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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED OCTOBER 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ____________ TO_____________
COMMISSION FILE NUMBER 0-26686
FIRST INVESTORS FINANCIAL SERVICES GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 76-0465087
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
675 BERING DRIVE, SUITE 710
HOUSTON, TEXAS 77057
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(713) 977-2600
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ].
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
SHARES
OUTSTANDING AT
CLASS DECEMBER 6, 1996
----- ----------------
COMMON STOCK -- $.001 PAR VALUE 5,566,669
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<PAGE>
FIRST INVESTORS FINANCIAL SERVICES GROUP, INC.,
AND SUBSIDIARIES
FORM 10-Q
OCTOBER 31, 1996
TABLE OF CONTENTS
PAGE NO.
--------
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of
April 30, 1996 and
October 31, 1996..................... 3
Consolidated Statements of Operations
for the Three Months and
Six Months Ended October 31, 1995 and
1996................................. 4
Consolidated Statement of
Shareholders' Equity for the Six
Months Ended October 31, 1996........ 5
Consolidated Statements of Cash Flows
for the Six Months Ended
October 31, 1995 and 1996............ 6
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations........................... 10
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K..... 18
SIGNATURES................................... 19
2
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRST INVESTORS FINANCIAL SERVICES GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS -- APRIL 30, 1996 AND OCTOBER 31, 1996
APRIL 30, OCTOBER 31,
1996 1996
--------------- ------------
(UNAUDITED)
ASSETS
Receivables Held for Investment,
net................................ $ 96,263,092 $109,560,386
Cash and Short-Term Investments,
including restricted cash of
$3,048,148 and $2,518,003.......... 6,649,417 6,116,137
Other Receivables:
Due from servicer............... 5,266,531 6,431,124
Accrued interest................ 1,613,953 1,763,229
Assets Held for Sale................. 1,912,050 1,786,329
Other Assets:
Funds held under reinsurance
agreement..................... 2,830,689 1,240,469
Deferred financing costs and
other, net of accumulated
amortization and depreciation
of $446,603 and $536,874...... 828,613 1,048,696
Federal income tax receivable... 295,523 90,500
--------------- ------------
Total assets............... $ 115,659,868 $128,036,870
=============== ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Debt:
Secured credit facilities....... $ 91,048,636 $102,432,154
Other Liabilities:
Due to dealers.................. 806,634 553,832
Accounts payable and accrued
liabilities................... 1,692,942 1,320,589
Current income taxes payable.... 193,434 --
Deferred income taxes payable... 125,472 378,332
--------------- ------------
Total liabilities.......... 93,867,118 104,684,907
--------------- ------------
Commitments and Contingencies
Shareholders' Equity:
Common stock, $0.001 par value,
10,000,000 shares authorized,
5,566,669 and 5,566,669,
shares issued and
outstanding................... 5,567 5,567
Additional paid-in capital...... 18,464,918 18,464,918
Retained earnings............... 3,322,265 4,881,478
--------------- ------------
Total shareholders'
equity..................... 21,792,750 23,351,963
--------------- ------------
Total liabilities and
shareholders' equity....... $ 115,659,868 $128,036,870
=============== ============
The accompanying notes are an integral part of these consolidated financial
statements.
3
<PAGE>
FIRST INVESTORS FINANCIAL SERVICES GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND SIX MONTHS ENDED OCTOBER 31, 1995 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS ENDED
---------------------------- ----------------------------
OCTOBER 31, OCTOBER 31, OCTOBER 31, OCTOBER 31,
1995 1996 1995 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest Income...................... $ 3,332,995 $ 4,577,626 $ 6,259,687 $ 9,077,657
Interest Expense..................... 1,282,717 1,668,225 2,491,726 3,228,822
----------- ----------- ----------- -----------
Net interest income........ 2,050,278 2,909,401 3,767,961 5,848,835
Provision for Credit Losses.......... 120,000 401,367 220,000 760,974
----------- ----------- ----------- -----------
Net Interest Income After Provision
for Credit Losses.................. 1,930,278 2,508,034 3,547,961 5,087,861
----------- ----------- ----------- -----------
Other Income:
Late fees and other............. 131,654 145,645 226,711 317,594
----------- ----------- ----------- -----------
Operating Expenses:
Servicing fees.................. 264,608 382,211 503,808 734,525
Salaries and benefits........... 418,794 498,927 798,700 1,117,430
Other........................... 580,161 500,903 1,015,605 1,098,047
----------- ----------- ----------- -----------
Total operating expenses... 1,263,563 1,382,041 2,318,113 2,950,002
----------- ----------- ----------- -----------
Income Before Provision for Income
Taxes.............................. 798,369 1,271,638 1,456,559 2,455,453
----------- ----------- ----------- -----------
Provision for Income Taxes:
Current......................... 212,231 323,569 332,076 643,380
Deferred........................ 75,410 140,608 192,285 252,860
----------- ----------- ----------- -----------
Total provision for income
taxes.................... 287,641 464,177 524,361 896,240
----------- ----------- ----------- -----------
Net Income........................... $ 510,728 $ 807,461 $ 932,198 $ 1,559,213
----------- ----------- ----------- -----------
Preferred Stock Dividends............ (22,033) -- (50,033) --
----------- ----------- ----------- -----------
Net Income Allocable to Common
Shareholders before Redemption of
Preferred Stock.................... 488,695 807,461 882,165 1,559,213
Premium Paid Upon Redemption of
Preferred Stock.................... (160,000) -- (160,000) --
----------- ----------- ----------- -----------
Net Income Allocable to Common
Shareholders after Redemption of
Preferred Stock.................... $ 328,695 $ 807,461 $ 722,165 $ 1,559,213
=========== =========== =========== ===========
Net Income Per Common Share before
Redemption of Preferred Stock...... $0.12 $0.15 $0.22 $0.28
=========== =========== =========== ===========
Net Income Per Common Share after
Redemption of Preferred Stock...... $0.08 $0.15 $0.18 $0.28
=========== =========== =========== ===========
The accompanying notes are an integral part of these consolidated financial
statements.
</TABLE>
4
<PAGE>
FIRST INVESTORS FINANCIAL SERVICES GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED OCTOBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL EARNINGS TOTAL
------- -------------- ------------ --------------
<S> <C> <C> <C> <C>
Balance, April 30, 1996.............. $5,567 $ 18,464,918 $ 3,322,265 $ 21,792,750
Net income...................... -- -- 1,559,213 1,559,213
------- -------------- ------------ --------------
Balance, October 31, 1996............ $5,567 $ 18,464,918 $ 4,881,478 $ 23,351,963
======= ============== ============ ==============
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
5
<PAGE>
FIRST INVESTORS FINANCIAL SERVICES GROUP, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED OCTOBER 31, 1995 AND 1996
(UNAUDITED)
1995 1996
--------------- ---------------
Cash Flows From Operating Activities:
Net income...................... $ 932,198 $ 1,559,213
Adjustments to reconcile net
income to net cash used in
operating activities --
Depreciation and
amortization expense..... 484,753 799,614
Provision for credit
losses................... 220,000 760,974
Charge-offs, net of
recoveries............... (216,073) (630,761)
(Increase) decrease in:
Accrued interest
receivable............... (314,952) (149,276)
Restricted cash............ 766,999 530,145
Deferred financing costs
and other................ (231,235) (289,725)
Funds held under
reinsurance agreement.... (582,974) 1,590,220
Due from servicer.......... (1,380,117) (1,164,593)
Deferred income tax
asset.................... 192,285 --
Federal income tax
receivable............... -- 205,023
Increase (decrease) in:
Due to dealers............. 27,463 (252,802)
Accounts payable and
accrued liabilities...... (15,168) (372,353)
Due to shareholders........ (46,667) --
Current income taxes
payable.................. (502,023) (193,434)
Deferred income taxes
payable.................. -- 252,860
--------------- ---------------
Net cash provided by
(used in) operating
activities.......... (665,511) 2,645,105
--------------- ---------------
Cash Flows From Investing Activities:
Purchase of receivables......... (32,436,986) (35,391,364)
Principal payments from
receivables................... 15,717,581 21,395,234
Purchase of furniture and
equipment..................... (45,493) (35,628)
--------------- ---------------
Net cash used in
investing
activities.......... (16,764,898) (14,031,758)
--------------- ---------------
Cash Flows From Financing Activities:
Proceeds from advances on
secured debt.................. 27,602,242 31,354,444
Principal payments made on --
Secured debt............... (14,967,609) (19,970,926)
Unsecured debt............. (5,000,000) --
Proceeds from issuance of common
stock, net of issuance costs.. 18,466,818 --
Redemption of preferred stock... (960,000) --
Preferred stock dividends
paid.......................... (50,033) --
--------------- ---------------
Net cash provided by
financing
activities.......... 25,091,418 11,383,518
--------------- ---------------
Increase (Decrease) in Cash and
Short-Term Investments............. 7,661,009 (3,135)
Cash and Short-Term Investments at
Beginning of Period................ 1,517,438 3,601,269
--------------- ---------------
Cash and Short-Term Investments at
End of Period...................... $ 9,178,447 $ 3,598,134
=============== ===============
Supplemental Disclosures of Cash Flow
Information:
Cash paid during the period
for --
Interest................... $ 2,518,526 $ 3,055,713
Income taxes............... 834,100 631,791
The accompanying notes are an integral part of these consolidated financial
statements.
6
<PAGE>
FIRST INVESTORS FINANCIAL SERVICES GROUP, INC., AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
OCTOBER 31, 1995 AND 1996
1. THE COMPANY
ORGANIZATION. First Investors Financial Services Group, Inc. (First
Investors) together with its direct and indirect subsidiaries (collectively
referred to as the Company) is principally involved in the business of acquiring
and holding for investment retail installment contracts secured by new and used
automobiles and light trucks (receivables) originated by factory authorized
franchised dealers. As of October 31, 1996, approximately 48 percent of
receivables held for investment were located in Texas. The Company currently
operates in 17 states.
2. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION. The consolidated financial statements include the
accounts of First Investors and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
The results for the interim periods are not necessarily indicative of the
results of operations that may be expected for the fiscal year. In the opinion
of management, the information furnished reflects all adjustments which are of a
normal recurring nature and are necessary for a fair presentation of the
Company's financial position as of October 31, 1996, and the results of its
operations for the three months and six months ended October 31, 1995 and 1996,
and its cash flows for the six months ended October 31, 1995 and 1996.
The consolidated financial statements for the interim periods have been
prepared pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations, although the Company believes that the disclosures are adequate to
make the information not misleading.
Certain reclassifications have been made to the 1995 amounts to conform
with the 1996 presentation.
EARNINGS PER SHARE. Earnings per share amounts are calculated based on net
income available to common shareholders after preferred dividends, if any, and
in the case of the three and six months ended October 31, 1995, the premium paid
to the holders of the 1993 preferred stock upon its redemption, divided by the
weighted average number of shares of common stock outstanding, adjusted for a
3-for-1 stock split paid on June 7, 1995. The weighted average common shares
outstanding for the three months ended October 31, 1995 and 1996, were 4,244,928
and 5,566,669, respectively; and for the six months ended October 31, 1995 and
1996, were 3,955,797 and 5,566,669, respectively.
3. RECEIVABLES HELD FOR INVESTMENT
Net receivables consisted of the following:
APRIL 30, OCTOBER 31,
1996 1996
-------------- ---------------
Receivables.......................... $ 94,357,356 $ 107,016,460
Unamortized premium and deferred
fees............................... 2,535,863 3,304,266
Allowance for credit losses.......... (630,127) (760,340)
-------------- ---------------
Net receivables................. $ 96,263,092 $ 109,560,386
============== ===============
7
<PAGE>
FIRST INVESTORS FINANCIAL SERVICES GROUP, INC., AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
CORE PROGRAM. At October 31, 1996, the Company had investments in
receivables pursuant to the core program with an aggregate principal balance of
$100,043,006.
Activity in the allowance for credit losses for the six months ended
October 31, 1996, was as follows:
Balance, beginning of period......... $ 630,127
Provision for credit losses.......... 760,974
Charge-offs, net of recoveries....... (630,761)
------------
Balance, end of period............... $ 760,340
============
PARTICIPATING PROGRAM. At October 31, 1996, the Company had investments in
receivables pursuant to the dealer recourse program with an aggregate principal
balance of $6,769,633. The Company was reimbursed by participating dealers for
$8,842 of losses incurred during the six months ended October 31, 1996. During
the six months ended October 31, 1996, excess cash flows of $40,645 were
remitted to the dealers pursuant to this program.
The following table summarizes activity in the dealer reserves for the six
months ended October 31, 1996.
Balance, beginning of period......... $ 765,504
Additions............................ 11,688
Charges to dealer reserve accounts,
net of recoveries.................. (228,797)
Amounts remitted to dealers.......... (2,382)
------------
Balance, end of period............... $ 546,013
============
PORTFOLIO ACQUISITIONS. At October 31, 1996, the Company had receivables
with an aggregate principal balance of $203,821 which were acquired in portfolio
transactions.
4. DEBT
Borrowings under the warehouse credit facility and commercial paper
facility were $43,110,000 and $59,322,154, respectively, at October 31, 1996,
and had weighted average interest rates, including the effect of facility fees,
program fees, dealer fees, and hedge instruments, as applicable, of 6.33 percent
and 6.12 percent, respectively.
The Company's credit facilities bear interest at floating interest rates
which are reset on a short-term basis whereas its receivables bear interest at
fixed rates which are generally at the maximum rates allowable by law which do
not generally vary with changes in interest rates. To manage the risk of
fluctuation in the interest rate environment, the Company enters into interest
rate swaps and caps to lock in what management believes to be an acceptable net
interest spread. However, the Company will be exposed to limited rate
fluctuation risk to the extent it cannot perfectly match the timing of net
advances from its credit facilities and acquisitions of additional interest rate
protection agreements.
On October 22, 1996, the Company completed a $105 million commercial paper
conduit financing through Enterprise Funding Corporation, a commercial paper
conduit administered by NationsBank. The financing was provided to a
special-purpose, wholly-owned subsidiary of the Company, First Investors Auto
Receivables Corporation. It replaced an existing $75 million commercial paper
conduit facility which was provided by Enterprise Funding to another special-
purpose, wholly-owned subsidiary of the Company, F.I.R.C., Inc. Credit
enhancement for the new $105 million facility is provided to the commercial
paper investors by a surety bond issued by MBIA Insurance Corporation.
Borrowings under the commercial paper facility bear interest at
8
<PAGE>
FIRST INVESTORS FINANCIAL SERVICES GROUP, INC., AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
the commercial paper rate plus a borrowing spread equal to 0.25% per annum.
Additionally, the agreement provides for additional fees based on the unused
amount of the facility and dealer fees associated with the issuance of the
commercial paper. A surety bond premium equal to 0.35% per annum is assessed
based on the outstanding borrowings under the facility. The commercial paper
facility has been initially provided for a term of one year, expiring October
21, 1997. If the facility were not extended, receivables pledged as collateral
would be allowed to amortize; however, no new receivables would be allowed to be
transferred from the warehouse credit facility.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Net income for the three months ended October 31, 1996 was $807,461, an
increase of 58% from that reported for the comparable period in the preceding
year of $510,728. Net income for the six months ended October 31, 1996 was
$1,559,213, an increase of 67% from that reported for the comparable period in
the preceding year of $932,198. Earnings per common share from operations were
$0.15 and $0.28 for the three and six months ended October 31, 1996,
respectively. All share and per share data has been restated to reflect the 3:1
stock split paid on June 7, 1995, effected in the form of a stock dividend.
NET INTEREST INCOME
The continued profitability of the Company during these periods has been
achieved by the growth of the receivables portfolio and effective management of
net interest income. The following table summarizes the Company's growth in
receivables and net interest income (dollars in thousands):
AS OF OR FOR THE
SIX MONTHS ENDED
OCTOBER 31,
---------------------
1995 1996
--------- ----------
Investment in receivables:
Number.............................................. 7,076 9,680
Principal balance................................... $ 77,775 $ 107,016
Average principal balance of
receivables outstanding during
the period......................................... $ 70,004 $ 101,471
THREE MONTHS ENDED SIX MONTHS ENDED
OCTOBER 31, OCTOBER 31,
-------------------- --------------------
1995 1996 1995 1996
--------- --------- --------- ---------
Interest income(1).................. $ 3,333 $ 4,577 $ 6,260 $ 9,078
Interest expense.................... 1,283 1,668 2,492 3,229
--------- --------- --------- ---------
Net interest income............ $ 2,050 $ 2,909 $ 3,768 $ 5,849
========= ========= ========= =========
- - ------------
(1) Amounts shown are net of yield participations paid to dealers pursuant to
the participating program of $52, $21, $119 and $41, respectively.
10
<PAGE>
The following table sets forth information with regard to the Company's net
interest spread, which represents the difference between the effective yield on
receivables and the Company's average cost of debt, and its net interest margin
(averages based on month-end balances):
THREE MONTHS SIX MONTHS
ENDED ENDED
OCTOBER 31, OCTOBER 31,
-------------------- --------------------
1995 1996 1995 1996
--------- --------- --------- ---------
Effective yield on receivables(1).. 18.3% 17.5% 17.9% 17.9%
Average cost of debt(2)............ 6.8 6.6 7.0 6.6
--------- --------- --------- ---------
Net interest spread(3)............. 11.5% 10.9% 10.9% 11.3%
========= ========= ========= =========
Net interest margin(4)............. 11.3% 11.1% 10.8% 11.5%
========= ========= ========= =========
- - ------------
(1) Represents interest income as a percentage of average receivables
outstanding.
(2) Represents interest expense as a percentage of average debt outstanding.
(3) Represents yield on receivables less average cost of debt.
(4) Represents net interest income as a percentage of average receivables
outstanding.
Net interest income is the difference between interest earned from the
receivables portfolio and interest expense incurred on the credit facilities
used to acquire the receivables. Net interest income increased for the three and
six months ended October 31, 1996 to $2.909 million and $5.849 million,
respectively, from $2.050 million and $3.768 million for the comparable periods
in the preceding year. Net interest income in 1996 represents increases of 42%
and 55% from the same periods in 1995.
Changes in the principal amount and rate components associated with the
receivables and debt can be segregated to analyze the periodic changes in net
interest income. The following table analyzes the changes attributable to the
principal amount and rate components of net interest income (dollars in
thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
OCTOBER 31, OCTOBER 31,
1995 TO 1996 1995 TO 1996
----------------------------------- -----------------------------------
INCREASE (DECREASE) INCREASE (DECREASE)
DUE TO CHANGE IN DUE TO CHANGE IN
--------------------- ---------------------
AVERAGE AVERAGE
PRINCIPAL AVERAGE TOTAL NET PRINCIPAL AVERAGE TOTAL NET
AMOUNT RATE INCREASE AMOUNT RATE INCREASE
--------- ------- --------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Interest income...................... $ 1,476 $ (232 ) $ 1,244 $ 2,814 $ 4 $ 2,818
Interest expense..................... 444 (59 ) 385 931 (194) 737
--------- ------- --------- --------- ------- ---------
Net interest income.................. $ 1,032 $ (173 ) $ 859 $ 1,883 $ 198 $ 2,081
========= ======= ========= ========= ======= =========
</TABLE>
RESULTS OF OPERATIONS
THREE AND SIX MONTHS ENDED OCTOBER 31, 1996 AND 1995 (DOLLARS IN THOUSANDS)
INTEREST INCOME. Interest income for the 1996 periods increased to $4,577
and $9,078 for the respective periods. These results compare with $3,333 and
$6,260 for the comparable periods in 1995 and reflects an increase of 37% and
45%, respectively. The increase in interest income is due to an increase in the
average principal balance of receivables held of 44% and 45%, respectively from
the 1995 to 1996 comparable periods. The increase in average principal balance
of receivables held for the three months ended offset a 0.8% decline in the
effective yield realized on the receivables. The effective yield for the six
months ended was flat relative to the prior period. Management attributes the
decrease in yield to a reduction in financing fees paid by dealers and an
increase in the percentage of receivables on which rate participation is paid to
dealers as incentive to utilize the Company's financing programs.
11
<PAGE>
INTEREST EXPENSE. Interest expense in 1996 increased to $1,668 and $3,229
as compared to $1,283 and $2,492 in 1995. The increase of 30% and 30% was due to
an increase in the weighted average borrowings outstanding of 35% and 37%. The
weighted average cost of debt declined 0.2% and 0.4% as compared to 1995,
reflecting a general decline in market rates and the expiration of certain
interest rate swaps during the period.
NET INTEREST INCOME. Net interest income increased to $2,909 and $5,849,
respectively in 1996, an increase of 42% and 55%, respectively over the
comparable 1995 period. During the three months ended, the increase resulted
from the growth of the receivables portfolio which offset a decline of 0.6% in
the net interest spread over the prior year period. During the six month period,
the increase was due to the growth in the receivables portfolio and an increase
in the net interest spread of 0.4%. Additionally, the Company's net interest
margin was favorably impacted by the use of $10.1 million of the proceeds from
the issuance of common stock to purchase new receivables which mitigated the
effects of the net interest spread decline in the three months ended and
positively impacted the net interest margin in the six months ended.
PROVISION FOR CREDIT LOSSES. The provision for credit losses for 1996
increased to $401 and $761 as compared to $120 and $220 in 1995. The increase
was the result of the growth of the Company's receivables portfolio.
LATE FEES AND OTHER INCOME. Other income increased to $146 and $318 from
$132 and $227 in 1995. Other income primarily represents interest income earned
on short-term marketable securities and money market instruments, due to the
issuance of common stock in October 1995.
SERVICING FEE EXPENSES. Servicing fee expenses increased to $382 and $735
in 1996 from $265 and $504 in 1995. Since these costs vary with the volume of
receivables serviced, this increase was primarily attributable to the growth in
the number of receivables serviced, which increased by 2,604 from 1995 to 1996.
SALARIES AND BENEFIT EXPENSES. Salaries and benefits increased to $499 and
$1,117 in 1996 from $419 and $799 in 1995. The increase was primarily due to an
increase in full time employees which was necessitated by the expansion of the
Company's operations.
OTHER EXPENSES. Other expenses decreased to $501 from $580 for the three
months ended and increased to $1,098 from $1,016 for the six months ended. The
decrease for the three months ended was due to a decline in origination volume
for the period relative to the prior year. The overall increase was primarily
due to the expansion of the Company's operations in additional states.
INCOME BEFORE PROVISION FOR INCOME TAXES. During 1996, income before
provision for income taxes increased to $1,272 and $2,455 or 59% and 69% from
the comparable periods in 1995. The increase was the result of the increase in
net interest income after provision for credit losses of $578 and $1,540
partially offset by an increase in operating expenses of $118 and $632,
respectively.
LIQUIDITY AND CAPITAL RESOURCES
SOURCES AND USES OF CASH FLOWS. On October 4, 1995 the Company sold 1.9
million shares of common stock in a public offering and received proceeds of
$19.4 million, net of underwriting discounts and commissions. Approximately $7
million of the proceeds were used to prepay promissory notes plus accrued
interest, to redeem outstanding preferred stock including accrued dividends and
redemption premium, and to pay issuance costs.
12
<PAGE>
The Company's business requires significant cash flow to support its
operating activities. The principal cash requirements include (i) amounts
necessary to acquire receivables from dealers and fund required reserve
accounts, (ii) amounts necessary to fund premiums for credit enhancement
insurance, and (iii) amounts necessary to fund costs to retain receivables,
primarily interest expense and servicing fees. The Company also requires a
significant amount of cash flow for working capital to fund fixed operating
expenses, primarily salaries and benefits.
The Company's most significant cash flow requirement is the acquisition of
receivables from dealers. The Company funds the purchase price of the
receivables through the use of a $55 million warehouse credit facility. The
current warehouse credit facility generally permits the Company to draw advances
up to the outstanding principal balance of qualified receivables. The Company
paid $15.0 million and $35.4 million for receivables acquired for the three and
six months ended October 31, 1996, compared to $18.3 million and $32.4 million
paid in the comparable 1995 period. Receivables that have accumulated in the
warehouse credit facility may be transferred to a commercial paper conduit
facility at the option of the Company. The commercial paper facility provides
additional liquidity of up to $105 million to fund the Company's investment in
the receivables portfolio. Substantially all of the Company's receivables are
pledged to collateralize these credit facilities.
On October 22, 1996, the Company completed a $105 million commercial paper
conduit financing through Enterprise Funding Corporation, a commercial paper
conduit administered by NationsBank. The financing was provided to a
special-purpose, wholly-owned subsidiary of the Company, First Investors Auto
Receivables Corporation ("FIARC"). It replaced an existing $75 million
commercial paper conduit facility which was provided by Enterprise Funding to
another special-purpose, wholly-owned subsidiary of the Company, F.I.R.C., Inc
("FIRC"). Credit enhancement for the new $105 million facility is provided to
the commercial paper investors by a surety bond issued by MBIA Insurance
Corporation. Credit enhancement for the replaced $75 million facility was
provided by an Auto Loan Protection Insurance ("ALPI") policy issued by
National Union Fire Insurance Company of Pittsburgh and reinsured by the
Company's captive insurance subsidiary. The ALPI policy continues to provide
credit enhancement for the $55 million warehouse credit facility.
Receivables originally purchased by the Company are financed with
borrowings under the warehouse credit facility. Once a sufficient amount of
receivables have been accumulated, the receivables are transferred from FIRC to
FIARC with advances under the commercial paper facility used to repay borrowings
under the warehouse credit facility. Once receivables are transferred to the
FIARC subsidiary and pledged as collateral for commercial paper borrowings, the
ALPI policy with respect to the transferred receivables is canceled with any
unearned premiums returned to FIRC. FIARC may borrow up to 90% of the face
amount of the receivables being transferred. In addition, a cash reserve equal
to 1% of the outstanding borrowings under the commercial paper facility must be
maintained in a reserve account for the benefit of the creditors and surety bond
provider.
Borrowings under the commercial paper facility bear interest at the
commercial paper rate plus a borrowing spread equal to 0.25% per annum.
Additionally, the agreement provides for additional fees based on the unused
amount of the facility and dealer fees associated with the issuance of the
commercial paper. A surety bond premium equal to 0.35% per annum is assessed
based on the outstanding borrowings under the facility. The commercial paper
facility has been initially provided for a term of one year, expiring October
21, 1997. If the facility were not extended, receivables pledged as collateral
would be allowed to amortize; however, no new receivables would be allowed to be
transferred from the warehouse credit facility.
The Company's most significant source of cash flow is the principal and
interest payments received from the receivables portfolio. The Company received
such payments in the amount of
13
<PAGE>
$29.8 million and $20.8 million for the six months ended October 31, 1996 and
1995, respectively. Such cash flow funds repayment of amounts borrowed under the
warehouse credit and commercial paper facilities and other holding costs,
primarily interest expense and servicing and custodial fees. During the six
months ended, the Company required net cash flow of $14.0 million in 1996 and
$16.7 million in 1995 (cash required to acquire receivables net of principal
payments on receivables) to fund the growth of its receivables portfolio.
The following table summarizes borrowings under the warehouse credit
facility and the commercial paper facility (dollars in thousands):
AS OF OR FOR THE
SIX MONTHS
ENDED
OCTOBER 31,
--------------------
1995 1996
--------- ---------
WAREHOUSE CREDIT FACILITY:
At period-end:
Balance outstanding............. $ 50,223 $ 43,110
Weighted average interest
rate(1)........................ 6.66% 6.33%
During period(2):
Maximum borrowings
outstanding.................... $ 50,223 $ 55,000
Weighted average balance
outstanding.................... 39,505 48,993
Weighted average interest
rate........................... 6.83% 6.80%
COMMERCIAL PAPER FACILITY:
At period-end:
Balance outstanding............. $ 27,075 $ 59,322
Weighted average interest
rate(1)........................ 7.03% 6.12%
During period(2):
Maximum borrowings
outstanding.................... $ 35,227 $ 59,322
Weighted average balance
outstanding.................... 31,992 49,216
Weighted average interest
rate........................... 7.15% 6.36%
- - ------------
(1) Based on interest rates, facility fees and hedge instruments applied to
borrowings outstanding at period-end.
(2) Based on month-end balances.
INTEREST RATE MANAGEMENT. The Company's credit facilities bear interest at
floating interest rates which are reset on a short-term basis whereas its
receivables bear interest at fixed rates which are generally at the maximum
rates allowable by law which do not generally vary with changes in interest
rates. To manage the risk of fluctuation in the interest rate environment, the
Company enters into interest rate swaps and caps with notional principal amounts
which approximate the balance of its debt outstanding to lock in what management
believes to be an acceptable net interest spread. However, the Company will be
exposed to limited rate fluctuation risk to the extent it cannot perfectly match
the timing of net advances from its credit facilities and acquisitions of
additional interest rate protection agreements. On August 7, 1996, the Company
entered into a new swap agreement with NationsBank of Texas, N.A. pursuant to
which the Company's interest rate exposure is fixed, through August 1997, at a
rate of 5.545% on a notional amount of $100 million. This agreement may be
extended to August 1999, at the sole discretion of NationsBank of Texas, N.A.
DELINQUENCY AND CREDIT LOSS EXPERIENCE
The Company's results of operations, financial condition and liquidity may
be adversely affected by nonperforming receivables. The Company seeks to manage
its risk of credit loss through (i) prudent credit evaluations and effective
collection procedures, (ii) providing recourse
14
<PAGE>
to dealers under its participating program for a period of time and thereafter
secured by cash reserves in the event of losses and (iii) insurance against
certain losses from independent third party insurers. As a result of its
recourse programs and third party insurance, the Company is not exposed to
credit losses on its entire receivables portfolio. The following table
summarizes the credit loss exposure of the Company (dollars in thousands):
<TABLE>
<CAPTION>
OCTOBER 31,
-----------------------------------------------
1995 1996
--------------------- ---------------------
RECEIVABLES RESERVE RECEIVABLES RESERVE
BALANCE BALANCE BALANCE BALANCE
----------- ------- ----------- -------
<S> <C> <C> <C> <C>
Core Program:
Insured by third party
insurer....................... $ 6,901 $ -- $ 3,430 $ --
Other receivables(1)............ 57,469 534(2) 96,817 760(2)
Participating Program................ 13,405 1,089(3) 6,769 546(3)
----------- -----------
$77,775 $ 107,016
=========== ===========
Allowance for credit losses as a
percentage of other
receivables(1)..................... 0.9% 0.8%
Dealer reserves as a percentage of
participating program
receivables........................ 8.1% 8.1%
</TABLE>
- - ------------
(1) Represents receivables reinsured by Company's insurance affiliate or
receivables on which no credit loss insurance exists.
(2) Represents the balance of the Company's allowance for credit losses.
(3) Represents the balance of the dealer reserve accounts.
The Company considers a loan to be delinquent when the borrower fails to
make a scheduled payment of principal and interest. Accrual of interest is
suspended when the payment from the borrower is over 60 days past due.
Generally, repossession procedures are initiated 60 to 90 days after the payment
default.
CORE PROGRAM AND PORTFOLIO ACQUISITIONS. Under the core program and for
receivables acquired pursuant to bulk portfolio acquisitions, the Company
retains the credit risk associated with the receivables acquired. The Company
purchases credit enhancement insurance from third party insurers which covers
the risk of loss upon default and certain other risks. Until March 1994, such
insurance absorbed substantially all credit losses. In April 1994, the Company
established a captive insurance subsidiary to reinsure certain risks under the
credit enhancement insurance coverage for all receivables acquired in March 1994
and thereafter. With the completion of the $105 million commercial paper conduit
financing in October 1996, credit loss insurance and the Company's reinsurance
liability is cancelled upon the transfer of receivables to FIARC utilizing
commercial paper borrowings. Provisions for credit losses of $401,367 and
$760,974 have been recorded for the three and six months ended October 31, 1996,
respectively, for losses which are reinsured by the Company's captive insurance
subsidiary and for losses on receivables pledged as collateral under the
commercial paper conduit facility.
The allowance for credit losses represents management's estimate of losses
for receivables that may become uncollectable. In making this estimate,
management analyzes portfolio characteristics in the light of its underwriting
criteria, delinquency and repossession statistics, historical loss experience,
and size, quality and concentration of the receivables, as well as external
factors such as future economic outlooks. The allowance for credit losses is
based on estimates and qualitative evaluations and ultimate losses will vary
from current estimates. These estimates are reviewed periodically and as
adjustments, either positive or negative, become necessary, are reported in
earnings in the period they become known.
PARTICIPATING PROGRAM. Under the Company's participating program, the
dealer retains the credit risk for a period of time, usually twelve to eighteen
months. In the event of payment
15
<PAGE>
default, the dealer is obligated to repurchase the receivable. A specified
portion of the purchase price is set aside in a reserve account to secure
performance of the dealer's repurchase obligation. Receivables purchased from
each dealer are aggregated into pools of specified size for purposes of tracking
the dealer's participation. When the dealer's participation in a pool is
terminated, a portion of the reserve account exceeding a specified percentage is
released to the dealer and the balance is retained in the reserve account to
fund credit losses until all receivables in the pool are paid in full. As a
result of establishing relationships only with franchised dealers and securing
each dealer's repurchase obligation with a funded reserve account, the Company
has incurred no losses under the participating program.
As a result of a shift in the preference of dealers to sell receivables to
the Company under the core program rather than the participating program, the
participating program accounted for only 6% of the aggregate receivables held by
the Company as of October 31, 1996, representing a 11% decrease from 17% on
October 31, 1995. Management believes that this trend will continue and that the
significance of the participating program by comparison to the core program,
will diminish over future periods.
The following table summarizes the status and collection experience of
receivables acquired by the Company (dollars in thousands):
<TABLE>
<CAPTION>
AS OF OR FOR THE SIX MONTHS ENDED OCTOBER 31,
----------------------------------------------------
1995 1996
----------------------- -----------------------
NUMBER NUMBER
OF LOANS AMOUNT(1) OF LOANS AMOUNT(1)
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
CORE PROGRAM AND PORTFOLIO
ACQUISITIONS:
Delinquent amount outstanding:
30 - 59 days.................... 92 $ 1,510 129 $ 2,051
60 - 89 days.................... 16 246 31 513
90 days or more................. 30 502 59 1,023
--- --------- --- ---------
Total delinquencies.................. 138 $ 2,258 219 $ 3,587
--- --------- --- ---------
Total delinquencies as a percentage
of outstanding receivables acquired
pursuant to portfolio acquisitions
and the core program............... 2.4% 2.5% 2.5% 2.6%
Net charge-offs as a percentage of
average receivables outstanding
during the period which were
acquired pursuant to portfolio
acquisitions and the core
program(2)(3)...................... -- 1.0% -- 1.4%
PARTICIPATING PROGRAM:
Delinquent amount outstanding:
30 - 59 days.................... 64 $ 685 25 $ 205
60 - 89 days.................... 8 100 2 15
90 days or more................. 20 291 15 175
--- --------- --- ---------
Total delinquencies.................. 92 $ 1,076 42 $ 395
--- --------- --- ---------
Total delinquencies as a percentage
of participating program
receivables........................ 6.0% 6.0% 4.2% 4.7%
Net charge-offs as a percentage of
average receivables outstanding
during the period which were
acquired pursuant to the
participating program.............. -- 0% -- 0%
</TABLE>
(FOOTNOTES ON FOLLOWING PAGE)
16
<PAGE>
- - ------------
(1) Amounts of delinquent receivables outstanding and total delinquencies as a
percent of outstanding receivables acquired in portfolio transactions and
pursuant to the core program are based on gross receivables balances, which
include principal outstanding plus unearned interest income.
(2) Does not give effect to reimbursements under the Company's credit
enhancement insurance policies with respect to charged-off receivables. The
Company recognized no charge-offs prior to March 1994 since all credit
losses were reimbursed by third-party insurers. Subsequent to that time the
primary coverage has been reinsured by an affiliate of the Company under
arrangements whereby the Company bears the entire risk of credit losses, and
charge-offs have accordingly been recognized.
(3) The percentages have been annualized and are not necessarily indicative of
the results for a full year.
17
<PAGE>
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)
10.29 -- Security Agreement dated as of October 22, 1996 among First
Investors Auto Receivables Corporation, Enterprise Funding
Corporation, Texas Commerce Bank National Association, MBIA Insurance
Corporation, NationsBank N.A., and First Investors Financial
Services, Inc.
10.30 -- Note Purchase Agreement dated as of October 22, 1996 between First
Investors Auto Receivables Corporation and Enterprise Funding
Corporation.
10.31 -- Purchase Agreement dated as of October 22, 1996 between First
Investors Financial Services, Inc. and First Investors Auto
Receivables Corporation.
10.32 -- Insurance Agreement dated as of October 1, 1996 among First
Investors Auto Receivables Corporation, MBIA Insurance Corporation,
First Investors Financial Services, Inc., Texas Commerce Bank
National Association and NationsBank N.A.
10.33 -- Servicing Agreement dated as of October 22, 1996 between First
Investors Auto Receivables Corporation and General Electric Capital
Corporation.
10.34 -- Amended and Restated Credit Agreement dated as of October 30, 1996
among F.I.R.C., Inc. and NationsBank of Texas, N.A., individually and
as Agent for the financial institutions party thereto.
10.35 -- Amended and Restated Collateral Security Agreement dated as of
October 30, 1996 between F.I.R.C., Inc. and Texas Commerce Bank
National Association as collateral agent for the ratable benefit of
NationsBank of Texas, N.A., individually and as agent for the
financial institutions party to the Amended and Restated Credit
Agreement filed as Exhibit 10.34.
10.36 -- Amended and Restated Purchase Agreement dated as of October 30,
1996 between First Investors Financial Services, Inc. and F.I.R.C.,
Inc.
10.37 -- Amended and Restated Servicing Agreement between F.I.R.C., Inc.
and General Electric Capital Corporation.
27 -- Financial Data Schedule for the Second Quarter October 31, 1996 of
Fiscal Year April 30, 1997.
18
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST INVESTORS FINANCIAL SERVICES GROUP, INC.
(Registrant)
Date: December 13, 1996 By: /s/ Tommy A. Moore, Jr.
TOMMY A. MOORE, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Date: December 13, 1996 By: /s/ Bennie H. Duck
BENNIE H. DUCK
SECRETARY, TREASURER AND CHIEF FINANCIAL OFFICER
19
EXHIBIT 10.29
- - --------------------------------------------------------------------------------
SECURITY AGREEMENT
among
FIRST INVESTORS AUTO RECEIVABLES CORPORATION
as Debtor,
ENTERPRISE FUNDING CORPORATION,
as Company,
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Collateral Agent,
MBIA INSURANCE CORPORATION,
as Surety Bond Provider,
NATIONSBANK, N.A.,
individually and as Reserve Account Agent,
and
FIRST INVESTORS FINANCIAL SERVICES, INC.,
as Seller
Dated as of October 22, 1996
- - --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions...................................... 2
ARTICLE II
GRANT OF SECURITY INTEREST
SECTION 2.1. Grant of Security Interest....................... 25
SECTION 2.2. Additional Receivables........................... 28
SECTION 2.3. Re-Liening Trigger............................... 31
SECTION 2.4. Subrogation...................................... 32
SECTION 2.5. Increase of Note................................. 32
SECTION 2.6. Release of Receivables........................... 33
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEBTOR
SECTION 3.1. Representations and Warranties Concerning
Receivables...................................... 36
SECTION 3.2. Covenants of the Debtor.......................... 43
ARTICLE IV
SERVICING AND ADMINISTRATION
SECTION 4.1. Servicing........................................ 51
SECTION 4.2. Rights After Designation of Successor
Servicer......................................... 52
SECTION 4.3. Responsibilities of the Debtor................... 53
SECTION 4.4. Monthly Debtor's Certificate..................... 53
ARTICLE V
ALLOCATION AND APPLICATION
OF COLLECTIONS; RESERVE ACCOUNT
SECTION 5.1. Collections...................................... 55
SECTION 5.2. Remittances to the Secured Parties............... 57
ARTICLE V-A
THE RESERVE ACCOUNT AND THE RESERVE ACCOUNT AGENT
SECTION 5A.1 Establishment of the Reserve Account............. 58
SECTION 5A.2 Security Interest................................ 59
SECTION 5A.3 Termination of Reserve Account;
i
<PAGE>
PAGE
Release of Funds................................. 60
SECTION 5A.4 Duties of the Reserve Account Agent.............. 61
SECTION 5A.5 Representations, Warranties and
Covenants of the Reserve Account Agent........... 62
SECTION 5A.6 Liability of the Reserve Account Agent........... 63
SECTION 5A.7 Limitation on Liability of the Reserve
Account Agent and Others......................... 65
ARTICLE VI
TERMINATION EVENTS; SERVICING TERMINATION
SECTION 6.1. Termination Events............................... 66
SECTION 6.2. Wind-Down Events................................. 69
SECTION 6.3. Amortization Events.............................. 69
SECTION 6.4. Remedies......................................... 70
SECTION 6.5 Proceeds......................................... 72
ARTICLE VII
THE COLLATERAL AGENT
SECTION 7.1. Duties of the Collateral Agent................... 72
SECTION 7.2. Compensation and Indemnification of
Collateral Agent................................. 73
SECTION 7.3. Representations, Warranties and
Covenants of the Collateral Agent................ 74
SECTION 7.4. Liability of the Collateral Agent................ 75
SECTION 7.5. Merger or Consolidation of, or
Assumption of the Obligations of,
the Collateral Agent............................. 78
SECTION 7.6. Limitation on Liability of the
Collateral Agent and Others...................... 79
SECTION 7.7. Indemnification of the Secured Parties........... 79
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. Notices, etc..................................... 80
SECTION 8.2. Successors and Assigns........................... 81
SECTION 8.3. Severability Clause.............................. 82
SECTION 8.4. AMENDMENTS; GOVERNING LAW........................ 82
SECTION 8.5. No Bankruptcy Petition Against the
Company or the Debtor............................ 82
SECTION 8.6. Setoff........................................... 83
SECTION 8.7. No Recourse...................................... 83
SECTION 8.8. Further Assurances............................... 83
SECTION 8.9. Other Costs, Expenses and Related
Matters.......................................... 83
ii
<PAGE>
SECTION 8.10. Exercise of Rights by Surety Bond
Provider......................................... 84
SECTION 8.11. Counterparts..................................... 84
SECTION 8.12. Headings......................................... 84
EXHIBITS
EXHIBIT A Form of Note
EXHIBIT B Receivables Schedule
EXHIBIT C Servicing Agreement
EXHIBIT D List of Eligible Investments
EXHIBIT E Credit Guidelines
EXHIBIT F Form of Supplemental Pledge of Additional Re-
ceivables
EXHIBIT G Form of Reassignment of Removed Receivables
EXHIBIT H Form of Monthly Debtor's Certificate
EXHIBIT I Form of Additional Investment Certificate
EXHIBIT J Form of Surety Bond
EXHIBIT K Forms of Contracts
iii
<PAGE>
SECURITY AGREEMENT
SECURITY AGREEMENT (this "AGREEMENT"), dated as of October 22, 1996
among ENTERPRISE FUNDING CORPORATION, a Delaware corporation, as a secured party
(together with its successors and assigns, the "COMPANY"), FIRST INVESTORS AUTO
RECEIVABLES CORPORATION, a Delaware corporation, as debtor (together with its
successors and assigns, the "DEBTOR"), MBIA INSURANCE CORPORATION, a New York
stock insurance company, as a secured party and as Surety Bond Provider (in such
capacity, the "SURETY BOND PROVIDER"), FIRST INVESTORS FINANCIAL SERVICES, INC.,
a Texas corporation (the "SELLER"), NATIONSBANK, N.A., a national banking
association, individually and as reserve account agent (together with its
successors and assigns in such capacity, the "RESERVE ACCOUNT AGENT") and TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, a national banking association, as
collateral agent (together with its successors and assigns in such capacity, the
"COLLATERAL AGENT").
W I T N E S S E T H :
WHEREAS, subject to the terms and conditions of this Agreement, the
Debtor desires to grant a security interest in and to the Receivables and
related property including the Debtor's security interest in the Financed
Vehicles and the Collections derived therefrom during the full term of this
Agreement;
WHEREAS, pursuant to the Insurance Agreement, the Surety Bond
Provider has issued its Surety Bond to provide for the full and timely payment
of all amounts of interest due on and principal of the Note;
WHEREAS, pursuant to the Note Purchase Agreement, the Debtor has
issued the Note to the Company and will be obligated to the holder of such Note
to pay the principal of and interest on such Note in accordance with the terms
thereof;
WHEREAS, the Debtor is granting a security interest in the
Collateral to the Collateral Agent, for the benefit of the Secured Parties, to
secure the payment and performance of the Debtor of its obligations under
<PAGE>
this Agreement, the Note, the Note Purchase Agreement and the Insurance
Agreement;
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. All capitalized terms used herein shall
have the meanings herein specified, and shall include in the singular number the
plural and in the plural number the singular:
"ACCRUED INTEREST COMPONENT" shall mean for any Collection Period,
the Interest Component of all Related Commercial Paper outstanding at any time
during such Collection Period which has accrued from the first day through the
last day of such Collection Period whether or not such Related Commercial Paper
matures during such Collection Period. For purposes of the immediately preceding
sentence, the portion of the Interest Component of Related Commercial Paper
accrued in a Collection Period in which Related Commercial Paper has a stated
maturity date that succeeds the last day of such Collection Period shall be
based on the actual number of days elapsed in such Collection Period during
which Related Commercial Paper was outstanding.
"ADDITION CLOSING DATE" shall mean the date on which a Supplemental
Conveyance conveying an interest in Additional Receivables as of the Addition
Date is delivered by the Debtor to the Company.
"ADDITION CUT-OFF DATE" shall mean the cut-off date with respect to
Additional Receivables to be added as of any Addition Date. The Addition Cut-Off
Date shall be the last day of the Collection Period immediately preceding any
Addition Date.
"ADDITION DATE" shall mean the date as of which Additional
Receivables are to be included as Collateral in accordance with Section 2.2 of
this Agreement.
2
<PAGE>
"ADDITIONAL AMOUNTS" shall mean (i) any refunds or other payments
under any Extended Service Agreement; (ii) refunds in connection with (a) credit
life policies relating to Financed Vehicles and (b) accident and health policies
relating to Financed Vehicles and (iii) sales tax refunds relating to Financed
Vehicles.
"ADDITIONAL INVESTMENT" shall mean additional advances of funds
evidenced by the Note.
"ADDITIONAL RECEIVABLES" shall mean those Eligible Receivables
designated by the Debtor as additional Collateral and included as Collateral in
accordance with Section 2.2 of this Agreement.
"ADJUSTED LIBOR RATE" means, with respect to any Collection Period,
a rate per annum equal to the sum (rounded upwards, if necessary, to the next
higher 1/100 of 1%) of (A) the rate obtained by dividing (i) the applicable
LIBOR Rate by (ii) a percentage equal to 100% minus the reserve percentage used
for determining the maximum reserve requirement as specified in Regulation D
(including, without limitation, any marginal, emergency, supplemental, special
or other reserves) that is applicable to the Liquidity Provider during such
Collection Period in respect of eurocurrency or eurodollar funding, lending or
liabilities (or, if more than one percentage shall be so applicable, the daily
average of such percentage for those days in such Collection Period during which
any such percentage shall be applicable) plus (B) the then daily net annual
assessment rate (rounded upwards, if necessary, to the nearest 1/100 of 1%) as
estimated by the Liquidity Provider for determining the current annual
assessment payable by the Liquidity Provider to the Federal Deposit Insurance
Corporation in respect of eurocurrency or eurodollar funding, lending or
liabilities.
"ADMINISTRATIVE AGENT" shall mean NationsBank, N.A., as
administrative agent for the Company.
"AFFILIATE" shall mean, with respect to a Person, any other Person
which directly or indirectly controls, is controlled by or is under common
control with such Person. The term "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of a
3
<PAGE>
Person, whether through the ownership of voting securities, by contract or
otherwise.
"AGREEMENT" shall mean this Security Agreement, as it may from time
to time be amended, supplemented or otherwise modified in accordance with the
terms hereof.
"AMORTIZATION EVENT" shall have the meaning set
forth in Section 6.3 hereof.
"AMOUNT FINANCED" with respect to a Receivable means the amount
advanced under the Receivable toward the purchase price of the Financed Vehicle
and any related costs.
"ANNUAL PERCENTAGE RATE" or "APR" of a Receivable means the annual
rate of finance charges stated in the Receivable.
"AVAILABLE COLLECTIONS" shall mean, with respect to each Remittance
Date, all Collections received by the Servicer, from whatever source, during or
with respect to the prior Collection Period, LESS the fees and expenses of GECC
as Servicer which GECC, pursuant to the Servicing Agreement, is permitted to
withhold from amounts remitted to the Debtor or the Collateral Agent.
"AVAILABLE FUNDS" shall mean, with respect to a Remittance Date, the
sum of (a) Available Collections, (b) Reserve Advances and (c) amounts available
for withdrawal from the Reserve Account on such date.
"BAILEE" means a "Bailee" within the meaning of
Section 9-305 of the Relevant UCC.
"BASE RATE" means, a rate per annum equal to the greater of (i) the
prime rate of interest announced by the Liquidity Provider (or, if more than one
Liquidity Provider, then by NationsBank, N.A.) from time to time, changing when
and as said prime rate changes (such rate not necessarily being the lowest or
best rate charged by the Liquidity Provider (or NationsBank, N.A. as
applicable)) and (ii) the sum of (a) 1.50% and (b) the rate equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business
4
<PAGE>
Day, for the next preceding Business Day) by the Federal Reserve Bank of New
York, or, if such rate is not so published for any day that is a Business Day,
the average of the quotations for such day for such transactions received by the
Liquidity Provider (or, if more than one Liquidity Provider, then by
NationsBank, N.A.) from three Federal funds brokers of recognized standing
selected by it.
"BORROWING BASE" shall mean, at any time, the aggregate Principal
Balance of all Eligible Receivables MINUS the aggregate Principal Balance of all
Eligible Receivables originated by any one Originator to the extent that such
aggregate Principal Balance exceeds 5.0% of the aggregate Principal Balance of
all Eligible Receivables.
"BUSINESS DAY" means any day (excluding Saturday or Sunday) on which
banks are open for business in New York, New York, Charlotte, North Carolina and
Houston, Texas.
"CAP COUNTERPARTY" shall have the meaning specified in Section
3.2(n) of this Agreement.
"CARRYING COSTS" shall mean for any Collection Period the sum of:
(i) the sum of the dollar amount of the Company's obligations for such
Collection Period determined on an accrual basis in accordance with
generally accepted accounting principles consistently applied
(a) to pay interest with respect to Purchased Interests (such
interest to be calculated based on the Adjusted LIBOR Rate, provided
such rate is available and provided that the Surety Bond Provider
has not failed to make any required payment under the Surety Bond,
otherwise, the Base Rate) outstanding at any time during such
Collection Period accrued from the first day through the last day of
such Collection Period whether or not such interest is payable
during such Collection Period;
(b) without duplication of the amounts
described in clause (a) above, to pay interest,
5
<PAGE>
calculated at the Base Rate, with respect to amounts disbursed by
the Credit Support Provider in respect of Defaulted Receivables, if
the Surety Bond Provider shall have failed to make any required
payment under the Surety Bond in respect of such Defaulted
Receivables, outstanding at any time during such Collection Period
accrued from the first day through the last day of such Collection
Period whether or not such interest is payable during such
Collection Period;
(c) to pay the Accrued Interest Component of Related
Commercial Paper with respect to any Collection Period (it being
understood that to the extent the Company has obtained funding under
the Liquidity Agreement or a Credit Support Agreement, the Company
will not obtain duplicative funding in the commercial paper
markets);
(d) to pay a dealer fee of .05% per annum of the face amount
of Related Commercial Paper issued during such Collection Period;
(e) any past due amounts not paid in clause (a), (b) and (c);
and
(f) to pay the costs of the Company with respect to the
operation of the Yield Protection Provision, which amounts paid
pursuant to this clause (f) shall not exceed 1.00% per annum of the
Net Investment; and
(ii) the Program Fee and Unused Program Fee (the sum of which shall not
exceed .30% per annum of the Net Investment) accrued from the first day
through the last day of such Collection Period whether or not such amount
is payable during such Collection Period.
"CERTIFICATED SECURITIES" means "certificated securities" as defined
in Section 8-102(l)(a) of the New York UCC and Section 8-102(a)(4) of the Texas
UCC which are in the continuous possession in the State of New York by the
Financial Intermediary and the State of Texas by the Financial Intermediary.
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"CLEARING CORPORATION" means The Depository Trust Company.
"CLEARING CORPORATION SECURITIES" means "certificated securities" as
defined in Section 8-102(l)(a) of the New York UCC and Section 8-102(a)(4) of
the Texas UCC which are in the continuous possession in the States of Texas or
New York of the Clearing Corporation or a Custodian Bank.
"CLOSING DATE" shall mean October 22, 1996.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time (including any successor statute), and the regulations promulgated
and the rulings issued thereunder.
"COLLATERAL" shall have the meaning set forth
in Section 2.1 of this Agreement.
"COLLATERAL ACCOUNT" shall mean that certain account of the Company
pledged to secure its obligations to the Liquidity Provider, the Credit Support
Provider
and certain other secured parties.
"COLLATERAL AGENT" shall mean Texas Commerce Bank National
Association, or any successor thereto.
"COLLECTION ACCOUNT" shall mean the account established pursuant to
Section 4.1(b).
"COLLECTION PERIOD" shall mean with respect to any Remittance Date,
the calendar month immediately preceding the month of such Remittance Date (and
with respect to the initial Remittance Date, the time period from the Cut-Off
Date to October 31, 1996).
"COLLECTIONS" shall mean all Principal Collections and Finance
Charge Collections received by the Servicer in respect of the Collateral in the
form of cash, checks, wire transfers or other form of payment.
"COMMERCIAL PAPER" shall mean promissory notes of the Company issued
by the Company in the commercial paper market.
7
<PAGE>
"COMPANY" shall mean Enterprise Funding Corporation, a Delaware
corporation, together with its successors and assigns.
"CONVEYANCE DATE" shall have the meaning set forth in Section 3.1(a)
hereof.
"CORPORATE TRUST OFFICE" shall mean the office of the Collateral
Agent at which its corporate trust business shall be principally administered,
which office shall be the office specified in Section 8.1 of this Agreement, or
such office at some other address which the Collateral Agent shall designate
from time to time by notice to the Debtor, the Company, the Surety Bond Provider
and the Administrative Agent.
"CREDIT GUIDELINES" shall mean policies and procedures of the
Seller, relating to the operation of the automotive financing business of the
Seller, including, without limitation, the policies and procedures for
determining the creditworthiness of retail automotive installment sales contract
customers, the extension of credit to such customers and relating to the
maintenance of retail automotive installment sales contracts and collection of
retail automotive installment sales contracts, as such policies and procedures
may be amended from time to time and which shall be attached hereto as Exhibit
E.
"CREDIT INSURANCE" shall mean VSI Insurance and any other insurance
with respect to the Receivables upon which the Company and the Seller have
agreed.
"CREDIT SUPPORT AGREEMENT" means any agreement between the Company
and the Credit Support Provider evidencing the obligation of the Credit Support
Provider to provide credit support to the Company in connection with the
issuance of Commercial Paper.
"CREDIT SUPPORT PROVIDER" means the Person or Persons who will
provide credit support to the Company in connection with the issuance by the
Company of its Commercial Paper.
"CUSTODIAN BANK" means a "custodian bank" as defined in Section
8-102(4) of the New York UCC.
8
<PAGE>
"CUT-OFF DATE" shall mean September 30, 1996.
"DEBTOR" shall mean First Investors Auto Receivables Corporation and
its successors and assigns.
"DEFAULTED RECEIVABLE" shall mean each Receivable with respect to
which (i) in accordance with the Debtor's Credit Guidelines the Servicer has
determined in good faith that eventual payment in full is unlikely, (ii) the
related Financed Vehicle has been repossessed or (iii) any payment or part
thereof is over 90 days contractually delinquent.
"DELINQUENT RECEIVABLE" shall mean each Receivable (i) as to which
any payment, or part thereof, remains unpaid for more than 30 days from the
original due date for such payment and (ii) is not a Defaulted Receivable.
"DELINQUENCY RATIO" shall mean, with respect to any date of
determination, the ratio (expressed as a percentage) of (i) the aggregate amount
of remaining scheduled payments of principal and interest with respect to all
Receivables which are Delinquent Receivables as of such date to (ii) the
aggregate amount of remaining scheduled payments of principal and interest with
respect to all outstanding Receivables as of such date.
"DETERMINATION DATE" shall mean with respect to any Remittance Date,
the 15th day of the month in which such Remittance Date falls or, if such day is
not a Business Day, the Business Day next succeeding such day.
"DOLLAR," "DOLLARS" and the symbol "$" shall mean lawful money of
the United States of America.
"EFC COLLATERAL AGENT" shall mean NationsBank, N.A. as collateral
agent in respect of the Company's Commercial Paper program.
"ELIGIBLE INVESTMENTS" shall mean each of the investments attached
hereto on the list of investments set forth as Exhibit D, as amended or modified
only with the prior written consent of the Surety Bond Provider, Moody's and S&P
and which may include investments for which the Collateral Agent (but not in its
capacity as
9
<PAGE>
Collateral Agent) or an Affiliate of the Collateral Agent provides services.
"ELIGIBLE RECEIVABLES" shall mean, as of any day, each Receivable,
including Additional Receivables, of the Debtor:
(a) which is payable in Dollars;
(b) at the time of origination, the Obligor on which has
provided, as its most recent billing address, an address located in the United
States;
(c) which is not a Defaulted Receivable at the time such
Receivable becomes part of the Collater- al;
(d) which has been created in accordance with, or under
standards no less stringent than, the Credit Guidelines which are attached
hereto as EXHIBIT E;
(e) which is not more than 30 days contractually delinquent
from the due date, at the time such Receivable becomes part of the Collateral
(except for no more than 2% of the Principal Balance of any Receivables pledged
on the Closing Date or 1% of the Principal Balance of any Receivables pledged on
any Addition Date, which, in each case, may be 30 to 59 days contractually
delinquent), nor does the Obligor with respect thereto have any other automotive
receivable owing to the Seller which is 60 or more days contractually delinquent
or defaulted at the time of transfer;
(f) which was sold to the Debtor in the ordinary course of the
Debtor's business and which was created as a result of an advance by an
Originator, directly to or for the benefit of an Obligor for the purchase of an
automobile or light truck;
(g) as to which at the time such Receivable first became part
of the Collateral, the Debtor will have good and marketable title thereto and
which is not subject to any Lien or claim or other encumbrance for any work,
labor or materials performed on the related Financed Vehicle which are Liens
prior to, or equal or coordinate with, the security interest in the Financed
Vehicle granted by the Receivable, and as to which, the
10
<PAGE>
Collateral Agent, for the benefit of the Secured Parties, shall have a valid and
perfected first priority security interest, free and clear of all Liens,
encumbrances, security interests and rights of others;
(h) as to which at the time such Receivable first became part
of the Collateral, to the best of the Seller's knowledge, a bona-fide down
payment has been made;
(i) which provides for level monthly payments (provided that
the payment in the first and last month of the Receivable may be minimally
different from the level payment) that fully amortize the Amount Financed by
maturity and yield interest at the APR;
(j) which provides for, in the event that such Receivable is
prepaid by the Obligor, a prepayment that fully pays the Principal Balance of
such Receivable and any interest accrued through the date of prepayment;
(k) which does not represent either a direct or indirect
obligation of any federal, state or local government entity;
(l) the Obligor of which has not previously defaulted on an
automobile installment sales contract purchased by the Seller at the time such
Receivable becomes part of the Collateral;
(m) which was originated by an Originator approved by the
Seller and which Originator is subject to an Originator Agreement with the
Seller, and which if acquired by the Seller pursuant to a "bulk purchase" from
another Originator has been approved in writing by the Surety Bond Provider;
(n) which has a clear right of reposses- sion on the Financed
Vehicle securing such Receivable;
(o) the purchase of which with the proceeds of Commercial
Paper would constitute a "current transaction" within the meaning of Section
3(a)(3) of the Securities Act of 1933, as amended;
(p) which is not, at the time such Re- ceivable became part of
the Collateral, subject to any
11
<PAGE>
right of rescission, cancellation, setoff, claim, coun- terclaim or defense
(including the defense of usury) of the Obligor;
(q) which has a maturity, at the time such Receivable became
part of the Collateral, of 60 months or less and with respect to which the
Obligor thereof has made at least one scheduled payment in full;
(r) which has an APR of at least 13.0%;
(s) the due date for any payment or payments on which has not
been extended as of any date of determination; PROVIDED, that if the Obligor
with respect to a Receivable has made six consecutive payments in full on such
Receivable, such Receivable shall be an Eligible Receivable if it satisfies all
other clauses of this definition and if extensions have been granted on the
payments with respect to such Receivable either (i) in the aggregate for no more
than one month for each twelve months of the original term of such Receivable;
or (ii) no more than twice for periods of one month each during the preceding
twelve calendar months;
(t) which is secured by a valid, subsisting, and enforceable
first priority perfected security interest in favor of the Seller in the related
Financed Vehicle, which security interest has been validly assigned by the
Seller to the Debtor;
(u) which represents the genuine, legal, valid and binding
payment obligation in writing of the Obligor, enforceable by the holder thereof
in accordance with its terms, subject to the effect of bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally;
(v) which shall have complied with, at the time of its
origination, and shall remain in compliance with, all Requirements of Law;
(w) which had at the time of origination thereof, an
outstanding Principal Balance of not greater than $40,000;
(x) as to which, if originated under the Seller's
Participating Program, a period of at least 12
12
<PAGE>
months has elapsed since origination and the Originator of which is not
obligated to repurchase such Receivable in the event of a payment default by the
Obligor;
(y) the Obligor of which is required to make payments to a
lockbox under the control of the Servicer;
(z) which, at the time such Receivable first became part of
the Collateral, has not been waived or modified except as permitted herein by
the Collateral Agent acting upon the written instructions of both the
Administrative Agent and the Surety Bond Provider;
(aa) as to which the Debtor has done nothing, at the time such
Receivable first became part of the Collateral, to impair the rights of the
Surety Bond Provider, the Company or the Collateral Agent therein;
(ab) which is covered by a valid VSI Insurance Policy;
(ac) which constitutes "chattel paper" under and as defined in
Article 9 of the UCC as then in effect in the Relevant UCC State; and
(ad) which was acquired pursuant to an Originator Agreement in
a transaction constituting a bona fide sale in the ordinary course of such
Originator's business.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" shall mean with respect to the Debtor, at any
time, each trade or business (whether or not incorporated) that would, at the
time, be treated together with the Debtor as a single employer under Section
4001 of ERISA or Sections 414(b), (c), (m) or (o) of the Code.
"EXTENDED SERVICE AGREEMENT" shall mean a service contract covering
repairs to a Financed Vehicle.
"FACILITY LIMIT" shall mean $105,000,000.
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<PAGE>
"FEDERAL BOOK-ENTRY SECURITIES" means securities issued by the U.S.
Treasury, FNMA or by FHLMC which are maintained in book-entry form on the
records of the Federal Reserve Bank of Dallas.
"FEE LETTER" shall mean the letter agreement, dated the Closing
Date, between the Company and the Debtor in respect of the payment by the Debtor
of certain fees.
"FINANCE CHARGE COLLECTIONS" shall mean, with respect to any
Collection Period, the sum of the following amounts: (i) that portion of all
collections on Receivables allocable to interest, late fees, insufficient funds
check charges and related charges assessed against Obligors, (ii) Liquidation
Proceeds to the extent allocable to interest due thereon in accordance with the
Servicer's customary servicing procedures, (iii) any amounts received by the
Debtor pursuant to any Interest Rate Cap, and (iv) the interest portion of the
amount required to be paid by the Debtor to reduce the principal balance of the
Note and release the lien of the Secured Parties on each Receivable that became
an Ineligible Receivable during the related Collection Period.
"FINANCED VEHICLE" shall mean an automobile or light truck, together
with all accessions thereto, securing an Obligor's indebtedness under the
respective Receivable.
"FINANCIAL INTERMEDIARY" means NationsBank, N.A. and any other
entity acting in the capacity of a "financial intermediary" as defined in
Section 8-313(4) of the New York UCC and as a "securities intermediary" as
defined in Section 8-102(a)(14) of the Texas UCC.
"FINANCIAL INTERMEDIARY SECURITIES ACCOUNT" means a reserve account
which is a securities account maintained by the Financial Intermediary in the
name of NationsBank, N.A. as Reserve Account Agent for Texas Commerce Bank
National Association, as Collateral Agent for the Secured Parties.
"FIRC" shall mean F.I.R.C., Inc., a Delaware corporation.
14
<PAGE>
"GECC" shall mean General Electric Capital Corporation.
"GOVERNMENTAL AUTHORITY" shall mean the United States of America,
any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"GROSS DEFAULT RATIO" shall mean, with respect to each Collection
Period the ratio of (i) the product of (a) 12 and (b) the aggregate Principal
Balance of all Receivables which became Defaulted Receivables during such
Collection Period and (ii) the Borrowing Base as of
the beginning of such Collection Period.
"GUARANTY" shall mean any agreement, undertaking or arrangement by
which any Person guarantees, endorses, or otherwise becomes contingently liable
(whether directly, or indirectly by way of agreement, contingent or otherwise,
or purchase, to provide funds for payment, to supply funds to or otherwise
invest in the debtor, or otherwise to assure the creditor against loss) upon,
the indebtedness, obligation or liability of any Person, or guarantees the
payment of dividends or other distributions upon the stock of any corporation.
"INELIGIBLE RECEIVABLE" shall have the meaning specified in Section
3.1.
"INSTRUMENTS" means "instruments" as defined in Section 9-105 of the
Relevant UCC.
"INSURANCE AGREEMENT" shall mean that certain Insurance Agreement
dated as of October 1, 1996 between the Debtor, the Seller, the Collateral
Agent, the Reserve Account Agent and the Surety Bond Provider.
"INTEREST COMPONENT" shall mean, (i) with respect to any Commercial
Paper issued on an interest-bearing basis, the interest payable on such
Commercial Paper at its maturity (including any dealer commissions) and (ii)
with respect to any Commercial Paper issued on a discount basis, the portion of
the face amount of such Commercial Paper representing the discount incurred in
respect thereof (including any dealer commissions).
