United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-25714
THE AEGIS CONSUMER FUNDING GROUP, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 22-3008867
(State or other jurisdiction 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
(Issuer'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 May 6, 1996, 14,944,258 shares of the issuer's common stock were
outstanding.
<PAGE>
THE AEGIS CONSUMER FUNDING GROUP, INC.
FORM 10-QSB
INDEX
Page
PART I. FINANCIAL INFORMATION No.
Item 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited):
Consolidated Condensed Statements of Financial Condition -
March 31, 1996 and June 30, 1995. . . . . . . . . .. 3
Consolidated Condensed Statements of Income - three
and nine months ended March 31, 1996 and 1995 . . . . . 4
Consolidated Condensed Statement of Cash Flows -nine
months ended March 31, 1996 and 1995. . . . . . . .... 5
Notes to Consolidated Condensed Financial Statements ... 6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION. . . . . . . . . . . . . . 7
PART II. OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . 15
Item 2. Changes in Securities. . . . . . . . . . . 15
Item 3. Defaults upon Senior Securities. . . . . . 15
Item 4. Submission of Matters to a Vote of Security Holders. . 15
Item 5. Other information. . . . . . . . . . . . . 15
Item 6. Exhibits and Reports on Form 8-K . . . . . 16
SIGNATURES . . . . . . . . . . . . . . . . . . . . . 17
EXHIBIT INDEX . . . . . . . . . . . . . . . . . . . 16
2
<PAGE>
PART I. FINANCIAL INFORMATION:
Item 1. Consolidated Condensed Statements
THE AEGIS CONSUMER FUNDING GROUP, INC.
Consolidated Condensed Statements of Financial Condition
(unaudited)
ASSETS
March 31, June 30,
1996 1995
----------- ------------
Cash and cash equivalents $ 5,782,492 $5,970,571
Automobile finance receivables, net 46,668,234 39,783,558
Retained interests in securitized receivables 57,910,123 23,985,222
Note receivable from sale of loans - 7,651,985
Note receivable from related party, net - 600,000
Other assets 3,975,100 6,745,611
------------ ----------
$114,335,949 $84,736,947
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Warehouse credit facilities $39,946,386 $48,162,271
Notes payable 23,704,730 12,956,123
Accounts payable and accrued expenses 13,339,536 6,115,756
Income taxes payable 6,692,116 1,805,477
---------- -----------
Total liabilities 83,682,768 69,039,627
----------- -----------
Stockholders' equity:
Common stock, $.01 par value
30,000,000 shares authorized;
14,776,844 shares issued and outstanding 147,768 147,768
Preferred stock Series C, $.10 par value,
1,100 shares authorized;
920 shares issued and outstanding 92 -
Paid in capital 21,635,809 13,030,222
Other transactions with stockholders - (100,000)
Retained earnings, since date of
recapitalization (March 1,1992) 8,869,512 2,619,330
------------ -----------
Total stockholders' equity 30,653,181 15,697,320
------------ -----------
$114,335,949 $84,736,947
============ ===========
See accompanying notes
3
<PAGE>
THE AEGIS CONSUMER FUNDING GROUP, INC.
Consolidated Condensed Statements ofIncome
(unaudited)
Three months ended Nine months ended
March 31, March 31,
1996 1995 1996 1995
---------- --------- -------- --------
Revenues:
Fees and commissions earned $24,936 $82,316 $166,483 $685,230
Fees and commissions -related party - - - 275,000
Gains from securitization
transactions 9,658,639 1,983,824 21,605,316 4,324,896
Interest income 3,339,173 1,477,572 9,739,614 4,287,571
Other income 41,528 218,542 116,434 329,196
---------- --------- ---------- ---------
13,064,276 3,762,254 31,627,847 9,901,893
---------- --------- ---------- ---------
Operating expenses:
Salaries and other employee costs 2,510,045 824,011 5,841,650 2,610,489
Provision for credit losses 1,382,578 38,000 2,505,628 175,106
Interest expense 2,722,981 1,145,967 7,306,368 2,760,445
Interest paid to related parties - 118,044 - 232,880
Other expenses 1,931,751 1,035,616 4,582,440 2,844,662
---------- --------- --------- ---------
8,547,355 3,161,638 20,236,086 8,623,582
---------- --------- ---------- ---------
Net income before income taxes 4,516,921 600,616 11,391,761 1,278,311
Income taxes 1,987,500 294,908 5,012,400 620,424
---------- --------- ---------- ---------
Net income $2,529,421 $305,708 $6,379,361 $657,887
========== ======== ========== ========
Net income available to common
stockholders $2,400,242 $245,232 $6,250,182 $472,424
========== ======== =========== ========
Primary Earnings Per Share:
HISTORICAL BASIS
Net income available $2,529,421 N/A $6,379,361 N/A
========== === ========== ===
Net income per common and
common equivalent share $0.17 N/A $0.45 N/A
========== === ========== ===
Weighted average common and
common equivalent shares 14,941,987 N/A 14,136,732 N/A
========== === ========== ===
PRO FORMA BASIS
Pro forma net income (1) N/A $389,341 N/A $946,413
=== ========= === ========
Pro forma net income per
common and common
equivalent share (1) N/A $0.03 N/A $0.07
=== ========= === =====
Pro forma weighted average
common and common equivalent
shares (1) N/A 13,852,224 N/A 13,856,224
=== ========== === ==========
Fully Diluted Earnings Per Share:
HISTORICAL BASIS
Net income available $2,529,421 N/A $6,379,361 N/A
========== === ========== ===
Net income per common and
common equivalent share $0.16 N/A $0.42 N/A
===== === =========== ===
Weighted average common and
common equivalent shares 16,021,822 N/A 15,215,040 N/A
========== === ========== ===
(1) Amounts reflect pro-forma adjustments in connection with the Company's
Initial Public Offering on April 6, 1995 for (i) the redemption of
approximately $2.5 million of the Company's outstanding preferred stock and
dividends paid of $60,477 and $185,463, respectively (ii) the termination of
a consulting agreement providing for consulting fees of $59,000 and $115,000,
net of taxes, respectively and (iii) the repayment of approximately $2.1
million of indebtedness under the Company's revolving credit facility and
related interest expense of $25,000 and $173,000, net of taxes, respectively.
See accompanying notes.
4
<PAGE>
THE AEGIS CONSUMER FUNDING GROUP, INC.
Consolidated Condensed Statements of Cash Flows
(unaudited)
Nine months ended March 31,
---------------------------
1996 1995
---- ----
Cash flows from operating activities:
Net income $6,379,361 $657,887
Adjustments to reconcile net income to net
cash used in operating activities:
Amortization and depreciation expense 589,542 279,873
Provision for credit losses 2,505,627 175,106
Valuation allowance on retained interests
in securitized receivables 4,000,000 -
Valuation allowance on note receivable
from related party 600,000 -
Unrealized gains on securitization
transactions (37,781,125) (11,019,858)
Increase in automobile finance receivables (9,390,304) (25,468,103)
Decrease (increase) in note receivable 7,651,985 (91,351)
Decrease (increase) in other assets 2,760,300 (2,487,706)
Increase in accounts payable and
accrued expenses 7,196,876 3,727,219
Increase (decrease) in income taxes payable 4,886,639 (240,312)
----------- ------------
Net cash used in operating activities (10,601,099) (34,467,245)
------------ ------------
Cash flows from investing activities:
Distributions from retained interests
in securitized receivables 2,191,786 945,561
Additional Payments for securitized
receivable trusts (2,335,562) -
Purchases of fixed assets (452,428) (557,100)
------------ ------------
Net cash (used in) provided by
investing activities (596,204) 388,461
------------ ------------
Cash flows from financing activities:
Proceeds from borrowing under warehouse
credit facilities 272,589,438 96,180,437
Repayment of borrowing under warehouse
credit facilities (280,805,322) (73,936,871)
Proceeds from borrowing under notes payable 21,556,398 11,221,420
Repayment of borrowing under notes payable (10,807,790) (1,916,197)
Proceeds from issuance of preferred stock, net 8,464,000 -
Dividends paid - (124,985)
Issuance of stock warrants 12,500 -
Proceeds from borrowing under revolving
credit facility - 5,273,006
Repayment of borrowing under revolving
credit facility - (2,047,442)
------------ -------------
Net cash provided by financing activities 11,009,224 34,649,368
------------ -------------
Net (decrease) increase in cash and cash equivalents (188,079) 570,584
Cash and cash equivalents, beginning of period 5,970,571 981,326
------------ -------------
Cash and cash equivalents, end of period $5,782,492 $1,551,910
============ =============
Supplemental disclosures of cash flow information:
Cash paid during the period
Interest $7,564,275 $2,515,977
========== ==========
Income taxes $ 135,927 $22,803
========== ==========
See accompanying notes.
5
<PAGE>
THE AEGIS CONSUMER FUNDING GROUP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
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
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-KSB filing for the fiscal year ended June 30, 1995.
This quarterly report should be read in conjunction with such annual
10-KSB filing.
NOTES PAYABLE
During the three months ended March 31, 1996, the Company entered into an
additional Loan and Security Agreement (the "Financing Agreement") with its
warehouse credit facility lender, whereby, as borrower, the Company may
borrow up to $5,000,000 under the Financing Agreement. During the three
months ended March 31, 1996, the Company borrowed $2,265,633 under the
Financing Agreement. As of March 31, 1996, the Company had notes payable
aggregating $23,704,730 and related interest payable of $83,897 under the
Financing Agreement and similar financing agreements. The notes bear
interest at 12% per annum and are secured by certain of the Company's
retained interests in securitized receivables with carrying values
aggregating approximately $43.4 million at March 31, 1996, which approximates
their fair value.
COMMITMENT
In December 1995, the Company entered into a commitment to sell $175.0
million of sub-prime automobile loans to be resold as asset-backed securities
through a Master Trust Agreement (the "Agreement"). During the nine month
period ended March 31, 1996, the Company sold approximately $53.5 million
automobile receivables into this facility. The Agreement requires the Company
to directly sell between $8.0 million and $15.0 million per month for a
fifteen month funding period, subsequent to the initial funding date. As of
March 31, 1996, the Company had a remaining commitment of approximately
$121.5 million.
CAPITAL STOCK
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 of 1933. The Preferred Stock is convertible into Common Stock of the
Company 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% annual dividend payable in Common Stock at
the time of conversion. The Preferred Stock is automatically converted
into Common Stock on the third anniversary of its issuance. For purposes of
computing earnings per share, the Preferred Stock is deemed to be a common
stock equivalent, and as such is included in the weighted average common and
common equivalent shares outstanding. The Company also issued warrants to
the placement agent to purchase 114,553 shares of Common Stock of the Company
at a price of $6.425 per share, which expire five years from their issuance
date.
CONTINGENCIES
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. The complaint seeks damages of $4.6
million plus interest and punitive damages of at least $460 thousand,
together with costs, attorney's 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 theses actions will not materially affect
the results of operations, cash flows or financial position of the Company.
6
<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 ofthe Company relates to the nine and three month periods ended
March 31, 1996 and 1995 and should be read in conjunction with the Company's
Consolidated CondensedFinancial Statements and Notes thereto included elsewhere
in this quarterly report. The unaudited results for the three and nine month
periods ended March 31, 1996 are not necessarily indicative of results to be
expected for the entire fiscal year.
Overview
In the nine months ended March 31, 1996, the Company's revenues were derived
primarily from securitization of sub-prime automobile finance receivables
and interest income earned on its automobile finance receivables while in the
warehouse period. Upon a securitization of receivables, the Company
recognizes the sale of such receivables and records a gain or loss in an
amount which takes into account the cash flows expected to be received as a
result of its retained interest, net of purchase discounts and other deferred
acquisition costs. The Company values each retained interest by calculating
the net present value of its expected residual cash distributions from the
securitization trust. The calculation of the gain or loss and of the value of
the retained interest arising from the securitizations embody prepayment,
elinquency, default, recovery and interest rate assumptions that the Company
believes are reasonable and consistent with assumptions that other market
participants would use for similar financial instruments, and are discounted
assuming an interest rate that the Company believes a third party purchaser of
such financial instrument would demand. If actual experience differs from
these assumptions, additional gains or losses to the Company would result.
Moreover, if the Company were unable to securitize loans in a financial
reporting period in the form of a sale, the Company would likely incur a
significant decline in total revenues and net income, or report a loss for
such period.
<TABLE>
<CAPTION>
Quarters in the Fiscal Year ended June 30,
(dollars in thousands)
1996 1995
----------------------------- ---------------------------------------
Third Second First Fourth Third Second First
<S> <C> <C> <C> <C> <C> <C> <C>
Loans acquired $128,781 $100,582 $72,562 $59,609 $32,785 $19,188 $20,712
Gains on Securitizations
(1)(2) $12,759 $7,424 $6,023 $5,197 $1,984 $741 $1,600
Portfolio (at period end) $401,704 $287,481 $197,911 $145,362 $94,576 $69,248 $55,032
Selected Securitization Data:
Aegis Auto Receivables
Trust, Series: 1996-1 1995-4 1995-3 1995-2 1995-1 1994-3 1994-2
Original Amount (3) $92,000 $70,000 $60,000 $54,000 $21,000 $21,000 $23,251
Duff & Phelps Rating
(4),(5) A+,BBB,BB A+ A+ A+ A+ A+ A+
Fitch Rating (4),(5) A+,BBB+,BB N/A N/A N/A N/A N/A N/A
Weighted average
coupon rate 20.13% 19.88% 20.04% 19.94% 20.41% 19.66% 19.82%
Certificate Rate N/A 6.65% 7.09% 7.16% 8.60% 9.46% 8.04%
Certificate Rate Class A 8.39% N/A N/A N/A N/A N/A N/A
Certificate Rate Class B 7.86% N/A N/A N/A N/A N/A N/A
Certificate Rate Class C 12.14% N/A N/A N/A N/A N/A N /A
Gross Spread (6) 12.73% 13.23% 12.95% 12.78% 11.81% 10.20% 11.78%
Net Spread (7) 9.93% 10.41% 10.12% 8.98% 8.46% 6.46% 8.12%
Aegis Auto Owners Trust 1995: N/A N/A N/A N/A N/A
Original Amount (8) $38,138 $15,368
Standard and Poors
Rating (8) AAA AAA
Moody's Rating (8) Aaa,Baa2 Aaa,Baa2
Weighted average
coupon rate 20.21% 20.00%
Certificate Rate (8) 6.12% 6.28%
Gross Spread (6) 14.09% 13.78%
Net Spread (9) 11.07% 10.74%
</TABLE>
- -----------------------
(1) Includes gains on whole loan sales (in thousands) of $111, $48, $40, $604,
$124, and $87, respectively, in the periods presented.
(2) The third and second quarters of Fiscal 1996 exclude valuation allowances
of $3.1 million and $1.5 million, respectively, taken on prior retained
interests in securitized receivables.
7
<PAGE>
(3) Includes prefunded amounts which were transferred to the related trust
by the end of the quarter for 1995-3, 1995-2, and 1995-1 and by the first
week of the next quarter for 1994-3.
(4) Ratings apply to Original Amount of trust certificates.
(5) 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.
(6) Difference between weighted average coupon rate of receivables and the
weighted average rate of interest on the trust certificates (the
"Certificate Rate").
(7) Difference between weighted average coupon rate of receivables and
Certificate Rate, net of servicing and trustee monthly fees and annualized
issuance costs which include underwriting fees and hedging gains or
losses, if any.
(8) The Company has a total commitment of $175.0 million,$15.4 was funded in
the second quarter of fiscal 1996, $38.1 million was funded in the third
quarter of fiscal 1996, the remaining $121.5 million will be filled over
the next twelve months. The Trust has Class A Notes rated AAA by
Standard & Poors and Aaa by Moody's, and the Class B Certificates are
rated Baa2 by Moody's.
(9) Difference between weighted average coupon rate of receivables and
Certificate Rate, net of servicing and trustee monthly fees and amortized
over maximum $175.0 million facility amount, and annualized issuance costs
which include underwriting fees and hedging gains or losses, if any.
Results of Operations
Nine Months Ended March 31, 1996 Compared To Nine Months Ended March 31,1995
During the nine months ended March 31, 1996 and 1995, the Company's revenues
increased from $9.9 million in 1995 to $31.6 million in 1996 or 219.4%.
The increase was primarily attributable to an increase in securitization
profits from $4.3 million in 1995 to $21.6 million in 1996 or an increase of
$17.3 million representing a 400.0% increase and an increase in interest income
from $4.3 million in 1995 to $9.7 million in 1996, an increase of $5.4 million
or 127.2%. The increases resulted from the increase in automobile loans
acquired and subsequently, securitized, sold, or held by the Company. The
increase in securitized gains is offset by a valuation allowance of $4.6
million taken on retained interests from securitized receivables from earlier
securitizations and a valuation allowance on a note receivable, from a then
related party, created in a prior sale of a retained interest. See
"Delinquency and Loss Experience".
For the nine months ended March 31, 1996 and 1995, the Company increased its
loan and lease acquisition and origination volume from 7,530 loans and
leases with an aggregate total value of $94.0 million in 1995 to 24,728 loans
and leases with an aggregate total value of $302.4 million in 1996, an increase
of 221.7%.
Net income for the nine months ended March 31, 1996 was $6.4 million compared
to $0.7 million for the nine months ended March 31, 1995, an increase of
$5.7 million or 870.0%. This increase resulted primarily from the increase
in the size of automobile securitization transactions from $65.3 million in the
nine months ended March 31, 1995 to $214.7 million in the nine months ended
March 31, 1996.
Operating Expenses
Operating expenses increased from $8.6 million in 1995 to $20.2 million in
1996, an increase of $11.6 million or 134.7%.
Interest Expense. Interest expense increased to $7.3 million in 1996 from
$3.0 million in the prior year period, an increase of $4.3 million or 139.5%,
as a result of the increased financing requirements caused by the Company's
increased loan acquisition activity. The increase in interest expense
represents 37.3% of the total increase in operating expenses and is partially
attributable to the Company's warehouse credit facilities which are at
fluctuating interest rates which ranged from as low as 9.0625% to as high as
10.125% in 1996 compared to a low of 8.5% and a high of 10.125% in 1995. In
addition, the Company's monthly average outstanding balance on its warehouse
facility increased from $29.7 million in 1995 to $71.7 million in the
comparable 1996 period. The Company also incurred interest on notes payable
at a 12% interest rate on an monthly average outstanding balance of $6.2
million in 1995 compared to a monthly outstanding average balance of $18.1
million in 1996.
Salaries and Other Employee Costs. Salaries and other costs increased $3.2
million from $2.6 million in 1995 to $5.8 million in 1996 or 123.8% due to
an increase in the number of employees from approximately 150 at March 31,
1995 to approximately 320 employees at March 31, 1996 and approximately $1.9
million of accrued bonuses which are based on the Company's pre-tax net income.
Bonuses were not owed in the prior period since the minimum pre-tax net
income level was not attained as of March 31, 1995.
8
<PAGE>
Provision for Credit Losses. The provision for credit losses increased from
$0.2 million in 1995 to $2.5 million in 1996, an increase of $2.3 million
due to: (i) the Company's increased acquisition/origination volume in loans
and leases, (ii) the Company's decision to discontinue purchasing default
insurance on its lease origination effective January 1995, (iii) the Company's
decision, effective August 1995, to insure on a discretionary basis its loan
acquisitions; to the extent loans remain uninsured for default, the Company's
loss ratio is higher, (iv) the increase in delinquent automobile finance
receivables (as discussed below) and (v) the higher level of loans and leases
owned by the Company at March 31, 1996 ($50.5 million) as compared to March 31,
1995 ($31.5 million). These changes also resulted in an increase 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) from 1.4% in 1995 to 2.1% in 1996.
The Company maintains residual value insurance relating to its entire lease
portfolio.
All Other Operating Expenses. Other operating expenses increased $1.7
million from $2.8 million in 1995 to $4.6 million in 1996 or 61.1% primarily
due to an increase in the number of processing centers from two in 1995 to
three in 1996, the expansion of the Company's systems and development
facility in Kansas City and its headquarters facility and operation center in
Jersey City, and the expansion of the Company's collection department
located in Irvine, California.
Income Taxes. Income taxes increased from $0.6 million in 1995 (an effective
tax rate of 48.5%) to $5.0 million (an effective tax rate of 44.0%) in 1996,
an increase of $4.4 million or 707.9%. The decrease in the Company's effective
tax rate of 4.5% is primarily due to the decrease in the Company's state taxes
from a rate of 14% in 1995 to 10% in 1996. The decrease in the state taxes is
attributed to the Company moving its headquarters and northeast operating
facility from New York, New York, to Jersey City, New Jersey.
Results of Operations
Quarter Ended March 31, 1996 Compared To Quarter Ended March 31, 1995
During the quarters ended March 31, 1996 and 1995, the Company's revenues
increased from $3.8 million in 1995 to $13.1 million in 1996, an increase of
$9.3 million or 247.3%. This increase was primarily attributable to an
increase in securitization profits from $2.0 million in 1995 to $9.7 million
in 1996 or an increase of $7.7 million representing a 386.9% increase and an
increase in interest income from $1.5 million in 1995 to $3.3 million in 1996,
an increase of $1.9 million or 126.0%. The increases resulted from the
increase in automobile loans acquired and subsequently, either securitized,
sold, or held by the Company. The increase in securitized gains is offset by
a valuation allowance of $3.1 million taken on retained interests from
securitized receivables from earlier securitizations and a valuation
allowance on a note receivable, from a then related party, created in a prior
sale of a retained interest. See "Delinquency and Loss Experience".
For the fiscal quarters ended March 31, 1996 and 1995, the Company increased
its loan and lease acquisition and origination volume from 3,167 loans and
eases with an aggregate total value of $40.3 million in 1995 to 10,569 loans
with an aggregate total value of $128.8 million in 1996, an increase of 130.2%.
Net income for the fiscal quarter ended March 31, 1996 was $2.5 million
compared to $0.3 million for the fiscal quarter ended March 31, 1995. The
increase resulted primarily from the increase in the size of automobile
securitization transactions from $21.0 million in the quarter ended March 31,
1995 to $130.2 million in the quarter ended March 31, 1996.
Operating Expenses
Operating expenses increased from $3.2 million in 1995 to $8.5 million in
1996, an increase of $5.4 million or 170.4%.
Interest Expense. Interest expense increased to $2.7 million in 1995 from
$1.3 million in the prior year period as a result of the increased financing
required by the Company's increased loan acquisition activity. This increase
of $1.4 million represents 25.9% of the total increase in operating expenses
and is partially attributable to the Company's warehouse credit facilities
which are at fluctuating interest rates which ranged from as low as 9.0625%
to as high as 9.6875% in 1996 compared to a low of 9.75% and a high of 10.125%
in 1995. In addition, the Company's monthly average outstanding balance on
its warehouse facility increased from $31.6 million in 1995 to $67.8 million
in the comparable 1996 period. The Company also incurred interest on notes
payable at a 12% interest rate on a monthly average outstanding balance of
$10.3 million in 1995 compared to an monthly average outstanding balance of
$22.9 million in 1996.
Salaries and Other Employee Costs. Salaries and other employee costs
increased $1.7 million from $1.8 million in 1995 to $2.5 million in 1996 or
204.6% due to an increase in the number of employees from approximately 150
at March 31, 1995 to approximately 320 employees at March 31, 1996 and
approximately $0.7 million in accrued bonuses which are based on the
Company's pre-tax net income. Bonuses were not owed in the prior period
since the minimum pre-tax net income level was not attained as of March 31,
1995.
9
<PAGE>
Provision for Credit Losses. The provision for credit losses increased from
$0.04 million in 1995 to $1.4 million in 1996 due to: (i) the Company's
increased acquisition volume in loans, (ii) the Company's decision to
discontinue purchasing default insurance on its lease origination effective
January 1995 (iii) the Company's decision, effective August 1995, to insure
on a discretionary basis its loan acquisitions; to the extent loans remain
uninsured for default, the Company's loss ratio is higher, (iv) the increase
in delinquent automobile finance receivables (as discussed below) and (v) the
higher level of loans and leases owned by the Company at March 31, 1996
($50.5 million) as compared to March 31, 1995 ($31.5 million). These changes
also resulted in an increase 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 or sold) from 1.4% in 1995
to 2.1% in 1996. The Company maintains residual value insurance relating to
its entire lease portfolio.
All Other Operating Expenses. Other operating expenses increased $0.9
million from $1.0 million in 1995 to $1.9 million in 1996 or 86.5% due to
an increase in the number of processing centers from two in 1995 to three in
1996, the expansion of the Company's systems and development facility in
Kansas City and its headquarters facility and operation center in Jersey
City, and the expansion of the Company's collection department located in
Irvine, California.
Income Taxes. Income taxes increased from $0.3 million in 1995 (an effective
tax rate of 44.0%) to $2.0 million (an effective tax rate of 44.0%) in 1996,
an increase of $1.7 million. The Company's effective tax rate changed from
the prior period primarily due to a reduction in the Company's state tax rate
from 17% in 1995 to 9% in 1996 from the Company's move of its headquarters and
northeast operating facility from New York, New York, to Jersey City, New
Jersey.
Delinquency and Loss Experience
Set forth below is information concerning delinquencies and losses experienced
on the total portfolio of loans and leases acquired or originated by the
Company through March 31, 1996. The following tables reflect the delinquency
experience of all loans or leases acquired or originated, including those sold
in whole loan sales or securitizations, by the Company at March 31, 1996 and
June 30, 1995, 1994, 1993:
<TABLE>
<CAPTION>
LOAN PORTFOLIO AT (1)
March 31, June 30,
----------- --------------------------------
1996 1995 1994 1993
----- --------- ---------- ---------
(dollars in thousands)
<S> <C> <C> <C> <C>
Principal balance
outstanding(2). . . . $388,346 $146,557 $38,844 $11,156
Number of contracts
outstanding . . . . 34,687 13,345 3,785 1,139
Delinquent loans (3)
31-59 days $16,654 4.3% $7,974 5.4% $195 0.5% $350 3.2%
60-89 days 4,317 1.1% 1,186 0.8% 36 0.1% 68 0.6%
90 days and over 1,360 0.4% 410 0.3% 40 0.1% - 0.0%
------------- ------------- ------------ ----------
Total 22,331 5.8% 9,570 6.5% 271 0.7% 418 3.8%
Loans in repossession
or bankruptcy 17,946 4.6% 3,384 2.3% 1,051 2.7% 213 1.9%
------------- ------------ ----------- ----------
Grand total $40,277 10.4% $12,954 8.8% $1,322 3.4% $631 5.7%
============= ============ =========== ==========
</TABLE>
- -----------
(1) Previously, the Company netted vehicles in the repossession process
from its delinquencies. Delinquencies include bankruptcies and vehicles
in the repossession process. Prior periods have been restated to reflect
this change.
(2) Excludes contracts for which notice of intent to liquidate has expired
and those having an outstanding balance less than or equal to $500.
(3) Percentage based on outstanding principal balance, excluding loans and
leases as to which repossessed vehicles were fully liquidated.
10
<PAGE>
<TABLE>
<CAPTION>
LEASE PORTFOLIO AT (1)
March 31, June 30,
--------- ----------------------
1996 1995 1994
--------- --------- --------
(dollars in thousands)
<S> <C> <C> <C>
Principal balance
outstanding. . . . $22,860 $27,756 $1,391
Number of contracts
outstanding. . . . 1,922 1,976 82
Delinquent loans (2)
31-59 days $1,310 5.7% $2,221 8.0% $44 3.1%
60-89 days 364 1.6% 688 2.5% 0 0.0%
90 days and over 648 2.8% 160 0.6% 0 0.0%
------------ ------------ ---------
Total $2,322 10.1% $3,069 11.1% $44 3.1%
============ ============ =========
</TABLE>
- ----------
(1) The Company began originating leases in April 1994 and suspended funding
leases in the first quarter of its 1996 fiscal year, pending development
of a program to securitize or sell leases.
(2) Percentages based on outstanding principal balance, excludes leases as to
which repossessed vehicles were liquidated.
The following table shows the Company's repossession and loss experience for
its loan portfolio for the periods indicated:
<TABLE>
<CAPTION>
Nine Months Ended
March 31, Year End June 30,
----------------- ---------------------------
1996 1995 1994 1993
-------- --------- -------- --------
(dollars in thousands)
<S> <C> <C> <C> <C>
Average principal balance
outstanding (1) . . . $260,065 $93,821 $25,173 $5,861
Average number of loans
outstanding . . 23,500 8,735 3,978 1,165
Dollar amount of repossessions. $24,074 $7,722 $1,707 $326
Repossession Ratio (2). . . . . 12.3% 8.2% 6.8% 5.6%
Default balance of fully
liquidated vehicles . . . . $6,413 $6,719 $1,391 $79
Gross charge offs(3) . . . . $3,146 $3,326 $477 $26
Net charge offs(4) . . . . . $1,071 $657 $41 $3
Net charge offs as a percentage
of liquidations (5) . . . . . 16.7% 9.8% 2.9% 3.8%
Net charge offs as a percentage
of average principal balance
outstanding . . . . . . . . 0.5% 0.7% 0.2% 0.0%
</TABLE>
- -------
(1) Arithmetic mean of beginning and ending outstanding principal balance
of all loans originated or acquired including those previously sold in
securitization transactions.
(2) Loans relating to vehicles repossessed at period end as a percentage of
the average loan portfolio outstanding during the period, nine month
numbers are presented on an annualized basis.
(3) Gross charge offs equals the aggregate balance of loans 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.
(4) Net charge offs are gross charge offs reduced by risk default proceeds
received relating to the defaulted receivables.
(5) Net charge off amount divided by the aggregate balance of contracts
relating to vehicles liquidated.
The Company has prepared analyses, based on its own credit experience and
available industry data, to identify the relationship between loan delinquency
and default rates at the various stages of a loan repayment term. The results
of these analyses, which have been incorporated into the Company's methodology
of determining gain on the sale of loans, including through securitizations,
suggest that the probability of a loan becoming delinquent or going into
default is highest during the "seasoning periods" which occur between the
second through the sixth payment and again during the 18 to 24 month payment
periods from the acquisition date. The Company believes that the increase in
net charge offs as a percentage of average principal balance outstanding is to
some extent the result of an increase in the percentage of loans in the
"seasoning periods," rather than any change in the underlying average credit
characteristics of the Company's loan portfolio. If the rate of the Company's
loan acquisitions continues to escalate, an increasingly large portion of the
Company's loan portfolio is expected to fall into the "seasoning periods"
which may cause a rise in the overall loan portfolio delinquency and default
rates, without regard to underwriting performance.
11
<PAGE>
The Company believes delinquencies and losses can be mitigated through a more
proactive 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
loans acquired which were included in the Company's December 1994
securitization transaction and all loans acquired thereafter. In addition,
the Company assumed responsibility for liquidation activities on its entire
loan portfolio (including securitized loans) at such time.
Because of the Company's limited operating history and the rapid growth of
its loan acquisitions, a significant portion of its loan and lease 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. In addition, increases in the delinquency
and/or loss rates in the portfolio would adversely affect the Company's
ability to obtain credit or securitize its receivables. Moreover, increases
in the delinquency and/or loss rates of loans which have been securitized may
cause the re-valuation of the Company's retained interests in such
securitization transactions, which could adversely affect the Company's
results of operations. In the nine month period ended March 31, 1996, the
Company recorded a re-valuation allowance of $4.0 million with a resulting
charge to its results of operations in such period.
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 purchase and finance automobile loans pending securitization, (ii) cash held
from time to time in restricted spread accounts to support securitizations and
other securitization expenses and (iii) net interest margins on retained
interest on securitized receivables. 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 do so for as long as the
Company's volume of loan purchases continues to grow. The Company has
historically funded these negative operating cash flows, principally through
borrowings from financial institutions and sales of equity securities, among
other resources. 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 loan 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 loans it repays a portion of its outstanding warehouse
indebtedness, 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 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.
Until the Company can implement such arrangements, it has suspended the funding
of leases.
The following table sets forth the major components of the (decrease) increase
in cash and cash equivalents:
Nine months ended
March 31,
---------------------
(dollars in thousands)
1996 1995
----------- ---------
Net cash used in operating activities(1) . ($10,601) ($34,467)
Net cash (used in) provided by investing
activities. . . . . . . . . . . . . . . . (596) 389
Net cash provided by financing activities(2) 11,009 34,649
--------- -------
Net (decrease) increase in cash
and cash equivalents. . . . . . . . . . ($188) $571
======== ======
- --------
(1) Includes net cash used in acquisition of automobile finance receivables
of $(9,390) in 1996 and $(25,468) in 1995.
