United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-25714
THE AEGIS CONSUMER FUNDING GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-3008867
(State or otherjurisdiction of (IRS Employer
incorporation or organization) Identification No.)
525 Washington Blvd.,
29th Floor,
Jersey City, NJ 07310
(Address of principal executive offices) (Zip Code)
(201) 418-7300 FAX (201) 418-7393
(Registrant's telephone number,
including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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.
As of November 6, 1996, 15,981,644 shares of the issuer's common stock
were outstanding.
<PAGE>
THE AEGIS CONSUMER FUNDING GROUP, INC.
FORM 10-Q
INDEX
Page
PART I. FINANCIAL INFORMATION No.
Item 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited):
Consolidated Condensed Statements of Financial Condition -
September 30, 1996 and June 30, 1996. . . 3
Consolidated Condensed Statements of Income -three
months ended September 30, 1996 and 1995. 4
Consolidated Condensed Statements of Cash Flows - three
months ended September 30, 1996 and 1995. 5
Notes to Consolidated Condensed Financial Statements . 6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS. . . . . . 8
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . 22
Item 2. Changes in Securities. . . . . . . . . . . 22
Item 3. Defaults upon Senior Securities. . . . . . 22
Item 4. Submission of Matters to a Vote of Security Holders. . 22
Item 5. Other information. . . . . . . . . . . . . 22
Item 6. Exhibits and Reports on Form 8-K . . . . . 22
SIGNATURES . . . . . . . . . . . . . . . . . . . . . 24
EXHIBIT INDEX . . . . . . . . . . . . . . . . . . . 22
<PAGE>
PART I. FINANCIAL INFORMATION:
Item 1. Consolidated Condensed Statements
THE AEGIS CONSUMER FUNDING GROUP, INC.
Consolidated Condensed Statements of Financial Condition
(unaudited)
<TABLE>
<CAPTION>
ASSETS
September 30, June 30,
1996 1996
------------ ----------
<S> <C> <C>
Cash and cash equivalents $ 2,373,277 $3,090,624
Automobile finance receivables, net 54,153,648 41,058,222
Retained interests in securitized receivables 82,138,886 70,242,773
Other assets 8,708,456 7,060,135
---------- ----------
$147,374,267 $121,451,754
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Warehouse credit facilities $44,886,123 $37,202,342
Notes payable 37,233,577 29,848,859
Accounts payable and accrued expenses 16,863,735 11,220,644
Income taxes payable 11,337,741 9,188,444
----------- -----------
Total liabilities 110,321,176 87,460,289
----------- -----------
Stockholders' equity:
Common stock, $.01 par value;
30,000,000 shares authorized;
15,455,958 issued and outstanding
at June 30 and 16,002,606 issued and
15,922,606 outstanding at September 30 160,026 154,560
Preferred stock, Series C, $0.10 par value;
1,100 shares authorized; 920 shares issued;
525 shares outstanding at June 30 and 325
shares outstanding at September 30 33 53
Paid in capital 22,537,102 22,199,545
Retained earnings, since date of
recapitalization (March 1,1992) 14,695,930 11,637,307
---------- ----------
Total capital and retained earnings 37,393,091 33,991,465
---------- ----------
Treasury stock 340,000 -
---------- ----------
Total stockholders' equity 37,053,091 33,991,465
---------- ----------
$147,374,267 $121,451,754
============ ============
</TABLE>
See accompanying notes.
<PAGE>
THE AEGIS CONSUMER FUNDING GROUP, INC.
Consolidated Condensed Statements of Income
Three months ended September 30, 1996 and 1995
(unaudited)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
Revenues:
Fees and commissions earned $46,555 $72,055
Gains on securitizations and securities sales 8,349,120 6,022,858
Interest income 5,142,854 2,990,301
Other income 150,249 72,939
-------- ---------
13,688,778 9,158,153
---------- ---------
Operating expenses:
Salaries and other employee costs 2,219,607 1,261,372
Provision for credit losses 536,175 753,775
Interest expense 3,013,473 2,124,347
Other expenses 2,604,790 1,371,177
--------- ---------
8,374,045 5,510,671
--------- ---------
Net income before income taxes 5,314,733 3,647,482
Taxes on income 2,179,090 1,641,400
--------- ---------
Net income $3,135,643 $2,006,082
========== ==========
Net income available to common stockholders $3,135,643 $2,006,082
========== ==========
Primary Earnings Per Share:
Net income available to common stockholders $3,135,643 $2,006,082
========== ==========
Net income per common and common equivalent
share $0.19 $0.15
===== =====
Weighted average common and common
equivalent shares 16,484,713 13,738,109
========== ==========
Fully Diluted Earnings Per Share:
Net income available to common stockholders $3,135,643 $2,006,082
========== ==========
Net income per common and common equivalent
share $0.19 $0.14
===== =====
Weighted average common and common
equivalent shares 16,491,910 14,821,219
=========== ==========
</TABLE>
See accompanying notes.
<PAGE>
THE AEGIS CONSUMER FUNDING GROUP, INC.
Consolidated Condensed Statements of Cash Flows
Three months ended September 30, 1996 and 1995
(unaudited)
<TABLE>
1996 1995
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $3,135,643 $2,006,082
Adjustments to reconcile net income to
net cash used in operating activities:
Amortization and depreciation expense 277,146 121,125
Provision for credit losses, net 536,175 753,775
Unrealized gains on securitization
transactions (12,109,339) (9,923,586)
Write down of retained interest in securitized
receivables 2,000,000 -
Increase in automobile finance receivables
portfolio (13,631,601) (8,534,030)
Decrease in note receivable - 7,651,985
Decrease in other assets 27,034 2,987,028
Increase (decrease) in accounts payable and
accrued expenses 5,643,089 (572,190)
Increase in income taxes payable 2,149,297 1,574,263
--------- ---------
Net cash used in operating activities (11,972,556) (3,935,548)
------------ -----------
Cash flows from investing activities:
Distributions from retained interests in securitized
receivables 642,885 592,351
Additional payments to securitized receivable
trusts (2,429,659) -
Purchases of fixed assets (1,686,515) (91,942)
----------- ---------
Net cash (used in) provided by investing
activities (3,473,289) 500,409
----------- ---------
Cash flows from financing activities:
Proceeds from borrowing under warehouse credit
facilities 221,308,450 68,453,403
Repayment of borrowing under warehouse credit
facilities (213,624,669) (73,700,140)
Proceeds from borrowing under notes payable 14,522,975 4,884,225
Repayment of borrowing under notes payable (7,138,258) (1,262,042)
Purchase of treasury stock (340,000) -
---------- -----------
Net cash provided by (used in) financing
activities 14,728,498 (1,624,554)
----------- -----------
Net decrease in cash and cash equivalents (717,347) (5,059,693)
Cash and cash equivalents, beginning of period 3,090,624 5,970,571
---------- -----------
Cash and cash equivalents, end of period $2,373,277 $ 910,878
========== ============
Supplemental disclosures of cash flow information:
Cash paid during the period:
Interest $2,917,413 $2,114,708
========== ===========
Income taxes $91,800 $77,700
========== ===========
</TABLE>
See accompanying notes.
<PAGE>
THE AEGIS CONSUMER FUNDING GROUP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The interim financial data is unaudited; however, in the
opinion of management, the interim data includes all
adjustments, consisting only of normal recurring
adjustments, necessary for a fair statement of the results
for the interim periods. Results for interim periods are
not necessarily indicative of the results for a full year.
The consolidated condensed financial statements included herein
have been prepared by the Company pursuant to the rules
and regulations of the Securities and Exchange
Commission (the "SEC"). Pursuant to interim accounting
disclosure rules and regulations, certain information and
footnote disclosures normally included in financial
statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted.
The organization and business of the Company,
accounting policies followed by the Company and other
information are contained in the notes to the Company's
consolidated financial statements filed as part of the
Company's 10-K filing for the fiscal year ended June 30,
1996. This quarterly report should be read in conjunction
with such annual 10-K filing.
2. WAREHOUSE AND OTHER CREDIT FACILITIES
In October 1996, the two separate two-year Loan and
Security Agreements (the "Auto Agreements") with III
Finance Ltd ("III Finance") were amended to increase the
borrowing limits to $200.0 million, this limit is inclusive
of the Auto Agreements and Loan and Security Agreements
with III Finance (the "Financing Agreements"). Under the terms of the
amended Auto Agreements, the rate of interest on loan
borrowings in excess of $50.0 million is LIBOR plus
2.75% compared to LIBOR plus 4.0%.
During the three months ended September 30, 1996, the
Company borrowed $2.0 million of the $5.0 million
available under a revolving credit agreement provided by
Greenwich Capital Markets, Inc. ("Greenwich Capital").
In October, 1996, the Company borrowed the remaining
$3.0 million available under the revolving credit
agreement.
3. NOTES PAYABLE
During the three months ended September 30, 1996, the
Company entered into an additional Loan and Security
Agreement with III Finance,
whereby, the Company may borrow up to $3,147,123.
During the three months ended September 30, 1996, the
Company borrowed $2,197,411 under this
agreement. As of September 30, 1996, the Company had
notes payable aggregating $34,889,839 and related
interest payable of $118,100 under all the Financing
Agreements with III Finance. The notes bear interest at a rate of 12% per
annum and are secured by certain of the Company's
retained interests in securitized receivables with carrying
values aggregating approximately $81.6 million at
September 30, 1996, which approximates their fair value.
In October 1996, the Company was unable to make a principal
payment of $4.2 million due under the note payable secured
by its retained interest in securitized receivables created under
the Aegis Auto Owner Trust 1995-A securitization as a result of the
change in the recalculated borrwing base. As of September 30, 1996, the
Company had borrowings of $9.7 million under this note which is
secured by retained interests in securitized receivables with an estimated
fair value of $22.7 million. In October, 1996, when the payment
was due, the Company negotiated a 40 day extension on the $4.2 million
principal payment owed. Based on information available to the Company
at the time it negotiated its extension, the Company believed it would
have completed a transaction that would have raised the necessary capital
to pay the amount owed. However, as of the date hereof, the consummation
of such transaction is uncertain and the Company is therefore renegotiating
the payment terms under this financing.
During the three months ended September 30, 1996,
certain executive officers of the Company deferred
payment of their bonuses earned for the year ended June
30, 1996. In connection therewith, the Company entered
into notes payable (the "Executive Notes") with such
officers in an aggregate amount of $686,000. The
Executive Notes expire no later than January 2, 1997 and
bear interest at a rate of 15% per annum.
On July 29, 1996, Systems and Services Technologies,
Inc., ("SST"), a wholly owned subsidiary of the
Company, purchased a building and property (the
"Property"), located at 4215 Pickett Road, St. Joseph,
Missouri, formerly known as the Northwest Missouri
Community College Facility. The Property will be
utilized by SST as its loan servicing center after the
completion of the refurbishments, which are expected to
be finished by the end of the Company's second quarter.
<PAGE>
The Company believes the purchase and refurbishment of
the Property will cost $2.2 million. Commerce Bank,
N.A. ("Commerce") has executed a Loan Agreement with
SST, dated as of July 29, 1996, whereby Commerce
advanced SST $1.4 million with interest of 8.2% per
annum, expiring in August, 2001 for the purchase and
refurbishment of the Property.
4. COMMITMENTS AND CONTINGENCIES
In December 1995, the Company entered into a
commitment to sell $175.0 million of sub-prime
automobile finance contracts to be resold as asset-backed
securities through an Owners Trust Agreement (the
"Agreement"). Through September 30, 1996, the
Company sold approximately $143.5 million of finance contracts
in accordance with the Agreement and had a
remaining commitment of approximately $31.5 million.
In October 1996, it was determined that the finance contracts
underlying the securities were not performing in
accordance with the levels required under the
Agreement. This event terminated the Company's commitment to sell
finance contracts under the terms of the Agreement
of $26.6 million (as of that date, the Company had sold $148.4
million of finance contracts of the $175.0 million
total commitment).
The Company has a one-year commitment from
Greenwich Capital Markets, Inc. ("Greenwich Capital") to
purchase and securitize up to $533.0 million of the
Company's finance contract acquisitions until the
commitment is filled, subject to customary conditions.
Three securitizations aggregating $307.0 million were
completed as of September 30, 1996 pursuant to this
commitment.
In connection with securitization transactions, the
Company enters into pooling and servicing agreements.
Certain of these agreements require the Company to
increase its cash contribution to the underlying trusts
when the delinquencies and default rates increase to
certain levels defined in the agreements. As delinquencies
and/or default rates increase or decrease, the Company's
obligation varies. For the year ended June 30,1996, the
Company paid additional contributions to the trusts of
approximately $2.3 million and, in August 1996, paid
$2.4 million, which management believes to be, its final
contribution under this obligation.
On April 28, 1996, a complaint was filed against the
Company in the United States District Court for the
Southern District of New York alleging that the
complainant was entitled to certain fees under a finder's
agreement entered into with the Company on January 2,
1996. The amounts alleged to be due were in connection
with the Company's private placement of $92 million of
asset-backed securities in March 1996. On July 3, 1996,
the complaint was amended to include fees allegedly due
under the finder's agreement in connection with a series
of financing arrangements entered into by the Company
and in connection with a potential sale of common stock
of the Company. The complainant seeks damages of $15.8
million plus interest and punitive damages of at least
$545,000, together with costs, attorneys' fees and such
other relief as the court deems appropriate. The Company
believes it has meritorious defenses to the allegations in
the complaint and intends to defend the matter
vigorously.
The Company is subject to various other legal
proceedings and claims that arise in the ordinary course
of business. In the opinion of management of the
Company, based in part on the advice of counsel, the
amount of any ultimate liability with respect to these
actions will not materially affect the results of operations,
cash flows or financial position of the Company.
5. CAPITAL STOCK
No warrants that were issued and outstanding at June 30,
1996 have been exercised as of November 6, 1996.
During the three months ended September 30, 1996, the
Company converted 200 shares of Series C Preferred
Stock into 546,648 shares of common stock.
During the three months ended September 30, 1996 the
Company purchased 80,000 shares of common stock from
a former executive officer, who is currently the CEO of
SST, for $340,000.
<PAGE>
Item 2.
Managements Discussion and Analysis of Financial
Condition and Results of Operations.
The following discussion and analysis of financial
condition and results of operations of the Company
relates to the fiscal quarters ended September 30, 1996
and 1995 and should be read in conjunction with the
Company's Consolidated Condensed Financial Statements
and Notes thereto included elsewhere in this quarterly
report. The unaudited results for the three months ended
September 30, 1996 are not necessarily indicative of
results to be expected for the entire fiscal year.
Overview
The Company is a specialty consumer finance company
engaged in acquiring, securitizing and servicing finance
contracts originated by Dealers in connection with the
sale of late-model used and, to a lesser extent, new cars
to consumers with sub-prime credit. Since commencing
the acquisition of finance contracts in May 1992, through
September 30, 1996, the Company has acquired
approximately $821 million of finance contracts, of which
$755 million have been securitized in fifteen offerings of
asset-backed securities.
The following table illustrates the Company's finance
contract acquisition volume, total revenue, securitization
activity and servicing portfolio during the past nine fiscal
quarters.
<TABLE>
<CAPTION>
For the Quarters Ended
Sept. 30, Dec. 31, Mar. 31, June 30, Sept. 30, Dec. 31. Mar. 31, June 30, Sept 30
1994 1994 1995 1995 1995 1995 1996 1996 1996
-------- ------- ------- -------- -------- ------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(dollars in thousands)
Number of finance contracts
acquired during period . 1,729 1,583 2,688 4,901 5,943 8,190 10,569 12,037 15,401
Average finance contract
balance $12.0 $12.1 $12.2 $12.2 $12.2 $12.3 $12.2 $12.4 $12.4
Aggregate value of finance
contracts acquired during
period 20,712 19,188 32,785 59,609 72,562 100,582 128,781 149,612 190,843
Gains from securitization
transactions(1)(2) . 1,600 741 1,984 5,197 6,023 7,424 12,759 10,824 8,349
Gains from whole loan sales. 87 124 604 40 48 64 111 290 -
Net interest (expense) income. 747 334 213 765 866 1,021 546 993 2,129
Revenue(3) . . 2,462 1,949 2,498 6,111 7,034 6,946 10,341 11,916 10,675
Finance contracts securitized
during period. . 23,251 21,000 21,000 54,000 67,630 85,368 130,138 149,274 173,270
Finance contracts sold during
period . . . . . 998 1,750 8,561 1,000 1,000 1,801 2,752 2,250 -
Servicing portfolio(at period
end)(4) . . . . 55,032 69,248 94,576 146,557 197,911 287,481 401,704 500,694 645,551
<FN>
<F1>
(1) Excludes gains from whole loan sales of finance
contracts.
<F2>
(2) The quarters ended December 31, 1995, March 31,
1996, June 30, 1996 and September 30, 1996 are before write downs of $3.1
million, $1.5 million, $3.5 million and $2.0 million, respectively,
taken on prior retained interests in securitized receivables.
<F3>
(3) Revenue is net of interest expense.
<F4>
(4) Excludes finance contracts in bankruptcy, authorized
for repossession and in repossession and still eligible for
reinstatement.
</FN>
</TABLE>
Revenues
The Company's primary sources of revenues consist of
two components: gains from securitization transactions
and interest income.
Gains from Securitization Transactions. The Company
warehouses the finance contracts it acquires and
periodically sells them to a trust, which in turn sells
asset-backed securities to investors. By securitizing its
finance contracts, the Company is able to lock in the
difference ( gross spread ) between the annual rate of
interest paid by the consumer ( APR ) on the finance
contracts acquired and the interest rate on the asset-
backed securities sold ( Certificate Rate ). When the
Company securitizes its finance contracts, it records a
gain from securitization transactions and establishes an
asset referred to as retained interest in securitized
receivables. Gains from securitization transactions are
equal to the retained interest on the securitized
receivables plus the difference between the net proceeds
from the securitization and the cost (including the cost of
VSI Policy and credit default premiums) to the Company
of the finance contracts sold.
<PAGE>
The retained interest on
securitized receivables represents the estimated present
value of the estimated future cash flows to be received by
the Company, discounted at a market-based rate, taking
into consideration (i) contractual obligations of the
obligors, (ii) amounts due to the investors in asset-backed
securities, (iii) various costs of the securitizations,
including the effects of hedging transactions, if any, and
(iv) adjustments to the cash flows to reflect estimated
prepayments of finance contracts and losses incurred in
connection with defaults. Subsequent to securitization,
the Company continues to service the securitized finance
contracts, for which it recognizes servicing fees over the
life of the securitization. Retained interest in securitized
receivables represents the difference between the
weighted average finance contract rate earned and the rate
paid on certificates issued to the investors in the
securitization, less servicing fees and other costs over the
life of the securitization. Retained interest in securitized
receivables is computed by taking into account certain
assumptions regarding prepayments, defaults, servicing
and other costs. The Company reviews on a quarterly
basis the retained interest in securitized receivables. If
actual experience differs from the Company s
assumptions or to the extent that market and economic
changes occur that adversely impact the assumptions
utilized in determining the retained interest in securitized
receivables, the Company records a charge against gains
from securitization transactions. The discount rate
utilized in determining the retained interest in securitized
receivables and gain from securitization transactions is
based on the Company's estimate of the yield required by
a third party purchaser of such instrument. The Company
also bases these assumptions on the performance
characteristics of the Company's finance contract
portfolio to date. The Company's default assumptions are
based on estimated repossession rates, proceeds from the
liquidation of repossessed vehicles, proceeds from VSI
Policy coverage and recoveries from the Company s
credit default insurance.
Interest Income. Interest income consists of: (i) interest
income earned on finance contracts (ii) interest income
earned on leases (the Company ceased funding leases in
the quarter ended September 30, 1995), (iii) servicing
fees net of expenses, (iv) the accretion of finance contract
acquisition discounts net of related capitalized costs and
(v) the amortization of capitalized costs net of origination
discounts for leases. Other factors influencing interest
income during a given fiscal period include (a) the annual
percentage rate of the finance contracts acquired, (b) the
aggregate principal balance of finance contracts acquired
and funded through the Company's warehouse credit
facilities prior to securitization, and (c) the length of time
such finance contracts are funded by the warehouse credit
facilities prior to securitization. Finance contract
acquisition growth has a significant impact on the amount
of interest income earned by the Company.
The following table provides information for each of the
Company s rated securitizations:
<TABLE>
<CAPTION>
Weighted
Remaining Average Weighted
balance at Finance Average
Original September 30, Contract Certificate Gross Net
Securitizations Balance 1996 Rate Rate Ratings Spread (1) Spread(2)
- --------------- -------- ------------ --------- ------------ -------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Aegis Auto Receivables Trust,
Series:
1994-A . . $18,539 $5,200 20.28% 7.74% A(3) 12.54% 8.70%
1994-2 . . 23,251 8,466 19.82 8.04 A+(3) 11.78 8.12
1994-3 . . 21,000(4) 8,834 19.66 9.46 A+(3) 10.20 6.46
1995-1 . . 21,000(4) 10,364 20.41 8.60 A+(3) 11.81 8.46
1995-2 . . 54,000(4) 30,633 19.94 7.16 A+(3) 12.78 8.98
1995-3 . . 60,000(4) 38,902 20.04 7.09 A+(3) 12.95 10.12
1995-4 . . 70,000(4) 51,808 19.88 6.65 A+(3) 13.23 10.41
1996-1 . . 92,000(4) 79,350 20.13 8.44(5) A+,BBB,BB/ 11.69 8.89
A+,BBB+,BB(6)
1996-2 . . 105,000(4) 100,983 20.10 8.93(7) A+,BBB,BB/ 11.17 8.40
A+,BBB+,BB(8)
1996-3 . . 110,000(4) 109,108 20.2 8.82(9) A+,BBB,BB/ 11.40 8.75
A,BBB,BB(10)
Aegis Auto
Owner Trust. . . . . 143,477 125,943 20.14 6.53 AAA/Aaa,Baa2(11) 13.611 0.87(12)
<FN>
<F1>
(1) Difference between the Weighted
Average APR on finance contracts and the Weighted
Average APR on the trust certificates (the "Weighted
Average Certificate Rate").
<F2>
(2) Difference between Weighted
Average APR on finance contracts and the Weighted
Average Certificate Rate, net of servicing and trustee
monthly fees and annualized issuance costs that include
underwriting fees and hedging gains or losses, if any.
<F3>
(3) Indicates ratings by Duff & Phelps.
<F4>
(4) Includes prefunded amounts which
were transferred to the related trust by the end of the
quarter for 1995-1, 1995-2, 1995-3, 1995-4, 1996-1,
1996-2, 1996-3 and by the first week of the next quarter
for 1994-3.
<F5>
(5) The Weighted Average Certificate
Rate is composed of the following: The Class A
certificate rate is 8.39%, the Class B certificate rate is
7.86% and the Class C certificate rate is 12.14%.
<F6>
(6) The 1996-1 Securitization has Class
A Notes rated A+ by Duff & Phelps and A+ by Fitch;
Class B Notes rated BBB by Duff & Phelps and BBB+
by Fitch and Class C Notes rated BB by Duff & Phelps
and BB by Fitch.
<F7>
(7) The Weighted Average Certificate
Rate is composed of the following: The Class A
certificate rate is 8.9%, the Class B certificate rate is
8.4% and the Class C certificate rate is 11.65%
<F8>
(8) The 1996-2 Securitization has Class
A notes rated A+ by both Duff & Phelps and Fitch;
Class B Notes rated BBB by Duff and Phelps and BBB+
by Fitch and Class C Notes rated BB by both Duff &
Phelps and Fitch.
<F9>
(9) The weighted average Certificate
Rate is composed of the following: the Class A
certificate is 8.8%, the Class B certificate is 8.3% and the
Class C certificate is 11.1%.
<F10>
(10) The 1996-3 Securitization has
Class A notes rated A+ by Duff & Phelps and A by
Fitch; Class B notes rated BBB and Class C notes rated
BB by both Duff & Phelps and Fitch.
<F11>
(11) The Company had a total funding commitment
of $175.0 million, of which $15.4 million was funded in
the second quarter of the fiscal year ended June 30, 1996,
$38.1 million was funded in the third quarter of the fiscal
year ended June 30, 1996 , $44.3 million was funded in
the fourth quarter of fiscal year ended June 30, 1996 ,
$45.7 million was funded in the first quarter of the fiscal
year ending June 30, 1997. The Owner Trust Facility has
Class A Notes rated AAA by Standard & Poor s and Aaa
by Moody s and Class B Certificates rated Baa2 by
Moody s.
<F12>
(12) Amortized over maximum $175.0 million
facility.
</FN>
</TABLE>
<TABLE>
<PAGE>
Results of Operations
Three Months Ended September 30, 1996 Compared To
Three Months Ended September 30, 1995
Revenues
Revenues increased to $13.7 million for the three
months ended September 30, 1996 from $9.2 million for
the three months ended September 30, 1995, an increase
of $4.5 million or 49.5%.
Gains from Securitization Transactions. Gains from
securitization transactions increased to $8.3 million for
the three months ended September 30, 1996 from $6.0
million for the three months ended September 30, 1995,
an increase of $2.3 million or 38.6%. The increase in
gains from securitization transactions was offset by write
downs of $2.0 million (described below) taken on the
retained interests in securitized receivables from earlier
securitizations. Additionally, the Company's
securitization costs increased as a result of the inherent
costs associated with issuing warrants to Greenwich
Capital in connection with additional securitizations
pursuant to the terms of the Securitization Facility.
Quarterly, the Company revalues its retained interests in
securitized receivables using actual experience on the
respective underlying securitization trust's finance
contract performance. When the actual experience differs
from the original assumptions utilized in the initial
valuation in a detrimental direction, the Company can
incur permanent losses in the carrying value of these
assets. During the three months ended September 30,
1996, the Company incurred $2.0 million of, what
management believes to be, permanent losses on its
retained interests in securitized receivables portfolio. The
cause of the permanent impairment was higher than
expected default rates on the underlying finance contracts.
As a result of these increases, current assumptions utilized
in current valuations have been adjusted to reflect the
higher default rates.
<PAGE>
Interest Income. Interest income increased to $5.1
million for the three months ended September 30, 1996
from $3.0 million for the three months ended September
30,1995, an increase of $2.1 million or 72.0%, primarily
as a result of the Company s increased finance contract
volume. The Company s weighted monthly average
outstanding balance of finance contracts owned increased
to $39.3 million for the three months ended September
30, 1996 from $20.8 million for the three months ended
September 30, 1995, an increase of $18.5 million or
88.9%. Since the Company s weighted average APR on
finance contracts has remained at approximately 20.5%,
the increase in interest income is partially attributable to
the increase in the weighted average outstanding balance.
(Interest income is net of servicing fees paid and earned.)
Operating Expenses.
Operating expenses increased to $8.4 million for the
three months ended September 30, 1996 from $5.5 million
for the three months ended September 30, 1995, an increase
of $2.9 million or 52.0%.
Interest Expense. Interest expense increased to $3.0
million for the three months ended September 30, 1996
from $2.1 million for the three months ended September
30, 1995, an increase of $0.9 million or 41.9%, as a
result of the increased financing requirements for the
increased finance contract acquisition activity. The
increase in interest expense represents 31.1% of the total
increase in operating expenses and is partially attributable
to the Company s warehouse credit facilities, which are at
fluctuating interest rates that ranged from as low as
9.4102% to as high as 9.5156% for the three months
ended September 30, 1996 compared to a low of
9.8125% and a high of 10.125% for the three months
ended September 30, 1995. In addition, the Company s
monthly average outstanding balance on its warehouse
credit facility increased to $73.0 million for the three
months ended September 30, 1996 from $57.4 million for
the three months ended September 30, 1995. The
Company also incurred interest on notes payable at a 12%
interest rate on a monthly average outstanding balance of
$31.3 million for the three months ended September 30,
1996 compared to a monthly outstanding average balance
of $14.2 million for the three months ended September
30, 1995.
Salaries and Other Employee Costs. Salaries and other
employee costs increased to $2.2 million for the three
months ended September 30, 1996 from $1.3 million for
the three months ended September 30, 1995, an increase
of $0.9 million or 76.0%, due to an increase in the
number of employees to approximately 350 at September
30, 1996 from approximately 210 employees at
September 30, 1995. In addition temporary help charges
incurred increased to $541,000 for the three months
ended September 30, 1996 from $21,000 for the three
months ended September 30, 1995, an increase of
$520,000 or 252.1%. Temporary employment agencies,
specializing in providing collectors, are increasingly being
utilized in the Company's California collections unit
located in Irvine, CA as a screening process for hiring
new collectors. The Collections unit continues to expand
its operations in an effort to maintain the number of
finance contracts per collector at levels acceptable to the
Company.
Provision for Credit Losses. The provision for credit
losses decreased to $536,000 for the three months ended
September 30, 1996 from $754,000 for the three months
ended September 30, 1995, a decrease of $218,000 or
28.9%. The provision for credit losses for the three
months ended September 30, 1996 includes an adjustment
for $500,000 for estimated recoveries of sales taxes paid on
automobile finance contracts which became delinquent
and/or defaulted. Exclusive of this adjustment, the
provision for credit losses increased to $1.0 million, an
increase of $300,000 or 39.8% from the three months
ended September 30, 1995. The Company's provision for
credit losses is affected by: (i) the Company's increased
acquisition volume of finance contracts; (ii) the
Company's decision to discontinue purchasing credit
default insurance on its lease originations effective
January 1995; (iii) the Company's decision, effective
August 1995, to insure on a discretionary basis its finance
contract acquisitions (to the extent finance contracts
remain uninsured for default, the Company's loss ratio is
higher); (iv) the increase in delinquent automobile finance
receivables (as discussed below); (v) the higher amount
of finance contracts and leases owned by the Company at
September 30, 1996 ($54.2 million) as compared to
September 30, 1995 ($47.6 million); and (vi) the ratio of
current finance contracts to non-current finance contracts
at September 30, 1996 (69.6%) compared to September
30, 1995 (45.6%). These changes also resulted in a
decrease in the Company's reserve rate as a percentage of
total automobile finance receivables held on the
Company's balance sheet (i.e., original balance net of
receivables repaid, sold or charged off) to 5.4% in 1996
from 6.2% in 1995. The Company maintains residual
value insurance relating to its entire lease portfolio.
<PAGE>
All Other Operating Expenses. All other operating
expenses increased to $2.6 million for the three months
ended September 30, 1996 from $1.4 million for the
three months ended September 30, 1995, an increase of
$1.2 million or 90.0%. The significant components of
the increase in all other operating expenses are increases
in professional fees and general and administrative
expenses. Professional fees increased to $504,000 for the
three months ended September 30, 1996 from $194,000
for the three months ended September 30, 1995, an
increase of $310,000 (25.8% of the total increase) or
160.1% primarily due to increased legal fees incurred for
defending the Company's on going litigation. In general,
the Company's general and administrative expenses
increased to support the Company's increased finance
contract acquisition levels.
Taxes on Income. Taxes on income increased to $2.2
million (an effective tax rate of 41%) for the three
months ended September 30, 1996 from $1.6 million (an
effective tax rate of 45%) for the three months ended
September 30, 1995, an increase of $0.5 million. The
decrease in the Company's effective tax rate of 4% is a
result of the state and local tax rate decreasing to an
estimate of 4% for the three months ended September 30,
1996 from 9% for the three months ended September 30,
1995.
Net Income. Net income increased to $3.1 million for the
three months ended September 30, 1996 from $2.0 million for
the three months ended Sep tember 30, 1995, an increase
of $1.1 million or 56.3%. This increase resulted
primarily from the increase in the size of automobile
securitization transactions to $173.3 million for the three
months ended September 30, 1996 from $67.6 million for
the three months ended September 30, 1995.
Financial Condition
Automobile Finance Receivables, Net. Automobile
finance receivables consists of finance contracts held for
sale, finance contracts held for investment (including
vehicles held for repossession) and the Company's lease
portfolio. The Company suspended originating leases in
the first quarter of its 1996 fiscal year.
Automobile finance receivables, net of allowance for
credit losses, increased to $54.2 million at September 30,
1996 from $41.1 million at June 30, 1996, an increase of
$13.1 million or 31.9%. Finance contracts held for sale
increased to $28.1 million at September 30, 1996 from
$12.9 million at June 30, 1996, an increase of $15.2
million or 117.8%. Finance contracts held for investment
increased to $12.0 million at September 30, 1996 from
$11.4 million at June 30, 1996, an increase of $0.6
million or 5.2%. As of September 30, 1996,
approximately $4.0 million of finance contracts held for
investment were in the repossession process. The
increase in the finance contracts held for investment was
due primarily to the increased volume of finance contract
acquisitions. The increase was also due to a decrease in
the allowance for credit losses to $2.9 million at
September 30, 1996 from $3.1 million at June 30, 1996 and a
decrease in automobile leases held for investment to
$17.4 million at September 30, 1996 from $19.8 million
at September 30, 1996, a decrease of $2.4 million or
12.1%, primarily due to amortization and write offs.
The number and principal balance of finance contracts
held are largely dependent upon the timing and size of
the Company's securitizations. The Company plans to
securitize finance contracts on a regular quarterly basis.
<PAGE>
Retained Interests in Securitized Receivables. The
following table provides historical data regarding the
retained interests in securitized receivables for the periods
shown:
Three Months Ended
Year Ended June 30, September 30,
------------------ -------------------
1996 1996
---- ----
(dollars in thousands)
Beginning balance. . $23,985 $70,243
Additions. . . . . . 56,749 14,539
Amortization . . . . (2,991) (643)
Write downs. . . . . (7,500) (2,000)
------- -------
Ending balance . . . $70,243 $82,139
======== ========
<PAGE>
Delinquency Experience
The following table reflects the delinquency
experience of all finance contracts acquired, including
those sold in whole finance contract sales or securitizations,
by the Company at the dates shown:
Finance Contract Portfolio
At June 30, At September 30,
---------- ----------------
1996 1996
---- ----
(dollars in thousands)
<S> <C> <C> <C> <C>
Principal balance
outstanding(1) . $500,694 $645,551
Number of finance
contracts outstanding (1). . . . 44,600 57,404
Delinquent loans
31-59 days. . . $33,625 6.7% $46,145 7.2%
60-89 days . . 9,172 1.8% 13,157 2.0%
90 days and over. . . . . . . . 2,054 0.4% 3,340 0.5%
----- ---- ------ ----
Total. . . . . 44,851 8.9% 62,642 9.7%
Finance contracts in repossession
or bankruptcy(2) . 21,022 4.2% 40,048 6.2%
------ ---- ------ ----
Grand Total $65,874 13.1% $102,690 15.9%
======= ===== ======== =====
<FN>
<F1>
(1) Excludes contracts for which notice of intent
to liquidate has expired and those having an outstanding
balance less than or equal to $500.
<F2>
(2) Excludes finance contracts in bankruptcy,
authorized for repossession and in repossession and still
eligible for reinstatement.
</FN>
Credit Loss Experience
An allowance for credit losses is maintained for all
finance contracts held for sale and for all finance
contracts held for investment. Management evaluates the
reasonableness of the assumptions employed by reviewing
credit loss experience, delinquencies, repossession trends,
the size of the finance contract portfolio and general
economic conditions and trends. If necessary,
assumptions are changed to reflect historical experience to
the extent it deviates materially from that which was
assumed.
If a delinquency exists and a default is deemed inevitable
or the collateral is in jeopardy, and in no event later than
the 35th day of delinquency, the Company's collections
department will initiate the repossession of the financed
vehicle. Bonded, insured outside repossession agencies
are used to secure involuntary repossessions. In most
jurisdictions, notice to the borrower of the Company's
intention to sell the repossessed automobile is required,
whereupon the borrower may exercise certain rights to
cure his or her default or redeem the automobile.
Following the expiration of the legally required notice
period, the repossessed vehicle is sold at a wholesale auto
auction, usually within 150 days of the repossession. The
Company monitors vehicles set for auction, and procures
an appraisal under the VSI Policy prior to sale.
Liquidation proceeds are applied to the borrower's
outstanding obligation under the finance contract and loss
deficiency claims under the VSI Policy and credit default
insurance policy are then filed.
<PAGE>
The Company reports the
remaining deficiency as a net charge-off against the
allowance for credit losses for automobile finance
receivables owned by the Company. For finance
contracts held in securitization trusts, charge-offs are
accounted for in accordance with the underlying pooling
and servicing agreements.
Because of the Company's limited operating history, its
finance contract portfolio is unseasoned. Accordingly,
delinquency and charge-off rates in the portfolio may not
fully reflect the rates that may apply when the average
holding period for finance contracts in the portfolio is
longer. Increases in the delinquency and/or charge-off
rates in the portfolio would adversely affect the
Company's ability to obtain credit or securitize its finance
contracts and would have an adverse effect on the
Company's results of operations and financial condition.
The following table shows the Company's repossession
and loss experience for its managed finance contract
portfolio for the periods indicated:
</TABLE>
<TABLE>
<CAPTION>
Three Months
Year Ended June 30, Ended September 30,
------------------ ------------------
1996 1996
---- ----
(dollars in thousands)
<S> <C> <C>
Average principal balance outstanding(1) . $333,183 $617,400
Balance of finance contracts at the time of
repossession . . 40,258 20,080
Number of repossessions(2) . . . . 3,494 1,759
Repossession ratio (3) . . . . . . 13.0% 13.0%
Default balance of fully liquidated
vehicles . $15,920 $19,942
Proceeds from liquidation, net of
repossession costs . . 7,964 9,167
Gross charge offs(4) . . . . . . . 7,956 10,775
Credit default insurance proceeds (5). . . . 4,092 4,076
Net charge offs (6). . . . . . . . 3,864 6,699
Net charge offs as a percentage of
liquidations(7) . . 24.3% 33.6%
Net charge offs as a percentage of average
principal balance outstanding . . 1.2% 1.1%
<FN>
<F1>
(1) Arithmetic mean of beginning and ending outstanding
principal balance of all finance contracts acquired
including those previously sold in securitization
transactions.
<F2>
(2) Number of vehicles which have been repossessed and
its notice of intent to liquidate ("NOI") has expired.
<F3>
(3) Balance of finance contracts at the time of
repossession divided by average principal balance
outstanding during the period, annualized for the three
months ended September 30, 1996.
<F4>
(4) Gross charge offs equals the aggregate balance of
finance contracts liquidated, including those previously
sold in securitization transactions, less all recoveries from
the sale of the financed vehicles. Repossession and
liquidation expenses are included in gross charge offs.
<F5>
(5) Since August 1995, the Company no longer deposits
money to a segregated account from which losses
incurred under a policy would be paid.
<F6>
(6) Net charge offs are gross charge offs reduced by
credit default insurance proceeds received relating to the
defaulted finance contracts.
<F7>
(7) Net charge off amount divided by the aggregate
balance of finance contracts relating to vehicles
liquidated.
</FN>
</TABLE>
The Company has prepared analyses, based on its own
credit experience and available industry data, to identify
the relationship between finance contract delinquency and
default rates at the various stages of a finance contract
repayment term. The results of these analyses, which have
been incorporated into the Company's methodology of
determining gains from securitization transactions, suggest
that the probability of a finance contract becoming
delinquent or going into default is highest during the
"seasoning period" that occurs between the sixth to the
eighteenth month payment period from the acquisition
date.
If the rate of the Company's finance contract
acquisition volume continues to escalate, an increasingly
greater portion of the Company's finance contract
portfolio is expected to fall into the "seasoning period"
described above, which may cause a rise in the overall
finance contract portfolio delinquency and default rates,
without regard to underwriting performance. Assuming
no changes in any other factors that may affect
delinquency and default rates, the Company believes this
trend should stabilize or reverse when the volume of
mature finance contracts (with lower delinquency and
default rates) is sufficient to offset the total finance
contract portfolio delinquency and default rates.
<PAGE>
The Company believes delinquencies and losses can be
mitigated through an in-house collection program.
Accordingly, the Company responded to the increased
rates of delinquencies and losses in the fiscal year ended
June 30, 1995 by entering into a sub-servicing agreement
with its third-party servicer in April 1995, providing for
the transfer of specific collection functions to the
Company. Through this arrangement the Company
assumed responsibility for all customer contact with
respect to all existing leases and with respect to finance
contracts that were included in the Company's December
1994 securitization transaction and all finance contracts
acquired thereafter. In addition, the Company assumed
responsibility for liquidation activities on its entire
finance contract portfolio (including securitized finance
contracts) at such time.
Because of the Company's limited operating history
and the rapid growth of its finance contract acquisitions, a
significant portion of its finance contract portfolio is
unseasoned. Accordingly, delinquency and loss rates in
the portfolio may not be indicative of rates the Company
may experience over time. There can be no assurance that
the performance of the Company's portfolio will be
maintained, or that the rate of future defaults and/or
losses will be consistent with prior experience or at levels
that will not adversely affect the Company's profitability.
Repossession Experience - Static Pool Analysis
The Company's finance contract portfolio is continuing
to grow rapidly. The Company does not record its
provision for credit losses based on a percentage of the
Company's finance contract portfolio outstanding because
percentages can be favorably affected by large balances
of recently acquired finance contracts. The Company
utilizes actual dollar levels of delinquencies and
charge-offs and analyzes the data on a "static pool" basis.
The Company s goal is to complete the liquidation
process as quickly as possible. All repossessed vehicles
are sold at wholesale auction. The Company is
responsible for the costs of repossession, transportation
and storage. The Company's net charge-off per
repossession equals the unpaid balance less the auction
proceeds (net of associated costs) and less proceeds from
insurance claims.
<PAGE>
The following table provides static pool information
regarding the Company's rated securitization transactions
as of September 30, 1996:
<TABLE>
<CAPTION> Cumulative Gross Loss Gross Loss Net Loss
Percentage Repossession per Default Pool, Pool
Issuance Original Current of Original Frequency Contract Cumulative Cumulative,
Date Amount Amount Amount (1) (1)(2) (1)(3) (1)(3)(4) (1)(5)
------ -------- -------- ------------- ---------- ------- ---------- ----------
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Aegis Auto Receivable Trust
Series 1994-A. Jun-94 $18,539 $5,200 28.05% 17.71% 48.24% 7.90% 2.73%
Aegis Auto Receivable Trust
Series 1994-2. Sep-94 23,251 8,466 36.41 19.09 49.89 8.46 2.69
Aegis Auto Receivable Trust
Series 1994-3. Dec-94 21,000 8,834 42.07 18.36 49.78 8.15 3.47
Aegis Auto Receivable Trust
Series 1995-1. Mar-95 21,000 10,364 49.35 19.35 51.06 8.11 4.10
Aegis Auto Receivable Trust
Series 1995-2. Jun-95 54,000 30,633 56.73 18.47 51.02 7.47 3.96
Aegis Auto Receivable Trust
Series 1995-3. Sep-95 60,000 38,902 64.84 16.00 52.47 4.83 4.75
Aegis Auto Receivable Trust
Series 1995-4. Dec-95 70,000 51,808 74.01 13.88 51.28 2.94 0.25
Aegis Auto Receivable Trust
Series 1996-1. Mar-96 92,000 79,350 86.25 6.61 50.98 0.64 0.07
Aegis Auto Receivable Trust
Series 1996-2. Jun-96 105,000 100,983 96.17 0.95 0.00 0.00 0.00
Aegis Auto Receivable Trust
Series 1996-3. Sep-96 110,000 109,108 99.20 0.00 0.00 0.00 0.00
Aegis Auto Owners Trust
1995-A . . . . Dec-95 - Jun-96 143,477 125,943 87.78 2.82 52.05 0.47 0.47
Total Managed Portfolio. . $820,284 $664,081 0.96% 8.56% 50.73% 2.76% 1.39%
<FN>
<F1>
(1) Data computed from trustee reports of October
1996 reflecting servicer data of September 30, 1996 and
from Company s records as of September 30, 1996.
<F2>
(2) Cumulative Repossession Frequency reflect the total
dollar volume of finance contracts that have been
liquidated, or are in the liquidation process (but in any
event can no longer be reinstated), as a percentage of the
original pool balance.
<F3>
(3) Receivable gross losses are calculated as losses
after the proceeds from repossessed vehicle sales, service
contract rebates, consumer insurance and VSI insurance,
net of repossession and liquidation costs, as a percentage
of the defaulted receivable balance.
<F4>
(4) Calculated as the receivable gross losses for the
pool as a percentage of the original pool balance.
<F5>
(5) Net loss is calculated as the receivable gross losses
for the pool less proceeds received from credit default
insurance, as a percentage of the original pool balance.
</FN>
</TABLE>
<PAGE>
Liquidity and Capital Resources
The Company's business requires substantial cash to
support its operating activities. The principal cash
requirements include (i) amounts necessary to acquire
automobile finance contracts pending securitization and
(ii) cash held from time to time in restricted spread
accounts to support securitizations and (iii) other
securitization expenses. The Company also uses material
amounts of cash for operating expenses and debt service.
The Company has operated on a negative operating cash
flow basis and expects to continue to do so for so long as
the Company's volume of finance contract acquisitions
continues to grow. The Company has funded these
negative operating cash flows principally through
borrowings from financial institutions and sales of equity
securities, among other resources. However, there can be
no assurance that the Company will have access to capital
markets in the future or that financing will be available to
satisfy the Company's operating and debt service
requirements or to fund future growth. If these resources
are not available on terms acceptable to the Company, the
Company may have to curtail its finance contract
acquisition volume levels.
The Company's external capital resources primarily
consist of the warehouse credit facilities and the
Company's securitization program. When the Company
securitizes finance contracts it repays a portion of its
outstanding warehouse indebtedness with the proceeds
from such securitizations, making such portion available
for future borrowing. The Company expects to securitize
its assets at least quarterly, although there can be no
assurance that the Company will be able to do so. The
Company also continues to seek additional arrangements
with financial institutions with respect to the disposition
of its portfolio assets. In addition, the Company has
borrowed against its retained interests to increase
liquidity. The Company is exploring the feasibility of
securitizing pools of its leases or selling whole leases as
possible complements to its current financing
arrangements. The Company ceased the funding of leases
in the first quarter of fiscal 1996.
The following table sets forth the major components of
the increase (decrease) in cash and cash equivalents for
the periods shown:
<TABLE>
<CAPTION>
Three Months Ended September 30,
--------------------------------
1995 1996
---- ----
(dollars in thousands)
<S> <C> <C>
Net cash used in operating activities(1) . $(3,935) $(11,972)
Net cash provided by (used in) investing
activities . . . . . . 500 (3,473)
Net cash (used in) provided by financing
activities(2) (1,625) 14,728
------- ------
Net decrease in cash and cash
equivalents. . . . . . . $(5,060) $(717)
======== =======
<FN>
<F1>
(1) Includes net cash used in acquisition of automobile
finance contracts of $(8,534) in the three months ended
September 30, 1995, and $(13,632) in the three months
ended September 30, 1996.
<F2>
(2) Includes net cash provided by (used in) warehouse
credit facilities of $5,247 in the three months ended
September 30, 1995, and $(7,684) in the three months
ended September 30, 1996.
</FN>
</TABLE>
<PAGE>
Net cash used in operating activities primarily
represents cash flows utilized to support the Company's
acquisition of finance contracts, including amounts
representing capitalized acquisition costs, net of cash
proceeds of sales, including through securitizations, and
repayments from automobile finance receivables. The
cash used to acquire finance contracts is generated
primarily by financing activities under the Company's
warehouse credit facilities.
A further significant source of cash used in operating
activities is net income offset by non-cash revenue items,
most notably unrealized gains on securitization
transactions, which is expected to generate cash in future
periods. The unrealized gains principally represent the
discounted present value of the amount of anticipated
collections from securitized receivables over the amounts
due investors in the securitizations. These amounts were
$9.9 million and $12.1 million for the three months ended
September 30, 1995 and 1996, respectively. During the
three months ended September 30, 1995 and 1996, the
Company received cash proceeds of $592,000 and
$643,000, respectively, from its retained interests in
securitized receivables which were utilized in meeting its
debt repayment requirements under the related financing
agreements.
Other non-cash adjustments include depreciation and
amortization, which amounted to $121,000 and $277,000
for the three months ended September 30, 1995 and 1996,
respectively; and provision for credit losses, which
amounted to $753,000 for the three months ended
September 30, 1995 and $536,000 for the three months
ended September 30, 1996. The Company also incurred
non-cash charges of $2.0 million for the three months
ended September 30, 1996 for write downs on retained
interests in securitized receivables with no such charge in
the prior period.
To the extent that the foregoing activities were net
users of cash, such cash was provided primarily by
borrowings under notes payable of $4.9 million for the
three months ended September 30, 1995 and $14.5
million for the three months ended September 30, 1996,
secured by retained interests in securitized receivables
created in the Company's finance contract securitizations.
Principal repayments under the notes payable are made
from the Company's proceeds received from pay downs
on retained interests in securitized receivables, which
amounted to $592,000 for the three months ended
September 30, 1995 and $643,000 for the comparable
1996 period. The borrowing base on the retained
interests in securitized receivables is determined on each
transaction through a monthly calculation that
incorporates prevailing prepayment default and loss
experience. As each securitization
transaction becomes seasoned, it experiences a period of
higher incidence of default and loss, resulting in
repayments on the notes payable which are secured by the
allocable retained interests in securitized receivables.
The Company made principal payments of $670,000
and $6.5 million in excess of cash distributions received
from the underlying collateral during the three months ended
September 30, 1995 and 1996, respectively.
In October 1996, the Company was unable to make
a principal payment of $4.2 million due under the note
payable secured by its retained interest in securitized
receivables created under the Aegis Auto Owner Trust
1995-A securitization as a result of the change in the
recalculated borrowing base. As of September 30, 1996,
the Company had borrowings of $9.7 million under this
note which is secured by retained interests in securitized
receivables with an estimated fair value of $22.7 million.
In October, 1996 when the payment was due, the Company
negotiated a 40 day extension on the $4.2 million principal
payment owed. Based on information available to the Company
at the time it negotiated the extension, the Company believed
it would have completed a transaction that would have raised
the necessary capital to pay the amount owed. However,
as of the date hereof, the consummation of such transaction is
uncertain and the Company is therefore, renegotiating
the payment terms under this financing. If the Company
is not successful in its efforts to raise capital in the form
of cash, there can be no assurance that the Company will
be successful in renegotiating its payment terms with its
lender.
The Company's cash flows and results of operations
may be affected adversely in the near term by rising
interest rates, since not all costs of funds, which under the
Company's warehouse credit facilities are at floating rates
of interest, can be immediately passed on to consumers,
whose finance contracts are at fixed rates of interest. In
addition, rising interest rates would result in a decrease in
the Company s net spreads on securitization transactions
thereby decreasing future projected cash flows from
retained interests in securitized receivables. Furthermore,
the Company s discount rate utilized in determining its
borrowing base may also rise, decreasing the amount
available to borrow. Moreover, interest rates charged by
the Company may be more significantly affected by
factors other than prevailing interest rates, most notably
geographic distribution and varying state interest rate
limitations. The Company has a hedging policy which
seeks to limit the risks associated with changes in interest
rates.
In connection with its securitization transactions, the
Company enters into pooling and servicing agreements
(the "Agreements") in which its finance contracts are sold
to a trust which, in turn, sells securities to investors.
Generally, the Company is required to make an initial
cash deposit to the trust as a form of credit enhancement
for the securitization. The terms of the Agreements
generally require that the excess servicing cash flows of
the finance contracts be retained in a bank account under
the control of the trustee (the "Reserve Fund") until the
Reserve Fund meets predetermined deposit requirements.
Any cash flows in excess of Reserve Fund requirements
are released to the Company on a monthly basis. For the
three months ended September 30, 1995 and 1996, the
Company received $592,000, and $643,000 respectively,
in excess servicing cash flows from Reserve Funds. In
the event that the finance contracts owned by the trusts
fail to meet predetermined delinquency and loss
performance measures, the Agreements require that the
trustee retain excess servicing cash flows until the
Reserve Fund attains pre-set incrementally higher levels
of credit enhancement. The predetermined performance
measures are not always maintained on a consistent
monthly basis, thus deferring the release of the cash flows
to the Company from the Reserve Fund of the applicable
trust. In addition, certain of the Agreements require the
Company to deposit additional cash into the Trust's
Reserve Fund if its initial minimum required levels were
not met within a predetermined time frame. For the three
months ended September 30, 1996, the Company paid
additional cash contributions to certain Reserve Funds of
$2.4 million, which management believes to be the
Company's final payment to Reserve Funds under the
existing Agreements.
The Company's warehouse credit facility with III
Finance Ltd. for automobile finance contracts was
amended during the three months ended September 30,
1996 to provide that the Company may borrow the
lesser of $200 million (less amounts outstanding under
the Company's lease warehouse credit facility with III
Finance Ltd. described below ($12.5 million as of
October 21, 1996) and its retained interests in securitized
receivables financing ($32.6 million as of October 21,
1996)) or the sum of (A) 100% of the outstanding
principal amount of performing, insured, finance contracts
and (B) the lesser of 90% of the outstanding principal
amount of delinquent finance contracts (which
percentages are reduced to 80% and 70%, respectively, if
the Company's automobile insurer fails to maintain an
A.M. Best Company rating of "A" or better (defined by
A.M. Best Company as an "excellent" rating regarding the
insurer's financial strength and ability to meet its
obligations to policyholders)) and $1.0 million plus 92%
(declining 1% per month for each month the receivable is
outstanding past 180 days) of the outstanding principal
amount of uninsured automobile finance contracts for the
purpose of acquiring automobile finance contracts in
accordance with the Company's underwriting guidelines.
The Company has a warehouse credit facility for
originating its lease transactions, which provides the
Company with a $50.0 million credit line on substantially
the same terms as the automobile finance contract facility.
These facilities are secured primarily by the Company's
finance contract receivables and bear interest for the
first $50 million of funding of finance contracts at the rate of
the one-month LIBOR plus 4.0%, adjusted monthly
(9.375% for October, 1996) and for any outstanding balance
in excess of $50 million, at the rate of the one-month LIBOR plus
2.75%, adjusted monthly. Under the amended
agreement, when the Company's borrowings under the
finance contract portion of the warehouse exceeds $50.0
million, the rate of interest charged decreases to LIBOR
plus 2.75%. Under these warehouse credit facilities,
principal payments are made monthly to the extent of
principal payments received on the underlying collateral,
and interest payments are made quarterly in arrears and
on the date of any prepayment of principal on the
underlying collateral. The Company's ability to continue
to borrow under these warehouse credit facilities is
dependent upon its compliance with the terms thereof,
including the maintenance by the Company of certain
minimum capital levels. Under each warehouse credit
facility, the Company is required to prepay 5% of the
outstanding principal balance of finance contracts held by
the Company for more than 180 days. In addition, each
warehouse credit facility requires a prepayment fee of
0.25% of the outstanding principal balance of the finance
contracts voluntarily prepaid, including in connection with
the sale of finance contracts. In the event the prepayment
occurs within the same month of the borrowings, the
prepayment fee is 0.125% of the outstanding principal
balance. As of September 30, 1996, the Company had
approximately $120.8 million of borrowings available
through the warehouse credit facility arrangements with
III Finance Ltd. In addition, the Company has a $50.0
million warehouse credit facility with III Finance Ltd.
dedicated to the purchase of HUD Title I Loans, which
the Company does not anticipate utilizing at this time.
All three warehouse credit facilities with III Finance, Ltd.
expire in November 1997.
In May 1996, the Company secured an additional
warehouse credit facility with Greenwich Capital, for
$100.0 million, which provides the Company with
additional flexibility to purchase greater volumes of
finance contracts or warehouse finance contracts for
longer periods. The facility is secured primarily by the
Company's finance contracts and bears interest at the rate
of the one-month LIBOR plus 3.0% (8.375% at October
22, 1996), adjusted monthly. Principal payments are
made to the extent that principal is paid on the underlying
collateral, and are required to be made if the underlying
collateral does not meet certain specified conditions.
Prepayment of principal is not permitted, except in
connection with securitization transactions and whole loan
sales. The Company's ability to continue to borrow
under this facility is dependent on its compliance with the
terms thereof, including the maintenance by the Company
of certain minimum capital levels. As of September 30,
1996, the Company had approximately $99.4 million of
borrowings available through this facility. In addition to
the warehouse financing, the Company also secured a
one-year $5.0 million revolving credit facility (with a
six-month renewal option) from Greenwich Capital (the
Company utilized $2.0 million of the revolving credit
facility in August 1996 and borrowed the remaining 3.0
million in October 1996) and a one-year commitment
from Greenwich Capital to purchase and securitize up to
$533.0 million of the Company's finance contract
acquisitions until the commitment is filled, subject to
customary conditions. Three securitizations aggregating
$307.0 million were completed as of September 30, 1996
pursuant to this commitment. In connection with these
facilities, the Company granted warrants to Greenwich
Capital to purchase 1,116,335 shares of common stock at
an exercise price of $6.50 per share (subject to
adjustment as defined in the agreement). The Greenwich
Capital warehouse credit facility is for a one year term
with a one year renewal option. In addition, the
agreement provides the Company, at its option (expiring
in December 1996), to increase the facility up to $150
million with a 90 day notice. In October 1996, as a
result of credit deterioration in the Company's finance
contract portfolio, the Company experienced a Portfolio
Event as such term is defined in and contemplated by,
both the warehouse credit facility and the revolving credit
facility. As a result, Greenwich Capital, at its discretion,
may terminate its commitment to the Company under
either facility, and may accelerate the payment of any
outstanding balance under each facility ($0 and $5.0
million, respectively, as of the date hereof) which would
then become immediately due and payable. As of the
date hereof, Greenwich Capital has not terminated its
commitment or accelerated the due date of either facility,
although they have reserved their right to do so at any
time.
In the quarters ended June 1994, September 1994,
December 1994, March 1995, June 1995, September
1995, December 1995, March 1996, June 1996 and
September 1996, the Company securitized approximately
$18.5 million, $23.3 million, $21.0 million, $21.0
million, $54.0 million, $60.0 million, $85.4 million,
$130.1 million, $149.3 million and $173.3 million,
respectively, of finance contracts and used the net
proceeds to pay down borrowings under its warehouse
credit facilities. In each of its last eight securitizations,
the Company has utilized a "pre-funding account" that
enabled the Company to fund certain finance contract
acquisitions without committing its warehouse credit
facility for an extended period of time. Additionally, the
Company directly sold, in the form of whole finance
contract sales, approximately $20.1 million of automobile
finance contracts as of September 30, 1996 and used part
of the proceeds to pay down borrowings under its
warehouse credit facilities.
In December 1995, the Company entered into a
commitment to sell $175.0 million of sub-prime
automobile finance contracts to be resold as asset-backed
securities through Rothschild, Inc. Through September
30, 1996, the Company sold approximately $143.5
million of automobile receivables into this facility. This
facility requires the Company to directly sell between
$8.0 million and $15.0 million of finance contracts per
month for a fifteen-month funding period subsequent to
the initial funding date. If the Company fails to meet the
minimum target, the terms of the facility provide that the
Company may not be able to sell future finance contracts
to the facility. As of September 30, 1996 the Company
had a remaining commitment of $31.5 million; however,
in October 1996, the Company experienced the
occurrence of certain performance- related events within
this facility. As a result, under the terms of the facility
(i) the Company was required to cease future funding to this facility
(as of that date, the Company had sold $148.4 million of
the $175.0 million commitment leaving the remaining
$26.6 commitment unfulfilled), and (ii) the amount of the
required reserve has been increased and the facility will
capture all payments otherwise due to the Company with respect
to its retained interest in excess spread cash flows until the
required reserve is filled. As a result, the Company will not
receive any excess spread cash flows from this facility for some
time. Additionally, MBIA Insurance Corporation ("MBIA),a guarantor
of principal and interest to the Class A noteholders under
this facility, retains the right at any time to require early
amortization of the Class A notes from cash flows generated by the collateral
sold into the facility. If MBIA chooses to require early amortization,
the event could have an additional material adverse affect on cash flows
available to the Company and on the valuation of the retained interest in
securitized receivables carried on the books of the Company relating to
this facility.
In February 1996, the Company issued $9,200,000
of Series C Convertible Preferred Stock (the "Preferred
Stock") under Regulation S of the Securities Act. The
Preferred Stock is convertible into Common Stock at the
lower of $6.425 per share of Common Stock or 85% of
the fair market value of the Common Stock at the time of
conversion. The Company can redeem the Preferred
Stock upon conversion at the fair market value of the
Common Stock into which such Preferred Stock is
convertible. The Preferred Stock has an 8.0% annual
dividend payable in Common Stock at the time of
conversion. Any outstanding shares of Preferred Stock
will automatically convert into Common Stock on the
third anniversary of its issuance. As of September 30,
1996, the Company redeemed 88 shares of Preferred
Stock for $1.1 million and converted 595 shares of
Preferred Stock into 1,225,762 shares of Common Stock.
Management believes that cash flows from
operations, available lines of credit and its warehouse
credit facilities are adequate to support its operation needs
at current levels only into the end of third fiscal
quarter, ending March 31, 1997. The Company is currently
in the process of seeking additional capital; or other sources
of available cash; however, there can be no assurance as to the
availability or timing of such transactions or the terms and
conditions upon which any such tranactions would be made
available to the Company. If the Company is not successful
in raising additional capital or other similar financing by
the beginning of it third fiscal quarter, it will have to
materially curtail its operations.
Inflation
While inflation has not had a material impact upon
the Company s results of operations, there can be no
assurance that the Company's business will not be
affected by inflation in the future. Increases in the
inflation rate generally result in increased interest rates
and can be expected to result in increases in the
Company's operating expenses. As the Company
borrows funds at variable rates and generally acquires
finance contracts at an average interest rate of
approximately 20.2%, increased interest rates will
increase the borrowing costs of the Company, and such
increased borrowing costs may not be offset by increases
in the interest rates with respect to finance contracts
acquired.
Seasonality
The Company's operations are affected to some
extent by seasonal fluctuations. Finance contract
acquisitions tend to increase in March through June and
September and October, while finance contract
acquisitions are lowest in December and January.
Delinquencies also tend to be higher during certain
holiday periods, particularly at calendar year end.
<PAGE>
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 - None
Item 5. Other Information - None
Item 6. (a) Exhibits -
Page
Exhibit No. Description No.
10.9.3 Termination of Employment Agreement with Matthew B. Burns.
10.97 Purchase Agreement dated as of September 1, 1996 by and
between Aegis Auto Finance, Inc. as Seller and Aegis Auto
Funding Corp. as Purchaser.
10.97.1 Servicing Agreement dated as of September 1, 1996 among
Aegis Auto Finance, Inc., as Servicer Norwest Bank
Minnesota, National Association in its capacity as
Backup Servicer and Norwest Bank Minnesota, National
Association as Trustee.
10.97.2 Pooling and Servicing Agreement Dated as of September 1,
1996 by and between Aegis Auto Funding Corp., as Seller
and Norwest Bank Minnesota, National Association as
Trustee and Backup Servicer.
10.98 Loan and Security Agreement dated as of September 12, 1996
by and between Aegis Auto Finance, Inc. as Borrower and
III Finance, Inc. as Lender.
10.98.1 Note relating to 10.98.
10.99 Pooling and Servicing Agreement dated as of September 1,
1996 by and between Aegis Auto Funding Corp., as Seller
and Norwest Bank Minnesota, National Association, as
Trustee and Backup Servicer.
10.100 Servicing Agreement dated as of September 1, 1996 among
Aegis Auto Finance, Inc., as Servicer, Norwest
Bank Minnesota, National Association in its capacity as
Backup Servicer and Norwest Bank Minnesota, National
Association in its capacity as Trustee.
10.101 Employment Agreement Agreement by and between Systems
and Services Technologies, Inc. and Matthew B. Burns.
10.102 Employment Agreement by and between Systems and Services
Technologies, Inc. and John Chapell.
10.103 Deed of Trust for Systems and Services Technologies, Inc.
dated as of the 29th day of July, 1996, for the property
known as 6700 Antioch, Suite 400, Merriam, Kansas 66204.
10.103.1 Note relating to 10.103
10.102.2 Assignment of Rents and Leases by Systems and Services
Technologies, Inc. to Commerce Bank, N.A.
10.104 Note relating to loan from Commerce Bank, N.A.
10.105 Deed of Trust and Security Agreement dated as of October 2,
1996, between Systems and Services Technologies, Inc. and
the First Bank of Missouri.
10.105.1 Addendum to that certain Deed of Trust and Security
Agreement dated as of October 2, 1996, between
Systems and Services Technologies, Inc. and the
First Bank of Missouri.
10.105.2 Note relating to loan from First Bank of Missouri.
(b) Reports on Form 8-K - No reports on Form 8-K were
filed by the Company during the quarter ended September 30, 1996.
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act,
the registrant caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
THE AEGIS CONSUMER FUNDING GROUP,
INC.
Date: November 14, 1996 By: /S/ DINA L. PENEPENT
----------------------------------
Dina L. Penepent
Chief Financial Officer,
Executive Vice-President and
Secretary
Signing on behalf of the registrant
and as principal financial and
accounting officer.
EXHIBIT 10.100
_________________________________________
SERVICING AGREEMENT
Dated as of September 1, 1996
Among
AEGIS AUTO FINANCE, INC.,
Servicer
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
in its capacity as Backup Servicer
and
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
in its capacity as Trustee
Relating to
Aegis Auto Receivables Trust 1996-A
_________________________________________
<PAGE>
TABLE OF CONTENTS
Page
I.
RECITALS . . . . . . . . . . . . . . . . . . . . . . 1
II.
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . 1
III.
SERVICING RELATIONSHIP
A. NATURE AND SCOPE OF RELATIONSHIP. . . . . . . . 2
B. GENERAL CONDITIONS. . . . . . . . . . . . . . . 3
IV.
ADMINISTRATION AND SERVICING OF RECEIVABLES
A. DUTIES OF SERVICER. . . . . . . . . . . . . . . 6
B. MAINTENANCE OF RECORDS. . . . . . . . . . . . . 7
C. MAINTENANCE OF SECURITY INTEREST . . . . . 8
D. COLLECTION OF RECEIVABLE PAYMENTS. . . . . 8
E. PHYSICAL DAMAGE INSURANCE . . . . . . . . . . . 8
F. COVENANTS OF THE TRUSTEE AND SERVICER;
NOTICES. . . . . . . . . . . . . . . . . . . . . . . 9
G. PURCHASE OF RECEIVABLES UPON BREACH . . . . . 10
H. SERVICING FEE . . . . . . . . . . . . . . . . 10
I. MONTHLY SERVICING CERTIFICATES. . . . . . . . 11
J. ANNUAL STATEMENT AS TO COMPLIANCE;
ACCOUNTANTS'
SERVICING REPORT. . . . . . . . . . . . . . . . 11
K. ACCESS TO CERTAIN DOCUMENTATION AND
INFORMATION
REGARDING RECEIVABLES . . . . . . . . . . . . 12
L. RESPONSIBILITY FOR INSURANCE POLICIES;
PROCESSING OF
CLAIMS UNDER INSURANCE POLICIES; DAILY
RECORDS AND
REPORTS . . . . . . . . . . . . . . . . . . . 12
M. ENFORCEMENT . . . . . . . . . . . . . . . . . . 13
N. PAYMENT IN FULL ON RECEIVABLE . . . . . . . . 14
O. SUBSTITUTION OF COLLATERAL. . . . . . . . . . 15
P. FIDELITY BOND AND ERRORS AND OMISSIONS
INSURANCE. . . . . . . . . . . . . . . . . . . . . 15
V.
REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF
SERVICER . . . . . . . . . . . . . . . . . . . . . 16
B. REPRESENTATIONS AND WARRANTIES OF BACKUP
SERVICER . . . . . . . . . . . . . . . . . . . . . . 17
C. SURVIVAL OF REPRESENTATIONS AND
WARRANTIES . . . . . . . . . . . . . . . . . . . . . 18
VI.
EVENTS OF SERVICING DEFAULT. . . . . . . . . . . . 18
VII.
REMEDIES . . . . . . . . . . . . . . . . . . . . . 20
VIII.
RESPONSIBILITY AND AUTHORITY OF SERVICER . . . . . 20
IX.
COLLECTIONS; LOCK-BOX ACCOUNT AND RELATED
BANK ACCOUNTS. . . . . . . . . . . . . . . . . . . 20
X.
DOCUMENTS AND RECORDS
A. SERVICING DOCUMENTS AND RECORDS . . . . . . . 21
B. REPORTS AND CREDIT AGENCIES. . . . . . . 22
XI.
INDEMNIFICATION. . . . . . . . . . . . . . . . . . 22
XII.
TERM AND TERMINATION . . . . . . . . . . . . . . . 23
XIII.
ARBITRATION AND ATTORNEYS' FEES. . . . . . . . . . 23
XIV.
WAIVERS. . . . . . . . . . . . . . . . . . . . . . 24
XV.
NOTICES. . . . . . . . . . . . . . . . . . . . . . 24
XVI.
ASSIGNABILITY. . . . . . . . . . . . . . . . . . . 25
XVII.
FURTHER ASSURANCES . . . . . . . . . . . . . . . . 25
XVIII.
COUNTERPARTS . . . . . . . . . . . . . . . . . . . 25
XIX.
ENTIRE AGREEMENT; AMENDMENTS . . . . . . . . . . . 26
XX.
INSPECTION . . . . . . . . . . . . . . . . . . . . 26
XXI.
LIMIT ON TRUSTEE'S PAYMENT OBLIGATIONS . . . . . . 26
XXII.
SERVICER NOT TO RESIGN . . . . . . . . . . . . . . 26
XXIII.
MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF
THE
OBLIGATIONS OF, OR RESIGNATION OF SERVICER . . . . 27
XXIV.
GOVERNING LAW. . . . . . . . . . . . . . . . . . . 28
SCHEDULE A: SUMMARY OF SERVICES A-1
I. SERVICES A-1
A. CONTRACT SERVICES - COLLECTIONS A-1
B. CONTRACT SERVICES - CUSTOMER SERVICE A-2
II. A. SPECIAL COLLECTION ACTIVITIES A-4
1. Repossession and Sale A-4
2. Credit Enhancement Claims Filing A-4
3. Deficiency A-5
4. Bankruptcies A-6
5. Disability A-6
6. Allotments A-7
7. Skips A-7
III. FEE SCHEDULE A-7
A. GENERAL SERVICING A-7
B. EXPENSE REIMBURSEMENT A-8
C. DEFICIENCY SERVICING A-8
SCHEDULE B: SERVICER MONTHLY ACTIVITY REPORT
B-1
SCHEDULE C: REQUEST FOR RELEASE OF DOCUMENTS
C-1
SCHEDULE D: RELEASE AND ASSIGNMENT D-1
SERVICING AGREEMENT
This SERVICING AGREEMENT is entered into as of
September 1, 1996 (this "Servicing Agreement") among AEGIS
AUTO FINANCE, INC., a Delaware corporation, as servicer
(hereinafter referred to as "Servicer" and, in its separate capacity
as the originator of the Receivables described herein, the
"Originator"), NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association, in its capacity as
backup servicer (hereinafter referred to as "Backup Servicer") and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
in its capacity as trustee (hereinafter referred to as "Trustee") in
both cases under that certain Pooling and Servicing Agreement
dated as of September 1, 1996 by and among Aegis Auto Funding
Corp., a Delaware corporation, as Seller, Norwest Bank
Minnesota, National Association in its capacity as Backup
Servicer, and Norwest Bank Minnesota, National Association in its
capacity as Trustee (such agreement, the "Pooling and Servicing
Agreement").
I. RECITALS
WHEREAS, Servicer provides portfolio
management services, including collection assistance, loan
administration and financial reporting to financial institutions in
connection with motor vehicle retail installment sales contracts,
and
WHEREAS, Norwest Bank Minnesota, National
Association, in its capacity as Trustee, is or will become the
holder of those motor vehicle retail installment sales contracts
referred to in Exhibit C to the Pooling and Servicing Agreement
(hereinafter referred to as "Receivables") which were originated by
the Originator, subsequently sold to Aegis Auto Funding Corp.
pursuant to a Purchase Agreement dated as of September 1, 1996
(the "Purchase Agreement") between the Originator and Aegis
Auto Funding Corp., and subsequently deposited by Aegis Auto
Funding Corp. with the Trustee pursuant to the terms of the
Pooling and Servicing Agreement, and
WHEREAS, pursuant to the Pooling and Servicing
Agreement, the Backup Servicer and the Trustee, on behalf of the
Trust created under the Pooling and Servicing Agreement, desire
to avail themselves of the services provided by Servicer, then
Let this be the terms and conditions of this Servicing
Agreement:
II. DEFINITIONS
Capitalized terms not otherwise defined herein shall have
the meanings ascribed thereto in the Pooling and Servicing
Agreement. Whenever used in this Servicing Agreement,
the following terms shall have the following meanings.
Credit Agency. A recognized agency to which Servicer
reports delinquencies, repossessions and redemptions.
Independent Public Accountants. Means any of (a) Arthur
Andersen & Co., (b) Deloitte & Touche, LLP, (c) Coopers
& Lybrand, (d) Ernst & Young LLP, (e) KPMG Peat
Marwick and (f) Price Waterhouse, or such other nationally
recognized firm of independent accountants as shall be
acceptable to the parties hereto and the Rating Agencies;
provided, that such firm is independent with respect to the
Servicer within the meaning of the Securities Act of 1933,
as amended.
Loan Documents. Has the meaning set forth in
paragraph III.B.9.
III. SERVICING RELATIONSHIP
A. NATURE AND SCOPE OF RELATIONSHIP
The Servicer hereby agrees to service and administer
the Receivables for the Trust and render those services described
in this Servicing Agreement and in the attached Schedule A. In
performing its duties under this Servicing Agreement, the Servicer
shall have full power and authority to do or cause to be done any
and all things in connection with such servicing and administration
which it may deem necessary or desirable, within the terms of the
Pooling and Servicing Agreement and this Servicing Agreement.
Servicer acknowledges receiving a copy of the Pooling and
Servicing Agreement. Servicer shall report in writing solely to
such officers or other employees of Backup Servicer and Trustee
as Backup Servicer and Trustee may designate from time to time
in writing.
Nothing in this Servicing Agreement shall be
construed as establishing an agency, an employment or a
partnership or joint venture between Backup Servicer, Trustee, any
third party contract purchaser and Servicer.
Furthermore, Backup Servicer shall not use or
permit the use of Servicer's name or the names of any of
Servicer's affiliates in any advertising or promotional materials
prepared by Backup Servicer or on Backup Servicer's behalf
without the prior written consent of Servicer.
Compensation payable to the Servicer under this
Servicing Agreement shall be payable by the Trustee solely from
the Trust Property in accordance with the terms of the Pooling and
Servicing Agreement, and except as provided in the Pooling and
Servicing Agreement, none of the Trust, the Trustee or the
Certificateholders will have any liability to the Servicer with
respect thereto. In accordance with Section 4.04 of the Pooling
and Servicing Agreement, such compensation shall be paid to the
Servicer and/or one or more subservicers as the Servicer may from
time to time direct in writing to the Trustee.
In the event the Backup Servicer shall for any
reason no longer be acting as such (including by reason of
resignation or an Event of Backup Servicing Default as specified
in Section 4.02 or 10.01, respectively, of the Pooling and
Servicing Agreement), the successor Backup Servicer shall
thereupon assume all of the rights and obligations of the outgoing
Backup Servicer under this Servicing Agreement; provided,
however that the successor Backup Servicer shall not be liable for
any acts, omissions or obligations of the outgoing Backup Servicer
prior to such succession or for any breach by the outgoing Backup
Servicer of any of its representations and warranties contained in
this Servicing Agreement or in any related document or agreement
and the outgoing Backup Servicer shall not be relieved of any
liability or obligation hereunder to the extent such obligation or
liability arose prior to the assumption by the successor Backup
Servicer of the obligations of the Backup Servicer hereunder.
B. GENERAL CONDITIONS
1. Servicer agrees to provide the services
hereunder during the term hereof.
Servicer, Backup Servicer and Trustee each represent and warrant
that it is duly authorized to enter into the arrangements
contemplated hereby with respect to the Receivables.
2. Servicer may make such communications
with third parties and the ultimate Obligor as are necessary and
proper to perform the services provided for hereunder.
3. The Servicer hereby agrees to act for the
Trust as custodian of all the documents or instruments delivered to
the Servicer with respect to each Receivable, and any and all other
documents that Servicer receives, creates, generates, or otherwise
possesses which relate to a Receivable, an Obligor or a Financed
Vehicle, provided, however, that the Custodian Files, including the
original of the motor vehicle installment sale contract and the
original certificate of title or such documents evidencing the
security interest of the Trust in the Financed Vehicle or efforts
made by the Trustee or its assignor to perfect such security interest
shall be held by the Custodian, which shall be the Trustee. The
Servicer shall maintain in its files copies, computer records or
originals of each of the following documents with respect to each
Receivable and the Financed Vehicle related thereto:
(i) application of the Obligor for credit;
(ii) a copy (but not the original) of the retail
installment sale contract and any amendments
thereto; provided, however, that the Servicer shall
deliver any original amendments to the retail
installment sale contract to the Trustee immediately
following execution thereof;
(iii) a copy (but not the original) of a
certificate of title with a lien notation or an
application therefor;
(iv) copies of the Risk Default Insurance
Policy and the VSI Insurance Policy; and
(v) such other documents as the Servicer may
reasonably request in order to accomplish its duties
under this Servicing Agreement.
Items (i), (ii), (iii), (iv) and (v) shall be referred to
collectively as the "Servicer Files."
4. Upon receipt of the documentation indicated
in Paragraph III.B.3, Servicer shall establish a physical file for
each Receivable, which shall contain the Servicer Files, as well as
copies of all reports developed by or information received by
Servicer with respect to the Receivable, including insurance
certificates and reports of collection activities.
In its capacity as custodian of such files, Servicer
shall hold the Servicer Files and all related files and documents on
behalf of the Trust, and maintain such accurate and complete
accounts, records, and computer systems pertaining to the
Receivables using reasonable care and that degree of skill and
attention with respect to the Receivables and the files and
documents as is customary with other companies in the industry
that service motor vehicle installment sales contracts for
themselves as well as for others.
The Servicer shall keep satisfactory books and
records pertaining to each Receivable and shall make periodic
reports in accordance with this Servicing Agreement. Such
records may not be destroyed or otherwise disposed of except as
provided herein and as allowed by applicable laws, regulations or
decrees; provided, that, such records may be released to the Seller
if the related Receivable is paid in full, the related Financed
Vehicle is repossessed, the Receivable has been either repurchased
or replaced pursuant to the Purchase Agreement with a Substitute
Receivable (as defined therein) or the Receivable otherwise is no
longer being serviced by the Servicer pursuant to this Servicing
Agreement. All documents, whether developed or originated by
the Servicer or not, reasonably required to document or to
properly administer any Receivable shall remain at all times the
property of the Trust. The Servicer shall not acquire any property
rights with respect to such records, and shall not have the right to
possession of them except as subject to the conditions stated in this
Servicing Agreement. The Servicer shall bear the entire cost of
restoration in the event any Loan Documents (as defined below)
shall become damaged, lost or destroyed.
5. Servicer shall make available to the Backup
Servicer, the Trustee and the Certificateholders, or their duly
authorized representatives, attorneys, or auditors, the Servicer
Files and any related accounts, records, and computer systems
maintained by the Servicer, at such times as the Backup Servicer,
the Trustee or any Certificateholder shall reasonably instruct, but
without disrupting Servicer's operations. Without otherwise
limiting the scope of the examination, the Backup Servicer, the
Trustee or any Certificateholder may, upon at least two (2)
Business Days' prior notice and at its own expense, using
generally accepted audit procedures, verify the status of each
Receivable and review the Loan Documents and records relating
thereto for conformity to monthly reports prepared pursuant to
paragraph IV.I. and compliance with the standards represented to
exist as to each Receivable in this Servicing Agreement. Nothing
herein shall require the Backup Servicer, the Trustee or any
Certificateholder to conduct any inspection pursuant to this
Section.
6. Within five (5) Business Days following the
last day of each Collection Period, the Servicer shall forward to
the Backup Servicer, via electronic transfer in a format mutually
acceptable to the Servicer and the Backup Servicer, its
computerized records reflecting (i) all collections received during
such Collection Period with respect to the Receivables and (ii)
information as of the last day of each Collection Period regarding
repossessed Financed Vehicles and sales of repossessed Financed
Vehicles. Within three (3) Business Days of receipt of the
foregoing information, the Backup Servicer shall input such
information onto its computer system such that such information
is immediately available to the Backup Servicer. The Backup
Servicer shall then review such information within five (5)
Business Days of its input onto the Backup Servicer's computer
system and compare it to the information reported by the Servicer
in its Monthly Servicing Certificate delivered to the Backup
Servicer, Trustee and each Rating Agency in the form of Schedule
B (the "Monthly Servicing Certificate"). Any discrepancies shall
then be immediately reported to the Servicer, who shall have ten
(10) Business Days from receipt of notice of discrepancies to
correct all such discrepancies. Any discrepancies which cannot be
corrected in such time period shall be reported by the Servicer to
the Trustee, each Rating Agency and the Certificateholders.
7. On Monday of each week beginning October
7, 1996, the Servicer shall forward to the Backup Servicer, via
electronic transfer in form mutually acceptable to the Servicer and
the Backup Servicer, its computerized records reflecting (i) all
collections received during the preceding calendar week with
respect to the Receivables and (ii) a listing of all Receivables with
the date through which payments have been made by the Obligor.
8. Other than the duties specifically set forth in
this Servicing Agreement, the Backup Servicer shall have no
obligation hereunder. The Backup Servicer shall have no liability
for any action taken or omitted by the Servicer. The duties and
obligations of the Backup Servicer shall be determined solely by
the express provisions of this Servicing Agreement and the Pooling
and Servicing Agreement and no implied covenants or obligations
shall be read into this Agreement against the Backup Servicer.
9. Unless otherwise specified herein, the
Servicer shall maintain physical possession, or computerized
records, of good and legible copies of the Servicer Files received
by it; such other instruments or documents that modify or
supplement the terms or conditions of any of the foregoing; and,
all other instruments, documents, correspondence and memoranda
generated by or coming into the possession of the Servicer
(including, but not limited to, insurance premium receipts, ledger
sheets, payment records, insurance claim files, correspondence and
current and historical computerized data files) that are required to
document or service any Receivable. Collectively, all of the
documents described in this paragraph III.B.9 with respect to a
Receivable are referred to as "Loan Documents." The Servicer
shall hold all Loan Documents in trust for the benefit of the
Certificateholders and the Trust; all Loan Documents shall remain
the property of the Trust. The Servicer shall respond to all third
party inquiries concerning ownership of the Receivables by
indicating that the Receivables have been assigned to the Trust.
10. The Servicer may employ or otherwise utilize
subservicers and enter into subservicing agreements in carrying out
its duties and obligations under this Servicing Agreement. An
affiliate of the Servicer, Aegis Consumer Finance, Inc. ("ACF"),
has heretofore entered into a Master Servicing Agreement dated as
of April 6, 1996 (the "Subservicing Agreement") with American
Lenders Facilities, Inc. ("ALFI") pursuant to which ALFI has
agreed to perform certain subservicing duties as therein described.
The Servicer shall cause ALFI to act as subservicer of the
Receivables with respect to the receipt of collections on the
Receivables, custody and application of payments from Obligors
and for the maintenance of individual records for each Receivable
in accordance with the terms of such Subservicing Agreement or
the terms of any new subservicing agreement subsequently entered
into with ALFI for the performance of such duties. The
Subservicing Agreement and any such other subservicing
agreement hereafter entered into by the Servicer and/or ACF shall
provide that the Backup Servicer, at the direction of the Majority
Certificateholders and each Rating Agency, shall have the right to
direct the Servicer to terminate such subservicing arrangement if
(a) the Majority Certificateholders and each Rating Agency
reasonably determine that the subservicer is failing to perform its
obligations thereunder and (b) such failure materially reduces the
amount recovered on defaulted loans. The Servicer agrees to
promptly terminate a subcontracting arrangement if directed to do
so by the Backup Servicer. In addition, should ALFI's
employment as subservicer of the Receivables as described above
be terminated at any time, ALFI shall be entitled to a fee of $5.00
per Receivable.
IV. ADMINISTRATION AND SERVICING OF
RECEIVABLES
A. DUTIES OF SERVICER
The Servicer shall service and administer the
Receivables in compliance with all applicable Federal and State
laws and regulations governing the Servicer and the Receivables,
and shall act prudently and in accordance with customary and usual
servicing procedures for other institutional servicers and applicable
law, and, to the extent not inconsistent with the foregoing, shall
exercise that degree of skill and care it uses for servicing assets
held for its own account.
The Servicer's duties shall include collection and
posting of all payments, responding to inquiries by Obligors or by
Federal, State, or local governmental authorities on the
Receivables, investigating delinquencies, sending payment books
or monthly statements to Obligors, responding to inquiries by
Obligors with respect to the Receivables and furnishing Monthly
Servicing Certificates to the Trustee with respect to distributions
and any additional information reasonably requested by the Trustee
to enable the Trustee to make distributions and produce reports
required under the Pooling and Servicing Agreement.
Without limiting the generality of the foregoing, the
Servicer shall be authorized and empowered to execute and deliver
any and all instruments of satisfaction or cancellation, and all other
comparable instruments, with respect to the Receivables or the
Financed Vehicles.
If the Servicer shall commence a legal proceeding to
enforce a Receivable, the Trustee, acting on behalf of the Trust,
shall thereupon be deemed to have automatically assigned such
Receivable to the Servicer which assignment shall be solely for the
purpose of collection. The Trustee, acting on behalf of the Trust,
shall furnish the Servicer with any powers of attorney and other
documents necessary or appropriate to enable the Servicer to carry
out its servicing and administrative duties hereunder.
B. MAINTENANCE OF RECORDS
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); (ii) reconciliation between
payments or recoveries on (or with respect to) each Receivable and
the amounts from time to time owing in respect of such
Receivable.
To the extent that such records are maintained on a
computer system, the Servicer shall also maintain such computer
system so that the Servicer's master computer records (including
archives) that shall refer to each Receivable indicate that such
Receivable is owned by the Trust.
Such accounts and records shall be kept only for as
long as Servicer is servicing the Receivables for the Trust.
At all times during the term hereof, for so long as
Aegis Auto Finance, Inc. is acting as Servicer, the Servicer shall
keep available at its office located at 525 Washington Boulevard,
Jersey City, New Jersey 07310 (or such other location as to which
it shall give written notice to the Trustee and each
Certificateholder), for inspection by Certificateholders a copy of
the list of Receivables, and shall mail a copy of such list to a
Certificateholder upon written request.
C. MAINTENANCE OF SECURITY INTEREST
The Servicer shall cooperate with the Seller in taking
such steps as are necessary to maintain perfection of the security
interest created by each Receivable in the respective Financed
Vehicle. The Trustee, on behalf of the Trust, hereby authorizes
and the Servicer hereby agrees to take such steps (and at the
Trust's expense) as are necessary to re-perfect such security
interest on behalf of the Trust in the event such re-perfection is
necessary or advisable for any reason. The title to each Financed
Vehicle relating to a Receivable included in the Trust initially shall
bear a notation of a lien in the name of the Originator.
D. COLLECTION OF RECEIVABLE PAYMENTS
The Servicer shall use its best efforts to collect all
payments called for under the terms and provisions of the
Receivables as and when the same shall become due.
In addition, the Servicer, on behalf of the Trust,
shall use its best efforts to repossess or otherwise recover the
Financed Vehicle securing any Receivable as to which the Servicer
shall have determined, after consultation with Seller if Servicer so
requests, that eventual payment in full is unlikely and such
repossession or recovery is permitted under the terms of the
Receivable and any applicable law. The Servicer shall be entitled
to recover all reasonable expenses incurred by it in the course of
repossessing and liquidating the Financed Vehicle into cash
proceeds.
Subject to the provisions of paragraph IV.A. above,
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 selling the Financed
Vehicle at public or private sale in accordance with applicable state
law. 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 the Servicer
shall determine in its discretion that such repair and/or
repossession will increase the Liquidation Proceeds or Insurance
Proceeds by an amount greater than the amount of such expenses.
E. PHYSICAL DAMAGE INSURANCE
1. The Servicer, in accordance with its
customary servicing procedures, shall use its best efforts to ensure
that each Obligor maintains physical damage insurance covering
the Financed Vehicle throughout the lesser of the term of the Trust
or the Receivable.
2. In the event of any physical loss or damage
to a Financed Vehicle from any cause, whether through accidental
means or otherwise, the Servicer shall have no obligation to cause
the affected Financed Vehicle to be restored or repaired.
However, the Servicer shall comply with the provisions of any
insurance policy or policies directly or indirectly related to any
physical loss or damage to a Financed Vehicle.
3. The Servicer will administer the filings of
claims under the VSI Insurance Policy and the Risk Default
Insurance Policy as provided under paragraph IV.L. hereof.
F. COVENANTS OF THE TRUSTEE AND
SERVICER; NOTICES
1. The Servicer shall (1) prior to a default with
respect to a Receivable, not release any 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 upon transfer of the Financed
Vehicle to a successor purchaser following repossession by the
Servicer, (2) not impair the rights of the Certificateholders or the
Trustee in the Receivables, (3) not increase the number of
Scheduled Payments due under a Receivable except as permitted
in paragraph A.3.e of Schedule A, (4) prior to the termination of
the Trust, not sell, pledge, assign, or transfer to any other Person,
or grant, create, incur, assume, or suffer to exist any Lien on any
Receivable transferred to the Trust or any interest therein, except
for assignment to the Risk Default Insurer upon its request after
the Risk Default Insurer has paid a claim in full, (5) immediately
notify the Trustee of the existence of any material Lien on any
Receivable, (6) defend the right, title, and interest of the Trust in,
to and under the Receivables transferred to the Trust, against all
claims of third parties claiming through or under the Servicer,
(7) deposit into the Lock-Box Account all payments received by
the Servicer with respect to the Receivables in accordance with this
Servicing Agreement, (8) comply in all respects with the terms and
conditions of this Servicing Agreement relating to the obligation of
Seller to repurchase Receivables from the Trust pursuant to the
Pooling and Servicing Agreement, or the obligation of the
Originator to repurchase Receivables from the Seller pursuant to
the Purchase Agreement, (9) promptly notify the Trustee of the
occurrence of any Event of Servicing Default and any breach by
the Backup Servicer of any of its covenants or representations and
warranties contained herein, (10) with the cooperation of the
Seller, make any filings, reports, notices, or applications and seek
any consents or authorizations from any and all government
agencies, tribunals, or authorities in accordance with the UCC and
any state vehicle license or registration authority on behalf of the
Trust as may be necessary or advisable or reasonably requested by
the Trustee to create, maintain, and protect a first-priority security
interest of the Trustee in, to, and on the Financed Vehicles and a
first-priority security interest of the Trust in, to, and on the
Receivables transferred to it and (11) take all reasonable action
necessary to maximize the returns pursuant to the Risk Default
Insurance Policy and the VSI Insurance Policy.
2. The Trustee shall promptly notify the
Servicer of any actual knowledge on its part (i) of any
abandonment of any Financed Vehicle by an Obligor, (ii) of any
material change in the condition or value of any Financed Vehicle,
(iii) of any waste committed with respect to any Financed Vehicle;
(iv) of any failure on the part of an Obligor to keep the Financed
Vehicle insured or in good condition and repair, (v) of any
permanent or substantial injury to a Financed Vehicle caused by
unreasonable use, abuse or neglect or (vi) of any other matter
which would adversely affect or result in diminution of the value
of any Financed Vehicle.
3. The Servicer will promptly advise the
Trustee of any inquiry received from an Obligor which
contemplates the consent of the Trustee. Inquiries contemplating
consent of the Trustee shall include, but not be limited to,
inquiries about settlement of any unasserted claim or defense, or
compromise of any amount an Obligor owes or any other matters
the Servicer should reasonably understand are not within the
Servicer's authority under this Servicing Agreement.
4. Notwithstanding any other provision of this
Servicing Agreement, the Trustee and the Backup Servicer (except
if and when the Backup Servicer is acting as the Servicer
hereunder) shall be under no duty or obligation to investigate or
inquire into the status of any Obligor or Financed Vehicle and
"actual knowledge" referred to in subparagraphs 2 and 3 of this
paragraph IV.F. shall be limited to actual knowledge of a Trustee
Officer.
G. PURCHASE OF RECEIVABLES UPON BREACH
The Servicer shall inform each Rating Agency, the
Trustee, the Backup Servicer and each Certificateholder promptly,
in writing, upon the discovery of any breach pursuant to Section
3.01 of the Pooling and Servicing Agreement. The Servicer has
no duty to investigate or determine the existence of any breach
except as specified herein. Unless the breach shall have been
cured within the time periods specified in Section 3.02 of the
Pooling and Servicing Agreement, the Trustee shall use all
reasonable efforts to cause the Seller to repurchase or replace the
affected Receivables in accordance with Section 3.02 of the
Pooling and Servicing Agreement, and enforce the repurchase or
substitution obligations of the Originator under Section 7.02 of the
Purchase Agreement. In consideration of the purchase of such
Receivable, the Trustee shall use all reasonable efforts to cause the
Seller or the Originator to remit the Purchase Amount or the
substitute Receivable to the Trustee. The Trustee's rights with
respect to this paragraph IV.G. shall not subject the Trustee to any
duty or obligation upon a breach by the Seller or the Originator of
its representations, warranties or covenants as set forth above,
other than to take action as described herein and as may be
directed by the Certificateholders in accordance with and subject
to the condition and limitation set forth in the Pooling and
Servicing Agreement.
H. SERVICING FEE
The Servicer shall be paid a monthly servicing fee
("Servicing Fee") with respect to each Receivable serviced under
this Servicing Agreement during a Collection Period in accordance
with paragraph III of Schedule A hereto. The Servicing Fee shall
be due on the succeeding Distribution Date. In the event this
Servicing Agreement is terminated on a date other than the last day
of a Collection Period, then the Servicing Fee for such period shall
be determined on a pro rata basis. In the event that the Backup
Servicer assumes the responsibilities and obligations of the
Servicer under this Servicing Agreement, the Backup Servicer shall
be entitled to receive its normal and customary fee for such
services with respect to comparable quality Receivables, not to
exceed those set forth in the Fee Schedule set forth in paragraph
III of Schedule A attached hereto.
I. MONTHLY SERVICING CERTIFICATES
The Servicer shall deliver to the Backup Servicer, the
Trustee (which shall deliver a copy to each Certificateholder), each
Rating Agency and the Seller, on each Determination Date, a
Monthly Servicing Certificate substantially in the form of Schedule
B hereto containing all information necessary for the Trustee to
calculate and make the distributions pursuant to Section 5.06 of the
Pooling and Servicing Agreement.
J. ANNUAL STATEMENT AS TO COMPLIANCE;
ACCOUNTANTS' SERVICING REPORT
1. The Servicer shall deliver to the Backup
Servicer, the Trustee, each Certificateholder, and each Rating
Agency, on or before March 31 of each year, an Officer's
Certificate, dated effective as of December 31 of the preceding
year beginning with the calendar year ended December 31,
1996, stating that (i) a review of the activities of the Servicer
during the preceding 12-month period and of its performance
under this Servicing Agreement has been made under such
officer's supervision and (ii) based on such review, the Servicer
has materially fulfilled all its obligations under this Servicing
Agreement throughout such year, 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.
A copy of such certificate may be obtained by any
Certificateholder by a request in writing to the Servicer from
any such Certificateholder.
2. Unless required more frequently by each
Rating Agency, on each yearly anniversary of the Closing Date,
the Servicer at the expense of the Trust, shall cause a firm of
Independent Public Accountants to furnish a statement to the
Trustee, each Rating Agency and each Certificateholder to the
effect that such firm has examined certain documents and
records relating to the servicing of the Receivables and the
reporting requirements with respect thereto as set forth in this
Agreement, and that, on the basis of such examination, such
servicing and reporting requirements have been conducted in
compliance with this Agreement, except for (i) such exceptions
as such firm shall believe to be immaterial and (ii) such other
exceptions as shall be set forth in such statement.
3. If an Event of Servicing Default shall have
occurred and be continuing, then, at the request of the Majority
Certificateholders not more frequently than once every six
months, the Trustee, within 30 days of such request, shall cause
a firm of Independent Public Accountants to review certain
documents and records of the Servicer relating to the servicing
of the Receivables and the reporting requirements with respect
thereto as set forth in this Agreement, and furnish a statement to
the effect specified in paragraph IV.J.2 above.
4. The Servicer shall deliver to the Trustee,
the Backup Servicer and each Certificateholder, promptly after
having obtained actual knowledge thereof, but in no event later
than five (5) Business Days thereafter, written notice in an
Officer's Certificate of the Servicer of any event which with the
giving of notice or lapse of time, or both, would become an
Event of Master Servicing Default under Section 10.01 of the
Pooling and Servicing Agreement or an Event of Servicing
Default under paragraph VI hereof.
K. ACCESS TO CERTAIN DOCUMENTATION
AND INFORMATION REGARDING
RECEIVABLES
The Trustee and the Servicer shall, upon written
request, each provide to or cause the Certificateholders to have
access to its Custodian Files or Servicer Files, as the case may be,
relating to the Receivables. Access shall be afforded without
charge, but only upon reasonable request and during the normal
business hours at the offices of the Trustee or the Servicer, as the
case may be. Nothing in this Section shall affect the obligation of
the Trustee or the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors, and
the failure of the Trustee or the Servicer to provide access to
information as a result of such obligation shall not constitute a
breach of this paragraph IV.K.
L. RESPONSIBILITY FOR INSURANCE POLICIES;
PROCESSING OF CLAIMS UNDER INSURANCE
POLICIES; DAILY RECORDS AND REPORTS
1. The Servicer, on behalf of the Trust, will
administer and enforce all rights and responsibilities of the holder
of the Receivables provided for in the Insurance Policies relating
to the Receivables. The Servicer, on behalf of the Trust, shall
verify that an endorsement listing each Receivable has been issued
with respect to each Receivable under the Risk Default Insurance
Policy, that each Receivable is listed by the VSI Insurer as covered
under the VSI Insurance Policy, and that the Risk Default
Insurance Policy names the Trustee as the insured and the VSI
Insurance Policy names the Trustee as an additional insured.
2. The Servicer will administer the filings of
claims under the VSI Insurance Policy and Risk Default Insurance
Policy by filing the appropriate notices related to claims as well as
claims with the respective carriers or their authorized agents, all
in accordance with the terms of the VSI Insurance Policy and Risk
Default Insurance Policy. The Servicer shall file all such claims
regardless of whether a Receivable may have become a Purchased
Receivable or a Liquidated Receivable. The Servicer shall file
such claims on a timely basis after obtaining knowledge of the
events giving rise to such claims, subject to the servicing standard
set forth in paragraph IV.A. hereof. The Servicer will utilize such
notices, claim forms and claim procedures as are required by the
respective insurance carriers. The Servicer shall notify the Trustee
and Seller of (i) any such claims actually denied under the
applicable Risk Default Insurance Policy or VSI Insurance Policy
and (ii) those claims which would have been denied under such
Risk Default Insurance Policy or VSI Insurance Policy had the
Receivable(s) not been repurchased from the Trust, and in both
cases, the reasons for such denials. The Servicer shall cause all
Insurance Proceeds to be deposited to the Lock-Box Account
within two (2) Business Days of receipt thereof.
The Servicer shall not be required to pay any
premiums or, other than administering the filing of claims and
performing reporting requirements specified in the VSI Insurance
Policy and Risk Default Insurance Policy in connection with filing
such claims, perform any obligations of any named insured under
the foregoing VSI Insurance Policy and Risk Default Insurance
Policy, and shall not be required to institute any litigation or
proceeding or otherwise enforce the obligations of any insurer
thereunder. Notwithstanding any provision to the contrary in the
Pooling and Servicing Agreement, the Servicer shall not be
responsible to any Certificateholder or the Seller (i) for any act or
omission to act done in order to comply with the requirements or
satisfy any provisions of the VSI Insurance Policy or Risk Default
Insurance Policy or (ii) for any act or omission to act, absent
willful misconduct or gross negligence, done or omitted in
compliance with this Servicing Agreement. In the case of any
inconsistency between this Servicing Agreement and the terms of
any VSI Insurance Policy or Risk Default Insurance Policy, the
Servicer shall comply with the latter.
3. Notwithstanding any other provision in this
Servicing Agreement to the contrary, the Trustee and the Backup
Servicer, unless it is acting as Servicer, shall not be under any
obligation to administer the Receivables as required by the VSI
Insurance Policy and/or Risk Default Insurance Policy.
M. ENFORCEMENT
1. The Servicer will, consistent with the standard of
care required by paragraph IV.A. hereof, act with respect to the
Receivables and the Insurance Policies in such manner as will, in
the reasonable judgment of the Servicer, maximize the amount to
be received by the Trust with respect thereto.
2. The Servicer may and shall, at the direction of
the Trustee, sue to enforce or collect upon the Receivables and the
Insurance Policies (including unpaid claims), with the prior
approval of the Trustee, in the name of and as agent for the Trust.
If the Servicer commences a legal proceeding to enforce a
Receivable or an Insurance Policy, the act of commencement shall
be deemed to be an automatic assignment of the Receivable and
the related rights under the Insurance Policies by the Trustee to the
Servicer for purposes of collection only. If, however, in any
enforcement suit or legal proceeding it is held that the Servicer
may not enforce a Receivable or an Insurance Policy on the
grounds that it is not a real party in interest or a holder entitled to
enforce the Receivable or the Insurance Policy, the Trustee, on
behalf of the Trust, shall, at the Servicer's request, take such steps
as the Servicer deems reasonably necessary to enforce the
Receivable or the Insurance Policy, including bringing suit in its
name or the names of the Certificateholders. The Servicer shall
be entitled to reimbursement for expenses incurred in connection
with enforcement or collection activities with respect to the
Receivables pursuant to this paragraph IV.M.2.
3. The Servicer shall exercise any rights of recourse
against third persons that exist with respect to any Receivable in
accordance with the Servicer's usual practice and the standard of
care required by paragraph IV.A hereof. In exercising such
recourse rights, the Servicer is hereby authorized on the Trustee's
behalf to reassign the Receivable and to deliver the certificate of
title to the Financed Vehicle to the person against whom recourse
exists at the price set forth in the document creating the recourse.
4. The Servicer may not permit any rescission
or cancellation of any Receivable nor may it take any action with
respect to any Receivable or Insurance Policy which would
materially impair the rights or interest of the Trust or the
Certificateholders therein or in the proceeds thereof.
5. Except as otherwise provided in paragraph I.A.3
of Schedule A hereto, neither the Backup Servicer nor the Servicer
may increase or reduce the amount of any Scheduled Payments,
change any Receivable, APR, extend the maturity date of or
rework any Receivable, modify or change any Obligor with respect
to any Receivable or modify any other material term of a
Receivable.
N. PAYMENT IN FULL ON RECEIVABLE
Upon payment in full on any Receivable, the
Servicer shall notify the Custodian pursuant to Section 3.03 of the
Pooling and Servicing Agreement, prior to the next succeeding
Distribution Date, by a certificate of a Servicing Officer
substantially in the form of Schedule C hereto and request for
release of the related Custodian File (which certificate shall include
a statement to the effect that all amounts received in connection
with such payment in full which are required to be deposited in the
Collection Account or the Lock-Box Account pursuant to
Section 5.02 of the Pooling and Servicing Agreement have been so
deposited). Upon receipt of such request, the Custodian shall
promptly release or cause to be released such Receivable and the
related Custodian File by executing a release and assignment in the
form of Schedule D hereto, which shall be without recourse to the
Trustee. The Custodian shall be authorized, upon receipt of a
request for release from the Servicer in the form of Schedule C
hereto, to execute an instrument in satisfaction of such Receivable
and to take such other actions and execute such other documents
as the Servicer deems necessary to discharge the Obligor
thereunder and eliminate the security interest in the Financed
Vehicle related thereto. Upon request of a Servicing Officer, the
Trustee shall perform such other acts as reasonably requested by
the Servicer and otherwise cooperate with the Servicer in
enforcement of the Certificateholders' rights and remedies with
respect to the Receivables.
O. SUBSTITUTION OF COLLATERAL
In the event a Financed Vehicle sustains significant
physical damage such that the insurance company carrying the
physical damage insurance covering such Financed Vehicle
determines that the Financed Vehicle is not repairable, the
Servicer, the Trustee or the Seller may permit the Obligor to
pledge a vehicle of equal or greater market value than that of the
Financed Vehicle immediately prior to sustaining the physical
damage, provided, that any such substitution shall not be made if
to do so would void coverage of the related Receivable under the
VSI Insurance Policy or the Risk Default Insurance Policy, and
provided further that the value of Financed Vehicles (prior to
sustaining the physical damage) for which substitutions may be
made shall not exceed in the aggregate ten percent (10%) of the
Original Pool Balance. The second vehicle shall be substituted as
the collateral ("Substituted Financed Vehicle") for the Receivable
and the terms of the Receivable shall not be amended or modified
except to reflect the substituted collateral. The Servicer shall,
within 90 days of the purchase of the Substituted Financed
Vehicle, cause the certificate of title for the Substituted Financed
Vehicle to be delivered to the Trustee as Custodian pursuant to
Section 3.03 of the Pooling and Servicing Agreement; provided,
however, that if the certificate of title is not delivered to the
Trustee within such 90-day period, the Seller shall be deemed to
be in breach of its representations and warranties in the Pooling
and Servicing Agreement. In accordance with Section 3.03 of the
Pooling and Servicing Agreement, the Servicer shall make
appropriate notation in its records of the substitution of the
collateral.
P. FIDELITY BOND AND ERRORS AND
OMISSIONS INSURANCE
The Servicer shall maintain, at its own expense, (i)
an errors and omissions insurance policy and (ii) a blanket fidelity
bond (but only to the extent ALFI or any other subservicer
appointed by the Servicer to perform the collection activities and
related services specified to be performed by ALFI in paragraph
III. B. 10 hereof does not maintain a blanket fidelity bond with
respect to such servicing functions to be performed hereunder;
provided if the Servicer does participate in performing any such
functions, it shall maintain a blanket fidelity bond), in each case
with broad coverage with responsible companies on all officers,
employees or other persons acting on behalf of the Servicer in any
capacity with regard to the Receivables to handle funds, money,
documents and papers relating to the Receivables. Any such
fidelity bond and errors and omissions insurance shall protect and
insure the Servicer against losses, including forgery, theft,
embezzlement, fraud, errors and omissions and negligent acts of
such persons and shall be maintained in a form and amount that
would meet the requirements of prudent institutional motor vehicle
installment sales contract servicers. No provision of this
paragraph IV.P. requiring such fidelity bond and errors and
omissions insurance shall diminish or relieve the Servicer from its
duties and obligations as set forth in this Agreement. The Servicer
shall be deemed to have complied with this provision if one of its
respective Affiliates has such fidelity bond and errors and
omissions policy coverage and, by the terms of such fidelity bond
and errors and omission policy, the coverage afforded thereunder
extends to the Servicer. The Servicer shall cause each and every
subservicer for it to maintain a policy of insurance covering errors
and omissions and a fidelity bond which would meet such
requirements. Upon request of the Trustee, the Servicer shall
cause to be delivered to the Trustee a certification evidencing
coverage under such fidelity bond and insurance policy. Any such
fidelity bond or insurance policy shall not be cancelled or modified
in a materially adverse manner without ten days' prior written
notice to the Trustee, each Rating Agency and the
Certificateholders.
V. REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF
SERVICER
1. Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and has full corporate power and
authority to enter into this Agreement and to carry out the
provisions of this Agreement.
2. This Agreement and all other instruments or
documents to be delivered hereunder or pursuant hereto, and the
transactions contemplated hereby, have been duly authorized by all
necessary corporate proceedings of Servicer; this Agreement has
been duly and validly executed and delivered by Servicer; and,
assuming due authorization, execution and delivery by Backup
Servicer and the Trustee, this Agreement is a valid and legally
binding agreement of Servicer enforceable in accordance with its
terms.
3. The execution and delivery of this Agreement
by Servicer hereunder and the compliance by Servicer with all
provisions of this Agreement do not conflict with or violate any
applicable law, regulation or order and do not conflict with or
result in a breach of or default under any of the terms or
provisions of any contract or agreement to which Servicer is
subject or by which it or its property is bound, nor does such
execution, delivery or compliance violate the certificate of
incorporation or bylaws of Servicer.
4. During the term of this Agreement, Servicer
will maintain fire and theft, general liability, business interruption
and employee fidelity insurance coverage in such amounts and
upon such terms as shall be customary given the nature and extent
of Servicer's business activities.
5. The Servicer is not in violation of, and the
execution, delivery and performance of this Servicing Agreement
by the Servicer will not constitute a violation with respect to, any
order or decree of any court or any order, regulation or demand
of any federal, state, municipal or governmental agency, which
violation might have consequences that would materially and
adversely affect the condition (financial or other) or operations of
the Servicer or its properties or might have consequences that
would affect the performance of its duties hereunder;
6. No proceeding of any kind, including but not
limited to litigation, arbitration, judicial or administrative, is
contemplated by or, to the Servicer's knowledge, pending or
threatened against the Servicer which would under any
circumstance have a material adverse effect on the execution,
delivery, performance or enforceability of this Servicing
Agreement;
7. To the best of Servicer's knowledge all
electronic data provided by the Servicer will be at the time of
delivery thereof true and correct;
8. No information, certificate of an officer,
statement furnished in writing or report delivered to the Backup
Servicer by the Servicer will, to the knowledge of the Servicer,
contain any untrue statement of a material fact or omit a material
fact necessary to make the information, certificate, statement or
report not misleading; and
9. The Servicer is an Eligible Servicer as of the
Closing Date and shall remain an Eligible Servicer throughout the
term of this Servicing Agreement.
B. REPRESENTATIONS AND WARRANTIES OF
BACKUP SERVICER
1. Backup Servicer is a national banking
association in good standing under the laws of the United States,
and has full corporate power and authority to enter into this
Agreement and to carry out the provisions of this Agreement.
Backup Servicer has all licenses, approvals and consents to conduct
its business as contemplated by this Agreement, except to the
extent that the failure to possess such licenses, approvals and
consents does not have a material adverse effect on the ability of
the Backup Servicer to perform its duties under this Agreement.
2. This Agreement and all other instruments or
documents to be delivered hereunder or pursuant hereto, and the
transactions contemplated hereby, have been duly authorized by all
necessary corporate proceedings of Backup Servicer; this
Agreement has been duly and validly executed and delivered by
Backup Servicer; and, assuming due authorization, execution and
delivery by Servicer, this Agreement is a valid and legally binding
agreement of Backup Servicer enforceable in accordance with its
terms.
3. The execution and delivery of this Agreement
by Backup Servicer hereunder and the compliance by Backup
Servicer with all provisions of this Agreement do not conflict with
or violate any applicable law, regulation or order and do not
conflict with or result in a breach of or default under any of the
terms or provisions of any contract or agreement to which Backup
Servicer is subject or by which it or its property is bound, nor
does such execution, delivery or compliance violate the Certificate
of Incorporation or Bylaws of Backup Servicer.
C. SURVIVAL OF REPRESENTATIONS AND
WARRANTIES
The representations and warranties set forth in this
paragraph V are made as of the date of this Servicing Agreement
and shall survive the date of this Servicing Agreement. Upon
discovery by the Backup Servicer, the Trustee or the Servicer of
a breach of any of the foregoing representations and warranties,
the party discovering such breach shall give prompt written notice
to the other parties.
VI. EVENTS OF SERVICING DEFAULT
If any one of the following events ("Events of Servicing
Default") shall occur and be continuing:
(i) Any failure by the Servicer to deliver to the
Trustee any proceeds or payment required to
be so delivered under the terms of this
Servicing Agreement that shall continue
unremedied for a period of two (2) Business
Days after the earlier to occur of (a) the
date on which written notice of such failure
shall have been received by the Servicer or
(b) a Servicing Officer shall have actual
knowledge thereof or, with reasonable
diligence, should have had knowledge
thereof; or
(ii) Failure on the part of the Servicer to
observe or to perform in any material
respect any other covenants or agreements
set forth in this Servicing Agreement which
continue unremedied for a period of thirty
(30) days after the earlier to occur of (a) the
date on which written notice of such failure
shall have been received by the Servicer or
(b) a Servicing Officer shall have actual
knowledge thereof or, with reasonable
diligence, should have had knowledge
thereof; or
(iii) The entry of a decree or order by a court or
agency or supervisory authority having
jurisdiction in the premises for the
appointment of a conservator, receiver,
trustee, or liquidator for the Servicer in any
bankruptcy, insolvency, readjustment of
debt, marshalling of assets and liabilities, or
similar proceedings, or for the winding-up
or liquidation of its affairs, and the
continuance of any such decree or order
unstayed and in effect for a period of thirty
(30) consecutive days; or
(iv) The consent by the Servicer to the
appointment of a trustee, conservator,
receiver, or liquidator in any bankruptcy,
insolvency, readjustment of debt,
marshalling of assets and liabilities, or
similar proceedings of or relating to the
Servicer and involving substantially all of its
property; or
(v) The Servicer shall admit in writing its
inability to pay its debts generally as they
become due, file a petition of any applicable
bankruptcy, insolvency, or reorganization
statute, make an assignment for the benefit
of its creditors, or voluntarily suspend
payment of its obligations; or
(vi) The failure by the Servicer to provide true
and correct electronic data, in violation of
representations and warranties made by the
Servicer in paragraph V.A. hereof, which
violation shall be material and shall continue
unremedied for a period of 30 days after the
date on which written notice of such failure
requiring the same to be remedied, shall
have been sent (1) to the Servicer by the
Trustee, or (2) to the Servicer and to the
Trustee by the Holders of Certificates
evidencing not less than 20% of the Voting
Interests thereof; or
(vii) The assignment by the Servicer to a delegate
of its duties or rights hereunder, except as
specifically permitted hereunder, or any
attempt to make such an assignment; or
(viii) The failure to provide the Trustee at least
thirty (30) days prior written notice of a
merger or consolidation involving the
Servicer or assumption of obligations of the
Servicer, or the failure to receive the
approval by each Rating Agency (such
approval not to be unreasonably withheld) of
such merger or consolidation involving the
Servicer or assumption of obligations of the
Servicer pursuant to paragraph XXIII of this
Servicing Agreement; or
(ix) Any fraud, gross negligence or willful
misconduct on the part of the Servicer with
respect to the Receivables or its duties
hereunder.
Then, and in each and every case and so long as an
Event of Servicing Default described above shall not have been
remedied in the period, if any, provided for in the applicable
subsection, the Trustee may, and upon the direction of the
Majority Certificateholders or, in the case of an Event of Servicing
Default described in subsections (iii), (iv) or (v) above, at the
direction of the Risk Default Insurer, the Trustee shall terminate
all of the rights and obligations of the Servicer under this Servicing
Agreement.
On or after the receipt by the Servicer of such
written notice, all authority and power of the Servicer under this
Servicing Agreement, with respect to the Receivables or otherwise,
shall pass to and be vested in the Backup Servicer or in any
successor Servicer to be appointed by the Trustee at the direction
of the Majority Certificateholders or at the direction of the Risk
Default Insurer, provided that the direction of the Risk Default
Insurer shall be subject to the consent of the Majority
Certificateholders and each Rating Agency. The Backup Servicer
is hereby authorized and empowered to execute and deliver on
behalf of the Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other
acts with things necessary to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of
the Receivable files, or otherwise. Anything to the contrary herein
notwithstanding, the Backup Servicer may appoint agents to
perform its duties as successor Servicer hereunder.
The Servicer shall cooperate with the Backup
Servicer in effecting the termination of the responsibilities and
rights of the Servicer under this Servicing Agreement, including
the transfer to the Backup Servicer or any successor Servicer for
administration by it of all cash amounts that shall at the time be
held by the Servicer or shall have been deposited by the Servicer
in any account or that shall thereafter be received by the Servicer
with respect to a Receivable.
The Backup Servicer or the successor Servicer
appointed by the Trustee (including by reason of an Event of
Servicing Default under this Section or resignation pursuant to
Section XXII) shall be successor in all respects to the Servicer in
its capacity as Servicer and custodian under this Servicing
Agreement; provided, however that the Backup Servicer or
successor Servicer shall not be liable for any acts, omissions or
obligations of the Servicer that arose prior to such succession or
for any breach by the outgoing Servicer of any of its
representations and warranties contained in this Servicing
Agreement or in any related document or agreement, and the
outgoing Servicer shall not be relieved of any liability or
obligations hereunder to the extent such obligation or liability arose
prior to such succession. The Servicer shall be entitled to receive
all Servicing Fees and recovery of all costs up to the date of the
transfer to the successor Servicer of all functions referenced under
this Servicing Agreement.
VII. REMEDIES
In addition to the right to terminate contained in
Section VI, the Servicer agrees that upon the happening of any
Event of Servicing Default (as defined herein), the Backup
Servicer or the successor Servicer may avail itself of any other
relief to which the Backup Servicer or the successor Servicer may
be legally or equitably entitled, subject only to the provision of
Section XIII of this Servicing Agreement.
VIII. RESPONSIBILITY AND AUTHORITY OF
SERVICER
Subject to the limitations set forth herein or in the
Pooling and Servicing Agreement, the Servicer shall have the full
power and authority, acting alone and without the consent of the
Trustee or the Backup Servicer, to do any and all things in
connection with such servicing and administration that it may deem
reasonably necessary or desirable, to collect the Receivables, to
disburse the proceeds and to protect the interests of the Trustee
and the Certificateholders in the Receivables.
IX. COLLECTIONS; LOCK-BOX ACCOUNT AND
RELATED BANK ACCOUNTS
Any amounts received by the Servicer, including all
payments by or on behalf of the Obligors (other than Purchased
Receivables), all Liquidation Proceeds, Insurance Proceeds and
other Recoveries, all as collected during the Collection Period in
respect of a Receivable being serviced by the Servicer, shall be
remitted to the Lock-Box Account as soon as practicable, but in
no event later than the close of business on the Business Day after
receipt thereof by the Servicer.
The Servicer shall maintain the Lock-Box Account
and shall collect and hold in trust (for the benefit of the Trust) in
such account all funds received on account of the Obligors until
such funds are transferred to the Trustee or in accordance with its
instructions. On a daily basis the posted balance (in excess of
$2,000) related to the Receivables in the Lock-Box Account shall
be transferred by wire transfer to the Trustee.
Such funds shall not be commingled with the funds
of any other person; provided that there may be deposited in the
Lock-Box Account moneys collected on other motor vehicle
installment sales contracts originated by Aegis Finance and its
affiliates. The Servicer shall be responsible for all charges with
respect to the Lock-Box Account and, insofar as such charges
relate to the Receivables, shall be reimbursed in accordance with
the instructions set forth in the Monthly Servicer Certificate. The
Servicer shall provide written notice to the Trustee of the location
and account number of the Lock-Box Accounts promptly after
establishing or changing the same.
Wells Fargo Bank, N.A. will serve as the initial
Lock-Box Account Depository with respect to the Receivables.
The Servicer shall provide thirty (30) days' prior notice to the
Trustee of its appointment of a successor Lock-Box Account
Depository, which such successor Lock-Box Account Depository
shall be an Eligible Institution.
The Servicer shall deposit into the Lock-Box
Account all amounts (including late payments) remitted by
Obligors to the Servicer under the terms of the Receivables within
one (1) Business Day after receipt thereof. The Servicer shall
provide the Lock-Box Account Depository with a report providing
instructions related to distributions of funds from the Lock-Box
Account to the Collection Account.
The Servicer shall deposit in the Collection Account
the aggregate Purchase Amount with respect to Purchased
Receivables. All such deposits shall be made in Automated
Clearinghouse Corporation next-day funds or immediately available
funds, on the Business Day following receipt thereof.
X. DOCUMENTS AND RECORDS
A. SERVICING DOCUMENTS AND RECORDS
1. All documents with respect to an Obligor
account and delivered to Servicer hereunder will be held in trust
and kept safely by Servicer as delivered.
2. The Servicer shall hold in trust and keep
safely for the benefit of the Trust the computer records relating to
the Obligor accounts and the proceeds thereof.
3. The Servicer will furnish copies of any audit
reports prepared for the Servicer (either internal or otherwise) with
respect to the Receivables to the Trustee promptly upon the receipt
thereof by Servicer.
4. All data, documents and information held by
the Servicer on behalf of the Trust shall be held in confidence and
not used or disclosed for any purpose other than as contemplated
by this Servicing Agreement or as required by law or as may be
necessary to enforce their respective rights under this Servicing
Agreement.
B. REPORTS AND CREDIT AGENCIES
1. In addition to its normal reporting, the
Servicer shall also furnish Backup Servicer upon request with such
reports as are required by this Servicing Agreement and such
additional information underlying the data in the aforesaid reports
as may be reasonably pertinent to Backup Servicer's needs and that
can be generated by the Servicer's existing data processing system
without undue effort or expense. The reports required by this
Servicing Agreement shall be substantially in the form of Schedule
B hereto.
2. Backup Servicer and Trustee understand that
all transactions with respect to an Obligor account will be reported
by Servicer to one or more Credit Agencies in the name of the
Seller or its applicable affiliate as required by contract and by law.
Servicer will comply with all Credit Agency agreements.
XI. INDEMNIFICATION
The Servicer agrees to indemnify the Backup
Servicer and the Trustee and hold the Backup Servicer and the
Trustee, their respective officers, employees and agents harmless
against any and all claims, losses, penalties, fines, forfeitures,
legal fees and related costs, judgments, and any other costs, fees
and expenses that the Backup Servicer or the Trustee, as the case
may be, may sustain in any way related to failure of the Servicer
to perform its duties and service the Receivables in compliance
with the terms of this Servicing Agreement. The Servicer shall
immediately notify the Backup Servicer and the Trustee if a claim
is made by a third party with respect to this Servicing Agreement
or the Receivables, assume (with the consent of the Backup
Servicer and the Trustee) the defense of any such claim and pay all
expenses in connection therewith, including counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which
may be entered against it or the Backup Servicer or the Trustee in
respect of such claim. This right to indemnification shall survive
the termination of this Servicing Agreement.
XII. TERM AND TERMINATION
1. The Servicer agrees to service all
Receivables for their full term and until their expiration or earlier
termination.
2. In the event the Trustee, on behalf of the
Trust, transfers any Receivable(s), the transferee shall have the
option to terminate the servicing of the respective Obligor
account(s) by providing thirty (30) days written notice to Servicer.
3. The holder of the Residual Interest may at
any time replace the Servicer with a substitute Eligible Servicer
upon the delivery of written notice of such substitution stating the
name and address of such substitute Servicer to the Master
Trustee, the Trustee, each Rating Agency and the predecessor
Servicer at least 90 days prior to the change in Servicer, provided
(1) the holder of the Residual Interest delivers to the Trustee in
connection with such substitution evidence of the consent of at
least the Majority Certificateholders to the change and (2) provided
further that such substitute Servicer shall have executed an
agreement of assumption, acceptable to the Trustee and each
Rating Agency, under which it assumes every obligation and duty
of the Servicer under this Servicing Agreement. Upon the
occurrence of the foregoing, such substitute Servicer shall be
deemed the Servicer for all purposes under this Servicing
Agreement.
Should the transferee or holder of the Residual
Interest elect to terminate the servicing as indicated above, the
Servicer shall be entitled to a five ($5.00) dollars per Receivable
transfer fee, such fee to be paid by the transferee or holder of the
Residual Interest on the date of transfer.
XIII. ARBITRATION AND ATTORNEYS' FEES
1. It is understood that this Servicing
Agreement is made in good faith and should there arise, from any
unforeseen cause, a difference of opinion or of interpretation of
this Servicing Agreement which cannot be settled amicably
between the Trustee, the Backup Servicer and the Servicer, such
difference or interpretations shall be submitted to a decision of a
board of arbitration.
2. The aforementioned board of arbitration shall
be composed of two (2) arbitrators and an umpire meeting in the
State of Minnesota, unless otherwise agreed to by the Trustee, the
Backup Servicer and the Servicer.
3. The members of the board of arbitration shall
be active or retired disinterested officials of insurance companies
or financial institutions. Each party shall appoint its arbitrator, and
the two arbitrators shall choose an umpire before instituting the
hearing. If the respondent fails to appoint its arbitrator within
thirty (30) days after being requested to do so by the claimant, the
latter shall also appoint the second arbitrator.
If the two arbitrators fail to agree upon the
appointment of an umpire within two (2) weeks after their
nominations, each of them shall name three (3), of whom the other
shall decline two (2) and the decision shall be made by drawing
lots. The claimant shall submit its initial brief within twenty (20)
days from appointment of the umpire. The respondent shall submit
its brief within twenty (20) days thereafter, and the claimant may
submit a reply brief within ten (10) days after filing of the
respondent's brief.
4. The board shall make an award with regard
to the custom and usage of the business contemplated by this
Servicing Agreement. The board shall issue its award in writing
based upon a hearing at which evidence may be introduced without
following strict rules of evidence but in which cross-examination
and rebuttal shall be allowed.
The board shall make its award within thirty
(30) days following the termination of the hearing unless the
parties consent to an extension. A decision by the majority of the
members of the board shall become the award of the board and
shall be final and binding upon all parties to the proceeding. Either
party may apply to the United States District Court, sitting in the
State of Minnesota, for an order confirming the award. If such an
order is issued, the attorneys' fees of the party so applying and the
court cost will be paid by the party against whom confirmation is
sought.
5. Each party shall bear the expense of its
arbitrator and shall jointly and equally bear with the other party
the expense of the umpire. The remaining costs of the arbitration
proceeding (including attorneys' fees of the parties) shall be
allocated by the board in its award. Notwithstanding any other
provision hereof, any expenses (including attorney's fees) incurred
by the Trustee or the Backup Servicer shall be reimbursed from
the Trust.
XIV. WAIVERS
No failure or delay on the part of the Servicer, the
Trustee or the Backup Servicer in exercising any power, right or
remedy under this Servicing Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power,
right or remedy, preclude any other or further exercise thereof or
the exercise of any other power, right or remedy, except by a
written instrument signed by the party to be charged or as
otherwise expressly provided herein.
XV. NOTICES
Except as otherwise provided herein, all notices,
requests, consents, demands and other communications given
hereunder shall be in writing. All notices of whatever kind shall be
either personally delivered or sent by telecopy or other form of
rapid transmission and confirmed by United States mail, properly
addressed and with full postage prepaid, addressed as follows:
To Servicer: Aegis Auto Finance,
Inc.
525 Washington
Boulevard
Jersey City, NJ
07310
Attn: Joseph F.
Battiato, President
Telecopy No. (201)
418-7339
To Backup Servicer: Norwest Bank
Minnesota,
National Association
Corporate Trust
Services
Asset Backed
Administration
Sixth Street and
Marquette Ave.
Minneapolis, MN
55479-0070
Telecopy No. (612)
667-3539
To Trustee: Norwest Bank
Minnesota,
National Association
Corporate Trust
Services
Asset Backed
Administration
Sixth Street and
Marquette Ave.
Minneapolis, MN
55479-0070
Telecopy No. (612)
667-3539
or to such other address as such party shall have
specified in writing in the manner set forth above.
All notices to the Certificateholders shall be sent in
the manner specified in the Pooling and Servicing
Agreement.
XVI. ASSIGNABILITY
No party may assign any of its rights or obligations
hereunder without the prior written consent of the other parties.
Nothing in this Servicing Agreement is intended to confer,
expressly or by implication, upon any Person other than the
Trustee, the Backup Servicer and the Servicer any rights or
remedies under or by reason of this Servicing Agreement.
XVII. FURTHER ASSURANCES
Each party agrees, if reasonably requested by
another party, to execute and deliver such additional documents or
instruments and take such further actions as may be reasonably
necessary to effect the transactions contemplated by this
Agreement.
XVIII. COUNTERPARTS
This Servicing Agreement may be executed in
counterparts, each of which shall be deemed an original but all of
which taken together shall constitute but one and the same
document.<PAGE>
XIX. ENTIRE AGREEMENT; AMENDMENTS
This Servicing Agreement, including the Schedules
attached hereto and the documents referred to herein, contains the
entire agreement between the parties hereto with respect to the
transactions contemplated hereby and supersedes all prior
understandings, negotiations, commitments and writings with
respect thereto. This Servicing Agreement may not be modified,
changed or supplemented except upon the express written consent
of each of the parties hereto. The Trustee shall not agree to any
amendment of this Servicing Agreement without the prior written
consent of the Majority Certificateholders. In the event of any
conflict between this Servicing Agreement and a Schedule hereto,
the Schedule shall govern.
XX. INSPECTION
Any party hereto or its designated agents, and any
Certificateholder, may, during ordinary business hours and after
reasonable notice, inspect, audit, check and make abstracts from
any party's books, accounts, records and other papers directly
pertaining to the subject matter of this Servicing Agreement or the
Schedules hereto. All costs and expenses of such activities shall
be borne by the inspecting party. Each party shall use reasonable
efforts to facilitate any such inspection.
XXI. LIMIT ON TRUSTEE'S PAYMENT
OBLIGATIONS
Neither the Trustee, nor Norwest Bank Minnesota,
National Association, nor any of its affiliates, shall have any
obligation to make any payment to the Servicer in respect of any
payment obligation of the Trustee to the Servicer under this
Servicing Agreement, any Schedules, riders or amendments hereto
otherwise than from funds held by the Trustee pursuant to the
Pooling and Servicing Agreement. The Servicer hereby
specifically consents to the same and agrees that under no
circumstances will it offset or otherwise withhold amounts owing
to it from remittances made by it to the Trustee pursuant to this
Servicing Agreement, or any Schedules hereto or any riders or
amendments hereto.