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<PAGE>
"INTEREST RATE" shall mean with respect to a Collection Period, a
per annum interest rate which if multiplied by the Net Investment determined as
of the last day of such Collection Period would produce, on the basis of a
360-day year, an amount equal to the Carrying Costs for such Collection Period.
"INTEREST RATE CAP" and "INTEREST RATE CAPS" shall have the meanings
specified in Section 3.2(n).
"LAW" shall mean any law (including common law), constitution,
statute, treaty, regulation, rule, ordinance, order, injunction, writ, decree or
award of any Official Body.
"LIBOR RATE" means, with respect to any Collection Period, the rate
determined by NationsBank, N.A. ("NATIONSBANK") to be (i) the per annum rate for
deposits in U.S. Dollars for a term of one month which appears on the Telerate
Page 3750 Screen on the day that is two London Business Days prior to the first
day of such Collection Period except, that if such first day of the Collection
Period is not a Business Day, then the first preceding day that is a Business
Day (rounded upwards, if necessary, to the nearest 1/100,000 of 1%), (ii) if
such rate does not appear on the Telerate Page 3750 Screen , the term "LIBOR
Rate" with respect to that Collection Period shall be the arithmetic mean
(rounded upwards, if necessary, to the nearest 1/100,000 of 1%) of the offered
quotations obtained by NationsBank from four major banks in the London interbank
market selected by NationsBank (the "REFERENCE BANKS") for deposits in U.S.
dollars to leading banks in the London interbank market as of approximately
11:00 a.m. (London time) on the day that is two London Business Days prior to
the first day of such Collection Period, unless such first day of the Collection
Period is not a Business Day, in which case, the first preceding day that is a
Business Day or (iii) if fewer than two Reference Banks provide NationsBank with
such quotations, the LIBOR Rate shall be the rate per annum which NationsBank
determines to be the arithmetic mean (rounded upwards, if necessary, to the
nearest 1/100,000 of 1%) of the offered quotations which leading banks in New
York City selected by NationsBank are quoting in the New York interbank market
on such date for deposits in U.S. dollars to the Reference Banks or; if
16
<PAGE>
fewer than two such quotations are available, to leading European and Canadian
Banks.
"LIEN" shall mean any mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, encumbrance, lien (statutory or
other), preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever, including, without limitation, any
conditional sale or other title retention agreement, any financing lease having
substantially the same economic effect as any of the foregoing and the filing of
any financing statement under the Uniform Commercial Code (other than any such
financing statement filed for informational purposes only) or comparable law of
any jurisdiction to evidence any of the foregoing.
"LIQUIDATION PROCEEDS" shall mean (i) proceeds of any claim under
any Credit Insurance and (ii) all monies collected in connection with the
disposition of any Financed Vehicle, from whatever source, securing a Defaulted
Receivable, net of the sum of (x) any amounts reasonably expended by the
Servicer in connection with the liquidation of such Financed Vehicle for the
account of the Obligor and (y) any such amounts required by law to be remitted
to the Obligor.
"LIQUIDITY AGREEMENT" shall mean the agreement between the Company
and any Liquidity Provider evidencing the obligation of the Liquidity Provider
to provide liquidity support to the Company in connection with the issuance of
Commercial Paper.
"LIQUIDITY PROVIDER" shall mean the Person or Persons who will
provide liquidity support to the Company in connection with the issuance by the
Company of its Commercial Paper, which, initially, shall be NationsBank, N.A.
"LONDON BUSINESS DAY" any day which is a Business Day and also is a
day on which commercial banks are open for international business (including
dealings in U.S. dollar deposits) in London.
"MONTHLY DEBTOR'S CERTIFICATE" shall have the meaning specified in
Section 4.4.
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<PAGE>
"MOODY'S" shall mean Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN" shall mean a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which contributions are or have been made by the
Debtor or any ERISA Affiliate of the Debtor.
"NET DEFAULT RATIO" shall mean the ratio of (i) the product of (a)
12 and (b)(1) the aggregate Principal Balance of all Receivables which became
Defaulted Receivables during such Collection Period minus (2) Liquidation
Proceeds received during the related Collection Period and allocable to
principal and (ii) the Borrowing Base as of the beginning of such Collection
Period.
"NET INVESTMENT" shall mean with respect to any date of
determination, (i) the Original Investment PLUS (ii) the amount of any
Subsequent Funding occurring on or prior to such date LESS (iii) all Collections
distributed to the Noteholder in reduction of the Net Investment pursuant to
Section 5.1 hereof on or prior to such date of determination, (iv) draws from
the Reserve Account distributed to the Noteholder in reduction of the Net
Investment, and (v) draws on the Surety Bond distributed to the Noteholder in
reduction of the Net Investment; PROVIDED HOWEVER, that the Net Investment for
the first day of the first Collection Period shall equal the Original
Investment, and PROVIDED FURTHER, that as to the Surety Bond Provider, draws
made under the Surety Bond will not reduce the principal amount due under the
Note .
"NOTE" shall mean the note issued by the Debtor to the Company
pursuant to Section 2.1 of the Note Purchase Agreement, as the same may be
amended from time to time and any other notes issued in replacement therefor.
"NOTEHOLDER" shall mean the Company as holder of the Note or any
assignee thereof which shall include only the Company, any Liquidity Provider,
or any commercial paper conduit administered by NationsBank, N.A.
"NOTEHOLDER'S PERCENTAGE" shall mean 90%.
"NOTE PURCHASE AGREEMENT" shall mean the Note Purchase Agreement
dated as of October 22, 1996 between the Debtor and the Company, as such
agreement may be
18
<PAGE>
amended, modified and supplemented from time to time in accordance with the
terms thereof.
"OBLIGOR" shall mean, for any Receivable, each and every Person who
purchased or co-purchased a Financed Vehicle or any other person who owes
payments under such Receivable.
"OFFICIAL BODY" shall mean any government or political subdivision
or any agency, authority, bureau, central bank, commission, department or
instrumentality of either, or any court, tribunal, grand jury or arbitrator, in
each case whether foreign or domestic.
"ORIGINAL INVESTMENT" shall mean $59,322,154.20.
"ORIGINATOR" shall mean a bank, finance company, car rental company
or factory authorized dealer or its affiliates or any other originator approved
in writing by the Surety Bond Provider which has entered into an Originator
Agreement with the Seller.
"ORIGINATOR AGREEMENT" shall mean the agreement between the Seller
and an Originator relating to the purchase by the Seller of a Receivable.
"PBGC" shall mean the Pension Benefit Guaranty Corporation or any
other entity succeeding to the functions currently performed by the Pension
Benefit Guaranty Corporation.
"PERSON" shall mean and include an individual, a partnership, a
corporation (including a business trust), a joint stock company, a trust, an
unincorporated association, a joint venture or other entity or a government or
an agency or political subdivision thereof.
"PLAN" shall mean any employee pension benefit plan that (a) is or
has been maintained by the Debtor or any ERISA Affiliate of the Debtor, or to
which contributions by any such Person are or have been required to be made, (b)
is subject to the provisions of Title IV of ERISA and (c) is not a Multiemployer
Plan.
"PLAN EVENT" shall mean (a) the provisions of a notice of intent to
terminate any Plan under Section 4041
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<PAGE>
of ERISA other than in a "standard termination", or the treatment of a Plan
amendment as a distress termination under Section 4041 of ERISA, (b) the receipt
of any notice by any Plan to the effect that the PBGC intends to apply for the
appointment of a trustee to administer any Plan, (c) the termination of any Plan
which may result in a material liability to the Debtor, (d) the withdrawal of
the Debtor or any ERISA Affiliate of the Debtor from any Plan described in
Section 4063 of ERISA which may result in a material liability of the Debtor,
(e) the complete or partial withdrawal of the Debtor or any ERISA Affiliate of
the Debtor from any Multiemployer Plan which may result in a material liability
of the Debtor, (f) a "reportable event" described in Section 4043 of ERISA
(other than a "reportable event" not subject to the provision for 30-day notice
to the PBGC) or an event described in Section 4068(f) of ERISA which may result
in a material liability of the Debtor, and (g) any other event or condition
which under ERISA or the Code may constitute grounds for the imposition of a
lien on the assets of the Debtor in respect of any Plan or Multiemployer Plan
which is not corrected within 30 days.
"POTENTIAL AMORTIZATION EVENT" means an event which, but for the
lapse of time or the giving of notice, or both, would constitute an Amortization
Event.
"POTENTIAL TERMINATION EVENT" means an event which but for the lapse
of time or the giving of notice, or both, would constitute a Termination Event.
"POTENTIAL WIND-DOWN EVENT" means an event which, but for the lapse
of time or the giving of notice, or both, would constitute a Wind-Down Event.
"PRINCIPAL BALANCE" of a Receivable as of the close of business on
the last day of a Collection Period, means the Amount Financed MINUS all
Collections collected by the Servicer to and including such day with respect to
such Receivable and applied by the Servicer in accordance with the Servicer's
customary servicing procedures to reduce the principal balance thereof PROVIDED,
HOWEVER, that the Principal Balance of any Receivable which is a "Defaulted
Receivable" as defined herein shall be zero.
"PRINCIPAL COLLECTIONS" means, for any Remit- tance Date, the sum of
the following amounts with respect
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<PAGE>
to the preceding Collection Period: (i) that portion of all collections on
Receivables allocable to principal, (ii) Liquidation Proceeds attributable to
principal in accordance with the Servicer's customary servicing procedures,
(iii) partial prepayments of any refunded item included in the Amount Financed,
such as extended warranty protection plan costs, or physical damage, credit
life, or disability insurance premiums, and (iv) the principal portion of the
amount paid by the Debtor to reduce the principal balance of the Note and
release the lien of the Secured Parties on each Receivable that became an
Ineligible Receivable during the related Collection Period.
"PRINCIPAL COMPONENT" shall mean with respect to Commercial Paper
(A) in the case of Commercial Paper issued on a discount basis, the amount of
proceeds received by the Company upon the sale thereof and (B) in the case of
Commercial Paper issued on an interest-bearing basis, the face amount thereof.
"PROGRAM FEE" shall mean a fee payable monthly to the Company by the
Debtor, the terms of which are set forth in the Fee Letter.
"PURCHASE AGREEMENT" shall mean the Purchase Agreement, dated as of
October 22, 1996, between the Debtor, as purchaser thereunder, and the Seller,
as seller thereunder, as the same may be amended, modified and supplemented from
time to time in accordance with the terms thereof and hereof.
"PURCHASED INTEREST" shall mean the interest in the Note acquired by
the Liquidity Provider, if any.
"RECEIVABLE" shall mean any retail installment sales contract listed
on the attached Receivables Sched- ule and any indebtedness owed thereunder
(including any Additional Amounts), whether constituting an account, chattel
paper, instrument, mortgage, deed of trust or general intangible, arising out of
or in connection with the sale of new or used cars, or new and used light trucks
including the rendering of services by the Origi- nator or any other party in
connection therewith, under an Extended Service Agreement or otherwise, and
including the right of payment of any finance charges and other obligations of
the Obligor with respect thereto. Not-
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<PAGE>
withstanding the foregoing, once the Collateral Agent has released its security
interest in a Receivable pursuant to Section 2.6 hereof, it shall no longer
constitute a Receivable hereunder.
"RECEIVABLE SCHEDULE" shall mean the schedule of Receivables (which
schedule may be in the form of a computer file or microfiche) attached as
EXHIBIT B to this Agreement, as amended or modified from time to time pursuant
to the terms of this Agreement.
"RELATED COMMERCIAL PAPER" shall mean Commercial Paper the proceeds
of which were used to acquire, or refinance, the Net Investment.
"RELEVANT UCC STATE" shall mean the States of New York and Texas.
"RE-LIENING EXPENSE" shall mean all expenses incurred by the Seller
or the Collateral Agent for the purpose of re-titling the Financed Vehicles to
name the Collateral Agent as lienholder on the certificate of title thereto.
"RE-LIENING TRIGGER" shall mean:
(a) First Investors Financial Services Group, Inc. (including
its consolidated subsidiaries) stockholders' equity falls below $12,000,000;
(b) any event described in Section 6.1(c) hereof shall occur
with respect to the Seller or the Debtor; or
(c) one or more courts of competent jurisdiction have issued
final, non-appealable orders to the effect that the Collateral Agent does not
have a valid perfected first priority security interest in the Financed Vehicles
securing any Receivable where the aggregate initial Principal Balance of such
affected Receivables is equal to or greater than 5.0% or more of the aggregate
Principal Balance of the Receivables as of the date of such order.
"REMITTANCE DATE" shall mean the 20th day of each month beginning
November 20, 1996, or, if such 20th
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day is not a Business Day, the next succeeding Business Day.
"REMOVAL DATE" shall have the meaning specified in Section 2.6
hereof.
"REQUIRED RESERVE ACCOUNT BALANCE" shall mean the greater of (i) an
amount equal to the product of (a) 1.00% and (b) the Borrowing Base and (ii) an
amount equal to the product of (x) 0.20% and (y) the greatest Net Investment
since the Closing Date; PROVIDED, HOWEVER, that on and after any Remittance Date
occurring after the occurrence of a Termination Event, there shall be no maximum
limit on the amount required to be on deposit in the Reserve Account.
"REQUIREMENTS OF LAW" for any Person shall mean the certificate of
incorporation or articles of association and by-laws or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation, or
determination of an arbitrator or Governmental Authority, in each case
applicable to or binding upon such Person or to which such Person is subject,
whether Federal, state or local (including, without limitation, usury laws, the
Federal Truth in Lending Act and Regulation Z and Regulation B of the Board of
Governors of the Federal Reserve System).
"RESERVE ACCOUNT" shall mean the account established pursuant to
Section 5A.1 hereof.
"RESERVE ACCOUNT AGENT" shall mean NationsBank, N.A., solely in its
capacity as Reserve Account Agent under this Agreement and the Insurance
Agreement.
"RESERVE ADVANCE" shall mean amounts advanced from the Reserve
Account in accordance with Section 5.1(b) hereof.
"REVOLVING PERIOD" shall mean the period from and including the
Closing Date to, but not including, the Termination Date.
"S&P" shall mean Standard & Poor's Ratings Group, a Division of The
McGraw-Hill Companies.
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"SECURED PARTIES" shall mean the Company and the Surety Bond
Provider.
"SELLER" means First Investors Financial Services, Inc.
"SELLER'S PARTICIPATING PROGRAM" means the program for the purchase
of Receivables from an Originator or group of affiliated Originators, whereby
the Receivables are aggregated into pools from which the Originators are
entitled to receive a portion of the aggregate yield for a specified period in
exchange for the Originator's agreement to repurchase Defaulted Receivables from
the pool during such period.
"SERVICER" shall mean GECC as servicer under the Servicing Agreement
or any successor Servicer acceptable to the Surety Bond Provider.
"SERVICER EVENT OF DEFAULT" has the meaning set forth in the
Servicing Agreement.
"SERVICING AGREEMENT" shall mean the Servicing Agreement, dated as
of October 22, 1996, between GECC, as servicer and the Debtor, as such agreement
may be amended, modified and supplemented from time to time (but only with the
consent of the Surety Bond Provider).
"SUBSEQUENT FUNDING" shall have the meaning specified in the Note
Purchase Agreement.
"SUBSIDIARY" means any corporation more than 50% of the outstanding
voting securities of which shall at any time be owned or controlled, directly or
indirectly, by the Debtor or by one or more Subsidiaries, or any similar
business organization which is so owned or controlled.
"SUPPLEMENTAL CONVEYANCE" shall have the mean- ing specified in
Section 2.2(b)(iii) hereof.
"SURETY BOND" shall mean that certain surety bond, substantially in
the form annexed hereto as EXHIBIT K.
"SURETY BOND PREMIUM" shall have the meaning specified in the
Insurance Agreement.
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"SURETY BOND PROVIDER" shall mean MBIA Insurance Corporation, a New
York stock insurance company.
"TARGETED MONTHLY PRINCIPAL PAYMENT" shall mean, with respect to
each Remittance Date, the amount necessary to reduce the Net Investment to the
product of (i) the Noteholder's Percentage and (ii) the Borrowing Base.
"TELERATE PAGE 3750 SCREEN" shall mean the display designated as
"Page 3750" on the Telerate Service (or such other page as may replace Page 3750
on that service or such other service as may be nominated by the British
Bankers' Association as the information vendor for the purposes of displaying
British Bankers' Association Interest Settlement Rates for U.S. Dollar
deposits).
"TERMINATION DATE" shall mean the earlier of (i) October 21, 1997
unless such date shall be extended by the parties hereto pursuant to a written
document, (ii) the date of termination of the commitment of the Liquidity
Provider under any Liquidity Agreement, (iii) the date of the termination of the
commitment of the Credit Support Provider under any Credit Support Agreement,
(iv) the date designated by the Debtor as the date on which the Revolving Period
shall terminate (which date shall be the last day of a Collection Period)
following not less than 30 Business Days' prior written notice to the Company
and the Surety Bond Provider and the Administrative Agent, and (v) the date on
which any Termination Event has occurred.
"TERMINATION EVENT" shall have the meaning specified in Section 6.1
hereof.
"TRANSFER" or "TRANSFERRED," when used with respect to Eligible
Investments held or to be held in the Reserve Account means:
(i) with respect to each Clearing Corporation Security,
transfer to the Reserve Account Agent will occur upon the latest of: (w)
the making by the Clearing Corporation of appropriate entries on its books
reducing the appropriate securities account of the transferor and
increasing the appropriate securities account of the Financial
Intermediary by the amount of such Clearing Corporation
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Security, (x) the sending of a confirmation to the Reserve Account Agent
by the Financial Intermediary of the purchase by the Reserve Account Agent
of such Clearing Corporation Security and (y) the identification by book
entry to the Financial Intermediary Securities Account by the Financial
Intermediary of the Clearing Corporation Securities as belonging to the
Reserve Account Agent, acting for the Collateral Agent, on behalf of the
Secured Parties;
(ii) with respect to each Certificated Security, transfer to
the Reserve Account Agent will occur upon the latest of (x) the sending of
a confirmation by the Financial Intermediary of the purchase by the
Reserve Account Agent of such Certificated Security and (y) the
identification by book-entry to the Financial Intermediary Securities
Account by the Financial Intermediary of such Certificated Security as
belonging to the Reserve Account Agent, acting for the Collateral Agent,
on behalf of the Secured Parties;
(iii) with respect to each Federal BookEntry Security,
transfer to the Reserve Account Agent will occur upon the latest of (x)
the making by the Federal Reserve Bank of Dallas of appropriate entries
transferring the Federal Book-Entry Security on its books and records to
the book-entry account of the Financial Intermediary at the Federal
Reserve Bank of Dallas, (y) the sending of a confirmation by the Financial
Intermediary of the purchase by the Reserve Account Agent of such Federal
Book-Entry Security, and (z) the identification by book-entry to the
Financial Intermediary Securities Account by the Financial Intermediary of
such Federal BookEntry Security as belonging to the Reserve Account Agent,
acting for the Collateral Agent, on behalf of the Secured Parties;
(iv) with respect to Instruments in the possession of the
Bailee, in the State of Texas, the sending of notice to the Bailee by the
Reserve Account Agent of the security interest of the Reserve Account
Agent, acting for the Collateral Agent, on behalf of the Secured Parties
and the sending of an acknowledgment of such notice to the Reserve Account
Agent; and
(v) with respect to any Eligible Inv- estment, by any method
creating a perfected security
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interest in favor of the Reserve Account Agent, acting for the Collateral
Agent, on behalf of the Secured Parties, provided that the Debtor shall
have delivered an opinion of counsel to the Reserve Account Agent and the
Collateral Agent to the effect that the Reserve Account Agent acting for
the Collateral Agent, on behalf of the Secured Parties, has a valid
perfected first priority security interest in such Eligible Investment .
"TRUST OFFICER" means any officer in the Corporate Trust Office of
the Collateral Agent responsible for the administration of this Agreement.
"UNIFORM COMMERCIAL CODE" OR "UCC" shall mean the Uniform Commercial
Code as adopted in the Relevant UCC State.
"UNUSED PROGRAM FEE" shall mean a fee payable monthly to the Company
by the Debtor, the terms of which are set forth in the Fee Letter.
"VSI INSURANCE" shall mean the blanket collateral protection
insurance policy or policies of insurance underwritten by Agricultural Excess
and Surplus Insurance Company (or any other insurance company acceptable to the
Company) covering each of the installment sales contracts held by the Debtor,
including the Receivables, in the form attached hereto as EXHIBIT J.
"WIND-DOWN EVENT" shall have the meaning speci-
fied in Section 6.2.
"YIELD PROTECTION PROVISION" shall mean the compensation of the
Company by the Debtor with respect to increased taxes, reserves and funding
costs of the Company as described in Section 4.2 of the Note Purchase Agreement.
ARTICLE II
GRANT OF SECURITY INTEREST
SECTION 2.1. GRANT OF SECURITY INTEREST. As security for the prompt
and complete payment of the Note and the performance of all of the Debtor's
obligations under the Note, the Note Purchase Agreement, the Insurance Agreement
and this Agreement, the Debtor hereby grants to the Collateral Agent, for the
benefit of the
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Secured Parties, a security interest in and continuing Lien on all of the
Debtor's right, title and interest in, to and under (i) all Receivables listed
on the date hereof in the Receivables Schedule attached hereto on EXHIBIT B and
all Additional Receivables which become Receivables at any time following the
Cut-Off Date pursuant to Section 2.2, all monies due or to become due with
respect to Receivables, including Additional Receivables, on and after the
Cut-Off Date or Addition Cut-Off Date, as applicable, whether such amounts are
considered accounts, general intangibles or other property, and all monies,
instruments, securities or investments of any type or description on deposit in
or credited to the Collection Account at any time; (ii) the security interests
in the Financed Vehicles granted by Obligors pursuant to the related Receivables
and any accessions thereto; (iii) any proceeds from claims on any physical
damage, credit life, credit disability, VSI Insurance or other insurance
policies covering Financed Vehicles or Obligors and any other Liquidation
Proceeds; (iv) any Interest Rate Cap, including the right to payment under any
such Interest Rate Cap or other hedging arrangement; and (v) the proceeds of any
and all of the foregoing (collectively, the "COLLATERAL"). As security for the
prompt and complete payment of the Note and the performance of all of Debtor's
obligations under the Note, the Note Purchase Agreement, the Insurance Agreement
and this Agreement, the Debtor hereby grants to the Reserve Account Agent for
the benefit of the Collateral Agent for the benefit of the Secured Parties, a
security interest in and continuing Lien on all of Debtor's right, title and
interest in, to and under the Reserve Account and all Eligible Investments,
securities, instruments and other financial assets (as defined in Section
8-102(a)(9) of the 1994 Official Text of the Uniform Commercial Code and the
Texas UCC) credited to the Reserve Account and the proceeds thereof. In
addition, the Debtor hereby assigns to the Collateral Agent all of its rights
under the Purchase Agreement with respect to the Receivables. Notwithstanding
the foregoing assignment, the Debtor does not assign its rights as to any retail
installment sales contracts purchased thereunder other than the retail
installment sales contracts and any other rights relating to Receivables. The
foregoing pledge does not constitute an assumption by the Collateral Agent of
any obligations of the Debtor to Obligors or any other Person in connection with
the Collateral or under any agreement and instrument relating
28
<PAGE>
to the Collateral, including without limitation any obligation to make future
advances to or on behalf of such Obligors.
In connection with such pledge, the Debtor agrees to record and
file, at its own expense, financing statements with respect to the Collateral
now existing and hereafter created for the transfer of chattel paper, accounts
and general intangibles (each as defined in Article 9 of the UCC as in effect in
the Relevant UCC State) meeting the requirements of applicable state law in such
manner and in such jurisdictions as are necessary to perfect the first priority
security interest of the Collateral Agent in the Collateral, and to deliver a
file-stamped copy of such financing statements or other evidence of such filing
(which may, for purposes of this Section 2.1, consist of telephone confirmation
of such filing) to the Company on or prior to the Closing Date. In addition, the
Debtor agrees to clearly and unambiguously mark its general ledger and all
accounting records and documents and all computer tapes and records to show that
the Receivables have been pledged to the Collateral Agent hereunder.
In connection with the grant of the security interest pursuant to
this Section 2.1, the Debtor agrees to direct GECC as Servicer, on or prior to
the Closing Date, to indicate, on or prior to the Closing Date, clearly and
unambiguously in its computer files described in the preceding paragraph that an
undivided interest in the Receivables created in connection with the Receivables
has been pledged to the Collateral Agent pursuant to this Agreement. The Debtor
shall deliver to the Collateral Agent a computer file or microfiche list
containing a true and complete list of all such Receivables, identified by
account number and principal balance as of the Cut-Off Date. Such file or list
shall be marked as the Receivable Schedule and EXHIBIT B to this Agreement,
delivered to the Collateral Agent as confidential and proprietary information,
and is hereby incorporated into and made a part of this Agreement. The Debtor
agrees to deliver to the Collateral Agent at such times as requested by the
Collateral Agent in connection with a thirdparty's request to review EXHIBIT B,
as provided in the financing statement filed by the Collateral Agent under the
UCC, a computer file or microfiche list containing a true and complete list of
all Receivables, including all
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Receivables created on or after the Cut-Off Date, in existence as of the later
of (w) the last day of the prior Collection Period, (x) the most recent Addition
Date or (y) the most recent Removal Date by account number and by Principal
Balance as of such day or date. Such updated and revised file or list shall be
marked as the Receivable Schedule and EXHIBIT B to this Agreement, delivered to
the Collateral Agent as confidential and proprietary information, shall replace
the previously delivered Receivable Schedule identified as EXHIBIT B, and shall
be incorporated into and made a part of this Agreement. The Debtor agrees to
direct the Servicer, by the end of each Collection Period to indicate clearly
and unambiguously in its computer files that an undivided interest in the
Receivables has been pledged to the Collateral Agent pursuant to this Agreement.
SECTION 2.2. ADDITIONAL RECEIVABLES.
(a) At any time during the Revolving Period, but no more than
once in any consecutive three month period (unless more frequent additions are
approved by the Collateral Agent acting upon written instructions of each of the
Secured Parties), the Debtor may designate additional Eligible Receivables to be
included as part of the Collateral ("ADDITIONAL RECEIVABLES"); PROVIDED,
HOWEVER, that in the case of an addition done for a purpose other than
preventing the sum of the Borrowing Base plus the amount on deposit in the
Reserve Account from declining below the Net Investment, the date of transfer
(the "ADDITION DATE") shall be as of the opening of business on the first
Business Day of the Collection Period immediately succeeding the Addition
Cut-Off Date with respect to such Additional Receivables. It shall be a
condition precedent to the pledge to the Collateral Agent of any Additional
Receivables that (i) the Debtor shall have provided the Collateral Agent and the
Surety Bond Provider reasonable access to all computer tapes, books, records,
files and documentation relating to the Receivables and the retail installment
sales contracts to be designated as Additional Receivables, (ii) the Debtor
shall have entered into an Interest Rate Cap, which shall be in form and
substance acceptable to the Surety Bond Provider, (iii) after giving effect to
such pledge of Additional Receivables the Net Investment shall not be greater
than the Noteholder's Percentage of the Borrowing Base, (iv) the amount on
deposit in the Reserve Account
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shall at least equal the Required Reserve Account Balance (calculated as if such
Additional Receivables shall have been pledged to the Collateral Agent), (v) if
any Additional Receivables proposed to be pledged to the Collateral Agent were
acquired by the Seller in a bulk purchase, the Surety Bond Provider shall have
consented in writing to the pledge of such Additional Receivables, and (vi) the
weighted average original term to maturity of each group of Additional
Receivables proposed to be pledged to the Collateral Agent shall be at least one
month greater than the weighted average remaining term to maturity of such group
of Additional Receivables.
(b) Any addition of Receivables as part of the Collateral made
under subsection (a) shall satisfy the following conditions:
(i) On or before the tenth Business Day (the "NOTICE
DATE") prior to the Addition Date, the Debtor shall give the
Administrative Agent, the Surety Bond Provider and the Collateral Agent
written notice that such Additional Receivables will be included as
Collateral as of the Addition Date and specifying the estimated Principal
Balance of such Additional Receivables as of the Addition CutOff Date;
(ii) On or prior to the Addition Closing Date, the
Debtor shall have clearly and unambiguously marked its general ledger and
any computer tapes or other records to show that an undivided interest in
the Additional Receivables has been pledged to the Collateral Agent;
(iii) On or prior to the Addition Closing Date, the
Debtor and the Collateral Agent shall have executed a supplemental
conveyance in substantially the form of EXHIBIT F to this Agreement (the
"SUPPLEMENTAL CONVEYANCE");
(iv) On or prior to the Addition Date, the Debtor shall
have deposited or caused to be deposited in the Reserve Account an amount
necessary to cause the amount on
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<PAGE>
deposit in the Reserve Account to at least equal the Required Reserve
Account Balance (calculated as if such Additional Receivables shall have
been pledged to the Collateral
Agent);
(v) On or prior to the Addition Closing Date, the Debtor
shall have directed the Servicer, on behalf of the Debtor, to (A) clearly
and unambiguously mark each computer file containing any Additional
Receivable or any documentation or records relating thereto, and all
computer tapes and records to show that an undivided interest in the
Additional Receivables has been pledged to the Collateral Agent as of the
Addition Date and (B) deliver to the Collateral Agent and each Secured
Party a computer file or microfiche list containing a true and complete
list of all Additional Receivables identified by account number and by
Principal Balance of such Additional Receivables as of the Addition
Cut-Off Date, or a true and complete list of all Receivables, including
the Additional Receivables, identified by account number and by Principal
Balance as of the Addition Cut-Off Date, which computer file or microfiche
list shall be as of the date of such Supplemental Conveyance incorporated
into and made a part of such Supplemental Conveyance and this Agreement;
(vi) The Debtor shall represent and warrant to the
Collateral Agent and the Secured Parties that (w) each Additional
Receivable is, as of the Notice Date, the Addition Date and the Addition
Closing Date, an Eligible Receivable, (x) no selection procedure adverse
to the interests of the Secured Parties was utilized in selecting the
Additional Receivables from the available receivables, (y) such transfer
of Additional Receivables was not made with the intent to hinder, delay,
or defraud any creditor, and (z) (1) the Debtor received reasonably
equivalent value in exchange for such Additional Receivables and (2)(a) as
of the Addition Date, the Debtor is not insolvent and will not be made
insolvent by the transfer
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of such Additional Receivables (b) the Debtor is not engaged or about to
engage in any business for which the Debtor has unreasonably small capital
and (c) the Debtor does not intend to incur or believe that it will incur
any debts that would be beyond its ability to pay such debts as they
occur; and
(vii) The Debtor shall represent and warrant that, as of
the Addition Closing Date, the Supplemental Conveyance constitutes a grant
of a first priority perfected security interest (as defined in the UCC as
in effect in the Relevant UCC State) in such property to the Collateral
Agent, which is enforceable with respect to the Additional Receivables and
the proceeds (including Liquidation Proceeds) thereof on such Addition
Closing Date. Upon the filing on or prior to the Addition Closing Date of
financing statements of the type described in Section 2.1 with respect to
such Additional Receivables and the proceeds (including Liquidation
Proceeds) thereof, and upon the pledge of such Additional Receivables and
the proceeds thereof (including Liquidation Proceeds), the Collateral
Agent, on behalf of the Secured Parties, shall have a first priority
perfected ownership or security interest in such property, except for
Liens permitted under Section 3.2(e).
SECTION 2.3. RE-LIENING TRIGGER. Upon the occurrence of a Re-Liening
Trigger, the Seller shall take all steps necessary to cause the certificate of
title or other evidence of ownership of the related Financed Vehicle to be
revised to name the Collateral Agent on behalf of the Secured Parties as
lienholder. Any costs associated with such revision of the Certificate of Title
shall be paid by the Seller and to the extent such costs are not paid by the
Seller such unpaid costs shall be recovered from Available Funds as described in
Section 5.1 hereof.
In addition, with respect to any state in which Obligors are located
with respect to Receivables that account for more than 10% of the initial
aggregate Principal Balance of Receivables, the Seller shall be required
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to deliver a legal opinion satisfactory to the Surety Bond Provider and counsel
for the Surety Bond Provider and to S&P as to the status of the security
interest of the Collateral Agent, on behalf of the Secured Parties, in the
related Financed Vehicles or cause the certificate of title or other evidence of
ownership of the related Financed Vehicle to be revised to name the Collateral
Agent on behalf of the Secured Parties as lienholder.
Further, in the event that First Investors Financial Services Group,
Inc. (including its consolidated subsidiaries) stockholders' equity falls below
$15,000,000, the Seller shall within 30 days thereof, either (i) deliver to the
Collateral Agent and the Surety Bond Provider opinions of legal counsel, in form
and substance satisfactory to the Surety Bond Provider and counsel to the Surety
Bond Provider, with respect to the laws of each state required by the Surety
Bond Provider, as to the status of the security interest of the Collateral
Agent, on behalf of the Secured Parties, in the related Financed Vehicles or
(ii) the Seller shall cause to be taken all steps necessary to cause the
certificate of title or other evidence of ownership of the related Financed
Vehicle to be revised to name the Collateral Agent on behalf of the Secured
Parties as lienholder. Any costs associated with such revision of the
Certificate of Title shall be paid by the Seller and to the extent such costs
are not paid by the Seller such unpaid costs shall be recovered from Available
Funds as described in Section 5.1 hereof.
SECTION 2.4. SUBROGATION. The parties hereto each acknowledge that,
to the extent of any payment made under the Surety Bond, the Surety Bond
Provider shall be fully subrogated to the extent of such payment, to the rights
of the Noteholder to any moneys paid or payable to such holder in respect of the
corresponding amounts due on such Note. The parties hereto each agree to such
subrogation and each further agrees to execute such instruments and to take such
actions as, in the sole judgment of the Surety Bond Provider, are necessary to
evidence such subrogation and to perfect the rights of the Surety Bond Provider
to receive any moneys paid or payable to the Surety Bond Provider under the
Note, the Note Purchase Agreement, the Insurance Agreement and this Agreement.
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SECTION 2.5. INCREASE OF NOTE. The Debtor may increase the
outstanding principal amount of the Note only upon satisfaction of the following
conditions:
(i) no Termination Event, no Amortization Event and no Wind-Down
Event shall have occurred and be continuing;
(ii) the Debtor shall have entered into any Interest Rate Cap that
is satisfactory to the Surety Bond Provider, Moody's and S&P;
(iii) after giving effect to any such increase, the Net Investment
shall not be greater than the Noteholder's Percentage of the
Borrowing Base;
(iv) after giving effect to any such increase, the sum of the Net
Investment and the interest component of Related Commercial
Paper would not exceed the Facility Limit;
(v) the amount on deposit in the Reserve Account shall at least
equal the Required Reserve Account Balance (calculated as if
such increase in the Note shall have occurred);
(vi) the Surety Bond Provider shall not have failed to make a
payment required to be made under the Surety Bond; and
(vii) the Debtor shall have provided notice to the Collateral Agent
and each of the Secured Parties ten Business Days prior to
such increase.
SECTION 2.6. RELEASE OF RECEIVABLES. On any Business Day, provided
that no Termination Event, Amortization Event or Wind-Down Event shall have
occurred, the Debtor shall have the right to require the Collateral Agent to
release all of the Collateral Agent's right, title and interest in and to all or
certain specified Receivables on the terms and conditions set forth herein (the
effective date of any such release, the "REMOVAL
35
<PAGE>
DATE"). It shall be a condition precedent to any such release that (i) after
giving effect to any such release, the Net Investment shall not exceed the
Noteholder's Percentage of the Borrowing Base, such determination to be based on
the most recent Monthly Debtor's Certificate delivered by the Debtor, (ii) such
release does not result in a Termination Event, a Wind-Down Event or an
Amortization Event, (iii) the Debtor shall (y) pay to the Collateral Agent for
payment to the Noteholder on the day of receipt from the Debtor, an amount equal
to the amount necessary, if any, to reduce the Net Investment such that the Net
Investment does not exceed the Noteholder's Percentage of the Borrowing Base
after giving effect to such release and (z) pay to the Collateral Agent for
payment to the Noteholder on the day of receipt from the Debtor, an amount equal
to all unpaid Carrying Costs (including Carrying Costs not yet accrued) to the
extent reasonably determined by the Administrative Agent to be attributable to
that portion of the Net Investment to be reduced as a result of the payment
referred to in clause (y) above, (iv) the Debtor shall have given the Collateral
Agent, the Surety Bond Provider and the Administrative Agent at least five (5)
days prior written notice of its intention to request the release of such
Receivables, (v) all amounts due under the Note Purchase Agreement and the
Insurance Agreement, to the extent accrued to the date of such release or, at
the option of the Collateral Agent, acting upon the written instructions of the
Company and the Surety Bond Provider, acting separately, accrued to such date
and to accrue thereafter, shall have been reimbursed and (vi) such release shall
not materially and adversely affect either Secured Party and (vii) such release
shall include at least $5,000,000 in Principal Balance of Receivables; PROVIDED,
HOWEVER, that there shall be no minimum release amount with respect to
Ineligible Receivables. It is the intention of the parties that, to the extent
the Company is the Noteholder and the Company is funding its interest in the
Note through related Commercial Paper, the Debtor shall pay to the Collateral
Agent such amounts as are required under this Section 2.6 on the Business Day
preceding the maturity date of the Related Commercial Paper issued by the
Company to fund its interest in the Note. The Company agrees to use its
reasonable efforts to reinvest in overnight Eligible Investments any payments
received by the Company from the Debtor in respect of maturing Commercial Paper
36
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prior to the Business Day preceding such maturity and remit the proceeds of such
investments to the Debtor.
The amount described in clause (iii)(y) above upon receipt by the
Company shall be applied in reduction of the Net Investment.
The Debtor shall also be obligated to pay to the Collateral Agent,
the Company, the Surety Bond Provider and the Administrative Agent the
reasonable legal fees and expenses of the Collateral Agent, the Surety Bond
Provider, the Administrative Agent and the Company arising in connection with
any such release.
Upon (i) the deposit to the Collection Account and the payment to
the respective parties of the amounts described in this Section, and (ii) the
receipt by the Collateral Agent of a certificate of the Debtor stating that all
conditions precedent contained in this Section 2.6 have been satisfied, the
Collateral Agent shall execute and deliver to the Debtor, at the Debtor's
expense, such documents or instruments as are necessary to terminate the
Collateral Agent's interest in the applicable Receivables and the proceeds
thereof. Any such documents shall be prepared by or on behalf of the Debtor and
shall specifically identify (by loan or account number and outstanding Principal
Balance) the Receivables in which the Collateral Agent's security interest is to
be released.
The Debtor shall deliver to the Collateral Agent, the Surety Bond
Provider and the Administrative Agent a computer file, microfiche list or
printed list containing a true and complete list of all such Receivables to be
released, identified by account number and principal balance as of the Cut-Off
Date or Removal Date. Such file or list, when taken together with the list
provided pursuant to Section 2.1 hereof shall constitute the Receivables
Schedule as of such Removal Date after giving effect to such removal.
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE DEBTOR
SECTION 3.1. REPRESENTATIONS AND WARRANTIES CONCERNING RECEIVABLES.
The Debtor represents and warrants to and covenants with the Collateral Agent
and the Secured Parties as of the Closing Date and, except as otherwise provided
herein, as of each Addition Date relating to the Receivables added to the
Collateral on such Addition Date pursuant to Section 2.2, that:
(a) Immediately prior to the Closing Date or the related
Addition Date, as applicable, (each a "CONVEYANCE DATE") the Seller had a valid
and enforceable first priority security interest in the related Financed
Vehicle, and such security interest had been duly perfected and was prior to all
other present and future liens and security interests (except future tax liens
and liens that, by statute, may be granted priority over previously perfected
security interests) that now exist or may hereafter arise, and the Seller had
the full right to assign such security interest to the Debtor.
(b) On and after the related Conveyance Date, there shall
exist under such Receivable a valid, subsisting, and enforceable first priority
perfected security interest in the related Financed Vehicle (other than, as to
the priority of such security interest, any statutory lien arising by operation
of law after the related Conveyance Date which is prior to such interest) and,
following the grant of all of the Debtor's right, title and interest in and to
such security interest to the Collateral Agent, at such time as enforcement of
such security interest is sought there shall exist in favor of the Collateral
Agent a valid, subsisting, and enforceable first priority perfected security
interest (other than, as to the priority of such security interest, any
statutory lien arising by operation of law after the related Addition Date which
is prior to such interest) in the related Financed Vehicle.
(c) If such Receivable was originated in a state in which
notation of a security interest on the title document for the Financed Vehicle
securing such Receivable is required or permitted to perfect such secu-
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rity interest, the title document for such Financed Vehicle shows, or if a new
or replacement title document is being applied for with respect to such Financed
Vehicle the title document will show, the Seller as the sole holder of a
security interest in such Financed Vehicle. If such Receivable was originated in
a state in which the filing of a financing statement under the UCC is required
to perfect a security interest in motor vehicles, such filings or recordings
have been duly made and show the Seller as the sole holder of a first priority
security interest in such Financed Vehicle, and in either case the Debtor has
the same rights as the Seller has or would have (if the Seller were still the
owner of a Receivable) against the Obligor and all creditors of the Obligor
claiming an interest in such Financed Vehicles.
(d) Immediately prior to the related Conveyance Date: (i) such
Receivable had not been sold, assigned, or pledged by the Seller to any Person;
(ii) the Seller had good and marketable title thereto free and clear of any
encumbrance, equity, pledge, charge, claim or security interest; (iii) the
Seller was the sole owner thereof and had full right to sell the Receivable to
the Debtor and upon the sale thereof to the Debtor, the Debtor will have good
and marketable title thereto and will own such Receivables free and clear of any
encumbrances. Such Receivable was acquired by the Seller, from an Originator
with which the Seller does business, pursuant to an Originator Agreement between
the Seller and such Originator. Such Originator had full right to assign to the
Seller such Receivable and the security interest in the related Financed
Vehicle. The Seller has full right to sell to the Debtor such Receivable and the
security interest in the related Financed Vehicle. The Collateral Agent, for the
benefit of the Secured Parties, has a valid and perfected first priority
security interest in such Receivable and all proceeds thereof, free and clear of
all Liens, encumbrances, security interests and rights of others.
(e) As of the related Conveyance Date, there is no lien
against the related Financed Vehicle for delinquent taxes.
(f) Such Receivable, and the sale of the Financed Vehicle
securing such Receivable, where applicable, complied, at the time it was made,
and now complies,
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in all material respects with applicable state and federal laws (and regulations
thereunder), including, without limitation, usury, disclosure and consumer
protection laws, equal credit opportunity, fair credit reporting,
truth-in-lending or other similar laws, the Federal Trade Commission Act, and
applicable state laws regulating retail installment sales contracts in general
and motor vehicle retail installment sales contracts and loans in particular,
and the receipt of interest on, and the ownership of, such Receivable by the
Debtor will not violate any such laws and the related Obligor has no right of
rescission or cancellation, claims or defenses, set-offs, or counterclaims of
any kind whatsoever as to or against the contract evidencing a related
Receivable.
(g) The Receivable constitutes the entire agreement between
the Seller (as assignee of the related Originator) and the related Obligor.
(h) At the time of origination of such Receivable, the
proceeds of such Receivable were fully disbursed, and there is no requirement
for future advances thereunder, and all fees and expenses in connection with the
origination of such Receivable have been paid.
(i) As of the related Conveyance Date, there is no default,
breach, violation or event of acceleration existing under any such Receivable
and no event which, with the passage of time or with notice or with both, would
constitute a default, breach, violation or event of acceleration under any such
Receivable. The Seller has not waived any such default, breach, violation or
event of acceleration.
(j) In connection with the purchase of such Receivable, the
Seller required the related Originator to furnish evidence that the related
Financed Vehicle was covered by a comprehensive and collision insurance policy
naming the Seller as loss payee and insuring against loss and damage due to
fire, theft, transportation, collision and other risks generally covered by
comprehensive and collision coverage in an amount equal to the actual cash value
of the related Financed Vehicle.
(k) Such Receivable contains customary and enforceable
provisions such as to render the rights
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and remedies of the holder thereof adequate for the realization against the
related Financed Vehicle of the benefits of the security.
(l) The collection practices used with respect to such
Receivable have been in all material respects legal, proper, prudent and
customary in the automobile installment sales contract or installment loan
servicing business as applied with respect to obligors with credit standings
comparable to that of the Obligor.
(m) Neither the Obligor on such Receivable nor any of its
Affiliates is the Obligor on a Receivable or Receivables with an aggregate
principal amount greater than $40,000 as of the Conveyance Date.
(n) The related Obligor does not have any other motor vehicle
retail installment sale contracts owing to the Seller which are 60 or more days
contractually delinquent at the Conveyance Date.
(o) No Receivable is due from an Obligor who has defaulted
under a previous Receivable with the Seller.
(p) The Originator that sold such Receivable to the Seller has
entered into an Originator Agreement and such Originator Agreement constitutes
the entire agreement between the Seller and the related Originator with respect
to the sale of such Receivable to the Seller, such Originator Agreement was, at
the time of the origination of such Receivable, in full force and effect and is
the legal, valid, binding and enforceable obligation of such Originator (subject
to applicable bankruptcy and insolvency laws and other similar laws affecting
the enforcement of creditors' rights generally and to principles of equity,
regardless of whether enforcement is sought in a proceeding in equity or at
law); there have been no material defaults by such Originator or by the Seller
under such Originator Agreement; the Seller has fully performed all of its
obligations under such Originator Agreement; the Seller has not made any
statements or representations to such Originator inconsistent with any term of
such Originator Agreement; the purchase price for such Receivable has been paid
in full by the Seller, there is no other payment due to such Originator from the
Seller for the purchase of such Receivable, such Origina-
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tor has no right, title or interest in or to any Receivable; there is no prior
course of dealing between such Originator and the Seller which will affect the
terms of such Originator Agreement; any additional payment that may be owed to
such Originator by the Seller is a corporate obligation of the Seller.
(q) The Seller has provided to the Servicer the sole original
counterpart of such Receivable as amended, and the related title document or the
application for title document, previously in the possession of the Seller.
(r) Such Receivable constitutes "chattel paper" for purposes
of Section 9-105(1)(b) and 9-308 of the UCC. The Seller's electronic ledgers
have been marked as provided in Section 2.1 and 2.2 of this Agreement with
respect to such Receivable.
(s) Such Receivable was not originated in, nor is it subject
to the law of, any jurisdiction, the laws of which would make unlawful the sale,
transfer or assignment of such document, under this Agreement, including any
repurchase in accordance with this Agreement.
(t) Such Receivable is in full force and effect in accordance
with its respective terms and neither the Seller nor the related Obligor has
suspended or reduced any payments or obligations due or to become due thereunder
by reason of a default by the other party to such Receivable; there are no
proceedings pending, or to the best of the Seller's knowledge, threatened,
asserting insolvency of the related Obligor, there has been no previous default
on such Receivable that resulted in repossession of the related Financed
Vehicle; and there are no proceedings pending, or to the best of the Seller's
knowledge, threatened, wherein the related Obligor or any governmental agency
has alleged that such Receivable is illegal or unenforceable.
(u) Each contract evidencing a Receivable being acquired by
the Debtor is substantially similar to one of the Seller's standard form
contracts attached hereto as EXHIBIT K except for immaterial modifications or
deviations therefrom in accordance with state law which will not have a material
adverse effect on the
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Secured Parties and will not reduce the scheduled payments thereunder or other
payments due under the Receivables.
(v) The Seller has duly fulfilled all obligations to be
fulfilled on the Seller's part under or in connection with the origination,
acquisition and disposition of such Receivable, including, without limitation,
giving any notices or consents necessary to effect the acquisition of such
Receivables by the Debtor, and has done nothing to impair the rights of the
Collateral Agent or the Secured Parties in such Receivable or payments with
respect thereto. The Seller has obtained all necessary licenses, permits and
charters required to be obtained by the Seller, which failure to obtain would
render any portion of the transaction document unenforceable and would have a
material adverse effect on the Secured Parties.
(w) The Originator that originated such Receivable was
selected by the Seller based on such Originator's financial and operating
history.
(x) As of the Cut-Off Date, the aggregate Principal Balance of
all Receivables was $65,913,504.67.
(y) The contract securing such Receivable arose from a bona
fide sale in the ordinary course of the Originator's business.
(z) Such Receivable represents the sale of goods described in
the contract evidencing the Receivable.
(aa) Such Receivable is exclusive and contains all the terms
and conditions of the related contract.
(ab) To the best of the Debtor's knowledge, all signatures,
names, addresses, telephone numbers, figures and other statements of fact set
forth in the contract evidencing the Receivable are genuine, true and correct.
(ac) To the best of the Debtor's knowledge, no part of the
down payment, or any installment, has been loaned by the Originator to the
related Obligor.
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(ad) To the best of the Debtor's knowledge, all credit
information provided to the Seller is true and correct and reported as received
from the Obligor.
(ae) To the best of the Debtor's knowledge, the Obligor is in
fact the primary or sole operator of the related Financed Vehicle.
(af) Each Receivable constitutes an Eligible Receivable.
(ag) The sale of the Extended Service Agreement to the related
Obligor complied at the time of such sale with all applicable state and federal
laws (and regulations thereunder), including without limitation, insurance,
usury, disclosure and consumer protection laws, equal credit opportunity, fair
credit reporting, truth-in-lending or other similar laws, the Federal Trade
Commission Act, and applicable state laws regulating extended service agreements
and insurance, and the ownership of such Extended Service Agreement will not
violate any such laws.
(ah) To the best of the Debtor's knowledge, each Extended
Service Agreement and each credit life policy and accident and health policy
relating to a Financed Vehicle or an Obligor is the legal, valid and binding
obligation of each party thereto, and is enforceable in accordance with its
terms.
(ai) To the best of the Debtor's knowledge, the Seller and any
party obligated to perform services under an Extended Service Agreement relating
to a Financed Vehicle, any credit life insurance policy or any accident and
health policy related to a Financed Vehicle or an Obligor have complied with all
licensing, insurance or other laws applicable to them in connection with the
origination, servicing, performance or administration thereof.
(aj) The Collateral Agent will be entitled to receive all
amounts due to an Obligor or lienholder upon cancellation by an Obligor of an
Extended Service Agreement or any credit life insurance policy and accident and
health insurance policy relating to a Financed Vehicle or an Obligor; and
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(ak) All rights (but not obligations) of the Seller under each
Extended Service Agreement and any credit life insurance policy and accident and
health insurance policy relating to a Financed Vehicle or an Obligor have been
assigned by the Seller to the Debtor, and subsequently assigned by the Debtor to
the Collateral Agent for the benefit of the Secured Parties.
With respect to any Receivable for which any representation or
warranty made by the Debtor set forth in Section 3.1 above shall be or shall
have been untrue as of the last day of the prior Collection Period (each, an
"Ineligible Receivable") the Debtor shall be obligated to pay to the Collateral
Agent, for application in accordance with Section 5.1 as if such amounts
constituted Available Collections for such Remittance Date, the principal
balance plus accrued interest at the applicable APR on each such Ineligible
Receivable. Such payment shall be made on the Business Day preceding the next
Remittance Date. After the payment of such amount in respect of any Receivable,
the lien of the Collateral Agent in any such Receivable shall be released.
SECTION 3.2. COVENANTS OF THE DEBTOR
The Debtor hereby covenants to the Collateral Agent and the Secured
Parties, so long as any amounts shall be outstanding under the Note, the Note
Purchase Agreement or the Insurance Agreement or the Surety Bond is in effect,
that:
(a) CORPORATE EXISTENCE. The Debtor will preserve and maintain
its existence as a corporation duly organized and existing under the laws of the
jurisdiction of its incorporation and will remain duly qualified as a foreign
corporation under the laws of each other jurisdiction in which the failure to so
qualify would have a material adverse effect on the ability of the Debtor to
perform its obligations under this Agreement, the Note, the Note Purchase
Agreement, the Insurance Agreement or the Purchase Agreement.
(b) LOSSES, ETC. In any suit, proceeding or action brought by
the Collateral Agent or any Secured Party for any sum owing thereto, the Debtor
will save, indemnify and keep the Collateral Agent and the Secured Parties
harmless from and against all expense, loss or damage suffered by reason of any
defense, setoff, counterclaim, recoupment or reduction of liability whatsoever
of the Obligor under such Receivable, arising out of a breach by the Debtor of
any
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obligation under the related Receivable or arising out of any other agreement,
indebtedness or liability at any time owing to or in favor of such Obligor or
its successor from the Debtor, and all such obligations of the Debtor shall be
and remain enforceable against and only against the Debtor and shall not be
enforceable against the Collateral Agent or any Secured Party.
(c) COMPLIANCE WITH LAW. The Debtor will comply, in all
material respects, with all acts, rules, regulations, orders, decrees and
directions of any governmental authority applicable to the Receivables or any
part thereof; PROVIDED, HOWEVER, that the Debtor may contest any act, rule,
regulation, order, decree or direction in any reasonable manner which will not
materially and adversely affect the rights of the Collateral Agent in the
Receivables or the collectability of the Receivables.
(d) NO INSTRUMENTS. The Debtor will take no action to cause
any Receivable to be evidenced by any instru- ment (as defined in the UCC as in
effect in the Relevant UCC State).
(e) NO LIENS. Except for the conveyances contemplated
hereunder, the Debtor will not sell, pledge, assign or transfer to any other
Person, or grant, create, incur, assume or suffer to exist any Lien on any
Receivable or any interest therein; the Debtor will notify the Collateral Agent
and the Surety Bond Provider of the existence of any Lien on any Receivable
immediately upon discovery thereof; and the Debtor shall defend the right, title
and interest of the Collateral Agent on behalf of the Secured Parties in, to and
under the applicable Receivables against all claims of third parties claiming
through or under the Debtor; PROVIDED, HOWEVER, that nothing in this Section
3.2(e) shall prevent or be deemed to prohibit the Debtor from suffering to exist
upon any of the Receivables any Liens for municipal or other local taxes and
other governmental charges if such taxes or governmental charges shall not at
the time be due and payable or if the Debtor shall currently be contesting the
validity thereof in good faith by appropriate proceedings and shall have set
aside on its books adequate reserves with respect thereto.
(f) NOTICE TO COLLATERAL AGENT. The Debtor will advise the
Collateral Agent and the Surety Bond Provider promptly, in reasonable detail,
(i) of any Lien asserted or claim made against any of the Receivables, (ii) of
the occur-
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rence of any breach by the Debtor of any of its representations, warranties and
covenants contained herein and (iii) of the occurrence of any other event which
would have a material adverse effect on the Collateral Agent's security interest
on behalf of the Secured Parties in the Receivables or the collectability
thereof, or which would have a material adverse effect on the interests of the
Secured Parties.
(g) BOOKS AND RECORDS. The Collateral Agent and the Secured
Parties and their agents and representatives shall at all times have full and
free access during normal business hours to all the computer tapes, books,
correspondence and records of the Debtor insofar as they relate to the
Receivables, and the Collateral Agent and its agents and representatives and the
Surety Bond Provider may examine the same, take extracts therefrom and make
photocopies thereof, and the Debtor agrees to render to the Collateral Agent and
the Surety Bond Provider or its agents and representatives, at the Debtor's cost
and expense, such clerical and other assistance as may be reasonably requested
with regard thereto. The Debtor hereby assigns to the Collateral Agent and its
agents and representatives and the Surety Bond Provider all rights the Debtor
has or shall have to examine computer tapes, books, correspondence and records
relating to Receivables serviced by the Servicer or any successor servicer
thereto. Each of the Collateral Agent and the Surety Bond Provider acknowledges
that in exercising the rights and privileges conferred in this Section 3.2(g)
it, or its agents and representatives, may from time to time obtain knowledge of
information and practices set forth in such computer tapes, books,
correspondence and records (whether in the possession of the Debtor or the
Servicer) of a confidential nature and in which the Debtor has a proprietary
interest. The Collateral Agent and the Secured Parties agree that all such
information, practices, books, correspondence and records are to be regarded as
confidential information and that (i) it shall retain in strict confidence and
shall use its best efforts to ensure that its representatives retain in strict
confidence and will not disclose without the prior written consent of the Debtor
any or all of such information, practices, books, correspondence and records
furnished to them and (ii) it will not, and will use its best efforts to ensure
that its agents and representatives will not, make any use whatsoever (other
than for the purposes contemplated by this Agreement) of any of such
information, practices, computer tapes, books, correspondence and records
without the prior written consent of the Debtor, unless such information (i) is
generally available to the public, (ii) is
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required by law to be disclosed or is requested by any Governmental Authority
having authority over the Surety Bond Provider, the Company, any Liquidity
Provider or Credit Support Provider or (iii) is requested by Moody's or S&P in
connection with their rating of the Related Commercial Paper or the implied
rating of the facility.
(h) ADMINISTRATIVE PROCEDURES. The Debtor will maintain and
implement administrative operating procedures (including, without limitation, an
ability to recreate records evidencing the Receivables in the event of the
destruction of the originals thereof) and keep and maintain all documents,
books, records and other information customarily maintained in the servicing of
sub-prime auto loans.
(i) UCC FILINGS. The Debtor shall execute and file such
continuation statements and any other documents requested by the Company, the
Surety Bond Provider or the Collateral Agent or which may be required by law to
fully preserve and protect the interest of the Company, the Surety Bond
Provider, and the Collateral Agent hereunder in and to the Receivables.
(j) CHANGE OF LOCATION. The Debtor will not (i) without
providing 30 days' notice to the Company the Surety Bond Provider, and the
Collateral Agent and without filing such amendments to any previously filed
financing statements as the Collateral Agent or the Surety Bond Provider may
require, (A) change the location of its principal executive office or the
location of the offices where the records relating to the accounts are kept, and
(B) change its name, identity or corporate structure in any manner which would,
could or might make any financing statement or continuation statement filed by
the Debtor in accordance with this Agreement seriously misleading within the
meaning of Section 9- 402(7) of the UCC or any applicable enactment of the UCC.
(k) FURTHER ASSURANCES. The Debtor shall deliver to the
Company, the Surety Bond Provider, and the Collateral Agent within 90 days of
the first anniversary of the Closing Date and each anniversary thereafter an
opinion of independent counsel to the Debtor, dated as of a date during such
90-day period, either (a) stating that, in the opinion of such counsel, (1) such
action has been taken with respect to the recording, registering, filing,
re-recording, re-registering and re-filing of financing statements, continuation
statements or other instruments or documents as is necessary
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to preserve and protect the interest of the Collateral Agent and the Secured
Parties in and to the Receivables and reciting the details of such action or
referring to prior opinions of counsel in which such details are given, and (2)
all financing statements, continuation statements and any other necessary
documents have been executed and filed that are necessary fully to preserve and
protect the perfected interest of the Collateral Agent and the Secured Parties
in and to the Receivables, and reciting the details of such filings or referring
to prior opinions of counsel in which such details are given, or (b) stating
that, in the opinion of such counsel, no such action is necessary to preserve
and protect such interest.
(l) REPORTING. The Debtor will furnish, or cause to be
furnished to the Administrative Agent, the Surety Bond Provider, and the
Collateral Agent (unless otherwise provided to the Collateral Agent):
(i) NOTICE OF TERMINATION EVENT, AMORTIZATION EVENT,
WIND-DOWN EVENT, POTENTIAL TERMINATION EVENTS, POTENTIAL AMORTIZATION
EVENT OR POTENTIAL WIND-DOWN EVENT. As soon as possible and in any event
within five days of becoming aware of the occurrence of each Termination
Event, Amortization Event, Wind-Down Event, or each Potential Termination
Event, Potential Amortization Event or Potential Wind-Down Event
hereunder, or each Servicer Event of Default (as defined in the Servicing
Agreement) or FIARC Event of Default (as defined in the Servicing
Agreement) under the Servicing Agreement, a statement of the chief
financial officer or chief accounting officer of the Debtor setting forth
details of such Termination Event, Amortization Event, Wind-Down Event,
Potential Termination Event, Potential Amortization Events or Potential
Wind-Down Event, Servicer Event of Default or FIARC Event of Default and
the action which the Debtor proposes to take with respect thereto.
(ii) CHANGE IN CREDIT GUIDELINES. Within 10 days after
the date of any material change in or amendment to the Credit Guidelines,
a copy of the Credit Guidelines then in effect indicating such change or
amendment. Any change that will materially and adversely affect the Surety
Bond Provider shall be approved in writing by the Surety Bond Provider.
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(m) The Debtor shall not, without the prior written consent of
the Collateral Agent and the Surety Bond Provider,
(i) engage in any business or activ- ity other than
those set forth in Article III of the Debtor's Certificate of
Incorporation;
(ii) incur any indebtedness, or assume or guaranty an
indebtedness of any other entity, other than any indebtedness contemplated
by Article IV of the Debtor's Certificate of Incorporation, which
indebtedness shall be subordinated to all other obligations of the Debtor;
(iii) without the affirmative vote of 100% of the
members of the Board of Directors of the Debtor, institute proceedings to
be adjudicated bankrupt or insolvent, or consent to the institution of
bankruptcy or insolvency proceedings against it, or file a petition
seeking or consent to reorganization or relief under any applicable
federal or state law relating to bankruptcy, or consent to the appointment
of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the corporation or a substantial part of its
property, or make any assignment for the benefit of creditors, or admit in
writing its inability to pay its debts generally as they become due, or
take corporate action in furtherance of any such action.
(iv) The Debtor shall at all times (a) to the extent the
Debtor's office is located in the offices of the Seller or any Affiliate
of the Seller, pay fair market rent for its executive office space located
in the offices of the Seller or any Affiliate of the Seller, (b) maintain
the Debtor's books, financial statements, accounting records and other
corporate documents and records separate from those of the Seller or any
other entity, (c) not commingle the Debtor's assets with those of the
Seller or any other entity (it being understood that certain Collections
on Receivables owned by the Debtor may be temporarily commingled with
collections on other receivables serviced by the Seller); (d) act solely
in its corporate name and through its own authorized officers and agents,
(e)
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make investments directly or by brokers engaged and paid by the Debtor or
its agents (provided that if any such agent is an Affiliate of the Debtor
it shall be compensated at a fair market rate for its services), (f)
separately manage the Debtor's liabilities from those of the Seller or any
Affiliates of the Seller and pay its own liabilities, including all
administrative expenses, from its own separate assets, and (g) pay from
the Debtor's assets all obligations and indebtedness of any kind incurred
by the Debtor. The Debtor shall abide by all corporate formalities,
including the maintenance of current minute books, and the Debtor shall
cause its financial statements to be prepared in accordance with generally
accepted accounting principles in a manner that indicates the separate
existence of the Debtor and its assets and liabilities. The Debtor shall
(i) pay all its liabilities, (ii) not assume the liabilities of the Seller
or any Affiliate of the Seller, and (iii) not guarantee the liabilities of
the Seller or any Affiliate of the Seller. The officers and directors of
the Debtor (as appropriate) shall make decisions with respect to the
business and daily operations of the Debtor independent of and not
dictated by any controlling entity.
(v) The Debtor shall only amend, alter, change or repeal
its Certificate of Incorporation as in effect on the date hereof with the
prior written consent of the Collateral Agent and the Surety Bond
Provider.
(n) The Debtor shall have at all times in effect an interest
rate cap agreement or agreements (each an "INTEREST RATE CAP" and collectively
the "INTEREST RATE CAPS") with a financial institution or institutions ("CAP
COUNTERPARTIES") provided that (i) any such Cap Counterparty shall be approved
by the Surety Bond Provider, Moody's and S&P, (ii) such Cap Counterparty shall
have irrevocably and unconditionally agreed that, prior to the date which is one
year and one day after the payment in full of the Note and the Commercial Paper,
it will not institute against, or join any other Person in instituting against,
the Company, the Seller or the Debtor any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceeding
under the laws of the United States, any state of the United States or any other
jurisdiction, (iii) the form and
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substance of any such Interest Rate Cap shall be acceptable to the Surety Bond
Provider, Moody's and S&P, (iv) all amounts payable by the Cap Counterparty
thereunder shall be required to be paid by such counterparty directly to the
Collection Account, (v) such Interest Rate Cap shall provide that the Cap
Counterparty acknowledges that the Debtor's rights thereunder shall have been
irrevocably assigned to, and a security interest therein has been granted to,
the Collateral Agent for the benefit of the Secured Parties, (vi) the strike
rate of any Interest Rate Cap shall be not more than 8.5%, and (vii) such
Interest Rate Cap shall cover at least 100% of the Net Investment and must be in
effect for at least as long as the latest maturing Receivable securing the Net
Investment.
(o) CREDIT GUIDELINES. The Debtor shall not amend, modify or
supplement its Credit Guidelines in any manner which would materially and
adversely affect the Surety Bond Provider.
(p) EXTENDED SERVICE AGREEMENTS. The Debtor will not amend,
and shall not permit any amendment to any Extended Service Agreement relating to
any Financed Vehicle which would adversely affect its ability and right to
receive refunds under such contracts, or which would adversely affect
the position of the Surety Bond Provider.
(q) THE NOTE. The Debtor will not amend, and shall not permit
any amendment to the Note, except in accordance with the Note Purchase
Agreement, except with the consent of the Company and the Surety Bond Provider.
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ARTICLE IV
SERVICING AND ADMINISTRATION
SECTION 4.1. SERVICING. (a) Pursuant to the Servicing Agreement, the
Debtor has contracted with General Electric Capital Corporation ("GECC") to act
as servicer to manage, collect and administer each of the Receivables. Until
such time as GECC is terminated as servicer under the Servicing Agreement,
references to the Servicer herein shall refer to GECC as servicer under the
terms of the Servicing Agreement. In the event of a Servicer Event of Default
pursuant to Section 8.01 of the Servicing Agreement, the Debtor, shall upon the
written direction of the Surety Bond Provider, or may, with the consent of the
Surety Bond Provider, terminate GECC as Servicer thereunder, but in any event
shall notify Moody's and S&P of such Servicer Event of Default. The Surety Bond
Provider shall also have the right to remove the Servicer for cause, which shall
include the material breach of any obligation or covenant under the Servicing
Agreement. Upon the termination of GECC as servicer of the Receivables pursuant
to either Section 8.01 or Section 9.02 of the Servicing Agreement, the Surety
Bond Provider, shall have the right to appoint a successor servicer and the
Debtor shall enter into a servicing agreement with such successor servicer in
form and substance acceptable to the Surety Bond Provider, with such successor
servicer acceptable to the Surety Bond Provider at such time. Such appointment
shall be subject to the consent of the Debtor, which consent shall not be
unreasonably withheld; PROVIDED, HOWEVER, that if a Termination Event shall have
occurred and be continuing, or an event has occurred which, but for the passage
of time or the giving of notice would constitute a Termination Event, Wind-Down
Event or Amortization Event, the consent of the Debtor shall not be required.