(2) Includes net cash (used in) provided by warehouse credit facilities of
$(8,216) in 1996 and $22,244 in 1995.
Net cash used in operating activities primarily represents cash flows utilized
to support the Company's acquisition of automobile finance receivables,
including amounts representing capitalized acquisition costs, net of cash
proceeds of sales, including through securitizations, and repayments of such
receivables. The cash used to acquire automobile finance receivables is
generated primarily by financing activities under the Company's warehouse
credit facilities, discussed below.
12
<PAGE>
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 are 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 to investors in the securitizations. These amounts were
$37.8 million in the nine months ended March 31, 1996 and $11.0 million for
the nine months ended March 31, 1995. During the nine months ended March 31,
1996 and 1995, the Company received cash proceeds of $2.2 million and $0.9
million, respectively, from its retained interests in securitized receivables
which were utilized in meeting both its operating needs and its debt repayment
requirements under the related financing agreements.
Other non-cash adjustments include depreciation and amortization which were
$0.6 million in the nine months ended March 31, 1996 and $0.3 million in the
nine months ended March 31, 1995, and provision for credit losses, which was
$2.5 million in the nine months ended March 31, 1996 and $0.2 million in the
nine months ended March 31, 1995. The Company also incurred non-cash
adjustments of $4.0 million and $0.6 million in the nine month period ended
March 31, 1996 for valuation allowances on retained interests in securitized
receivables and a note receivable from related party, respectively, with no
such charges 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 $21.6 million in
1996 and $11.2 million in 1995 secured by retained interests in securitized
receivables created in the Company's automobile loan securitizations. Principal
repayments are made from the Company's proceeds received from pay downs on such
assets, which amounted to $2.2 million in the nine month period ended March 31,
1996 and $0.9 million in the comparable 1995 period. The Company made
additional principal pay downs of $8.6 million in excess of proceeds received
in the nine month period ended March 31, 1996 and $1.0 million in the comparable
1995 period.
The Company's cash flows may be affected adversely in the near term by rising
interest rates, since not all costs of funds, which under the Company's
warehouse facilities are at floating rates of interest, can be immediately
passed on to consumers, whose receivables are at fixed financing rates, and
since the present value of anticipated cash flows on retained interests in
future securitization transactions may decline. 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.
In connection with the Company's securitization transactions, it enters into
pooling and servicing agreements (the "Agreements"). The Agreements require
the Company to increase its required cash deposits with the underlying Trusts
when delinquencies and default rates increase to certain levels, as defined in
the Agreements. As delinquencies and/or default rates increase or decrease,
the Company's obligation varies. As of May 6, 1996, the Company estimates
its potential obligation to be $3.6 million. During the nine month period
ended March 31, 1996, the Company made additional contributions of
approximately $2.3 million.
The Company's warehouse credit facility provides that the Company may borrow
the lesser of $100 million (less the amount outstanding under the Company's
lease warehouse credit facility ($17.5 million as of May 1, 1996)) or the sum
of (A) 100% of the outstanding principal amount of performing, insured,
automobile receivables and (B) the lesser of 90% of the outstanding principal
amount of delinquent automobile receivables (which percentages are reduced to
80% and 70%, respectively, if the Company's automobile casualty 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 million plus 92% of
the outstanding principal amount of performing uninsured automobile receivables
(declining 1% per month for each month the receivable is outstanding past 180
days) for the purpose of financing automobile receivables in accordance with
the Company's underwriting guidelines. The Company has a warehouse credit
facility, which provides the Company with a $50 million credit line on
substantially the same terms as the automobile loan facility, for financing
its lease transactions. These facilities are secured primarily by the
Company's receivables and bear interest at the rate of the one-month LIBOR
plus 4%, adjusted monthly (9.0625% for March 1996). Under the 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
underlying collateral. The Company's ability to continue to borrow under the
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 receivables held by the
Company for more than 180 days. In addition, each warehouse credit facility
requires a prepayment fee of 0.5% of the outstanding principal balance of the
receivables voluntarily prepaid with respect to the first $50 million prepaid
and 0.25% thereafter, including in connection with the sale of receivables.
Effective in December 1995, 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 March 31, 1996 and June 30, 1995, the Company had
approximately $60.1 million and $51.8 million, respectively, of borrowings
available through the warehouse credit facility arrangements related to
automobile loans and leases. In addition, the Company has a $50 million
warehouse line dedicated to the purchase of HUD Title I Loans, which the
Company does not anticipate utilizing at this time.
13
<PAGE>
In December 1995, the Company successfully entered into a commitment to sell
$175.0 million of sub-prime automobile loans to be resold as asset-backed
securities through Rothschild, Inc. During the nine month period ended
March 31, 1996, the Company sold approximately $53.5 million automobile
receivables into this facility. The facility requires the Company to directly
sell between $8.0 million and $15.0 million per month for a fifteen month
funding period, subsequent to the initial funding date. As of May 3, 1996
the Company has a remaining commitment of $104.3 million.
The Company is currently in negotiations with another lender to secure an
additional warehouse financing in a minimum amount of $100 millionon more
favorable terms which could provide the Company additional flexibility to
purchase greater volumes of receivables or warehouse automobile receivables
for longer periods. In addition to the warehouse financing, the Company is
also negotiating a $5.0 million revolving credit facility. There can be no
assurance that the Company will be able to consummate these transactions.
In June 1994, September 1994, December 1994, March 1995, June 1995, September
1995 December 1995 and March 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 and $130.1 million, respectively, of automobile
receivables and used the net proceeds to pay down borrowings under its
warehouse credit facilities. The Company is currently negotiating with such
ender to obtain a commitment to securitize up to $500 million of its loan
acquisitions until the commitment is filled, subject to customary conditions.
In connection with these contemplated facilities, the Company will grant
warrants to the lender to purchase a certain amount of shares of common stock
of the Company representing approximately 7 1/2% of the outstanding common
stock at an exercise price of $6.50. In each of its last six securitizations,
the Company has utilized a "pre-funding account" which enabled the Company to
fund certain loan acquisitions without drawing on its warehouse credit facility.
Additionally, the Company directly sold approximately $17.9 million
(approximately $5.6 million in the nine months ended March 31, 1996) of
automobile loans as of March 31, 1996 and used part of the proceeds to pay
down borrowings under its warehouse credit 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 of 1933. The Preferred Stock is convertible into Common Stock of the
Company 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% annual dividend payable in Common Stock at the time of
conversion. The Preferred Stock is automatically converted into Common Stock
on the third anniversary of its issuance.
The Company believes that cash flows from operations, available lines of credit
and its warehouse credit facilities along with the proceeds received from its
Preferred Stock are adequate to support its current and near-term funding and
operations needs. However, the Company's ability to grow in the long term is
dependent upon its securing substantial additional resources, which the Company
is continuing to seek.
Release of Escrowed Shares
Immediately prior to the consummation of the Company's initial public offering,
1,892,763 of common shares (approximately 12.8% of the Common Stock outstanding
after completion of such offering, including the exercise of the Underwriters'
over-allotment option for 316,250 shares) were placed in escrow. During the
quarter ended March 31, 1996, no shares were released from escrow and as of
March 31, 1996, 1,078,308 shares remain in escrow.
Seasonality
The Company's operations are affected to some extent by seasonal fluctuations.
Loan purchases tend to increase in March through June (inclusive) and
September and October, while loan purchases are lowest in December and January.
Delinquencies also tend to be higher during certain holiday periods,
particularly at calendar year end.
14
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings -
On April 28, 1996, Star Holdings, Inc. d/b/a The Sloane Organization filed a
complaint against the Company in the United States District Court for the
Southern District of New York alleging that it 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 through Greenwich Capital
Markets, Inc. in March 1996. On theories of breach of contact, quantum meruit,
account stated and fraud, the complaint seeks damages of $4.6 million plus
interest and punitive damages of at least $460 thousand, together with costs,
attorney's 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.
On May 2, 1996, a purported class action lawsuit on behalf of Josephine
Thornton and other individuals was filed in the New York Supreme Court for New
York County against Bennett Finance Inc. and various other persons and entities
alleged to have been affiliated with or employed by Bennett Funding and Bennett
Management. Other entities, including the Company, were named as defendants
because they were allegedly alter egos and agents for Patrick Bennett, Michael
Bennett, their parents and certain other named individual defendants. It is
further alleged that, as such alter egos and agents, the corporate defendants,
including the Company, engaged in common law fraud, negligence misrepresenta-
tion, deceptive acts or practices, sale of unregistered securities and breaches
of fiduciary duty in connection with the financing activities of Bennett Funding
and Bennett Management. Plaintiffs in this action seek an accounting,
unspecified compensatory and punitive damages, injunctive relief, costs,
attorneys' fees and such other relief as the court deems appropriate. The
Company believes that the allegations as set forth in the complaint are totally
without merit and intends to defend the matter vigorously.
Item 2. Changes in Securities
(b) 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 of 1933. The Preferred Stock is convertible into Common Stock of the
Company 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% annual dividend payable in Common Stock at the time of
conversion. The Preferred Stock is automatically converted into Common Stock
on the third anniversary of its issuance of the Preferred Stock. The Company
also issued warrants to the placement agent to purchase 114,553 shares of
Common Stock of the Company at a price of $6.425 per share, which expire in
five years from their issuance date.
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
15
<PAGE>
Item 6. (a) Exhibits -
Exhibit No. Description Page No.
- ----------- ----------- --------
10.6.2 Form of Amendment to Employment Agreement with
Angelo R. Appierto........................
10.7.2 Form of Amendment to Employment Agreement with
Gary D. Peiffer...........................
10.8.2 Form of Amendment to Employment Agreement with
Joseph F. Battiato........................
10.81 Purchase Agreement dated as of 2/29/96 between
Aegis Auto Finance, Inc. as Seller and First
Bank of Eunice as Purchaser................
10.82 Purchase Agreement dated as of 3/21/96 between
Aegis Auto Finance, Inc. as Seller and United
Bank and Trust Company as Purchaser.........
10.83 Purchase Agreement dated as of 3/1/96 by and
between Aegis Auto Finance, Inc. as Seller and
Aegis Auto Funding Corp., as Purchaser.......
10.84 Purchase Agreement dated as of 3/22/96 by and
between Aegis Auto Funding Corp. as Seller and
Greenwich Capital Markets, Inc., as Purchaser...
10.85 Loan and Security Agreement dated as of 3/22/96
between Aegis Auto Finance, Inc. as Borrower and
III Finance Ltd., as Lender.....................
10.85.1 Form of Promissory Note relating to Exhibit 10.85 .
10.86 Exhibit 10.75 Form of Cash Flow Valuation Report,
relating to Exhibit 10.48 relating to Exhibit 10.30.2,
relating to Exhibit 10.29.2, relating to Exhibit 10.21.3,
relating to Exhibit 10.21(1)......................
10.86.1 Exhibit 10.75.1 Pooling and Servicing Agreement, relating
to Exhibit 10.48.1, relating to Exhibit 10.30.3,
relating to Exhibit 10.29.4, relating to Exhibit
10.21.4, relating to Exhibit 10.21(1)................
10.86.2 Exhibit 10.75.2 List of Closing Documents, relating
to Exhibit 10.48.2, relating to Exhibit 10.30.4, relating
to Exhibit 10.29.5, relating to Exhibit 10.21.5, relating
to Exhibit 10.21(1)...................................
10.86.3 Exhibit 10.75.3 Form of RDI Policy, relating to
Exhibit 10.48.3, relating to Exhibit 10.30.5, relating
to Exhibit 10.29.6, relating to Exhibit 10.3.4, relating
to Exhibit 10.3(1)....................................
10.86.4 Exhibit 10.75.4 Form of VSI Policy, relating to Exhibit
10.48.4, relating to Exhibit 10.30.6, relating to
Exhibit 10.29.7, relating to Exhibit 10.3.6, relating
to Exhibit 10.3(1).....................................
10.87 Servicing Agreement dated as of 3/1/96 by and between Aegis
Auto Finance, Inc. as Servicer and Norwest Bank
Minnesota, National Association in its capacity as
Backup Servicer and Norwest Bank Minnesota, National
Association in its capacity as Trustee..................
10.88 Master Servicing Agreement dated as of 4/6/96 by
and between American Lenders Facilities, Inc. as Servicer
and Aegis Consumer Finance, Inc. as Company................
10.89 Subcontracting Agreement dated as of 4/6/96 by and between
American Lenders Facilities, Inc. as Servicer and Aegis
Consumer Finance, Inc. as Subcontractor..................
10.90 Form of Greenwich Capital Markets, Inc. Warrant
("Greenwich Warrant") to purchase Common Stock of The
Aegis Consumer Funding Group, Inc.......................
10.90.1 Form of Escrow letter concerning Greenwich Warrant,
relating to Exhibit 10.90..............................
10.90.2 Form of Acknowledgement letter concerning the adequacy
of the Greenwich Warrant, relating to Exhibit 10.90....
11.0 Statement re computation of per share earnings...........
27 Financial Data Schedule..................................
(1) Previously filed.
(b) Reports on Form 8-K - a report on Form 8-K was filed on March 5, 1996
which reported, pursuant to Item 5, a description of certain transactions
which may be deemed to constitute a change in control.
16
<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: May 13, 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.
17
April 22, 1996
Mr. Angelo R. Appierto
23 Ashley Court
Jamesburg, NJ 08831
Dear Angelo:
The purpose of this letter is to set forth certain terms and
conditions which will constitute an amendment to your executive
employment agreement dated as of March 1, 1994, as amended
July 1, 1995 and October 13, 1995 (collectively the "Employment
Agreement"). Capitalized term, not otherwise defined herein,
shall have the meaning ascribed to them in the Employment Agreement.
The parties do hereby acknowledge that Whitehall Financial
Group, Inc. together with certain other affiliated and
non-affiliated parties, filed a Form 13D with the Securities and Exchange
Commission on or about February 5, 1996 (such filing together
with amendments subsequently filed thereto and another 13D filed
by PCG Management, Inc. and Gary Winnick in connection
therewith referred to as the "Bennett Transfer Filings").
Without admitting or denying that the Bennett Transfer Filings or the
transactions reflected therein (collectively the "Transactions")
constitute a "Change in Control" as contemplated by your
Employment Agreement; the parties hereto agree that a Change in
Control shall not be deemed to have occurred with respect to the
Bennett Transfer Filings or the Transactions and no payment
shall be deemed owed to the Executive by the Company as a result
thereof unless and until:
i. The Executive shall voluntarily terminate his
employment prior to June 30, 1996 or
ii The Company shall terminate the Executive's employment
without cause on or before June 30, 1997.
In either of the two events described above, the Company shall
pay to the Executive the payment (herein the "Change in Control
Payment") to which he would have been entitled had the Transactions
been deemed to constitute a Change in Control under the terms of the
Employment Agreement.
In all other respects, the Employment Agreement shall remain
in full force and effect unmodified, except in accordance with
the provisions hereof.
If this letter correctly sets forth the understanding of the
Company and the Executive, please indicate your acceptance of the
above stated terms and conditions by executing a copy of this
letter and returning it to the Company.
Very truly yours,
THE AEGIS CONSUMER FUNDING GROUP, INC.
By:________________________________
Gary D. Peiffer
Vice Chairman
By:__________________________________
Angelo R. Appierto
Executive
April 22, 1996
Mr. Gary D. Peiffer
319 Ardmore Road
Hohokus, NJ 07423
Dear Gary:
The purpose of this letter is to set forth certain
terms and conditions which will constitute an amendment
to your executive employment agreement dated as of March
1, 1994, as amended July 1, 1995 and October 13, 1995
(collectively the "Employment Agreement"). Capitalized
term, not otherwise defined herein, shall have the
meaning ascribed to them in the Employment Agreement.
The parties do hereby acknowledge that Whitehall Financial
Group, Inc. together with certain other affiliated and
non-affiliated parties, filed a Form 13D with the
Securities and Exchange Commission on or about February
5, 1996(such filing together with amendments subsequently
filed thereto and another 13D filed by PCG Management,
Inc. and Gary Winnick in connection therewith referred
to as the "Bennett Transfer Filings"). Without
admitting or denying that the Bennett Transfer Filings or
the transactions reflected therein (collectively
the"Transactions") constitute a "Change in Control"as
contemplated by your Employment Agreement; the parties
here to agree that a Change in Control shall not be deemed
to have occurred with respect to the Bennett Transfer
Filings or the Transactions and no payment shall be
deemed owed to the Executive by the Company as a result
thereof unless and until:
i. The Executive shall voluntarily terminate his
employment prior to June 30, 1996 or
ii. The Company shall terminate the Executive's employment
without cause on or before June 30, 1997.
In either of the two events described above,
the Company shall pay to the Executive the payment(herein
the "Change in Control Payment") to which he would have
been entitled had the Transactions been deemed to
constitute a Change in Control under the terms of the
Employment Agreement. In all other respects,
the Employment Agreement shall remain in full force and
effect unmodified, except in accordance with the
provisions hereof. If this letter correctly sets
forth the understanding of the Company and the Executive,
please indicate your acceptance of the above stated terms
and conditions by executing a copy of this letter and
returning it to the Company.
Very truly yours,
THE AEGIS CONSUMER FUNDING GROUP, INC.
By:________________________________
Angelo R. Appierto
Chairman
By:_________________________________
Gary D. Peiffer Executive
April 22, 1996
Mr. Joseph F. Battiato
125 Johanna Lane
Staten Island, NY 10309
Dear Joe:
The purpose of this letter is to set forth certain
termsand conditions which will constitute an amendment to
your executive employment agreement dated as of March 1,
1994,as amended July 1, 1995 and October 13, 1995
(collectively the "Employment Agreement"). Capitalized
term, not otherwise defined herein, shall have the
meaning ascribed to them in the Employment Agreement.
The parties do hereby acknowledge that Whitehall
Financial Group, Inc. together with certain other
affiliated and non-affiliated parties, filed a Form 13D
with the Securities and Exchange Commission on or about
February 5, 1996 (such filing together with amendments
subsequently filed thereto and another 13D filed by PCG
Management, Inc. and Gary Winnick in connection
therewith referred to as the "Bennett Transfer Filings").
Without admitting or denying that the Bennett Transfer
Filings or the transactions reflected therein
(collectively the"Transactions") constitute a "Change in
Control"as contemplated by your Employment Agreement; the
parties hereto agree that a Change in Control shall not
be deemed to have occurred with respect to the Bennett
Transfer Filings or the Transactions and no payment
shall be deemed owed to the Executive by the Company as
a result thereof unless and until:
i. The Executive shall voluntarily terminate his
employment prior to June 30, 1996 or
ii The Company shall terminate the Executive's
employment without cause on or before June 30, 1997. In
either of the two events described above, the Company
shall pay to the Executive the payment (herein the
"Change in Control Payment") to which he would have been
entitled had the Transactions been deemed to constitute
a Change in Control under the terms of the Employment
Agreement. The Company shall and does hereby agree to
advance to the Executive the sum of $125,000
(the"Advance"). The Loan shall be on a limited recourse
basis to the Executive and shall provide that repayment
of the loan shall be made solely as an offset and
deduction by the Company (i) from the proceeds of any
bonus due to the Executive under his Employment Agreement
with respect to the Company's fiscal year ending June 30,
1997; or (ii) if a Change in Control Payment becomes due
in accordance with the provisions hereof, from the
proceeds due from such Change in Control Payment.
However, anything herein above to the contrary
notwithstanding, in the event that the employment of the
Executive is terminated prior to the date the bonus with
respect to the Company's fiscal year ending June 30, 1997
is payable by the Company for Cause or by the Executive
without Good Reason, the Advance shall thereafter become
a full recourse loan and the Executive shall have an
unconditional obligation to pay in full, the amount of
the Advance together with interest at the rate of 7% per
annum from the date the Advance was made on or before the
earlier to occur of (i) the date a Change in Control
Payment becomes due, if any, or (ii) September 1, 1997.
In all other respects, the Employment Agreement shall
remain in full force and effect unmodified, except in
accordance with the provisions hereof. If this letter
correctly sets forth the understanding of the Company and
the Executive, please indicate your acceptance of the
above stated terms and conditions by executing a copy of
this letter and returning it to the Company.
Very truly yours,
THE AEGIS CONSUMER FUNDING GROUP, INC.
By:________________________________
Angelo R. Appierto
Chairman
By:__________________________________
Joseph F. Battiato
Executive
PURCHASE AGREEMENT
This PURCHASE AGREEMENT is made as of this 29th day
of February, 1996, by and between Aegis Auto Finance,
Inc. (the "Seller"), a Delaware corporation, and First
Bank of Eunice, having its principal place of business in
Eunice, Louisiana (the "Purchaser").
WHEREAS, Seller has underwritten and purchased on an
indirect basis, in the ordinary course of business
certain motor vehicle retail installment sales contracts
secured by new and used automobiles and light duty ("one
ton capacity") trucks; and
WHEREAS, Purchaser wishes to purchase from Seller,
certain motor vehicle retail installment contracts
("Receivables" as herein defined) which Seller has
underwritten and purchased on an indirect basis in the
ordinary course of its business; and
WHEREAS, Seller and the Purchaser wish to set forth
the terms pursuant to which the Receivables are to be
sold by the Seller to the Purchaser.
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
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):
"Agreement" shall mean this Purchase Agreement and all
amendments hereof and supplements hereto.
"Assignment" shall mean the document of assignment
attached to this Agreement as Exhibit A.
"Closing Date" shall mean the date on which the
Receivables are purchased.
"Collections" shall mean all amounts collected by the
Servicer on or with respect to the Receivables.
"Cut-Off Date" shall mean the 1st day of the month of
February, 1996
"Dealer" shall mean a authorized new or used car dealer
who has executed a Dealership Agreement with Aegis Auto
Finance, Inc.
"Distribution Date" shall mean, for the Collection
Period, the 20th day of the following month or, if such
twentieth day is not a business day, the next succeeding
business day.
"Obligor" shall have the meaning specified in the
Servicing Agreement.
"Person" shall have the meaning specified in the
Servicing Agreement.
"Purchaser" shall mean United Bank and Trust Company, its
successors and assigns.
"Receivable" shall mean any retail installment sale
contracts identified on Exhibit B hereto.
"Receivable Files" shall mean as to each individual
Receivable, the note, retail installment sales contract
or other evidence of the Obligor's obligation to repay
the Receivable, the document evidencing the security
interest in the related financed vehicle, the original
Title or UCC financing statement indicating that the
security interest granted by the Obligor has been
perfected under applicable law, original instruments
modifying the terms and conditions of the Receivables,
original endorsements or assignments of such note or
retail installment sales contract and security document,
if any, credit report, notes of oral verification of
employment and income, manufacturer's statement of
origin, as to new financed vehicles, factory invoices and
work orders setting forth the
financed vehicle and equipment added thereto, as
to used financed vehicles, the bill of sale and guaranty
of title, and any evidence or notes of
verification thereof, insurance policies, tax receipts,
ledger sheets, payment records, insurance claim files and
correspondence, current and historical computerized data
files, all documentation with respect to any
modifications, releases or accommodations or co-signing
or guaranties, and such other additional documents
relating to the Receivables which are commonly maintained
in loan files of private institutional
automobile loan investors or servicers. "Repurchase
Amount" shall mean for each repurchased Receivable, that
Receivable's outstanding principal balance plus any
accrued and unpaid interest.
"Repurchase Event" shall have the meaning specified in
Section 7.02 hereof.
"Risk Default Insurer" shall mean Agricultural Excess and
Surplus Insurance Company, its successors and assigns.
"Risk Default Insurance Policy" or "Risk Default Policy"
means the insurance policies listed on
Exhibits E, F, and G issued by the Risk Default Insurer
to the Seller. "Schedule of Receivables" shall mean the
list of Receivables annexed hereto as Exhibit B.
"Seller" shall mean Aegis Auto Finance, Inc., a
Delaware corporation, its successors and assigns.
"Servicer" shall mean American Lenders Facilities,
Inc. its successors and assigns.
"Servicing Agreement" shall mean the Servicing Agreement
by and among the Servicer, as servicer; and the Seller;
dated as of April 6, 1995.
"Servicing Fee" shall have the meaning specified
in the Servicing Agreement.
"UCC" shall mean the Uniform Commercial Code, as
in effect from time to time in the relevant
jurisdictions.
ARTICLE II
PURCHASE AND SALE OF
RECEIVABLES
2.01. Purchase and Sale of Receivables. On the
Closing 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 and simultaneously with the transactions
pursuant to the Servicing Agreement, the Seller shall
sell, transfer, assign and otherwise convey to the
Purchaser, without recourse, all of Seller's interest in:
(i) all rights, title and interests of the
Seller in and to the Receivables, and all monies due
thereon, on and after the Cutoff Date, excepting for
monies due the Seller relating to interest accrued
between each Receivable's last paid to date and the
Cutoff Date; and
(ii) the security interest of the Seller in the
Financed vehicles granted by the Obligors pursuant to the
receivables; and
(iii) the interest of the Seller in any
proceeds from claims on any physical damage, credit life,
credit loss or disability insurance policies relating to
the Financed vehicles or the Obligors; and
(iv) the proceeds of any and all of the
foregoing. (All of the property identified in this
subsection (A) shall constitute the "Trust Property").
(B) Receivables Purchase Price. In consideration for
the Receivables and Trust Property described in section
2.01 (a), the Purchaser shall, on the Closing Date, pay
to the Seller the Receivables Purchase Price. The
Receivables Purchase Price shall be equal to the
sum of 112% of each Receivable's outstanding balance as
of the Cutoff Date plus accrued interest at 11.85% from
and including the Cut-Off Date to the Closing Date. The
Receivables Purchase Price shall be paid to the Seller in
cash by federal wire transfer (same day) funds or, at the
discretion of the Purchaser, by a thirty (30) day
promissory note. If the Purchaser pays Seller by
promissory note, Purchaser, notwithstanding anything else
in this Agreement to the contrary, shall acquire the
Receivables subject to a lien which shall be released
upon full payment of the promissory note by the
Purchaser.
2.02. The Closing. The sale and purchase of the
Receivables shall take place on the Closing Date,
simultaneously with the transfer to the Purchaser of the
Receivables by Servicer.
2.03. Reserve Account.
(A) On the Closing Date, the Seller shall establish
a Reserve Account in the name of the Purchaser (the
"Account") of 3% of the aggregate
outstanding balance of the Receivables against which
Purchaser shall be entitled to draw only to recover any
repossession and storage costs and expenses such as out
of pocket costs associated with repossession of
automobiles which are not reimbursable under any claims
it may file under policy numbers PAL001626, 001613 and
001632 issued by Agricultural Excess and Surplus
Insurance Co., the insurer of the Receivables. The
Account shall be the only recourse Purchaser shall have
to Seller under Section 2.01(A) hereof After such
time as each and every Receivable shall have been paid
off in full, Seller shall be entitled to receive the
entire balance, if any, including all interest earned
thereon and remaining, which may remain in the Account.
(B) Upon full payment of the Receivables Purchase
Price by the Purchaser to the Seller, Seller shall
establish the Account by delivering good funds to the
Purchaser, who shall deposit them into an interest
bearing bank account on behalf of Seller and who shall
administer the Account in accordance with Section
2.04(A) of this Agreement.
2.04.Servicing of the Receivables
(A) The Purchaser agrees that the Receivables will
continue to be serviced by American Lenders Facilities,
Inc., in accordance with those portions of the Servicing
Agreement (a copy of which is attached hereto and marked
Exhibit C) applicable to the Receivables. The Purchaser
acknowledges and accepts that the Servicer will act as
Custodian for the Receivables in accordance with the
provisions of the Servicing Agreement relating thereto.
The Purchaser agrees to pay the Servicer a monthly
Servicing Fee calculated in accordance with Schedule A,
Section IV (the "Fee Schedule") of the Servicing
Agreement. The Servicing Fee is as follows: for all
receivables with a remaining obligor loan balance greater
than zero ($0.00) dollars as of the first day of the
related remittance period, the Servicer receives a
monthly servicing fee equal to one-twelfth of 1.85%
(annualized) of the outstanding remaining obligor loan
balance or $10.00, whichever is
greater.
(B) The Servicer will establish a segregated
Collection Account in the name of the Purchaser (the
"Collection Account") into which it will wire all monies
collected relating to the Receivables. On or prior to
the 20th day of each month (or the next succeeding
business day if the 20th is not a business day) the
Servicer will provide the Purchaser with a Servicing
Report (which shall be substantially in the form of
Exhibit D) and shall include a detailed explanation of
the monthly Servicing Fee (the "Servicing Report"). The
Servicer shall be permitted to withdraw the Servicing Fee
from the Collection Account or retain monies that would
otherwise be directed to
the Purchaser's collection account until such Servicing
Fee has been collected in full. If no monies remain in
the Collection Account and the Servicer determines that
the cash flow from the Receivables is insufficient to
fully pay the Servicing Fee, the Servicer shall be
entitled to withdraw the Servicing Fee directly from the
Reserve Account. Such action shall not be performed
without prior notification to the Seller and final
notification to Purchaser to directly pay such fee.
Should such action be taken, the Servicer will then use
all subsequent monies that would otherwise be directed to
the Collection Account to reimburse the Reserve Account
for such a withdrawal.
(C) The Seller retains the rights to receive ongoing
electronic transmissions from the Servicer
relating to all Servicing activities regarding the
Receivables. The Seller shall also be entitled to
receive a copy of the monthly Servicer report, which
report will be substantially consistent with the sample
Servicing Report appearing as Exhibit D of this document.
ARTICLE III
REPRESENTATIONS AND
WARRANTIES
3.01. Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Seller as of the
date hereof and as of the Closing Date:
(A) Organization. The Purchaser is duly organized
and validly existing as a corporation in good standing
under the laws of the State of Louisiana, and has all
necessary and proper governmental and private
authorizations to own and operate its property and
conduct the business in which it is now engaged. The
Purchaser is duly qualified to do business and has
obtained all necessary licenses and approvals in each
jurisdiction in which failure to so qualify or obtain
such licenses and approvals would have a material and
adverse effect on the ability of the Purchaser to perform
its obligations hereunder.
(B) Due Authorization. The execution, delivery and
performance by the Purchaser of this Agreement have been
duly authorized by all necessary corporate action, and
this Agreement is the valid, binding and enforceable
obligation against the Purchaser in accordance to its
terms.
(C) Consents. Purchaser has obtained all necessary
governmental and private authorizations, and made all
governmental filings required under applicable law for
the execution, delivery and performance by Purchaser of
this Agreement and each exhibit referred to in this
Agreement. Purchaser has obtained or has caused to be
waived all consents which are required to be obtained in
connection with the execution, delivery or performance of
this Agreement under any instruments to which Purchaser
is a party or by which it or any of its property is
bound.
(D) No Litigation. No litigation or administrative
proceeding of or before any court, tribunal or
governmental body is presently pending, or to the
knowledge of the Purchaser threatened, against the
Purchaser or its properties or with respect to this
Agreement, which, if adversely determined would, in the
opinion of the Purchaser, have a material adverse effect
on the transactions contemplated by this
Agreement.
3.02. Representations and Warranties of the Seller.
(A) The Seller hereby represents and warrants
to the Purchaser as of the date hereof and as of the
Closing Date the following:
(i) Power and Authority. The Seller:
(a) has full power and authority to execute and
deliver this Agreement and to carry out its terms; and
(b) has full power and authority to sell and
assign the property sold and assigned to the Purchaser;
and
(c) has duly authorized such sale and assignment
to the Purchaser by all necessary corporate action, and
the execution, delivery, and performance of
this Agreement has been duly authorized by the Seller by
all necessary corporate action and is
enforceable and valid in accordance with its terms.
(ii) No Violation. The consummation of the
transactions contemplated by this Agreement and the
fulfillment of the terms do not:
(a) conflict with, result in the breach of any
of the terms and provisions of, nor constitute (with or
without notice or lapse of time) a default under, the
articles of incorporation or bylaws of the Seller, or any
indenture, agreement or other instrument
(other than this Agreement); and
(b) violate any law or, to the best of the
Seller's knowledge, any order, rule or regulation
applicable to the Seller, or any court or of any federal
or state regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over the
Seller or its properties.
(iii) No Proceedings. To the Seller'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 Seller or
its properties, asserting the invalidity of this
Agreement or seeking to prevent the consummation of any
of the transactions contemplated by this Agreement or
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.