XXII. SERVICER NOT TO RESIGN
1. The Servicer shall not resign from the
obligations and duties imposed on it as Servicer under this
Servicing Agreement except (i) in the event that the performance
of its duties under this Servicing Agreement shall no longer be
permissible under applicable law or it shall no longer be an
Eligible Servicer or (ii) if the Backup Servicer has taken over the
duties of the Servicer in accordance with the terms hereof or upon
the appointment of a successor or substitute Servicer (other than
the Backup Servicer) to take over the duties and obligations of the
Servicer hereunder. Notice of any such determination permitting
the resignation of the Servicer shall be communicated in writing to
the Trustee, the Backup Servicer and each Rating Agency at the
earliest practicable time and any such determination shall be
evidenced by an Opinion of Counsel to such effect delivered to the
Trustee concurrently with or promptly after such notice. No such
resignation shall become effective until an Eligible Servicer shall
have assumed the responsibilities and obligations of the Servicer;
provided, however, in the event that the Backup Servicer is unable
to act as Servicer hereunder and a successor Eligible Servicer has
not been appointed within thirty (30) days, the Trustee may
petition a court of competent jurisdiction for the appointment of a
successor Eligible Servicer acceptable to the Majority
Certificateholders.
2. Upon the Servicer's receipt of notice of
termination pursuant to paragraph VI. or upon the Servicer's
resignation pursuant to this paragraph, the Backup Servicer shall
perform as Servicer until such time, if ever, as a successor
Servicer who is an Eligible Servicer reasonably acceptable to each
Rating Agency and the Majority Certificateholders shall have been
appointed by the Trustee and shall have assumed the duties and
responsibilities of the Servicer.
3. 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 applicable portion of the
Servicing Fee and all of the rights granted to the predecessor
Servicer, by the terms and provisions of the Pooling and Servicing
Agreement.
XXIII.
MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF
THE
OBLIGATIONS OF, OR RESIGNATION OF
SERVICER.
Any Person (a) into which the Servicer may be
merged or consolidated, (b) which may result from any merger or
consolidation to which the Servicer shall be a party, (c) which may
succeed to the properties and assets of the Servicer substantially as
a whole, or (d) which may succeed to the duties and obligations of
the Servicer under this Servicing Agreement which Person
executes an agreement of assumption to perform every obligation
of the Servicer hereunder, shall be the successor to the Servicer
under this Servicing Agreement without further act on the part of
any of the parties to this Servicing Agreement; provided, however,
prior to any merger or consolidation of, or assumption of the
obligations of, the Servicer, each Rating Agency shall have
delivered to the Servicer, the Backup Servicer, the Trustee and
each Certificateholder a statement that such transaction shall not
have an adverse effect on the ratings assigned to the Rated
Certificates; further provided, however, that (i) immediately after
giving effect to such transaction, no Event of Servicing Default (as
defined in paragraph VI.), and no event which, after notice or
lapse of time, or both, would become an Event of Servicing
Default shall have happened and be continuing, (ii) the Servicer
shall have delivered to the Trustee an Officer's Certificate stating
that such consolidation, merger or succession and such agreement
of assumption comply with this paragraph XXIII. and that all
conditions precedent provided for in this Servicing Agreement
relating to such transaction have been complied with, and (iii) the
Servicer shall have delivered to the Trustee an Opinion of Counsel
either (A) stating that, in the opinion of such counsel, all financing
statements, continuation statements and amendments and notations
on certificates of title thereto have been executed and filed that are
necessary fully to preserve and protect the interest of the Trustee
in the Receivables and the Financed Vehicles, and reciting the
details of such filings, or (B) stating that, in the opinion of such
counsel, no such action shall be necessary to preserve and protect
such interest. Without receipt by the Trustee of written notice
from the Servicer of such merger, consolidation or succession at
least thirty days prior to such action by the Servicer and approval
by each Rating Agency and the Majority Certificateholders, which
approval shall not be unreasonably withheld, such merger,
consolidation or succession shall constitute an Event of Servicing
Default with respect to the Servicer.
XXIV. GOVERNING LAW.
This Servicing Agreement shall be governed by and
construed in accordance with the laws of the State of New York
without regard or reference to principles of conflicts of laws of
such State.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have
caused this Servicing Agreement to be executed as of the date first
written above.
SERVICER:
AEGIS AUTO
FINANCE,
INC.
By:
Joseph F.
Battiato
President
[Signatures continue on following page]
BACKUP
SERVICER:
NORWEST
BANK
MINNESOTA
, NATIONAL
ASSOCIATIO
N, in its
capacity as
Backup
Servicer under
the Pooling
and Servicing
Agreement
By:
Name:
Stephen Seitz
Title:
Corporate Trust Officer
TRUSTEE:
NORWEST
BANK MINNESOTA,
NATIONAL
ASSOCIATION, in its
capacity as
Trustee under the
Pooling and
Servicing Agreement
By:
Name:
Stephen Seitz
Title:
Corporate Trust Officer
[Counterpart signature page to Servicing Agreement]
<PAGE>
ACKNOWLEDGEMENT AND AGREEMENT OF SELLER
The undersigned hereby acknowledges this Servicing
Agreement and agrees, in its capacity as Seller, to be bound by the
applicable provisions hereof.
AEGIS AUTO FUNDING CORP.,
In its capacity as Seller under the
Pooling and Servicing Agreement
By:
Brendan Meyer
Vice President
SCHEDULE A - SUMMARY OF SERVICES
I. SERVICES
A. CONTRACT SERVICES - COLLECTIONS
1. Prior to the execution of this Agreement
Servicer has established a Lock-Box
Account at Wells Fargo Bank, N.A.
2. Servicer shall be responsible for the mailing
of payment coupon books or monthly
statements. Payment books shall contain
coupons in sufficient quantity to allow
Obligor to enclose a coupon with each
scheduled payment per the terms of the
related contract. Each payment coupon book
may contain up to 36 coupons.
For those Obligor accounts whose contract
term exceeds 36 months a new coupon book
for the remaining term will be sent in the
35th month.
3. Servicer shall process Obligor accounts for
which the Obligor fails to make a payment
on the applicable payment due date (a
"Delinquency") on the following basis:
a. Commencing on the first business
day on which an Obligor is
delinquent by more than ten (10)
days, Servicer shall, at the Servicer's
discretion, either (1) phone the
Obligor, (2) if no contact is made
after phoning, the Servicer may send
a letter to the Obligor asking the
Obligor to immediately contact the
Servicer, or (3) order a field call by
an outside agency to the Obligor.
b. Servicer may request the Seller's
authorization to repossess an
Obligor's vehicle at any time after an
Obligor is delinquent and Servicer
has satisfactory reason to believe that
Obligor will not pay. However,
such authorization will be deemed
given if Servicer cannot obtain
timely authorization, provided
Servicer has determined that any
delay would impede the Servicer's
ability to service the Obligor's
vehicle. Servicer shall create and
maintain a report of any Obligor's
vehicle it repossesses and all events
leading to such action.
c. If an Obligor requests a change to
his normal monthly due date (a "Due
Date Change") and if the Obligor has
defaulted on his obligations under a
Receivable or if the Servicer
reasonably believes such default is
imminent, Servicer may grant such
Due Date Change to the extent the
Servicer deems in the best interest of
the Certificateholders; however, no
Due Date Change shall be granted
beyond the currently due month.
d. Except as otherwise provided in this
agreement, if an Obligor has been
delinquent for more than thirty-five
(35) days, Servicer shall request
Seller's authorization to repossess
pursuant to Section IA3.b. of this
Schedule A.
e. If an Obligor requests an extension
of the currently required monthly
payment to extend the end of the
loan term (a "Loan Extension") and
if the Obligor has defaulted on his
obligations under a Receivable or if
the Servicer reasonably believes such
default is imminent, Servicer may to
the extent the Servicer deems in the
best interest of the Certificateholders
grant such Loan Extension once each
year.
Servicer shall grant a Loan
Extension only to those Obligors
who have made at least six (6)
regularly scheduled payments; and in
no case shall the number of Loan
Extensions per loan exceed the
number of years in the loan term. In
no event may any modification cause
the final payment date to extend
beyond the Final Scheduled
Distribution Date for the
Receivables.
B. CONTRACT SERVICES - CUSTOMER SERVICE
1. If Servicer receives written or oral notice
from an Obligor of such Obligor's refusal to
make payments on the Obligor's account,
Servicer shall enter such notice into its
computer records.
2. The Seller shall have the responsibility to
apply for title to the motor vehicle covered
by the contract. Servicer shall send, or
cause to be sent, to Trustee all titles to such
motor vehicles. With respect to titles
received, Servicer shall verify that Aegis
Finance is noted as lien holder.
3. Servicer shall notify Originator and/or
Custodian of any discrepancies with respect
to the lien holder indicated on received
titles. Servicer shall further notify Originator
and/or Custodian of missing titles.
Originator shall be responsible for correcting
title discrepancies and obtaining missing
titles.
4. Servicer shall not release any title to a
vehicle except upon the full payment of the
remaining obligor principal balance by the
Obligor or others, or the repossession and
sale of the related vehicle, or the release of
the title to Originator for the correcting of
title problems, or as required by law, or as
directed by Custodian. Custodian will
release title to Servicer on a timely basis,
pursuant to Section 3.04(c) of the Pooling
and Servicing Agreement.
5. Servicer shall perform the following
insurance tracking functions with respect to
a contract until the earlier of the
repossession and sale of the vehicle or the
remaining obligor principal balance is paid
in full by the Obligor or others:
a. Seller shall provide initial physical
damage insurance information at the
time of portfolio boarding.
b. Servicer shall notify Seller and/or
Custodian if Servicer has not
received a copy of a physical damage
insurance policy for an Obligor's
vehicle within twenty (20) days of
the receipt of a Notice of
Cancellation/Non-Renewal.
c. Servicer shall produce a monthly
Insurance Expiration report showing
those Obligor accounts for whom a
Notice of Cancellation/Non-Renewal
has been received or the expiration
date for an Obligor's insurance
policy in Servicer's computer records
has elapsed.
d. Servicer shall not be liable for any
loss or liability resulting from the
lack of insurance coverage on any
Obligor vehicles if it has complied
with the foregoing.
6. Servicer shall negotiate and settle any claims
relating to physical damage to a vehicle and
endorse any insurance company drafts for
such claim subject to the following
conditions:
a. Servicer shall endorse a draft for
payment of a claim to body shop or
other auto repair service.
b. If the Obligor's account is more than
thirty (30) days delinquent, Servicer
shall attempt to collect all currently
due amounts. If unable to make such
collection, Servicer shall request
Seller's authorization to repossess
vehicle from the repair facility
pursuant to Section I-A-3.b. of this
Schedule A. To effect such
repossession, Servicer may negotiate
for the release of the vehicle from
the repair facility in exchange for the
endorsed draft in the amount of the
repairs and an agreement to hold the
repair facility harmless for the
release of the vehicle.
7. Servicer shall calculate early payoffs of
remaining obligor principal balance per the
terms of the related sales contract. Seller
authorization is required for any payoff
amount other than the full calculated
amount. Notwithstanding any condition in
this Agreement, Servicer, however, shall
have the right (in the event of early payoff)
to waive any remaining obligor principal
balance of twenty-five dollars ($25.00) or
less.
8. Upon receipt by Servicer of the full payment
of the remaining Obligor principal balance
by the Obligor, the Custodian shall release
to the Servicer which in turn shall release
and forward to the Obligor the original of
the installment sales contract.
II.
A. SPECIAL COLLECTION ACTIVITIES
1. Repossession and Sale
The following terms shall govern the
repossession and sale of the vehicle:
a. Servicer shall order repossession
services from licensed, bonded
agents.
b. Within five (5) business days after
repossession or sooner if required by
law, Servicer shall prepare and mail
a Notice of Intent (the "NOI") to the
Obligor and send a copy of the NOI
once per month together with their
monthly reports to the Seller.
c. Servicer shall cause the repossessed
vehicle to be delivered to a location
as designated by Seller for the
amount of time required by
applicable State law for Obligor
redemption (the "Obligor
Redemption Period").
d. After the expiration of the Obligor
Redemption Period, Seller may
authorize Servicer to arrange for the
sale and disposition of the vehicle.
2. Credit Enhancement Claims Filing
Within the provisions of the Fee Schedule
set forth in paragraph III of this Schedule,
Servicer shall perform the following
insurance functions with respect to a
Receivable and will comply with all
necessary operating and claims filing
procedures (which may be modified by the
insurance company from time to time and by
mutual consent of the Seller and the
Servicer) pursuant to each Credit
Enhancement:
a. With respect to the Risk Default
Insurance Policy, Servicer shall: (1)
file notice of loss within the earlier
of (a) 60 days from the date of
expiration of the Obligor Redemption
Period or (b) 30 days from the date
the Financed Vehicle was sold at
auction, (2) maintain claim data
components, (3) calculate the claim
amount and (4) submit to the Insurer
all supporting documents for each
claim required by the Risk Default
Insurance Policy.
b. With respect to the VSI Insurance
Policy, Servicer shall:
(1) if appropriate, prior to
liquidation and within ninety (90)
days of date of loss, file an initial
notice of loss which shall mean the
following for purposes of this
Section only:
(A) For physical damage,
the date of repossession;
(B) For instrument non-
filing insurance, the date of
filing of a superior lien;
(C) For a skip, the date of
the first delinquency plus 150
days; and
(D) For a repossession,
the date the damage
occurred.
(2) maintain physical and electronic
information, (3) calculate the claim
amount, (4) prepare physical and
electronic information and complete
claim form and (5) in the case of a
claim dispute, select an independent
appraiser and file an appraisal report
within thirty (30) days of initial
claim filing rejection.
3. Deficiency
a. After the repossession and sale of a
vehicle, in order to calculate a
deficiency, if any, Servicer shall
request the cancellation of any
financed product related to the
vehicle (e.g., credit life, disability
insurance, etc.), file for any refunds
associated therewith and furnish a
cancellation report to Custodian.
b. After taking into account any
cancellation refunds, Servicer shall
compute any deficiency resulting
from the repossession and sale of a
vehicle and notify Obligor of any
such deficiency.
c. At the discretion and instruction of
the Seller, Servicer shall commence
collection activities on any such
established Obligor deficiency
accounts.
4. Bankruptcies
If Servicer receives written notice that an
Obligor has become subject to bankruptcy
proceedings under Federal or State law,
Servicer or its designee (attorney if
required) shall provide the following
services as necessary:
a. Servicer shall immediately cease all
collection activity and otherwise
comply with the Bankruptcy Code
and all related laws and regulations.
b. Servicer shall file a claim with the
applicable court.
c. Servicer shall obtain legal services
for the prosecution of the claim
when necessary.
d. Servicer shall monitor the receipts of
funds being paid through the
applicable bankruptcy plan.
e. Upon dismissal of an action under
bankruptcy, Servicer shall service
the Obligor's account pursuant to the
standard collection procedures of
Section I of this Schedule A.
f. Should the Obligor account be the
subject of a reaffirmation or court
ordered modified payment schedule,
Servicer shall administer and collect
the account in the same fashion as
that prior to the bankruptcy
proceedings.
5. Disability
If Servicer is notified in writing of an
Obligor's disability claim and evidence of
the Obligor's disability insurance policy is
on file, Servicer shall suspend all collection
activity on such Obligor's account until such
time as Obligor resumes his normal payment
schedule, however:
a. Servicer shall continue to monitor
such Obligor's account until the
earlier of the date on which:
1) A claim approval or denial
has been received; or
2) The Obligor resumes
payment, at which time
Servicer will resume
collection activity pursuant to
Section III of this agreement.
b. If Obligor's disability claim is
denied, Servicer shall resume
collection activity pursuant to Section
I of this Agreement and the terms
and conditions of the related sales
contract.
c. Servicer's collection procedures for
a disability account shall comply
with the terms stipulated on the
related sales contract.
6. Allotments
Servicer shall have been notified at the time
of loan boarding if an Obligor will be
subject to military allotment processing. If
Servicer has not received an allotment
verification on a designated allotment
account within 60 days of any subsequent
allotment establishment and the designated
Obligor's account is greater than 45 days
delinquent, Servicer shall request Seller's
authorization to repossess pursuant to
Section I.A.3.b of this Schedule A.
7. Skips
If Servicer determines that Obligor has
become a skip, Servicer shall conduct skip-
tracing efforts for a period of 30 days. If
such skip-tracing efforts prove unsuccessful,
Servicer will file (if applicable) the
necessary claim forms with Seller's
insurance carriers as described in II A(2) of
Schedule B of this document.
III. FEE SCHEDULE
Servicer shall be entitled to receive the following fees and
costs no later than the Distribution Date immediately
following each related Collection Period:
A. GENERAL SERVICING
1. For all Receivables with an outstanding
balance greater than zero dollars ($0.00) as
of the first day of the related Collection
Period, a monthly serving fee equal to one-
twelfth of 1.85% of the outstanding balance
or $10.00, whichever is greater.
2. All extension fees that are received during
the related Collection Period.
<PAGE>
3. All late charges that are received during the
related Collection Period.
4. A charge of $25.00 per filing of Credit
Enhancement claims forms with the
designated Insurers during the related
Collection Period.
B. EXPENSE REIMBURSEMENT
1. All out-of-pocket expenses incurred by
Servicer in the pursuit of its job functions as
described in this Schedule (including but not
limited to filing fees, investigation fees,
repossession fees, transportation and storage
fees, legal fees, DMV fees, etc.) shall be
reimbursed to the Servicer at Servicer's
actual cost. In addition Servicer shall be
entitled to an administrative fee equal to 8%
of all out-of-pocket expenses. Servicer shall
provide the Trustee with documentation for
all such out-of-pocket expenses as a
condition to payment.
2. All postage costs associated with the mailing
of insurance follow-up letters, payment
statements, including Notice of Intent and
Deficiency Statement, during the related
Remittance Period.
3. All expenses relating to establishing,
maintaining and transferring funds from the
Lock-Box account to the relevant Collection
Account maintained by the Trustee. Such
expenses shall be reimbursed at actual cost
provided the Servicer include copies of
related invoices.
C. DEFICIENCY SERVICING
For those Obligor accounts that have been the
subject of a short insurance payoff, within the
related Collection Period, Servicer shall cause the
account to be moved to a "non-performing" loan
pool and marked inactive.
All collection activity by Servicer will be suspended
until such time as the Seller directs Servicer to
resume collection efforts. Upon such reactivation,
a one time set-up fee of fifty ($50.00) dollars will
be charged and payable on the next Distribution
Date.
For each Collection Period that an Obligor account
remains in the above described deficiency condition,
a servicing fee will be charged and payable on the
related Distribution Date based on the following
schedule:
1. $1.00 per month for months 1-4 that a
subject Receivable remains in the nonperforming loan pool.
2. $0.50 per month for months 5-8 that a
Receivable remains in the nonperforming loan pool.
3. $0.10 per month for each month thereafter
that a Receivable remains in the nonperforming loan pool.
SCHEDULE B
SERVICER MONTHLY ACTIVITY REPORT
Aegis Auto Receivables Trust 1996-A
Automobile Receivable Pass-Through Certificates
Series 1996-A
I. COLLECTION ACTIVITY INTEREST PRINCIPAL
TOTALS
Beginning of Period Pool Principal Balance 0
Scheduled Payments 0 0
0
Full & Partial Prepayments 0 0
0
Risk Default Insurance Cash Proceeds 0 0
0
Receivables Repurchased by Seller
Recoveries (on Liquidated and Defaulted
Receivables)
Miscellaneous Servicer Collections
Available Distribution Amount 0 0
0
Net Losses 0
End of Period Pool Balance 0
II. SERVICING COMPENSATION
Amount
(ATTACH BREAKOUT OF FEES)
Servicer Compensation
III. POOL BALANCE INFORMATION
Original Pool Balance: Beginning of Period
End of Period
Pool Balance
Pool Factor
Weighted Average Coupon (WAC)
Weighted Average Remaining Maturity (WAM)
Remaining Number of Contracts
IV. RECEIVABLES REPURCHASED/SUBSTITUTED BY SELLER
Number of Receivables Repurchased
Principal Amount
Number of Additional Receivables Substituted
Principal Amount
V. EXTENSIONS
Number of Extensions granted
Principal Amount
VI. DELINQUENCY INFORMATION*
% of
# of Principal Outstanding
Contracts Balance Pool Balance
30-59 Days Delinquent
60-90 Days Delinquent
90 Days or more Delinquent
*Excluding Liquidated and Defaulted Receivables
VII. REPOSSESSION INFORMATION
Current Period Inventory
Number of Receivables as to which Vehicles have been
Repossessed (and NOI expired)
Principal Balances of Receivables relating to Vehicles
which have been Repossessed (and NOI expired)
VIII. LIQUIDATED AND DEFAULTED RECEIVABLES
Current Period Cumulative
Number of Liquidated Receivables*
Principal Balance of Liquidated Receivables**
(Prior to Liquidation)
Number of Defaulted Receivables***
Principal Balance of Defaulted Receivables
Total Principal Balance of Liquidated Defaulted Receivables
*Includes Receivables transferred to Risk Default Insurer for liquidation
**Excludes Receivables previously characterized as Defaulted Receivables
***180 days delinquent
IX. RECOVERIES
Current Period Cumulative
Liquidation Proceeds
VSI Physical Damage/Loss Insurance Proceeds
Rebates of Servicer Cancelled Warranty Contracts
Consumer Insurance
Other
Total Recoveries
X. RISK DEFAULT POLICY INSURED RETENTION AMOUNT
Beginning Balance
Add: Quarterly Reserve Loss Deficiency
Less: Approved Claims
Less: Surplus in Quarterly Loss Reserve
Ending Balance
<PAGE>
XI. NET LOSSES
Current Period Cumulative
Principal Balance of Liquidated and Defaulted Receivables
Less: Recoveries
Less: Risk Default Insurance Proceeds
Net Losses
XII. INSURANCE CLAIMS
Current Period Cumulative
Number of Risk Default Insurance Claims
Amount of Risk Default Insurance Claims
Retention Amount
Number of VSI Insurance Claims
Amount of VSI Physical Damage/Loss Insurance Claims
Number of Risk Defaulted Insurance Claims Rejected
Principal Balance of Receivables relating to Risk Default
Insurance Claims Rejected
SERVICER COMPENSATION BREAKDOWN Amount
Servicing Fees
Collection Expenses Incurred
Claim Filing Fees
Bank Charges
Late fees, extension fees collected
Postage
Total Servicer Compensation
<PAGE>
SCHEDULE C
REQUEST FOR RELEASE OF DOCUMENTS
To: Norwest Bank Minneapolis, National Association,
as Custodian
Sixth Street and Marquette Avenue
Minneapolis, MN 55479-0067
Re: Aegis Auto Receivables Trust 1996-A; Servicing
Agreement dated as of September 1, 1996 by and
among Aegis Auto Finance, Inc., Norwest Bank
Minneapolis, National Association, as Trustee, and
Norwest Bank Minneapolis, National Association,
as Backup Servicer.
In connection with the administration of the pool of
Receivables held by you as Custodian for the Trustee, we request the
release and acknowledge receipt of the (Custodian's Receivable
Files/[specify documents]) for the Receivable described below, for the
reason indicated.
Borrower's Name, Address & Zip Code:
Receivable Number: [list here or on attached schedule]
Reason for Requesting Documents (check one or put code on attached
schedule)
_____ 1. Receivable Paid in Full (Servicer hereby certifies that all
amounts received in connection therewith have been
credited to the Collection Account as provided in the
Pooling and Servicing Agreement.)
_____ 2. Receivable Repurchased Pursuant to Section 3.02 of the
Pooling and Servicing Agreement (Servicer hereby certifies
that any applicable repurchase price has been credited to
the Collection Account as provided in the Pooling and
Servicing Agreement.)
_____ 3. Receivable [to be] Liquidated (Servicer hereby certifies that
all proceeds of foreclosure, insurance or other liquidation
[have been finally received and credited] [when received
shall be credited] to the Collection Account pursuant to the
Pooling and Servicing Agreement.)
<PAGE>
_____ 4. Receivable to be transferred to Risk Default Insurer for
liquidation (servicer hereby certifies that all proceeds of
insurance when received shall be credited to the Collection
Account pursuant to the Pooling and Servicing Agreement).
_____ 5. Receivable in Foreclosure
_____ 6. Other (explain)
If box 1, 2, 3 or 4 above is checked, and if all or part of
the Custodian's Receivable File was previously released to us, please
deliver to us a copy of our previous request for release on file with you,
as well as any additional documents in your possession relating to the
above specified Receivable.
If box 5 or 6 above is checked, upon our return of all of the
above documents to you as Custodian, please acknowledge your receipt
by signing in the space indicated below, and returning this form.
AEGIS AUTO FINANCE,
INC.
Servicer
By:________________________________
Name:
Title:
Date:______________________________
Documents returned to Custodian:
NORWEST BANK MINNEAPOLIS, NATIONAL ASSOCIATION,
as Custodian
By: _______________________________
Name:
Title:
Date:
______________________________<PAGE>
SCHEDULE D
RELEASE AND ASSIGNMENT
PURSUANT TO SECTION IV.N.
OF THE SERVICING AGREEMENT
Norwest Bank Minnesota, National Association, as custodian (the
"Custodian") for the Trustee of the Aegis Auto Receivables Trust Series
1996-A created pursuant to the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") dated as of September 1, 1996
among Aegis Auto Funding Corp. (the "Seller"), Norwest Bank
Minnesota, National Association, as master servicer (the "Backup
Servicer") and as trustee (the "Trustee"), does hereby transfer, assign and
release to the Seller, without recourse, representation or warranty of the
Trustee, all of the Trustee's right, title and interest in and to the
Receivable and related Custodian File (as defined in the Pooling and
Servicing Agreement) identified as paid in full in the attached Servicer's
Request For Release of Documents, and all security and documents
relating thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this
day of 199 .
Norwest Bank Minnesota,
National Association,
as Custodian
By
_____________________________________
[Name]
[Title]
EXHIBIT 10.101 EXECUTIVE
EMPLOYMENT AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT made as of the ____
day of _______, 1996, by and between Systems and Services Technologies,
Inc., a Delaware corporation, with offices at 525 Washington Blvd., Jersey
City, New Jersey 07310 (the "Company"), and Matthew Burns, residing
at 12468 Benson, Overland Park, Kansas 66214 (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company is a wholly-owned subsidiary of The
Aegis Consumer Funding Group, Inc. ("Aegis");and
WHEREAS, the Company desires to employ the Executive, and the
Executive desires to be employed by the Company, upon the terms and
subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein, the parties hereto agree as follows:
1. Employment. The Company agrees to and does hereby employ
the Executive, and the Executive agrees to and does hereby accept
employment by the Company, subject to the terms and conditions herein set
forth.
2. Term. The term of the Executive's employment hereunder shall
commence on the date hereof (the "Effective Date") and, unless sooner
terminated as set forth below, shall terminate on July 1, 2001 (such period
hereinafter referred to as the "Term"). The Term is subject to extension
or reduction in accordance with the provisions of this Agreement.
3. Duties.
(a) During the Term, the Executive shall be employed as
Chairman and Chief Executive Officer of the Company and shall be in
charge of and responsible for the general and supervisory duties normally
and customarily attendant to such office in a business entity of the size and
type of the Company as such duties may be reasonably defined by the
Board of Directors of the Company (the "Board"). Executive shall also
render such other lawful services, and exercise such powers, which are
from time to time reasonably requested of him, assigned to him or vested
in him by the Board and which are commensurate with his position.
(b) The duties of the Executive may be changed from time to
time by the Board, provided that, except as permitted in accordance with
the provisions of Section 7(d) hereof, the Executive shall not be given
duties unrelated to, or not generally associated with, the executive level of
his position immediately prior to such change.
(c) The Executive will, to the best of the Executives abilities, in
good faith and with integrity, devote his full time, attention, energy and
skill to the fulfillment of his duties hereunder. The foregoing,
notwithstanding, the Executive will be permitted to own, as an inactive
investor, securities of a corporation whose equity securities are registered
under Section 12b or 12g of the Exchange Act, so long as his beneficial
ownership in any one such corporation shall not in the aggregate constitute
more than five percent (5%) of any class of equity securities of such
corporation.
(d) The Executive will be subject to such policies and procedures
as are from time to time established for employees of the Company
generally, except to the extent that such policies or procedures are contrary
to the terms of this Agreement or are inconsistent with the Executive's
position and duties.
(e) It is hereby acknowledged that, subject to Paragraph 9
hereof, the Executive may either presently, or in the future, be involved in
charitable or community activities so long as such other activities do not
unreasonably interfere with the performance by the Executive of his duties
hereunder and do not require more than five percent (5%) of his time
during working hours.
(f) Except as herein provided, the Company shall not require the
Executive to relocate his residence out of the greater Kansas City area in
the performance of his duties; provided, however, that the Company shall
not be deemed to have required a relocation of his residence in the event
the Company would require the Executive to perform his normal duties
outside of the greater Kansas City area for less than six months in any
calendar year. In the event the Executive is required to relocate beyond 150
miles from the city limits of Kansas City, Kansas, the base compensation
of the Executive as set forth in Section 4(a) hereof shall be increased at the
reasonable discretion of the Board to the extent necessary to reflect a
material increase in the cost of living related to the relocation. In addition,
upon any relocation required by the Company, the Company shall
reimburse the Executive for all out of pocket expenses incurred by the
executive reasonably related to the relocation including but not limited to
such expenses as those related to transportation of personal effects, closing
costs for a new residence, brokerage fees with respect to the sale of the
existing residence, and reasonable hotel accommodations during that period
of time reasonably necessary to locate a new residence. In the event that
the Executive should fail to close on the sale of his existing residence
within a period of six (6) months following the month in which the
Company shall have requested the Executive to relocate, the Company, at
the request of the Executive, shall purchase such residence from the
Executive, on or before the last day of the ninth (9) month following the
month in which relocation was requested, for the fair market value of
such residence. Fair market value" shall be determined as the average
between two appraisals, one obtained from a real estate brokerage firm
chosen by the Company and one by a firm chosen by the Executive; both
real estate firms shall be prominent firms generally recognized in the
immediately surrounding geographic area.
4. Compensation.
(a) Base Salary. In consideration for services performed
hereunder, the Company shall pay to the Executive an annual salary of
$150,000. during each year of the Term, subject to adjustment as herein
provided and in installments payable in accordance with the Company's
customary payroll practices. In addition, the Company shall reimburse the
Executive for all expenses reasonably incurred by him in connection with
the performance of his duties hereunder and the business of the Company
upon the submission to the Company of appropriate receipts therefor.
(b) Adjustments. Subsequent to June 30, 1997, the annual salary
of the Executive shall be adjusted annually during the Term (for each
twelve month period subsequent to June 30, 1997) based upon a comparison
of the actual "Net Pre-tax Income" (as hereinafter defined) of the Company
for the fiscal year of the Company immediately preceding the applicable
year for which the adjustment is to be made to the "Performance Target"
(as hereinafter defined) for such` fiscal year. The Performance Target
shall mean the anticipated net pre-tax income or loss of the Company
applicable for each fiscal year of the Company as set forth on Schedule A
hereto. Not later than 90 days following the end of each fiscal year of the
Company ending after June 30, 1996, the actual Net Pre-tax Income of the
Company for such fiscal year (determined in accordance with generally
accepted accounting practices consistently applied ("GAAP") by the
accounting firm normally retained by the Company) shall be compared to
the Performance Target for such fiscal year. In the event that the actual
Net Pre-tax Income exceeds the Performance Target (or in the event any
pre-tax loss is less than the pre-tax loss reflected in the Performance Target,
(as the case may be) the annual salary of the Executive for the next
ensuing fiscal year shall be increased by ten percent (10%) of the
Executive's annual base salary for the previous year. Immediately
subsequent to the determination of any adjustment of base compensation
hereunder, the base compensation shall be adjusted retroactively to the
commencement of the fiscal year for which it is applicable.
(c) Bonus. In order to provide performance-based incentive
compensation to the Executive, the Company hereby agrees to pay the
Executive, in addition to the base salary set forth in Subparagraphs (a) and
(b) hereof, a bonus in respect of each fiscal year subsequent to June 30,
1996 during the Executive's employment hereunder (provided, that the
Executive was employed at least 6 months during the applicable fiscal
year) calculated in the manner set forth hereinbelow. For purposes hereof,
and for each of the first two fiscal years subsequent to June 30, 1996 during
the employment of the Executive hereunder, the Executive shall receive a
bonus equal to the greater of (i) $50,000 or (ii) three and one third percent
(3.33%) of the Company's Net Pre-Tax Income for each such fiscal year
in which the Net Pre Tax Income equals or exceeds (or with respect to
losses is less than) the Performance Targets for such periods; for each fiscal
year during the Term subsequent to the first two fiscal years ending after
June 30,1996, and provided that the Executive is employed at least 6
months during of the applicable fiscal year, the Executive shall receive a
bonus equal to three and one third percent (3.33%) of the Net Pre-tax
Income of the Company for each such fiscal year in which the Net Pre-
Tax Income of the Company equals or exceeds (or with respect to losses,
is less than) the Performance Targets for that fiscal year.
Any bonuses earned in accordance with the provisions of this
Subsection shall be paid within 90 days following the end of each fiscal
year of the Company with respect to which such bonuses are payable.
Anything herein to the contrary notwithstanding, (i) no bonus shall
be deemed earned or be paid or payable to the Executive if on or before the
end of the applicable Adjustment Year such bonus would otherwise be
payable hereunder, the employment of the Executive was terminated by the
Company for "Cause" (as hereinafter defined) or by the Executive without
"Good Reason" (as hereinafter defined) and (ii) other than is provided in
subsection (i), the earning of bonuses with respect to any fiscal year in
which the Executive is employed for less than the full fiscal year shall be
pro rated based on the number of months the Executive was employed by
the Company during such fiscal year.
(d) Net Pre-Tax Income of the Company. For purposes hereof
the Net Pre-Tax Income of the Company shall be that amount determined
by the independent accountants of the Company with respect to a given
fiscal year. In making such determination, the accountants shall calculate
actual net Pre Tax Income on the basis of GAAP without giving effect to
any bonus paid pursuant to subsection (c) of this Paragraph 4. Such
determination shall also be made solely on the basis of the operations of the
Company and any subsidiaries thereof and shall take into account only those
items of revenue and expense arising from transactions or charges between
the Company and Aegis as are described in Schedule B hereto or as are
otherwise specifically agreed to by the parties hereto in writing. The
determination of the accountants for the Company shall be final, conclusive
and binding for all purposes, absent manifest error.
5. Vacation. The Executive shall be entitled to three weeks' paid
vacation during the first two years of his employment hereunder and four
weeks paid vacation during each year thereafter. Vacation shall be taken
at times mutually agreeable to the Executive and the Company. In no event
may vacation be accumulated from year to year and the Executive in no
circumstance shall receive compensation for vacation which was not taken;
any vacation time not taken during a year of employment shall be forfeited.
6. Benefits. Throughout the Term, the Executive shall be eligible
to participate in any pension, profit-sharing, stock option or similar plan or
program of the Company now existing or established hereafter for the
benefit of its employees generally, to the extent that he is eligible under the
general provisions thereof. The Executive shall also be entitled to
participate in any group insurance, hospitalization, medical, health and
accident, disability or similar or non-similar plan or program of the
Company now existing or established hereafter for the benefit of its
employees or executives generally, to the extent that he is eligible under the
general provisions thereof.
7. Termination of Executive's Employment.
(a) Notwithstanding any provisions contained herein to the contrary,
the Executive's employment may be terminated by the Company upon the
Executive's death or disability (as defined below) or for Cause (as defined
below), and the Executive may terminate his employment for Good Reason
(as defined below);
(b) For purposes of this Agreement, "disability" shall mean the
Executive is mentally or physically disabled from properly and fully
performing his duties and responsibilities hereunder for a period of 120
consecutive days or for 180 days, even though not consecutive, within any
360-day period, all as evidenced by the written certification of a qualified
medical doctor selected by the Company;
(c) For purposes of this Agreement, "Cause" shall mean any action
or inaction on the part of Executive (an "Event") which could materially
and adversely affect the Company and which legally constitutes cause for
termination of an executive's employment agreement, which Event (i) is not
cured within fifteen (15) business days after written notice from the
Company that it deems such event to constitute "Cause", and (ii) which
Event, if cured on one occasion, does not reoccur on more than one
additional occasion. The Company and the Executive agree that the Event
referred to in the notice of termination must be of sufficient significance to
permit a reasonable conclusion that the Company could suffer a material
and adverse effect as a result thereof. In no event shall "Cause" be deemed
to include any action or inaction on the part of the Executive undertaken in
good faith, consistent with his fiduciary duties to the Company, which are
within the "business judgement rule" as such rule or embodiment thereof
has been interpreted in accordance with the laws of the applicable
jurisdiction as set forth in Section 11 hereof.
(d) For purposes of this Agreement, "Good Reason" shall mean any
of the following: (i) the assignment to the Executive of duties inconsistent
with the Executive's position, duties, or responsibilities, as described
herein, provided that the Board shall be permitted to modify the duties of
the Executive if the Board, (x) determines in good faith that such
modification is in the best interests of the Company, (y) the Executive is
given or maintains an "executive level" position within the Company and
(z) the Company has failed to demonstrate financial performance within ten
percent (10%) of the Performance Targets for any two consecutive fiscal
quarters subsequent to July 1, 1997 or (ii) a material breach of the terms
of this Agreement by the Company (x) which breach remains uncured for
a period of 15 days after written notice thereof is received by the Company
and (y) which breach if cured on one occasion does not reoccur on more
than one additional occasion.
(e) In the event that the Executive's employment hereunder is
terminated as a result of death or disability of Executive or for Cause by
the Company, or without Good Reason by the Executive, or in the event
that this Agreement is not renewed or extended at the end of the Term, then
the Company shall have no further obligations or liabilities to the Executive
hereunder, such that all benefits and salary provided for within this
Agreement shall terminate simultaneously with the termination of the
Executive's employment except for benefits, bonuses and salary earned and
accrued through the date of such termination; provided, however, that in no
event shall the Executive be entitled to receive any bonuses, whether or not
earned or accrued, if his employment is terminated by the Company for
Cause or by the Executive without good reason. Nothing in this subsection
(e) shall supersede any rights of the Executive to receive any amounts or
benefits otherwise due to him upon the occurrence of any of the events
described in the immediately preceding sentence, whether such rights are
created by this Agreement or otherwise.
8. Covenants Not to Compete.
(a) Executive agrees that during that period of time from
the date hereof through July 1, 2001 (whether or not the Executive is
actually employed for the entire period that is herein contemplated to be the
Term) in addition to any extensions or renewals thereof and provided that
the Company continues to faithfully perform all of its obligations hereunder
and provided that Executive has not been terminated by the Company
without Cause or by Executive with Good Reason, Executive will not,
without the prior consent of the Company, whether directly or indirectly,
as principal or as agent, officer director, employee, consultant, or
otherwise, alone or in association with any other person, firm, corporation
or other business organization, carry on, or be engaged, concerned, or take
part in, or render services to or own, share in the earnings of, or invest in
the stock, bonds, or other securities of any person, firm, corporation, or
other business organization engaged anywhere in the United States, Canada,
Europe or South America in the business of financing or servicing loans for
the purchase of automobiles which could be deemed competitive to the
business of the Company or to any other business which the Company or
any member of the "Affiliated Group" is engaged in or is the process of
implementing at any time during the time during which the Executive is
employed (a "Similar Business"). Notwithstanding the foregoing, Executive
may, following any termination hereof, be so employed or associated with
an organization which finances or services loans solely and exclusively for
its own account, whether or not such activity is competitive to the business
of the Company. "Affiliated Group" is defined as the Company, or any of
its subsidiaries. The foregoing notwithstanding, during the Term Executive
may invest in stock, bonds, or other securities of any Similar Business (but
without otherwise participating in such Similar Business) if such stock,
bonds, or other securities are listed on any national or regional securities
exchange or have been registered under Section l2(g) of the Securities
Exchange Act of l934 provided that such investment does not exceed, in the
case of any class of the capital stock of any one issuer, 2% of the issued
and outstanding shares, or, in the case of other securities, 2% of the
aggregate principal amount thereof issued and outstanding.
(b) As a separate and independent covenant, Executive
agree that during the Term, including any extensions or renewals thereof,
Executive will not, without the consent of the Company, in any way,
directly or indirectly (except in the course of Executive's employment with
the Company), for the purpose of conducting or engaging in any Similar
Business, call upon, solicit, advise or otherwise do, or attempt to do,
business with any clients, customers or accounts of the Affiliated Group
with whom Executive had any dealings during the course of Executive's
employment with the Company or any of its affiliates or interfere or attempt
to interfere with any officers, employees, representatives or agents of the
Affiliated Group, or induce or attempt to induce any of them to leave the
employ of or violate the terms of their contracts with the Affiliated Group.
(c) If, in any judicial proceeding, a court shall determine
that the geographical, temporal or other scope of any of the covenants
contained in this Paragraph 9 is so broad or long as to be unenforceable,
then the geographical or other scope of such covenant shall be deemed to
be restricted so as to be enforceable under applicable law.
(d) Executive's obligations under this Section 8 hereof
shall survive any termination of this Agreement by the Company with
Cause or by the Executive without Good Reason; provided, however, that
the survival of these provisions shall not operate to extend the length of
time the Executive shall be prohibited from engaging in the activities
prohibited hereunder beyond July 1, 2001 unless the employment of the
Executive is extended or renewed beyond such time in which event such
obligations shall be extended to be co-terminus with the actual termination
of Executive's employment.
(e) In the event of a breach or threatened breach by
Executive of any provision of this Section 8 hereof, the Company shall be
entitled to seek an injunction restraining such breach, but nothing herein
shall be construed as prohibiting the Company from pursuing any additional
remedy available to the Company for such breach or threatened breach.
(f) The obligations of the Executive under this Section 8
shall not apply and shall terminate if the termination of this Agreement was
by the Company without Cause or by the Executive with good reason.
9. Covenants Regarding Confidential Information and
Proprietary Rights.
(a) Confidential Information Defined. As used herein,
"Confidential Information" means any non-public information, and any
document or media containing non-public information, concerning the
"Business Group" (defined for purposes hereof as the Affiliated Group and
any of the Affiliated Group's actual or prospective customers, suppliers,
contractor and co-venturers) or concerning any actual or planned
discoveries, inventions, developments, improvements, technology, know-
how, processes, products, services, businesses, business opportunities,
operations, activities or plans of or belonging to the Affiliated Group
(including, without limitation, technical formulae and designs, computer
hardware and software, databases, original works of authorship, customer
lists, bills of material, business plans, financial information, trade secrets
and other proprietary information) provided that Confidential Information
shall not include such portion of the aforesaid information which has
become or hereafter becomes public knowledge within the industry through
no fault of Executive's own.
(b) Confidentiality. It is understood and agreed that prior
to and during the Term, Executive has and will become aware of
Confidential Information, the unauthorized disclosure of which may harm
the Company or another member of the Business Group. Accordingly,
Executive agrees that, except as expressly authorized by the Company or
to the extent the Executive reasonably believes it necessary in order to
fulfill Executive's duties under this Agreement, both during and after the
Term, Executive will never divulge to others or appropriate to Executive's
own use, or to the use of any third party, any Confidential Information
conceived of, or obtained, by Executive prior to or during the Term. Upon
termination of this Agreement for whatever reason or whenever requested
by the Company, Executive will promptly deliver to the Company all
documents, media or other materials containing Confidential Information
which are in Executive's possession or under Executive's control.
(c) Proprietary Property. Executive agrees that all
inventions, original works of authorship, developments, improvements and
trade secrets (unless (i) not relating to the Company's actual or
demonstrably anticipated business, products, services or research and
development and (ii) developed entirely on Executive's own time, not as a
result of any work performed by Executive for the Company, and without
use of equipment, supplies, facilities or trade secrets of the Company)
conceived of, developed or reduced to practice by Executive, whether alone
or in conjunction with others, during the period of time Executive is in the
employ of the Company ("Proprietary Property") shall be the property of
the Company. Executive agrees to disclose promptly to the Company or
its counsel any Proprietary Property and to take such actions (at the
Company's request and expense) both during and after the Term necessary
or convenient to vest in the Company all of Executive's rights in such
Proprietary Property including, without limitation, the execution of any
applications, assignments or other instruments necessary or convenient in
order to assign all of Executive's interest therein to the Company or its
nominee and to apply for and obtain copyright protection or Letters Patent
of the United States or any foreign country or to otherwise protect the
Company's interest therein.
(d) Remedies. In the event of a breach or threatened
breach by Executive of any provision of this Section 9 hereof, the
Company shall be entitled to seek an injunction restraining such breach, but
nothing herein shall be construed as prohibiting the Company from pursuing
any additional remedies available to the Company for such breach or
threatened breach.
10. Representation by Counsel - Interpretation. Each of the
parties hereto acknowledge that it is being represented by counsel of its
choice in connection with this Agreement; that it is freely waiving any rights
or claims being waived by it pursuant to this Agreement; and that this
Agreement has been entered into by it freely and voluntarily and without
duress or coercion of any kind. In the interpretation of this Agreement,
whether by a court or otherwise, no weight or presumption shall be given
or ascribed by virtue of the drafting of this Agreement by one party or the
other; both parties shall be deemed to have contributed to the drafting of this
Agreement equally.
11. Governing Law - Jurisdiction. This Agreement shall be
construed in accordance with and governed by the laws of the State of
Delaware applicable to contracts executed in and to be performed solely
within such state. Each of the parties hereto agree that any disputes
hereunder shall be settled by a court of competent jurisdiction in such
jurisdiction that shall be chosen by the party filing an initial suit for the
enforcement or interpretation of any of the provisions hereof; the remaining
party agrees hereby to submit to the jurisdiction chosen by the filing party.
In no event may the chosen jurisdiction be a state or federal court situate
in any state other than Kansas, Delaware or New Jersey.
12. Notices. All notices required or permitted to be given by either
party hereunder, including notice of change of address, shall be in writing
and delivered by hand, or mailed, postage prepaid, certified or registered
mail, return receipt requested, to the other party as follows:
If to the Company: Systems & Services Technologies, Inc.,
c/o The Aegis Consumer Funding Group, Inc.
525 Washington Blvd.
Jersey City, NJ 07310
Attention: Angelo R. Appierto
With a copy to: The Aegis Consumer Funding Group, Inc.
525 Washington Blvd
Jersey City, N. J. 07310
Attention: Gary D. Peiffer, Esq.
If to the Executive: Matthew Burns
12468 Benson
Overland Park, Kansas 66214
With a copy to: Joseph L. Hiersteiner, Esq.
Bryan Cave, LLP
3500 One Kansas City Place
1200 Main Street
Kansas City, Missouri 64105-2100
13. Miscellaneous.
(a) Entire Agreement. This Agreement (together with any
agreement regarding options granted to the Executive to purchase securities)
constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes any and all prior oral or written
agreements and understandings; however, this Agreement shall not
supersede, diminish or modify any rights of the Executive under any
employee benefit plans of the Company. There are no oral promises,
conditions, representations, understandings, interpretations or terms of any
kind as conditions or inducements to the execution hereof or in effect
among the parties. This Agreement may not be amended, and no provision
hereof shall be waived, except by a writing signed by the Company and the
Executive, or in the case of a waiver, by the party waiving compliance
therewith, which states that it is intended to amend or waive a provision of
this Agreement. Any waiver of any rights or failure to act in a specific
instance shall relate only to such instance and shall not be construed as an
agreement to waive any rights or failure to act in any other instance,
whether or not similar.
(b) Further Acts. The parties hereto agree that, after the execution
of this Agreement, they will make, do, execute or cause to be made, done
or executed all such further and other lawful acts, deeds, things, devices,
conveyances and assurances in law whatsoever as may be required to carry
out the true intention and to give full force and effect to this Agreement.
(c) Severability. Should any provision of this Agreement be held
by a court of competent jurisdiction to be unenforceable or prohibited by
an applicable law, this Agreement shall be considered divisible as to such
provision, which shall be inoperative, and the remainder of this Agreement
shall be valid and binding as though such provision were not included
herein.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of, and be binding upon, the Company and any corporation with
which the Company merges or consolidates or to which the Company sells
all or substantially all of its assets, and upon the Executive and his
executors, administrators, heirs and legal representatives.
(e) Headings. All headings in this Agreement are for
convenience only and are not intended to affect the meaning of any
provision hereof.
(f) Counterparts. This Agreement may be executed in two or more
counterparts with the same effect as if the signatures to all such
counterparts were upon the same instrument, and all such counterparts shall
constitute but one instrument.
IN WITNESS WHEREOF, the Executive has executed this
Agreement and the Company has caused this Agreement to be executed by
its duly authorized officer as of the day and year first above written.
SYSTEMS & SERVICES TECHNOLOGIES, INC.
EXECUTIVE
By: _______________________________________
By:______________________
Name: _______________________________________
Matthew Burns
Title: _______________________________________
EXHIBIT 10.102
EXECUTIVE EMPLOYMENT
AGREEMENT
EXECUTIVE EMPLOYMENT AGREEMENT made as of the ____
day of _______, 1996, by and between Systems and Services Technologies,
Inc., a Delaware corporation, with offices at 525 Washington Blvd., Jersey
City, New Jersey 07310 (the "Company"), and John Chappell, residing at
10001 Roe, Overland Park, Kansas 66207 (the "Executive").
W I T N E S S E T H:
WHEREAS, the Company is a wholly-owned subsidiary of The
Aegis Consumer Funding Group, Inc. ("Aegis");and
WHEREAS, the Company desires to employ the Executive, and the
Executive desires to be employed by the Company, upon the terms and
subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein, the parties hereto agree as follows:
1. Employment. The Company agrees to and does hereby employ
the Executive, and the Executive agrees to and does hereby accept
employment by the Company, subject to the terms and conditions herein set
forth.
2. Term. The term of the Executive's employment hereunder shall
commence on the date hereof (the "Effective Date") and, unless sooner
terminated as set forth below, shall terminate on July 1, 2001 (such period
hereinafter referred to as the "Term"). The Term is subject to extension
or reduction in accordance with the provisions of this Agreement.
3. Duties.
(a) During the term, the Executive shall be employed as
President of the Company and shall be in charge of and responsible for the
general supervisory duties normally and customarily attendant to such office
in a business entity of the size and type of the Company as such duties may
be reasonably defined by the Board of Directors of the Company (the
"Board"). Such duties may include coordination of the operational
functions for Personnel administration, Data Processing and Loan
Servicing.
(b) The duties of the Executive may be changed from time to
time by the Board, provided that, except as permitted in accordance with
the provisions of Section 7(d) hereof, the Executive shall not be given
duties unrelated to, or not generally associated with, the executive level of
his position immediately prior to such change.
(c) The Executive will, to the best of the Executives abilities, in
good faith and with integrity, devote his full time, attention, energy and
skill to the fulfillment of his duties hereunder. The foregoing,
notwithstanding, the Executive will be permitted to own, as an inactive
investor, securities of a corporation whose equity securities are registered
under Section 12b or 12g of the Exchange Act, so long as his beneficial
ownership in any one such corporation shall not in the aggregate constitute
more than five percent (5%) of any class of equity securities of such
corporation.
(d) The Executive will be subject to such policies and procedures
as are from time to time established for employees of the Company
generally, except to the extent that such policies or procedures are contrary
to the terms of this Agreement or are inconsistent with the Executive's
position and duties.
(e) It is hereby acknowledged that, subject to Paragraph 9
hereof, the Executive may either presently, or in the future, be involved in
charitable or community activities so long as such other activities do not
unreasonably interfere with the performance by the Executive of his duties
hereunder and do not require more than five percent (5%) of his time
during working hours.
(f) Except as herein provided, the Company shall not require the
Executive to relocate his residence out of the greater Kansas City area in
the performance of his duties; provided, however, that the Company shall
not be deemed to have required a relocation of his residence in the event
the Company would require the Executive to perform his normal duties
outside of the greater Kansas City area for less than six months in any
calendar year. In the event the Executive is required to relocate beyond 150
miles from the city limits of Kansas City, Kansas, the base compensation
of the Executive as set forth in Section 4(a) hereof shall be increased at the
reasonable discretion of the Board to the extent necessary to reflect a
material increase in the cost of living related to the relocation. In addition,
upon any relocation required by the Company, the Company shall
reimburse the Executive for all out of pocket expenses incurred by the
executive reasonably related to the relocation including but not limited to
such expenses as those related to transportation of personal effects, closing
costs for a new residence, brokerage fees with respect to the sale of the
existing residence, and reasonable hotel accommodations during that period
of time reasonably necessary to locate a new residence. In the event that
the Executive should fail to close on the sale of his existing residence
within a period of six (6) months following the month in which the
Company shall have requested the Executive to relocate, the Company, at
the request of the Executive, shall purchase such residence from the
Executive, on or before the last day of the ninth (9) month following the
month in which relocation was requested, for the fair market value of
such residence. Fair market value" shall be determined as the average
between two appraisals, one obtained from a real estate brokerage firm
chosen by the Company and one by a firm chosen by the Executive; both
real estate firms shall be prominent firms generally recognized in the
immediately surrounding geographic area.
4. Compensation.
(a) Base Salary. In consideration for services performed
hereunder, the Company shall pay to the Executive an annual salary of
$125,000. during each year of the Term, subject to adjustment as herein
provided and in installments payable in accordance with the Company's
customary payroll practices. In addition, the Company shall reimburse the
Executive for all expenses reasonably incurred by him in connection with
the performance of his duties hereunder and the business of the Company
upon the submission to the Company of appropriate receipts therefor.
(b) Adjustments. Subsequent to June 30, 1997, the annual salary
of the Executive shall be adjusted annually during the Term (for each
twelve month period subsequent to June 30, 1997) based upon a comparison
of the actual "Net Pre-tax Income" (as hereinafter defined) of the Company
for the fiscal year of the Company immediately preceding the applicable
year for which the adjustment is to be made to the "Performance Target"
(as hereinafter defined) for such` fiscal year. The Performance Target
shall mean the anticipated net pre-tax income or loss of the Company
applicable for each fiscal year of the Company as set forth on Schedule A
hereto. Not later than 90 days following the end of each fiscal year of the
Company ending after June 30, 1996, the actual Net Pre-tax Income of the
Company for such fiscal year (determined in accordance with generally
accepted accounting practices consistently applied ("GAAP") by the
accounting firm normally retained by the Company) shall be compared to
the Performance Target for such fiscal year. In the event that the actual
Net Pre-tax Income exceeds the Performance Target (or in the event any
pre-tax loss is less than the pre-tax loss reflected in the Performance Target,
(as the case may be) the annual salary of the Executive for the next
ensuing fiscal year shall be increased by ten percent (10%) of the
Executive's annual base salary for the previous year. Immediately
subsequent to the determination of any adjustment of base compensation
hereunder, the base compensation shall be adjusted retroactively to the
commencement of the fiscal year for which it is applicable.
(c) Bonus. In order to provide performance-based incentive
compensation to the Executive, the Company hereby agrees to pay the
Executive, in addition to the base salary set forth in Subparagraphs (a) and
(b) hereof, a bonus in respect of each fiscal year subsequent to June 30,
1996 during the Executive's employment hereunder (provided, that the
Executive was employed at least 6 months during the applicable fiscal
year) calculated in the manner set forth hereinbelow. For purposes hereof,
and for each of the first two fiscal years subsequent to June 30, 1996 during
the employment of the Executive hereunder, the Executive shall receive a
bonus equal to the greater of (i) $50,000 or (ii) three and one third percent
(3.33%) of the Company's Net Pre-Tax Income for each such fiscal year
in which the Net Pre Tax Income equals or exceeds (or with respect to
losses is less than) the Performance Targets for such periods; for each fiscal
year during the Term subsequent to the first two fiscal years ending after
June 30,1996, and provided that the Executive is employed at least 6
months during of the applicable fiscal year, the Executive shall receive a
bonus equal to three and one third percent (3.33%) of the Net Pre-tax
Income of the Company for each such fiscal year in which the Net Pre-
Tax Income of the Company equals or exceeds (or with respect to losses,
is less than) the Performance Targets for that fiscal year.
Any bonuses earned in accordance with the provisions of this
Subsection shall be paid within 90 days following the end of each fiscal
year of the Company with respect to which such bonuses are payable.
Anything herein to the contrary notwithstanding, (i) no bonus shall
be deemed earned or be paid or payable to the Executive if on or before the
end of the applicable Adjustment Year such bonus would otherwise be
payable hereunder, the employment of the Executive was terminated by the
Company for "Cause" (as hereinafter defined) or by the Executive without
"Good Reason" (as hereinafter defined) and (ii) other than is provided in
subsection (i), the earning of bonuses with respect to any fiscal year in
which the Executive is employed for less than the full fiscal year shall be
pro rated based on the number of months the Executive was employed by
the Company during such fiscal year.
(d) Net Pre-Tax Income of the Company. For purposes hereof
the Net Pre-Tax Income of the Company shall be that amount determined
by the independent accountants of the Company with respect to a given
fiscal year. In making such determination, the accountants shall calculate
actual net Pre Tax Income on the basis of GAAP without giving effect to
any bonus paid pursuant to subsection (c) of this Paragraph 4. Such
determination shall also be made solely on the basis of the operations of the
Company and any subsidiaries thereof and shall take into account only those
items of revenue and expense arising from transactions or charges between
the Company and Aegis as are described in Schedule B hereto or as are
otherwise specifically agreed to by the parties hereto in writing. The
determination of the accountants for the Company shall be final, conclusive
and binding for all purposes, absent manifest error.
5. Vacation. The Executive shall be entitled to three weeks' paid
vacation during the first two years of his employment hereunder and four
weeks paid vacation during each year thereafter. Vacation shall be taken
at times mutually agreeable to the Executive and the Company. In no event
may vacation be accumulated from year to year and the Executive in no
circumstance shall receive compensation for vacation which was not taken;
any vacation time not taken during a year of employment shall be forfeited.
6. Benefits. Throughout the Term, the Executive shall be eligible
to participate in any pension, profit-sharing, stock option or similar plan or
program of the Company now existing or established hereafter for the
benefit of its employees generally, to the extent that he is eligible under the
general provisions thereof. The Executive shall also be entitled to
participate in any group insurance, hospitalization, medical, health and
accident, disability or similar or non-similar plan or program of the
Company now existing or established hereafter for the benefit of its
employees or executives generally, to the extent that he is eligible under the
general provisions thereof.
7. Termination of Executive's Employment.
(a) Notwithstanding any provisions contained herein to the contrary,
the Executive's employment may be terminated by the Company upon the
Executive's death or disability (as defined below) or for Cause (as defined
below), and the Executive may terminate his employment for Good Reason
(as defined below);
(b) For purposes of this Agreement, "disability" shall mean the
Executive is mentally or physically disabled from properly and fully
performing his duties and responsibilities hereunder for a period of 120
consecutive days or for 180 days, even though not consecutive, within any
360-day period, all as evidenced by the written certification of a qualified
medical doctor selected by the Company;
(c) For purposes of this Agreement, "Cause" shall mean any action
or inaction on the part of Executive (an "Event") which could materially
and adversely affect the Company and which legally constitutes cause for
termination of an executive's employment agreement, which Event (i) is not
cured within fifteen (15) business days after written notice from the
Company that it deems such event to constitute "Cause", and (ii) which
Event, if cured on one occasion, does not reoccur on more than one
additional occasion. The Company and the Executive agree that the Event
referred to in the notice of termination must be of sufficient significance to
permit a reasonable conclusion that the Company could suffer a material
and adverse effect as a result thereof. In no event shall "Cause" be deemed
to include any action or inaction on the part of the Executive undertaken in
good faith, consistent with his fiduciary duties to the Company, which are
within the "business judgement rule" as such rule or embodiment thereof
has been interpreted in accordance with the laws of the applicable
jurisdiction as set forth in Section 11 hereof.
(d) For purposes of this Agreement, "Good Reason" shall mean any
of the following: (i) the assignment to the Executive of duties inconsistent
with the Executive's position, duties, or responsibilities, as described
herein, provided that the Board shall be permitted to modify the duties of
the Executive if the Board, (x) determines in good faith that such
modification is in the best interests of the Company, (y) the Executive is
given or maintains an "executive level" position within the Company and
(z) the Company has failed to demonstrate financial performance within ten
percent (10%) of the Performance Targets for any two consecutive fiscal
quarters subsequent to July 1, 1997 or (ii) a material breach of the terms
of this Agreement by the Company (x) which breach remains uncured for
a period of 15 days after written notice thereof is received by the Company
and (y) which breach if cured on one occasion does not reoccur on more
than one additional occasion.
(e) In the event that the Executive's employment hereunder is
terminated as a result of death or disability of Executive or for Cause by
the Company, or without Good Reason by the Executive, or in the event
that this Agreement is not renewed or extended at the end of the Term, then
the Company shall have no further obligations or liabilities to the Executive
hereunder, such that all benefits and salary provided for within this
Agreement shall terminate simultaneously with the termination of the
Executive's employment except for benefits, bonuses and salary earned and
accrued through the date of such termination; provided, however, that in no
event shall the Executive be entitled to receive any bonuses, whether or not
earned or accrued, if his employment is terminated by the Company for
Cause or by the Executive without good reason. Nothing in this subsection
(e) shall supersede any rights of the Executive to receive any amounts or
benefits otherwise due to him upon the occurrence of any of the events
described in the immediately preceding sentence, whether such rights are
created by this Agreement or otherwise.
8. Covenants Not to Compete.
(a) Executive agrees that during that period of time from
the date hereof through July 1, 2001 (whether or not the Executive is
actually employed for the entire period that is herein contemplated to be the
Term) in addition to any extensions or renewals thereof and provided that
the Company continues to faithfully perform all of its obligations hereunder
and provided that Executive has not been terminated by the Company
without Cause or by Executive with Good Reason, Executive will not,
without the prior consent of the Company, whether directly or indirectly,
as principal or as agent, officer director, employee, consultant, or
otherwise, alone or in association with any other person, firm, corporation
or other business organization, carry on, or be engaged, concerned, or take
part in, or render services to or own, share in the earnings of, or invest in
the stock, bonds, or other securities of any person, firm, corporation, or
other business organization engaged anywhere in the United States, Canada,
Europe or South America in the business of financing or servicing loans for
the purchase of automobiles which could be deemed competitive to the
business of the Company or to any other business which the Company or
any member of the "Affiliated Group" is engaged in or is the process of
implementing at any time during the time during which the Executive is
employed (a "Similar Business"). Notwithstanding the foregoing, Executive
may, following any termination hereof, be so employed or associated with
an organization which finances or services loans solely and exclusively for
its own account, whether or not such activity is competitive to the business
of the Company. "Affiliated Group" is defined as the Company, or any of
its subsidiaries. The foregoing notwithstanding, during the Term Executive
may invest in stock, bonds, or other securities of any Similar Business (but
without otherwise participating in such Similar Business) if such stock,
bonds, or other securities are listed on any national or regional securities
exchange or have been registered under Section l2(g) of the Securities
Exchange Act of l934 provided that such investment does not exceed, in the
case of any class of the capital stock of any one issuer, 2% of the issued
and outstanding shares, or, in the case of other securities, 2% of the
aggregate principal amount thereof issued and outstanding.
(b) As a separate and independent covenant, Executive
agree that during the Term, including any extensions or renewals thereof,
Executive will not, without the consent of the Company, in any way,
directly or indirectly (except in the course of Executive's employment with
the Company), for the purpose of conducting or engaging in any Similar
Business, call upon, solicit, advise or otherwise do, or attempt to do,
business with any clients, customers or accounts of the Affiliated Group
with whom Executive had any dealings during the course of Executive's
employment with the Company or any of its affiliates or interfere or attempt
to interfere with any officers, employees, representatives or agents of the
Affiliated Group, or induce or attempt to induce any of them to leave the
employ of or violate the terms of their contracts with the Affiliated Group.
(c) If, in any judicial proceeding, a court shall determine
that the geographical, temporal or other scope of any of the covenants
contained in this Paragraph 9 is so broad or long as to be unenforceable,
then the geographical or other scope of such covenant shall be deemed to
be restricted so as to be enforceable under applicable law.
(d) Executive's obligations under this Section 8 hereof
shall survive any termination of this Agreement by the Company with
Cause or by the Executive without Good Reason; provided, however, that
the survival of these provisions shall not operate to extend the length of
time the Executive shall be prohibited from engaging in the activities
prohibited hereunder beyond July 1, 2001 unless the employment of the
Executive is extended or renewed beyond such time in which event such
obligations shall be extended to be co-terminus with the actual termination
of Executive's employment.
(e) In the event of a breach or threatened breach by
Executive of any provision of this Section 8 hereof, the Company shall be
entitled to seek an injunction restraining such breach, but nothing herein
shall be construed as prohibiting the Company from pursuing any additional
remedy available to the Company for such breach or threatened breach.
(f) The obligations of the Executive under this Section 8
shall not apply and shall terminate if the termination of this Agreement was
by the Company without Cause or by the Executive with good reason.
9. Covenants Regarding Confidential Information and
Proprietary Rights.
(a) Confidential Information Defined. As used herein,
"Confidential Information" means any non-public information, and any
document or media containing non-public information, concerning the
"Business Group" (defined for purposes hereof as the Affiliated Group and
any of the Affiliated Group's actual or prospective customers, suppliers,
contractor and co-venturers) or concerning any actual or planned
discoveries, inventions, developments, improvements, technology, know-
how, processes, products, services, businesses, business opportunities,
operations, activities or plans of or belonging to the Affiliated Group
(including, without limitation, technical formulae and designs, computer
hardware and software, databases, original works of authorship, customer
lists, bills of material, business plans, financial information, trade secrets
and other proprietary information) provided that Confidential Information
shall not include such portion of the aforesaid information which has
become or hereafter becomes public knowledge within the industry through
no fault of Executive's own.
(b) Confidentiality. It is understood and agreed that prior
to and during the Term, Executive has and will become aware of
Confidential Information, the unauthorized disclosure of which may harm
the Company or another member of the Business Group. Accordingly,
Executive agrees that, except as expressly authorized by the Company or
to the extent the Executive reasonably believes it necessary in order to
fulfill Executive's duties under this Agreement, both during and after the
Term, Executive will never divulge to others or appropriate to Executive's
own use, or to the use of any third party, any Confidential Information
conceived of, or obtained, by Executive prior to or during the Term. Upon
termination of this Agreement for whatever reason or whenever requested
by the Company, Executive will promptly deliver to the Company all
documents, media or other materials containing Confidential Information
which are in Executive's possession or under Executive's control.
(c) Proprietary Property. Executive agrees that all
inventions, original works of authorship, developments, improvements and
trade secrets (unless (i) not relating to the Company's actual or
demonstrably anticipated business, products, services or research and
development and (ii) developed entirely on Executive's own time, not as a
result of any work performed by Executive for the Company, and without
use of equipment, supplies, facilities or trade secrets of the Company)
conceived of, developed or reduced to practice by Executive, whether alone
or in conjunction with others, during the period of time Executive is in the
employ of the Company ("Proprietary Property") shall be the property of
the Company. Executive agrees to disclose promptly to the Company or
its counsel any Proprietary Property and to take such actions (at the
Company's request and expense) both during and after the Term necessary
or convenient to vest in the Company all of Executive's rights in such
Proprietary Property including, without limitation, the execution of any
applications, assignments or other instruments necessary or convenient in
order to assign all of Executive's interest therein to the Company or its
nominee and to apply for and obtain copyright protection or Letters Patent
of the United States or any foreign country or to otherwise protect the
Company's interest therein.
(d) Remedies. In the event of a breach or threatened
breach by Executive of any provision of this Section 9 hereof, the
Company shall be entitled to seek an injunction restraining such breach, but
nothing herein shall be construed as prohibiting the Company from pursuing
any additional remedies available to the Company for such breach or
threatened breach.
10. Representation by Counsel - Interpretation. Each of the
parties hereto acknowledge that it is being represented by counsel of its
choice in connection with this Agreement; that it is freely waiving any rights
or claims being waived by it pursuant to this Agreement; and that this
Agreement has been entered into by it freely and voluntarily and without
duress or coercion of any kind. In the interpretation of this Agreement,
whether by a court or otherwise, no weight or presumption shall be given
or ascribed by virtue of the drafting of this Agreement by one party or the
other; both parties shall be deemed to have contributed to the drafting of this
Agreement equally.
11. Governing Law - Jurisdiction. This Agreement shall be
construed in accordance with and governed by the laws of the State of
Delaware applicable to contracts executed in and to be performed solely
within such state. Each of the parties hereto agree that any disputes
hereunder shall be settled by a court of competent jurisdiction in such
jurisdiction that shall be chosen by the party filing an initial suit for the
enforcement or interpretation of any of the provisions hereof; the remaining
party agrees hereby to submit to the jurisdiction chosen by the filing party.
In no event may the chosen jurisdiction be a state or federal court situate
in any state other than Kansas, Delaware or New Jersey.
12. Notices. All notices required or permitted to be given by either
party hereunder, including notice of change of address, shall be in writing
and delivered by hand, or mailed, postage prepaid, certified or registered
mail, return receipt requested, to the other party as follows:
If to the Company: Systems & Services Technologies, Inc.,
c/o The Aegis Consumer Funding Group, Inc.
525 Washington Blvd.
Jersey City, NJ 07310
Attention: Angelo R. Appierto
With a copy to: The Aegis Consumer Funding Group, Inc.
525 Washington Blvd
Jersey City, N. J. 07310
Attention: Gary D. Peiffer, Esq.
If to the Executive: John Chappell
10001 Roe
Overland Park, Kansas 66207
With a copy to: Joseph L. Hiersteiner, Esq.
Bryan Cave, LLP
3500 One Kansas City Place
1200 Main Street
Kansas City, Missouri 64105-2100
13. Miscellaneous.
(a) Entire Agreement. This Agreement (together with any
agreement regarding options granted to the Executive to purchase securities)
constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes any and all prior oral or written
agreements and understandings; however, this Agreement shall not
supersede, diminish or modify any rights of the Executive under any
employee benefit plans of the Company. There are no oral promises,
conditions, representations, understandings, interpretations or terms of any
kind as conditions or inducements to the execution hereof or in effect
among the parties. This Agreement may not be amended, and no provision
hereof shall be waived, except by a writing signed by the Company and the
Executive, or in the case of a waiver, by the party waiving compliance
therewith, which states that it is intended to amend or waive a provision of
this Agreement. Any waiver of any rights or failure to act in a specific
instance shall relate only to such instance and shall not be construed as an
agreement to waive any rights or failure to act in any other instance,
whether or not similar.
(b) Further Acts. The parties hereto agree that, after the execution
of this Agreement, they will make, do, execute or cause to be made, done
or executed all such further and other lawful acts, deeds, things, devices,
conveyances and assurances in law whatsoever as may be required to carry
out the true intention and to give full force and effect to this Agreement.
(c) Severability. Should any provision of this Agreement be
held by a court of competent jurisdiction to be unenforceable or prohibited
by an applicable law, this Agreement shall be considered divisible as to
such provision, which shall be inoperative, and the remainder of this
Agreement shall be valid and binding as though such provision were not
included herein.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of, and be binding upon, the Company and any corporation with
which the Company merges or consolidates or to which the Company sells
all or substantially all of its assets, and upon the Executive and his
executors, administrators, heirs and legal representatives.
(e) Headings. All headings in this Agreement are for
convenience only and are not intended to affect the meaning of any
provision hereof.
(f) Counterparts. This Agreement may be executed in two or more
counterparts with the same effect as if the signatures to all such
counterparts were upon the same instrument, and all such counterparts shall
constitute but one instrument.
IN WITNESS WHEREOF, the Executive has executed this
Agreement and the Company has caused this Agreement to be executed by
its duly authorized officer as of the day and year first above written.
SYSTEMS & SERVICES TECHNOLOGIES, INC.
EXECUTIVE
By: _______________________________________
By:_____________________
Name: _______________________________________
John Chappell
Title: _______________________________________
EXHIBIT 10.9.3
TERMINATION AGREEMENT
THIS TERMINATION AGREEMENT, dated as of this 18th
day of September, 1996, by and between The Aegis Consumer
Funding Group, Inc. ("Aegis") and Matthew Burns ("Burns").
W I T N E S S E T H
WHEREAS, on even date herewith, Burns has entered into an
employment agreement (the "New Agreement") with Systems and
Services Technologies, Inc ("SST"), a subsidiary of Aegis; and
WHEREAS, prior to the date hereof, Burns was employed in
various capacities as an employee and officer of Aegis pursuant to
an employment agreement dated March 1, 1994 as such agreement
was amended and supplemented from time to time (such
employment agreement including any supplements and amendments
thereto being referred to herein as the "Old Agreement"); and
WHEREAS, Burns has tendered for sale 80,000 shares of Aegis
Common Stock to Aegis (the "Stock Sale") and
WHEREAS, Burns executed a promissory note dated November
15, 1994 (the "Note") payable to Aegis in the original principal
amount of $100,000; and
WHEREAS, Aegis has agreed to forgive $20,000 of the principal
amount due resulting in a total outstanding indebtedness under the
Note of $90,000 inclusive of interest in the amount of $10,000;
and
WHEREAS, Burns, from the proceeds of the Stock Sale repaid in
full the $90,000 outstanding obligation under the Note.
NOW, THEREFORE, in consideration of the premises and
covenants herein contained and other good and valuable
consideration paid or given by each party to the other, the receipt
and adequacy of which is hereby acknowledged by both parties,
the parties hereto agree as follows:
Termination. From and after the date hereof, the Old
Agreement, and Burns' employment thereunder, shall be deemed
terminated and of no further force or effect; any and all obligations
thereunder from either party to the other shall be deemed satisfied
in full or otherwise forgiven.
Representation. Each party hereby represents and
warrants to the other party that, Aegis has received $90,000 as
payment in full of the Note including interest thereon, and that
each party knows of no claim demand or cause of action, and has
no actual knowledge of facts which would give rise to any claim,
demand or cause of action, arising under, with respect to, or by
virtue of the Note or Burns' employment by Aegis pursuant to the
Old Agreement through and including the date hereof.
IN WITNESS WHEREOF, the parties hereto have executed
this Termination Agreement as of the day and year first above
written.
ATTEST: THE AEGIS CONSUMER
FUNDING GROUP, INC.
______________________ By:
_________________________________________
WITNESS: EXECUTIVE
_______________________ By:
____________________________
Matthew Burns
EXHIBIT 10.97
PURCHASE AGREEMENT
This PURCHASE AGREEMENT is made as of September
1, 1996, by and between Aegis Auto Finance, Inc., a Delaware
corporation, having its principal place of business at 525
Washington Boulevard, Jersey City, New Jersey 07310, as seller
(the "Seller"), and Aegis Auto Funding Corp., a Delaware
corporation, having its principal executive office at 525
Washington Boulevard, Jersey City, New Jersey 07310, as
purchaser (the "Purchaser").
WHEREAS, the Seller has originated or acquired in the
ordinary course of business, certain Receivables (as defined
herein); and
WHEREAS, the Seller and the Purchaser wish to set forth
the terms pursuant to which Receivables owned by the Seller as of
the Closing Date (as defined herein) and as of each Funding Date
(as defined herein) are to be sold by the Seller to the Purchaser,
which Receivables will be sold by the Purchaser pursuant to the
Pooling and Servicing Agreement (as hereinafter defined), to the
Aegis Auto Receivables Trust 1996-3 (the "Trust") to be created
thereunder, which Trust will issue pass-through certificates
representing undivided interests in such Receivables and the other
property of the Trust (the "Certificates").
NOW, THEREFORE, in consideration of the foregoing,
other good and valuable consideration, and the mutual terms and
covenants contained herein, the parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Terms not defined in this Agreement shall have the
meaning set forth in Article I of the Pooling and Servicing
Agreement dated as of September 1, 1996 (the "Pooling and
Servicing Agreement") among Aegis Auto Funding Corp. (as seller
thereunder), Norwest Bank Minnesota, National Association, as
trustee, and Norwest Bank Minnesota, National Association, as
backup servicer. As used in this Agreement, the following terms
shall, unless the context otherwise requires, have the following
meanings (such meanings to be equally applicable to the singular
and plural forms of the terms defined):
"Additional Receivables" means all Receivables acquired by
the Purchaser from the Seller after the Closing Date and during the
Funding Period pursuant to this Agreement.
"Agreement" means this Purchase Agreement and all
amendments hereof and supplements hereto.
"Assignment" means the document of assignment
substantially in the form attached to this Agreement as Exhibit A.
"Backup Servicer" means Norwest Bank Minnesota,
National Association, in its capacity as Backup Servicer under the
Pooling and Servicing Agreement, and its successors in such
capacity, who shall be Eligible Servicers.
"Closing Date" means September 12, 1996.
"Cutoff Date" means September 1, 1996 with respect to the
Initial Receivables and the last Business Day of the calendar week
preceding the calendar week of a Funding Date with respect to any
Additional Receivables acquired on such Funding Date.
"Funding Account" means the trust account designated as
such, established and maintained pursuant to Sections 5.01 and
5.08 of the Pooling and Servicing Agreement.
"Funding Date" means each date occurring no more than
once per calendar week during the Funding Period on which
Additional Receivables are acquired by the Purchaser pursuant to
this Agreement and transferred to the Trust pursuant to the Pooling
and Servicing Agreement.
"Funding Event" means, with respect to a Funding Date,
the occurrence of the events required to occur in accordance with
Section 3.08 of the Pooling and Servicing Agreement.
"Funding Period" means the period beginning on the
Closing Date and ending on the earlier to occur of (i) the date on
which the amount in the Funding Account has been reduced to
zero or (ii) September 30, 1996.
"Initial Receivables" means all Receivables acquired by the
Purchaser from the Seller on the Closing Date pursuant to this
Agreement.
"Lock-Box Account" means the account(s) designated as
such, established and maintained pursuant to Section 5.01 of the
Pooling and Servicing Agreement.
"Purchaser" means Aegis Auto Funding Corp, a Delaware
corporation, its successors and assigns.
"Rating Agency" means each of Duff & Phelps Credit
Rating Co. and Fitch Investors Service, Inc., and any successors
thereto.
"Receivable" means any retail installment sales contract and
security agreement identified on the Schedule of Receivables.
"Receivable Review" means a review conducted by the
Review Firm to determine compliance with the requirements of
this Agreement, which review shall employ the procedures set
forth in the letter from the Review Firm attached to the Pooling
and Servicing Agreement as Exhibit P.
"Receivables Cash Purchase Price" means with respect to
any Receivable an amount equal to 100% of the Principal Balance
of such Receivable.
"Review Firm" means Ernst & Young LLP, its successors
and assigns.
"Schedule of Receivables" means the list of Receivables
annexed hereto as Exhibit B; provided that Exhibit B shall be
deemed to be amended on each Funding Date to add Additional
Receivables acquired by the Purchaser from the Seller on each
such date pursuant to this Agreement.
"Seller" means Aegis Auto Finance, Inc., a Delaware
corporation, its successors and assigns.
"Trust" means the Aegis Auto Receivables Trust 1996-3.
"Trustee" means Norwest Bank Minnesota, National
Association, its successors and assigns.
"UCC" means the Uniform Commercial Code, as in effect
from time to time in the relevant jurisdictions.<PAGE>
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
Section 2.01. Purchase and Sale of Receivables. On the
Closing Date and on each Funding Date, subject to the terms and
conditions of this Agreement, the Seller agrees to sell to the
Purchaser, and the Purchaser agrees to purchase from the Seller,
the Receivables and the other Trust Property relating thereto (as
defined in Section 2.01(a) below).
(a) Transfer of Receivables and Trust Property. On
the Closing Date (with respect to the Initial Receivables)
and each Funding Date (with respect to any Additional
Receivables), simultaneously with the transactions pursuant
to the Pooling and Servicing Agreement, the Seller shall
sell, transfer, assign and otherwise convey to the
Purchaser, without recourse, a 100% interest in (i) all
right, title and interest of the Seller in and to the
Receivables being purchased on such dates, all moneys
received thereon on and after the related Cutoff Date
allocable to principal, and all moneys received thereon
allocable to interest accrued thereon from and including the
related Cutoff Date, (ii) the security interests in the
Financed Vehicles granted by the Obligors pursuant to the
Receivables; (iii) the interest of the Seller in any Risk
Default Insurance Proceeds and any proceeds from claims
on any Insurance Policies (including the VSI Insurance
Policy) covering the Receivables, the Financed Vehicles or
the Obligors; (iv) the interest of the Seller in any Dealer
Recourse; and (v) the proceeds of any and all of the
foregoing. (All of the property identified in this subsection
(a) shall constitute "Trust Property"; provided that (A) the
minimum amount of Receivables sold to the Purchaser on
any Funding Date other than the last Funding Date shall
not be less than $500,000, (B) the Seller and the Purchaser
shall comply with the requirements specified in Section
2.01(c) hereof as a condition to any such purchase and (C)
the Funding Account shall contain available funds in an
amount at least equal to the Receivables Cash Purchase
Price for the Receivables to be acquired by the Purchaser
hereunder on such Funding Date immediately prior to the
Funding Event.)
(b) Receivables Purchase Price. (i) In
consideration for the Initial Receivables and the other Trust
Property relating thereto, the Purchaser shall, on the
Closing Date, pay to the Seller an amount equal to 100%
of the Receivables Cash Purchase Price for the Initial
Receivables in cash (the "Initial Receivables Purchase
Price").
(ii) In consideration for the Additional
Receivables and other Trust Property relating thereto, upon
one Business Day's prior notice given by the Purchaser to
the Trustee, the Purchaser shall cause the Trustee, on each
Funding Date, to pay to the Seller an amount equal to
100% of the Receivables Cash Purchase Price in cash by
federal wire transfer funds. The Seller acknowledges that
funds to purchase the Additional Receivables and other
Trust Property relating thereto on each Funding Date shall
be disbursed by the Trustee solely from the Funding
Account pursuant to Section 5.08 of the Pooling and
Servicing Agreement.
(c) Delivery of Documents. Not later than
Wednesday of the week of any proposed Funding Date (or
the next Business Day if Wednesday is not a Business Day)
(each a "Delivery Date"), the Seller shall, with respect to
Additional Receivables, deliver to the Trustee (1) the
original retail installment sale contracts evidencing such
Receivables, (2) original titles or copies of dealer blanket
guarantees of title or applications for title for each
Financed Vehicle relating to such Receivables sold
hereunder, (3) an executed Assignment substantially in the
form of Exhibit A hereto with a Schedule I attached listing
all Receivables to be acquired on such Funding Date, (4)
an executed Certificate of Delivery substantially in the form
of Exhibit D-2 hereto, (5) a power of attorney substantially
in the form of Exhibit E hereto, (6) a release and UCC-3
Termination Statement executed by each warehouse lender
terminating such Person's prior security interests in such
Additional Receivables granted by Aegis Finance and (7)
an endorsement to the Risk Default Insurance Policy
confirming insurance regarding each Additional Receivable.
The Purchaser shall cause the Trustee, upon receipt of such
documents and the other items specified in Section
3.08(b)(ii) of the Pooling and Servicing Agreement on the
Delivery Dates, to pay from the Funding Account to the
Seller the Receivables Cash Purchase Price therefor on the
Funding Date.
(d) Security Interest. It is the intention of the
Seller and the Purchaser that the transfer and assignment of
the Seller's right, title and interest in and to the
Receivables and the other Trust Property shall constitute an
absolute sale by the Seller to the Purchaser. In the event
a court of competent jurisdiction were to recharacterize the
transfer of the Trust Property as a secured borrowing
rather than a sale, contrary to the intent of the Seller and
the Purchaser, the Seller does hereby grant, assign and
convey to the Purchaser, a security interest in and lien
upon all of its right, title and interest in and to the Trust
Property, and all proceeds of any thereof, said security
interest to be effective from the date of execution of this
Agreement.
Section 2.02. The Closing. The sale and purchase of the
Initial Receivables shall take place at a closing (the "Closing") at
the offices of Kutak Rock, 767 Third Avenue, 19th Floor, New
York, New York 10017 on the Closing Date, simultaneously with:
(a) the closings under the Pooling and Servicing Agreement
pursuant to which (i) the Purchaser will assign and pledge all of its
right, title and interest in and to the Initial Receivables and other
Trust Property relating thereto to the Trustee for the benefit of the
Certificateholders; and (ii) the Trustee will deposit the foregoing
into the Trust; and (b) the purchase of the Certificates by the
purchasers thereof.
Section 2.03. The Funding Events. The sale and purchase
of the Additional Receivables on each Funding Date shall take
place at the offices of the Trustee or such other location as the
Seller and Purchaser may reasonably agree.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01. Representations and Warranties of the
Seller.
(a) The Seller hereby represents and warrants to the Purchaser
and its respective successors and assigns and for the benefit of the
Trustee and the Trust as of the date hereof and as of each Funding
Date:
(i) Organization, Etc. The Seller is a
corporation duly organized, validly existing and in
good standing under the laws of the State of
Delaware.
(ii) Due Qualification. The Seller is in
good standing and duly qualified to do business and
has obtained all necessary licenses and approvals in
the States of Delaware and New Jersey and all
jurisdictions in which the ownership or lease of its
property or the conduct of its business shall require
such qualifications unless the failure of the Seller to
obtain such licenses and approvals would have no
material adverse effect on the Seller's ability to
fulfill its obligations hereunder.
(iii) Power and Authority. The Seller has
the power and authority to execute and deliver this
Agreement and to carry out its terms; the Seller has
full power and authority to sell and assign the
property to be sold and assigned to the Purchaser
and such sale and assignment is valid and binding
against the Seller, and the Seller has duly
authorized such sale and assignment to the
Purchaser by all necessary action; the execution,
delivery and performance of this Agreement have
been duly authorized by the Seller by all necessary
action, and this Agreement is the legal, valid and
binding obligation of the Seller enforceable in
accordance with its terms. The Seller has duly
executed and delivered this Agreement and any
other agreements and documents necessary to
effectuate the transactions contemplated hereby.
(iv) No Violation. The consummation of
the transactions contemplated hereby and the
fulfillment of the terms hereof, neither conflict
with, result in any breach of any of the terms and
provisions of, nor constitute (with or without notice
or lapse of time) a default under, the certificate of
incorporation or bylaws of the Seller, or any
indenture, agreement or other instrument to which
the Seller is a party or by which it is 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 this Agreement); nor violate any law or,
to the best of Seller's knowledge, any order, rule or
regulation applicable to the Seller of any court or of
any federal or state regulatory body, administrative
agency, or other governmental instrumentality
having jurisdiction over the Seller or its properties.
(v) No Proceedings. There are no
proceedings or investigations pending or, to the best
knowledge of Seller, threatened before any court,
regulatory body, administrative agency or other
governmental instrumentality having jurisdiction
over the Seller or its properties: (A) asserting the
invalidity of this Agreement; (B) seeking to prevent
the consummation of any of the transactions
contemplated by this Agreement; or (C) seeking any
determination or ruling that might materially and
adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability
of, this Agreement.
(vi) No Approvals. No approval,
authorization or other action by, or filing with, any
governmental authority of the United States of
America or any of the States is required or
necessary to consummate the transactions
contemplated hereby, except such as have been duly
obtained or made by the Closing Date. Seller
complies in all material respects with all applicable
laws, rules and orders with respect to itself, its
business and properties and the Receivables; and
Seller maintains all applicable permits, licenses and
certifications.
(vii) Taxes. The Seller has filed all
federal, state, county, local and foreign income,
franchise and other tax returns required to be filed
by it through the date hereof, and has paid all taxes
reflected as due thereon. There is no pending
dispute with any taxing authority that, if determined
adversely to the Seller, would result in the assertion
by any taxing authority of any material tax
deficiency, and the Seller has no knowledge of a
proposed liability for any tax to be imposed upon
the Seller's properties or assets for which there is
not an adequate reserve reflected in the Seller's
current financial statements.
(viii) Investment Company. The 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.
(ix) Pension/Profit Sharing Plans. No
contribution failure has occurred with respect to any
pension or profit sharing plan and all such plans
have been fully funded as of the date of this
Agreement.
(x) Trade Names. "Aegis Auto Finance,
Inc." is the only trade name under which the Seller
is currently operating its business; for the six (6)
years (or such shorter period of time during which
the Seller was in existence) preceding the Closing
Date, the only other trade name under which Seller
operated its business is "The Clearing House Corp."
(xi) Ability to Perform. There is no
material impairment in the ability of the Seller to
perform its obligations under this Agreement.
(xii) Valid Business Reasons; No
Fraudulent Transfers. The Seller has valid business
reasons for transferring the Receivables rather than
obtaining a secured loan with the Receivables as
collateral. At the time of each transfer: (i) the
Seller transferred the Receivables to the Purchaser
without any intent to hinder, delay, or defraud any
current or future creditor of the Seller; (ii) the
Seller was not insolvent and did not become
insolvent as a result of the transfer; (iii) the Seller
was not engaged and was not about to engage in
any business or transaction for which any property
remaining with the Seller was an unreasonably
small capital or for which the remaining assets of
the Seller were unreasonably small in relation to the
business of the Seller or the transaction; (iv) the
Seller did not intend to incur, and did not believe or
reasonably should not have believed that it would
incur, debts beyond its ability to pay as they
become due; and (v) the consideration paid by the
Purchaser to the Seller for the Receivables was
equivalent to the fair market value of such
Receivables.
(xiii) Chief Executive Office. The Seller
maintains its chief executive office in the State of
New Jersey, and there have been no other locations
of the Seller's chief executive office since January
1995.
(xiv) Adverse Orders. There is no
injunction, writ, restraining order or other order of
any nature binding upon Seller that adversely affects
Seller's performance of this Agreement and the
transactions contemplated hereby and by the Pooling
and Servicing Agreement.
(b) The Seller makes the following
representations and warranties as to the Receivables for the
benefit of the Purchaser, the Certificateholders, the Trustee
and the Trust and on which the Purchaser relies in
accepting the Receivables on the Closing Date and each
Funding Date. Such representations and warranties speak
as of the Closing Date and each Funding Date, but shall
survive the sale, transfer and assignment of the Receivables
to the Purchaser and the subsequent assignment to the
Trustee pursuant to the Pooling and Servicing Agreement.
The Seller acknowledges and expressly agrees that any or
all of the Purchaser, the Trustee or the Certificateholders
may enforce the Seller's repurchase obligations or
substitution obligations in the case of Additional
Receivables pursuant to Section 7.02 hereof for any breach
of any of the following representations and warranties.
(i) Characteristics of Receivables. Each
Receivable (A) has been originated in the United
States of America by Seller or a Dealer for the
retail sale of a Financed Vehicle in the ordinary
course of Seller's or such Dealer's business, has
been fully and properly executed by the parties
thereto and, if originated by a Dealer, has been
purchased by Seller from such Dealer or has been
financed for such Dealer under an existing
agreement with Seller, (B) has created a valid,
subsisting and enforceable first priority security
interest in favor of the Seller or the Dealer in the
Financed Vehicle, which security interest, if in
favor of the Dealer, has been assigned by the
Dealer to Seller, and which in either case has been
duly assigned by Seller to the Purchaser, (C) is
covered by the VSI Insurance Policy and by the
Risk Default Insurance Policy, (D) contains
customary and enforceable provisions 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 (provided that the payment in the
first or last month in the life of the Receivable may
be different from the level payment) that fully
amortize the Amount Financed over an original
term of no greater than 60 months and yield interest
at the Annual Percentage Rate.
(ii) Schedule of Receivables. The
information set forth on the Schedule of Receivables
is true, complete and correct in all material respects
as of the opening of business on the applicable
Cutoff Dates and no selection procedures adverse to
the Certificateholders have been utilized in selecting
the Receivables.
(iii) Compliance With Law. Each
Receivable and the sale of each Financed Vehicle
(A) complied at the time it was originated or made
and at the Closing Date or the applicable Funding
Date complies in all material respects 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 Magnuson-Moss Warranty Act, the Federal
Reserve Board's Regulations B and Z, 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 (B) does not contravene any
applicable contracts to which Seller is a party and
no party to such contract is in violation of any
applicable law, rule or regulation which is material
to the Receivable or the sale of the Financed
Vehicle.
(iv) Binding Obligation. Each Receivable
represents the genuine, legal, valid and binding
payment obligation in writing of the Obligor,
enforceable by the holder thereof in accordance
with its terms.
(v) No Government Obligor. None of
the Receivables is due from the United States of
America or any State or local government or from
any agency, department or instrumentality of the
United States of America or any State or local
government.
(vi) Security Interest in Financed Vehicle.
Immediately prior to the sale, assignment and
transfer thereof, each Receivable is secured by a
validly perfected first priority security interest in
the Financed Vehicle in favor of the Seller as
secured party or all necessary and appropriate
actions have been commenced that would result in
the valid perfection of a first priority security
interest in the Financed Vehicle in favor of the
Seller as the secured party. The Seller has caused
each certificate of title (or copy of an application
for title) or such other document delivered by the
state title registration agency evidencing the security
interest in the Financed Vehicle, to be delivered to
the Custodian pursuant to Section 3.03(a)(ii) of the
Pooling and Servicing Agreement, together with
powers of attorney, duly executed by Seller in favor
of the Trustee, which powers of attorney are
sufficient to change the lien holder on the certificate
of title with respect to a Financed Vehicle.
(vii) 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.
(viii) No Waiver. No provision of a
Receivable has been waived, impaired, altered or
modified in any respect except in accordance with
the Servicing Agreement, the substance of which is
reflected in the Schedule of Receivables as it relates
to the information included thereon.
(ix) No Amendments. No Receivable has
been amended such that either the original
Scheduled Payment has been decreased or the
number of originally scheduled due dates has been
increased except as permitted under the terms of the
Risk Default Policy.
(x) No Defenses. No right of rescission,
setoff, recoupment, counterclaim or defense has
been asserted or threatened with respect to any
Receivable.
(xi) No Liens. No Liens or claims have
been filed for work, labor or materials relating to a
Financed Vehicle that are Liens prior to, or equal
or coordinate with, the security interest in the
Financed Vehicle granted by the Obligor pursuant
to the Receivable.
(xii) No Default. Except for payment
delinquencies continuing for a period of not more
than thirty (30) days as of the applicable Cutoff
Date, no default, breach, violation or event
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
permitting acceleration under the terms of any
Receivable has arisen; and the Seller has not waived
any of the foregoing. As of the date hereof and as
of each Funding Date, the Seller has no knowledge
of any facts regarding any particular Receivable
transferred on such date indicating that such
Receivable would not be paid in full.
(xiii) Insurance. Each Receivable is
covered, as of the Closing Date or the related
Funding Date when acquired, and throughout the
shorter of the term of the Trust or the term of the
Receivable, under the VSI Insurance Policy and the
Risk Default Insurance Policy, and each such
insurance policy is valid and remains in full force
and effect. The Seller, in accordance with its
customary procedures, has required that each
Obligor obtain, and has determined that each
Obligor has obtained, physical damage insurance
covering the Financed Vehicle as of the date of
execution of the Receivable insuring repair or
replacement of such Financed Vehicle subject to a
deductibility not in excess of $500.
(xiv) Title. It is the intention of the Seller
that the transfer and assignment of the Receivables
from the Seller to the Purchaser herein
contemplated be treated as an absolute sale for
financial accounting purposes, and that the
beneficial interest in and title to the Receivables not
be part of the property of the Seller for any purpose
under state or federal law. No Receivable has been
sold, transferred, assigned or pledged by the Seller
to any Person other than the Purchaser, except the
pledge to and liens for the benefit of certain of
Seller's creditors which will be released prior to
conveyance to the Purchaser hereunder.
Immediately prior to the transfer and assignment
herein contemplated, the Seller had good and
marketable title to each Receivable free and clear of
all Liens and rights of others; and, immediately
upon the transfer thereof, the Purchaser will have
good and marketable title to each Receivable, free
and clear of all Liens and rights of others; and the
transfer has been validly perfected under the UCC.
(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 under this
Agreement or pursuant to transfers of the
Certificates is or shall be unlawful, void or
voidable.
(xvi) All Filings Made. All filings
(including, without limitation, UCC filings)
necessary in any jurisdiction to give the Purchaser
a first perfected security interest in the Receivables
have been made.
(xvii) One Original. There is only one
original executed copy of each Receivable.
(xviii) Maturity of Receivables. Each
Receivable had an original maturity of not more
than 60 months; the weighted average original term
to maturity of the Initial Receivables was 54.22
months as of the Cutoff Date while the weighted
average remaining term to maturity as of the Cutoff
Date for such Initial Receivables was 53.58 months;
the remaining maturity of each Receivable was 60
months or less as of the Cutoff Date; the addition of
the Additional Receivables on each Funding Date
will not extend the weighted average remaining
term to maturity of all Receivables sold hereunder
by more than 1.00 month as of the applicable
Cutoff Dates.
(xix) Scheduled Payments. Each Initial
Receivable has a next scheduled payment due date
on or prior to November 20, 1996; no Receivables
had a payment that was more than 30 days overdue
as of the Cutoff Date; and each Receivable has a
final scheduled payment due no later than the Final
Scheduled Distribution Date.
(xx) Monthly Payments. Each Receivable
provides for level monthly payments (provided that
the payment in the first or last month in the life of
the Receivable may be minimally different from
such level payment) which fully amortize the
amount financed over the original term; provided,
however, that the Risk Default Policy provides that
loan extensions will be allowed, subject to no more
than one extension during each 12 months in the
Receivable's term.
(xxi) Outstanding Principal Balance;
Annual Percentage Rate. Each Initial Receivable
had an outstanding Principal Balance as of the
applicable Cutoff Date of at least $1,121.37; and no
Initial Receivable has an outstanding Principal
Balance in excess of $34,659.46. As of their
Cutoff Date, the weighted average APR of the
Initial Receivables was 20.23% per annum. The
addition of the Additional Receivables on each
Funding Date will not decrease the weighted
average APR of all Receivables pledged hereunder
by more than 10 basis points.
(xxii) Financing. Each Receivable
represents a Simple Interest Receivable.
(xxiii) Bankruptcy Proceeding. No
Receivable as of the respective Cutoff Date is noted
in the Seller's records as a dischargeable debt under
a bankruptcy proceeding.
(xxiv) Chattel Paper, Valid and Binding.
Each Receivable constitutes "chattel paper" under
the UCC, and is the legal, valid and binding
obligation of the Obligor thereunder in accordance
with the terms thereof.
(xxv) States of Origination. At the time of
origination, each Receivable was originated in one
of the following states, which are the only states in
which the Receivables were originated: Alabama,
Arizona, California, Colorado, Connecticut,
Delaware, Florida, Georgia, Illinois, Indiana,
Kansas, Kentucky, Louisiana, Maryland,
Mississippi, Missouri, Nevada, New Jersey, New
Mexico, New York, North Carolina, Ohio,
Pennsylvania, South Carolina, Tennessee, Texas,
Virginia and West Virginia. After the addition of
all Additional Receivables not more than 25% of
the Receivables will have been originated in any
one state.
(xxvi) Age of Financed Vehicles.
Approximately 6.15% of the Initial Receivables
relate to new Financed Vehicles and approximately
93.85% relate to used Financed Vehicles.
(xxvii) No Future Advances. The full
principal amount of each Receivable has been
advanced to each Obligor or advanced in
accordance with the directions of each such
Obligor, and there is no requirement for future
advances thereunder. The Obligor with respect to
the Receivable does not have any options under
such Receivable to borrow from any person
additional funds secured by the Financed Vehicle.
Each Receivable as of the Closing Date and each
related Funding Date is fully secured by the related
Financed Vehicle.
(xxviii) Underwriting Guidelines. Each
Receivable has been originated in accordance with
the Underwriting Guidelines and in accordance with
the underwriting guidelines acceptable to the Risk
Default Insurer. Such guidelines include but are not
limited to the following:
(A) the purchase of the Financed
Vehicle by the Obligor, at the time of
funding of the Receivable, was affordable to
the Obligor based upon Seller's existing
Underwriting Guidelines with respect to
discretionary income; and
(B) at the time of funding of the
Receivable, the Financed Vehicle was
purchased from, and the Receivable
originated by, a Dealer located in one of the
states specified in paragraph (xxv) above.
(xxix) Financed Vehicle in Good Repair.
To the best of the Seller's knowledge, each
Financed Vehicle is in good repair and working
order.
(xxx) Principal Balance. No Receivable
has a Principal Balance which includes capitalized
interest, physical damage insurance or late charges.
(xxxi) Servicing. At the applicable Cutoff
Date, each Receivable was being serviced by the
Servicer.
(xxxii) Eligible Loan. Each Receivable
constitutes an "Instrument" and each Financed
Vehicle constitutes "Eligible Collateral" as defined
in and for purposes of the Risk Default Insurance
Policy. Neither the insured under the Risk Default
Insurance Policy nor any Person acting on behalf of
such insured has concealed or misrepresented any
material facts or circumstances regarding any matter
that would serve as a basis for the Risk Default
Insurer to void the Risk Default Insurance Policy.
(xxxiii) Original Principal Amount. The
original principal amount of each Receivable (A)
originated under the original "Zero Down" and the
"Reduced Income" programs, was not more than (1)
in the case of new Financed Vehicles, the lower of
(x) 105% of the manufacturer's suggested retail
price plus rebatable premiums on cancelable items
and (y) 120% of the manufacturer's suggested retail
price or (2) in the case of used Financed Vehicles,
the lower of (x) 105% of the retail value of the
Financed Vehicle at the time of origination of the
Receivable as set forth in the Kelley "Blue Book"
for the appropriate region plus rebatable premiums
on cancelable items and (y) 120% of such Kelley
"Blue Book" retail value; (B) originated under the
"First Time Buyer" program, was not more than (1)
in the case of new Financed Vehicles, 95% of the
manufacturer's suggested retail price plus rebatable
premiums on cancelable items of up to 15% of the
manufacturer's suggested retail price or (2) in the
case of used Financed Vehicles, 95% of the retail
value of the Financed Vehicle at the time of
origination of the Receivable as set forth in the
Kelley "Blue Book" for the appropriate region plus
rebatable premiums on cancelable items of up to
15% of the manufacturer's suggested retail price
and (C) originated under the "Military Program"
was not more than 105% of the manufacturer's
suggested retail price or, in the case of used
Financed Vehicles, 105% of the Kelley "Blue
Book" retail value. Calculations made with respect
to the percentages referenced above are rounded to
the nearest whole percentage point. All of the
Additional Receivables will be originated in
accordance with the applicable Underwriting
Guidelines.
(xxxiv) No Proceedings. There are no
proceedings or investigations pending or, to the best
knowledge of the Seller, threatened before any
court, regulatory body, administrative agency or
other governmental instrumentality having
jurisdiction over the Seller or its respective
properties: (A) asserting the invalidity of any of the
Receivables; (B) seeking to prevent the enforcement
of any of the Receivables; or (C) seeking any
determination or ruling that might materially and
adversely affect the payment on or enforceability of
any Receivable.
(xxxv) Licensing. With respect to each
Receivable originated in the State of Pennsylvania,
the Seller and each prior holder of any such
Receivable were each properly licensed under
applicable Pennsylvania laws and regulations during
the respective times the Seller and each prior holder
of any such Receivable held such Receivable,
except where the failure to be so licensed would not
have a material adverse effect on the ability of the
Trust to collect principal or interest payments on
such Receivable or to realize upon the Financed
Vehicle underlying any such Receivable in
accordance with the terms thereof.
(xxxvi) Additional Receivables. Each
Additional Receivable shall have been identified and
approved by Aegis Finance on or prior to the
Closing Date, as evidenced by the Seller's dated
notation of approval on the loan application (or
other writing).
(c) The Seller makes the following additional
representations, warranties and covenants for the benefit of
the Purchaser, the Certificateholders and the Trust on
which the Purchaser relies in accepting the Receivables on
the Closing Date and each Funding Date, which
representations, warranties and covenants shall survive the
Closing Date and each Funding Date.
(i) Location of Servicer Files. The
Servicer Files are kept by the Servicer at the
location listed in Exhibit C hereto, with the
exception of (A) the original titles or other
documents evidencing the security interest of the
Seller in the Financed Vehicle and (B) the original
Receivables, which documents shall be kept at an
office of the Custodian.
(ii) Evidence of Security Interest. On the
Closing Date (in the case of the Initial Receivables)
and the applicable Funding Date (in the case of each
Additional Receivable), the Seller shall deliver or
cause to be delivered to the Trustee, as Custodian,
(A) an original certificate of title or (B) if the
applicable state title registration agency does not
deliver certificates of title to lienholders, such other
document delivered to the Seller by the state title
registration agency evidencing the security interest
of the Seller in the Financed Vehicle, or (C) a
guarantee of title or a copy of an application for
title if no certificate of title or other evidence of the
security interest in the Financed Vehicle has yet
been issued, for each Financed Vehicle relating to
each Receivable sold, transferred, assigned and
conveyed hereunder; provided, however, that any
original certificate of title or other document
evidencing the security interest of the Seller in the
Financed Vehicle not so delivered on the Closing
Date or the Funding Date, as the case may be, due
to the fact that such title or other document has not
yet been issued by a state title registration agency
and delivered to the Seller as of such date, shall be
delivered by the Seller to the Trustee within one
hundred twenty (120) days after the Closing Date or
Funding Date, as the case may be, or such later
date permitted by the Rating Agencies in
accordance with Section 3.03(a) of the Pooling and
Servicing Agreement; provided, further, that failure
to so deliver any original certificate of title or other
document evidencing the security interest of the
Seller in the Financed Vehicle to the Trustee shall
be deemed to be a breach by the Seller of its
representations and warranties contained in this
Section 3.01, and such occurrence shall constitute
a breach pursuant to Section 7.02 herein.
(iii) Insurance Claims. The Seller shall
provide to the Purchaser, within five (5) Business
Days of receipt or distribution thereof, (A) copies of
all documents received from the Risk Default
Insurer contesting the eligibility of any claim made
under a Risk Default Policy and (B) copies of all
documents regarding the resolution of alleged
ineligible claims.
(iv) Business Purpose. The Seller will
sell, transfer, assign and otherwise convey (for state
law, tax and financial accounting purposes) the
Receivables for a bona fide business purpose.
(v) Financial Accounting Purposes. The
Seller and the Purchaser, as owner of the
Receivables, each intend to treat the transactions
contemplated by this Agreement as an absolute sale
of the Receivables by the Seller for financial
accounting purposes. The Seller and the Trustee
intend to cause to be filed all returns or reports in
a manner consistent with such treatment.
(vi) Valid Transfer. This Agreement
constitutes a valid transfer by the Seller to the
Purchaser of all of the Seller's right, title and
interest in the Receivables and the other Trust
Property.
(vii) Seller's Obligations. The Seller has
submitted all necessary documentation for payment
of the Receivables to the Obligors and has fulfilled
all of its applicable obligations hereunder required
to be fulfilled as of the Closing Date or Funding
Date, as the case may be.
(viii) Insurance Policies. The Seller will
not cancel, nor permit the cancellation of, the Risk
Default Insurance Policy or VSI Insurance Policy,
in each case as it relates to the Receivables.
ARTICLE IV
CONDITIONS
Section 4.01. Conditions to Obligation of the Purchaser.
The obligation of the Purchaser to purchase the Receivables is
subject to the satisfaction of the following conditions:
(a) Representations and Warranties True. The
representations and warranties of the Seller hereunder shall
be true and correct on the Closing Date and each Funding
Date and the Seller shall have performed all obligations to
be performed by each of them hereunder on or prior to the
Closing Date and each Funding Date.
(b) Files Marked; Files and Records owned by
Trust. The Seller shall, at its own expense, on or prior to
the Closing Date and each Funding Date indicate in its files
that the Receivables have been sold to the Purchaser
pursuant to this Agreement and the Seller shall deliver to
the Purchaser a Schedule of Receivables certified by the
Chairman, the President, the Vice President or the
Treasurer of the Seller to be true, correct and complete.
Further, the Seller hereby agrees that the computer files
and other physical records of the Receivables maintained by
the Seller will bear an indication reflecting that the
Receivables have been sold to the Purchaser and thereafter
sold, transferred and assigned to the Trustee for deposit in
the Trust.
(c) Documents to be Delivered by the Seller at
the Closing and Each Funding Date.
(i) The Assignment. At the Closing and each Funding Date,
the Seller will execute and deliver an Assignment substantially in
the form of Exhibit A hereto with respect to the Receivables then
being sold.
(ii) Custodian files. At the Closing and
each Funding Date, the Seller shall deliver to the
Trustee, as custodian, for the benefit of the
Purchaser and its assigns the Custodian Files, which
delivery shall be accompanied by a Certificate of
Delivery substantially in the form of Exhibit D-1
(for Initial Receivables) or D-2 (for Additional
Receivables) as appropriate.
(iii) Evidence of UCC Filings. The Seller
shall record and file, at its own expense, (A) on or
prior to the Closing Date and each Funding Date,
UCC-3 termination statements in each jurisdiction
required by applicable law, to release any prior
security interests in the Receivables granted by the
Seller, and (B) on or prior to the Closing Date and
each Funding Date, UCC financing statements in
each jurisdiction in which required by applicable
law, executed by the Seller as seller or debtor, and
naming the Purchaser as purchaser or secured party,
naming the Trustee as assignee of such purchaser or
secured party, identifying the Receivables and the
other Trust Property as collateral, meeting the
requirements of the laws of each such jurisdiction
and in such manner as is necessary to perfect the
sale, transfer, assignment and conveyance of such
Receivables to the Purchaser and the sale, transfer,
assignment and conveyance thereof to the Trustee.
The Seller shall deliver file-stamped copies, or
other evidence satisfactory to the Purchaser and the
Trustee of such filing, to the Purchaser and the
Trustee on or prior to the Closing Date and each
Funding Date.
(iv) Evidence of Insurance and Payment.
On the Closing Date and each Funding Date the
Seller shall deliver to the Trustee on the Purchaser's
behalf evidence of payment in full of all premiums
due under the Risk Default Insurance Policy and the
VSI Insurance Policy with respect to the
Receivables being sold on such date.
(v) Other Documents. Such other
documents, including without limitation powers of
attorney with respect to the Receivables, as the
Purchaser may reasonably request.
Section 4.02. Conditions to Obligation of the Seller. The
obligation of the Seller to sell the Receivables to the Purchaser on
the Closing Date and each Funding Date is subject to the condition
that at the Closing Date the Purchaser will deliver to the Seller the
Initial Receivables Purchase Price for the Initial Receivables, as
provided in Section 2.01(b)(i) and on each Funding Date will
deliver or cause the Trustee to deliver the Receivables Cash
Purchase Price for the Additional Receivables being sold on each
such date as provided in Section 2.01(b)(ii).
ARTICLE V
COVENANTS OF THE SELLER
The Seller agrees with the Purchaser as follows; provided,
however, that to the extent that any provision of this Article V
conflicts with any provision of the Pooling and Servicing
Agreement, the Pooling and Servicing Agreement shall govern:
Section 5.01. Protection of Right, Title and Interest.
(a) Filings. The Seller shall cause all financing
statements and continuation statements and any other
necessary documents covering the right, title and interest of
the Purchaser in and to the Receivables and the other Trust
Property to be promptly filed, and at all times to be kept
recorded, registered and filed, all in such manner and in
such places as may be required by law fully to preserve
and protect the right, title and interest of the Purchaser
hereunder to the Receivables and the other Trust Property.
The Seller shall deliver to the Purchaser file-stamped
copies of, or filing receipts for, any document recorded,
registered or filed as provided above, as soon as available
following such recordation, registration or filing. The
Purchaser shall cooperate fully with the Seller in
connection with the obligations set forth above and will
execute any and all documents reasonably required to fulfill
the intent of this Section 5.01(a).
(b) Name Change. At least fifteen days before
the Seller makes any change in its name, identity or
corporate structure which would make any financing
statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the
applicable provisions of the UCC or any title statute, the
Seller shall give the Purchaser and the Trustee notice of
any such change and no later than five (5) days after the
effective date thereof, shall file such financing statements
or amendments as may be necessary to continue the
perfection of the Purchaser's security interest in the Trust
Property.
Section 5.02. Other Liens or Interests. Except for the
conveyances hereunder and pursuant to the Pooling and Servicing
Agreement, the Seller will not sell, pledge, assign or transfer the
Receivables to any other person, or grant, create, incur, assume or
suffer to exist any Lien on any interest therein, and the Seller shall
defend the right, title, and interest of the Purchaser in, to and
under such Receivables against all claims of third parties claiming
through or under the Seller; provided, however, that the Seller's
obligations under this Section 5.02 shall terminate upon the
termination of the Trust pursuant to the Pooling and Servicing
Agreement.
Section 5.03. Chief Executive Office. The Seller shall
give written notice to the Purchaser and the Trustee at least 30
days prior to relocating its chief executive office and shall make
such filings under the UCC as shall be necessary to maintain the
perfection of the security interest (as defined in the UCC) in the
Receivables granted in favor of the Purchaser hereunder.
Section 5.04. Trustee as Named Insured; Pledge of
Proceeds. The Seller shall cause the Trustee to be identified as
the named insured or additional insured under the Risk Default
Insurance Policy and as an additional insured, as its interests may
appear, under the VSI Insurance Policy as of the Closing Date.
The Seller hereby assigns to the Trustee for the benefit of the
Certificateholders, any interest it may have in any and all proceeds
with respect to a Receivable under the terms of any of the
foregoing insurance policies.
Section 5.05. Costs and Expenses. The Seller agrees to
pay all reasonable costs and disbursements in connection with the
perfection, as against all third parties, of the sale to the Purchaser
of the Seller's right, title and interest in and to the Receivables.
Section 5.06. No Waiver. The Seller shall not waive any
default, breach, violation or event permitting acceleration under
the terms of any Receivable.
Section 5.07. Location of Servicer Files. The Servicer
Files, exclusive of the original titles to the Financed Vehicles and
exclusive of the originals of the Receivables, have been delivered
to the location listed in Exhibit C hereto. The Custodian Files,
including the original titles (or other evidence of the security
interest in the Financed Vehicles) and the originals of the
Receivables shall be delivered to the principal executive office of
the Custodian as specified in the Pooling and Servicing Agreement.
Section 5.08. Sale of Receivables. The Seller will take no
action inconsistent with the Purchaser's ownership of the
Receivables. If a third party, including a potential purchaser of
the Receivables, should inquire, the Seller will promptly indicate
that ownership of the Receivables has been transferred to the
Purchaser, and by the Purchaser to the Trust.
Section 5.09. The Seller's Records. This Agreement and
all related documents describe the transfer of the Receivables from
the Seller as an absolute sale by the Seller to the Purchaser and
evidence the clear intention by the Seller to effectuate an absolute
sale and assignment of such Receivables. The financial statements
and tax returns of the Seller will disclose that, under generally
accepted accounting principles, or for tax purposes, respectively,
the Seller transferred ownership of the Receivables.
Section 5.10. Financial Statements. The Seller will
furnish to the Purchaser and each Certificateholder, (A) within 90
days after the end of its fiscal year, an unaudited balance sheet as
at the end of such fiscal year and the related statements of income
and cash flow for such fiscal year, setting forth in comparative
form the figures as at the end of and for the previous fiscal year
and (B) within 45 days after the end of each of the first three
quarterly accounting periods in each fiscal year, an unaudited
balance sheet of the Seller as at the end of such quarterly period
setting forth in each case in comparative form the figures for the
corresponding periods of the previous fiscal year.
Section 5.11. Compliance with Laws, Etc. The Seller will
comply in all material respects with all applicable laws, rules,
regulations, judgments, decrees and orders (including those
relating to the Receivables and any other agreements related
thereto), where the failure so to comply, individually or in the
aggregate for all such failures, would have a reasonable likelihood
of having a material adverse effect on the business or properties of
the Seller.
Section 5.12. Preservation of Existence. The Seller will
preserve and maintain its existence, rights, franchises and
privileges in the jurisdiction of its organization, and qualify and
remain qualified in good standing in each jurisdiction where the
failure to preserve and maintain such existence, rights, franchises,
privileges and qualifications would have a reasonable likelihood of
having a material adverse effect on the business or properties of
the Seller.
Section 5.13. Keeping of Records and Books of Account.
The Seller shall maintain and implement administrative and
operating procedures (including, an ability to recreate records
evidencing its Receivables in the event of the destruction of the
originals thereof), and shall keep and maintain, or cause to be kept
or maintained, all documents, books, records and other
information which, in the reasonable determination of Purchaser
and the Trustee, are necessary or advisable in accordance with
prudent industry practice and custom for transactions of this type
for the collection of all Receivables. Seller shall maintain or cause
to be maintained at all times accurate and complete books, records
and accounts relating to the Receivables, which books and records
shall be marked to indicate the sales of all Receivables hereunder.
Section 5.14. Separate Existence of Purchaser. The
Seller hereby acknowledges that the Trustee, on behalf of the
Trust, is entering into the transactions contemplated by the Pooling
and Servicing Agreement in reliance upon Purchaser's identity as
a legal entity separate from the Seller and Seller's other affiliates.
Seller will, and will cause each other affiliate to, take all
reasonable steps to continue their respective identities as separate
legal entities and to make it apparent to third Persons that each is
an entity with assets and liabilities distinct from those of Purchaser
and that Purchaser is not a division of the Seller or any other
Person.
ARTICLE VI
INDEMNIFICATION
Section 6.01. Indemnification. The Seller shall indemnify
the Purchaser, the Trustee and each Certificateholder for any
liability as a result of the failure of a Receivable to be originated
in compliance with all requirements of law and for any breach of
any of its representations and warranties contained herein. In
addition, the Seller shall indemnify the Trustee, the Trust, the
Backup Servicer, the Custodian and each Certificateholder to the
extent of the Purchaser's indemnity obligations under Section 8.02
of the Pooling and Servicing Agreement and under the fourth
sentence of Section 11.07 of the Pooling and Servicing Agreement,
which provisions are incorporated herein by this reference as if
such provisions were fully set forth herein and as if the "Seller"
thereunder were the Seller hereunder. The Seller hereby
acknowledges that any of the Trustee, the Custodian, the Backup
Servicer or the Certificateholders may enforce the obligation of the
Seller under this Section 6.01. These indemnity obligations shall
be in addition to any obligation that the Seller may otherwise have.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01. Obligations of the Seller. The obligations
of the Seller under this Agreement shall not be affected by reason
of any invalidity, illegality or irregularity of any Receivable.
Section 7.02. Repurchase or Substitution Upon Breach.
(a) The Seller hereby covenants and agrees to deliver to the
Purchaser, the Trustee and each Certificateholder prompt written
notice of (i) the occurrence of a breach of any of the
representations and warranties of the Seller contained or deemed
to be contained in Section 3.01(b) hereof with respect to any
Receivable or (ii) the failure of the Seller to deliver original
certificates of title or other documents evidencing the security
interest of the Seller in the Financed Vehicle pursuant to Section
4.01(c)(ii). If (x) such breach shall not have been cured by the
thirtieth day following discovery thereof or (y) the non-delivery
shall not have been cured by the seventh Business Day following
receipt by a responsible officer of the Seller of notice by certified
mail thereof, the Seller shall be obligated to repurchase such
Receivable hereunder from the Purchaser at the Purchase Amount
on a date which shall be no later than the fifth Business Day
following the applicable cure period. The Seller shall be obligated
to repurchase the Receivable to which such breach or non-delivery
relates even if the Purchaser shall not have breached its respective
representations and warranties with respect to such Receivable
under the Pooling and Servicing Agreement and even if the
Purchaser fails to comply with any repurchase obligation it may
have under the Pooling and Servicing Agreement. The Seller shall
remit the Purchase Amount to the Trustee on behalf of the
Purchaser. For purposes of this Section, the Purchase Amount of
a Receivable which is not consistent with the warranty pursuant to
Section 3.01(b)(i)(E) shall include such additional amount as shall
be necessary to provide the full amount of principal and interest as
contemplated therein.
(b) The foregoing notwithstanding, the Seller shall also
have the option of substituting, within the five Business Day period
following the applicable cure period, a Receivable conforming to
the requirements hereof (a "Substitute Receivable") for any breach
or failing Receivable instead of repurchasing such Receivable,
provided any such substitution occurs within ninety (90) days of
the Closing Date. It shall be a condition of any such substitution
that (i) the outstanding Principal Balance of the Substitute
Receivable as of the date of substitution shall be less than or equal
to the outstanding Principal Balance of the replaced Receivable as
of the date of substitution; provided that an amount equal to the
difference, if any, between the outstanding Principal Balance of the
replaced Receivable and the outstanding Principal Balance of the
Substitute Receivable shall be paid in cash to Purchaser for deposit
into the Collection Account pursuant to the Pooling and Servicing
Agreement; (ii) the remaining term to maturity of the Substitute
Receivable shall not be greater than that of the replaced
Receivable; (iii) the Cutoff Date with respect to the Substitute
Receivable shall be deemed to be the first day of the month of the
substitution; (iv) the Substitute Receivable otherwise satisfies the
conditions of Section 3.01(b) hereof (the Seller shall be deemed to
make all representations and warranties contained in
Section 3.01(b) and (c) hereof with respect to the Substitute
Receivable as of the date of substitution); and (v) the Seller shall
have delivered to the Purchaser and the Trustee all of the
documents specified in Section 4.01(c) hereof with respect to the
Substitute Receivable on or before the date of substitution.
(c) Except as provided in subsection (b) above, the
repurchase obligation of the Seller shall constitute the sole remedy
of the Certificateholders, the Trustee or the Purchaser against the
Seller for its breach hereunder; provided, that the Seller hereby
acknowledges that any of the Purchaser, the Certificateholders or
the Trustee may enforce the Seller's obligation to repurchase or
substitute for nonconforming Receivables pursuant to this Section
7.02.
Section 7.03. Purchaser's Assignment of Nonconforming
Receivables. With respect to all Receivables repurchased or
substituted for by the Seller pursuant to this Agreement, the
Purchaser shall assign, without recourse, representation or
warranty, to the Seller all the Purchaser's right, title and interest
in and to such Receivables, and all security and documents relating
thereto.
Section 7.04. Trust. The Seller acknowledges that the
Purchaser will assign the Receivables to the Trust for the benefit
of the Certificateholders, pursuant to the Pooling and Servicing
Agreement, and that the representations and warranties contained
in this Agreement and the rights of the Purchaser under Section
7.02 hereof are intended to benefit such Trust and each
Certificateholder. The Seller hereby consents to such transfers and
assignments.
Section 7.05. Amendment. This Agreement may be
amended from time to time by a written amendment duly executed
and delivered by the Seller and the Purchaser; provided however,
that for so long as any Certificates are outstanding no amendment
which in any manner (x) relates to the Seller's obligations under
Section 7.02 or (y) would have a materially adverse effect on the
interests of the Certificateholders, shall be effective without the
prior written consent of each Certificateholder.
Section 7.06. Waivers. No failure or delay on the part of
the Purchaser in exercising any power, right or remedy under this
Agreement or the Assignments shall operate as a waiver thereof,
nor shall any single or partial exercise of any such power, right or
remedy preclude any other or further exercise thereof or the
exercise of any other power, right or remedy.
Section 7.07. Notices. All communications and notices
pursuant hereto to any party shall be in writing or by telegraph or
telex and addressed or delivered to it at its address (or in case of
telex, at its telex number at such address) shown in the preamble
of this Agreement or at such other address as may be designated
by it by notice to the other party and, if mailed or sent by
telegraph or telex, shall be deemed given when mailed,
communicated to the telegraph office or transmitted by telex.
Section 7.08. Costs and Expenses. The Seller will pay all
expenses, including reasonable fees and expenses of counsel,
incident to the performance of its obligations under this Agreement
and the Seller agrees to pay all reasonable out-of-pocket costs and
expenses in connection with the enforcement of any obligation of
the Seller hereunder.
Section 7.09 Acknowledgement Concerning Insurance
Proceeds. The Seller hereby acknowledges and agrees for the
benefit of the Purchaser, the Trustee and the Certificateholders that
any checks representing Risk Default Insurance Proceeds or
proceeds from claims on any Insurance Policies in respect of the
Receivables that at any time may be made payable to the Seller
will be so made payable for reasons of administrative and claims
processing convenience only and that, notwithstanding that such
checks may be made so payable, the Seller shall have no right,
title or interest in such proceeds.
Section 7.10. Limited Recourse to Purchaser. The Seller
agrees that the obligations of the Purchaser hereunder are payable
solely from the Purchaser's interests in the Trust Property and that
the Seller may not look to any other property or assets of the
Purchaser in respect of such obligations.
Section 7.11. Headings and Cross-References. The
various headings in this Agreement are included for convenience
only and shall not affect the meaning or interpretation of any
provision of this Agreement. References in this Agreement to
Section names or numbers are to such Sections of this Agreement.
Section 7.12. Governing Law. This Agreement and the
Assignment shall be governed by and construed in accordance with
the laws of the State of New York without regard or reference to
principles of conflicts of laws of such state.
Section 7.13. Counterparts. This Agreement may be
executed in two or more counterparts, each of which shall be an
original, but all of which together shall constitute one and the same
instrument.<PAGE>
IN WITNESS WHEREOF, the parties hereby have caused
this Purchase Agreement to be executed by their respective officers
thereunto duly authorized as of the date and year first above
written.
AEGIS AUTO
FINANCE, INC., as Seller
By
Joseph F.
Battiato
President
AEGIS AUTO
FUNDING CORP., a
Delaware corporation,
as Purchaser
By
Angelo R.
Appierto
President
<PAGE>
EXHIBIT A
ASSIGNMENT
For value received in accordance with the Purchase
Agreement dated as of September 1, 1996, (the "Purchase
Agreement"), by and between the undersigned ("the Seller"), and
Aegis Auto Funding Corp., a Delaware corporation (the
"Purchaser"), the undersigned does hereby sell, assign, transfer
and otherwise convey unto the Purchaser, without recourse, (i) all
right, title and interest of the undersigned in and to the Receivables
identified on the Schedule attached hereto, all moneys received
thereon on and after the Cutoff Date allocable to principal, and all
moneys received thereon allocable to interest accrued thereon from
and including the Cutoff Date therefor; (ii) the security interests of
the Seller in the Financed Vehicles granted by the Obligors
pursuant to the Receivables; (iii) the interest of the Seller in any
Risk Default Insurance Proceeds and any proceeds from claims on
any Insurance Policies (including the VSI Insurance Policy)
covering the Receivables, the Financed Vehicles or Obligors from
the Cutoff Date; (iv) the interest of the Seller in any Dealer
Recourse; and (v) the proceeds of any and all of the foregoing.
The foregoing sale does not constitute and is not intended to result
in any assumption by the Purchaser of any obligation of the
undersigned to the Obligors, insurers or any other person in
connection with the Receivables, Custodian Files, Servicer Files,
any insurance policies or any agreement or instrument relating to
any of them.
This Assignment is made pursuant to and upon the
representations, warranties and agreements on the part of the
undersigned contained in the Purchase Agreement and is to be
governed by the Purchase Agreement.
Capitalized terms used herein and not otherwise defined
shall have the meaning assigned to them in the Purchase
Agreement.
IN WITNESS WHEREOF, the undersigned has caused this
Assignment to be duly executed as of [CLOSING DATE]
[FUNDING DATE].
AEGIS AUTO
FINANCE INC.
By
Name:
Title:
<PAGE>
EXHIBIT B
SCHEDULE OF RECEIVABLES
<PAGE>
EXHIBIT C
LOCATION OF SERVICER FILES
American Lenders Facilities, Inc.
2600 Michaelson Drive
Suite 470
Irvine, CA 92715
<PAGE>
EXHIBIT D-1
CERTIFICATE OF DELIVERY
(Initial Receivables)
In connection with the transfer of certain auto loan
receivables to the Aegis Auto Receivables Trust 1996-3 (the
"Trust") to be formed pursuant to a Pooling and Servicing
Agreement (the "Agreement") to be entered into among Aegis
Auto Funding Corp., a Delaware corporation, as seller (the
"Seller"), Norwest Bank Minnesota, National Association, as
Backup Servicer (the "Backup Servicer"), and Norwest Bank
Minnesota, National Association, as Trustee (the "Trustee"), the
undersigned hereby certifies that the documents listed below are
included in the Custodian Files delivered to William Milbauer,
Vice President of the Trustee for each of the Receivables listed on
the Schedule hereto. Unless otherwise defined herein, capitalized
terms have the meanings set forth in the Agreement or the
Purchase Agreement (as defined in the Agreement).
(i) The original of the Receivable and
any amendments thereto.
(ii) The original certificate of title or
other document evidencing the security interest in
the Financed Vehicles, or a guarantee of title or a
copy of an application for title if no certificate of
title or other document evidencing the security
interest in the Financed Vehicle has yet been issued.
(iii) A copy of the Risk Default
Insurance Policy and the VSI Insurance Policy and
endorsements to the Risk Default Insurance Policy
and the VSI Insurance Policy confirming insurance
(as reflected on a master list of insured Receivables)
regarding each Receivable.
AEGIS AUTO
FINANCE, INC.
Dated: , 1996 By
Name:
Title:
<PAGE>
EXHIBIT D-2
CERTIFICATE OF DELIVERY
(Additional Receivables)
In connection with the transfer of certain auto loan
receivables to the Aegis Auto Receivables Trust 1996-3 (the
"Trust") to be formed pursuant to a Pooling and Servicing
Agreement (the "Agreement") to be entered into among Aegis
Auto Funding Corp., a Delaware corporation, as seller (the
"Seller"), Norwest Bank Minnesota, National Association, as
Backup Servicer (the "Backup Servicer"), and Norwest Bank
Minnesota, National Association, as Trustee (the "Trustee"), the
undersigned hereby certifies that the documents listed below are
included in the Custodian Files delivered to William Milbauer,
Vice President of the Trustee for each of the Additional
Receivables listed on the Schedule hereto. Unless otherwise
defined herein, capitalized terms have the meanings set forth in the
Agreement or the Purchase Agreement (as defined in the
Agreement).
(i) The original of each Additional
Receivable and any amendments thereto.
(ii) The original certificate of title or
other document evidencing the security interest in
the Financed Vehicle, or a guarantee of title or a
copy of an application for title if no certificate of
title or other document evidencing the security
interest in the Financed Vehicle has yet been issued.
(iii) A copy of an endorsement to the
Risk Default Insurance Policy and the VSI
Insurance Policy confirming insurance (as reflected
on a master list of insured Receivables) regarding
each Receivable.
AEGIS AUTO
FINANCE, INC.
