United States
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission File Number 0-25714
THE AEGIS CONSUMER FUNDING GROUP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 22-3008867
(State or 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
(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for
such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X. No.
As of May 12, 1997, 17,677,217 shares of the issuer's common stock were
outstanding.
<PAGE>
THE AEGIS CONSUMER FUNDING GROUP, INC.
FORM 10-Q
INDEX
Page
PART I. FINANCIAL INFORMATION No.
Item 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited):
Consolidated Condensed Statements of Financial Condition -
March 31, 1997 and June 30, 1996. . . . . . 3
Consolidated Condensed Statements of Operations - three
months and nine months ended March 31, 1997 and 1996. 4
Consolidated Condensed Statement of Cash Flows -
nine months ended March 31, 1997 and 1996 . 5
Notes to Consolidated Condensed Financial Statements. . 6
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATION . . . . . . . . . . . . 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . 27
Item 2. Changes in Securities . . . . . . . 27
Item 3. Defaults upon Senior Securities . . 27
Item 4. Submission of Matters to a Vote of Security Holders . 27
Item 5. Other information . . . . . . . . . 27
Item 6. Exhibits and Reports on Form 8-K. . 27
SIGNATURES . . . . . . . . . . 30
EXHIBIT INDEX . . . . . . . . . . . . . . . 27
- 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,
1997 1996
---- ----
Cash and cash equivalents $1,698,502 $ 3,090,624
Automobile finance receivables, net 64,524,509 41,058,222
Retained interests in securitized
receivables 52,618,591 70,242,773
Other assets 10,466,016 7,060,135
----------- -----------
$129,307,618 $121,451,754
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Warehouse credit facilities $40,827,440 $37,202,342
Notes payable 60,984,362 29,848,859
Accounts payable and accrued expenses 13,107,408 11,220,644
Income taxes payable - 9,188,444
---------- ----------
Total liabilities 114,919,210 87,460,289
----------- -----------
Subordinated debt
5,000,000 -
----------- -----------
Stockholders' equity:
Common stock, $.01 par value
30,000,000 shares authorized;
15,455,958 shares issued and outstanding
at June 30, 1996 and 17,677,217 shares issued
and outstanding at March 31, 1997 176,772 154,560
Preferred stock Series C, $.10 par value,
1,100 shares authorized;
920 shares issued, 525 shares outstanding
at June 30, and 106 shares outstanding
at March 31, 1997 11 53
Paid in capital 22,281,599 22,199,545
Retained (defecit) earnings, since date of
recapitalization (March 1,1992) (13,069,974) 11,637,307
------------ ----------
Total stockholders' equity 9,388,408 33,991,465
------------ ----------
$129,307,618 $121,451,754
============ ============
See accompanying notes
- 3 -
<PAGE>
THE AEGIS CONSUMER FUNDING GROUP, INC.
Consolidated Condensed Statements of Operations
(unaudited)
<TABLE>
<CAPTION>
Three months ended Nine months ended
March 31, March 31,
-------- --------
<S> <C> <C> <C> <C>
1997 1996 1997 1996
---- ---- ---- ----
Revenues:
Fees and commissions earned $36,962 $24,936 $107,504 $166,483
Gains (losses) from securitization
transactions 6,016,327 9,658,639 (15,212,347) 21,605,316
Interest income 9,340,415 3,339,173 21,515,924 9,739,614
Other income 213,275 41,528 352,260 116,434
---------- --------- ----------- ----------
15,606,979 13,064,276 6,763,341 31,627,847
---------- ---------- ----------- ----------
Operating expenses:
Salaries and other employee costs 5,027,470 2,510,045 9,155,565 5,841,650
Provision for credit losses 1,399,564 1,382,578 7,979,089 2,505,628
Interest expense 6,446,475 2,722,981 13,674,274 7,306,368
Other expenses 3,498,850 1,931,751 8,910,483 4,582,440
---------- ---------- ---------- ----------
16,372,359 8,547,355 39,719,411 20,236,086
---------- ---------- ---------- ----------
Net (loss) income before
income tax (benefit) expense (765,380) 4,516,921 (32,956,070) 11,391,761
Income tax (benefit) expense - 1,987,500 (8,427,030) 5,012,400
----------- --------- ------------ ----------
Net (loss) income $(765,380) $2,529,421 $(24,529,040) $6,379,361
=========== ========== ============ ==========
Net (loss) income available to
common stockholders $(810,097) $2,400,242 $(24,707,280) $6,250,182
=========== ========== ============= ==========
Primary Earnings Per Share:
Net (loss) income available to
common stockholders $(810,097) $2,529,421 $(24,707,280) $6,379,361
========== ========== =========== ==========
Net (loss) income per common and
dilutive common equivalent share $(0.05) $0.17 $(1.53) $0.45
======= ===== ======= =====
Weighted average common and dilutive
common equivalent shares 16,534,761 14,941,987 16,124,517 14,136,732
========== ========== =========== ==========
Fully Diluted Earnings Per Share:
Net (loss) income available to
common stockholders $(810,097) $2,529,421 $(24,707,280) $6,379,361
=========== ========== ============= ==========
Net (loss) income per common and
dilutive common equivalent share $(0.05) $0.16 $(1.53) $0.42
=========== ========== ============= ==========
Weighted average common and dilutive
common equivalent shares 16,534,761 16,021,822 16,124,517 15,215,040
========== ========== ============ ==========
</TABLE>
See accompanying notes.
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<PAGE>
THE AEGIS CONSUMER FUNDING GROUP, INC.
Consolidated Condensed Statements of Cash Flows
(unaudited)
Nine months ened March 31,
-------------------------
1997 1996
----- ----
Cash flows from operating activities:
Net (loss) income $(24,529,040) $6,379,361
Adjustments to reconcile net (loss) income to
net cash used in operating activities:
Amortization and depreciation expense 847,341 589,542
Provision for credit losses 7,979,089 2,505,627
Valuation allowance on note receivable
from related party - 600,000
Unrealized gains on securitization
transactions (12,316,889) (37,781,125)
Write down or retained interests in
securitized receivables 31,000,000 4,000,000
Increase in automobile finance receivables (31,445,378) (9,390,304)
Decrease in note receivable - 7,651,985
(Increase) decrease in other assets (230,431) 2,760,300
Increase in accounts payable and
accrued expenses 1,855,609 7,196,876
(Decrease) increase in income taxes payable (9,157,289) 4,886,639
------------ ----------
Net cash used in operating activities (35,996,988) (10,601,099)
------------ ------------
Cash flows from investing activities:
Distributions from retained interests in
securitized receivables 1,362,355 2,191,786
Additional payments for securitized
receivable trusts (2,421,284) (2,335,562)
Purchases of fixed assets (3,756,804) (452,428)
----------- ---------
Net cash used in investing activities (4,815,733) (596,204)
----------- ---------
Cash flows from financing activities:
Proceeds from borrowing under warehouse
credit facilities 515,970,559 272,589,438
Repayment of borrowing under warehouse
credit facilities (512,345,462) (280,805,322)
Proceeds from borrowing under notes payable 48,322,444 21,556,398
Repayment of borrowing under notes payable (17,186,942) (10,807,790)
Proceeds from subordinated debt 5,000,000 -
Purchase of treasury stock (340,000) -
Proceeds from issuance of preferred stock,net - 8,464,000
Increase from issuance of stock warrants - 12,500
------------ ----------
Net cash provided by financing activities 39,420,599 11,009,224
------------ ----------
Net decrease in cash and cash equivalents (1,392,122) (188,079)
Cash and cash equivalents, beginning of period 3,090,624 5,970,571
---------- ---------
Cash and cash equivalents, end of period $1,698,502 $5,782,492
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the period
Interest $13,522,064 $7,564,275
=========== ==========
Income taxes $130,440 $ 135,927
=========== ==========
See accompanying notes.
- 5 -
<PAGE>
THE AEGIS CONSUMER FUNDING GROUP, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(unaudited)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The interim financial data is unaudited; however, in the opinion of
management, the interim data includes all adjustments, consisting only of
normal recurring adjustments, necessary for a fair statement of the results
for the interim periods. Results for interim periods are not necessarily
indicative of the results for a full year. The consolidated condensed
financial statements included herein have been prepared by the Company
pursuant to the rules and regulations of the Securities and Exchange
Commission (the "SEC"). Pursuant to interim accounting disclosure rules
and regulations, certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted. The
organization and business of the Company, accounting policies followed by the
Company and other information are contained in the notes to the Company's
consolidated financial statements filed as part of the Company's 10-K filing
for the fiscal year ended June 30, 1996. This quarterly report should be read
in conjunction with such annual 10-K filing.
Systems and Services Technologies, Inc.("SST"), a wholly owned subsidiary of
the Company began operations during January 1997 as a loan servicing company
designed to service loans acquired by the Company as well as various other
types of marginal loans originated by third parties.
2. WAREHOUSE AND OTHER CREDIT FACILITIES
During the nine months ended March 31, 1997 the two separate Loan and Security
Agreements (the "Auto Agreements") with III Finance Ltd ("III Finance") were
amended to increase the borrowing limits to $300.0 million. This limit was
inclusive of the Auto Agreements and the additional Loan and Security Agreements
(see Note 3) with III Finance (the "Financing Agreements"). Under the terms of
the amended Auto Agreements, The rate of interest on loan balances borrowed in
excess of $50.0 million was LIBOR plus 2.75% compared to LIBOR plus 4.0% in the
original Auto Agreements. The Auto Agreement for the purchase of automobile
finance contracts terminated on March 19, 1997 as a result of the completion
of a multi-structured finance facility (the "Facility"). The Facility includes
a commitment for the purchase of $350.0 million of subordinated Class B trust
certificates which will support the issuance by the Company of $650.0 million of
senior Class A trust certificates for a total of $1.0 billion (the "Purchase
Facility"). The Purchase Facility portion of the Facility is supported by a
$50.0 million warehouse lending line ("the Warehouse Line") which closed
concurrently. The Warehouse Line replaced the Auto Agreement for the purchase
of automobile finance contracts. The Auto Agreement for the purchase of
automobile leases was amended to limit the borrowing thereunder to its then
outstanding balance of $9.2 million. The Auto Agreement for the purchase of
automobile finance contracts was paid in full through the use of proceeds from
the securitization completed during the three months ended March 31, 1997 and
the issuance of a note payable for $23.4 million. The Warehouse Line expires
March 14, 2001. Interest on the Warehouse Line accrues at LIBOR plus 3% and
is payable quarterly in arrears on the twentieth of the month (or succeeding
business day) following the calendar quarter end.
The Company's ability to borrow under its $100.0 million warehouse credit
facility with Greenwich Capital Markets,Inc. ("Greenwich") was curtailed in the
quarter ended March 31, 1997. The Company also has a one-year commiitment
from Greenwich Capital to purchase and securitize up to $533.0 million of the
Company's finance contract acquisitions until the commitment is filled, subject
to customary conditions. Three securitizations aggregating $307.0 million were
completed as of March 31, 1997 pursuant to this commitment. These facilities
are currently being restructured. (See Note 8).
- 6 -
<PAGE>
In December 1996, the Company entered into a purchase agreement with Enterprise
National Bank (the "Enterprise Agreement") whereby approximately $15.0
million of automobile finance contracts were sold at par. Under the terms of
the Enterprise Agreement, the unamortized balance of the contracts were to be
repurchased no later than July 1997 and paid interest at LIBOR plus 2.78%. In
<PAGE>
March 1997, the Enterprise Agreement was amended to remove the repurchase
provision. As a result, the Company recognized a net gain on sale of
approximately $37,000 and retired the outstanding obligation relating to the
repurchase provision under the Enterprise Agreement.
3. NOTES PAYABLE
During the nine months ended March 31, 1997, the Company entered into
additional Loan and Security Agreements with III Finance. As of March 31,
1997, the Company had notes payable aggregating $57.4 million and related
interest payable of $125,000 under the Financing Agreements with III Finance.
The notes bear interest at a rate of 12% per annum and are secured by certain of
the Company's retained interests in securitized receivables with carrying
values aggregating approximately $52.4 million at March 31, 1997, which
approximates their fair value as of March 31, 1997, and approximately $28.6
million of automobile finance contract receivables. The Company intends on
paying down $14.1 million of the notes payable with the proceeds received
from the issuance of the Debenture. (See Note 8).
In March 1997, the Company entered into a note payable of $1.2 million between
consolidating entities. This note was assigned to the Aegis Auto Receivables
Trust 1997-3 as a credit enhancement of the securitization. The note accrues
interest at LIBOR, adjusted monthly, (5.6875% at March 31, 1997) and is payable
monthly.
During the nine months ended March 31, 1997, certain executive officers of the
Company deferred payment of their respective bonus earned for the year ended
June 30, 1996. In connection therewith, the Company entered into notes payable
(the "Executive Notes") with such officers in an aggregate amount of $686,000.
The Executive Notes bear interest at an annual rate of 15%. Effective
December 31, 1996, the Executive Notes were cancelled and all executive
officers entitled to bonuses under their contracts agreed to forfeit their
respective deferred bonus earned for the year ended June 30, 1996. (See Note 8).
On July 29, 1996, SST purchased a building and property (the "Property"),
located at 4215 Pickett Road, St. Joseph, Missouri, formerly known as the
Northwest Missouri Community College Facility. The Property will be utilized
by SST as its loan servicing center. Commerce Bank, N.A. ("Commerce") has
executed a loan agreement (the "Loan Agreement") with SST, dated as of July
29, 1996, whereby Commerce advanced SST $1.4 million with interest of 8.2%
per annum, expiring in August, 2001, for the purchase and refurbishment of
the Property. SST has borrowed an additional $0.9 million from various
financial institutions for the purchase of fixed assets and building
improvements with terms that are substantially similar to those of the Loan
Agreement.
4. SUBORDINATED DEBT
During the nine months ended March 31, 1997, the Company borrowed $5.0 million
available under a revolving credit agreement provided by Greenwich. The
revolving credit agreement accrues interest at LIBOR plus 9% (14.6875% at
March 31, 1997). The revolving credit agreement is up for renewal in May 1997.
(See Note 8).
-7-
<PAGE>
5. COMMITMENTS AND CONTINGENCIES
In December 1995, the Company entered into a commitment to sell $175.0 million
of sub-prime automobile finance contracts to be resold as asset-backed
securities through an Owners Trust Agreement (the "Agreement"). In October
1996, it was determined that the finance contracts underlying the securities
were not performing in accordance with the levels required under the Agreement.
This event terminated the Company's remaining commitment of $26.6 million (as
of that date, the Company had sold $148.4 million of finance contracts of the
$175.0 million total commitment).
In connection with securitization transactions, the Company enters into pooling
and servicing agreements. Certain of these agreements require the Company to
<PAGE>
increase its cash contribution to the underlying trusts when the delinquencies
and default rates increase to certain levels defined in the agreements. As
delinquencies and/or default rates increase or decrease, the Company's
obligation varies. For the year ended June 30,1996, the Company paid additional
contributions to the trusts of approximately $2.3 million and, in August 1996,
paid $2.4 million, which is the final contribution under these obligations.
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 "Complaint"). The amounts
alleged to be due were in connection with the Company's private placement of
$92 million of asset-backed securities in March 1996. On July 3, 1996, the
complaint was amended (the "Amended Complint") to include fees allegedly due
under the finder's agreement in connection with a series of financing
arrangements entered into by the Company and in connection with a potential
sale of common stock of the Company. The complainant seeks damages of
approximately $21.0 million plus interest and punitive damages of at least
$545,000, together with costs, attorneys' fees and such other relief as the
court deems appropriate. On January 8, 1997, the United States District Court
for the Southern District of New York denied
Plaintiffs Attachment Motion and its cross motion for partial summary judgment.
The Company's Motion to Dismiss has been granted with respect to certain claims
for relief made by the Plaintiff. In accordance with the procedures set by the
court, both parties have submitted their direct cases in writing and the
remainder of the trial is set for late May 1997. The Company believes it has
meritorious defenses to the remaining allegations in the Complaint and the
Amended Complaint and intends to defend the matter vigorously.
The Company is subject to various other legal proceedings and claims that arise
in the ordinary course of business. In the opinion of management of the Company,
based in part on the advice of counsel, the amount of any ultimate liability
with respect to these actions will not materially affect the results of
operations, cash flows or financial position of the Company.
6. CAPITAL STOCK
No warrants or options that were issued and outstanding at June 30, 1996 have
been exercised as of May 12, 1997.
During the nine months ended March 31, 1997, the Company converted 419 shares
of Series C Preferred Stock into 2,221,259 shares of common stock.
In July 1996, the Company purchased 80,000 shares of common stock from a former
Executive officer of the Company, who is currently the CEO of SST, for $340,000.
These shares were re-issued in connection with the conversion of preferred stock
to common stock.
7. INCOME TAXES
During the nine months ended March 31, 1997, the Company established a
valuation allowance of $5.4 million against its deferred tax assets, which
represents the income tax benefit relating to losses incurred in excess of
previously earned income. As the Company generates earnings in the future,
the income tax provision and the valuation allowance account will be adjusted.
As of March 31, 1997, the balance of the valuation allowance is $5.4 million.
- 8 -
<PAGE>
8. SUBSEQUENT EVENTS
The Company has reached an agreement in principal for the sale of $21.3 million
subordinated debentures (the "Debenture"). The Debenture will be purchased
for $20.0 million and will be convertible into 8% non-voting preferred stock
(the "Preferred Shares") of the Company on a common share equivalent basis
equal to $2.0 per common share. The Debenture will have a term of seven years
and carry a coupon rate of twelve percent (12%) per annum. Approximately $15.1
million of the proceeds of the Debenture will be utilized to repay existing
debt. The Debenture and the Preferred Shares, into which the Debenture is
convertible, are redeemable at any time by the Company for cash or by the
holder for cash; however, if the redemption is requested by the holder, the
Company at its election may pay the redemption price in the form of common
stock. In the event the Debentures are redeemed for any reason, in addition
to the redemption price, warrants shall be issued to the holder which are
exercisable for that number of Preferred Shares into which the redeemed
Debentures were convertible. If Preferred Shares are redeemed at the option
of the Company, the Company must issue to the holder warrants to acquire an
equivalent number of shares of common stock at an aggregate purchase price
equal to the redemption price paid by the Company. All warrants will expire
at the original stated maturity date of the Debenture.
The Executive Officers' employment contracts are currently being reviewed by
the Compensation Committee of the Board of Directors. Discussions are taking
place between the Compensation Committee and the respective officers regarding
a restructuring of certain contractual provisions including but not limited to
the bonus structure, term and base compensation.
The Company has reached an agreement in principal with Greenwich
regarding the restructure of its $5.0 million revolving credit facility.
Under the terms of the agreement, the Company will use $1.0 million of the
proceeds from the sale the Debenture, as described above, to pay down the $5.0
million balance to $4.0 million. The Company will repay $2.0 million of the
adjusted balance under the revolving credit facility proportionately (pari
passu) with principal payments made on the balances of the Debentures and
certain notes payable aggregating $41.3 million. The term of the loan was
extended for four years from the date of closing of the Debenture and the
interest rate decreased to 12.0% per annum, payable monthly. Early repayment
for the other $2.0 million under the revolving credit facility is permitted
If Greenwich provides auto loan servicing to the Company as defined thereunder.
Additional terms of the agreement provide for lowering the strike price on
warrants issued to them by the Company from $6.50 to as low as $4.00,
contingent on achieving certain levels of auto loan servicing placed by
Greenwich with the Company.
- 9 -
<PAGE>
Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations.
The following discussion and analysis of financial condition and results of
operations of the Company relates to the nine and three months ended March 31,
1997 and 1996 and should be read in conjunction with the Company's Consolidated
Condensed Financial Statements and Notes thereto included elsewhere in this
quarterly report. The unaudited results for the three and nine months ended
March 31, 1997 are not necessarily indicative of results to be expected for the
entire fiscal year.
Overview
The Company is a specialty consumer finance company engaged in acquiring,
securitizing and servicing finance contracts originated by Dealers in connection
with the sale of late-model used and, to a lesser extent, new cars to consumers
with sub-prime credit. Since commencing the acquisition of finance contracts in
May 1992, through March 31, 1997, the Company has acquired approximately $1.1
billion of finance contracts, of which $1.0 billion have been securitized in
sixteen offerings of asset-backed securities or sold in whole loan sales of
finance contracts.
The following table illustrates the Company's finance contract acquisition
volume, total revenue, securitization activity and servicing portfolio during
the past nine fiscal quarters.
<TABLE>
<CAPTION>
For the Quarters Ended
Mar. 31, June 30, Sept.30, Dec. 31. Mar. 31, June 30, Sept. 30, Dec 31, Mar 31
1995 1995 1995 1995 1996 1996 1996 1996 1997
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
(dollars in thousands)
Number of finance contracts
acquired during period ........... 2,688 4,901 5,943 8,190 10,569 12,037 15,401 14,584 8,992
Average finance contract balance.. $12.2 $12.2 $12.2 $12.3 $12.2 $12.4 $12.4 $12.3 $12.3
Aggregate value of finance
contracts acquired during period. 32,785 59,609 72,562 100,582 128,781 149,612 190,843 179,933 110,580
Gains from securitization
transactions(1)(2)................ 1,984 5,197 6,023 7,424 12,759 10,824 10,349 (578) 5,979
Gains from whole loan sales....... 604 40 48 64 111 290 - - 37
Net interest income............... 213 765 866 1,021 546 993 2,129 2,747 2,894
Revenue(3)........................ 2,498 6,111 7,034 6,946 10,341 11,916 10,675 (26,747) 9,161
Finance contracts securitized
during period..................... 21,000 54,000 67,630 85,368 130,138 149,274 173,270 4,870 238,693
Finance contracts sold during
period............................ 8,561 1,000 1,000 1,801 2,752 2,250 - - 15,000
Servicing portfolio(at period
end)(4)........................... 94,576 146,557 197,911 287,481 401,704 500,694 645,551 759,304 783,757
<FN>
<F1>
(1) Excludes gains from whole loan sales of finance contracts.
<F2>
(2) The quarters ended December 31, 1995, March 31, 1996, June 30, 1996,
September 30,1996 and December 31, 1996 are before write downs of $1.5
million, $2.5 million, $3.5 million, $2.0 million and $29.0 million,
respectively, taken on prior retained interests in securitized receivables.
<F3>
(3) Revenue is net of interest expense and write downs on retained interests in
securitized receivables.
<F4>
(4) Excludes finance contracts which are in bankruptcy and authorized for
repossession or in repossession and still eligible for reinstatement.
</FN>
</TABLE>
Revenues
- 10 -
<PAGE>
The Company's primary sources of revenues consist of two components: gains or
losses from securitization transactions and interest income.
Gains or Losses from Securitization Transactions. The Company warehouses the
finance contracts it acquires and periodically sells them to trusts, which in
turn sells asset-backed securities to investors. By securitizing its finance
contracts, the Company is able to lock in the difference ( gross spread )
between the annual rate of interest paid by the consumer ( APR ) on the finance
contracts acquired and the interest rate on the asset-backed securities sold
( Certificate Rate ). When the Company securitizes its finance contracts, it
records gains or losses from securitization transactions and establishes an
<PAGE>
asset referred to as retained interest in securitized receivables. Gains or
losses from securitization transactions are equal to the retained interest on
the securitized receivables plus the difference between the net proceeds from
the securitization and the cost (including the cost of VSI Policy and credit
default premiums) to the Company of the finance contracts sold. The retained
interest on securitized receivables represents the estimated present value of
the projected future cash flows to be received by the Company, discounted at
a market-based rate, taking into consideration (i) contractual obligations of
the obligors, (ii) amounts due to the investors in asset-backed securities,
(iii) various costs of the securitizations, including the effects of hedging
transactions, if any, and (iv) adjustments to the cash flows to reflect
estimated prepayments of finance contracts, defaults and losses incurred in
connection with defaults (collectively "Assumptions"). Subsequent to
securitization, the Company continues to service the securitized finance
contracts, for which it recognizes servicing fees, net of third party
sub-servicer fees, over the life of the securitization. The Company reviews,
on a quarterly basis, the fair value of its retained interest in securitized
receivables. If actual experience differs from the Companys Assumptions, or
to the extent that market and economic changes occur that adversely impact the
Assumptions utilized in determining the retained interest in securitized
receivables, the Company records a charge against gains from securitization
transactions. The discount rate utilized in determining the retained interest
in securitized receivables and gain from securitization transactions is based
on the Company's estimate of the yield required by a third party purchaser of
such instrument. The Company also bases these assumptions on the static pool
performance characteristics of the Company's finance contract portfolio to date.
The Company's default assumptions are based on historical static pool experience
as to repossession rates, proceeds from the liquidation of repossessed vehicles,
proceeds from VSI Policy coverage and recoveries from the Company s credit
default insurance.
Interest Income. Interest income consists of: (i) interest income earned on
finance contracts; (ii) interest income earned on leases (the Company ceased
funding leases in the quarter ended September 30, 1995); (iii) servicing fees
net of expenses; (iv) the accretion of finance contract acquisition discounts
net of related capitalized costs and (v) the amortization of capitalized costs
net of origination discounts. Other factors influencing interest income during
a given fiscal period include (a) the annual percentage rate of the finance
contracts acquired, (b) the aggregate principal balance of finance contracts
acquired and funded through the Company's warehouse credit facilities prior
to securitization and (c) the length of time such finance contracts are funded
by the warehouse credit facilities prior to securitization. Finance contract
acquisition volume has a significant impact on the amount of interest income
earned by the Company.
The following table provides information for each of the Company s rated
securitizations:
<TABLE>
<CAPTION>
Weighted
Remaining Average Weighted
balance at Finance Average
Original March 31, Contract Certificate Current Gross Net
Securitizations Balance 1997 Rate Rate Ratings Spread(1) Spread(2)
(dollars in thousnads)
<S> <C> <C> <C> <C> <C> <C> <C>
Aegis Auto Receivables Trust,
Series:
1994-A..................... $18,539 $3,385 20.28% 7.74% A(3) 12.54% 8.70%
1994-2..................... 23,251 5,715 19.82 8.04 A+(3) 11.78 8.12
1994-3..................... 21,000(4) 6,209 19.66 9.46 A+(3) 10.20 6.46
1995-1..................... 21,000(4) 7,563 20.41 8.60 A+(3) 11.81 8.46
1995-2..................... 54,000(4) 22,578 19.94 7.16 A+(3) 12.78 8.98
1995-3..................... 60,000(4) 29,161 20.04 7.09 A+(3) 12.95 10.12
1995-4..................... 70,000(4) 38,119 19.88 6.65 BBB+(3) 13.23 10.41
1996-1..................... 92,000(4) 62,164 20.13 8.44(5) (6) 11.69 8.89
1996-2..................... 105,000(4) 79,876 20.10 8.93(7) (8) 11.17 8.40
1996-3..................... 110,000(4) 91,925 20.2 8.82(9) (10) 11.40 8.75
Aegis Auto Owners Trust.... 148,347 103,599 20.14 6.53 (11) 13.61 10.87
<FN>
<F1>
(1) Difference between the Weighted Average APR on finance contracts and
the Weighted Average APR on the trust certificates (the "Weighted
Average Certificate Rate").
<F2>
(2) Difference between Weighted Average APR on finance contracts and the
Weighted Average Certificate Rate, net of servicing and trustee monthly
fees and annualized issuance costs that include underwriting fees and
hedging gains or losses, if any.
<F3>
(3) Indicates ratings by Duff & Phelps.
<F4>
(4) Includes prefunded amounts which were transferred to the related trust by
the end of the quarter for 1995-1, 1995-2, 1995-3, 1995-4, 1996-1, 1996-2,
1996-3 and by the first week of the next quarter for 1994-3.
<F5>
(5) The Weighted Average Certificate Rate is composed of the following: The
Class A certificate rate is 8.39%, the Class B certificate rate is 7.86%
and the Class C certificate rate is 12.14%.
<F6>
(6) The 1996-1 Securitization has Class A Notes rated BBB-by Duff & Phelps
and BBB by Fitch; Class B Notes rated B by Duff & Phelps and BB by Fitch
and Class C Notes rated CCC by Duff & Phelps and B- by Fitch
<F7>
(7) The Weighted Average Certificate Rate is composed of the following: The
Class A certificate rate is 8.9%, the Class B certificate rate is 8.4% and
the Class C certificate rate is 11.65%
<F8>
(8) The 1996-2 Securitization has Class BBB-by both Duff & Phelps and Fitch;
Class B notes rated B by Duff and Phelps and B- by Fitch and Class C notes
rated CCC by Duff & Phelps and CCC+ by Fitch.
<F9>
(9) The weighted average Certificate Rate is composed of the following: the
Class A certificate is 8.8%, the Class B certificate is 8.3% and the Class
C certificate is 11.1%.
<F10>
(10) The 1996-3 Securitization has Class A notes rated BBB- by Duff & Phelps and
BBB by Fitch; Class B notes rated B by Duff & Phelps and BB by Fitch and
Class C notes rated CCC by Duff & Phelps and B- by Fitch.
<F11>
(11) The Owner Trust Facility has Class A notes rated AAA by Standard & Poors
and Aaa by Moodys and Class B certificates rated Ba1 by Moodys.
</FN>
</TABLE>
The following table provides information for each of the Company's
securitizations under its $1.0 billion Purchase Facility:
<TABLE>
<CAPTION>
Weighted
Remaining Average Weighted
balance at Finance Average
Original March 31, Contract Certificate Gross Net
Securitizations Balance 1997 Rate Rate Spread (1) Spread(2)
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Aegis Auto Receivables Trust
Series:
1997-1................ $238,693 $238,693 20.4% 9.50%(3) 10.93% 8.47%
<FN>
<F1>
(1) Difference between the Weighted Average APR on finance contracts
and the Weighted Average APR on the trust certificates (the "Weighted Average
Certificate Rate").
<F2)
(2) Difference between Weighted Average APR on finance contracts and the
Weighted Average Certificate Rate, net of servicing and trustee monthly
<F3>
(3) The weighted average Certificate Rate is composed of the following: the
Class A certificate rate is 7.3% and the Class B certificate rate is
13.73%.
</FN>
</TABLE>
Results of Operations
Nine Months Ended March 31, 1997 Compared To Nine Months Ended March 31, 1996
Revenues
Revenues decreased to $6.8 million for the nine months ended March 31, 1997
from $31.6 million for the nine months ended March 31, 1996, a decrease of
$24.9 million or 78.6%.
Gains or Losses from Securitization Transactions. Gains or losses from
securitization transactions decreased to $(15.2) million for the nine months
ended March 31, 1997 from $21.5 million for the nine months ended March 31,
1996, a decrease of $36.7 million or 170.8%. The decrease in gains or losses
from securitization transactions includes write downs of $31.0 million
(described below) taken on the retained interests in securitized receivables
from earlier securitizations, the lack of a material securitization transaction
in the three months ended December 31, 1996 and the lower gain obtained on the
securitization transaction completed in the fiscal quarter ended March 31, 1997
compared to the gain obtained in the comparable quarter ended March 31, 1996.
The securitization completed for the three months ended March 31, 1997 under
the Company's Purchase Facility is not rated. Quarterly, the Company revalues
its retained interests in securitized receivables using actual experience on
the respective underlying securitization trust's finance contract performance.
When the actual experience differs from the original assumptions utilized in the
initial valuation in a detrimental direction, the Company can incur permanent
impairment losses in the carrying value of these assets. During the nine
months ended March 31, 1997 and 1996, the Company incurred $31.0 million and
$4.0 million, respectively, of what management believes to be permanent
impairment losses on its retained interests in securitized receivables
portfolio. The most significant cause of the permanent impairment was
higher than expected default rates on the underlying finance contracts. As
a result of this increase and other observations on portfolio performance,
current assumptions utilized in current valuations have been adjusted to
reflect the higher rates actually experienced. The decrease in gains or
losses from securitization transactions is also a result of the Company's
current assumptions utilized in evaluating its retained interest in securitized
receivables which incorporate higher expected default rates over the life of the
securitization trust compared to the levels used in the comparable period a
year ago. During the nine month period ended March 31, 1996, the Company also
recorded a valuation allowance of $0.6 million on a note receivable from a
related party.
Additionally, the Company's securitization costs increased
as a result of the costs associated with issuing warrants to Greenwich
Capital in connection with additional securitizations pursuant to the terms of
the Securitization Facility.
Interest Income. Interest income increased to $21.5 million for the nine
months ended March 31, 1997 from $9.7 million for the nine months ended March
31,1996, an increase of $11.8 million or 121.0% primarily as a result of the
Company s increased finance contract volume. The Company s weighted monthly
average outstanding balance of finance contracts owned increased to $122.4
- 13 -
<PAGE>
million for the nine months ended March 31, 1997 from $34.1 million for the
nine months ended March 31, 1996, an increase of $88.3 million or 258.9%.
This significant increase in the weighted average outstanding balance is
attributed to the Company not securitizing or otherwise disposing of
finance contracts acquired in the quarter ended December 31, 1996 until March
1997. The Company also recorded income of $775,000 representing the accretion
of dealer discount, net of direct costs of finance contracts held for
investment for the nine months ended March 31, 1997. There was no accretion for
the corresponding period of the comparable period a year ago as balances held
for investment were not material. (Interest income is net of servicing fees
paid and earned.)
Operating Expenses
Operating expenses increased to $39.7 million for the nine months ended
March 31, 1997 from $20.2 million for the nine months ended March 31, 1996,
an increase of $19.5 million or 96.3%.
Interest Expense. Interest expense increased to $13.7 million for the nine
months ended March 31, 1997 from $7.3 million for the nine months ended March
31, 1996, an increase of $6.4 million or 87.2%, as a result of the increased
financing requirements for the increased finance contract balances. The
increase in interest expense represents 32.7% of the total increase in
operating expenses and is partially attributable to the Companys warehouse
credit facilities, which are at fluctuating interest rates that ranged from
as low as 8.125% to as high as 9.5625% for the nine months ended March 31,
1997 compared to a low of 9.0625% and a high of 10.125% for the nine months
ended March 31, 1996. In addition, the Company s monthly average outstanding
balance on its warehouse credit facility increased to $153.2 million for the
nine months ended March 31, 1997 from $71.7 million for the nine months ended
March 31, 1996. This significant increase in the average outstanding balance
is attributed to the Company not securitizing or otherwise disposing of the
finance contracts acquired in the second quarter ended December 31, 1996 until
March 1997. The Company also incurred interest on notes payable at a 12%
interest rate on a monthly average outstanding balance of $34.2 million for
the nine months ended March 31, 1997 compared to a monthly outstanding average
balance of $18.1 million for the nine months ended March 31, 1996.
Salaries and Other Employee Costs.
Salaries and other employee costs increased to $9.2 million for the nine months
ended March 31, 1997 from $5.8 million for the nine months ended March 31, 1996,
an increase of $3.3 million or 56.7%, due to an increase in the number of
employees to approximately 556 (including 71 SST employees) at March 31,
1997 from approximately 320 employees at March 31, 1996. In addition temporary
help charges incurred increased to approximately $2.1 million for the nine
months ended March 31, 1997 from approximately $222,000 for the nine months
ended March 31, 1996, an increase of $1.9 million. Temporary employment
agencies, specializing in providing collectors, were utilized in the Company's
California collections unit located in Irvine as a screening process for hiring
new collectors. The collections unit expanded its operations in an effort to
maintain the number of finance contracts per collector at levels acceptable
to the Company. The Company expects continued increases in the number of
permanent employees, as well as total salary costs, as it expands its servicing
operations of SST. In addition, Salaries and other employee costs for the nine
months ended March 31, 1997 includes an adjustment of $611,000 relating to the
forfeitures of the deferred portion of contractual bonuses of certain executive
officers earned for the year ended June 30, 1996. See "Recent Developments."
Provision for Credit Losses. The provision for credit losses increased to
$8.0 million for the nine months ended March 31, 1997 from $2.5 million for
the nine months ended March 31, 1996, an increase of $5.5 million or 218.5%.
The Company's provision for credit losses is affected by: (i) the Company's
increased acquisition volume of finance contracts; (ii) the Company's decision
to discontinue purchasing credit default insurance on its lease originations
effective January 1995; (iii) the Company's decision, effective August 1995,
to insure on a discretionary basis its finance contract acquisitions (to the
extent finance contracts remain uninsured for default, the Company's loss ratio
is higher); (iv) the increase in delinquent automobile finance receivables (as
discussed below); (v) the change in the Company's historical loss ratios;
- 14 -
<PAGE>
(vi) the higher amount of finance contracts and leases owned by the Company at
March 31, 1997 ($73.8 million) as compared to March 31, 1996 ($50.5 million);
and (vii) the ratio of current finance contracts to total finance contracts
at March 31, 1997 (70.6%) compared to March 31, 1996 (72.7%). These changes
resulted in a 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) to 10.8% at
March 31, 1997 from 6.4% at March 31, 1996. The provision for credit losses
for the nine months ended March 31, 1997 includes an adjustment for $500,000
for estimated recoveries of sales taxes paid on automobile finance contracts
which became delinquent and/or defaulted. Exclusive of this adjustment, the
provision for credit losses increased to $8.5 million, an increase of $6.0
million from the nine months ended March 31, 1996. The Company maintains
residual value insurance relating to its entire lease portfolio.
All Other Operating Expenses. All other operating expenses increased to $8.9
million for the nine months ended March 31, 1997 from $4.6 million for the nine
months ended March 31, 1996, an increase of $4.3 million or 94.5%. The
significant components of the increase in all other operating expenses are
increases in office, communications and data services, professional fees and
all other general and administrative expenses. Office, communications and data
service expenses increased to $2.5 million for the nine months ended March 31,
1997 from $960,000 for the nine months ended March 31, 1996, an increase of
$1.6 million (36.5% of the total increase) or 164.7%. These expenses increased
due to the Company's increased acquisitions of finance contracts and the upgrade
and maintenance of communications equipment at all of its offices. Professional
fees increased to $1.2 million for the nine months ended March 31, 1997 from
$765,000 for the nine months ended March 31, 1996, an increase of $419,000
(9.7% of the total increase) or 54.7%, primarily due to increased legal fees
incurred for defending the Company's ongoing litigation and consulting fees
incurred under the Whitehall Financial Group, Inc. consulting agreement of
$175,000 with $50,000 in the comparable 1996 period. All other general and
administrative expenses increased to $5.2 million for the nine months ended
March 31, 1997 from $2.9 million from the comparable 1996 period, an increase
of $2.3 million or 81.8%. In general, the Company's general and administrative
expenses increased to support the Company's increased finance contract
acquisition levels and its collections efforts.
Income Tax (Benefit) Expense. A net tax benefit of $8.4 million was recorded
by the Company for the nine months ended March 31, 1997 which is net of a
valuation adjustment of $5.4 million which represents an adjustment to the
income tax benefit relating to losses incurred in excess of previously earned
income. Exclusive of the valuation adjustment, the Company's tax benefit would
have been $13.5 million (an effective tax rate of 42%). A tax expense of $5.0
million was recorded by the Company for the nine months ended March 31, 1996
(an effective tax rate of 44%). The change in effective tax rates is
attributed to decreased state and local taxes.
Net (Loss) Income. The Company recognized a net loss of $24.5 million for the
nine months ended March 31, 1997. The net loss resulted from several factors
including; (1) a write down of $18.0 million, net of taxes, in retained
interests in securitized receivables; (2) while in the process of negotiating
the Company's $1.0 billion Purchase Facility, the Company did not sell its
loans through its securitization exit strategy and retained the finance
contracts on its balance sheet, resulting in no gain from securitization
transactions, in the three months ended December 31, 1996, (3) the decrease in
gains or losses from securitization transactions is also a result of the
Company's current assumptions utilized in evaluating its retained interest
in securitized receivables which incorporate higher expected default rates
over the life of the securitization trust compared to the levels used in the
comparable period a year ago, and (4) a tax benefit related valuation adjustment
of $5.4 million taken on losses incurred in excess of previously earned income.
Three Months Ended March 31, 1997 Compared To Three Months Ended March 31, 1996
- 15 -
<PAGE>
Revenues
Revenues increased to $15.6 million for the three months ended March 31, 1997
from $13.1 million for the three months ended March 31, 1996, an increase of
$2.5 million or 19.5%.
Gains or Losses from Securitization Transactions. Gains or losses from
securitization transactions decreased to $6.0 million for the three months
ended March 31, 1997 from $9.7 million for the three months ended March 31,
1996, a decrease of $3.6 million or 37.7%. The decrease in gains or losses
from securitization transactiosn is a result of the Company's current
assumptions utilized in evaluating its retained interest in securitized
receivables which incorporate higher expected default rates over
the life of the securitization trust compared to the levels used in the
comparable period a year ago.
Quarterly, the Company revalues its retained interests in secritized
receivables using actual experience on the respective underlying securitization
trust's finance contract performance. When the actual experience differs from
the original assumptions utilized in the initial valuation in a detrimental
direction, the Company can incur permanent impairment in the carrying value of
these assets. During the three months ended march 31, 1997 and 1996, the
Company incurred none and $2.5 million, respectively, of what management
believes to be permanent impairment losses on its retained interests in
securitized receivables protfolio.
Interest Income. Interest income increased to $9.3 million for the three
months ended March 31, 1997 from $3.3 million for the three months ended March
31, 1996, an increase of $6.1 million or 186.1%. The Company s weighted monthly
average outstanding balance of finance contracts owned increased to $203.0
million for the three months ended March 31, 1997 from $35.1 million for the
three months ended March 31, 1996, an increase of $204.2 million or 581.8
%. This significant increase in the weighted average outstanding balance is
attributed to the Company not securitizing or otherwise disposing of its finance
contracts acquired in the quarter ended December 31, 1996 until March 1997.
The Company also recorded income of $584,000 representing the accretion of
dealer discount, net of direct costs of finance contracts held for investment
for the three months ended March 31, 1997. There was no accretion for the
corresponding period of the comparable period a year ago as balances held for
investment were not material. (Interest income is net of servicing fees paid
and earned.)
Operating Expenses
Operating expenses increased to $16.4 million for the three months ended
March 31, 1997 from $8.5 million for the three months ended March 31, 1996,
an increase of $7.8 million or 91.5 %.
Interest Expense. Interest expense increased to $6.4 million for the three
months ended March 31, 1997 from $2.7 million for the three months ended March
31, 1996, an increase of $3.7 million or 136.7%. The increase in interest
expense represents 47.6% of the total increase in operating expenses and is
partially attributable to the Company s warehouse credit facilities, which
are at fluctuating interest rates that ranged from as low as 8.125% to as
high as 9.5% for the three months ended March 31, 1997 compared to a low of
9.0625% and a high of 9.6875% for the three months ended March 31, 1996. In
addition, the Company s monthly average outstanding balance on its warehouse
credit facility increased to $193.6 million for the three months ended March
31, 1997 from $67.8 million for the three months ended March 31, 1996.
This significant increase in the average outstanding balance is attributed to
the Company not securitizing or otherwise disposing of its finance contracts
acquired in the quarter ended December 31, 1996 until the quarter ended March
- 16 -
<PAGE>
31, 1997. The Company also incurred interest on notes payable at a 12% interest
rate on a monthly average outstanding balance of $38.1 million for the three
months ended March 31, 1997 compared to a monthly outstanding average balance
of $22.9 million for the three months ended March 31, 1996.
Salaries and Other Employee Costs.
Salaries and other employee costs increasedto $5.0 million for the three months
ended March 31, 1997 from $2.5 million for the three months ended March 31,
1996, an increase of $2.5 million or 100.3%. The number of employees increased
to approximately 556 (including 71 SST employees) at March 31, 1997, from
approximately 320 employees at March 31, 1996. Temporary help charges incurred
increased to $820,000 for the three months ended March 31, 1997 from $133,000
for the three months ended March 31, 1996, an increase of $687,000. Temporary
employment agencies, specializing in providing collectors, were increasingly
utilized in the Company's California collections unit located in Irvine as a
screening process for hiring new collectors. The collections unit expanded its
operations in an effort to maintain the number of finance contracts per
collector at levels acceptable to the Company. The Company expects continued
increases in the number of permanent employees, as well as total salary costs,
as it expands its servicing operations of SST. See "Recent Developments".
Provision for Credit Losses. The provision for credit losses increased to
$1.40 million for the three months ended March 31, 1997 from $1.38 million for
the three months ended March 31, 1996, an increase of $0.02 million or 1.2%. The
Company's provision for credit losses is affected by: (i) the Company's
acquisition volume of finance contracts; (ii) the Company's
decision to discontinue purchasing credit default insurance on its lease
originations effective January 1995; (iii) the Company's decision, effective
August 1995, to insure on a discretionary basis its finance contract
acquisitions (to the extent finance contracts remain uninsured for default,
the Company's loss ratio is higher); (iv) he increase in delinquent automobile
finance receivables (as discussed below); (v) a change in the Company's
historical loss ratios; (vi) the higher amount of finance contracts and
leases owned by the Company at March 31, 1997 ($73.8 million) as compared to
March 31, 1996 ($50.5 million); and (vii) the ratio of current finance
contracts to total finance contracts at March 31, 1997 (70.6%) compared to
March 31, 1996 (72.7%). These changes 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) to 10.8% at March 31, 1997 from 6.4 at March 31, 1996.
The Company maintains residual value insurance relating to its entire lease
portfolio.
All Other Operating Expenses. All other operating expenses increased to $3.5
million for the three months ended March 31, 1997 from $1.9 million for the
three months ended March 31, 1996, an increase of $1.6 million or 81.1%.
The significant components of the increase in all other operating expenses
are increases in office, communications and data services and all other
general and administrative expenses. Office, communications and data service
expenses increased to $1.3 million for the three months ended March 31, 1996
from $416,000 for the three months ended March 31, 1996, an increase of $925,000
(60.2% of the increase) or 222.3%. These expenses increased due to the
Company's increased volume of applications processed and the upgrade and
maintenance of communications equipment at all of its offices. All other
general and administrative expenses increased to $2.2 million for the three
months ended March 31, 1997 from $1.5 million for the three months ended March
31, 1996, an increase of $0.6 million or 42.4%. In general, the Company's
general and administrative expenses increased to support the Company's increased
volume of applications processed.
Income Tax (Benefit) Expense. A net tax benefit of $ 0.3 million was
recorded by the Company for the three months ended March 31, 1997 which was
offset with a corresponding valuation adjustment for $0.3 million. The balance
of the valuation adjustment account at March 31, 1997 is $5.4 million which
represents an adjustment to income tax benefits relating to previously recorded
losses incurred in excess of previously earned income. A tax expense of $2.0
million was recorded by the Company for the three months ended March 31, 1996
(an effective tax rate of 44.0%). The change in effective tax rates is
attributed to decreased state and local taxes.
- 17 -
<PAGE>
Net (Loss) Income. The Company recognized a net loss of $765,000 for the
three months ended March 31, 1997 compared to net income of $2.5 million for
the three months ended March 31, 1996. The net loss resulted from the
following: (1) a decrease in gains or losses from securitization transactions
as a result of the Company's current assumptions utilized in evaluating its
retained interest in securitized receivables incorporating higher expected
default rates over the life of the securitization trust compared to the levels
used in the comparable period a year ago, and (2) a tax benefit related
valuation adjustment of $0.3 million taken on losses incurred in excess of
previously earned income.
Financial Condition
Automobile Finance Receivables, Net. Automobile finance receivables
consists of finance contracts held for sale, finance contracts held for
investment (including vehicles held for repossession) and the Company's lease
portfolio. The Company suspended originating leases in the first quarter of
its 1996 fiscal year.
Automobile finance receivables, net of allowance for credit losses,
increased to $64.5 million at March 31, 1997 from $41.1 million at June 30,
1996, an increase of $23.5 million or 57.2 %. Finance contracts held for sale
increased to $30.3 million at March 31, 1997 from $12.9 million at June 30,
1996 an increase of $17.4 million or 134.9%. Finance contracts held for
investment increased to $21.4 million at March 31, 1997 from $11.4 million
at June 30, 1996, an increase of $10.0 million or 87.7%. Additionally, the
increase in finance contracts held for investment was offset by an increase
in the allowance for credit losses to $6.2 million at March 31, 1997 from $3.1
million at June 30, 1996 and a decrease in automobile leases held for investment
to $12.8 million at March 31, 1997 from $19.8 million at June 30, 1996, a
decrease of $7.0 million or 35.4%, primarily due to amortization and write-offs.
As of March 31, 1997, approximately $12.2 million of finance contracts held for
investment were in the repossession process.
The number and principal balance of finance contracts held are largely
dependent upon the timing and size of the Company's securitizations. The
terms under the Company's Purchase Facility, provide the Company with a
monthly securitization strategy.
Retained Interests in Securitized Receivables. The following table provides
historical data regarding the retained interests in securitized receivables
for the periods shown:
Nine Months Three Months
Ended Ended
March 31, March 31, Year Ended June 30,
1997 1997 1996
(dollars in thousands)
Beginning balance. . $70,243 $52,717 $23,985
Additions. . . . . . 14,738 208 56,749
Amortization . . . . (1,362) (306) (2,991)
Write downs. . . . . (31,000) - (7,500)
-------- ------- --------
Ending balance . . . $52,619 $52,619 $70,243
======== ======= ========
On a quarterly basis, the Company revalues its retained interests in
securitized receivables using actual experience on the respective underlying
securitization trust's finance contract performance. When the actual experience
differs from the original assumptions utilized in the initial valuation in a
detrimental direction, the Company can incur permanent impairment losses in the
carrying value of these assets. During the nine month period ended March 31,
1997, the Company experienced an increase in its default rates from the rates
utilized in the valuation at June 30, 1996 resulting in a $31.0 million write
down in the carrying value of its retained interests in securitized receivables.
This write down was in accordance with the Company's policy, since the actual
experience differed adversely from the original assumptions utilized or from
its prior valuation.
- 18 -
<PAGE>
Delinquency Experience
The following table reflects the delinquency experience of all finance
contracts acquired, including those sold in whole finance contract sales or
securitizations, by the Company at the dates shown:
<TABLE>
<CAPTION>
Finance Contract Portfolio at:
March 31, December 31, September 30, June 30,
1997 1996 1996 1996
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Principal balance
outstanding(1) . $783,757 $759,304 $645,551 $500,694
Number of finance
contracts outstanding (1). 71,884 67,950 57,404 44,600
Delinquent loans
31-59 days. . . $50,937 6.50% $63,744 8.4% $46,145 7.2% $33,625 6.7%
60-89 days . . 13,186 1.68% 16,461 2.2% 13,157 2.0% 9,172 1.8%
90 days and over. 2,418 0.31% 3,959 0.5% 3,340 0.5% 2,054 0.4%
----- ----- ------ ---- ------ ---- -----
Total. . . . . 66,542 8.49% 84,164 11.1% 62,642 9.7% 44,851 8.9%
Finance contracts in
repossession or bankruptcy(2) 56,256 7.18% 56,445 7.4% 40,048 6.2% 21,022 4.2%
Grand Total $122,798 15.67% $140,609 18.5% $102,690 15.9% $65,874 13.1%
======== ====== ======== ===== ======== ===== =======
<FN>
<F1>
(1) Excludes contracts for which notice of intent to liquidate has expired and
those having an outstanding balance less than or equal to $500.
<F2>
(2) Excludes finance contracts which are in bankruptcy and authorized for
repossession or in repossession and still eligible for reinstatement.
</FN>
</TABLE>
Credit Loss Experience
An allowance for credit losses is maintained for all finance contracts held for
sale and for all finance contracts held for investment. Management evaluates
the reasonableness of the assumptions employed by reviewing credit loss
experience, delinquencies, repossession trends, the size of the finance
contract portfolio and general economic conditions and trends. If necessary,
assumptions are changed to reflect historical experience to the extent it
deviates materially from that which was assumed.
If a delinquency exists and a default is deemed inevitable or the collateral
is in jeopardy, and in no event later than the 35th day of delinquency, the
Company's collections department initiates the repossession of the financed
vehicle. Bonded, insured outside repossession agencies are used to secure
involuntary repossessions. In most jurisdictions, notice to the borrower of
the Company's intention to sell the repossessed automobile is required,
whereupon the borrower may exercise certain rights to cure his or her default
or redeem the automobile. Following the expiration of the legally required
notice period, the repossessed vehicle is sold at a wholesale auto auction,
usually within 150 days of the repossession. The Company monitors vehicles
set for auction, and procures an appraisal under the VSI Policy prior to sale.
Liquidation proceeds are applied to the borrower's outstanding obligation under
the finance contract and loss deficiency claims under the VSI Policy and credit
default insurance policy are then filed. The Company reports the remaining
deficiency as a net charge-off against the allowance for credit losses for
automobile finance receivables owned by the Company. For finance contracts
held in securitization trusts, charge-offs are accounted for in accordance
with the underlying pooling and servicing agreements.
Because of the Company's limited operating history, its finance contract
portfolio is unseasoned. Accordingly, delinquency and charge-off rates in
the portfolio may not fully reflect the rates that may apply when the average
holding period for finance contracts in the portfolio is longer. Increases in
the delinquency and/or charge-off rates in the portfolio would adversely affect
the Company's ability to obtain credit or securitize its finance contracts and
would have an adverse effect on the Company's results of operations and
financial condition.
- 19 -
<PAGE>
The following table shows the Company's repossession and loss experience
for its managed finance contract portfolio for the periods indicated:
<TABLE>
<CAPTION>
Nine Months Six Months Three Months Year Ended
Ended Mar. 31 Ended Dec. 31, Ended Sept. 30, June 30,
1997 1996 1996 1996
(dollars in thousands)
<S> <C> <C> <C> <C>
Average principal balance outstanding(1).. $731,126 $660,084 $617,400 $333,183
Balance of finance contracts at the time of
repossession.............................. 101,221 55,893 20,080 40,258
Number of repossessions(2)................ 8,736 4,875 1,759 3,494
Repossession ratio (3).................... 18.5% 16.9% 13.0% 13.0%
Default balance of fully liquidated
vehicles................................. $62,051 $43,078 $19,942 $15,920
Proceeds from liquidation, net of
repossession costs........................ 26,515 18,679 9,167 7,964
Gross charge offs(4)...................... 35,537 24,399 10,775 7,956
Credit default insurance proceeds (5)..... 9,477 7,469 4,076 4,092
Net charge offs (6)....................... 26,060 16,930 6,699 3,864
Net charge offs as a percentage of
liquidations(7)(8)........................ 42.0% 39.3% 33.6% 24.3%
Net charge offs as a percentage of average
principal balance outstanding............ 3.6% 2.6% 1.1% 1.2%
<FN>
<F1>
(1) Arithmetic mean of beginning and ending outstanding principal balance of
all finance contracts acquired including those previously sold in
securitization transactions.
<F2>
(2) Number of vehicles which have been repossessed and its notice of intent
to liquidate ("NOI") has expired.
<F3>
(3) Balance of finance contracts at the time of repossession divided by
average principal balance outstanding during the period, annualized for
the periods presented.
<F4>
(4) Gross charge offs equals the aggregate balance of finance contracts
liquidated, including those previously sold in securitization transactions,
less all recoveries from the sale of the financed vehicles. Repossession and
liquidation expenses are included in gross charge offs.
<F5>
(5) Since August 1995, the Company no longer deposits money to a segregated
account from which losses incurred under a policy would be paid.
<F6>
(6) Net charge offs are gross charge offs reduced by credit default insurance
proceeds received relating to the defaulted finance contracts.
<F7>
(7) Net charge off amount divided by the aggregate balance of finance contracts
relating to vehicles liquidated.
<F8>
(8) A portion of the Company's managed finance contract portfolio is not
insured under its credit default insurance policies (approximately $151.6
million at March 31, 1997). Under the structured sale (primarily, Aegis
Auto Owner's Trust 1995) the Company was not required to purchase risk
default insurance. Net losses for these receivables are therefore
significantly higher than those insured by a credit risk insurance policy.
</FN>
</TABLE>
The Company has prepared analyses, based on its own credit experience and
available industry data, to identify the relationship between finance contract
delinquency and default rates at the various stages of a finance contract
repayment term. The results of these analyses, which have been incorporated
into the Company's methodology of determining gains from securitization
transactions, suggest that the probability of a finance contract becoming
delinquent or going into default is highest during the "seasoning period"
that occurs between the sixth to the eighteenth month payment period from
the acquisition date.
If the rate of the Company's finance contract
acquisition volume escalates, an increasingly greater portion of
the Company's finance contract portfolio is expected to fall into the
"seasoning period" described above, which may cause a rise in the overall
finance contract portfolio delinquency and default rates, without regard
to underwriting performance. Assuming no changes in any other factors that
may affect delinquency and default rates, the Company believes this trend
should stabilize or reverse when the volume of mature finance contracts
(with lower delinquency and default rates) is sufficient to offset the total
finance contract portfolio delinquency and default rates.
Because of the Company's limited operating history and the rapid growth of
its finance contract acquisitions, a significant portion of its finance contract
portfolio is unseasoned. Accordingly, delinquency and loss rates in the
portfolio may not be indicative of rates the Company may experience over time.
There can be no assurance that the performance of the Company's portfolio will
be maintained, or that the rate of future defaults and/or losses will be
consistent with prior experience or at levels that will not adversely affect
the Company's profitability.
- 20 -
<PAGE>
The Company believes delinquencies and losses can be mitigated through an
in-house collection program. Accordingly, in January 1997, the Company's
wholly owned subsidiary, SST, began its operations as the Company's loan
servicing center. Initially, SST will be fully responsible for all servicing
aspects of the Company's new finance contracts acquired. Ultimately, SST will
be servicing substantially all of the Company's managed portfolio. As of late
May 1997, SST will be servicing approximately $601.1 million of finance
contracts acquired by the Company. Additionally, the Company responded to
the increased rates of delinquencies and losses in the fiscal year ended June
30, 1995 by entering into a sub-servicing agreement with its third-party
servicer in April 1995, providing for the transfer of specific collection
functions to the Company. Through this arrangement the Company assumed
responsibility for all customer contact with respect to all existing leases
and with respect to finance contracts that were included in the Company's
December 1994 securitization transaction and all finance contracts acquired
thereafter. In addition, the Company assumed responsibility for liquidation
activities on its entire finance contract portfolio (including securitized
finance contracts) at such time. The Company continues to devote its
resources to servicing its own finance contracts acquired in an effort to
decrease and ultimately stabilize its rates of delinquencies, repossessions
and defaults and believes that having full control over the entire servicing
process coupled with changes in its underwriting guidelines made in January
1997, should assist it in meeting its overall objectives.
Repossession Experience - Static Pool
Analysis
The Company's finance contract portfolio is continuing to grow. The Company
does not record its provision for credit losses based on a percentage of the
Company's finance contract portfolio outstanding because percentages can be
favorably affected by large balances of recently acquired finance contracts.
The Company utilizes actual dollar levels of delinquencies and charge-offs
and analyzes the data on a "static pool" basis. The Company s goal is to
complete the liquidation process as quickly as possible. All repossessed
vehicles are sold at wholesale auction. The Company's net charge-off per
repossession equals the unpaid balance less the auction proceeds (net of
associated costs) and less proceeds from insurance claims.
The following table provides static pool information regarding the Company's
rated securitization transactions as of March 31, 1997:
<TABLE>
<CAPTION>
Gross Loss
Cumulative per Gross Loss NetLoss
Percentage Repossession Default Pool, Pool
Issuance Original Current of Original Frequency Contract Cumulative Cumulative,
Date Amount Amount Amount (1) (1)(2) (1)(3) (1)(3)(4) (1)(5)
(dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
Aegis Auto Receivable Trust
Series 1994-A. Jun-94 $18,539 $3,385 18.26% 19.36% 50.07% 9.25% 3.65%
Aegis Auto Receivable Trust
Series 1994-2. Sep-94 $23,251 5,715 24.58 21.83 52.06 10.30 3.97
Aegis Auto Receivable Trust
Series 1994-3. Dec-94 21,000 6,209 29.57 21.64 52.49 9.96 4.99
Aegis Auto Receivable Trust
Series 1995-1. Mar-95 21,000 7,563 36.01 23.86 53.48 10.83 5.94
Aegis Auto Receivable Trust
Series 1995-2. Jun-95 54,000 22,578 41.81 24.21 53.61 10.57 6.29
Aegis Auto Receivable Trust
Series 1995-3. Sep-95 60,000 29,161 48.60 23.58 56.19 10.70 9.73
Aegis Auto Receivable Trust
Series 1995-4. Dec-95 70,000 38,119 54.46 24.15 55.47 7.10 1.18
Aegis Auto Receivable Trust
Series 1996-1. Mar-96 92,000 62,164 67.57 19.33 53.93 2.97 0.61
Aegis Auto Receivable Trust
Series 1996-2. Jun-96 105,000 79,876 76.07 15.58 58.39 2.02 2.02
Aegis Auto Receivable Trust
Series 1996-3. Sep-96 110,000 91,925 83.57 10.28 54.08 0.44 0.44
Aegis Auto Owners Trust
1995-A . . . Dec-95 - Oct-96 148,347 103,599 69.84 10.51 57.76 4.08 4.07
Total Managed Portfolio. . $1,110,007 $829,627 74.74% 13.64% 54.65 4.27% 2.77%
<FN>
<F1>
(1)Data computed from trustee reports of April 1997 reflecting servicer data of
March 31, 1997 and from Company s records as of March 31, 1997.
<F2>
(2) Cumulative Repossession Frequency reflects the total dollar volume of
financecontracts that have been liquidated, or are in the liquidation
process (but in any event can no longer be reinstated), as a percentage
of the original pool balance.
<F3>
(3) Receivable gross losses are calculated as losses after the proceeds from
repossessed vehicle sales, service contract rebates, consumer insurance
and VSI insurance, net of repossession and liquidation costs, as a
percentage of the defaulted receivable balance.
<F4>
(4) Calculated as the receivable gross losses for the pool as a percentage of
the original pool balance.
<F5>
(5) Net loss is calculated as the receivable gross losses for the pool less
proceeds received from credit default insurance, as a percentage of the
original pool balance.
Liquidity and Capital Resources
The Company's business requires substantial cash to support its operating
activities. The principal cash requirements include (i) amounts necessary to
acquire automobile finance contracts, (ii) cash held from time to time in
restricted spread accounts to support securitizations and (iii) other
securitization expenses. The Company also uses material amounts of cash for
operating expenses and debt service. The Company has operated on a negative
operating cash flow basis and expects to continue to do so . The
Company has funded these negative operating cash flows principally through
borrowings from financial institutions and sales of equity securities, among
other resources. However, there can be no assurance that the Company will have
access to capital markets in the future or that financing will be available to
satisfy the Company's operating and debt service requirements or to fund future
growth. If these resources are not available on terms acceptable to the
Company, the Company may have to curtail its finance contract acquisition
volume levels.
The Company's external capital resources primarily consist of its $50.0
million Warehouse Line the Company's $1.0 billion Purchase
Facility. When the Company securitizes finance contracts through its Purchase
Facility, it repays a portion of its outstanding warehouse indebtedness with
the proceeds from such securitization, making such portion available for future
borrowing. The quarter ended December 31, 1996 was the first quarter since June
30, 1994 the Company was unable to meet its objective of securitizing its loan
acquisitions at least quarterly. This event was due to the Company negotiating
its $1.0 billion Purchase Facility. Other factors that impacted the Company's
decision to not securitize its finance contracts in the quarter ended December
31, 1996 were due to the changes occurring in the securitization market as a
result of the overall industry developments as well as the increased delinquency
and default rates experienced by the Company. These changes made
securitizations more expensive, required more chas for credit enhancements
thus making this strategy less attractive and more difficulr for the Company.
The terms under the Purchase Facility
provide the Company with a semi-monthly securitization strategy. The Company
completed its first securitization in March 1997 in the amount of $238.7
million and expects to securitize at least monthly thereafter. There can be
no assurances that These transactions will be completed. The Company also
continues to seek additional arrangements with financial institutions with
respect to the disposition of its portfolio assets. In addition, the Company
has been able to borrow against its retained interests in securitized
receivables to increase liquidity. The Company ceased the funding of leases
in the first quarter of fiscal 1996.
- 22 -
<PAGE>
The following table sets forth the major components of the decrease
in cash and cash equivalents for the periods shown:
Nine Months Ended March 31,
1997 1996
(dollars in thousands)
Net cash used in operating activities(1)...... $(35,997) $(10,601)
Net cash used in investing activities......... (4,816) (596)
Net cash provided by.........................
financing activities(2). 39,421 11,009
-------- -------
Net decrease in cash and cash
equivalents................................. $(1,392) $(188)
<FN>
<F1> ========== ========
(1) Includes net cash used in acquisition of automobile finance contracts of
$31,445 in the nine months ended March 31, 1997, and $9,390 in the nine
months ended March 31, 1996.
<F2>
(2) Includes net cash provided by (used in) warehouse credit facilities of
$3,625 in the nine months ended March 31, 1997, and $(8,216) in the nine
months ended March 31, 1996.
Net cash used in operating activities primarily represents cash flows
utilized to support the Company's acquisition of finance contracts, including
amounts representing capitalized acquisition costs, net of cash proceeds of
sales, including through securitizations, and repayments from automobile
finance receivables. The cash used to acquire finance contracts is generated
primarily by financing activities under the Company's warehouse credit
facilities.
A further significant source of cash used in operating activities is net
income offset by non-cash revenue items, most notably unrealized gains on
securitization transactions, which 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 investors in the securitizations. These amounts were
$12.3 million and $37.8 million for the nine months ended March 31, 1997 and
1996, respectively. During the nine months ended March 31, 1997 and 1996, the
Company received cash proceeds of $1.4 million and $2.2 million respectively,
from its retained interests in securitized receivables which were utilized in
meeting its debt repayment requirements under the related financing agreements.
Other non-cash adjustments include depreciation and amortization, which
amounted to $847,000 and $590,000 for the nine months ended March 31, 1997 and
1996, respectively; and provision for credit losses, which amounted to $8.0
million for the nine months ended March 31, 1997 and $2.5 million for the nine
months ended March 31, 1996. The Company also incurred non-cash charges of
none and $4.0 million respectively, for the nine months ended March 31, 1997
and 1996, for write downs on retained interests in securitized receivables.
For the nine months ended March 31, 1997, the Company also recorded a valuation
allowance of $0.6 million on a note receivable from related party.
To the extent that the foregoing activities were net users of cash, such
cash was provided primarily by borrowings under notes payable of $48.3 million
for the nine months ended March 31, 1997 and $21.6 million for the nine months
ended March 31, 1996, secured by retained interests in securitized receivables
created in the Company's finance contract securitizations and all assets of
the Company not otherwise encumbered. Principal repayments under the notes
payable are made from the Company's proceeds received from pay downs on retained
interests in securitized receivables, which amounted to $1.4 million for the
nine months ended March 31, 1997 and $2.2 million for the comparable 1996
period. As each securitization transaction becomes seasoned, it experiences
a period of higher incidence of default and loss, resulting in repayments
on the notes payable which are secured by the allocable retained interests in
securitized receivables. The Company made principal payments of $15.8 million
and $8.6 million in excess of cash distributions received from the underlying
collateral during the nine months ended March 31, 1997 and 1996, respectively.
Since November 1996, the Company has not made any of the required payments
under the borrowing base calculations under the note payable secured by these
- 23 -
<PAGE>
assets. The Company has renegotiated the payment terms under this obligation
which provides the Company with more liquidity as it relates to the repayment
requirements under this financing line. The new terms provide for payment as
cash proceeds are received from the underlying trusts on a dollar for dollar
basis as well as any excess cash from the Company's operating activities, for
a term not to exceed four years. The Company will use $13.1 million of the
proceeds from the closing of the Debenture to pay down these notes to
approximately $20.0 million. (See "Recent Developments")
The Company's cash flows and results of operations may be affected
adversely in the near term by rising interest rates, since not all costs of
funds, which under the Company's warehouse credit facilities are at floating
rates of interest, can be immediately passed on to consumers, whose finance
contracts are at fixed rates of interest. In addition, rising interest rates
would result in a decrease in the Company s net spreads on securitization
transactions thereby decreasing projected cash flows from future retained
interests in securitized receivables. Furthermore, the Companys discount rate
utilized in determining its borrowing base may also rise, decreasing the
amount available to borrow. Moreover, interest rates charged by the Company
may be more significantly affected by factors other than prevailing interest
rates, most notably geographic distribution and varying state interest rate
limitations. The Company has a hedging policy which seeks to limit the risks
associated with changes in interest rates, which it has not had the need to
use to date.
In connection with its securitization transactions, the Company enters
into pooling and servicing agreements (the "Agreements") in which its finance
contracts are sold to a trust which, in turn, sells securities to investors.
Generally, the Company is required to make an initial cash deposit to the trust
as a form of credit enhancement for the securitization. The terms of the
Agreements generally require that the excess servicing cash flows of the
finance contracts be retained in a bank account under the control of the trustee
(the "Reserve Fund") until the Reserve Fund meets predetermined deposit
requirements. Any cash flows in excess of Reserve Fund requirements are
released to the Company on a monthly basis. For the nine months ended March 31,
1997 and 1996, the Company received $1.4 million and $2.2 million, respectively,
in excess servicing cash flows from Reserve Funds. In the event that the
finance contracts owned by the trusts fail to meet predetermined delinquency
and loss performance measures, the Agreements require that the trustee retain
excess servicing cash flows until the Reserve Fund attains pre-set incrementally
higher levels of credit enhancement. The predetermined performance measures are
not always maintained on a consistent monthly basis, thus deferring the release
of the cash flows to the Company from the Reserve Fund of the applicable trust.
In addition, certain of the Agreements required the Company to deposit
additional cash into the trust's Reserve Fund if its initial minimum required
levels were not met within a predetermined time frame. For the nine months
ended March 31, 1997 and 1996, the Company paid additional cash contributions
to certain Reserve Funds of $2.4 million and $2.3 million, respectively. The
Company has fulfilled its commitments relating tho this type of obligation.
As disclosed in the Company's December 31, 1996 10-Q filed on February 14,
1997, the Company reached an agreement with a group of funds and financial
institutions, including its existing warehouse lender, for a multi-structured
finance facility (the "Purchase Facility"). The Purchase Facility includes a
commitment for the purchase of $350.0 million of subordinated Class B trust
certificates which will support the issuance by the Company of $650.0 million
of senior Class A trust certificates for a total of $1.0 billion. The Purchase
Facility's terms provide for the private sale of up to $650.0 million of senior
Class A Grantor Trust Certificates and up to $350.0 million of subordinate Class
B Grantor Trust Certificates. The Certificates are backed by the Company's
finance contracts and are unrated. The Purchase Facility is supported by a $50.0
million warehouse line. The Purchase Facility provides for initial financing
through the warehouse line as the finance contracts are acquired and
subsequently sold into the Facility on a bi-weekly basis. These facilities
closed in March 1997.
The Company's warehouse credit facility with III Finance Ltd. for
automobile finance contracts was initially amended during the nine months ended
March 31, 1997 to provide the Company with borrowing limits of the lesser of
$300 million (less amounts outstanding under the Company's lease warehouse
credit facility with III Finance Ltd. described below and its retained
- 24-
<PAGE>
interests in securitized receivables financing) or the sum of (A) 100% of the
outstanding principal amount of performing, insured, finance contracts and
(B) the lesser of 90% of the outstanding principal amount of delinquent
finance contracts (which percentages are reduced to 80% and 70%, respectively,
if the Company's automobile insurer fails to maintain an A.M. Best Company
rating of "A" or better (defined by A.M. Best Company as an "excellent"
rating regarding the insurer's financial strength and ability to meet its
obligations to policyholders)) and $1.0 million plus 92% (declining 1% per
month for each month the receivable is outstanding past 180 days) of the
outstanding principal amount of uninsured automobile finance contracts for the
purpose of acquiring automobile finance contracts in accordance with the
Company's underwriting guidelines. As of March 31, 1997, the Company had no
borrowings available through the warehouse credit facility arrangements
with III Finance. The Company also had warehouse credit facility for
originating its lease transactions, which provided the Company with a $50.0
million credit line on substantially the same terms as the automobile finance
contract facility. These facilities were secured primarily by the Company's
finance contract receivables. Interest accrued for the first $50.0 million
of funding of finance contracts at the rate of the one-month LIBOR plus 4.0%,
adjusted monthly and for any outstanding balance in excess of $50 million, at
the rate of the one-month LIBOR plus 2.75%, adjusted monthly. Under thes
warehouse credit facilities, principal payments were made monthly to the extent
of principal payments received on the underlying collateral, and interest
payments were made quarterly in arrears and on the date of any prepayment of
principal on the underlying collateral. The Company was able to continue to
borrow under these warehouse credit facilities so long as it complied with
the terms thereof, including the maintenance by the Company of certain minimum
capital levels. Under each warehouse credit facility, the Company was required
to prepay 5% of the outstanding principal balance of finance contracts held by
the Company for more than 180 days. Upon the closing of the Facility, the
auto loan warehouse facility was replaced with a $50.0 million line expiring
four years from the closing date and the lease warehouse credit facility was
reduced to the amount then outstanding (approximately $8.7 million as of May 6,
1997) and expires in November 1997. In addition, the Company has a $50.0
million warehouse credit facility with III Finance dedicated to the purchase
of HUD Title I Loans which the Company does not anticipate utilizing at this
time.
In May 1996, the Company secured an additional warehouse credit facility
with Greenwich Capital for $100.0 million, which provided the Company with
additional flexibility to purchase greater volumes of finance contracts or
warehouse finance contracts for longer periods. The facility was secured
primarily by the Company's finance contracts and accrued interest at the rate
of the one-month LIBOR plus 3.0%, adjusted monthly. Principal payments were
made to the extent that principal was paid on the underlying collateral, and
were required to be made if the underlying collateral did not meet certain
specified conditions. Prepayment of principal was not permitted, except in
connection with securitization transactions and whole loan sales. The Company's
ability to borrow under this facility was curtailed in the quarter ended
March 31, 1997. In addition to the warehouse financing, the Company also
secured a one-year $5.0 million revolving credit facility (with a nine-month
renewal option) from Greenwich Capital (which the Company borrowed during the
nine month period ended March 31, 1997) and a one-year commitment from
Greenwich Capital to purchase and securitize up to $533.0 million of the
Company's finance contract acquisitions until the commitment is filled, subject
to customary conditions. Three securitizations aggregating $307.0 million
were completed as of March 31, 1997 pursuant to this commitment. In connection
with these facilities, the Company granted warrants to Greenwich Capital to
purchase 1,116,335 shares of common stock at an exercise price of $6.50 per
share (subject to adjustment as defined in the agreement). The warehouse
credit facility was for a one year term with a one year renewal option.
In October 1996, as a result of credit deterioration in the Company's finance
contract portfolio, the Company experienced a Portfolio Event as such term is
defined in and contemplated by both the warehouse credit facility and the
revolving credit facility. As a result, Greenwich Capital, at its discretion,
may terminate its commitment to the Company under either facility, and may
accelerate the repayment of any outstanding balance under each facility ($5.0
million, as of the date hereof) which would then become immediately due and
- 25 -
<PAGE>
payable. These facilities are currently being restructured. (See Recent
Developments).
In the quarters ended June 1994, September 1994, December 1994, March
1995, June 1995, September 1995, December 1995, March 1996, June 1996, September
1996, December 1996 and March 1997 the Company securitized approximately $18.5
million, $23.3 million, $21.0 million, $21.0 million, $54.0 million, $60.0
million, $85.4 million, $130.1 million, $149.3 million, $173.3 million, $4.9
million and $238.7 million, respectively, of finance contracts and used the
net proceeds to pay down borrowings under its warehouse credit facilities.
In some securitizations, the Company has utilized a "pre-funding account" that
enabled the Company to fund certain finance contract acquisitions without
committing its warehouse credit facility for an extended period of time.
Additionally, the Company directly sold, in the form of whole finance contract
sales, approximately $35.1 million of automobile finance contracts as of March
31, 1997 and used part of the proceeds to pay down borrowings under its
warehouse credit facilities.
In December 1995, the Company entered into a commitment to sell $175.0
million of sub-prime automobile finance contracts to be resold as asset-backed
securities through Rothschild, Inc. Through March 31, 1997, the Company sold
approximately $148.4 million of automobile receivables into this facility. This
facility required the Company to directly sell between $8.0 million and $15.0
million of finance contracts per month for a fifteen-month funding period
subsequent to the initial funding date. In October 1996, the Company
experienced the occurrence of certain performance-related events within this
facility. As a result, under the terms of the facility (i) the Company was
required to cease future funding to this facility and (ii) the amount of
the required reserve has been increased and the facility will capture all
payments otherwise due to the Company with respect to its retained interest
in excess spread cash flows until the required reserve is filled. As a result,
the Company will not receive any excess spread cash flows from this facility
for some time. Additionally, MBIA Insurance Corporation ("MBIA"), a guarantor
of principal and interest to the Class A note holders under this facility,
retains the right at any time to require early amortization of the Class A
notes from cash flows generated by the collateral sold into the facility.
If MBIA chooses to require early amortization, the event could have an
additional material adverse affect on cash flows available to the Company and
on the valuation of the retained interest in securitized receivables carried
on the books of the Company relating to this facility.
In February 1996, the Company issued 920 shares for $9,200,000 of Series
C Convertible Preferred Stock (the "Preferred Stock") under Regulation S of the
Securities Act. The Preferred Stock is convertible into Common Stock at the
lower of $6.425 per share of Common Stock or 85% of the fair market value of
the Common Stock at the time of conversion. The Company can redeem the
Preferred Stock upon conversion at the fair market value of the Common Stock
into which such Preferred Stock is convertible. The Preferred Stock has an
8.0% annual dividend payable in Common Stock at the time of conversion. Any
outstanding shares of Preferred Stock will automatically convert into Common
Stock on the third anniversary of its issuance. As of March 31, 1997, the
Company redeemed 88 shares of Preferred Stock for $1.1 million and converted
726 shares of Preferred Stock into 1,602,009 shares of Common Stock and had
106 shares of Preferred Shares outstanding.
Recent Developments
The Company has reached an agreement in principal for the sale of $21.3 million of
subordinated debentures (the "Debenture"). The Debenture will be purchased
for $20.0 million and will be convertible into 8% non-voting preferred
- 26 -
<PAGE>
stock (the "Preferred Shares") of the Company on a common share equivalent
basis equal to $2.0 per common share. The Debenture will have a term of seven
years and carry a coupon rate of twelve percent (12%) per annum. Approximately
$14.1 million of the proceeds of the Debenture will be utilized to repay
existing debt. The Debenture and the Preferred Shares, into which the
Debenture is convertible, are redeemable at anytime by the Company for cash
or by the holder for cash; however, if the redemption is requested by the
holder, the Company at its election may pay the redemption price in the form
of common stock. In the event the Debentures are redeemed for any reason,
in addition to the redemption price, warrants shall be issued to the holder
which are exercisable for that number of Preferred Shares into which the
redeemed Debentures were convertible. If Preferred Shares are redeemed at
the option of the Company, the Company must issue to the holder warrants to
acquire an equivalent number of shares of common stock at an aggregate purchase
price equal to the redemption price paid by the Company. All warrants will
expire at the original stated maturity date of the Debenture.
The Company has reached an agreement in principal with Greenwich
Capital regarding the restructure of its $5.0 million revolving credit
facility. Under the terms of the agreement, the Company will use $1.0
million of the proceeds from the sale of Debenture, as described above, to
pay down the $5.0 million balance to $4.0 million. The Company will repay
$2.0 million of the adjusted balance under the revolving credit facility
proportionately (pari passu) with principal payments made on the balances of
the Debentures and certain notes payable aggregating $41.3 million. The term
of the loan was extended for four years from the date of closing of the
Debenture and the interest rate decreased to 12.0% per annum, payable
monthly. Early repayment for the other $2.0 million under the revolving
credit facility is permitted if Greenwich provides auto loan servicing to the
Company as defined thereunder. Additional terms of the agreement provide for
lowering the strike price on warrants issued to them by the Company from $6.50
to as low as $4.00, contingent on achieving certain levels of auto loan
servicing placed by Greenwich with the Company.
The Executive Officers' employment contracts are currently being reviewed
by the Compensation Committee of the Board of Directors. Discussions are taking
place between the Compensation Committee and the respective officers regarding a
restructuring of certain contractual provisions including but not limited to the
bonus structure, term and base compensation.]
In February 1997, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 128, Earnings Per Share, which is effective for annual and interim
financial statements issued for periods ending after December 15, 1997. SFAS
No. 128 was issued to simplify the standards for calculating earnings per
share ("EPS") previously found in APB No. 15, Earnings Per Share. SFAS 128
replaces the presentation of primary EPS with a presentation of basic EPS.
The new rules also require dual presentation of basic and diluted EPS on the
face of the statement of operations for companies with a complex capital
structure. For the Company, basic EPS will exclude the dilutive effects of
stock options, stock warrnats, and convertible preferred Series C stock.
Diluted EPS for the Company will reflect all potential dilutive securities
(similar to fully diluted EPS under APB No. 15). Under the provisions of
FAS 128, basic EPS would have been (0.05) and $0.18 for the quarter of
ended March 1, 1997 and 1996, respecitvely and (1.52) and $0.47 for the nine
months ended March 31, 1997 and 1996, respectively. Diluted EPS would have
been the same as the reported amounts.
In conjunction with the full implementation of the Company's cost
cutting plan, management believes that cash flows from operations (including
SST),the Purchase Facility, and its warehouse credit facility along with
proceeds it expects to receive from the Debenture should be adequate to
support its current and near-term funding and operations needs at current
- 27 -
<PAGE>
levels. The Company is currently in the process of closing the Debenture and
restructuring the Greenwich credit facilities. The Company believes these
transactions will close within the next 30 days. If the Company is not
successful in closing these transactions or implementing its cost cutting plan,
it will have to materially curtail its operations.
Inflation
While inflation has not had a material impact upon the Companys results
of operations, there can be no assurance that the Company's business will not
be affected by inflation in the future. Increases in the inflation rate
generally result in increased interest rates and can be expected to result
in increases in the Company's operating expenses. As the Company borrows
funds at variable rates and generally acquires finance contracts at an
average interest rate of approximately 20.2%, increased interest rates will
increase the borrowing costs of the Company, and such increased borrowing
costs may not be offset by increases in the interest rates with respect to
finance contracts acquired.
Seasonality
The Company's operations are affected to some extent by seasonal
fluctuations. Finance contract acquisitions tend to increase in March through
June and September and October, while finance contract acquisitions are lowest
in December and January. Delinquencies also tend to be higher during certain
holiday periods, particularly at calendar year end.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
A complaint was filed in April 1996 by Star Holdings,
Inc. d/b/a/ The Sloane Organization against the Company in the United States
District Court for the Southern District of New York, captioned Star Holdings,
Inc. d/b/a The Sloane Organization vs. Aegis Consumer Funding Group Inc.,
alleging that it was entitled to certain fees under a finder's agreement
entered into with the Company on January 2, 1996; On Januray 8, 1997, the
United States District Court for the Southern District of New York denied
Plaintiffs Attachment Motion and its cross motion for partial summary
judgement. The Company's Motion to Dismiss has been granted with respect
to certain claims for relief made by the Plaintiff. In accordance with the
procedures set by the court, both parties have submitted their direct cases
in writing and the remainder of the trial is set for late May 1997.
The Company believes it has meritorious defenses to the remaing allegations
in the Complaint and the Amended Complaint and intends to defent the matter
vigorously.
In September 1996, an action was brought in the United States District
Court for the Middle Dstrict of the State of Louisiana on behalf of putative
class defined as persons who hold installment contracts originated by and/or
negotiated to Chase Bank, N.A., ("Chase") and Aegis Auto Finance, Inc. ("Aegis")
- 28 -
<PAGE>
and their Louisiana affiliates with respect to vehicle purchases made from a
specific Louisiana dealer. Plaintiffs assert claims for compensatory and
punitive damages under the Federal Truth-in-Lending Act ("TILA") and Louisiana
state law based on the allegation that certain taxes and state fees were
improperly included in the "amount financed" section of the contract thus
causing the disclosed "annual percentage rate" under the relevant contracts
to be misstated by a small actionable amount. Chase and Aegis have moved to
dismiss the complaint for failure to state a claim. The motion is being briefed
and will be submitted to the court this summer. Counsel advises that there is
substantial support Aegis' position on the motion. No significant factual
discovery has taken place. The Company believes that the allegatins as set
forth in the complaint are without legal or factual merit and intends to defend
the matter vigorously.
Changes in Securities - Not Applicable
Item 3. Defaults Upon Senior Securities -Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders - None
Item 5. Other Information:- None
Page
Exhibit No. Description No.
10.103.A FIRST MODIFICATION OF PURCHASE AGREEMENT
dated as of March 20, 1997, by and between AEGIS
AUTO FINANCE, INC. as Seller and ENTERPRISE
NATIONAL BANK OF PALM BEACH as Purchaser..............
10.103.1A MODIFICATION OF ADDENDUM TO MASTER SERVICING
AGREEMENT dated as of March 20, 1997, by
and among AMERICAN LENDERS FACILITIES, INC.
as Servicer, AEGIS CONSUMER FINANCE, INC., AEGIS
AUTO FINANCE, INC. as Seller and ENTERPRISE NATIONAL
BANK OF PALM BEACH as Purchaser.......................
10.104 MASTER TRUST AGREEMENT dated as of March 1, 1997,
by and among AEGIS AUTO FUNDING CORP. IV, NORWEST
BANK MINNESOTA, NATIONAL ASSOCIATION as Backup
Servicer, and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION as Trustee with respect to the Aegis
Auto Receivables Trusts...............................
10.104.1 MASTER PURCHASE AGREEMENT dated as of March 1, 1997,
by and between AEGIS AUTO FINANCE, INC. as Borrower
and AEGIS AUTO FUNDING CORP. IV.......................
10.104.2 MASTER SERVICING AGREEMENT dated as of March 1, 1997,
by and among AEGIS AUTO FUNDING CORP. IV, NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION as Backup Servicer
and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION as
Trustee...............................................
10.104.3 POOLING AND SERVICING AGREEMENT dated as of March 1,
1997, by and among AEGIS AUTO FUNDING CORP. IV.,
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION as
Trustee and Backup Servicer...........................
10.104.4 MASTER CERTIFICATE PURCHASE AGREEMENT dated as of
March 14, 1997, by and among AEGIS AUTO FUNDING CORP.
IV THE AEGIS CONSUMER FUNDING GROUP, INC., and III
FINANCE LTD., III GLOBAL LTD. and III LIMITED
PARTNERSHIP, collectively, as Purchasers..............
10.104.5 POOLING AND SERVICING AGREEMENT dated as of April 1,
1997, by and between AEGIS AUTO FUNDING CORP. IV,
as Seller and NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee and Backup Servicer...........
10.104.6 SUPPLEMENTAL CONVEYANCE dated as of April 16, 1997,
by AEGIS AUTO FINANCE, INC. to AEGIS AUTO FUNDING CORP.
IV, as Purchaser......................................
10.104.7 PROMISSORY NOTE dated as of April 16, 1997, executed
by THE AEGIS CONSUMER FUNDING GROUP, INC. in favor of
AEGIS AUTO FUNDING CORP. IV..........................
10.104.8 POOLING AND SERVICING dated as of May 1, 1997, by and
between AEGIS AUTO FUNDING CORP. IV, as Seller and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as
Trustee and Backup Servicer.
10.104.9 PROMISSORY NOTE dated as of May 12, 1997, executed
by THE AEGIS CONSUMER FUNDING GROUP, INC. in favor
of AEGIS AUTO FUNDING CORP. IV.
10.104.10 SUPPLEMENTAL CANVEYANCE dated as May 12, 1997,
executed by AEGIS AURO FINANCE, INC. to AEGIS AUTO
FUNDING CORP. IV, as Purchaser.
10.105 LOAN AND SECURITY AGREEMENT dated as of March 14, 1997,
by and among AEGIS AUTO FINANCE, INC. as Borrower,
III FINANCE LTD. and III GLOBAL LTD., collectively
as Lenders
10.105.1 PROMISSORY NOTE dated as of March 14, 1997,
executed by AEGIS AUTO FINANCE, INC. in favor of
III FINANCE LTD.......................................
10.105.2 PROMISSORY NOTE dated as of March 14, 1997,
executed by AEGIS AUTO FINANCE, INC. in favor of
III GLOBAL LTD.........................................
10.105.3 GUARANTY dated as of March 14, 1997, executed by THE
AEGIS CONSUMER FUNDING GROUP, INC. in favor of III
FINANCE LTD. and III GLOBAL LTD........................
10.105.4 PLEDGE AGREEMENT dated as of March 14,1997, executed
by THE AEGIS CONSUMER FUNDING GROUP, INC. in favor of
III FINANCE LTD. and III GLOBAL LTD....................
10.105.5 PLEDGE AGREEMENT dated as of March 14, 1997, executed
by AEGIS CONSUMER FINANCE, INC. in favor of III
FINANCE LTD. and III GLOBAL LTD........................
10.105.6 PLEDGE AGREEMENT dated as of March 14, 1997, executed
by AEGIS CAPITAL MARKETS, INC.(d/b/a MARKETS) in
favor of III FINANCE LTD. AND III GLOBAL LTD...........
10.105.7 RETAINED YIELD PLEDGE AGREEMENT dated as of March 14,
1997, executed by AEGIS AUTO FINANCE, INC. in favor of
III FINANCE LTD........................................
10.105.8 AMENDMENT NO. 6 dated as of March 12, 1997, by and
among AEGIS ACCEPTANCE CORP., AEGIS CONSUMER FINANCE,
INC. and III FINANCE LTD. to the LOAN AND SECURITY
AGREEMENT dated as of February 28, 1994.
10.105.9 SECURITY AGREEMENT dated as of March 14, 1997, by and
between AEGIS ACCEPTANCE CORP. and AEGIS CONSUMER
FINANCE INC., as grantors and III FINANCE LTD. and
III GLOBAL LTD. and GLOBAL LTD., as Secured Parties
10.105.10 MASTER AMENDMENT TO LOAN AND SECURITY AGREEMENT dated
as of March 19, 1997 by and between AEGIS
CONSUMER FINANCE, INC. and AEGIS AUTO FINANCE, INC.,
as Borrowers and III FINANCE LTD., as Lender and
an ASSIGNMENT AGREEMENT dated as of March 19, 1997
by and among AEGIS CAPITAL MARKETS, AEGIS ACCEPTANCE
CORP. AND AEGIS AUTO FINANCE, INC.
10.106 SERVICING AGREEMENT dated as of January 3, 1997,
by and between SYSTEMS & SERVICES TECHNOLOGIES, INC.
and AEGIS CONSUMER FINANCE, INC........................
10.107 TERM SHEET dated as April 25, 1997, by and among
GREENWICH CAPITAL MARKETS, AEGIS CONSUMER FUNDING
GROUP, INC. and III FINANCE LTD.
27 Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8-K were filed
by the Company during the quarter ended March 31, 1997.
<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 15, 1997 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.
</TABLE>
FIRST MODIFICATION OF PURCHASE AGREEMENT
THIS MODIFICATION is made as of this 20th day of
March, 1997, by and between AEGIS AUTO FINANCE, INC. (the
Seller ), a Delaware corporation, and ENTERPRISE NATIONAL
BANK OF PALM BEACH (the Purchaser ), a national banking
association.
W I T N E S S E T H:
WHEREAS, the Seller and the Purchaser are parties to a
Purchase Agreement, dated as of December 9, 1996 (the Purchase
Agreement ; all capitalized terms used in this Modification and not
otherwise defined herein shall have the respective meanings given such
terms in the Purchase Agreement), pursuant to which the Seller has sold
to the Purchaser certain retail installment sales contracts; and
WHEREAS, the Seller and the Purchaser desire to modify
the Purchase Agreement is certain respects as set forth in this
Modification.
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:
. All references to the Purchase Agreement in any of
the Purchase Documents shall be deemed to be references to the
Purchase Agreement as modified by this Modification.
. Section 1.01 of the Purchase Agreement shall be
amended by deleting therefrom the definitions and the terms Additional
Purchase Price , Administrative Agent , Distribution Amount , Net
Loss , Net Loss Paydowns , Purchaser Interest Rate , Seller
Bankruptcy , and Shortfall Amount .
. Section 1.01 of the Purchase Agreement shall be
further amended by deleting therefrom the definitions of the terms
Outstanding Balance , Payment Date , Payment Period , Principal
Collections , Repurchase Amount , and RDI Policy , and by
substituting the following new respective definitions of such terms in lieu
thereof:
Outstanding Balance shall mean, for any date for
which such amount is determined, the aggregate outstanding
principal balance of all Receivables together with all accrued but
unpaid interest or other finance charges owing by the Obligors on
such Receivables.
Payment Date shall mean the twentieth (20th) day
of the calendar month immediately following a Payment Period (if
such day is not a Business Day, then such Payment Date shall be
the Business Day next succeeding such agreed-upon day).
Payment Period shall mean the first day through
and including the last day of the calendar month immediately
preceding a Payment Date, except that the first Payment Period
shall commence on the initial Purchase Date and shall end on
February 28, 1997.
Principal Collections shall mean all collections of
principal and all other recoveries of principal on the Receivables
received by the Servicer during the related Payment Period.
Repurchase Amount shall mean (i) for a
repurchase of all outstanding Receivables, the aggregate
Outstanding Balance of all of such Receivables and (ii) for a
repurchase of any particular Receivable, the Outstanding Balance
of such Receivable.
RDI Policy shall mean the Secured Value
Insurance Master Policy number ZSC 1500271 issued by The
Connecticut Indemnity Company and dated March 17, 1997
(rewriting policy number 1500262 dated December 31, 1996), as
the same may be amended, supplemented or restated from time to
time with the express written approval of the Purchaser.
. Section 2.01(C) of the Purchase Agreement is
hereby deleted in its entirety.
. The third sentence of Section 2.04(A) of the
Purchase Agreement shall be deleted in its entirety and the following
new sentence shall be substituted in lieu thereof:
All fees, expenses or other sums owing to the Servicer
under the Servicing Agreement for servicing the
Receivables and acting as custodian and bailee for
Purchaser of the Receivables and the Receivable Files shall
be paid from Interest Collections and Principal Collections
in accordance with the Servicing Agreement.
. Section 2.04(B) of the Purchase Agreement is
hereby deleted in its entirety and the following new Section 2.04(B) is
hereby substituted in lieu thereof:
(B) The Purchaser shall establish and maintain
the Depository Account for the Receivables with the Purchaser
for the sole benefit of the Purchaser. All monies constituting
Principal Collections and Interest Collections for each Payment
Period shall be deposited by the Servicer into the Depository
Account; provided, however, that before making such deposit, the
Servicer may retain for its own account an amount equal to the
Servicing Fee and expense reimbursements due to it for the
current or any prior Payment Period. No other funds shall be
allowed to be deposited into the Depository Account. On each
Payment Date, the Purchaser shall withdraw from the Depository
Account monies, to the extent available therein, equal to, the
Available Distribution Amount for the related Payment Period and
shall transfer such amount to the Purchaser.
. Sections 2.04(E) and (F) of the Purchase Agreement
shall be deleted in their entirety and the third sentence of Section
2.04(D) of the Purchaser Agreement shall also be deleted in its entirety.
. Section 5.01 of the Purchase Agreement shall be
amended by adding thereto the following new subsection (C):
(C) RDI Policy. Without the Purchaser s
express prior written consent, the Seller shall not permit the RDI
Policy to be amended, modified, restated, canceled or terminated
with respect to the Insured Receivables, the Seller shall not waive
(or permit to be waived) any of its rights under any provisions of
the RDI Policy with respect to the Insured Receivables, the Seller
shall not consent to any deviation from the terms thereof or
otherwise grant any consents provided for therein with respect to
the Insured Receivables, and the Seller shall not default on any of
its obligations thereunder with respect to the Insured Receivables,
and all premiums payable thereunder with respect to the Insured
Receivables have been paid by the Seller. Seller shall cause an
endorsement to the RDI Policy to be issued to Purchaser showing
Purchaser as loss payee thereunder.
. Section 7.02(B) of the Purchase Agreement shall be
deleted in its entirety.
. The Seller agrees to cause American Lenders
Facilities, Inc., as the current Servicer, to enter into a written
amendment of the Servicing Agreement Addendum as in effect on this
date, such amendment to be, in the form of Exhibit 1 attached hereto, so
that its terms and conditions are consistent with the terms and conditions
of Section 2.04 of the Purchase Agreement as amended hereby.
. Except as expressly modified by this Modification,
the Purchase Agreement shall remain in full force and effect.
. This Modification shall be governed by and
construed in accordance with the internal laws of the State of New
Jersey.
. This Modification may be executed in one or more
counterparts and by different parties in separate counterparts, each of
which shall be an original, but all of which together shall constitute one
and the same instrument.
. This Modification shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors
and assigns.
IN WITNESS HEREOF, the parties hereto have caused
this Modification to be executed by their respective officers thereunto
duly authorized, all as of the date and year first above written.
SELLER:
AEGIS AUTO FINANCE, INC.
By:_____________________________________
Name:___________________________________
Title:____________________________________
PURCHASER:
ENTERPRISE NATIONAL BANK
OF
PALM BEACH
By:_____________________________________
Name:___________________________________
Title:____________________________________
EXHIBIT 1
MODIFICATION OF ADDENDUM TO
MASTER SERVICING AGREEMENT
THIS MODIFICATION is entered into as of this 20th
day of March, 1997, by and among AMERICAN LENDERS
FACILITIES, INC., a California corporation ( Servicer ), AEGIS
CONSUMER FINANCE, INC., a Delaware corporation (the
Company ), AEGIS AUTO FINANCE, INC., a Delaware corporation
( Seller ), and ENTERPRISE NATIONAL BANK OF PALM
BEACH, a national banking association ( Purchaser ).
Statement of Facts
Servicer, Company, Seller and Purchaser are parties to an
Addendum to Master Servicing Agreement, dated as of December 9,
1996 (the Addendum ; all capitalized terms used herein and not
otherwise expressly defined herein shall have the respective meanings
given such terms in the Addendum). The parties desire to modify the
Addendum in certain respects and are entering into this Modification for
such purpose.
NOW, THEREFORE, for and in consideration of the
premises and the mutual covenants herein set forth, as well as other
good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties do hereby agree as follows:
Statement of Terms
1. The Addendum shall be amended by deleting
Section 7 thereof in its entirety and by substituting the following new
Section 7 in lieu thereof:
7. The Purchaser shall establish in its name a
Depository Account for the Receivables, which account shall be
maintained with the Purchaser for the sole benefit of itself. All
monies constituting the Available Distribution Amount for each
Payment Period shall be deposited by the Servicer into the
Depository Account; provided, however, that before making such
deposit the Servicer may retain for its own account the Servicing
Fee and expense reimbursements due to it for the current or any
prior Payment Period. No other funds shall be allowed to be
deposited into the Depository Account. On each Payment Date,
the Purchaser shall withdraw from the Depository Account
monies, to the extent available therein, equal to the Available
Distribution Amount for the related Payment Period and shall
transfer such amount to the Purchaser.
2. Except as expressly modified by the Modification,
the Purchase Agreement shall remain in full force and effect.
IN WITNESS WHEREOF, each of the Servicer, the
Company, the Seller and the Purchaser has caused its respective duly
authorized officer or representative to execute and deliver this
Modification on its behalf, all as of the day and year first above set
forth.
AMERICAN LENDERS
FACILITIES, INC.
By:_____________________________________
Name:___________________________________
Title:____________________________________
AEGIS CONSUMER FINANCE,
INC.
By:_____________________________________
Name:___________________________________
Title:____________________________________
AEGIS AUTO FINANCE, INC.
By:_____________________________________
Name:___________________________________
Title:____________________________________
ENTERPRISE NATIONAL BANK
OF
PALM BEACH
By:_____________________________________
Name:___________________________________
Title:____________________________________
MASTER TRUST AGREEMENT
by and between
AEGIS AUTO FUNDING CORP. IV,
a Delaware Corporation, Seller
and
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
Trustee
Dated as of March 1, 1997
With respect to
Aegis Auto Funding Corp. IV
Aegis Auto Receivables Trusts
Automobile Receivable Pass-Through Certificates
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS 1
ARTICLE II. CREATION OF TRUSTS; SALE AND TAX TREATMENT
1
ARTICLE III. ESTABLISHMENT OF RESERVE FUND 2
ARTICLE IV ADDITIONAL REQUIREMENTS 5
ARTICLE V. TERMINATION 6
ARTICLE VI. AMENDMENTS 6
ARTICLE VII. MISCELLANEOUS 6
TESTIMONIUM
SIGNATURES
APPENDIX A Standard Terms and Conditions
APPENDIX B Form of Pooling and Servicing Agreement
MASTER TRUST AGREEMENT
This MASTER TRUST AGREEMENT
dated as of March 1, 1997 (this "Master Trust
Agreement") is by and between AEGIS AUTO
FUNDING CORP. IV, a Delaware corporation, as
Seller, and NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee for the
holders from time to time of the Automobile
Receivable Pass-Through Certificates (the
"Certificates") to be issued by the trusts created
pursuant to the terms hereof.
W I T N E S S E T H :
WHEREAS, the Seller desires to provide for
the creation of a series of grantor trusts (each a
"Trust"), the assets of each to consist of a pool of
motor vehicle retail installment sales contracts
secured by new and used automobiles and light-duty
trucks and certain related property;
WHEREAS, each such Trust will issue a
series of Certificates evidencing an undivided
interest in the assets of the Trust (excluding the
residual interest retained by the Seller);
WHEREAS, each series of Certificates will
be issued pursuant to the terms of this Master Trust
Agreement and a related Pooling and Servicing
Agreement incorporating the Standard Terms and
Conditions attached hereto as Appendix A (the
"Standard Terms"); and
WHEREAS, each series of Certificates will
be additionally secured by a common reserve fund
established hereby and to be held outside each of
the individual Trusts;
NOW, THEREFORE, in consideration of
the foregoing premises and the mutual covenants
expressed herein, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
Terms used in this Master Trust Agreement
and not otherwise defined shall have the meanings
assigned in the Standard Terms.
ARTICLE II
CREATION OF TRUSTS; SALE AND TAX
TREATMENT
Section 2.1. Creation of Trusts. Each
Trust shall be created upon the execution and
delivery of a Pooling and Servicing Agreement
substantially in the form of Appendix B hereto
and the Seller's conveyance to the Trustee of the
trust property specified therein. Concurrent with
the creation of each Trust, the Trustee shall execute
and deliver to the Seller or upon the
Seller's written order Automobile Receivable Pass-
Through Certificates representing a fractional
undivided ownership interest in the trust property
conveyed (excluding the residual interest retained by
the Seller). Such Certificates shall bear a separate
series designation, pay pass-through interest and be
subject to such other terms as provided in the
related Pooling and Servicing Agreement. Each
Pooling and Servicing Agreement shall incorporate
the Standard Terms, with such appropriate
variations as from time to time may be agreed to by
the Seller and the Trustee subject to Article V
hereof.
Section 2.2. Sale and Tax Treatment. It is
the intention of the parties that each transfer of trust
property to a Trust be treated as an absolute sale
and conveyance of such property by the Seller to
the Trustee on behalf of such Trust, and that each
Trust be treated as a separate grantor trust for
federal income tax purposes.
ARTICLE III
ESTABLISHMENT OF RESERVE FUND
Section 3.1. Establishment and Funding.
(a) In order to assure that sufficient amounts to
make required payments to the holders of the
Certificates will be available, there shall be
established and maintained with the Trustee the
following Eligible Account: the "Reserve Fund
Aegis Auto Funding Corp. IV, Aegis Auto
Receivables Trusts" (the "Reserve Fund"), which
will include the money and other property deposited
therein pursuant to applicable sections of each
Pooling and Servicing Agreement and held therein
pursuant to this Article III. The Reserve Fund shall
not be part of any trust created pursuant to the
terms hereof, but instead will be held outside each
trust for the benefit of the holders of the
Certificates and to secure trustee and servicing fee
distributions as described below. The Seller and the
Trustee acknowledge that any amounts on deposit in
the Reserve Fund (and any investment earnings
thereon) will be owned directly by and be the
separate property of the Seller, and such parties
hereby agree to treat the same as assets (and
investment earnings) of the Seller for federal
income tax purposes.
(b) The Reserve Fund shall be funded
through deposits made on the date of creation of
each Trust and transfers made on each Distribution
Date and each Funding Date (if any) as provided in
the Pooling and Servicing Agreements.
Section 3.2. Reserve Fund Investments. (a)
Subject to subsection (b) below, amounts held in the
Reserve Fund shall be invested in Eligible
Investments, in accordance with written instructions
from the Seller or its designee, and such
investments shall not be sold or disposed of prior to
their maturity but shall mature no later than two
Business Days before the Distribution Date next
succeeding the date of investment. All amounts
held in the Reserve Fund, including proceeds of
investments, shall be available for application to
required distributions on such Distribution Date
pursuant to Section 3.5 hereof and 5.07(a) of the
Standard Terms. All such investments shall be made
in the name of the Trustee or its nominee. Any
loss on investment of amounts held in the Reserve
Fund and all income and gain realized on the
Reserve Fund shall be credited to such fund. The
Trustee shall not have any liability for losses on
moneys invested by the Trustee hereunder except if
caused by its negligence or its failure to act in
accordance with reasonable and proper instructions
given in writing and received by the Trustee.
(b) The foregoing subsection (a)
notwithstanding, an amount equal to the Reserve
Fund Initial Deposit deposited into the Reserve
Fund on the Closing Date with respect to each Trust
may be invested in capital appreciation notes issued
by The Aegis Consumer Funding Group, Inc. in a
maturity amount of up to four percent (4%) of the
aggregate initial Class Certificate Balance of the
Certificates issued by such Trust. Such notes (the
"Term Notes") shall mature on the date which is
sixty-six (66) months from the date thereof, and
shall be purchased at a price calculated to yield the
Discount Rate, payable at maturity. All amounts
paid on such Term Notes shall be deposited into the
Reserve Fund. In addition, if the Trustee receives
the written direction of the Seller and the written
consent of the Subordinate Holders from every
series of Certificates issued as of the date of such
consent, or if the Agreement so provides, additional
amounts in the Reserve Fund may be invested in
demand promissory notes ("Demand Notes") issued
by The Aegis Consumer Funding Group, Inc. on
then current market terms.