Such servicing agreement shall specify the duties and obligations of such
successor servicer, and all references herein to the Servicer shall be deemed to
refer to such successor servicer.
(b) There shall be established on the Closing Date and
maintained, for the benefit of the Secured Parties, in the trust department of
the Collateral Agent, a segregated account (the "COLLECTION ACCOUNT"), bearing a
designation clearly indicating that all of the funds deposited therein are held
for the benefit of the Secured Parties. Funds on deposit in the Collection
Account (other than investment earnings) shall be invested by the Collateral
Agent at the direction of
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the Debtor in Eligible Investments that will mature so that such funds will be
available prior to the next succeeding Remittance Date, except that in the case
of funds representing Collections with respect to a succeeding Collection
Period, such Eligible Investments may mature so that such funds will be
available no later than the Business Day prior to the Remittance Date for such
Collection Period. Any funds on deposit in the Collection Account to be so
invested shall be invested solely in Eligible Investments. On each Remittance
Date, all interest and earnings (net of losses and investment expenses) on funds
on deposit in the Collection Account shall be available to make any payments
required hereunder and shall be distributed pursuant to the priorities set forth
in Section 5.1.
(c) The Debtor shall cause GECC as servicer under the
Servicing Agreement to deposit all Collections in the Collection Account no
later than ten (10) Business Days after the end of the related Collection Period
(LESS the fees and expenses of GECC as Servicer which GECC, pursuant to the
Servicing Agreement, is permitted to withhold from amounts remitted to the
Debtor or the Collateral Agent), but in any event, on or before the 14th day of
the month following the related Collection Period.
SECTION 4.2. RIGHTS AFTER DESIGNATION OF SUCCESSOR SERVICER. At any
time following the designation of a Servicer (other than GECC) pursuant to
Section 4.1 as a result of the occurrence of a Servicer Event of Default
pursuant to Section 8.01 of the Servicing Agreement:
(i) The Collateral Agent and the Surety Bond Provider
may direct that payment of all amounts payable under any Receivable be
made directly to the Collateral Agent or its designee.
(ii) The Debtor shall, at the Collateral Agent's or the
Surety Bond Provider's request and at the Debtor's expense, give notice of
the Collateral Agent's interest in the Receivables to each Obligor and
direct that payments be made directly to the Collateral Agent or its
designee.
(iii) The Debtor shall, at the Collateral Agent's or the
Surety Bond Provider's request, (A) assemble all of the records relating
to the Collateral, including all Receivables files, and
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shall make the same available to the Collateral Agent and the Surety Bond
Provider at a place selected by the Collateral Agent and the Surety Bond
Provider or its designee, and (B) segregate all cash, checks and other
instruments received by it from time to time constituting collections of
Collateral in a manner acceptable to the Collateral Agent and the Surety
Bond Provider and shall, promptly upon receipt, remit all such cash,
checks and instruments, duly endorsed or with duly executed instruments of
transfer, to the Collateral Agent or its designee.
(iv) The Debtor hereby authorizes the Collateral Agent
to take any and all steps in the Debtor's name and on behalf of the Debtor
necessary or desirable, in the determination of the Collateral Agent, to
collect all amounts due under any and all of the Collateral with respect
thereto, including, without limitation, endorsing the Debtor's name on
checks and other instruments representing Collections and enforcing the
Receivables.
SECTION 4.3. RESPONSIBILITIES OF THE DEBTOR. Anything herein to the
contrary notwithstanding, the Debtor shall (i) perform all of its obligations
under the Receivables to the same extent as if a security interest in such
Receivables had not been granted hereunder and the exercise by the Collateral
Agent of its rights hereunder shall not relieve the Debtor from such obligations
and (ii) pay when due any taxes, including without limitation, any sales taxes
payable in connection with the Receivables and their creation and satisfaction.
Neither the Collateral Agent nor any Secured Party shall have any obligation or
liability with respect to any Receivable, nor shall any of them be obligated to
perform any of the obligations of the Debtor thereunder.
SECTION 4.4. MONTHLY DEBTOR'S CERTIFICATE. On each Determination
Date, the Debtor shall deliver to the Administrative Agent, the Surety Bond
Provider and the Collateral Agent a certificate in substantially the form of
EXHIBIT H attached hereto (the "MONTHLY DEBTOR'S CERTIFICATE") for the related
Collection Period. The Monthly Debtor's Certificate shall have attached thereto
the certificate of the Servicer with respect to the Receivables relating to the
immediately preceding Collection Period (which for so long as GECC is the
Servicer shall be in the form specified in Section 4.09 of the
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Servicing Agreement). The Company shall provide (or cause the Administrative
Agent to provide) to the Debtor, by the 10th day of the calendar month following
the Collection Period to which such Monthly Debtor's Certificate relates,
information relating to the amount of each obligation of the Company which
comprises Carrying Costs for such Collection Period. The Monthly Debtor's
Certificate shall specify whether a Termination Event, an Amortization Event or
Wind-Down Event is deemed to have occurred with respect to the Collection Period
preceding such Determination Date. Upon receipt of the Monthly Debtor's
Certificate, the Collateral Agent shall rely (and shall be fully protected in so
relying) on the information contained therein for the purposes of making
distributions and allocations as provided for herein.
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ARTICLE V
ALLOCATION AND APPLICATION
OF COLLECTIONS; RESERVE ACCOUNT
SECTION 5.1. COLLECTIONS. (a) On each Remittance Date, the
Collateral Agent shall determine by reference to the Monthly Debtor's
Certificate the Available Collections for the prior Collection Period and shall
withdraw such amount from the Collection Account and allocate and pay such
amount in the following order of priority:
(i) to the Reserve Account to repay Reserve Advances;
(ii) to pay to the Collateral Agent all fees and
expenses due pursuant to Section 7.2 (a) hereof and then to pay the
servicing fee due to any successor Servicer;
(iii) to the Noteholder, an amount equal to Carrying
Costs for the related Collection Period;
(iv) to the Noteholder, to pay the Targeted Monthly
Principal Payment;
(v) to the Surety Bond Provider, the Surety Bond
Premium, including any overdue Surety Bond Premium, accrued interest
thereon plus any amounts owed under the Surety Bond or the Insurance
Agreement;
(vi) to the Surety Bond Provider, the aggregate amount
of any previously unreimbursed draws on the Surety Bond, plus accrued
interest thereon at the rate provided in the Insurance Agreement;
(vii) prior to the occurrence of a Termination Event, to
the Reserve Account, the amount necessary to increase the amount on
deposit in the Reserve Account to the Required Reserve
Account Balance;
(viii) to the Collateral Agent, FIRST, the amount to be
applied by the Collateral
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Agent to pay any and all Re-Liening Expenses then due and payable which
have not been previously paid by or on behalf of the Debtor, and SECOND,
all amounts due the Collateral Agent pursuant to Section 7.2 (b) hereof;
(ix) after the occurrence of a Termination Event or on
any Remittance Date on which the product of the Noteholder's Percentage
and the Borrowing Base is less than or equal to 5.0% of the Facility
Limit, the remainder to the Noteholder to reduce the Net Investment;
(x) to the Noteholder or any other appropriate party, an
amount equal to any other amounts owed thereto under the Note Purchase
Agreement (other than amounts due under the Note, with the exception of
costs incurred in the enforcement of the Note), other amounts due thereto
under this Agreement, and unreimbursed Carrying Costs with respect to
prior Collection Periods; and
(xi) all remaining amounts shall be distributed by the
Collateral Agent to a bank account designated by the Debtor for further
distribution.
(b) In the event that, on any Business Day other than a
Remittance Date, the Debtor does not have sufficient funds to pay the Interest
Component of matured or maturing Related Commercial Paper due and payable on
such day, the Reserve Account Agent, acting upon written instructions of the
Administrative Agent, shall make an advance from the Reserve Account in an
amount equal to such costs due and payable on such day (a "RESERVE ADVANCE") and
pay to the Company the amount of such advance. To the extent that amounts
available in the Reserve Account are insufficient to cover such costs, the
Debtor shall be obligated to make a payment to the Collateral Agent, for
distribution to the Company, in an amount equal to such remaining shortfall.
Amounts required to be remitted pursuant to this Section 5.1(b) to the Company
shall be remitted in immediately available funds to the Collateral Account no
later than 12:00 noon, New York City time, on the date due. To the extent that
amounts available in the Reserve Account are insufficient to cover such costs
and the Debtor fails to make a payment to the Reserve Account Agent in the
amount of such shortfall, the Administrative Agent shall make
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a demand for payment under the Surety Bond in accordance with its terms. The
Administrative Agent shall be entitled to direct the Collateral Agent to make a
demand for payment upon the Debtor for shortfalls reasonably expected to occur
in the amount available to be withdrawn from Reserve Account pursuant to this
Section 5.1(b), provided, that any such demands shall be (i) based on the
maturity schedule of Related Commercial Paper and (ii) shall be made not more
than four Business Days prior to the scheduled maturity date of the Related
Commercial Paper to which such expected shortfall relates. The Debtor shall
deposit to the credit of the Reserve Account, on the Business Day following any
such demand, the amount of such requested payment.
(c) If the Available Collections in respect of a Remittance
Date are insufficient to pay the sum of the amounts to be distributed on such
Remittance Date pursuant to clauses (ii) through (iv) of Section 5.1(a) and
clause (viii) of Section 5.1(a), the Debtor shall notify the Reserve Account
Agent of such shortfall and the Reserve Account Agent shall cause the withdrawal
of the amount of such shortfall from the Reserve Account, to the extent of
amounts on deposit therein, and remit the proceeds of such withdrawal to the
Collateral Agent and the Collateral Agent shall apply such amount to the payment
of the items described in clauses (ii), (iii), (iv) and (viii) of Section
5.1(a), on the related Remittance Date and in that order of priority. The
Administrative Agent shall be entitled to direct the Collateral Agent to make a
demand for payment upon the Debtor for shortfalls reasonably expected to occur
in the amount available to be withdrawn from Reserve Account on any Remittance
Date pursuant to this Section 5.1(c), provided, that any such demands shall be
(i) based on the information contained in the related Monthly Debtor's
Certificate and (ii) shall be made not more than four Business Days prior to the
scheduled maturity date of the Related Commercial Paper to which such expected
shortfall relates. The Debtor shall deposit to the credit of the Reserve
Account, on the Business Day following any such demand, the amount of such
requested payment.
(d) If on any Remittance Date Available Collections and
amounts available to be withdrawn from the Reserve Account are insufficient to
pay the sum of the amounts to be distributed pursuant to clauses (ii) through
(iv) and (viii) of section 5.1 (a), the Administrative Agent shall review the
terms of the Surety Bond, and if a demand for payment may be made thereunder for
any such shortfall, the
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Administrative Agent shall make a demand thereunder in accordance with the terms
of the Surety Bond.
SECTION 5.2. REMITTANCES TO THE SECURED PARTIES. On each Remittance
Date, the Collateral Agent shall remit Available Collections to each Secured
Party in accordance with the provisions of Section 5.1. The foregoing
notwithstanding, the final remittance in respect of the Note shall be made in
the applicable manner specified above only upon presentation and surrender of
the Note at the office of the Debtor specified by it in the notice of such final
remittance or repurchase.
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ARTICLE V-A
THE RESERVE ACCOUNT AND THE RESERVE ACCOUNT AGENT
SECTION 5A.1 ESTABLISHMENT OF THE RESERVE ACCOUNT.
(a) APPOINTMENT OF RESERVE ACCOUNT AGENT. The Collateral Agent
on behalf of the Secured Parties hereby appoints NationsBank, N.A. to act as
Reserve Account Agent on behalf of the Collateral Agent on behalf of the Secured
Parties hereunder, and NationsBank, N.A. accepts such appoint- ment.
(b) ESTABLISHMENT OF RESERVE ACCOUNT. On or before the Closing
Date, the Debtor shall establish a segregated account, which shall be entitled
"Reserve Account of NationsBank, N.A. as Reserve Account Agent for the benefit
of Texas Commerce Bank National Association as Collateral Agent for Enterprise
Funding Corporation and MBIA Insurance Corporation" (the "RESERVE ACCOUNT").
Subject to the terms hereof, the Reserve Account Agent for the benefit of the
Collateral Agent for the benefit of the Secured Parties shall possess all right,
title and interest in and to all funds deposited from time to time in the
Reserve Account. Notwithstanding the foregoing, the Reserve Account Agent shall
not withdraw any funds from, or otherwise exercise control over, the Reserve
Account except as provided in this Agreement and the Reserve Account Agent
acknowledges that all amounts on deposit in the Reserve Account shall be held by
the Reserve Account Agent for the benefit of the Collateral Agent for the
benefit of the Secured Parties.
(c) DEPOSITS TO AND WITHDRAWALS FROM THE RESERVE ACCOUNT. On
or prior to the Closing Date, the Debtor shall deposit or cause to be deposited
in the Reserve Account, the Required Reserve Account Balance. The Debtor shall
deposit into the Reserve Account all amounts which are required to be deposited
therein by this Agreement. The Reserve Account Agent shall promptly withdraw
from the Reserve Account all amounts required to be withdrawn therefrom pursuant
to Section 5.1(b) and 5.1(c) hereof, and shall either (i) pay such amounts to
the Company (in the case of withdrawals pursuant to Section 5.1(b)) or (ii)
remit such amounts to the Collateral Agent (in the case of withdrawals therefrom
pursuant to Section 5.1(c)).
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Prior to the occurrence of a Termination Event and to the
extent that amounts on deposit in the Reserve Account on any Remittance Date,
after giving effect to any required withdrawals therefrom on such day, exceed
the Required Reserve Account Balance, such excess amounts shall be withdrawn
from the Reserve Account by the Reserve Account Agent and be deposited by the
Reserve Account Agent in the Collection Account and shall constitute part of
Available Funds for the next succeeding Remittance Date.
(d) INVESTMENT OF FUNDS ON DEPOSIT IN THE RESERVE ACCOUNT.
(i) Funds on deposit in the Reserve Account shall be invested
in Eligible Investments by or at the written direction of the
Debtor, provided that if a Termination Event shall have
occurred, such investments shall be limited to the Eligible
Investments set forth in items A, B and C of Exhibit D hereto.
Any such written directions shall specify the particular
investment to be made and shall certify that such investment
is an Eligible Investment and is permitted to be made under
this Agreement.
(ii) All investments of amounts on deposit in the Reserve
Account shall be accomplished in a manner so as to cause such
investments to be Transferred to the Reserve Account Agent
and, if required by applicable law or any amendment thereto,
to be maintained by the Reserve Ac- count Agent through
continued registration of the Reserve Account Agent's
ownership of such investments, so as to continously establish
"control" (as defined in Section 8-106 of the 1994 Official
Text of Article 8 of the Uniform Commercial Code and the Texas
UCC) thereof by the Reserve Acoount Agent; provided that in-
vestments need not be Transferred to the Re- serve Account
Agent in accordance with each action set forth in the
definition of "Trans- ferred", if as a result of the
effectiveness in the State of New York of the 1994 Official
Text of Article 8 of the Uniform Commercial Code, or
otherwise, such action is no longer required to perfect the
security interest of the Reserve Account Agent. The Reserve
Account Agent
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agrees that, without the prior consent of the Surety Bond
Provider, it shall not accept for credit to the Reserve
Account any investment as to which it has knowledge of any
adverse claim thereto. NationsBank, N.A. hereby agrees (and
any other Financial Intermediary holding the Reserve Account
shall so agree) to comply with all Entitlement Orders (as
defined in Section 8-102(a)(8) of the 1994 Official Text of
the Uniform Commercial Code and the Texas UCC) received by it
from the Reserve Account Agent.
(iii) Funds on deposit in the Reserve Account on the Closing
Date and thereafter shall be so invested in Eligible
Investments that mature such that sufficient amounts of such
funds or the proceeds thereof will be available for withdrawal
pursuant to Section 5.1(b) on the maturity date of Related
Commercial Paper and for remittance to the Collateral Agent
pursuant to Section 5.1(b); in any event the maturity of any
Eligible Investment shall not exceed 30 days. No Eligible
Investment may be liquidated or disposed of prior to its
maturity. All proceeds of any Eligible Investment shall be
deposited in the Reserve Account. Investments may be made on
any date (provided such investments mature in accordance with
the preceding sentence), only after giving effect to deposits
to and withdrawals from the Reserve Account on such date. Not
later than 5:00 p.m. (New York time) on the Business Day prior
to each Remittance Date, all interest and earnings (net of
losses and investment expenses, if any) accrued since the
previous Remittance Date (or since the Closing Date in the
case of the first Remittance Date) on funds on deposit in the
Reserve Account shall be withdrawn by the Reserve Account
Agent and remitted to the Collateral Agent to be applied
pursuant to Section 5.1 of this Agreement in accordance with
the Monthly Debtor's Certificate. Realized losses, if any, on
amounts invested in Eligible Investments shall be charged
against undistributed investment earnings on amounts on
deposit in the Reserve Account.
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(iv) The Debtor and the Surety Bond Provider shall each
provide the Reserve Account Agent on the date hereof and from
time to time upon request an incumbency certificate or the
substantial equivalent with respect to each officer of the
Debtor and the Surety Bond Provider, respectively, that is
authorized to provide instructions relating to investments in
Eligible Investments.
SECTION 5A.2 MAINTENANCE OF ELIGIBLE INVESTMENTS. Eligible
Investments shall be maintained by the Reserve Account Agent in such manner as
may be necessary to maintain the first priority perfected security interest in
favor of the Reserve Account Agent, as the secured party on behalf of the
Collateral Agent on behalf of the Secured Parties. NationsBank, N.A. agrees (and
any other Financial Intermediary holding the Reserve Account shall so agree)
that it shall not agree to comply with Entitlement Orders (as defined in Section
8-102(a)(8) of the 1994 version of the Official Text of Article 8 of the Uniform
Commercial Code and the Texas UCC) with respect to the Reserve Account given to
it by any Person other than the Reserve Account Agent.
All amounts or property credited to the Reserve Account shall be
subject to the lien of the Reserve Account Agent, for the Collateral Agent on
behalf of the Secured Parties, until released or withdrawn from the Reserve
Account.
SECTION 5A.3 TERMINATION OF RESERVE ACCOUNT; RELEASE OF FUNDS. If
and to the extent that all amounts owed by the Debtor to the Secured Parties
hereunder, under the Note Purchase Agreement, the Insurance Agreement and the
Note have been paid in full, any amounts on deposit in the Reserve Account shall
be released to the Debtor. In the event that thereafter the Debtor shall request
that the Noteholder increase its Net Investment, it shall be a condition
precedent thereto that the Reserve Account be funded in an amount equal to the
Required Reserve Account Balance after giving effect to any Receivables added to
the Collateral in connection with such increase in the Net Investment.
SECTION 5A.4 DUTIES OF THE RESERVE ACCOUNT AGENT. The Reserve
Account Agent, both prior to the occurrence of a Termination Event, Amortization
Event or Wind-Down Event hereunder and after an Amortization Event or Wind-Down
Event shall have been cured or waived, shall undertake to perform such
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duties and only such duties as are specifically set forth in this Agreement. The
Reserve Account Agent shall at all times after the occurrence of a Termination
Event, Amortization Event or Wind-Down Event which has not been cured (except in
the case of a Termination Event) or waived exercise such of the rights and
powers vested in it pursuant to this Agreement using the same degree of care and
skill as a prudent person would exercise or use in the conduct of his or her own
affairs.
The Reserve Account Agent shall only resign if it shall (i) become
incapable of acting as Reserve Account Agent in accordance with the terms of
this Agreement, (ii) be adjudicated insolvent or bankrupt or otherwise become
subject to any bankruptcy, insolvency, reorganization or liquidation proceeding,
(iii) be no longer qualified as the Reserve Account Agent as such term is
defined in the agreement governing its responsibility as Reserve Account Agent
or otherwise be subject to replacement pursuant to or such agreement governing
its responsibility as Reserve Account Agent or (iv) materially breach any of the
provisions of this Agreement; PROVIDED, FURTHER, that, without the consent of
the Company and the Surety Bond Provider, such resignation shall not be
effective until a successor Reserve Account Agent acceptable to the Surety Bond
Provider shall have accepted appointment as Reserve Account Agent hereunder and
shall have agreed to be bound by the terms of this Agreement.
Except as otherwise provided herein, the Reserve Account Agent shall
not resign from the obligations and duties hereby imposed on it except upon
determination that (i) the performance of its duties hereunder is no longer
permissible under applicable law and (ii) there is no reasonable action which
the Reserve Account Agent could take to make the performance of its duties
hereunder permissible under applicable law. Any such determination permitting
the resignation of the Reserve Account Agent shall be evidenced as to clause (i)
above by an opinion of counsel to such effect delivered to the Secured Parties.
No resignation of the Reserve Account Agent shall become effective until a
successor Reserve Account Agent approved by the Secured Parties shall have
assumed the responsibilities and obligations of the Reserve Account Agent
hereunder. In the event that the long-term debt rating of the Reserve Account
Agent assigned by Moody's and S&P is reduced below Baa3 and BBB-, respectively,
the Surety Bond Provider may remove the Reserve Account Agent and appoint a
successor Reserve Account Agent.
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SECTION 5A.5 REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
RESERVE ACCOUNT AGENT. The Reserve Account Agent agrees to make the following
representations, warranties and covenants.
(i) ORGANIZATION AND GOOD STANDING. The Reserve Account Agent
is a national banking association duly organized, validly existing and in good
standing under the laws of the United States of America, and has full corporate
power, authority and legal right to conduct its business as such business is
presently conducted, and to execute, deliver and perform its obligations under
this Agreement and the Insurance Agreement.
(ii) DUE AUTHORIZATION. The execution, delivery, and
performance of this Agreement and the Insurance Agreement have been duly
authorized by the Reserve Account Agent by all necessary corporate action on the
part of the Reserve Account Agent.
(iii) BINDING OBLIGATION. This Agreement and the Insurance
Agreement each constitutes a legal, valid and binding obligation of the Reserve
Account Agent, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereinafter in effect,
affecting the enforcement of creditors' rights in general and except as such
enforceability may be limited by general principles of equity (whether
considered in a proceeding at law or in equity).
(iv) NO CONFLICT. The execution and delivery of this Agreement
and the Insurance Agreement by the Reserve Account Agent, and the performance of
the transactions contemplated hereby and thereby and the fulfillment of the
terms hereof and thereof applicable to the Reserve Account Agent, will not
conflict with, violate, result in any breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time or both) a default
under, any Requirement of Law applicable to the Reserve Account Agent or any
indenture, contract, agreement, mortgage, deed of trust or other instrument to
which the Reserve Account Agent is a party or by which it is bound.
SECTION 5A.6 LIABILITY OF THE RESERVE ACCOUNT AGENT. (a) The Reserve
Account Agent shall be liable in accordance herewith only to the extent of the
obligations spe-
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cifically undertaken by the Reserve Account Agent in such capacity herein. No
implied covenants or obligations shall be read into this Agreement against the
Reserve Account Agent and, in the absence of bad faith on the part of the
Reserve Account Agent, the Reserve Account Agent may conclusively rely on the
truth of the statements and the correctness of the opinions expressed in any
certificates or opinions furnished to the Reserve Account Agent and conforming
to the requirements of this Agreement.
(b) The Reserve Account Agent shall not be liable for an error
of judgment made in good faith unless it shall be proved that the Reserve
Account Agent shall have been negligent in ascertaining the pertinent facts.
(c) The Reserve Account Agent 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 Collateral Agent or a Secured
Party relating to the exercise of any power conferred upon the Reserve Account
Agent under this Agreement.
(d) The Reserve Account Agent shall not be charged with
knowledge of any Termination Event, Wind-Down Event or Amortization Event unless
an officer directly involved with the administration of the Reserve Account
obtains actual knowledge of such event or the Reserve Account Agent receives
written notice of such event from the Debtor, the Company, the Surety Bond
Provider or the Administrative Agent, as the case may be.
(e) The Reserve Account Agent 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 there shall be reasonable ground for believing that the repayment of
such funds or adequate indemnity against such risk or liability shall not be
reasonably assured to it.
(f) The Reserve Account Agent may rely and shall be protected
in acting or refraining from acting upon any resolution, officer's certificate,
any Monthly Debtor's Certificate, certificate of auditors, or any other
certificate, statement, instrument, opinion, report, notice, request, consent,
order, appraisal, bond or other paper or document reasonably believed by it to
be genuine and to have been signed or presented by the proper party or parties.
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(g) The Reserve Account Agent may consult with counsel and any
opinion of such counsel shall be full and complete authorization and protection
in respect of any action taken or suffered or omitted by it under this Agreement
in good faith and in accordance with such opinion of counsel.
(h) The Reserve Account Agent 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 a Secured Party or the
Collateral Agent pursuant to the provisions of this Agreement, unless a Secured
Party shall have offered to the Reserve Account Agent reasonable security or
indemnity against the costs, expenses and liabilities that may be incurred
therein or thereby; nothing contained in this Agreement, however, shall relieve
the Reserve Account Agent of its obligations, upon the occurrence of a
Termination Event, a Wind-Down Event or Amortization Event (that shall not have
been cured (except with respect to a Termination Event) or waived), to exercise
such of the rights and powers vested in it by this Agreement, and to 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 or her own
affairs.
(i) The Reserve Account Agent 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.
(j) Prior to the occurrence of a Termination Event, Wind-Down
Event or Amortization Event and before the Reserve Account Agent has received
notice of such Termination Event, Wind-Down Event or Amortization Event and
after the curing (except with respect to a Termination Event) or waiver of any
Wind-Down Event or Amortization Event that may have occurred, the Reserve
Account Agent 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 a Secured Party; PROVIDED,
HOWEVER, that if the payment within a reasonable time to the Reserve Account
Agent of the costs, expenses or liabilities likely to be incurred by it in the
making of such investigation shall be, in the opinion of the Reserve Account
Agent, not reasonably assured by the Debtor,
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the Reserve Account Agent may require reasonable indemnity against such cost,
expense or liability as a condition to so proceeding. The reasonable expense of
every such examination shall be paid by the Debtor or, if paid by the Reserve
Account Agent, shall be reimbursed by the Debtor upon demand from funds
available pursuant to Section 5.1(a)(x) hereof.
SECTION 5A.7 LIMITATION ON LIABILITY OF THE RESERVE ACCOUNT AGENT
AND OTHERS. The directors, officers, employees or agents of the Reserve Account
Agent shall not be under any liability to the Reserve Account Agent, any Secured
Party or any other Person hereunder or pursuant to any document delivered
hereunder, it being expressly understood that all such liability is expressly
waived and released as a condition of, and as consideration for, the execution
of this Agreement; PROVIDED, HOWEVER, that this provision shall not protect the
directors, officers, employees and agents of the Reserve Account Agent against
any liability which would otherwise be imposed by reason of willful misfeasance,
bad faith or gross negligence in the performance of duties or by reason of
reckless disregard of obligations and duties hereunder. Except as provided in
Section 5A.4, the Reserve Account Agent shall not be under any liability to any
Secured Party or any other Person for any action taken or for refraining from
the taking of any action in its capacity as Reserve Account Agent pursuant to
this Agreement whether arising from express or implied duties under this
Agreement; PROVIDED, HOWEVER, that this provision shall not protect the Reserve
Account Agent against any liability which would otherwise be imposed by reason
of willful misfeasance, bad faith or gross negligence in the performance of
duties or by reason of reckless disregard of obligations and duties hereunder.
The Reserve Account Agent may rely in good faith on any document of any kind
PRIMA FACIE properly executed and submitted by any Person respecting any matters
arising hereunder. The Reserve Account Agent shall not be under any obligation
to appear in, prosecute or defend any legal action which is not incidental to
its duties to administer the Reserve Account in accordance with this Agreement
which in its reasonable opinion may involve it in any expense or liability.
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ARTICLE VI
TERMINATION EVENTS; SERVICING TERMINATION
SECTION 6.1. TERMINATION EVENTS. The occurrence of any one of the
following events shall be a "TERMINATION EVENT" under this Agreement:
(a) failure on the part of the Debtor to pay or disburse when
due the amounts provided for herein;
(b) failure (i) by the Debtor, to observe or perform any term,
covenant, condition or agreement set forth in Sections 3.2(a), (d), (e), (f),
(g), (h), (i), (j), (l), (m), and (n) of this Agreement or (ii) of any
representation or warranty of the Debtor, the Seller or the Servicer contained
herein or, in the Note Purchase Agreement, the Purchase Agreement or the
Servicing Agreement to be true and correct in all material respects on any day
when made or deemed made hereunder, or (iii) by the Debtor to observe or perform
any other term, covenant, condition or agreement provided for herein or in the
Note, the Note Purchase Agreement, the Servicing Agreement, the Purchase
Agreement or the Interest Rate Cap (other than a term addressed in clause (i)
above) which, in the case of clause (ii) above continues for a period of thirty
(30) days after the earlier of (u) the date on which written notice of such
breach shall have been given to the Debtor, the Seller or the Servicer, by the
Company, the Surety Bond Provider or the Collateral Agent, (v) the date on which
the Debtor became aware of such breach or (w) the date on which the Debtor
exercising reasonable care should have become aware of such breach, or which, in
the case of clause (iii) above continues for a period of thirty (30) days after
the earlier of (x) the date on which written notice of such failure shall have
been given to the Debtor by the Company, the Surety Bond Provider, or the
Collateral Agent, (y) the date on which the Debtor became aware of such failure
or (z) the date on which the Debtor exercising reasonable care should have
become aware of such failure;
(c) the Debtor, the Seller or the Servicer shall consent 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 Debtor, the Seller or the Servicer, as the
case may be, or of or relating to all or substantially all of its property, or a
decree or order of a court or agency or
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supervisory authority having jurisdiction in the premises for the appointment of
a conservator or receiver or liquidator in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against the
Debtor, the Seller or the Servicer, as the case may be, and such decree or order
shall have remained in force undischarged or unstayed for a period of 60 days;
or the Debtor, the Seller or the Servicer shall admit in writing its inability
to pay its debts generally as they become due, file a petition to take advantage
of an applicable insolvency or reorganization statute, make any assignment for
the benefit of its creditors or voluntarily suspend payment of its obligations;
or the Debtor, the Seller or the Servicer, as the case may be, shall become
unable for any reason to pledge Collateral to the Collateral Agent in accordance
with the provisions of this Agreement;
(d) (i) the Net Investment exceeds 91.0% of the sum of the
Borrowing Base PLUS the amount on deposit in the Reserve Account for 30
consecutive days; (ii) the Net Investment PLUS the aggregate interest component
of all Related Commercial Paper issued to fund or refinance the Net Investment
equals or exceeds the Facility Limit or (iii) the Net Investment at any time
equals or exceeds the sum of the Borrowing Base plus the amount on deposit in
the Reserve Account;
(e) the Debtor shall enter into any merger, consolidation or
conveyance transaction regardless of the surviving entity, or the Servicer shall
enter into any merger, consolidation or conveyance transaction whereby it is not
the surviving entity;
(f) any material adverse change in the operations of the
Servicer which materially adversely affects the ability of the Servicer to
service the Receivables or to perform its obligations under the Servicing
Agreement (or any other agreement pursuant to which the Servicer is acting as
servicer of the Receivables);
(g) there shall be a payment default by the Seller or the
Debtor under any material agreement for borrowed money to which the Seller or
the Debtor is a Party or there shall be a Servicer Event of Default under the
Servicing Agreement;
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(h) the Delinquency Ratio averaged over any three consecutive
Collection Periods shall equal or exceed 6.00%;
(i) the Gross Default Ratio averaged over any three
consecutive Collection Periods shall equal or exceed 12.00%;
(j) the Collateral Agent shall fail for any reason to have a
valid and perfected first priority security interest in the Receivables and the
proceeds thereof;
(k) there shall be a material breach by the Seller of its
obligations under the Purchase Agreement;
(l) on and after the Remittance Date next following the fourth
Collection Period after the Closing Date, the annualized Net Default Ratio
averaged over any three consecutive Collection Periods is greater than or equal
to 5.00%;
(m) (i) a final judgment for the payment of money in excess of
$1,000,000 shall have been rendered against the Seller by a court of competent
jurisdiction and the Seller shall not have either: (1) discharged or provided
for the discharge of such judgment in accordance with its terms, or (2)
perfected a timely appeal of such judgment and caused the execution thereof to
be stayed (by supersedeas or otherwise) during the pendency of such appeal or
(ii) the Seller shall have made payments of amounts in excess of $1,000,000 in
settlement of any litigation;
(n) the weighted average APR of the Loans is less than 17.5%;
(o) the weighted average remaining term to maturity on the
Receivables is greater than 45 months;
(p) a draw is made under the Surety Bond;
(q) the Surety Bond Provider shall have given notice that an
event of default has occurred and is continuing under the Insurance Agreement;
(r) the term of the Surety Bond is not of the term required by
the Company (which term shall be at least
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equal to the term of the latest maturing Receivable in the facility plus 90
days);
(s) the Servicer's long-term debt rating falls below A-/A3 and
a successor servicer acceptable to the Surety Bond Provider is not in place
within 60 days;
(t) the long-term debt rating of any active provider of an
Interest Rate Cap is below A-/A3 and a successor to such provider acceptable to
the Surety Bond Provider is not in place or collateral acceptable to the Surety
Bond Provider has not been posted, in each case, within 10 business days;
(u) the outstanding principal balance of Receivables
originated under the Seller's Participating Program exceeds 10% of the Borrowing
Base;
(v) the facility no longer carries a shadow rating of at least
BBB- from S&P or at least Baa3 from Moody's; and
(w) the occurrence of a Wind-Down Event which is not cured
within 35 days.
SECTION 6.2. WIND-DOWN EVENTS. The occurrence and continuation of
any one of the following events shall be a "WIND-DOWN EVENT" under this
Agreement:
(a) the Liquidity Provider or the Credit Support Provider
shall have notified the Company that an event of default has occurred under the
Liquidity Agreement or the Credit Support Agreement, respectively;
(b) the Company's Commercial Paper shall no longer be rated at
least "A-2", in the case of S&P, and at least "P-2", in the case of Moody's;
(c) a downgrade in the claims-paying rating of the Surety Bond
Provider below "Aa" or "AA" by either Moody's or S&P.
SECTION 6.3. AMORTIZATION EVENTS. The occurrence and continuance of
any one of the following events shall be an "AMORTIZATION EVENT" under this
Agreement:
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(a) at any time the Net Investment exceeds 89.0% of the sum of
the Borrowing Base PLUS the amount on deposit in the Reserve Account and such
condition continues uncured;
(b) the First Investors Financial Services Group, Inc.
consolidated stockholders equity falls below $15,000,000 as reported on a Form
10-Q or Form 10-K;
(c) the semi-annual due diligence by the Surety Bond Provider
(or its designee) uncovers Receivables representing more than 10% of the sample
which display material adverse non-compliance with the Seller's Credit
Guidelines;
(d) the departure of any two of the following executives from
the Seller: Tommy Moore, Phil Durham and Roberto Marchesini, if a replacement
for such individual(s) acceptable to the Surety Bond Provider is not made within
90 days;
(e) GECC, as Servicer, is no longer obligated to service new
Loans originated by the Seller;
(f) the Seller changes its existing loan verification
procedures in any material respect and its new procedures are not acceptable to
the Surety Bond Provider;
(g) there occurs any material adverse change to the Seller's
Credit Guidelines, unless such change is approved by the Surety Bond Provider;
(h) the Delinquency Ratio for the Seller's total managed
portfolio averaged over any three consecutive Collection Periods shall equal or
exceed 8.5%; and
(i) on and after the Remittance Date next following the fourth
Collection Period after the Closing Date, the annualized Net Default Ratio for
the Seller's total managed portfolio averaged over any three consecutive
Collection Periods is greater than or equal to 5.0%.
SECTION 6.4. REMEDIES. If a Termination Event as specified in
Section 6.1 shall have occurred, the Collateral Agent, at the written direction
of Surety Bond Provider shall, or the Company may, with the consent of the
Surety Bond Provider, declare by written notice to the Debtor any date as the
date upon which the Note shall become due and payable and,
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the Collateral Agent shall have all of the rights and remedies provided to a
secured creditor under the UCC by applicable law in respect thereto. In
addition, the Company shall have the right to cease issuing Related Commercial
Paper. The Company may, at its option, determine that its Carrying Costs with
respect to the Net Investment after the occurrence of a Termination Event are
calculated by reference to the Adjusted LIBOR Rate, if available and if the
Surety Bond Provider has not failed to make a required payment under the Surety
Bond, otherwise, the Base Rate PLUS 2.0%. There shall be no Subsequent Funding
upon the occurrence of any Termination Event or Potential Termination Event or
during the continuance of any Wind-Down Event, Potential Wind-Down Event,
Amortization Event or Potential Amortization Event. The payment by or on behalf
of the Debtor to the Noteholder of an amount such that after such payment the
Net Investment is below 89.0% of the sum of the Borrowing Base plus the amount
on deposit in the Reserve Account shall cure any Amortization Event described in
Section 6.3(a).
No waiver of any Termination Event, Potential Termination
Event, Wind-Down Event, Potential Wind-Down Event, Amortization Event or
Potential Amortization Event shall be effective without the prior written
consent of the Surety Bond Provider.
If the Note is declared due and payable in accordance with
this Section 6.4, the Collateral Agent shall, at the direction of the Surety
Bond Provider, and may, with the consent of the Surety Bond Provider, do any one
or more of the following:
(a) take all necessary action to foreclose upon the
Collateral;
(b) retain in satisfaction of any amounts owing from the
Debtor all amounts otherwise payable to the Debtor pursuant to this Agreement to
the extent necessary to pay in full all amounts (including principal and
interest) (i) due and payable under the Note, (ii) due and payable by the Debtor
under the Note Purchase Agreement, and (iii) all amounts due and payable by the
Debtor under the Insurance Agreement;
(c) pursue any available remedy by proceeding at law or in
equity including complete or partial foreclosure of the lien upon the Collateral
and sale of the Collateral or
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any portion thereof or rights or interest therein as may appear necessary or
desirable (i) to collect amounts owed pursuant to the Note and any other
payments then due and thereafter to become due under the Note or (ii) to enforce
the performance and observance of any obligation, covenant, agreement or
provision contained in this Agreement to be observed or performed by the Debtor;
or
(d) exercise any remedies of a secured party under the Uniform
Commercial Code and take any other appropriate action to protect and enforce the
rights and remedies of the Collateral Agent on behalf of the Secured Parties.
SECTION 6.5. PROCEEDS. The proceeds from the sale, disposition or
liquidation of the Receivables pursuant to Section 6.4 above shall be treated as
Collections on the Receivables and shall be allocated and deposited in
accordance with the provisions governing allocations set forth herein.
ARTICLE VII
THE COLLATERAL AGENT
SECTION 7.1. DUTIES OF THE COLLATERAL AGENT. The Secured Parties
hereby appoint Texas Commerce Bank National Association to act solely on their
behalf as Collateral Agent hereunder, and Texas Commerce Bank National
Association hereby accepts such appointment. The Collateral Agent, both prior to
the occurrence of a Termination Event, Amortization Event or Wind-Down Event
hereunder and after an Amortization Event or Wind-Down Event shall have been
cured or waived, shall undertake to perform such duties and only such duties as
are specifically set forth in this Agreement. The Collateral Agent shall at all
times after the occurrence of a Termination Event, Amortization Event or
Wind-Down Event which has not been cured (except in the case of a Termination
Event) or waived exercise such of the rights and powers vested in it pursuant to
this Agreement using the same degree of care and skill as a prudent person would
exercise or use in the conduct of his or her own affairs.
All Collections received by the Collateral Agent from the Servicer
or otherwise will, pending remittance to the Secured Party entitled thereto, be
held in trust by the Collateral Agent for the benefit of the Secured Parties and
together with all other payment obligations of the Debtor
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hereunder owing to the Secured Parties shall be payable to the Secured Parties
in accordance with the provisions of Article V hereof.
The Collateral Agent shall only resign if it shall (i) become
incapable of acting as Collateral Agent in accordance with the terms of this
Agreement, (ii) be adjudicated insolvent or bankrupt or otherwise become subject
to any bankruptcy, insolvency, reorganization or liquidation proceeding, (iii)
be no longer qualified as the Collateral Agent as such term is defined in the
agreement governing its responsibility as Collateral Agent or otherwise be
subject to replacement pursuant to or such agreement governing its
responsibility as Collateral Agent or (iv) materially breach any of the
provisions of this Agreement such Agreement or PROVIDED, FURTHER, that, without
the consent of the Company and the Surety Bond Provider, such resignation shall
not be effective until a successor Collateral Agent acceptable to the Surety
Bond Provider shall have accepted appointment as Collateral Agent hereunder and
shall have agreed to be bound by the terms of this Agreement.
Except as otherwise provided herein, the Collateral Agent shall not
resign from the obligations and duties hereby imposed on it except upon
determination that (i) the performance of its duties hereunder is no longer
permissible under applicable law and (ii) there is no reasonable action which
the Collateral Agent could take to make the performance of its duties hereunder
permissible under applicable law. Any such determination permitting the
resignation of the Collateral Agent shall be evidenced as to clause (i) above by
an opinion of counsel to such effect delivered to the Secured Parties.
Notwithstanding the foregoing, the Collateral Agent may resign if, after demand
therefor, it does not receive payment of any compensation due from the Debtor
pursuant to the letter agreement described in Section 7.2. No resignation of the
Collateral Agent shall become effective until a successor Collateral Agent
approved by the Secured Parties shall have assumed the responsibilities and
obligations of the Collateral Agent hereunder.
This Agreement shall be administered in the Corporate Trust Office
of the Collateral Agent. The Collateral Agent shall maintain fidelity bond
coverage insuring against losses through wrongdoing of its officers and
employees who are involved in the administration of Collections covering such
actions and in such amounts as the Collateral Agent be-
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lieves to be reasonable in light of industry standards from time to time.
SECTION 7.2. COMPENSATION AND INDEMNIFICATION OF COLLATERAL AGENT.
(a) The Collateral Agent shall be compensated for its activities hereunder and
reimbursed for reasonable out-of-pocket expenses (including (i) securities
transaction charges not waived due to the Collateral Agent's receipt of a
payment from a financial institution with respect to certain Eligible
Investments, as specified by the Debtor and (ii) the compensation and expenses
of its counsel and agents) pursuant to a separate letter agreement between the
Collateral Agent and the Debtor. All such amounts shall be payable from funds
available therefor in accordance with Section 5.1(a)(ii) hereof with any
increase in such amounts to be approved by the Surety Bond Provider. Subject to
the terms of such letter agreement, the Collateral Agent shall be required to
pay the expenses incurred by it in connection with its activities hereunder from
its own account. Notwithstanding any other provisions in this Agreement, the
Collateral Agent shall not be liable for any liabilities, costs or expenses of
the Debtor arising under any tax law, including without limitation any Federal,
state or local income or franchise taxes or any other tax imposed on or measured
by income (or any interest or penalties with respect thereto or from a failure
to comply therewith).
(b) The Debtor shall indemnify the Collateral Agent, its officers,
directors, employees and agents for, and hold it harmless against any loss,
liability or expense incurred without willful misconduct, gross negligence or
bad faith on its part, arising out of or in connection with (i) the acceptance
or administration of this Agreement, 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 and (ii) the
negligence, willful misconduct or bad faith of the Debtor in the performance of
its duties hereunder. All such amounts shall be payable in accordance with
Section 5.1(a)(viii) hereof. The provisions of this Section 7.2 shall survive
the termination of this Agreement.
SECTION 7.3. REPRESENTATIONS, WARRANTIES AND COVE- NANTS OF THE
COLLATERAL AGENT. The Collateral Agent agrees to make the following
representations, warranties and covenants, and further agrees that the Secured
Parties shall be deemed to
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have relied upon such representations, warranties and covenants in accepting
their interest in the Receivables.
(a) ORGANIZATION AND GOOD STANDING. The Collateral Agent is a
national banking association duly organized, validly existing and in good
standing under the laws of the United States of America, and has full corporate
power, authority and legal right to own its properties and conduct its business
as such properties are presently owned and such business is presently conducted,
and to execute, deliver and perform its obligations under this Agreement.
(b) DUE AUTHORIZATION. The execution, delivery, and
performance of this Agreement have been duly authorized by the Collateral Agent
by all necessary corporate action on the part of the Collateral Agent.
(c) BINDING OBLIGATION. This Agreement constitutes a legal,
valid and binding obligation of the Collateral Agent, enforceable in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereinafter in effect, affecting the enforcement of creditors' rights in general
and except as such enforceability may be limited by general principles of equity
(whether considered in a proceeding at law or in equity).
(d) NO CONFLICT. The execution and delivery of this Agreement
by the Collateral Agent, and the performance of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof applicable to the
Collateral Agent, will not conflict with, violate, result in any breach of any
of the terms and provisions of, or constitute (with or without notice or lapse
of time or both) a default under, any Requirement of Law applicable to the
Collateral Agent or any indenture, contract, agreement, mortgage, deed of trust
or other instrument to which the Collateral Agent is a party or by which it is
bound.
SECTION 7.4. LIABILITY OF THE COLLATERAL AGENT. (a) The Collateral
Agent shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Collateral Agent in such capacity
herein. No implied covenants or obligations shall be read into this Agreement
against the Collateral Agent and, in the absence of bad faith on the part of the
Collateral Agent, the Collateral Agent may conclusively rely on the truth of the
statements and
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the correctness of the opinions expressed in any certificates or opinions
furnished to the Collateral Agent and conforming to the requirements of this
Agreement.
(b) The Collateral Agent shall not be liable for an error of
judgment made in good faith by a Trust Officer, unless it shall be proved that
the Collateral Agent shall have been negligent in ascertaining the pertinent
facts.
(c) The Collateral Agent 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 a Secured Party relating to the
exercise of any power conferred upon the Collateral Agent under this Agreement.
(d) The Collateral Agent shall not be charged with knowledge
of any Termination Event, Wind-Down Event or Amortization Event unless a Trust
Officer assigned to the Collateral Agent's Corporate Trust Office obtains actual
knowledge of such event or the Collateral Agent receives written notice of such
event from the Debtor, the Company, the Surety Bond Provider or the
Administrative Agent, as the case may be.
(e) Without limiting the generality of this Section 7.4, the
Collateral Agent shall have no duty (i) to see to any recording, filing or
depositing of this Agreement or any agreement referred to herein 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 recording, 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 Receivables, (iv) to confirm or verify the contents of
any reports or certificates of the Servicer or the Debtor delivered to the
Collateral Agent pursuant to this Agreement believed by the Collateral Agent 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 Debtor's or the Servicer's
representations, warranties or covenants or the Servicer's duties and
obligations as Servicer and as custodian of books, records, files and comput-
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er records relating to the Receivables under the Servicing Agreement.
(f) The Collateral Agent 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 there shall be reasonable ground for believing that the repayment of such
funds or adequate indemnity against such risk or liability shall not be
reasonably assured to it, and none of the provisions contained in this Agreement
shall in any event require the Collateral Agent to perform, or be responsible
for the manner of performance of, any of the obligations of the Servicer under
this Agreement.
(g) The Collateral Agent may rely and shall be protected in
acting or refraining from acting upon any resolution, officer's certificate, any
Monthly Debtor's Certificate, certificate of auditors, or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document reasonably believed by it to be
genuine and to have been signed or presented by the proper party or parties.
(h) The Collateral Agent may consult with counsel and any
opinion of such counsel shall be full and complete authorization and protection
in respect of any action taken or suffered or omitted by it under this Agreement
in good faith and in accordance with such opinion of counsel.
(i) The Collateral Agent 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 the Company pursuant to
the provisions of this Agreement, unless the Company shall have offered to the
Collateral Agent reasonable security or indemnity against the costs, expenses
and liabilities that may be incurred therein or thereby; nothing contained in
this Agreement, however, shall relieve the Collateral Agent of its obligations,
upon the occurrence of a Termination Event, a Wind-Down Event or Amortization
Event (that shall not have been cured or waived), to exercise such of the rights
and powers vested in it by this Agreement, and to 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 or her own affairs.
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(j) The Collateral Agent 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.
(k) Prior to the occurrence of a Termination Event, Wind-Down
Event or Amortization Event and before the Collateral Agent has received notice
of such Termination Event, Wind-Down Event or Amortization Event and after the
curing (except with respect to a Termination Event) or waiver of any Termination
Event, Wind-Down Event or Amortization Event that may have occurred, the
Collateral Agent 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 a Secured Party; PROVIDED,
HOWEVER, that if the payment within a reasonable time to the Collateral Agent of
the costs, expenses or liabilities likely to be incurred by it in the making of
such investigation shall be, in the opinion of the Collateral Agent, not
reasonably assured by the Debtor, the Collateral Agent may require reasonable
indemnity against such cost, expense or liability as a condition to so
proceeding. The reasonable expense of every such examination shall be paid by
the Debtor or, if paid by the Collateral Agent, shall be reimbursed by the
Debtor upon demand.
(l) The Collateral Agent 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 Collateral Agent shall not
be responsible for any misconduct or negligence of any such agent or custodian
appointed with due care by it hereunder.
SECTION 7.5. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE COLLATERAL AGENT. The Collateral Agent shall not consolidate
with or merge into any other corporation or convey or transfer its properties
and assets substantially as an entirety to any Person, unless:
(i) the corporation formed by such consolidation or into
which the Collateral Agent is merged or the Person which acquires by
conveyance or transfer the properties and assets of the Collateral Agent
substantially as an entirety shall be a corporation organized and existing
under the laws of the United States of America or any State or the Dis-
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trict of Columbia and, if the Collateral Agent is not the surviving
entity, shall expressly assume, by an agreement supplemental hereto,
executed and delivered to the Secured Parties in form satisfactory to the
Secured Parties, the performance of every covenant and obligation of the
Collateral Agent hereunder; and
(ii) the Collateral Agent has delivered to the Secured
Parties an officer's certificate and an opinion of counsel each stating
that such consolidation, merger, conveyance or transfer and such
supplemental agreement comply with this Section 7.5 and that all
conditions precedent herein provided for relating to such transaction have
been complied with.
SECTION 7.6. LIMITATION ON LIABILITY OF THE COLLATERAL AGENT AND
OTHERS. The directors, officers, employees or agents of the Collateral Agent
shall not be under any liability to the Collateral Agent, any Secured Party or
any other Person hereunder or pursuant to any document delivered hereunder, it
being expressly understood that all such liability is expressly waived and
released as a condition of, and as consideration for, the execution of this
Agreement; PROVIDED, HOWEVER, that this provision shall not protect the
directors, officers, employees and agents of the Collateral Agent against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. Except as provided in Section
7.4, the Collateral Agent shall not be under any liability to any Secured Party
or any other Person for any action taken or for refraining from the taking of
any action in its capacity as Collateral Agent pursuant to this Agreement
whether arising from express or implied duties under this Agreement; PROVIDED,
HOWEVER, that this provision shall not protect the Collateral Agent against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder. The Collateral Agent may rely in
good faith on any document of any kind PRIMA FACIE properly executed and
submitted by any Person respecting any matters arising hereunder. The Collateral
Agent shall not be under any obligation to appear in, prosecute or defend any
legal action which is not incidental to its duties to administer the Collections
and the Collection
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Account in accordance with this Agreement which in its reasonable opinion may
involve it in any expense or liability.
SECTION 7.7. INDEMNIFICATION OF THE SECURED PARTIES. The Collateral
Agent shall indemnify and hold harmless the Company from and against any loss,
liability, expense, damage or injury suffered or sustained by reason of willful
misfeasance, bad faith, or gross negligence in the performance of the duties of
the Collateral Agent or by reason of reckless disregard of obligations and
duties of the Collateral Agent hereunder or by reason of the acts, omissions or
alleged acts or omissions of the Collateral Agent pursuant to this Agreement.
The provisions of this indemnity shall run directly to and be enforceable by an
injured party subject to the limitations hereof.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. NOTICES, ETC. Except where telephonic instructions or
notices are authorized herein to be given, all notices, demands, instructions
and other communications required or permitted to be given to or made upon any
party hereto shall be in writing and shall be sent by facsimile transmission
with a confirmation of the receipt thereof and shall be deemed to be given for
purposes of this Agreement on the day that the receipt of such facsimile
transmission is confirmed in accordance with the provisions of this Section 8.1.
Unless otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section 8.1, notices, demands, instructions and
other communications in writing shall be given to or made upon the respective
parties hereto at their respective addresses indicated below, and, in the case
of telephonic instructions or notices, by calling the telephone number or
numbers indicated for such party below:
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If to the Company:
Enterprise Funding Corporation
c/o Merrill Lynch Money Markets Inc.
World Financial Center - South Tower
225 Liberty Street
New York, New York 10281
Attention: Gary Carlin
Telephone: (212) 236-7200
Telecopy: (212) 236-7584
(with a copy to the Administrative Agent)
If to the Debtor:
First Investors Auto Receivables
Corporation
675 Bering Drive
Suite 710
Houston, Texas 77057
Attention: Tommy A. Moore, Jr.
Telephone: (713) 977-2600
Telecopy: (713) 977-0657
If to the Collateral Agent:
Texas Commerce Bank National Association
600 Travis, 8th Floor
Houston, Texas 77022
Attention: Global Trust Services-First
Investor Auto Receivables Corporation
Telephone: (713) 216-4181
Telecopy: (713) 216-4880
If to the Administrative Agent:
NationsBank N.A.
NationsBank Corporate
Center - 10th Floor
100 North Tryon Street
NC1-007-10-01
Charlotte, North Carolina 28255-0001
Attention: Michelle M. Heath
Investment Banking
Telephone: (704) 386-7922
Telecopy: (704) 388-9169
85
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If to the Surety Bond Provider:
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Insured Portfolio
Management - SF
Telephone: (914) 273-4545
Telecopy: (914) 765-3810
SECTION 8.2. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the Debtor, the Collateral Agent, the Secured Parties, the Seller and their
respective successors and assigns and shall inure to the benefit of the Debtor,
the Servicer, the Collateral Agent, the Secured Parties, the Seller and the
Company and their respective successors and permitted assigns including any
Liquidity Provider; PROVIDED that the Debtor shall not assign any of its rights
or obligations hereunder without the prior written consent of the Collateral
Agent acting upon written instruction of each of the Secured Parties. The Debtor
and the Collateral Agent hereby acknowledge that the Company has granted a
security interest in all of its rights hereunder to the EFC Collateral Agent. In
addition, the Debtor hereby acknowledges that the Company may at any time and
from time to time assign all or a portion of its rights hereunder to the
Liquidity Provider pursuant to the Liquidity Agreement. Except as expressly
permitted hereunder or in the agreements establishing the Company's commercial
paper program, the Company shall not assign any of its rights or obligations
hereunder without the prior written consent of the Debtor.
SECTION 8.3. SEVERABILITY CLAUSE. Any provisions of this Agreement
which are prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 8.4. AMENDMENTS; GOVERNING LAW. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER (I) MAY NOT BE CHANGED ORALLY
BUT ONLY BY AN INSTRUMENT IN WRITING SIGNED BY THE PARTY AGAINST WHICH
ENFORCEMENT IS SOUGHT AND (II) SHALL BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. THE PARTIES
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<PAGE>
HEREUNDER AGREE THAT THEY WILL NOT AMEND, MODIFY, WAIVE, OR TERMINATE ANY
PROVISION OF THIS AGREEMENT WITHOUT THE WRITTEN CONSENT OF EACH PARTY.
SECTION 8.5. NO BANKRUPTCY PETITION AGAINST THE COMPANY OR THE
DEBTOR. The Debtor and each of the other parties hereto covenant and agree that,
and each such Person agrees that they shall cause any successor Servicer
appointed pursuant to Section 4.1 to covenant and agree that, prior to the date
which is one year and one day after the payment in full of all Commercial Paper
issued by the Company it will not institute against, or join any other Person in
instituting against, the Company any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any federal or
state bankruptcy or similar law. The Company, the Secured Parties, the Seller
and the Collateral Agent hereby agree that they shall not institute against, or
join any other Person in instituting against, the Debtor any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings under any federal or state bankruptcy or similar law unless one year
and one day has passed following the final payment on the Note.
SECTION 8.6. SETOFF. The Debtor hereby irrevocably and
unconditionally waives all right of setoff that it may have under contract
(including this Agreement), applicable law or otherwise with respect to any
funds or monies of the Debtor at any time held by or in the possession of the
Collateral Agent or Reserve Account Agent.
SECTION 8.7. NO RECOURSE. Except as otherwise expressly provided in
this Agreement, it is understood and agreed that the Debtor shall not be liable
for amounts due under this Agreement, the Note, the Insurance Agreement or the
Note Purchase Agreement, except to the extent of the Collateral. The preceding
sentence shall not relieve the Debtor from any liability hereunder with respect
to its representations, warranties, covenants and other payment and performance
obligations herein described.
SECTION 8.8. FURTHER ASSURANCES. The Debtor agrees to do such
further acts and things and to execute and deliver to the Secured Parties, the
Administrative Agent or the Collateral Agent such additional assignments,
agreements, powers and instruments as are required by the Collateral Agent or
the Surety Bond Provider to carry into effect the purposes of this Agreement or
to better assure and confirm unto the
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Collateral Agent or the Surety Bond Provider its rights, powers and remedies
hereunder.
SECTION 8.9. OTHER COSTS, EXPENSES AND RELATED MATTERS. (a) The
Debtor agrees, upon receipt of a written invoice, to pay or cause to be paid,
and to save the Collateral Agent and the Secured Parties harmless against
liability for the payment of, all reasonable out-of-pocket expenses (including,
without limitation, attorneys', accountant's and other third parties' fees and
expenses, any filing fees and expenses incurred by officers or employees of the
Collateral Agent) incurred by or on behalf of the Collateral Agent (i) in
connection with the negotiation, execution, delivery and preparation of this
Agreement and any documents or instruments delivered pursuant hereto and the
transactions contemplated hereby (including, without limitation, the perfection
or protection of the Collateral Agent's interest in the Collateral) and (ii)
from time to time (a) relating to any amendments, waivers or consents under this
Agreement, (b) arising in connection with the Collateral Agent's or the Secured
Parties' or their agent's enforcement or preservation of rights (including,
without limitation, the perfection and protection of the Collateral Agent's
security interest in the Collateral under this Agreement), or (c) arising in
connection with any audit, dispute, disagreement, litigation or preparation for
litigation involving this Agreement.
SECTION 8.10. EXERCISE OF RIGHTS BY SURETY BOND PROVIDER. All rights
granted to the Surety Bond Provider pursuant to this Agreement shall terminate
during the pendency of a payment default by the Surety Bond Provider under the
Surety Bond or during the pendency of a Surety Insolvency (as defined in the
Insurance Agreement as in effect on the date hereof) and during such time the
Surety Bond Provider's rights may be exercised by the Company, PROVIDED,
HOWEVER, the Surety Bond Provider's rights shall be reinstated in full,
immediately upon the cure of such default.
SECTION 8.11. COUNTERPARTS. This Agreement may be executed in any
number of copies, and by the different parties hereto on the same or separate
counterparts, each of which shall be deemed to be an original instrument.
SECTION 8.12. HEADINGS. Section headings used in this Agreement are
for convenience of reference only and shall not affect the construction or
interpretation of this Agree- ment.7
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IN WITNESS WHEREOF, the Debtor, the Company, the Surety Bond
Provider, the Reserve Account Agent, the Collateral Agent and the Seller and,
solely with respect to Sections 5A.1 and 5A.2 hereof, NationsBank, N.A., in its
individual capacity, have caused this Agreement to be executed by their
respective officers thereunto duly authorized as of the day and year first above
written.
FIRST INVESTORS AUTO RECEIVABLES
CORPORATION
as Debtor
By: /s/ TOMMY A. MOORE JR.
Name: Tommy A. Moore Jr.
Title:
FIRST INVESTORS FINANCIAL SERVICES, INC.
as Seller
By: /s/ TOMMY A. MOORE JR.
Name: Tommy A. Moore Jr.
Title:
ENTERPRISE FUNDING CORPORATION,
as Company
By: /s/ GERARD M. HAVATT
Name: Gerard M. Havatt
Title: Vice President
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION,
as Collateral Agent
By: /s/ RAFAEL HERRERA
Name: Rafael Herrera
Title: Vice President
and Trust Officer
NATIONSBANK, N.A., individually and
as Reserve Account Agent
By: /s/ MICHELLE M. HEATH
Name: Michelle M. Heath
Title: Vice President
89
<PAGE>
MBIA INSURANCE CORPORATION
as Surety Bond Provider
By: /s/ ANN D. MCKENNA
Name: Ann D. McKenna
Title: Assistant Secretary
90
EXHIBIT A
[Form of Note]
October 22, 1996
$105,000,000
Reference is hereby made to that certain Note Purchase Agreement
dated as of October 22, 1996 (as amended, supplemented or otherwise modified in
accordance with the terms thereof and in effect from time to time, the "NOTE
PURCHASE AGREEMENT") by and between First Investors Auto Receivables
Corporation, a Delaware corporation (the "ISSUER") and Enterprise Funding
Corporation, a Delaware corporation (the "COMPANY") and to that certain Security
Agreement dated as of October 22, 1996 (as amended, supplemented or otherwise
modified and in effect from time to time, the "SECURITY AGREEMENT") by and among
the Issuer, the Company, First Investors Financial Services, Inc., as seller,
Texas Commerce Bank National Association, as collateral agent, NationsBank,
N.A., as reserve account agent and MBIA Insurance Corporation. All capitalized
terms used but not defined herein shall have the meanings assigned thereto in
the Note Purchase Agreement or the Security Agreement.
FOR VALUE RECEIVED, the Issuer hereby promises to pay to the order
of the Company at the principal office of the Company at World Financial Center
- - - South Tower, 225 Liberty Street, New York, New York 10281 a principal sum
equal to ONE HUNDRED FIVE MILLION DOLLARS ($105,000,000.00), in lawful money of
the United States of America and in immediately available funds.
The date and amount of each Funding extended by the Company to the
Issuer under the Note Purchase Agreement, and each payment of principal thereof,
shall be recorded by the Company on its books and, prior to any transfer of this
Note (or, at the discretion of the Company, at any other time), endorsed by the
Company on the schedule attached hereto or any continuation thereof. Although
the stated principal amount of this Note is as stated above, this Note shall be
enforceable only with respect to the Issuer's obligation to pay the principal
hereof only to the extent of the unpaid principal amount
A-1
<PAGE>
of the Fundings outstanding under the Note Purchase Agreement at the time such
enforcement shall be sought.
Interest on the outstanding principal amount of this Note shall
accrue at the rate or rates necessary for the payment to the holder hereof, on
the dates provided for in the Security Agreement, of Carrying Costs payable to
the holder hereof on such date or dates, and shall be payable in accordance with
the priorities set forth in the Security Agreement.
Principal in an amount equal to the Targeted Monthly Principal
Payment will be due and payable on each Remittance Date, and such amounts shall
be payable in accordance with the priorities set forth in Section 5.1 of the
Security Agreement. On each Remittance Date, principal in an amount equal to the
principal balance of each Receivable determined during the prior Collection
Period to be an Ineligible Receivable shall be due and payable hereunder.
The entire outstanding principal amount of this Note and accrued
interest thereon will be due and payable on the Remittance Date occurring in the
calendar month following the third calendar month in which the latest maturing
Receivable (determined as of the Termination Date) is scheduled to mature
(without regard to extensions subsequently granted on any Receivable by the
Issuer or any servicing agent).
After the occurrence of a Termination Event, the holder hereof may
(with the prior written consent of the Surety Bond Provider, subject to the
terms of the Security Agreement) declare all amounts due hereunder to be
immediately due and payable.
The Issuer's obligation to make payments hereunder shall be a
limited recourse obligation of the Issuer, payable solely from the Collateral;
provided, however, that the foregoing shall not affect the right of the
Administrative Agent on behalf of the holder hereof to make a demand for payment
under the Surety Bond of amounts due hereunder, in accordance with the
provisions thereof.
The Issuer shall pay all costs of collection of any amount due
hereunder when incurred, including without
A-2
<PAGE>
limitation, reasonable attorney's fees and expenses, and including all costs and
expenses actually incurred in connection with the pursuit by the holder of any
of its rights or remedies referred to herein or in the Security Agreement or the
protection of or realization upon collateral, and all such costs shall be
payable in accordance with Section 5.1(a)(x) of the Security Agreement.
The Issuer waives presentment, notice of dishonor, protest and other
notice or formality with respect to this Note.
A-3
<PAGE>
THIS NOTE SHALL BE GOVERNED BY, AND INTERPRETED AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
FIRST INVESTORS AUTO
RECEIVABLES CORPORATION
By:
Name:
Title:
A-4
<PAGE>
AMOUNT OF AMOUNT OF PRINCIPAL NOTATION
DATE OF FUNDING REPAYMENT OUTSTANDING BY
A-5
EXHIBIT 10.30
- - --------------------------------------------------------------------------------
NOTE PURCHASE AGREEMENT
between
FIRST INVESTORS AUTO RECEIVABLES CORPORATION
as Issuer,
and
ENTERPRISE FUNDING CORPORATION,
as Company,
Dated as of October 22, 1996
- - --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions.................................. 1
ARTICLE II
FUNDINGS; THE NOTE
SECTION 2.1. Funding; The Note............................ 7
SECTION 2.2. The Surety Bond; Demands Under the Sure-
ty Bond...................................... 19
SECTION 2.3. Fees......................................... 19
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE ISSUER
SECTION 3.1. Representations, Warranties and Cove-
nants of the Issuer.......................... 20
ARTICLE IV
INDEMNIFICATION
SECTION 4.1. Indemnity.................................... 23
SECTION 4.2. Indemnity for Taxes, Reserves and Ex-
penses....................................... 25
SECTION 4.3. Other Costs, Expenses and Related Mat-
ters......................................... 27
ARTICLE V
MISCELLANEOUS
SECTION 5.1. Notices, etc................................. 28
SECTION 5.2. Successors and Assigns....................... 29
SECTION 5.3. Severability Clause.......................... 30
SECTION 5.4. Amendments; Governing Law.................... 30
SECTION 5.5. No Bankruptcy Petition Against the Com-
pany......................................... 30
SECTION 5.6. No Proceedings............................... 31
SECTION 5.7. Setoff....................................... 31
SECTION 5.8. No Recourse.................................. 31
i
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PAGE
SECTION 5.9. Further Assurances........................... 31
SECTION 5.10. No Recourse against Merrill.................. 31
SECTION 5.11. Counterparts................................. 32
SECTION 5.12. Headings..................................... 32
EXHIBITS
EXHIBIT A Form of Note
EXHIBIT B Form of Funding Request
EXHIBIT C Form of Surety Bond
ii
NOTE PURCHASE AGREEMENT
NOTE PURCHASE AGREEMENT (this "AGREEMENT"), dated as of October 22,
1996, between ENTERPRISE FUNDING CORPORATION, a Delaware corporation, as
purchaser (together with its successors and assigns, the "COMPANY"), for itself
and as agent for the Liquidity Provider, and FIRST INVESTORS AUTO RECEIVABLES
CORPORATION, a Delaware corporation, as transferor (together with its successors
and assigns, the "ISSUER").