Dated: , 1996 By
Name:
Title:
<PAGE>
EXHIBIT E
POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, that
Aegis Auto Finance, Inc., a Delaware corporation ("Aegis
Finance"), having its principal place of business at 525 Washington
Boulevard, Jersey City, New Jersey 07310, in connection with the
transfer of its interests in certain automobile receivables and
certain security interests and liens created in the Collateral (as
defined below) has and hereby affirms that it has made, constituted
and appointed, and by these presents does make, constitute and
appoint Norwest Bank Minnesota, National Association, a national
banking association, as trustee of the Aegis Auto Receivables
Trust 1996-3 ("Trustee"), having its principal place of business at
Sixth Street and Marquette Avenue, Minneapolis, Minnesota
55479-0070, and its successors or assigns in such capacity, Aegis
Finance's true and lawful attorney-in-fact for and in Aegis
Finance's name, place and stead to act:
FIRST: To execute and/or endorse any loan agreement,
promissory note, security agreement, financing statement,
certificate of title or other document, instrument, or agreement, or
any amendment, modification or supplement of any of the
foregoing and perform any act and covenant in any way which
Aegis Finance itself could do (to the fullest extent that the Aegis
Finance is permitted by law to act through an agent), which is
necessary or appropriate to modify, amend, renew, extend,
release, terminate and/or extinguish (i) any and all liens and
security interests granted to or created in favor of Aegis Finance
in and to or affecting any of the motor vehicles described in
Schedule "A" (the "Collateral") annexed hereto and by this
reference made a part hereof, or (ii) any indebtedness secured by
any such lien or security interest or any right or obligation of the
obligor of such indebtedness or Aegis Finance, in each case upon
such terms and conditions deemed, in the sole discretion of said
attorney-in-fact, necessary or appropriate in connection with such
modification, amendment, renewal, extension, release, termination
and/or extinguishment.
SECOND: To agree and to contract with any person, in
any manner and upon terms and conditions deemed, in the sole
discretion of said attorney-in-fact, necessary or appropriate for the
accomplishment of any such modification, amendment, renewal,
extension, release, termination and/or extinguishment of any such
lien, security interest, indebtedness, right or obligation referred to
above with respect to the Collateral; to perform, rescind, reform,
release or modify any such agreement or contract or any similar
agreement or contract made by or on behalf of the principal; to
execute, acknowledge, seal and deliver any contract, agreement,
certificate of title or other document, agreement or instrument
creating, evidencing, securing or secured by any such lien,
security interest, indebtedness, right or obligation; and to take all
such other actions and steps, pay or receive such moneys and to
execute, acknowledge, seal and deliver all such other certificates,
documents and agreements as said attorney-in-fact may deem
necessary or appropriate to consummate any such modification,
amendment, renewal, extension, release, termination and/or
extinguishment of any such security interest, lien, indebtedness,
right or obligation, or in furtherance of any of the transactions
contemplated by the foregoing.
THIRD: With full and unqualified authority to delegate
any or all of the foregoing powers to any person or persons whom
said attorney-in-fact shall select.
FOURTH: This power of attorney shall not be affected by
the subsequent disability or incompetence of the principal.
FIFTH: This power of attorney shall be irrevocable and
coupled with an interest.
SIXTH: To induce any third party to act hereunder, Aegis
Finance hereby agrees that any third party receiving a duly
executed copy or facsimile of this instrument may act hereunder,
and that any notice of revocation or termination hereof or other
revocation or termination hereof by operation of law shall be
ineffective as to such third party.
<PAGE>
IN WITNESS WHEREOF, Aegis Finance has executed this
Power of Attorney as of this [Funding Date].
AEGIS AUTO
FINANCE, INC.
By
Name:
Title:
The foregoing instrument was acknowledged before me this
[Funding Date], by
, the of Aegis Auto Finance, Inc.
WITNESS my hand and official seal.
__________________
______________
Notary Public
[NOTARIAL SEAL]
My commission expires:
<PAGE>
SCHEDULE A
DESCRIPTION OF COLLATERAL
EXHIBIT 10.97.1
_________________________________________
SERVICING AGREEMENT
Dated as of September 1, 1996
Among
AEGIS AUTO FINANCE, INC.,
Servicer
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
in its capacity as Backup Servicer
and
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION
in its capacity as Trustee
Relating to
Aegis Auto Receivables Trust 1996-3
_________________________________________
<PAGE>
TABLE OF CONTENTS
Page
I.
RECITALS . . . . . . . . . . . . . . . . . . . . . . 1
II.
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . 1
III.
SERVICING RELATIONSHIP
A. NATURE AND SCOPE OF RELATIONSHIP. . . . . . . . 2
B. GENERAL CONDITIONS. . . . . . . . . . . . . . . 3
IV.
ADMINISTRATION AND SERVICING OF RECEIVABLES
A. DUTIES OF SERVICER. . . . . . . . . . . . . . . 6
B. MAINTENANCE OF RECORDS. . . . . . . . . . . . . 7
C. MAINTENANCE OF SECURITY INTEREST . . . . . 8
D. COLLECTION OF RECEIVABLE PAYMENTS. . . . . 8
E. PHYSICAL DAMAGE INSURANCE . . . . . . . . . . . 8
F. COVENANTS OF THE TRUSTEE AND SERVICER;
NOTICES. . . . . . . . . . . . . . . . . . . . . . . 9
G. PURCHASE OF RECEIVABLES UPON BREACH . . . . . 10
H. SERVICING FEE . . . . . . . . . . . . . . . . 10
I. MONTHLY SERVICING CERTIFICATES. . . . . . . . 11
J. ANNUAL STATEMENT AS TO COMPLIANCE;
ACCOUNTANTS'
SERVICING REPORT. . . . . . . . . . . . . . . . 11
K. ACCESS TO CERTAIN DOCUMENTATION AND
INFORMATION
REGARDING RECEIVABLES . . . . . . . . . . . . 12
L. RESPONSIBILITY FOR INSURANCE POLICIES;
PROCESSING OF
CLAIMS UNDER INSURANCE POLICIES; DAILY
RECORDS AND
REPORTS . . . . . . . . . . . . . . . . . . . 12
M. ENFORCEMENT . . . . . . . . . . . . . . . . . . 13
N. PAYMENT IN FULL ON RECEIVABLE . . . . . . . . 14
O. SUBSTITUTION OF COLLATERAL. . . . . . . . . . 15
P. FIDELITY BOND AND ERRORS AND OMISSIONS
INSURANCE. . . . . . . . . . . . . . . . . . . . . 15
V.
REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF
SERVICER . . . . . . . . . . . . . . . . . . . . . 16
B. REPRESENTATIONS AND WARRANTIES OF BACKUP
SERVICER . . . . . . . . . . . . . . . . . . . . . . 17
C. SURVIVAL OF REPRESENTATIONS AND
WARRANTIES . . . . . . . . . . . . . . . . . . . . . 18
VI.
EVENTS OF SERVICING DEFAULT. . . . . . . . . . . . 18
VII.
REMEDIES . . . . . . . . . . . . . . . . . . . . . 20
VIII.
RESPONSIBILITY AND AUTHORITY OF SERVICER . . . . . 20
IX.
COLLECTIONS; LOCK-BOX ACCOUNT AND RELATED
BANK ACCOUNTS. . . . . . . . . . . . . . . . . . . 20
X.
DOCUMENTS AND RECORDS
A. SERVICING DOCUMENTS AND RECORDS . . . . . . . 21
B. REPORTS AND CREDIT AGENCIES. . . . . . . 22
XI.
INDEMNIFICATION. . . . . . . . . . . . . . . . . . 22
XII.
TERM AND TERMINATION . . . . . . . . . . . . . . . 23
XIII.
ARBITRATION AND ATTORNEYS' FEES. . . . . . . . . . 23
XIV.
WAIVERS. . . . . . . . . . . . . . . . . . . . . . 24
XV.
NOTICES. . . . . . . . . . . . . . . . . . . . . . 24
XVI.
ASSIGNABILITY. . . . . . . . . . . . . . . . . . . 25
XVII.
FURTHER ASSURANCES . . . . . . . . . . . . . . . . 25
XVIII.
COUNTERPARTS . . . . . . . . . . . . . . . . . . . 25
XIX.
ENTIRE AGREEMENT; AMENDMENTS . . . . . . . . . . . 26
XX.
INSPECTION . . . . . . . . . . . . . . . . . . . . 26
XXI.
LIMIT ON TRUSTEE'S PAYMENT OBLIGATIONS . . . . . . 26
XXII.
SERVICER NOT TO RESIGN . . . . . . . . . . . . . . 26
XXIII.
MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF
THE
OBLIGATIONS OF, OR RESIGNATION OF SERVICER . . . . 27
XXIV.
GOVERNING LAW. . . . . . . . . . . . . . . . . . . 28
SCHEDULE A: SUMMARY OF SERVICES A-1
I. SERVICES A-1
A. CONTRACT SERVICES - COLLECTIONS A-1
B. CONTRACT SERVICES - CUSTOMER SERVICE A-2
II. A. SPECIAL COLLECTION ACTIVITIES A-4
1. Repossession and Sale A-4
2. Credit Enhancement Claims Filing A-4
3. Deficiency A-5
4. Bankruptcies A-6
5. Disability A-6
6. Allotments A-7
7. Skips A-7
III. FEE SCHEDULE A-7
A. GENERAL SERVICING A-7
B. EXPENSE REIMBURSEMENT A-8
C. DEFICIENCY SERVICING A-8
SCHEDULE B: SERVICER MONTHLY ACTIVITY REPORT
B-1
SCHEDULE C: REQUEST FOR RELEASE OF DOCUMENTS
C-1
SCHEDULE D: RELEASE AND ASSIGNMENT D-1
SERVICING AGREEMENT
This SERVICING AGREEMENT is entered into as of
September 1, 1996 (this "Servicing Agreement") among AEGIS
AUTO FINANCE, INC., a Delaware corporation, as servicer
(hereinafter referred to as "Servicer" and, in its separate capacity
as the originator of the Receivables described herein, the
"Originator"), NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, a national banking association, in its capacity as
backup servicer (hereinafter referred to as "Backup Servicer") and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
in its capacity as trustee (hereinafter referred to as "Trustee") in
both cases under that certain Pooling and Servicing Agreement
dated as of September 1, 1996 by and among Aegis Auto Funding
Corp., a Delaware corporation, as Seller, Norwest Bank
Minnesota, National Association in its capacity as Backup
Servicer, and Norwest Bank Minnesota, National Association in its
capacity as Trustee (such agreement, the "Pooling and Servicing
Agreement").
I. RECITALS
WHEREAS, Servicer provides portfolio
management services, including collection assistance, loan
administration and financial reporting to financial institutions in
connection with motor vehicle retail installment sales contracts,
and
WHEREAS, Norwest Bank Minnesota, National
Association, in its capacity as Trustee, is or will become the
holder of those motor vehicle retail installment sales contracts
referred to in Exhibit D to the Pooling and Servicing Agreement
(as such Exhibit is amended or deemed amended pursuant to the
Pooling and Servicing Agreement on any Funding Date,
hereinafter referred to as "Receivables") which were originated by
the Originator, subsequently sold to Aegis Auto Funding Corp.
pursuant to a Purchase Agreement dated as of September 1, 1996
(the "Purchase Agreement") between the Originator and Aegis
Auto Funding Corp., and subsequently deposited by Aegis Auto
Funding Corp. with the Trustee pursuant to the terms of the
Pooling and Servicing Agreement, and
WHEREAS, pursuant to the Pooling and Servicing
Agreement, the Backup Servicer and the Trustee, on behalf of the
Trust created under the Pooling and Servicing Agreement, desire
to avail themselves of the services provided by Servicer, then
Let this be the terms and conditions of this Servicing
Agreement:
II. DEFINITIONS
Capitalized terms not otherwise defined herein shall have
the meanings ascribed thereto in the Pooling and Servicing
Agreement. Whenever used in this Servicing Agreement,
the following terms shall have the following meanings.
Credit Agency. A recognized agency to which Servicer
reports delinquencies, repossessions and redemptions.
Independent Public Accountants. Means any of (a) Arthur
Andersen & Co., (b) Deloitte & Touche, LLP, (c) Coopers
& Lybrand, (d) Ernst & Young LLP, (e) KPMG Peat
Marwick and (f) Price Waterhouse, or such other nationally
recognized firm of independent accountants as shall be
acceptable to the parties hereto and the Rating Agencies;
provided, that such firm is independent with respect to the
Servicer within the meaning of the Securities Act of 1933,
as amended.
Loan Documents. Has the meaning set forth in
paragraph III.B.9.
III. SERVICING RELATIONSHIP
A. NATURE AND SCOPE OF RELATIONSHIP
The Servicer hereby agrees to service and administer
the Receivables for the Trust and render those services described
in this Servicing Agreement and in the attached Schedule A. In
performing its duties under this Servicing Agreement, the Servicer
shall have full power and authority to do or cause to be done any
and all things in connection with such servicing and administration
which it may deem necessary or desirable, within the terms of the
Pooling and Servicing Agreement and this Servicing Agreement.
Servicer acknowledges receiving a copy of the Pooling and
Servicing Agreement. Servicer shall report in writing solely to
such officers or other employees of Backup Servicer and Trustee
as Backup Servicer and Trustee may designate from time to time
in writing.
Nothing in this Servicing Agreement shall be
construed as establishing an agency, an employment or a
partnership or joint venture between Backup Servicer, Trustee, any
third party contract purchaser and Servicer.
Furthermore, Backup Servicer shall not use or
permit the use of Servicer's name or the names of any of
Servicer's affiliates in any advertising or promotional materials
prepared by Backup Servicer or on Backup Servicer's behalf
without the prior written consent of Servicer.
Compensation payable to the Servicer under this
Servicing Agreement shall be payable by the Trustee solely from
the Trust Property in accordance with the terms of the Pooling and
Servicing Agreement, and except as provided in the Pooling and
Servicing Agreement, none of the Trust, the Trustee or the
Certificateholders will have any liability to the Servicer with
respect thereto. In accordance with Section 4.04 of the Pooling
and Servicing Agreement, such compensation shall be paid to the
Servicer and/or one or more subservicers as the Servicer may from
time to time direct in writing to the Trustee.
In the event the Backup Servicer shall for any
reason no longer be acting as such (including by reason of
resignation or an Event of Backup Servicing Default as specified
in Section 4.02 or 10.01, respectively, of the Pooling and
Servicing Agreement), the successor Backup Servicer shall
thereupon assume all of the rights and obligations of the outgoing
Backup Servicer under this Servicing Agreement; provided,
however that the successor Backup Servicer shall not be liable for
any acts, omissions or obligations of the outgoing Backup Servicer
prior to such succession or for any breach by the outgoing Backup
Servicer of any of its representations and warranties contained in
this Servicing Agreement or in any related document or agreement
and the outgoing Backup Servicer shall not be relieved of any
liability or obligation hereunder to the extent such obligation or
liability arose prior to the assumption by the successor Backup
Servicer of the obligations of the Backup Servicer hereunder.
B. GENERAL CONDITIONS
1. Servicer agrees to provide the services
hereunder during the term hereof.
Servicer, Backup Servicer and Trustee each represent and warrant
that it is duly authorized to enter into the arrangements
contemplated hereby with respect to the Receivables.
2. Servicer may make such communications
with third parties and the ultimate Obligor as are necessary and
proper to perform the services provided for hereunder.
3. The Servicer hereby agrees to act for the
Trust as custodian of all the documents or instruments delivered to
the Servicer with respect to each Receivable, and any and all other
documents that Servicer receives, creates, generates, or otherwise
possesses which relate to a Receivable, an Obligor or a Financed
Vehicle, provided, however, that the Custodian Files, including the
original of the motor vehicle installment sale contract and the
original certificate of title or such documents evidencing the
security interest of the Trust in the Financed Vehicle or efforts
made by the Trustee or its assignor to perfect such security interest
shall be held by the Custodian, which shall be the Trustee. The
Servicer shall maintain in its files copies, computer records or
originals of each of the following documents with respect to each
Receivable and the Financed Vehicle related thereto:
(i) application of the Obligor for credit;
(ii) a copy (but not the original) of the retail
installment sale contract and any amendments
thereto; provided, however, that the Servicer shall
deliver any original amendments to the retail
installment sale contract to the Trustee immediately
following execution thereof;
(iii) a copy (but not the original) of a
certificate of title with a lien notation or an
application therefor;
(iv) copies of the Risk Default Insurance
Policy and the VSI Insurance Policy; and
(v) such other documents as the Servicer may
reasonably request in order to accomplish its duties
under this Servicing Agreement.
Items (i), (ii), (iii), (iv) and (v) shall be referred to
collectively as the "Servicer Files."
4. Upon receipt of the documentation indicated
in Paragraph III.B.3, Servicer shall establish a physical file for
each Receivable, which shall contain the Servicer Files, as well as
copies of all reports developed by or information received by
Servicer with respect to the Receivable, including insurance
certificates and reports of collection activities.
In its capacity as custodian of such files, Servicer
shall hold the Servicer Files and all related files and documents on
behalf of the Trust, and maintain such accurate and complete
accounts, records, and computer systems pertaining to the
Receivables using reasonable care and that degree of skill and
attention with respect to the Receivables and the files and
documents as is customary with other companies in the industry
that service motor vehicle installment sales contracts for
themselves as well as for others.
The Servicer shall keep satisfactory books and
records pertaining to each Receivable and shall make periodic
reports in accordance with this Servicing Agreement. Such
records may not be destroyed or otherwise disposed of except as
provided herein and as allowed by applicable laws, regulations or
decrees; provided, that, such records may be released to the Seller
if the related Receivable is paid in full, the related Financed
Vehicle is repossessed, the Receivable has been either repurchased
or replaced pursuant to the Purchase Agreement with a Substitute
Receivable (as defined therein) or the Receivable otherwise is no
longer being serviced by the Servicer pursuant to this Servicing
Agreement. All documents, whether developed or originated by
the Servicer or not, reasonably required to document or to
properly administer any Receivable shall remain at all times the
property of the Trust. The Servicer shall not acquire any property
rights with respect to such records, and shall not have the right to
possession of them except as subject to the conditions stated in this
Servicing Agreement. The Servicer shall bear the entire cost of
restoration in the event any Loan Documents (as defined below)
shall become damaged, lost or destroyed.
5. Servicer shall make available to the Backup
Servicer, the Trustee and the Certificateholders, or their duly
authorized representatives, attorneys, or auditors, the Servicer
Files and any related accounts, records, and computer systems
maintained by the Servicer, at such times as the Backup Servicer,
the Trustee or any Certificateholder shall reasonably instruct, but
without disrupting Servicer's operations. Without otherwise
limiting the scope of the examination, the Backup Servicer, the
Trustee or any Certificateholder may, upon at least two (2)
Business Days' prior notice and at its own expense, using
generally accepted audit procedures, verify the status of each
Receivable and review the Loan Documents and records relating
thereto for conformity to monthly reports prepared pursuant to
paragraph IV.I. and compliance with the standards represented to
exist as to each Receivable in this Servicing Agreement. Nothing
herein shall require the Backup Servicer, the Trustee or any
Certificateholder to conduct any inspection pursuant to this
Section.
6. Within five (5) Business Days following the
last day of each Collection Period, the Servicer shall forward to
the Backup Servicer, via electronic transfer in a format mutually
acceptable to the Servicer and the Backup Servicer, its
computerized records reflecting (i) all collections received during
such Collection Period with respect to the Receivables and (ii)
information as of the last day of each Collection Period regarding
repossessed Financed Vehicles and sales of repossessed Financed
Vehicles. Within three (3) Business Days of receipt of the
foregoing information, the Backup Servicer shall input such
information onto its computer system such that such information
is immediately available to the Backup Servicer. The Backup
Servicer shall then review such information within five (5)
Business Days of its input onto the Backup Servicer's computer
system and compare it to the information reported by the Servicer
in its Monthly Servicing Certificate delivered to the Backup
Servicer, Trustee and each Rating Agency in the form of Schedule
B (the "Monthly Servicing Certificate"). Any discrepancies shall
then be immediately reported to the Servicer, who shall have ten
(10) Business Days from receipt of notice of discrepancies to
correct all such discrepancies. Any discrepancies which cannot be
corrected in such time period shall be reported by the Servicer to
the Trustee, each Rating Agency and the Certificateholders.
7. On Monday of each week beginning
September 16, 1996, the Servicer shall forward to the Backup
Servicer, via electronic transfer in form mutually acceptable to the
Servicer and the Backup Servicer, its computerized records
reflecting (i) all collections received during the preceding calendar
week with respect to the Receivables and (ii) a listing of all
Receivables with the date through which payments have been made
by the Obligor.
8. Other than the duties specifically set forth in
this Servicing Agreement, the Backup Servicer shall have no
obligation hereunder. The Backup Servicer shall have no liability
for any action taken or omitted by the Servicer. The duties and
obligations of the Backup Servicer shall be determined solely by
the express provisions of this Servicing Agreement and the Pooling
and Servicing Agreement and no implied covenants or obligations
shall be read into this Agreement against the Backup Servicer.
9. Unless otherwise specified herein, the
Servicer shall maintain physical possession, or computerized
records, of good and legible copies of the Servicer Files received
by it; such other instruments or documents that modify or
supplement the terms or conditions of any of the foregoing; and,
all other instruments, documents, correspondence and memoranda
generated by or coming into the possession of the Servicer
(including, but not limited to, insurance premium receipts, ledger
sheets, payment records, insurance claim files, correspondence and
current and historical computerized data files) that are required to
document or service any Receivable. Collectively, all of the
documents described in this paragraph III.B.9 with respect to a
Receivable are referred to as "Loan Documents." The Servicer
shall hold all Loan Documents in trust for the benefit of the
Certificateholders and the Trust; all Loan Documents shall remain
the property of the Trust. The Servicer shall respond to all third
party inquiries concerning ownership of the Receivables by
indicating that the Receivables have been assigned to the Trust.
10. The Servicer may employ or otherwise utilize
subservicers and enter into subservicing agreements in carrying out
its duties and obligations under this Servicing Agreement. An
affiliate of the Servicer, Aegis Consumer Finance, Inc. ("ACF"),
has heretofore entered into a Master Servicing Agreement dated as
of April 6, 1996 (the "Subservicing Agreement") with American
Lenders Facilities, Inc. ("ALFI") pursuant to which ALFI has
agreed to perform certain subservicing duties as therein described.
The Servicer shall cause ALFI to act as subservicer of the
Receivables with respect to the receipt of collections on the
Receivables, custody and application of payments from Obligors
and for the maintenance of individual records for each Receivable
in accordance with the terms of such Subservicing Agreement or
the terms of any new subservicing agreement subsequently entered
into with ALFI for the performance of such duties. The
Subservicing Agreement and any such other subservicing
agreement hereafter entered into by the Servicer and/or ACF shall
provide that the Backup Servicer, at the direction of the Majority
Certificateholders and each Rating Agency, shall have the right to
direct the Servicer to terminate such subservicing arrangement if
(a) the Majority Certificateholders and each Rating Agency
reasonably determine that the subservicer is failing to perform its
obligations thereunder and (b) such failure materially reduces the
amount recovered on defaulted loans. The Servicer agrees to
promptly terminate a subcontracting arrangement if directed to do
so by the Backup Servicer. In addition, should ALFI's
employment as subservicer of the Receivables as described above
be terminated at any time, ALFI shall be entitled to a fee of $5.00
per Receivable.
IV. ADMINISTRATION AND SERVICING OF
RECEIVABLES
A. DUTIES OF SERVICER
The Servicer shall service and administer the
Receivables in compliance with all applicable Federal and State
laws and regulations governing the Servicer and the Receivables,
and shall act prudently and in accordance with customary and usual
servicing procedures for other institutional servicers and applicable
law, and, to the extent not inconsistent with the foregoing, shall
exercise that degree of skill and care it uses for servicing assets
held for its own account.
The Servicer's duties shall include collection and
posting of all payments, responding to inquiries by Obligors or by
Federal, State, or local governmental authorities on the
Receivables, investigating delinquencies, sending payment books
or monthly statements to Obligors, responding to inquiries by
Obligors with respect to the Receivables and furnishing Monthly
Servicing Certificates to the Trustee with respect to distributions
and any additional information reasonably requested by the Trustee
to enable the Trustee to make distributions and produce reports
required under the Pooling and Servicing Agreement.
Without limiting the generality of the foregoing, the
Servicer shall be authorized and empowered to execute and deliver
any and all instruments of satisfaction or cancellation, and all other
comparable instruments, with respect to the Receivables or the
Financed Vehicles.
If the Servicer shall commence a legal proceeding to
enforce a Receivable, the Trustee, acting on behalf of the Trust,
shall thereupon be deemed to have automatically assigned such
Receivable to the Servicer which assignment shall be solely for the
purpose of collection. The Trustee, acting on behalf of the Trust,
shall furnish the Servicer with any powers of attorney and other
documents necessary or appropriate to enable the Servicer to carry
out its servicing and administrative duties hereunder.
B. MAINTENANCE OF RECORDS
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); (ii) reconciliation between
payments or recoveries on (or with respect to) each Receivable and
the amounts from time to time owing in respect of such
Receivable.
To the extent that such records are maintained on a
computer system, the Servicer shall also maintain such computer
system so that the Servicer's master computer records (including
archives) that shall refer to each Receivable indicate that such
Receivable is owned by the Trust.
Such accounts and records shall be kept only for as
long as Servicer is servicing the Receivables for the Trust.
At all times during the term hereof, for so long as
Aegis Auto Finance, Inc. is acting as Servicer, the Servicer shall
keep available at its office located at 525 Washington Boulevard,
Jersey City, New Jersey 07310 (or such other location as to which
it shall give written notice to the Trustee and each
Certificateholder), for inspection by Certificateholders a copy of
the list of Receivables, and shall mail a copy of such list to a
Certificateholder upon written request.
C. MAINTENANCE OF SECURITY INTEREST
The Servicer shall cooperate with the Seller in taking
such steps as are necessary to maintain perfection of the security
interest created by each Receivable in the respective Financed
Vehicle. The Trustee, on behalf of the Trust, hereby authorizes
and the Servicer hereby agrees to take such steps (and at the
Trust's expense) as are necessary to re-perfect such security
interest on behalf of the Trust in the event such re-perfection is
necessary or advisable for any reason. The title to each Financed
Vehicle relating to a Receivable included in the Trust initially shall
bear a notation of a lien in the name of the Originator.
D. COLLECTION OF RECEIVABLE PAYMENTS
The Servicer shall use its best efforts to collect all
payments called for under the terms and provisions of the
Receivables as and when the same shall become due.
In addition, the Servicer, on behalf of the Trust,
shall use its best efforts to repossess or otherwise recover the
Financed Vehicle securing any Receivable as to which the Servicer
shall have determined, after consultation with Seller if Servicer so
requests, that eventual payment in full is unlikely and such
repossession or recovery is permitted under the terms of the
Receivable and any applicable law. The Servicer shall be entitled
to recover all reasonable expenses incurred by it in the course of
repossessing and liquidating the Financed Vehicle into cash
proceeds.
Subject to the provisions of paragraph IV.A. above,
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 selling the Financed
Vehicle at public or private sale in accordance with applicable state
law. 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 the Servicer
shall determine in its discretion that such repair and/or
repossession will increase the Liquidation Proceeds or Insurance
Proceeds by an amount greater than the amount of such expenses.
E. PHYSICAL DAMAGE INSURANCE
1. The Servicer, in accordance with its
customary servicing procedures, shall use its best efforts to ensure
that each Obligor maintains physical damage insurance covering
the Financed Vehicle throughout the lesser of the term of the Trust
or the Receivable.
2. In the event of any physical loss or damage
to a Financed Vehicle from any cause, whether through accidental
means or otherwise, the Servicer shall have no obligation to cause
the affected Financed Vehicle to be restored or repaired.
However, the Servicer shall comply with the provisions of any
insurance policy or policies directly or indirectly related to any
physical loss or damage to a Financed Vehicle.
3. The Servicer will administer the filings of
claims under the VSI Insurance Policy and the Risk Default
Insurance Policy as provided under paragraph IV.L. hereof.
F. COVENANTS OF THE TRUSTEE AND
SERVICER; NOTICES
1. The Servicer shall (1) prior to a default with
respect to a Receivable, not release any 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 upon transfer of the Financed
Vehicle to a successor purchaser following repossession by the
Servicer, (2) not impair the rights of the Certificateholders or the
Trustee in the Receivables, (3) not increase the number of
Scheduled Payments due under a Receivable except as permitted
in paragraph A.3.e of Schedule A, (4) prior to the termination of
the Trust, not sell, pledge, assign, or transfer to any other Person,
or grant, create, incur, assume, or suffer to exist any Lien on any
Receivable transferred to the Trust or any interest therein, except
for assignment to the Risk Default Insurer upon its request after
the Risk Default Insurer has paid a claim in full, (5) immediately
notify the Trustee of the existence of any material Lien on any
Receivable, (6) defend the right, title, and interest of the Trust in,
to and under the Receivables transferred to the Trust, against all
claims of third parties claiming through or under the Servicer,
(7) deposit into the Lock-Box Account all payments received by
the Servicer with respect to the Receivables in accordance with this
Servicing Agreement, (8) comply in all respects with the terms and
conditions of this Servicing Agreement relating to the obligation of
Seller to repurchase Receivables from the Trust pursuant to the
Pooling and Servicing Agreement, or the obligation of the
Originator to repurchase Receivables from the Seller pursuant to
the Purchase Agreement, (9) promptly notify the Trustee of the
occurrence of any Event of Servicing Default and any breach by
the Backup Servicer of any of its covenants or representations and
warranties contained herein, (10) with the cooperation of the
Seller, make any filings, reports, notices, or applications and seek
any consents or authorizations from any and all government
agencies, tribunals, or authorities in accordance with the UCC and
any state vehicle license or registration authority on behalf of the
Trust as may be necessary or advisable or reasonably requested by
the Trustee to create, maintain, and protect a first-priority security
interest of the Trustee in, to, and on the Financed Vehicles and a
first-priority security interest of the Trust in, to, and on the
Receivables transferred to it and (11) take all reasonable action
necessary to maximize the returns pursuant to the Risk Default
Insurance Policy and the VSI Insurance Policy.
2. The Trustee shall promptly notify the
Servicer of any actual knowledge on its part (i) of any
abandonment of any Financed Vehicle by an Obligor, (ii) of any
material change in the condition or value of any Financed Vehicle,
(iii) of any waste committed with respect to any Financed Vehicle;
(iv) of any failure on the part of an Obligor to keep the Financed
Vehicle insured or in good condition and repair, (v) of any
permanent or substantial injury to a Financed Vehicle caused by
unreasonable use, abuse or neglect or (vi) of any other matter
which would adversely affect or result in diminution of the value
of any Financed Vehicle.
3. The Servicer will promptly advise the
Trustee of any inquiry received from an Obligor which
contemplates the consent of the Trustee. Inquiries contemplating
consent of the Trustee shall include, but not be limited to,
inquiries about settlement of any unasserted claim or defense, or
compromise of any amount an Obligor owes or any other matters
the Servicer should reasonably understand are not within the
Servicer's authority under this Servicing Agreement.
4. Notwithstanding any other provision of this
Servicing Agreement, the Trustee and the Backup Servicer (except
if and when the Backup Servicer is acting as the Servicer
hereunder) shall be under no duty or obligation to investigate or
inquire into the status of any Obligor or Financed Vehicle and
"actual knowledge" referred to in subparagraphs 2 and 3 of this
paragraph IV.F. shall be limited to actual knowledge of a Trustee
Officer.
G. PURCHASE OF RECEIVABLES UPON BREACH
The Servicer shall inform each Rating Agency, the
Trustee, the Backup Servicer and each Certificateholder promptly,
in writing, upon the discovery of any breach pursuant to Section
3.01 of the Pooling and Servicing Agreement. The Servicer has
no duty to investigate or determine the existence of any breach
except as specified herein. Unless the breach shall have been
cured within the time periods specified in Section 3.02 of the
Pooling and Servicing Agreement, the Trustee shall use all
reasonable efforts to cause the Seller to repurchase or replace the
affected Receivables in accordance with Section 3.02 of the
Pooling and Servicing Agreement, and enforce the repurchase or
substitution obligations of the Originator under Section 7.02 of the
Purchase Agreement. In consideration of the purchase of such
Receivable, the Trustee shall use all reasonable efforts to cause the
Seller or the Originator to remit the Purchase Amount or the
substitute Receivable to the Trustee. The Trustee's rights with
respect to this paragraph IV.G. shall not subject the Trustee to any
duty or obligation upon a breach by the Seller or the Originator of
its representations, warranties or covenants as set forth above,
other than to take action as described herein and as may be
directed by the Certificateholders in accordance with and subject
to the condition and limitation set forth in the Pooling and
Servicing Agreement.
H. SERVICING FEE
The Servicer shall be paid a monthly servicing fee
("Servicing Fee") with respect to each Receivable serviced under
this Servicing Agreement during a Collection Period in accordance
with paragraph III of Schedule A hereto. The Servicing Fee shall
be due on the succeeding Distribution Date. In the event this
Servicing Agreement is terminated on a date other than the last day
of a Collection Period, then the Servicing Fee for such period shall
be determined on a pro rata basis. In the event that the Backup
Servicer assumes the responsibilities and obligations of the
Servicer under this Servicing Agreement, the Backup Servicer shall
be entitled to receive its normal and customary fee for such
services with respect to comparable quality Receivables, not to
exceed those set forth in the Fee Schedule set forth in paragraph
III of Schedule A attached hereto.
I. MONTHLY SERVICING CERTIFICATES
The Servicer shall deliver to the Backup Servicer, the
Trustee (which shall deliver a copy to each Certificateholder), each
Rating Agency and the Seller, on each Determination Date, a
Monthly Servicing Certificate substantially in the form of Schedule
B hereto containing all information necessary for the Trustee to
calculate and make the distributions pursuant to Section 5.06 of the
Pooling and Servicing Agreement.
J. ANNUAL STATEMENT AS TO COMPLIANCE;
ACCOUNTANTS' SERVICING REPORT
1. The Servicer shall deliver to the Backup
Servicer, the Trustee, each Certificateholder, and each Rating
Agency, on or before March 31 of each year, an Officer's
Certificate, dated effective as of December 31 of the preceding
year beginning with the calendar year ended December 31, 1996,
stating that (i) a review of the activities of the Servicer during the
preceding 12-month period and of its performance under this
Servicing Agreement has been made under such officer's
supervision and (ii) based on such review, the Servicer has
materially fulfilled all its obligations under this Servicing
Agreement throughout such year, 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. A copy
of such certificate may be obtained by any Certificateholder by a
request in writing to the Servicer from any such Certificateholder.
2. Unless required more frequently by each
Rating Agency, on each yearly anniversary of the Closing Date,
the Servicer at the expense of the Trust, shall cause a firm of
Independent Public Accountants to furnish a statement to the
Trustee, each Rating Agency and each Certificateholder to the
effect that such firm has examined certain documents and records
relating to the servicing of the Receivables and the reporting
requirements with respect thereto as set forth in this Agreement,
and that, on the basis of such examination, such servicing and
reporting requirements have been conducted in compliance with
this Agreement, except for (i) such exceptions as such firm shall
believe to be immaterial and (ii) such other exceptions as shall be
set forth in such statement.
3. If (a) the Reserve Requirement shall be
increased because either (i) the "60 Day + Delinquency Rate" (as
defined in the definition of Reserve Requirement) exceeds 4.75%
of the Pool Balance (as set forth in clause (2) of the definition of
Reserve Requirement) or (ii) the cumulative Net Losses with
respect to the Receivables exceed the applicable percentages of the
Original Pool Balance (as set forth in clause (4) of the definition
of Reserve Requirement) or (b) an Event of Servicing Default shall
have occurred and be continuing, then, at the request of the
Majority Certificateholders not more frequently than once every
six months, the Trustee, within 30 days of such request, shall
cause a firm of Independent Public Accountants to review certain
documents and records of the Servicer relating to the servicing of
the Receivables and the reporting requirements with respect thereto
as set forth in this Agreement, and furnish a statement to the effect
specified in paragraph IV.J.2 above.
4. The Servicer shall deliver to each Rating
Agency, the Trustee, the Backup Servicer and each
Certificateholder, promptly after having obtained actual knowledge
thereof, but in no event later than five (5) Business Days
thereafter, written notice in an Officer's Certificate of the Servicer
of any event which with the giving of notice or lapse of time, or
both, would become an Event of Master Servicing Default under
Section 10.01 of the Pooling and Servicing Agreement or an Event
of Servicing Default under paragraph VI hereof.
K. ACCESS TO CERTAIN DOCUMENTATION AND
INFORMATION REGARDING RECEIVABLES
The Trustee and the Servicer shall, upon written
request, each provide to or cause the Certificateholders to have
access to its Custodian Files or Servicer Files, as the case may be,
relating to the Receivables. Access shall be afforded without
charge, but only upon reasonable request and during the normal
business hours at the offices of the Trustee or the Servicer, as the
case may be. Nothing in this Section shall affect the obligation of
the Trustee or the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors, and
the failure of the Trustee or the Servicer to provide access to
information as a result of such obligation shall not constitute a
breach of this paragraph IV.K.
L. RESPONSIBILITY FOR INSURANCE POLICIES;
PROCESSING OF CLAIMS UNDER INSURANCE
POLICIES; DAILY RECORDS AND REPORTS
1. The Servicer, on behalf of the Trust, will
administer and enforce all rights and responsibilities of the holder
of the Receivables provided for in the Insurance Policies relating
to the Receivables. The Servicer, on behalf of the Trust, shall
verify that an endorsement listing each Receivable has been issued
with respect to each Receivable under the Risk Default Insurance
Policy, that each Receivable is listed by the VSI Insurer as covered
under the VSI Insurance Policy, and that the Risk Default
Insurance Policy names the Trustee as the insured and the VSI
Insurance Policy names the Trustee as an additional insured.
2. The Servicer will administer the filings of
claims under the VSI Insurance Policy and Risk Default Insurance
Policy by filing the appropriate notices related to claims as well as
claims with the respective carriers or their authorized agents, all
in accordance with the terms of the VSI Insurance Policy and Risk
Default Insurance Policy. The Servicer shall file all such claims
regardless of whether a Receivable may have become a Purchased
Receivable or a Liquidated Receivable. The Servicer shall file
such claims on a timely basis after obtaining knowledge of the
events giving rise to such claims, subject to the servicing standard
set forth in paragraph IV.A. hereof. The Servicer will utilize such
notices, claim forms and claim procedures as are required by the
respective insurance carriers. The Servicer shall notify the Trustee
and Seller of (i) any such claims actually denied under the
applicable Risk Default Insurance Policy or VSI Insurance Policy
and (ii) those claims which would have been denied under such
Risk Default Insurance Policy or VSI Insurance Policy had the
Receivable(s) not been repurchased from the Trust, and in both
cases, the reasons for such denials. The Servicer shall cause all
Insurance Proceeds to be deposited to the Lock-Box Account
within two (2) Business Days of receipt thereof.
The Servicer shall not be required to pay any
premiums or, other than administering the filing of claims and
performing reporting requirements specified in the VSI Insurance
Policy and Risk Default Insurance Policy in connection with filing
such claims, perform any obligations of any named insured under
the foregoing VSI Insurance Policy and Risk Default Insurance
Policy, and shall not be required to institute any litigation or
proceeding or otherwise enforce the obligations of any insurer
thereunder. Notwithstanding any provision to the contrary in the
Pooling and Servicing Agreement, the Servicer shall not be
responsible to any Certificateholder or the Seller (i) for any act or
omission to act done in order to comply with the requirements or
satisfy any provisions of the VSI Insurance Policy or Risk Default
Insurance Policy or (ii) for any act or omission to act, absent
willful misconduct or gross negligence, done or omitted in
compliance with this Servicing Agreement. In the case of any
inconsistency between this Servicing Agreement and the terms of
any VSI Insurance Policy or Risk Default Insurance Policy, the
Servicer shall comply with the latter.
3. Notwithstanding any other provision in this
Servicing Agreement to the contrary, the Trustee and the Backup
Servicer, unless it is acting as Servicer, shall not be under any
obligation to administer the Receivables as required by the VSI
Insurance Policy and/or Risk Default Insurance Policy.
M. ENFORCEMENT
1. The Servicer will, consistent with the standard of
care required by paragraph IV.A. hereof, act with respect to the
Receivables and the Insurance Policies in such manner as will, in
the reasonable judgment of the Servicer, maximize the amount to
be received by the Trust with respect thereto.
2. The Servicer may and shall, at the direction of
the Trustee, sue to enforce or collect upon the Receivables and the
Insurance Policies (including unpaid claims), with the prior
approval of the Trustee, in the name of and as agent for the Trust.
If the Servicer commences a legal proceeding to enforce a
Receivable or an Insurance Policy, the act of commencement shall
be deemed to be an automatic assignment of the Receivable and
the related rights under the Insurance Policies by the Trustee to the
Servicer for purposes of collection only. If, however, in any
enforcement suit or legal proceeding it is held that the Servicer
may not enforce a Receivable or an Insurance Policy on the
grounds that it is not a real party in interest or a holder entitled to
enforce the Receivable or the Insurance Policy, the Trustee, on
behalf of the Trust, shall, at the Servicer's request, take such steps
as the Servicer deems reasonably necessary to enforce the
Receivable or the Insurance Policy, including bringing suit in its
name or the names of the Certificateholders. The Servicer shall
be entitled to reimbursement for expenses incurred in connection
with enforcement or collection activities with respect to the
Receivables pursuant to this paragraph IV.M.2.
3. The Servicer shall exercise any rights of recourse
against third persons that exist with respect to any Receivable in
accordance with the Servicer's usual practice and the standard of
care required by paragraph IV.A hereof. In exercising such
recourse rights, the Servicer is hereby authorized on the Trustee's
behalf to reassign the Receivable and to deliver the certificate of
title to the Financed Vehicle to the person against whom recourse
exists at the price set forth in the document creating the recourse.
4. The Servicer may not permit any rescission
or cancellation of any Receivable nor may it take any action with
respect to any Receivable or Insurance Policy which would
materially impair the rights or interest of the Trust or the
Certificateholders therein or in the proceeds thereof.
5. Except as otherwise provided in paragraph I.A.3
of Schedule A hereto, neither the Backup Servicer nor the Servicer
may increase or reduce the amount of any Scheduled Payments,
change any Receivable, APR, extend the maturity date of or
rework any Receivable, modify or change any Obligor with respect
to any Receivable or modify any other material term of a
Receivable.
N. PAYMENT IN FULL ON RECEIVABLE
Upon payment in full on any Receivable, the
Servicer shall notify the Custodian pursuant to Section 3.03 of the
Pooling and Servicing Agreement, prior to the next succeeding
Distribution Date, by a certificate of a Servicing Officer
substantially in the form of Schedule C hereto and request for
release of the related Custodian File (which certificate shall include
a statement to the effect that all amounts received in connection
with such payment in full which are required to be deposited in the
Collection Account or the Lock-Box Account pursuant to
Section 5.02 of the Pooling and Servicing Agreement have been so
deposited). Upon receipt of such request, the Custodian shall
promptly release or cause to be released such Receivable and the
related Custodian File by executing a release and assignment in the
form of Schedule D hereto, which shall be without recourse to the
Trustee. The Custodian shall be authorized, upon receipt of a
request for release from the Servicer in the form of Schedule C
hereto, to execute an instrument in satisfaction of such Receivable
and to take such other actions and execute such other documents
as the Servicer deems necessary to discharge the Obligor
thereunder and eliminate the security interest in the Financed
Vehicle related thereto. Upon request of a Servicing Officer, the
Trustee shall perform such other acts as reasonably requested by
the Servicer and otherwise cooperate with the Servicer in
enforcement of the Certificateholders' rights and remedies with
respect to the Receivables.
O. SUBSTITUTION OF COLLATERAL
In the event a Financed Vehicle sustains significant
physical damage such that the insurance company carrying the
physical damage insurance covering such Financed Vehicle
determines that the Financed Vehicle is not repairable, the
Servicer, the Trustee or the Seller may permit the Obligor to
pledge a vehicle of equal or greater market value than that of the
Financed Vehicle immediately prior to sustaining the physical
damage, provided, that any such substitution shall not be made if
to do so would void coverage of the related Receivable under the
VSI Insurance Policy or the Risk Default Insurance Policy, and
provided further that the value of Financed Vehicles (prior to
sustaining the physical damage) for which substitutions may be
made shall not exceed in the aggregate ten percent (10%) of the
Original Pool Balance. The second vehicle shall be substituted as
the collateral ("Substituted Financed Vehicle") for the Receivable
and the terms of the Receivable shall not be amended or modified
except to reflect the substituted collateral. The Servicer shall,
within 90 days of the purchase of the Substituted Financed
Vehicle, cause the certificate of title for the Substituted Financed
Vehicle to be delivered to the Trustee as Custodian pursuant to
Section 3.03 of the Pooling and Servicing Agreement; provided,
however, that if the certificate of title is not delivered to the
Trustee within such 90-day period, the Seller shall be deemed to
be in breach of its representations and warranties in the Pooling
and Servicing Agreement. In accordance with Section 3.03 of the
Pooling and Servicing Agreement, the Servicer shall make
appropriate notation in its records of the substitution of the
collateral.
P. FIDELITY BOND AND ERRORS AND
OMISSIONS INSURANCE
The Servicer shall maintain, at its own expense, (i)
an errors and omissions insurance policy and (ii) a blanket fidelity
bond (but only to the extent ALFI or any other subservicer
appointed by the Servicer to perform the collection activities and
related services specified to be performed by ALFI in paragraph
III. B. 10 hereof does not maintain a blanket fidelity bond with
respect to such servicing functions to be performed hereunder;
provided if the Servicer does participate in performing any such
functions, it shall maintain a blanket fidelity bond), in each case
with broad coverage with responsible companies on all officers,
employees or other persons acting on behalf of the Servicer in any
capacity with regard to the Receivables to handle funds, money,
documents and papers relating to the Receivables. Any such
fidelity bond and errors and omissions insurance shall protect and
insure the Servicer against losses, including forgery, theft,
embezzlement, fraud, errors and omissions and negligent acts of
such persons and shall be maintained in a form and amount that
would meet the requirements of prudent institutional motor vehicle
installment sales contract servicers. No provision of this
paragraph IV.P. requiring such fidelity bond and errors and
omissions insurance shall diminish or relieve the Servicer from its
duties and obligations as set forth in this Agreement. The Servicer
shall be deemed to have complied with this provision if one of its
respective Affiliates has such fidelity bond and errors and
omissions policy coverage and, by the terms of such fidelity bond
and errors and omission policy, the coverage afforded thereunder
extends to the Servicer. The Servicer shall cause each and every
subservicer for it to maintain a policy of insurance covering errors
and omissions and a fidelity bond which would meet such
requirements. Upon request of the Trustee, the Servicer shall
cause to be delivered to the Trustee a certification evidencing
coverage under such fidelity bond and insurance policy. Any such
fidelity bond or insurance policy shall not be cancelled or modified
in a materially adverse manner without ten days' prior written
notice to the Trustee, each Rating Agency and the
Certificateholders.
V. REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND WARRANTIES OF
SERVICER
1. Servicer is a corporation duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its incorporation, and has full corporate power and
authority to enter into this Agreement and to carry out the
provisions of this Agreement.
2. This Agreement and all other instruments or
documents to be delivered hereunder or pursuant hereto, and the
transactions contemplated hereby, have been duly authorized by all
necessary corporate proceedings of Servicer; this Agreement has
been duly and validly executed and delivered by Servicer; and,
assuming due authorization, execution and delivery by Backup
Servicer and the Trustee, this Agreement is a valid and legally
binding agreement of Servicer enforceable in accordance with its
terms.
3. The execution and delivery of this Agreement
by Servicer hereunder and the compliance by Servicer with all
provisions of this Agreement do not conflict with or violate any
applicable law, regulation or order and do not conflict with or
result in a breach of or default under any of the terms or
provisions of any contract or agreement to which Servicer is
subject or by which it or its property is bound, nor does such
execution, delivery or compliance violate the certificate of
incorporation or bylaws of Servicer.
4. During the term of this Agreement, Servicer
will maintain fire and theft, general liability, business interruption
and employee fidelity insurance coverage in such amounts and
upon such terms as shall be customary given the nature and extent
of Servicer's business activities.
5. The Servicer is not in violation of, and the
execution, delivery and performance of this Servicing Agreement
by the Servicer will not constitute a violation with respect to, any
order or decree of any court or any order, regulation or demand
of any federal, state, municipal or governmental agency, which
violation might have consequences that would materially and
adversely affect the condition (financial or other) or operations of
the Servicer or its properties or might have consequences that
would affect the performance of its duties hereunder;
6. No proceeding of any kind, including but not
limited to litigation, arbitration, judicial or administrative, is
contemplated by or, to the Servicer's knowledge, pending or
threatened against the Servicer which would under any
circumstance have a material adverse effect on the execution,
delivery, performance or enforceability of this Servicing
Agreement;
7. To the best of Servicer's knowledge all
electronic data provided by the Servicer will be at the time of
delivery thereof true and correct;
8. No information, certificate of an officer,
statement furnished in writing or report delivered to the Backup
Servicer by the Servicer will, to the knowledge of the Servicer,
contain any untrue statement of a material fact or omit a material
fact necessary to make the information, certificate, statement or
report not misleading; and
9. The Servicer is an Eligible Servicer as of the
Closing Date and shall remain an Eligible Servicer throughout the
term of this Servicing Agreement.
B. REPRESENTATIONS AND WARRANTIES OF
BACKUP SERVICER
1. Backup Servicer is a national banking
association in good standing under the laws of the United States,
and has full corporate power and authority to enter into this
Agreement and to carry out the provisions of this Agreement.
Backup Servicer has all licenses, approvals and consents to conduct
its business as contemplated by this Agreement, except to the
extent that the failure to possess such licenses, approvals and
consents does not have a material adverse effect on the ability of
the Backup Servicer to perform its duties under this Agreement.
2. This Agreement and all other instruments or
documents to be delivered hereunder or pursuant hereto, and the
transactions contemplated hereby, have been duly authorized by all
necessary corporate proceedings of Backup Servicer; this
Agreement has been duly and validly executed and delivered by
Backup Servicer; and, assuming due authorization, execution and
delivery by Servicer, this Agreement is a valid and legally binding
agreement of Backup Servicer enforceable in accordance with its
terms.
3. The execution and delivery of this Agreement
by Backup Servicer hereunder and the compliance by Backup
Servicer with all provisions of this Agreement do not conflict with
or violate any applicable law, regulation or order and do not
conflict with or result in a breach of or default under any of the
terms or provisions of any contract or agreement to which Backup
Servicer is subject or by which it or its property is bound, nor
does such execution, delivery or compliance violate the Certificate
of Incorporation or Bylaws of Backup Servicer.
C. SURVIVAL OF REPRESENTATIONS AND
WARRANTIES
The representations and warranties set forth in this
paragraph V are made as of the date of this Servicing Agreement
and shall survive the date of this Servicing Agreement. Upon
discovery by the Backup Servicer, the Trustee or the Servicer of
a breach of any of the foregoing representations and warranties,
the party discovering such breach shall give prompt written notice
to the other parties.
VI. EVENTS OF SERVICING DEFAULT
If any one of the following events ("Events of Servicing
Default") shall occur and be continuing:
(i) Any failure by the Servicer to deliver to the
Trustee any proceeds or payment required to
be so delivered under the terms of this
Servicing Agreement that shall continue
unremedied for a period of two (2) Business
Days after the earlier to occur of (a) the
date on which written notice of such failure
shall have been received by the Servicer or
(b) a Servicing Officer shall have actual
knowledge thereof or, with reasonable
diligence, should have had knowledge
thereof; or
(ii) Failure on the part of the Servicer to
observe or to perform in any material
respect any other covenants or agreements
set forth in this Servicing Agreement which
continue unremedied for a period of thirty
(30) days after the earlier to occur of (a) the
date on which written notice of such failure
shall have been received by the Servicer or
(b) a Servicing Officer shall have actual
knowledge thereof or, with reasonable
diligence, should have had knowledge
thereof; or
(iii) The entry of a decree or order by a court or
agency or supervisory authority having
jurisdiction in the premises for the
appointment of a conservator, receiver,
trustee, or liquidator for the Servicer in any
bankruptcy, insolvency, readjustment of
debt, marshalling of assets and liabilities, or
similar proceedings, or for the winding-up
or liquidation of its affairs, and the
continuance of any such decree or order
unstayed and in effect for a period of thirty
(30) consecutive days; or
(iv) The consent by the Servicer to the
appointment of a trustee, conservator,
receiver, or liquidator in any bankruptcy,
insolvency, readjustment of debt,
marshalling of assets and liabilities, or
similar proceedings of or relating to the
Servicer and involving substantially all of its
property; or
(v) The Servicer shall admit in writing its
inability to pay its debts generally as they
become due, file a petition of any applicable
bankruptcy, insolvency, or reorganization
statute, make an assignment for the benefit
of its creditors, or voluntarily suspend
payment of its obligations; or
(vi) The failure by the Servicer to provide true
and correct electronic data, in violation of
representations and warranties made by the
Servicer in paragraph V.A. hereof, which
violation shall be material and shall continue
unremedied for a period of 30 days after the
date on which written notice of such failure
requiring the same to be remedied, shall
have been sent (1) to the Servicer by the
Trustee, or (2) to the Servicer and to the
Trustee by the Holders of Certificates
evidencing not less than 20% of the Voting
Interests thereof; or
(vii) The assignment by the Servicer to a delegate
of its duties or rights hereunder, except as
specifically permitted hereunder, or any
attempt to make such an assignment; or
(viii) The failure to provide the Trustee at least
thirty (30) days prior written notice of a
merger or consolidation involving the
Servicer or assumption of obligations of the
Servicer, or the failure to receive the
approval by each Rating Agency (such
approval not to be unreasonably withheld) of
such merger or consolidation involving the
Servicer or assumption of obligations of the
Servicer pursuant to paragraph XXIII of this
Servicing Agreement; or
(ix) Any fraud, gross negligence or willful
misconduct on the part of the Servicer with
respect to the Receivables or its duties
hereunder.
Then, and in each and every case and so long as an
Event of Servicing Default described above shall not have been
remedied in the period, if any, provided for in the applicable
subsection, the Trustee may, and shall, either at the direction of
the Majority Certificateholders or, in the case of an Event of
Servicing Default described in subsections (iii), (iv) or (v) above,
at the direction of the Risk Default Insurer, terminate all of the
rights and obligations of the Servicer under this Servicing
Agreement.
On or after the receipt by the Servicer of such
written notice, all authority and power of the Servicer under this
Servicing Agreement, with respect to the Receivables or otherwise,
shall pass to and be vested in the Backup Servicer or in any
successor Servicer to be appointed by the Trustee at the direction
of the Majority Certificateholders or at the direction of the Risk
Default Insurer, provided that the direction of the Risk Default
Insurer shall be subject to the consent of the Majority
Certificateholders and each Rating Agency. The Backup Servicer
is hereby authorized and empowered to execute and deliver on
behalf of the Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other
acts with things necessary to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of
the Receivable files, or otherwise. Anything to the contrary herein
notwithstanding, the Backup Servicer may appoint agents to
perform its duties as successor Servicer hereunder.
The Servicer shall cooperate with the Backup
Servicer in effecting the termination of the responsibilities and
rights of the Servicer under this Servicing Agreement, including
the transfer to the Backup Servicer or any successor Servicer for
administration by it of all cash amounts that shall at the time be
held by the Servicer or shall have been deposited by the Servicer
in any account or that shall thereafter be received by the Servicer
with respect to a Receivable.
The Backup Servicer or the successor Servicer
appointed by the Trustee (including by reason of an Event of
Servicing Default under this Section or resignation pursuant to
Section XXII) shall be successor in all respects to the Servicer in
its capacity as Servicer and custodian under this Servicing
Agreement; provided, however that the Backup Servicer or
successor Servicer shall not be liable for any acts, omissions or
obligations of the Servicer that arose prior to such succession or
for any breach by the outgoing Servicer of any of its
representations and warranties contained in this Servicing
Agreement or in any related document or agreement, and the
outgoing Servicer shall not be relieved of any liability or
obligations hereunder to the extent such obligation or liability arose
prior to such succession. The Servicer shall be entitled to receive
all Servicing Fees and recovery of all costs up to the date of the
transfer to the successor Servicer of all functions referenced under
this Servicing Agreement.
VII. REMEDIES
In addition to the right to terminate contained in
Section VI, the Servicer agrees that upon the happening of any
Event of Servicing Default (as defined herein), the Backup
Servicer or the successor Servicer may avail itself of any other
relief to which the Backup Servicer or the successor Servicer may
be legally or equitably entitled, subject only to the provision of
Section XIII of this Servicing Agreement.
VIII. RESPONSIBILITY AND AUTHORITY OF
SERVICER
Subject to the limitations set forth herein or in the
Pooling and Servicing Agreement, the Servicer shall have the full
power and authority, acting alone and without the consent of the
Trustee or the Backup Servicer, to do any and all things in
connection with such servicing and administration that it may deem
reasonably necessary or desirable, to collect the Receivables, to
disburse the proceeds and to protect the interests of the Trustee
and the Certificateholders in the Receivables.
IX. COLLECTIONS; LOCK-BOX ACCOUNT AND
RELATED BANK ACCOUNTS
Any amounts received by the Servicer, including all
payments by or on behalf of the Obligors (other than Purchased
Receivables), all Liquidation Proceeds, Insurance Proceeds and
other Recoveries, all as collected during the Collection Period in
respect of a Receivable being serviced by the Servicer, shall be
remitted to the Lock-Box Account as soon as practicable, but in
no event later than the close of business on the Business Day after
receipt thereof by the Servicer.
The Servicer shall maintain the Lock-Box Account
and shall collect and hold in trust (for the benefit of the Trust) in
such account all funds received on account of the Obligors until
such funds are transferred to the Trustee or in accordance with its
instructions. On a daily basis the posted balance (in excess of
$2,000) related to the Receivables in the Lock-Box Account shall
be transferred by wire transfer to the Trustee.
Such funds shall not be commingled with the funds
of any other person; provided that there may be deposited in the
Lock-Box Account moneys collected on other motor vehicle
installment sales contracts originated by Aegis Finance and its
affiliates. The Servicer shall be responsible for all charges with
respect to the Lock-Box Account and, insofar as such charges
relate to the Receivables, shall be reimbursed in accordance with
the instructions set forth in the Monthly Servicer Certificate. The
Servicer shall provide written notice to the Trustee of the location
and account number of the Lock-Box Accounts promptly after
establishing or changing the same.
Wells Fargo Bank, N.A. will serve as the initial
Lock-Box Account Depository with respect to the Receivables.
The Servicer shall provide thirty (30) days' prior notice to the
Trustee of its appointment of a successor Lock-Box Account
Depository, which such successor Lock-Box Account Depository
shall be an Eligible Institution.
The Servicer shall deposit into the Lock-Box
Account all amounts (including late payments) remitted by
Obligors to the Servicer under the terms of the Receivables within
one (1) Business Day after receipt thereof. The Servicer shall
provide the Lock-Box Account Depository with a report providing
instructions related to distributions of funds from the Lock-Box
Account to the Collection Account.
The Servicer shall deposit in the Collection Account
the aggregate Purchase Amount with respect to Purchased
Receivables. All such deposits shall be made in Automated
Clearinghouse Corporation next-day funds or immediately available
funds, on the Business Day following receipt thereof.
X. DOCUMENTS AND RECORDS
A. SERVICING DOCUMENTS AND RECORDS
1. All documents with respect to an Obligor
account and delivered to Servicer hereunder will be held in trust
and kept safely by Servicer as delivered.
2. The Servicer shall hold in trust and keep
safely for the benefit of the Trust the computer records relating to
the Obligor accounts and the proceeds thereof.
3. The Servicer will furnish copies of any audit
reports prepared for the Servicer (either internal or otherwise) with
respect to the Receivables to the Trustee promptly upon the receipt
thereof by Servicer.
4. All data, documents and information held by
the Servicer on behalf of the Trust shall be held in confidence and
not used or disclosed for any purpose other than as contemplated
by this Servicing Agreement or as required by law or as may be
necessary to enforce their respective rights under this Servicing
Agreement.
B. REPORTS AND CREDIT AGENCIES
1. In addition to its normal reporting, the
Servicer shall also furnish Backup Servicer upon request with such
reports as are required by this Servicing Agreement and such
additional information underlying the data in the aforesaid reports
as may be reasonably pertinent to Backup Servicer's needs and that
can be generated by the Servicer's existing data processing system
without undue effort or expense. The reports required by this
Servicing Agreement shall be substantially in the form of Schedule
B hereto.
2. Backup Servicer and Trustee understand that
all transactions with respect to an Obligor account will be reported
by Servicer to one or more Credit Agencies in the name of the
Seller or its applicable affiliate as required by contract and by law.
Servicer will comply with all Credit Agency agreements.
XI. INDEMNIFICATION
The Servicer agrees to indemnify the Backup
Servicer and the Trustee and hold the Backup Servicer and the
Trustee, their respective officers, employees and agents harmless
against any and all claims, losses, penalties, fines, forfeitures,
legal fees and related costs, judgments, and any other costs, fees
and expenses that the Backup Servicer or the Trustee, as the case
may be, may sustain in any way related to failure of the Servicer
to perform its duties and service the Receivables in compliance
with the terms of this Servicing Agreement. The Servicer shall
immediately notify the Backup Servicer and the Trustee if a claim
is made by a third party with respect to this Servicing Agreement
or the Receivables, assume (with the consent of the Backup
Servicer and the Trustee) the defense of any such claim and pay all
expenses in connection therewith, including counsel fees, and
promptly pay, discharge and satisfy any judgment or decree which
may be entered against it or the Backup Servicer or the Trustee in
respect of such claim. This right to indemnification shall survive
the termination of this Servicing Agreement.
XII. TERM AND TERMINATION
1. The Servicer agrees to service all
Receivables for their full term and until their expiration or earlier
termination.
2. In the event the Trustee, on behalf of the
Trust, transfers any Receivable(s), the transferee shall have the
option to terminate the servicing of the respective Obligor
account(s) by providing thirty (30) days written notice to Servicer.
3. The holder of the Residual Interest may at
any time replace the Servicer with a substitute Eligible Servicer
upon the delivery of written notice of such substitution stating the
name and address of such substitute Servicer to the Master
Trustee, the Trustee, each Rating Agency and the predecessor
Servicer at least 90 days prior to the change in Servicer, provided
(1) the holder of the Residual Interest delivers to the Trustee in
connection with such substitution evidence of the consent of at
least the Majority Certificateholders to the change and (2) provided
further that such substitute Servicer shall have executed an
agreement of assumption, acceptable to the Trustee and each
Rating Agency, under which it assumes every obligation and duty
of the Servicer under this Servicing Agreement. Upon the
occurrence of the foregoing, such substitute Servicer shall be
deemed the Servicer for all purposes under this Servicing
Agreement.
Should the transferee or holder of the Residual
Interest elect to terminate the servicing as indicated above, the
Servicer shall be entitled to a five ($5.00) dollars per Receivable
transfer fee, such fee to be paid by the transferee or holder of the
Residual Interest on the date of transfer.
XIII. ARBITRATION AND ATTORNEYS' FEES
1. It is understood that this Servicing
Agreement is made in good faith and should there arise, from any
unforeseen cause, a difference of opinion or of interpretation of
this Servicing Agreement which cannot be settled amicably
between the Trustee, the Backup Servicer and the Servicer, such
difference or interpretations shall be submitted to a decision of a
board of arbitration.
2. The aforementioned board of arbitration shall
be composed of two (2) arbitrators and an umpire meeting in the
State of Minnesota, unless otherwise agreed to by the Trustee, the
Backup Servicer and the Servicer.
3. The members of the board of arbitration shall
be active or retired disinterested officials of insurance companies
or financial institutions. Each party shall appoint its arbitrator, and
the two arbitrators shall choose an umpire before instituting the
hearing. If the respondent fails to appoint its arbitrator within
thirty (30) days after being requested to do so by the claimant, the
latter shall also appoint the second arbitrator.
If the two arbitrators fail to agree upon the
appointment of an umpire within two (2) weeks after their
nominations, each of them shall name three (3), of whom the other
shall decline two (2) and the decision shall be made by drawing
lots. The claimant shall submit its initial brief within twenty (20)
days from appointment of the umpire. The respondent shall submit
its brief within twenty (20) days thereafter, and the claimant may
submit a reply brief within ten (10) days after filing of the
respondent's brief.
4. The board shall make an award with regard
to the custom and usage of the business contemplated by this
Servicing Agreement. The board shall issue its award in writing
based upon a hearing at which evidence may be introduced without
following strict rules of evidence but in which cross-examination
and rebuttal shall be allowed.
The board shall make its award within thirty
(30) days following the termination of the hearing unless the
parties consent to an extension. A decision by the majority of the
members of the board shall become the award of the board and
shall be final and binding upon all parties to the proceeding. Either
party may apply to the United States District Court, sitting in the
State of Minnesota, for an order confirming the award. If such an
order is issued, the attorneys' fees of the party so applying and the
court cost will be paid by the party against whom confirmation is
sought.
5. Each party shall bear the expense of its
arbitrator and shall jointly and equally bear with the other party
the expense of the umpire. The remaining costs of the arbitration
proceeding (including attorneys' fees of the parties) shall be
allocated by the board in its award. Notwithstanding any other
provision hereof, any expenses (including attorney's fees) incurred
by the Trustee or the Backup Servicer shall be reimbursed from
the Trust.
XIV. WAIVERS
No failure or delay on the part of the Servicer, the
Trustee or the Backup Servicer in exercising any power, right or
remedy under this Servicing Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power,
right or remedy, preclude any other or further exercise thereof or
the exercise of any other power, right or remedy, except by a
written instrument signed by the party to be charged or as
otherwise expressly provided herein.
XV. NOTICES
Except as otherwise provided herein, all notices,
requests, consents, demands and other communications given
hereunder shall be in writing. All notices of whatever kind shall be
either personally delivered or sent by telecopy or other form of
rapid transmission and confirmed by United States mail, properly
addressed and with full postage prepaid, addressed as follows:
To Servicer: Aegis Auto Finance,
Inc.
525 Washington
Boulevard
Jersey City, NJ
07310
Attn: Joseph F.
Battiato, President
Telecopy No. (201)
418-7339
To Backup Servicer: Norwest Bank
Minnesota,
National Association
Corporate Trust
Services Asset
Backed
Administration
Sixth Street and
Marquette Ave.
Minneapolis, MN
55479-0070
Telecopy No. (612)
667-3539
To Trustee: Norwest Bank
Minnesota,
National Association
Corporate Trust
Services Asset
Backed
Administration
Sixth Street and
Marquette Ave.
Minneapolis, MN
55479-0070
Telecopy No. (612)
667-3539
or to such other address as such party shall have
specified in writing in the manner set forth above.
All notices to the Certificateholders shall be sent in
the manner specified in the Pooling and Servicing
Agreement.
XVI. ASSIGNABILITY
No party may assign any of its rights or obligations
hereunder without the prior written consent of the other parties.
Nothing in this Servicing Agreement is intended to confer,
expressly or by implication, upon any Person other than the
Trustee, the Backup Servicer and the Servicer any rights or
remedies under or by reason of this Servicing Agreement.
XVII. FURTHER ASSURANCES
Each party agrees, if reasonably requested by
another party, to execute and deliver such additional documents or
instruments and take such further actions as may be reasonably
necessary to effect the transactions contemplated by this
Agreement.
XVIII. COUNTERPARTS
This Servicing Agreement may be executed in
counterparts, each of which shall be deemed an original but all of
which taken together shall constitute but one and the same
document.<PAGE>
XIX. ENTIRE AGREEMENT; AMENDMENTS
This Servicing Agreement, including the Schedules
attached hereto and the documents referred to herein, contains the
entire agreement between the parties hereto with respect to the
transactions contemplated hereby and supersedes all prior
understandings, negotiations, commitments and writings with
respect thereto. This Servicing Agreement may not be modified,
changed or supplemented except upon the express written consent
of each of the parties hereto. The Trustee shall not agree to any
amendment of this Servicing Agreement without the prior written
consent of the Majority Certificateholders. In the event of any
conflict between this Servicing Agreement and a Schedule hereto,
the Schedule shall govern.
XX. INSPECTION
Any party hereto or its designated agents, and any
Certificateholder, may, during ordinary business hours and after
reasonable notice, inspect, audit, check and make abstracts from
any party's books, accounts, records and other papers directly
pertaining to the subject matter of this Servicing Agreement or the
Schedules hereto. All costs and expenses of such activities shall
be borne by the inspecting party. Each party shall use reasonable
efforts to facilitate any such inspection.
XXI. LIMIT ON TRUSTEE'S PAYMENT
OBLIGATIONS
Neither the Trustee, nor Norwest Bank Minnesota,
National Association, nor any of its affiliates, shall have any
obligation to make any payment to the Servicer in respect of any
payment obligation of the Trustee to the Servicer under this
Servicing Agreement, any Schedules, riders or amendments hereto
otherwise than from funds held by the Trustee pursuant to the
Pooling and Servicing Agreement. The Servicer hereby
specifically consents to the same and agrees that under no
circumstances will it offset or otherwise withhold amounts owing
to it from remittances made by it to the Trustee pursuant to this
Servicing Agreement, or any Schedules hereto or any riders or
amendments hereto.
XXII. SERVICER NOT TO RESIGN
1. The Servicer shall not resign from the
obligations and duties imposed on it as Servicer under this
Servicing Agreement except (i) in the event that the performance
of its duties under this Servicing Agreement shall no longer be
permissible under applicable law or it shall no longer be an
Eligible Servicer or (ii) if the Backup Servicer has taken over the
duties of the Servicer in accordance with the terms hereof or upon
the appointment of a successor or substitute Servicer (other than
the Backup Servicer) to take over the duties and obligations of the
Servicer hereunder. Notice of any such determination permitting
the resignation of the Servicer shall be communicated in writing to
the Trustee, the Backup Servicer and each Rating Agency at the
earliest practicable time and any such determination shall be
evidenced by an Opinion of Counsel to such effect delivered to the
Trustee concurrently with or promptly after such notice. No such
resignation shall become effective until an Eligible Servicer shall
have assumed the responsibilities and obligations of the Servicer;
provided, however, in the event that the Backup Servicer is unable
to act as Servicer hereunder and a successor Eligible Servicer has
not been appointed within thirty (30) days, the Trustee may
petition a court of competent jurisdiction for the appointment of a
successor Eligible Servicer acceptable to the Majority
Certificateholders.
2. Upon the Servicer's receipt of notice of
termination pursuant to paragraph VI. or upon the Servicer's
resignation pursuant to this paragraph, the Backup Servicer shall
perform as Servicer until such time, if ever, as a successor
Servicer who is an Eligible Servicer reasonably acceptable to each
Rating Agency and the Majority Certificateholders shall have been
appointed by the Trustee and shall have assumed the duties and
responsibilities of the Servicer.
3. 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 applicable portion of the
Servicing Fee and all of the rights granted to the predecessor
Servicer, by the terms and provisions of the Pooling and Servicing
Agreement.
XXIII.
MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF
THE
OBLIGATIONS OF, OR RESIGNATION OF
SERVICER.
Any Person (a) into which the Servicer may be
merged or consolidated, (b) which may result from any merger or
consolidation to which the Servicer shall be a party, (c) which may
succeed to the properties and assets of the Servicer substantially as
a whole, or (d) which may succeed to the duties and obligations of
the Servicer under this Servicing Agreement which Person
executes an agreement of assumption to perform every obligation
of the Servicer hereunder, shall be the successor to the Servicer
under this Servicing Agreement without further act on the part of
any of the parties to this Servicing Agreement; provided, however,
prior to any merger or consolidation of, or assumption of the
obligations of, the Servicer, each Rating Agency shall have
delivered to the Servicer, the Backup Servicer, the Trustee and
each Certificateholder a statement that such transaction shall not
have an adverse effect on the ratings assigned to the Rated
Certificates; further provided, however, that (i) immediately after
giving effect to such transaction, no Event of Servicing Default (as
defined in paragraph VI.), and no event which, after notice or
lapse of time, or both, would become an Event of Servicing
Default shall have happened and be continuing, (ii) the Servicer
shall have delivered to the Trustee an Officer's Certificate stating
that such consolidation, merger or succession and such agreement
of assumption comply with this paragraph XXIII. and that all
conditions precedent provided for in this Servicing Agreement
relating to such transaction have been complied with, and (iii) the
Servicer shall have delivered to the Trustee an Opinion of Counsel
either (A) stating that, in the opinion of such counsel, all financing
statements, continuation statements and amendments and notations
on certificates of title thereto have been executed and filed that are
necessary fully to preserve and protect the interest of the Trustee
in the Receivables and the Financed Vehicles, and reciting the
details of such filings, or (B) stating that, in the opinion of such
counsel, no such action shall be necessary to preserve and protect
such interest. Without receipt by the Trustee of written notice
from the Servicer of such merger, consolidation or succession at
least thirty days prior to such action by the Servicer and approval
by each Rating Agency and the Majority Certificateholders, which
approval shall not be unreasonably withheld, such merger,
consolidation or succession shall constitute an Event of Servicing
Default with respect to the Servicer.
XXIV. GOVERNING LAW.
This Servicing Agreement shall be governed by and
construed in accordance with the laws of the State of New York
without regard or reference to principles of conflicts of laws of
such State.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have
caused this Servicing Agreement to be executed as of the date first
written above.
SERVICER:
AEGIS AUTO
FINANCE,
INC.
By:
Joseph F.
Battiato
President
[Signatures continue on following page]
BACKUP
SERVICER:
NORWEST
BANK
MINNESOTA
, NATIONAL
ASSOCIATIO
N, in its
capacity as
Backup
Servicer under
the Pooling
and Servicing
Agreement
By:
Name:
Stephen Seitz
Title:
Corporate Trust Officer
TRUSTEE:
NORWEST
BANK MINNESOTA,
NATIONAL
ASSOCIATION, in its
capacity as
Trustee under the
Pooling and
Servicing Agreement
By:
Name:
Stephen Seitz
Title:
Corporate Trust Officer
[Counterpart signature page to Servicing Agreement]
<PAGE>
ACKNOWLEDGEMENT AND AGREEMENT OF SELLER
The undersigned hereby acknowledges this Servicing
Agreement and agrees, in its capacity as Seller, to be bound by the
applicable provisions hereof.
AEGIS AUTO FUNDING CORP.,
In its capacity as Seller under the
Pooling and Servicing Agreement
By:
Brendan Meyer
Vice President
SCHEDULE A - SUMMARY OF SERVICES
I. SERVICES
A. CONTRACT SERVICES - COLLECTIONS
1. Prior to the execution of this Agreement
Servicer has established a Lock-Box
Account at Wells Fargo Bank, N.A.
2. Servicer shall be responsible for the mailing
of payment coupon books or monthly
statements. Payment books shall contain
coupons in sufficient quantity to allow
Obligor to enclose a coupon with each
scheduled payment per the terms of the
related contract. Each payment coupon book
may contain up to 36 coupons.
For those Obligor accounts whose contract
term exceeds 36 months a new coupon book
for the remaining term will be sent in the
35th month.
3. Servicer shall process Obligor accounts for
which the Obligor fails to make a payment
on the applicable payment due date (a
"Delinquency") on the following basis:
a. Commencing on the first business
day on which an Obligor is
delinquent by more than ten (10)
days, Servicer shall, at the Servicer's
discretion, either (1) phone the
Obligor, (2) if no contact is made
after phoning, the Servicer may send
a letter to the Obligor asking the
Obligor to immediately contact the
Servicer, or (3) order a field call by
an outside agency to the Obligor.
b. Servicer may request the Seller's
authorization to repossess an
Obligor's vehicle at any time after an
Obligor is delinquent and Servicer
has satisfactory reason to believe that
Obligor will not pay. However,
such authorization will be deemed
given if Servicer cannot obtain
timely authorization, provided
Servicer has determined that any
delay would impede the Servicer's
ability to service the Obligor's
vehicle. Servicer shall create and
maintain a report of any Obligor's
vehicle it repossesses and all events
leading to such action.
c. If an Obligor requests a change to
his normal monthly due date (a "Due
Date Change") and if the Obligor has
defaulted on his obligations under a
Receivable or if the Servicer
reasonably believes such default is
imminent, Servicer may grant such
Due Date Change to the extent the
Servicer deems in the best interest of
the Certificateholders; however, no
Due Date Change shall be granted
beyond the currently due month.
d. Except as otherwise provided in this
agreement, if an Obligor has been
delinquent for more than thirty-five
(35) days, Servicer shall request
Seller's authorization to repossess
pursuant to Section IA3.b. of this
Schedule A.
e. If an Obligor requests an extension
of the currently required monthly
payment to extend the end of the
loan term (a "Loan Extension") and
if the Obligor has defaulted on his
obligations under a Receivable or if
the Servicer reasonably believes such
default is imminent, Servicer may to
the extent the Servicer deems in the
best interest of the Certificateholders
grant such Loan Extension once each
year.
Servicer shall grant a Loan
Extension only to those Obligors
who have made at least six (6)
regularly scheduled payments; and in
no case shall the number of Loan
Extensions per loan exceed the
number of years in the loan term. In
no event may any modification cause
the final payment date to extend
beyond the Final Scheduled
Distribution Date for the
Receivables.
B. CONTRACT SERVICES - CUSTOMER SERVICE
1. If Servicer receives written or oral notice
from an Obligor of such Obligor's refusal to
make payments on the Obligor's account,
Servicer shall enter such notice into its
computer records.
2. The Seller shall have the responsibility to
apply for title to the motor vehicle covered
by the contract. Servicer shall send, or
cause to be sent, to Trustee all titles to such
motor vehicles. With respect to titles
received, Servicer shall verify that Aegis
Finance is noted as lien holder.
3. Servicer shall notify Originator and/or
Custodian of any discrepancies with respect
to the lien holder indicated on received
titles. Servicer shall further notify Originator
and/or Custodian of missing titles.
Originator shall be responsible for correcting
title discrepancies and obtaining missing
titles.
4. Servicer shall not release any title to a
vehicle except upon the full payment of the
remaining obligor principal balance by the
Obligor or others, or the repossession and
sale of the related vehicle, or the release of
the title to Originator for the correcting of
title problems, or as required by law, or as
directed by Custodian. Custodian will
release title to Servicer on a timely basis,
pursuant to Section 3.04(c) of the Pooling
and Servicing Agreement.
5. Servicer shall perform the following
insurance tracking functions with respect to
a contract until the earlier of the
repossession and sale of the vehicle or the
remaining obligor principal balance is paid
in full by the Obligor or others:
a. Seller shall provide initial physical
damage insurance information at the
time of portfolio boarding.
b. Servicer shall notify Seller and/or
Custodian if Servicer has not
received a copy of a physical damage
insurance policy for an Obligor's
vehicle within twenty (20) days of
the receipt of a Notice of
Cancellation/Non-Renewal.
c. Servicer shall produce a monthly
Insurance Expiration report showing
those Obligor accounts for whom a
Notice of Cancellation/Non-Renewal
has been received or the expiration
date for an Obligor's insurance
policy in Servicer's computer records
has elapsed.
d. Servicer shall not be liable for any
loss or liability resulting from the
lack of insurance coverage on any
Obligor vehicles if it has complied
with the foregoing.
6. Servicer shall negotiate and settle any claims
relating to physical damage to a vehicle and
endorse any insurance company drafts for
such claim subject to the following
conditions:
a. Servicer shall endorse a draft for
payment of a claim to body shop or
other auto repair service.
b. If the Obligor's account is more than
thirty (30) days delinquent, Servicer
shall attempt to collect all currently
due amounts. If unable to make such
collection, Servicer shall request
Seller's authorization to repossess
vehicle from the repair facility
pursuant to Section I-A-3.b. of this
Schedule A. To effect such
repossession, Servicer may negotiate
for the release of the vehicle from
the repair facility in exchange for the
endorsed draft in the amount of the
repairs and an agreement to hold the
repair facility harmless for the
release of the vehicle.
7. Servicer shall calculate early payoffs of
remaining obligor principal balance per the
terms of the related sales contract. Seller
authorization is required for any payoff
amount other than the full calculated
amount. Notwithstanding any condition in
this Agreement, Servicer, however, shall
have the right (in the event of early payoff)
to waive any remaining obligor principal
balance of twenty-five dollars ($25.00) or
less.
8. Upon receipt by Servicer of the full payment
of the remaining Obligor principal balance
by the Obligor, the Custodian shall release
to the Servicer which in turn shall release
and forward to the Obligor the original of
the installment sales contract.
II.
A. SPECIAL COLLECTION ACTIVITIES
1. Repossession and Sale
The following terms shall govern the
repossession and sale of the vehicle:
a. Servicer shall order repossession
services from licensed, bonded
agents.
b. Within five (5) business days after
repossession or sooner if required by
law, Servicer shall prepare and mail
a Notice of Intent (the "NOI") to the
Obligor and send a copy of the NOI
once per month together with their
monthly reports to the Seller.
c. Servicer shall cause the repossessed
vehicle to be delivered to a location
as designated by Seller for the
amount of time required by
applicable State law for Obligor
redemption (the "Obligor
Redemption Period").
d. After the expiration of the Obligor
Redemption Period, Seller may
authorize Servicer to arrange for the
sale and disposition of the vehicle.
2. Credit Enhancement Claims Filing
Within the provisions of the Fee Schedule
set forth in paragraph III of this Schedule,
Servicer shall perform the following
insurance functions with respect to a
Receivable and will comply with all
necessary operating and claims filing
procedures (which may be modified by the
insurance company from time to time and by
mutual consent of the Seller and the
Servicer) pursuant to each Credit
Enhancement:
a. With respect to the Risk Default
Insurance Policy, Servicer shall: (1)
file notice of loss within the earlier
of (a) 60 days from the date of
expiration of the Obligor Redemption
Period or (b) 30 days from the date
the Financed Vehicle was sold at
auction, (2) maintain claim data
components, (3) calculate the claim
amount and (4) submit to the Insurer
all supporting documents for each
claim required by the Risk Default
Insurance Policy.
b. With respect to the VSI Insurance
Policy, Servicer shall:
(1) if appropriate, prior to
liquidation and within ninety (90)
days of date of loss, file an initial
notice of loss which shall mean the
following for purposes of this
Section only:
(A) For physical damage,
the date of repossession;
(B) For instrument non-
filing insurance, the date of
filing of a superior lien;
(C) For a skip, the date of
the first delinquency plus 150
days; and
(D) For a repossession,
the date the damage
occurred.
(2) maintain physical and electronic
information, (3) calculate the claim
amount, (4) prepare physical and
electronic information and complete
claim form and (5) in the case of a
claim dispute, select an independent
appraiser and file an appraisal report
within thirty (30) days of initial
claim filing rejection.
3. Deficiency
a. After the repossession and sale of a
vehicle, in order to calculate a
deficiency, if any, Servicer shall
request the cancellation of any
financed product related to the
vehicle (e.g., credit life, disability
insurance, etc.), file for any refunds
associated therewith and furnish a
cancellation report to Custodian.
b. After taking into account any
cancellation refunds, Servicer shall
compute any deficiency resulting
from the repossession and sale of a
vehicle and notify Obligor of any
such deficiency.
c. At the discretion and instruction of
the Seller, Servicer shall commence
collection activities on any such
established Obligor deficiency
accounts.
4. Bankruptcies
If Servicer receives written notice that an
Obligor has become subject to bankruptcy
proceedings under Federal or State law,
Servicer or its designee (attorney if
required) shall provide the following
services as necessary:
a. Servicer shall immediately cease all
collection activity and otherwise
comply with the Bankruptcy Code
and all related laws and regulations.
b. Servicer shall file a claim with the
applicable court.
c. Servicer shall obtain legal services
for the prosecution of the claim
when necessary.
d. Servicer shall monitor the receipts of
funds being paid through the
applicable bankruptcy plan.
e. Upon dismissal of an action under
bankruptcy, Servicer shall service
the Obligor's account pursuant to the
standard collection procedures of
Section I of this Schedule A.
f. Should the Obligor account be the
subject of a reaffirmation or court
ordered modified payment schedule,
Servicer shall administer and collect
the account in the same fashion as
that prior to the bankruptcy
proceedings.
5. Disability
If Servicer is notified in writing of an
Obligor's disability claim and evidence of
the Obligor's disability insurance policy is
on file, Servicer shall suspend all collection
activity on such Obligor's account until such
time as Obligor resumes his normal payment
schedule, however:
a. Servicer shall continue to monitor
such Obligor's account until the
earlier of the date on which:
1) A claim approval or denial
has been received; or
2) The Obligor resumes
payment, at which time
Servicer will resume
collection activity pursuant to
Section III of this agreement.
b. If Obligor's disability claim is
denied, Servicer shall resume
collection activity pursuant to Section
I of this Agreement and the terms
and conditions of the related sales
contract.
c. Servicer's collection procedures for
a disability account shall comply
with the terms stipulated on the
related sales contract.
6. Allotments
Servicer shall have been notified at the time
of loan boarding if an Obligor will be
subject to military allotment processing. If
Servicer has not received an allotment
verification on a designated allotment
account within 60 days of any subsequent
allotment establishment and the designated
Obligor's account is greater than 45 days
delinquent, Servicer shall request Seller's
authorization to repossess pursuant to
Section I.A.3.b of this Schedule A.
7. Skips
If Servicer determines that Obligor has
become a skip, Servicer shall conduct skip-
tracing efforts for a period of 30 days. If
such skip-tracing efforts prove unsuccessful,
Servicer will file (if applicable) the
necessary claim forms with Seller's
insurance carriers as described in II A(2) of
Schedule B of this document.
III. FEE SCHEDULE
Servicer shall be entitled to receive the following fees and
costs no later than the Distribution Date immediately
following each related Collection Period:
A. GENERAL SERVICING
1. For all Receivables with an outstanding
balance greater than zero dollars ($0.00) as
of the first day of the related Collection
Period, a monthly serving fee equal to one-
twelfth of 1.85% of the outstanding balance
or $10.00, whichever is greater.
2. All extension fees that are received during
the related Collection Period.
<PAGE>
3. All late charges that are received during the
related Collection Period.
4. A charge of $25.00 per filing of Credit
Enhancement claims forms with the
designated Insurers during the related
Collection Period.
B. EXPENSE REIMBURSEMENT
1. All out-of-pocket expenses incurred by
Servicer in the pursuit of its job functions as
described in this Schedule (including but not
limited to filing fees, investigation fees,
repossession fees, transportation and storage
fees, legal fees, DMV fees, etc.) shall be
reimbursed to the Servicer at Servicer's
actual cost. In addition Servicer shall be
entitled to an administrative fee equal to 8%
of all out-of-pocket expenses. Servicer shall
provide the Trustee with documentation for
all such out-of-pocket expenses as a
condition to payment.
2. All postage costs associated with the mailing
of insurance follow-up letters, payment
statements, including Notice of Intent and
Deficiency Statement, during the related
Remittance Period.
3. All expenses relating to establishing,
maintaining and transferring funds from the
Lock-Box account to the relevant Collection
Account maintained by the Trustee. Such
expenses shall be reimbursed at actual cost
provided the Servicer include copies of
related invoices.
C. DEFICIENCY SERVICING
For those Obligor accounts that have been the
subject of a short insurance payoff, within the
related Collection Period, Servicer shall cause the
account to be moved to a "non-performing" loan
pool and marked inactive.
All collection activity by Servicer will be suspended
until such time as the Seller directs Servicer to
resume collection efforts. Upon such reactivation,
a one time set-up fee of fifty ($50.00) dollars will
be charged and payable on the next Distribution
Date.
For each Collection Period that an Obligor account
remains in the above described deficiency condition,
a servicing fee will be charged and payable on the
related Distribution Date based on the following
schedule:
1. $1.00 per month for months 1-4 that a
subject Receivable remains in the nonperforming loan pool.
2. $0.50 per month for months 5-8 that a
Receivable remains in the nonperforming loan pool.
3. $0.10 per month for each month thereafter
that a Receivable remains in the nonperforming loan pool.
SCHEDULE B
SERVICER MONTHLY ACTIVITY REPORT
Aegis Auto Receivables Trust 1996-3
Automobile Receivable Pass-Through Certificates
Series 1996-3
I. COLLECTION ACTIVITY INTEREST PRINCIPAL
TOTALS
Beginning of Period Pool Principal Balance 0
Additional Receivables Purchased 0
Scheduled Payments 0 0
0
Full & Partial Prepayments 0 0
0
Risk Default Insurance Cash Proceeds 0 0
0
Receivables Repurchased by Seller
Recoveries (on Liquidated and Defaulted
Receivables)
Miscellaneous Servicer Collections
Available Distribution Amount 0 0
0
Net Losses 0
End of Period Pool Balance 0
II. SERVICING COMPENSATION
Amount
(ATTACH BREAKOUT OF FEES)
Servicer Compensation
III. POOL BALANCE INFORMATION
Original Pool Balance: Beginning of Period
End of Period
Pool Balance
Pool Factor
Weighted Average Coupon (WAC)
Weighted Average Remaining Maturity (WAM)
Remaining Number of Contracts
IV. RECEIVABLES REPURCHASED/SUBSTITUTED BY SELLER
Number of Receivables Repurchased
Principal Amount
Number of Additional Receivables Substituted
Principal Amount
V. EXTENSIONS
Number of Extensions granted
Principal Amount
VI. DELINQUENCY INFORMATION*
% of
# of Principal Outstanding
Contracts Balance Pool Balance
30-59 Days Delinquent
60-90 Days Delinquent
90 Days or more Delinquent
*Excluding Liquidated and Defaulted Receivables
VII. REPOSSESSION INFORMATION
Current Period Inventory
Number of Receivables as to which Vehicles have been
Repossessed (and NOI expired)
Principal Balances of Receivables relating to Vehicles
which have been Repossessed (and NOI expired)
VIII. LIQUIDATED AND DEFAULTED RECEIVABLES
Current Period Cumulative
Number of Liquidated Receivables*
Principal Balance of Liquidated Receivables**
(Prior to Liquidation)
Number of Defaulted Receivables***
Principal Balance of Defaulted Receivables
Total Principal Balance of Liquidated Defaulted Receivables
*Includes Receivables transferred to Risk Default Insurer for liquidation
**Excludes Receivables previously characterized as Defaulted Receivables
***180 days delinquent
IX. RECOVERIES
Current Period Cumulative
Liquidation Proceeds
VSI Physical Damage/Loss Insurance Proceeds
Rebates of Servicer Cancelled Warranty Contracts
Consumer Insurance
Other
Total Recoveries
X. RISK DEFAULT POLICY INSURED RETENTION AMOUNT
Beginning Balance
Add: Prefunded Receivables
Add: Quarterly Reserve Loss Deficiency
Less: Approved Claims
Less: Surplus in Quarterly Loss Reserve
Ending Balance
<PAGE>
XI. NET LOSSES
Current Period Cumulative
Principal Balance of Liquidated and Defaulted Receivables
Less: Recoveries
Less: Risk Default Insurance Proceeds
Net Losses
XII. INSURANCE CLAIMS
Current Period Cumulative
Number of Risk Default Insurance Claims
Amount of Risk Default Insurance Claims
Retention Amount
Number of VSI Insurance Claims
Amount of VSI Physical Damage/Loss Insurance Claims
Number of Risk Defaulted Insurance Claims Rejected
Principal Balance of Receivables relating to Risk Default
Insurance Claims Rejected
SERVICER COMPENSATION BREAKDOWN Amount
Servicing Fees
Collection Expenses Incurred
Claim Filing Fees
Bank Charges
Late fees, extension fees collected
Postage
Total Servicer Compensation
<PAGE>
SCHEDULE C
REQUEST FOR RELEASE OF DOCUMENTS
To: Norwest Bank Minneapolis, National Association,
as Custodian
Sixth Street and Marquette Avenue
Minneapolis, MN 55479-0070
Re: Aegis Auto Receivables Trust 1996-3; Servicing
Agreement dated as of September 1, 1996 by and
among Aegis Auto Finance, Inc., Norwest Bank
Minneapolis, National Association, as Trustee, and
Norwest Bank Minneapolis, National Association,
as Backup Servicer.
In connection with the administration of the pool of
Receivables held by you as Custodian for the Trustee, we request the
release and acknowledge receipt of the (Custodian's Receivable
Files/[specify documents]) for the Receivable described below, for the
reason indicated.
Borrower's Name, Address & Zip Code:
Receivable Number: [list here or on attached schedule]
Reason for Requesting Documents (check one or put code on attached
schedule)
_____ 1. Receivable Paid in Full (Servicer hereby certifies that all
amounts received in connection therewith have been
credited to the Collection Account as provided in the
Pooling and Servicing Agreement.)
_____ 2. Receivable Repurchased Pursuant to Section 3.02 of the
Pooling and Servicing Agreement (Servicer hereby certifies
that any applicable repurchase price has been credited to
the Collection Account as provided in the Pooling and
Servicing Agreement.)
_____ 3. Receivable [to be] Liquidated (Servicer hereby certifies that
all proceeds of foreclosure, insurance or other liquidation
[have been finally received and credited] [when received
shall be credited] to the Collection Account pursuant to the
Pooling and Servicing Agreement.)
<PAGE>
_____ 4. Receivable to be transferred to Risk Default Insurer for
liquidation (servicer hereby certifies that all proceeds of
insurance when received shall be credited to the Collection
Account pursuant to the Pooling and Servicing Agreement).
_____ 5. Receivable in Foreclosure
_____ 6. Other (explain)
If box 1, 2, 3 or 4 above is checked, and if all or part of
the Custodian's Receivable File was previously released to us, please
deliver to us a copy of our previous request for release on file with you,
as well as any additional documents in your possession relating to the
above specified Receivable.
If box 5 or 6 above is checked, upon our return of all of the
above documents to you as Custodian, please acknowledge your receipt
by signing in the space indicated below, and returning this form.
AEGIS AUTO FINANCE,
INC.
Servicer
By:________________________________
Name:
Title:
Date:______________________________
Documents returned to Custodian:
NORWEST BANK MINNEAPOLIS, NATIONAL ASSOCIATION,
as Custodian
By: _______________________________
Name:
Title:
Date:
______________________________<PAGE>
SCHEDULE D
RELEASE AND ASSIGNMENT
PURSUANT TO SECTION IV.N.
OF THE SERVICING AGREEMENT
Norwest Bank Minnesota, National Association, as custodian (the
"Custodian") for the Trustee of the Aegis Auto Receivables Trust Series
1996-3 created pursuant to the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") dated as of September 1, 1996
among Aegis Auto Funding Corp. (the "Seller"), Norwest Bank
Minnesota, National Association, as master servicer (the "Backup
Servicer") and as trustee (the "Trustee"), does hereby transfer, assign and
release to the Seller, without recourse, representation or warranty of the
Trustee, all of the Trustee's right, title and interest in and to the
Receivable and related Custodian File (as defined in the Pooling and
Servicing Agreement) identified as paid in full in the attached Servicer's
Request For Release of Documents, and all security and documents
relating thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this
day of 199 .
Norwest Bank Minnesota,
National Association,
as Custodian
By
_____________________________________
[Name]
[Title]
EXHIBIT 10.97.3
AEGIS AUTO FUNDING CORP.,
a Delaware Corporation, Seller
and
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
Trustee and Backup Servicer
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 1996
$110,000,000
AEGIS AUTO RECEIVABLES TRUST 1996-3
AUTOMOBILE RECEIVABLE PASS-THROUGH
CERTIFICATES
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
INTRODUCTION
Section 1.01. Definitions. . . . . . . . . . . 1
Section 1.02. Usage of Terms . . . . . . . . . 20
Section 1.03. Cutoff Date and Record Date. . . 20
Section 1.04. Section References . . . . . . . 20
ARTICLE II
CREATION OF TRUST
Section 2.01. Conveyance and Acceptance by
Trustee. . . . . . . . . . . . . . . . . . 20
ARTICLE III
THE RECEIVABLES
Section 3.01. Representations and Warranties of
Seller . . . . . . . . . . . . . . . . . . 22
Section 3.02. Repurchase or Substitution Upon
Breach . . . . . . . . . . . . . . . . . . 31
Section 3.03. Custody of Documents . . . . . . 32
Section 3.04. Duties of Custodian. . . . . . . 34
Section 3.05. Instructions; Authority to Act . 35
Section 3.06. Custodian Fees; Indemnification. 35
Section 3.07. Effective Period and Termination 35
Section 3.08. Funding Events . . . . . . . . . 35
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 4.01. Servicing Duties . . . . . . . . 38
Section 4.02. Resignation of Backup Servicer.. 39
Section 4.03. Covenant of Backup Servicer. . . 39
Section 4.04. Servicing Fees . . . . . . . . . 40
Section 4.05. Costs and Expenses . . . . . . . 40
Section 4.06. Standard of Care . . . . . . . . 40
ARTICLE V
DISTRIBUTIONS; ACCOUNTS;
STATEMENTS TO CERTIFICATEHOLDERS
Section 5.01. Accounts . . . . . . . . . . . . 41
Section 5.02. Collections. . . . . . . . . . . 41
Section 5.03. Application of Collections . . . 42
Section 5.04. Miscellaneous Servicer Collections 42
Section 5.05. Additional Deposits. . . . . . . 42
Section 5.06. Distributions. . . . . . . . . . 42
Section 5.07. Reserve Fund; Priority of
Distributions. . . . . . . . . . . . . . . 44
Section 5.08. Funding Account. . . . . . . . . 46
Section 5.09. Statements to Certificateholders; Tax
Returns. . . . . . . . . . . . . . . . . . 46
Section 5.10. Reliance on Information from the
Servicer . . . . . . . . . . . . . . . . . 50
ARTICLE VI
RIGHTS OF CERTIFICATEHOLDERS. . . . . . . . . . 50
ARTICLE VII
THE CERTIFICATES
Section 7.01. The Certificates . . . . . . . . 51
Section 7.02. Execution, Authentication of
Certificates . . . . . . . . . . . . . . . 51
Section 7.03. Registration of Transfer and
Exchange of Certificates . . . . . . . . . 51
Section 7.04. Mutilated, Destroyed, Lost or Stolen
Certificates . . . . . . . . . . . . . . . 54
Section 7.05. Persons Deemed Owners. . . . . . 55
Section 7.06. Access to List of Certificateholders'
Names and Addresses. . . . . . . . . . . . 55
Section 7.07. Maintenance of Office or Agency. 55
Section 7.08. Notices to Certificateholders. . 55
ARTICLE VIII
THE SELLER
Section 8.01. Representations of Seller. . . . 55
Section 8.02. Liability of Seller; Indemnities 59
Section 8.03. Merger or Consolidation of, or
Assumption of the Obligations of,
Seller . . . . . . . . . . . . . . . . . . 59
Section 8.04. Limitation on Liability of Seller and
Others . . . . . . . . . . . . . . . . . . 60
Section 8.05. Seller May Own Certificates. . . 60
Section 8.06. Covenants of the Seller. . . . . 61
Section 8.07. Enforcement by Trustee . . . . . 62
Section 8.08. No Bankruptcy Petition . . . . . 65
ARTICLE IX
THE BACKUP SERVICER
Section 9.01. Representations of Backup Servicer 65
Section 9.02. Merger or Consolidation of, or
Assumption of the Obligations of, or
Resignation of Backup Servicer . . . . . . 66
Section 9.03. Limitation on Liability of Backup
Servicer and Others. . . . . . . . . . . . 66
Section 9.04. Successor Backup Servicer. . . . 67
Section 9.05. No Bankruptcy Petition . . . . . 67
ARTICLE X
BACKUP SERVICING DEFAULT
Section 10.01. Events of Backup Servicing Default
. . . . . . . . . . . . . . . . . . . . . 67
Section 10.02. Appointment of Successor. . . . 68
Section 10.03. Notification to Certificateholders 69
Section 10.04. Waiver of Past Defaults . . . . 69
ARTICLE XI
THE TRUSTEE
Section 11.01. Duties of Trustee . . . . . . . 70
Section 11.02. Trustee's Certificate . . . . . 72
Section 11.03. Trustee's Assignment of Purchased
Receivables. . . . . . . . . . . . . . . . 73
Section 11.04. Certain Matters Affecting Trustee 73
Section 11.05. Trustee Not Liable for Certificates
or Receivables . . . . . . . . . . . . . . 74
Section 11.06. Trustee May Own Certificates. . 75
Section 11.07. Trustee's Fees and Expenses . . 75
Section 11.08. Eligibility Requirements for Trustee
. . . . . . . . . . . . . . . . . . . . . 75
Section 11.09. Resignation or Removal of Trustee
. . . . . . . . . . . . . . . . . . . . . 76
Section 11.10. Successor Trustee . . . . . . . 76
Section 11.11. Merger or Consolidation of Trustee
. . . . . . . . . . . . . . . . . . . . . 77
Section 11.12. Appointment of Co-Trustee or
Separate Trustee . . . . . . . . . . . . . 77
Section 11.13. Representations and Warranties of
Trustee. . . . . . . . . . . . . . . . . . 78
Section 11.14. No Bankruptcy Petition. . . . . 79
ARTICLE XII
TERMINATION
Section 12.01. Termination of the Trust. . . . 79
Section 12.02. Optional Purchase of All
Receivables. . . . . . . . . . . . . . . . 81
Section 12.03. Notice. . . . . . . . . . . . . 81
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01. Amendment . . . . . . . . . . . 81
Section 13.02. Protection of Title to Trust. . 82
Section 13.03. Limitation on Rights of
Certificateholders . . . . . . . . . . . . 83
Section 13.04. Governing Law . . . . . . . . . 84
Section 13.05. Notices . . . . . . . . . . . . 84
Section 13.06. Severability of Provisions. . . 85
Section 13.07. Assignment. . . . . . . . . . . 85
Section 13.08. Certificates Nonassessable and
Fully Paid . . . . . . . . . . . . . . . . 86
Section 13.09. Counterparts. . . . . . . . . . 86
Section 13.10. Limited Recourse to Seller. . . 86
EXHIBIT A: Forms of Certificates . . . . . . .A-1-1
EXHIBIT B: Depository Agreement . . . . . . . .B-1
EXHIBIT C: Form of Trustee's Statement to
Certificateholders . . . . . . . . . . . . . . . . .C-1
EXHIBIT D: Schedule of Receivables . . . . . . .D-1
EXHIBIT E: Location of Servicer Files . . . . .E-1
EXHIBIT F-1: Receivable Characteristics (Cutoff Date)F-1-1
EXHIBIT F-2: Receivable Characteristics (Funding Date)F-2-1
EXHIBIT G: Wiring Instructions Form . . . . . .G-1
EXHIBIT H: Fee Schedule. . . . . . . . . . . . .H-1
EXHIBIT I: Risk Default Insurance Policy . . . .I-1
EXHIBIT J: VSI Insurance Policy. . . . . . . . .J-1
EXHIBIT K: Form of Transferee Letter (Rule 144A
Transfer). . . . . . . . . . . . . . . . . . . . . K-1
EXHIBIT L: Form of Transferee Letter (Non-Rule 144A
Transfer). . . . . . . . . . . . . . . . . . . . . .L-1
EXHIBIT M: Form of ERISA Representation Letter .M-1
EXHIBIT N: Form of Notice of Funding . . . . . .N-1
EXHIBIT O: Form of Officer's Certificate . . . .O-1
EXHIBIT P: Assignment. . . . . . . . . . . . . .P-1
EXHIBIT Q: Review Firm Procedures. . . . . . . .Q-1
EXHIBIT R: Form of Trustee's Certificate . . . .R-1
EXHIBIT S: Schedule of Identified Receivables. .S-1
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 1996
This POOLING AND SERVICING AGREEMENT, dated
as of September 1, 1996, is made among AEGIS AUTO
FUNDING CORP., a Delaware corporation, as Seller, NORWEST
BANK MINNESOTA, NATIONAL ASSOCIATION, as Backup
Servicer, and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee for the Trust.
WITNESSETH THAT, in consideration of the mutual
agreements herein contained, each party agrees as follows for the
benefit of the other parties and for the benefit of the
Certificateholders and the other beneficiaries to the extent provided
herein:
ARTICLE I
INTRODUCTION
Section 1.01. Definitions. Whenever used in this
Agreement, the following words and phrases, unless the context
otherwise requires, shall have the following meanings:
"Accounts" shall mean the accounts and funds identified in
Section 5.01 hereof.
"Additional Receivables" means all Receivables sold by the
Seller to the Trust after the Closing Date and during the Funding
Period, which shall be listed on Schedule A to the related
assignment, and each of which is identified on the schedule of
receivables attached as Exhibit S hereto.
"Aegis Finance" means Aegis Auto Finance, Inc., a
Delaware corporation, its successors and assigns.
"Aegis Finance Servicing Agreement" means the Servicing
Agreement dated as of September 1, 1996 among Aegis Finance,
the Backup Servicer and the Trustee, and all amendments,
modifications and supplements thereto.
"Affiliate" of any Person means any other Person which,
directly or indirectly, controls, is controlled by or is under
common control with such Person. A Person shall be deemed to
be "controlled by" any other Person if such other Person
possesses, directly or indirectly, power
(a) to vote 10% or more of the securities (on a fully
diluted basis) having ordinary voting power for the election of
directors or managing general partners; or
(b) to direct or cause the direction of the management
and policies of such Person whether by contract or otherwise.
"Agreement" means this Pooling and Servicing Agreement
executed by the Seller, the Backup Servicer and the Trustee, and
all amendments, modifications and supplements thereto.
"ALFI" means American Lenders Facilities, Inc., a
California corporation, its successors and assigns.
"Amount Financed" means, with respect to a Receivable,
the amount advanced under the Receivable toward the purchase
price of the Financed Vehicle and any related costs.
"Annual Percentage Rate" or "APR" means, with respect
to a Receivable, the annual rate of finance charges stated in the
Receivable.
"Available Interest Distribution Amount" means, for any
Distribution Date, the sum of the following amounts with respect
to the preceding Collection Period: (i) that portion of all
collections of Scheduled Payments on Receivables allocable to
interest; (ii) Liquidation Proceeds and other Recoveries to the
extent allocable to interest due on Liquidated Receivables and
Defaulted Receivables in accordance with the Servicer's customary
servicing procedures; (iii) Risk Default Insurance Proceeds to the
extent allocable to interest as determined by the Servicer; (iv) the
earnings, if any, on amounts in the Funding Account accrued
during the related Collection Period, and for the Distribution Date
occurring on October 21, 1996, such earnings as have accrued to
such date; and (v) the Purchase Amount of each Receivable that
became a Purchased Receivable during the related Collection
Period to the extent attributable to accrued interest thereon;
provided, however, that in calculating the Available Interest
Distribution Amount the following will be excluded: all payments
and proceeds (including Liquidation Proceeds) of any Purchased
Receivables the Purchase Amount of which has been included in
the Principal Distributable Amount with respect to a prior
Distribution Date.
"Available Principal Distribution Amount" means, for any
Distribution Date, the sum of the following amounts with respect
to the preceding Collection Period: (i) that portion of all
collections of Scheduled Payments and prepayments in full or in
part on Receivables allocable to principal; (ii) Liquidation Proceeds
and other Recoveries allocable to the principal amount of
Liquidated Receivables and Defaulted Receivables in accordance
with the Servicer's customary servicing procedures; (iii) Risk
Default Insurance Proceeds to the extent not allocable to interest
as determined by the Servicer; (iv) amounts deposited in the
Collection Account pursuant to Section 3.02(b) in respect of
Receivables that became Substitute Receivables during the related
Collection Period; and (v) to the extent attributable to principal,
the Purchase Amount of each Receivable that became a Purchased
Receivable during the preceding Collection Period; provided,
however, that in calculating the Available Principal Distribution
Amount the following will be excluded: all payments and proceeds
(including Liquidation Proceeds) of any Purchased Receivables the
Purchase Amount of which has been included in the Principal
Distributable Amount with respect to a prior Distribution Date.
"Backup Servicer" means Norwest Bank Minnesota,
National Association, until any successor Backup Servicer is
appointed or succeeds to the duties and obligations of the Backup
Servicer hereunder, and thereafter means the Eligible Servicer
appointed successor Backup Servicer pursuant to Section 9.02 or
10.02.
"Backup Servicer Fee" means the fee payable to the Backup
Servicer for services rendered during the respective Collection
Period, determined in accordance with Exhibit H hereto.
"Bankruptcy Code" means the federal Bankruptcy Code of
1978, as amended, 11 USC SEC 101 through 1330.
"Business Day" means any day other than a Saturday, a
Sunday, or a day on which banking institutions in the cities in
which the principal offices of the Trustee or the Servicer are
located, or New York, New York, or Jersey City, New Jersey
shall be authorized or obligated by law, executive order, or
governmental decree to be closed. Any action required to be taken
on a day which falls on a non-Business Day shall be conducted on
the next Business Day.
"Certificate" means a Class A Certificate, a Class B
Certificate or a Class C Certificate.
"Certificate Account" means the trust account designated as
such, established and maintained pursuant to Section 5.01.
"Certificate Owner" means, with respect to any Certificate
held in book-entry form, the Person who is the beneficial owner
of such Certificate, as reflected on the books of the 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).
"Certificate Register" and "Certificate Registrar" mean the
register maintained and the registrar appointed pursuant to Section
7.03.
"Certificateholder" or "Holder" means the Person in whose
name the respective Certificate shall be registered in the Certificate
Register, except that, solely for the purposes of giving any
approval, consent, waiver, request or demand pursuant to this
Agreement, the interest evidenced by any Certificate registered in
the name of the Seller, the Servicer, the Backup Servicer, the
Trustee or any Affiliate of any of the foregoing shall not be taken
into account in determining whether the requisite percentage
necessary to effect any such consent, waiver, request or demand
shall have been obtained.
"Certificateholder Statement" means the Statement the form
of which is attached hereto as Exhibit C.
"Class" means all Certificates having the same priority of
payment and bearing the same alphabetical designation (A, B or
C).
"Class A Certificate" means any one of the Certificates
executed by the Trustee on behalf of the Trust and authenticated
by the Trustee in substantially the form set forth in Exhibit A-1
hereto.
"Class A Certificate Balance" shall equal, initially, the
Class A Percentage of the aggregate Principal Balance of the Initial
Receivables as of the initial Cutoff Date plus the Class A
Percentage of the Original Pre-Funded Amount and, thereafter, the
initial Class A Certificate Balance, reduced by all amounts
previously distributed to Class A Certificateholders as principal.
"Class A Distributable Amount" means, on any Distribution
Date, the sum of the Class A Interest Distributable Amount and
the Class A Principal Distributable Amount.
"Class A Interest Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Class A Interest
Distributable Amount for such Distribution Date plus any
outstanding Class A Interest Carryover Shortfall from the previous
Distribution Date plus interest on such outstanding Class A Interest
Carryover Shortfall, to the extent permitted by law, at the Class A
Rate from such preceding Distribution Date through the current
Distribution Date, over the amount of interest that the holders of
the Class A Certificates actually received on such Distribution
Date.
"Class A Interest Distributable Amount" means, for any
Distribution Date, one-twelfth of the product of (x) the Class A
Rate and (y) the Class A Certificate Balance as of the close of
business on the preceding Distribution Date (or, with respect to the
initial Distribution Date, the Closing Date) (after giving effect to
any distribution of principal on the Class A Certificates made on
such preceding Distribution Date).
"Class A Percentage" means 93.25%.
"Class A Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Class A Principal
Distributable Amount plus any outstanding Class A Principal
Carryover Shortfall from the preceding Distribution Date over the
amount of principal that the holders of the Class A Certificates
actually received on such Distribution Date pursuant to Section
5.06.
"Class A Principal Distributable Amount" means, with
respect to any Distribution Date, the Class A Percentage of the
Principal Distributable Amount.
"Class A Rate" means 8.80% of interest per annum. The
Class A Rate includes (i) at any time during the Funding Period,
the sum of (a) the Class B Rate multiplied by the Class A
Percentage multiplied by the Pool Balance, (b) 46.625 basis points
on the Pool Balance and (c) a portion of the amount contributed to
the Trust during the Funding Period by the Seller from amounts on
deposit in the Reserve Fund or otherwise allocable to the Reserve
Fund (including, but not limited to the Funding Account Interest
Amount) equal to the difference between (x) the Class A Rate
multiplied by the Class A Principal Balance and (y) the sum of
items (a) and (b) above and (ii) at any time after the Funding
Period, the sum of (a) the Class A Rate multiplied by the Class A
Percentage multiplied by the Pool Balance and (b) 46.625 basis
points on the Pool Balance. In no event will the Class A Rate
exceed 8.80% per annum.
"Class B Certificate" means any one of the Certificates
executed by the Trustee on behalf of the Trust and authenticated
by the Trustee in substantially the form set forth in Exhibit A-2
hereto.
"Class B Certificate Balance" shall equal, initially, the
Class B Percentage of the aggregate Principal Balance of the Initial
Receivables as of the initial Cutoff Date plus the Class B
Percentage of the Original Pre-Funded Amount and, thereafter, the
initial Class B Certificate Balance, reduced by all amounts
previously distributed to Class B Certificateholders as principal.
"Class B Distributable Amount" means, on any Distribution
Date, the sum of the Class B Interest Distributable Amount and the
Class B Principal Distributable Amount.
"Class B Interest Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Class B Interest
Distributable Amount for such Distribution Date plus any
outstanding Class B Interest Carryover Shortfall from the previous
Distribution Date plus interest on such outstanding Class B Interest
Carryover Shortfall, to the extent permitted by law, at the Class B
Rate from such preceding Distribution Date through the current
Distribution Date, over the amount of interest that the holders of
the Class B Certificates actually received on such Distribution
Date.
"Class B Interest Distributable Amount" means, for any
Distribution Date, one-twelfth of the product of (x) the Class B
Rate and (y) the Class B Certificate Balance as of the close of
business on the preceding Distribution Date (or, with respect to the
initial Distribution Date, the Closing Date) (after giving effect to
any distribution of principal on the Class B Certificates made on
such preceding Distribution Date).
"Class B Percentage" means 4.75%.
"Class B Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Class B Principal
Distributable Amount plus any outstanding Class B Principal
Carryover Shortfall from the preceding Distribution Date over the
amount of principal that the holders of the Class B Certificates
actually received on such Distribution Date pursuant to Section
5.06.
"Class B Principal Distributable Amount" means, as of any
Distribution Date, the Class B Percentage of the Principal
Distributable Amount.
"Class B Rate" means 8.30% of interest per annum.
"Class Certificate Balance" means, with respect to the
applicable Class of Certificates, the Class A Certificate Balance,
the Class B Certificate Balance or the Class C Certificate.
"Class C Certificate" means any one of the Certificates
executed by the Trustee on behalf of the Trust and authenticated
by the Trustee in substantially the form set forth in Exhibit A-3
hereto.
"Class C Certificate Balance" shall equal, initially, the
Class C Percentage of the aggregate Principal Balance of the Initial
Receivables as of the initial Cutoff Date plus the Class C
Percentage of the Original Pre-Funded Amount and, thereafter,
shall equal the initial Class C Certificate Balance, reduced by all
amounts previously distributed to Class C Certificateholders as
principal.
"Class C Distributable Amount" means, on any Distribution
Date, the sum of the Class C Interest Distributable Amount and the
Class C Principal Distributable Amount.
"Class C Interest Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Class C Interest
Distributable Amount for such Distribution Date plus any
outstanding Class C Interest Carryover Shortfall from the previous
Distribution Date plus interest on such outstanding Class C Interest
Carryover Shortfall, to the extent permitted by law, at the Class C
Rate from such preceding Distribution Date through the current
Distribution Date, over the amount of interest that the holders of
the Class C Certificates actually received on such Distribution
Date.
"Class C Interest Distributable Amount" means, for any
Distribution Date, one-twelfth of the product of (x) the Class C
Rate and (y) the Class C Certificate Balance as of the close of
business on the preceding Distribution Date (or, with respect to the
initial Distribution Date, the Closing Date) (after giving effect to
any distribution of principal on the Class C Certificates made on
such preceding Distribution Date).
"Class C Percentage" means 2.0%.
"Class C Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Class C Principal
Distributable Amount plus any outstanding Class C Principal
Carryover Shortfall from the preceding Distribution Date over the
amount of principal that the holders of the Class C Certificates
actually received on such Distribution Date pursuant to Section
5.06.
"Class C Principal Distributable Amount" means, as of any
Distribution Date, the Class C Percentage of the Principal
Distributable Amount.
"Class C Rate" means 11.10% of interest per annum. The
Class C Rate includes (i) at any time during the Funding Period,
the sum of (a) the Class B Rate multiplied by the Class C
Percentage multiplied by the Pool Balance, (b) 5.6 basis points on
the Pool Balance and (c) a portion of the amount contributed to the
Trust during the Funding Period by the Seller from amounts on
deposit in the Reserve Fund or otherwise allocable to the Reserve
Fund (including, but not limited to the Funding Account Interest
Amount) equal to the difference between (x) the Class C Rate
multiplied by the Class C Principal Balance and (y) the sum of
items (a) and (b) above and (ii) at any time after the Funding
Period, the sum of (a) the Class B Rate multiplied by the Class C
Percentage multiplied by the Pool Balance and (b) 5.6 basis points
on the Pool Balance. In no event will the Class C Rate exceed
11.10% per annum.
"Class Factor" means, with respect to any Distribution
Date and any Class of Certificates, a seven-digit decimal figure
computed by the Trustee equal to the Class Certificate Balance of
such Class as of such Distribution Date divided by the Original
Class Certificate Balance thereof.
"Class Percentage" means, with respect to the applicable
Class of Certificates, the Class A Percentage, the Class B
Percentage or the Class C Percentage.
"Clearing Agency" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer,
bank, other financial institution or other Person for whom from
time to time a Clearing Agency effects book entry transfers and
pledges of securities deposited with the Clearing Agency.
"Closing Date" means September 12, 1996.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Collection Account" means the trust account designated as
such, established and maintained pursuant to Section 5.01.
"Collection Period" means, with respect to a Distribution
Date, the calendar month immediately prior to such Distribution
Date. Any amount stated "as of the close of business of 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, and (2) all distributions.
"Corporate Trust Office" means the office of the Trustee at
which its corporate trust business shall be administered, which
office at the date of this Agreement shall be 6th Street and
Marquette Avenue, Minneapolis, Minnesota 55479-0070,
Attention: Corporate Trust Services --Asset Backed
Administration, or such other address as shall be designated by the
Trustee in written notice to the Seller, the Backup Servicer, the
Servicer and each Certificateholder.
"Custodian" means the Person acting as Custodian of the
Trust pursuant to Section 3.03 of this Agreement, its successor in
interest and any successor custodian.
"Custodian Files" means the documents specified in Section
3.03(a).
"Cutoff Date" means September 1, 1996 with respect to the
Initial Receivables and the last Business Day of the calendar week
preceding the calendar week of a Funding Date with respect to any
Additional Receivables acquired on such Funding Date.
"DCR" means Duff & Phelps Credit Rating Co. or any
successors thereto.
"Dealer" means any licensed or franchised factory-
authorized motor vehicle dealer, or affiliate thereof, who sold a
Financed Vehicle to an Obligor and who originated the respective
Receivable which was acquired by Aegis Finance.
"Dealer Recourse" means, with respect to a Receivable, all
recourse rights against the Dealer that originated the Receivable,
and any successor Dealer.
"Defaulted Receivable" means any Receivable, other than
a Liquidated Receivable, as to which the Obligor became 180 days
past due in making Scheduled Payments during the prior Collection
Period.
"Delivery Date" has the meaning set forth in Section
3.08(b)(i).
"Depository Agreement" means the agreement entered
among the Seller, the Trustee and The Depository Trust Company,
as the initial Clearing Agency, in connection with the issuance of
the Class A and the Class B Certificates, substantially in the form
of Exhibit B.
"Determination Date" means, with respect to any
Distribution Date, the eighth (8th) Business Day of the calendar
month of such Distribution Date; provided, however, if such
Business Day is later than the eleventh (11th) day of such month,
then the Determination Date shall mean the next earlier Business
Day which is not later than the eleventh (11th) day of such
calendar month.
"Dissolution" means, with respect to the Seller, bankruptcy,
insolvency or dissolution.
"Distribution Date" means, for each Collection Period, the
20th day of the month following the month in which the Collection
Period ends, or if the 20th day is not a Business Day, the next
following Business Day, beginning on the Initial Distribution Date.
"Eligible Account" means a segregated account (except as
otherwise permitted with respect to the Lock-Box Account) which
may be an account maintained with the Trustee, which is either (a)
maintained with an Eligible Institution, or (b) a segregated trust
account or similar account maintained with a federally or state
chartered depository institution subject to regulations regarding
fiduciary funds on deposit substantially similar to 12 C.F.R.
SEC 9.10(b).
"Eligible Institution" means a depository institution or trust
company whose long-term unsecured debt obligations are rated at
least "A" by each Rating Agency and either "A" by S&P or "A2"
by Moody's (provided that, if only one such rating agency rates
such institution, such single rating shall suffice).
"Eligible Investments" means negotiable instruments or
securities or other investments (a) which, except in the case of
demand or time deposits, investments in money market funds and
repurchase obligations, are represented by instruments in bearer or
registered form or ownership of which is represented by book
entries by a clearing agency or by a Federal Reserve Bank in favor
of depository institutions eligible to have an account with such
Federal Reserve Bank who hold such investments on behalf of
their customers and (b) which evidence:
(i) direct obligations of, and obligations fully
guaranteed as to full and timely payment by, the United
States of America;
(ii) demand deposits, time deposits or certificates
of deposit of depository institutions or trust companies
incorporated under the laws of the United States of
America or any state thereof and subject to supervision and
examination by federal or state banking or depository
institution authorities; provided, however, that at the time
of the Trust's investment or contractual commitment to
invest therein, the short-term unsecured debt obligations of
such depository institution or trust company shall have
credit ratings from each Rating Agency and either S&P or
Moody's in the highest investment category granted by
each Rating Agency (and S&P or Moody's, as applicable);
(iii) commercial paper having, at the time of the
Trust's investment or contractual commitment to invest
therein, a rating from each Rating Agency and either S&P
or Moody's in the highest investment category by each
Rating Agency (and S&P or Moody's, as applicable);
(iv) bankers' acceptances issued by any
depository institution or trust company referred to in (ii)
above;
(v) investments in money market funds having
the highest investment category from each Rating Agency
or, if not rated by each Rating Agency, either S&P or
Moody's (provided that, for purposes of this definition,
such investments may include money market funds
sponsored by Norwest Bank Minnesota, National
Association, that have a credit rating from either S&P or
Moody's);
(vi) time deposits (having maturities of not more
than 30 days) or notes which are payable on demand by an
entity the commercial paper of which has the highest
investment category granted by each Rating Agency and
either S&P or Moody's; and
(vii) repurchase obligations with respect to any
security described in clause (i) above entered into with a
depository institution or trust company (acting as principal)
meeting the rating standards described in clause (ii) above.
Any Eligible Investments may be purchased by or through the
Trustee or any of its affiliates.
"Eligible Servicer" means any entity which, at the time of
its appointment as Backup Servicer, supervisory servicer, Servicer
or subservicer, and for so long as such entity is acting in such
capacity, (i) is servicing a portfolio of motor vehicle retail
installment sale contracts or motor vehicle loans, (ii) is legally
qualified (or is acting through an Affiliate which is legally
qualified) and has the capacity to service the Receivables, (iii) has
demonstrated the ability to professionally and competently service
a portfolio of similar contracts in accordance with industry
standards of skill and care, (iv) is qualified and entitled to use, and
agrees to maintain the confidentiality of, the software that the
Backup Servicer, supervisory servicer, Servicer or a subservicer
uses in connection with performing its duties and responsibilities
under this Agreement, a supervisory servicing agreement, the
Servicing Agreement or a subservicing agreement or obtains rights
to use or develops its own software which is adequate to perform
its duties and responsibilities under this Agreement, a supervisory
servicing agreement, the Servicing Agreement or a subservicing
agreement and (v) is approved by the Risk Default Insurer and
each Rating Agency.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"ERISA-Restricted Certificate" means any Class B or Class
C Certificate.
"Event of Backup Servicing Default" with respect to the
Backup Servicer means an event specified in Section 10.01.
"Event of Servicing Default" means an event specified in
paragraph VI of the Servicing Agreement.
"Excess Receipts" means, with respect to any Distribution
Date, the greater of (x) zero and (y) the remaining amount on
deposit in the Collection Account after distributions pursuant to
Section 5.06(d)(i) through (vii) have been made.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Final Funding Date" means the Funding Date upon which
the balance in the Funding Account is reduced to zero.
"Final Scheduled Distribution Date" means March 20,
2002.
"Financed Vehicle" means an automobile or light-duty
truck, together with all accessions thereto, securing an Obligor's
indebtedness under the respective Receivable.
"Fitch" means Fitch Investors Service, L.P.
"Funding Account" means the trust account designated as
such, established and maintained pursuant to Sections 5.01 and
5.08 hereof.
"Funding Account Interest Amount" means an amount equal
to $32,000.
"Funding Corp. III" means Aegis Auto Funding Corp. III,
a Delaware corporation, its successors and assigns.
"Funding Date" means each date occurring no more than
once per calendar week during the Funding Period on which
Additional Receivables are sold to the Trust.
"Funding Event" shall mean, with respect to a Funding
Date, the occurrence of the events required to occur in accordance
with Section 3.08.
"Funding Period" means the period beginning on the
Closing Date and ending on the earlier to occur of (i) the Final
Funding Date or (ii) September 30, 1996.
"Initial Distribution Date" means October 21, 1996.
"Initial Receivables" means all Receivables sold to the
Trust by the Seller on the Closing Date.
"Insurance Policy" means, with respect to a Receivable,
any comprehensive, collision, fire and theft insurance policy
required to be maintained by the Obligor with respect to the
Financed Vehicle, the VSI Insurance Policy, and any credit life
and disability insurance maintained by the Obligor or Seller and
benefitting the holder of the Receivable.
"Lien" means a security interest, lien, charge, pledge,
equity or encumbrance of any kind.
"Liquidated Receivable" means any Receivable, other than
a Receivable that first became a Defaulted Receivable, liquidated
by the Servicer through sale of the Financed Vehicle or otherwise.
"Liquidation Proceeds" means the moneys collected during
the respective Collection Period on a Liquidated Receivable,
whether through foreclosure or otherwise, other than Risk Default
Insurance Proceeds, net of the sum of any amounts expended by
the Servicer for the account of the Obligor and the expenses
incurred in the liquidation.
"Lock-Box Account" means the account(s) designated as
such, established and maintained pursuant to Section 5.01 hereof,
into which account shall be deposited only those moneys collected
with respect to the Receivables as contemplated herein and moneys
collected with respect to other retail installment sales contracts
originated or purchased by Aegis Finance or its Affiliates.
"Lock-Box Account Depository" means Wells Fargo Bank,
N.A., acting as Lock-Box Account Depository hereunder, its
successors in interest and any successors appointed pursuant to
paragraph IX of the Servicing Agreement.
"Majority Certificateholders" means Holders of Certificates
evidencing not less than 51% of the Voting Interests thereof.
"Miscellaneous Servicer Collections" means, with respect
to a Collection Period, all late charges, extension fees and
recoveries of expenses relating to liquidation, repossession and
other costs previously incurred by the Servicer.
"Monthly Servicing Certificate" means the certificate
substantially in the form of Schedule B to the Servicing
Agreement.
"Moody's" means Moody's Investors Service or any
successors thereto.
"Net Loss" means, with respect to a Collection Period, the
sum of the Principal Balances of Receivables that became
Liquidated Receivables or Defaulted Receivables during such
Collection Period, minus Recoveries and Risk Default Insurance
Proceeds (to the extent allocable to principal) received in such
Collection Period.
"Obligor" means, with respect to a Receivable, the
purchaser or co-purchasers of the Financed Vehicle and/or any
other Person who owes payments under such 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, any assistant vice president, any trust
officer, the treasurer, the controller or any assistant treasurer or
any assistant controller of the Seller, the Trustee, the Servicer, the
Custodian or the Backup Servicer, as appropriate.
"Opinion of Counsel" means a written opinion of counsel
who may but need not be counsel to the Seller or Servicer, which
counsel shall be acceptable to the Trustee.
"Optional Purchase Percentage" means 5% of the Original
Pool Balance.
"Original Certificate Balance" means, as to any Certificate,
the initial certificate balance stated on the face of such Certificate.
"Original Class Certificate Balance" means, as to the Class
A Certificates, $102,575,000; as to the Class B Certificates,
$5,225,000; and as to the Class C Certificates, $2,200,000.
"Original Pool Balance" means the initial Principal Balance
of all Receivables (including Additional Receivables) as of their
respective Cutoff Dates.
"Original Pre-Funded Amount" means the amount deposited
in the Funding Account on the Closing Date.
"Pass-through Rate" means, with respect to the applicable
Class of Certificates, the Class A Rate, the Class B Rate or the
Class C Rate.
"Percentage Interest" means, with respect to any
Certificate, the percentage ownership interest of such Certificate
in the aggregate of amounts distributable hereunder to the related
Class of Certificates. With respect to any Certificate, the
Percentage Interest evidenced thereby shall equal the Original
Certificate Balance thereof divided by the aggregate Original Class
Certificate Balance of the related Class.
"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.
"Plan" shall have the meaning set forth in Section 7.03.
"Pool Balance" means, as of the day of calculation, the
aggregate Principal Balance of the Receivables less Net Losses.
"Pool Factor" means, as of any Distribution Date, a seven-
digit decimal figure equal to the Pool Balance for such Distribution
Date divided by the Original Pool Balance.
"Principal Balance" means, with respect to any Receivable
at any time, the Amount Financed minus the sum of (a) the portion
of all payments made by or on behalf of the related Obligor and
allocable to principal using the Simple Interest Method and (b) the
portion of any payment of the Purchase Amount with respect to the
Receivable allocable to principal, calculated as of the close of
business on the last day of the prior Collection Period (or, prior to
the end of the first Collection Period, calculated as of the close of
business on the day immediately prior to the Cutoff Date).