Section 3.3. Pledge of Reserve Fund. In
order to provide for the required payments to be
made to the holders of the Certificates, the Trustee,
the Custodian, the Servicer and the Backup Servicer
pursuant to the Pooling and Servicing Agreements,
and to assure availability of the amounts maintained
in the Reserve Fund, the Seller hereby grants in
favor of the Trustee, as collateral agent, and its
successor and assigns, a security interest in and lien
upon all its right, title and interest in and to the
Reserve Fund, including all amounts and
investments held from time to time in the Reserve
Fund (whether in the form of deposit accounts,
instruments, book-entry securities, uncertificated
securities or otherwise) (all of the foregoing, subject
to the limitations set forth below, the "Reserve
Fund Property"); to have and to hold all the
aforesaid property, rights and privileges unto the
Trustee, its successors and assigns, in trust for the
uses and purposes set forth in this Article. The
Trustee hereby acknowledges such transfer and
accepts the trust hereunder and shall hold and
distribute the Reserve Fund Property in accordance
with the terms and provisions of this Article.
Section 3.4. Further Assurances. The Seller
agrees to take or cause to be taken such further
actions and to execute, deliver and file or cause to
be executed, delivered and filed such further
documents and instruments (including, without
limitation, any UCC financing statements or this
Master Trust Agreement) as may be determined to
be necessary to perfect the interests created by this
Article in favor of the Trustee and otherwise fully
to effectuate the purposes, terms and conditions of
this Article. Specifically, the Seller (with respect to
Reserve Fund Property) shall:
(i) promptly execute, deliver and
file any financing statements, amendments,
continuation statements, assignments,
certificates and other documents with respect
to such interests and perform all such other
acts as may be necessary in order to perfect
or to maintain the perfection of the Trustee's
security interest in the Reserve Fund
Property; and
(ii) make the necessary filings of
financing statements or amendments thereto
within ten business days after the occurrence
of any of the following: (1) any change in
the Seller's corporate name or any trade
name; (2) any change in the location of its
chief executive office or principal place of
business; and (3) any merger or
consolidation or other change in its identity
or corporate structure and promptly notify
the Trustee of any such filings.
Section 3.5. Reserve Fund Draws. If on
any Distribution Date the Total Available
Distribution Amount with respect to any series of
Certificates is insufficient to make all required
distributions to the Trustee, Back-Up Servicer,
Custodian, Servicer and the holders of such
Certificates, the Trustee shall withdraw an amount
equal to such insufficiency (or any lesser amount on
deposit in the Reserve Fund if an equal amount is
not available) from the Reserve Fund (any such
withdrawal, a "Reserve Fund Draw"), first from
cash on deposit in the Reserve Fund and, second,
from proceeds of Demand Notes or Term Notes as
described below, and apply such amount in the
order of priority for distributions established by the
terms of the applicable Pooling and Servicing
Agreement. If, on any such Distribution Date, the
amount of the insufficiency described above is
greater than the amounts on deposit in the Reserve
Fund in cash or Eligible Investments and there are
Demand Notes outstanding, the Trustee shall notify
the Certificateholders of such insufficiency and, if
directed to do so by the Majority Certificateholders
the Trustee shall, before making any required
withdrawals from the Reserve Fund (or as soon as
practicable after receiving the direction of the
Majority Certificateholders), demand payment of
such Demand Notes in an amount equal to the
lesser of (x) the amount of such excess insufficiency
and (y) the outstanding principal balance of such
Demand Notes plus accrued interest thereon. Any
amount repaid in excess of the amounts required for
a Reserve Fund Draw shall be retained in the
Reserve Fund. If on any Distribution Date a
Reserve Fund Draw is needed under more than one
Pooling and Servicing Agreement to make required
distributions, and the total amount on deposit in the
Reserve Fund is insufficient to make all such
distributions, the Trustee shall apply the available
amount on deposit in the Reserve Fund to make
required distributions in the order of the dated dates
of each such Pooling and Servicing Agreement,
commencing with the earliest.
Section 3.6. Release of Reserve Fund
Amounts. Commencing on the Distribution Date
which is at least 24 months after the initial Closing
Date, funds remaining on deposit in the Reserve
Fund on any Distribution Date after any needed
Reserve Fund Draws have been made (exclusive of
any Demand Notes or Term Notes), shall, on such
date, be released to the Servicer to pay accrued and
unpaid Servicing Fees and, to the extent such fees
are paid in full, shall also be released to the Seller,
provided that the aggregate amount of such released
funds shall not exceed the least of:
(x) 75% of the average aggregate
amount of monthly collections received in
the Reserve Fund during the most recent and
two preceding months (or, if less, 75% of
such collections received during the most
recent month) and which are allocable to
any Trust which has been in existence for at
least 24 months, so long as the total
cumulative deposits from such Trust into the
Reserve Fund have exceeded the total
cumulative withdrawals made to such Trust
from the Reserve Fund; and
(y) 50% of the amount by which
(i) the aggregate amount of collections
received during the most recent month for
all Trusts exceeds (ii) the aggregate of the
required payments to the Trustee, Back-up Servicer,
Custodian, Servicer and all holders of the
Certificates on such Distribution Date; and
(z) 50% of the amount by which
(i) the aggregate amount of collections
received during the most recent month and
the two preceding months for all trusts
exceeds (ii) the aggregate of the required
payments to the Trustee, Back-up Servicer,
Custodian, Servicer and all holders of the
Certificates made on such Distribution Date
and the two preceding Distribution Dates;
provided that, in no event shall amounts be
distributed to the Seller from the Reserve Fund on
any Distribution Date to the extent that the amounts
on deposit therein (exclusive of Term Notes and
Demand Notes), after giving effect to Reserve Fund
Draws on such date, would be less than the Reserve
Requirement.
Upon termination of this Master Trust
Agreement and all related Pooling and Servicing
Agreements, any amounts on deposit in the Reserve
Fund, after payment of all amounts due the Backup
Servicer, the Trustee, the Custodian, the Servicer
and the holders of the Certificates, shall be paid to
the Seller or its assignee. Amounts properly
received by the Seller pursuant to this Master Trust
Agreement and any Pooling and Servicing
Agreement shall not be available to the Trustee for
the purpose of making deposits to the Reserve Fund
or making payments to the holders of the
Certificates, nor shall the Seller be required to
refund any amount properly received by it.
ARTICLE IV
ADDITIONAL REQUIREMENTS
Section 4.1. Financing Statements.
On or before the initial Closing Date, the
Seller shall deliver to the Trustee UCC-1 financing
statements to be filed in appropriate jurisdictions
which are necessary to perfect the interests of the
Trustee in the Receivables and other Trust Property
to be transferred to the Trustee from time to time
pursuant to the related Pooling and Servicing
Agreements and the pledge of the Reserve Fund by
the Seller to the Trustee pursuant to this
Agreement. In addition, on or before the initial
Closing Date, the Seller shall deliver to the Trustee
copies of UCC-1 financing statements filed by the
lenders pursuant to the Warehouse Facility, each of
which shall provide that the Receivables and other
Trust Property sold from time to time by Aegis
Finance to the Seller pursuant to the Purchase
Agreement and by the Seller to the Trustee pursuant
to the related Pooling and Servicing Agreement,
shall not be included in the collateral covered by
such financing statements.
Section 4.2. Risk Default Insurance
Policies.
On the initial Closing Date the Seller shall
deliver to the Trustee the original Risk Default
Insurance Policies, each of which shall name Aegis
Finance as the named insured. On each Closing
Date and Funding Date, if any, the Seller shall
deliver to the Trustee an endorsement to such policy
naming the Trustee as an additional insured or a
"pool certificate holder" with respect to the
Receivables being transferred to the Trustee on such
date and the related Trust.
ARTICLE V
TERMINATION
This Master Trust Agreement may be
terminated by the Seller upon written notice to the
Trustee, but only if at the time of such notice every
Pooling and Servicing Agreement previously
executed and delivered pursuant to this Master
Trust Agreement has been terminated in accordance
with its respective terms.
ARTICLE VI
AMENDMENTS
This Master Trust Agreement may be
amended from time to time by a written amendment
duly executed and delivered by the Seller and the
Trustee; provided, however, that for so long as any
Certificates are outstanding, without the prior
written consent of all holders of the Certificates, (i)
no amendment of Section 2.2 or Article III shall be
made and (ii) the Standard Terms shall not be
amended nor varied in any given Pooling and
Servicing Agreement so as to change the day of the
month on which regular distributions from each of
the trusts is made or to make any other change that
would create a preference or distinction among the
holders of different series of Certificates
outstanding with respect to the security represented
by the Reserve Fund.
ARTICLE VII
MISCELLANEOUS
Section 7.1. Headings and
Cross-References. The various headings in this
Master Trust Agreement are included for
convenience only and shall not affect the meaning
or interpretation of any provision contained herein.
References herein to Section or Article names or
numbers are to such Sections or Articles of this
Master Trust Agreement.
Section 7.2. Governing Law. This Master
Trust Agreement shall be governed by and
construed in accordance with the laws of the State
of New York, including Section 5-1401 of the
General Obligations Law but otherwise without
regard or reference to principles of conflicts of laws
of such state.
Section 7.3. Counterparts. This Master
Trust Agreement may be executed in one or more
counterparts, each of which shall be an original, but
all of which together shall constitute one and the
same instrument.
<PAGE>
IN WITNESS WHEREOF, the Seller and
the Trustee have caused this Master Trust
Agreement to be duly executed by their respective
officers as of the day and year first above written.
AEGIS AUTO FUNDING CORP. IV,
as Seller
By
Angelo R. Appierto
President
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By
Jason VanVleet
Corporate Trust Officer
APPENDIX A
TO THE MASTER TRUST AGREEMENT
STANDARD TERMS AND CONDITIONS
Aegis Auto Funding Corp. IV
Aegis Auto Receivables Trusts
Automobile Receivable Pass-Through Certificates
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . 1
ARTICLE II
INTERPRETATION
Section 2.01 Usage of Terms . . . . . . .18
Section 2.02. Cutoff Date and Record Date. 18
Section 2.03. Section References . . 18
ARTICLE III
THE RECEIVABLES
Section 3.01. Representations and Warranties of Seller . . . 18
Section 3.02. Repurchase or Substitution Upon Breach . . . . 25
Section 3.03. Custody of Documents. . . . . . . . . . . . . 26
Section 3.04. Duties of Custodian. . . . . . . . . . 29
Section 3.05. Instructions; Authority to Act . . . . . . . . 29
Section 3.06. Custodian Fees; Indemnification. . . . . . . . 29
Section 3.07. Effective Period and Termination. . . . . . . 30
Section 3.08. Funding Events . . . . . . . . . . . . 30
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 4.01. Servicing Duties . . . . . . . 32
Section 4.02. Resignation ofBackup Servicer. . .33
Section 4.03. Covenant of Backup Servicer . . . 34
Section 4.04. Servicing Fees . . . . . . . . .34
Section 4.05. Costs and Expenses . . . . . . 34
Section 4.06. Standard of Care . . . . . . .34
ARTICLE V
DISTRIBUTIONS; ACCOUNTS;
STATEMENTS TO CERTIFICATEHOLDERS
Section 5.01. Accounts . . . . . . . . . . . . . . . 35
Section 5.02. Collections. . . . . . . . . . . . . . . . 36
Section 5.03. Application of Collections. . . . . . . . . . 36
Section 5.04. Miscellaneous Servicer Collections . . . . . . 36
Section 5.05. Additional Deposits. . . . . . . . . . . . . .36
Section 5.06. Distributions. . . . . . . . . . . . . . . . .37
Section 5.07. Reserve Fund . . . . . . . . . . . . . . . . .39
Section 5.08. Funding Account. . . . . . . . . . . . . . . .39
Section 5.09. Statements to Certificateholders; Tax Returns. 39
Section 5.10. Reliance on Information from the Servicer. . . 43
ARTICLE VI
RIGHTS OF CERTIFICATEHOLDERS . . . . . . . 43
ARTICLE VII
THE CERTIFICATES
Section 7.01. The Certificates . . . . . . . . . . .. . . 43
Section 7.02. Execution, Authentication of Certificates . . 44
Section 7.03. Registration of Transfer and Exchange of
Certificates . . . . . . . . . . . . . . . . 44
Section 7.04. Mutilated, Destroyed, Lost or Stolen
Certificates. . . . . . . .. . . . . . . . . 47
Section 7.05. Persons Deemed Owners . . . . . . . . . . . . 47
Section 7.06. Access to List of Certificateholders' Names
and Addresses. . . . . . . . . . . .. . . . .47
Section 7.07. Maintenance of Office or Agency. . . . . . . .48
Section 7.08. Notices to Certificateholders . . . . . . . . 48
ARTICLE VIII
THE SELLER
Section 8.01. Representations of Seller . . . . . . . . . . . . . 48
Section 8.02. Liability of Seller;Indemnities. . . . . . . . . . 51
Section 8.03. Merger or Consolidation of, or
Assumption of the Obligations of, Seller. . . . . . 52
Section 8.04. Limitation on Liability of Seller and Others. . . . 53
Section 8.05. Seller May Own Certificates . . . . . . . . . . . . 53
Section 8.06. Covenants of the Seller . . . . . . . . . . . . . . 53
Section 8.07. Enforcement by Trustee. . . . . . . . . . . . . . .54
Section 8.08. No Bankruptcy Petition . . . . . . . . . . . . . . 57
ARTICLE IX
THE BACKUP SERVICER
Section 9.01. Representations of Backup Servicer. . . . . . . . . 57
Section 9.02. Merger or Consolidation of, or Assumption of the
Obligations of, or Resignation of Backup Servicer . 58
Section 9.03. Limitation on Liability of Backup Servicer and
Others . . . . . . . . . . . . . . . . . . 58
Section 9.04. Successor Backup Servicer . . . . . . . . . . . . .59
Section 9.05. No Bankruptcy Petition . . . . . . . . . . . . . . 59
ARTICLE X
BACKUP SERVICING DEFAULT
Section 10.01. Events of Backup
Servicing Default. . . . . . . . 60
Section 10.02. Appointment of Successor. . . . . . . . . . . . .61
Section 10.03. Notification to Certificateholders . . . . . . . 61
Section 10.04. Waiver of Past Defaults . . . . . . . . . . . . 62
ARTICLE XI
THE TRUSTEE
Section 11.01. Duties of Trustee . . 62
Section 11.02. Trustee's Certificate. . . . . . . . . . . . . . . 64
Section 11.03. Trustee's Assignment of Purchased Receivables. . . 65
Section 11.04. Certain Matters Affecting Trustee. . . . . . . . . 65
Section 11.05. Trustee Not Liable for Certificates or Receivables.66
Section 11.06. Trustee May Own Certificates . . . . . . . . . . . 67
Section 11.07. Trustee's Fees and Expenses . .. . . . . . . . . . 67
Section 11.08. Eligibility Requirements for Trustee . . . . ......67
Section 11.09. Resignation or Removal of Trustee . . . . . . . . 68
Section 11.10. Successor Trustee . . . . . . . .. . . .. . . . 68
Section 11.11. Merger or Consolidation of Trustee . . . . . . . 69
Section 11.12. Appointment of Co-Trustee or Separate Trustee. . . 69
Section 11.13. Representations and Warranties of Trustee . . . . 70
Section 11.14. No Bankruptcy Petition . . . . . . . . . . . .. . 71
ARTICLE XII
TERMINATION
Section 12.01. Termination of the Trust. . . . . . . . . . . . . . . 71
Section 12.02. Optional Purchase of All Receivables. . . . . . . . . 73
Section 12.03. Notice. . . . . . . . . . . . . . . . . . . 73
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01. Amendment . . . . . . 73
Section 13.02. Protection of Title to Trust. . . . . . . . . . . . . 74
Section 13.03. Limitation on Rights of Certificateholders. . . . . . 75
Section 13.04. Governing Law . . . . . . . . . . . . . . . 75
Section 13.05. Notices . . . . . . . .. . . . . . . . . . 76
Section 13.06. Severability of Provisions . . . . . . . . . . . . .76
Section 13.07. Assignment. . . . . . . . . . . . . . . . . 77
Section 13.08. Certificates Nonassessable and Fully Paid . . . . . . 77
Section 13.09. Counterparts. . . . . . . . . . . . . . . . 77
Section 13.10. Limited Recourse to Seller . . . . . . . . . . . . . .77
EXHIBIT A Forms of Certificates . .A-1-1
EXHIBIT B [Reserved]. . . . . . . . .B-1
EXHIBIT C Form of Trustee's Statement
to Certificateholders. . ..C-1
EXHIBIT D [Reserved]. . . . . . . . .D-1
EXHIBIT E Location of Servicer Files E-1
EXHIBIT F1 [Reserved]. . . . . . . .F-1-1
EXHIBIT F2 [Reserved]. . . . . . . .F-2-1
EXHIBIT G Wiring Instructions Form .G-1
EXHIBIT H [Reserved]. . . . . . . . .H-1
EXHIBIT I Risk Default Insurance
Policy. . . . . . . . . . .I-1
EXHIBIT J VSI Insurance Policy. . . .J-1
EXHIBIT K Form of Transferee Letter
(Rule 144A Transfer) . . .K-1
EXHIBIT L Form of Transferee Letter
(Non-Rule 144A Transfer) . L-1
EXHIBIT M Form of ERISA
Representation Letter . . . . . . . . . .M-1
EXHIBIT N Form of Notice of Funding.. N-1
EXHIBIT O Form of Officer's
Certificate . . . . . . .O-1
EXHIBIT P Assignment. . . . . . . . .P-1
EXHIBIT Q [Reserved]. . . . . . . . .Q-1
EXHIBIT R Form of Trustee's
Certificate . . . . . . . .R-1
EXHIBIT S [Reserved]. . . . . . . . .S-1
STANDARD TERMS AND CONDITIONS
INTRODUCTION
The following Standard Terms and
Conditions shall be applicable to each Trust formed
by the Seller pursuant to the foregoing Master Trust
Agreement, with respect to which a Pooling and
Servicing Agreement incorporating by reference
these Standard Terms and Conditions shall have
been executed, subject to such modifications as may
be specified in such particular Pooling and
Servicing Agreement and as may be permitted
under Article V of the Master Trust Agreement.
ARTICLE I
DEFINITIONS
Whenever used in these Standard Terms, the
following words and phrases, unless the context
otherwise requires, shall have the following
meanings:
"Accounts" shall mean the accounts and
funds identified in Section 5.01 hereof.
"Additional Receivables" means all
Receivables sold by the Seller to the Trust after the
Closing Date and during the Funding Period, if any,
which shall be listed on Schedule A to the related
assignment, delivered pursuant to the Agreement.
"Aegis Finance" means Aegis Auto Finance,
Inc., a Delaware corporation, its successors and
assigns.
"Aegis Finance Servicing Agreement" means
the Servicing Agreement providing for the servicing
of the Receivables among Aegis Finance, the
Backup Servicer and the Trustee, and all
amendments, modifications and supplements
thereto.
"Affiliate" of any Person means any other
Person which, directly or indirectly, controls, is
controlled by or is under common control with such
Person. A Person shall be deemed to be
"controlled by" any other Person if such other
Person possesses, directly or indirectly, power
(a) to vote 10% or more of the securities
(on a fully diluted basis) having ordinary voting
power for the election of directors or managing
general partners; or
(b) to direct or cause the direction of the
management and policies of such Person whether by
contract or otherwise.
"Agreement" means the Pooling and
Servicing Agreement executed by the Seller, the
Backup Servicer and the Trustee as of the date set
forth thereon, into which these Standard
Terms and Conditions shall be incorporated by
reference, and all amendments, modifications and
supplements thereto.
"Amount Financed" means, with respect to
a Receivable, the amount advanced under the
Receivable toward the purchase price of the
Financed Vehicle and any related costs.
"Annual Percentage Rate" or "APR" means,
with respect to a Receivable, the annual rate of
finance charges stated in the Receivable.
"Available Interest Distribution Amount"
means, for any Distribution Date, the sum of the
following amounts with respect to the preceding
Collection Period: (i) that portion of all collections
of Scheduled Payments on Receivables allocable to
interest; (ii) Liquidation Proceeds and other
Recoveries to the extent allocable to interest due on
Liquidated Receivables and Defaulted Receivables
in accordance with the Servicer's customary
servicing procedures; (iii) Risk Default Insurance
Proceeds to the extent allocable to interest as
determined by the Servicer; (iv) the earnings, if
any, on amounts in the Funding Account (if any)
accrued during the related Collection Period, and
for the initial Distribution Date, such earnings as
have accrued to such date; and (v) the Purchase
Amount of each Receivable that became a
Purchased Receivable during the related Collection
Period to the extent attributable to accrued interest
thereon; provided, however, that in calculating the
Available Interest Distribution Amount the
following will be excluded: all payments and
proceeds (including Liquidation Proceeds) of any
Purchased Receivables the Purchase Amount of
which has been included in the Principal
Distributable Amount with respect to a prior
Distribution Date.
"Available Principal Distribution Amount"
means, for any Distribution Date, the sum of the
following amounts with respect to the preceding
Collection Period: (i) that portion of all collections
of Scheduled Payments and prepayments in full or
in part on Receivables allocable to principal; (ii)
Liquidation Proceeds and other Recoveries allocable
to the principal amount of Liquidated Receivables
and Defaulted Receivables in accordance with the
Servicer's customary servicing procedures; (iii)
Risk Default Insurance Proceeds to the extent not
allocable to interest as determined by the Servicer;
(iv) amounts deposited in the Collection Account
pursuant to Section 3.02(b) in respect of
Receivables that became Substitute Receivables
during the related Collection Period; and (v) to the
extent attributable to principal, the Purchase
Amount of each Receivable that became a
Purchased Receivable during the preceding
Collection Period; provided, however, that in
calculating the Available Principal Distribution
Amount the following will be excluded: all
payments and proceeds (including Liquidation
Proceeds) of any Purchased Receivables the
Purchase Amount of which has been included in the
Principal Distributable Amount with respect to a
prior Distribution Date.
"Backup Servicer" means Norwest Bank
Minnesota, National Association, until any
successor Backup Servicer is appointed or succeeds
to the duties and obligations of the Backup Servicer
hereunder, and thereafter means the Eligible
Servicer appointed successor Backup Servicer
pursuant to Section 9.02 or 10.02.
"Bankruptcy Code" means the federal
Bankruptcy Code of 1978, as amended, 11 US
101 through 1330.
"Business Day" means any day other than a
Saturday, a Sunday, or a day on which banking
institutions (including the Federal Reserve Bank, if
applicable) in the cities in which the principal
offices of the Trustee or the Servicer are located, or
New York, New York, or Jersey City, New Jersey
shall be authorized or obligated by law, executive
order, or governmental decree to be closed. Any
action required to be taken on a day which falls on
a non-Business Day shall be conducted on the next
Business Day.
"Certificate" means a Class A Certificate or
a Class B Certificate.
"Certificate Account" means the trust
account designated as such, established and
maintained pursuant to Section 5.01.
"Certificate Register" and "Certificate
Registrar" mean the register maintained and the
registrar appointed pursuant to Section 7.03.
"Certificateholder" or "Holder" means the
Person in whose name the respective Certificate
shall be registered in the Certificate Register,
except that, solely for the purposes of giving any
approval, consent, waiver, request or demand
pursuant to this Agreement, the interest evidenced
by any Certificate registered in the name of the
Seller, the Servicer, the Backup Servicer, the
Trustee or any Affiliate of any of the foregoing
shall not be taken into account in determining
whether the requisite percentage necessary to effect
any such consent, waiver, request or demand shall
have been obtained.
"Certificateholder Statement" means the
Statement the form of which is attached hereto as
Exhibit C.
"Class" means all Certificates having the
same priority of payment and bearing the same
alphabetical designation (A or B).
"Class A Certificate" means any one of the
Certificates executed by the Trustee on behalf of the
Trust and authenticated by the Trustee in
substantially the form set forth in Exhibit A-1
hereto.
"Class A Certificate Balance" shall equal,
initially, the Class A Percentage of the aggregate
Principal Balance of the Initial Receivables as of the
initial Cutoff Date plus the Class A Percentage of
the Original Pre-Funded Amount, if any, and,
thereafter, the initial Class A Certificate Balance,
reduced by all amounts previously distributed to
Class A Certificateholders as principal.
"Class A Distributable Amount" means, on
any Distribution Date, the sum of the Class A
Interest Distributable Amount and the Class A
Principal Distributable Amount.
"Class A Interest Carryover Shortfall"
means, as of the close of any Distribution Date, the
excess of the Class A Interest Distributable Amount
for such Distribution Date plus any outstanding
Class A Interest Carryover Shortfall from the
previous Distribution Date plus interest on such
outstanding Class A Interest Carryover Shortfall, to
the extent permitted by law, at the Class A Rate
from such preceding Distribution Date through the
current Distribution Date, over the amount of
interest that the holders of the Class A Certificates
actually received on such Distribution Date.
"Class A Interest Distributable Amount"
means, (i) for any Distribution Date (other than the
Initial Distribution Date), one-twelfth of the product
of (x) the Class A Rate and (y) the Class A
Certificate Balance as of the close of business on
the preceding Distribution Date (after giving effect
to any distribution of principal on the Class A
Certificates made on such preceding Distribution
Date) and (ii) for the Initial Distribution Date, the
product of (x) the Class A Rate, (y) the initial Class
A Certificate Balance and (2) a fraction the
numerator of which is the number of days from and
including the Closing Date to and including the end
of the calendar month in which the Closing Date
occurs, and the denominator of which is 360.
"Class A Percentage" has the meaning set
forth in the Agreement.
"Class A Principal Carryover Shortfall"
means, as of the close of any Distribution Date, the
excess of the Class A Principal Distributable
Amount plus any outstanding Class A Principal
Carryover Shortfall from the preceding Distribution
Date over the amount of principal that the holders
of the Class A Certificates actually received on such
Distribution Date pursuant to Section 5.06.
"Class A Principal Distributable Amount"
means, with respect to any Distribution Date, the
Class A Percentage of the Principal Distributable
Amount.
"Class B Certificate" means any one of the
Certificates executed by the Trustee on behalf of the
Trust and authenticated by the Trustee in
substantially the form set forth in Exhibit A-2
hereto.
"Class B Certificate Balance" shall equal,
initially, the Class B Percentage of the aggregate
Principal Balance of the Initial Receivables as of the
initial Cutoff Date plus the Class B Percentage of
the Original Pre-Funded Amount, if any, and,
thereafter, the initial Class B Certificate Balance,
reduced by all amounts previously distributed to
Class B Certificateholders as principal.
"Class B Distributable Amount" means, on
any Distribution Date, the sum of the Class B
Interest Distributable Amount and the Class B
Principal Distributable Amount.
"Class B Interest Distributable Amount"
means, (i) for any Distribution Date (other than the
Initial Distribution Date), one-twelfth of the product
of (x) the Class B Rate and (y) the Class B
Certificate Balance as of the close of business on
the preceding Distribution Date (after giving effect
to any distribution of principal on the Class B
Certificates made on such preceding Distribution
Date) and (ii) for the Initial Distribution Date, the
sum of (1) the product of (x) the Class B Rate, (y)
the initial Class B Certificate Balance and (z) a
fraction the numerator of which is the number of
days from and including the Closing Date to and
including the end of the calendar month in which
the Closing Date occurs, and the denominator of
which is 360, plus (2) an amount equal to that
portion of the purchase price of the Class B
Certificates under the Master Certificate Purchase
Agreement equal to the interest payable under the
Warehouse Facility.
"Class B Percentage" has the meaning set
forth in the Agreement.
"Class B Principal Carryover Shortfall"
means, as of the close of any Distribution Date, the
excess of the Class B Principal Distributable
Amount plus any outstanding Class B Principal
Carryover Shortfall from the preceding Distribution
Date over the amount of principal that the holders
of the Class B Certificates actually received on such
Distribution Date pursuant to Section 5.06.
"Class B Principal Distributable Amount"
means, as of any Distribution Date, the Class B
Percentage of the Principal Distributable Amount.
"Class Certificate Balance" means, with
respect to the applicable Class of Certificates, the
Class A Certificate Balance or the Class B
Certificate Balance.
"Class Factor" means, with respect to any
Distribution Date and any Class of Certificates, a
seven-digit decimal figure computed by the Trustee
equal to the Class Certificate Balance of such Class
as of such Distribution Date divided by the Original
Class Certificate Balance thereof.
"Class Percentage" means, with respect to
the applicable Class of Certificates, the Class A
Percentage or the Class B Percentage.
"Clearing Agency" means an organization
registered as a "clearing agency" pursuant to
Section 17A of the Exchange Act.
"Clearing Agency Participant" means a
broker, dealer, bank, other financial institution or
other Person for whom from time to time a
Clearing Agency effects book entry transfers and
pledges of securities deposited with the Clearing
Agency.
"Closing Date" shall be determined
separately for each Trust and shall be specified in
the corresponding Agreement.
"Code" means the Internal Revenue Code of
1986, as amended.
"Collection Account" means the trust account
designated as such, established and maintained
pursuant to Section 5.01.
"Collection Period" means, with respect to
a Distribution Date, the calendar month
immediately prior to such Distribution Date. Any
amount stated "as of the close of business of the last
day of a Collection Period" shall give effect to the
following calculations as determined as of the end
of the day on such last day: (1) all applications of
collections, and (2) all distributions.
"Corporate Trust Office" means the office of
the Trustee at which its corporate trust business
shall be administered, which office at the date of
this Agreement shall be 6th Street and Marquette
Avenue, Minneapolis, Minnesota 55479-0070,
Attention: Corporate Trust Services --Asset-Backed
Administration, or such other address as shall be
designated by the Trustee in written notice to the
Seller, the Backup Servicer, the Servicer and each
Certificateholder.
"Custodian" means the Person acting as
Custodian of the Trust pursuant to Section 3.03, its
successor in interest and any successor custodian.
"Custodian Fees" shall have the meaning set
forth in the Agreement.
"Custodian Files" means the documents
specified in Section 3.03(a).
"Dealer" means any licensed or franchised
factory-authorized motor vehicle dealer, or affiliate
thereof, who sold a Financed Vehicle to an Obligor
and who originated the respective Receivable which
was acquired by Aegis Finance.
"Dealer Recourse" means, with respect to a
Receivable, all recourse rights against the Dealer
that originated the Receivable, and any successor
Dealer.
"Defaulted Receivable" means any
Receivable, other than a Liquidated Receivable, as
to which the Obligor became 90 days past due
(calculated on the basis of a 360-day year of 12 30-
day months) in making Scheduled Payments during
the prior Collection Period.
"Demand Note" has the meaning set forth in
Section 3.2(b) of the Master Trust Agreement.
"Delivery Date" has the meaning set forth in
Section 3.08(b)(i).
"Determination Date" means, with respect to
any Distribution Date, the eighth (8th) Business
Day of the calendar month of such Distribution
Date; provided, however, if such Business Day is
later than the eleventh (11th) day of such month,
then the Determination Date shall mean the next
earlier Business Day which is not later than the
eleventh (11th) day of such calendar month.
"Discount Rate" has the meaning set forth in
the Agreement.
"Dissolution" means, with respect to the
Seller, bankruptcy, insolvency or dissolution.
"Distribution Date" means, for each
Collection Period, the 20th day of the month
following the month in which the Collection Period
ends, or if the 20th day is not a Business Day, the
next following Business Day, beginning on the
Initial Distribution Date.
"Eligible Account" means a segregated
account (except as otherwise permitted with respect
to the Lock-Box Account) which may be an account
maintained with the Trustee, which is either (a)
maintained with an Eligible Institution, or (b) a
segregated trust account or similar account
maintained with a federally or state chartered
depository institution subject to regulations
regarding fiduciary funds on deposit substantially
similar to 12 C.F.R. 9.10(b).
"Eligible Institution" means a depository
institution or trust company whose long-term
unsecured debt obligations are rated at least "A" by
S&P or "A2" by Moody's (provided that, if only
one such rating agency rates such institution, such
single rating shall suffice).
"Eligible Investments" means negotiable
instruments or securities or other investments (a)
which, except in the case of demand or time
deposits, investments in money market funds and
repurchase obligations, are represented by
instruments in bearer or registered form or
ownership of which is represented by book entries
by a clearing agency or by a Federal Reserve Bank
in favor of depository institutions eligible to have an
account with such Federal Reserve Bank who hold
such investments on behalf of their customers and
(b) which evidence:
(i) direct obligations of, and
obligations fully guaranteed as to full and
timely payment by, the United States of
America;
(ii) demand deposits, time
deposits or certificates of deposit of
depository institutions or trust companies
incorporated under the laws of the United
States of America or any state thereof and
subject to supervision and examination by
federal or state banking or depository
institution authorities; provided, however,
that at the time of the Trust's investment or
contractual commitment to invest therein,
the short-term unsecured debt obligations of
such depository institution or trust company
shall have credit ratings from either S&P or
Moody's in the highest investment category
granted by S&P or Moody's, as applicable;
(iii) commercial paper having, at
the time of the Trust's investment or
contractual commitment to invest therein, a
rating from either S&P or Moody's in the
highest investment category by S&P or
Moody's;
(iv) bankers' acceptances issued
by any depository institution or trust
company referred to in (ii) above;
(v) investments in money market
funds having the highest investment category
from either S&P or Moody's (such
investments may include money market
funds sponsored by Norwest Bank
Minnesota, National Association that have a
credit rating from either S&P or Moody's);
(vi) time deposits (having
maturities of not more than 30 days) or
notes which are payable on demand by an
entity the commercial paper of which has
the highest investment category granted by
either S&P or Moody's; and
(vii) repurchase obligations with
respect to any security described in clause
(i) above entered into with a depository
institution or trust company (acting as
principal) meeting the rating standards
described in clause (ii) above.
Any Eligible Investments may be purchased by or
through the Trustee or any of its affiliates.
"Eligible Servicer" means any entity which,
at the time of its appointment as Backup Servicer,
Servicer or subservicer, and for so long as such
entity is acting in such capacity, (i) is servicing a
portfolio of motor vehicle retail installment sale
contracts or motor vehicle loans, (ii) is legally
qualified (or is acting through an Affiliate which is
legally qualified) and has the capacity to service the
Receivables, (iii) has demonstrated the ability to
professionally and competently service a portfolio
of similar contracts in accordance with industry
standards of skill and care, (iv) is qualified and
entitled to use, and agrees to maintain the
confidentiality of, the software that the Backup
Servicer, Servicer or a subservicer uses in
connection with performing its duties and
responsibilities under this Agreement, a supervisory
servicing agreement, the Servicing Agreement or a
subservicing agreement or obtains rights to use or
develops its own software which is adequate to
perform its duties and responsibilities under this
Agreement, a supervisory servicing agreement, the
Servicing Agreement or a subservicing agreement
and (v) is approved by the Risk Default Insurer.
"ERISA" means the Employee Retirement
Income Security Act of 1974, as amended.
"ERISA-Restricted Certificate" means any
Class B Certificate.
"Event of Backup Servicing Default" with
respect to the Backup Servicer means an event
specified in Section 10.01.
"Event of Servicing Default" means an event
specified in paragraph VI of the Servicing
Agreement.
"Excess Interest Collections" has the
meaning set forth in Section 5.05(b).
"Excess Receipts" means, with respect to any
Distribution Date, the remaining amount on deposit
in the Collection Account after all distributions
pursuant to Section 5.06 have been made.
"Exchange Act" means the Securities
Exchange Act of 1934, as amended.
"Final Funding Date" means the date upon
which the balance in the Funding Account is
reduced to zero.
"Financed Vehicle" means an automobile or
light-duty truck, together with all accessions
thereto, securing an Obligor's indebtedness under
the respective Receivable.
"Funding Account" means the trust account,
if any, designated as such, established and
maintained pursuant to the Agreement and
Sections 5.01 and 5.08 hereof.
"Funding Date" means each date occurring
no more than once per calendar week during the
Funding Period, if any, on which Additional
Receivables are sold to the Trust.
"Funding Event" shall mean, with respect to
a Funding Date, if any, the occurrence of the events
required to occur in accordance with Section 3.08.
"Funding Period" has the meaning set forth
in the Agreement, which in no case shall be more
than fifteen days from the Closing Date of the
corresponding Trust.
"Initial Distribution Date" has the meaning
set forth in the Agreement.
"Initial Receivables" means all Receivables
sold to the Trust by the Seller on the Closing Date.
"Insurance Policy" means, with respect to a
Receivable, any comprehensive, collision, fire and
theft insurance policy required to be maintained by
the Obligor with respect to the Financed Vehicle,
the VSI Insurance Policy, and any credit life and
disability insurance maintained by the Obligor or
Seller and benefitting the holder of the Receivable.
"Investment Company Act" means the
Investment Company Act of 1940, as amended.
"Lien" means a security interest, lien,
charge, pledge, equity or encumbrance of any kind.
"Liquidated Receivable" means any
Receivable, other than a Receivable that first
became a Defaulted Receivable, liquidated by the
Servicer through sale of the Financed Vehicle or
otherwise.
"Liquidation Proceeds" means the moneys
collected during the respective Collection Period on
a Liquidated Receivable, whether through
foreclosure or otherwise, other than Risk Default
Insurance Proceeds, net of the sum of any amounts
expended by the Servicer for the account of the
Obligor and the expenses incurred in the
liquidation.
"Lock-Box Account" means the account(s)
designated as such, established and maintained
pursuant to Section 5.01 hereof, into which account
shall be deposited only those moneys collected with
respect to the Receivables as contemplated herein
and moneys collected with respect to other retail
installment sales contracts originated or purchased
by Aegis Finance or its Affiliates.
"Lock-Box Account Depository" means each
of Wells Fargo Bank, N.A., and Commerce Bank,
acting as Lock-Box Account Depository hereunder,
its successors in interest and any successors
appointed pursuant to paragraph IX of the Servicing
Agreement.
"Majority Certificateholders" means Holders
of Certificates evidencing not less than 51% of the
Voting Interests of each Class thereof.
"Master Certificate Purchase Agreement"
means the Master Certificate Purchase Agreement
dated March 14, 1997 among the Seller, The Aegis
Consumer Funding Group, Inc., III Finance Ltd.,
III Global Ltd. and III Limited Partnership, as
amended, supplemented or restated.
"Master Trust Agreement" means the Master
Trust Agreement dated as of March 1, 1997 by and
between the Seller and the Trustee, as amended.
"Miscellaneous Servicer Collections" means,
with respect to a Collection Period, all late charges,
extension fees and recoveries of expenses relating to
liquidation, repossession and other costs previously
incurred by the Servicer.
"Monthly Servicing Certificate" means the
certificate substantially in the form of Schedule B to
the Servicing Agreement.
"Moody's" means Moody's Investors Service
or any successors thereto.
"Net Loss" means, with respect to a
Collection Period, the sum of the Principal Balances
of Receivables that became Liquidated Receivables
or Defaulted Receivables during such Collection
Period, minus Recoveries and Risk Default
Insurance Proceeds (to the extent allocable to
principal) received in such Collection Period.
"Nonconforming Insured Receivables" means
Receivables which were not originated in
accordance with the Underwriting Guidelines but
which are covered by a Risk Default Insurance
Policy.
"Notice of Funding" has the meaning set
forth in Section 3.08(b)(ii)(C).
"Obligor" means, with respect to a
Receivable, the purchaser or co-purchasers of the
Financed Vehicle and/or any other Person who
owes payments under such Receivable.
"Officer's Certificate" means a certificate
signed by the chairman of the board, the president,
any vice chairman of the board, any vice president,
any assistant vice president, any trust officer, the
treasurer, the controller or any assistant treasurer or
any assistant controller of the Seller, the Trustee,
the Servicer, the Custodian or the Backup Servicer,
as appropriate.
"Opinion of Counsel" means a written
opinion of counsel who may but need not be
counsel to the Seller or Servicer, which counsel
shall be acceptable to the Trustee.
"Optional Purchase Percentage" means 10%
of the Original Pool Balance.
"Original Certificate Balance" means, as to
any Certificate, the initial certificate balance stated
on the face of such Certificate.
"Original Pool Balance" means the initial
Principal Balance of all Receivables (including
Additional Receivables) as of their respective Cutoff
Dates.
"Original Pre-Funded Amount" means the
amount deposited in the Funding Account, if any,
on the Closing Date, which amount shall not exceed
30% of the Original Pool Balance.
"Pass-through Rate" means, with respect to
the applicable Class of Certificates, the Class A
Rate or the Class B Rate.
"Percentage Interest" means, with respect to
any Certificate, the percentage ownership interest of
such Certificate in the aggregate of amounts
distributable hereunder to the related Class of
Certificates. With respect to any Certificate, the
Percentage Interest evidenced thereby shall equal
the Original Certificate Balance thereof divided by
the aggregate Original Class Certificate Balance of
the related Class.
"Person" means any individual, corporation,
estate, partnership, limited liability company, joint
venture, association, joint stock company, trust,
unincorporated organization, or government or any
agency or political subdivision thereof.
"Plan" means an employee benefit plan
subject to ERISA or a plan or other retirement
arrangement subject to Section 4975 of the Code.
"Pool Balance" means, as of the day of
calculation, the aggregate Principal Balance of the
Receivables less Net Losses.
"Pool Factor" means, as of any Distribution
Date, a seven-digit decimal figure equal to the Pool
Balance for such Distribution Date divided by the
Original Pool Balance.
"Principal Balance" means, with respect to
any Receivable at any time, the Amount Financed
minus the sum of (a) the portion of all payments
made by or on behalf of the related Obligor and
allocable to principal using the Simple Interest
Method and (b) the portion of any payment of the
Purchase Amount with respect to the Receivable
allocable to principal, calculated as of the close of
business on the last day of the prior Collection
Period (or, prior to the end of the first Collection
Period, calculated as of the close of business on the
day immediately prior to the Cutoff Date).
"Principal Distributable Amount" means,
with respect to any Distribution Date the sum of: (i)
the portion of all Scheduled Payments allocable to
principal (including delinquent payments) collected
during the preceding Collection Period on the
Receivables; (ii) the principal portion of all
prepayments in full or in part received during the
preceding Collection Period (without duplication of
amounts included in clause (i) above); (iii) the
Principal Balance of each Receivable that became a
Purchased Receivable during the preceding
Collection Period (without duplication of amounts
referred to in clauses (i) and (ii) above); (iv) the
Principal Balance of each Receivable that became a
Liquidated Receivable during the preceding
Collection Period (without duplication of amounts
included in clause (i), (ii) and (iii) above), and (v)
the Principal Balance of each Receivable that
became a Defaulted Receivable during the preceding
Collection Period (without duplication of amounts
included in clause (i), (ii), (iii) and (iv) above);
provided, however, that in calculating the Principal
Distributable Amount the following will be
excluded: all payments and proceeds of any
Purchased Receivables the Purchase Amount of
which has been included in the Principal
Distributable Amount in a prior Collection Period.
Further, (i) with respect to the Distribution Date
immediately following the end of the Funding
Period, if any, the principal required to be
distributed to Certificateholders shall include an
amount equal to the remaining balance in the
Funding Account on the last day of the Funding
Period, to the extent allocable to principal, and (ii)
with respect to the Distribution Date following the
substitution of a Receivable pursuant to Section
3.02, the principal required to be distributed to
Certificateholders shall include the difference, if
any, between the outstanding Principal Balance of
the replaced Receivable and the outstanding
Principal Balance of the substitute Receivable.
"Purchase Agreement" means the Master
Purchase Agreement dated as of March 1, 1997
providing for Aegis Finance's sale of the
Receivables to the Seller.
"Purchase Amount" means the amount, as of
the close of business on the last day of a Collection
Period, required to prepay in full the respective
Receivable under the terms thereof, including the
principal amount thereof and interest to the end of
such Collection Period.
"Purchased Receivable" means a Receivable
purchased as of the close of business on the last day
of a Collection Period by the Seller or by Aegis
Finance on behalf of the Seller pursuant to the
Purchase Agreement.
"Rated Certificates" means each Class of
Certificates, if any, that has been rated by a Rating
Agency at the request of the Seller.
"Rated Entity" shall mean a Person whose
long-term unsecured debt obligations (at the time of
the transfer under Section 7.03) are rated within the
investment grade categories of either Moody's or
S&P.
"Rating Agency" means any statistical credit
rating agency, or its successor, providing a rating
for any of the Certificates at the request of the
Seller.
"Receivable" means any retail installment
sales contract and security agreement identified on
the Schedule of Receivables. Any Receivable
transferred to a Trust hereunder shall be the sole
and exclusive property of such Trust, subject to the
rights of the Seller therein.
"Receivables Cash Purchase Price" means
with respect to any Additional Receivable, an
amount equal to 100% of the Principal Balance of
such Additional Receivable (or 92% if such
Additional Receivable is Uninsured).
"Record Date" means the last day of the
Collection Period preceding a Distribution Date or
termination of the Trust.
"Recoveries" means all amounts received
(net of out-of-pocket costs of collection), other than
Risk Default Insurance Proceeds, with respect to
Defaulted Receivables and Liquidated Receivables.
"Refunding Event" means the transfer of
remaining funds in the Funding Account, if any, to
the Certificate Account and distribution to the
Certificateholders on a pro rata basis, on the
Distribution Date immediately following the end of
the Funding Period, of such remaining funds in the
Funding Account in accordance with Section 5.06
hereof.
"Required Deposit Rating" means a rating of
an institution which has either short-term deposits
of "P-1" by Moody's, or short-term deposits of
"A-1+" by S&P; and any requirement that deposits
have the "Required Deposit Rating" shall mean that
such deposits have the foregoing required ratings by
Moody's or S&P.
"Reserve Fund" means the separate fund
established and maintained pursuant to the Master
Trust Agreement outside of the Trust.
"Reserve Fund Draw" has the meaning
specified in the Master Trust Agreement.
"Reserve Fund Initial Deposit" shall be
determined separately for each Trust, shall be
specified in the corresponding Agreement, and shall
be equal to the present value of the "Term Note"
which is a permitted investment under Section
3.2(b) of the Master Trust Agreement, discounted
at the Discount Rate.
"Reserve Fund Property" has the meaning
specified in the Master Trust Agreement.
"Reserve Requirement" means the greater of
(i) $1,000,000 and (ii) 5% of the aggregate
outstanding Principal Balance of the Receivables of
all Trusts which are outstanding as of the date of
determination.
"Residual Interest" means the right of the
Seller to all distributions from, and assets of, the
Trust, after payment in full of the fees and expenses
of the Backup Servicer, the Servicer, the Trustee
and the Custodian and payment in full of the
Certificates upon termination of this Agreement.
"Retention Amount" means the insured's
deductible (initially equal to 10% of the aggregate
insured portion of the Amount Financed of the
Receivables) under the terms of the Risk Default
Policy as described therein.
"Risk Default Insurance Policy" or "Risk
Default Policy" means each insurance policy listed
on Exhibit I issued by the Risk Default Insurer,
which shall show Aegis Finance as named insured
and the Trustee as an additional insured or pool
certificate holder thereunder, including all
endorsements thereto, the original of which policy
and endorsements shall be delivered to the
Custodian on or prior to the Closing Date.
"Risk Default Insurance Proceeds" means the
proceeds received by the Trustee, the Backup
Servicer, the Servicer, the insured or any other
Person under the Risk Default Policy, which
proceeds shall include allocations to principal and
interest as determined by the Servicer.
"Risk Default Insurer" means The
Connecticut Indemnity Company, its successors and
assigns, or Empire Fire & Marine Insurance Co., a
division of Zurich Insurance Company, its
successors and assigns.
"Schedule of Receivables" means the list of
Receivables annexed to the Agreement as Appendix
A; provided that such Appendix A shall be deemed
to be amended on each Funding Date, if any, to add
Additional Receivables acquired by the Trust on
each such date pursuant to the Agreement.
Appendix A shall include an indication of any
Receivables that are Uninsured Receivables or
Nonconforming Insured Receivables.
"Scheduled Payment" means the fixed
payment required to be made by the Obligor during
the respective Collection Period sufficient to fully
amortize the Principal Balance under the Simple
Interest Method over the term of the Receivable and
to provide interest at the applicable APR, including
any delinquent payment; provided, however, that
"Scheduled Payment" does not include
Miscellaneous Servicer Collections.
"Securities Act" means the Securities Act of
1933, as amended.
"Seller" means Aegis Auto Funding Corp.
IV, a Delaware corporation, as the seller of the
Receivables to the Trust under this Agreement, and
its successors (in the same capacity) pursuant to
Section 8.03.
"Servicer" means Aegis Finance, as servicer
of the Receivables pursuant to the Servicing
Agreement or any other Eligible Servicer acting as
servicer pursuant to the Servicing Agreement in
accordance with Section 4.01, as the context may
require.
"Servicer Files" shall have the meaning set
forth in Section 3.03(b).
"Servicing Agreement" means the Aegis
Finance Servicing Agreement or another servicing
agreement entered into by the Backup Servicer and
the Trustee with an Eligible Servicer which shall be
substantially in the form of the Aegis Finance
Servicing Agreement or such other form as shall be
approved by the Majority Certificateholders.
"Servicing Fee" means the fee payable to the
Servicer for services rendered during the respective
Collection Period, determined pursuant to the
Servicing Agreement.
"Servicing Officer" means any officer of the
Servicer involved in, or responsible for, the
administration and servicing of Receivables whose
name appears on a list of servicing officers attached
to an Officer's Certificate furnished to the Trustee
by the Servicer, as such list may be amended from
time to time.
"Simple Interest Method" means the method
of allocating a fixed level payment to principal and
interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the
product of the APR multiplied by the unpaid
principal balance multiplied by a fraction the
numerator of which is the number of days elapsed
since the preceding payment was made and the
denominator of which is 365.
"Simple Interest Receivable" means any
Receivable under which the portion of a payment
allocable to interest and the portion allocable to
principal is determined in accordance with the
Simple Interest Method.
"S&P" means Standard & Poor's Ratings
Services, a division of The McGraw-Hill
Companies, Inc., or any successors thereto.
"SST" means System and Services
Technology, Inc., a Missouri corporation, its
successors and assigns.
"Standard Terms" means these Standard
Terms and Conditions, as the same may be
modified or amended from time to time.
"State" means any state of the United States
of America, or the District of Columbia.
"Subordinate Holder" means the Holder of
any Certificate that is subordinated in payment to
the Class A Certificates.
"Substitute Receivable" means any
replacement Receivable substituted for another
Receivable in accordance with Section 3.02(b).
"Total Available Distribution Amount"
means, for each Distribution Date, the sum of the
Available Interest Distribution Amount, the
Available Principal Distribution Amount and the
Miscellaneous Servicer Collections.
"Transition Costs" means an amount
necessary to reimburse the successor to the
Servicer, the Trustee or the Backup Servicer, as the
case may be, for reasonable costs and expenses
incurred in connection with such transition(s).
"Trust" means the Trust created by the
Agreement, the estate of which shall consist of the
Trust Property.
"Trust Property" shall have the meaning set
forth in Article II of the Agreement.
"Trustee" means the Person acting as
Trustee of the Trust under the Agreement, its
successor in interest and any successor trustee
pursuant to Section 11.10.
"Trustee Fee" shall have the meaning set
forth in the Agreement.
"Trustee Officer" means any vice president
or assistant vice president, any assistant secretary,
any trust officer or any other officer of the
Corporate Trust Department of the Trustee
customarily performing functions similar to those
performed by any of the above designated officers
and also means with respect to a particular
corporate trust matter, any other officer to whom
such matter is referred because of his knowledge of
and familiarity with the particular subject.
"Trustee's Certificate" means a certificate
completed and executed by the Trustee by a Trustee
Officer pursuant to Section 11.02, substantially in
the form of, in the case of an assignment to the
Seller, Exhibit R.
"UCC" means the Uniform Commercial
Code as in effect from time to time in the relevant
jurisdictions.
"Underwriting Guidelines" means the
underwriting guidelines of Aegis Finance with
respect to each of its programs, as in effect at the
time of origination of each Receivable.
"Uninsured Receivables" means Receivables
not covered by a Risk Default Insurance Policy.
"Vendor's Single Interest Physical Damage
Insurance Policy" or "VSI Insurance Policy" means
the insurance policy listed on Exhibit J issued by
the VSI Insurer, including all endorsements thereto.
"Voting Interests" means the portion of the
voting interests of all the Certificates that is
allocated to any Certificate for purposes of the
voting provisions of this Agreement. Voting
Interests shall be allocated to the Class A and Class
B Certificates, respectively, in proportion to their
Class Certificate Balances. Voting Interests
allocated to each Class of Certificates shall be
allocated among the Certificates within each such
class in proportion to their Certificate Balances.
Where the Voting Interests are relevant in
determining whether the vote of the requisite
percentage of the Certificateholders necessary to
effect any consent, waiver, request or demand shall
have been obtained, the Voting Interests shall be
deemed to be reduced by the amount equal to the
Voting Interests (without giving effect to this
provision) represented by the interests evidenced by
any Certificate registered in the name of the
Servicer, Aegis Finance, the Seller or any Person
known to a Trustee Officer to be an Affiliate of any
such foregoing entities, unless such entity owns all
affected Certificates.
"VSI Insurer" means Guaranty National
Insurance Company.
"Warehouse Facility" means the Loan and
Security Agreement dated as of March 14, 1997
among Aegis Finance, III Finance Ltd and III
Global Ltd.
ARTICLE II
INTERPRETATION
Section 2.01. Usage of Terms. With
respect to all terms in these Standard Terms, the
singular includes the plural and the plural the
singular; words importing any gender include the
other genders; references to "writing" include
printing, typing, lithography and other means of
reproducing words in a visible form; references to
agreements and other contractual instruments
include all subsequent amendments thereto or
changes therein entered into in accordance with
their respective terms and not prohibited by these
Standard Terms; references to Persons include their
permitted successors and assigns; and the term
"including" means "including without limitation."
Section 2.02. Cutoff Date and Record
Date. All references to the Record Date prior to
the first Record Date in the life of the Trust shall be
to the Closing Date.
Section 2.03. Section References. Unless
otherwise indicated, all section references shall be
to Sections in these Standard Terms.
ARTICLE III
THE RECEIVABLES
Section 3.01. Representations and
Warranties of Seller.
(a) The Seller makes the
following representations and warranties as
to the Receivables on which the Trustee
relies in accepting the Receivables in trust
on the Closing Date and each Funding Date
and executing and authenticating the
Certificates on the Closing Date. Such
representations and warranties speak as of
the Closing Date with respect to the Initial
Receivables and as of the related Funding
Date with respect to Additional Receivables
to be acquired on such date, but shall
survive the sale, transfer and assignment of
the Receivables to the Trustee.
(i) Characteristics of
Receivables. Each Receivable (A)
has been originated in the United
States of America by Aegis Finance
or a Dealer for the retail sale of a
Financed Vehicle in the ordinary
course of Aegis Finance's or such
Dealer's business, has been fully and
properly executed by the parties
thereto, and, if originated by a
Dealer, has been purchased by Aegis
Finance in the ordinary course of
business from such Dealer or has
been financed for such Dealer under
an existing agreement with Aegis
Finance, (B) has created a valid,
subsisting and enforceable first
priority security interest in favor of
Aegis Finance or the Dealer in the
Financed Vehicle, which security
interest, (1) if in favor of the Dealer,
has been assigned by the Dealer to
Aegis Finance, (2) in either case has
been duly assigned by Aegis Finance
to the Seller, and (3) has been
assigned by the Seller to the Trustee,
(C) is covered by the VSI Insurance
Policy and, except as identified on
the Schedule of Receivables, 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) Compliance With
Law. Each Receivable and the sale
of each Financed Vehicle (A)
complied at the time it was
originated or made and at the
Closing Date or the applicable
Funding Date, as the case may be,
complies in all material respects with
all requirements of applicable
federal, State and local laws and
regulations thereunder, including,
without limitation, usury laws, the
Federal Truth-in-Lending Act, the
Equal Credit Opportunity Act, the
Fair Credit Reporting Act, the Fair
Debt Collection Practices Act, the
Federal Trade Commission Act, the
Magnuson-Moss Warranty Act, the
Federal Reserve Board's Regulations
B and Z, State adaptations of the
National Consumer Act and of the
Uniform Consumer Credit Code, and
other consumer credit laws and equal
credit opportunity and disclosure
laws and (B) does not contravene any
applicable contracts to which Aegis
Finance is a party and no party to
such contract is in violation of any
applicable law, rule or regulation
which is material to the Receivable
or the sale of the Financed Vehicle.
(ii) 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.
Each Receivable is denominated and
payable solely in U.S. dollars.
(iii) No Government
Obligor or Affiliate. 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 nor from any Affiliate of
Aegis Finance or the Seller.
(iv) Security Interest in
Financed Vehicle. Immediately prior
to the assignment and transfer
thereof, each Receivable is secured
by a validly perfected first priority
security interest in the related
Financed Vehicle in favor of the
Seller as secured party or all
necessary and appropriate actions
have been commenced that would
result in the valid perfection of a
first priority security interest in the
Financed Vehicle in favor of the
Seller as the secured party. The
Seller has caused each certificate of
title (or copy of an application for
title), or such other document
delivered by the state title
registration agency evidencing the
security interest in each Financed
Vehicle, to be delivered to the
Custodian pursuant to Section 3.03
hereof, together with a power of
attorney, duly executed by Aegis
Finance in favor of the Trustee,
which powers of attorney are
sufficient to change the lien holder
on the certificate of title with respect
to a Financed Vehicle.
(v) 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.
(vi) No Waiver. No
provision of a Receivable has been
waived, impaired, altered or
modified in any respect except in
accordance with the Servicing
Agreement, the substance of which is
reflected in the Schedule of
Receivables contained in the
Purchase Agreement as it relates to
the information included thereon.
(vii) No Amendments. No
Receivable has been amended such
that either the original Scheduled
Payment has been decreased or the
number of originally scheduled due
dates has been increased except as
permitted under the terms of the Risk
Default Policy covering such
Receivable.
(viii) No Defenses. No
right of rescission, setoff,
recoupment, counterclaim or defense
has been asserted or threatened with
respect to any Receivable.
(ix) 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.
(x) No Default. Except
for payment delinquencies continuing
for a period of not more than fifty-
nine days as of the applicable Cutoff
Date for any Receivable, no default,
breach, violation or event permitting
acceleration under the terms of any
Receivable has occurred; and no
continuing condition that with notice
or the lapse of time would constitute
a default, breach, violation or event
permitting acceleration under the
terms of any such Receivable has
arisen; and the Seller has not waived
any of the foregoing. As of the date
hereof and as of each Funding Date,
the Seller has no knowledge of any
facts regarding any particular
Receivable indicating that such
Receivable would not be paid in full.
(xi) Insurance. Each
Receivable is covered, as of the
Closing Date or Funding Date when
acquired, as the case may be, and
throughout the shorter of the term of
the Trust or the term of the
Receivable, under the VSI Insurance
Policy and, except as indicated on
the Schedule of Receivables, under
the Risk Default Insurance Policy,
and each such insurance policy is
valid and remains in full force and
effect. No more than one fifth of
one percent of the Receivables are
not covered by a Risk Default
Insurance Policy. Aegis Finance, in
accordance with its customary
procedures, has required that each
Obligor obtain, and has determined
that each Obligor has obtained,
physical damage insurance covering
the Financed Vehicle as of the date
of execution of the Receivable
insuring repair or replacement of
such Financed Vehicle subject to a
deductible not in excess of $500.
(xii) Title. It is the
intention of the Seller that the
transfer and assignment of the
Receivables from the Seller to the
Trust herein contemplated be treated
as an absolute sale for financial
accounting purposes, and that the
beneficial interest in and title to the
Receivables not be part of the
property of the Seller for any
purpose under state or federal law.
No Receivable has been sold,
transferred, assigned or pledged by
the Seller to any Person other than
the Trustee. Immediately prior to
the transfer and assignment herein
contemplated, the Seller had good
and marketable title to each
Receivable free and clear of all Liens
and rights of others and, immediately
upon the transfer thereof, the Trustee
for the benefit of the
Certificateholders will have good and
marketable title to each Receivable,
free and clear of all Liens and rights
of others; and the transfer has been
validly perfected under the UCC.
(xiii) Lawful Assignment.
No Receivable has been originated
in, or is subject to the laws of, any
jurisdiction under which the pledge,
transfer and assignment of such
Receivable under this Agreement or
pursuant to transfers of the
Certificates is or shall be unlawful,
void or voidable.
(xiv) All Filings Made. All
filings (including, without limitation,
UCC filings) necessary in any
jurisdiction to give the Trustee a first
perfected ownership interest in the
Receivables have been made.
(xv) One Original. There
is only one original executed copy of
each Receivable.
(xvi) Maturity of
Receivables. Each Receivable has
an original term to maturity of not
more than 60 months and, as of each
Cut-Off Date, each Receivable has a
remaining maturity of 60 months or
less.
(xvii) 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 Policies provide that
loan extensions will be allowed,
subject to a total number of
extensions of no more than one
extension for each twelve (12) month
period or fraction thereof in the
Receivable's term.
(xviii) [Reserved]
(xix) Financing. Each
Receivable represents a Simple
Interest Receivable.
(xx) Bankruptcy
Proceeding. No Receivable as of the
respective Cutoff Date is noted in
Aegis Finance's or the Seller's
records as a discharged debt under a
bankruptcy proceeding.
(xxi) 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.
(xxii) [Reserved]
(xxiii) [Reserved]
(xxiv) No Future Advances.
The full principal amount of each
Receivable has been advanced to
each Obligor or advanced in
accordance with the directions of
each such Obligor, and there is no
requirement for future advances
thereunder. The Obligor with
respect to the Receivable does not
have any options under such
Receivable to borrow from any
person additional funds secured by
the Financed Vehicle. Each
Receivable as of the Closing Date
and each related Funding Date is
secured by the related Financed
Vehicle.
(xxv) Underwriting
Guidelines. Except for Uninsured
Receivables constituting no more
than one-fifth of 1% of the aggregate
initial Principal Balance, and
Nonconforming Insured Receivables
constituting no more than 1% of the
aggregate initial Principal Balance,
each Receivable has been originated
in accordance with the applicable
Underwriting Guidelines of Aegis
Finance in effect at the time of
origination and in accordance with
underwriting guidelines acceptable to
the Risk Default Insurer.
(xxvi) Financed Vehicle in
Good Repair. To the best of the
Seller's knowledge, each Financed
Vehicle is in good repair and
working order.
(xxvii) Principal Balance.
No Receivable has a Principal
Balance which includes capitalized
interest, physical damage insurance
or late charges. The maximum
principal balance of any Receivable
does not exceed $40,000, or such
lesser maximum principal balance as
is permitted under the Underwriting
Guidelines.
(xxviii) Servicing. At the
applicable Cutoff Date, each
Receivable was being serviced by the
Servicer.
(xxix) Eligible Loan. Each
Receivable covered by a Risk Default
Insurance Policy constitutes an
"Instrument" or "Insured Security
Agreement" 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.
(xxx) Original Principal
Amount. The original principal
amount of each Receivable with
respect to which a credit application
was received by Aegis Finance prior
to January 15, 1997 and which was
(A) originated under the original
"Zero Down" and the "Reduced
Income" programs, was not more
than (1) in the case of new Financed
Vehicles, the lower of (x) 105% of
the manufacturer's suggested retail
price plus rebatable premiums on
cancelable items and (y) 120% of the
manufacturer's suggested retail price
or (2) in the case of used Financed
Vehicles, the lower of (x) 105% of
the retail value of the Financed
Vehicle at the time of origination of
the Receivable as set forth in the
Kelley "Blue Book" for the
appropriate region plus rebatable
premiums on cancelable items and
(y) 120% of such Kelley "Blue
Book" retail value; (B) originated
under the "First Time Buyer"
program, was not more than (1) in
the case of new Financed Vehicles,
95% of the manufacturer's suggested
retail price plus rebatable premiums
on cancelable items of up to 15% of
the manufacturer's suggested retail
price or (2) in the case of used
Financed Vehicles, 95% of the retail
value of the Financed Vehicle at the
time of origination of the Receivable
as set forth in the Kelley "Blue
Book" for the appropriate region plus
rebatable premiums on cancelable
items of up 15% of the
manufacturer's suggested retail price
and (C) originated under the
"Military Program" was not more
than 105% of the manufacturer's
suggested retail price or, in the case
of used Financed Vehicles, 105% of
the Kelley "Blue Book" retail value.
Calculations made with respect to the
percentages referenced above are
rounded to the nearest whole
percentage point. The original
principal amount of each Receivable
with respect to which a credit
application was received by Aegis
Finance after January 15, 1997
which was (A) originated under the
original "Zero Down" program, was
not more than (1) in the case of new
Financed Vehicles (other than
Hyundai automobiles), 100% of the
manufacturer's suggested retail price
(not to exceed $20,000) plus taxes,
title and other fees and premiums for
approved service contracts or (2) in
the case of used Financed Vehicles
(other than Hyundai automobiles),
100% 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 (not to exceed
$20,000) plus taxes, title and other
fees and premiums for approved
service contracts; (B) originated
under the "Reduced Income"
program and with respect to all
Hyundai automobiles, was not more
than (1) in the case of new Financed
Vehicles, 85% of the manufacturer's
suggested retail price plus taxes,
title and other fees and premiums for
approved service contracts or (2) in
the case of used Financed Vehicles,
85% 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 taxes,
title and other fees and premiums for
approved service contracts; provided
that, in any such case, if any such
amount is higher than that approved
by the Risk Default Insurer, each
Receivable will be limited in amount
to that permitted by the Risk Default
Insurer for coverage under the Risk
Default Insurance Policy.
(xxxi) 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.
(xxxii) Licensing. With
respect to each Receivable originated
in the State of Pennsylvania, the
Trust, the Seller, Aegis Finance and
each prior holder of any such
Receivable were each properly
licensed under applicable
Pennsylvania laws and regulations
during the respective times the Trust,
the Seller, Aegis Finance and each
prior holder of any such Receivable
held such Receivable, except where
the failure to be so licensed would
not have a material adverse effect on
the ability of the Trust to collect
principal or interest payments on
such Receivable or to realize upon
the Financed Vehicle underlying any
such Receivable in accordance with
the terms thereof.
(xxxiii) Additional
Receivables. Each Additional
Receivable shall have been identified
and approved by Aegis Finance on or
prior to the Closing Date, as
evidenced by Aegis Finance's dated
notation of approval on the loan
application (or other writing).
(b) The Seller makes the following
additional representations, warranties and
covenants on which the Trustee relies in
accepting the Receivables in trust on the
Closing Date and each Funding Date and
executing and authenticating the Certificates
on the Closing Date, which representations,
warranties and covenants shall survive the
Closing Date and each Funding Date.
(i) Location of Servicer Files. The Servicer
Files are kept at the location or locations listed in
Exhibit E hereto, with the exception of (A) the
original certificates of title or other documents
under applicable state laws evidencing the security
interest of Aegis Finance in the Financed Vehicles,
and (B) the original Receivables, which documents
shall be kept at an office of the Custodian.
(ii) Evidence of Security
Interest. On the Closing Date (in the
case of the Initial Receivables) and
the applicable Funding Date (in the
case of each Additional Receivable),
the Seller shall deliver or cause to be
delivered to the Custodian (A) an
original certificate of title or (B) if
the applicable state title registration
agency does not deliver certificates
of title to lienholders, such other
document under applicable state laws
evidencing the security interest of
Aegis Finance in the Financed
Vehicle, or (C) a guarantee of title
or a copy of an application for title if
no certificate of title or other
evidence of the security interest in
the Financed Vehicle has yet been
issued, for each Financed Vehicle
relating to each Receivable sold,
transferred, assigned and conveyed
hereunder; provided, however, that
any original certificate of title or
other document under applicable law
evidencing the security interest of
Aegis Finance in the Financed
Vehicle not so delivered on the
Closing Date or Funding Date, as the
case may be, due to the fact that
such certificate of title or other
document has not yet been issued by
a state title registration agency and
delivered to the Seller as of such
date, shall be delivered by the Seller
to the Custodian within one hundred
twenty (120) days after the Closing
Date or the applicable Funding Date,
as the case may be, or such later
date permitted in accordance with
Section 3.03(a); provided, further,
that failure to so deliver any original
certificate of title or other document
evidencing the security interest of
Aegis Finance in the Financed
Vehicle to the Trustee shall be
deemed to be a breach by the Seller
of its representations and warranties
contained in this Section 3.01, and
such occurrence shall constitute a
breach pursuant to Section 3.02.
Section 3.02. Repurchase or
Substitution Upon Breach.
(a) The Seller, the Backup
Servicer or the Trustee, as the case may be,
shall inform the other parties to this
Agreement and each Certificateholder
promptly, in writing, upon its discovery of
(i) any breach of the Seller's representations
and warranties made pursuant to Section
3.01(a), or of Aegis Finance's
representations and warranties made
pursuant to Section 3.01(b) of the Purchase
Agreement, or (ii) the failure of the Seller to
deliver original certificates of title or other
documents evidencing the security interest of
Aegis Finance in the Financed Vehicle
pursuant to Section 3.01(b) and 3.03.
Neither the Backup Servicer nor the Trustee
has any duty to investigate or determine the
existence of any breach or non-delivery
except as specified herein. Unless (i) the
breach shall have been cured by the thirtieth
day following the discovery thereof by the
Trustee or receipt by the Trustee of notice
from the Seller, the Servicer or the Backup
Servicer of such breach, or (ii) the non-
delivery shall have been cured by the
seventh Business Day following receipt by
an officer of the Seller of notice from the
Trustee by certified mail, the Seller shall
repurchase each Receivable (x) to which
such breach relates by the fifth Business
Day following such 30 day cure period or
(y) relating to the non-delivery by the fifth
Business Day following such seven day cure
period. Concurrently therewith, the Seller
shall cause Aegis Finance to repurchase such
Receivable pursuant to the Purchase
Agreement for the Purchase Amount. In
consideration of the purchase of the
Receivable, the Seller shall remit or cause
Aegis Finance to remit the Purchase Amount
to the Trustee for application in the manner
specified in Section 5.05. For purposes of
this Section 3.02, the Purchase Amount of a
Receivable which is not consistent with the
warranty pursuant to Section 3.01(a)(i)(E)
shall include such additional amount as shall
be necessary to provide the full amount of
principal and interest as contemplated
therein.
(b) The foregoing
notwithstanding, the Seller shall also have
the option of substituting, within the five
Business Day period following the
applicable cure period, one or more
replacement Receivables conforming to the
requirements hereof (a "Substitute
Receivable") for any breach or failing
Receivable instead of repurchasing such
Receivable, provided any such substitution
occurs within ninety (90) days of the
Closing Date. It shall be a condition of any
such substitution that (i) the outstanding
Principal Balance of the Substitute
Receivables as of the date of substitution
shall be less than or equal to the outstanding
Principal Balance of the replaced Receivable
as of the date of substitution; provided that
an amount equal to the difference, if any,
between the outstanding Principal Balance of
the replaced Receivable and the outstanding
Principal Balance of the Substitute
Receivable shall be deposited into the
Collection Account and shall be applied to
repay the outstanding Principal Balance of
the Certificates on the next Distribution
Date; (ii) the remaining term to maturity of
the Substitute Receivable shall not be greater
than that of the replaced Receivable; (iii) the
APR on the Substitute Receivable is not less
than the APR on the replaced Receivable;
(iv) the Cutoff Date with respect to the
Substitute Receivable shall be deemed to be
the first day of the month in which the
substitution occurs; (v) the Substitute
Receivable otherwise shall satisfy the
conditions of Section 3.01(a) and (b) hereof
(and the Seller shall be deemed to make all
representations and warranties contained in
Sections 3.01(a) and (b) hereof with respect
to the Substitute Receivable as of the date of
substitution); and (vi) the Seller shall have
delivered to the Purchaser and the Trustee
all of the documents specified in Section
3.03(a) or 3.08(b) hereof with respect to the
Substitute Receivable on or before the date
of substitution.
(c) The sole remedy of the
Trustee, the Trust or the Certificateholders
with respect to a breach of representations
and warranties of the Seller pursuant to
Section 3.01(a), or a breach of
representations and warranties of Aegis
Finance pursuant to Section 3.01(b) of the
Purchase Agreement, or non-delivery of
certificates of title pursuant to Section
3.01(b) and 3.03, shall be to require the
Seller to repurchase or substitute for the
Receivables pursuant to this Section 3.02
and to enforce Aegis Finance's obligation to
repurchase such Receivables pursuant to the
Purchase Agreement.
Section 3.03. Custody of Documents.
(a) To assure uniform quality in
servicing the Receivables, to reduce
administrative costs and to perfect the
security interest conveyed by the Seller to
the Trustee and the Trust pursuant to this
Agreement in the Trust Property, the
Trustee, upon the execution and delivery of
this Agreement, is hereby irrevocably
appointed as Custodian of the following
documents or instruments, which shall be
delivered to the Custodian with respect to
each Receivable within 10 days after the
Closing Date or applicable Funding Date:
(i) The original of the
Receivable and any amendments
thereto;
(ii) The original certificate
of title or, if the applicable state title
registration agency does not issue
certificates of title to lienholders,
such other document under
applicable state laws evidencing the
security interest of Aegis Finance in
the Financed Vehicle, or a guarantee
of title or a copy of an application
for title if a certificate of title or
other document evidencing the
security interest in the Financed
Vehicle has not yet been issued; and
(iii) Such other documents
as may be in existence evidencing the
security interest of Aegis Finance in
the Financed Vehicle; provided,
however, that the Trustee has no
obligation to determine the existence
or necessity for such other
documents.
Items (a)(i), (ii) and (iii) shall be
referred to collectively as the "Custodian
Files."
The Custodian shall review the
Custodian Files (A) within 30 days after the
Closing Date (or 30 days after the end of
the Funding Period, if applicable) to verify
that all guarantees of title and all
applications for title have been replaced by
either an original certificate of title or other
documents delivered by a state title
registration agency evidencing the security
interest of Aegis Finance in the Financed
Vehicle, and (B) within 30 days after the
Closing Date and each Funding Date,
whichever is applicable with respect to each
Receivable, to verify that an original
installment sale contract is present for each
Receivable and that each Receivable is
covered by an endorsement to the Risk
Default Policy confirming insurance
thereunder. The Custodian shall
immediately deliver written notice by
certified mail to the Seller and Aegis
Finance if any such document is missing or
has not been delivered to the Custodian.
With respect to Receivables for which the
original certificates of title or other
documents evidencing the security interest of
Aegis Finance in the Financed Vehicle have
not been delivered within 30 days after the
Closing Date (or within 30 days after the
end of the Funding Period if applicable), the
Custodian shall review the related Custodian
Files every thirty days thereafter to
determine whether or not such documents
have been delivered, and shall promptly
notify the Seller in writing, on a monthly
basis, of any such documents which have
not been delivered as of the date of such
notice. The Custodian shall deliver written
notice to the Certificateholders if any
original certificate of title or other document
evidencing the security interest of Aegis
Finance in the Finance Vehicle has not been
delivered to the Custodian within 120 days
after the Closing Date (or within 120 days
after the end of the Funding Period if
applicable). Such notice shall confirm
whether or not a guaranty of title or an
application for title has been delivered to the
Custodian with respect to the related
Receivable.
With respect to Receivables for
which the original retail installment sale
contract has not been delivered to the
Custodian in accordance with this Section
3.03(a), the Seller shall cause Aegis Finance
to deliver the missing documents within
seven (7) Business Days of receipt of such
notice or repurchase such Receivables
pursuant to Section 3.02 hereof. With
respect to Receivables for which original
certificates of title or other documents
evidencing the security interest of Aegis
Finance in the Financed of the Vehicle have
not been delivered to the Custodian within
120 days after the Closing Date (or within
120 after the Funding Period if applicable),
the Seller shall cause Aegis Finance to
deliver such within 120 days thereafter (i.e.,
within 240 days after the Closing Date or
the end of the Funding Period, as
applicable) or repurchase the Receivables
pursuant to Section 3.02 hereof. Other than
the reviews set forth in this paragraph, the
Custodian shall have no duty or obligation
to review any of the Custodian Files.
(b) The Seller shall deliver to the
Servicer for custody pursuant to the
Servicing Agreement the documents and
instruments described in Paragraph III.B.3.
of the Servicing Agreement (collectively, the
"Servicer Files").
(c) The Custodian agrees to
maintain the Custodian Files at the offices of
the Custodian as shall from time to time be
identified to the Trustee by written notice.
Subject to the foregoing, the Trustee may
temporarily move individual Custodian Files
or any portion thereof without notice as
necessary to conduct collection and other
servicing activities in accordance with its
customary practices and procedures.
The Custodian shall have and
perform the following powers and duties:
(i) hold the Custodian
Files for the benefit of all present
and future Certificateholders,
maintain accurate records pertaining
to each Receivable to enable it to
comply with the terms and conditions
of this Agreement and maintain a
current inventory thereof;
(ii) carry out such policies
and procedures in accordance with its
customary actions with respect to the
handling and custody of the
Custodian Files so that the integrity
and physical possession of the
Custodian Files will be maintained;
and
(iii) promptly release the
original certificate of title to the
Servicer upon receipt of a written
request for release of documents
certified by an officer of the
Servicer, substantially in the form of
Schedule C to the Servicing
Agreement, with respect to the
matters therein.
Section 3.04. Duties of Custodian.
(a) Safekeeping. The Trustee, as
Custodian, shall hold the original
Receivables and original certificates of title
at the Corporate Trust Office, for the use
and benefit of all present and future
Certificateholders. In performing its duties
the Custodian will comply with all
applicable state and federal laws and will
exercise that degree of skill and care
consistent with the same degree of skill and
care that the Custodian exercises with
respect to similar motor vehicle loans held
by the Custodian and that is consistent with
prudent industry standards, and will apply in
performing such duties and obligations,
those standards, policies and procedures
consistent with the same standards, policies
and procedures the Custodian applies with
respect to similar motor vehicle loans or
motor vehicle retail installment sale
contracts which the Custodian serves as
custodian or in a similar capacity.
(b) Maintenance of and Access to
Records. Subject to Section 3.03(c), the
Custodian shall maintain the Custodian Files
at the Corporate Trust Office or at such
other office as shall be specified to the
Trustee by written notice not later than 90
days after any change in location. The
Custodian shall make available to the
Servicer and the Certificateholders or their
duly authorized representatives, attorneys or
auditors a list of locations of the Custodian
Files, and the related accounts, records and
computer systems maintained by Custodian
at such times as the Servicer or the Majority
Certificateholders shall instruct.
(c) Release of Documents. In
addition to releasing certificates of title
pursuant to Section 3.03(c)(iii) upon receipt
of written instructions from the Servicer in
the form of Schedule C to the Servicing
Agreement, the Custodian shall release any
Custodian File to the Servicer, the
Servicer's agent or the Servicer's designee,
as the case may be, at such place or places
as the Servicer may designate, as soon as
practicable.
Section 3.05. Instructions; Authority to
Act. The Custodian shall be deemed to have
received proper instructions with respect to the
Custodian Files upon its receipt of written
instructions from the Servicer in the form of
Schedule C to the Servicing Agreement.
Section 3.06. Custodian Fees;
Indemnification.
(a) In consideration for services
rendered as Custodian, the Custodian shall
be paid the Custodian Fees.
(b) The Seller shall indemnify the
Custodian for any and all liabilities,
obligations, losses, compensatory damages,
payments, costs or expenses of any kind
whatsoever, including reasonable fees and
expenses of counsel, that may be imposed
on, incurred or asserted against the
Custodian as the result of any improper act
or omission by the Seller or alleged
improper act or omission by the Seller in
any way relating to the maintenance and
custody by the Custodian of the Custodian
Files; provided, however, that the Seller
shall not be liable for any portion of any
such amount resulting from the willful
misfeasance, bad faith or negligence of the
Custodian.
Section 3.07. Effective Period and
Termination. The Trustee's appointment as
Custodian shall become effective as of the Closing
Date and shall continue in full force and effect until
the Trustee resigns or is removed pursuant to
Section 11.09. As soon as practicable after any
termination of such appointment, the Custodian
shall deliver the original documents identified in
Section 3.03 to the successor Custodian at such
place or places as the successor Custodian may
reasonably designate.
Section 3.08. Funding Events.
(a) A funding event (each a
"Funding Event") shall occur upon a
Funding Date and in accordance with the
requirements of this Section 3.08.
(b) During the Funding Period,
the Seller shall, on Funding Dates, acquire
Additional Receivables at the Receivables
Cash Purchase Price from Aegis Finance
pursuant to the Purchase Agreement with
moneys deposited in the Funding Account
on the Closing Date.
The Seller shall transfer to the
Trustee the Additional Receivables and the
other property and rights related thereto
described in Section 2.01(b) only upon
satisfaction of each of the following
conditions on or prior to the related Funding
Date:
(i) On or before the
related Cutoff Date immediately
preceding any Funding Date for the
Additional Receivables, the Seller
will review, package and forward to
the Trustee for receipt by not less
than two Business Days prior to the
Funding Date (each, a "Delivery
Date"), the following documents
related to such Additional
Receivables:
(A) Original retail
installment
sales contracts
evidencing
such
Receivables
and any
amendments
thereto;
(B) Original
certificates of
title, or copies
of dealer
blanket
guarantees of
title, or
applications
for title to the
related
Financed
Vehicles;
(C) With respect
to Receivables
covered by a
Risk Default
Insurance
Policy, an
endorsement
to the Risk
Default
Insurance
Policy
confirming
insurance
regarding each
Receivable to
be purchased
on such
Funding Date
(as specified
on a master
list of
Receivables
annexed to
such
endorsement);
(D) A list of
Receivables
being
purchased on
such Funding
Date in
electronic
format
satisfactory to
the Trustee;
and
(E) A notice that
the Funding
Date will
occur on the
Friday
immediately
following the
Delivery Date
(or such other
day as
specified in
such notice).
(ii) By the Delivery Date,
the Seller shall deliver, or cause to
be delivered, to the Trustee (with a
copy to Seller's counsel), fully
executed documents as follows:
(A) Assignment
(in the form of
Exhibit A to
the Purchase
Agreement)
with Schedule
A attached
listing all
Receivables to
be sold on
such Funding
Date;
(B) Assignment
(in the form of
Exhibit P
hereto) with
Schedule A
attached listing
all Receivables
to be sold on
such Funding
Date;
(C) Notice of
funding (in the
form of
Exhibit N
hereto)(the
"Notice of
Funding");
(D) Officer's
Certificate (in
the form of
Exhibit O
hereto); and
(E) Power of
Attorney by
the Seller in
favor of the
Trust
reflecting the
Additional
Receivables.
(iii) On the Delivery Date,
the Trustee will acknowledge receipt
of a written certification of the Seller
of the presence of the documents
listed in Sections 3.08(b)(i) and (ii)
above by sending notice, via
telecopy, to Seller and Seller's
counsel. The Trustee shall not be
responsible for the accuracy of such
documents. Only those Receivables
for which the documents listed in
Sections 3.08(b)(i) and (ii) are
delivered to the Trustee on the
Delivery Date will be included in the
Funding Event. Within 30 days of
the Funding Event, the Trustee will
also stamp the Receivables to
indicate their sale to the Seller and
their subsequent transfer and
assignment to the Trust.
(iv) Upon satisfaction of
the above requirements with respect
to events to occur on or before the
Funding Date, the Trustee will on
the Funding Date withdraw funds
from the Funding Account to pay to
the Seller or its designee with respect
to Additional Receivables acquired
on such Funding Date, in cash by
federal wire transfer funds, an
amount equal to the Receivables
Cash Purchase Price, all pursuant to
the written directions provided to the
Trustee in the Notice of Funding.
(v) The Trustee shall
review the documents delivered to it
in connection with any Funding
Event within 20 Business Days after
the initial Funding Date and within 5
Business Days after each subsequent
Funding Date (or within such greater
number of Business Days required to
review such documents at a rate of
1500 files per Business Day) to
verify the presence of the documents
listed in Sections 3.08(b)(i) and
3.08(b)(ii) for each Additional
Receivable. The Trustee shall
immediately deliver written notice by
certified mail to the Seller, Aegis
Finance and each Certificateholder,
if any of such documents is missing.
The Seller shall cause Aegis Finance
to deliver to the Trustee the missing
items within 3 Business Days of
receipt of such notice.
(c) If the Seller does not provide
written notice to the Trustee of its intent to
acquire Additional Receivables pursuant to
this Section 3.08 prior to the end of the
Funding Period, then the remaining balance
on deposit in the Funding Account after the
end of the Funding Period (excluding
earnings on investments or reinvestments
thereof) shall be used for the purpose of
partially prepaying the Certificates in
accordance with Section 5.06(d) hereof.
The Trustee shall provide notice to the
Certificateholders of any such partial
prepayment, which prepayment shall be
made on the Distribution Date immediately
following the end of the Funding Period.
(d) The Seller shall take any
action required to maintain the first
perfected ownership interest of the Trust in
the Trust Property and the first perfected
security interest of the Trustee in the
Reserve Fund Property.
ARTICLE IV
ADMINISTRATION AND SERVICING OF
RECEIVABLES
Section 4.01. Servicing Duties.
(a) On or before the Closing
Date, the Backup Servicer and the Trustee
will enter into the Aegis Finance Servicing
Agreement with Aegis Finance pursuant to
which Aegis Finance shall act as Servicer
with respect to the Receivables. Any
Servicer shall be, and shall remain, for so
long as it is acting as Servicer, an Eligible
Servicer. The Backup Servicer shall review
each Monthly Servicing Certificate required
to be provided by the Servicer pursuant to
paragraph III.B.6 of the Servicing
Agreement and shall notify the Trustee and
each Certificateholder of any discrepancy in
such Monthly Servicing Certificate which
cannot be corrected in accordance with
paragraph III.B.6 of the Servicing
Agreement.
(b) In the event of termination of
the rights and obligations of the Servicer
under the Servicing Agreement, the Backup
Servicer shall, in accordance with paragraph
VI of the Servicing Agreement, act as
Servicer of the Receivables by assuming
such rights and obligations under the
Servicing Agreement unless a successor
Servicer, other than the Backup Servicer, is
appointed by the Trustee under the Servicing
Agreement; provided, however, that the
Backup Servicer shall not be liable for any
acts, omissions or obligations of the Servicer
prior to such succession or for any breach
by the Servicer of any of its representations
and warranties contained in the Servicing
Agreement or in any related document or
agreement.
(c) Any Servicing Agreement that
may be entered into and any other
transactions or servicing arrangements
relating to the Receivables and the other
Trust Property involving a Servicer in its
capacity as such shall be deemed to be for
the benefit of the Trust, the Trustee and the
Certificateholders.
(d) Other than the duties
specifically set forth in this Agreement and
the Servicing Agreement, the Backup
Servicer shall have no obligation hereunder,
including, without limitation, to supervise,
verify, monitor or administer the
performance of the Servicer. The Backup
Servicer shall have no liability for any
actions taken or omitted by the Servicer.
The duties and obligations of the Backup
Servicer shall be determined solely by the
express provisions of this Agreement and the
Servicing Agreement and no implied
covenants or obligations shall be read into
this Agreement against the Backup Servicer.
Section 4.02. Resignation of Backup
Servicer. The Backup Servicer may resign from the
obligations and duties imposed on it under this
Agreement and the Servicing Agreement as Backup
Servicer, and shall resign at any time when it ceases
to be an Eligible Servicer, by giving written notice
of such resignation to the Trustee and the
Certificateholders. No such resignation shall
become effective until a successor Backup Servicer
that is an Eligible Servicer acceptable to the
Majority Certificateholders shall have assumed the
responsibilities and obligations of the Backup
Servicer in accordance with Section 10.02; provided
however, if a successor Backup Servicer has not
assumed the responsibilities and obligations of the
Backup Servicer within 30 days after such
resignation, the Backup Servicer may petition a
court of competent jurisdiction for its removal.
In the event the Backup Servicer shall for
any reason no longer be acting as such (including
by reason of resignation as set forth in this Section
4.02 or an Event of Backup Servicing Default as
specified in Section 10.01), the successor Backup
Servicer shall thereupon assume all of the rights and
obligations of the outgoing Backup Servicer under
the Servicing Agreement. In such event, the
successor Backup Servicer shall be deemed to have
assumed all of the Backup Servicer's interest therein
and to have replaced the outgoing Backup Servicer
as a party to the Servicing Agreement to the same
extent as if the Servicing Agreement had been
assigned to the successor Backup Servicer, except
that the outgoing Backup Servicer shall not thereby
be relieved of any liability or obligations on the part
of the outgoing Backup Servicer to the Servicer
under such Servicing Agreement to the extent such
obligations or liabilities arose prior to the
assumption by the successor Backup Servicer of the
obligations of the Backup Servicer thereunder. The
outgoing Backup Servicer shall, upon request of the
Trustee, deliver to the successor Backup Servicer
all documents and records relating to the Servicing
Agreement and the Receivables and otherwise use
its reasonable efforts to effect the orderly and
efficient transfer of the Servicing Agreement to the
successor Backup Servicer.
Section 4.03. Covenant of Backup
Servicer. The Backup Servicer shall promptly
notify the Trustee of the occurrence of any Event of
Backup Servicing Default or Event of Servicing
Default of which it has obtained actual knowledge
and any breach by the Backup Servicer or the Seller
of any of its respective covenants or representations
and warranties contained in this Agreement.
Section 4.04. Servicing Fees. The total
servicing fees payable on each Distribution Date to
the Backup Servicer and the Servicer, subject to
accrual and deferral of a portion of the Servicing
Fee in accordance with the Servicing Agreement,
shall equal the Backup Servicer Fee and the
Servicing Fee, respectively. Any proposed increase
in the Backup Servicer Fee or the Servicing Fee due
to the assumption of duties hereunder or under the
Servicing Agreement by a successor Backup
Servicer or successor Servicer shall be approved by
the Seller and the Majority Certificateholders. The
Backup Servicer shall also be entitled to any
reimbursement pursuant to Section 9.03. Any
Servicing Fee payable to the Servicer hereunder or
pursuant to the Servicing Agreement shall be paid
to the Servicer and/or to one or more subservicers
as the servicer may from time to time direct in
writing to the Trustee.
Section 4.05. Costs and Expenses. All
reasonable out-of-pocket costs and expenses
incurred by the Backup Servicer in carrying out its
duties as Backup Servicer hereunder, including all
out-of-pocket fees and expenses not expressly stated
hereunder to be for the account of the Trust or the
Seller, shall be paid or caused to be paid by the
Backup Servicer, and the Backup Servicer shall be
entitled to reimbursement therefor hereunder.
Nothing in this Section 4.05 shall be construed to
limit the compensation to be paid to or retained by
the Backup Servicer pursuant to Section 4.04.
Section 4.06. Standard of Care. In
managing, administering, servicing and making
collections on the Receivables, and in performing
its obligations under the Servicing Agreement after
succeeding as Servicer thereunder, the Backup
Servicer will exercise that degree of skill and care
consistent with the same degree of skill and care
that the Backup Servicer exercises with respect to
similar motor vehicle loans owned and/or serviced
by the Backup Servicer and that is consistent with
prudent industry standards, and will apply in the
management, administration, servicing and
collection of the Receivables and in the
administration and enforcement of the Insurance
Policies relating to the Receivables, those standards,
policies and procedures consistent with the best
standards, policies and procedures the Backup
Servicer applies with respect to similar motor
vehicle loans owned or serviced by it, and, to the
extent not inconsistent with the foregoing, to
exercise that degree of skill and care it uses in
servicing assets held for its own account; provided,
however, that notwithstanding the foregoing, the
Backup Servicer shall not, except pursuant to a
judicial order from a court of competent
jurisdiction, or as otherwise required by applicable
law or regulation, release or waive the right to
collect the unpaid balance on any Receivable and
provided, further, that the Backup Servicer shall not
amend or modify any Receivable, unless a default
with respect to such Receivable has occurred or is,
in the judgment of the Backup Servicer, imminent.
In performing its duties and obligations hereunder
or under the Servicing Agreement, in the event
there is no Servicer managing, administering,
servicing or making collections on the Receivables
and administering and enforcing the Insurance
Policies relating to the Receivables, the Backup
Servicer shall comply with all applicable federal and
state laws and regulations, shall maintain all state
and federal licenses and franchises necessary for it
to perform its servicing responsibilities hereunder
and thereunder, and in such event it shall exercise
the same degree of skill and care it uses in
managing, administering, servicing and making
collection on the Receivables and administering and
enforcing the Insurance Policies in its capacity as
Backup Servicer hereunder, and shall not impair the
rights of the Trust or the Certificateholders in the
Trust Property.
ARTICLE V
DISTRIBUTIONS; ACCOUNTS;
STATEMENTS TO CERTIFICATEHOLDERS
Section 5.01. Accounts.
(a) The Trustee shall establish
and maintain separately with respect to each
Trust the Collection Account, the Funding
Account, if any, and the Certificate Account
in the name of the Trustee for the benefit of
the Certificateholders. The Collection
Account, the Funding Account and the
Certificate Account shall be segregated trust
accounts established with the trust
department of the Trustee. The Servicer
shall establish the Lock-Box Account
pursuant to the Servicing Agreement. The
Lock-Box Account shall be a non-interest
bearing account established with a Lock-Box
Account Depository, which shall at all times
be an Eligible Institution, by the Servicer
for the sole benefit of the Trust and other
holders of retail installment sales contracts
originated by Aegis Finance or its Affiliates.
All of the foregoing Accounts shall be
Eligible Accounts.
(b) Amounts held in the
Collection Account, the Certificate Account
and the Funding Account shall be invested
by the Trustee, upon the written direction of
the Seller, in Eligible Investments. Any
such investment in the Certificate Account
or the Funding Account shall mature no
later than (i) one Business Day before the
Distribution Date (or Funding Date with
respect to the Funding Account), next
succeeding the date of investment or, (ii) in
the case of money market fund investments,
on such Distribution Date. Any such
investment in the Collection Account shall
mature not later than two Business Days
before such Distribution Date. Any written
investment direction by the Seller shall
certify that any such investment is
authorized by this Section 5.01. The
Trustee shall have no authority to sell or
otherwise dispose of Eligible Investments
attributable to funds held in the Certificate
Account, the Collection Account or the
Funding Account prior to their respective
maturity dates. Interest and earnings on
investments of funds in any Account shall be
credited to and all losses borne by the
Account with respect to which they were
derived. All accounts with the Trustee must
be trust accounts subject to regulations
substantially similar to 12 C.F.R. 9.10(b).
The Trustee shall not have any responsibility
or liability for any investment of moneys at
the direction of the Seller or any loss
resulting therefrom.
(c) The Servicer has appointed
each of Wells Fargo Bank, N.A., and
Commerce Bank, as an initial Lock-Box
Account Depository under the Servicing
Agreement. All funds of the Trust held by
a Lock-Box Account Depository are and
shall remain the property of the Trust.
Section 5.02. Collections. Pursuant to the
Servicing Agreement, the Servicer shall remit to the
Lock-Box Account as soon as practicable, but in no
event later than its close of business on the Business
Day after receipt thereof by the Servicer, all
payments by or on behalf of the Obligors with
respect to each Receivable (other than Purchased
Receivables), all Recoveries and all Risk Default
Insurance Proceeds, all as collected during the
Collection Period. As provided in the Servicing
Agreement, the Servicer shall cause the Lock-Box
Account Depository to transfer all available funds
applied to the Receivables in excess of $2,000 from
the Lock-Box Account to the Collection Account on
each Business Day. In the event an Obligor remits
funds to the Trustee rather than remitting such
funds directly to the Servicer, the Trustee shall
notify the Servicer and shall deposit such amounts
into the Collection Account within one (1) Business
Day after receipt. Deposits into the Lock-Box
Account allocable to collections on Receivables of
each Trust shall be identified and earmarked
separately from the collections with respect to each
other Trust (the "Earmarked Funds"). The
Earmarked Funds shall be transferred to the
Collection Account of the related Trust.
Section 5.03. Application of Collections.
All collections for the Collection Period shall be
applied by the Trustee in accordance with reports
provided to the Trustee by the Servicer pursuant to
the Servicing Agreement, as follows:
With respect to each Receivable (other than
a Purchased Receivable), payments by or on behalf
of the Obligor shall be applied to the Scheduled
Payment. Any excess payments received
constituting Scheduled Payments for subsequent
Collection Periods shall be applied to the Principal
Balance of the Receivables on the Distribution Date
relating to such subsequent Collection Period.
Section 5.04. Miscellaneous Servicer
Collections. All Miscellaneous Servicer Collections
shall be deposited by the Servicer to the Lock-Box
Account within one Business Day of receipt thereof.
Section 5.05. Additional Deposits. (a) The
Trustee shall deposit or cause to be deposited in the
Collection Account the aggregate Purchase Amount
received with respect to Purchased Receivables and
shall, upon receipt, deposit such other amounts to
such accounts as may be specified herein. All such
deposits shall be made in Automated Clearinghouse
Corporation next-day funds or immediately
available funds, on or before the Business Day
preceding the Distribution Date.
(b) On the Closing Date and each Funding
Date, the Seller shall deliver to the Trustee and the
Trustee shall deposit into the Collection Account
any amount transferred from the "Depository
Account" established under the Warehouse Facility
which constitutes collections received with respect
to the Receivables to be purchased by the Seller and
sold to the Trust on such date, net of amounts paid
under the Warehouse Facility with respect to
principal and interest on the related loans under the
Warehouse Facility ("Excess Interest Collections").
Section 5.06. Distributions.
(a) On each Distribution Date,
the Trustee shall cause to be made the
transfers and distributions set forth in this
Section 5.06 in the amounts set forth in the
Monthly Servicing Certificate for such
Distribution Date.
(b) The Trustee shall, on each
Determination Date, based upon a certificate
delivered to the Trustee from the Backup
Servicer, calculate the Total Available
Distribution Amount, the Class A
Distributable Amount and the Class B
Distributable Amount, and, based on the
Total Available Distribution Amount,
determine the amount distributable to the
Certificateholders and the other distributions
to be made on such Distribution Date.
(c) Two (2) Business Days prior
to each Distribution Date, the Trustee shall
transfer from the Collection Account to the
Certificate Account an amount equal to the
Total Available Distribution Amount and all
investment earnings and interest on the
funds in the Collection Account.
(d) The rights of the Class B
Certificateholders to receive distributions in
respect of the Class B Certificates shall be
and hereby are subordinated to the rights of
the Class A Certificateholders to receive
distributions in respect of the Class A
Certificates to the extent provided in this
Section. Except as otherwise provided
below, on each Distribution Date, the
Trustee (based on the information contained
in the Monthly Servicing Certificate
delivered on the related Determination Date
pursuant to the Servicing Agreement) shall
make the following distributions from the
funds then on deposit in the Certificate
Account (including funds transferred from
the Reserve Fund when necessary pursuant
to the Master Trust Agreement and Section
5.07 below) in the following order of
priority:
(i) to the Backup Servicer, the Backup Servicer
Fee and expenses and all unpaid Backup Servicer
Fees and unreimbursed expenses from prior
Collection Periods; to the Servicer, the Servicing
Fees, to the extent then payable in cash and not
accrued and deferred in accordance with the
Servicing Agreement, and servicing expenses, and
all such unpaid Servicing Fees and unreimbursed
expenses from prior Collection Periods; to the
Trustee and Custodian, the Trustee Fees and
expenses and Custodian Fees and expenses
(including but not limited to the expenses associated
with maintaining a credit rating, if any, assigned by
a Rating Agency and obtaining an audit, procedures
review or other accountants' report on the reports,
accounts or statements prepared by the Servicer or
the Trustee) and all unpaid Trustee Fees and
unreimbursed expenses and Custodian Fees and
unreimbursed expenses from prior Collection
Periods; and to the successor to the Servicer, the
Trustee or the Backup Servicer, Transition Costs, if
any;
(ii)
to the Class A Certificateholders of record,
an amount equal to the sum of the Class A Interest
Distributable Amount and any Class A Interest
Carryover Shortfall from the prior Distribution
Date;
(iii) to the Class A
Certificateholders of record, an
amount equal to the sum of the Class
A Principal Distributable Amount
and any Class A Principal Carryover
Shortfall from the prior Distribution
Date;
(iv) to the Class B
Certificateholders of record, an
amount equal to the sum of the Class
B Interest Distributable Amount and
any Class B Interest Carryover
Shortfall from the prior Distribution
Date; and
(v) to the Class B
Certificateholders of record, an
amount equal to the sum of the Class
B Principal Distributable Amount
and any Class B Principal Carryover
Shortfall from the prior Distribution
Date.
(e) On each Distribution Date,
the Trustee shall distribute any Excess
Receipts into the Reserve Fund, provided
that, if on such Distribution Date, amounts
may be released from the Reserve Fund
under the terms of Section 3.6 of the Master
Trust Agreement, then such Excess Receipts
shall be distributed directly to the Seller or
its assignee as holder of the Excess
Receipts.
(f) All distributions with respect
to each Class of Certificates on each
Distribution Date shall be made pro rata
among the outstanding Certificates of such
Class, in proportion to the Percentage
Interests evidenced thereby. All payments
to Certificateholders shall be made on each
Distribution Date to each Certificateholder
of record on the related Record Date by
check, or, if requested by a
Certificateholder holding Certificates with
Original Certificate Balances in the
aggregate in excess of $1,000,000, by wire
transfer to the account designated in writing
by such Holder in the form of Exhibit G
hereto (or such other account as such
Certificateholder may designate in writing)
delivered to the Trustee prior to the
Determination Date, in immediately
available funds.
<PAGE>
Section 5.07. Reserve Fund.
(a) If on any Distribution Date
amounts in the Collection Account are
insufficient to make the distributions
specified in Section 5.06(d), the Trustee
shall draw upon the Reserve Fund to make
up such insufficiency in accordance with the
Master Trust Agreement.
(b) On the Closing Date, the Seller
shall deposit into the Reserve Fund an
amount equal to (i) the Reserve Fund Initial
Deposit and (ii) such other amounts as may
be specified in the Agreement.
Section 5.08. Funding Account.
(a) The Trustee shall establish the
Funding Account, if any, for the benefit of
the Certificateholders. On the Closing Date,
the Trustee shall deposit into the Funding
Account the Original Pre-Funded Amount.
(b) The Trustee shall use funds
on deposit in the Funding Account on a
Funding Date to acquire Additional
Receivables on behalf of the Trust.
(c) Two Business Days prior to
the Distribution Date immediately following
the end of the Funding Period, the Trustee
shall first transfer all amounts received as
earnings on income from any investments or
reinvestments of funds in the Funding
Account to the Collection Account and,
second, shall transfer all remaining funds in
the Funding Account to the Certificate
Account for the purpose of prepaying the
Certificates on such Distribution Date.
Section 5.09. Statements to
Certificateholders; Tax Returns. With each
distribution from the Certificate Account to the
Certificateholders made on a Distribution Date, the
Trustee shall provide to the Backup Servicer, the
Seller and each Certificateholder of record, based
on the Monthly Servicing Certificate provided to the
Backup Servicer and the Trustee by the Servicer in
the form of Schedule B to the Servicing Agreement,
a statement substantially in the form of Exhibit C to
this Agreement setting forth at least the following
information with respect to such Distribution Date
and the related Collection Period, to the extent
applicable:
(a) Servicer Collections:
(i) The Available Interest Distribution Amount;
(ii) The Available
Principal Distribution Amount;
(iii) The Miscellaneous
Servicer Collections; and
(iv) The Total Available
Distribution Amount.
(b) Distributions:
(i) the amount of such distribution allocable to
principal in respect of each Class of Certificates;
(ii) the amount of such
distribution allocable to interest in
respect of each Class of Certificates;
(iii) the amount of the
Backup Servicing Fee, Servicing
Fee, Trustee and Custodian Fees and
expenses for the related Collection
Period and the portion of such fees
allocable to each Class of
Certificates;
(iv) the amount of Class
Interest Carryover Shortfalls, if any,
on such Distribution Date in respect
of each Class of Certificates and the
amount of the Class Principal
Carryover Shortfalls, if any, on such
Distribution Date in respect of each
Class of Certificates;
(v) the Pool Factor and
the Class Factor for each Class of
Certificates as of such Distribution
Date, after giving effect to payments
allocated to principal reported under
clause (i) above;
(vi) the amount on deposit
in the Reserve Fund on such
Distribution Date, after giving effect
to amounts deposited in the Reserve
Fund and Reserve Fund Draws on
such date;
(vii) the aggregate amount
of Reserve Fund Draws, and the
breakdown of the application of such
draws to cover payment shortfalls to
Class A or B Certificateholders,
made on such Distribution Date;
(viii) the amount of net
investment earnings with respect to
the Reserve Fund earned during the
related Collection Period; and
(ix) the amounts, if any,
released from the Reserve Fund to
the Seller.
(c) Pool Information:
The Original Pool
Balance, the Pool Balance, the
weighted average coupon, the
weighted average maturity (in
months) and the remaining number
of Receivables for both the first and
the last day of the preceding
Collection Period, after giving effect
to payments allocated to principal
reported in (b)(ii) above.
(d) Receivables Repurchased or
Substituted by Seller:
The number and
aggregate Purchase Amount of
Receivables repurchased by Seller
and for any substitution of
Receivables, the number and
principal balance of both the
Receivables being replaced and the
Receivables substituted.
(e) Delinquency Information:
The amount of
Receivables (other than Defaulted
Receivables and Liquidated
Receivables) as to which Obligors
are (i) 30 days to 59 days past due
and (ii) 60 days to 89 days past due
in making Scheduled Payments.
(f) Repossession Information:
The number and
principal balance of Receivables as to
which the Servicer has repossessed
the Financed Vehicle during the
current period and on a cumulative
basis.
(g) Liquidated and Defaulted
Receivables Information:
The number and
principal balance of Receivables
which became Liquidated
Receivables (other than Receivables
previously characterized as Defaulted
Receivables) and the number and
principal balance of Receivables
which became Defaulted Receivables
during the Collection Period and on
a cumulative basis.