W I T N E S S E T H :
WHEREAS, subject to the terms and conditions of the Security
Agreement, the Issuer desires to obtain funds from time to time from the
Company, and to evidence the obligation to repay such amounts through the
issuance of the Note;
WHEREAS, pursuant to the Security Agreement, the Issuer will pledge
to the Collateral Agent for the benefit of the Secured Parties its interest in
the Receivables and related property including the Issuer's security interest in
the Financed Vehicles;
NOW THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. All capitalized terms used herein shall
have the meanings herein specified, and shall include in the singular number the
plural and in the plural number the singular:
"ADDITION DATE" shall have the meaning specified in Section 1.1 of
the Security Agreement.
"ADDITIONAL INVESTMENT" shall have the meaning specified in Section
1.1 of the Security Agreement.
<PAGE>
"ADDITIONAL RECEIVABLES" shall have the meaning specified in Section
1.1 of the Security Agreement.
"ADMINISTRATIVE AGENT" shall mean NationsBank, N.A., as
administrative agent for the Company.
"AGREEMENT" shall mean this Note Purchase Agreement, as it may from
time to time be amended, supplemented or otherwise modified in accordance with
the terms hereof.
"AMORTIZATION EVENT" shall have the meaning specified in Section 6.3
of the Security Agreement
"AVAILABLE COLLECTIONS" shall have the meaning specified in Section
1.1 of the Security Agreement.
"AVAILABLE FUNDS" shall have the meaning specified in Section 1.1 of
the Security Agreement.
"BORROWING BASE" shall have the meaning specified in Section 1.1 of
the Security Agreement.
"CARRYING COSTS" shall have the meaning specified in Section 1.1 of
the Security Agreement.
"CLOSING DATE" shall mean October 22, 1996.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time (including any successor statute), and the regulations promulgated
and the rulings issued thereunder.
"COLLATERAL" shall have the meaning specified
in Section 2.1 of the Security Agreement.
"COLLATERAL AGENT" shall mean Texas Commerce Bank National
Association, as Collateral Agent under the Security Agreement, or any successor
thereto.
"COMMERCIAL PAPER" shall mean promissory notes of the Company issued
by the Company in the commercial paper market.
"COMPANY" shall mean Enterprise Funding Corporation, a Delaware
corporation, together with its successors and assigns.
2
<PAGE>
"CREDIT SUPPORT PROVIDER" shall mean the Person or Persons who will
provide credit support to the Company in connection with the issuance by the
Company of its Commercial Paper.
"EFC COLLATERAL AGENT" shall have the meaning specified in Section
1.1 of the Security Agreement.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"ERISA AFFILIATE" shall have the meaning specified in Section 1.1 of
the Security Agreement.
"FACILITY LIMIT" shall mean $105,000,000.
"FINANCED VEHICLE" shall have the meaning specified in Section 1.1
of the Security Agreement.
"FUNDING" shall mean any advance by the Company to the Issuer
hereunder, and shall consist of the Initial Funding pursuant to Section 2.1(a)
hereof and each Subsequent Funding pursuant to Section 2.1(b) hereof.
"FUNDING REQUEST" shall have the meaning specified in Section 2.1(a)
hereof.
"GECC" shall mean General Electric Capital Corporation.
"GOVERNMENTAL AUTHORITY" shall have the meaning specified in Section
1.1 of the Security Agreement.
"INDEMNIFIED AMOUNTS" shall have the meaning set forth in Section
4.1 hereof.
"INDEMNIFIED PARTIES" shall have the meaning set forth in Section
4.1 hereof.
"INITIAL FUNDING" shall mean the Funding which is made pursuant to
Section 2.1(a) hereof.
"INSURANCE AGREEMENT" shall mean the Insurance Agreement dated as of
October 1, 1996 between the Issuer, the Seller, the Collateral Agent, the
Reserve Account Agent and the Surety Bond Provider.
3
<PAGE>
"INTEREST RATE CAP" and "INTEREST RATE CAPS" shall have the meanings
specified in Section 3.2(n) of the Security Agreement.
"ISSUER" shall mean First Investors Auto Receivables Corporation, a
Delaware corporation, and its successors and permitted assigns.
"LAW" shall have the meaning specified in Section 1.1 of the
Security Agreement.
"LIQUIDITY AGREEMENT" shall mean the agreement, between the Company
and the Liquidity Provider evidencing the obligation of the Liquidity Provider
to provide liquidity support to the Company in connection with the issuance of
Commercial Paper.
"LIQUIDITY FACILITY" shall mean the asset purchase facility provided
to the Company pursuant to the Liquidity Agreement.
"LIQUIDITY PROVIDER" shall mean the Person or Persons who will
provide liquidity support to the Company in connection with the issuance by the
Company of its Commercial Paper, which , as of the Closing Date, is NationsBank,
N.A.
"MOODY'S" shall mean Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN" shall have the meaning specified in Section 1.1
of the Security Agreement.
"NET INVESTMENT" shall have the meaning specified in Section 1.1 of
the Security Agreement.
"NOTE" shall mean the note issued to the Company pursuant to Section
2.1(f)(i) of this Agreement.
"NOTEHOLDER'S PERCENTAGE" shall equal 90%.
"OBLIGOR" shall have the meaning set forth in Section 1.1 the
Security Agreement.
"OFFICIAL BODY" shall have the meaning specified in Section 1.1 of
the Security Agreement.
4
<PAGE>
"ORIGINAL INVESTMENT" shall mean $59,322,154.20.
"OTHER TRANSFEROR" means any Person other than the Issuer that has
entered into a transfer and administration agreement, receivables purchase
agreement or other similar agreement with the Company and which is not a party
to any Transaction Document.
"PERSON" shall have the meaning specified in Section 1.1 of the
Security Agreement.
"PLAN" shall have the meaning specified in Section 1.1 of the
Security Agreement.
"PLAN EVENT" shall have the meaning specified in Section 1.1 of the
Security Agreement.
"POTENTIAL AMORTIZATION EVENT" shall have the meaning specified in
Section 1.1 of the Security Agreement.
"POTENTIAL TERMINATION EVENT" shall have the meaning specified in
Section 1.1 of the Security Agreement.
"POTENTIAL WIND-DOWN EVENT" shall have the meaning specified in
Section 1.1 of the Security Agreement.
"PROGRAM FEE" shall have the meaning specified in Section 1.1 of the
Security Agreement.
"PURCHASE AGREEMENT" shall mean the Purchase Agreement, dated as of
October 22, 1996, between the Issuer, as purchaser thereunder, and the Seller,
as seller thereunder, as the same may be amended, modified and supplemented from
time to time in accordance with the terms thereof and hereof.
"PURCHASED INTEREST" shall mean any interest in the Note acquired by
the Liquidity Provider.
"RECEIVABLE SCHEDULE" shall have the meaning specified in Section
1.1 of the Security Agreement.
5
<PAGE>
"RELATED COMMERCIAL PAPER" shall have the meaning specified in
Section 1.1 of the Security Agreement.
"REMITTANCE DATE" shall have the meaning set forth in Section 1.1 of
the Security Agreement.
"REQUIRED RESERVE ACCOUNT BALANCE" shall have the meaning specified
in Section 1.1 of the Security Agreement.
"REQUIREMENTS OF LAW" shall have the meaning specified in Section
1.1 of the Security Agreement.
"RESERVE ACCOUNT" shall mean the account established pursuant to
Section 5A.1(b) of the Security Agreement.
"RESERVE ACCOUNT AGENT" shall mean NationsBank, N.A., solely in its
capacity as Reserve Account Agent under the Security Agreement and the Insurance
Agreement.
"RESERVE ADVANCE" shall have the meaning set forth in Section 1.1 of
the Security Agreement.
"S&P" shall mean Standard & Poor's Ratings Group, a Division of The
McGraw-Hill Companies.
"SECTION 4.2 COSTS" shall have the meaning set forth in Section 4.2
hereof.
"SECURITY AGREEMENT" shall mean the Security Agreement dated as of
October 22, 1996 among the Seller, the Issuer, the Collateral Agent, the
Company, the Reserve Account Agent and the Surety Bond Provider, as amended,
modified and supplemented from time to time.
"SELLER" means First Investors Financial Ser- vices, Inc.
"SERVICER" shall mean GECC as servicer under the Servicing Agreement
or any successor Servicer acceptable to the Surety Bond Provider.
"SUBSEQUENT FUNDING" shall mean a Funding which is made pursuant to
Section 2.1(b) hereof.
6
<PAGE>
"SURETY BOND" shall mean that certain surety bond, substantially in
the form annexed hereto as Exhibit C.
"SURETY BOND PROVIDER" shall mean MBIA Insur- ance Corporation.
"TARGETED MONTHLY PRINCIPAL PAYMENT" shall have the meaning
specified in Section 1.1 of the Security Agreement.
"TERMINATION DATE" shall have the meaning specified in Section 1.1
of the Security Agreement.
"TERMINATION EVENT" shall have the meaning specified in Section 6.1
of the Security Agreement.
"TRANSACTION COSTS" shall have the meaning specified in Section 4.3
hereof.
"TRANSACTION DOCUMENTS" shall have the meaning as specified in the
Insurance Agreement.
"UCC" shall have the meaning specified in Section 1.1 of the
Security Agreement.
"UNUSED PROGRAM FEE" shall have the meaning specified in Section 1.1
of the Security Agreement.
"WIND-DOWN EVENT" shall have the meaning specified in Section 6.2 of
the Security Agreement.
ARTICLE II
FUNDINGS; THE NOTE
SECTION 2.1. FUNDING; THE NOTE. (a) INITIAL FUNDING. Upon the terms
and subject to the conditions herein set forth, the Company shall make advances
(any such advance, a "FUNDING", and the first such advance, the "INITIAL
FUNDING") to the Issuer from time to time on or after the Closing Date and prior
to the Termination Date. In connection with the Initial Funding, the Issuer
shall, by notice to the Company in the form of Exhibit B hereto (a "Funding
Request") request such Funding at least ten Business Days prior to the proposed
date of
7
<PAGE>
such Initial Funding. Such notice shall specify the pro- posed Funding Amount
(which shall be at least $1,000,000) and the proposed date of the Initial
Funding.
(b) SUBSEQUENT FUNDING. On any Business Day occurring after the
Initial Funding under Section 2.1(a), upon ten Business Days notice to the
Company of a Funding Request and prior to the Termination Date, the Issuer may
request that the Company make additional Fundings (which shall be at least
$1,000,000 and shall occur no more than once per consecutive three month
period)(each such additional Funding, a "SUBSEQUENT FUNDING").
(c) CONDITIONS TO FUNDING. The Company shall not, and shall have no
obligation to, advance any funds to the Issuer in connection with any Funding
unless on the date of such Funding (i) the sum of the Net Investment after
giving effect to such Funding plus the interest component of Related Commercial
Paper would not exceed the Facility Limit; (ii) the Net Investment, after giving
effect to such Funding, would not be greater than 90% of the Borrowing Base;
(iii) the Surety Bond shall be in full force and effect and the Surety Bond
Provider shall not have failed to make any required payment thereunder; (iv) an
amount equal to the Required Reserve Account Balance shall be on deposit in the
Reserve Account; (v) each representation and warranty of the Issuer herein, in
the Security Agreement or in any other Transaction Document shall be true and
correct; (vi) a Wind-Down Event, an Amortization Event, a Potential Termination
Event, a Potential Wind-Down Event or a Potential Amortization Event shall not
have occurred or be continuing and the Termination Date shall not have occurred;
(vii) the Company is able to obtain funds for the making of such Funding in the
commercial paper market or pursuant to the Liquidity Agreement and (viii) in
connection with the Initial Funding, the conditions precedent set forth in
paragraph (g) of this Section shall be satisfied.
(d) FUNDING REQUEST IRREVOCABLE. The notice of the proposed Initial
Funding and any Funding Request shall be irrevocable and binding on the Issuer
and the Issuer shall indemnify the Company against any loss or expense incurred
by the Company, either directly or indirectly (including through the Liquidity
Provider Agreement) as a result of any failure by the Issuer to complete the
requested Funding including, without limita-
8
<PAGE>
tion, any loss (including loss of anticipated profits) or expense incurred by
the Company, either directly or indirectly (including pursuant to the Liquidity
Provider Agreement), by reason of the liquidation or reemployment of funds
acquired by the Company (or the Liquidity Provider) (including, without
limitation, funds obtained by issuing commercial paper or promissory notes or
obtaining deposits or loans from third parties) for the Company to complete the
requested Funding.
(e) DISBURSEMENT OF FUNDS. No later than 4:30 p.m. (New York City
time) on the date on which a Funding is to be made, the Company will make
available to the Issuer in immediately available funds, the amount of the
Funding to be made on such day by remitting the amount thereof to an account of
the Issuer as designated in the related notice requesting such Funding.
(f) THE NOTE.
(i) The Issuer's obligation to pay the principal of and
interest on all amounts advanced by the Company pursuant to any Funding
shall be evidenced by a single note of the Issuer (the "NOTE") which shall
(1) be dated the Closing Date; (2) be in the stated principal amount equal
to the Facility Limit (as reflected from time to time on the grid attached
thereto); (3) bear interest as provided therein; (4) be payable to the
order of the Company and mature on the Remittance Date occurring in the
third calendar month following the calendar month in which the latest
maturing Receivable (determined as of the Termination Date) is scheduled
to mature (without regard to extensions subsequently granted on any
Receivable by the Issuer or any servicing agent); (5) be entitled to the
benefits of the Surety Bond and the Security Agreement; and (6) be
substantially in the form of Exhibit A to this Agreement, with blanks
appropriately completed in conformity herewith. The Company shall, and is
hereby authorized to, make a notation on the schedule attached to the Note
of the date and the amount of each Funding and the date and amount of the
payment of principal thereon, and prior to any transfer of the Note, the
Company
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shall endorse the outstanding principal amount of the Note on the schedule
attached thereto; PROVIDED, HOWEVER, that failure to make such notation
shall not adversely affect the Company's rights with respect to the Note.
(ii) Although the Note shall be dated the Closing Date,
interest in respect thereof shall be payable only for the periods during
which amounts are outstanding thereunder and on such amounts as are
outstanding thereunder. Although the stated principal amount of the Note
shall be equal to the Facility Limit, the Note shall be enforceable with
respect to the Issuer's obligation to pay the principal thereof only to
the extent of the unpaid principal amount of the Fundings outstanding
thereunder at the time such enforcement shall be sought.
(g) The Company's obligations under this Agreement are subject
to the accuracy of the representations and warranties on the part of the Issuer
contained herein, as of the date hereof, and as of the Closing Date (as if made
on such date), to the performance by the Issuer of its obligations under this
Agreement and to the satisfaction of the following further conditions on the
Closing Date:
(i) The Company shall have received letters of Vinson &
Elkins LLP, special counsel to the Issuer, that it may rely on such
counsel's opinions to Moody's and S&P as to "true sale" and substantive
nonconsolidation issues under the Bankruptcy code (each such opinion
referred to herein as a "RATING AGENCY OPINION").
(ii) The Company shall have received an opinion, dated
the Closing Date from Buck, Keenan & Owens, L.L.P., special counsel
for the Issuer, with respect to:
(1) Each of the Note, this Agreement and the
Security Agreement have been duly authorized, executed and delivered by
the Issuer and is a valid and binding agreement,
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enforceable against the Issuer in accordance with its respective terms,
except to the extent that enforcement thereof may be limited by (1)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally, (2)
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity) and (3) the qualification
that certain remedial provisions of the Security Agreement may be
unenforceable in whole or in part, but the inclusion of such provisions
does not affect the validity of the Security Agreement, and the Security
Agreement, together with applicable law, contains adequate remedial
provisions for the practical realization of the benefits of the security
created thereby;
(2) The pledge of the Receivables and the other
property pledged by the Issuer to the Collateral Agent, on behalf of the
Secured Parties pursuant to the Security Agreement, the compliance by the
Issuer with all of the provisions of the Security Agreement, this
Agreement and the Note and the consummation of the transactions therein or
herein contemplated will not (A) conflict with or result in a breach of
any of the terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the Issuer is a party or by
which the Issuer is bound or to which any of the property or assets of the
Issuer is subject, (B) result in any violation of the provisions of any
order known to such counsel of any court or governmental agency or body
having jurisdiction over the Issuer or any of its properties or (C) result
in any violation of the provisions of the charter or the by-laws of the
Issuer or any statute or any rule or regulation of any governmental agency
or body having jurisdiction over the Issuer or any of its properties;
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(3) No authorization, approval, consent or order
of, or filing with, any court or governmental authority or agency is
required by the Issuer in connection with the consummation of the
transactions contemplated in the Security Agreement and this Agreement,
except such as have been obtained;
(4) To the best of such counsel's knowledge and
information, there are no legal or governmental proceedings pending or
threatened (A) asserting the invalidity of the Security Agreement or this
Agreement, (B) seeking to prevent the consummation by the Issuer of any of
the transactions contemplated by the Security Agreement or this Agreement
or (C) which might materially and adversely affect the performance by the
Issuer of its obligations under the Security Agreement or this Agreement;
(5) The provisions of the Security Agreement are
effective to create a valid security interest in the Collateral in favor
of the Collateral Agent on behalf of the Secured Parties and such security
interest is perfected and prior to all other creditors of and purchasers
from the Issuer; and
(6) The Issuer is not required to be registered
as an "investment company" under the Investment Company Act of 1940, as
amended.
(iii) The Company shall have received an opinion, dated
the Closing Date, from Buck, Keenan & Owens, L.L.P., counsel to the
Seller, to the effect that:
(1) The Seller is a corporation organized,
existing and in good standing under the laws of the State of Texas, with
corporate power and authority to own its properties and conduct its
business as currently conducted; and the Seller is qualified to do
business as a foreign corporation in good standing in each jurisdiction in
which it
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owns or leases substantial properties or in which the conduct of its
business requires such qualification;
(2) The Seller has or had at all relevant times
full power, authority and legal right to exercise, deliver and perform its
obligations under the Purchase Agreement; and has or had at all relevant
times full power, authority and legal right to acquire, own and transfer
the Receivables and the other property transferred by it to the Issuer
pursuant to the Purchase Agreement;
(3) The Purchase Agree- ment has been duly
authorized, executed and delivered by the Seller and is a valid and
binding agreement, enforceable against the Seller in accordance with its
terms, except to the extent that enforcement thereof may be limited by (1)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and (2)
general principles of equity (regardless of whether enforcement is
considered in a proceeding in equity or at law);
(4) The transfer of the Receivables and the other
property transferred by the Seller to the Issuer pursuant to the Purchase
Agreement, the compliance by the Seller with all of the provisions of the
Purchase Agreement, the Security Agreement and this Agreement and the
consummation of the transactions therein or herein contemplated will not
(A) conflict with or result in a breach of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument known to such counsel to
which the Seller is a party or by which the Seller is bound or to which
any of the property or assets of the Seller is subject, (B) result in any
violation of the provisions of any order known to such counsel of any
court or governmental agency or body hav-
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ing jurisdiction over the Seller or any of its properties or (C) result in
any violation of the provisions of the charter or the by-laws of the
Seller or any statute or any rule or regulation of any governmental agency
or body having jurisdiction over the Seller or any of its properties;
(5) No authorization, approval, consent or order
of, or filing with, any court or governmental authority or agency is
required by the Seller in connection with the consummation of the
transactions contemplated in the Purchase Agreement and this Agreement,
except such as have been obtained; and
(6) To the best of such
counsel's knowledge and information, there are no legal or governmental
proceedings pending or threatened (A) asserting the invalidity of the
Purchase Agreement, the Security Agreement or this Agreement, (B) seeking
to prevent the consummation by the Seller of any of the transactions
contemplated by the Purchase Agreement, the Security Agreement or this
Agreement or (C) which might materially and adversely affect the
performance by the Seller of its obligations under the Purchase Agreement,
the Security Agreement or this Agreement.
(iv) The Company shall have received an opinion, dated
the Closing Date, of Andrews & Kurth L.L.P., counsel for the Collateral
Agent, to the effect that:
(1) The Collateral Agent is a national banking
association with trust powers, and is duly and validly existing under the
laws of the United States of America with corporate power and authority to
execute, deliver and perform its obligations required under the Security
Agreement.
(2) The Security Agreement has been duly
authorized, executed and
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delivered by the Collateral Agent and constitutes the valid and binding
obligation of the Collateral Agent, enforceable against the Collateral
Agent in accordance with its terms, except as the enforceability thereof
may be limited by (i) bankruptcy, fraudulent conveyance, fraudulent
transfer, insolvency, reorganization, liquidation, receivership,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding
in equity or at law).
(3) The execution and delivery of the Security
Agreement by the Collateral Agent and the performance by the Collateral
Agent of its obligations under the Security Agreement do not conflict with
or result in a violation of (A) any law or regulation of the United States
of America governing the banking or trust powers of the Collateral Agent,
or (B) the by-laws of the Collateral Agent.
(4) No approval, consent or giving of notice to,
or registration or filing with, any governmental authority of the United
States of America having jurisdiction over the banking or trust powers of
the Collateral Agent is required in connection with the execution and
delivery by the Collateral Agent of the Security Agreement or the
performance by the Collateral Agent of its obligations under the Security
Agreement.
(v) The Company shall have received a certificate of the
Issuer, dated the Closing Date, stating that (i) its representations and
warranties made herein and in the Security Agreement are true and correct
as of the Closing Date, and (ii) the Issuer has complied with all
agreements and satisfied all conditions to be satisfied on its part
pursuant to this Agreement at or prior to the Closing Date.
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(vi) The Company shall have received written evidence
that the facility shall have been rated at least "Baa3" and "BBB-",
respectively, by Moody's and S&P, without giving effect to the Surety Bond
and on the Closing Date such rating shall be in full force and effect.
(vii) All conditions precedent to the authentication and
delivery of the Note under this Agreement shall have been satisfied.
(viii) Each party shall have performed and complied with
all agreements and conditions contained herein and in the Security
Agreement and all other documents delivered in connection herewith or
therewith which are required to be performed or complied with by such
party before or at the Closing.
(ix) This Agreement, the Purchase Agreement and the
Security Agreement shall have been duly authorized, executed and delivered
by the respective parties thereto, shall be in full force and effect on
the Closing Date and shall be in form and substance satisfactory to the
Company.
(x) The Company shall have received the following, in
each case in form and substance satisfactory to it:
(1) copy of the resolutions of the Board of
Directors of the Issuer, certified by the Secretary or an Assistant
Secretary as of the Closing Date, duly authorizing the execution, delivery
and performance by the Issuer of the documents executed by or on behalf of
the Issuer in connection with the transactions contemplated by this
Agreement and the Security Agreement; and attesting to the names and true
signatures of the person or persons executing and delivering each such
document;
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(2) a copy of the resolutions of the Board of
Directors of the Seller, certified by the Secretary or an Assistant
Secretary of the Seller as of the Closing Date, duly authorizing the
execution, delivery and performance by the Seller of the Purchase
Agreement and any other documents executed by or on behalf of the Seller
in connection with the transactions contemplated hereby; and an incumbency
certificate of the Seller as to the person or persons executing and
delivering each such document;
(3) a certificate of the Collateral Agent
regarding its authority and the incumbency of its officers; and
(4) such other documents and evidence with respect
to the Issuer, the Seller, the Servicer and the Collateral Agent as the
Company may reasonably request in order to establish the corporate
existence and good standing of each thereof, the proper taking of all
appropriate corporate proceedings in connection with the transactions
contemplated by this Agreement, the Security Agreement, the Servicing
Agreement and the Purchase Agreement and the compliance with the
conditions set forth herein and therein.
(xi) No fact or condition shall exist under applicable
law or applicable regulations thereunder or interpretations thereof by any
regulatory authority which in the Company's reasonable opinion would make
it unlawful to issue the Note or for the Issuer or any of the other
parties thereto to perform their respective obligations under this
Agreement, the Security Agreement and the Purchase Agreement.
(xii) On or prior to the Closing Date, the Seller and
the Issuer shall have filed any financing statements or amendments
thereto, wherever necessary or advisable, in order to perfect the transfer
and assignment of the Receivables to the Issuer and the grant
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of the security interest therein to the Collateral Agent and shall have
delivered filestamped copies of such financing statements or other
evidence of the filing thereof to the Company.
(xiii) All taxes and fees due in connection with the
filing of the financing statements referred to in clause (xii) of this
Section 2.1(g) shall have been paid in full or duly provided for.
(xiv) The Surety Bond Provider shall have issued the
Surety Bond, in form and substance satisfactory to the Company, dated as
of the Closing Date.
(xv) No action or proceeding shall have been instituted
nor shall any governmental action be threatened before any court or
governmental agency nor shall any order, judgment or decree have been
issued or proposed to be issued by any court or governmental agency to set
aside, restrain, enjoin or prevent the performance of this Agreement or
any of the other agreements or the transactions contemplated hereby.
(xvi) The Company shall have been furnished with such
other documents and opinions (including executed copies, addressed to it
or otherwise expressly allowing it to rely thereon of such documents or
opinions delivered to any other person in connection with the Closing (as
hereinafter defined)) as it may reasonably require, and all documents and
opinions as well as actions and proceedings taken by the Issuer in
connection with the issuance of the Note shall be satisfactory in form and
substance to the Company and its counsel.
(xvii) An opinion of Kutak Rock, counsel to the Surety
Bond Provider, pertaining to the Surety Bond Provider and the
enforceability of the Surety Bond and in form and substance satisfactory
to the Company, shall have been delivered to the Company.
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(xviii) The Company shall have received, in substance
reasonably satisfactory to the Company, the Fee Letter dated as of the
Closing Date.
(xix) The Reserve Account shall have been established at
NationsBank, N.A., and the required deposit by the Issuer into the Reserve
Account shall have been made.
SECTION 2.2 THE SURETY BOND; DEMANDS UNDER THE SURETY BOND. The
Issuer has obtained the Surety Bond for the benefit of the Company. The Issuer
acknowledges that the Administrative Agent is entitled, in accordance with the
terms thereof, to demand funds thereunder for the benefit of the Company. The
Administrative Agent shall have no liability to the Issuer, and the Issuer shall
indemnify and hold the Administrative Agent harmless, in connection with any
demands made by the Administrative Agent under the Surety Bond except to the
extent that the Administrative Agent shall have acted with gross negligence in
making any such demand. Such indemnified amounts shall be paid to the extent and
in the priority set forth in the Security Agreement.
SECTION 2.3. FEES. The Issuer shall pay to the Company, on each
Remittance Date, the Program Fee and the Unused Program Fee. Such fees are
non-refund- able.
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
OF THE ISSUER
SECTION 3.1. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE
ISSUER. The Issuer represents and warrants to and covenants with the Company as
of the Closing Date and, except as otherwise provided herein, as of each date of
any Subsequent Funding that:
(a) ORGANIZATION AND GOOD STANDING. The Issuer is a
corporation duly organized and validly existing in good standing under the laws
of the jurisdiction of its incorporation, and has full corporate power,
authority and legal right to own its properties and conduct its business as such
properties are presently owned and such business is presently conducted, and to
execute, deliver and perform its obligations under this Agreement and to
execute, deliver and perform, the Note.
(b) DUE QUALIFICATION. The Issuer is duly qualified to do
business and is in good standing as a foreign corporation in any state required
in order to conduct its business, and has obtained all necessary licenses and
approvals, in each jurisdiction in which failure to so qualify or to obtain such
licenses and approvals would have a material adverse effect on the conduct of
the Issuer's business.
(c) DUE AUTHORIZATION. The Issuer has the power and authority
to execute and deliver this Agreement, the Security Agreement and the Note. The
execution and delivery of this Agreement, the Security Agreement and the Note by
the Issuer and the consummation of the transactions provided for in this
Agreement and the Security Agreement have been duly authorized by the Issuer by
all necessary corporate action on the part of the Issuer.
(d) NO CONFLICT. The execution and de- livery of this
Agreement, the Security Agreement and the Note, the performance of the
transactions contemplated by this Agreement and the Security Agreement and the
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fulfillment of the terms hereof will not conflict with, result in any breach of
any of the terms and provisions of, or constitute (with or without notice or
lapse of time or both) a default under, any Requirement of Law applicable to the
Issuer or any indenture, contract, agreement, mortgage, deed of trust, or other
material instrument to which the Issuer is a party or by which it or any of its
properties are bound.
(e) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the best knowledge of the Issuer, threatened, before any court,
regulatory body, administrative agency, arbitrator or other tribunal or
governmental instrumentality (i) asserting the invalidity of this Agreement, the
Security Agreement or the Note, (ii) seeking to prevent the issuance of the Note
or the consummation of any of the transactions contemplated by this Agreement,
the Security Agreement or the Note, (iii) seeking any determination or ruling
that, individually or in the aggregate, in the reasonable judgment of the
Issuer, would materially and adversely affect the performance by the Issuer of
its obligations under this Agreement, the Security Agreement or the Note, or
(iv) seeking any determination or ruling that would materially and adversely
affect the validity or enforceability of this Agreement, the Security Agreement
or the Note.
(f) ALL CONSENTS REQUIRED. All approvals, authorizations,
consents, orders or other actions of any Person or of any governmental body or
official required to be obtained on or prior to the date hereof in connection
with the execution and delivery of this Agreement, the Security Agreement and
the Note, the performance by the Issuer of the transactions contemplated by this
Agreement, the Security Agreement and the fulfillment by the Issuer of the terms
hereof, have been obtained.
(g) SOLVENCY. The Issuer is not insolvent and will not be
rendered insolvent immediately following the consummation on the Closing Date of
the transactions contemplated by this Agreement and the Security Agreement,
including the pledge by the Issuer to the Collateral Agent of the Collateral
specified in Section 2.1 of the Security Agreement.
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(h) NO TERMINATION EVENT. After giving effect to the payment
by the Company of the Original Investment and the issuance of the Note and the
acquisition of any Additional Investment pursuant to Section 2.2 of the Security
Agreement, no Potential Termination Event, Potential Wind-Down Event, Potential
Amortization Event, Termination Event, Wind-Down Event or Amortization Event
exists.
(i) INFORMATION FURNISHED TO THE COMPANY. All information
furnished by or on behalf of the Issuer to the Company will be true and complete
in all material respects.
(j) TAXES. The Issuer has filed all tax returns required to be
filed and has paid or made adequate provision for the payment of all its taxes,
assessments and other governmental charges.
(k) COMPLIANCE. The Issuer has complied in all material
respects with all Requirements of Law in respect of the conduct of its business
and ownership of its property.
(l) INVESTMENT COMPANY. The Issuer is not an "investment
company" within the meaning of the Investment Company Act of 1940, as amended,
or is exempt from the provisions of such act.
(m) ERISA. The Issuer is in compliance with ERISA in all
material respects. No Plan Event has occurred or is expected to occur that might
result, directly or indirectly, in any lien being imposed on the property of the
Issuer.
(n) HEDGING. The Issuer will not enter into Interest Rate Caps
or other agreements or mechanisms for hedging except as set forth in Section
3.2(n) of the Security Agreement.
The representations and warranties set forth in this Section 3.1
shall survive the pledge and grant of a lien in the respective Receivables to
the Collateral Agent as agent for the Company and the Surety Bond Provider. Upon
discovery by the Issuer or the Company of a breach of any of the foregoing
representations and
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warranties, the party discovering such breach shall give prompt written notice
to the others.
ARTICLE IV
INDEMNIFICATION
SECTION 4.1. INDEMNITY. Without limiting any other rights which the
Company may have hereunder or under applicable law, the Issuer agrees to
indemnify the Company, the Administrative Agent, the Reserve Account Agent, the
Collateral Agent, the Liquidity Provider and the Credit Support Provider and any
permitted assigns and their respective agents, officers, directors and employees
(collectively, "INDEMNIFIED PARTIES") from and against any and all damages,
losses, claims, liabilities, costs and expenses, including reasonable attorneys'
fees (which such attorneys may be employees of the Company, the Administrative
Agent, the Reserve Account Agent, the Collateral Agent, the Liquidity Provider
and the Credit Support Provider) and disbursements (all of the foregoing being
collectively referred to as "INDEMNIFIED AMOUNTS") awarded against or incurred
by any of them arising out of or as a result of this Agreement or the ownership,
either directly or indirectly, by the Company, the Administrative Agent, the
Liquidity Provider or the Credit Support Provider of the Note excluding,
however, (i) Indemnified Amounts to the extent resulting from gross negligence
or willful misconduct on the part of an Indemnified Party or (ii) recourse
(except as otherwise specifically provided in this Agreement) for uncollectible
Receivables. Such Indemnified Amounts shall be paid in accordance with Section
5.1 of the Security Agreement. Without limiting the generality of the foregoing,
the Issuer shall indemnify each Indemnified Party for Indemnified Amounts
relating to or resulting from:
(a) reliance on any representation or warranty made by the
Issuer or the Servicer (or any officers of the Issuer or the Servicer) under or
in connection with this Agreement, the Servicing Agreement, any Servicer's
Certificate or any other information or report delivered by the Issuer or the
Servicer pursuant hereto or thereto, which shall have been false or incorrect in
any material respect when made or deemed made;
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(b) the failure by the Issuer or the Servicer to comply with
any applicable law, rule or regulation with respect to the Collateral, or the
non-conformity of the Collateral with any such applicable law, rule or
regulation;
(c) the failure to vest and maintain vested in the Collateral
Agent a first priority perfected security interest in the Collateral, free and
clear of any Lien;
(d) the failure to file, or any delay in filing, financing
statements, continuation statements, or other similar instruments or documents
under the UCC of any applicable jurisdiction or other applicable laws with
respect to all or any part of the Collateral in order to maintain the first
priority perfected security interest of the Collateral Agent in such Collateral;
(e) any dispute, claim, offset or defense (other than
discharge in bankruptcy of the Obligor) of the Obligor to the payment of any
Receivable (including, without limitation, a defense based on such Receivable
not being the legal, valid and binding obligation of such Obligor enforceable
against it in accordance with its terms), or any other claim resulting from the
sale of a Financed Vehicle or services related to such Receivable or the
furnishing or failure to furnish such Financed Vehicle or services;
(f) any failure of the Issuer to perform its duties or
obligations in accordance with the provisions of Articles IV and V of the
Security Agreement; or
(g) any products liability claim or personal injury or
property damage suit or other similar or related claim or action of whatever
sort arising out of or in connection with the related Financed Vehicle or
related merchandise or services which are the subject of any Receivable;
PROVIDED, HOWEVER, that if the Company enters into agreements for the purchase
of interests in receivables from one or more Other Transferors, the Company
shall allocate such Indemnified Amounts which are in connection with the
Liquidity Agreement or the Credit Support Agreement to the Issuer and each Other
Transferor; and
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PROVIDED, FURTHER, that if such Indemnified Amounts are attributable to the
Issuer and not attributable to any Other Transferor, the Issuer shall be solely
liable for such Indemnified Amounts or if such Indemnified Amounts are
attributable to Other Transferors and not attributable to the Issuer, such Other
Transferors shall be solely liable for such Indemnified Amounts.
SECTION 4.2. INDEMNITY FOR TAXES, RESERVES AND EXPENSES. (a) If
after the date hereof, the adoption of any Law or bank regulatory guideline or
any amendment or change in the interpretation of any existing or future Law or
bank regulatory guideline by any Official Body charged with the administration,
interpretation or application thereof, or the compliance with any directive of
any Official Body (in the case of any bank regulatory guideline, whether or not
having the force of Law):
(1) shall subject any Indemnified Party to any tax, duty or
other charge with respect to this Agreement, the Note, the Net Investment, the
Collateral or payments of amounts due hereunder, or shall change the basis of
taxation of payments to any Indemnified Party of amounts payable in respect of
this Agreement, the Note, the Net Investment, the Collateral or payments of
amounts due hereunder or its obligation to advance funds under the Liquidity
Agreement, the Credit Support Agreement or otherwise in respect of this
Agreement, the Note, the Net Investment or the Collateral (except for changes in
the rate of general corporate, franchise, net income or other income tax imposed
on such Indemnified Party by the jurisdiction in which such Indemnified Party's
principal executive office is located); or
(2) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without limitation, any such
requirement imposed by the Board of Governors of the Federal Reserve System)
against assets of, deposits with or for the account of, or credit extended by,
any Indemnified Party or shall impose on any Indemnified Party or on the United
States market for certificates of deposit or the London interbank market any
other condition affecting this Agreement, the Note, the Net Investment, the
Collateral or payments of amounts due hereunder or its obligation to advance
funds under the Liquidity Agree-
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ment, the Credit Support Agreement or otherwise in re- spect of this Agreement,
the Note, the Net Investment or the Collateral;
(3) imposes upon any Indemnified Party any other expense
(including, without limitation, reasonable attorneys' fees and expenses, and
expenses of litigation or preparation therefor in contesting any of the
foregoing) with respect to this Agreement, the Note, the Net Investment, the
Collateral or payments of amounts due hereunder or its obligation to advance
funds under the Liquidity Agreement or the Credit Support Agreement or otherwise
in respect of this Agreement, the Note, the Net Investment or the Collateral;
and the result of any of the foregoing is to increase the cost to such
Indemnified Party with respect to this Agreement, the Note, the Net Investment,
the Collateral, the obligations hereunder, the funding of any purchases
hereunder, the Liquidity Agreement or the Credit Support Agreement, by an amount
deemed by such Indemnified Party to be material, then within 10 days after
demand by the Company, the Issuer shall pay to the Company such additional
amount or amounts as will compensate such Indemnified Party for such increased
cost PROVIDED that no such amount shall be payable with respect to any period
commencing more than 90 days prior to the date the Company first notifies the
Issuer of its intention to demand compensation therefor under this Section
4.2(a).
(b) If any Indemnified Party shall have determined that after
the date hereof, the adoption of any applicable Law or bank regulatory guideline
regarding capital adequacy, or any change therein, or any change in the
interpretation thereof by any Official Body, or any directive regarding capital
adequacy (in the case of any bank regulatory guideline, whether or not having
the force of law) of any such Official Body, has or would have the effect of
reducing the rate of return on capital of such Indemnified Party (or its parent)
as a consequence of such Indemnified Party's obligations hereunder or with
respect hereto to a level below that which such Indemnified Party (or its
parent) could have achieved but for such adoption, change, request or directive
(taking into consideration its policies with respect to capital adequacy) by an
amount deemed by such Indemnified Party to be material, then
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from time to time, within 10 days after demand by the Company, the Issuer shall
pay to the Company such additional amount or amounts as will compensate such
Indemnified Party (or its parent) for such reduction; PROVIDED that no such
amount shall be payable with respect to any period commencing less than 30 days
after the date the Company first notifies the Issuer of its intention to demand
compensation under this Section 4.2(b).
(c) The Company will promptly notify the Issuer of any event
of which it has knowledge, occurring after the date hereof, which will entitle
an Indemnified Party to compensation pursuant to this Section 4.2. A notice by
the Company claiming compensation under this Section and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive in
the absence of manifest error. In determining such amount, the Company may use
any reasonable averaging and attributing methods.
(d) Anything in this Section 4.2 to the contrary
notwithstanding, if the Company enters into agreements for the acquisition of
interests in receivables from one or more Other Transferors, the Company shall
allocate the liability for any amounts under this Section 4.2 ("SECTION 4.2
COSTS") ratably to the Issuer and each Other Transferor; and PROVIDED, FURTHER,
that if such Section 4.2 Costs are attributable to the Issuer and not
attributable to any Other Transferor, the Issuer shall be solely liable for such
Section 4.2 Costs or if such Section 4.2 Costs are attributable to Other
Transferors and not attributable to the Issuer, such Other Transferors shall be
solely liable for such Section 4.2 Costs.
SECTION 4.3. OTHER COSTS, EXPENSES AND RELATED MATTERS. The
Issuer agrees, upon receipt of a written invoice, to pay or cause to be paid, in
accordance with 5.1(a)(x) of the Security Agreement and to save the Company and
the Administrative Agent harmless against liability for the payment of, all
reasonable out-of-pocket expenses (including, without limitation, attorneys',
accountant's and other third parties' fees and expenses, any filing fees and
expenses incurred by officers or employees of the Company) incurred by or on
behalf of the Company and the Administrative Agent (i) in connection with the
negotiation, execution, delivery
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and preparation of this Agreement, the Note and the Security Agreement and any
documents or instruments delivered pursuant hereto or thereto and the
transactions contemplated hereby and thereby and (ii) from time to time (a)
relating to any amendments, waivers or consents under this Agreement, the Note
and the Security Agreement, (b) arising in connection with the Company's or its
agent's enforcement or preservation of rights (including, without limitation,
the perfection and protection of the Collateral Agent's security interest in the
Collateral), or (c) arising in connection with any audit, dispute, disagreement,
litigation or preparation for litigation involving this Agreement (all of such
amounts, collectively, "TRANSACTION COSTS").
ARTICLE V
MISCELLANEOUS
SECTION 5.1. NOTICES, ETC. Except where telephonic instructions or
notices are authorized herein to be given, all notices, demands, instructions
and other communications required or permitted to be given to or made upon any
party hereto shall be in writing and shall be sent by facsimile transmission
with a confirmation of the receipt thereof and shall be deemed to be given for
purposes of this Agreement on the day that the receipt of such facsimile
transmission is confirmed in accordance with the provisions of this Section 5.1.
Unless otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this Section, notices, demands, instructions and other
communications in writing shall be given to or made upon the respective parties
hereto at their respective addresses indicated below, and, in the case of
telephonic instructions or notices, by calling the telephone number or numbers
indicated for such party below:
If to the Company:
Enterprise Funding Corporation
c/o Merrill Lynch Money Markets Inc.
World Financial Center - South Tower
225 Liberty Street
New York, New York 10281
Attention: Gary Carlin
Telephone: (212) 236-7200
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Telecopy: (212) 236-7584
(with a copy to the Administrative Agent)
If to the Issuer:
First Investors Auto Receivables
Corporation
675 Bering Drive
Suite 710
Houston, Texas 77057
Attention: Tommy A. Moore, Jr.
Telephone: (713) 977-2600
Telecopy: (713) 977-0657
If to the Collateral Agent:
Texas Commerce Bank National Association
600 Travis, 8th Floor
Houston, Texas 77022
Attention: Global Trust Services -
First Investors Auto
Receivables Corporation
Telephone: (713) 216-4181
Telecopy: (713) 216-4880
If to the Administrative Agent:
NationsBank N.A.
NationsBank Corporate
Center - 10th Floor
100 North Tryon Street
NC1-007-10-01
Charlotte, North Carolina 28255-0001
Attention: Michelle M. Heath
Investment Banking
Telephone: (704) 386-7922
Telecopy: (704) 388-9169
SECTION 5.2. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon the Issuer and the Company and their respective successors and assigns and
shall inure to the benefit of the Issuer, and the Company and their respective
successors and assigns including the Liquidity Provider; PROVIDED that the
Issuer shall not assign any of its rights or obligations hereunder without the
prior written consent of the Company, the Collateral Agent and the Surety Bond
Provider. The Issuer hereby acknowledges that the Company has assigned
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and granted a security interest in all of its rights hereunder and under the
Note to the EFC Collateral Agent. In addition, the Issuer hereby acknowledges
that the Company may at any time and from time to time assign all or a portion
of its rights hereunder to the Liquidity Provider pursuant to the Liquidity
Agreement. Except as expressly permitted hereunder or in the agreements
establishing the Company's commercial paper program, the Company shall not
assign any of its rights or obligations hereunder without the prior written
consent of the Issuer. The parties hereto agree that the Surety Bond Provider is
an intended third-party beneficiary of this Agreement.
SECTION 5.3. SEVERABILITY CLAUSE. Any provisions of this Agreement
which are prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 5.4. AMENDMENTS; GOVERNING LAW. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER (I) MAY NOT BE CHANGED ORALLY
BUT ONLY BY AN INSTRUMENT IN WRITING SIGNED BY THE PARTIES HERETO PROVIDED THAT
THE WRITTEN CONSENT OF THE SURETY BOND PROVIDER SHALL BE REQUIRED PRIOR TO ANY
AMENDMENT OR MODIFICATION OF SECTIONS 4.2, 4.3, 5.4 OR 5.8 OF THIS AGREEMENT AND
PRIOR TO ANY AMENDMENT OR MODIFICATION WHICH SHALL MATERIALLY AND ADVERSELY
AFFECT THE RIGHTS OR OBLIGATIONS OF THE SURETY BOND PROVIDER AND (II) SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 5.5. NO BANKRUPTCY PETITION AGAINST THE COMPANY. The Issuer
covenants and agrees that, prior to the date which is one year and one day after
the payment in full of all Commercial Paper issued by the Company, it will not
institute against, or join any other Person in instituting against, the Company
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any federal or state bankruptcy or
similar law.
SECTION 5.6. NO PROCEEDINGS. The Company hereby agrees that it will
not directly or indirectly
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institute, or cause to be instituted, against the Issuer any bankruptcy or
insolvency proceeding so long as there shall not have elapsed one year plus one
day after payment in full of the Note.
SECTION 5.7. SETOFF. The Issuer hereby irrevocably and
unconditionally waives all right of setoff that it may have under contract
(including this Agreement), applicable law or otherwise with respect to any
funds or monies of the Company at any time held by or in the possession of the
Issuer.
SECTION 5.8. NO RECOURSE. The Issuer's obligations under the Note
are payable solely from the Collateral and no general recourse shall be had on
the Note against the Issuer; provided that nothing in this Agreement shall
affect the ability of the Company, or the Administrative Agent, to demand funds
under the Surety Bond in accordance with the terms thereof. Except as otherwise
expressly provided in this Agreement, it is understood and agreed that the
Issuer shall not be liable for the payment of Commercial Paper or for any losses
suffered by the Company in respect of the Note. The foregoing sentence shall not
relieve the Issuer from any liability hereunder or under the Security Agreement
with respect to its representations, warranties, covenants and other payment and
performance obligations herein or therein described.
SECTION 5.9. FURTHER ASSURANCES. The Issuer agrees to do such
further acts and things and to execute and deliver to the Company or the
Collateral Agent such additional assignments, agreements, powers and instruments
as are required by the Company or the Collateral Agent to carry into effect the
purposes of this Agreement or the Security Agreement or to better assure and
confirm unto the Company or the Collateral Agent its rights, powers and remedies
hereunder or thereunder.
SECTION 5.10. NO RECOURSE AGAINST MERRILL. The obligations of the
Company under this Agreement are solely the corporate obligations of the
Company. No recourse shall be had for the payment of any amount owing against
Merrill Lynch Money Markets, Inc. ("Merrill") or against any stockholder,
employee, officer, director or incorporator of the Company. For purposes of this
Section 5.10, the term "Merrill" shall mean and include Merrill and all
affiliates thereof and any employee, officer, director, incorporator, share-
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holder or beneficial owner of any of them; PROVIDED HOWEVER, that the Company
shall not be considered to be an affiliate of Merrill for purposes of this
Section 5.10.
SECTION 5.11 COUNTERPARTS. This Agreement may be executed in any
number of copies, and by the different parties hereto on the same or separate
counterparts, each of which shall be deemed to be an original instrument.
SECTION 5.12 HEADINGS. Section headings used in this Agreement are
for convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
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IN WITNESS WHEREOF, the Issuer and the Company have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
FIRST INVESTORS AUTO RECEIVABLES
CORPORATION,
as Issuer
By: /s/ TOMMY MOORE JR.
Name: Tommy Moore Jr.
Title:
ENTERPRISE FUNDING CORPORATION,
as Company
By: /s/ GERARD M. HAVATT
Name: Gerard M. Havatt
Title: Vice President
33
EXHIBIT 10.31
PURCHASE AGREEMENT
This Purchase Agreement is made as of the 22nd day of October, 1996, by
and between First Investors Financial Services, Inc., a Texas corporation (the
"Seller"), having its principal executive office at 675 Bering Drive, Suite 710,
Houston, Texas 77057, and First Investors Auto Receivables Corporation, a
Delaware corporation ("FIARC"), having its principal executive office at 675
Bering Drive, Suite 710, Houston, Texas 77057.
WHEREAS, in the regular course of its business, the Seller purchases motor
vehicle installment sales contracts secured by new and used automobiles and
light duty trucks from motor vehicle dealers and others; and
WHEREAS, the Seller and FIARC desire to set forth their agreement pursuant
to which certain of such installment sales contracts are to be sold and
transferred by the Seller to FIARC from time to time;
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):
"Agreement" shall mean this Purchase Agreement as such agreement may be
amended or modified provided, however, that any such amendments and
modifications shall have been consented to by MBIA.
"Amount Financed" shall mean, 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" shall mean, with respect to a
Receivable, the annual rate of finance charges stated in such Receivable.
"Assignment" shall mean the document of assignment substantially in the
form attached to this Agreement as Exhibit "A".
"Business Day" shall have the meaning ascribed to it in the Security
Agreement.
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"Collateral Agent" shall have the meaning ascribed to it in the Security
Agreement.
"Company" shall mean Enterprise Funding Corporation.
"Credit Insurance" shall have the meaning ascribed to it in the Security
Agreement.
"Cut-Off Date" shall have the meaning ascribed to it in the Security
Agreement.
"Effective Time" shall mean, with respect to the sale of any Receivable
pursuant to this Agreement, the time at which FIARC pays to or for the account
of Seller, the Purchase Price of such Receivable.
"Eligible Receivable" shall have the meaning ascribed to it in the
Security Agreement.
"Financed Vehicle" shall have the meaning ascribed to it in the Security
Agreement.
"FIARC" shall mean First Investors Auto Receivables Corporation, a
Delaware corporation.
"MBIA" shall mean MBIA Insurance Corporation, as Surety Bond Provider.
"Lien" shall have the meaning ascribed to it in the Security Agreement.
"Obligor" shall have the meaning ascribed to it in the Security Agreement.
"Originator" shall have the meaning ascribed to it in the Security
Agreement.
"Originator Agreement" shall have the meaning ascribed to it in the
Security Agreement.
"Person" shall have the meaning ascribed to it in the Security Agreement.
"Precomputed Receivable" means any Receivable under which the portion of a
payment allocable to earned interest and the portion allocable to the Amount
Financed is determined according to the sum of periodic balances or the sum of
monthly balances or any equivalent method of calculating monthly actuarial
receivables.
"Principal Balance" shall have the meaning ascribed to it in the Security
Agreement.
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"Purchase Amount" means the sum of (i) the outstanding Principal Balance
of the related Receivable and (ii) accrued and unpaid interest to the end of the
month of purchase at the APR of the related Receivable. The Purchase Amount
shall include any out-of-pocket expenses of the Servicer which are otherwise
reimbursable to the Servicer by FIARC under the Servicing Agreement.
"Purchase Price" shall mean, with respect to any Receivable sold by Seller
to FIARC pursuant to this Agreement, the outstanding Principal Balance of such
Receivable, computed in accordance with the Simple Interest Method, as of the
applicable Effective Time.
"Receivable" shall mean any retail installment sales contract listed on
the Receivables Schedule attached as Exhibit B to the Security Agreement and any
indebtedness owed thereunder (including any Additional Amounts), whether
constituting an account, chattel paper, instrument, mortgage, deed of trust or
general intangible, arising out of or in connection with the sale of new or used
cars, or new and used light trucks including the rendering of services by the
Originator or any other party in connection therewith, under an Extended Service
Agreement or otherwise, and including the right of payment of any finance
charges and other obligations of the Obligor with respect thereto.
Notwithstanding the foregoing, once the Collateral Agent has released its
security interest in a Receivable pursuant to Section 2.6 of the Security
Agreement, it shall no longer constitute a Receivable hereunder.
"Reserve Account Agent" shall have the meaning ascribed thereto in the
Security Agreement.
"Secured Parties" shall have the meaning ascribed thereto in the Security
Agreement.
"Security Agreement" shall mean that certain Security Agreement dated as
of October 22, 1996 among FIARC, the Company, the Collateral Agent, the Reserve
Account Agent, the Seller and MBIA, as such agreement may be amended or
supplemented in accordance with the terms thereof.
"Seller" shall mean First Investors Financial Services, Inc., a Texas
corporation.
"Servicer" shall mean General Electric Capital Corporation.
"Servicing Agreement" shall mean the Servicing Agreement, dated as of
October 22, 1996, between the Servicer, as servicer and FIARC, as such agreement
may be amended, modified and supplemented from time to time (but only with the
consent of MBIA).
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"UCC" shall have the meaning ascribed to it in the Security Agreement.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
From time to time until the termination of this Agreement, the Seller
shall sell and transfer Receivables to FIARC, and FIARC shall purchase and pay
for such Receivables, as follows:
(a) SELECTION OF RECEIVABLES. The Seller shall select Receivables for sale
to FIARC hereunder in such amounts and at such times as Seller shall determine
in its sole discretion however, the Seller shall not use any selection procedure
that would result in a material adverse effect on MBIA. The Seller's selection
of any Receivable for sale to FIARC shall be conclusively evidenced by the
tender of such Receivable pursuant to clause (b) immediately following.
(b) TENDER OF RECEIVABLES. The Seller shall tender a Receivable for sale
to FIARC by delivering such Receivable to or as directed by FIARC, together with
all documentation pertaining to such Receivable, which documentation shall
include a validly executed Assignment with respect to such Receivable.
(c) TRANSFER OF RECEIVABLES. As of the Effective Time with respect to any
Receivable, the Seller shall sell, transfer, assign and otherwise convey to
FIARC, without recourse, a 100% interest in (i) all right, title and interest of
the Seller in and to such Receivable, and all monies paid thereon, and due
thereon, at or after the Effective Time, as applicable, whether such amounts are
considered accounts, general intangibles or other property; (ii) the interest of
the Seller in all security interests and liens in or on the Financed Vehicle and
any accessions thereto granted by an Obligor pursuant to such Receivable; (iii)
the interest of the Seller in any proceeds from claims on Credit Insurance, or
other insurance policies covering such Financed Vehicle or Obligor; (iv) the
interest of the Seller in all rebates of premiums and other amounts relating to
insurance policies and other items financed under such Receivables as of the
Effective Time; and (v) the proceeds of any and all of the foregoing.
(d) PAYMENT FOR RECEIVABLES. As of the Effective Time with respect to any
Receivable, FIARC shall purchase and pay for such Receivable by causing the
Purchase Price thereof to be paid to the Seller in cash; provided, however that
at the discretion of the Seller, any number of specified Receivables may be
assigned and transferred to FIARC from time to time as a capital contribu-
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tion by Seller to FIARC in the amount of the aggregate Purchase Price otherwise
applicable thereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 REPRESENTATIONS AND WARRANTIES OF FIARC.
FIARC hereby represents and warrants to the Seller as of the date hereof:
(a) ORGANIZATION, ETC. FIARC has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, and has full corporate power and authority to execute and deliver this
Agreement and to perform the terms and provisions hereof.
(b) DUE AUTHORIZATION AND NO VIOLATION. This Agreement has been duly
authorized, executed and delivered by FIARC, and is the valid, binding and
enforceable obligation of FIARC except as the same may be limited by insolvency,
bankruptcy, reorganization or other laws relating to or affecting the
enforcement of creditors' rights or by general equity principles. The
consummation of the transactions contemplated by this Agreement, and the
fulfillment of the terms thereof, will not conflict with or result in a breach
of any of the terms or provisions of, or constitute a default under (in each
case material to FIARC), or (except as contemplated by the Security Agreement)
result in the creation or imposition of any Lien, charge or encumbrance (in each
case material to FIARC) upon any of the property or assets of FIARC pursuant to
the terms of any indenture, mortgage, deed of trust, loan agreement, guarantee,
lease financing agreement or similar agreement or instrument under which FIARC
is a debtor or guarantor, nor will such action result in any violation of the
provisions of the Certificate of Incorporation or the By-laws of FIARC.
(c) NO LITIGATION. No legal or governmental proceedings are pending to
which FIARC is a party or of which any property of FIARC is the subject, and no
such proceedings are threatened or contemplated by governmental authorities or
threatened by others other than such proceedings which will not have a material
adverse effect upon the general affairs, financial position, net worth or
results of operations (on an annual basis) of FIARC and will not materially and
adversely affect the performance by FIARC of its obligations under, or the
validity and enforceability of, this Agreement.
3.2 REPRESENTATIONS AND WARRANTIES OF THE SELLER.
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(a) The Seller hereby represents and warrants to FIARC as of the date
hereof:
(i) ORGANIZATION, ETC. The Seller has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
State of Texas, and is duly qualified to transact business and is in good
standing in each jurisdiction in the United States of America in which the
conduct of its business or the ownership of its property requires such
qualification
(ii) POWER AND AUTHORITY. The Seller has full power and authority to
sell and assign the property to be sold and assigned to FIARC hereunder
and has duly authorized such sale and assignment to FIARC by all necessary
corporate action. This Agreement has been duly authorized, executed and
delivered by the Seller and shall constitute the legal, valid and binding
obligation of the Seller except as the same may be limited by insolvency,
bankruptcy, reorganization or other laws relating to or affecting the
enforcement of creditors' rights or by general equity principles.
(iii) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement, and the fulfillment of the terms thereof,
will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under (in each case material to the
Seller and its subsidiaries considered as a whole), or result in the
creation or imposition of any Adverse Claim, charge or encumbrance (in
each case material to the Seller and its subsidiaries considered as a
whole) upon any of the property or assets of the Seller pursuant to the
terms of any indenture, mortgage, deed of trust, loan agreement,
guarantee, lease financing agreement or similar agreement or instrument
under which the Seller is a debtor or guarantor, nor will such action
result in any violation of the provisions of the Articles of Incorporation
or the By-laws of the Seller.
(iv) NO PROCEEDINGS. No legal or governmental proceedings are
pending to which the Seller is a party or of which any property of the
Seller is the subject, and no such proceedings are threatened or
contemplated by governmental authorities or threatened by others, other
than such proceedings which will not have a material adverse effect upon
the validity or collectability of the Receivables, or upon the general
affairs, financial position, net worth or results of operations (on an
annual basis) of the Seller and its subsidiaries considered as a whole and
will not materially and adversely affect the performance by the Seller of
its obligations under, or the validity and enforceability of, this
Agreement.
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(v) NO ADVERSE EVENTS. No event has occurred that would have a
material adverse effect on the Receivables or the ability of the Seller to
collect the Receivables or to perform its obligations hereunder.
(b) The Seller makes the following representations and warranties as to
the Receivables on which FIARC relies in purchasing the Receivables. Such
representations and warranties speak as of the execution and delivery of this
Agreement, and as of the Effective Time with respect to each Receivable, but
shall survive the sale, transfer, and assignment of the Receivables to FIARC:
(i) Immediately prior to the Effective Time the Seller had a valid
and enforceable first priority security interest in the related Financed
Vehicle, and such security interest had been duly perfected and was prior
to all other present and future liens and security interests (except
future tax liens and liens that, by statute, may be granted priority over
previously perfected security interests) that now exist or may hereafter
arise, and the Seller had the full right to assign such security interest
to the FIARC.
(ii) On and after the Effective Time, there shall exist under such
Receivable a valid, subsisting, and enforceable first priority perfected
security interest in the related Financed Vehicle (other than, as to the
priority of such security interest, any statutory lien arising by
operation of law after the Effective Time which is prior to such interest)
and, following the grant of all of the Seller's right, title and interest
in and to such security interest to FIARC, at such time as enforcement of
such security interest is sought there shall exist in favor of FIARC a
valid, subsisting, and enforceable first priority perfected security
interest (other than, as to the priority of such security interest, any
statutory lien arising by operation of law after the Effective Time which
is prior to such interest) in the related Financed Vehicle.
(iii) If such Receivable was originated in a state in which notation
of a security interest on the title document for the Financed Vehicle
securing such Receivable is required or permitted to perfect such security
interest, the title document for such Financed Vehicle shows, or if a new
or replacement title document is being applied for with respect to such
Financed Vehicle the title document will show, the Seller as the sole
holder of a security interest in such Financed Vehicle. If such Receivable
was originated in a state in which the filing of a financing statement
under the UCC is required to perfect a security interest in motor
vehicles, such filings or recordings have been duly made and show the
Seller as the sole holder of a first
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priority security interest in such Financed Vehicle, and in either case
FIARC has the same rights as the Seller has or would have (if the Seller
were still the owner of a Receivable) against the Obligor and all
creditors of the Obligor claiming an interest in such Financed Vehicles.
(iv) Immediately prior to the Effective Time: (i) such Receivable
had not been sold, assigned, or pledged by the Seller to any Person; (ii)
the Seller had good and marketable title thereto free and clear of any
encumbrance, equity, pledge, charge, claim or security interest; (iii) the
Seller was the sole owner thereof and had full right to sell the
Receivable to FIARC and upon the sale thereof to FIARC, FIARC will have
good and marketable title thereto and will own such Receivables free and
clear of any encumbrances. Such Receivable was acquired by the Seller,
from an Originator with which the Seller does business, pursuant to an
Originator Agreement between the Seller and such Originator. Such
Originator had full right to assign to the Seller such Receivable and the
security interest in the related Financed Vehicle. The Seller has full
right to sell to FIARC such Receivable and the security interest in the
related Financed Vehicle.
(v) As of the Effective Time, there is no lien against the related
Financed Vehicle for delinquent taxes.
(vi) Such Receivable, and the sale of the Financed Vehicle securing
such Receivable, where applicable, complied, at the time it was made, and
now complies, in all material respects with applicable state and federal
laws (and regulations thereunder), including, without limitation, usury,
disclosure and consumer protection laws, equal credit opportunity, fair
credit reporting, truth-in-lending or other similar laws, the Federal
Trade Commission Act, and applicable state laws regulating retail
installment sales contracts in general and motor vehicle retail
installment sales contracts and loans in particular, and the receipt of
interest on, and the ownership of, such Receivable by FIARC will not
violate any such laws and the related Obligor has no right of rescission
or cancellation, claims or defenses, set-offs, or counterclaims of any
kind whatsoever as to or against the contract evidencing a related
Receivable.
(vii) The Receivable constitutes the entire agreement between the
Seller (as assignee of the related Originator) and the related Obligor.
(viii) At the time of origination of such Receivable, the proceeds
of such Receivable were fully disbursed, and there is no requirement for
future advances thereunder, and
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all fees and expenses in connection with the origination of such
Receivable have been paid.
(ix) As of the Effective Time, there is no default, breach,
violation or event of acceleration existing under any such Receivable and
no event which, with the passage of time or with notice or with both,
would constitute a default, breach, violation or event of acceleration
under any such Receivable. The Seller has not waived any such default,
breach, violation or event of acceleration.
(x) In connection with the purchase of such Receivable, the Seller
required the related Originator to furnish evidence that the related
Financed Vehicle was covered by a comprehensive and collision insurance
policy naming the Seller as loss payee and insuring against loss and
damage due to fire, theft, transportation, collision and other risks
generally covered by comprehensive and collision coverage in an amount
equal to the actual cash value of the related Financed Vehicle.
(xi) Such Receivable contains customary and enforceable provisions
such as to render the rights and remedies of the holder thereof adequate
for the realization against the related Financed Vehicle of the benefits
of the security.
(xii) The collection practices used with respect to such Receivable
have been in all material respects legal, proper, prudent and customary in
the automobile installment sales contract or installment loan servicing
business as applied with respect to obligors with credit standings
comparable to that of the Obligor.
(xiii) Neither the Obligor on such Receivable nor any of its
Affiliates is the Obligor on a Receivable or Receivables with an aggregate
principal amount greater than $40,000 as of the Effective Time.
(xiv) The related Obligor does not have any other motor vehicle
retail installment sale contracts owing to the Seller which are 60 or more
days past due or defaulted at the Effective Time.
(xv) No Receivable is due from an Obligor who has defaulted under a
previous Receivable with the Seller.
(xvi) The Originator that sold such Receivable to the Seller has
entered into an Originator Agreement and such Originator Agreement
constitutes the entire agreement between the Seller and the related
Originator with respect to the sale of such Receivable to the Seller, such
Originator Agreement was, at the time of the origination of such Re-
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ceivable, in full force and effect and the legal, valid, binding and
enforceable obligation of such Originator (subject to applicable
bankruptcy and insolvency laws and other similar laws affecting the
enforcement of creditors' rights generally and to principles of equity,
regardless of whether enforcement is sought in a proceeding in equity or
at law); there have been no material defaults by such Originator or by the
Seller under such Originator Agreement; the Seller has fully performed all
of its obligations under such Originator Agreement; the Seller has not
made any statements or representations to such Originator inconsistent
with any term of such Originator Agreement; the purchase price for such
Receivable has been paid in full by the Seller, there is no other payment
due to such Originator from the Seller for the purchase of such
Receivable, such Originator has no right, title or interest in or to any
Receivable; there is no prior course of dealing between such Originator
and the Seller which will affect the terms of such Originator Agreement;
any additional payment that may be owed to such Originator by the Seller
is a corporate obligation of the Seller.
(xvii) The Seller has provided to the Servicer the sole original
counterpart of such Receivable as amended, and the related title document
or the application for title document, previously in the possession of the
Seller.
(xviii) Such Receivable constitutes "chattel paper" for purposes of
Section 9-105(1)(b) and 9-308 of the UCC. The Seller's electronic ledgers
have been marked as provided in Section 2.1 and 2.2 of the Security
Agreement with respect to such Receivable.
(xix) Such Receivable was not originated in, nor is it subject to
the law of, any jurisdiction, the laws of which would make unlawful the
sale, transfer or assignment of such Receivable, under this Agreement,
including any repurchase in accordance with this Agreement.