"Principal Distributable Amount" means, with respect to
any Distribution Date the sum of: (i) the portion of all Scheduled
Payments allocable to principal (including delinquent payments)
collected during the preceding Collection Period on the
Receivables, (ii) the principal portion of all prepayments in full or
in part received during the preceding Collection Period (without
duplication of amounts included in clause (i) above); (iii) the
Principal Balance of each Receivable that became a Purchased
Receivable during the preceding Collection Period (without
duplication of amounts referred to in clauses (i) and (ii) above);
(iv) the Principal Balance of each Receivable that became a
Liquidated Receivable during the preceding Collection Period
(without duplication of amounts included in clause (i), (ii) and (iii)
above), and (v) the Principal Balance of each Receivable that
became a Defaulted Receivable during the preceding Collection
Period (without duplication of amounts included in clause (i), (ii),
(iii) and (iv) above); provided, however, that in calculating the
Principal Distributable Amount the following will be excluded: all
payments and proceeds of any Purchased Receivables the Purchase
Amount of which has been included in the Principal Distributable
Amount in a prior Collection Period. Further, (i) with respect to
the Distribution Date occurring on October 21, 1996, the principal
required to be distributed to Certificateholders shall include an
amount equal to the remaining balance in the Funding Account on
the last day of the Funding Period, to the extent allocable to
principal, and (ii) with respect to the Distribution Date following
the substitution of a Receivable pursuant to Section 3.02, the
principal required to be distributed to Certificateholders shall
include the difference, if any, between the outstanding Principal
Balance of the replaced Receivable and the outstanding Principal
Balance of the substitute Receivable.
"Purchase Agreement" means Purchase Agreement dated as
of September 1, 1996 between the Seller, as purchaser, and Aegis
Finance, as seller of the Receivables.
"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
the principal amount thereof and interest to the end of the
Collection Period.
"Purchased Receivable" means a Receivable purchased as
of the close of business on the last day of a Collection Period by
the Seller or by Aegis Finance on behalf of the Seller pursuant to
the Purchase Agreement.
"Rated Certificates" means each Class of Certificates that
has been rated by a Rating Agency at the request of the Seller.
"Rated Entity" shall mean a Person whose long-term
unsecured debt obligations (at the time of the transfer under
Section 7.03) are rated within the investment grade categories of
either Moody's, S&P, Fitch or DCR.
"Rating Agency" means each statistical credit rating agency,
or its successor, that rated any of the Certificates at the request of
the Seller at the time of the initial issuance of the Certificates. If
such agency or a successor is no longer in existence, "Rating
Agency" shall be such statistical credit rating agency, or other
comparable Person, designated by the Seller, notice of which
designation shall be given to the Trustee. As of the date of the
initial issuance of the Certificates, the Rating Agencies for the
Class A, Class B and Class C Certificates are DCR and Fitch.
"Receivable" means any retail installment sales contract and
security agreement identified on Exhibit D hereto; provided that
Exhibit D shall be deemed to be amended on each Funding Date
to add the Additional Receivables acquired by the Seller from
Aegis Finance pursuant to the Purchase Agreement and sold to the
Trust pursuant to the terms hereof on each such Funding Date.
"Receivable Review" means a review conducted by the
Review Firm to determine compliance with the requirements of the
Agreement, which review shall employ the procedures set forth in
the letter from the Review Firm attached hereto as Exhibit P.
"Receivables Cash Purchase Price" means with respect to
any Additional Receivable, an amount equal to 100% of the
Principal Balance of such Additional Receivable, a portion of
which will be deposited into the Reserve Fund as provided herein.
"Record Date" means the last day of the Collection Period
preceding a Distribution Date or termination of the Trust.
"Recoveries" means all amounts received (net of out-of-
pocket costs of collection), other than Risk Default Insurance
Proceeds, with respect to Defaulted Receivables and Liquidated
Receivables.
"Refunding Event" means the transfer of remaining funds
in the Funding Account to the Certificate Account and distribution
to the Certificateholders on a pro rata basis on October 21, 1996
of such remaining funds in the Funding Account in accordance
with Section 5.06 hereof.
"Required Deposit Rating" means a rating of an institution
which has either short-term deposits of "P-1" by Moody's, or
short-term deposits of "A-1+" by S&P, and short-term deposits of
"D-1+" by DCR, if rated by DCR; and any requirement that
deposits have the "Required Deposit Rating" shall mean that such
deposits have the foregoing required ratings first, by DCR, or
second, by Moody's or S&P.
"Reserve Fund" means the fund established and maintained
pursuant to Section 5.07 hereof outside of the Trust.
"Reserve Fund Draw" has the meaning set forth in Section
5.07(f).
"Reserve Fund Initial Deposit" means $3,100,716.09, an
amount equal to 3.0% of the Principal Balance of the Initial
Receivables as of the initial Cutoff Date plus the Funding Account
Interest Amount, which amount shall be deposited in the Reserve
Fund on the date of the initial issuance of the Certificates pursuant
to Section 5.07 hereof.
"Reserve Fund Property" has the meaning specified in
Section 5.07(c).
"Reserve Requirement" means, as of any Distribution Date,
after giving effect to distributions of principal on such date, an
amount equal to the greatest of the amounts calculated pursuant to
the following provisions (1), (2), (3), (4) and (5) that are
applicable as of such date:
(1) Eight percent (8%) of the Pool Balance;
(2) Eleven percent (11%) of the Pool Balance if, as of
the end of any Collection Period, the "60 day +
Delinquency Rate" (as hereinafter defined) is
greater than 4.75% of the Pool Balance, increasing
to eleven and one-half percent (11.50%) of the Pool
Balance if, as of the end of any Collection Period,
the 60 day + Delinquency Rate exceeds 5.75% of
the Pool Balance, and further increasing to twelve
percent (12%) of the Pool Balance if, as of the end
of any Collection Period, the 60 day +
Delinquency Rate exceeds 6.75% of the Pool
Balance, and the Reserve Requirement shall remain
at such higher applicable percentage for so long as
the Certificates are outstanding; provided, however,
the Reserve Requirement shall be reduced one time
while the Certificates are outstanding to nine and
one-half percent (9.50%) of the Pool Balance if the
60 day + Delinquency Rate drops and remains
below 4.75% of the Pool Balance for three (3)
consecutive Collection Periods after the Reserve
Requirement is first increased pursuant to this
provision (2);
(3) Thirteen percent (13%) of the Pool Balance if (i)
the rating of the claims-paying ability of the issuer
or an endorser of the Risk Default Insurance Policy
as measured by either Rating Agency (or, if neither
Rating Agency rates such claims-paying ability, by
Moody's or S&P) is below "A" (without regard to
+ or - or other gradations) or the issuer of the VSI
Insurance Policy becomes bankrupt or insolvent, or
(ii) the rating on the Class A Certificates from
either Rating Agency is below "A" (without regard
to + or - or other gradations) or is withdrawn;
(4) Thirteen percent (13%) of the Pool Balance if, at
the end of any Collection Period, the cumulative
Net Losses exceed the corresponding percentage of
the Original Pool Balance set forth in the table
below:
<PAGE>
Cumulative Net Losses
Collection Periods Ending as a %
of Original Pool Balance
September 1996 - February 1997 4.0%
March 1997 - August 1997 7.0%
September 1997 - February 1998 10.0%
March 1998 - August 1998 13.0%
September 1998 - February 1999 14.5%
March 1999 and thereafter 16.0%
If the Reserve Requirement is increased to 13% of
the Pool Balance due to this clause (4), the Reserve
Requirement shall remain at such level until (i) a
minimum of six (6) months have elapsed and (ii) as
of the end of a Collection Period during a Cure
Period Testing Month (as hereinafter defined), the
cumulative Net Losses are below the corresponding
percentage of the Original Pool Balance set forth in
the table above. The Reserve Requirement may be
cured only one time under this provision; or
(5) the lesser of $2,200,000 and the aggregate Principal
Balance of the Receivables.
For purposes of determining the Reserve Requirement, "60
Day + Delinquency Rate" for any Distribution Date means the
Principal Balance, as of the close of the immediately preceding
Collection Period, of the Receivables (other than Liquidated and
Defaulted Receivables) as to which Obligors are more than 60 days
past due in making Scheduled Payments, divided by the Pool
Balance as of the close of such Collection Period. "Cure Period
Testing Month" means each of August 1997, February 1998,
August 1998, February 1999 and August 1999.
"Residual Interest" means the right of the Seller to all
distributions from, and assets of, the Trust, after payment in full
of the fees and expenses of the Backup Servicer, the Servicer, the
Trustee and the Custodian and payment in full of the Certificates
upon termination of this Agreement.
"Retention Amount" means the insured's deductible (initially
equal to 8% of the aggregate insured portion of the Amount
Financed of the Receivables) under the terms of the Risk Default
Policy as described therein.
"Review Firm" means Ernst & Young LLP, or its
successors and assigns.
"Risk Default Insurance Policy" or "Risk Default Policy"
means the insurance policy listed on Exhibit I issued by the Risk
Default Insurer to the Trustee for the benefit of the Trust as named
insured thereunder, including all endorsements thereto, the original
of which policy and endorsements shall be delivered to the
Custodian on or prior to the Closing Date.
"Risk Default Insurance Proceeds" means the proceeds
received by the Trustee, the Backup Servicer, the Servicer, the
insured or any other Person under the Risk Default Policy, which
proceeds shall include allocations to principal and interest as
determined by the Servicer.
"Risk Default Insurer" means The Connecticut Indemnity
Company, its successors and assigns.
"Schedule of Receivables" means the list of Receivables
annexed hereto as Exhibit D; provided that Exhibit D shall be
deemed to be amended on each Funding Date to add Additional
Receivables acquired by the Trust on each such date pursuant to
this Agreement such Exhibit shall be amended from time to time.
"Scheduled Payment" means the fixed payment required to
be made by the Obligor during the respective Collection Period
sufficient to fully amortize the Principal Balance under the Simple
Interest Method over the term of the Receivable and to provide
interest at the applicable APR, including any delinquent payment;
provided, however, that "Scheduled Payment" does not include
Miscellaneous Servicer Collections.
"Securities Act" shall have the meaning set forth in Section
7.03.
"Seller" means Aegis Auto Funding Corp., a Delaware
corporation, as the seller of the Receivables to the Trust under this
Agreement, and its successors (in the same capacity) pursuant to
Section 8.03.
"Servicer" means Aegis Finance, as servicer of the
Receivables pursuant to the Servicing Agreement or any other
Eligible Servicer acting as servicer pursuant to the Servicing
Agreement in accordance with Section 4.01, as the context may
require.
"Servicer Files" shall have the meaning set forth in Section
3.03(b).
"Servicing Agreement" means the Aegis Finance Servicing
Agreement or another servicing agreement entered into by the
Backup Servicer and the Trustee with an Eligible Servicer which
shall be substantially in the form of the Aegis Finance Servicing
Agreement or such other form as shall be approved by the
Majority Certificateholders.
"Servicing Fee" means the fee payable to the Servicer for
services rendered during the respective Collection Period,
determined pursuant to the Servicing Agreement.
"Servicing Officer" means any officer of the Servicer
involved in, or responsible for, the administration and servicing of
Receivables whose name appears on a list of servicing officers
attached to an Officer's Certificate furnished to the Trustee by the
Servicer, as such list may be amended from time to time.
"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 APR multiplied by the unpaid principal balance
multiplied by a fraction the numerator of which is the number of
days elapsed since the preceding payment was made and the
denominator of which is 365.
"Simple Interest Receivable" means any Receivable under
which the portion of a payment allocable to interest and the portion
allocable to principal is determined in accordance with the Simple
Interest Method.
"S&P" means Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., or any successors
thereto.
"State" means any state of the United States of America, or
the District of Columbia.
"Substitute Receivable" means any replacement Receivable
substituted for another Receivable in accordance with Section
3.02(b).
"Total Available Distribution Amount" means, for each
Distribution Date, the sum of the Available Interest Distribution
Amount, the Available Principal Distribution Amount and the
Miscellaneous Servicer Collections.
"Transition Costs" means an amount necessary to reimburse
the successor to the Servicer, the Trustee or the Backup Servicer,
as the case may be, for reasonable costs and expenses incurred in
connection with such transition(s).
"Trust" means the Aegis Auto Receivables Trust 1996-3
created by this Agreement, the estate of which shall consist of the
Trust Property.
"Trust Property" shall have the meaning set forth in Section
2.01(c).
"Trustee" means the Person acting as Trustee of the Trust
under this Agreement, its successor in interest and any successor
trustee pursuant to Section 11.10.
"Trustee Officer" means any vice president or assistant vice
president, any assistant secretary, any trust officer or any other
officer of the Corporate Trust Department of the Trustee
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.
"Trustee's Certificate" means a certificate completed and
executed by the Trustee by a Trustee Officer pursuant to Section
11.02, substantially in the form of, in the case of an assignment to
the Seller, Exhibit B.
"UCC" means the Uniform Commercial Code as in effect
from time to time in the relevant jurisdictions.
"Underwriting Guidelines" means the underwriting
guidelines of Aegis Finance with respect to each of its programs,
a copy of which is annexed to the Risk Default Insurance Policy.
"Vendor's Single Interest Physical Damage Insurance
Policy" means the insurance policy listed on Exhibit J issued by
the VSI Insurer, including all endorsements thereto.
"Voting Interests" means the portion of the voting interests
of all the Certificates that is allocated to any Certificate for
purposes of the voting provisions of this Agreement. Voting
Interests shall be allocated to the Class A, Class B and Class C
Certificates, respectively, in proportion to their Class Certificate
Balances. Voting Interests allocated to each Class of Certificates
shall be allocated among the Certificates within each such class in
proportion to their Certificate Balances. Where the Voting
Interests are relevant in determining whether the vote of the
requisite percentage of the Certificateholders necessary to effect
any consent, waiver, request or demand shall have been obtained,
the Voting Interests shall be deemed to be reduced by the amount
equal to the Voting Interests (without giving effect to this
provision) represented by the interests evidenced by any Certificate
registered in the name of the Servicer, Aegis Finance, the Seller
or any Person known to a Trustee Officer to be an Affiliate of any
such foregoing entities, unless such entity owns all affected
Certificates.
"VSI Insurance Policy" means Vendor's Single Interest
Physical Damage Insurance Policy.
"VSI Insurer" means Guaranty National Insurance
Company.
Section 1.02. 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."
Section 1.03. Cutoff Date and Record Date. All
references to the Record Date prior to the first Record Date in the
life of the Trust shall be to the Closing Date.
Section 1.04. Section References. Unless otherwise
indicated, all section references shall be to Sections in this
Agreement.
ARTICLE II
CREATION OF TRUST
Upon the execution by the parties hereto, there is hereby
created the Aegis Auto Receivables Trust 1996-3. The situs and
administration of the Trust shall be in Minneapolis, Minnesota or
in such other city in which the Corporate Trust Office is located
from time to time.
Section 2.01. Conveyance and Acceptance by Trustee.
(a) In consideration of the Trustee's delivery of
the Certificates to or upon the order of the Seller in an
aggregate principal amount equal to the aggregate Principal
Balance of the Initial Receivables plus the Original Pre-
Funded Amount, the Seller does hereby irrevocably sell,
assign, and otherwise convey to the Trustee, in trust for the
benefit of the Certificateholders, without recourse (subject
to the obligations herein):
(i) all right, title and interest of the Seller in and to the
Initial Receivables identified on Exhibit D, all moneys received
thereon on and after the Cutoff Date allocable to principal, and
all moneys received thereon allocable to interest accrued from and
including the Cutoff Date;
(ii) the interest of the Seller in the
security interests in the Financed Vehicles granted
by the Obligors pursuant to the Initial Receivables;
(iii) the interest of the Seller in any Risk
Default Insurance Proceeds and any proceeds from
claims on any Insurance Policies (including the VSI
Insurance Policy) covering the Initial Receivables,
the Financed Vehicles or the Obligors from the
Cutoff Date;
(iv) all right, title and interest of the
Seller in and to the Funding Account and all
moneys and investments from time to time on
deposit therein;
(v) the right of the Seller to realize upon
any property (including the right to receive future
Liquidation Proceeds) that shall have secured an
Initial Receivable and have been repossessed by or
on behalf of the Trustee;
(vi) the interest of the Seller in any
Dealer Recourse relating to the Initial Receivables;
(vii) all right, title and interest of the
Seller in and to the Purchase Agreement; and
(viii) the proceeds of any and all of the
foregoing.
(b) Subject to the conditions set forth in Section
3.08 hereof, in consideration of the Trustee's delivery on
the related Funding Dates to or upon the order of the Seller
of all or a portion of the balance in the Funding Account in
an amount equal to the aggregate Receivables Cash
Purchase Price of the Additional Receivables to be acquired
on the Funding Date (a portion of which shall be deposited
into the Reserve Fund in accordance with Section 5.07(b)
hereof), the Seller shall on such Funding Date sell,
transfer, assign, set over and otherwise convey to the
Trustee, without recourse (subject to the obligations
herein):
(i) all right, title and interest of the Seller in and to Additional
Receivables and all moneys received thereon, on and after the
related Cutoff Date, allocable to principal, and all moneys received
thereon allocable to interest accrued from and including the related
Cutoff Date;
(ii) the interest of the Seller in the security interests in the
Financed Vehicles granted by Obligors pursuant to the Additional
Receivables;
(iii) the interest of the Seller in any Risk Default Insurance
Proceeds or any proceeds from claims on any Insurance Policies
(including the VSI Insurance Policy) covering the Additional
Receivables, the Financed Vehicles or the Obligors from the
related Cutoff Date;
(iv) the right of the Seller to realize upon any property
(including the right to receive future Liquidation Proceeds) that
shall have secured an Additional Receivable and have been
repossessed by or on behalf of the Trustee;
(v) the interest of the Seller in any Dealer Recourse relating to
the Additional Receivables;
(vi) all right, title and interest of the Seller in and to the
Purchase Agreement; and
(vii) the proceeds of any and all of the foregoing.
(c) It is the intention of the Seller and the
Trustee that the transfer and assignment of the Seller's
right, title and interest in and to the assets identified in
clauses (i) through (vii) of Section 2.01(a) and clauses (i)
through (vii) of Section 2.01(b) (collectively, the "Trust
Property") shall constitute an absolute sale by the Seller to
the Trustee in trust for the benefit of the Certificateholders.
In the event a court of competent jurisdiction were to
recharacterize the transfer of the Trust Property as a
secured borrowing rather than a sale, contrary to the intent
of the Seller and the Trustee, the Seller does hereby grant,
assign and convey to the Trustee and the Trust, as security
for all amounts payable to the Certificateholders, a security
in and lien upon all of its right, title and interest in and to
the Trust Property, including all amounts deposited to the
Lock-Box Account, the Collection Account, the Certificate
Account and the Funding Account, said security interest to
be effective from the date of execution of this Agreement.
(d) The Trustee does hereby accept all
consideration conveyed by the Seller pursuant to Section
2.01(a) and 2.01(b), and declares that the Trustee shall
hold such consideration upon the trusts herein set forth for
the benefit of all present and future Certificateholders,
subject to the terms and provisions of this Agreement.
The Trustee and the Certificateholders acknowledge
and agree that the Seller is the holder of the Residual
Interest and, subject to the terms and provisions of this
Agreement, shall be entitled to receive all distributions of
Excess Receipts.
ARTICLE III
THE RECEIVABLES
Section 3.01. Representations and Warranties of Seller.
(a) The Seller makes the following
representations and warranties as to the Receivables on
which the Trustee relies in accepting the Receivables in
trust on the Closing Date and each Funding Date and
executing and authenticating the Certificates on the Closing
Date. Such representations and warranties speak as of the
Closing Date with respect to the Initial Receivables and as
of the related Funding Date with respect to Additional
Receivables to be acquired on such date, but shall survive
the sale, transfer and assignment of the Receivables to the
Trustee.
(i) Characteristics of Receivables. Each
Receivable (A) has been originated in the United
States of America by Aegis Finance or a Dealer for
the retail sale of a Financed Vehicle in the ordinary
course of Aegis Finance's or such Dealer's
business, has been fully and properly executed by
the parties thereto, and, if originated by a Dealer,
has been purchased by Aegis Finance from such
Dealer or has been financed for such Dealer under
an existing agreement with Aegis Finance, (B) has
created a valid, subsisting and enforceable first
priority security interest in favor of Aegis Finance
or the Dealer in the Financed Vehicle, which
security interest, (1) if in favor of the Dealer, has
been assigned by the Dealer to Aegis Finance, (2)
in either case has been duly assigned by Aegis
Finance to the Seller, and (3) has been assigned by
the Seller to the Trustee, (C) is covered by the VSI
Insurance Policy and the Risk Default Insurance
Policy, (D) contains customary and enforceable
provisions 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 (provided that
the payment in the first or last month in the life of
the Receivable may be different from the level
payment) that fully amortize the Amount Financed
over an original term of no greater than 60 months
and yield interest at the Annual Percentage Rate.
(ii) Schedule of Receivables. The
information set forth in Exhibits D, F-1 and F-2
hereto is true, complete and correct in all material
respects as of the opening of business on the
applicable Cutoff Dates, as the case may be, and no
selection procedures adverse to the
Certificateholders have been utilized in selecting the
Receivables.
(iii) Compliance With Law. Each
Receivable and the sale of each Financed Vehicle
(A) complied at the time it was originated or made
and at the Closing Date or the applicable Funding
Date, as the case may be, complies in all material
respects 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 Magnuson-Moss
Warranty Act, the Federal Reserve Board's
Regulations B and Z, 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 (B) does not contravene any applicable
contracts to which Aegis Finance is a party and no
party to such contract is in violation of any
applicable law, rule or regulation which is material
to the Receivable or the sale of the Financed
Vehicle.
(iv) Binding Obligation. Each Receivable
represents the genuine, legal, valid and binding
payment obligation in writing of the Obligor,
enforceable by the holder thereof in accordance with
its terms.
(v) No Government Obligor. None of
the Receivables is due from the United States of
America or any State or local government or from
any agency, department or instrumentality of the
United States of America or any State or local
government.
(vi) Security Interest in Financed Vehicle.
Immediately prior to the assignment and transfer
thereof, each Receivable is secured by a validly
perfected first priority security interest in the related
Financed Vehicle in favor of the Seller as secured
party or all necessary and appropriate actions have
been commenced that would result in the valid
perfection of a first priority security interest in the
Financed Vehicle in favor of the Seller as the
secured party. The Seller has caused each
certificate of title (or copy of an application for
title), or such other document delivered by the state
title registration agency evidencing the security
interest in each Financed Vehicle, to be delivered to
the Custodian pursuant to Section 3.03 hereof,
together with a power of attorney, duly executed by
Aegis Finance in favor of the Trustee, which
powers of attorney are sufficient to change the lien
holder on the certificate of title with respect to a
Financed Vehicle.
(vii) 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.
(viii) No Waiver. No provision of a
Receivable has been waived, impaired, altered or
modified in any respect except in accordance with
the Servicing Agreement, the substance of which is
reflected in the Schedule of Receivables contained
in the Purchase Agreement as it relates to the
information included thereon.
(ix) No Amendments. No Receivable has
been amended such that either the original
Scheduled Payment has been decreased or the
number of originally scheduled due dates has been
increased except as permitted under the terms of the
Risk Default Policy covering such Receivable.
(x) No Defenses. No right of rescission,
setoff, recoupment, counterclaim or defense has
been asserted or threatened with respect to any
Receivable.
(xi) No Liens. No Liens or claims have
been filed for work, labor or materials relating to a
Financed Vehicle that are Liens prior to, or equal
or coordinate with, the security interest in the
Financed Vehicle granted by the Obligor pursuant
to the Receivable.
(xii) No Default. Except for payment
delinquencies continuing for a period of not more
than thirty (30) days as of the applicable Cutoff
Date for any Receivable, no default, breach,
violation or event 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 permitting acceleration under the terms of any
such Receivable has arisen; and the Seller has not
waived any of the foregoing. As of the date hereof
and as of each Funding Date, the Seller has no
knowledge of any facts regarding any particular
Receivable indicating that such Receivable would
not be paid in full.
(xiii) Insurance. Each Receivable is
covered, as of the Closing Date or Funding Date
when acquired, as the case may be, and throughout
the shorter of the term of the Trust or the term of
the Receivable, under the VSI Insurance Policy and
the Risk Default Insurance Policy, and each such
insurance policy is valid and remains in full force
and effect. Aegis Finance, in accordance with its
customary procedures, has required that each
Obligor obtain, and has determined that each
Obligor has obtained, physical damage insurance
covering the Financed Vehicle as of the date of
execution of the Receivable insuring repair or
replacement of such Financed Vehicle subject to a
deductibility not in excess of $500.
(xiv) Title. It is the intention of the Seller
that the transfer and assignment of the Receivables
from the Seller to the Trust herein contemplated be
treated as an absolute sale for financial accounting
purposes, and that the beneficial interest in and title
to the Receivables not be part of the property of the
Seller for any purpose under state or federal law.
No Receivable has been sold, transferred, assigned
or pledged by the Seller to any Person other than
the Trustee. Immediately prior to the transfer and
assignment herein contemplated, the Seller had good
and marketable title to each Receivable free and
clear of all Liens and rights of others and,
immediately upon the transfer thereof, the Trustee
for the benefit of the Certificateholders will have
good and marketable title to each Receivable, free
and clear of all Liens and rights of others; and the
transfer has been validly perfected under the UCC.
(xv) Lawful Assignment. No Receivable
has been originated in, or is subject to the laws of,
any jurisdiction under which the pledge, transfer
and assignment of such Receivable under this
Agreement or pursuant to transfers of the
Certificates is or shall be unlawful, void or
voidable.
(xvi) All Filings Made. All filings
(including, without limitation, UCC filings)
necessary in any jurisdiction to give the Trustee a
first perfected ownership interest in the Receivables
have been made.
(xvii) One Original. There is only one
original executed copy of each Receivable.
(xviii) Maturity of Receivables. Each
Receivable had an original term to maturity of not
more than 60 months; the weighted average original
term to maturity of the Initial Receivables was
54.22 months as of the Cutoff Date while the
weighted average remaining term to maturity as of
the Cutoff Date for such Initial Receivables was
53.58 months; the remaining term to maturity of
each Receivable was 60 months or less as of the
respective Cutoff Date; the addition of the
Additional Receivables on each Funding Date will
not extend the weighted average remaining term to
maturity of all Receivables sold hereunder by more
than 1 month as of the applicable Cutoff Dates.
(xix) Scheduled Payments. Each Initial
Receivable has a next scheduled payment due date
on or prior to November 20, 1996; no Receivables
had a payment that was more than 30 days overdue
as of the applicable Cutoff Date; and each
Receivable has a final scheduled payment due no
later than the Final Scheduled Distribution Date.
(xx) Monthly Payments. Each Receivable
provides for level monthly payments (provided that
the payment in the first or last month in the life of
the Receivable may be minimally different from
such level payment) which fully amortize the
amount financed over the original term; provided,
however, that the Risk Default Policy provides that
loan extensions will be allowed, subject to no more
than one extension during each twelve (12) months
in the Receivable's term.
(xxi) Outstanding Principal Balance;
Annual Percentage Rate. Each Initial Receivable
had an outstanding Principal Balance as of the
applicable Cutoff Date of at least $1,121.37; and no
Initial Receivable has an outstanding Principal
Balance in excess of $34,659.46. As of their
Cutoff Date, the weighted average APR of the
Initial Receivables was 20.23% per annum. The
addition of the Additional Receivables on each
Funding Date will not decrease the weighted
average APR of all Receivables sold hereunder by
more than 10 basis points.
(xxii) Financing. Each Receivable
represents a Simple Interest Receivable.
(xxiii) Bankruptcy Proceeding. No
Receivable as of the respective Cutoff Date is noted
in Aegis Finance's or the Seller's records as a
dischargeable debt under a bankruptcy proceeding.
(xxiv) Chattel Paper, Valid and Binding.
Each Receivable constitutes "chattel paper" under
the UCC, and is the legal, valid and binding
obligation of the Obligor thereunder in accordance
with the terms thereof.
(xxv) States of Origination. At the time of
origination, each Receivable was originated in one
of the following states, which are the only states in
which the Receivables were originated: Alabama,
Arizona, California, Colorado, Connecticut,
Delaware, Florida, Georgia, Illinois, Indiana,
Kansas, Kentucky, Louisiana, Maryland,
Mississippi, Missouri, Nevada, New Jersey, New
Mexico, New York, North Carolina, Ohio,
Pennsylvania, Rhode Island, South Carolina,
Tennessee, Texas, Virginia and West Virginia.
After the addition of all Additional Receivables to
the Trust, not more than 25% of the Receivables
will have been originated in any one state.
(xxvi) Age of Financed Vehicles.
Approximately 6.15% of the Initial Receivables
relate to new Financed Vehicles and approximately
93.85% of the Initial Receivables relate to used
Financed Vehicles.
(xxvii) No Future Advances. The full
principal amount of each Receivable has been
advanced to each Obligor or advanced in accordance
with the directions of each such Obligor, and there
is no requirement for future advances thereunder.
The Obligor with respect to the Receivable does not
have any options under such Receivable to borrow
from any person additional funds secured by the
Financed Vehicle. Each Receivable as of the
Closing Date and each related Funding Date is
secured by the related Financed Vehicle.
(xxviii) Underwriting Guidelines. Each
Receivable has been originated in accordance with
the applicable Underwriting Guidelines of Aegis
Finance in effect at the time of origination and in
accordance with underwriting guidelines acceptable
to the Risk Default Insurer. Such guidelines include
but are not limited to the following:
(A) the purchase of the Financed
Vehicle by the Obligor, at the time of
funding of the Receivable, was affordable to
the Obligor based upon Aegis Finance's
existing Underwriting Guidelines with
respect to discretionary income; and
(B) at the time of funding of the
Receivable, the Financed Vehicle was
purchased from, and the Receivable
originated by, a Dealer located in one of the
states specified in paragraph (xxv) above.
(xxix) Financed Vehicle in Good Repair.
To the best of the Seller's knowledge, each
Financed Vehicle is in good repair and working
order.
(xxx) Principal Balance. No Receivable
has a Principal Balance which includes capitalized
interest, physical damage insurance or late charges.
(xxxi) Servicing. At the applicable Cutoff
Date, each Receivable was being serviced by the
Servicer.
(xxxii) Eligible Loan. Each Receivable
constitutes an "Instrument" and each Financed
Vehicle constitutes "Eligible Collateral" as defined
in and for purposes of the Risk Default Insurance
Policy. Neither the insured under the Risk Default
Insurance Policy nor any Person acting on behalf of
such insured has concealed or misrepresented any
material facts or circumstances regarding any matter
that would serve as a basis for the Risk Default
Insurer to void the Risk Default Insurance Policy.
(xxxiii) Original Principal Amount. The
original principal amount of each Receivable (A)
originated under the original "Zero Down" and the
"Reduced Income" programs, was not more than (1)
in the case of new Financed Vehicles, the lower of
(x) 105% of the manufacturer's suggested retail
price plus rebatable premiums on cancelable items
and (y) 120% of the manufacturer's suggested retail
price or (2) in the case of used Financed Vehicles,
the lower of (x) 105% of the retail value of the
Financed Vehicle at the time of origination of the
Receivable as set forth in the Kelley "Blue Book"
for the appropriate region plus rebatable premiums
on cancelable items and (y) 120% of such Kelley
"Blue Book" retail value; (B) originated under the
"First Time Buyer" program, was not more than (1)
in the case of new Financed Vehicles, 95% of the
manufacturer's suggested retail price plus rebatable
premiums on cancelable items of up to 15% of the
manufacturer's suggested retail price or (2) in the
case of used Financed Vehicles, 95% of the retail
value of the Financed Vehicle at the time of
origination of the Receivable as set forth in the
Kelley "Blue Book" for the appropriate region plus
rebatable premiums on cancelable items of up 15%
of the manufacturer's suggested retail price and (C)
originated under the "Military Program" was not
more than 105% of the manufacturer's suggested
retail price or, in the case of used Financed
Vehicles, 105% of the Kelley "Blue Book" retail
value. Calculations made with respect to the
percentages referenced above are rounded to the
nearest whole percentage point. All of the
Additional Receivables will be originated in
accordance with the applicable Underwriting
Guidelines.
(xxxiv) No Proceedings. There are no
proceedings or investigations pending or, to the best
knowledge of the Seller, threatened before any
court, regulatory body, administrative agency or
other governmental instrumentality having
jurisdiction over the Seller or its respective
properties: (A) asserting the invalidity of any of the
Receivables; (B) seeking to prevent the enforcement
of any of the Receivables; or (C) seeking any
determination or ruling that might materially and
adversely affect the payment on or enforceability of
any Receivable.
(xxxv) Licensing. With respect to each
Receivable originated in the State of Pennsylvania,
the Trust, the Seller, Funding Corp. III, Aegis
Finance and each prior holder of any such
Receivable were each properly licensed under
applicable Pennsylvania laws and regulations during
the respective times the Trust, the Seller, Aegis
Finance and each prior holder of any such
Receivable held such Receivable, except where the
failure to be so licensed would not have a material
adverse effect on the ability of the Trust to collect
principal or interest payments on such Receivable or
to realize upon the Financed Vehicle underlying any
such Receivable in accordance with the terms
thereof.
(xxxvi) Additional Receivables. Each
Additional Receivable shall have been identified and
approved by Aegis Finance on or prior to the
Closing Date, as evidenced by Aegis Finance's
dated notation of approval on the loan application
(or other writing).
(b) The Seller makes the following additional
representations, warranties and covenants on which the
Trustee relies in accepting the Receivables in trust on the
Closing Date and each Funding Date and executing and
authenticating the Certificates on the Closing Date, which
representations, warranties and covenants shall survive the
Closing Date and each Funding Date.
(i) Location of Servicer Files. The Servicer Files are kept at
the location or locations listed in Exhibit E hereto, with the
exception of (A) the original certificates of title or other documents
under applicable state laws evidencing the security interest of
Aegis Finance in the Financed Vehicles, and (B) the original
Receivables, which documents shall be kept at an office of the
Custodian.
(ii) Evidence of Security Interest. On the
Closing Date (in the case of the Initial Receivables)
and the applicable Funding Date (in the case of each
Additional Receivable), the Seller shall deliver or
cause to be delivered to the Custodian (A) an
original certificate of title or (B) if the applicable
state title registration agency does not deliver
certificates of title to lienholders, such other
document under applicable state laws evidencing the
security interest of Aegis Finance in the Financed
Vehicle, or (C) a guarantee of title or a copy of an
application for title if no certificate of title or other
evidence of the security interest in the Financed
Vehicle has yet been issued, for each Financed
Vehicle relating to each Receivable sold,
transferred, assigned and conveyed hereunder;
provided, however, that any original certificate of
title or other document under applicable law
evidencing the security interest of Aegis Finance in
the Financed Vehicle not so delivered on the
Closing Date or Funding Date, as the case may be,
due to the fact that such certificate of title or other
document has not yet been issued by a state title
registration agency and delivered to the Seller as of
such date, shall be delivered by the Seller to the
Custodian within one hundred twenty (120) days
after the Closing Date or the applicable Funding
Date, as the case may be, or such later date
permitted by the Rating Agencies in accordance
with Section 3.03(a); provided, further, that failure
to so deliver any original certificate of title or other
document evidencing the security interest of Aegis
Finance in the Financed Vehicle to the Trustee shall
be deemed to be a breach by the Seller of its
representations and warranties contained in this
Section 3.01, and such occurrence shall constitute a
breach pursuant to Section 3.02.
(c) Review of Receivables. The Seller will (i)
engage the Review Firm to conduct a Receivable Review
with respect to the Initial Receivables and the Additional
Receivables; and (ii) instruct the Review Firm to provide
written notice to the Trustee, the Seller, Aegis Finance, the
Rating Agencies and each Certificateholder of the results of
each Receivable Review. All services, duties and
responsibilities of the Review Firm shall be performed and
carried out by the Review Firm as an independent
contractor of the Seller, and none of the provisions of any
agreement between the Seller and the Review Firm shall be
deemed to make, authorize or appoint the Review Firm as
agent or representative of the Seller, the Trustee, Aegis
Finance or the Rating Agencies or their respective
successors and assigns.
<PAGE>
Section 3.02. Repurchase or Substitution Upon
Breach.
(a) The Seller, the Backup Servicer or the
Trustee, as the case may be, shall inform the other parties
to this Agreement and each Certificateholder promptly, in
writing, upon its discovery of (i) any breach of the Seller's
representations and warranties made pursuant to Section
3.01(a), or of Aegis Finance's representations and
warranties made pursuant to Section 3.01(b) of the
Purchase Agreement, or (ii) the failure of the Seller to
deliver original certificates of title or other documents
evidencing the security interest of Aegis Finance in the
Financed Vehicle pursuant to Section 3.01(b) and 3.03.
Neither the Backup Servicer nor the Trustee has any duty
to investigate or determine the existence of any breach or
non-delivery except as specified herein. Unless (i) the
breach shall have been cured by the thirtieth day following
the discovery thereof by the Trustee or receipt by the
Trustee of notice from the Seller, the Servicer or the
Backup Servicer of such breach, or (ii) the non-delivery
shall have been cured by the seventh Business Day
following receipt by an officer of the Seller of notice from
the Trustee by certified mail, the Seller shall repurchase
each Receivable (x) to which such breach relates by the
fifth Business Day following such 30 day cure period or (y)
relating to the non-delivery by the fifth Business Day
following such seven day cure period. Concurrently
therewith, the Seller shall cause Aegis Finance to
repurchase such Receivable pursuant to the Purchase
Agreement for the Purchase Amount. In consideration of
the purchase of the Receivable, the Seller shall remit or
cause Aegis Finance to remit the Purchase Amount to the
Trustee for application in the manner specified in Section
5.05. For purposes of this Section 3.02, the Purchase
Amount of a Receivable which is not consistent with the
warranty pursuant to Section 3.01(a)(i)(E) shall include
such additional amount as shall be necessary to provide the
full amount of principal and interest as contemplated
therein.
(b) The foregoing notwithstanding, the Seller
shall also have the option of substituting, within the five
Business Day period following the applicable cure period,
one or more replacement Receivables conforming to the
requirements hereof (a "Substitute Receivable") for any
breach or failing Receivable instead of repurchasing such
Receivable, provided any such substitution occurs within
ninety (90) days of the Closing Date. It shall be a
condition of any such substitution that (i) the outstanding
Principal Balance of the Substitute Receivables as of the
date of substitution shall be less than or equal to the
outstanding Principal Balance of the replaced Receivable as
of the date of substitution; provided that an amount equal
to the difference, if any, between the outstanding Principal
Balance of the replaced Receivable and the outstanding
Principal Balance of the Substitute Receivable shall be
deposited into the Collection Account and shall be applied
to repay the outstanding Principal Balance of the
Certificates on the next Distribution Date; (ii) the
remaining term to maturity of the Substitute Receivable
shall not be greater than that of the replaced Receivable;
(iii) the Cutoff Date with respect to the Substitute
Receivable shall be deemed to be the first day of the month
in which the substitution occurs; (iv) the Substitute
Receivable otherwise shall satisfy the conditions of Section
3.01(a) and (b) hereof (and the Seller shall be deemed to
make all representations and warranties contained in
Sections 3.01(a) and (b) hereof with respect to the
Substitute Receivable as of the date of substitution); (v) the
Seller shall have delivered to the Purchaser and the Trustee
all of the documents specified in Section 3.03(a) or 3.08(b)
hereof with respect to the Substitute Receivable on or
before the date of substitution.
(c) The sole remedy of the Trustee, the Trust or
the Certificateholders with respect to a breach of
representations and warranties of the Seller pursuant to
Section 3.01(a), or a breach of representations and
warranties of Aegis Finance pursuant to Section 3.01(b) of
the Purchase Agreement, or non-delivery of certificates of
title pursuant to Section 3.01(b) and 3.03, shall be to
require the Seller to repurchase or substitute for the
Receivables pursuant to this Section 3.02 and to enforce
Aegis Finance's obligation to repurchase such Receivables
pursuant to the Purchase Agreement.
Section 3.03. Custody of Documents.
(a) To assure uniform quality in servicing the
Receivables, to reduce administrative costs and to perfect
the security interest conveyed by the Seller to the Trustee
and the Trust pursuant to this Agreement in the Trust
Property, the Trustee, upon the execution and delivery of
this Agreement, is hereby irrevocably appointed as
Custodian of the following documents or instruments,
which are hereby delivered to the Custodian with respect to
each Initial Receivable and shall be delivered to the
Custodian with respect to each Additional Receivable on
the applicable Funding Date:
(i) The original of the Receivable and
any amendments thereto;
(ii) The original certificate of title or, if
the applicable state title registration agency does not
issue certificates of title to lienholders, such other
document under applicable state laws evidencing the
security interest of Aegis Finance in the Financed
Vehicle, or a guarantee of title or a copy of an
application for title if a certificate of title or other
document evidencing the security interest in the
Financed Vehicle has not yet been issued;
(iii) The original Risk Default Insurance
Policy and a copy of the VSI Insurance Policy
(including all endorsements thereto), including
endorsements confirming insurance thereunder (as
reflected on master lists of insured Receivables
annexed to such endorsements) regarding each
Receivable covered thereby and, with respect to the
VSI Insurance Policy, an endorsement naming the
Trustee as an additional insured thereunder;
(iv) Such other documents as may be in
existence evidencing the security interest of Aegis
Finance in the Financed Vehicle; provided,
however, that the Trustee has no obligation to
determine the existence or necessity for such other
documents.
The following documents shall be delivered to the
Custodian within 30 days of the Closing Date:
(v) File-stamped copies of the UCC-1
financing statements filed pursuant to this
Agreement.
Items (a)(i), (ii), (iii) and (iv) shall be referred to
collectively as the "Custodian Files."
The Custodian shall review the Custodian Files (A)
within 30 days after the end of the Funding Period to verify
that all guarantees of title and all applications for title have
been replaced by either an original certificate of title or
other documents delivered by a state title registration
agency evidencing the security interest of Aegis Finance in
the Financed Vehicle, and (B) within 30 days after the
Closing Date and each Funding Date, whichever is
applicable with respect to each Receivable, to verify that an
original installment sale contract is present for each
Receivable and that each Receivable is covered by an
endorsement to the Risk Default Policy confirming
insurance thereunder. The Custodian shall immediately
deliver written notice by certified mail to the Seller and
Aegis Finance if any such document is missing or has not
been delivered to the Custodian. With respect to
Receivables for which the original certificates of title or
other documents evidencing the security interest of Aegis
Finance in the Financed Vehicle have not been delivered
within 30 days after the end of the Funding Period, the
Custodian shall review the related Custodian Files every
thirty days thereafter to determine whether or not such
documents have been delivered, and shall promptly notify
the Seller, on a monthly basis, if any such documents have
not been delivered as of the date of such notice. The
Custodian shall deliver written notice to each Rating
Agency and the Certificateholders if any original certificate
of title or other document evidencing the security interest
of Aegis Finance in the Finance Vehicle has not been
delivered to the Custodian within 120 days after the end of
the Funding Period. Such notice shall confirm whether or
not a guaranty of title or an application for title has been
delivered to the Custodian with respect to the related
Receivable.
With respect to Receivables for which the original
retail installment sale contract has not been delivered to the
Custodian in accordance with this Section 3.03(a), the
Seller shall cause Aegis Finance to deliver the missing
documents within seven (7) Business Days of receipt of
such notice or repurchase such Receivables pursuant to
Section 3.02 hereof. With respect to Receivables for which
original certificates of title or other documents evidencing
the security interest of Aegis Finance in the Financed
Vehicle have not been delivered to the Custodian within
120 days of the end of the Funding Period, the Seller shall
cause Aegis Finance to deliver such within such period of
time as determined by the Rating Agencies (after receipt of
notice as described in the preceding paragraph) or
repurchase the Receivables pursuant to Section 3.02 hereof.
Other than the reviews set forth in this paragraph, the
Custodian shall have no duty or obligation to review any of
the Custodian Files.
(b) The Seller shall deliver to the Servicer for
custody pursuant to the Servicing Agreement the documents
and instruments described in Paragraph III.B.3. of the
Servicing Agreement (collectively, the "Servicer Files").
(c) The Custodian agrees to maintain the
Custodian Files at the offices of the Custodian as shall
from time to time be identified to the Trustee by written
notice. Subject to the foregoing, the Trustee may
temporarily move individual Custodian Files or any portion
thereof without notice as necessary to conduct collection
and other servicing activities in accordance with its
customary practices and procedures.
The Custodian shall have and perform the following
powers and duties:
(i) hold the Custodian Files for the
benefit of all present and future Certificateholders,
maintain accurate records pertaining to each
Receivable to enable it to comply with the terms
and conditions of this Agreement and maintain a
current inventory thereof;
(ii) carry out such policies and
procedures in accordance with its customary actions
with respect to the handling and custody of the
Custodian Files so that the integrity and physical
possession of the Custodian Files will be
maintained; and
(iii) promptly release the original
certificate of title to the Servicer upon receipt of a
written request for release of documents certified by
an officer of the Servicer, substantially in the form
of Schedule C to the Servicing Agreement, with
respect to the matters therein.
Section 3.04. Duties of Custodian.
(a) Safekeeping. The Trustee, as Custodian,
shall hold the original Receivables and original certificates
of title at the Corporate Trust Office, for the use and
benefit of all present and future Certificateholders. In
performing its duties the Custodian will comply with all
applicable state and federal laws and will exercise that
degree of skill and care consistent with the same degree of
skill and care that the Custodian exercises with respect to
similar motor vehicle loans held by the Custodian and that
is consistent with prudent industry standards, and will
apply in performing such duties and obligations, those
standards, policies and procedures consistent with the same
standards, policies and procedures the Custodian applies
with respect to similar motor vehicle loans or motor vehicle
retail installment sale contracts which the Custodian serves
as custodian or in a similar capacity.
(b) Maintenance of and Access to Records.
Subject to Section 3.03(c), the Custodian shall maintain the
Custodian Files at the Corporate Trust Office or at such
other office as shall be specified to the Trustee by written
notice not later than 90 days after any change in location.
The Custodian shall make available to the Servicer and the
Certificateholders or their duly authorized representatives,
attorneys or auditors a list of locations of the Custodian
Files, and the related accounts, records and computer
systems maintained by Custodian at such times as the
Servicer or the Majority Certificateholders shall instruct.
(c) Release of Documents. In addition to
releasing certificates of title pursuant to Section 3.03(c)(iii)
upon receipt of written instructions from the Servicer in the
form of Schedule C to the Servicing Agreement, the
Custodian shall release any Custodian File to the Servicer,
the Servicer's agent or the Servicer's designee, as the case
may be, at such place or places as the Servicer may
designate, as soon as practicable.
Section 3.05. Instructions; Authority to Act. The
Custodian shall be deemed to have received proper instructions
with respect to the Custodian Files upon its receipt of written
instructions from the Servicer in the form of Schedule C to the
Servicing Agreement.
Section 3.06. Custodian Fees; Indemnification.
(a) In consideration for services rendered as
Custodian, the Custodian shall be paid the Custodian fees
specified in Exhibit H.
(b) The Seller shall indemnify the Custodian for
any and all liabilities, obligations, losses, compensatory
damages, payments, costs or expenses of any kind
whatsoever, including reasonable fees and expenses of
counsel, that may be imposed on, incurred or asserted
against the Custodian as the result of any improper act or
omission by the Seller or alleged improper act or omission
by the Seller in any way relating to the maintenance and
custody by the Custodian of the Custodian Files; provided,
however, that the Seller shall not be liable for any portion
of any such amount resulting from the willful misfeasance,
bad faith or negligence of the Custodian.
Section 3.07. Effective Period and Termination. The
Trustee's appointment as Custodian shall become effective as of
the Closing Date and shall continue in full force and effect until
the Trustee resigns or is removed pursuant to Section 11.09. As
soon as practicable after any termination of such appointment, the
Custodian shall deliver the original documents identified in Section
3.03 to the successor Custodian at such place or places as the
successor Custodian may reasonably designate.
Section 3.08. Funding Events.
(a) A funding event (each a "Funding Event")
shall occur upon a Funding Date and in accordance with
the requirements of this Section 3.08.
(b) During the Funding Period, the Seller shall,
on Funding Dates, acquire Additional Receivables at the
Receivables Cash Purchase Price from Aegis Finance
pursuant to the Purchase Agreement with moneys deposited
in the Funding Account on the Closing Date; provided,
however, that the minimum amount of Additional
Receivables acquired on any Funding Date other than the
Final Funding Date shall be $500,000.
The Seller shall transfer to the Trustee the
Additional Receivables and the other property and rights
related thereto described in Section 2.01(b) only upon
satisfaction of each of the following conditions on or prior
to the related Funding Date:
(i) On or before the related Cutoff Date
immediately preceding any Funding Date for the
Additional Receivables, the Seller will review,
package and forward to the Trustee for receipt by
not less than two Business Days prior to the
Funding Date (each, a "Delivery Date"), the
following documents related to such Additional
Receivables:
(A) Original retail installment
sales contracts evidencing
such Receivables and any
amendments thereto;
(B) Original certificates of title,
or copies of dealer blanket
guarantees of title, or
applications for title to the
related Financed Vehicles;
(C) An endorsement to the Risk
Default Insurance Policy
confirming insurance
regarding each Receivable to
be purchased on such
Funding Date (as specified on
a master list of Receivables
annexed to such
endorsement);
(D) A list of Receivables being
purchased on such Funding
Date; and
(E) A notice that the Funding
Date will occur on the Friday
immediately following the
Delivery Date (or such other
day as specified in such
notice).
(ii) By the Delivery Date, the Seller shall
deliver, or cause to be delivered, to the Trustee
(with a copy to Seller's counsel), fully executed
documents as follows:
(A) Assignment (in the form of
Exhibit A to the Purchase
Agreement) with Schedule A
attached listing all
Receivables to be sold on
such Funding Date;
(B) Assignment (in the form of
Exhibit P hereto) with
Schedule A attached listing
all Receivables to be sold on
such Funding Date;
(C) Notice of Funding (in the
form of Exhibit N hereto);
(D) Officer's Certificate (in the
form of Exhibit O hereto)
with a copy, via telecopy, to
the Rating Agency and the
Trustee;
(E) Power of Attorney by the
Seller in favor of the Trust
reflecting the Additional
Receivables; and
(F) A release and applicable
UCC-3 Termination
Statement executed by each
warehouse lender terminating
such person's prior security
interests in such Additional
Receivables granted by Aegis
Finance.
(iii) On the Delivery Date, the Trustee
will acknowledge receipt of a written certification
of the Seller of the presence of the documents listed
in Sections 3.08(b)(i) and (ii) above by sending
notice, via telecopy, to Seller and Seller's counsel.
The Trustee shall not be responsible for the
accuracy of such documents. Only those
Receivables for which the documents listed in
Sections 3.08(b)(i) and (ii) are delivered to the
Trustee on the Delivery Date will be included in the
Funding Event. The Trustee will also stamp the
Receivables to indicate their sale to the Seller and
their subsequent transfer and assignment to the
Trust.
(iv) Upon satisfaction of the above
requirements with respect to events to occur on or
before the Funding Date, the Trustee will on the
Funding Date withdraw funds from the Funding
Account to (A) make the deposits required by
Section 5.01(c) into the Reserve Fund and (B) pay
to the Seller or its designee with respect to
Additional Receivables acquired on such Funding
Date, in cash by federal wire transfer funds, an
amount equal to the balance of the Receivables
Cash Purchase Price (net of the deposit to the
Reserve Fund), all pursuant to the written directions
provided to the Trustee in the Notice of Funding.
(v) By the Funding Date, the Seller shall
deliver or cause to be delivered to the Rating
Agency and the Trustee, a Receivables
Characteristics report substantially in the form of
Exhibit F-2 hereto with respect to all Receivables
acquired on and prior to such Funding Date.
(vi) The Trustee shall review the
documents delivered to it in connection with any
Funding Event within 5 Business Days after the
Funding Date to verify the presence of the
documents listed in Sections 3.08(b)(i) and
3.08(b)(ii) for each Additional Receivable. The
Trustee shall immediately deliver written notice by
certified mail to the Seller, Aegis Finance and each
Certificateholder, if any of such documents is
missing. The Seller shall cause Aegis Finance to
deliver to the Trustee the missing items within 3
Business Days of receipt of such notice.
(c) If the Seller does not provide on or prior to
September 25, 1996 written direction to the Trustee of its
intent to acquire Additional Receivables pursuant to this
Section 3.08 on or prior to September 30, 1996, then the
funds on deposit in the Funding Account after September
30, 1996 (excluding earnings on investments or
reinvestments thereof) shall be used for the purpose of
partially prepaying the Certificates in accordance with
Section 5.06(d) hereof. The Trustee shall provide notice
to the Certificateholders of any such partial prepayment,
which prepayment shall be made on October 21, 1996.
(d) The Seller shall take any action required to
maintain the first perfected ownership interest of the Trust
in the Trust Property and the first perfected security
interest of the Trustee in the Reserve Fund Property.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 4.01. Servicing Duties.
(a) On or before the Closing Date, the Backup
Servicer and the Trustee will enter into the Aegis Finance
Servicing Agreement with Aegis Finance pursuant to which
Aegis Finance shall act as Servicer with respect to the
Receivables. Any Servicer shall be, and shall remain, for
so long as it is acting as Servicer, an Eligible Servicer.
The Backup Servicer shall review each Monthly Servicing
Certificate required to be provided by the Servicer pursuant
to paragraph III.B.6 of the Servicing Agreement and shall
notify the Trustee, each Rating Agency and each
Certificateholder of any discrepancy in such Monthly
Servicing Certificate which cannot be corrected in
accordance with paragraph III.B.6 of the Servicing
Agreement.
(b) In the event of termination of the rights and
obligations of the Servicer under the Servicing Agreement,
the Backup Servicer shall, in accordance with paragraph VI
of the Servicing Agreement, act as Servicer of the
Receivables by assuming such rights and obligations under
the Servicing Agreement unless a successor Servicer, other
than the Backup Servicer, is appointed by the Trustee under
the Servicing Agreement; provided, however, that the
Backup Servicer shall not be liable for any acts, omissions
or obligations of the Servicer prior to such succession or
for any breach by the Servicer of any of its representations
and warranties contained in the Servicing Agreement or in
any related document or agreement.
(c) Any Servicing Agreement that may be
entered into and any other transactions or servicing
arrangements relating to the Receivables and the other
Trust Property involving a Servicer in its capacity as such
shall be deemed to be for the benefit of the Trust, the
Trustee and the Certificateholders.
(d) Other than the duties specifically set forth in
this Agreement and the Servicing Agreement, the Backup
Servicer shall have no obligation hereunder, including,
without limitation, to supervise, verify, monitor or
administer the performance of the Servicer. The Backup
Servicer shall have no liability for any actions taken or
omitted by the Servicer. The duties and obligations of the
Backup Servicer shall be determined solely by the express
provisions of this Agreement and the Servicing Agreement
and no implied covenants or obligations shall be read into
this Agreement against the Backup Servicer.
Section 4.02. Resignation of Backup Servicer. The
Backup Servicer may resign from the obligations and duties
imposed on it under this Agreement and the Servicing Agreement
as Backup Servicer, and shall resign at any time when it ceases to
be an Eligible Servicer, by giving written notice of such
resignation to the Trustee and the Certificateholders; provided,
however, that (a) at least 45 days prior to such resignation the
Backup Servicer shall have notified the Rating Agency, in writing,
of (i) its intention to resign and (ii) the identity of the proposed
successor Backup Servicer, and (b) each Rating Agency shall have,
within a reasonable time thereafter, notified the Backup Servicer
of its approval of such proposed successor Backup Servicer, which
approval shall not be unreasonably withheld by the Rating Agency.
No such resignation shall become effective until a successor
Backup Servicer that is an Eligible Servicer acceptable to the
Majority Certificateholders shall have assumed the responsibilities
and obligations of the Backup Servicer in accordance with Section
10.02; provided however, if a successor Backup Servicer has not
assumed the responsibilities and obligations of the Backup Servicer
within 30 days after such resignation, the Backup Servicer may
petition a court of competent jurisdiction for its removal.
In the event the Backup Servicer shall for any reason no
longer be acting as such (including by reason of resignation as set
forth in this Section 4.02 or an Event of Backup Servicing Default
as specified in Section 10.01), the successor Backup Servicer shall
thereupon assume all of the rights and obligations of the outgoing
Backup Servicer under the Servicing Agreement. In such event,
the successor Backup Servicer shall be deemed to have assumed all
of the Backup Servicer's interest therein and to have replaced the
outgoing Backup Servicer as a party to the Servicing Agreement
to the same extent as if the Servicing Agreement had been assigned
to the successor Backup Servicer, except that the outgoing Backup
Servicer shall not thereby be relieved of any liability or obligations
on the part of the outgoing Backup Servicer to the Servicer under
such Servicing Agreement to the extent such obligations or
liabilities arose prior to the assumption by the successor Backup
Servicer of the obligations of the Backup Servicer thereunder. The
outgoing Backup Servicer shall, upon request of the Trustee,
deliver to the successor Backup Servicer all documents and records
relating to the Servicing Agreement and the Receivables and
otherwise use its reasonable efforts to effect the orderly and
efficient transfer of the Servicing Agreement to the successor
Backup Servicer.
Section 4.03. Covenant of Backup Servicer. The Backup
Servicer shall promptly notify the Trustee of the occurrence of any
Event of Backup Servicing Default or Event of Servicing Default
of which it has obtained actual knowledge and any breach by the
Backup Servicer or the Seller of any of its respective covenants or
representations and warranties contained in this Agreement.
Section 4.04. Servicing Fees. The total servicing fees
payable on each Distribution Date to the Backup Servicer and the
Servicer shall equal the Backup Servicer Fee and the Servicing
Fee, respectively. Any proposed increase in the Backup Servicer
Fee or the Servicing Fee due to the assumption of duties hereunder
or under the Servicing Agreement by a successor Backup Servicer
or successor Servicer shall be approved by the Seller, each Rating
Agency and the Majority Certificateholders. The Backup Servicer
shall also be entitled to any reimbursement pursuant to Section
9.03. Any Servicing Fee payable to the Servicer hereunder or
pursuant to the Servicing Agreement shall be paid to the Servicer
and/or to one or more subservicers as the servicer may from time
to time direct in writing to the Trustee.
Section 4.05. Costs and Expenses. All reasonable out-of-
pocket costs and expenses incurred by the Backup Servicer in
carrying out its duties as Backup Servicer hereunder, including all
out-of-pocket fees and expenses not expressly stated hereunder to
be for the account of the Trust or the Seller, shall be paid or
caused to be paid by the Backup Servicer, and the Backup Servicer
shall be entitled to reimbursement therefor hereunder. Nothing in
this Section 4.05 shall be construed to limit the compensation to be
paid to or retained by the Backup Servicer pursuant to Section
4.04.
Section 4.06. Standard of Care. In managing,
administering, servicing and making collections on the
Receivables, and in performing its obligations under the Servicing
Agreement after succeeding as Servicer thereunder, the Backup
Servicer will exercise that degree of skill and care consistent with
the same degree of skill and care that the Backup Servicer
exercises with respect to similar motor vehicle loans owned and/or
serviced by the Backup Servicer and that is consistent with prudent
industry standards, and will apply in the management,
administration, servicing and collection of the Receivables and in
the administration and enforcement of the Insurance Policies
relating to the Receivables, those standards, policies and
procedures consistent with the best standards, policies and
procedures the Backup Servicer applies with respect to similar
motor vehicle loans owned or serviced by it, and, to the extent not
inconsistent with the foregoing, to exercise that degree of skill and
care it uses in servicing assets held for its own account; provided,
however, that notwithstanding the foregoing, the Backup Servicer
shall not, except pursuant to a judicial order from a court of
competent jurisdiction, or as otherwise required by applicable law
or regulation, release or waive the right to collect the unpaid
balance on any Receivable and provided, further, that the Backup
Servicer shall not amend or modify any Receivable, unless a
default with respect to such Receivable has occurred or is, in the
judgment of the Backup Servicer, imminent. In performing its
duties and obligations hereunder or under the Servicing
Agreement, in the event there is no Servicer managing,
administering, servicing or making collections on the Receivables
and administering and enforcing the Insurance Policies relating to
the Receivables, the Backup Servicer shall comply with all
applicable federal and state laws and regulations, shall maintain all
state and federal licenses and franchises necessary for it to perform
its servicing responsibilities hereunder and thereunder, and in such
event it shall exercise the same degree of skill and care it uses in
managing, administering, servicing and making collection on the
Receivables and administering and enforcing the Insurance Policies
in its capacity as Backup Servicer hereunder, and shall not impair
the rights of the Trust or the Certificateholders in the Trust
Property.
ARTICLE V
DISTRIBUTIONS; ACCOUNTS;
STATEMENTS TO CERTIFICATEHOLDERS
Section 5.01. Accounts.
(a) The Trustee shall establish the Collection
Account, the Funding Account and the Certificate Account
in the name of the Trustee for the benefit of the
Certificateholders. The Collection Account, the Funding
Account and the Certificate Account shall be segregated
trust accounts established with the trust department of the
Trustee. The Servicer shall establish the Lock-Box
Account pursuant to the Servicing Agreement. The Lock-
Box Account shall be a non-interest bearing account
established with a Lock-Box Account Depository, which
shall at all times be an Eligible Institution, by the Servicer
for the sole benefit of the Trust and other holders of retail
installment sales contracts originated by Aegis Finance or
its Affiliates. All of the foregoing Accounts shall be
Eligible Accounts.
(b) Amounts held in the Collection Account, the
Certificate Account and the Funding Account shall be
invested by the Trustee, upon the written direction of the
Seller, in Eligible Investments. Any such investment in the
Certificate Account or the Funding Account shall mature no
later than (i) one Business Day before the Distribution Date
(or Funding Date with respect to the Funding Account),
next succeeding the date of investment or, (ii) in the case
of money market fund investments, on such Distribution
Date. Any such investment in the Collection Account shall
mature not later than two Business Days before such
Distribution Date. Any written investment direction by the
Seller shall certify that any such investment is authorized
by this Section 5.01. The Trustee shall have no authority
to sell or otherwise dispose of Eligible Investments
attributable to funds held in the Certificate Account, the
Collection Account or the Funding Account prior to their
respective maturity dates. Interest and earnings on
investments of funds in any Account shall be credited to
and all losses borne by the Account with respect to which
they were derived. All accounts with the Trustee must be
trust accounts subject to regulations substantially similar to
12 C.F.R. SEC 9.10(b). The Trustee shall not have any
responsibility or liability for any investment of moneys at
the direction of the Seller or any loss resulting therefrom.
(c) The Servicer has appointed Wells Fargo
Bank, N.A., as the initial Lock-Box Account Depository
under the Servicing Agreement. All funds of the Trust
held by a Lock-Box Account Depository are and shall
remain the property of the Trust.
Section 5.02. Collections. Pursuant to the Servicing
Agreement, the Servicer shall remit to the Lock-Box Account as
soon as practicable, but in no event later than its close of business
on the Business Day after receipt thereof by the Servicer, all
payments by or on behalf of the Obligors with respect to each
Receivable (other than Purchased Receivables), all Recoveries and
all Risk Default Insurance Proceeds, all as collected during the
Collection Period. As provided in the Servicing Agreement, the
Servicer shall cause the Lock-Box Account Depository to transfer
all available funds applied to the Receivables in excess of $2,000
from the Lock-Box Account to the Collection Account on each
Business Day. In the event an Obligor remits funds to the Trustee
rather than remitting such funds directly to the Servicer, the
Trustee shall notify the Servicer and shall deposit such amounts
into the Collection Account within one (1) Business Day after
receipt.
Section 5.03. Application of Collections. All collections
for the Collection Period shall be applied by the Trustee in
accordance with reports provided to the Trustee by the Servicer
pursuant to the Servicing Agreement, as follows:
With respect to each Receivable (other than a Purchased
Receivable), payments by or on behalf of the Obligor shall be
applied to the Scheduled Payment. Any excess payments received
constituting Scheduled Payments for subsequent Collection Periods
shall be applied to the Principal Balance of the Receivables on the
Distribution Date relating to such subsequent Collection Period.
Section 5.04. Miscellaneous Servicer Collections. All
Miscellaneous Servicer Collections shall be deposited by the
Servicer to the Lock-Box Account within one Business Day of
receipt thereof.
Section 5.05. Additional Deposits. The Trustee shall
deposit or cause to be deposited in the Collection Account the
aggregate Purchase Amount received with respect to Purchased
Receivables and shall, upon receipt, deposit such other amounts to
such accounts as may be specified herein. All such deposits shall
be made in Automated Clearinghouse Corporation next-day funds
or immediately available funds, on or before the Business Day
preceding the Distribution Date.
Section 5.06. Distributions.
(a) On each Distribution Date, the Trustee shall
cause to be made the transfers and distributions set forth in
this Section 5.06 in the amounts set forth in the Monthly
Servicing Certificate for such Distribution Date.
(b) The Trustee shall, on each Determination
Date, based upon a certificate delivered to the Trustee from
the Backup Servicer, calculate the Total Available
Distribution Amount, the Class A Distributable Amount,
the Class B Distributable Amount, the Class C
Distributable Amount, the Reserve Fund balance and,
based on the Total Available Distribution Amount,
determine the amount distributable to the Certificateholders
and the other distributions to be made on such Distribution
Date.
(c) Two (2) Business Days prior to each
Distribution Date, the Trustee shall transfer from the
Collection Account to the Certificate Account an amount
equal to the Total Available Distribution Amount and all
investment earnings and interest on the funds in the
Collection Account.
(d) The rights of the Class B Certificateholders
to receive distributions in respect of the Class B
Certificates shall be and hereby are subordinated to the
rights of the Class A Certificateholders to receive
distributions in respect of the Class A Certificates to the
extent provided in this Section. The rights of the Class C
Certificateholders to receive distributions in respect of the
Class C Certificates shall be and hereby are subordinated
to the rights of the Class A Certificateholders and the Class
B Certificateholders to receive their respective distributions
to the extent provided in this Section. Except as otherwise
provided below, on each Distribution Date, the Trustee
(based on the information contained in the Monthly
Servicing Certificate delivered on the related Determination
Date pursuant to the Servicing Agreement) shall make the
following distributions from the funds then on deposit in
the Certificate Account (including funds transferred from
the Reserve Fund when necessary as set forth below and
pursuant to Section 5.07) in the following order of priority:
(i) to the Backup Servicer, the Backup Servicer Fee and
expenses and all unpaid Backup Servicer Fees and unreimbursed
expenses from prior Collection Periods; to the Servicer, the
Servicing Fees and expenses, and all unpaid Servicing Fees and
unreimbursed expenses from prior Collection Periods; to the
Trustee and Custodian, the Trustee and Custodian fees and
expenses and all unpaid Trustee and Custodian fees and
unreimbursed expenses from prior Collection Periods; and to the
successor to the Servicer, the Trustee or the Backup Servicer,
Transition Costs, if any;
(ii)
to the Class A Certificateholders of record, an amount
equal to the sum of the Class A Interest Distributable Amount and
any Class A Interest Carryover Shortfall from the prior
Distribution Date;
(iii) to the Class B Certificateholders of
record, an amount equal to the sum of the Class B
Interest Distributable Amount and any Class B
Interest Carryover Shortfall from the prior
Distribution Date;
(iv) to the Class C Certificateholders of
record, an amount equal to the sum of the Class C
Interest Distributable Amount and any Class C
Interest Carryover Shortfall from the prior
Distribution Date;
(v) to the Class A Certificateholders of
record, an amount equal to the sum of the Class A
Principal Distributable Amount and any Class A
Principal Carryover Shortfall from the prior
Distribution Date;
(vi) to the Class B Certificateholders of
record, an amount equal to the sum of the Class B
Principal Distributable Amount and any Class B
Principal Carryover Shortfall from the prior
Distribution Date; and
(vii) to the Class C Certificateholders of
record, an amount equal to the sum of the Class C
Principal Distribution Amount and any Class C
Principal Carryover Shortfall from the prior
Distribution Date.
(e) On each Distribution Date, the Trustee shall
distribute any Excess Receipts in the following amounts
and in the following order of priority: (i) into the Reserve
Fund until the amount on deposit therein equals the Reserve
Fund Requirement for such date and (ii) any remaining
Excess Receipts will be distributed to the Seller.
(f) All distributions with respect to each Class
of Certificates on each Distribution Date shall be made pro
rata among the outstanding Certificates of such Class, in
proportion to the Percentage Interests evidenced thereby.
All payments to Certificateholders shall be made on each
Distribution Date to each Certificateholder of record on the
related Record Date by check, or, if requested by a
Certificateholder holding Certificates with Original
Certificate Balances in the aggregate in excess of
$1,000,000, by wire transfer to the account designated in
writing by such Holder in the form of Exhibit G hereto (or
such other account as such Certificateholder may designate
in writing) delivered to the Trustee prior to the
Determination Date, in immediately available funds.
Section 5.07. Reserve Fund; Priority of Distributions.
(a) In order to assure that sufficient amounts to
make required payments to the Certificateholders specified
therein will be available, there shall be established and
maintained with the Trustee the following Eligible Account:
the "Reserve Fund--Aegis Auto Receivables Trust 1996-3"
(the "Reserve Fund"), which will include the money and
other property deposited and held therein pursuant to
Section 5.06(e) and this Section. The Reserve Fund shall
not be part of Trust, but instead will be held for the benefit
of the Certificateholders. The Seller and the Trustee
acknowledge that any amounts on deposit in the Reserve
Fund (and any investment earnings thereon) will be owned
directly by the Seller, and such parties hereby agree to treat
the same as assets (and investment earnings) of the Seller
for federal income tax purposes.
(b) (i) The Reserve Fund shall be initially funded
on the Closing Date in the amount of the Reserve Fund
Initial Deposit.
(ii) On each Funding Date, the Trustee shall
deposit in the Reserve Fund an amount transferred from the
Funding Account pursuant to Section 5.08(b) equal to 3.0%
of the Principal Balance of the Additional Receivables to be
purchased by the Seller and sold to the Trust on such
Funding Date.
(c) Amounts held in the Reserve Fund shall be
invested in Eligible Investments, in accordance with written
instructions from the Seller or its designee, and such
investments shall not be sold or disposed of prior to their
maturity but shall mature no later than two Business Days
before the Distribution Date next succeeding the date of
investment. All such investments shall be made in the
name of the Trustee or its nominee. Any loss on
investment of amounts held in the Reserve Fund and all
income and gain realized on the Reserve Fund shall be
credited to such fund. As provided in Section 11.05, the
Trustee shall not have any responsibility for moneys
invested by the Trustee hereunder or any losses resulting
therefrom.
(d) In order to provide for the prompt payment
to the Certificateholders, the Trustee, the Custodian, the
Servicer and the Backup Servicer in accordance with
Section 5.06(d), and to assure availability of the amounts
maintained in the Reserve Fund, the Seller, subject to the
terms and conditions hereof and solely for the purpose of
providing for payment of the fees and expenses of the
Backup Servicer, the Trustee and the Custodian and making
the distributions to the Certificateholders provided for in
Section 5.06 and this Section 5.07, hereby grants in favor
of the Trustee, as collateral agent, and its successor and
assigns, a security interest in and lien upon all its right,
title and interest in and to the Reserve Fund, including the
Reserve Fund Initial Deposit and all proceeds of the
foregoing, and hereby pledges to the Trustee, as collateral
agent, and its successors and assigns, all other amounts and
investments held from time to time in the Reserve Fund
(whether in the form of deposit accounts, instruments,
book-entry securities, uncertificated securities or otherwise)
(all of the foregoing, subject to the limitations set forth
below, the "Reserve Fund Property"); to have and to hold
all the aforesaid property, rights and privileges unto the
Trustee, its successors and assigns, in trust for the uses and
purposes, and subject to the terms and provisions, set forth
in this Section 5.07. The Trustee hereby acknowledges
such transfer and accepts the trust hereunder and shall hold
and distribute the Reserve Fund Property in accordance
with the terms and provisions of this Section 5.07.
(e) The Seller agrees to take or cause to be
taken such further actions, to execute, deliver and file or
cause to be executed, delivered and filed such further
documents and instruments (including, without limitation,
any UCC financing statements or this Agreement) as may
be determined to be necessary to perfect the interests
created by this Section in favor of the Trustee and
otherwise fully to effectuate the purposes, terms and
conditions of this Section. The Seller (with respect to
Reserve Fund Property) shall:
(i) promptly execute, deliver and file
any financing statements, amendments, continuation
statements, assignments, certificates and other
documents with respect to such interests and
perform all such other acts as may be necessary in
order to perfect or to maintain the perfection of the
Trustee's security interest in the Reserve Fund
Property; and
(ii) make the necessary filings of
financing statements or amendments thereto within
ten business days after the occurrence of any of the
following: (1) any change in its corporate name or
any trade name; (2) any change in the location of
its chief executive office or principal place of
business; and (3) any merger or consolidation or
other change in its identity or corporate structure
and promptly notify the Trustee of any such filings.
(f) If on any Distribution Date the Total
Available Distribution Amount is insufficient to distribute
the full amount described in clauses (i) through (vii) of
Section 5.06(d), the Trustee shall withdraw an amount
equal to such insufficiency from the Reserve Fund (any
such amount, the "Reserve Fund Draw") and apply such
amount (in the order of priority provided by Section
5.06(d)) in respect of such insufficiencies. If on any
Distribution Date amounts on deposit in the Reserve Fund
are in excess of the Reserve Fund Requirement for such
date (after giving effect to Reserve Fund Draws on such
date, if applicable), the Trustee shall release such excess to
the Seller. Any amounts released from the Reserve Fund
on any Distribution Date shall not be available for Reserve
Fund Draws on following Distribution Dates. Upon
termination of this Agreement, any amounts on deposit in
the Reserve Fund, after payment of all amounts due the
Backup Servicer, the Trustee, the Custodian, the Servicer
and the Certificateholders, shall be paid to the Seller.
(g) Amounts properly received by the Seller
pursuant to this Agreement shall not be available to the
Trustee or the Trust for the purpose of making deposits to
the Reserve Fund or making payments to the
Certificateholders, nor shall the Seller be required to refund
any amount properly received by them.
Section 5.08. Funding Account.
(a) The Trustee shall establish the Funding
Account for the benefit of the Certificateholders. The
Funding Account shall be initially funded in the amount of
$7,709,463.60.
(b) The Trustee shall use funds on deposit in the
Funding Account on a Funding Date to (i) deposit funds to
the Reserve Fund as required by Section 5.07(b)(ii) hereof
(assuming the occurrence of a Funding Event on such
Funding Date) and (ii) acquire Additional Receivables on
behalf of the Trust.
(c) Two Business Days prior to the Initial
Distribution Date, the Trustee shall first transfer all
amounts received as earnings on income from any
investments or reinvestments of funds in the Funding
Account to the Collection Account and, second, shall
transfer all remaining funds in the Funding Account to the
Certificate Account for the purpose of prepaying the
Certificates on the Initial Distribution Date.
Section 5.09. Statements to Certificateholders; Tax
Returns. With each distribution from the Certificate Account to
the Certificateholders made on a Distribution Date, the Trustee
shall provide to the Rating Agency, the Backup Servicer, the Seller
and each Certificateholder of record, based on the Monthly
Servicing Certificate provided to the Backup Servicer and the
Trustee by the Servicer in the form of Schedule B to the Servicing
Agreement, a statement substantially in the form of Exhibit C to
this Agreement setting forth at least the following information with
respect to such Distribution Date and the related Collection Period,
to the extent applicable:
(a) Servicer Collections:
(i) The Available Interest Distribution Amount;
(ii) The Available Principal Distribution
Amount;
(iii) The Miscellaneous Servicer
Collections; and
(iv) The Total Available Distribution
Amount.
(b) Distributions:
(i) the amount of such distribution allocable to principal in
respect of each Class of Certificates;
(ii) the amount of such distribution
allocable to interest in respect of each Class of
Certificates;
(iii) the amount of the Backup Servicing
Fee, Servicing Fee, Trustee and Custodian Fees and
expenses for the related Collection Period and the
portion of such fees allocable to each Class of
Certificates;
(iv) the amount of Class Interest
Carryover Shortfalls, if any, on such Distribution
Date in respect of each Class of Certificates and the
amount of the Class Principal Carryover Shortfalls,
if any, on such Distribution Date in respect of each
Class of Certificates;
(v) the Pool Factor and the Class Factor
for each Class of Certificates as of such Distribution
Date, after giving effect to payments allocated to
principal reported under clause (i) above;
(vi) the amount on deposit in the Reserve
Fund on such Distribution Date, after giving effect
to amounts deposited in the Reserve Fund and
Reserve Fund Draws on such date;
(vii) the aggregate amount of Reserve
Fund Draws, and the breakdown of the application
of such draws to cover payment shortfalls to Class
A, B or C Certificateholders, made on such
Distribution Date;
(viii) the amount of net investment earnings
with respect to the Reserve Fund earned during the
related Collection Period;
(ix) the amounts, if any, released from
the Reserve Fund to the Seller;
(c) Pool Information:
The Original Pool Balance, the Pool
Balance, the weighted average coupon, the weighted
average maturity (in months) and the remaining
number of Receivables for both the first and the last
day of the preceding Collection Period, after giving
effect to payments allocated to principal reported in
(b)(ii) above.
(d) Receivables Repurchased or Substituted by
Seller:
The number and aggregate Purchase
Amount of Receivables repurchased by Seller and
for any substitution of Receivables, the number and
principal balance of both the Receivables being
replaced and the Receivables substituted.
(e) Delinquency Information:
The amount of Receivables (other
than Defaulted Receivables and Liquidated
Receivables) as to which Obligors are (i) 30 days to
59 days past due (ii) 60 days to 89 days past due,
and (iii) 90 days past due in making Scheduled
Payments.
(f) Repossession Information:
The number and principal balance of
Receivables as to which the Servicer has
repossessed the Financed Vehicle during the current
period and on a cumulative basis.
(g) Liquidated and Defaulted Receivables
Information:
The number and principal balance of
Receivables which became Liquidated Receivables
(other than Receivables previously characterized as
Defaulted Receivables) and the number and
principal balance of Receivables which became
Defaulted Receivables during the Collection Period
and on a cumulative basis.
(h) Recoveries:
The amount of Liquidation Proceeds, the
amount of insurance claims paid under the VSI
Insurance Policy, the amount of rebates received
from the Servicer as a result of cancelled warranty
or extended service contracts and the amount of
claims paid under consumer insurance during the
related Collection Period and on a cumulative basis.
(i) Retention Amount:
The beginning balance, the amount added
with respect to Additional Receivables or quarterly
reserve loss deficiency, the amount subtracted with
respect to approved claims and quarterly reserve
loss surplus, and the ending balance.
(j) Risk Default Insurance Proceeds:
The amount of insurance proceeds paid
under the Risk Default Insurance Policy.
(k) Net Losses:
The amount of Net Losses, if any, on
such Distribution Date and the cumulative amount
of all Net Losses realized on the Receivables since
the Closing Date.
(l) Insurance Claims:
The number of Receivables as to
which a claim was filed under the Risk Default
Policy or the VSI Insurance Policy, the amount of
such claims, the number of claims rejected and the
principal balance of related Receivables rejected
under the Risk Default Policy for the related
Collection Period and on a cumulative basis.
(m) Funding Account:
The beginning balance, the amount
withdrawn to purchase Additional Receivables and
to make deposits to the Reserve Fund, the amount
of any reinvestment income earned on the moneys
on deposit therein, and the ending balance.
(n) Collection Account:
The amount of reinvestment income
on funds held in the Collection Account.
<PAGE>
(o) Other Information:
Any other information regarding each
distribution which any Certificateholder reasonably
requests in writing 30 days prior to such distribution
and which the Trustee can provide without undue
expense or effort.
Within thirty (30) days after the end of each calendar year,
the Trustee shall furnish to each Person who at any time during
such calendar year was a Certificateholder of record and received
any payment thereon (a) a report as to the aggregate of amounts
reported pursuant to clauses (b)(i), (ii) and (iii) of this Section 5.09
for such calendar year or applicable portion thereof during which
such Person was a Certificateholder and (b) such information as
may be reasonably requested by the Certificateholders or required
by the Code, and the regulations thereunder, to enable such
Holders to prepare their federal and state income tax returns.
Within thirty (30) days after the end of each calendar year, the
Trustee shall furnish or shall cause to be furnished to the Seller a
statement containing such of the information provided pursuant to
this Section 5.09 as relates to distributions to the Seller,
aggregated for such calendar year, as well as information
respecting the amounts which were transferred from the Reserve
Fund to make payments to Certificateholders and amounts
otherwise distributable to the Seller which were placed in the
Reserve Fund. The obligation of the Trustee set forth in this
paragraph shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the
Backup Servicer pursuant to any requirements of the Code.
The Seller shall prepare any tax returns or other forms
required to be filed by the Trust. So long as no applicable statute,
Treasury regulation or applicable Internal Revenue Service ruling
or other administrative pronouncement requires to the contrary, all
such tax returns shall be prepared in a manner consistent with tax
information reporting positions described in the Offering
Memorandum prepared in connection with the Certificates dated
September 12, 1996. The Trustee, upon request, will furnish the
Seller with all such information known to the Trustee as may be
reasonably required in connection with the preparation of all tax
returns of the Trust.
Section 5.10. 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 V and any movement of cash between such accounts
shall be made by the Trustee in reliance on information provided
to the Trustee by the Servicer in writing, whether by way of the
Servicer's Monthly Servicing Certificate or otherwise unless the
Trustee has actual knowledge or notice of any inaccuracy therein.
ARTICLE VI
RIGHTS OF CERTIFICATEHOLDERS
The Certificates shall represent fractional undivided
interests in the assets of the Trust which shall consist of the right
to receive, at the time and in the amount specified herein pursuant
to Section 5.01, a Percentage Interest in distributions with respect
to the Trust Property secured by funds available pursuant to the
Reserve Fund. Any other right to receive payments or
distributions hereunder shall not represent any interest in the
Accounts or the Reserve Fund, except as specifically provided in
this Agreement. The parties hereto and the Certificateholders
agree that the Certificates represent undivided interests in the
Receivables, which Receivables shall constitute stripped bonds
within the meaning of Section 1286 of the Code.
ARTICLE VII
THE CERTIFICATES
Section 7.01. The Certificates. The Certificates shall be
substantially in the forms of Exhibit A-1 through A-3 hereto. The
Class A, Class B and Class C Certificates shall be issuable in
minimum denominations in Certificate Balances of $250,000 and
integral multiples of $1,000 in excess thereof. The Certificates
shall be executed on behalf of the Trust by manual or facsimile
signature of a Trustee Officer of the Trustee under the Trustee's
seal imprinted thereon and shall bear legends restricting the
transfer thereof. Certificates bearing the manual or facsimile
signatures of individuals who were, at the time when such
signatures shall have been affixed, authorized to sign on behalf of
the Trust, shall be valid and binding obligations of the Trust,
notwithstanding that such individuals or any of them shall have
ceased to be so authorized prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of such
Certificates.
Section 7.02. Execution, Authentication of Certificates.
The Trustee shall cause the Certificates to be executed on behalf
of the Trust, and delivered to or upon the written order of the
Seller pursuant to this Agreement. No Certificate shall entitle its
Holder to any benefit under this Agreement or shall be valid for
any purpose, unless there shall appear on such Certificate a
certificate of authentication substantially in the form set forth in
Exhibits A-1 to A-3 hereto executed by the Trustee by manual
signature; such authentication shall constitute conclusive evidence
that such Certificate shall have been duly authenticated and
delivered hereunder. All Certificates shall be dated the date of
their authentication.
Section 7.03. Registration of Transfer and Exchange of
Certificates.
(a) The Certificate Registrar shall maintain a
Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Certificate Register
shall provide for the registration of Certificates and
transfers and exchanges of Certificates as provided in this
Agreement. The Trustee is hereby initially appointed
Certificate Registrar for the purpose of registering
Certificates and transfers and changes of Certificates as
provided in this Agreement. In the event that, subsequent
to the Closing Date, the Trustee notifies the Seller that it
is unable to act as Certificate Registrar, the Seller shall
appoint another bank or trust company, having an office or
agency located in the Borough of Manhattan, The City of
New York, agreeing to act in accordance with the
provisions of this Agreement applicable to it, and otherwise
acceptable to the Trustee, to act as successor Certificate
Registrar under this Agreement.
No transfer of a Certificate shall be made unless (I)
(a) such transfer is made pursuant to an effective
registration statement under the Securities Act and any
applicable state securities laws or (b) (i) such transfer is
exempt from the registration requirements under the
Securities Act and such state securities laws or (ii) the
Certificate Registrar is notified by such transferee that such
Certificate will be registered in the name of the Clearing
Agency or its nominee and shall be held by such transferee
in book-entry form through the Clearing Agency, and (II)
such transfer is to a Person that satisfies the requirements
of paragraph (a) (2) (i) or (a) (2) (ii) of Rule 3a-7 as then
in effect or any successor rule ("Rule 3a-7") under the
Investment Company Act. Each prospective purchaser of
a non-registered Certificate not held in book-entry form
shall deliver a completed and duly executed Transferee's
Certificate in the form of Exhibit K or L, as applicable, to
the Trustee and to the Seller for inspection prior to
effecting any requested transfer. The Seller and the
Trustee may rely conclusively upon the information
contained in any such certificate in the absence of
knowledge to the contrary. In connection with any transfer
within three years from the date of the initial issuance of
the Certificates (other than the transfer of any Certificate
that is or has become registered under the Securities Act on
or before such transfer or any transfer of a Certificate held
in book-entry form), the Trustee shall (except in the case
of a transfer to a "qualified institutional buyer") require an
Opinion of Counsel to the effect that such transfer may be
effected without registration under the Securities Act,
which Opinion of Counsel shall be addressed to the Seller
and the Trustee and shall be secured at the expense of the
Holder. Each Certificate Owner shall be deemed to have
agreed to these restrictions on transfer.
(b) If an election is made to hold a Certificate in
book-entry form, the Certificate shall be registered in the
name of a nominee designated by the Clearing Agency (and
may be aggregated as to denominations with other
Certificates held by the Clearing Agency). With respect to
Certificates held in book-entry form:
(1) the Certificate Registrar and the
Trustee will be entitled to deal with the Clearing
Agency for all purposes of this Agreement
(including the payment of principal of and interest
on the Certificates and the giving of instructions or
directions hereunder) as the sole Holder of the
Certificates, and shall have no obligation to the
Certificate Owners;
(2) the rights of Certificate Owners will
be exercised only through the Clearing Agency and
will be limited to those established by law and
agreements between such Certificate Owners and
the Clearing Agency and/or the Clearing Agency
Participants pursuant to the Depository Agreement;
(3) whenever this Agreement requires or
permits actions to be taken based upon instructions
or directions of Holders of Certificates evidencing
a specified percentage of the Outstanding Amount of
the Certificates, the Clearing Agency will be
deemed to represent such percentage only to the
extent that it has received instructions to such effect
from Certificate Owners and/or Clearing Agency
Participants owning or representing, respectively,
such required percentage of the beneficial interest in
the Certificates and has delivered such instructions
to the Trustee; and
(4) without the consent of the Seller and
the Trustee, no such Certificate may be transferred
by the Clearing Agency except to a successor
Clearing Agency that agrees to hold such Certificate
for the account of the Certificate Owners or except
upon the election of the Certificate Owner thereof
or a subsequent transferee to hold such Certificate
in physical form.
Neither the Trustee nor the Certificate Registrar
shall have any responsibility to monitor or restrict the
transfer of beneficial ownership in any Certificate an
interest in which is transferable through the facilities of the
Clearing Agency.
The Seller shall cause each Certificate to contain a
legend stating that transfer of the Certificates is subject to
certain restrictions and referring prospective purchasers of
the Certificates to this Section 7.03 with respect to such
restrictions.
(c) No transfer of an ERISA-Restricted Certificate
(other than a Certificate held in book-entry form) shall be
made to any Person unless the Trustee and Seller have
received (A) a certificate (substantially in the form of
Exhibit M) from such transferee to the effect that such
transferee (i) is not a Plan or a Person that is using the
assets of a Plan to acquire such Certificate or (ii) is an
insurance company investing assets of its general account
and the exemptions provided by Section III(a) of
Department of Labor Prohibited Transactions Class
Exemption 95-60, 60 Fed. Reg. 35925 (July 12, 1995) (the
"Exemptions") apply to the transferee's acquisition and
holding of any such Certificate or (B) an opinion of counsel
satisfactory to the Trustee and the Seller to the effect that
the purchase and holding of such Certificate will not
constitute or result in the assets of the Trust being deemed
to be "plan assets" subject to the prohibited transactions
provisions of ERISA or Section 4975 of the Code and will
not subject the Trustee or the Seller to any obligation in
addition to those undertaken in the Agreement; provided,
however, that the Trustee will not require such certificate
or opinion in the event that, as a result of a change of law
or otherwise, counsel satisfactory to the Trustee has
rendered an opinion to the effect that the purchase and
holding of a Certificate by a Plan or a Person that is
purchasing or holding such a Certificate with the assets of
a Plan will not constitute or result in a prohibited
transaction under ERISA or Section 4975 of the Code.
Any Certificate Owners of a Certificate held in book-entry
form shall be deemed to have made the representation in
clause (A) of this preceding sentence by its acceptance of
such Certificate. The preparation and delivery of the
certificate and opinions referred to above shall not be an
expense of the Trust, the Trustee nor any other party to the
Agreement but shall be borne by the Holder.
(d) The Certificates, until such time, if at all, as
they become registered under the Securities Act, shall bear
legends stating that they have not been registered under the
Securities Act and are subject to the restrictions on transfer
described in Section 7.03(a). The Certificates shall
additionally bear legends stating that they are subject to the
restrictions on transfer described in Section 7.03(c). By
purchasing a Certificate, each purchaser shall be deemed to
have agreed to these restriction on transfer.
(e) The Holder of a Certificate desiring to effect
any transfer or assignment shall, and the transferee of such
Certificate by purchasing such Certificate agrees to,
indemnify the Trustee and the Seller against any liability
that may result if the transfer or assignment is not made in
accordance with the provisions of this Section 7.03 and
applicable federal and state securities laws.
(f) Upon surrender for registration of transfer of
any Certificate at the Corporate Trust Office, the Trustee
shall execute, authenticate and deliver, in the name of the
designated transferee or transferees, one or more new
Certificates of the same Class in authorized denominations
of a like aggregate principal amount.
(g) At the option of a Class A, Class B or Class C
Certificateholder, such holder's Certificates may be
exchanged for other Certificates of the same Class in
authorized denominations of a like aggregate principal
amount, upon surrender of the Certificates to be exchanged
at any such office or agency. Whenever any Certificates
are so surrendered for exchange the Trustee on behalf of
the Trust shall execute, authenticate and deliver the
Certificates that the Certificateholder making the exchange
is entitled to receive.
(h) Every Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied
by a written instrument of transfer in form satisfactory to
the Trustee and the Certificate Registrar duly executed by
the Holder or his attorney duly authorized in writing. Each
Certificate surrendered for registration of transfer and
exchange shall be cancelled and subsequently disposed of
by the Trustee.
(i) No service charge shall be made to the
Certificateholders for any registration of transfer or
exchange of Certificates, but the Trustee may require
payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.
(j) The Class A Certificates shall initially be issued
in book-entry form to "qualified institutional buyers" as
defined in Rule 144A under the Securities Act.
Section 7.04. Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate shall be surrendered
to the Certificate Registrar, or if the Certificate Registrar shall
receive evidence to its satisfaction of the destruction, loss or theft
of any Certificate (provided that a Certificateholder's written
statement with respect to such destruction, loss or theft shall
constitute satisfactory evidence thereof) and (b) there shall be
delivered to the Certificate Registrar and the Trustee such security
or indemnity as may be required by them to save each of them
harmless, then in the absence of notice that such Certificate shall
have been acquired by a bona fide purchaser, the Trustee on behalf
of the Trust shall execute and the Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor
and denomination. In connection with the issuance of any new
Certificate under this Section 7.04, the Trustee and the Certificate
Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Certificate issued pursuant to
this Section 7.04 shall constitute conclusive evidence of ownership
in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.
Section 7.05. Persons Deemed Owners. Prior to due
presentation of a Certificate for registration of transfer, the Trustee
or the Certificate Registrar may treat the Person in whose name
any Certificate shall be registered as the owner of such Certificate
for the purpose of receiving distributions pursuant to Section 5.06
and for all other purposes whatsoever, and neither the Trustee nor
the Certificate Registrar shall be bound by any notice to the
contrary.
Section 7.06. Access to List of Certificateholders' Names
and Addresses. The Trustee shall furnish or cause to be furnished
to the Servicer, at the expense of the Trust, within 15 days after
receipt by the Trustee of a request therefor from the Servicer in
writing, a list, in such form as the Servicer may reasonably
require, of the names and addresses of the Certificateholders as of
the most recent Record Date. Each Holder, by receiving and
holding a Certificate, shall be deemed to have agreed to hold
neither the Servicer nor the Trustee accountable by reason of the
disclosure of its name and address, regardless of the source from
which such information was derived.
Section 7.07. Maintenance of Office or Agency. The
Trustee shall maintain in Minneapolis, Minnesota, or New York,
New York, an office or offices or agency or agencies where
Certificates may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Trustee
in respect of the Certificates and this Agreement may be served.
The Trustee initially designates the Corporate Trust Office as
specified in this Agreement as its office for such purposes. The
Trustee shall give prompt written notice to the Backup Servicer
and to the Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
Section 7.08. Notices to Certificateholders. Whenever
notice or other communication to the Certificateholders is required
under this Agreement, the Trustee shall give all such notices and
communications specified herein to be given to Holders of the
Certificates at their respective addresses as they appear in the
Certificate Register.
ARTICLE VIII
THE SELLER
Section 8.01. Representations of Seller. The Seller makes
the following representations on which the Trustee relies in
accepting the Receivables in trust and executing and authenticating
the Certificates on the Closing Date. The representations speak as
of the Closing Date, but shall survive the pledge, transfer and
assignment of the Receivables to the Trustee in trust for the benefit
of the Certificateholders.
(a) Organization and Good Standing. The
Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
(b) Due Qualification. The Seller is in good
standing and duly qualified to do business and has obtained
all necessary licenses and approvals in the States of
Delaware and New Jersey and all other jurisdictions in
which the ownership or lease of property or the conduct of
its business shall require such qualifications, unless the
failure of the Seller to obtain such licenses and approvals
would have no material adverse effect on the Seller's
ability to fulfill its obligations hereunder.
(c) Power and Authority. The Seller has the
power and authority to execute and deliver this Agreement
and to carry out its terms; the Seller has full power and
authority to sell and assign the property to be so sold and
assigned to and deposited with the Trustee as part of the
Trust and such sale and assignment is valid and binding
against the Seller and has been duly authorized by the
Seller by all necessary action; and the execution, delivery
and performance of this Agreement have been duly
authorized by the Seller by all necessary action and this
Agreement is the legal, valid and binding obligation of the
Seller, enforceable in accordance with its terms. The
Seller has duly executed and delivered this Agreement and
any other agreements and documents necessary to effectuate
the transactions contemplated hereby.
(d) No Violation. The consummation of the
transactions contemplated by this Agreement and the
fulfillment of the terms hereof neither conflict with, result
in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default
under, the certificate of incorporation or bylaws of the
Seller, or any indenture, agreement, or other instrument to
which the Seller is a party or by which it shall be bound;
nor result in the creation or imposition of any Lien upon
any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than this
Agreement); nor violate any law or, to the best of the
Seller's knowledge, any order, rule or regulation applicable
to the Seller of any court or of any federal or State
regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the
Seller or its properties.
(e) No Proceedings. To the Seller's
knowledge, there are no proceedings or investigations
pending, or threatened, before any court, regulatory body,
administrative agency, or other governmental
instrumentality having jurisdiction over the Seller or its
properties: (i) asserting the invalidity of this Agreement,
the Purchase Agreement or the Certificates; (ii) seeking to
prevent the issuance of the Certificates or the
consummation of any of the transactions contemplated by
the Purchase Agreement or this Agreement; (iii) seeking
any determination or ruling that might materially and
adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, this
Agreement, the Purchase Agreement or the Certificates; or
(iv) relating to the Seller and which might adversely affect
the federal or State income tax attributes of the Certificates.
(f) No Approvals. No approval, authorization
or other action by, or filing with, any governmental
authority of the United States of America or any of the
States is required or necessary to consummate the
transactions contemplated hereby, except as such as have
been duly obtained or made by the Closing Date. Seller
complies in all material respects with all applicable laws,
rules and orders with respect to itself, its business and
properties and the Receivables; and Seller maintains all
applicable permits and certifications.
(g) Taxes. The Seller has filed all federal,
State, county, local and foreign income, franchise and other
tax returns required to be filed by it through the date
hereof, and has paid all taxes reflected as due thereon.
There is no pending dispute with any taxing authority that,
if determined adversely to the Seller, would result in the
assertion by any taxing authority of any material tax
deficiency, and the Seller has no knowledge of a proposed
liability for any tax to be imposed upon the Seller's
properties or assets for which there is not an adequate
reserve reflected in the Seller's current financial statements.
(h) Adequate Provisions for Taxes. The
provisions for taxes on the Seller's books are in accordance
with generally accepted accounting principles.
(i) Pension/Profit Sharing Plans. No
contribution failure has occurred with respect to any
pension or profit sharing plan, and all such plans have been
fully funded as of the date of this Agreement.
(j) Trade Names. "Aegis Auto Funding
Corp." is the only trade name under which the Seller is
currently operating its business and under which the Seller
operated its business for the period of time during which
the Seller was in existence preceding the Closing Date.
(k) Ability to Perform. There has been no
material impairment in the ability of Seller to perform its
obligations under this Agreement.
(l) Chief Executive Office. Since its
inception, the Seller has maintained its chief executive
office in the State of New Jersey and there have been no
other locations of the Seller's chief executive office
preceding the Closing Date. The Seller shall give written
notice to the Trustee and the Certificateholders at least 30
days prior to relocating its chief executive office and shall
make such filings under the UCC as shall be necessary to
maintain the perfected, first priority security interest in the
Receivables granted hereunder in favor of the Trust.
(m) Adverse Orders. There is no injunction,
writ, restraining order or other order of any nature binding
upon Seller that adversely affects Seller's performance of
this Agreement and the transactions contemplated thereby.
(n) Solvent. Seller is solvent and will not
become insolvent after giving effect to the transactions
contemplated hereunder; Seller is paying its debts as they
become due; Seller, after giving effect to the contemplated
transactions, will have adequate capital to conduct its
business.
(o) Lock-Box Account. Each Obligor of a
Receivable has been directed and is required to remit
payments to the Lock-Box Account.
(p) Consolidation. Seller has operated and
will operate its business such that its assets and liabilities
will not be substantively consolidated with the assets and
liabilities of Aegis Finance and its separate existence will
not be disregarded in any state or federal court proceeding.
(q) Business Purpose. The Seller will acquire
and sell, transfer, assign and otherwise convey (for state
law, tax and financial accounting purposes) the Receivables
for a bona fide business purpose.
(r) Federal Income Tax Purposes. The Seller
intends to treat the transactions contemplated under this
Agreement as a sale of the Receivables to the Trust for
federal income tax purposes, subject to the retention by the
Seller of a stripped coupon therein as described in Section
1286 of the Code. The Seller and the Trustee intend to
cause to be filed all returns or reports in a manner
consistent with such treatment.
(s) Valid Transfer. The Purchase Agreement
constitutes a valid transfer to the Seller of all of Aegis
Finance's right, title and interest in the Receivables
transferred to the Seller pursuant to such Purchase
Agreement.
(t) Seller's Obligations. The Seller has
submitted all necessary documentation for payment of the
Receivables to the Obligors and has fulfilled all of its
applicable obligations hereunder required to be fulfilled as
of the Closing Date.
(u) Rating. The Seller will maintain a rating
on the Certificates with each Rating Agency. The expenses
of maintaining such rating shall be paid as an expense of
the Trust.
(v) 1940 Act. The 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.
Section 8.02. Liability of Seller; Indemnities. The Seller
shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Seller under this
Agreement, and only to the extent of the Seller's interest in the
Trust Property.
(a) The Seller shall indemnify, defend and
hold harmless the Trustee, the Trust, the Backup Servicer,
the Custodian and each Certificateholder from and against
any taxes, other than income and franchise taxes, that may
at any time be asserted against the Trustee, the Trust, the
Backup Servicer, the Custodian or the Certificateholders
with respect to, and as of the date of, the transfer of the
Receivables to the Trust or the issuance and original sale
of the Certificates, including any sales, gross receipts,
general corporation, tangible personal property, privilege
or license taxes and costs and expenses in defending against
the same.
(b) The Seller shall assume, defend and hold
harmless the Trustee, the Trust, the Backup Servicer, the
Custodian and each Certificateholder from and against any
loss, liability, expense or action, suit, claim or damage
incurred by reason of (i) the Seller's willful misfeasance,
bad faith or 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
such indemnity shall extend to the performance of the
Seller's duties and the satisfaction of its obligations with
respect to any Receivables that become Purchased
Receivables, as provided in this Agreement), (ii) the
Seller's violation of federal or State securities laws in
connection with the exemption from registration of the sale
of the Certificates, and (iii) any transaction arising out of
or contemplated by this Agreement except any loss,
liability, expense, action, suit, claim or damage arising out
of the failure to pay principal, premium, if any, or interest
with respect to the Certificates to the extent such failure
does not result from the Seller's omission to comply with
the terms of this Agreement or acts of the Seller in
contravention of this Agreement.
The assumption of liability or indemnification under this
Section 8.02 shall include, without limitation, reasonable fees and
expenses of counsel and expenses of litigation and shall survive
termination of this Agreement. If the Seller shall have made any
payments to the Trustee pursuant to this Section and the Trustee
thereafter shall collect any of such amounts from others, the
Trustee shall repay such amounts to such party without interest.
Notwithstanding anything to the contrary herein, the liability of the
Seller under this Section 8.02 is intended to be the same primary
liability as would apply to the general partner of a limited
partnership organized under the laws of the State of Delaware.
Potential creditors of the Trust are intended beneficiaries of the
assumption of liabilities by the Seller under this Section 8.02 and
may enforce such assumption in accordance with its tenor.
Section 8.03. Merger or Consolidation of, or Assumption
of the Obligations of, Seller. Any Person (a) into which the Seller
may be merged or consolidated, (b) which may result from any
merger or consolidation to which the Seller shall be a party, or (c)
which may succeed to the properties and assets of the Seller
substantially as a whole, which Person in any of the foregoing
cases executes an agreement of assumption to perform every
obligation of the Seller under this Agreement, shall be the
successor to the Seller hereunder without the execution or filing of
any document or any further act by any of the parties to this
Agreement; provided, however, that (i) immediately after giving
effect to such transaction, no representation or warranty or
covenant made pursuant to Section 3.01 or Section 8.01 shall have
been breached, no Event of Servicing Default, and no event that,
after notice or lapse of time, or both, would become an Event of
Servicing Default shall have happened and be continuing and the
conditions of Section 8.07(a)(ii) shall have been satisfied, (ii) the
Seller shall have delivered to the Trustee and each
Certificateholder an Officer's Certificate and an Opinion of
Counsel, which shall be independent outside counsel, each stating
that such consolidation, merger or succession and such agreement
or assumption comply with this Section 8.03 and that all conditions
precedent, if any, provided for in this Agreement relating to such
transaction have been complied with and (iii) the Seller shall have
delivered to the Trustee an Opinion of Counsel, which shall be
independent outside 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
Trustee 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 interest. The
Seller shall provide notice of any merger, consolidation or
succession pursuant to this Section 8.03 to each Rating Agency and
each Certificateholder and each Rating Agency shall have
confirmed in writing to the Seller and the Trustee (a copy of which
confirmation shall have been delivered by the Seller to each
Certificateholder) that such merger, consolidation or succession
shall not result in a downgrade or withdrawal of the current rating
of the Certificates by such Rating Agency. Notwithstanding
anything herein to the contrary, the execution of the foregoing
agreement of assumption and compliance with clauses (i), (ii) and
(iii) above shall be conditions to the consummation of the
transactions referred to in clauses (a), (b) or (c) above.
Section 8.04. Limitation on Liability of Seller and Others.
The Seller and any director or officer or employee or agent of the
Seller or the Seller's general partner may rely in good faith on the
written advice of counsel or on any document of any kind, prima
facie properly executed and submitted by any Person respecting
any matters arising hereunder.
Section 8.05. Seller May Own Certificates. The Seller
and any Affiliate of the Seller may in its individual or any other
capacity become the owner or pledgee of Certificates with the
same rights as it would have if it were not the Seller or an
Affiliate thereof, except as otherwise provided in the definition of
"Certificateholder" in Section 1.01. Certificates so owned by or
pledged to the Seller or such Affiliate shall have an equal and
proportionate benefit under the provisions of this Agreement,
without preference, priority or distinction as among all of the
Certificates, other than with respect to Voting Interests.
Notwithstanding the foregoing, the Seller will not, and will not
permit any of their Affiliates (or any Person acting on behalf of
the Seller or any such Affiliate) to directly or indirectly acquire or
make any offer to acquire any Certificates unless the Seller or such
Affiliate (or such Person acting on behalf thereof) shall have
offered to acquire Certificates, pro rata, from all Holders and upon
the same terms.
Section 8.06. Covenants of the Seller. The Seller shall:
(a) not impair the rights of the
Certificateholders or the Trustee in the Receivables;
(b) except for the sale and assignment effected
under this Agreement and prior to the termination of the
Trust, not sell, pledge, assign, or transfer to any other
Person, or grant, create, incur, assume, or suffer to exist
any Lien on any Receivable sold to the Trustee or any
interest therein;
(c) immediately notify the Trustee of the
existence of any Lien on any Receivable;
(d) defend the right, title, and interest of the
Trustee in, to, and under the Receivables transferred to the
Trustee, against all claims of third parties claiming through
or under the Seller, Aegis Finance or the Servicer;
(e) make at its sole cost and expense any
filings, reports, notices, applications, registrations with,
and seek any consents or authorizations from, the Securities
and Exchange Commission and any state securities
authority on behalf of the Trust as may be necessary or
advisable or reasonably requested by the Trustee, and shall
comply with any federal or State securities or reporting
requirements laws;
(f) comply in all respects with the terms and
conditions of the Purchase Agreement and not amend,
modify, or waive any provision of the Purchase Agreement
in any manner relating to the obligation of Aegis Finance
to repurchase Receivables or in any manner that would
have a materially adverse effect on the interests of the
Certificateholders;
(g) promptly notify the Trustee and the
Certificateholders of the occurrence of any Event of
Backup Servicing Default or Event of Servicing Default
and any breach by the Seller or the Backup Servicer of any
of its respective covenants or representations and warranties
contained in this Agreement or, with respect to the Seller,
in the Purchase Agreement;
(h) make at its sole cost and expense any
filings, reports, notices, or applications and seek any
consents or authorizations from any and all government
agencies, tribunals, or authorities in accordance with the
UCC and any State vehicle license or registration authority
on behalf of the Trust as may be necessary or advisable or
reasonably requested by the Trustee to create, maintain and
protect a first-priority perfected security interest of the
Trust in, to, and on the Financed Vehicles and a
first-priority perfected ownership interest of the Trust in,
to, and on the Receivables transferred to it;
(i) maintain a rating on the Certificates with
each Rating Agency; the expenses of maintaining such
rating shall be paid as an expense of the Trust; and
(j) upon request of any Certificateholder,
furnish the information required by paragraph (d)(4) of
Rule 144A promulgated under the Securities Act.
Section 8.07. Enforcement by Trustee. The Seller hereby
acknowledges and agrees that the following covenants and
agreements of the Seller shall be enforceable by the Trustee at all
times until the Trust is terminated.
(a) Covenants Regarding Operations:
(i) The Seller shall not engage in any
business or activity other than in connection with or
relating to the purchase of auto loan receivables and
the issuance of rated debt secured by, or certificates
of participation in, a pool of auto loan receivables.
(ii) The Seller shall not consolidate or
merge with or into any other entity or convey or
transfer its properties and assets substantially as an
entirety to any entity unless (A) the entity (if other
than the Seller) formed or surviving such
consolidation or merger, or that acquires by
conveyance or transfer the properties and assets of
the Seller substantially as an entirety, shall be
organized and existing under the laws of the United
States of America or any State thereof or the
District of Columbia, and shall expressly assume in
form satisfactory to the Rating Agency and the
Majority Certificateholders, the performance of
every covenant on the part of the Seller to be
performed or observed pursuant to this Agreement
and the Purchase Agreement, (B) immediately after
giving effect to such transaction, no default or event
of default under this Agreement shall have occurred
and be continuing and (C) the Seller shall have
delivered to the Rating Agency, each
Certificateholder and the Trustee an Officers'
Certificate and an opinion of independent counsel,
each stating that such consolidation, merger,
conveyance or transfer comply with this Agreement.
(iii) The Seller shall not dissolve or
liquidate, in whole or in part, except (A) as
permitted in paragraph (ii) above or (B) with the
prior written consent of the Trustee and prior
written confirmation from the Rating Agency (a
copy of which shall be provided to the Trustee and
each Certificateholder by the Seller) that such
dissolution or liquidation will have no adverse effect
on the rating assigned to the Rated Certificates.
(iv) The funds and other assets of the
Seller shall not be commingled with those of any
other corporation, entity or Person, including, but
not limited to, the parent or Affiliates of the Seller.
(v) The Seller shall not hold itself out as
being liable for the debts of any other party,
including, but not limited to, the debts of the parent
or Affiliates of the Seller.
(vi) The Seller shall not form, or cause to
be formed, or otherwise have, any subsidiaries.
(vii) The Seller shall act solely in its
corporate name and through the duly authorized
officers or agents in the conduct of its business, and
shall conduct its business so as not to mislead others
as to the identity of the entity with which they are
concerned.
(viii) At all times, except in the case of a
temporary vacancy, which shall promptly be filled,
the Seller shall have on its board of directors at
least one director who qualifies as an "Independent
Director" as such term is defined in the Seller's
Certificate of Incorporation as originally filed with
the Delaware Secretary of State's office.
(ix) The Seller shall maintain records and
books of account of the Seller and shall not
commingle such records and books of account with
the records and books of account of any Person.
The books of the Seller may be kept (subject to any
provision contained in the statutes) inside or outside
the State of New Jersey at such place or places as
may be designated from time to time by the board
of directors of the Seller.
(x) The board of directors of the Seller
shall hold appropriate meetings to authorize all of
its corporate actions. Regular meetings of the board
of directors of the Seller shall be held not less
frequently than three times per annum.
(xi) Meetings of the shareholders of the
Seller shall be held not less frequently than one time
per annum.
(xii) The Seller shall not amend, alter,
change or repeal any provision contained in this
Section 8.07(a) without (A) the affirmative vote in
favor thereof of eighty percent (80%) of the then
outstanding shares of the Seller entitled to vote
thereon; (B) the prior written consent of the Trustee
and the Majority Certificateholders; and (C) the
prior written confirmation from the Rating Agency
that the rating on the Rated Certificates will not be
impaired.
(xiii) The Seller shall not, without the
affirmative unanimous vote of the whole board of
directors of the Seller (including at least one
director referred to in clause (viii) above), institute
any proceedings to adjudicate the Seller a bankrupt
or insolvent, consent to the institution of bankruptcy
or insolvency proceedings against the Seller, file a
petition seeking or consenting to reorganization or
relief under any applicable federal or State law
relating to bankruptcy, consent to the appointment
of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Seller
or a substantial part of its property or admit its
inability to pay its debts generally as they become
due or authorize any of the foregoing to be done or
taken on behalf of the Seller.
(xiv) The Seller is not and shall not be
involved in the day-to-day or other management of
its parent or any of its Affiliates.
(xv) Other than the purchase and sale or
pledge of assets as provided in this Agreement and
related agreements with respect to this transaction
and other transactions relating to the purchase of
auto loan receivables and the issuance of rated debt
or rated certificates of participation, the Seller shall
engage in no other transactions with any of its
Affiliates.
(xvi) Seller shall maintain a separate
business office and telephone number from any of
its Affiliates.
(xvii) Seller's financial statements shall
reflect its separate legal existence from any of its
Affiliates.
(xviii) The Seller will not amend its
Certificate of Incorporation in any respect material
to the Certificateholders without the consent of the
Rating Agency.
(xix) The Seller shall use separate
invoices, stationery and checks.
(xx) The Seller shall not suffer or permit
the credit or assets of Aegis Finance to be held out
as available for the obligations of the Seller.
(xxi) The Seller shall enter into
transactions with Aegis Finance or its affiliates only
on commercially reasonable terms.
(xxii) The Seller shall not incur or issue
any "Obligation" (as such term is defined in its
Certificate of Incorporation) in contravention of the
limitations set forth therein.
(xxiii) The Seller shall not issue any
"Securities" or incur or issue any "Obligations" (as
such terms are defined in its Certificate of
Incorporation) under any other pooling and
servicing agreement, purchase agreement or
otherwise, unless such agreement contains an
express provision substantially similar to Section
13.10 hereof limiting recourse to the Seller to the
assets involved in the transaction to which such
agreement relates.
Section 8.08. No Bankruptcy Petition. The Seller
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 the
Seller or by a trust for which the Seller was the depositor, which
securities were rated by any nationally recognized statistical rating
organization, it will not institute any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other
proceedings under any federal or State bankruptcy or similar law.
ARTICLE IX
THE BACKUP SERVICER
Section 9.01. Representations of Backup Servicer. The
Backup Servicer makes the following representations on which the
Trustee relies in accepting the Receivables in trust and executing
and authenticating the Certificates on the Closing Date. The
representations speak as of the Closing Date, but shall survive the
sale and assignment of the Receivables to the Trustee in trust for
the benefit of the Certificateholders.
(a) Organization and Good Standing. The
Backup Servicer shall have been duly organized and shall
be validly existing and in good standing under the federal
laws of the United States of America, 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.
(b) Power and Authority. The Backup Servicer
shall have the power and authority to execute and deliver
this Agreement and the Servicing Agreement and to carry
out their respective terms; and the execution, delivery and
performance of this Agreement and the Servicing
Agreement shall have been duly authorized by the Backup
Servicer by all necessary corporate action. Each of this
Agreement and the Servicing Agreement constitutes the
valid and binding obligation of the Backup Servicer
enforceable in accordance with its terms.
(c) No Violation. The consummation of the
transactions by the Backup Servicer contemplated by this
Agreement and the Servicing Agreement and the fulfillment
of the terms hereof and thereof neither conflict with, result
in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default
under, the charter or bylaws of the Backup Servicer, or, to
the best of the Backup Servicer's knowledge, any
indenture, agreement or other instrument to which the
Backup Servicer is a party or by which it is 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 this Agreement
and the Servicing Agreement); nor to the best of the
Backup Servicer's knowledge, any law, order, rule or
regulation applicable to the Backup Servicer of any court
or of any federal or state regulatory body, administrative
agency, or other governmental instrumentality having
jurisdiction over the Backup Servicer or its properties.
(d) No Proceedings. To the Backup Servicer's
best knowledge, there are no proceedings or investigations
pending, or threatened, before any court, regulatory body,
administrative agency or other governmental instrumentality
having jurisdiction over the Backup Servicer or its
respective properties: (A) asserting the invalidity of this
Agreement or the Servicing Agreement; (B) seeking to
prevent the consummation of any of the transactions
contemplated by this Agreement or the Servicing
Agreement; or (C) seeking any determination or ruling that
might materially and adversely affect the performance by
the Backup Servicer of its obligations under, or the validity
or enforceability of, this Agreement or the Servicing
Agreement.
Section 9.02. Merger or Consolidation of, or Assumption
of the Obligations of, or Resignation of Backup Servicer. Any
Person (a) into which the Backup Servicer may be merged or
consolidated, (b) which may result from any merger or
consolidation to which the Backup Servicer shall be a party, (c)
which may succeed to the properties and assets of the Backup
Servicer substantially as a whole, or (d) which may succeed to the
duties and obligations of the Backup Servicer under this Agreement
and the Servicing Agreement following the resignation of the
Backup Servicer, whether or not such Person executes an
agreement of assumption to perform every obligation of the
Backup Servicer hereunder and thereunder, shall be the successor
to the Backup Servicer under this Agreement and the Servicing
Agreement without further act on the part of any of the parties to
this Agreement or the Servicing Agreement. If at any time
thereafter the Rating Agency shall have delivered to the Backup
Servicer and to the Trustee a statement that such transaction will
have an adverse effect on the rating assigned to the Rated
Certificates, then such transaction shall be deemed to constitute an
Event of Backup Servicing Default.
Section 9.03. Limitation on Liability of Backup Servicer
and Others. Neither the Backup Servicer nor any of the directors
or officers or employees or agents of the Backup Servicer shall be
under any liability to the Trust or the Certificateholders, 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 Backup Servicer or any such Person against any liability that
would otherwise be imposed by reason of willful misfeasance, bad
faith or negligence in the performance of duties or by reason of
reckless disregard of obligations and duties under this Agreement.
The Backup Servicer and any director or officer or employee or
agent of the Backup 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.
Except as provided in this Agreement, the Backup Servicer
shall not be under any obligation to appear in, prosecute or defend
any legal action that shall not be incidental to its duties under this
Agreement and the Servicing Agreement, and that in its opinion
may involve it in any expense or liability; provided, however, that
the Backup Servicer may undertake any reasonable action that it
may deem necessary or desirable in respect of this Agreement and
the Servicing Agreement and the rights and duties of the parties to
this Agreement and the Servicing Agreement and the interests of
the Certificateholders under this Agreement and the Servicing
Agreement. In such event, the legal expenses and costs of such
action and any liability resulting therefrom shall be expenses, costs
and liabilities of the Trust and the Backup Servicer shall be entitled
to be reimbursed therefor.
The Trustee shall distribute out of the Collection Account
on the Distribution Date succeeding the delivery of the Opinion of
Counsel referred to below, without regard to any deficiencies in
the amounts required to be distributed pursuant to Section 5.06,
any expenses, costs or liabilities required from the Trust pursuant
to this Section 9.03, provided, however, that the Trustee shall only
distribute amounts pursuant to this Section 9.03 upon the Trustee's
receipt of an Opinion of Counsel to the effect that such distribution
is permitted by this Agreement.
Section 9.04. Successor Backup Servicer. The Backup
Servicer under this Agreement shall at all times be a corporation
or a banking association organized and existing in good standing
under the laws of the United States or a state thereof; having a
combined capital and surplus as designated from time to time by
each Rating Agency or as otherwise approved by the Rating
Agency (but in any event not less than $100,000,000) and subject
to supervision or examination by federal or state authorities. If
such association or 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 9.04, 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 Backup Servicer shall cease to be eligible in
accordance with the provisions of this Section 9.04, or shall cease
to be an Eligible Servicer, the Backup Servicer shall resign
immediately in the manner and with the effect specified in Section
4.02.
Section 9.05. No Bankruptcy Petition. The Backup
Servicer 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 the Seller or by the Trust it will not institute against, or join
any other Person in instituting against, the Seller any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any federal or state bankruptcy or
similar law; provided, however, that nothing contained herein shall
prohibit the Backup Servicer from participating in any existing
bankruptcy proceeding.
ARTICLE X
BACKUP SERVICING DEFAULT
Section 10.01. Events of Backup Servicing Default. If
any one of the following events ("Events of Backup Servicing
Default") shall occur and be continuing:
(a) Failure to make any payment, transfer or
deposit required to be made by the Backup Servicer under
the terms of this Agreement or the Servicing Agreement,
which failure shall continue for two (2) Business Days after
the date due; or
(b) Failure on the part of the Backup Servicer
duly to observe or to perform in any material respect any
covenant or agreement of the Backup Servicer set forth in
this Agreement or the Servicing Agreement, which failure
shall (i) materially and adversely affect the rights of
Certificateholders and (ii) continue unremedied for a period
of 30 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been
sent (A) to the Backup Servicer by the Trustee, or (B) to
the Backup Servicer and to the Trustee by the Holders of
Certificates evidencing not less than 20% of the Voting
Interests thereof; or
(c) The entry of a decree or order by a court or
agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator, receiver or
liquidator for the Backup Servicer in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding up or liquidation of
its affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 30 consecutive days;
or
(d) The consent by the Backup Servicer to the
appointment of a conservator or receiver or liquidator in
any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings of or relating to the
Backup Servicer or of or relating to substantially all of its
property; or the Backup Servicer shall admit in writing its
inability to pay its debts generally as they become due, file
a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit
of its creditors or voluntarily suspend payment of its
obligations;
then, and in each and every case, so long as an Event of Backup
Servicing Default shall not have been remedied, either the Trustee,
or the Holders of the Certificates evidencing not less than 20% of
the Voting Interests thereof, by notice then given in writing to the
Backup Servicer (and to the Trustee if given by the
Certificateholders) may terminate all of the rights and obligations
of the Backup Servicer under this Agreement. Thirty (30) days
after the receipt by the Backup Servicer of such written notice, all
authority and power of the terminated Backup Servicer under this
Agreement, whether with respect to the Certificates or the
Receivables or otherwise, shall, without further action, pass to and
be vested in the Trustee if the Trustee is not the same entity as the
terminated Backup Servicer and a successor Backup Servicer has
not been appointed under Section 10.02. The Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the
predecessor Backup Servicer, as attorney in fact or otherwise, any
and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the
purposes of such notice of termination. The predecessor Backup
Servicer shall cooperate with the successor Backup Servicer and
the Trustee in effecting the termination of the responsibilities and
rights of the predecessor Backup Servicer under this Agreement.
Upon receipt of notice of the occurrence of an Event of Backup
Servicing Default, the Trustee shall give notice thereof to the
Rating Agency.
Section 10.02. Appointment of Successor.
(a) Upon a Backup Servicer's receipt of notice
of termination pursuant to Section 10.01 or a Backup
Servicer's resignation in accordance with Section 4.02, the
predecessor Backup Servicer shall continue to perform its
functions as Backup Servicer under this Agreement until
receipt of such notice and, in the case of resignation, until
a successor Backup Servicer shall have assumed the duties
of the Backup Servicer in accordance with this Section
10.02. In the event of a Backup Servicer's termination
hereunder, the Trustee (with the consent of the Majority
Certificateholders) shall appoint a successor Backup
Servicer, and the successor Backup Servicer shall accept its
appointment by a written assumption in form acceptable to
the Trustee. In the event that a successor Backup Servicer
has not been so appointed (i) within 45 days of delivery of
notice of termination, or (ii) within 30 days of resignation,
the Trustee may petition a court of competent jurisdiction
to appoint any established institution, having a combined
capital and surplus of not less than $100,000,000 and
which is an Eligible Servicer, as the successor to the
Backup Servicer under this Agreement.
(b) Upon appointment, the successor Backup
Servicer shall be the successor in all respects to the
predecessor Backup Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter
relating thereto placed on the predecessor Backup Servicer,
including, but not limited to, the assumption by the Backup
Servicer of all duties and obligations of the Servicer in the
event of an Event of Servicing Default with respect to the
Servicer under the Servicing Agreement pursuant to the
terms therein and shall be entitled to all of the rights
granted to the predecessor Backup Servicer, by the terms
and provisions of this Agreement.
(c) The outgoing Backup Servicer shall deliver
to the successor Backup Servicer all documents and records
in its possession which are necessary to enable the
successor Backup Servicer to perform its duties relating to
the Servicing Agreement and the Receivables and otherwise
use its best efforts to effect the orderly and efficient
transfer of the Servicing Agreement to the successor
Backup Servicer.
Section 10.03. Notification to Certificateholders. Upon
any termination of, or appointment of a successor to, a Backup
Servicer pursuant to this Article X, the Trustee shall give prompt
written notice thereof to Certificateholders at their respective
addresses appearing in the Certificate Register and to the Rating
Agency.
Section 10.04. Waiver of Past Defaults. The Majority
Certificateholders (or, in the case of a default referred to in
Section 10.01(a), the Holders of Certificates evidencing 100% of
the Voting Interests thereof) may, on behalf of all Holders of
Certificates, waive any default by the Backup Servicer in the
performance of its obligations hereunder and its consequences.
Upon any such waiver of a past default, such default shall cease to
exist, and any Event of Backup Servicing 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.
ARTICLE XI
THE TRUSTEE
Section 11.01. Duties of Trustee. The Trustee, both prior
to the occurrence of an Event of Backup Servicing Default and
after an Event of Backup Servicing Default shall have been cured
or waived, shall undertake to perform only such duties as are
specifically set forth in this Agreement. If an Event of Backup
Servicing Default shall have occurred and shall not have been
cured or waived, the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and shall 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
his own affairs; provided, however, that if the Trustee shall
assume the duties of a Backup Servicer pursuant to Section 10.02,
the Trustee shall perform such duties in accordance with Section
4.06. If the Trustee is uncertain with respect to performing its
duties or if a conflict arises regarding the Trustee's rights, duties
and obligations, the Trustee may petition a court of competent
jurisdiction for written direction or to interplead necessary parties.
Notwithstanding anything in this Agreement to the contrary,
neither the Trustee nor the Backup Servicer shall have any
authority to perform any act which would cause the Trust to be
characterized as an association taxable as a corporation for federal
income tax purposes.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other
instruments furnished to the Trustee that shall be specifically
required to be furnished pursuant to any provision of this
Agreement, shall examine them to determine whether they conform
as to form to the requirements of this Agreement; provided,
however, in the absence of bad faith on its part, the Trustee can
assume the truth and accuracy of the statements made therein and
the genuineness of the signatures thereon.
The Trustee shall take and maintain custody of the Schedule
of Receivables included as an exhibit to this Agreement and shall
retain all Monthly Servicing Certificates identifying Receivables
that become Purchased Receivables and Liquidated Receivables.
The Trustee shall give written notice to each Rating
Agency, the Certificateholders, the Seller and Aegis Finance of the
occurrence, to its actual knowledge, which notice shall be given
within three (3) Business Days' of the Trustee's receipt of actual
knowledge thereof, of any waiver of or any action taken to cure (i)
any default, breach, violation or event permitting acceleration
under the terms of any Receivable; (ii) any 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; (iii) any default or delinquency under the terms
of any Receivable that remained uncured for more than thirty (30)
days after notice to the Seller; or (iv) any event which constitutes
or with notice or the lapse of time would constitute an Event of
Backup Servicing Default or Event of Servicing Default.
The Trustee shall give written notice to each Rating Agency
and each Certificateholder promptly upon receipt of a notice from
the Backup Servicer pursuant to Section 4.02 hereof or from the
Servicer pursuant to paragraph IV.F.1 of the Servicing Agreement
or the Seller pursuant to Section 8.06(g) hereof of an event which
with the giving of notice or the lapse of time, or both, would
constitute an Event of Backup Servicing Default or an Event of
Servicing Default.
The Trustee shall deliver to each Rating Agency by no later
than the 20th calendar day of each month, a certificate signed by
an officer of the Trustee certifying that, as of the date of such
certificate, based solely upon information provided to the Trustee
by the Servicer or the Backup Servicer, the Trustee has no
knowledge of, nor to the Trustee's best knowledge, has any event
occurred which would cause the Trustee to reasonably believe, that
an Event of Backup Servicing Default or an Event of Servicing
Default has occurred.
No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its
own negligent failure to act or its own bad faith; provided,
however, that:
(a) Prior to the occurrence of an Event of
Backup Servicing Default, and after the curing or waiving
of all such Events of Backup Servicing Default that may
have occurred, the duties and obligations of the Trustee
shall be determined solely by the express provisions of this
Agreement, the Trustee 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 Trustee and, in the absence of bad faith on the
part of the Trustee, the Trustee may conclusively rely on
the truth of the statements and the correctness of the
opinions expressed upon any certificates or opinions
furnished to the Trustee and conforming as to form to the
requirements of this Agreement;
(b) The Trustee shall not be liable for an error
of judgment made in good faith by a Trustee Officer,
unless it shall be proved that the Trustee shall have been
negligent in ascertaining the pertinent facts;
(c) The Trustee 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 Holders of Certificates evidencing not less than 20%
of the Voting Interests thereof relating to the time, method
and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Agreement;
(d) The Trustee shall not be charged with
knowledge of any failure by the Backup Servicer (so long
as the Trustee is not the Backup Servicer) or the Servicer
to comply with the obligations, covenants or
representations or warranties of the Backup Servicer or the
Servicer under this Agreement or the Servicing Agreement,
as the case may be, or of any failure by the Seller to
comply with the obligations, covenants or representations
or warranties of the Seller under this Agreement, unless a
Trustee Officer assigned to the Trustee's Corporate Trust
Department obtains actual knowledge of such failure (it
being understood that, so long as the Trustee is not the
Backup Servicer, knowledge of the Backup Servicer is not
attributable to the Trustee) or the Trustee receives written
notice of such failure from the Backup Servicer, Servicer
or the Seller, as the case may be, or any Holder of
Certificates; and
(e) Without limiting the generality of this Section
or Section 11.04, the Trustee (except if also serving as the
Backup Servicer and the duties of the Backup Servicer
require such) shall have no duty (i) to see to any recording,
filing or depositing of this Agreement or any agreement
referred to therein or any financing statement or
continuation statement evidencing a security interest in the
Receivables or the Financed Vehicles, or to see to the
maintenance of any such recording or filing or depositing
or to any rerecording, refiling or redepositing of any
thereof, (ii) to see to any insurance of the Financed
Vehicles or Obligors or to effect or maintain any such
insurance, (iii) to see to the payment or discharge of any
tax, assessment or other governmental charge or any Lien
or encumbrance of any kind owing with respect to,
assessed or levied against, any part of the Trust, (iv) to
confirm or verify the contents of any reports or certificates
of the Servicer delivered to the Trustee pursuant to this
Agreement or the Servicing Agreement believed by the
Trustee to be genuine and to have been signed or presented
by the proper party or parties or (v) to inspect the Financed
Vehicles at any time or ascertain or inquire as to the
performance or observance of any of the Seller's or the
Servicer's representations, warranties or covenants or the
Servicer's duties and obligations as Servicer under this
Agreement and the Servicing Agreement.
The Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of
any of its duties hereunder, or in the exercise of any of its rights
or powers, if it believes in its sole discretion 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 or the Servicing Agreement shall in
any event require the Trustee to perform, or be responsible for the
manner of performance of, any of the obligations of the Servicer,
the Backup Servicer or a Servicer under this Agreement or the
Servicing Agreement, as the case may be.
Section 11.02. Trustee's Certificate. On or as soon as
practicable after each Distribution Date on which Receivables shall
be assigned to the Seller pursuant to Section 11.03, the Trustee
shall execute a Trustee's Certificate (in the form of Exhibit R),
based on the information contained in the Monthly Servicing
Certificate for the related Collection Period, amounts deposited to
the Certificate Account and notices received pursuant to this
Agreement, identifying the Receivables repurchased by the Seller
pursuant to Section 3.02 during such Collection Period, and shall
deliver such Trustee's Certificate, accompanied by a copy of the
Monthly Servicing Certificate for such Collection Period to the
Seller. The Trustee's Certificate submitted with respect to such
Distribution Date shall operate, as of such Distribution Date, as an
assignment, without recourse, representation or warranty, to the
Seller, of all the Trustee'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.
Section 11.03. Trustee's Assignment of Purchased
Receivables. With respect to all Receivables repurchased by the
Seller pursuant to Section 3.02, the Trustee shall by a Trustee's
Certificate (in the form of Exhibit R) assign, without recourse,
representation or warranty, to the Seller all the Trustee's right,
title and interest in and to such Receivables, and all security and
documents relating thereto.
Section 11.04. Certain Matters Affecting Trustee. Except
as otherwise provided in Section 11.01:
(a) The Trustee may rely and shall be protected
in acting or refraining from acting upon any resolution,
Officer's Certificate, Monthly Servicing Certificate,
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.
(b) The Trustee may consult with counsel and
any written 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 written Opinion of
Counsel.
(c) The Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
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 any of the
Certificateholders pursuant to the provisions of this
Agreement, unless such Certificateholders shall have
offered to the Trustee security or indemnity, reasonably
satisfactory to the Trustee, against the costs, expenses and
liabilities that may be incurred therein or thereby.
(d) The Trustee shall not be liable for any action
taken, suffered or omitted by it in good faith and believed
by it to be authorized or within the discretion or rights or
powers conferred upon it by this Agreement.
(e) Except as expressly provided herein, the
Trustee 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,
unless requested in writing so to do by Holders of
Certificates evidencing not less than 20% of the Voting
Interests thereof; provided, however, that the Trustee may
require reasonable indemnity against any cost, expense or
liability as a condition to so proceeding at the direction of
the Certificateholders.
(f) The Trustee may execute any of the trusts or
powers hereunder or perform any duties under this
Agreement either directly or by or through agents or
attorneys or a custodian. The Trustee shall not be
responsible for any misconduct or negligence of any such
agent or custodian appointed with due care by it hereunder
or of the Servicer in its capacity as Servicer. The Trustee
may act upon the opinion or advice of accountants,
engineers or such other professionals as the Trustee deems
necessary and selected by it in the exercise of reasonable
care, and the Trustee may pay reasonable compensation
and shall be entitled to reimbursement hereunder for such
compensation paid to such professionals, which fee shall be
considered an expense of the Trustee to be paid pursuant to
Section 5.06(d)(i).
(g) Subsequent to the sale of the Receivables by
the Seller to the Trust, the Trustee shall have no duty of
independent inquiry, and the Trustee may rely upon the
representations and warranties and covenants of the Seller
and the Servicer contained in this Agreement and the
Servicing Agreement with respect to the Receivables.
Section 11.05. Trustee Not Liable for Certificates or
Receivables. The recitals contained herein and in the Certificates
(other than the certificate of authentication on the Certificates)
shall be taken as the statements of the Seller, and the Trustee
assumes no responsibility for the correctness thereof. The Trustee
shall make no representations as to the validity or sufficiency of
this Agreement, the Trust Property or of the Certificates (other
than the certificate of authentication on the Certificates), or of any
Receivable or related document or the validity, genuineness or
originality of any document delivered to the Trustee in its capacity
as Custodian. The Trustee 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 Trust or its ability to
generate the payments to be distributed to Certificateholders under
this Agreement, including, without limitation: the existence,
condition, location and ownership of any Financed Vehicle; the
review of any Servicer File or Custodian File therefor; the
existence and enforceability of any physical damage insurance
thereon; the existence and contents of any Receivable or any
Servicer File or Custodian File or any computer or other record
thereof; the validity of the assignment of any Receivable to the
Trust or of any intervening assignment; the completeness of any
Receivable or any Servicer File or Custodian File; the performance
or enforcement of any Receivable; the compliance by the Seller or
the Servicer, with any warranty or representation made under this
Agreement or the Servicing Agreement or in any related document
and the accuracy of any such warranty or representation prior to
the Trustee's receipt of notice or other discovery of any
noncompliance therewith or any breach thereof (provided,
however, that the receipt of notice or other discovery of such
noncompliance or breach shall only obligate the Trustee to comply
with the terms of Section 3.02 hereof); any investment of moneys
by the Trustee or any loss resulting therefrom (it being understood
that the Trustee shall remain responsible for any Trust property
that it may hold); the acts or omissions of the Seller, the Servicer
or any Obligor; an action of the Servicer taken in the name of the
Trustee; or any action by the Trustee taken at the instruction of the
Servicer; provided, however, that the foregoing shall not relieve
the Trustee of its obligation to perform its duties under this
Agreement. Except if caused by its negligence or its failure to act
in accordance with reasonable and proper instructions given in
writing received by the Trustee, the Trustee shall not be liable for
losses on investments on the funds or on the accounts established
pursuant to Section 5.01. The Trustee shall not be liable for
collections received by the Servicer prior to deposit by the Servicer
of such collections into the Collection Account or for the
application or misapplication of funds, or for other acts or
defaults, by any person, firm or corporation except its own
directors, officers, agents and employees. Except with respect to
a claim based on the Trustee's negligence or willful misconduct,
no recourse shall be had for any claim based on any provision of
this Agreement, the Certificates or any Receivable or assignment
thereof against the Trustee in its individual capacity, the Trustee
shall not have any personal obligation, liability or duty whatsoever
to any Certificateholder or any other Person with respect to any
such claim, and any such claim shall be asserted solely against the
Trust or any indemnitor who shall furnish indemnity as provided
in this Agreement. The Trustee shall not be accountable for the
use or application by the Seller of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any
funds paid to a Servicer in respect of the Receivables. The Seller
hereby certifies to the Trustee that the rating agency rating the
Rated Certificates is the Rating Agency, and that its address is as
set forth in Section 13.05. The Trustee may rely on the accuracy
of such certification until it receives from the Seller an Officer's
Certificate superseding such certification.
Section 11.06. Trustee May Own Certificates. The
Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates and may deal with the Seller and
the Servicer in banking transactions with the same rights as it
would have if it were not Trustee, except as otherwise provided in
the definition of "Certificateholder" in Section 1.01.
Section 11.07. Trustee's Fees and Expenses. The Trustee
shall be entitled to its customary compensation as set forth on
Exhibit H to this Agreement (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an
express trust) for all services rendered by it in the execution of the
trusts created by this Agreement and in the exercise and
performance of any of the Trustee's powers and duties under this
Agreement. The Trustee shall be paid or reimbursed pursuant to
Section 5.06 upon its request for all reasonable expenses and
disbursements (including the reasonable compensation and the
expenses and disbursements of its counsel and of all Persons not
regularly in its employ) incurred or made by the Trustee in
accordance with any provisions of this Agreement, except any such
expense or disbursement as may be attributable to its willful
misfeasance, negligence or bad faith. Unpaid fees and expenses
of the Trustee shall bear interest at the prime rate then in effect
plus 2%. The Seller shall indemnify the Trustee 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 in connection with the acceptance or administration of the
Trust, including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or
performance of any of its powers or duties under this Agreement.
Additionally, the Seller, pursuant to Section 8.02, shall indemnify
the Trustee with respect to certain matters. The Trustee shall not
be required to furnish any surety bond. The provisions of this
Section 11.07 shall survive the termination of this Agreement.
Section 11.08. Eligibility Requirements for Trustee. The
Trustee shall at all times be a corporation having an office in the
same state as the location of the Corporate Trust Office as
specified in or pursuant to this Agreement; and organized and
doing business under the laws of such state or the United States of
America; authorized under such laws to exercise corporate trust
powers; having a combined capital and surplus of at least
$100,000,000 and subject to supervision or examination by federal
or state authorities. 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 11.08, 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 Trustee shall cease to be
eligible in accordance with the provisions of this Section 11.08,
the Trustee shall resign immediately in the manner and with the
effect specified in Section 11.09.
Section 11.09. Resignation or Removal of Trustee. The
Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Seller and
each Certificateholder. Upon receiving such notice of resignation,
the Majority Certificateholders with the approval of each Rating
Agency shall promptly appoint a successor Trustee by written
instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor
Trustee. If no successor Trustee shall have been so appointed and
have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court
of competent jurisdiction for the appointment of a successor
Trustee.
If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 11.08 and shall fail to
resign after written request therefor by the Seller, or if at any time
the Trustee shall be legally unable to act, or shall be adjudged
bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take charge
or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the
Majority Certificateholders may remove the Trustee. If the
Majority Certificateholders shall remove the Trustee under the
authority of the immediately preceding sentence, the Majority
Certificateholders with the approval of the Rating Agency shall
promptly appoint a successor Trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the
outgoing Trustee so removed and one copy to the successor
Trustee and payment of all fees and expenses owed to the outgoing
Trustee.
Any resignation or removal of the Trustee and appointment
of a successor Trustee pursuant to any of the provisions of this
Section 11.09 shall not become effective until acceptance of
appointment by the successor Trustee pursuant to Section 11.10
and payment of all fees and expenses owed to the outgoing Trustee
or upon order of a court of competent jurisdiction. The Seller
shall provide notice of such resignation or removal of the Trustee
to each Rating Agency.
Section 11.10. Successor Trustee. Any successor Trustee
appointed pursuant to Section 11.09 shall execute, acknowledge
and deliver to the Backup Servicer, the Servicer and to the
predecessor Trustee an instrument accepting such appointment
under this Agreement, and thereupon the resignation or removal of
the predecessor Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become
fully vested with all the rights, powers, duties and obligations of
its predecessor under this Agreement, with like effect as if
originally named as Trustee. The predecessor Trustee shall upon
payment of its fees and expenses deliver to the successor Trustee
all documents and statements and moneys held by it under this
Agreement; and the Seller and the predecessor Trustee 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 Trustee all such rights, powers, duties
and obligations.
No successor Trustee shall accept appointment as provided
in this Section 11.10 unless at the time of such acceptance such
successor Trustee shall be eligible pursuant to Section 11.08.
Upon acceptance of appointment by a successor Trustee
pursuant to this Section 11.10, the successor Trustee shall mail
notice of the successor of such Trustee under this Agreement to all
Holders of Certificates at their addresses as shown in the
Certificate Register and to the Rating Agency.
Section 11.11. Merger or Consolidation of Trustee. Any
corporation into which the Trustee 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 Trustee
shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the Trustee, shall
be the successor of the Trustee hereunder, provided such
corporation shall be eligible pursuant to Section 11.08, without the
execution or filing of any instrument or any further act on the part
of any of the parties hereto; provided, further, that the Trustee
shall mail notice of such merger or consolidation to the Rating
Agency and each Certificateholder.
Section 11.12. Appointment of Co-Trustee or Separate
Trustee. 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 Trust or any Financed
Vehicle may at the time be located, the Backup Servicer and the
Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved
by the Trustee to act as co-trustee, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust,
and to vest in such Person, in such capacity and for the benefit of
the Certificateholders, such title to the Trust, or any part thereof,
and, subject to the other provisions of this Section 11.12, such
powers, duties, obligations, rights and trusts as the Backup
Servicer and the Trustee may consider necessary or desirable. If
the Backup Servicer 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 Backup Servicing Default shall have occurred
and be continuing, the Trustee alone shall have the power to make
such appointment. No co-trustee or separate trustee under this
Agreement shall be required to meet the terms of eligibility as a
successor trustee pursuant to Section 11.08 and no notice of a
successor trustee pursuant to Section 11.10 and no notice to
Certificateholders of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 11.10.
Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following
provisions and conditions:
(a) All rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred
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
(whether as Trustee under this Agreement or as successor
to the Backup Servicer under this Agreement), 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;
(b) No trustee under this Agreement shall be
personally liable by reason of any act or omission of any
other trustee under this Agreement; and
(c) The Backup Servicer and the Trustee acting
jointly may at any time accept the resignation of or remove
any separate trustee or co-trustee.
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 XI.
Each separate trustee and co-trustee, upon its acceptance of the
trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all
the provisions of this Agreement, specifically including every
provision of this Agreement relating to the conduct of, affecting
the liability of, or affording protection to, the Trustee. Each such
instrument shall be filed with the Trustee and copies thereof given
to the Backup Servicer.
Any separate trustee or co-trustee may at any time appoint
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 vest in and be
exercised by the Trustee, to the extent permitted by law, without
the appointment of a new or successor separate trustee or
co-trustee.
Section 11.13. Representations and Warranties of Trustee.
The Trustee makes the following representations and warranties on
which the Seller and Certificateholders rely:
(a) The Trustee is a banking association duly
organized, validly existing, and in good standing under the
laws of its place of incorporation.
(b) The Trustee has full corporate power,
authority and legal right to execute, deliver and perform its
obligations under this Agreement and the Servicing
Agreement, and shall have taken all necessary action to
authorize the execution, delivery and performance by it of
this Agreement and the Servicing Agreement.
(c) This Agreement and the Servicing Agreement
shall have been duly executed and delivered by the Trustee,
and each constitutes the valid and binding obligation of the
Trustee enforceable in accordance with its terms.
(d) The execution, delivery and performance by
the Trustee of this Agreement (a) does not violate any
provision of any law governing the banking and trust
powers of the Trustee or any order, writ, judgment or
decree of any court, arbitrator, or governmental authority
applicable to the Trustee or any of its assets, (b) does not
violate any provision of the corporate charter or by-laws of
the Trustee, and (c) does not violate any provision of, or
constitute, with or without notice or lapse of time, a default
under, or result in the creation or imposition of any lien on
any properties included in the Trust pursuant to the
provisions of any mortgage, indenture, contract, agreement
or other undertaking to which it is a party, which violation,
default or lien could reasonably be expected to materially
and adversely affect the Trustee's performance or ability to
perform its duties under this Agreement or the transactions
contemplated in this Agreement.
(e) The execution, delivery and performance by
the Trustee of this Agreement does not require the
authorization, consent, or approval of, the giving of notice
to, the filing or registration with, or the taking of any other
action in respect of, any governmental authority or agency
regulating the banking and corporate trust activities of the
Trustee.
Section 11.14. No Bankruptcy Petition. Except with the
consent of the Majority Certificateholders, the Trustee 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 the Seller or by
the Trust it will not institute against, or join any other Person in
instituting against, the Seller any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other
proceedings under any federal or state bankruptcy or similar law;
provided, however, that nothing contained herein shall prohibit the
Trustee from participating in any existing bankruptcy proceeding.
ARTICLE XII
TERMINATION
Section 12.01. Termination of the Trust.
(a) The Trust and the respective obligations of
the Seller, the Backup Servicer and the Trustee created by
this Agreement (except such obligations as are hereinafter
set forth) shall terminate upon the earliest of (i) payment to
the Certificateholders of all amounts required to be paid to
them pursuant to this Agreement and the disposition of all
property held as part of the Trust Property, (ii) the
purchase as of any Distribution Date by the Seller, at its
option, of the corpus of the Trust as described in Section
12.02, (iii) the Final Scheduled Distribution Date or (iv)
subject to Section 12.01(c), 90 days after the Dissolution of
the Seller. The Seller shall promptly notify the Trustee of
any prospective termination pursuant to this Section 12.01.
(b) Notice of any prospective termination,
specifying the Distribution Date for payment of the final
distribution and requesting the surrender of the Certificates
for cancellation, shall be given promptly by the Trustee by
letter to Certificateholders mailed not earlier than the 15th
day and not later than the 25th day of the month next
preceding the specified Distribution Date stating (A) the
Distribution Date upon which final payment of the
Certificates shall be made and (B) the amount of any such
final payment. Surrender of the Certificates shall not be a
condition of payment of the final distribution; however,
each Certificateholder, by accepting the Certificates, hereby
agrees to indemnify and hold harmless the Trustee, the
Seller and the Certificate Registrar from and against any
and all claims arising from such failure, including but not
limited to claims by third parties claiming to be bona fide
purchasers subsequently presenting such Certificates for
payment.
(c) The Seller shall not voluntarily take any
action that would cause it to cease being deemed a general
partner of the Trust if the Trust were deemed a limited
partnership formed under the Delaware Revised Uniform
Limited Partnership Act and the Residual Interest were
deemed to represent the sole general partnership interest in
such a partnership.
In the event of the Dissolution of the Seller or any
action that would cause the Seller to cease being deemed a
general partner of the Trust if the Trust were deemed a
limited partnership formed under the Delaware Revised
Uniform Limited Partnership Act and the Residual Interest
were deemed to represent the sole general partnership
interest in such a partnership, the Trust shall terminate 90
days after the date of such event and its assets liquidated in
accordance with Section 12.01(d) unless:
A. The Majority Certificateholders inform the
Trustee in writing before the end of such 90 day period that
they disapprove of the liquidation of the assets of the Trust;
and
B. The Seller and the Trustee shall receive an
Opinion of Counsel from independent counsel to the effect
that the continuation of the Trust shall not cause the Trust
to be treated as an association taxable as a corporation for
federal income tax purposes.
During any period that the Certificates are
outstanding, the Seller agrees that it shall not voluntarily
take action that will cause the Dissolution of the Seller.
If the Trust will be terminated and its assets
liquidated in accordance with this Section 12.01(c), the
Trustee shall act as liquidator of the assets of the Trust, but
shall continue to have all the powers, rights and duties of
the Trustee hereunder, under the Servicing Agreement and
the Purchase Agreement until the disposition of the assets
of the Trust and the final distribution to the
Certificateholders, the Trustee and the Backup Servicer of
all amounts required to be paid to them pursuant to this
Agreement.
(d) Upon receipt by the Trustee from the Seller
of notice of any prospective termination of the Trust
pursuant to Section 12.01(a)(iii) or (iv), the Trustee shall,
subject to the direction of the Majority Certificateholders
(provided that, if the Majority Certificateholders shall not
have provided such direction to the Trustee within 30 days
of the Trustee having sent a written request for such
direction to the Certificateholders, the Trustee shall
proceed without such direction) sell the remaining assets of
the Trust, if any, at public or private sale, in a
commercially reasonable manner and on commercially
reasonable terms. The Seller agrees to cooperate with the
Trustee to effect any such sale, including by executing such
instruments of conveyance or assignment as shall be
necessary or required by the purchaser. Proceeds of sale,
net of expenses, shall be treated as collections on the assets
of the Trust and shall be deposited into the Collection
Account. On the Distribution Date specified for final
payment, the Trustee shall cause to be distributed to
Certificateholders and the Seller amounts distributable on
such Distribution Date pursuant to Section 5.06 and Section
5.07.
Section 12.02. Optional Purchase of All Receivables. The
Seller shall have the option to purchase the corpus of the Trust on
the Distribution Date following the last day of any Collection
Period as of which the Pool Balance as a percentage of the
Original Pool Balance shall be less than or equal to the Optional
Purchase Percentage. To exercise such option, the Seller shall (i)
give notice to the Trustee and the Certificateholders not less than
30 days prior to the Distribution Date on which such purchase is
to be effected and (ii) on or before such Distribution Date, deposit
in the Collection Account an amount equal to the Purchase Amount
for the Receivables and the appraisal value of any other property
held by the Trust. After payment of such amounts, the Seller shall
succeed to all interests in and to the Trust Property.
Section 12.03. Notice. The Trustee shall give notice of
termination of the Trust to the Seller and each Rating Agency.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01. Amendment. (a) This Agreement may be
amended by written instrument executed by the Seller, the Backup
Servicer and the Trustee, without the consent of any of the
Certificateholders, (i) to cure any ambiguity, to correct or
supplement any provisions in this Agreement, (ii) to add, change
or eliminate any other provisions with respect to matters or
questions arising under this Agreement that shall not be
inconsistent with the provisions of this Agreement; or (iii) to add
or amend any provision therein in connection with permitting
transfers of the Certificates or to add or provide for any credit
enhancement for the Certificates; provided, however, that any such
action described in clause (ii) shall not adversely affect in any
material respect the interests of the Certificateholders and
provided, further, that in connection with any such amendment
delivery to the Trustee of a letter from each Rating Agency to the
effect that such amendment will not cause the then-current rating
on the Rated Certificates to be qualified, reduced or withdrawn
shall constitute conclusive evidence that such amendment does not
adversely affect in any material respect the interests of the Class
A, Class B or Class C Certificateholders.
(b) This Agreement may also be amended from time to
time or the provisions hereof waived from time to time by a
written instrument executed by the Seller, the Backup Servicer and
the Trustee with the consent of the Holders of the
Certificateholders affected thereby (which consent of any Holder
of a Certificate given pursuant to this Section or pursuant to any
other provision of the Agreement shall be conclusive and binding
on such Holder and on all future Holders of such Certificate and
of any Certificate issued upon the transfer thereof or in exchange
thereof or in lieu thereof whether or not notation of such consent
is made upon the Certificate) evidencing not less than 51% of the
Voting Interests of all the affected Certificates 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 any Class of Certificateholders; provided,
however, that no such amendment or waiver shall, without the
consent of the Holders of all Certificates affected thereby then
outstanding, (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 on
any Certificate or (b) reduce the aforesaid percentage of the Voting
Interests of the Certificates required to consent to any such
amendment.
(c) Prior to any such amendment, the Trustee shall furnish
written notification of the substance of the proposed amendment to
each Rating Agency and each Rating Agency shall provide written
confirmation to the Trustee that such amendment will have no
adverse effect on the ratings assigned to the Rated Certificates.
Any amendment which affects the Trustee's own rights, duties or
immunities under the Agreement or otherwise shall not be effective
to such extent unless the Trustee shall have joined thereto.
(d) Promptly after the execution of any such amendment
or consent, the Trustee shall furnish a copy of such amendment or
consent to each Certificateholder and the Rating Agency. It shall
not be necessary for the consent of Certificateholders pursuant to
this Section 13.01 to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof. The manner of obtaining such
consents (and any other consents of Certificateholders provided for
in this Agreement) and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such
reasonable requirements as the Trustee may prescribe.
(e) Prior to the execution of any amendment to this
Agreement, 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.
Section 13.02. Protection of Title to Trust.
(a) The Seller shall execute and file such
financing statements and cause to be executed and filed
such continuation statements, all in such manner and in
such places as may be required by law fully to preserve,
maintain and protect the interest of the Certificateholders
and the Trustee in the Receivables and the other assets of
the Trust Property and in the proceeds thereof. The Seller
shall deliver (or cause to be delivered) to the Trustee
file-stamped copies of, or filing receipts for, any document
filed as provided above, as soon as available following such
filing.
(b) The Seller shall not 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 SEC 9-402(7) of
the UCC, unless it shall have given the Trustee at least
thirty (30) days' prior written notice thereof and shall have
promptly filed appropriate amendments to all previously
filed financing statements or continuation statements.
(c) The Seller shall give the Trustee at least 30
days' prior written notice of any relocation of its chief
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,
it shall promptly file any such amendment and shall give
the amendment with the recorder's file stamp thereon to the
Custodian promptly upon receipt thereof.
Section 13.03. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate
to terminate this Agreement or the Trust, nor entitle such
Certificateholder's legal representatives or heirs to claim an
accounting or to take any action or commence any proceeding in
any court for a partition or winding up of the Trust, nor otherwise
affect the rights, obligations and liabilities of the parties to this
Agreement or any of them.
Nothing in this Agreement set forth, or contained in the
terms of the Certificates, shall be construed so as to constitute the
Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability
to any third Person by reason of any action taken pursuant to any
provision of this Agreement.
No Certificateholder shall have any right by virtue or by
availing itself of any provisions of this Agreement to institute any
suit, action or proceeding in equity or at law upon or under or
with respect to this Agreement, unless such Holder previously
shall have given to the Trustee a written notice of default and of
the continuance thereof, and unless also the Holders of Certificates
evidencing not less than 20% of the Voting Interests thereof shall
have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee under this
Agreement and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 30
days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such
action, suit or proceeding and during such 30-day period no
request or waiver inconsistent with such written request has been
given to the Trustee pursuant to this Section or Section 10.04; no
one or more Holders shall have any right in any manner whatever
by virtue or by availing itself or themselves of any provisions of
this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of the Certificates, or to obtain or seek to
obtain priority over or preference to any other such Holder, or to
enforce any right under this Agreement except in the manner
provided in this Agreement and for the equal, ratable and common
benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section 13.03, each
Certificateholder and the Trustee shall be entitled to such relief as
can be given either at law or in equity.
Section 13.04. 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 WITHOUT REGARD OR
REFERENCE TO PRINCIPLES OF CONFLICTS OF LAWS OF
SUCH STATE.
Section 13.05. Notices. All demands, notices and
communications upon or to the Seller, the Backup Servicer, the
Trustee, or either Rating Agency under this Agreement shall be in
writing, personally delivered or mailed by certified mail, return
receipt requested, and shall be deemed to have been duly given
upon receipt:
(a) in the case of the Seller, to
Angelo R. Appierto
President
Aegis Auto Funding Corp.
525 Washington Boulevard
Jersey City, New Jersey 07310
or at such other address as shall be designated by the Seller
in a written notice to the Trustee;
(b) in the case of the Backup Servicer, to
Norwest Bank Minnesota, National
Association
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479-0070
Attention: Corporate Trust Services--Asset
Backed Administration
or at such other address as shall be designated by the
Backup Servicer in a written notice to the Seller;
(c) in the case of the Trustee or Custodian, to
Norwest Bank Minnesota, National
Association
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479-0070
Attention: Corporate Trust Services--Asset
Backed Administration
or at such other address as shall be designated by the
Trustee in a written notice to the Seller;
(d) in the case of the Rating Agencies, to
Duff & Phelps Credit Rating Co.
55 East Monroe Street
Chicago, Illinois 60603
Attention: Asset-Backed Finance
Research and Monitoring
Fitch Investors Service, L.P.
One State Street Plaza
New York, New York 10004
Attention:
Any notice or other communication required or permitted
to be mailed to a Certificateholder shall be given by first class
mail, postage prepaid, at the address of such Holder as shown in
the Certificate Register (with copies thereof to such other Person(s)
as such Certificateholder shall have requested in writing, the
address of such other Person(s) to receive such copies also to be
reflected in the Certificate Register), and shall be deemed to have
been given upon receipt.
Section 13.06. 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 or of the
Certificates or the rights of the Holders thereof.
Section 13.07. Assignment. Notwithstanding anything to
the contrary contained herein, except as provided in Sections 8.03,
this Agreement may not be assigned by the Seller without the prior
written consent of the Trustee and the Holders of Certificates
evidencing not less than 66% of the Voting Interests thereof.
Section 13.08. Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of
the Trust. The interests represented by the Certificates shall be
nonassessable for any losses or expenses of the Trust or for any
reason whatsoever.
Section 13.09. Counterparts. 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 13.10. Limited Recourse to Seller. The parties
hereto agree that the obligations of the Seller hereunder, including,
without limitation, the obligation of the Seller in respect of
indemnification pursuant to Sections 3.06, 8.02 and 11.07 in
respect of repurchases or substitutions of Receivables upon breach
of representations and warranties pursuant to Section 3.02, and in
respect of fees, costs and expenses pursuant to Sections 3.06, 4.04
and 4.05, are payable solely from the Seller's interests in the Trust
Property and that no party may look to any other property or
assets of the Seller in respect of such obligations.
<PAGE>
IN WITNESS WHEREOF, the Seller, the Backup Servicer
and the Trustee have caused this Pooling and Servicing Agreement
to be duly executed by their respective officers as of the day and
year first above written.
AEGIS AUTO FUNDING
CORP.,
as Seller
By
Angelo R. Appierto
President
NORWEST BANK
MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By
Stephen Seitz
Corporate Trust Officer
NORWEST BANK
MINNESOTA, NATIONAL
ASSOCIATION, as Backup
Servicer
By
Stephen Seitz
Corporate Trust Officer
EXHIBIT A-1
FORM OF CLASS A CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"),OR UNDER THE
SECURITIES OR BLUE SKY LAWS OF ANY STATE IN THE
UNITED STATES OR ANY FOREIGN SECURITIES LAWS.
BY ITS ACCEPTANCE OF THIS CERTIFICATE THE
HOLDER OF THIS CERTIFICATE IS DEEMED TO
REPRESENT TO THE SELLER AND THE TRUSTEE (i) THAT
IT IS AN INSTITUTIONAL INVESTOR THAT IS AN
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) OF REGULATION D PROMULGATED UNDER
THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED
INVESTOR") AND THAT IT IS ACQUIRING THIS
CERTIFICATE FOR ITS OWN ACCOUNT (AND NOT FOR
THE ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR
AGENT FOR OTHERS (WHICH OTHERS ALSO ARE
INSTITUTIONAL ACCREDITED INVESTORS UNLESS THE
HOLDER IS A BANK ACTING IN ITS FIDUCIARY
CAPACITY) FOR INVESTMENT AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, THE
PUBLIC DISTRIBUTION HEREOF OR (II) THAT IT IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT AND IS
ACQUIRING SUCH CERTIFICATE FOR ITS OWN ACCOUNT
(AND NOT FOR THE ACCOUNT OF OTHERS) OR AS A
FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS
ALSO ARE QUALIFIED INSTITUTIONAL BUYERS).
NO SALE, PLEDGE OR OTHER TRANSFER OF THIS
CERTIFICATE MAY BE MADE BY ANY PERSON UNLESS
EITHER (i) SUCH SALE, PLEDGE OR OTHER TRANSFER IS
MADE TO THE SELLER, (ii) SUCH SALE, PLEDGE OR
OTHER TRANSFER IS MADE TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT EXECUTES A
CERTIFICATE, SUBSTANTIALLY IN THE FORM SPECIFIED
IN THE AGREEMENT, TO THE EFFECT THAT IT IS AN
INSTITUTIONAL ACCREDITED INVESTOR ACTING FOR
ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT OF
OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS
(WHICH OTHERS ALSO ARE INSTITUTIONAL
ACCREDITED INVESTORS UNLESS THE HOLDER IS A
BANK ACTING IN ITS FIDUCIARY CAPACITY), (iii) SO
LONG AS THIS CERTIFICATE IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT,
SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO
A PERSON WHOM THE ISSUER REASONABLY BELIEVES
AFTER DUE INQUIRY IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A), ACTING FOR ITS
OWN ACCOUNT (AND NOT FOR THE ACCOUNT OF
OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS
(WHICH OTHERS ALSO ARE QUALIFIED INSTITUTIONAL
BUYERS) TO WHOM NOTICE IS GIVEN THAT THE SALE,
PLEDGE OR TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, OR (iv) SUCH SALE, PLEDGE OR OTHER
TRANSFER IS OTHERWISE MADE IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, IN WHICH CASE (A) THE TRUSTEE
SHALL REQUIRE THAT BOTH THE PROSPECTIVE
TRANSFEROR AND THE PROSPECTIVE TRANSFEREE
CERTIFY TO THE TRUSTEE AND THE SELLER IN
WRITING THE FACTS SURROUNDING SUCH TRANSFER,
WHICH CERTIFICATION SHALL BE IN FORM AND
SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE
SELLER, AND (B) THE TRUSTEE SHALL REQUIRE A
WRITTEN OPINION OF COUNSEL (WHICH SHALL NOT BE
AT THE EXPENSE OF THE SELLER OR THE TRUSTEE)
SATISFACTORY TO THE SELLER AND THE TRUSTEE TO
THE EFFECT THAT SUCH TRANSFER WILL NOT VIOLATE
THE SECURITIES ACT. NO SALE, PLEDGE OR OTHER
TRANSFER MAY BE MADE TO ANY ONE PERSON FOR
CERTIFICATES WITH A FACE AMOUNT OF LESS THAN
$250,000 AND, IN THE CASE OF ANY PERSON ACTING ON
BEHALF OF ONE OR MORE THIRD PARTIES (OTHER
THAN A BANK (AS DEFINED IN SECTION 3(a)(2) OF THE
SECURITIES ACT) ACTING IN ITS FIDUCIARY CAPACITY),
FOR CERTIFICATES WITH A FACE AMOUNT OF LESS
THAN $250,000 FOR EACH SUCH THIRD PARTY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE DEPOSITOR OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE 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.
<PAGE>
AEGIS AUTO RECEIVABLES TRUST 1996-3
AUTOMOBILE RECEIVABLE PASS-THROUGH
CERTIFICATES
CLASS A CERTIFICATE
PPN:
CUSIP:
NUMBER R-1
Original Certificate Balance:
Class A Rate
$_______________________
Final Scheduled Distribution Date: March 20, 2002
Initial Class A Certificate Balance of all Class A Certificates: $
THIS CERTIFIES THAT ___________________ is the
registered owner of this _________ DOLLARS Class A
Certificate. This Certificate evidences a fractional undivided
interest in the Aegis Auto Receivables Trust 1996-3 (the "Trust")
(excluding the Residual Interest in the Trust), formed by Aegis
Auto Funding Corp., a Delaware corporation (the "Seller"). The
Trust was created pursuant to a Pooling and Servicing Agreement
dated as of September 1, 1996 (the "Agreement") among the
Seller, Norwest Bank Minnesota, National Association, as backup
servicer (the "Backup Servicer"), and Norwest Bank Minnesota,
National Association, as trustee (the "Trustee"). The property of
the Trust includes, among other assets, a pool of motor vehicle
retail installment sale contracts secured by new and used
automobiles and light-duty trucks. (This Class A Certificate does
not represent an interest in or obligation of the Seller or any of the
respective Affiliates thereof, except to the extent described below.)
A summary of certain of the pertinent provisions of the Agreement
is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them
in the Agreement. The Certificate Balance of this Class A
Certificate will be decreased by the payments on this Class A
Certificate in respect of principal as described in the Agreement.
Accordingly, following the initial issuance of the Class A
Certificates, the Certificate Balance of this Class A Certificate will
over time be less than the original denomination shown above.
Anyone acquiring this Class A Certificate may ascertain its current
Certificate Balance by inquiry of the Trustee.
This Certificate is one of the duly authorized Certificates
designated as "Automobile Receivable Pass-Through Certificates,"
issued in three Classes (Class A, Class B and Class C,
collectively, the "Certificates"). To the extent described in the
Agreement the Class B and C Certificates are subordinate in
payment to the Class A Certificates and the Class C Certificates
are subordinate in payment to the Class A and Class B
Certificates. This Class A Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Class A Certificate by
virtue of the acceptance hereof assents and by which such Holder
is bound. The property of the Trust includes, without limitation,
a pool of motor vehicle retail installment sale contracts (the
"Receivables") acquired on the Closing Date and on Funding Dates
(both as defined in the Agreement) secured by new and used
automobiles and light-duty trucks (the "Financed Vehicles"), all
moneys due thereunder after the applicable Cutoff Dates (as
defined in the Agreement), proceeds from claims on certain
insurance policies and certain other rights under the Agreement, all
right, title and interest of the Seller in and to the Purchase
Agreement and any and all proceeds of the foregoing.
This Class A Certificate does not purport to summarize the
Agreement and reference is made to the Agreement for information
with respect to the interests, rights, benefits, obligations, proceeds
and duties evidenced hereby and the rights, duties and immunities
of the Trustee. Copies of the Agreement and all amendments
thereto will be provided to any Certificateholder, at its expense,
upon a written request to the Trustee.
Under the Agreement, there will be distributed on the 20th
day of each month or, if such 20th day is not a Business Day, the
next Business Day (the "Distribution Date"), commencing on
October 21, 1996, to the person in whose name this Class A
Certificate is registered at the close of business on the last day of
the Collection Period preceding a Distribution Date or termination
of the Trust (the "Record Date") an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the
amount, if any required to be distributed to the holders of all Class
A Certificates.
All payments to Certificateholders shall be made on each
Distribution Date to each Certificateholder of record on the related
Record Date by check, or, if requested by a Certificateholder
holding Certificates with Original Certificate Balances in aggregate
in excess of $1,000,000, by wire transfer to the account designated
in writing by such Holder in the form of Exhibit G to the
Agreement (or such other account as such Certificateholder may
designate in writing) delivered to the Trustee prior to the
Determination Date, in immediately available funds. Except as
otherwise provided in the Agreement and notwithstanding the
above, the final distribution on this Class A Certificate will be
made after due notice by the Trustee of the pendency of such
distribution, which notice shall request that the Certificateholder
present and surrender this Class A Certificate at the office or
agency maintained for that purpose by the Trustee in Minneapolis,
Minnesota. Surrender of this Class A Certificate shall not be a
condition of payment of the final distribution; however, the
Holder, by accepting this Class A Certificate, hereby agrees to
indemnify and hold harmless the Trustee, the Seller and the
Certificate Registrar from and against any and all claims arising
from such failure to present and surrender this Class A Certificate,
including but not limited to claims by third parties claiming to be
bona fide purchasers.
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Trustee, by manual
signature, this Class A Certificate shall not entitle the Holder
hereof to any benefit under the Agreement or be valid for any
purpose.
The Class A Certificates do not represent a recourse
obligation of, or an interest in, the Seller, the Backup Servicer, the
Trustee or any Affiliate of any of them. The Class A Certificates
are limited in right of payment to certain collections and recoveries
respecting the Receivables, all as more specifically set forth in the
Agreement. A copy of the Agreement may be examined during
normal business hours at the principal office of the Seller, and at
such other places, if any, designated by the Seller, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights
and obligations of the Seller and the rights of the Certificateholders
under the Agreement at any time by the Seller and the Trustee
with the consent of the Holders of the Certificates affected thereby
voting as a class evidencing not less than 51% of the Voting
Interests of all affected Certificates. Any such consent by the
Holder of this Class A Certificate shall be conclusive and binding
on such Holder and on all future Holders of this Class A
Certificate and of any Class A Certificate issued upon the transfer
hereof or in exchange hereof or in lieu hereof whether or not
notation of such consent is made upon this Class A Certificate.
The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any
of the Class A Certificates.
As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Class A Certificate
is registrable in the Certificate Register upon surrender of this
Class A Certificate for registration of transfer at the offices or
agencies maintained by the Trustee in its capacity as Certificate
Registrar, or by any successor Certificate Registrar, in
Minneapolis, Minnesota, or such other office of the Trustee
maintained for such purpose and designated by the Trustee in
writing, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Class A Certificate Registrar
duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Class A
Certificates of authorized denominations evidencing the same
aggregate interest in the Trust will be issued to the designated
transferee.
The Class A Certificates are initially issuable only as
registered Class A Certificates without coupons in denominations
of $250,000 and integral multiples of $1,000 in excess thereof,
except that one Class A Certificate may be issued in a different
denomination. As provided in the Agreement and subject to
certain limitations set forth therein, Class A Certificates are
exchangeable for new Class A Certificates evidencing the same
aggregate denomination, as requested by the Holder surrendering
the same. No service charge will be made to the Holder for any
such registration of transfer or exchange, but the Trustee may
require payment of a sum sufficient to cover any tax or
governmental charges payable in connection therewith.
The Trustee, the Certificate Registrar, and any agent of the
Trustee or the Certificate Registrar may treat the person in whose
name this Class A Certificate is registered as the owner hereof for
all purposes, and neither the Trustee, the Certificate Registrar, nor
any such agent shall be affected by any notice to the contrary.
The Trust created by the Agreement shall terminate upon
the earliest of (i) payment to the Certificateholders of all amounts
required to be paid to them pursuant to the Agreement and the
disposition of all property held as part of the Trust Property, (ii)
March 20, 2002 or (iii) subject to the Agreement, 90 days after the
Dissolution of the Seller. The Seller may, at its option, purchase
the corpus of the Trust, in whole, at a price specified in the
Agreement, and such purchase will effect early retirement of the
Certificates; however, such right of purchase is exercisable only
on a Distribution Date following the last day of any Collection
Period as of which the Pool Balance is less than or equal to 5% of
the Original Pool Balance.<PAGE>
IN WITNESS WHEREOF, the Trustee, not in its
individual capacity but on behalf of the Trust, has caused this
Class A Certificate to be duly executed.
AEGIS AUTO
RECEIVABLES
TRUST 1996-3
By: NORWEST
BANK
MINNESOTA,
NATIONAL
ASSOCIATION, as
Trustee
By
Name:
Title:
This is one of the Class A Certificates referred to
in the within-mentioned Agreement.
NORWEST BANK
MINNESOTA,
NATIONAL
ASSOCIATION, as
Trustee
By
Name:
Title:
Dated as of
_________________, 199_
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells,
assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or typewrite name and address, including postal zip
code, of assignee)
the within Class A Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing
Attorney
to transfer said Class A Certificate on the books of the Certificate
Registrar, with full power of substitution in the premises.
Dated:
*
Name:
_______________
*NOTICE: The signature to this assignment must correspond with
the name as it appears upon the face of the within Class A
Certificate in every particular, without alteration, enlargement or
any change whatever.
<PAGE>
EXHIBIT A-2
FORM OF CLASS B CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF
PAYMENT AS DESCRIBED IN THE AGREEMENT
REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"),OR UNDER THE
SECURITIES OR BLUE SKY LAWS OF ANY STATE IN THE
UNITED STATES OR ANY FOREIGN SECURITIES LAWS.
BY ITS ACCEPTANCE OF THIS CERTIFICATE THE
HOLDER OF THIS CERTIFICATE IS DEEMED TO
REPRESENT TO THE SELLER AND THE TRUSTEE (i) THAT
IT IS AN INSTITUTIONAL INVESTOR THAT IS AN
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) OF REGULATION D PROMULGATED UNDER
THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED
INVESTOR") AND THAT IT IS ACQUIRING THIS
CERTIFICATE FOR ITS OWN ACCOUNT (AND NOT FOR
THE ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR
AGENT FOR OTHERS (WHICH OTHERS ALSO ARE
INSTITUTIONAL ACCREDITED INVESTORS UNLESS THE
HOLDER IS A BANK ACTING IN ITS FIDUCIARY
CAPACITY) FOR INVESTMENT AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, THE
PUBLIC DISTRIBUTION HEREOF OR (II) THAT IT IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT AND IS
ACQUIRING SUCH CERTIFICATE FOR ITS OWN ACCOUNT
(AND NOT FOR THE ACCOUNT OF OTHERS) OR AS A
FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS
ALSO ARE QUALIFIED INSTITUTIONAL BUYERS).
NO SALE, PLEDGE OR OTHER TRANSFER OF THIS
CERTIFICATE MAY BE MADE BY ANY PERSON UNLESS
EITHER (i) SUCH SALE, PLEDGE OR OTHER TRANSFER IS
MADE TO THE SELLER, (ii) SUCH SALE, PLEDGE OR
OTHER TRANSFER IS MADE TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT EXECUTES A
CERTIFICATE, SUBSTANTIALLY IN THE FORM SPECIFIED
IN THE AGREEMENT, TO THE EFFECT THAT IT IS AN
INSTITUTIONAL ACCREDITED INVESTOR ACTING FOR
ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT OF
OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS
(WHICH OTHERS ALSO ARE INSTITUTIONAL
ACCREDITED INVESTORS UNLESS THE HOLDER IS A
BANK ACTING IN ITS FIDUCIARY CAPACITY), (iii) SO
LONG AS THIS CERTIFICATE IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT,
SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO
A PERSON WHOM THE ISSUER REASONABLY BELIEVES
AFTER DUE INQUIRY IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A), ACTING FOR ITS
OWN ACCOUNT (AND NOT FOR THE ACCOUNT OF
OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS
(WHICH OTHERS ALSO ARE QUALIFIED INSTITUTIONAL
BUYERS) TO WHOM NOTICE IS GIVEN THAT THE SALE,
PLEDGE OR TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, OR (iv) SUCH SALE, PLEDGE OR OTHER
TRANSFER IS OTHERWISE MADE IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, IN WHICH CASE (A) THE TRUSTEE
SHALL REQUIRE THAT BOTH THE PROSPECTIVE
TRANSFEROR AND THE PROSPECTIVE TRANSFEREE
CERTIFY TO THE TRUSTEE AND THE SELLER IN
WRITING THE FACTS SURROUNDING SUCH TRANSFER,
WHICH CERTIFICATION SHALL BE IN FORM AND
SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE
SELLER, AND (B) THE TRUSTEE SHALL REQUIRE A
WRITTEN OPINION OF COUNSEL (WHICH SHALL NOT BE
AT THE EXPENSE OF THE SELLER OR THE TRUSTEE)
SATISFACTORY TO THE SELLER AND THE TRUSTEE TO
THE EFFECT THAT SUCH TRANSFER WILL NOT VIOLATE
THE SECURITIES ACT. NO SALE, PLEDGE OR OTHER
TRANSFER MAY BE MADE TO ANY ONE PERSON FOR
CERTIFICATES WITH A FACE AMOUNT OF LESS THAN
$250,000 AND, IN THE CASE OF ANY PERSON ACTING ON
BEHALF OF ONE OR MORE THIRD PARTIES (OTHER
THAN A BANK (AS DEFINED IN SECTION 3(a)(2) OF THE
SECURITIES ACT) ACTING IN ITS FIDUCIARY CAPACITY),
FOR CERTIFICATES WITH A FACE AMOUNT OF LESS
THAN $250,000 FOR EACH SUCH THIRD PARTY.
THIS CERTIFICATE MAY NOT BE PURCHASED BY OR
TRANSFERRED TO ANY EMPLOYEE BENEFIT PLAN
SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR A
PLAN SUBJECT TO SECTION 4975 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED ("SECTION 4975")
(A "PLAIN") OR A PERSON THAT IS USING THE ASSETS
OF A PLAN TO ACQUIRE THIS CERTIFICATE.
ACCORDINGLY, TRANSFER OF THIS CERTIFICATE IS
SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN THE
AGREEMENT.
<PAGE>
AEGIS AUTO RECEIVABLES TRUST 1996-3
AUTOMOBILE RECEIVABLE PASS-THROUGH
CERTIFICATES
CLASS B CERTIFICATE
PPN:
CUSIP:
NUMBER R-1
Original Certificate Balance:
Class B Rate
$_______________________
Final Scheduled Distribution Date: March 20, 2002
Initial Class B Certificate Balance of all Class B Certificates: $
THIS CERTIFIES THAT ___________________ is the
registered owner of this _________ DOLLARS Class B
Certificate. This Certificate evidences a fractional undivided
interest in the Aegis Auto Receivables Trust 1996-3 (the "Trust")
(excluding the Residual Interest in the Trust), formed by Aegis
Auto Funding Corp., a Delaware corporation (the "Seller"). The
Trust was created pursuant to a Pooling and Servicing Agreement
dated as of September 1, 1996 (the "Agreement") among the
Seller, Norwest Bank Minnesota, National Association, as backup
servicer (the "Backup Servicer"), and Norwest Bank Minnesota,
National Association, as trustee (the "Trustee"). The property of
the Trust includes, among other assets, a pool of motor vehicle
retail installment sale contracts secured by new and used
automobiles and light-duty trucks. (This Class B Certificate does
not represent an interest in or obligation of the Seller or any of the
respective Affiliates thereof, except to the extent described below.)
A summary of certain of the pertinent provisions of the Agreement
is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them
in the Agreement. The Certificate Balance of this Class B
Certificate will be decreased by the payments on this Class B
Certificate in respect of principal as described in the Agreement.
Accordingly, following the initial issuance of the Class B
Certificates, the Certificate Balance of this Class B Certificate will
over time be less than the original denomination shown above.
Anyone acquiring this Class B Certificate may ascertain its current
Certificate Balance by inquiry of the Trustee.
This Certificate is one of the duly authorized Certificates
designated as "Automobile Receivable Pass-Through Certificates",
issued in three Classes (Class A, Class B and Class C,
collectively, the "Certificates"). To the extent described in the
Agreement the Class B and C Certificates are subordinate in
payment to the Class A Certificates and the Class C Certificates
are subordinate in payment to the Class A and Class B
Certificates. This Class B Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Class B Certificate by
virtue of the acceptance hereof assents and by which such Holder
is bound. The property of the Trust includes, without limitation,
a pool of motor vehicle retail installment sale contracts (the
"Receivables") acquired on the Closing Date and on Funding Dates
(both as defined in the Agreement) secured by new and used
automobiles and light-duty trucks (the "Financed Vehicles"), all
moneys due thereunder after the applicable Cutoff Dates (as
defined in the Agreement), proceeds from claims on certain
insurance policies and certain other rights under the Agreement, all
right, title and interest of the Seller in and to the Purchase
Agreement and any and all proceeds of the foregoing.
This Class B Certificate does not purport to summarize the
Agreement and reference is made to the Agreement for information
with respect to the interests, rights, benefits, obligations, proceeds
and duties evidenced hereby and the rights, duties and immunities
of the Trustee. Copies of the Agreement and all amendments
thereto will be provided to any Certificateholder, at its expense,
upon a written request to the Trustee.
Under the Agreement, there will be distributed on the 20th
day of each month or, if such 20th day is not a Business Day, the
next Business Day (the "Distribution Date"), commencing on
October 21, 1996, to the person in whose name this Class B
Certificate is registered at the close of business on the last day of
the Collection Period preceding a Distribution Date or termination
of the Trust (the "Record Date") an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the
amount, if any required to be distributed to the holders of all Class
B Certificates.
All payments to Certificateholders shall be made on each
Distribution Date to each Certificateholder of record on the related
Record Date by check, or, if requested by a Certificateholder
holding Certificates with Original Certificate Balances in aggregate
in excess of $1,000,000, by wire transfer to the account designated
in writing by such Holder in the form of Exhibit G to the
Agreement (or such other account as such Certificateholder may
designate in writing) delivered to the Trustee prior to the
Determination Date, in immediately available funds. Except as
otherwise provided in the Agreement and notwithstanding the
above, the final distribution on this Class B Certificate will be
made after due notice by the Trustee of the pendency of such
distribution, which notice shall request that the Certificateholder
present and surrender this Class B Certificate at the office or
agency maintained for that purpose by the Trustee in Minneapolis,
Minnesota. Surrender of this Class B Certificate shall not be a
condition of payment of the final distribution; however, the
Holder, by accepting this Class B Certificate, hereby agrees to
indemnify and hold harmless the Trustee, the Seller and the
Certificate Registrar from and against any and all claims arising
from such failure to present and surrender this Class B Certificate,
including but not limited to claims by third parties claiming to be
bona fide purchasers.
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Trustee, by manual
signature, this Class B Certificate shall not entitle the Holder
hereof to any benefit under the Agreement or be valid for any
purpose.
The Class B Certificates do not represent a recourse
obligation of, or an interest in, the Seller, the Backup Servicer, the
Trustee or any Affiliate of any of them. The Class B Certificates
are limited in right of payment to certain collections and recoveries
respecting the Receivables, all as more specifically set forth in the
Agreement. A copy of the Agreement may be examined during
normal business hours at the principal office of the Seller, and at
such other places, if any, designated by the Seller, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights
and obligations of the Seller and the rights of the Certificateholders
under the Agreement at any time by the Seller and the Trustee
with the consent of the Holders of the Certificates affected thereby
voting as a class evidencing not less than 51% of the Voting
Interests of all affected Certificates. Any such consent by the
Holder of this Class B Certificate shall be conclusive and binding
on such Holder and on all future Holders of this Class B
Certificate and of any Class B Certificate issued upon the transfer
hereof or in exchange hereof or in lieu hereof whether or not
notation of such consent is made upon this Class B Certificate.
The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any
of the Class B Certificates.
As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Class B Certificate
is registrable in the Certificate Register upon surrender of this
Class B Certificate for registration of transfer at the offices or
agencies maintained by the Trustee in its capacity as Certificate
Registrar, or by any successor Certificate Registrar, in
Minneapolis, Minnesota, or such other office of the Trustee
maintained for such purpose and designated by the Trustee in
writing, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Class B Certificate Registrar
duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Class B
Certificates of authorized denominations evidencing the same
aggregate interest in the Trust will be issued to the designated
transferee.
The Class B Certificates are initially issuable only as
registered Class B Certificates without coupons in denominations
of $250,000 and integral multiples of $1,000 in excess thereof,
except that one Class B Certificate may be issued in a different
denomination. As provided in the Agreement and subject to
certain limitations set forth therein, Class B Certificates are
exchangeable for new Class B Certificates evidencing the same
aggregate denomination, as requested by the Holder surrendering
the same. No service charge will be made to the Holder for any
such registration of transfer or exchange, but the Trustee may
require payment of a sum sufficient to cover any tax or
governmental charges payable in connection therewith.
The Trustee, the Certificate Registrar, and any agent of the
Trustee or the Certificate Registrar may treat the person in whose
name this Class B Certificate is registered as the owner hereof for
all purposes, and neither the Trustee, the Certificate Registrar, nor
any such agent shall be affected by any notice to the contrary.
The Trust created by the Agreement shall terminate upon
the earliest of (i) payment to the Certificateholders of all amounts
required to be paid to them pursuant to the Agreement and the
disposition of all property held as part of the Trust Property, (ii)
March 20, 2002 or (iii) subject to the Agreement, 90 days after the
Dissolution of the Seller. The Seller may, at its option, purchase
the corpus of the Trust, in whole, at a price specified in the
Agreement, and such purchase will effect early retirement of the
Certificates; however, such right of purchase is exercisable only
on a Distribution Date following the last day of any Collection
Period as of which the Pool Balance is less than or equal to 5% of
the Original Pool Balance.
IN WITNESS WHEREOF, the Trustee, not in its
individual capacity but on behalf of the Trust, has caused this
Class B Certificate to be duly executed.
AEGIS AUTO
RECEIVABLES
TRUST 1996-3
By: NORWEST
BANK
MINNESOTA,
NATIONAL
ASSOCIATION, as
Trustee
By
Name:
Title:
This is one of the Class B Certificates referred to
in the within-mentioned Agreement.
NORWEST BANK
MINNESOTA,
NATIONAL
ASSOCIATION, as
Trustee
By
Name:
Title:
Dated as of
______, 199_
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells,
assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or typewrite name and address, including postal zip
code, of assignee)
the within Class B Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing
Attorney
to transfer said Class B Certificate on the books of the Certificate
Registrar, with full power of substitution in the premises.
Dated:
*
Name:
_______________
*NOTICE: The signature to this assignment must correspond with
the name as it appears upon the face of the within Class B
Certificate in every particular, without alteration, enlargement or
any change whatever.
<PAGE>
EXHIBIT A-3-1
FORM OF CLASS C CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED IN RIGHT OF
PAYMENT AS DESCRIBED IN THE AGREEMENT
REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"),OR UNDER THE
SECURITIES OR BLUE SKY LAWS OF ANY STATE IN THE
UNITED STATES OR ANY FOREIGN SECURITIES LAWS.
BY ITS ACCEPTANCE OF THIS CERTIFICATE THE
HOLDER OF THIS CERTIFICATE IS DEEMED TO
REPRESENT TO THE SELLER AND THE TRUSTEE (i) THAT
IT IS AN INSTITUTIONAL INVESTOR THAT IS AN
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) OF REGULATION D PROMULGATED UNDER
THE SECURITIES ACT (AN "INSTITUTIONAL ACCREDITED
INVESTOR") AND THAT IT IS ACQUIRING THIS
CERTIFICATE FOR ITS OWN ACCOUNT (AND NOT FOR
THE ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR
AGENT FOR OTHERS (WHICH OTHERS ALSO ARE
INSTITUTIONAL ACCREDITED INVESTORS UNLESS THE
HOLDER IS A BANK ACTING IN ITS FIDUCIARY
CAPACITY) FOR INVESTMENT AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, THE
PUBLIC DISTRIBUTION HEREOF OR (II) THAT IT IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT AND IS
ACQUIRING SUCH CERTIFICATE FOR ITS OWN ACCOUNT
(AND NOT FOR THE ACCOUNT OF OTHERS) OR AS A
FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS
ALSO ARE QUALIFIED INSTITUTIONAL BUYERS).
NO SALE, PLEDGE OR OTHER TRANSFER OF THIS
CERTIFICATE MAY BE MADE BY ANY PERSON UNLESS
EITHER (i) SUCH SALE, PLEDGE OR OTHER TRANSFER IS
MADE TO THE SELLER, (ii) SUCH SALE, PLEDGE OR
OTHER TRANSFER IS MADE TO AN INSTITUTIONAL
ACCREDITED INVESTOR THAT EXECUTES A
CERTIFICATE, SUBSTANTIALLY IN THE FORM SPECIFIED
IN THE AGREEMENT, TO THE EFFECT THAT IT IS AN
INSTITUTIONAL ACCREDITED INVESTOR ACTING FOR
ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT OF
OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS
(WHICH OTHERS ALSO ARE INSTITUTIONAL
ACCREDITED INVESTORS UNLESS THE HOLDER IS A
BANK ACTING IN ITS FIDUCIARY CAPACITY), (iii) SO
LONG AS THIS CERTIFICATE IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT,
SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO
A PERSON WHOM THE ISSUER REASONABLY BELIEVES
AFTER DUE INQUIRY IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A), ACTING FOR ITS
OWN ACCOUNT (AND NOT FOR THE ACCOUNT OF
OTHERS) OR AS A FIDUCIARY OR AGENT FOR OTHERS
(WHICH OTHERS ALSO ARE QUALIFIED INSTITUTIONAL
BUYERS) TO WHOM NOTICE IS GIVEN THAT THE SALE,
PLEDGE OR TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, OR (iv) SUCH SALE, PLEDGE OR OTHER
TRANSFER IS OTHERWISE MADE IN A TRANSACTION
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT, IN WHICH CASE (A) THE TRUSTEE
SHALL REQUIRE THAT BOTH THE PROSPECTIVE
TRANSFEROR AND THE PROSPECTIVE TRANSFEREE
CERTIFY TO THE TRUSTEE AND THE SELLER IN
WRITING THE FACTS SURROUNDING SUCH TRANSFER,
WHICH CERTIFICATION SHALL BE IN FORM AND
SUBSTANCE SATISFACTORY TO THE TRUSTEE AND THE
SELLER, AND (B) THE TRUSTEE SHALL REQUIRE A
WRITTEN OPINION OF COUNSEL (WHICH SHALL NOT BE
AT THE EXPENSE OF THE SELLER OR THE TRUSTEE)
SATISFACTORY TO THE SELLER AND THE TRUSTEE TO
THE EFFECT THAT SUCH TRANSFER WILL NOT VIOLATE
THE SECURITIES ACT. NO SALE, PLEDGE OR OTHER
TRANSFER MAY BE MADE TO ANY ONE PERSON FOR
CERTIFICATES WITH A FACE AMOUNT OF LESS THAN
$250,000 AND, IN THE CASE OF ANY PERSON ACTING ON
BEHALF OF ONE OR MORE THIRD PARTIES (OTHER
THAN A BANK (AS DEFINED IN SECTION 3(a)(2) OF THE
SECURITIES ACT) ACTING IN ITS FIDUCIARY CAPACITY),
FOR CERTIFICATES WITH A FACE AMOUNT OF LESS
THAN $250,000 FOR EACH SUCH THIRD PARTY.
THIS CERTIFICATE MAY NOT BE PURCHASED BY
OR TRANSFERRED TO ANY EMPLOYEE BENEFIT PLAN
SUBJECT TO THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED ("ERISA") OR A
PLAN SUBJECT TO SECTION 4975 OF THE INTERNAL
REVENUE CODE OF 1986, AS AMENDED ("SECTION 4975")
(A "PLAIN") OR A PERSON THAT IS USING THE ASSETS
OF A PLAN TO ACQUIRE THIS CERTIFICATE.
ACCORDINGLY, TRANSFER OF THIS CERTIFICATE IS
SUBJECT TO CERTAIN RESTRICTIONS SET FORTH IN THE
AGREEMENT.
<PAGE>
AEGIS AUTO RECEIVABLES TRUST 1996-3
AUTOMOBILE RECEIVABLE PASS-THROUGH
CERTIFICATES
CLASS C CERTIFICATE
PPN:
CUSIP:
NUMBER R-1
Original Certificate Balance:
Class C Rate
$_______________________
Final Scheduled Distribution Date: March 20, 2002
Initial Class C Certificate Balance of all Class C Certificates: $
THIS CERTIFIES THAT ___________________ is the
registered owner of this _________ DOLLARS Class C
Certificate. This Certificate evidences a fractional undivided
interest in the Aegis Auto Receivables Trust 1996-3 (the "Trust")
(excluding the Residual Interest in the Trust), formed by Aegis
Auto Funding Corp., a Delaware corporation (the "Seller"). The
Trust was created pursuant to a Pooling and Servicing Agreement
dated as of September 1, 1996 (the "Agreement") among the
Seller, Norwest Bank Minnesota, National Association, as backup
servicer (the "Backup Servicer"), and Norwest Bank Minnesota,
National Association, as trustee (the "Trustee"). The property of
the Trust includes, among other assets, a pool of motor vehicle
retail installment sale contracts secured by new and used
automobiles and light-duty trucks. (This Class C Certificate does
not represent an interest in or obligation of the Seller or any of the
respective Affiliates thereof, except to the extent described below.)
A summary of certain of the pertinent provisions of the Agreement
is set forth below. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them
in the Agreement. The Certificate Balance of this Class C
Certificate will be decreased by the payments on this Class C
Certificate in respect of principal as described in the Agreement.
Accordingly, following the initial issuance of the Class C
Certificates, the Certificate Balance of this Class C Certificate will
over time be less than the original denomination shown above.
Anyone acquiring this Class C Certificate may ascertain its current
Certificate Balance by inquiry of the Trustee.
This Certificate is one of the duly authorized Certificates
designated as "Automobile Receivable Pass-Through Certificates",
issued in three Classes (Class A, Class B and Class C,
collectively, the "Certificates"). To the extent described in the
Agreement the Class B and C Certificates are subordinate in
payment to the Class A Certificates and the Class C Certificates
are subordinate in payment to the Class A and Class B
Certificates. This Class C Certificate is issued under and is
subject to the terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Class C Certificate by
virtue of the acceptance hereof assents and by which such Holder
is bound. The property of the Trust includes, without limitation,
a pool of motor vehicle retail installment sale contracts (the
"Receivables") acquired on the Closing Date and on Funding Dates
(both as defined in the Agreement) secured by new and used
automobiles and light-duty trucks (the "Financed Vehicles"), all
moneys due thereunder after the applicable Cutoff Dates (as
defined in the Agreement), proceeds from claims on certain
insurance policies and certain other rights under the Agreement, all
right, title and interest of the Seller in and to the Purchase
Agreement and any and all proceeds of the foregoing.
This Class C Certificate does not purport to summarize the
Agreement and reference is made to the Agreement for information
with respect to the interests, rights, benefits, obligations, proceeds
and duties evidenced hereby and the rights, duties and immunities
of the Trustee. Copies of the Agreement and all amendments
thereto will be provided to any Certificateholder, at its expense,
upon a written request to the Trustee.
Under the Agreement, there will be distributed on the 20th
day of each month or, if such 20th day is not a Business Day, the
next Business Day (the "Distribution Date"), commencing on
October 21, 1996, to the person in whose name this Class C
Certificate is registered at the close of business on the last day of
the Collection Period preceding a Distribution Date or termination
of the Trust (the "Record Date") an amount equal to the product
of the Percentage Interest evidenced by this Certificate and the
amount, if any required to be distributed to the holders of all Class
C Certificates.
All payments to Certificateholders shall be made on each
Distribution Date to each Certificateholder of record on the related
Record Date by check, or, if requested by a Certificateholder
holding Certificates with Original Certificate Balances in aggregate
in excess of $1,000,000, by wire transfer to the account designated
in writing by such Holder in the form of Exhibit G to the
Agreement (or such other account as such Certificateholder may
designate in writing) delivered to the Trustee prior to the
Determination Date, in immediately available funds. Except as
otherwise provided in the Agreement and notwithstanding the
above, the final distribution on this Class C Certificate will be
made after due notice by the Trustee of the pendency of such
distribution, which notice shall request that the Certificateholder
present and surrender this Class C Certificate at the office or
agency maintained for that purpose by the Trustee in Minneapolis,
Minnesota. Surrender of this Class C Certificate shall not be a
condition of payment of the final distribution; however, the
Holder, by accepting this Class C Certificate, hereby agrees to
indemnify and hold harmless the Trustee, the Seller and the
Certificate Registrar from and against any and all claims arising
from such failure to present and surrender this Class C Certificate,
including but not limited to claims by third parties claiming to be
bona fide purchasers.
Unless the certificate of authentication hereon shall have
been executed by an authorized officer of the Trustee, by manual
signature, this Class C Certificate shall not entitle the Holder
hereof to any benefit under the Agreement or be valid for any
purpose.
The Class C Certificates do not represent a recourse
obligation of, or an interest in, the Seller, the Backup Servicer, the
Trustee or any Affiliate of any of them. The Class C Certificates
are limited in right of payment to certain collections and recoveries
respecting the Receivables, all as more specifically set forth in the
Agreement. A copy of the Agreement may be examined during
normal business hours at the principal office of the Seller, and at
such other places, if any, designated by the Seller, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights
and obligations of the Seller and the rights of the Certificateholders
under the Agreement at any time by the Seller and the Trustee
with the consent of the Holders of the Certificates affected there
by voting as a class evidencing not less than 51% of the Voting
Interests of all affected Certificates. Any such consent by the
Holder of this Class C Certificate shall be conclusive and binding
on such Holder and on all future Holders of this Class C
Certificate and of any Class C Certificate issued upon the transfer
hereof or in exchange hereof or in lieu hereof whether or not
notation of such consent is made upon this Class C Certificate.
The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any
of the Class C Certificates.
As provided in the Agreement and subject to certain
limitations set forth therein, the transfer of this Class C Certificate
is registrable in the Certificate Register upon surrender of this
Class C Certificate for registration of transfer at the offices or
agencies maintained by the Trustee in its capacity as Certificate
Registrar, or by any successor Certificate Registrar, in
Minneapolis, Minnesota, or such other office of the Trustee
maintained for such purpose and designated by the Trustee in
writing, accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Class C Certificate Registrar
duly executed by the Holder hereof or such Holder's attorney duly
authorized in writing, and thereupon one or more new Class C
Certificates of authorized denominations evidencing the same
aggregate interest in the Trust will be issued to the designated
transferee.
The Class C Certificates are initially issuable only as
registered Class C Certificates without coupons in denominations
of $250,000 and integral multiples of $1,000 in excess thereof,
except that one Class C Certificate may be issued in a different
denomination. As provided in the Agreement and subject to
certain limitations set forth therein, Class C Certificates are
exchangeable for new Class C Certificates evidencing the same
aggregate denomination, as requested by the Holder surrendering
the same. No service charge will be made to the Holder for any
such registration of transfer or exchange, but the Trustee may
require payment of a sum sufficient to cover any tax or
governmental charges payable in connection therewith.
The Trustee, the Certificate Registrar, and any agent of the
Trustee or the Certificate Registrar may treat the person in whose
name this Class C Certificate is registered as the owner hereof for
all purposes, and neither the Trustee, the Certificate Registrar, nor
any such agent shall be affected by any notice to the contrary.
The Trust created by the Agreement shall terminate upon
the earliest of (i) payment to the Certificateholders of all amounts
required to be paid to them pursuant to the Agreement and the
disposition of all property held as part of the Trust Property, (ii)
March 20, 2002 or (iii) subject to the Agreement, 90 days after the
Dissolution of the Seller. The Seller may, at its option, purchase
the corpus of the Trust, in whole, at a price specified in the
Agreement, and such purchase will effect early retirement of the
Certificates; however, such right of purchase is exercisable only
on a Distribution Date following the last day of any Collection
Period as of which the Pool Balance is less than or equal to 5% of
the Original Pool Balance.<PAGE>
IN WITNESS WHEREOF, the Trustee, not in its
individual capacity but on behalf of the Trust, has caused this
Class C Certificate to be duly executed.
AEGIS AUTO
RECEIVABLES
TRUST 1996-3
By: NORWEST
BANK
MINNESOTA,
NATIONAL
ASSOCIATION, as
Trustee
By
Name:
Title:
This is one of the Class C Certificates referred to
in the within-mentioned Agreement.
NORWEST BANK
MINNESOTA,
NATIONAL
ASSOCIATION, as
Trustee
By
Name:
Title:
Dated as of
____________, 199_
<PAGE>
EXHIBIT B
DEPOSITORY AGREEMENT
<PAGE>
EXHIBIT C
TRUSTEE'S STATEMENT TO CERTIFICATEHOLDERS
Aegis Auto Receivables Trust 1996-3
Automobile Receivable Pass-Through Certificates
Distribution Date:
Last Day of Collection Period:
I. COLLECTIONS INTEREST PRINCIPAL
TOTALS
Scheduled Payments
Full & Partial Prepayments
Recoveries
Risk Default Insurance Proceeds
Receivable Repurchased by Seller
Miscellaneous Servicer Collections
Available Interest Distribution Amount
Available Principal Distribution Amount
Total Available Distribution Amount
Reinvestment Income on Collection Account
Withdrawals from
Reserve Fund
Total Amount Available
II. DISTRIBUTIONS
Backup Servicer Fee
Servicing Fee
Trustee and Custodian Fees
Allocation of Expenses by Class
Class A
Class B
Class C
Class A Interest Distribution
Class A Interest Carryover Shortfall
Class A Principal Distribution
Class A Principal Carryover Shortfall
Class B Interest Distribution
Class B Interest Carryover Shortfall
Class B Principal Distribution
Class B Principal Carryover Shortfall
Class C Interest Distribution
Class C Interest Carryover Shortfall
Class C Principal Distribution
Class C Principal Carryover Shortfall
Funding Account-Prepayment Distribution
Deposits to Reserve Fund
Releases to Seller
Total Funds Distributed
III. CLASS CERTIFICATE BALANCE
Original Class A Certificate Balance
Beginning Class A Certificate Balance
Ending Class A Certificate Balance
Class A Interest Carryover Shortfall
Class A Principal Carryover Shortfall
Class A Certificate Factor
Original Class B Certificate Balance
Beginning Class B Certificate Balance
Ending Class B Certificate Balance
Class B Interest Carryover Shortfall
Class B Principal Carryover Shortfall
Class B Certificate Factor
Original Class C Certificate Balance
Beginning Class C Certificate Balance
Ending Class C Certificate Balance
Class C Interest Carryover Shortfall
Class C Principal Carryover Shortfall
Class C Certificate Factor
IV. POOL BALANCE INFORMATION
Original Pool Balance:
Beginning of Period
End of Period
Pool Balance
Pool Factor
Weighted Average Coupon (WAC)
Weighted Average Remaining Maturity (WAM) (in months)
Remaining Number of Receivables
<PAGE>
V. RESERVE FUND
Amount
Beginning Balance
Plus: Deposits
Plus: Reinvestment Income
Withdrawals to Certificateholders
Class A
Class B
Class C
Withdrawals for expenses
Released to Seller
Ending Balance
VI. RECEIVABLES REPURCHASED/SUBSTITUTED BY SELLER
Number of Receivables Repurchased
Principal Amount
Number of Receivables Substituted
Principal Amount
VII. DELINQUENCY INFORMATION*
# of Principal % of
Contracts Balance Pool
Balance
30-59 Days Delinquent
60-90 days Delinquent
90 Days or more Delinquent
*Excluding Liquidated and Defaulted Receivables
VIII. REPOSSESSION INFORMATION Current Period
Cumulative
Number of Receivables as to which Vehicles have been
Repossessed (and not yet liquidated)
Principal Balances of Receivables relating to Vehicles
which have been Repossessed (and not yet liquidated)
<PAGE>
IX. LIQUIDATED AND DEFAULTED RECEIVABLES Current Period
Cumulative
Number of Liquidated Receivables
Principal Balances of Liquidated Receivables*
(Prior to Liquidation)
Number of Defaulted Receivables**
Principal Balances of Defaulted Receivables
Total Principal Balance of Liquidated
and Defaulted Receivables
* Excludes receivables previously characterized
as Defaulted Receivables
**Refers to Receivables that have become
180 days delinquent and are not Liquidated Receivables
X. RECOVERIES Current Period
Cumulative
Liquidation Proceeds
Rebate of Servicer Cancelled Warranty Contracts
VSI Physical Damage/Loss Insurance Proceeds
Consumer Insurance
Total Recoveries
XI. RETENTION AMOUNT
Beginning Balance
Plus: (Additional Receivables)
Plus: Quarterly Reserve Loss Deficiency
Less: Claims approved
Less: Quarterly Reserve Loss Surplus
Ending Balance
XII. RISK DEFAULT INSURANCE PROCEEDS Current Period
Cumulative
Risk Default Insurance Proceeds
<PAGE>
XIII. NET LOSSES Current Period
Cumulative
Principal Balance of Liquidated and
Defaulted Receivables
Less: Recoveries
Less: Risk Default Insurance Proceeds
Net Losses
XIV. INSURANCE CLAIMS
Current Period
Cumulative
Number of Risk Default Insurance Claims
Amount of Risk Default Insurance Claims
Number of VSI Physical Damage/Loss Insurance Claims
Amount of VSI Physical Damage/Loss Insurance Claims
Number of Risk Default Insurance Claims Rejected
Principal Balance of Receivables Rejected
XV. FUNDING ACCOUNT
Beginning Balance
Withdrawals (Additional Receivables)
Withdrawals (Reserve Fund)
Reinvestment Income Retained
Ending Balance
<PAGE>
EXHIBIT D
SCHEDULE OF RECEIVABLES
Delivered to the Trustee on the Closing Date
(This Schedule shall be deemed to be amended on each Funding Date to add
Additional Receivables and shall be deemed to be amended to account for any
substitution of Receivables permitted by the Agreement upon the
occurrence of any such substitution.)
(See Attached)
<PAGE>
EXHIBIT E
LOCATION OF SERVICER FILES
American Lenders Facilities, Inc.
2600 Michaelson Drive
Suite 470
Irvine, CA 92715
<PAGE>
EXHIBIT F-1
Aegis Auto Receivables Trust 1996-3
AUTO RECEIVABLES PASS-THROUGH CERTIFICATES
RECEIVABLE CHARACTERISTICS
As of September 1, 1996 (Cutoff Date)
Remaining Term % Outstanding
Outstanding
To Maturity Principal Balance
Principal Balance
19-24 0.00%
$ 0.00
25-30 0.00%
4,037.33
31-36 2.24%
2,301,363.07
37-42 7.08%
7,242,519.02
43-48 18.98%
19,411,239.22
49-54 28.17%
28,814,963.20
55-60 43.53%
44,516,414.56
Weighted Average Remaining Term to Maturity 53.58 months
Annual Percentage Rate
Weighted Average Annual Percentage Rate 20.23%
% Outstanding
Outstanding
Model Year Principal Balance
Principal Balance
1991 2.29%
$ 2,342,988.93
1992 7.04%
7,196,580.94
1993 18.88%
19,308,420.59
1994 28.29%
28,940,415.41
1995 34.40%
35,187,437.73
1996 8.87%
9,075,934.78
1997 0.23%
238,758.02
% Outstanding
Outstanding
New/Used Collateral Principal Balance
Principal Balance
New 6.15%
$ 6,293,212.88
Used 93.85%
95,997,323.52
Outstanding
Principal Balance
Largest $34,659.46
Smallest 1,121.37
Average 12,263.50
EXHIBIT F-2
RECEIVABLE CHARACTERISTICS (FUNDING DATE)
(This Exhibit F-2 shall take substantially the same form as
Exhibit F-1 except shall be dated the Cutoff Date
for the applicable Funding Date.)
EXHIBIT G
WIRING INSTRUCTIONS FORM
______________, 19____
Norwest Bank Minnesota, National Association
6th Street and Marquette Avenue
Minneapolis, MN 55479-0070
Re: Automobile Receivable Pass-Through Certificates
Class ___ Issued by Aegis Automobile Receivables
Trust 1996-3
Dear Sirs:
In connection with the sale of the above-captioned Certificate by
to
("Transferee") you, as Trustee with respect to the related Certificates, are
instructed to make all remittances to Transferee as Certificateholder as of
, 19 and you are directed to send all notices to the appropriate
party at the address set forth on Schedule 1 hereto. You are further
instructed to treat the Transferee as the record holder for purposes of the
, 199__ Distribution Date.
[Transferee]
By
Title:
Acknowledged
[Seller]
By
Title:
<PAGE>
EXHIBIT H
FEE SCHEDULE
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
CORPORATE TRUST DEPARTMENT
SCHEDULE OF FEES
AEGIS AUTO RECEIVABLES TRUST 1996-3
I. Trustee and Custodian Fee:
one-twelfth of the product of (i) 0.03% per annum and (ii) the
aggregate Class Certificate Balance as of the close of business on
the preceding Distribution Date or, in the case of the first
Distribution Date, the original aggregate Class Certificate Balance.
II. Monthly Backup Servicer Fee:
one-twelfth of the product of (i) 0.02% per annum and (ii) the
outstanding Pool Balance as of the first day of the preceding
Collection Period or, in the case of the first Distribution Date, as
of the Closing Date.
<PAGE>
EXHIBIT I
RISK DEFAULT INSURANCE POLICY
Issuer: The Connecticut Indemnity Company
Policy Name: Secured Value Insurance Policy
Policy No.: ZSC __________
Date: September , 1996
Named Insured: Norwest Bank Minnesota, N.A., as Trustee for Aegis Receivables
Trust 1996-3
Endorsements: Exhibit A, Ed. 8/30/95 & Exhibit B, Ed. 11/7/95
and Exhibit C
<PAGE>
EXHIBIT J
VSI INSURANCE POLICY
1. Issuer: Guaranty National Insurance Company
Policy Name: Lenders Comprehensive Single Interest Insurance Policy
Policy No.: ZYG 1500103
Date: February 1, 1994
Named Insured: Aegis Capital Markets
Endorsements: 42621-0 (10/93), 42623-0 (10/93), 42624-0 (10/93),
42627-0 (10/93), 42629-0 (10/93), 42630-0 (10/93),
41510-0 (6/90), Nos. 7, 8, Coverage Endorsements dated
3/23/94,
9/08/94 and 9/26/94, Nos. 16-24, 30-31
<PAGE>
EXHIBIT K
FORM OF TRANSFEREE LETTER
(Rule 144A Transfer)
[Date]
Aegis Auto Funding Corp.
525 Washington Boulevard
Jersey City, New Jersey 07310
Norwest Bank Minnesota, National Association
Sixth Street and Marquette Avenue
Minneapolis, MN 55479-0070
Attention: Corporate Trust Services Asset Backed Administration
Aegis Auto Receivables Trust 1996-3
Automobile Receivable Pass-Through Certificates, Class
___
Ladies and Gentlemen:
The undersigned (the "Purchaser") proposes to purchase one or
more Automobile Receivable Pass-Through Certificates, Class ___ (the
"Certificates") issued by Aegis Auto Receivables Trust 1996-3 (the
"Trust") pursuant to that certain Pooling and Servicing Agreement dated
as of September 1, 1996 (the "Pooling and Servicing Agreement") by and
among Aegis Auto Funding Corp., a Delaware corporation, as seller
("Seller"), Norwest Bank Minnesota, National Association, as Backup
Servicer, and Norwest Bank Minnesota, National Association, as Trustee.
Unless the context or use indicates another or different meaning, each
capitalized term used herein and not otherwise defined herein shall have
the meaning ascribed to it in the Pooling and Servicing Agreement.
1. The undersigned hereby certifies that, as indicated below,
the undersigned is the President, Chief Executive/Financial Officer, Senior
Vice President or other executive officer or investment officer of the
Purchaser.
2. In connection with the purchase by the Purchaser of the
Certificates, the undersigned hereby certifies to you that the Purchaser is
a "qualified institutional buyer" as defined in Rule 144A ("Rule 144A")
promulgated under the Securities Act of 1933, as amended, because:
[ ] (a) The Purchaser owned or invested on a discretionary basis $100
million in securities (except for the excluded securities referred to
below) as of the end of the Purchaser's most recent fiscal year
(such amount being calculated in accordance with Rule 144A) and
the Purchaser satisfies the criteria in the subcategory marked below
(check one):
[ ] Insurance Company. The Purchaser is an insurance
company whose primary and predominant business activity
is the writing of insurance or the reinsuring of risks
underwritten by insurance companies and which is subject
to supervision by the insurance commissioner or a similar
official or agency of a State or territory or the District of
Columbia.
[ ] Investment Company. The Purchaser is (i) an investment
company registered under the Investment Company Act of
1940, as amended (the "Investment Company Act") or (ii)
a business development company as defined in Section
2(a)(48) of that Act.
[ ] Small Business Investment Company. The Purchaser is a
Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301(c) or (d)
of the Small Business Investment Act of 1958.
[ ] Corporation, Etc. The Purchaser is an organization
described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended, a corporation (other than a
bank, savings and loan association or similar institution),
partnership or Massachusetts or similar business trust.
[ ] State or Local Plan. The Purchaser is a plan established
and maintained by a State or its political subdivisions, or
any agency or instrumentality of a State or its political
subdivisions, for the benefit of its employees.
[ ] ERISA Plan. The Purchaser is an employee benefit plan
within the meaning of Title I of the Employee Retirement
Income Security Act of 1974.
[ ] Trust Fund. The Purchaser is a trust fund whose trustee is
a bank or trust company and whose participants are
exclusively plans established and maintained by a State or
its political subdivision, or any agency or instrumentality
of a State or its political subdivisions, for the benefit of its
employees.
[ ] Business Development Company. The Purchaser is a
business development company as defined in Section
202(a)(22) of the Investment Adviser Act of 1940.
[ ] Investment Advisor. The Purchaser is an investment
advisor registered under the Investment Advisers Act of
1940, as amended.
[ ] (b) The Purchaser is a dealer registered pursuant too Section 15
of the Exchange Act, acting for its own account or the accounts of
other qualified institutional buyers, that in the aggregate owns and
invests on a discretionary basis at least $10 million of securities of
issuers that are not affiliated with the dealer, provided that
securities constituting the whole or a part of an unsold allotment
to or subscription by a dealer as a participant in a public offering
shall not be deemed to be owned such dealer.
[ ] (c) The Purchaser is a dealer registered pursuant to Section 15 of
the Exchange Act acting in a riskless principal transaction on
behalf of a qualified institutional buyer.
[ ] (d) The Purchaser is an investment company registered under the
Investment Company Act, acting for its own account or for the
accounts of other qualified institutional buyers, that is part of a
family of investment companies which own in the aggregate at
least $100 million in securities of issuers other than issuers that are
affiliated with the investment company or are part of such family
of investment companies. "Family of investment companies"
means any two or more investment companies registered under the
Investment Company Act, except for a unit investment trust whose
assets consist solely of shares of one or more registered investment
companies, that have the same investment adviser (or, in the case
of unit investment trusts, the same depositor), provided that, for
purposes of this section:
(A) each series of a series company (as defined in Rule
18f-2 under the Investment Company Act (17 CFR
270.18f-2)) shall be deemed to be a separate investment
company; and
(B) investment companies shall be deemed to have the
same adviser (or depositor) if their advisers (or depositors)
are majority-owned subsidiaries of the same parent, or if
on investment company's adviser (or depositor) is a
majority-owned subsidiary of the other investment
company's adviser (or depositor).
[ ] (e) The Purchaser is an entity, all of the equity owners of which
are qualified institutional buyers, acting for its own account or the
accounts of other qualified institutional buyers.
[ ] (f) The Purchaser is a bank as defined in Section 3(a)(2) of the
Act, any savings and loan association or other institution as
referenced in Section 3(a)(5)(A) of the Act, or any foreign bank or
savings and loan association or equivalent institution, acting for its
own account or the accounts of other qualified institutional buyers,
that in the aggregate owns and invests on a discretionary basis at
least $100 million in securities of issuers that are not affiliated
with it and that has an audited net worth of at least $25 million ad
demonstrated in its latest annual financial statements, as of a date
not more than 16 months preceding the date of sale under the Rule
in the case of a U.S. bank or savings and loan association, and not
more than 18 months preceding such date of sale for a foreign
bank or savings and loan association or equivalent institution.
The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Purchaser, (ii) securities that are part
of an unsold allotment to or subscription by the Purchaser (if the
Purchaser is a dealer), (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned
but subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.
For purposes of determining the aggregate amount of securities
owned or invested on a discretionary basis by the Purchaser, the
Purchaser used the cost of such securities to the Purchaser and did not
include any of the securities referred to in the preceding paragraph.
Further, in determining such aggregate amount, the Purchaser may
have included securities owned by subsidiaries of the Purchaser, but only
if such subsidiaries are consolidated with the Purchaser in its financial
statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under
the Purchaser's direction. However, such securities were not included if
the Purchaser is a majority-owned, consolidated subsidiary of another
enterprise and the Purchaser is not itself a reporting company under the
Securities Exchange Act of 1934, as amended.
3. The Purchaser certifies and acknowledges that it is familiar
with Rule 144A and understands that you and your customers (if you act
as a broker for one or more customers) are relying on the statements made
therein.
4. The Purchaser certifies that the Purchaser is purchasing the
Certificates in the capacity marked below (check one):
[ ] The Purchaser certifies that the Purchaser is purchasing the
Certificates for its own account only; or
[ ] The Purchaser certifies that the Purchaser is purchasing the
Certificates for the account of [one] [specify number:] other
qualified institutional buyer(s), [each of] which is a "qualified
institutional buyer." (Draw a line through inapplicable words and
brackets.)
5. The Purchaser certifies that, to the extent it has requested
same, it has received from the Seller the information that satisfies the
requirements of paragraph (d)(4) of Rule 144A (the "Rule 144A
Information").
6. The Purchaser certifies that it will comply with all
applicable federal and state securities laws in connection with any
subsequent resale by the Purchaser of the Certificates. The Purchaser
acknowledges that no Certificates may be exchanged for any new
Certificates having an initial principal balance of less than $250,000.
7. The Purchaser understands and acknowledges that the
Certificates have not been and will not be registered under the Securities
Act of 1933, as amended, or any state securities laws and may be resold
only if (a) the Certificates are registered pursuant to the provisions of the
Securities Act of 1933, as amended, and such state securities laws, or (b)
if an exemption from such registration is available. The Purchaser
understands and acknowledges that the Seller is not required to register the
Certificates and that any transfer must comply with Section 7.03 of the
Agreement. The Trustee is not obligated to provide Rule 144A
Information.
8. The Purchaser understands that there is no market, nor is
there any assurance that a market will develop, for the Certificates and
that the Seller does not have any obligation to make or facilitate any such
market (or to otherwise repurchase the Certificates from the Purchaser)
under any circumstances.
9. The Purchaser has consulted with its own legal counsel,
independent accountants and financial advisors to the extent it deems
necessary regarding the tax consequences to it of ownership of the
Certificates, is aware that its taxable income with respect to the
Certificates in any accounting period may not correspond to the cash flow
(if any) from the Certificates for such period, and is not purchasing the
Certificates in reliance on any representations of the Seller or its counsel
with respect to tax matters.
10. The Purchaser has reviewed the Offering Memorandum (the
"Memorandum") dated September 12, 1996 with respect to the
Certificates, and the agreements and other materials referred to therein,
and has had the opportunity to ask questions and receive answers
concerning the terms and conditions of the transactions contemplated by
the Memorandum and to obtain additional information necessary to verify
the accuracy and completeness of any information furnished to the
Purchaser or to which the Purchaser had access.
11. The Purchaser hereby further agrees to be bound by all the
terms and conditions of the Certificates as provided in the Pooling and
Servicing Agreement.
12. If the Purchaser sells any of the Certificates, the Purchaser
will obtain from any subsequent purchaser the same representations
contained in this Letter.
Very truly yours,
[PURCHASER]
By
Name
Title
EXHIBIT L
FORM OF TRANSFEREE LETTER
(Non-Rule 144A Transfer)
[Date]
Aegis Auto Funding Corp.
525 Washington Boulevard
Jersey City, New Jersey 07310
Norwest Bank Minnesota, National Association
Sixth Street and Marquette Avenue
Minneapolis, MN 55479-0070
Attention: Corporate Trust Services Asset Backed Administration
Aegis Auto Receivables Trust 1996-3
Automobile Receivable Pass-Through Certificates, Class
___
Ladies and Gentlemen:
The undersigned (the "Purchaser") proposes to purchase certain
Automobile Receivable Certificates, Class ____ (the "Certificates") issued
by Aegis Auto Receivables Trust 1996-3 (the "Trust) pursuant to a
Pooling and Servicing Agreement dated as of September 1, 1996 (the
"Pooling and Servicing Agreement"), among Aegis Auto Funding Corp.,
as Seller, Norwest Bank Minnesota, National Association, as Backup
Servicer, and Norwest Bank Minnesota, National Association as Trustee.
Unless the context or use indicates another or different meaning, each
capitalized term used herein and not otherwise defined herein shall have
the meaning ascribed to it in the Pooling and Servicing Agreement.
The Purchaser represents and warrants that:
(a) Information. The Purchaser acknowledges that it has been
furnished, received and reviewed a copy of the Offering Memorandum
dated September 12, 1996 describing the Certificates and material related
matters (the "Private Offering Memorandum") and has made such
investigation as the Purchaser deems necessary to evaluate the merits and
risks involved with an investment in the Certificates, and has had an
opportunity to meet with officers and employees of the Seller and to ask
questions and receive answers regarding an investment in the Certificates
and has asked any question he desired to ask and has received answers
with respect to such questions to the full satisfaction of the Purchaser and
has relied exclusively on the information set forth in the Private Offering
Memorandum and information discussed at such meeting. The Purchaser
acknowledges that the Private Offering Memorandum supersedes any and
all other written materials relating to an investment in the Certificates
which may have been previously delivered to the Purchaser and the
Purchaser has not relied in any manner on such materials. No oral
representations have been made or oral information furnished to the
Purchaser in connection with the offering of the Certificates which were
in any way inconsistent with the Private Offering Memorandum. The
Purchaser also acknowledges that there are certain risks associated with
the purchase of the Certificates and that the Purchaser has reviewed the
information in the Private Placement Memorandum under the heading
"Special Considerations."
(b) No Reliance on Other Purchasers. In making its investment
decision with respect to subscribing for the Certificates, the Purchaser has
not relied upon any statement, representation or advice of any other
Purchaser of the Certificates.
(c) Purchase for Investment. The Purchaser is purchasing the
Certificates without a view to any distribution, assignment, resale or other
disposition of the Certificates in any manner which would violate the
Securities Act of 1933, as amended (the "Securities Act"), or applicable
state securities or "Blue Sky" laws, subject, nevertheless, to the
understanding that the disposition of the Purchaser's property shall at all
times be and remain within the Purchaser's control, and the Certificates
are being purchased solely for the Purchaser's own account for investment
purposes only and not for the account of any other person.
(d) Institutional Accredited Investor. The Purchaser is an
institutional "accredited investor" as defined in Rule 501 under the
Securities Act as follows (check one):
( ) A bank as defined in Section 3(a)(2) of the
Securities Act, whether acting in its individual or fiduciary
capacity;
( ) A savings and loan association or other institution
as defined in Section 3(a)(5)(A) of the Securities Act, whether
acting in its individual or fiduciary capacity;
( ) A broker or dealer registered pursuant to Section 15
of the Securities Exchange Act of 1934;
( ) An insurance company as defined in Section 2(13)
of the Securities Act;
( ) An investment company registered under the
Investment Company Act of 1940 or a business development
company as defined in Section 2(a)(48) of that Act;
( ) A Small Business Investment Company licensed by
the U.S. Small Business Administration under Section 301(c) or
(d) of the Small Business Investment Act of 1958;
( ) An employee benefit plan within the meaning of
Title I of the Employee Retirement Income Security Act of 1974
("ERISA"), if the investment decision is made by a plan fiduciary
(as defined in Section 3(21) of ERISA) which is a bank, savings
and loan association, insurance company or registered investment
advisor, or if the plan has total assets in excess of $5,000,000 or,
if a self-directed plan, with investment decisions made solely by
accredited investors;
( ) A plan established or maintained by a state, its
political subdivisions, or any agency or instrumentality of a state
or its political subdivisions, for the benefit of its employees, if
such plan has total assets in excess of $5,000,000;
( ) A private business development company as defined
in Section 202(a)(22) of the Investment Advisers Act of 1940;
( ) An organization described in Section 501(c)(3) of
the Internal Revenue Code, corporation, Massachusetts or similar
business trust or partnership, not formed for the specific purpose
of acquiring the securities offered, with total assets in excess of
$5,000,000;
( ) A trust, with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a person having such
knowledge and experience in financial and business matters to be
capable of evaluating the merits and risks of an investment in the
Certificates; or
( ) An entity in which all of the equity owners fall
within one of the foregoing categories of "accredited investors."
(e) Exempt Offering. The Purchaser understands that the
Certificates are not being registered under the Securities Act or any state
securities or "Blue Sky" laws and are being sold in reliance on exemptions
from the registration requirements of the Securities Act and any such laws
for non-public offerings. The Purchaser understands that the exemptions
from the registration requirements under state securities laws upon which
the Certificates is relying require that the Purchaser be one of the types
of investors specified in subsection (d) above under the applicable state
securities law and the Purchaser is such an investor. The Purchaser
further understands that the Certificates must be held indefinitely unless
subsequently registered under the Securities Act, any applicable state
securities or "Blue Sky" laws or unless exemptions from the registration
requirements of the Securities Act and such laws are available. The
Purchaser represents, warrants and agrees that, if at some future time the
Purchaser wishes to dispose of or exchange any of the Certificates, the
Purchaser will not do so unless before any such sale, transfer or other
disposition the Purchaser shall have furnished to the Trustee either (a) a
certificate of the transferee that the transferee is a "qualified institutional
buyer" within the meaning of Rule 144A promulgated pursuant to the
Securities Act or (b) a certificate of the transferee that the transferee is an
institutional "accredited investor" as defined in Rule 501(a) of the
Securities Act and, in the case of (b) only, an opinion of counsel
satisfactory in form and substance to the Trustee and the transferor, to the
effect that the sale, transfer or other disposition of such Certificate has
been registered under the Securities Act, or that such sale, transfer or
other disposition does not require registration under the Securities Act.
(f) Legal Investment. The Purchaser understands that there
may be restrictions on the ability of certain investors, including, without
limitation, depository institutions, either to purchase the Certificates or to
purchase investments having characteristics similar to those of the
Certificates representing more than a specified percentage of the investor's
assets, and the Purchaser further represents and warrants that it has
consulted, and relied on the advice of, its own legal advisor in
determining whether and to what extent the Certificates constitute a legal
investment for the Purchaser.
(g) The Purchaser (i) has no need for liquidity with respect to
the Certificates, (ii) is able to bear the economic risks of an investment
in the Certificates for an indefinite period and (iii) is able to afford a
complete loss of such investment. The Purchaser has such knowledge and
experience in financial and business matters to use the information made
available in connection with the offering of the Certificates, to evaluate the
merits and risks of the prospective investment in the Certificates and to
make an informed business decision with respect thereto. The Purchaser
understands that the Seller will rely upon the information supplied by the
Purchaser pursuant to this Agreement in order to verify this representation
and warranty and represents that such information is true and correct in
all respects. The Purchaser understands that a false representation may
constitute a violation of law, that any person which suffers damage as a
result of a false representation may have a claim against the undersigned
for damages for which the undersigned will indemnify the Seller and its
affiliates pursuant to the terms of this Agreement.
(h) The Purchaser recognizes that an investment in the
Certificates involves significant risks including those risks which are set
forth under the caption "SPECIAL CONSIDERATIONS" in the Private
Offering Memorandum.
(i) The Purchaser understands that the Private Offering
Memorandum has not been filed with or reviewed by any state securities
administrators because of the representations made by the Seller as to the
private or limited nature of the offering.
(j) The Purchaser understands that there is no established
market for the Certificates and that none may develop and, accordingly,
that the Purchaser must bear the economic risk of an investment in the
Certificates for an indefinite period of time.
(k) The Purchaser agrees that it is bound by and will abide by
the provisions of the Pooling and Servicing Agreement pursuant to which
the Certificates are issued.
(l) All information which the Purchaser has provided to the
Seller concerning the Purchaser is correct and complete as of the date
hereof, and if there should be any adverse change in such information
before receiving notification that this subscription has been accepted, the
Purchaser will immediately provide the Seller with such information.
Very truly yours,
[PURCHASER]
By
Name
Title
<PAGE>
EXHIBIT M
FORM OF ERISA REPRESENTATION LETTER
________________
(Date)
Aegis Auto Funding Corp.
525 Washington Boulevard
Jersey City, NJ 07130
Norwest Bank Minnesota, National Association
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479-0070
Attention: Corporate Trust Services Asset Backed Administration
Re: Aegis Auto Receivables Trust 1996-3
Auto Receivable Pass-Through
Certificates, Class ____
Ladies and Gentlemen:
[NAME OF OFFICER] _______________________ HEREBY
CERTIFIES THAT:
1. [That he [she] is [Title of Officer]
________________________ of [Name of Transferee]
___________________________________ (the "Transferee"), a [savings
institution] [corporation] duly organized and existing under the laws of
[the State of _____________] [the United States], on behalf of which he
[she] makes this affidavit.
2. The Transferee (i) is not, and on _________ [insert date of
transfer of Certificate to Transferee] will not be, and on such date will not
be investing the funds of, an employee benefit plan subject to the
Employee Retirement Income Security Act of 1974, as amended
("ERISA") or a plan subject to Section 4975 of the Code or (ii) is an
insurance company investing assets of its general account and the
exemption provided by Section III(a) of Department of Labor Prohibited
Transaction Class Exemption 95-60, 60 Fed. Reg. 35925 (July 12, 1995)
(the "Exemption") applies to the transferee's acquisition and holding of
such Certificate.
3. The Transferee hereby acknowledges that under the terms
of the Pooling and Servicing Agreement (the "Agreement") among Aegis
Auto Funding Corp., and Norwest Bank Minnesota, National Association,
as Backup Servicer and as Trustee, dated as of September 1, 1996, no
transfer of any Class B or Class C Certificates shall be permitted to be
made to any person unless the Trustee has received (i) a certificate from
such transferee to the effect that such transferee (A) is not an employee
benefit plan subject to ERISA or a plan subject to Section 4975 of the
Code (a "Plan") and is not using assets of any such employee benefit or
other plan to acquire any such Certificate or (B) is an insurance company
investing assets of its general account and the Exemption applies to the
transferee's acquisition and holding of such Certificate or (ii) an opinion
of counsel satisfactory to the Trustee to the effect that the purchase and
holding of any such Certificate will not constitute or result in the assets
of the Trust created by the Agreement begin deemed to be "plan assets"
and subject to the prohibited transaction provisions of ERISA or Section
4975 of the Code and will not subject the Trustee or the Seller to any
obligation in addition to those undertaken in the Agreement (provided,
however, that the Trustee will not require such certificate or opinion in
the event that, as a result of changed of law or otherwise, counsel
satisfactory to the Trustee has rendered an opinion to the effect that the
purchase and holding of any such Certificate by a Plan or a Person that
is purchasing or holding any such Certificate with the assets of a Plan will
not constitute or result in a prohibited transaction under ERISA or Section
4975 of the Code).
IN WITNESS WHEREOF, the Transferee has caused this
instrument to be executed on its behalf, pursuant to authority of its Board
of Directors, by its [Title of Officer] __________________, this day of
_____, 199_.
_______________________________________________
[name of
Transferee]
By:_____________________________________________
Name:
Title:
<PAGE>
EXHIBIT N
NOTICE OF FUNDING
In accordance with the Pooling and Servicing Agreement dated as
of September 1, 1996 by and among Norwest Bank Minnesota, National
Association, as backup servicer and as trustee, and Aegis Auto Funding
Corp., a Delaware corporation (the "Pooling and Servicing Agreement"),
the undersigned hereby gives notice of a Funding Date to occur on
____________, 19 for each of the Receivables listed on Schedule I to the
Assignment executed by the undersigned and accompanying this Notice of
Funding. Unless otherwise defined herein, capitalized terms have the
meanings set forth in the Pooling and Servicing Agreement.
Such Receivables represent the following amounts:
Principal Balance of Receivables
as of the Cutoff Date: $______________
Amount to be transferred
to the Reserve Fund from
the Funding Account: $______________
Amount to be wired to the undersigned or its
designee (Aegis Finance) in payment for such
Receivables: $______________
The undersigned hereby certifies that, in connection with the
Funding Date specified above, the undersigned has complied with all
terms and provisions specified in Section 3.08 of the Pooling and
Servicing Agreement, including, but not limited to, delivery of the
Officers' Certificate, as specified therein.
Date: ________________, 199
AEGIS AUTO
FUNDING CORP.,
a Delaware
Corporation, as Seller
By
Angelo R.
Appierto
President
EXHIBIT O
OFFICER'S CERTIFICATE
re: Funding Date
AEGIS AUTO FUNDING CORP.
To: Norwest Bank Minnesota, National Association
With Copies to:
Corporate Trust Services--Asset Backed Administration
Sixth Street and Marquette Avenue
Rating Agencies
Minneapolis, MN 55479-0070
Fax 612-667-9825
This Officer's Certificate is being issued in accordance with
Section 3.08 of the Pooling and Servicing Agreement dated as of
September 1, 1996 (the "Pooling and Servicing Agreement") by and
among Aegis Auto Funding Corp., a Delaware corporation, as seller
("Seller"), and Norwest Bank Minnesota, National Association, as Backup
Servicer and as Trustee. Terms not otherwise defined herein shall have
the meanings ascribed thereto in the Pooling and Servicing Agreement.
By his signature below, the undersigned certifies that:
(a) The matters set forth in Section 3.01(b) of the
Purchase Agreement by and between Aegis Auto Finance, Inc., as
the transferor named therein, and Seller, as transferee, are true and
correct. All Receivables acquired on the Funding Date to occur
on ________, 199 constitute Additional Receivables meeting the
criteria specified in the Purchase Agreement; and
(b) The representations and warranties set forth in
Sections 3.01(a) and (b) of the Pooling and Servicing Agreement
are true and correct as of the date hereof; and
(c) The documents listed in Sections 3.08(b)(i) and (ii)
of the Pooling and Servicing Agreement are being delivered to the
Trustee in its capacity as Custodian on or before the Funding Date
specified herein.
Dated: __________, 199_
AEGIS AUTO
FUNDING CORP.
a Delaware corporation,
as Seller
By
Angelo R.
Appierto, President<PAGE>
EXHIBIT P
ASSIGNMENT
In accordance with the Pooling and Servicing Agreement dated as
of September 1, 1996 by and among Aegis Auto Funding Corp., a
Delaware corporation (the "Seller"), and Norwest Bank Minnesota,
National Association, as trustee (the "Trustee") and as backup servicer
(the "Backup Servicer") (the "Pooling and Servicing Agreement"), the
Seller hereby assigns, transfers and otherwise conveys unto the Trustee in
trust for the benefit of the Certificateholders, without recourse (capitalized
terms used herein and not otherwise defined shall have the meaning
assigned to them in the Pooling and Servicing Agreement): (i) all right,
title and interest of the Seller in and to the Receivables identified on
Schedule I attached hereto (the "Receivables"), and all moneys received
thereon, on and after the Cutoff Date allocable to principal, and all monies
received thereon allocable to interest accrued from and including the
Cutoff Date; (ii) the interest of the Seller in the security interests in the
Financed Vehicles granted by the Obligors pursuant to the Receivables and
all certificates of title to such Financed Vehicles; (iii) the interest of the
Seller in any Risk Default Insurance Proceeds or any proceeds from
claims on Insurance Policies (including the VSI Insurance Policy) covering
the Receivables, the Financed Vehicles or Obligors from the Cutoff Date;
(iv) the right of the Seller to realize upon any property (including the right
to receive future liquidation Proceeds) that shall have secured a Receivable
and have been repossessed by or on behalf of the Trustee; (v) the interest
of the Seller in any Dealer Recourse; (vi) all right, title and interest in the
Seller in and to the Purchase Agreement; (vii) all right, title and interest
of the Seller in and to the Funding Account and any monies and
investments on deposit therein and (viii) the proceeds of any and all of the
foregoing. The foregoing sale does not constitute and is not intended to
result in any assumption by the Trustee of any obligation of the
undersigned to the Obligors, insurers or any other person in connection
with the Receivables, Custodian Files, Servicer Files, any insurance
policies or any agreement or instrument relating to any of them.
This Assignment is made pursuant to and upon the representations,
warranties and agreements contained in the Pooling and Servicing
Agreement.
IN WITNESS WHEREOF, the undersigned has caused this
Assignment to be duly executed as of , 199 .
AEGIS AUTO
FUNDING CORP.
a Delaware
corporation
By
Angelo
R. Appierto, President
<PAGE>
EXHIBIT Q
REVIEW FIRM PROCEDURES
<PAGE>
EXHIBIT R
TRUSTEE'S CERTIFICATE
PURSUANT TO SECTION 11.02
OF THE POOLING AND SERVICING AGREEMENT
Norwest Bank Minnesota, National Association, as trustee (the
"Trustee") of the Aegis Auto Receivables Trust Series 1996-3 created
pursuant to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement") dated as of September 1, 1996 among Aegis Auto
Funding Corp. (the "Seller"), Norwest Bank Minnesota, National
Association, as backup servicer (the "Backup Servicer") and as trustee (the
"Trustee"), does hereby sell, transfer, assign and otherwise convey to the
Seller, without recourse, representation or warranty, all of the Trustee's
right, title and interest in and to all of the Receivables (as defined in the
Pooling and Servicing Agreement) identified in the attached Servicer's
Certificate of "Purchased Receivables," which are to be repurchased by
the Seller pursuant to Section 3.02 of the Pooling and Servicing
Agreement, and all security and documents relating thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this
day of 199 .
Norwest Bank Minnesota, National
Association, as Trustee
By
[Name]
[Title]
<PAGE>
EXHIBIT S
SCHEDULE OF IDENTIFIED RECEIVABLES
EXHIBIT 10.98
EXECUTION
COPY
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement
("Agreement") is made as of this
12th day
of
September, 1996
between AEGIS AUTO FINANCE,
INC., a Delaware corporation ("Borrower") and
III FINANCE LTD., a Cayman Islands company
("Lender").
PRELIMINARY STATEMENT:
WHEREAS, Borrower has requested,
and Lender has agreed, on the terms and
conditions set forth therein, that Lender
advance to the Borrower up to
$3,000,000.00
on a revolving credit basis;
NOW, THEREFORE, in consideration of
the terms and conditions contained herein,
and of any loans or extension of credit now
or hereafter made to or for the benefit of
Borrower by Lender hereunder, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 General Terms. When
used herein, the following terms shall have
the following meanings:
"ABS" shall mean that model of
prepayments commonly applied to
automobile loans which measures
prepayments as a percentage of original
pool balance.
"Additional Loan" shall mean any
Loan other than the Initial Loan.
"Affiliate" shall mean, as to any
Person, any other Person that, directly
or indirectly, controls, is controlled
by or is under common control with such
Person or is a director or officer of
such Person.
"Applicable Insured Percentage"
shall mean, (A) with respect to Insured
Receivables, so long as the Insurer is
obligated (by endorsement or otherwise)
to make payments on the Risk Default
Policy and maintains the A.M. Best
Rating specified below, the percentage
specified below opposite such rating,
calculated monthly as of each month end;
(B) with respect to Uninsured
Receivables, 35% and (C) with respect to
Insured Receivables, if the Insurer does
not remain so obligated as described in
clause A above, then 35%.
Rating Applicable
Insured Percentage
A- or better 80%
Less than A- but
B or better 65%
Less than B but
C or better 50%
Below C
35%.
"Applicable Stress Factor"
means 2.0; provided however, that
if the Lender, in its discretion,
deems the collection history of the
various receivables portfolios
underlying the "Collateral" under
this Agreement and the other
Secured Loan Agreements to be
materially weaker than such
collection history as of the end of
March 1996, the Lender may, upon
not less than five (5) Business
Days' prior written notice to the
Borrower, increase the Applicable
Stress Factor to a number not
exceeding 2.50 and such increase
shall take effect in the next
calculation of the Borrowing Base
to be made under Section 2.1.
"Average Pool Balance" shall have
the meaning set forth in Section 2.1
hereof.
"Backup Servicer" shall have the
meaning set forth in the Pooling and
Servicing Agreement.
"Borrowing Base" shall have the
meaning set forth in Section 2.1 hereof.
"Business Day" shall mean any day
other than a Saturday, Sunday, legal
holiday or other day under the laws of
Bermuda, the United States, or the State
of New York, on which commercial banking
institutions are obligated by law or
executive order to be closed.
"Cash Flow Valuation Report" shall
mean a monthly report delivered pursuant
to Section 2.2 (b) or Section 5.1(c) in
the form attached hereto as Exhibit A.
"Change in Control" shall mean any
of the following: (i) Parent ceases to
be the owner, directly or indirectly, of
100% of the equity interest in, and
capital stock of, the Borrower; or (ii)
Joseph Battiato and/or Angelo Appierto
shall cease to hold their offices as
President and Chief Executive Officer,
respectively, of the Borrower.
"Collateral" shall have the meaning
set forth in Section 6.1.
"Default" shall mean any event
which, with the passage of time or the
giving of notice, or both, would
constitute an Event of Default.
"Default Rate" shall have the
meaning set forth in Section 2.1.
"Default Ratio" shall have the
meaning set forth in Section 2.1.
"Defaulted Receivables" shall mean,
collectively, "Defaulted Receivables"
and "Liquidated Receivables" as each
such term is defined in the Pooling and
Servicing Agreement.
"Delinquency Rate" shall have the
meaning set forth in Section 2.1.
"Delinquency Ratio" shall have the
meaning set forth in Section 2.1.
"Distribution Date" shall have the
meaning set forth in the Pooling and
Servicing Agreement.
"Event of Default" shall mean any
one or more of the events specified in
Section 7.1.
"Excess Receipts" shall have the
meaning set forth in the Pooling and
Servicing Agreement.
"Existing AAF Loan Agreements"
shall mean those certain Loan and
Security Agreements between the
Borrower and Lender, dated as of
June 20, 1995, September 25, 1995,
December 20, 1995, March 22, 1996,
May 20, 1996 and June 25, 1996,
respectively, as the same have been
or may hereafter be amended,
restated or otherwise modified from
time to time.
"Existing ACF Loan Agreements"
shall mean those certain Loan and
Security Agreements between Aegis
Consumer Finance, Inc. and Lender,
dated as of August 11, 1994,
September 28, 1994, December 22,
1994 and March 22, 1995,
respectively, as the same have been
or may hereafter be amended,
restated or otherwise modified from
time to time.
"Existing Loan Agreements"
shall mean the Existing ACF Loan
Agreements and the Existing AAF
Loan Agreements.
"Existing Loans" shall mean the
"Loans" outstanding from time to time
under the Existing Loan Agreements.
"Financing Agreements" shall mean
all agreements, instruments and
documents, including, without
limitation, this Agreement, the
Guaranty, the Note, the SPC
Acknowledgment and all other
assignments, security agreements, pledge
instructions, loan agreements, notes,
guarantees, certificates of title,
subordination agreements, pledges,
powers of attorney, consents,
assignments, contracts, notices, leases,
financing statements, instruments,
documents and all other written matter
whether heretofore, now or hereafter
executed by or on behalf of Borrower in
connection with the transactions
contemplated by this Agreement.
"Funding Date" shall mean any date
on which a Loan (other than the Initial
Loan) is made hereunder.
"Governmental Authority" shall mean
any nation or government, any federal,
state, local or other political
subdivision thereof and any entity
exercising executive, legislative,
judicial, regulatory or administrative
functions of or pertaining to
government.
"Guaranty" shall mean that certain
Guaranty executed by Parent pursuant to
which Parent guaranties all of the
Obligations of Borrower to Lender under
this Agreement.
"Indebtedness" of any Person shall
mean (i) indebtedness of such Person for
borrowed money, (ii) obligations of such
Person evidenced by bonds, debentures,
notes or other similar instruments,
(iii) obligations of such Person to pay
the deferred purchase price of property
or services, (iv) obligations of such
Person as lessee under leases which
shall have been or should be, in
accordance with generally accepted
accounting principles, recorded as a
capital lease, (v) obligations secured
by any Lien upon property or assets
owned by such Person, even though such
Person has not assumed or become liable
for the payment of such obligations, and
(vi) obligations of such Person under
direct or indirect guaranties in respect
of, and obligations (contingent or
otherwise) to purchase or otherwise
acquire, or otherwise to assure a
creditor against loss in respect of,
indebtedness or obligations of others of
the kinds referred to in clause (i)
through (v) above.
"Initial Funding Date" shall mean
the date on which the Initial Loan is
made.
"Initial Loan" shall mean the
initial Loan made by Lender to Borrower
hereunder.
"Insured Receivable" shall mean
each Receivable loss on which is insured
under the Risk Default Policy.
"Insurer" shall mean The
Connecticut Indemnity Company.
"IRC" shall mean the Internal
Revenue Code of 1986, as amended.
"Lien" shall mean any security
interest, charge, pledge, option or lien
or other encumbrance of any nature,
whether arising under contract or by
operation of law.
"Liquidation Period" shall have the
meaning set forth in Section 2.1.
"Loans" shall have the meaning set
forth in Section 2.1.
"Maximum Rate" shall have the
meaning ascribed to such term in Section
2.4(c) hereof.
"Note" shall mean a promissory note
of Borrower in favor of Lender
substantially in the form of Exhibit B.
"Obligations" shall mean all of the
payment and performance obligations and
liabilities of Borrower to Lender under
this Agreement, the Existing Loan
Agreements, the other Financing
Agreements, and the other "Financing
Agreements" (as such term is defined in
each Existing Loan Agreement).
"Parent" shall mean The Aegis
Consumer Funding Group, Inc., a Delaware
corporation formerly known as Aegis
Holdings Corporation.
"Person" shall mean any individual,
sole proprietorship, partnership, joint
venture, trust, unincorporated
organization, association, corporation,
institution, entity, party or government
(whether national, federal, state,
provincial, county, city, municipal or
otherwise, including without limitation,
any instrumentality, division, agency,
body or department thereof).
"Pledged Stock" shall mean the
issued and outstanding stock of the SPC.
"Pool Balance" shall have the
meaning set forth in the Pooling and
Servicing Agreement.
"Pooling and Servicing Agreement"
shall mean that certain Pooling and
Servicing Agreement dated as of
September 1,
1996 among the SPC, Norwest
Bank Minnesota, National Association, as
Backup
Servicer, and Norwest Bank
Minnesota, National Association, as
Trustee, a copy of which is attached
hereto as Exhibit C.
"Prepayment Rate" shall have the
meaning set forth in Section 2.1.
"Purchase
Agreement"
shall
mean the
Purchase
Agreement
made as of September
1, 1996 between Borrower, as seller, and
the SPC as purchaser.
"Receivables" shall have the
meaning set forth in the Pooling and
Servicing Agreement.
"Recovery Upon Default" shall have
the meaning set forth in Section 2.1.
"Registry" shall have the meaning
set forth in Section 2.1.
"Report Date" shall mean the 20th
day of each calendar month or, if such
day is not a Business Day, then the next
succeeding Business Day.
"Repossessed Receivables" shall
have the meaning set forth in Section
2.1.
"Residual Interest" shall have the
meaning set forth in the Pooling and
Servicing Agreement.
"Risk Default Policy" shall have
the meaning set forth in the Pooling and
Servicing Agreement.
"Secured Loan Agreement" shall
mean each Existing Loan Agreement
and each other loan agreement or
credit agreement entered into by
Borrower or any of its Affiliates
with Lender from time to time which
is designated in writing as a
"Secured Loan Agreement" within the
meaning of this Agreement;
provided, however, that the term
"Secured Loan Agreement" shall not
include that certain Loan and
Security Agreement dated as of
November 8, 1993 by and among Aegis
Auto Finance, Inc., Aegis Capital
Markets, Inc., Aegis Acceptance
Corp. and Lender (as amended,
restated or otherwise modified from
time to time).
"Secured Obligations" shall
mean, collectively, all of the
"Obligations" as defined under this
Agreement and under any other
Secured Loan Agreement and
including all indebtedness and
other obligations owed by Borrower
or any of its Affiliates to Lender
under any Secured Loan Agreement.
"Servicer" shall have the meaning
set forth in the Pooling and Servicing
Agreement.
"SPC" shall mean Aegis Auto Funding
Corp., a Delaware corporation and a
wholly-owned subsidiary of the Borrower.
"SPC Acknowledgment" shall mean
that certain Acknowledgment executed by
the SPC as of the Initial Funding Date
whereby the SPC acknowledges the terms
of this Agreement and agrees to comply
with certain provisions hereof
pertaining to the SPC and agrees, from
and after an Event of Default, to to pay
directly to the Lender any and all
amounts owed by the SPC to the Borrower.
"Termination Date" shall mean the
earlier of (i) the second anniversary of
the Initial Funding Date and (ii) the
date on which Lender terminates this
Agreement pursuant to Section 7.1(A).
"Trust" shall mean the Aegis Auto
Receivables Trust
1996-3 created
pursuant to the Pooling and Servicing
Agreement.
"Trust Certificates" shall mean the
Aegis Auto Receivables Trust 1996-3
Automobile Receivable Pass-Through
Certificates, Series 1996-3, issued
pursuant to the Pooling and Servicing
Agreement.
"Uninsured Receivables" shall mean
all Receivables which are not Insured
Receivables.
"Voting Notice" shall have the
meaning set forth in Section 6.1(c).
"VSI Insurance Policy" shall have
the meaning set forth in the Pooling and
Servicing Agreement.
Section 1.2 Terms Defined in
Uniform Commercial Code. All other terms
contained in this Agreement (and which are
not otherwise specifically defined herein)
shall have the meanings provided by the
Uniform Commercial Code as in effect from
time to time in the State of New York (the
"Code") to the extent the same are used or
defined therein.
Section 1.3 Accounting Terms. All
accounting terms not specifically defined
herein shall be construed in accordance with
generally accepted accounting principles,
consistently applied.
Section 1.4 Other Terms. Any
references herein to exhibits, sections,
articles or schedules, unless otherwise
specified, are references to exhibits,
sections, articles or schedules of this
Agreement. The words "hereof", "herein", and
"hereunder" and words of similar import when
used in this Agreement shall refer to this
Agreement as a whole and not to any
particular provisions of this Agreement.
Wherever appropriate in context, terms used
herein in the singular also include the
plural, and vice-versa, and each masculine,
feminine or neuter pronoun shall also include
the other gender.
Section 1.5 Preliminary Statement.
The Preliminary Statement is incorporated
herein by this reference thereto.
ARTICLE II
LOANS AND INTEREST
Section 2.1 Loans. (a) Subject
to the terms and conditions contained in this
Agreement, Lender will from time to time,
prior to the Termination Date, extend loans
("Loans") to Borrower up to an aggregate
principal amount equal to the lesser of (i)
Three Million
Dollars and No Cents
($3,000,000.00);
or (ii) the Borrowing Base
(as defined below); provided, that if the
Lender ceases trading activities, dissolves
or commences distribution of a material
portion of its assets, then the Lender may,
from and after written notice to the
Borrower, refuse to advance any further Loans
to the Borrower. The "Borrowing Base" shall
be calculated on each Funding Date and
monthly on each Report Date in the Cash Flow
Valuation Report then delivered and shall
equal the discounted present value of the
Excess Receipts (utilizing a discount rate
equal to twelve percent (12%)) as calculated
by the Borrower in each Cash Flow Valuation
Report in a manner reasonably satisfactory to
the Lender in accordance with the following
parameters:
(i) Assume that the number of
Receivables which will become Defaulted
Receivables on an annualized basis will
equal the Default Rate times the
outstanding principal balance of the
Receivables as of the most recent month
end. As used herein, (a) the "Default
Rate" shall mean the greater of (1)
the
Applicable Stress Factor times
the
Default Ratio as of the end of the most
recent calendar month and (2) eighteen
percent (18%) and (b)
the "Default
Ratio" shall mean, with respect to the
three most recent calendar months, a
fraction, (1) the numerator of which
equals four times the sum of (A) the
dollar amount of Receivables which
became Defaulted Receivables during such
three-month period and (B) the dollar
amount of "Repossessed Receivables") (as
defined below) acquired during such
three-month period, and (2) the
denominator of which equals the "Average
Pool Balance" of the Receivables during
such three-month period. As used above,
the term "Repossessed Receivables" with
respect to any three-month period shall
mean the outstanding principal amount of
Receivables the underlying collateral
for which has been repossessed during
such period but which have not become
Defaulted Receivables during such
period. The Average Pool Balance shall
be computed by taking the sum of the
Pool Balance as of the beginning of the
three-month period referred to above
plus the Pool Balance as of the end of
such three-month period and dividing
such number by two.
(ii) Assume that Receivables will
be prepaid in accordance with the most
recently calculated Prepayment Rate. As
used herein, the "Prepayment Rate" shall
mean the greater of (a) one and one-half
times the most recently monthly
prepayment rate, as calculated by
utilizing the standard ABS formula (also
known as the "Absolute Prepayment
Model") as of the end of the most recent
calendar month and (b) one hundred and
twenty percent times the standard ABS
benchmark rate.
(iii) Assume that Receivables will
become or remain past due on an
annualized basis in accordance with the
most recently calculated Delinquency
Rate. The "Delinquency Rate" for
Receivables which may become or remain
30, 60, and 90 days past due shall mean
two times the Delinquency Ratio as of
the end of the most recent calendar
month. As used herein, the "Delinquency
Ratio" shall mean, with respect to
Receivables which may become or remain
30, 60 or 90 days past due, a fraction,
the numerator of which is twelve times
the amount of Receivables which became
or remained 30, 60 and/or 90 days past
due during the most recent calendar
month, as applicable, and the
denominator of which equals the
outstanding principal balance of the
Receivables as of the beginning of such
calendar month.
(iv) Assume that collections and
other recoveries with respect to
Defaulted Receivables and Repossessed
Receivables, after application of all
cash payments including insurance
proceeds, shall equal the Recovery Upon
Default and shall not be collected until
the expiration of the Liquidation Period
with respect to such Receivables. As
used herein, (a) the "Recovery Upon
Default", with respect to any Defaulted
Receivable or Repossessed Receivable,
shall mean the Applicable Insured
Percentage times the outstanding
principal balance of such Receivable and
(b) the "Liquidation Period" with
respect to any Defaulted Receivables or
Repossessed Receivables, shall equal the
greater of (1) one and one-half times
the average number of days outstanding
between the date such Receivables first
became Defaulted Receivables or
Repossessed Receivables, as the case may
be, and the date such Receivables are
paid, through liquidation of the
underlying collateral therefor or
otherwise, according to a methodology
acceptable to the Lender, and (2) 270
days.
The Borrower shall set forth in the Cash Flow
Valuation Report, delivered monthly pursuant
to Section 5.1(c), the calculation of the
Borrowing Base in reasonable detail and with
such supporting information as may be
reasonably requested by Lender. In the event
of any discrepancy between the Borrower's and
the Lender's calculation of the Borrowing
Base or of any component thereof, the
Lender's calculation, absent manifest error,
shall control. It is expressly understood and
agreed that amounts on deposit in the
"Funding Account" (as such term is defined in
the Pooling and Servicing Agreement) shall
not be credited towards the Borrowing Base
Calculation.
(b) The aggregate principal amount
of the Loans shall be evidenced by a Note and
shall be payable in accordance with Section
2.5.
(c) Borrower may prepay any
portion of the Loans in whole or in part;
provided, however, that simultaneously with
such prepayment, Borrower shall pay all
interest accrued and unpaid on the amount so
prepaid through the date of prepayment.
Section 2.2 Making the Loans. (a)
No Loan shall be in an aggregate amount of
less than $100,000, nor shall it be in an
amount greater than the Borrowing Base minus
the aggregate principal amount of all Loans
previously advanced and still outstanding.
(b) On or prior to each Funding
Date, the Borrower shall deliver a Cash Flow
Valuation Report setting forth the
calculation of the Borrowing Base as of the
last day of the preceding calendar month in
accordance with the parameters set forth in
Section 2.1 above based on the Receivables
which, as of the close of business on such
Funding Date, will have been transferred to
the Trust pursuant to the Pooling and
Servicing Agreement. The Initial Loan shall
be in an aggregate amount not exceeding the
Borrowing Base as calculated in such report.
Each subsequent Loan shall be in an aggregate
amount not exceeding the Borrowing Base as
calculated in such report minus the aggregate
principal amount of all Loans previously
advanced and still outstanding.
Notwithstanding anything to the contrary in
this Agreement, Lender's obligations to make
any subsequent Loans hereunder shall
terminate on the earlier of (i) the end of
the "Funding Period" (as such term is defined
in the Pooling and Servicing Agreement) and
(ii) December 15, 1996.
Section 2.3 Note. Concurrently
with the execution hereof, Borrower shall
execute and deliver to Lender the Note to
evidence the aggregate amount of all Loans
outstanding from time to time. The Note
shall be dated the date hereof and shall
mature on the Termination Date. Lender is
hereby authorized to endorse the amount of
each Loan, each repayment or prepayment of
principal thereof on the schedule attached to
and constituting a part of the Note, which
endorsement shall constitute prima facie
evidence of the accuracy of the information
so endorsed; provided, that failure by Lender
to make such endorsement shall not affect the
obligations of Borrower hereunder or under
the Note. In lieu of endorsing such
schedule, Lender is hereby authorized, at its
option, to record such Loans, repayments or
prepayments in its books and records, such
books and records constituting prima facie
evidence of the accuracy of the information
contained therein.
Section 2.4 Interest. (a)
Borrower hereby promises to pay to Lender
interest on the unpaid principal amount of
each Loan for the period commencing on the
date such Loan was made until, but not
including, the date such Loan shall be paid
in full. All Loans shall bear interest at a
rate equal to twelve percent (12%) per annum.
Each interest payment shall be computed on
the basis of a 360-day year for the actual
number of days elapsed. Interest shall be
paid, monthly in arrears on each Distribution
Date, commencing on the first Distribution
Date after the Initial Loan is made, for all
accrued and unpaid interest on the unpaid
principal of the Loans through such date. In
addition, on any date of any principal
prepayment hereunder pursuant to Sections 2.5
and 7.1, the Borrower shall pay accrued and
unpaid interest on the amount of such
prepayment to the extent such interest is not
otherwise paid pursuant to the immediately
preceding sentence.
(b) After the occurrence and during
the continuance of an Event of Default, the
Loans shall bear interest at a rate equal to
the rate set forth in Section 2.4(a) plus two
percent (2.00%).
(c) Notwithstanding the foregoing,
nothing in this Agreement shall require
Borrower to pay interest at a rate exceeding
the maximum rate (the "Maximum Rate")
permitted by applicable law. If the interest
rate provided for hereunder on any date would
exceed the Maximum Rate, then the interest
rate shall be automatically reduced to the
Maximum Rate and the interest rate for any
subsequent period, to the extent less than
the Maximum Rate, shall be increased to equal
the Maximum Rate until such time as the
interest paid hereunder equals the amount
which would have been paid if the interest
otherwise payable hereunder had at all times
been permitted under applicable law.
Section 2.5 Repayments;
Prepayments. (a) The Loans shall be payable
as follows:
(i) Whenever the aggregate
principal amount of Loans outstanding
less the sum of any accrued and unpaid
interest on the Loans exceeds the
Borrowing Base, as calculated pursuant
to Section 2.1 hereof, then a mandatory
prepayment of principal shall be made in
the amount of such excess. Such
prepayments shall be applied to the
Obligations as set forth in Section
2.5(b) and shall be accompanied by a
payment of all interest accrued and
unpaid through the date of such
mandatory prepayment and allocable to
the amount so prepaid.
(ii) The entire remaining
outstanding principal balance of the
Loans, together with any accrued and
unpaid interest and any other
Obligations hereunder, shall be due and
payable on the Termination Date.
(iii) In addition to the foregoing,
if the Lender ceases trading activities,
dissolves or commences distribution of a
material portion of its assets, then the
Lender may demand payment of all Loans
then outstanding, in which event the
entire remaining outstanding principal
balance of the Loans, together with any
accrued and unpaid interest and any
other Obligations hereunder, shall be
due and payable on the ninetieth day
following such written notice.
(b) Subject to Section 7.2(d), all
payments of any amounts due under any
provision of this Agreement or any other
Financing Agreement, shall be applied in the
following order: first to payment of
interest due and owing; second to the then
outstanding principal balance of the Loans;
and third to the remaining balance of the
Obligations. If any payment becomes due on a
Saturday, Sunday or any day on which Lender
is legally closed for business, such payment
shall be made on the next succeeding Business
Day, and, in the case of a principal payment,
interest on such principal payment shall be
payable for such extension of time and shall
be included with such payment.
(c) Borrower shall make each
payment hereunder and under the Note on the
day when due in lawful money of the United
States of America to Lender at The First
National Bank of Chicago, Chicago, Illinois,
account number 52-61333, or at such other
account which Lender may hereafter designate
to Borrower in writing.
(d) The obligation of Borrower to
pay the Loans and other Obligations shall be
a general obligation of Borrower, absolute
and unconditional.
ARTICLE III
CONDITIONS TO LENDING
Section 3.1 Conditions Precedent
to the Initial Loan. The obligation of
Lender to make the Initial Loan is subject to
the satisfaction of all of the following
conditions precedent:
(a) Documents. Lender shall have
received, on or before the Initial Funding
Date, this Agreement, the Note, the SPC
Acknowledgement, the Guaranty, and all other
agreements, documents, financing statements
and instruments described in the List of
Closing Documents
attached hereto as Exhibit
D and made a part hereof, each duly executed
where appropriate, dated the
Initial Funding
Date
where appropriate and in form and
substance reasonably satisfactory to Lender.