(h) Recoveries:
The amount of Liquidation
Proceeds, the amount of insurance
claims paid under the VSI Insurance
Policy, the amount of rebates
received from the Servicer as a
result of cancelled warranty or
extended service contracts and the
amount of claims paid under
consumer insurance during the
related Collection Period and on a
cumulative basis.
(i) Retention Amount:
The beginning balance, the
amount added with respect to
Additional Receivables or quarterly
reserve loss deficiency, the amount
subtracted with respect to approved
claims and quarterly reserve loss
surplus, and the ending balance.
(j) Risk Default Insurance Proceeds:
The amount of insurance
proceeds paid under the Risk Default
Insurance Policy.
(k) Net Losses:
The amount of Net
Losses, if any, on such Distribution
Date and the cumulative amount of
all Net Losses realized on the
Receivables since the Closing Date.
(l) Insurance Claims:
The number of
Receivables as to which a claim was
filed under the Risk Default Policy
or the VSI Insurance Policy, the
amount of such claims, the number
of claims rejected and the principal
balance of related Receivables
rejected under the Risk Default
Policy for the related Collection
Period and on a cumulative basis.
(m) Funding Account:
The beginning
balance, the amount withdrawn to
purchase Additional Receivables and
to make deposits to the Reserve
Fund, the amount of any
reinvestment income earned on the
moneys on deposit therein, and the
ending balance.
(n) Collection Account:
The amount of
reinvestment income on funds held in
the Collection Account.
(o) Other Information:
Any other information
regarding each distribution which any
Certificateholder reasonably requests
in writing 30 days prior to such
distribution and which the Trustee
can provide without undue expense
or effort.
Within thirty (30) days after the end of each
calendar year, the Trustee shall furnish to each
Person who at any time during such calendar year
was a Certificateholder of record and received any
payment thereon (a) a report as to the aggregate of
amounts reported pursuant to clauses (b)(i), (ii) and
(iii) of this Section 5.09 for such calendar year or
applicable portion thereof during which such Person
was a Certificateholder and (b) such information as
may be reasonably requested by the
Certificateholders or required by the Code, and the
regulations thereunder, to enable such Holders to
prepare their federal and state income tax returns.
The obligation of the Trustee set forth in this
paragraph shall be deemed to have been satisfied to
the extent that substantially comparable information
shall be provided by the Backup Servicer pursuant
to any requirements of the Code. The parties
hereto further agree to treat each series of
Certificates as separate from each other series
created under the Master Trust Agreement for
federal income tax purposes.
The Seller shall prepare any tax returns or
other forms required to be filed by the Trust. The
Trustee, upon request, will furnish the Seller with
all such information known to the Trustee as may
be reasonably required in connection with the
preparation of all tax returns of the Trust.
Section 5.10. Reliance on Information
from the Servicer. Notwithstanding anything to the
contrary contained in this Agreement, all
distributions from any of the accounts described in
this Article V and any movement of cash between
such accounts shall be made by the Trustee in
reliance on information provided to the Trustee by
the Servicer in writing, whether by way of the
Servicer's Monthly Servicing Certificate or
otherwise unless the Trustee has actual knowledge
or notice of any inaccuracy therein.
ARTICLE VI
RIGHTS OF CERTIFICATEHOLDERS
The Certificates shall represent fractional
undivided interests in the assets of the Trust which
shall consist of the right to receive, at the time and
in the amount specified herein pursuant to Section
5.01, a Percentage Interest in distributions with
respect to the Trust Property secured by funds
available pursuant to the Reserve Fund. Any other
right to receive payments or distributions hereunder
shall not represent any interest in the Accounts or
the Reserve Fund, except as specifically provided in
this Agreement. The parties hereto and the
Certificateholders agree that the Certificates
represent undivided interests in the Receivables,
which Receivables shall constitute stripped bonds
within the meaning of Section 1286 of the Code.
The parties hereto further agree to treat the
Certificates as separate from all other series of
certificates created under the Master Trust
Agreement for federal income tax purposes.
ARTICLE VII
THE CERTIFICATES
Section 7.01. The Certificates. The
Certificates shall be substantially in the forms of
Exhibit A-1 and A-2 hereto. The Class A and
Class B Certificates shall be issuable in minimum
denominations in Certificate Balances of $1,000,000
and integral multiples of $1,000 in excess thereof,
except that one Class A Certificate or Class B
Certificate may be issued in a different
denomination to account for an odd initial aggregate
Certificate Balance. The Certificates shall be
executed on behalf of the Trust by manual or
facsimile signature of a Trustee Officer of the
Trustee under the Trustee's seal imprinted thereon
and shall bear legends restricting the transfer
thereof. Certificates bearing the manual or
facsimile signatures of individuals who were, at the
time when such signatures shall have been affixed,
authorized to sign on behalf of the Trust, shall be
valid and binding obligations of the Trust,
notwithstanding that such individuals or any of them
shall have ceased to be so authorized prior to the
authentication and delivery of such Certificates or
did not hold such offices at the date of such
Certificates.
Section 7.02. Execution, Authentication of
Certificates. The Trustee shall cause the
Certificates to be executed on behalf of the Trust,
and delivered to or upon the written order of the
Seller pursuant to this Agreement. No Certificate
shall entitle its Holder to any benefit under this
Agreement or shall be valid for any purpose, unless
there shall appear on such Certificate a certificate of
authentication substantially in the form set forth in
Exhibits A-1 and A-2 hereto executed by the
Trustee by manual signature; such authentication
shall constitute conclusive evidence that such
Certificate shall have been duly authenticated and
delivered hereunder. All Certificates shall be dated
the date of their authentication.
Section 7.03. Registration of Transfer and
Exchange of Certificates.
(a) The Certificate Registrar shall
maintain a Certificate Register in which,
subject to such reasonable regulations as it
may prescribe, the Certificate Register shall
provide for the registration of Certificates
and transfers and exchanges of Certificates
as provided in this Agreement. The Trustee
is hereby initially appointed Certificate
Registrar for the purpose of registering
Certificates and transfers and changes of
Certificates as provided in this Agreement.
In the event that, subsequent to the Closing
Date, the Trustee notifies the Seller that it is
unable to act as Certificate Registrar, the
Seller shall appoint another bank or trust
company, having an office or agency located
in the Borough of Manhattan, The City of
New York, agreeing to act in accordance
with the provisions of this Agreement
applicable to it, and otherwise acceptable to
the Trustee, to act as successor Certificate
Registrar under this Agreement.
No transfer of a Certificate shall be
made unless (I) (a) such transfer is made
pursuant to an effective registration
statement under the Securities Act and any
applicable state securities laws or (b) (i)
such transfer is exempt from the registration
requirements under the Securities Act and
such state securities laws or (ii) the
Certificate Registrar is notified by such
transferee that such Certificate will be
registered in the name of the Clearing
Agency or its nominee and shall be held by
such transferee in book-entry form through
the Clearing Agency, and (II) such transfer
is to a Person that satisfies the requirements
of paragraph (a) (2) (i) or (a) (2) (ii) of Rule
3a-7 as then in effect or any successor rule
("Rule 3a-7") under the Investment
Company Act. Each prospective purchaser
of a non-registered Certificate not held in
book-entry form shall deliver a completed
and duly executed Transferee's Certificate in
the form of Exhibit K or L, as applicable, to
the Trustee and to the Seller for inspection
prior to effecting any requested transfer.
The Seller and the Trustee may rely
conclusively upon the information contained
in any such certificate in the absence of
knowledge to the contrary. In connection
with any transfer within three years from the
date of the initial issuance of the Certificates
(other than the transfer of any Certificate
that is or has become registered under the
Securities Act on or before such transfer or
any transfer of a Certificate held in book-
entry form), the Trustee shall (except in the
case of a transfer to a "qualified institutional
buyer") require an Opinion of Counsel to
the effect that such transfer may be effected
without registration under the Securities Act,
which Opinion of Counsel shall be addressed
to the Seller and the Trustee and shall be
secured at the expense of the Holder. Each
Certificate Owner shall be deemed to have
agreed to these restrictions on transfer.
(b) If an election is made to hold a
Certificate in book-entry form, the
Certificate shall be registered in the name of
a nominee designated by the Clearing
Agency (and may be aggregated as to
denominations with other Certificates held
by the Clearing Agency). With respect to
Certificates held in book-entry form:
(1) the Certificate
Registrar and the Trustee will be
entitled to deal with the Clearing
Agency for all purposes of this
Agreement (including the payment of
principal of and interest on the
Certificates and the giving of
instructions or directions hereunder)
as the sole Holder of the Certificates,
and shall have no obligation to the
Certificate Owners;
(2) the rights of
Certificate Owners will be exercised
only through the Clearing Agency
and will be limited to those
established by law and agreements
between such Certificate Owners and
the Clearing Agency and/or the
Clearing Agency Participants
pursuant to the Depository
Agreement;
(3) whenever this
Agreement requires or permits
actions to be taken based upon
instructions or directions of Holders
of Certificates evidencing a specified
percentage of the Outstanding
Amount of the Certificates, the
Clearing Agency will be deemed to
represent such percentage only to the
extent that it has received
instructions to such effect from
Certificate Owners and/or Clearing
Agency Participants owning or
representing, respectively, such
required percentage of the beneficial
interest in the Certificates and has
delivered such instructions to the
Trustee; and
(4) without the consent of
the Seller and the Trustee, no such
Certificate may be transferred by the
Clearing Agency except to a
successor Clearing Agency that
agrees to hold such Certificate for
the account of the Certificate Owners
or except upon the election of the
Certificate Owner thereof or a
subsequent transferee to hold such
Certificate in physical form.
Neither the Trustee nor the
Certificate Registrar shall have any
responsibility to monitor or restrict the
transfer of beneficial ownership in any
Certificate an interest in which is
transferable through the facilities of the
Clearing Agency.
The Seller shall cause each
Certificate to contain a legend stating that
transfer of the Certificates is subject to
certain restrictions and referring prospective
purchasers of the Certificates to this Section
7.03 with respect to such restrictions.
(c) No transfer of an ERISA-
Restricted Certificate (other than a
Certificate held in book-entry form) shall be
made to any Person unless the Trustee and
Seller have received (A) a certificate
(substantially in the form of Exhibit M)
from such transferee to the effect that such
transferee (i) is not a Plan or a Person that
is using the assets of a Plan to acquire such
Certificate or (ii) is an insurance company
investing assets of its general account and
the exemptions provided by Section III(a) of
Department of Labor Prohibited
Transactions Class Exemption 95-60, 60
Fed. Reg. 35925 (July 12, 1995) (the
"Exemptions") apply to the transferee's
acquisition and holding of any such
Certificate or (B) an opinion of counsel
satisfactory to the Trustee and the Seller to
the effect that the purchase and holding of
such Certificate will not constitute or result
in the assets of the Trust being deemed to be
"plan assets" subject to the prohibited
transactions provisions of ERISA or Section
4975 of the Code and will not subject the
Trustee or the Seller to any obligation in
addition to those undertaken in the
Agreement; provided, however, that the
Trustee will not require such certificate or
opinion in the event that, as a result of a
change of law or otherwise, counsel
satisfactory to the Trustee has rendered an
opinion to the effect that the purchase and
holding of a Certificate by a Plan or a
Person that is purchasing or holding such a
Certificate with the assets of a Plan will not
constitute or result in a prohibited
transaction under ERISA or Section 4975 of
the Code. Any Certificate Owners of a
Certificate held in book-entry form shall be
deemed to have made the representation in
clause (A) of this preceding sentence by its
acceptance of such Certificate. The
preparation and delivery of the certificate
and opinions referred to above shall not be
an expense of the Trust, the Trustee nor any
other party to the Agreement but shall be
borne by the Holder.
(d) The Certificates, until such time,
if at all, as they become registered under the
Securities Act, shall bear legends stating that
they have not been registered under the
Securities Act and are subject to the
restrictions on transfer described in Section
7.03(a). The Certificates shall additionally
bear legends stating that they are subject to
the restrictions on transfer described in
Section 7.03(c). By purchasing a
Certificate, each purchaser shall be deemed
to have agreed to these restriction on
transfer.
(e) The Holder of a Certificate
desiring to effect any transfer or assignment
shall, and the transferee of such Certificate
by purchasing such Certificate agrees to,
indemnify the Trustee and the Seller against
any liability that may result if the transfer or
assignment is not made in accordance with
the provisions of this Section 7.03 and
applicable federal and state securities laws.
(f) Upon surrender for registration
of transfer of any Certificate at the
Corporate Trust Office, the Trustee shall
execute, authenticate and deliver, in the
name of the designated transferee or
transferees, one or more new Certificates of
the same Class in authorized denominations
of a like aggregate principal amount.
(g) At the option of a Class A or
Class B Certificateholder, such holder's
Certificates may be exchanged for other
Certificates of the same Class in authorized
denominations of a like aggregate principal
amount, upon surrender of the Certificates
to be exchanged at any such office or
agency. Whenever any Certificates are so
surrendered for exchange the Trustee on
behalf of the Trust shall execute,
authenticate and deliver the Certificates that
the Certificateholder making the exchange is
entitled to receive.
(h) Every Certificate presented or
surrendered for registration of transfer or
exchange shall be accompanied by a written
instrument of transfer in form satisfactory to
the Trustee and the Certificate Registrar
duly executed by the Holder or his attorney
duly authorized in writing. Each Certificate
surrendered for registration of transfer and
exchange shall be cancelled and
subsequently disposed of by the Trustee.
(i) No service charge shall be made
to the Certificateholders for any registration
of transfer or exchange of Certificates, but
the Trustee may require payment of a sum
sufficient to cover any tax or governmental
charge that may be imposed in connection
with any transfer or exchange of
Certificates.
Section 7.04. Mutilated, Destroyed, Lost or
Stolen Certificates. If (a) any mutilated Certificate
shall be surrendered to the Certificate Registrar, or
if the Certificate Registrar shall receive evidence to
its satisfaction of the destruction, loss or theft of
any Certificate (provided that a Certificateholder's
written statement with respect to such destruction,
loss or theft shall constitute satisfactory evidence
thereof) and (b) there shall be delivered to the
Certificate Registrar and the Trustee such security
or indemnity as may be required by them to save
each of them harmless, then in the absence of notice
that such Certificate shall have been acquired by a
bona fide purchaser, the Trustee on behalf of the
Trust shall execute and the Trustee shall
authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor and
denomination. In connection with the issuance of
any new Certificate under this Section 7.04, the
Trustee and the Certificate Registrar may require
the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in
connection therewith. Any duplicate Certificate
issued pursuant to this Section 7.04 shall constitute
conclusive evidence of ownership in the Trust, as if
originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time.
Section 7.05. Persons Deemed Owners.
Prior to due presentation of a Certificate for
registration of transfer, the Trustee or the
Certificate Registrar may treat the Person in whose
name any Certificate shall be registered as the
owner of such Certificate for the purpose of
receiving distributions pursuant to Section 5.06 and
for all other purposes whatsoever, and neither the
Trustee nor the Certificate Registrar shall be bound
by any notice to the contrary.
Section 7.06. Access to List of
Certificateholders' Names and Addresses. The
Trustee shall furnish or cause to be furnished to the
Servicer, at the expense of the Trust, within 15
days after receipt by the Trustee of a request
therefor from the Servicer in writing, a list, in such
form as the Servicer may reasonably require, of the
names and addresses of the Certificateholders as of
the most recent Record Date. Each Holder, by
receiving and holding a Certificate, shall be deemed
to have agreed to hold neither the Servicer nor the
Trustee accountable by reason of the disclosure of
its name and address, regardless of the source from
which such information was derived.
Section 7.07. Maintenance of Office or
Agency. The Trustee shall maintain in
Minneapolis, Minnesota, or New York, New York,
an office or offices or agency or agencies where
Certificates may be surrendered for registration of
transfer or exchange and where notices and
demands to or upon the Trustee in respect of the
Certificates and this Agreement may be served.
The Trustee initially designates the Corporate Trust
Office as specified in this Agreement as its office
for such purposes. The Trustee shall give prompt
written notice to the Backup Servicer and to the
Certificateholders of any change in the location of
the Certificate Register or any such office or
agency.
Section 7.08. Notices to Certificateholders.
Whenever notice or other communication to the
Certificateholders is required under this Agreement,
the Trustee shall give all such notices and
communications specified herein to be given to
Holders of the Certificates at their respective
addresses as they appear in the Certificate Register.
ARTICLE VIII
THE SELLER
Section 8.01. Representations of Seller.
The Seller makes the following representations on
which the Trustee relies in accepting the
Receivables in trust and executing and
authenticating the Certificates on the Closing Date.
The representations speak as of the Closing Date,
but shall survive the pledge, transfer and
assignment of the Receivables to the Trustee in trust
for the benefit of the Certificateholders.
(a) Organization and Good
Standing. The Seller is a corporation duly
organized, validly existing and in good
standing under the laws of the State of
Delaware.
(b) Due Qualification. The
Seller is in good standing and duly qualified
to do business and has obtained all necessary
licenses and approvals in the States of
Delaware and New Jersey and all other
jurisdictions in which the ownership or lease
of property or the conduct of its business
shall require such qualifications, unless the
failure of the Seller to obtain such licenses
and approvals would have no material
adverse effect on the Seller's ability to fulfill
its obligations hereunder.
(c) Power and Authority. The
Seller has the power and authority to
execute and deliver this Agreement and to
carry out its terms; the Seller has full power
and authority to sell and assign the property
to be so sold and assigned to and deposited
with the Trustee as part of the Trust and
such sale and assignment is valid and
binding against the Seller and has been duly
authorized by the Seller by all necessary
action; and the execution, delivery and
performance of this Agreement have been
duly authorized by the Seller by all
necessary action and this Agreement is the
legal, valid and binding obligation of the
Seller, enforceable in accordance with its
terms. The Seller has duly executed and
delivered this Agreement and any other
agreements and documents necessary to
effectuate the transactions contemplated
hereby.
(d) No Violation. The
consummation of the transactions
contemplated by this Agreement and the
fulfillment of the terms hereof neither
conflict with, result in any breach of any of
the terms and provisions of, nor constitute
(with or without notice or lapse of time) a
default under, the certificate of incorporation
or bylaws of the Seller, or any indenture,
agreement, or other instrument to which the
Seller is a party or by which it shall be
bound; nor result in the creation or
imposition of any Lien upon any of its
properties pursuant to the terms of any such
indenture, agreement or other instrument
(other than this Agreement); nor violate any
law or, to the best of the Seller's
knowledge, any order, rule or regulation
applicable to the Seller of any court or of
any federal or State regulatory body,
administrative agency or other governmental
instrumentality having jurisdiction over the
Seller or its properties.
(e) No Proceedings. To the
Seller's knowledge, there are no proceedings
or investigations pending, or threatened,
before any court, regulatory body,
administrative agency, or other
governmental instrumentality having
jurisdiction over the Seller or its properties:
(i) asserting the invalidity of this
Agreement, the Purchase Agreement or the
Certificates; (ii) seeking to prevent the
issuance of the Certificates or the
consummation of any of the transactions
contemplated by the Purchase Agreement or
this Agreement; (iii) seeking any
determination or ruling that might materially
and adversely affect the performance by the
Seller of its obligations under, or the
validity or enforceability of, this Agreement,
the Purchase Agreement or the Certificates;
or (iv) relating to the Seller and which might
adversely affect the federal or State income
tax attributes of the Certificates.
(f) No Approvals. No
approval, authorization or other action by,
or filing with, any governmental authority of
the United States of America or any of the
States is required or necessary to
consummate the transactions contemplated
hereby, except as such as have been duly
obtained or made by the Closing Date.
Seller complies in all material respects with
all applicable laws, rules and orders with
respect to itself, its business and properties
and the Receivables; and Seller maintains all
applicable permits and certifications.
(g) Taxes. The Seller has filed
all federal, State, county, local and foreign
income, franchise and other tax returns
required to be filed by it through the date
hereof, and has paid all taxes reflected as
due thereon. There is no pending dispute
with any taxing authority that, if determined
adversely to the Seller, would result in the
assertion by any taxing authority of any
material tax deficiency, and the Seller has
no knowledge of a proposed liability for any
tax to be imposed upon the Seller's
properties or assets for which there is not an
adequate reserve reflected in the Seller's
current financial statements.
(h) Adequate Provisions for
Taxes. The provisions for taxes on the
Seller's books are in accordance with
generally accepted accounting principles.
(i) Pension/Profit Sharing
Plans. No contribution failure has occurred
with respect to any pension or profit sharing
plan to which the Seller or any of its
Affiliates is a contributor, and all such plans
have been fully funded as of the date of this
Agreement.
(j) Trade Names. "Aegis Auto
Funding Corp. IV" is the only trade name
under which the Seller is currently operating
its business and under which the Seller
operated its business for the period of time
during which the Seller was in existence
preceding the Closing Date.
(k) Ability to Perform. There
has been no material impairment in the
ability of Seller to perform its obligations
under this Agreement.
(l) Chief Executive Office.
Since it commenced operations, the Seller
has maintained its chief executive office in
the State of Delaware and there have been
no other locations of the Seller's chief
executive office preceding the Closing Date.
The Seller shall give written notice to the
Trustee and the Certificateholders at least 30
days prior to relocating its chief executive
office and shall make such filings under the
UCC as shall be necessary to maintain the
perfected, first priority security interest in
the Receivables granted hereunder in favor
of the Trust.
(m) Adverse Orders. There is
no injunction, writ, restraining order or
other order of any nature binding upon
Seller that adversely affects Seller's
performance of this Agreement and the
transactions contemplated thereby.
(n) Solvent. Seller is solvent
and will not become insolvent after giving
effect to the transactions contemplated
hereunder; Seller is paying its debts as they
become due; Seller, after giving effect to the
contemplated transactions, will have
adequate capital to conduct its business.
(o) Lock-Box Account. Each
Obligor of a Receivable has been, or will be
within 30 days of the Closing Date or
Funding Date when acquired, directed and is
required to remit payments to the Lock-Box
Account.
(p) Consolidation. Seller has
operated and will operate its business such
that its assets and liabilities will not be
substantively consolidated with the assets
and liabilities of Aegis Finance and its
separate existence will not be disregarded in
any state or federal court proceeding.
(q) Business Purpose. The
Seller will acquire and sell, transfer, assign
and otherwise convey (for state law, tax and
financial accounting purposes) the
Receivables for a bona fide business
purpose.
(r) Federal Income Tax
Purposes. The Seller intends to treat the
transactions contemplated under this
Agreement as a sale of the Receivables to
the Trust for federal income tax purposes,
subject to the retention by the Seller of a
stripped coupon therein as described in
Section 1286 of the Code. The Seller
intends to cause to be filed all returns or
reports in a manner consistent with such
treatment. In addition, the Seller intends to
treat each other trust created under the
Master Trust Agreement as an entity
separate from the Trust for federal income
tax purposes. Further, the Seller intends to
treat the Reserve Fund as property separate
from any interest in any trust the Seller may
acquire, including but not limited to any
interest in the Excess Receipts.
(s) Valid Transfer. The
Purchase Agreement constitutes a valid
transfer to the Seller of all of Aegis
Finance's right, title and interest in the
Receivables transferred to the Seller
pursuant to such Purchase Agreement.
(t) Seller's Obligations. The
Seller has submitted all necessary
documentation for payment of the
Receivables to the Obligors and has fulfilled
all of its applicable obligations hereunder
required to be fulfilled as of the Closing
Date.
(u) 1940 Act. The Seller is
not, and is not controlled by, an "investment
company" registered or required to be
registered under the Investment Company
Act of 1940, as amended.
Section 8.02. Liability of Seller;
Indemnities. The Seller shall be liable in
accordance herewith only to the extent of the
obligations specifically undertaken by the Seller
under this Agreement, and only to the extent of the
Seller's interest in the Trust Property.
(a) The Seller shall indemnify,
defend and hold harmless the Trustee, the
Trust, the Backup Servicer, the Custodian
and each Certificateholder from and against
any taxes, other than income and franchise
taxes, that may at any time be asserted
against the Trustee, the Trust, the Backup
Servicer, the Custodian or the
Certificateholders with respect to, and as of
the date of, the transfer of the Receivables
to the Trust or the issuance and original sale
of the Certificates, including any sales,
gross receipts, general corporation, tangible
personal property, privilege or license taxes
and costs and expenses in defending against
the same.
(b) The Seller shall assume,
defend and hold harmless the Trustee, the
Trust, the Backup Servicer, the Custodian
and each Certificateholder from and against
any loss, liability, expense or action, suit,
claim or damage incurred by reason of (i)
the Seller's willful misfeasance, bad faith or
negligence in the performance of its duties
under this Agreement, or by reason of
reckless disregard of its obligations and
duties under this Agreement (and such
indemnity shall extend to the performance of
the Seller's duties and the satisfaction of its
obligations with respect to any Receivables
that become Purchased Receivables, as
provided in this Agreement), (ii) the Seller's
violation of federal or State securities laws
in connection with the exemption from
registration of the sale of the Certificates,
and (iii) any transaction arising out of or
contemplated by this Agreement except any
loss, liability, expense, action, suit, claim or
damage arising out of the failure to pay
principal, premium, if any, or interest with
respect to the Certificates to the extent such
failure does not result from the Seller's
omission to comply with the terms of this
Agreement or acts of the Seller in
contravention of this Agreement.
The assumption of liability or
indemnification under this Section 8.02 shall
include, without limitation, reasonable fees and
expenses of counsel and expenses of litigation and
shall survive termination of this Agreement. If the
Seller shall have made any payments to the Trustee
pursuant to this Section and the Trustee thereafter
shall collect any of such amounts from others, the
Trustee shall repay such amounts to such party
without interest. Notwithstanding anything to the
contrary herein, the liability of the Seller under this
Section 8.02 is intended to be the same primary
liability as would apply to the general partner of a
limited partnership organized under the laws of the
State of Delaware. Potential creditors of the Trust
are intended beneficiaries of the assumption of
liabilities by the Seller under this Section 8.02 and
may enforce such assumption in accordance with its
tenor.
Section 8.03. Merger or Consolidation of,
or Assumption of the Obligations of, Seller. Any
Person (a) into which the Seller may be merged or
consolidated, (b) which may result from any merger
or consolidation to which the Seller shall be a party,
or (c) which may succeed to the properties and
assets of the Seller substantially as a whole, which
Person in any of the foregoing cases executes an
agreement of assumption to perform every
obligation of the Seller under this Agreement, shall
be the successor to the Seller hereunder without the
execution or filing of any document or any further
act by any of the parties to this Agreement;
provided, however, that (i) immediately after giving
effect to such transaction, no representation or
warranty or covenant made pursuant to Section 3.01
or Section 8.01 shall have been breached, no Event
of Servicing Default, and no event that, after notice
or lapse of time, or both, would become an Event
of Servicing Default shall have happened and be
continuing and the conditions of Section 8.07(a)(ii)
shall have been satisfied, (ii) the Seller shall have
delivered to the Trustee and each Certificateholder
an Officer's Certificate and an Opinion of Counsel,
which shall be independent outside counsel, each
stating that such consolidation, merger or
succession and such agreement or assumption
comply with this Section 8.03 and that all
conditions precedent, if any, provided for in this
Agreement relating to such transaction have been
complied with, (iii) the Seller shall have delivered
to the Trustee an Opinion of Counsel, which shall
be independent outside counsel, either (A) stating
that, in the opinion of such counsel, all financing
statements and continuation statements and
amendments thereto have been executed and filed
that are necessary fully to preserve and protect the
interest of the Trustee in the Receivables, and
reciting the details of such filings, or (B) stating
that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such
interest and (iv) the Major Certificateholders shall
have consented to such merger, consolidation or
succession. The Seller shall provide notice of any
merger, consolidation or succession pursuant to this
Section 8.03 to each Certificateholder.
Notwithstanding anything herein to the contrary, the
execution of the foregoing agreement of assumption
and compliance with clauses (i), (ii), (iii) and (iv)
above shall be conditions to the consummation of
the transactions referred to in clauses (a), (b) or (c)
above.
Section 8.04. Limitation on Liability of
Seller and Others. The Seller and any director or
officer or employee or agent of the Seller may rely
in good faith on the written advice of counsel or on
any document of any kind, prima facie properly
executed and submitted by any Person respecting
any matters arising hereunder.
Section 8.05. Seller May Own Certificates.
The Seller and any Affiliate of the Seller may in its
individual or any other capacity become the owner
or pledgee of Certificates with the same rights as it
would have if it were not the Seller or an Affiliate
thereof, except as otherwise provided in the
definition of "Certificateholder" in Section 1.01.
Certificates so owned by or pledged to the Seller or
such Affiliate shall have an equal and proportionate
benefit under the provisions of this Agreement,
without preference, priority or distinction as among
all of the Certificates, other than with respect to
Voting Interests. Notwithstanding the foregoing,
the Seller will not, and will not permit any of their
Affiliates (or any Person acting on behalf of the
Seller or any such Affiliate) to directly or indirectly
acquire or make any offer to acquire any
Certificates unless the Seller or such Affiliate (or
such Person acting on behalf thereof) shall have
offered to acquire Certificates, pro rata, from all
Holders and upon the same terms.
Section 8.06. Covenants of the Seller. The
Seller shall:
(a) not impair the rights of the
Certificateholders or the Trustee in the
Receivables;
(b) except for the sale and
assignment effected under this Agreement
and prior to the termination of the Trust, not
sell, pledge, assign, or transfer to any other
Person, or grant, create, incur, assume, or
suffer to exist any Lien on any Receivable
sold to the Trustee or any interest therein;
(c) immediately notify the
Trustee of the existence of any Lien on any
Receivable;
(d) defend the right, title, and
interest of the Trustee in, to, and under the
Receivables transferred to the Trustee,
against all claims of third parties claiming
through or under the Seller, Aegis Finance
or the Servicer;
(e) make at its sole cost and
expense any filings, reports, notices,
applications, registrations with, and seek any
consents or authorizations from, the
Securities and Exchange Commission and
any state securities authority on behalf of the
Trust as may be necessary or advisable or
reasonably requested by the Trustee, and
shall comply with any federal or State
securities or reporting requirements laws;
(f) comply in all respects with
the terms and conditions of the Purchase
Agreement and not amend, modify, or
waive any provision of the Purchase
Agreement in any manner relating to the
obligation of Aegis Finance to repurchase
Receivables or in any manner that would
have a materially adverse effect on the
interests of the Certificateholders;
(g) promptly after receipt of
knowledge thereof, notify the Trustee and
the Certificateholders of the occurrence of
any Event of Backup Servicing Default or
Event of Servicing Default and any breach
by the Seller or the Backup Servicer of any
of its respective covenants or representations
and warranties contained in this Agreement
or, with respect to the Seller, in the
Purchase Agreement;
(h) make at its sole cost and
expense any filings, reports, notices, or
applications and seek any consents or
authorizations from any and all government
agencies, tribunals, or authorities in
accordance with the UCC and any State
vehicle license or registration authority on
behalf of the Trust as may be necessary or
advisable or reasonably requested by the
Trustee to create, maintain and protect a
first-priority perfected security interest of
the Trust in, to, and on the Financed
Vehicles and a first-priority perfected
ownership interest of the Trust in, to, and
on the Receivables transferred to it;
(i) upon request of any
Certificateholder, furnish the information
required by paragraph (d)(4) of Rule 144A
promulgated under the Securities Act.
Section 8.07. Enforcement by Trustee.
The Seller hereby acknowledges and agrees that the
following covenants and agreements of the Seller
shall be enforceable by the Trustee at all times until
the Trust is terminated.
(a) Covenants Regarding
Operations:
(i) The Seller shall not
engage in any business or activity
other than in connection with or
relating to the purchase of auto loan
receivables and the issuance of debt
secured by, or certificates of
participation in, a pool of auto loan
receivables.
(ii) The Seller shall not
consolidate or merge with or into any
other entity or convey or transfer its
properties and assets substantially as
an entirety to any entity unless (A)
the entity (if other than the Seller)
formed or surviving such
consolidation or merger, or that
acquires by conveyance or transfer
the properties and assets of the Seller
substantially as an entirety, shall be
organized and existing under the
laws of the United States of America
or any State thereof or the District of
Columbia, and shall expressly
assume in form satisfactory to the
Majority Certificateholders, the
performance of every covenant on
the part of the Seller to be performed
or observed pursuant to this
Agreement and the Purchase
Agreement, (B) immediately after
giving effect to such transaction, no
default or event of default under this
Agreement shall have occurred and
be continuing, (C) the Seller shall
have delivered to each
Certificateholder and the Trustee an
Officers' Certificate and an opinion
of independent counsel, each stating
that such consolidation, merger,
conveyance or transfer comply with
this Agreement and (D) the Majority
Certificateholders shall have
consented thereto.
(iii) The Seller shall not
dissolve or liquidate, in whole or in
part, except (A) as permitted in
paragraph (ii) above or (B) with the
prior written consent of the Trustee
and the Majority Certificateholders.
(iv) The funds and other
assets of the Seller shall not be
commingled with those of any other
corporation, entity or Person,
including, but not limited to, the
parent or Affiliates of the Seller.
(v) The Seller shall not
hold itself out as being liable for the
debts of any other party, including,
but not limited to, the debts of the
parent or Affiliates of the Seller.
(vi) The Seller shall not
form, or cause to be formed, or
otherwise have, any subsidiaries.
(vii) The Seller shall act
solely in its corporate name and
through the duly authorized officers
or agents in the conduct of its
business, and shall conduct its
business so as not to mislead others
as to the identity of the entity with
which they are concerned.
(viii) At all times, except
in the case of a temporary vacancy,
which shall promptly be filled, the
Seller shall have on its board of
directors at least two directors each
of whom qualifies as an
"Independent Director" as such term
is defined in the Seller's Certificate
of Incorporation as originally filed
with the Delaware Secretary of
State's office.
(ix) The Seller shall
maintain records and books of
account of the Seller and shall not
commingle such records and books
of account with the records and
books of account of any Person.
The books of the Seller may be kept
(subject to any provision contained in
the statutes) inside or outside the
State of New Jersey at such place or
places as may be designated from
time to time by the board of
directors of the Seller.
(x) The board of directors
of the Seller shall hold appropriate
meetings to authorize all of its
corporate actions. Regular meetings
of the board of directors of the Seller
shall be held not less frequently than
three times per annum.
(xi) Meetings of the
shareholders of the Seller shall be
held not less frequently than one time
per annum.
(xii) The Seller shall not
amend, alter, change or repeal any
provision contained in this
Section 8.07(a) without (A) the
affirmative vote in favor thereof of
eighty percent (80%) of the then
outstanding shares of the Seller
entitled to vote thereon and (B) the
prior written consent of the Trustee
and the Majority Certificateholders.
(xiii) The Seller shall not,
without the affirmative unanimous
vote of the whole board of directors
of the Seller (including at least one
director referred to in clause (viii)
above), institute any proceedings to
adjudicate the Seller a bankrupt or
insolvent, consent to the institution
of bankruptcy or insolvency
proceedings against the Seller, file a
petition seeking or consenting to
reorganization or relief under any
applicable federal or State law
relating to bankruptcy, consent to the
appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or
other similar official) of the Seller or
a substantial part of its property or
admit its inability to pay its debts
generally as they become due or
authorize any of the foregoing to be
done or taken on behalf of the Seller.
(xiv) The Seller is not and
shall not be involved in the day-to-
day or other management of its
parent or any of its Affiliates.
(xv) Other than the
purchase and sale or pledge of assets
as provided in this Agreement and
related agreements with respect to
this transaction and other transactions
relating to the purchase of auto loan
receivables and the issuance of debt
or certificates of participation as
contemplated by the Master Trust
Agreement, the Seller shall engage in
no other transactions with any of its
Affiliates.
(xvi) Seller shall maintain a
separate business office and
telephone number from any of its
Affiliates.
(xvii) Seller's financial
statements shall reflect its separate
legal existence from any of its
Affiliates.
(xviii) The Seller will not
amend its Certificate of Incorporation
in any respect material to the
Certificateholders.
(xix) The Seller shall use
separate invoices, stationery and
checks.
(xx) The Seller shall not
suffer or permit the credit or assets
of Aegis Finance to be held out as
available for the obligations of the
Seller.
(xxi) The Seller shall enter
into transactions with Aegis Finance
or its affiliates only on commercially
reasonable terms.
(xxii) The Seller shall not
incur or issue any "Obligation" (as
such term is defined in its Certificate
of Incorporation) in contravention of
the limitations set forth therein.
(xxiii) The Seller shall not
issue any "Securities" or incur or
issue any "Obligations" (as such
terms are defined in its Certificate of
Incorporation) under any other
pooling and servicing agreement,
purchase agreement or otherwise,
unless such agreement contains an
express provision substantially
similar to Section 13.10 hereof
limiting recourse to the Seller to the
assets involved in the transaction to
which such agreement relates.
(xxiv) The Seller will
maintain its valid corporate existence
in good standing under the laws of
the State of Delaware; (ii) will
observe all corporate procedures
required by its Certificate of
Incorporation and Bylaws (the
"Bylaws") and the laws of the State
of Delaware; and (iii) and will
otherwise comply with the provisions
of its Certificate of Incorporation and
Bylaws and the Delaware General
Corporation Law.
(xxv) Financial and
operational services, including,
without limitation, maintenance of
the Seller's books and records, will
be performed on behalf of the Seller
by independent contractors. The
Seller will make payments to such
independent contractors for such
services rendered or expenses
incurred on its behalf in an amount
equal to the fair value of such
services and expenses. To the extent
the Seller leases premises from Aegis
Finance or its Affiliates, the Seller
will pay appropriate compensation or
rental. The Seller will be directly
responsible for the costs of outside
legal, auditing and other similar
services. The Seller will provide for
its operating expenses and liabilities
from its own funds.
(xxvi) The annual financial
statements of the Seller will disclose
the effects of these transactions in
accordance with generally accepted
accounting principles. Any
consolidated financial statements
which consolidate the assets and
earnings of Aegis Finance with those
of the Seller will contain a footnote
stating that the assets of Aegis
Finance will not be available to
creditors of Seller. Audited financial
statements of the Seller will disclose
that the assets of the Seller are not
available to pay creditors of Aegis
Finance.
Section 8.08. No Bankruptcy Petition. The
Seller covenants and agrees that prior to the date
which is one year and one day after the payment in
full of all securities issued by the Seller or by a
trust for which the Seller was the depositor, which
securities were rated by any nationally recognized
statistical rating organization, it will not institute
any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other
proceedings under any federal or State bankruptcy
or similar law.
ARTICLE IX
THE BACKUP SERVICER
Section 9.01. Representations of Backup
Servicer. The Backup Servicer makes the following
representations on which the Trustee relies in
accepting the Receivables in trust and executing and
authenticating the Certificates on the Closing Date.
The representations speak as of the Closing Date,
but shall survive the sale and assignment of the
Receivables to the Trustee in trust for the benefit of
the Certificateholders.
(a) Organization and Good
Standing. The Backup Servicer shall have
been duly organized and shall be validly
existing and in good standing under the
federal laws of the United States of
America, with power and authority to own
its properties and to conduct its business as
such properties shall be currently owned and
such business is presently conducted.
(b) Power and Authority. The
Backup Servicer shall have the power and
authority to execute and deliver this
Agreement and the Servicing Agreement and
to carry out their respective terms; and the
execution, delivery and performance of this
Agreement and the Servicing Agreement
shall have been duly authorized by the
Backup Servicer by all necessary corporate
action. Each of this Agreement and the
Servicing Agreement constitutes the valid
and binding obligation of the Backup
Servicer enforceable in accordance with its
terms.
(c) No Violation. The
consummation of the transactions by the
Backup Servicer contemplated by this
Agreement and the Servicing Agreement and
the fulfillment of the terms hereof and
thereof neither conflict with, result in any
breach of any of the terms and provisions
of, nor constitute (with or without notice or
lapse of time) a default under, the charter or
bylaws of the Backup Servicer, or, to the
best of the Backup Servicer's knowledge,
any indenture, agreement or other
instrument to which the Backup Servicer is
a party or by which it is bound; nor result in
the creation or imposition of any Lien upon
any of its properties pursuant to the terms of
any such indenture, agreement or other
instrument (other than this Agreement and
the Servicing Agreement); nor to the best of
the Backup Servicer's knowledge, any law,
order, rule or regulation applicable to the
Backup Servicer of any court or of any
federal or state regulatory body,
administrative agency, or other
governmental instrumentality having
jurisdiction over the Backup Servicer or its
properties.
(d) No Proceedings. To the
Backup Servicer's best knowledge, there are
no proceedings or investigations pending, or
threatened, before any court, regulatory
body, administrative agency or other
governmental instrumentality having
jurisdiction over the Backup Servicer or its
respective properties: (A) asserting the
invalidity of this Agreement or the Servicing
Agreement; (B) seeking to prevent the
consummation of any of the transactions
contemplated by this Agreement or the
Servicing Agreement; or (C) seeking any
determination or ruling that might materially
and adversely affect the performance by the
Backup Servicer of its obligations under, or
the validity or enforceability of, this
Agreement or the Servicing Agreement.
Section 9.02. Merger or Consolidation of,
or Assumption of the Obligations of, or
Resignation of Backup Servicer. Any Person (a)
into which the Backup Servicer may be merged or
consolidated, (b) which may result from any merger
or consolidation to which the Backup Servicer shall
be a party, (c) which may succeed to the properties
and assets of the Backup Servicer substantially as a
whole, or (d) which may succeed to the duties and
obligations of the Backup Servicer under this
Agreement and the Servicing Agreement following
the resignation of the Backup Servicer, whether or
not such Person executes an agreement of
assumption to perform every obligation of the
Backup Servicer hereunder and thereunder, shall be
the successor to the Backup Servicer under this
Agreement and the Servicing Agreement without
further act on the part of any of the parties to this
Agreement or the Servicing Agreement.
Section 9.03. Limitation on Liability of
Backup Servicer and Others. Neither the Backup
Servicer nor any of the directors or officers or
employees or agents of the Backup Servicer shall be
under any liability to the Trust or the
Certificateholders, except as provided under this
Agreement, for any action taken or for refraining
from the taking of any action pursuant to this
Agreement; provided, however, that this provision
shall not protect the Backup Servicer or any such
Person against any liability that would otherwise be
imposed by reason of willful misfeasance, bad faith
or negligence in the performance of duties or by
reason of reckless disregard of obligations and
duties under this Agreement. The Backup Servicer
and any director or officer or employee or agent of
the Backup Servicer may rely in good faith on any
document of any kind prima facie properly executed
and submitted by any Person respecting any matters
arising under this Agreement.
Except as provided in this Agreement, the
Backup Servicer shall not be under any obligation
to appear in, prosecute or defend any legal action
that shall not be incidental to its duties under this
Agreement and the Servicing Agreement, and that
in its opinion may involve it in any expense or
liability; provided, however, that the Backup
Servicer may undertake any reasonable action that
it may deem necessary or desirable in respect of
this Agreement and the Servicing Agreement and
the rights and duties of the parties to this
Agreement and the Servicing Agreement and the
interests of the Certificateholders under this
Agreement and the Servicing Agreement. In such
event, the legal expenses and costs of such action
and any liability resulting therefrom shall be
expenses, costs and liabilities of the Trust and the
Backup Servicer shall be entitled to be reimbursed
therefor.
The Trustee shall distribute out of the
Collection Account on the Distribution Date
succeeding the delivery of the Opinion of Counsel
referred to below, without regard to any
deficiencies in the amounts required to be
distributed pursuant to Section 5.06, any expenses,
costs or liabilities required from the Trust pursuant
to this Section 9.03, provided, however, that the
Trustee shall only distribute amounts pursuant to
this Section 9.03 upon the Trustee's receipt of an
Opinion of Counsel to the effect that such
distribution is permitted by this Agreement.
Section 9.04. Successor Backup Servicer.
The Backup Servicer under this Agreement shall at
all times be a corporation or a banking association
organized and existing in good standing under the
laws of the United States or a state thereof; having
a combined capital and surplus not less than
$50,000,000 and subject to supervision or
examination by federal or state authorities. If such
association or corporation shall publish reports of
condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or
examining authority, then for the purpose of this
Section 9.04, the combined capital and surplus of
such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent
report of condition so published. In case at any
time the Backup Servicer shall cease to be eligible
in accordance with the provisions of this Section
9.04, or shall cease to be an Eligible Servicer, the
Backup Servicer shall resign immediately in the
manner and with the effect specified in Section
4.02.
Section 9.05. No Bankruptcy Petition. The
Backup Servicer covenants and agrees that prior to
the date which is one year and one day after the
payment in full of all securities issued by the Seller
or by the Trust it will not institute against, or join
any other Person in instituting against, the Seller
any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other
proceedings under any federal or state bankruptcy
or similar law; provided, however, that nothing
contained herein shall prohibit the Backup Servicer
from participating in any existing bankruptcy
proceeding.
ARTICLE X
BACKUP SERVICING DEFAULT
Section 10.01. Events of Backup Servicing
Default. If any one of the following events
("Events of Backup Servicing Default") shall occur
and be continuing:
(a) Failure on the part of the
Backup Servicer duly to observe or to
perform in any material respect any
covenant or agreement of the Backup
Servicer set forth in this Agreement or the
Servicing Agreement, which failure shall (i)
materially and adversely affect the rights of
Certificateholders and (ii) continue
unremedied for a period of 30 days after the
date on which written notice of such failure,
requiring the same to be remedied, shall
have been sent (A) to the Backup Servicer
by the Trustee, or (B) to the Backup
Servicer and to the Trustee by the Holders
of Certificates evidencing not less than 20%
of the Voting Interests thereof; or
(b) The entry of a decree or order
by a court or agency or supervisory
authority having jurisdiction in the premises
for the appointment of a conservator,
receiver or liquidator for the Backup
Servicer in any insolvency, readjustment of
debt, marshalling of assets and liabilities or
similar proceedings, or for the winding up
or liquidation of its affairs, and the
continuance of any such decree or order
unstayed and in effect for a period of 30
consecutive days; or
(c) The consent by the Backup
Servicer to the appointment of a conservator
or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets
and liabilities or similar proceedings of or
relating to the Backup Servicer or of or
relating to substantially all of its property;
or the Backup Servicer shall admit in
writing its inability to pay its debts generally
as they become due, file a petition to take
advantage of any applicable insolvency or
reorganization statute, make an assignment
for the benefit of its creditors or voluntarily
suspend payment of its obligations;
then, and in each and every case, so long as an
Event of Backup Servicing Default shall not have
been remedied, either the Trustee, or the Holders of
the Certificates evidencing not less than 20% of the
Voting Interests thereof, by notice then given in
writing to the Backup Servicer (and to the Trustee
if given by the Certificateholders) may terminate all
of the rights and obligations of the Backup Servicer
under this Agreement. Thirty (30) days after the
receipt by the Backup Servicer of such written
notice, all authority and power of the terminated
Backup Servicer under this Agreement, whether
with respect to the Certificates or the Receivables
or otherwise, shall, without further action, pass to
and be vested in the Trustee if the Trustee is not the
same entity as the terminated Backup Servicer and
a successor Backup Servicer has not been appointed
under Section 10.02. The Trustee is hereby
authorized and empowered to execute and deliver,
on behalf of the predecessor Backup Servicer, as
attorney in fact or otherwise, any and all documents
and other instruments, and to do or accomplish all
other acts or things necessary or appropriate to
effect the purposes of such notice of termination.
The predecessor Backup Servicer shall cooperate
with the successor Backup Servicer and the Trustee
in effecting the termination of the responsibilities
and rights of the predecessor Backup Servicer under
this Agreement.
Section 10.02. Appointment of Successor.
(a) Upon a Backup Servicer's
receipt of notice of termination pursuant to
Section 10.01 or a Backup Servicer's
resignation in accordance with Section 4.02,
the predecessor Backup Servicer shall
continue to perform its functions as Backup
Servicer under this Agreement until receipt
of such notice and, in the case of
resignation, until a successor Backup
Servicer shall have assumed the duties of the
Backup Servicer in accordance with this
Section 10.02. In the event of a Backup
Servicer's termination hereunder, the
Trustee (with the consent of the Majority
Certificateholders) shall appoint a successor
Backup Servicer, and the successor Backup
Servicer shall accept its appointment by a
written assumption in form acceptable to the
Trustee. In the event that a successor
Backup Servicer has not been so appointed
(i) within 45 days of delivery of notice of
termination, or (ii) within 30 days of
resignation, the Trustee may petition a court
of competent jurisdiction to appoint any
established institution, having a combined
capital and surplus of not less than
$50,000,000 and which is an Eligible
Servicer, as the successor to the Backup
Servicer under this Agreement.
(b) Upon appointment, the
successor Backup Servicer shall be the
successor in all respects to the predecessor
Backup Servicer and shall be subject to all
the responsibilities, duties and liabilities
arising thereafter relating thereto placed on
the predecessor Backup Servicer, including,
but not limited to, the assumption by the
Backup Servicer of all duties and obligations
of the Servicer in the event of an Event of
Servicing Default with respect to the
Servicer under the Servicing Agreement
pursuant to the terms therein and shall be
entitled to all of the rights granted to the
predecessor Backup Servicer, by the terms
and provisions of this Agreement.
(c) The outgoing Backup Servicer
shall deliver to the successor Backup
Servicer all documents and records in its
possession which are necessary to enable the
successor Backup Servicer to perform its
duties relating to the Servicing Agreement
and the Receivables and otherwise use its
best efforts to effect the orderly and efficient
transfer of the Servicing Agreement to the
successor Backup Servicer.
Section 10.03. Notification to
Certificateholders. Upon any termination of, or
appointment of a successor to, a Backup Servicer
pursuant to this Article X, the Trustee shall give
prompt written notice thereof to Certificateholders
at their respective addresses appearing in the
Certificate Register.
Section 10.04. Waiver of Past Defaults.
The Majority Certificateholders (or, in the case of
a default referred to in Section 10.01(a), the
Holders of Certificates evidencing 100% of the
Voting Interests thereof) may, on behalf of all
Holders of Certificates, waive any default by the
Backup Servicer in the performance of its
obligations hereunder and its consequences. Upon
any such waiver of a past default, such default shall
cease to exist, and any Event of Backup Servicing
Default arising therefrom shall be deemed to have
been remedied for every purpose of this Agreement.
No such waiver shall extend to any subsequent or
other default or impair any right consequent
thereon.
ARTICLE XI
THE TRUSTEE
Section 11.01. Duties of Trustee. The
Trustee, both prior to the occurrence of an Event of
Backup Servicing Default and after an Event of
Backup Servicing Default shall have been cured or
waived, shall undertake to perform only such duties
as are specifically set forth in this Agreement. If
an Event of Backup Servicing Default shall have
occurred and shall not have been cured or waived,
the Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and shall use
the same degree of care and skill in their exercise,
as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs;
provided, however, that if the Trustee shall assume
the duties of a Backup Servicer pursuant to Section
10.02, the Trustee shall perform such duties in
accordance with Section 4.06. If the Trustee is
uncertain with respect to performing its duties or if
a conflict arises regarding the Trustee's rights,
duties and obligations, the Trustee may petition a
court of competent jurisdiction for written direction
or to interplead necessary parties. Notwithstanding
anything in this Agreement to the contrary, neither
the Trustee nor the Backup Servicer shall have any
authority to perform any act which would cause the
Trust to be characterized as an association taxable
as a corporation for federal income tax purposes.
The Trustee, upon receipt of all resolutions,
certificates, statements, opinions, reports,
documents, orders or other instruments furnished to
the Trustee that shall be specifically required to be
furnished pursuant to any provision of this
Agreement, shall examine them to determine
whether they conform as to form to the
requirements of this Agreement; provided,
however, in the absence of bad faith on its part, the
Trustee can assume the truth and accuracy of the
statements made therein and the genuineness of the
signatures thereon.
The Trustee shall take and maintain custody
of the Schedule of Receivables included as an
exhibit to this Agreement and shall retain all
Monthly Servicing Certificates identifying
Receivables that become Purchased Receivables and
Liquidated Receivables.
The Trustee shall give written notice to the
Certificateholders, the Seller and Aegis Finance of
the occurrence, to its actual knowledge, which
notice shall be given within three (3) Business
Days' of the Trustee's receipt of actual knowledge
thereof, of any waiver of or any action taken to
cure (i) any default, breach, violation or event
permitting acceleration under the terms of any
Receivable; (ii) any continuing condition that with
notice or the lapse of time would constitute a
default, breach, violation or event permitting
acceleration under the terms of any Receivable; (iii)
any default or delinquency under the terms of any
Receivable that remained uncured for more than
thirty (30) days after notice to the Seller; or (iv)
any event which constitutes or with notice or the
lapse of time would constitute an Event of Backup
Servicing Default or Event of Servicing Default.
The Trustee shall give written notice to each
Certificateholder promptly upon receipt of a notice
from the Backup Servicer pursuant to Section 4.02
hereof or from the Servicer pursuant to paragraph
IV.F.1 of the Servicing Agreement or the Seller
pursuant to Section 8.06(g) hereof of an event
which with the giving of notice or the lapse of time,
or both, would constitute an Event of Backup
Servicing Default or an Event of Servicing Default.
No provision of this Agreement shall be
construed to relieve the Trustee from liability for its
own negligent action, its own negligent failure to
act or its own bad faith; provided, however, that:
(a) Prior to the occurrence of an
Event of Backup Servicing Default, and
after the curing or waiving of all such
Events of Backup Servicing Default that
may have occurred, the duties and
obligations of the Trustee shall be
determined solely by the express provisions
of this Agreement, the Trustee shall not be
liable except for the performance of such
duties and obligations as shall be specifically
set forth in this Agreement, no implied
covenants or obligations shall be read into
this Agreement against the Trustee and, in
the absence of bad faith on the part of the
Trustee, the Trustee may conclusively rely
on the truth of the statements and the
correctness of the opinions expressed upon
any certificates or opinions furnished to the
Trustee and conforming as to form to the
requirements of this Agreement;
(b) The Trustee shall not be liable
for an error of judgment made in good faith
by a Trustee Officer, unless it shall be
proved that the Trustee shall have been
negligent in ascertaining the pertinent facts;
(c) The Trustee shall not be liable
with respect to any action taken, suffered or
omitted to be taken in good faith in
accordance with this Agreement or at the
direction of the Holders of Certificates
evidencing not less than 20% of the Voting
Interests thereof relating to the time, method
and place of conducting any proceeding for
any remedy available to the Trustee, or
exercising any trust or power conferred
upon the Trustee, under this Agreement;
(d) The Trustee shall not be
charged with knowledge of any failure by
the Backup Servicer (so long as the Trustee
is not the Backup Servicer) or the Servicer
to comply with the obligations, covenants or
representations or warranties of the Backup
Servicer or the Servicer under this
Agreement or the Servicing Agreement, as
the case may be, or of any failure by the
Seller to comply with the obligations,
covenants or representations or warranties of
the Seller under this Agreement, unless a
Trustee Officer assigned to the Trustee's
Corporate Trust Department obtains actual
knowledge of such failure (it being
understood that, so long as the Trustee is
not the Backup Servicer, knowledge of the
Backup Servicer is not attributable to the
Trustee) or the Trustee receives written
notice of such failure from the Backup
Servicer, Servicer or the Seller, as the case
may be, or any Holder of Certificates; and
(e) Without limiting the generality
of this Section or Section 11.04, the Trustee
(except if also serving as the Backup
Servicer and the duties of the Backup
Servicer require such) shall have no duty (i)
to see to any recording, filing or depositing
of this Agreement or any agreement referred
to therein or any financing statement or
continuation statement evidencing a security
interest in the Receivables or the Financed
Vehicles, or to see to the maintenance of
any such recording or filing or depositing or
to any rerecording, refiling or redepositing
of any thereof, (ii) to see to any insurance
of the Financed Vehicles or Obligors or to
effect or maintain any such insurance, (iii)
to see to the payment or discharge of any
tax, assessment or other governmental
charge or any Lien or encumbrance of any
kind owing with respect to, assessed or
levied against, any part of the Trust, (iv) to
confirm or verify the contents of any reports
or certificates of the Servicer delivered to
the Trustee pursuant to this Agreement or
the Servicing Agreement believed by the
Trustee to be genuine and to have been
signed or presented by the proper party or
parties or (v) to inspect the Financed
Vehicles at any time or ascertain or inquire
as to the performance or observance of any
of the Seller's or the Servicer's
representations, warranties or covenants or
the Servicer's duties and obligations as
Servicer under this Agreement and the
Servicing Agreement.
The Trustee shall not be required to expend
or risk its own funds or otherwise incur financial
liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or
powers, if it believes in its sole discretion that the
repayment of such funds or adequate indemnity
against such risk or liability shall not be reasonably
assured to it, and none of the provisions contained
in this Agreement or the Servicing Agreement shall
in any event require the Trustee to perform, or be
responsible for the manner of performance of, any
of the obligations of the Servicer, the Backup
Servicer or a Servicer under this Agreement or the
Servicing Agreement, as the case may be.
Section 11.02. Trustee's Certificate. On or
as soon as practicable after each Distribution Date
on which Receivables shall be assigned to the Seller
pursuant to Section 3.02, the Trustee shall execute
a Trustee's Certificate (in the form of Exhibit R),
based on the information contained in the Monthly
Servicing Certificate for the related Collection
Period, amounts deposited to the Certificate
Account and notices received pursuant to this
Agreement, identifying the Receivables repurchased
by the Seller pursuant to Section 3.02 during such
Collection Period, and shall deliver such Trustee's
Certificate, accompanied by a copy of the Monthly
Servicing Certificate for such Collection Period to
the Seller. The Trustee's Certificate submitted with
respect to such Distribution Date shall operate, as
of such Distribution Date, as an assignment,
without recourse, representation or warranty, to the
Seller, of all the Trustee's right, title and interest in
and to such repurchased Receivable, and all security
and documents relating thereto, such assignment
being an assignment outright and not for security.
Section 11.03. [Reserved]
Section 11.04. Certain Matters Affecting
Trustee. Except as otherwise provided in Section
11.01:
(a) The Trustee may rely and
shall be protected in acting or refraining
from acting upon any resolution, Officer's
Certificate, Monthly Servicing Certificate,
certificate of auditors or any other
certificate, statement, instrument, opinion,
report, notice, request, consent, order,
appraisal, bond or other paper or document
believed by it to be genuine and to have
been signed or presented by the proper party
or parties.
(b) The Trustee may consult with
counsel and any written Opinion of Counsel
shall be full and complete authorization and
protection in respect of any action taken or
suffered or omitted by it under this
Agreement in good faith and in accordance
with such written Opinion of Counsel.
(c) The Trustee shall be under no
obligation to exercise any of the rights or
powers vested in it by this Agreement, or to
institute, conduct or defend any litigation
under this Agreement or in relation to this
Agreement, at the request, order or direction
of any of the Certificateholders pursuant to
the provisions of this Agreement, unless
such Certificateholders shall have offered to
the Trustee security or indemnity,
reasonably satisfactory to the Trustee,
against the costs, expenses and liabilities
that may be incurred therein or thereby.
(d) The Trustee shall not be liable
for any action taken, suffered or omitted by
it in good faith and believed by it to be
authorized or within the discretion or rights
or powers conferred upon it by this
Agreement.
(e) Except as expressly provided
herein, the Trustee shall not be bound to
make any investigation into the facts of
matters stated in any resolution, certificate,
statement, instrument, opinion, report,
notice, request, consent, order, approval,
bond or other paper or document, unless
requested in writing so to do by Holders of
Certificates evidencing not less than 20% of
the Voting Interests thereof; provided,
however, that the Trustee may require
reasonable indemnity against any cost,
expense or liability as a condition to so
proceeding at the direction of the
Certificateholders.
(f) Subject to the limitations
herein, the Trustee may execute any of the
trusts or powers hereunder or perform any
duties under this Agreement either directly
or by or through agents or attorneys or a
custodian. The Trustee shall not be
responsible for any misconduct or
negligence of any such agent or custodian
appointed with due care by it hereunder or
of the Servicer in its capacity as Servicer.
The Trustee may act upon the opinion or
advice of accountants, engineers or such
other professionals as the Trustee deems
necessary and selected by it in the exercise
of reasonable care, and the Trustee may pay
reasonable compensation and shall be
entitled to reimbursement hereunder for such
compensation paid to such professionals,
which fee shall be considered an expense of
the Trustee to be paid pursuant to
Section 5.06(d)(i).
(g) Subsequent to the sale of the
Receivables by the Seller to the Trust, the
Trustee shall have no duty of independent
inquiry, and the Trustee may rely upon the
representations and warranties and covenants
of the Seller and the Servicer contained in
this Agreement and the Servicing Agreement
with respect to the Receivables.
Section 11.05. Trustee Not Liable for
Certificates or Receivables. The recitals contained
herein and in the Certificates (other than the
certificate of authentication on the Certificates) shall
be taken as the statements of the Seller, and the
Trustee assumes no responsibility for the
correctness thereof. The Trustee shall make no
representations as to the validity or sufficiency of
this Agreement, the Trust Property or of the
Certificates (other than the certificate of
authentication on the Certificates), or of any
Receivable or related document or the validity,
genuineness or originality of any document
delivered to the Trustee in its capacity as
Custodian. The Trustee shall at no time have any
responsibility or liability for or with respect to the
legality, validity and enforceability of any security
interest in any Financed Vehicle or any Receivable,
or the perfection and priority of such a security
interest or the maintenance of any such perfection
and priority, or for or with respect to the efficacy
of the Trust or its ability to generate the payments
to be distributed to Certificateholders under this
Agreement, including, without limitation: the
existence, condition, location and ownership of any
Financed Vehicle; the review of any Servicer File
or Custodian File therefor; the existence and
enforceability of any physical damage insurance
thereon; the existence and contents of any
Receivable or any Servicer File or Custodian File
or any computer or other record thereof; the
validity of the assignment of any Receivable to the
Trust or of any intervening assignment; the
completeness of any Receivable or any Servicer File
or Custodian File; the performance or enforcement
of any Receivable; the compliance by the Seller or
the Servicer, with any warranty or representation
made under this Agreement or the Servicing
Agreement or in any related document and the
accuracy of any such warranty or representation
prior to the Trustee's receipt of notice or other
discovery of any noncompliance therewith or any
breach thereof (provided, however, that the receipt
of notice or other discovery of such noncompliance
or breach shall only obligate the Trustee to comply
with the terms of Section 3.02 hereof); any
investment of moneys by the Trustee or any loss
resulting therefrom (it being understood that the
Trustee shall remain responsible for any Trust
property that it may hold); the acts or omissions of
the Seller, the Servicer or any Obligor; an action of
the Servicer taken in the name of the Trustee; or
any action by the Trustee taken at the instruction of
the Servicer; provided, however, that the foregoing
shall not relieve the Trustee of its obligation to
perform its duties under this Agreement. Except if
caused by its negligence or its failure to act in
accordance with reasonable and proper instructions
given in writing received by the Trustee, the
Trustee shall not be liable for losses on investments
on the funds or on the accounts established pursuant
to Section 5.01. The Trustee shall not be liable for
collections received by the Servicer prior to deposit
by the Servicer of such collections into the
Collection Account or for the application or
misapplication of funds, or for other acts or
defaults, by any person, firm or corporation except
its own directors, officers, agents and employees.
Except with respect to a claim based on the
Trustee's negligence or willful misconduct, no
recourse shall be had for any claim based on any
provision of this Agreement, the Certificates or any
Receivable or assignment thereof against the
Trustee in its individual capacity, the Trustee shall
not have any personal obligation, liability or duty
whatsoever to any Certificateholder or any other
Person with respect to any such claim, and any such
claim shall be asserted solely against the Trust or
any indemnitor who shall furnish indemnity as
provided in this Agreement. The Trustee shall not
be accountable for the use or application by the
Seller of any of the Certificates or of the proceeds
of such Certificates, or for the use or application of
any funds paid to a Servicer in respect of the
Receivables.
Section 11.06. Trustee May Own
Certificates. The Trustee in its individual or any
other capacity may become the owner or pledgee of
Certificates and may deal with the Seller and the
Servicer in banking transactions with the same
rights as it would have if it were not Trustee,
except as otherwise provided in the definition of
"Certificateholder" in Section 1.01.
Section 11.07. Trustee's Fees and
Expenses. The Trustee shall be entitled to the
Trustee Fees as compensation (which shall not be
limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all
services rendered by it in the execution of the trusts
created by this Agreement and in the exercise and
performance of any of the Trustee's powers and
duties under this Agreement. The Trustee shall be
paid or reimbursed pursuant to Section 5.06 upon
its request for all reasonable expenses and
disbursements (including the reasonable
compensation and the expenses and disbursements
of its counsel and of all Persons not regularly in its
employ) incurred or made by the Trustee in
accordance with any provisions of this Agreement,
except any such expense or disbursement as may be
attributable to its willful misfeasance, negligence or
bad faith. Unpaid fees and expenses of the Trustee
shall bear interest at the prime rate then in effect
plus 2%. The Seller shall indemnify the Trustee
for, and hold it harmless against, any loss, liability
or expense incurred without willful misfeasance,
negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration
of the Trust, including the costs and expenses of
defending itself against any claim or liability in
connection with the exercise or performance of any
of its powers or duties under this Agreement.
Additionally, the Seller, pursuant to Section 8.02,
shall indemnify the Trustee with respect to certain
matters. The Trustee shall not be required to
furnish any surety bond. The provisions of this
Section 11.07 shall survive the termination of this
Agreement.
Section 11.08. Eligibility Requirements for
Trustee. The Trustee shall at all times be a
corporation having an office in the same state as the
location of the Corporate Trust Office as specified
in or pursuant to this Agreement; and organized and
doing business under the laws of such state or the
United States of America; authorized under such
laws to exercise corporate trust powers; having a
combined capital and surplus of at least
$100,000,000 and subject to supervision or
examination by federal or state authorities. If such
corporation shall publish reports of condition at
least annually, pursuant to law or to the
requirements of the aforesaid supervising or
examining authority, then for the purpose of this
Section 11.08, the combined capital and surplus of
such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent
report of condition so published. In case at any
time the Trustee shall cease to be eligible in
accordance with the provisions of this Section
11.08, the Trustee shall resign immediately in the
manner and with the effect specified in Section
11.09.
Section 11.09. Resignation or Removal of
Trustee. The Trustee may at any time resign and
be discharged from the trusts hereby created by
giving written notice thereof to the Seller and each
Certificateholder. Upon receiving such notice of
resignation, the Majority Certificateholders shall
promptly appoint a successor Trustee by written
instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning
Trustee and one copy to the successor Trustee. If
no successor Trustee shall have been so appointed
and have accepted appointment within 30 days after
the giving of such notice of resignation, the
resigning Trustee may petition any court of
competent jurisdiction for the appointment of a
successor Trustee.
If at any time the Trustee shall cease to be
eligible in accordance with the provisions of Section
11.08 and shall fail to resign after written request
therefor by the Seller, or if at any time the Trustee
shall be legally unable to act, or shall be adjudged
bankrupt or insolvent, or a receiver of the Trustee
or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then the
Majority Certificateholders may remove the
Trustee. If the Majority Certificateholders shall
remove the Trustee under the authority of the
immediately preceding sentence, the Majority
Certificateholders shall promptly appoint a
successor Trustee by written instrument, in
duplicate, one copy of which instrument shall be
delivered to the outgoing Trustee so removed and
one copy to the successor Trustee and payment of
all fees and expenses owed to the outgoing Trustee.
Any resignation or removal of the Trustee
and appointment of a successor Trustee pursuant to
any of the provisions of this Section 11.09 shall not
become effective until acceptance of appointment by
the successor Trustee pursuant to Section 11.10 and
payment of all fees and expenses owed to the
outgoing Trustee or upon order of a court of
competent jurisdiction.
Section 11.10. Successor Trustee. Any
successor Trustee appointed pursuant to Section
11.09 shall execute, acknowledge and deliver to the
Backup Servicer, the Servicer and to the
predecessor Trustee an instrument accepting such
appointment under this Agreement, and thereupon
the resignation or removal of the predecessor
Trustee shall become effective and such successor
Trustee, without any further act, deed or
conveyance, shall become fully vested with all the
rights, powers, duties and obligations of its
predecessor under this Agreement, with like effect
as if originally named as Trustee. The predecessor
Trustee shall upon payment of its fees and expenses
deliver to the successor Trustee all documents and
statements and moneys held by it under this
Agreement; and the Seller and the predecessor
Trustee shall execute and deliver such instruments
and do such other things as may reasonably be
required for fully and certainly vesting and
confirming in the successor Trustee all such rights,
powers, duties and obligations.
No successor Trustee shall accept
appointment as provided in this Section 11.10
unless at the time of such acceptance such successor
Trustee shall be eligible pursuant to Section 11.08.
Upon acceptance of appointment by a
successor Trustee pursuant to this Section 11.10,
the successor Trustee shall mail notice of the
successor of such Trustee under this Agreement to
all Holders of Certificates at their addresses as
shown in the Certificate Register.
Section 11.11. Merger or Consolidation of
Trustee. Any corporation into which the Trustee
may be merged or converted or with which it may
be consolidated, or any corporation resulting from
any merger, conversion or consolidation to which
the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate
trust business of the Trustee, shall be the successor
of the Trustee hereunder, provided such corporation
shall be eligible pursuant to Section 11.08, without
the execution or filing of any instrument or any
further act on the part of any of the parties hereto;
provided, further, that the Trustee shall mail notice
of such merger or consolidation to each
Certificateholder.
Section 11.12. Appointment of Co-Trustee
or Separate Trustee. Notwithstanding any other
provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust or any
Financed Vehicle may at the time be located, the
Backup Servicer and the Trustee acting jointly shall
have the power and shall execute and deliver all
instruments to appoint one or more Persons
approved by the Trustee to act as co-trustee, jointly
with the Trustee, or separate trustee or separate
trustees, of all or any part of the Trust, and to vest
in such Person, in such capacity and for the benefit
of the Certificateholders, such title to the Trust, or
any part thereof, and, subject to the other
provisions of this Section 11.12, such powers,
duties, obligations, rights and trusts as the Backup
Servicer and the Trustee may consider necessary or
desirable. If the Backup Servicer shall not have
joined in such appointment within 15 days after the
receipt by it of a request so to do, or in the case an
Event of Backup Servicing Default shall have
occurred and be continuing, the Trustee alone shall
have the power to make such appointment. No
co-trustee or separate trustee under this Agreement
shall be required to meet the terms of eligibility as
a successor trustee pursuant to Section 11.08 and no
notice of a successor trustee pursuant to Section
11.10 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee
shall be required pursuant to Section 11.10.
Each separate trustee and co-trustee shall, to
the extent permitted by law, be appointed and act
subject to the following provisions and conditions:
(a) All rights, powers, duties and
obligations conferred or imposed upon the
Trustee shall be conferred upon and
exercised or performed by the Trustee and
such separate trustee or co-trustee jointly (it
being understood that such separate trustee
or co-trustee is not authorized to act
separately without the Trustee joining in
such act), except to the extent that under any
law of any jurisdiction in which any
particular act or acts are to be performed
(whether as Trustee under this Agreement or
as successor to the Backup Servicer under
this Agreement), the Trustee shall be
incompetent or unqualified to perform such
act or acts, in which event such rights,
powers, duties and obligations (including the
holding of title to the Trust or any portion
thereof in any such jurisdiction) shall be
exercised and performed singly by such
separate trustee or co-trustee, but solely at
the direction of the Trustee;
(b) No trustee under this
Agreement shall be personally liable by
reason of any act or omission of any other
trustee under this Agreement; and
(c) The Backup Servicer and the
Trustee acting jointly may at any time
accept the resignation of or remove any
separate trustee or co-trustee.
Any notice, request or other writing given to
the Trustee shall be deemed to have been given to
each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every
instrument appointing any separate trustee or
co-trustee shall refer to this Agreement and the
conditions of this Article XI. Each separate trustee
and co-trustee, upon its acceptance of the trusts
conferred, shall be vested with the estates or
property specified in its instrument of appointment,
either jointly with the Trustee or separately, as may
be provided therein, subject to all the provisions of
this Agreement, specifically including every
provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection
to, the Trustee. Each such instrument shall be filed
with the Trustee and copies thereof given to the
Backup Servicer.
Any separate trustee or co-trustee may at
any time appoint the Trustee, its agent or
attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act
under or in respect of this Agreement on its behalf
and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting,
resign or be removed, all of its estates, properties,
rights, remedies and trusts shall vest in and be
exercised by the Trustee, to the extent permitted by
law, without the appointment of a new or successor
separate trustee or co-trustee.
Section 11.13. Representations and
Warranties of Trustee. The Trustee makes the
following representations and warranties on which
the Seller and Certificateholders rely:
(a) The Trustee is a banking
association duly organized, validly existing,
and in good standing under the laws of its
place of incorporation.
(b) The Trustee has full corporate
power, authority and legal right to execute,
deliver and perform its obligations under
this Agreement and the Servicing
Agreement, and shall have taken all
necessary action to authorize the execution,
delivery and performance by it of this
Agreement and the Servicing Agreement.
(c) This Agreement and the
Servicing Agreement shall have been duly
executed and delivered by the Trustee, and
each constitutes the valid and binding
obligation of the Trustee enforceable in
accordance with its terms.
(d) The execution, delivery and
performance by the Trustee of this
Agreement (a) does not violate any
provision of any law governing the banking
and trust powers of the Trustee or any
order, writ, judgment or decree of any
court, arbitrator, or governmental authority
applicable to the Trustee or any of its assets,
(b) does not violate any provision of the
corporate charter or by-laws of the Trustee,
and (c) does not violate any provision of, or
constitute, with or without notice or lapse of
time, a default under, or result in the
creation or imposition of any lien on any
properties included in the Trust pursuant to
the provisions of any mortgage, indenture,
contract, agreement or other undertaking to
which it is a party, which violation, default
or lien could reasonably be expected to
materially and adversely affect the Trustee's
performance or ability to perform its duties
under this Agreement or the transactions
contemplated in this Agreement.
(e) The execution, delivery and
performance by the Trustee of this
Agreement does not require the
authorization, consent, or approval of, the
giving of notice to, the filing or registration
with, or the taking of any other action in
respect of, any governmental authority or
agency regulating the banking and corporate
trust activities of the Trustee.
Section 11.14. No Bankruptcy Petition.
Except with the consent of the Majority
Certificateholders, the Trustee covenants and agrees
that prior to the date which is one year and one day
after the payment in full of all securities issued by
the Seller or by the Trust it will not institute
against, or join any other Person in instituting
against, the Seller any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings,
or other proceedings under any federal or state
bankruptcy or similar law; provided, however, that
nothing contained herein shall prohibit the Trustee
from participating in any existing bankruptcy
proceeding.
ARTICLE XII
TERMINATION
Section 12.01. Termination of the Trust.
(a) The Trust and the respective
obligations of the Seller, the Backup
Servicer and the Trustee created by this
Agreement (except such obligations as are
hereinafter set forth) shall terminate upon
the earliest of (i) payment to the
Certificateholders of all amounts required to
be paid to them pursuant to this Agreement
and the disposition of all property held as
part of the Trust Property, (ii) the purchase
as of any Distribution Date by the Seller, at
its option, of the corpus of the Trust as
described in Section 12.02 or (iii) the Final
Scheduled Distribution Date. The Seller
shall promptly notify the Trustee of any
prospective termination pursuant to this
Section 12.01.
(b) Notice of any prospective
termination, specifying the Distribution Date
for payment of the final distribution and
requesting the surrender of the Certificates
for cancellation, shall be given promptly by
the Trustee by letter to Certificateholders
mailed not earlier than the 15th day and not
later than the 25th day of the month next
preceding the specified Distribution Date
stating (A) the Distribution Date upon which
final payment of the Certificates shall be
made and (B) the amount of any such final
payment. Surrender of the Certificates shall
not be a condition of payment of the final
distribution; however, each
Certificateholder, by accepting the
Certificates, hereby agrees to indemnify and
hold harmless the Trustee, the Seller and the
Certificate Registrar from and against any
and all claims arising from such failure,
including but not limited to claims by third
parties claiming to be bona fide purchasers
subsequently presenting such Certificates for
payment.
(c) Upon receipt by the Trustee
from the Seller of notice of any prospective
termination of the Trust pursuant to Section
12.01(a), the Trustee shall, subject to the
direction of the Majority Certificateholders
(provided that, if the Majority
Certificateholders shall not have provided
such direction to the Trustee within 30 days
of the Trustee having sent a written request
for such direction to the Certificateholders,
the Trustee shall proceed without such
direction) sell the remaining assets of the
Trust, if any, at public or private sale, in a
commercially reasonable manner and on
commercially reasonable terms. The Seller
agrees to cooperate with the Trustee to
effect any such sale, including by executing
such instruments of conveyance or
assignment as shall be necessary or required
by the purchaser. Proceeds of sale, net of
expenses, shall be treated as collections on
the assets of the Trust and shall be deposited
into the Collection Account. On the
Distribution Date specified for final
payment, the Trustee shall cause to be
distributed to Certificateholders and the
Seller amounts distributable on such
Distribution Date pursuant to Section 5.06
and Section 5.07.
Section 12.02. Optional Purchase of All
Receivables. The Seller shall have the option (and
shall have a similar option with respect to each trust
created pursuant to the Master Trust Agreement) to
purchase the corpus of the Trust on the Distribution
Date following the last day of any Collection Period
as of which the Pool Balance as a percentage of the
Original Pool Balance shall be less than or equal to
the Optional Purchase Percentage. To exercise such
option, the Seller shall (i) give notice to the Trustee
and the Certificateholders not less than 30 days
prior to the Distribution Date on which such
purchase is to be effected and (ii) on or before such
Distribution Date, deposit in the Collection Account
an amount equal to the Purchase Amount for the
Receivables and the appraisal value of any other
property held by the Trust. After payment of such
amounts, the Seller shall succeed to all interests in
and to the Trust Property.
Section 12.03. Notice. The Trustee shall
give notice of termination of the Trust to the Seller.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01. Amendment. (a) This
Agreement may be amended by written instrument
executed by the Seller, the Backup Servicer and the
Trustee, without the consent of any of the
Certificateholders, (i) to cure any ambiguity, to
correct or supplement any provisions in this
Agreement, (ii) to add, change or eliminate any
other provisions with respect to matters or questions
arising under this Agreement that shall not be
inconsistent with the provisions of this Agreement;
or (iii) to add or amend any provision therein in
connection with permitting transfers of the
Certificates or to add or provide for any credit
enhancement for the Certificates; provided,
however, that any such action described in clause
(ii) shall not adversely affect the interests of the
Certificateholders.
(b) This Agreement may also be amended
from time to time or the provisions hereof waived
from time to time by a written instrument executed
by the Seller, the Backup Servicer and the Trustee
with the consent of the Holders of the
Certificateholders affected thereby (which consent
of any Holder of a Certificate given pursuant to this
Section or pursuant to any other provision of the
Agreement shall be conclusive and binding on such
Holder and on all future Holders of such Certificate
and of any Certificate issued upon the transfer
thereof or in exchange thereof or in lieu thereof
whether or not notation of such consent is made
upon the Certificate) evidencing not less than 51%
of the Voting Interests of each Class of the affected
Certificates for the purpose of adding any
provisions to or changing in any manner or
eliminating any of the provisions of this Agreement,
or of modifying in any manner the rights of any
Class of Certificateholders; provided, however, that
no such amendment or waiver shall, without the
consent of the Holders of all Certificates affected
thereby then outstanding, (a) increase or reduce in
any manner the amount of, or accelerate or delay
the timing of, collections of payments on
Receivables or distributions that shall be required to
be made on any Certificate or (b) reduce the
aforesaid percentage of the Voting Interests of the
Certificates required to consent to any such
amendment.
(c) Any amendment which affects the
Trustee's own rights, duties or immunities under
the Agreement or otherwise shall not be effective to
such extent unless the Trustee shall have joined
thereto.
(d) Promptly after the execution of any such
amendment or consent, the Trustee shall furnish a
copy of such amendment or consent to each
Certificateholder. It shall not be necessary for the
consent of Certificateholders pursuant to this
Section 13.01 to approve the particular form of any
proposed amendment or consent, but it shall be
sufficient if such consent shall approve the
substance thereof. The manner of obtaining such
consents (and any other consents of
Certificateholders provided for in this Agreement)
and of evidencing the authorization of the execution
thereof by Certificateholders shall be subject to such
reasonable requirements as the Trustee may
prescribe.
(e) Prior to the execution of any amendment
to this Agreement, the Trustee shall be entitled to
receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized
or permitted by this Agreement and does not
conflict with the amendment provisions of the
Master Trust Agreement.
Section 13.02. Protection of Title to Trust.
(a) The Seller shall execute and
file such financing statements and cause to
be executed and filed such continuation
statements, all in such manner and in such
places as may be required by law fully to
preserve, maintain and protect the interest of
the Certificateholders and the Trustee in the
Receivables and the other assets of the Trust
Property and in the proceeds thereof. The
Seller shall deliver (or cause to be delivered)
to the Trustee file-stamped copies of, or
filing receipts for, any document filed as
provided above, as soon as available
following such filing.
(b) The Seller shall not change its
name, identity or corporate structure in any
manner that would, could or might make
any financing statement or continuation
statement filed in accordance with paragraph
(a) above seriously misleading within the
meaning of 9-402(7) of the UCC, unless it
shall have given the Trustee at least thirty
(30) days' prior written notice thereof and
shall have promptly filed appropriate
amendments to all previously filed financing
statements or continuation statements.
(c) The Seller shall give the
Trustee at least 30 days' prior written notice
of any relocation of its chief executive
office. If, as a result of such relocation, the
applicable provisions of the UCC would
require the filing of any amendment of any
previously filed financing or continuation
statement or of any new financing statement,
it shall promptly file any such amendment
and shall give the amendment with the
recorder's file stamp thereon to the
Custodian promptly upon receipt thereof.
Section 13.03. Limitation on Rights of
Certificateholders. The death or incapacity of any
Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such
Certificateholder's legal representatives or heirs to
claim an accounting or to take any action or
commence any proceeding in any court for a
partition or winding up of the Trust, nor otherwise
affect the rights, obligations and liabilities of the
parties to this Agreement or any of them.
Nothing in this Agreement set forth, or
contained in the terms of the Certificates, shall be
construed so as to constitute the Certificateholders
from time to time as partners or members of an
association; nor shall any Certificateholder be under
any liability to any third Person by reason of any
action taken pursuant to any provision of this
Agreement.
No Certificateholder shall have any right by
virtue or by availing itself of any provisions of this
Agreement to institute any suit, action or
proceeding in equity or at law upon or under or
with respect to this Agreement, unless such Holder
previously shall have given to the Trustee a written
notice of default and of the continuance thereof, and
unless also the Holders of Certificates evidencing
not less than 20% of the Voting Interests thereof
shall have made written request upon the Trustee to
institute such action, suit or proceeding in its own
name as Trustee under this Agreement and shall
have offered to the Trustee such reasonable
indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or
thereby, and the Trustee, for 30 days after its
receipt of such notice, request and offer of
indemnity, shall have neglected or refused to
institute any such action, suit or proceeding and
during such 30-day period no request or waiver
inconsistent with such written request has been
given to the Trustee pursuant to this Section or
Section 10.04; no one or more Holders shall have
any right in any manner whatever by virtue or by
availing itself or themselves of any provisions of
this Agreement to affect, disturb or prejudice the
rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority
over or preference to any other such Holder, or to
enforce any right under this Agreement except in
the manner provided in this Agreement and for the
equal, ratable and common benefit of all
Certificateholders. For the protection and
enforcement of the provisions of this Section 13.03,
each Certificateholder and the Trustee shall be
entitled to such relief as can be given either at law
or in equity.
Section 13.04. Governing Law. THIS
AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF
THE PARTIES UNDER THIS AGREEMENT
SHALL BE DETERMINED IN ACCORDANCE
WITH SUCH LAWS INCLUDING SECTION 5-
1401 OF THE GENERAL OBLIGATIONS LAWS
BUT OTHERWISE WITHOUT REGARD OR
REFERENCE TO PRINCIPLES OF CONFLICTS
OF LAWS OF SUCH STATE.
Section 13.05. Notices. All demands,
notices and communications upon or to the Seller,
the Backup Servicer or the Trustee under this
Agreement shall be in writing, personally delivered
or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly
given upon receipt:
(a) in the case of the Seller, to
Angelo R. Appierto
President
Aegis Auto Funding Corp. IV
525 Washington Boulevard
Jersey City, New Jersey
07310
or at such other address as shall be
designated by the Seller in a written notice
to the Trustee;
(b) in the case of the Backup
Servicer, to
Norwest Bank Minnesota,
National Association
Sixth Street and Marquette
Avenue
Minneapolis, Minnesota
55479-0070
Attention: Corporate Trust
Services Asset Backed
Administration
or at such other address as shall be
designated by the Backup Servicer in a
written notice to the Seller; and
(c) in the case of the Trustee or
Custodian, to
Norwest Bank Minnesota,
National Association
Sixth Street and Marquette
Avenue
Minneapolis, Minnesota
55479-0070
Attention: Corporate Trust
Services Asset Backed Administration
or at such other address as shall be
designated by the Trustee in a written notice
to the Seller.
Any notice or other communication required
or permitted to be mailed to a Certificateholder
shall be given by first class mail, postage prepaid,
at the address of such Holder as shown in the
Certificate Register (with copies thereof to such
other Person(s) as such Certificateholder shall have
requested in writing, the address of such other
Person(s) to receive such copies also to be reflected
in the Certificate Register), and shall be deemed to
have been given upon receipt.
Section 13.06. Severability of Provisions.
If any one or more of the covenants, agreements,
provisions or terms of this Agreement shall be for
any reason whatsoever held invalid, then such
covenants, agreements, provisions or terms shall be
deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement
and shall in no way affect the validity or
enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the
Holders thereof.
Section 13.07. Assignment.
Notwithstanding anything to the contrary contained
herein, except as provided in Sections 8.03, this
Agreement may not be assigned by the Seller
without the prior written consent of the Trustee and
the Holders of Certificates evidencing not less than
66% of the Voting Interests thereof.
Section 13.08. Certificates Nonassessable
and Fully Paid. Certificateholders shall not be
personally liable for obligations of the Trust. The
interests represented by the Certificates shall be
nonassessable for any losses or expenses of the
Trust or for any reason whatsoever.
Section 13.09. Counterparts. This
Agreement may be executed simultaneously in any
number of counterparts, each of which counterparts
shall be deemed to be an original, and all of which
counterparts shall constitute but one and the same
instrument.
Section 13.10. Limited Recourse to Seller.
The parties hereto agree that the obligations of the
Seller hereunder, including, without limitation, the
obligation of the Seller in respect of indemnification
pursuant to Sections 3.06, 8.02 and 11.07 in respect
of repurchases or substitutions of Receivables upon
breach of representations and warranties pursuant to
Section 3.02, and in respect of fees, costs and
expenses pursuant to Sections 3.06, 4.04 and 4.05,
are payable solely from the Seller's interests in the
Trust Property and that no party may look to any
other property or assets of the Seller in respect of
such obligations.
<PAGE>
EXHIBIT A-1
FORM OF CLASS A CERTIFICATE
THIS CERTIFICATE HAS NOT BEEN AND
WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"),OR UNDER THE
SECURITIES OR BLUE SKY LAWS OF ANY
STATE IN THE UNITED STATES OR ANY
FOREIGN SECURITIES LAWS. BY ITS
ACCEPTANCE OF THIS CERTIFICATE THE
HOLDER OF THIS CERTIFICATE IS DEEMED
TO REPRESENT TO THE SELLER AND THE
TRUSTEE (i) THAT IT IS AN INSTITUTIONAL
INVESTOR THAT IS AN "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) OF REGULATION D
PROMULGATED UNDER THE SECURITIES
ACT (AN "INSTITUTIONAL ACCREDITED
INVESTOR") AND THAT IT IS ACQUIRING
THIS CERTIFICATE FOR ITS OWN ACCOUNT
(AND NOT FOR THE ACCOUNT OF OTHERS)
OR AS A FIDUCIARY OR AGENT FOR
OTHERS (WHICH OTHERS ALSO ARE
INSTITUTIONAL ACCREDITED INVESTORS
UNLESS THE HOLDER IS A BANK ACTING IN
ITS FIDUCIARY CAPACITY) FOR
INVESTMENT AND NOT WITH A VIEW TO,
OR FOR OFFER OR SALE IN CONNECTION
WITH, THE PUBLIC DISTRIBUTION HEREOF
OR (II) THAT IT IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT
AND IS ACQUIRING SUCH CERTIFICATE FOR
ITS OWN ACCOUNT (AND NOT FOR THE
ACCOUNT OF OTHERS) OR AS A FIDUCIARY
OR AGENT FOR OTHERS (WHICH OTHERS
ALSO ARE QUALIFIED INSTITUTIONAL
BUYERS).
NO SALE, PLEDGE OR OTHER TRANSFER OF
THIS CERTIFICATE MAY BE MADE BY ANY
PERSON UNLESS EITHER (i) SUCH SALE,
PLEDGE OR OTHER TRANSFER IS MADE TO
THE SELLER, (ii) SUCH SALE, PLEDGE OR
OTHER TRANSFER IS MADE TO AN
INSTITUTIONAL ACCREDITED INVESTOR
THAT EXECUTES A CERTIFICATE,
SUBSTANTIALLY IN THE FORM SPECIFIED
IN THE AGREEMENT, TO THE EFFECT THAT
IT IS AN INSTITUTIONAL ACCREDITED
INVESTOR ACTING FOR ITS OWN ACCOUNT
(AND NOT FOR THE ACCOUNT OF OTHERS)
OR AS A FIDUCIARY OR AGENT FOR
OTHERS (WHICH OTHERS ALSO ARE
INSTITUTIONAL ACCREDITED INVESTORS
UNLESS THE HOLDER IS A BANK ACTING IN
ITS FIDUCIARY CAPACITY), (iii) SO LONG AS
THIS CERTIFICATE IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT, SUCH SALE, PLEDGE OR
OTHER TRANSFER IS MADE TO A PERSON
WHOM THE ISSUER REASONABLY BELIEVES
AFTER DUE INQUIRY IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A), ACTING FOR ITS OWN
ACCOUNT (AND NOT FOR THE ACCOUNT OF
OTHERS) OR AS A FIDUCIARY OR AGENT
FOR OTHERS (WHICH OTHERS ALSO ARE
QUALIFIED INSTITUTIONAL BUYERS) TO
WHOM NOTICE IS GIVEN THAT THE SALE,
PLEDGE OR TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, OR (iv) SUCH
SALE, PLEDGE OR OTHER TRANSFER IS
OTHERWISE MADE IN A TRANSACTION
EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT,
IN WHICH CASE (A) THE TRUSTEE SHALL
REQUIRE THAT BOTH THE PROSPECTIVE
TRANSFEROR AND THE PROSPECTIVE
TRANSFEREE CERTIFY TO THE TRUSTEE
AND THE SELLER IN WRITING THE FACTS
SURROUNDING SUCH TRANSFER, WHICH
CERTIFICATION SHALL BE IN FORM AND
SUBSTANCE SATISFACTORY TO THE
TRUSTEE AND THE SELLER, AND (B) THE
TRUSTEE SHALL REQUIRE A WRITTEN
OPINION OF COUNSEL (WHICH SHALL NOT
BE AT THE EXPENSE OF THE SELLER OR
THE TRUSTEE) SATISFACTORY TO THE
SELLER AND THE TRUSTEE TO THE EFFECT
THAT SUCH TRANSFER WILL NOT VIOLATE
THE SECURITIES ACT. NO SALE, PLEDGE OR
OTHER TRANSFER MAY BE MADE TO ANY
ONE PERSON FOR CERTIFICATES WITH A
FACE AMOUNT OF LESS THAN $1,000,000
AND, IN THE CASE OF ANY PERSON ACTING
ON BEHALF OF ONE OR MORE THIRD
PARTIES (OTHER THAN A BANK (AS
DEFINED IN SECTION 3(a)(2) OF THE
SECURITIES ACT) ACTING IN ITS FIDUCIARY
CAPACITY), FOR CERTIFICATES WITH A
FACE AMOUNT OF LESS THAN $1,000,000
FOR EACH SUCH THIRD PARTY.
AEGIS AUTO RECEIVABLES TRUST 199
AUTOMOBILE RECEIVABLE PASS THROUGH CERTIFICATES
CLASS A CERTIFICATE
[PPN:]
[CUSIP:]
NUMBER R-
Original Certificate Balance:
Class A Rate:
$_______________________
Final Scheduled Distribution Date:
Initial Class A Certificate Balance of all Class A
Certificates: $
THIS CERTIFIES THAT
___________________ is the registered owner of
this _________ DOLLARS Class A Certificate.
This Certificate evidences a fractional undivided
interest in the Aegis Auto Receivables Trust 199_-_
(the "Trust") (excluding the Residual Interest in the
Trust), formed by Aegis Auto Funding Corp. IV, a
Delaware corporation (the "Seller"). The Trust was
created pursuant to a Pooling and Servicing
Agreement dated as of _________________ (the
"Agreement") among the Seller, Norwest Bank
Minnesota, National Association, as backup servicer
(the "Backup Servicer"), and Norwest Bank
Minnesota, National Association, as trustee (the
"Trustee"). The property of the Trust includes,
among other assets, a pool of motor vehicle retail
installment sale contracts secured by new and used
automobiles and light-duty trucks. (This Class A
Certificate does not represent an interest in or
obligation of the Seller or any of the respective
Affiliates thereof, except to the extent described
below.) A summary of certain of the pertinent
provisions of the Agreement is set forth below. To
the extent not otherwise defined herein, the
capitalized terms used herein have the meanings
assigned to them in the Agreement. The Certificate
Balance of this Class A Certificate will be decreased
by the payments on this Class A Certificate in
respect of principal as described in the Agreement.
Accordingly, following the initial issuance of the
Class A Certificates, the Certificate Balance of this
Class A Certificate will over time be less than the
original denomination shown above. Anyone
acquiring this Class A Certificate may ascertain its
current Certificate Balance by inquiry of the
Trustee.
This Certificate is one of the duly authorized
Certificates designated as "Automobile Receivable
Pass-Through Certificates," issued in two Classes
(Class A and Class B collectively, the
"Certificates"). To the extent described in the
Agreement the Class B Certificates are subordinate
in payment to the Class A Certificates. This Class
A Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Class A
Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound. The
property of the Trust includes, without limitation,
a pool of motor vehicle retail installment sale
contracts (the "Receivables") acquired on the
Closing Date and on Funding Dates (both as defined
in the Agreement) secured by new and used
automobiles and light-duty trucks (the "Financed
Vehicles"), all moneys due thereunder after the
applicable Cutoff Dates (as defined in the
Agreement), proceeds from claims on certain
insurance policies and certain other rights under the
Agreement, all right, title and interest of the Seller
in and to the Purchase Agreement and any and all
proceeds of the foregoing.
This Class A Certificate does not purport to
summarize the Agreement and reference is made to
the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and
duties evidenced hereby and the rights, duties and
immunities of the Trustee. Copies of the
Agreement and all amendments thereto will be
provided to any Certificateholder, at its expense,
upon a written request to the Trustee.
Under the Agreement, there will be
distributed on the 20th day of each month or, if
such 20th day is not a Business Day, the next
Business Day (the "Distribution Date"),
commencing on _________________, to the person
in whose name this Class A Certificate is registered
at the close of business on the last day of the
Collection Period preceding a Distribution Date or
termination of the Trust (the "Record Date") an
amount equal to the product of the Percentage
Interest evidenced by this Certificate and the
amount, if any required to be distributed to the
holders of all Class A Certificates.
All payments to Certificateholders shall be
made on each Distribution Date to each
Certificateholder of record on the related Record
Date by check, or, if requested by a
Certificateholder holding Certificates with Original
Certificate Balances in aggregate in excess of
$1,000,000, by wire transfer to the account
designated in writing by such Holder in the form of
Exhibit G to the Agreement (or such other account
as such Certificateholder may designate in writing)
delivered to the Trustee prior to the Determination
Date, in immediately available funds. Except as
otherwise provided in the Agreement and
notwithstanding the above, the final distribution on
this Class A Certificate will be made after due
notice by the Trustee of the pendency of such
distribution, which notice shall request that the
Certificateholder present and surrender this Class A
Certificate at the office or agency maintained for
that purpose by the Trustee in Minneapolis,
Minnesota. Surrender of this Class A Certificate
shall not be a condition of payment of the final
distribution; however, the Holder, by accepting this
Class A Certificate, hereby agrees to indemnify and
hold harmless the Trustee, the Seller and the
Certificate Registrar from and against any and all
claims arising from such failure to present and
surrender this Class A Certificate, including but not
limited to claims by third parties claiming to be
bona fide purchasers.
Unless the certificate of authentication
hereon shall have been executed by an authorized
officer of the Trustee, by manual signature, this
Class A Certificate shall not entitle the Holder
hereof to any benefit under the Agreement or be
valid for any purpose.
The Class A Certificates do not represent a
recourse obligation of, or an interest in, the Seller,
the Backup Servicer, the Trustee or any Affiliate of
any of them. The Class A Certificates are limited
in right of payment to certain collections and
recoveries respecting the Receivables, all as more
specifically set forth in the Agreement. A copy of
the Agreement may be examined during normal
business hours at the principal office of the Seller,
and at such other places, if any, designated by the
Seller, by any Certificateholder upon request.
The Agreement permits, with certain
exceptions therein provided, the amendment thereof
and the modification of the rights and obligations of
the Seller and the rights of the Certificateholders
under the Agreement at any time by the Seller and
the Trustee with the consent of the Holders of the
Certificates affected thereby voting as a class
evidencing not less than 51% of the Voting Interests
of all affected Certificates. Any such consent by
the Holder of this Class A Certificate shall be
conclusive and binding on such Holder and on all
future Holders of this Class A Certificate and of
any Class A Certificate issued upon the transfer
hereof or in exchange hereof or in lieu hereof
whether or not notation of such consent is made
upon this Class A Certificate. The Agreement also
permits the amendment thereof, in certain limited
circumstances, without the consent of the Holders
of any of the Class A Certificates.
As provided in the Agreement and subject to
certain limitations set forth therein, the transfer of
this Class A Certificate is registrable in the
Certificate Register upon surrender of this Class A
Certificate for registration of transfer at the offices
or agencies maintained by the Trustee in its capacity
as Certificate Registrar, or by any successor
Certificate Registrar, in Minneapolis, Minnesota, or
such other office of the Trustee maintained for such
purpose and designated by the Trustee in writing,
accompanied by a written instrument of transfer in
form satisfactory to the Trustee and the Class A
Certificate Registrar duly executed by the Holder
hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Class A
Certificates of authorized denominations evidencing
the same aggregate interest in the Trust will be
issued to the designated transferee.
The Class A Certificates are initially issuable
only as registered Class A Certificates without
coupons in denominations of $1,000,000 and
integral multiples of $1,000 in excess thereof,
except that one Class A Certificate may be issued in
a different denomination. As provided in the
Agreement and subject to certain limitations set
forth therein, Class A Certificates are exchangeable
for new Class A Certificates evidencing the same
aggregate denomination, as requested by the Holder
surrendering the same. No service charge will be
made to the Holder for any such registration of
transfer or exchange, but the Trustee may require
payment of a sum sufficient to cover any tax or
governmental charges payable in connection
therewith.
The Trustee, the Certificate Registrar, and
any agent of the Trustee or the Certificate Registrar
may treat the person in whose name this Class A
Certificate is registered as the owner hereof for all
purposes, and neither the Trustee, the Certificate
Registrar, nor any such agent shall be affected by
any notice to the contrary.
The Trust created by the Agreement shall
terminate upon the earliest of (i) payment to the
Certificateholders of all amounts required to be paid
to them pursuant to the Agreement and the
disposition of all property held as part of the Trust
Property, (ii) the purchase as of any Distribution
Date by the Seller of the corpus of the Trust, as
described below, or (iii) the Final Scheduled
Distribution Date. The Seller may, at its option,
purchase the corpus of the Trust, in whole, at a
price specified in the Agreement, and such purchase
will effect early retirement of the Certificates;
however, such right of purchase is exercisable only
on a Distribution Date following the last day of any
Collection Period as of which the Pool Balance is
less than or equal to 10% of the Original Pool
Balance.<PAGE>
IN WITNESS WHEREOF, the Trustee, not
in its individual capacity but on behalf of the Trust,
has caused this Class A Certificate to be duly
executed.
AEGIS AUTO RECEIVABLES TRUST 199
By:
NORWEST BANK MINNESOTA,NATIONAL ASSOCIATION,
as Trustee
By
Name:
Title:
This is one of the Class A Certificates referred to
in the within-mentioned Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee
By
Name:
Title:
Dated as of
_________________, 199
ASSIGNMENT
FOR VALUE RECEIVED the undersigned
hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or typewrite name and address,
including postal zip code, of assignee)
the within Class A Certificate, and all rights
thereunder, hereby irrevocably constituting and
appointing
Attorney
to transfer said Class A Certificate on the books of
the Certificate Registrar, with full power of
substitution in the premises.
Dated:
Name:
_______________
*NOTICE: The signature to this assignment must
correspond with the name as it appears upon the
face of the within Class A Certificate in every
particular, without alteration, enlargement or any
change whatever.
EXHIBIT A-2
FORM OF CLASS B CERTIFICATE
THIS CERTIFICATE IS SUBORDINATED
IN RIGHT OF PAYMENT AS DESCRIBED IN
THE AGREEMENT REFERRED TO HEREIN.
THIS CERTIFICATE HAS NOT BEEN AND
WILL NOT BE REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"),OR UNDER THE
SECURITIES OR BLUE SKY LAWS OF ANY
STATE IN THE UNITED STATES OR ANY
FOREIGN SECURITIES LAWS. BY ITS
ACCEPTANCE OF THIS CERTIFICATE THE
HOLDER OF THIS CERTIFICATE IS DEEMED
TO REPRESENT TO THE SELLER AND THE
TRUSTEE (i) THAT IT IS AN INSTITUTIONAL
INVESTOR THAT IS AN "ACCREDITED
INVESTOR" AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) OF REGULATION D
PROMULGATED UNDER THE SECURITIES
ACT (AN "INSTITUTIONAL ACCREDITED
INVESTOR") AND THAT IT IS ACQUIRING
THIS CERTIFICATE FOR ITS OWN ACCOUNT
(AND NOT FOR THE ACCOUNT OF OTHERS)
OR AS A FIDUCIARY OR AGENT FOR
OTHERS (WHICH OTHERS ALSO ARE
INSTITUTIONAL ACCREDITED INVESTORS
UNLESS THE HOLDER IS A BANK ACTING IN
ITS FIDUCIARY CAPACITY) FOR
INVESTMENT AND NOT WITH A VIEW TO,
OR FOR OFFER OR SALE IN CONNECTION
WITH, THE PUBLIC DISTRIBUTION HEREOF
OR (II) THAT IT IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT
AND IS ACQUIRING SUCH CERTIFICATE FOR
ITS OWN ACCOUNT (AND NOT FOR THE
ACCOUNT OF OTHERS) OR AS A FIDUCIARY
OR AGENT FOR OTHERS (WHICH OTHERS
ALSO ARE QUALIFIED INSTITUTIONAL
BUYERS).
NO SALE, PLEDGE OR OTHER TRANSFER OF
THIS CERTIFICATE MAY BE MADE BY ANY
PERSON UNLESS EITHER (i) SUCH SALE,
PLEDGE OR OTHER TRANSFER IS MADE TO
THE SELLER, (ii) SUCH SALE, PLEDGE OR
OTHER TRANSFER IS MADE TO AN
INSTITUTIONAL ACCREDITED INVESTOR
THAT EXECUTES A CERTIFICATE,
SUBSTANTIALLY IN THE FORM SPECIFIED
IN THE AGREEMENT, TO THE EFFECT THAT
IT IS AN INSTITUTIONAL ACCREDITED
INVESTOR ACTING FOR ITS OWN ACCOUNT
(AND NOT FOR THE ACCOUNT OF OTHERS)
OR AS A FIDUCIARY OR AGENT FOR
OTHERS (WHICH OTHERS ALSO ARE
INSTITUTIONAL ACCREDITED INVESTORS
UNLESS THE HOLDER IS A BANK ACTING IN
ITS FIDUCIARY CAPACITY), (iii) SO LONG AS
THIS CERTIFICATE IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT, SUCH SALE, PLEDGE OR
OTHER TRANSFER IS MADE TO A PERSON
WHOM THE ISSUER REASONABLY BELIEVES
AFTER DUE INQUIRY IS A "QUALIFIED
INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A), ACTING FOR ITS OWN
ACCOUNT (AND NOT FOR THE ACCOUNT OF
OTHERS) OR AS A FIDUCIARY OR AGENT
FOR OTHERS (WHICH OTHERS ALSO ARE
QUALIFIED INSTITUTIONAL BUYERS) TO
WHOM NOTICE IS GIVEN THAT THE SALE,
PLEDGE OR TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, OR (iv) SUCH
SALE, PLEDGE OR OTHER TRANSFER IS
OTHERWISE MADE IN A TRANSACTION
EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT,
IN WHICH CASE (A) THE TRUSTEE SHALL
REQUIRE THAT BOTH THE PROSPECTIVE
TRANSFEROR AND THE PROSPECTIVE
TRANSFEREE CERTIFY TO THE TRUSTEE
AND THE SELLER IN WRITING THE FACTS
SURROUNDING SUCH TRANSFER, WHICH
CERTIFICATION SHALL BE IN FORM AND
SUBSTANCE SATISFACTORY TO THE
TRUSTEE AND THE SELLER, AND (B) THE
TRUSTEE SHALL REQUIRE A WRITTEN
OPINION OF COUNSEL (WHICH SHALL NOT
BE AT THE EXPENSE OF THE SELLER OR
THE TRUSTEE) SATISFACTORY TO THE
SELLER AND THE TRUSTEE TO THE EFFECT
THAT SUCH TRANSFER WILL NOT VIOLATE
THE SECURITIES ACT. NO SALE, PLEDGE OR
OTHER TRANSFER MAY BE MADE TO ANY
ONE PERSON FOR CERTIFICATES WITH A
FACE AMOUNT OF LESS THAN $1,000,000
AND, IN THE CASE OF ANY PERSON ACTING
ON BEHALF OF ONE OR MORE THIRD
PARTIES (OTHER THAN A BANK (AS
DEFINED IN SECTION 3(a)(2) OF THE
SECURITIES ACT) ACTING IN ITS FIDUCIARY
CAPACITY), FOR CERTIFICATES WITH A
FACE AMOUNT OF LESS THAN [$1,000,000]
FOR EACH SUCH THIRD PARTY.