(iv) No Litigation. No litigation or
administrative proceeding of or before any court,
tribunal or governmental body is presently pending, or to
the knowledge of the Seller threatened, against the
Seller or its properties or with respect to this
Agreement, which,if adversely determined would, in the
opinion of the Seller, have a material adverse effect on
the transactions contemplated by this Agreement.
(B) Seller makes the following representations and
warranties as the Receivable in which the Purchaser
relies in accepting the Receivables. Such representations
and warranties speak as of the execution and delivery of
this Agreement, but shall survive the sale, transfer and
assignment of the Receivables to the Purchaser.
(i) Characteristics of Receivables.
Each Receivable purchased by the Seller:
(a) has been originated in the United
States of America by the Dealer for the retail sale of a
financed vehicle in the ordinary course of such Dealer's
business; has been fully and properly executed by the
parties thereto, and if originated by a Dealer, has been
purchased by the Seller from such Dealer or has been
financed for such Dealer under an existing dealer
agreement with the Seller, or has been purchased from a
licensed originator and properly assigned to the
Seller; and
(b) has created or creates a valid,
subsisting, and enforceable first priority security
interest in favor of the Seller in the financed vehicle,
which security interest shall be assigned by the Seller
to the Purchaser; and
(c) is covered by policy numbers PAL 001626,
001613 and 001632, issued by Agricultural Excess and
Surplus; and
(d) contains customary and enforceable
provisions such that the rights and remedies of the
holder thereof shall be adequate for realization against
the collateral of the benefits of the security; and
(e) is a simple interest installment
contract that 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 the level payment) that fully amortize the amount
financed by maturity and yield interest at the annual
percentage rate.
(ii) Schedule of Receivables. The
information set forth in Exhibit B to this Agreement is
true and correct in all material respects as of the
opening of business on the Cutoff Date, and no selection
procedures believed to be adverse to the Purchasers have
been utilized in selecting the Receivables. All
information regarding the Receivables made available to
the Purchaser and its assigns is true and correct in all
material aspects.
(iii) Form of Receivables. Each of the
Receivables is substantially in the form of Exhibit H
attached hereto.
(iv) Compliance with Law. Each Receivable
and the sale of the Financed vehicle complied at the time
it was originated or made, and at the execution of this
Agreement does comply in all material respects with all
requirements of applicable federal, state and local laws,
and regulations thereunder, including, without
limitation, usury laws, the Fair Credit Reporting Act,
the Federal Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Fair Debt Collections
Practices Act, the Federal Trade Commission Act, the
Magnuson-Moss Warranty Act, the Federal Reserve Board's
Regulations B and Z, and other consumer credit laws and
equal credit opportunity and disclosure laws.
(v) 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.
(vi) No Government Obligor. No receivable
is due from the United States of America or any State or
from any agency, department or instrumentality of the
United States of America of any State.
(vii) Security Interest in financed
vehicle. Immediately prior to the sale, assignment and
transfer thereof, each Receivable was secured by a
validly perfected first 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
security interest in the financed vehicle in favor of the
Seller as secured party.
(viii) 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.
(ix) No Waiver. No provision of a Receivable has been
waived.
(x) No Amendments. No Receivable has been
amended such that the number of the Obligor's scheduled
Payments have been increased.
(xi) No Defenses. No right of rescission,
set off, counterclaim or defense has been asserted or
threatened with respect to any Receivable.
(xii) No Liens. To the best of Seller's
knowledge, no liens or claims have been filed for work,
labor or materials relating to a financed vehicle that
would be liens prior to, or equal or coordinate with, the
security interest in the financed vehicle granted by the
Obligor pursuant to the Receivable.
(xiii) No Default. Except for payment
defaults continuing for a period of not more than thirty
(30) days as of the Cutoff Date, no default, breach,
violation or event permitting acceleration under the
terms of any Receivable has occurred; and no continuing
condition that with no lapse of time would constitute a
default, breach, violation or event permitting
acceleration under the terms of any Receivable has
arisen.
(xiv) Insurance. 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 prior to the Seller's purchase of the Receivable.
(xv) Title. It is the intention of the
Seller that the transfer and assignment herein
contemplated constitute a sale of the Receivables to the
Purchaser and that the beneficial interest in and title
to the Receivables not be part of the Seller's estate in
the event of the filing of a bankruptcy law. No
Receivable has been sold, transferred, assigned or
pledged by the Seller to any Person other than the
Purchaser. Subject to those liens specified in section
2.01(b) of this Agreement, upon the transfer and
assignment herein contemplated, the Seller has good and
marketable title to each Receivable free and clear of all
Liens, encumbrances, security interest and rights
of others and, immediately upon the transfer thereof, the
Purchaser, subject to those liens specified in section
2.01(b) of this Agreement, will have good and marketable
title to each Receivable, free and clear of all Liens,
encumbrances, security interests and rights of others;
and the security interest in the financed
vehicle and related underlying collateral has been
validly perfected under the UCC or other applicable law.
(xvi) 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 to the Seller or under this
Agreement would be unlawful, void or voidable.
(xvii) All Filings Made. All filings
(including, without limitation, UCC filings) necessary in
any jurisdiction to give the Purchaser a first perfected
ownership interest in the Receivables have been made.
(xviii) One Original. There is only
one original executed copy of each Receivable.
(xix) Maturity of Receivables. Each
Receivable has an original maturity of not more
than 60 months; the weighted average remaining term of
Receivables is anticipated at 50.28 months as of the
Cutoff Date.
(xx) Monthly Payments. Each Receivable is a simple
interest installment contract which 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 the level payment) which
fully amortize the amount financed over the original
term. No Receivable will be greater than thirty (30) Days
delinquent as of the Cutoff Date prior to Closing.
(xxi) Remaining Maturity. Each Receivable
has a remaining maturity of 54 months or less as of the
Cut-Off Date, and the latest scheduled maturity of any
Receivable is no later than August 9, 2000.
(xxii) Bankruptcy Proceeding. No
Receivable as of the Cut-Off Date was noted in the
Seller's records as a dischargeable debt under a
bankruptcy proceeding.
(xxiii) Chattel Paper. Each Receivable
constitutes "chattel paper" as defined in the UCC.
(xxiv) Scheduled Payments. Each Receivable
has a next scheduled due date on or prior to March 4,
1996 and no Receivable has a payment that is more than
thirty (30) days overdue as of the Cutoff Date.
(xxv) Outstanding Principal Balance. Each
Receivable has an outstanding balance of at least
$4,828.71.
ARTICLE IV
CONDITIONS
4.01. Conditions to Obligations 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 with the
same effect as if then made, and the Seller shall have
performed all obligations to be performed by it hereunder
on or prior to the Closing Date.
(B) Files Marked. The Seller shall, at its own
expense, on or prior to the Closing Date, indicate in its
files that Receivables created in connection with the
Receivables have been sold to the Purchaser pursuant to
this Agreement and the Seller shall deliver to the
Purchaser the Schedule of Receivables certified by the
President, the Vice President, Secretary or the Treasurer
of the Seller to be true, correct and complete.
(C) Documents to be Delivered by the Seller at the
Closing.
(i) The Assignment. At the Closing, the
Seller will execute and deliver the Assignment. The
Assignment shall be substantially in the form of Exhibit
A hereto.
(ii) Evidence of UCC filing. Upon payment
of the Purchase Price in full by the Purchaser, the
Seller shall record and file, at its own expense, a UCC-
1 financing statement 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, 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. The Seller shall
deliver a file-stamped copy, or other evidence
satisfactory to the Purchaser of such filing, to the
Purchaser on or prior to the Closing Date or promptly
thereafter.
(iii) Evidence of Insurance. Within
forty-five (45) days of the Closing Date, the Seller
shall deliver manifests indicating that each Receivable
is covered by Credit Loss Insurance under Agricultural
Excess and Surplus Insurance Co. policy nos. PAL 001626,
001613 and 001632 and Vendor's Single Interest Physical
Damage Insurance from Guaranty National Insurance
Company, under policy no. ZYG1500103. In addition, Seller
will deliver to the Purchaser executed
endorsements to these insurance policies naming the
Purchaser as additionally insured for the Receivables
indicated on said manifests.
(iv) Other Documents. Such other documents
as the Purchaser may reasonably request.
(D) Other Transactions. The transactions
contemplated by the Servicing Agreement shall be
consummated on the Closing Date.
4.02. Conditions to Obligation of the Seller. The
obligation of the Seller to sell the Receivables to the
Purchaser is subject to the satisfaction of the following
conditions:
(A) Representations and Warranties True. The
warranties of the Purchaser hereunder shall be true and
correct on the Closing Date with the same effect as if
then made, and the Purchaser shall have performed all
obligations to be performed by it hereunder on or prior
to the Closing Date.
(B) Receivables Purchase Price. At the Closing
Date, the Purchaser will deliver to the Seller the
Receivables Purchase Price, as provided in Section 2.01
(b).
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
Servicing Agreement, the Servicing Agreement shall
govern:
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 Purchase 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).
5.02. Other Liens or Interests. Except for the
conveyances hereunder and pursuant to the Servicing
Agreement, the Seller will not sell, pledge, assign or
transfer 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
terminated upon satisfaction of all Receivables sold to
the Purchaser hereunder.
5.03. Principal Executive Office. The Seller has
maintained, and from the date of this Agreement, shall
maintain, its principal executive office in the state of
New Jersey.
5.04. 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
Purchaser's right, title and interest in and to the
Receivables.
5.05. Location of Receivable Files. The Receivable
Files, are to be kept at the location listed in Schedule
A hereto in accordance with Servicing Agreement.
ARTICLE VI
INDEMNIFICATION
6.01. Indemnification. The Seller shall indemnify
the Purchaser 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.
These indemnity obligations shall be in addition to any
obligation that the Seller may otherwise have and shall
survive the sale, transfer and assignment of the
Receivables to Purchaser.
ARTICLE VII
MISCELLANEOUS PROVISIONS
7.01 Obligations of Seller. The obligations of the
Seller under this Agreement shall not be affected by
reason of any invalidity, illegality or irregularity or
any Receivable.
7.02. Repurchase Events. The Seller hereby covenants
and agrees with the Purchaser for the benefit of the
Purchaser that the occurrence of a breach of any of the
Seller's representations and warranties contained in
Section 3.02 (b) hereof with respect to a receivable
shall Constitute an event obligating the Seller to
repurchase such Receivable hereunder ("Repurchase
Events"), at the Repurchase Amount from the Purchaser.
The repurchase obligation of the Seller shall constitute
the sole remedy to the Purchaser against the Seller with
respect to any Repurchase Event.
7.03. Purchaser's Assignment of Repurchased
Receivables. With respect to all Receivables repurchased
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.
7.04. Amendment. This Agreement may be amended by
mutual agreement from time to time by a written amendment
duly executed and delivered by the Seller and the
Purchaser.
7.05. Waivers. No failure or delay on the part of
the Purchaser in exercising any power, right or remedy
under this Agreement or the assignment 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.
7.06. Notices. All communication and notices
pursuant hereto 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 opening portion 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 facsimile.
7.07. Representations. The respective agreements,
representations, warranties and other statements by the
Seller and the Purchaser set forth in or made pursuant to
this Agreement shall remain in full force and effect and
will survive the Closing Date under Section 2.02 hereof
7.08. Confidential Information. The Purchaser agrees
that it will neither use nor disclose to any person the
names and addresses of the Obligors, except in connection
with the enforcement of the Purchaser's rights hereunder,
under the Receivable, under the Servicing Agreement or as
required by law.
7.09. 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.
7.10. Governing Law. This Agreement and the
Assignment shall be governed by and construed in
accordance with the internal laws of the State of New
Jersey.
7.11. Counterparts. This Agreement may be executed
in two or more counterparts and by different parties on
separate counterparts, each of which shall be original,
but all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties hereby have caused
this Agreement to be executed by their respective
officers there unto duly authorized as of the date and
year first above written.
as Seller: Aegis Auto Finance, Inc.
525 Washington Blvd.
Jersey City, NJ 07310
By:
Name: Dina L. Penepent,
Title: Vice President
as Purchaser: First Bank of Eunice
300 Park Avenue
Eunice, LA 70535-4630
By:
Name: John Pousson,
Title: President
Exhibit A ASSIGNMENT
For value received, in accordance with the Purchase
Agreement dated of March 21, 1996, by and between the
Seller and United Bank and Trust Company (the
"Purchaser), the undersigned does hereby sell, assign,
transfer and otherwise convey unto the Purchaser, without
recourse, all right, title and interest of the
undersigned in and to (i) the Receivables identified on
the Receivables Schedule attached as Exhibit B to the
Purchase Agreement and all moneys due thereon, on and
after the Cut-Off Date; (ii) the security interest of the
Seller in the Financed vehicles granted by the Obligors
pursuant to the Receivables; (iii) the interest of the
Seller in any proceeds from claims on any physical
damage, credit life, credit loss or disability insurance
policies relating to the financed vehicles or Obligors;
and (iv) 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 (as defined in the Servicing Agreement),
Servicer Files (as defined in the Servicing Agreement),
any insurance policies or any agreement or instrument
relating to any of them.
This Agreement 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 March 21, 1996.
By:
Name: Joseph F, Battiato
Title: President
PURCHASE AGREEMENT
This PURCHASE AGREEMENT is made as of this 21st day
of March, 1996, by and between Aegis Auto Finance, Inc.
(the "Seller"), a Delaware corporation, and United Bank,
having its principal place of business in New Orleans,
Louisiana (the"Purchaser").
WHEREAS, Seller has underwritten and purchased on an
indirect basis, in the ordinary course of business
certain motor vehicle retail installment sales contracts
secured by new and used automobiles and light duty ("one
ton capacity") trucks; and
WHEREAS, Purchaser wishes to purchase from Seller,
certain motor vehicle retail installment contracts
("Receivables" as herein defined) which Seller has
underwritten and purchased on an indirect basis in the
ordinary course of its business; and
WHEREAS, Seller and the Purchaser wish to set forth
the terms pursuant to which the Receivables are to be
sold by the Seller to the Purchaser.
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
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):
"Agreement" shall mean this Purchase Agreement and all
amendments hereof and supplements hereto. "Assignment"
shall mean the document of assignment attached to this
Agreement as Exhibit A. "Closing Date" shall mean the
date on which the Receivables are purchased.
"Collections" shall mean all amounts collected by the
Servicer on or with respect to the Receivables.
"Cut-Off Date" shall mean the 1st day of the month of
March, 1996
"Dealer" shall mean a authorized new or used car dealer
who has executed a Dealership Agreement with Aegis Auto
Finance, Inc.
"Distribution Date" shall mean, for the Collection
Period, the 20th day of the following month or, if such
twentieth day is not a business day, the next succeeding
business day.
"Obligor" shall have the meaning specified in the
Servicing Agreement.
"Person" shall have the meaning specified in the
Servicing Agreement.
"Purchaser" shall mean United Bank and Trust Company, its
successors and assigns.
"Receivable" shall mean any retail installment sale
contracts identified on Exhibit B hereto.
"Receivable Files" shall mean as to each individual
Receivable, the note, retail installment sales contract
or other evidence of the Obligor's obligation to repay
the Receivable, the document evidencing the security
interest in the related financed vehicle, the original
Title or UCC financing statement indicating that the
security interest granted by the Obligor has been
perfected under applicable law, original instruments
modifying the terms and conditions of the Receivables,
original endorsements or assignments of such note or
retail installment sales contract and security document,
if any, credit report, notes of oral verification of
employment and income, manufacturer's statement of
origin, as to new financed vehicles, factory
invoices and work orders setting forth the financed
vehicle and equipment added thereto, as to used financed
vehicles, the bill of sale and guaranty of title, and any
evidence or notes of verification thereof, insurance
policies, tax receipts, ledger sheets, payment records,
insurance claim files and correspondence, current and
historical computerized data files, all documentation
with respect to any modifications, releases or
accommodations or co-signing or guaranties, and such
other additional documents relating to the Receivables
which are commonly maintained in loan files of private
institutional automobile loan investors or servicers.
"Repurchase Amount" shall mean for each repurchased
Receivable, that Receivable's outstanding principal
balance plus any accrued and unpaid interest.
"Repurchase Event" shall have the meaning specified in
Section 7.02 hereof.
"Risk Default Insurer" shall mean Agricultural Excess and
Surplus Insurance Company, its successors and assigns.
"Risk Default Insurance Policy" or "Risk Default Policy"
means the insurance policies listed on Exhibits E, F, and
G issued by the Risk Default Insurer to the Seller.
"Schedule of Receivables" shall mean the list of
Receivables annexed hereto as Exhibit B.
"Seller" shall mean Aegis Auto Finance, Inc., a Delaware
corporation, its successors and assigns.
"Servicer" shall mean American Lenders Facilities, Inc.
its successors and assigns.
"Servicing Agreement" shall mean the Servicing Agreement
by and among the Servicer, as servicer; and the Seller;
dated as of April 6, 1995.
"Servicing Fee" shall have the meaning specified in the
Servicing Agreement.
"UCC" shall mean the Uniform Commercial Code, as in
effect from time to time in the relevant jurisdictions.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
2.01. Purchase and Sale of Receivables. On the
Closing 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 and simultaneously with the transactions
pursuant to the Servicing Agreement, the Seller shall
sell, transfer, assign and otherwise convey to the
Purchaser, without recourse, all of Seller's interest in:
(i) all rights, title and interests of the
Seller in and to the Receivables, and all monies due
thereon, on and after the Cutoff Date, excepting for
monies due the Seller relating to interest accrued
between each Receivable's last paid to date and the
Cutoff Date; and
(ii) the security interest of the Seller in the
Financed vehicles granted by the Obligors pursuant to the
receivables; and
(iii) the interest of the Seller in any proceeds
from claims on any physical damage, credit life, credit
loss or disability insurance policies relating to the
Financed vehicles or the Obligors; and
(iv) the proceeds of any and all of the
foregoing. (All of the property identified in this
subsection (A) shall constitute the "Trust Property").
(B) Receivables Purchase Price. In consideration for
the Receivables and Trust Property described in section
2.01 (a), the Purchaser shall, on the Closing Date, pay
to the Seller the Receivables Purchase Price. The
Receivables Purchase Price shall be equal to the sum of
112% of each Receivable's outstanding balance as of the
Cutoff Date plus accrued interest at 11.57% from and
including the Cut-Off Date to the Closing Date. The
Receivables Purchase Price shall be paid to the Seller in
cash by federal wire transfer (same day) funds or, at the
discretion of the Purchaser, by a thirty (30) day
promissory note. If the Purchaser pays Seller by
promissory note, Purchaser, notwithstanding anything else
in this Agreement to the contrary, shall acquire the
Receivables subject to a lien which shall be released
upon full payment of the promissory note by the
Purchaser.
2.02. The Closing. The sale and purchase of the
Receivables shall take place on the Closing Date,
simultaneously with the transfer to the Purchaser of the
Receivables by Servicer.
2.03. Reserve Account.
(A) On the Closing Date, the Seller shall establish
a Reserve Account in the name of the Purchaser (the
"Account") of 3% of the aggregate outstanding balance of
the Receivables against which Purchaser shall be entitled
to draw only to recover any repossession and storage
costs and expenses such as out of pocket costs associated
with repossession of automobiles which are not
reimbursable under any claims it may file under policy
numbers PAL001626, 001613 and 001632 issued by
Agricultural Excess and Surplus Insurance Co., the
insurer of the Receivables. The Account shall be the only
recourse Purchaser shall have to Seller under Section
2.01(A) hereof After such time as each and every
Receivable shall have been paid off in full, Seller shall
be entitled to receive the entire balance, if any,
including all interest earned thereon and remaining,
which may remain in the Account.
(B) Upon full payment of the Receivables Purchase
Price by the Purchaser to the Seller, Seller shall
establish the Account by delivering good funds to the
Purchaser, who shall deposit them into an interest
bearing bank account on behalf of Seller and who shall
administer the Account in accordance with Section 2.04(A)
of this Agreement.
2.04. Servicing of the Receivables
(A) The Purchaser agrees that the Receivables will
continue to be serviced by American Lenders Facilities,
Inc., in accordance with those portions of the Servicing
Agreement (a copy of which is attached hereto and marked
Exhibit C) applicable to the Receivables. The Purchaser
acknowledges and accepts that the Servicer will act as
Custodian for the Receivables in accordance with the
provisions of the Servicing Agreement relating thereto.
The Purchaser agrees to pay the Servicer a monthly
Servicing Fee calculated in accordance with Schedule A,
Section IV (the "Fee Schedule") of the Servicing
Agreement. The Servicing Fee is as follows: for all
receivables with a remaining obligor loan balance greater
than zero ($0.00) dollars as of the first day of the
related remittance period, the Servicer receives a
monthly servicing fee equal to one-twelfth of 1.85%
(annualized) of the outstanding remaining obligor loan
balance or $10.00, whichever is greater.
(B) The Servicer will establish a segregated
Collection Account in the name of the Purchaser (the
"Collection Account") into which it will wire all monies
collected relating to the Receivables. On or prior to the
20th day of each month (or the next succeeding business
day if the 20th is not a business day) the Servicer will
provide the Purchaser with a Servicing Report (which
shall be substantially in the form of Exhibit D) and
shall include a detailed explanation of the monthly
Servicing Fee (the "Servicing Report"). The Servicer
shall be permitted to withdraw the Servicing Fee from the
Collection Account or retain monies that would otherwise
be directed to the Purchaser's collection account until
such Servicing Fee has been collected in full. If no
monies remain in the Collection Account and the Servicer
determines that the cash flow from the Receivables is
insufficient to fully pay the Servicing Fee, the Servicer
shall be entitled to withdraw the Servicing Fee directly
from the Reserve Account. Such action shall not be
performed without prior notification to the Seller and
final notification to Purchaser to directly pay such fee.
Should such action be taken, the Servicer will then use
all subsequent monies that would otherwise be directed to
the Collection Account to reimburse the Reserve Account
for such a withdrawal.
(C) The Seller retains the rights to receive ongoing
electronic transmissions from the Servicer relating to
all Servicing activities regarding the Receivables. The
Seller shall also be entitled to receive a copy of the
monthly Servicer report, which report will be
substantially consistent with the sample Servicing Report
appearing as Exhibit D of this document.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01. Warranties of the Purchaser. The Purchaser
hereby represents and warrants to the Seller as of the
date hereof and as of the Closing Date:
(A) Organization. The Purchaser is duly organized
and validly existing as a corporation in good standing
under the laws of the State of Louisiana, and has all
necessary and proper governmental and private
authorizations to own and operate its property and
conduct the business in which it is now engaged. The
Purchaser is duly qualified to do business and has
obtained all necessary licenses and approvals in each
jurisdiction in which failure to so qualify or obtain
such licenses and approvals would have a material and
adverse effect on the ability of the Purchaser to perform
its obligations hereunder.
(B) Due Authorization. The execution, delivery and
performance by the Purchaser of this Agreement have been
duly authorized by all necessary corporate action, and
this Agreement is the valid, binding and enforceable
obligation against the Purchaser in accordance to its
terms.
(C) Consents. Purchaser has obtained all necessary
governmental and private authorizations, and made all
governmental filings required under applicable law for
the execution, delivery and performance by Purchaser of
this Agreement and each exhibit referred to in this
Agreement. Purchaser has obtained or has caused to be
waived all consents which are required to be obtained in
connection with the execution, delivery or performance of
this Agreement under any instruments to which Purchaser
is a party or by which it or any of its property is
bound.
(D) No Litigation. No litigation or administrative
proceeding of or before any court, tribunal or
governmental body is presently pending, or to the
knowledge of the Purchaser threatened, against the
Purchaser or its properties or with respect to this
Agreement, which, if adversely determined would, in the
opinion of the Purchaser, have a material adverse effect
on the transactions contemplated by this Agreement.
3.02. Representations and Warranties of the Seller.
(A) The Seller hereby represents and warrants to the
Purchaser as of the date hereof and as of the Closing
Date the following:
(i) Power and Authority. The Seller:
(a) has full power and authority to execute and
deliver this Agreement and to carry out its terms; and
(b) has full power and authority to sell and
assign the property sold and assigned to the Purchaser;
and
(c) has duly authorized such sale and assignment
to the Purchaser by all necessary corporate action, and
the execution, delivery, and performance of this
Agreement has been duly authorized by the Seller by all
necessary corporate action and is enforceable and valid
in accordance with its terms.
(ii) No Violation. The consummation of the
transactions contemplated by this Agreement and the
fulfillment of the terms do not:
(a) conflict with, result in the breach of any
of the terms and provision of, nor constitute (with or
without notice or lapse of time) a default under, the
articles of incorporation or bylaws of the Seller, or any
indenture, agreement or other instrument (other than this
Agreement); and
(b) violate any law or, to the best of the
Seller's knowledge, any order, rule or regulation
applicable to the Seller, or any court or of any federal
or state regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over the
Seller or its properties.
(iii) No Proceedings. To the Seller'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 Seller or
its properties, asserting the invalidity of this
Agreement or seeking to prevent the consummation of any
of the transactions contemplated by this Agreement or
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.
(iv) No Litigation. No litigation or
administrative proceeding of or before any court,
tribunal or governmental body is presently pending, or to
the knowledge of the Seller threatened, against the
Seller or its properties or with respect to this
Agreement, which, if adversely determined would, in the
opinion of the Seller, have a material adverse effect on
the transactions contemplated by this Agreement.
(B) Seller makes the following representations and
warranties as the Receivable in which the Purchaser
relies in accepting the Receivables. Such representations
and warranties speak as of the execution and delivery of
this Agreement, but shall survive the sale, transfer and
assignment of the Receivables to the Purchaser.
(i) Characteristics of Receivables.
Each Receivable purchased by the Seller:
(a) has been originated in the United
States of America by the Dealer for the retail sale of a
financed vehicle in the ordinary course of such Dealer's
business; has been fully and properly executed by the
parties thereto, and if originated by a Dealer, has been
purchased by the Seller from such Dealer or has been
financed for such Dealer under an existing dealer
agreement with the Seller, or has been purchased from a
licensed originator and properly assigned to the Seller;
and
(b) has created or creates a valid,
subsisting, and enforceable first priority security
interest in favor of the Seller in the financed vehicle,
which security interest shall be assigned by the Seller
to the Purchaser; and
(c) is covered by policy numbers PAL
001626, 001613 and 001632, issued by Agricultural Excess
and Surplus; and
(d) contains customary and enforceable
provisions such that the rights and remedies of the
holder thereof shall be adequate for realization against
the collateral of the benefits of the security; and
(e) is a simple interest installment
contract that 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 the level payment) that fully amortize the amount
financed by maturity and yield interest at the annual
percentage rate.
(ii) Schedule of Receivables. The
information set forth in Exhibit B to this Agreement is
true and correct in all material respects as of the
opening of business on the Cutoff Date, and no selection
procedures believed to be adverse to the Purchasers have
been utilized in selecting the Receivables. All
information regarding the Receivables made available to
the Purchaser and its assigns is true and correct in
all material aspects.
(iii) Form of Receivables. Each of the
Receivables is substantially in the form of Exhibit H
attached hereto.
(iv) Compliance with Law. Each Receivable
and the sale of the Financed vehicle complied at the time
it was originated or made, and at the execution of this
Agreement does comply in all material respects with all
requirements of applicable federal, state and local laws,
and regulations thereunder, including, without
limitation, usury laws, the Fair Credit Reporting
Act, the Federal Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Fair Debt Collections Practices Act,
the Federal Trade Commission Act, the Magnuson-Moss
Warranty Act, the Federal Reserve Board's Regulations B
and Z, and other consumer credit laws and equal credit
opportunity and disclosure laws.
(v) 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.
(vi) No Government Obligor. No Receivable
is due from the United States of America or any State or
from any agency, department or instrumentality of the
United States of America of any State.
(vii) Security Interest in financed
vehicle. Immediately prior to the sale, assignment and
transfer thereof, each Receivable was secured by a
validly perfected first 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
security interest in the financed vehicle in favor of the
Seller as secured party.
(viii) 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.
(ix) No Waiver. No provision of a
Receivable has been waived.
(x) No Amendments. No Receivable
has been amended such that the number of the Obligor's
scheduled Payments have been increased.
(xi) No Defenses. No right of rescission,
set off, counterclaim or defense has been asserted or
threatened with respect to any Receivable.
(xii) No Liens. To the best of Seller's
knowledge, no liens or claims have been filed for work,
labor or materials relating to a financed vehicle that
would be liens prior to, or equal or coordinate with, the
security interest in the financed vehicle granted by the
Obligor pursuant to the Receivable.
(xiii) No Default. Except for payment
defaults continuing for a period of not more than thirty
(30) days as of the Cutoff Date, no default, breach,
violation or event permitting acceleration under the
terms of any Receivable has occurred; and no continuing
condition that with no lapse of time would constitute a
default, breach, violation or event permitting
acceleration under the terms of any Receivable has
arisen.
(xiv) Insurance. 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 prior to the Seller's purchase of the Receivable.
(xv) Title. It is the intention of the
Seller that the transfer and assignment herein
contemplated constitute a sale of the Receivables to the
Purchaser and that the beneficial interest in and title
to the Receivables not be part of the Seller's estate in
the event of the filing of a bankruptcy law. No
Receivable has been sold, transferred, assigned or
pledged by the Seller to any Person other than the
Purchaser. Subject to those liens specified in section
2.01(b) of this Agreement, upon the transfer and
assignment herein contemplated, the Seller has good and
marketable title to each Receivable free and clear of all
Liens, encumbrances, security interest and rights of
others and, immediately upon the transfer thereof, the
Purchaser, subject to those liens specified in section
2.01(b) of this Agreement, will have good and marketable
title to each Receivable, free and clear of all Liens,
encumbrances, security interests and rights of others;
and the security interest in the financed vehicle and
related underlying collateral has been validly perfected
under the UCC or other applicable law.
(xvi) 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 to the Seller or under this
Agreement would be unlawful, void or voidable.
(xvii) All Filings Made. All filings
(including, without limitation, UCC filings) necessary in
any jurisdiction to give the Purchaser a first perfected
ownership interest in the Receivables have been made.
(xviii) One Original. There is only one
original executed copy of each Receivable.
(xix) Maturity of Receivables. Each
Receivable has an original maturity of not more than 60
months; the weighted average remaining term of
Receivables is anticipated at 48 months as of the Cutoff
Date.
(xx) Monthly Payments. Each Receivable is
a simple interest installment contract which 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 the level payment) which fully
amortize the amount financed over the original term. No
Receivable will be greater than thirty (30) Days
delinquent as of the Cutoff Date prior to Closing.
(xxi) Remaining Maturity. Each Receivable
has a remaining maturity of 54 months or less as of the
Cut-Off Date, and the latest scheduled maturity of any
Receivable is no later than August 2, 2000
(xxii) Bankruptcy Proceeding. No
Receivable as of the Cut-Off Date was noted in the
Seller's records as a dischargeable debt under a
bankruptcy proceeding.
(xxiii) Chattel Paper. Each Receivable
constitutes "chattel paper" as defined in the UCC.
(xxiv) Scheduled Payments. Each Receivable
has a next scheduled due date on or prior to March 28,
1996 and no Receivable has a payment that is more than
thirty (30) days overdue as of the Cutoff Date.
(xxv) Outstanding Principal Balance. Each
Receivable has an outstanding balance of at least
$3,893.40
ARTICLE IV
CONDITIONS
4.01. Conditions to Obligations 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 with the
same effect as if then made, and the Seller shall have
performed all obligations to be performed by it hereunder
on or prior to the Closing Date.
(B) Files Marked. The Seller shall, at its own
expense, on or prior to the Closing Date, indicate in its
files that Receivables created in connection with the
Receivables have been sold to the Purchaser pursuant to
this Agreement and the Seller shall deliver to the
Purchaser the Schedule of Receivables certified by the
President, the Vice President, Secretary or the Treasurer
of the Seller to be true, correct and complete.
(C) Documents to be Delivered by the Seller at
the Closing.
(i) The Assignment. At the Closing, the
Seller will execute and deliver the Assignment. The
Assignment shall be substantially in the form of Exhibit
A hereto.
(ii) Evidence of UCC filing. Upon payment
of the Purchase Price in full by the Purchaser, the
Seller shall record and file, at its own expense, a UCC-
1 financing statement 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, 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. The Seller shall deliver a file-stamped
copy, or other evidence satisfactory to the Purchaser of
such filing, to the Purchaser on or prior to the Closing
Date or promptly thereafter.