(b) Governmental and Other
Consents and Approvals. All notices to and
filings with all regulatory bodies and other
Persons required to be given or made, and all
consents or other approvals therefrom shall
have been obtained in connection with the
transactions contemplated by this Agreement
and the other Financing Agreements.
(c) Pooling and Servicing
Agreement. (i) The transactions contemplated
by the Pooling and Servicing Agreement shall
have been consummated, (ii) the SPC shall
have received the net cash proceeds from the
sale of Trust Certificates thereunder and
(iii) the Borrower and its Affiliates shall
have made all prepayments owed to the Lender
under that certain Loan and Security
Agreement dated as of November 8, 1993 among
Lender and certain of Borrower's Affiliates
on account of the transactions contemplated
by the Pooling and Servicing Agreement.
Section 3.2 Conditions Precedent
to All Loans. The obligation of Lender to
make any Loans hereunder (including the
Initial Loan) shall be subject to the further
conditions precedent that on each such date
(a) the following statements shall be true
(and the request for any Loans and the
acceptance by Borrower of the proceeds of
such Loan, shall constitute a representation
and warranty by Borrower that on the date of
making of such Loan such statements are
true):
(i) The representations and
warranties contained in Article IV are
true and correct in all respects on and
as of the date of such Loan, before and
after giving effect to such Loan, as
though made on and as of such date;
(ii) No event has occurred and is
continuing, or would result from such
Loan, which constitutes a Default or an
Event of Default;
(iii) There has been no material
adverse change in the business
operations or financial condition of
Parent or Borrower since June 30, 1995;
(iv) No law, regulation, order,
judgment or decree of any Governmental
Authority shall enjoin, prohibit or
restrain, or impose or result in the
imposition of any material adverse
condition upon, Lender's making of the
requested Loan; and
(v) the aggregate outstanding
amount of all Loans hereunder (after
giving effect to the requested Loan
hereunder), together with all "Loans"
outstanding under Lender's other loan
agreements with Borrower and Borrower's
Affiliates, shall not exceed 35% of
Lender's "net assets" (as such term is
defined in Lender's Articles of
Association).
(vi) the Lender shall have
received such other approvals, opinions
or documents as Lender may reasonably
request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce Lender to enter into this
Agreement and make the Loans provided for
herein, Borrower hereby makes the following
representations and warranties to Lender,
each of which shall survive the execution and
delivery of this Agreement or any other
Financing Agreement and shall be deemed
remade as of the date of each Additional Loan
to Borrower:
Section 4.1 Corporate Existence.
Each of the Borrower, the Parent and the SPC
is duly organized, validly existing and in
good standing under the laws of the State of
Delaware, and has authority to conduct
business and is in good standing in all other
states where the nature and extent of the
business transacted by it or the ownership of
its assets makes such authorization
necessary.
Section 4.2 Corporate Authority;
No Conflicts. The borrowings hereunder and
the execution, delivery and performance by
the Borrower of this Agreement, the Note and
the other Financing Agreements (i) are within
Borrower's corporate powers, (ii) have been
duly authorized by all necessary corporate
and stockholder action, (iii) do not
contravene Borrower's Certificate of
Incorporation or by-laws, and (iv) do not
contravene nor result in a default under, nor
result in the creation of a Lien (other than
the Liens in favor of Lender created pursuant
to the terms of this Agreement) under, any
law or any contractual restriction binding on
or affecting Borrower. No consent or
approval of any holder of any indebtedness or
obligation of Borrower, and no consent,
permission, authorization, order or license
of any Governmental Authority, is necessary
in connection with the execution, delivery
and performance of the Financing Agreements,
including, without limitation, this Agreement
and the Note, or any transaction contemplated
hereby or thereby. The execution, delivery
and performance by the Parent of the Guaranty
(i) are within the Parent's corporate powers,
(ii) have been duly authorized by all
necessary corporate and stockholder action,
(iii) do not contravene the Parent's
Certificate of Incorporation or by-laws, and
(iv) do not contravene nor result in a
default under, nor result in the creation of
a Lien under, any law or any contractual
restriction binding on or affecting the
Parent. The execution, delivery and
performance by the SPC of the SPC
Acknowledgement (i) are within the SPC's
corporate powers (ii) have been duly
authorized by all necessary corporate and
stockholder action, (iii) do not contravene
the SPC's Certificate of Incorporation or by-
laws, and (iv) do not contravene nor result
in a default under, nor result in the
creation of a Lien under, any law or
contractual restriction binding on or
affecting the SPC. This Agreement, the Note
and the other Financing Agreements to which
the Borrower is a party constitute valid,
binding and legal obligations of the Borrower
enforceable in accordance with their terms,
the Guaranty constitutes the valid, binding
and legal obligation of the Parent
enforceable in accordance with its terms, and
the SPC Acknowledgement constitutes the
valid, binding and legal obligation of the
SPC enforceable in accordance with its terms.
Section 4.3 Financial Condition.
The audited consolidated financial statements
of the Parent and its subsidiaries (including
the Borrower) dated as of June 30, 1995, and
all interim financial statements previously
delivered to Lender are complete and correct
and such financial statements have been
prepared in conformity with generally
accepted accounting principles and practices
consistently applied and fairly present the
financial condition and results of operations
of the Parent and the Borrower as of the date
thereof (and for the period then ended) in
conformity with such accounting principles
and practices (subject, in the case of
interim statements, to normal year-end
adjustments). Since June 30, 1995, there has
been no material adverse change is such
financial condition or results of operation
for the Parent and/or the Borrower.
Section 4.4 Litigation. There is
no litigation, tax claim, proceeding or
dispute pending or, to the Borrower's
knowledge, threatened against the Borrower,
the Parent, or the SPC, or affecting their
respective properties or assets, which, if
determined adversely to Borrower, the Parent,
or the SPC as the case may be, (a) could
reasonably be expected to adversely affect
(i) the execution, delivery or enforceability
of this Agreement or the other Financing
Agreements, or (ii) the ability of Borrower
to perform its obligations under this
Agreement or any of the other Financing
Agreements, or (b) could reasonably be
expected to have a material adverse effect on
the financial condition of the Borrower or
the SPC.
Section 4.5 Compliance with Laws
and Regulations. Borrower, the Parent and
the SPC are in compliance with all laws,
orders, regulations and ordinances of all
Governmental Authorities relating to their
business operations and assets.
Section 4.6 Title to Pledged Stock
and Excess Receipts. (a) Attached as Exhibit
C to the
Existing
Loan Agreement dated June
20, 1995 is a true, complete and accurate
copy of the Certificate of Incorporation of
the SPC, which has not been amended since
June 20, 1995. Borrower is the legal and
beneficial owner of 100% of the Pledged Stock
free and clear of any Lien
except for (i)
Liens in favor of Lender created pursuant to
the Secured Loan Agreements and (ii) Liens in
favor of Greenwich Capital Financial
Products, Inc. which are subordinated to the
Liens of the Lender on terms agreed to by
Lender in writing, and the SPC is the legal
and beneficial holder of the Residual
Interest free and clear of any Lien, and has
the unencumbered right to receive the Excess
Receipts. Such Pledged Stock represents 100%
of the issued and outstanding stock of the
SPC. After giving effect to the anticipated
depletion to zero of the "Funding Account"
(as defined in the Pooling and Servicing
Agreement), the Residual Interest will be
valued on the books and records of the SPC at
$6,151,029.03, and the Borrower's
interest in
the Pledged Stock will be valued on the books
and records of the Borrower at the sum of (x)
the equivalent amount, plus (y) the current
valuation of the
Borrower's residual
interests in the various trusts formed in
connection with prior securitizations as
referred to in the Existing
Loan
Agreements.
Borrower has the right to vote the Pledged
Stock and to pledge and grant a security
interest in all of the Collateral to the
Lender. Except as otherwise provided in the
Pooling and Servicing Agreement or in the
SPC's Certificate of Incorporation or in the
Existing Loan Agreements, there are no
restrictions upon any of the rights
associated with, or the transfer of, any of
the Collateral, which would interfere with
the Lender's ability to exercise the Lender's
rights and remedies hereunder. Borrower has
no obligation to make capital contributions
or make any other payments to the SPC with
respect to its interests, the non-payment of
which would in any way create a right of
offset from the SPC as against distributions
otherwise payable to the Borrower. The SPC
(i) has conducted no business other than the
transactions evidenced by and contemplated
(x) under the Purchase
Agreement
and the
Pooling and Servicing Agreement, and (y) the
"Purchase Agreement" and "Pooling and
Servicing Agreement" (as each such term is
defined in each Existing Loan Agreement),
(ii) has no properties other than the
Residual Interest and the "Residual Interest"
(as defined in each Existing Loan Agreement)
and (iii) has no Indebtedness to any third-
parties (including Affiliates) except for any
Indebtedness expressly created under the
above-referenced agreements.
(b) Lender has a perfected, first-
priority security interest in the Collateral
constituting the Pledged Stock and any
general intangibles relating thereto and no
further action is required to perfect such
security interest.
Section 4.7 No Defaults. No event
has occurred and is continuing or would
result from the making of a Loan which
constitutes a Default or an Event of Default.
Neither Borrower, Parent nor the SPC is in
default under any loan or credit agreement or
any other material agreement, lease or
instrument to which they are parties or by
which it or any of their properties are
bound.
Section 4.8 Taxes. Each of
Borrower and the Parent have filed all
required federal and local tax returns and
paid all material taxes due pursuant to said
returns or any assessments against Borrower
or Parent, as the case may be, except for
those taxes being contested in good faith and
for which adequate reserves have been
provided on the books and records of Borrower
or Parent, as the case may be.
Section 4.9 Margin Stock. None of
the proceeds of any Loan will be used,
directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of
purchasing or carrying any "margin stock"
within the meaning of Regulation G and
Regulation X of the Board of Governors of the
Federal Reserve System. Borrower is not
engaged in the business of extending credit
for the purpose of purchasing or carrying any
such margin stock and no part of the proceeds
of the Loans will be used to purchase or
carry any such margin stock of for any other
purpose that violates or is inconsistent with
such Regulation G or Regulation X.
Section 4.10 Investment Company
Act. Borrower is not an "investment company"
or a company "controlled" by an "investment
company," within the meaning of the
Investment Company Act of 1940, as amended.
Section 4.11 Disclosure. No
representation or warranty of Borrower
contained in this Agreement or any
certificate or similar instrument required to
be furnished to Lender by or on behalf of
Borrower in connection with the transactions
contemplated by this Agreement contains or
will contain any untrue statement of a
material fact or omits to state a material
fact (known to Borrower, in the case of any
document not furnished by it) necessary in
order to make the statements contained herein
or therein not misleading.
Section 4.12 Chief Executive
Office. Borrower's chief executive office
and principal place of business are located
at 525 Washington Street, Jersey City, New
Jersey 07310, or, from and after the date
hereof, at such other location with respect
to which all necessary actions under Section
5.11 hereof have been performed.
Section 4.13 Pooling and Servicing
Agreement. Attached hereto as Exhibit C is a
true, complete and accurate copy of the
Pooling and Servicing Agreement. There are
no agreements written or otherwise, which
would modify or otherwise affect the rights
of the SPC under the Pooling and Servicing
Agreement. All of the representations and
warranties made by the Borrower, the SPC or
any Affiliates thereof in the aforementioned
agreements are true and correct in all
material respects and are hereby confirmed.
ARTICLE V
COVENANTS
Borrower covenants and agrees that,
so long as any Obligations remain
outstanding, and (even if there shall be no
Obligations outstanding) so long as this
Agreement remains in effect:
Section 5.1 Reports/Financial
Information. Borrower shall deliver to
Lender:
(a) As soon as practicable, and in
any event within forty-five (45) days after
the end of each calendar month, the
consolidated balance sheet and income
statement of Parent and its subsidiaries as
at the end of such month, which for each
month coinciding with the end of a calendar
quarter shall set forth comparative figures
for the related periods in the prior fiscal
year, all of which shall be certified by the
chief financial officer, chief accounting
officer or chief executive officer of
Borrower, subject to changes resulting from
audit and normal year-end adjustments;
(b) As soon as practicable, and in
any event within one-hundred-twenty (120)
days after the end of each fiscal year of
Parent, the consolidated balance sheet and
income statement of Parent and its
subsidiaries as at the end of such year,
certified by independent certified public
accountants of recognized national standing
whose certification shall be without
qualification as to the scope of audit,
together with a certificate of such
accounting firm stating that in the course of
its regular audit of the business of the
Parent and Borrower, which audit was
conducted in accordance with generally
accepted auditing standards, such accounting
firm has obtained no knowledge of any Default
or Event of Default under Sections 5.1(a),
(b), (f), 5.2(a), 5.6(a), 5.10 or 5.12 hereof
which has occurred or is continuing or, if in
the opinion of such accounting firm such a
Default or Event of Default under the above-
referenced Sections has occurred and is
continuing, a statement as to the nature
thereof;
(c) On or before the Report Date
of each calendar month, a schedule of
activity for the preceding calendar month,
which sets forth (i) the aggregate
outstanding principal amount of Receivables
and of the Trust Certificates, (ii) a Cash
Flow Valuation Report in the form attached
hereto as Exhibit A, setting forth, among
other things, the calculation of the
Borrowing Base with supporting information in
reasonable detail, (iii) copies of the
monthly reports distributed to holders of the
Trust Certificates pursuant to Section 5.09
of the Pooling and Servicing Agreement or any
successor provisions and (iv) any other
pertinent information reasonably requested by
Lender.
(d) Promptly upon receipt thereof,
copies of (i) any financial reports or other
information required to be delivered by
Borrower or the SPC or any other affiliate
thereof pursuant to the terms of the Pooling
and Servicing Agreement and (ii) any written
reports, certifications or other material
notices given to the Borrower, the SPC or any
affiliate thereof by the Trustee, Servicer
or
Backup
Servicer.
(e) Promptly, such other financial
or portfolio information related to this
Agreement or the Financing Agreements that
Lender may reasonably request from time to
time.
(f) As soon as practicable, and in
any event within forty-five (45) days after
the end of each fiscal quarter of Borrower, a
list of all agreements entered into by
Borrower pursuant to which Borrower may (i)
incur any Indebtedness to any Person in
excess of $100,000 or (ii) become the obligee
with respect to any loan, advance or other
Indebtedness of any Affiliate; such notice
shall include the name and date of the
agreement, the name of the counterparty, the
maximum amount of Indebtedness thereunder,
and a description of any security thereunder
for such Indebtedness; provided, however,
that after the occurrence and during the
continuance of an Event of Default, the
Borrower shall notify Lender immediately upon
entering into any agreement described in this
Section 5.1(f).
Section 5.2 Notices. Borrower
shall give prompt written notice to Lender
of:
(a) Any litigation, including,
without limitation, adversary proceedings or
contested matters brought by Parent, Borrower
or by any other Person against Parent or
Borrower (or any material change in such
litigation), where the amount in controversy
is $100,000 or more and all litigation when
the aggregate amounts in controversy equal or
exceed $500,000, or any other litigation or
proceeding which Borrower deems material or
which could materially and adversely affect
the operations, financial condition or
prospects of Parent and/or Borrower, and, if
requested by Lender, deliver to Lender copies
of all pleadings with respect to any such
matters served on or filed by Parent or
Borrower;
(b) Any Event of Default or
Default and Borrower's proposed cure
therefor; any such notice shall refer to this
Agreement, describe such Event of Default or
Default and state that such notice is a
"Notice of Default"; and
Section 5.3 Corporate Existence.
Borrower shall maintain and preserve its
corporate existence and all rights,
privileges and franchises now enjoyed, and
conduct its business in accordance with the
terms of, and otherwise comply with, its
formation documents. Borrower shall cause
the SPC to maintain and preserve its
corporate existence and all rights,
privileges and franchises now enjoyed by it.
Section 5.4 Compliance with Law.
Borrower shall, and shall cause the SPC to,
comply in all material respects with all
applicable laws, rules, regulations and
orders.
Section 5.5 Compliance with
Financing Agreements. Borrower shall comply
promptly with any and all covenants and
provisions of this Agreement, the Note and
the other Financing Agreements, and shall
cause the SPC and its other Affiliates to
comply promptly with any and all covenants
and provisions to be performed by such
parties under the Pooling and Servicing
Agreement.
Section 5.6 Books and Records;
Right of Inspection. (a) Borrower shall,
and shall cause the SPC to, maintain adequate
books, accounts and records, and prepare all
financial statements required hereunder in
accordance with generally accepted accounting
principles and, once per calendar year after
reasonable notice, and at any time after the
occurrence and during the continuance of an
Event of Default, permit employees or agents
of Lender at any reasonable time to inspect
the properties of Borrower and the SPC and to
examine or audit each of their books,
accounts and records and make copies and
memoranda thereof.
(b) Borrower shall maintain all
records necessary for compliance with the
exception to withholding for portfolio
interest under Section 871(h) of the Internal
Revenue Code.
Section 5.7 Further Assurances.
(a) Borrower shall furnish to Lender such
periodic, special, or other reports and
information as reasonably requested by
Lender.
(b) From time to time, at its own
expense, Borrower will take whatever action
is reasonably requested by Lender or its
legal counsel to preserve, protect or perfect
the security interest in the Collateral
granted pursuant to Article VI, including,
without limitation, executing UCC financing
statements, endorsing notes, executing
additional security documents or delivering
possession of Collateral, and shall perform
such acts as Lender shall reasonably deem
necessary or appropriate to effectuate the
purposes of this Agreement. Borrower will
appear in and defend at its own expense any
action or proceeding which may affect
Borrower's title to the Collateral, the
security interest granted hereunder or the
SPC's title to the Excess Receipts and the
Residual Interest.
Section 5.8 Maintenance of
Insurance. (a) Borrower shall maintain and
keep in force in adequate amounts insurance
with responsible and reputable companies or
implement and maintain a reasonable program
of self-insurance, and accept no self-
insurance risks which are substantially
greater than those historically carried by
Borrower.
(b) Borrower shall cause to be
paid all annual insurance premiums with
respect to the Risk Default Policy and the
VSI Insurance Policy and shall take all other
actions necessary or possible to be taken on
its part in order to maintain the
effectiveness of each such policy and the
liability of the Insurer with respect
thereto.
Section 5.9 Pooling and Servicing
Agreement. Without the prior written consent
of Lender, Borrower shall not, and shall not
permit any of its affiliates to (i) amend,
modify, restate, supplement, cancel or
terminate the Pooling and Servicing
Agreement, (ii) waive any of its rights under
any provision thereof, (iii) consent to any
deviation from the terms thereof or (iv)
otherwise grant any consents provided for
thereunder, or default in its obligations
thereunder.
Section 5.10 Merger;
Consolidation, Etc. Borrower shall not, and
shall not permit the SPC to, liquidate,
dissolve, merge into or consolidate with
another entity; or sell, lease or otherwise
dispose of all or a substantial portion of
its business or assets, except for sales of
loans not constituting Receivables in the
ordinary course of its business. Borrower
shall not permit the SPC to engage in any
business other than the holding of the
Residual Interest and the "Residual Interest"
(as defined in each Existing Loan Agreement),
nor to acquire any other assets nor incur any
Indebtedness not expressly permitted under
Section 4.6 hereof except that the SPC shall
be permitted to hold residual interests which
are substantially similar in nature to the
Residual Interest and to incur any
Indebtedness under any other pooling and
servicing agreement which is substantially
similar in nature to the Pooling and
Servicing Agreement and to which the Lender
has consented.
Section 5.11 Change of Principal
Office. Borrower shall not (a) change the
location of its chief executive office and
principal place of business from Newport
Tower, 525 Washington Street, Jersey City,
New Jersey 07310 or (b) change its name,
identity or corporate structure to such an
extent that any financing statement filed in
connection with this Agreement would become
seriously misleading, unless Borrower shall
have given Lender at least 30 days prior
written notice thereof and prior to effecting
any such change, taken such steps as Lender
may deem necessary or desirable to continue
the perfection and priority of the Liens in
favor of Lender granted in connection
herewith.
Section 5.12 Net Worth. The sum
of the Parent's consolidated total assets
minus the Parent's consolidated total
liabilities (each determined in conformity
with generally accepted accounting
principles, consistently applied and without
duplication) shall not be less than
$15,000,000 as of the Initial Funding Date,
and the greater of such amount or ten percent
(10%) of Parent's consolidated assets
(without duplication) on any subsequent date;
provided, however that for purposes of this
Section, the Collateral shall constitute an
asset of Borrower and any assets which have
been sold by any Person in a non-recourse
sale to an unaffiliated third party in a
securitization transaction shall not
constitute assets of any such Person.
Section 5.13 Limited Business of
SPC. The Borrower will take all actions
which may be required on its part to ensure
that the SPC engages in no business and
incurs no Indebtedness or other liabilities
other than that permitted under Section 4.6
and Section 5.10 above or and issues no
capital stock or other equity interest in
favor of any Person other than the Borrower.
ARTICLE VI
COLLATERAL
Section 6.1 Security Interest.
(a) To secure the prompt and complete
payment, observance and performance of all of
the
Secured Obligations,
Borrower hereby (1)
reaffirms the grant of a security interest in
the Collateral made under the Existing Loan
Agreements and (2) pledges and grants to
Lender a security interest in and assignment
of all of Borrower's rights, title and
interest in and to the following property and
interests in property, whether now owned or
existing or hereafter arising or acquired and
wheresoever located and whether the same
comprise accounts, instruments, securities,
chattel paper or general intangibles (the
"Collateral"):
(i) all of Borrower's rights in the
Pledged Stock, and all of Borrower's
rights, as a shareholder of the SPC, in
and to the property (and interests in
property) that is owned by the SPC;
(ii) all warrants, options and
other rights to acquire stock in the SPC
and all of Borrower's rights, if any, to
participate in the management of the
SPC;
(iii) all rights, privileges,
authority and powers of Borrower as
owner or holder of its equity interest
in the SPC, including, but not limited
to, all general intangibles and contract
rights related thereto;
(iv) all documents and certificates
representing or evidencing Borrower's
equity interest in the SPC;
(v) all of Borrower's interest in
and to the profits and losses of the SPC
and Borrower's right as a shareholder of
the SPC to receive dividends on account
of the SPC's capital stock or to receive
distributions of the SPC's assets, upon
complete or partial liquidation or
otherwise;
(vi) all of Borrower's right, title
and interest to receive payments of
principal and interest on any loans
and/or other extensions of credit made
by Borrower or its Affiliates to the
SPC, all other accounts and other rights
to payment which may be owing by the SPC
to Borrower, and any all instruments
creating or evidencing such rights;
(vii) all distributions, cash,
instruments and other property from time
to time received, receivable or
otherwise distributed in respect of, or
in exchange for, Borrower's interest in
the SPC; and
(viii) any other right, title,
interest, privilege, authority and power
of Borrower in or relating to the SPC,
all whether now existing or hereafter
arising, and whether arising at law or
in equity and any and all proceeds of
any of the foregoing and all books and
records of Borrower pertaining to any of
the foregoing.
(b) Pursuant to the Existing Loan
Agreement dated June 20, 1995, Borrower has
delivered to Lender all stock certificates
evidencing the Collateral. If Borrower
acquires (by dividend, purchase, additional
contribution, reclassification or otherwise):
(a) any additional stock, shares, units,
options or warrants of stock in the SPC
(whether or not certificated or otherwise
evidenced in writing); (b) any subscriptions,
warrants or any other rights or options
issued in connection with any of the
Collateral; or (c) any options, warrants or
convertible securities in connection with the
Collateral; (all of the foregoing being
collectively referred to as the "Additional
Interests"), then all such Additional
Interests shall be promptly delivered to and
held by the Lender (if the same are
certificated) under the terms of this
Agreement, accompanied by duly executed stock
powers, instruments of transfer or
assignments in blank, as applicable, all in
form and substance satisfactory to the
Lender, and the same shall constitute
Collateral hereunder.
(c) Notwithstanding the foregoing,
prior to the delivery of a Voting Notice (as
defined below in this paragraph (c)),
Borrower shall be entitled to exercise any
and all voting rights pertaining to the
Collateral (or any portion thereof), except
as otherwise provided in Section 5.9 above.
As used herein, the term "Voting Notice"
means a written notice from the Lender to
each of the Borrower and the SPC providing
that the Lender may exercise all of the
voting rights and powers described in
subparagraph (a) of Section 6 hereof.
Borrower hereby acknowledges and agrees that
upon the receipt of a Voting Notice, the
Lender shall be entitled to exercise all of
said voting rights and powers and all of the
Borrower's voting rights and powers shall
immediately cease. Except as otherwise
expressly provided herein, under no
circumstances shall the Lender have, or be
deemed to have or have had, any right to
exercise, or to direct Borrower to exercise,
any voting, managerial, election or other
rights of an owner of the Pledged Stock.
(d) All distributions by the SPC,
all Additional Interests and other payments
that are made, paid, issued, distributed or
delivered by the SPC to Borrower in cash or
otherwise shall be received in trust for the
benefit of the Lender and shall be delivered
to the Lender for application (i) to the
extent such payments are attributable or
allocable to Excess Receipts or other amount
distributable in respect of the Residual
Interest, in accordance with the terms of
this Agreement; (ii) to the extent such
payments are attributable or allocable to
"Excess Receipts" or other amounts
distributable
to the Borrower in respect
of
any "Class
B
Certificate" or "Residual
Interest", as
such
term is defined in any
Existing Loan Agreement, in accordance with
the terms of such Existing Loan Agreement;
and (iii) to the extent such payments are
attributable or allocable to similar amounts
received in respect of any residual interest
received under any similar transaction and in
respect of which Lender has given value under
any subsequent loan agreement with Borrower,
in accordance with the terms of such other
loan agreement.
Section 6.2 Perfection of the
Security Interest. (a) Borrower agrees (i)
promptly to deliver to the Lender or its
designee, all certificates, instruments and
other documents evidencing any portion of the
Collateral, which may at any time come into
the possession of the Borrower and in which a
security interest may be perfected, (ii) to
execute and deliver such notices of the
Lender's security interest in the Collateral
(which notice shall be satisfactory in form
and substance to the Lender and which may
request acknowledgment from the addressee) to
any third party designated by the Lender,
(iii) to execute and deliver to the Lender
such financing statements as the Lender may
request with respect to the Collateral, (iv)
to cause the SPC to indicate in its records
the security interests granted hereby, in a
manner satisfactory to the Lender, and (v) to
take such other steps as the Lender may from
time to time request in order to perfect the
Lender's security interest in the Collateral
under applicable law. Borrower agrees that
this Agreement or a photocopy of this
Agreement shall be sufficient as a financing
statement to the extent permitted by
applicable law.
Section 6.3 Power of Attorney.
Subject to the terms and provisions of this
Agreement, at any time, without notice and at
the expense of Borrower, Lender may, and Bor-
rower hereby appoints Lender its true
attorney-in-fact (such agency being coupled
with an interest) for such purposes.
(a) Upon the occurrence of an
Event of Default, perform any
obligation of Borrower hereunder in
Borrower's name or otherwise;
(b) Upon the occurrence of
any Event of Default, notify any
Person obligated on any Collateral
of the rights of Lender hereunder;
(c) Upon the occurrence of
any Event of Default, enter into
any extension, settlement or
compromise agreement relating to or
affecting the Collateral and, in
connection therewith, to sell,
transfer or dispose of any of the
Collateral, and take such action as
Lender may deem proper, and apply
any money or property received in
exchange for any of such Collateral
to any of the
Secured Obligations;
(d) Upon the occurrence of
any Event of Default, endorse,
deliver evidence of title, enforce
and collect by legal action or
otherwise any of the Collateral;
(e) Upon the occurrence of
any Event of Default, receive
payment or performance in
connection with any insurance
claims, claims for breach of
warranty or any other claims
concerning any of the Collateral;
and
(f) Upon the occurrence of
any Event of Default, protect,
defend and preserve the Collateral
including, without limitation,
filing or prosecution of any third
party claim or other legal action
or proceeding which Lender deems
necessary to protect any of the
rights, interests or priorities of
Lender with respect to any of the
Collateral.
ARTICLE VII
DEFAULT; REMEDIES
Section 7.1 Events of Default.
Upon the occurrence of any of the following
events (each an "Event of Default"):
(a) Borrower fails to make any
payment of principal of or interest on the
Note, or payment of any other Obligation due
hereunder, under the Note or under any other
Financing Agreement on or before the date
such payment is due;
(b) Any breach by Borrower in the
due observance or performance of any covenant
set forth in Sections 5.1 to 5.3 or 5.5 to
5.12, and such breach continues unremedied
for five (5) Business Days after any officer
of Borrower obtains knowledge thereof;
(c) Any breach by Borrower of any
covenant, other than those covenants
enumerated in Section 7.1 (a) or (b) of this
Agreement, which remains unremedied for
thirty (30) days after the date such breach
occurs;
(d) Any representation or warranty
made by Borrower under this Agreement or by
Borrower or Parent under any other Financing
Agreement or in any certificate, report,
financial statement or other agreement,
instrument or document furnished in
connection with this Agreement or any other
Financing Agreement shall prove to have been
false or misleading in any material respect
when made;
(e) Default in, or breach of, any
provision of the SPC Acknowledgment by the
SPC or by Borrower;
(f) Any representation or warranty
made by Borrower, the SPC or any Affiliates
in the Purchase Agreement or in the Pooling
and Servicing Agreement or in any certificate
or report a copy of which is delivered to
Lender pursuant to this Agreement shall prove
to have been false or misleading in any
material respect when made;
(g) The occurrence of a default,
breach or failure of condition by Borrower,
any guarantor of the Obligations or Parent
under any other Financing Agreement which
(unless such default otherwise constitutes an
Event of Default pursuant to the other
provisions of this Section 7.1) is not
remedied within the applicable cure period
contained therein, if any;
(h) Any default by Borrower, any
guarantor of the Obligations, the SPC or
Parent after any applicable notice and cure
period, shall occur under any Indebtedness
with respect to which Borrower or Parent, as
applicable, is a party as borrower or
guarantor, provided, that any such default by
Parent described in this subsection 7.01(h)
shall not constitute an Event of Default
unless the aggregate Indebtedness owed under
such agreement is greater than or equal to
$100,000;
(i) Borrower, the SPC, any
guarantor of the Obligations or Parent shall
generally not pay its debts as they become
due or shall admit in writing its inability
to pay its debts, or shall make a general
assignment for the benefit of creditors;
(j) Borrower, the SPC, any
guarantor of the Obligations, or Parent,
shall (i) apply for or consent to the
appointment of a receiver, trustee,
custodian, intervenor or liquidator of it, or
of all or a substantial part of its assets,
(ii) file a voluntary petition in bankruptcy,
(iii) file a petition or answer seeking
reorganization or an arrangement with
creditors, or to take advantage of any
applicable liquidation, conservatorship
bankruptcy, moratorium, arrangement,
receivership, insolvency, reorganization or
similar laws affecting the rights of
creditors generally, (iv) file an answer
admitting the material allegations of, or
consent to, or default in answering, a
petition filed against it in any bankruptcy,
reorganization or insolvency proceeding, or
(v) take corporate action for the purpose of
effecting any of the foregoing;
(k) An involuntary petition or
complaint shall be filed against Borrower,
the SPC, any guarantor of the Obligations, or
Parent, seeking bankruptcy or reorganization
of such Person or the appointment of a
receiver, custodian, trustee, intervenor or
liquidator of such Person, or all or
substantially all of its assets, and such
petition or complaint shall not have been
dismissed within sixty (60) days of the
filing thereof; or an order, order for
relief, judgment or decree shall be entered
by any court of competent jurisdiction or
other competent authority approving a
petition or complaint seeking reorganization
of such Person or appointing a receiver,
custodian, trustee, intervenor or liquidator
of such Person, or of all or substantially
all of its assets;
(l) Any final judgment or order
for the payment of money in excess of
$100,000 shall be rendered against Borrower,
the SPC or the Parent, and either (i)
enforcement proceedings shall have been
commenced by any creditor upon such judgment
or order or (ii) the same remains
undischarged or unpaid for a period of sixty
(60) days, during which period the execution
of such judgment is not effectively stayed;
(m) (i) Any of the Financing
Agreements, or any Lien or priority claim
granted thereunder shall terminate, cease to
be effective or cease to be the legal, valid,
binding and enforceable obligation of
Borrower, the SPC, Parent or any guarantor of
the Obligations; (ii) Borrower or any of its
Affiliates, shall, directly or indirectly,
contest in any manner such effectiveness,
validity, binding nature or enforceability
(it being understood that Borrower may, in
good faith, question the accuracy of any
mathematical calculation of an amount owed
hereunder); or (iii) any Lien or priority
claim securing the
Secured Obligations
shall
cease to be effective and to be of first
priority;
(n) Any Person shall levy on,
seize or attach all or any material portion
of the assets of Borrower, the SPC or Parent
and within thirty (30) days thereafter such
person shall not have dissolved such levy or
attachment, as the case may be, and, if
applicable, regained possession of such
seized assets;
(o) the occurrence of a Change in
Control;
(p) either the Risk Default Policy
or the VSI Insurance Policy shall cease to be
in full force and effect;
(r) an "Event of Backup Servicing
Default" shall have occurred and been
continuing under the Pooling and Servicing
Agreement; or
(s) this Agreement, the Note or
any other Financing Agreement shall for any
reason cease to be in full force and effect,
or be declared null and void or unenforceable
in whole or in part as the result of any
action initiated by any Person other than
Lender;
then, and in every such event and at any time
thereafter during the continuance of such
event, Lender may, at the same or different
times, take one or more of the following
actions:
(A) By notice to Borrower (which
may be telephonic notice confirmed in
writing) declare Lender's obligation to
make any future Loans hereunder
terminated and/or declare the occurrence
of the Termination Date, whereupon, in
each case, such obligations shall be
terminated and/or the Termination Date
shall have occurred; and
(B) By notice to Borrower,
declare the unpaid principal amount
and interest of the Loans and all
other amounts payable by Borrower
hereunder to be forthwith due and
payable, whereupon such amounts
shall become forthwith due and
payable, both as to principal and
interest, without presentment,
demand, protest or any other notice
of any kind, all of which are
hereby expressly waived, anything
contained herein or in the
Financing Agreements to the
contrary notwithstanding.
Notwithstanding the foregoing, upon
the occurrence of an Event of Default
described in paragraph (j) or (k) of this
Section 7.1, with respect to the Parent, the
SPC or Borrower the actions described in
paragraphs (A) and (B) above shall occur
automatically without the requirement of
giving of any notice to Borrower.
Section 7.2 Remedies. (a) Lender
shall have all rights and remedies provided
to Lender at law, in equity, under the
Financing Agreements and under the Uniform
Commercial Code as in effect in the State of
New York (the "Code"), all of which rights
and remedies shall be cumulative, and, in
addition, upon the occurrence of any Event of
Default, Lender may exercise any one or more
of the following rights and remedies:
(i) Exercise all the rights
and remedies available to secured
parties under the provisions of the
Code.
(ii) Institute legal
proceedings to foreclose upon and
against the Lien granted by the
Financing Agreements to recover
judgment for the Obligations and to
collect the same out of any of the
Collateral or the proceeds of any
sale thereof.
(iii) Without being
responsible for loss or damage to
such Collateral beyond the
responsibility to use reasonable
care with respect to the
Collateral, require delivery to
Lender of any Collateral then being
held by Borrower, sell and dispose
of, or cause to be sold and
disposed of, all or any part of the
Collateral at one or more public or
private sales, or other
dispositions, at such places and
times and on such terms and condi-
tions and in such order as Lender
may deem fit, without any previous
demand or advertisement but with
reasonable notification to Borrower
of any such sale or other disposal.
Reasonable notification pursuant to
this Section 7.2(a)(iii) shall be
deemed to be written or telephonic
notice at least ten (10) days prior
to such public or private sale.
(b) Any notice of sale or other
disposition, advertisement and other notice
or demand, any right or equity of redemption
and any obligation of a prospective purchaser
to inquire as to the power and authority of
Lender to sell or otherwise dispose of the
Collateral or as to the application of the
proceeds of sale or otherwise, which would
otherwise be required by, or available to
Borrower under, applicable law are hereby
expressly waived by Borrower to the fullest
extent permitted by such law.
(c) All moneys received or
collected by Lender pursuant to this
Agreement from and after an Event of Default
shall be applied, at Lender's discretion,
first to the payment of all costs incurred in
the collection of such moneys (including
reasonable attorneys' fees and legal
expenses). All remaining amounts shall be
applied pursuant to Section 2.5(b). The
balance, if any, of such moneys remaining
after payment in full of the
Secured
Obligations
shall be remitted to Borrower or
as otherwise directed by a court of competent
jurisdiction.
(d) In view of the fact that
federal and state securities laws may impose
certain restrictions on the method by which a
sale of the Collateral may be effected, the
Borrower agrees that, upon the occurrence and
during the continuance of an Event of Default
and without notice except as otherwise
specified hereinabove, the Lender may attempt
to sell all or any part of the Collateral by
means of a private placement, restricting the
bidders and prospective purchasers to those
who are qualified and who will represent and
agree that they are purchasing in accordance
with an exemption from registration under the
federal or state securities laws. In so
doing, the Lender may solicit offers to buy
the Collateral, or any part of it, for cash,
from a limited number of institutional
investors deemed by the Lender in its
reasonable judgment to be financially
responsible parties who might be interested
in purchasing such Collateral and, if the
Lender solicits such offers from not less
than four (4) such investors, the acceptance
by the Lender of the highest offer obtained
therefrom shall be deemed to be a
commercially reasonable method of disposing
of such Collateral.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Amendments, etc. No
amendment or waiver of any provision of this
Agreement or the Note, nor consent to any
departure by Borrower therefrom, shall be
effective unless the same shall be in writing
and signed by Lender, and then such waiver or
consent shall be effective only in the
specific instance and for the specific
purpose for which given.
Section 8.2 Notices. All notices
and other communications provided for
hereunder shall be in writing (including
telegraphic or facsimile transmission) and
mailed by registered mail, return receipt
requested, or telexed, telecopied or hand
delivered, (a) as to Lender:
III Finance Ltd.
c/o International Fund
Administration, Ltd.
48 Par-La-Ville Road, Suite 464
Hamilton, HM11 Bermuda
Telecopy:
(441)
295-9637
Confirmation:
(441)
295-4718
Attention: Rebecca Lewis
with a copy to:
III Offshore Advisors
250 South Australian Avenue, Suite
600
West Palm Beach, Florida 33401
Telecopy: (407) 655-6871
Confirmation: (407) 655-5885
Attention: Walter Lesbirel
(b) as to Borrower:
Aegis Auto Finance, Inc.
525 Washington Street, 29th Floor
Jersey City, New Jersey, 07310
Telecopy: (201) 418-7370
Confirmation: (201) 418-7379
Attention: Joseph Battiato
or (c) at such other address as shall be
designated by such party in a written notice
to the other party. All such notices and
communications shall be effective and deemed
delivered only when received by the party to
which it is sent; provided, however, that a
telecopy transmission shall be deemed to be
received when transmitted so long as the
transmitting machine has provided an
electronic confirmation of such transmission.
Section 8.3 Survival of
Representations and Warranties. All
representations and warranties made herein
shall survive the execution, delivery and
acceptance of this Agreement, the Note and
the other Financing Agreements.
Section 8.4 No Waiver; Remedies.
No failure on the part of Lender to exercise,
and no delay in exercising any right
hereunder or under the Note or any other
Financing Agreement shall operate as a waiver
thereof; nor shall any single or partial
exercise of any right hereunder or under the
Note preclude any other or further exercise
thereof or the exercise of any other right.
The remedies herein provided are cumulative
and not exclusive of any remedies provided by
law.
Section 8.5 Costs and Expenses.
Except as otherwise provided in the
immediately subsequent sentence, each party
hereto agrees to pay its own costs and
expenses (including attorneys' and
paralegals' fees and expenses) in connection
with the execution and delivery of this
Agreement, the Note and the other Financing
Agreements. Borrower agrees to pay (a) all
costs and expenses incurred by Lender in
maintaining, preserving or insuring any
Collateral and (b) all costs and expenses of
Lender (including reasonable attorneys' and
paralegals' fees and expenses) in connection
with the enforcement of this Agreement, the
Note, the other Financing Agreements and/or
the Lien on any of the Collateral. All of
the costs, fees and expenses enumerated in
the immediately preceding sentence shall
constitute Obligations.
Section 8.6 Relationship;
Indemnity. (a) The relationship of Borrower
to the Lender under the Financing Agreements
is, and shall at all times remain, solely
that of borrower and lender; other than as
set forth in Section 7.2(a)(iii), Lender does
not undertake or assume any responsibility or
duty to Borrower or to any third party with
respect to the Collateral.
(b) Borrower hereby indemnifies
and agrees to hold harmless Lender and its
officers, directors, employees, attorneys and
agents (collectively, the "Indemnified
Parties") from any and all losses, damages
(whether general, punitive or otherwise),
liabilities, claims, causes of action and
other costs and expenses, including
reasonable attorneys' fees, which any
Indemnified Party may suffer or incur by or
as a result of claims by third parties in any
manner relating to or arising out of this
Agreement or the other Financing Agreements,
or any act, event or transaction related
thereto, the making of Loans, the use or
intended use of the proceeds of the Loans, or
any of the other transactions contemplated by
the Financing Agreements.
(c) Promptly after any Indemnified
Party is served with process in connection
with the commencement of any action, such
Indemnified Party shall, if a claim against
Borrower in respect thereof is to be made
pursuant to this indemnification, notify
Borrower of the commencement thereof.
Borrower shall pay any Obligations arising
under this indemnity to such Indemnified
Party immediately upon demand. The duty of
Borrower to indemnify Lender shall survive
the release and cancellation of this
Agreement or any of the other Financing
Agreements.
Section 8.7 Successors and
Assigns; Assignment. This Agreement shall be
binding upon and inure to the benefit of
Borrower and Lender and their respective
successors and assigns, except that no
Borrower shall have the right to assign its
rights hereunder or any interest herein
without the prior written consent of Lender.
Lender, at its sole option, shall have the
right to assign this Agreement, the Note and
any of its rights and interest hereunder and
thereunder.
Section 8.8 Registered
Obligations. The Loans (including the Note
evidencing the Loans) are registered
obligations and the right, title and interest
of Lender and its assigns (and of a Person
who takes a participation in a Loan directly
from Lender) in and to such Loan shall be
transferrable only upon notation of such
transfer in a registry (the "Registry")
maintained to record the interest of Lender
and its assigns (and such direct
participants). A Note shall only evidence
Lender's, or its assigns', right, title and
interest in and to the related Loans, and in
no event is any such Note to be considered a
bearer instrument or obligation. This
Section 8.8 shall be construed so that the
Loans are at all times maintained in
"registered form" within the meaning of
Section 163(f), 871(h)(2) and 881(c)(2) of
the IRC and any related regulations (or any
successor provisions of the IRC or such
regulations). Borrower shall maintain the
Registry in which Borrower will register the
Loans. No transfer by Lender or any of its
assigns of (or direct participant with
respect to) any of the Loans shall be
permitted or effective unless and until
recorded on the Registry. Any such transfer
shall be made only by written application by
the transferring Lender, its assigns, or
participants to Borrower stating the name of
the proposed transferee. Borrower agrees
that within five (5) Business Days after its
receipt of such written notice, Borrower
shall, at its own expense, record such
transfer on the Registry and shall, if
requested by Lender or the transferee,
execute new Notes to the order of Lender
and/or the transferee, as applicable, in
exchange for the surrendered Note or Notes.
Such new Note or Notes shall be in an
aggregate principal amount equal to the
unpaid aggregate principal amount of such
surrendered Note or Notes, shall be dated the
effective date of the assignment and shall
otherwise be in substantially the form of
Exhibit B.
Section 8.9 Binding Effect;
Governing Law. This Agreement constitutes
the complete and final expression of the
parties' agreement with respect to the
matters set forth herein and supersedes all
oral negotiations and prior writings in
respect of such matters. This Agreement and
the Note shall be governed by, and construed
in accordance with, the laws and decisions of
the State of New York. Whenever possible,
each provision of this Agreement shall be
interpreted in such manner as to be effective
and valid under applicable law, but if any
provision of this Agreement shall be
prohibited or invalid under applicable law,
such provision shall be ineffective only to
the extent of such prohibition or invalidity,
without invalidating the remainder of such
provision or the remaining provisions of this
Agreement.
Section 8.10 WAIVER OF TRIAL BY
JURY; SUBMISSION TO JURISDICTION. BORROWER
AND LENDER EACH HEREBY AGREE TO WAIVE ANY
RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION ARISING UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR ANY
FINANCING AGREEMENT, WHETHER SOUNDING IN
TORT, CONTRACT OR OTHERWISE. BORROWER HEREBY
CONSENTS TO THE JURISDICTION OF ANY LOCAL OR
FEDERAL COURT LOCATED WITHIN THE STATE OF NEW
YORK AND WAIVES ANY OBJECTION WHICH BORROWER
MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON
CONVENIENS TO THE CONDUCT OF ANY PROCEEDING
IN ANY SUCH COURT; NOTHING IN THIS SECTION
8.10 SHALL AFFECT LENDER'S RIGHT TO BRING ANY
ACTION OR PROCEEDING AGAINST BORROWER OR ITS
PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION.
Section 8.11 Term. This
Agreement shall become effective when
executed and delivered by the parties hereto
and shall expire upon that date occurring on
or after the Termination Date when Lender has
received indefeasible payment in full in cash
of the Obligations. Notwithstanding the
foregoing, Borrower's agreement to indemnify
Lender under Section 8.6 shall survive the
termination of this Agreement.
Section 8.12 Headings. Article
and Section headings in this Agreement are
included for convenience of reference only
and shall not affect any construction or
interpretation of this Agreement.
Section 8.13 Counterparts. This
Agreement may be executed by the parties
hereto in separate counterparts, each of
which when so executed shall be deemed to be
an original and both of which taken together
shall constitute one and the same agreement.
Section 8.14 Reference to and
Effect Upon Existing Loan Agreements. The
parties hereto agree that, to the extent the
transactions evidenced hereby would not be
permitted under the terms of the Existing
Loan Agreements, the terms of the Existing
Loan Agreements shall be waived to the
extent, and solely to the extent, necessary
to permit such transactions.
[Rest of Page Intentionally Left Blank]
<PAGE>
IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be
executed by their respective officers
thereunto duly authorized, as of the date
first written above.
III FINANCE
LTD.
By______________________________
Name:
Title:
AEGIS AUTO
FINANCE, INC.
By______________________________
Name:
Title:
The undersigned, Aegis Consumer
Finance, Inc., a Delaware corporation, hereby
acknowledges the foregoing Loan and Security
Agreement (the "New AAF Loan Agreement")
between Aegis Auto Finance, Inc. and III
Finance, Ltd. and hereby agrees that: (i)
such New AAF Loan Agreement shall constitute
a "Secured Loan Agreement" within the meaning
of the "Existing ACF Loan Agreements" (as
such term is defined in the New AAF Loan
Agreement) and (ii) the "Obligations" under
the New AAF Loan Agreement shall be secured
by all of the "Collateral" in which a
security interest has been granted by the
undersigned under the Existing ACF Loan
Agreements.
AEGIS
CONSUMER FINANCE, INC.
By:
_______________________
Title:_____________________
<PAGE>
EXECUTION
COPY
(9/09/96)
LOAN AND SECURITY AGREEMENT
Dated as of
September 12, 1996
BETWEEN
AEGIS AUTO FINANCE, INC.
as Borrower
AND
III FINANCE LTD.
as Lender
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE
I
DEFINITIONS
Section 1.1 General Terms. . . . . . . . . . . .1
Section 1.2 Terms Defined in Uniform
Commercial Code. . . . . . . . . . . . . . .7
Section 1.3 Accounting Terms.. . . . . . . . . .7
Section 1.4 Other Terms. . . . . . . . . . . . .7
Section 1.5 Preliminary Statement. . . . . . . .8
ARTICLE II
LOANS AND INTEREST
Section 2.1 Loans. . . . . . . . . . . . . . . .8
Section 2.2 Making the Loans.. . . . . . . . . 10
Section 2.3 Note.. . . . . . . . . . . . . . . 10
Section 2.4 Interest.. . . . . . . . . . . . . 11
Section 2.5 Repayments; Prepayments. . . . . . 11
ARTICLE III
CONDITIONS TO LENDING
Section 3.1 Conditions Precedent to the
Initial Loan.. . . . . . . . . . . . . . . . . . . . 12
Section 3.2 Conditions Precedent to All
Loans. . . . . . . . . . . . . . . . . . . 13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 Corporate Existence. . . . . . . . 14
Section 4.2 Corporate Authority; No
Conflicts. . . . . . . . . . . . . . . . . 14
Section 4.3 Financial Condition. . . . . . . . 15
Section 4.4 Litigation.. . . . . . . . . . . . 15
Section 4.5 Compliance with Laws and
Regulations.15 . . . . . . . . . . . . . . .
Section 4.6 Title to Pledged Stock and
Excess Receipts. . . . . . . . . . . . . . 15
Section 4.7 No Defaults. . . . . . . . . . . . 16
Section 4.8 Taxes. . . . . . . . . . . . . . . 17
Section 4.9 Margin Stock.. . . . . . . . . . . 17
Section 4.10 Investment Company Act.. . . . . . 17
Section 4.11 Disclosure.. . . . . . . . . . . . 17
Section 4.12 Chief Executive Office . . . . . . 17
Section 4.13 Pooling and Servicing
Agreement. . . . . . . . . . . . . . . . . 17
ARTICLE V
COVENANTS
Section 5.1 Reports/Financial
Information. . . . . . . . . . . . . . . . 18
Section 5.2 Notices. . . . . . . . . . . . . . 19
Section 5.3 Corporate Existence. . . . . . . . 19
Section 5.4 Compliance with Law. . . . . . . . 20
Section 5.5 Compliance with Financing
Agreements. . . . 20 . . . . . . . . . . . .
Section 5.6 Books and Records; Right of
Inspection.. . . . . . . . . . . . . . . . 20
Section 5.7 Further Assurances.. . . . . . . . 20
Section 5.8 Maintenance of Insurance.. . . . . 21
Section 5.9 Pooling and Servicing
Agreement. . . . . . . . . . . . . . . . . 21
Section 5.10 Merger; Consolidation, Etc.
. . . . . . . . . . . . . . . . . . . . . 21
Section 5.11 Change of Principal Office.
. . . . . . . . . . . . . . . . . . . . . 21
Section 5.12 Net Worth. . . . . . . . . . . . . 22
Section 5.13 Limited Business of SPC. . . . . . 22
ARTICLE VI
COLLATERAL
Section 6.1 Security Interest. . . . . . . . . 22
Section 6.2 Perfection of the Security
Interest.. . . . . . . . . . . . . . . . . 24
Section 6.3 Power of Attorney. . . . . . . . . 24
ARTICLE VII
DEFAULT; REMEDIES
Section 7.1 Events of Default. . . . . . . . . 25
Section 7.2 Remedies.. . . . . . . . . . . . . 28
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Amendments, etc. . . . . . . . . . 30
Section 8.2 Notices. . . . . . . . . . . . . . 30
Section 8.3 Survival of Representations
and Warranties.. . . . . . . . . . . . . . 31
Section 8.4 No Waiver; Remedies. . . . . . . . 31
Section 8.5 Costs and Expenses.. . . . . . . . 31
Section 8.6 Relationship; Indemnity. . . . . . 31
Section 8.7 Successors and Assigns;
Assignment . . . . . . . . . . . . . . . . 32
Section 8.8 Registered Obligations . . . . . . 32
Section 8.9 Binding Effect; Governing
Law. . . . . . . . . . . . . . . . . . . . 33
Section 8.10 WAIVER OF TRIAL BY JURY;
SUBMISSION TO
JURISDICTION.. . . . . . . . . . . . . . . . . . . . 33
Section 8.11 Term.. . . . . . . . . . . . . . . 33
Section 8.12 Headings.. . . . . . . . . . . . . 33
Section 8.13 Counterparts.. . . . . . . . . . . 33
Section 8.14 Reference to and Effect
Upon Existing Loan
Agreements.. . . . . . . . . . . . . . . . . . . . . 33
EXHIBIT 10.98.1
EXECUTION COPY
NOTE
U.S.
$3,000,000.00
September 12, 1996
FOR VALUE RECEIVED, AEGIS AUTO
FINANCE, INC., a Delaware corporation
("Borrower") hereby promises to pay to III
FINANCE LTD., a
Cayman
Islands company
("Lender"), the principal amount of U.S.
FIVE
MILLION
DOLLARS AND ZERO CENTS
($3,000,000.00)
or, if less, the unpaid
principal amount of the Loans made by Lender
to Borrower under that certain Loan and
Security Agreement dated as of
September 12,
1996
between Borrower and Lender (as amended,
restated, supplemented or otherwise modified
from time to time, the "Loan Agreement"), on
the Termination Date, and to pay interest on
the unpaid principal balance hereof at the
rates and at the times set forth in the Loan
Agreement. Capitalized terms used herein
without definition are used as defined in the
Loan Agreement.
Interest shall be paid monthly in
arrears on each Payment Date of each month on
the principal amount outstanding hereunder at
the rate of twelve percent (12%) per annum,
calculated on the basis of a 360-day year for
the actual number of days elapsed, and on the
date of any prepayment of principal on the
Note on the principal amount so prepaid.
Upon the occurrence and during the
continuance of an Event of Default, the
interest rate shall be increased by two
percent (2.00%) per annum above the rate of
interest otherwise applicable. In no event
shall the interest payable hereunder exceed
the Maximum Rate.
This Note is referred to in, is
issued pursuant to, and is entitled to the
benefits of, the Loan Agreement, to which
reference is hereby made for a more complete
statement of the terms and conditions under
which the Loans evidenced hereby are made and
are to be repaid.
This Note is a registered
obligation (as more particularly described in
Section 8.8 of the Loan Agreement), and it is
the intent of the parties to the Loan
Agreement that the Loans be maintained in
"registered form" within the meaning of
Section 163(f), 871(h)(2) and 881(c)(2) of
the Internal Revenue Code.
Upon and after the occurrence of an
Event of Default, this Note may, as provided
in the Loan Agreement, without demand, notice
or legal process of any kind, be declared,
and immediately shall become, due and
payable. The Loan Agreement also contains
provisions for optional and mandatory
prepayments on account of the principal
hereof prior to maturity upon the terms and
conditions specified therein.
<PAGE>
All payments of principal of and
interest on this Note shall be made to Lender
at such account as Lender shall in writing
direct Borrower, in immediately available
funds and in currency of the United States of
America which at the time of payment shall be
legal tender for the payment of public and
private debts.
Borrower promises to pay all costs
and expenses, including reasonable attorneys'
fees and disbursements incurred in the
collection and enforcement of this Note or
any appeal of a judgment rendered thereon,
all in accordance with the provisions of the
Loan Agreement. Borrower hereby waives
diligence, presentment, protest, demand and
notice of every kind except as required
pursuant to the Loan Agreement and to the
full extent permitted by law the right to
plead any statute of limitations as a defense
to any demands hereunder.
This Note is secured by all
Collateral securing the Secured Obligations
pursuant to the Loan Agreement and the other
Financing Agreements.
THIS NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
AEGIS AUTO
FINANCE, INC.
By______________________________
Name:
Title:
228216
November 13, 1996 (7:8p)
EXHIBIT 10.99
AEGIS AUTO FUNDING CORP.,
a Delaware Corporation, Seller
and
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
Trustee and Backup Servicer
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 1996
$17,561,371.61
AEGIS AUTO RECEIVABLES TRUST 1996-A
AUTOMOBILE RECEIVABLE PASS-THROUGH
CERTIFICATES
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
INTRODUCTION
Section 1.01. Definitions. . . . . . . . . . . 1
Section 1.02. Usage of Terms . . . . . . . . . 14
Section 1.03. Record Date. . . . . . . . . . . 14
Section 1.04. Section References . . . . . . . 14
ARTICLE II
CREATION OF TRUST
Section 2.01. Conveyance and Acceptance by
Trustee. . . . . . . . . . . . . . . . . . 15
ARTICLE III
THE RECEIVABLES
Section 3.01. Representations and Warranties of
Seller . . . . . . . . . . . . . . . . . . 16
Section 3.02. Repurchase or Substitution Upon
Breach . . . . . . . . . . . . . . . . . . 23
Section 3.03. Custody of Documents . . . . . . 24
Section 3.04. Duties of Custodian. . . . . . . 27
Section 3.05. Instructions; Authority to Act . 27
Section 3.06. Custodian Fees; Indemnification 28
Section 3.07. Effective Period and Termination 28
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 4.01. Servicing Duties . . . . . . . . 28
Section 4.02. Resignation of Backup Servicer.. 29
Section 4.03. Covenant of Backup Servicer. . . 29
Section 4.04. Servicing Fees . . . . . . . . . 30
Section 4.05. Costs and Expenses . . . . . . . 30
Section 4.06. Standard of Care . . . . . . . . 30
ARTICLE V
DISTRIBUTIONS; ACCOUNTS;
STATEMENTS TO CERTIFICATEHOLDERS
Section 5.01. Accounts . . . . . . . . . . . . 31
Section 5.02. Collections. . . . . . . . . . . 31
Section 5.03. Application of Collections . . . 31
Section 5.04. Miscellaneous Servicer Collections 32
Section 5.05. Additional Deposits. . . . . . . 32
Section 5.06. Distributions. . . . . . . . . . 32
Section 5.07. Reserve Fund; Priority of
Distributions. . . . . . . . . . . . . . . 33
Section 5.08. Statements to Certificateholders; Tax
Returns. . . . . . . . . . . . . . . . . . 35
Section 5.09. Reliance on Information from the
Servicer . . . . . . . . . . . . . . . . . 39
ARTICLE VI
RIGHTS OF CERTIFICATEHOLDERS. . . . . . . . . . 39
ARTICLE VII
THE CERTIFICATES
Section 7.01. The Certificates . . . . . . . . 39
Section 7.02. Execution, Authentication of
Certificates . . . . . . . . . . . . . . . 40
Section 7.03. Registration of Transfer and
Exchange of Certificates . . . . . . . . . 40
Section 7.04. Mutilated, Destroyed, Lost or Stolen
Certificates . . . . . . . . . . . . . . . 42
Section 7.05. Persons Deemed Owners. . . . . . 43
Section 7.06. Access to List of Certificateholders'
Names and Addresses. . . . . . . . . . . . 43
Section 7.07. Maintenance of Office or Agency. 43
Section 7.08. Notices to Certificateholders. . 43
ARTICLE VIII
THE SELLER
Section 8.01. Representations of Seller. . . . 43
Section 8.02. Liability of Seller; Indemnities 46
Section 8.03. Merger or Consolidation of, or
Assumption of
the Obligations of, Seller. . . . . . 47
Section 8.04. Limitation on Liability of Seller and
Others . . . . . . . . . . . . . . . . . . 48
Section 8.05. Seller May Own Certificates. . . 48
Section 8.06. Covenants of the Seller. . . . . 48
Section 8.07. Enforcement by Trustee . . . . . 50
Section 8.08. No Bankruptcy Petition . . . . . 52
ARTICLE IX
THE BACKUP SERVICER
Section 9.01. Representations of Backup Servicer 53
Section 9.02. Merger or Consolidation of, or
Assumption
of the Obligations of, or Resignation of
Backup Servicer. . . . . . . . . . . . . . . . . . . 54
Section 9.03. Limitation on Liability of Backup
Servicer and Others. . . . . . . . . . . . 54
Section 9.04. Successor Backup Servicer. . . . 55
Section 9.05. No Bankruptcy Petition . . . . . 55
ARTICLE X
BACKUP SERVICING DEFAULT
Section 10.01. Events of Backup Servicing Default
. . . . . . . . . . . . . . . . . . . . . 55
Section 10.02. Appointment of Successor. . . . 56
Section 10.03. Notification to Certificateholders 57
Section 10.04. Waiver of Past Defaults . . . . 57
ARTICLE XI
THE TRUSTEE
Section 11.01. Duties of Trustee . . . . . . . 57
Section 11.02. Trustee's Certificate . . . . . 60
Section 11.03. Trustee's Assignment of Purchased
Receivables. . . . . . . . . . . . . . . . 60
Section 11.04. Certain Matters Affecting Trustee 60
Section 11.05. Trustee Not Liable for Certificates
or Receivables . . . . . . . . . . . . . . 62
Section 11.06. Trustee May Own Certificates. . 63
Section 11.07. Trustee's Fees and Expenses . . 63
Section 11.08. Eligibility Requirements for Trustee
. . . . . . . . . . . . . . . . . . . . . 63
Section 11.09. Resignation or Removal of Trustee
. . . . . . . . . . . . . . . . . . . . . 63
Section 11.10. Successor Trustee . . . . . . . 64
Section 11.11. Merger or Consolidation of Trustee
. . . . . . . . . . . . . . . . . . . . . 65
Section 11.12. Appointment of Co-Trustee or
Separate Trustee . . . . . . . . . . . . . 65
Section 11.13. Representations and Warranties of
Trustee. . . . . . . . . . . . . . . . . . 66
Section 11.14. No Bankruptcy Petition. . . . . 67
ARTICLE XII
TERMINATION
Section 12.01. Termination of the Trust. . . . 67
Section 12.02. Optional Purchase of All
Receivables. . . . . . . . . . . . . . . . 69
Section 12.03. Notice. . . . . . . . . . . . . 69
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01. Amendment . . . . . . . . . . . 69
Section 13.02. Protection of Title to Trust. . 70
Section 13.03. Limitation on Rights of
Certificateholders . . . . . . . . . . . . 71
Section 13.04. Governing Law . . . . . . . . . 71
Section 13.05. Notices . . . . . . . . . . . . 72
Section 13.06. Severability of Provisions. . . 72
Section 13.07. Assignment. . . . . . . . . . . 73
Section 13.08. Certificates Nonassessable and
Fully Paid . . . . . . . . . . . . . . . . 73
Section 13.09. Counterparts. . . . . . . . . . 73
Section 13.10. Limited Recourse to Seller. . . 73
Exhibit A Form of Certificates. . . . . . . . .A-1
Exhibit B Form of Trustee's Statement to
Certificateholders . . . . . . . . . . . . . . . . .B-1
Exhibit C Schedule of Receivables . . . . . . .C-1
Exhibit D Location of Servicer Files. . . . . .D-1
Exhibit E Receivable Characteristics (Cutoff Date)E-1
Exhibit F Wiring Instructions Form. . . . . . .F-1
Exhibit G Fee Schedule. . . . . . . . . . . . .G-1
Exhibit H Risk Default Insurance Policy . . . .H-1
Exhibit I VSI Insurance Policy. . . . . . . . .I-1
Exhibit J Form of Transferee Letter (Rule 144A
Transfer) . . . . . . . . . . . . . .J-1
Exhibit K Form of Transferee Letter (Non-Rule 144A
Transfer) . . . . . . . . . . . . . .K-1
Exhibit L Assignment. . . . . . . . . . . . . .L-5
Exhibit M Form of Trustee Certificate . . . . .M-1
Exhibit N Appointment of Custodian's Agent. . .N-1
<PAGE>
POOLING AND SERVICING AGREEMENT
Dated as of September 1, 1996
This POOLING AND SERVICING AGREEMENT, dated
as of September 1, 1996, is made among AEGIS AUTO
FUNDING CORP., a Delaware corporation, as Seller, NORWEST
BANK MINNESOTA, NATIONAL ASSOCIATION, as Backup
Servicer, and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee for the Trust.
WITNESSETH THAT, in consideration of the mutual
agreements herein contained, each party agrees as follows for the
benefit of the other parties and for the benefit of the
Certificateholders and the other beneficiaries to the extent provided
herein:
ARTICLE I
INTRODUCTION
Section 1.01. Definitions. Whenever used in this
Agreement, the following words and phrases, unless the context
otherwise requires, shall have the following meanings:
"Accounts" shall mean the accounts and funds identified in
Section 5.01 hereof.
"Aegis Finance" means Aegis Auto Finance, Inc., a
Delaware corporation, its successors and assigns.
"Aegis Finance Servicing Agreement" means the Servicing
Agreement dated as of September 1, 1996 among Aegis Finance,
the Backup Servicer and the Trustee, and all amendments,
modifications and supplements thereto.
"Affiliate" of any Person means any other Person which,
directly or indirectly, controls, is controlled by or is under
common control with such Person. A Person shall be deemed to
be "controlled by" any other Person if such other Person
possesses, directly or indirectly, power
(a) to vote 10% or more of the securities (on a fully
diluted basis) having ordinary voting power for the election of
directors or managing general partners; or
(b) to direct or cause the direction of the management
and policies of such Person whether by contract or otherwise.
"Agreement" means this Pooling and Servicing Agreement
executed by the Seller, the Backup Servicer and the Trustee, and
all amendments, modifications and supplements thereto.
"ALFI" means American Lenders Facilities, Inc., a
California corporation, its successors and assigns.
"Amount Financed" means, with respect to a Receivable,
the amount advanced under the Receivable toward the purchase
price of the Financed Vehicle and any related costs.
"Annual Percentage Rate" or "APR" means, with respect
to a Receivable, the annual rate of finance charges stated in the
Receivable.
"Available Interest Distribution Amount" means, for any
Distribution Date, the sum of the following amounts with respect
to the preceding Collection Period: (i) that portion of all
collections of Scheduled Payments on Receivables allocable to
interest; (ii) Liquidation Proceeds and other Recoveries to the
extent allocable to interest due on Liquidated Receivables and
Defaulted Receivables in accordance with the Servicer's customary
servicing procedures; (iii) Risk Default Insurance Proceeds to the
extent allocable to interest as determined by the Servicer; and (iv)
the Purchase Amount of each Receivable that became a Purchased
Receivable during the related Collection Period to the extent
attributable to accrued interest thereon; provided, however, that in
calculating the Available Interest Distribution Amount the
following will be excluded: all payments and proceeds (including
Liquidation Proceeds) of any Purchased Receivables the Purchase
Amount of which has been included in the Principal Distributable
Amount with respect to a prior Distribution Date.
"Available Principal Distribution Amount" means, for any
Distribution Date, the sum of the following amounts with respect
to the preceding Collection Period: (i) that portion of all
collections of Scheduled Payments and prepayments in full or in
part on Receivables allocable to principal; (ii) Liquidation Proceeds
and other Recoveries allocable to the principal amount of
Liquidated Receivables and Defaulted Receivables in accordance
with the Servicer's customary servicing procedures; (iii) Risk
Default Insurance Proceeds to the extent not allocable to interest
as determined by the Servicer; (iv) amounts deposited in the
Collection Account pursuant to Section 3.02(b) in respect of
Receivables that became Substitute Receivables during the related
Collection Period; and (v) to the extent attributable to principal,
the Purchase Amount of each Receivable that became a Purchased
Receivable during the preceding Collection Period; provided,
however, that in calculating the Available Principal Distribution
Amount the following will be excluded: all payments and proceeds
(including Liquidation Proceeds) of any Purchased Receivables the
Purchase Amount of which has been included in the Principal
Distributable Amount with respect to a prior Distribution Date.
"Backup Servicer" means Norwest Bank Minnesota,
National Association, until any successor Backup Servicer is
appointed or succeeds to the duties and obligations of the Backup
Servicer hereunder, and thereafter means the Eligible Servicer
appointed successor Backup Servicer pursuant to Section 9.02 or
10.02.
"Backup Servicer Fee" means the fee payable to the Backup
Servicer for services rendered during the respective Collection
Period, determined in accordance with Exhibit G hereto.
"Bankruptcy Code" means the federal Bankruptcy Code of
1978, as amended, 11 USC SECS 101 through 1330.
"Business Day" means any day other than a Saturday, a
Sunday, or a day on which banking institutions in the cities in
which the principal offices of the Trustee or the Servicer are
located, or New York, New York, or Jersey City, New Jersey
shall be authorized or obligated by law, executive order, or
governmental decree to be closed. Any action required to be taken
on a day which falls on a non-Business Day shall be conducted on
the next Business Day.
"Certificate" means any one of the Certificates executed by
the Trustee on behalf of the Trust and authenticated by the Trustee
in substantially the form set forth in Exhibit A hereto.
"Certificate Account" means the trust account designated as
such, established and maintained pursuant to Section 5.01.
"Certificate Balance" shall equal, initially, the aggregate
Principal Balance of the Receivables as of the Cutoff Date and,
thereafter, the initial Certificate Balance, reduced by all amounts
previously distributed to Certificateholders as principal.
"Certificate Factor" means, with respect to any Distribution
Date, a seven-digit decimal figure computed by the Trustee equal
to the aggregate Certificate Balance of the Certificates as of such
Distribution Date divided by the aggregate Original Certificate
Balance of the Certificates.
"Certificate Owner" means, with respect to any Certificate
held in book-entry form, the Person who is the beneficial owner
of such Certificate, as reflected on the books of the 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).
"Certificate Register" and "Certificate Registrar" mean the
register maintained and the registrar appointed pursuant to Section
7.03.
"Certificateholder" or "Holder" means the Person in whose
name the respective Certificate shall be registered in the Certificate
Register, except that, solely for the purposes of giving any
approval, consent, waiver, request or demand pursuant to this
Agreement, the interest evidenced by any Certificate registered in
the name of the Seller, the Servicer, the Backup Servicer, the
Trustee or any Affiliate of any of the foregoing shall not be taken
into account in determining whether the requisite percentage
necessary to effect any such consent, waiver, request or demand
shall have been obtained.
"Certificateholder Statement" means the Statement the form
of which is attached hereto as Exhibit B.
"Clearing Agency" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer,
bank, other financial institution or other Person for whom from
time to time a Clearing Agency effects book entry transfers and
pledges of securities deposited with the Clearing Agency.
"Closing Date" means September 30, 1996.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Collection Account" means the trust account designated as
such, established and maintained pursuant to Section 5.01.
"Collection Period" means, with respect to a Distribution
Date, the calendar month immediately prior to such Distribution
Date. Any amount stated "as of the close of business of 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, and (2) all distributions.
"Corporate Trust Office" means the office of the Trustee at
which its corporate trust business shall be administered, which
office at the date of this Agreement shall be 6th Street and
Marquette Avenue, Minneapolis, Minnesota 55479-0070,
Attention: Corporate Trust Services --Asset Backed
Administration, or such other address as shall be designated by the
Trustee in written notice to the Seller, the Backup Servicer, the
Servicer and each Certificateholder.
"Custodian" means the Person acting as Custodian of the
Trust pursuant to Section 3.03 of this Agreement, its successor in
interest and any successor custodian.
"Custodian Files" means the documents specified in Section
3.03(a).
"Cutoff Date" means September 24, 1996.
"DCR" means Duff & Phelps Credit Rating Co. or any
successors thereto.
"Dealer" means any licensed or franchised factory-
authorized motor vehicle dealer, or affiliate thereof, who sold a
Financed Vehicle to an Obligor and who originated the respective
Receivable which was acquired by Aegis Finance.
"Dealer Recourse" means, with respect to a Receivable, all
recourse rights against the Dealer that originated the Receivable,
and any successor Dealer.
"Defaulted Receivable" means any Receivable, other than
a Liquidated Receivable, as to which the Obligor became 180 days
past due in making Scheduled Payments during the prior Collection
Period.
"Depository Agreement" means an agreement entered
among the Seller, the Trustee and a Clearing Agency, in
connection with the issuance of the Certificates in book-entry
form.
"Determination Date" means, with respect to any
Distribution Date, the eighth (8th) Business Day of the calendar
month of such Distribution Date; provided, however, if such
Business Day is later than the eleventh (11th) day of such month,
then the Determination Date shall mean the next earlier Business
Day which is not later than the eleventh (11th) day of such
calendar month.
"Dissolution" means, with respect to the Seller, bankruptcy,
insolvency or dissolution.
"Distributable Amount" means, on any Distribution Date,
the sum of the Interest Distributable Amount and the Principal
Distributable Amount.
"Distribution Date" means, for each Collection Period, the
20th day of the month following the month in which the Collection
Period ends, or if the 20th day is not a Business Day, the next
following Business Day, beginning on the Initial Distribution Date.
"Eligible Account" means a segregated account (except as
otherwise permitted with respect to the Lock-Box Account) which
may be an account maintained with the Trustee, which is either (a)
maintained with an Eligible Institution, or (b) a segregated trust
account or similar account maintained with a federally or state
chartered depository institution subject to regulations regarding
fiduciary funds on deposit substantially similar to 12 C.F.R.
SECS 9.10(b).
"Eligible Institution" means a depository institution or trust
company whose long-term unsecured debt obligations are rated at
least "A" by each Rating Agency and either "A" by S&P or "A2"
by Moody's (provided that, if only one such rating agency rates
such institution, such single rating shall suffice).
"Eligible Investments" means negotiable instruments or
securities or other investments (a) which, except in the case of
demand or time deposits, investments in money market funds and
repurchase obligations, are represented by instruments in bearer or
registered form or ownership of which is represented by book
entries by a clearing agency or by a Federal Reserve Bank in favor
of depository institutions eligible to have an account with such
Federal Reserve Bank who hold such investments on behalf of
their customers and (b) which evidence:
(i) direct obligations of, and obligations fully
guaranteed as to full and timely payment by, the United
States of America;
(ii) demand deposits, time deposits or certificates
of deposit of depository institutions or trust companies
incorporated under the laws of the United States of
America or any state thereof and subject to supervision and
examination by federal or state banking or depository
institution authorities; provided, however, that at the time
of the Trust's investment or contractual commitment to
invest therein, the short-term unsecured debt obligations of
such depository institution or trust company shall have
credit ratings from each Rating Agency and either S&P or
Moody's in the highest investment category granted by
each Rating Agency (and S&P or Moody's, as applicable);
(iii) commercial paper having, at the time of the
Trust's investment or contractual commitment to invest
therein, a rating from each Rating Agency and either S&P
or Moody's in the highest investment category by each
Rating Agency (and S&P or Moody's, as applicable);
(iv) bankers' acceptances issued by any
depository institution or trust company referred to in (ii)
above;
(v) investments in money market funds having
the highest investment category from each Rating Agency
or, if not rated by each Rating Agency or there is no
Rating Agency, either S&P or Moody's (provided that, for
purposes of this definition, such investments may include
money market funds sponsored by Norwest Bank
Minnesota, National Association, that have a credit rating
from either S&P or Moody's);
(vi) time deposits (having maturities of not more
than 30 days) or notes which are payable on demand by an
entity the commercial paper of which has the highest
investment category granted by each Rating Agency and
either S&P or Moody's; and
(vii) repurchase obligations with respect to any
security described in clause (i) above entered into with a
depository institution or trust company (acting as principal)
meeting the rating standards described in clause (ii) above.
Any Eligible Investments may be purchased by or through the
Trustee or any of its affiliates.
"Eligible Servicer" means any entity which, at the time of
its appointment as Backup Servicer, supervisory servicer, Servicer
or subservicer, and for so long as such entity is acting in such
capacity, (i) is servicing a portfolio of motor vehicle retail
installment sale contracts or motor vehicle loans, (ii) is legally
qualified (or is acting through an Affiliate which is legally
qualified) and has the capacity to service the Receivables, (iii) has
demonstrated the ability to professionally and competently service
a portfolio of similar contracts in accordance with industry
standards of skill and care, (iv) is qualified and entitled to use, and
agrees to maintain the confidentiality of, the software that the
Backup Servicer, supervisory servicer, Servicer or a subservicer
uses in connection with performing its duties and responsibilities
under this Agreement, a supervisory servicing agreement, the
Servicing Agreement or a subservicing agreement or obtains rights
to use or develops its own software which is adequate to perform
its duties and responsibilities under this Agreement, a supervisory
servicing agreement, the Servicing Agreement or a subservicing
agreement and (v) is approved by the Risk Default Insurer.
"ERISA" means the Employee Retirement Income Security
Act of 1974, as amended.
"Event of Backup Servicing Default" with respect to the
Backup Servicer means an event specified in Section 10.01.
"Event of Servicing Default" means an event specified in
paragraph VI of the Servicing Agreement.
"Excess Receipts" means, with respect to any Distribution
Date, the greater of (x) zero and (y) the remaining amount on
deposit in the Collection Account after distributions pursuant to
Section 5.06(d)(i) through (iii) have been made.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Final Scheduled Distribution Date" means May 20, 2002.
"Financed Vehicle" means an automobile or light-duty
truck, together with all accessions thereto, securing an Obligor's
indebtedness under the respective Receivable.
"Fitch" means Fitch Investors Service, L.P.
"Initial Distribution Date" means October 21, 1996.
"Insurance Policy" means, with respect to a Receivable,
any comprehensive, collision, fire and theft insurance policy
required to be maintained by the Obligor with respect to the
Financed Vehicle, the VSI Insurance Policy, and any credit life
and disability insurance maintained by the Obligor or Seller and
benefitting the holder of the Receivable.
"Interest Carryover Shortfall" means, as of the close of any
Distribution Date, the excess of the Interest Distributable Amount
for such Distribution Date plus any outstanding Interest Carryover
Shortfall from the previous Distribution Date plus interest on such
outstanding Interest Carryover Shortfall, to the extent permitted
by law, at the Pass-Through Rate from such preceding Distribution
Date through the current Distribution Date, over the amount of
interest that the holders of the Certificates actually received on
such Distribution Date.
"Interest Distributable Amount" means, (i) for any
Distribution Date (other than the Initial Distribution Date), one-
twelfth of the product of (x) the Pass-Through Rate and (y) the
aggregate Certificate Balance as of the close of business on the
preceding Distribution Date (after giving effect to any distribution
of principal on the Certificates made on such preceding
Distribution Date) and (ii) for the Initial Distribution Date, 1/360th
of the product of the Pass-Through Rate and the aggregate
Certificate Balance as of the Closing Date.
"Lien" means a security interest, lien, charge, pledge,
equity or encumbrance of any kind.
"Liquidated Receivable" means any Receivable, other than
a Receivable that first became a Defaulted Receivable, liquidated
by the Servicer through sale of the Financed Vehicle or otherwise.
"Liquidation Proceeds" means the moneys collected during
the respective Collection Period on a Liquidated Receivable,
whether through foreclosure or otherwise, other than Risk Default
Insurance Proceeds, net of the sum of any amounts expended by
the Servicer for the account of the Obligor and the expenses
incurred in the liquidation.
"Lock-Box Account" means the account(s) designated as
such, established and maintained pursuant to Section 5.01 hereof,
into which account shall be deposited only those moneys collected
with respect to the Receivables as contemplated herein and moneys
collected with respect to other retail installment sales contracts
originated or purchased by Aegis Finance or its Affiliates.
"Lock-Box Account Depository" means Wells Fargo Bank,
N.A., acting as Lock-Box Account Depository hereunder, its
successors in interest and any successors appointed pursuant to
paragraph IX of the Servicing Agreement.
"Majority Certificateholders" means Holders of Certificates
evidencing not less than 51% of the Voting Interests thereof.
"Miscellaneous Servicer Collections" means, with respect
to a Collection Period, all late charges, extension fees and
recoveries of expenses relating to liquidation, repossession and
other costs previously incurred by the Servicer.
"Monthly Servicing Certificate" means the certificate
substantially in the form of Schedule B to the Servicing
Agreement.
"Moody's" means Moody's Investors Service or any
successors thereto.
"Net Loss" means, with respect to a Collection Period, the
sum of the Principal Balances of Receivables that became
Liquidated Receivables or Defaulted Receivables during such
Collection Period, minus Recoveries and Risk Default Insurance
Proceeds (to the extent allocable to principal) received in such
Collection Period.
"Obligor" means, with respect to a Receivable, the
purchaser or co-purchasers of the Financed Vehicle and/or any
other Person who owes payments under such 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, any assistant vice president, any trust
officer, the treasurer, the controller or any assistant treasurer or
any assistant controller of the Seller, the Trustee, the Servicer, the
Custodian or the Backup Servicer, as appropriate.
"Opinion of Counsel" means a written opinion of counsel
who may but need not be counsel to the Seller or Servicer, which
counsel shall be acceptable to the Trustee.
"Optional Purchase Percentage" means 10% of the Original
Pool Balance.
"Original Certificate Balance" means, as to any Certificate,
the initial certificate balance stated on the face of such Certificate.
"Original Pool Balance" means the initial Principal Balance
of all Receivables as of the Cutoff Date.
"Pass-Through Rate" means 9.00% per annum.
"Percentage Interest" means, with respect to any
Certificate, the percentage ownership interest of such Certificate
in the aggregate of amounts distributable hereunder to the
Certificates. With respect to any Certificate, the Percentage
Interest evidenced thereby shall equal the Original Certificate
Balance thereof divided by the aggregate Original Certificate
Balance of the Certificates.
"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.
"Plan" shall have the meaning set forth in Section 7.03.
"Pool Balance" means, as of the day of calculation, the
aggregate Principal Balance of the Receivables less Net Losses.
"Pool Factor" means, as of any Distribution Date, a seven-
digit decimal figure equal to the Pool Balance for such Distribution
Date divided by the Original Pool Balance.
"Principal Balance" means, with respect to any Receivable
at any time, the Amount Financed minus the sum of (a) the portion
of all payments made by or on behalf of the related Obligor and
allocable to principal using the Simple Interest Method and (b) the
portion of any payment of the Purchase Amount with respect to the
Receivable allocable to principal, calculated as of the close of
business on the last day of the prior Collection Period (or, prior to
the end of the first Collection Period, calculated as of the close of
business on the day immediately prior to the Cutoff Date).
"Principal Carryover Shortfall" means, as of the close of
any Distribution Date, the excess of the Principal Distributable
Amount plus any outstanding Principal Carryover Shortfall from
the preceding Distribution Date over the amount of principal that
the holders of the Certificates actually received on such
Distribution Date pursuant to Section 5.06.
"Principal Distributable Amount" means, with respect to
any Distribution Date the sum of: (i) the portion of all Scheduled
Payments allocable to principal (including delinquent payments)
collected during the preceding Collection Period on the
Receivables, (ii) the principal portion of all prepayments in full or
in part received during the preceding Collection Period (without
duplication of amounts included in clause (i) above); (iii) the
Principal Balance of each Receivable that became a Purchased
Receivable during the preceding Collection Period (without
duplication of amounts referred to in clauses (i) and (ii) above);
(iv) the Principal Balance of each Receivable that became a
Liquidated Receivable during the preceding Collection Period
(without duplication of amounts included in clause (i), (ii) and (iii)
above), and (v) the Principal Balance of each Receivable that
became a Defaulted Receivable during the preceding Collection
Period (without duplication of amounts included in clause (i), (ii),
(iii) and (iv) above); provided, however, that in calculating the
Principal Distributable Amount the following will be excluded: all
payments and proceeds of any Purchased Receivables the Purchase
Amount of which has been included in the Principal Distributable
Amount in a prior Collection Period. Further, with respect to the
Distribution Date following the substitution of a Receivable
pursuant to Section 3.02, the principal required to be distributed
to Certificateholders shall include the difference, if any, between
the outstanding Principal Balance of the replaced Receivable and
the outstanding Principal Balance of the substitute Receivable.
"Purchase Agreement" means Purchase Agreement dated as
of September 1, 1996 between the Seller, as purchaser, and Aegis
Finance, as seller of the Receivables.
"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
the principal amount thereof and interest to the end of the
Collection Period.
"Purchased Receivable" means a Receivable purchased as
of the close of business on the last day of a Collection Period by
the Seller or by Aegis Finance on behalf of the Seller pursuant to
the Purchase Agreement.
"Rated Certificates" means the Certificates if rated by a
Rating Agency at the request of the Seller.
"Rated Entity" shall mean a Person whose long-term
unsecured debt obligations (at the time of the transfer under
Section 7.03) are rated within the investment grade categories of
either Moody's, S&P, Fitch or DCR.
"Rating Agency" means each statistical credit rating agency,
if any, or its successor, that rates any of the Certificates at the
request of the Seller. If such agency or a successor is no longer
in existence, "Rating Agency" shall be such statistical credit rating
agency, or other comparable Person, designated by the Seller,
notice of which designation shall be given to the Trustee.
"Receivable" means any retail installment sales contract and
security agreement identified on Exhibit C hereto.
"Record Date" means the last day of the Collection Period
preceding a Distribution Date or termination of the Trust.
"Recoveries" means all amounts received (net of out-of-
pocket costs of collection), other than Risk Default Insurance
Proceeds, with respect to Defaulted Receivables and Liquidated
Receivables.
"Required Deposit Rating" means a rating of an institution
which has either short-term deposits of "P-1" by Moody's, or
short-term deposits of "A-1+" by S&P, and short-term deposits of
"D-1+" by DCR, if rated by DCR; and any requirement that
deposits have the "Required Deposit Rating" shall mean that such
deposits have the foregoing required ratings first, by DCR, or
second, by Moody's or S&P.
"Reserve Fund" means the fund established and maintained
pursuant to Section 5.07 hereof outside of the Trust.
"Reserve Fund Draw" has the meaning set forth in Section
5.07(f).
"Reserve Fund Initial Deposit" means $878,068.58, an
amount equal to 5.0% of the Principal Balance of the Receivables
as of the Cutoff Date, which amount shall be deposited in the
Reserve Fund on the date of the initial issuance of the Certificates
pursuant to Section 5.07 hereof.
"Reserve Fund Property" has the meaning specified in
Section 5.07(c).
"Reserve Requirement" means, as of any Distribution Date,
after giving effect to distributions of principal on such date, an
amount equal to the greater of:
(1) Ten percent (10%) of the Pool Balance; or
(2) the lesser of $351,228 and the aggregate Principal
Balance of the Receivables.
"Residual Interest" means the right of the Seller to all
distributions from, and assets of, the Trust, after payment in full
of the fees and expenses of the Backup Servicer, the Servicer, the
Trustee and the Custodian and payment in full of the Certificates
upon termination of this Agreement.
"Retention Amount" means the insured's deductible (initially
equal to 9.5% of the aggregate insured portion of the Amount
Financed of the Receivables) under the terms of the Risk Default
Policy as described therein.
"Risk Default Insurance Policy" or "Risk Default Policy"
means the insurance policy listed on Exhibit H issued by the Risk
Default Insurer to the Trustee for the benefit of the Trust as named
insured thereunder, including all endorsements thereto, the original
of which policy and endorsements shall be delivered to the
Custodian on or prior to the Closing Date.
"Risk Default Insurance Proceeds" means the proceeds
received by the Trustee, the Backup Servicer, the Servicer, the
insured or any other Person under the Risk Default Policy, which
proceeds shall include allocations to principal and interest as
determined by the Servicer.
"Risk Default Insurer" means The Connecticut Indemnity
Company, its successors and assigns.
"Schedule of Receivables" means the list of Receivables
annexed hereto as Exhibit C.
"Scheduled Payment" means the fixed payment required to
be made by the Obligor during the respective Collection Period
sufficient to fully amortize the Principal Balance under the Simple
Interest Method over the term of the Receivable and to provide
interest at the applicable APR, including any delinquent payment;
provided, however, that "Scheduled Payment" does not include
Miscellaneous Servicer Collections.
"Securities Act" shall have the meaning set forth in Section
7.03.
"Seller" means Aegis Auto Funding Corp., a Delaware
corporation, as the seller of the Receivables to the Trust under this
Agreement, and its successors (in the same capacity) pursuant to
Section 8.03.
"Servicer" means Aegis Finance, as servicer of the
Receivables pursuant to the Servicing Agreement or any other
Eligible Servicer acting as servicer pursuant to the Servicing
Agreement in accordance with Section 4.01, as the context may
require.
"Servicer Files" shall have the meaning set forth in Section
3.03(b).
"Servicing Agreement" means the Aegis Finance Servicing
Agreement or another servicing agreement entered into by the
Backup Servicer and the Trustee with an Eligible Servicer which
shall be substantially in the form of the Aegis Finance Servicing
Agreement or such other form as shall be approved by the
Majority Certificateholders.
"Servicing Fee" means the fee payable to the Servicer for
services rendered during the respective Collection Period,
determined pursuant to the Servicing Agreement.
"Servicing Officer" means any officer of the Servicer
involved in, or responsible for, the administration and servicing of
Receivables whose name appears on a list of servicing officers
attached to an Officer's Certificate furnished to the Trustee by the
Servicer, as such list may be amended from time to time.
"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 APR multiplied by the unpaid principal balance
multiplied by a fraction the numerator of which is the number of
days elapsed since the preceding payment was made and the
denominator of which is 365.
"Simple Interest Receivable" means any Receivable under
which the portion of a payment allocable to interest and the portion
allocable to principal is determined in accordance with the Simple
Interest Method.
"S&P" means Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., or any successors
thereto.
"State" means any state of the United States of America, or
the District of Columbia.
"Substitute Receivable" means any replacement Receivable
substituted for another Receivable in accordance with Section
3.02(b).
"Temporary Agent" means American Lenders Facilities,
Inc., as temporary agent for the Custodian.
"Total Available Distribution Amount" means, for each
Distribution Date, the sum of the Available Interest Distribution
Amount, the Available Principal Distribution Amount and the
Miscellaneous Servicer Collections.
"Transition Costs" means an amount necessary to reimburse
the successor to the Servicer, the Trustee or the Backup Servicer,
as the case may be, for reasonable costs and expenses incurred in
connection with such transition(s).
"Trust" means the Aegis Auto Receivables Trust 1996-A
created by this Agreement, the estate of which shall consist of the
Trust Property.
"Trust Property" shall have the meaning set forth in Section
2.01(c).
"Trustee" means the Person acting as Trustee of the Trust
under this Agreement, its successor in interest and any successor
trustee pursuant to Section 11.10.
"Trustee Officer" means any vice president or assistant vice
president, any assistant secretary, any trust officer or any other
officer of the Corporate Trust Department of the Trustee
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.
"Trustee's Certificate" means a certificate completed and
executed by the Trustee by a Trustee Officer pursuant to Section
11.02, substantially in the form of, in the case of an assignment to
the Seller, Exhibit M.
"UCC" means the Uniform Commercial Code as in effect
from time to time in the relevant jurisdictions.
"Underwriting Guidelines" means the underwriting
guidelines of Aegis Finance with respect to each of its programs,
a copy of which is annexed to the Risk Default Insurance Policy.
"Vendor's Single Interest Physical Damage Insurance
Policy" means the insurance policy listed on Exhibit I issued by
the VSI Insurer, including all endorsements thereto.
"Voting Interests" means the portion of the voting interests
of all the Certificates that is allocated to any Certificate for
purposes of the voting provisions of this Agreement. Voting
Interests shall be allocated among the Certificates in proportion to
their Certificate Balances. Where the Voting Interests are relevant
in determining whether the vote of the requisite percentage of the
Certificateholders necessary to effect any consent, waiver, request
or demand shall have been obtained, the Voting Interests shall be
deemed to be reduced by the amount equal to the Voting Interests
(without giving effect to this provision) represented by the interests
evidenced by any Certificate registered in the name of the
Servicer, Aegis Finance, the Seller or any Person known to a
Trustee Officer to be an Affiliate of any such foregoing entities,
unless such entity owns all affected Certificates.
"VSI Insurance Policy" means Vendor's Single Interest
Physical Damage Insurance Policy.
"VSI Insurer" means Guaranty National Insurance
Company.
Section 1.02. 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."
Section 1.03. Record Date. All references to the Record
Date prior to the first Record Date in the life of the Trust shall be
to the Closing Date.
Section 1.04. Section References. Unless otherwise
indicated, all section references shall be to Sections in this
Agreement.
ARTICLE II
CREATION OF TRUST
Upon the execution by the parties hereto, there is hereby
created the Aegis Auto Receivables Trust 1996-A. The situs and
administration of the Trust shall be in Minneapolis, Minnesota or
in such other city in which the Corporate Trust Office is located
from time to time.
Section 2.01. Conveyance and Acceptance by Trustee.
(a) In consideration of the Trustee's delivery of
the Certificates to or upon the order of the Seller in an
aggregate principal amount equal to the aggregate Principal
Balance of the Receivables, the Seller does hereby
irrevocably sell, assign, and otherwise convey to the
Trustee, in trust for the benefit of the Certificateholders,
without recourse (subject to the obligations herein):
(i) all right, title and interest of the Seller in and to the
Receivables identified on Exhibit C, all moneys received thereon
on and after the Cutoff Date allocable to principal, and all moneys
received thereon allocable to interest accrued from and including
the Cutoff Date;
(ii) the interest of the Seller in the
security interests in the Financed Vehicles granted
by the Obligors pursuant to the Receivables;
(iii) the interest of the Seller in any Risk
Default Insurance Proceeds and any proceeds from
claims on any Insurance Policies (including the VSI
Insurance Policy) covering the Receivables, the
Financed Vehicles or the Obligors from the Cutoff
Date;
(iv) the right of the Seller to realize upon
any property (including the right to receive future
Liquidation Proceeds) that shall have secured a
Receivable and have been repossessed by or on
behalf of the Trustee;
(v) the interest of the Seller in any
Dealer Recourse relating to the Receivables;
(vi) all right, title and interest of the
Seller in and to the Purchase Agreement; and
(vii) the proceeds of any and all of the
foregoing.
(b) It is the intention of the Seller and the
Trustee that the transfer and assignment of the Seller's
right, title and interest in and to the assets identified in
clauses (i) through (vii) of Section 2.01(a) (collectively, the
"Trust Property") shall constitute an absolute sale by the
Seller to the Trustee in trust for the benefit of the
Certificateholders. In the event a court of competent
jurisdiction were to recharacterize the transfer of the Trust
Property as a secured borrowing rather than a sale,
contrary to the intent of the Seller and the Trustee, the
Seller does hereby grant, assign and convey to the Trustee
and the Trust, as security for all amounts payable to the
Certificateholders, a security in and lien upon all of its
right, title and interest in and to the Trust Property,
including all amounts deposited to the Lock-Box Account,
the Collection Account and the Certificate Account, said
security interest to be effective from the date of execution
of this Agreement.
(c) The Trustee does hereby accept all
consideration conveyed by the Seller pursuant to Section
2.01(a), and declares that the Trustee shall hold such
consideration upon the trusts herein set forth for the benefit
of all present and future Certificateholders, subject to the
terms and provisions of this Agreement.
The Trustee and the Certificateholders acknowledge
and agree that the Seller is the holder of the Residual
Interest and, subject to the terms and provisions of this
Agreement, shall be entitled to receive all distributions of
Excess Receipts.
ARTICLE III
THE RECEIVABLES
Section 3.01. Representations and Warranties of Seller.
(a) The Seller makes the following
representations and warranties as to the Receivables on
which the Trustee relies in accepting the Receivables in
trust on the Closing Date and executing and authenticating
the Certificates on the Closing Date. Such representations
and warranties speak as of the Closing Date, but shall
survive the sale, transfer and assignment of the Receivables
to the Trustee.
(i) Characteristics of Receivables. Each
Receivable (A) has been originated in the United
States of America by Aegis Finance or a Dealer for
the retail sale of a Financed Vehicle in the ordinary
course of Aegis Finance's or such Dealer's
business, has been fully and properly executed by
the parties thereto, and, if originated by a Dealer,
has been purchased by Aegis Finance from such
Dealer or has been financed for such Dealer under
an existing agreement with Aegis Finance, (B) has
created a valid, subsisting and enforceable first
priority security interest in favor of Aegis Finance
or the Dealer in the Financed Vehicle, which
security interest, (1) if in favor of the Dealer, has
been assigned by the Dealer to Aegis Finance, (2)
in either case has been duly assigned by Aegis
Finance to the Seller, and (3) has been assigned by
the Seller to the Trustee, (C) is covered by the VSI
Insurance Policy and the Risk Default Insurance
Policy, (D) contains customary and enforceable
provisions 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 (provided that
the payment in the first or last month in the life of
the Receivable may be different from the level
payment) that fully amortize the Amount Financed
over an original term of no greater than 60 months
and yield interest at the Annual Percentage Rate.
(ii) Schedule of Receivables. The
information set forth in Exhibits C and E hereto is
true, complete and correct in all material respects as
of the opening of business on the Cutoff Date, and
no selection procedures adverse to the
Certificateholders have been utilized in selecting the
Receivables.
(iii) Compliance With Law. Each
Receivable and the sale of each Financed Vehicle
(A) complied at the time it was originated or made
and at the Closing Date complies in all material
respects with all requirements of applicable federal,
State and local laws and regulations thereunder,
including, 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 Magnuson-Moss
Warranty Act, the Federal Reserve Board's
Regulations B and Z, 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 (B) does not contravene any applicable
contracts to which Aegis Finance is a party and no
party to such contract is in violation of any
applicable law, rule or regulation which is material
to the Receivable or the sale of the Financed
Vehicle.
(iv) Binding Obligation. Each Receivable
represents the genuine, legal, valid and binding
payment obligation in writing of the Obligor,
enforceable by the holder thereof in accordance with
its terms.
(v) No Government Obligor. None of
the Receivables is due from the United States of
America or any State or local government or from
any agency, department or instrumentality of the
United States of America or any State or local
government.
(vi) Security Interest in Financed Vehicle.
Immediately prior to the assignment and transfer
thereof, each Receivable is secured by a validly
perfected first priority security interest in the related
Financed Vehicle in favor of the Seller as secured
party or all necessary and appropriate actions have
been commenced that would result in the valid
perfection of a first priority security interest in the
Financed Vehicle in favor of the Seller as the
secured party. The Seller has caused each
certificate of title (or copy of an application for
title), or such other document delivered by the state
title registration agency evidencing the security
interest in each Financed Vehicle, to be delivered to
the Custodian pursuant to Section 3.03 hereof,
together with a power of attorney, duly executed by
Aegis Finance in favor of the Trustee,
which powers of attorney are sufficient to change
the lien holder on the certificate of title with respect
to a Financed Vehicle.
(vii) 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.
(viii) No Waiver. No provision of a
Receivable has been waived, impaired, altered or
modified in any respect except in accordance with
the Servicing Agreement, the substance of which is
reflected in the Schedule of Receivables contained
in the Purchase Agreement as it relates to the
information included thereon.
(ix) No Amendments. No Receivable has
been amended such that either the original
Scheduled Payment has been decreased or the
number of originally scheduled due dates has been
increased except as permitted under the terms of the
Risk Default Policy covering such Receivable.
(x) No Defenses. No right of rescission,
setoff, recoupment, counterclaim or defense has
been asserted or threatened with respect to any
Receivable.
(xi) No Liens. No Liens or claims have
been filed for work, labor or materials relating to a
Financed Vehicle that are Liens prior to, or equal
or coordinate with, the security interest in the
Financed Vehicle granted by the Obligor pursuant
to the Receivable.
(xii) No Default. Except for payment
delinquencies continuing for a period of not more
than thirty (30) days as of the Cutoff Date for any
Receivable, no default, breach, violation or event
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
permitting acceleration under the terms of any such
Receivable has arisen; and the Seller has not waived
any of the foregoing. As of the Closing Date, the
Seller has no knowledge of any facts regarding any
particular Receivable indicating that such Receivable
would not be paid in full.
(xiii) Insurance. Each Receivable is
covered, as of the Closing Date, and throughout the
shorter of the term of the Trust or the term of the
Receivable, under the VSI Insurance Policy and the
Risk Default Insurance Policy, and each such
insurance policy is valid and remains in full force
and effect. Aegis Finance, in accordance with its
customary procedures, has required that each
Obligor obtain, and has determined that each
Obligor has obtained, physical damage insurance
covering the Financed Vehicle as of the date of
execution of the Receivable insuring repair or
replacement of such Financed Vehicle subject to a
deductibility not in excess of $500.
(xiv) Title. It is the intention of the Seller
that the transfer and assignment of the Receivables
from the Seller to the Trust herein contemplated be
treated as an absolute sale for financial accounting
purposes, and that the beneficial interest in and title
to the Receivables not be part of the property of the
Seller for any purpose under state or federal law.
No Receivable has been sold, transferred, assigned
or pledged by the Seller to any Person other than
the Trustee. Immediately prior to the transfer and
assignment herein contemplated, the Seller had good
and marketable title to each Receivable free and
clear of all Liens and rights of others and,
immediately upon the transfer thereof, the Trustee
for the benefit of the Certificateholders will have
good and marketable title to each Receivable, free
and clear of all Liens and rights of others; and the
transfer has been validly perfected under the UCC.
(xv) Lawful Assignment. No Receivable
has been originated in, or is subject to the laws of,
any jurisdiction under which the pledge, transfer
and assignment of such Receivable under this
Agreement or pursuant to transfers of the
Certificates is or shall be unlawful, void or
voidable.
(xvi) All Filings Made. All filings
(including, without limitation, UCC filings)
necessary in any jurisdiction to give the Trustee a
first perfected ownership interest in the Receivables
have been made.
(xvii) One Original. There is only one
original executed copy of each Receivable.
(xviii) Maturity of Receivables. Each
Receivable had an original term to maturity of not
more than 60 months; the weighted average original
term to maturity of the Receivables was 54.48
months as of the Cutoff Date while the weighted
average remaining term to maturity as of the Cutoff
Date for such Receivables was 54.40 months; the
remaining term to maturity of each Receivable was
60 months or less as of the Cutoff Date.
(xix) Scheduled Payments. Each
Receivable has a next scheduled payment due date
on or prior to November 24, 1996; no Receivables
had a payment that was more than 30 days overdue
as of the Cutoff Date; and each Receivable has a
final scheduled payment due no later than the Final
Scheduled Distribution Date.
(xx) Monthly Payments. Each Receivable
provides for level monthly payments (provided that
the payment in the first or last month in the life of
the Receivable may be minimally different from
such level payment) which fully amortize the
amount financed over the original term; provided,
however, that the Risk Default Policy provides that
loan extensions will be allowed, subject to no more
than one extension during each twelve (12) months
in the Receivable's term.
(xxi) Outstanding Principal Balance;
Annual Percentage Rate. Each Receivable had an
outstanding Principal Balance as of the Cutoff Date
of at least $3,911.50; and no Receivable has an
outstanding Principal Balance in excess of
$36,505.52. As of the Cutoff Date, the weighted
average APR of the Receivable was 20.06% per
annum.
(xxii) Financing. Each Receivable
represents a Simple Interest Receivable.
(xxiii) Bankruptcy Proceeding. No
Receivable as of the Cutoff Date is noted in Aegis
Finance's or the Seller's records as a dischargeable
debt under a bankruptcy proceeding.
(xxiv) Chattel Paper, Valid and Binding.
Each Receivable constitutes "chattel paper" under
the UCC, and is the legal, valid and binding
obligation of the Obligor thereunder in accordance
with the terms thereof.
(xxv) States of Origination. At the time of
origination, each Receivable was originated in one
of the following states, which are the only states in
which the Receivables were originated: Alabama,
Arizona, Colorado, Connecticut, Delaware, Florida,
Georgia, Illinois, Indiana, Kansas, Kentucky,
Louisiana, Maryland, Michigan, Mississippi,
Missouri, Nevada, New Jersey, New Mexico, New
York, North Carolina, Ohio, Pennsylvania, South
Carolina, Tennessee, Texas, Virginia and West
Virginia.
(xxvi) Age of Financed Vehicles.
Approximately 5.57% of the Receivables relate to
new Financed Vehicles and approximately 94.43%
of the Receivables relate to used Financed Vehicles.
(xxvii) No Future Advances. The full
principal amount of each Receivable has been
advanced to each Obligor or advanced in accordance
with the directions of each such Obligor, and there
is no requirement for future advances thereunder.
The Obligor with respect to the Receivable does not
have any options under such Receivable to borrow
from any person additional funds secured by the
Financed Vehicle. Each Receivable as of the
Closing Date is secured by the related Financed
Vehicle.
(xxviii) Underwriting Guidelines. Each
Receivable has been originated in accordance with
the applicable Underwriting Guidelines of Aegis
Finance in effect at the time of origination and in
accordance with underwriting guidelines acceptable
to the Risk Default Insurer. Such guidelines include
but are not limited to the following:
(A) the purchase of the Financed
Vehicle by the Obligor, at the time of
funding of the Receivable, was affordable to
the Obligor based upon Aegis Finance's
existing Underwriting Guidelines with
respect to discretionary income; and
(B) at the time of funding of the
Receivable, the Financed Vehicle was
purchased from, and the Receivable
originated by, a Dealer located in one of the
states specified in paragraph (xxv) above.
(xxix) Financed Vehicle in Good Repair.
To the best of the Seller's knowledge, each
Financed Vehicle is in good repair and working
order.
(xxx) Principal Balance. No Receivable
has a Principal Balance which includes capitalized
interest, physical damage insurance or late charges.
(xxxi) Servicing. At the Cutoff Date, each
Receivable was being serviced by the Servicer.
(xxxii) Eligible Loan. Each Receivable
constitutes an "Instrument" and each Financed
Vehicle constitutes "Eligible Collateral" as defined
in and for purposes of the Risk Default Insurance
Policy. Neither the insured under the Risk Default
Insurance Policy nor any Person acting on behalf of
such insured has concealed or misrepresented any
material facts or circumstances regarding any matter
that would serve as a basis for the Risk Default
Insurer to void the Risk Default Insurance Policy.
(xxxiii) Original Principal Amount. The
original principal amount of each Receivable (A)
originated under the original "Zero Down" and the
"Reduced Income" programs, was not more than (1)
in the case of new Financed Vehicles, the lower of
(x) 105% of the manufacturer's suggested retail
price plus rebatable premiums on cancelable items
and (y) 120% of the manufacturer's suggested retail
price or (2) in the case of used Financed Vehicles,
the lower of (x) 105% of the retail value of the
Financed Vehicle at the time of origination of the
Receivable as set forth in the Kelley "Blue Book"
for the appropriate region plus rebatable premiums
on cancelable items and (y) 120% of such Kelley
"Blue Book" retail value; (B) originated under the
"First Time Buyer" program, was not more than (1)
in the case of new Financed Vehicles, 95% of the
manufacturer's suggested retail price plus rebatable
premiums on cancelable items of up to 15% of the
manufacturer's suggested retail price or (2) in the
case of used Financed Vehicles, 95% of the retail
value of the Financed Vehicle at the time of
origination of the Receivable as set forth in the
Kelley "Blue Book" for the appropriate region plus
rebatable premiums on cancelable items of up 15%
of the manufacturer's suggested retail price and (C)
originated under the "Military Program" was not
more than 105% of the manufacturer's suggested
retail price or, in the case of used Financed
Vehicles, 105% of the Kelley "Blue Book" retail
value. Calculations made with respect to the
percentages referenced above are rounded to the
nearest whole percentage point.
(xxxiv) No Proceedings. There are no
proceedings or investigations pending or, to the best
knowledge of the Seller, threatened before any
court, regulatory body, administrative agency or
other governmental instrumentality having
jurisdiction over the Seller or its respective
properties: (A) asserting the invalidity of any of the
Receivables; (B) seeking to prevent the enforcement
of any of the Receivables; or (C) seeking any
determination or ruling that might materially and
adversely affect the payment on or enforceability of
any Receivable.
(xxxv) Licensing. With respect to each
Receivable originated in the State of Pennsylvania,
the Trust, the Seller, Aegis Finance and each prior
holder of any such Receivable were each properly
licensed under applicable Pennsylvania laws and
regulations during the respective times the Trust,
the Seller, Aegis Finance and each prior holder of
any such Receivable held such Receivable, except
where the failure to be so licensed would not have
a material adverse effect on the ability of the Trust
to collect principal or interest payments on such
Receivable or to realize upon the Financed Vehicle
underlying any such Receivable in accordance with
the terms thereof.
(xxxvi) State Concentrations. The forms of
retail installment sales contract used by Aegis
Finance in each of Florida, Georgia, North Carolina
and Texas have not been changed since September
12, 1996. The percentage of the aggregate
Principal Balance of the Receivables originated in
each of the foregoing states is as follows:
Florida 20.14%
Georgia 14.22%
North Carolina 11.86%
Texas 12.98%
As of the Closing Date, no other state represented
more than five percent (5%) of the aggregate
Principal Balance of the Receivables. After giving
effect to the substitution of Substitute Receivables
and the release of all funds from the escrow account
established on the Closing Date pursuant to a
separate agreement, no more than eight percent
(8%) of the original aggregate Principal Balance of
the Receivables will have been originated in any one
state.
(b) The Seller makes the following additional
representations, warranties and covenants on which the
Trustee relies in accepting the Receivables in trust on the
Closing Date and executing and authenticating the
Certificates on the Closing Date, which representations,
warranties and covenants shall survive the Closing Date.
(i) Location of Servicer Files. The Servicer Files are kept at
the location or locations listed in Exhibit D hereto, with the
exception of (A) the original certificates of title or other documents
under applicable state laws evidencing the security interest of
Aegis Finance in the Financed Vehicles, and (B) the original
Receivables, which documents shall be kept at an office of the
Custodian.
(ii) Evidence of Security Interest. On the
Closing Date, the Seller shall deliver or cause to be
delivered to the Custodian or the Temporary Agent
(A) an original certificate of title or (B) if the
applicable state title registration agency does not
deliver certificates of title to lienholders, such other
document under applicable state laws evidencing the
security interest of Aegis Finance in the Financed
Vehicle, or (C) a guarantee of title or a copy of an
application for title if no certificate of title or other
evidence of the security interest in the Financed
Vehicle has yet been issued, for each Financed
Vehicle relating to each Receivable sold,
transferred, assigned and conveyed hereunder;
provided, however, that any original certificate of
title or other document under applicable law
evidencing the security interest of Aegis Finance in
the Financed Vehicle not so delivered on the
Closing Date, due to the fact that such certificate of
title or other document has not yet been issued by
a state title registration agency and delivered to the
Seller as of such date, shall be delivered by the
Seller to the Custodian within one hundred fifty
(150) days after the Closing Date, or such later date
permitted by the Majority Certificateholders (or, if
the Certificates have been rated, by each Rating
Agency) in accordance with Section 3.03(a);
provided, further, that failure to so deliver any
original certificate of title or other document
evidencing the security interest of Aegis Finance in
the Financed Vehicle to the Trustee shall be deemed
to be a breach by the Seller of its representations
and warranties contained in this Section 3.01, and
such occurrence shall constitute a breach pursuant
to Section 3.02.
Section 3.02. Repurchase or Substitution Upon
Breach.
(a) The Seller, the Backup Servicer or the
Trustee, as the case may be, shall inform the other parties
to this Agreement and each Certificateholder promptly, in
writing, upon its discovery of (i) any breach of the Seller's
representations and warranties made pursuant to Section
3.01(a), or of Aegis Finance's representations and
warranties made pursuant to Section 3.01(b) of the
Purchase Agreement, or (ii) the failure of the Seller to
deliver original certificates of title or other documents
evidencing the security interest of Aegis Finance in the
Financed Vehicle pursuant to Section 3.01(b) and 3.03.
Neither the Backup Servicer nor the Trustee has any duty
to investigate or determine the existence of any breach or
non-delivery except as specified herein. Unless (i) the
breach shall have been cured by the thirtieth day following
the discovery thereof by the Trustee or receipt by the
Trustee of notice from the Seller, the Servicer or the
Backup Servicer of such breach, or (ii) the non-delivery
shall have been cured by the seventh Business Day
following receipt by an officer of the Seller of notice from
the Trustee by certified mail, the Seller shall repurchase
each Receivable (x) to which such breach relates by the
fifth Business Day following such 30 day cure period or (y)
relating to the non-delivery by the fifth Business Day
following such seven day cure period. Concurrently
therewith, the Seller shall cause Aegis Finance to
repurchase such Receivable pursuant to the Purchase
Agreement for the Purchase Amount. In consideration of
the purchase of the Receivable, the Seller shall remit or
cause Aegis Finance to remit the Purchase Amount to the
Trustee for application in the manner specified in Section
5.05. For purposes of this Section 3.02, the Purchase
Amount of a Receivable which is not consistent with the
warranty pursuant to Section 3.01(a)(i)(E) shall include
such additional amount as shall be necessary to provide the
full amount of principal and interest as contemplated
therein.
(b) The foregoing notwithstanding, the Seller
shall also have the option of substituting, within the five
Business Day period following the applicable cure period,
one or more replacement Receivables conforming to the
requirements hereof (a "Substitute Receivable") for any
breach or failing Receivable instead of repurchasing such
Receivable, provided any such substitution occurs within
ninety (90) days of the Closing Date. It shall be a
condition of any such substitution that (i) the outstanding
Principal Balance of the Substitute Receivables as of the
date of substitution shall be less than or equal to the
outstanding Principal Balance of the replaced Receivable as
of the date of substitution; provided that an amount equal
to the difference, if any, between the outstanding Principal
Balance of the replaced Receivable and the outstanding
Principal Balance of the Substitute Receivable shall be
deposited into the Collection Account and shall be applied
to repay the outstanding Principal Balance of the
Certificates on the next Distribution Date; (ii) the
remaining term to maturity of the Substitute Receivable
shall not be greater than that of the replaced Receivable;
(iii) the Cutoff Date with respect to the Substitute
Receivable shall be deemed to be the first day of the month
in which the substitution occurs; (iv) the Substitute
Receivable otherwise shall satisfy the conditions of Section
3.01(a) and (b) hereof (and the Seller shall be deemed to
make all representations and warranties contained in
Sections 3.01(a) and (b) hereof with respect to the
Substitute Receivable as of the date of substitution); (v) the
Seller shall have delivered to the Purchaser and the Trustee
all of the documents specified in Section 3.03(a) hereof
with respect to the Substitute Receivable on or before the
date of substitution.
(c) The Seller agrees to repurchase at the
Purchase Amount on each Distribution Date, commencing
with the Distribution Date occurring in December 1996,
any Receivable for which, through the end of the related
Collection Period, either of the first two Scheduled
Payments was not paid within forty-five (45) days of the
due date for such Scheduled Payment.
(d) The sole remedy of the Trustee, the Trust or
the Certificateholders with respect to a breach of
representations and warranties of the Seller pursuant to
Section 3.01(a), or a breach of representations and
warranties of Aegis Finance pursuant to Section 3.01(b) of
the Purchase Agreement, or non-delivery of certificates of
title pursuant to Section 3.01(b) and 3.03, or failure by an
Obligor to make the first or second Scheduled Payments as
set forth above, shall be to require the Seller to repurchase
or substitute for the Receivables pursuant to this Section
3.02 and to enforce Aegis Finance's obligation to
repurchase such Receivables pursuant to the Purchase
Agreement.
Section 3.03. Custody of Documents.
(a) To assure uniform quality in servicing the
Receivables, to reduce administrative costs and to perfect
the security interest conveyed by the Seller to the Trustee
and the Trust pursuant to this Agreement in the Trust
Property, the Trustee, upon the execution and delivery of
this Agreement, is hereby irrevocably appointed as
Custodian of the following documents or instruments,
which are hereby delivered to the Custodian or the
Temporary Agent with respect to each Receivable:
(i) The original of the Receivable and
any amendments thereto;
(ii) The original certificate of title or, if
the applicable state title registration agency does not
issue certificates of title to lienholders, such other
document under applicable state laws evidencing the
security interest of Aegis Finance in the Financed
Vehicle, or a guarantee of title or a copy of an
application for title if a certificate of title or other
document evidencing the security interest in the
Financed Vehicle has not yet been issued;
(iii) The original Risk Default Insurance
Policy and a copy of the VSI Insurance Policy
(including all endorsements thereto), including
endorsements confirming insurance thereunder (as
reflected on master lists of insured Receivables
annexed to such endorsements) regarding each
Receivable covered thereby and, with respect to the
VSI Insurance Policy, an endorsement naming the
Trustee as an additional insured thereunder;
(iv) Such other documents as may be in
existence evidencing the security interest of Aegis
Finance in the Financed Vehicle; provided,
however, that the Trustee has no obligation to
determine the existence or necessity for such other
documents.
Each document identified in paragraphs (i) through
(iv) above and delivered to the
Temporary Agent shall be delivered to the Custodian no
later than October 15, 1996.
The following documents shall be delivered to the
Custodian within 30 days of the Closing Date:
(v) File-stamped copies of the UCC-1
financing statements filed pursuant to this
Agreement.
Items (a)(i), (ii), (iii) and (iv) shall be referred to
collectively as the "Custodian Files."
The Custodian shall review the Custodian Files (A)
within 30 days after the Closing Date to verify that all
guarantees of title and all applications for title have been
replaced by either an original certificate of title or other
documents delivered by a state title registration agency
evidencing the security interest of Aegis Finance in the
Financed Vehicle, and (B) within 30 days after the Closing
Date to verify that an original installment sale contract is
present for each Receivable and that each Receivable is
covered by an endorsement to the Risk Default Policy
confirming insurance thereunder. The Custodian shall
immediately deliver written notice by certified mail to the
Seller and Aegis Finance if any such document is missing
or has not been delivered to the Custodian. With respect
to Receivables for which the original certificates of title or
other documents evidencing the security interest of Aegis
Finance in the Financed Vehicle have not been delivered
within 30 days after the Closing Date, the Custodian shall
review the related Custodian Files every thirty days
thereafter to determine whether or not such documents have
been delivered, and shall promptly notify the Seller, on a
monthly basis, if any such documents have not been
delivered as of the date of such notice. The Custodian
shall deliver written notice to each Rating Agency and the
Certificateholders if any original certificate of title or other
document evidencing the security interest of Aegis Finance
in the Finance Vehicle has not been delivered to the
Custodian within 150 days after the Closing Date. Such
notice shall confirm whether or not a guaranty of title or an
application for title has been delivered to the Custodian
with respect to the related Receivable.
With respect to Receivables for which the original
retail installment sale contract has not been delivered to the
Custodian in accordance with this Section 3.03(a), the
Seller shall cause Aegis Finance to deliver the missing
documents within seven (7) Business Days of receipt of
such notice or repurchase such Receivables pursuant to
Section 3.02 hereof. With respect to Receivables for which
original certificates of title or other documents evidencing
the security interest of Aegis Finance in the Financed
Vehicle have not been delivered to the Custodian within
150 days of the Closing Date, the Seller shall cause Aegis
Finance to deliver such within such period of time as
determined by the Majority Certificateholders (or, if the
Certificates have been rated, by each Rating Agency) (after
receipt of notice as described in the preceding paragraph)
or repurchase the Receivables pursuant to Section 3.02
hereof. Other than the reviews set forth in this paragraph,
the Custodian shall have no duty or obligation to review
any of the Custodian Files.
(b) The Seller shall deliver to the Servicer for
custody pursuant to the Servicing Agreement the documents
and instruments described in Paragraph III.B.3. of the
Servicing Agreement (collectively, the "Servicer Files").
(c) The Custodian agrees to maintain the
Custodian Files at the offices of the Custodian as shall
from time to time be identified to the Trustee by written
notice. Subject to the foregoing, the Trustee may
temporarily move individual Custodian Files or any portion
thereof without notice as necessary to conduct collection
and other servicing activities in accordance with its
customary practices and procedures.
The Custodian shall have and perform the following
powers and duties:
(i) hold the Custodian Files for the
benefit of all present and future Certificateholders,
maintain accurate records pertaining to each
Receivable to enable it to comply with the terms
and conditions of this Agreement and maintain a
current inventory thereof;
(ii) carry out such policies and
procedures in accordance with its customary actions
with respect to the handling and custody of the
Custodian Files so that the integrity and physical
possession of the Custodian Files will be
maintained; and
(iii) promptly release the original
certificate of title to the Servicer upon receipt of a
written request for release of documents certified by
an officer of the Servicer, substantially in the form
of Schedule C to the Servicing Agreement, with
respect to the matters therein.
(d) Notwithstanding anything to the contrary
herein, the Custodian is authorized and directed to appoint
American Lenders Facilities Inc. ("ALFI") as its agent (the
"Temporary Agent") to accept delivery of and temporarily
maintain custody of the Custodian Files and to perform
such other duties of the Custodian hereunder as are
specified in the instrument or agreement appointing such
agent, a copy of which shall be annexed hereto as
Exhibit N. Delivery of documents to the Temporary Agent
at the address designated by the Temporary Agent in
writing shall be deemed to be delivery to the Custodian at
the Corporate Trust Office for all purposes of this
Agreement.
Section 3.04. Duties of Custodian.
(a) Safekeeping. The Trustee, as Custodian,
shall hold the original Receivables and original certificates
of title at the Corporate Trust Office, for the use and
benefit of all present and future Certificateholders. In
performing its duties the Custodian will comply with all
applicable state and federal laws and will exercise that
degree of skill and care consistent with the same degree of
skill and care that the Custodian exercises with respect to
similar motor vehicle loans held by the Custodian and that
is consistent with prudent industry standards, and will
apply in performing such duties and obligations, those
standards, policies and procedures consistent with the same
standards, policies and procedures the Custodian applies
with respect to similar motor vehicle loans or motor vehicle
retail installment sale contracts which the Custodian serves
as custodian or in a similar capacity.
(b) Maintenance of and Access to Records.
Subject to Section 3.03(c), the Custodian shall maintain the
Custodian Files at the Corporate Trust Office or at such
other office as shall be specified to the Trustee by written
notice not later than 90 days after any change in location.
The Custodian shall make available to the Servicer and the
Certificateholders or their duly authorized representatives,
attorneys or auditors a list of locations of the Custodian
Files, and the related accounts, records and computer
systems maintained by Custodian at such times as the
Servicer or the Majority Certificateholders shall instruct.
(c) Release of Documents. In addition to
releasing certificates of title pursuant to Section 3.03(c)(iii)
upon receipt of written instructions from the Servicer in the
form of Schedule C to the Servicing Agreement, the
Custodian shall release any Custodian File to the Servicer,
the Servicer's agent or the Servicer's designee, as the case
may be, at such place or places as the Servicer may
designate, as soon as practicable.
Section 3.05. Instructions; Authority to Act. The
Custodian shall be deemed to have received proper instructions
with respect to the Custodian Files upon its receipt of written
instructions from the Servicer in the form of Schedule C to the
Servicing Agreement.
Section 3.06. Custodian Fees; Indemnification.
(a) In consideration for services rendered as
Custodian, the Custodian shall be paid the Custodian fees
specified in Exhibit G.
(b) The Seller shall indemnify the Custodian for
any and all liabilities, obligations, losses, compensatory
damages, payments, costs or expenses of any kind
whatsoever, including reasonable fees and expenses of
counsel, that may be imposed on, incurred or asserted
against the Custodian as the result of any improper act or
omission by the Seller or the Temporary Agent or alleged
improper act or omission by the Seller or the Temporary
Agent in any way relating to the maintenance and custody
by the Custodian or the Temporary Agent of the Custodian
Files; provided, however, that the Seller shall not be liable
for any portion of any such amount resulting from the
willful misfeasance, bad faith or negligence of the
Custodian.
Section 3.07. Effective Period and Termination. The
Trustee's appointment as Custodian shall become effective as of
the Closing Date and shall continue in full force and effect until
the Trustee resigns or is removed pursuant to Section 11.09. As
soon as practicable after any termination of such appointment, the
Custodian shall deliver the original documents identified in Section
3.03 to the successor Custodian at such place or places as the
successor Custodian may reasonably designate.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 4.01. Servicing Duties.
(a) On or before the Closing Date, the Backup
Servicer and the Trustee will enter into the Aegis Finance
Servicing Agreement with Aegis Finance pursuant to which
Aegis Finance shall act as Servicer with respect to the
Receivables. Any Servicer shall be, and shall remain, for
so long as it is acting as Servicer, an Eligible Servicer.
The Backup Servicer shall review each Monthly Servicing
Certificate required to be provided by the Servicer pursuant
to paragraph III.B.6 of the Servicing Agreement and shall
notify the Trustee, each Rating Agency and each
Certificateholder of any discrepancy in such Monthly
Servicing Certificate which cannot be corrected in
accordance with paragraph III.B.6 of the Servicing
Agreement.
(b) In the event of termination of the rights and
obligations of the Servicer under the Servicing Agreement,
the Backup Servicer shall, in accordance with paragraph VI
of the Servicing Agreement, act as Servicer of the
Receivables by assuming such rights and obligations under
the Servicing Agreement unless a successor Servicer, other
than the Backup Servicer, is appointed by the Trustee under
the Servicing Agreement; provided, however, that the
Backup Servicer shall not be liable for any acts, omissions
or obligations of the Servicer prior to such succession or
for any breach by the Servicer of any of its representations
and warranties contained in the Servicing Agreement or in
any related document or agreement.
(c) Any Servicing Agreement that may be
entered into and any other transactions or servicing
arrangements relating to the Receivables and the other
Trust Property involving a Servicer in its capacity as such
shall be deemed to be for the benefit of the Trust, the
Trustee and the Certificateholders.
(d) Other than the duties specifically set forth in
this Agreement and the Servicing Agreement, the Backup
Servicer shall have no obligation hereunder, including,
without limitation, to supervise, verify, monitor or
administer the performance of the Servicer. The Backup
Servicer shall have no liability for any actions taken or
omitted by the Servicer. The duties and obligations of the
Backup Servicer shall be determined solely by the express
provisions of this Agreement and the Servicing Agreement
and no implied covenants or obligations shall be read into
this Agreement against the Backup Servicer.
Section 4.02. Resignation of Backup Servicer. The
Backup Servicer may resign from the obligations and duties
imposed on it under this Agreement and the Servicing Agreement
as Backup Servicer, and shall resign at any time when it ceases to
be an Eligible Servicer, by giving written notice of such
resignation to the Trustee and the Certificateholders; provided,
however, that (a) at least 45 days prior to such resignation the
Backup Servicer shall have notified the Rating Agency, in writing,
of (i) its intention to resign and (ii) the identity of the proposed
successor Backup Servicer, and (b) each Rating Agency shall have,
within a reasonable time thereafter, notified the Backup Servicer
of its approval of such proposed successor Backup Servicer, which
approval shall not be unreasonably withheld by each Rating
Agency. No such resignation shall become effective until a
successor Backup Servicer that is an Eligible Servicer acceptable
to the Majority Certificateholders shall have assumed the
responsibilities and obligations of the Backup Servicer in
accordance with Section 10.02; provided however, if a successor
Backup Servicer has not assumed the responsibilities and
obligations of the Backup Servicer within 30 days after such
resignation, the Backup Servicer may petition a court of competent
jurisdiction for its removal.
In the event the Backup Servicer shall for any reason no
longer be acting as such (including by reason of resignation as set
forth in this Section 4.02 or an Event of Backup Servicing Default
as specified in Section 10.01), the successor Backup Servicer shall
thereupon assume all of the rights and obligations of the outgoing
Backup Servicer under the Servicing Agreement. In such event,
the successor Backup Servicer shall be deemed to have assumed all
of the Backup Servicer's interest therein and to have replaced the
outgoing Backup Servicer as a party to the Servicing Agreement
to the same extent as if the Servicing Agreement had been assigned
to the successor Backup Servicer, except that the outgoing Backup
Servicer shall not thereby be relieved of any liability or obligations
on the part of the outgoing Backup Servicer to the Servicer under
such Servicing Agreement to the extent such obligations or
liabilities arose prior to the assumption by the successor Backup
Servicer of the obligations of the Backup Servicer thereunder. The
outgoing Backup Servicer shall, upon request of the Trustee,
deliver to the successor Backup Servicer all documents and records
relating to the Servicing Agreement and the Receivables and
otherwise use its reasonable efforts to effect the orderly and
efficient transfer of the Servicing Agreement to the successor
Backup Servicer.
Section 4.03. Covenant of Backup Servicer. The Backup
Servicer shall promptly notify the Trustee of the occurrence of any
Event of Backup Servicing Default or Event of Servicing Default
of which it has obtained actual knowledge and any breach by the
Backup Servicer or the Seller of any of its respective covenants or
representations and warranties contained in this Agreement.
Section 4.04. Servicing Fees. The total servicing fees
payable on each Distribution Date to the Backup Servicer and the
Servicer shall equal the Backup Servicer Fee and the Servicing
Fee, respectively. Any proposed increase in the Backup Servicer
Fee or the Servicing Fee due to the assumption of duties hereunder
or under the Servicing Agreement by a successor Backup Servicer
or successor Servicer shall be approved by the Seller, each Rating
Agency and the Majority Certificateholders. The Backup Servicer
shall also be entitled to any reimbursement pursuant to Section
9.03. Any Servicing Fee payable to the Servicer hereunder or
pursuant to the Servicing Agreement shall be paid to the Servicer
and/or to one or more subservicers as the servicer may from time
to time direct in writing to the Trustee.
Section 4.05. Costs and Expenses. All reasonable out-of-
pocket costs and expenses incurred by the Backup Servicer in
carrying out its duties as Backup Servicer hereunder, including all
out-of-pocket fees and expenses not expressly stated hereunder to
be for the account of the Trust or the Seller, shall be paid or
caused to be paid by the Backup Servicer, and the Backup Servicer
shall be entitled to reimbursement therefor hereunder. Nothing in
this Section 4.05 shall be construed to limit the compensation to be
paid to or retained by the Backup Servicer pursuant to Section
4.04.
Section 4.06. Standard of Care. In managing,
administering, servicing and making collections on the
Receivables, and in performing its obligations under the Servicing
Agreement after succeeding as Servicer thereunder, the Backup
Servicer will exercise that degree of skill and care consistent with
the same degree of skill and care that the Backup Servicer
exercises with respect to similar motor vehicle loans owned and/or
serviced by the Backup Servicer and that is consistent with prudent
industry standards, and will apply in the management,
administration, servicing and collection of the Receivables and in
the administration and enforcement of the Insurance Policies
relating to the Receivables, those standards, policies and
procedures consistent with the best standards, policies and
procedures the Backup Servicer applies with respect to similar
motor vehicle loans owned or serviced by it, and, to the extent not
inconsistent with the foregoing, to exercise that degree of skill and
care it uses in servicing assets held for its own account; provided,
however, that notwithstanding the foregoing, the Backup Servicer
shall not, except pursuant to a judicial order from a court of
competent jurisdiction, or as otherwise required by applicable law
or regulation, release or waive the right to collect the unpaid
balance on any Receivable and provided, further, that the Backup
Servicer shall not amend or modify any Receivable, unless a
default with respect to such Receivable has occurred or is, in the
judgment of the Backup Servicer, imminent. In performing its
duties and obligations hereunder or under the Servicing
Agreement, in the event there is no Servicer managing,
administering, servicing or making collections on the Receivables
and administering and enforcing the Insurance Policies relating to
the Receivables, the Backup Servicer shall comply with all
applicable federal and state laws and regulations, shall maintain all
state and federal licenses and franchises necessary for it to perform
its servicing responsibilities hereunder and thereunder, and in such
event it shall exercise the same degree of skill and care it uses in
managing, administering, servicing and making collection on the
Receivables and administering and enforcing the Insurance Policies
in its capacity as Backup Servicer hereunder, and shall not impair
the rights of the Trust or the Certificateholders in the Trust
Property.