THIS CERTIFICATE MAY NOT BE
PURCHASED BY OR TRANSFERRED TO ANY
EMPLOYEE BENEFIT PLAN SUBJECT TO THE
EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED
("ERISA") OR A PLAN SUBJECT TO SECTION
4975 OF THE INTERNAL REVENUE CODE OF
1986, AS AMENDED ("SECTION 4975") (A
"PLAN") OR A PERSON THAT IS USING THE
ASSETS OF A PLAN TO ACQUIRE THIS
CERTIFICATE. ACCORDINGLY, TRANSFER
OF THIS CERTIFICATE IS SUBJECT TO
CERTAIN RESTRICTIONS SET FORTH IN THE
AGREEMENT.
AEGIS AUTO RECEIVABLES TRUST 199_-_
AUTOMOBILE RECEIVABLE PASS-
THROUGH CERTIFICATES
CLASS B CERTIFICATE
[PPN:]
[CUSIP:]
NUMBER R-
Original Certificate Balance:
Class B Rate:
$_______________________
Final Scheduled Distribution Date:
Initial Class B Certificate Balance of all Class B
Certificates: $
THIS CERTIFIES THAT
___________________ is the registered owner of
this _________ DOLLARS Class B Certificate.
This Certificate evidences a fractional undivided
interest in the Aegis Auto Receivables Trust 199_-_
(the "Trust") (excluding the Residual Interest in the
Trust), formed by Aegis Auto Funding Corp. IV, a
Delaware corporation (the "Seller"). The Trust was
created pursuant to a Pooling and Servicing
Agreement dated as of ________________ (the
"Agreement") among the Seller, Norwest Bank
Minnesota, National Association, as backup servicer
(the "Backup Servicer"), and Norwest Bank
Minnesota, National Association, as trustee (the
"Trustee"). The property of the Trust includes,
among other assets, a pool of motor vehicle retail
installment sale contracts secured by new and used
automobiles and light-duty trucks. (This Class B
Certificate does not represent an interest in or
obligation of the Seller or any of the respective
Affiliates thereof, except to the extent described
below.) A summary of certain of the pertinent
provisions of the Agreement is set forth below. To
the extent not otherwise defined herein, the
capitalized terms used herein have the meanings
assigned to them in the Agreement. The Certificate
Balance of this Class B Certificate will be decreased
by the payments on this Class B Certificate in
respect of principal as described in the Agreement.
Accordingly, following the initial issuance of the
Class B Certificates, the Certificate Balance of this
Class B Certificate will over time be less than the
original denomination shown above. Anyone
acquiring this Class B Certificate may ascertain its
current Certificate Balance by inquiry of the
Trustee.
This Certificate is one of the duly authorized
Certificates designated as "Automobile Receivable
Pass-Through Certificates", issued in two Classes
(Class A and Class B, collectively, the
"Certificates"). To the extent described in the
Agreement the Class B Certificates are subordinate
in payment to the Class A Certificates. This Class
B Certificate is issued under and is subject to the
terms, provisions and conditions of the Agreement,
to which Agreement the Holder of this Class B
Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound. The
property of the Trust includes, without limitation,
a pool of motor vehicle retail installment sale
contracts (the "Receivables") acquired on the
Closing Date and on Funding Dates (both as defined
in the Agreement) secured by new and used
automobiles and light-duty trucks (the "Financed
Vehicles"), all moneys due thereunder after the
applicable Cutoff Dates (as defined in the
Agreement), proceeds from claims on certain
insurance policies and certain other rights under the
Agreement, all right, title and interest of the Seller
in and to the Purchase Agreement and any and all
proceeds of the foregoing.
This Class B Certificate does not purport to
summarize the Agreement and reference is made to
the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and
duties evidenced hereby and the rights, duties and
immunities of the Trustee. Copies of the
Agreement and all amendments thereto will be
provided to any Certificateholder, at its expense,
upon a written request to the Trustee.
Under the Agreement, there will be
distributed on the 20th day of each month or, if
such 20th day is not a Business Day, the next
Business Day (the "Distribution Date"),
commencing on ________________, to the person
in whose name this Class B Certificate is registered
at the close of business on the last day of the
Collection Period preceding a Distribution Date or
termination of the Trust (the "Record Date") an
amount equal to the product of the Percentage
Interest evidenced by this Certificate and the
amount, if any required to be distributed to the
holders of all Class B Certificates.
All payments to Certificateholders shall be
made on each Distribution Date to each
Certificateholder of record on the related Record
Date by check, or, if requested by a
Certificateholder holding Certificates with Original
Certificate Balances in aggregate in excess of
$1,000,000, by wire transfer to the account
designated in writing by such Holder in the form of
Exhibit G to the Agreement (or such other account
as such Certificateholder may designate in writing)
delivered to the Trustee prior to the Determination
Date, in immediately available funds. Except as
otherwise provided in the Agreement and
notwithstanding the above, the final distribution on
this Class B Certificate will be made after due
notice by the Trustee of the pendency of such
distribution, which notice shall request that the
Certificateholder present and surrender this Class B
Certificate at the office or agency maintained for
that purpose by the Trustee in Minneapolis,
Minnesota. Surrender of this Class B Certificate
shall not be a condition of payment of the final
distribution; however, the Holder, by accepting this
Class B Certificate, hereby agrees to indemnify and
hold harmless the Trustee, the Seller and the
Certificate Registrar from and against any and all
claims arising from such failure to present and
surrender this Class B Certificate, including but not
limited to claims by third parties claiming to be
bona fide purchasers.
Unless the certificate of authentication
hereon shall have been executed by an authorized
officer of the Trustee, by manual signature, this
Class B Certificate shall not entitle the Holder
hereof to any benefit under the Agreement or be
valid for any purpose.
The Class B Certificates do not represent a
recourse obligation of, or an interest in, the Seller,
the Backup Servicer, the Trustee or any Affiliate of
any of them. The Class B Certificates are limited
in right of payment to certain collections and
recoveries respecting the Receivables, all as more
specifically set forth in the Agreement. A copy of
the Agreement may be examined during normal
business hours at the principal office of the Seller,
and at such other places, if any, designated by the
Seller, by any Certificateholder upon request.
The Agreement permits, with certain
exceptions therein provided, the amendment thereof
and the modification of the rights and obligations of
the Seller and the rights of the Certificateholders
under the Agreement at any time by the Seller and
the Trustee with the consent of the Holders of the
Certificates affected thereby voting as a class
evidencing not less than 51% of the Voting Interests
of all affected Certificates. Any such consent by
the Holder of this Class B Certificate shall be
conclusive and binding on such Holder and on all
future Holders of this Class B Certificate and of any
Class B Certificate issued upon the transfer hereof
or in exchange hereof or in lieu hereof whether or
not notation of such consent is made upon this Class
B Certificate. The Agreement also permits the
amendment thereof, in certain limited
circumstances, without the consent of the Holders
of any of the Class B Certificates.
As provided in the Agreement and subject to
certain limitations set forth therein, the transfer of
this Class B Certificate is registrable in the
Certificate Register upon surrender of this Class B
Certificate for registration of transfer at the offices
or agencies maintained by the Trustee in its capacity
as Certificate Registrar, or by any successor
Certificate Registrar, in Minneapolis, Minnesota, or
such other office of the Trustee maintained for such
purpose and designated by the Trustee in writing,
accompanied by a written instrument of transfer in
form satisfactory to the Trustee and the Class B
Certificate Registrar duly executed by the Holder
hereof or such Holder's attorney duly authorized in
writing, and thereupon one or more new Class B
Certificates of authorized denominations evidencing
the same aggregate interest in the Trust will be
issued to the designated transferee.
The Class B Certificates are initially issuable
only as registered Class B Certificates without
coupons in denominations of $1,000,000 and
integral multiples of $1,000 in excess thereof,
except that one Class B Certificate may be issued in
a different denomination. As provided in the
Agreement and subject to certain limitations set
forth therein, Class B Certificates are exchangeable
for new Class B Certificates evidencing the same
aggregate denomination, as requested by the Holder
surrendering the same. No service charge will be
made to the Holder for any such registration of
transfer or exchange, but the Trustee may require
payment of a sum sufficient to cover any tax or
governmental charges payable in connection
therewith.
The Trustee, the Certificate Registrar, and
any agent of the Trustee or the Certificate Registrar
may treat the person in whose name this Class B
Certificate is registered as the owner hereof for all
purposes, and neither the Trustee, the Certificate
Registrar, nor any such agent shall be affected by
any notice to the contrary.
The Trust created by the Agreement shall
terminate upon the earliest of (i) payment to the
Certificateholders of all amounts required to be paid
to them pursuant to the Agreement and the
disposition of all property held as part of the Trust
Property, (ii) the purchase as of any Distribution
Date by the Seller of the corpus of the Trust as
described below, or (iii) the Final Scheduled
Distribution Date. The Seller may, at its option,
purchase the corpus of the Trust, in whole, at a
price specified in the Agreement, and such purchase
will effect early retirement of the Certificates;
however, such right of purchase is exercisable only
on a Distribution Date following the last day of any
Collection Period as of which the Pool Balance is
less than or equal to 10% of the Original Pool
Balance.
IN WITNESS WHEREOF, the Trustee, not
in its individual capacity but on behalf of the Trust,
has caused this Class B Certificate to be duly
executed.
AEGIS AUTO RECEIVABLES TRUST 199_-_
By:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By
Name:
Title:
This is one of the Class B Certificates referred to
in the within-mentioned Agreement.
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, as Trustee
By
Name:
Title:
Dated as of
______, 199_
ASSIGNMENT
FOR VALUE RECEIVED the undersigned
hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or typewrite name and address,
including postal zip code, of assignee)
the within Class B Certificate, and all rights
thereunder, hereby irrevocably constituting and
appointing
Attorney
to transfer said Class B Certificate on the books of
the Certificate Registrar, with full power of
substitution in the premises.
Dated:
*
Name:
_______________
*NOTICE: The signature to this assignment must
correspond with the name as it appears upon the
face of the within Class B Certificate in every
particular, without alteration, enlargement or any
change whatever.
<PAGE>
EXHIBIT B
[RESERVED]
<PAGE>
EXHIBIT C
TRUSTEE'S STATEMENT TO CERTIFICATEHOLDERS
Aegis Auto Funding Corp. IV
Aegis Auto Receivables Trust 199_-_
Automobile Receivable Pass-Through
Certificates
Distribution Date:
Last Day of Collection Period:
I. COLLECTIONS INTEREST PRINCIPAL
TOTALS
Scheduled Payments
Full & Partial Prepayments
Recoveries
Risk Default Insurance Proceeds
Receivable Repurchased by Seller
Miscellaneous Servicer Collections
Available Interest Distribution Amount
Available Principal Distribution Amount
Total Available Distribution Amount
Reinvestment Income on Collection Account
Withdrawals from
Reserve Fund
Total Amount Available
II. DISTRIBUTIONS
Backup Servicer Fee
Servicing Fee
Trustee and Custodian Fees
Allocation of Expenses by Class
Class A
Class B
Class A Interest Distribution
Class A Interest Carryover Shortfall
Class A Principal Distribution
Class A Principal Carryover Shortfall
Class B Interest Distribution
Class B Interest Carryover Shortfall
Class B Principal Distribution
Class B Principal Carryover Shortfall
Funding Account-Prepayment Distribution
<PAGE>
Deposits to Reserve Fund
Releases to Seller from Reserve Fund
Total Funds Distributed
III. CLASS CERTIFICATE BALANCE
Original Class A Certificate Balance
Beginning Class A Certificate Balance
Ending Class A Certificate Balance
Class A Interest Carryover Shortfall
Class A Principal Carryover Shortfall
Class A Certificate Factor
Original Class B Certificate Balance
Beginning Class B Certificate Balance
Ending Class B Certificate Balance
Class B Interest Carryover Shortfall
Class B Principal Carryover Shortfall
Class B Certificate Factor
IV. POOL BALANCE INFORMATION
Original Pool Balance:
Beginning of Period
End of Period
Pool Balance
Pool Factor
Weighted Average Coupon (WAC)
Weighted Average Remaining Maturity (WAM) (in months)
Remaining Number of Receivables
V. RESERVE FUND
Amount
Beginning Balance
Plus: Deposits
Plus: Reinvestment Income
Withdrawals to Certificateholders
Class A
Class B
Withdrawals for expenses
[Withdrawals for other Series]
Released to Seller
Ending Balance
VI. RECEIVABLES REPURCHASED/SUBSTITUTED BY SELLER
Number of Receivables Repurchased
Principal Amount
Number of Receivables Substituted
Principal Amount
VII. DELINQUENCY INFORMATION*
# of Principal
% of
Contracts Balance
Pool Balance
30-59 Days Delinquent
60-89 days Delinquent
*Excluding Liquidated and Defaulted Receivables
VIII. REPOSSESSION INFORMATION Current Period
Inventory
Number of Receivables as to which Vehicles have been
Repossessed (and not yet liquidated)
Principal Balances of Receivables relating to Vehicles
which have been Repossessed (and not yet liquidated)
IX. LIQUIDATED AND DEFAULTED RECEIVABLES Current Period
Cumulative
Number of Liquidated Receivables
Principal Balances of Liquidated Receivables*
(Prior to Liquidation)
Number of Defaulted Receivables**
Principal Balances of Defaulted Receivables
Total Principal Balance of Liquidated
and Defaulted Receivables
* Excludes receivables previously characterized
as Defaulted Receivables
**Refers to Receivables that have become
90 days delinquent and are not Liquidated Receivables
X. RECOVERIES Current Period
Cumulative
Liquidation Proceeds
Rebate of Servicer Cancelled Warranty Contracts
VSI Physical Damage/Loss Insurance Proceeds
Consumer Insurance
Other
Total Recoveries
XI. RETENTION AMOUNT
Beginning Balance
Plus: (Additional Receivables)
Plus: Quarterly Reserve Loss Deficiency
Less: Claims approved
Less: Quarterly Reserve Loss Surplus
Ending Balance
XII. RISK DEFAULT INSURANCE PROCEEDS Current Period
Cumulative
Risk Default Insurance Proceeds
<PAGE>
XIII. NET LOSSES Current Period
Cumulative
Principal Balance of Liquidated and
Defaulted Receivables
Less: Recoveries
Less: Risk Default Insurance Proceeds
Net Losses
XIV. INSURANCE CLAIMS
Current Period
Cumulative
Number of Risk Default Insurance Claims
Amount of Risk Default Insurance Claims
Number of VSI Physical Damage/Loss Insurance Claims
Amount of VSI Physical Damage/Loss Insurance Claims
Number of Risk Default Insurance Claims Rejected
Principal Balance of Receivables Rejected
XV. FUNDING ACCOUNT
Beginning Balance
Withdrawals (Additional Receivables)
Withdrawals (Reserve Fund)
Reinvestment Income Retained
Ending Balance
EXHIBIT D
[RESERVED]
EXHIBIT E
LOCATION OF SERVICER FILES
American Lenders Facilities, Inc.
2600 Michaelson Drive
Suite 470
Irvine, CA 92715
Systems and Services Technology, Inc.
4315 Pickett Road
St. Jospeh, MO 64503
EXHIBIT F
[RESERVED]
EXHIBIT G
WIRING INSTRUCTIONS FORM
______________, 19____
Norwest Bank Minnesota, National Association
6th Street and Marquette Avenue
Minneapolis, MN 55479-0070
Re: Aegis Auto Funding Corp. IV Automobile
Receivable Pass-Through Certificates
Class ___ Issued by Aegis Automobile
Receivables Trust 199_-_
Dear Sirs:
In connection with the sale of the above-captioned
Certificate by to
("Transferee") you, as Trustee with respect to the
related Certificates, are instructed to make all remittances to
Transferee as Certificateholder as of , 19 and you are
directed to send all notices to the appropriate party at the address
set forth on Schedule 1 hereto. You are further instructed to treat
the Transferee as the record holder for purposes of the
, 199__ Distribution Date.
[Transferee]
By
Title:
Acknowledged
[Seller]
By
Title:
EXHIBIT H
[RESERVED]
<PAGE>
EXHIBIT I
RISK DEFAULT INSURANCE POLICIES
Issuer:
Policy Name:
Policy No.:
Date:
Named Insured:
Endorsements:
Issuer:
Policy Name:
Policy No:
Date:
Named Insured:
Endorsements:
EXHIBIT J
VSI INSURANCE POLICY
1. Issuer: Guaranty National Insurance Company
Policy Name: Lenders Comprehensive Single Interest Insurance
Policy
Policy No.: ZYG 1500103
Date: February 1, 1994
Named Insured: Aegis Capital Markets
Endorsements: 42621-0 (10/93), 42623-0 (10/93), 42624-0
(10/93),
42627-0 (10/93), 42629-0 (10/93), 42630-0
(10/93),
41510-0 (6/90), Nos. 7, 8, Coverage Endorsements
dated 3/23/94,
9/08/94 and 9/26/94, Nos. 16-24, 30-31
EXHIBIT K
FORM OF INVESTMENT/TRANSFEREE LETTER
(Rule 144A Transfer)
[Date]
Aegis Auto Funding Corp. IV
525 Washington Boulevard
Jersey City, New Jersey 07310
Norwest Bank Minnesota, National Association
Sixth Street and Marquette Avenue
Minneapolis, MN 55479-0070
Attention: Corporate Trust Services Asset Backed
Administration
Aegis Auto Funding Corp. IV
Aegis Auto Receivables Trust 199_-_
Automobile Receivable Pass-Through Certificates,
Class ___
Ladies and Gentlemen:
The undersigned (the "Purchaser") proposes to purchase
one or more Automobile Receivable Pass-Through Certificates,
Class ___ (the "Certificates") issued by Aegis Auto Receivables
Trust 199_-_ (the "Trust") pursuant to that certain Pooling and
Servicing Agreement dated as of _________________ (the
"Pooling and Servicing Agreement") by and among Aegis Auto
Funding Corp. IV, a Delaware corporation, as seller ("Seller"),
Norwest Bank Minnesota, National Association, as Backup
Servicer, and Norwest Bank Minnesota, National Association, as
Trustee. Unless the context or use indicates another or different
meaning, each capitalized term used herein and not otherwise
defined herein shall have the meaning ascribed to it in the Pooling
and Servicing Agreement.
1. The undersigned hereby certifies that, as indicated
below, the undersigned is the President, Chief Executive/Financial
Officer, Senior Vice President or other executive officer or
investment officer of the Purchaser.
2. In connection with the purchase by the Purchaser of
the Certificates, the undersigned hereby certifies to you that the
Purchaser is a "qualified institutional buyer" as defined in Rule
144A ("Rule 144A") promulgated under the Securities Act of
1933, as amended, because:
[ ] (a) The Purchaser owned or invested on a discretionary
basis $100 million in securities (except for the excluded
securities referred to below) as of the end of the
Purchaser's most recent fiscal year (such amount being
calculated in accordance with Rule 144A) and the
Purchaser satisfies the criteria in the subcategory marked
below (check one):
[ ] Insurance Company. The Purchaser is an insurance
company whose primary and predominant business
activity is the writing of insurance or the reinsuring
of risks underwritten by insurance companies and
which is subject to supervision by the insurance
commissioner or a similar official or agency of a
State or territory or the District of Columbia.
[ ] Investment Company. The Purchaser is (i) an
investment company registered under the Investment
Company Act of 1940, as amended (the "Investment
Company Act") or (ii) a business development
company as defined in Section 2(a)(48) of that Act.
[ ] Small Business Investment Company. The
Purchaser is a Small Business Investment Company
licensed by the U.S. Small Business Administration
under Section 301(c) or (d) of the Small Business
Investment Act of 1958.
[ ] Corporation, Etc. The Purchaser is an organization
described in Section 501(c)(3) of the Internal
Revenue Code of 1986, as amended, a corporation
(other than a bank, savings and loan association or
similar institution), partnership or Massachusetts or
similar business trust.
[ ] State or Local Plan. The Purchaser is a plan
established and maintained by a State or its political
subdivisions, or any agency or instrumentality of a
State or its political subdivisions, for the benefit of
its employees.
[ ] ERISA Plan. The Purchaser is an employee benefit
plan within the meaning of Title I of the Employee
Retirement Income Security Act of 1974.
[ ] Trust Fund. The Purchaser is a trust fund whose
trustee is a bank or trust company and whose
participants are exclusively plans established and
maintained by a State or its political subdivision, or
any agency or instrumentality of a State or its
political subdivisions, for the benefit of its
employees.
[ ] Business Development Company. The Purchaser is
a business development company as defined in
Section 202(a)(22) of the Investment Adviser Act of
1940.
[ ] Investment Advisor. The Purchaser is an
investment advisor registered under the Investment
Advisers Act of 1940, as amended.
[ ] (b) The Purchaser is a dealer registered pursuant too
Section 15 of the Exchange Act, acting for its own account
or the accounts of other qualified institutional buyers, that
in the aggregate owns and invests on a discretionary basis
at least $10 million of securities of issuers that are not
affiliated with the dealer, provided that securities
constituting the whole or a part of an unsold allotment to
or subscription by a dealer as a participant in a public
offering shall not be deemed to be owned such dealer.
[ ] (c) The Purchaser is a dealer registered pursuant to
Section 15 of the Exchange Act acting in a riskless
principal transaction on behalf of a qualified institutional
buyer.
[ ] (d) The Purchaser is an investment company registered
under the Investment Company Act, acting for its own
account or for the accounts of other qualified institutional
buyers, that is part of a family of investment companies
which own in the aggregate at least $100 million in
securities of issuers other than issuers that are affiliated
with the investment company or are part of such family of
investment companies. "Family of investment companies"
means any two or more investment companies registered
under the Investment Company Act, except for a unit
investment trust whose assets consist solely of shares of
one or more registered investment companies, that have the
same investment adviser (or, in the case of unit investment
trusts, the same depositor), provided that, for purposes of
this section:
(A) each series of a series company (as defined in
Rule 18f-2 under the Investment Company Act (17
CFR 270.18f-2)) shall be deemed to be a separate
investment company; and
(B) investment companies shall be deemed to have
the same adviser (or depositor) if their advisers (or
depositors) are majority-owned subsidiaries of the
same parent, or if on investment company's adviser
(or depositor) is a majority-owned subsidiary of the
other investment company's adviser (or depositor).
[ ] (e) The Purchaser is an entity, all of the equity owners of
which are qualified institutional buyers, acting for its own
account or the accounts of other qualified institutional
buyers.
[ ] (f) The Purchaser is a bank as defined in Section 3(a)(2)
of the Act, any savings and loan association or other
institution as referenced in Section 3(a)(5)(A) of the Act, or
any foreign bank or savings and loan association or
equivalent institution, acting for its own account or the
accounts of other qualified institutional buyers, that in the
aggregate owns and invests on a discretionary basis at least
$100 million in securities of issuers that are not affiliated
with it and that has an audited net worth of at least $25
million ad demonstrated in its latest annual financial
statements, as of a date not more than 16 months preceding
the date of sale under the Rule in the case of a U.S. bank
or savings and loan association, and not more than 18
months preceding such date of sale for a foreign bank or
savings and loan association or equivalent institution.
The term "securities" as used herein does not include (i)
securities of issuers that are affiliated with the Purchaser, (ii)
securities that are part of an unsold allotment to or subscription by
the Purchaser (if the Purchaser is a dealer), (iii) bank deposit notes
and certificates of deposit, (iv) loan participations, (v) repurchase
agreements, (vi) securities owned but subject to a repurchase
agreement and (vii) currency, interest rate and commodity swaps.
For purposes of determining the aggregate amount of
securities owned or invested on a discretionary basis by the
Purchaser, the Purchaser used the cost of such securities to the
Purchaser and did not include any of the securities referred to in
the preceding paragraph.
Further, in determining such aggregate amount, the
Purchaser may have included securities owned by subsidiaries of
the Purchaser, but only if such subsidiaries are consolidated with
the Purchaser in its financial statements prepared in accordance
with generally accepted accounting principles and if the
investments of such subsidiaries are managed under the
Purchaser's direction. However, such securities were not included
if the Purchaser is a majority-owned, consolidated subsidiary of
another enterprise and the Purchaser is not itself a reporting
company under the Securities Exchange Act of 1934, as amended.
3. The Purchaser certifies and acknowledges that it is
familiar with Rule 144A and understands that you and your
customers (if you act as a broker for one or more customers) are
relying on the statements made therein.
4. The Purchaser certifies that the Purchaser is
purchasing the Certificates in the capacity marked below (check
one):
[ ] The Purchaser certifies that the Purchaser is purchasing the
Certificates for its own account only; or
[ ] The Purchaser certifies that the Purchaser is purchasing the
Certificates for the account of [one] [specify number:]
other qualified institutional buyer(s), [each of] which is a
"qualified institutional buyer." (Draw a line through
inapplicable words and brackets.)
5. The Purchaser certifies that, to the extent it has
requested same, it has received from the Seller the information that
satisfies the requirements of paragraph (d)(4) of Rule 144A (the
"Rule 144A Information").
6. The Purchaser certifies that it will comply with all
applicable federal and state securities laws in connection with any
subsequent resale by the Purchaser of the Certificates. The
Purchaser acknowledges that no Certificates may be exchanged for
any new Certificates having an initial principal balance of less than
$1,000,000.
7. The Purchaser understands and acknowledges that
the Certificates have not been and will not be registered under the
Securities Act of 1933, as amended, or any state securities laws
and may be resold only if (a) the Certificates are registered
pursuant to the provisions of the Securities Act of 1933, as
amended, and such state securities laws, or (b) if an exemption
from such registration is available. The Purchaser understands and
acknowledges that the Seller is not required to register the
Certificates and that any transfer must comply with Section 7.03
of the Agreement. The Trustee is not obligated to provide Rule
144A Information.
8. The Purchaser understands that there is no market,
nor is there any assurance that a market will develop, for the
Certificates and that the Seller does not have any obligation to
make or facilitate any such market (or to otherwise repurchase the
Certificates from the Purchaser) under any circumstances.
9. The Purchaser has consulted with its own legal
counsel, independent accountants and financial advisors to the
extent it deems necessary regarding the tax consequences to it of
ownership of the Certificates, is aware that its taxable income with
respect to the Certificates in any accounting period may not
correspond to the cash flow (if any) from the Certificates for such
period, and is not purchasing the Certificates in reliance on any
representations of the Seller or its counsel with respect to tax
matters.
10. [For III Finance and III Global only: The purchaser
acknowledges that it or its affiliate has acted as a warehouse lender
to the originator of the Receivables backing the Certificates and,
as such, it has had substantial access to information relating to the
Trust and the assets backing the Certificates] The Purchaser
has had the opportunity to review the documents providing for the
issuance of the Certificates and to ask questions and receive
answers concerning the terms and conditions of the transactions
contemplated thereby and to obtain additional information
necessary to verify the accuracy and completeness of any
information furnished to the Purchaser or to which the Purchaser
had access. The Purchaser acknowledges that no offering
memorandum or other offering literature has been prepared in
connection with the offering of the Certificates and that it is not
relying on any party for furnishing or verifying information
relating to the Seller, the Trust or other parties to this transaction
or their respective financial condition, or with respect to any assets
of the Trust or which relates in any way to the Certificates or any
security relating to the Certificates. The Purchaser has been
represented by its own legal counsel to the extent it deems
necessary in connection with the offering of the Certificates and is
not relying on counsel to the Trust or counsel to any other party
with respect to the matters relating, directly or indirectly, to the
furnishing or verifying of information relating to the Seller, the
Trust or any parties to the transaction or their respective financial
condition or with respect to any assets of the Trust or which
relates in any way to the Certificates or any security relating to the
Certificates.
11. The Purchaser hereby further agrees to be bound by
all the terms and conditions of the Certificates as provided in the
Pooling and Servicing Agreement.
<PAGE>
12. If the Purchaser sells any of the Certificates, the
Purchaser will obtain from any subsequent purchaser the same
representations contained in this Letter.
Very truly yours,
[PURCHASER]
By
Name
Title EXHIBIT L
FORM OF INVESTOR/TRANSFEREE LETTER
(Non-Rule 144A Transfer)
[Date]
Aegis Auto Funding Corp. IV
525 Washington Boulevard
Jersey City, New Jersey 07310
Norwest Bank Minnesota, National Association
Sixth Street and Marquette Avenue
Minneapolis, MN 55479-0070
Attention: Corporate Trust Services Asset Backed
Administration
Aegis Auto Funding Corp. IV
Aegis Auto Receivables Trust 199_-_
Automobile Receivable Pass-Through Certificates,
Class ___
Ladies and Gentlemen:
The undersigned (the "Purchaser") proposes to purchase
certain Automobile Receivable Certificates, Class ____ (the
"Certificates") issued by Aegis Auto Receivables Trust 199_-_ (the
"Trust) pursuant to a Pooling and Servicing Agreement dated as of
_________________ (the "Pooling and Servicing Agreement"),
among Aegis Auto Funding Corp. IV, as Seller, Norwest Bank
Minnesota, National Association, as Backup Servicer, and Norwest
Bank Minnesota, National Association as Trustee. Unless the
context or use indicates another or different meaning, each
capitalized term used herein and not otherwise defined herein shall
have the meaning ascribed to it in the Pooling and Servicing
Agreement.
The Purchaser represents and warrants that:
(a) Information. [For III Finance and III Global only:
The Purchaser acknowledges that it or its affiliate has acted as a
warehouse lender to the originator of the Receivables and, as such,
it has had substantial access to information relating to the Trust
and the assets backing the Certificates.] The Purchaser
acknowledges that no offering memorandum or other offering
literature has been prepared in connection with the offering of the
Certificates and that it is not relying on any party for furnishing or
verifying information relating to the Seller, the Trust or other
parties to this transaction or their respective financial condition, or
with respect to any assets of the Trust or which relates in any way
to the Certificates or any security relating to the Certificates. The
Purchaser acknowledges that it has made such investigation as the
Purchaser deems necessary to evaluate the merits and risks
involved with an investment in the Certificates, and has had an
opportunity to review the documents providing for the issuance of
the Certificates and to meet with officers and employees of the
Seller and to ask questions and receive answers regarding an
investment in the Certificates and has asked any question he
desired to ask and has received answers with respect to such
questions to the full satisfaction of the Purchaser, and the
Purchaser confirms that all requested documents, records and
books pertaining to the investment in the Certificates have been
made available or delivered to the Purchaser, and the Purchaser
has relied exclusively on such information. The Purchaser has
been represented by its own legal counsel to the extent it deems
necessary in connection with the offering of the Certificate and is
not relying on counsel to the Trust or counsel to any other party
with respect to any matters relating, directly or indirectly, to the
furnishing or verifying of information relating to the Seller, the
Trust or other parties to the transaction or their respective financial
condition or with respect to any assets of the Trust or which
relates in any way to the Certificates or any security relating to the
Certificates.
(b) No Reliance on Other Purchasers. In making its
investment decision with respect to subscribing for the Certificates,
the Purchaser has not relied upon any statement, representation or
advice of any other Purchaser of the Certificates.
(c) Purchase for Investment. The Purchaser is
purchasing the Certificates without a view to any distribution,
assignment, resale or other disposition of the Certificates in any
manner which would violate the Securities Act of 1933, as
amended (the "Securities Act"), or applicable state securities or
"Blue Sky" laws, subject, nevertheless, to the understanding that
the disposition of the Purchaser's property shall at all times be and
remain within the Purchaser's control, and the Certificates are
being purchased solely for the Purchaser's own account for
investment purposes only and not for the account of any other
person.
(d) Institutional Accredited Investor. The Purchaser is
an institutional "accredited investor" as defined in Rule 501 under
the Securities Act as follows (check one):
( ) A bank as defined in Section 3(a)(2) of the
Securities Act, whether acting in its individual or fiduciary
capacity;
( ) A savings and loan association or other
institution as defined in Section 3(a)(5)(A) of the Securities
Act, whether acting in its individual or fiduciary capacity;
( ) A broker or dealer registered pursuant to
Section 15 of the Securities Exchange Act of 1934;
( ) An insurance company as defined in Section
2(13) of the Securities Act;
( ) An investment company registered under the
Investment Company Act of 1940 or a business
development company as defined in Section 2(a)(48) of that
Act;
( ) A Small Business Investment Company
licensed by the U.S. Small Business Administration under
Section 301(c) or (d) of the Small Business Investment Act
of 1958;
( ) An employee benefit plan within the meaning
of Title I of the Employee Retirement Income Security Act
of 1974 ("ERISA"), if the investment decision is made by
a plan fiduciary (as defined in Section 3(21) of ERISA)
which is a bank, savings and loan association, insurance
company or registered investment advisor, or if the plan
has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by
accredited investors;
( ) A plan established or maintained by a state,
its political subdivisions, or any agency or instrumentality
of a state or its political subdivisions, for the benefit of its
employees, if such plan has total assets in excess of
$5,000,000;
( ) A private business development company as
defined in Section 202(a)(22) of the Investment Advisers
Act of 1940;
( ) An organization described in Section
501(c)(3) of the Internal Revenue Code, corporation,
Massachusetts or similar business trust or partnership, not
formed for the specific purpose of acquiring the securities
offered, with total assets in excess of $5,000,000;
( ) A trust, with total assets in excess of
$5,000,000, not formed for the specific purpose of
acquiring the securities offered, whose purchase is directed
by a person having such knowledge and experience in
financial and business matters to be capable of evaluating
the merits and risks of an investment in the Certificates; or
( ) An entity in which all of the equity owners
fall within one of the foregoing categories of "accredited
investors."
(e) Exempt Offering. The Purchaser understands that
the Certificates are not being registered under the Securities Act or
any state securities or "Blue Sky" laws and are being sold in
reliance on exemptions from the registration requirements of the
Securities Act and any such laws for non-public offerings. The
Purchaser understands that the exemptions from the registration
requirements under state securities laws upon which the
Certificates is relying require that the Purchaser be one of the
types of investors specified in subsection (d) above under the
applicable state securities law and the Purchaser is such an
investor. The Purchaser further understands that the Certificates
must be held indefinitely unless subsequently registered under the
Securities Act, any applicable state securities or "Blue Sky" laws
or unless exemptions from the registration requirements of the
Securities Act and such laws are available. The Purchaser
represents, warrants and agrees that, if at some future time the
Purchaser wishes to dispose of or exchange any of the Certificates,
the Purchaser will not do so unless before any such sale, transfer
or other disposition the Purchaser shall have furnished to the
Trustee either (a) a certificate of the transferee that the transferee
is a "qualified institutional buyer" within the meaning of Rule
144A promulgated pursuant to the Securities Act or (b) a
certificate of the transferee that the transferee is an institutional
"accredited investor" as defined in Rule 501(a) of the Securities
Act and, in the case of (b) only, an opinion of counsel satisfactory
in form and substance to the Trustee and the transferor, to the
effect that the sale, transfer or other disposition of such Certificate
has been registered under the Securities Act, or that such sale,
transfer or other disposition does not require registration under the
Securities Act.
(f) Legal Investment. The Purchaser understands that
there may be restrictions on the ability of certain investors,
including, without limitation, depository institutions, either to
purchase the Certificates or to purchase investments having
characteristics similar to those of the Certificates representing
more than a specified percentage of the investor's assets, and the
Purchaser further represents and warrants that it has consulted, and
relied on the advice of, its own legal advisor in determining
whether and to what extent the Certificates constitute a legal
investment for the Purchaser.
(g) The Purchaser (i) has no need for liquidity with
respect to the Certificates, (ii) is able to bear the economic risks
of an investment in the Certificates for an indefinite period and
(iii) is able to afford a complete loss of such investment. The
Purchaser has such knowledge and experience in financial and
business matters to use the information made available in
connection with the offering of the Certificates, to evaluate the
merits and risks of the prospective investment in the Certificates
and to make an informed business decision with respect thereto.
The Purchaser understands that the Seller will rely upon the
information supplied by the Purchaser pursuant to this Agreement
in order to verify this representation and warranty and represents
that such information is true and correct in all respects. The
Purchaser understands that a false representation may constitute a
violation of law, that any person which suffers damage as a result
of a false representation may have a claim against the undersigned
for damages for which the undersigned will indemnify the Seller
and its affiliates pursuant to the terms of this Agreement.
(h) The Purchaser recognizes that an investment in the
Certificates involves significant risks.
(i) The Purchaser understands that no offering
memorandum has been prepared for filing with or review by any
state securities administrators because of the representations made
by the Seller as to the private or limited nature of the offering.
(j) The Purchaser understands that there is no
established market for the Certificates and that none may develop
and, accordingly, that the Purchaser must bear the economic risk
of an investment in the Certificates for an indefinite period of
time.
(k) The Purchaser agrees that it is bound by and will
abide by the provisions of the Pooling and Servicing Agreement
pursuant to which the Certificates are issued.
(l) All information which the Purchaser has provided
to the Seller concerning the Purchaser is correct and complete as
of the date hereof, and if there should be any adverse change in
such information before receiving notification that this subscription
has been accepted, the Purchaser will immediately provide the
Seller with such information.
Very truly yours,
[PURCHASER]
By
Name
Title
EXHIBIT M
FORM OF ERISA REPRESENTATION LETTER
________________
(Date)
Aegis Auto Funding Corp. IV
525 Washington Boulevard
Jersey City, NJ 07130
Norwest Bank Minnesota, National Association
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479-0070
Attention: Corporate Trust Services Asset Backed
Administration
Re: Aegis Auto Funding Corp. IV
Aegis Auto Receivables Trust 199_-_
Auto Receivable Pass-Through Certificates, Class
____
Ladies and Gentlemen:
[NAME OF OFFICER] _______________________
HEREBY CERTIFIES THAT:
1. [That he [she] is [Title of Officer]
________________________ of [Name of Transferee]
___________________________________ (the "Transferee"), a
[savings institution] [corporation] duly organized and existing
under the laws of [the State of _____________] [the United
States], on behalf of which he [she] makes this affidavit.
2. The Transferee (i) is not, and on _________ [insert
date of transfer of Certificate to Transferee] will not be, and on
such date will not be investing the funds of, an employee benefit
plan subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA") or a plan subject to Section 4975 of
the Code or (ii) is an insurance company investing assets of its
general account and the exemption provided by Section III(a) of
Department of Labor Prohibited Transaction Class Exemption 95-
60, 60 Fed. Reg. 35925 (July 12, 1995) (the "Exemption") applies
to the transferee's acquisition and holding of such Certificate.
3. The Transferee hereby acknowledges that under the
terms of the Pooling and Servicing Agreement (the "Agreement")
among Aegis Auto Funding Corp. IV, and Norwest Bank
Minnesota, National Association, as Backup Servicer and as
Trustee, dated as of _________________, no transfer of any Class
B or Class C Certificates shall be permitted to be made to any
person unless the Trustee has received (i) a certificate from such
transferee to the effect that such transferee (A) is not an employee
benefit plan subject to ERISA or a plan subject to Section 4975 of
the Code (a "Plan") and is not using assets of any such employee
benefit or other plan to acquire any such Certificate or (B) is an
insurance company investing assets of its general account and the
Exemption applies to the transferee's acquisition and holding of
such Certificate or (ii) an opinion of counsel satisfactory to the
Trustee to the effect that the purchase and holding of any such
Certificate will not constitute or result in the assets of the Trust
created by the Agreement begin deemed to be "plan assets" and
subject to the prohibited transaction provisions of ERISA or
Section 4975 of the Code and will not subject the Trustee or the
Seller to any obligation in addition to those undertaken in the
Agreement (provided, however, that the Trustee will not require
such certificate or opinion in the event that, as a result of changed
of law or otherwise, counsel satisfactory to the Trustee has
rendered an opinion to the effect that the purchase and holding of
any such Certificate by a Plan or a Person that is purchasing or
holding any such Certificate with the assets of a Plan will not
constitute or result in a prohibited transaction under ERISA or
Section 4975 of the Code).
IN WITNESS WHEREOF, the Transferee has caused this
instrument to be executed on its behalf, pursuant to authority of its
Board of Directors, by its [Title of Officer] __________________,
this day of _____, 199_.
_______________________________________________
[name
of Transferee]
By:_____________________________________________
Name:
Title:
<PAGE>
EXHIBIT N
NOTICE OF FUNDING
In accordance with the Pooling and Servicing Agreement
dated as of _________________ by and among Norwest Bank
Minnesota, National Association, as backup servicer and as
trustee, and Aegis Auto Funding Corp. IV, a Delaware corporation
(the "Pooling and Servicing Agreement"), the undersigned hereby
gives notice of a Funding Date to occur on ____________, 19
for each of the Receivables listed on Schedule I to the Assignment
executed by the undersigned and accompanying this Notice of
Funding. Unless otherwise defined herein, capitalized terms have
the meanings set forth in the Pooling and Servicing Agreement.
Such Receivables represent the following amounts:
Principal Balance of Receivables
as of the Cutoff Date: $______________
Amount to be transferred
to the Reserve Fund from
the Funding Account: $______________
Amount to be wired to the undersigned or its
designee (Aegis Finance) in payment for such
Receivables: $______________
The undersigned hereby certifies that, in connection with
the Funding Date specified above, the undersigned has complied
with all terms and provisions specified in Section 3.08 of the
Pooling and Servicing Agreement, including, but not limited to,
delivery of the Officers' Certificate, as specified therein.
Date: ________________, 199
AEGIS
AUTO FUNDING CORP. IV,
a
Delaware Corporation, as Seller
By
Angelo R. Appierto
President<PAGE>
EXHIBIT O
OFFICER'S CERTIFICATE
re: Funding Date
AEGIS AUTO FUNDING CORP. IV
To: Norwest Bank Minnesota, National Association
Corporate Trust Services Asset Backed Administration
Sixth Street and Marquette Avenue
Minneapolis, MN 55479-0070
Fax 612-667-9825
This Officer's Certificate is being issued in accordance with
Section 3.08 of the Pooling and Servicing Agreement dated as of
_________________ (the "Pooling and Servicing Agreement") by
and among Aegis Auto Funding Corp. IV, a Delaware corporation,
as seller ("Seller"), and Norwest Bank Minnesota, National
Association, as Backup Servicer and as Trustee. Terms not
otherwise defined herein shall have the meanings ascribed thereto
in the Pooling and Servicing Agreement.
By his signature below, the undersigned certifies that:
(a) The matters set forth in Section 3.01(b) of
the Purchase Agreement by and between Aegis Auto
Finance, Inc., as the transferor named therein, and Seller,
as transferee, are true and correct. All Receivables
acquired on the Funding Date to occur on ________, 199
constitute Additional Receivables meeting the criteria
specified in the Purchase Agreement; and
(b) The representations and warranties set forth
in Sections 3.01(a) and (b) of the Pooling and Servicing
Agreement are true and correct as of the date hereof; and
(c) The documents listed in Sections 3.08(b)(i)
and (ii) of the Pooling and Servicing Agreement are being
delivered to the Trustee in its capacity as Custodian on or
before the Funding Date specified herein.
Dated: __________, 199_
AEGIS AUTO
FUNDING CORP. IV,
a Delaware
corporation, as Seller
By
Angelo
R. Appierto, President<PAGE>
EXHIBIT P
ASSIGNMENT
In accordance with the Pooling and Servicing Agreement
dated as of _________________ by and among Aegis Auto
Funding Corp. IV, a Delaware corporation (the "Seller"), and
Norwest Bank Minnesota, National Association, as trustee (the
"Trustee") and as backup servicer (the "Backup Servicer") (the
"Pooling and Servicing Agreement"), the Seller hereby assigns,
transfers and otherwise conveys unto the Trustee in trust for the
benefit of the Certificateholders, without recourse (capitalized
terms used herein and not otherwise defined shall have the
meaning assigned to them in the Pooling and Servicing
Agreement): (i) all right, title and interest of the Seller in and to
the Receivables identified on Schedule I attached hereto (the
"Receivables"), and all moneys received thereon, on and after the
Cutoff Date; (ii) the interest of the Seller in the security interests
in the Financed Vehicles granted by the Obligors pursuant to the
Receivables and all certificates of title to such Financed Vehicles;
(iii) the interest of the Seller in any Risk Default Insurance
Proceeds or any proceeds from claims on Insurance Policies
(including the VSI Insurance Policy) covering the Receivables, the
Financed Vehicles or Obligors from the Cutoff Date; (iv) the right
of the Seller to realize upon any property (including the right to
receive future liquidation Proceeds) that shall have secured a
Receivable and have been repossessed by or on behalf of the
Trustee; (v) the interest of the Seller in any Dealer Recourse; (vi)
all right, title and interest in the Seller in and to the Purchase
Agreement; (vii) all right, title and interest of the Seller in and to
the Funding Account and any monies and investments on deposit
therein and (viii) the proceeds of any and all of the foregoing.
The foregoing sale does not constitute and is not intended to result
in any assumption by the Trustee of any obligation of the
undersigned to the Obligors, insurers or any other person in
connection with the Receivables, Custodian Files, Servicer Files,
any insurance policies or any agreement or instrument relating to
any of them.
This Assignment is made pursuant to and upon the
representations, warranties and agreements contained in the
Pooling and Servicing Agreement.
IN WITNESS WHEREOF, the undersigned has caused this
Assignment to be duly executed as of , 199 .
AEGIS
AUTO FUNDING CORP. IV,
a
Delaware corporation
By
Angelo R. Appierto, President
EXHIBIT Q
[RESERVED]
EXHIBIT R
TRUSTEE'S CERTIFICATE
Norwest Bank Minnesota, National Association, as trustee
(the "Trustee") of the Aegis Auto Receivables Trust Series 199_-_
created pursuant to the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") dated as of
_________________ among Aegis Auto Funding Corp. IV (the
"Seller"), Norwest Bank Minnesota, National Association, as
backup servicer (the "Backup Servicer") and as trustee (the
"Trustee"), does hereby sell, transfer, assign and otherwise convey
to the Seller, without recourse, representation or warranty, all of
the Trustee's right, title and interest in and to all of the
Receivables (as defined in the Pooling and Servicing Agreement)
identified in the attached Servicer's Certificate of "Purchased
Receivables," which are to be repurchased by the Seller pursuant
to Section 3.02 of the Pooling and Servicing Agreement, and all
security and documents relating thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this
day of 199 .
Norwest Bank Minnesota, National
Association, as Trustee
By
[Name]
[Title]
EXHIBIT S
[RESERVED]
APPENDIX B
TO THE MASTER TRUST AGREEMENT
FORM OF POOLING AND SERVICING AGREEMENT
AEGIS AUTO FUNDING CORP. IV,
a Delaware Corporation, Seller
and
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
Trustee and Backup Servicer
POOLING AND SERVICING AGREEMENT
Dated as of _________________
$______________
AEGIS AUTO RECEIVABLES TRUST 199_-_
AUTOMOBILE RECEIVABLE PASS-THROUGH
CERTIFICATES
TABLE OF CONTENTS
Page
ARTICLE I. CREATION OF TRUST
1
ARTICLE II. CONVEYANCE OF RECEIVABLES
1
ARTICLE III. ACCEPTANCE BY TRUSTEE
3
ARTICLE IV. INCORPORATION OF STANDARD TERMS
AND
CONDITIONS
3
ARTICLE V. SPECIAL DEFINITIONS AND TERMS
4
ARTICLE VI. ADDITIONAL SELLER REPRESENTATIONS
5
TESTIMONIUM
SIGNATURES
APPENDIX A Schedule of Receivables
APPENDIX B Schedule of Identified Additional Receivables
APPENDIX C Standard Terms and Conditions
APPENDIX D VSI Insurance Policy Endorsement
POOLING AND SERVICING AGREEMENT
This POOLING AND SERVICING AGREEMENT is dated
as of ____________ (this "Agreement") among Aegis Auto
Funding Corp. IV, a Delaware corporation, as Seller (the "Seller")
and Norwest Bank Minnesota, National Association, a national
banking association, as trustee for the Trust (the "Trustee") and as
Backup Servicer (the "Backup Servicer") and is made with respect
to the formation of the Aegis Auto Receivables Trust 199_-_ (the
"Trust").
WHEREAS, the Seller and the Trustee desire to form a
trust pursuant to the Master Trust Agreement dated as of March 1,
1997 (the "Master Trust Agreement") by and between the Seller
and the Trustee, and provide for the issuance of a series of
Automobile Pass-Through Certificates by such trust;
NOW, THEREFORE, in consideration of the premises and
of the mutual agreements herein contained, the parties hereto agree
as follows:
ARTICLE I
CREATION OF TRUST
Upon the execution of this Agreement by the parties hereto,
there is hereby created the Aegis Auto Receivables Trust 199_-_.
The situs and administration of the Trust shall be in Minneapolis,
Minnesota or in such other city in which the Corporate Trust
Office is located from time to time.
ARTICLE II
CONVEYANCE OF RECEIVABLES
[Note: Delete bracketed provisions if no Funding Period is
applicable. Remove brackets if there will be a Funding Period]
Section 2.01. Conveyance by Seller.
(a) In consideration of the Trustee's delivery of
the Certificates to or upon the order of the Seller in an
aggregate principal amount equal to the aggregate Principal
Balance of the Initial Receivables [plus the Original Pre-
Funded Amount,] the Seller does hereby irrevocably sell,
assign, and otherwise convey to the Trustee, in trust for the
benefit of the Certificateholders, without recourse (subject
to the obligations herein):
(i) all right, title and interest of the Seller in and to the Initial
Receivables identified on Appendix A hereto, all Excess Interest
Collections thereon and all other moneys received thereon on and
after the Cutoff Date;
(ii) the interest of the Seller in the
security interests in the Financed Vehicles granted
by the Obligors pursuant to the Initial Receivables;
(iii) the interest of the Seller in any Risk
Default Insurance Proceeds and any proceeds from
claims on any Insurance Policies (including the VSI
Insurance Policy) covering the Initial Receivables,
the Financed Vehicles or the Obligors from the
Cutoff Date;
(iv) all right, title and interest of the
Seller in and to the Funding Account and all
moneys and investments from time to time on
deposit therein;
(v) the right of the Seller to realize upon
any property (including the right to receive future
Liquidation Proceeds) that shall have secured an
Initial Receivable and have been repossessed by or
on behalf of the Trustee;
(vi) the interest of the Seller in any
Dealer Recourse relating to the Initial Receivables;
(vii) all right, title and interest of the
Seller in and to the Purchase Agreement; and
(viii) the proceeds of any and all of the
foregoing.
[(b) Subject to the conditions set forth in Section
3.08 of the Standard Terms incorporated herein, in
consideration of the Trustee's delivery on the related
Funding Dates to or upon the order of the Seller of all or
a portion of the balance in the Funding Account in an
amount equal to the aggregate Receivables Cash Purchase
Price of the Additional Receivables to be acquired on the
Funding Date, the Seller shall on such Funding Date sell,
transfer, assign, set over and otherwise convey to the
Trustee, without recourse (subject to the obligations
herein):
(i) all right, title and interest of the Seller in and to the
Additional Receivables, all Excess Interest Collections thereon and
all other moneys received thereon on and after the related Cutoff
Date;
(ii) the interest of the Seller in the security interests in the
Financed Vehicles granted by Obligors pursuant to the Additional
Receivables;
(iii) the interest of the Seller in any Risk Default Insurance
Proceeds or any proceeds from claims on any Insurance Policies
(including the VSI Insurance Policy) covering the Additional
Receivables, the Financed Vehicles or the Obligors from the
related Cutoff Date;
(iv) the right of the Seller to realize upon any property
(including the right to receive future Liquidation Proceeds) that
shall have secured an Additional Receivable and have been
repossessed by or on behalf of the Trustee;
(v) the interest of the Seller in any Dealer Recourse relating to
the Additional Receivables;
(vi) all right, title and interest of the Seller in and to the
Purchase Agreement; and
(vii) the proceeds of any and all of the foregoing.]
Section 2.02. Nature of Conveyance. It is the intention of
the Seller and the Trustee that the transfer and assignment of the
Seller's right, title and interest in and to the assets identified in
clauses (i) through (vii) of Section 2.01(a) [and clauses (i) through
(vii) of Section 2.01(b)] (collectively, the "Trust Property") shall
constitute an absolute sale by the Seller to the Trustee in trust for
the benefit of the Certificateholders. In the event a court of
competent jurisdiction were to recharacterize the transfer of the
Trust Property as a secured borrowing rather than a sale, contrary
to the intent of the Seller and the Trustee, the Seller does hereby
grant, assign and convey to the Trustee and the Trust, as security
for all amounts payable to the Certificateholders, a security in and
lien upon all of its right, title and interest in and to the Trust
Property, including all amounts deposited to the Lock-Box
Account, the Collection Account, the Certificate Account [and the
Funding Account,] said security interest to be effective from the
date of execution of this Agreement.
The Trustee and the Certificateholders acknowledge and
agree that the Seller is the holder of the Residual Interest.
ARTICLE III
ACCEPTANCE BY TRUSTEE
The Trustee, on behalf of the Trust, hereby accepts all
consideration conveyed by the Seller pursuant to Article II, and
declares that the Trustee shall hold such consideration upon the
trusts herein set forth for the benefit of all present and future
Certificateholders, subject to the terms and provisions of this
Agreement and the Master Trust Agreement.
ARTICLE IV
INCORPORATION OF STANDARD TERMS AND
CONDITIONS
This Agreement hereby incorporates by reference the
Standard Terms provided for by the Master Trust Agreement in
the form attached hereto as Appendix C, except to the extent
expressly modified hereby.
ARTICLE V
SPECIAL DEFINITIONS AND TERMS
Capitalized terms not otherwise defined herein shall have
the meanings ascribed to them in the Standard Terms and
Conditions. Whenever used in this Agreement, the following
words and phrases shall have the following meanings:
"Backup Servicer Fee" means, with respect to any
Distribution Date, one-twelfth of the product of (i) 0.02% per
annum and (ii) the outstanding Pool Balance as of the first day of
the preceding Collection Period or, in the case of the first
Distribution Date, as of the Closing Date.
"Class A Percentage" means _________%.
"Class A Rate" means _________% of interest per annum.
"Class B Percentage" means _________%.
"Class B Rate" means _________% of interest per annum.
"Closing Date" means _____________.
"Custodian Fee" means $1.75 per file boarded.
"Cutoff Date" means ____________.
"Discount Rate" means % per annum.
"Final Scheduled Distribution Date" means
______________.
["Funding Account Interest Amount" means
________________________.]
["Funding Period" means the period beginning on the
Closing Date and ending on the earlier to occur of (i) the Final
Funding Date or (ii) the expiration of the fifteen day period
commencing on the Closing Date.]
"Initial Distribution Date" means _____________.
"Original Class Certificate Balance" means, as to the Class
A Certificates, $_____________, and as to the Class B
Certificates, $______________.
["Original Pre-Funded Amount" means $ , the
amount deposited in the Funding Account on the Closing Date.]
"Reserve Fund Initial Deposit" means $______________.
"Trustee Fee" means, with respect to any Distribution Date,
one-twelfth of the product of (i) 0.01% per annum and (ii) the
aggregate Class Certificate Balance as of the close of business on
the preceding Distribution Date (or, in the case of the Initial
Distribution Date, the original aggregate Class Certificate
Balance).
ARTICLE VI
ADDITIONAL SELLER REPRESENTATIONS
The Seller hereby makes the following additional
representations with respect to the Receivables:
(i) Schedule of Receivables. The information set forth
in Appendix A hereto is true, complete and correct in all material
respects as of the opening of business on the applicable Cutoff
Dates, as the case may be, and no selection procedures adverse to
the Certificateholders have been utilized in selecting the
Receivables.
(ii) Scheduled Payments. No Receivables had a payment
that was more than 59 days overdue as of the applicable Cutoff
Date; and each Receivable has a final scheduled payment due no
later than the Final Scheduled Distribution Date.
(iii) Annual Percentage Rate. The addition of the
Additional Receivables on each Funding Date will not decrease the
weighted average APR of all Receivables sold hereunder by more
than 10 basis points.
(iv) States of Origination. After the addition of all
Additional Receivables to the Trust, not more than 25% of the
Receivables will have been originated in any one state.
(v) Insurance Policy Endorsements. Attached hereto as
Appendices E and F, respectively, are true and correct copies of
the endorsements to the Risk Default Insurance Policy and VSI
Insurance Policy required by the Standard Terms.
ARTICLE VII
CERTIFICATE DELIVERY AND REGISTRATION
The Certificates shall be designated as the "Aegis Auto
Receivables Trust _________, Automobile Receivable Pass-
Through Certificates, Series _____ (the "Certificates"), and issued
with an initial aggregate Certificate Balance of $___________ in
two Classes as follows: Class A Certificates with an initial
Balance of $______________ and Class B Certificates with an
initial Certificate Balance of $_____________.
The Seller hereby directs the Trustee to register the
Certificates in the names and denominations specified in the
direction attached hereto as Appendix E, and to execute,
authenticate and deliver the Certificates to the initial purchasers
specified in such direction upon receipt by the Trustee of the
following:
(i) $_____________ in immediately available
funds from the purchasers for the account of the
Seller;
(ii) Investor letters executed by each of the
initial purchasers;
(iii) An executed copy of the Supplemental
Conveyance from Aegis Finance in the form attached as
Appendix A to the Purchase Agreement with respect to the
Receivables conveyed to the Trust on the Closing Date;
(iv) An executed copy of the certificate of the
Seller required by Section 7 of the Master Certificate
Purchase Agreement substantially in the form attached
hereto as Appendix F; and
(v) Executed opinions of counsel to the Seller
required by Section 7 of the Master Certificate Purchase
Agreement.
ARTICLE VIII
APPLICATION OF PROCEEDS
The proceeds of the Certificates, receipt of which the
Trustee hereby acknowledges, shall be applied as follows:
(i) $___________ shall be deposited into
the Reserve Fund as the Reserve Fund Initial
Deposit;
[(ii) $____________ shall be deposited
into the Funding Account as the Original Pre-
Funded Amount]; and
(iii) The remainder of $____________
shall be paid to the Seller or upon the Seller's
order.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused
this Pooling and Servicing Agreement to be duly executed by their
respective officers as of the day and year first above written.
AEGIS AUTO
FUNDING CORP. IV,
as Seller
By:
Name:
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee and
as Backup Servicer
By:
Name:
Title:
[Signature Page to Pooling and Servicing Agreement]
APPENDIX A
SCHEDULE OF RECEIVABLES
Delivered to the Trustee on the Closing Date
[(This Schedule shall be deemed to be amended on each Funding
Date to add
Additional Receivables and shall be deemed to be amended to
account for any
substitution of Receivables permitted by the Agreement upon the
occurrence of any such substitution.)]
(See Attached)
APPENDIX B
STANDARD TERMS AND CONDITIONS
APPENDIX C
RISK DEFAULT INSURANCE POLICY ENDORSEMENT
APPENDIX D
VSI INSURANCE POLICY ENDORSEMENT
Appendix E
$[AMOUNT]
Aegis Auto Receivables Trust ________
Automobile Receivable Pass-Through Certificates,
Series _________
DIRECTION AS TO
REGISTRATION OF CERTIFICATES
The undersigned purchasers of the above-referenced Certificates hereby
direct the Trustee to register such Certificates in the names and
denominations specified below:
CLASS A CERTIFICATES
Certificate
Number Name
Amount Purchased
R-1
$[CLASS A AMOUNT]
CLASS B CERTIFICATES
Certificate
Number Name
Amount Purchased
R-1
$[CLASS B AMOUNT]
Total
$[AMOUNT]
IN WITNESS WHEREOF, the undersigned have duly
executed this Direction as to Registration of Certificates as of the
date set forth below.
Dated: _____________________
III FINANCE LTD.
By
Name:
Title:
III GLOBAL LTD.
By
Name:
Title:
III LIMITED PARTNERSHIP
By
Name:
Title:
Appendix F
$[AMOUNT]
Aegis Auto Receivables Trust _________
Automobile Receivable Pass-Through Certificates,
Series _________
GENERAL CERTIFICATE
OF
AEGIS AUTO FUNDING CORP. IV
The undersigned, on behalf of Aegis Auto Funding
Corp. IV, a Delaware corporation ("Seller"), hereby certifies this
_________________, as follows in connection with the issuance of
the above-referenced Certificates (the "Certificates") pursuant to
the terms of the Pooling and Servicing Agreement dated as of
________________ (the "Agreement") among the Seller, Norwest
Bank Minnesota, National Association, as backup servicer and
Norwest Bank Minnesota, National Association, as Trustee, and
the Master Trust Agreement dated as of March 1, 1997 (the
"Master Trust Agreement") between the Seller and the Trustee
(capitalized terms used but not otherwise defined herein shall have
the meanings ascribed to them in the Standard Terms and
Conditions attached as Appendix A to the Master Trust
Agreement):
1. The undersigned has carefully examined the
Agreement, the Master Trust Agreement, the Purchase Agreement
and the Master Certificate Purchase Agreement.
2. The representations and warranties of the
Seller contained in the Agreement, the Master Trust Agreement,
the Purchase Agreement and the Master Certificate Purchase
Agreement are true and correct in all material respects as if made
on and as of the date hereof (except for such representations and
warranties specifically made as of another specified date).
3. Neither the Seller nor any of its Affiliates is
in default in the performance of any of their respective obligations
under the documents mentioned in paragraph 2 above or any other
Pooling and Servicing Agreement executed pursuant to the terms
of the Master Trust Agreement.
4. The Seller has complied with all agreements
and satisfied all conditions on its part to be performed or satisfied
under the documents specified in paragraph 2 above at or prior to
the date hereof.
5. The Seller did not, either independently or
through any other party, solicit any offer to buy or offer to sell the
Certificates or any similar security by means of any form of
general solicitation or general advertising, including, but not
limited to, (i) any advertisement, article, notice or other
communication published in any newspaper, magazine or similar
medium or broadcast over television or radio, and (ii) any seminar
or meeting whose attendees have been invited by any general
solicitation or general advertising.
6. The Certificates were sold by the Seller to III
Finance Ltd., III Global Ltd. and III Limited Partnership in a
private placement in transactions exempt from the registration
requirements of the Act.
7. The undersigned is duly authorized by the
Seller to make the foregoing representations on behalf of the Seller
and has conducted such investigation and made such inquiries as
he has deemed necessary and appropriate in order to make such
representations on behalf of the Seller.
<PAGE>
IN WITNESS WHEREOF the undersigned has signed this
General Certificate of Aegis Auto Funding Corp. IV as of the date
first written above.
AEGIS AUTO
FUNDING CORP. IV
By:
__________________________
Name:
Title:
<PAGE>
Appendix [G]
FORM OF OPINIONS
MASTER PURCHASE AGREEMENT
This MASTER PURCHASE AGREEMENT
is made as of March 1, 1997, 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. IV, a Delaware
corporation, having its principal executive office at
525 Washington Boulevard, Jersey City, New
Jersey 07310, as purchaser (the "Purchaser").
WHEREAS, the Seller originates or acquires
in the ordinary course of its business motor vehicle
retail installment sales contracts secured by new and
used automobiles and light-duty trucks, along with
certain related property with respect thereto (the
"Receivables"); and
WHEREAS, the Seller desires to sell
Receivables to the Purchaser from time to time
during the term of this Agreement and the
Purchaser desires to purchase such Receivables
subject to the terms and conditions set forth herein;
and
WHEREAS, the Purchaser intends to
subsequently convey Receivables purchased by it
pursuant to the terms hereof to a series of separate
trusts (each a "Trust") to be created pursuant to the
terms of the Master Trust Agreement dated as of
March 1, 1997 (the "Master Trust Agreement")
between the Purchaser and Norwest Bank
Minnesota, National Association, as trustee (the
"Trustee") and each related Pooling and Servicing
Agreement executed and delivered pursuant to the
terms thereof; and
WHEREAS, each such Trust is expected to
issue pass-through certificates representing
undivided interests in each pool of Receivables and
other property conveyed to 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 the Standard Terms
and Conditions attached to the Master Trust
Agreement. 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" means this Master Purchase
Agreement and all amendments hereof and
supplements hereto.
"Cutoff Date" means the date designated as
such in any Supplemental Conveyance.
"Purchaser" means Aegis Auto Funding
Corp. IV, a Delaware corporation, its successors
and assigns.
"Receivable" means any retail installment
sales contract and security agreement sold pursuant
hereto, as identified on the related Schedule of
Receivables for each Sale Date.
"Receivables Cash Purchase Price" means
with respect to any Receivable sold on a Sale Date,
100% of the Principal Balance of such Receivable
(or 92% if such Receivable is Uninsured) payable
as provided in Section 2.01 hereof.
"Sale Date" means each date on which a
pool of Receivables is sold pursuant to the terms
hereof, each such date corresponding to either a
Closing Date or a Funding Date for the Purchaser's
sale of Receivables to a Trust.
"Schedule of Receivables" means, with
respect to any Sale Date, the list of Receivables
sold on such date attached as Schedule I to the
related Supplemental Conveyance.
"Seller" means Aegis Auto Finance, Inc., a
Delaware corporation, its successors and assigns.
"Supplemental Conveyance" means each
supplemental conveyance executed by the Seller
substantially in the form attached to this Agreement
as Exhibit A evidencing the sale of a pool of
Receivables to the Purchaser.
"Trustee" means Norwest Bank Minnesota,
National Association, its successors and assigns.
"UCC" means the Uniform Commercial
Code, as in effect from time to time in the relevant
jurisdictions.<PAGE>
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
Section 2.01. Purchase and Sale of
Receivables. (a) On each Sale Date, in exchange
for the Receivables Cash Purchase Price and subject
to the other terms and conditions of this Agreement,
the Seller agrees to sell, transfer, assign and
otherwise convey to the Purchaser, without recourse
(except as provided in Sections 6.01 and 7.02), a
100% interest in (i) all right, title and interest of the
Seller in and to the Receivables listed on the
applicable Schedule of Receivables, all monies
constituting Excess Interest Collections with respect
thereto, and all other moneys received thereon on
and after the related Cutoff Date; (ii) the security
interests in the Financed Vehicles granted by the
Obligors pursuant to such 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 such Receivables, the Financed
Vehicles or the Obligors; (iv) the interest of the
Seller in any Dealer Recourse; and (v) the proceeds
of any and all of the foregoing. (All of the
property identified in this subsection (a) shall
constitute "Trust Property.")
(b) In consideration for the Receivables
and the other Trust Property relating thereto sold on
any Sale Date, the Purchaser shall (i) on each such
date corresponding to a Closing Date for a Trust,
pay to the Seller an amount equal to the Receivables
Cash Purchase Price by wire transfer of
immediately available funds; and (ii) on each such
date corresponding to a Funding Date for a Trust,
cause the Trustee for such Trust to pay to the Seller
from the applicable Funding Account an amount
equal to the Receivables Cash Purchase Price by
wire transfer of immediately available funds.
Section 2.02. Security Interest. It is the
intention of the Seller and the Purchaser that each
sale hereunder of the Seller's right, title and interest
in and to Receivables and related Trust Property
shall constitute an absolute sale by the Seller to the
Purchaser. In the event a court of competent
jurisdiction were to recharacterize any transfer of
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
such Trust Property, and all proceeds of any
thereof, said security interest to be effective from
the date of execution of the related Supplemental
Conveyance.
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 as of the date hereof and each Sale Date:
(i) Organization, Etc. The Seller is a
corporation duly organized, validly existing and in
good standing under the laws of the State of
Delaware.
(ii) Due Qualification. The Seller is in
good standing and duly qualified to do business and
has obtained all necessary licenses and approvals in
the States of Delaware and New Jersey and all
jurisdictions in which the ownership or lease of its
property or the conduct of its business shall require
such qualifications unless the failure of the Seller to
obtain such licenses and approvals would have no
material adverse effect on the Seller's ability to
fulfill its obligations hereunder.
(iii) Power and Authority. The Seller has
the power and authority to execute and deliver this
Agreement and to carry out its terms; the Seller has
full power and authority to sell and assign the
property to be sold and assigned to the Purchaser
and such sale and assignment is valid and binding
against the Seller, and the Seller has duly
authorized such sale and assignment to the
Purchaser by all necessary action; the execution,
delivery and performance of this Agreement have
been duly authorized by the Seller by all necessary
action, and this Agreement is the legal, valid and
binding obligation of the Seller enforceable in
accordance with its terms. The Seller has duly
executed and delivered this Agreement and any
other agreements and documents necessary to
effectuate the transactions contemplated hereby.
(iv) No Violation. The consummation of
the transactions contemplated hereby and the
fulfillment of the terms hereof, neither conflict
with, result in any breach of any of the terms and
provisions of, nor constitute (with or without notice
or lapse of time) a default under, the certificate of
incorporation or bylaws of the Seller, or any
indenture, agreement or other instrument to which
the Seller is a party or by which it is bound; nor
result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of
any such indenture, agreement or other instrument
(other than this Agreement); nor violate any law or,
to the best of Seller's knowledge, any order, rule or
regulation applicable to the Seller of any court or of
any federal or state regulatory body, administrative
agency, or other governmental instrumentality
having jurisdiction over the Seller or its properties.
(v) No Proceedings. There are no
proceedings or investigations pending or, to the best
knowledge of Seller, threatened before any court,
regulatory body, administrative agency or other
governmental instrumentality having jurisdiction
over the Seller or its properties: (A) asserting the
invalidity of this Agreement; (B) seeking to prevent
the consummation of any of the transactions
contemplated by this Agreement; or (C) seeking any
determination or ruling that might materially and
adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability
of, this Agreement.
(vi) No Approvals. No approval,
authorization or other action by, or filing with, any
governmental authority of the United States of
America or any of the States is required or
necessary to consummate the transactions
contemplated hereby, except such as have been duly
obtained or made on or prior to each applicable
Sale 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 to which the Seller or
any of its Affiliates is a contributor 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 each Sale
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.
(b) As of each Sale Date, the Seller
makes the following representations and warranties
as to the Receivables for the benefit of the
Purchaser and the Trustee with respect to any trust
formed pursuant to the Master Trust Agreement,
and intends that the Purchaser rely thereon in
accepting the Receivables on each Sale Date. Such
representations and warranties shall survive each
sale, transfer and assignment of the Receivables to
the Purchaser and each subsequent assignment to
the Trustee. The Seller acknowledges and
expressly agrees that either the Purchaser or the
Trustee may enforce the Seller's repurchase
obligations or substitution obligations 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 in the ordinary course of
business 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 (except as otherwise indicated
on the related Schedule of Receivables) 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 Cutoff Date
relating to such Sale Date and no selection
procedures adverse to the Purchaser or the Trustee
have been utilized in selecting the Receivables.
(iii) Compliance With Law. Each
Receivable and the sale of the related Financing
Vehicle (A) complied at the time it was originated
or made and at the Sale 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. Each Receivable is denominated and
payable solely in U.S. dollars.
(v) No Government Obligor or Affiliate.
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 or from any Affiliate of the
Seller.
(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, 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 covering such Receivable.
(x) No Defenses. No right of rescission,
setoff, recoupment, counterclaim or defense has
been asserted or threatened with respect to any
Receivable.
(xi) No Liens. No Liens or claims have
been filed for work, labor or materials relating to a
Financed Vehicle that are Liens prior to, or equal
or coordinate with, the security interest in the
Financed Vehicle granted by the Obligor pursuant
to the Receivable.
(xii) No Default. Except for payment
delinquencies continuing for a period of not more
than fifty-nine (59) 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 each Sale 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 under the VSI Insurance Policy and (except
as indicated on the related Schedule of Receivables)
the Risk Default Insurance Policy, and each such
insurance policy is valid and remains in full force
and effect. No more than one fifth of one percent
of the Receivables are not covered by a Risk
Default Insurance Policy. 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
concurrently with or prior to conveyance to the
Purchaser hereunder. Immediately prior to or
concurrently with 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 related
pass-through 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 remaining maturity of each
Receivable was 60 months or less as of the Cutoff
Date.
(xix) 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 Policies provide that
loan extensions will be allowed, subject to a total
number of extensions of no more than one extension
for each 12 month period or fraction thereof in the
Receivable's term. No Receivables had a payment
that was more than 30 days overdue as of the
applicable Cutoff Date; and each Receivable has a
final scheduled payment due no later than the
applicable Final Scheduled Distribution Date.
(xx) Financing. Each Receivable
represents a Simple Interest Receivable.
(xxi) Bankruptcy Proceeding. No
Receivable as of the respective Cutoff Date is noted
in the Seller's records as a discharged debt under a
bankruptcy proceeding.
(xxii) 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.
(xxiii) 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 is secured by the related Financed
Vehicle.
(xxiv) Underwriting Guidelines. Except for
Uninsured Receivables constituting no more than
one-fifth of one percent of the aggregate Principal
Balance of all Receivables being conveyed to any
single Trust, and Nonconforming Insured
Receivables constituting no more than 1% of the
aggregate Principal Balance of all Receivables being
conveyed to any single Trust, each Receivable has
been originated in accordance with the Underwriting
Guidelines and in accordance with the underwriting
guidelines acceptable to the Risk Default Insurer.
(xxv) Financed Vehicle in Good Repair.
To the best of the Seller's knowledge, each
Financed Vehicle is in good repair and working
order.
(xxvi) Principal Balance. No Receivable
has a Principal Balance which includes capitalized
interest, physical damage insurance or late charges.
The maximum principal balance of any Receivable
does not exceed $40,000 or such lesser maximum
amount as is permitted under the Underwriting
Guidelines.
(xxvii) Servicing. At the Cutoff Date, each
Receivable was being serviced by the Servicer.
(xxviii) Eligible Loan. Each Receivable
constitutes an "Instrument" or "Insured Security
Agreement" 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.
(xxix) Original Principal Amount. The
original principal amount of each Receivable with
respect to which a credit application was received
by Aegis Finance prior to January 15, 1997 and
which was (A) originated under the original "Zero
Down" and the "Reduced Income" programs, was
not more than (1) in the case of new Financed
Vehicles, the lower of (x) 105% of the
manufacturer's suggested retail price plus rebatable
premiums on cancelable items and (y) 120% of the
manufacturer's suggested retail price or (2) in the
case of used Financed Vehicles, the lower of (x)
105% of the retail value of the Financed Vehicle at
the time of origination of the Receivable as set forth
in the Kelley "Blue Book" for the appropriate
region plus rebatable premiums on cancelable items
and (y) 120% of such Kelley "Blue Book" retail
value; (B) originated under the "First Time Buyer"
program, was not more than (1) in the case of new
Financed Vehicles, 95% of the manufacturer's
suggested retail price plus rebatable premiums on
cancelable items of up to 15% of the manufacturer's
suggested retail price or (2) in the case of used
Financed Vehicles, 95% of the retail value of the
Financed Vehicle at the time of origination of the
Receivable as set forth in the Kelley "Blue Book"
for the appropriate region plus rebatable premiums
on cancelable items of up 15% of the
manufacturer's suggested retail price and (C)
originated under the "Military Program" was not
more than 105% of the manufacturer's suggested
retail price or, in the case of used Financed
Vehicles, 105% of the Kelley "Blue Book" retail
value. Calculations made with respect to the
percentages referenced above are rounded to the
nearest whole percentage point. The original
principal amount of each Receivable with respect to
which a credit application was received by Aegis
Finance after January 15, 1997 which was (A)
originated under the original "Zero Down"
program, was not more than (1) in the case of new
Financed Vehicles (other than Hyundai
automobiles), 100% of the manufacturer's suggested
retail price (not to exceed $20,000) plus taxes, title
and other fees and premiums for approved service
contracts or (2) in the case of used Financed
Vehicles (other than Hyundai automobiles), 100%
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
(not to exceed $20,000) plus taxes, title and other
fees and premiums for approved service contracts;
(B) originated under the "Reduced Income"
program and with respect to all Hyundai
automobiles, was not more than (1) in the case of
new Financed Vehicles, 85% of the manufacturer's
suggested retail price plus taxes, title and other fees
and premiums for approved service contracts or (2)
in the case of used Financed Vehicles 85%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
taxes, title and other fees and premiums for
approved service contracts; provided that, in any
such case, if any such amount is higher than that
approved by the Risk Default Insurer, each
Receivable will be limited in amount to that
permitted by the Risk Default Insurer for coverage
under the Risk Default Insurance Policy.
(xxx) 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.
(xxxi) Licensing. With respect to each
Receivable originated in the State of Pennsylvania,
the Seller and each prior holder of any such
Receivable were each properly licensed under
applicable Pennsylvania laws and regulations during
the respective times the Seller and each prior holder
of any such Receivable held such Receivable,
except where the failure to be so licensed would not
have a material adverse effect on the ability of the
Trust to collect principal or interest payments on
such Receivable or to realize upon the Financed
Vehicle underlying any such Receivable in
accordance with the terms thereof.
(c) The Seller makes the following
additional representations, warranties and covenants
for the benefit of the Purchaser and the Trustee on
which the Purchaser relies in accepting the
Receivables on each Sale Date, which
representations, warranties and covenants shall
survive each Sale Date.
(i) Location of Servicer Files.
The Servicer Files are kept by the Servicer
at the locations listed in Exhibit B 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.
Within 10 days after each Sale Date, 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 Sale Date, 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 Sale Date or such later date (not
exceeding another 120 days thereafter)
permitted by the related 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 intends 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 Sale Date.
(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 Receivables on each Sale Date is subject
to the satisfaction of the following conditions:
(a) Notice of Sale. The Seller shall
provide the Purchaser notice of each sale hereunder
at least three Business Days in advance of each Sale
Date.
(b) Representations and Warranties True.
The representations and warranties of the Seller
hereunder shall be true and correct on each Sale
Date and the Seller shall have performed all
obligations to be performed by it hereunder on or
prior to each Sale Date.
(c) Files Marked; Files and Records
owned by Trustee. The Seller shall, at its own
expense, on or prior to each Sale Date indicate in
its files that the applicable Receivables have been
sold to the Purchaser pursuant to this Agreement.
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.
(d) Documents to be Delivered by the
Seller on or prior to each Sale Date.
(i) Supplemental Conveyance. On or prior to
each Sale Date, the Seller will execute and deliver
a Supplemental Conveyance substantially in the
form of Exhibit A hereto with respect to the
Receivables and related Trust Property being
conveyed on such date.
(ii) Custodian Files. At each Sale
Date, the Seller shall deliver to the Trustee,
as custodian, for the benefit of the Purchaser
and its assigns the Custodian Files.
(iii) Evidence of UCC Filings. The
Seller shall record and file, at its own expense, (A)
on or prior to the initial Sale Date, UCC-3
termination statements in each jurisdiction
required by applicable law, to release effective as
of each Sale Date any prior security
interests in the related Receivables granted by the
Seller,and (B) on or prior to the initial Sale
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 being sold hereunder as collateral,
meeting the requirements of the laws of each such jurisdiction
and in such manner as is necessary to perfect effective as of each
Sale Date 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 initial Sale Date.
(iv) Evidence of Insurance and
Payment. On each Sale 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 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 each Sale Date is
subject to the condition that on each Sale Date the
Purchaser will deliver to the Seller the Receivables
Cash Purchase Price for the Receivables.
ARTICLE V
COVENANTS OF THE SELLER
The Seller agrees with the Purchaser as
follows:
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 Master Trust Agreement and each related
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 with respect to any pool of
Receivables sold on a Sale Date shall terminate
upon the termination of the related trust to which
the pool is conveyed.
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 under
the Risk Default Insurance Policy and as an
additional insured, as its interests may appear,
under the VSI Insurance Policy as of the Sale Date
with respect to each pool of Receivables sold
hereunder. The Seller hereby agrees to assign to
the Trustee 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, shall be delivered to the location
listed in Exhibit B 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.
Section 5.08. Sale of Receivables.
Following each sale, 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 Trustee on behalf of
each related trust.
Section 5.09. The Seller's Records. All of
the Seller's records shall describe each sale and
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 also 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 the Trustee,
(A) within 90 days after the end of its fiscal year,
an unaudited balance sheet as at the end of such
fiscal year and the related statements of income and
cash flow for such fiscal year, setting forth in
comparative form the figures as at the end of and
for the previous fiscal year and (B) within 45 days
after the end of each of the first three quarterly
accounting periods in each fiscal year, an unaudited
balance sheet of the Seller as at the end of such
quarterly period setting forth in each case in
comparative form the figures for the corresponding
periods of the previous fiscal year.
Section 5.11. Compliance with Laws, Etc.
The Seller will comply in all material respects with
all applicable laws, rules, regulations, judgments,
decrees and orders (including those relating to the
Receivables and any other agreements related
thereto), where the failure so to comply,
individually or in the aggregate for all such failures,
would have a reasonable likelihood of having a
material adverse effect on the business or properties
of the Seller.
Section 5.12. Preservation of Existence.
The Seller will preserve and maintain its existence,
rights, franchises and privileges in the jurisdiction
of its organization, and qualify and remain qualified
in good standing in each jurisdiction where the
failure to preserve and maintain such existence,
rights, franchises, privileges and qualifications
would have a reasonable likelihood of having a
material adverse effect on the business or properties
of the Seller.
Section 5.13. Keeping of Records and
Books of Account. The Seller shall maintain and
implement administrative and operating procedures
(including, an ability to recreate records evidencing
its Receivables in the event of the destruction of the
originals thereof), and shall keep and maintain, or
cause to be kept or maintained, all documents,
books, records and other information which, in the
reasonable determination of Purchaser and the
Trustee, are necessary or advisable in accordance
with prudent industry practice and custom for
transactions of this type for the collection of all
Receivables. The Seller shall maintain or cause to
be maintained at all times accurate and complete
books, records and accounts relating to the
Receivables, which books and records shall be
marked to indicate the sales of all Receivables
hereunder.
Section 5.14. Separate Existence of
Purchaser. The Seller hereby acknowledges that
the Trustee is entering into the transactions
contemplated by the Master Trust Agreement and
each related 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. Without limiting the foregoing,
the Seller will take no actions which would be
inconsistent with the covenants of the Purchaser set
forth in Section 8.07 of the Standard Terms.
ARTICLE VI
INDEMNIFICATION
Section 6.01. Indemnification. The Seller
shall indemnify the Purchaser and the Trustee 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 on
behalf of each trust, the Backup Servicer, the
Custodian and the Certificateholders to the extent of
the Purchaser's indemnity obligations under each
related 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 or the Backup
Servicer 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 or Certain Payment Defaults. (a)
The Seller hereby covenants and agrees to deliver
to the Purchaser and the Trustee 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 or in the Supplemental Conveyance
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 related Pooling
and Servicing Agreement and even if the Purchaser
fails to comply with any repurchase obligation it
may have under the related 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
related Sale 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 related 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 and the applicable
Supplemental Conveyance (the Seller shall be
deemed to make all representations and warranties
contained in Section 3.01(b) and (c) hereof and the
applicable Supplemental Conveyance 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. 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
pursuant to the related Pooling and Servicing
Agreements, no amendment shall be effective
without the prior written consent of the holders of
at least 51% of each Class of each series of
Certificates outstanding.
Section 7.05. Waivers. No failure or delay
on the part of the Purchaser in exercising any
power, right or remedy under this Agreement or
any Supplemental Conveyance 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 7.06. 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 7.07. 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 7.08. 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 7.09. 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 7.10. 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 7.11. Governing Law. This
Agreement and the Assignment shall be governed
by and construed in accordance with the laws of the
State of New York, including Section 5-1401 of the
General Obligations Law, but otherwise without
regard or reference to principles of conflicts of laws
of such state.
Section 7.12. Counterparts. This
Agreement may be executed in any number of
counterparts, each of which shall be an original, but
all of which together shall constitute one and the
same instrument.<PAGE>
IN WITNESS WHEREOF, the parties
hereby have caused this Master 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
President
AEGIS AUTO FUNDING CORP.IV,
a Delaware corporation, as Purchaser
By
President
EXHIBIT A
SUPPLEMENTAL CONVEYANCE
For value received in accordance with the
Master Purchase Agreement dated as of March 1,
1997, (the "Purchase Agreement"), by and between
the undersigned (the "Seller"), and Aegis Auto
Funding Corp. IV, 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 of Receivables attached
as Schedule I hereto, all monies constituting Excess
Interest Collections thereon and all other moneys
received thereon on and after
____________________ (the "Cutoff Date"); (ii)
the security interests of the Seller in the Financed
Vehicles granted by the Obligors pursuant to the
Receivables; (iii) the interest of the Seller in any
Risk Default Insurance Proceeds and any proceeds
from claims on any Insurance Policies (including
the VSI Insurance Policy) covering the Receivables,
the Financed Vehicles or Obligors from the Cutoff
Date; (iv) the interest of the Seller in any Dealer
Recourse; and (v) the proceeds of any and all of the
foregoing. The foregoing sale does not constitute
and is not intended to result in any assumption by
the Purchaser of any obligation of the undersigned
to the Obligors, insurers or any other person in
connection with the Receivables, Custodian Files,
Servicer Files, any insurance policies or any
agreement or instrument relating to any of them.
This Supplemental Conveyance is executed
and delivered pursuant to the Purchase Agreement.
The representations, warranties and agreements on
the part of the undersigned contained in the
Purchase Agreement are hereby confirmed.
The undersigned 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 _____ ("Trustee"), having its
principal place of business at Sixth Street and
Marquette Avenue, Minneapolis, Minnesota 55479-
0070, and its successors or assigns in such capacity,
Seller's true and lawful attorney-in-fact for and in
Seller'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 Seller itself could do (to the fullest
extent that the Seller 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 (the "Collateral") granted
to or created in favor of Seller in and to or
affecting any of the Receivables described on
Schedule I 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
Seller, 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 Receivables or
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, Seller 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.
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 Supplemental Conveyance to be duly
executed as of
__________________________________.
AEGIS
AUTO FINANCE INC.
By
Name:
Title: SCHEDULE I
SCHEDULE OF RECEIVABLES
<PAGE>
EXHIBIT B
LOCATION OF SERVICER FILES
System and Services Technology, Inc.
4315 Pickett Road
St. Joseph, MO 64503
American Lenders Facilities, Inc.
2600 Michaelson Drive
Suite 470
Irvine, CA 92715
_________________________________________
MASTER SERVICING AGREEMENT
Dated as of March 1, 1997
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 Trusts
_________________________________________
TABLE OF CONTENTS
I. RECITALS . . . . . . . . . . . . 1
II. DEFINITIONS. . . . . . . . . . . 1
III. SERVICING RELATIONSHIP
A. NATURE AND SCOPE
OF RELATIONSHIP. . . . . . . . . 2
B. GENERAL
CONDITIONS . . . . . . . . . . . 3
IV. ADMINISTRATION AND
SERVICING OF RECEIVABLES
A. DUTIES OF
SERVICER . . . . . . . . . . . . 6
B. MAINTENANCE OF
RECORDS. . . . . . . . . . . . . 7
C. MAINTENANCE OF
SECURITY INTEREST. . . . . . . . 8
D. COLLECTION OF
RECEIVABLE PAYMENTS
. . . . . . . . . . . . . . . . 8
E. PHYSICAL
DAMAGE INSURANCE . . . . . . . . 8
F. COVENANTS OF
THE TRUSTEE AND
SERVICER; NOTICES. . . . . . . . 9
G. PURCHASE OF
RECEIVABLES UPON
BREACH . . . . . . . . . . . . 10
H. SERVICING FEE . . . . . . 10
I. MONTHLY
SERVICING
CERTIFICATES . . . . . . . . . 11
J. ANNUAL
STATEMENT AS TO
COMPLIANCE;
ACCOUNTANTS'
SERVICING
REPORT. . . . . . . . . . . 11
K. ACCESS TO
CERTAIN
DOCU
MENT
ATIO
N
AND
INFO
RMAT
ION
REGA
RDIN
G
RECEI
VABL
ES . . . . . . . . . . . . 12
L. RESPONSIBILITY
FOR INSURANCE
POLICIES;
PROCESSING OF
CLAIMS UNDER
INSURANCE
POLICIES; DAILY
RECORDS AND
REPORTS . . . . . . . . . . 12
M. ENFORCEMENT . . . . . . . . 13
N. PAYMENT IN FULL
ON RECEIVABLE. . . . . . . . . . 14
O. SUBSTITUTION OF
COLLATERAL . . . . . . . . . . 15
P. FIDELITY BOND
AND ERRORS AND
OMISSIONS INSURANCE. . . . . . . 15
V. REPRESENTATIONS AND
WARRANTIES
A. REPRESENTATIONS
AND WARRANTIES OF
SERVICER . . . . . . . . . . . . 16
B. REPRESENTATIONS
AND WARRANTIES OF
BACKUP SERVICER. . . . . . . . . 17
C. SURVIVAL OF
REPRESENTATIONS AND
WARRANTIES . . . . . . . . . . . 18
VI. EVENTS OF SERVICING
DEFAULT. . . . . . . . . . . . . 18
VII. REMEDIES. . . . . . . . . . 20
VIII. RESPONSIBILITY
AND AUTHORITY OF
SERVICER . . . . . . . . . . . . 20
IX. COLLECTIONS;
LOCK-BOX
ACCOUNT AND
RELATED BANK
ACCOUNTS. . . . . . . . . . 21
X. DOCUMENTS AND RECORDS
A. SERVICING
DOCUMENTS AND
RECORDS. . . . . . . . . . . . . 22
B. REPORTS AND
CREDIT AGENCIES. . . . . . . . . 22
XI. INDEMNIFICATION
. . . . . . . . . . . . . . 22
XII. TERM AND
TERMINATION . . . . . . . . 23
XIII. ARBITRATION AND
ATTORNEYS' FEES. . . . . . . . . 23
XIV. WAIVERS . . . . . . . . . . 24
XV. NOTICES . . . . . . . . . . 25
XVI. ASSIGNABILITY . . . . . . . 25
XVII. FURTHER
ASSURANCES . . . . . . . . . . . 26
XVIII. COUNTERPARTS. . . . . . . . 26
XIX. ENTIRE
AGREEMENT;
AMENDMENTS . . . . . . . . 26
XX. INSPECTION. . . . . . . . . 26
XXI. LIMIT ON
TRUSTEE'S
PAYMENT
OBLIGATIONS . . . . . . . . 26
XXII. SERVICER NOT TO
RESIGN . . . . . . . . . . . . 27
XXIII.
MERGER OR CONSOLID
ATION OF, OR ASSUMPT
ION OF THE
OBLIGATIONS OF, OR
RESIGNATION OF SERVICER. . . . . . . . . . 27
XXIV. GOVERNING LAW.
. . . . . . . . . . . . . . . . 28
Page
I.
RECITALS . . . . . . . . . . . . . . . . . 1
II.
DEFINITIONS. . . . . . . . . . . . . . . . 1
III.
SERVICING RELATIONSHIP
A. NATURE AND SCOPE OF
RELATIONSHIP . . . . . . . . . . . . . . . 2
B. GENERAL CONDITIONS. . . . . . . . . . 3
IV.
ADMINISTRATION AND SERVICING OF
RECEIVABLES
A. DUTIES OF SERVICER. . . . . . . . . . 6
B. MAINTENANCE OF RECORDS. . . . . . . . 7
C. MAINTENANCE OF SECURITY
INTEREST. . . . . . . . . . . . . . . 8
D. COLLECTION OF RECEIVABLE
PAYMENTS. . . . . . . . . . . . . . . 8
E. PHYSICAL DAMAGE INSURANCE . . . . . . 8
F. COVENANTS OF THE TRUSTEE AND
SERVICER; NOTICES. . . . . . . . . . . . . 9
G. PURCHASE OF RECEIVABLES UPON
BREACH . . . . . . . . . . . . . . . . . 10
H. SERVICING FEE . . . . . . . . . . . 10
I. MONTHLY SERVICING CERTIFICATES
. . . . . . . . . . . . . . . . . . . . 11
J. ANNUAL STATEMENT AS TO
COMPLIANCE; ACCOUNTANTS'
SERVICING REPORT. . . . . . . . . . . 11
K. ACCESS TO CERTAIN
DOCUMENTATION AND INFORMATION
REGARDING RECEIVABLES . . . . . . . 12
L. RESPONSIBILITY FOR INSURANCE
POLICIES; PROCESSING OF
CLAIMS UNDER INSURANCE
POLICIES; DAILY RECORDS AND
REPORTS . . . . . . . . . . . . . . 12
M. ENFORCEMENT . . . . . . . . . . . . . 13
N. PAYMENT IN FULL ON RECEIVABLE . . . 14
O. SUBSTITUTION OF COLLATERAL. . . . . 15
P. FIDELITY BOND AND ERRORS AND
OMISSIONS INSURANCE. . . . . . . . . . . 15
V.
REPRESENTATIONS AND WARRANTIES
A. REPRESENTATIONS AND
WARRANTIES OF SERVICER . . . . . . . . . 16
B. REPRESENTATIONS AND
WARRANTIES OF BACKUP SERVICER. . . . . . . 17
C. SURVIVAL OF REPRESENTATIONS
AND WARRANTIES . . . . . . . . . . . . . . 18
VI.
EVENTS OF SERVICING DEFAULT. . . . . . . 18
VII.
REMEDIES . . . . . . . . . . . . . . . . 20
VIII.
RESPONSIBILITY AND AUTHORITY OF
SERVICER . . . . . . . . . . . . . . . . 20
IX.
COLLECTIONS; LOCK-BOX ACCOUNT AND
RELATED BANK ACCOUNTS. . . . . . . . . . 20
X.
DOCUMENTS AND RECORDS
A. SERVICING DOCUMENTS AND
RECORDS. . . . . . . . . . . . . . . . . 21
B. REPORTS AND CREDIT AGENCIES. . 22
XI.
INDEMNIFICATION. . . . . . . . . . . . . 22
XII.
TERM AND TERMINATION . . . . . . . . . . 23
XIII.
ARBITRATION AND ATTORNEYS' FEES. . . . . 23
XIV.
WAIVERS. . . . . . . . . . . . . . . . . 24
XV.
NOTICES. . . . . . . . . . . . . . . . . 24
XVI.
ASSIGNABILITY. . . . . . . . . . . . . . 25
XVII.
FURTHER ASSURANCES . . . . . . . . . . . 25
XVIII.
COUNTERPARTS . . . . . . . . . . . . . . 25
XIX.
ENTIRE AGREEMENT; AMENDMENTS . . . . . . 26
XX.
INSPECTION . . . . . . . . . . . . . . . 26
XXI.
LIMIT ON TRUSTEE'S PAYMENT
OBLIGATIONS. . . . . . . . . . . . . . . 26
XXII.
SERVICER NOT TO RESIGN . . . . . . . . . 26
XXIII.
MERGER OR CONSOLIDATION OF, OR
ASSUMPTION OF THE
OBLIGATIONS OF, OR RESIGNATION OF
SERVICER . . . . . . . . . . . . . . . . 27
XXIV.
GOVERNING LAW. . . . . . . . . . . . . . 28
SCHEDULE A SUMMARY OF SERVICES A-1
I. SERVICES A-1
A. CONTRACT SERVICES -
COLLECTIONS A-1
B. CONTRACT SERVICES - CUSTOMER
SERVICE A-2
II. A. SPECIAL COLLECTION ACTIVITIES
A-4
1. Repossession and Sale A-4
2. Credit Enhancement Claims FilingA-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>
MASTER SERVICING AGREEMENT
This MASTER SERVICING AGREEMENT
is entered into as of March 1, 1997 (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") under that certain Master Trust
Agreement dated as of March 1, 1997 (the "Master
Trust Agreement"), between Aegis Auto Funding
Corp. IV, a Delaware corporation, as Seller, and
Norwest Bank Minnesota, National Association as
Trustee for the holders from time to time of the
Automobile Receivable Pass-Through Certificates to
be issued by the Trusts created pursuant to the
Master Trust 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 A to various Pooling and
Servicing Agreements executed and delivered by the
Seller and the Trustee from time to time pursuant to
the Master Trust Agreement (as such Exhibits are
amended or deemed amended pursuant to the related
Pooling and Servicing Agreements on any Funding
Date, hereinafter referred to as "Receivables")
which Receivables were originated by the
Originator, subsequently sold to the Seller pursuant
to a Master Purchase Agreement dated as of March
1, 1997 (the "Purchase Agreement") between the
Originator and the Seller and subsequently deposited
by the Seller with the Trustee pursuant to the terms
of the related Pooling and Servicing Agreements,
and
WHEREAS, pursuant to the Pooling
and Servicing Agreements, the Back-up Servicer
and the Trustee, on behalf of each trust created
under the Pooling and Servicing Agreements,
desires to avail itself 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 Master Trust Agreement or in
the Standard Terms referred to therein.
Whenever used in this Servicing Agreement,
the following terms shall have the following
meanings.
Credit Agency. A recognized agency to
which Servicer reports delinquencies,
repossessions and redemptions.
Independent Public Accountants. Means any
of (a) Arthur Andersen & Co., (b) Deloitte
& Touche, LLP, (c) Coopers & Lybrand,
(d) Ernst & Young LLP, (e) KPMG Peat
Marwick and (f) Price Waterhouse, or such
other nationally recognized firm of
independent accountants as shall be
acceptable to the parties hereto and the
Rating Agencies; provided, that such firm is
independent with respect to the Servicer
within the meaning of the Securities Act of
1933, as amended.
Loan Documents. Has the meaning set forth
in paragraph III.B.9.
III. SERVICING RELATIONSHIP
A. NATURE AND SCOPE OF
RELATIONSHIP
The Servicer hereby agrees to service
and administer the Receivables for each Trust
established pursuant to the Master Trust Agreement
and a related Pooling and Servicing Agreement 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 related Pooling
and Servicing Agreements and this Servicing
Agreement. Servicer acknowledges receiving a
copy of the Pooling and Servicing Agreement dated
as of March 1, 1997 relating to the creation of the
Aegis Auto Receivables Trust 1997-1 and agrees to
promptly acknowledge receipt of copies of each
Pooling and Servicing Agreement relating to a trust
created after the initial Closing Date. Servicer shall
report in writing solely to such officers or other
employees of the Backup Servicer and the Trustee
as the Trustee and the Backup Servicer 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 the 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 related Pooling
and Servicing Agreements, and except as provided
in the Pooling and Servicing Agreements, none of
the Trusts, the Trustee or the Certificateholders will
have any liability to the Servicer with respect
thereto. In accordance with Section 4.04 of the
Standard Terms, such compensation shall be paid to
the Servicer and/or one or more subservicers as the
Servicer may from time to time direct in writing to
the Trustee.
In the event the Backup Servicer shall
for any reason no longer be acting as such
(including by reason of resignation or an Event of
Backup Servicing Default as specified in Section
4.02 or 10.01, respectively, of the Standard
Terms), the successor Backup Servicer shall
thereupon assume all of the rights and obligations of
the outgoing Backup Servicer under this Servicing
Agreement; provided, however that the successor
Backup Servicer shall not be liable for any acts,
omissions or obligations of the outgoing Backup
Servicer prior to such succession or for any breach
by the outgoing Backup Servicer of any of its
representations and warranties contained in this
Servicing Agreement or in any related document or
agreement and the outgoing Backup Servicer shall
not be relieved of any liability or obligation
hereunder to the extent such obligation or liability
arose prior to the assumption by the successor
Backup Servicer of the obligations of the Backup
Servicer hereunder.
B. GENERAL CONDITIONS
1. Servicer agrees to provide the
services hereunder during the term hereof.
Servicer, Backup Servicer and Trustee each
represent and warrant that it is duly authorized to
enter into the arrangements contemplated hereby
with respect to the Receivables.
2. Servicer may make such
communications with third parties and the ultimate
Obligor as are necessary and proper to perform the
services provided for hereunder.
3. The Servicer hereby agrees to
act for each Trust as custodian of all the documents
or instruments delivered to the Servicer with respect
to each Receivable of such Trust, 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 related 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 for each Trust,
separate and segregated from the files of each other
Trust, copies, computer records or originals of each
of the following documents with respect to each
related 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;
and
(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. 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 related
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 related 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 related
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 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, for each Trust, (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 Certificates
delivered to the Backup Servicer and Trustee with
respect to each Trust in the form of Schedule B (the
"Monthly Servicing Certificates"). 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, and the
related Certificateholders.
7. On Monday of each week
beginning March 21, 1997, 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, for each Trust, (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 Agreements and no implied
covenants or obligations shall be read into this
Servicing 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 related Certificateholders and the
related Trust; all Loan Documents shall remain the
property of such 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 applicable 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,
provided that the subservicers and the terms of any
such subservicing agreement shall have been
approved by the Majority Certificateholders for
each Trust affected thereby, and provided that,
except as provided herein, the duties of such
subservicer shall be limited by the terms and
conditions of this Servicing Agreement. The
Servicer is expressly authorized to enter into
subservicing agreements with American Lenders
Facilities, Inc. ("ALFI") and Systems and Services
Technology, Inc. ("SST"), the forms of which
agreements are annexed hereto as Exhibits A and B,
respectively. Notwithstanding any provision hereof
to the contrary, but subject to the proviso to this
sentence, ALFI and SST shall service the
Receivables in accordance with the provisions of
their respective subservicing agreements and, in the
event of a conflict between any such subservicing
agreement and this Servicing Agreement, the
subservicing agreement shall control the duties and
obligations of SST and ALFI; provided, however,
that, for the purpose of preserving the separate
status of each Trust as a grantor trust for federal
income tax purposes, each subservicer shall comply
with the provisions of paragraphs IV.B, F, M.4,
M.5 and O, VI, IX, and A.3.c and A.3.e of
Schedule A, each of which provisions shall be
deemed to be incorporated into the related
subservicing agreement; provided, further, that
neither ALFI nor SST nor any other Servicer or
subservicer shall have any authority to perform any
act which, if consummated, would cause the Trust
to fail to be treateed as a trust for federal income
tax purposes. Any subservicing agreement entered
into by the Servicer shall provide that the Majority
Certificateholders of each Trust affected thereby
shall have the right to direct the Servicer to
terminate such subservicing arrangement with
respect to such Trust if (a) the Majority
Certificateholders of such Trust 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 with respect
to any Trust if directed to do so by the Majority
Certificateholders of such Trust.
<PAGE>
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 related Pooling and Servicing
Agreements.
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 related 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 related Trust, shall
furnish the Servicer with any powers of attorney
and other documents necessary or appropriate to
enable the Servicer to carry out its servicing and
administrative duties hereunder.
B. MAINTENANCE OF RECORDS
The Servicer shall maintain accounts
and records as to each Receivable accurately and in
sufficient detail to permit: (i) the reader thereof to
know at any time the status of such Receivable,
including payments and recoveries made and
payments owing (and the nature of each) and which
Trust owns such Receivable; (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 related Trust.
Such accounts and records shall be
kept only for as long as Servicer is servicing the
Receivables for the related 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 applicable Certificateholder), for
inspection by Certificateholders a copy of the list of
Receivables for each Trust, and shall mail a copy of
the applicable 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 each Trust,
hereby authorizes and the Servicer hereby agrees to
take such steps (and at the related Trust's expense)
as are necessary to re-perfect such security interest
on behalf of such 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 each 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 related 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
related 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 Policies 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
related 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 such 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 related Trust in, to and under the Receivables
transferred to such 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 and the related Pooling and 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 a Trust pursuant to the related
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
related Trust as may be necessary or advisable or
reasonably requested by the Majority
Certificateholders to create, maintain, and protect a
first-priority security interest of such Trustee in, to,
and on the Financed Vehicles and a first-priority
security interest of the related 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 Policies and
the VSI Insurance Policy.
2. The Trustee shall promptly
notify the Servicer of any actual knowledge on its
part (i) of any abandonment of any Financed
Vehicle by an Obligor, (ii) of any material change
in the condition or value of any Financed Vehicle,
(iii) of any waste committed with respect to any
Financed Vehicle; (iv) of any failure on the part of
an Obligor to keep the Financed Vehicle insured or
in good condition and repair, (v) of any permanent
or substantial injury to a Financed Vehicle caused
by unreasonable use, abuse or neglect or (vi) of any
other matter which would adversely affect or result
in diminution of the value of any Financed Vehicle.
3. The Servicer will promptly
advise the Trustee of any inquiry received from an
Obligor which contemplates the consent of the
Trustee. Inquiries contemplating consent of the
Trustee shall include, but not be limited to,
inquiries about settlement of any unasserted claim
or defense, or compromise of any amount an
Obligor owes or any other matters the Servicer
should reasonably understand are not within the
Servicer's authority under this Servicing
Agreement.
4. Notwithstanding any other
provision of this Servicing Agreement, the Trustee
and the Backup Servicer (except if and when the
Backup Servicer is acting as the Servicer hereunder)
shall be under no duty or obligation to investigate
or inquire into the status of any Obligor or
Financed Vehicle and "actual knowledge" referred
to in subparagraphs 2 and 3 of this paragraph IV.F.
shall be limited to actual knowledge of a Trustee
Officer.
G. PURCHASE OF RECEIVABLES
UPON BREACH
The Servicer shall inform the Trustee,
the Backup Servicer and each affected
Certificateholder promptly, in writing, upon the
discovery of any breach pursuant to Section 3.01 of
the Standard Terms or Article VI of a 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 Standard Terms, 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 Standard
Terms, 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 for deposit to
the applicable Trust. 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 applicable Certificateholders in
accordance with and subject to the condition and
limitation set forth in the related 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, provided that a
portion thereof may accrue and payment of such
portion may be deferred in accordance with such
paragraph III of Schedule A hereto. 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
Trustee (which shall deliver a copy to each
applicable Certificateholder) and the Seller, on each
Determination Date, a Monthly Servicing Certificate
with respect to each Trust, substantially in the form
of Schedule B hereto containing all information
necessary for the Trustee to calculate and make the
distributions with respect to each Trust pursuant to
Section 5.06 of the Standard Terms and the related
Pooling and Servicing Agreements.