(iii) Evidence of Insurance. Within
forty-five (45) days of the Closing Date, the Seller
shall deliver manifests indicating that each Receivable
is covered by Credit Loss Insurance under Agricultural
Excess and Surplus Insurance Co. policy nos. PAL 001626,
001613 and 001632 and Vendor's Single Interest Physical
Damage Insurance from Guaranty National Insurance
Company, under policy no. ZYG1500103. In addition, Seller
will deliver to the Purchaser executed endorsements to
these insurance policies naming the Purchaser as
additionally insured for the Receivables indicated on
said manifests.
(iv) Other Documents. Such other documents
as the Purchaser may reasonably request.
(D) Other Transactions. The transactions
contemplated by the Servicing Agreement shall be
consummated on the Closing Date.
4.02. Conditions to Obligation of the Seller. The
obligation of the Seller to sell the Receivables to the
Purchaser is subject to the satisfaction of the following
conditions:
(A) Representations and Warranties True. The
warranties of the Purchaser hereunder shall be true and
correct on the Closing Date with the same effect as if
then made, and the Purchaser shall have performed all
obligations to be performed by it hereunder on or prior
to the Closing Date.
(B) Receivables Purchase Price. At the Closing
Date, the Purchaser will deliver to the Seller the
Receivables Purchase Price, as provided in Section 2.01
(b).
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
Servicing Agreement, the Servicing Agreement shall
govern:
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 Purchase 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).
5.02. Other Liens or Interests. Except for the
conveyances hereunder and pursuant to the Servicing
Agreement, the Seller will not sell, pledge, assign or
transfer 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
terminated upon satisfaction of all Receivables sold to
the Purchaser hereunder.
5.03. Principal Executive Office. The Seller has
maintained, and from the date of this Agreement, shall
maintain, its principal executive office in the state of
New Jersey.
5.04. 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
Purchaser's right, title and interest in and to the
Receivables.
5.05. Location of Receivable Files. The Receivable
Files, are to be kept at the location listed in Schedule
A hereto in accordance with Servicing Agreement.
ARTICLE VI
INDEMNIFICATION
6.01. Indemnification. The Seller shall indemnify
the Purchaser 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.
These indemnity obligations shall be in addition to any
obligation that the Seller may otherwise have and shall
survive the sale, transfer and assignment of the
Receivables to Purchaser.
ARTICLE VII
MISCELLANEOUS PROVISIONS
7.01 Obligations of Seller. The obligations of the
Seller under this Agreement shall not be affected by
reason of any invalidity, illegality or irregularity or
any Receivable.
7.02. Repurchase Events. The Seller hereby covenants
and agrees with the Purchaser for the benefit of the
Purchaser that the occurrence of a breach of any of the
Seller's representations and warranties contained in
Section 3.02 (b) hereof with respect to a receivable
shall Constitute an event obligating the Seller to
repurchase such Receivable hereunder ("Repurchase
Events"), at the repurchase Amount from the Purchaser.
The repurchase obligation of the Seller shall constitute
the sole remedy to the Purchaser against the Seller with
respect to any Repurchase Event.
7.03. Purchaser's Assignment of Repurchased
Receivables. With respect to all Receivables repurchased
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.
7.04. Amendment. This Agreement may be amended by
mutual agreement from time to time by a written amendment
duly executed and delivered by the Seller and the
Purchaser.
7.05. Waivers. No failure or delay on the part of
the Purchaser in exercising any power, right or remedy
under this Agreement or the assignment 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.
7.06. Notices. All communication and notices
pursuant hereto 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 opening portion 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
facsimile.
7.07. Representations. The respective agreements,
representations, warranties and other statements by the
Seller and the Purchaser set forth in or made pursuant to
this Agreement shall remain in full force and effect and
will survive the Closing Date under Section 2.02 hereof
7.08. Confidential Information. The Purchaser agrees
that it will neither use nor disclose to any person the
names and addresses of the Obligors, except in connection
with the enforcement of the Purchaser's rights hereunder,
under the Receivable, under the Servicing Agreement or as
required by law.
7.09. 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.
7.10. Governing Law. This Agreement and the
Assignment shall be governed by and construed in
accordance with the internal laws of the State of New
Jersey.
7.11. Counterparts. This Agreement may be executed
in two or more counterparts and by different parties on
separate counterparts, each of which shall be original,
but all of which together shall constitute one and the
same instrument.
IN WITNESS WHEREOF, the parties hereby have caused
this Agreement to be executed by their respective
officers there unto duly authorized as of the date and
year first above written.
as Seller: Aegis Auto Finance, Inc.
525 Washington Blvd.
Jersey City, NJ 07310
By:
Name: Joseph F. Battiato,
Title: President
as Purchaser: United Bank and Trust Company
2714 Canal Street
New Orleans, Louisiana 70119
By:
Name: Marvin Beaulieu,
Title: President
Exhibit A ASSIGNMENT
For value received, in accordance with the
Purchase Agreement dated of March 21, 1996, by and
between the Seller and United Bank and Trust
Company (the "Purchaser), the undersigned does
hereby sell, assign, transfer and otherwise convey
unto the Purchaser, without recourse, all right,
title and interest of the undersigned in and to
(i) the Receivables identified on the Receivables
Schedule attached as Exhibit B to the Purchase
Agreement and all moneys due thereon, on and after
the Cut-Off Date; (ii) the security interest of
the Seller in the Financed vehicles granted by the
Obligors pursuant to the Receivables; (iii) the
interest of the Seller in any proceeds from claims
on any physical damage, credit life, credit loss
or disability insurance policies relating to the
financed vehicles or Obligors; and (iv) 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
(as defined in the Servicing Agreement), Servicer
Files (as defined in the Servicing Agreement), any
insurance policies or any agreement or instrument
relating to any of them.
This Agreement 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
March 21, 1996.
By:
Name: Joseph F, Battiato
Title: President
PURCHASE AGREEMENT
This PURCHASE AGREEMENT is made as of March 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 1996-1 (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 March 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 March 22, 1996.
"Cutoff Date" means March 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) June 20, 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 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 1996-1.
"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.
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; and (iv) 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 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.
(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
54.1 months as of the Cutoff Date while the weighted average
remaining term to maturity as of the Cutoff Date for such Initial
Receivables was 53.2 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 April 29,
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
$4,065.51; and no Initial Receivable has an outstanding Principal
Balance in excess of $36,297.67. As of their Cutoff Date, the
weighted average APR of the Initial Receivables was 20.1% 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, Oregon, 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
5.49% of the Initial Receivables relate to new Financed Vehicles
and approximately 94.51% 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) 105.49% 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) 105.49% 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. 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, (i) Aegis Finance and
each prior holder of any such Receivable were each properly
licensed under applicable Pennsylvania laws and regulations
during the respective times 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 and (ii) the failure of the Trustee or the
Trust to be licensed under applicable Pennsylvania lending laws
and regulations on the Closing Date will not, during the time the
Trust holds such Receivables, have a material adverse effect on
the ability of the Trust to collect principal or interest
payments on such Receivables or to realize upon the Financed
Vehicle underlying any such Receivable in accordance with the
terms thereof.
(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 Agency 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. [RESERVED]
Section 5.12. 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 5.13. 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 5.14. 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 5.15. 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.
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
EXHIBIT A
ASSIGNMENT
For value received in accordance with the Purchase Agreement
dated as of March 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; and (iv) 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:
EXHIBIT B
SCHEDULE OF RECEIVABLES
EXHIBIT C
LOCATION OF SERVICER FILES
American Lenders Facilities, Inc.
2600 Michaelson Drive
Suite 470
Irvine, CA 92715
EXHIBIT D-1
CERTIFICATE OF DELIVERY
(Initial Receivables)
In connection with the transfer of certain auto loan
receivables to the Aegis Auto Receivables Trust 1996-1 (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:
EXHIBIT D-2
CERTIFICATE OF DELIVERY
(Additional Receivables)
In connection with the transfer of certain auto loan
receivables to the Aegis Auto Receivables Trust 1996-1 (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:
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 1996-1 ("Trustee"), having its principal place of business
at Sixth Street and Marquette Avenue, Minneapolis, Minnesota
55479-0069, 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.
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:
SCHEDULE A
DESCRIPTION OF COLLATERAL
EXECUTION
AEGIS AUTO FUNDING CORP.
AUTOMOBILE RECEIVABLE PASS-THROUGH CERTIFICATES,
SERIES 1996-1
CERTIFICATE PURCHASE AGREEMENT
March 21, 1996
Greenwich Capital Markets, Inc.
600 Steamboat Road
Greenwich, Connecticut 06830
Dear Sirs:
Aegis Auto Funding Corp., a Delaware corporation (the
"Company"), proposes to sell to you its Automobile
Receivable Pass-Through Certificates, Series 1996-1 in
the classes, in the respective original principal amounts
and with the designations set forth in Schedule I hereto
(the "Designated Certificates"). Only the Designated
Certificates are being purchased by you hereunder. The
Designated Certificates (collectively, the
"Certificates"), will be issued by the Company pursuant
to a Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement"), dated as of March 1, 1996, among
the Company, as seller, Norwest Bank Minnesota, National
Association, as back-up servicer (the "Back-up
Servicer"), and Norwest Bank Minnesota, National
Association, as trustee (the "Trustee"). Each
Certificate will evidence the holder's fractional
undivided interest in a trust (the "Trust"), created
pursuant to the Pooling and Servicing Agreement, and
consisting primarily of a pool (the "Pool") of retail
installment sale contracts for new or used automobiles
and light-duty trucks between dealers and retail
purchasers (the "Contracts") and certain monies due
thereunder on and after the Cut-off Date. Upon your
request, the Company will furnish to you, on or before
such date as you shall specify, a private placement
memorandum which will more fully describe the Designated
Certificates. Such private placement memorandum, in the
form so furnished, including the documents incorporated
by reference thereto or attached as exhibits thereto, is
herein referred to as the "Memorandum".
1. Representations and Warranties. The Company
represents and warrants to, and agrees with, you and each
person who purchases a Designated Certificate directly
from you that:
(a) The Company has been duly incorporated and
is validly existing as a corporation in good standing
under the laws of the State of Delaware, has full power
and authority (corporate and other) necessary to own or
hold its properties and to conduct its business as now
conducted by it and to enter into and perform its
obligations under this Agreement, the Pooling and
Servicing Agreement and the Purchase Agreement dated as
of March 1, 1996 (the "Purchase Agreement"), between the
Company and Aegis Auto Finance, Inc.
(b) This Agreement has been duly authorized,
executed and delivered by the Company.
(c) The Pooling and Servicing Agreement, when
executed and delivered as contemplated hereby and
thereby, will have been duly authorized, executed and
delivered by the Company, and when so executed and
delivered, will constitute a legal, valid, binding and
enforceable agreement of the Company, subject, as to
enforceability, to bankruptcy, insolvency,
reorganization, moratorium or other similar laws
affecting creditors' rights generally and to general
principles of equity regardless of whether enforcement is
sought in a proceeding in equity or at law.
(d) The Purchase Agreement, when executed and
delivered as contemplated hereby and thereby, will have
been duly authorized, executed and delivered by the
Company, and when so executed and delivered, will
constitute a legal, valid, binding and enforceable
agreement of the Company, except insofar as any
indemnification provisions therein may be limited by
applicable law.
(e) The Memorandum and any amendment or
supplement thereto, as of the date thereof, and as of the
date hereof, will not contain an untrue statement of any
material fact or omit to state any material fact
necessary in order to make the statements therein, in
light of the circumstances under which they were made,
not misleading.
(f) As of the Closing Date, the Designated
Certifi- cates and the Pooling and Servicing Agreement
will conform in all material respects to the respective
descriptions thereof contained in the Memorandum. As of
the Closing Date, the Designated Certificates will be
duly and validly authorized and, when duly and validly
executed, authenticated and delivered in accordance with
the Pooling and Servicing Agreement and delivered to you
against payment therefor as provided herein, will be duly
and validly issued and outstanding and entitled to the
benefits of the Pooling and Servicing Agreement.
(g) On the Closing Date, the representations
and warranties of the Company with respect to the
Contracts contained in the Pooling and Servicing
Agreement will be true and correct.
(h) The Company is not in violation of its
certificate of incorporation or by-laws or in default
under any agreement, indenture or instrument the effect
of which violation or default would be material to the
Company. Neither the issuance and sale of the Designated
Certificates, nor the execution and delivery by the
Company of this Agreement, the Pooling and Servicing
Agreement or the Purchase Agreement, nor the consummation
by the Company of any of the transactions herein or
therein contemplated, nor compliance by the Company with
the provisions hereof or thereof, does or will conflict
with or result in a breach of any term or provision of
the certificate of incorporation or by-laws of the
Company or conflict with, result in a breach, violation
or acceleration of, or constitute a default under, the
terms of any indenture or other agreement or instrument
to which the Company is a party or by which it is bound,
or any statute (including, without limitation, any local
registration or licensing requirements), order or
regulation applicable to the Company of any court,
regulatory body, administrative agency or governmental
body having jurisdiction over the Company. The Company
is not a party to, bound by or in breach or violation of
any indenture or other agreement or instrument, or
subject to or in violation of any statute, order or
regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it
that materially and adversely affects, or may in the
future materially and adversely affect, (i) the ability
of the Company to perform its obligations under this
Agreement, the Pooling and Servicing Agreement or the
Purchase Agreement or (ii) the business, operations,
financial conditions, properties or assets of the
Company.
(i) There are no actions or proceedings
against, or investigations of, the Company pending, or,
to the knowledge of the Company, threatened, before any
court, arbitrator, administrative agency or other
tribunal (i) asserting the invalidity of this Agreement,
the Pooling and Servicing 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 this Agreement,
the Pooling and Servicing Agreement or the Purchase
Agreement, (iii) that are reasonably likely to be
adversely determined and that might materially and
adversely affect the performance by the Company of its
obligations under, or the validity or enforceability of,
this Agreement, the Pooling and Servicing Agreement, the
Purchase Agreement or the Certificates or (iv) seeking to
affect adversely the federal income tax attributes of the
Certificates as described in the Memorandum.
(j) Any taxes, fees and other governmental
charges in connection with the execution and delivery of
this Agreement, the Pooling and Servicing Agreement and
the Purchase Agreement or the execution, delivery and
sale of the Certificates have been or will be paid on or
prior to the Closing Date.
(k) Immediately prior to the assignment of the
Contracts to the Trustee as contemplated by the Pooling
and Servicing Agreement, the Company (i) had good title
to, and was the sole owner of, each Contract free and
clear of any pledge, mortgage, lien, security interest or
other encumbrance (collectively, "Liens"), (ii) had not
assigned to any person any of its right, title or
interest in such Contracts or in the Pooling and
Servicing Agreement and (iii) will have the power and
authority to sell such Contracts to the Trustee, and upon
the execution and delivery of the Pooling and Servicing
Agreement by the Trustee, the Trustee will have acquired
all of the Company's right, title and interest in and to
the Contracts.
(l) There are no contracts, agreements or
understand- ings between the Company and any person
granting such person the right to require the Company to
file a registration statement under the Securities Act of
1933, as amended (the "1933 Act"), with respect to any
Designated Certificates owned or to be owned by such
person.
(m) The sale of the Designated Certificates
pursuant to this Agreement is exempt from the
registration and prospectus delivery requirements of the
1933 Act. In the case of each offer or sale of the
Designated Certificates, no form of general solicitation
or general advertising was used by the Company or its
representatives, including, but not limited to,
advertise- ments, articles, notices or other
communications published in any newspaper, magazine or
similar medium or broadcast over tele- vision or radio,
or any seminar or meeting whose attendees have been
invited by any general solicitation or general
advertising. Neither the Company nor any person acting
on its behalf has offered or sold, nor will the Company
or any person acting on its behalf offer or sell directly
or indirectly, any Designated Certificate or any other
security in any manner that, assuming the accuracy of the
representations and warranties and the performance of the
covenants given by you, would render the issuance and
sale of any of the Designated Certificates as
contemplated hereby a violation of Section 5 of the 1933
Act or the registration or qualification requirements of
any state securities laws, nor has the Company
authorized, nor will it authorize, any person to act in
such manner.
(n) Neither the Company nor the Trust is, and
neither the issuance and sale of the Certificates nor the
activities of the Trust pursuant to the Pooling and
Servicing Agreement will cause the Company or the Trust
to be, an "investment company" or under the control of an
"investment company" as such terms are defined in the
Investment Company Act of 1940, as amended (the
"Investment Company Act").
2. Representations, Warranties and Covenants of the
Pur- chaser. You represent and warrant to, and agree
with, the Company that:
(a) You are purchasing the Designated
Certificates, in the Original Certificate Principal
Balances set forth on Schedule I, solely for your own
account as principal and not as nominee or agent for any
other person, and not with a view to, or for offer or
sale in connection with, any distribution (within the
meaning of the 1933 Act) or fractionalization thereof,
subject, never- theless, to the understanding that the
disposition of your property shall at all times be and
remain within your control. It is understood that you
intend to reoffer or resell the Designated Certificates
from time to time in one or more privately negotiated
transactions.
(b) You are an "accredited investor" as defined
in Rule 501(a)(1), (2) or (3) of Regulation D under the
1933 Act and a "qualified institutional buyer" as defined
in Rule 144A under the 1933 Act.
(c) You will not offer the Designated
Certificates or any part thereof or any similar security
for issue or sale to, or solicit any offer to acquire any
of the same from, anyone so as to bring the offer and
sale of the Designated Certificates to you and by you
within the provisions of Section 5 of the 1933 Act.
3. Purchase and Sale. Subject to the terms and
conditions and in reliance upon the representations and
warranties set forth herein, the Company agrees to sell
the Designated Certificates to you, and you agree to
purchase the Designated Certificates from the Company,
for the purchase price of $93,395,362.28 (including
accrued interest from and including the Cut-off Date to,
but not including, the Closing Date).
4. Delivery and Payment. Delivery of and payment
for the Designated Certificates shall be made at the
office of Kutak Rock, 767 Third Avenue, New York, New
York 10017, on the date specified in Schedule I hereto,
which date and time may be changed by agreement between
you and the Company (such date and time of delivery and
payment for the Designated Certificates being herein
called the "Closing Date"). Delivery of the Designated
Certificates shall be made to you against payment by you
of the purchase price therefor in immediately available
funds wired to such bank as may be designated by the
Company, or such other manner of payment as may be agreed
upon by the Company and you. The Designated Certificates
to be so delivered shall be in definitive fully
registered form, in such denominations and registered in
such names as you may have requested in writing not less
than two full business days in advance of the Closing
Date.
The Company agrees to have the Designated
Certificates available for inspection, checking and
packaging by you in New York, New York on the business
day prior to the Closing Date.
5. Covenants of the Company. The Company covenants
and agrees with you that:
(a) On the date hereof or such other date as
you may specify (the "Memorandum Delivery Date"), the
Company will prepare and furnish to you the Memorandum,
appropriately completed, with such changes therein as are
satisfactory to you.
(b) If, at any time prior to 90 days after the
Memorandum Delivery Date or such later date as you shall
have resold all of the Designated Certificates, any event
occurs as a result of which the Memorandum (as then
amended or supplemented) would include an untrue
statement of a material fact, or omit to state any
material fact necessary to make the statements therein,
in light of the circumstances under which they were made,
not misleading, the Company will promptly prepare and
furnish to you an amendment or supplement to the
Memorandum satisfactory to you that will correct such
statement or omission.
(c) During the period referred to in Section
5(b), the Company will furnish to you, without charge,
copies of the Memorandum (including all documents
incorporated by reference therein and all amendments or
supplements to such documents) in each case as soon as
available and in such reasonable quantities as you
request.
(d) During the period referred to in Section
5(b), the Company will, at your request, furnish through
you to any prospective purchaser of Designated
Certificates from you such information as is reasonably
requested and is reasonably available concerning matters
reasonably relevant to such prospective purchaser's
decision to purchase the Designated Certificates and the
Company represents and warrants that such information
will be accurate and not misleading.
(e) The Company authorizes you to deliver to
investors copies of the Memorandum, as then amended or
supplemented as contemplated by Section 5(b) hereof, and
any information provided under Section 5(d) hereof in
connection with any reoffer or resale of the Designated
Certificates by you in accordance herewith.
(f) The Company agrees to use its reasonable
best efforts to furnish (or cause to be furnished) such
information and to execute such documents or instruments
as you may rea- sonably request to satisfy any condition
to the availability of an exemption under the state
securities or blue sky laws of any state for any sale of
Designated Certificates by you (provided that in no event
shall the Company be obligated to qualify to do business
in any jurisdiction where it is not now so qualified or
take any action that would subject it to service of
process in suits, other than those arising out of the
offering or sale of the Certificates, in any jurisdiction
where it is not now so subject).
(g) The Company will pay all costs and expenses
in connection with the transactions herein contemplated,
including, but not limited to, the fees and disbursements
of its counsel; the costs and expenses of printing (or
otherwise reproducing) and delivering the Memorandum, the
Pooling and Servicing Agreement and the Certificates; the
fees, costs and expenses of the Trustee (to the extent
permitted under the Pooling and Servicing Agreement, and
except to the extent that another party is obligated to
pay such amounts thereunder) and the fees and
disbursements of accountants for the Company (including
those fees and disbursements arising in connection with
any comfort letter issued by such accountants that
addresses the information contained in the Memorandum).
(h) The Company will enter into the Pooling and
Servicing Agreement and Purchase Agreement on or prior to
the Closing Date.
(i) The Company agrees to take such action as
you shall reasonably request following the Closing Date
in connection with any subsequent transfer of the
Designated Certificates by you.
6. Conditions to the Purchase of the Designated
Certifi- cates. Your obligation hereunder to purchase
the Designated Certificates shall be subject to the
accuracy of the repre- sentations and warranties on the
part of the Company contained herein as of the date
hereof and as of the Closing Date, to the accuracy of the
statements of the Company made in any certifi- cates
delivered pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder
and to the following additional conditions:
(a) The Company shall have delivered to you a
certifi- cate of the Company, signed by the President or
a vice president of the Company and dated the Closing
Date, to the effect that the signer of such certificate
has carefully examined this Agreement and that to the
best of such signer's knowledge: (i) the repre-
sentations and warranties of the Company in this
Agreement are true and correct in all material respects
at and as of the Closing Date with the same effect as if
made on the Closing Date and (ii) the Company has
complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or
prior to the Closing Date.
(b) You shall have received from Brown & Wood,
special counsel for the Purchaser, such opinions as you
may reasonably require, and the Company shall have
furnished to such counsel such documents as you may
reasonably request for the purposes of enabling them to
render such opinions.
(c) You shall have received from Kutak Rock,
special counsel for the Company, a favorable opinion,
dated the Closing Date, to the effect that:
(i) This Agreement has been duly
authorized, executed and delivered by the Company and The
Aegis Consumer Funding Group, Inc.;
(ii) The Pooling and Servicing Agreement
has been duly authorized, executed and delivered by the
Company, and when so executed and delivered, constitutes
a legal, valid, binding and enforceable agreement of the
Company, enforceable according to its terms, subject to
bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally
and to general principles of equity regardless of whether
enforcement is sought in a proceeding in equity or at
law;
(iii) The Purchase Agreement has been duly
authorized, executed and delivered by the Company and
constitutes a legal, valid, binding and enforceable
agreement of the Company, except insofar as the
indemnification provisions therein may be limited by
applicable law;
(iv) The issuance of the Certificates has
been duly and validly authorized by all required
corporate action by the Company and when executed and
countersigned in the manner contemplated in the Pooling
and Servicing Agreement will be validly issued and
outstanding and entitled to the benefits of the Pooling
and Servicing Agreement;
(v) The offer and sale of the Designated
Certificates to you in the manner contemplated in this
Agreement and the Pooling and Servicing Agreement is not,
assuming the accuracy of your representations and
warranties and the performance of your covenants
contained herein, a transaction requiring the
registration of the Designated Certificates under the
1933 Act;
(vi) The Pooling and Servicing Agreement is
not required to be qualified under the Trust Indenture
Act of 1939, as amended, and neither the Company nor the
Trust is required to be registered under the Investment
Company Act; and
(vii) The Trust as described in the
Memorandum will be treated as a grantor trust for federal
income tax purposes, assuming: (i) compliance with the
Pooling and Servicing Agreement and (ii) compliance with
changes in the law, including any amendments to the Code
or applicable Treasury regulations thereunder.
(viii) Such counsel has no reason to believe
that the Memorandum, as of its date, and as amended or
supplemented, if applicable, as of the Memorandum
Delivery Date, contained any untrue statement of a
material fact or omitted to state a material fact
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading, or
that the descriptions in the Memorandum of the Designated
Certificates and the Pooling and Servicing Agreement are
not accurate in all material respects; it being
understood that such counsel need express no opinion as
to the financial and statistical statements or other
financial data contained or incorporated by reference in
the Memorandum.
(d) You shall have received from Kutak Rock,
special counsel for the Company, a favorable opinion,
dated the Closing Date, to the effect that:
(i) The Company has been duly organized
and is validly existing as a corporation in good standing
under the laws of the State of Delaware and has all
corporate power and authority necessary to own or hold
its properties and to conduct its business, as now
conducted by it, and to enter into and perform its
obligations under this Agreement, the Pooling and
Servicing Agreement and the Purchase Agreement;
(ii) There are no actions, proceedings or
investigations pending or threatened against or affecting
the Company before or by any court, arbitrator,
administrative agency or other governmental authority
reasonably likely to be adversely determined that would
materially and adversely affect the ability of the
Company to carry out the transactions contemplated in
this Agreement, the Pooling and Servicing Agreement or
the Purchase Agreement;
(iii) No consent, approval, authorization or
order of, or filing or registration with, any state or
federal court or governmental agency or body is required
for the consummation by the Company of the transactions
contemplated herein, except such as may be required under
the blue sky laws of any jurisdiction in connection with
the purchase and distribution of the Designated
Certificates and except any recordation of the
assignments of the Contracts to the Trustee pursuant to
the Pooling and Servicing Agreement that have not yet
been completed; and
(iv) The Company is not in violation of its
certificate of incorporation or by-laws or in default
under any agreement, indenture or instrument the effect
of which violation or default would be material to the
Company, and neither the issuance and sale of the
Designated Certificates, nor the execu- tion or delivery
of or performance under this Agreement, the Pooling and
Servicing Agreement or the Purchase Agreement, nor the
consummation of any other of the transactions
contemplated herein or therein will conflict with or
result in a breach or violation of any term or provision
of, or constitute a default (or an event which with the
passing of time or notification, or both, would
constitute a default) under, the certificate of
incorporation or by-laws of the Company, or, to the
knowledge of such counsel, any indenture or other
agreement or instrument to which the Company or any of
its affiliates is a party or by which it or any of them
is bound, or any New York or federal statute or
regulation applicable to the Company or any of its
affiliates or, to the knowledge of such counsel, any
order of any New York or federal court, regulatory body,
administrative agency or govern- mental body having
jurisdiction over the Company or any of its affiliates.
With respect to the opinions in paragraphs (c)
and (d) above, such counsel may: (1) express its
reliance as to factual matters on the representations and
warranties made by, and on certificates or other
documents furnished by officers of, the parties to this
Agreement, the Pooling and Servicing Agreement and the
Purchase Agreement; (2) assume the due authorization,
execution and delivery of the instruments and documents
referred to therein by the parties thereto other than the
Company; and (3) qualify such opinion only as to the
federal laws of the United States of America, the laws of
the State of New York and the general corporation law of
the State of Delaware. Such counsel shall also confirm
that you may rely, on and as of the Closing Date, on any
opinion or opinions of such counsel submitted to the
rating agency or agencies rating the Designated
Certificates as if addressed to you and dated the Closing
Date.
(e) The Class A Certificates shall have been
rated no lower than "A+" by each of Duff & Phelps Credit
Rating Co. ("DCR") and Fitch Investors Service, L.P.
("Fitch"), the Class B Certificates shall have been rated
no lower than "BBB" by DCR and "BBB+" by Fitch, and the
Class C Certificates shall have been rated no lower than
"BB" by each of DCR and Fitch.
(f) You shall have received from counsel for
the Trustee a favorable opinion, dated the Closing Date,
in form and substance satisfactory to you and your
counsel, to the effect that the Pooling and Servicing
Agreement has been duly authorized, executed and
delivered by the Trustee and constitutes the legal,
valid, binding and enforceable agreement of the Trustee,
subject, as to enforceability, to bankruptcy, insolvency,
reorganization, moratorium or other similar laws
affecting creditors' rights in general and by general
principles of equity regardless of whether enforcement is
considered in a proceeding in equity or at law, and as to
such other matters as may be agreed upon by you and the
Trustee.
(g) You shall have received from counsel for
the Master Servicer a favorable opinion, dated the
Closing Date, in form and substance satisfactory to you
and your counsel.
(h) On the Memorandum Delivery Date, the
Company shall furnish to you a certificate signed by the
president or a senior vice president, dated the
Memorandum Delivery Date, to the effect that such officer
has no reason to believe and does not believe that the
Memorandum, as of its date, and as amended or
supplemented, if applicable, as of the Memorandum
Delivery Date, contained any untrue statement of a
material fact or omitted to state a material fact
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading and
that the descriptions in the Memorandum of the Designated
Certificates and the Pooling and Servicing Agreement are
accurate in all material respects; it being understood
that such counsel need express no opinion or belief as to
the financial and statistical statements or other
financial data contained or incorporated by reference in
the Memorandum.
(i) You shall have received such further
information, certificates, documents and opinions as you
may reasonably have requested not later than the Closing
Date.
(j) All proceedings in connection with the
trans- actions contemplated by this Agreement and all
documents incident hereto shall be satisfactory in form
and substance to you and your counsel, and you and your
counsel shall have received such information,
certificates and documents as you or they may have
reasonably requested.
If any of the conditions specified in this
Section 6 shall not have been fulfilled in all material
respects when and as provided in this Agreement, if the
Company is in breach of any covenants or agreements
contained herein or if any of the opinions and
certificates referred to above or elsewhere in this
Agreement shall not be in all material respects
reasonably satisfactory in form and substance to you and
your counsel, this Agreement and all your obligations
hereunder may be cancelled by you at, or at any time
prior to, the Closing. Notice of such cancellation shall
be given to the Company in writing, or by telephone or
facsimile transmission confirmed in writing.
7. Conditions of the Company's Obligations. The
obligation of the Company to sell the Designated
Certificates to you shall be subject to: (i) the accuracy
of your representations and warranties herein contained
at and as of the Closing Date and (ii) your performance
of all of your obligations hereunder to be performed at
or prior to the Closing Date.
8. Information Provided by the Purchaser. It is
understood and agreed that the information contained in
the first sentence of the last paragraph on the inside
cover page of the Memorandum and under the heading
"Offering" in the Memorandum is the only information
furnished by the Purchaser to the Company for inclusion
in the Memorandum.
9. Indemnification and Contribution. The Company
and The Aegis Consumer Funding Group, Inc. ("Aegis
Consumer Funding") agree with you that:
(a) The Company and Aegis Consumer Funding,
jointly and severally will indemnify and hold harmless
you and each person who controls you within the meaning
of either the 1933 Act or the Securities Exchange Act of
1934, as amended (the "1934 Act") against any and all
losses, claims, damages or liabilities, joint or several,
to which you or any of them may become subject under the
1933 Act, the 1934 Act, or other federal or state law or
regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in
respect thereof) (x) arise out of or are based upon any
untrue statement or alleged untrue statement of a
material fact contained in the Memorandum or in any
amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state
therein a material fact necessary to make the statements
therein, in light of the circumstances in which they were
made, not misleading, or (y) arise out of or are based
upon any material inaccuracy contained in any statistical
information provided by the Company to you in writing or
by electronic transmission prior to the date hereof, and
agrees to reimburse each such indemnified party for any
legal or other expenses reasonably incurred by it in
connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however,
that neither the Company nor Aegis Consumer Funding will
be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is
based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in
reliance upon and in conformity with written information
furnished to the Company as herein stated by you
specifically for use in connection with the preparation
thereof. This indemnity will be in addition to any
liability that the Company may otherwise have.
(b) You will indemnify and hold harmless the
Company, Aegis Consumer Funding and each of their
respective directors and officers and each person, if
any, who controls the Company within the meaning of
either the 1933 Act or the 1934 Act, to the same extent
as the foregoing indemnity from the Company and Aegis
Consumer Funding to you, but only with reference to
written information furnished to the Company as herein
stated by you specifically for use in connection with the
preparation of the documents referred to in the foregoing
indemnity. This indemnity will be in addition to any
liability that you may otherwise have.