ARTICLE V
DISTRIBUTIONS; ACCOUNTS;
STATEMENTS TO CERTIFICATEHOLDERS
Section 5.01. Accounts.
(a) The Trustee shall establish the Collection
Account and the Certificate Account in the name of the
Trustee for the benefit of the Certificateholders. The
Collection Account and the Certificate Account shall be
segregated trust accounts established with the trust
department of the Trustee. The Servicer shall establish the
Lock-Box Account pursuant to the Servicing Agreement.
The Lock-Box Account shall be a non-interest bearing
account established with a Lock-Box Account Depository,
which shall at all times be an Eligible Institution, by the
Servicer for the sole benefit of the Trust and other holders
of retail installment sales contracts originated by Aegis
Finance or its Affiliates. All of the foregoing Accounts
shall be Eligible Accounts.
(b) Amounts held in the Collection Account and
the Certificate Account shall be invested by the Trustee,
upon the written direction of the Seller, in Eligible
Investments. Any such investment in the Certificate
Account shall mature no later than (i) one Business Day
before the Distribution Date next succeeding the date of
investment or, (ii) in the case of money market fund
investments, on such Distribution Date. Any such
investment in the Collection Account shall mature not later
than two Business Days before such Distribution Date.
Any written investment direction by the Seller shall certify
that any such investment is authorized by this Section 5.01.
The Trustee shall have no authority to sell or otherwise
dispose of Eligible Investments attributable to funds held in
the Certificate Account or the Collection Account prior to
their respective maturity dates. Interest and earnings on
investments of funds in any Account shall be credited to
and all losses borne by the Account with respect to which
they were derived. All accounts with the Trustee must be
trust accounts subject to regulations substantially similar to
12 C.F.R. SECS 9.10(b). The Trustee shall not have any
responsibility or liability for any investment of moneys at
the direction of the Seller or any loss resulting therefrom.
(c) The Servicer has appointed Wells Fargo
Bank, N.A., as the initial Lock-Box Account Depository
under the Servicing Agreement. All funds of the Trust
held by a Lock-Box Account Depository are and shall
remain the property of the Trust.
Section 5.02. Collections. Pursuant to the Servicing
Agreement, the Servicer shall remit to the Lock-Box Account as
soon as practicable, but in no event later than its close of business
on the Business Day after receipt thereof by the Servicer, all
payments by or on behalf of the Obligors with respect to each
Receivable (other than Purchased Receivables), all Recoveries and
all Risk Default Insurance Proceeds, all as collected during the
Collection Period. As provided in the Servicing Agreement, the
Servicer shall cause the Lock-Box Account Depository to transfer
all available funds applied to the Receivables in excess of $2,000
from the Lock-Box Account to the Collection Account on each
Business Day. In the event an Obligor remits funds to the Trustee
rather than remitting such funds directly to the Servicer, the
Trustee shall notify the Servicer and shall deposit such amounts
into the Collection Account within one (1) Business Day after
receipt.
Section 5.03. Application of Collections. All collections
for the Collection Period shall be applied by the Trustee in
accordance with reports provided to the Trustee by the Servicer
pursuant to the Servicing Agreement, as follows:
With respect to each Receivable (other than a Purchased
Receivable), payments by or on behalf of the Obligor shall be
applied to the Scheduled Payment. Any excess payments received
constituting Scheduled Payments for subsequent Collection Periods
shall be applied to the Principal Balance of the Receivables on the
Distribution Date relating to such subsequent Collection Period.
Section 5.04. Miscellaneous Servicer Collections. All
Miscellaneous Servicer Collections shall be deposited by the
Servicer to the Lock-Box Account within one Business Day of
receipt thereof.
Section 5.05. Additional Deposits. The Trustee shall
deposit or cause to be deposited in the Collection Account the
aggregate Purchase Amount received with respect to Purchased
Receivables and shall, upon receipt, deposit such other amounts to
such accounts as may be specified herein. All such deposits shall
be made in Automated Clearinghouse Corporation next-day funds
or immediately available funds, on or before the Business Day
preceding the Distribution Date.
Section 5.06. Distributions.
(a) On each Distribution Date, the Trustee shall
cause to be made the transfers and distributions set forth in
this Section 5.06 in the amounts set forth in the Monthly
Servicing Certificate for such Distribution Date.
(b) The Trustee shall, on each Determination
Date, based upon a certificate delivered to the Trustee from
the Backup Servicer, calculate the Total Available
Distribution Amount, the Distributable Amount, the
Reserve Fund balance and, based on the Total Available
Distribution Amount, determine the amount distributable to
the Certificateholders and the other distributions to be made
on such Distribution Date.
(c) Two (2) Business Days prior to each
Distribution Date, the Trustee shall transfer from the
Collection Account to the Certificate Account an amount
equal to the Total Available Distribution Amount and all
investment earnings and interest on the funds in the
Collection Account.
(d) Except as otherwise provided below, on each
Distribution Date, the Trustee (based on the information
contained in the Monthly Servicing Certificate delivered on
the related Determination Date pursuant to the Servicing
Agreement) shall make the following distributions from the
funds then on deposit in the Certificate Account (including
funds transferred from the Reserve Fund when necessary
as set forth below and pursuant to Section 5.07) in the
following order of priority:
(i) to the Backup Servicer, the Backup Servicer Fee and
expenses and all unpaid Backup Servicer Fees and unreimbursed
expenses from prior Collection Periods; to the Servicer, the
Servicing Fees and expenses, and all unpaid Servicing Fees and
unreimbursed expenses from prior Collection Periods; to the
Trustee and Custodian, the Trustee and Custodian fees and
expenses and all unpaid Trustee and Custodian fees and
unreimbursed expenses from prior Collection Periods; and to the
successor to the Servicer, the Trustee or the Backup Servicer,
Transition Costs, if any;
(ii)
to the Certificateholders of record, an amount equal to the
sum of the Interest Distributable Amount and any Interest
Carryover Shortfall from the prior Distribution Date; and
(iii) to the Certificateholders of record, an
amount equal to the sum of the Principal
Distributable Amount and any Principal Carryover
Shortfall from the prior Distribution Date.
(e) On each Distribution Date, the Trustee shall
distribute any Excess Receipts in the following amounts
and in the following order of priority: (i) into the Reserve
Fund until the amount on deposit therein equals the Reserve
Fund Requirement for such date and (ii) any remaining
Excess Receipts will be distributed to the Seller.
(f) All distributions with respect to the
Certificates on each Distribution Date shall be made pro
rata among the outstanding Certificates in proportion to the
Percentage Interests evidenced thereby. All payments to
Certificateholders shall be made on each Distribution Date
to each Certificateholder of record on the related Record
Date by check, or, if requested by a Certificateholder
holding Certificates with Original Certificate Balances in
the aggregate in excess of $1,000,000, by wire transfer to
the account designated in writing by such Holder in the
form of Exhibit F hereto (or such other account as such
Certificateholder may designate in writing) delivered to the
Trustee prior to the Determination Date, in immediately
available funds.
Section 5.07. Reserve Fund; Priority of Distributions.
(a) In order to assure that sufficient amounts to
make required payments to the Certificateholders specified
therein will be available, there shall be established and
maintained with the Trustee the following Eligible Account:
the "Reserve Fund--Aegis Auto Receivables Trust 1996-A"
(the "Reserve Fund"), which will include the money and
other property deposited and held therein pursuant to
Section 5.06(e) and this Section. The Reserve Fund shall
not be part of Trust, but instead will be held for the benefit
of the Certificateholders. The Seller and the Trustee
acknowledge that any amounts on deposit in the Reserve
Fund (and any investment earnings thereon) will be owned
directly by the Seller, and such parties hereby agree to treat
the same as assets (and investment earnings) of the Seller
for federal income tax purposes.
(b) The Reserve Fund shall be initially funded on
the Closing Date in the amount of the Reserve Fund Initial
Deposit.
(c) Amounts held in the Reserve Fund shall be
invested in Eligible Investments, in accordance with written
instructions from the Seller or its designee, and such
investments shall not be sold or disposed of prior to their
maturity but shall mature no later than two Business Days
before the Distribution Date next succeeding the date of
investment. All such investments shall be made in the
name of the Trustee or its nominee. Any loss on
investment of amounts held in the Reserve Fund and all
income and gain realized on the Reserve Fund shall be
credited to such fund. As provided in Section 11.05, the
Trustee shall not have any responsibility for moneys
invested by the Trustee hereunder or any losses resulting
therefrom.
(d) In order to provide for the prompt payment
to the Certificateholders, the Trustee, the Custodian, the
Servicer and the Backup Servicer in accordance with
Section 5.06(d), and to assure availability of the amounts
maintained in the Reserve Fund, the Seller, subject to the
terms and conditions hereof and solely for the purpose of
providing for payment of the fees and expenses of the
Backup Servicer, the Trustee and the Custodian and making
the distributions to the Certificateholders provided for in
Section 5.06 and this Section 5.07, hereby grants in favor
of the Trustee, as collateral agent, and its successor and
assigns, a security interest in and lien upon all its right,
title and interest in and to the Reserve Fund, including the
Reserve Fund Initial Deposit and all proceeds of the
foregoing, and hereby pledges to the Trustee, as collateral
agent, and its successors and assigns, all other amounts and
investments held from time to time in the Reserve Fund
(whether in the form of deposit accounts, instruments,
book-entry securities, uncertificated securities or otherwise)
(all of the foregoing, subject to the limitations set forth
below, the "Reserve Fund Property"); to have and to hold
all the aforesaid property, rights and privileges unto the
Trustee, its successors and assigns, in trust for the uses and
purposes, and subject to the terms and provisions, set forth
in this Section 5.07. The Trustee hereby acknowledges
such transfer and accepts the trust hereunder and shall hold
and distribute the Reserve Fund Property in accordance
with the terms and provisions of this Section 5.07.
(e) The Seller agrees to take or cause to be
taken such further actions, to execute, deliver and file or
cause to be executed, delivered and filed such further
documents and instruments (including, without limitation,
any UCC financing statements or this Agreement) as may
be determined to be necessary to perfect the interests
created by this Section in favor of the Trustee and
otherwise fully to effectuate the purposes, terms and
conditions of this Section. The Seller (with respect to
Reserve Fund Property) shall:
(i) promptly execute, deliver and file
any financing statements, amendments, continuation
statements, assignments, certificates and other
documents with respect to such interests and
perform all such other acts as may be necessary in
order to perfect or to maintain the perfection of the
Trustee's security interest in the Reserve Fund
Property; and
(ii) make the necessary filings of
financing statements or amendments thereto within
ten business days after the occurrence of any of the
following: (1) any change in its corporate name or
any trade name; (2) any change in the location of
its chief executive office or principal place of
business; and (3) any merger or consolidation or
other change in its identity or corporate structure
and promptly notify the Trustee of any such filings.
(f) If on any Distribution Date the Total
Available Distribution Amount is insufficient to distribute
the full amount described in clauses (i) through (iii) of
Section 5.06(d), the Trustee shall withdraw an amount
equal to such insufficiency from the Reserve Fund (any
such amount, the "Reserve Fund Draw") and apply such
amount (in the order of priority provided by Section
5.06(d)) in respect of such insufficiencies. If on any
Distribution Date amounts on deposit in the Reserve Fund
are in excess of the Reserve Fund Requirement for such
date (after giving effect to Reserve Fund Draws on such
date, if applicable), the Trustee shall release such excess to
the Seller. Any amounts released from the Reserve Fund
on any Distribution Date shall not be available for Reserve
Fund Draws on following Distribution Dates. Upon
termination of this Agreement, any amounts on deposit in
the Reserve Fund, after payment of all amounts due the
Backup Servicer, the Trustee, the Custodian, the Servicer
and the Certificateholders, shall be paid to the Seller.
(g) Amounts properly received by the Seller
pursuant to this Agreement shall not be available to the
Trustee or the Trust for the purpose of making deposits to
the Reserve Fund or making payments to the
Certificateholders, nor shall the Seller be required to refund
any amount properly received by them.
Section 5.08. Statements to Certificateholders; Tax
Returns. With each distribution from the Certificate Account to
the Certificateholders made on a Distribution Date, the Trustee
shall provide to the Rating Agency, the Backup Servicer, the Seller
and each Certificateholder of record, based on the Monthly
Servicing Certificate provided to the Backup Servicer and the
Trustee by the Servicer in the form of Schedule B to the Servicing
Agreement, a statement substantially in the form of Exhibit B to
this Agreement setting forth at least the following information with
respect to such Distribution Date and the related Collection Period,
to the extent applicable:
(a) Servicer Collections:
(i) The Available Interest Distribution Amount;
(ii) The Available Principal Distribution
Amount;
(iii) The Miscellaneous Servicer
Collections; and
(iv) The Total Available Distribution
Amount.
(b) Distributions:
(i) the amount of such distribution allocable to principal in
respect of the Certificates;
(ii) the amount of such distribution
allocable to interest in respect of the Certificates;
(iii) the amount of the Backup Servicing
Fee, Servicing Fee, Trustee and Custodian Fees and
expenses for the related Collection Period;
(iv) the amount of Interest Carryover
Shortfall, if any, on such Distribution Date and the
amount of the Principal Carryover Shortfall, if any,
on such Distribution Date;
(v) the Pool Factor and the Certificate
Factor as of such Distribution Date, after giving
effect to payments allocated to principal reported
under clause (i) above;
(vi) the amount on deposit in the Reserve
Fund on such Distribution Date, after giving effect
to amounts deposited in the Reserve Fund and
Reserve Fund Draws on such date;
(vii) the aggregate amount of Reserve
Fund Draws, and the breakdown of the application
of such draws to cover payment shortfalls to
Certificateholders, made on such Distribution Date;
(viii) the amount of net investment earnings
with respect to the Reserve Fund earned during the
related Collection Period;
(ix) the amounts, if any, released from
the Reserve Fund to the Seller;
(c) Pool Information:
The Original Pool Balance, the Pool
Balance, the weighted average coupon, the weighted
average maturity (in months) and the remaining
number of Receivables for both the first and the last
day of the preceding Collection Period, after giving
effect to payments allocated to principal reported in
(b)(ii) above.
(d) Receivables Repurchased or Substituted by
Seller:
The number and aggregate Purchase
Amount of Receivables repurchased by Seller and
for any substitution of Receivables, the number and
principal balance of both the Receivables being
replaced and the Receivables substituted.
(e) Delinquency Information:
The amount of Receivables (other
than Defaulted Receivables and Liquidated
Receivables) as to which Obligors are (i) 30 days to
59 days past due (ii) 60 days to 89 days past due,
and (iii) 90 days past due in making Scheduled
Payments.
(f) Repossession Information:
The number and principal balance of
Receivables as to which the Servicer has
repossessed the Financed Vehicle during the current
period and on a cumulative basis.
(g) Liquidated and Defaulted Receivables
Information:
The number and principal balance of
Receivables which became Liquidated Receivables
(other than Receivables previously characterized as
Defaulted Receivables) and the number and
principal balance of Receivables which became
Defaulted Receivables during the Collection Period
and on a cumulative basis.
(h) Recoveries:
The amount of Liquidation Proceeds, the
amount of insurance claims paid under the VSI
Insurance Policy, the amount of rebates received
from the Servicer as a result of cancelled warranty
or extended service contracts and the amount of
claims paid under consumer insurance during the
related Collection Period and on a cumulative basis.
(i) Retention Amount:
The beginning balance, the amount added
with respect to quarterly reserve loss deficiency, the
amount subtracted with respect to approved claims
and quarterly reserve loss surplus, and the ending
balance.
(j) Risk Default Insurance Proceeds:
The amount of insurance proceeds paid
under the Risk Default Insurance Policy.
(k) Net Losses:
The amount of Net Losses, if any, on
such Distribution Date and the cumulative amount
of all Net Losses realized on the Receivables since
the Closing Date.
(l) Insurance Claims:
The number of Receivables as to
which a claim was filed under the Risk Default
Policy or the VSI Insurance Policy, the amount of
such claims, the number of claims rejected and the
principal balance of related Receivables rejected
under the Risk Default Policy for the related
Collection Period and on a cumulative basis.
(m) Collection Account:
The amount of reinvestment income
on funds held in the Collection Account.
(n) Other Information:
Any other information regarding each
distribution which any Certificateholder reasonably
requests in writing 30 days prior to such distribution
and which the Trustee can provide without undue
expense or effort.
Within thirty (30) days after the end of each calendar year,
the Trustee shall furnish to each Person who at any time during
such calendar year was a Certificateholder of record and received
any payment thereon (a) a report as to the aggregate of amounts
reported pursuant to clauses (b)(i), (ii) and (iii) of this Section 5.08
for such calendar year or applicable portion thereof during which
such Person was a Certificateholder and (b) such information as
may be reasonably requested by the Certificateholders or required
by the Code, and the regulations thereunder, to enable such
Holders to prepare their federal and state income tax returns.
Within thirty (30) days after the end of each calendar year, the
Trustee shall furnish or shall cause to be furnished to the Seller a
statement containing such of the information provided pursuant to
this Section 5.08 as relates to distributions to the Seller,
aggregated for such calendar year, as well as information
respecting the amounts which were transferred from the Reserve
Fund to make payments to Certificateholders and amounts
otherwise distributable to the Seller which were placed in the
Reserve Fund. The obligation of the Trustee set forth in this
paragraph shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the
Backup Servicer pursuant to any requirements of the Code.
The Seller shall prepare any tax returns or other forms
required to be filed by the Trust. The Trustee, upon request, will
furnish the Seller with all information known to the Trustee as may
be reasonably required in connection with the preparation of all tax
returns of the Trust.
Section 5.09. 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 V and any movement of cash between such accounts
shall be made by the Trustee in reliance on information provided
to the Trustee by the Servicer in writing, whether by way of the
Servicer's Monthly Servicing Certificate or otherwise unless the
Trustee has actual knowledge or notice of any inaccuracy therein.
ARTICLE VI
RIGHTS OF CERTIFICATEHOLDERS
The Certificates shall represent fractional undivided
interests in the assets of the Trust which shall consist of the right
to receive, at the time and in the amount specified herein pursuant
to Section 5.01, a Percentage Interest in distributions with respect
to the Trust Property secured by funds available pursuant to the
Reserve Fund. Any other right to receive payments or
distributions hereunder shall not represent any interest in the
Accounts or the Reserve Fund, except as specifically provided in
this Agreement. The parties hereto and the Certificateholders
agree that the Certificates represent undivided interests in the
Receivables, which Receivables shall constitute stripped bonds
within the meaning of Section 1286 of the Code.
ARTICLE VII
THE CERTIFICATES
Section 7.01. The Certificates. The Certificates shall be
substantially in the form of Exhibit A. The Certificates shall be
issuable in minimum denominations in Certificate Balances of
$250,000 and integral multiples of $1,000 in excess thereof. The
Certificates shall be executed on behalf of the Trust by manual or
facsimile signature of a Trustee Officer of the Trustee under the
Trustee's seal imprinted thereon and shall bear legends restricting
the transfer thereof. Certificates bearing the manual or facsimile
signatures of individuals who were, at the time when such
signatures shall have been affixed, authorized to sign on behalf of
the Trust, shall be valid and binding obligations of the Trust,
notwithstanding that such individuals or any of them shall have
ceased to be so authorized prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of such
Certificates.
Section 7.02. Execution, Authentication of Certificates.
The Trustee shall cause the Certificates to be executed on behalf
of the Trust, and delivered to or upon the written order of the
Seller pursuant to this Agreement. No Certificate shall entitle its
Holder to any benefit under this Agreement or shall be valid for
any purpose, unless there shall appear on such Certificate a
certificate of authentication substantially in the form set forth in
Exhibit A hereto executed by the Trustee by manual signature;
such authentication shall constitute conclusive evidence that such
Certificate shall have been duly authenticated and delivered
hereunder. All Certificates shall be dated the date of their
authentication.
Section 7.03. Registration of Transfer and Exchange of
Certificates.
(a) The Certificate Registrar shall maintain a
Certificate Register in which, subject to such reasonable
regulations as it may prescribe, the Certificate Register
shall provide for the registration of Certificates and
transfers and exchanges of Certificates as provided in this
Agreement. The Trustee is hereby initially appointed
Certificate Registrar for the purpose of registering
Certificates and transfers and changes of Certificates as
provided in this Agreement. In the event that, subsequent
to the Closing Date, the Trustee notifies the Seller that it
is unable to act as Certificate Registrar, the Seller shall
appoint another bank or trust company, having an office or
agency located in the Borough of Manhattan, The City of
New York, agreeing to act in accordance with the
provisions of this Agreement applicable to it, and otherwise
acceptable to the Trustee, to act as successor Certificate
Registrar under this Agreement.
No transfer of a Certificate shall be made unless (I)
(a) such transfer is made pursuant to an effective
registration statement under the Securities Act and any
applicable state securities laws or (b) (i) such transfer is
exempt from the registration requirements under the
Securities Act and such state securities laws or (ii) the
Certificate Registrar is notified by such transferee that such
Certificate will be registered in the name of the Clearing
Agency or its nominee and shall be held by such transferee
in book-entry form through the Clearing Agency, and (II)
such transfer is to a Person that satisfies the requirements
of paragraph (a) (2) (i) or (a) (2) (ii) of Rule 3a-7 as then
in effect or any successor rule ("Rule 3a-7") under the
Investment Company Act. Each prospective purchaser of
a non-registered Certificate not held in book-entry form
shall deliver a completed and duly executed Transferee's
Certificate in the form of Exhibit J or K, as applicable, to
the Trustee and to the Seller for inspection prior to
effecting any requested transfer. The Seller and the
Trustee may rely conclusively upon the information
contained in any such certificate in the absence of
knowledge to the contrary. In connection with any transfer
within three years from the date of the initial issuance of
the Certificates (other than the transfer of any Certificate
that is or has become registered under the Securities Act on
or before such transfer or any transfer of a Certificate held
in book-entry form), the Trustee shall (except in the case
of a transfer to a "qualified institutional buyer") require an
Opinion of Counsel to the effect that such transfer may be
effected without registration under the Securities Act,
which Opinion of Counsel shall be addressed to the Seller
and the Trustee and shall be secured at the expense of the
Holder. Each Certificate Owner shall be deemed to have
agreed to these restrictions on transfer.
(b) If an election is made to hold a Certificate in
book-entry form, the Certificate shall be registered in the
name of a nominee designated by the Clearing Agency (and
may be aggregated as to denominations with other
Certificates held by the Clearing Agency). With respect to
Certificates held in book-entry form:
(1) the Certificate Registrar and the
Trustee will be entitled to deal with the Clearing
Agency for all purposes of this Agreement
(including the payment of principal of and interest
on the Certificates and the giving of instructions or
directions hereunder) as the sole Holder of the
Certificates, and shall have no obligation to the
Certificate Owners;
(2) the rights of Certificate Owners will
be exercised only through the Clearing Agency and
will be limited to those established by law and
agreements between such Certificate Owners and
the Clearing Agency and/or the Clearing Agency
Participants pursuant to the Depository Agreement;
(3) whenever this Agreement requires or
permits actions to be taken based upon instructions
or directions of Holders of Certificates evidencing
a specified percentage of the Outstanding Amount of
the Certificates, the Clearing Agency will be
deemed to represent such percentage only to the
extent that it has received instructions to such effect
from Certificate Owners and/or Clearing Agency
Participants owning or representing, respectively,
such required percentage of the beneficial interest in
the Certificates and has delivered such instructions
to the Trustee; and
(4) without the consent of the Seller and
the Trustee, no such Certificate may be transferred
by the Clearing Agency except to a successor
Clearing Agency that agrees to hold such Certificate
for the account of the Certificate Owners or except
upon the election of the Certificate Owner thereof
or a subsequent transferee to hold such Certificate
in physical form.
Neither the Trustee nor the Certificate Registrar
shall have any responsibility to monitor or restrict the
transfer of beneficial ownership in any Certificate an
interest in which is transferable through the facilities of the
Clearing Agency.
The Seller shall cause each Certificate to contain a
legend stating that transfer of the Certificates is subject to
certain restrictions and referring prospective purchasers of
the Certificates to this Section 7.03 with respect to such
restrictions.
(c) The Certificates, until such time, if at all, as
they become registered under the Securities Act, shall bear
legends stating that they have not been registered under the
Securities Act and are subject to the restrictions on transfer
described in Section 7.03(a). By purchasing a Certificate,
each purchaser shall be deemed to have agreed to these
restriction on transfer.
(d) The Holder of a Certificate desiring to effect
any transfer or assignment shall, and the transferee of such
Certificate by purchasing such Certificate agrees to,
indemnify the Trustee and the Seller against any liability
that may result if the transfer or assignment is not made in
accordance with the provisions of this Section 7.03 and
applicable federal and state securities laws.
(e) Upon surrender for registration of transfer of
any Certificate at the Corporate Trust Office, the Trustee
shall execute, authenticate and deliver, in the name of the
designated transferee or transferees, one or more new
Certificates in authorized denominations of a like aggregate
principal amount.
(f) At the option of a Certificateholder, such
holder's Certificates may be exchanged for other
Certificates in authorized denominations of a like aggregate
principal amount, upon surrender of the Certificates to be
exchanged at any such office or agency. Whenever any
Certificates are so surrendered for exchange the Trustee on
behalf of the Trust shall execute, authenticate and deliver
the Certificates that the Certificateholder making the
exchange is entitled to receive.
(g) Every Certificate presented or surrendered for
registration of transfer or exchange shall be accompanied
by a written instrument of transfer in form satisfactory to
the Trustee and the Certificate Registrar duly executed by
the Holder or his attorney duly authorized in writing. Each
Certificate surrendered for registration of transfer and
exchange shall be cancelled and subsequently disposed of
by the Trustee.
(h) No service charge shall be made to the
Certificateholders for any registration of transfer or
exchange of Certificates, but the Trustee may require
payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection
with any transfer or exchange of Certificates.
Section 7.04. Mutilated, Destroyed, Lost or Stolen
Certificates. If (a) any mutilated Certificate shall be surrendered
to the Certificate Registrar, or if the Certificate Registrar shall
receive evidence to its satisfaction of the destruction, loss or theft
of any Certificate (provided that a Certificateholder's written
statement with respect to such destruction, loss or theft shall
constitute satisfactory evidence thereof) and (b) there shall be
delivered to the Certificate Registrar and the Trustee such security
or indemnity as may be required by them to save each of them
harmless, then in the absence of notice that such Certificate shall
have been acquired by a bona fide purchaser, the Trustee on behalf
of the Trust shall execute and the Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Certificate, a new Certificate of like tenor
and denomination. In connection with the issuance of any new
Certificate under this Section 7.04, the Trustee and the Certificate
Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Certificate issued pursuant to
this Section 7.04 shall constitute conclusive evidence of ownership
in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Certificate shall be found at any time.
Section 7.05. Persons Deemed Owners. Prior to due
presentation of a Certificate for registration of transfer, the Trustee
or the Certificate Registrar may treat the Person in whose name
any Certificate shall be registered as the owner of such Certificate
for the purpose of receiving distributions pursuant to Section 5.06
and for all other purposes whatsoever, and neither the Trustee nor
the Certificate Registrar shall be bound by any notice to the
contrary.
Section 7.06. Access to List of Certificateholders' Names
and Addresses. The Trustee shall furnish or cause to be furnished
to the Servicer, at the expense of the Trust, within 15 days after
receipt by the Trustee of a request therefor from the Servicer in
writing, a list, in such form as the Servicer may reasonably
require, of the names and addresses of the Certificateholders as of
the most recent Record Date. Each Holder, by receiving and
holding a Certificate, shall be deemed to have agreed to hold
neither the Servicer nor the Trustee accountable by reason of the
disclosure of its name and address, regardless of the source from
which such information was derived.
Section 7.07. Maintenance of Office or Agency. The
Trustee shall maintain in Minneapolis, Minnesota, or New York,
New York, an office or offices or agency or agencies where
Certificates may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Trustee
in respect of the Certificates and this Agreement may be served.
The Trustee initially designates the Corporate Trust Office as
specified in this Agreement as its office for such purposes. The
Trustee shall give prompt written notice to the Backup Servicer
and to the Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
Section 7.08. Notices to Certificateholders. Whenever
notice or other communication to the Certificateholders is required
under this Agreement, the Trustee shall give all such notices and
communications specified herein to be given to Holders of the
Certificates at their respective addresses as they appear in the
Certificate Register.
ARTICLE VIII
THE SELLER
Section 8.01. Representations of Seller. The Seller makes
the following representations on which the Trustee relies in
accepting the Receivables in trust and executing and authenticating
the Certificates on the Closing Date. The representations speak as
of the Closing Date, but shall survive the pledge, transfer and
assignment of the Receivables to the Trustee in trust for the benefit
of the Certificateholders.
(a) Organization and Good Standing. The
Seller is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware.
(b) Due Qualification. The Seller is in good
standing and duly qualified to do business and has obtained
all necessary licenses and approvals in the States of
Delaware and New Jersey and all other jurisdictions in
which the ownership or lease of property or the conduct of
its business shall require such qualifications, unless the
failure of the Seller to obtain such licenses and approvals
would have no material adverse effect on the Seller's
ability to fulfill its obligations hereunder.
(c) Power and Authority. The Seller has the
power and authority to execute and deliver this Agreement
and to carry out its terms; the Seller has full power and
authority to sell and assign the property to be so sold and
assigned to and deposited with the Trustee as part of the
Trust and such sale and assignment is valid and binding
against the Seller and has been duly authorized by the
Seller by all necessary action; and the execution, delivery
and performance of this Agreement have been duly
authorized by the Seller by all necessary action and this
Agreement is the legal, valid and binding obligation of the
Seller, enforceable in accordance with its terms. The
Seller has duly executed and delivered this Agreement and
any other agreements and documents necessary to effectuate
the transactions contemplated hereby.
(d) No Violation. The consummation of the
transactions contemplated by this Agreement and the
fulfillment of the terms hereof neither conflict with, result
in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default
under, the certificate of incorporation or bylaws of the
Seller, or any indenture, agreement, or other instrument to
which the Seller is a party or by which it shall be bound;
nor result in the creation or imposition of any Lien upon
any of its properties pursuant to the terms of any such
indenture, agreement or other instrument (other than this
Agreement); nor violate any law or, to the best of the
Seller's knowledge, any order, rule or regulation applicable
to the Seller of any court or of any federal or State
regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the
Seller or its properties.
(e) No Proceedings. To the Seller's
knowledge, there are no proceedings or investigations
pending, or threatened, before any court, regulatory body,
administrative agency, or other governmental
instrumentality having jurisdiction over the Seller or its
properties: (i) asserting the invalidity of this Agreement,
the Purchase Agreement or the Certificates; (ii) seeking to
prevent the issuance of the Certificates or the
consummation of any of the transactions contemplated by
the Purchase Agreement or this Agreement; (iii) seeking
any determination or ruling that might materially and
adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, this
Agreement, the Purchase Agreement or the Certificates; or
(iv) relating to the Seller and which might adversely affect
the federal or State income tax attributes of the Certificates.
(f) No Approvals. No approval, authorization
or other action by, or filing with, any governmental
authority of the United States of America or any of the
States is required or necessary to consummate the
transactions contemplated hereby, except as such as have
been duly obtained or made by the Closing Date. Seller
complies in all material respects with all applicable laws,
rules and orders with respect to itself, its business and
properties and the Receivables; and Seller maintains all
applicable permits and certifications.
(g) Taxes. The Seller has filed all federal,
State, county, local and foreign income, franchise and other
tax returns required to be filed by it through the date
hereof, and has paid all taxes reflected as due thereon.
There is no pending dispute with any taxing authority that,
if determined adversely to the Seller, would result in the
assertion by any taxing authority of any material tax
deficiency, and the Seller has no knowledge of a proposed
liability for any tax to be imposed upon the Seller's
properties or assets for which there is not an adequate
reserve reflected in the Seller's current financial statements.
(h) Adequate Provisions for Taxes. The
provisions for taxes on the Seller's books are in accordance
with generally accepted accounting principles.
(i) Pension/Profit Sharing Plans. No
contribution failure has occurred with respect to any
pension or profit sharing plan, and all such plans have been
fully funded as of the date of this Agreement.
(j) Trade Names. "Aegis Auto Funding
Corp." is the only trade name under which the Seller is
currently operating its business and under which the Seller
operated its business for the period of time during which
the Seller was in existence preceding the Closing Date.
(k) Ability to Perform. There has been no
material impairment in the ability of Seller to perform its
obligations under this Agreement.
(l) Chief Executive Office. Since its
inception, the Seller has maintained its chief executive
office in the State of New Jersey and there have been no
other locations of the Seller's chief executive office
preceding the Closing Date. The Seller shall give written
notice to the Trustee and the Certificateholders at least 30
days prior to relocating its chief executive office and shall
make such filings under the UCC as shall be necessary to
maintain the perfected, first priority security interest in the
Receivables granted hereunder in favor of the Trust.
(m) Adverse Orders. There is no injunction,
writ, restraining order or other order of any nature binding
upon Seller that adversely affects Seller's performance of
this Agreement and the transactions contemplated thereby.
(n) Solvent. Seller is solvent and will not
become insolvent after giving effect to the transactions
contemplated hereunder; Seller is paying its debts as they
become due; Seller, after giving effect to the contemplated
transactions, will have adequate capital to conduct its
business.
(o) Lock-Box Account. Each Obligor of a
Receivable has been directed and is required to remit
payments to the Lock-Box Account.
(p) Consolidation. Seller has operated and
will operate its business such that its assets and liabilities
will not be substantively consolidated with the assets and
liabilities of Aegis Finance and its separate existence will
not be disregarded in any state or federal court proceeding.
(q) Business Purpose. The Seller will acquire
and sell, transfer, assign and otherwise convey (for state
law, tax and financial accounting purposes) the Receivables
for a bona fide business purpose.
(r) Federal Income Tax Purposes. The Seller
intends to treat the transactions contemplated under this
Agreement as a sale of the Receivables to the Trust for
federal income tax purposes, subject to the retention by the
Seller of a stripped coupon therein as described in Section
1286 of the Code. The Seller and the Trustee intend to
cause to be filed all returns or reports in a manner
consistent with such treatment.
(s) Valid Transfer. The Purchase Agreement
constitutes a valid transfer to the Seller of all of Aegis
Finance's right, title and interest in the Receivables
transferred to the Seller pursuant to such Purchase
Agreement.
(t) Seller's Obligations. The Seller has
submitted all necessary documentation for payment of the
Receivables to the Obligors and has fulfilled all of its
applicable obligations hereunder required to be fulfilled as
of the Closing Date.
(u) 1940 Act. The 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.
Section 8.02. Liability of Seller; Indemnities. The Seller
shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Seller under this
Agreement, and only to the extent of the Seller's interest in the
Trust Property.
(a) The Seller shall indemnify, defend and
hold harmless the Trustee, the Trust, the Backup Servicer,
the Custodian and each Certificateholder from and against
any taxes, other than income and franchise taxes, that may
at any time be asserted against the Trustee, the Trust, the
Backup Servicer, the Custodian or the Certificateholders
with respect to, and as of the date of, the transfer of the
Receivables to the Trust or the issuance and original sale
of the Certificates, including any sales, gross receipts,
general corporation, tangible personal property, privilege
or license taxes and costs and expenses in defending against
the same.
(b) The Seller shall assume, defend and hold
harmless the Trustee, the Trust, the Backup Servicer, the
Custodian and each Certificateholder from and against any
loss, liability, expense or action, suit, claim or damage
incurred by reason of (i) the Seller's willful misfeasance,
bad faith or 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
such indemnity shall extend to the performance of the
Seller's duties and the satisfaction of its obligations with
respect to any Receivables that become Purchased
Receivables, as provided in this Agreement), (ii) the
Seller's violation of federal or State securities laws in
connection with the exemption from registration of the sale
of the Certificates, and (iii) any transaction arising out of
or contemplated by this Agreement except any loss,
liability, expense, action, suit, claim or damage arising out
of the failure to pay principal, premium, if any, or interest
with respect to the Certificates to the extent such failure
does not result from the Seller's omission to comply with
the terms of this Agreement or acts of the Seller in
contravention of this Agreement.
The assumption of liability or indemnification under this
Section 8.02 shall include, without limitation, reasonable fees and
expenses of counsel and expenses of litigation and shall survive
termination of this Agreement. If the Seller shall have made any
payments to the Trustee pursuant to this Section and the Trustee
thereafter shall collect any of such amounts from others, the
Trustee shall repay such amounts to such party without interest.
Notwithstanding anything to the contrary herein, the liability of the
Seller under this Section 8.02 is intended to be the same primary
liability as would apply to the general partner of a limited
partnership organized under the laws of the State of Delaware.
Potential creditors of the Trust are intended beneficiaries of the
assumption of liabilities by the Seller under this Section 8.02 and
may enforce such assumption in accordance with its tenor.
Section 8.03. Merger or Consolidation of, or Assumption
of the Obligations of, Seller. Any Person (a) into which the Seller
may be merged or consolidated, (b) which may result from any
merger or consolidation to which the Seller shall be a party, or (c)
which may succeed to the properties and assets of the Seller
substantially as a whole, which Person in any of the foregoing
cases executes an agreement of assumption to perform every
obligation of the Seller under this Agreement, shall be the
successor to the Seller hereunder without the execution or filing of
any document or any further act by any of the parties to this
Agreement; provided, however, that (i) immediately after giving
effect to such transaction, no representation or warranty or
covenant made pursuant to Section 3.01 or Section 8.01 shall have
been breached, no Event of Servicing Default, and no event that,
after notice or lapse of time, or both, would become an Event of
Servicing Default shall have happened and be continuing and the
conditions of Section 8.07(a)(ii) shall have been satisfied, (ii) the
Seller shall have delivered to the Trustee and each
Certificateholder an Officer's Certificate and an Opinion of
Counsel, which shall be independent outside counsel, each stating
that such consolidation, merger or succession and such agreement
or assumption comply with this Section 8.03 and that all conditions
precedent, if any, provided for in this Agreement relating to such
transaction have been complied with and (iii) the Seller shall have
delivered to the Trustee an Opinion of Counsel, which shall be
independent outside 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
Trustee 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 interest. The
Seller shall provide notice of any merger, consolidation or
succession pursuant to this Section 8.03 to each Rating Agency and
each Certificateholder and each Rating Agency shall have
confirmed in writing to the Seller and the Trustee (a copy of which
confirmation shall have been delivered by the Seller to each
Certificateholder) that such merger, consolidation or succession
shall not result in a downgrade or withdrawal of the current rating
of the Certificates by such Rating Agency. Notwithstanding
anything herein to the contrary, the execution of the foregoing
agreement of assumption and compliance with clauses (i), (ii) and
(iii) above shall be conditions to the consummation of the
transactions referred to in clauses (a), (b) or (c) above.
Section 8.04. Limitation on Liability of Seller and Others.
The Seller and any director or officer or employee or agent of the
Seller or the Seller's general partner may rely in good faith on the
written advice of counsel or on any document of any kind, prima
facie properly executed and submitted by any Person respecting
any matters arising hereunder.
Section 8.05. Seller May Own Certificates. The Seller
and any Affiliate of the Seller may in its individual or any other
capacity become the owner or pledgee of Certificates with the
same rights as it would have if it were not the Seller or an
Affiliate thereof, except as otherwise provided in the definition of
"Certificateholder" in Section 1.01. Certificates so owned by or
pledged to the Seller or such Affiliate shall have an equal and
proportionate benefit under the provisions of this Agreement,
without preference, priority or distinction as among all of the
Certificates, other than with respect to Voting Interests.
Notwithstanding the foregoing, the Seller will not, and will not
permit any of their Affiliates (or any Person acting on behalf of
the Seller or any such Affiliate) to directly or indirectly acquire or
make any offer to acquire any Certificates unless the Seller or such
Affiliate (or such Person acting on behalf thereof) shall have
offered to acquire Certificates, pro rata, from all Holders and upon
the same terms.
Section 8.06. Covenants of the Seller. The Seller shall:
(a) not impair the rights of the
Certificateholders or the Trustee in the Receivables;
(b) except for the sale and assignment effected
under this Agreement and prior to the termination of the
Trust, not sell, pledge, assign, or transfer to any other
Person, or grant, create, incur, assume, or suffer to exist
any Lien on any Receivable sold to the Trustee or any
interest therein;
(c) immediately notify the Trustee of the
existence of any Lien on any Receivable;
(d) defend the right, title, and interest of the
Trustee in, to, and under the Receivables transferred to the
Trustee, against all claims of third parties claiming through
or under the Seller, Aegis Finance or the Servicer;
(e) make at its sole cost and expense any
filings, reports, notices, applications, registrations with,
and seek any consents or authorizations from, the Securities
and Exchange Commission and any state securities
authority on behalf of the Trust as may be necessary or
advisable or reasonably requested by the Trustee, and shall
comply with any federal or State securities or reporting
requirements laws;
(f) comply in all respects with the terms and
conditions of the Purchase Agreement and not amend,
modify, or waive any provision of the Purchase Agreement
in any manner relating to the obligation of Aegis Finance
to repurchase Receivables or in any manner that would
have a materially adverse effect on the interests of the
Certificateholders;
(g) promptly notify the Trustee and the
Certificateholders of the occurrence of any Event of
Backup Servicing Default or Event of Servicing Default
and any breach by the Seller or the Backup Servicer of any
of its respective covenants or representations and warranties
contained in this Agreement or, with respect to the Seller,
in the Purchase Agreement;
(h) make at its sole cost and expense any
filings, reports, notices, or applications and seek any
consents or authorizations from any and all government
agencies, tribunals, or authorities in accordance with the
UCC and any State vehicle license or registration authority
on behalf of the Trust as may be necessary or advisable or
reasonably requested by the Trustee to create, maintain and
protect a first-priority perfected security interest of the
Trust in, to, and on the Financed Vehicles and a
first-priority perfected ownership interest of the Trust in,
to, and on the Receivables transferred to it;
(i) if requested by the Majority
Certificateholders, cooperate with the Certificateholders in
obtaining, and thereafter maintain, a rating on the
Certificates by DCR and/or Fitch; the expenses of
maintaining any such rating shall be paid as an expense of
the Trust; and
(j) upon request of any Certificateholder,
furnish the information required by paragraph (d)(4) of
Rule 144A promulgated under the Securities Act.
Section 8.07. Enforcement by Trustee. The Seller hereby
acknowledges and agrees that the following covenants and
agreements of the Seller shall be enforceable by the Trustee at all
times until the Trust is terminated.
(a) Covenants Regarding Operations:
(i) The Seller shall not engage in any
business or activity other than in connection with or
relating to the purchase of auto loan receivables and
the issuance of rated debt secured by, or certificates
of participation in, a pool of auto loan receivables.
(ii) The Seller shall not consolidate or
merge with or into any other entity or convey or
transfer its properties and assets substantially as an
entirety to any entity unless (A) the entity (if other
than the Seller) formed or surviving such
consolidation or merger, or that acquires by
conveyance or transfer the properties and assets of
the Seller substantially as an entirety, shall be
organized and existing under the laws of the United
States of America or any State thereof or the
District of Columbia, and shall expressly assume in
form satisfactory to each Rating Agency, if any,
and the Majority Certificateholders, the performance
of every covenant on the part of the Seller to be
performed or observed pursuant to this Agreement
and the Purchase Agreement, (B) immediately after
giving effect to such transaction, no default or event
of default under this Agreement shall have occurred
and be continuing and (C) the Seller shall have
delivered to each Rating Agency, if any, each
Certificateholder and the Trustee an Officers'
Certificate and an opinion of independent counsel,
each stating that such consolidation, merger,
conveyance or transfer comply with this Agreement.
(iii) The Seller shall not dissolve or
liquidate, in whole or in part, except (A) as
permitted in paragraph (ii) above or (B) with the
prior written consent of the Trustee and the
Majority Certificateholders (if the Certificates are
not then rated) and prior written confirmation from
each Rating Agency, if any, (a copy of which shall
be provided to the Trustee and each
Certificateholder by the Seller) that such dissolution
or liquidation will have no adverse effect on the
rating assigned to the Rated Certificates.
(iv) The funds and other assets of the
Seller shall not be commingled with those of any
other corporation, entity or Person, including, but
not limited to, the parent or Affiliates of the Seller.
(v) The Seller shall not hold itself out as
being liable for the debts of any other party,
including, but not limited to, the debts of the parent
or Affiliates of the Seller.
(vi) The Seller shall not form, or cause to
be formed, or otherwise have, any subsidiaries.
(vii) The Seller shall act solely in its
corporate name and through the duly authorized
officers or agents in the conduct of its business, and
shall conduct its business so as not to mislead others
as to the identity of the entity with which they are
concerned.
(viii) At all times, except in the case of a
temporary vacancy, which shall promptly be filled,
the Seller shall have on its board of directors at
least one director who qualifies as an "Independent
Director" as such term is defined in the Seller's
Certificate of Incorporation as originally filed with
the Delaware Secretary of State's office.
(ix) The Seller shall maintain records and
books of account of the Seller and shall not
commingle such records and books of account with
the records and books of account of any Person.
The books of the Seller may be kept (subject to any
provision contained in the statutes) inside or outside
the State of New Jersey at such place or places as
may be designated from time to time by the board
of directors of the Seller.
(x) The board of directors of the Seller
shall hold appropriate meetings to authorize all of
its corporate actions. Regular meetings of the board
of directors of the Seller shall be held not less
frequently than three times per annum.
(xi) Meetings of the shareholders of the
Seller shall be held not less frequently than one time
per annum.
(xii) The Seller shall not amend, alter,
change or repeal any provision contained in this
Section 8.07(a) without (A) the affirmative vote in
favor thereof of eighty percent (80%) of the then
outstanding shares of the Seller entitled to vote
thereon; (B) the prior written consent of the Trustee
and the Majority Certificateholders; and (C) the
prior written confirmation from each Rating
Agency, if any, that the rating on the Rated
Certificates will not be impaired.
(xiii) The Seller shall not, without the
affirmative unanimous vote of the whole board of
directors of the Seller (including at least one
director referred to in clause (viii) above), institute
any proceedings to adjudicate the Seller a bankrupt
or insolvent, consent to the institution of bankruptcy
or insolvency proceedings against the Seller, file a
petition seeking or consenting to reorganization or
relief under any applicable federal or State law
relating to bankruptcy, consent to the appointment
of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Seller
or a substantial part of its property or admit its
inability to pay its debts generally as they become
due or authorize any of the foregoing to be done or
taken on behalf of the Seller.
(xiv) The Seller is not and shall not be
involved in the day-to-day or other management of
its parent or any of its Affiliates.
(xv) Other than the purchase and sale or
pledge of assets as provided in this Agreement and
related agreements with respect to this transaction
and other transactions relating to the purchase of
auto loan receivables and the issuance of rated debt
or rated certificates of participation, the Seller shall
engage in no other transactions with any of its
Affiliates.
(xvi) Seller shall maintain a separate
business office and telephone number from any of
its Affiliates.
(xvii) Seller's financial statements shall
reflect its separate legal existence from any of its
Affiliates.
(xviii) The Seller will not amend its
Certificate of Incorporation in any respect material
to the Certificateholders without the consent of the
Majority Certificateholders (or, if the Certificates
have been rated, by each Rating Agency.)
(xix) The Seller shall use separate
invoices, stationery and checks.
(xx) The Seller shall not suffer or permit
the credit or assets of Aegis Finance to be held out
as available for the obligations of the Seller.
(xxi) The Seller shall enter into
transactions with Aegis Finance or its affiliates only
on commercially reasonable terms.
(xxii) The Seller shall not incur or issue
any "Obligation" (as such term is defined in its
Certificate of Incorporation) in contravention of the
limitations set forth therein.
(xxiii) The Seller shall not issue any
"Securities" or incur or issue any "Obligations" (as
such terms are defined in its Certificate of
Incorporation) under any other pooling and
servicing agreement, purchase agreement or
otherwise, unless such agreement contains an
express provision substantially similar to Section
13.10 hereof limiting recourse to the Seller to the
assets involved in the transaction to which such
agreement relates.
Section 8.08. No Bankruptcy Petition. The Seller
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 the
Seller or by a trust for which the Seller was the depositor, which
securities were rated by any nationally recognized statistical rating
organization, it will not institute any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other
proceedings under any federal or State bankruptcy or similar law.
ARTICLE IX
THE BACKUP SERVICER
Section 9.01. Representations of Backup Servicer. The
Backup Servicer makes the following representations on which the
Trustee relies in accepting the Receivables in trust and executing
and authenticating the Certificates on the Closing Date. The
representations speak as of the Closing Date, but shall survive the
sale and assignment of the Receivables to the Trustee in trust for
the benefit of the Certificateholders.
(a) Organization and Good Standing. The
Backup Servicer shall have been duly organized and shall
be validly existing and in good standing under the federal
laws of the United States of America, 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.
(b) Power and Authority. The Backup Servicer
shall have the power and authority to execute and deliver
this Agreement and the Servicing Agreement and to carry
out their respective terms; and the execution, delivery and
performance of this Agreement and the Servicing
Agreement shall have been duly authorized by the Backup
Servicer by all necessary corporate action. Each of this
Agreement and the Servicing Agreement constitutes the
valid and binding obligation of the Backup Servicer
enforceable in accordance with its terms.
(c) No Violation. The consummation of the
transactions by the Backup Servicer contemplated by this
Agreement and the Servicing Agreement and the fulfillment
of the terms hereof and thereof neither conflict with, result
in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default
under, the charter or bylaws of the Backup Servicer, or, to
the best of the Backup Servicer's knowledge, any
indenture, agreement or other instrument to which the
Backup Servicer is a party or by which it is 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 this Agreement
and the Servicing Agreement); nor to the best of the
Backup Servicer's knowledge, any law, order, rule or
regulation applicable to the Backup Servicer of any court
or of any federal or state regulatory body, administrative
agency, or other governmental instrumentality having
jurisdiction over the Backup Servicer or its properties.
(d) No Proceedings. To the Backup Servicer's
best knowledge, there are no proceedings or investigations
pending, or threatened, before any court, regulatory body,
administrative agency or other governmental instrumentality
having jurisdiction over the Backup Servicer or its
respective properties: (A) asserting the invalidity of this
Agreement or the Servicing Agreement; (B) seeking to
prevent the consummation of any of the transactions
contemplated by this Agreement or the Servicing
Agreement; or (C) seeking any determination or ruling that
might materially and adversely affect the performance by
the Backup Servicer of its obligations under, or the validity
or enforceability of, this Agreement or the Servicing
Agreement.
Section 9.02. Merger or Consolidation of, or Assumption
of the Obligations of, or Resignation of Backup Servicer. Any
Person (a) into which the Backup Servicer may be merged or
consolidated, (b) which may result from any merger or
consolidation to which the Backup Servicer shall be a party, (c)
which may succeed to the properties and assets of the Backup
Servicer substantially as a whole, or (d) which may succeed to the
duties and obligations of the Backup Servicer under this Agreement
and the Servicing Agreement following the resignation of the
Backup Servicer, whether or not such Person executes an
agreement of assumption to perform every obligation of the
Backup Servicer hereunder and thereunder, shall be the successor
to the Backup Servicer under this Agreement and the Servicing
Agreement without further act on the part of any of the parties to
this Agreement or the Servicing Agreement. If at any time
thereafter any Rating Agency shall have delivered to the Backup
Servicer and to the Trustee a statement that such transaction will
have an adverse effect on the rating assigned to the Rated
Certificates, if any, then such transaction shall be deemed to
constitute an Event of Backup Servicing Default.
Section 9.03. Limitation on Liability of Backup Servicer
and Others. Neither the Backup Servicer nor any of the directors
or officers or employees or agents of the Backup Servicer shall be
under any liability to the Trust or the Certificateholders, 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 Backup Servicer or any such Person against any liability that
would otherwise be imposed by reason of willful misfeasance, bad
faith or negligence in the performance of duties or by reason of
reckless disregard of obligations and duties under this Agreement.
The Backup Servicer and any director or officer or employee or
agent of the Backup 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.
Except as provided in this Agreement, the Backup Servicer
shall not be under any obligation to appear in, prosecute or defend
any legal action that shall not be incidental to its duties under this
Agreement and the Servicing Agreement, and that in its opinion
may involve it in any expense or liability; provided, however, that
the Backup Servicer may undertake any reasonable action that it
may deem necessary or desirable in respect of this Agreement and
the Servicing Agreement and the rights and duties of the parties to
this Agreement and the Servicing Agreement and the interests of
the Certificateholders under this Agreement and the Servicing
Agreement. In such event, the legal expenses and costs of such
action and any liability resulting therefrom shall be expenses, costs
and liabilities of the Trust and the Backup Servicer shall be entitled
to be reimbursed therefor.
The Trustee shall distribute out of the Collection Account
on the Distribution Date succeeding the delivery of the Opinion of
Counsel referred to below, without regard to any deficiencies in
the amounts required to be distributed pursuant to Section 5.06,
any expenses, costs or liabilities required from the Trust pursuant
to this Section 9.03, provided, however, that the Trustee shall only
distribute amounts pursuant to this Section 9.03 upon the Trustee's
receipt of an Opinion of Counsel to the effect that such distribution
is permitted by this Agreement.
Section 9.04. Successor Backup Servicer. The Backup
Servicer under this Agreement shall at all times be a corporation
or a banking association organized and existing in good standing
under the laws of the United States or a state thereof; having a
combined capital and surplus as designated from time to time by
the Majority Certificateholders (or, if the Certificates have been
rated, by each Rating Agency) or as otherwise approved by the
Majority Certificateholders (or, if the Certificates have been rated,
by each Rating Agency) (but in any event not less than
$100,000,000) and subject to supervision or examination by federal
or state authorities. If such association or 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 9.04, 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 Backup Servicer
shall cease to be eligible in accordance with the provisions of this
Section 9.04, or shall cease to be an Eligible Servicer, the Backup
Servicer shall resign immediately in the manner and with the effect
specified in Section 4.02.
Section 9.05. No Bankruptcy Petition. The Backup
Servicer 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 the Seller or by the Trust it will not institute against, or join
any other Person in instituting against, the Seller any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any federal or state bankruptcy or
similar law; provided, however, that nothing contained herein shall
prohibit the Backup Servicer from participating in any existing
bankruptcy proceeding.
ARTICLE X
BACKUP SERVICING DEFAULT
Section 10.01. Events of Backup Servicing Default. If
any one of the following events ("Events of Backup Servicing
Default") shall occur and be continuing:
(a) Failure to make any payment, transfer or
deposit required to be made by the Backup Servicer under
the terms of this Agreement or the Servicing Agreement,
which failure shall continue for two (2) Business Days after
the date due; or
(b) Failure on the part of the Backup Servicer
duly to observe or to perform in any material respect any
covenant or agreement of the Backup Servicer set forth in
this Agreement or the Servicing Agreement, which failure
shall (i) materially and adversely affect the rights of
Certificateholders and (ii) continue unremedied for a period
of 30 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been
sent (A) to the Backup Servicer by the Trustee, or (B) to
the Backup Servicer and to the Trustee by the Holders of
Certificates evidencing not less than 20% of the Voting
Interests thereof; or
(c) The entry of a decree or order by a court or
agency or supervisory authority having jurisdiction in the
premises for the appointment of a conservator, receiver or
liquidator for the Backup Servicer in any insolvency,
readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding up or liquidation of
its affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 30 consecutive days;
or
(d) The consent by the Backup Servicer to the
appointment of a conservator or receiver or liquidator in
any insolvency, readjustment of debt, marshalling of assets
and liabilities or similar proceedings of or relating to the
Backup Servicer or of or relating to substantially all of its
property; or the Backup Servicer shall admit in writing its
inability to pay its debts generally as they become due, file
a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit
of its creditors or voluntarily suspend payment of its
obligations;
then, and in each and every case, so long as an Event of Backup
Servicing Default shall not have been remedied, either the Trustee,
or the Holders of the Certificates evidencing not less than 20% of
the Voting Interests thereof, by notice then given in writing to the
Backup Servicer (and to the Trustee if given by the
Certificateholders) may terminate all of the rights and obligations
of the Backup Servicer under this Agreement. Thirty (30) days
after the receipt by the Backup Servicer of such written notice, all
authority and power of the terminated Backup Servicer under this
Agreement, whether with respect to the Certificates or the
Receivables or otherwise, shall, without further action, pass to and
be vested in the Trustee if the Trustee is not the same entity as the
terminated Backup Servicer and a successor Backup Servicer has
not been appointed under Section 10.02. The Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the
predecessor Backup Servicer, as attorney in fact or otherwise, any
and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the
purposes of such notice of termination. The predecessor Backup
Servicer shall cooperate with the successor Backup Servicer and
the Trustee in effecting the termination of the responsibilities and
rights of the predecessor Backup Servicer under this Agreement.
Upon receipt of notice of the occurrence of an Event of Backup
Servicing Default, the Trustee shall give notice thereof to each
Rating Agency, if any.
Section 10.02. Appointment of Successor.
(a) Upon a Backup Servicer's receipt of notice
of termination pursuant to Section 10.01 or a Backup
Servicer's resignation in accordance with Section 4.02, the
predecessor Backup Servicer shall continue to perform its
functions as Backup Servicer under this Agreement until
receipt of such notice and, in the case of resignation, until
a successor Backup Servicer shall have assumed the duties
of the Backup Servicer in accordance with this Section
10.02. In the event of a Backup Servicer's termination
hereunder, the Trustee (with the consent of the Majority
Certificateholders) shall appoint a successor Backup
Servicer, and the successor Backup Servicer shall accept its
appointment by a written assumption in form acceptable to
the Trustee. In the event that a successor Backup Servicer
has not been so appointed (i) within 45 days of delivery of
notice of termination, or (ii) within 30 days of resignation,
the Trustee may petition a court of competent jurisdiction
to appoint any established institution, having a combined
capital and surplus of not less than $100,000,000 and
which is an Eligible Servicer, as the successor to the
Backup Servicer under this Agreement.
(b) Upon appointment, the successor Backup
Servicer shall be the successor in all respects to the
predecessor Backup Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter
relating thereto placed on the predecessor Backup Servicer,
including, but not limited to, the assumption by the Backup
Servicer of all duties and obligations of the Servicer in the
event of an Event of Servicing Default with respect to the
Servicer under the Servicing Agreement pursuant to the
terms therein and shall be entitled to all of the rights
granted to the predecessor Backup Servicer, by the terms
and provisions of this Agreement.
(c) The outgoing Backup Servicer shall deliver
to the successor Backup Servicer all documents and records
in its possession which are necessary to enable the
successor Backup Servicer to perform its duties relating to
the Servicing Agreement and the Receivables and otherwise
use its best efforts to effect the orderly and efficient
transfer of the Servicing Agreement to the successor
Backup Servicer.
Section 10.03. Notification to Certificateholders. Upon
any termination of, or appointment of a successor to, a Backup
Servicer pursuant to this Article X, the Trustee shall give prompt
written notice thereof to Certificateholders at their respective
addresses appearing in the Certificate Register and to each Rating
Agency, if any.
Section 10.04. Waiver of Past Defaults. The Majority
Certificateholders (or, in the case of a default referred to in
Section 10.01(a), the Holders of Certificates evidencing 100% of
the Voting Interests thereof) may, on behalf of all Holders of
Certificates, waive any default by the Backup Servicer in the
performance of its obligations hereunder and its consequences.
Upon any such waiver of a past default, such default shall cease to
exist, and any Event of Backup Servicing 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.
ARTICLE XI
THE TRUSTEE
Section 11.01. Duties of Trustee. The Trustee, both prior
to the occurrence of an Event of Backup Servicing Default and
after an Event of Backup Servicing Default shall have been cured
or waived, shall undertake to perform only such duties as are
specifically set forth in this Agreement. If an Event of Backup
Servicing Default shall have occurred and shall not have been
cured or waived, the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and shall 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
his own affairs; provided, however, that if the Trustee shall
assume the duties of a Backup Servicer pursuant to Section 10.02,
the Trustee shall perform such duties in accordance with Section
4.06. If the Trustee is uncertain with respect to performing its
duties or if a conflict arises regarding the Trustee's rights, duties
and obligations, the Trustee may petition a court of competent
jurisdiction for written direction or to interplead necessary parties.
Notwithstanding anything in this Agreement to the contrary,
neither the Trustee nor the Backup Servicer shall have any
authority to perform any act which would cause the Trust to be
characterized as an association taxable as a corporation for federal
income tax purposes.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other
instruments furnished to the Trustee that shall be specifically
required to be furnished pursuant to any provision of this
Agreement, shall examine them to determine whether they conform
as to form to the requirements of this Agreement; provided,
however, in the absence of bad faith on its part, the Trustee can
assume the truth and accuracy of the statements made therein and
the genuineness of the signatures thereon.
The Trustee shall take and maintain custody of the Schedule
of Receivables included as an exhibit to this Agreement and shall
retain all Monthly Servicing Certificates identifying Receivables
that become Purchased Receivables and Liquidated Receivables.
The Trustee shall give written notice to each Rating
Agency, if any, the Certificateholders, the Seller and Aegis
Finance of the occurrence, to its actual knowledge, which notice
shall be given within three (3) Business Days' of the Trustee's
receipt of actual knowledge thereof, of any waiver of or any action
taken to cure (i) any default, breach, violation or event permitting
acceleration under the terms of any Receivable; (ii) any 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; (iii) any default or delinquency under
the terms of any Receivable that remained uncured for more than
thirty (30) days after notice to the Seller; or (iv) any event which
constitutes or with notice or the lapse of time would constitute an
Event of Backup Servicing Default or Event of Servicing Default.
The Trustee shall give written notice to each Rating
Agency, if any, and each Certificateholder promptly upon receipt
of a notice from the Backup Servicer pursuant to Section 4.02
hereof or from the Servicer pursuant to paragraph IV.F.1 of the
Servicing Agreement or the Seller pursuant to Section 8.06(g)
hereof of an event which with the giving of notice or the lapse of
time, or both, would constitute an Event of Backup Servicing
Default or an Event of Servicing Default.
The Trustee shall deliver to each Certificateholder (or, if
the Certificates have been rated, to each Rating Agency) by no
later than the 20th calendar day of each month, a certificate signed
by an officer of the Trustee certifying that, as of the date of such
certificate, based solely upon information provided to the Trustee
by the Servicer or the Backup Servicer, the Trustee has no
knowledge of, nor to the Trustee's best knowledge, has any event
occurred which would cause the Trustee to reasonably believe, that
an Event of Backup Servicing Default or an Event of Servicing
Default has occurred.
No provision of this Agreement shall be construed to
relieve the Trustee from liability for its own negligent action, its
own negligent failure to act or its own bad faith; provided,
however, that:
(a) Prior to the occurrence of an Event of
Backup Servicing Default, and after the curing or waiving
of all such Events of Backup Servicing Default that may
have occurred, the duties and obligations of the Trustee
shall be determined solely by the express provisions of this
Agreement, the Trustee 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 Trustee and, in the absence of bad faith on the
part of the Trustee, the Trustee may conclusively rely on
the truth of the statements and the correctness of the
opinions expressed upon any certificates or opinions
furnished to the Trustee and conforming as to form to the
requirements of this Agreement;
(b) The Trustee shall not be liable for an error
of judgment made in good faith by a Trustee Officer,
unless it shall be proved that the Trustee shall have been
negligent in ascertaining the pertinent facts;
(c) The Trustee 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 Holders of Certificates evidencing not less than 20%
of the Voting Interests thereof relating to the time, method
and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power
conferred upon the Trustee, under this Agreement;
(d) The Trustee shall not be charged with
knowledge of any failure by the Backup Servicer (so long
as the Trustee is not the Backup Servicer) or the Servicer
to comply with the obligations, covenants or
representations or warranties of the Backup Servicer or the
Servicer under this Agreement or the Servicing Agreement,
as the case may be, or of any failure by the Seller to
comply with the obligations, covenants or representations
or warranties of the Seller under this Agreement, unless a
Trustee Officer assigned to the Trustee's Corporate Trust
Department obtains actual knowledge of such failure (it
being understood that, so long as the Trustee is not the
Backup Servicer, knowledge of the Backup Servicer is not
attributable to the Trustee) or the Trustee receives written
notice of such failure from the Backup Servicer, Servicer
or the Seller, as the case may be, or any Holder of
Certificates; and
(e) Without limiting the generality of this Section
or Section 11.04, the Trustee (except if also serving as the
Backup Servicer and the duties of the Backup Servicer
require such) shall have no duty (i) to see to any recording,
filing or depositing of this Agreement or any agreement
referred to therein or any financing statement or
continuation statement evidencing a security interest in the
Receivables or the Financed Vehicles, or to see to the
maintenance of any such recording or filing or depositing
or to any rerecording, refiling or redepositing of any
thereof, (ii) to see to any insurance of the Financed
Vehicles or Obligors or to effect or maintain any such
insurance, (iii) to see to the payment or discharge of any
tax, assessment or other governmental charge or any Lien
or encumbrance of any kind owing with respect to,
assessed or levied against, any part of the Trust, (iv) to
confirm or verify the contents of any reports or certificates
of the Servicer delivered to the Trustee pursuant to this
Agreement or the Servicing Agreement believed by the
Trustee to be genuine and to have been signed or presented
by the proper party or parties or (v) to inspect the Financed
Vehicles at any time or ascertain or inquire as to the
performance or observance of any of the Seller's or the
Servicer's representations, warranties or covenants or the
Servicer's duties and obligations as Servicer under this
Agreement and the Servicing Agreement.
The Trustee shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of
any of its duties hereunder, or in the exercise of any of its rights
or powers, if it believes in its sole discretion 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 or the Servicing Agreement shall in
any event require the Trustee to perform, or be responsible for the
manner of performance of, any of the obligations of the Servicer,
the Backup Servicer or a Servicer under this Agreement or the
Servicing Agreement, as the case may be.
Section 11.02. Trustee's Certificate. On or as soon as
practicable after each Distribution Date on which Receivables shall
be assigned to the Seller pursuant to Section 11.03, the Trustee
shall execute a Trustee's Certificate (in the form of Exhibit N),
based on the information contained in the Monthly Servicing
Certificate for the related Collection Period, amounts deposited to
the Certificate Account and notices received pursuant to this
Agreement, identifying the Receivables repurchased by the Seller
pursuant to Section 3.02 during such Collection Period, and shall
deliver such Trustee's Certificate, accompanied by a copy of the
Monthly Servicing Certificate for such Collection Period to the
Seller. The Trustee's Certificate submitted with respect to such
Distribution Date shall operate, as of such Distribution Date, as an
assignment, without recourse, representation or warranty, to the
Seller, of all the Trustee'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.
Section 11.03. Trustee's Assignment of Purchased
Receivables. With respect to all Receivables repurchased by the
Seller pursuant to Section 3.02, the Trustee shall by a Trustee's
Certificate (in the form of Exhibit N) assign, without recourse,
representation or warranty, to the Seller all the Trustee's right,
title and interest in and to such Receivables, and all security and
documents relating thereto.
Section 11.04. Certain Matters Affecting Trustee. Except
as otherwise provided in Section 11.01:
(a) The Trustee may rely and shall be protected
in acting or refraining from acting upon any resolution,
Officer's Certificate, Monthly Servicing Certificate,
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.
(b) The Trustee may consult with counsel and
any written 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 written Opinion of
Counsel.
(c) The Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
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 any of the
Certificateholders pursuant to the provisions of this
Agreement, unless such Certificateholders shall have
offered to the Trustee security or indemnity, reasonably
satisfactory to the Trustee, against the costs, expenses and
liabilities that may be incurred therein or thereby.
(d) The Trustee shall not be liable for any action
taken, suffered or omitted by it in good faith and believed
by it to be authorized or within the discretion or rights or
powers conferred upon it by this Agreement.
(e) Except as expressly provided herein, the
Trustee 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,
unless requested in writing so to do by Holders of
Certificates evidencing not less than 20% of the Voting
Interests thereof; provided, however, that the Trustee may
require reasonable indemnity against any cost, expense or
liability as a condition to so proceeding at the direction of
the Certificateholders.
(f) The Trustee may execute any of the trusts or
powers hereunder or perform any duties under this
Agreement either directly or by or through agents or
attorneys or a custodian. The Trustee shall not be
responsible for any misconduct or negligence of any such
agent or custodian appointed with due care by it hereunder
or of the Servicer in its capacity as Servicer. The Trustee
may act upon the opinion or advice of accountants,
engineers or such other professionals as the Trustee deems
necessary and selected by it in the exercise of reasonable
care, and the Trustee may pay reasonable compensation
and shall be entitled to reimbursement hereunder for such
compensation paid to such professionals, which fee shall be
considered an expense of the Trustee to be paid pursuant to
Section 5.06(d)(i).
(g) Subsequent to the sale of the Receivables by
the Seller to the Trust, the Trustee shall have no duty of
independent inquiry, and the Trustee may rely upon the
representations and warranties and covenants of the Seller
and the Servicer contained in this Agreement and the
Servicing Agreement with respect to the Receivables.
Section 11.05. Trustee Not Liable for Certificates or
Receivables. The recitals contained herein and in the Certificates
(other than the certificate of authentication on the Certificates)
shall be taken as the statements of the Seller, and the Trustee
assumes no responsibility for the correctness thereof. The Trustee
shall make no representations as to the validity or sufficiency of
this Agreement, the Trust Property or of the Certificates (other
than the certificate of authentication on the Certificates), or of any
Receivable or related document or the validity, genuineness or
originality of any document delivered to the Trustee in its capacity
as Custodian. The Trustee 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 Trust or its ability to
generate the payments to be distributed to Certificateholders under
this Agreement, including, without limitation: the existence,
condition, location and ownership of any Financed Vehicle; the
review of any Servicer File or Custodian File therefor; the
existence and enforceability of any physical damage insurance
thereon; the existence and contents of any Receivable or any
Servicer File or Custodian File or any computer or other record
thereof; the validity of the assignment of any Receivable to the
Trust or of any intervening assignment; the completeness of any
Receivable or any Servicer File or Custodian File; the performance
or enforcement of any Receivable; the compliance by the Seller or
the Servicer, with any warranty or representation made under this
Agreement or the Servicing Agreement or in any related document
and the accuracy of any such warranty or representation prior to
the Trustee's receipt of notice or other discovery of any
noncompliance therewith or any breach thereof (provided,
however, that the receipt of notice or other discovery of such
noncompliance or breach shall only obligate the Trustee to comply
with the terms of Section 3.02 hereof); any investment of moneys
by the Trustee or any loss resulting therefrom (it being understood
that the Trustee shall remain responsible for any Trust property
that it may hold); the acts or omissions of the Seller, the Servicer
or any Obligor; an action of the Servicer taken in the name of the
Trustee; or any action by the Trustee taken at the instruction of the
Servicer; provided, however, that the foregoing shall not relieve
the Trustee of its obligation to perform its duties under this
Agreement. Except if caused by its negligence or its failure to act
in accordance with reasonable and proper instructions given in
writing received by the Trustee, the Trustee shall not be liable for
losses on investments on the funds or on the accounts established
pursuant to Section 5.01. The Trustee shall not be liable for
collections received by the Servicer prior to deposit by the Servicer
of such collections into the Collection Account or for the
application or misapplication of funds, or for other acts or
defaults, by any person, firm or corporation except its own
directors, officers, agents and employees. Except with respect to
a claim based on the Trustee's negligence or willful misconduct,
no recourse shall be had for any claim based on any provision of
this Agreement, the Certificates or any Receivable or assignment
thereof against the Trustee in its individual capacity, the Trustee
shall not have any personal obligation, liability or duty whatsoever
to any Certificateholder or any other Person with respect to any
such claim, and any such claim shall be asserted solely against the
Trust or any indemnitor who shall furnish indemnity as provided
in this Agreement. The Trustee shall not be accountable for the
use or application by the Seller of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any
funds paid to a Servicer in respect of the Receivables. The Seller
hereby certifies to the Trustee that the rating agency rating the
Rated Certificates is the Rating Agency, and that its address is as
set forth in Section 13.05. The Trustee may rely on the accuracy
of such certification until it receives from the Seller an Officer's
Certificate superseding such certification.
Section 11.06. Trustee May Own Certificates. The
Trustee in its individual or any other capacity may become the
owner or pledgee of Certificates and may deal with the Seller and
the Servicer in banking transactions with the same rights as it
would have if it were not Trustee, except as otherwise provided in
the definition of "Certificateholder" in Section 1.01.
Section 11.07. Trustee's Fees and Expenses. The Trustee
shall be entitled to its customary compensation as set forth on
Exhibit G to this Agreement (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an
express trust) for all services rendered by it in the execution of the
trusts created by this Agreement and in the exercise and
performance of any of the Trustee's powers and duties under this
Agreement. The Trustee shall be paid or reimbursed pursuant to
Section 5.06 upon its request for all reasonable expenses and
disbursements (including the reasonable compensation and the
expenses and disbursements of its counsel and of all Persons not
regularly in its employ) incurred or made by the Trustee in
accordance with any provisions of this Agreement, except any such
expense or disbursement as may be attributable to its willful
misfeasance, negligence or bad faith. Unpaid fees and expenses
of the Trustee shall bear interest at the prime rate then in effect
plus 2%. The Seller shall indemnify the Trustee 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 in connection with the acceptance or administration of the
Trust, including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or
performance of any of its powers or duties under this Agreement.
Additionally, the Seller, pursuant to Section 8.02, shall indemnify
the Trustee with respect to certain matters. The Trustee shall not
be required to furnish any surety bond. The provisions of this
Section 11.07 shall survive the termination of this Agreement.
Section 11.08. Eligibility Requirements for Trustee. The
Trustee shall at all times be a corporation having an office in the
same state as the location of the Corporate Trust Office as
specified in or pursuant to this Agreement; and organized and
doing business under the laws of such state or the United States of
America; authorized under such laws to exercise corporate trust
powers; having a combined capital and surplus of at least
$100,000,000 and subject to supervision or examination by federal
or state authorities. 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 11.08, 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 Trustee shall cease to be
eligible in accordance with the provisions of this Section 11.08,
the Trustee shall resign immediately in the manner and with the
effect specified in Section 11.09.
Section 11.09. Resignation or Removal of Trustee. The
Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Seller and
each Certificateholder. Upon receiving such notice of resignation,
the Majority Certificateholders with the approval of each Rating
Agency, if any, shall promptly appoint a successor Trustee by
written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Trustee and one copy to the
successor Trustee. If no successor Trustee shall have been so
appointed and have accepted appointment within 30 days after the
giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of
a successor Trustee.
If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 11.08 and shall fail to
resign after written request therefor by the Seller, or if at any time
the Trustee shall be legally unable to act, or shall be adjudged
bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take charge
or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, then the
Majority Certificateholders may remove the Trustee. If the
Majority Certificateholders shall remove the Trustee under the
authority of the immediately preceding sentence, the Majority
Certificateholders with the approval of each Rating Agency, if any,
shall promptly appoint a successor Trustee by written instrument,
in duplicate, one copy of which instrument shall be delivered to
the outgoing Trustee so removed and one copy to the successor
Trustee and payment of all fees and expenses owed to the outgoing
Trustee.
Any resignation or removal of the Trustee and appointment
of a successor Trustee pursuant to any of the provisions of this
Section 11.09 shall not become effective until acceptance of
appointment by the successor Trustee pursuant to Section 11.10
and payment of all fees and expenses owed to the outgoing Trustee
or upon order of a court of competent jurisdiction. The Seller
shall provide notice of such resignation or removal of the Trustee
to each Rating Agency, if any.
Section 11.10. Successor Trustee. Any successor Trustee
appointed pursuant to Section 11.09 shall execute, acknowledge
and deliver to the Backup Servicer, the Servicer and to the
predecessor Trustee an instrument accepting such appointment
under this Agreement, and thereupon the resignation or removal of
the predecessor Trustee shall become effective and such successor
Trustee, without any further act, deed or conveyance, shall become
fully vested with all the rights, powers, duties and obligations of
its predecessor under this Agreement, with like effect as if
originally named as Trustee. The predecessor Trustee shall upon
payment of its fees and expenses deliver to the successor Trustee
all documents and statements and moneys held by it under this
Agreement; and the Seller and the predecessor Trustee 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 Trustee all such rights, powers, duties
and obligations.
No successor Trustee shall accept appointment as provided
in this Section 11.10 unless at the time of such acceptance such
successor Trustee shall be eligible pursuant to Section 11.08.
Upon acceptance of appointment by a successor Trustee
pursuant to this Section 11.10, the successor Trustee shall mail
notice of the successor of such Trustee under this Agreement to all
Holders of Certificates at their addresses as shown in the
Certificate Register and to each Rating Agency, if any.
Section 11.11. Merger or Consolidation of Trustee. Any
corporation into which the Trustee 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 Trustee
shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of the Trustee, shall
be the successor of the Trustee hereunder, provided such
corporation shall be eligible pursuant to Section 11.08, without the
execution or filing of any instrument or any further act on the part
of any of the parties hereto; provided, further, that the Trustee
shall mail notice of such merger or consolidation to each Rating
Agency, if any, and each Certificateholder.
Section 11.12. Appointment of Co-Trustee or Separate
Trustee. 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 Trust or any Financed
Vehicle may at the time be located, the Backup Servicer and the
Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved
by the Trustee to act as co-trustee, jointly with the Trustee, or
separate trustee or separate trustees, of all or any part of the Trust,
and to vest in such Person, in such capacity and for the benefit of
the Certificateholders, such title to the Trust, or any part thereof,
and, subject to the other provisions of this Section 11.12, such
powers, duties, obligations, rights and trusts as the Backup
Servicer and the Trustee may consider necessary or desirable. If
the Backup Servicer 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 Backup Servicing Default shall have occurred
and be continuing, the Trustee alone shall have the power to make
such appointment. No co-trustee or separate trustee under this
Agreement shall be required to meet the terms of eligibility as a
successor trustee pursuant to Section 11.08 and no notice of a
successor trustee pursuant to Section 11.10 and no notice to
Certificateholders of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 11.10.
Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following
provisions and conditions:
(a) All rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred
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
(whether as Trustee under this Agreement or as successor
to the Backup Servicer under this Agreement), 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;
(b) No trustee under this Agreement shall be
personally liable by reason of any act or omission of any
other trustee under this Agreement; and
(c) The Backup Servicer and the Trustee acting
jointly may at any time accept the resignation of or remove
any separate trustee or co-trustee.
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 XI.
Each separate trustee and co-trustee, upon its acceptance of the
trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all
the provisions of this Agreement, specifically including every
provision of this Agreement relating to the conduct of, affecting
the liability of, or affording protection to, the Trustee. Each such
instrument shall be filed with the Trustee and copies thereof given
to the Backup Servicer.
Any separate trustee or co-trustee may at any time appoint
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 vest in and be
exercised by the Trustee, to the extent permitted by law, without
the appointment of a new or successor separate trustee or
co-trustee.
Section 11.13. Representations and Warranties of Trustee.
The Trustee makes the following representations and warranties on
which the Seller and Certificateholders rely:
(a) The Trustee is a banking association duly
organized, validly existing, and in good standing under the
laws of its place of incorporation.
(b) The Trustee has full corporate power,
authority and legal right to execute, deliver and perform its
obligations under this Agreement and the Servicing
Agreement, and shall have taken all necessary action to
authorize the execution, delivery and performance by it of
this Agreement and the Servicing Agreement.
(c) This Agreement and the Servicing Agreement
shall have been duly executed and delivered by the Trustee,
and each constitutes the valid and binding obligation of the
Trustee enforceable in accordance with its terms.
(d) The execution, delivery and performance by
the Trustee of this Agreement (a) does not violate any
provision of any law governing the banking and trust
powers of the Trustee or any order, writ, judgment or
decree of any court, arbitrator, or governmental authority
applicable to the Trustee or any of its assets, (b) does not
violate any provision of the corporate charter or by-laws of
the Trustee, and (c) does not violate any provision of, or
constitute, with or without notice or lapse of time, a default
under, or result in the creation or imposition of any lien on
any properties included in the Trust pursuant to the
provisions of any mortgage, indenture, contract, agreement
or other undertaking to which it is a party, which violation,
default or lien could reasonably be expected to materially
and adversely affect the Trustee's performance or ability to
perform its duties under this Agreement or the transactions
contemplated in this Agreement.
(e) The execution, delivery and performance by
the Trustee of this Agreement does not require the
authorization, consent, or approval of, the giving of notice
to, the filing or registration with, or the taking of any other
action in respect of, any governmental authority or agency
regulating the banking and corporate trust activities of the
Trustee.
Section 11.14. No Bankruptcy Petition. Except with the
consent of the Majority Certificateholders, the Trustee 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 the Seller or by
the Trust it will not institute against, or join any other Person in
instituting against, the Seller any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other
proceedings under any federal or state bankruptcy or similar law;
provided, however, that nothing contained herein shall prohibit the
Trustee from participating in any existing bankruptcy proceeding.
ARTICLE XII
TERMINATION
Section 12.01. Termination of the Trust.
(a) The Trust and the respective obligations of
the Seller, the Backup Servicer and the Trustee created by
this Agreement (except such obligations as are hereinafter
set forth) shall terminate upon the earliest of (i) payment to
the Certificateholders of all amounts required to be paid to
them pursuant to this Agreement and the disposition of all
property held as part of the Trust Property, (ii) the
purchase as of any Distribution Date by the Seller, at its
option, of the corpus of the Trust as described in Section
12.02, (iii) the Final Scheduled Distribution Date or (iv)
subject to Section 12.01(c), 90 days after the Dissolution of
the Seller. The Seller shall promptly notify the Trustee of
any prospective termination pursuant to this Section 12.01.
(b) Notice of any prospective termination,
specifying the Distribution Date for payment of the final
distribution and requesting the surrender of the Certificates
for cancellation, shall be given promptly by the Trustee by
letter to Certificateholders mailed not earlier than the 15th
day and not later than the 25th day of the month next
preceding the specified Distribution Date stating (A) the
Distribution Date upon which final payment of the
Certificates shall be made and (B) the amount of any such
final payment. Surrender of the Certificates shall not be a
condition of payment of the final distribution; however,
each Certificateholder, by accepting the Certificates, hereby
agrees to indemnify and hold harmless the Trustee, the
Seller and the Certificate Registrar from and against any
and all claims arising from such failure, including but not
limited to claims by third parties claiming to be bona fide
purchasers subsequently presenting such Certificates for
payment.
(c) The Seller shall not voluntarily take any
action that would cause it to cease being deemed a general
partner of the Trust if the Trust were deemed a limited
partnership formed under the Delaware Revised Uniform
Limited Partnership Act and the Residual Interest were
deemed to represent the sole general partnership interest in
such a partnership.
In the event of the Dissolution of the Seller or any
action that would cause the Seller to cease being deemed a
general partner of the Trust if the Trust were deemed a
limited partnership formed under the Delaware Revised
Uniform Limited Partnership Act and the Residual Interest
were deemed to represent the sole general partnership
interest in such a partnership, the Trust shall terminate 90
days after the date of such event and its assets liquidated in
accordance with Section 12.01(d) unless:
A. The Majority Certificateholders inform the
Trustee in writing before the end of such 90 day period that
they disapprove of the liquidation of the assets of the Trust;
and
B. The Seller and the Trustee shall receive an
Opinion of Counsel from independent counsel to the effect
that the continuation of the Trust shall not cause the Trust
to be treated as an association taxable as a corporation for
federal income tax purposes.
During any period that the Certificates are
outstanding, the Seller agrees that it shall not voluntarily
take action that will cause the Dissolution of the Seller.
If the Trust will be terminated and its assets
liquidated in accordance with this Section 12.01(c), the
Trustee shall act as liquidator of the assets of the Trust, but
shall continue to have all the powers, rights and duties of
the Trustee hereunder, under the Servicing Agreement and
the Purchase Agreement until the disposition of the assets
of the Trust and the final distribution to the
Certificateholders, the Trustee and the Backup Servicer of
all amounts required to be paid to them pursuant to this
Agreement.
(d) Upon receipt by the Trustee from the Seller
of notice of any prospective termination of the Trust
pursuant to Section 12.01(a)(iii) or (iv), the Trustee shall,
subject to the direction of the Majority Certificateholders
(provided that, if the Majority Certificateholders shall not
have provided such direction to the Trustee within 30 days
of the Trustee having sent a written request for such
direction to the Certificateholders, the Trustee shall
proceed without such direction) sell the remaining assets of
the Trust, if any, at public or private sale, in a
commercially reasonable manner and on commercially
reasonable terms. The Seller agrees to cooperate with the
Trustee to effect any such sale, including by executing such
instruments of conveyance or assignment as shall be
necessary or required by the purchaser. Proceeds of sale,
net of expenses, shall be treated as collections on the assets
of the Trust and shall be deposited into the Collection
Account. On the Distribution Date specified for final
payment, the Trustee shall cause to be distributed to
Certificateholders and the Seller amounts distributable on
such Distribution Date pursuant to Section 5.06 and Section
5.07.
Section 12.02. Optional Purchase of All Receivables. The
Seller shall have the option to purchase the corpus of the Trust on
the Distribution Date following the last day of any Collection
Period as of which the Pool Balance as a percentage of the
Original Pool Balance shall be less than or equal to the Optional
Purchase Percentage. To exercise such option, the Seller shall (i)
give notice to the Trustee and the Certificateholders not less than
30 days prior to the Distribution Date on which such purchase is
to be effected and (ii) on or before such Distribution Date, deposit
in the Collection Account an amount equal to the Purchase Amount
for the Receivables and the appraisal value of any other property
held by the Trust. After payment of such amounts, the Seller shall
succeed to all interests in and to the Trust Property.
Section 12.03. Notice. The Trustee shall give notice of
termination of the Trust to the Seller and each Rating Agency.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01. Amendment. (a) This Agreement may be
amended by written instrument executed by the Seller, the Backup
Servicer and the Trustee, without the consent of any of the
Certificateholders if the Certificates are at such time rated by at
least one Rating Agency, (i) to cure any ambiguity, to correct or
supplement any provisions in this Agreement, (ii) to add, change
or eliminate any other provisions with respect to matters or
questions arising under this Agreement that shall not be
inconsistent with the provisions of this Agreement; or (iii) to add
or amend any provision therein in connection with permitting
transfers of the Certificates or to add or provide for any credit
enhancement for the Certificates; provided, however, that any such
action described in clause (ii) shall not adversely affect in any
material respect the interests of the Certificateholders and
provided, further, that in connection with any such amendment
delivery to the Trustee of a letter from each Rating Agency to the
effect that such amendment will not cause the then-current rating
on the Rated Certificates to be qualified, reduced or withdrawn
shall constitute conclusive evidence that such amendment does not
adversely affect in any material respect the interests of the
Certificateholders.
(b) This Agreement may also be amended from time to
time or the provisions hereof waived from time to time by a
written instrument executed by the Seller, the Backup Servicer and
the Trustee with the consent of the Holders of the
Certificateholders affected thereby (which consent of any Holder
of a Certificate given pursuant to this Section or pursuant to any
other provision of the Agreement shall be conclusive and binding
on such Holder and on all future Holders of such Certificate and
of any Certificate issued upon the transfer thereof or in exchange
thereof or in lieu thereof whether or not notation of such consent
is made upon the Certificate) evidencing not less than 51% of the
Voting Interests of all the affected Certificates 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 Certificateholders; provided, however, that no
such amendment or waiver shall, without the consent of the
Holders of all Certificates affected thereby then outstanding, (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 on any Certificate
or (b) reduce the aforesaid percentage of the Voting Interests of
the Certificates required to consent to any such amendment.
(c) Prior to any such amendment, the Trustee shall furnish
written notification of the substance of the proposed amendment to
each Rating Agency and each Rating Agency shall provide written
confirmation to the Trustee that such amendment will have no
adverse effect on the ratings assigned to the Rated Certificates.
Any amendment which affects the Trustee's own rights, duties or
immunities under the Agreement or otherwise shall not be effective
to such extent unless the Trustee shall have joined thereto.
(d) Promptly after the execution of any such amendment
or consent, the Trustee shall furnish a copy of such amendment or
consent to each Certificateholder and each Rating Agency. It shall
not be necessary for the consent of Certificateholders pursuant to
this Section 13.01 to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof. The manner of obtaining such
consents (and any other consents of Certificateholders provided for
in this Agreement) and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such
reasonable requirements as the Trustee may prescribe.
(e) Prior to the execution of any amendment to this
Agreement, 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.
Section 13.02. Protection of Title to Trust.
(a) The Seller shall execute and file such
financing statements and cause to be executed and filed
such continuation statements, all in such manner and in
such places as may be required by law fully to preserve,
maintain and protect the interest of the Certificateholders
and the Trustee in the Receivables and the other assets of
the Trust Property and in the proceeds thereof. The Seller
shall deliver (or cause to be delivered) to the Trustee
file-stamped copies of, or filing receipts for, any document
filed as provided above, as soon as available following such
filing.
(b) The Seller shall not 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 SECS 9-402(7) of
the UCC, unless it shall have given the Trustee at least
thirty (30) days' prior written notice thereof and shall have
promptly filed appropriate amendments to all previously
filed financing statements or continuation statements.
(c) The Seller shall give the Trustee at least 30
days' prior written notice of any relocation of its chief
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,
it shall promptly file any such amendment and shall give
the amendment with the recorder's file stamp thereon to the
Custodian promptly upon receipt thereof.
Section 13.03. Limitation on Rights of Certificateholders.
The death or incapacity of any Certificateholder shall not operate
to terminate this Agreement or the Trust, nor entitle such
Certificateholder's legal representatives or heirs to claim an
accounting or to take any action or commence any proceeding in
any court for a partition or winding up of the Trust, nor otherwise
affect the rights, obligations and liabilities of the parties to this
Agreement or any of them.
Nothing in this Agreement set forth, or contained in the
terms of the Certificates, shall be construed so as to constitute the
Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability
to any third Person by reason of any action taken pursuant to any
provision of this Agreement.
No Certificateholder shall have any right by virtue or by
availing itself of any provisions of this Agreement to institute any
suit, action or proceeding in equity or at law upon or under or
with respect to this Agreement, unless such Holder previously
shall have given to the Trustee a written notice of default and of
the continuance thereof, and unless also the Holders of Certificates
evidencing not less than 20% of the Voting Interests thereof shall
have made written request upon the Trustee to institute such
action, suit or proceeding in its own name as Trustee under this
Agreement and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses and
liabilities to be incurred therein or thereby, and the Trustee, for 30
days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such
action, suit or proceeding and during such 30-day period no
request or waiver inconsistent with such written request has been
given to the Trustee pursuant to this Section or Section 10.04; no
one or more Holders shall have any right in any manner whatever
by virtue or by availing itself or themselves of any provisions of
this Agreement to affect, disturb or prejudice the rights of the
Holders of any other of the Certificates, or to obtain or seek to
obtain priority over or preference to any other such Holder, or to
enforce any right under this Agreement except in the manner
provided in this Agreement and for the equal, ratable and common
benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section 13.03, each
Certificateholder and the Trustee shall be entitled to such relief as
can be given either at law or in equity.
Section 13.04. 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 WITHOUT REGARD OR
REFERENCE TO PRINCIPLES OF CONFLICTS OF LAWS OF
SUCH STATE.
Section 13.05. Notices. All demands, notices and
communications upon or to the Seller, the Backup Servicer, the
Trustee under this Agreement shall be in writing, personally
delivered or mailed by certified mail, return receipt requested, and
shall be deemed to have been duly given upon receipt:
(a) in the case of the Seller, to
Angelo R. Appierto
President
Aegis Auto Funding Corp.
525 Washington Boulevard
Jersey City, New Jersey 07310
or at such other address as shall be designated by the Seller
in a written notice to the Trustee;
(b) in the case of the Backup Servicer, to
Norwest Bank Minnesota, National
Association
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479-0070
Attention: Corporate Trust Services--Asset
Backed Administration
or at such other address as shall be designated by the
Backup Servicer in a written notice to the Seller;
(c) in the case of the Trustee or Custodian, to
Norwest Bank Minnesota, National
Association
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479-0070
Attention: Corporate Trust Services--Asset
Backed Administration
or at such other address as shall be designated by the
Trustee in a written notice to the Seller;
(d) in the case of any Rating Agency, such
address as shall be designated by such Rating Agency in a
written notice to the Seller and the Trustee.
Any notice or other communication required or permitted to be
mailed to a Certificateholder shall be given by first class mail, postage
prepaid, at the address of such Holder as shown in the Certificate Register
(with copies thereof to such other Person(s) as such Certificateholder shall
have requested in writing, the address of such other Person(s) to receive
such copies also to be reflected in the Certificate Register), and shall be
deemed to have been given upon receipt.
Section 13.06. 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 or of the Certificates or the rights of the Holders thereof.
Section 13.07. Assignment. Notwithstanding anything to the
contrary contained herein, except as provided in Sections 8.03, this
Agreement may not be assigned by the Seller without the prior written
consent of the Trustee and the Holders of Certificates evidencing not less
than 66% of the Voting Interests thereof.
Section 13.08. Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of the
Trust. The interests represented by the Certificates shall be nonassessable
for any losses or expenses of the Trust or for any reason whatsoever.
Section 13.09. Counterparts. 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 13.10. Limited Recourse to Seller. The parties hereto
agree that the obligations of the Seller hereunder, including, without
limitation, the obligation of the Seller in respect of indemnification
pursuant to Sections 3.06, 8.02 and 11.07 in respect of repurchases or
substitutions of Receivables upon breach of representations and warranties
pursuant to Section 3.02, and in respect of fees, costs and expenses
pursuant to Sections 3.06, 4.04 and 4.05, are payable solely from the
Seller's interests in the Trust Property and that no party may look to any
other property or assets of the Seller in respect of such obligations.
<PAGE>
IN WITNESS WHEREOF, the Seller, the Backup Servicer and the
Trustee have caused this Pooling and Servicing Agreement to be duly
executed by their respective officers as of the day and year first above
written.
AEGIS AUTO FUNDING CORP.,
as Seller
By
Brendan Meyer
Vice President
NORWEST BANK MINNESOTA,
NATIONAL
ASSOCIATION, as Trustee
By
Stephen Seitz
Corporate Trust Officer
NORWEST BANK MINNESOTA,
NATIONAL
ASSOCIATION, as Backup Servicer
By
Stephen Seitz
Corporate Trust Officer
EXHIBIT A
FORM OF CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN AND WILL NOT BE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED (THE "SECURITIES ACT"),OR UNDER THE
SECURITIES OR BLUE SKY LAWS OF ANY STATE IN THE
UNITED STATES OR ANY FOREIGN SECURITIES LAWS. BY ITS
ACCEPTANCE OF THIS CERTIFICATE THE HOLDER OF THIS
CERTIFICATE IS DEEMED TO REPRESENT TO THE SELLER AND
THE TRUSTEE (i) THAT IT IS AN INSTITUTIONAL INVESTOR
THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) OF REGULATION D PROMULGATED
UNDER THE SECURITIES ACT (AN "INSTITUTIONAL
ACCREDITED INVESTOR") AND THAT IT IS ACQUIRING THIS
CERTIFICATE FOR ITS OWN ACCOUNT (AND NOT FOR THE
ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR AGENT FOR
OTHERS (WHICH OTHERS ALSO ARE INSTITUTIONAL
ACCREDITED INVESTORS UNLESS THE HOLDER IS A BANK
ACTING IN ITS FIDUCIARY CAPACITY) FOR INVESTMENT AND
NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN
CONNECTION WITH, THE PUBLIC DISTRIBUTION HEREOF OR
(II) THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT AND IS
ACQUIRING SUCH CERTIFICATE FOR ITS OWN ACCOUNT (AND
NOT FOR THE ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR
AGENT FOR OTHERS (WHICH OTHERS ALSO ARE QUALIFIED
INSTITUTIONAL BUYERS).
NO SALE, PLEDGE OR OTHER TRANSFER OF THIS CERTIFICATE
MAY BE MADE BY ANY PERSON UNLESS EITHER (i) SUCH
SALE, PLEDGE OR OTHER TRANSFER IS MADE TO THE SELLER,
(ii) SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE TO AN
INSTITUTIONAL ACCREDITED INVESTOR THAT EXECUTES A
CERTIFICATE, SUBSTANTIALLY IN THE FORM SPECIFIED IN
THE AGREEMENT, TO THE EFFECT THAT IT IS AN
INSTITUTIONAL ACCREDITED INVESTOR ACTING FOR ITS OWN
ACCOUNT (AND NOT FOR THE ACCOUNT OF OTHERS) OR AS A
FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS ALSO
ARE INSTITUTIONAL ACCREDITED INVESTORS UNLESS THE
HOLDER IS A BANK ACTING IN ITS FIDUCIARY CAPACITY), (iii)
SO LONG AS THIS CERTIFICATE IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, SUCH
SALE, PLEDGE OR OTHER TRANSFER IS MADE TO A PERSON
WHOM THE ISSUER REASONABLY BELIEVES AFTER DUE
INQUIRY IS A "QUALIFIED INSTITUTIONAL BUYER" (AS
DEFINED IN RULE 144A), ACTING FOR ITS OWN ACCOUNT
(AND NOT FOR THE ACCOUNT OF OTHERS) OR AS A
FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS ALSO
ARE QUALIFIED INSTITUTIONAL BUYERS) TO WHOM NOTICE
IS GIVEN THAT THE SALE, PLEDGE OR TRANSFER IS BEING
MADE IN RELIANCE ON RULE 144A, OR (iv) SUCH SALE,
PLEDGE OR OTHER TRANSFER IS OTHERWISE MADE IN A
TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, IN WHICH CASE (A)
THE TRUSTEE SHALL REQUIRE THAT BOTH THE PROSPECTIVE
TRANSFEROR AND THE PROSPECTIVE TRANSFEREE CERTIFY
TO THE TRUSTEE AND THE SELLER IN WRITING THE FACTS
SURROUNDING SUCH TRANSFER, WHICH CERTIFICATION
SHALL BE IN FORM AND SUBSTANCE SATISFACTORY TO THE
TRUSTEE AND THE SELLER, AND (B) THE TRUSTEE SHALL
REQUIRE A WRITTEN OPINION OF COUNSEL (WHICH SHALL
NOT BE AT THE EXPENSE OF THE SELLER OR THE TRUSTEE)
SATISFACTORY TO THE SELLER AND THE TRUSTEE TO THE
EFFECT THAT SUCH TRANSFER WILL NOT VIOLATE THE
SECURITIES ACT. NO SALE, PLEDGE OR OTHER TRANSFER
MAY BE MADE TO ANY ONE PERSON FOR CERTIFICATES WITH
A FACE AMOUNT OF LESS THAN $250,000 AND, IN THE CASE
OF ANY PERSON ACTING ON BEHALF OF ONE OR MORE THIRD
PARTIES (OTHER THAN A BANK (AS DEFINED IN SECTION
3(a)(2) OF THE SECURITIES ACT) ACTING IN ITS FIDUCIARY
CAPACITY), FOR CERTIFICATES WITH A FACE AMOUNT OF
LESS THAN $250,000 FOR EACH SUCH THIRD PARTY.
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE
DEPOSITOR OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE 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.]
<PAGE>
AEGIS AUTO RECEIVABLES TRUST 1996-A
AUTOMOBILE RECEIVABLE PASS-THROUGH CERTIFICATES
PPN:
CUSIP:
NUMBER R-1 Original
Certificate Balance:
Pass-Through Rate: 9.00%
$_______________________
Final Scheduled Distribution Date: May 20, 2002
Initial Certificate Balance of all Certificates: $
THIS CERTIFIES THAT ___________________ is the registered
owner of this _________ DOLLARS Certificate. This Certificate
evidences a fractional undivided interest in the Aegis Auto Receivables
Trust 1996-A (the "Trust") (excluding the Residual Interest in the Trust),
formed by Aegis Auto Funding Corp., a Delaware corporation (the
"Seller"). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as of September 1, 1996 (the "Agreement") among the
Seller, Norwest Bank Minnesota, National Association, as backup servicer
(the "Backup Servicer"), and Norwest Bank Minnesota, National
Association, as trustee (the "Trustee"). The property of the Trust
includes, among other assets, a pool of motor vehicle retail installment
sale contracts secured by new and used automobiles and light-duty trucks.
(This Certificate does not represent an interest in or obligation of the
Seller or any of the respective Affiliates thereof, except to the extent
described below.) A summary of certain of the pertinent provisions of the
Agreement is set forth below. To the extent not otherwise defined herein,
the capitalized terms used herein have the meanings assigned to them in
the Agreement. The Certificate Balance of this Certificate will be
decreased by the payments on this Certificate in respect of principal as
described in the Agreement. Accordingly, following the initial issuance of
the Certificates, the Certificate Balance of this Certificate will over time
be less than the original denomination shown above. Anyone acquiring
this Certificate may ascertain its current Certificate Balance by inquiry of
the Trustee.
This Certificate is one of the duly authorized Certificates
designated as "Automobile Receivable Pass-Through Certificates." This
Certificate is issued under and is subject to the terms, provisions and
conditions of the Agreement, to which Agreement the Holder of this
Certificate by virtue of the acceptance hereof assents and by which such
Holder is bound. The property of the Trust includes, without limitation,
a pool of motor vehicle retail installment sale contracts (the
"Receivables") acquired on the Closing Date (as defined in the
Agreement) secured by new and used automobiles and light-duty trucks
(the "Financed Vehicles"), all moneys due thereunder after the Cutoff
Date (as defined in the Agreement), proceeds from claims on certain
insurance policies and certain other rights under the Agreement, all right,
title and interest of the Seller in and to the Purchase Agreement and any
and all proceeds of the foregoing.
This Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced
hereby and the rights, duties and immunities of the Trustee. Copies of the
Agreement and all amendments thereto will be provided to any
Certificateholder, at its expense, upon a written request to the Trustee.
Under the Agreement, there will be distributed on the 20th day of
each month or, if such 20th day is not a Business Day, the next Business
Day (the "Distribution Date"), commencing on October 21, 1996, to the
person in whose name this Certificate is registered at the close of business
on the last day of the Collection Period preceding a Distribution Date or
termination of the Trust (the "Record Date") an amount equal to the
product of the Percentage Interest evidenced by this Certificate and the
amount, if any, required to be distributed to the holders of all Certificates.
All payments to Certificateholders shall be made on each
Distribution Date to each Certificateholder of record on the related Record
Date by check, or, if requested by a Certificateholder holding Certificates
with Original Certificate Balances in aggregate in excess of $1,000,000,
by wire transfer to the account designated in writing by such Holder in the
form of Exhibit F to the Agreement (or such other account as such
Certificateholder may designate in writing) delivered to the Trustee prior
to the Determination Date, in immediately available funds. Except as
otherwise provided in the Agreement and notwithstanding the above, the
final distribution on this Certificate will be made after due notice by the
Trustee of the pendency of such distribution, which notice shall request
that the Certificateholder present and surrender this Certificate at the
office or agency maintained for that purpose by the Trustee in
Minneapolis, Minnesota. Surrender of this Certificate shall not be a
condition of payment of the final distribution; however, the Holder, by
accepting this Certificate, hereby agrees to indemnify and hold harmless
the Trustee, the Seller and the Certificate Registrar from and against any
and all claims arising from such failure to present and surrender this
Certificate, including but not limited to claims by third parties claiming
to be bona fide purchasers.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Trustee, by manual signature, this
Certificate shall not entitle the Holder hereof to any benefit under the
Agreement or be valid for any purpose.
The Certificates do not represent a recourse obligation of, or an
interest in, the Seller, the Backup Servicer, the Trustee or any Affiliate
of any of them. The Certificates are limited in right of payment to certain
collections and recoveries respecting the Receivables, all as more
specifically set forth in the Agreement. A copy of the Agreement may be
examined during normal business hours at the principal office of the
Seller, and at such other places, if any, designated by the Seller, by any
Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided,
the amendment thereof and the modification of the rights and obligations
of the Seller and the rights of the Certificateholders under the Agreement
at any time by the Seller and the Trustee with the consent of the Holders
of the Certificates affected thereby evidencing not less than 51% of the
Voting Interests of all affected Certificates. Any such consent by the
Holder of this Certificate shall be conclusive and binding on such Holder
and on all future Holders of this Certificate and of any Certificate issued
upon the transfer hereof or in exchange hereof or in lieu hereof whether
or not notation of such consent is made upon this Certificate. The
Agreement also permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations set forth
therein, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at
the offices or agencies maintained by the Trustee in its capacity as
Certificate Registrar, or by any successor Certificate Registrar, in
Minneapolis, Minnesota, or such other office of the Trustee maintained
for such purpose and designated by the Trustee in writing, accompanied
by a written instrument of transfer in form satisfactory to the Trustee and
the Certificate Registrar duly executed by the Holder hereof or such
Holder's attorney duly authorized in writing, and thereupon one or more
new Certificates of authorized denominations evidencing the same
aggregate interest in the Trust will be issued to the designated transferee.
The Certificates are initially issuable only as registered Certificates
without coupons in denominations of $250,000 and integral multiples of
$1,000 in excess thereof, except that one Certificate may be issued in a
different denomination. As provided in the Agreement and subject to
certain limitations set forth therein, Certificates are exchangeable for new
Certificates evidencing the same aggregate denomination, as requested by
the Holder surrendering the same. No service charge will be made to the
Holder for any such registration of transfer or exchange, but the Trustee
may require payment of a sum sufficient to cover any tax or governmental
charges payable in connection therewith.
The Trustee, the Certificate Registrar, and any agent of the Trustee
or the Certificate Registrar may treat the person in whose name this
Certificate is registered as the owner hereof for all purposes, and neither
the Trustee, the Certificate Registrar, nor any such agent shall be affected
by any notice to the contrary.
The Trust created by the Agreement shall terminate upon the
earliest of (i) payment to the Certificateholders of all amounts required to
be paid to them pursuant to the Agreement and the disposition of all
property held as part of the Trust Property, (ii) May 20, 2002 or
(iii) subject to the Agreement, 90 days after the Dissolution of the Seller.
The Seller may, at its option, purchase the corpus of the Trust, in whole,
at a price specified in the Agreement, and such purchase will effect early
retirement of the Certificates; however, such right of purchase is
exercisable only on a Distribution Date following the last day of any
Collection Period as of which the Pool Balance is less than or equal to
10% of the Original Pool Balance.
IN WITNESS WHEREOF, the Trustee, not in
its individualcapacity but on behalf of the Trust, has caused this
Certificate to be duly executed.
AEGIS AUTO
RECEIVABLES TRUST
1996-A
By: NORWEST BANK
MINNESOTA,
NATIONAL
ASSOCIATION, as Trustee
By
Name:
Title:
This is one of the Certificates referred to
in the within-mentioned Agreement.
NORWEST BANK
MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By
Name:
Title:
Dated as of
_________________, 199_
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns
and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or typewrite name and address, including postal zip code, of
assignee)
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney
to transfer said Certificate on the books of the Certificate Registrar, with
full power of substitution in the premises.
Dated:
*
Name:
_______________
*NOTICE: The signature to this assignment must correspond with the
name as it appears upon the face of the within Certificate in every
particular, without alteration, enlargement or any change whatever.
<PAGE>
EXHIBIT B
TRUSTEE'S STATEMENT TO CERTIFICATEHOLDERS
Aegis Auto Receivables Trust 1996-A
Automobile Receivable Pass-Through Certificates
Distribution Date:
Last Day of Collection Period:
I. COLLECTIONS INTEREST PRINCIPAL
TOTALS
Scheduled Payments
Full & Partial Prepayments
Recoveries
Risk Default Insurance Proceeds
Receivable Repurchased by Seller
Miscellaneous Servicer Collections
Available Interest Distribution Amount
Available Principal Distribution Amount
Total Available Distribution Amount
Reinvestment Income on Collection Account
Withdrawals from
Reserve Fund
Total Amount Available
II. DISTRIBUTIONS
Backup Servicer Fee
Servicing Fee
Trustee and Custodian Fees
Interest Distribution
Interest Carryover Shortfall
Principal Distribution
Principal Carryover Shortfall
Deposits to Reserve Fund
Releases to Seller
Total Funds Distributed
III. CERTIFICATE BALANCE
Original Aggregate Certificate Balance
Beginning Aggregate Certificate Balance
Ending Aggregate Certificate Balance
Interest Carryover Shortfall
Principal Carryover Shortfall
Certificate Factor
IV. POOL BALANCE INFORMATION
Original Pool Balance:
Beginning of Period
End of Period
Pool Balance
Pool Factor
Weighted Average Coupon (WAC)
Weighted Average Remaining Maturity (WAM) (in months)
Remaining Number of Receivables
V. RESERVE FUND
Amount
Beginning Balance
Plus: Deposits
Plus: Reinvestment Income
Withdrawals to Certificateholders
Withdrawals for expenses
Released to Seller
Ending Balance
VI. RECEIVABLES REPURCHASED/SUBSTITUTED BY SELLER
Number of Receivables Repurchased
Principal Amount
Number of Receivables Substituted
Principal Amount
VII. DELINQUENCY INFORMATION*
# of Principal % of
Contracts Balance Pool
Balance
30-59 Days Delinquent
60-90 days Delinquent
90 Days or more Delinquent
*Excluding Liquidated and Defaulted Receivables
VIII. REPOSSESSION INFORMATION Current Period
Cumulative
Number of Receivables as to which Vehicles have been
Repossessed (and not yet liquidated)
Principal Balances of Receivables relating to Vehicles
which have been Repossessed (and not yet liquidated)
IX. LIQUIDATED AND DEFAULTED RECEIVABLES Current Period
Cumulative
Number of Liquidated Receivables
Principal Balances of Liquidated Receivables*
(Prior to Liquidation)
Number of Defaulted Receivables**
Principal Balances of Defaulted Receivables
Total Principal Balance of Liquidated
and Defaulted Receivables
* Excludes receivables previously characterized
as Defaulted Receivables
**Refers to Receivables that have become
180 days delinquent and are not Liquidated Receivables
X. RECOVERIES Current Period
Cumulative
Liquidation Proceeds
Rebate of Servicer Cancelled Warranty Contracts
VSI Physical Damage/Loss Insurance Proceeds
Consumer Insurance
Total Recoveries
XI. RETENTION AMOUNT
Beginning Balance
Plus: Quarterly Reserve Loss Deficiency
Less: Claims approved
Less: Quarterly Reserve Loss Surplus
Ending Balance
XII. RISK DEFAULT INSURANCE PROCEEDS Current Period
Cumulative
Risk Default Insurance Proceeds
XIII. NET LOSSES Current Period
Cumulative
Principal Balance of Liquidated and
Defaulted Receivables
Less: Recoveries
Less: Risk Default Insurance Proceeds
Net Losses
XIV. INSURANCE CLAIMS
Current Period
Cumulative
Number of Risk Default Insurance Claims
Amount of Risk Default Insurance Claims
Number of VSI Physical Damage/Loss Insurance Claims
Amount of VSI Physical Damage/Loss Insurance Claims
Number of Risk Default Insurance Claims Rejected
Principal Balance of Receivables Rejected
<PAGE>
EXHIBIT C
SCHEDULE OF RECEIVABLES
Delivered to the Trustee on the Closing Date
(See Attached)
<PAGE>
EXHIBIT D
LOCATION OF SERVICER FILES
American Lenders Facilities, Inc.
2600 Michaelson Drive
Suite 470
Irvine, CA 92715
<PAGE>
EXHIBIT E
Aegis Auto Receivables Trust 1996-A
AUTO RECEIVABLES PASS-THROUGH CERTIFICATES
RECEIVABLE CHARACTERISTICS
As of September 24, 1996 (Cutoff Date)
Remaining Term % Outstanding
Outstanding
To Maturity Principal Balance
Principal Balance
31-36 2.70%
475,356.22
37-42 6.39%
1,122,707.24
43-48 16.22%
2,848,514.56
49-54 29.53%
5,185,458.99
55-60 45.16%
7,929,334.60
Weighted Average Remaining Term to Maturity 54.4 months
Annual Percentage Rate
Weighted Average Annual Percentage Rate 20.06%
% Outstanding
Outstanding
Model Year Principal Balance
Principal Balance
1991 2.67%
468,439.22
1992 6.52%
1,144,501.30
1993 15.76%
2,768,426.74
1994 29.82%
5,236,729.50
1995 33.85%
5,944,811.85
1996 11.00%
1,932,017.31
1997 0.38%
66,445.69
% Outstanding
Outstanding
New/Used Collateral Principal Balance
Principal Balance
New 5.57%
977,456.35
Used 94.43%
16,583,915.26
Outstanding
Principal Balance
Largest 36,505.52
Smallest 3,911.50
Average 12,402.10
EXHIBIT F
WIRING INSTRUCTIONS FORM
______________, 19____
Norwest Bank Minnesota, National Association
6th Street and Marquette Avenue
Minneapolis, MN 55479-0070
Re: Automobile Receivable Pass-Through Certificates
Issued by Aegis Automobile Receivables Trust
1996-A
Dear Sirs:
In connection with the sale of the above-captioned Certificate by
to
("Transferee") you, as Trustee with respect to the related Certificates, are
instructed to make all remittances to Transferee as Certificateholder as of
, 19 and you are directed to send all notices to the appropriate
party at the address set forth on Schedule 1 hereto. You are further
instructed to treat the Transferee as the record holder for purposes of the
, 199__ Distribution Date.
[Transferee]
By
Title:
Acknowledged
[Seller]
By
Title:
<PAGE>
EXHIBIT G
FEE SCHEDULE
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
CORPORATE TRUST DEPARTMENT
SCHEDULE OF FEES
AEGIS AUTO RECEIVABLES TRUST 1996-A
I. Trustee and Custodian Fee:
one-twelfth of the product of (i) 0.03% per annum and (ii) the
aggregate Certificate Balance as of the close of business on the
preceding Distribution Date or, in the case of the first Distribution
Date, the original aggregate Certificate Balance.
II. Monthly Backup Servicer Fee:
one-twelfth of the product of (i) 0.02% per annum and (ii) the
outstanding Pool Balance as of the first day of the preceding
Collection Period or, in the case of the first Distribution Date, as
of the Closing Date.
<PAGE>
EXHIBIT H
RISK DEFAULT INSURANCE POLICY
Issuer: The Connecticut Indemnity Company
Policy Name: Secured Value Insurance Policy
Policy No.: ZSC __________
Date: September , 1996
Named Insured: Norwest Bank Minnesota, N.A., as Trustee for Aegis Receivables
Trust 1996-A
Endorsements: Exhibit A, Ed. 8/30/95 & Exhibit B, Ed. 11/7/95
and Exhibit C
<PAGE>
EXHIBIT I
VSI INSURANCE POLICY
1. Issuer: Guaranty National Insurance Company
Policy Name: Lenders Comprehensive Single Interest Insurance Policy
Policy No.: ZYG 1500103
Date: February 1, 1994
Named Insured: Aegis Capital Markets
Endorsements: 42621-0 (10/93), 42623-0 (10/93), 42624-0 (10/93),
42627-0 (10/93), 42629-0 (10/93), 42630-0 (10/93),
41510-0 (6/90), Nos. 7, 8, Coverage Endorsements dated
3/23/94,
9/08/94 and 9/26/94, Nos. 16-24, 30-31
<PAGE>
EXHIBIT J
FORM OF TRANSFEREE LETTER
(Rule 144A Transfer)
[Date]
Aegis Auto Funding Corp.
525 Washington Boulevard
Jersey City, New Jersey 07310
Norwest Bank Minnesota, National Association
Sixth Street and Marquette Avenue
Minneapolis, MN 55479-0070
Attention: Corporate Trust Services Asset Backed Administration
Aegis Auto Receivables Trust 1996-A
Automobile Receivable Pass-Through Certificates
Ladies and Gentlemen:
The undersigned (the "Purchaser") proposes to purchase one or
more Automobile Receivable Pass-Through Certificates, (the
"Certificates") issued by Aegis Auto Receivables Trust 1996-A (the
"Trust") pursuant to that certain Pooling and Servicing Agreement dated
as of September 1, 1996 (the "Pooling and Servicing Agreement") by and
among Aegis Auto Funding Corp., a Delaware corporation, as seller
("Seller"), Norwest Bank Minnesota, National Association, as Backup
Servicer, and Norwest Bank Minnesota, National Association, as Trustee.
Unless the context or use indicates another or different meaning, each
capitalized term used herein and not otherwise defined herein shall have
the meaning ascribed to it in the Pooling and Servicing Agreement.
1. The undersigned hereby certifies that, as indicated below,
the undersigned is the President, Chief Executive/Financial Officer, Senior
Vice President or other executive officer or investment officer of the
Purchaser.
2. In connection with the purchase by the Purchaser of the
Certificates, the undersigned hereby certifies to you that the Purchaser is
a "qualified institutional buyer" as defined in Rule 144A ("Rule 144A")
promulgated under the Securities Act of 1933, as amended, because:
[ ] (a) The Purchaser owned or invested on a discretionary basis $100
million in securities (except for the excluded securities referred to
below) as of the end of the Purchaser's most recent fiscal year
(such amount being calculated in accordance with Rule 144A) and
the Purchaser satisfies the criteria in the subcategory marked below
(check one):
[ ] Insurance Company. The Purchaser is an insurance
company whose primary and predominant business activity
is the writing of insurance or the reinsuring of risks
underwritten by insurance companies and which is subject
to supervision by the insurance commissioner or a similar
official or agency of a State or territory or the District of
Columbia.
[ ] Investment Company. The Purchaser is (i) an investment
company registered under the Investment Company Act of
1940, as amended (the "Investment Company Act") or (ii)
a business development company as defined in Section
2(a)(48) of that Act.
[ ] Small Business Investment Company. The Purchaser is a
Small Business Investment Company licensed by the U.S.
Small Business Administration under Section 301(c) or (d)
of the Small Business Investment Act of 1958.
[ ] Corporation, Etc. The Purchaser is an organization
described in Section 501(c)(3) of the Internal Revenue
Code of 1986, as amended, a corporation (other than a
bank, savings and loan association or similar institution),
partnership or Massachusetts or similar business trust.
[ ] State or Local Plan. The Purchaser is a plan established
and maintained by a State or its political subdivisions, or
any agency or instrumentality of a State or its political
subdivisions, for the benefit of its employees.
[ ] ERISA Plan. The Purchaser is an employee benefit plan
within the meaning of Title I of the Employee Retirement
Income Security Act of 1974.
[ ] Trust Fund. The Purchaser is a trust fund whose trustee is
a bank or trust company and whose participants are
exclusively plans established and maintained by a State or
its political subdivision, or any agency or instrumentality
of a State or its political subdivisions, for the benefit of its
employees.
[ ] Business Development Company. The Purchaser is a
business development company as defined in Section
202(a)(22) of the Investment Adviser Act of 1940.
[ ] Investment Advisor. The Purchaser is an investment
advisor registered under the Investment Advisers Act of
1940, as amended.
[ ] (b) The Purchaser is a dealer registered pursuant too Section 15
of the Exchange Act, acting for its own account or the accounts of
other qualified institutional buyers, that in the aggregate owns and
invests on a discretionary basis at least $10 million of securities of
issuers that are not affiliated with the dealer, provided that
securities constituting the whole or a part of an unsold allotment
to or subscription by a dealer as a participant in a public offering
shall not be deemed to be owned such dealer.
[ ] (c) The Purchaser is a dealer registered pursuant to Section 15 of
the Exchange Act acting in a riskless principal transaction on
behalf of a qualified institutional buyer.
[ ] (d) The Purchaser is an investment company registered under the
Investment Company Act, acting for its own account or for the
accounts of other qualified institutional buyers, that is part of a
family of investment companies which own in the aggregate at
least $100 million in securities of issuers other than issuers that are
affiliated with the investment company or are part of such family
of investment companies. "Family of investment companies"
means any two or more investment companies registered under the
Investment Company Act, except for a unit investment trust whose
assets consist solely of shares of one or more registered investment
companies, that have the same investment adviser (or, in the case
of unit investment trusts, the same depositor), provided that, for
purposes of this section:
(A) each series of a series company (as defined in Rule
18f-2 under the Investment Company Act (17 CFR
270.18f-2)) shall be deemed to be a separate investment
company; and
(B) investment companies shall be deemed to have the
same adviser (or depositor) if their advisers (or depositors)
are majority-owned subsidiaries of the same parent, or if
on investment company's adviser (or depositor) is a
majority-owned subsidiary of the other investment
company's adviser (or depositor).
[ ] (e) The Purchaser is an entity, all of the equity owners of which
are qualified institutional buyers, acting for its own account or the
accounts of other qualified institutional buyers.
[ ] (f) The Purchaser is a bank as defined in Section 3(a)(2) of the
Act, any savings and loan association or other institution as
referenced in Section 3(a)(5)(A) of the Act, or any foreign bank or
savings and loan association or equivalent institution, acting for its
own account or the accounts of other qualified institutional buyers,
that in the aggregate owns and invests on a discretionary basis at
least $100 million in securities of issuers that are not affiliated
with it and that has an audited net worth of at least $25 million ad
demonstrated in its latest annual financial statements, as of a date
not more than 16 months preceding the date of sale under the Rule
in the case of a U.S. bank or savings and loan association, and not
more than 18 months preceding such date of sale for a foreign
bank or savings and loan association or equivalent institution.
The term "securities" as used herein does not include (i) securities
of issuers that are affiliated with the Purchaser, (ii) securities that are part
of an unsold allotment to or subscription by the Purchaser (if the
Purchaser is a dealer), (iii) bank deposit notes and certificates of deposit,
(iv) loan participations, (v) repurchase agreements, (vi) securities owned
but subject to a repurchase agreement and (vii) currency, interest rate and
commodity swaps.
For purposes of determining the aggregate amount of securities
owned or invested on a discretionary basis by the Purchaser, the
Purchaser used the cost of such securities to the Purchaser and did not
include any of the securities referred to in the preceding paragraph.
Further, in determining such aggregate amount, the Purchaser may
have included securities owned by subsidiaries of the Purchaser, but only
if such subsidiaries are consolidated with the Purchaser in its financial
statements prepared in accordance with generally accepted accounting
principles and if the investments of such subsidiaries are managed under
the Purchaser's direction. However, such securities were not included if
the Purchaser is a majority-owned, consolidated subsidiary of another
enterprise and the Purchaser is not itself a reporting company under the
Securities Exchange Act of 1934, as amended.
3. The Purchaser certifies and acknowledges that it is familiar
with Rule 144A and understands that you and your customers (if you act
as a broker for one or more customers) are relying on the statements made
therein.
4. The Purchaser certifies that the Purchaser is purchasing the
Certificates in the capacity marked below (check one):
[ ] The Purchaser certifies that the Purchaser is purchasing the
Certificates for its own account only; or
[ ] The Purchaser certifies that the Purchaser is purchasing the
Certificates for the account of [one] [specify number:] other
qualified institutional buyer(s), [each of] which is a "qualified
institutional buyer." (Draw a line through inapplicable words and
brackets.)
5. The Purchaser certifies that, to the extent it has requested
same, it has received from the Seller the information that satisfies the
requirements of paragraph (d)(4) of Rule 144A (the "Rule 144A
Information").
6. The Purchaser certifies that it will comply with all
applicable federal and state securities laws in connection with any
subsequent resale by the Purchaser of the Certificates. The Purchaser
acknowledges that no Certificates may be exchanged for any new
Certificates having an initial principal balance of less than $250,000.
7. The Purchaser understands and acknowledges that the
Certificates have not been and will not be registered under the Securities
Act of 1933, as amended, or any state securities laws and may be resold
only if (a) the Certificates are registered pursuant to the provisions of the
Securities Act of 1933, as amended, and such state securities laws, or (b)
if an exemption from such registration is available. The Purchaser
understands and acknowledges that the Seller is not required to register the
Certificates and that any transfer must comply with Section 7.03 of the
Agreement. The Trustee is not obligated to provide Rule 144A
Information.
8. The Purchaser understands that there is no market, nor is
there any assurance that a market will develop, for the Certificates and
that the Seller does not have any obligation to make or facilitate any such
market (or to otherwise repurchase the Certificates from the Purchaser)
under any circumstances.
9. The Purchaser has consulted with its own legal counsel,
independent accountants and financial advisors to the extent it deems
necessary regarding the tax consequences to it of ownership of the
Certificates, is aware that its taxable income with respect to the
Certificates in any accounting period may not correspond to the cash flow
(if any) from the Certificates for such period, and is not purchasing the
Certificates in reliance on any representations of the Seller or its counsel
with respect to tax matters.
10. The Purchaser hereby further agrees to be bound by all the
terms and conditions of the Certificates as provided in the Pooling and
Servicing Agreement.
11. If the Purchaser sells any of the Certificates, the Purchaser
will obtain from any subsequent purchaser the same representations
contained in this Letter.
Very truly yours,
[PURCHASER]
By
Name
Title
EXHIBIT K
FORM OF TRANSFEREE LETTER
(Non-Rule 144A Transfer)
[Date]
Aegis Auto Funding Corp.
525 Washington Boulevard
Jersey City, New Jersey 07310
Norwest Bank Minnesota, National Association
Sixth Street and Marquette Avenue
Minneapolis, MN 55479-0070
Attention: Corporate Trust Services Asset Backed Administration
Aegis Auto Receivables Trust 1996-A
Automobile Receivable Pass-Through Certificates
Ladies and Gentlemen:
The undersigned (the "Purchaser") proposes to purchase certain
Automobile Receivable Certificates (the "Certificates") issued by Aegis
Auto Receivables Trust 1996-A (the "Trust) pursuant to a Pooling and
Servicing Agreement dated as of September 1, 1996 (the "Pooling and
Servicing Agreement"), among Aegis Auto Funding Corp., as Seller,
Norwest Bank Minnesota, National Association, as Backup Servicer, and
Norwest Bank Minnesota, National Association as Trustee. Unless the
context or use indicates another or different meaning, each capitalized
term used herein and not otherwise defined herein shall have the meaning
ascribed to it in the Pooling and Servicing Agreement.
The Purchaser represents and warrants that:
(a) Information. The Purchaser acknowledges that it has made
such investigation as the Purchaser deems necessary to evaluate the merits
and risks involved with an investment in the Certificates, and has had an
opportunity to meet with officers and employees of the Seller and to ask
questions and receive answers regarding an investment in the Certificates
and has asked any question he desired to ask and has received answers
with respect to such questions to the full satisfaction of the Purchaser and
has relied exclusively on the information and information discussed at
such meeting.
(b) No Reliance on Other Purchasers. In making its investment
decision with respect to subscribing for the Certificates, the Purchaser has
not relied upon any statement, representation or advice of any other
Purchaser of the Certificates.
(c) Purchase for Investment. The Purchaser is purchasing the
Certificates without a view to any distribution, assignment, resale or other
disposition of the Certificates in any manner which would violate the
Securities Act of 1933, as amended (the "Securities Act"), or applicable
state securities or "Blue Sky" laws, subject, nevertheless, to the
understanding that the disposition of the Purchaser's property shall at all
times be and remain within the Purchaser's control, and the Certificates
are being purchased solely for the Purchaser's own account for investment
purposes only and not for the account of any other person.
(d) Institutional Accredited Investor. The Purchaser is an
institutional "accredited investor" as defined in Rule 501 under the
Securities Act as follows (check one):
( ) A bank as defined in Section 3(a)(2) of the
Securities Act, whether acting in its individual or fiduciary
capacity;
( ) A savings and loan association or other institution
as defined in Section 3(a)(5)(A) of the Securities Act, whether
acting in its individual or fiduciary capacity;
( ) A broker or dealer registered pursuant to Section 15
of the Securities Exchange Act of 1934;
( ) An insurance company as defined in Section 2(13)
of the Securities Act;
( ) An investment company registered under the
Investment Company Act of 1940 or a business development
company as defined in Section 2(a)(48) of that Act;
( ) A Small Business Investment Company licensed by
the U.S. Small Business Administration under Section 301(c) or
(d) of the Small Business Investment Act of 1958;
( ) An employee benefit plan within the meaning of
Title I of the Employee Retirement Income Security Act of 1974
("ERISA"), if the investment decision is made by a plan fiduciary
(as defined in Section 3(21) of ERISA) which is a bank, savings
and loan association, insurance company or registered investment
advisor, or if the plan has total assets in excess of $5,000,000 or,
if a self-directed plan, with investment decisions made solely by
accredited investors;
( ) A plan established or maintained by a state, its
political subdivisions, or any agency or instrumentality of a state
or its political subdivisions, for the benefit of its employees, if
such plan has total assets in excess of $5,000,000;
( ) A private business development company as defined
in Section 202(a)(22) of the Investment Advisers Act of 1940;
( ) An organization described in Section 501(c)(3) of
the Internal Revenue Code, corporation, Massachusetts or similar
business trust or partnership, not formed for the specific purpose
of acquiring the securities offered, with total assets in excess of
$5,000,000;
( ) A trust, with total assets in excess of $5,000,000,
not formed for the specific purpose of acquiring the securities
offered, whose purchase is directed by a person having such
knowledge and experience in financial and business matters to be
capable of evaluating the merits and risks of an investment in the
Certificates; or
( ) An entity in which all of the equity owners fall
within one of the foregoing categories of "accredited investors."