J. ANNUAL STATEMENT AS TO
COMPLIANCE; ACCOUNTANTS'
SERVICING REPORT
1. The Servicer shall deliver to
the Backup Servicer, the Trustee and each
Certificateholder, on or before September 30 of
each year, an Officer's Certificate, dated effective
as of the end of the Servicer's fiscal year, beginning
with the fiscal year ended June 30, 1997, 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 fiscal 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 the Majority Certificateholders of
every Trust, within 90 days after the end of each
fiscal year of the the Servicer, commencing June
30, 1997, the Servicer at the expense of the Trusts,
shall cause a firm of Independent Public
Accountants to furnish a statement to the Trustee
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 Servicing Agreement, and that, on the
basis of such examination, such servicing and
reporting requirements have been conducted in
compliance with this Servicing 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. The Servicer shall deliver to
the Trustee, the Backup Servicer and each
Certificateholder, promptly after having obtained
actual knowledge thereof, but in no event later than
five (5) Business Days thereafter, written notice in
an Officer's Certificate of the Servicer of any event
which with the giving of notice or lapse of time, or
both, would become an Event of Back-up Servicing
Default under Section 10.01 of the Standard Terms
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
related 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
each 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 each
Trust, shall verify that an endorsement listing each
Receivable has been issued with respect to each
Receivable under the applicable 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 Policies
name 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 Policies 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 Policies. 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 related 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 Policies in connection
with filing such claims, perform any obligations of
any named insured under the foregoing VSI
Insurance Policies and Risk Default Insurance
Policies, 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 a
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 any
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 the
Risk Default Insurance Policies.
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
related 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 applicable 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 related
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 related
Trust or the Certificateholders therein or in the
proceeds thereof.
5. Except as otherwise provided in
paragraph I.A.3 of Schedule A hereto, the Servicer
may not 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 Standard Terms of
the related 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 Standard Terms of the related
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 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 related 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 with respect to any Trust
shall not exceed in the aggregate ten percent (10%)
of the Original Pool Balance of such 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 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
Standard Terms; 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 Standard
Terms, 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 any subservicer appointed by the Servicer
to perform collection activities and related services
pursuant to 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 Servicing 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 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 Servicing Agreement and
to carry out the provisions of this Servicing
Agreement.
2. This Servicing 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
Servicing 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 Servicing Agreement
is a valid and legally binding agreement of Servicer
enforceable in accordance with its terms.
3. The execution and delivery of
this Servicing Agreement by Servicer hereunder and
the compliance by Servicer with all provisions of
this Servicing 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
Servicing 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 Servicing Agreement
and to carry out the provisions of this Servicing
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 Servicing
Agreement.
2. This Servicing 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 Servicing Agreement has been duly
and validly executed and delivered by Backup
Servicer; and, assuming due authorization,
execution and delivery by Servicer, this Servicing
Agreement is a valid and legally binding agreement
of Backup Servicer enforceable in accordance with
its terms.
3. The execution and delivery of
this Servicing Agreement by Backup Servicer
hereunder and the compliance by Backup Servicer
with all provisions of this Servicing 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
of any Trust 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
(ix) Any fraud, gross negligence
or willful misconduct on the
part of the Servicer with
respect to the Receivables or
its duties hereunder.
Then, and in each and every case and
so long as an Event of Servicing Default described
above shall not have been remedied in the period,
if any, provided for in the applicable subsection, the
Trustee may, and shall, at the direction of the
Majority Certificateholders for every Trust,
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 for every Trust. 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
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,
the Trustee or the successor Servicer may avail
itself of any other relief to which the Backup
Servicer, the Trustee 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 Agreements,
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.
<PAGE>
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 each Trust, as applicable) 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 for deposit into the Collection Accounts
established for the related Trusts.
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. In the event funds of more than one
Trust are deposited in the Lock-Box Account,
collections attributable to Receivables of each Trust
shall be separately identified. The Servicer shall be
responsible for all charges with respect to the Lock-
Box Account and, insofar as such charges relate to
the Receivables, shall be reimbursed in accordance
with the instructions set forth in the Monthly
Servicer Certificate. The Servicer shall provide
written notice to the Trustee of the location and
account number of the Lock-Box Accounts promptly
after establishing or changing the same.
Wells Fargo Bank, N.A. and
Commerce Bank will each serve as an 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 applicable Collection Accounts.
The Servicer shall deposit in the
applicable 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 each Trust
the computer records relating to the related 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
Trusts 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 any 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 in the Trusts 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 Back-up Trustee, the Trustee, 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 of
each Trust to the change and (2) provided further
that such substitute Servicer shall have executed an
agreement of assumption, acceptable to the Trustee,
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 Trusts.
XIV. WAIVERS
No failure or delay on the part of the
Servicer, the Trustee or the Backup Servicer in
exercising any power, right or remedy under this
Servicing Agreement shall operate as a waiver
thereof, nor shall any single or partial exercise of
any such power, right or remedy, preclude any
other or further exercise thereof or the exercise of
any other power, right or remedy, except by a
written instrument signed by the party to be charged
or as otherwise expressly provided herein.
XV. NOTICES
Except as otherwise provided herein,
all notices, requests, consents, demands and other
communications given hereunder shall be in writing.
All notices of whatever kind shall be either
personally delivered or sent by telecopy or other
form of rapid transmission and confirmed by United
States mail, properly addressed and with full
postage prepaid, addressed as follows:
To Servicer: Aegis Auto Finance,Inc.
525 Washington Boulevard
Jersey City, NJ 07310
Attn: Joseph F. Battiato,
President
Telecopy No.(201)418-7339
To Backup Servicer: Norwest Bank Minnesota,
National Association
Corporate Trust Services Asset Backed Adminstration
Sixth Street and Marquette Ave.
Minneapolis, MN 55479-0070
Telecopy No. (612) 667-3539
To Trustee: Norwest Bank Minnesota,
National Association
Corporate Trust Services Asset Backed Administration
Sixth Street and Marquette Ave.
Minneapolis, MN 55479-0070
Telecopy No. (612) 667-3539
or to such other address as such
party shall have specified in writing
in the manner set forth above. All
notices to the Certificateholders shall
be sent in the manner specified in the
related 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.
<PAGE>
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 of each Trust affected
thereby. 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 a 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
the Certificateholders 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 of each
Trust.
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 the Majority Certificateholders of each
Trust 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 related Pooling and
Servicing Agreements.
XXIII.
MERGER OR CONSOLIDATION OF, OR ASS
UMPTION 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, 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 the Majority Certificateholders of each
Trust, 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 including Section 5-
1401 of the General Obligations Laws but otherwise
without regard or reference to principles of conflicts
of laws of such State.
<PAGE>
IN WITNESS WHEREOF, the
parties hereto have caused this Servicing Agreement
to be executed as of the date first written above.
SERVICER: AEGIS AUTO FINANCE,INC.
By:
Joseph F. Battiato
President
[Signatures continue on following page]
BACKUP SERVICER: NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
in its capacity as Backup Servicer
under the Pooling and Servicing Agreement
By:
Name:
Title: Corporate Trust Officer
TRUSTEE:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION, in its
capacity as Trustee under the
Pooling and Servicing Agreement
By:
Name:
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. IV,
In its capacity as Seller under the
Pooling and Servicing Agreement
By:
Name:
Title:
SCHEDULE A - SUMMARY OF SERVICES
I. SERVICES
A. CONTRACT SERVICES -
COLLECTIONS
1. Prior to the execution of this
Servicing Agreement Servicer
has established a Lock-Box
Account at Wells Fargo
Bank, N.A.
2. Servicer shall be responsible
for the mailing of payment
coupon books or monthly
statements. Payment books
shall contain coupons in
sufficient quantity to allow
Obligor to enclose a coupon
with each scheduled payment
per the terms of the related
contract. Each payment
coupon book may contain up
to 36 coupons.
For those Obligor accounts
whose contract term exceeds
36 months a new coupon
book for the remaining term
will be sent in the 35th
month.
3. Servicer shall process
Obligor accounts for which
the Obligor fails to make a
payment on the applicable
payment due date (a
"Delinquency") on the
following basis:
a. Commencing on the
first business day on
which an Obligor is
delinquent by more
than ten (10) days,
Servicer shall, at the
Servicer's discretion,
either (1) phone the
Obligor, (2) if no
contact is made after
phoning, the Servicer
may send a letter to
the Obligor asking the
Obligor to
immediately contact
the Servicer, or (3)
order a field call by
an outside agency to
the Obligor.
b. Servicer may request
the Seller's
authorization to
repossess an Obligor's
vehicle at any time
after an Obligor is
delinquent and
Servicer has
satisfactory reason to
believe that Obligor
will not pay.
However, such
authorization will be
deemed given if
Servicer cannot obtain
timely authorization,
provided Servicer has
determined that any
delay would impede
the Servicer's ability
to service the
Obligor's vehicle.
Servicer shall create
and maintain a report
of any Obligor's
vehicle it repossesses
and all events leading
to such action.
c. If an Obligor requests
a change to his
normal monthly due
date (a "Due Date
Change") and if the
Obligor has defaulted
on his obligations
under a Receivable or
if the Servicer
reasonably believes
such default is
imminent, Servicer
may grant such Due
Date Change to the
extent the Servicer
deems in the best
interest of the
Certificateholders;
however, no Due
Date Change shall be
granted beyond the
currently due month.
d. Except as otherwise
provided in this
agreement, if an
Obligor has been
delinquent for more
than thirty-five (35)
days, Servicer shall
request Seller's
authorization to
repossess pursuant to
Section IA3.b. of this
Schedule A.
e. If an Obligor requests
an extension of the
currently required
monthly payment to
extend the end of the
loan term (a "Loan
Extension") and if the
Obligor has defaulted
on his obligations
under a Receivable or
if the Servicer
reasonably believes
such default is
imminent, Servicer
may to the extent the
Servicer deems in the
best interest of the
Certificateholders
grant such Loan
Extension, subject to
the following
paragraph.
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, including
fractions thereof, 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 Standard Terms.
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 Servicing
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 each
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
Subject to the following provisions, 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 2.05% of the
outstanding balance or
$10.00, whichever is greater;
provided, however, that with
respect to Receivables
serviced or subserviced by
Systems and Services
Technology, Inc., only one-
twelfth of 1.15% of such
outstanding balance shall be
payable currently on each
Distribution Date and the
balance of .90% will accrue
on each Distribution Date and
be deferred and paid from the
Reserve Fund in accordance
with the terms of the Master
Trust Agreement; provided
further that the amount
payable currently shall be
adjusted from time to time to
equal 100% of the reasonable
and necessary costs and
expenses of the Servicer, not
to exceed 1.85% of the
outstanding balance.
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.
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.<PAGE>
SCHEDULE B
SERVICER MONTHLY ACTIVITY REPORT
Aegis Auto Receivables Trust 199 -
Automobile Receivable Pass-Through Certificates
Series 199 -
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
Amount Payable currently
Amount Accrued and Deferred (SST only)
Collection Expenses Incurred
Claim Filing Fees
Bank Charges
Late fees, extension fees collected
Postage
Total Servicer Compensation
Less Deferred Servicing Fees ( )
Net Cash Servicer Compensation
SCHEDULE C
REQUEST FOR RELEASE OF DOCUMENTS
To: Norwest Bank Minneapolis, National Association,
as Custodian
Sixth Street and Marquette Avenue
Minneapolis, MN 55479-0070
Re: Aegis Auto Receivables Trust 199 - ;
Servicing Agreement dated as of March 1,
1997 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 a 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 applicable Pooling and Servicing
Agreement.)
_____ 2. Receivable Repurchased Pursuant to Section 3.02 of
the Standard Terms of the applicable 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 related Pooling
and Servicing Agreement.)
<PAGE>
_____ 4. Receivable to be transferred to Risk Default Insurer
for liquidation (servicer hereby certifies that all
proceeds of insurance when received shall be
credited to the Collection Account pursuant to the
related 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 199 - created pursuant to the Pooling
and Servicing Agreement (the "Pooling and Servicing Agreement")
dated as of 1, 199 -among Aegis Auto Funding Corp. IV
(the "Seller"), Norwest Bank Minnesota, National Association, as
backup 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 Standard Terms of the
related 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]
AEGIS AUTO FUNDING CORP. IV,
a Delaware Corporation, Seller
and
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
Trustee and Backup Servicer
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 1997
With respect to
$238,693,000
Aegis Auto Receivables Trust 1997-1
Automobile Receivable Pass-Through
Certificates
Series 1997-1
TABLE OF CONTENTS
Page
ARTICLE I. CREATION OF TRUST
1
ARTICLE II. CONVEYANCE OF
RECEIVABLES 1
ARTICLE III. ACCEPTANCE BY TRUSTEE
3
ARTICLE IV. INCORPORATION OF
STANDARD TERMS AND
CONDITIONS
4
ARTICLE V. SPECIAL DEFINITIONS AND
TERMS 4
ARTICLE VI. ADDITIONAL SELLER
REPRESENTATIONS
5
ARTICLE VII. CERTIFICATE DELIVERY
AND REGISTRATION
6
ARTILE VIII. APPLICATION OF PROCEEDS
6
TESTIMONIUM
SIGNATURES
APPENDIX A Schedule of Receivables
APPENDIX B Standard Terms and Conditions
APPENDIX C Risk Default Insurance Policy
Endorsement
APPENDIX D VSI Insurance Policy
Endorsement
APPENDIX E Direction as to Registration of
Certificates
APPENDIX F General Certificate of Aegis Auto
Funding Corp. IV
APPENDIX G Form of Demand Note
<PAGE>
POOLING AND SERVICING AGREEMENT
This POOLING AND SERVICING
AGREEMENT is dated as of March 1, 1997 (this
"Agreement") among Aegis Auto Funding Corp.
IV, a Delaware corporation, as Seller (the "Seller")
and Norwest Bank Minnesota, National Association,
a national banking association, as trustee for the
Trust (the "Trustee") and as Backup Servicer (the
"Backup Servicer") and is made with respect to the
formation of the Aegis Auto Receivables Trust
1997-1 (the "Trust").
WHEREAS, the Seller and the Trustee
desire to form a trust pursuant to the Master Trust
Agreement dated as of March 1, 1997 (the "Master
Trust Agreement") by and between the Seller and
the Trustee, and provide for the issuance of a series
of Automobile Pass-Through Certificates by such
trust;
NOW, THEREFORE, in consideration of
the premises and of the mutual agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
CREATION OF TRUST
Upon the execution of this Agreement by the
parties hereto, there is hereby created the Aegis
Auto Receivables Trust 1997-1. The situs and
administration of the Trust shall be in Minneapolis,
Minnesota or in such other city in which the
Corporate Trust Office is located from time to time.
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.01. Conveyance by Seller.
(a) In consideration of the
Trustee's delivery of the Certificates to or
upon the order of the Seller in an aggregate
principal amount equal to the aggregate
Principal Balance of the Receivables, the
Seller does hereby irrevocably sell, assign,
and otherwise convey to the Trustee, in trust
for the benefit of the Certificateholders,
without recourse (subject to the obligations
herein):
(i) all right, title and interest of the Seller in
and to the Receivables identified on Appendix A
hereto, all monies constituting Excess Interest
Collections with respect thereto and all other
moneys received thereon on and after the Cutoff
Date;
(ii) the interest of the
Seller in the security interests in the
Financed Vehicles granted by the
Obligors pursuant to the Receivables;
(iii) the interest of the
Seller in any Risk Default Insurance
Proceeds and any proceeds from
claims on any Insurance Policies
(including the VSI Insurance Policy)
covering the Receivables, the
Financed Vehicles or the Obligors
from the Cutoff Date;
(iv) the right of the Seller
to realize upon any property
(including the right to receive future
Liquidation Proceeds) that shall have
secured a Receivable and have been
repossessed by or on behalf of the
Trustee;
(v) the interest of the
Seller in any Dealer Recourse
relating to the Receivables;
(vi) all right, title and
interest of the Seller in and to the
Purchase Agreement; and
(vii) the proceeds of any
and all of the foregoing.
(b) [RESERVED]
Section 2.02. Nature of Conveyance. It is
the intention of the Seller and the Trustee that the
transfer and assignment of the Seller's right, title
and interest in and to the assets identified in clauses
(i) through (viii) of Section 2.01(a) (collectively, the
"Trust Property") shall constitute an absolute sale
by the Seller to the Trustee in trust for the benefit
of the Certificateholders. In the event a court of
competent jurisdiction were to recharacterize the
transfer of the Trust Property as a secured
borrowing rather than a sale, contrary to the intent
of the Seller and the Trustee, the Seller does hereby
grant, assign and convey to the Trustee and the
Trust, as security for all amounts payable to the
Certificateholders, a security in and lien upon all of
its right, title and interest in and to the Trust
Property, including all amounts deposited to the
Lock-Box Account, the Collection Account the
Certificate Account, said security interest to be
effective from the date of execution of this
Agreement.
The Trustee and the Certificateholders
acknowledge and agree that the Seller is the holder
of the Residual Interest.
ARTICLE III
ACCEPTANCE BY TRUSTEE
The Trustee, on behalf of the Trust, hereby
accepts all consideration conveyed by the Seller
pursuant to Article II, and declares that the Trustee
shall hold such consideration upon the trusts herein
set forth for the benefit of all present and future
Certificateholders, subject to the terms and
provisions of this Agreement and the Master Trust
Agreement.
ARTICLE IV
INCORPORATION OF STANDARD TERMS
AND CONDITIONS
This Agreement hereby incorporates by
reference the Standard Terms provided for by the
Master Trust Agreement in the form attached hereto
as Appendix B, except to the extent expressly
modified hereby.
ARTICLE V
SPECIAL DEFINITIONS AND TERMS
Section 5.01 Special Definitions.
Capitalized terms not otherwise defined herein shall
have the meanings ascribed to them in the Standard
Terms and Conditions. Whenever used in this
Agreement, the following words and phrases shall
have the following meanings:
"Backup Servicer Fee" means, with respect
to any Distribution Date, one-twelfth of the product
of (i) 0.02% per annum and (ii) the outstanding
Pool Balance as of the first day of the preceding
Collection Period or, in the case of the first
Distribution Date, as of the Closing Date.
"Class A Percentage" means
65.00020037675%.
"Class A Rate" means 7.225% of interest
per annum.
"Class B Percentage" means
34.99975340072%.
"Class B Rate" means 13.725% of interest
per annum.
"Closing Date" means March 19, 1997.
"Custodian Fee" means $1.75 per Custodian
File boarded.
"Cutoff Date" means March 1, 1997.
"Discount Rate" means 14.0% per annum.
"Final Scheduled Distribution Date" means
September 20, 2002.
"Initial Distribution Date" means April 20,
1997.
"Original Class Certificate Balance" means,
as to the Class A Certificates, $155,151,000, and as
to the Class B Certificates, $83,542,000.
"Reserve Fund Initial Deposit" means
$4,534,348.30.
"Trustee Fee" means, with respect to any
Distribution Date, one-twelfth of the product of (i)
0.01% per annum and (ii) the aggregate Class
Certificate Balance as of the close of business on
the preceding Distribution Date (or, in the case of
the Initial Distribution Date, the original aggregate
Class Certificate Balance).
Section 5.02. Special Terms.
(a) Additional Deposit to Reserve Fund.
On the Closing Date the Seller shall make an
additional deposit to the Reserve Fund in the
amount of $1,237,563. Such additional deposit
shall be invested in a Demand Note of The Aegis
Consumer Funding Group, Inc., substantially in the
form of Appendix G hereto, which Demand Note
shall bear interest on the unpaid principal amount
thereof at LIBOR (as defined therein) from the date
thereof until paid in full.
(b) [Reserved]
ARTICLE VI
ADDITIONAL SELLER REPRESENTATIONS
The Seller hereby makes the following
additional representations with respect to the
Receivables:
(i) Schedule of Receivables. The
information set forth in Appendix A hereto is true,
complete and correct in all material respects as of
the opening of business on the Cutoff Dates, and no
selection procedures adverse to the
Certificateholders have been utilized in selecting the
Receivables.
(ii) Scheduled Payments. No Receivables
had a payment that was more than 59 days overdue
as of the Cutoff Date; and each Receivable has a
final scheduled payment due no later than the Final
Scheduled Distribution Date.
(iii) Insurance Policy Endorsements.
Attached hereto as Appendices C and D,
respectively, are true and correct copies of the
endorsements to the Risk Default Insurance Policy
and VSI Insurance Policy required by the Standard
Terms.
<PAGE>
ARTICLE VII
CERTIFICATE DELIVERY AND
REGISTRATION
The Certificates shall be designated as the
"Aegis Auto Receivables Trust 1997-1, Automobile
Receivable Pass-Through Certificates, Series 1997-1
(the "Certificates"), and issued with an initial
aggregate Certificate Balance of $238,693,000 in
two Classes as follows: Class A Certificates with
an initial Certificate Balance of $155,151,000 and
Class B Certificates with an initial Certificate
Balance of $83,542,000.
The Seller hereby directs the Trustee to
register the Certificates in the names and
denominations specified in the direction attached
hereto as Appendix E, and to execute, authenticate
and deliver the Certificates to the initial purchasers
specified in such direction upon receipt by the
Trustee of the following:
(i) $239,701,399.92 from the
purchasers for the account of the
Seller, representing the purchase
price of the Certificates;
(ii) Investor letters executed by
each of the initial purchasers;
(iii) An executed copy of the
Supplemental Conveyance from Aegis Finance
in the form attached as Appendix A to the
Purchase Agreement with respect to the
Receivables conveyed to the Trust on the
Closing Date;
(iv) An executed copy of the
certificate of the Seller required by Section
7 of the Master Certificate Purchase
Agreement substantially in the form attached
hereto as Appendix F; and
(v) Executed opinions of
counsel to the Seller required by Section 7 of the
Master Certificate Purchase Agreement.
ARTICLE VIII
APPLICATION OF PROCEEDS
The proceeds of the Certificates shall be
applied as follows:
(i) $4,534,348.30 shall be
deposited into the Reserve Fund as
the Reserve Fund Initial Deposit and
immediately invested in a Term Note
of The Aegis Consumer Funding
Group, Inc. in accordance with
Section 3.2 of the Master Trust
Agreement; and
(ii) The remainder of
$235,167,051.62 shall be paid to the
Seller or upon the Seller's order.
[Signature page follows]
<PAGE>
IN WITNESS WHEREOF, the parties
hereto have caused this Pooling and Servicing
Agreement to be duly executed by their respective
officers as of the day and year first above written.
AEGIS AUTO FUNDING CORP. IV,
as Seller
By:
Angelo R. Appierto
President
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee
By:
Jason VanVleet
Corporate Trust Officer
NORWEST BANK MINNESOTA
NATIONAL ASSOCIATION,
as Backup Servicer
By:
Jason VanVleet
Corporate Trust Officer
[Signature Page to Pooling and Servicing
Agreement]<PAGE>
APPENDIX A
SCHEDULE OF RECEIVABLES
Delivered to the Trustee on the Closing Date
(See Attached)<PAGE>
APPENDIX B
STANDARD TERMS AND CONDITIONS<PAGE>
APPENDIX C
RISK DEFAULT INSURANCE POLICY
ENDORSEMENT<PAGE>
APPENDIX D
VSI INSURANCE POLICY ENDORSEMENT
<PAGE>
Appendix E
$238,693,000
Aegis Auto Receivables Trust 1997-1
Automobile Receivable Pass-Through Certificates,
Series 1997-1
DIRECTION AS TO
REGISTRATION OF CERTIFICATES
The undersigned purchasers of the above-
referenced Certificates hereby direct the Trustee to
register such Certificates in the names and
denominations specified below:
CLASS A CERTIFICATES
Certificate
Number Name
Amount Purchased
R-1 III
FINANCE LTD. $108,605,700
R-2 III
GLOBAL LTD. $46,545,300
CLASS B CERTIFICATES
Certificate
Number Name
Amount Purchased
R-1 III LIMITED
PARTNERSHIP $83,542,000
Total
$238,693,000
<PAGE>
IN WITNESS WHEREOF, the undersigned
has duly executed this Direction as to Registration
of Certificates as of the date set forth below.
Dated: March 19, 1997
III
FINANCE LTD.
By
Name:
Title:
III
GLOBAL LTD.
By
Name:
Title:
III
LIMITED PARTNERSHIP
By
Name:
<PAGE>
Appendix F
$238,693,000
Aegis Auto Receivables Trust 1997-1
Automobile Receivable Pass-Through Certificates,
Series 1997-1
GENERAL CERTIFICATE
OF
AEGIS AUTO FUNDING CORP. IV
The undersigned, on behalf of Aegis
Auto Funding Corp. IV, a Delaware corporation
("Seller"), hereby certifies this March 19, 1997, as
follows in connection with the issuance of the
above-referenced Certificates (the "Certificates")
pursuant to the terms of the Pooling and Servicing
Agreement dated as of March 1, 1997 (the
"Agreement") among the Seller, Norwest Bank
Minnesota, National Association, as backup servicer
and Norwest Bank Minnesota, National Association,
as Trustee, and the Master Trust Agreement dated
as of March 1, 1997 (the "Master Trust
Agreement") between the Seller and the Trustee
(capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to them in
the Standard Terms and Conditions attached as
Appendix A to the Master Trust Agreement):
1. The undersigned has carefully
examined the Agreement, the Master Trust
Agreement, the Purchase Agreement and the Master
Certificate Purchase Agreement.
2. The representations and
warranties of the Seller contained in the Agreement,
the Master Trust Agreement, the Purchase
Agreement and the Master Certificate Purchase
Agreement are true and correct in all material
respects as if made on and as of the date hereof
(except for such representations and warranties
specifically made as of another specified date).
3. Neither the Seller nor any of
its Affiliates is in default in the performance of any
of their respective obligations under the documents
mentioned in paragraph 2 above or any other
Pooling and Servicing Agreement executed pursuant
to the terms of the Master Trust Agreement.
4. The Seller has complied with
all agreements and satisfied all conditions on its part
to be performed or satisfied under the documents
specified in paragraph 2 above at or prior to the
date hereof.
5. The Seller did not, either
independently or through any other party, solicit
any offer to buy or offer to sell the Certificates or
any similar security by means of any form of
general solicitation or general advertising,
including, but not limited to, (i) any advertisement,
article, notice or other communication published in
any newspaper, magazine or similar medium or
broadcast over television or radio, and (ii) any
seminar or meeting whose attendees have been
invited by any general solicitation or general
advertising.
6. The Certificates were sold by
the Seller to III Finance Ltd., III Global Ltd. and
III Limited Partnership in a private placement in
transactions exempt from the registration
requirements of the Act.
7. The undersigned is duly
authorized by the Seller to make the foregoing
representations on behalf of the Seller and has
conducted such investigation and made such
inquiries as he has deemed necessary and
appropriate in order to make such representations
on behalf of the Seller.
<PAGE>
IN WITNESS WHEREOF the undersigned
has signed this General Certificate of Aegis Auto
Funding Corp. IV as of the date first written above.
AEGIS
AUTO
FUND
ING
CORP.
IV
By:
__________________________
Name:
Title:
<PAGE>
APPENDIX G
FORM OF DEMAND NOTE
$1,237,563 Dated Date: March 19, 1997
FOR VALUE RECEIVED, The Aegis
Consumer Funding Group, Inc., a Delaware
Corporation (the "Company"), does hereby promise
to pay upon demand to the order of Aegis Auto
Funding Corp. IV, a Delaware corporation (the
"Payee") or its assigns in lawful money of the
United States of America, the principal amount of
ONE MILLION TWO HUNDRED THIRTY-
SEVEN THOUSAND FIVE HUNDRED SIXTY-
THREE DOLLARS ($1,237,563) (or such lesser
amount as may be outstanding hereunder from time
to time, the "Principal Balance"), plus interest
accrued on the unpaid Principal Balance hereof
from the Dated Date hereof until such Principal
Balance is paid in full, at the rates, at the times and
subject to the terms and conditions described below
Interest on the unpaid Principal Balance of
this Note shall be payable monthly in arrears on the
20th day of each month commencing April 20, 1997
(or the next succeeding Business Day if any such
20th day is not a Business Day) and on the date of
any payment of the Principal Balance of this Note
or any portion thereof (each an "Interest Payment
Date") at an initial interest rate per annum equal to
LIBOR on the date hereof, subject to adjustment on
the first day of each calendar month hereafter to
LIBOR on such date. Interest shall be calculated on
the basis of a 360-day year for the actual number of
days elapsed.
All or any portion of the unpaid Principal
Balance of this Note shall be payable upon demand
by the Payee or its assigns, together with any
accrued and unpaid interest on the amount of the
Principal Balance demanded to be paid.
For purposes hereof, the term "LIBOR"
shall mean an interest rate per annum equal to the
rate of interest per annum at which deposits in U.S.
dollars are offered for a period of thirty (30) days
or less, as applicable, and which appears as of
11:00 a.m., London time on the date of
determination (i) on the Telerate page 3750 or (ii)
if such page on such service ceases to display such
information, such other page as may replace it on
that service for the purpose of display of such
information, or (iii) if such rate does not appear on
the Telerate, then the rate quoted on Reuters Screen
page "LIBO", or (iv) if such page on such service
ceases to display such information, such other page
as may replace it on that service for the purpose of
displaying such information, or (v) if that service
ceases to display such information, the
determination shall be made on the basis of the
rates which are available.
For purposes hereof, the term "Business
Day" shall mean any day other than a Saturday,
Sunday, legal holiday or other day under the law of
the United States or the State of New York on
which commercial banking institutions are permitted
by law or executive order to close.
Notwithstanding the foregoing, the entire
outstanding Principal Balance of this Note, together
with all interest owing thereon, shall, without
demand, notice or legal process of any kind, be
declared and shall become immediately due and
payable upon the occurrence of any of the following
events (each a "Bankruptcy Event"): (i) the entry
of a decree or order by a court of agency or
supervisory authority having jurisdiction in the
premises for the appointment of a conservator,
receiver, trustee, or liquidator for the Company 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; (ii) the consent by the
Company 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 Company and
involving substantially all of its property; or (iii) the
Company 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.
The Company hereby promises to pay all
costs and expenses incurred in the collection and
enforcement of this Note and any appeal of a
judgement rendered hereon.
This Note represents a general unsecured
obligation of the Company.
[Signature page follows]
<PAGE>
THIS PROMISSORY NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
THE AEGIS CONSUMER FUNDING GROUP,
INC., a Delaware corporation
By:
Name:
Title:
PAY TO THE ORDER of Norwest Bank
Minnesota, National Association, as Trustee under
that certain Master Trust Agreement between the
Trustee and Aegis Auto Funding Corp. IV dated
March 1, 1997, without recourse or warranty.
AEGIS AUTO FUNDING CORP. IV
By:
Name:
Title:
[DEMAND PROMISSORY NOTE]
EXECUTION COPY
March 14, 1997
AEGIS AUTO FUNDING CORP. IV
AUTOMOBILE RECEIVABLE PASS-THROUGH
CERTIFICATES
MASTER CERTIFICATE PURCHASE
AGREEMENT
III Finance Ltd.
III Global Ltd.
c/o Admiral Administration Ltd.
Anchorage Centre
,
2nd
Floor
Grand Cayman, Cayman Islands
British West Indies
III
Limited Partnership
c/o III Offshore Advisors
250 South Australian Avenue, Suite
600
West Palm Beach, FL 33401
Dear Sirs:
Aegis Auto Funding Corp.
IV, a Delaware corporation (the
"Company"), proposes from time to
time and subject to the terms and
conditions hereinafter set forth,
to sell to
you
(collectively,
with
your successors and assigns, the
"Purchasers")
certain
Automobile
Receivable Pass-Through
Certificates (collectively, the
"Certificates")
to be executed in
multiple
Series,
Classes
and
respective original principal
amounts and with the designations
set forth
as may be permitted
pursuant to the terms hereof and
the terms of the Pooling and
Servicing Agreements referred to
below. Each Series of Certificates
will be issued by the Company
pursuant to a Pooling and Servicing
Agreement (each, a "Pooling and
Servicing Agreement"), the terms of
which shall be in conformity with
that certain Master Trust Agreement
dated as of March 1, 1997 (the
"Master Trust Agreement") between
the
Company, as
seller,
and Norwest
Bank Minnesota, National
Association, as trustee (the
"Trustee"). Each Certificate will
evidence the holder's fractional
undivided interest in one of
several trusts (the "Trusts"),
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" for each Trust (as such
term is defined in
the
Standard
Terms and Conditions (the "Standard
Terms and Conditions") attached to
the Master Trust Agreement.
1. Capitalized terms
used in this Agreement without
definition shall have the meanings
assigned to such terms in the
Standard Terms and Conditions. In
addition, all capitalized terms
which are defined in the preamble
to this Agreement shall have the
meanings ascribed thereto in the
preamble and the following terms
shall have the following meanings:
"Aegis Consumer Funding"
shall mean The Aegis Consumer
Funding Group, Inc., a
Delaware corporation.
"Aegis Finance" shall
mean Aegis Auto Finance, Inc.,
a Delaware corporation.
"Agreement" shall mean
this Master Certificate
Purchase Agreement as the same
may be amended, restated or
otherwise modified from time
to time.
"Change in Control" shall
mean any of Joseph Battiato,
Angelo Appierto or Gary
Peiffer ceasing to hold their
current positions or ceasing
to be otherwise actively
involved in the management of
the Company, Aegis Finance and
Aegis Consumer Funding;
provided that if one (but only
one) of the foregoing
individuals ceases to be
involved in such management
due to death, disability or
discharge for cause, then no
"Change in Control" shall be
deemed to have occurred unless
and until another of the
foregoing individuals ceases
to hold his current position
or otherwise ceases to be
actively involved in
management of the Company,
Aegis Finance and/or Aegis
Consumer Funding.
"Class A Pro Rata Share"
shall mean, as to any
Purchaser, the percentage set
forth opposite its name on the
signature
page
hereof.
"Class A Purchase" shall
mean a Purchase of Class A
Certificates.
"Class A Purchasers"
shall mean III Finance Ltd.
and III Global Ltd., each a
Cayman islands company.
"Class B Pro Rata Share"
shall mean, as to any
Purchaser, the percentage set
forth opposite its name on the
signature
page
hereof.
"Class B Purchase"
shall
mean
a Purchase of Class B
Certificates.
"Class B Purchaser" shall
mean III Limited Partnership,
a Nevada limited partnership.
"Closing Date" shall
mean, with respect to any
Certificates of any Series,
the date and time of delivery
and payment for the
Certificates in accordance
with the terms of Section 5
hereof.
"Eligible Receivables"
shall mean Receivables which
satisfy all of the
representations, warranties,
and eligibility criteria set
forth in the Standard Terms
and Conditions attached to the
Master Trust Agreement.
"Event of Termination"
shall have the meaning set
forth in Section 10(a).
"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 clauses
(i) through (v)
above.
"Indenture" shall mean
that certain Indenture entered
into among Aegis Finance,
Aegis Consumer Funding and
Norwest Bank Minnesota,
National Association, as
Indenture Trustee with respect
to the issuance by Aegis
Finance of certain
subordinated debentures.
"Investment Company Act"
shall mean the Investment
Company Act of 1940, as
amended.
"LIBOR" shall mean, as of
any Closing Date, an interest
rate per annum equal to the
rate of interest per annum at
which deposits in U.S. dollars
are offered for a period of
thirty (30) days or less, as
applicable, and which appeared
as of 11:00 a.m., London time
on the most recent LIBOR
Determination
Date, on
the
Telerate page 3750 or such
other page as may replace page
3750 on that service for the
purpose of displaying such
information;
or, if such
rate
does not appear on the
Telerate, then on the Reuters
Screen
LIBO
Page or such other
page as may replace the
LIBO
Page on that service for the
purpose of displaying such
information; provided that if
at least two such offered
rates appear on Telerate or
the Reuters Screen
LIBO
Page,
as applicable, LIBOR will be
the arithmetic mean (rounded
upwards, if necessary, to the
nearest one-sixteenth of a
percent) of such offered
rates. If both Telerate and
Reuters cease to display such
information, LIBOR shall be
determined on any other basis
to which the parties hereto
mutually consent in writing.
"LIBOR Determination
Date" shall mean, as to any
Purchase, the first Business
Day of the calendar month in
which such Purchase has
occurred.
"Lien" shall mean any
pledge, mortgage, lien,
security interest, charge,
hypothecation or encumbrance
of any kind.
"Purchase" shall have the
meaning set forth in Section
4(a).
"Purchase Agreement"
shall mean that certain
Master
Purchase
Agreement dated as of
March 1,
1997 between the
Company and Aegis Finance.
"Purchase Limit" shall
mean, as to any Purchaser, the
dollar amount set forth
opposite its name on the
signature
page
hereof.
"Securities Act" shall
mean the Securities Act of
1933, as amended.
"Securities Exchange Act"
shall mean the Securities
Exchange Act of 1934, as
amended.
"Termination Date" shall
mean
March 14,
2000,
or such
earlier date on which this
Agreement is
terminated
in
accordance with Section
10(a)
or Section 14 hereof.
"Warehouse Loan" shall
mean a "Loan" outstanding
under the Warehouse Loan
Agreement.
"Warehouse Loan
Agreement" shall mean that
certain Loan and Security
Agreement dated as of March
14, 1997 by and among III
Finance Ltd. and III Global
Ltd. as the "Lenders" and
Aegis Finance as the
"Borrower" thereunder.
2. Representations and
Warranties. The Company represents
and warrants to, and agrees with,
you and each person who purchases a
Certificate
that, as of the date
hereof and as of each Closing Date
relating to such Certificate:
(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 Master Trust Agreement, each
Pooling
and Servicing Agreement and
the Purchase Agreement.
(b) This Agreement has
been duly authorized, executed and
delivered by the Company.
(c)
The Master Trust
Agreement has been, and such
Pooling
and Servicing Agreement,
when executed and delivered as
contemplated
hereby
and
by the
Master Trust Agreement will
have
been,
duly authorized, executed and
delivered by the Company,
and each
such agreement,
when so executed
and delivered,
does or 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 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 any indemnification
provisions therein may be limited
by applicable law, and 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.
(e) The Certificates
issued as of such Closing Date and
the Pooling and Servicing Agreement
relating thereto conform in all
material respects to the
requirements set forth in this
Agreement and the Master Trust
Agreement. Such Certificates, as
of the Closing Date relating
thereto, have been duly and validly
authorized and executed and, when
duly authenticated and delivered in
accordance with the applicable
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 Master Trust
Agreement and such Pooling and
Servicing Agreement.
(f) The representations
and warranties of the Company
contained in the Master Trust
Agreement and the applicable
Pooling and Servicing Agreement are
true and correct in all material
respects.
(g) 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 Certificates being issued as of
such Closing Date, nor the
execution and delivery by the
Company of this Agreement, the
Master Trust Agreement, the
Purchase Agreement nor any Pooling
and Servicing 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 or 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,
(i) the ability of the Company to
perform its obligations under this
Agreement, the Master Trust
Agreement, the Purchase Agreement
or any Pooling and Servicing
Agreement or (ii) the business,
operations, financial condition,
properties or assets of the
Company.
(h) 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 Master Trust
Agreement, any Pooling and
Servicing Agreement, the Purchase
Agreement or any Certificates,
(ii) seeking to prevent the
issuance of any Certificates or the
consummation of any of the
transactions contemplated by this
Agreement, the Master Trust
Agreement, any 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 Master Trust
Agreement, any Pooling and
Servicing Agreement, the Purchase
Agreement or the Certificates or
(iv) seeking to affect adversely
the federal income tax attributes
of any Certificates.
(i) Any taxes, fees and
other governmental charges in
connection with the execution and
delivery of this Agreement, the
Master Trust Agreement or the
Purchase Agreement have been or
will be paid on or prior to the
initial Closing Date, and any other
taxes, fees and other governmental
charges in connection with the
execution and delivery of any
Pooling and Servicing Agreement or
the execution, delivery and sale of
any Certificates have been paid on
or prior to the applicable Closing
Date for such Certificates.
(j) Immediately prior to
each assignment of the Contracts to
the Trustee as contemplated by each
Pooling and Servicing Agreement,
the Company (i) has good title to,
and is the sole owner of, each such
Contract free and clear of any
Liens (other than Liens under the
Warehouse Loan Agreement or the
Indenture which in either case will
be released concurrently with
issuance of the Certificates), (ii)
had not assigned to any person any
of its right, title or interest in
such Contracts or in such Pooling
and Servicing Agreement and (iii)
had the power and authority to sell
such Contracts to the Trustee, and,
upon the execution and delivery of
such 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
free and clear of all Liens.
(k) There are no
contracts, agreements or
understanding between the Company
and any person granting such person
the right to require the Company to
file a registration statement under
the Securities Act with respect to
any Certificates owned or to be
owned by such person.
(l) Assuming the
accuracy of the representations and
warranties made by you in this
Agreement, the sale of the
Certificates pursuant to this
Agreement is exempt from the
registration and prospectus
delivery requirements of the
Securities Act. In the case of
each offer or sale of the
Certificates, no form of general
solicitation or general advertising
was used by the Company, or any
other representative of the Company
including, but not limited to,
advertisements, articles, notices
or other communications published
in any newspaper, magazine or
similar medium or broadcast over
television or radio, or any general
solicitation or general
advertising. Neither the Company,
nor any other person acting on
behalf of the Company has offered
or sold, nor will the Company, or
any other person acting on behalf
of the Company offer or sell
directly or indirectly, any
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 Certificates as contemplated
hereby a violation of Section 5 of
the Securities 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.
(m)
Neither the Company
nor any Trust is, and neither the
issuance and sale of the
Certificates nor the activities of
any
Trust
pursuant to the
Master
Trust Agreement or the applicable
Pooling
and Servicing Agreement
has
caused or will
cause the Company or
such Trust to be, an "investment
company" or under the control of
any
"investment
company" as such
terms are defined in
the Investment
Company Act.
(n) As of any Closing
Date, the representations and
warranties of the Company contained
in Section 3.01(a) with respect to
Receivables transferred to the
Trust on such Closing Date shall be
true and correct on such Closing
Date.
3.
Representations,
Warranties and Covenants of the
Purchaser. You represent and
warrant to, and agree with, the
Company
that, as of the date hereof
and as of each Closing Date:
(a) You are purchasing
the Certificates 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 Securities Act) or
fractionalization thereof, subject,
nevertheless, to the understanding
that the disposition of your
property shall at all times be and
remain within your control. It is
understood that you may re-offer or
resell the Certificates from time
to time in one or more privately
negotiated transactions.
(b) You are an
institutional "accredited
investor"
as defined in Rule 501(a)(1), (2)
or (3) of Regulation D under the
Securities Act
or a
"qualified
institutional buyer" as defined in
Rule 144A under the Securities Act.
(c) You will not offer
the 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 Certificates
to you and by you within the
provisions of Section 5 of the
Securities Act.
4.
Purchase and Sale.
(a) On
the terms and subject to the
conditions set forth in the Master
Trust Agreement, each Pooling and
Servicing Agreement and this
Agreement, and in reliance on the
covenants, representations and
agreements set forth therein and
herein: (i) the Company agrees to
cause each Trust to issue to the
Company and the Company agrees to
sell to the Purchasers, on each
Closing Date which may occur prior
to the Termination Date, all of the
Certificates to be issued on such
Closing Date; (ii) each Class A
Purchaser severally agrees to
purchase its Class A Pro Rata Share
of the Class A Certificates to be
issued on such Closing Date, (iii)
III Limited Partnership agrees to
purchase 100% of the Class B
Certificates to be issued on such
Closing Date and (iv) in the event
and to the extent that III Limited
Partnership does not purchase such
Class B Certificates because of the
limitations on its purchase
obligations set forth below in this
Section 4(a), each other Class B
Purchaser severally agrees to
purchase its Class B Pro Rata Share
of the Class B Certificates (or its
Class B Pro Rata Share of the
remaining Class B Certificates, as
the case may be) to be issued on
such Closing Date. (Each such
purchase being hereinafter referred
to individually as a "Purchase" and
collectively as the "Purchases").
Under no circumstances shall any
Purchaser be required to make any
Purchase if, after giving effect
thereto, the aggregate outstanding
principal amount of all
Certificates held by it would
exceed its Purchase Limit and no
Purchaser hereunder shall be
required to purchase its applicable
share of Certificates issued on any
Closing Date unless all of the
Purchasers have agreed to purchase
their respective shares of such
Certificates. In addition, no
Purchaser shall be required to make
any Purchase if such Purchase would
cause the aggregate outstanding
amount of such Purchaser's
Certificates, together with any
loans made by such Purchaser to
Aegis Finance and/or any of its
Affiliates, to exceed 25% of such
Purchaser's net assets (excluding
from such net assets, in the case
of any Purchaser, its investment in
any other Purchaser).
(b) Each Purchase shall
relate to a single Series of
Certificates which Series shall be
in a minimum principal amount of
$25,000,000 and in an integral
multiple of $1,000 in excess of
such amount. Each Purchase shall
be made on written notice from the
Company to the Purchasers given not
later than 11:00 A.M. (New York
City time) at least three Business
Days prior to the date of such
Purchase. Each such notice of a
proposed Purchase shall specify (i)
the aggregate Principal Balances of
the Receivables to be transferred
to the applicable Trust on the
Closing Date and (ii) the desired
Purchase Price to be paid to the
Company as calculated below. The
Purchasers shall promptly notify
the Company of the applicable
Certificate Rates to be assigned to
the respective Certificates to be
issued, as such Certificate Rates
may be calculated in accordance
with subsection (d) below.
(c) The aggregate
principal amount of all of the
Certificates issued on any Closing
Date shall equal 100% of the sum of
(i) Principal Balance of all
Receivables included in the Trust
Assets for the applicable Trust
plus (ii) the Original Pre-Funded
Amount, if any, as set forth in the
applicable Pooling and Servicing
Agreement. The aggregate purchase
price paid for the Class A
Certificates shall equal the sum of
(A) the Class A Percentage times
100% of the Principal Balance of
all Receivables other than
Nonconforming Insured Receivables
included in the Trust Assets for
the applicable Trust, (B) the Class
A Percentage times 92% of the
Principal Balance of all
Receivables which constitute
Nonconforming Insured Receivables
included in the Trust Assets for
the applicable Trust and (C) the
Class A Percentage times the
Original Pre-Funded Amount
applicable to such Trust, if any.
The aggregate purchase price paid
for the Class B Certificates shall
equal the sum of (A) the Class B
Percentage times 100% of the
Principal Balance of all
Receivables other than
Nonconforming Insured Receivables
included in the Trust Assets for
the applicable Trust, (B) the Class
B Percentage times 92% of the
Principal Balance of all
Receivables which constitute
Nonconforming Insured Receivables
included in the Trust Assets for
the applicable Trust, (C) the Class
B Percentage times the Original
Pre-Funded Amount applicable to
such Trust, if any and (D) any
accrued and unpaid interest
(calculated at the contract rate
under the Warehouse Loan Agreement)
on any outstanding Warehouse Loans
which were made in respect of the
Receivables being sold to the
applicable Trust on such date.
(d) The Purchasers shall
have the right, at least one
Business Day prior to any Closing
Date, to assign to each Class of
Certificates to be issued on such
Closing Date a Certificate Rate so
long as the weighted average of
such Certificate Rates (based on
the initial principal amounts of
all such Certificate) shall equal a
per annum rate equal to (x) the sum
of (i) the two-year swap rate (as
reported on Telerate page 19901 for
a rate of LIBOR for two years) plus
(ii) 3.00% or (y) such other rate
as is mutually agreed to by the
Company and the Purchasers at such
time. The Purchasers shall,
promptly upon receiving any notice
of a proposed Purchase under this
Agreement but in no event later
than 11:00 A.M. (New York time) on
the Business Day preceding the
Closing Date, notify the Company of
the applicable Certificate Rates
for each Class of Certificates to
be issued on such Closing Date.
(e) On each Closing
Date, the Company will cause the
Trust to issue the applicable
Certificates and to deliver such
Certificates to the appropriate
Purchasers. Each such Certificate
shall be dated the applicable
Closing Date, registered in the
name of the applicable Purchaser
and duly authenticated in
accordance with the provisions of
the applicable Pooling and
Servicing Agreement against
delivery by the Purchasers to the
Seller of the Purchase Price
therefor.
5.
Delivery and
Payment. Delivery of and payment
for each series of Certificates
shall be made at the
offices
of
Kutak Rock, 767 Third Avenue, New
York, New York 10017,
on
the date
specified in
the Notice of proposed
Purchase with respect to
such
Series, which date and time may be
changed by agreement between
the
Purchasers and
the
Company.
Delivery of the Certificates of any
Series 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
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
one full
Business
Day
in advance of
the Closing Date.
The Company agrees to have the
Certificates available for
inspection, checking and packaging
by you in New York, New York on the
Business Day
prior to the Closing
Date.
6.
Covenants of the
Company. The Company covenants and
agrees with you that:
(a)
The
Company will, at
your request, furnish
to you such
information as is reasonably
requested and is reasonably
available concerning matters
relevant
to
the issuance of any
Certificates, the nature of any
Trust Assets for such Trust or the
performance of the Receivables in
any Trust or on an aggregate basis,
and the Company represents and
warrants that such information will
be accurate in all material
respects and not misleading.
(b) 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 reasonably
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 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).
(c) 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) the Master
Trust Agreement, the applicable
Pooling and Servicing Agreements
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.
(d) The Company will
enter into the Master Trust
Agreement and the Purchase
Agreement on or prior to the
initial Closing Date.
(e) The Company agrees
to take such actions as you shall
reasonably request following each
Closing Date in connection with any
subsequent transfer of any
Certificates by you.
7.
Conditions to the
Purchase of the Certificates. Your
obligation hereunder to purchase
any Certificates shall be subject
to the accuracy of the
representations and warranties on
the part of the Company contained
herein, in the Master Trust
Agreement
and in the
applicable
Pooling
and Servicing Agreement as
of the date hereof and as of the
applicable Closing Date, to the
accuracy of the statements of the
Company made in any certificates
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 certificate
of the Company, signed by the
President or a
Vice
President
of
the Company and dated each 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 representations
and warranties of the Company in
this
Agreement, the Master Trust
Agreement and the applicable
Pooling
and Servicing Agreement are
true and correct in all material
respects
at
and as of
such
Closing
Date with the same effect as if
made on such Closing
Date, (ii)
neither the Company nor any of its
Affiliates is in default in the
performance of any of their
respective obligations under the
Master Trust Agreement, any Pooling
and Servicing Agreement or the
Purchase Agreement and (iii) 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 such Closing Date.
(b) With respect to the
initial Closing Date, you shall
have received from Kutak Rock,
special counsel for the Company, a
favorable opinion, dated the
initial Closing Date, to the effect
that:
(i) This
Agreement has been duly
authorized, executed and
delivered by the Company and
Aegis Consumer Funding and
constitutes a legal, valid,
binding and enforceable
agreement of the Company and
Aegis Consumer Funding,
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;
(ii) Each of the
Master Trust Agreement and the
initial 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
Aegis Finance and constitutes
a legal, valid, binding and
enforceable agreement of each
such party, except insofar as
the indemnification provisions
therein may be limited by
applicable law, and 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;
(iv) The issuance
of the initial 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 Standard
Terms and Conditions will be
validly issued and outstanding
and entitled to the benefits
of the Pooling and Servicing
Agreement;
(v) The offer and
sale of the initial
Certificates to you in the
manner contemplated in this
Agreement and the Master Trust
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
Certificates under the
Securities Act;
(vi) Neither the
Master Trust Agreement nor the
initial Pooling and Servicing
Agreement is 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 initial
Trust will be treated as a
grantor trust for federal
income tax purposes, assuming:
(i) compliance with the Master
Trust Agreement and the
Standard Terms and Conditions
for the initial Pooling and
Servicing Agreement and (ii)
compliance with changes in the
law, including any amendments
to the Code or applicable
Treasury regulations
thereunder.
(c) With respect to the
initial Closing Date, you shall
have received from Kutak Rock,
special counsel for the Company, a
favorable opinion, dated the
initial Closing Date, to the effect
that:
(i) The Company and
Aegis Finance have each been
duly organized and each 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 Master Trust
Agreement, the initial Pooling
and Servicing Agreement and
the Purchase Agreement;
(ii) There are no
actions, proceedings or
investigations pending or
threatened against or
affecting the Company or Aegis
Finance 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 any such
party to carry out the
transactions contemplated in
this Agreement, the Master
Trust Agreement, the initial
Pooling and Servicing
Agreement or the Purchase
Agreement;
(iii) No consent,
approval, authorization or
order of, or filings 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 in
this Agreement, the Master
Trust Agreement, the Purchase
Agreement or the initial
Pooling and Servicing
Agreement except any
recordation of the assignments
of the Contracts to the
Trustee pursuant to such
Pooling and Servicing
Agreement that have not yet
been completed; and
(iv) Neither the Company
nor Aegis Finance is 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 Certificates, nor the
execution or delivery of or
performance under this
Agreement, the Master Trust
Agreement, the initial 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
branch 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
Aegis Finance or, to the
knowledge of such counsel, any
indenture or other agreement
or instrument to which the
Company or Aegis Finance or
any of their affiliates is a
party or by which any of them
is bound, or any New York or
federal statute or regulation
applicable to the Company or
Aegis Finance or any of their
affiliates or, to the
knowledge of such counsel, any
order of any New York or
federal court, regulatory
body, administrative agency or
governmental body having
jurisdiction over the Company
or Aegis Finance or any of
their respective affiliates.
With respect to the
opinions in paragraphs (b) and (c)
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
Master Trust Agreement, the Pooling
and Servicing Agreements 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.
(d) With respect to the
initial Closing Date, you shall
have received from counsel for the
Trustee a favorable opinion, dated
the initial Closing Date, in form
and substance satisfactory to you
and your counsel, to the effect
that the Master Trust Agreement and
each Pooling and Servicing
Agreement has been duly authorized
by the Trustee, and that the Master
Trust Agreement has been and that
each Pooling and Servicing
Agreement (assuming no repudiations
of the authorization described
above) will, upon execution and
delivery, have been, duly executed
and delivered by the Trustee and
constitutes (or when so executed
and delivered, will constitute) 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.
Notwithstanding anything to the
contrary herein, it shall be
sufficient, with respect to each
Closing Date after the initial
Closing Date, to receive a
confirmation from counsel to the
Trustee that its opinions described
above are true and correct on such
Closing Date.
(e) With respect to each
Closing Date after the initial
Closing Date, you shall have
received either (x) a confirmation
from Kutak Rock that its opinions
described in clauses (b) and (c)
above are true with respect to the
Pooling and Servicing Agreement and
Certificates executed and/or issued
as of such Closing Date and the
Trust relating thereto or (y) such
other legal opinions as may be
reasonably satisfactory to you with
respect to such matters on a
prospective basis for multiple
Closing Dates.
(f) You shall have
received from counsel for the
Backup Servicer a favorable
opinion, dated the initial Closing
Date, in form and substance
satisfactory to you and your
counsel.
(g) You shall have
received such further information,
certificates, documents and
opinions as you may reasonably have
requested not later than the
applicable Closing Date.
(h) All proceedings in
connection with the transactions
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.
(i) No "Event of Default"
under the Warehouse Loan Agreement,
or any event which, with the giving
of notice or the passage of time,
or both, would constitute such an
Event of Default, shall have
occurred and be continuing.
If any of the conditions
specified in this Section 7 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
canceled by you at, or at any time
prior to, the applicable Closing
Date. Notice of such cancellation
shall be given to the Company in
writing, or by telephone or
facsimile transmission confirmed in
writing.
8. Conditions of the
Company's Obligations. The
obligation of the Company to sell
the Certificates to you shall be
subject to: (i) the accuracy of
your representations and warranties
herein contained at and as of the
Closing Date, (ii) your performance
of all of your obligations
hereunder to be performed at or
prior to the Closing Date, and
(iii) execution and delivery by you
of an "investment letter" or
similar letter of representations
which affirms the representations
set forth in Section 3 hereof;
provided that the Company shall be
entitled to rely upon any prior
"investment letter" or other letter
of representations delivered by any
Purchaser unless it has received
written notice from such Purchaser
that such letter is no longer
accurate with respect to such
Purchaser.
9. Indemnification and
Contribution. The Company and
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 Securities Act or the
Securities Exchange 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 Securities Act,
the Securities Exchange 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 made
on its part in the Purchase
Agreement, the Master Trust
Agreement or any Pooling and
Servicing Agreement 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. This indemnity will be in
addition to any liability that the
Company may otherwise have.
(b) 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).
(c) In addition to the
foregoing the Company and Aegis
Consumer Funding hereby agree to
indemnify you for the following
costs which may also be incurred in
connection with the purchase of the
Certificates:
(1) If, after the date
hereof due to either (i) the
introduction of or any change
in or to the interpretation of
any law or regulation by the
governmental authority that
promulgated or administers
compliance with such law or
regulation or (ii) the
compliance with any guideline
or request from any central
bank or other fiscal, monetary
or governmental authority
(whether or not having the
force of law), any reserve or
deposit or similar requirement
shall be imposed, modified or
deemed applicable or, any
basis of taxation shall be
changed or any other condition
shall be imposed, and there
shall be any increase in the
cost to any Purchaser which is
subject to regulation by the
Office of the Comptroller of
the Currency, the Federal
Deposit Insurance Corporation
or the Board of Governors of
the Federal Reserve System
(each such Purchaser, a
"Regulated Purchaser") of
making, funding, or
maintaining its Purchases of
Certificates, then, in any
such case, the Company shall
from time to time, upon demand
by such Purchaser, by the
submission of the certificate
described below, pay to such
Purchaser additional amounts
sufficient to compensate such
Regulated Purchaser for such
increased cost. A certificate
setting forth in reasonable
detail the amount of such
increased cost submitted to
the Company by a Regulated
Purchaser shall be conclusive
and binding for all purposes,
absent manifest error.
(2) If a Regulated
Purchaser determines that
compliance with any law or
regulation or any guideline or
request or any written
interpretation from any
central bank or other fiscal,
monetary or governmental
authority, rating agency or
similar agency (whether or not
having the force of law) which
is introduced, implemented or
received by the Regulated
Purchaser after the date
hereof, affects or would
affect capital adequacy or the
amount of capital required or
expected to be maintained by
such Regulated Purchaser or
any corporation controlling
such Regulated Purchaser and
that the amount of such
capital is increased by or
based upon the Certificates or
the existence of this
Agreement, or has or would
have the effect of reducing
such Purchaser's rate of
return on capital, then, upon
demand by such Regulated
Purchaser, by the submission
of the certificate described
below, the Company shall pay
to such Regulated Purchaser
from time to time as specified
by such Regulated Purchaser,
additional amounts sufficient
to compensate the Regulated
Purchaser, in the light of
such circumstances, to the
extent that such Purchaser
reasonably determines such
increase in capital to be
allocable to the Certificates
or the existence of this
Agreement. A certificate
setting forth in reasonable
detail such amounts submitted
to the Company by a Regulated
Purchaser shall be conclusive
and binding for all purposes,
absent manifest error.
(3) All payments made by
the Company under this
Agreement and the Certificates
shall be made free and clear
of, and without deduction or
withholding for or on account
of, any present or future
taxes, levies, imposts,
duties, charges, fees,
deductions or withholdings,
now or hereafter imposed,
levied, collected, withheld or
assessed by any governmental
authority having taxing
authority, excluding net
income taxes and franchise
taxes (imposed in lieu of
income taxes) imposed on the
Purchasers as a result of any
present or former connection
between the jurisdiction of
the government or taxing
authority imposing such tax or
any political subdivision or
taxing authority thereof or
therein and the Purchasers
(all such non-excluded taxes,
levies, imposts, duties,
charges, fees, deductions and
withholdings being hereinafter
called "Taxes"). If any Taxes
are required to be withheld
from any amounts payable to or
under the Certificates,
(i) the sum payable shall be
increased as may be necessary
so that, after making all
required deductions (including
deductions applicable to
additional sums payable under
this Section 9), each
Purchaser receives an amount
equal to the sum it would have
received had no such
deductions been made, (ii) the
Company shall make such
deductions, and (iii) the
Company shall pay the full
amount deducted to the
relevant taxation authority or
other authority in accordance
with applicable law.
(4) In addition, the
Company agrees to pay any
present or future stamp or
documentary taxes or any other
excise or property taxes,
charges, or similar levies
that arise from any payment
made hereunder or from the
execution, delivery or regis-
tration of, or otherwise with
respect to, this Agreement,
the Master Trust Agreement,
any Pooling and Servicing
Agreement or any Certificates
(hereinafter "Other Taxes").
(5) The Company will
indemnify the Purchasers for
the full amount of Taxes or
Other Taxes (including,
without limitation, any Taxes
or Other Taxes imposed by any
jurisdiction on amounts
payable under this Section 9)
paid by the Purchasers and any
liability (including
penalties, interest and
expenses) arising therefrom or
with respect thereto.
Whenever any Taxes are payable
by the Company, as promptly as
possible thereafter the
Company shall send to each
Purchaser a certified copy of
an original official receipt
received by the Company
showing payment thereof. If
the Company fails to pay any
Taxes when due to the
appropriate taxing authority
or fails to remit to a
Purchaser the required
receipts or other required
documentary evidence, the
Company shall indemnify each
of the Purchasers for any
incremental Taxes, interest or
penalties that the Purchaser
is legally required to pay as
a result of any such failure.
The agreements in this
subsection shall survive the
termination of this Agreement
and the payment of the
Certificates.
If any Purchaser requests
indemnification pursuant to this
Section 9(c) in an amount which the
Company, in its sole discretion,
deems material, the Company may
cause such Purchaser to assign all
of such Purchaser's rights and
obligations under this Agreement,
the Master Trust Agreement, each
Pooling and Servicing Agreement,
and any Certificates to another
financial institution selected by
the Company and willing to accept
and assume such rights and
obligations; provided, however,
that (w) such assignment shall be
without recourse, warranty or
representation of any kind except
that the assigned Certificates are
free and clear of any Lien created
on the part of the assigning
Purchaser; (x) such assignment
shall be pursuant to form and
documentation reasonably acceptable
to the assignor and assignee and
shall not conflict with any law,
rule, regulation, order or decree
of any governmental authority, (y)
the Purchaser making such
assignment shall have received from
the assignee full payment in
immediately available funds of the
outstanding principal amount of its
Certificates and accrued but unpaid
interest thereon and shall have
received from the Company any other
amounts owing to it in connection
herewith.
10. Termination. (a)
If any of the following events
(each, an "Event of Termination")
shall occur:
(i) Either (a) the
Servicer, the Company or any of the
Company's affiliates shall fail to
make any payment or deposit to be
made by it under the Purchase
Agreement, the Master Trust
Agreement, the Servicing Agreement
or any Pooling and Servicing
Agreement when due and such failure
shall remain uncured for three (3)
Business Days after written notice
thereof has been delivered to the
Servicer; or (b) the Servicer shall
fail to perform or observe any
other term, covenant or agreement
under any Pooling and Servicing
Agreement or the Servicing
Agreement and such failure shall
remain unremedied for ten (10)
Business Days after written notice
thereof shall have been given by
any Purchaser to the Servicer or
the Company, as the case may be; or
(ii) Any representation
or warranty made or deemed to be
made by the Company or Aegis
Finance (or any of their respective
officers) under or in connection
with this Agreement, the Master
Trust Agreement, any Pooling and
Servicing Agreement or the Purchase
Agreement or any other information
or report delivered pursuant hereto
or thereto shall prove to have been
false or incorrect in any material
respect when made; or
(iii) A Change in Control
shall have occurred; or
(iv) The Company shall
fail to perform or observe any
term, covenant or agreement
contained in this Agreement, the
Master Trust Agreement or any
Pooling and Servicing Agreement on
its part to be performed or
observed and any such failure shall
remain unremedied for twenty (20)
calendar days after written notice
thereof shall have been given by
any Purchaser to the Company; or
(v) Aegis Finance shall
fail to perform or observe any
term, covenant or agreement
contained in this Agreement, the
Master Trust Agreement, any Pooling
and Servicing Agreement or the
Purchase Agreement on its part to
be performed or observed and any
such failure shall remain
unremedied for fifteen (15)
calendar days after written notice
thereof shall have been given by
any Purchaser to Aegis Finance; or
(vi) Any default or any
other event or condition under any
agreements or instruments relating
to or evidencing any Indebtedness
of Aegis Finance or Aegis Consumer
Funding in excess of $1,000,000 in
the aggregate shall occur and shall
continue after the applicable grace
period, if any, specified therefor
in such agreement or instrument if
the effect or consequence of such
default, event or condition with
respect to any such Indebtedness of
the Seller is to accelerate, or to
permit the acceleration of, the
maturity of such Indebtedness; or
any such Indebtedness shall be
declared to be due and payable or
required to be prepaid (other than
by a regularly scheduled required
prepayment) prior to the stated
maturity thereof; or
(vii) (a) Any of the
Company, Aegis Finance, Aegis
Consumer or any of their Affiliates
shall generally not pay its debts
as such debts become due, or shall
admit in writing its inability to
pay its debts generally, or shall
make a general assignment for the
benefit of creditors; or any
proceeding shall be instituted by
or against such Person seeking to
adjudicate it a bankrupt or
insolvent, or seeking liquidation,
winding up, reorganization,
arrangement, adjustment, protec-
tion, relief, or composition of it
or its debts under any law relating
to bankruptcy, insolvency or
reorganization or relief of
debtors, or seeking the entry of an
order for relief or the appointment
of a receiver, trustee, or other
similar official for it or for any
substantial part of its property;
or (b) any such Person shall take
any corporate action to authorize
any of the actions set forth in
clause (a) above in this Section
10(a)(vii); or
(viii) An "Event of
Default" under and as defined in
the Warehouse Loan Agreement shall
have occurred and be continuing;
then, and in any such event, any
Purchaser may, by notice to the
Company, declare the Termination
Date to have occurred, except that,
in the case of any event described
in Section 10(a)(vii) above, the
Termination Date shall be deemed to
have occurred automatically upon
the occurrence of such event. Upon
the occurrence of the Termination
Date, all obligations of the
Purchasers to purchase Certificates
shall terminate and cease to be of
any force and effect.
Notwithstanding anything
to the contrary in this Section
10(a), if an Event of Termination
has arisen as a result of a breach
of representations or warranties
described in Section 3.02(a) of the
Standard Terms and Conditions with
respect to any Receivables
transferred to a Trust, no
Purchaser may declare by notice the
Termination Date to have occurred
unless and until all the respective
time periods for cure of the breach
or repurchase and substitution of
such Receivables as provided in
Section 3.02(a) and (b) of the
Standard Terms and Conditions have
elapsed without cure, repurchase or
substitution in accordance with the
terms of such Sections.
(b) If the sale of the
Certificates shall not be
consummated because any condition
to your obligations set forth in
Section 7 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 a default on the part of
the Purchasers, the Company shall
reimburse the Purchasers for the
reasonable fees and expenses of
counsel and for such other out-of-
pocket expenses as shall have been
incurred by the Purchasers in
connection with this Agreement and
the proposed purchase of the
Certificates, and upon demand the
Company shall pay the full amount
thereof to the applicable
Purchasers.
(c) This Agreement will
survive delivery of and payment for
the 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 both f the addresses set forth
on the first page of this
Agreement, Attention: David Bree
(at Global and Finance) and Robert
Fasulo at (III Limited
Partnership); or, if sent to the
Company, will be mailed, delivered
or transmitted by facsimile and
confirmed to it at 525 Washington
Boulevard, Jersey City, New Jersey
07310, Attention: President; or in
any such case at such other address
as any such party may hereafter
designate in a written notice to
the other parties given in
accordance with the foregoing
provisions.
12. Successors. This
Agreement will inure to the benefit
of and be binding upon the parties
hereto, the officers and directors
and controlling persons referred to
in Section 10, and their respective
successors and assigns, and no
other person will have any right or
obligation hereunder.
13. Applicable Law;
Counterparts. This Agreement will
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.
14. Replacement
Purchasers; Superseding Amendments.
The parties hereto acknowledge that
the Company may, in order to obtain
a larger Purchase Limit for the
Class A Certificates to be sold
hereunder, request that the initial
Class A Purchasers assign their
rights and obligations hereunder
and under the Class A Certificates
to a financial institution or
institutions which are (i)
reasonably acceptable to the
Company and the Class A Purchasers
and (ii) willing to purchase Class
A Certificates on terms and
conditions which are substantially
similar to the terms and conditions
of this Agreement except for the
increased Purchase Limit described
above. The initial Class A
Purchasers agree, upon request of
the Company, to assign their rights
and obligations under this
Agreement and under the
Certificates
to any such financial
institution provided that any such
assignment shall satisfy the
conditions set forth in the last
paragraph of Section 9 for
mandatory assignments. The parties
hereto further agree that, in the
event that the substitute Class A
Purchasers request modifications to
this Agreement, the Company and the
Purchasers will cooperate and use
their best efforts to amend or
restate this Agreement in order to
accommodate such requests. Any
such amended and/or restated
agreement shall, to the extent set
forth therein, supersede the terms
and conditions of this Agreement.
Upon the assignment of the Class A
Certificates as contemplated
above,and subject to the
satisfaction of any conditions
precedent to such assignment, the
Original Purchasers hereunder shall
have a commitment to purchase Class
B Certificates in an amount up to
the sum of Purchase Limits set
forth on the signature page hereof.
15. Physical Damage
Insurance. The Purchasers hereby
acknowledge that the Company may,
subject to further business and
legal analysis, commence offering
financing to Obligors for physical
damage insurance charges, which
financing would be offered on an
elective and not forced basis. In
such event, if the Company so
requests, and so long as no Event
of Termination has occurred and is
then continuing, the Purchasers
agree to negotiate in good faith
with respect to modifying the
Master Trust Agreement in order to
accommodate such business plan,
including a possible modification
of the definition of "Outstanding
Balance" to include such physical
damage insurance charges; provided,
however, that (x) no party hereto
shall have any liability for
failing to reach a final agreement
on such issues and (y) the
Purchasers shall have no obligation
to negotiate with respect to such
issues unless the Company shall
have first demonstrated to the
Purchasers' reasonable satisfaction
that the financing of such
insurance charges and the inclusion
of such charges in the amounts
financed under any Pooling and
Servicing Agreement (i) will be
permitted under all applicable
state laws, (ii) will not have any
material impact on the payment and
performance of the Receivables by
the Obligors, (iii) will be
permitted under the Underwriting
Guidelines and (iv) will not
adversely affect the obligations of
the Risk Default Insurers or the
rights of the Purchasers with
respect to the Risk Default
Insurance Policies.
<PAGE>
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. IV
By:__________________________
Name:
Title:
Acknowledged
and agreed to
for purposes
of Section 9
hereof:
THE AEGIS CONSUMER FUNDING GROUP, INC.
By:__________________________
Name:
Title:
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.
III FINANCE LTD.
III GLOBAL LTD.
By:________________________
By:________________________
Name:
Name:
Title:
Title:
Purchase Limit: $159,500,000
Purchase Limit: $68,250,000
Class A Pro Rata Share: 70%
Class A Pro Rata Share: 30%
Class B Pro Rata Share: 70%
Class B Pro Rata Share: 30%
III LIMITED PARTNERSHIP
BY: Cheyenne, Inc., its General
Partner
By:________________________
Name:
Title:
Purchase Limit: $122,500,000
Class A Pro Rata Share: 0%
Class B Pro Rata Share: 100%
AEGIS AUTO FUNDING CORP. IV,
a Delaware Corporation, Seller
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
Trustee and Backup Servicer
POOLING AND SERVICING AGREEMENT
Dated as of April 1, 1997
$37,162,000
AEGIS AUTO RECEIVABLES TRUST 1997-2
AUTOMOBILE RECEIVABLE PASS-THROUGH CERTIFICATES
TABLE OF CONTENTS
Page
ARTICLE I. CREATION OF TRUST
1
ARTICLE II. CONVEYANCE OF RECEIVABLES
1
ARTICLE III. ACCEPTANCE BY TRUSTEE
3
ARTICLE IV. INCORPORATION OF STANDARD TERMS AND
CONDITIONS
3
ARTICLE V. SPECIAL DEFINITIONS AND TERMS
4
ARTICLE VI. ADDITIONAL SELLER REPRESENTATIONS
5
ARTICLE VII. CERTIFICATE DELIVERY AND REGISTRATION
5
ARTICLE VIII. APPLICATION OF PROCEEDS
6
TESTIMONIUM
SIGNATURES
APPENDIX A Schedule of Receivables
APPENDIX B Standard Terms and Conditions
APPENDIX C Risk Default Insurance Policy Endorsement
APPENDIX D VSI Insurance Policy Endorsement
APPENDIX E Direction as to Registration of Certificates
APPENDIX F General Certificate of Aegis Auto Funding Corp. IV
APPENDIX G Form of Term Note
POOLING AND SERVICING AGREEMENT
This POOLING AND SERVICING AGREEMENT is dated as of April
1, 1997 (this "Agreement") among Aegis Auto Funding Corp. IV, a Delaware
corporation, as Seller (the "Seller") and Norwest Bank Minnesota, National
Association, a national banking association, as trustee for the Trust (the
"Trustee") and as Backup Servicer (the "Backup Servicer") and is made with
respect to the formation of the Aegis Auto Receivables Trust 1997-2 (the
"Trust").
WHEREAS, the Seller and the Trustee desire to form a trust pursuant
to the Master Trust Agreement dated as of March 1, 1997 (the "Master Trust
Agreement") by and between the Seller and the Trustee, and provide for the
issuance of a series of Automobile Pass-Through Certificates by such trust;
NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein contained, the parties hereto agree as follows:
ARTICLE I
CREATION OF TRUST
Upon the execution of this Agreement by the parties hereto, there is
hereby created the Aegis Auto Receivables Trust 1997-2. The situs and
administration of the Trust shall be in Minneapolis, Minnesota or in such
other city in which the Corporate Trust Office is located from time to time.
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.01. Conveyance by Seller.
(a) In consideration of the Trustee's delivery of the
Certificates to or upon the order of the Seller in an aggregate principal
amount equal to the aggregate Principal Balance of the Initial
Receivables, the Seller does hereby irrevocably sell, assign, and
otherwise convey to the Trustee, in trust for the benefit of the
Certificateholders, without recourse (subject to the obligations herein):
(i) all right, title and interest of the Seller in and to the Initial
Receivables identified on Appendix A hereto, all Excess Interest
Collections thereon and all other moneys received thereon on and
after the Cutoff Date;
(ii) the interest of the Seller in the security interests
in the Financed Vehicles granted by the Obligors pursuant to
the Initial Receivables;
(iii) the interest of the Seller in any Risk Default
Insurance Proceeds and any proceeds from claims on any
Insurance Policies (including the VSI Insurance Policy)
covering the Initial Receivables, the Financed Vehicles or the
Obligors from the Cutoff Date;
(iv) the right of the Seller to realize upon any
property (including the right to receive future Liquidation
Proceeds) that shall have secured an Initial Receivable and have
been repossessed by or on behalf of the Trust;
(v) the interest of the Seller in any Dealer Recourse
relating to the Initial Receivables;
(vi) all right, title and interest of the Seller in and to
the Purchase Agreement; and
(vii) the proceeds of any and all of the foregoing.
(b) [RESERVED]
Section 2.02. Nature of Conveyance. It is the intention of the Seller
and the Trustee that the transfer and assignment of the Seller's right, title
and interest in and to the assets identified in clauses (i) through (vii) of
Section 2.01(a) (collectively, the "Trust Property") shall constitute an
absolute sale by the Seller to the Trustee in trust for the benefit of the
Certificateholders. In the event a court of competent jurisdiction were to
recharacterize the transfer of the Trust Property as a secured borrowing
rather than a sale, contrary to the intent of the Seller and the Trustee,
the Seller does hereby grant, assign and convey to the Trustee and the
Trust, as security for all amounts payable to the Certificateholders, a
security interest in and lien upon all of its right, title and interest in
and to the Trust Property, including all amounts deposited
to the Lock-Box Account, the Collection Account and the Certificate Account,
said security interest to be effective from the date of execution of this
Agreement.
The Trustee and the Certificateholders acknowledge and agree that the
Seller is the holder of the Residual Interest.
<PAGE>
ARTICLE III
ACCEPTANCE BY TRUSTEE
The Trustee, on behalf of the Trust, hereby accepts all consideration
conveyed by the Seller pursuant to Article II, and declares that the Trustee
shall hold such consideration upon the trusts herein set forth for the
benefit of all present and future Certificateholders, subject to the terms
and provisions of this Agreement and the Master Trust Agreement.
ARTICLE IV
INCORPORATION OF STANDARD TERMS AND CONDITIONS
This Agreement hereby incorporates by reference the Standard Terms
provided for by the Master Trust Agreement in the form attached hereto as
Appendix C, except to the extent expressly modified hereby.
ARTICLE V
SPECIAL DEFINITIONS AND TERMS
Section 5.01. Special Definitions. Capitalized terms not otherwise
defined herein shall have the meanings ascribed to them in the Standard
Terms. Whenever used in this Agreement, the following words and phrases
shall have the following meanings:
"Backup Servicer Fee" means, with respect to any Distribution Date,
one-twelfth of the product of (i) 0.02% per annum and (ii) the outstanding
Pool Balance as of the first day of the preceding Collection Period or, in
the case of the first Distribution Date, as of the Closing Date.
"Class A Percentage" means 64.9992%.
"Class A Rate" means 7.515% of interest per annum.
"Class B Percentage" means 35.0008%.
"Class B Rate" means 13.901% of interest per annum; provided,
however that if a Credit Enhancement Event shall have occurred, "Class B
Rate" shall mean 12.972%. A "Credit Enhancement Event" shall have
occurred if, within 90 days of the Closing Date, the Seller notifies the
Trustee and the Certificateholders that a Credit Enhancement Fee shall be
payable to the Credit Enhancer in connection with the credit enhancement of
the Class A Certificates or any commercial paper issued to fund the purchase
of the Class A Certificates.
"Closing Date" means April 16, 1997.
"Credit Enhancement Event" shall have the meaning set forth in the
definition of "Class B Rate".
"Credit Enhancement Fee" means, with respect to any Distribution
Date, one-twelfth of the product of 0.50% per annum times the Class A
Percentage of the Pool Balance as of the end of the preceding Distribution
Date, payable to the Credit Enhancer after a Credit Enhancement Event shall
have occurred.
"Custodian Fee" means $1.75 per file boarded.
"Cutoff Date" means March 31, 1997.
"Discount Rate" means 14.0% per annum.
"Final Scheduled Distribution Date" means October 20, 2002.
"Initial Distribution Date" means May 20, 1997.
"Original Class Certificate Balance" means, as to the Class A
Certificates, $24,155,000, and as to the Class B Certificates, $13,007,000.
"Reserve Fund Initial Deposit" means $705,154.92.
"Trustee Fee" means, with respect to any Distribution Date, one-
twelfth of the product of (i) 0.02% per annum and (ii) the aggregate Class
Certificate Balance as of the close of business on the preceding Distribution
Date (or, in the case of the Initial Distribution Date, the original aggregate
Class Certificate Balance).
Section 5.02. Special Terms. (a) Term Note. On the Closing Date,
the Reserve Fund Initial Deposit shall be invested in a Term Note of The
Aegis Consumer Funding Group, Inc., substantially in the form of Appendix
G hereto.
(b) [Reserved]
ARTICLE VI
ADDITIONAL SELLER REPRESENTATIONS
The Seller hereby makes the following additional representations with
respect to the Receivables:
(i) Schedule of Receivables. The information set forth in Appendix
A hereto is true, complete and correct in all material respects as of the
opening of business on the applicable Cutoff Dates, as the case may be, and
no selection procedures adverse to the Certificateholders have been utilized
in selecting the Receivables.
(ii) Scheduled Payments. No Receivables had a payment that was
more than 59 days overdue as of the applicable Cutoff Date; and each
Receivable has a final scheduled payment due no later than the Final
Scheduled Distribution Date.
(iii) Insurance Policy Endorsements. Attached hereto as Appendices
E and F, respectively, are true and correct copies of the endorsements to the
Risk Default Insurance Policy and VSI Insurance Policy required by the
Standard Terms.
ARTICLE VII
CERTIFICATE DELIVERY AND REGISTRATION
The Certificates shall be designated as the "Aegis Auto Receivables
Trust 1997-2, Automobile Receivable Pass-Through Certificates, Series 1997-
2" (the "Certificates"), and issued with an initial aggregate Certificate
Balance of $37,162,000 in two Classes as follows: Class A Certificates with
an initial Certificate Balance of $24,155,000 and Class B Certificates with
an initial Certificate Balance of $13,007,000.
The Seller hereby directs the Trustee to register the Certificates in the
names and denominations specified in the direction attached hereto as
Appendix E, and to execute, authenticate and deliver the Certificates to the
initial purchasers specified in such direction upon receipt by the Trustee
of the following:
(i) $37,302,997,36 in immediately available funds from
the purchasers for the account of the Seller;
(ii) Investor letters executed by each of the initial
purchasers;
(iii) An executed copy of the Supplemental Conveyance
from Aegis Finance in the form attached as Appendix A to the
Purchase Agreement with respect to the Receivables conveyed to the
Trust on the Closing Date;
(iv) An executed copy of the certificate of the Seller
required by Section 7 of the Master Certificate Purchase Agreement
substantially in the form attached hereto as Appendix F;
(v) Executed opinions of counsel to the Seller required by
Section 7 of the Master Certificate Purchase Agreement; and
(vi) $24,021.54 in immediately available funds from the
Seller for deposit to the Collection Account of Excess Interest
Collections.
ARTICLE VIII
APPLICATION OF PROCEEDS
The proceeds of the Certificates, receipt of which the Trustee hereby
acknowledges, shall be applied as follows:
(i) $24,021.54 in immediately available funds from
the Seller for deposit to the Collection Account of Excess
Interest Collections.
(ii) $705,154.92 shall be deposited into the Reserve
Fund as the Reserve Fund Initial Deposit; and
(iii) The remainder of $37,302,997.36 shall be paid
to the Seller or upon the Seller's order.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Pooling
and Servicing Agreement to be duly executed by their respective officers as
of the day and year first above written.
AEGIS AUTO FUNDING CORP. IV,
as Seller
By:
Name:
Title:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Trustee and as Backup Servicer
By:
Name:
Title:
[Signature Page to Pooling and Servicing Agreement]
APPENDIX A
SCHEDULE OF RECEIVABLES
Delivered to the Trustee on the Closing Date
(See Attached)
APPENDIX B
STANDARD TERMS AND CONDITIONS
APPENDIX C
RISK DEFAULT INSURANCE POLICY ENDORSEMENT
APPENDIX D
VSI INSURANCE POLICY ENDORSEMENT
APPENDIX E
$37,162,000
Aegis Auto Receivables Trust 1997-2
Automobile Receivable Pass-Through Certificates,
Series 1997-2
DIRECTION AS TO
REGISTRATION OF CERTIFICATES
The undersigned purchasers of the above-referenced Certificates hereby
direct the Trustee to register such Certificates in the names and
denominations specified below:
CLASS A CERTIFICATES
Certificate
Number Name
Amount Purchased
R-1 III Finance Ltd. $16,908,500
R-2 III Global Ltd $ 7,246,500
CLASS B CERTIFICATES
Certificate
Number Name
Amount Purchased
R-1 III Limited Partnership
$13,007,000
Total $
37,162,000
IN WITNESS WHEREOF, the undersigned have duly executed this
Direction as to Registration of Certificates as of the date set forth
below.
Dated: April 16, 1997
III FINANCE LTD.
By
Name:
Title:
III GLOBAL LTD.
By
Name:
Title:
III LIMITED PARTNERSHIP
By
Name:
Title:
Appendix F
$37,162,000
Aegis Auto Receivables Trust 1997-2
Automobile Receivable Pass-Through Certificates,
Series 1997-2
GENERAL CERTIFICATE
OF
AEGIS AUTO FUNDING CORP. IV
The undersigned, on behalf of Aegis Auto Funding Corp. IV,
a Delaware corporation ("Seller"), hereby certifies this April 16, 1997, as
follows in connection with the issuance of the above-referenced Certificates
(the "Certificates") pursuant to the terms of the Pooling and Servicing
Agreement dated as of April 1, 1997 (the "Agreement") among the Seller,
Norwest Bank Minnesota, National Association, as backup servicer and
Norwest Bank Minnesota, National Association, as Trustee, and the Master
Trust Agreement dated as of March 1, 1997 (the "Master Trust Agreement")
between the Seller and the Trustee (capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to them in the Standard Terms
and Conditions attached as Appendix A to the Master Trust Agreement):
1. The undersigned has examined the Agreement, the
Master Trust Agreement, the Purchase Agreement and the Master Certificate
Purchase Agreement.
2. The representations and warranties of the Seller
contained in the Agreement, the Master Trust Agreement, the Purchase
Agreement and the Master Certificate Purchase Agreement are true and
correct in all material respects as if made on and as of the date hereof
(except for such representations and warranties specifically made as of
another specified date).
3. Neither the Seller nor any of its Affiliates is in default
in the performance of any of their respective obligations under the documents
mentioned in paragraph 2 above or any other Pooling and Servicing
Agreement executed pursuant to the terms of the Master Trust Agreement.
4. The Seller has complied with all agreements and satisfied
all conditions on its part to be performed or satisfied under the documents
specified in paragraph 2 above at or prior to the date hereof.
5. The Seller did not, either independently or through any
other party, solicit any offer to buy or offer to sell the Certificates or any
similar security by means of any form of general solicitation or general
advertising, including, but not limited to, (i) any advertisement, article,
notice or other communication published in any newspaper, magazine or similar
medium or broadcast over television or radio, and (ii) any seminar or meeting
whose attendees have been invited by any general solicitation or general
advertising.
6. The Certificates were sold by the Seller to III Finance
Ltd., III Global Ltd. and III Limited Partnership in a private placement in
transactions exempt from the registration requirements of the Act.
7. The undersigned is duly authorized by the Seller to make
the foregoing representations on behalf of the Seller and has conducted such
investigation and made such inquiries as he has deemed necessary and
appropriate in order to make such representations on behalf of the Seller.
<PAGE>
IN WITNESS WHEREOF the undersigned has signed this General
Certificate of Aegis Auto Funding Corp. IV as of the date first written above.
AEGIS AUTO FUNDING
CORP. IV
By: __________________________
Name:
Title:
PROMISSORY NOTE
$1,486,480 Dated Date: April 16, 1997
Maturity Date: October 20, 2002
FOR VALUE RECEIVED, The Aegis Consumer Funding Group, Inc.,
a Delaware Corporation (the "Company"), does hereby promise to pay to the
order of Aegis Auto Funding Corp. IV, a Delaware corporation (the "Payee")
in lawful money of the United States of America, the principal amount of
ONE MILLION FOUR HUNDRED EIGHT-SIX THOUSAND FOUR
HUNDRED EIGHTY DOLLARS ($1,486,480) (the "Principal Amount") on
the Maturity Date stated above subject to the conditions described herein.
Notwithstanding the foregoing, this Note shall, without demand, notice
or legal process of any kind, be declared and shall become immediately due
and payable upon the occurrence of any of the following events (each a
"Bankruptcy Event"): (i) 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 Company
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; (ii) the consent by the Company
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 Company and involving
substantially all of its property; or (iii) the Company 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.
If a Bankruptcy Event occurs, the amount immediately due and payable
on this Note shall equal the original purchase price hereof ($705,154.92) plus
interest accrued on such amount from the Dated Date hereof until such amount
is paid in full at the rate of 14% per annum, calculated on the basis of a 360-
day year for the actual number of days elapsed and compounded semiannually.
The Company hereby promises to pay all costs and expenses incurred in the
collection and enforcement of this Note and any appeal of a judgement
rendered hereon.
This Note represents a general unsecured obligation of the Company.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
THE AEGIS
CONSUMER FUNDING
GROUP, INC., a
Delaware corporation
By:
Name:
Title:
PAY TO THE ORDER of Norwest Bank Minnesota, National
Association, as Trustee under that certain Master Trust Agreement between
the Trustee and Aegis Auto Funding Corp. IV dated March 1, 1997, as
amended and restated from time to time, without recourse or warranty.
AEGIS AUTO FUNDING
CORP. IV
By:
Name:
Title:
[PROMISSORY NOTE]
SUPPLEMENTAL CONVEYANCE
For value received in accordance with the Amended and Restated
Master Purchase Agreement dated as of April 1, 1997, (the "Purchase
Agreement"), by and between the undersigned (the "Seller"), and Aegis Auto
Funding Corp. IV, 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 of Receivables attached as Schedule
I hereto, all monies constituting Excess Interest Collections thereon and all
other moneys received thereon on and after March 31, 1997 (the "Cutoff
Date"); (ii) the interest of the Seller in the security interests of the
Seller in the Financed Vehicles granted by the Obligors pursuant to the
Receivables; (iii) the interest of the Seller in any Risk Default Insurance
Proceeds and any proceeds from claims on any Insurance Policies (including
the VSI Insurance Policy) covering the Receivables, the Financed Vehicles or
Obligors from the Cutoff Date; (iv) the right of the Seller to realize upon
any property (including the right to receive future Liquidation Proceeds)
that shall have secured a Receivable and have been repossessed by or on
behalf of the Purchaser; (v) the interest of the Seller in any Dealer
Recourse; and (vi) 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 Supplemental Conveyance is executed and delivered pursuant to
the Purchase Agreement. The representations, warranties and agreements on
the part of the undersigned contained in the Purchase Agreement are hereby
confirmed.
The undersigned 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 1997-2 ("Trustee"), having its
principal place of business at Sixth Street and Marquette Avenue, Minneapolis,
Minnesota 55479-0070, and its successors or assigns in such capacity, Seller's
true and lawful attorney-in-fact for and in Seller'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 Seller itself could do (to the fullest extent that the Seller 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 (the "Collateral") granted to or created in
favor of Seller in and to or affecting any of the Receivables described on
Schedule I 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 Seller, 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 Receivables or 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, Seller 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.
Capitalized terms used herein and not otherwise defined shall have the
meaning assigned to them in the Purchase Agreement.
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused this
Supplemental Conveyance to be duly executed as of April 16, 1997.
AEGIS AUTO FINANCE INC.
By
Name:
Title:
SCHEDULE I
SCHEDULE OF RECEIVABLES
EXHIBIT B
LOCATION OF SERVICER FILES
System and Services Technology, Inc.
4315 Pickett Road
St. Joseph, MO 64503
American Lenders Facilities, Inc.
2600 Michaelson Drive
Suite 470
Irvine, CA 92715
PROMISSORY NOTE
$1,486,480 Dated Date: April 16, 1997
Maturity Date: October 20, 2002
FOR VALUE RECEIVED, The Aegis Consumer Funding Group, Inc.,
a Delaware Corporation (the "Company"), does hereby promise to pay to the
order of Aegis Auto Funding Corp. IV, a Delaware corporation (the "Payee")
in lawful money of the United States of America, the principal amount of
ONE MILLION FOUR HUNDRED EIGHT-SIX THOUSAND FOUR
HUNDRED EIGHTY DOLLARS ($1,486,480) (the "Principal Amount") on
the Maturity Date stated above subject to the conditions described herein.
Notwithstanding the foregoing, this Note shall, without demand, notice
or legal process of any kind, be declared and shall become immediately due
and payable upon the occurrence of any of the following events (each a
"Bankruptcy Event"): (i) 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 Company
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; (ii) the consent by the Company
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 Company and
involving substantially all of its property; or (iii) the Company 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.
If a Bankruptcy Event occurs, the amount immediately due and payable
on this Note shall equal the original purchase price hereof ($705,154.92) plus
interest accrued on such amount from the Dated Date hereof until such amount
is paid in full at the rate of 14% per annum, calculated on the basis of a 360-
day year for the actual number of days elapsed and compounded semiannually.
The Company hereby promises to pay all costs and expenses incurred in the
collection and enforcement of this Note and any appeal of a judgement
rendered hereon.
This Note represents a general unsecured obligation of the Company.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK.
THE AEGIS
CONSUMER FUNDING
GROUP, INC., a
Delaware corporation
By:
Name:
Title:
PAY TO THE ORDER of Norwest Bank Minnesota, National
Association, as Trustee under that certain Master Trust Agreement between
the Trustee and Aegis Auto Funding Corp. IV dated March 1, 1997, as
amended and restated from time to time, without recourse or warranty.
AEGIS AUTO FUNDING
CORP. IV
By:
Name:
Title:
[PROMISSORY NOTE]
AEGIS AUTO FUNDING CORP. IV,
a Delaware Corporation, Seller
and
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
Trustee and Backup Servicer
POOLING AND SERVICING AGREEMENT
Dated as of May 1, 1997
$38,462,366.44
AEGIS AUTO RECEIVABLES TRUST 1997-3
AUTOMOBILE RECEIVABLE PASS-
THROUGH CERTIFICATES
TABLE OF CONTENTS
Page
ARTICLE I. CREATION OF TRUST 1
ARTICLE II. CONVEYANCE OF RECEIVABLES 1
ARTICLE III. ACCEPTANCE BY TRUSTEE 3
ARTICLE IV. INCORPORATION OF STANDARD TERMS AND CONDITIONS 3
ARTICLE V. SPECIAL DEFINITIONS AND TERMS 4
ARTICLE VI. ADDITIONAL SELLER REPRESENTATIONS 5
ARTICLE VII CERTIFICATE DELIVERY AND REGISTRATION 5
ARTICLE VIII.APPLICATION OF PROCEEDS 6
TESTIMONIUM
SIGNATURES
APPENDIX A Schedule of Receivables
APPENDIX B Standard Terms and Conditions
APPENDIX C Risk Default Insurance Policy Endorsement
APPENDIX D VSI Insurance Policy Endorsement
APPENDIX E Direction as to Registration of Certificates
APPENDIX F General Certificate of Aegis Auto Funding Corp. IV
APPENDIX G Form of Term Note
POOLING AND SERVICING AGREEMENT
This POOLING AND SERVICING
AGREEMENT is dated as of May 1, 1997 (this
"Agreement") among Aegis Auto Funding Corp.
IV, a Delaware corporation, as Seller (the "Seller")
and Norwest Bank Minnesota, National Association,
a national banking association, as trustee for the
Trust (the "Trustee") and as Backup Servicer (the
"Backup Servicer") and is made with respect to the
formation of the Aegis Auto Receivables Trust
1997-3 (the "Trust").
WHEREAS, the Seller and the Trustee
desire to form a trust pursuant to the Master Trust
Agreement dated as of March 1, 1997 (the "Master
Trust Agreement") by and between the Seller and
the Trustee, and provide for the issuance of a series
of Automobile Pass-Through Certificates by such
trust;
NOW, THEREFORE, in consideration of
the premises and of the mutual agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
CREATION OF TRUST
Upon the execution of this Agreement by the
parties hereto, there is hereby created the Aegis
Auto Receivables Trust 1997-3. The situs and
administration of the Trust shall be in Minneapolis,
Minnesota or in such other city in which the
Corporate Trust Office is located from time to time.
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.01. Conveyance by Seller.
(a) In consideration of the
Trustee's delivery of the Certificates to or
upon the order of the Seller in an aggregate
principal amount equal to the aggregate
Principal Balance of the Initial Receivables,
the Seller does hereby irrevocably sell,
assign, and otherwise convey to the Trustee,
in trust for the benefit of the
Certificateholders, without recourse (subject
to the obligations herein):
(i) all right, title and
interest of the Seller in and
to the Initial Receivables
identified on Appendix A
hereto, all Excess Interest
Collections thereon and all
other moneys received
thereon on and after the
Cutoff Date;
(ii) the interest of the
Seller in the security
interests in the Financed
Vehicles granted by the
Obligors pursuant to the
Initial Receivables;
(iii) the interest of the
Seller in any Risk Default
Insurance Proceeds and any
proceeds from claims on
any Insurance Policies
(including the VSI
Insurance Policy) covering
the Initial Receivables, the
Financed Vehicles or the
Obligors from the Cutoff
Date;
(iv) the right of the Seller
to realize upon any
property (including the
right to receive future
Liquidation Proceeds) that
shall have secured an
Initial Receivable and have
been repossessed by or on
behalf of the Trust;
(v) the interest of the
Seller in any Dealer
Recourse relating to the
Initial Receivables;
(vi) all right, title and
interest of the Seller in and
to the Purchase Agreement;
and
(vii) the proceeds of any
and all of the foregoing.
(b) [RESERVED]
Section 2.02. Nature of Conveyance. It is
the intention of the Seller and the Trustee that the
transfer and assignment of the Seller's right, title
and interest in and to the assets identified in clauses
(i) through (vii) of Section 2.01(a) (collectively, the
"Trust Property") shall constitute an absolute sale
by the Seller to the Trustee in trust for the benefit
of the Certificateholders. In the event a court of
competent jurisdiction were to recharacterize the
transfer of the Trust Property as a secured
borrowing rather than a sale, contrary to the intent
of the Seller and the Trustee, the Seller does hereby
grant, assign and convey to the Trustee and the
Trust, as security for all amounts payable to the
Certificateholders, a security interest in and lien
upon all of its right, title and interest in and to the
Trust Property, including all amounts deposited to
the Lock-Box Account, the Collection Account and
the Certificate Account, said security interest to be
effective from the date of execution of this
Agreement.
The Trustee and the Certificateholders
acknowledge and agree that the Seller is the holder
of the Residual Interest.
<PAGE>
ARTICLE III
ACCEPTANCE BY TRUSTEE
The Trustee, on behalf of the Trust, hereby
accepts all consideration conveyed by the Seller
pursuant to Article II, and declares that the Trustee
shall hold such consideration upon the trusts herein
set forth for the benefit of all present and future
Certificateholders, subject to the terms and
provisions of this Agreement and the Master Trust
Agreement.
ARTICLE IV
INCORPORATION OF STANDARD TERMS
AND CONDITIONS
This Agreement hereby incorporates by
reference the Standard Terms provided for by the
Master Trust Agreement in the form attached hereto
as Appendix C, except to the extent expressly
modified hereby.
ARTICLE V
SPECIAL DEFINITIONS AND TERMS
Section 5.01. Special Definitions.
Capitalized terms not otherwise defined herein shall
have the meanings ascribed to them in the Standard
Terms. Whenever used in this Agreement, the
following words and phrases shall have the
following meanings:
"Backup Servicer Fee" means, with respect
to any Distribution Date, one-twelfth of the product
of (i) 0.02% per annum and (ii) the outstanding
Pool Balance as of the first day of the preceding
Collection Period or, in the case of the first
Distribution Date, as of the Closing Date.
"Class A Percentage" means 64.99922%.
"Class A Rate" means 7.245% of interest
per annum.
"Class B Percentage" means 35.00078%.
"Class B Rate" means 13.774% of interest
per annum; provided, however that if a Credit
Enhancement Event shall have occurred, "Class B
Rate" shall mean 12.845%. A "Credit
Enhancement Event" shall have occurred if, within
90 days of the Closing Date, the Seller notifies the
Trustee and the Certificateholders that a Credit
Enhancement Fee shall be payable to the Credit
Enhancer in connection with the credit enhancement
of the Class A Certificates or any commercial paper
issued to fund the purchase of the Class A
Certificates.
"Closing Date" means May 12, 1997.
"Credit Enhancement Event" shall have the
meaning set forth in the definition of "Class B
Rate".
"Credit Enhancement Fee" means, with
respect to any Distribution Date, one-twelfth of the
product of 0.50% per annum times the Class A
Percentage of the Pool Balance as of the end of the
preceding Distribution Date, payable to the Credit
Enhancer after a Credit Enhancement Event shall
have occurred.
"Custodian Fee" means $1.75 per file
boarded.
"Cutoff Date" means May 1, 1997.
"Discount Rate" means 14.0% per annum.
"Final Scheduled Distribution Date" means
November 20, 2002.
"Initial Distribution Date" means June 20,
1997.
"Original Class Certificate Balance" means,
as to the Class A Certificates, $25,000,000, and as
to the Class B Certificates, $13,462,000.00.
"Reserve Fund Initial Deposit" means Term
Notes, as such term is defined in Section 3.2(b) of
the Master Trust Agreement, with an initial price of
$727,904.87.
"Trustee Fee" means, with respect to any
Distribution Date, one-twelfth of the product of (i)
0.02% per annum and (ii) the aggregate Class
Certificate Balance as of the close of business on
the preceding Distribution Date (or, in the case of
the Initial Distribution Date, the original aggregate
Class Certificate Balance).
Section 5.02. Special Terms. (a) Term
Note. On the Closing Date, the Reserve Fund
Initial Deposit shall be invested in a Term Note of
The Aegis Consumer Funding Group, Inc.,
substantially in the form of Appendix G hereto.
(b) [Reserved]
ARTICLE VI
ADDITIONAL SELLER REPRESENTATIONS
The Seller hereby makes the following
additional representations with respect to the
Receivables:
(i) Schedule of Receivables. The
information set forth in Appendix A hereto is true,
complete and correct in all material respects as of
the opening of business on the applicable Cutoff
Dates, as the case may be, and no selection
procedures adverse to the Certificateholders have
been utilized in selecting the Receivables.
(ii) Scheduled Payments. No Receivables
had a payment that was more than 59 days overdue
as of the applicable Cutoff Date; and each
Receivable has a final scheduled payment due no
later than the Final Scheduled Distribution Date.
(iii) Insurance Policy Endorsements.
Attached hereto as Appendices E and F,
respectively, are true and correct copies of the
endorsements to the Risk Default Insurance Policy
and VSI Insurance Policy required by the Standard
Terms.
ARTICLE VII
CERTIFICATE DELIVERY AND
REGISTRATION
The Certificates shall be designated as the
"Aegis Auto Receivables Trust 1997-3, Automobile
Receivable Pass-Through Certificates, Series 1997-
3" (the "Certificates"), and issued with an initial
aggregate Certificate Balance of $38,462,000 in two
Classes as follows: Class A Certificates with an
initial Certificate Balance of $25,000,000 and Class
B Certificates with an initial Certificate Balance of
$13,462,000.
The Seller hereby directs the Trustee to
register the Certificates in the names and
denominations specified in the direction attached
hereto as Appendix E, and to execute, authenticate
and deliver the Certificates to the initial purchasers
specified in such direction upon receipt by the
Trustee of the following:
(i) $38,583,195.95 in
immediately available funds from the
purchasers for the account of the
Seller;
(ii) Investor letters executed by
each of the initial purchasers;
(iii) An executed copy of the
Supplemental Conveyance from Aegis
Finance in the form attached as
Appendix A to the
Purchase Agreement with
respect to the Receivables
conveyed to the Trust on
the Closing Date;
(iv) An executed copy of the
certificate of the Seller required by Section
7 ofthe Master Certificate Purchase
Agreement substantially in the form
attached hereto as Appendix F;
(v) Executed opinions of
counsel to the Seller required by Section 7
of the Master Certificate Purchase
Agreement; and
(vi) $0.00 in immediately
available funds from the Seller for deposit to
the Collection Account of Excess Interest
Collections; and
(vii) The Reserve Fund Initial
Deposit.
ARTICLE VIII
APPLICATION OF PROCEEDS
The proceeds of the Certificates and such
other amounts as indicated below, receipt of which
the Trustee hereby acknowledges, shall be applied
as follows:
(i) $ 0.00 in immediately available
funds from the Seller for deposit to
the Collection Account of Excess
Interest Collections.
(ii) $727,904.87 shall be deposited
into the Reserve Fund as the Reserve
Fund Initial Deposit; and
(iii) $38,583,195.95 shall be paid to
the Seller or upon the Seller's order.
<PAGE>
IN WITNESS WHEREOF, the parties
hereto have caused this Pooling and Servicing
Agreement to be duly executed by their respective
officers as of the day and year first above written.
AEGIS AUTO FUNDING CORP. IV,
as Seller
By:
Name: Joseph F. Battiato
Title: Vice President
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Trustee and as Backup Servicer
By:
Name:
Title:
APPENDIX A
SCHEDULE OF RECEIVABLES
Delivered to the Trustee on the Closing Date
(See Attached)
APPENDIX B
STANDARD TERMS AND CONDITIONS
APPENDIX C
RISK DEFAULT INSURANCE POLICY ENDORSEMENT
APPENDIX D
VSI INSURANCE POLICY ENDORSEMENT
APPENDIX E
$38,462,000
Aegis Auto Receivables Trust 1997-3
Automobile Receivable Pass-Through
Certificates,
Series 1997-3
DIRECTION AS TO
REGISTRATION OF CERTIFICATES
The undersigned purchasers of the above-referenced
Certificates hereby direct the Trustee to register
such Certificates in the names and denominations
specified below:
CLASS A CERTIFICATES
Certificate
Number Name Amount Purchased
R-1 IIIFinance Ltd. $17,500,000
R-2 IIIGlobal Ltd $ 7,500,000
CLASS B CERTIFICATES
Certificate
Number Name Amount Purchased
R-1 III LimitedPartnership $13,462,000
Total $38,462,000
IN WITNESS WHEREOF, the undersigned
have duly executed this Direction as to
Registration of Certificates as of the date set forth
below.
Dated: May 12, 1997
IIIFINANCE LTD.
By
Name:
Title:
III
GLOBAL LTD.
By
Name:
Title:
III
LIMITED PARTNERSHIP
By
Name:
Title:
<PAGE>
Appendix F
$38,462,000
Aegis Auto Receivables Trust 1997-3
Automobile Receivable Pass-Through Certificates,
Series 1997-3
GENERAL CERTIFICATE
OF
AEGIS AUTO FUNDING CORP. IV
The undersigned, on behalf of Aegis
Auto Funding Corp. IV, a Delaware corporation
("Seller"), hereby certifies this May 12, 1997, as
follows in connection with the issuance of the
above-referenced Certificates (the "Certificates")
pursuant to the terms of the Pooling and Servicing
Agreement dated as of April 1, 1997 (the
"Agreement") among the Seller, Norwest Bank
Minnesota, National Association, as backup servicer
and Norwest Bank Minnesota, National Association,
as Trustee, and the Master Trust Agreement dated
as of March 1, 1997 (the "Master Trust
Agreement") between the Seller and the Trustee
(capitalized terms used but not otherwise defined
herein shall have the meanings ascribed to them in
the Standard Terms and Conditions attached as
Appendix A to the Master Trust Agreement):
1. The undersigned has examined
the Agreement, the Master Trust Agreement, the
Purchase Agreement and the Master Certificate
Purchase Agreement.