(xx) Such Receivable is in full force and effect in accordance with
its respective terms and neither the Seller nor the related Obligor has
suspended or reduced any payments or obligations due or to become due
thereunder by reason of a default by the other party to such Receivable;
there are no proceedings pending, or to the best of the Seller's
knowledge, threatened, asserting insolvency of the related Obligor, there
has been no previous default on such Receivable that resulted in
repossession of the related Financed Vehicle; and there are no proceedings
pending, or to the best of the Seller's knowledge, threatened, wherein the
related Obligor or any governmental agency has alleged that such
Receivable is illegal or unenforceable.
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(xxi) Each contract evidencing a Receivable being acquired by FIARC
is substantially similar to one of the Seller's standard form contracts
attached to the Security Agreement as EXHIBIT K except for immaterial
modifications or deviations therefrom in accordance with state law which
will not have a material adverse effect on FIARC or any pledgee from FIARC
and will not reduce the scheduled payments thereunder or other payments
due under the Receivables.
(xxii) The Seller has duly fulfilled all obligations to be fulfilled
on the Seller's part under or in connection with the origination,
acquisition and disposition of such Receivable, including, without
limitation, giving any notices or consents necessary to effect the
acquisition of such Receivables by FIARC, and has done nothing to impair
the rights of the Secured Parties in such Receivable or payments with
respect thereto. The Seller has obtained all necessary licenses, permits
and charters required to be obtained by the Seller, which failure to
obtain would render any Receivable, this Agreement, the Note, the Note
Purchase Agreement, the Security Agreement or the Insurance Agreement
unenforceable and would have a material adverse effect on FIARC or any
pledgees of FIARC.
(xxiii) The Originator that originated such Receivable was selected
by the Seller based on such Originator's financial and operating history.
(xxiv) The contract securing such Receivable arose from a bona fide
sale in the ordinary course of the Originator's business.
(xxv) Such Receivable represents the sale of goods described in the
contract evidencing the Receivable.
(xxvi) Such Receivable is exclusive and contains all the terms and
conditions of the related contract.
(xxvii) To the best of the Seller's knowledge, all signatures,
names, addresses, telephone numbers, figures and other statements of fact
set forth in the contract evidencing the Receivable are genuine, true and
correct.
(xxviii) To the best of the Seller's knowledge, no part of the down
payment, or any installment, has been loaned by the Originator to the
related Obligor.
(xxix) To the best of the Seller's knowledge, all credit information
provided to FIARC is true and correct and reported as received from the
Obligor.
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(xxx) To the best of the Seller's knowledge, the Obligor is in fact
the primary or sole operator of the related Financed Vehicle.
(xxxi) Each Receivable constitutes an Eligible Receiv-
able.
(xxxii) The sale of the Extended Service Agreement to the related
Obligor complied at the time of such sale with all applicable state and
federal laws (and regulations thereunder), including without limitation,
insurance, usury, disclosure and consumer protection laws, equal credit
opportunity, fair credit reporting, truth-in-lending or other similar
laws, the Federal Trade Commission Act, and applicable state laws
regulating extended service agreements and insurance, and the ownership of
such Extended Service Agreement will not violate any such laws.
(xxxiii) To the best of the Seller's knowledge, each Extended
Service Agreement and each credit life insurance policy and each accident
and health policy related to a Financed Vehicle or an Obligor is the
legal, valid and binding obligation of each party thereto, and is
enforceable in accordance with its terms.
(xxxiv) To the best of the Seller's knowledge, any party obligated
to perform services under an Extended Service Agreement relating to a
Financed Vehicle, any credit life insurance policy or any accident and
health policy related to a Financed Vehicle or an Obligor have complied
with all licensing, insurance or other laws applicable to them in
connection with the origination, servicing, performance or administration
thereof.
(xxxv) The Collateral Agent will be entitled to receive all amounts
due to an Obligor or lienholder upon cancellation by an Obligor of an
Extended Service Agreement or any credit life insurance policy and
accident and health insurance policy relating to a Financed Vehicle or an
Obligor .
(xxxvi) All rights (but not obligations) of the Seller under each Extended
Service Agreement and each credit life insurance policy and accident and health
insurance policy relating to a Financed Vehicle or an Obligor have been assigned
by the Seller to FIARC.
(xxxvii) No Receivable has been satisfied, subordinated, or rescinded, nor
has any Financed Vehicle been released, in whole or in part, from the lien
granted by the related Receivable.
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(xxxviii) It is the intention of the Seller that each transfer and
assignment contemplated by this Agreement constitute a sale of the related
Receivables from the Seller to FIARC and that the beneficial interest in and
title to the Receivables shall not be part of the Seller's estate in the event
of the filing of a bankruptcy petition by or against the Seller under any
bankruptcy law.
ARTICLE IV
CONDITIONS
4.1 CONDITIONS TO OBLIGATIONS OF FIARC.
The obligation of FIARC to purchase the Receivables is subject to the
satisfaction of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of the Seller hereunder shall be true and correct at the Effective
Time with respect to each Receivable, with the same effect as if then made.
(b) DOCUMENTS TO BE DELIVERED BY THE SELLER.
(i) THE ASSIGNMENT. As provided herein, the Seller shall have
executed and delivered an Assignment with respect to each Receivable. The
Assignment shall be substantially in the form of Exhibit A hereto.
(ii) EVIDENCE OF UCC FILING. The Seller shall have recorded and
filed, at its own expense, a UCC-1 financing statement in each
jurisdiction in which filing is required by applicable law, executed by
the Seller, as seller of the Receivables, and naming FIARC, as purchaser
of the Receivables, and the Collateral Agent, as assignee, describing the
Receivables and the other property conveyed hereunder, meeting the
requirements of the laws of each jurisdiction and in such manner as is
necessary to perfect the sale, transfer, assignment and conveyance of such
Receivables to FIARC. The Seller shall deliver to FIARC, the Collateral
Agent and MBIA a file-stamped copy, or other evidence satisfactory to
FIARC, the Collateral Agent and MBIA of such filing.
(iii) OTHER DOCUMENTS. All other documents in the possession of the
Seller relating to the Receivables and any other document requested by
MBIA to be delivered shall have been delivered to FIARC.
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4.2 CONDITIONS TO OBLIGATIONS OF THE SELLER.
The obligation of the Seller to sell the Receivables to FIARC is subject
to the satisfaction of the following conditions:
(a) REPRESENTATION AND WARRANTIES TRUE. The representa- tions and
warranties of FIARC hereunder shall be true and correct at the Effective Time
with the same effect as if then made.
(b) RECEIVABLES PURCHASE PRICE. At the Effective Time with respect to each
Receivable, FIARC shall have delivered to the Seller the Purchase Price of each
Receivable, as provided in clause (d) of Article II, above or, the Seller shall
have determined to make a capital contribution of such Receivables as provided
herein.
ARTICLE V
COVENANTS OF THE SELLER
The Seller agrees with FIARC as follows:
5.1 PROTECTION OF RIGHT, TITLE AND INTEREST.
(a) The Seller shall execute and file such financing statements and cause
to be executed and filed such continuation statements and any required
documentation all in such manner and in such places as may be required by law
fully to preserve, maintain and protect the ownership interest of FIARC in the
Receivables and in the proceeds thereof. The Seller shall deliver (or cause to
be delivered) to FIARC and MBIA 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 by the Seller in accordance with paragraph (a)
above seriously misleading within the meaning of Section 9-402 of the UCC,
unless it shall have given FIARC, the Collateral Agent and MBIA at least sixty
days' prior written notice thereof and shall have filed appropriate amendments
to all previously filed financing statements or continuation statements prior to
such changes.
(c) The Seller shall give FIARC, MBIA and the Collateral Agent at least
sixty days' prior written notice of any relocation of its principal executive
office if, as a result of such relocation, the applicable provisions of the UCC
would require
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the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall file any such amendment
prior to any such relocation. The Seller shall at all times maintain its
principal executive office within the United States of America.
(d) The Seller shall maintain its computer systems so that, from and after
the time of sale hereunder of the Receivables to FIARC, the Seller's master
computer records (including any back-up archives) that refer to a Receivable
shall indicate clearly the interest of FIARC in such Receivable and that such
Receivable is owned by FIARC. Indication of FIARC's ownership of a Receivable
shall be deleted from or modified on the Seller's computer systems when, and
only when, the Receivable shall have been paid in full or repurchased.
(e) If at any time the Seller shall propose to sell, grant a security
interest in, or otherwise transfer any interest in automotive receivables to any
prospective purchaser, lender, or other transferee, the Seller shall give to
such prospective purchaser, lender, or other transferee computer tapes, records,
or print-outs (including any restored from back-up archives) that, if they shall
refer in any manner whatsoever to any Receivable, the same shall indicate
clearly that such Receivable has been sold to and is owned by FIARC.
(f) Upon the written request of the Collateral Agent, upon written request
from the Secured Parties, the Seller shall cause the following notation to be
stamped on the face of the retail installment sales contract evidencing such
Receivable: "FIRST INVESTORS FINANCIAL SERVICES, INC. HAS SOLD AND ASSIGNED ALL
RIGHT, TITLE AND INTEREST IN THIS CONTRACT TO FIRST INVESTORS AUTO RECEIVABLES
CORPORATION, WHICH HAS GRANTED A SECURITY INTEREST IN THIS CONTRACT TO TEXAS
COMMERCE BANK NATIONAL ASSOCIATION AS COLLATERAL AGENT FOR CERTAIN SECURED
PARTIES."
(g) Within sixty days after the Effective Time with respect to each
Receivable, the Seller shall give written notice by regular mail, addressed to
the Obligor under such Receivable, in form acceptable to FIARC, to the effect
that such Receivable has been sold and assigned to FIARC.
(h) The Seller shall permit FIARC and its agents and MBIA and its agents
at any time during normal business hours to inspect, audit, and make copies of
and abstracts from the Seller's records regarding any Receivable.
(i) Upon request, the Seller shall furnish to FIARC and MBIA, within five
Business Days, a list of all Receivables (by contract number and name of
Obligor) previously sold to FIARC pursuant to this Agreement.
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(j) The Seller will not amend, and shall not permit any amendment to any
Extended Service Agreement relating to the Financed Vehicles which would
adversely affect its ability and right to receive refunds under such contracts,
or which would adversely affect the rights of MBIA.
(k) The Seller agrees, for the benefit of MBIA, to take all reasonable
measures to enforce any right to a refund due to it under any Extended Service
Agreement.
5.2 OTHER LIENS OR INTERESTS. Except for the conveyances hereunder, the
Seller will not sell, pledge, assign or transfer to any other Person, or grant,
create, incur, assume or suffer to exist any adverse claim on any interest in
the Receivables, and the Seller shall defend the right, title, and interest of
FIARC in, to and under the Receivables against all claims of third parties
claiming through or under the Seller.
5.3 COSTS AND EXPENSES. The Seller agrees to pay all reasonable costs and
disbursements in connection with the perfection, as against all third parties,
of FIARC's right, title and interest in and to the Receivables, and in and to
the Financed Vehicles and the Seller shall take, at its expense, any additional
action required by FIARC, MBIA or the Collateral Agent in order to protect
FIARC's and the Collateral Agent's (on behalf of the Secured Parties) interests
in the Receivables and the Financed Vehicles and, in connection therewith, shall
execute and file such financing statements, or amendments thereto, continuation
statements, and such other instruments, documents, or notices as may be
requested by FIARC or the Collateral Agent.
5.4 INDEMNIFICATION. The Seller shall indemnify FIARC, the Collateral
Agent and each Secured Party under the Security Agreement for any liability as a
result of the failure of a Receivable to be originated in compliance with all
requirements of law and for any breach of any of its representations and
warranties contained herein. These indemnity obligations shall be in addition to
any obligation that the Seller may otherwise have.
5.5 SALE. Seller agrees to treat this conveyance for all purposes
(including without limitation tax and financial accounting purposes) as a sale
on all relevant books, records, tax returns, financial statements and other
applicable documents.
5.6 SELLER'S RECEIPT OF PAYMENTS. Seller agrees that any amounts received
by Seller in respect of any of the Receivables after the Effective Time
applicable thereto shall be received in trust for the benefit of FIARC, shall be
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segregated from other funds of the Seller and shall immediately be paid over to
the Collection Account (as defined in the Security Agreement) in the same form
as so received (with any necessary endorsement).
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.1 OBLIGATION OF SELLER. The obligations of the Seller under this
Agreement shall not be affected by reason of the invalidity, illegality or
irregularity of any Receivable.
6.2 REPURCHASE EVENTS. The Seller hereby covenants and agrees with FIARC
(for the benefit of the Collateral Agent, for the benefit of the Secured
Parties, as their respective interests may appear), that the Seller shall
promptly repurchase from FIARC any Receivable, for the Purchase Amount in cash,
with respect to which either of the following events ("Repurchase Events") shall
have occurred: (i) any representation or warranty of the Seller contained in
Section 3.2(b) shall have been breached with respect to such Receivable as of
the Effective Time, or (ii) FIARC, or any servicing agent who may at the time be
servicing such Receivable for FIARC, shall have failed to receive, within sixty
days following the applicable Effective Time, (A) a Tax Collector's Receipt for
Texas Title Application/Registration/Motor Vehicle Tax (commonly known as a
"white slip") in proper form, (B) a Certificate of Title in proper form issued
by the Texas Department of Transportation, or (C) the equivalent certificates or
registrations in proper form issued by the appropriate authorities of other
states if applicable, reflecting FIARC (or the Seller) as the lienholder thereon
with respect to the Financed Vehicle covered by such Receivable. This repurchase
obligation of the Seller shall constitute the sole remedy of FIARC and the
Collateral Agent under the Security Agreement against the Seller with respect to
any Repurchase Event. With respect to all Receivables repurchased by the Seller
pursuant to this Agreement, FIARC shall assign, without recourse, representation
or warranty, to the Seller all of FIARC's right, title and interest in and to
such Receivables, and all security and documents relating thereto.
6.3 TERMINATION. The obligations of the Seller to sell Receivables to
FIARC, and of FIARC to purchase Receivables from the Seller, pursuant to this
Agreement shall terminate at such time as all amounts due and payable by FIARC
under the Security Agreement are paid in full; provided, however, that (i) the
representations and warranties of Seller pursuant to Section 3.2(b) of this
Agreement, insofar as they relate to Receivables sold to FIARC pursuant to this
Agreement prior to such termination, shall survive such termination; (ii) with
17
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respect to such Receivables, the obligations of Seller set forth in Sections
5.1, 5.2, 5.3 and 5.6 pertaining to the protection of such Receivables, and the
obligation of Seller set forth in Section 5.4 pertaining to indemnification
under certain circumstances, shall survive such termination; and (iii) with
respect to such Receivables, the repurchase obligations of Seller pursuant to
Section 6.2 shall survive such termination.
6.4 AMENDMENT. This Agreement may be amended from time to time by a
written instrument duly executed and delivered by the Seller and FIARC;
PROVIDED, HOWEVER, that no such amendment shall be effective without the prior
written consent of the Collateral Agent and MBIA.
6.5 COLLATERAL ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, the Seller (i) acknowledges and consents that FIARC has
assigned its rights hereunder and its interest herein as collateral pursuant to
the Security Agreement for the benefit of the Secured Parties, and (ii) agrees
to attorn to the Collateral Agent in the event of its succession to the rights
and interest of FIARC hereunder by reason of foreclosure or otherwise.
6.6 POWER OF ATTORNEY. The parties recognize that, notwithstanding the
sale and assignment of a Receivable to FIARC pursuant to this Agreement, it may
not be practicable under applicable state recordation procedures to substitute
FIARC for the Seller as the lienholder identified on the certificate of title or
similarly recorded instrument pertaining to the related Financed Vehicle.
Accordingly, with respect to each Receivable, the Seller hereby grants to FIARC,
and to any servicing agent who may service such Receivable for FIARC, an
irrevocable power of attorney, coupled with an interest, to enforce, in the
name, place and stead of the Seller, all rights and remedies of the holder of
such Receivable and of the security interests in the related Financed Vehicle.
The Seller agrees to provide, promptly upon the request of FIARC or such
servicer, any additional documentation which they may reasonably require to
evidence, or otherwise to more perfectly vest, the irrevocable power of attorney
granted hereby. The Seller also agrees, as provided in the Security Agreement,
to execute such documents as are required under Section 501.114 of the Texas
Certificate of Title Act to assign the liens recorded on the Certificates of
Title covering the Financed Vehicles from the Seller to FIARC, if the Collateral
Agent shall have reasonably determined that such assignment is necessary to the
enforcement of the related Receivable or Receivables.
6.7 WAIVERS. No failure or delay on the part of any party in exercising
any power, right or remedy under this
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Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power, right or remedy preclude any other further exercise
thereof or the exercise of any other power, right or remedy.
6.8 NOTICES. All communications and notices directed to either party
pursuant to this Agreement shall be in writing addressed or delivered to it at
its address shown in the introductory paragraph of this Agreement and to MBIA
at: MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504,
Attention: Insured Portfolio Management-SF or at such other address as may be
designated by it by notice to other party and, if mailed or transmitted by
facsimile transmission, shall be deemed given when mailed or transmitted.
6.9 COSTS AND EXPENSES. The Seller will pay all expenses incident to the
performance of its obligations under this Agreement and the Seller agrees to pay
all reasonable out-of-pocket costs and expenses of FIARC, in connection with the
perfection as against third parties of FIARC's right, title and interest in and
to the Receivables and the enforcement of any obligation of the Seller
hereunder.
6.10 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 provisions of this Agreement.
6.11 GOVERNING LAW. This Agreement and the Assignment shall be governed by
and construed in accordance with the laws of the State of Texas.
6.12 COUNTERPARTS. This Agreement may be executed in two or more
counterparts and by different parties on separate counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
6.13 NO PROCEEDINGS. For so long as this agreement is in effect, the
Seller agrees that it will not file any involuntary petition or otherwise
institute any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other proceeding under any federal or state bankruptcy or similar
law against FIARC.
6.14 THIRD PARTY BENEFICIARY. Each of the parties hereto agree that MBIA
is a third party beneficiary of this Agreement.
6.15 ASSIGNMENT. This Agreement may not be assigned by either party hereto
without the prior written consent of MBIA.
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IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
and year first above written.
FIRST INVESTORS FINANCIAL
SERVICES, INC.
By:_________________________
Tommy A. Moore, Jr.,
President
FIRST INVESTORS AUTO RECEIVABLES
CORPORATION
By:___________________________
Tommy A. Moore, Jr.,
President
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EXHIBIT "A"
ASSIGNMENT
FOR VALUE RECEIVED, in accordance with the Purchase Agreement dated as of
October 22, 1996 (the "Purchase Agreement") between the undersigned and First
Investors Auto Receivables Corporation (the "Purchaser"), the undersigned does
hereby sell, assign, transfer and otherwise convey unto the Purchaser, without
recourse, all right, title and interest of the undersigned in and to:
(A) all motor vehicle installment sales contracts listed on Exhibit "A"
attached hereto (the "Receivables")) and all monies paid thereon, and due
thereon, at or after the Effective Time as applicable, whether such amounts are
considered accounts, general intangibles or other property;
(B) together with (i) the interest of the undersigned in all security
interests and liens in or on the Financed Vehicle and any accessions thereto
granted by an Obligor pursuant to the Receivable, and all monies paid thereon,
and due thereon, at or after the Effective Time, as applicable whether such
amounts are considered accounts, general intangibles or other property, (ii) the
interest of the undersigned in any proceeds from claims on any physical damage,
credit life, credit disability, Credit Insurance or other insurance policies
covering such Financed Vehicle or Obligor, (iii) the interest of the undersigned
in all rebates of premiums and other amounts relating to insurance policies and
other items financed under the Receivable as of the Effective Time, and (iv) the
proceeds of any and all of the foregoing.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the
Purchase Agreement and is to be governed by the Purchase Agreement.
Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Purchase Agreement.
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IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed, effective as of the Effective Date of this Assignment as provided in
the Purchase Agreement.
FIRST INVESTORS FINANCIAL
SERVICES, INC.
By:____________________________
Name:_____________________
Title:____________________
2
EXHIBIT 10.32
EXECUTION COPY
================================================================================
MBIA INSURANCE CORPORATION,
as Surety
FIRST INVESTORS AUTO RECEIVABLES CORPORATION,
as Transferor
FIRST INVESTORS FINANCIAL SERVICES, INC.,
as Seller
TEXAS COMMERCE BANK NATIONAL ASSOCIATION,
as Collateral Agent
and
NATIONSBANK, N.A.,
as Reserve Account Agent
INSURANCE AGREEMENT
First Investors Auto Receivables Corporation Revolving
Automobile Receivables Financing Facility
Dated as of October 1, 1996
<PAGE>
TABLE OF CONTENTS
(This Table of Contents is for convenience of reference only and shall
not be deemed to be a part of this Insurance Agreement.)
PAGE
ARTICLE I
DEFINITIONS
Section 1.01. General Definitions.............................................1
Section 1.02. Generic Terms...................................................3
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations and Warranties of the Transferor,
the Seller, the Collateral Agent, and the Reserve
Account Agent.................................................4
Section 2.02. Affirmative Covenants of the Transferor, the Seller,
the Collateral Agent, and the Reserve Account Agent...........8
Section 2.03. Negative Covenants of the Transferor, the Collateral
Agent and the Seller.........................................13
ARTICLE III
THE SURETY BOND; SECURITY
Section 3.01. Agreement To Issue Surety Bond.................................14
Section 3.02. Conditions Precedent To Issuance of the Surety Bond............14
Section 3.03. Premium........................................................16
Section 3.04. Indemnification................................................16
Section 3.05. Payment Procedure..............................................19
Section 3.06. Subrogation....................................................19
Section 3.07. Reimbursement and Additional Payment Obligation................19
Section 3.08. Assignment by Transferor.......................................21
ARTICLE IV
FURTHER AGREEMENTS
Section 4.01. Effective Date; Term of Agreement..............................21
Section 4.02. Waiver of Rights; Further Assurances and Corrective
Instruments..................................................21
Section 4.03. Obligations Absolute...........................................22
<PAGE>
Section 4.04. Assignments; Reinsurance; Third-Party Rights...................22
ARTICLE V
DEFAULTS; REMEDIES
Section 5.01. Defaults.......................................................23
Section 5.02. Remedies; No Remedy Exclusive..................................24
Section 5.03. Waivers........................................................25
Section 5.04. No Insolvency Proceedings......................................25
ARTICLE VI
MISCELLANEOUS
Section 6.01. Amendments, Changes and Modifications..........................25
Section 6.02. Notices........................................................26
Section 6.03. Severability...................................................27
Section 6.04. Governing Law..................................................27
Section 6.05. Consent to Jurisdiction and Venue, Etc.........................27
Section 6.06. Consent of Surety..............................................28
Section 6.07. Counterparts...................................................28
Section 6.08. Recitals.......................................................28
Section 6.09. Headings.......................................................28
TESTIMONIUM
SIGNATURES
<PAGE>
INSURANCE AGREEMENT
THIS INSURANCE AGREEMENT is made as of October 1, 1996 by and among MBIA
INSURANCE CORPORATION (the "Surety"), FIRST INVESTORS AUTO RECEIVABLES
CORPORATION, in its capacity as transferor (the "Transferor"), FIRST INVESTORS
FINANCIAL SERVICES, INC., in its capacity as seller (the "Seller"), TEXAS
COMMERCE BANK NATIONAL ASSOCIATION, in its capacity as Collateral Agent (the
"Collateral Agent"), and NATIONSBANK, N.A., in its capacity as Reserve Account
Agent (the "Reserve Account Agent").
RECITALS:
1. The Transferor, Enterprise Funding Corporation (the "Company"), the
Reserve Account Agent, the Collateral Agent, the Surety and the Seller have
entered into a Security Agreement (as defined herein) of even date herewith,
pursuant to which, among other things, the Transferor has granted a security
interest in the Collateral to the Collateral Agent for the benefit of the
Company and the Surety, to secure payments under the Note, the Security
Agreement, the Note Purchase Agreement and this Agreement.
2. The Transferor and the Seller have requested that the Surety issue
its Surety Bond (as defined below) to guarantee payment of Insured Amounts (as
defined in the Surety Bond), upon such terms and conditions as were mutually
agreed upon by the parties and subject to the terms and conditions of the Surety
Bond.
3. The parties hereto desire to specify the conditions precedent to the
issuance of the Surety Bond by the Surety, the indemnity and reimbursement to be
provided by the Transferor in respect of amounts paid by the Surety under the
Surety Bond, the security to be provided to the Surety by the Transferor as an
inducement for the Surety to deliver the Surety Bond and to provide for certain
other indemnities and for certain other matters.
NOW, THEREFORE, in consideration of the premises and of the agreements
herein contained, the Surety, the Transferor, the Seller, the Collateral Agent,
and the Reserve Account Agent agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. GENERAL DEFINITIONS. The terms defined in this Article I
shall have the meanings provided herein for all purposes of this Agreement,
unless the context clearly requires otherwise, in both singular and plural form,
as appropriate. Capitalized terms used in this Agreement but not otherwise
defined herein will have the meanings ascribed to such terms in the Security
Agreement.
"ADVERSE SELECTION PROCEDURE" means any method of selecting or
identifying a Receivable eligible to be included in the Collateral, other than
in accordance with the Transaction Documents,
<PAGE>
that materially and adversely affects the representative nature of the sample of
Receivables so selected.
"AGREEMENT" means this Insurance Agreement dated as of October 1, 1996,
including any amendments or any supplements hereto as herein permitted.
"CLOSING DATE" means October 22, 1996.
"COMMITMENT" means the Commitment Letter dated as of October 17, 1996
between the Transferor, the Seller and the Surety.
"DATE OF ISSUANCE" means the date on which the Surety Bond is issued.
"EVENT OF DEFAULT" means any event of default set forth in Section 5.01
hereof.
"FIFSG" means First Investors Financial Services Group, Inc.
"FINANCIAL STATEMENTS" means the balance sheets and the statements of
income, retained earnings and cash flows and notes thereto of FIFSG prepared on
a consolidated basis and furnished on behalf of the Seller to the Surety
pursuant to Section 2.02(c) hereof.
"INSURED AMOUNTS" shall have the meaning assigned thereto in the Surety
Bond.
"LATE PAYMENT RATE" means the rate of interest as is publicly announced
by Citibank, N.A. at its principal office in New York, New York as its prime
rate (any change in such prime rate of interest to be effective on the date such
change is announced by Citibank, N.A.) plus 2%. The Late Payment Rate shall be
computed on the basis of a year of 365 days calculating the actual number of
days elapsed. In no event shall the Late Payment Rate exceed the maximum rate
permissible under law applicable to this Agreement limiting interest rates.
"MBIA PREMIUM" means the amount set forth in paragraph 1.a. of the
Commitment.
"MOODY'S" means Moody's Investors Service Inc., its successors and their
assigns, and, if such corporation shall for any reason no longer perform the
functions of a securities rating agency, "Moody's" shall be deemed to refer to
any other nationally recognized rating agency designated by the Transferor with
the approval of the Surety.
"NOTE" means the promissory note issued by the Transferor to the Company
pursuant to the Note Purchase Agreement.
"NOTE PURCHASE AGREEMENT" means the Note Purchase Agreement dated as of
October 22, 1996 between the Company and the Transferor.
"SECURITY AGREEMENT" means the Security Agreement dated as of October
22, 1996, among the Company, the Transferor, the Surety, the Seller, the Reserve
Account Agent and the Collateral Agent.
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"SERVICING AGREEMENT" shall have the meaning assigned thereto in the
Security Agreement.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a division
of The McGraw-Hill Companies, its successors and their assigns and, if such
corporation shall for any reason no longer perform the functions of a securities
rating agency, "Standard & Poor's" shall be deemed to refer to any other
nationally recognized rating agency designated by the Transferor with the
approval of the Surety.
"STATE" means the State of New York.
"SURETY" means MBIA Insurance Corporation.
"SURETY BOND" means the Surety Bond issued with respect to the
Receivables.
"SURETY DEFAULT" means the occurrence and continuance of any failure of
the Surety to make payments under the Surety Bond in accordance with its terms.
"SURETY INSOLVENCY" means (i) the entry of a decree or order of a court
or agency having jurisdiction in respect of the Surety in an involuntary case
under any present or future Federal or state bankruptcy, insolvency or similar
law or appointing a conservator or receiver or liquidator or rehabilitator or
other similar official of the Surety or of any substantial part of its property,
or the entering of an order for the winding up or liquidation of the affairs of
the Surety and the continuance of any such decree or order undischarged or
unstayed and in force for a period of 90 consecutive days; (ii) the Surety shall
consent to the appointment of a conservator or receiver or liquidator or other
similar official in any insolvency, readjustment of debt, marshaling of assets
and liabilities, rehabilitation or similar proceedings of or relating to the
Surety or of or relating to all or substantially all of its property; or (iii)
the Surety shall admit in writing its inability to pay its debts generally as
they become due, file a petition to take advantage of or otherwise voluntarily
commence a case or proceeding under any applicable bankruptcy, insolvency,
reorganization or other similar statute, make an assignment for the benefit of
its creditors, or voluntarily suspend payment of its obligations.
"TERM OF THE AGREEMENT" shall be determined as provided in Section 4.01.
"TRANSACTION" means the transactions contemplated by the Transaction
Documents.
"TRANSACTION DOCUMENTS" means this Agreement, the Interest Rate Cap, the
Note Purchase Agreement, the Servicing Agreement, the Security Agreement, the
Purchase Agreement, any Originator Agreement and the Note.
Section 1.02. GENERIC TERMS. All words used herein shall be construed to
be of such gender or number as the circumstances require. This "Agreement" shall
mean this Agreement as a whole and as the same may, from time to time hereafter,
be amended, supplemented or modified. The words "herein," "hereby," "hereof,"
"hereto," "hereinabove" and "hereinbelow," and words of similar import, refer to
this Agreement as a whole and not to any particular paragraph, clause or other
subdivision hereof, unless otherwise specifically noted.
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ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. REPRESENTATIONS AND WARRANTIES OF THE TRANSFEROR, THE
SELLER, THE COLLATERAL AGENT, AND THE RESERVE ACCOUNT AGENT. The Transferor, the
Seller, the Collateral Agent, and the Reserve Account Agent represent and
warrant to, and covenant with, the other parties hereto (in each case only as to
matters concerning itself) as follows:
(a) REPRESENTATIONS AND WARRANTIES OF TRANSFEROR, SELLER AND THE
COLLATERAL AGENT CONTAINED IN OTHER TRANSACTION DOCUMENTS. All of the
representations and warranties made by the Transferor, the Seller and
the Collateral Agent, as the case may be, as of the Closing Date in any
of the Transaction Documents (except with respect to the Originator
Agreements) are incorporated as if fully set forth herein for the
benefit of the Surety and are true and correct as of the Closing Date.
(b) DUE ORGANIZATION AND QUALIFICATION. Each of the Transferor
and the Seller is a corporation, duly organized, validly existing and in
good standing under the laws of its respective jurisdiction of
incorporation. The Collateral Agent is a national banking institution
duly organized, validly existing and in good standing under the laws of
the United States. Each of the Transferor, the Seller and the Collateral
Agent is duly qualified to do business, is in good standing and has
obtained all necessary licenses, permits, charters, registrations and
approvals (together, "approvals") required to be obtained by the
Transferor, the Seller and the Collateral Agent in each jurisdiction in
which the failure to obtain such approvals would render any portion of
the Transaction Documents unenforceable by the Transferor, the Seller or
the Collateral Agent or any other party to the Transaction Documents, as
the case may be, and would have a material adverse effect on the Surety.
(c) POWER AND AUTHORITY. Each of the Transferor, the Seller and
the Collateral Agent has all necessary corporate or institutional power
and authority to conduct its business as currently conducted and to
execute, deliver and perform its obligations under the Transaction
Documents and to consummate the Transaction.
(d) DUE AUTHORIZATION. The execution, delivery and performance of
the Transaction Documents by the Transferor, the Seller and the
Collateral Agent have been duly authorized by all necessary corporate or
institutional action, as the case may be, and do not require any
additional approvals or consents, or other action by or any notice to or
filing with any Person, including, without limitation, any governmental
entity or the Transferor's or the Seller's stockholders, which have not
previously been obtained or given by the Transferor, the Seller or the
Collateral Agent.
(e) NONCONTRAVENTION. Neither the execution and delivery of the
Transaction Documents by the Seller, the Transferor, the Collateral
Agent or the Reserve Account Agent, as the case may be, the consummation
of the transactions contemplated thereby nor the satisfaction of the
terms and conditions of the Transaction Documents:
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(i) conflicts with or results in any breach or violation
of any provision of the certificate of incorporation, bylaws or
other organizational document of the Seller, the Transferor or
the Collateral Agent or any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award currently in
effect having applicability to the Seller, the Transferor or the
Collateral Agent or any of their material properties, including
regulations issued by an administrative agency or other
governmental authority having supervisory powers over the Seller,
the Transferor or the Collateral Agent;
(ii) constitutes a default by the Seller, the Transferor
or the Collateral Agent under or a breach of any provision of any
loan agreement, mortgage, indenture or other agreement or
instrument which is material to the Seller, the Transferor or the
Collateral Agent to which the Seller, the Transferor or the
Collateral Agent is a party or by which any of its or their
respective properties, which are individually or in the aggregate
material to the Seller, the Transferor or the Collateral Agent,
is or may be bound or affected; or
(iii) except as contemplated by the Transaction Documents,
results in or requires the creation of any lien upon or in
respect of any assets of the Seller, the Transferor, the
Collateral Agent or the Reserve Account Agent.
(f) PENDING LITIGATION OR OTHER PROCEEDING. There is no pending
action or proceeding before any court, governmental or administrative
agency or arbitrator against or affecting the Transferor, the Seller,
the Collateral Agent or the Reserve Account Agent or any of its or their
subsidiaries or any properties or rights of the Transferor, the Seller,
the Collateral Agent or the Reserve Account Agent or any of its or their
subsidiaries or, to the Transferor's, the Seller's, the Collateral
Agent's or the Reserve Account Agent's knowledge, any investigation or
any threatened action or proceeding before any of the foregoing, which,
if decided adversely to the Transferor, the Seller, the Collateral Agent
or the Reserve Account Agent, would materially and adversely affect the
ability of the Transferor, the Seller, the Collateral Agent or the
Reserve Account Agent to perform their respective obligations under the
Transaction Documents or would have a material adverse effect on the
Surety.
(g) VALID AND BINDING OBLIGATIONS. The Transaction Documents to
which the Transferor, the Seller and the Collateral Agent, respectively,
is a party constitute, and when executed will constitute, the legal,
valid and binding agreements of the Transferor, the Seller and the
Collateral Agent, respectively, enforceable against the Transferor, the
Seller, and the Collateral Agent in accordance with their respective
terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or limiting creditors' rights generally or general equitable
principles, as such relate to the Transferor, the Seller and the
Collateral Agent. The Transferor, the Seller and the Collateral Agent
hereby agree and covenant that each will not at any time in the future,
deny that the Transaction Documents to which the Transferor, the Seller
and the Collateral Agent, respectively, is a party constitute the
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valid, legal and binding agreements of the Transferor, the Seller and
the Collateral Agent, respectively, subject to the aforesaid
limitations.
(h) FINANCIAL STATEMENTS. The Financial Statements of FIFSG,
copies of which the Seller has caused to be furnished to the Surety on
behalf of the Seller, (i) are, as of the dates and for the periods
referred to therein, complete and correct in all material respects, (ii)
present fairly the financial condition and results of operations of the
companies reported therein as of the dates and for the periods indicated
and (iii) have been prepared in accordance with generally accepted
accounting principles consistently applied, except as noted therein and
subject to year-end adjustments with respect to interim statements.
Since the date of the most recent Financial Statements, there has been
no material adverse change in such condition or operations. Except as
disclosed in the Financial Statements, the Seller, is not subject to any
contingent liabilities or commitments that, individually or in the
aggregate, have a material possibility of causing a material adverse
change in respect of the Seller.
(i) COMPLIANCE WITH LAW, REGULATIONS, ETC. None of the
Transferor, the Seller, the Collateral Agent or the Reserve Account
Agent has notice or any reason to believe that any practice, procedure
or policy employed by the Transferor, the Seller, the Collateral Agent
or the Reserve Account Agent in the conduct of its business violates any
law, regulation, judgment or agreement applicable to the Transferor, the
Seller, the Collateral Agent or the Reserve Account Agent which, if
enforced, would have a material adverse effect on the ability of the
Seller, the Transferor, the Collateral Agent or the Reserve Account
Agent, as the case may be, to perform its respective obligations under
the Transaction Documents. None of the Transferor, the Seller, the
Collateral Agent or the Reserve Account Agent is in breach of or in
default under any applicable law or administrative regulation of the
state of its respective incorporation or any department, division,
agency or instrumentality thereof or of the United States or any
applicable judgment or decree or any loan agreement, note, resolution,
certificate, agreement or other instrument to which the Transferor is a
party or is otherwise subject which, if enforced, would have a material
adverse effect on the ability of the Collateral Agent, the Reserve
Account Agent, the Transferor or the Seller, as the case may be, to
perform its respective obligations under the Transaction Documents.
(j) TAXES. Each of the Transferor and the Seller and its
respective parent company or companies have filed prior to the date
hereof all federal and state tax returns that are required to be filed
and paid all taxes, including any assessments received by them that are
not being contested in good faith, to the extent that such taxes have
become due, except for any failures to file or pay that, individually or
in the aggregate, would not result in a material adverse change with
respect to the Transferor and the Seller.
(k) DELIVERY OF INFORMATION. Each of the Transferor and the
Seller represents and warrants that none of the Transaction Documents
nor any other information furnished in writing to the Surety by the
Transferor or the Seller, as the case may be, contain any statement of a
material fact by the Transferor or the Seller as the case may be, which
was untrue or misleading in any material respect when made. None of the
Transferor or the
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Seller has any knowledge of circumstances that could reasonably be
expected to cause a material adverse change with respect to the
Transferor or the Seller. Since the furnishing of such information by
the Transferor and the Seller, there has been no change nor any
development or event involving a prospective change which would render
any of the Transaction Documents or other information furnished to the
Surety untrue or misleading in a material respect.
(l) SOLVENCY. The Transferor and the Seller are solvent and will
not be rendered insolvent by the Transaction and, after giving effect to
the Transaction, neither of the Transferor or the Seller will be left
with an unreasonably small amount of capital with which to engage in its
business, nor does the Transferor or the Seller intend to incur, or
believe that it has incurred, debts beyond its ability to pay as they
mature. None of the Transferor or the Seller contemplates the
commencement of insolvency, bankruptcy, liquidation or consolidation
proceedings or the appointment of a receiver, liquidator, conservator,
trustee or similar official in respect of the Transferor or the Seller
or any of its respective assets.
(m) PRINCIPAL PLACE OF BUSINESS. The principal place of the
Collateral Agent is located in Texas and the principal place of business
of the Transferor is located in Texas. The principal place of business
of the Seller is located in Texas.
(n) REQUIREMENTS FOR RECEIVABLES. The Seller and the Transferor
represent and warrant with respect to each Receivable that: (a) the
related Obligor has no right of recission or cancellation, claims or
defenses, set-offs or counterclaims of any kind whatsoever as to or
against each Receivable; (b) the obligation created by the contract
evidencing each Receivable is a bonafide sale in the ordinary course of
the Originator's business; (c) the contract evidencing such Receivable
complies with all state and federal laws and regulations; (d) the
contract evidencing each Receivable, including, but not limited to,
description of the motor vehicle and/or services contained therein, is
in all respects complete, accurate and represents the entire agreement
between the Originator and the Obligor and complies with Federal
Consumer Credit Protection Act and all other applicable state and
federal laws and regulations.
Section 2.02. AFFIRMATIVE COVENANTS OF THE TRANSFEROR, THE SELLER, THE
COLLATERAL AGENT, AND THE RESERVE ACCOUNT AGENT. The Transferor, the Seller, the
Collateral Agent, and the Reserve Account Agent hereby covenant and agree that
during the term of this Agreement:
(a) COMPLIANCE WITH AGREEMENTS. The Transferor, the Seller, the
Collateral Agent and the Reserve Account Agent shall comply in all
material respects with the terms and conditions of the Transaction
Documents to which each, respectively, is a party and, so long as no
Surety Default or Surety Insolvency exists, unless the Surety shall
otherwise consent, none of the Transferor, the Seller, the Collateral
Agent or the Reserve Account Agent shall agree to any waiver, amendment
to or modification of the terms of any of the Transaction Documents to
which each, respectively, is a party, except with respect to the
Originator Agreements and except under the circumstances and in
accordance with the terms specifically set forth in the related
Transaction Document.
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(b) CORPORATE EXISTENCE. The Transferor, the Seller, the
Collateral Agent, and the Reserve Account Agent shall maintain their
respective existences and continue to be duly organized, duly qualified
and duly authorized under the laws of its respective jurisdiction of
incorporation or organization and shall conduct its business in
accordance with the terms of its certificate of incorporation and
bylaws, or other organization documents.
(c) THE SELLER TO PROVIDE FINANCIAL STATEMENTS; ACCOUNTANTS'
REPORTS; OTHER INFORMATION. The Seller shall keep or cause to be kept in
reasonable detail books and records of account of the Seller's books and
records relating to its obligations assumed under the Transaction
Documents, in accordance with its operating rules and procedures. The
Seller shall furnish or cause to be furnished to the Surety:
(i) ANNUAL FINANCIAL STATEMENTS. As soon as available, and
in any event within 120 days after the close of each fiscal year
of FIFSG the audited consolidated balance sheets of FIFSG as of
the end of such fiscal year and the related audited consolidated
statements of income, changes in shareholders' equity and cash
flows for such fiscal year, all in reasonable detail and stating
in comparative form the respective figures for the corresponding
date and period in the preceding fiscal year, prepared in
accordance with generally accepted accounting principles,
consistently applied, and accompanied by the audit opinion of the
FIFSG's independent accountants (which shall be a nationally
recognized independent public accounting firm) and by the
certificate specified in Section 2.02(e) hereof.
(ii) QUARTERLY FINANCIAL STATEMENTS. As soon as available,
and in any event within 90 days after each of the first three
fiscal quarters of each fiscal year of FIFSG, the unaudited
consolidated balance sheets of FIFSG and its subsidiaries as of
the end of such fiscal quarter and the related unaudited
consolidated statements of income, changes in shareholders'
equity and cash flows for such fiscal quarter, all in reasonable
detail and stating in comparative form the respective figures for
the corresponding date and period in the preceding fiscal year,
prepared in accordance with generally accepted accounting
principles, consistently applied, and accompanied by the
certificate specified in Section 2.02(e) hereof.
(iii) [Reserved.]
(iv) OTHER REPORTS AND INFORMATION. The Seller shall also
furnish, or cause to be furnished, with reasonable promptness,
such other financial data, financial reports relating to the
Seller or FIFSG prepared by third parties and other data relating
to the Seller or FIFSG which are commonly prepared and can be
provided without undue effort, as the Surety may reasonably
request.
(d) THE TRANSFEROR SHAREHOLDER MEETINGS. The Transferor shall
have annual shareholder meetings and at least annual board of director
meetings and shall prepare
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income and franchise tax returns as appropriate. Upon the request of the
Surety, the Transferor shall deliver to the Surety copies of the minutes
of such meetings and such tax returns promptly upon filing.
(e) CERTIFICATE OF COMPLIANCE. The Seller shall cause the
Transferor to deliver to the Surety concurrently with the delivery of
the Financial Statements required pursuant to paragraph (c) above any
statement required to be delivered under the Security Agreement.
(f) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS.
The Transferor, the Seller, the Collateral Agent and the Reserve Account
Agent shall, upon the request of the Surety, permit the Surety, or its
authorized agent, at reasonable times and upon reasonable notice:
(i) to inspect such books and records of the Transferor,
the Seller and the Collateral Agent as the case may be, as they
may relate to the Receivables, the obligations of the Transferor,
the Seller and the Collateral Agent, as the case may be, under
the Transaction Documents and the transactions consummated in
connection herewith and to inspect the books and records of the
Reserve Account Agent as they may relate to the Reserve Account;
(ii) to discuss the affairs, finances and accounts of the
Transferor, the Seller and the Collateral Agent as such relate to
the performance by it of its obligations under the Transaction
Documents with an appropriate officer of the Transferor, the
Seller and the Collateral Agent, as the case may be; and to
discuss the affairs, finances and accounts of the Reserve Account
Agent as such may relate to the Reserve Account with an
appropriate officer of the Reserve Account Agent.
(iii) to discuss the affairs, finances and accounts of the
Transferor, the Seller and the Collateral Agent as such relate to
the performance by it of its obligations under the Transaction
Documents with the Transferor's, the Seller's and the Collateral
Agent's independent public accountants, as the case may be,
provided that an appropriate officer of the Transferor, the
Seller and the Collateral Agent, as the case may be, shall have
the right to be present during such discussions.
Such inspections and discussions shall be conducted upon the
request of the Surety and during normal business hours and shall not
unreasonably disrupt the business of the Transferor, the Seller, the
Collateral Agent or the Reserve Account Agent. The books and records of
the Transferor will be maintained at the address of the Transferor
designated herein for receipt of notices, unless the Transferor shall
otherwise advise the parties hereto in writing, the books and records of
the Collateral Agent will be maintained at the address of the Collateral
Agent designated herein for receipt of notices, unless the Collateral
Agent shall otherwise advise the parties hereto in writing, the books
and records of the Reserve Account Agent will be maintained at the
address of the Reserve Account Agent designated herein for receipt of
notices, unless the Reserve Account Agent shall
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otherwise advise the parties hereto in writing and the books and records
of the Seller will be maintained at the Seller's address designated
herein for receipt of notices, unless the Seller shall otherwise advise
the parties hereto in writing.
The Surety shall keep confidential all financial statements and
reports delivered to it, the Credit Guidelines and any matter of which
it becomes aware through such inspections or discussions, except as may
be otherwise required, by regulation, law or court order or requested by
appropriate governmental authorities or as necessary to enforce any of
the provisions of the Transaction Documents, provided that the foregoing
shall not limit the right of the Surety to make such information
available on a confidential basis, to its regulators, securities rating
agencies, reinsurers, credit and liquidity providers, counsel and
accountants. If the Surety is requested or required (by oral questions,
interrogatories, requests for information or documents subpoena, civil
investigative demand or similar process) to disclose any information of
which it becomes aware through such inspections or discussions, the
Surety will promptly notify the Seller of such request(s) so that the
Seller may seek an appropriate protective order and/or waive the
Surety's compliance with the provisions of this Insurance Agreement. If,
in the absence of a protective order or the receipt of a waiver
hereunder, the Surety is, nonetheless, in the opinion of its counsel,
compelled to disclose such information to any tribunal or else stand
liable for contempt or suffer other censure or significant penalty, the
Surety may disclose such information to such tribunal that the Surety is
compelled to disclose, provided that a copy of all information disclosed
is provided to the Seller promptly upon such disclosure.
(g) INFORM SURETY OF MATERIAL EVENTS. Each of the Transferor,
the Seller and the Collateral Agent (each, as to matters relating to
itself) shall promptly inform the Surety in writing of the following:
(i) any default or any fact or event (of which, in the
case of the Collateral Agent, the Collateral Agent has actual
knowledge) which results, or which with notice or the passage of
time, or both, would result in an Event of Default, or Servicer
Event of Default, Termination Event, Wind-Down Event or
Amortization Event under any Transaction Document or would
constitute a material breach of a representation, warranty or
covenant by it under any Transaction Document;
(ii) the submission of any claim or the initiation of any
legal process, litigation or administrative or judicial
investigation against it in any federal, state or local court or
before any governmental body or agency, or before any arbitration
board, or any such proceedings threatened by any governmental
agency, (of which, in the case of the Collateral Agent, the
Collateral Agent has actual knowledge), which, if adversely
determined, would have a material adverse effect upon its ability
to perform its obligations under any Transaction Document;
(iii) except in the case of the Collateral Agent, the
submission of any claim or the initiation of any legal process,
litigation or administrative or judicial investigation in any
federal, state or local court or before any arbitration board, or
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any such proceeding threatened by any governmental agency
transferred, which, if adversely determined, would have a
material adverse effect on the Receivables;
(iv) the commencement of any proceedings under any
applicable bankruptcy, reorganization, liquidation, insolvency or
other similar law now or hereafter in effect or of any proceeding
in which a receiver, liquidator, trustee or other similar
official shall have been, or may be, appointed or requested;
(v) the receipt of notice from any agency or governmental
body having authority over the conduct of its business that it is
to cease and desist, or to undertake any, practice, program,
procedure or policy employed by it in the conduct of its
business, and such cessation or undertaking will materially
adversely affect its ability to perform its obligations under the
Transaction Documents; and
(vi) any change in the location of the Seller's, the
Transferor's or the Collateral Agent's principal offices or books
and records.
(h) FINANCING STATEMENTS AND FURTHER ASSURANCES. The Seller shall
cause the Transferor to file all necessary financing statements or other
instruments, and any amendments or continuation statements relating
thereto, necessary to be kept and filed in such manner and in such
places as may be required by law to preserve and protect fully the
interest of the Surety in the Receivables. The parties hereto shall,
upon the request of the Surety, from time to time, execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, within
ten days of such request, such amendments hereto and such further
instruments and take such further action as may be reasonably necessary
to effectuate the intention, performance and provisions of the
Transaction Documents. The parties hereto agree to fully cooperate with
the Surety, Standard & Poor's and Moody's in connection with any review
which may be undertaken by Standard & Poor's and/or Moody's after the
date hereof and to provide all information reasonably requested by
Standard & Poor's and/or Moody's.
(i) NOTICE OF AMENDMENTS. The Seller will provide the Surety with
written notice of any change or amendment to any Transaction Document
(except with respect to the Originator Agreements) as currently in
effect.
(j) THIRD-PARTY RIGHTS. Each of the Transferor, the Seller, the
Collateral Agent, and the Reserve Account Agent agrees that the Surety
shall have all of the rights of a third-party beneficiary of, and
pursuant to, its agreements under each Transaction Document (except with
respect to the Originator Agreements) to which the Transferor, the
Seller, the Collateral Agent, respectively, is a party, unless otherwise
expressly provided in the related Transaction Document.
(k) MAINTENANCE OF LOANS. On or before each April 15, beginning
in 1997, the Seller shall cause the Transferor to furnish to the Surety
an officer's certificate either stating that such action has been taken
with respect to the recording, filing, rerecording and refiling of any
financing statements and continuation statements as is necessary to
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maintain the interest of the Surety created by the Security Agreement
with respect to the Receivables and reciting the details of such action
or stating that no such action is necessary to maintain such interests.
Such officer's certificate shall also describe the recording, filing,
rerecording and refiling of any financing statements and continuation
statements that will be required to maintain the interest of the Surety
in the Receivables until the date such next officer's certificate is
due. The Seller will use its best efforts to cause any necessary
recordings or filings to be made with respect to the Receivables.
(l) SELLER'S INDEMNITY. Notwithstanding anything in subsection
3.07(a) hereof, the Seller shall pay to the Surety an amount equal to
any amount paid by the Surety because of the Servicer's failure to
deposit into the Collection Account any amount required to be so
deposited by it pursuant to the Servicing Agreement, together with
interest on any and all amounts remaining unreimbursed (to the extent
permitted by law, if in respect to any unreimbursed amounts representing
interest) from the date such amounts became due until paid in full
(after as well as before judgment) at a rate of interest equal to the
Late Payment Rate.
(m) MAINTENANCE OF LICENSES. The Collateral Agent, the Seller and
the Transferor, respectively, or any successors thereof, shall maintain
all licenses, permits, charters and registrations which are material to
the conduct of its business.
(n) CLOSING DOCUMENTS. The Seller shall provide or cause to be
provided to the Surety an executed original copy of each document
executed in connection with the Transaction within 30 days after the
date of closing.
(o) NOTICES UNDER THE INTEREST RATE CAP AND THE NOTE PURCHASE
AGREEMENT. The Transferor shall promptly forward to the Surety a copy of
each notice or other communication received by the Transferor or sent by
the Transferor with respect to the Interest Rate Cap and the Note
Purchase Agreement.
(p) COLLATERAL AGENT TO ACT UPON DIRECTION OF SURETY; DELIVERY OF
NOTICES. The Collateral Agent agrees that so long as no Surety Default
has occurred and is continuing (i) the Collateral Agent shall not take
any action which the Collateral Agent is entitled to take pursuant to
the Servicing Agreement without the prior written consent of the Surety,
and (ii) following the Surety's written request or direction, it will
take or refrain from taking any action which the Collateral Agent is
entitled to take pursuant to the Servicing Agreement. The Collateral
Agent shall promptly forward to the Surety a copy of each notice or
other communication given or received by the Collateral Agent pursuant
to the Servicing Agreement.
Section 2.03. NEGATIVE COVENANTS OF THE TRANSFEROR, THE COLLATERAL AGENT
AND THE SELLER. The Transferor, the Collateral Agent and the Seller agree and
covenant with the Surety that at all times during the Term of the Agreement:
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(a) ADVERSE SELECTION PROCEDURE. The Transferor and the Seller
will not use any Adverse Selection Procedure in selecting the
Receivables that qualify under the Security Agreement for inclusion as
Collateral.
(b) IMPAIRMENT OF RIGHTS. The Transferor, the Collateral Agent
and the Seller each agree and covenant with the Surety that at all times
during the Term of the Agreement the Transferor, the Seller and the
Collateral Agent shall not take any action, or decline to take any
action if reasonably requested by the Surety at a time when no Surety
Default or Surety Insolvency exists, if such action or failure to take
action will interfere with the enforcement of any rights under any of
the Transaction Documents. The Transferor, the Collateral Agent and the
Seller shall give the Surety written notice of any such action or
failure to act on the earlier of: (i) the date upon which any publicly
available filing or release is made with respect to such action or
failure to act or (ii) promptly prior to the date of consummation of
such action or failure to act. The Transferor, the Collateral Agent, and
the Seller shall furnish to the Surety all information requested by it
that is reasonably necessary to determine compliance with this
paragraph.
(c) AMENDMENT TO CERTIFICATE OF INCORPORATION. The Transferor
shall not amend its certificate of incorporation at a time when no
Surety Default or Surety Insolvency exists without the Surety's prior
written consent except in accordance with the terms thereof.
(d) LOAN AGREEMENTS; CHARGE-OFF POLICY. Except as otherwise
permitted in the Security Agreement, the Seller shall not, and shall not
permit the Servicer to, alter or amend any Receivable or their
respective charge-off policies in a manner that materially adversely
affects the Surety unless the Surety shall have previously given its
consent.
(e) INTEREST RATE CAP. The Transferor will not enter into the
Interest Rate Cap until the Interest Rate Cap has been approved in form
and substance by the Surety. The Transferor shall not agree to any
changes to the Interest Rate Cap unless the Surety shall have previously
given its consent. The Transferor shall take or refrain from taking any
action, and exercise or refrain from exercising any rights of the
Transferor under the Interest Rate Cap, in the manner directed by the
Surety.
ARTICLE III
THE SURETY BOND; SECURITY
Section 3.01. AGREEMENT TO ISSUE SURETY BOND. The Surety agrees, subject
to the conditions set forth in Section 3.02 hereof, to issue the Surety Bond.
Section 3.02. CONDITIONS PRECEDENT TO ISSUANCE OF THE SURETY BOND. The
Transferor and the Seller shall have complied with the terms and satisfied the
conditions precedent set forth below:
(i) Payment of the MBIA Premium in accordance with Section 3.03
hereof;
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(ii) Payment of or satisfactory arrangements for payment by the
Transferor of (a) rating agency fees of Standard & Poor's and Moody's;
and (b) the fees and expenses incurred by the Surety in connection with
the issuance of such Surety Bond, including reasonable fees and expenses
of counsel to the Surety and accountants for the Surety, all in
accordance with the terms of the Commitment. The fees for any other
rating agency shall be paid by the party requesting such other agency's
rating, unless such other agency is a substitute for Standard & Poor's
or Moody's in the event that Standard & Poor's or Moody's is no longer
rating securities, in which case the cost for such agency shall be paid
by the Transferor;
(iii) Receipt by the Surety of a fully executed copy of the
Transaction Documents (except for the Originator Agreements);
(iv) Receipt by the Surety of (A) the certificate of
incorporation and bylaws of the Transferor and (B) certified copies of
the resolutions of the board of directors of the Transferor authorizing
the execution and delivery and performance of the Transaction Documents
and the other matters contemplated thereby, and of all other documents
evidencing any other action of the Transferor necessary to enter into
the Transaction Documents, all in form and substance acceptable to the
Surety and its counsel;
(v) [Reserved.]
(vi) Receipt by the Surety of the following opinions of counsel:
(A) The law firm of Buck, Keenan & Owens shall have issued
its favorable opinion, in form and substance acceptable to the
Surety and its counsel, regarding and the validity and
enforceability of the Transaction Documents (except with respect
to the Originator Agreements) against the Transferor and the
Seller, the law firm of Skadden, Arps, Slate, Meagher & Flom
shall have issued its favorable opinion, in form and substance
acceptable to the Surety and its counsel, regarding and the
validity and enforceability of the Security Agreement and the
Insurance Agreement against the Reserve Account Agent, and the
law firm of Andrews & Kurth, L.L.P. shall have issued its
favorable opinion, in form and substance acceptable to the Surety
and its counsel, regarding and the validity and enforceability of
the Transaction Documents against the Collateral Agent.
(B) The law firm of Vinson & Elkins shall have issued its
favorable opinions, in form and substance acceptable to the
Surety and its counsel, regarding the sale of the Receivables
from the Seller to the Transferor, consolidation of the Seller
and the Transferor in the event of the Seller's bankruptcy.
(C) The law firm of Buck, Keenan & Owens shall have issued
its favorable opinions, in form and substance acceptable to the
Surety and its counsel, regarding the perfection of the
Collateral Agent's interest in the Receivables and the Reserve
Account Agent's interest in (i) the funds on deposit in, and (ii)
investments with respect to, the Reserve Account.
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(D) The Surety shall have received such other opinions of
counsel, in form and substance acceptable to the Surety and its
counsel, including tax opinions, addressing such other matters as
the Surety may reasonably request.
(vii) Receipt by the Surety of true and correct copies of all
approvals, licenses and consents, if any, including, without limitation,
any required approval of the shareholders of the parties hereto,
necessary for the transactions contemplated by the Transaction
Documents;
(viii) Receipt of confirmation from Standard & Poor's and Moody's
that the rating of the Facility without regard to the Surety Bond is at
least BBB- and Baa3, respectively;
(ix) The Surety shall have received a certificate of an
authorized officer of the Transferor, the Collateral Agent, the Seller
and the Reserve Account Agent certifying the name and true signatures of
the officers of the Transferor, the Collateral Agent, the Seller and the
Reserve Account Agent, executing the Transaction Documents;
(x) [Reserved.]
(xi) The representations and warranties of the parties hereto set
forth or incorporated by reference in this Agreement shall be true and
correct as of the Date of Issuance as if made on the Date of Issuance
and the Surety shall have received a certificate of appropriate officers
of each of the parties hereto to that effect.
(xii) The Seller will cause FIFSG to furnish a certificate to the
Surety to the effect that (i) the Financial Statements which have been
furnished to the Surety are, as of the date thereof, complete and
correct in all material respects; present fairly the financial condition
of FIFSG on a consolidated basis as of the date thereof; and have been
prepared in accordance with generally accepted accounting principles
consistently applied (except as noted therein and subject to year-end
adjustments for interim statements) and (ii) there has been no material
adverse change in such conditions or operations;
(xiii) Delivery of such other documents, customary closing
certificates, instruments, approvals or opinions as are reasonably
requested by the Surety;
(xiv) No suit, action or other proceeding, investigation or
injunction, or final judgment relating thereto, shall be pending or
threatened before any court or governmental agency in which it is sought
to restrain or prohibit or to obtain damages or other relief in
connection with the Transaction Documents or the consummation of the
Transaction;
(xv) No statute, rule, regulation or order shall have been
enacted, entered or deemed applicable by any government or governmental
or administrative agency or court that would make the transactions
contemplated by any of the Transaction Documents illegal or otherwise
prevent the consummation thereof;
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(xvi) No default or any fact or event which results, or which
with notice or the passage of time, or both, would result in a
Termination Event, Amortization Event, Wind- Down Event or Event of
Default shall have occurred;
(xvii) Compliance with all other terms, conditions and
requirements of the Commitment;
(xiii) The Surety and its counsel shall have determined that all
documents, certificates and opinions to be delivered in connection with
the Receivables conform to the terms of the Transaction Documents; and
(xix) The Surety shall have received such other documents,
instruments, approvals or opinions requested by the Surety as may be
reasonably necessary to effect the Transaction, including but not
limited to, evidence satisfactory to the Surety that the conditions
precedent, if any, in the Transaction Documents have been satisfied.
Issuance of such Surety Bond will be conclusive evidence of satisfaction or
waiver of any of the conditions set forth in this Section 3.02.
Section 3.03. PREMIUM. The MBIA Premium shall be payable in accordance
with the Security Agreement so long as no Surety Default or Surety Insolvency
has occurred. The MBIA Premium shall be nonrefundable without regard to whether
the Surety makes any payment under the Surety Bond.
Section 3.04. INDEMNIFICATION. (a) In addition to any and all rights of
indemnification or any other rights of the Surety pursuant hereto or under law
or equity, the Transferor, the Seller, the Reserve Account Agent (subject to
Section 3.04(g) hereof) and the Collateral Agent (subject to the provisions of
Section 3.04(g) hereof), and any successors thereto agree to pay, and to
protect, indemnify and save harmless, the Surety and its officers, directors,
shareholders, employees, agents, including each person, if any, who controls the
Surety within the meaning of either Section 15 of the Securities Act of 1933, as
amended, or Section 20 of the Securities and Exchange Act of 1934, as amended,
from and against any and all claims, losses, liabilities (including penalties),
actions, suits, judgments, demands, damages, costs or reasonable expenses
(including, without limitation, reasonable fees and expenses of attorneys,
consultants and auditors and reasonable costs of investigations) or obligations
whatsoever (herein collectively referred to as "Liabilities") of any nature
arising out of or relating to the transactions contemplated by the Transaction
Documents by reason of:
(i) the misfeasance or malfeasance of, or gross negligence or
theft committed by, any director, officer, employee or agent of the
Transferor, the Seller, the Reserve Account Agent, the Servicer or the
Collateral Agent;
(ii) the violation by the Transferor or the Seller of any federal
or state laws, rules or regulations relating to the maximum amount of
interest permitted to be received on account of the loan of money or
with respect to the Receivables;
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(iii) the breach by the Transferor, the Seller or the Collateral
Agent of any of its material obligations under this Agreement or any of
the Transaction Documents;
(iv) the breach by the Reserve Account Agent or the Servicer
under any of the Transaction Documents to which it is a party, and such
breach is not cured within the applicable time period set forth in the
related Transaction Document;
(v) the breach by the Transferor, the Seller, the Reserve Account
Agent, the Servicer or the Collateral Agent of any representation or
warranty on the part of the Transferor, the Seller, the Reserve Account
Agent, the Servicer or the Collateral Agent contained in the Transaction
Documents or in any certificate furnished or delivered to the Surety
thereunder, and such breach is not cured within the applicable time
period set forth in the related Transaction Document; and
(vi) any state or federal tax liability imposed upon the
Transferor or in connection with the transactions contemplated by the
Transaction Documents.
(b) The Transferor and the Seller agree to pay, and to protect,
indemnify and save harmless, the Surety and its officers, directors,
shareholders, employees, agents, including each person, if any, who controls the
Surety within the meaning of either Section 15 of the Securities Act of 1933, as
amended, or Section 20 of the Securities and Exchange Act of 1934, as amended,
from and against any and all claims, losses, liabilities (including penalties),
actions, suits, judgments, demands, damages, costs or reasonable expenses
(including, without limitation, reasonable fees and expenses of attorneys,
consultants and auditors and reasonable costs of investigations) or obligations
whatsoever (herein collectively referred to as "Liabilities") of any nature
arising out of or relating to the transactions contemplated by the Transaction
Documents by reason of any losses, damages or expenses of whatsoever kind or
nature, including reasonable attorney's fees, which the Surety may at any time
incur by reason of or in consequence of any Obligor making any legally proven
claim relating to an Originator's acts regarding each contract evidencing the
related Receivable purchased by the Seller or Transferor.
(c) The Transferor and the Seller agree to pay, and to protect,
indemnify and save harmless, the Surety and its officers, directors,
shareholders, employees, agents, including each person, if any, who controls the
Surety within the meaning of either Section 15 of the Securities Act of 1933, as
amended, or Section 20 of the Securities and Exchange Act of 1934, as amended,
from and against any and all claims, losses, liabilities (including penalties),
actions, suits, judgments, demands, damages, costs or reasonable expenses
(including, without limitation, reasonable fees and expenses of attorneys,
consultants and auditors and reasonable costs of investigations) or obligations
whatsoever (herein collectively referred to as "Liabilities") of any nature
arising out of or relating to the occurrence of the events set forth in Section
4.1(a) through (g) of the Note Purchase Agreement.
(d) Any party which proposes to assert the right to be indemnified under
this Section 3.04 will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim is to
be made against the Transferor, the Seller, the Reserve Account Agent or the
Collateral Agent under this Section 3.04, notify the
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Transferor, the Collateral Agent, the Reserve Account Agent or the Seller of the
commencement of such action, suit or proceeding, enclosing a copy of all papers
served. In case any action, suit or proceeding shall be brought against any
indemnified party and it shall notify the Transferor, the Collateral Agent, the
Reserve Account Agent or the Seller of the commencement thereof, the Transferor,
the Seller, the Reserve Account Agent or the Collateral Agent shall be entitled
to participate in, and, to the extent that it shall wish, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party, and
after notice from the Transferor, the Seller, the Reserve Account Agent or the
Collateral Agent to such indemnified party of its election so to assume the
defense thereof, the Transferor, the Seller, the Reserve Account Agent or the
Collateral Agent shall not be liable to such indemnified party for any legal or
other expenses other than reasonable costs of investigation subsequently
incurred by such indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its counsel in any such action
the defense of which is assumed by the Transferor, the Seller, the Reserve
Account Agent or the Collateral Agent in accordance with the terms of this
subsection (d), but the fees and expenses of such counsel shall be at the
expense of such indemnified party unless the employment of counsel by such
indemnified party has been authorized by the Transferor, the Seller, the Reserve
Account Agent or the Collateral Agent. The Transferor, the Seller, the Reserve
Account Agent and the Collateral Agent shall not be liable for any settlement of
any action or claim effected without its consent.