(c) Promptly after receipt by an indemnified
party under this Section 9 of notice of the commencement
of any action, such indemnified party will, if a claim in
respect thereof is to be made against the indemnifying
party under this Section 9, notify the indemnifying party
in writing of the commencement thereof; but the omission
so to notify the indemnifying party will not relieve it
from any liability that it may have to any indemnified
party otherwise than under this Section 9. In case any
such action is brought against any indemnified party and
it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to
participate therein, and to the extent that it may elect
by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof, with
counsel satisfactory to such indemnified party; provided,
however, that if the defendants in any such action
include both the indemnified party and the indemnifying
party and the indemnified party or parties shall have
reasonably concluded that there may be legal defenses
available to it or them and/or other indemnified parties
that are different from or additional to those available
to the indemnifying party, the indemnified party or
parties shall have the right to elect separate counsel to
assert such legal defenses and to otherwise participate
in the defense of such action on behalf of such
indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of
its election to so assume the defense of such action and
approval by the indemnified party of counsel, the
indemnifying party will not be liable for any legal or
other expenses subsequently incurred by such indemnified
party in connection with the defense thereof, unless (i)
the indemnified party shall have employed separate
counsel in connection with the assertion of legal
defenses in accordance with the proviso to the next
preceding sentence (it being understood, however, that
the indemnifying party shall not be liable for the
expenses of more than one separate counsel, approved by
you in the case of paragraph (a) of this Section 9,
representing the indemnified parties under such paragraph
(a) who are parties to such action), (ii) the
indemnifying party shall not have employed counsel
satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice
of commencement of the action or (iii) the indemnifying
party has authorized the employment of counsel for the
indemnified party at the expense of the indemnifying
party; and except that, if clause (i) or (iii) is
applicable, such liability shall only be in respect of
the counsel referred to in such clause (i) or (iii).
(d) If the indemnification provided for in this
Section 9 shall for any reason be unavailable to an
indemnified party under this Section 9, then you and the
Company shall contribute to the amount paid or payable by
such indemnified party as a result of the aggregate
losses, claims, damages and liabilities referred to in
paragraph (a) or (b) above, in such proportion so that
(i) you are responsible for the lesser of (1) 0.5%
thereof and (2) 0.5% of the Aggregate Initial Pool
Balance (as set forth on Schedule I hereto) and (ii) the
Company is responsible for the balance; provided,
however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepre-
sentation. For purposes of this Section 9, each person,
if any, who controls you within the meaning of either the
1933 Act or the 1934 Act shall have the same rights to
contribution as do you and each person, if any, who
controls the Company or Consumer Funding Group within the
meaning of either the 1933 Act or the 1934 Act shall have
the same rights to contribution as does the Company and
Aegis Consumer Funding. Any party entitled to
contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against
such party in respect of which a claim for contribution
may be made against another party or parties under this
paragraph (d), notify such party or parties from whom
contribution may be sought, but the omission to so notify
such party or parties shall not relieve the party or
parties from whom contribution may be sought from any
other obligation it or they may have hereunder or
otherwise than under this paragraph (d).
10. Termination. (a) This Agreement shall be
subject to termination in your absolute discretion by
notice given to the Company prior to delivery of and
payment for the Designated Certificates, if prior to such
time, (i) trading of securities generally on the New York
Stock Exchange or the American Stock Exchange shall have
been suspended or materially limited; (ii) a general
moratorium on commercial banking activities in New York
shall have been declared by either federal or New York
State authorities; or (iii) there shall have occurred any
material outbreak or declaration of hostilities or other
calamity or crisis the effect of which on the financial
markets of the United States is such as to make it, in
your reasonable judgment, impracticable to market the
Designated Certificates on the terms specified herein.
(b) If the sale of the Designated Certificates
shall not be consummated because any condition to your
obligations set forth in Section 6 hereof is not
satisfied or because of any refusal, inability or failure
on the part of the Company to perform any agreement
herein or comply with any provision hereof other than by
reason of your default, the Company shall reimburse you
for the reasonable fees and expenses of your counsel and
for such other out-of-pocket expenses as shall have been
incurred by you in connection with this Agreement and the
proposed purchase of the Designated Certificates, and
upon demand the Company shall pay the full amount thereof
to you.
(c) This Agreement will survive delivery of and
payment for the Designated Certificates. The provisions
of Section 9 and this Section 10(c) shall survive the
termination or cancellation of this Agreement.
11. Notices. All communications hereunder will be
in writing and effective only on receipt, and, if sent to
you, will be mailed, delivered or transmitted by
facsimile and confirmed to you at 600 Steamboat Road,
Greenwich, Connecticut 06830, Attention: President; or,
if sent to the Company, will be mailed, delivered or
transmitted by facsimile and confirmed to it at 5032
Parkway Plaza Boulevard, P.O. Box 195005, Charlotte,
North Carolina 28219.
12. Successors. This Agreement will inure to the
benefit of and be binding upon the parties hereto and
their respective successors and the officers and
directors and controlling persons referred to in Section
9 and their successors and assigns, and no other person
will have any right or obligation hereunder.
13. Applicable Law; Counterparts. This Agreement w
ill be governed by and construed in accordance with the
laws of the State of New York. This Agreement may be
executed in any number of counterparts, each of which
shall for all purposes be deemed to be an original and
all of which shall together constitute but one and the
same instrument.If the foregoing is in accordance with
your understanding of our agreement, please sign and
return to us a counterpart hereof, whereupon this letter
and your acceptance shall represent a binding agreement
between the Company and you.
Very truly yours,
AEGIS AUTO FUNDING CORP.
By:_________________________
Name:
Title:
Acknowledged and agreed to for purposes of Section 9
hereof:
AEGIS CONSUMER FUNDING GROUP, INC.
By:_________________________
Name:
Title:
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.
GREENWICH CAPITAL MARKETS, INC.
By:____________________________
Name:
Title: SCHEDULE I
Certificate Purchase Agreement dated March 21, 1996.
Closing Date: March 22, 1996
Title, Purchase Price and Description of Designated
Certificates:
AUTOMOBILE RECEIVABLE PASS-THROUGH CERTIFICATES,
SERIES 1996-1, CLASS A, CLASS B AND CLASS C
Aggregate Initial Certificate Balance:
$92,000,000.00
Cut-off Date: March 1, 1996
Original
Designated Certificate
Certificates Balance
Class A$85,790,000.00
Class B$ 4,370,000.00
Class C$ 1,840,000.00
EXECUTION COPY (3/21/96)
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement ("Agreement") is
made as of this 22nd day of March, 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 $5,000,000.00
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%.
"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 Loan Agreements" shall mean (i) that
certain Loan and Security Agreement dated as of June 20,
1995 between Borrower and Lender;(ii) that certain Loan
and Security Agreement dated as of September 25, 1995;
and (iii) that certain Loan and Security Agreement dated
as of December 20, 1995.
"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
March 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" (as such term is defined in the Pooling and
Servicing Agreement) 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.
"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 1996-1 created pursuant to the Pooling and
Servicing Agreement.
"Trust Certificates" shall mean the Aegis Auto
Receivables Trust 1996-1 Automobile Receivable
Pass-Through Certificates, Series 1996-1, 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) Five Million Dollars
and No Cents ($5,000,000.00); 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) one and one-half 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 Liquidated 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)
June 20, 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 Exisitng 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 the
Lien in favor of Lender created pursuant to this
Agreement and the Existing Loan Agreements, 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 $7,264,732.14 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 "Class B
Certificates" referred to in Section 4.6 of each Existing
Loan Agreement. 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 memo- randa 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 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 in respect of the "Class B Certificate" as
each 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 Borrower 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
Bor- rower'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 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 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
avail- able 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 conditions 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,
adver- tisement 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 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: (809) 295-9637
Confirmation: (809) 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
rela- tionship 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]
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:
EXECUTION COPY
LOAN AND SECURITY AGREEMENT
Dated as of March 22, 1996
BETWEEN
AEGIS AUTO FINANCE, INC.
as Borrower
AND
III FINANCE LTD.
as Lender
ARTICLE I DEFINITIONS Section 1.1
General Terms. .1
Section 1.2 Terms Defined in Uniform CommercialCode.. . . . . . . .6
Section 1.3 Accounting Terms.. . . . . . . . . .. . . . . . . . . 7
Section 1.4 Other Terms. . . . . . . . . . . . . .. . . . . . . . .7
Section 1.5 Preliminary Statement. . . . . . . . .. . . . . . . . .7
ARTICLE II LOANS AND INTEREST
Section 2.1 Loans. . . . . . . . . . . . . . . . .. . . . . . . . .7
Section 2.2 Making the Loans.. . . . . . . . . . .. . . . . . . . .9
Section 2.3 Note.. . . . . . . . . . . . . . . . .. . . . . . . . 10
Section 2.4 Interest.. . . . . . . . . . . . . . .. . . . . . . . 10
Section 2.5 Repayments; Prepayments. . . . . . . .. . . . . . . . 10
ARTICLE III CONDITIONS TO LENDING
Section 3.1 Conditions Precedent to the InitialLoan.. . . . . . . 12
Section 3.2 Conditions Precedent to All Loans. . .. . . . . . . . 12
ARTICLE IV REPRESENTATIONS AND WARRANTIES
Section 4.1 Corporate Existence. . . . . . . . . .. . . . . . . . 13
Section 4.2 Corporate Authority; No Conflicts. . .. . . . . . . . 13
Section 4.3 Financial Condition. . . . . . . . . . . . . . . . . .14
Section 4.4 Litigation.. . . . . . . . . . . . . .. . . . . . . . 14
Section 4.5 Compliance with Laws andRegulations. . . . . . . . . .15
Section 4.6 Title to Pledged Stock and ExcessReceipts.. . . . . . 15
Section 4.7 No Defaults. . . . . . . . . . . . . .. . . . . . . . 16
Section 4.8 Taxes. . . . . . . . . . . . . . . . .. . . . . . . . 16
Section 4.9 Margin Stock.. . . . . . . . . . . . .. . . . . . . . 16
Section 4.10 Investment Company Act.. . . . . . . .. . . . . . . . 16
Section 4.11 Disclosure.. . . . . . . . . . . . . .. . . . . . . . 16
Section 4.12 Chief Executive Office . . . . . . . .. . . . . . . . 16
Section 4.13 Pooling and Servicing Agreement. . . .. . . . . . . . 17
ARTICLE V
COVENANTS
Section 5.1 Reports/Financial Information. . . . .. . . . . . . . 17
Section 5.2 Notices. . . . . . . . . . . . . . . .. . . . . . . . 18
Section 5.3 Corporate Existence. . . . . . . . . .. . . . . . . . 19
Section 5.4 Compliance with Law. . . . . . . . . .. . . . . . . . 19
Section 5.5 Compliance with Financing Agreements.19. . . . . . . . .
Section 5.6 Books and Records; Right of Inspection. . . . . . . . 19
Section 5.7 Further Assurances.. . . . . . . . . .. . . . . . . . 19
Section 5.8 Maintenance of Insurance.. . . . . . .. . . . . . . . 20
Section 5.9 Pooling and Servicing Agreement. . . .. . . . . . . . 20
Section 5.10 Merger; Consolidation, Etc.. . . . . .. . . . . . . . 20
Section 5.11 Change of Principal Office.. . . . . .. . . . . . . . 20
Section 5.12 Net Worth. . . . . . . . . . . . . . . . . . . . . .. 21
Section 5.13 Limited Business of SPC. . . . . . . .. . . . . . . . 21
ARTICLE VI COLLATERAL
Section 6.1 Security Interest. . . . . . . . . . .. . . . . . . . 21
Section 6.2 Perfection of the Security Interest. .. . . . . . . . 23
Section 6.3 Power of Attorney. . . . . . . . . . .. . . . . . . . 24
ARTICLE VII DEFAULT; REMEDIES
Section 7.1 Events of Default. . . . . . . . . . .. . . . . . . . 24
Section 7.2 Remedies.. . . . . . . . . . . . . . .. . . . . . . . 27
ARTICLE VIII MISCELLANEOUS
Section 8.1 Amendments, etc. . . . . . . . . . . .. . . . . . . . 29
Section 8.2 Notices. . . . . . . . . . . . . . . .. . . . . . . . 29
Section 8.3 Survival of Representations and Warranties.. . . . .. 30
Section 8.4 No Waiver; Remedies. . . . . . . . . .. . . . . . . . 30
Section 8.5 Costs and Expenses.. . . . . . . . . .. . . . . . . . 30
Section 8.6 Relationship; Indemnity. . . . . . . .. . . . . . . . 30
Section 8.7 Successors and Assigns; Assignment . .. . . . . . . . 31
Section 8.8 Registered Obligations . . . . . . . .. . . . . . . . 31
Section 8.9 Binding Effect; Governing Law. . . . .. . . . . . . . 32
Section 8.10 WAIVER OF TRIAL BY JURY; SUBMISSION TO
JURISDICTION. . . . . . . . . . . . . . . . . . . . . 32
Section 8.11 Term.. . . . . . . . . . . . . . . . .. . . . . . . . 32
Section 8.12 Headings.. . . . . . . . . . . . . . .. . . . . . . . 32
Section 8.13 Counterparts.. . . . . . . . . . . . .. . . . . . . . 32
Section 8.14 Reference to and Effect Upon Existing
Loan Agreements. . . . . . . . . . . . . . . . . . . .33
EXECUTION COPY
NOTE
U.S. $5,000,000.00
March 22, 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 ($5,000,000.00) 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 March 22, 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 Distribution 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.
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 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:
_________________________________________
SERVICING AGREEMENT
Dated as of March 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 1996-1
_________________________________________
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 AND RECORDS . . . . . . . . . . . . . . . 7
C. MAINTENANCE OF SECURITY INTEREST . . . . . . . . 7
D. COLLECTION OF RECEIVABLE PAYMENTS. . . . . . . . 8
E. PHYSICAL DAMAGE INSURANCE . . . . . . . . . . . . . . 8
F. COVENANTS OF THE TRUSTEE AND SERVICER; NOTICES
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
G. PURCHASE OF RECEIVABLES UPON BREACH . . . . . . . . 10
H. SERVICING FEE . . . . . . . . . . . . . . . . . . . 10
I. MONTHLY SERVICING CERTIFICATES. . . . . . . . . . . 10
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. . . . . 17
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 . . . . . . . . . . . . . . . . . . 22
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 . . . . . . . . . . . . . . .25
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
<PAGE>
SERVICING AGREEMENT
This Servicing Agreement is entered into as of the first day of
March, 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 March 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 by the Originator to Aegis
Auto Funding Corp. pursuant to a Purchase Agreement dated as of March
1, 1996 (the "Purchase Agreement"), 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; 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 Master 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
they are 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 Friday of each week beginning March 29, 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, 1995 (as amended,
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 AND 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 or 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 Trustee, 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,
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.
First Interstate Bank of California, 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
Department
Sixth Street and
Marquette Ave.
Minneapolis, MN 55479-0069
Telecopy No. (612) 667-9825
To Trustee: Norwest Bank Minnesota,
National Association
Corporate Trust
Department
Sixth Street and
Marquette Ave.
Minneapolis, MN 55479-0069
Telecopy No. (612)667-9825
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.
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 ASSUMPTI
ON 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]
<PAGE>
Backup Servicer:
NORWEST BANK
MINNESOTA,
NATIONAL
ASSOCIATION, in
its capacity as Backup
Servicer under the
Pooling and Servicing
Agreement
By:
Name: Michae lG. Luger
Title: Corporate Trust Officer
TRUSTEE:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, in its
capacity as Trustee under the
Pooling and Servicing Agreement
By:
Name: Michael G. Luger
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:
Jeffrey Cohen
Vice President
<PAGE>
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 The First
Interstate Bank of California, 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.
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.
<PAGE>
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 1996-1
Automobile Receivable Pass-Through Certificates
Series 1996-1
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
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 55479-0069
Re: Aegis Auto Receivables Trust 1996-1; Servicing Agreement dated as
of March 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.)
_____ 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 1996-1 created
pursuant to the Pooling and Servicing Agreement (the "Pooling and Servicing
Agreement") dated as of March 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]
<PAGE>
______________________________________________
______________________________________________
AMERICAN LENDERS FACILITIES, INC.
MASTER SERVICING AGREEMENT
_______________________________________________________
_______________________________________________________
<PAGE>
DRAFT
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
ARTICLE I.
DEFINITIONS1
ARTICLE II. NATURE AND SCOPE OF RELATIONSHIP. . . . . . . . . . . . . . .4
ARTICLE III.
ADMINISTRATION AND SERVICING OF RECEIVABLES . . . .. . . . . . . . .5
A. DUTIES OF SERVICER . . . . . . . . . . . .. . . . . . . . .5
B. MAINTENANCE AND RECORDS. . . . . . . . . .. . . . . . . . .9
C. MAINTENANCE OF SECURITY INTEREST . . . . .. . . . . . . . 10
D. COLLECTION OF RECEIVABLE PAYMENTS. . . . .. . . . . . . . 10
ARTICLE IV.
FIDELITY BOND AND ERRORS AND OMISSIONS INSURANCE .. . . . . . . . .11
ARTICLE V.
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . 11
A. REPRESENTATIONS AND WARRANTIES OF SERVICER. . . . . . . . 11
B. REPRESENTATIONS AND WARRANTIES OF COMPANY.. . . . . . . . 12
ARTICLE VI.
EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE VII.
REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE VIII.
RESPONSIBILITY AND AUTHORITY OF SERVICER. . . . . .. . . . . . . . 14
ARTICLE IX.
LOCK-BOX ACCOUNT. . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE X.
A. SERVICING DOCUMENTS AND RECORDS. . . . . . . . . . . . . . . . .15
B. REPORTS AND CREDIT AGENCIES. . . . . . . . . . . . . . . . . . .15
ARTICLE XI.
INDEMNIFICATION . . . . . . . . . . . . . . . . . .. . . . . . . . 16
ARTICLE XII.
TERM AND TERMINATION. . . . . . . . . . . . . . . .. . . . . . . . 17
ARTICLE XIII.
ARBITRATION AND ATTORNEYS' FEES . . . . . . . . . .. . . . . . . . 17
ARTICLE XIV.
WAIVERS . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 17
ARTICLE XV.
NOTICES . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 17
ASSIGNABILITY . . . . . . . . . . . . . . . . . . .. . . . . . . . 17
ARTICLE XVII.
FURTHER ASSURANCES. . . . . . . . . . . . . . . . .. . . . . . . . 17
ARTICLE XVIII.
COUNTERPARTS. . . . . . . . . . . . . . . . . . . .. . . . . . . . 19
ARTICLE XIX.
ENTIRE AGREEMENT; AMENDMENTS. . . . . . . . . . . .. . . . . . . . 19
ARTICLE XX.
INSPECTION. . . . . . . . . . . . . . . . . . . . .. . . . . . . . 19
SCHEDULE A - SUMMARY OF SERVICES
I. SERVICES. . . . . . . . . . . . . . . . . . . . . .. . . . . . . . 20
A. Contract Services - Collections. . . . . .. . . . . . . . 20
B. Contract Services - Customer Service . . .. . . . . . . . 23
II. SPECIAL COLLECTION ACTIVITIES . . . . . . . . . . .. . . . . . . . 25
A. Repossession and Sale. . . . . . . . . . .. . . . . . . . 25
B. Bankruptcies . . . . . . . . . . . . . . .. . . . . . . . 26
C. Disability . . . . . . . . . . . . . . . .. . . . . . . . 26
D. Allotments . . . . . . . . . . . . . . . .. . . . . . . . 27
E. Skips. . . . . . . . . . . . . . . . . . .. . . . . . . . 27
III. CUSTODIAL DUTIES. . . . . . . . . . . . . . . . . .. . . . . . . . 27
IV. FEE SCHEDULE. . . . . . . . . . . . . . . . . . . .. . . . . . . . 29
A. Loan Boarding and Custodial Fee. . . . . .. . . . . . . . 29
B. General Servicing. . . . . . . . . . . . .. . . . . . . . 29
C. Expense Reimbursement. . . . . . . . . . .. . . . . . . . 30
D. Method of Payment . . . . . . . . . . . . .. . . . . . . . 30
E. Deficiency Servicing. . . . . . . . . . . .. . . . . . . . 31
V.RESPONSIBILITY FOR INSURANCE POLICIES; PROCESSING OF
CLAIMS
UNDER INSURANCE POLICIES; DAILY RECORDS AND REPORTS . . . . . . . .31
VI. MONTHLY SERVICING CERTIFICATES . . . . . . . . . .. . . . . . . . 32
VII. ANNUAL STATEMENT AS TO COMPLIANCE; ACCOUNTANTS' SERVICING REPORT. 33
VIII. PAYMENT IN FULL ON RECEIVABLE. . . . . . . .. . . . . . . . . . . 33
IX. SUBSTITUTION OF COLLATERAL . . . . . . . . . . . .. . . . . . . . 34
SCHEDULE B - SERVICER MONTHLY ACTIVITY REPORT . . . . . . . . . . . . . 35
SCHEDULE C - REQUEST FOR RELEASE OF DOCUMENTS . . . . .. . . . . . . . .C-1
SCHEDULE D - RELEASE AND ASSIGNMENT PURSUANT TO SECTION IV.N. OF THE
SERVICING AGREEMENT . . . . . . . .. . . . . . . . . . . . D-1
AMERICAN LENDERS FACILITIES, INC.
MASTER SERVICING AGREEMENT
This Master Servicing Agreement (the "Agreement") is entered into as
of the 6th day of April, 1996 between American Lenders Facilities, Inc.
(hereinafter referred to as "Servicer"),a California corporation and Aegis
Consumer Finance,Inc., a Delaware corporation, its successors, and assigns
(hereinafter collectively referred to as
"Company").
RECITALS
WHEREAS, Servicer provides portfolio
management services, including collection assistance,
loan administration and financial reporting to financial
institutions in connection with Sales Contracts (as
hereinafter defined); and
WHEREAS, the Company and Servicer have
previously entered into agreements pursuant to which the
Servicer provided services to the Company in accordance
with the terms thereof dated February 28, 1994 and April
6, 1995 (collectively referred to as the "Prior
Agreements"); and
WHEREAS, Company and its Affiliates are and
will continue to become the owners of Sales Contracts;
and
WHEREAS, Company desires to continue to avail
itself of the services provided by Servicer on the terms
provided herein with respect to Sales Contracts
identified to the Servicer for servicing in accordance
with the provisions hereof after the "Effective Date" (as
hereinafter defined).
NOW THEREFORE, in consideration of the
foregoing, other good and valuable consideration, and the
mutual terms and covenants contained herein, the parties
hereto agree as follows:
ARTICLE I.
DEFINITIONS
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):
Approved Program. Shall mean, each package or pool
of Receivables, whether held by Company, placed with a
financial institution pursuant to a Warehouse Agreement
or transferred to a Trust or Holder on a given date,
which shall be considered a separate Approved Program;
provided, however, that Receivables accumulated under an
Approved Program (whether under a Warehouse Agreement or
otherwise) prior to sale to a Trust or Holder may be
delivered to Servicer on a daily basis, and Servicer will
thereupon service such Receivables pursuant hereto.
Audit. Wherever used in this Agreement (and as
applicable), audit shall define the scope of
responsibilities of Servicer in overseeing the
performance of any and all Sub-Servicers as outlined in
Schedule A.
Business Day. Any day other than Saturday, Sunday,
a regularly scheduled holiday of Servicer, or a day on
which banking institutions in California or New Jersey
are authorized or required by law to close.
Closing Holder Principal Balance. With respect to
a Loan Receivable transferred to a Trust or Holder, the
unpaid principal balance of that Receivable owed to the
Holder at the time of such transfer.
Closing Obligor Loan Balance. The unpaid principal
balance (in the case of a contract written under the
simple interest method of loan repayment) owed by the
Obligor at the time that Loan Receivable became subject
to this Agreement to the Company.
Credit Agency. A recognized agency to which
Servicer on behalf of the Company reports repayment
delinquencies, repossessions and redemptions.
Credit Enhancement. Any policy of insurance
(including but not limited to: Skip, Confiscation,
Physical Damage, Obligor Default, Credit Default,
Contingent Excess Liability, Residual Value Insurance,
Vendors Single Interest Physical Damage and GAP Auto
Protection) written by an Insurer for the purpose of
providing loan repayment guarantees to Company, Trust or
Holder.
Custodian. The holder of all the documents or
instruments delivered to the Servicer with respect to
each Receivable.
Dealer. Any licensed or franchised motor vehicle
dealer from whom Receivables have been acquired by
Company, either directly or through a financial
institution or credit union which itself acquired
Receivables from a motor vehicle dealer.
Depository Account. A remittance banking account
into which daily collections from the Lock- box Account
shall be deposited if required by any Purchase or loan
and security agreement.
Holder. As to any Receivable, the Person purchasing
or lending against the security of such Receivable.
Indirect Lender. As to any Receivable, the Person
acquiring a Sales Contract from an approved Dealer.
Insurer. Any insurance company which has issued
insurance utilized in the Company's automobile
receivables program.
Lock-Box Account. A bank account or accounts, in
the Company and Servicers name, into which Obligors,
Servicer, Company and the Insurer (if applicable) shall
be directed to deposit collections with respect to the
Receivables.
Obligor. An account debtor or any other person
obligated under a Sales Contract to make payments on any
Receivable.
Person. Any natural person or any entity, including
without limitation any trust, corporation, partnership,
firm, government or government agency.
Purchase Agreement. An agreement by which a Trust
or Holder purchases Receivables from Company in an
Approved Program.
Remarketing Agent. An entity responsible for the
disposition of a Vehicle after all Servicer functions
have been completed.
Receivable. A Sales Contract Agreement that:
a) complies with all applicable federal and state
laws and legal requirements;
b) was originated in connection with the sale of
a Vehicle to a person or the Company or the financing or
refinancing of such a Vehicle;
c) represents a bona fide obligation of an Obligor
and was executed in good faith by an Obligor and
constitutes a legal, valid and binding payment obligation
of such Obligor in accordance with its terms;
d) has been purchased by Company from a Dealer or
other Indirect Lender of Receivables or purchased by
Company from any person in the regular course of
Company's business;
e) is secured by a valid and perfected first
priority security interest in a Vehicle titled or
registered in one of the states of the United States or
the District of Columbia;
f) provides that an Obligor shall make payment on
such Sales Contract in United States dollars in
substantially equal monthly installments;
g) constitutes chattel paper as defined in the
Uniform Commercial Code provisions regarding transactions
in force in the jurisdiction whose law governs the
perfection of Company's or a subsequent Holder's security
interest in such Sales Contract; and falls within the
confines of this Agreement;
h) to the best of Company's knowledge, is one as
to which the property which is the subject thereof has
been delivered to an Obligor or a member of an Obligor's
family, there are no exceptions, counterclaims or
set-offs on the part of such Obligor against the amounts
payable and there have been no representations or
warranties made to such Obligor by the Dealer (if the
Receivable was originated by a Dealer) not contained in
the Sales Contract.
Remaining Holder Principal Balance. As to any Loan
Receivable, the Closing Holder Principal Balance
throughout the entire remittance process thereof less the
aggregate amount of principal payments, including all
liquidation and Credit Enhancement proceeds received by
the Servicer and remitted to a Trust or Holder to its
final payoff pursuant to this Agreement.
Remaining Obligor Loan Balance. As to any Loan
Receivable, the Closing Obligor Loan Balance thereof less
the aggregate amount of principal payments remitted by
Obligor (in the case of a contract written under the
simple interest method of loan repayment), or less the
remaining unearned finance charge.
Remittance Date. Shall be the fifteenth (15th) day
of the calendar month immediately following a Remittance
Period (unless another date is agreed to in writing by
both parties). If such day is not a Business Day, the
Business Day next succeeding such agreed upon day.
Remittance Period. Shall be the first day through,
and including, the last day of the calendar month
immediately preceding a Remittance Date.
Reserve Account. If required by a Purchase
Agreement, Warehouse Agreement or policy of insurance, a
bank account in which Company deposits funds to be used
for making payments due a Trust, Holder, Servicer and/or
Company.
Sales Contract. A motor vehicle retail installment
or conditional sales contract (comparable loan or other
document) pursuant to which an Obligor has acquired or
refinanced a Vehicle or used a Vehicle as security for a
financing. A motor vehicle retail installment sales
contract shall be deemed to include any motor vehicle
owned by an Obligor under a loan program.
Sub-Servicer. As used in this Agreement (and as
applicable), that person performing the responsibilities
outlined in Schedule A attached hereto.
Trust. A grantor or other Trust established
directly or indirectly by the Company which shall own
receivables in connection with a securitization or other
financing of all or a portion of a Company's loan
portfolio.
Vehicle. A new or used motor vehicle that was
purchased pursuant to a Sales Contract and serves as
collateral for a Receivable.
Warehouse Agreement. An agreement with a bank or
other financial institution to finance the acquisition
and accumulation of Receivables pending their sale to a
Trust or Holder.
ARTICLE II.
NATURE AND SCOPE OF RELATIONSHIP
A. Company hereby engages Servicer and Servicer agrees
to render to Company those services described in this
Agreement and in the attached Schedule A. In performing
its duties under this Agreement, Servicer shall report in
writing solely to such officers or other employees of
Company as Company may designate from time to time.
Nothing in this Agreement shall be construed as
establishing an employment or agency relationship or a
partnership or joint venture between Company, any third
party contract purchaser and Servicer.
B. Neither Company, nor its Affiliates shall use or
permit the use of Servicer's name or the names of any of
Servicer's affiliates in any advertising or promotional
material prepared by Company or on Company's behalf
without the prior written consent of Servicer which
consent shall not be unreasonably withheld; provided, for
purposes of clarification, the Company shall be
permitted to disclose Servicer's name and the
relationship of Servicer to the Company to third party
rating agencies, investors or parties to a
securitization, and in any case where disclosure is
required as a matter of law.
ARTICLE III.
ADMINISTRATION AND SERVICING OF RECEIVABLES
A. DUTIES OF SERVICER
1. The Servicer, for the Company: (i) shall act
prudently in accordance with customary and usual
servicing procedures for other institutional servicers;
(ii) shall administer, maintain and service the
Receivables in compliance with all applicable Federal and
State laws and regulations governing the Servicer and the
Receivables; and (iii) shall use and exercise that degree
of skill and attention that is customary with other
Servicers in the industry that service Sales Contracts
for themselves as well as others.
2. The Servicer's duties shall include collection
and posting of all payments, responding to inquiries 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 statements to the Company with respect
to distributions together with such additional
information as may be reasonably requested by the
Company.
3. The Servicer hereby agrees to act as a
custodian for 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 Vehicle; provided, however,
that the original of the Motor Vehicle Installment Sale
Contract and the original certificate of title or such
other documents evidencing the securities interest of any
trust in the financed vehicle and any other documents
designated by the Company to be held by an independent
custodian shall, at the request of the Company, be
delivered to such independent custodian. The Servicer
shall maintain in its files copies, computer records or
originals of each of the following documents with respect
to each receivable on the financed vehicle related
thereto:
(i) Application of the Obligor for
Credit;
(ii) A copy of the Retail Installment Sale
Contract and any amendments thereto;
(iii) A copy of a Certificate of Title
with a lien notation or an application therefor;
(iv) Such other documents as the Servicer
may reasonably request in order to accomplish its duties
under this Servicing Agreement.
Items (i), (ii), (iii) and (iv) shall be
referred to collectively as the "Servicer Files".
4. 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.
a. In its capacity as custodian of such
files, Servicer shall hold the Servicer Files and all
related files and documents on behalf of the Company,
Holder or a Trust designated by the Company, 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.
b. 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 permitted by the Company
and as allowed by applicable laws, regulations or
decrees. 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 Company, Holder or the
Trust designated by the Company. 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. When Servicer is acting in its capacity as
Custodian, 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 Holder,
Trustee of any Trust as applicable, and the Company, or
their duly authorized representatives, attorneys, or
auditors, the Servicer Files and any related accounts,
records, and computer systems maintained by the Servicer,
they shall reasonably instruct, but without disrupting
Servicer's operations. Without otherwise limiting the
scope of the examination, the Holder, Trustee or the
Company 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 compliance with the standards represented to
exist as to each Receivable in this Servicing Agreement.
Nothing herein shall require the Holder, Trustee or the
Company to conduct any inspection pursuant to this
Section.