2. The representations and
warranties of the Seller contained in the Agreement,
the Master Trust Agreement, the Purchase
Agreement and the Master Certificate Purchase
Agreement are true and correct in all material
respects as if made on and as of the date hereof
(except for such representations and warranties
specifically made as of another specified date).
3. Neither the Seller nor any of
its Affiliates is in default in the performance of any
of their respective obligations under the documents
mentioned in paragraph 2 above or any other
Pooling and Servicing Agreement executed pursuant
to the terms of the Master Trust Agreement.
4. The Seller has complied with
all agreements and satisfied all conditions on its part
to be performed or satisfied under the documents
specified in paragraph 2 above at or prior to the
date hereof.
5. The Seller did not, either
independently or through any other party, solicit
any offer to buy or offer to sell the Certificates or
any similar security by means of any form of
general solicitation or general advertising,
including, but not limited to, (i) any advertisement,
article, notice or other communication published in
any newspaper, magazine or similar medium or
broadcast over television or radio, and (ii) any
seminar or meeting whose attendees have been
invited by any general solicitation or general
advertising.
6. The Certificates were sold by
the Seller to III Finance Ltd., III Global Ltd. and
III Limited Partnership in a private placement in
transactions exempt from the registration
requirements of the Act.
7. The undersigned is duly
authorized by the Seller to make the foregoing
representations on behalf of the Seller and has
conducted such investigation and made such
inquiries as he has deemed necessary and
appropriate in order to make such representations
on behalf of the Seller.
<PAGE>
IN WITNESS WHEREOF the undersigned
has signed this General Certificate of Aegis Auto
Funding Corp. IV as of the date first written above.
AEGIS AUTO FUNDING CORP.IV
By:
__________________________
Name: Joseph F. Battiato
Title: Vice President
APPENDIX G
PROMISSORY NOTE
$1,538,480.00 Dated Date: May 12, 1997
Maturity Date: November 20, 2002
FOR VALUE RECEIVED, The Aegis
Consumer Funding Group, Inc., a Delaware
Corporation (the "Company"), does hereby promise
to pay to the order of Aegis Auto Funding Corp.
IV, a Delaware corporation (the "Payee") in lawful
money of the United States of America, the
principal amount of ONE MILLION FIVE
HUNDRED THIRTY EIGHT THOUSAND FOUR
HUNDRED EIGHTY DOLLARS ($1,538,480) (the
"Principal Amount") on the Maturity Date stated
above subject to the conditions described herein.
Notwithstanding the foregoing, this Note
shall, without demand, notice or legal process of
any kind, be declared and shall become immediately
due and payable upon the occurrence of any of the
following events (each a "Bankruptcy Event"): (i)
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 Company 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; (ii) the consent by the
Company 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 Company and
involving substantially all of its property; or (iii) the
Company 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.
If a Bankruptcy Event occurs, the amount
immediately due and payable on this Note shall
equal the original purchase price hereof
($727,904.87) plus interest accrued on such amount
from the Dated Date hereof until such amount is
paid in full at the rate of 14% per annum,
calculated on the basis of a 360-day year for the
actual number of days elapsed and compounded
semiannually. The Company hereby promises to
pay all costs and expenses incurred in the collection
and enforcement of this Note and any appeal of a
judgement rendered hereon.
This Note represents a general unsecured
obligation of the Company.
THIS PROMISSORY NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
THE AEGIS CONSUMER FUNDING GROUP,
INC., a Delaware corporation
By:
Name: Joseph F. Battiato
Title: President
PAY TO THE ORDER of Norwest Bank
Minnesota, National Association, as Trustee under
that certain Master Trust Agreement between the
Trustee and Aegis Auto Funding Corp. IV dated
March 1, 1997, as amended and restated from time
to time, without recourse or warranty.
AEGIS AUTO FUNDING CORP. IV
By:
Name: Angelo R. Appierto
Title: President
[PROMISSORY NOTE]
PROMISSORY NOTE
$1,538,480.00 Dated Date: May 12, 1997
Maturity Date: November 20, 2002
FOR VALUE RECEIVED, The Aegis
Consumer Funding Group, Inc., a Delaware
Corporation (the "Company"), does hereby promise
to pay to the order of Aegis Auto Funding Corp.
IV, a Delaware corporation (the "Payee") in lawful
money of the United States of America, the
principal amount of ONE MILLION FIVE
HUNDRED THIRTY EIGHT THOUSAND FOUR
HUNDRED EIGHTY DOLLARS ($1,538,480) (the
"Principal Amount") on the Maturity Date stated
above subject to the conditions described herein.
Notwithstanding the foregoing, this Note
shall, without demand, notice or legal process of
any kind, be declared and shall become immediately
due and payable upon the occurrence of any of the
following events (each a "Bankruptcy Event"): (i)
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 Company 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; (ii) the consent by the
Company 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 Company and
involving substantially all of its property; or (iii) the
Company 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.
If a Bankruptcy Event occurs, the amount
immediately due and payable on this Note shall
equal the original purchase price hereof
($727,904.87) plus interest accrued on such amount
from the Dated Date hereof until such amount is
paid in full at the rate of 14% per annum,
calculated on the basis of a 360-day year for the
actual number of days elapsed and compounded
semiannually. The Company hereby promises to
pay all costs and expenses incurred in the collection
and enforcement of this Note and any appeal of a
judgement rendered hereon.
This Note represents a general unsecured
obligation of the Company.
THIS PROMISSORY NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK.
THE AEGIS CONSUMER FUNDING GROUP,
INC., a Delaware corporation
By:
Name: Joseph F. Battiato
Title: President
PAY TO THE ORDER of Norwest Bank
Minnesota, National Association, as Trustee under
that certain Master Trust Agreement between the
Trustee and Aegis Auto Funding Corp. IV dated
March 1, 1997, as amended and restated from time
to time, without recourse or warranty.
AEGIS AUTO FUNDING CORP. IV
By:
Name: Angelo R. Appierto
Title: President
SUPPLEMENTAL CONVEYANCE
For value received in accordance with the
Master Purchase Agreement dated as of March 1,
1997, (the "Purchase Agreement"), by and between
the undersigned (the "Seller"), and Aegis Auto
Funding Corp. IV, 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 of Receivables attached
as Schedule I hereto, all monies constituting Excess
Interest Collections thereon and all other moneys
received thereon on and after May 1, 1997 (the
"Cutoff Date"); (ii) the interest of the Seller in the
security interests of the Seller in the Financed
Vehicles granted by the Obligors pursuant to the
Receivables; (iii) the interest of the Seller in any
Risk Default Insurance Proceeds and any proceeds
from claims on any Insurance Policies (including
the VSI Insurance Policy) covering the Receivables,
the Financed Vehicles or Obligors from the Cutoff
Date; (iv) the right of the Seller to realize upon any
property (including the right to receive future
Liquidation Proceeds) that shall have secured a
Receivable and have been repossessed by or on
behalf of the Purchaser; (v) the interest of the Seller
in any Dealer Recourse; and (vi) 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 Supplemental Conveyance is executed
and delivered pursuant to the Purchase Agreement.
The representations, warranties and agreements on
the part of the undersigned contained in the
Purchase Agreement are hereby confirmed.
The undersigned 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 1997-3 ("Trustee"), having its
principal place of business at Sixth Street and
Marquette Avenue, Minneapolis, Minnesota 55479-
0070, and its successors or assigns in such capacity,
Seller's true and lawful attorney-in-fact for and in
Seller'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 Seller itself could do (to the fullest
extent that the Seller 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 (the "Collateral") granted
to or created in favor of Seller in and to or
affecting any of the Receivables described on
Schedule I 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
Seller, 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 Receivables or
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, Seller 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.
Capitalized terms used herein and not
otherwise defined shall have the meaning assigned
to them in the Purchase Agreement.
<PAGE>
IN WITNESS WHEREOF, the undersigned
has caused this Supplemental Conveyance to be duly
executed as of May 12, 1997.
AEGIS
AUTO
FINA
NCE
INC.
By
Name: Joseph F. Battiato
Title: President<PAGE>
SCHEDULE I
SCHEDULE OF RECEIVABLES
<PAGE>
EXHIBIT B
LOCATION OF SERVICER FILES
System and Services Technology, Inc.
4315 Pickett Road
St. Joseph, MO 64503
American Lenders Facilities, Inc.
2600 Michaelson Drive
Suite 470
Irvine, CA 92715
EXECUTION COPY
LOAN AND SECURITY AGREEMENT
Dated as of March 14, 1997
Among
AEGIS AUTO FINANCE, INC.,
as Borrower
III FINANCE LTD.,
as a Lender
AND
III GLOBAL LTD.
as a Lender
LOAN AND SECURITY AGREEMENT
This Loan and Security Agreement
("Agreement") is made as of this 14th day
of March, 1997 among AEGIS AUTO FINANCE,
INC., a Delaware corporation (the
"Borrower"), III FINANCE LTD., a Cayman
Islands company ("Finance") and III GLOBAL
LTD., a Cayman Islands company ("Global",
and together with Finance, the "Lenders"
and each individually, a "Lender"); and
for purposes of Section 8.14 hereof only,
AEGIS CAPITAL MARKETS, INC., a Delaware
corporation ("Aegis Capital") and AEGIS
ACCEPTANCE CORP., a Delaware corporation
("AAC" and together with Aegis Capital and
the Borrower, the "Original Borrowers").
PRELIMINARY STATEMENT:
WHEREAS, the Original Borrowers
and Finance have previously entered into a
Loan and Security Agreement dated as of
November 8, 1993 (as amended or modified
from time to time through the date hereof,
the "Original Agreement") pursuant to
which Finance agreed, on the terms and
conditions set forth therein, to advance
to the Original Borrowers certain loans on
a revolving credit basis in order to
finance the Original Borrowers' purchase
of retail installment sales contracts for
the purchase and financing of new and used
automobiles, light trucks, vans and
minivans; and
WHEREAS, the Original Borrowers
and Finance desire to terminate the
Original Agreement as set forth in Section
8.14 hereof and replace the agreements set
forth therein with this Agreement;
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 the Borrower by the Lenders
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:
"AAC" shall have the meaning set
forth in the preamble hereto.
"Account Agreement" shall
mean an agreement executed by a
Servicer and the Borrower
substantially in the form of
Exhibit I attached hereto.
"Aegis Capital" shall have the
meaning set forth in the preamble
hereto.
"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.
"Aging Receivable Report" shall
mean a monthly report delivered
pursuant to Section 5.1(c) in the
form attached hereto as Exhibit A.
"Applicable Advance Rate" shall
mean:
(i) with respect to
(x) any Nonconforming Receivable
(other than a Nonconforming
Insured Receivable) and (y) any
Eligible Receivable which is not
covered by an RDI Policy at the
applicable time of determination
(i.e., because it has been
outstanding for less than 14
days), a percentage equal to (a)
92% from the date of creation
thereof to the last Business Day
in any calendar month occurring
no less than five nor more than
six months after such date of
creation; (b) during each
succeeding calendar month, an
amount equal to the "Applicable
Advance Rate" during the
immediately preceding calendar
month minus one percent (1%);
(ii) with respect to
any Nonconforming Insured
Receivable or Eligible
Receivable which is a Delinquent
Receivable, a percentage equal
to ninety percent (90%);
(iii) with respect to
any Nonconforming Insured
Receivable and any Eligible
Receivable not described in
clauses (i) or (ii) above, 100%;
provided, however, that if at any
time the insurer with which the
Borrower maintains the applicable RDI
Policy or VSI Policy referred to in
Section 5.8 of this Agreement is
rated by A.M. Best Company ("Best")
at a level lower than "A", then the
Applicable Advance Rate with respect
to any Nonconforming Insured
Receivables or Eligible Receivables
described in clause (ii) above shall
be seventy percent (70%) and the
Applicable Advance Rate with respect
to any Nonconforming Insured
Receivables or Eligible Receivables
described in clause (iii) above shall
be eighty percent (80%).
"Automobile" shall mean the new
or used automobile, light truck, van
or minivan that is purchased by a Car
Buyer to which a particular
Receivable relates.
"Best" shall have the meaning
given such term in the definition of
"Applicable Advance Rate."
"Borrowing Base" shall mean, at
any time, the sum of:
(A) the Applicable Advance
Rate times the then aggregate
Outstanding Balance of the
Eligible Receivables (excluding
Delinquent Receivables); plus
(B) the lesser of (i) the
Applicable Advance Rates times
the then aggregate Outstanding
Balance of Delinquent
Receivables (excluding
Nonconforming Receivables) and
(ii) $1,000,000; plus
(C) with respect to
Nonconforming Receivables which
are Nonconforming Insured
Receivables, the lesser of (i)
the Applicable Advance Rate
times the then aggregate
Outstanding Balance of such
Nonconforming Insured
Receivables and (ii) one percent
(1.0%) of the Loans outstanding
at such time; plus
(D) with respect to
Nonconforming Receivables which
are not Nonconforming Insured
Receivables, the lesser of (i)
the Applicable Advance Rate
times the then aggregate
Outstanding Balance of such
Nonconforming Receivables and
(ii) one-fifth of one percent
(0.2%) of the Loans outstanding
at such time.
"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
permitted by law or executive order
to be closed.
"Car Buyer" shall mean the
obligor under a Receivable.
"Certificates" shall mean any
pass-through certificates or similar
instruments evidencing a fractional
undivided interest in Receivables
originated by the Borrower and/or any
of its Affiliates.
"Change in Control" shall mean
any of the following: (i) the Parent
ceases to be the owner, directly or
indirectly, of 100% of the equity
interest in, and capital stock of the
Borrower; or (ii) any of Joseph
Battiato, Angelo Appierto or Gary
Peiffer shall cease to hold their
current positions or cease to be
otherwise actively involved in the
management of the Borrower, provided
however, that should any one of the
foregoing individuals (and only one)
cease to hold his current office or
cease to be actively involved in
management of the Borrower and the
Parent as a result of death,
disability or discharge for cause,
then no "Change of Control" shall be
deemed to have occurred under this
definition unless and until another
of the foregoing individuals ceases
to hold his current office or ceases
to be actively involved in management
as described above.
"Closing Date" shall mean March
14, 1997, or such other date as all
of the conditions precedent set forth
in Article III hereof shall have been
satisfied.
"Collateral" shall have the
meaning ascribed to such term in
Section 6.1.
"Contract" shall mean, with
respect to each Receivable, the note,
retail sales installment contract or
other evidence of the Car Buyer's
obligation to repay the Receivable,
executed by such Car Buyer in
connection with the purchase of an
Automobile.
"Dealer" shall mean an
automobile dealer that enters into a
Dealer Agreement with the Borrower.
"Dealer Agreement" shall mean an
agreement between a Dealer and the
Borrower, in form and substance
substantially similar to one of the
agreements attached as Exhibit B
hereto, whereby the Borrower acquires
Contracts for its benefit.
"Default" shall mean any event
which, with the passage of time or
the giving of notice, or both, would
constitute an Event of Default.
"Defaulted Receivable"
shall mean any Receivable with
respect to which: (i) any
principal or interest payments
are past due for one hundred and
eighty (180) days or more or
(ii) the relevant Car Buyer has
filed for bankruptcy or (iii)
the Borrower or the Servicer has
taken, or caused to be taken,
enforcement or similar action to
repossess the relevant vehicle.
"Delinquent Receivable" shall
mean any Receivable, principal or
interest payments on which are more
than ninety (90) days and less than
one hundred eighty (180) days
delinquent, but which (i) otherwise
meets the criteria for an Eligible
Receivable or (ii) is a Nonconforming
Insured Receivable.
"Depository Account" shall mean
that certain concentration account
into which a Servicer shall, pursuant
to an Account Agreement or Servicing
Agreement, deposit collections from
Receivables as more fully described
in Section 6.7 hereof.
"Eligible Receivable" shall mean
a Receivable:
(a) which is not a
Defaulted Receivable;
(b) which, together with
its related Contract, was
created in compliance with all
applicable federal and state
laws and regulations, including
consumer credit laws and
regulations;
(c) which has been created
or acquired by the Borrower in
the ordinary course of the
Borrower's business and in
accordance with its Underwriting
Criteria;
(d) which is legally and
beneficially owned by the
Borrower free and clear of any
Lien except for the Lien in
favor of the Lenders created
pursuant to this Agreement;
(e) with respect to which
the Borrower is the lienholder
of record on the Title or shall
have filed with appropriate
state authorities all necessary
applications to be lienholder of
record on the Title;
(f) which, together with
the Contract related thereto, is
the legal, valid and binding
obligation of the maker thereof,
enforceable in accordance with
its terms, except as
enforceability may be limited by
bankruptcy, insolvency,
reorganization or other similar
laws affecting creditors rights
in general and by general
principles of equity;
(g) with respect to which
the Lenders have a perfected,
first-priority security interest
free and clear of all other
liens, security interests and
encumbrances except for a junior
lien thereon to secure the
Subordinated Debentures;
(h) which is denominated
and payable only in U.S.
dollars;
(i) the Car Buyer or other
obligor with respect to which is
(i) located in one of the 48
contiguous states in the United
States, (ii) not an Affiliate of
the Borrower and (iii) not a
governmental entity;
(j) which is secured by a
first priority perfected
security interest in a passenger
car, pick-up truck, sport
utility vehicle, minivan or van
rated at less than one ton;
(k) which, together with
its Contract, constitutes
"chattel paper" under the
Uniform Commercial Code as in
effect in the relevant state and
the sole original of which is
held by the Servicer together
with the original Title;
(l) the Servicer's File
with respect to which contains
proof of a policy of physical
damage insurance for the related
Automobile on standard forms,
naming or assigned to the
Borrower as the lien holder or
as a named insured, insuring
repair or replacement of such
Automobile subject to a
deductible not in excess of $500
or a legally enforceable binder
to furnish such a policy of
physical damage insurance within
three days of origination of
such Receivable;
(m) the origination and
collection practices used by the
Servicer with respect to which
have been, and are, in all
respects legal, proper, prudent
and customary in the automobile
loan servicing business;
(n) which is not (nor is
its related Contract) subject to
any set off, counterclaim or
defense, including the defense
of usury, nor will the operation
of any of the terms of any
Contract, or the exercise of any
right thereunder, render such
Receivable or Contract
unenforceable, in whole or in
part, or subject to any right of
rescission, set-off,
counterclaim or defense,
including the defense of usury
and no such right of rescission,
set-off, counterclaim or defense
has been asserted with respect
thereto;
(o) the Car Buyer with
respect to which had legal
capacity at the time to incur
the Receivable and to execute
and deliver the Contract, and
the Contract has been duly and
properly executed by such party;
(p) the Contract with
respect to which contains
customary and enforceable
provisions so as to render the
rights and remedies of the
holder thereof adequate for the
realization against the property
subject to the Contract of the
benefits of the security
provided thereby, including all
the rights of a secured party
under the Uniform Commercial
Code as in effect in the state
in which the Car Buyer resides
or the Contract was executed;
(q) which matures within
not less than twelve (12) months
nor more than sixty (60) months
from the time of origination, is
payable in monthly installments
of principal and interest, with
interest payable in arrears, has
a coupon of not less than 7 1/2%
and not more than 29% and
requires a monthly payment which
is sufficient to amortize the
original principal balance over
the original term, and the
Contract with respect to which
does not provide for any
extension of the original term
other than on terms which are
(but for final maturity)
consistent with the foregoing;
(r) the Automobile with
respect to which was at the time
of purchase, and to the best of
the Borrower's knowledge,
continues to be, free of
material damage and is in good
repair;
(s) the original
Outstanding Balance of which was
(i) with respect to Receivables
for which the Car User's finance
application was received by the
Borrower prior to January 15,
1997, not more than 120%, and
with respect to Receivables for
which the Car User's finance
application was received by the
Borrower on or after January 15,
1997, not more than 100%, of (A)
in the case of new Automobiles,
the manufacturer's suggested
retail price or (B) in the case
of used Automobiles, the retail
value of the Automobile at the
time of origination of the
Receivable as set forth in the
Kelley "Blue Book" for the
appropriate region plus (ii) the
amount of taxes, title and other
fees and premiums for approved
service contracts related to
such Receivables;
(t) the principal balance
of which does not include
capitalized interest, physical
damage insurance and/or late
charges;
(u) which is being
serviced by the Servicer
pursuant to the Servicing
Agreement;
(v) which, unless
otherwise identified to the
Lenders as a Nonconforming
Insured Receivable or a
Nonconforming Receivable,
satisfies the conditions for
coverage under an RDI Policy and
which, except for any
Nonconforming Receivable not
constituting a Nonconforming
Insured Receivable, is insured
under such policy, provided
however, that any Receivables
which have been outstanding for
less than 14 days since their
origination and for which the
Borrower is in the process of
obtaining insurance under an RDI
Policy shall be deemed to be
Eligible Receivables under this
subclause (v);
(w) which satisfies the
conditions for coverage under
the VSI Policy and is insured
under such policy; and
(x) which otherwise
complies with the Borrower's
representations and warranties
as set forth in Section 6.4
hereof.
"ERISA" shall mean the Employee
Retirement Income Security Act of
1974, as amended from time to time,
together with any regulations
promulgated and rulings issued
thereunder from time to time.
"Event of Default" shall mean
any one or more of the events
specified in Section 7.1.
"Finance" shall have the meaning
set forth in the preamble hereto.
"Financing Agreements" shall
mean all agreements, instruments and
documents, including, without
limitation, this Agreement, the
Dealer Agreement, the Servicing
Agreement, the Guaranty, the Pledge
Agreements, the Security Agreement,
the Contracts, the Titles, the Notes
and all other assignments, security
agreements, 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 the Borrower or a Dealer in
connection with the transactions
contemplated by this Agreement.
"Global" shall have the meaning
set forth in the preamble hereto.
"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 dated as of even
date herewith, executed by the Parent
pursuant to which the Parent
guaranties all of the Obligations of
the Borrower to the Lenders.
"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 (excluding trade payables
payable within 30 days of delivery of
goods 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.
"IRC" shall mean the Internal
Revenue Code of 1986, as amended.
"Lease Warehouse Facility"
shall mean the outstanding credit
facility made by Finance to AAC and
Aegis Consumer Finance, Inc., a
Delaware corporation, pursuant to the
Loan and Security Agreement, dated
February 28, 1994, as amended from
time to time.
"LIBOR" shall mean an interest
rate per annum equal to the rate of
interest per annum at which deposits
in U.S. dollars are offered for a
period of thirty (30) days or less,
as applicable, and which appears as
of 11:00 a.m., London time on the
date of determination (i) on the
Telerate page 3750 or (ii) if such
page on such service ceases to
display such information, such other
page as may replace it on that
service for the purpose of display of
such information; or (iii) if such
rate does not appear on the Telerate,
then the rate quoted on Reuters
Screen page "LIBO", or (iv) if such
page on such service ceases to
display such information, such other
page as may replace it on that
service for the purpose of displaying
such information, or (v) if that
service ceases to display such
information, the determination shall
be made on the basis of the rates
which are available.
"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.
"Loan Request Amount" shall have
the meaning set forth in Section
2.2(b) hereof.
"Loans" shall have the meaning
set forth in Section 2.1 hereof.
"Lock-box Account" shall have
the meaning ascribed to such term in
the Servicing Agreement.
"Master Amendment" shall have
the meaning set forth in Section 8.14
hereof.
"Master Certificate Purchase
Agreement" shall mean that certain
Master Certificate Purchase
Agreement, dated as of March 14, 1997
from the SPC and the Parent to
Finance and Global.
"Master Trust Agreement" shall
mean that certain Master Trust
Agreement, dated as of March 1, 1997
between the SPC and Norwest Bank
Minnesota, National Association, as
the Trustee.
"Maximum Loan Amount" shall
mean the lesser of (i)
$50,000,000 and (ii) the maximum
dollar amount of the Loans which
the Lenders could be requested
to make under Section 2.1.
"Maximum Rate" shall have the
meaning given to such term in Section
2.4(c) hereof.
"Nonconforming Insured
Receivable" shall mean a
Nonconforming Receivable with respect
to which the applicable Risk Default
Insurer has waived in writing such
Receivable's non-compliance with the
Underwriting Criteria and has agreed
to cover such Receivable under its
RDI Policy.
"Nonconforming Receivables"
shall mean any Receivables which
are generated outside of the
Underwriting Criteria but which
otherwise meet the criteria for
Eligible Receivables.
"Notes" shall mean the
promissory notes of the Borrower in
favor of the Lenders, one in favor of
Finance, the other in favor of
Global, each of which is
substantially in the form of Exhibit
C.
"Obligations" shall mean all of
the payment and performance
obligations and liabilities of the
Borrower to the Lenders under this
Agreement, the Original Agreement and
the other Financing Agreements.
"Original Agreement" shall have
the meaning set forth in the first
preliminary statement hereof.
"Original Borrowers" shall have
the meaning set forth in the first
preliminary statement hereof.
"Outstanding Balance" shall
mean, with respect to any Receivable
or Receivables at any time, the
outstanding principal amount of such
Receivable or Receivables at such
time, exclusive of any amounts
representing capitalized interest,
physical damage insurance or late
charges.
"Parent" shall mean The Aegis
Consumer Funding Group, Inc., a
Delaware corporation.
"Parent Pledge Agreement" shall
mean the Pledge Agreement, dated as
of March 14, 1997, among the Parent
and the Lenders.
"Payment Date" shall mean the
twentieth calendar day of each month,
provided, however, that, if any such
day is not a Business Day, then
Payment Date shall mean the
immediately succeeding Business Day.
"Payment Period" shall mean,
with respect to any Payment Date, the
calendar month immediately preceding
such Payment Date.
"Permitted Existing
Indebtedness" shall mean the
Indebtedness described on
Schedule 5.4 hereto.
"Permitted Existing Liens"
shall mean the Liens described
on Schedule 5.4 hereto.
"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).
"Pledge Agreements" shall mean
each of (i) the Parent Pledge
Agreement (ii) the Pledge Agreement,
dated as of March 14, 1997, among
Aegis Consumer Finance, Inc. and the
Lenders, (iii) the Pledge Agreement,
dated as of March 14, 1997, among
Aegis Capital and the Lenders and
(iv) the Pledge Agreement, dated as
of March 14, 1997, between the
Borrower and III Finance.
"Proportionate Share" shall mean
(i) with respect to Finance, seventy
percent (70%) and (ii) with respect
to Global, thirty percent (30%).
"RDI Policy" shall mean one of
the risk default policies maintained
with a Risk Default Insurer with
respect to the Receivables, copies of
which policies are attached hereto as
Exhibit D.
"Receivables" shall mean all
indebtedness of a Car Buyer evidenced
by a Contract, whether such Contract
is originated by the Borrower or
purchased from a Dealer by the
Borrower pursuant to a Dealer
Agreement or Agreements, which
indebtedness is or has been reflected
in a Receivables Schedule furnished
to the Lenders by the Borrower or a
Servicer pursuant to Section 2.2(b)
or which has otherwise been included
in the calculation of the Borrowing
Base at any time. It is expressly
understood and agreed that the term
"Receivable" (x) does not include any
such indebtedness which has never
been listed in a Receivables Schedule
or otherwise included in the
calculation of the Borrowing Base at
any time and (y) includes all
Receivables so listed in any
Receivables Schedule or included in
the calculation of the Borrowing Base
at any time notwithstanding that such
Receivable has become a Defaulted
Receivable or Delinquent Receivable
or has (for any reason other than an
affirmative release by each of the
Lenders of its respective security
interest therein in connection with a
disposition of such Receivable)
ceased to be an Eligible Receivable.
"Receivables Sale
Documents" shall mean each of
(i) that certain Purchase
Agreement between the Borrower
and the SPC, dated as of March
14, 1997, pursuant to which the
Borrower sells Receivables to
the SPC, (ii) the Master Trust
Agreement, (iii) any Pooling and
Servicing Agreement entered into
in connection with the Master
Trust Agreement, (iv) the Master
Certificate Purchase Agreement,
(v) the Certificates and (vi)
any agreements, documents or
instruments relating to the
foregoing.
"Receivables Sale Program"
shall mean that certain program
contemplated under the
Receivables Sale Documents for
the sales, from time to time, by
the Borrower, of Receivables and
related intangible assets to the
SPC on the terms and conditions
set forth in the Receivables
Sale Documents and (ii) the
sale, assignment or transfer by
the SPC to a special-purpose
trust or trusts in connection
with the issuance of pass-
through trust certificates, the
net cash proceeds of which are
sufficient for the Borrower to
repay the Loans by an amount at
least equal to the reduction in
the Borrowing Base resulting
from such sale transaction or
series of transactions.
"Receivables Schedule" shall
mean the schedule of new Receivables
furnished to the Lenders pursuant to
Section 2.2(b).
"Registry" shall have the
meaning set forth in Section 8.8.
"Risk Default Insurer" shall
mean Connecticut Indemnity Insurance
Co., and/or Empire Fire & Marine
Insurance Co., a division of Zurich
Insurance Company, or such other
insurer reasonably acceptable to the
Lender and rated at least "A" by
Best.
"Secured Obligations" shall
mean, collectively, all of the
Obligations and all indebtedness
and other obligations under any
loan agreement or credit
agreement entered into by the
Borrower or any of its
Affiliates with the Lenders from
time to time.
"Security Agreement" shall mean
that certain Security Agreement,
dated as of March 14, 1997, from AAC
and Aegis Consumer Finance, Inc. to
the Lenders.
"Servicer" shall mean, (i)
System and Services Technology, Inc.,
a wholly owned subsidiary of the
Parent or (ii) such other Person
acceptable to the Lenders who,
pursuant to a Servicing Agreement,
has agreed to perform various
services on behalf of the Borrower
with respect to that particular
Receivable; provided, that, so long
as any of the Receivables continue to
be serviced by American Lenders
Facilities, Inc., a California
corporation ("ALFI"), then the term
Servicer, when used with respect to
such Receivables or when the context
also requires, shall mean and include
ALFI as well as the other Servicers
described above.
"Servicer's Confirmation" shall
have the meaning ascribed to such
term in Section 2.2(c).
"Servicer's File" shall mean,
with respect to each Receivable, the
original Contract, Title, all
original instruments modifying the
terms and conditions of such
Receivable, the original endorsements
or assignments of such Contract,
factory invoices and work orders
describing the Automobile, the bill
of sale and guaranty of title,
insurance policies, tax receipts,
property and casualty insurance
policies or binders naming the
Servicer as loss payee or additional
named insured, as is appropriate,
insurance premium receipts, ledger
sheets, payment records, insurance
claim files and correspondence, all
documentation in connection with any
modification, release, accommodation,
co-signing or guaranty of the
Receivable and any other
documentation executed or otherwise
obtained in connection with any
Receivable which the Servicer is
required to hold under the terms of
the Servicing Agreement.
"Servicing Agreement" shall mean
either (i) that certain Servicing
Agreement dated as of
January 3,
1997
by and between the Borrower, certain
of its Affiliates, and System and
Services Technology, Inc., or (ii)
any other agreement, in form and
substance satisfactory to the
Lenders, between the Borrower and a
Servicer pursuant to which a Servicer
agrees to perform various services on
behalf of the Borrower with respect
to that Receivable.
"SPC" shall mean Aegis Auto
Funding Corp. IV, a Delaware
corporation.
"Subordinated Debentures"
shall mean the Borrower's
$21,333,333 12% Exchangeable
Subordinated Debentures
guaranteed by the Parent.
"Termination Date" shall mean
the earlier of (i) March 13, 1999 and
(ii) the date on which either Lender
terminates this Agreement pursuant to
Section 7.1(A).
"Title" shall mean, with respect
to each Receivable, the original
certificate or other instrument or
registration evidencing ownership of
the related Automobile, which
certificate, other instrument or
registration shall have the lien of
the Borrower noted thereon and, if
applicable, a UCC financing statement
signed by the Car Buyer and filed in
the appropriate jurisdiction
evidencing the perfection of the lien
granted by the Car Buyer to the
Borrower as secured party.
"Underwriting Criteria" shall
mean the underwriting criteria in
place for the purchase and
origination of the Contracts and the
Receivables customarily adhered to by
the Borrower as more particularly
described on Exhibit E attached
hereto, or such other standards or
criteria subsequently developed by
the Borrower and approved of in
writing by each of the Lenders and
the Risk Default Insurers under the
RDI Policies.
"VSI Policy" shall mean the
vendors' single interest physical
damage insurance policy maintained
with respect to the Receivables, a
copy of which is attached as Exhibit
F.
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. Unless otherwise specified, in
the computation of any time period, the
word "from" means "from and including" and
the words "to" or "until" mean "until but
not including."
Section 1.5 Preliminary
Statement. The Preliminary Statement is
incorporated herein by this reference
thereto.
ARTICLE II
LOANS AND INTEREST
Section 2.1 Loans. Subject to
the terms and conditions contained in this
Agreement, each of the Lenders severally
agrees that it will, from time to time on
or after the Closing Date and continuing
until the Termination Date, extend loans
(all such loans from each of the Lenders
hereinafter referred to as the "Loans") to
the Borrower in an amount equal to each
such Lender's Proportionate Share;
provided however, that (A) the aggregate
outstanding principal amount of the Loans
shall not exceed the lesser of (i) the
Maximum Loan Amount or (ii) the Borrowing
Base, and (B) if either Lender ceases
trading activities, dissolves or commences
distribution of a material portion of its
assets, then such Lender may, upon ninety
(90) days advance notice, stop extending
Loans to the Borrower and may demand
payment on all Loans then outstanding to
such Lender. All Loans shall be made
ratably by the Lenders in accordance with
their Proportionate Shares. The Borrower
shall set forth in the Aging Receivable
Report, delivered monthly pursuant to
Section 5.1(c), the amount of Receivables
which constitute Eligible Receivables,
with separate indications for which such
Receivables constitute Delinquent
Receivables, Nonconforming Receivables and
Nonconforming Insured Receivables. The
aggregate principal amount of the Loans
shall be evidenced by the Notes and shall
be payable in accordance with Section 2.5.
Notwithstanding the foregoing, the
Borrower shall not request, and no Lender
shall have any obligation to make, any
Loans under this Agreement if, as a result
thereof, the aggregate outstanding
principal amount of all Loans, loans under
the Lease Warehouse Facility, Certificates
and any other loans, advances and other
extensions of credit made or held by
either Lender to the Borrower and/or its
Affiliates) would exceed 25% of such
Lender's "net assets" as such term is
defined in such Lender's Articles of
Association, it being understood that,
with respect to Global, its investment in
Finance will not be included in "net
assets" for purposes of the foregoing
sentence.
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 amount
set forth on the Receivables Schedule
submitted by the Borrower in accordance
with Section 2.2(b).
(b) On or before the date of
the initial borrowing hereunder, the
Borrower shall deliver to each of the
Lenders a schedule of all Receivables
included in the Collateral, setting forth
the total principal balance of each such
Receivable, the interest rate with respect
thereto, the monthly payment thereon, the
maturity date thereof and an indication of
the aggregate dollar amount of Receivables
scheduled thereon constituting Eligible
Receivables and separately indicating the
dollar amount of such Receivables
constituting Delinquent Receivables,
Nonconforming Receivables (other than
Nonconforming Insured Receivables) and
Nonconforming Insured Receivables (a
"Receivables Schedule"). Such Receivables
Schedule may, but is not required to, also
contain a written request for new Loans to
be advanced hereunder. Thereafter,
Borrower shall deliver a Receivables
Schedule to each Lender of all new
Receivables created since the date of the
last Receivables Schedule submitted to the
Lenders (i) on the date of each proposed
Loan hereunder and (ii) in any event no
less frequently than once each week. Upon
the Lenders' receipt of a Receivables
Schedule pursuant to clause (i) above,
Borrower shall be deemed to have (i)
requested a Loan from the Lenders in an
amount (the "Loan Request Amount") equal
to the least of (A) the Applicable Advance
Rate of all Receivables or new Receivables
described on such Receivables Schedule
since the previous schedule so delivered
multiplied by the Outstanding Balance of
such Receivables, (B) the amount by which
the Borrowing Base exceeds the aggregate
outstanding principal amount of all Loans
outstanding hereunder or (C) such lesser
amount which Borrower notes on the
applicable Receivables Schedule. By
delivery of any Receivables Schedule as
described in the immediately preceding
sentence, Borrower shall be deemed to have
represented and warranted to the Lenders
that on and as of such date, (x) all of
the conditions precedent set forth in
Section 3.2 have been met and (y) the
Borrower shall have sent to the Servicer
all documents necessary for the Servicer's
execution of the Servicer's Confirmation
(as described below).
(c) Upon receipt by each Lender
of a Receivables Schedule (which may be
transmitted by telecopy or telex), each
Lender shall, subject to the terms and
conditions contained in this Agreement,
make its Proportionate Share of a Loan in
the amount of eighty percent (80%) of the
Loan Request Amount by wire transfer to
such account as the Borrower may designate
to the Lenders from time to time in
writing. Within three (3) Business Days
of such Loan, the Servicer will transmit a
copy of the Servicer's confirmation (each
in the form of Exhibit G hereto, the
"Servicer's Confirmation") (which may be
transmitted by telecopy or telex)
confirming that the Servicer has in its
possession all documents necessary to
complete the Servicer's File with respect
to each Receivable itemized on the
Receivables Schedule submitted with the
relevant Servicer's Confirmation, and
subject to the terms and conditions
contained in this Agreement, each Lender
shall make its Proportionate Share of a
Loan in the amount of the remaining twenty
percent (20%) of the Loan Request Amount
by wire transfer to such account as the
Borrower may designate to the Lenders from
time to time in writing. Notwithstanding
the foregoing, to the extent a Servicer's
Confirmation accompanies or precedes
delivery of a Receivables Schedule, each
Lender shall, subject to the terms and
conditions contained in this Agreement,
make its Proportionate Share of a Loan in
the amount of one-hundred percent (100%)
of the Loan Request Amount by wire
transfer to such account as the Borrower
may designate to the Lenders from time to
time in writing. Funding of any Loan
requested as a result of delivery of a
Receivables Schedule or Servicer's
Confirmation shall (subject to the other
terms and conditions contained herein)
occur on the date the Lenders have
received such Receivables Schedule or
Servicer's Confirmation, as applicable, if
received no later than 1:00 p.m. (Eastern
time) on any Business Day. If such
Receivables Schedule or Servicer's
Confirmation, as applicable, is received
on or after 1:00 p.m. (Eastern time) on
any Business Day, funding shall (subject
to the other terms and conditions
contained herein) occur on the next
succeeding Business Day.
Section 2.3 Notes. On the
Closing Date, the Borrower shall execute
and deliver to the Lenders the Notes to
evidence the aggregate amount of all Loans
outstanding from time to time. The Notes
shall be dated the Closing Date and shall
mature on the Termination Date. Each
Lender is hereby authorized to endorse the
amount of its Loan, each repayment or
prepayment of principal thereof on the
schedule attached to and constituting a
part of its respective Note, which
endorsement shall constitute prima facie
evidence of the accuracy of the
information so endorsed; provided, that
failure by a Lender to make such
endorsement shall not affect the
obligations of the Borrower to such Lender
hereunder or under the relevant Note. In
lieu of endorsing such schedule, each
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) The
Borrower hereby promises to pay to the
Lenders interest, quarterly in arrears on
the first Payment Date following each
calendar quarter and on the date of any
principal prepayment hereunder pursuant to
Sections 2.5 and 7.1, 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.
Except as otherwise provided in Section
2.4(b) below, all Loans shall bear
interest at a rate per annum equal to
LIBOR on the date such Loan was funded for
any Loan which has been outstanding less
than one calendar month, and LIBOR on the
first day of each calendar month for each
such Loan thereafter, plus three percent
(3.0%). Each interest payment shall be
computed on the basis of a 360-day year
for the actual number of days elapsed.
(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 the 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 for
the period during which such interest
accrued 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) Mandatory partial
prepayments of principal shall be
made on each Payment Date, in an
amount equal to the excess, if any,
of (A) the principal amount of all
Loans outstanding over (B) the
Borrowing Base as calculated as of
the prior month end. All mandatory
prepayments of principal shall be
accompanied by payment of accrued and
unpaid interest on the principal so
prepaid as provided in Section 2.4.
(ii) Whenever the aggregate
principal amount of Loans outstanding
exceeds the sum of (A) the Borrowing
Base, as calculated pursuant to
Section 2.1 hereof and (B) all
amounts then held in the Depository
Account less the sum of any accrued
and unpaid interest on the Loans and
any accrued and unpaid servicing fee
due the Servicer (pursuant to the
terms of the Servicing Agreement), 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(c) and shall be
accompanied by a payment of all
interest accrued and unpaid on all
Loans through the date of such
mandatory prepayment and allocable to
the amount so prepaid.
(iii) Whenever any Receivables
are sold to the SPC pursuant to the
Receivables Sale Program, a mandatory
prepayment of principal shall be made
in an amount equal to the aggregate
outstanding principal balance of all
Loans advanced against or in respect
of the Receivables so sold. Such
prepayments shall be applied to the
Obligations as set forth in Section
2.5(c) and shall be accompanied by a
payment of all interest accrued and
unpaid on all Loans through the date
of such mandatory prepayment and
allocable to the amount so prepaid.
(iv) 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.
(b) The Borrower may
voluntarily prepay any portion of the
Loans in whole or in part; provided,
however, that, simultaneously with such
prepayment, the Borrower shall pay all
interest accrued and unpaid on such Loans
through the date of such prepayment.
(c) 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
in the order in which they were first
made; and third to the remaining balance
of the Obligations. If any payment
becomes due on a day other than a Business
Day, 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.
(d) The Borrower shall make each
payment hereunder and under the Notes on
the day when due in lawful money of the
United States of America to (i) in the
case of Finance, The First National Bank
of Chicago, Chicago, Illinois, account
number
52-61333
and (ii) in the case of Global,
The First National Bank of Chicago,
Chicago, Illinois, account
number 52-39095
or (iii) in either case, such other
account which the applicable Lender may
hereafter designate to the Borrower in
writing.
(e) The obligation of the
Borrower to pay the Loans and other
Obligations shall be a general obligation
of the Borrower, absolute and
unconditional.
Section 2.6. Increased Costs,
Capital Adequacy.
(a) If, after the date hereof
due to either (i) the introduction of or
any change in or to the interpretation of
any law or regulation by a Governmental
Authority that promulgated or administers
compliance with such law or regulation or
(ii) the compliance with any guideline or
request from any central bank or other
fiscal, monetary or Governmental Authority
(whether or not having the force of law),
any reserve or deposit or similar
requirement shall be imposed, modified or
deemed applicable or, any basis of
taxation shall be changed or any other
condition shall be imposed, and there
shall be any increase in the cost to a
Lender of making, funding, or maintaining
its Loans or its commitments hereunder and
other commitments of this type, the
Borrower shall from time to time, upon
demand by such Lender, by the submission
of the certificate described below, pay to
such Lender additional amounts sufficient
to compensate such Lender for such
increased cost. A certificate setting
forth in reasonable detail the amount of
such increased cost submitted to the
Borrower by a Lender shall be conclusive
and binding for all purposes, absent
manifest error.
(b) If a Lender determines that
compliance with any law or regulation or
any guideline or request or any written
interpretation from any central bank or
other fiscal, monetary or Governmental
Authority (whether or not having the force
of law) which is introduced, implemented
or received by the Lender after the date
hereof, affects or would affect capital
adequacy or the amount of capital required
or expected to be maintained by such
Lender or any corporation controlling such
Lender and that the amount of such capital
is increased by or based upon the Loans or
the commitments under this Agreement and
other similar commitments of this type, or
has or would have the effect of reducing
such Lender's rate of return on capital,
then, upon demand by such Lender, by the
submission of the certificate described
below, the Borrower shall pay to such
Lender from time to time as specified by
such Lender, additional amounts sufficient
to compensate the Lender, in the light of
such circumstances, to the extent that
such Lender reasonably determines such
increase in capital to be allocable to the
Loans or the existence of this Agreement.
A certificate setting forth in reasonable
detail such amounts submitted to the
Borrower by a Lender shall be conclusive
and binding for all purposes, absent
manifest error.
Section 2.7 Taxes. (a) All
payments made by the Borrower under this
Agreement and the Notes shall be made free
and clear of, and without deduction or
withholding for or on account of, any
present or future taxes, levies, imposts,
duties, charges, fees, deductions or
withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by
any Governmental Authority having taxing
authority, excluding net income taxes and
franchise taxes (imposed in lieu of income
taxes) imposed on the Lenders as a result
of any present or former connection
between the jurisdiction of the government
or taxing authority imposing such tax or
any political subdivision or taxing
authority thereof or therein and the
Lenders (all such non-excluded taxes,
levies, imposts, duties, charges, fees,
deductions and withholdings being
hereinafter called "Taxes"). If any Taxes
are required to be withheld from any
amounts payable to or under the Notes,
(i) the sum payable shall be increased as
may be necessary so that, after making all
required deductions (including deductions
applicable to additional sums payable
under this Section 2.7), each Lender
receives an amount equal to the sum it
would have received had no such deductions
been made, (ii) the Borrower shall make
such deductions, and (iii) the Borrower
shall pay the full amount deducted to the
relevant taxation authority or other
authority in accordance with applicable
law.
(b) In addition, the Borrower
agrees to pay any present or future stamp
or documentary taxes or any other excise
or property taxes, charges, or similar
levies that arise from any payment made
hereunder or from the execution, delivery
or registration of, or otherwise with
respect to, this Agreement (hereinafter
"Other Taxes").
(c) The Borrower will indemnify
the Lenders for the full amount of Taxes
or Other Taxes (including, without
limitation, any Taxes or Other Taxes
imposed by any jurisdiction on amounts
payable under this Section 2.7) paid by
the Lenders and any liability (including
penalties, interest and expenses) arising
therefrom or with respect thereto.
Whenever any Taxes are payable by the
Borrower, as promptly as possible
thereafter the Borrower shall send to each
Lender a certified copy of an original
official receipt received by the Borrower
showing payment thereof. If the Borrower
fails to pay any Taxes when due to the
appropriate taxing authority or fails to
remit to a Lender the required receipts or
other required documentary evidence, the
Borrower shall indemnify each of the
Lenders for any incremental Taxes,
interest or penalties that the Lender is
legally required to pay as a result of any
such failure. The agreements in this
subsection shall survive the termination
of this Agreement and the payment of the
Notes.
Section 2.8 Sharing of
Payments. Etc. Each repayment of Loans
and payment of Interest shall be allocated
between the Lenders in accordance with
each Lender's Proportionate Share. If any
Lender shall obtain any payment (whether
voluntary, involuntary, through the
exercise of any right of set-off, or
otherwise) on account of the Loans made by
it (other than pursuant to Section 8.6,
2.6 or 2.7) in excess of its Proportionate
Share of payments on account of all Loans
outstanding, such Lender shall forthwith
(i) notify the other Lender of such
receipt and (ii) purchase from the other
Lender such participation in the Loans
made by it as shall be necessary to cause
such purchasing Lender to share the excess
payment with the other Lender in
accordance with each Lender's
Proportionate Share; provided, however,
that, if all or any portion of such excess
payment is thereafter recovered from such
purchasing Lender, such purchase from the
other Lender shall be rescinded and such
Lender shall repay to the purchasing
Lender the purchase price to the extent of
such recovery. The Borrower agrees that
any Lender so purchasing a participation
from another Lender pursuant to this
Section 2.8 may, to the fullest extent
permitted by law, exercise all its rights
of payment (including the right of setoff)
with respect to such participation as
fully as if such Lender were the direct
creditor of the Borrower in the amount of
such participation.
ARTICLE III
CONDITIONS TO LENDING
Section 3.1 Conditions
Precedent to this Agreement. The
effectiveness of this Agreement is subject
to the satisfaction of all of the
following conditions precedent:
(a) Documents. The Lenders
shall have received, on or before the
Closing Date, this Agreement, the Notes,
the Dealer Agreement, the Servicing
Agreement, the Guaranty, the Pledge
Agreements, the Security Agreement and all
other agreements, documents, financing
statements and instruments described in
the List of Closing Documents attached
hereto as Exhibit H and made a part
hereof, each duly executed where
appropriate, dated the Closing Date or the
date hereof where appropriate and in form
and substance reasonably satisfactory to
the Lenders.
(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) Receivables Sale Program.
The Receivables Sale Documents shall have
been executed and all conditions precedent
to the effectiveness of the Receivables
Sale Program shall have been satisfied,
including the use of the initial proceeds
to retire any outstanding loans made by
Finance to the Original Borrowers under
the Original Agreement.
(d) Reduction of Loans under
Original Agreement. The aggregate
principal amount of "Loans" outstanding
under the Original Agreement shall have
been reduced by $3,500,000, as more
particularly described in the Master
Amendment.
Section 3.2 Conditions
Precedent to All Loans. The obligation of
the Lenders to make any Loans hereunder
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 in the
applicable Receivables Schedule and the
acceptance by the Borrower of the proceeds
of such Loan, shall constitute a
representation and warranty by the
Borrower that on the date of making of
such Loan such statements are true):
(i) The representations and
warranties contained in Article IV
and Section 6.4 are true and correct
in all material 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 the Parent or the
Borrower since December 31, 1996; and
(iv) with respect to either
Lender, 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, such
Lender's making of the requested
Loan; and
(b) the Lenders shall have
received such other approvals, opinions or
documents as each may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Lenders to enter
into this Agreement and make the Loans
provided for herein, the Borrower hereby
makes the following representations and
warranties to each Lender, as well as
those representations and warranties
contained in Section 6.4, 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 Loan:
Section 4.1 Corporate
Existence. The Borrower 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, including,
without limitation, under the laws of each
state in which any Car Buyer resides or
under which any Title is issued or is
otherwise exempt under applicable law from
such qualification. The Parent 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 Notes and the other
Financing Agreements (i) are within the
Borrower's corporate powers, (ii) have
been duly authorized by all necessary
corporate and stockholder action, (iii) do
not contravene the 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 the
Lenders created pursuant to the terms of
this Agreement) under, any law or any
contractual restriction binding on or
affecting the Borrower. No consent or
approval of any holder of any indebtedness
or obligation of the 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, the Servicing Agreement, this
Agreement and the Notes, or any
transaction contemplated hereby or
thereby. The execution, delivery and
performance by the Parent of the Guaranty
and the Parent Pledge Agreement (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
(other than the Liens in favor of the
Lenders created pursuant to the terms of
the Parent Pledge Agreement) under, any
law or any contractual restriction binding
on or affecting the Parent. This
Agreement, the Notes and the other
Financing Agreements to which the Borrower
is a party have been duly executed and
delivered by the Borrower and constitute
valid, binding and legal obligations of
the Borrower enforceable in accordance
with their terms. Each of the Guaranty
and the Parent Pledge Agreement has been
duly executed and delivered by the Parent
and constitute valid, binding and legal
obligations of the Parent enforceable in
accordance with their terms.
Section 4.3 Financial
Condition. The audited consolidated and
consolidating financial statements of the
Parent and the Borrower dated as of June
30, 1996, and all interim financial
statements previously delivered to the
Lenders are complete and correct in all
material respects 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 December 31, 1996,
there has been no material adverse change
in such financial condition or results of
operation for the Parent 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
or the Parent or affecting their
respective properties or assets, which, if
determined adversely to the Borrower or
the Parent, 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 the 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.
Section 4.5 Compliance with
Laws and Regulations. The Borrower and
the Parent are in compliance in all
material respects with all laws, orders,
regulations and ordinances of all
Governmental Authorities relating to their
business operations and assets.
Section 4.6 Title to
Receivables. (a) The Borrower is the
legal and beneficial owner of the
Receivables attributed to it in any
Receivables Schedule free and clear of any
Lien except for the Lien in favor of the
Lenders created pursuant to this
Agreement.
(b) Each Lender has a
perfected, first-priority security
interest in each Receivable and no further
action is required to perfect such
security interest, other than the
possession by the Servicer of the
Contracts and Titles relating to each
Receivable, which possession is evidenced
by the Servicer's Confirmations.
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 the Borrower nor the
Parent 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 other than the
Defaults set forth on Schedule 4.7
attached hereto.
Section 4.8 Taxes. Each of the
Borrower and the Parent have filed all
required federal, state and other local
tax returns and paid all material taxes
due pursuant to said returns or any
assessments against the Borrower or the
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 the
Borrower or the 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. The
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 or for any other
purpose that violates or is inconsistent
with such Regulation G or Regulation X.
Section 4.10 Investment Company
Act. The 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 the Borrower
contained in this Agreement or any
certificate or similar instrument required
to be furnished to the Lenders by or on
behalf of the 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
the 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 ERISA. The
Borrower and its Affiliates are in
material compliance with all provisions of
ERISA, no contribution failure has
occurred with respect to any "benefit
plan" under ERISA, nor does any such plan
have any accumulated or waived funding
deficiency.
Section 4.13 Dealer Agreements.
Each Dealer Agreement requires the Dealer
to repurchase from the Borrower any
Receivable the Contract with respect to
which knowingly contained misleading or
untruthful statements.
ARTICLE V
COVENANTS
The 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. The Borrower shall deliver
to each 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 the Parent and the Borrower
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 the
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 the Borrower, the consolidated
balance sheet and income statement of the
Parent and the Borrower 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
the 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, 5.11, 5.12
or 5.14 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 twentieth
day of each calendar month, a schedule of
activity for each Receivable for the
preceding calendar month, which sets forth
(i) the aggregate Outstanding Balances of
the Receivables and the Eligible
Receivables (indicating separate balances
for Nonconforming Receivables and
Delinquent Receivables), (ii) an Aging
Receivable Report in the form attached
hereto as Exhibit A, setting forth the
aggregate principal amount of Receivables
which are delinquent and the number of
days payments on such Receivables are
delinquent, and (iii) any other pertinent
information reasonably requested by a
Lender;
(d) Promptly upon receipt
thereof, copies of any financial reports
or other information required to be
delivered to the Borrower by the Servicer
pursuant to the terms of the Servicing
Agreement;
(e) Promptly, such other
financial or portfolio information related
to this Agreement or the Financing
Agreements that a Lender may reasonably
request from time to time; and
(f) Promptly after the sending
or filing thereof, copies of all reports
that the Parent or the Borrower sends to
any of its security holders, and copies of
all reports and registration statements
that the Parent or any subsidiary files
with the Securities and Exchange
Commission or any national securities
exchange.
Section 5.2 Notices. The
Borrower shall give prompt written notice
to the Lenders of:
(a) Any litigation, including,
without limitation, adversary proceedings
or contested matters brought by the
Borrower or any other Person affecting the
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
the Borrower deems material or which could
materially and adversely affect the
operations, financial condition or
prospects of the Borrower, and, if
requested by either Lender, deliver to
such Lender copies of all pleadings with
respect to any such matters served on or
filed by the 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
(c) Promptly upon becoming
aware thereof, the failure of any
Receivable previously constituting or
reported to be an Eligible Receivable to
continue to satisfy the criteria for
Eligible Receivables.
Section 5.3 Corporate
Existence; Compliance with Laws. The
Borrower shall (i) 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 and (ii) comply in
all material respects with all applicable
laws, rules, regulations and orders.
Section 5.4 Indebtedness;
Liens; Sales of Assets. The Borrower
shall not create, incur, assume or suffer
to exist any Indebtedness, or allow any of
its Subsidiaries to create, incur, assume
or suffer to exist any Indebtedness,
except for (i) Indebtedness incurred under
this Agreement, (ii) Indebtedness
evidenced by the Subordinated Debentures,
(iii) Indebtedness incurred under any
Receivables Sale Document and (iv)
Permitted Existing Indebtedness. The
Borrower shall not sell, assign (by
operation of law or otherwise) or
otherwise dispose of, or create or suffer
to exist, any Lien upon or with respect
to, any of its properties or assets,
except for (i) Permitted Existing Liens
and (ii) Liens incurred to evidence the
sales of Receivables pursuant to the
Receivables Sale Program.
Section 5.5 Compliance with
Financing Agreements. The Borrower shall
comply promptly with any and all covenants
and provisions of this Agreement, the
Notes and the other Financing Agreements.
Section 5.6 Books and Records;
Right of Inspection. (a) The Borrower
shall 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 the
Lenders at any reasonable time to inspect
the properties of the Borrower and to
examine or audit its books, accounts and
records and make copies and memoranda
thereof.
(b) The Borrower shall
maintain, or shall cause the Servicer to
maintain pursuant to the terms of the
Servicing Agreement, 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) The Borrower shall furnish to a Lender
such periodic, special, or other reports
and information as reasonably requested by
such Lender.
(b) From time to time, at its
own expense, the Borrower will take
whatever action is reasonably requested by
a 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 to the Servicer,
and shall perform such acts as a Lender
shall reasonably deem necessary or
appropriate to effectuate the purposes of
this Agreement. The Borrower will appear
in and defend at its own expense any
action or proceeding which may affect the
Borrower's title to the Collateral or the
security interest granted hereunder.
Section 5.8 Maintenance of
Insurance. (a) The 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 the
Borrower.
(b) The Borrower shall pay or
cause to be paid all insurance premiums
with respect to the RDI Policies and the
VSI Policy and all charges and fees
relating thereto. The Borrower shall not
amend the terms of any RDI Policy or the
VSI Policy in any manner adverse to the
Borrower or the Lenders without the prior
written consent of the Lenders.
(c) The Borrower shall obtain
and maintain endorsements to the RDI
Policies and the VSI Policy in form and
substance satisfactory to the Lenders
naming the Lenders as additional insureds
and/or loss payee thereunder.
Section 5.9 Servicing
Agreement. The Borrower shall not permit
the Servicing Agreement to be amended,
modified, restated, supplemented, canceled
or terminated, waive any of its rights
under any provision thereof, consent to
any deviation from the terms thereof or
otherwise grant any consents provided for
thereunder, in each case without the prior
written consent of the Lenders, or default
in its obligations thereunder.
Section 5.10 Merger;
Consolidation, Etc. The Borrower shall
not 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 Receivables
pursuant to the Receivables Sale Program.
Section 5.11 Use of Proceeds.
The Borrower shall not use the proceeds of
any Loan for any purpose other than the
purchase of Receivables, repayment of
other outstanding Loans, and the payment
of any transaction costs associated with
any of the foregoing.
Section 5.12 Actions with
Respect to Receivables. The Borrower
shall not, without the prior written
consent of each Lender:
(a) Compromise, extend, release
or adjust payments on any Contracts or
Receivables, accept a conveyance of an
Automobile in full or partial satisfaction
of any Contract or Receivable, or release
the lien noted on any Title to any
Automobile securing any Receivable except
upon full payment thereof; provided, that
the Borrower may, consistent with its
present business practices and subject to
the rights of the Lenders from and after
an Event of Default, compromise, extend,
release or adjust payments on, or
otherwise accept a conveyance of an
Automobile in respect of, a Delinquent
Receivable or other past-due Receivable in
an effort to maximize the collectibility
thereof, provided, that any Receivable so
adjusted or enforced shall not be an
Eligible Receivable;
(b) Transfer, sell or assign
any Receivable or Contract to any Person
other than a Lender, except to a Dealer as
permitted pursuant to the Dealer Agreement
or to the SPC in connection with the
Receivables Sale Program, or deliver or
permit delivery of any Contract or Title
to any Person other than a Lender or the
Servicer prior to the repayment in full of
the Receivable which is secured by the
lien noted on the relevant Title except
that the Borrower shall be allowed to
effect such delivery as may be necessary
to consummate a sale of Receivables under
the Receivables Sale Program; and
(c) Grant, create, incur, permit
or suffer to exist any Lien upon any
Collateral except for (i) the Liens
granted to the Lenders to secure the
Secured Obligations and (ii) the Liens
granted to the SPC or any successor
purchasers pursuant to the Receivables
Sale Program.
Section 5.13 Change of
Principal Office. The Borrower shall not
(a) change the location of its chief
executive office and principal place of
business from 525 Washington Boulevard,
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 the Borrower shall have
given the Lenders at least 30 days prior
written notice thereof and prior to
effecting any such change, taken such
steps as the Lenders may deem necessary or
desirable to continue the perfection and
priority of the Liens in favor of the
Lenders granted in connection herewith.
Section 5.14 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 the greater of (i)$10,000,000
and (ii) ten percent (10%) of the Parent's
consolidated assets (without duplication)
on any subsequent date; provided, however
that for purposes of this Section, any
Collateral shall constitute an asset of
its applicable owner, 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.
ARTICLE VI
COLLATERAL
Section 6.1 Security Interest.
To secure the prompt and complete payment,
observance and performance of all of the
Secured Obligations, the Borrower hereby
grants to the Lenders a security interest
in all of the 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, chattel paper or general
intangibles (the "Collateral"):
(a) All of the Borrower's
right, title and interest in and to the
Receivables, the related Contracts, the
Titles evidencing the liens securing the
Receivables and the Automobiles securing
such Receivables;
(b) All documents and
instruments, including all books, records,
files, tapes, correspondence, and other
information or materials relating to the
Receivables, the Contracts, the Titles,
the Automobiles and the Dealer Agreements,
whether now or hereafter delivered to, or
in the possession, custody or control of,
the Borrower, the Servicer, any
subservicer, any Dealer and/or a Lender;
(c) All rights of the Borrower
under any Dealer Agreement, including all
amounts received or receivable by the
Borrower from any Dealer pursuant to the
terms of any Dealer Agreement, and all
amounts received or receivable by the
Borrower from the Servicer pursuant to the
terms of the Servicing Agreement,
including, without limitation, on account
of principal and interest payments on the
Receivables or the Contracts, all net
proceeds received by virtue of liquidation
of any Receivables, any retained proceeds
received under any property damage,
casualty or other insurance policy with
respect to any Receivable, all proceeds
received under the RDI Policies and the
VSI Policy with respect to claims made
under the RDI Policies and the VSI Policy
and any and all interest of the Borrower
in any property damage, casualty or other
insurance policies as the same relate to
the Automobiles securing the Receivables;
(d) All right, title and
interest of the Borrower in and to the
Depository Account, and any and all cash
deposited by the Borrower, or by any
Dealer in the Depository Account, and all
investments held in and all rights with
respect to the Depository Account;
(e) Any and all interest of the
Borrower (i) in and under the Servicing
Agreement and (ii) in, to and under any
tax refunds receivable by the Borrower on
account of any defaults under the
Receivables;
(f) All cash and non-cash
proceeds of the foregoing items (a) - (e)
and the documents pertaining thereto,
together with whatever is receivable or
received when any of items (a) through (e)
or the proceeds thereof are sold,
collected or exchanged or otherwise
disposed of, whether such disposition is
voluntary or involuntary and also
includes, without limitation, all rights
to payment with respect to any cause of
action affecting or relating to the
foregoing and all additions thereto,
substitutions therefor and replacements
thereof.
Section 6.2 Release of Security
Interest. Notwithstanding the foregoing
Section 6.1, upon the sale of any
Receivables to the SPC pursuant to or in
connection with the Receivables Sale
Program and upon prepayment of the Loans
in accordance with Section 2.5(a)(iii)
hereof, the Lenders' lien on the
Receivables so sold shall be automatically
released from the security interest
granted to the Lenders under Section 6.1
hereof.
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 the Borrower,
either Lender may, and the Borrower hereby
appoints each 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 the Borrower
hereunder in the Borrower's name
or otherwise;
(b) Upon the occurrence of
any Event of Default, notify any
Person obligated on any
Collateral of the rights of the
Lenders 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 including,
without limitation, the
Depository Account and all
amounts contained therein, and
take such action as such Lender
may deem proper and apply any
money or property received in
exchange for any of such
Collateral to any of the Secured
Obligations, including, without
limitation, directing the
Servicer to remit to the Lenders
all funds in the Depository
Account;
(d) Upon the occurrence of
an Event of Default, release any
of the Collateral (and, prior to
an Event of Default, release any
Receivable in accordance with
the terms of Section 6.6);
(e) 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 including, without
limitation, the Depository
Account and all amounts
contained therein;
(f) 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
(g) Upon the occurrence of
any Event of Default, protect,
defend and preserve the
Collateral including, without
limitation, the Depository
Account, or any rights or
interests of the Lenders with
regard thereto, including,
without limitation, filing or
prosecution of any third party
claim or other legal action or
proceeding which a Lender deems
necessary to protect any of the
rights, interests or priorities
of such Lender with respect to
any of the Collateral.
Section 6.4 Representations and
Warranties with Respect to Collateral.
The Borrower hereby represents and
warrants to the Lenders that:
(a) Each Receivable securing
the Loans and contributing to the
calculation of the Borrowing Base is an
Eligible Receivable.
(b) The Servicer currently has
in effect (i) a blanket fidelity bond
protecting such Servicer and the Borrower
against losses, including, without
limitation, forgery, theft, embezzlement
and fraud, by all officers, employees, or
other Persons acting in any capacity with
regard to the Receivables and the handling
of any funds, money, documents and papers
relating to the Receivables, and (ii)
errors and omissions insurance, with broad
coverage from responsible companies (with
a rating of "A" or better from Best) on
all officers, employees, or other Persons
acting in any capacity with regard to the
Receivables and the handling of any funds,
money, documents and papers relating to
the Receivables. The fidelity bond
provides minimum coverage of $1,000,000
and the insurance policy is for
$1,000,000. The insurance policy names
the Borrower as an additional insured
party. The Borrower has assigned to the
Lender all of its rights and benefits
under the insurance policy, as such rights
and benefits relate to (i) the
Receivables, (ii) the handling of any
funds, monies, documents and/or papers
relating to the Receivables or (iii) any
of the other Collateral hereunder.
(c) The Borrower's chief
executive office and principal place of
business are located at 525 Washington
Boulevard, Jersey City, New Jersey 07310
and the Servicer's chief executive office
and principal place of business is located
at the address set forth in the Servicing
Agreement.
(d) No Receivable or Contract
has been assigned or pledged except
pursuant to the terms of the Dealer
Agreement and this Agreement, the Borrower
has good and marketable title thereto, and
the Borrower is the sole legal and
beneficial owner thereof and has full
right to transfer, sell and encumber the
same free and clear of any encumbrance,
equity, lien, pledge, charge, claim or
security interest, except as created in
favor of the Lenders pursuant to the terms
of this Agreement.
(e) To the best of the
Borrower's knowledge, after diligent
inquiry, there is no default, breach,
violation or event of acceleration
existing under any Contract, and there is
no event which, with the passage of time,
or with notice and the expiration of any
grace or cure period, would constitute a
default, breach, violation or event of
acceleration, and the Borrower has not
waived any default, breach, violation or
event of acceleration;
(f) No Contract is secured by
any collateral except the Lien with
respect to the corresponding Automobile as
noted on the relevant Title. The
outstanding principal balance of each
Receivable is secured by the related
Automobile; and
(g) The transfer, assignment
and conveyance of the Contracts by each
Dealer to the Borrower pursuant to the
Dealer Agreement are not subject to any
bulk transfer or similar statutory
provisions in effect in any applicable
jurisdiction. The Borrower is a holder in
due course with respect to each Receivable
acquired by it under the Dealer Agreement.
Section 6.5 Covenants with
Respect to Collateral.
(a) The Borrower shall comply,
and shall cause the Servicer to comply,
with any and all requirements of any
federal, state or local law applicable to
the Contracts, including, without
limitation, all consumer laws and the
Underwriting Criteria.
(b) The Borrower shall keep the
Collateral, or cause the Collateral to be
kept, in accordance with safe and sound
business practices.
Section 6.6 Release of
Receivables and Liens with Respect to
Automobiles. (a) Whether or not an Event
of Default exists, in the event that any
Receivable is paid or prepaid in full and
the proceeds of such payment or prepayment
have been deposited into the Depository
Account or paid or prepaid to the Lenders,
then the Servicer shall release the
corresponding Contract and Title to the
Car Buyer.
(b) In the event that any Loan
is prepaid in full prior to the
Termination Date with the proceeds
received from a sale of Receivables under
the Receivables Sale Program in accordance
with the provisions of Section
2.5(a)(iii), then, in such event, the
security interest in the Receivables
relating to such prepaid Loan shall be
released.
Section 6.7 Depository Account.
(a) All principal and interest payments
on the Contracts made by the Car Buyers,
all net proceeds received by virtue of
liquidation of any Receivables, any
retained proceeds received under any
property damage, casualty or other
insurance policy with respect to any
Receivable and all proceeds received under
the RDI Policies and VSI Policy shall be
deposited by the Servicer into the
Depository Account. No other funds shall
be allowed to be deposited into the
Depository Account. The Borrower shall
deposit, or shall cause the Servicer to
deposit, all funds received in any Lock-
box Account and allocable to the
Receivables into the Depository Account
within three (3) Business Days of receipt
thereof and in any event whenever the
funds in the Lock-box Account exceed
$35,000 at any one time.
(b) The financial institution
which maintains the Depository Account
shall acknowledge in writing that the
Depository Account has been pledged to the
Lenders as security for the Loans, that
the Lenders have exclusive dominion and
control over the Depository Account and
that neither the Borrower nor the Servicer
shall be entitled to make withdrawals from
the Depository Account except as otherwise
provided in Section 6.7(c).
(c) The Borrower shall be
permitted to withdraw the following
amounts from the Depository Account solely
under the following circumstances and for
the following purposes:
(i) on any Payment Date, (A) all
principal payments made on the
Contracts during the related Payment
Period, (B) any interest payments
then due pursuant to Section 2.4, (C)
payment of any other Obligations then
due, (D) all net proceeds received by
virtue of liquidation of any
Receivables during such Payment
Period, (E) any retained proceeds
received under any property damage,
casualty or other insurance policy
with respect to any Receivable during
such Payment Period and (F) all
proceeds received under the RDI
Policies or the VSI Policy during
such Payment Period; provided,
however, that such amounts are
directly transferred, in proportion
to each Lender's Proportionate Share,
to the Lenders' accounts, described
in Section 2.5(d), or at such other
accounts which the Lenders may
hereafter designate to the Borrower
in writing, and shall not be
transferred into any other accounts.
(ii) whenever the Borrower is
making a voluntary prepayment on the
Loans pursuant to Section 2.5(b), an
amount equal to any accrued and
unpaid interest on such Loans being
prepaid pursuant to Section 2.5(b).
(iii) So long as no Event of
Default has occurred and is
continuing, any servicing fees to the
Servicer pursuant to the Servicing
Agreement may be withdrawn on the
applicable Payment Date for fees
earned during the preceding month.
(iv) Upon any sale of
Receivables pursuant to the
Receivables Sale Program and
prepayment of the Loans in accordance
with Section 2.5(a)(iii), amounts on
deposit in the Depository Account
which constitute collections received
in respect to the Receivables so sold
or prepaid, shall be either (i) paid
to the Lenders (to the extent of
amounts owed hereunder in respect of
principal or interest on such prepaid
Loans) or (ii) transferred to the
collection account maintained for the
applicable "Trust" to which such
Receivables have been transferred.
Section 6.8 Pledge of Stock.
To secure the prompt and complete payment,
observance and performance of all of the
Secured Obligations, in addition to the
Borrower's granting of a security interest
in the Collateral pursuant to Section
6.17, the Parent hereby agrees to pledge
100% of the issued and outstanding shares
of all of its direct and indirect
subsidiaries, as more fully described in
the Pledge Agreements.
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) The Borrower fails to make
any payment of principal of or interest on
the Notes, or payment of any other
Obligation due hereunder, under the Notes
or under any other Financing Agreement on
or before the date such payment is due;
(b) Any breach by the Borrower
in the due observance or performance of
any covenant set forth in Sections 5.1 to
5.3, 5.5, 5.6, 5.8 to 5.14, and such
breach continues unremedied for ten (10)
Business Days after any officer of the
Borrower obtains knowledge thereof;
(c) Any breach by the 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
earlier of (i) an officer of the Borrower
obtaining knowledge thereof or (ii) notice
thereof having been made to the Borrower;
(d) Any representation or
warranty made by the Borrower under this
Agreement or by the Borrower or the 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 any Dealer Agreement by
any Dealer or default in, or breach of,
any provision of the Servicing Agreement
by the Servicer which such default or
breach is not cured within the specified
cure period therefor in the Dealer
Agreement or Servicing Agreement, as the
case may be;
(f) Failure by the Servicer for
any reason, to remain a party to, or be
bound by the terms of, the Servicing
Agreement;
(g) The occurrence of a default,
breach or failure of condition by the
Borrower, any guarantor of the Obligations
or the 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 the
Borrower, any guarantor of the Obligations
or the Parent after any applicable notice
and cure period, shall occur under any
Indebtedness with respect to which the
Borrower or the Parent, as applicable, is
a party as borrower or guarantor,
provided, that any such default by the
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) The Borrower, any guarantor
of the Obligations or the 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) The Borrower, any guarantor
of the Obligations, the Parent or any
Servicer 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; provided,
that, to the extent American Lender
Facilities, Inc. is the Servicer, any such
event with respect to the Servicer shall
not be an Event of Default hereunder
unless such event has occurred and is
continuing for at least thirty (30) days
and shall not be an Event of Default
thereafter if the court having
jurisdiction over such proceeding shall
have determined that the Receivables are
not property of American Lender
Facilities, Inc.'s bankruptcy estate;
(k) An involuntary petition or
complaint shall be filed against the
Borrower, any guarantor of the
Obligations, the Parent or any Servicer
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; provided, that any such event with
respect to any Servicer shall not be an
Event of Default hereunder unless such
event has occurred and is continuing for
at least thirty (30) days and shall not be
an Event of Default thereafter if the
court having jurisdiction over such
proceeding shall have determined that the
Receivables are not property of such
Servicer's bankruptcy estate;
(l) Any final judgment or order
for the payment of money in excess of
$100,000 shall be rendered against the
Borrower 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 the Borrower, the Parent, any guarantor
of the Obligations, any Dealer or any
Servicer thereunder; (ii) the Borrower
shall, directly or indirectly, contest in
any manner such effectiveness, validity,
binding nature or enforceability (it being
understood that the Borrower may, in good
faith, question the accuracy of any
mathematical calculation of an amount owed
hereunder); or (iii) any Lien or priority
claim securing the Secured Obligations
shall cease to be effective and to be of
first priority;
(n) any Person shall levy on,
seize or attach all or any material
portion of the assets of the Borrower and
within thirty (30) days thereafter the
Borrower 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 RDI Policy or the
VSI Policy shall cease to be in full force
and effect, unless replaced by a
substitute RDI Policy or VSI Policy
acceptable to the Lenders;
(r) the Servicer shall cease to
be qualified to do business as a foreign
corporation in each jurisdiction in which
such qualification is or shall be
necessary to protect the validity and
enforceability of any of the Receivables,
the Dealer Agreements or the Servicing
Agreement, as the case may be, or the
ability of the Servicer to perform its
duties under the Servicing Agreement;
(s) This Agreement, the Notes
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 a Lender;
(t) There shall have been an
"Event of Backup Servicing Default" under
the Master Trust Agreement or an "Event of
Termination" under the Master Certificate
Purchase Agreement.
then, and in every such event and at any
time thereafter during the continuance of
such event, either Lender may, at the same
or different times, take one or more of
the following actions:
(A) By notice to the Borrower
(which may be telephonic notice con-
firmed in writing) declare such
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;
(B) By notice to the
Borrower, declare the unpaid
principal amount and interest of
the Loans and all other amounts
payable by the Borrower here-
under 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;
(C) Retain and require the
Servicer to retain any or all of
the Collateral in the possession
or under the control of the
Servicer.
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 or
the Borrower the actions described in
paragraphs (A) and (B) above shall occur
automatically without the requirement of
giving of any notice to the Borrower.
Notwithstanding anything to the
contrary in this Section 7.1, if (i) an
Event of Default or Default described in
paragraph (b), (c) or (d) of this Section
7.1 has arisen as a result of the failure
of a Receivable to constitute an Eligible
Receivable, and (ii) the Borrower shall
have made a mandatory prepayment in an
amount equal to the Applicable Advance
Rate times the Outstanding Balance of such
Receivable which no longer constitutes an
Eligible Receivable, then, in such event,
such Event of Default or Default shall be
deemed to have been cured for all purposes
under this Article VII.
Section 7.2 Remedies. (a) The
Lenders shall have all rights and remedies
provided to the Lenders 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, either
Lender may exercise any one or more of the
following rights and remedies:
(i) Exercise all the
rights and remedies available to
secured parties under the
provisions of the Code.
(ii) Institute legal
proceedings to foreclose upon
and against the Lien granted by
the Financing Agreements to
recover judgment for the Secured
Obligations and to collect the
same out of any of the Collat-
eral 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
the Servicer or the Lenders of
any Collateral then being held
by the Borrower or the Servicer,
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 the Lenders may
deem fit, without any previous
demand or advertisement but with
reasonable notification to the
Borrower of any such sale or
other disposal. Written or
telephonic notice at least ten
(10) days prior to such public
or private sale shall be deemed
to constitute reasonable
notification pursuant to this
Section 7.2(a)(iii).
(b) Any notice of sale or other
disposition, advertisement and other
notice or demand, any right or equity of
redemption and any obligation of a
prospective purchaser to inquire as to the
power and authority of a 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 the Borrower
under, applicable law are hereby expressly
waived by the Borrower to the fullest
extent permitted by such law.
(c) The Lenders may notify any
Car Buyer under the Receivables of the
Lenders' Liens therein, may direct the
Servicer or any such Car Buyer to make
payment directly to the Lenders and may
take control of any proceeds to which the
Lenders may be entitled hereunder.
(d) All moneys received or
collected by the Lenders pursuant to this
Agreement from and after an Event of
Default shall be applied, at Lenders'
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(c). The balance, if any, of
such moneys remaining after payment in
full of the Secured Obligations shall be
remitted to the Borrower or as otherwise
directed by a court of competent
jurisdiction.
ARTICLE VIII
MISCELLANEOUS
Section 8.1 Amendments, etc.
No amendment or waiver of any provision of
this Agreement or the Notes, nor consent
to any departure by the Borrower
therefrom, shall be effective unless the
same shall be in writing and signed by
each 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 Finance or Global:
III Finance Ltd.
III Global Ltd.
c/o Admiral Administration, Ltd.
Anchorage Centre, 2nd Floor
Grand Cayman, Cayman Islands,
B.W.I.
Telecopy: (345) 949-0705
Confirmation: (345) 949-0704
Attention: David Bree
with a copy, in either case to:
III Offshore Advisors
250 South Australian Avenue,
Suite 600
West Palm Beach, Florida 33401
Telecopy: (561) 655-6871
Confirmation: (561) 655-5885
Attention: Robert Fasulo
and
James River Capital
103 Sabot Park
Manakin-Sabot, Virginia 23103
Telecopy: (804) 784-5833
Confirmation: (804) 784-4500
Attention: Kevin Brandt
(b) as to Borrower:
Aegis Auto Finance, Inc.
Newport Tower
525 Washington Boulevard, 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 Notes
and the other Financing Agreements.
Section 8.4 No Waiver;
Remedies. No failure on the part of a
Lender to exercise, and no delay in
exercising any right hereunder or under
the Notes or any other Financing Agreement
shall operate as a waiver thereof with
respect to such Lender; nor shall any
single or partial exercise of any right
hereunder or under the Notes 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 Notes and the other
Financing Agreements. The Borrower agrees
to pay (a) all costs and expenses incurred
by the Lenders in maintaining, preserving
or insuring any Collateral and (b) all
costs and expenses of the Lenders
(including reasonable attorneys' and
paralegals' fees and expenses) in
connection with the enforcement of this
Agreement, the Notes, 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 and shall be secured by the
Collateral.
Section 8.6 Relationship;
Indemnity. (a) The relationship of the
Borrower to each 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), neither Lender undertakes or
assumes any responsibility or duty to the
Borrower or to any third party with
respect to the Collateral.
(b) The Borrower hereby
indemnifies and agrees to hold harmless
each Lender and its respective 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, including any Dealer Agreement
or Contract.
(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 the Borrower in respect
thereof is to be made pursuant to this
indemnification, notify the Borrower of
the commencement thereof. The Borrower
shall pay any Obligations arising under
this indemnity to such Indemnified Party
immediately upon demand. The duty of the
Borrower to indemnify the Lenders 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 the Borrower and the Lenders and their
respective successors and assigns, except
that the Borrower shall not have the right
to assign its rights hereunder or any
interest herein without the prior written
consent of the Lenders. Either Lender, at
its sole option, shall have the right to
assign this Agreement, its Note and any of
its rights and interest hereunder and
thereunder.
Section 8.8 Registered
Obligations. The Loans (including the
Notes evidencing the Loans) are registered
obligations and the right, title and
interest of the Lenders and their assigns
(and of a Person who takes a participation
in a Loan directly from a 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 each Lender and its
respective assigns (and such direct
participants). A Note shall only evidence
a 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). The Borrower shall maintain
the Registry in which the Borrower will
register the Loans. No transfer by a
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
the Borrower stating the name of the
proposed transferee. The Borrower agrees
that within five (5) Business Days after
its receipt of such written notice, the
Borrower shall, at its own expense, record
such transfer on the Registry and shall,
if requested by a Lender or the
transferee, execute new Notes to the order
of such 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 C.
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 Notes 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. THE
BORROWER AND EACH LENDER EACH HEREBY
AGREES 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. THE 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 EITHER
LENDER'S RIGHT TO BRING ANY ACTION OR
PROCEEDING AGAINST THE 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 each Lender has received indefeasible
payment in full in cash of the Obligations
owed to it. Notwithstanding the
foregoing, the Borrower's agreement to
indemnify the Lenders 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 Termination of
Original Agreement. The Borrower, Aegis
Capital, AAC and the Lenders all hereby
agree that, upon the execution, delivery
and effectiveness of that certain Master
Amendment to the Retained Yield Loan
Agreements, dated as of the date hereof
(the "Master Amendment"), among III
Finance, the Borrower and Aegis Consumer
Finance, Inc., the provisions of the
Original Agreement not expressly
incorporated by reference in the Master
Amendment shall terminate and be of no
further force or effect and the provisions
of the Original Agreement expressly
incorporated by reference in the Master
Amendment shall continue in full force and
effect thereunder.
Section 8.15 Physical Damage
Insurance. The Lenders hereby acknowledge
that the Borrower may, subject to further
business and legal analysis, commence
offering financing to its Car Buyers for
physical damage insurance charges, which
financing would be offered on an elective
and not forced basis. In such event, if
the Borrower so requests, and so long as
no Default or Event of Default has
occurred and is then continuing, the
Lenders agree to negotiate in good faith
with respect to modifying this Agreement
in order to accommodate such business
plan, including a possible modification of
the definition of "Outstanding Balance" to
include such physical damage insurance
charges; provided, however, that (x) no
party hereto shall have any liability for
failing to reach a final agreement on such
issues and (y) the Lenders shall have no
obligation to negotiate with respect to
such issues unless the Borrower shall have
first demonstrated to the Lenders'
reasonable satisfaction that the financing
of such insurance charges and the
inclusion of such charges in the amounts
financed under this Agreement (i) will be
permitted under all applicable state laws,
(ii) will not have any material impact on
the payment and performance of the
Receivables by the Car Buyers, (iii) will
be permitted under the Underwriting
Criteria and (iv) will not adversely
affect the obligations of the Risk Default
Insurers or the rights of the Lenders with
respect to the RDI Policies.
<PAGE>
IN WITNESS WHEREOF, the parties
hereto have caused this Agreement to be
executed by their respective officers
thereunto duly authorized, as of the date
first written above.
III FINANCE
LTD.
By______________________________
Name:
Title:
III GLOBAL
LTD.
By______________________________
Name:
Title:
AEGIS AUTO FINANCE, INC.
By______________________________
Name:
Title:
AEGIS CAPITAL MARKETS, INC.,
for purposes
of Section 8.16 hereof
By______________________________
Name:
Title:
AEGIS ACCEPTANCE CORP.,
for purposes
of Section 8.16 hereof
By______________________________
Name:
Title:
TABLE OF CONTENTS
Section Page
ARTICLE I
DEFINITIONS . . . . . . . . . . . . . .2
Section 1.1 General Terms. . . . . . .2
Section 1.2 Terms Defined in Uniform
Commercial Code. . . . . . . . . 15
Section 1.3 Accounting Terms . . . . 15
Section 1.4 Other Terms. . . . . . . 15
Section 1.5 Preliminary Statement . . 15
ARTICLE II
LOANS AND INTEREST. . . . . . . . . . 15
Section 2.1 Loans. . . . . . . . . . 15
Section 2.2 Making the Loans . . . . 16
Section 2.3 Notes. . . . . . . . . . 17
Section 2.4 Interest . . . . . . . . 18
Section 2.5 Repayments; Prepayments. 18
Section 2.6. Increased Costs, Capital
Adequacy . . . . . . . . . . . . 20
Section 2.7 Taxes. . . . . . . . . . 21
Section 2.8 Sharing of Payments.
Etc. . . . . . . . . . . . . . . 22
ARTICLE III
CONDITIONS TO LENDING . . . . . . . . 22
Section 3.1 Conditions Precedent to
this Agreement . . . . . . . . . 22
Section 3.2 Conditions Precedent to
All Loans. . . . . . . . . . . . 23
ARTICLE IV
REPRESENTATIONS AND WARRANTIES. . . . 24
Section 4.1 Corporate Existence. . . 24
Section 4.2 Corporate Authority; No
Conflicts. . . . . . . . . . . . 24
Section 4.3 Financial Condition. . . 25
Section 4.4 Litigation . . . . . . . 25
Section 4.5 Compliance with Laws and
Regulations. . . . . . . . . . . 25
Section 4.6 Title to Receivables . . 25
Section 4.7 No Defaults. . . . . . . 26
Section 4.8 Taxes. . . . . . . . . . 26
Section 4.9 Margin Stock . . . . . . 26
Section 4.10 Investment Company Act. 26
Section 4.11 Disclosure. . . . . . . 26
Section 4.12 ERISA . . . . . . . . . 27
Section 4.13 Dealer Agreements . . . 27
ARTICLE V
COVENANTS . . . . . . . . . . . . . . 27
Section 5.1 Reports/Financial
Information. . . . . . . . . . . 27
Section 5.2 Notices. . . . . . . . . 28
Section 5.3 Corporate Existence;
Compliance with Laws . . . . . . 29
Section 5.4 Indebtedness; Liens;
Sales of Assets. . . . . . . . . 29
Section 5.5 Compliance with
Financing Agreements . . . . . . 29
Section 5.6 Books and Records; Right
of Inspection. . . . . . . . . . 29
Section 5.7 Further Assurances . . . 30
Section 5.8 Maintenance of Insurance 30
Section 5.9 Servicing Agreement. . . 30
Section 5.10 Merger; Consolidation,
Etc. . . . . . . . . . . . . . . 31
Section 5.11 Use of Proceeds . . . . 31
Section 5.12 Actions with Respect to
Receivables. . . . . . . . . . . 31
Section 5.13 Change of Principal
Office . . . . . . . . . . . . . 32
Section 5.14 Net Worth . . . . . . . 32
ARTICLE VI
COLLATERAL. . . . . . . . . . . . . . 32
Section 6.1 Security Interest. . . . 32
Section 6.2 Release of Security
Interest . . . . . . . . . . . . 33
Section 6.3 Power of Attorney. . . . 34
Section 6.4 Representations and
Warranties with Respect to
Collateral . . . . . . . . . . . 35
Section 6.5 Covenants with Respect
to Collateral. . . . . . . . . . 36
Section 6.6 Release of Receivables
and Liens with Respect to
Automobiles. . . . . . . . . . . 36
Section 6.7 Depository Account . . . 36
Section 6.8 Pledge of Stock. . . . . 38
ARTICLE VII
DEFAULT; REMEDIES . . . . . . . . . . 38
Section 7.1 Events of Default. . . . 38
Section 7.2 Remedies . . . . . . . . 42
ARTICLE VIII
MISCELLANEOUS . . . . . . . . . . . . 43
Section 8.1 Amendments, etc. . . . . 43
Section 8.2 Notices. . . . . . . . . 43
Section 8.3 Survival of
Representations and Warranties . 45
Section 8.4 No Waiver; Remedies. . . 45
Section 8.5 Costs and Expenses . . . 45
Section 8.6 Relationship; Indemnity. 46
Section 8.7 Successors and Assigns;
Assignment . . . . . . . . . . . 46
Section 8.8 Registered Obligations 46
Section 8.9 Binding Effect;
Governing Law. . . . . . . . . . 47
Section 8.10 WAIVER OF TRIAL BY
JURY; SUBMISSION TO
JURISDICTION . . . . . . . . . . 47
Section 8.11 Term . . . . . . . . . 48
Section 8.12 Headings . . . . . . . 48
Section 8.13 Counterparts. . . . . . 48
Section 8.14 Termination of Original
Agreement. . . . . . . . . . . . 48
Section 8.15 Physical Damage
Insurance. . . . . . . . . . . . 48
PROMISSORY NOTE
U.S. $15,000,000 March
14, 1997
FOR VALUE RECEIVED, AEGIS AUTO FINANCE,
INC., a Delaware corporation (the "Borrower") does
hereby promise to pay to III GLOBAL, LTD., a Cayman
Islands company (the "Lender"), the principal amount
of U.S. $15,000,000 (FIFTEEN MILLION AND NO/100
DOLLARS) or, if less, such Lender's Proportionate
Share of the unpaid principal amount of the Loans
made by the lenders to the Borrower under that
certain Loan and Security Agreement dated as of
March 14, 1997 among the Borrower, the Lender and
III Finance, Ltd. as an additional 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 calculated on the basis
of a 360-day year for the actual number of days
elapsed. 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 the Lender at such
account as the Lender shall in writing direct the
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.
The 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. The 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:
PROMISSORY NOTE
U.S. $35,000,000 March 14, 1997
FOR VALUE RECEIVED, AEGIS AUTO FINANCE, INC.,
a Delaware corporation (the "Borrower") does hereby promise to pay to III
GLOBAL, LTD., a Cayman Islands company (the "Lender"), the principal
amount of U.S. $35,000,000 (THIRTY FIVE MILLION AND NO/100
DOLLARS) or, if less, such Lender's Proportionate Share of the unpaid
principal amount of the Loans made by the lenders to the Borrower under
that certain Loan and Security Agreement dated as of March 14, 1997
among the Borrower, the Lender and III Finance, Ltd. as an additional
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 calculated on the basis of a 360-day year for
the actual number of days elapsed. 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 the Lender at such account as the Lender shall in writing direct the
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.
The 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. The 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:
EXECUTION COPY
GUARANTY
GUARANTY dated March 14, 1997 made by The
Aegis Consumer Funding Group, Inc., a Delaware corporation
(the "Guarantor"), in favor of the Lenders (as defined in the
Loan and Security Agreement referred to below).
PRELIMINARY STATEMENT
III Finance Ltd., a Cayman Islands company
("Finance") and III Global Ltd., a Cayman Islands company
("Global" and together with Finance, the "Lenders") are party to
the Loan and Security Agreement dated as of March 14, 1997
(said agreement, as it may hereafter be amended, supplemented
or otherwise modified from time to time, being the "Loan and
Security Agreement," the terms defined therein and not otherwise
defined herein being used herein as therein defined) with Aegis
Auto Finance, Inc., a Delaware corporation (the "Borrower"). It
is a condition precedent to the making of Loans under the Loan
and Security Agreement that the Guarantor shall have executed
and delivered this Guaranty.
NOW, THEREFORE, in consideration of the
premises and in order to induce the Lenders to make the Loans
under the Loan and Security Agreement, the Guarantor hereby
agrees as follows:
Section 1. Guaranty. The Guarantor hereby
unconditionally and irrevocably guarantees the punctual payment
when due, whether at stated maturity, by acceleration or
otherwise, of all obligations of the Borrower now or hereafter
existing under the Loan and Security Agreement, whether for
principal, interest, fees, expenses or otherwise (such obligations
being the "Guaranteed Obligations"), and agrees to pay any and
all expenses (including reasonable counsel fees and expenses)
incurred by the Lenders in enforcing any rights under this
Guaranty. Without limiting the generality of the foregoing, the
Guarantor's liability shall extend to all amounts that constitute
part of the Guaranteed Obligations and would be owed by the
Borrower to the Lenders or any other Person under the Loan and
Security Agreement but for the fact that they are unenforceable
or not allowable due to the existence of a bankruptcy,
reorganization or similar proceeding involving the Borrower.
Section 2. Guaranty Absolute. The Guarantor
guarantees that the Guaranteed Obligations will be paid strictly
in accordance with the terms of the Loan and Security
Agreement, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms
or the rights of the Lenders with respect thereto. The obligations
of the Guarantor under this Guaranty are independent of the
Guaranteed Obligations or any other obligations of any other
party under the Loan and Security Agreement, and a separate
action or actions may be brought and prosecuted against the
Guarantor to enforce this Guaranty, irrespective of whether any
action is brought against the Borrower or any other party or
whether the Borrower or any other party is joined in any such
action or actions. The liability of the Guarantor under this
Guaranty shall be irrevocable, absolute and unconditional
irrespective of, and the Guarantor hereby irrevocably waives any
defenses it may now or hereafter have in any way relating to,
any or all of the following:
(a) any lack of validity or enforceability of the
Loan and Security Agreement or any agreement or
instrument relating thereto;
(b) any change in the time, manner or place of
payment of, or in any other term of, all or any of the
Guaranteed Obligations, or any other amendment or
waiver of or any consent to departure from the Loan and
Security Agreement, including, without limitation, any
increase in the Guaranteed Obligations resulting from the
extension of additional credit to the Borrower or any of
its Affiliates or otherwise;
(c) any taking, exchange, release or non-
perfection of any Collateral, or any taking, release or
amendment or waiver of or consent to departure from any
other guaranty, for all or any of the Guaranteed
Obligations;
(d) any manner of application of Collateral, or
proceeds thereof, to all or any of the Guaranteed
Obligations, or any manner of sale or other disposition of
any Collateral for all or any of the Guaranteed
Obligations under the Loan and Security Agreement or
any other assets of the Borrower or any of its Affiliates;
or
(e) any change, restructuring or termination of the
corporate structure or existence of the Borrower or any of
its Affiliates.
This Guaranty shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the
Guaranteed Obligations is rescinded or must otherwise be
returned by the Lenders or any other Person upon the insolvency,
bankruptcy or reorganization of the Borrower or otherwise, all as
though such payment had not been made.
Section 3. Waivers and Acknowledgments. (a)
The Guarantor hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Guaranty and any requirement
that the Lenders protect, secure, perfect or insure any lien or any
property subject thereto or exhaust any right or take any action
against the Borrower or any other Person or any Collateral.
(b) The Guarantor hereby waives any right to
revoke this Guaranty, and acknowledges that this Guaranty is
continuing in nature and applies to all Guaranteed Obligations,
whether existing now or in the future.
(c) The Guarantor acknowledges that it will
receive substantial direct and indirect benefits from the financing
arrangements contemplated by the Loan and Security Agreement
and that the waivers set forth in this Section 3 are knowingly
made in contemplation of such benefits.
Section 4. Subrogation. The Guarantor will not
exercise any rights that it may now or hereafter acquire against
the Borrower that arise from the existence, payment,
performance or enforcement of the Guarantor's Obligations
under this Guaranty, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or
indemnification and any right to participate in any claim or
remedy of the Lenders against the Borrower or any Collateral,
whether or not such claim, remedy or right arises in equity or
under contract, statute or common law, including, without
limitation, the right to take or receive from the Borrower directly
or indirectly, in cash or other property or by set-off or in any
other manner, payment or security on account of such claim,
remedy or right, unless and until all of the Guaranteed
Obligations and all other amounts payable under this Guaranty
shall have been paid in full in accordance with the terms of the
Loan and Security Agreement. If any amount shall be paid to
the Guarantor in violation of the preceding sentence at any time
prior to the payment in full of the Guaranteed Obligations and
all other amounts payable under this Guaranty, such amount shall
be held in trust for the benefit of the Lenders and shall forthwith
be paid to the Lenders to be credited and applied to the
Guaranteed Obligations and all other amounts payable under this
Guaranty, whether matured or unmatured, in accordance with the
terms of the Loan and Security Agreement, or to be held as
Collateral for any Guaranteed Obligations or other amounts
payable under this Guaranty thereafter arising. If (i) the
Guarantor shall make payment to the Lenders of all or any part
of the Guaranteed Obligations, (ii) all of the Guaranteed
Obligations and all other amounts payable under this Guaranty
shall be paid in full and (iii) the Termination Date shall have
occurred, the Lenders will, at the Guarantor's request and
expense, execute and deliver to the Guarantor appropriate
documents, without recourse and without representation or
warranty, necessary to evidence the transfer by subrogation to
the Guarantor of an interest in the Guaranteed Obligations
resulting from such payment by the Guarantor.
Section 5. Representations and Warranties. The
Guarantor hereby represents and warrants as follows:
(a) The Guarantor (i) is a corporation duly
organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation, (ii) is duly
qualified and in good standing as a foreign corporation in
each other jurisdiction in which it owns or leases property
or in which the conduct of its business requires it to so
qualify or be licensed except where the failure to so
qualify or be licensed would not have a material adverse
effect on the business or properties, taken as a whole, or
the condition, financial or otherwise, of the Guarantor (a
"Material Adverse Effect"), and (iii) has all requisite
corporate power and authority to own or lease and
operate its properties and to carry on its business as now
conducted and as proposed to be conducted.
(b) The execution, delivery and performance by
the Guarantor of this Guaranty are within the Guarantor's
corporate powers, have been duly authorized by all
necessary corporate action, and do not (i) contravene the
Guarantor's charter or bylaws, (ii) violate any law
(including, without limitation, the Securities Exchange
Act of 1934 and the Racketeer Influenced and Corrupt
Organizations Chapter of the Organized Crime Control
Act of 1970), rule, regulation (including, without
limitation, Regulations G, T, U and X of the Board of
Governors of the Federal Reserve System), order, writ,
judgment, injunction, decree, determination or award, (iii)
conflict with or result in the breach of, or constitute a
default under, any loan agreement, contract, indenture,
mortgage, deed of trust, lease or other instrument binding
on or affecting the Guarantor, any of its subsidiaries or
any of its or their properties, the effect of which conflict,
breach or default is reasonably likely to have a Material
Adverse Effect, or (iv) except for the Liens created under
the Loan and Security Agreement, result in or require the
creation or imposition of any Lien upon or with respect
to any of the properties of the Guarantor or any of its
subsidiaries. The Guarantor is not in violation of any
such law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award, or in breach
of any such contract, loan agreement, indenture,
mortgage, deed of trust, lease or other instrument, the
violation or breach of which would be reasonably likely
to have a Material Adverse Effect.
(c) No authorization or approval or other action
by, and no notice to or filing with, any governmental
authority or regulatory body or any other third party is
required for (i) the due execution, delivery, recordation,
filing or performance by the Guarantor of this Guaranty,
and (ii) the exercise by the Lenders of their rights under
this Guaranty.
(d) This Guaranty has been duly executed and
delivered by the Guarantor. This Guaranty is the legal,
valid and binding obligation of the Guarantor, enforceable
against the Guarantor in accordance with its terms except
as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other laws
relating to or limiting creditors' rights or by equitable
principles generally.
(e) There are no conditions precedent to the
effectiveness of this Guaranty that have not been satisfied
or waived.
(f) The Guarantor has, independently and without
reliance upon the Lenders, and based on such documents
and information as it has deemed appropriate, made its
own credit analysis and decision to enter into this
Guaranty.
Section 6. Amendments, Etc. No amendment or
waiver of any provision of this Guaranty and no consent to any
departure by the Guarantor therefrom shall in any event be
effective unless the same shall be in writing and signed by each
of the Lenders, and then such waiver or consent shall be
effective only in the specific instance and for the specific
purpose for which given.
Section 7. Notices, Etc. All notice and other
communications provided for hereunder shall be in writing
(including telegraphic, telecopy or telex communication) and
mailed, telegraphed, telecopied, telexed or delivered by overnight
courier of nationally recognized standing to it, if to the
Guarantor, addressed to 525 Washington Boulevard, 29th Floor,
Jersey City, New Jersey 07310, Attention: Gary D. Peiffer,
General Counsel, if to the Lenders, at their addresses specified in
the Loan and Security Agreement, or as to any party, at such
other address as shall be designated by such party in a written
notice to each other party complying as to delivery with the
terms of this Section 7. All such notices and other
communications shall, when mailed, telecopied, telegraphed,
telexed or sent by courier, be effective when deposited in the
mails, delivered to the telegraph company, transmitted by
telecopier, confirmed by telex answerback or delivered to the
overnight courier, respectively, addressed as aforesaid.
Section 8. No Waiver, Remedies. No failure on
the part of the Lenders to exercise, and no delay in exercising,
any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder 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 9. Indemnification. Without limitation on
any other Guaranteed Obligations of the Guarantor or remedies
of the Lenders under this Guaranty, the Guarantor shall, to the
fullest extent permitted by law, indemnify, defend and save and
hold harmless each of the Lenders from and against, and shall
pay on demand, any and all losses, liabilities, damages, costs,
expenses and charges (including the reasonable fees and
disbursement of the Lenders' legal counsel) suffered or incurred
by the Lenders as a result of any failure of any Guaranteed
Obligations to be the legal, valid and binding obligations of the
Borrower enforceable against the Borrower in accordance with
their terms.
Section 10. Continuing Guaranty; Assignments
under the Loan and Security Agreement. This Guaranty is a
continuing guaranty and shall (a) remain in full force and effect
until the later of the payment in full of the Guaranteed
Obligations and all other amounts payable under this Guaranty
and the Termination Date, (b) be binding upon the Guarantor, its
successors and assigns, and (c) inure to the benefit of and be
enforceable by the Lenders and their successors, transferees and
assigns.
Section 11. Governing Law; Jurisdiction. This
Guaranty shall be governed by, and construed in accordance
with, the laws of the State of New York.
IN WITNESS WHEREOF, the Guarantor has
caused this Guaranty to be duly executed and delivered by its
officer thereunto duly authorized as of the date first above
written.
THE AEGIS CONSUMER
FUNDING GROUP, INC.
By:
_____________________________________
Name:
_______________________________
Title:
________________________________
I:\AHC_COM\10_105_3.WPD May 8, 1997 (4:57p)
EXECUTION COPY
PLEDGE AGREEMENT
between
The Aegis Consumer Funding Group, Inc.,
as Pledgor
AND
III Finance, Ltd.
and
III Global, Ltd.,
as Lenders
Dated as of March 14, 1997
<PAGE>
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (the
"Pledge Agreement"), dated as of March 14, 1997, is
executed by and among THE AEGIS CONSUMER
FUNDING GROUP, INC., a Delaware corporation (the
"Pledgor"), III FINANCE, LTD., a Cayman Islands
corporation ("Finance") and III GLOBAL, LTD., a Cayman
Islands Corporation ("Global" and together with Finance, the
"Lenders" and each individually a "Lender"). Capitalized
terms used herein and not otherwise defined herein shall have
the respective meanings ascribed to such terms in the "Loan
and Security Agreement" (as defined below).
WITNESSETH:
WHEREAS, Aegis Auto Finance,
Inc., a Delaware corporation (the "Borrower") and the
Lenders have entered into a certain Loan and Security
Agreement of even date herewith (as amended, restated,
supplemented or otherwise modified from time to time, the
"Loan and Security Agreement"), pursuant to which the
Lenders have agreed, subject to certain conditions precedent,
to make loans and other financial accommodations to the
Borrower from time to time;
WHEREAS, the Pledgor has
entered into a Guaranty of even date herewith (the
"Guaranty"), pursuant to which the Pledgor guaranties all of
the Obligations of the Borrower to the Lenders;
WHEREAS, the Pledgor directly
owns 100% of the issued and outstanding capital stock of
Aegis Capital Markets, Inc. (d/b/a Markets), Aegis Securitized
Assets, Inc., Aegis Automobile Assets, Inc., Aegis Consumer
Finance, Inc., Remodelers of America, Inc., Aegis Financial
Advisors, Inc., Aegis Securities Corporation and Systems &
Services Technologies, Inc. (such direct subsidiaries and any
other subsidiary acquired or formed by the Pledgor, the
"Direct Subsidiaries") and will derive direct and indirect
economic benefit from the loans and other financial
accommodations made to the Borrower under the Loan and
Security Agreement; and
WHEREAS, the Lenders have
required, as a condition to their entering into the Loan and
Security Agreement, that the Pledgor execute and deliver this
Pledge Agreement;
NOW, THEREFORE, for and in
consideration of the foregoing and of any financial
accommodations or extensions of credit (including, without
limitation, any loan or advance by renewal, refinancing or
extension of the agreements described hereinabove or
otherwise) heretofore, now or hereafter made to or for the
benefit of the Borrower pursuant to the Loan and Security
Agreement or any other agreement, instrument or document
executed pursuant to or in connection therewith, and for other
good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Pledgor and the
Lenders hereby agree as follows:
1. Pledge. The Pledgor hereby
pledges to the Lenders, and grants to the Lenders a security
interest in, the following (collectively, the "Pledged
Collateral"):
(a) The shares of the capital stock
of each Direct Subsidiary, now or at any
time or times hereafter owned by the
Pledgor, and the certificates representing
the shares of such capital stock (such
now-owned shares being identified on
Exhibit A next to each Direct Subsidiary),
all options and warrants for the purchase of
shares of the stock of any Direct
Subsidiary now or hereafter held in the
name of the Pledgor (all of said capital
stock, options and warrants and all capital
stock held in the name of the Pledgor as a
result of the exercise of such options or
warrants being hereinafter collectively
referred to as the "Pledged Stock"),
herewith delivered to the Lenders
accompanied by stock powers in the form
of Exhibit B attached hereto and made a
part hereof (the "Powers") duly executed in
blank, and all dividends, cash, instruments
and other property from time to time
received, receivable or otherwise
distributed in respect of, or in exchange
for, any or all of the Pledged Stock;
(b) All additional shares of stock
of any Direct Subsidiary from time to time
acquired by the Pledgor in any manner,
and the certificates representing such
additional shares (any such additional
shares shall constitute part of the Pledged
Stock and the Lenders are irrevocably
authorized to amend Exhibit A from time
to time to reflect such additional shares),
and all options, warrants, dividends, cash,
instruments and other rights and options
from time to time received, receivable or
otherwise distributed in respect of or in
exchange for any or all of such shares;
(c) The property and interests in
property described in Section 3 below; and
(d) All proceeds of the foregoing.