(e) Exempt Offering. The Purchaser understands that the
Certificates are not being registered under the Securities Act or any state
securities or "Blue Sky" laws and are being sold in reliance on exemptions
from the registration requirements of the Securities Act and any such laws
for non-public offerings. The Purchaser understands that the exemptions
from the registration requirements under state securities laws upon which
the Certificates is relying require that the Purchaser be one of the types
of investors specified in subsection (d) above under the applicable state
securities law and the Purchaser is such an investor. The Purchaser
further understands that the Certificates must be held indefinitely unless
subsequently registered under the Securities Act, any applicable state
securities or "Blue Sky" laws or unless exemptions from the registration
requirements of the Securities Act and such laws are available. The
Purchaser represents, warrants and agrees that, if at some future time the
Purchaser wishes to dispose of or exchange any of the Certificates, the
Purchaser will not do so unless before any such sale, transfer or other
disposition the Purchaser shall have furnished to the Trustee either (a) a
certificate of the transferee that the transferee is a "qualified
institutionalbuyer" within the meaning of Rule 144A promulgated pursuant to
the Securities Act or (b) a certificate of the transferee that the transferee
is an institutional "accredited investor" as defined in Rule 501(a) of the
Securities Act and, in the case of (b) only, an opinion of counsel
satisfactory in form and substance to the Trustee and the transferor, to the
effect that the sale, transfer or other disposition of such Certificate has
been registered under the Securities Act, or that such sale, transfer or
other disposition does not require registration under the Securities Act.
(f) Legal Investment. The Purchaser understands that there
may be restrictions on the ability of certain investors, including, without
limitation, depository institutions, either to purchase the Certificates or to
purchase investments having characteristics similar to those of the
Certificates representing more than a specified percentage of the investor's
assets, and the Purchaser further represents and warrants that it has
consulted, and relied on the advice of, its own legal advisor in
determining whether and to what extent the Certificates constitute a legal
investment for the Purchaser.
(g) The Purchaser (i) has no need for liquidity with respect to
the Certificates, (ii) is able to bear the economic risks of an investment
in the Certificates for an indefinite period and (iii) is able to afford a
complete loss of such investment. The Purchaser has such knowledge and
experience in financial and business matters to use the information made
available in connection with the offering of the Certificates, to evaluate the
merits and risks of the prospective investment in the Certificates and to
make an informed business decision with respect thereto. The Purchaser
understands that the Seller will rely upon the information supplied by the
Purchaser pursuant to this Agreement in order to verify this representation
and warranty and represents that such information is true and correct in
all respects. The Purchaser understands that a false representation may
constitute a violation of law, that any person which suffers damage as a
result of a false representation may have a claim against the undersigned
for damages for which the undersigned will indemnify the Seller and its
affiliates pursuant to the terms of this Agreement.
(h) The Purchaser understands that there is no established
market for the Certificates and that none may develop and, accordingly,
that the Purchaser must bear the economic risk of an investment in the
Certificates for an indefinite period of time.
(i) The Purchaser agrees that it is bound by and will abide by
the provisions of the Pooling and Servicing Agreement pursuant to which
the Certificates are issued.
(j) All information which the Purchaser has provided to the
Seller concerning the Purchaser is correct and complete as of the date
hereof, and if there should be any adverse change in such information
before receiving notification that this subscription has been accepted, the
Purchaser will immediately provide the Seller with such information.
Very truly yours,
[PURCHASER]
By
Name
Title
EXHIBIT L
ASSIGNMENT
In accordance with the Pooling and Servicing Agreement dated as
of September 1, 1996 by and among Aegis Auto Funding Corp., a
Delaware corporation (the "Seller"), and Norwest Bank Minnesota,
National Association, as trustee (the "Trustee") and as backup servicer
(the "Backup Servicer") (the "Pooling and Servicing Agreement"), the
Seller hereby assigns, transfers and otherwise conveys unto the Trustee in
trust for the benefit of the Certificateholders, without recourse (capitalized
terms used herein and not otherwise defined shall have the meaning
assigned to them in the Pooling and Servicing Agreement): (i) all right,
title and interest of the Seller in and to the Receivables identified on
Schedule I attached hereto (the "Receivables"), and all moneys received
thereon, on and after the Cutoff Date allocable to principal, and all monies
received thereon allocable to interest accrued from and including the
Cutoff Date; (ii) the interest of the Seller in the security interests in the
Financed Vehicles granted by the Obligors pursuant to the Receivables and
all certificates of title to such Financed Vehicles; (iii) the interest of the
Seller in any Risk Default Insurance Proceeds or any proceeds from
claims on Insurance Policies (including the VSI Insurance Policy) covering
the Receivables, the Financed Vehicles or Obligors from the Cutoff Date;
(iv) the right of the Seller to realize upon any property (including the right
to receive future liquidation Proceeds) that shall have secured a Receivable
and have been repossessed by or on behalf of the Trustee; (v) the interest
of the Seller in any Dealer Recourse; (vi) all right, title and interest in the
Seller in and to the Purchase Agreement; and (vii) the proceeds of any and
all of the foregoing. The foregoing sale does not constitute and is not
intended to result in any assumption by the Trustee of any obligation of
the undersigned to the Obligors, insurers or any other person in
connection with the Receivables, Custodian Files, Servicer Files, any
insurance policies or any agreement or instrument relating to any of them.
This Assignment is made pursuant to and upon the representations,
warranties and agreements contained in the Pooling and Servicing
Agreement.
IN WITNESS WHEREOF, the undersigned has caused this
Assignment to be duly executed as of , 199 .
AEGIS AUTO
FUNDING CORP.
a Delaware
corporation
By
Brendan
Meyer, Vice President
<PAGE>
EXHIBIT M
TRUSTEE'S CERTIFICATE
PURSUANT TO SECTION 11.02
OF THE POOLING AND SERVICING AGREEMENT
Norwest Bank Minnesota, National Association, as trustee (the
"Trustee") of the Aegis Auto Receivables Trust Series 1996-A created
pursuant to the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement") dated as of September 1, 1996 among Aegis Auto
Funding Corp. (the "Seller"), Norwest Bank Minnesota, National
Association, as backup servicer (the "Backup Servicer") and as trustee (the
"Trustee"), does hereby sell, transfer, assign and otherwise convey to the
Seller, without recourse, representation or warranty, all of the Trustee's
right, title and interest in and to all of the Receivables (as defined in the
Pooling and Servicing Agreement) identified in the attached Servicer's
Certificate of "Purchased Receivables," which are to be repurchased by
the Seller pursuant to Section 3.02 of the Pooling and Servicing
Agreement, and all security and documents relating thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this
day of 199 .
Norwest Bank Minnesota, National
Association, as Trustee
By
[Name]
[Title]
<PAGE>
EXHIBIT N
APPOINTMENT OF CUSTODIAN'S AGENT
EXHIBIT 10.103.1
PROMISSORY NOTE
$1,360,000.00
Kansas City, Missouri
July 17, 1996
THE UNDERSIGNED PROMISES TO PAY TO THE ORDER
OF COMMERCE BANK, N.A. ("Bank") at its office the principal sum of
ONE MILLION, THREE HUNDRED SIXTY THOUSAND AND NO/100
DOLLARS ($1,360,000.00), or the then outstanding and unpaid balance
of sums advanced hereunder, together with accrued interest. All sums
advanced hereunder shall bear interest from the date of such advance
at the per annum rate equal to 8.50%. Interest shall be calculated on
the actual number of days outstanding on the basis of a year of 360
days. Interest shall be payable monthly beginning August 15, 1996,
until and including January 15, 1997; thereafter, principal and interest
shall be payable in monthly installments of $13,392 until July 15, 2001
when all amounts owing on this Note shall be due and payable in full.
Payments will be applied first to interest and then to principal.
This Note shall bear interest after maturity, whether by
acceleration or otherwise, at the rate of 3% over the stated rate, but not
exceeding the maximum rate allowed by law; and if not paid annually,
such interest shall be compounded annually.
Reference is made to that certain Loan Agreement, by and
between the undersigned and Bank and dated the date hereof, for
provisions concerning Bank's obligations to make any advance
hereunder and the rights of Bank to accelerate the maturity of this
Note; the terms and conditions of such Loan Agreement shall govern
this Note, the same being hereby incorporated herein by this reference.
THIS NOTE IS SECURED BY A FUTURE ADVANCE DEED
OF TRUST AND OTHER SECURITY INSTRUMENTS, ALL OF WHICH
ARE DATED THE DATE HEREOF. Reference is made to such Future
Advance Deed of Trust and other security instruments for additional
rights as to acceleration of this indebtedness. Nothing contained
herein shall limit the effectiveness of any other security instrument and
assignments whether dated the date hereof or not.
All without notice to and without affecting the liability of the
undersigned to Bank, the undersigned waives presentment, protest,
demand, notice of dishonor or default, and consents to the release of
any party or parties directly or indirectly liable for payment hereof or the
release, subordination or substitution of any collateral securing this
Note.
This Note shall be governed by, and construed in accordance
with, the laws of the State of Missouri.
SYSTEMS AND SERVICES
TECHNOLOGIES, INC.
By:_________________________________________________
Name:
______________________________________________
Title:
_______________________________________________
EXHIBIT 10.103.2
ASSIGNMENT OF RENTS AND LEASES
KNOW ALL PERSONS BY THESE PRESENTS THAT SYSTEMS & SERVICES TECHNOLOGIES,
INC., a Delaware corporation ("Assignor"), in consideration of financial
accommodations extended or to be extended to Assignor, and other good and
valuable consideration paid by COMMERCE BANK, N.A., ("Assignee"), hereby
conveys, transfers and assigns unto the Assignee, its successors and assigns,
all the rights, interests and privileges, which the Assignor as Lessor has
and may have in the leases now existing or hereafter made.
This Assignment is made as additional security for the payment of the
Loan(the "Loan"), as defined and more fully described in that certain
Loan Agreement, dated the date hereof, by and between Assignee and
Assignor (and all extensions, modifications or renewals thereof); such
Loans made by Assignee to Assignor in the amount of One Million Three
Hundred Sixty Thousand and No/100 Dollars ($1,360,000.00) with interest,
of even date herewith, and secured by a Future Advance Deed of Trust
covering real property.
(See Exhibit A attached hereto)
It is expressly understood and agreed by the parties hereto that before an
event of default occurs under the terms of said Loan Agreement, Assignor
shall have the right to collect rents, income and profits from the
aforementioned lease(s) and to retain, use and enjoy the same; provided
that even before an event of default occurs, no rent not due under the
terms of said lease(s) shall be collected or accepted without the prior
written consent of the Assignee.
to the contrary notwithstanding, Assignor hereby assigns to Assignee any
award made hereafter to it in any court proceeding involving any of the
lessees in any bankruptcy, insolvency, or reorganization proceedings in
any state or Federal court, and any and all payments made by lessees in
lieu of rent. Assignor hereby irrevocably appoints Assignee as its attorney
in fact to appear in any action and/or to collect any such award or payment
in lieu of rent.
The Assignor, upon an event of default under the Loan Agreement, hereby
authorizes the Assignee, at its option, to enter and take possession of the
Real Property and to manage and operate the same, to collect all or any
rents accruing therefrom and from said lease(s), to let or re-let the Real
Property or any part thereof, to cancel and modify the lease(s), evict
tenants, bring or defend any suits in connection with the possession of
the Real Property in its own name or Assignor's name, make repairs as
in its discretion, may deem proper.
The receipt by the Assignee of any rents, issues or profits pursuant to
this instrument after the institution of foreclosure proceedings under the
related Future Advance Deed of Trust shall not cure any default(s) nor
affect such proceeds or any sale pursuant thereto.
Assignee shall not be obligated to perform or discharge any obligation or
duty to be performed or discharged by Assignor under said lease(s), and the
Assignor hereby agrees to indemnify the Assignee for, and to save it
harmless from, any and all liability arising from said lease(s) or from
this Assignment, and this Assignment shall not place responsibility for
the control, care, management or repair of the Real Property upon the
Assignee, or make the Assignee responsible or liable for any negligence
in the to any tenant, licensee, employee, invitee or stranger.
The Assignor covenants and represents that (i) the Assignor has full right
and title to assign said lease(s) and the rents, income and profits due or
to become due thereunder and no other assignment of any interest therein has
been made; and (ii) after an event of default (as defined in the Loan
Agreement), the Assignor will not hereafter cancel, surrender or terminate
said lease(s), exercise any option which might lead to such termination or
change, alter or modify such lease(s), or consent to the release
r written consent of the Assignee.
Assignor hereby authorizes the Assignee to give notice in writing of this
Assignment at any time to any tenant under the lease(s).
Violation of any of the covenants, representations and provisions contained
herein by the Assignor shall be deemed a default under the terms of the Loan
Agreement. Nothing contained herein shall be deemed to diminish or modify
any provision of the Loan Agreement or Future Advance Deed of Trust including
without limitation any covenant not to transfer by lease or otherwise the
Real Property.
Any expenditures made by the Assignee in curing a default under any lease
on the Assignor's behalf, with interest thereon at the highest rate payable
on any obligation of Assignor owing to Assignee, shall become part of the
debt secured by this Assignment.
The full performance of the related Future Advance Deed of Trust and the
duly recorded release or reconveyance of the Real Property shall render this
Assignment void.
This Assignment applies to and binds the parties hereto and their
respective heirs, administrators, executors, successors and assigns, as well
as any subsequent owner of the Real Property and any assignee of the related
Future Advance Deed of Trust. This Assignment shall be governed by, and
construed in accordance with, the laws of the State of Missouri.
IN WITNESS WHEREOF, the Assignor has signed and sealed this Assignment on
the 17th day of July, 1996.
(SEAL) SYSTEMS & SERVICES TECHNOLOGY, INC.
By:_________________________________________________
Attest: Name:______________________________________________
Title:________________________________________________
STATE OF MISSOURI )
) ss.
COUNTY OF BUCHANAN )
On this 17th day of July, 1996, before me personally appeared _____________
____________, to me personally known, who being by me duly sworn, did say
that he is the ____________________ of Systems & Services Technologies,
Inc., and that the foregoing instrument was signed on behalf of Systems &
Services Technologies, Inc., and said _______________________ acknowledged
said instrument to be the free act and deed of said Systems & Services
Technologies, Inc.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal at my office in _______________________________, the day and year last
above written.
_______________________________________
Notary Public
My Commission Expires:
__________________________________
EXHIBIT A
(Legal Description)
EXHIBIT 10.103
MISSOURI FUTURE ADVANCE
DEED OF TRUST AND SECURITY AGREEMENT
THIS DEED OF TRUST SECURES FUTURE ADVANCES
AND ALSO SECURES ALL OTHER FUTURE
OBLIGATIONS OF GRANTOR TO LENDER WHICH ARE
CONTRACTUAL IN NATURE. THE TOTAL PRINCIPAL
AMOUNT OF THE OBLIGATIONS WHICH MAY BE
SECURED HEREBY IS $1,360,000. THIS DEED OF
TRUST IS GOVERNED BY SECTION 443.055 R.S.MO.
THIS DEED OF TRUST is made this 29th day of July,
1996, among the Grantor, SYSTEMS & SERVICES
TECHNOLOGIES, INC., a Delaware corporation, (herein
"Grantor"), 6700 Antioch, Suite 400, Merriam, Kansas 66204,
the Trustee, CAROL D. HAYS (herein "Trustee"), and the
Beneficiary, COMMERCE BANK, N.A., a national banking
association, organized and existing under the laws of the United
States of America, whose address is 1000 Walnut, Kansas City,
Missouri 64106 (herein "Lender").
GRANTOR, in consideration of the indebtedness herein
recited and the trust herein created, irrevocably grants, bargains,
sells, conveys and confirms to Trustee, in trust, with power of
sale, all of the hereinafter described properties, rights and
interest, whether now owned or hereafter acquired (said
properties, rights and interests, together with any additions hereto
that may be subject to the lien of this instrument by means of
supplements hereto being hereinafter called the "Mortgaged
Property"), and in so far as the Mortgaged Property consists of
equipment, accounts, accounts receivable, contract rights, general
intangibles, inventory, fixtures, proceeds of collateral or any
other personal property of any kind or character, Grantor hereby
grants to Lender a security interest in all of Grantor's right, title
and interest therein (all said personal property being hereinafter
sometimes referred to as the "Personal Property Collateral")
namely:
1. The land as further described in Schedule 1 hereto
(the "Land"), and all air space above the surface of the Land,
with the tenements, hereditament, appurtenances, privileges,
easements, franchises, rights, appendages and immunities
thereunto belonging or appertaining.
2. All buildings, improvements and fixtures, and all
other property constituting real property or real estate under the
laws of Missouri, now located, or hereafter erected, upon the
Land (the "Improvements"), including the property constituting
real property or real estate described in Schedule 1 hereto, and
all right, title and interest of Grantor, now owned or hereafter
acquired, in and to (a) any and all strips and gores of land
adjacent to or used in connection with the Land, (b) all land
upon which any such buildings or improvements may now or
hereafter encroach, (c) the land within the streets, roads and
alleys adjoining all such real property, and (d) all and singular
and tenements, hereditament, appurtenances, privileges,
easements, franchises, rights, appendages and immunities
whatsoever belonging to or in any wise appertaining to all such
real property.
3. Any and all fixtures, appliances, machinery and
equipment of any nature whatsoever, and other articles of
property (real, personal or mixed), at any time now or hereafter
acquired, which is (i) attached to or situated in or upon the Land
or other real estate described above or the Improvements with
the intention of being attached to the Mortgaged Property, Land
or Improvements, (ii) used or intended to be used in connection
with the Land or such other real estate if said property is or shall
be affixed thereto, (iii) or financed in whole or in part with the
proceeds of the Loan, including, without limiting the generality
of the foregoing, (a) all building materials, fixtures, building
machinery and building equipment delivered on site to the real
estate during the course of, or in connection with, any
construction of any Improvements, (b) all carpeting, air
conditioners, heating units, ranges, stoves, ovens, disposals, and
dishwashers, and (c) all heating, lighting, refrigeration, plumbing,
electrical lighting, ventilating, incinerating, water heating,
cooking, security, air conditioning and energy management
equipment, (but excluding any furniture, fixtures, equipment,
appliances and equipment not owned by Grantor.
4. Any and all building materials and equipment of
Grantor which is intended to be installed in or on the Mortgaged
Property, Land or Improvements.
5. Any and all water and water rights, ditches and ditch
rights, reservoirs and reservoir rights, stock or interests in water,
irrigation or ditch companies, royalties, minerals, oil and gas
rights, and lease or leasehold interests owned by Grantor, now or
hereafter used or useful in connection with, appurtenant to or
related to the Land or other Mortgaged Property or any part
thereof.
6. All leases of the Land or other Mortgaged Property or
any part thereof, whether now existing or hereafter entered into,
and all right, title and interest of Grantor thereunder, including
cash and securities deposited under said leases.
7. All licenses, permits (including building permits),
authorizations or approvals of any type or nature whatsoever,
now owned or held or hereafter acquired, which relate to the use,
development or occupancy of the Land or other Mortgaged
Property or any part thereof.
8. All insurance proceeds and condemnation awards
relating to the Land or other Mortgaged Property or any part
thereof, and any escrow accounts established pursuant to Article
5 of this Deed of Trust.
9. All rents from, all issues, uses, profits, proceeds and
products of, all replacements and substitutions for, and other
rights and interests now or hereafter belonging to, any of the
foregoing.
10. All other estates, easements, franchises, interest,
licenses, rights, titles, powers or privileges of every kind and
character which Grantor now has or may hereafter acquire in and
to the property and interests described above, including without
limitation: (a) all present or future estates, easements, franchises,
interests, leaseholds, licenses, rights, titles, powers and privileges
of Grantor in and to all easements, air rights and other rights-of-
way in connection with the property and interests described
above or any part thereof or as a means of ingress to, or egress
from, the Land or the Improvements or any part thereof, (b) all
present or future estates, easements, franchises, interests,
leaseholds, licenses, rights, titles, powers, and privileges of
Grantor in and to the Land or the Improvements or any part
thereof, (c) all present or future estates, easements, franchises,
interests, leaseholds, licenses, rights, titles, powers, and
privileges, if any, of Grantor, either at law or in equity, in
possession or in expectancy, in and to the real property or air
space, as the case may be, lying in, under, or over the streets,
highways, roads, alleys, ways, sidewalks, skywalks, tunnels, or
avenues, open or proposed, in front of, above, over, under,
through, or adjoining, the Land, and in and to any strips or gores
of real property adjoining the Land, and (d) all present or future
estates, easements, franchises, interests, leaseholds, licenses,
development rights or credits, air rights, solar rights, water, water
rights (whether riparian, appropriative time, or otherwise, and
whether or not appurtenant), water, irrigation or ditch stock
interests, rights, titles, powers, and privileges appurtenant, or
incident to, the Land or the Improvements.
11. Any and all proceeds of any and all of the foregoing
(including, without limitation, payment of proceeds that
constitute property of the types described in paragraphs 3, 4 or 5
above).
TO HAVE AND TO HOLD the Mortgaged Property unto
the Trustee forever, and possession of the Mortgaged Property is
now delivered unto the Trustee, in trust, however, for the
purposes set forth herein.
ARTICLE ONE
SECURED OBLIGATIONS
1.1. Obligations Secured. This Deed of Trust is given to
secure the payment and performance of the following
indebtedness and obligations ("Secured Obligations"), in such
order as Lender may elect:
(a) Payment of present and future indebtedness of
Grantor to Lender whether evidenced by promissory
notes, guaranties or other evidences of indebtedness and
any and all amendments, extensions, modifications,
substitutions, replacements or renewals thereof (all of
which are hereinafter referred to as "Note"), now or
hereafter executed by Grantor, which on their face
contain a statement that they are secured hereby, and the
performance and discharge of each and every obligation
of Grantor set forth in the Note and related documents;
(b) Payment of and the performance and discharge of
each and every obligation of Grantor under that Loan
Agreement, dated the date hereof, by and between
Grantor and Lender ("Loan Agreement"); and
(c) Payment of and the performance and discharge of
each and every obligation of Grantor as provided herein
and in all other agreements of Grantor with Lender,
including without Limitation the Assignment of Rents and
Leases (hereinafter collectively called the "Loan
Documents").
1.2. No Commitment. The specification of a maximum
amount which may be secured hereby is intended solely to
comply with the statutory requirements governing future advance
deeds of trust and shall not be construed as evidence of a
commitment to loan such amount to Grantor, nor shall it limit
the extent of personal liability under any Note. In the event the
Note is in excess of the maximum amount recited above, this
Deed of Trust shall secure the Note to the extent of said amount,
without reduction, until the Note is satisfied in full. Neither the
existence nor priority of this Deed of Trust shall be adversely
affected if at any time prior to the expiration of this Deed of
Trust there are no Secured Obligations or the Secured
Obligations are reduced to nothing.
ARTICLE TWO
GENERAL COVENANTS, REPRESENTATIONS
AND WARRANTIES
2.1. Payment and Performance. Grantor covenants and
agrees to pay and perform each of the Secured Obligations and
to perform, comply with and abide by each and every of the
agreements, conditions and covenants contained and set forth in
this Deed of Trust, the Note, the Loan Agreement and each of
the other Loan Documents.
2.2. Title to Mortgaged Property. Grantor covenants,
agrees and warrants that it has good and marketable fee simple
title to the Mortgaged Property, free and clear of liens and
encumbrances, except for the permitted encumbrances (as set
forth in Schedule 2 hereto) (the "Permitted Encumbrances"), and
that Grantor has good right and lawful authority to Deed of Trust
and convey the same in the manner and form herein set forth.
ARTICLE THREE
MAINTENANCE, ALTERATIONS AND ADDITIONS
3.1. Maintenance of Mortgaged Property; Compliance
with Laws. Grantor covenants and agrees to permit, commit or
suffer no waste and to maintain the improvements on the
Mortgaged Property at all times in a state of good repair and
condition; to comply with, or cause to be complied with, all
statutes, ordinances and requirements of any governmental or
other authority relating to the Mortgaged Property; and to do or
permit to be done to the Mortgaged Property nothing that will
alter or change the use and character of the Mortgaged Property
or in any way impair or weaken the security of this Deed of
Trust. In case of the refusal, neglect or inability of Grantor to
repair and maintain said property, Lender may, at its option,
upon not less than five (5) days prior written notice to Grantor,
make such repairs or cause the same to be made, and advance
monies in that behalf.
3.2. Alterations and Additions. No building or other
property now or hereafter covered by the lien of this Deed of
Trust shall be removed, demolished or materially altered without
the prior written consent of Lender, and no addition to or
structural changes will be made to the Improvements without the
prior written approval of Lender., provided, alterations may be
made in accordance with the Loan Agreement. No fixtures will
be installed on the Mortgaged Property subject to vendor's lien
or other lien, and shall any such fixtures be hereafter installed
the lien of this instrument shall immediately attach and be prior
and superior to liens or claims of others thereon.
ARTICLE FOUR
TRANSFERS, ENCUMBRANCES AND LIENS
4.1. Sale or Transfer of Mortgaged Property. Grantor
agrees that no assignment (by operation of law or otherwise),
sale or contract to sell, transfer, mortgage, conveyance or lease
(except as permitted in the Loan Agreement) shall be made by
Grantor of the Mortgaged Property or any part thereof or any
right, title or interest therein (including, without limitation, any
oil, gas or other mineral interest) without first obtaining the prior
written consent of Lender; provided, however, notwithstanding
the foregoing, upon prior written notice to Lender, Grantor may
make such an assignment, sale or transfer to the Guarantor (as
defined in the Loan Agreement) or any wholly owned subsidiary
of Guarantor, but such assignment, sale or transfer shall be
without release of liability of Grantor.
4.2. Claims Against Mortgaged Property. Grantor will
pay, from time to time when the same shall become due, all
claims and demands of mechanics, materialmen, laborers and
others which, if unpaid, might result in, or permit the creation
of, a lien on the Mortgaged Property, whether paramount or
subordinate to this Deed of Trust or any part thereof, or on the
revenues, rents, issues, income and profits arising therefrom and
in general will do or cause to be done everything necessary so
that the lien of this Deed of Trust shall be fully preserved, at the
cost of Grantor, without expense to Lender; provided however,
Grantor shall have the right to contest such claims.
4.3. Subrogation. Lender at its option shall be
subrogated for further security to the lien of any prior
encumbrance, mechanic's or vendor's lien on the Mortgaged
Property paid out of the proceeds of the loan hereby secured,
even though the same be released of record.
ARTICLE FIVE
TAXES AND PUBLIC CHARGES
5.1. Taxes and Public Charges. Grantor, from time to
time when the same shall become due and payable, will pay and
discharge all taxes of every kind and nature (including real and
personal property taxes and income, franchise, withholding,
profits and gross receipts taxes), all general and special
assessments, levies, permits, inspection and license fees, all water
and sewer rents and charges, and all other public charges,
whether of a like or different nature, imposed upon or assessed
against it or the Mortgaged Property or any part thereof or upon
the revenues, rents, issues, income and profits of the Mortgaged
Property or arising in respect of the occupancy, use or possession
thereof. Grantor will, upon the request of Lender, deliver to
Lender receipts evidencing the payment of all such taxes,
assessments, levies, fees, rents and other public charges imposed
or assessed against it or the Mortgaged Property or the revenues,
rents, issues, income or profits thereof. Upon demand by
Lender, at any time after the occurrence of an Event of Default
(as hereinafter defined) or at any time if amounts due hereunder
or under any of the other Loan Documents remain outstanding in
excess of thirty (30) days (whether or not subsequently paid),
Grantor agrees to pay to Lender monthly one-twelfth (1/12) of
the estimated amount of the foregoing taxes, assessments and
charges and any balance which shall be required to pay the taxes,
assessments and charges when due. These payments shall be
held in trust by Lender, will not bear interest, and shall be
applied for the payment of the foregoing when due.
ARTICLE SIX
INSURANCE
6.1. Insurance. Grantor will keep the Mortgaged
Property insured and shall maintain such other insurance as is
required under the terms of the Loan Agreement.
6.2. Evidence of Insurance. Grantor shall deliver and
keep in Lender's possession at all times originals of all insurance
policies required hereunder and shall deliver renewals of all such
policies to Lender at least ten (10) days prior to any expiration
or termination thereof. In the event that renewals of policies are
not delivered to Lender ten (10) days or more before the
termination or expiration of the existing policy or policies,
Grantor authorizes Lender to act for it and procure at Grantor's
expense the necessary insurance coverage and agrees to keep
insurance so written in force until its expiration date.
6.3. Insurers and Cancellation. All insurance maintained
pursuant to the terms of this Deed of Trust shall be issued by
insurers of recognized responsibility which are qualified to do
business in the State. Each such policy of insurance shall
provide that it shall not be canceled or terminated for any reason
or modified or amended in any manner so as to reduce the scope
or amount of coverage or increase the deductible amount except
upon thirty (30) days' prior written notice to Lender.
6.4. Casualty. In the event of any casualty, Grantor will
give immediate notice by mail to Lender, and will commence
proof of loss with the casualty insurer. Lender reserves the right
to direct and approve all proof of loss and claims procedures. If
proof of loss is not made promptly by Grantor, Lender is
authorized by Grantor to do so. Each insurance company
concerned is hereby authorized and directed to make payment for
such loss directly to Lender and not to Grantor and Lender
jointly. The insurance proceeds shall be applied, at Lender's
option, either (a) to the reduction of the Secured Obligations (in
such order as Lender determines), principal or interest, whether
matured or unmatured, but only if an Event of Default (as
hereinafter defined) has occurred, or (b) to the restoration and
repair of the damaged Mortgaged Property provided that (i)
Grantor and Lender agree that such restoration and repair is
economically feasible and reasonable, (ii) Grantor and Lender
agree that Lender's security will not be lessened or impaired
thereby, (iii) no Event of Default has occurred and is continuing
and (iv) Grantor and Lender agree that the proceeds shall be
adequate to pay all estimated costs of restoration and repair or
Grantor shall deposit with Lender sums sufficient, in Lender's
opinion, when added to such proceeds, to pay all such estimated
costs. If such proceeds are to be applied to restoration and
repair, Grantor covenants and agrees to promptly commence the
restoration and repair of such damaged Mortgaged Property to as
nearly as possible the same condition as existed prior to such
casualty, except as otherwise approved in writing by Lender, and
to diligently prosecute such restoration and repair to completion,
paying all costs thereof that the insurance proceeds and other
sums deposited by Grantor with Lender may be insufficient to
pay. If at any time or times Lender determines, in Lender's sole
discretion, that the proceeds and such sums deposited by Grantor
may be insufficient to pay in full all estimated costs of
restoration and repair, Grantor shall on demand deposit with
Lender such additional sums as Lender deems necessary to pay
all such estimated costs. Grantor will submit plans and design
and construction contracts for such restoration and repair to
Lender for Lender's prior written approval. The proceeds of
insurance and any sums deposited by Grantor with Lender as
aforesaid shall be held by Lender and disbursed in payment of
the costs of such restoration and repair in accordance with such
procedures and subject to such conditions as Lender shall
require. Any proceeds of insurance in excess of the costs of
restoration and repair shall, at the option of Lender, be applied to
the reduction of the Secured Obligations or paid to the person
legally entitled thereto.
6.5. Rights to Insurance After Foreclosure. In the event
of foreclosure of this Deed of Trust, or other transfer of title in
full or partial satisfaction of the Secured Obligations or any part
thereof, all right, title and interest of Grantor in and to any
insurance policies then in force, and any proceeds thereof, shall
pass to the purchaser or transferee, and Grantor shall not be
entitled to unearned premiums.
ARTICLE SEVEN
CONDEMNATION
7.1. Condemnation. If all or any part of the Mortgaged
Property hereunder be taken or damaged by the exercise of the
power of eminent domain, Grantor may contest the same in good
faith so long as there is not an Event of Default, the award for
any property so taken is hereby assigned to Lender, and Lender,
upon such award becoming final, is hereby authorized, in the
name of Grantor, to execute and deliver acquittances for, and
release of, any such award and to collect the proceeds. If any
part of the Mortgaged Property shall be so taken or damaged,
and such award shall be, at Lender's sole option, either (a)
applied to the reduction of the Secured Obligations (in such
order as Lender determines), principal or interest, whether
matured or unmatured, or (b) (i) if Grantor and Lender agree
that the tenant under the Lease can reasonably continue to
conduct its business on the Mortgaged Property substantially as
conducted prior to the taking or damage, (ii) if Lender
determines, in its sole discretion, that its security will not be
lessened or impaired, (iii) no Event of Default has occurred and
is continuing, and (iv) Lender determines, in its sole discretion,
that the award shall be adequate to pay all estimated costs of
restoration, replacement and repair or Grantor shall deposit with
Lender sums sufficient, in Lender's sole opinion, when added to
such award, to pay all such estimated costs, then such award
shall be used to restore, replace and repair the taken or damaged
Mortgaged Property. If such award is to be applied to
restoration, replacement and repair, Grantor covenants and agrees
to promptly commence the restoration, replacement and repair of
the taken or damaged Mortgaged Property and to diligently
prosecute such restoration, replacement and repair to completion,
paying all costs thereof that the award and other sums deposited
by Grantor with Lender may be insufficient to pay. If at any
time or times Lender determines, in Lender's sole discretion, that
the award and such sums deposited by Grantor may be
insufficient to pay in full all estimated costs of restoration,
replacement and repair, Grantor shall on demand deposit with
Lender such additional sums as Lender deems necessary to pay
all such estimated costs. Grantor will submit plans and design
and construction and other contracts for such restoration,
replacement and repair to Lender for Lender's prior written
approval. The award and any sums deposited by Grantor with
Lender as aforesaid shall be held by Lender and disbursed in
payment of the costs of such restoration, replacement and repair
in accordance with such procedures and subject to such
conditions as Lender shall require. Any portion of the award in
excess of the costs of restoration, replacement and repair shall, at
the option of Lender, be applied to the reduction of the Secured
Obligations or paid to the person legally entitled thereto.
ARTICLE EIGHT
SECURITY AGREEMENT
8.1. Security Agreement. This Deed of Trust, in
addition to being a lien on real estate, is also a security
agreement by and upon all Personal Property Collateral,
including without limitation any collateral listed on any schedule
of collateral attached hereto, and creates a valid security interest
in and lien on all Personal Property Collateral to secure the
payment and performance of the Secured Obligations.
8.2. Remedies of Lender with Respect to Personal
Property Collateral. Upon the occurrence of any Event of
Default, Lender will have all rights and remedies granted by law,
and particularly by the Uniform Commercial Code, including,
without limitation, the right to take possession of all Personal
Property Collateral, and for this purpose Lender may enter upon
any premises on which any or all of the Personal Property
Collateral is situated and take possession of and operate the
Personal Property Collateral (or any portion thereof) or remove it
therefrom. Lender may require Grantor to assemble the Personal
Property Collateral or any part thereof and make it available to
Lender at a place to be designated by Lender which is
reasonably convenient to all parties. Unless the Personal
Property Collateral or any part thereof is perishable or threatens
to decline speedily in value or is of a type customarily sold on a
recognized market, Lender will give Grantor reasonable notice of
the time and place of any public sale or of the time after which
any private sale or other disposition of such Personal Property
Collateral is to be made. This requirement of sending reasonable
notice will be met if the notice is given to Grantor as herein
provided at least five (5) days before the time of the sale or
disposition.
8.3. Remedies of Lender with Respect to Fixtures
Constituting a Part of the Mortgaged Property. Upon the
occurrence of an Event of Default, Lender may elect, with regard
to the fixtures constituting a part of the Mortgaged Property, to
proceed under this Deed of Trust or to exercise such rights as are
provided by the Uniform Commercial Code of Missouri.
ARTICLE NINE
DEFAULT AND REMEDIES
9.1. Events of Default. Any Event of Default as defined
in the Loan Agreement shall constitute an "Event of Default"
hereunder.
9.2. Remedies Upon Default. At any time after an Event
of Default has occurred, the Secured Obligations shall become
due at Lender's option forthwith or thereafter at the continuing
option of Lender, and this Deed of Trust shall remain in force,
and Lender may exercise any right, power or remedy hereunder
or under the Note or Loan Agreement or otherwise permitted to
it by law or by contract, and in particular, without limiting the
generality of the foregoing, Lender shall have the absolute right,
at its option and election, to pursue one or more of the following
rights:
(a) The Trustee, or his successor appointed as hereinafter
provided, may proceed to sell the Mortgaged Property
hereinabove described and any and every part thereof at public
vendue, to the highest bidder for cash, at the east front door of
the Circuit Court House of Buchanan County, in St. Joseph,
Missouri, after giving at least twenty (20) days public notice of
the time, terms and place of sale, and the property to be sold, by
advertisement in some newspaper printed and published in said
county, or after giving notice for the minimum period and in the
manner provided by statute for such sales at the time of such
notice; and upon such sale shall execute and deliver deed(s)
conveying the Mortgaged Property so sold to the purchaser(s)
thereof, and any statement or recital of fact in any such deed(s)
shall be prima facie evidence of the truth of such statement or
recital, and said Trustee, or his successors in said trust, shall
receive the proceeds of said sale, out of which he shall pay in
the following order: (1) Costs and expenses of executing the trust
created and evidenced hereby, including the usual and reasonable
compensation to the Trustee, his agents and attorneys, for all
services rendered in connection with the trust estate and the sale
thereof; (2) Any past due and accrued, unpaid interest on the
Secured Obligations; (3) All unpaid Secured Obligations (in such
order as Lender determines; and (4) The remainder of such
proceeds of sale, if any, after the satisfaction in full of all
expenses and the Secured Obligations, to the Grantor or to those
lawfully entitled to receive any such remainder. The Trustee
may postpone the sale of all or any parcel of the Mortgaged
Property to a different date or time by public announcement at
the time and place set forth in the notice published.
(b) Lender shall have the right from time to time to take
action to recover any sums, whether interest, principal or any
installment of either, or any other sums required to be paid under
the terms of this Deed of Trust, the Note, the Loan Agreement
or any of the other Loan Documents, as the same become due,
without regard to whether or not the principal sum secured, or
any other sums secured, by this Deed of Trust shall be due, and
without prejudice to the right of Lender thereafter to institute
foreclosure, or any other action, for any Event or Events of
Default existing at the time such earlier action was commenced.
9.3. Multiple Foreclosures. Lender shall have the option
to proceed with foreclosure in satisfaction of any part of the
Secured Obligations without declaring the whole of the Secured
Obligations as immediately matured, and such foreclosure may
be made subject to the unmatured part of the Secured
Obligations, and it is agreed that such foreclosure, if so made,
shall not in any manner affect the unmatured part of the Secured
Obligations, but as to such unmatured part this Deed of Trust, as
well as the other Loan Documents, shall remain in full force and
effect just as though no foreclosure had been made. Several
foreclosures may be made without exhausting the right of
foreclosures for any unmatured part of the Secured Obligations,
it being the purpose to provide for a foreclosure of the security
for any matured portion of the Secured Obligations without
exhausting the power of foreclosure respecting Mortgaged
Property for any other part of the Secured Obligations. The
power of sale conferred herein shall survive until all of the
Mortgaged Property has been conveyed by the Trustee or his
successor free from defects. When necessary to effect the
purpose of this Deed of Trust, the power of sale shall be
construed to enable successive sales of the Mortgaged Property
or any parcel thereof.
9.4. Entry by Lender. During the continuance of any
Event of Default, Lender personally, or by its agents or
attorneys, may enter into and upon all or any part of the
Mortgaged Property, and each and every part thereof, and may
exclude Grantor, its agents and servants wholly therefrom and,
having and holding the same, may use, occupy and control the
Mortgaged Property, either personally or by its superintendents,
manager, agents, servants, attorneys or receivers; and upon every
such entry, Lender at the expense of the Mortgaged Property, or
Grantor, from time to time, either by purchase, repairs or
construction, may maintain and restore the Mortgaged Property,
thereof it shall become possessed as aforesaid, may complete the
construction or development of any improvements and in the
course of such completion may make such changes in the
contemplated improvements as it may deem desirable and may
insure the same; and likewise, from time to time, at the expense
of the Mortgaged Property, or Grantor, Lender may make all
necessary or proper repairs, renewals and replacements and such
useful alterations, additions, betterments and improvements
thereto and thereon as may seem advisable to Lender; and in
every such case Lender shall have the right to manage and
operate the Mortgaged Property and exercise all rights and
powers of Grantor with respect thereto either in the name of
Grantor or otherwise as it shall deem best; and Lender shall be
entitled to collect and receive all earnings, revenues, rents,
issues, profits and income of the Mortgaged Property and every
part thereof; and after deducting the expenses of conducting the
business thereof and of all maintenance, repairs, renewals,
replacements, alterations, betterments and improvements and
amounts necessary to pay for taxes, assessments, insurance and
prior or other proper charges upon the Mortgaged Property, or
any part thereof, as well as just and reasonable compensation for
the services of Lender and for all attorneys, counsel, agents,
clerks, servants and other employees by it properly engaged and
employed, Lender shall apply the monies arising as aforesaid, to
the payment of the Secured Obligations.
9.5. Appointment of Receiver. Upon the occurrence of
any Event of Default, Lender shall be entitled without notice to
Grantor to apply at any time to a court having jurisdiction
thereof for the appointment of a receiver of the Mortgaged
Property or any part thereof and of all rents, incomes, profits,
issues and revenues thereof, from whatever source derived; and
thereupon it is hereby expressly covenanted and agreed that the
court shall forthwith appoint such receiver with the usual powers
and duties of receivers in like cases; and said appointments shall
be made by the court ex parte as a matter of strict right to
Lender, and without reference to the adequacy or inadequacy of
the value of the Mortgaged Property, or to the solvency or
insolvency of Grantor or any party defendant to such suit.
Grantor hereby specifically waives the right to object to the
appointment of a receiver as aforesaid and hereby expressly
consents that such appointment shall be made ex parte and
without notice to Grantor as an admitted equity and as a matter
of absolute right to Lender. In order to maintain and preserve
the Mortgaged Property and to prevent waste and impairment of
its security, Lender may, at its option, advance monies to the
appointed receiver and all such sums advanced shall become
Secured Obligations and shall bear interest from the date of such
advance at the Default Rate (as specified and defined in the Loan
Agreement).
9.6. Remedies Cumulative. No remedy conferred upon
or reserved to Lender herein or in the Loan Agreement or any of
the other Loan Documents is intended to be exclusive of any
other remedy or remedies, and each and every such remedy shall
be cumulative and shall be in addition to every remedy given to
Lender or now or hereafter existing at law or in equity or by
statute. No delay or omission of Lender to exercise any right or
power accruing upon any Event of Default herein or in the Loan
Agreement or any default under the other Loan Documents shall
impair any such right or power, or shall be construed to be a
waiver of any such default or any acquiescence therein; and
every power and remedy given by this Deed of Trust or in the
Loan Agreement or any of the other Loan Documents to Lender
may be exercised from time to time as often as may be deemed
expedient by Lender. Nothing in this Deed of Trust or in the
Loan Agreement or in any of the other Loan Documents shall
affect the obligation of Grantor to pay its obligations under the
Note and the Loan Agreement in the manner and at the time and
place therein respectively expressed. In the event of foreclosure,
Grantor shall be fully liable for any deficiency.
9.7. No Waiver. Any failure by Lender to insist upon
the strict performance by Grantor of any of the terms and
provisions of this Deed of Trust, the Loan Agreement or the
other Loan Documents shall not be deemed to be a waiver of
any of the terms and provisions hereof, or of the Loan
Agreement or the other Loan Documents, and Lender,
notwithstanding any such failure, shall have the right thereafter
to insist upon the strict performance by Grantor of any and all
the terms and provisions of this Deed of Trust or of the Loan
Agreement or the other Loan Documents to be performed by
Grantor; and Lender may resort for the payment of the Secured
Obligations to the Mortgaged Property or to any other security
therefor held by Lender in such order and manner as Lender may
elect.
9.8. Attornment by Tenant. In the event the Mortgaged
Property or any part thereof is hereafter occupied by a tenant
under a lease, and in the event of any foreclosure hereunder,
such tenant shall, unless otherwise agreed in writing to by
Lender, at the option of the purchaser of the Mortgaged
Property, either (i) immediately surrender possession of the
Mortgaged Property to such purchaser or (ii) agree to attorn to
and to execute an agreement reasonably satisfactory to such
purchaser, which agreement shall recognize such purchaser as the
landlord under such lease.
9.9. Waiver of Redemption and Other Rights. To the
extent permitted by the laws of Missouri, Grantor will not at any
time insist upon, or plead, or in any manner whatever claim or
take any benefit or advantage of, any stay or extension or
moratorium law, any exemption from execution or sale of the
Mortgaged Property or any part thereof, wherever enacted, now
or at any time hereafter in force, which may affect the covenants
and terms of performance of this Deed of Trust, nor claim, take
or insist upon any benefit or advantage of any law now or
hereafter in force providing for the valuation or appraisal of the
Mortgaged Property, or any part thereof, prior to any sale or
sales thereof which may be made pursuant to any provision
herein, or pursuant to the decree, judgment or order of any court
of competent jurisdiction; nor, after any such sale or sales, claim
or exercise any right under any statute heretofore or hereafter
enacted, by any governmental authority or otherwise, to redeem
the property so sold or any part thereof; and Grantor hereby
expressly waives all benefit or advantage of any such law or
laws, and covenants not to hinder, delay or impede the execution
of any power herein granted or delegated to Lender, but to suffer
and permit the execution of every as though no such law or laws
had been made or enacted. Without limiting the generality of
the foregoing, to the extent legally permissible, Grantor waives
all rights of redemption, whether at equity or law, with respect to
the Mortgaged Property. Grantor, for itself and all who claim
under it, waives, to the extent that it lawfully may, all right to
have the Mortgaged Property, or any other assets which secure
the indebtedness hereby secured, marshaled upon any foreclosure
hereof.
9.10. Trustee. Although the Trustee or any successor in
trust hereunder may be or become an agent of, officer of,
attorney for or otherwise connected with the Lender or any
subsequent owner or holder of any Note, such Trustee may act
hereunder and any such owner or holder, including the Lender,
may bid for and purchase any property sold hereunder, as if such
Trustee were entirely disinterested. If publication of notice of
sale hereunder be withdrawn by request of the Grantor, all
expenses of the Trustee with a fee for his attorney in preparation
and publication of such notice shall be paid by Grantor on
demand, and the power of sale granted herein shall in no way be
affected.
ARTICLE TEN
ENVIRONMENTAL COVENANTS
10.1. Definitions. "Hazardous Substances" means and
includes all hazardous and toxic substances (including without
limitation petroleum and petroleum products), pesticides,
infectious wastes, wastes or materials, any pollutants or
contaminants (including, without limitation, PCBs, asbestos and
raw materials which include hazardous constituents), or any other
similar substances, or materials which are included under or
regulated by any now existing or hereafter enacted or
promulgated local, state or federal law, statute, ordinance, rule or
regulation pertaining to environmental protection, regulation,
contamination or clean-up, toxic waste, underground storage
tanks and hazardous substance or material handling, treatment,
storage, use or disposal, including without limitation the
Comprehensive Environmental Response Compensation and
Liability Act ("CERCLA"), the Resource Conservation and
Recovery Act ("RCRA"), state lien or environmental clean-up
statutes, all as exist from time to time (all such laws, statutes,
ordinances, rules and regulations being referred to collectively as
"Environmental Laws").
10.2. Hazardous Substances. Grantor represents and
warrants, after diligent inspection of the Mortgaged Property,
that the Mortgaged Property has never been used as either a
sanitary landfill or as a disposal site for Hazardous Substances
and no Hazardous Substances or underground storage tanks have
been deposited or are located in, under or upon the Mortgaged
Property and no part of the Mortgaged Property is presently
contaminated by Hazardous Substances.
10.3. Adjacent Property. To Grantor's knowledge, no
parcel adjacent to the Mortgaged Property has ever been used as
either a sanitary landfill or as a disposal site for Hazardous
Substances, and no Hazardous Substances or underground storage
tanks have been deposited or are located in, under or upon any
parcel adjacent to the Mortgaged Property and no part of any
parcel adjacent to the Mortgaged Property is presently
contaminated by Hazardous Substances.
10.4. Representation and Warranties. Grantor represents
and warrants that it has not received and does not have actual
notice of any violation or claimed or threatened violation of any
Environmental Laws. Grantor agrees to notify Lender of any
such notice within five (5) business days of receipt. Grantor
hereby covenants and agrees to comply with, operate and at all
times use, keep and maintain the Mortgaged Property and every
part thereof (whether or not such property constitutes a facility,
as defined in CERCLA) in conformance with all Environmental
Laws. Without limiting the generality of the foregoing, Grantor
will not use, generate, treat, store, dispose of or otherwise
introduce any Hazardous Substance into, under or on the
Mortgaged Property or any part thereof nor cause, suffer, allow
or permit anyone else to do so except in accordance with
Environmental Laws.
10.5. Default. Upon any Event of Default, Lender shall
have the right to inspect the Mortgaged Property and, if the
Event of Default is not remedied within thirty (30) days, the
option to obtain an environmental assessment(s) of the
Mortgaged Property. This Deed of Trust also secures the
reasonable cost of such an environmental assessments(s), and all
money so paid, with interest thereon from the date of such
payment at a rate equivalent to the Default Rate (as defined and
specified in the Loan Agreement), shall be a Secured Obligation,
and shall be repaid by Grantor on demand. Grantor agrees that
Lender shall not be responsible for liability caused by the
presence or release of Hazardous Substances during such
inspection and/or an environmental assessment(s), and Grantor
agrees to indemnify and hold Lender harmless from and against
any and all such liability.
10.6. Indemnification. Grantor covenants and agrees to
indemnify and hold Lender, it affiliates, agents, servants and
employees harmless from and against any or all liability, loss,
injury, damage, liens or cost (including reasonable attorney's
fees) whatsoever caused by or relating to any violation or
claimed violation of any of the foregoing representations,
warranties or covenants or any Environmental Laws which
relates to the Mortgaged Property. This indemnification
provision shall survive the satisfaction or release of the lien
hereof, foreclosure, or transfer of title by deed in lieu of
foreclosure or otherwise.
ARTICLE ELEVEN
MISCELLANEOUS
11.1. Protection of Lender's Security. Lender may, at its
option and without waiving its right to accelerate the Secured
Obligations and to foreclose the same, pay either before or after
delinquency any or all of those certain obligations required by
the terms hereof to be paid by Grantor for the protection of the
Deed of Trust or for the collection of any of the Secured
Obligations. All sums so advanced or paid by Lender shall
become Secured Obligations and shall bear interest from the date
thereof at the default rate (as specified and defined in the Loan
Agreement) and become an integral part thereof, subject in all
respects to the terms, conditions and covenants of the Loan
Agreement, and this Deed of Trust, as fully and to the same
extent as though a part of the original indebtedness evidenced by
the Note and the Loan Agreement and secured by this Deed of
Trust, excepting, however, that said sums shall be repaid to
Lender upon demand by Lender to Grantor for said payment.
11.2. Costs and Expenses. Grantor agrees to pay all fees
and charges incurred in the procuring and making of this Deed
of Trust or in the perfection of the lien and security interest
hereof, including without limitation fees and expenses relating to
the examination of title to the Mortgaged Property; title
insurance premiums, costs and expenses; surveys; recording,
documentary, transfer, registration or similar fees or taxes;
revenue stamps; architects' and engineers' services; and
attorneys' fees. Grantor further agrees to pay all and singular
costs, charges and expenses, including attorneys' fees and
abstract costs, reasonably incurred or paid at any time by Lender
because of the failure of Grantor to perform, comply with, and
abide by each and every of the agreements, conditions and
covenants of the Loan Agreement, this Deed of Trust, or any of
the other Loan Documents.
11.3. Successors and Assigns. All of the grants,
covenants, terms, provisions and conditions herein shall run with
the Land and bind and inure to the benefit of, the successors and
assigns of Grantor and the successors and assigns of Lender.
11.4. Grantor's Certificate. Grantor will, within ten (10)
days after the request of Lender, furnish a written statement of
the amount owing on the Secured Obligations. Such statement
shall also include such other certifications as Lender may
require.
11.5. Notices. Except as otherwise provided by
applicable law, all notices, certificates or other communications
hereunder shall be in writing and shall be given as provided for
notices given under the Loan Agreement.
11.6. Corrections and Future Acts. Grantor will, upon
request of Lender, promptly correct any defect, error, or
omission which may be discovered in the contents of this Deed
of Trust or in the execution or acknowledgment hereof, and will
execute, acknowledge, and deliver such further instruments and
do such further acts as may be necessary or as may be
reasonably requested by Lender to carry out more effectively the
purpose of this Deed of Trust, to subject to the lien and security
interest hereby created any of Grantor's properties, rights, or
interest covered or intended to be covered hereby, and to perfect
and maintain such lien and security interest.
11.7. Indemnification. Grantor shall indemnify, defend,
hold harmless and reimburse Lender for any liability, damage, or
expense, including attorneys' fees and amounts paid in
settlement, which Lender may incur or sustain in the execution
of this Deed of Trust or in the doing of any act which it is
required or permitted to do by the terms hereof or by law, and
shall be reimbursed therefor in accordance with the provisions of
Section 11.1. However, Grantor shall not be obligated to
indemnify, defend, hold harmless and reimburse Lender from
any such liabilities, damages or expenses to the extent such are
attributable to the gross negligence or willful misconduct of
Lender or any of its agents, contractors or employees.
11.8. Governing Law. This Deed of Trust shall be
construed according to Missouri law, without reference to the
conflicts of laws principles thereof.
11.9. Severability. If any provision or clause of this
Deed of Trust shall be held or deemed to be or shall, in fact, be
inoperative, invalid or unenforceable as applied in any particular
case or in all cases because it conflicts with any provisions of
any constitution or statute or rule of public policy, or for any
other reason, such determination shall not affect in any way any
other provision or clause herein which can be given effect
without the inoperative, invalid or unenforceable provision or
clause.
11.10. Amendments. No alteration or amendment of this
Deed of Trust shall be effective unless in writing signed by the
parties sought to be charged or bound thereby.
11.11. After-Acquired Property. All rights, title and
interest of Grantor in and to all improvements, betterments,
renewals, substitutes and replacements of and all additions and
appurtenances to, the Mortgaged Property hereafter acquired,
constructed, assembled or placed by Grantor on the Mortgaged
Property, and all conversions of the security constituted thereby,
and any other or additional interest in or to the Mortgaged
Property hereafter acquired by Grantor, immediately upon such
acquisition, construction, assembly, placement or conversion, as
the case may be, and in each such case without any further
mortgage, grant, conveyance or assignment or other act of
Grantor, shall become subject to the lien of this Deed of Trust as
fully and completely, and with the same effect, as though now
owned by Grantor and specifically described in the Granting
Clause hereof.
11.12. Tenancy. By the execution and delivery hereof,
Grantor becomes tenant of the Trustee and any successor in trust
hereunder until a foreclosure sale be held as hereinafter provided
for, at a rental of one cent per month, payable monthly in
advance on demand, upon the condition that he Grantor and all
persons claiming or occupying the Mortgaged Property through
or under Grantor, shall pay said monthly rental on demand and
surrender peaceable possession of the entire Mortgaged Property
to the Trustee or any successor in trust as Trustee hereunder, or
to the purchaser at any foreclosure sale hereunder, within ten
days after such sale and without any notice or demand for such
possession.
11.13. Successor Trustee. The Lender shall have the
right and power successively to remove the above named Trustee
or any successor Trustee and to appoint in writing
(acknowledged and recorded) a successor to such Trustee, which
successor shall succeed to the title and to all of the rights and
powers of the original Trustee.
11.14. Effective Date. The dating of this Deed of Trust
is intended as and for the convenient identification of this Deed
of Trust and is not intended to indicate that this Deed of Trust
was executed and delivered on said date, this Deed of Trust
being executed on the date set forth in the acknowledgment
hereto. This Deed of Trust shall become effective
simultaneously with the effectiveness of the Loan Agreement as
provided for therein.
IN WITNESS WHEREOF, Grantor has duly executed
this Deed of Trust.
SYSTEMS &
SERVICES TECHNOLOGY,
INC., a Delaware corporation
By:_______________________________
Name:___________________________
Title:_____________________________
<PAGE>
STATE OF MISSOURI }
} ss.
COUNTY OF JACKSON }
On this 29th day of July, 1996, before me personally
appeared ______________________, to me personally know,
who, being by me duly sworn, did say that he is the ______ of
Systems & Services Technologies, Inc., a Delaware corporation,
that the said instrument was signed on behalf of said corporation
by consent of its Board of Directors and that said
___________________ acknowledged said instrument to be the
free act and deed of said corporation.
IN TESTIMONY WHEREOF, I have hereunto set my
hand and affixed my official seal in the County and State
aforesaid, the day and year first above written.
_________________________________
Notary Public
in and for said County and
State
My Commission Expires:
<PAGE>
EXHIBIT A
LEGAL DESCRIPTION
A tract of land located in the Southeast Quarter (SE 1/4) of the
Northeast Quarter (NE 1/4) of Section 23, Township 57 North,
Range 35 West, lying West of the West right-of-way of
Interstate Route 29 and North of the North right-of-way of
Pickett Road, St. Joseph, Buchanan County, Missouri, more
particularly described as follows: Beginning at a point on the
West line of the Southeast Quarter (SE 1/4) of the Northeast
Quarter (NE 1/4) of Section 23, Township 57 North, Range 35
West, on the North right-of-way line of Pickett Road, said point
being 33.2 feet North of the Southwest corner of said Southeast
Quarter (SE 1/4) of the Northeast Quarter (NE 1/4); thence
North 84 degrees 57' 55" East along the North right-of-way line
of Pickett Road for a distance of 373.49 feet; thence continuing
along said North right-of-way South 89 degrees 56' 50" East for
a distance of 199.81 feet; thence continuing along said North
right-of-way South 88 degrees 43' 06" East for a distance of
35.01 feet; thence North 25 degrees 37' 28" East along the
Westerly right-of-way of the access road for a distance of 269.25
feet to the West right-of-way of Interstate 29; thence North 00
degrees 11'56" East along said West right-of-way line along a
cure to the left having a radius of 9549.3 feet of an arc length of
358.42 feet; thence South 89 degrees 59' 55" West for a distance
of 721.60 feet to the West line of the Southeast Quarter (SE 1/4)
of the Northeast Quarter (NE 1/4); thence South 00 degrees 10'
00" East along said West line for a distance of 929.36 feet to the
point of beginning. All in Buchanan County, Missouri and
subject to all public and private roads and easements.
RED20/2051
EXHIBIT 10.104
TERM NOTE
$360,000.00
October ___, 1996
plus interest
Kansas City, Missouri
FOR VALUE RECEIVED, the undersigned,
SYSTEMS & SERVICES TECHNOLOGIES, INC.
("Company"), a Delaware corporation, hereby
promises to pay to the order of COMMERCE
BANK, N.A. ("Bank"), at its offices in Kansas
City, Missouri, and in lawful money of the
United States of America and in immediately
available funds, the principal sum of Three
Hundred Sixty Thousand Dollars ($360,000) and
accrued interest, or so much thereof as is
advanced hereunder (if less than all of the
principal amount is advanced). The aggregate
unpaid principal amount plus interest shall
become immediately due and payable without
demand or further action on the part of Bank
upon the occurrence of an Event of Default as
set forth under that certain Letter Agreement
dated as of September 26, 1996, by and
between Company and Bank.
This Term Note shall be payable with
respect to interest only until and including
March 31, 1997. Thereafter, this Term Note
shall be payable in thirty-six (36) equal
monthly installments of principal (with each
installment to be equal to 1/36th of the
principal balance outstanding on March 31,
1997). Principal payments (together with
accrued interest) shall commence on April 30,
1997, and shall continue on the last day of
each month thereafter until March 31, 2000,
when the outstanding principal balance,
together with accrued interest, shall be due
and payable in full.
This Term Note shall bear interest at a
per annum variable rate equal to the Prime
Rate (as that term is defined in the Letter
Agreement) in effect from time to time.
Accrued interest shall be calculated on the
actual number of days outstanding based on a
year consisting of 360 days and shall be
payable monthly, in arrears, and at maturity.
After any expressed or accelerated maturity,
this Term Note shall bear interest at 3%
above the Prime Rate, and if not paid
monthly, such interest shall be compounded
monthly.
If any installment of this Term Note
shall become due and payable on a day which
is not a business day of Bank, payment shall
be made on the next succeeding business day
of Bank.
Company may, at any time, make principal
prepayments without premium or penalty. Any
such prepayments shall be applied to the
monthly principal payments in inverse order
of their maturities.
The Company and all endorsers, sureties,
guarantors and other persons liable hereon or
who may become liable for the payment hereof,
severally waive demand on the Company,
presentment, notice of dishonor or nonpayment
to the Company, notice of protest and any and
all lack of diligence in the enforcement
hereof and hereby assent to each and any
extension or postponement of the time of
payment, at or after maturity, or other
indulgence and hereby waive any and all
notice thereof.
This Term Note is issued pursuant to the
terms of the Letter Agreement and any
amendments thereto, is entitled to the
benefits thereof and is subject to the terms
and conditions expressed therein including,
without limitation, provisions concerning the
acceleration of the maturity hereof upon the
happening of certain stated events. The
defined terms used herein shall have the same
meaning as used in the Letter Agreement.
THE COMPANY AND BANK HEREBY AGREE TO
TRIAL BY COURT AND IRREVOCABLY WAIVE JURY
TRIAL IN ANY ACTION OR PROCEEDING (INCLUDING
BUT NOT LIMITED TO ANY COUNTERCLAIM) ARISING
OUT OF OR IN ANY WAY RELATING TO OR CONNECTED
TO THIS TERM NOTE, ANY RELATIONSHIP OR
TRANSACTION BETWEEN COMPANY AND BANK, THE
ORIGINATION, ADMINISTRATION OR ENFORCEMENT OF
THE INDEBTEDNESS EVIDENCED OR SECURED BY THIS
TERM NOTE, OR ANY OTHER MATTER.
This Term Note shall be governed by, and
construed in accordance with, the laws of the
State of Missouri.
IN WITNESS WHEREOF, Company has duly
caused this Term Note to be executed and
delivered at the place specified above and as
of the date first written above.
SYSTEMS & SERVICES
TECHNOLOGIES, INC.
By:__________________________________
Title:_______________________________
EXHIBIT 10.105.1
ADDENDUM
WITNESS THIS ADDENDUM to be incorporated in and
made a part of that certain Deed of Trust and Security
Agreement dated October 2, 1996 (the "Deed of Trust"), between
Systems and Services Technologies, Inc. ("Borrower") and the
First Bank of Missouri ("Lender").
In consideration of and in connection with the sum or
sums to be loaned to Borrower to Lender under the terms of that
certain promissory note of even date herewith in the principal
amount of $705,000.00, executed by Borrower and made payable
to the order of Lender, and for other valuable consideration, the
receipt and sufficiency of which is hereby acknowledged,
Borrower and Lender hereby agree that the terms and conditions
of the Deed of Trust shall be and are hereby modified, altered
and changed as follows:
1. The last sentence of the last paragraph of Section
4 is hereby deleted in its entirety.
2. Paragraph I of Section 10 is hereby deleted in its
entirety and, in lieu thereof, a new Paragraph I, Section 10 is
hereby added to read as follows:
A transfer of a substantial part of Grantor's money or
property to any person or party other than Aegis Consumer
Funding Group, Inc.
3. The first sentence of Section 11 is hereby deleted
in its entirety and, in lieu thereof, a new first sentence of Section
11 is hereby added to read as follows:
At the option of Bank, all or any part of the principal and
accrued interest on the Obligations shall become immediately
due and payable after the giving of ten (10) days written notice
by Bank to Grantor of any non-monetary Event of Default, or
the giving of five (5) days written notice by Bank to Grantor of
any monetary Event of Default, or at any time thereafter.
4. Subparagraph I, Paragraph B, Section 18 is hereby
deleted in its entirety and, in lieu thereof, a new Subparagraph 1,
Paragraph B, Section 18 is hereby added to read as follows:
To the best of Grantor's knowledge, except as previously
disclosed and acknowledged in writing to Bank, no hazardous
Substance has been, is or will be located, transported,
manufactured, treated, refined, or handled by any person on,
under or about the Property except in the ordinary course of
business and in strict compliance with all applicable
Environmental Law.
5. Paragraph C and paragraph E of Section 27, as
well as the last sentence of Section 27, are hereby deleted in
their entirety.
6. A new Paragraph F to Section 30 is hereby added
to read as follows:
Trustee agrees to release this Deed of Trust upon
payment of all Obligations secured by this Deed of Trust.
7. Paragraph A of Section 34 is hereby deleted in its
entirety.
8. Except as herein modified, all terms, conditions
and provisions of the Deed of Trust shall remain in full force
and effect and unchanged.
IN WITNESS WHEREOF, the parties hereto have caused
this Addendum to have been executed as of this _____ day of
_____________, 1996.
GRANTOR:
SYSTEMS & SERVICES TECHNOLOGIES, INC.
By:
Matthew B. Burns, Chief Executive Officer
BANK:
THE FIRST BANK OF MISSOURI
By:
Wayde S. Kindiger, Vice President
STATE OF MISSOURI )
)
COUNTY OF CLAY )
On this ___ day of __________, 19___, before me, a
notary public, personally appeared Matthew B. Burns, Chief
Executive Officer, to me personally known, who, being by me
duly sworn, did say that he is acting in the capacity shown above
on behalf of Systems & Services Technologies, Inc., a Delaware
corporation, and that said instrument was signed and sealed on
behalf of said corporation by authority of its board of directors,
and that Matthew B. Burns acknowledged said instrument to be
the free act and deed of said corporation, and that said
corporation has no corporate seal.
Notary Public
My Commission Expires:
STATE OF MISSOURI )
)
COUNTY OF CLAY )
On this ___ day of _________, 19 ___, before me, a
notary public, personally appeared Wayde S. Kindiger, Vice
President, to me personally known, who, being by me duly
sworn, did say that he is acting in the capacity shown above on
behalf on the First Bank of Missouri, a Missouri corporation, and
that said instrument was signed and sealed on behalf of said
corporation by authority of its board of directors, and that
Wayde S. Kindiger acknowledged said instrument to be the free
act and deed of said corporation, and that said corporation has no
corporate seal.
Notary Public
My Commission Expires:
EXHIBIT 10.105.2
Loan No. Loan Name Account No. Note Date Rate Note Amount Maturity Initials
100270 Systems/100270 10/02/96 8.5% $705,000.00 06/02/99
WSK
Draw
(For Bank Purposes Only-MC)
PROMISSORY NOTE
(Business Purpose)
First Bank of Missouri
1. DATE AND PARTIES. The date of this Promissory Note
(Note) is October 2, 1996. This Note evidences a loan which includes
all extensions, modifications and and substitutions (Loan). The parties
to this Note and Loan are:
BORROWER:
SYSTEMS & SERVICES TECHNOLOGIES, INC.
a DELAWARE corporation
4315 PICKETT ROAD
ST. JOSEPH, MO 64506
Tax I.D. # 22-3370315
BANK:
FIRST BANK OF MISSOURI
a MISSOURI banking corporation
7001 N. Oak St.
P.O. Box 10689
Gladstone, Missouri 64118
Tax I.D. # 44-0667863
Branch No. 001
2. PROMISE TO PAY. For value received, Borrower promises
to pay to Bank s order at its office at the above address, or such other
place as Bank may designate, the sum of $705,000.00 (Principal) or so
much thereof as may, from time to time, be advanced to Borrower
hereunder plus interest from the date of disbursement, on the unpaid
principal balance at the rate of 8.5% per annum (Contract Rate) until
this Note matures or the obligation is accelerated. After maturity or
acceleration, the unpaid balance shall bear Interest at the rate specified
in the paragraph in this Note entitled DEFAULT RATE OF
INTEREST until paid in full. The Loan and this Note are limited to
the maximum lawful amount of Interest (Maximum Lawful Interest)
permitted under federal and state laws. If the interest accrued and
collected exceeds the Maximum Lawful Interest as of the time of
collection, such excess shall be applied to reduce the principal amount
outstanding, unless otherwise required by law. If or when no principal
amount is outstanding, amy excess interest shall be amortized and
prorated over the full term of the Loan for purposes of determining the
Maximum Lawful Interest. Interest shall be computed on the basis of
the actual calender year and the actual number of days elapsed.
This is a draw Note and all or part of the Principal sfall be advanced
from time to time by Bank upon request of Borrower or any
authorized agent of Borrower subject to all of the following conditions:
A. There has not been a default by Borrower or any other
party.
B. Bank has retrieved all documents, information, and
warranties as Bank may require, all properly executed,
if appropriate, in a form acceptable to Bank.
C. A request for the advance is received from Borrower or
Borrower s authorized agent prior to the maturity date
of the Loan in a form acceptable to Bank.
D. Bank has made all inspections which Bank considers
necessary and is satisfied with the same.
E. At no time shall the amount of any advance exceed 85%
of the amount of the invoice, payment order or other
written evidence satisfactory to Lender relating to the
making of leasehold improvements to the Facility, nor
shall any advance exceed 80% of the amount of the
invoice, payment order or other written evidence
satisfactory to Lander relating to the purchase of
the furniture or equipment to be used by Borrower in
connection with those operations to be conducted by
Borrower at the Falicity. At no time shall Lender be
obligated to make any advance to Borrower under the
Note on or after April 1, 1997.
Any authorized agent of Borrower shall have authority to direct the
disposition of any such advances until written notice of the revocation
is received by Bank. The total amount of all such advances shall not
exceed the Principal regardless of any payments made by Borrower
and credited to Principal. Interest shall accrue only on the amount of
outstanding Principal that is drawn and unpaid. In the event of
default, Bank is not obligated to make any additional advances
regardless of the amount of Principal that has not been drawn at the
time of default.
Accrued interest only is due and payable on the 2nd day of each
month for the months of November and December, 1996 and January,
February, March, April, and May, 1997. Principal and accrued interest
are due and payable in 24 equal monthly payments of $11,362.46 on
the 2nd day of each month, beginning June 2, 1997, or the day
following if the payment day is a holiday or is a non-business day for
Bank. Unless paid prior to maturity, all other unpaid principal,
accrued interest, costs and expenses are due and payable on June 2,
1999, which is the date of maturity. These payments amounts are
based upon timely payment of each installment. All amounts shall be
paid in legal U.S. currency. Any payment made with a check will
constitute payment only when collected.
3. EFFECT OF PAYMENT. Borrower may prepay this Loan in full,
subject to any prepayment penalty or miminum charge as agreed to
below. However, no partial prepayment shall excuse or defer
Borrower s subsequent payments or entitle Borrower to a release of
any collateral. Interest will cease to accrue on the amounts prepaid on
the day actually credited by Bank.
4. MINIMUM FINANCE CHARGE. Borrower has the right to
prepay in full subject to a minimum finance charge of $1.00.
5. LATE CHARGE. Borrower agrees to pay Bank a late charge
equal to 5% of the unpaid installment, if payment is not made in full
on or before 15 days after the scheduled due date.
6. EVENTS OF DEFAULT. Borrower shall be in default upon the
occurance of any of the following events, circumstances of conditions
(Events of Default):
A. Failure by any party obligated on the Note or any
other obligations Borrower has with Bank to make
payment when due; or
B. A default or breach by Borrower or any co-signer,
endorser, surety, or guarantor under any of the
terms of this Note, any construction loan agreement
of other loan agreement, any security agreement,
mortgage, deed to secure debt, deed of trust, trust
deed, or any other document or instrument
evidencing, guarantying, securing, or otherwise
relating to this Note or any other obligations
Borrower has with Bank; or
C. The making or furnishing of any verbal or written
representation, statement or warranty to Bank which
is or becomes false or incorrect in any material
respect by or on behalf of Borrower, or any
co-signer, endorser, surety or guarantor of this
Note or any other obligations Borrower has with Bank; or
D. Failure to obtain or maintain the insurance coverages
required by Bank, or insurance as is customary and
proper for any collateral (as herein defined); or
E. The death, dissolution or insolvency of, the appointment
of a receiver by or on behalf of, the assignment for the
benefit of creditors by or on federal of state
insolvency, bankruptcy, reorganization, composition or
debtor relief law by or against Borrower, or any
co-signer, endorser, surety or guarantor of this Note
or any other obligations Borrower has with Bank; or
F. A good faith belief by Bank at any time that Bank is
insecure with respect to Borrower, or any co-signer,
endorser, surety or guarantor, that the prospect of any
payment is impaired or that any collateral (as herein
defined) is impaired; or
G. Failure to pay or provide proof of payment of any tax,
assessment, rent, insurance premium, escrow or escrow
deficiency on or before its due date; or
H. A material adverse change in Borrower s business,
including ownership, management, and financial
conditions, which in Bank s opinion, impairs any
collateral or repayment of the Obligations; or
I. A transfer of a substantial part of Borrower s money
or property.
7. DEFAULT RATE OF INTEREST. If there is a default in this
Note, the rate of interest, at Bank s option, shall immediately be
increased by 5 percentage points whether or not Bank accelerates the
maturity, and interest shall accrue thereafter at the resulting rate until
all obligations under this Note are paid in full. Unless Bank has
accelerated the maturity, Bank shall, within 10 days following the
effective date of such interest rate increase, notify Borrower of the fact
that the interest rate has been increased pursuant to this provision.
8. REMEDIES ON DEFAULT. On or after the occurance of an
Event of Default, at the option of Bank, all or any part of the Principal
and accrued interest on this Note, the Loan and all other obligations
which Borrower owes Bank shall become immediately due and payable
without notice or demand. Bank may exercise all rights and remedies
provided by law, equity, this Note, any mortgage, deed of trust or
similar instrument and any other security, loan, guaranty or surety
agreements pertaining to this Note and all other obligations of
Borrower to Bank. Bank is entitled to all rights and remedies provided
at law or equity whither or not expressly stated in this Note. By
choosing any remedy, Bank does not waive its right to an immediate
use of any other remedy if the event of default continues or occurs
again.
9. SET-OFF. Borrower agrees that Bank may exercise Bank s right
of off-set to pay and or all of the outstanding Principal and accrued
Interest, costs and expenses, attorneys fees, and advances due and
owing on this Note against any obligation Bank may have, now or
hereafter, to pay money, securities, or other property to Borrower.
This includes, without limitation:
A. any deposit account balance, securities account balance
or certificate of deposit balance Borrower has with Bank
whether general, special, time, savings, or checking;
B. any money owing to Borrower on an item presented to Bank
or in Bank s possession for collection or exchange; and
C. any repurchase agreement or any other non-deposit
obligation or credit in Borrower s favor.
Borrower hereby appoints Bank as Borrower s attorney-in-fact and
authorizes bank to redeem or obtain payment on any certificate of
deposit in which Borrower has an interest in order to exercise Bank s
right of set-off. Such authorization applies to any certificate of deposit
even if not matured. Borrower further authorizes Bank to withhold
any early withdrawal penalty without liability in the event such penalty
is applicable as a result of Bank s set-off against a certificate of prior
to its maturity.
Bank s right of set-off may be exercised:
A. without prior demand or notice;
B. without regard to the existance or value of any
Collateral securing this Note; and
C. without regard to the number or creditworthiness of any
other persons who have agreed to pay this Note.
Bank will not be liable for dishonor of a check or other request for
payment where there are insufficient funds in the account (or other
obligations) to pay such request because of Bank s exercise of Bank s
right of set-off. Borrower agrees to indemnify and hold Bank harmless
from any person s claims and the costs and expenses, including
without limitation, attorneys fees and paralegal fees, incurred as a
result of such claims or arising as the result of Bank s exercise of
Bank s right of
set-off.
10. COLLECTION EXPENSES. On or after Event of Default, Bank
may recover from Borrower and all guarantors or any of them, all fees
and expenses in collecting, enforcing and protecting liabilities and
reasonable expenses in realizing on any security incurred by Bank,
plus expenses of collecting and exforcing this Note. Such fees and
expenses shall include, but are not limited to, filing fees, publication
expenses, deposition fees, stenographer fees, witness fees and any
other court costs. Any such fees and expenses shall be added to the
Principal of this Note and shall sccrue interest at the same rate as
provided for in this Note.
11. ATTORNEYS FEES AND COLLECTION COSTS. Upon default
of this Note, Bank may recover from Borrower all costs of collecting,
enforcing and protecting liabilities, reasonable expenses in realizing on
any security, reasonable attorneys fees not exceeding 15 percent of the
unpaid balance (provided attorney is not Bank s salaried employee),
paralegal fees and other legal expenses to the extent not prohibited by
law.
12. NO DUTY BY BANK. Bank is under no duty to preserve or
protect any Collateral until Bank is in actual, or constructive,
possession of the Collateral. For purposes of this paragraph, Bank
shall only be considered to be in actual possession of the Collateral
when Bank has physical, immediate and exclusive control over the
Collateral and has affirmatively accepted such control. Bank shall
only be considered to be in constructive possession of the Collateral
when Bank has both the power and the intent to exercise such control
over the Collateral.
13. WAIVER AND CONSENT BY BORROWER AND OTHER
SIGNERS. Regarding this Note, to the extent not prohibited by law,
Borrower and any other signers:
A. waive protest, presentment for payment, demand, notice of
acceleration, notice of intent to accelerate and notice
of dishonor.
B. consent to any renewals and extensions for payment on
this Note, regardless of the number of such renewals or
extensions.
C. consent to Bank s release of any borrower, endorser,
guarantor, surety, accomodation maker or any other
co-signer.
D. consent to the release, substitution or impairment of any
collateral.
E. consent that Borrower is authorized to modify the terms
of this Note or any instrument securing, guarantying or
relating to this Note.
F. consent to Bank s right of set-off, as well as any right
of set-off of bank participating in the Loan.
G. consent to any and all sales, repurchases and
participations of this Note to any person in any amounts
and waive notice of such sales, repurchases or
participations of this Note.
14. SECURITY. This Note is secured by the following type(s) (or
items) of property (Collateral):
Accounts
Equipment
General Intangibles
Real Estate
Fixtures & Furniture
which includes (but is not limited to) the following described property:
ALL MACHINERY & EQUIPMENT, FURNITURE &
FIXTURES, ALL
PRESENT AND FUTURE ACCOUNTS RECEIVABLE,
PROCEEDS ARISING
THEREFROM, CHATTEL PAPER, CONTRACT RIGHTS AND
GENERAL
INTANGIBLES, HOWEVER EVIDENCED OR ACQUIRED,
NOW OWNED,
PURCHASED WITH LOAN PROCEEDS AND HEREAFTER
ACQUIRED,
AND ALL ADDITIONS AND ACCESSIONS THERETO.
The real property portion of the Collateral includes the following
described property (Property) situated in BUCHANAN County,
MISSOURI, to-wit:
SEE ATTACHED EXHIBIT A.
The Property may be commonly referred to as 4315 PICKETT
ROAD, ST. JOSEPH, MISSOURI
The term Collateral further includes, but is not limited to, the
following property, whether now owned or hereafter acquired, and
whether or not held by a bailee for the benefit of the Owner or
owners, all: accessions, accessories, additions, fittings, increases,
insurance benefits and proceeds, parts, products, profits, renewals,
rents, replacements, special tools and substitutions, together with all
books and records pertaining to the Collateral and access to the
equipment containing such books and records including computer
stored information and all software relating thereto, plus all cash and
non-cash proceeds and all proceeds of proceeds arising from the
type(s) (items) of property listed above.
This Note is secured by the following described real estate documents:
A Deed of Trust dated October 2, 1996 in the amount of $705,000.00
executed by Systems & Services Technologies, Inc.
Additionally, a security interest is granted in the Collateral by the
following described security agreements: A Security Agreement dated
October 2, 1996.
15. PAYMENTS APPLIED. All payments, including but not limited
to regular payments or prepayments, received by Bank shall be applied
first to costs and then in an appropriate manner as determined by Bank
in its sole discretion except as otherwise required by law.
16. LOAN PURPOSE. Borrower represents and warrants that the
purpose of this Loan is for leasehold improvements and purchase of
fixtures, furniture & equipment.
17. JOINT AND SEVERAL. Borrower or any other signers shall be
jointly and severally liable under this Note.
18. FINANCIAL STATEMENTS. Until this Note is paid in full,
Borrower shall furnish Bank upon Bank s request and in the event of
no request, at least annually a current financial statement which is
certified by Borrower and Borrower s accountant to be true, complete
and accurate.
19. GENERAL PROVISIONS.
A. TIME IS OF THE ESSENCE. Time is of the essence in
Borrower s performance of all duties and obligations
imposed by this Note.
B. NO WAIVER BY BANK. Bank s course of dealing, or Bank s
forbearance from, or delay in, the exercise of any of
Bank s rights, remedies, privileges or right to insist
upon Borrower s strict performance of any provisions
contained in this Note, or other Loan documents, shall
not be construed as a waiver by Bank, unless any such
waiver is in writing and is signed by Bank.
C. AMENDMENT. The provisions contained in the Note may not
be amended, except through a written amendment which is
signed by Borrower and Bank.
D. INTEGRATION CLAUSE. This written Note and all
documents
executed concurrently herewith, represent the entire
understanding between the parties as to the Obligations
and may not be contradicted by evidence of prior,
contemporaneous, or subsequent oral agreements of the
parties.
E. FURTHER ASSURANCES. Borrower agrees, upon request of
Bank and within the time Bank specifies, to provides any
information, and to execute, acknowledge, deliver and
record of file such further instruments or documents as
may be required by Bank to secure this Note or confirm
any lien.
F. GOVERNING LAW. This Note shall be governed by the laws
of the State of MISSOURI, provided that such laws are not
otherwise preempted by federal laws and regulations.
G. FORUM AND VENUE. In the event of litigation pertaining
to this Note, the exclusive forum, venue and place of
jurisdiction shall be in the State of MISSOURI, unless
otherwise designated in writing by Bank or otherwise
required by law.
H. SUCCESSORS. This Note shall inure to the benefit of
and bind the heirs, personal representatives, successors
and assigns of the parties; provided however, that
Borrower may not assign, transfer, or delegate any of
the rights or obligations under this Note.
I. NUMBER AND GENDER. Whenever used, the singular shall
include the plural, the plural the singular, and the
use of any gender shall be applicable to all genders.
J. DEFINITIONS. The terms used in this Note, if not defined
herein, shall have their meanings as defined in the other
documents executed contemporaneously, or in conjunction,
with this Note.
K. PARAGRAPH HEADINGS. The headings at the beginning of
any paragraph, or any subparagraph, in this Note are for
convenience only and shall not be dipositive in
interpreting or construing this Note.
L. IF HELD UNENFORCEABLE. If any provision of this Note
shall be held unenforceable or void, then such provision
to the extent not otherwise limited by law shall be
severable from the remaining provisions and shall in no
way affect the enforceability of the remaining provisions
nor the validity of this Note.
M. CHANGE IN APPLICATION. Borrower will notify Bank in
writing prior to any change in Borrower s name, address,
or other application information.
N. NOTICE. All notices under this Note must be in writing.
Any notice given by Bank to Borrower hereunder will be
effective upon personal delivery or 24 hours after
mailing by first class United States mail, postage
prepaid, addressed to Borrower at the address indicated
below Borrower s name of page one of this Note. Any
notice given by Borrower to Bank hereunder will be
effective upon receipt by Bank at the address indicated
below Bank s name on page one of this Note. Such
addresses may be changed by written notice to the
other party.
O. HOLDER. The term Bank shall include any transferee
and assignee of bank or other holder of this Note.
P. BORROWER DEFINED. The term Borrower includes each
and
every person signing this Note as a Borrower and any
co-signers.
20. RECEIPT OF COPY. By signing below, Borrower acknowledges
that Borrower has read and received a copy of this Note.
ORAL AGREEMENTS OR COMMITMENTS TO LOAN
MONEY, EXTEND
CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT
OF A
DEBT INCLUDING PROMISES TO EXTEND OR RENEW
SUCH DEBT
ARE NOT ENFORCEABLE. TO PROTECT YOU
(BORROWER) AND US
(BANK) FROM MISUNDERSTANDING OR
DISAPPOINTMENT, ANY
AGREEMENTS WE REACH COVERING SUCH MATTERS
ARE CONTAINED
IN THIS WRITING, WHICH IS THE COMPLETE AND
EXCLUSIVE
STATEMENT OF THE AGREEMENT BETWEEN US, EXCEPT
AS WE MAY
LATER AGREE IN WRITING TO MODIFY IT.
BORROWER:
SYSTEMS & SERVICES TECHNOLOGIES, INC.
a DELAWARE corporation
[Corporate Seal*]
by:
MATTHEW B. BURNS, CHIEF EXEC. OFFICER
Attest
(*Corporate seal may be affixed, but failure to affix
shall not affect validity or reliance.)
THIS IS THE LAST PAGE OF A 3 PAGE DOCUMENT.
EXHIBITS
AND/OR ADDENDA MAY FOLLOW.
EXHIBIT A
A tract of land located in the Southeast Quarter (SE 1/4) of the
Northeast Quarter (NE 1/4) of Section 23, Township 57 North, Range
35 West, lying West of the West right-of-way of Interstate 29 and
North of the North right-of-way of Pickett Road, St. Joseph, Buchanan
County, Missouri, more particularly described as follows: Beginning
at a point on the West line of the Southeast Quarter (SE 1/4) of the
Northeast Quarter (NE 1/4) of Section 23, Township 57 North, Range
35 West, on the North of the North right-of-way of Pickett Road, said
point being 33.2 feet North of the Northeast Quarter (NE 1/4); thence
North 84 degrees 57 55 East along the North right-of-way line of
Pickett Road for a distance of 373.49 feet; thence continuing along
said North right-of-way South 89 degrees 56 50 East for a distance
of 199.81 feet; thence continuing along said North right-of-way South
88 degrees 43 06 East for a distance of 35.01 feet; thence North 25
degrees 37 28 East along the Westerly right-of-way of the access
road for a distance of 269.25 feet to the West right-of-way of Interstate
29; thence North 00 degrees 11 56 East along said West right-of-way
line for a distance of 296.43 feet; thence continuing on said West
right-of-way line along a curve to the left having a radius of 9549.3
feet for an arc length of 358.42 feet; thence South 89 degrees 59 55
West for a distance of 721.60 feet to the West line of the Southeast
Quarter (SE 1/4) of the Northeast Quarter (NE 1/4); thence South 00
degrees 10 00 East along said West line for a distance of 929.36 feet
to the point of beginning. All in Buchanan County, Missouri and
subject to all public and private roads and easements.
4315 Pickett Road, St. Joseph, MO
ADDENDUM
WITNESS THIS ADDENDUM to be incorporated in and made a
part of that certain prommisory note dated Octoboer 2, 1996, in the
principal amount of $705,000.00 (the Note ), executed by Systems &
Services Technologies, Inc. ( Borrower ), and made payable to the
order of the First Bank of Missouri ( Lender ).
In consideration of and in connection with the sums to be loaned to
Borrower by Lender under the terms of the Note, and for other
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Borrower and Lender hereby agree that the terms and
conditions of the Note shall be and are hereby modified, altered and
changed as follows:
1. The last sentence of the last paragraph of Section 2
is hereby deleted in its entirety.
2. Paragraph I of Section 6 is hereby deleted in its
entirety and, in lieu thereof, a new paragraph I,
Section 6 is hereby added to read as follows:
A transfer of a substantial part of Grantor s money or
property to any person or party other than Aegis
Consumer Funding Group, Inc..
3. The first sentence of Section 8 is hereby deleted in its
entirety and, in lieu thereof, a new first sentence of
Section 8 is hereby added read as follows:
At the option of Bank, all of any part of the principal
and accrued interest on this Note, the Loan and other
obligations which Borrower owes Bank, shall become
immediately due and payable after the giving of ten (10)
days written notice by Bank to Borrower of an
non-monetary Event of Default, or the giving of five (5)
days written notice by Bank to Borrower of any monetary
Event of Default, or at any time thereafter.
4. Paragraph A and paragraph E of Section 13 are hereby
deleted in their entirety.
5. The Collateral referred to in Section 14 is hereby
amended to reflect the following types of Collateral:
Real Estate, Fixtures and Accounts, excluding custodial
accounts, as well as Machinery, Equipment, and Furniture
purchased with proceeds advanced by Bank to Borrower
under the terms of this Note.
6. Paragraph A os Section 19 is hereby deleted in its
entirety.
7. Except as herein modified, all terms, conditions, and
provisions of the Note shall remain in full force and
effect and unchanged.
IN WITNESS THEREOF, the parties hereto have caused this
Addendum to have been executed as of this 2nd day of October 1996.
GRANTOR:
SYSTEMS & SERVICES TECHNOLOGIES, INC.
By:
Matthew B. Burns, Chief Executive Officer
BANK:
THE FIRST BANK OF MISSOURI
By:
Wayde S. Kindiger, Vice President
EXHIBIT 10.105
DEED OF TRUST AND SECURITY AGREEMENT
To Secure A Loan
From FIRST BANK OF MISSOURI
(securing future advances and future obligations governed by RSMo 443.055)
1. DATE AND PARTIES. The date of this Deed of Trust (Deed of
Trust) and Security Agreement is October 2, 1996, and the parties and
their mailing addresses are the following:
GRANTOR:
SYSTEMS & SERVICES TECHNOLOGIES, INC.
a DELAWARE corporation
4315 PICKETT ROAD
ST. JOSEPH, MO 64506
Tax I.D. # 22-3370315
TRUSTEE:
LARRY ENKELMANN
#3 6812 N. Oak Trafficway
Gladstone, Missouri 64118
BANK:
FIRST BANK OF MISSOURI
a MISSOURI banking corporation
7001 N. Oak St.
P.O. Box 10689
Gladstone, Missouri 64118
Tax I.D. # 44-0667863
Branch No. 001
2. MAXIMUM OBLIGATION LIMIT. The total principal amount
(exclusive of interest, attorneys fees, paralegal fees, costs and other
legal expenses) of the Obligations secured by this Deed of Trust, not
including, however, any sums advanced for the protection of the
Property or Bank s Interest therein, shall not exceed the sum of
$705,000.00, provided, however, that nothing contained herein shall
constitute a commitment to make additional or future loans or
advances in any amounts.
3. OBLIGATIONS DEFINED. The term Obligations is defined as
and includes the following:
A. A promissory note, No. 100270, (Note) dated October 2,
1996, with a maturity date of June 2, 1999, and executed
by SYSTEMS & SERVICES TECHNOLOGIES, INC.
(Borrower)
payable to the order of Bank, which evidences a loan
(Loan) to Borrower in the amount of $705,000.00, plus
interest, and all extensions, renewals, modifications,
or substitutions thereof.
B. All future advances or other future obligations by Bank
to Borrower, to Grantor, to any one of them or to any one
of them and others, provided each instrument evidencing
any such future advance shall state within the body of
the instrument that such instrument is secured by this
Deed of Trust and provided further that such instrument
identifies this Deed of Trust by date of execution, all
in accordance with 443.055 RSMo, as amended.
C. All additional sums advanced, and expenses incurred, by
Bank for the purpose of insuring, preserving or otherwise
protecting the Property (as herein defined) and its
value, and any other sums advanced, and expenses incurred
by Bank pursuant to this Deed of Trust, plus interest at
the same rate provided for in the Note computed on a
simple interest method.
D. All other obligations, now existing or hereafter arising,
of Borrower to the extent the taking of the Property (as
herein defined) as security therefor is not prohibited by
law, including but not limimted to liabilities as
guarantor, endorser or surety, of Borrower to Bank, due
or to become due, direct or indirect, absolute or
contingent, primary or secondary, liquidated or
unliquidated, or joint, several, or joint and several.
E. Borrower s performance of the terms in the Note or Loan,
Grantor s performance of any terms in this Deed of Trust,
and Borrower s and Grantor s performance of any terms in
any other deed of trust, any trust deed, and trust
indenture, any mortgage, and deed to secure debt, any
security agreement, and assignment, any construction
loan agreement, any loan agreement, any assignment of
beneficial interest, any guaranty agreement or any other
agreement wich secures, guarantees or otherwise relates
to the Note or Loan.
However, this Deed of Trust will not secure another debt:
A. to the extent that this Deed of Trust is in household
goods and the other debt to be secured is a consumer
loan (as those terms are defined in applicable federal
regulations governing unfair and deceptive credit
practices); or
B. if Bank fails to make any disclosure of the existance of
this Deed of Trust required by law for such other debt.
4. NOTE: Borrower has executed a promissory note dated October 2,
1996, (Note) in the principal amount of $705,000.00 and payable to
the order of Bank with interest from the date of disbursement, on the
unpaid principal balance at the rate of 8.5% per annum (Contract Rate)
until the Note matures or the obligation is accelerated. After maturity
or accerelation, the unpaid balance shall bear Interest at the rate
specified in the Note until paid. The Loan and the Note are limited to
the maximum lawful amount of Interest (Maximum Lawful Interest)
permitted under federal and state laws. If the Interest accrued and
collected exceeds the Maximum Lawful Interest as of the time of
collection, such excess shall be applied to reduce the principal amount
outstanding, unless otherwise indicated by law. If or when no
principal amount is outstanding, any excess interest shall be refunded
to Borrower according to the actuarial method. Unless otherwise
required by law, all fees and charges, accrued, assessed or collected
shall be amortized and prorated over the full term of the Loan for
purposes of determining the Maximum Lawful Interest. Interest shall
be computed on the basis of the actual calender year and the actual
number of days elapsed.
Accrued interest only is due and payable on the 2nd day of each
month for the months of November and December, 1996 and January,
February, March, April, and May, 1997. Principal and accrued interest
are due and payable in 24 equal monthly payments of $11,362.46 on
the 2nd day of each month, beginning June 2, 1997, or the day
following if the payment day is a holiday or is a non-business day for
Bank. Unless paid prior to maturity, all other unpaid principal,
accrued interest, costs and expenses are due and payable on June 2,
1999, which is the date of maturity. These payments amounts are
based upon timely payment of each installment. All amounts shall be
paid in legal U.S. currency. Any payment made with a check will
constitute payment only when collected.
5. CONVEYANCE. For and in consideration of the sum of $1.00
and other valuable consideration, receipt and sufficiency of which are
hereby acknowledged, to the Grantor paid and to secure the
Obligations according to their specific terms, and any future advances
or other future obligations of Grantor or Borrower, Grantor grants,
bargains, sells and warrants to Trustee in trust with power of sale the
following described property (Property), situated in BUCHANAN
County, MISSOURI,
to-wit:
SEE ATTACHED EXHIBIT A.
The property may be commonly called referred to as
4315 PICKETT ROAD, ST. JOSEPH, MISSOURI
such property not constituting the homestead of Borrower, together
with all buildings, improvements, fixtures and equipment now or
hereafter attached to the Property, including, but not limited to, all
heating, air conditioning, ventilation, plumbing, cooling, electrical and
lighting fixtures and equipment; all exterior and interior improvements;
all easements, issues, rights, appurtenances, rents, royalties, oil and gas
rights, privileges, proceeds, profits, other minerals, water, water rights,
and water stock, crops, grass and timber at any time growing upon
said land, including replacements and additions thereto, all of which
shall be deemed to be and remain a part of the Property. The Trustee
accepts this trust when this Deed of Trust, duly executed and
acknowledged, is made of public record as provided by law.
6. LIENS AND ENCUMBRANCES. Grantor warrants the title to the
Property and warrants that the Property is free and clear of all liens
and encumbrances except: Future Advance Deed of Trust and Security
Agreement dated July 30, 1996 and recorded July 31, 1996 in Book
2057 at Page 182 in said Recorder s Office, executed by Systems &
Services Technologies, Inc., a Delaware corporation, in favor of Larry
D McKeaigg, Trustee for Commerce Bank, N.A., securing
$1,360,000.00, payable as set out in said note and deed of trust.
7. WARRANTY OF TITLE. Grantor agrees to forever warrant and
defend the title to the Property and represents and warrants that
Grantor:
A. owns the Property in fee simple;
B. is authorized to convey the Property, and
C. will defend Grantor s title against all claims.
8. CORPORATE WARRANTIES AND REPRESENTATIONS. If
Grantor is a corporation, Grantor makes to Bank the following
warranties and representations which shall be continuing so long as the
Obligations remain outstanding:
A. Grantor is a corporation which is duly organized and
validly existing in Grantor s state of incorporation as
represented in the DATE AND PARTIES paragraph above;
Grantor is in good standing under the laws of all states
in which Grantor transacts business; Grantor has the
corporate power and authority to own the Property and to
carry on its business as now being conducted; Grantor is
qualified to do business in every jurisdiction in which
the nature of its business or its property makes such
qualification necessary; and Grantor is in compliance
with all laws, regulations, ordinances and orders of
public authorities applicable to it.
B. The execution, delivery and performance of this Deed of
Trust by Grantor and the borrowing evidenced by the Note:
(1) are within the corporate powers of Grantor, (2) have
been duly authorized by all requisite corporate action;
(3) have received all necessary government approval; (4)
will not violate any provision of law, any order of any
court or other agency of government of Grantor s Articles
of Incorporation or Bylaws; and (5) will not violate any
provision of indenture, agreement or other instrument to
which Grantor is a party or to which Grantor is or any of
Grantor s property is subject, including but not limited
to any provision prohibiting the creation or imposition
of any lien, charge or encrumbrance of any nature
whatsoever upon any of Grantor s property or assets. The
Note and this Deed or Trust when executed and delivered
by Grantor will constitute the legal, valid and binding
obligations of Grantor, and of the other obligors named
therein, if any, in accordance with their respective
terms.
C. All other information, reports, papers and data given to
Bank with respect to Grantor or to others obligated under
the terms of this Deed of Trust are accurate and correct
in all material respects and complete insofar as
completeness nay be necessary to give Bank a true and
accurate knowledge of the subject matter.
D. Grantor has not changed its name within the last six
years, unless otherwise disclosed in writing; other than
the trade names of fictitious names actually disclosed to
Bank prior to execution of this Deed of Trust, Grantor
uses no other names; and until the Obligations shall have
paid in full, Grantor hereby covenants and agrees to
preserve and keep in full force and effect its existing
name, corporate existance, rights, franchises and trade
names, and to continue the operation of its business in
the ordinary course.
9. ASSIGNMENT OF LEASES AND RENTS. Grantor grants,
bargains, sells, warrants, assigns, and transfers to Trustee, in trust for
the benefit of Bank, as additional security all the right, title and
interest in and to any and all:
A. Existing or future leases, subleases, licenses,
guaranties and any other written or verbal agreements for
the use and occupancy of any portion of the Property,
including any extensions, renewals, modifications or
substitutions of such agreements (all referred to as
Leases ).
B. Rents, issues and profits (all referred to as Rents ),
including but not limited to security deposits, minimum
rent, percentage rent, additional rent, common area
maintenance charges, parking charges, real estate
taxes, other applicable taxes, insurance premium
contributions, liquidated damages following default,
cancellation premiums, loss of rents insurance, guest
receipts, revenues, royalties, proceeds, bonuses,
accounts, contract rights, general intangibles, and all
rights and claims which Grantor may have that in any way
pertain to or are on account of the use or occupancy of
the whole or any part of the Property.
In the event any item listed as Leases or Rents is determined to be
personal property, this Deed of Trust will also be regarded as a
security agreement.
Grantor will promptly provide Bank with true and correct copies of all
existing and future Leases. Grantor may collect, receive, enjoy and
use the Rents so long as Grantor is not in default. Except for one
lease period s rent, Grantor will not collect in advance any Rents in
trust for Bank and Grantor will not commingle the Rents with any
other funds. Any amounts collected shall be applied at Bank s
discretion first to costs of managing, protecting and preserving the
Property, and to any other necessary related expenses including Bank s
court costs. Any remaining amounts shall be applied to reduce the
Obligations.
Grantor agrees that this agreement is immediately effective between
the parties to this Deed of Trust and effective as to third parties on
Grantor s default when Bank or Trustee takes an affirmative action as
prescribed by the law in the state where the Property is located, and
this assignment will remain effective during any period of redemption
by Grantor until the Obligations are satisfied. Unless otherwise
prohibited or prescribed by state law, Grantor agrees that Bank or
Trustee may take actual possession of the Property without the
necessity of commencing any legal action or proceeding and Grantor
agrees that actual possession of the Property is deemed to occur when
Bank notifies Grantor of Grantor s default and demands that Grantor
and Grantor s tenants pay all Rents due or to become due directly to
Bank. Immediately after Bank gives Grantor the notice of default,
Grantor will endorse and deliver to Bank any payment of Rents. If
Grantor becomes subject to a voluntary or involuntary bankruptcy,
then Grantor agrees that Bank and Trustee are entitled to receive relief
from the automatic stay in bankruptcy for the purpose of making this
assignment effective and enforceable under state and federal laws and
within Grantor s bankruptcy proceedings.
Grantor warrants that no default exists under the Leases or any
applicable landlord law. Grantor also warrants and agrees to maintain,
and require the tenants to comply with, the Leases and any applicable
law. Grantor will promptly notify bank of any noncompliance. If
Grantor neglects or refuses to enforce compliance with the terms of the
Leases, then Bank or Trustee may opt to enforce compliance to the
extent that the law permits. Grantor will obtain Bank s written
authorization before Grantor consents to sublet, modify, cancel, or
otherwise after the Leases, to accept the surrender of the Property
covers by such Leases (unless the Leases so require), or to assign,
compromise or encumber the Leases or any future Rents. Grantor will
hold Bank harmless and indemnify Bank for any and all liability, loss
or damage that Bank may incur as a consequence of the assignment
under this paragraph.
10. EVENTS OF DEFAULT. Grantor shall be in default upon the
occurance of any of the following events, circumstances or conditions
(Events of Default):
A. Failure by any party obligated on the Obligations to make
payments when due; or
B. A default or breach by Borrower, Grantor or any
co-signer, endorser, surety, or guarantor under any of
the terms of this Deed of Trust, the Note, any
construction loan agreement or other loan agreement, any
security agreement, mortgage, deed to secure debt, deed
of trust, trust deed, or any other document or instuement
evidencing, guarantying, securing or otherwise relating
to the Obligations; or
C. The making or furnishing of any verbal or written
representation, statement or warranty to Bank which is or
becomes false or incorrect in any material respect by or
on behalf of Grantor, Borrower, or any co-signer,
endorser, surety or guarantor of the Obligations; or
D. Failure to obtain or maintain the insurance coverages
required by Bank, or insurance as is customary and proper
for the Property (as herein defined); or
E. The death, dissolution of insolvency of, the appointment
of a receiver by or on behalf of, the assignment for the
benefit of creditors by or on behalf of, the voluntary or
involuntary termination of existance by, or the
commencement of any proceeding under any present or
future federal federal or state insolvency, bankruptcy,
reorganization, composition or debtor relief law by or
against Grantor, Borrower, or any co-signer, endorser,
surety or guarantor of the Obligations; or
F. A good faith belief by Bank at any time that Bank is
insecure with respect to Borrower, or any co-signer,
endorser, surety or guarantor, that the prospect of any
payment is impaired or that the Property (as herein
defined) is impaired; or
G. Failure to pay or provide proof of any tax, assessment,
rent, insurance premium, escrow or escrow deficiency on
or before its due date; or
H. A material adverse change in Grantor s business,
including ownership, management, and financial
conditions, which in Bank s opinion, impairs the Property
or repayment of the Obligations; or
I. A transfer of a substantial part or Grantor s money or
property; or
J. If all or any part of the Property or any interest
therein is sold, leased or transferred by Grantor except
as permitted in the paragraph below entitled DUE ON
SALE OR ENCUMBRANCE .
11. REMEDIES ON DEFAULT. At the option of Bank, all or any
part of the principal and accrued interest on the Obligations shall
become immediately due and payable after giving up the required
notice, if any, under applicable law, upon the occurance of an Event of
Default or at any time thereafter. In addition, upon the occurance of
any Event of Default, Bank and Trustee shall be entitled to all of the
rights and remedies provided by law, the Note, this Deed of Trust, and
any related loan documents, including without limitation, the power to
sell the Property, and/or the the power to foreclose on the Property as
a mortgage, and to exercise any remedies permitted under
MISSOURI s Uniform Commercial Code. If Bank exercises such
option to accelerate, Bank shall mail Grantor, by certified mail or
otherwise, notice of acceleration to the address of Grantor shown on
Bank s records as may be required by law. If Grantor fails to pay all
sums that are due and payable within the time period provided by law
or as provided in the notice (if any), Bank may, without further notice
or demand on Grantor, invoke any remedies permitted on Default. In
addition, if there is a Default and Bank files with Trustee a notice of
election and demand for sale of the Property, Trustee shall advertise
and sell the Property (to convey title as a whole or in separate parcels
as Bank may deem best) free and clear of all right, title and interest of
Grantor at public auction of the Property or at such place as Trustee
designates in the notice for the best price the Property will bring in
cash. Trustee shall give notice of sale in accordance with and as
prescribed by applicable MISSOURI law. Public advertisement of
such notice shall take the form of daily publication in some newspaper
of general circulation in the county, or counties, where the Property is
located for at least 20 days prior to the sale, except where the
applicable state law requires or permits notice in another form(s) or in
another manner. Upon sale of the Property and to the extent not
prohibited by law, Trustee shall make and deliver to the purchaser or
purchasers a deed or deeds to the Property sold to convey title, and
after first paying and retaining all fees, charges and costs, shall pay to
Bank all amounts advanced for repairs, taxes, insurance, liens,
assessments and prior encumbrances and interest thereon, and the
principal and interest on the Note paying the surplus, if any, to the
person or persons legally entitled thereto. The holder of the Note may
purchase the Property. The recitals in any deed or deeds of
conveyance shall be taken as prima facie true. Bank and Trustee are
entitled to all rights and remedies provided at law or equity whether or
not expressly stated in this Deed of Trust. By choosing any remedy,
Bank and Trustee do not waive their right to an immediate use of any
other remedy if the event of default continues or occurs again.
12. DUE ON SALE OR ENCUMBRANCE. Bank may, at Bank s
option, declare the entire balance will all accrued interest on the
Obligations to be immediately due and payable upon the contract for,
or creation of, any lien, encumbrance, transfer or sale of the Property,
or any portion thereof, by Grantor. Lapse of time or the acceptance of
payments by Bank after such creation of any lien, encumbrance,
transfer, sale or contract for any of the foregoing shall not be deemed
a waiver or estoppel of Bank s right to accelerate the Note. If Grantor
fails to pay such sums prior to the expiration of such period, Bank
may, without further notice or demand on Grantor, invoke any
remedies permitted on Default. This covenant shall run with the
Property and shall remain in effect until the Obligations and this Deed
of Trust are fully paid.
In the preceding paragraph, the phrase transfer or sale includes the
conveyance of any right, title or interest in the Property, whether
voluntary or involuntary, by outright sale, deed, installment contract
sale, land contract, contract for deed, leasehold interest with a term
greater than three years, lease-option contract or any other method of
conveyence of Property interests; the term interest includes, whether
legal or equitable, any right, title, interest, lien, claim, encumbrance or
proprietary right, choate or inchoate.
13. POSSESSION ON DEFAULT. If there is an Event of Default,
Bank or the holder of the Note shall at once become entitled to the
possession, use and enjoyment of the Property and to the rents, issues
and profits from the Property, and shall be entitled thereto as a matter
of right without regard to the solvency or insolvency of Grantor or the
then owner of the Property and without regard to the value of the
Property of the adequacy of any security for the Obligations.
14. APPOINTMENT OF RECEIVER. If there is a Default, Bank of
the holder of the Note shall at once become entitled to appointment of
a receiver for the Property and the rents, issues and profits from the
Property, and shall be entitled thereto as a matter of right without
adequacy of any security for the Obligations. Such receiver may be
appointed by a court of competent jurisdiction upon ex parte
application, and without notice (notice being expressly waived) and all
rents, issues and profits, income and revenue from the Property shall
be applied by the receiver, subject to the court s order, to the payment
of the Obligations under this Deed of Trust and the Note.
15. PROPERTY OBLIGATIONS. Grantor shall promptly pay all
taxes, assessments, levies, water rents, other rents, insurance premiums,
and all amounts due on any encumbrances, if any, as they become due.
Grantor shall provide written proof to Bank for such payment(s).
16. INSURANCE. Grantor shall insure and keep insured the Property
against loss by fire, and other hazard, casualty and loss, with extended
coverage including but not limited to the replacement value of all
improvements, with an insurance company acceptable to Bank and in
an amount acceptable to Bank. Such insurance shall contain the
standard Mortgage Clause and where applicable, Loss Payee
Clause , which shall name and endorse Bank as mortgagee and loss
payee. Such insurance shall also contain a provision under which the
insurer shall give Bank at least 30 days notice before the cancellation,
termination or material change in coverage.
If an insurer elects to pay a fire or other hazard loss or damage claim
rather than to repair, rebuild or replace the Property lost or damaged,
Bank shall have the option to apply such insurance proceeds upon the
Obligations secured by this Deed of Trust whether or not then due or
to have said Property repaired or rebuilt. Grantor hereby appoints
Bank as Grantor s attornery-in-fact, coupled with an interest to collect,
settle, and compromise and matters with insurer. Grantor shall deliver,
or cause to be delivered, evidence of such coverage and copies of all
notices and renewals relating thereto. Bank shall be entitled to pursue
any claim under the insurance if Grantor fails to promptly do so. The
Bank shall be entitled to endorse the Grantor s name on any insurance
check or draft. Grantor shall pay the premiums required to maintain
such insurance in effect until such time as the requirement for such
insurance terminates. Notwithstanding anything to the contrary, if the
Property is acquired by Bank under the terms of this Deed of Trust, all
right, title, and interest of Grantor in and to any insurance policies
(including proceeds thereof resulting from damage to the Property
prior to the sale or acquisition) shall pass to Bank to the extent of the
sums secured by this Deed of Trust immediately prior to such sale or
acquisition.
17. WASTE. Grantor shall not alienate or encumber the Property to
the prejudice of Bank, or commit, permit or suffer any waste,
impairment or deterioration of the Property, and regardless of natural
depreciation, shall keep the Property and all its improvements at all
times in
good condition and repair. Grantor shall comply with and not
violate any and all laws and regulations regarding the use,
ownership and occupancy of the Property. Grantor shall
perform and abide by all obligations and restrictions under any
declarations, covenants and other documents governing the use,
ownership and occupancy of the Property.
18. ENVIRONMENTAL LAWS AND HAZARDOUS
SUBSTANCES.
A. As used in this paragraph:
(1) Environmental Law means, without
limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act ( CERCLA , 42 U.S.C. 9601 et
seq.), all federal, state and local laws, regulations, ordinances, court
orders, attorney general opinions or interpretive letters concerning the
public health, safety, welfare, environment or a Hazardous Substance
(as defined herein).
(2) Hazardous Substance means any toxic,
radioactive or hazardous material, waste, pollutant or contaminant
which has characteristics which render the substance dangerous or
potentially dangerous to the public health, safety, welfare or the
environment. The term includes, without limitation, any substances
defined as hazardous material, toxic substances, hazardous
waste or hazardous substance under any Environmental Law.
B. Grantor represents, warrants and agrees that:
(1) Except as previously disclosed and
acknowledged in writing to Bank, no Hazardous Substance has been,
is or will be located, transported, manufactured, treated, refined, or
handled by any person on, under or about the Property except in the
ordinary course of business and in strict compliance with all applicable
Environmental Law.
(2) Except as previously disclosed and
acknowledged in writing to Bank, Grantor has not and shall not cause,
contribute to or permit the release of any Hazardous Substance on the
Property.
(3) Grantor shall immediately notify Bank if: (a)
a release or threatened release of Hazardous Substance occurs on,
under or about the Property or migrates or threatens to migrate from
nearby property; or (b) there is a violation of any Environmental Law
concerning the Property. In such an event, Grantor shall take all
necessary remedial action in accordance with any Environmental Law.
(4) Except as previously disclosed and
acknowledged in writing to Bank, Grantor has no knowledge of or
reason to believe there is any pending or threatened investigation,
claim, or proceeding of any kind relating to (a) any Hazardous
Substance located on, under or about the Property or (b) any violation
by Grantor of any tenant of any Environmental Law. Grantor shall
immediately notify Bank in writing as soon as Grantor has reason to
believe there is any such pending or threatened investigation, claim, or
proceeding. In such an event, Bank has the right, but not the
obligation, to participate in any such proceeding including the right to
receive copies of any documents relating to such proceedings.
(5) Except as previously disclosed and
acknowledged in writing to Bank, Grantor and every tenant have been,
are and shall remain in full compliance with any applicable
Environmental Law.
(6) Except as previously disclosed and
acknowledge in writing to Bank, there are no underground storage
tanks, private dumps or open wells located on or under the Property
and no such tank, dump or well shall be added unless Bank first
agrees in writing.
(7) Grantor will regularly inspect the Property,
monitor the activities and operations on the Property, and confirm that
all permits, licenses or approvals required by any applicable
Environmental Law are obtained and complied with.
(8) Grantor will permit, or cause any tenant to
permit, Bank or Bank s agent to enter and inspect the Property and
review all records at any reasonable time to determine: (a) the
existence, location and nature of any Hazardous Substance on, under
or about the Property; (b) the existence, location, nature, and
magnitude of any Hazardous Substance that has been released on,
under or about the Property; (c) whether or not Grantor and any
tenant are in compliance with any applicable Environmental Law.
(9) Upon Bank s request, Grantor agrees, at
Grantor s expense, to engage a qualified environmental engineer to
prepare an environmental audit of the Property and to submit the
results of such audit to Bank. The choice of the environmental
engineer who will perform such audit is subject to the approval of
Bank.
(10) Bank has the right, but not the obligation, to
perform any of Grantor s obligations under this paragraph at Grantor s
expense.
(11) As a consequence of any breach of any
representation, warranty or promise made in this paragraph, (a)
Grantor will indemnify and hold Bank and Bank s successors or
assigns harmless from and against all losses, claims, demands,
liabilities, damages, cleanup, response and remediation costs, penalties
and expenses, including without limitation all costs of litigation and
reasonable attorneys fees, which Bank and Bank s successors or
assigns may sustain; and (b) at Bank s discretion, Bank may release
this Deed of Trust and in return Grantor will provide Bank with
collateral of at least equal value to the Property secured by this Deed
of Trust without prejudice to any of Bank s rights under this Deed of
Trust.
(12) Notwithstanding any of the language contained
in this Deed of trust to the contrary, the terms of this paragraph shall
survive any foreclosure or satisfaction of any deed of trust, mortgage
or any obligation regardless of any passage of title to Bank or any
disposition by Bank of any or all of the Property. Any claims and
defenses to the contrary are hereby waived.
19. CONDITION OF PROPERTY. As to the Property, Grantor
shall:
A. keep all buildings occupied and keep all buildings,
structures and improvements in good repair.
B. refrain from the commission or allowance of any acts
of waste or impairment of the value of the Property or improvements
thereon.
C. not cut or remove or permit to be cut or removed, any
wood or timber from Property, which cutting or removal would
adversely affect the value of the Property.
D. prevent the spread of noxious or damaging weeds,
preserve and prevent the erosion of the soil and continuously practice
approved methods of farming on the Property if used for agricultural
purposes.
20. INSPECTION BY BANK. Bank or its agents may make or
cause to be made reasonable entries upon the Property and inspect the
Property provided that bank shall make reasonable efforts to give
Grantor prior notice of any such inspection.
21. PROTECTION OF BANK S SECURITY. If Grantor fails to
perform any covenant, obligation or agreement contained in the Note,
this Deed of Trust or any loan documents or if any action or
proceeding is commenced which materially affects Bank s interest in
the Property, including, but not limited to, foreclosure, eminent
domain, insolvency, housing or Environmental Law or law
enforcement, or arrangements or proceedings involving a bankrupt or
decedent, then Bank, at Bank s sole option, may make such
appearances, disburse such sums, and take such action as is necessary
to protect Bank s interest. Grantor hereby assigns to Bank any right
Grantor may have by reason of any prior encumbrance on the
Property or by law or otherwise to cure any default under said prior
encumbrance. Grantor agrees to indemnify and hold Bank harmless
for all liability, costs, expenses, attorneys fees and paralegal fees
incurred by Bank in its protection of the Property of its lien. Without
Bank s prior written consent, grantor will not partition or subdivide
the Property.
22. EXPENSES OF BANK. If Grantor fails to:
A. procure the required insurance for the Property.
B. keep the Property in good repair or prevent waste of
the Property.
C. promptly pay all of the obligations relating to the
Property.
D. perform any other obligation of this Deed of Trust, the
Note, or any other instrument securing or relating to the Note, or
E. prevent the Property from becoming subject to any
other lien or encumbrance.
Bank may pay or procure such things at Grantor s cost and Bank may
make any reasonable expenditure incidental thereto. Bank shall have
the right to file and defend suits at the expense of Grantor and in
Grantor s name for the recovery of damages or to uphold the lien of
the encumbrance and preserve the rights of Bank. All costs expended
by Bank in accordance with this section, including reasonable
attorneys and paralegal fees, shall be repaid by Grantor upon
demand, and such sums, with interest thereon at the rates provided in
the Note shall be added to the indebtedness secured by this Deed of
Trust, and shall become a part of the Obligations as defined above,
and shall be paid out of the proceeds of the sale of the Property, if not
otherwise paid by Grantor.
23. COLLECTION EXPENSES. In the event of default, Grantor
agrees to pay all costs of collection incurred by Bank. Such costs
shall include, but not limited to, filing fees, costs of publication,
deposition fees, stenographer fees, witness fees and any other court
costs.
plus costs of collecting, enforcing and protecting the Property and
Obligations. Any such collection costs shall be added to the principal
amount of the Obligations, shall accrue interest at the same rate as the
Obligations and shall be secured by this Deed of Trust.
24. ATTORNEYS' FEES. In the event of default, Grantor agrees to
pay reasonalbe attorneys' fees incurred by Bank. Such reasonable
attorneys' fees shall include, without limitation, paralegal fees. Any
such reasonable attorneys' fees shall be added to the principal amount
of the Obligations, shall accrue interest at the same rate as the
Obligations and shall be secured by this Deed of Trust.
25. CONDEMNATION. In the event all of any part of the Property
(including but not limited to any easement therein) is sought to be
taken by private taking or by virtue of the law of eminent domain,
Grantor will promptly give written notice to Bank of the institution of
such proceedings. Grantor further agrees to notify Bank of any
attempt to purchase or appropriate the Property or any easement
therein, by any public authority or by any other person or corporation
claiming or having the right of eminent domain or appropriation.
Grantor further agrees and directs that all comdemnation proceeds or
purchase money which may be agreed upon or which may be found to
be due shall be paid to Bank as a prepayment under the Note. Grantor
also agrees to notify Bank of any proceedings instituted for the
establishment of any sewer, water, conservation, ditch drainage, or
other district relating to or binding upon the Property or any part
thereof. All awards payable for the taking of title to, or possession of,
or damage to all or any portion of the Property by reason of any
private taking, condemnation, eminent domain, change of grade, or
other proceeding shall, at the option of Bank, be paid to Bank. Such
awards or compensation are hereby assigned to Bank, and judgment
therefor shall be entered in favor of Bank.
When paid, such awards shall be used, at Bank's option, toward
the payment of the Obligations or payment of taxes, assessments,
repairs or other items provided for in this Deed of Trust, whether due
or not, all in such order and manner as Bank may determine. Any
amount not so used shall be applied to the Obligations. Such
application or release shall not cure or waive any default. In the event
Bank deems it necessary to appear or answer in any dondemnation
action, hearing or proceeding, Grantor shall hold Bank harmless from
and pay all legal expenses, inluding buty not limited to attorneys' fees,
paralegal fees, court costs and othere expenses.
26. OTHER PROCEEDINGS. If any action or proceeding is
commenced to which Bank is made or chooses to become a party by
reason of the execution of the Note, this Deed of Trust, any loan
documents, the existence of any Obligations, or in which Bank deems
it necessary to appear or answer in order to protect its interests,
Grantor agrees to pay and to hold Bank harmless for all liabilities,
costs and expenses paid or incurred by Bank in such action or
proceedings, including but not limited to attorney's fees, paralegal fees,
court costs and all other damages and expenses.
27. WAIVER BY GRANTOR. To the extent not specifically
prohibited by law, Grantor hereby waives and releases any and all
rights and remedies Grantor may now have or acquire in the future
relating to:
A. homestead;
B. exemptions as to the Property;
C. appraisement;
D. marshalling of liens and assets; and
E. statutes of limitations.
In addition, redemption by Grantor after foreclosure sale is expressly
waived to the extent and prohibited by law.
28. OTHER WAIVERS. No waiver, express or implied, of the
performance of any obligation of this Deed of Trust, the Note or
Obligations, shall be deemed to be a waiver of any other or succeeding
obligation. No payment or advancement by Bank on behalf of Grantor
shall be deemed a waiver of the breach occurring, or of the right to
elect to foreclose this Deed of Trust; and, the indulgence of Bank to
Grantor in not exercising its option to declare the entire indebtedness
to be due and payable upon the happening of any one of the events or
conditions herein described, shall not, even though such indulgence be
repeated and extended, be construed as a waiver of the right of Bank
to exercise such option at any time thereafter for any cause and
without notice to Grantor.
29. PARTIAL RELEASE. Bank, at Bank's discretion, may release
any part of the Property from the lien of this Deed of Trust and such
release shall in no way affect the lien of this Deed of Trust on the
remaining portion of the Property or any of the rights or remedies
herein provided. Trustee shall, only upon proper written authorization
of Bank, perform all acts necessary to execute such release. It is
agreed that Grantor will pay the expenses of obtaining and recording
all releases, if any, from this Deed of Trust.
30. DUTIES AND OBLIGATIONS OF TRUSTEE. The duties and
obligations of Trustee are as follows:
A. The duties and obligations of Trustee shall be determined solely by
the express provisions of this Deed of Trust and applicable law, and
Trustee shall not be liable except for the performance of such duties
and obligations as are specifically set forth herein, and no implied
covenants or obligations shall be imposed upon Trustee;
B. No provision of this Deed of Trust shall require Trustee to expend
or risk Trustee's own funds, or otherwise incur any financial obligation
in the performance of any of the duties hereunder, or in the exercise of
any of the rights or powers. If Trustee shall have ground for believing
that the repayment of such funds or adequate indemnity against such
risk or liability is not reasonably assured to Trustee;
C. Trustee may consult with counsel of Trustee's own choosing and
the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken or suffered hereunder in good
faith and reliance thereon;
D. Trustee shall not be liable for any action taken in good faith and
reasonably believed to be authorized or within the discretion or rights
or powers conferred by this Deed of Trust; and
E. Trustee shall not be responsible for the payment of any unpaid taxes
on the Property due and owing at the time of the sale of all or any part
of the Property as herein provided.
31. SUCCESSOR TRUSTEE. Bank may from time to time substitute
a successor or successors to any trustee named herein or acting
hereunder to execute this Deed of Trust. Upon such appointment and
without conveyance to the successor trustee, the letter shall be vested
with all title, powers, and duties conferred upon Trustee herein named
or acting hereunder. Each such appointment and substitution shall be
made by written instrument given by Bank, containing reference to this
Deed of Trust and its place of record, which when recorded in the
office of the county or counties in which the Property is situated shall
be conclusive proof of proper appointment of the successor trustee.
The foregoing power of substitution and the procedure therefor shall
be used in substitution of the power and procedure provided for by
law, unless and to the extent otherwise provided by applicable law.
32. LEASE OF PROPERTY. Trustee hereby leases the Property to
Grantor until this Deed of Trust is either satisfied and released or until
there is a default under the provisions of this Deed of Trust. The
Property is leased upon the following terms and conditions: Grantor,
and every person claiming an interest in or prossessing the Property of
any part thereof, shall pay rent during the term of the lease in the
amount of one cent per month, payable on demand, and without notice
or demand shall and will surrender peaceable possession of the
Property to Trustee upon default or to the purchaser of the Property at
the foreclosure sale.
33. TERM. This Deed of Trust shall remain in effect until terminated
in writing.
34. GENERAL PROVISIONS.
A. TIME IS OF THE ESSENCE. Time is of the essence in Grantor's
performance of all duties and obligations imposed by this Deed of
Trust.
B. NO WAIVER BY BANK. Bank's course of dealing, or Bank's
forbearance from, or delay in, the exercise of any of Bank's rights,
remedies, privileges or right to insist upon Grantor's strict performance
of any provisions contained in this Deed of Trust, or other loan
documents, shall not be construed as a waiver by Bank, unless any
such waiver is in writing and is signed by Bank.
C. AMENDMENT. The provisions contained in this Deed of Trust
may not be amended, except through a written amendment which is
signed by Grantor and Bank.
D. INTEGRATION CLAUSE. This written Deed of Trust and all
documents executed concurrently herewith, represent the entire
understanding between the parties as to the Obligations and may not be
contradicted by evidence of prior, contemporaneous or subsequent oral
agreements of the parties.
E. FURTHER ASSURANCES. Grantor agrees, upon request of Bank
and within the time Bank specifies, to provide and information, and to
execute, acknowledge, deliver and record or file such further
instruments or documents as may be required by Bank to secure the
Note or confirm any lien.
F. GOVERNING LAW. This Deed of Trust shall be governed by the
laws of the State of MISSOURI, provided that such laws are not
otherwise preempted by federal laws and regulations.
G. FORUM AND VENUE. In the event of litigation pertaining to
this Deed of Trust, the exclusive forum, venue and place of
jurisdiction shall be in the State of Missouri, unless otherwise
designated in writing by Bank or otherwise required by law.
H. SUCCESSORS. This Deed of Trust shall inure to the benefit of
and bind the heirs, personal representatives, successors and assigns of
the parties; provided however, that Grantor may not assign, transfer or
delegate any of the rights or obligations under this Deed of Trust.
I. NUMBER AND GENDER. Whenever used, the singular shall
include the plural, the plural the singular and the use of any gender
shall be applicable to all genders.
J. DEFINITIONS. The terms used in this Deed of Trust, if not
defined herein, shall have their meanings as defined in the other
docuemtns executed contemporaneously, or in conjunction, with this
Deed of Trust.
K. PARAGRAPH HEADINGS. The headings at the beginning of any
paragraph, or any subparagraph, in this Deed of Trust are for
convenience only and shall not be dispositive in interpreting or
construing this Deed of Trust.
L. IF HELD UNENFORCEABLE. If any provision of this Deed of
Trust shall be held unenforceable or void, then such provision to the
extent not otherwise limited by law shall be severable from the
remaining provisions and shall in no way affect the enforceability of
the remaining provisions not the validity of this Deed of Trust.
M. CHANGE IN APPLICATION. Grantor will notify Bank in
writing prior to any change in Grantor's name, address, or other
application information.
N. NOTICE. All notices under this Deed of Trust must be in writing.
Any notice given by Bank to Grantor hereunder will be effective upon
personal delivery or 24 hours after mailing by first class United States
mail, postabe prepaid, addressed to Grantor at the address indicated
below Grantor's name on page one of this Deed of Trust. Any notice
given by Grantor to Bank hereunder will be effective upon receipt by
Bank at the address indicated below Bank's name on page one of this
Deed of Trust. Such addresses may be changed by written notice to
the other party.
O. GRANTOR DEFINED. The term "Grantor" includes each and
every person signing this Deed of Trust as a Grntor and any
co-signers.
P. SEPARATE AND DISTINCT. Each privilege, option or remedy
provided in this Deed of Trust is distinct from every other priviledge,
option or remedy contained herein or afforded by law or equity, and
may be exercised, to the extent not prohibited by law, independently,
concurrently, cumulatively, and successively by Bank or by any other
owner or holder of the Obligations.
Q. FILING AS FINANCING STATEMENT. Grantor agrees and
acknowledge that this Deed of Trust also suffices as a financing
statement and as such, may be filed of record as a financing statement
for purposes of Article 9 of the MISSOURI Uniform Commercial
Code. A carbon, photographic or other reproduction of this Deed of
Trust is sufficient as a financing statment. This deed of trust may be
filed in the real estate records as a fixture filing.
35. ACKNOWLEDGMENT. By their signatures below, the
undersigned acknowledge they have read and received a copy of this
Deed of Trust.
GRANTOR:
[ARTICLE] 5
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF THE AEGIS CONSUMER FUNDING
GROUP, INC. AND SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATMENTS WHICH START ON PAGE 3 OF THIS REPORT.
<TABLE>
<S> <C> <C> <C> <C>
[PERIOD-TYPE] 3-MOS YEAR 3-MOS 3-MOS
[FISCAL-YEAR-END] JUN-30-1997 JUN-30-1996 JUN-30-1997 JUN-30-1996
[PERIOD-END] SEP-30-1996 JUN-30-1996 SEP-30-1996 SEP-30-1995
[CASH] $2,373,277 $3,090,624 0 0
[SECURITIES] 0 0 0 0
[RECEIVABLES] 54,153,648 41,058,222 0 0
[ALLOWANCES] 0 0 0 0
[INVENTORY] 0 0 0 0
[CURRENT-ASSETS] 0 0 0 0
[PP&E] 0 0 0 0
[DEPRECIATION] 0 0 0 0
[TOTAL-ASSETS] $147,374,267 $121,451,754 0 0
[CURRENT-LIABILITIES] $110,321,176 $87,460,289 0 0
[BONDS] 0 0 0 0
[PREFERRED-MANDATORY] 0 0 0 0
[PREFERRED] 33 53 0 0
[COMMON] 160,026 154,560 0 0
[OTHER-SE] (340,000) 0 0 0
[TOTAL-LIABILITY-AND-EQUITY] $147,374,267 $121,451,754 0 0
[SALES] 0 0 0 0
[TOTAL-REVENUES] 0 0 $13,688,778 $9,158,153
[CGS] 0 0 0 0
[TOTAL-COSTS] 0 0 0 0
[OTHER-EXPENSES] 0 0 4,824,397 2,632,549
[LOSS-PROVISION] 0 0 536,175 753,775
[INTEREST-EXPENSE] 0 0 3,013,473 2,124,347
[INCOME-PRETAX] 0 0 5,314,733 3,647,482
[INCOME-TAX] 0 0 2,179,090 1,3641,400
[INCOME-CONTINUING] 0 0 3,135,643 2,006,082
[DISCONTINUED] 0 0 0 0
[EXTRAORDINARY] 0 0 0 0
[CHANGES] 0 0 0 0
[NET-INCOME] 0 0 $3,135,643 $2,006,082
[EPS-PRIMARY] 0 0 $0.19 $0.15
[EPS-DILUTED] 0 0 $0.19 $0.14
</TABLE>