6. 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 documents described in this
paragraph 6 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 Company, Holder
and those Trusts designated by the Company; all Loan
Documents shall remain the property of the Company,
Holder or those Trusts designated by the Company. The
Servicer shall respond to all third party inquiries
concerning ownership of the Receivables.
7. Upon the written consent of the Company, the
Servicer may employ or otherwise utilize subservicers and
enter into "subservicing agreements in carrying out its
duties and obligations under this Servicing Agreement.
8. If the Servicer shall commence a legal
proceeding on behalf of the Company to enforce a
Receivable the Company shall there upon be deemed to have
automatically assigned such Receivable to the Servicer
which assignment shall be solely for the purpose of
collection. The Company 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.
9. Servicer shall attempt to contact each Obligor
within five (5) days of boarding a Receivable into
Company's PRIM system and shall verify:
(i) the Obligor's home address, home
phone number, as well as employer name, address and phone
number;
(ii) the vehicle's make, model, year,
contents, state of registry and license plate number.
10. Within five (5) business days after Servicer
has electronically boarded the Receivable into Servicer's
system, Servicer shall attempt to contact the Obligor and
shall ensure and otherwise verify:
(i) whether the Obligor has been
instructed (A) as to when the first payment is due and
(B) where the first payment is to be made pursuant to the
Sales Contract executed by the Obligor;
(ii) whether the Obligor is prepared to
make the first payment due under the Obligor's Sales
Contract;
(iii) whether the Obligor has been
instructed as to the correct process for successive
payments;
(iv) that the information obtained
pursuant to Article III, Section A, paragraph 6(i) above
is true and accurate;
(v) whether the due date on the Obligor's
payment schedule is immediately following the date the
Obligor's employment paycheck is received;
(vi) that all dates and figures contained
in the Contract are true and accurate;
(vii) and inform the Obligor that the
Obligor shall receive a Welcome Letter informing them
that the Servicer is collecting for the Company; and
(viii) whether the Obligor is satisfied
with the motor vehicle and the dealership from which the
Obligor purchased the vehicle.
11. If a vehicle is reported or discovered to be
stolen or damaged, Servicer shall coordinate matters
with the primary insurance agent, the Obligor, and
Company. If a vehicle is reported or discovered to be
damaged beyond repair, Servicer shall coordinate matters
with the primary insurance agent and the Obligor.
Servicer shall administer all insurance claims and
rebates. Upon notification of the disability of the
Obligor, Servicer's collection manager shall file any
necessary insurance claims and coordinate and process
insurance payments. Servicer shall be responsible for
the collection of any outstanding or remaining
delinquency.
12. Servicer shall pursue skips for 120 days prior
to the VSI filing at which time the Obligor's account
shall be submitted to the Servicer's claims manager who
shall file the claim before the account becomes 150 days
delinquent.
13. Servicer shall administer all matters relating
to any Obligor's bankruptcy, including all legal filings
and responses as outlined in Schedule A herein;
14. Upon notice to either Company or Servicer of
the death of an Obligor, the Obligor's account shall be
transferred to the Servicer's collection manager who
shall be responsible for either (i) the repossession or
(ii) insurance administration relating to that
Receivable.
15. 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:
(i) commencing on the first business day
on which an Obligor is delinquent by more than four (4)
days, Servicer shall, at Servicer's discretion, either
(A) phone the Obligor, (B) if no contact is made after
phoning the Obligor, send a letter to the Obligor asking
the Obligor to immediately contact Servicer, or (C) order
a field call by an outside agency to the Obligor; and
(ii) in those cases where Servicer
contacts the Obligor, Servicer shall inform Obligor that
payment on Obligor's account may be made (A) by quick
collect, (B) by bank wire, (C) by overnight delivery or
(D) by normal payment.
16. When a determination is made by Servicer's
collection manager to repossess a vehicle, the Servicer's
collection manager shall turn over the account to the
assignment and reinstatement manager for assignment by
the Servicer to a repossession agency. Upon authorization
for repossession to Servicer by Company, Servicer shall
commence those activities enumerated in Schedule A,
Section II herein. Servicer shall continue to track and
monitor the repossession process with the repossession
agent until the vehicle is physically repossessed.
Company shall inform Servicer's NOI processor whether
reinstatement shall be permitted on a repossessed
vehicle. If the Obligor contacts Servicer during the NOI
period, Servicer shall request the Obligor to maintain
physical damage insurance. After the vehicle is
repossessed, Servicer shall coordinate and handle all
repossession and liquidation related matters as outlined
in Schedule A herein. If the Receivable is reinstated and
brought current, all collection activities relating to
the Receivable and enumerated in Article III, Section A,
paragraphs 6 through 12 herein, shall revert back to
Servicer.
17. Servicer shall promptly notify Company of all
collection processes implemented by Servicer or
modification of collection processes implemented by
Servicer.
18. 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
term of the Receivable.
19. 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.
20. The Servicer will administer the filings of
claims under the VSI Insurance Policy and the Risk
Default Insurance Policy as provided for in Schedule A,
Section B, paragraph 2(b) hereof.
21. Servicer shall be authorized and empowered by
Company to execute and deliver, on behalf of itself or
Company, any and all instruments of satisfaction or
cancellation, for a partial or full release or discharge
and all other comparable instruments, with respect to the
Receivables or the Vehicles.
22. Servicer shall make available to the Company,
or its duly authorized representative, attorneys, or
auditors, the Receivable files and any related accounts,
records, and computer systems maintained by the Servicer,
at such times as the Company shall reasonably instruct,
but without disrupting Servicer's operations.
23. In the event that Servicer's duties under
Article III, Section A, paragraphs 9 and 10 herein,
impose upon the Servicer more responsibilities and/or
duties (the "Extra Servicing") than were previously
contracted for in the Prior Agreements, and if the
Servicer should have to perform these duties due to the
removal of the Company as a subcontractor under that
certain subcontracting agreement (the "Subcontracting
Agreement") executed as of even date with the Agreement,
the Company and Servicer shall negotiate in good faith to
determine Servicer's reasonable compensation for
performing the Extra Servicing.
B. MAINTENANCE AND RECORDS
1. The Servicer shall maintain accounts, books 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. Additionally, the Servicer shall maintain
computer records in an agreed upon electronic format
which allows the Company, Trust or Holder to receive all
information relating to the Obligor and Holder Balance
belonging to the Company, Trust or Holder both in the
master file, transactional file and repo file through its
entire remittance period and final disposition process;
such information shall be provided to Company, Trust or
Holder upon request. The Servicer shall not acquire any
property rights with respect to such accounts, books and
records, and shall not have the right to possession of
them except as subject to the conditions stated in this
Agreement. The Servicer shall bear the entire cost of
restoration in the event any of the accounts, books or
records shall become damaged, lost or destroyed.
2. 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 Company, Trust or Holder.
3. Such physical and electronic accounts and
records shall be kept only for as long as Servicer is
servicing the Receivables for Company. Servicer shall
maintain separate accounts and records for Sales
Contracts. At such time as Servicer is no longer
servicing the Receivables for the Company, Servicer will
transfer physical accounts and records to the Company or
its designated storage facility, upon Company's request.
All electronic accounts and records shall be transferred
to the Company's facility located at 6700 Antioch, Suite
400, Shawnee, Kansas, 66204.
C. MAINTENANCE OF SECURITY INTEREST
The Servicer shall take such steps as are necessary
to maintain perfection of the security interest created
by each Receivable in the respective Financed Vehicle.
The Company hereby authorizes the Servicer and hereby
agrees to take such steps (at Company's expense), as are
necessary to re- perfect such security interest on behalf
of the Company in the event such re-perfection is
necessary or advisable for any reason.
D. COLLECTION OF RECEIVABLE PAYMENTS
1. 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.
2. In addition, the Servicer, on behalf of the
Company, shall use its best efforts to repossess or
otherwise recover the Vehicle securing any Receivable as
to which the Servicer shall have determined, after
consultation with the Company, 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 Vehicle into
cash proceeds.
3. Subject to the provisions of paragraph III(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 Vehicle at public or
private sale. The foregoing shall be subject to the
provision that, in any case in which the Vehicle shall
have suffered damage, the Servicer shall not expend funds
except at the direction of the Company, in connection
with the repair or the repossession of such 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.
ARTICLE IV.
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, 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 Article IV. 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 which would meet such requirements. Upon
request of the Company, Trust or Holder, the Servicer
shall cause to be delivered to the Company, Trust or
Holder 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 Company, Trust, Holder or
each Rating Agency.
ARTICLE 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 State of California, 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 Company, 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
by-laws 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.
B. REPRESENTATIONS AND WARRANTIES OF COMPANY
1. Company is a corporation duly organized,
validly existing and in good standing under the laws of
the State of Delaware, and has full corporate power and
authority to enter into this Agreement and to carry out
the provisions of this Agreement. Company has all
licenses, approvals and consents to conduct its business
as contemplated by 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
Company; this Agreement has been duly and validly
executed and delivered by Company; and, assuming due
authorization, execution and delivery by Servicer, this
Agreement is a valid and legally binding agreement of
Company enforceable in accordance with its terms.
3. Company is a member in good standing of TRW
Credit Data and shall in its best efforts maintain such
membership throughout the term of this Agreement.
4. The execution and delivery of this Agreement by
Company hereunder and the compliance by Company with all
provisions of this Agreement do not conflict with or
violate any applicable law, regulation or order and do
not conflict with or result in a breach of or default
under any of the terms or provisions of any contract or
agreement to which Company is subject or by which it or
its property is bound, nor does such execution, delivery
or compliance violate the Certificate of Incorporation or
by-laws of Company.
5. Company warrants that Company is duly
authorized to enter into the arrangements contemplated
hereby with respect to the applicable contracts,
including those provisions contained herein which
contemplate that Company will make decisions that may
affect a third party purchaser's rights under any given
Sales Contract .
ARTICLE VI.
EVENTS OF DEFAULT
A. If any one of the following events ("Events of
Default") shall occur and be continuing:
1. Any failure by the Servicer to deliver to the
Company any proceeds or payment required to be so
delivered under the terms of the Agreement that shall
continue unremedied for a period of two (2) business days
after receipt of written notice to the Servicer by the
Company; or
2. Failure on the part of the Servicer to observe
or to perform in any material respect any other covenants
or agreements set forth in this Agreement, which failure
shall adversely effect the rights of the Company and
continue unremedied for a period of thirty (30) days
after the date on which written notice of such failure
shall have been received by the Servicer; or
3. 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
4. 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
5. 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;
then, and in each and every case and so long as an
Event of Default described above shall not have been
remedied, the Company may terminate all of the rights and
obligations of the Servicer under this Agreement.
B. On or after the receipt by the Servicer of such
written notice, all authority and power of the Servicer
under this Agreement, with respect to the Receivables or
otherwise, shall pass to and be vested in the Company or
in any successor Servicer to be appointed by the Company
and the Company 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.
C. The Servicer shall cooperate with the Company in
effecting the termination of the responsibilities and
rights of the Servicer under this Agreement, including
the transfer to the Company 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.
D. The Company or the successor Servicer appointed by
the Company shall be successor in all respects to the
Servicer in its capacity as Servicer and Custodian under
this Agreement. Servicer shall be entitled to receive all
servicing fees and recovery of all costs up to the date
of the transfer of all functions referenced under this
Agreement.
ARTICLE VII.
REMEDIES
In addition to the indemnification rights contained in
Section XI, and the right to terminate contained in
Section XII, Servicer agrees that upon the happening of
any Event of Default (as defined in this Agreement
and/or Schedule A), the Company may avail itself of any
other relief to which the Company may be legally or
equitably entitled, subject only to the provision of
Section XIII of this Agreement.
ARTICLE VIII.
RESPONSIBILITY AND AUTHORITY OF SERVICER
A. Servicer shall have the full power and authority,
acting alone and without the consent of Company, to do
any and all things in connection with such servicing and
administration that it may deem reasonably necessary or
desirable, including but not limited to the right to
subcontract any of its duties hereunder, to collect the
account, to disburse the proceeds and to protect the
interests of the Company, Trust or Holder in the
Receivables.
B. The Company authorizes the Servicer to communicate
with third parties and the Obligor in the name of the
Company as necessary and proper to perform the services
anticipated by this Agreement.
C. Upon the execution and delivery of this Agreement,
Company shall revocably appoint the Servicer, and the
Servicer shall accept such appointment, to act for the
Company as Custodian.
ARTICLE IX.
LOCK-BOX ACCOUNT
Servicer shall establish, control and maintain the
Lock-Box Account and related bank accounts and shall
collect and hold in trust (for the benefit of Company,
Trust or Holder) in such accounts all funds received on
account of the Obligor (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. Company shall be
responsible for all charges, and shall be entitled to
receive all interest earned on amounts in the Lock-Box
Account and related bank accounts. All Lock-Box and
related accounts shall be in a financial institution
selected by Company. Company agrees that Servicer shall
bear no liability for any losses that occur as a result
of the failure or closure of the financial institution
selected by Company.
ARTICLE 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. Servicer shall hold in trust and keep safely
for the benefit of Company, Trust or Holder the computer
records relating to the Obligor accounts and the proceeds
thereof.
3. If required by Company, Trust or Holder,
Company shall retain an independent public accounting
firm to audit the applicable Obligor accounts on the
basis and scope of audit directed by Company, Trust or
Holder, as the case may be. All fees and expenses of such
firm shall be borne by Company, Trust or Holder, as the
case may be.
4. The Servicer will furnish copies of any audit
reports prepared for the Servicer (either internal or
otherwise) with respect to the Receivables to the
Company, Trust or Holder promptly upon the receipt
thereof by Servicer.
5. All data, documents and information held by
Servicer on behalf of Company, Trust or Holder shall be
held in confidence and not used or disclosed for any
purpose other than as contemplated by this Agreement or
as required by law.
6. Servicer shall provide the Company, Trust, and
Holder or their designee(s) access to Servicer's facility
but only upon reasonable request and during normal
business hours and to the extent that such access would
not significantly disrupt the orderly conduct of business
at such facility.
7. If the Company, Trust or Holder exercises its
right to gain access to Servicer's facility pursuant to
ArticleX paragraph 6, then it shall reimburse Servicer
for the costs of any extraordinary expenses in connection
with Servicer providing such access, including but not
limited to photocopying, telephone calls, keys and
parking.
8. Company shall cause such Sales Contract
documentation, as Servicer indicates is necessary for
Servicer to perform the Services, to be delivered to
Servicer.
9. Servicer shall upon the Company's request,
deliver to Company as of the closing date of a
securitization, a report concerning the receivables
involved in said securitization, detailing the amount of
interest owed by an Obligor to the Company, and the
amount of interest collected by Servicer from an Obligor
on behalf of the Company (the "Sellers Interest Report")
as of a specified date set by Company, within reason.
Servicer shall provide an updated Sellers Interest Report
on the first business day of the third month following
the closing date of a securitization.
10. Servicer shall perform electronic file
transfers to back-up servicers each Friday.
B. REPORTS AND CREDIT AGENCIES
1. In addition to its normal reporting, Servicer
shall also furnish the Company, Trust or Holder upon
request, with such additional information underlying the
data in the aforesaid reports as may be reasonably
pertinent to Company's needs and that can be generated by
Servicer's existing data processing system without undue
effort or expense. The reports required by this
Agreement shall be in a form acceptable to the Company
and Trust.
2. Company understands that all transactions with
respect to an Obligor account will be reported by one or
more Credit Agencies as required by contract and by law.
Company and Servicer will comply with all Credit Agency
agreements.
3. Servicer shall notify one or more Credit
Agencies as required by contract and by law, of any
change in a deficiency balance of an Obligor's account
upon Company's notification to Servicer of same.
ARTICLE XI.
INDEMNIFICATION
A. The Servicer agrees to indemnify the Company, 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 Company, 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 Company if a claim is made by a third party
with respect to this Servicing Agreement or the
Receivables, assume (with the consent of Company) 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 Company in
respect of such claim. The Company shall indemnify the
Servicer against, and holds Servicer harmless from, any
and all other claims and damages relating to this
Agreement, provided that prompt written notice of any
such claim or damage (when known by Servicer) is given to
Company. This right to indemnification shall survive the
termination of this Servicing Agreement.
B. Company shall be entitled to assume the complete
control of the defense or settlement of any such claim at
Company's expense. Servicer shall not settle or
compromise any such claim without Company's prior written
consent unless Company has not agreed to assume the
complete control of the defense or settlement thereof.
ARTICLE XII.
TERM AND TERMINATION
A. The term of this Agreement shall be for one (1)
year from the date of signing of this Agreement. Company
shall have the option, exercisable at any time prior to
thirty (30) days from the expiration of the initial term
of this Agreement, to renew this Agreement for subsequent
terms with each such subsequent term running one (1)
year.
B. Servicer or Company shall have the right to
terminate this Agreement (but not the servicing of any
Obligor Accounts being serviced under the original or any
subsequent term, unless the Company exercises its right
to transfer the servicing of its portfolio or any portion
thereof as provided for in Article XII, paragraph D
herein) upon ninety (90) days written notice sent by
overnight mail. For tolling purposes the date of notice
shall be the date the non-moving party receives written
notice of the moving parties intent to either terminate
the Agreement or in the case of Aegis (as the moving
party), to transfer the servicing of its portfolio or any
portion thereof as more particularly described in Article
XII, paragraph D.
C. Notwithstanding the expiration or earlier
termination of this Agreement, Servicer agrees to service
all Obligor accounts for their full term and until their
expiration or early termination.
D. In the event the Company elects to transfer the
servicing of its portfolio or any portion thereof,
Company shall notify Servicer of its intent to transfer
pursuant to Article XII B. On the first day following
Company's effective notice to Servicer of its intent to
move servicing, the Servicer shall have thirty (30)
calendar days (the "Interim Period") to complete the
transfer of all servicing to the Company or its designee.
E. During the Interim Period, the Servicer shall
continue to service the loans and/or leases under the
Agreement and will promptly provide Company, its designee
or any successor servicer, and/or sub-servicer all
written documents and records as requested and, without
limitation, all electronic records or reproductions
pertaining to Company's assets or information thereof on
a daily basis.
F. The Servicer shall transfer to the Company or its
designee during the Interim Period with all diligence,
all amounts which should have been deposited in
collection accounts by Servicer or which are thereafter
received by Servicer.
G. Upon termination of the Interim Period (the
"Termination Date") which shall coincide with the
termination of Servicer's rights and obligations under
this Agreement (except for those rights, warranties and
remedies intended to survive this Agreement or any
amendments thereto), the Company or its designee will
have received from Servicer all account files and related
documents, computer tapes which contain all data
electronically boarded and accumulated with respect to
each loan on its systems, and statements current as of
that day held by the Servicer on behalf of the Company,
Holder, and Trust, in furtherance to this or any prior
Agreement between the Company and Servicer; and Servicer
will:
i. deliver to Company or its designee a full
accounting of all funds, including a statement showing
monthly payments collected and a statement of moneys held
in any account or trust by it for payments or charges
with respect to the loans or leases;
ii. execute and deliver such instruments and have
performed all acts requested in order to effect the
orderly and efficient transfer of loan and lease
servicing to the Company or its designee and to more
fully and definitively affect vesting and transfer of
authorities to Company or its designee in dealings with
any third party vendor having business with or activity
with the loans and leases of the Company being serviced
(including but not limited to supplying the Company or
its designee with the names, addresses, contact persons,
account numbers, phone numbers and fax numbers of any
subcontractors or third party vendors); and
iii. fully vest all rights, powers and duties,
responsibilities, obligations and liabilities of Servicer
under this Agreement with the Company or its designee.
H. In the event of termination, the Company or its
designated servicer is fully authorized and empowered to
execute and deliver on behalf of the Servicer any and all
documents and other instruments and to do or cause to be
done all other acts or things necessary and appropriate
to effect the purposes of any such notice of termination,
including but not limited to the transfer and endorsement
or assignment of any loans or leases originated by the
Company.
I. Upon the completion of the transfer of servicing
from Servicer to Company or its designee, Company shall
pay to Servicer five (5) dollars for each receivable
transferred.
ARTICLE XIII.
ARBITRATION AND ATTORNEYS' FEES
A. It is understood that this Agreement is made in good
faith and should there arise, from any unforeseen cause,
a difference of opinion or of interpretation of this
Agreement which cannot be settled amicably between
Company and Servicer, such difference or interpretations
shall be submitted to a decision of a board of
arbitration.
B. The aforementioned board of arbitration shall be
composed of two (2) arbitrators and an umpire meeting in
Irvine, California, unless otherwise agreed to by Company
and Servicer.
C. 1. 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.
2. 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.
D. 1. The board shall make an award with regard to
the custom and usage of the business contemplated by this
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.
2. 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, Los Angeles,
California, 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.
E. 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.
ARTICLE XIV.
WAIVERS
No failure or delay on the part of Servicer or Company in
exercising any power, right or remedy under this
Agreement shall operate as a waiver thereof, nor shall
any single or partial exercise of any such power, right
or remedy, preclude any other or further exercise thereof
or the exercise of any other power, right or remedy,
except by a written instrument signed by the party to be
charged or as otherwise expressly provided herein.
ARTICLE 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: American Lenders Facilities,Inc.
2600 Michaelson Blvd.
Suite 470
Irvine, CA 92715
Attn: C. Joseph Bruno, President, CEO
Telecopy No. (714) 955-7074
To Company: Aegis Consumer Finance, Inc.
525 Washington Blvd.
Jersey City, New Jersey 07310
Attn: Joseph F. Battiato, President
Telecopy No. (201) 418-7339
or to such other address as such party shall have
specified in writing in the manner set forth above.
ARTICLE XVI.
ASSIGNABILITY
Neither party may assign any of its rights or obligations
hereunder without the prior written consent of the other
party. Nothing in this Agreement is intended to confer,
expressly or by implication, upon any Person other than
Company and Servicer any rights or remedies under or by
reason of this Agreement.
ARTICLE XVII.
FURTHER ASSURANCES
Each party agrees, if reasonably requested by the other
party, to execute and deliver such additional documents
or instruments and take such further actions as may be
reasonably necessary to effect the transactions
contemplated by this Agreement.
ARTICLE XVIII.
COUNTERPARTS
This Agreement may be executed in counterparts, each of
which shall be deemed an original but all of which taken
together shall constitute but one and the same document.
ARTICLE XIX.
ENTIRE AGREEMENT; AMENDMENTS
This 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 Agreement may not be modified,
changed or supplemented except upon the express written
consent of both of the parties hereto. In the event of
any conflict between this Agreement and a Schedule
hereto, the Schedule shall govern.
ARTICLE XX.
INSPECTION
Either party or its designated agents may, during
ordinary business hours and after reasonable notice,
inspect, audit, check and make abstracts from the other
party's books, accounts, records and other papers
directly pertaining to the subject matter of this
Agreement or Schedule A hereto. All costs and expenses
of such activities shall be borne by the inspecting
party. The other party shall reasonably facilitate any
such inspection.
This Agreement shall be governed by and construed
in accordance with the laws of the State of California.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed as of the date first
written above.
SERVICER:
AMERICAN LENDERS FACILITIES, INC.
Attest
______________________
By: C. Joseph Bruno
Title: President, CEO
COMPANY:
Attest
______________________
By: Joseph F. Battiato
Title: President
Servicer and Company agree that neither the
Servicer nor the Company will at any time, without the
written consent of the other party, disclose to anyone
nor permit anyone under either parties direction to
disclose to anyone not properly entitled to disclosure,
any information contained in or relating to this
Agreement. For purposes of this Agreement, persons
properly entitled to such information shall be only
employees and agents of employer and such other persons
as are legally entitled to such information.
SCHEDULE A - SUMMARY OF SERVICES
I. SERVICES
A. CONTRACT SERVICES - COLLECTIONS:
1. Promptly following the execution of this
Agreement, Servicer shall establish a Lock-box Account in
both the Company's and Lender's name, at First Interstate
Bank of California, N.A., subject to future change at the
discretion of the Company.
a. The Servicer shall maintain the Lock-Box
Account and shall collect and hold in trust (for the
benefit of the Company, Trust or Holder) in such account
all funds received on account of the Obligors until such
funds are transferred to the Company, Trust or Holder in
accordance with their 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 Company, Trust, Holder or its
designee.
b. 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 Company, Trust, and Holder or its designee
(respectively), of the location and account number of the
Lock-Box Accounts promptly after establishing or changing
the same.
c. First Interstate Bank of California,
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
Company, Trust and Holder of its appointment of a
successor Lock-Box Account Depository, which such
successor Lock-Box Account Depository shall be an
eligible institution agreed to by Company.
d. 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.
e. 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.
2. Within two business days that a Receivable is
entered into Servicer's computer system, Servicer shall
send each Obligor a "Welcome Letter" in a form agreeable
to both Servicer and Company, which will advise the
Obligor of the payment procedures and such further
information as the parties deem appropriate.
3. Servicer shall be responsible for the mailing
of payment coupon books or monthly statements as directed
by the Company. 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.
4. 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 Obligor, 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 shall request Company'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 waived if
Servicer cannot obtain authorization, provided the
Servicer has determined that any delay would impede the
Servicer's ability to secure the Vehicle. Servicer shall
supply a report of any Vehicle it repossesses and events
leading to such actions.
c. If an Obligor requests a change to his
normal monthly due date (a "Due Date Change"), Servicer
shall have the right to grant such Due Date Change;
however, no Due Date Change shall be granted beyond the
currently due payment.
d. Except as otherwise provided in this
agreement, if an Obligor has been delinquent for more
than thirty-five (35) days, Servicer shall request
Company's authorization to repossess pursuant to Section
I-A-4.b of this Schedule A.
e. 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 more
than one Loan Extension per year and/or three (3) Loan
Extensions per loan term be granted to any one Obligor or
in no case more than allowed by an insurer.
f. Loan Extensions other than as provided
for herein shall require the Company's approval. In no
event shall Servicer permit more Loan Extensions than
permitted by a Credit Enhancement Insurer.
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. Within the provisions of the General
Servicing Fee contained in the Fee 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 Company and the
Servicer) pursuant to each Credit Enhancement:
a. With respect to the Company's Credit
Default Insurance Policy ("Credit Default"), Servicer
shall:
(1) Initial Notice of Loss to be filed
within 45 days of Date of Loss (which shall mean for
purposes of this Section only, the earlier of the
repossession date or last pay to date plus ninety (90)
days);
(2) Forward a completed claim form for
liquidation of a Vehicle and evidence of loss to AESIC or
Lee & Mason Financial Services, Inc. (depending upon
which policy is applicable in each case) within the
required time frame as prescribed by the applicable
policy, but in no event longer than ninety (90) days of
Date of Loss;
(3) Maintain claim data components;
(4) Calculate the claim amount;
(5) Prepare a correct and complete
claim form; and
(6) Submit claim form to either AESIC,
Dixie Terminal B Building South, Suite 300, 49 East
Fourth Street, Cincinnati, Ohio, 45202- 3803 or, Lee &
Mason Financial Services, Inc., Box 270, Northville, NY,
12134-270, (518) 863-4311 or (518) 863-6963, depending
upon which policy is applicable in each case.
b. With respect to the Company's Vender's
Single Interest Policy (the "VSI 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
c. With respect to the Company's Gap Insurance Policy (the "Gap Policy"),
Servicer shall:
(1) Initial Notice of Loss within sixty (60) days of Date of
Loss which shall mean for purposes of this Section only,
the repossession date;
(2) Maintain claim data components; and
(3) Calculate the claim amount
(4) prepare a correct and complete claim form and (5) submit
claim to either AESIC, Dixie Terminal B Building South,
Suite 300, 49 East Fourth Street, Cincinnati, Ohio,
45202-3803 or, Lee & Mason Financial Services, Inc., Box
270, Northville, NY, 12134-0270. Phone number (518)
863-4311 or (518) 863-6963.
d. With respect to the Obligor's physical damage insurance and
Company's rights to proceeds as lender and/or owner of
Vehicle, Servicer shall:
1) Receive from the Company the initial physical damage
insurance information at the time of portfolio boarding;
2) Notify Company 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;
3) 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;
4) Not be liable for any loss or liability resulting from the lack
of insurance coverage on any Obligor vehicles.
3. Company authorizes Servicer to negotiate and settle any claims
relating to physical damage to a Vehicle and to 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 Company's
authorization to repossess Vehicle from the repair
facility pursuant to Section I-A-4.b of this agreement.
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.
c. Company authorization is required for
settlements where the claim payment differs from the
Remaining Obligor Loan Balance (in case of a total loss
to a Vehicle) by an amount greater than the policy
deductible plus collection expenses; orin all other
cases, the amount necessary to repair damage by an amount
greater than the policy deductible.
4. Servicer shall calculate early payoffs of
Remaining Obligor Loan Balance per the terms of the
related sales contract. Company 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 Loan Balance
of twenty-five dollars ($25.00) or less.
5. Upon receipt by Servicer of the full payment
of the Remaining Obligor Loan Balance by the Obligor,
Servicer shall release and forward to the Obligor the
original of the conditional Sales Contract.
II. SPECIAL COLLECTION ACTIVITIES:
A. REPOSSESSION AND SALE
If Servicer receives authorization from Company
to repossess a Vehicle, the following terms shall govern
the repossession and sale of the Vehicle:
1. Servicer shall order repossession services
from licensed, bonded agents.
2. After repossession, Servicer shall prepare
and mail a Notice of Intent (the "NOI) to the Obligor
within five (5) business days, or the time period allowed
under applicable state statute, whichever is less, and
send a copy of the NOI to Company.
3. Upon request, Servicer will provide Company
with names, contact names, addresses, phone numbers, and
fax numbers of all sub-contractors performing any service
with respect to Company assets.
4. Servicer shall cause the repossessed Vehicle
to be delivered to a location as designated by Company
for the amount of time required by applicable State law
for Obligor redemption (the "Obligor Redemption Period").
5. After the expiration of the Obligor
Redemption Period, Company may authorize Servicer to
arrange for the sale and disposition of the Vehicle.
B. 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:
1. Servicer shall immediately cease all
collection activity and otherwise comply with the
Bankruptcy Code and all related laws and regulations.
2. Servicer shall file a claim with the
applicable court.
3. Servicer shall obtain legal services for the
prosecution of the claim when necessary.
4. Servicer shall monitor the receipts of funds
being paid through the applicable bankruptcy plan.
5. 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.
6. 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, and Servicer shall update its
computer system to reflect the bankruptcy status of the
Obligor's account.
C. 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:
1. Servicer shall continue to monitor such
Obligor's account until the earlier of the date on which:
a. A claim approval or denial has been
received; or
b. The Obligor resumes payment, at which
time Servicer will resume collection activity pursuant to
Section III of this Agreement.
2. 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 .
3. Servicer's collection procedures for a
disability account shall comply with the terms stipulated
on the related Sales Contract.
D. ALLOTMENTS
1. Company shall notify Servicer at the time of
loan boarding if an Obligor will be subject to military
allotment processing.
2. 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 Company's
authorization to repossess pursuant to Section I-A-4.b of
this Schedule A.
E. 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 Company's insurance carriers
or with the relevant insurance policies.
III. CUSTODIAL DUTIES.
A. Upon the execution and delivery of this Agreement,
Company shall revocably appoint the Servicer, and the
Servicer shall accept such appointment, to act for the
Company as Custodian.
B. Company shall deliver to the Servicer as Custodian
the documents or instruments pertaining to each
Receivable electronically boarded with the Servicer. The
Servicer as Custodian shall independently verify the data
received by the Servicer against the Receivable documents
and instruments. The following information will be
verified by the Servicer as Custodian: (1) Receivable
identifying number; (2) the name of the Obligor; (3) the
mailing and garaging address(es); (4) the year, make,
model and VIN of the Vehicle; (5) the amount financed,
term, rate and monthly payment as applicable; (6) the
contract and first payment due dates; and (7) owner and
lienholder information. Custodian shall inform the
Company of any and all discrepancies;
C. Company shall deliver and release to Custodian,
including but not limited to, the following documents
pertaining to each Receivable:
1. The original Sales Contract;
2. The original credit application;
3. The original certificate of title or
supporting vehicle documentation (copy of title
certificate, MSO, MCO, guarantee of title) as applicable
evidencing the ownership and security interest of the
company or lienholder in the Vehicle or efforts made by
the Company or its assignee to perfect such ownership or
security interest;
4. All documents provided by the Company
evidencing the existence of physical damage and liability
insurance covering a motor Vehicle. Upon receipt of the
original title, Servicer as Custodian shall in addition
to its customary review of title, review the seventh
character of the VIN for an "X." If an "X" appears in
the seventh position of the VIN, Servicer acting as
Custodian, shall notify the Company upon discovery.