2. Security for Liabilities. The
Pledged Collateral secures the prompt payment, performance
and observance of (i) the Borrower's obligations and
liabilities under the Loan and Security Agreement and each
agreement, document or instrument executed pursuant to or in
connection with the Loan and Security Agreement, (ii) the
Pledgor's obligations and liabilities under the Guaranty and
(iii) the Pledgor's obligations and liabilities under this Pledge
Agreement and each agreement, document or instrument
executed pursuant to or in connection with this Pledge
Agreement (all such obligations and liabilities of the Pledgor
and the Borrower now or hereafter existing being hereinafter
referred to as the "Liabilities").
3. Pledged Collateral Adjustments.
If, during the term of this Pledge Agreement:
(a) Any stock dividend,
reclassification, readjustment or other
change is declared or made in the capital
structure of any Direct Subsidiary, or any
option included within the Pledged
Collateral is exercised, or both, or
(b) Any subscription warrants or
any other rights or options shall be issued
in connection with the Pledged Collateral,
then all new, substituted and additional shares, warrants,
rights, options or other securities, issued by reason of any of
the foregoing, shall be immediately delivered to and held by
the Lenders under the terms of this Pledge Agreement and
shall constitute Pledged Collateral hereunder; provided,
however, that nothing contained in this Section 3 shall be
deemed to permit any stock dividend, issuance of additional
stock, warrants, rights or options, reclassification,
readjustment or other change in the capital structure of a
Direct Subsidiary which is not permitted in the Loan and
Security Agreement.
4. Subsequent Changes Affecting
Pledged Collateral. The Pledgor represents and warrants that
it has made its own arrangements for keeping itself informed
of changes or potential changes affecting the Pledged
Collateral (including, but not limited to, rights to convert,
rights to subscribe, payment of dividends, reorganization or
other exchanges, tender offers and voting rights), and the
Pledgor agrees that the Lenders shall have no obligation to
inform the Pledgor of any such changes or potential changes
or to take any action or omit to take any action with respect
thereto. The Lenders may, after the occurrence of an Event
of Default, without notice and at their option, transfer or
register the Pledged Collateral or any part thereof into their
respective or their respective nominee's name with or without
any indication that such Pledged Collateral is subject to the
security interest hereunder. In addition, the Lenders may at
any time exchange certificates or instruments representing or
evidencing Pledged Shares for certificates or instruments of
smaller or larger denominations.
5. Representations and Warranties.
The Pledgor represents and warrants as follows:
(a) The Pledgor is the legal and
beneficial owner of the Pledged Stock, which represents
100% of the issued and outstanding common stock of each
Direct Subsidiary identified on Exhibit A, free and clear of
any Lien except for the security interest created by this
Pledge Agreement and the Pledgor owns no other stock other
than that identified on Exhibit A;
(b) The Pledgor has full corporate
power and authority to enter into this Pledge Agreement;
(c) There are no restrictions upon
the voting rights associated with, or upon the transfer of, any
of the Pledged Collateral;
(d) The Pledgor has the right to
vote, pledge and grant a security interest in or otherwise
transfer such Pledged Collateral free of any Liens;
(e) No authorization, approval, or
other action by, and no notice to or filing with, any
Governmental Authority or regulatory body is required either
(i) for the pledge of the Pledged Collateral pursuant to this
Pledge Agreement or for the execution, delivery or
performance of this Pledge Agreement by the Pledgor or (ii)
for the exercise by the Lenders of the voting or other rights
provided for in this Pledge Agreement or the remedies in
respect of the Pledged Collateral pursuant to this Pledge
Agreement (except as may be required in connection with
such disposition by laws affecting the offering and sale of
securities generally);
(f) The pledge of the Pledged
Collateral pursuant to this Pledge Agreement creates a valid
and perfected first priority security interest in the Pledged
Collateral, in favor of the Lenders, securing the payment and
performance of the Liabilities; and
(g) The Powers are duly executed
and give the Lenders the authority they purport to confer.
6. Voting Rights. During the term
of this Pledge Agreement, and except as provided in this
Section 7(b) below, the Pledgor shall have the right to vote
the Pledged Stock on all corporate questions in a manner not
inconsistent with the terms of this Pledge Agreement, the
Guaranty, the Loan and Security Agreement and any other
agreement, instrument or document executed pursuant thereto
or in connection therewith. After the occurrence of an Event
of Default, the Lenders or either of the Lenders' nominees
may, at the Lenders' or such nominee's option and following
written notice from the Lenders to the Pledgor, exercise all
voting powers pertaining to the Pledged Collateral, including
the right to take action by shareholder consent. Such
authorization shall constitute an irrevocable voting proxy
from the Pledgor to the Lenders or, at the Lenders' option, to
the Lenders' nominees.
7. Dividends and Other
Distributions. (a) So long as no Event of Default or Default
shall have occurred:
(i) The Pledgor shall be entitled to
receive and retain any and all dividends and interest paid in
respect of the Pledged Collateral, provided, however, that any
and all
(A) dividends and interest paid or
payable other than in cash with respect to,
and instruments and other property
received, receivable or otherwise
distributed with respect to, or in exchange
for, any of the Pledged Collateral;
(B) dividends and other
distributions paid or payable in cash with
respect to any of the Pledged Collateral on
account of a partial or total liquidation or
dissolution or in connection with a
reduction of capital, capital surplus or
paid-in surplus; and
(C) cash paid, payable or otherwise
distributed with respect to principal of, or
in redemption of, or in exchange for, any
of the Pledged Collateral;
shall be Pledged Collateral, and shall be forthwith delivered
to the Lenders to hold as Pledged Collateral and shall, if
received by the Pledgor, be received in trust for the Lenders,
be segregated from the other property or funds of the
Pledgor, and be delivered immediately to the Lenders as
Pledged Collateral in the same form as so received (with any
necessary endorsement); and
(ii) The Lenders shall execute and
deliver (or cause to be executed and delivered) to the Pledgor
all such proxies and other instruments as the Pledgor may
reasonably request for the purpose of enabling the Pledgor to
receive the dividends or interest payments which it is
authorized to receive and retain pursuant to clause (i) above.
(b) After the occurrence of an
Event of Default:
(i) All rights of the Pledgor to
receive the dividends and interest payments which it would
otherwise be authorized to receive and retain pursuant to
Section 7(a)(i) hereof shall cease, and all such rights shall
thereupon become vested in the Lenders, which shall
thereupon have the sole right to receive and hold as Pledged
Collateral such dividends and interest payments;
(ii) All dividends and interest
payments which are received by the Pledgor contrary to the
provisions of clause (i) of this Section 7(b) shall be received
in trust for the Lenders, shall be segregated from other funds
of the Pledgor and shall be paid over immediately to the
Lenders as Pledged Collateral in the same form as so received
(with any necessary endorsements);
(iii) The Pledgor shall, upon the
request of the Lenders, at Pledgor's expense, use its best
efforts to obtain all necessary governmental approvals for the
sale of the Pledged Collateral, as requested by the Lenders;
(iv) The Pledgor shall, upon the
request of the Lenders, at the Pledgor's expense, do or cause
to be done all such other acts and things as may be necessary
to make such sale of the Pledged Collateral or any part
thereof valid and binding and in compliance with applicable
law.
The Pledgor will reimburse the Lenders for all expenses
incurred by the Lenders, including, without limitation,
reasonable attorneys' and accountants' fees and expenses in
connection with the foregoing. The Pledgor agrees that, in
light of the fact that federal and state securities laws impose
certain restrictions on the method by which the Pledged
Collateral may be sold, it will be commercially reasonable if
a private sale, upon at least ten (10) days' notice to the
Pledgor, is arranged so as to avoid a public offering, even
though the sales price established and/or obtained at such
private sale may be substantially less than prices which could
have been obtained for such security on any market or
exchange or in any other public sale.
8. Transfers and Other Liens. The
Pledgor agrees that it will not (i) sell or otherwise dispose of,
or grant any option with respect to, any of the Pledged
Collateral without the prior written consent of the Lenders or
(ii) create or permit to exist any Lien upon or with respect to
any of the Pledged Collateral, except for the security interest
under this Pledge Agreement.
9. Remedies. (a) The Lenders
shall have, in addition to any other rights given under this
Pledge Agreement or by law, all of the rights and remedies
with respect to the Pledged Collateral of a secured party
under the Uniform Commercial Code as in effect in the State
of New York. After the occurrence of an Event of Default
and following written notice to the Pledgor, the Lenders
(personally or through an agent) are hereby authorized and
empowered to transfer and register in their name or in the
name of their nominee the whole or any part of the Pledged
Collateral, to exercise all voting rights with respect thereto, to
collect and receive all cash dividends and other distributions
made thereon, and to otherwise act with respect to the
Pledged Collateral as though the Lenders were the outright
owners thereof. The Pledgor hereby irrevocably constitutes
and appoints each Lender as the proxy and attorney-in-fact of
the Pledgor, with full power of substitution to do so, such
proxy becoming effective upon the occurrence of an Event of
Default and following written notice thereof; provided,
however, that the Lenders shall have no duty to exercise any
such right or to preserve the same and shall not be liable for
any failure to do so or for any delay in doing so. In addition,
after the occurrence of an Event of Default, the Lenders shall
have such powers of sale and other powers as may be
conferred by applicable law. With respect to the Pledged
Collateral or any part thereof which shall then be in or shall
thereafter come into the possession or custody of the Lenders
or which the Lenders shall otherwise have the ability to
transfer under applicable law, each Lender may, in its sole
discretion, without notice except as specified below, after the
occurrence of an Event of Default, sell or cause the same to
be sold at any exchange, broker's board or at public or
private sale, in one or more sales or lots, at such price as
such Lender may deem best, for cash or on credit or for
future delivery, without assumption of any credit risk, and the
purchaser of any or all of the Pledged Collateral so sold shall
thereafter own the same, absolutely free from any claim,
encumbrance or right of any kind whatsoever. The Lenders
may, in their own name, or in the name of a designee or
nominee, buy the Pledged Collateral at any public sale and, if
permitted by applicable law, buy the Pledged Collateral at
any private sale. The Pledgor will pay to the Lenders all
reasonable expenses (including, without limitation, court costs
and reasonable attorneys' and paralegals' fees and expenses)
of, or incidental to, the enforcement of any of the provisions
hereof. The Lenders agree to distribute any proceeds of the
sale of the Pledged Collateral in accordance with the Loan
and Security Agreement and the Pledgor shall remain liable
for any deficiency following the sale of the Pledged
Collateral.
(b) Unless any of the Pledged
Collateral threatens to decline speedily in value or is or
becomes of a type sold on a recognized market, the Lenders
will give the Pledgor reasonable notice of the time and place
of any public sale thereof, or of the time after which any
private sale or other intended disposition is to be made. Any
sale of the Pledged Collateral conducted in conformity with
reasonable commercial practices of banks, commercial finance
companies, insurance companies or other financial institutions
disposing of property similar to the Pledged Collateral shall
be deemed to be commercially reasonable. Notwithstanding
any provision to the contrary contained herein, the Pledgor
agrees that any requirements of reasonable notice shall be met
if such notice is received by the Pledgor as provided in
Section 25 below at least ten (10) days before the time of the
sale or disposition; provided, however, that the Lenders may
give any shorter notice that is commercially reasonable under
the circumstances. Any other requirement of notice, demand
or advertisement for sale is waived, to the extent permitted by
law.
(c) In view of the fact that federal
and state securities laws may impose certain restrictions on
the method by which a sale of the Pledged Collateral may be
effected after an Event of Default, the Pledgor agrees that
after the occurrence of an Event of Default, the Lenders may,
from time to time, attempt to sell all or any part of the
Pledged Collateral by means of a private placement restricting
the bidders and prospective purchasers to those who are
qualified and will represent and agree that they are purchasing
for investment only and not for distribution. In so doing, the
Lenders may solicit offers to buy the Pledged Collateral, or
any part of it, from a limited number of investors deemed by
the Lenders, in their reasonable judgment, to be financially
responsible parties who might be interested in purchasing the
Pledged Collateral. If the Lenders solicit such offers from
not less than three (3) such investors, then the acceptance by
the Lenders of the highest offer obtained therefrom shall be
deemed to be a commercially reasonable method of disposing
of such Pledged Collateral; provided, however, that this
Section does not impose a requirement that the Lenders solicit
offers from three or more investors in order for the sale to be
commercially reasonable.
10. Security Interest Absolute. All
rights of the Lenders and security interests hereunder, and all
obligations of the Pledgor hereunder, shall be absolute and
unconditional irrespective of:
(a) Any lack of validity or
enforceability of the Loan and Security
Agreement, the Guaranty or any other
agreement or instrument relating thereto;
(b) Any change in the time,
manner or place of payment of, or in any
other term of, all or any part of the
Liabilities, or any other amendment or
waiver of or any consent to any departure
from the Guaranty or the Loan and
Security Agreement;
(c) Any exchange, release or
non-perfection of any other collateral, or
any release or amendment or waiver of or
consent to departure from any guaranty, for
all or any part of the Liabilities; or
(d) any other circumstance which
might otherwise constitute a defense
available to, or a discharge of, the Pledgor
in respect of the Liabilities or of this
Pledge Agreement.
11. Lenders Appointed
Attorney-in-Fact. The Pledgor hereby appoints each Lender
its attorney-in-fact, with full authority, in the name of the
Pledgor or otherwise, after the occurrence of an Event of
Default, from time to time in such Lender's sole discretion, to
take any action and to execute any instrument which such
Lender may deem necessary or advisable to accomplish the
purposes of this Pledge Agreement, including, without
limitation, to receive, endorse and collect all instruments
made payable to the Pledgor representing any dividend,
interest payment or other distribution in respect of the
Pledged Collateral or any part thereof and to give full
discharge for the same and to arrange for the transfer of all or
any part of the Pledged Collateral on the books of a Direct
Subsidiary to the name of the Lenders or their nominees.
12. Waivers. (a) The Pledgor
waives presentment and demand for payment of any of the
Liabilities, protest and notice of dishonor or Event of Default
with respect to any of the Liabilities and all other notices to
which the Pledgor might otherwise be entitled except as
otherwise expressly provided herein, in the Guaranty or in the
Loan and Security Agreement.
(b) The Pledgor agrees that all of
its obligations under this Pledge Agreement shall remain in
full force and effect without defense, offset or counterclaim
of any kind, notwithstanding that the Pledgor's rights against
the Borrower may be impaired, destroyed or otherwise
affected by reason of any action or inaction on the part of the
Lenders.
(c) The Pledgor hereby expressly
waives the benefits of any laws purporting to allow a
guarantor or pledgor to revoke a continuing guaranty or
pledge with respect to any transactions occurring after the
date of the guaranty or pledge.
13. Term. This Pledge Agreement
shall remain in full force and effect until the Liabilities have
been fully and indefeasibly paid in cash, all commitments to
lend under the Loan and Security Agreement have expired
and the Loan and Security Agreement has been terminated
pursuant to its terms. Upon the termination of this Pledge
Agreement as provided above (other than as a result of the
sale of the Pledged Collateral), the Lenders will release the
security interest created hereunder and, if they then have
possession of the Pledged Stock, will deliver the Pledged
Stock and the Powers to the Pledgor.
14. Definitions. The singular shall
include the plural and vice versa and any gender shall include
any other gender as the context may require.
15. Successors and Assigns. This
Pledge Agreement shall be binding upon and inure to the
benefit of the Pledgor, the Lenders and their respective
successors and assigns. The Pledgor's successors and assigns
shall include, without limitation, a receiver, trustee or
debtor-in-possession of or for the Pledgor.
16. GOVERNING LAW. THIS
PLEDGE AGREEMENT HAS BEEN EXECUTED AND
DELIVERED BY THE PARTIES HERETO IN NEW
YORK, NEW YORK. ANY DISPUTE BETWEEN THE
LENDERS AND THE PLEDGOR ARISING OUT OF OR
RELATED TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS
PLEDGE AGREEMENT, AND WHETHER ARISING IN
CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL
BE RESOLVED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, INCLUDING SECTION 5-
1401 OF THE GENERAL OBLIGATIONS LAWS BUT
OTHERWISE WITHOUT REGARD TO CONFLICTS OF
LAWS PROVISIONS.
17. Consent to Jurisdiction;
Counterclaims; Forum Non Conveniens. (a) Exclusive
Jurisdiction. Except as provided in subsection (b) of this
Section 17, the Lenders and the Pledgor agree that all
disputes between them arising out of or related to the
relationship established between them in connection with this
Pledge Agreement, whether arising in contract, tort, equity, or
otherwise, shall be resolved only by state or federal courts
located in New York, New York, but the parties acknowledge
that any appeals from those courts may have to be heard by a
court located outside of New York, New York.
(b) Other Jurisdictions. The
Lenders shall have the right to proceed against the Pledgor or
its property in a court in any location to enable the Lenders to
obtain personal jurisdiction over the Pledgor, to realize on the
Pledged Collateral or any other security for the Liabilities or
to enforce a judgment or other court order entered in favor of
the Lenders. The Pledgor shall not assert any permissive
counterclaims in any proceeding brought by the Lenders
arising out of or relating to this Pledge Agreement.
(c) Venue; Forum Non
Conveniens. Each of the Pledgor and each of the Lenders
waives any objection that it may have (including, without
limitation, any objection to the laying of venue or based on
forum non conveniens) to the location of the court in which
any proceeding is commenced in accordance with this Section
17.
18. WAIVER OF JURY TRIAL.
EACH OF THE PLEDGOR AND THE LENDERS WAIVES
ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, BETWEEN THE LENDERS AND THE
PLEDGOR ARISING OUT OF OR RELATED TO THE
TRANSACTIONS CONTEMPLATED BY THIS PLEDGE
AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH. EITHER
THE PLEDGOR OR A LENDER MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS
PLEDGE AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.
19. Waiver of Bond. The Pledgor
waives the posting of any bond otherwise required of the
Lenders in connection with any judicial process or proceeding
to realize on the Collateral or any other security for the
Liabilities, to enforce any judgment or other court order
entered in favor of the Lenders, or to enforce by specific
performance, temporary restraining order, or preliminary or
permanent injunction, this Pledge Agreement or any other
agreement or document between the Lenders and the Pledgor.
20. Advice of Counsel. The
Pledgor represents and warrants to the Lenders that it has
consulted with its legal counsel regarding all waivers under
this Pledge Agreement, including without limitation those
under Section 12 and Sections 16 through 19 hereof, that it
believes that it fully understands all rights that it is waiving
and the effect of such waivers, that it assumes the risk of any
misunderstanding that it may have regarding any of the
foregoing, and that it intends that such waivers shall be a
material inducement to the Lenders to extend the indebtedness
secured hereby.
21. Severability. Whenever
possible, each provision of this Pledge Agreement shall be
interpreted in such manner as to be effective and valid under
applicable law, but, if any provision of this Pledge Agreement
shall be held to 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 Pledge
Agreement.
22. Further Assurances. The
Pledgor agrees that it will cooperate with the Lenders and
will execute and deliver, or cause to be executed and
delivered, all such other stock powers, proxies, instruments
and documents, and will take all such other actions,
including, without limitation, the execution and filing of
financing statements, as the Lenders may reasonably request
from time to time in order to carry out the provisions and
purposes of this Pledge Agreement.
23. The Lenders' Duty of Care.
The Lenders shall not be liable for any acts, omissions, errors
of judgment or mistakes of fact or law including, without
limitation, acts, omissions, errors or mistakes with respect to
the Pledged Collateral, except for those arising out of or in
connection with the Lenders' (i) gross negligence or willful
misconduct, or (ii) failure to use reasonable care with respect
to the safe custody of the Pledged Collateral in the Lenders'
possession. Without limiting the generality of the foregoing,
the Lenders shall be under no obligation to take any steps
necessary to preserve rights in the Pledged Collateral against
any other parties but may do so at its option. All expenses
incurred in connection therewith shall be for the sole account
of the Pledgor, and shall constitute part of the Liabilities
secured hereby.
24. Notices. All notices and other
communications required or desired to be served, given or
delivered hereunder shall be made in writing or by a
telecommunications device capable of creating a written
record and shall be addressed to the party to be notified as
follows:
if to the Pledgor, at
The Aegis Consumer Funding
Group, Inc.
525 Washington Boulevard
Jersey City, New Jersey 07310
Attention: President
Telecopy: (201) 418-7379
if to the Lender, at
III Finance, Ltd.
III Global, Ltd.
c/o Admiral Administration Ltd.
Anchorage Center, 2nd Floor
Grand Cayman, Cayman Islands
British West Indies
Attention: David Bree
Telecopy: (345) 949-0705
<PAGE>
with a copy to
III Offshore Advisors
250 South Australian Avenue, Suite
600
West Palm Beach, Florida 33401
Attention: Robert Fasulo
Telecopy: (407) 655-5496
or, as to each party, at such other address as designated by
such party in a written notice to the other party. All such
notices and communications shall be deemed to be validly
served, given or delivered (i) three (3) days following deposit
in the United States mails, with proper postage prepaid; (ii)
upon delivery thereof if delivered by hand to the party to be
notified; (iii) one Business Day after delivery thereof to a
reputable overnight courier service, with delivery charges
prepaid; or (iv) upon transmission thereof with confirmation
of successful transmission from the sending
telecommunications device, if sent by telecommunications
device.
25. Amendments, Waivers and
Consents. No amendment or waiver of any provision of this
Pledge Agreement nor consent to any departure by the
Pledgor herefrom, shall in any event be effective unless the
same shall be in writing and signed by each of the Lenders
pursuant to the terms of the Loan and Security Agreement,
and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific
purpose for which given.
26. Section Headings. The section
headings herein are for convenience of reference only, and
shall not affect in any way the interpretation of any of the
provisions hereof.
27. Execution in Counterparts.
This Pledge Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of
which shall together constitute one and the same agreement.
28. Merger. This Pledge
Agreement represents the final agreement of the Pledgor with
respect to the matters contained herein and may not be
contradicted by evidence of prior or contemporaneous
agreements, or subsequent oral agreements, between the
Pledgor and the Lenders.
29. Bailment, Agency for
Possession. Each of the Lenders hereby appoints [III
Offshore Advisors] as their agent for purposes of perfecting
their respective security interests and liens on the Pledged
Collateral. To the extent that either Lender obtains
possession of the Pledged Collateral, such Lender shall hold
such Pledged Collateral as agent for itself and the other
Lender.
<PAGE>
IN WITNESS WHEREOF, the
Pledgor and the Lenders have executed this Pledge
Agreement as of the date set forth above.
THE AEGIS CONSUMER FUNDING
GROUP, INC.
By: _________________________
Name: ___________________
Title: __________________
III
FINA
NCE,
LTD.
By: _________________________
Name: ___________________
Title: __________________
III GLOBAL, LTD.
By:
_________________________
Name: ___________________
Title: __________________
<PAGE>
ACKNOWLEDGMENT
The undersigned hereby
acknowledges receipt of a copy of the foregoing Pledge
Agreement, agrees promptly to note on its books the security
interests granted under such Pledge Agreement, and waives
any rights or requirement at any time hereafter to receive a
copy of such Pledge Agreement in connection with the
registration of any Pledged Collateral in the name of the
Lenders or its nominee or the exercise of voting rights by the
Lenders or their nominees.
AEGIS
CAPITAL MARKETS, INC.
(D/B/A MARKETS)
By:
___________________________
Name: _____________________
Title: ______________________
AEGIS
SECURITIZED ASSETS, INC.
By:
___________________________
Name: _____________________
Title: ______________________
AEGIS
AUTOMOBILE ASSETS, INC.
By:
___________________________
Name: _____________________
Title: ______________________
AEGIS
CONSUMER FINANCE, INC.
By:
___________________________
Name: _____________________
Title: ______________________
<PAGE>
REMODELERS OF AMERICA, INC.
By:
___________________________
Name: _____________________
Title: ______________________
AEGIS
FINANCIAL ADVISORS, INC.
By:
___________________________
Name: _____________________
Title: ______________________
AEGIS
SECURITIES CORPORATION
By:
___________________________
Name: _____________________
Title: ______________________
SYSTEM AND SERVICES TECHNOLOGY, INC.
By:
___________________________
Name: _____________________
Title: ______________________
<PAGE>
EXHIBIT A
to
PLEDGE AGREEMENT
dated as of March __, 1997
Pledged Stock Certificates
Number of
Name of Direct
Issued and
Subsidiary
Outstanding Shares
Aegis Capital Markets, Inc.
[__________]
(d/b/a Markets)
Aegis Securitized Assets, Inc.
[__________]
Aegis Automobile Assets, Inc.
[__________]
Aegis Consumer Finance, Inc.
[__________]
Remodelers of America, Inc.
[__________]
Aegis Financial Advisors, Inc.
[__________]
Aegis Securities Corporation
[__________]
System and Services Technology, Inc.
[__________]
<PAGE>
EXHIBIT B
to
PLEDGE AGREEMENT
dated as of March __, 1997
Form of Stock Power
STOCK POWER
FOR VALUE RECEIVED, the
undersigned does hereby sell, assign and transfer to
_____________________________ _____ Shares of Common
Stock of [INSERT NAME OF DIRECT SUBSIDIARY], a
Delaware corporation, represented by Certificate No. __ (the
"Stock"), standing in the name of the undersigned on the
books of said corporation and does hereby irrevocably
constitute and appoint
___________________________________ as the
undersigned's true and lawful attorney, for it and in its name
and stead, to sell, assign and transfer all or any of the Stock,
and for that purpose to make and execute all necessary acts of
assignment and transfer thereof; and to substitute one or more
persons with like full power, hereby ratifying and confirming
all that said attorney or substitute or substitutes shall lawfully
do by virtue hereof.
Dated: _______________
THE
AEGIS CONSUMER FUNDING
GROUP, INC.
By:
_________________________
Title:
<PAGE>
TABLE OF CONTENTS
1. Pledge . . . . . . . . . . . . . . .2
2. Security for Liabilities . . . . . .2
3. Pledged Collateral Adjustments . . .2
4. Subsequent Changes Affecting Pledged
Collateral . . . . . . . . . . . . . . .3
5. Representations and Warranties . . .3
6. Voting Rights. . . . . . . . . . . .4
7. Dividends and Other Distributions. .4
8. Transfers and Other Liens. . . . . .5
9. Remedies . . . . . . . . . . . . . .6
10. Security Interest Absolute. . . . .7
11. Lenders Appointed Attorney-in-Fact.7
12. Waivers . . . . . . . . . . . . . .7
13. Term. . . . . . . . . . . . . . . .8
14. Definitions . . . . . . . . . . . .8
15. Successors and Assigns. . . . . . .8
16. GOVERNING LAW . . . . . . . . . . .8
17. Consent to Jurisdiction;
Counterclaims; Forum Non Conveniens. . .8
18. WAIVER OF JURY TRIAL. . . . . . . .9
19. Waiver of Bond. . . . . . . . . . .9
20. Advice of Counsel . . . . . . . . .9
21. Severability. . . . . . . . . . . .9
22. Further Assurances. . . . . . . . 10
23. The Lenders' Duty of Care . . . . 10
24. Notices . . . . . . . . . . . . . 10
25. Amendments, Waivers and Consents. 11
26. Section Headings. . . . . . . . . 11
27. Execution in Counterparts . . . . 11
28. Merger. . . . . . . . . . . . . . 11
29. Bailment, Agency for Possession . 11
EXHIBITS
EXHIBIT A -- Pledged Stock Certificates
EXHIBIT B -- Form of Stock Power
I:\AHC_COM\10_105_4.WPD May 8, 1997 (4:58p)
EXECUTION COPY
PLEDGE AGREEMENT
between
Aegis Consumer Finance, Inc.,
as Pledgor
AND
III Finance, Ltd.
and
III Global, Ltd.,
as Lenders
Dated as of March 14, 1997
<PAGE>
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (the
"Pledge Agreement"), dated as of March 14, 1997,
is executed by and among AEGIS CONSUMER
FINANCE, INC., a Delaware corporation (the
"Pledgor"), III FINANCE, LTD., a Cayman
Islands corporation ("Finance") and III GLOBAL,
LTD., a Cayman Islands Corporation ("Global"
and together with Finance, the "Lenders" and each
individually a "Lender"). Capitalized terms used
herein and not otherwise defined herein shall have
the respective meanings ascribed to such terms in
the "Loan and Security Agreement" (as defined
below).
WITNESSETH:
WHEREAS, Aegis Auto Finance,
Inc., a Delaware corporation (the "Borrower") and
the Lenders have entered into a certain Loan and
Security Agreement of even date herewith (as
amended, restated, supplemented or otherwise
modified from time to time, the "Loan and
Security Agreement"), pursuant to which the
Lenders have agreed, subject to certain conditions
precedent, to make loans and other financial
accommodations to the Borrower from time to
time;
WHEREAS, the Pledgor directly
owns 100% of the issued and outstanding capital
stock of Aegis Acceptance Corp. and Aegis Auto
Finance, Inc. (such direct subsidiaries and any
other subsidiary acquired or formed by the
Pledgor, the "Direct Subsidiaries") and will derive
direct and indirect economic benefit from the
loans and other financial accommodations made to
the Borrower under the Loan and Security
Agreement; and
WHEREAS, the Lenders have
required, as a condition to their entering into the
Loan and Security Agreement, that the Pledgor
execute and deliver this Pledge Agreement;
NOW, THEREFORE, for and in
consideration of the foregoing and of any financial
accommodations or extensions of credit (including,
without limitation, any loan or advance by
renewal, refinancing or extension of the
agreements described hereinabove or otherwise)
heretofore, now or hereafter made to or for the
benefit of the Borrower pursuant to the Loan and
Security Agreement or any other agreement,
instrument or document executed pursuant to or in
connection therewith, and for other good and
valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Pledgor
and the Lenders hereby agree as follows:
1. Pledge. The Pledgor hereby
pledges to the Lenders, and grants to the Lenders
a security interest in, the following (collectively,
the "Pledged Collateral"):
(a) The shares of the capital stock
of each Direct Subsidiary, now or at any
time or times hereafter owned by the
Pledgor, and the certificates representing
the shares of such capital stock (such
now-owned shares being identified on
Exhibit A next to each Direct Subsidiary),
all options and warrants for the purchase of
shares of the stock of any Direct
Subsidiary now or hereafter held in the
name of the Pledgor (all of said capital
stock, options and warrants and all capital
stock held in the name of the Pledgor as a
result of the exercise of such options or
warrants being hereinafter collectively
referred to as the "Pledged Stock"),
herewith delivered to the Lenders
accompanied by stock powers in the form
of Exhibit B attached hereto and made a
part hereof (the "Powers") duly executed in
blank, and all dividends, cash, instruments
and other property from time to time
received, receivable or otherwise
distributed in respect of, or in exchange
for, any or all of the Pledged Stock;
(b) All additional shares of stock
of any Direct Subsidiary from time to time
acquired by the Pledgor in any manner,
and the certificates representing such
additional shares (any such additional
shares shall constitute part of the Pledged
Stock and the Lenders are irrevocably
authorized to amend Exhibit A from time
to time to reflect such additional shares),
and all options, warrants, dividends, cash,
instruments and other rights and options
from time to time received, receivable or
otherwise distributed in respect of or in
exchange for any or all of such shares;
(c) The property and interests in
property described in Section 3 below; and
(d) All proceeds of the foregoing.
2. Security for Liabilities. The
Pledged Collateral secures the prompt payment,
performance and observance of (i) the Borrower's
obligations and liabilities under the Loan and
Security Agreement and each agreement,
document or instrument executed pursuant to or in
connection with the Loan and Security Agreement
and (ii) the Pledgor's obligations and liabilities
under this Pledge Agreement and each agreement,
document or instrument executed pursuant to or in
connection with this Pledge Agreement (all such
obligations and liabilities of the Pledgor and the
Borrower now or hereafter existing being
hereinafter referred to as the "Liabilities").
3. Pledged Collateral Adjustments.
If, during the term of this Pledge Agreement:
(a) Any stock dividend,
reclassification, readjustment or other
change is declared or made in the capital
structure of any Direct Subsidiary, or any
option included within the Pledged
Collateral is exercised, or both, or
(b) Any subscription warrants or
any other rights or options shall be issued
in connection with the Pledged Collateral,
then all new, substituted and additional shares,
warrants, rights, options or other securities, issued
by reason of any of the foregoing, shall be
immediately delivered to and held by the Lenders
under the terms of this Pledge Agreement and
shall constitute Pledged Collateral hereunder;
provided, however, that nothing contained in this
Section 3 shall be deemed to permit any stock
dividend, issuance of additional stock, warrants,
rights or options, reclassification, readjustment or
other change in the capital structure of a Direct
Subsidiary which is not permitted in the Loan and
Security Agreement.
4. Subsequent Changes Affecting
Pledged Collateral. The Pledgor represents and
warrants that it has made its own arrangements for
keeping itself informed of changes or potential
changes affecting the Pledged Collateral
(including, but not limited to, rights to convert,
rights to subscribe, payment of dividends,
reorganization or other exchanges, tender offers
and voting rights), and the Pledgor agrees that the
Lenders shall have no obligation to inform the
Pledgor of any such changes or potential changes
or to take any action or omit to take any action
with respect thereto. The Lenders may, after the
occurrence of an Event of Default, without notice
and at their option, transfer or register the Pledged
Collateral or any part thereof into their respective
or their respective nominee's name with or
without any indication that such Pledged Collateral
is subject to the security interest hereunder. In
addition, the Lenders may at any time exchange
certificates or instruments representing or
evidencing Pledged Shares for certificates or
instruments of smaller or larger denominations.
5. Representations and Warranties.
The Pledgor represents and warrants as follows:
(a) The Pledgor is the legal and
beneficial owner of the Pledged Stock, which
represents 100% of the issued and outstanding
common stock of each Direct Subsidiary identified
on Exhibit A, free and clear of any Lien except
for the security interest created by this Pledge
Agreement and the Pledgor owns no other stock
other than that identified on Exhibit A;
(b) The Pledgor has full corporate
power and authority to enter into this Pledge
Agreement;
(c) There are no restrictions upon
the voting rights associated with, or upon the
transfer of, any of the Pledged Collateral;
(d) The Pledgor has the right to
vote, pledge and grant a security interest in or
otherwise transfer such Pledged Collateral free of
any Liens;
(e) No authorization, approval, or
other action by, and no notice to or filing with,
any Governmental Authority or regulatory body is
required either (i) for the pledge of the Pledged
Collateral pursuant to this Pledge Agreement or
for the execution, delivery or performance of this
Pledge Agreement by the Pledgor or (ii) for the
exercise by the Lenders of the voting or other
rights provided for in this Pledge Agreement or
the remedies in respect of the Pledged Collateral
pursuant to this Pledge Agreement (except as may
be required in connection with such disposition by
laws affecting the offering and sale of securities
generally);
(f) The pledge of the Pledged
Collateral pursuant to this Pledge Agreement
creates a valid and perfected first priority security
interest in the Pledged Collateral, in favor of the
Lenders, securing the payment and performance of
the Liabilities; and
(g) The Powers are duly executed
and give the Lenders the authority they purport to
confer.
6. Voting Rights. During the term
of this Pledge Agreement, and except as provided
in this Section 7(b) below, the Pledgor shall have
the right to vote the Pledged Stock on all
corporate questions in a manner not inconsistent
with the terms of this Pledge Agreement, the Loan
and Security Agreement and any other agreement,
instrument or document executed pursuant thereto
or in connection therewith. After the occurrence
of an Event of Default, the Lenders or either of
the Lenders' nominees may, at the Lenders' or
such nominee's option and following written
notice from the Lenders to the Pledgor, exercise
all voting powers pertaining to the Pledged
Collateral, including the right to take action by
shareholder consent. Such authorization shall
constitute an irrevocable voting proxy from the
Pledgor to the Lenders or, at the Lenders' option,
to the Lenders' nominees.
7. Dividends and Other
Distributions. (a) So long as no Event of Default
or Default shall have occurred:
(i) The Pledgor shall be entitled to
receive and retain any and all dividends and
interest paid in respect of the Pledged Collateral,
provided, however, that any and all
(A) dividends and interest paid or
payable other than in cash with respect to,
and instruments and other property
received, receivable or otherwise
distributed with respect to, or in exchange
for, any of the Pledged Collateral;
(B) dividends and other
distributions paid or payable in cash with
respect to any of the Pledged Collateral on
account of a partial or total liquidation or
dissolution or in connection with a
reduction of capital, capital surplus or
paid-in surplus; and
(C) cash paid, payable or otherwise
distributed with respect to principal of, or
in redemption of, or in exchange for, any
of the Pledged Collateral;
shall be Pledged Collateral, and shall be forthwith
delivered to the Lenders to hold as Pledged
Collateral and shall, if received by the Pledgor, be
received in trust for the Lenders, be segregated
from the other property or funds of the Pledgor,
and be delivered immediately to the Lenders as
Pledged Collateral in the same form as so received
(with any necessary endorsement); and
(ii) The Lenders shall execute and
deliver (or cause to be executed and delivered) to
the Pledgor all such proxies and other instruments
as the Pledgor may reasonably request for the
purpose of enabling the Pledgor to receive the
dividends or interest payments which it is
authorized to receive and retain pursuant to clause
(i) above.
(b) After the occurrence of an
Event of Default:
(i) All rights of the Pledgor to
receive the dividends and interest payments which
it would otherwise be authorized to receive and
retain pursuant to Section 7(a)(i) hereof shall
cease, and all such rights shall thereupon become
vested in the Lenders, which shall thereupon have
the sole right to receive and hold as Pledged
Collateral such dividends and interest payments;
(ii) All dividends and interest
payments which are received by the Pledgor
contrary to the provisions of clause (i) of this
Section 7(b) shall be received in trust for the
Lenders, shall be segregated from other funds of
the Pledgor and shall be paid over immediately to
the Lenders as Pledged Collateral in the same
form as so received (with any necessary
endorsements);
(iii) The Pledgor shall, upon the
request of the Lenders, at Pledgor's expense, use
its best efforts to obtain all necessary
governmental approvals for the sale of the Pledged
Collateral, as requested by the Lenders;
(iv) The Pledgor shall, upon the
request of the Lenders, at the Pledgor's expense,
do or cause to be done all such other acts and
things as may be necessary to make such sale of
the Pledged Collateral or any part thereof valid
and binding and in compliance with applicable
law.
The Pledgor will reimburse the Lenders for all
expenses incurred by the Lenders, including,
without limitation, reasonable attorneys' and
accountants' fees and expenses in connection with
the foregoing. The Pledgor agrees that, in light of
the fact that federal and state securities laws
impose certain restrictions on the method by
which the Pledged Collateral may be sold, it will
be commercially reasonable if a private sale, upon
at least ten (10) days' notice to the Pledgor, is
arranged so as to avoid a public offering, even
though the sales price established and/or obtained
at such private sale may be substantially less than
prices which could have been obtained for such
security on any market or exchange or in any
other public sale.
8. Transfers and Other Liens. The
Pledgor agrees that it will not (i) sell or otherwise
dispose of, or grant any option with respect to,
any of the Pledged Collateral without the prior
written consent of the Lenders, or (ii) create or
permit to exist any Lien upon or with respect to
any of the Pledged Collateral, except for the
security interest under this Pledge Agreement.
9. Remedies. (a) The Lenders
shall have, in addition to any other rights given
under this Pledge Agreement or by law, all of the
rights and remedies with respect to the Pledged
Collateral of a secured party under the Uniform
Commercial Code as in effect in the State of New
York. After the occurrence of an Event of
Default and following written notice to the
Pledgor, the Lenders (personally or through an
agent) are hereby authorized and empowered to
transfer and register in their name or in the name
of their nominee the whole or any part of the
Pledged Collateral, to exercise all voting rights
with respect thereto, to collect and receive all cash
dividends and other distributions made thereon,
and to otherwise act with respect to the Pledged
Collateral as though the Lenders were the outright
owners thereof. The Pledgor hereby irrevocably
constitutes and appoints each Lender as the proxy
and attorney-in-fact of the Pledgor, with full
power of substitution to do so, such proxy
becoming effective upon the occurrence of an
Event of Default and following written notice
thereof; provided, however, that the Lenders shall
have no duty to exercise any such right or to
preserve the same and shall not be liable for any
failure to do so or for any delay in doing so. In
addition, after the occurrence of an Event of
Default, the Lenders shall have such powers of
sale and other powers as may be conferred by
applicable law. With respect to the Pledged
Collateral or any part thereof which shall then be
in or shall thereafter come into the possession or
custody of the Lenders or which the Lenders shall
otherwise have the ability to transfer under
applicable law, each Lender may, in its sole
discretion, without notice except as specified
below, after the occurrence of an Event of
Default, sell or cause the same to be sold at any
exchange, broker's board or at public or private
sale, in one or more sales or lots, at such price as
such Lender may deem best, for cash or on credit
or for future delivery, without assumption of any
credit risk, and the purchaser of any or all of the
Pledged Collateral so sold shall thereafter own the
same, absolutely free from any claim,
encumbrance or right of any kind whatsoever.
The Lenders may, in their own name, or in the
name of a designee or nominee, buy the Pledged
Collateral at any public sale and, if permitted by
applicable law, buy the Pledged Collateral at any
private sale. The Pledgor will pay to the Lenders
all reasonable expenses (including, without
limitation, court costs and reasonable attorneys'
and paralegals' fees and expenses) of, or
incidental to, the enforcement of any of the
provisions hereof. The Lenders agree to distribute
any proceeds of the sale of the Pledged Collateral
in accordance with the Loan and Security
Agreement and the Pledgor shall remain liable for
any deficiency following the sale of the Pledged
Collateral.
(b) Unless any of the Pledged
Collateral threatens to decline speedily in value or
is or becomes of a type sold on a recognized
market, the Lenders will give the Pledgor
reasonable notice of the time and place of any
public sale thereof, or of the time after which any
private sale or other intended disposition is to be
made. Any sale of the Pledged Collateral
conducted in conformity with reasonable
commercial practices of banks, commercial
finance companies, insurance companies or other
financial institutions disposing of property similar
to the Pledged Collateral shall be deemed to be
commercially reasonable. Notwithstanding any
provision to the contrary contained herein, the
Pledgor agrees that any requirements of reasonable
notice shall be met if such notice is received by
the Pledgor as provided in Section 25 below at
least ten (10) days before the time of the sale or
disposition; provided, however, that the Lenders
may give any shorter notice that is commercially
reasonable under the circumstances. Any other
requirement of notice, demand or advertisement
for sale is waived, to the extent permitted by law.
(c) In view of the fact that federal
and state securities laws may impose certain
restrictions on the method by which a sale of the
Pledged Collateral may be effected after an Event
of Default, the Pledgor agrees that after the
occurrence of an Event of Default, the Lenders
may, from time to time, attempt to sell all or any
part of the Pledged Collateral by means of a
private placement restricting the bidders and
prospective purchasers to those who are qualified
and will represent and agree that they are
purchasing for investment only and not for
distribution. In so doing, the Lenders may solicit
offers to buy the Pledged Collateral, or any part of
it, from a limited number of investors deemed by
the Lenders, in their reasonable judgment, to be
financially responsible parties who might be
interested in purchasing the Pledged Collateral. If
the Lenders solicit such offers from not less than
three (3) such investors, then the acceptance by
the Lenders of the highest offer obtained
therefrom shall be deemed to be a commercially
reasonable method of disposing of such Pledged
Collateral; provided, however, that this Section
does not impose a requirement that the Lenders
solicit offers from three or more investors in order
for the sale to be commercially reasonable.
10. Security Interest Absolute. All
rights of the Lenders and security interests
hereunder, and all obligations of the Pledgor
hereunder, shall be absolute and unconditional
irrespective of:
(a) Any lack of validity or
enforceability of the Loan and Security
Agreement or any other agreement or
instrument relating thereto;
(b) Any change in the time,
manner or place of payment of, or in any
other term of, all or any part of the
Liabilities, or any other amendment or
waiver of or any consent to any departure
from the Loan and Security Agreement;
(c) Any exchange, release or
non-perfection of any other collateral, or
any release or amendment or waiver of or
consent to departure from any guaranty, for
all or any part of the Liabilities; or
(d) any other circumstance which
might otherwise constitute a defense
available to, or a discharge of, the Pledgor
in respect of the Liabilities or of this
Pledge Agreement.
11. Lenders Appointed
Attorney-in-Fact. The Pledgor hereby appoints
each Lender its attorney-in-fact, with full
authority, in the name of the Pledgor or otherwise,
after the occurrence of an Event of Default, from
time to time in such Lender's sole discretion, to
take any action and to execute any instrument
which such Lender may deem necessary or
advisable to accomplish the purposes of this
Pledge Agreement, including, without limitation,
to receive, endorse and collect all instruments
made payable to the Pledgor representing any
dividend, interest payment or other distribution in
respect of the Pledged Collateral or any part
thereof and to give full discharge for the same and
to arrange for the transfer of all or any part of the
Pledged Collateral on the books of a Direct
Subsidiary to the name of the Lenders or their
nominees.
12. Waivers. (a) The Pledgor
waives presentment and demand for payment of
any of the Liabilities, protest and notice of
dishonor or Event of Default with respect to any
of the Liabilities and all other notices to which the
Pledgor might otherwise be entitled except as
otherwise expressly provided herein or in the Loan
and Security Agreement.
(b) The Pledgor agrees that all of
its obligations under this Pledge Agreement shall
remain in full force and effect without defense,
offset or counterclaim of any kind,
notwithstanding that the Pledgor's rights against
the Borrower may be impaired, destroyed or
otherwise affected by reason of any action or
inaction on the part of the Lenders.
(c) The Pledgor hereby expressly
waives the benefits of any laws purporting to
allow a guarantor or pledgor to revoke a
continuing guaranty or pledge with respect to any
transactions occurring after the date of the
guaranty or pledge.
13. Term. This Pledge Agreement
shall remain in full force and effect until the
Liabilities have been fully and indefeasibly paid in
cash, all commitments to lend under the Loan and
Security Agreement have expired and the Loan
and Security Agreement has been terminated
pursuant to its terms. Upon the termination of this
Pledge Agreement as provided above (other than
as a result of the sale of the Pledged Collateral),
the Lenders will release the security interest
created hereunder and, if they then have
possession of the Pledged Stock, will deliver the
Pledged Stock and the Powers to the Pledgor.
14. Definitions. The singular shall
include the plural and vice versa and any gender
shall include any other gender as the context may
require.
15. Successors and Assigns. This
Pledge Agreement shall be binding upon and inure
to the benefit of the Pledgor, the Lenders and their
respective successors and assigns. The Pledgor's
successors and assigns shall include, without
limitation, a receiver, trustee or
debtor-in-possession of or for the Pledgor.
16. GOVERNING LAW. THIS
PLEDGE AGREEMENT HAS BEEN
EXECUTED AND DELIVERED BY THE
PARTIES HERETO IN NEW YORK, NEW
YORK. ANY DISPUTE BETWEEN THE
LENDERS AND THE PLEDGOR ARISING
OUT OF OR RELATED TO THE
RELATIONSHIP ESTABLISHED BETWEEN
THEM IN CONNECTION WITH THIS PLEDGE
AGREEMENT, AND WHETHER ARISING IN
CONTRACT, TORT, EQUITY, OR
OTHERWISE, SHALL BE RESOLVED IN
ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK, INCLUDING
SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAWS BUT OTHERWISE
WITHOUT REGARD TO CONFLICTS OF
LAWS PROVISIONS.
17. Consent to Jurisdiction;
Counterclaims; Forum Non Conveniens. (a)
Exclusive Jurisdiction. Except as provided in
subsection (b) of this Section 17, the Lenders and
the Pledgor agree that all disputes between them
arising out of or related to the relationship
established between them in connection with this
Pledge Agreement, whether arising in contract,
tort, equity, or otherwise, shall be resolved only
by state or federal courts located in New York,
New York, but the parties acknowledge that any
appeals from those courts may have to be heard
by a court located outside of New York, New
York.
(b) Other Jurisdictions. The
Lenders shall have the right to proceed against the
Pledgor or its property in a court in any location
to enable the Lenders to obtain personal
jurisdiction over the Pledgor, to realize on the
Pledged Collateral or any other security for the
Liabilities or to enforce a judgment or other court
order entered in favor of the Lenders. The
Pledgor shall not assert any permissive
counterclaims in any proceeding brought by the
Lenders arising out of or relating to this Pledge
Agreement.
(c) Venue; Forum Non
Conveniens. Each of the Pledgor and each of the
Lenders waives any objection that it may have
(including, without limitation, any objection to the
laying of venue or based on forum non
conveniens) to the location of the court in which
any proceeding is commenced in accordance with
this Section 17.
18. WAIVER OF JURY TRIAL.
EACH OF THE PLEDGOR AND THE
LENDERS WAIVES ANY RIGHT TO TRIAL
BY JURY IN ANY DISPUTE, WHETHER
SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, BETWEEN THE LENDERS AND
THE PLEDGOR ARISING OUT OF OR
RELATED TO THE TRANSACTIONS
CONTEMPLATED BY THIS PLEDGE
AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN
CONNECTION HEREWITH. EITHER THE
PLEDGOR OR A LENDER MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF
THIS PLEDGE AGREEMENT WITH ANY
COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE PARTIES HERETO TO
THE WAIVER OF THEIR RIGHT TO TRIAL
BY JURY.
19. Waiver of Bond. The Pledgor
waives the posting of any bond otherwise required
of the Lenders in connection with any judicial
process or proceeding to realize on the Collateral
or any other security for the Liabilities, to enforce
any judgment or other court order entered in favor
of the Lenders, or to enforce by specific
performance, temporary restraining order, or
preliminary or permanent injunction, this Pledge
Agreement or any other agreement or document
between the Lenders and the Pledgor.
20. Advice of Counsel. The
Pledgor represents and warrants to the Lenders
that it has consulted with its legal counsel
regarding all waivers under this Pledge
Agreement, including without limitation those
under Section 12 and Sections 16 through 19
hereof, that it believes that it fully understands all
rights that it is waiving and the effect of such
waivers, that it assumes the risk of any
misunderstanding that it may have regarding any
of the foregoing, and that it intends that such
waivers shall be a material inducement to the
Lenders to extend the indebtedness secured
hereby.
21. Severability. Whenever
possible, each provision of this Pledge Agreement
shall be interpreted in such manner as to be
effective and valid under applicable law, but, if
any provision of this Pledge Agreement shall be
held to 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 Pledge Agreement.
22. Further Assurances. The
Pledgor agrees that it will cooperate with the
Lenders and will execute and deliver, or cause to
be executed and delivered, all such other stock
powers, proxies, instruments and documents, and
will take all such other actions, including, without
limitation, the execution and filing of financing
statements, as the Lenders may reasonably request
from time to time in order to carry out the
provisions and purposes of this Pledge Agreement.
23. The Lenders' Duty of Care.
The Lenders shall not be liable for any acts,
omissions, errors of judgment or mistakes of fact
or law including, without limitation, acts,
omissions, errors or mistakes with respect to the
Pledged Collateral, except for those arising out of
or in connection with the Lenders' (i) gross
negligence or willful misconduct, or (ii) failure to
use reasonable care with respect to the safe
custody of the Pledged Collateral in the Lenders'
possession. Without limiting the generality of the
foregoing, the Lenders shall be under no
obligation to take any steps necessary to preserve
rights in the Pledged Collateral against any other
parties but may do so at its option. All expenses
incurred in connection therewith shall be for the
sole account of the Pledgor, and shall constitute
part of the Liabilities secured hereby.
24. Notices. All notices and other
communications required or desired to be served,
given or delivered hereunder shall be made in
writing or by a telecommunications device capable
of creating a written record and shall be addressed
to the party to be notified as follows:
if to the Pledgor, at
Aegis Consumer Finance, Inc.
525 Washington Boulevard
Jersey City, New Jersey 07310
Attention: President
Telecopy: (201) 418-7379
if to the Lender, at
III Finance, Ltd.
III Global, Ltd.
c/o Admiral Administration Ltd.
Anchorage Center, 2nd Floor
Grand Cayman, Cayman Islands
British West Indies
Attention: David Bree
Telecopy: (345) 949-0705
with a copy to
III Offshore Advisors
250 South Australian Avenue, Suite
600
West Palm Beach, Florida 33401
Attention: Robert Fasulo
Telecopy: (407) 655-5496
or, as to each party, at such other address as
designated by such party in a written notice to the
other party. All such notices and communications
shall be deemed to be validly served, given or
delivered (i) three (3) days following deposit in
the United States mails, with proper postage
prepaid; (ii) upon delivery thereof if delivered by
hand to the party to be notified; (iii) one Business
Day after delivery thereof to a reputable overnight
courier service, with delivery charges prepaid; or
(iv) upon transmission thereof with confirmation
of successful transmission from the sending
telecommunications device, if sent by
telecommunications device.
25. Amendments, Waivers and
Consents. No amendment or waiver of any
provision of this Pledge Agreement nor consent to
any departure by the Pledgor herefrom, shall in
any event be effective unless the same shall be in
writing and signed by each of the Lenders
pursuant to the terms of the Loan and Security
Agreement, and then such amendment, waiver or
consent shall be effective only in the specific
instance and for the specific purpose for which
given.
26. Section Headings. The section
headings herein are for convenience of reference
only, and shall not affect in any way the
interpretation of any of the provisions hereof.
27. Execution in Counterparts.
This Pledge Agreement may be executed in any
number of counterparts, each of which shall be an
original, but all of which shall together constitute
one and the same agreement.
28. Merger. This Pledge
Agreement represents the final agreement of the
Pledgor with respect to the matters contained
herein and may not be contradicted by evidence of
prior or contemporaneous agreements, or
subsequent oral agreements, between the Pledgor
and the Lenders.
29. Bailment, Agency for
Possession. Each of the Lenders hereby appoints
[III Offshore Advisors] as their agent for purposes
of perfecting their respective security interests and
liens on the Pledged Collateral. To the extent that
either Lender obtains possession of the Pledged
Collateral, such Lender shall hold such Pledged
Collateral as agent for itself and the other Lender.
<PAGE>
IN WITNESS WHEREOF, the
Pledgor and the Lenders have executed this Pledge
Agreement as of the date set forth above.
AEGIS CONSUMER FINANCE, INC.
By: _________________________
Name: ___________________
Title: __________________
III
FINA
NCE,
LTD.
By: _________________________
Name: ___________________
Title: __________________
III GLOBAL, LTD.
By: _________________________
Name: ___________________
Title: __________________
<PAGE>
ACKNOWLEDGMENT
The undersigned hereby
acknowledges receipt of a copy of the foregoing
Pledge Agreement, agrees promptly to note on its
books the security interests granted under such
Pledge Agreement, and waives any rights or
requirement at any time hereafter to receive a
copy of such Pledge Agreement in connection
with the registration of any Pledged Collateral in
the name of the Lenders or its nominee or the
exercise of voting rights by the Lenders or their
nominees.
AEGIS
ACCEPTANCE CORP.
By:
___________________________
Name: _____________________
Title: ______________________
AEGIS
AUTO FINANCE, INC.
By:
___________________________
Name: _____________________
Title: ______________________
<PAGE>
EXHIBIT A
to
PLEDGE AGREEMENT
dated as of March __, 1997
Pledged Stock Certificates
Number of
Name of Direct
Issued and
Subsidiary
Outstanding Shares
Aegis Auto Finance, Inc.
[__________]
Aegis Acceptance Corp.
[__________]
<PAGE>
EXHIBIT B
to
PLEDGE AGREEMENT
dated as of March __, 1997
Form of Stock Power
STOCK POWER
FOR VALUE RECEIVED, the
undersigned does hereby sell, assign and transfer
to _____________________________ _____
Shares of Common Stock of [INSERT NAME OF
DIRECT SUBSIDIARY], a Delaware corporation,
represented by Certificate No. __ (the "Stock"),
standing in the name of the undersigned on the
books of said corporation and does hereby
irrevocably constitute and appoint
___________________________________ as the
undersigned's true and lawful attorney, for it and
in its name and stead, to sell, assign and transfer
all or any of the Stock, and for that purpose to
make and execute all necessary acts of assignment
and transfer thereof; and to substitute one or more
persons with like full power, hereby ratifying and
confirming all that said attorney or substitute or
substitutes shall lawfully do by virtue hereof.
Dated: _______________
AEGIS
CONSUMER FINANCE, INC.
By:
_________________________
Title:
<PAGE>
TABLE OF CONTENTS
1. Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Security for Liabilities . . . . . . . . . . . . . . . . . . . . . 2
3. Pledged Collateral Adjustments . . . . . . . . . . . . . . . . . . 2
4. Subsequent Changes Affecting Pledged
Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5. Representations and Warranties . . . . . . . . . . . . . . . . . . 3
6. Voting Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7. Dividends and Other Distributions. . . . . . . . . . . . . . . . . 4
8. Transfers and Other Liens. . . . . . . . . . . . . . . . . . . . . 5
9. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
10. Security Interest Absolute. . . . . . . . . . . . . . . . . . . . 7
11. Lenders Appointed Attorney-in-Fact. . . . . . . . . . . . . . . . 7
12. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
13. Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
14. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
15. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . 8
16. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . 8
17. Consent to Jurisdiction;
Counterclaims; Forum Non Conveniens. . . . . . . . . . . . . . . . . . 8
18. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . . 9
19. Waiver of Bond. . . . . . . . . . . . . . . . . . . . . . . . . . 9
20. Advice of Counsel . . . . . . . . . . . . . . . . . . . . . . . . 9
21. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
22. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . 9
23. The Lenders' Duty of Care . . . . . . . . . . . . . . . . . . . .10
24. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
25. Amendments, Waivers and Consents. . . . . . . . . . . . . . . . .11
26. Section Headings. . . . . . . . . . . . . . . . . . . . . . . . .11
27. Execution in Counterparts . . . . . . . . . . . . . . . . . . . .11
28. Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
29. Bailment, Agency for Possession . . . . . . . . . . . . . . . . .11
EXHIBITS
EXHIBIT A -- Pledged Stock
Certificates
EXHIBIT B -- Form of Stock Power
I:\AHC_COM\10_105_5.WPD May 9, 1997 (11:15a)
EXECUTION COPY
PLEDGE AGREEMENT
between
Aegis Capital Markets, Inc. (d/b/a Markets)
as Pledgor
AND
III Finance, Ltd.
and
III Global, Ltd.,
as Lenders
Dated as of March 14, 1997
<PAGE>
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (the
"Pledge Agreement"), dated as of March 14, 1997, is
executed by and among AEGIS CAPITAL MARKETS, INC.
(D/B/A MARKETS), a Delaware corporation (the "Pledgor"),
III FINANCE, LTD., a Cayman Islands corporation
("Finance") and III GLOBAL, LTD., a Cayman Islands
Corporation ("Global" and together with Finance, the
"Lenders" and each individually a "Lender"). Capitalized
terms used herein and not otherwise defined herein shall have
the respective meanings ascribed to such terms in the "Loan
and Security Agreement" (as defined below).
WITNESSETH:
WHEREAS, Aegis Auto Finance,
Inc., a Delaware corporation (the "Borrower") and the
Lenders have entered into a certain Loan and Security
Agreement of even date herewith (as amended, restated,
supplemented or otherwise modified from time to time, the
"Loan and Security Agreement"), pursuant to which the
Lenders have agreed, subject to certain conditions precedent,
to make loans and other financial accommodations to the
Borrower from time to time;
WHEREAS, the Pledgor directly
owns 100% of the issued and outstanding capital stock of
Commission Finance 92-1 Incorporated, Receivables Finance
93-1 Incorporated, MF Receivable Finance Company and MF
Commission Finance 1994-1 Corporation(such direct
subsidiaries and any other subsidiary acquired or formed by
the Pledgor, the "Direct Subsidiaries") and will derive direct
and indirect economic benefit from the loans and other
financial accommodations made to the Borrower under the
Loan and Security Agreement; and
WHEREAS, the Lenders have
required, as a condition to their entering into the Loan and
Security Agreement, that the Pledgor execute and deliver this
Pledge Agreement;
NOW, THEREFORE, for and in
consideration of the foregoing and of any financial
accommodations or extensions of credit (including, without
limitation, any loan or advance by renewal, refinancing or
extension of the agreements described hereinabove or
otherwise) heretofore, now or hereafter made to or for the
benefit of the Borrower pursuant to the Loan and Security
Agreement or any other agreement, instrument or document
executed pursuant to or in connection therewith, and for other
good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the Pledgor and the
Lenders hereby agree as follows:
1. Pledge. The Pledgor hereby
pledges to the Lenders, and grants to the Lenders a security
interest in, the following (collectively, the "Pledged
Collateral"):
(a) The shares of the capital stock
of each Direct Subsidiary, now or at any
time or times hereafter owned by the
Pledgor, and the certificates representing
the shares of such capital stock (such
now-owned shares being identified on
Exhibit A next to each Direct Subsidiary),
all options and warrants for the purchase of
shares of the stock of any Direct
Subsidiary now or hereafter held in the
name of the Pledgor (all of said capital
stock, options and warrants and all capital
stock held in the name of the Pledgor as a
result of the exercise of such options or
warrants being hereinafter collectively
referred to as the "Pledged Stock"),
herewith delivered to the Lenders
accompanied by stock powers in the form
of Exhibit B attached hereto and made a
part hereof (the "Powers") duly executed in
blank, and all dividends, cash, instruments
and other property from time to time
received, receivable or otherwise
distributed in respect of, or in exchange
for, any or all of the Pledged Stock;
(b) All additional shares of stock
of any Direct Subsidiary from time to time
acquired by the Pledgor in any manner,
and the certificates representing such
additional shares (any such additional
shares shall constitute part of the Pledged
Stock and the Lenders are irrevocably
authorized to amend Exhibit A from time
to time to reflect such additional shares),
and all options, warrants, dividends, cash,
instruments and other rights and options
from time to time received, receivable or
otherwise distributed in respect of or in
exchange for any or all of such shares;
(c) The property and interests in
property described in Section 3 below; and
(d) All proceeds of the foregoing.
2. Security for Liabilities. The
Pledged Collateral secures the prompt payment, performance
and observance of (i) the Borrower's obligations and
liabilities under the Loan and Security Agreement and each
agreement, document or instrument executed pursuant to or in
connection with the Loan and Security Agreement and (ii) the
Pledgor's obligations and liabilities under this Pledge
Agreement and each agreement, document or instrument
executed pursuant to or in connection with this Pledge
Agreement (all such obligations and liabilities of the Pledgor
and the Borrower now or hereafter existing being hereinafter
referred to as the "Liabilities").
3. Pledged Collateral Adjustments.
If, during the term of this Pledge Agreement:
(a) Any stock dividend,
reclassification, readjustment or other
change is declared or made in the capital
structure of any Direct Subsidiary, or any
option included within the Pledged
Collateral is exercised, or both, or
(b) Any subscription warrants or
any other rights or options shall be issued
in connection with the Pledged Collateral,
then all new, substituted and additional shares, warrants,
rights, options or other securities, issued by reason of any of
the foregoing, shall be immediately delivered to and held by
the Lenders under the terms of this Pledge Agreement and
shall constitute Pledged Collateral hereunder; provided,
however, that nothing contained in this Section 3 shall be
deemed to permit any stock dividend, issuance of additional
stock, warrants, rights or options, reclassification,
readjustment or other change in the capital structure of a
Direct Subsidiary which is not permitted in the Loan and
Security Agreement.
4. Subsequent Changes Affecting
Pledged Collateral. The Pledgor represents and warrants that
it has made its own arrangements for keeping itself informed
of changes or potential changes affecting the Pledged
Collateral (including, but not limited to, rights to convert,
rights to subscribe, payment of dividends, reorganization or
other exchanges, tender offers and voting rights), and the
Pledgor agrees that the Lenders shall have no obligation to
inform the Pledgor of any such changes or potential changes
or to take any action or omit to take any action with respect
thereto. The Lenders may, after the occurrence of an Event
of Default, without notice and at their option, transfer or
register the Pledged Collateral or any part thereof into their
respective or their respective nominee's name with or without
any indication that such Pledged Collateral is subject to the
security interest hereunder. In addition, the Lenders may at
any time exchange certificates or instruments representing or
evidencing Pledged Shares for certificates or instruments of
smaller or larger denominations.
5. Representations and Warranties.
The Pledgor represents and warrants as follows:
(a) The Pledgor is the legal and
beneficial owner of the Pledged Stock, which represents
100% of the issued and outstanding common stock of each
Direct Subsidiary identified on Exhibit A, free and clear of
any Lien except for the security interest created by this
Pledge Agreement and the Pledgor owns no other stock other
than that identified on Exhibit A;
(b) The Pledgor has full corporate
power and authority to enter into this Pledge Agreement;
(c) There are no restrictions upon
the voting rights associated with, or upon the transfer of, any
of the Pledged Collateral;
(d) The Pledgor has the right to
vote, pledge and grant a security interest in or otherwise
transfer such Pledged Collateral free of any Liens;
(e) No authorization, approval, or
other action by, and no notice to or filing with, any
Governmental Authority or regulatory body is required either
(i) for the pledge of the Pledged Collateral pursuant to this
Pledge Agreement or for the execution, delivery or
performance of this Pledge Agreement by the Pledgor or (ii)
for the exercise by the Lenders of the voting or other rights
provided for in this Pledge Agreement or the remedies in
respect of the Pledged Collateral pursuant to this Pledge
Agreement (except as may be required in connection with
such disposition by laws affecting the offering and sale of
securities generally);
(f) The pledge of the Pledged
Collateral pursuant to this Pledge Agreement creates a valid
and perfected first priority security interest in the Pledged
Collateral, in favor of the Lenders, securing the payment and
performance of the Liabilities; and
(g) The Powers are duly executed
and give the Lenders the authority they purport to confer.
6. Voting Rights. During the term
of this Pledge Agreement, and except as provided in this
Section 7(b) below, the Pledgor shall have the right to vote
the Pledged Stock on all corporate questions in a manner not
inconsistent with the terms of this Pledge Agreement, the
Loan and Security Agreement and any other agreement,
instrument or document executed pursuant thereto or in
connection therewith. After the occurrence of an Event of
Default, the Lenders or either of the Lenders' nominees may,
at the Lenders' or such nominee's option and following
written notice from the Lenders to the Pledgor, exercise all
voting powers pertaining to the Pledged Collateral, including
the right to take action by shareholder consent. Such
authorization shall constitute an irrevocable voting proxy
from the Pledgor to the Lenders or, at the Lenders' option, to
the Lenders' nominees.
7. Dividends and Other
Distributions. (a) So long as no Event of Default or Default
shall have occurred:
(i) The Pledgor shall be entitled to
receive and retain any and all dividends and interest paid in
respect of the Pledged Collateral, provided, however, that any
and all
(A) dividends and interest paid or
payable other than in cash with respect to,
and instruments and other property
received, receivable or otherwise
distributed with respect to, or in exchange
for, any of the Pledged Collateral;
(B) dividends and other
distributions paid or payable in cash with
respect to any of the Pledged Collateral on
account of a partial or total liquidation or
dissolution or in connection with a
reduction of capital, capital surplus or
paid-in surplus; and
(C) cash paid, payable or otherwise
distributed with respect to principal of, or
in redemption of, or in exchange for, any
of the Pledged Collateral;
shall be Pledged Collateral, and shall be forthwith delivered
to the Lenders to hold as Pledged Collateral and shall, if
received by the Pledgor, be received in trust for the Lenders,
be segregated from the other property or funds of the
Pledgor, and be delivered immediately to the Lenders as
Pledged Collateral in the same form as so received (with any
necessary endorsement); and
(ii) The Lenders shall execute and
deliver (or cause to be executed and delivered) to the Pledgor
all such proxies and other instruments as the Pledgor may
reasonably request for the purpose of enabling the Pledgor to
receive the dividends or interest payments which it is
authorized to receive and retain pursuant to clause (i) above.
(b) After the occurrence of an
Event of Default:
(i) All rights of the Pledgor to
receive the dividends and interest payments which it would
otherwise be authorized to receive and retain pursuant to
Section 7(a)(i) hereof shall cease, and all such rights shall
thereupon become vested in the Lenders, which shall
thereupon have the sole right to receive and hold as Pledged
Collateral such dividends and interest payments;
(ii) All dividends and interest
payments which are received by the Pledgor contrary to the
provisions of clause (i) of this Section 7(b) shall be received
in trust for the Lenders, shall be segregated from other funds
of the Pledgor and shall be paid over immediately to the
Lenders as Pledged Collateral in the same form as so received
(with any necessary endorsements);
(iii) The Pledgor shall, upon the
request of the Lenders, at Pledgor's expense, use its best
efforts to obtain all necessary governmental approvals for the
sale of the Pledged Collateral, as requested by the Lenders;
(iv) The Pledgor shall, upon the
request of the Lenders, at the Pledgor's expense, do or cause
to be done all such other acts and things as may be necessary
to make such sale of the Pledged Collateral or any part
thereof valid and binding and in compliance with applicable
law.
The Pledgor will reimburse the Lenders for all expenses
incurred by the Lenders, including, without limitation,
reasonable attorneys' and accountants' fees and expenses in
connection with the foregoing. The Pledgor agrees that, in
light of the fact that federal and state securities laws impose
certain restrictions on the method by which the Pledged
Collateral may be sold, it will be commercially reasonable if
a private sale, upon at least ten (10) days' notice to the
Pledgor, is arranged so as to avoid a public offering, even
though the sales price established and/or obtained at such
private sale may be substantially less than prices which could
have been obtained for such security on any market or
exchange or in any other public sale.
8. Transfers and Other Liens. The
Pledgor agrees that it will not (i) sell or otherwise dispose of,
or grant any option with respect to, any of the Pledged
Collateral without the prior written consent of the Lenders, or
(ii) create or permit to exist any Lien upon or with respect to
any of the Pledged Collateral, except for the security interest
under this Pledge Agreement.
9. Remedies. (a) The Lenders
shall have, in addition to any other rights given under this
Pledge Agreement or by law, all of the rights and remedies
with respect to the Pledged Collateral of a secured party
under the Uniform Commercial Code as in effect in the State
of New York. After the occurrence of an Event of Default
and following written notice to the Pledgor, the Lenders
(personally or through an agent) are hereby authorized and
empowered to transfer and register in their name or in the
name of their nominee the whole or any part of the Pledged
Collateral, to exercise all voting rights with respect thereto, to
collect and receive all cash dividends and other distributions
made thereon, and to otherwise act with respect to the
Pledged Collateral as though the Lenders were the outright
owners thereof. The Pledgor hereby irrevocably constitutes
and appoints each Lender as the proxy and attorney-in-fact of
the Pledgor, with full power of substitution to do so, such
proxy becoming effective upon the occurrence of an Event of
Default and following written notice thereof; provided,
however, that the Lenders shall have no duty to exercise any
such right or to preserve the same and shall not be liable for
any failure to do so or for any delay in doing so. In addition,
after the occurrence of an Event of Default, the Lenders shall
have such powers of sale and other powers as may be
conferred by applicable law. With respect to the Pledged
Collateral or any part thereof which shall then be in or shall
thereafter come into the possession or custody of the Lenders
or which the Lenders shall otherwise have the ability to
transfer under applicable law, each Lender may, in its sole
discretion, without notice except as specified below, after the
occurrence of an Event of Default, sell or cause the same to
be sold at any exchange, broker's board or at public or
private sale, in one or more sales or lots, at such price as
such Lender may deem best, for cash or on credit or for
future delivery, without assumption of any credit risk, and the
purchaser of any or all of the Pledged Collateral so sold shall
thereafter own the same, absolutely free from any claim,
encumbrance or right of any kind whatsoever. The Lenders
may, in their own name, or in the name of a designee or
nominee, buy the Pledged Collateral at any public sale and, if
permitted by applicable law, buy the Pledged Collateral at
any private sale. The Pledgor will pay to the Lenders all
reasonable expenses (including, without limitation, court costs
and reasonable attorneys' and paralegals' fees and expenses)
of, or incidental to, the enforcement of any of the provisions
hereof. The Lenders agree to distribute any proceeds of the
sale of the Pledged Collateral in accordance with the Loan
and Security Agreement and the Pledgor shall remain liable
for any deficiency following the sale of the Pledged
Collateral.
(b) Unless any of the Pledged
Collateral threatens to decline speedily in value or is or
becomes of a type sold on a recognized market, the Lenders
will give the Pledgor reasonable notice of the time and place
of any public sale thereof, or of the time after which any
private sale or other intended disposition is to be made. Any
sale of the Pledged Collateral conducted in conformity with
reasonable commercial practices of banks, commercial finance
companies, insurance companies or other financial institutions
disposing of property similar to the Pledged Collateral shall
be deemed to be commercially reasonable. Notwithstanding
any provision to the contrary contained herein, the Pledgor
agrees that any requirements of reasonable notice shall be met
if such notice is received by the Pledgor as provided in
Section 25 below at least ten (10) days before the time of the
sale or disposition; provided, however, that the Lenders may
give any shorter notice that is commercially reasonable under
the circumstances. Any other requirement of notice, demand
or advertisement for sale is waived, to the extent permitted by
law.
(c) In view of the fact that federal
and state securities laws may impose certain restrictions on
the method by which a sale of the Pledged Collateral may be
effected after an Event of Default, the Pledgor agrees that
after the occurrence of an Event of Default, the Lenders may,
from time to time, attempt to sell all or any part of the
Pledged Collateral by means of a private placement restricting
the bidders and prospective purchasers to those who are
qualified and will represent and agree that they are purchasing
for investment only and not for distribution. In so doing, the
Lenders may solicit offers to buy the Pledged Collateral, or
any part of it, from a limited number of investors deemed by
the Lenders, in their reasonable judgment, to be financially
responsible parties who might be interested in purchasing the
Pledged Collateral. If the Lenders solicit such offers from
not less than three (3) such investors, then the acceptance by
the Lenders of the highest offer obtained therefrom shall be
deemed to be a commercially reasonable method of disposing
of such Pledged Collateral; provided, however, that this
Section does not impose a requirement that the Lenders solicit
offers from three or more investors in order for the sale to be
commercially reasonable.
10. Security Interest Absolute. All
rights of the Lenders and security interests hereunder, and all
obligations of the Pledgor hereunder, shall be absolute and
unconditional irrespective of:
(a) Any lack of validity or
enforceability of the Loan and Security
Agreement or any other agreement or
instrument relating thereto;
(b) Any change in the time,
manner or place of payment of, or in any
other term of, all or any part of the
Liabilities, or any other amendment or
waiver of or any consent to any departure
from the Loan and Security Agreement;
(c) Any exchange, release or
non-perfection of any other collateral, or
any release or amendment or waiver of or
consent to departure from any guaranty, for
all or any part of the Liabilities; or
(d) any other circumstance which
might otherwise constitute a defense
available to, or a discharge of, the Pledgor
in respect of the Liabilities or of this
Pledge Agreement.
11. Lenders Appointed
Attorney-in-Fact. The Pledgor hereby appoints each Lender
its attorney-in-fact, with full authority, in the name of the
Pledgor or otherwise, after the occurrence of an Event of
Default, from time to time in such Lender's sole discretion, to
take any action and to execute any instrument which such
Lender may deem necessary or advisable to accomplish the
purposes of this Pledge Agreement, including, without
limitation, to receive, endorse and collect all instruments
made payable to the Pledgor representing any dividend,
interest payment or other distribution in respect of the
Pledged Collateral or any part thereof and to give full
discharge for the same and to arrange for the transfer of all or
any part of the Pledged Collateral on the books of a Direct
Subsidiary to the name of the Lenders or their nominees.
12. Waivers. (a) The Pledgor
waives presentment and demand for payment of any of the
Liabilities, protest and notice of dishonor or Event of Default
with respect to any of the Liabilities and all other notices to
which the Pledgor might otherwise be entitled except as
otherwise expressly provided herein or in the Loan and
Security Agreement.
(b) The Pledgor agrees that all of
its obligations under this Pledge Agreement shall remain in
full force and effect without defense, offset or counterclaim
of any kind, notwithstanding that the Pledgor's rights against
the Borrower may be impaired, destroyed or otherwise
affected by reason of any action or inaction on the part of the
Lenders.
(c) The Pledgor hereby expressly
waives the benefits of any laws purporting to allow a
guarantor or pledgor to revoke a continuing guaranty or
pledge with respect to any transactions occurring after the
date of the guaranty or pledge.
13. Term. This Pledge Agreement
shall remain in full force and effect until the Liabilities have
been fully and indefeasibly paid in cash, all commitments to
lend under the Loan and Security Agreement have expired
and the Loan and Security Agreement has been terminated
pursuant to its terms. Upon the termination of this Pledge
Agreement as provided above (other than as a result of the
sale of the Pledged Collateral), the Lenders will release the
security interest created hereunder and, if they then have
possession of the Pledged Stock, will deliver the Pledged
Stock and the Powers to the Pledgor.
14. Definitions. The singular shall
include the plural and vice versa and any gender shall include
any other gender as the context may require.
15. Successors and Assigns. This
Pledge Agreement shall be binding upon and inure to the
benefit of the Pledgor, the Lenders and their respective
successors and assigns. The Pledgor's successors and assigns
shall include, without limitation, a receiver, trustee or
debtor-in-possession of or for the Pledgor.
16. GOVERNING LAW. THIS
PLEDGE AGREEMENT HAS BEEN EXECUTED AND
DELIVERED BY THE PARTIES HERETO IN NEW
YORK, NEW YORK. ANY DISPUTE BETWEEN THE
LENDERS AND THE PLEDGOR ARISING OUT OF OR
RELATED TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS
PLEDGE AGREEMENT, AND WHETHER ARISING IN
CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL
BE RESOLVED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, INCLUDING SECTION 5-
1401 OF THE GENERAL OBLIGATIONS LAWS BUT
OTHERWISE WITHOUT REGARD TO CONFLICTS OF
LAWS PROVISIONS.
17. Consent to Jurisdiction;
Counterclaims; Forum Non Conveniens. (a) Exclusive
Jurisdiction. Except as provided in subsection (b) of this
Section 17, the Lenders and the Pledgor agree that all
disputes between them arising out of or related to the
relationship established between them in connection with this
Pledge Agreement, whether arising in contract, tort, equity, or
otherwise, shall be resolved only by state or federal courts
located in New York, New York, but the parties acknowledge
that any appeals from those courts may have to be heard by a
court located outside of New York, New York.
(b) Other Jurisdictions. The
Lenders shall have the right to proceed against the Pledgor or
its property in a court in any location to enable the Lenders to
obtain personal jurisdiction over the Pledgor, to realize on the
Pledged Collateral or any other security for the Liabilities or
to enforce a judgment or other court order entered in favor of
the Lenders. The Pledgor shall not assert any permissive
counterclaims in any proceeding brought by the Lenders
arising out of or relating to this Pledge Agreement.
(c) Venue; Forum Non
Conveniens. Each of the Pledgor and each of the Lenders
waives any objection that it may have (including, without
limitation, any objection to the laying of venue or based on
forum non conveniens) to the location of the court in which
any proceeding is commenced in accordance with this Section
17.
18. WAIVER OF JURY TRIAL.
EACH OF THE PLEDGOR AND THE LENDERS WAIVES
ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, BETWEEN THE LENDERS AND THE
PLEDGOR ARISING OUT OF OR RELATED TO THE
TRANSACTIONS CONTEMPLATED BY THIS PLEDGE
AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH. EITHER
THE PLEDGOR OR A LENDER MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS
PLEDGE AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.
19. Waiver of Bond. The Pledgor
waives the posting of any bond otherwise required of the
Lenders in connection with any judicial process or proceeding
to realize on the Collateral or any other security for the
Liabilities, to enforce any judgment or other court order
entered in favor of the Lenders, or to enforce by specific
performance, temporary restraining order, or preliminary or
permanent injunction, this Pledge Agreement or any other
agreement or document between the Lenders and the Pledgor.
20. Advice of Counsel. The
Pledgor represents and warrants to the Lenders that it has
consulted with its legal counsel regarding all waivers under
this Pledge Agreement, including without limitation those
under Section 12 and Sections 16 through 19 hereof, that it
believes that it fully understands all rights that it is waiving
and the effect of such waivers, that it assumes the risk of any
misunderstanding that it may have regarding any of the
foregoing, and that it intends that such waivers shall be a
material inducement to the Lenders to extend the indebtedness
secured hereby.
21. Severability. Whenever
possible, each provision of this Pledge Agreement shall be
interpreted in such manner as to be effective and valid under
applicable law, but, if any provision of this Pledge Agreement
shall be held to 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 Pledge
Agreement.
22. Further Assurances. The
Pledgor agrees that it will cooperate with the Lenders and
will execute and deliver, or cause to be executed and
delivered, all such other stock powers, proxies, instruments
and documents, and will take all such other actions,
including, without limitation, the execution and filing of
financing statements, as the Lenders may reasonably request
from time to time in order to carry out the provisions and
purposes of this Pledge Agreement.
23. The Lenders' Duty of Care.
The Lenders shall not be liable for any acts, omissions, errors
of judgment or mistakes of fact or law including, without
limitation, acts, omissions, errors or mistakes with respect to
the Pledged Collateral, except for those arising out of or in
connection with the Lenders' (i) gross negligence or willful
misconduct, or (ii) failure to use reasonable care with respect
to the safe custody of the Pledged Collateral in the Lenders'
possession. Without limiting the generality of the foregoing,
the Lenders shall be under no obligation to take any steps
necessary to preserve rights in the Pledged Collateral against
any other parties but may do so at its option. All expenses
incurred in connection therewith shall be for the sole account
of the Pledgor, and shall constitute part of the Liabilities
secured hereby.
24. Notices. All notices and other
communications required or desired to be served, given or
delivered hereunder shall be made in writing or by a
telecommunications device capable of creating a written
record and shall be addressed to the party to be notified as
follows:
if to the Pledgor, at
Aegis Capital Markets, Inc. (d/b/a
Markets)
525 Washington Boulevard
Jersey City, New Jersey 07310
Attention: President
Telecopy: (201) 418-7379
if to the Lender, at
III Finance, Ltd.
III Global, Ltd.
c/o Admiral Administration Ltd.
Anchorage Center, 2nd Floor
Grand Cayman, Cayman Islands
British West Indies
Attention: David Bree
Telecopy: (345) 949-0705
with a copy to
III Offshore Advisors
250 South Australian Avenue, Suite
600
West Palm Beach, Florida 33401
Attention: Robert Fasulo
Telecopy: (407) 655-5496
or, as to each party, at such other address as designated by
such party in a written notice to the other party. All such
notices and communications shall be deemed to be validly
served, given or delivered (i) three (3) days following deposit
in the United States mails, with proper postage prepaid; (ii)
upon delivery thereof if delivered by hand to the party to be
notified; (iii) one Business Day after delivery thereof to a
reputable overnight courier service, with delivery charges
prepaid; or (iv) upon transmission thereof with confirmation
of successful transmission from the sending
telecommunications device, if sent by telecommunications
device.
25. Amendments, Waivers and
Consents. No amendment or waiver of any provision of this
Pledge Agreement nor consent to any departure by the
Pledgor herefrom, shall in any event be effective unless the
same shall be in writing and signed by each of the Lenders
pursuant to the terms of the Loan and Security Agreement,
and then such amendment, waiver or consent shall be
effective only in the specific instance and for the specific
purpose for which given.
26. Section Headings. The section
headings herein are for convenience of reference only, and
shall not affect in any way the interpretation of any of the
provisions hereof.
27. Execution in Counterparts.
This Pledge Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of
which shall together constitute one and the same agreement.
28. Merger. This Pledge
Agreement represents the final agreement of the Pledgor with
respect to the matters contained herein and may not be
contradicted by evidence of prior or contemporaneous
agreements, or subsequent oral agreements, between the
Pledgor and the Lenders.
29. Bailment, Agency for
Possession. Each of the Lenders hereby appoints [III
Offshore Advisors] as their agent for purposes of perfecting
their respective security interests and liens on the Pledged
Collateral. To the extent that either Lender obtains
possession of the Pledged Collateral, such Lender shall hold
such Pledged Collateral as agent for itself and the other
Lender.
<PAGE>
IN WITNESS WHEREOF, the
Pledgor and the Lenders have executed this Pledge
Agreement as of the date set forth above.
AEGIS CAPITAL MARKETS, INC.
(D/B/A MARKETS)
By: _________________________
Name: ___________________
Title: __________________
III
FINA
NCE,
LTD.
By: _________________________
Name: ___________________
Title: __________________
III GLOBAL, LTD.
By:
_________________________
Name: ___________________
Title: __________________
<PAGE>
ACKNOWLEDGMENT
The undersigned hereby
acknowledges receipt of a copy of the foregoing Pledge
Agreement, agrees promptly to note on its books the security
interests granted under such Pledge Agreement, and waives
any rights or requirement at any time hereafter to receive a
copy of such Pledge Agreement in connection with the
registration of any Pledged Collateral in the name of the
Lenders or its nominee or the exercise of voting rights by the
Lenders or their nominees.
RECEIVABLES FINANCE 92-1
INCORPORATED
By:
___________________________
Name: _____________________
Title: ______________________
RECEIVABLES FINANCE 93-1
INCORPORATED
By:
___________________________
Name: _____________________
Title: ______________________
MF
RECEIVABLE FINANCE COMPANY
By:
___________________________
Name: _____________________
Title: ______________________
MF
COMMISSION FINANCE 1994-1
CORPORATION
By:
___________________________
Name: _____________________
Title: ______________________
EXHIBIT A
to
PLEDGE AGREEMENT
dated as of March __, 1997
Pledged Stock Certificates
Number of
Name of Direct
Issued and
Subsidiary
Outstanding Shares
Receivables Finance 92-1 Incorporated
[__________]
Receivables Finance 93-1 Incorporated
[__________]
MF Receivable Finance Company
[__________]
MF Commission Finance 1994-1 Corporation
[__________]
<PAGE>
EXHIBIT B
to
PLEDGE AGREEMENT
dated as of March __, 1997
Form of Stock Power
STOCK POWER
FOR VALUE RECEIVED, the
undersigned does hereby sell, assign and transfer to
_____________________________ _____ Shares of Common
Stock of [INSERT NAME OF DIRECT SUBSIDIARY], a
Delaware corporation, represented by Certificate No. __ (the
"Stock"), standing in the name of the undersigned on the
books of said corporation and does hereby irrevocably
constitute and appoint
___________________________________ as the
undersigned's true and lawful attorney, for it and in its name
and stead, to sell, assign and transfer all or any of the Stock,
and for that purpose to make and execute all necessary acts of
assignment and transfer thereof; and to substitute one or more
persons with like full power, hereby ratifying and confirming
all that said attorney or substitute or substitutes shall lawfully
do by virtue hereof.
Dated: _______________
AEGIS
CAPITAL MARKETS, INC.
(D/B/A MARKETS)
By:
_________________________
Title:
<PAGE>
TABLE OF CONTENTS
1. Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Security for Liabilities . . . . . . . . . . . . . . . . . . . . . 2
3. Pledged Collateral Adjustments . . . . . . . . . . . . . . . . . . 2
4. Subsequent Changes Affecting Pledged
Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5. Representations and Warranties . . . . . . . . . . . . . . . . . . 3
6. Voting Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7. Dividends and Other Distributions. . . . . . . . . . . . . . . . . 4
8. Transfers and Other Liens. . . . . . . . . . . . . . . . . . . . . 5
9. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
10. Security Interest Absolute. . . . . . . . . . . . . . . . . . . . 7
11. Lenders Appointed Attorney-in-Fact. . . . . . . . . . . . . . . . 7
12. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
13. Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
14. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
15. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . 8
16. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . 8
17. Consent to Jurisdiction;
Counterclaims; Forum Non Conveniens. . . . . . . . . . . . . . . . . . 8
18. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . . 9
19. Waiver of Bond. . . . . . . . . . . . . . . . . . . . . . . . . . 9
20. Advice of Counsel . . . . . . . . . . . . . . . . . . . . . . . . 9
21. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
22. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . . 9
23. The Lenders' Duty of Care . . . . . . . . . . . . . . . . . . . .10
24. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
25. Amendments, Waivers and Consents. . . . . . . . . . . . . . . . .11
26. Section Headings. . . . . . . . . . . . . . . . . . . . . . . . .11
27. Execution in Counterparts . . . . . . . . . . . . . . . . . . . .11
28. Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
29. Bailment, Agency for Possession . . . . . . . . . . . . . . . . .11
EXHIBITS
EXHIBIT A -- Pledged Stock Certificates
EXHIBIT B -- Form of Stock Power
I:\AHC_COM\10_105_6.WPD May 8, 1997 (5:1p)
EXECUTION COPY
PLEDGE AGREEMENT
between
Aegis Auto Finance, Inc.,
as Pledgor
AND
III Finance, Ltd.,
Dated as of March 14, 1997
<PAGE>
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT (the
"Pledge Agreement"), dated as of March 14, 1997, is
executed by and between AEGIS AUTO FINANCE, INC., a
Delaware corporation (the "Pledgor"), and III FINANCE,
LTD. (the "Lender"). Capitalized terms used herein and not
otherwise defined herein shall have the respective meanings
ascribed to such terms in that certain Master Amendment to
Loan and Security Agreements dated as of March 14, 1997
(the "Master Amendment") by and among Pledgor, Lender
and Aegis Consumer Finance, Inc. ("ACF").
WITNESSETH:
WHEREAS, the Pledgor and ACF
in order to secure the Secured Obligations under certain loan
agreements entered into with the Lender (the "Loan
Agreements") have previously pledged to the Lender all of
their right, title and interest to certain partnerships and
subsidiaries;
WHEREAS, the Pledgor directly
owns 100% of the issued and outstanding capital stock of
Aegis Auto Funding Corp. IV (the "SPC"), Aegis Auto
Funding Corp. II ("AAFC II") and Aegis Auto Funding Corp.
("AAFC") (such direct subsidiaries and any other subsidiary
acquired or formed by the Pledgor, the "Direct Subsidiaries")
and will derive direct and indirect economic benefit from the
executor and delivery of the Master Amendment; and
WHEREAS, the Lender has
required, as a condition to its entering into the Master
Amendment, that the Pledgor execute and deliver this Pledge
Agreement;
NOW, THEREFORE, for and in
consideration of the foregoing and of any financial
accommodations or extensions of credit (including, without
limitation, any loan or advance by renewal, refinancing or
extension of the Loan Agreements described hereinabove or
otherwise) heretofore, now or hereafter made to or for the
benefit of the Pledgor pursuant to the Loan Agreements, or
any other agreement, instrument or document executed
pursuant to or in connection therewith, and for other good
and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the Pledgor and the Lender
hereby agree as follows:
1. Pledge. The Pledgor hereby
pledges to the Lender, and grants to the Lender a security
interest in, the following (collectively, the "Pledged
Collateral"):
(a) The shares of the capital stock
of each Direct Subsidiary, now or at any
time or times hereafter owned by the
Pledgor, and the certificates representing
the shares of such capital stock (such
now-owned shares being identified on
Exhibit A next to each Direct Subsidiary),
all options and warrants for the purchase of
shares of the stock of any Direct
Subsidiary now or hereafter held in the
name of the Pledgor (all of said capital
stock, options and warrants and all capital
stock held in the name of the Pledgor as a
result of the exercise of such options or
warrants being hereinafter collectively
referred to as the "Pledged Stock"),
herewith in the case of the capital stock of
the SPC only, delivered to the Lender
accompanied by stock powers in the form
of Exhibit B attached hereto and made a
part hereof (the "Powers") duly executed in
blank, and all dividends, cash, instruments
and other property from time to time
received, receivable or otherwise
distributed in respect of, or in exchange
for, any or all of the Pledged Stock it
being understood that the stock powers for
each Direct Subsidiary other than the SPC
have been delivered to the Lender in
connection with the Loan Agreements.
(b) All additional shares of stock
of any Direct Subsidiary from time to time
acquired by the Pledgor in any manner,
and the certificates representing such
additional shares (any such additional
shares shall constitute part of the Pledged
Stock and the Lender is irrevocably
authorized to amend Exhibit A from time
to time to reflect such additional shares),
and all options, warrants, dividends, cash,
instruments and other rights and options
from time to time received, receivable or
otherwise distributed in respect of or in
exchange for any or all of such shares;
(c) The property and interests in
property described in Section 3 below; and
(d) All proceeds of the foregoing.
2. Security for Liabilities. The
Pledged Collateral secures the prompt payment, performance
and observance of (i) the Pledgor's obligations and liabilities
under the Loan Agreements and each agreement, document or
instrument executed pursuant to or in connection with any
Loan Agreement, including the "Secured Obligations" (as
such term is defined in each of the Loan Agreements) and (ii)
the Pledgor's obligations and liabilities under this Pledge
Agreement and each agreement, document or instrument
executed pursuant to or in connection with this Pledge
Agreement (all such obligations and liabilities of the Pledgor
now or hereafter existing being hereinafter referred to as the
"Liabilities").
3. Pledged Collateral Adjustments.
If, during the term of this Pledge Agreement:
(a) Any stock dividend,
reclassification, readjustment or other
change is declared or made in the capital
structure of any Direct Subsidiary, or any
option included within the Pledged
Collateral is exercised, or both, or
(b) Any subscription warrants or
any other rights or options shall be issued
in connection with the Pledged Collateral,
then all new, substituted and additional shares, warrants,
rights, options or other securities, issued by reason of any of
the foregoing, shall be immediately delivered to and held by
the Lender under the terms of this Pledge Agreement and
shall constitute Pledged Collateral hereunder; provided,
however, that nothing contained in this Section 3 shall be
deemed to permit any stock dividend, issuance of additional
stock, warrants, rights or options, reclassification,
readjustment or other change in the capital structure of a
Direct Subsidiary which is not permitted by any Loan
Agreement.
4. Subsequent Changes Affecting
Pledged Collateral. The Pledgor represents and warrants that
it has made its own arrangements for keeping itself informed
of changes or potential changes affecting the Pledged
Collateral (including, but not limited to, rights to convert,
rights to subscribe, payment of dividends, reorganization or
other exchanges, tender offers and voting rights), and the
Pledgor agrees that the Lender shall have no obligation to
inform the Pledgor of any such changes or potential changes
or to take any action or omit to take any action with respect
thereto. The Lender may, after the occurrence of an Event of
Default, without notice and at its option, transfer or register
the Pledged Collateral or any part thereof into its or its
nominee's name with or without any indication that such
Pledged Collateral is subject to the security interest hereunder.
In addition, the Lender may at any time exchange certificates
or instruments representing or evidencing Pledged Shares for
certificates or instruments of smaller or larger denominations.
5. Representations and Warranties.
The Pledgor represents and warrants as follows:
(a) The Pledgor is the legal and
beneficial owner of the Pledged Stock, which represents
100% of the issued and outstanding common stock of each
Direct Subsidiary identified on Exhibit A, free and clear of
any Lien except for the security interest created by this
Pledge Agreement or pursuant to the Loan Agreements and
Lender Pledge Agreement and the Pledgor owns no other
stock other than that of Aegis Auto Funding Corp. III, the
stock of which is specifically excluded from the security
interest granted hereby.
(b) The Pledgor has full corporate
power and authority to enter into this Pledge Agreement;
(c) There are no restrictions upon
the voting rights associated with, or upon the transfer of, any
of the Pledged Collateral;
(d) The Pledgor has the right to
vote, pledge and grant a security interest in or otherwise
transfer such Pledged Collateral free of any Liens other than
the Lien created pursuant to this Pledge Agreement or the
Loan Agreements;
(e) No authorization, approval, or
other action by, and no notice to or filing with, any
Governmental Authority or regulatory body is required either
(i) for the pledge of the Pledged Collateral pursuant to this
Pledge Agreement or for the execution, delivery or
performance of this Pledge Agreement by the Pledgor or (ii)
for the exercise by the Lender of the voting or other rights
provided for in this Pledge Agreement or the remedies in
respect of the Pledged Collateral pursuant to this Pledge
Agreement (except as may be required in connection with
such disposition by laws affecting the offering and sale of
securities generally);
(f) The pledge of the Pledged
Collateral pursuant to this Pledge Agreement creates a valid
and perfected security interest in the Pledged Collateral, in
favor of the Lender, securing the payment and performance of
the Liabilities; and
(g) The Powers delivered to the
Lender are duly executed and give the Lender the authority
they purport to confer.
6. Voting Rights. During the term
of this Pledge Agreement, and except as provided in this
Section 7(b) below, the Pledgor shall have the right to vote
the Pledged Stock on all corporate questions in a manner not
inconsistent with the terms of this Pledge Agreement, the
Loan Agreements and any other agreement, instrument or
document executed pursuant thereto or in connection
therewith. After the occurrence of an Event of Default, the
Lender or its nominee may, at the Lender or such nominee's
option and following written notice from the Lender to the
Pledgor, exercise all voting powers pertaining to the Pledged
Collateral, including the right to take action by shareholder
consent. Such authorization shall constitute an irrevocable
voting proxy from the Pledgor to the Lender or, at the
Lender's option, to the Lender's nominee.
7. Dividends and Other
Distributions. (a) So long as no Event of Default or Default
shall have occurred:
(i) The Pledgor shall be entitled to
receive and retain any and all dividends and interest paid in
respect of the Pledged Collateral, provided, however, that any
and all
(A) dividends and interest paid or
payable other than in cash with respect to,
and instruments and other property
received, receivable or otherwise
distributed with respect to, or in exchange
for, any of the Pledged Collateral;
(B) dividends and other
distributions paid or payable in cash with
respect to any of the Pledged Collateral on
account of a partial or total liquidation or
dissolution or in connection with a
reduction of capital, capital surplus or
paid-in surplus; and
(C) cash paid, payable or otherwise
distributed with respect to principal of, or
in redemption of, or in exchange for, any
of the Pledged Collateral;
shall be Pledged Collateral, and shall be forthwith delivered
to the Lender to hold as Pledged Collateral and shall, if
received by the Pledgor, be received in trust for the Lender,
be segregated from the other property or funds of the
Pledgor, and be delivered immediately to the Lender as
Pledged Collateral in the same form as so received (with any
necessary endorsement); and
(ii) The Lender shall execute and
deliver (or cause to be executed and delivered) to the Pledgor
all such proxies and other instruments as the Pledgor may
reasonably request for the purpose of enabling the Pledgor to
receive the dividends or interest payments which it is
authorized to receive and retain pursuant to clause (i) above.
(b) After the occurrence of an
Event of Default:
(i) All rights of the Pledgor to
receive the dividends and interest payments which it would
otherwise be authorized to receive and retain pursuant to
Section 7(a)(i) hereof shall cease, and all such rights shall
thereupon become vested in the Lender, which shall
thereupon have the sole right to receive and hold as Pledged
Collateral such dividends and interest payments;
(ii) All dividends and interest
payments which are received by the Pledgor contrary to the
provisions of clause (i) of this Section 7(b) shall be received
in trust for the Lender, shall be segregated from other funds
of the Pledgor and shall be paid over immediately to the
Lender as Pledged Collateral in the same form as so received
(with any necessary endorsements);
(iii) The Pledgor shall, upon the
request of the Lender, at Pledgor's expense, use its best
efforts to obtain all necessary governmental approvals for the
sale of the Pledged Collateral, as requested by the Lender;
(iv) The Pledgor shall, upon the
request of the Lender, at the Pledgor's expense, do or cause
to be done all such other acts and things as may be necessary
to make such sale of the Pledged Collateral or any part
thereof valid and binding and in compliance with applicable
law.
The Pledgor will reimburse the Lender for all expenses
incurred by the Lender, including, without limitation,
reasonable attorneys' and accountants' fees and expenses in
connection with the foregoing. The Pledgor agrees that, in
light of the fact that federal and state securities laws impose
certain restrictions on the method by which the Pledged
Collateral may be sold, it will be commercially reasonable if
a private sale, upon at least ten (10) days' notice to the
Pledgor, is arranged so as to avoid a public offering, even
though the sales price established and/or obtained at such
private sale may be substantially less than prices which could
have been obtained for such security on any market or
exchange or in any other public sale.
8. Transfers and Other Liens. The
Pledgor agrees that it will not (i) sell or otherwise dispose of,
or grant any option with respect to, any of the Pledged
Collateral without the prior written consent of the Lender, or
(ii) create or permit to exist any Lien upon or with respect to
any of the Pledged Collateral except for the security interest
under this Pledge Agreement and in connection with the Loan
Agreements.
9. Remedies. (a) The Lender
shall have, in addition to any other rights given under this
Pledge Agreement or by law, all of the rights and remedies
with respect to the Pledged Collateral of a secured party
under the Uniform Commercial Code as in effect in the State
of New York. After the occurrence of an Event of Default
and following written notice to the Pledgor, the Lender
(personally or through an agent) is hereby authorized and
empowered to transfer and register in its name or in the name
of its nominee the whole or any part of the Pledged
Collateral, to exercise all voting rights with respect thereto, to
collect and receive all cash dividends and other distributions
made thereon, and to otherwise act with respect to the
Pledged Collateral as though the Lender were the outright
owner thereof. The Pledgor hereby irrevocably constitutes
and appoints the Lender as the proxy and attorney-in-fact of
the Pledgor, with full power of substitution to do so, such
proxy becoming effective upon the occurrence of an Event of
Default and following written notice thereof; provided,
however, that the Lender shall have no duty to exercise any
such right or to preserve the same and shall not be liable for
any failure to do so or for any delay in doing so. In addition,
after the occurrence of an Event of Default, the Lender shall
have such powers of sale and other powers as may be
conferred by applicable law. With respect to the Pledged
Collateral or any part thereof which shall then be in or shall
thereafter come into the possession or custody of the Lender
or which the Lender shall otherwise have the ability to
transfer under applicable law, the Lender may, in its sole
discretion, without notice except as specified below, after the
occurrence of an Event of Default, sell or cause the same to
be sold at any exchange, broker's board or at public or
private sale, in one or more sales or lots, at such price as the
Lender may deem best, for cash or on credit or for future
delivery, without assumption of any credit risk, and the
purchaser of any or all of the Pledged Collateral so sold shall
thereafter own the same, absolutely free from any claim,
encumbrance or right of any kind whatsoever. The Lender
may, in its own name, or in the name of a designee or
nominee, buy the Pledged Collateral at any public sale and, if
permitted by applicable law, buy the Pledged Collateral at
any private sale. The Pledgor will pay to the Lender all
reasonable expenses (including, without limitation, court costs
and reasonable attorneys' and paralegals' fees and expenses)
of, or incidental to, the enforcement of any of the provisions
hereof. The Lender agrees to distribute any proceeds of the
sale of the Pledged Collateral in accordance with the Loan
Agreements and the Master Amendment and the Pledgor shall
remain liable for any deficiency following the sale of the
Pledged Collateral.
(b) Unless any of the Pledged
Collateral threatens to decline speedily in value or is or
becomes of a type sold on a recognized market, the Lender
will give the Pledgor reasonable notice of the time and place
of any public sale thereof, or of the time after which any
private sale or other intended disposition is to be made. Any
sale of the Pledged Collateral conducted in conformity with
reasonable commercial practices of banks, commercial finance
companies, insurance companies or other financial institutions
disposing of property similar to the Pledged Collateral shall
be deemed to be commercially reasonable. Notwithstanding
any provision to the contrary contained herein, the Pledgor
agrees that any requirements of reasonable notice shall be met
if such notice is received by the Pledgor as provided in
Section 25 below at least ten (10) days before the time of the
sale or disposition; provided, however, that the Lender may
give any shorter notice that is commercially reasonable under
the circumstances. Any other requirement of notice, demand
or advertisement for sale is waived, to the extent permitted by
law.
(c) In view of the fact that federal
and state securities laws may impose certain restrictions on
the method by which a sale of the Pledged Collateral may be
effected after an Event of Default, the Pledgor agrees that
after the occurrence of an Event of Default, the Lender may,
from time to time, attempt to sell all or any part of the
Pledged Collateral by means of a private placement restricting
the bidders and prospective purchasers to those who are
qualified and will represent and agree that they are purchasing
for investment only and not for distribution. In so doing, the
Lender may solicit offers to buy the Pledged Collateral, or
any part of it, from a limited number of investors deemed by
the Lender, in its reasonable judgment, to be financially
responsible parties who might be interested in purchasing the
Pledged Collateral. If the Lender solicits such offers from
not less than three (3) such investors, then the acceptance by
the Lender of the highest offer obtained therefrom shall be
deemed to be a commercially reasonable method of disposing
of such Pledged Collateral; provided, however, that this
Section does not impose a requirement that the Lender solicit
offers from three or more investors in order for the sale to be
commercially reasonable.
10. Security Interest Absolute. All
rights of the Lender and security interests hereunder, and all
obligations of the Pledgor hereunder, shall be absolute and
unconditional irrespective of:
(a) Any lack of validity or
enforceability of the Loan Agreements or
any other agreement or instrument relating
thereto;
(b) Any change in the time,
manner or place of payment of, or in any
other term of, all or any part of the
Liabilities, or any other amendment or
waiver of or any consent to any departure
from the Loan Agreements;
(c) Any exchange, release or
non-perfection of any other collateral, or
any release or amendment or waiver of or
consent to departure from any guaranty, for
all or any part of the Liabilities; or
(d) any other circumstance which
might otherwise constitute a defense
available to, or a discharge of, the Pledgor
in respect of the Liabilities or of this
Pledge Agreement.
11. Lender Appointed
Attorney-in-Fact. The Pledgor hereby appoints the Lender its
attorney-in-fact, with full authority, in the name of the
Pledgor or otherwise, after the occurrence of an Event of
Default, from time to time in the Lender's sole discretion, to
take any action and to execute any instrument which the
Lender may deem necessary or advisable to accomplish the
purposes of this Pledge Agreement, including, without
limitation, to receive, endorse and collect all instruments
made payable to the Pledgor representing any dividend,
interest payment or other distribution in respect of the
Pledged Collateral or any part thereof and to give full
discharge for the same and to arrange for the transfer of all or
any part of the Pledged Collateral on the books of a Direct
Subsidiary to the name of the Lender or its nominee.