(e) This indemnity provision shall survive the termination of this
Agreement and shall survive until the statute of limitations has run on any
causes of action which arise from one of these reasons and until all suits filed
as a result thereof have been finally concluded.
(f) Notwithstanding any provision or obligation to the contrary set
forth in this Agreement or any instrument now or hereafter securing, affecting
or relating to any obligation of the Transferor, the Seller, the Reserve Account
Agent or the Collateral Agent under this Agreement, including, without
limitation, the Security Agreement, no individual representative of the
Transferor, the Collateral Agent, the Reserve Account Agent or the Seller
(including, without limitation, employees, officers, directors and shareholders
thereof) shall have any personal liability under this Agreement including,
without limitation, any liability for the performance or observance or
nonperformance or nonobservance of any covenant or obligation of the Transferor,
the Collateral Agent, the Reserve Account Agent and the Seller or for breach of
any representation or warranty contained in this Agreement.
(g) Notwithstanding any other provision of this Section 3.04, (I) the
Collateral Agent shall be obligated under this Section 3.04 to pay, protect,
indemnify and save harmless any indemnified party hereunder from and against
Liabilities only with respect to any misfeasance or malfeasance of, or gross
negligence or theft committed by any director, officer, employee or agent of the
Collateral Agent, as specified in Section 3.04(a)(i), and any breach by the
Collateral Agent, as specified in Section 3.04(a)(iii) or (v); and (II) in
connection with its duties, representations, warranties, covenants and
obligations pursuant to the Security Agreement and this Agreement, the Reserve
Account Agent shall be obligated under this Section 3.04 to pay, protect,
indemnify, and save harmless any indemnified party hereunder from and against
Liabilities only with respect to any gross negligence by the Reserve Account
Agent or theft committed by any director, officer,
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employee or agent of the Reserve Account Agent, as specified in Section
3.04(a)(i) and any breach by the Reserve Account Agent, as specified in Section
3.04(a)(iv) or (v).
Section 3.05. PAYMENT PROCEDURE. If the Surety makes any payment under
the Surety Bond, the Transferor, the Seller and the Collateral Agent shall
accept, except in the case of manifest error, a voucher or other evidence of
payment as prima facie evidence that such payment was properly made. In the
event of any payment by the Surety, the Transferor, the Seller and the
Collateral Agent agree to accept a voucher or other evidence of payment complete
on its face as prima facie evidence of the propriety thereof and the liability
therefor of the Surety except in the case of manifest error. All payments to be
made to the Surety under this Agreement shall be made to the Surety in lawful
currency of the United States of America in immediately available funds at the
notice address for the Surety as specified in Section 6.02 hereof on the date
when due. Payments to be made to the Surety under this Agreement shall bear
interest payable to the extent provided in this Agreement at the Late Payment
Rate from the date when due to the date paid.
Section 3.06. SUBROGATION. Upon any payment by the Surety pursuant to
the Surety Bond, the Surety shall be fully subrogated to the rights of the
Insured Party (as defined in the Surety Bond) to the extent of such payment,
pursuant to the priority set forth in Section 5.1 of the Security Agreement.
Each of the Transferor, the Seller, the Collateral Agent, and the Reserve
Account Agent acknowledges such subrogation and, further, agrees to execute such
instruments prepared by the Surety and to take such reasonable actions as, in
the sole judgment of the Surety, are necessary to evidence such subrogation and
to perfect the rights of the Surety to receive any moneys paid or payable under
the Security Agreement.
Section 3.07. REIMBURSEMENT AND ADDITIONAL PAYMENT OBLIGATION. (a) In
accordance with Section 5.1(a)(vi) of the Security Agreement, the Surety shall
be entitled to reimbursement for any payment made by the Surety under the Surety
Bond, which reimbursement shall be due and payable on the date that any amount
is to be paid pursuant to a Notice or a Remittance Date Notice (each as defined
in the Surety Bond), in an amount equal to the amount to be so paid and all
amounts previously paid that remain unreimbursed, together with interest on any
and all amounts remaining unreimbursed (to the extent permitted by law, if in
respect of any unreimbursed amounts representing interest) from the date such
amounts became due until paid in full (after as well as before judgment), at a
rate of interest equal to the Late Payment Rate.
(b) The Seller agrees to pay to the Surety as follows: anything in
subsection 3.07(a) hereof to the contrary notwithstanding, the Surety shall be
entitled to reimbursement from the Seller (i) for payments made under the Surety
Bond arising as a result of the Transferor's failure to repurchase any
Receivable required to be repurchased pursuant to Section 3.1 of the Security
Agreement, or Section 3.02 of the Servicing Agreement, or the Seller's failure
to repurchase any Receivable required to be repurchased pursuant to Section 6.2
of the Purchase Agreement and (ii) for payments made under the Surety Bond,
arising as a result of the Servicer's failure to deposit into the Collection
Account any other amount required to be so deposited pursuant to the Security
Agreement, together with interest on any and all amounts remaining unreimbursed
(to the extent permitted by law, if in respect to any unreimbursed amounts
representing interest) from
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the date such amounts became due until paid in full (after as well as before
judgment), at a rate of interest equal to the Late Payment Rate.
(c) The Seller agrees to pay to the Surety as follows: any and all
charges, fees, costs and expenses that the Surety may reasonably pay or incur,
including, but not limited to, reasonable attorneys' and accountants' fees and
expenses, in connection with (i) any accounts established to facilitate payments
under the Surety Bond to the extent the Surety has not been immediately
reimbursed on the date that any amount is paid by the Surety under the Surety
Bond, (ii) the enforcement, defense or preservation of any rights in respect of
any of the Transaction Documents, including defending, monitoring or
participating in any litigation or proceeding (including any insolvency or
bankruptcy proceeding in respect of any Transaction participant or any affiliate
thereof) relating to any of the Transaction Documents, any party to any of the
Transaction Documents, in its capacity as such a party, or the Transaction, or
(iii) any amendment, waiver or other action with respect to, or related to, any
Transaction Document, whether or not executed or completed, and the Surety
reserves the right to charge a reasonable fee as a condition to executing any
waiver or consent proposed in respect of any of the Transaction Documents.
(d) The Reserve Account Agent agrees to pay the Surety as follows: any
and all charges, fees, costs and expenses that the Surety may reasonably pay or
incur, including, but not limited to, reasonable attorneys' fees and expenses,
in connection with the Reserve Account Agent's failure to perform in any respect
any of its obligations, covenants or agreements contained in the Security
Agreement and in this Agreement.
(e) The Seller and the Reserve Account Agent, as the case may be, and in
each case as to matters concerning itself, agree to pay to the Surety as
follows: with respect to the Seller, interest on any and all amounts described
in subclauses (b), (c), (f) and (g) and with respect to the Reserve Account
Agent, interest on any and all amounts described in subclause (d) of this
Section 3.07 from the date payable or paid by such party until payment thereof
in full, payable to the Surety at the Late Payment Rate per annum.
(f) The Collateral Agent, the Seller and the Transferor agree to pay to
the Surety as follows: any payments made by the Surety on behalf of, or advanced
to, the Collateral Agent the Seller or the Transferor, as the case may be,
consisting of any amounts payable by the Collateral Agent, the Seller or the
Transferor pursuant to the Transaction Documents.
(g) Following termination of the Security Agreement pursuant to Section
6.1 thereof, the Seller agrees to reimburse the Surety for any Insured Payments
required to be made pursuant to the Surety Bond subsequent to the date of such
termination.
Section 3.08. ASSIGNMENT BY TRANSFEROR. The Transferor hereby assigns to
the Surety all of its rights in and to any indemnification provided to the
Transferor by the Servicer under the Servicing Agreement, including, but not
limited to, the indemnification rights of the Transferor pursuant to Sections
3.07 and 7.02 of the Servicing Agreement.
ARTICLE IV
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FURTHER AGREEMENTS
Section 4.01. EFFECTIVE DATE; TERM OF AGREEMENT. This Agreement shall
take effect on the Date of Issuance and shall remain in effect until such time
as the Surety is no longer subject to a claim under the Surety Bond and all
amounts payable by the Transferor, the Seller, the Collateral Agent or the
Reserve Account Agent hereunder or under any other Transaction Document have
been paid in full and any preference period applicable to any such payment has
expired and all other obligations of the Transferor, the Seller, the Collateral
Agent or the Reserve Account Agent hereunder or under any other Transaction
Document have been performed in full.
Section 4.02. WAIVER OF RIGHTS; FURTHER ASSURANCES AND CORRECTIVE
INSTRUMENTS. (a) Excepting at such times as a Surety Insolvency or a Surety
Default shall exist or shall have occurred and be continuing, none of the
Transferor, the Seller, the Collateral Agent or the Reserve Account Agent shall
grant any waiver of rights under any of the Transaction Documents (except with
respect to the Originator Agreements) to which any of them is a party without
the prior written consent of the Surety, and any amendment or supplement to the
Transaction Documents without the written consent of the Surety shall be null
and void and of no force or effect, unless otherwise expressly provided under
the terms of the related Transaction Document.
(b) Each of the Transferor, the Collateral Agent, the Reserve Account
Agent and the Seller agrees that it will, from time to time, execute,
acknowledge and deliver, or cause to be executed, acknowledged and delivered,
such supplements hereto and such further instruments as the Surety may
reasonably request and as may be reasonably required in the Surety's judgment to
effectuate the intention of or facilitate the performance of this Agreement.
Section 4.03. OBLIGATIONS ABSOLUTE. The obligations of the Transferor,
the Collateral Agent, the Reserve Account Agent and the Seller hereunder shall
be absolute and unconditional, and shall not be subject to, and the Transferor,
the Seller, the Collateral Agent, and the Reserve Account Agent hereby waive any
of their rights of, abatement, diminution, postponement or deduction, or to any
defense other than payment, or to any right of setoff or recoupment arising out
of any breach under any of the Transaction Documents, by any party thereto or
any beneficiary thereof, or out of any obligation at any time owing to the
Transferor, the Seller, the Collateral Agent or the Reserve Account Agent.
Nothing herein shall be construed as prohibiting the Transferor, the Seller, the
Collateral Agent or the Reserve Account Agent from pursuing any rights or
remedies they may have against any other person or entity in a separate legal
proceeding. The obligations of the Transferor, the Seller, the Collateral Agent
and the Reserve Account Agent are absolute and unconditional and will be paid or
performed strictly in accordance with this Agreement.
Section 4.04. ASSIGNMENTS; REINSURANCE; THIRD-PARTY RIGHTS. (a) This
Agreement shall be a continuing obligation of the Transferor, the Seller, the
Collateral Agent and the Reserve Account Agent and shall (i) be binding upon the
Transferor, the Seller, the Collateral Agent and the Reserve Account Agent and
their respective successors and assigns and (ii) inure to the benefit of and be
enforceable by the Surety and its successors, transferees and assigns. None of
the Transferor, the Seller, the Collateral Agent or the Reserve Account Agent
may assign this
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Agreement, or delegate any of its duties specifically set forth herein, without
the prior written consent of the Surety which consent shall not be unreasonably
withheld.
(b) The Surety shall have the right to give participations in its rights
under this Agreement and to enter into contracts of reinsurance with respect to
the Surety Bond and each such participant or reinsurer shall be entitled to the
benefit of any representation, warranty, covenant and obligation of the
Transferor, the Seller, the Collateral Agent and the Reserve Account Agent
hereunder as if such participant or Surety was a party hereto; provided that no
such grant of participation shall operate to relieve the Surety of liability on
the Surety Bond.
(c) Except as provided herein with respect to participants and
reinsurers, nothing in this Agreement shall confer any right, remedy or claim,
express or implied, upon any person, other than the Surety, against the
Transferor, the Seller, the Collateral Agent or the Reserve Account Agent, and
all the terms, covenants, conditions, promises and agreements contained herein
shall be for the sole and exclusive benefit of the parties hereto and their
successors.
ARTICLE V
DEFAULTS; REMEDIES
Section 5.01. DEFAULTS. The occurrence of any of the following events
shall constitute an Event of Default:
(a) Any representation or warranty made by the Transferor, the
Seller, the Collateral Agent or the Reserve Account Agent (i) hereunder
which, if capable of being cured, is not cured within 15 days after
notice thereof is given to the Transferor, the Seller, the Collateral
Agent or the Reserve Account Agent or (ii) under the Transaction
Documents, or in any certificate furnished hereunder or under the
Transaction Documents, which is not cured within the applicable cure
period set forth in the related Transaction Document shall prove to be
untrue or incomplete in any material respect;
(b) (i) The Transferor, the Seller, the Reserve Account Agent or
the Collateral Agent shall fail to pay when due any amount payable by
the Transferor, the Seller, the Reserve Account Agent or the Collateral
Agent hereunder or (ii) a legislative body has enacted any law that
declares or a court of competent jurisdiction shall find or rule that
any of the Transaction Documents to which the related Person is a party
are not valid and binding on the Transferor, the Seller, the Collateral
Agent or the Reserve Account Agent;
(c) The occurrence and continuance of a Servicer Event of Default
under the Servicing Agreement (as defined therein) or a Termination
Event, a Wind-Down Event or Amortization Event under the Security
Agreement, which is not cured within the applicable cure period set
forth in the related Transaction Document (except with respect to a
Termination Event);
(d) Any failure on the part of the Transferor, the Seller, the
Collateral Agent or the Reserve Account Agent duly to observe or perform
in any material respect any other of the covenants or agreements on the
part of the Transferor, the Seller, the Collateral
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Agent or the Reserve Account Agent contained in this Agreement which
continues unremedied for 30 days, or in any other Transaction Document
which is not cured within the applicable cure period set forth in the
related Transaction Document after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given
to the Transferor, the Seller, the Collateral Agent or the Reserve
Account Agent, as the case may be, by the Surety or by the Reserve
Account Agent or the Collateral Agent (with a copy to the Surety);
(e) Any material party thereto shall breach any material
representation or warranty or fail to observe any material covenant or
agreement contained in any Transaction Document (except for the
obligations described under paragraph (a) or (c) above), and such
failure shall continue for a period of 30 days after written notice
given to the Transferor and, if applicable, such other party; provided
that, if such failure shall be of a nature that it cannot be cured
within 30 days, such failure shall not constitute an Event of Default
hereunder if within such 30-day period the Transferor or such other
party shall have given notice to the Surety of corrective action it
proposes to take, which corrective action is agreed in writing by the
Surety to be satisfactory and the Transferor or such other party shall
thereafter pursue such corrective action diligently until such default
is cured;
(f) A decree or order of a court or agency or supervisory
authority having jurisdiction in the premises in an involuntary case
under any present or future federal or state bankruptcy, insolvency or
similar law or the appointment of a conservator or receiver or
liquidator or other similar official in any insolvency, readjustment of
debt, marshaling of assets and liabilities or similar proceedings, or
for the winding-up or liquidation of its affairs, shall have been
entered against the Transferor, the Seller, the Collateral Agent or the
Reserve Account Agent and such decree or order shall have remained in
force undischarged or unstayed for a period of 60 consecutive days;
(g) The Transferor, the Seller, the Collateral Agent or the
Reserve Account Agent shall consent to the appointment of a conservator
or receiver or liquidator or other similar official in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings of or relating to the Transferor, the Seller, the Collateral
Agent or the Reserve Account Agent or of or relating to all or
substantially all of the property of any of them; or
(h) The Transferor, the Seller, the Collateral Agent or the
Reserve Account Agent shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of
or otherwise voluntarily commence a case or proceeding under any
applicable bankruptcy, insolvency, reorganization or other similar
statute, make an assignment for the benefit of its creditors or
voluntarily suspend payment of its obligations.
Section 5.02. REMEDIES; NO REMEDY EXCLUSIVE. (a) Upon the occurrence of
an Event of Default, the Surety may exercise any one or more of the rights and
remedies set forth below against the party in default:
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(i) declare all indebtedness of every type or description owed by
such party to the Surety with respect to the transactions contemplated
by the Transaction Documents to be immediately due and payable, and the
same shall thereupon be immediately due and payable;
(ii) exercise any rights and remedies under any of the
Transaction Documents in accordance with the terms of such Transaction
Document; or
(iii) take whatever action at law or in equity as may appear
necessary or desirable in its judgment to collect the amounts then due
and thereafter to become due under any of the Transaction Documents or
to enforce performance and observance of any obligation, agreement or
covenant of the Transferor, the Seller, the Collateral Agent or the
Reserve Account Agent, as the case may be, under any of the Transaction
Documents.
(b) Unless otherwise expressly provided, no remedy herein conferred upon
or reserved to the Surety is intended to be exclusive of any other available
remedy, but each remedy shall be cumulative and shall be in addition to other
remedies given under any of the Transaction Documents or existing at law or in
equity. No delay or omission to exercise any right or power accruing under any
of the Transaction Documents upon the happening of any event set forth in
Section 5.01 hereof shall impair any such right or power or shall be construed
to be a waiver thereof, but any such right and power may be exercised from time
to time and as often as may be deemed expedient. In order to entitle the Surety
to exercise any remedy reserved to the Surety in this Article, it shall not be
necessary to give any notice, other than such notice as may be required in this
Article.
Section 5.03. WAIVERS. (a) No failure by the Surety to exercise, and no
delay by the Surety in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by the Surety of any right hereunder shall not preclude
the exercise of any other right, and the remedies provided herein to the Surety
are declared in every case to be cumulative and not exclusive of any remedies
provided by law or equity.
(b) The Surety shall have the right, to be exercised in its complete
discretion, to waive any Event of Default hereunder, by a writing setting forth
the terms, conditions and extent of such waiver signed by the Surety and
delivered to the Transferor, the Seller, the Collateral Agent, and the Reserve
Account Agent. Unless such writing expressly provides to the contrary, any
waiver so granted shall extend only to the specific event or occurrence which
gave rise to the Event of Default so waived and not to any other similar event
or occurrence which occurs subsequent to the date of such waiver.
Section 5.04. NO INSOLVENCY PROCEEDINGS. So long as this Agreement is in
effect, no party hereto will file any involuntary petition or otherwise
institute any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other proceeding under any federal or state bankruptcy or similar
law against the Transferor; provided, however, the Surety may take whatever
action it deems necessary to realize on the Receivables to the extent of any
payments under the Surety Bond.
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ARTICLE VI
MISCELLANEOUS
Section 6.01. AMENDMENTS, CHANGES AND MODIFICATIONS. This Agreement may
be amended, changed, modified, altered or terminated only by written instrument
or written instruments signed by the parties hereto. The Seller agrees to cause
the Transferor to provide prior written notification to both Moody's and
Standard & Poor's of any amendment to this Agreement.
Section 6.02. NOTICES. All demands, notices and other communications to
be given hereunder shall be in writing (except as otherwise specifically
provided herein) and shall be mailed by registered mail or personally delivered
or telexed or telecopied to the recipient as follows:
To the Surety: MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
Attention: Insured Portfolio Management-SF
Telecopy No.: (914) 765-3810
Confirmation: (914) 765-3781
To the Seller: First Investors Financial Services
Group, Inc.
Suite 710
675 Bering Drive
Houston, TX 77057
Attention: Tommy A. Moore, Jr.
Telecopy No.: (713) 977-0657
Confirmation: (713) 977-2600
To the Collateral Agent: Texas Commerce Bank National Association
Corporate Trust Department
601 Travis Street
8th Floor
Houston, TX 77002
Attention: Global Trust Services/First
Investors Auto Receivables
Corporation
Telecopy No.: (713) 216-4880
Confirmation: (713) 216-4181
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To the Reserve
Account Agent: NationsBank, N.A.
NationsBank Corporate Center
10th Floor
100 N. Tryon Street
Charlotte, NC 28255
Attention: Michelle Heath
Telecopy No.: (704) 388-9169
Confirmation: (704) 386-7922
To the Transferor: First Investors Auto Receivables Corporation
Suite 710
675 Bering Drive
Houston, TX 77057
Attention: Tommy A. Moore, Jr.
Telecopy No.: (713) 977-0657
Confirmation: (713) 977-2600
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other parties as aforesaid. All such notices
and other communications shall be effective upon delivery, except when telexed
or telecopied, in which case, effective upon telex or telecopy against receipt
of answerback or written confirmation.
An affidavit by any Person representing or acting on behalf of any party
hereto, as to such mailing, having the registry receipt attached, shall be
conclusive evidence of the mailing of such demand, notice or communication.
Section 6.03. SEVERABILITY. In the event any provision of this Agreement
shall be held invalid or unenforceable by any court of competent jurisdiction,
the parties hereto agree that such holding shall not invalidate or render
unenforceable any other provision hereof. The parties hereto further agree that
the holding by any court of competent jurisdiction that any remedy pursued by
the Surety hereunder is unavailable or unenforceable shall not affect in any way
the ability of the Surety to pursue any other remedy available to it.
Section 6.04. GOVERNING LAW. This Agreement shall be construed, and the
obligations, rights and remedies of the parties hereunder shall be determined,
in accordance with the laws of the State of New York.
Section 6.05. CONSENT TO JURISDICTION AND VENUE, ETC. The Transferor,
the Seller, the Collateral Agent and the Reserve Account Agent each irrevocably
(a) agrees that any suit, action or other legal proceeding arising out of or
relating to this Agreement, the Security Agreement or any of the other
Transaction Documents may be brought in a court of record in the State of New
York or in the Courts of the United States of America located in such state, (b)
consents to the jurisdiction of each such court in any such suit, action or
proceeding and (c) waives any objection which they may have to the laying of
venue of any such suit, action or proceeding in any of such courts and any claim
that any such suit, action or proceeding has been brought in an
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inconvenient forum. The Transferor, the Seller and the Collateral Agent each
hereby irrevocably appoints CT Corporation System, Suite 1301, 116 John Street,
New York, New York 10038, as its agent to receive on behalf of the Transferor,
the Seller and the Collateral Agent, as the case may be, and their respective
properties service of copies of the summons and complaint and other process
which may be served in any such suit, action or proceeding (the "Process
Agent"). Such service may be made by mailing or delivering a copy of such
process to the Transferor, the Seller or the Collateral Agent, as the case may
be, in care of the Process Agent at the applicable address above, and the
Transferor, the Seller and the Collateral Agent each hereby irrevocably
authorizes and directs the Process Agent to accept such service on their behalf.
The Reserve Account Agent hereby irrevocably consents to the service of any and
all process in any such suit, action or proceeding described in clause (a) above
by the mailing of copies of such process to its New York office located at 767
Fifth Avenue, New York, NY 10153, with a copy to the Reserve Account Agent at
its address provided in Section 6.02 hereof. The Surety agrees to mail to the
Transferor, the Seller or the Collateral Agent as the case may be, at its
address provided in Section 6.02 hereof a copy of any summons, complaint or
other process mailed or delivered by it to the Process Agent. As an alternative
method of service, the Transferor, the Seller and the Collateral Agent each also
irrevocably consents to the service of any and all process in any such action or
proceeding described in clause (a) above by the mailing of copies of such
process to the Transferor, the Seller and the Collateral Agent, as the case may
be, at its address provided in Section 6.02 hereof. The Transferor, the Seller,
the Collateral Agent and the Reserve Account Agent each agrees that a final,
nonappealable judgment in any such suit, action or proceeding shall be
conclusive and may be enforced in other jurisdictions by execution on the
judgment or in any other manner provided by law. All mailings under this Section
6.05 shall be by certified mail, return receipt requested.
Nothing in this Section 6.05 shall affect the right of the Surety to
serve legal process in any other manner permitted by law or affect the right of
the Surety to bring any suit, action or proceeding against the Transferor, the
Seller, the Collateral Agent or the Reserve Account Agent or their respective
property in the courts of any other jurisdiction.
Section 6.06. CONSENT OF SURETY. In the event that the Surety's consent
is required under the terms hereof or any term of any other Transaction
Document, it is understood and agreed that the determination whether to grant or
withhold such consent shall be made solely by the Surety in its absolute
discretion. The Surety hereby agrees that it will respond to any request for
consent in a timely manner, taking into consideration the business of the
Transferor, the Seller, the Collateral Agent and the Reserve Account Agent.
Section 6.07. COUNTERPARTS. This Agreement may be executed in
counterparts by the parties hereto, and each such counterpart shall be
considered an original and all such counterparts shall constitute one and the
same instrument.
Section 6.08. RECITALS. All of the recitals hereinabove set forth are
incorporated in this Agreement by reference.
Section 6.09. HEADINGS. The headings of sections contained in this
Agreement are provided for convenience only. They form no part of this Agreement
and shall not affect its
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construction or interpretation. All references to sections or subsections of
this Agreement refer to the corresponding sections or subsections of this
Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement, all
as of the day and year first above mentioned.
MBIA INSURANCE CORPORATION
By
FIRST INVESTORS AUTO RECEIVABLES
CORPORATION, as Transferor
By /s/ TOMMY A. MOORE JR.
Tommy A. Moore Jr.
FIRST INVESTORS FINANCIAL SERVICES,
INC., as Seller
By /s/ TOMMY A. MOORE JR.
Tommy A. Moore Jr.
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Collateral Agent
By
NATIONSBANK, N.A., as Reserve
Account Agent
By /s/ MICHELLE HEATH
Michelle Heath
29
EXHIBIT 10.33
SERVICING AGREEMENT
This Servicing Agreement, dated as of October 22, 1996, is between First
Investors Auto Receivables Corporation, a Delaware corporation ("FIARC"), and
General Electric Capital Corporation, as Servicer ("Servicer").
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
INTRODUCTION
Contemporaneously with the execution of this Agreement, (i) FIARC and
Enterprise Funding Corporation ("Enterprise") have entered into a Note Purchase
Agreement dated as of October 22, 1996 whereby FIARC has issued to Enterprise
its Note evidencing certain indebtedness on the terms and conditions set forth
therein (the "Indebtedness"); (ii) FIARC, Enterprise, Texas Commerce Bank
National Association (the "Collateral Agent"), NationsBank, N.A., MBIA Insurance
Corporation ("MBIA") and First Investors Financial Services, Inc. ("First
Investors") have entered into a Security Agreement dated October 22, 1996
("Security Agreement") whereby FIARC has granted to the Collateral Agent, for
the benefit of Enterprise and MBIA, a first priority security interest in the
Receivables as defined therein ("Receivables") and certain other properties and
rights as provided in the Security Agreement, to collateralize the Indebtedness;
and (iii) in accordance with the terms of the Security Agreement, the Collateral
Agent has agreed to administer the receipt and disbursement of funds generated
from the Receivables on the terms and conditions provided therein. In connection
therewith, the Servicer has agreed to service the Receivables on the terms and
conditions set forth below.
ARTICLE II
DEFINITIONS
SECTION 2.01. DEFINITIONS.
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
<PAGE>
"AGREEMENT" means this Servicing Agreement and all amendments and
supplements thereto; provided, however, that MBIA has given its prior
written consent to such amendments and supplements.
"AMOUNT FINANCED" with respect to a Receivable means the amount advanced
under the Receivable toward the purchase price of the Financed Vehicle and
any related costs.
"ANNUAL PERCENTAGE RATE" or "APR" of a Receivable means the annual rate of
finance charges stated in the Receivable.
"BUSINESS DAY" means a day on which banks are open for business in New
York, New York, Charlotte, North Carolina, and Houston, Texas.
"COLLECTION ACCOUNT" means the account referred to in Section 5.01.
"COLLATERAL AGENT" means Texas Commerce Bank National Association, as
collateral agent and any successor collateral agent acceptable to MBIA and
appointed pursuant to the provisions of the Security Agreement.
"COLLATERAL AGENT OFFICER" means the chairman or vice-chairman of the
board of directors, the chairman or vice-chairman of the executive
committee of the board or directors, the president, any vice president,
the secretary, any assistant secretary, the treasurer, any assistant
treasurer, the cashier, any assistant cashier, any trust officer or
assistant trust officer, the controller and any assistant controller or
any other officer of the Collateral Agent 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 such officer's
knowledge of and familiarity with the particular subject.
"COLLECTION PERIOD" means a calendar month.
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"CORPORATE TRUST OFFICE" means the office of the Collateral Agent at which
its corporate trust business shall be administered, which office at the
date of this Agreement is located at:
Texas Commerce Bank National Association
600 Travis, 8th Floor
Houston, Texas 77002
Attention: Vice President,
Corporate Trust Department
"CREDIT INSURANCE" means VSI Insurance and any other insurance with
respect to the Receivables maintained in accordance with the Security
Agreement.
"DEALER" means the dealer who sold a Financed Vehicle and who originated
and assigned the related Receivable to First Investors under an existing
agreement between such dealer and First Investors.
"EFFECTIVE TIME" means the time at which the purchase of any Receivable by
FIARC from First Investors shall be effective in accordance with the terms
of the Purchase Agreement.
"ELIGIBLE SERVICER" means any established institution approved in writing
by MBIA and having a consolidated net worth of not less than $100,000,000
or the accounts of which are consolidated for financial accounting
purposes with any established institution having such a consolidated net
worth and whose regular business shall include the servicing of automotive
receivables.
"ENDING DATE" means the last day of each Collection Period.
"ENTERPRISE" means Enterprise Funding Corporation, a Delaware corporation.
"FACILITY" means the $105,000,000 revolving credit facility created and
evidenced by the Note Purchase Agreement and the Security Agreement.
"FINANCED VEHICLE" means an automobile or light truck, together with all
accessions thereto, securing an Obligor's indebtedness under the
respective Receivable.
"FIRST INVESTORS" means First Investors Financial Services, Inc., a
Texas corporation.
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"FIARC" means First Investors Auto Receivables Corporation, a Delaware
corporation.
"FIARC EVENT OF DEFAULT" means an event specified in Section 8.02.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of
the foregoing and the filing of any financing statement under the UCC
(other than any such financing statement filed for informational purposes
only) or comparable law of any jurisdiction to evidence any of the
foregoing.
"LIQUIDATED RECEIVABLE" means any Defaulted Receivable (as defined in the
Security Agreement) liquidated by the Servicer through sale of the
Financed Vehicle or otherwise.
"LIQUIDATION PROCEEDS" means (i) proceeds of any claim under any Credit
Insurance and (ii) all monies collected in connection with the disposition
of any Financed Vehicle relating to a Liquidated Receivable, from whatever
source, net of the sum of (x) any amounts reasonably expended by the
Servicer in connection with the liquidation of such Financed Vehicle for
the account of the Obligor and, (y) any such amounts required by law to be
remitted to the Obligor.
"MBIA" means MBIA Insurance Corporation, a New York stock insurance
company.
"NOTE PURCHASE AGREEMENT" means the Note Purchase Agreement dated October
22, 1996 between FIARC and Enterprise.
"OBLIGOR" on a Receivable means the purchaser or co-purchasers of the
Financed Vehicle or any other Person who owes payments under the
Receivable.
"OFFICER'S CERTIFICATE" means a certificate signed by the chairman of the
board, the president, any vice chairman of the board, any vice president,
the treasurer, the controller or any assistant treasurer or any assistant
controller of FIARC, First Investors, or a Servicing Employee of the
Servicer, as appropriate.
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"OPINION OF COUNSEL" means a written opinion of counsel who may but need
not be counsel to FIARC or the Servicer, which counsel shall be acceptable
to the Collateral Agent and MBIA and which opinion of counsel shall, in
addition to the addressee specified, be addressed to the Collateral Agent
and MBIA.
"PERSON" means an individual, a partnership, a corporation, (including a
business trust), a joint stock company, a trust, an unincorporated
association, a joint venture or other entity or a government or an agency
or political subdivision thereof.
"PRECOMPUTED RECEIVABLE" means any Receivable under which the portion of a
payment allocable to earned interest (which may be referred to in the
Receivable as an add-on finance charge) and the portion allocable to the
Amount Financed is determined according to the sum of periodic balances or
the sum of monthly balances or any equivalent method of calculating
monthly actuarial receivables.
"PURCHASE AGREEMENT" means the agreement dated as of October 22, 1996
relating to the purchase by FIARC from First Investors of the Receivables,
as the same may be amended, modified and supplemented from time to time in
accordance with the terms thereof and of the Security Agreement, but only
with the written consent of MBIA.
"PURCHASE AMOUNT" means the amount, as of an Ending Date, required to
prepay in full the respective Receivable under the terms thereof including
interest to the end of the month of purchase. In the event a Receivable is
repurchased by FIARC, the Purchase Amount shall include any out-of-pocket
expenses which are otherwise reimbursable hereunder.
"PURCHASED RECEIVABLE" means a Receivable purchased as of the respective
Ending Date by the Servicer pursuant to Section 4.07 or by FIARC pursuant
to Section 3.02.
"RECEIVABLE" means indebtedness owed to FIARC under a retail installment
sales contract pledged to secure the Facility pursuant to the Security
Agreement, whether constituting an account, chattel paper, instrument,
mortgage, deed of trust or general intangible, arising out of or in
connection with the sale of new or used cars, or new or used light trucks
including the rendering of services by the Dealer in connection therewith,
and includes the right of payment of any finance charges and other
obligations of the Obligor with
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respect thereto. Notwithstanding the foregoing, once the Collateral Agent
has released its security interest in a Receivable and FIARC shall have
given notice thereof to the Servicer pursuant to Section 3.03, it shall no
longer constitute a Receivable hereunder.
"RECEIVABLE FILES" means the documents specified in Section 3.04.
"SCHEDULED PAYMENTS" on a Precomputed Receivable means that portion of the
payment required to be made by the Obligor during the respective
Collection Period sufficient to amortize the principal balance over the
term of the Receivable and to provide interest at the APR.
"SECURITY AGREEMENT" means the Security Agreement dated October 22, 1996
among Enterprise, FIARC, MBIA, First Investors, the Collateral Agent and
NationsBank N.A. in its capacity as Reserve Account Agent as defined
therein.
"SERVICER" means General Electric Capital Corporation as the servicer of
the Receivables, and each successor to General Electric Capital
Corporation (in the same capacity) approved by MBIA in writing pursuant to
Section 7.03 or 8.03.
"SERVICER EVENT OF DEFAULT" means an event specified in Section 8.01.
"SERVICER'S CERTIFICATE" means a certificate completed and executed on
behalf of the Servicer by a Servicing Employee of the Servicer pursuant to
Section 4.09.
"SERVICING EMPLOYEE" means any employee of the Servicer authorized to
execute documents on behalf of the Servicer, involved in, or responsible
for, the administration and servicing of the Receivables whose name
appears on a list of servicing employees furnished to FIARC, MBIA and the
Collateral Agent by the Servicer, as such list may from time to time be
amended.
"SERVICING FEE" means the fee payable to the Servicer for services
rendered during the respective Collection Period, determined pursuant to
Section 4.08.
"SIMPLE INTEREST METHOD" means the method of allocating a fixed level
payment to principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the fixed
rate of interest multiplied by the
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unpaid principal balance multiplied by the period of time elapsed since
the preceding payment of interest was made.
"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.
"STATE" means any state or commonwealth of the United States of America,
or the District of Columbia.
"SUB-SERVICER" means any Person appointed by the Servicer as a
sub-servicer pursuant to Section 4.12.
"UCC" means the Uniform Commercial Code as in effect from time to time in
the States of New York and Texas.
"VSI INSURANCE" means the blanket collateral protection insurance policy
or policies of insurance underwritten by Agricultural Excess and Surplus
Insurance Company (or any other insurance company acceptable to MBIA)
covering each of the installment sales contracts held by FIARC, including
the Receivables, in the form attached hereto as Exhibit "A".
SECTION 2.02. USAGE OF TERMS.
With respect to all terms in this Agreement, the singular includes the
plural and the plural the singular; words importing any gender include the other
genders; references to "writing" include printing, typing, lithography, and
other means of reproducing words in a visible form; references to agreements and
other contractual instruments include all subsequent amendments thereto or
changes therein entered into in accordance with their respective terms and not
prohibited by this Agreement; references to Persons include their permitted
successors and assigns; and the term "including" means "including without
limitation."
ARTICLE III
THE RECEIVABLES
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF FIARC.
FIARC makes the following representations and warranties as to the
Receivables on which the Servicer may rely in accepting the responsibilities of
Servicer hereunder and on which MBIA may also
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rely. Such representations and warranties speak (i) as of the execution and
delivery of this Agreement, but shall survive such execution and delivery, and
(ii) as of the Effective Time of the sale of each Receivable to FIARC under the
Purchase Agreement.
(i) CHARACTERISTICS OF RECEIVABLES. Each Receivable (a) shall have
been originated in the United States of America, shall have been fully and
properly executed by the parties thereto, shall have been purchased by
FIARC from First Investors and shall have been validly assigned to FIARC;
(b) shall have created a valid, subsisting and enforceable first priority
security interest in favor of First Investors in the Financed Vehicle,
which security interest has been assigned by First Investors to FIARC, (c)
shall contain customary and enforceable provisions such that the rights
and remedies of the holder thereof shall be adequate for realization
against the collateral of the benefits of the security, (d) shall provide
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 by maturity and yield
interest at the Annual Percentage Rate, (e) is an "Eligible Receivable" as
defined in the Security Agreement, and (f) in the case of a Precomputed
Receivable, shall provide for, in the event that such contract is prepaid,
a prepayment that fully pays the principal balance and includes a full
month's interest, in the month of prepayment, at the Annual Percentage
Rate.
(ii) COMPLIANCE WITH LAW. Each Receivable and the sale of the
Financed Vehicle complies with all requirements of applicable federal,
State, and local laws, and regulations thereunder, including, without
limitation, usury laws, the Federal Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Fair Credit Reporting Act, the Fair Debt
CollectionPractices Act, the Federal Trade Commission Act, the
Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B and
Z, the Texas Consumer Credit Code and 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.
(iii) BINDING OBLIGATION. Each Receivable shall represent the
genuine, legal, valid, and binding payment obligation in writing of the
Obligor, enforceable by the holder thereof in accordance with its terms.
(iv) NO GOVERNMENT OBLIGOR. None of the Receivables shall be due
from the United States of America or any State or
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from any agency, department, or instrumentality of the United States of
America or any State.
(v) SECURITY INTEREST IN FINANCED VEHICLE. Immediately prior to the
sale, assignment, and transfer thereof under the Purchase Agreement, each
Receivable shall be secured by a validly perfected first priority Lien and
security interest in the Financed Vehicle in favor of First Investors as
secured party or all necessary and appropriate actions shall have been
commenced that would result in the valid perfection of a first priority
security interest in the Financed Vehicle in favor of First Investors as
secured party.
(vi) RECEIVABLES IN FORCE. No Receivable shall have been satisfied,
subordinated, or rescinded, nor shall any Financed Vehicle have been
released from the lien granted by the related Receivable in whole or in
part.
(vii) NO WAIVER. No provision of a Receivable shall have been
waived.
(viii) NO AMENDMENTS. No Receivable shall have been amended such
that the number of the Obligor's Scheduled Payments in the case of a
Precomputed Receivable or the number of originally scheduled due dates in
the case of a Simple Interest Receivable shall have been increased.
(ix) NO DEFENSES. No right of rescission, cancellation, claim, set
off, counterclaim, or defense shall have been asserted or threatened with
respect to any Receivable, nor does any Obligor have any right or
rescission or cancellation, claim, defense, set off or counterclaim of any
kind with respect to any Receivable.
(x) NO LIENS. To the best of FIARC's knowledge, no liens or claims
shall have been filed for work, labor, or materials relating to a Financed
Vehicle that shall be liens prior to, or equal or coordinate with, the
security interest in the Financed Vehicle granted by the Obligor.
(xi) NO DEFAULT. Except for payment delinquencies permitted for
Eligible Receivables as defined in the Security Agreement, no default,
breach, violation, or event permitting acceleration under the terms of
such Receivable shall have 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 such
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Receivable shall have arisen; and FIARC shall not waive any of the
foregoing.
(xii) INSURANCE. First Investors, in accordance with its customary
procedures, shall have determined that the Obligor has obtained or agreed
to obtain physical damage insurance.
(xiii) TITLE. It is the intention of FIARC that each transfer and
assignment contemplated by the Purchase Agreement constitute a sale of the
Receivables from First Investors to FIARC and that the beneficial interest
in and title to the Receivables shall not be part of the debtor's estate
in the event of the filing of a bankruptcy petition by or against First
Investors under any bankruptcy law. No Receivable has been sold,
transferred, assigned or pledged by First Investors or FIARC to any Person
other than the pledge to the Collateral Agent pursuant to the Security
Agreement. FIARC has good and marketable title to each Receivable free and
clear of all Liens, encumbrances, security interests, and rights of others
except for the security interest of the Collateral Agent under the
Security Agreement.
(xiv) LAWFUL ASSIGNMENT. No Receivable shall have been originated
in, or shall be subject to the laws of, any jurisdiction under which the
sale, transfer, and assignment of such Receivable from First Investors to
FIARC under the Purchase Agreement, or the pledge of such Receivable by
FIARC to the Collateral Agent under the Security Agreement, shall be
unlawful, void, or voidable.
(xv) ALL FILINGS MADE. All filings (including, without limitation,
UCC filings) necessary in any jurisdiction to give the Collateral Agent a
first perfected security interest in each Receivable shall have been made
as of the relevant Effective Time.
(xvi) ONE ORIGINAL. There shall be only one original executed copy
of each Receivable, which shall be delivered to the Servicer in accordance
with Section 3.03.
(xvii) CHATTEL PAPER. Each Receivable constitutes "chattel paper"
under the UCC.
(xviii) MATURITY. Each Receivable shall have an original maturity of
not more than 60 months.
(xix) LOCATION OF OFFICE. The principal executive office of FIARC is
located in Houston, Texas.
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(xx) AGENT FOR SERVICE. The agent for service for FIARC shall be CT
Corporation System, 811 Dallas Avenue, Houston, Texas 77002.
(xxi) NO INSOLVENT OBLIGORS. As of the Effective Time with respect
to any Receivable, no Obligor on such Receivable is shown on the
Receivable Files to be the subject of a bankruptcy proceeding.
SECTION 3.02. REPURCHASE UPON BREACH.
FIARC and the Servicer shall each promptly inform the other, in writing,
with a copy to the Collateral Agent, upon the discovery of any breach of FIARC's
representations and warranties made pursuant to Section 3.01. Unless the breach
shall have been cured by the second Ending Date following such written notice,
FIARC shall repurchase (or shall cause First Investors to repurchase pursuant to
its obligations under the Purchase Agreement) any Receivable materially and
adversely affected by the breach. In consideration of the purchase of the
Receivable, FIARC shall remit the Purchase Amount, in the manner specified in
Section 5.04. 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(i)(d) or (f) shall include such additional amount as shall be necessary to
provide the full amount of interest as contemplated therein. The sole remedy of
the Servicer with respect to a breach of any representation and warranty
pursuant to Section 3.01 shall be to require FIARC to repurchase Receivables
pursuant to this Section 3.02 or to enforce First Investors' obligation to FIARC
to repurchase such Receivables pursuant to the Purchase Agreement.
SECTION 3.03. DESIGNATION AND REMOVAL OF RECEIVABLES.
Prior to the transfer by FIARC of a security interest in Receivables to
the Collateral Agent pursuant to the Security Agreement, FIARC shall give
written notice of such transfer to the Servicer and MBIA (i) identifying all
such Receivables, and (ii) specifying the date on which such transfer is to be
effected. On or prior to such date, the Servicer shall clearly and unambiguously
mark all computer tapes, files and records to indicate that such security
interest has been transferred to the Collateral Agent as of the indicated date.
In the event that any Receivable should cease to be a Receivable by reason
of the release of the security interest of the Collateral Agent therein, FIARC
shall promptly give notice thereof to the Servicer and MBIA (i) identifying such
Receivable, and (ii) specifying the date as of which the same shall cease to be
a
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Receivable for purposes of this Agreement. The Servicer shall promptly modify
its computer tapes, files and records accordingly.
SECTION 3.04. CUSTODY OF RECEIVABLE FILES.
To assure uniform quality in servicing the Receivables and to reduce
administrative costs, FIARC, upon the execution and delivery of this Agreement,
hereby revocably appoints the Servicer, and the Servicer hereby accepts such
appointment, to act as the agent of the Collateral Agent as custodian (such
appointment being subject to revocation to the extent provided in Section 3.08)
of the following documents or instruments which shall be delivered to the
Servicer, as custodian for the Collateral Agent, with respect to each
Receivable:
1. Agreement of Obligor to provide physical damage insurance or binder
2. Original application for title with lien of First Investors
disclosed therein which has been presented, together with tender of
filing fee, to designated agent of the Texas Department of
Transportation in accordance with Section 501.113 of Texas
Certificate of Title Act (or equivalent documents under other
applicable state laws)
a. White Slip or original certificate of title (or other title
documents under applicable state law)
b. Letter of Guaranty
3. Original sales contract/security agreement evidencing the
Receivable signed by Obligor and the original of any
assumption agreement or any modification, extension or
refinancing agreement
4. Factory invoice (new car) or loan to value evaluation
(used car)
5. Original credit application (signed by Obligor)
6. Credit Bureau reports
7. Insurance score sheet
8. GAP and VSI insurance certificate
9. Credit life & disability insurance certificate,
application or policy to the extent obtained by the
Obligor
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10. (a) Assignment and Power of Attorney, transferring title
from First Investors to FIARC
(b) Power of Attorney in favor of Servicer from First
Investors
11. Equifax report
12. Any and all other documents that Servicer shall maintain on file, in
accordance with customary servicing practices, pertaining to such
Receivable or the related Obligor or Financed Vehicle.
The Servicer shall not be responsible for the custody and maintenance of
any of the foregoing documents that have not been delivered to it or obtained by
the Servicer in the course of servicing the Receivables pursuant to this
Agreement.
SECTION 3.05. DUTIES OF SERVICER AS CUSTODIAN.
(a) SAFEKEEPING. The Servicer shall hold the Receivable Files
on behalf of the Collateral Agent and maintain such accounts,
records, and computer systems pertaining to each Receivable File in
a manner that is consistent with customary servicing practices. In
performing its duties as custodian the Servicer shall act with
reasonable care, using that degree of skill and attention that the
Servicer exercises with respect to the receivable files relating to
comparable automotive receivables that the Servicer services for
itself or others. The Servicer shall promptly report to the
Collateral Agent any material failure on its part to hold the
Receivable Files and maintain its accounts, records, and computer
systems as herein provided and promptly take appropriate action to
remedy any such failure, it being understood that the Servicer shall
have no responsibility with respect to Receivable Files (or any
portion thereof) not delivered to the Servicer. Nothing herein shall
be deemed to require an initial review or any periodic review by the
Collateral Agent of the Receivable Files.
(b) MAINTENANCE OF AND ACCESS TO RECORDS. The
Servicer shall maintain each Receivable File at one of
its offices specified in Exhibit "B" to this Agreement,
or at such other office in the United States as shall be
specified to FIARC and the Collateral Agent by written
notice delivered promptly, but in no event later than 20
days after any change in location. The Servicer may
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temporarily move individual Receivable 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 Servicer shall make available to FIARC and the
Collateral Agent a list of locations of the Receivable Files, and
the related accounts, records and computer systems maintained by the
Servicer at such times as FIARC or the Collateral Agent shall
reasonably request.
(c) RELEASE OF DOCUMENTS. Upon written instruction from the
Collateral Agent, the Servicer shall release any Receivable File to
the Collateral Agent, the Collateral Agent's agent, or the
Collateral Agent's designee, as the case may be, at such place or
places as the Collateral Agent may designate, as soon as
practicable. The Servicer shall not be responsible for any
Receivable File so released until such time, if any, as it has been
returned to the Servicer.
SECTION 3.06. INSTRUCTIONS; AUTHORITY TO ACT.
To the extent that the Servicer is authorized or required under this
Agreement to act upon the instructions of the Collateral Agent with respect to
the custody of the Receivable Files, the Servicer shall be deemed to have
received proper instructions with respect to the Receivable Files upon its
receipt of written instructions signed by a Collateral Agent Officer.
SECTION 3.07. CUSTODIAN'S INDEMNIFICATION.
The Servicer as custodian shall indemnify FIARC, for any breach of its
obligations as custodian hereunder, to the extent specified in Section 7.02.
SECTION 3.08. EFFECTIVENESS AND TERMINATION.
The Servicer's appointment as custodian shall become effective as of the
date hereof and shall continue in full force and effect until such time as all
of the rights and obligations of the Servicer shall have been terminated in
accordance with the provisions of this Agreement.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.01. DUTIES OF SERVICER.
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The Servicer as agent for FIARC (to the extent provided herein) shall
manage, service, administer and make collections on the Receivables with
reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to automotive receivables that it services for itself or
others. The Servicer's duties shall include, to the extent specified herein,
collection and posting of payments, responding to inquiries of Obligors on such
Receivables, investigating delinquencies, sending payment coupons to Obligors,
accounting for collections, and furnishing monthly statements to FIARC and the
Collateral Agent as provided herein. Subject to the provisions of Section 4.02,
the Servicer shall follow its customary standards, policies, and procedures in
performing its duties as Servicer. Without limiting the generality of the
foregoing, and subject to the provisions of Section 4.06, the Servicer is
authorized and empowered to execute and deliver, on behalf of itself or FIARC
any and all instruments of satisfaction or cancellation, or partial or full
release or discharge, and all other comparable instruments, with respect to the
Financed Vehicles securing the Receivables. If the Servicer, in its sole
discretion, determines that it is necessary or desirable to commence a legal
proceeding to enforce a Receivable, the Servicer shall consult with FIARC to
determine whether to commence such a legal proceeding. If the Servicer and FIARC
agree to commence legal proceedings with respect to such Receivable, then (i)
the costs and expenses (including, without limitation, any legal fees) incurred
in connection with such legal proceeding shall be borne by FIARC, and (ii) the
Servicer may reimburse itself for its reasonable out-of-pocket expenses incurred
in connection with such legal proceedings prior to depositing any recoveries
received by the Servicer from such legal proceeding in the Collection Account
pursuant to Section 5.02. FIARC shall furnish the Servicer with any powers of
attorney, including any requisite power of attorney from First Investors, and
any other documents reasonably necessary or appropriate to enable the Servicer
to carry out its servicing and administrative duties hereunder.
SECTION 4.02. COLLECTION OF RECEIVABLE PAYMENTS.
The Servicer shall make reasonable efforts to collect all payments called
for under the terms and provisions of the Receivables as and when the same shall
become due and shall follow such collection procedures as it follows with
respect to comparable automotive receivables that it services for itself or
others. The Servicer may in its discretion grant extensions, rebates or
adjustments on a Receivable or waive any late payment charge or any other fees
that may be collected in the ordinary course of servicing a Receivable
consistent with its customary servicing procedures. The foregoing
notwithstanding, no extension of a
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monthly payment shall be granted with respect to a Receivable unless the first
six consecutive monthly payments were made in accordance with the terms of such
Receivable, and in no event (i) shall more than two extensions of monthly
payments with respect to a Receivable be granted during any 12-month period, or
(ii) shall the total extensions of monthly payments granted over the term of a
Receivable exceed one such extension for every 12 months in the stated term of
such Receivable.
SECTION 4.03. REALIZATION UPON RECEIVABLES.
The Servicer shall use its reasonable best efforts, consistent with its
customary servicing procedures, to repossess or otherwise convert the ownership
of the Financed Vehicle securing any Receivable as to which the Servicer shall
have determined that no satisfactory arrangement can be made for collection of
payments, and in the case of the repossession of Financed Vehicles, the Servicer
shall use its best efforts to remarket the repossessed Financed Vehicles in the
same manner that the Servicer remarkets its own financed vehicles. The foregoing
shall be subject to the provision that, in any case in which the Financed
Vehicle shall have suffered damage, the Servicer shall not expend funds in
connection with the repair or the repossession of such Financed Vehicle unless
it shall determine in good faith and in its reasonable discretion that such
repair and/or repossession will increase the Liquidation Proceeds by an amount
greater than the amount of such expenses; provided, however, that the Servicer
shall incur no liability hereunder if such repair and/or possession does not, in
fact, increase the Liquidation Proceeds by an amount greater than the amount of
such expenses. Notwithstanding any provision of this Agreement to the contrary,
the Servicer shall not be obligated to institute any action for repossession
through judicial proceedings unless it shall determine in good faith and in its
reasonable discretion that such action would increase the Liquidation Proceeds
by an amount greater than the amount of expenses incurred by it in connection
with such proceeding; provided, however, that the Servicer shall incur no
liability hereunder if such proceeding does not, in fact, increase the
Liquidation Proceeds by an amount greater than the amount of expenses incurred
by it in connection with such proceeding. The Servicer may reimburse itself for
its reasonable out-of-pocket expenses incurred in connection with the
repossession or disposition of a Financed Vehicle prior to depositing any
Liquidation Proceeds with respect thereto in the Collection Account pursuant to
Section 5.02.
With respect to any Receivable, the Obligor of which has filed
bankruptcy, if it is not referred by the Servicer to outside legal
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counsel the Servicer shall be entitled to receive a one time fee of $250 in
respect of such Receivable, and, if it is so referred, the Servicer shall be
entitled to reimbursement of the fees and expenses of such counsel. The Servicer
shall have no obligation under the Agreement to take any action to realize upon
any recourse to Dealers.
SECTION 4.04. INSURANCE AND TITLE TRACKING.
The Servicer, in accordance with its customary servicing procedures, shall
monitor the contractual requirement that each Obligor shall maintain physical
damage insurance covering the Financed Vehicle as of the execution date of the
Receivable. The Servicer shall track the expirations and cancellations of
insurance policies required to be maintained by Obligors and shall send reminder
notices to Obligors whose insurance policies have expired and default letters to
Obligors who fail to obtain or maintain required coverages. The Servicer shall
notify the Collateral Agent and FIARC on a monthly basis of Obligors who have
failed to obtain or maintain such coverages. The Servicer may subcontract such
insurance services to a third party.
FIARC shall undertake to cause the proper Certificates of Title issued by
the Texas Department of Transportation, or the equivalent certificates or
registrations issued by the appropriate authorities of other States, if
applicable, to reflect FIARC (or First Investors) as the lienholder thereon with
respect to any Financed Vehicle covered by a Receivable. The Servicer shall
establish procedures to track and verify the receipt of proper Certificates of
Title issued by the Texas Department of Transportation, or the equivalent
certificates or registrations issued by the appropriate authorities of other
States if applicable, reflecting FIARC (or First Investors) as the lienholder
thereon with respect to any Financed Vehicle covered by a Receivable. In the
event that the Servicer does not receive such documentation with respect to any
Receivable, within 120 days after the Servicer enters such Receivable into its
tracking system, the Servicer shall promptly notify FIARC and the Collateral
Agent by delivery of a Notice of Title Discrepancy in the form attached hereto
as Exhibit "C". The Servicer shall have no obligations hereunder to cause any
such Certificate or Title or equivalent certificates to reflect FIARC (or First
Investors) as the lienholder thereon with respect to any Financed Vehicle
covered by a Receivable.
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SECTION 4.05. MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES.
The Servicer shall, in accordance with its customary servicing procedures,
cooperate with FIARC in taking such steps as are necessary to maintain
perfection of the security interest created by each Receivable in the related
Financed Vehicle. FIARC hereby authorizes the Servicer to take such steps as are
necessary to reperfect such security interest on behalf of FIARC in the event of
the relocation of a Financed Vehicle or for any other reason. Without limiting
the foregoing, the Servicer shall take such steps as are necessary to assure
that any remarketing of repossessed Financed Vehicles under consignment
arrangements with dealers or other third parties are effected in such manner as
to assure that the priority of the security interest of FIARC therein is not
impaired.
Notwithstanding the foregoing or any other provision of this Agreement, the
Servicer shall have no obligation to effect any change in the notation of First
Investors as the lienholder on any title documents relating to the Financed
Vehicles or to cause any such title documents to be endorsed or delivered to
FIARC.
SECTION 4.06. COVENANTS OF SERVICER.
Except as may otherwise be required by any applicable law, rule,
regulation, order or decree, the Servicer shall not (i) impair FIARC's ownership
of the Receivables, or (ii) release the Financed Vehicle securing any such
Receivable from the security interest granted by such Receivable, in whole or in
part, except upon the expiration of twenty days following (a) payment in full by
the Obligor thereunder, (b) repossession, or (c) payment of final settlement
with a physical damage insurance carrier.
SECTION 4.07. PURCHASE OF RECEIVABLES UPON BREACH.
The Servicer and FIARC shall promptly inform the other, in writing (with a
copy to the Collateral Agent), upon the discovery of any breach of Section 4.06.
Unless the breach shall have been cured by the second Ending Date following such
discovery (or, at the Servicer's election, the first following Ending Date), the
Servicer shall purchase the related Receivable. In consideration of the purchase
of such Receivable, the Servicer shall remit the Purchase Amount in the manner
specified in Section 5.04. The sole remedy of FIARC with respect to a breach of
Section 4.06 shall be to require the Servicer to repurchase Receivables pursuant
to this Section 4.07.
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SECTION 4.08. SERVICING COMPENSATION.
The Servicing Fee with respect to each Collection Period, which shall be
withheld by the Servicer from collections on Receivables prior to remittance to
the Collection Account as provided in Section 5.02, shall equal (i) $12.45 for
each Receivable being serviced by the Servicer as of the tenth day of such
Collection Period, plus (ii) $75.00 for each Financed Vehicle repossessed and
remarketed.
SECTION 4.09. SERVICER'S MONTHLY REPORTS.
On or before the tenth day after each Ending Date, the Servicer shall
deliver to FIARC and the Collateral Agent the following reports with respect to
the preceding Collection Period: (i) a Servicer's Certificate substantially in
the form of Exhibit "D" hereto (on which the "principal portion of amount
collected", the "interest portion of amount collected" and the "aggregate
principal balance of the Receivables as of the Ending Date" shall be computed in
accordance with the Simple Interest Method), (ii) a Trial Balance and
Collections Report substantially in the form of Exhibit "D-1" hereto, and (iii)
a Monthly Delinquency Report substantially in the form of Exhibit "D-2" hereto.
Such reports shall be presumed correct and accurate unless, within thirty days
after receipt thereof, FIARC or the Collateral Agent delivers to the Servicer by
registered or certified mail, written objection specifying the error or errors
contained in such reports, in which event the Servicer's sole liability shall be
to make appropriate adjustments correcting such error.
SECTION 4.10. NOTICE OF DEFAULT.
The Servicer shall deliver to FIARC and the Collateral Agent promptly
after having obtained knowledge thereof, but in no event later than two business
Days thereafter, written notice in an Officer's Certificate of any event which
with the giving of notice or lapse of time, or both, would become a Servicer
Event of Default under Section 8.01. FIARC shall deliver to the Collateral Agent
and the Servicer, promptly after having obtained knowledge thereof, but in no
event later than two Business Days thereafter, written notice in an Officer's
Certificate of any event which with the giving of notice or lapse of time, or
both, would become a FIARC Event of Default under Section 8.02.
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SECTION 4.11. SERVICER EXPENSES.
Except as otherwise reimbursable hereunder, the Servicer shall be required
to pay all expenses incurred by it in connection with its activities hereunder,
including taxes imposed on the Servicer.
SECTION 4.12. APPOINTMENT OF SUB-SERVICER.
The Servicer may at any time appoint a Sub-servicer to perform any of the
duties or obligations of the Servicer hereunder; provided, however, that such
appointment shall not relieve the Servicer of its responsibility with respect to
such duties and obligations. All Sub-servicing arrangements will be upon such
terms and conditions as are not inconsistent with this Agreement. The fees and
expenses of the Sub-servicer shall be as agreed between the Servicer and its
Sub-servicer from time to time and FIARC shall have no responsibility therefor.
SECTION 4.13. PROCESSING OF CLAIMS UNDER CREDIT INSURANCE.
The Servicer will administer the filings of claims under the policies of
Credit Insurance 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 such policies. The Servicer shall use reasonable efforts to
file such notices and claims on a timely basis after obtaining knowledge of the
events giving rise to such claims, subject to the servicing standard set forth
in Section 4.01; provided, however, that the Servicer shall have no
responsibility in connection with the resolution of any dispute that may arise
between FIARC and such carriers with respect to the settlement of any such
claims.
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 insurance policies, in connection with filing such claims
perform any obligations of the named insured under any of the foregoing
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 this Agreement, the Servicer
shall not be responsible to FIARC (i) for any act or omission to act done in
order to comply with the requirements or satisfy any provisions of any of the
foregoing insurance policies or (ii) for any act, absent willful misconduct or
gross negligence, or omission to act done in compliance with this Agreement. In
the case of any inconsistency between this Agreement and the terms of any
insurance policy, the Servicer shall comply with the latter.
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SECTION 4.14. AGENCY STATUS.
The parties hereto agree and acknowledge that to the extent General
Electric Capital Corporation is named in any title document, UCC financing or
continuation statement, insurance policy, Receivable document or court document
as a lienholder, secured party, loss payee, owner of a Financed Vehicle or
agent, or in another similar capacity, General Electric Capital Corporation is
acting in such capacity as agent of FIARC for the sole purpose of facilitating
the servicing of the Receivables and has no equitable interest in the
Receivables, except such as it may have by virtue of its purchase of a
Receivable pursuant to this Agreement.
SECTION 4.15. INSPECTION.
At the request of FIARC or MBIA and upon reasonable notice, the Servicer
shall make available to authorized representatives of FIARC or MBIA for
inspection and copying, during regular business hours, the computer disks, tapes
or other records reflecting the payment status and history, and related
information maintained by the Servicer in accordance with its customary
servicing procedures, with respect to the Receivables.
ARTICLE V
DISTRIBUTIONS
SECTION 5.01. COLLECTION ACCOUNT.
FIARC represents to the Servicer that, contemporaneously with the execution
of this Agreement, the Collateral Agent shall establish the Collection Account
in accordance with the requirements of Section 4.1(b) of the Security Agreement.
SECTION 5.02. COLLECTIONS.
The Servicer shall remit, within ten Business Days (but in no event more
than 14 calendar days) after each Ending Date, to the Collection Account all
payments by or on behalf of the Obligors (other than Purchased Receivables), and
all Liquidation Proceeds, both as collected during the Collection Period. The
Servicer shall remit such collections to the Collection Account in immediately
available funds and from the time of receipt of any of the amounts specified in
this paragraph until deposit thereof in the Collection Account, the Servicer
shall not be required to segregate such amounts from other funds held by it.
Except as otherwise provided in Section 5.04, the foregoing requirements for
deposit in the
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Collection Account shall be exclusive, it being understood and agreed that,
without limiting the generality of the foregoing, the Servicer shall withhold
from the Collection Account, (a) the Servicing Fee as provided in Section 4.08
and (b) any reimbursable expenses incurred by the Servicer in repossessing a
Financed Vehicle pursuant to Section 4.03 or commencing a legal proceeding to
enforce a Receivable pursuant to Section 4.01. Moreover, the Servicer may
instruct the Collateral Agent to withdraw from the Collection Account and
deliver to the Servicer (a) amounts deposited in error, and (b) chargebacks
attributable to errors in posting, returned checks, or rights of offset for
amounts that should not have been paid or that must be refunded as a result of a
successful claim or defense under bankruptcy or similar laws.
SECTION 5.03. APPLICATION OF COLLECTIONS.
All collections for the Collection Period shall be applied by the Servicer
as follows:
With respect to each Receivable (other than a Purchased Receivable),
payments by or on behalf of the Obligor shall be applied first, in the case of
Precomputed Receivables, to the Scheduled Payment and, in the case of Simple
Interest Receivables, to be applied to interest and principal in accordance with
the Simple Interest Method. With respect to Precomputed Receivables, any
remaining excess shall be applied to prepay the Precomputed Receivable.
SECTION 5.04. ADDITIONAL DEPOSITS.
The Servicer and FIARC, as the case may be, shall deposit or cause to be
deposited in the Collection Account the aggregate Purchase Amount required to be
paid by it pursuant to Section 4.07 or 3.02, respectively, with respect to
Purchased Receivables. All such deposits shall be made in immediately available
funds on the Business Day next following the purchase of the Purchased
Receivable.
SECTION 5.05. NET DEPOSITS.
As an administrative convenience, the Servicer will be permitted to make
the deposit of collections on the Receivables for or with respect to the
Collection Period net of distributions to be made to the Servicer, in accordance
with the express terms hereof, with respect to the Collection Period or amounts
payable to or withdrawable by the Servicer pursuant to this Agreement. The
Servicer, however, will account to FIARC and the Collateral Agent
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as if all deposits, distributions and transfers were made individually.
ARTICLE VI
FIARC
SECTION 6.01. REPRESENTATIONS OF FIARC.
FIARC makes the following representations on which the Servicer may rely
in accepting the responsibilities of Servicer hereunder and on which MBIA may
also rely. The representations speak as of the execution and delivery of the
Agreement and shall survive such execution and delivery.
(i) ORGANIZATION AND GOOD STANDING. FIARC is duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with power and authority to own its properties and to conduct its
business as such properties shall be currently owned and such business is
presently conducted, and had at all relevant times, and has, power, authority,
and legal right to acquire and own the Receivables.
(ii) DUE QUALIFICATION. FIARC is duly qualified to do business as a
foreign corporation and is in good standing under the laws of, and shall have
obtained all necessary licenses and approvals in, all jurisdictions in which the
ownership or lease of property or the conduct of its business shall require such
qualifications, licenses or approvals.
(iii) POWER AND AUTHORITY. FIARC has the power and authority to execute
and deliver this Agreement and to carry out its terms, and the execution,
delivery, and performance of this Agreement has been duly authorized by FIARC by
all necessary corporate action.
(iv) BINDING OBLIGATION. This Agreement constitutes a legal, valid, and
binding obligation of FIARC enforceable in accordance with its terms, subject as
to the enforcement of remedies (x) to applicable bankruptcy, insolvency,
reorganization, moratorium, and other similar laws affecting creditors' rights
generally and (y) to general principles of equity (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity or at law).
(v) NO VIOLATION. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof will not conflict with,
result in any breach of any of the terms and provisions of, nor constitute (with
or without notice or
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lapse of time) a default under, the certificate of incorporation or bylaws of
FIARC, or any indenture, agreement, or other instrument to which FIARC 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 as contemplated by this Agreement);
nor violate any law or any order, rule, or regulation applicable to FIARC of any
court or of any federal or state regulatory body, administrative agency, or
other governmental instrumentality having jurisdiction over FIARC or its
properties and no consent, approval, authorization, order, registration or
qualification of or with any court, regulatory authority or other governmental
agency or body is required for the execution and delivery of this Agreement, or
the consummation of the transactions contemplated thereby.