D. Upon receipt and review of the documentation
indicated above, Servicer as Custodian shall establish an
independent electronic file for each Receivable, which
shall contain the data and document tracking information
in an agreed upon electronic format which will allow the
Company or lienholder to receive all information relating
to the Custodian's file; such information shall be
provided upon request.
E. In the event Company, Trust or any Holder
subsequent to the execution of this Agreement appoints
any Person other than Servicer as custodian of the
documents and instruments indicated in III. C above,
Company shall indemnify Servicer against any liability
arising from such subsequent appointment; excepting for
liability arising from Servicer's actions during the
period of their appointment. In its capacity as
Custodian, Servicer shall hold all files and documents on
behalf of the Company, 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 conditional Sales Contracts for themselves as
well as for others.
F. Company (if applicable) shall have the
responsibility to verify application for title to the
motor Vehicle covered by the contract. Company shall
send, or cause to be sent, to Servicer all titles to such
motor Vehicles. With respect to titles received, Servicer
shall verify that Company or its designee is lienholder
with respect to the Vehicle. Servicer as Custodian
shall verify that Company is the legal and registered
owner of the Vehicle.
G. Servicer as Custodian shall notify Company of any
discrepancies with respect to the lienholder indicated on
received titles. Servicer shall further notify Company of
missing titles. Company shall be responsible for
correcting title discrepancies and obtaining missing
titles.
H. Servicer as Custodian shall not release any title
to a Vehicle except upon the full payment of the
Remaining Obligor Loan Balance by the Obligor or others,
or the repossession and sale of the related vehicle, or
the release of the title to Company for the correcting of
title problems, or as required by law, or as directed by
Company.
I. Servicer as Custodian shall deliver to Company,
within two business days of Company's request,
the original certificate of title or supporting vehicle
documentation if within Servicer's possession. If the
original certificate of title or supporting vehicle
documentation is in the possession of a custodian other
than the Servicer, the Servicer shall have two business
days to request the original certificate of title or
supporting documentation from the custodian, and upon
receipt of same, the Servicer will have twenty-four (24)
hours to deliver the requested material to the Company.
J. Custodian agrees to deliver its custodial files to
the possession of a custodian, prior to the closing of
any securitization, whole loan sale or other financing,
as directed by the Company. The Company shall give the
Custodian at least ten (10) calendar days notice, but
will endeavor to give notice soon as is possible, prior
to the closing date. Notice shall be accomplished by the
Company's (i) transmittal of a memo to Custodian
(specifically addressed to Jerry Sokolow, John Marasco
and C. Joseph Bruno) identifying the date of the closing,
and (ii) by the Company's electronic file transfer
(specifically addressed to Jerry Sokolow and John
Marasco) to Custodian of information sufficient for
Custodian to identify the custodial files to be copied
and transferred.
IV. FEE SCHEDULE
Servicer shall be entitled to receive from Company the
following fees and costs no later than the Remittance
Date immediately following each related Remittance
Period:
A. LOAN BOARDING AND CUSTODIAL FEE
For $15 per Subject Receivable, Servicer shall:
(1) enter the Subject Receivable into Servicer's computer
system electronically during the related Remittance
Period; (2) transmit Electronic Receivable files to the
Company at its offices located at 6700 Antioch, Suite
400, Shawnee, Kansas, 66204, unless otherwise mutually
agreed upon; and (3) Servicer shall perform as the
Company's Custodian pursuant to the requirements stated
in Section III of Schedule A.
B. GENERAL SERVICING
1. For all Receivables with a Remaining Obligor
Loan Balance greater than zero ($0.00) dollars as of the
first day of the related Remittance Period, the Company
shall pay a monthly servicing fee equal to one-twelfth of
1.85% (annualized) of the outstanding Remaining Obligor
Loan Balance or $10.00, whichever is greater.
2. For those Receivables boarded onto Servicer's
computer system during the related Remittance Period the
monthly servicing fee stated above will be pro-rated for
the number of days from such boarding through the last
day of the related Remittance Period.
3. In the event that the Company ceases to
utilize Servicer's services, the monthly servicing fee
for the existing receivables shall be set at a $1,000
minimum.
4. In addition, Servicer shall receive:
a. All extension fees that are received
during the related Remittance Period.
b. All late charges that are received
during the related Remittance Period.
c. A charge of $ 25.00 per filing of Credit
Enhancement claims forms with the designated Insurers
during the related Remittance Period.
C. 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 plus eight percent (8%). Servicer shall
provide Company with documentation for all such
out-of-pocket expenses.
2. In the event Company elects the use of
monthly payment statements versus coupon books, Company
shall reimburse Servicer for all preparation costs
associated with such statements.
3. 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.
4. Company shall reimburse Servicer for all
programming expenses arising from modification of the
servicing software which the Company has requested in
writing and which both the Company and Servicer have
approved. The amount to be reimbursed will be based upon
Servicer's invoiced cost for outside contractors, if any.
Servicer shall provide Company with copies of invoices,
time sheets and all supporting documentation reasonably
required by Company to verify the cost of such
programming charges.
D. METHOD OF PAYMENT
1. All General Servicing fees as indicated in
Section IV. above earned during a Remittance Period may
be withdrawn by Servicer from the applicable bank account
on the tenth (10th) day following the related Remittance
Period to the extent such fees are available from the
bank account.
2. In the event the applicable bank account has
insufficient funds to pay all fees due, Company shall
issue a check for any unpaid balance within five (5) days
of the billing by Servicer for such fees.
3. All boarding fees, postage reimbursement and
out-of-pocket expense reimbursement earned during a
Remittance Period shall be billed by Servicer and paid by
Company to Servicer by the tenth (10th) day following the
related Remittance Period. In the event Company fails to
pay the applicable out-of-pocket expense reimbursement by
the date indicated, Servicer shall have the right to
withdraw such expense reimbursement from the applicable
bank account.
E. NON-PERFORMING LOANS
1. In accordance with instructions provided by
Company, Servicer shall cause those Receivables who have
met criteria established in the various Purchase
Agreements to be transferred to a Non-performing pool
(the "Aegis-A" pool).
2. All reports generated on Receivables residing in
the Aegis-A pool shall contain the necessary information
to allow for any reconciliation to the "host" pool from
which the Receivable was originally transferred. All
transactions will be processed against the Aegis-A pool
with receipted funds being reported to applicable
trustees for deposit to the corresponding Reserve
Accounts.
3. Servicer will charge Company a monthly fee based
on the following schedule:
a. $1.00 per month for months 1-4 that a Subject
Receivable remains in the Aegis-A pool.
b. $.50 per month for months 5-8 that a Subject
Receivable remains in the Aegis-A pool.
c. $.10 per month for each month thereafter that
a Subject Receivable remains in the Aegis-A pool.
V. RESPONSIBILITY FOR INSURANCE POLICIES; PROCESSING
OF CLAIMS UNDER INSURANCE POLICIES; DAILY RECORDS AND
REPORTS.
A. The Servicer, on behalf of the Company, Trust or
Holder (respectively), 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 Company, Trust or Holder (respectively), 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 Company, Trust or Holder (respectively) as the
insured and the VSI Insurance Policy names the Company,
Trust or Holder (respectively) as an additional insured.
B. 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 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 Schedule A, Section B. paragraph 2. 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 Company, Trust
or Holder (respectively) 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 Holder or 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.
C. 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 Agreement, the Servicer shall not be
responsible to the Company, Trust or Holder
(respectively) (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 Agreement. In the case
of any inconsistency between this Agreement and the terms
of any VSI Insurance Policy or Risk Default Insurance
Policy, the Servicer shall comply with the latter.
VI. MONTHLY SERVICING CERTIFICATES.
The Servicer shall deliver to the Company and Trust a
Monthly Servicing Certificate on the eighth (8) business
day of each month (but in no case later than the eleventh
(11) calendar day of each month ) for the previous month,
substantially in the form of, but not limited to,
Schedule B attached hereto, containing all information
requested by the Company or Trust.
VII. ANNUAL STATEMENT AS TO COMPLIANCE; ACCOUNTANTS'
SERVICING REPORT.
A. The Servicer shall deliver to the Company, Trust,
Holder or its designee (respectively), 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.
B. Upon request by the Company, Trust, Holder or each
Rating Agency, and at the expense of the Company, Trust
or Holder (respectively), a firm of Independent Public
Accountants shall furnish a statement to the Company,
Trust or Holder and each Rating Agency 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 the Agreement or Schedule A herein, and that, on the
basis of such examination, such servicing and reporting
requirements have been conducted in compliance with the
Agreement or Schedule A herein, 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.
VIII. PAYMENT IN FULL ON RECEIVABLE.
Upon payment in full on any Receivable, the Servicer
shall notify the Company, Trust, Holder or its designee
(respectively), 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, have been deposited.
Upon receipt of such request, the Company, Trust, Holder
or its designee (respectively), 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 Custodian, if any party other than the
Servicer is acting as custodian. 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 Company, Trust, Holder or its
designee (respectively), shall perform such other acts as
reasonably requested by the Servicer and otherwise
cooperate with the Servicer in enforcement of the rights
and remedies of the Company, Trust, Holder or its
designee (respectively), with respect to the Receivables.
IX. 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 Company 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 of any given Trust. 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 Company 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 Servicer.
SCHEDULE B
SERVICER MONTHLY ACTIVITY REPORT
Aegis Auto Receivables Trust 1996-1
Automobile Receivable Pass-Through Certificates
Series 1996-1
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
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
SCHEDULE C
REQUEST FOR RELEASE OF DOCUMENTS
To: Norwest Bank Minneapolis, National Association,
as Custodian
Sixth Street and Marquette Avenue
Minneapolis, MN 55479-0069
Re: Aegis Auto Receivables Trust 1996-1;
Servicing Agreement dated as of March 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.)
_____ 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:______________________________
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 1996-1 created pursuant to
the Pooling and Servicing Agreement (the "Pooling and
Servicing Agreement") dated as of March 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]
SUBCONTRACTING AGREEMENT
This Subcontracting Agreement is entered into
as of the 6th day of April, 1996 between American Lenders
Facilities, Inc.("ALFI"), a California corporation, and
Aegis Consumer Finance, Inc., its successors and assigns
(hereinafter referred to as "Aegis"), a Delaware
corporation.
WITNESSETH
Notwithstanding anything to the contrary set
forth in the said Agreements, as amended hereby, the
parties agree as follows:
WHEREAS, pursuant to the Master Servicing
Agreement (the "Servicing Agreement"), dated as of even
date herewith between ALFI and Aegis, ALFI has agreed to
provide portfolio management services, including
collection assistance, loan administration and financial
reporting to financial institutions in connection with
motor vehicle retail installment sales and lease
contracts (herein "Portfolio Services"); and
WHEREAS, ALFI and the Company have previously
entered into a Subcontracting Agreement dated as of April
6, 1995 (the "Prior Agreement"), and ALFI continues to
agree to subcontract to Aegis certain portfolio
management services, specifically collection assistance
(herein "Collection Services"), in connection with motor
vehicle retail installment sales contracts originated by
Aegis pursuant to the terms and conditions set forth
herein; and
WHEREAS, the parties hereto desire to amend the
Servicing Agreement in accordance with the provisions
hereof;
NOW THEREFORE, in consideration of the mutual
covenants herein contained, it is agreed:
SECTION 1. COLLECTION OF RECEIVABLE PAYMENTS
Section 1.01 Definitions. Capitalized terms used and
not otherwise defined herein shall have the respective
meanings assigned to them in the Servicing Agreement.
Section 1.02 Designation of Aegis as Subcontractor.
(a) ALFI hereby designates and appoints Aegis, and Aegis
shall hereinafter administer the Collection Services of
the Sales Contracts currently warehoused and originated
on and after the date of this Agreement and those Sales
Contracts originated and securitized hereafter including
bulk portfolio sales on or after the date of this
Agreement.
(b) ALFI shall transfer all necessary documentation to
Aegis to enable Aegis to administer collection duties
undertaken by Aegis pursuant to this Agreement.
Section 1.03. Duties of Aegis and ALFI.
(a) Subcontractor shall attempt to contact each Obligor
within five (5) days of boarding a Receivable into Aegis'
PRIM system and shall verify:
(i) the Obligor's home address, home phone
number, as well as employer name, address and phone
number;
(ii) the vehicle's make, model, year, contents,
state of registry and license plate number; and
(iii) the terms of such Sales Contract.
(b) Within five (5) business days after ALFI
notifies Aegis that the Receivable has been
electronically boarded onto ALFI's system, Aegis shall
attempt to contact the Obligor and shall ensure and
otherwise verify:
(i) whether the Obligor has been instructed (A) as
to when the first payment is due and (B) where the first
payment is to be made pursuant to the Sales Contract or
Lease executed by the Obligor;
(ii) whether the Obligor is prepared to make
the first payment due under the Obligor's Sales Contract
or Lease Agreement;
(iii) whether the Obligor has been instructed as
to the correct process for successive payments;
(iv) whether the information obtained pursuant
to Section 1.03(a)(i) above is true and accurate;
(v) whether the due date on the Obligor's
payment schedule is immediately following the date the
Obligor's employment paycheck is received;
(vi) whether all dates and figures contained in
the Contract are true and accurate;
(vii) whether the Obligor has been informed
that Obligor shall receive a Welcome Letter informing
them that Aegis is collecting for ALFI; and
(viii) whether the Obligor is satisfied with the
motor vehicle and the dealership from which the Obligor
purchased the vehicle.
(c) If a vehicle is reported or discovered to be
stolen or damaged, Aegis shall notify the claims manager
of ALFI and ALFI shall coordinate matters with the
primary insurance carrier Aegis and the Obligor. If a
vehicle is reported or discovered to be damaged beyond
repair, Aegis shall notify the claims manager of ALFI who
will coordinate matters with the primary insurance agent
and the Obligor. ALFI shall administer all insurance
claims and rebates. Upon notification of the disability
of the Obligor, ALFI's collection manager shall file any
necessary insurance claims and coordinate and process
insurance payments. Aegis shall be responsible for the
collection of any outstanding or remaining delinquency.
(d) Aegis shall pursue skips for 120 days prior to
the VSI filing, at which time the Obligor's account shall
be submitted to the claims manager of ALFI who shall file
the claim before 150 days of delinquency.
(e) ALFI shall administer all matters relating to
any Obligor bankruptcy, including all legal filings and
responses as outlined in Schedule A of the Servicing
Agreement;
(f) Upon notice to either ALFI or Aegis of the
death of an Obligor, the Obligor's account shall be
transferred to the collection manager of ALFI who shall
be responsible for either (i) the repossession or (ii)
insurance administration relating to that Receivable.
(g) Aegis 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:
(i) commencing on the first business day on which
an Obligor is delinquent by more than four (4) days,
Aegis shall, at Aegis' discretion, either (A) phone the
Obligor, (B) if no contact is made after phoning the
Obligor, send a letter to the Obligor asking the Obligor
to immediately contact Aegis, or (C) order a field call
by an outside agency to the Obligor; and
(ii) in those cases where Aegis contacts the
Obligor, Aegis shall inform Obligor that payment on
Obligor's account may be made (A) by quick collect, (B)
by bank wire, (C) by overnight delivery or (D) by normal
payment.
(h) When a determination is made by Aegis
collection manager to repossess a vehicle, the collection
manager of Aegis shall turn over the account to the
assignment and reinstatement manager of ALFI for
assignment by ALFI to a repossession agency. Upon
authorization for repossession to ALFI by Aegis, ALFI
shall commence those activities enumerated in Schedule A,
Section II of the Servicing Agreement. Aegis shall
continue to track and monitor the repossession process
with the repossession agent until the vehicle is
physically repossessed. When ALFI receives the
repossession file from Aegis, Aegis shall inform ALFI's
NOI processor whether reinstatement shall be permitted on
a repossessed vehicle. If the Obligor contacts Aegis
during the NOI period, Aegis shall request the Obligor
maintain physical damage insurance and to contact ALFI
upon receipt of the NOI letter. After the vehicle is
repossessed, ALFI shall coordinate and handle all
repossession and liquidation related matters as outlined
in Schedule A of the Servicing Agreement. If the
Receivable is reinstated and brought current, all
collection activities relating to the Receivable and
enumerated in Section 1.03(a)-(f) herein, shall revert
back to Aegis.
(i) Aegis shall promptly notify ALFI of all
collection processes implemented by Aegis or modification
of collection processes implemented by Aegis.
(j) ALFI shall provide access to all of ALFI's computer
systems relating to collection activities and sufficient
computing power for each collector of Aegis, if ALFI's
average response time over any two hour period during a
normal business day (including Saturdays) shall exceed
ten (10) seconds ("Response Time Default"), and ALFI
shall be unable to cure the underlying cause of the
Response Time Default within ten (10) business days, ALFI
will be deemed to have committed an Event of Default
pursuant to Article VI of the Servicing Agreement, and
Aegis shall be entitled to all rights and remedies made
available to Aegis in the event of ALFI committing an
Event of Default, as these rights and remedies are more
particularly described in Articles VI and VII of the
Servicing Agreement. As part of the access provided by
ALFI to their system for Aegis, ALFI shall provide a
sufficient number of supervisory sign-ons, as agreed to
by Aegis and ALFI, to allow for each supervisor to have
system entitlements to allow for the change of account
status as the situation may warrant.
(k) Aegis shall pay for all costs associated with
connecting Aegis's computer system to ALFI's computer
system.
(l) On each business day, ALFI shall provide Aegis
with (i) collector workbooks containing accounts for four
(4) days or more delinquent (only for the first three
(3) months following boarding) and (ii) previously
assigned, either system generated or manually entered
"jack dates."
(m) Aegis shall maintain and service the
Receivables in compliance with all applicable Federal and
State laws and regulations governing Aegis and the
Receivables, and shall use and exercise that degree of
skill and attention that is customary within the industry
that services Sales Contracts or Leases for themselves as
well as others.
(n) ALFI's duties shall include responding to
inquiries by State, or Local Governmental authorities on
the Receivables, investigating delinquencies, sending
payment books or monthly statements to Obligors, and
responding to inquiries by Obligors with respect to the
Receivables.
(o) Aegis shall be authorized and empowered by ALFI
to execute and deliver, on behalf of itself or ALFI, any
and all instruments of satisfaction or cancellation, for
a partial or full release or discharge and all other
comparable instruments, with respect to the Receivables
or the Vehicles.
(p) If Aegis commences a legal proceeding to enforce a
Receivable, ALFI shall thereupon be deemed to have
automatically assigned such Receivable to Aegis, which
assignment shall be solely for the purpose of collection.
ALFI shall furnish Aegis with any powers of attorney and
other documents necessary or appropriate to enable Aegis
to carry out its servicing and administrative duties
hereunder.
(q) Aegis will give immediate written notification
to ALFI of all confirmed violations or defaults under the
insurance policy agreed to between Aegis and Great
American Insurance Company, AESIC or any other insurance
carrier with which the Company may hold a policy.
SECTION 2. COMPENSATION.
In consideration of Aegis's services hereunder, Aegis
shall be entitled to compensation as follows:
(a) With respect to those Receivables originated
before the date of this Agreement, ALFI shall pay Aegis
a monthly fee equal to the greater of (i) .55%
(annualized) on the outstanding remaining Obligor loan
balance of ach active account (excluding the Aegis A
Pool) as of the first day of the Related Remittance
Period or (ii) $3.00.
(b) With respect to those Receivables boarded on
or after the date of this Agreement, ALFI shall pay Aegis
a monthly fee equal to the greater of (i) .65%
(annualized) on the outstanding remaining Obligor loan
balance of each active account (excluding accounts in
the Aegis A Pool, i.e., non-performing loans) as of the
first day of the Related Remittance Period or (ii) $3.00.
(c) With respect to those Receivables boarded on
or after the date of this Agreement, if the aggregate
original boarded Obligor loan balance of Aegis
Receivables (excluding the Aegis A Pool) becomes $400
million higher than as of the date of this Agreement,
ALFI shall pay Aegis a monthly fee equal to the greater
of (i) .67% (annualized) on the outstanding remaining
Obligor loan balance of each active account (excluding
accounts in the Aegis A Pool) as of the first day of the
Related Remittance Period or (ii) $3.00.
(d) With respect to those Receivables boarded on
or after the date of this Agreement, if the aggregate
original boarded Obligor loan balance of Aegis
Receivables (excluding the Aegis A Pool) becomes $800
million higher than as of the date of this Agreement,
ALFI shall pay Aegis a monthly fee equal to the greater
of (i) .70% (annualized) on the outstanding remaining
Obligor loan balance of each active account (excluding
accounts in the Aegis A Pool) as of the first day of the
Related Remittance Period or (ii) $3.00.
(e) The monthly fee for any pool that consists of loans
originated under the provisions of more than one tier as
described above, shall be an average of the fees in each
tier based on the remaining Obligor loan balance of the
loans in the pool from each tier.
(f) With respect to all Sales Contracts, portfolio
finance or sale transactions, hereafter, including but
not limited to bulk portfolio sales, ALFI shall credit
Aegis monthly for the monthly service fees described in
subsection (a) through (e) herein.
(g) ALFI shall pay Aegis a $4.00 fee per each
active Lease Agreement per month net of ALFI's fee of
$15.00 per active Lease Agreement
(h) Monthly fees payable to Aegis hereunder shall be
offset against fees payable by Aegis to ALFI under the
Servicing Agreement.
SECTION 3. LOCK-BOX ACCOUNT.
ALFI shall continue to control and maintain the Lock-Box
Account and related bank accounts as described in Section
IX of the Servicing Agreement. ALFI shall continue to
collect and hold in trust (for the benefit of Aegis
Holders) in such accounts all funds received on account
of the Obligor until such funds are transferred on the
applicable transfer date as described in Section IX of
the Servicing Agreement.
SECTION 4. RELATIONSHIP/INDEMNIFICATION.
(a) Nothing in this Agreement is intended to limit
the liability of ALFI for performance of all of the
obligations undertaken by ALFI under the Servicing
Agreement. Aegis is entering into this Agreement with
ALFI as a "subcontractor" of ALFI. In all other
instances and except as specifically contracted
hereunder, ALFI shall continue to perform all duties of
the servicer as enumerated in the Servicing Agreement.
(b) Notwithstanding any provision in paragraph (a)
above, Aegis hereby indemnifies ALFI against and holds
ALFI harmless from any and all claims, suits, causes of
action, expenses (including reasonable attorney fees) and
damages relating to this Subcontracting Agreement (i.e.
claims and damage resulting from Aegis' violation of any
law or regulation, misconduct in the performance of its
duties hereunder, gross negligence or material breach of
this Agreement). ALFI shall promptly notify Aegis of any
claim or damages (when known by ALFI) subject to
indemnification under this paragraph.
IN WITNESS WHEREOF, ALFI and Aegis have caused
their names to be signed hereto by their respective
officers thereunto duly authorized as of the day and year
first above.
AEGIS CONSUMER FINANCE, INC.
_________________________________
By: Joseph F. Battiato,
President
AMERICAN LENDERS FACILITIES, INC.
__________________________________
By: C. Joseph Bruno
President, CEO
Void after 5:00 p.m. New York Time, on May 3, 1999.
Warrant to Purchase 1,116,335 Shares of Common Stock.
WARRANT TO PURCHASE COMMON STOCK
OF
THE AEGIS CONSUMER FUNDING GROUP, INC.
This is to Certify That, FOR VALUE RECEIVED, Greenwich
Capital Markets, Inc.("Greenwich"), or permitted assigns
("Holder"), is entitled to purchase, subject to the provisions of this
Warrant, from The Aegis Consumer Funding Group, Inc., a
Delaware corporation ("Company"), up to 1,116,335 fully paid,
validly issued and nonassessable shares of Common Stock, par
value $.01 per share, of the Company ("Common Stock") at a price
of $6.50 per share at any time or from time to time during the
period from May 3 , 1996 to May 3, 1999, but not later than 5:00
p.m. New York City Time, on May 3, 1999 (the "Exercise
Period"). The number of shares of Common Stock to be received
upon the exercise of this Warrant and the price to be paid for each
share of Common Stock may be adjusted from time to time and
shall be subject to forfeiture as hereinafter set forth. The shares of
Common Stock deliverable upon such exercise, and as adjusted
from time to time, are hereinafter sometimes referred to as
"Warrant Shares" and the exercise price of a share of Common
Stock in effect at any time and as adjusted from time to time is
hereinafter sometimes referred to as the "Exercise Price" and the
aggregate purchase price payable hereunder for the Warrant Shares
is referred to herein as the "Aggregate Warrant Price." This
warrant, together with warrants of like tenor, constituting in the
aggregate warrants (the "Warrant") to purchase 1,116,335 shares
of Common Stock, is issued pursuant to a certain letter agreement
(the "Commitment") between the Company and Greenwich Capital
Markets, Inc. ("Greenwich") dated February 28, 1996 in
connection with the agreement of Greenwich to provide, and the
Company to accept, certain financing and securitization facilities
for its automobile loan portfolio.
1. EXERCISE OF WARRANT.
(a) This Warrant may be exercised in whole or in part at any
time or from time to time on or after May 3, 1996 and until May 3 ,
1999 (the "Exercise Period"), subject to the provisions of Section
(b) hereof, provided, however, that if either such day is a day on
which banking institutions in the State of New York are authorized
by law to close, then on the next succeeding day which shall not be
such a day. This Warrant may be exercised by presentation and
surrender hereof to the Company at its principal office, or at the
office of its stock transfer agent, if any, with the Purchase Form
annexed hereto duly executed and accompanied by payment of the
Exercise Price for the number of Warrant Shares specified in such
form. As soon as practicable after each such exercise of the
Warrants, but not later than seven (7) days from the date of such
exercise, the Company shall issue and deliver to the Holder a
certificate or certificates for the Warrant Shares issuable upon such
exercise, registered in the name of the Holder or its designee. If
this Warrant should be exercised in part only, the Company shall,
upon surrender of this Warrant for cancellation, execute and
deliver a new Warrant evidencing the rights of the Holder thereof
to purchase the balance of the Warrant Shares purchasable
thereunder. Upon receipt by the Company of this Warrant at its
office, or by the stock transfer agent of the Company at its office,
in proper form for exercise, together with the payment of the
Exercise Price for the number of Warrants so exercised, the Holder
shall be deemed to be the holder of record of the shares of
Common Stock issuable upon such exercise, notwithstanding that
the stock transfer books of the Company shall then be closed or
that certificates representing such shares of Common Stock shall
not then by physically delivered to the Holder.
(b) In no event shall any Holder which is a Regulation Y
Holder (as defined below) be entitled to exercise the Warrants in
the event that the exercise of such Warrants, would, taken together
with all other shares of Common Stock of the Company owned by
such Regulation Y Holder, increase such Regulation Y Holder's
ownership to greater than 4.9% of the Company's outstanding
voting Common Stock, unless such exercise is:
(i) for the purpose of the sale of the underlying Common
Stock to the public in an offering registered under the Securities
Act of 1933, as amended (the "Act");
(ii) for the purpose of the sale in connection with a
private placement or other transaction pursuant to Rule 144 or Rule
144A (or any successor provisions) under the Act or otherwise
exempt from the registration requirements of the Act in which no
single purchaser receives an interest (treating any such Warrant as
exercised) equivalent to more than two percent (2%) of the
outstanding Common Stock;
(iii) for the purpose of the sale of the underlying
Common Stock to a purchaser who is already a controlling
shareholder of the Company; or
(iv) for the purpose of the sale of the underlying Common
Stock back to the Company.
A "Regulation Y Holder" shall be defined as a Holder which
is a bank holding company within the meaning of the Bank
Holding Company Act of 1956, as amended (the "Bank Holding
Company Act"), or a subsidiary thereof subject to Regulation Y
under the Bank Holding Company Act. In the event of a change in
the rules and regulations under the Bank Holding Company Act or
any similar law, the effect of which is to permit the Regulation Y
Holder to transfer such Warrants or Common Stock in any other
manner, the foregoing restriction shall be deemed modified to
permit a transfer of such Warrants or Common Stock in such other
manner.
In no event shall the Company be liable, directly or
indirectly, for compliance or non- compliance by any Holder with
the provisions of this Subsection (b); the Company shall be entitled
to rely on any direction given to them by a Holder in accordance
with any rights of a Holder otherwise granted under this Warrant
whether or not such direction is in contravention of the provisions
of this Subsection (b).
(c) The Warrant shall become exercisable (vest) by the
Holder incrementally upon the following terms and conditions:
(i) this Warrant shall be exercisable with respect to
372,112 Warrant Shares (as adjusted in accordance with the
provisions of this Warrant) upon execution of definitive
documentation relating to all of the Facilities;
(ii) this Warrant shall be exercisable with respect to an
additional 223,267 Warrant Shares (as adjusted in accordance with
the provisions of this Warrant) upon the purchase or placement by
Greenwich of the portion of the Aegis Auto Loan Receivables
Trust 1996-1 Pass Through Certificates rated BB or higher by
Duff and Phelps Credit Rating Co. as contemplated in accordance
with terms of the Commitment;
(iii) for each calendar quarter commencing April 1,
1996 and continuing until this Warrant has become exercisable
with respect to a total of an additional 297,689 Warrant Shares (as
adjusted in accordance with the provisions of this Warrant)
pursuant to this clause (iii), this Warrant shall be exercisable with
respect to those number of Warrant Shares (as adjusted in
accordance with the provisions of this Warrant) equal to the
product of (a) the ratio of (1) the sum of the aggregate dollar
volume of contracts originated by the Company and securitized by
Greenwich during such quarter plus the aggregate dollar volume
of any contracts sold, securitized or otherwise disposed of during
such quarter with a third party (other than contracts placed through
the existing Facility of the Company with Rothschild, Inc.) where
the all-in cost of funds are not at least 0.30% less than, and the net
committed proceeds generated are not identical or greater than, that
offered by Greenwich under its final securitization proposal for
such contracts, to (2) $390 million and (b) 297,689 Warrant Shares
(as adjusted in accordance with the provisions of this Warrant);
provided, however, that if during any such quarter Greenwich shall
have exercised its right to terminate the Senior Warehouse Facility
or the Senior and Subordinated Term Securitization Facility (as
each term is defined in the Commitment), then for purposes hereof,
effect will be given only to contract securitizations occurring up to
the date of such termination;
(iv) this Warrant shall be exercisable with respect to an
additional 223,267 Warrant Shares (as adjusted in accordance with
the provisions of this Warrant) upon renewal by Greenwich of the
Senior Warehouse Facility (as defined in the Commitment) upon
substantially similar terms, as those set forth in the Commitment
and loan documentation executed in accordance therewith, and
providing for at least $100 million of continued funding thereunder
through December 31, 1997.
This Warrant to the extent that the right to exercise all or a
portion hereof has not vested on or before May 3, 1999 shall
terminate and shall be deemed forfeited. This Warrant may be
exercised in whole or in part only to the extent that it is vested in
accordance with the provisions hereinabove set forth. In no event
shall this Warrant be exercisable in whole or in part subsequent to
May 3, 1999. In the event any portion of this Warrant shall be
forfeited, the Holder shall thereupon immediately surrender this
Warrant for cancellation and the Company shall thereafter execute
and deliver a new Warrant evidencing the rights of the Holder to
purchase the balance of the Warrant Shares subject to the
provisions hereof. Determinations of vesting under this Section
1(b) shall be made by the Company in its reasonable judgement
consistent with the terms of this Warrant.
2. RESERVATION OF SHARES. The Company shall at all
times reserve for issuance and/or delivery upon exercise of this
Warrant such number of shares of its Common Stock as shall be
required for issuance and delivery upon exercise of the Warrants.
The Company covenants and agrees that, upon exercise of the
Warrants and payment of the Exercise Price therefor, all shares of
Common Stock and other securities issuable upon such exercise
thereof shall be duly and validly issued, fully paid, nonassessable
and not subject to the preemptive rights of any stockholder. No
later than the date upon which any Common Stock is issued
pursuant to exercise of any Warrants, the Company shall use its
best efforts to cause all shares of Common Stock issuable upon the
exercise of the Warrants to be listed on all securities exchanges
and/or included in the automated quotation system of the Nasdaq
Stock Market (subject to official notice of issuance) with respect to
which the Common Stock issued to the public in connection
herewith may then be so listed and/or quoted.