12. Waivers. (a) The Pledgor
waives presentment and demand for payment of any of the
Liabilities, protest and notice of dishonor or Event of Default
with respect to any of the Liabilities and all other notices to
which the Pledgor might otherwise be entitled except as
otherwise expressly provided herein or in the Loan
Agreements.
(b) The Pledgor agrees that all of
its obligations under this Pledge Agreement shall remain in
full force and effect without defense, offset or counterclaim
of any kind.
(c) The Pledgor hereby expressly
waives the benefits of any laws purporting to allow a
guarantor or pledgor to revoke a continuing guaranty or
pledge with respect to any transactions occurring after the
date of the guaranty or pledge.
13. Term. This Pledge Agreement
shall remain in full force and effect until the Liabilities have
been fully and indefeasibly paid in cash, all obligations if the
Pledgor in connection with the Loan Agreements have been
repaid and such Loan Agreements have been terminated
pursuant to their terms. Upon the termination of this Pledge
Agreement as provided above (other than as a result of the
sale of the Pledged Collateral), the Lender will release the
security interest created hereunder and, if they then have
possession of the Pledged Stock, will deliver the Pledged
Stock and the Powers to the Pledgor.
14. Definitions. The singular shall
include the plural and vice versa and any gender shall include
any other gender as the context may require.
15. Successors and Assigns. This
Pledge Agreement shall be binding upon and inure to the
benefit of the Pledgor, the Lender and their respective
successors and assigns. The Pledgor's successors and assigns
shall include, without limitation, a receiver, trustee or
debtor-in-possession of or for the Pledgor.
16. GOVERNING LAW. THIS
PLEDGE AGREEMENT HAS BEEN EXECUTED AND
DELIVERED BY THE PARTIES HERETO IN NEW
YORK, NEW YORK. ANY DISPUTE BETWEEN THE
LENDER AND THE PLEDGOR ARISING OUT OF OR
RELATED TO THE RELATIONSHIP ESTABLISHED
BETWEEN THEM IN CONNECTION WITH THIS
PLEDGE AGREEMENT, AND WHETHER ARISING IN
CONTRACT, TORT, EQUITY, OR OTHERWISE, SHALL
BE RESOLVED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK, INCLUDING SECTION 5-
1401 OF THE GENERAL OBLIGATIONS LAWS BUT
OTHERWISE WITHOUT REGARD TO CONFLICTS OF
LAWS PROVISIONS.
17. Consent to Jurisdiction;
Counterclaims; Forum Non Conveniens. (a) Exclusive
Jurisdiction. Except as provided in subsection (b) of this
Section 17, the Lender and the Pledgor agree that all disputes
between them arising out of or related to the relationship
established between them in connection with this Pledge
Agreement, whether arising in contract, tort, equity, or
otherwise, shall be resolved only by state or federal courts
located in New York, New York, but the parties acknowledge
that any appeals from those courts may have to be heard by a
court located outside of New York, New York.
(b) Other Jurisdictions. The
Lender shall have the right to proceed against the Pledgor or
its property in a court in any location to enable the Lender to
obtain personal jurisdiction over the Pledgor, to realize on the
Pledged Collateral or any other security for the Liabilities or
to enforce a judgment or other court order entered in favor of
the Lender. The Pledgor shall not assert any permissive
counterclaims in any proceeding brought by the Lender
arising out of or relating to this Pledge Agreement.
(c) Venue; Forum Non
Conveniens. Each of the Pledgor and the Lender waives any
objection that it may have (including, without limitation, any
objection to the laying of venue or based on forum non
conveniens) to the location of the court in which any
proceeding is commenced in accordance with this Section 17.
18. WAIVER OF JURY TRIAL.
EACH OF THE PLEDGOR AND THE Lender WAIVES
ANY RIGHT TO TRIAL BY JURY IN ANY DISPUTE,
WHETHER SOUNDING IN CONTRACT, TORT, OR
OTHERWISE, BETWEEN THE Lender AND THE
PLEDGOR ARISING OUT OF OR RELATED TO THE
TRANSACTIONS CONTEMPLATED BY THIS PLEDGE
AGREEMENT OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH. EITHER
THE PLEDGOR OR THE Lender MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF THIS
PLEDGE AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT
TO TRIAL BY JURY.
19. Waiver of Bond. The Pledgor
waives the posting of any bond otherwise required of the
Lender in connection with any judicial process or proceeding
to realize on the Collateral or any other security for the
Liabilities, to enforce any judgment or other court order
entered in favor of the Lender, or to enforce by specific
performance, temporary restraining order, or preliminary or
permanent injunction, this Pledge Agreement or any other
agreement or document between the Lender and the Pledgor.
20. Advice of Counsel. The
Pledgor represents and warrants to the Lender that it has
consulted with its legal counsel regarding all waivers under
this Pledge Agreement, including without limitation those
under Section 12 and Sections 16 through 19 hereof, that it
believes that it fully understands all rights that it is waiving
and the effect of such waivers, that it assumes the risk of any
misunderstanding that it may have regarding any of the
foregoing, and that it intends that such waivers shall be a
material inducement to the Lender to extend the indebtedness
secured hereby.
21. Severability. Whenever
possible, each provision of this Pledge Agreement shall be
interpreted in such manner as to be effective and valid under
applicable law, but, if any provision of this Pledge Agreement
shall be held to 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 Pledge
Agreement.
22. Further Assurances. The
Pledgor agrees that it will cooperate with the Lender and will
execute and deliver, or cause to be executed and delivered, all
such other stock powers, proxies, instruments and documents,
and will take all such other actions, including, without
limitation, the execution and filing of financing statements, as
the Lender may reasonably request from time to time in order
to carry out the provisions and purposes of this Pledge
Agreement.
23. The Lender' s Duty of Care.
The Lender shall not be liable for any acts, omissions, errors
of judgment or mistakes of fact or law including, without
limitation, acts, omissions, errors or mistakes with respect to
the Pledged Collateral, except for those arising out of or in
connection with the Lender's (i) gross negligence or willful
misconduct, or (ii) failure to use reasonable care with respect
to the safe custody of the Pledged Collateral in the Lender's
possession. Without limiting the generality of the foregoing,
the Lender shall be under no obligation to take any steps
necessary to preserve rights in the Pledged Collateral against
any other parties but may do so at its option. All expenses
incurred in connection therewith shall be for the sole account
of the Pledgor, and shall constitute part of the Liabilities
secured hereby.
24. Notices. All notices and other
communications required or desired to be served, given or
delivered hereunder shall be made in writing or by a
telecommunications device capable of creating a written
record and shall be addressed to the party to be notified as
follows:
if to the Pledgor, at
Aegis Auto Finance, Inc.
525 Washington Boulevard
Jersey City, New Jersey 07310
Attention: President
Telecopy: (201) 418-7379
if to the Lender, at
III Finance, Ltd.
c/o Admiral Administration Ltd.
Anchorage Center, 2nd Floor
Grand Cayman, Cayman Islands
British West Indies
Attention: David Bree
Telecopy: (345) 949-0705
with copies to
III Offshore Advisors
250 South Australian Avenue, Suite
600
West Palm Beach, Florida 33401
Attention: Robert Fasulo
Telecopy: (407) 655-5496
or, as to each party, at such other address as designated by
such party in a written notice to the other party. All such
notices and communications shall be deemed to be validly
served, given or delivered (i) three (3) days following deposit
in the United States mails, with proper postage prepaid; (ii)
upon delivery thereof if delivered by hand to the party to be
notified; (iii) one Business Day after delivery thereof to a
reputable overnight courier service, with delivery charges
prepaid; or (iv) upon transmission thereof with confirmation
of successful transmission from the sending
telecommunications device, if sent by telecommunications
device.
25. Amendments, Waivers and
Consents. No amendment or waiver of any provision of this
Pledge Agreement nor consent to any departure by the
Pledgor herefrom, shall in any event be effective unless the
same shall be in writing and signed by the Lender and then
such amendment, waiver or consent shall be effective only in
the specific instance and for the specific purpose for which
given.
26. Section Headings. The section
headings herein are for convenience of reference only, and
shall not affect in any way the interpretation of any of the
provisions hereof.
27. Execution in Counterparts.
This Pledge Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of
which shall together constitute one and the same agreement.
28. Merger. This Pledge
Agreement represents the final agreement of the Pledgor with
respect to the matters contained herein and may not be
contradicted by evidence of prior or contemporaneous
agreements, or subsequent oral agreements, between the
Pledgor and the Lender.
<PAGE>
IN WITNESS WHEREOF, the
Pledgor and the Lender have executed this Pledge Agreement
as of the date set forth above.
AEGIS AUTO FINANCE, INC.
By: _________________________
Name: ___________________
Title: ____________________
III
FINA
NCE,
LTD.
By: _________________________
Name: ___________________
Title: ____________________
<PAGE>
ACKNOWLEDGMENT
The undersigned hereby
acknowledges receipt of a copy of the foregoing Pledge
Agreement, agrees promptly to note on its books the security
interests granted under such Pledge Agreement, and waives
any rights or requirement at any time hereafter to receive a
copy of such Pledge Agreement in connection with the
registration of any Pledged Collateral in the name of the
Lender or its nominee or the exercise of voting rights by the
Lender or its nominee.
AEGIS
AUTO FUNDING CORP. IV
By:
___________________________
Name: _____________________
Title: ______________________
AEGIS
AUTO FUNDING CORP. II
By:
___________________________
Name: _____________________
Title: ______________________
AEGIS
AUTO FUNDING CORP.
By:
___________________________
Name: _____________________
Title: ______________________
<PAGE>
EXHIBIT A
to
PLEDGE AGREEMENT
dated as of March __, 1997
Pledged Stock Certificates
Number of
Name of Direct
Issued and
Subsidiary
Outstanding Shares
Aegis Auto Funding Corp. IV
[__________]
Aegis Auto Funding Corp. II
[__________]
Aegis Auto Funding Corp.
[__________]
<PAGE>
EXHIBIT B
to
PLEDGE AGREEMENT
dated as of March __, 1997
Form of Stock Power
STOCK POWER
FOR VALUE RECEIVED, the
undersigned does hereby sell, assign and transfer to
_____________________________ _____ Shares of Common
Stock of [INSERT NAME OF DIRECT SUBSIDIARY], a
Delaware corporation, represented by Certificate No. __ (the
"Stock"), standing in the name of the undersigned on the
books of said corporation and does hereby irrevocably
constitute and appoint
___________________________________ as the
undersigned's true and lawful attorney, for it and in its name
and stead, to sell, assign and transfer all or any of the Stock,
and for that purpose to make and execute all necessary acts of
assignment and transfer thereof; and to substitute one or more
persons with like full power, hereby ratifying and confirming
all that said attorney or substitute or substitutes shall lawfully
do by virtue hereof.
Dated: _______________
AEGIS
AUTO FINANCE, INC.
By:
_________________________
Title:
<PAGE>
TABLE OF CONTENTS
1. Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. Security for Liabilities . . . . . . . . . . . . . . . . . . . . . 2
3. Pledged Collateral Adjustments . . . . . . . . . . . . . . . . . . 2
4. Subsequent Changes Affecting Pledged
Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
5. Representations and Warranties . . . . . . . . . . . . . . . . . . 3
6. Voting Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
7. Dividends and Other Distributions. . . . . . . . . . . . . . . . . 4
8. Transfers and Other Liens. . . . . . . . . . . . . . . . . . . . . 5
9. Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
10. Security Interest Absolute. . . . . . . . . . . . . . . . . . . . 7
11. Lender Appointed Attorney-in-Fact . . . . . . . . . . . . . . . . 7
12. Waivers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
13. Term. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
14. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
15. Successors and Assigns. . . . . . . . . . . . . . . . . . . . . . 8
16. GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . . . 8
17. Consent to Jurisdiction;
Counterclaims; Forum Non Conveniens. . . . . . . . . . . . . . . . . . 8
18. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . . . 9
19. Waiver of Bond. . . . . . . . . . . . . . . . . . . . . . . . . . 9
20. Advice of Counsel . . . . . . . . . . . . . . . . . . . . . . . . 9
21. Severability. . . . . . . . . . . . . . . . . . . . . . . . . . . 9
22. Further Assurances. . . . . . . . . . . . . . . . . . . . . . . .10
23. The Lender' s Duty of Care. . . . . . . . . . . . . . . . . . . .10
24. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10
25. Amendments, Waivers and Consents. . . . . . . . . . . . . . . . .11
26. Section Headings. . . . . . . . . . . . . . . . . . . . . . . . .11
27. Execution in Counterparts . . . . . . . . . . . . . . . . . . . .11
28. Merger. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .11
EXHIBITS
EXHIBIT A -- Pledged Stock Certificates
EXHIBIT B -- Form of Stock Power
I:\AHC_COM\10_105_7.WPD May 8, 1997 (5:2p)
EXECUTION COPY
AMENDMENT
NO. 6
to
LOAN & SECURITY AGREEMENT
Dated as of
February 28, 1994
(LEASE WAREHOUSE FACILITY AMENDMENT)
THIS AMENDMENT No. 6
("Amendment") dated as of March 12, 1997 is entered into among AEGIS
AEGIS ACCEPTANCE CORP., a Delaware corporation ("AAC"), AEGIS CONSUMER
FINANCE, INC., a Delaware corporation ("ACF") (each of AAC and ACF,
individually, a "Borrower"and collectively, the "Borrowers")and III
FINANCE LTD., a Cayman Islands company ("Lender"). Reference is hereby made
to that certain Loan and Security Agreement among the parties hereto
dated as of February 28, 1994 as amended by that certain Amendment
No. 1 dated as of May 25, 1994, that certain Amendment No. 2 dated as of
August 23, 1994, that certain Master Amendment ("Amendment No. 3") to Loan
and Security Agreements dated as of August 24, 1995, that certain Amendment
No. 4 dated as of September 13, 1995 and that certain Amendment No. 5
dated as of October 18, 1995 (as the same may be further amended, restated,
supplemented or otherwise modified from time to time, the "Loan Agreement",
the terms defined therein being used herein as therein defined unless
otherwise defined herein). The Borrowers and the Lender have agreed to
amend the Loan Agreement as hereinafter set forth.
SECTION 1. Amendments to the Loan Agreement. The Loan Agreement is,
effective the date hereof and subject to the satisfaction of the conditions
precedent set forth in Section 3 hereof, hereby amended as follows:
1.1 Notwithstanding anything to the contrary in the Loan Agreement,
all obligations, if any, of the Lender to make any future Loans thereunder
shall hereby cease and be of no further force and effect.
1.2 Notwithstanding anything to the contrary in the Loan Agreement,
the Borrowers shall be entitled to grant subordinate security interests
in the Collateral (i) to III Finance Ltd. and III Global Ltd. in order to
secure obligations of such lenders under that certain Loan and Security
Agreement dated as of March 12, 1997, as such agreement may be amended
or otherwise modified from time to time and (ii) to Norwest Bank Minnesota,
N.A. as trustee under that certain Indenture dated as of March ___, 1997;
provided that all such security interests are subordinated to the lien of
the Lender on terms and conditions satisfactory to the Lender.
SECTION 2. Conditions Precedent. This Amendment shall become
effective upon receipt by the Lender of (i) counterpart signature pages of
this Amendment, executed by the Lender and each of the Borrowers and (ii)
the executed reaffirmation of guaranty attached hereto.
SECTION 3. Covenants, Representations and Warranties ofthe
Borrowers.
3.l Upon the effectiveness of this Amendment, each of the
Borrowers hereby reaffirms all covenants, representations and warranties
made by it in the Loan Agreement to the extent the same are not amended
hereby and agrees that all such covenants, representations and warranties
shall be deemed to have been re-made as of the effective date of this
Amendment.
3.2 Each of the Borrowers hereby represents and warrants that this
Amendment constitutes its legal, valid and binding obligation, enforceable
against such Borrower in accordance with its terms.
SECTION 4. Reference to and Effect on the Loan Agreement.
4.l Upon the effectiveness of this Amendment, each reference in the
Loan Agreement to "this Agreement", "hereunder", "hereof", "herein" or words
of like import shall mean and be a reference to the Loan Agreement, as
amended hereby, and each reference to the Loan Agreement in any other
document, instrument or agreement executed and/or delivered in connection
with the Loan Agreement shall mean and be a reference to the Loan Agreement
as amended hereby.
4.2 Except as specifically amended above, the Loan Agreement and
all other Financing Agreements executed and/or delivered in connection
therewith shall remain in full force and effect and are hereby ratified
and confirmed.
4.3 The execution, delivery and effectiveness of this Amendment
shall not operate as a waiver of any right, power or remedy of the Lender
under the Loan Agreement or any other Financing Agreement executed in
connection therewith, nor constitute a waiver of any provision contained
therein, except as specifically set forth herein.
SECTION 5. Execution in Counterparts. This Amendment may be
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed and delivered shall
be deemed to be an original and all of which taken together shall constitute
but one and the same instrument.
SECTION 6. Governing Law. This Amendment shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 7. Headings. Section headings in this Amendment are
included herein for convenience of reference only and shall not constitute
a part of this Amendment for any other purpose.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment
to be executed by their respective officers thereunto duly authorized as of
the date first above written.
III FINANCE LTD.
By______________________________
Name:
Title:
AEGIS ACCEPTANCE CORP.
By______________________________
Name:
Title:
AEGIS CONSUMER FINANCE, INC.
By______________________________
Name:
Title:
ACKNOWLEDGMENT TO AMENDMENT NO. 6 to
LOAN AND SECURITY AGREEMENT
The Aegis Consumer Funding Group hereby consents to the agreements of the
Lender and the Borrowers contained in the foregoing Amendment No. 6 to Loan and
Security Agreement, and reaffirms all of its obligations under the Guaranty
executed by it in connection with the Loan Agreement, which Guaranty shall
remain in full force and effect, before and after giving effect to the
amendments described hereinabove, and such Guaranty is hereby ratified and
confirmed.
THE AEGIS CONSUMER FUNDING GROUP, INC.
By______________________________
Name:
Title:
EXECUTION COPY
SECURITY AGREEMENT
between
Aegis Acceptance Corp. and
Aegis Consumer Finance, Inc.,
as Grantors
AND
III Finance, Ltd. and
III Global, Ltd.,
as Secured Parties
Dated as of March 14, 1997
<PAGE>
TABLE OF CONTENTS
SECTION 1. Defined Terms . . . . . . . . .1
SECTION 2 Grant of Security. . . . . . . .3
SECTION 3. Security for Obligations;
Subordination of Security Interest. . .4
SECTION 4. Grantors Remain Liable. . . . .4
SECTION 5. Representations and Warranties.5
SECTION 6. Perfection and Maintenance of
Security Interest and Lien. . . . . . .5
SECTION 7. Financing Statements. . . . . .6
SECTION 8. Filing Costs. . . . . . . . . .6
SECTION 9. Schedule of Collateral. . . . .6
SECTION 10. Grantor Covenants . . . . . . .6
SECTION 11. The Secured Parties Appointed
Attorneys-in-Fact . . . . . . . . . . .7
SECTION 12. The Secured Parties May Perform8
SECTION 13. Secured Parties' Duties . . . .8
SECTION 14. Remedies. . . . . . . . . . . .9
SECTION 15. Exercise of Remedies. . . . . 10
SECTION 16. Injunctive Relief . . . . . . 10
SECTION 17. Interpretation and Inconsistencies;
Merger. . . . . . . . . . . . . . . . 10
SECTION 18. Expenses. . . . . . . . . . . 10
SECTION 19. Amendments, Etc.. . . . . . . 10
SECTION 20. Notices . . . . . . . . . . . 10
SECTION 21. Continuing Security Interest;
Termination . . . . . . . . . . . . . 11
SECTION 22. Severability; No Strict
Construction. . . . . . . . . . . . . 11
SECTION 23. GOVERNING LAW . . . . . . . . 11
SECTION 24. CONSENT TO JURISDICTION;
SERVICE OF PROCESS; JURY TRIAL. . . . 11
(A) EXCLUSIVE JURISDICTION. . . 12
(B) OTHER JURISDICTIONS . . . . 12
(C) SERVICE OF PROCESS. . . . . 12
(D) WAIVER OF JURY TRIAL. . . . 12
(E) WAIVER OF BOND. . . . . . . 13
(F) ADVICE OF COUNSEL . . . . . 13
SCHEDULE 1 -- LOCATIONS
WHERE UCC-1
FINANCING
STATEMENTS ARE
TO BE FILED
SECURITY AGREEMENT
This SECURITY AGREEMENT
("Agreement"), dated as of March 14, 1997 is
made by Aegis Acceptance Corp., a Delaware
corporation ("AAC") and Aegis Consumer
Finance, Inc., a Delaware corporation ("ACF" and
together with AAC, the "Grantors" and each a
"Grantor") and III Finance, Ltd., a Cayman Islands
company ("III Finance") and III Global, Ltd., a
Cayman Islands company ("III Global", and
together with III Finance, the "Secured Parties"
and each a "Secured Party").
PRELIMINARY STATEMENT
WHEREAS, the Grantors have entered into
a Loan and Security Agreement, dated as of
February 28, 1994 with III Finance, pursuant to
which III Finance agreed to lend to the Grantors
up to $50,000,000 on a revolving basis for the
purchase and leasing of new and used
automobiles, light trucks, vans and minivans (the
"Lease Warehouse Facility");
WHEREAS, pursuant to that certain Loan
and Security Agreement, of even date herewith
(the "Loan Agreement"), between the Secured
Parties and Aegis Auto Finance, Inc., a Delaware
corporation and an Affiliate of the Grantors (the
"Borrower"), the Secured Parties have agreed to
lend to the Borrower up to $50,000,000 on a
revolving credit basis (the "Loan Warehouse
Facility") and in order to secure all indebtedness
of the Borrower evidenced by such Loan
Warehouse Facility and other obligations of the
Borrower relating thereto (all such obligations
hereinafter referred to as the "Obligations"), the
Grantors have agreed to grant to the Secured
Parties the security interest described herein; and
WHEREAS, it is a condition precedent
under the Loan Warehouse Facility that this
Agreement be entered into between the Grantors
and the Secured Parties;
NOW, THEREFORE, in consideration of
the premises set forth herein and for other good
and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
SECTION 1. Defined Terms. Unless
otherwise defined herein, terms defined in the
Indenture are used herein as therein defined, and
the following terms shall have the following
meanings (such meanings being equally applicable
to both the singular and the plural forms of the
terms defined):
"Agreement" shall mean this Security
Agreement, as the same may from time to time be
amended, restated, modified or supplemented, and
shall refer to this Agreement as the same may be
in effect at the time such reference becomes
operative.
"Automobile" shall mean the new or used
automobile, light truck, van or minivan that is
purchased by the Grantors for lease to a particular
lessee.
"Collateral" shall have the meaning given
such term in Section 2 hereof.
"Dealer" shall mean an automobile dealer
that enters into a Dealer Agreement with a
Grantor or an Affiliate of a Grantor.
"Dealer Agreement" shall mean an
agreement between a Dealer and a Grantor or an
Affiliate of a Grantor, pursuant to which the
Grantors or an Affiliate of the Grantors agrees to
purchase Automobiles for leasing to Users.
"Designee Agreement" shall mean that
certain Designee Agreement delivered by Norwest
Bank Minnesota, N.A. on February 28, 1994 in
connection with that certain Trust Agreement of
the same date with respect to the Lease Warehouse
Facility, and designating III Finance as the
beneficiary of a security interest in the
Automobiles.
"Financing Agreements" shall mean all
agreements, instruments and documents,
including, without limitation, the Dealer
Agreement, the Servicing Agreement, the Leases,
the Titles, the notes and all other assignments,
security agreements, 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 any
Grantor in connection with the transactions
contemplated by the Lease Warehouse Facility.
"Indenture Trustee" shall mean Norwest
Bank Minnesota, N.A., a national banking
association, in its capacity as indenture trustee
under that certain indenture dated as of March __,
1997 with the Borrower in connection with the
issuance by the Borrower of subordinated
debentures.
"Insurance Policies" shall have the
meaning set forth in Section 2(c) hereof.
"Lease" shall mean, with respect to each
Receivable, the related lease pursuant to which
the User leases an Automobile.
"Lease Warehouse Facility" shall have the
meaning set forth in the first preliminary
statement hereof.
"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.
"Obligations" shall have the meaning given
such term in the second preliminary statement
hereof.
"Receivables" shall mean the right to
receive all payments due under the Leases
identified to III Finance in connection with the
Lease Warehouse Facility.
"Servicing Agreement" shall mean that
certain Master Servicing Agreement by and
between Aegis Capital Markets, Inc. and a
Servicer, as amended and supplemented by that
certain letter agreement dated as of October 25,
1993 by and between the Grantors and the
Servicer or any other servicing agreement relating
to the Receivables or Leases.
"Servicer" shall mean American Lenders
Facilities, Inc., a California corporation or any
other servicer under a Servicing Agreement.
"Servicer's File" shall mean, with respect
to each Receivable, the original Lease, Title, all
original instruments modifying the terms and
conditions of such Receivable, the original
endorsements or assignments of such Lease,
factory invoices and work orders describing the
Automobile, the bill of sale and guaranty of title,
insurance policies, tax receipts, property and
casualty insurance policies or binders naming the
Servicer as loss payee or additional named
insured, as is appropriate, insurance premium
receipts, ledger sheets, payment records,
insurance claim files and correspondence, all
documentation in connection with any
modification, release, accommodation, cosigning
or guaranty of the Receivable and any other
documentation executed or otherwise obtained in
connection with any Receivable which the
Servicer is required to hold under the terms of the
Servicing Agreement.
"Title" shall mean, with respect to each
Receivable, the original certificate or other
instrument or registration evidencing ownership of
the related Automobile, which certificate, other
instrument or registration shall identify a Grantor
as owner.
"UCC" shall mean the Uniform
Commercial Code as the same may, from time to
time, be in effect in the State of New York;
provided, however, in the event that, by reason of
mandatory provisions of law, any or all of the
attachment, perfection or priority of the Secured
Parties security interest in any Collateral is
governed by the Uniform Commercial Code as in
effect in a jurisdiction other than the State of New
York, the term "UCC" shall mean the Uniform
Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof
relating to such attachment, perfection or priority
and for purposes of definitions related to such
provisions.
"User" shall mean the obligor under a
Receivable.
SECTION 2 Grant of Security. To
secure the prompt and complete payment,
observance and performance of the Obligations,
the Grantors hereby grant, assign and pledge to
the Secured Parties, a security interest in all of
Grantors' right, title and interest in and to the
following, whether now owned or existing or
hereafter arising or acquired and wheresoever
located and whether the same comprise accounts,
instruments, chattel paper, general intangibles or
inventory (the "Collateral"):
(a) All of such Grantors' right, title and
interest in and to the Receivables, the related
Leases and the Automobiles leased thereunder,
including all rights to the Titles evidencing
ownership of such Automobiles and all rights
under any Dealer Agreements with respect to such
Automobiles.
(b) All documents and instruments,
including all books, records, files, tapes,
correspondence, and other information or
materials relating to the Receivables, the Leases,
the Titles, the Automobiles and any Dealer
Agreement, whether now or hereafter delivered
to, or in the possession, custody or control of,
either Grantor, any Servicer or subservicer, any
Dealer and/or any Secured Party.
(c) All amounts received or receivable by
a Grantor from any Dealer pursuant to the terms
of any Dealer Agreement, and all amounts
received or receivable by a Grantor from the
Servicer or any subservicer pursuant to the terms
of any Servicing Agreement relating to the
Receivables or the Leases, all net proceeds
received by virtue of liquidation of any
Receivables or Automobiles, any proceeds
received under any property damage, casualty or
other insurance policy with respect to any
Receivable or Automobile, all proceeds received
under the insurance policies required to be
maintained under the Lease Warehouse Facility
("Insurance Policies") with respect to claims made
thereunder and any and all interest of the Grantors
in any Insurance Policies or any other property
damage, casualty or other insurance policies as
the same relate to the Automobiles, the Leases
and/or the Receivables.
(d) All right, title and interest of the
Grantors in and to any hedging or depository
accounts required to be maintained in connection
with the Lease Warehouse Facility, and any and
all cash deposited by the Grantors, or by any
Dealer in any such accounts, and all investments
held in and all rights with respect to such
accounts.
(e) Any and all interest of any Grantors in
and under the Servicing Agreement.
(f) All cash and non-cash proceeds of the
foregoing items (a) - (e) and the documents
pertaining thereto, together with whatever is
receivable or received when any of items (a)
through (e) or the proceeds thereof are sold,
collected, leased or exchanged or otherwise
disposed of, whether such disposition is voluntary
or involuntary and also includes, without
limitation, all rights to payment with respect to
any cause of action affecting or relating to the
foregoing and all additions thereto, substitutions
therefor and replacements thereof.
SECTION 3. Security for Obligations;
Subordination of Security Interest. This
Agreement secures the payment of all Obligations
of the Borrower now or hereafter existing under
the Loan Agreement. The parties hereby agree
that the security interest granted to the Secured
Parties hereunder shall be subordinate to any
security interest granted by the Grantors to III
Finance in connection with the Lease Warehouse
Facility.
SECTION 4. Grantors Remain
Liable. Anything herein to the contrary
notwithstanding, (a) Grantors shall remain solely
liable under the contracts and agreements included
in the Collateral to the extent set forth therein to
perform all of their duties and obligations
thereunder to the same extent as if this Agreement
had not been executed, (b) the exercise by the
Secured Parties of any of their rights hereunder
shall not release the Grantors from any of their
duties or obligations under the contracts and
agreements included in the Collateral, and (c) the
Secured Parties shall have no responsibility,
obligation or liability under the contracts and
agreements included in the Collateral by reason of
this Agreement, nor shall the Secured Parties be
required or obligated, in any manner, to
(i) perform or fulfill any of the obligations or
duties of the Grantors thereunder, (ii) make any
payment, or make any inquiry as to the nature or
sufficiency of any payment received by the
Grantors or the sufficiency of any performance by
any party under any such contract or agreement
or (iii) present or file any claim, or take any
action to collect or enforce any claim for payment
assigned hereunder.
SECTION 5. Representations and
Warranties. The Grantors represent and warrant,
as of the date of this Agreement and as of each
date hereafter until termination of this Agreement
pursuant to Section 21:
(a) The correct corporate names of the
Grantors are set forth in the first paragraph of this
Agreement. The chief place of business and chief
executive office of the Grantors are located at the
address of the Grantors set forth below each
Grantor's signature on this Agreement.
(b) The Grantors are the legal and
beneficial owners of the Collateral free and clear
of all liens except for the Lien granted to III
Finance under the Lease Warehouse Facility and
the Lien granted to the Indenture Trustee in
connection with the issuance by the Borrower of
subordinated debentures.
(c) This Agreement creates in favor of the
Secured Parties a legal, valid and enforceable
security interest in the Collateral. When
financing statements have been filed in the
appropriate offices against the Grantors in the
locations listed on Schedule 1, the Secured Parties
will have a lien on, and security interest in, the
Collateral in which a security interest may be
perfected by such filing, subject only to liens
permitted by this Agreement.
(d) No authorization, approval or other
action by, and no notice to or filing with, any
governmental authority, other than such that has
already been taken or made and which is in full
force and effect, is required (i) for the grant by
the Grantors of the security interest in the
Collateral granted hereby, (ii) the execution,
delivery or performance of this Agreement by the
Grantors or (iii) for the exercise by the Secured
Parties of any of their rights or remedies
hereunder.
SECTION 6. Perfection and Maintenance
of Security Interest and Lien. The Grantors agree
that until all of the Obligations have been fully
satisfied, the Secured Parties' security interests in
and liens on and against the Collateral and all
proceeds and products thereof, shall continue in
full force and effect. The Grantors shall perform
any and all steps reasonably requested by the
Secured Parties to perfect, maintain and protect
the Secured Parties' security interests in and liens
on and against the Collateral granted or purported
to be granted hereby or to enable the Secured
Parties to exercise their rights and remedies
hereunder with respect to any Collateral,
including, without limitation, (i) executing and
filing financing or continuation statements, or
amendments thereof, in form and substance
reasonably satisfactory to the Secured Parties,
(ii) delivering to the Secured Parties all certificates
and other instruments (including, without
limitation, all letters of credit on which the
Grantors are named as beneficiaries) representing
or evidencing Collateral, which certificates or
other instruments have been duly endorsed and are
accompanied by duly executed instruments of
transfer or assignment, (iii) marking conspicuously
each document, contract, chattel paper and all
records pertaining to the Collateral with a legend,
in form and substance satisfactory to the Secured
Parties, indicating that such document, contract,
chattel paper, or Collateral is subject to the
security interest granted hereby and (iv) executing
and delivering an amendment to the Designee
Agreement to reflect the security interest granted
hereby and any and all further instruments and
documents, and taking all further action, as the
Secured Parties may reasonably request.
SECTION 7. Financing Statements. To
the extent permitted by applicable law, the
Grantors hereby authorize the Secured Parties to
file one or more financing or continuation
statements and amendments thereto, disclosing the
security interest granted to the Secured Parties
under this Agreement without the Grantors'
signatures appearing thereon and the Secured
Parties agree to notify the Grantors when such a
filing has been made. The Grantors agree that, to
the extent permitted by applicable law, a carbon,
photographic, photostatic, or other reproduction of
this Agreement or of a financing statement is
sufficient as a financing statement.
SECTION 8. Filing Costs. The Grantors
shall pay the costs of, or incidental to, all
recordings or filings of all financing statements,
including, without limitation, any filing expenses
incurred by the Secured Parties pursuant to
Section 7.
SECTION 9. Schedule of Collateral. The
Grantors shall furnish to the Secured Parties from
time to time statements and schedules further
identifying and describing the Collateral and such
other reports in connection with the Collateral as
the Secured Parties may reasonably request, all in
reasonable detail.
SECTION 10. Grantor Covenants. The
Grantors covenant and agree with the Secured
Parties that from and after the date of this
Agreement and until termination of this
Agreement pursuant to Section 21, the Grantors
shall:
(a) 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 the Secured Parties at any
reasonable time to inspect the properties of the
Grantors and to examine or audit their books,
accounts and records and make copies and memo-
randa thereof;
(b) maintain, or shall cause the Servicer
and each subservicer under the Lease Warehouse
Facility to maintain pursuant to the terms of the
Servicing Agreement, all records necessary for
compliance with the exception to withholding for
portfolio interest under Section 871(h) of the
Internal Revenue Code;
(c) furnish to the Secured Parties such
periodic, special, or other reports and information
as reasonably requested by the Secured Parties;
(d) 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 the
Grantors;
(e) pay or cause to be paid all insurance
premiums with respect to the Insurance Policies
and all charges and fees relating thereto;
(f) not compromise, extend, release or
adjust payments on any Leases or Receivables,
except upon full payment thereof or as provided in
the Servicing Agreement; provided, that any
Grantor may, consistent with its present business
practices and subject to the rights of the Secured
Parties from and after an Event of Default,
compromise, extend, release or adjust payments
on, or otherwise take possession of an Automobile
in respect of a delinquent Receivable or other
past-due Receivable in an effort to maximize the
collectibility thereof;
(g) not transfer, sell or assign any
Receivable or Lease to any Person other than III
Finance, or deliver or permit delivery of any
Lease to any Person other than III Finance or the
Servicer prior to the repayment in full of the
related Receivable, or deliver or permit delivery of
any Title to any Person other than III Finance or
the Servicer prior to the recovery in full of any
residual value with respect to the related
Automobile;
(h) not grant, create, incur, permit or suffer
to exist any Lien upon any Collateral except for
the Liens granted to III Finance pursuant to the
Lease Warehouse Facility, to the Secured Parties
to secure the Obligations hereunder, or to the
Indenture Trustee in connection with the issuance
by the Borrower of subordinated debentures; and
(i) not change the location of their chief
executive office and principal place of business
from Newport Tower, 525 Washington Street,
29th Floor, Jersey City, New Jersey 07310, (b)
change their name or (c) change their identity or
corporate structure to such an extent that any
financing statement filed in connection with this
Agreement would become seriously misleading,
unless the Grantors shall have given the Secured
Parties at least 30 days prior written notice thereof
and prior to effecting any such change, taken such
steps as the Secured Parties may deem necessary
or desirable to continue the perfection and priority
of the Liens in favor of the Secured Parties
granted in connection herewith.
SECTION 11. The Secured Parties
Appointed Attorneys-in-Fact. The Grantors
hereby irrevocably appoint the Secured Parties as
the Grantors' attorneys-in-fact, with full authority
in the place and stead of the Grantors and in the
name of the Grantors or otherwise, from time to
time in the Secured Parties' discretion, to take any
action and to execute any instrument which the
Secured Parties may deem necessary or advisable
to accomplish the purposes of this Agreement,
upon the occurrence of an Event of Default, to:
(a) perform any obligation of the Grantors
under the Lease Warehouse Facility in a Grantor's
name or otherwise;
(b) notify any Person obligated on any
Collateral of the rights of the Secured Parties
hereunder;
(c) 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 the Secured Parties may deem
proper and apply any money or property received
in exchange for any of such Collateral to any of
the Obligations, including, without limitation,
directing the Servicer to remit to the Secured
Parties all funds held by the Servicer on account
of the Collateral;
(d) sell, transfer, dispose of or otherwise
release any of the Collateral;
(e) endorse, deliver evidence of title,
enforce and collect by legal action or otherwise
any of the Collateral;
(f) 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
(g) protect, defend and preserve the
Collateral and any rights or interests of the
Secured Parties with regard thereto, including,
without limitation, filing or prosecution of any
third party claim or other legal action or proceed-
ing which the Secured Parties deem necessary to
protect any of the rights, interests or priorities of
the Secured parties with respect to any of the
Collateral.
SECTION 12. The Secured Parties May
Perform. If the Grantors fail to perform any
agreement contained herein, the Secured Parties
may, upon three days' prior notice to the Grantors,
perform, or cause performance of, such agreement,
and the expenses of the Secured Parties incurred
in connection therewith shall be payable by the
Grantors under Section 18.
SECTION 13. Secured Parties' Duties.
The powers conferred on the Secured Parties here-
under are solely to protect their interest in the
Collateral and shall not impose any duty upon
either Secured Party to exercise any such powers.
Except for the safe custody of any Collateral in
their possession and the accounting for moneys ac-
tually received by them hereunder, the Secured
Parties shall not have any duty as to any
Collateral. The Secured Parties shall be deemed
to have exercised reasonable care in the custody
and preservation of the Collateral in their
possession if the Collateral is accorded treatment
substantially equal to that which the Secured
Parties accord their own property, it being
understood that the Secured Parties shall be under
no obligation to take any necessary steps to
preserve rights against prior parties or any other
rights pertaining to any Collateral, but may do so
at their option, and all reasonable expenses
incurred in connection therewith shall be for the
sole account of the Grantors or the Borrower and
shall be added to the Obligations.
SECTION 14. Remedies. (a) If any
Event of Default shall have occurred and be
continuing:
(i) the Secured Parties shall have, in
addition to other rights and remedies provided for
herein or otherwise available to them, all the
rights and remedies of a Secured Party upon
default under the UCC (whether or not the UCC
applies to the affected Collateral) and further, the
Secured Parties may, without notice, demand or
legal process of any kind (except as may be
required by law), all of which the Grantors waive,
at any time or times, (x) enter Grantors' owned or
leased premises and take physical possession of
the Collateral and maintain such possession on
Grantors' owned or leased premises, at no cost to
the Secured Parties, or remove the Collateral, or
any part thereof, to such other place(s) as the
Secured Parties may desire, (y) require the
Grantors to, and the Grantors hereby agree that
they will at their expense and upon request of the
Secured Parties forthwith, assemble all or any part
of the Collateral as directed by the Secured Parties
and make it available to the Secured Parties at a
place to be designated by the Secured Parties
which is reasonably convenient to the Secured
Parties and (z) without notice except as specified
below, sell, lease, assign, grant an option or
options to purchase or otherwise dispose of the
Collateral or any part thereof at public or private
sale, at any exchange, broker's board or at any of
the offices of the Secured Parties or elsewhere, for
cash, on credit or for future delivery, and upon
such other terms as the Secured Parties may deem
commercially reasonable. The Grantors agree
that, to the extent notice of sale shall be required
by law, at least ten (10) days' notice to the
Grantors of the time and place of any public sale
or the time after which any private sale is to be
made shall constitute reasonable notification. The
Secured Parties shall not be obligated to make any
sale of Collateral regardless of notice of sale
having been given. The Secured Parties may
adjourn any public or private sale from time to
time by announcement at the time and place fixed
therefor, and such sale may, without further
notice, be made at the time and place to which it
was so adjourned;
(ii) the Secured Parties shall apply all cash
proceeds received by the Secured Parties in
respect of any sale of, collection from, or other
realization upon all or any part of the Collateral
(after payment of any amounts payable to the
Secured Parties pursuant to Section 18), against
all or any part of the Obligations in such order as
may be required by the Loan Agreement, or, to
the extent not specified therein, as is determined
by the Secured Parties. Any surplus of such cash
or cash proceeds held by the Secured Parties and
remaining after payment in full of all the
Obligations shall be paid over to the Grantors or
to whomsoever may be lawfully entitled to receive
such surplus;
(b) the Grantors waive all claims, damages
and demands against the Secured Parties arising
out of the repossession, retention or sale of any of
the Collateral or any part or parts thereof, except
any such claims, damages and awards arising out
of the gross negligence or willful misconduct of
the Secured Parties, as determined in a final non-
appealable judgment of a court of competent
jurisdiction; and
(c) The rights and remedies provided
under this Agreement are cumulative and may be
exercised singly or concurrently and are not
exclusive of any rights and remedies provided by
law or equity.
SECTION 15. Exercise of Remedies. In
connection with the exercise of their remedies
pursuant to Section 14, the Secured Parties may,
(i) exchange, enforce, waive or release any portion
of the Collateral and any other security for the
Obligations, (ii) apply such Collateral or security
and direct the order or manner of sale thereof as
the Secured Parties may, from time to time,
determine and (iii) settle, compromise, collect or
otherwise liquidate any such Collateral or security
in any manner following the occurrence of a
Default, without affecting or impairing the
Secured Parties' rights to take any other further
action with respect to any Collateral or security or
any part thereof.
SECTION 16. Injunctive Relief. The
Grantors recognize that in the event the Grantors
fail to perform, observe or discharge any of their
obligations or liabilities under this Agreement, any
remedy of law may prove to be inadequate relief
to the Secured Parties; therefore, the Grantors
agree that the Secured Parties, if they so determine
and request, shall be entitled to temporary and
permanent injunctive relief in any such case
without the necessity of proving actual damages.
SECTION 17. Interpretation and
Inconsistencies; Merger.
(a) The rights and duties created by this
Agreement shall, in all cases, be interpreted
consistently with, and shall be in addition to (and
not in lieu of), the rights and duties created by the
Loan Agreement.
(b) Except as provided in subsection (a)
above, this Agreement represents the final
agreement of the Grantors and the Secured Parties
with respect to the matters contained herein and
may not be contradicted by evidence of prior or
contemporaneous agreements, or subsequent oral
agreements, between the Grantors and the Secured
Parties.
SECTION 18. Expenses. The Grantors
will upon demand pay to the Secured Parties the
amount of any and all reasonable expenses,
including the reasonable fees and disbursements of
their counsel and of any experts and agents,
incurred in connection with the enforcement of the
Loan Agreement and/or of this Agreement.
SECTION 19. Amendments, Etc. No
amendment or waiver of any provision of this
Agreement nor consent to any departure by the
Grantors herefrom shall in any event be effective
unless the same shall be in writing and signed by
the Secured Parties and the Grantors, and then
such waiver or consent shall be effective only in
the specific instance and for the specific purpose
for which given.
SECTION 20. Notices. All notices and
other communications provided for hereunder shall
be delivered to the applicable party in writing, by
telecopy, mail, messenger or overnight courier
delivery, and to the address set forth below such
party's name under this Agreement, or to another
address as to which such party shall have
informed the other party hereto by written notice
given in the manner described above.
SECTION 21. Continuing Security
Interest; Termination. (a) Except as provided in
Section 21(b), this Agreement shall create a
continuing security interest in the Collateral and
shall (i) remain in full force and effect until the
later of the payment or satisfaction in full of the
Obligations (other than contingent indemnity
obligations), (ii) be binding upon the Grantors,
their successors and assigns and (iii) inure,
together with the rights and remedies of the
Secured Parties hereunder, to the benefit of the
Secured Parties, their successors and assigns.
Nothing set forth herein or in the Loan Agreement
is intended or shall be construed to give any other
person any right, remedy or claim under, to or in
respect of this Agreement or any Collateral. The
Grantors' successors and assigns shall include,
without limitation, a receiver, trustee or debtor-in-
possession thereof or therefor.
(b) Upon the payment in full in cash of
the Obligations (other than contingent indemnity
obligations), this Agreement and the security
interest granted hereby shall terminate and all
rights to the Collateral shall revert to the Grantors.
Upon any such termination of security interest, the
Grantors shall be entitled to the return, upon their
request and at their expense, of such of the
Collateral held by the Secured Parties as shall not
have been sold or otherwise applied pursuant to
the terms hereof and the Secured Parties will, at
the Grantors' expense, execute and deliver to the
Grantors such other documents as the Grantors
shall reasonably request to evidence such
termination.
SECTION 22. Severability; No Strict
Construction. It is the parties' intention that this
Agreement be interpreted in such a way that it is
valid and effective under applicable law.
However, if one or more of the provisions of this
Agreement shall for any reason be found to be
invalid or unenforceable, the remaining provisions
of this Agreement shall be unimpaired.
SECTION 23. GOVERNING LAW.
ANY DISPUTE BETWEEN THE GRANTORS
AND THE SECURED PARTIES ARISING
OUT OF, CONNECTED WITH, RELATED
TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN
THEM IN CONNECTION WITH, THIS
AGREEMENT OR THE LOAN
AGREEMENT, AND WHETHER ARISING IN
CONTRACT, TORT, EQUITY, OR
OTHERWISE, SHALL BE RESOLVED IN
ACCORDANCE WITH THE INTERNAL
LAWS (INCLUDING SECTION 5-1401 OF
THE GENERAL OBLIGATIONS LAW BUT
OTHERWISE WITHOUT REGARD TO THE
CONFLICTS OF LAWS PROVISIONS) OF
THE STATE OF NEW YORK.
SECTION 24.
CONSENT TO JURISDICTION; SERVICE OF
PROCESS; JURY TRIAL.
(A) EXCLUSIVE JURISDICTION.
EXCEPT AS PROVIDED IN SUBSECTION (B),
EACH OF THE PARTIES HERETO AGREES
THAT ALL DISPUTES BETWEEN THEM
ARISING OUT OF, CONNECTED WITH,
RELATED TO, OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN
THEM IN CONNECTION WITH THIS AGREE-
MENT OR THE LOAN AGREEMENT,
WHETHER ARISING IN CONTRACT, TORT,
EQUITY, OR OTHERWISE, SHALL BE
RESOLVED EXCLUSIVELY BY STATE OR
FEDERAL COURTS LOCATED IN NEW
YORK, NEW YORK, BUT THE PARTIES
HERETO ACKNOWLEDGE THAT ANY
APPEALS FROM THOSE COURTS MAY
HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE OF NEW YORK, NEW
YORK. EACH OF THE PARTIES HERETO
WAIVES IN ALL DISPUTES BROUGHT
PURSUANT TO THIS SUBSECTION ANY
OBJECTION THAT IT MAY HAVE TO THE
LOCATION OF THE COURT CONSIDERING
THE DISPUTE.
(B) OTHER JURISDICTIONS. THE
GRANTORS AGREE THAT THE SECURED
PARTIES SHALL HAVE THE RIGHT TO
PROCEED AGAINST THE GRANTORS OR
THEIR PROPERTY IN A COURT IN ANY
LOCATION TO ENABLE SUCH PERSON TO
(1) OBTAIN PERSONAL JURISDICTION OVER
THE GRANTORS OR (2) REALIZE ON THE
COLLATERAL OR ANY OTHER SECURITY
FOR THE OBLIGATIONS OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER
ENTERED IN FAVOR OF SUCH PERSON.
THE GRANTORS AGREE THAT THEY WILL
NOT ASSERT ANY PERMISSIVE
COUNTERCLAIMS IN ANY PROCEEDING
BROUGHT BY SUCH PERSON TO REALIZE
ON THE COLLATERAL OR ANY OTHER
SECURITY FOR THE OBLIGATIONS OR TO
ENFORCE A JUDGMENT OR OTHER COURT
ORDER IN FAVOR OF SUCH PERSON. THE
GRANTORS WAIVE ANY OBJECTION THAT
THEY MAY HAVE TO THE LOCATION OF
THE COURT IN WHICH SUCH PERSON HAS
COMMENCED A PROCEEDING DESCRIBED
IN THIS SUBSECTION.
(C) SERVICE OF PROCESS. EACH
GRANTOR WAIVES PERSONAL SERVICE OF
ANY PROCESS UPON IT AND, AS
ADDITIONAL SECURITY FOR THE
OBLIGATIONS, IRREVOCABLY APPOINTS
CT CORPORATION SYSTEM, GRANTOR'S
REGISTERED AGENT, WHOSE ADDRESS IS
1633 BROADWAY, NEW YORK, NEW YORK
10019, AS GRANTOR'S AGENT FOR THE
PURPOSE OF ACCEPTING SERVICE OF
PROCESS ISSUED BY ANY COURT. EACH
GRANTOR IRREVOCABLY WAIVES ANY
OBJECTION (INCLUDING, WITHOUT
LIMITATION, ANY OBJECTION OF THE
LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS)
WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY SUCH
ACTION OR PROCEEDING WITH RESPECT
TO THIS AGREEMENT OR ANY OTHER
INSTRUMENT, DOCUMENT OR AGREEMENT
EXECUTED OR DELIVERED IN
CONNECTION HEREWITH IN ANY
JURISDICTION SET FORTH ABOVE.
(D) WAIVER OF JURY TRIAL.
EACH OF THE PARTIES HERETO
IRREVOCABLY WAIVES ANY RIGHT TO
HAVE A JURY PARTICIPATE IN RESOLV-
ING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT, OR OTHERWISE,
ARISING OUT OF, CONNECTED WITH,
RELATED TO OR INCIDENTAL TO THE
RELATIONSHIP ESTABLISHED BETWEEN
THEM IN CONNECTION WITH THIS
AGREEMENT OR THE LOAN AGREEMENT
OR ANY OTHER INSTRUMENT,
DOCUMENT OR AGREEMENT EXECUTED
OR DELIVERED IN CONNECTION
HEREWITH. EACH OF THE PARTIES
HERETO AGREES AND CONSENTS THAT
ANY SUCH CLAIM, DEMAND, ACTION OR
CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY AND
THAT ANY PARTY HERETO MAY FILE AN
ORIGINAL COUNTERPART OR A COPY OF
THIS AGREEMENT WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT
OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY
JURY.
(E) WAIVER OF BOND. THE
GRANTORS WAIVE THE POSTING OF ANY
BOND OTHERWISE REQUIRED OF ANY
PARTY HERETO IN CONNECTION WITH
ANY JUDICIAL PROCESS OR PROCEEDING
TO REALIZE ON THE COLLATERAL OR
ANY OTHER SECURITY FOR THE
OBLIGATIONS OR TO ENFORCE ANY
JUDGMENT OR OTHER COURT ORDER
ENTERED IN FAVOR OF SUCH PARTY, OR
TO ENFORCE BY SPECIFIC PERFORMANCE,
TEMPORARY RESTRAINING ORDER,
PRELIMINARY OR PERMANENT
INJUNCTION, THIS AGREEMENT.
(F) ADVICE OF COUNSEL. EACH OF
THE PARTIES REPRESENTS TO EACH
OTHER PARTY HERETO THAT IT HAS
DISCUSSED THIS AGREEMENT AND,
SPECIFICALLY, THE PROVISIONS OF THIS
SECTION 24, WITH ITS COUNSEL.
<PAGE>
IN WITNESS WHEREOF, the Grantors
have caused this Agreement to be duly executed
and delivered by their officers thereunto duly
authorized as of the date first above written.
AEGIS ACCEPTANCE CORP.
By:___
______
______
______
______
____
Name:
Title:
Address: Newport Tower
525 Washington Street
29th Floor
Jersey City, New Jersey
07310
Telecopy: (201) 418-7370
AEGIS CONSUMER FINANCE, INC.
By:___
______
______
______
______
____
Name:
Title:
Address: Newport Tower
525 Washington Street
29th Floor
Jersey City, New Jersey
07310
Telecopy: (201) 418-7370
III FINANCE, LTD.
By:___
______
______
______
______
____
Name:
Title:
Address: c/o Admiral Administration
Ltd.
P.O. Box 32021, SMB
Anchorage Centre, 2nd Floor
Grand Cayman, Cayman
Islands
British West Indies
Telecopy: (354) 949-0705
III GLOBAL, LTD.
By:___
______
______
______
______
____
Name:
Title:
Address: c/o Admiral Administration
Ltd.
P.O. Box 32021, SMB
Anchorage Centre, 2nd Floor
Grand Cayman, Cayman
Islands
British West Indies
Telecopy: (354) 949-0705 <PAGE>
SCHEDULE 1
to
SECURITY AGREEMENT
dated as of March ___, 1997
LOCATIONS WHERE UCC-1
FINANCING STATEMENTS ARE TO BE
FILED
Attached.
I:\AHC_COM\10_105_9.WPD May 14, 1997 (4:52p)
EXECUTION COPY
MASTER AMENDMENT TO LOAN AND
SECURITY AGREEMENTS
This MASTER AMENDMENT TO
LOAN AND SECURITY AGREEMENTS
("Amendment") dated as of March 19,
1997 is entered into between AEGIS
CONSUMER FINANCE, INC., a Delaware
corporation ("ACF"), AEGIS AUTO
FINANCE, INC. ("AAF") (AAF and ACF
are sometimes referred to
hereinafter individually as a
"Borrower" and collectively as the
"Borrowers") and III FINANCE LTD.,
a Cayman Islands company
("Lender").
Reference is hereby made
to the following agreements:
(i) that certain Loan
and Security Agreement dated
as of August 11, 1994 between
ACF and the Lender, as amended
(the "First ACF Loan
Agreement");
(ii) that certain Loan
and Security Agreement dated
as of September 28, 1994
between ACF and the Lender, as
amended (the "Second ACF Loan
Agreement");
(iii) that certain Loan
and Security Agreement dated
as of December 22, 1994
between ACF and the Lender, as
amended (the "Third ACF Loan
Agreement"); and
(iv) that certain Loan
and Security Agreement dated
as of March 22, 1995 between
ACF and the Lender, as amended
(the "Fourth ACF Loan
Agreement");
(v) that certain Loan
and Security Agreement dated
as of June 20, 1995 between
Aegis Auto Finance, Inc.,
("AAF") and the Lender (the
"First AAF Loan Agreement");
(vi) that certain Loan
and Security Agreement dated
as of September 25, 1995
between AAF and the Lender
(the "Second AAF Loan
Agreement");
(vii) that certain
Loan and Security Agreement
dated as of December 20, 1995
between AAF and the Lender
(the "Third AAF Loan
Agreement");
(viii) that certain Loan
and Security Agreement dated
as of March 22, 1996 between
AAF and the Lender (the
"Fourth AAF Loan Agreement");
(ix) that certain Loan
and Security Agreement dated
as of June 25, 1996 between
AAF and the Lender (the "Fifth
AAF Loan Agreement");
(xi) that certain Loan
and Security Agreement dated
as of September 12, 1996
between AAF and the Lender
(the "Sixth AAF Loan
Agreement"); and
(xii) that certain Loan
and Security Agreement dated
as of May 20, 1996 between AAF
and the Lender (the "AAF/MBIA
Loan Agreement").
The First ACF Loan Agreement, the
Second ACF Loan Agreement, the
Third ACF Loan Agreement and the
Fourth ACF Loan Agreement are
sometimes referred to herein
collectively as the "ACF Loan
Agreements" and individually as an
"ACF Loan Agreement". The First
AAF Loan Agreement, the Second AAF
Loan Agreement, the Third AAF Loan
Agreement, the Fourth AAF Loan
Agreement, the Fifth AAF Loan
Agreement, the Sixth AAF Loan
Agreement and the AAF/MBIA Loan
Agreement are sometimes referred to
herein collectively as the "AAF
Loan Agreements" and individually
as an "AAF Loan Agreement". The
ACF Loan Agreements and the AAF
Loan Agreements are sometimes
referred to herein collectively as
the "Loan Agreements" and each ACF
Loan Agreement and AAF Loan
Agreement is sometimes referred to
herein individually as a "Loan
Agreement".
Reference is also made to
that certain Loan and Security
Agreement dated as of November 8,
1993, as amended from time to time
(as so amended, the "Warehouse Loan
Agreement"), among Aegis Capital
Markets, Inc. ("Aegis Capital"),
Aegis Acceptance Corp. ("AAC"), AAF
and III Finance Ltd.
The Borrowers and the
Lender have agreed to amend the
Loan Agreements as hereinafter set
forth.
SECTION 1. Amendments to
the Loan Agreements. The Loan
Agreements are, effective the date
hereof and subject to the
satisfaction of the conditions
precedent set forth in Section 2
hereof, hereby amended as follows:
1.1 Amendment to Loan
Agreements. Notwithstanding
anything to the contrary in the
Loan Agreements, no further
advances shall be made under any of
the Loan Agreements.
1.2 Amendment by
Incorporation. In addition, each
of the Loan Agreements shall be
amended by incorporating by
reference the following provisions
of the Warehouse Loan Agreement
(which provisions shall only be
applicable to the Obligations (as
defined in the Warehouse Agreement)
which are being assumed by the
Borrowers pursuant to Section 3 of
this Amendment): Sections 1.1,
1.2, 1.3, 1.4, 1.5, 2.3, 2.4, 2.5,
5.1, 5.2, 5.3, 5.4, 5.5, 5.6, 5.7,
5.8, 5.9, 5.10, 5.11, 5.12, 5.13,
5.14, 6.1, 6.3, 6.4, 6.5, 6.6, 6.7,
6.8, 6.9, 7.1, 7.2, 8.1, 8.2, 8.3,
8.4, 8.5, 8.6, 8.7, 8.8, 8.9, 8.10,
8.11, 8.12 and 8.13 (the
"Incorporated Provisions").
1.3 AAF and ACF as
Borrower. AAF and ACF shall be a
"Borrower" (as that term is used in
the Incorporated Provisions) for
purposes of the Incorporated
Provisions.
1.4 Amendments to
Certain Incorporated Provisions.
Section 2.3 of the Incorporated
Provisions is amended in full to
read as follows:
"Section 2.3 Note. Upon
the assumption of the
Obligations by AAF and
ACF, the Borrowers shall
execute and deliver to
Lender an Amended and
Restated Note to evidence
the aggregate amount of
all Loans outstanding at
such time. The Amended
and Restated Note shall
be dated March 19, 1997
and shall mature on the
Termination Date. Lender
is hereby authorized to
endorse 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 Borrowers
hereunder or under the
Note. In lieu of
endorsing such schedule,
Lender is hereby
authorized, at its
option, to record such
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(a) of the Incorporated
Provisions is amended in full to
read as follows:
"Section 2.4 Interest.
(a) Borrowers hereby
jointly and severally
promise to pay to Lender
interest, quarterly in
arrears on the last
Business Day of each
calendar quarter and on
the date of any principal
prepayment hereunder
pursuant to Sections 2.5
and 7.1, 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. Except as
otherwise provided in
Section 2.4(b) below, all
Loans (including Hedging
Advances) shall bear
interest at a rate per
annum equal to 12%. Each
interest payment shall be
computed on the basis of
a 360-day year for the
actual number of days
elapsed."
SECTION 2. Conditions
Precedent. This Amendment shall
become effective and be deemed
effective as of the date first
above written, if, and only if, (a)
the outstanding Obligations (as
defined in Section 1.1 of the
Warehouse Loan Agreement) shall
have been paid down to
$23,357,834.12 and (b) the Lender
shall have received the following:
(i) counterpart
signature pages of this
Amendment, executed by each of
the parties hereto;
(ii) the acknowledgment
to this Amendment executed by
The Aegis Consumer Funding
Group, Inc.; and
(iii) the assignment
agreement executed by Aegis
Capital, AAC and AAF.
SECTION 3. Assumption and
Affirmation. Each of AAF and ACF
hereby (i) assumes all Obligations
(as such term is defined in Section
1.1 of the Incorporated
Provisions), (ii) agrees to be
bound by all terms of the
Incorporated Provisions as if it
was a "Borrower" thereunder and
(iii) reaffirms the security
interest granted to III Finance
Ltd. in the Collateral pursuant to
Section 6.1 of the Incorporated
Provisions.
SECTION 4. Covenants,
Representations and Warranties of
the Borrowers.
4.1 Upon the
effectiveness of this Amendment,
each Borrower hereby reaffirms all
covenants, representations and
warranties made by it in the Loan
Agreements to the extent the same
are not amended hereby and agrees
that all such covenants,
representations and warranties
shall be deemed to have been re-
made as of the effective date of
this Amendment.
4.2 Each Borrower hereby
represents and warrants that this
Amendment constitutes its legal,
valid and binding obligation,
enforceable against such Borrower
in accordance with its terms.
SECTION 5. Reference to
and Effect on the Loan Agreements.
5.1 Upon the effectiveness of
this Amendment, each reference in each of
the Loan Agreements to "this Agreement",
"hereunder", "hereof", "herein" or words of
like import shall mean and be a reference
to such Loan Agreement, as amended hereby,
and each reference to each such Loan
Agreement in any other document, instrument
or agreement executed and/or delivered in
connection with such Loan Agreement shall
mean and be a reference to such Loan
Agreement as amended hereby.
5.2 Except as specifically
amended above, each Loan Agreement and all
other agreements, documents and instruments
executed and/or delivered in connection
with any Loan Agreement shall remain in
full force and effect and are hereby
ratified and confirmed.
5.3 The execution, delivery and
effectiveness of this Amendment shall not
operate as a waiver of any right, power or
remedy of the Lender under any Loan
Agreement or any other agreement, document
or instrument executed in connection with
any Loan Agreement, nor constitute a waiver
of any provision contained therein, except
as specifically set forth herein.
SECTION 6. Execution in
Counterparts. This Amendment may be
executed in any number of counterparts and
by different parties hereto in separate
counterparts, each of which when so
executed and delivered shall be deemed to
be an original and all of which taken
together shall constitute but one and the
same instrument.
SECTION 7. Governing Law. This
Amendment shall be governed by and
construed in accordance with the laws of
the State of New York.
SECTION 8. Headings. Section
headings in this Amendment are included
herein for convenience of reference only
and shall not constitute a part of this
Amendment for any other purpose.
<PAGE>
IN WITNESS WHEREOF, the parties
hereto have caused this Amendment to be
executed by their respective officers
thereunto duly authorized as of the date
first above written.
III FINANCE
LTD.
By______________________________
Name:
Title:
AEGIS
CONSUMER FINANCE, INC.
By______________________________
Name:
Title:
AEGIS AUTO
FINANCE, INC.
By______________________________
Name:
Title:
<PAGE>
ACKNOWLEDGMENT TO MASTER AMENDMENT TO
LOAN AND SECURITY AGREEMENTS
The Aegis Consumer Funding Group,
Inc., formerly known as CapStar Consumer
Finance, Inc., hereby consents to the
agreements of the Lender and the Borrowers
contained in the foregoing Master Amendment
to Loan and Security Agreements, and
reaffirms all of its obligations under each
of its Guaranties executed by it in
connection with each of the Loan
Agreements, which Guaranties shall remain
in full force and effect, before and after
giving effect to the amendments described
hereinabove, and each such Guaranty is
hereby ratified and confirmed.
THE AEGIS CONSUMER
FUNDING GROUP, INC.
formerly known
as CapStar
Consumer
Finance, Inc.
By______________________________
Name:
Title:
<PAGE>
ASSIGNMENT AGREEMENT
Reference is made to that certain
Loan and Security Agreement dated as of
November 8, 1993, as amended from time to
time (as so amended, the "Warehouse Loan
Agreement"), among Aegis Capital Markets,
Inc. ("Aegis Capital"), Aegis Acceptance
Corp. ("AAC"), Aegis Auto Finance, Inc.
("AAF") and III Finance Ltd. Reference is
also made to that certain Master Amendment
to Loan and Security Agreements (the
"Amendment") dated as of March 14, 1997
among Aegis Consumer Finance, Inc. ("ACF"),
AAF and III Finance Ltd.
In consideration of ACF and AAF
assuming all Obligations (as such term is
defined in the Warehouse Loan Agreement) of
Aegis Capital, AAC and AAF, each of Aegis
Capital, AAC and AAF hereby assigns to ACF
and AAF, subject to the lien granted to III
Finance Ltd. pursuant to the Warehouse Loan
Agreement, all of its right, title and
interest in the property which constitutes
the Collateral (as such term is defined in
the Warehouse Loan Agreement) generated
prior to March 1, 1997 and not sold to
Norwest Bank Minnesota, National
Association, as Trustee, under that certain
Master Trust Agreement dated as of March 1,
1997 between Aegis Auto Funding Corp. IV
and the Trustee.
IN WITNESS WHEREOF, the parties
hereto have caused this Assignment
Agreement to be executed by their
respective officers thereunto duly
authorized as of the 19th day of March
1997.
AEGIS CAPITAL
MARKETS, INC.
By______________________________
Name:
Title:
AEGIS
ACCEPTANCE CORP.
By______________________________
Name:
Title:
AEGIS AUTO
FINANCE, INC.
By______________________________
Name:
Title:
EXECUTION COPY
SYSTEMS AND SERVICES TECHNOLOGIES, INC.
SERVICING AGREEMENT
This Servicing Agreement (the "Agreement") is entered into as of the 3rd day
of January, 1997 between Systems and Services Technologies, Inc.
(hereinafter referred to as "Servicer"), a Delaware 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 loan administration, payment collection and processing, insurance
claim processing, custodial services, third party recovery collections and
financial reporting to financial institutions in connection with Sales Contracts
(as hereinafter defined); and
WHEREAS, Company and certain of its subsidiaries and
commonly controlled corporations ("Affiliates") are and will continue to
become the owners of Sales Contracts; and
WHEREAS; Company desires to avail itself of the services
provided by Servicer on the terms provided herein with respect to Sales
Contracts;
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):
Inactive Receivable. One in which Servicer has been instructed by Company
to cease all servicing activities with the exception of posting payments
received from deficiency collections group.
Advance Account. A bank account established and maintained by Servicer in
trust for Company and Holders into which Company shall initially deposit
$7,500 (amount subject to change from time to time as agreed upon by both
Company and Servicer), from which Servicer may withdraw funds as
necessary to cover collection expenses, expenses incurred in repossessing
vehicles and expenses incurred in reconditioning vehicles, as necessary, in
order to maximize the proceeds generated by the sale of said Vehicle at
auction. To the extent possible, the account shall be replenished from monies
recovered from the Obligor. If at any time the account balance shall fall
below $3,000 (amount subject to change from time to time as agreed upon by
both Company and Servicer), Company shall contribute funds necessary to
bring the account balance to $5,000.
Approved Program. 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.
Business Day. Any day other than Saturday, Sunday, a regularly scheduled
holiday of Servicer, or a day on which banking institutions in the primary
business location of Servicer or Company are authorized or required by law
to close.
Closing Holder Principal Balance. With respect to a 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 Principal Balance. With respect to a Receivable, the unpaid
principal balance of that Receivable owed by the Obligor at the time that
Receivable became subject to this Agreement.
Collected Funds. All funds received by Servicer on behalf of Company to be
posted to an Obligor's account, including, but not limited to: account
payments, insurance policy proceeds, insurance policy rebates, warranty
proceeds, warranty rebates and any other funds received from any source for
the account of an Obligor.
Collection Day. Any day other than Sunday, a regularly scheduled holiday of
Servicer, or a day on which banking institutions in the Primary Business
Location of Servicer or Company are authorized or required by law to close.
Credit Agency. A recognized agency to which Servicer on behalf of Company
reports Obligor repayment, including but not limited to: delinquencies,
repossessions and redemptions.
Credit Enhancement. Any policy of insurance which provides value to
Company or Holder but does not reduce the Remaining Obligor Principal
Balance, including, but not limited to: skip, confiscation, Obligor default,
credit default and vendors single interest.
Custodian. The holder of all Docket Documents or instruments delivered to
Servicer with respect to each Receivable.
Depository Account. A remittance banking account into which daily
Collections from the Lock-Box Account shall be deposited if required by any
purchase agreement, loan and security agreement or any other agreement
relating to the Receivables.
Docket Documents. The original retail installment sales contract, the original
credit application, the original application for title, the original guarantee
of title, and the original evidence of title or the original title, when
received (subject to change, as agreed upon by Company and Servicer).
Holder. As to any Receivable, the Person purchasing or lending against the
security of such a Receivable.
Insurance. Any policy of insurance which provides value to the Closing
Obligor Principal Balance, including, but not limited to: life accident and
health insurance, GAP auto protection, unemployment insurance and vehicle
warranties.
Insurer. Any insurance company which has issued any policy of Credit
Enhancement.
Lock-Box Account. A remittance banking account into which Obligors,
Servicer, Company and any Insurer shall be directed to deposit Collected
Funds with respect to the Receivables.
Monthly Reports. The reports to be delivered or made available to Company
or its designee(s) on each of the Preliminary Report Delivery Date and Report
Delivery Date in a form similar to that which appears in the attached Exhibit
B.
NSF Account. A bank account established and maintained by Servicer in
trust for Company and Holders into which Company shall initially deposit
$5,000 (amount subject to change from time to time as agreed upon by both
Company and Servicer) which Servicer may withdraw as necessary to cover
checks received for Obligors' accounts which do not clear due to insufficient
funds. If, at any time, the account balance shall fall below $1,000 (amount
subject to change from time to time as agreed upon by both Company and
Servicer), Company shall contribute funds necessary to bring the account
balance to $5,000.
Obligor. An account debtor or any other person obligated under a Sales
Contract to make payments on the Receivable.
Person. Any natural person or any entity, including, without limitation, any
trust, corporation, partnership, firm, government or government agency.
Preliminary Report Delivery Date. The latter of the third business day or the
fifth calendar day of the month immediately following the related Remittance
Period.
Purchase Agreement. An agreement by which a Trust or Holder purchases
Receivables from Company in an Approved Program.
Receivable. A Sales Contract that:
a) complies with all applicable federal and state laws and legal
requirements; and
b) was originated in connection with the sale of a Vehicle to a
Person or the financing or refinancing of such a Vehicle; and
c) represents a bona fide obligation of an Obligor; and
d) has been purchased by Company, or originated by the
Company, from any Person in the regular course of
Company's business; and
e) is secured by a valid and perfected first priority security
interest in a Vehicle titled or registered in the United States, its
territories, or the District of Columbia; and
f) to the best of Company's knowledge, is one as to which (i) the
property which is the subject thereof has been delivered to an
Obligor, (ii) there are no exceptions, counterclaims or set-offs
on the part of such Obligor against the amounts payable, and
(iii) there have been no representations or warranties made to
such Obligor not contained in the Sales Contract.
Remaining Obligor Principal Balance. As to any Receivable, the Closing
Obligor Principal Balance less the aggregate amount of principal payments
remitted by or on behalf of an Obligor.
Remittance Date. The earlier of the eighth business day or the eleventh
calendar day of the month immediately following the related Remittance
Period.
Remittance Period. The first day through and including the last day of the
calendar month immediately preceding the Remittance Date.
Report Delivery Date. Remittance Date.
Reserve Account. A remittance banking account in which Company deposits
funds to be used for making payments due a Trust, Holder, Servicer and/or
Company.
Sales Contract. A retail installment or conditional sales contract (comparable
loan or other document) pursuant to which an Obligor has acquired or
financed a Vehicle or used a Vehicle as security for a financing.
Trust. A grantor or other trust established directly or indirectly by Company
which shall own Receivables in connection with a securitization or other
financing of all or a portion of Company's loan portfolio.
Unwind/Reversal Account. A bank account established and maintained by
Servicer in trust for Company and Holders from which Company will direct
Servicer to withdraw funds in order to credit an Obligor's account in full on
a Receivable which has been reassigned back to the originating dealership.
Company shall be responsible to deposit monies as necessary in amounts
sufficient to zero out an Obligor's account.
Vehicle. A new or used motor vehicle that was purchased pursuant to a Sales
Contract and serves as collateral for a Receivable.
ARTICLE II
NATURE AND SCOPE OF RELATIONSHIP
Company hereby engages Servicer and Servicer agrees to render to Company
those services described in this Agreement and in the attached Exhibit 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. This Agreement shall apply to all Receivables
identified to the Servicer by Company for boarding.
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
A. Servicer, for Company, shall: (i) act prudently in accordance with
customary and usual servicing procedures for other institutional
servicers; (ii) administer, maintain and service the Receivables in
compliance with all applicable Federal and State laws and regulations
governing Servicer and the Receivables; (iii) 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; (iv) furnish Monthly Reports (in a form similar to that which
appears in the attached Exhibit B) and (v) respond to inquiries by
Federal, State, or local governmental authorities relating to the
servicing of the Receivables or the Receivables themselves.
B. Servicer shall perform those duties outlined in this Agreement and
contained in the attached Exhibit A and shall receive the fees as
outlined in Exhibit A as full compensation for its services. Company
may reasonably direct Servicer to modify or supplement Servicer's
duties or methods of performing those duties provided that Company
shall compensate Servicer at a reasonable fee for any increase in
expense experienced by Servicer due to Company's requests.
ARTICLE IV
FIDELITY BOND AND ERRORS AND OMISSIONS INSURANCE
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 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 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 Sales Contract servicers (provided,
however, that in any event, both of the fidelity bond and the errors and
omissions insurance shall be in an amount and shall provide coverage
satisfactory to Company).
No provision of this Article IV requiring such fidelity bond and errors and
omissions insurance shall diminish or relieve Servicer from its duties and
obligations as set forth in this Agreement. Servicer shall cause each and every
sub-contractor for it to maintain a policy of insurance covering errors and
omissions which would meet the above stated requirements. Upon request of
Company, any Holder, or any Trust, Servicer shall cause to be delivered to
Company, all Holders, and/or all Trusts, a certification evidencing coverage
under such fidelity bond and insurance policy. Any such fidelity bond or
insurance policy shall not be canceled or modified without prior written
notice to all Trusts and without prior written consent of Company.
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 Delaware.
Servicer has, to the best of its knowledge, obtained all federal,
state and/or local licenses required to carry out the duties under
this Agreement in compliance with any applicable law or
regulation, if any. Servicer 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 and business interruption 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.
Company 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
Company, this Agreement is a valid and legally binding
agreement of Company enforceable in accordance with its
terms.
3. 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.
4. 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 Servicer to deliver to Company any proceeds or
payment required to be so delivered under the terms of this
Agreement that shall continue unremedied for a period of two
(2) Business Days after receipt of written notice to Servicer by
Company; or
2. Failure on the part of Servicer to observe or to perform in any
material respect any other covenants or agreements set forth in
this Agreement, which failure shall adversely affect the rights
of 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 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 Servicer in any bankruptcy, insolvency, readjustment of
debt, marshaling of assets and liabilities, or similar
proceedings, or 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 admission, in writing, by Servicer: (a) of its inability to
pay its debts generally as they become due; (b) that it has filed
a petition of any applicable bankruptcy, insolvency or
reorganization of any applicable statute; (c) that it has made an
arrangement for the benefit of its creditors or voluntarily
suspended payment of its obligations; or (d) that a third party
has forced Servicer into bankruptcy under Federal or State law;
then, and in each and every case and so long as an Event of Default
described above shall not have been remedied, Company may terminate
all of the rights and obligations of Servicer under this Agreement.
B. On or after the receipt by Servicer of such written notice, all authority
and power of Servicer under this Agreement, with respect to the
Receivables or otherwise, shall pass to and be vested in Company or
in any successor servicer to be appointed by Company. Company is
hereby authorized and empowered to execute and deliver on behalf of
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.
ARTICLE VII
REMEDIES
In addition to the indemnification rights contained in Article XI and the right
to terminate contained in Article XII, Servicer agrees that upon the happening
of any Event of Default, as defined in this Agreement, Company may avail
itself of any other relief to which Company may be legally or equitably
entitled.
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 servicing and administration that it may deem reasonably
necessary or desirable, consistent with the duties and obligations
imposed upon Servicer by this Agreement and the attached Exhibit A,
including, but not limited to, the right to subcontract (with the prior
written approval of Company, such approval not to be unreasonably
withheld) any of its duties hereunder. Notwithstanding, Servicer shall
cooperate fully with Company and promptly inform Company of any
and all changes or developments which may affect the servicing of the
Receivables or the Receivables themselves.
B. Company authorizes Servicer to communicate with third parties and the
Obligors in the name of 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 Servicer and Servicer shall accept such appointment
to act for Company as Custodian. Should Company elect to engage a
different Custodian, Servicer shall cooperate fully with this third party
to the best of its abilities.
D. Servicer may, subject to Company's approval (which approval shall
not be unreasonably withheld), employ or otherwise utilize sub-
contractors and enter into sub-contracting agreements in carrying out
its duties and obligations under this Agreement and the attached
Exhibit A.
E. Servicer shall have the right to commence a legal proceeding on behalf
of Company to enforce a Receivable. If Servicer shall exercise this
right, Company shall thereupon be deemed to have automatically
assigned such Receivable to Servicer, which assignment shall be solely
for the purpose of collection. Company shall furnish Servicer with any
powers of attorney and other documents necessary or appropriate to
enable Servicer to carry out its servicing and administrative duties
hereunder.
ARTICLE IX
BANK ACCOUNTS
A. Servicer shall establish, control and maintain bank accounts (including,
but not limited to, the Advance Account, Unwind/Reversal Account,
Depository Account, NSF Account and Reserve Account, as
applicable) and shall collect and hold in trust (for the benefit of
Company and Holders) in such accounts all funds received from either
Company, Holder or Obligor until such funds are depleted by Servicer,
as intended by the creation of the bank accounts or utilized as
instructed by Company. Company shall be responsible for all charges
on the bank accounts. All accounts shall be held with a financial
institution selected by Servicer and approved by the Company, which
approval shall not be unreasonably withheld. Company agrees that
Servicer shall bear no liability for any losses not attributable to the
negligence of Servicer or Servicer's sub-contractors. 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.
B. Servicer shall establish, control and maintain the Lock-Box Account
into which all of the payments received by the Servicer on behalf of
the Company are to be deposited, and such payments are to be posted
to the appropriate Obligor's account within 24 hours of identification.
All monies deposited to the Lock-Box Account must be swept to one
or more segregated Depository Accounts (held in the Servicer's name
for the benefit of the Company or its designee) as determined by the
Company, except for $5000.00, which may be left in the Lock-Box
Account from time to time at the Servicer's discretion. Company shall
be responsible for all charges to the Lock-Box Account. The Lock-
Box Account shall be held with a financial institution selected by
Servicer and approved by the Company, which approval shall not be
unreasonably withheld. Company agrees that Servicer shall bear no
liability for any losses not attributable to the negligence of Servicer or
Servicer's sub-contractors. 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.
ARTICLE X
DOCUMENTS AND RECORDS
A. SERVICING DOCUMENTS AND RECORDS
1. If required by Company, Holder or Trust, Company shall
retain, at its own expense, an independent public accounting
firm to prepare an audit report of the applicable Obligor
accounts. The basis and scope of such audit shall be defined by
Company, Holder or Trust, as the case may be.
2. Servicer will furnish copies of any such audit report prepared
for Servicer with respect to the Receivables to Company,
Holder or Trust promptly upon receipt thereof by Servicer.
3. All data, documents and information held by Servicer on behalf
of Company, Holder or Trust 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.
4. Servicer shall provide Company, Holder(s), Trust(s) or their
designee(s) access to Servicer's facility, but only upon
reasonable request and during normal business hours of
Servicer and to the extent that such access would not
significantly disrupt the orderly conduct of business at such
facility. If Company, any Holder or Trust exercises the right
to gain access to Servicer's facility, then Servicer shall be
reimbursed by said Holder or Trust for the costs of any
extraordinary expenses in connection with Servicer providing
such access (including, but not limited to, photocopying,
telephone calls or fax transmissions).
ARTICLE XI
INDEMNIFICATION
A. Servicer agrees to indemnify and hold Company, its respective
officers, employees and agents harmless against any and all claims,
losses, penalties, fines, forfeitures, legal fees and related costs,
judgements and any other costs, fees and expenses that Company, as
the case may be, may sustain in any way related to the performance by
Servicer under the terms of this Agreement and/or the attached Exhibit
A. Servicer shall immediately notify Company if a claim is made by
a third party with respect to this Agreement or the Receivables. The
Company shall assume the defense of any such claim and in its
discretion may settle or prosecute such claim. Servicer agrees to
reimburse Company for all expenses in connection therewith,
including reasonable counsel fees, settlement amount, judgement or
decree, if any, which may be entered against the Servicer or Company
in respect to such claim. This right to indemnification shall survive
the termination of this Agreement.
B. Company agrees to indemnify and hold Servicer, its respective
officers, employees and agents harmless against any and all claims,
losses, penalties, fines, forfeitures, legal fees and related costs,
judgements, and any other costs, fees and expenses that Servicer, as
the case may be, may sustain in any way related to the performance by
Company under the terms of this Agreement. Company shall
immediately notify Servicer if a claim is made by a third party with
respect to this Agreement or the Receivables. This right to
indemnification shall survive the termination of this Agreement.
ARTICLE XII
TERM AND TERMINATION
A. The term of this Agreement shall be for one (1) year from the date
first written above and will automatically renew for additional
successive one (1) year terms unless the Company or Servicer shall
upon ninety (90) days written notice elect not to renew the Agreement.
B Company shall have the right to terminate this Agreement (but not the
servicing of any Receivables being serviced under the original or any
subsequent term, unless Company exercises its right to transfer the
servicing of its portfolio or a portion thereof, as set forth in
sub-section C) upon not less than thirty (30) days written notice
delivered by overnight mail.
C. In the event Company elects to transfer the servicing of its portfolio or
any portion thereof, Servicer shall have thirty (30) calendar days (the
"Interim Period") from the effective date of the notice to complete the
transfer of all servicing to the Company or its designee. Upon
completion of the transfer of servicing from Servicer to Company or
its designee, Company shall pay to Servicer five (5) dollars for each
Receivable so transferred. Upon the transfer of a portfolio or any
portion thereof, Servicer shall, to the best of its abilities, take all
steps necessary to effectuate an efficient and proper transfer to a
servicer identified by Company, as requested by Company.
D. 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 (except for
those Receivables transferred in accordance with Article XII,
paragraph C hereof).
ARTICLE XIII
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 XIV
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 to the following:
To Servicer: Systems & Services Technologies, Inc.
4315 Pickett Road
St. Joseph, MO 64503
Attn: John J. Chappell, President
Telecopy No. (816) 671-2029
To Company: Aegis Consumer Finance, Inc.
525 Washington Blvd.
Jersey City, NJ 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 XV
ASSIGNABILITY
Neither Servicer nor Company may assign any of its rights or obligations
hereunder without the prior written consent of the non assigning party.
Notwithstanding the foregoing, to the extent the Company sells, assigns,
pledges or otherwise transfers any Receivables serviced hereunder, the
Company's rights hereunder relating to such Receivables may be similarly
sold, assigned, pledged or otherwise transferred. 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. Company retains the right to assign this Agreement to a third
party without the consent of Servicer.
ARTICLE XVI
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 XVII
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 XVIII
ENTIRE AGREEMENT; AMENDMENTS
This Agreement, including the exhibits 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 hereto.
This Agreement may not be modified, changed or supplemented except upon
the express written consent of both parties hereto. In the event of any
conflict between this Agreement and an exhibit hereto, the Agreement shall
govern.
This Agreement shall be governed by and construed in accordance with the
laws of the State of Delaware.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above.
SERVICER:
SYSTEMS & SERVICES TECHNOLOGIES, INC.
Attest:
By: John J. Chappell
Title: President
COMPANY:
AEGIS CONSUMER FINANCE,
INC.
Attest:
By: Joseph F. Battiato
Title: President
EXHIBIT A
SUMMARY OF SERVICES
I. LOAN BOARDING
A. Each day Company funds new loans that it
intends to have serviced by Servicer, Servicer
shall receive from Company, nightly, an
electronic transmission of all agreed upon data
elements.
B. On the day following each electronic
transmission, Servicer shall receive from
Company, by overnight delivery, the physical
loan packages corresponding to the electronic
transmission. The documents in each package
shall be placed by Company in the order which
appears in the attached Exhibit A-1 (the
"Stacking Order").
C. Beginning with receipt of the loan packages,
Servicer shall acquire an ongoing responsibility
to cause the following documents to be imaged
and stored electronically:
The original retail installment sales contract.
The original credit application.
A copy of the application for title.
The original guarantee of title.
The original title, or evidence of
Company's lien perfection ("Evidence of Title")
The buyer's reference list
In addition, Servicer may at its sole discretion
image subsequent documents received from or
on behalf of the Obligor, including, but not
limited to, insurance policies or endorsements,
change of address notices, general
correspondence, etc.
D. Servicer shall perform a data check to determine
the accuracy of the electronic transmission
against the physical loan package. Servicer's
data check shall include checking for the
following elements:
Amount Financed
Annual Percentage Rate (APR)
Contract Date
Scheduled Payment Amount
First Due Date
Year, Make, Model of Vehicle
At no time shall Servicer's check of the above
referenced data elements be construed to be a
verification of the authenticity of such data. The
accuracy of the Servicer's confirmation that the
data received through the electronic transmission
is the same as the data contained in the original
source documents shall be held to best efforts.
E. The day after acceptance of a loan by Servicer,
Servicer shall cause a "Welcome Letter" (a copy
of which is attached hereto, as Exhibit A-2) and
a payment statement to be sent to the Obligor.
In addition, Servicer shall make no less than
five (5) attempts to make an initial phone
contact with the Obligor confirming the
information as outlined in the "Phone
Verification Script" (a copy of which is attached
hereto, as Exhibit A-3). If after the fifth attempt
Servicer is unsuccessful in contacting the
Obligor, Servicer shall include the Obligor on an
exception report to be delivered to the Company
on the Report Delivery Date.
F. In the event Company sends Servicer a loan
package within five (5) days of the Obligor's
next scheduled payment due date, Company
shall, to the best of its ability, include either the
Obligor's next scheduled payment or evidence
that such payment was made by the Obligor.
G. Upon receipt of the original title or Evidence of
Title, as the case may be, Servicer shall verify
that the vehicle identification number appearing
on the original title or Evidence of Title is the
same as the vehicle identification number
appearing on the Sales Contract. If the vehicle
identification number appearing on the Sales
Contract is different from the vehicle
identification number appearing on the original
title or Evidence of Title, such disparity shall be
reflected in a weekly report to Company
containing among other things, identity of the
Obligor's account and the identity of the
originating dealership.
II. CUSTODIAL DUTIES OF SERVICER
A. Servicer shall perform a custodial check on those
documents contained in the loan packages
attempting to confirm a perfection of interest in
favor of Company. Servicer's custodial check
shall include checking for the elements which
appear in Exhibit D (a copy of which is
attached). At no time shall Servicer's custodial
check of the elements appearing in Exhibit D be
construed to be a verification of the authenticity
of such data. The check shall be held to a "best
effort" standard in confirming the data as
received through the electronic transmission
against the same data as displayed on the
original source documents.
B. Upon acceptance of a loan by Servicer, Servicer
shall establish all necessary records in its
computer system, as well as separate the
physical loan package for storage. The Docket
Documents shall be filed in appropriate fireproof
facilities.
C. Servicer shall receive file or store all remaining
non-docket origination documents with no
responsibility for receipt, verification or
correctness.
III. OBLIGOR ACCOUNTING
A. Servicer shall process all monies received by or
on behalf of an Obligor through the Lockbox
Account as described in Article IX of the
Agreement.
B. Servicer may, from time to time, use the
services of third party vendors to assist in the
receipt and processing of payments received by
or on behalf of Obligors, i.e., Western Union
"Quick Collect" or Speedpay. The use of such
vendors shall require the approval of Company,
such approval not to be unreasonably withheld.
C. To the extent possible, Servicer shall cause all
monies received by or on behalf of an Obligor to
post to the Obligor's account within one business
day of identification. All monies not identified
will be returned to the original sender after all
attempts to identify have been exhausted. All
monies posted to an Obligor's account shall be
swept from the Lockbox into one or more
Company designated accounts within one
business day of posting.
D. Servicer shall cause the Obligor's next scheduled
due date to roll when the Obligor payment
received is within $25.00 of the expected
monthly payment unless the aggregate unpaid
payment shortfalls exceeds $75.00 at the time of
posting.
E. Servicer shall hold in trust for the benefit of
Company, Holders and Trusts all such monies
received until the applicable Remittance Date as
defined in Article I of the Agreement.
F. Servicer shall withdraw monies from the
Advance Account as necessary to cover the
expenses incurred in the collection of an
Obligor's payments and/or the repossession of
an Obligor's Vehicle, including but not limited
to, field calls, repossession costs, storage and
transportation costs, legal costs, mailing costs,
skip tracing, mechanical liens, liquidation cost,
etc. To the extent there are not sufficient funds
in the Advance Account to cover such "out-of-
pocket" expenses, Company shall reimburse
Servicer pursuant to Article X infra. In
addition, Servicer shall post such expenses to the
applicable Obligor account and make every
reasonable effort to recover such expenses for
the sake of Company.
G. Servicer shall make distribution and report to
Company, Holder or Trust on each Remittance
Date in accordance with the terms and
conditions of any Purchase Agreement.
IV. CUSTOMER SERVICE
A. Servicer shall respond to all inquiries from
Obligors regarding their accounts.
B. Servicer shall provide to Obligors
or their approved representatives
(i) payment books or monthly
payment statements (monthly
payment statements will be sent
(10) ten pays prior to each of
Obligor's scheduled payment
dates), and (ii) payoff
information.
C. Servicer shall engage a subcontractor selected by
Company and approved by Servicer whose
approval shall not be unreasonably withheld for
the purposes of physical damage insurance
tracking. Servicer shall coordinate and assist
with electronic data transfers as needed. All
fees charged by subcontractor shall be paid by
Company. Any additional costs incurred by
Servicer in support of the selected subcontractor
shall be paid by Company.
D. Servicer shall advise Company in the event
Servicer does not receive the original title or
Evidence of Title within ninety (90) days of the
conditional sales contract date, or such title or
Evidence of Title is incorrect. It shall be
Company's responsibility to correct and perfect
the title. Servicer shall provide Company with
an Aged Title Report which will reflect when a
title was not received by Servicer.
V. COLLECTIONS
A. Servicer shall (i) use best efforts to collect
all payments called for under the terms and
provisions of the Receivables within the time
frames set forth below, and (ii) attempt to
contact a delinquent Obligor with the intent of
bringing the account current within the
following time frames:
By the Fifth Collection Day of delinquency
Servicer shall make an attempt to contact
the Obligor by phone.
If the attempt to contact the Obligor by
phone is unsuccessful Servicer shall make
additional attempts to contact the Obligor
by phone every three (3) collection days
thereafter until a successful phone contact
is made, payment is received or the
account is determined to be uncollectible.
If there is no contact by the Tenth
Collection Day of delinquency, a letter will
be sent.
If a Promise to Pay is obtained and
subsequently broken, (i) Servicer will send
a letter to the Obligor, and (ii) an attempt
to contact the Obligor will be made each
collection day thereafter until a successful
contact is made, payment is received or the
account is determined to be uncollectible.
Additional letters and/or other
correspondence may be sent at Servicer s
discretion.
Field calls may be used at Servicer s
discretion within Company s standards.
For the purposes of this Agreement:
(i) Delinquency shall be calculated on a 360
day calendar year.
(ii) Any audit as to compliance with these
procedures shall include no less than 100
accounts selected at random, all of which
represent statistically significant samples
of the specific collection function being
analyzed for compliance.
B. Servicer, at its sole discretion, may use
whatever methods (within legally permitted
boundaries) to collect the account, including
outside telephone calls, mailed notices, outside
field calls, etc.
C. If Servicer has determined or has reason to
believe that an Obligor is or may become a
"Skip", Servicer shall make all reasonable
attempts to locate the Obligor or Vehicle using
internal skip tracing procedures as well as sub-
contracting for outside services. Servicer shall
continue with its skip tracing efforts for the
period(s) of time indicated in the applicable
Credit Enhancement policy(ies) as described in
Exhibit F (a copy of which is attached hereto).
D. Servicer shall report monthly Obligor activity
and status to one or more of the nationally
recognized Credit Agencies using Company's
applicable subscriber code.
VI. SPECIAL RECOVERIES
A. Servicer will attempt to collect the Obligor's
account and apply all payments received until
such time as Servicer determines that further
payments will not be forthcoming from the
Obligor. At such time, Servicer shall use its
best efforts to repossess or otherwise recover the
Vehicle securing any Receivable as to which
Servicer shall have determined that eventual
repayment in full is unlikely and such
repossession or recovery is permitted under the
terms of the Receivable and any applicable law,
as follows:
At such time as a Vehicle has been
authorized for repossession, Servicer
shall assign the account to a regional
repossession agency. Such agent shall be
a member of a nationally recognized
association requiring adequate insurance
and bonding, i.e. National Finance
Adjusters and others.
Upon repossession, the repossession
agency shall deliver the Vehicle to the
destination specified by Company.
Servicer will engage, on Company's
behalf, an inspection agent to assess
physical damage to the Vehicle.
Company will manage the repair and
auction process and will provide the
timely and necessary information to
update Servicer's computer records
relating to repair and liquidation costs
and auction proceeds.
Within three (3) business days of
notification of repossession by the
repossession Agency, Servicer shall
produce and mail to the Obligor the
Notice of Intent ("NOI") to sell the
Vehicle.
Upon delivery of the Vehicle (and any
documents in Servicer's possession which
would be necessary to evidence
Company's interest in said Vehicle i.e.
Sales Contract, title, Evidence of Title,
etc.) to the selling location, Servicer
shall notify Company of the location and
the NOI expiration date.
If Servicer is not the Custodian of the
title or Evidence of Title, Servicer shall
request the appropriate documentation
from the Custodian at the time the NOI
is issued. Upon expiration of the NOI,
Servicer shall send the title or Evidence
of Title to the selling location if
received.
B. In the event a Vehicle is repossessed, Company
shall cause the Vehicle to be liquidated. Upon
liquidation of the Vehicle, Company shall send
(or cause to be sent) the liquidation proceeds to
Servicer. Servicer shall apply such proceeds to
the applicable Obligor account.
C. Following the liquidation of a Vehicle, Servicer
shall post all receipts and apply all credits that
may exist to the applicable Obligor account. If
the account is insured under a Credit
Enhancement policy, Servicer shall perform the
necessary claims filing as indicated in the
attached Exhibit C. Any changes contemplated
to the attached Claims Filing Procedures must be
reviewed and agreed to by Servicer unless such
changes are required by the Credit Enhancement
policy insurer or administrator. Such changes
may result in an adjustment to the Claim Filing
Fee as outlined in Article IX B infra.
D. If Servicer becomes aware of a bankruptcy filing
by an Obligor, Servicer shall take the necessary
and allowable actions to protect Company's
interest in the case as indicated in the attached
Exhibit D.
E. If, after the liquidation of the Vehicle and the
posting of all proceeds, any Obligor balance
remains outstanding, Servicer will charge off the
account and forward any resulting deficiency
balance information in a statement ("Deficiency
Accounting Statement"), in accordance with
Company's instructions.
F. Servicer will create and distribute the Deficiency
Accounting Statement in accordance with the
Company's instructions and other governing
statutes.
G. Servicer agrees to transmit Deficiency
information (in form and substance as directed
by Company agreed to by the Servicer whose
agreement will not be unreasonably withheld) to
third party deficiency collection agencies
identified to Servicer by Company. Servicer
further agrees to receive and process information
received back from third party deficiency
collection agencies and update Obligor accounts
accordingly.
VII. ADDITIONAL DUTIES OF SERVICER (From II. B-F)
A. Servicer shall establish a physical file for each
Receivable. In addition, Servicer shall keep
satisfactory books and records pertaining to each
Receivable and shall make periodic reports
pursuant to the Agreement and in a form similar
to that which appears in the attached Exhibit B.
Such records may not be destroyed or otherwise
disposed of except as permitted by Company and
as allowed by applicable laws, regulations or
decrees. All documents pertaining to each
Receivable, whether developed or originated by
Servicer or not, shall remain at all times the
property of Company, Holder or Trust
designated by Company. 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 Agreement.
B. Servicer shall make available to Holder, Trustee
of any Trust as applicable and Company or their
duly authorized representatives, attorneys, or
auditors, the above referenced files and any
related accounts, records and computer systems
maintained by Servicer, upon reasonable request,
so long as compliance with such request does
not unreasonably disrupt Servicer's operations.
C. Servicer shall provide on-line access to its
computer system for Company in read-only
fashion (excepting for those functions which
Company has agreed to provide direct data
entry). The cost associated with connectivity
(data lines and appropriate data transfer
methodology) are to be borne solely by
Company.
D. Servicer shall provide Company with a nightly
data download of certain servicing information
on each of Company's Obligors in an agreed
upon time frame and data format. Servicer shall
be held to "best efforts" in modifying the data
format in accordance with Company's changing
requirements as they might arise.
E. Unless otherwise specified herein, Servicer shall
maintain physical possession or computerized
records, of good and legible copies of the above
referenced 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 Servicer that are
required to document or service any Receivable.
VIII. BOARDING FEE
Servicer shall receive ten dollars ($10) for each
Receivable boarded onto Servicer's computer system
("Boarding Fee").
IX. GENERAL SERVICING FEE
A. For each Receivable with a Remaining Obligor
Principal Balance greater than zero dollars
($0.00) as of the first day of the related
Remittance Period, Company shall pay a
monthly servicing fee equal to (annualized)
of the outstanding Remaining Obligor Principal
Balance or [ ] dollars ($), whichever is greater
("General Servicing Fee"). 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. In addition, Servicer shall receive all
extension fees and late charges received during
the related Remittance Period.
B. In the event Servicer files risk default insurance
claims on behalf of Company, Servicer shall
receive $ per filing ("Claim Filing Fee").
This charge is subject to change as any
requirements from Insurer change.
C. There shall be a $ monthly servicing fee for
each Inactive Receivable until such time as
Company instructs Servicer to write the
Obligor s principal balance down to $0.00.
X. EXPENSE REIMBURSEMENT
All out-of-pocket expenses incurred by Servicer in the
pursuit of its job functions as described in this
Agreement (or any Schedule attached hereto), including,
but not limited to: filing fees, investigation fees,
repossession fees, transportation and storage fees, legal
fees, DMV fees, mailing costs associated with
collection efforts or payment processing, etc. ("Expense
Reimbursement"), shall be reimbursed to Servicer at
Servicer's actual cost.
XI. METHOD OF PAYMENT
1. All Boarding Fees, General Servicing Fees and
Expense Reimbursement earned during a
Remittance Period may be withdrawn by
Servicer from the applicable bank account on the
Remittance Date 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) business days of the billing by Servicer
for such fees.
April 25, 1997
Greenwich Capital Markets
Re: Restructure of Aegis Revolving Credit Facility
and Purchase of Aegis Auto Receivables Trust
1996-A
The following are the proposed terms of the restructuring
of Aegis Consumer Funding Group, Inc.'s ("Aegis") revolving
credit facility with Greenwich Capital Markets ("Greenwich")
and the purchase of Aegis Auto Receivables Trust 1996-A
("1996-A"):
1. Aegis has made the indicated deposits in the following
trusts:
Aegis Auto Receivables Trust - 1996-1 $
611,000
Aegis Auto Receivables Trust - 1996-2
1,124,910
Total $
1,735,910
2. Aegis will use $1 million of the proceeds of the sale of
convertible debentures to pay- down the $5 million balance
of the revolving credit
facility.
3. Aegis will repay $2 million of the balance of the
revolving credit facility proportionately (pari passu) with
principal payments
made by Aegis on
the total principal
balances of the
convertible
debentures and III
Finance's retained
yield financing (a
total of $41.33
million). The term
of this loan will be
four (4) years from
the date of closing of
the convertible
debentures.
4. The approximate balance of $2 million will be completely
subordinated to both the convertible debentures and III
Finance's senior lien on the retained
yields. Interest as specified in #5
below will be paid currently. The
term of this loan will be four (4)
years from the date of closing of
the convertible debentures.
5. The revolving credit line balance of approximately $4
million (after the pay-down of the $1 million specified in #2
above) will bear interest at
12% per annum.
6. In return for each $250 million of auto loan servicing that
Greenwich arranges to be placed with Aegis, $1 million of the
subordinated loan balance specified
in #4 above will be treated as a
loan balance described in #3 above,
i.e., will be pari passu with the
convertible debentures with respect
to principal payments.
Accordingly, if $500 million of
auto loan servicing is provided to
Aegis, the entire balance of
approximately $4 million payable to
Greenwich will be treated equally
with the owner of the subordinated
debentures.
The conversion of Greenwich's loan from subordinated to
pari passu under this paragraph will occur in multiples of
$50 million of loan servicing placed by Greenwich.
Accordingly, for each $50 million of servicing place,
$200,000 of the subordinated loan balance will be
converted to pari passu status.
7. For each $250 million of auto loan servicing that
Greenwich arranges to be placed with Aegis in excess of $500
million, $1 million of the
pari passu loan balance
specified in #5 above will be
treated as senior to the
convertible debentures with
respect to principal
payments. Accordingly, if
an additional $1 billion of
auto loan servicing is
provided to Aegis (a total of
$1.5 billion), the convertible
debentures will be
completely subordinated to
Greenwich's loan position.
The conversion of
Greenwich's loan from pari
passu to senior under this
paragraph will occur in
multiples of $50 million of
loan servicing placed by
Greenwich in excess of $500
million. Accordingly, for
each $50 million of
servicing placed in excess of
$500 million, $200,000 of
the pari passu loan balance
will be elevated to senior
status. Any portion of the
convertible debentures
subordinated to Greenwich's
position under this provision
will continue to be entitled
to current interest payments
at a 12% annual rate.
8. Further, in return for each $250 million of auto loan
servicing that Greenwich arranges to be placed with Aegis,
the strike price on
Greenwich's
options/warrants will
reduced by $1.25.
The reduction of the
strike price under this
paragraph will occur
in multiples of $50
million of loan
servicing placed by
Greenwich.
Accordingly, for each
$50 million of
servicing placed, the
strike price will be
reduced by $0.25.
However, irrespective
of the amount of
such servicing
placed, in no event
will the strike price
be reduced below
$4.00.
9. III Finance Ltd., and/or a related entity, will purchase
1996-A at par plus accrued coupon interest. The closing
of the purchase of
1996-A will occur
simultaneously with
the closing of Aegis
Auto Receivables
Trust 1997-3, which
is expected to occur
no later than 30 days
after the date of this
document.
<PAGE>
Acknowledged and Agreed:
GREENWICH CAPITAL MARKETS
By:
Date:
AEGIS CONSUMER FUNDING GROUP, INC.
By:
Date:
III FINANCE LTD.
By:
Date:
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED CONDENSED FINANCIAL STATEMENTS OF THE AEGIS CONSUMER FUNDING
GROUP, INC. AND SUBSIDIARIES AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS WHICH STARTS ON PAGE 3 OF THIS REPORT.
</LEGEND>
<S> <C> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR 9-MOS 9-MOS
<FISCAL-YEAR-END> JUN-30-1997 JUN-30-1996 JUN-30-1997 JUN-30-1996
<PERIOD-END> MAR-31-1997 JUN-30-1996 MAR-31-1997 MAR-31-1996
<CASH> $1,698,502 $3,090,624 0 0
<SECURITIES> 0 0 0 0
<RECEIVABLES> 64,524,509 41,058,222 0 0
<ALLOWANCES> 0 0 0 0
<INVENTORY> 0 0 0 0
<CURRENT-ASSETS> 0 0 0 0
<PP&E> 0 0 0 0
<DEPRECIATION> 0 0 0 0
<TOTAL-ASSETS> $129,307,618 $121,451,754 0 0
<CURRENT-LIABILITIES> $114,919,210 $87,460,289 0 0
<BONDS> 0 0 0 0
0 0 0 0
11 53 0 0
<COMMON> 176,772 154,560 0 0
<OTHER-SE> 0 0 0 0
<TOTAL-LIABILITY-AND-EQUITY> $129,307,618 $121,451,754 0 0
<SALES> 0 0 0 0
<TOTAL-REVENUES> 0 0 $6,763,341 $31,627,847
<CGS> 0 0 0 0
<TOTAL-COSTS> 0 0 0 0
<OTHER-EXPENSES> 0 0 18,066,048 10,424,090
<LOSS-PROVISION> 0 0 7,979,089 2,505,628
<INTEREST-EXPENSE> 0 0 13,674,274 7,306,368
<INCOME-PRETAX> 0 0 (32,956,070) 11,391,761
<INCOME-TAX> 0 0 (8,427,030) 5,012,400
<INCOME-CONTINUING> 0 0 (24,529,040) 6,379,361
<DISCONTINUED> 0 0 0 0
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 0 0 0
<NET-INCOME> 0 0 $(24,529,040) $6,379,361
<EPS-PRIMARY> 0 0 $(1.53)<F1>
$0.45
<EPS-DILUTED> 0 0 $(1.53)<F1>
$0.42
<FN>
<F1>The net loss available to common stockholders' for the nine months ended
March 31, 1997 of $(24,529,040) includes an adjustment of $178,240 for
dividends fo rthe Series C preferred stock, which are deemed to be
dilutive common equivalent shares.
</FN>
</TABLE>