(vi) NO PROCEEDINGS. There are no proceedings or investiga- tions pending,
or, to FIARC's best knowledge, threatened, before any court, regulatory body,
administrative agency, or other governmental instrumentality having jurisdiction
over FIARC 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 FIARC of its obligations under, or the
validity or enforceability, of this Agreement.
SECTION 6.02. LIABILITY OF FIARC; INDEMNITIES.
FIARC shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by FIARC under this Agreement.
(i) FIARC shall indemnify, defend and hold harmless the Servicer and its
respective officers, directors, agents and employees from and against any taxes
that may at any time be asserted against the Servicer with respect to the
Receivables, including any sales, gross receipts, general corporation, tangible
personal property, privilege, or license taxes and costs and expenses in
defending against the same.
(ii) FIARC shall indemnify, defend and hold harmless the Servicer, its
parents, subsidiaries, affiliates and the directors, officers, employees,
partners, agents, successors and assigns of each of such companies from and
against any claim, action, loss, damage, penalty, fine, cost, expense or other
liability, including all court costs and reasonable attorneys' fees incurred in
enforcing this indemnity or defending any claim or action, directly or
indirectly resulting from or arising out of the transactions
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contemplated by this Agreement or FIARC's performance of its duties under this
Agreement, including without limitation, any misrepresentation or breached
warranty under this Agreement.
(iii) FIARC shall indemnify, defend and hold harmless the Servicer and any
director, officer, employee or agent of the Servicer from and against any and
all costs, expenses, losses, claims, damages and liabilities incurred in
connection with any legal action or proceeding relating to this Agreement, other
than any such cost, expense, loss, claim, damage or liability for which the
Servicer provides an indemnity pursuant to Section 7.02 or for which the
Servicer is otherwise entitled to reimbursement under this Agreement.
Indemnification and rights of reimbursement under this Section 6.02 shall
survive the termination of this Agreement and shall include, without limitation,
reasonable fees and expenses of counsel and any other expenses incurred in
connection with preparing for, investigating or defending any such claims,
damages, losses or liabilities, which FIARC shall reimburse as incurred by the
indemnified party. If FIARC shall have made any indemnity payments pursuant to
this Section and the recipient thereafter shall collect any of such amounts from
others, the recipient shall repay such amounts to FIARC, without interest.
SECTION 6.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF FIARC.
Any Person (a) into which FIARC may be merged or consolidated, (b) which
may result from any merger or consolidation to which FIARC shall be a party, or
(c) which may succeed to the properties and assets of FIARC substantially as a
whole, which Person in any of the foregoing cases executes an agreement or
assumption to perform every obligation of FIARC under this Agreement, shall be
the successor to FIARC 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) MBIA has consented in writing to such consolidation, merger or
succession, (ii) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Section 3.01 shall have been
breached and no FIARC Event of Default, and no event that, after notice or lapse
of time, or both, would become a FIARC Event of Default shall have happened and
be continuing, (iii) FIARC shall have delivered to the Collateral Agent and MBIA
an Officer's Certificate and an Opinion of Counsel, addressed to the Collateral
Agent and MBIA, each stating that such consolidation, merger, or succession and
such agreement or assumption comply with this Section 6.03 and that all
conditions precedent, if any, provided
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for in this Agreement relating to such transaction have been complied with and
(iv) FIARC shall have delivered to the Collateral Agent and MBIA an Opinion of
Counsel, addressed to the Collateral Agent and MBIA, 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 security interest of the Collateral
Agent 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. Notwithstanding anything herein to the
contrary, the execution of the foregoing agreement or 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 6.04. LIMITATION ON LIABILITY OF FIARC AND OTHERS.
FIARC and any director or officer or employee or agent of FIARC may rely in
good faith on the advice of counsel or on any document of any kind, PRIMA FACIE
properly executed and submitted by any Person respecting any matters arising
hereunder. FIARC shall not be under any obligation to appear in, prosecute, or
defend any legal action that shall not be incidental to its obligations under
this Agreement, and that in its opinion may involve it in any expense or
liability.
ARTICLE VII
THE SERVICER
SECTION 7.01. REPRESENTATIONS OF SERVICER.
The Servicer makes the following representations to FIARC as of the
execution and delivery of this Agreement, which representations shall survive
such execution and delivery:
(i) ORGANIZATION AND GOOD STANDING. The Servicer is duly organized and
validly existing as a corporation in good standing under the laws of the state
of its incorporation, with power and authority to own its properties and to
conduct its business as such properties are currently owned and such business is
presently conducted, and had at all relevant times, and shall have, power,
authority, and legal right to service the Receivables and to hold the Receivable
Files as custodian as provided herein.
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(ii) DUE QUALIFICATION. The Servicer is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary material
licenses and approvals in all jurisdictions in which the servicing of the
Receivables as required by this Agreement shall require such qualifications.
(iii) POWER AND AUTHORITY. The Servicer shall have the power and authority
to execute and deliver this Agreement and to carry out its terms; and the
execution, delivery, and performance of this Agreement shall have been duly
authorized by the Servicer by all necessary corporate action.
(iv) BINDING OBLIGATION. This Agreement shall constitute a legal, valid,
and binding obligation of the Servicer enforceable in accordance with its terms
subject as to the enforcement of remedies (x) to applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting
creditors' rights generally and (y) to general principles of equity (regardless
of whether the enforcement of such remedies is considered in a proceeding in
equity or at law).
(v) NO VIOLATION. The consummation by the Servicer of the transactions
contemplated by this Agreement and the fulfillment by the Servicer of the terms
hereof shall not 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
material default under, the articles of incorporation or bylaws of the Servicer,
or any indenture, agreement, or other instrument to which the Servicer is a
party or by which it shall be bound; nor violate any law or any order, rule, or
regulation applicable to the Servicer of any court or of any federal or state
regulatory body, administrative agency, or other governmental instrumentality
having jurisdiction over the Servicer or its properties, which conflict, breach,
default or violation would have a material and adverse affect on the ability of
the Servicer to perform its obligations hereunder.
(vi) NO PROCEEDINGS. There are no proceedings or investiga- tions relating
to the Servicer pending, or to the Servicer's knowledge, threatened, before any
court, regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Servicer or its properties: A)
asserting the invalidity of this Agreement, 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 Servicer of its obligations under, or the validity or
enforceability of, this Agreement.
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SECTION 7.02. INDEMNITIES OF SERVICER.
The Servicer shall indemnify, defend, and hold harmless FIARC, its
directors, officers, employees, agents, successors and assigns, respectively,
from and against any claim, action, loss, damage, penalty, fine, cost, expense
or other liability, including all court costs and reasonable attorneys' fees
incurred in enforcing this indemnity or defending any claim or action, directly
resulting from any breach of any representation or warranty made by the Servicer
in this Agreement or directly resulting from the Servicer's willful misconduct,
bad faith or gross negligence. The right of indemnification provided hereby
shall survive the termination of this Agreement. If the Servicer shall have made
any indemnity payments pursuant to this Section and the recipient thereafter
collects any of such amounts from others, the recipient shall promptly repay
such amounts to the Servicer, without interest.
SECTION 7.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SERVICER.
Any Person (a) into which the Servicer may be merged or consolidated (b)
which may result from any merger or consolidation to which the Servicer shall be
a party, or (c) which may succeed to the properties and assets of the Servicer
substantially as a whole, which Person executed an agreement of assumption to
perform every obligation of the Servicer hereunder, shall be the successor to
the Servicer under this Agreement without further act on the part of any of the
parties to this Agreement; provided however, that immediately after giving
effect to such transaction, no Servicer Event of Default specified in clauses
(iii) or (iv) of Section 8.01, and no event which, after notice or lapse of
time, or both, would become such a Servicer Event of Default shall have happened
and be continuing.
SECTION 7.04. LIMITATION ON LIABILITY OF SERVICER AND OTHERS.
The Servicer shall be liable in accordance herewith only to the extent of
the obligations specifically undertaken by the Servicer under this Agreement.
Neither the Servicer nor any of the directors or officers or employees or
agents of the Servicer shall be under any liability to FIARC, except as
expressly provided under this Agreement, for any action taken or for refraining
from the taking of any action pursuant to this Agreement or any action taken in
good faith or for errors in judgment; provided, however, that this provision
shall not protect the Servicer or any such person against any liability
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that would otherwise be imposed by reason of willful misconduct, bad faith or
gross negligence in the performance of duties under this Agreement. The Servicer
and any director or officer or employee or agent of the Servicer may rely in
good faith on any document of any kind PRIMA FACIE properly executed and
submitted by any Person respecting any matters arising under this Agreement. The
Servicer shall not be liable for an error of judgment made in good faith by a
Servicing Employee, unless it shall be proved that the Servicer shall have been
grossly negligent in ascertaining the pertinent facts. The Servicer and any
director, officer, employee or agent of the Servicer may consult with counsel
respecting any matters arising under this Agreement and shall be protected in
relying in good faith on the advice of such counsel.
Except as expressly provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute, or defend any legal action that
shall not be incidental to its duties to service the Receivables in accordance
with this Agreement; provided, however, that the Servicer may undertake any
reasonable action that it may deem necessary or desirable in respect of this
Agreement and the rights and duties of the parties to this Agreement. In such
event, the reasonable legal expenses and costs of such action and any liability
resulting therefrom shall be expenses, costs, and liabilities of FIARC and the
Servicer shall be entitled to be reimbursed therefor. Rights of reimbursement
under this Section 7.04 shall survive the termination of this Agreement.
ARTICLE VIII
DEFAULT
SECTION 8.01. SERVICER EVENTS OF DEFAULT.
If any one of the following events ("Servicer Events of Default") shall
occur and be continuing:
(i) Any failure by the Servicer to deposit or transfer into the Collection
Account any proceeds or payment, required to be so deposited or transferred
under the terms of this Agreement that shall continue unremedied for a period of
three Business Days after written notice of such failure is received by the
Servicer from FIARC or the Collateral Agent; or
(ii) Failure on the part of the Servicer duly to observe or to perform in
any material respect any other covenants or agreements of the Servicer set forth
in this Agreement, or the material breach by the Servicer or any of its
representations and warranties set
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forth in this Agreement, which failure or breach shall (a) materially and
adversely affect the rights of FIARC and (b) continue unremedied for a period of
30 days after the date on which written notice of such failure or breach,
requiring the same to be remedied, shall have been given to the Servicer by
FIARC or the Collateral Agent; 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, or liquidator for the 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; or
(iv) The consent by the 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 Servicer or
of or relating substantially to all of its property; or the Servicer shall admit
in writing its inability to pay its debts generally as they become due, file a
petition to avail itself 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 a Servicer Event of Default shall
not have been cured, FIARC may with the written consent of MBIA and shall at the
written direction of MBIA, terminate all of the rights and obligations of the
Servicer under this Agreement, subject to accrued compensation, rights of
reimbursement and the survival of indemnity and limitation on liability
provisions, by notice in writing to the Servicer sent by certified mail, postage
prepaid, or by hand delivery. Upon the Servicer's receipt of notice of
termination pursuant to this Section 8.01, the Servicer shall continue to
perform its functions as Servicer under this Agreement until the earlier of (i)
the appointment of a successor Servicer pursuant to Section 8.03, and (ii) 45
days from its receipt of such notice of termination.
SECTION 8.02. FIARC EVENTS OF DEFAULT.
If any one of the following events ("FIARC Events of Default") shall occur
and be continuing:
(i) FIARC fails to timely remit to the Servicer any Servicing Fees
due and payable and such failure continues for a period of 30 days from
the date of the mailing or delivery of an invoice from the Servicer to
FIARC and the Collateral Agent; or
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(ii) If any representation or warranty of FIARC in this Agreement is
false, incorrect or misleading in any material respect, or if any
representation or warranty contained in any reports, documents,
certificates or other papers delivered to the Servicer from time to time
is false, incorrect or misleading in any material respect, and is not
cured within 30 days of written notice thereof to FIARC; or
(iii) If FIARC breaches or fails to perform or observe any
obligation or condition to be performed or observed by it under this
Agreement in any material respect and such breach or default is not cured
within 30 days after the Servicer has given FIARC written notice demanding
that such breach or default be cured;
then, and in each and every case, so long as such FIARC Event of Default shall
not have been cured, the Servicer may terminate all of its rights and
obligations as Servicer under this Agreement by notice in writing to FIARC and
the Collateral Agent sent by certified mail, postage prepaid, or by hand
delivery. Upon FIARC's and the Collateral Agent's receipt of notice of
termination pursuant to this Section 8.02, the Servicer shall not be required to
accept for servicing any new Receivables created thereafter (although the
Servicer shall accept Receivables which were, at the time such notice was
received, in transit to the Servicer), but the Servicer shall continue to
perform its functions as Servicer under this Agreement until the earlier of (i)
the appointment of a successor Servicer (approved in writing by MBIA) pursuant
to Section 8.03 and (ii) 120 days from the delivery of notice of termination to
FIARC in accordance with the preceding sentence; provided, however, that if the
Servicer has exercised its termination right hereunder on the basis of a FIARC
Event of Default not involving the failure by FIARC to timely pay Servicing Fees
or expenses reimbursable to the Servicer hereunder, then the Servicer shall,
after the expiration of such 120 day period, continue (for so long as the
Servicing Fees and reimbursable expenses are being timely paid) to service
Receivables then being serviced until (a) the appointment of a successor
Servicer acceptable to MBIA, or (b) such Receivables are fully paid or otherwise
liquidated; and, provided further, that the Servicer shall not be obligated to
continue to service any such Receivables to the extent such FIARC Event of
Default impairs or prevents the Servicer from performing its obligations
hereunder.
SECTION 8.03. APPOINTMENT OF SUCCESSOR.
(a) In the event that FIARC (with the written consent or at the written
direction of MBIA) should exercise its rights of
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termination under Section 8.01, or the Servicer should exercise its rights of
termination under Section 8.02, FIARC (with the consent of MBIA and the
Collateral Agent, which will not be unreasonably withheld) shall appoint a
successor Servicer, which shall accept its appointment by a written assumption
in form acceptable to FIARC, MBIA and the Collateral Agent; provided, however,
that if a Termination Event shall have occurred under the Security Agreement and
the indebtedness secured thereby shall have been accelerated pursuant to the
terms thereof, the Collateral Agent shall have the right to appoint a successor
Servicer (with the written consent of MBIA).
(b) Upon appointment, the successor Servicer shall be the successor in all
respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on the predecessor Servicer, and shall be entitled to the Servicing Fee
and all of the rights granted to the predecessor Servicer hereunder. Upon the
appointment of a successor Servicer in accordance herewith, all authority and
power of the Servicer under this Agreement, whether with respect to the
Receivables or otherwise, shall, without further action, pass to and be vested
in such successor Servicer; and, without limitation, FIARC is hereby authorized
and empowered to execute and deliver, on behalf of the predecessor Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of the Receivables and related documents, or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer and FIARC in
effecting the termination of the responsibilities and rights of the predecessor
Servicer under this Agreement, including the transfer to the successor Servicer
for administration by it of all cash amounts that shall at the time be held by
the predecessor Servicer for deposit, or shall thereafter be received with
respect to a Receivable, and delivery of the Receivable Files. All reasonable
costs and expenses (including attorneys' fees) incurred in connection with
transferring the Receivable Files to the successor Servicer and amending this
Agreement to reflect such succession as Servicer shall be paid by (i) the
predecessor Servicer in the case of termination under Section 8.01, or (ii)
FIARC in the case of termination under Section 8.02.
SECTION 8.04. PAYMENT OF COMPENSATION; REPAYMENT OF ADVANCES.
If the identity of the Servicer shall change, the predecessor Servicer
shall be entitled to receive all accrued unpaid Servicing Fees, and other
accrued and unpaid compensation described in Section 4.08 hereof, in each case
through the date it performs its
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duties hereunder. The predecessor Servicer shall also be entitled to receive
reimbursement for all outstanding reimbursable expenses.
SECTION 8.05. WAIVER OF PAST DEFAULTS.
FIARC (with the written consent of MBIA) may waive any default by the
Servicer in the performance of its obligations hereunder and its consequences,
except a default in making any required deposits to the Collection Account in
accordance with this Agreement. Upon any such waiver of a past default, such
default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.01. AMENDMENT.
This Agreement may be amended, modified or supplemented only by a written
instrument executed by FIARC (with the written consent of MBIA) and the
Servicer. Both FIARC and the Servicer shall promptly notify the Collateral Agent
in writing of any such amendment, modification or supplement.
SECTION 9.02 TERM.
The term of this Agreement shall begin on the date hereof and shall end on
October 31, 2000; provided, however, that the Servicer may terminate the
acceptance of new Receivables upon written notice to FIARC (with a copy to the
Collateral Agent, MBIA and all others entitled to notice under the Security
Agreement) between January 1 and June 30, 1997, or, upon a failure of the
parties to reach agreement on or before October 31 of any year as to the terms
of Section 4.08 hereof, which may be the subject of annual negotiation during
the term hereof upon the written request of either party on or before June 30 of
any year. Upon the expiration of the term of this Agreement on October 31, 2000,
or upon the earlier exercise by the Servicer of its right to terminate the
acceptance of new Receivables as above provided, (i) the Servicer's obligation
to accept new Receivables shall terminate on the December 31 next following, and
(ii) Servicer shall be obligated to service only the Receivables being serviced
hereunder as of such December 31 until the same are fully paid or otherwise
liquidated whereupon, after payment of all Servicing Fees and other amounts due
Servicer hereunder, this Agreement shall terminate.
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In the event that the Servicer exercises its right to terminate the
acceptance of new Receivables pursuant to this Section 9.02 prior to the
expiration of the term of this Agreement, within 30 days thereafter FIARC, at
its discretion (with the written consent of the Collateral Agent and MBIA), may
terminate this Agreement upon written notice to the Servicer, such termination
to be effective on the December 31 next following. If notice of termination is
given by FIARC pursuant to the preceding sentence, (i) the Servicer shall
cooperate with FIARC and any successor servicer (acceptable to MBIA) in
effecting the termination of the responsibilities and rights of the Servicer
under this Agreement, including the transfer to FIARC or the successor servicer
for administration by it of all cash amounts that shall at the time be held by
the Servicer for deposit, or shall thereafter be received with respect to a
Receivable, and delivery of the Receivable Files, and (ii) upon payment of all
Servicing Fees and other amounts due Servicer hereunder, this Agreement shall
terminate.
SECTION 9.03. PROTECTION OF THE RECEIVABLES.
(a) FIARC 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
first priority security interest of the Collateral Agent (for the benefit of
Enterprise and MBIA) in the Receivables. FIARC shall deliver (or cause to be
delivered) to the Collateral Agent and MBIA file stamped copies of, or filing
receipts for, any document filed as provided above, as soon as available
following such filing.
(b) In the event FIARC or the Servicer shall 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 Section 9.402 of the UCC, it shall
give the Servicer, MBIA and the Collateral Agent (in the case of FIARC) or
FIARC, MBIA and the Collateral Agent (in the case of the Servicer) written
notice thereof and shall promptly file appropriate amendments to all previously
filed financing statements or continuation statements.
(c) FIARC and the Servicer shall have an obligation to give
the Servicer, MBIA and the Collateral Agent (in the case of FIARC)
and FIARC, MBIA and the Collateral Agent (in the case of the
Servicer) at least 60 days' prior written notice of any relocation
of its principal executive office and shall promptly file any
amendment or new financing statements required under the UCC. The
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Servicer shall at all times maintain each office from which it shall service
Receivables, within the United States of America.
(d) The Servicer shall maintain records for each Receivable, which records
shall include (i) the original principal balance, the amount of each payment
applied to the Receivable, the date of each payment, the interest rate and the
current outstanding gross balance, and (ii) a reconciliation between payments or
recoveries on (or with respect to) the Receivable and the amounts from time to
time deposited in the Collection Account in respect of the Receivable. The
Servicer's obligation to perform its servicing duties and maintain accurate
records hereunder is limited to the accuracy and availability of the information
the Servicer receives in the Receivable Files delivered to the Servicer
hereunder.
SECTION 9.04. 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.
SECTION 9.05. NOTICES.
All demands, notices and communications upon or to FIARC, MBIA the
Servicer or the Collateral Agent 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 FIARC,
to 675 Bering, Suite 710, Houston, Texas 77057, Attention: President, (b) in the
case of MBIA, to MBIA Insurance Corporation, 113 King Street, Armonk, New York
10504, Attention: Insured Portfolio Management - SF, (c) in the case of the
Servicer, to General Electric Capital Corporation, Automobile Securitization,
600 Hart Road, Barrington, Illinois 60010, and (d) in the case of the Collateral
Agent, at the Corporate Trust Office, or in each case at such other address as
shall be designated in a written notice to the parties to this Agreement.
SECTION 9.06. 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, to the
extent permitted by law, 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.
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SECTION 9.07. ASSIGNMENT.
Notwithstanding anything to the contrary contained herein, except as
provided in Section 9.08 below and in the provisions of this Agreement
concerning the appointment of a successor Servicer, this Agreement may not be
assigned by FIARC or the Servicer without the prior written consent of the other
and MBIA.
SECTION 9.08. COLLATERAL ASSIGNMENT.
Notwithstanding anything to the contrary contained herein, the Servicer
(i) acknowledges and consents that FIARC has assigned its rights hereunder and
its interests herein to the Collateral Agent as collateral pursuant to the
Security Agreement, and (ii) agrees to attorn to the Collateral Agent in the
event of its succession to the rights and interests of FIARC hereunder pursuant
to the provisions of the Security Agreement.
SECTION 9.09. GOODWILL.
FIARC hereby acknowledges that substantial goodwill exists with respect to the
trade names "GE", "GECC", "GE Capital Corporation" and "General Electric Capital
Corporation" in the United States and that the Servicer's reputation in the
financial services business is of substantial importance to the operations of
the Servicer. Accordingly, FIARC agrees to use its best efforts to conduct its
activities under this Agreement in a manner that will not detract from the
Servicer's goodwill and standing and will not otherwise damage the reputation or
the Servicer.
SECTION 9.10. CERTAIN PROCEEDINGS.
For so long as this Agreement is in effect, the Servicer hereby agrees
that it will not file any involuntary petition or otherwise institute any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding or
other proceeding under any federal or state bankruptcy or similar law against
FIARC.
SECTION 9.11. LIMITED RECOURSE OF THE SERVICER.
Any provisions of this Agreement to the contrary notwithstanding, the sole
recourse of the Servicer for the payment of monies due and owing to it under the
terms of this Agreement shall be as follows:
(i) with respect to Servicing Fees as provided in Section 4.08 and
reimbursable expenses as provided in Sections 4.01 and 4.03, the Servicer's
right to withhold the same from deposit in the
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Collection Account as provided in Section 5.02 shall be exclusive of any other
recourse, and no other amounts shall be withheld by the Servicer from deposits
in the Collection Account pursuant to the terms of Sections 5.02 and 5.05;
(ii) with respect to any other amounts of any nature that may become due
and owing by FIARC to the Servicer hereunder (including, without limitation, any
Purchase Amount payable by FIARC pursuant to Section 3.02 and any amounts
payable by FIARC pursuant to its indemnification obligations under Section
6.02), such amounts shall be payable only from funds available to FIARC as a
result of distributions to it from the Collection Account in accordance with the
priorities set forth in the Security Agreement; and
(iii) except as expressly provided in clause (i) of this Section 9.11, the
Servicer hereby irrevocably and unconditionally waives all rights of setoff that
it may have under contract (including this Agreement), applicable law or
otherwise with respect to any funds or monies of FIARC at any time held by or in
the possession of the Servicer.
SECTION 9.12. THIRD PARTY BENEFICIARY.
Each of the parties agrees that MBIA is a third-party beneficiary of this
Agreement.
IN WITNESS WHEREOF, FIARC and the Servicer have caused this Servicing
Agreement to be duly executed by their respective officers as of the day and
year first above written.
FIRST INVESTORS AUTO RECEIVABLES
CORPORATION
By: /s/ TOMMY A. MOORE
Tommy A. Moore, Jr., President
GENERAL ELECTRIC CAPITAL CORPORATION
By: ________________________________
Title: ___________________________
37
EXHIBIT 10.34
AMENDED AND RESTATED
CREDIT AGREEMENT
DATED AS OF OCTOBER 30, 1996
AMONG
F.I.R.C., INC.
AS BORROWER
AND
THE FINANCIAL INSTITUTIONS NOW OR HEREAFTER PARTIES HERETO
AS BANKS
AND
NATIONSBANK OF TEXAS, N.A.
AS AGENT
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. CERTAIN DEFINED TERMS....................................1
Section 1.02. COMPUTATION OF TIME PERIODS.............................16
Section 1.03. ACCOUNTING TERMS........................................16
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
Section 2.01. THE ADVANCES............................................16
Section 2.02. MAKING THE ADVANCES.....................................17
Section 2.03. FEES....................................................18
Section 2.04. REDUCTION OF THE COMMITMENTS............................18
Section 2.05. EXTENSION OF TERMINATION DATE...........................18
Section 2.06. INTEREST................................................18
Section 2.07. ADDITIONAL INTEREST ON ADVANCES BASED ON THE LIBOR RATE.19
Section 2.08. INTEREST RATE DETERMINATION AND PROTECTION..............20
Section 2.09. VOLUNTARY INTEREST CONVERSION OF ADVANCES...............21
Section 2.10. FUNDING LOSSES RELATING TO FIXED RATE ADVANCES..........21
ARTICLE III
INCREASED COSTS, TAXES, PAYMENTS AND PREPAYMENTS
Section 3.01. INCREASED COSTS; CAPITAL ADEQUACY.......................22
Section 3.02. PAYMENTS AND COMPUTATIONS...............................23
Section 3.03. TAXES...................................................23
Section 3.04. SHARING OF PAYMENTS, ETC................................24
Section 3.05. VOLUNTARY PREPAYMENTS...................................24
Section 3.06. MANDATORY PREPAYMENTS...................................24
Section 3.07. BANK COLLATERAL AGENT AS BORROWER'S PAYING AGENT........25
Section 3.08. SUBSTITUTION OF BANK....................................25
ARTICLE IV
CONDITIONS OF LENDING
Section 4.01. CONDITIONS PRECEDENT TO INITIAL ADVANCES................25
Section 4.02. CONDITIONS PRECEDENT TO EACH BORROWING
(INCLUDING THE INITIAL BORROWING)........................27
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
Section 5.01. EXISTENCE...............................................28
Section 5.02. POWER AND AUTHORIZATION.................................28
Section 5.03. NO CONFLICT OR RESULTANT LIEN...........................28
Section 5.04. RECEIVABLES.............................................28
Section 5.05. NO CONSENT..............................................28
Section 5.06. BINDING OBLIGATIONS.....................................28
Section 5.07. FINANCIAL CONDITION.....................................29
Section 5.08. LITIGATION..............................................29
Section 5.09. USE OF PROCEEDS; MARGIN STOCK...........................29
Section 5.10. TAXES; GOVERNMENTAL CHARGES.............................29
Section 5.11. FULL DISCLOSURE.........................................29
Section 5.12. INVESTMENT COMPANY ACT..................................30
Section 5.13. ENVIRONMENTAL MATTERS...................................30
Section 5.14. CAPITAL STRUCTURE.......................................30
Section 5.15. COMPLIANCE WITH LAW.....................................30
Section 5.16. ERISA...................................................30
Section 5.17. NO DEFAULT OR EVENT OF DEFAULT..........................30
Section 5.18. PERMITS AND LICENSES....................................30
Section 5.19. SURVIVAL OF REPRESENTATIONS AND WARRANTIES..............30
ARTICLE VI
AFFIRMATIVE COVENANTS OF THE BORROWER
Section 6.01. COMPLIANCE WITH LAWS, ETC...............................31
Section 6.02. REPORTING AND NOTICE REQUIREMENTS.......................31
Section 6.03. TAXES AND LIENS.........................................34
Section 6.04. MAINTENANCE OF PROPERTY.................................34
Section 6.05. RIGHT OF INSPECTION.....................................34
Section 6.06. PERFORMANCE AND COMPLIANCE WITH RECEIVABLES
AND CREDIT INSURANCE....................................34
Section 6.07. FURTHER ASSURANCES......................................35
ARTICLE VII
NEGATIVE COVENANTS
Section 7.01. LIENS, ETC..............................................35
Section 7.02. DEBT....................................................35
Section 7.03. RESTRICTED PAYMENTS.....................................36
Section 7.04. MERGERS; CONSOLIDATIONS.................................36
Section 7.05. INVESTMENTS, LOANS, AND ADVANCES........................36
Section 7.06. SALE OR OTHER DISPOSITION OF ASSETS.....................36
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Section 7.07. USE OF PROCEEDS.........................................36
Section 7.08. TRANSACTIONS WITH AFFILIATES............................36
Section 7.09. OTHER BUSINESS..........................................37
Section 7.10. ISSUANCE OF SHARES......................................37
Section 7.11. ERISA...................................................37
Section 7.12. ACQUISITIONS............................................38
Section 7.13. CERTAIN FINANCIAL TESTS.................................38
Section 7.14. EXTENSION OR AMENDMENT OF RECEIVABLES
AND OTHER DOCUMENTS.....................................38
Section 7.15. LETTER OF GUARANTY......................................38
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.01. EVENTS OF DEFAULT.......................................38
ARTICLE IX
THE AGENT
Section 9.01. AUTHORIZATION AND ACTION................................41
Section 9.02. AGENT'S RELIANCE, ETC...................................42
Section 9.03. NATIONSBANK AND AFFILIATES..............................42
Section 9.04. BANK CREDIT DECISION....................................42
Section 9.05. INDEMNIFICATION.........................................43
Section 9.06. SUCCESSOR AGENT.........................................43
Section 9.07. AGENT'S RELIANCE........................................43
Section 9.08. DEFAULTS................................................44
ARTICLE X
MISCELLANEOUS
Section 10.01.AMENDMENTS, ETC.........................................44
Section 10.02.NOTICES, ETC............................................44
Section 10.03.NO WAIVER; REMEDIES.....................................45
Section 10.04.COSTS, EXPENSES AND TAXES...............................45
Section 10.05.RIGHT OF SET-OFF........................................45
Section 10.06.BINDING EFFECT..........................................45
Section 10.07.ASSIGNMENTS AND PARTICIPATIONS..........................45
Section 10.08.LIMITATION ON AGREEMENTS................................47
Section 10.09.SEVERABILITY............................................48
Section 10.10.GOVERNING LAW...........................................48
Section 10.11.SUBMISSION TO JURISDICTION; WAIVERS.....................48
Section 10.12.WAIVER OF JURY TRIAL....................................49
Section 10.13.EXECUTION IN COUNTERPARTS...............................49
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Section 10.14.NO INSOLVENCY PETITION AGAINST BORROWER.................49
Section 10.15.INDEMNIFICATION.........................................49
Section 10.16.SERVICING...............................................50
Section 10.17.FINAL AGREEMENT.........................................50
EXHIBITS:
Exhibit A - Form of ALPI Insurance Policy
Exhibit B - Form of Compliance Certificate
Exhibit C - Form of Consent to Extension
Exhibit D - Form of GAP and VSI Insurance Policy
Exhibit E - Form of Notice of Borrowing
Exhibit F - Form of Facility Note
Exhibit G - Form of Opinion of Counsel for the Borrower
Exhibit H - Form of Bank Collateral Agent's Disbursement Statement
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<PAGE>
AMENDED AND RESTATED
CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of October 30, 1996
(as the same may be amended, modified, renewed or extended from time to time,
this "AGREEMENT") is made by and among F.I.R.C., Inc., a Delaware corporation
(the "BORROWER"), the financial institutions listed on the signature pages
hereof and any other financial institution that may hereafter become a party
hereto pursuant to the provisions hereof (each individually a "BANK" and
collectively, the "BANKS"), and NationsBank of Texas, N.A. (in its individual
capacity, "NATIONSBANK"), as agent for the Banks (in such capacity, the
"AGENT").
WITNESSETH:
WHEREAS, the Borrower, the Banks, and the Agent desire hereby to amend
and restate that certain Credit Agreement, dated as of October 16, 1992, as
amended by First Amendment to Credit Agreement and Loan Documents, dated as of
November 5, 1993, as further amended by Second Amendment to Credit Agreement and
Loan Documents, dated as of March 3, 1994, as further amended by Third Amendment
to Credit Agreement and Loan Documents dated as of March 17, 1995, and as
further amended by Fourth Amendment to Credit Agreement and Loan Documents dated
as of July 31, 1995;
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants herein set forth and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the Borrower, the Banks,
and the Agent hereby agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ACTUAL CREDIT LOSSES" means, for any Collection Period, losses
of principal under the Receivables after taking into account any
Liquidation Proceeds received.
"ADVANCE" means any advance provided for under Section 2.01
hereof.
"AFFILIATE" means any Person which, directly or indirectly,
controls or is controlled by or is under common control with another
Person. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlled by" and "under common
control with"), as used with respect to any Person, means the power to
direct or cause the direction of the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities or by contract or otherwise.
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"AGREED RATE" means, for any Interest Period for each Agreed Rate
Advance, a fixed interest rate per annum mutually agreed upon among the
Borrower and the Banks.
"AGREED RATE ADVANCE" means an Advance which bears interest at
the interest rate as provided in Section 2.06(c).
"ALPI INSURANCE" means the policy or policies of insurance
covering each of the underlying installment sales contracts or other
written evidence of any Obligor's obligation arising out of the purchase
of a Financed Vehicle held by the Borrower issued by National Union Fire
Insurance Company of Pittsburgh, PA in the form attached hereto as
EXHIBIT A and the policy of insurance issued by Agricultural Excess and
Surplus Insurance Co. issued October 6, 1992 or such other insurance as
is satisfactory in form and substance to the Banks.
"APPLICABLE LENDING OFFICE" means, with respect to each Bank,
such Bank's Domestic Lending Office in the case of a Base Rate Advance
or an Agreed Rate Advance or such Bank's LIBOR Lending Office in the
case of a LIBOR Rate Advance.
"ANNUAL PERCENTAGE RATE" or "APR" has the meaning set forth in
the Purchase Agreement.
"ASSIGNEE" has the meaning specified in subsection 10.07(a)
hereof.
"ASSIGNMENT AND ACCEPTANCE" has the meaning specified in Section
10.07(a) hereof.
"AVAILABLE AMOUNT" means, at any time, an amount equal to the
excess of (a) the lesser of (i) the Commitments at such time or (ii) the
Borrowing Base OVER (b) the aggregate principal amount of all Advances
then outstanding.
"BANK COLLATERAL AGENT" means Texas Commerce Bank National
Association and any successor thereto appointed pursuant to Section 19
of the Security Agreement.
"BASE RATE" means, for any period, a fluctuating interest rate
per annum (rounded upwards to the nearest 1/16 of 1%) as shall be in
effect from time to time which rate per annum shall at all times be
equal to the higher of:
(a) the Prime Rate, or
(b) the Federal Funds Rate plus 1/2 of 1% per annum.
"BASE RATE ADVANCE" means an Advance which bears interest at the
interest rate as provided in Section 2.06(a).
"BORROWING" means a borrowing consisting of Advances of the same
Type made on the same day by the Banks.
"BORROWING BASE" means, at any time, an amount equal to the
lesser of (i) the sum of (A) 100% of Eligible Receivables PLUS (B) the
amount on deposit in the Escrow Account (after giving effect to the
deposit of the proceeds of any Advance on the date of calculation in the
Escrow
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Account) and (ii) the policy life aggregate limit of liability of the
ALPI Insurance as it may adjust from time to time.
"BUSINESS DAY" means a day of the year on which banks are not
required or authorized to close in Dallas, Texas and, if the applicable
Business Day relates to any LIBOR Rate Advances, on which dealings are
carried on in the London interbank market.
"CAPITAL LEASE" means a lease which should, in accordance with
GAAP, be recorded as a capital lease on the balance sheet of the lessee.
"CLOSING DATE" means the date the Agreement becomes effective in
accordance with Article IV.
"CODE" means the Internal Revenue Code of 1986, as amended from
time to time and any successor statute.
"COLLATERAL" has the meaning set forth in the Security Agreement.
"COLLATERAL ACCOUNT" means that certain trust account established
pursuant to Section 2 of the Security Agreement.
"COLLECTION PERIOD" means, with respect to any Distribution Date,
the calendar month immediately preceding such Distribution Date.
"COMMITMENT" means, as to any Bank, each Bank's Loan Percentage
of $55,000,000, as such amount may be reduced from time to time pursuant
to the terms and provisions hereof, and "COMMITMENTS" means,
collectively, all Banks' Commitments.
"COMPLIANCE CERTIFICATE" means a certificate, duly executed by a
Responsible Officer, appropriately completed and in substantially the
form of EXHIBIT B hereto.
"CONSENT TO EXTENSION" means a consent to the extension of the
Termination Date executed by each Bank in the form of EXHIBIT C hereto.
"CREDIT GUIDELINES" has the meaning set forth in the Purchase
Agreement.
"CREDIT INSURANCE" means the ALPI Insurance, GAP Insurance and
VSI Insurance covering the Receivables issued in the name of the
Borrower with the Agent named as an additional insured for the ratable
benefit of the Banks.
"CREDIT LOSS PERCENTAGE" means, as of any Determination Date, a
fraction (expressed as a percentage) the numerator of which shall be a
number equal to Actual Credit Losses for the four (4) immediately
preceding Collection Periods TIMES three and the denominator of which
shall be the average of the Receivables Portfolio Balance for the four
(4) immediately preceding Collection Periods.
"DEBT" means (without duplication), for any Person, (a)
indebtedness of such Person for borrowed money or arising out of any
extension of credit to or for the account of such Person
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(including, without limitation, extensions of credit in the form of
reimbursement or payment obligations of such Person relating to letters
of credit issued for the account of such Person) or for the deferred
purchase price of property or services; (b) indebtedness of the kind
described in clause (a) of this definition which is secured by (or for
which the holder of such Debt has any existing right, contingent or
otherwise, to be secured by) any Lien upon or in Property (including,
without limitation, accounts and contract rights) owned by such Person,
whether or not such Person has assumed or become liable for the payment
of such indebtedness or obligations; (c) all obligations as lessee under
any Capital Lease, (d) all contingent liabilities and obligations under
direct or indirect guarantees 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 (a) through (c) above,
including, without limitation, (i) any endorsement not for collection in
the ordinary course of business or discount with recourse or undertaking
substantially equivalent to or having economic effect similar to a
guaranty in respect of any such Debt; (ii) any agreement (A) to
purchase, or to advance or supply funds for the payment or purchase of,
any such Debt, (B) to purchase, sell, or lease property, products,
materials, supplies, transportation, or services, in order to enable
such Person to pay any such Debt or to assure the owner thereof against
loss regardless of the delivery or nondelivery of the property,
products, materials, supplies, transportation, or services, or (C) to
make any loan, advance, or capital contribution to, or other investment
in, or to otherwise provide funds to or for, such other Person in order
to enable such Person to satisfy any obligation (including any liability
for a dividend, stock liquidation payment or similar expense) or to
assure a minimum equity, working capital, or other balance sheet
condition in respect of any such obligation; and (iii) obligations under
surety, appeal, or custom bonds; (e) any obligation of a Person under or
in connection with a sale-leaseback or similar arrangement, including,
without limitation, any arrangement with any other party providing for
the leasing by such Person (as lessee) from such other party of any
Property which has been, or is to be, sold or transferred by such Person
to such other party or to any other Person to whom funds have been, or
are to be, advanced on the security of such Property or rental
obligations of such Person and (f) any and all obligations of such
Person under any interest rate swap, interest rate cap or other exchange
or rate protection agreement now existing or hereafter entered into by
such Person and NationsBank or any Affiliate of NationsBank.
"DEFAULT" means any event which, with the lapse of time or giving
of notice, or both, would constitute an Event of Default.
"DELINQUENT RECEIVABLES" means, at any time, those Receivables on
which the stated monthly payment has not been made in full for at least
thirty (30) days as reflected on the Servicer's reports delivered
pursuant to Section 6.02(g) hereof.
"DETERMINATION DATE" means the last day of each Collection Period
"DISTRIBUTION DATE" means the date on which Distributions are to
be made, and which shall be the 20th day of each month, or if such day
is not a Business Day, the next following Business Day, commencing with
November 20, 1996.
"DISTRIBUTIONS" means those amounts distributed by the Bank
Collateral Agent with respect to the Receivables pursuant to Section 5
of the Security Agreement.
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"DOMESTIC LENDING OFFICE" means, with respect to any Bank, the
office of such Bank specified as its "Domestic Lending Office" opposite
its name on the signature pages hereto, or such other office of such
Bank as such Bank may from time to time specify to the Borrower and the
Agent.
"EARNINGS BEFORE INTEREST, FEES AND DISTRIBUTIONS" means, for any
period, Net Income PLUS (to the extent deducted in arriving at Net
Income) any distributions or payments made to the Borrower's
shareholders PLUS Loan Interest Expense PLUS Fee Expense.
"ELIGIBLE RECEIVABLES" means, as at any date of determination
thereof, the Principal Balance portion of each Receivable which, as of
such determination date, complies with the following requirements:
(a) it and the sale of the Financed Vehicle complies with
all requirements of applicable federal, state, and local laws,
and regulations thereunder, including, without limitation, usury
laws, the Federal Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Fair Credit Reporting Act, the Fair Debt
Collection Practices Act, the Federal Trade Commission Act, the
Magnuson-Moss Warranty Act, the Federal Reserve Board's
Regulations B and Z, the Texas Consumer Credit Code and other
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;
(b) it represents the genuine, legal, valid, and binding
payment obligation in writing of the Obligor, enforceable by the
holder thereof in accordance with its terms;
(c) it is not due from the United States of America or any
state or from any agency, department or instrumentality of the
United States of America or any state;
(d) it is secured by a validly perfected first priority
security interest in the Financed Vehicle in favor of First
Investors as secured party;
(e) it has not been amended, nor have any of its
provisions been waived, other than as allowed under Section 4.02
of the Servicing Agreement;
(f) no liens or claims shall have been filed for work,
labor, or materials relating to a Financed Vehicle that shall be
liens prior to, or equal or coordinate with, the security
interest in the Financed Vehicle granted by it;
(g) it is not currently the subject of any sale, transfer,
assignment, or pledge by First Investors or the Borrower to any
Person (including Enterprise) other than the Bank Collateral
Agent;
(h) it has not been originated in, nor is it subject to
the laws of, any jurisdiction under which the sale, transfer, and
assignment of such Receivable under the Purchase Agreement or the
Security Agreement would be unlawful, void or voidable;
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(i) there is only one executed original of it, which
throughout the term of this Agreement is in the possession of the
Servicer as agent for the Borrower and custodian for the Bank
Collateral Agent, the Agent and the Banks;
(j) it has been originated in the United States of
America, has been fully and properly executed by the parties
thereto, is payable in United States dollars, contains customary
and enforceable provisions such that the rights and remedies of
the holder thereof shall be adequate for realization against the
collateral of the benefits of the security and constitutes an
"Eligible Loan" as defined in the ALPI Insurance;
(k) it has not been satisfied, subordinated, or rescinded,
and the Financed Vehicle relating thereto has not been released
in whole or in part;
(l) no right of rescission, cancellation, setoff, claim,
counterclaim or defense has been asserted or threatened with
respect to it;
(m) prior to its sale under the Purchase Agreement, First
Investors, in accordance with its customary procedures, shall
have determined that the Obligor obtained or agreed to obtain
physical damage insurance covering the Financed Vehicle;
(n) it has an original maturity of not greater than sixty
(60) months;
(o) the Agent has not received a Notice of Noninsurance
with respect to it and the Confirmation of Insurance with respect
to such Receivable has not been voided pursuant to Paragraph 18
of the ALPI Insurance;
(p) it is not subject to (i) any loss which is not covered
by Credit Insurance or (ii) any loss which would be covered by
Credit Insurance but for which an insurance claim has been
outstanding for more than 30 days past the maximum contractual
payment date as specified in the applicable Credit Insurance,
PROVIDED that, if such claim is subsequently paid, the Receivable
shall again constitute an Eligible Receivable;
(q) it has been assigned to the Borrower, is subject to
the Security Agreement and the first priority security interest
of the Bank Collateral Agent in the Receivable has been properly
perfected;
(r) (i) it would constitute an "Eligible Receivable" under
the Enterprise Agreement, (excluding, however, clauses (c), (e),
(g), (h), (x) and (aa) of the definition of Eligible Receivable
as set forth in such agreement) and (ii) conforms to the
representations made by FIARC in Section 3.1 of Article III of
the Enterprise Agreement.
(s) the Principal Balance of such Receivable shall not
exceed the lesser of (x) 120% of the Manufacturer's Suggested
Retail Price with respect to the subject unused Financed Vehicles
or (y) 120% of the retail value of such Financed Vehicles as
published in the National Automobile Dealers Association Used Car
Guide or the Kelly Blue Book with respect to the subject used or
pre-owned Financed Vehicles;
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(t) it shall not have been the subject of more than two
extensions of monthly payments with respect thereto during any
12-month period nor shall the total extensions of monthly
payments granted over the term of such Receivable exceed a number
which is equivalent to one such extension for every 12 months in
the stated term of such Receivable;
(u) it shall not have been the subject of any extension of
a monthly payment unless the Obligor thereon has made the first
six consecutive scheduled payments with respect to such
Receivable;
(v) at the time of origination, the Obligor on which has
provided, as its most recent billing address, an address located
in the United States;
(w) which has been created substantially in accordance
with, or under standards no less stringent than, the Credit
Guidelines;
(x) as to which at the time such Receivable first became
part of the Collateral, to the best of the Borrower's knowledge,
a bona fide down payment has been made;
(y) which provides for level monthly payments (PROVIDED
that the payment in the first and last month of the Receivable
may be minimally different from the level payment) that fully
amortize the amount financed by maturity and yield interest at
the stated Annual Percentage Rate;
(z) which provides for, in the event that such Receivable
is prepaid by the Obligor, a prepayment that fully pays the
principal balance of such Receivable and any interest accrued
through the date of prepayment;
(aa) the Obligor of which has not previously defaulted on
an automobile installment sales contract purchased by First
Investors at the time such Receivable becomes a part of the
Collateral;
(ab) which was originated by an Originator approved by
First Investors and which Originator is subject to an Originator
Agreement with First Investors providing for bona fide sales in
the ordinary course of such Originator's business and which if
acquired by First Investors pursuant to a "bulk purchase" from
another Originator has been approved by the Bank Collateral
Agent, acting upon written instructions of the Agent;
(ad) which has a clear right of repossession on the
Financed Vehicle securing such Receivable;
(af) which has an APR of at least 13.0%;
(ag) the Obligor of which is required to make payments to
a lockbox under the control of the Servicer;
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(ah) as to which neither First Investors, FIARC nor the
Borrower has done anything at the time such Receivable first
became part of the Collateral, to impair the rights of the Bank
Collateral Agent therein; and
(ai) the Obligor of which does not have any other
automotive receivable owing to First Investors which is more than
60 days contractually delinquent from the due date or defaulted
at the time such Receivable becomes a part of the Collateral.
"ENTERPRISE" means Enterprise Funding Corporation, a Delaware
corporation.
"ENTERPRISE AGREEMENT" means that certain Security Agreement
dated as of October 22, 1996, by and among FIARC, Enterprise, Texas
Commerce Bank National Association, MBIA Insurance Corporation,
NationsBank, N.A. and First Investors, and any amendments,
modifications, renewals or extensions thereof approved in accordance
with Section 7.14 hereof.
"ENVIRONMENTAL PROTECTION STATUTE" means (a) the Comprehensive
Environmental Response, Compensation and Liability Act of 1980 (as
amended by the Superfund Amendments and Reauthorization Act of 1986, 42
U.S.C.A. ss. 9601 ET SEQ.), as amended from time to time, and any and
all rules and regulations issued or promulgated thereunder ("CERCLA");
(b) the Resource Conservation and Recovery Act (as amended by the
Hazardous and Solid Waste Amendment of 1984, 42 U.S.C.A. ss. 6901 ET
SEQ.), as amended from time to time, and any and all rules and
regulations promulgated thereunder ("RCRA"); (c) the Clean Air Act, 42
U.S.C.A. ss. 7401 ET SEQ., as amended from time to time, and any and all
rules and regulations promulgated thereunder; (d) the Clean Water Act of
1977, 33 U.S.C.A. ss. 1251 ET SEQ., as amended from time to time, and
any and all rules and regulations promulgated thereunder; (e) the Toxic
Substances Control Act, 15 U.S.C.A. ss. 2601 ET SEQ., as amended from
time to time, and any and all rules and regulations promulgated
thereunder; or (f) any other federal or state law, statute, rule, or
regulation enacted in connection with or relating to the protection or
regulation of the environment (including, without limitation, those
laws, statutes, rules, and regulations regulating the disposal, removal,
production, storing, refining, handling, transferring, processing, or
transporting of Hazardous Materials) and any rules and regulations
issued or promulgated in connection with any of the foregoing by any
Governmental Authority, and "ENVIRONMENTAL PROTECTION STATUTES"means,
collectively, each of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA AFFILIATE" means any subsidiary or trade or business
(whether or not incorporated) which is a member of a group of which the
Borrower is a member and which is under common control within the
meaning of Section 414 of the Code and the rules and regulations
thereunder.
"ERISA EVENT" means any of the following events: (a) a
"Reportable Event" described in Section 4043 of ERISA and the
regulations issued thereunder (other than a "Reportable Event" not
subject to the provision for the 30-day notice to the Pension Benefit
Guaranty Corporation, under such regulations) or an event described in
Section 4068(f) of ERISA which may result in a material liability of the
Borrower or any ERISA Affiliate, (b) the withdrawal of the Borrower or
any ERISA Affiliate from a Plan during a plan year in which it was a
"substantial employer"
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as defined in Section 4001(a)(2) of ERISA or the incurrence of liability
by the Borrower or any ERISA Affiliate under Section 4064 of ERISA, (c)
the distribution of a notice of intent to terminate a Plan pursuant to
Section 4041(a)(2) of ERISA or the treatment of a Plan amendment as a
termination under Section 4041 of ERISA, (d) the institution of
proceedings to terminate a Plan by the Pension Benefit Guaranty
Corporation, or (e) any other event or condition which might constitute
grounds under ERISA or the Code for the termination of, or the
appointment of a trustee to administer, any Plan or for the imposition
of a lien on the assets of the Borrower or any ERISA Affiliate in
respect of any Plan or Multiemployer Plan which is not corrected within
30 days.
"ESCROW ACCOUNT" means that certain trust account established
pursuant to Article I of the Escrow Agreement.
"ESCROW AGENT" means NationsBank of Texas, N.A. (and any
successor thereto) as escrow agent under the Escrow Agreement.
"ESCROW AGREEMENT" means the Escrow Agreement dated as of
September 1, 1993 between the Borrower, the Agent, and the Escrow Agent,
and any amendments, modifications, renewals or extensions thereof.
"EUROCURRENCY LIABILITIES" has the meaning assigned to that term
in Regulation D of the Board of Governors of the Federal Reserve System,
as in effect from time to time.
"EVENTS OF DEFAULT" has the meaning specified in Section 8.01.
"EXTENSION DATE" means, at any time, that date which is one
hundred and eighty (180) days prior to the then-current Termination
Date.
"FACILITY" means the revolving credit facility created hereunder,
and the terms and conditions thereof.
"FACILITY NOTE" has the meaning specified in Section 2.02(d)
hereof and includes any amendments, modifications, renewals or
extensions thereof.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating
interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight federal funds transactions
with members of the Federal Reserve System arranged by federal funds
brokers, as published for such day (or, if such day is not a Business
Day, for the next preceding Business Day) by the Federal Reserve Bank of
New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such
transactions received by the Agent from three federal funds brokers of
recognized standing selected by it.
"FEE EXPENSE" means, for any period, the aggregate amount paid or
accrued by the Borrower in respect of the fee due under Section 2.03(a)
hereof.
"FIARC" means First Investors Auto Receivables Corporation, a
Delaware corporation.
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"FINANCED VEHICLE" means an automobile or light-duty truck,
together with all accessions thereto, securing an Obligor's indebtedness
under the respective Receivable.
"FIRST INVESTORS" means First Investors Financial Services, Inc.,
a Texas corporation.
"FIS GROUP" means First Investors Financial Services Group, Inc.,
a Texas corporation.
"FIXED RATE" means the LIBOR Rate or the Agreed Rate.
"FIXED RATE ADVANCE" means a LIBOR Rate Advance or an Agreed Rate
Advance.
"FUTURE PLAN" has the meaning specified in Section 6.02(h)
hereof.
"GAAP" means generally accepted accounting principles set forth
in the opinions and pronouncements of the Accounting Principles Board
and the American Institute of Certified Public Accountants, and
statements and pronouncements of the Financial Accounting Standards
Board.
"GAP INSURANCE" means the policy or policies of insurance issued
by Agricultural Excess and Surplus Insurance Company in the form
attached hereto as EXHIBIT D or such other insurance as satisfactory in
form and substance to the Banks.
"GOVERNMENTAL AUTHORITY" means any (domestic or foreign) federal,
state, county, municipal, parish, provincial, or other government, or
any department, commission, board, court, agency (including, without
limitation, the Environmental Protection Agency), or any other
instrumentality of any of them or any other political subdivision
thereof, and any entity exercising executive, legislative, judicial,
regulatory, or administrative functions of, or pertaining to,
government, including, without limitation, any arbitration panel, any
court, or any commission.
"GOVERNMENTAL REQUIREMENT" means any order, permit, law, statute
(including, without limitation, any Environmental Protection Statute),
code, ordinance, rule, regulation, certificate, or other direction or
requirement of any Governmental Authority.
"HAZARDOUS MATERIALS" means (a) any "hazardous waste" as defined
by RCRA; (b) any "hazardous substance" as defined by CERCLA; (c)
asbestos; (d) polychlorinated biphenyls; (e) any substance the presence
of which on any of the Borrower's Properties is prohibited by any
Governmental Authority; (f) petroleum, including crude oil and any
fraction thereof, natural gas liquids, liquified natural gas, and
synthetic gas useable for fuel (or mixtures of natural gas and such
synthetic gas); (g) drilling fluids, produced waters and other wastes
associated with the exploration, development, or production of crude
oil, natural gas, or geothermal energy; and (h) any other substance
which, pursuant to any Governmental Requirement, requires special
handling in its collection, storage, treatment, or disposal.
"HIGHEST LAWFUL RATE" means, with respect to each Bank, the
maximum nonusurious interest rate, if any, that at any time or from time
to time may be contracted for, taken, reserved, charged, or received
with respect to any Note or on other amounts, if any, due to such Bank
pursuant to this Agreement or any other Loan Document under laws
applicable to such Bank which are presently in effect or, to the extent
allowed by law, under such applicable laws which
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may hereafter be in effect and which allow a higher maximum nonusurious
interest rate than applicable laws now allow.
"INTEREST PERIOD" means, for each LIBOR Rate Advance or Agreed
Rate Advance comprising part of the same Borrowing, the period
commencing on the date of such Advance or the date of the conversion of
any Advance into such an Advance and ending on the last day of the
period selected by the Borrower pursuant to the provisions below and,
thereafter, each subsequent period commencing on the last day of the
immediately preceding Interest Period and ending on the last day of the
period selected by the Borrower pursuant to the provisions below. The
duration of each such Interest Period shall be (a) in the case of a
LIBOR Rate Advance, one, two, or three months, and (b) in the case of an
Agreed Rate Advance, 1 to (and including) 30 days, as the Borrower may,
upon notice received by the Agent, select in accordance with Section
2.02 or 2.09; PROVIDED, HOWEVER, that:
(i) the duration of any Interest Period which commences
before the Termination Date and otherwise ends after such date
shall end on the Termination Date; and
(ii) whenever the last day of any Interest Period would
otherwise occur on a day other than a Business Day, the last day
of such Interest Period shall be extended to occur on the next
succeeding Business Day, PROVIDED that, in the case of a LIBOR
Rate Advance or an Agreed Rate Advance based on the LIBOR Rate,
if such extension would cause the last day of such Interest
Period to occur in the next following calendar month, the last
day of such Interest Period shall occur on the next preceding
Business Day.
"INVESTMENT" of any Person means any investment so classified
under GAAP, and, whether or not so classified, includes (a) any direct
or indirect loan or advance made by it to any other Person, whether by
means of stock purchase, loan, advance or otherwise; (b) any capital
contribution to any other Person; and (c) any ownership or similar
interest in any other Person.
"LIBOR LENDING OFFICE" means, with respect to any Bank, the
office of such Bank specified as its "LIBOR Lending Office" opposite its
name on the signature pages hereto (or, if no such office is specified,
its Domestic Lending Office), or such other office of such Bank as such
Bank may from time to time specify to the Borrower and the Agent.
"LIBOR RATE" means, for any Interest Period for each LIBOR Rate
Advance, an interest rate per annum equal to the average (rounded upward
to the nearest whole multiple of 1/16 of 1% per annum) of the rate per
annum at which deposits in U.S. dollars are offered to the Agent, or at
the Agent's option, an Affiliate of the Agent by prime banks in the
London interbank market at 11:00 A M. (London time) three Business Days
before the first day of such Interest Period in an amount substantially
equal to such LIBOR Rate Advance and for a period equal to such Interest
Period.
"LIBOR RATE ADVANCE" means an Advance which bears interest at the
interest rate as provided in Section 2.06(b).
"LIBOR RATE MARGIN" means l/2 of 1% per annum.
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"LIBOR RATE RESERVE PERCENTAGE" of any Bank for any Interest
Period for any LIBOR Rate Advance means the reserve percentage, if any,
actually incurred during such Interest Period (or if more than one such
percentage shall be incurred, the daily average of such percentages for
those days in such Interest Period during which any such percentage
shall be incurred) under regulations issued from time to time by the
Board of Governors of the Federal Reserve System (or any successor) for
determining the maximum reserve requirement (including, without
limitation, any emergency, supplemental or other marginal reserve
requirement) for such Bank with respect to liabilities or assets
consisting of or including eurocurrency liabilities having a term equal
to such Interest Period.
"LIEN" means any claim, mortgage, deed of trust, pledge, security
interest, encumbrance, lien, or charge of any kind (including, without
limitation, any agreement to give any of the foregoing, any conditional
sale or other title retention agreement, or any lease in the nature
thereof), or the interest of the lessor under any Capital Lease.
"LIQUIDATED RECEIVABLE" means any Receivable liquidated by the
Servicer through sale of the Financed Vehicle or otherwise.
"LIQUIDATION PROCEEDS" means the monies collected from whatever
source, during the respective Collection Period, on a Liquidated
Receivable (including, without limitation, all proceeds from any
insurance held by the Obligor with respect thereto but excluding any
proceeds from the ALPI Insurance, the VSI Insurance and the GAP
Insurance).
"LOAN DOCUMENTS" means this Agreement, the Notes, the Security
Agreement, the Pledge Agreement, the Escrow Agreement and any document
or instrument executed in connection with the foregoing.
"LOAN INTEREST EXPENSE" means, for any period, the aggregate
amount of interest paid or accrued during such period on the Advances
(net of any costs or amounts received by the Borrower under any interest
rate protection agreements with respect thereto in accordance with
GAAP).
"LOAN PERCENTAGE" means as to any Bank a fraction (expressed as a
percentage) the numerator of which shall be the aggregate original
principal amount of such Bank's Notes and the denominator of which shall
be the aggregate amount of all the Commitments.
"MAJORITY BANKS" means (a) at any time during the term of this
Agreement when NationsBank is the only Bank or when there is only one
Bank in addition to NationsBank, all of such Banks and (b) at any time
during the term of this Agreement when there are two or more Banks in
addition to NationsBank, Banks holding at least 66-2/3% of the aggregate
unpaid principal amount of the Notes held by Banks, or, if no such
principal amount is then outstanding, Banks having at least 66-2/3% of
the Commitments.
"MARGIN STOCK" shall have the meaning assigned to such term in
Regulation G, T, U and X.
"MATERIAL ADVERSE EFFECT" means any material adverse effect on
(a) the financial condition, business, properties or operations of the
Borrower or (b) the ability of the Borrower
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to perform its respective obligations under this Agreement, any Note or
any other Loan Document to which it is a party, or under the Purchase
Agreement or the Servicing Agreement, on a timely basis.
"MULTIEMPLOYER PLAN" means a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate
is making or accruing or has made or accrued an obligation to make
contributions.
"MULTIPLE EMPLOYER PLAN" means a single employer plan, as defined
in Section 4001(a)(15) of ERISA, which (i) is maintained for employees
of the Borrower or an ERISA Affiliate and at least one entity other than
the Borrower or an ERISA Affiliate or (ii) was so maintained and in
respect of which the Borrower or an ERISA Affiliate could have liability
under Section 4064 or 4069 of ERISA in the event such plan has been or
were to be terminated.
"NET INCOME" means, for any period, the net earnings (or loss)
after taxes determined on a cash basis.
"NOTE" or "NOTES" means the Facility Notes.
"NOTICE OF BORROWING" has the meaning specified in Section
2.02(a).
"NOTICE OF INTEREST CONVERSION" has the meaning specified in
Section 2.09.
"NOTICE OF NONINSURANCE" means the notice required to be sent to
the Borrower and the Bank Collateral Agent from the Servicer pursuant to
Section 4.04 of the Servicing Agreement, which notice identifies any
Receivable for which the Servicer has not received a certificate
verifying insurance from each of the providers of the Credit Insurance
on or before forty-five (45) days after the date that the Servicer
enters the Receivable into its tracking system.
"OBLIGOR" means the purchaser or co-purchasers of a Financed
Vehicle or any other Person who owes payments under the Receivables.
"ORIGINATOR" shall mean a bank, finance company, car rental
company or factory authorized dealer or its affiliates which has entered
into an Originator Agreement with First Investors.
"ORIGINATOR AGREEMENT" shall mean the agreement between First
Investors and an Originator relating to the purchase of a Receivable.
"OTHER TAXES" has the meaning specified in subsection 3.03(b)
hereof
"PBGC PLAN" means any plan subject to Title IV of ERISA or
Section 412 of the Code.
"PERMITTED DEBT" has the meaning specified in Section 7.02.
"PERMITTED LIENS" means non-consensual Liens imposed by operation
of law including, without limitation, landlord Liens for rent not yet
due and payable, and Liens for materialmen, mechanics, warehousemen,
carriers, employees, workmen, repairmen, current wages, or accounts
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payable not yet delinquent and arising in the ordinary course of
business; PROVIDED, HOWEVER, that any right to seizure, levy,
attachment, sequestration, foreclosure, or garnishment with respect to
Property of the Borrower by reason of such Lien has not matured, or has
been, and continues to be, effectively enjoined or stayed.
"PERSON" means an individual, partnership, estate, corporation
(including a business trust), association, joint stock company, trust,
unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof.
"PLAN" means any employee benefit plan within the meaning of
Section 3(3) of ERISA, other than a Multiemployer Plan, maintained by
the Borrower or any ERISA Affiliate.
"PLEDGE AGREEMENT" means the Pledge Agreement dated as of October
16, 1992 between First Investors and the Agent, and any amendments,
modifications, renewals or extensions thereof.
"PRIME RATE" means the rate of interest most recently announced
publicly by NationsBank of Texas, N.A. in Dallas, Texas, from time to
time, as its prime rate, which rate shall fluctuate, with each such
change to be effective as of the date of such change in such rate;
PROVIDED that the prime rate is a reference rate and does not
necessarily represent the lowest rate charged to any customer.
"PRINCIPAL BALANCE" means, at any time and with respect to a
Receivable, the outstanding principal balance of the Receivable as shown
on the Servicer's reports delivered pursuant to Section 6.02(g) hereof
and based on the recalculation of interest by the Servicer under the
simple interest method pursuant to Section 4.09 of the Servicing
Agreement.
"PROPERTY" means any interest or right in any kind of property or
asset, whether real, personal, or mixed, owned or leased, tangible or
intangible, and whether now held or hereafter acquired.
"PURCHASE AGREEMENT" means the Amended and Restated Purchase
Agreement dated as of October 30, 1996 between the Borrower and First
Investors, as the same may be amended, restated, modified, renewed or
extended from time to time (subject to Section 7.14 hereof).
"PURCHASE AMOUNT" means, at any time, the Principal Balance at
which the Receivable is carried in the Borrowing Base plus any earned
interest thereon. In the event a Receivable is repurchased, the Purchase
Amount shall include any out-of-pocket expenses which are reimbursable
under the Servicing Agreement.
"PURCHASED RECEIVABLE" has the meaning set forth in the Security
Agreement.
"RECEIVABLE PORTFOLIO BALANCE" means, for any Collection Period,
the aggregate Principal Balance of the Receivables on the Determination
Date at the end of such Collection Period.
"RECEIVABLES" has the meaning set forth in the Purchase Agreement
"RECEIVABLES DOCUMENTS" means the Purchase Agreement and the
Servicing Agreement.
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"REGISTER" has the meaning specified in subsection 10.07(c)
hereof.
"REGULATION G", "REGULATION T", "REGULATION U", "REGULATION X" or
"REGULATION G, T, U OR X" means Regulation G, T, U or X, as the case may
be, of the Board of Governors of the Federal Reserve System, or any
successor or other regulation hereafter promulgated by said Board to
replace the prior Regulation G, T, U or X and having substantially the
same function.
"RESPONSIBLE OFFICER" means and includes the individual who is
the president of both the Borrower and First Investors and the
individual who is the chief financial officer of the Borrower.
"SECURITY AGREEMENT" means the Amended and Restated Collateral
Security Agreement dated as of October 30, 1996, among the Borrower, the
Agent, the Banks, and the Bank Collateral Agent, as the same may be
amended, restated, modified, renewed or extended from time to time.
"SERVICER" means General Electric Capital Corporation and each
successor thereto pursuant to Section 8.03 of the Servicing Agreement.
"SERVICING AGREEMENT" means the Amended and Restated Servicing
Agreement, dated as of October 30, 1996, between the Borrower and the
Servicer, as the same may be amended, restated, modified, renewed or
extended from time to time (subject to Section 7.14 hereof).