3. FRACTIONAL SHARES. No fractional shares or scrip
representing fractional shares shall be issued upon the exercise of
this Warrant. With respect to any fraction of a share called for
upon any exercise hereof, the Company shall pay to the Holder an
amount in cash equal to such fraction multiplied by the current
market value of a share, determined as follows:
(1) If the Common Stock is listed on a national
securities exchange or admitted to unlisted trading privileges on
such exchange or listed for trading on the NASDAQ system, the
current market value shall be the last reported sale price of the
Common Stock on such exchange or system on the last business
day prior to the date of exercise of this Warrant or if no such sale is
made on such day, the average closing bid and asked prices for
such day on such exchange or system; or
(2) If the Common Stock is not so listed or admitted to
unlisted trading privileges, the current market value shall be the
mean of the last reported bid and asked prices reported by the
National Quotation Bureau, Inc., on the last business day prior to
the date of the exercise of this Warrant; or
(3) If the Common Stock is not so listed or admitted to
unlisted trading privileges and bid and asked prices are not so
reported, the current market value shall be an amount, not less than
book value thereof as at the end of the most recent fiscal year of
the Company ending prior to the date of the exercise of the
Warrant, determined in such reasonable manner as may be
prescribed by the Board of Directors of the Company.
4. EXCHANGE, TRANSFER, ASSIGNMENT OR LOSS OF
WARRANT.
(a) General. This Warrant is exchangeable, without
expense, at the option of the Holder, subject to the provisions of
subsections 4(b) and 4(c) hereof, upon presentation and surrender
hereof to the Company or at the office of its stock transfer agent, if
any, for other warrants of different denominations entitling the
holder thereof to purchase in the aggregate the same number of
shares of Common Stock purchasable hereunder. This Warrant is
transferable and may be sold, transferred, pledged, assigned or
hypothecated , only in compliance with the provisions of
Subsections 4(b) and 4(c) hereof. Upon surrender of this Warrant
during the Exercise Period to the Company at its principal office or
at the office of its stock transfer agent, if any, with the Assignment
Form annexed hereto duly executed and funds sufficient to pay any
transfer tax, the Company shall, without charge, execute and
deliver a new Warrant in the name of the assignee named in such
instrument of assignment and this Warrant shall promptly be
cancelled. The term "Warrant" as used herein includes any
Warrants into which this Warrant may be divided or exchanged.
Upon receipt by the Company of evidence satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant, and (in the
case of loss, theft or destruction) of reasonably satisfactory
indemnification, and upon surrender and cancellation of this
Warrant, if mutilated, the Company will execute and deliver a new
Warrant of like tenor and date. Any such new Warrant executed
and delivered shall constitute an additional contractual obligation
on the part of the Company, whether or not this Warrant so lost,
stolen, destroyed, or mutilated shall be at any time enforceable by
anyone.
(b) Securities Law. Neither this Warrant nor the Warrant
Shares issuable upon the exercise hereof have been registered
under the Securities Act of 1933, as amended (the "Securities
Act"), or under any state securities laws and unless so registered
may not be transferred, sold, pledged, hypothecated or otherwise
disposed of unless an exemption from such registration is
available. In the event the Holder desires to transfer this Warrant
or any of the Warrant Shares issued, the Holder must give the
Company prior written notice of such proposed transfer including
the name and address of the proposed transferee. Such transfer
may be made only either (i) upon publication by the Securities and
Exchange Commission (the "Commission") of a ruling,
interpretation, opinion or "no action letter" based upon facts
presented to said Commission, or (ii) upon receipt by the Company
of an opinion of counsel to the Company, in either case to the
effect that the proposed transfer will not violate the provisions of
the Securities Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or the rules and regulations
promulgated under either such act, or in the case of clause (ii)
above, to the effect that the Warrant or Warrant Shares to be sold
or transferred have been registered under the Securities Act of
1933, as amended, and that there is in effect a current prospectus
meeting the requirements of Subsection 10(a) of the Securities Act,
which is being or will be delivered to the purchaser or transferee at
or prior to the time of delivery of the certificates evidencing the
Warrant or Warrant Shares to be sold or transferred.
(c) Conditions to Transfer. Prior to any such proposed
transfer, and as a condition thereto, if such transfer is not made
pursuant to an effective registration statement under the Securities
Act, the Holder will, if requested by the Company, deliver to the
Company (i) an investment covenant signed by the proposed
transferee, (ii) an agreement by such transferee to be bound by the
terms of this Warrant in general and to the restrictive investment
legend set forth herein on the certificate or certificates representing
the securities acquired by such transferee, (iii) an agreement by
such transferee that the Company may place a "stop transfer order"
with its transfer agent or registrar, and (iv) an agreement by the
transferee to indemnify the Company to the same extent as set
forth in Subsection (e) hereof.
(d) Lockup Agreements with Underwriters. In the event of
a public offering of the Company's securities, the Holder agrees to
enter into an agreement with the Underwriter or Underwriter's
representative for the public offering of the Company's securities
restricting the sale, transfer or other disposition of this Warrant or
the Warrant Shares to the extent that such agreement is required to
be executed by the other significant security holders of the
Company generally, as determined by the underwriter.
(e) Indemnity. The Holder acknowledges that the Holder
understands the meaning and legal consequences of this Section 4,
and the Holder hereby agrees to indemnify and hold harmless the
Company, its representatives and each officer and director thereof
from and against any and all loss, damage or liability (including all
attorneys' fees and costs incurred in enforcing this indemnity
provision) due to or arising out of (i) the inaccuracy of any
representation or the breach of any warranty of the Holder
contained in, or any other breach by the Holder of, this Warrant,
(ii) any transfer of the Warrant or any of the Warrant Shares in
violation of the Securities Act, the Exchange Act or the rules and
regulations promulgated under either of such acts, or (iii) any
untrue statement or omission to state any material fact in
connection with the investment representations or with respect to
the facts and representations supplied by the Holder to counsel to
the Company upon which its opinion as to a proposed transfer shall
have been based.
(f) Legend and Stop Transfer Orders. Unless the Warrant
Shares have been registered under the Securities Act, upon exercise
of any part of the Warrant and the issuance of any of the Warrant
Shares, the Company shall instruct its transfer agent to enter stop
transfer orders with respect to such shares, and all certificates
representing Warrant Shares shall bear on the face thereof
substantially the following legend, insofar as is consistent with
Delaware law:
"The shares of common stock represented by this certificate
have not been registered under the Securities act of 1933, as
amended, and may not be sold, offered for sale, assigned,
transferred or otherwise disposed of unless registered pursuant to
the provisions of that Act or an opinion of counsel to the Company
is obtained stating that such disposition is in compliance with an
available exemption from such registration."
5. RIGHTS OF THE HOLDER. The Holder shall not, by virtue
hereof, be entitled to any rights of a shareholder in the Company,
either at law or equity, and the rights of the Holder are limited to
those expressed in the Warrant and are not enforceable against the
Company except to the extent set forth herein.
6. ANTI-DILUTION PROVISIONS. The Exercise Price in
effect at any time and the number and kind of securities
purchasable upon the exercise of the Warrant shall be subject to
adjustment from time to time upon the happening of certain events
as follows:
(a) In case the Company shall (i) declare a dividend or
make a distribution on its outstanding shares of Common Stock in
shares of Common Stock, (ii) subdivide or reclassify its
outstanding shares of Common Stock into a greater number of
shares, or (iii) combine or reclassify its outstanding shares of
Common Stock into a smaller number of shares, the Exercise
Price in effect at the time of the record date for such dividend or
distribution or of the effective date of such subdivision,
combination or reclassification shall be adjusted so that it shall
equal the price determined by multiplying the Exercise Price by a
fraction, denominator of which shall be the number of shares of
Common Stock outstanding after giving effect to such action, and
the numerator of which shall be the number of shares of Common
Stock outstanding immediately prior to such action. Such
adjustment shall be made successively whenever any event listed
above shall occur.
(b) Whenever the Exercise Price payable upon exercise of
each Warrant is adjusted pursuant to Section 6, the number of
Shares purchasable upon exercise of this Warrant shall
simultaneously be adjusted by multiplying the number of Shares
initially issuable upon exercise of this Warrant by the Exercise
Price in effect immediately prior to the adjustment and dividing the
product so obtained by the Exercise Price, as adjusted.
(c) (i) If at any time the Company issues or sells any shares
of Capital Stock (defined below) at a per unit or share price (which
price shall include the price or cost of the Capital Stock and in the
case of any security or investment convertible or exchangeable
into Common Stock, the price or cost paid to the Company for
such conversion or exchange) less than the lower of the Exercise
Price or the then current Market Price immediately prior to the
time such Capital Stock is issued or sold, excluding sales in
connection with outstanding rights or warrants on the date hereof
(the "Additional Securities"), then:
the Exercise Price will be reduced to the lower of the prices
calculated by:
(I) dividing (x) an amount equal to the sum of (1) the
number of shares of Common Stock outstanding immediately prior
to such issuance or sale multiplied by the then existing Exercise
Price plus (2) the aggregate consideration, if any, received by the
Company upon such issuance or sale, by (y) the total number of
shares of Common Stock outstanding immediately after such
issuance or sale ; and
(II) multiplying the then existing Exercise Price by a
fraction, the numerator of which is (x) the sum of (1) the number of
shares of Common Stock outstanding immediately prior to such
issuance or sale, multiplied by the Market Price immediately prior
to such issuance or sale, plus (2) the aggregate consideration
received by the Company upon such issuance or sale, divided by
the total number of shares of Common Stock outstanding
immediately after such issuance or sale, and the denominator of
which is the (y) Market Price immediately prior to such issuance or
sale (for purposes of this subsection (II), the date as of which the
Market Price will be computed will be the earlier of the date upon
which the Company will (aa) enter into a firm contract for the
issuance of such shares, or (bb) issues such shares);
provided, however, that no such adjustment in connection
with an underwritten public offering shall result in an Exercise
Price less than $6.00, except to the extent such adjustments result
from the sale of Capital Stock in such offering to persons or
entities who, on the date hereof, have on file with the Securities
and Exchange Commission, either individually or as part of a
group, a statement of beneficial ownership on Schedule 13D
relating to Capital Stock of the Company (a "13D Filer").
(ii) "Capital Stock" means the Common Stock and any
other securities or other instruments convertible into, or exercisable
for Common Stock specifically excluding options granted to
employees, directors, or consultants of or to the Company (other
than options granted to any 13D Filer and other than options
granted with an exercise price less than the Market Price at the
time of grant).
(d) No adjustment in the Exercise Price shall be required
unless such adjustment would require an increase or decrease of at
least five cents ($0.05) in such price; provided, however, that any
adjustments which by reason of this Subsection (c) are not required
to be made shall be carried forward and taken into account in any
subsequent adjustment required to be made hereunder. All
calculations under this Section (6) shall be made to the nearest cent
or to the nearest one-hundredth of a share, as the case may be.
Anything in this Section (6) to the contrary notwithstanding, the
Company shall be entitled, but shall not be required, to make such
changes in the Exercise Price, in addition to those required by this
Section (6), as it shall determine, in its sole discretion, to be
advisable in order that any dividend or distribution in shares of
Common Stock, or any subdivision, reclassification or
combination of Common Stock, hereafter made by the Company
shall not result in any Federal Income tax liability to the holders of
Common Stock or securities convertible into Common Stock
(including Warrants).
(e) Irrespective of any adjustments in the Exercise Price or
the number or kind of shares purchasable upon exercise of this
Warrant, Warrants theretofore or thereafter issued may continue to
express the same price and number and kind of shares as are stated
in the similar Warrants initially pursuant to this Agreement.
(f) The Company acknowledges that it has advised
Greenwich that the Company has a present intention, albeit
non-binding, to use the proceeds of an underwritten public
offering, if any, to redeem shares of its Series C Preferred Stock
presented for conversion to Common Stock at prices less than
$6.425 per share.
7. OFFICER'S CERTIFICATE. Whenever the Exercise Price
shall be adjusted as required by the provisions of the foregoing
Section, the Company shall forthwith file in the custody of its
Secretary or an Assistant Secretary at its principal office and with
its stock transfer agent, if any, an officer's certificate showing the
adjusted Exercise Price determined as herein provided, setting
forth in reasonable detail the facts requiring such adjustment,
including a statement of the number of additional shares of
Common Stock, if any, and such other facts as shall be necessary
to show the reason for and the manner of computing such
adjustment. Each such officer's certificate shall be made available
at all reasonable times for inspection by the holder or any holder of
a Warrant and the Company shall, forthwith after each such
adjustment, mail a copy by certified mail of such certificate to the
Holder or any such holder.
8. NOTICES TO WARRANT HOLDERS. So long as this
Warrant shall be outstanding, (i) if the Company shall pay any
dividend or make any distribution upon the Common Stock or (ii)
if the Company shall offer to the holders of Common Stock for
subscription or purchase by them any share of any class or any
other rights or (iii) if any capital reorganization of the Company,
reclassification of the capital stock of the Company, consolidation
or merger of the Company with or into another corporation, sale,
lease or transfer of all or substantially all of the property and assets
of the Company to another corporation, or voluntary or involuntary
dissolution, liquidation or winding up of the Company shall be
effected or (iv) if any other event is contemplated which would
give rise to an adjustment pursuant to Section 6 hereof, then in any
such case, the Company shall cause to be mailed by certified mail
to the Holder, at least fifteen days prior the date specified in (x) or
(y) below, as the case may be, a notice containing a brief
description of the proposed action and stating the date on which (x)
a record is to be taken for the purpose of such dividend,
distribution or rights, or (y) if no record is taken, such
reclassification, reorganization, consolidation, merger, conveyance,
lease, dissolution, liquidation, winding up or other event.
9. RECLASSIFICATION, REORGANIZATION OR
MERGER. In case of any reclassification, capital reorganization
or other change of outstanding shares of Common Stock of the
Company, or in case of any consolidation or merger of the
Company with or into another corporation (other than a merger in
which the Company is the continuing corporation and which does
not result in any reclassification, capital reorganization or other
change of outstanding shares of Common Stock of the class
issuable upon exercise of this Warrant) or in case of any sale, lease
or conveyance to another corporation of the property of the
Company as an entirety, the Company shall, as a condition
precedent to such transaction, cause effective provisions to be
made so that the Holder shall have the right thereafter by
exercising this Warrant at any time prior to the expiration of the
Warrant, to purchase the kind and amount of shares of stock and
other securities and property receivable upon such reclassification,
capital reorganization and other change, consolidation, merger, sale
or conveyance by a holder of the number of shares of Common
Stock which might have been purchased upon exercise of this
Warrant immediately prior to such reclassification, change,
consolidation, merger, sale or conveyance. Any such provision
shall include provision for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided for in
this Warrant. The foregoing provisions of this Section 9 shall
similarly apply to successive reclassifications, capital
reorganizations and changes of shares of Common Stock and to
successive consolidations, mergers, sales or conveyances. In the
event that in connection with any such capital reorganization or
reclassification, consolidation, merger, sale or conveyance,
additional shares of Common Stock shall be issued in exchange,
conversion, substitution or payment, in whole or in part, for a
security of the Company other than Common Stock, any such issue
shall be treated as an issue of Common Stock covered by the
provisions of Subsection (a) of Section 6 hereof.
10. REGISTRATION UNDER THE SECURITIES ACT OF
1933.
(a) The Company shall advise the Holder of this Warrant
or of the Warrant Shares or any then holder of Warrants or Warrant
Shares (such persons being collectively referred to herein as
"holders") by written notice at least four weeks prior to the filing of
any registration statement or post-effective amendment thereto
under the Securities Act of 1933 (the "Act") covering securities of
the Company (other than asset-backed securities relating to the
Company's automobile loan portfolio) and will until January 1,
2001 , upon the request of any such holder, include in any such
post-effective amendment or registration statement such
information as may be required to permit a public offering of the
Warrant Shares, provided, however, if the Registration Statement
relates to an underwritten public offering, then the Warrant Shares
may be excluded or the number of such shares may be reduced if in
the written good faith judgment of the managing underwriter, the
inclusion of the Warrant Shares would reduce the number of shares
to be offered by the Company or interfere with the successful
marketing of the shares of stock offered by the Company;
provided, however, that any such reduction or exclusion would be
parri passu with those of other participating selling shareholders in
the transaction other than no more than two (2) selling
shareholder selling less than 50,000 shares in such offering. The
Company shall supply prospectuses and other documents as the
holder may reasonably request in order to facilitate the public sale
or other disposition of the Warrant Shares, qualify the Warrant
Shares for sale in such states as any such holder designates in
writing not more than one week after notice is given and use
reasonable efforts to do any and all other acts and things which
may be necessary or desirable to enable such holders to
consummate the public sale or other disposition of the Warrant
Shares, and furnish indemnification in the manner as set forth in
Subsection (d)(3) of this Section 10. Such holders shall furnish
information and indemnification as set forth in Subsection (d)(3) of
this Section 10.
(b) To the extent set forth in Section (d)(ii) of this Section
10, if any Majority Holder (as defined in Subsection (e) of this
Section 10 below) shall give notice to the Company at any time
prior to January 1, 2001 to the effect that such Holder
contemplates (i) the transfer of all or any part of his or its Warrant
Shares, or (ii) the exercise and/or conversion of all or any part of
his or its Warrants and the transfer of all or any part of the Warrant
Shares under such circumstances that a public offering (within the
meaning of the Act) of Warrant Shares will be involved, and
desires to register under the Act the Warrant Shares, then the
Company shall, within sixty (60) days after receipt of such notice,
file a post-effective amendment to an existing registration
statement or a new registration statement pursuant to the Act, to
the end that the Warrant Shares may be sold under the Act as
promptly as practicable thereafter and the Company will use its
best efforts to cause such registration to become effective and
continue to be current (including the taking of such steps as are
necessary to obtain the removal of any stop order) until the Holder
has advised that all of the Warrant Shares have been sold, but no
longer than nine (9) months after the effective date; provided that
such Holder shall furnish the Company with appropriate
information (relating to the intentions of such Holders) in
connection therewith as the Company shall reasonably request in
writing. On one occasion with respect to any given registration
statement, the Company may postpone the filing of the
Registration Statement for up to 90 days only in the event that the
Company would be required to incur material expenses to prepare
audited financial statements in order to timely file such
Registration Statement. The Holder may, at its option, request the
registration of Warrant Shares in a registration statement made by
the Company as contemplated by Subsection (a) of this Section 10
or in connection with a request made pursuant to Subsection (b) of
this Section 10 only with respect to Warrant Shares owned by the
Holder as a result of an exercise of the Warrants. If the Company
determines to include securities to be sold by it in any registration
statement originally requested pursuant to this Subsection (b) of
this Section 10, such registration shall be deemed to have been a
registration under Subsection (a) of this Section 10 and not under
Subsection (b) of this Section 10 whether or not the Company
contemplated the filing of, or files, a registration statement
covering other securities. Such Holders shall furnish information
and indemnification as set forth in Subsection (d)(3) of this Section
10.
(c) The Company shall not be required to effect a
registration of the Warrant Shares under a registration statement
pursuant to subsection (6) hereof on more than one occasion in any
calendar year; In no event shall the Company be required to effect
a registration of Warrant Shares on behalf of the Holder under
subsection (b) hereof on more than two occasions.
(d) The following provisions of this Section 10 shall also
be applicable:
(1) Within fifteen days after receiving any such notice
pursuant to Subsection (b) of this Section 10, the Company shall
give notice to the other Holders of Warrant Shares, advising that
the Company is proceeding with such post-effective amendment or
registration statement and offering to include therein Warrant
Shares of such other Holders, provided that they shall furnish the
Company with such appropriate information (relating to the
intentions of such Holders) in connection therewith as the
Company shall reasonably request in writing. Following the
effective date of such post- effective amendment or registration
statement, The Company shall supply prospectuses and other
documents as the holder may reasonably request in order to
facilitate the public sale or other disposition of the Warrant Shares,
qualify the Warrant Shares for sale in such states as any such
holder designates in writing not more than one week after notice is
given and use reasonable efforts to do any and all other acts and
things which may be necessary or desirable to enable such holders
to consummate the public sale or other disposition of the Warrant
Shares, and furnish indemnification in the manner as set forth in
Subsection (d)(3) of this Section 10. Such holders shall furnish
information and indemnification as set forth in Subsection (d)(3) of
this Section 10.
(2) In connection with any registration under subsection
(a) or (b) hereof, the Company covenants and agrees as follows:
(i) The Company shall use its best efforts to have
any registration statements declared effective at the earliest
possible time, and shall furnish each holder desiring to sell Warrant
Shares such number of prospectuses as shall reasonably be
requested.
(ii) The Company shall pay all of its costs, fees and
expenses in connection with all registration statements filed
pursuant to subsections (a) and (b) hereof including, without
limitation, the Company's legal and accounting fees, printing
expenses, blue sky fees and expenses. If the Company shall fail to
comply with the provisions of this subsection (2)(ii), the Company
shall, in addition to any other equitable or other relief available to
the holder(s), extend the Exercise Period of the Warrants by such
number of days as shall equal the delay caused by the Company's
failure.
(iii) The Company will take all necessary action
which may be required in qualifying or registering the Warrant
Shares included in a registration statement for offering and sale
under the securities or blue sky laws of such states as the holder(s)
shall reasonably designate.
(iv) The Company shall promptly notify each holder
of Warrant Shares covered by such registration statement, at any
time when a prospectus relating thereto is required to be delivered
under the Act, upon the Company's discovery that, or upon the
happening of any event as a result of which, the prospectus
included in such registration statement, as then in effect, includes
an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which
they were made, not misleading, and at the request of any such
holder promptly prepare and furnish to such holder and each
underwriter, if any, a reasonable number of copies of a supplement
to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such securities,
such prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the
light of the circumstances under which they were made.
(3) The Company shall, to the full extent permitted by
law, indemnify and hold harmless each such Holder and each
underwriter, within the meaning of the Act, who may purchase
from or sell for any such Holder any Warrant Shares from and
against any and all losses, claims damages and liabilities caused by
any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or any post-effective
amendment thereto or any registration statement under the Act or
any prospectus included therein required to be filed or furnished by
reason of this Section 10 or caused by any omission or alleged
omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading,
except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or alleged untrue statement or
omission or alleged omission based upon information furnished or
required to be furnished in writing to the Company of by Holder or
underwriter expressly for use therein, which indemnification shall
include each person, if any, who controls any such underwriter
within the meaning of such Act. However, anything herein to the
contrary notwithstanding, (i) the Company will not be liable in any
such case to the extent that any such loss, claim, damages or
liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in
said registration statement, said preliminary prospectus, said final
prospectus or said amendment or supplement in reliance upon and
in conformity with written information furnished by such Holder or
any other Holder, specifically for use in the preparation thereof;
and (ii) in the event that any prospectus shall have been amended
or supplemented and copies thereof as so amended or
supplemented shall have been furnished to a Holder prior to the
confirmation of any sales of securities, such indemnity with respect
to the prospectus shall not inure to the benefit of the Holder if the
person asserting such loss, claim, damage or liability and who
purchased the securities from such holder did not, at or prior to the
confirmation of the sale of the securities to such person, receive a
copy of the prospectus as so amended or supplemented and the
untrue statement or omission of a material fact contained in the
prospectus was corrected in the prospectus as so amended or
supplemented.
(4) Except as herein provided, neither the giving of any
notice by any such Majority Holder nor the making of any request
for prospectuses shall impose upon such Majority Holder or owner
making such request any obligation to sell any Warrant Shares, or
exercise any Warrants. However, in the event a Holder shall
request any Warrant Shares to be included in a registration
statement in accordance with the provisions of Subsection (a) of
this Section 10, the Holder must exercise the Warrant and pay the
Exercise Price with respect to such Warrant Shares immediately
prior to the closing of the offering covered by such registration
statement. Failure on the part of a Holder to comply with the
provisions of this Subsection (d)(4) shall result in a termination
and forfeiture of such Holder's right to exercise the Warrant at any
time with respect to the Warrant Shares requested to be included in
the registration statement.
(e) The term "Majority Holder" as used in this Section 10
shall include any owner or combination of owners of Warrant
Shares in any combination if the holdings of the aggregate amount
of:
(i) The Warrants held by him or among them, plus
(ii) the Warrants which he or they would be holding if
the Warrants for the Warrant Shares owned by him or among them
had not been exercised,
would constitute a majority of the Warrants originally issued.
The Company's agreements with respect to Warrant Shares in
this Section 10 shall continue in effect regardless of the exercise
and surrender of this Warrant.
11. WARRANT HOLDER NOT SHAREHOLDER. Except as
otherwise provided herein, this Warrant does not confer upon the
Holder any right to vote or to consent to or receive notice as a
shareholder of the Company, as such, in respect of any matters
whatsoever, or any other rights or liabilities as a shareholder, prior
to the exercise hereof.
12. COMMUNICATION. No notice or other communication
under this Warrant shall be effective unless the same is in writing
and is mailed by first-class mail, postage prepaid, addressed to:
(a) the Company at 525 Washington Blvd., Jersey City, New
Jersey 07310, or such other address as the Company has designated
in writing to the Holder, or
(b) the Holder at Greenwich Capital Markets, Inc., 600
Steamboat Road, Greenwich, Connecticut 06830, or such other
address as the Holder has designated in writing to the Company.
13. HEADINGS. The headings of this Warrant have been
inserted as a matter of convenience and shall not affect the
construction hereof.
14. APPLICABLE LAW. This Warrant shall be governed by
and construed in accordance with the laws of the State of Delaware
without giving effect to the principles of conflict of laws thereof.
IN WITNESS WHEREOF, The Aegis Consumer Funding
Group, Inc. has caused this Warrant to be signed by a duly
authorized officer as of this 3rd day of May, 1996.
THE AEGIS CONSUMER FUNDING
GROUP, INC.
By:______________________________
Gary D. Peiffer
Vice Chairman
[SEAL]
Dated: May 3, 1996
Attest:
________________________________
Cyril Means
Assistant Secretary
PURCHASE FORM
Dated________, __
The undersigned hereby irrevocably elects to exercise the
within Warrant to the extent of purchasing ________ shares of
Common Stock and hereby makes payment of __________ in
payment of the actual exercise price thereof.
______
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name _____________________________
(Please typewrite or print in block letters
Address ____________________________
Signature ___________________________
ASSIGNMENT FORM
FOR VALUE RECEIVED, ___________________ hereby
sells, assigns and transfers unto
Name ______________________________
(Please typewrite or print in block letters)
Address _____________________________
the right to purchase Common Stock represented by this Warrant
to the extent of _____ shares as to which such right is exercisable
and does hereby irrevocably constitute and appoint ___________
Attorney, to transfer the same on the books of the Company with
full power of substitution in the premises.
Date _________, __
Signature _____________________
May 3, 1996
VIA FEDERAL EXPRESS
Warren Nimetz, Esq.
Fulbright & Jaworski
666 Fifth Avenue, 31st Floor
New York, NY 10103
Dear Warren:
I am enclosing the executed original of the Warrant to purchase
1,116,335 Shares of Common Stock of The Aegis Consumer Funding Group,
Inc. (the "Warrant"). Please hold this warrant in escrow. You should
deliver this Warrant to Greenwich Capital Markets, Inc. ("Greenwich"),
or redeliver this Warrant to Aegis, only upon receipt of, and in accordance
with, our written instructions. This Warrant represents the Warrant which
Aegis has agreed to deliver to Greenwich in accordance with the terms of that
ce
Very truly yours,
Gary D. Peiffer
General Counsel
GDP:jb
Enclosure
May 3, 1996
VIA FEDERAL EXPRESS
Mr. Thomas E. Capasse
Senior Vice President
Greenwich Capital Markets, Inc.
600 Steamboat Road
Greenwich, CT 06830
Dear Tom:
I am enclosing a copy of the Warrant delivered by Aegis in accordance
with the February 28th commitment letter between Aegis and Greenwich as well
as a copy of the escrow letter pursuant to which we have requested Fulbright
& Jaworski to hold the Warrant. Please note that the number of shares
referenced in the Warrant are based on advice by our transfer agent that
there are 14,884,470 shares outstanding on this date. We ask that you sign
a copy of this letter acknowledging that the provisions of the ons of the
escrow letter attached. We will instructed Fulbright & Jaworski to release
the Warrant upon execution of final documentation for the facilities
identified in the Commitment Letter.
Very truly yours,
Gary D. Peiffer
General Counsel
GDP:jb
Enclosure
The undersigned acknowledges and agrees to the
provisions of the within letter.
By:________________________________________
GREENWICH CAPITAL MARKETS, INC.
THE AEGIS CONSUMER FUNDING GROUP, INC.
EARNINGS PER SHARE CALCULATION
THREE AND NINE MONTHS ENDED MARCH 31, 1996
(UNAUDITED)
Three Months Nine Months
ended ended
March 31, 1996 March 31, 1996
PRIMARY EARNINGS PER SHARE:
Weighted average shares outstanding 14,776,844 14,776,844
Less: Escrowed shares (1,078,308) (1,078,844)
Employee stock options granted 8,820 25,739
Warrants outstanding 4,523 5,403
Convertible preferred Series C Stock 1,230,109 407,054
---------- ----------
Weigthed average number of
common and common equivalent shares 14,941,988 14,136,732
========== ==========
Net income $2,529,421 $6,379,361
Less: Preferred stock dividends (129,179) (129,179)
----------- -----------
Net income available to common stockholders 2,400,242 6,250,182
Add: Preferred stock dividends on stock
deemed to be common stock equivalents 129,179 129,179
---------- ----------
Adjusted net income $2,529,421 $6,379,361
========== ==========
Net income per common and
common equivalent share $0.17 $0.45
===== =====
FULLY DILUTED EARNINGS PER SHARE:
Weighted average shares outstanding 14,776,844 14,776,844
Employee stock options granted 8,820 25,739
Warrants outstanding 6,049 5,403
Convertible Preferred Series C Stock 1,230,109 407,054
---------- ---------
Weighted average number of common
and common equivalent shares 16,021,822 15,215,040
========== ==========
Net income $2,529,421 $6,379,361
Less: Preferred stock dividends (129,179) (129,179)
---------- ----------
Net income available to common stockholders 2,400,242 6,250,182
Adjustments to net income available to
common stockholders:
Add: Preferred stock dividends on stock deemed
to be common stock equivalents 129,179 129,179
---------- ---------
Adjusted net income $2,529,421 $6,379,361
========== ==========
Net income per common and
common equivalent share $0.16 $0.42
===== =====
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR 9-MOS 9-MOS
<FISCAL-YEAR-END> JUN-30-1996 JUN-30-1995 JUN-30-1996 JUN-30-1995
<PERIOD-END> MAR-31-1996 JUN-30-1995 MAR-31-1996 MAR-31-1995
<CASH> $5,782,492 $5,970,571 0 0
<SECURITIES> 0 0 0 0
<RECEIVABLES> 46,668,234 39,783,558 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> $114,335,949 $84,736,947 0 0
<CURRENT-LIABILITIES>$83,682,768 $69,039,627 0 0
<BONDS> 0 0 0 0
0 0 0 0
92 0 0 0
<COMMON> 147,768 147,768 0 0
<OTHER-SE> 30,505,321 15,549,552 0 0
<TOTAL-LIABILITY-AND-EQUITY>
$114,335,949 $84,736,947 0 0
<SALES> 0 0 0 0
<TOTAL-REVENUES> 0 0 $31,627,847 $9,901,893
<CGS> 0 0 0 0
<TOTAL-COSTS> 0 0 0 0
<OTHER-EXPENSES> 0 0 10,424,090 5,455,151
<LOSS-PROVISION> 0 0 2,505,628 175,106
<INTEREST-EXPENSE> 0 0 7,306,368 2,993,325
<INCOME-PRETAX> 0 0 11,391,761 1,278,311
<INCOME-TAX> 0 0 5,012,400 620,424
<INCOME-CONTINUING> 0 0 0 0
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 0 0 $6,379,361 $657,887
<EPS-PRIMARY> 0 0 $0.45 $0.07
<F1>
<EPS-DILUTED> 0 0 $0.42 $0.00
<F2>
<FN>
<F1>
Amounts reflect pro-forma adjustments in connection with the Company's intital
public offering on April 5, 1995 for (i) redemption of approximately $2.5
million of the Company's outstanidng preferred stock and dividends paid of
$85,463, (ii) the termination of a consulting agreement providing for
consulting fees of $115,000, net of taxes, respectively and (iii) the repayment
of approximately $2.1 million of indebtedness under the Company's revolving
credit facility related related interest expense of $173,000, net of taxes,
respectively.
<F2>Not applicable for comparable period.
</FN>
</TABLE>