"SPECIFIED COLLATERAL ACCOUNT BALANCE" shall have the meaning set
forth in Section 1 of the Security Agreement.
"SUBSIDIARY" means any corporation of which any Person, either
directly or indirectly, owns at the time more than 50% of the
outstanding capital stock having ordinary voting power to elect a
majority of the Board of Directors of such corporation (whether or not
at the time stock of any other class or classes of such corporation
shall have, or might have, voting power by reason of the happening of
any contingency), and shall include any such corporation which shall
become a Subsidiary after the date hereof.
"TAXES" has the meaning specified in subsection 3.03(a) hereof.
"TERMINATION DATE" means October 15, 1997 (as the same may be
extended pursuant to Section 2.05 hereof), or the earlier date of
termination in whole of the Commitments pursuant to Section 2.04 or
8.01.
"TYPE" refers to the determination whether an Advance is a Base
Rate Advance, an Agreed Rate Advance, or a LIBOR Rate Advance (or a
Borrowing comprised of such Advances).
"UCC" has the meaning set forth in the Security Agreement.
"UNINSURED CREDIT LOSSES" means (a) losses on the Receivables
which are not covered by Credit Insurance and (b) losses on the
Receivables which are covered by Credit Insurance and for which
insurance claims have been filed by the Servicer and have been
outstanding for more than 30 days past the maximum contractual payment
date as specified in the applicable Credit Insurance, PROVIDED that, if
such claim is subsequently paid, it shall no longer constitute an
Uninsured Credit Loss.
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"VSI INSURANCE" means the policy or policies of insurance
underwritten by Agricultural Excess and Surplus Insurance Company in the
form attached hereto as EXHIBIT D or such other insurance as is
satisfactory in form and substance to the Bank.
Section 1.02. COMPUTATION OF TIME PERIODS. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
unless otherwise specified herein the word "from" means "from and including" and
the words "to" and "until" each means "to but excluding."
Section 1.03. ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP consistent with those
applied in the preparation of the financial statements referred to in Section
5.07.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
Section 2.01. THE ADVANCES. Each Bank severally agrees, on the terms and
conditions hereinafter set forth, to make Advances to the Borrower from time to
time on any Business Day during the period from the date hereof until the
Termination Date, in an aggregate amount not to exceed an amount equal to such
Bank's Loan Percentage of the Available Amount. Each Borrowing shall consist of
Advances of the same Type made on the same day by the Banks ratably according to
their respective Loan Percentage of the Available Amount. All Borrowings shall
be in an aggregate amount not less than $250,000 or an integral multiple of
$10,000 in excess thereof. Within the limits of each Bank's Loan Percentage of
the Available Amount, the Borrower may borrow, prepay pursuant to Sections 3.05
and 3.06 and reborrow under this Section 2.01. The principal amount outstanding
on the Advances shall mature and, together with accrued and unpaid interest
thereon, shall be due and payable on the Termination Date.
Section 2.02. MAKING THE ADVANCES. (a) Each Borrowing shall be made on
the Borrower's oral notice, or on written notice in the form attached hereto as
EXHIBIT E ("NOTICE OF BORROWING") given by the Borrower to the Agent not later
than 11:00 A.M. (Dallas time) (i) on the second Business Day prior to the date
of the proposed Borrowing in the case of a LIBOR Rate Advance, (ii) on the
Business Day prior to the date of the proposed Borrowing in the case of an
Agreed Rate Advance and (iii) on the same Business Day of the proposed Borrowing
in the case of a Base Rate Advance. With respect to any oral notice, the
Borrower shall promptly thereafter confirm such notice by delivering a Notice of
Borrowing. Each Notice of Borrowing shall specify therein the requested (i) date
of such Borrowing, (ii) Type of Advances comprising such Borrowing, (iii)
aggregate amount of such Borrowing, and (iv) in the case of a Borrowing
comprised of LIBOR Rate Advances or Agreed Rate Advances, the initial Interest
Period for each such Advance. The Agent shall promptly deliver a copy of each
Notice of Borrowing to each Bank and, in the case of any Agreed Rate Borrowing,
shall, after conferring with the Borrower and the Banks, and with the consent of
all Banks notify the Borrower not later than 2:00 p.m. (Dallas time) on the
Business Day prior to the Borrowing, of the Agreed Rate with respect to such
Borrowing. Each Bank shall, before 12:00 noon (Dallas time) on the date of such
Borrowing, make available for the account of its Applicable Lending Office to
the Agent at its address referred to in Section 10.02, in immediately available
funds, such Bank's ratable portion of such Borrowing. After the Agent's receipt
of such funds and upon fulfillment of the applicable conditions set forth in
Article IV, the Agent will transfer such funds
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to the Escrow Account to be made available to the Borrower as set forth in
Article II of the Escrow Agreement. Each Notice of Borrowing with respect to
LIBOR Rate or Base Rate Advances shall be irrevocable and binding on the
Borrower. In no event shall more than five Borrowings be outstanding at any
time.
(b) Unless the Agent shall have received notice from a Bank prior to the
date of any Borrowing that such Bank will not make available to the Agent such
Bank's Loan Percentage of such Borrowing, the Agent may assume that such Bank
has made such portion available to the Agent on the date of such Borrowing in
accordance with subsection (a) of this Section 2.02 and the Agent may, in
reliance upon such assumption, make available to the Borrower on such date a
corresponding amount. If and to the extent that such Bank shall not have so made
such Loan Percentage available to the Agent, such Bank and the Borrower
severally agree to repay to the Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the date such amount is
made available to the Borrower until the date such amount is repaid to the
Agent, at (i) in the case of the Borrower, the interest rate applicable at the
time to Advances comprising such Borrowing and (ii) in the case of such Bank,
the lesser of (A) the Federal Funds Rate or (B) the Highest Lawful Rate. If such
Bank shall repay to the Agent such corresponding amount, such amount so repaid
shall constitute such Bank's Advance as part of such Borrowing for purposes of
this Agreement.
(c) The failure of any Bank to make the Advance to be made by it as part
of any Borrowing shall not relieve any other Bank of its obligation, if any,
hereunder to make its Advance on the date of such Borrowing, but no Bank shall
be responsible for the failure of any other Bank to make the Advance to be made
by such other Bank on the date of any Borrowing.
(d) The Borrower shall execute and deliver to the Agent for each Bank to
evidence the Advances made by such Bank pursuant to Section 2.01 hereof, a
revolving credit note (each such note a "FACILITY NOTE" and more than one
Facility Note, the "FACILITY NOTES") in the amount of such Bank's Commitment.
Each Note shall be substantially in the form of EXHIBIT F with the blanks
appropriately filled, and shall mature on the Termination Date.
Section 2.03. FEES. (a) The Borrower agrees to pay to the Agent for the
account of each Bank (i) a commitment fee on the amount of each such Bank's
Commitment (whether or not principal amounts thereof are outstanding from time
to time) from the date hereof until November 1, 1996, and (ii) a commitment fee
on the daily average unused amount of each such Bank's Commitment from November
1, 1996 until the Termination Date, at the rate of 1/4 of 1% per annum, payable
on November 20, 1996 for the period from the Closing Date until such
Distribution Date, and thereafter, for each Collection Period on each
Distribution Date and continuing until the Termination Date. The fees payable
under this Section 2.03(a) shall be calculated by the Agent on the basis of a
360-day year, for the actual days (including the first day but excluding the
last day) occurring in the period for which such fee is payable. Each such
determination by the Agent shall be conclusive and binding for all purposes,
absent manifest error.
(b) From time to time, the Borrower shall pay or cause First Investors
to pay the Agent an administrative agency fee in accordance with the terms of a
letter agreement, dated as of July 31, 1995, between the Agent and First
Investors.
Section 2.04. REDUCTION OF THE COMMITMENTS. The Borrower shall have the
right, upon at least three Business Days' notice to the Agent, to terminate in
whole or reduce ratably in part the unused
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portions of the respective Commitments of the Banks, PROVIDED that each partial
reduction shall be in the aggregate amount of $1,000,000 or an integral multiple
thereafter of $500,000.
Section 2.05. EXTENSION OF TERMINATION DATE. On the date which is a
Business Day no less than forty-five (45) and no more than sixty (60) days prior
to the then-current Extension Date, the Borrower may elect to notify the Agent
in writing of its request for an extension of the Termination Date for a period
of one hundred eighty (180) days from such Termination Date. Promptly after
receipt of such request, the Agent shall notify the Banks of such request by
sending each Bank a Consent to Extension for its execution. Each Bank shall
return the executed Consent to Extension or notify the Agent in writing of its
rejection of the request on or prior to a date which is fifteen (15) Business
Days prior to the then-current Extension Date. In the event that any Bank fails
to so notify the Agent on or prior to such date, the request shall be deemed to
have been rejected by such Bank. The Commitments shall be extended hereunder
only upon the consent of all Banks whereupon the Termination Date and the
maturity date of each Note shall be deemed to be extended to a date which is one
hundred eighty (180) days after the then-current Termination Date. In the event
of the renewal and extension of the Commitments and the maturity date of the
Notes pursuant to this Section 2.05, the terms and conditions of this Agreement,
the Security Agreement, the Pledge Agreement and the other Loan Documents will
apply during such renewal and extension period and from and after the date of
such extension the term "Termination Date" shall mean the maturity date of the
Notes as so renewed and extended.
Section 2.06. INTEREST. The Borrower shall pay interest on the unpaid
principal amount of each Advance made by each Bank from the date of such Advance
until such principal amount shall be paid in full, at the times and at the rates
per annum set forth below:
(a) BASE RATE ADVANCES. During such periods as such Advance is a Base
Rate Advance, a rate per annum equal at all times to the lesser of (i) the Base
Rate in effect from time to time or (ii) the Highest Lawful Rate, payable on
each Distribution Date and on the Termination Date, PROVIDED that any amount of
principal which is not paid when due (whether at stated maturity, by
acceleration or otherwise) shall bear interest, from the date on which such
amount is due until such amount is paid in full, payable on demand, at a rate
per annum equal at all times to the lesser of (i) three percent (3%) per annum
above the Base Rate in effect from time to time or (ii) the Highest Lawful Rate.
(b) LIBOR RATE ADVANCES. During such periods as such Advance is a LIBOR
Rate Advance, a rate per annum equal at all times during each Interest Period
for such Advance to the lesser of (i) the sum of the LIBOR Rate for such
Interest Period for such Advance plus the LIBOR Rate Margin or (ii) the Highest
Lawful Rate, payable, together with additional interest due under Section 2.07
hereof, on the last day of such Interest Period and on the Termination Date;
PROVIDED that any amount of principal which is not paid when due (whether at
stated maturity, by acceleration or otherwise) shall bear interest, from the
date on which such amount is due until such amount is paid in full, payable on
demand, at a rate per annum equal at all times to the lesser of (i) three
percent (3%) per annum above the Base Rate in effect from time to time or (ii)
the Highest Lawful Rate.
(c) AGREED RATE ADVANCE. During such periods as such Advance is an
Agreed Rate Advance, a rate per annum equal at all times during such Interest
Period for such Advance to the lesser of (i) the Agreed Rate for such Interest
Period for such Advance or (ii) the Highest Lawful Rate, payable on the last day
of such Interest Period and on the Termination Date; PROVIDED that any amount of
principal which is not paid when due (whether at stated maturity, by
acceleration or otherwise) shall bear interest, from the date on which such
amount is due until such amount is paid in full, payable on demand, at a rate
per
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annum equal at all times to the lesser of (i) three percent (3%) above the Base
Rate in effect from time to time or (ii) the Highest Lawful Rate.
(d) INTEREST COMPUTATION. Computations of interest pursuant to this
Article II shall be made by the Agent with respect to Base Rate Advances or
Agreed Rate Advances based on the Prime Rate, on the basis of a year of 365 or
366 days, as the case may be, and with respect to Advances of any other type
(including Base Rate Advances based on the Federal Funds Rate), on the basis of
a year of 360 days, in each case for the actual number of days (including the
first day but excluding the last day) occurring in the period for which such
interest is payable. Each determination by the Agent of an interest rate
hereunder shall be conclusive and binding for all purposes, absent manifest
error.
Section 2.07. ADDITIONAL INTEREST ON ADVANCES BASED ON THE LIBOR RATE.
Subject to Section 10.08 hereof, the Borrower shall pay to each Bank, so long as
such Bank shall be required under regulations of the Board of Governors of the
Federal Reserve System to maintain reserves with respect to liabilities or
assets consisting of or including Eurocurrency Liabilities, additional interest
on the unpaid principal amount of each Advance of such Bank during such periods
as such Advance is a LIBOR Rate Advance or an Agreed Rate Advance based on the
LIBOR Rate, from the date of such Advance until such principal amount is paid in
full, at an interest rate per annum equal at all times to the remainder obtained
by subtracting (i) the LIBOR Rate for such Interest Period for such Advance from
(ii) the rate obtained by dividing such LIBOR Rate by a percentage equal to 100%
minus the LIBOR Rate Reserve Percentage of such Bank actually incurred for such
Interest Period, payable on each date on which interest is payable on such
Advance pursuant to Section 2.06 hereof. A certificate as to amounts required to
be paid under this Section 2.07 submitted to the Borrower and the Agent by such
Bank and setting forth in reasonable detail the amount or amounts to be paid to
it hereunder shall be conclusive absent manifest error.
Section 2.08. INTEREST RATE DETERMINATION AND PROTECTION. (a) The rate
of interest for (i) each LIBOR Rate Advance specified in a Notice of Borrowing
or a Notice of Interest Conversion, shall be determined by the Agent two (2)
Business Days before the first day of the Interest Period applicable for such
Advance and (ii) for each Agreed Rate Advance specified in a Notice of Borrowing
or a Notice of Interest Conversion shall be determined by the Agent, the Banks
and the Borrower as set forth in Section 2.02(a) hereof. The Agent shall give
prompt notice to the Borrower and the Banks of the applicable interest rate
determined by the Agent for purposes of Section 2.06(a), (b) or (c) hereof, and
each such determination by the Agent shall be conclusive, absent manifest error.
(b) If, with respect to any LIBOR Rate Advances, the Majority Banks
notify the Agent that the LIBOR Rate for any Interest Period for such Advances
will not adequately reflect the cost to such Majority Banks of making, funding
or maintaining their respective LIBOR Rate Advances for such Interest Period,
the Agent shall forthwith so notify the Borrower and the Banks, whereupon
(i) each LIBOR Rate Advance which has been effected will
automatically, on the last day of the then existing Interest
Period therefor, convert into a Base Rate Advance, and
(ii) the obligation of the Banks to make, or to convert
Advances into, LIBOR Rate Advances shall be suspended until the
Agent shall notify the Borrower and the Banks that the
circumstances causing such suspension no longer exist.
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(c) If the Borrower shall fail to deliver to the Agent a Notice of
Interest Conversion in accordance with Section 2.09 hereof, to select the
duration of any Interest Period for the principal amount outstanding under any
LIBOR Rate Advance or Agreed Rate Advance prior to the last day of the Interest
Period applicable to such Advance, the Agent will forthwith so notify the
Borrower and the Banks and such Advances will automatically, on the last day of
the then existing Interest Period therefor, convert into Base Rate Advances.
(d) Notwithstanding any other provision of this Agreement, if any Bank
shall notify the Agent that the introduction of or any change in or in the
interpretation of any law or regulation makes it unlawful, or any central bank
or other governmental authority asserts that it is unlawful, for any Bank or its
LIBOR Lending Office to perform its obligations hereunder to make LIBOR Rate
Advances or Agreed Rate Advances based on the LIBOR Rate or to fund or maintain
LIBOR Rate Advances or Agreed Rate Advances based on the LIBOR Rate hereunder,
(i) the obligation of the Banks to make, or to convert Advances into, LIBOR Rate
Advances or Agreed Rate Advances based on the LIBOR Rate shall be suspended
until the Agent shall notify the Borrower and the Banks that the circumstances
causing such suspension no longer exist and (ii) the Borrower shall forthwith
prepay in full all LIBOR Rate Advances or Agreed Rate Advances based on the
LIBOR Rate of all Banks then outstanding, together with interest accrued
thereon, unless the Borrower, within three Business Days of notice from the
Agent, converts all LIBOR Rate Advances or Agreed Rate Advances based on the
LIBOR Rate of all Banks then outstanding into Base Rate Advances in accordance
with Section 2.09.
Section 2.09. VOLUNTARY INTEREST CONVERSION OF ADVANCES. The Borrower
may on any Business Day, upon the Borrower's oral or written notice ("NOTICE OF
INTEREST CONVERSION") given by the Borrower to the Agent not later than 11:00 A
M. (Dallas time) on the second Business Day prior to the date of the proposed
interest conversion in the case of LIBOR Rate or Agreed Rate Advances, (i)
convert all Advances of one Type into Advances of another Type, (ii) convert all
LIBOR Rate Advances for a specified Interest Period into LIBOR Rate Advances for
a different Interest Period or (iii) convert all Agreed Rate Advances for a
specified Interest Period into Agreed Rate Advances for a different Interest
Period; PROVIDED, HOWEVER, with respect to any oral Notice of Interest
Conversion, the Borrower shall promptly confirm such notice in writing; PROVIDED
FURTHER that, any conversion of any LIBOR Rate Advances into LIBOR Rate Advances
for a different Interest Period, or into Base Rate Advances, or of Agreed Rate
Advances into Agreed Rate Advances for a different Interest Period, or into Base
Rate Advances shall be made on, and only on, the last day of an Interest Period
for such LIBOR Rate Advances or Agreed Rate Advances, as the case may be;
PROVIDED FURTHER that no conversion into a LIBOR Rate Advance or an Agreed Rate
Advance will be permitted if at the time of receipt by the Agent of the Notice
of Interest Conversion, a Default or Event of Default shall have occurred and be
continuing. Each such Notice of Interest Conversion shall specify therein the
requested (i) date of such interest conversion, (ii) the Advances to be
converted, and (iii) if such interest conversion is into Advances constituting
LIBOR Rate Advances or Agreed Rate Advances, as the case may be, the duration of
the Interest Period for each such Advance. The Agent shall promptly deliver a
copy of each Notice of Interest Conversion to each Bank. Each Notice of Interest
Conversion shall be irrevocable and binding on the Borrower. In no event shall
more than five (5) Interest Periods be in effect at any time with respect to
LIBOR Rate Advances.
Section 2.10. FUNDING LOSSES RELATING TO FIXED RATE ADVANCES. (a) If any
payment of principal of, or interest conversion of, any Fixed Rate Advance is
made other than on the last day of an Interest Period relating to such Advance,
as a result of a payment or conversion pursuant to Section 2.08 or Section 2.09,
or acceleration of the maturity of any Note in accordance with the terms hereof,
or for any
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other reason, the Borrower shall, upon demand by the Agent or any Bank (with a
copy of such demand to the Agent), pay to the Agent for the account of such Bank
any amounts required to compensate such Bank for any additional losses, costs,
or expenses which it may reasonably incur as a result of such payment or
interest conversion, including, without limitation, any loss, cost, or expense
incurred by reason of the liquidation or reemployment of the amounts so prepaid
or of deposits or other funds acquired by such Bank to fund or maintain such
Advance, as determined in accordance with Section 2.10(c).
(b) In the case of any Borrowing, the Borrower shall indemnify each Bank
against any loss, cost, or expense incurred by such Bank as a result of any
failure to fulfill on or before the date specified in a Notice of Borrowing the
applicable conditions set forth in Article IV, including, without limitation,
any loss, cost, or expense incurred by reason of the liquidation or reemployment
of the amounts so prepaid or of deposits or other funds acquired by such Bank to
fund the Advance to be made by such Bank as part of such Borrowing when such
Advance, as a result of such failure, is not made on such date, as determined in
accordance with Section 2.10(c).
(c) The losses, costs and expenses reasonably incurred by any Bank and
covered under Sections 2.10(a) and (b) hereof shall include, without limitation,
an amount equal to the excess, if any, as reasonably determined by each Bank of
(i) its cost of obtaining the funds for the Advance being paid, prepaid or
converted or not borrowed (based on the Fixed Rate applicable thereto) for the
period from the date of such payment, prepayment or conversion or failure to
borrow to the last day of the Interest Period for such Advance (or, in the case
of a failure to borrow, the Interest Period for the Advance which would have
commenced on the date of such failure to borrow) over (ii) the amount of
interest (as determined by the Bank in its sole judgment) that would be realized
by such Bank in reemploying the funds so paid, prepaid or converted or not
borrowed for such period or Interest Period, as the case may be, PROVIDED that
each Bank will use its best efforts to reemploy such funds in investments of
similar quality.
(d) Any Bank demanding payment under this Section 2.10 shall deliver to
the Borrower and the Agent a statement reasonably setting forth the amount and
manner of determining such loss, cost, or expense, which statement shall be
conclusive and binding for all purposes, absent manifest error. Any demand for
compensation pursuant to this Section 2.10 must be made on or before 90 days
after a Bank incurs the expense, cost or economic loss referred to or such Bank
shall be deemed to have waived the right to such compensation.
ARTICLE III
INCREASED COSTS, TAXES, PAYMENTS AND PREPAYMENTS
Section 3.01. INCREASED COSTS; CAPITAL ADEQUACY. (a) If, due to either
(i) the introduction of or any change (other than any change by way of
imposition or increase of reserve requirements, in the case of LIBOR Rate
Advances or Agreed Rate Advances based on the LIBOR Rate, included in the LIBOR
Rate Reserve Percentage) in or in the interpretation of any law or regulation or
(ii) the compliance with any guideline or request from any central bank or other
governmental authority (whether or not having the force of law), there shall be
any increase in the cost to any Bank of agreeing to make or making, funding or
maintaining Fixed Rate Advances, then the Borrower shall from time to time, upon
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demand by such Bank (with a copy of such demand to the Agent), pay to the Agent
for the account of such Bank additional amounts sufficient to compensate such
Bank for such increased cost.
(b) If any Bank determines that compliance with any law or regulation or
any guideline or request from any central bank or other governmental authority
(whether or not having the force of law) affects or would affect the amount of
capital required or expected to be maintained by such Bank or any corporation
controlling such Bank and that the amount of such capital is increased by or
based upon the existence of such Bank's Commitments to lend hereunder and other
commitments of this type, then, upon demand by such Bank (with a copy of such
demand to the Agent), the Borrower shall immediately pay to the Agent for the
account of such Bank, from time to time as specified by such Bank, additional
amounts sufficient to compensate such Bank or such corporation in the light of
such circumstances, to the extent that such Bank reasonably determines such
increase in capital to be allocable to the existence of such Bank's Commitment
to lend hereunder.
(c) A certificate as to amounts required to be paid under this Section
3.01 submitted to the Borrower and the Agent by such Bank and setting forth in
reasonable detail the amount or amounts to be paid to it hereunder shall be
conclusive and binding for all purposes, absent manifest error.
Section 3.02. PAYMENTS AND COMPUTATIONS. (a) The Borrower shall make
each payment hereunder and under the Notes not later than 11:00 a.m. (Dallas
time) on the day when due in U.S. dollars to the Agent at its address referred
to in Section 10.02 in immediately available funds (each such payment received
after such time on such due date to be deemed to have been made on the next
succeeding Business Day). The Agent will promptly thereafter cause to be
distributed like funds relating to the payment of principal or interest or fees
(to the extent received by the Agent) ratably to the Banks for the account of
their respective Applicable Lending Offices, and like funds relating to the
payment of any other amount payable to any Bank (to the extent received by the
Agent) to such Bank for the account of its Applicable Lending Office, in each
case to be applied in accordance with the terms of this Agreement.
(b) Whenever any payment hereunder or under the Notes shall be stated to
be due on a day other than a Business Day, such payment shall be made on the
next succeeding Business Day, and such extension of time shall in such case be
included in the computation of payment of interest or fees, as the case may be;
PROVIDED HOWEVER, if such extension would cause payment of interest on or
principal of LIBOR Rate Advances or Agreed Rate Advances based on the LIBOR Rate
to be made in the next following calendar month, such payment shall be made on
the next preceding Business Day.
(c) Unless the Agent shall have received notice from the Borrower prior
to the date on which any payment is due to the Banks hereunder that the Borrower
will not make such payment in full, the Agent may assume that the Borrower has
made such payment in full to the Agent on such date and the Agent may, in
reliance upon such assumption, cause to be distributed to each Bank on such due
date an amount equal to the amount then due such Bank. If and to the extent the
Borrower shall not have so made such payment in full to the Agent, each Bank
shall repay to the Agent forthwith on demand such amount distributed to such
Bank together with interest thereon, for each day from the date such amount is
distributed to such Bank until the date such Bank repays such amount to the
Agent, at the lesser of (i) the Federal Funds Rate or (ii) the Highest Lawful
Rate.
Section 3.03. TAXES. (a) Any and all payments by the Borrower hereunder
or under the Notes shall be made, in accordance with Section 3.02, free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
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thereto, excluding, in the case of each Bank and the Agent, taxes imposed on its
income, and franchise taxes imposed on it, by the jurisdiction under the laws of
which such Bank or the Agent (as the case may be) is organized or any political
subdivision thereof and, in the case of each Bank, taxes imposed on its income,
and franchise taxes imposed on it, by the jurisdiction of such Bank's Applicable
Lending Office or any political subdivision thereof (all such non-excluded
taxes, levies, imposts, deductions, charges, withholdings and liabilities being
hereinafter referred to as "TAXES"). If the Borrower shall be required by law to
deduct any Taxes from or in respect of any sum payable hereunder or under any
Note to any Bank or the Agent, (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 3.03) such Bank or the
Agent (as the case may be) 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 which arise from any payment made hereunder or under the Notes or from
the execution, delivery or registration of, or otherwise with respect to, this
Agreement or the Notes (hereinafter referred to as "OTHER TAXES").
(c) The Borrower will indemnify each Bank and the Agent 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
3.03) paid by such Bank or the Agent (as the case may be) and any liability
(including penalties, interest and expenses) arising therefrom or with respect
thereto, whether or not such Taxes or Other Taxes were correctly or legally
asserted. Amounts payable pursuant to this indemnification shall be paid within
thirty (30) days from the date such Bank or the Agent (as the case may be) makes
written demand therefor.
(d) Without prejudice to the survival of any other agreement of the
Borrower hereunder, the agreements and obligations of the Borrower contained in
this Section 3.03 shall survive the payment in full of principal and interest
hereunder and under the Notes.
Section 3.04. SHARING OF PAYMENTS, ETC.. If any Bank shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of any Advance made by it (other than pursuant
to Sections 2.07, 2.10, 3.01 or 3.03) in excess of its ratable share of payments
on account of the Advances, such Bank shall forthwith purchase from the other
Banks such participations in the Advances made by them as shall be necessary to
cause such purchasing Bank to share the excess payment ratably with each of
them, PROVIDED, HOWEVER, that if all or any portion of such excess payment is
thereafter recovered from such purchasing Bank, such purchase from each Bank
shall be rescinded and such Bank shall repay to the purchasing Bank the purchase
price to the extent of such recovery together with an amount equal to such
Bank's ratable share (according to the proportion of (i) the amount of such
Bank's required repayment to (ii) the total amount so recovered from the
purchasing Bank) of any interest or other amount paid or payable by the
purchasing Bank in respect of the total amount so recovered. The Borrower agrees
that any Bank so purchasing a participation from another Bank pursuant to this
Section 3.04 may, to the fullest extent permitted by law, exercise all its
rights of payment (including the right of set-off) with respect to such
participation as fully as if such Bank were the direct creditor of the Borrower
in the amount of such participation.
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Section 3.05. VOLUNTARY PREPAYMENTS. The Borrower may at any time and
from time to time, prepay an Advance, in whole or in part, (a) in the case of a
LIBOR Rate Advance or an Agreed Rate Advance, upon at least two Business Days'
written notice, provided that in the event Borrower prepays Fixed Rate Advances
in whole or in part on a day which is not the last day of the Interest Period
applicable thereto, the provisions of Section 2.10 shall apply and (b) in the
case of a Base Rate Advance, upon same Business Day written notice; PROVIDED,
HOWEVER, that all such prepayments shall be made together with accrued interest
to the date of such prepayment on the principal amount prepaid without premium
or penalty thereon. Each notice of prepayment shall specify the prepayment date
and the principal amount of each Advance(s) (or portion thereof) to be prepaid,
and shall be irrevocable and the payment amount specified in such notice shall
be due and payable on the prepayment date described in such notice, together
with accrued and unpaid interest on the amount prepaid. Partial prepayments with
respect to any Advance shall be in an aggregate principal amount of $500,000 or
greater integral multiples of $10,000.
Section 3.06. MANDATORY PREPAYMENTS. (a) If at any time the aggregate
outstanding principal balance of the Advances exceeds an amount equal to the
lesser of the Borrowing Base or the Commitments at such time, then the Borrower
shall immediately pay to the Agent for the ratable account of the Banks the
amount of such excess, together with accrued and unpaid interest thereon.
b) Promptly after the receipt thereof, the Borrower will pay to the
Agent 100% of the proceeds received by the Borrower from any transfer or
assignment of Receivables to First Investors under the Purchase Agreement, and
upon receipt thereof the Agent shall cause the Bank Collateral Agent to release
the lien covering such collateral created in its favor pursuant to the Security
Agreement.
Section 3.07. BANK COLLATERAL AGENT AS BORROWER'S PAYING AGENT. The
Agent and the Banks acknowledge that the Borrower has appointed the Bank
Collateral Agent as its paying agent under the Security Agreement and that all
payments required to be made by the Borrower under Sections 2.03, 2.06 or 2.07
or Article III or any other section hereof shall be deemed to have been made by
the Borrower if such payments are made by the Bank Collateral Agent.
Section 3.08. SUBSTITUTION OF BANK. In the event the Borrower is
required to pay any material amounts to any Bank pursuant to Section 2.10,
Section 3.01(a) or (b), or Section 3.03 hereof, the Borrower may give at least
forty-five (45) days prior notice to such Bank (with copies to the Agent) that
it wishes to seek one or more Assignees (which may be one or more of the Banks)
to assume the Commitments of such Bank and to purchase its outstanding Advances
and Notes and the Agent will use its best efforts to assist Borrower in
obtaining an Assignee, PROVIDED, HOWEVER, that if more than one Bank requests
that Borrower pay substantially and proportionately equal additional amounts
under any such sections and Borrower elects to seek an Assignee(s) to assume the
Commitments of any one of such affected Banks, Borrower must seek Assignee(s) to
assume the Commitments of all of such affected Banks. Each Bank requesting
compensation pursuant to Section 2.10, Section 3.01, or Section 3.03 hereof
agrees to sell its Commitments, Advances, Notes and interest in this Agreement
in accordance with Section 10.07 to any such Assignee for an amount equal to the
sum of the outstanding unpaid principal of and accrued interest on such Advances
and Notes PLUS all other fees and amounts (including, without limitation, any
compensation claimed by such Bank under any such sections) due such Bank
hereunder calculated, in each case, to the date such Commitments, Advances,
Notes and interest are purchased. Upon such sale or prepayment, said Bank shall
have no further Commitment or other obligation to Borrower hereunder or under
any Note.
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ARTICLE IV
CONDITIONS OF LENDING
Section 4.01. CONDITIONS PRECEDENT TO INITIAL ADVANCES. The obligation
of each Bank to make its initial Advance is subject to the condition precedent
that the Agent shall have received on or before the day of the initial Borrowing
the following, each dated such day, in form and substance satisfactory to the
Agent and (except for the Notes) in sufficient copies for each Bank:
(a) The Notes, duly executed by the Borrower and payable to the order of
each Bank.
(b) This Agreement, duly executed by the Borrower.
(c) The Security Agreement, duly executed by the Borrower, the Agent,
the Banks and the Bank Collateral Agent.
(d) The Pledge Agreement, duly executed by First Investors and the
Agent.
(e) A copy of the Servicing Agreement, in form and substance acceptable
to the Agent and duly executed by the Borrower and the Servicer.
(f) A copy of the Purchase Agreement, duly executed by the parties
thereto.
(g) A certificate of the Secretary of each of the Borrower and First
Investors, certifying (1) the names and true signatures of its officers
authorized to sign each Loan Document and Receivables Document to which it is a
party and the notices and other documents to be delivered by it pursuant to any
such Loan Document or Receivables Document; (2) its By-laws and Articles or
Certificate of Incorporation as in effect on the date of such certification; and
(3) the resolutions of its Board of Directors approving and authorizing the
execution, delivery, and performance by it of each Loan Document and Receivables
Document to which it is a party, the notices and other documents to be delivered
by it pursuant to any such Loan Document or Receivables Document, and the
transactions contemplated thereunder.
(h) Certificates of appropriate officials as to the existence and good
standing of (i) the Borrower in its jurisdiction of incorporation and any and
all other jurisdictions where the Property owned or the business transacted by
the Borrower requires the Borrower to be qualified therein and where the failure
to be so qualified would have a Material Adverse Effect and (ii) each of FIARC
and First Investors in its jurisdiction of incorporation.
(i) A favorable opinion of Buck, Keenan & Owens, L.L.P., counsel for the
Borrower, FIARC and First Investors, substantially in the form of EXHIBIT G
hereto and as to such other matters as any Bank through the Agent may reasonably
request.
(j) Acknowledgment copies of proper Financing Statements (Form UCC-1),
duly filed on or before the Closing Date, naming the Borrower as the debtor and
the Bank Collateral Agent as the secured party, or other, similar instruments or
documents, as may be necessary or, in the opinion of the Agent, desirable under
the UCC of all appropriate jurisdictions or any comparable law to perfect the
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Agent's and the Banks' security interests in all Receivables and related
security and the Collateral Account in which an interest may be assigned under
the Security Agreement.
(k) Certified copies of Requests for Information or Copies (Form UCC-11)
(or a similar search report certified by a party acceptable to the Agent), dated
on or before the Closing Date, listing all effective financing statements which
name the Borrower, FIARC or First Investors (under its present name and any
previous name) as debtor and which are filed in the jurisdictions in which
filings were made pursuant to subsection (o) of this Section 4.01, together with
copies of such financing statements.
(l) The ALPI Insurance, the GAP Insurance, and the VSI Insurance are in
form and substance satisfactory to the Agent and the Agent shall have been named
as an additional insured with respect thereto.
(m) A copy of each of the Enterprise Agreement and the other documents
contemplated thereby, duly executed and delivered by the parties thereto, in
form and substance satisfactory to the Banks.
(n) Such other documents and instruments with respect to the
transactions contemplated hereby as the Agent may reasonably request.
Section 4.02. CONDITIONS PRECEDENT TO EACH BORROWING (INCLUDING THE
INITIAL BORROWING). The obligation of each Bank to make an Advance on the
occasion of each Borrowing (including the initial Borrowing) shall be subject to
the further conditions precedent that on the date of such Borrowing:
(a) the Agent shall have received a Notice of Borrowing in accordance
with the terms of this Agreement;
(b) Credit Insurance is in full force and effect for all Receivables and
for the Receivables to be purchased with the proceeds of the Advance, and the
Agent shall not have received a notice of cancellation of the Credit Insurance
from any of the providers thereof;
(c) both before and after giving effect to the Borrowing, the aggregate
amount of outstanding Advances shall not exceed an amount equal to the lesser of
the Borrowing Base or the Commitments at such time; and
(d) the Agent shall have received such other approvals, information,
opinions or documents as any Bank through the Agent may reasonably request.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
In order to induce the Banks to enter into this Agreement, the Borrower
represents and warrants to the Banks (which representations and warranties will
survive the delivery of any Note and the making of any Advance) that:
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Section 5.01. EXISTENCE. The Borrower is a corporation duly organized,
validly existing, and in good standing under the laws of Delaware and is duly
qualified or licensed to do business in all jurisdictions where the Property
owned or the business transacted by it makes such qualification necessary and
where the failure to be so qualified would have a Material Adverse Effect.
Section 5.02. POWER AND AUTHORIZATION. The Borrower is duly authorized
and empowered to execute, deliver, and perform its obligations under each Loan
Document and the Receivables Documents, and all corporate or other action on the
Borrower's part requisite for the due execution, delivery, and performance of
each Loan Document and the Receivables Documents, has been duly and effectively
taken. The Borrower is duly authorized and empowered to borrow under this
Agreement and all corporate action on the Borrower's part requisite for
borrowing by the Borrower hereunder has been duly and effectively taken.
Section 5.03. NO CONFLICT OR RESULTANT LIEN. The execution, delivery,
and performance by the Borrower of each Loan Document and the Receivables
Documents, the Borrowings hereunder by the Borrower as contemplated herein, and
the effectuation of the transactions contemplated by any Loan Document and the
Receivables Documents, do not and will not violate any provision of, or result
in a default under, the Borrower's Certificate of Incorporation or other charter
documents or By-laws or any material agreement to which the Borrower is a party,
or Governmental Requirement to which the Borrower is subject, or result in the
creation or imposition of any Lien upon any Property of the Borrower, and no
transaction contemplated by the Receivables Documents requires compliance with
any bulk sales act or similar law. No Default or Event of Default has occurred
and is continuing.
Section 5.04. RECEIVABLES. The transfer and assignment contemplated
under the Purchase Agreement constitutes a sale of the Receivables from First
Investors to the Borrower and the beneficial interest in and title to the
Receivables shall not be part of the debtor's estate in the event of the filing
of a bankruptcy petition by or against First Investors under any bankruptcy law.
Immediately prior to the transfer and assignment contemplated under the Purchase
Agreement, First Investors had good and marketable title to each Receivable free
and clear of all Liens, encumbrances, security interests, and rights of others
and, immediately upon the transfer thereof, the Borrower shall have good and
marketable title to each Receivable, free and clear of all Liens, encumbrances,
security interests, and rights of others; and the transfer has been perfected
under the UCC.
Section 5.05. NO CONSENT. No authorization or approval or other action
by, and no notice to or filing with, any Person or any Governmental Authority is
required for the due execution, delivery, and performance by the Borrower of
this Agreement or any other Loan Document or the Receivables Documents, the
Borrowings hereunder as contemplated herein, or the effectuation of the
transactions contemplated under any Loan Document or Receivables Document.
Section 5.06. BINDING OBLIGATIONS. Each Loan Document and Receivable
Document constitutes the legal, valid and binding obligation of the Borrower
enforceable against it in accordance with its respective terms, except as such
enforceability may be (a) limited by the effect of any applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the enforcement of creditor's rights generally, and (b) subject to the
effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding at equity or at law).
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Section 5.07. FINANCIAL CONDITION. The certified consolidated audited
balance sheet of FIS Group and its Subsidiaries as at April 30, 1996, and the
related certified consolidated statements of income and stockholder's equity and
cash flow statements of FIS Group and its Subsidiaries for the Borrower's annual
fiscal period ending April 30, 1996 and the unaudited consolidated balance sheet
of FIS Group and its Subsidiaries as at July 31, 1996 and the related unaudited
consolidated statements of income and changes in stockholders' equity and cash
flow statements for the fiscal quarter then ended, certified by an officer of
FIS Group, copies of which have been furnished to each Bank, have been prepared
in accordance with GAAP and in accordance with FIS Group's and each Subsidiary's
accounting practices consistently applied, and certified by a Responsible
Officer as presenting fairly the consolidated financial condition of FIS Group
and its Subsidiaries as at such date and the results of the operations of FIS
Group and its Subsidiaries for the period ended on such date, all in accordance
with GAAP, and that, in the case of FIS Group and its Subsidiaries on a
consolidated basis, since April 30, 1996, and in the case of the Borrower, since
April 30, 1996, there has been no material adverse change in its financial
condition, business, Properties or operations. The Borrower has no obligations,
liabilities, or Debts (including, without limitation, contingent and indirect
liabilities and obligations) except for Permitted Debt.
Section 5.08. LITIGATION. There are no actions, suits, or proceedings
pending or, to the knowledge of the Borrower, threatened against or affecting
the Borrower, FIARC or First Investors, or the Properties of the Borrower, FIARC
or First Investors, which could, individually or in the aggregate, reasonably be
determined to have a Material Adverse Effect.
Section 5.09. USE OF PROCEEDS; MARGIN STOCK. The proceeds of each
Advance will be used by the Borrower to purchase Receivables from First
Investors. The Borrower is not engaged in the business of extending credit for
the purpose of purchasing or carrying Margin Stock, and no proceeds of any
Advance will be used (A) to purchase or carry any Margin Stock or to extend
credit to others for the purpose of purchasing or carrying any Margin Stock; (B)
to reduce or retire any Debt which was originally incurred to purchase or carry
any such Margin Stock; (C) for any other purpose which might constitute this
transaction a "purpose credit" within the meaning of Regulation G, T, U or X; or
(D) to acquire any security of any Person who is subject to Sections 13 and 14
of the Securities Exchange Act. Neither the Borrower, nor any Person acting on
behalf of the Borrower, has taken or will take any action which might cause any
Loan Document or Receivables Document to violate Regulation G, T, U or X or any
other regulation of the Board of Governors of the Federal Reserve System.
Section 5.10. TAXES; GOVERNMENTAL CHARGES. The Borrower has filed or
caused to be filed all federal, state, and foreign income tax returns which are
required to be filed, and has paid or caused to be paid all taxes as shown on
such returns or on any assessment received by it to the extent that such taxes
have become due.
Section 5.11. FULL DISCLOSURE. All information heretofore or
contemporaneously furnished by or on behalf of the Borrower or First Investors
in writing to the Agent or any Bank for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all other such
information hereafter furnished by or on behalf of the Borrower or First
Investors in writing to the Agent or any Bank will be, (i) true and accurate in
all material respects on the date as of which such information is dated or
certified and (ii) not incomplete by omitting to state any material fact
necessary to make such information not misleading in light of the circumstances
under which such information was provided. There is no fact known to the
Borrower or First Investors which is reasonably likely to have a Material
Adverse Effect,
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which has not been disclosed herein or in such other written documents,
information or certificates furnished to the Agent and the Banks for use in
connection with the transactions contemplated hereby.
Section 5.12. INVESTMENT COMPANY ACT. Neither First Investors nor the
Borrower is an "investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940, as amended.
Section 5.13. ENVIRONMENTAL MATTERS. Each of the Borrower and First
Investors is in compliance with all Environmental Protection Statutes.
Section 5.14. CAPITAL STRUCTURE. The Borrower has no Subsidiaries. All
of the issued and outstanding shares of capital stock of the Borrower are fully
paid and nonassessable and are owned beneficially and of record by First
Investors. The Borrower has not granted or issued, or agreed to grant or issue,
any options, warrants or similar rights to any Person to acquire any shares of,
or other securities convertible into, the Borrower's capital stock.
Section 5.15. COMPLIANCE WITH LAW. The business and operations of the
Borrower as conducted at all times have been and are in compliance in all
material respects with all applicable Governmental Requirements.
Section 5.16. ERISA. Neither the Borrower nor any ERISA Affiliate has
ever established, maintained, contributed to or been obligated to contribute to,
and neither the Borrower nor any ERISA Affiliate has any liability or obligation
with respect to any PBGC Plan, Multiemployer Plan or Multiple Employer Plan.
Neither the Borrower nor any ERISA Affiliate has any present intention to
establish a PBGC Plan, a Multiemployer Plan or a Multiple Employer Plan. Neither
the Borrower nor any ERISA Affiliate has ever established, maintained,
contributed to or been obligated to contribute to any employee welfare benefit
plan (as defined in Section 3(1) of ERISA) which provides benefits to retired
employees (other than as required by Section 601 of ERISA). The Borrower and any
ERISA Affiliate are in compliance in all material respects with all applicable
provisions of ERISA and the Code with respect to each Plan, including the
fiduciary provisions thereof, and each Plan is, and has been, maintained in
compliance with ERISA and, where applicable, the Code. Full payment when due has
been made of all amounts which the Borrower or any ERISA Affiliate is required
under the terms of each Plan or applicable law to have paid as contributions to
such Plan as of the date hereof.
Section 5.17. NO DEFAULT OR EVENT OF DEFAULT. No event has occurred or
is continuing which constitutes a Default or Event of Default hereunder.
Section 5.18. PERMITS AND LICENSES. All material permits, licenses and
other governmental authorizations necessary for the Borrower to carry on its
business have been obtained and are in full force and effect and the Borrower is
not in material breach of the foregoing. The Borrower owns or possesses adequate
licenses or other valid rights to use United States trademarks, trade names,
service marks, copyrights, patents and applications therefore which are material
to the conduct of the business, operations or financial condition of the
Borrower.
Section 5.19. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties of the Borrower in each Loan Document and the
Receivables Documents shall survive the delivery of the Notes and the making of
any Advance, and shall continue after the repayment of the Notes and the
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termination of the Commitments, and any investigation at any time made by or on
behalf of the Agent or any Bank shall not diminish any Bank's right to rely
thereon.
ARTICLE VI
AFFIRMATIVE COVENANTS OF THE BORROWER
So long as any Note shall remain unpaid or any Bank shall have any
Commitment hereunder, the Borrower agrees, unless the Majority Banks shall
otherwise consent in writing, as follows:
Section 6.01. COMPLIANCE WITH LAWS, ETC. The Borrower will comply in all
material respects with all applicable laws (including, without limitation, all
Environmental Protection Statutes), rules, regulations and orders of any
Governmental Authority.
Section 6.02. REPORTING AND NOTICE REQUIREMENTS. The Borrower will
furnish or cause to be furnished to the Agent for delivery to the Banks:
(a) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in
any event within forty-five (45) days after the end of each fiscal
quarter of FIS Group (including the last quarter), consolidating balance
sheets of FIS Group and its Subsidiaries as of the end of such quarter
and consolidating statements of income and stockholder's equity and cash
flow statements of FIS Group and its Subsidiaries for the period
commencing at the end of the previous fiscal year of FIS Group and
ending with the end of such fiscal quarter, setting forth in each case
in comparative form corresponding consolidating figures for the
corresponding period in the immediately preceding fiscal year of FIS
Group, all in reasonable detail and certified by a Responsible Officer
as presenting fairly the consolidating and consolidated financial
position of FIS Group and its Subsidiaries as of the date indicated and
the results of their operations for the period indicated in conformity
with GAAP, consistently applied, subject to changes resulting from
year-end adjustments.
(b) ANNUAL FINANCIAL STATEMENTS. As soon as available and in any
event within one hundred twenty (120) days after the end of each fiscal
year of FIS Group, audited consolidated statements of income and
stockholder's equity and cash flow statements of FIS Group and its
Subsidiaries for such fiscal year, and audited consolidated balance
sheets of FIS Group and its Subsidiaries as of the end of such fiscal
year, setting forth in each case in comparative form corresponding
consolidated figures from the immediately preceding audit, together with
unaudited consolidating schedules to such financial statements, all in
reasonable detail and satisfactory in form, substance, and scope to the
Agent, together with the unqualified opinion of Arthur Andersen & Co. or
such other independent certified public accountants of recognized
national standing as are selected by FIS Group and satisfactory to the
Agent, stating that such financial statements fairly present the
consolidated financial position of FIS Group and its Subsidiaries as of
the date indicated and the consolidated results of their operations and
changes in financial position for the period indicated in conformity
with GAAP, consistently applied (except for such inconsistencies which
may be disclosed in such report), and that the audit by such accountants
in connection with such consolidated financial statements has been made
in accordance with GAAP.
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(c) NOTICE OF DEFAULT. Immediately after any officer of the
Borrower knows or has reason to know that any Default or Event of
Default has occurred, a written statement of such officer of the
Borrower setting forth the details of such Default or Event of Default
and the action which the Borrower has taken or proposes to take with
respect thereto.
(d) NOTICE OF LITIGATION. Promptly after any officer of the
Borrower obtaining knowledge of the commencement thereof, notice of any
litigation, legal, administrative, or arbitral proceeding,
investigation, or other action of any nature against FIS Group or the
Borrower which could reasonably be expected to have a Material Adverse
Effect, and upon request by the Agent or any Bank, details regarding
such litigation which are satisfactory to the Agent or such Bank.
(e) SECURITIES FILINGS. Promptly after the sending or filing
thereof and in any event within fifteen (15) days thereof, copies of all
reports which FIS Group sends to any of its security holders, and copies
of all reports (including each regular and periodic report) and each
registration statement or prospectus which FIS Group or the Borrower
files with the Securities and Exchange Commission or any national
securities exchange.
(f) ERISA NOTICES. Promptly after the filing or receiving
thereof, copies of all reports and notices which the Borrower files
under ERISA with the Internal Revenue Service or the Pension Benefit
Guaranty Corporation or the U.S. Department of Labor or which the
Borrower receives from such Governmental Authorities or Pension Benefit
Guaranty Corporation.
(g) COMPLIANCE CERTIFICATE; RECEIVABLES REPORTS. (i) On or before
the fifteenth day of each calendar month during the term of this
Agreement, a Compliance Certificate (a copy of which shall also be
delivered to the Bank Collateral Agent) which shall demonstrate
compliance with the financial covenants set forth in Section 7.13 as of
the end of the preceding Collection Period and for the three immediately
preceding Collection Periods, shall set forth the Borrowing Base and
Uninsured Credit Losses, each determined as of the end of the preceding
Collection Period, together with a certification of such amounts by a
Responsible Officer of the Borrower, and shall state that no Default or
Event of Default has occurred or is continuing, or if any such condition
or event exists, specifying the nature and period of existence thereof
and what action the Borrower has taken or is taking with respect
thereto, (ii) on or before the tenth day of each calendar month during
the term of this Agreement, the reports and Servicer's Certificate (as
defined in the Servicing Agreement) delivered to the Borrower by the
Servicer pursuant to Section 4.09 of the Servicing Agreement, and (iii)
on or before the eighteenth day of each calendar month during the term
of this Agreement, a disbursement statement in the form of EXHIBIT H
hereto from the Bank Collateral Agent, together with such schedules,
computations and other information as may be requested by the Agent.
(h) ERISA NOTICES, INFORMATION AND COMPLIANCE.
(i) As soon as possible and in any event within ten days
after the Borrower or any of its ERISA Affiliates knows of the
occurrence of any of the following, a certificate of the chief
financial officer of the Borrower (or, if applicable, of the
ERISA Affiliate) setting forth the details as to such occurrence
and the action, if any, which the Borrower or ERISA Affiliate is
required or proposes to take, together with any notices
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required or proposed to be given or filed with or by the
Borrower, an ERISA Affiliate, the Pension Benefit Guaranty
Corporation, or plan administrator with respect thereto:
(A) the establishment or adoption of any PBGC Plan,
Multiemployer Plan or Multiple Employer Plan by the
Borrower or any ERISA Affiliate on or after the date
hereof (a "FUTURE PLAN");
(B) the occurrence of an ERISA Event with respect
to any Future Plan;
(C) the existence of an accumulated funding
deficiency with respect to any Future Plan;
(D) the making of an application to the Secretary
of the Treasury for a waiver or modification of the
minimum funding standard (including any required
installment payments) or extension of any amortization
period under Section 412 of the Code with respect to any
Future Plan;
(E) the institution of a proceeding pursuant to
Section 515 of ERISA to collect delinquent contributions
from the Borrower or an ERISA Affiliate with respect to a
Future Plan;
(F) the occurrence of any "prohibited transaction"
as described in Section 406 of ERISA or in Section 4975 of
the Code, in connection with any Plan or any trust created
thereunder; or
(G) the failure to pay when due all amounts that
the Borrower or any ERISA Affiliate is required under the
terms of each Plan or applicable law to have paid as a
contribution to such Plan; and
(ii) As soon as possible and in any event within ten days
from receipt or, if applicable, filing, a complete copy of the
annual report (Form 5500) of each Plan required to be filed with
the Internal Revenue Service, copies of any other reports or
notices which the Borrower or an ERISA Affiliate files with the
Internal Revenue Service, Pension Benefit Guaranty Corporation or
the United States Department of Labor or which the Borrower or an
ERISA Affiliate receives from such Governmental Authority, and
copies of any notice, complaint or other documentation of any
pending or threatened lawsuit or claim relating in any respect to
any Plan established or maintained by the Borrower or an ERISA
Affiliate or to which the Borrower or an ERISA Affiliate
contributes which may have a Material Adverse Effect on the
Borrower or an ERISA Affiliate.
(i) DELIVERY OF NOTICES FROM SERVICER. Promptly after the receipt
thereof, a copy of any notice received by the Borrower from the Servicer
under the Servicing Agreement with respect to a termination or proposed
termination thereof or a default thereunder.
(j) DELIVERY OF ENTERPRISE NOTICES. A copy of (i) any notice
received by FIARC from Enterprise or any other Person under the
Enterprise Agreement promptly upon receipt thereof and
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(ii) any notice FIARC delivers pursuant to Section 3.2(l) of the
Enterprise Agreement promptly upon the delivery or sending thereof.
(k) HEDGE POSITION REPORTING. Within thirty (30) days after the
end of each fiscal quarter of the Borrower (including the last quarter),
a report of the Borrower's hedge position identifying all hedge
agreements to which the Borrower is a party.
(l) NOTICE WITH RESPECT TO CERTAIN ENTERPRISE EVENTS. Promptly
upon occurrence, notice of any modification or amendment to the
Enterprise Agreement, any Potential Termination Event under the
Enterprise Agreement and notice of First Investor's being required to
accept re-assignment of Enterprise's interest in any uncollected
Receivables previously sold, transferred and assigned to Enterprise in
an aggregate amount of $500,000 or more within any 60 day period.
(m) OTHER INFORMATION. Such other information respecting the
condition or operations, financial or otherwise, of the Borrower as any
Bank through the Agent may from time to time reasonably request.
Section 6.03. TAXES AND LIENS. The Borrower will pay and discharge, or
will cause to be paid and discharged, promptly all taxes, assessments, and
governmental charges or levies imposed upon the Borrower or upon the income of
any Property of the Borrower as well as all claims of any kind (including,
without limitation, claims for labor, materials, supplies, and rent) when due.
Section 6.04. MAINTENANCE OF PROPERTY. The Borrower will at all times
maintain, preserve, protect, and keep, or cause to be maintained, preserved,
protected, and kept, its Property in good repair, working order, and condition
(ordinary wear and tear excepted) and, from time to time, will make, or cause to
be made, all repairs, renewals, replacements, extensions, additions,
betterments, and improvements to its Property as are appropriate, so that (a)
the Borrower maintains its current line of business, and (b) the business
carried on in connection therewith may be conducted properly and efficiently at
all times.
Section 6.05. RIGHT OF INSPECTION. The Borrower will permit any officer,
or employee of, or agent designated by, the Agent or any Bank to visit and
inspect any of the Properties of the Borrower, examine the Borrower's corporate
books or the Borrower's or First Investor's financial records, take copies and
extracts therefrom, and discuss the affairs, finances, and accounts of the
Borrower and First Investors with the Borrower's officers or certified public
accountants, all at such reasonable times and as often as the Agent or any Bank
may reasonably desire.
Section 6.06. PERFORMANCE AND COMPLIANCE WITH RECEIVABLES AND CREDIT
INSURANCE. The Borrower will, at its expense, timely and fully perform and
comply with, or cause to be timely and fully performed and complied with, all
material provisions, covenants and other promises required to be observed by it
under the Receivables, the Receivables Documents and the Credit Insurance.
Section 6.07. FURTHER ASSURANCES. The Borrower shall deliver to the
Agent within 90 days after the beginning of each calendar year, beginning with
the calendar year 1998, an opinion of independent counsel of the Borrower dated
as of a date during such 90-day period, either (a) stating that, in the opinion
of such counsel, (1) such action has been taken with respect to the recording,
registering, filing, rerecording, re-registering and re-filing of financing
statements, continuation statements or other instruments or documents as is
necessary to preserve and protect the interest of the Agent and the Banks in and
to the Receivables and reciting the details of such action or referring to prior
opinions of counsel in which such details are given, and (2) all financing
statements, continuation statements and any other necessary documents have been
executed and filed that are necessary fully to preserve and protect the
perfected interest of the Agent and the Banks in and to the Receivables, and
reciting the details of such filings or referring to prior opinions of counsel
in which such details are given, or (b) stating that, in the opinion of such
counsel, no such action is necessary to preserve and protect such interest.
ARTICLE VII
NEGATIVE COVENANTS
So long as any Note shall remain unpaid or any Bank shall have any
Commitment hereunder, the Borrower agrees, without the written consent of the
Majority Banks, as follows:
Section 7.01. LIENS, ETC. The Borrower will not grant, permit, create or
suffer to exist any Lien, upon or with respect to any of its Properties,
including, without limitation, the Receivables, whether now owned or hereafter
acquired, other than Permitted Liens and Liens created under the Security
Agreement and the Escrow Agreement; PROVIDED that, anything in the foregoing or
elsewhere in any Loan Document to the contrary notwithstanding, the Borrower
will not enter into any agreement that (i) prohibits the creation or assumption
of any Lien upon any Property of the Borrower in favor of any Person, including
without limitation the Banks or (ii) requires any obligation of the Borrower to
be secured if any obligation of the Borrower to the Banks is secured in favor of
another Person, including without limitation the Banks.
Section 7.02. DEBT. The Borrower will not create or suffer to exist any
Debt except as set forth below, all of which shall be "PERMITTED DEBT":
(a) Debt of the Borrower to the Agent and the Banks and to the Bank
Collateral Agent evidenced by any Loan Document;
(b) Debt of the Borrower for fees payable to the Servicer under the
Receivables Documents;
(c) Debt represented by the Distributions on the terms and conditions
set forth in the Security Agreement; and
(d) Debt of the Borrower under any interest rate swap or other exchange
agreement entered into with NationsBank in a notional amount up to $100,000,000
and which hedges interest payable under this Facility; PROVIDED, that any
portion of such notional amount in excess of the notional amount of this
Facility shall be assigned to and assumed by First Investors.
(e) Intercompany obligations to First Investors for Borrower's
reasonable net rent allocation, reasonable management fees and dividends
declared.
Section 7.03. RESTRICTED PAYMENTS. If a Default or Event of Default has
occurred and is continuing, or would exist after the making of any payments
pursuant to this Section 7.03, the Borrower
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will not declare or make any dividend payment or other distribution of
Properties, cash, rights, obligations, or securities on account of any shares of
any class of capital stock of the Borrower, or purchase, redeem, retire, or
otherwise acquire for value any shares of any class of capital stock of the
Borrower or any warrants, rights, or options to acquire any such shares, now or
hereafter outstanding.
Section 7.04. MERGERS; CONSOLIDATIONS. The Borrower will not merge or
consolidate with or into, or convey, transfer, lease, or otherwise dispose of
(whether in one transaction or in a series of transactions) any of its assets
(whether now owned or hereafter acquired) other than (i) to pay expenses
incurred in the ordinary course of business, (ii) in respect of the
Distributions, or (iii) the transfer and assignment of Receivables to First
Investors upon payment on the principal balance outstanding on the Notes of an
amount equal to the Purchase Amount.
Section 7.05. INVESTMENTS, LOANS, AND ADVANCES. Except as provided under
the other Loan Documents and the Receivables Documents, the Borrower will not
make or permit to remain outstanding any Investment, endorse, or otherwise be or
become contingently liable directly or indirectly, in connection with the
obligations, stock, or dividends of, or own, purchase or acquire any stock,
obligations, or securities of, or any other interest in, or make any capital
contribution to, any Person, or otherwise make, incur, create, assume, or suffer
to exist any contingent liability or any Investment of the Borrower to purchase
or acquire any assets.
Section 7.06. SALE OR OTHER DISPOSITION OF ASSETS. The Borrower will not
sell, assign, lease, transfer or otherwise dispose of (whether in one
transaction or in a series of transactions) any part of its Property (whether
now owned or hereafter acquired) to any Person other than (i) to pay expenses
incurred in the ordinary course of business, (ii) in respect of the
Distributions, or (iii) the transfer and assignment of Receivables to First
Investors upon payment on the principal balance outstanding on the Notes of an
amount equal to the Purchase Amount.
Section 7.07. USE OF PROCEEDS. The Borrower will not use, nor permit the
use of, all or any portion of any Advance for any purpose except as described in
Section 5.09 hereof.
Section 7.08. TRANSACTIONS WITH AFFILIATES. Except as provided under the
Loan Documents and the Receivables Documents and except in respect of any
management fee to be paid by the Borrower to First Investors, the Borrower will
not directly or indirectly enter into any transaction with any Affiliate
(including, without limitation, any transaction involving the payment of
management fees or directors' fees to any Affiliate), except for transactions
(including any loans or advances by or to any Affiliate otherwise in compliance
under the Agreement) in good faith, the terms of which are fair and reasonable
to the Borrower, and are at least as favorable as the terms which could be
obtained by the Borrower in a comparable transaction made on an arm's-length
basis between unaffiliated parties.
Section 7.09. OTHER BUSINESS. The Borrower will not engage in any
business or enterprise or enter into any material transaction other than as
contemplated by the Loan Documents and the Receivables Documents.
Section 7.10. ISSUANCE OF SHARES. The Borrower will not issue, sell, or
otherwise dispose of any shares of its capital stock or other equity securities,
or rights, warrants, or options to purchase or acquire any shares or equity
securities, other than as otherwise expressly permitted by other Sections of
this Agreement.
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Section 7.11. ERISA. The Borrower shall not and shall not permit any
ERISA Affiliate to:
(a) do any of the following, which in the aggregate would
reasonably be expected to have a Material Adverse Effect:
(i) engage in any transaction which it knows or has reason
to know could result in a civil penalty assessed pursuant to
Section 502(i) of ERISA or a tax imposed by Section 4975 of the
Code;
(ii) fail to make any payments when due to any
Multiemployer Plan that the Borrower or an ERISA Affiliate may be
required to make under any agreement relating to such
Multiemployer Plan, or any law pertaining thereto;
(iii) incur withdrawal liability under ERISA to a
Multiemployer Plan;
(iv) voluntarily terminate or, in the case of a
"substantial employer" as defined in Section 4001(a)(2) of ERISA,
withdraw from any Plan if such termination or withdrawal could
result in the imposition of a Lien on the Borrower or an ERISA
Affiliate under Section 4068 of ERISA;
(v) fail to make any required contribution when due to any
Plan subject to Section 412(n) of the Code that with the passage
of time would likely result in a Lien upon the properties or
assets of the Borrower or an ERISA Affiliate;
(vi) adopt any amendment to a Plan the effect of which is
to increase the "current liability" under the Plan as defined in
Section 302(d)(7) of ERISA;
(vii) act or fail to act, and, as a result thereof, an
event similar to any of those referred to in clauses (i) to (vi)
would likely occur under the applicable laws of a foreign
country; or
(b) permit the present value of all benefits (irrespective of
whether vested) under all Plans that have assets less than benefits
(irrespective of whether vested), to exceed the "current value" as
defined in Section 3(26) of ERISA of the assets of such Plans by an
aggregate amount of ten thousand dollars ($10,000.00); or
(c) permit the adoption, implementation or amendment of any
unfunded deferred compensation agreement or other arrangement of a
similar nature irrespective of whether subject to the funding
requirements of ERISA which could reasonably be expected to have a
Material Adverse Effect.
Section 7.12. ACQUISITIONS. Except as provided under the Receivables
Documents, the Borrower will not acquire by purchase, lease (including, without
limitation, assumption of any lease) or merger any of the assets, Property,
capital stock or other equity interests of any other Person.
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Section 7.13. CERTAIN FINANCIAL TESTS.
(a) The Borrower will not permit the ratio of Earnings Before Interest,
Fees and Distributions to the sum of Loan Interest Expense PLUS Fee Expense, as
determined as of each Determination Date for the immediately preceding three
Collection Periods, to be less than 1.70 to 1.00.
(b) The Borrower will not permit the Credit Loss Percentage, as
determined as of each Determination Date, to exceed 5.0%.
(c) The Borrower will not permit the number of Delinquent Receivables to
exceed 8.5% of the average number of Receivables as determined as of each
Determination Date for the immediately preceding three Collection Periods.
Section 7.14. EXTENSION OR AMENDMENT OF RECEIVABLES AND OTHER DOCUMENTS.
The Borrower will not, and will not permit the Servicer to, (a) extend, amend or
otherwise modify the terms of (i) any Receivable (PROVIDED that an extension,
amendment or modification permitted under Section 4.02 of the Servicing
Agreement shall not be prohibited by this Section 7.14), (ii) the Credit
Insurance, (iii) the Receivables Documents, or (iv) the Borrower's Certificate
of Incorporation or Bylaws.
Section 7.15. LETTER OF GUARANTY. The Borrower will not permit the
aggregate Principal Balance of the Receivables with respect to which the
Borrower has accepted a guaranty of delivery of the certificate of title from an
Originator to exceed $250,000 at any one time.
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.01. EVENTS OF DEFAULT. If any of the following events (each an
"EVENT OF DEFAULT") shall occur:
(a) The Borrower shall fail to pay any principal of any Note
when the same becomes due and payable; or
(b) The Borrower shall fail to pay interest on any Note or fees
or other amounts due under the Note or this Agreement or any other Loan
Document, or First Investors shall fail to pay any amounts due under the
Pledge Agreement, when the same becomes due and payable and such failure
shall remain unremedied for three days; or
(c) Any representation or warranty made by the Borrower (or any
of its officers) under or in connection with any Loan Document or the
Receivables Documents, or by First Investors (or any of its officers)
under or in connection with the Pledge Agreement, shall prove to have
been incorrect in any material respect when made; or
(d) The Borrower shall fail to perform or observe any term,
covenant or agreement contained in Section 6.02 or in Article VII; or
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(e) The Borrower shall fail to perform or observe any term,
covenant or agreement contained in any Loan Document (other than those
set forth in (a), (b), (c) and (d) above) or the Receivables Documents
on its part to be performed or observed, or First Investors shall fail
to perform or observe any term, covenant, or agreement contained in the
Pledge Agreement on its part to be performed or observed, if such
failure shall remain unremedied for thirty (30) days after the
occurrence of such event; or
(f) The Borrower shall fail to pay any principal of or premium or
interest on any Debt which is outstanding in a principal amount of at
least $10,000 in the aggregate when the same becomes due and payable
(whether by scheduled maturity, required prepayment, acceleration,
demand or otherwise), and such failure shall continue after the
applicable grace period, if any, specified in the agreement or
instrument relating to such Debt; or any other event constituting a
default (however defined) shall occur or condition shall exist under any
agreement or instrument relating to any such Debt and shall continue
after the applicable grace period, if any, specified in such agreement
or instrument; or
(g) The Borrower 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 the
Borrower seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, 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, custodian or other similar official for it or
for any substantial part of its property and, in the case of any such
proceeding instituted against it (but not instituted by it), either such
proceeding shall remain undismissed or unstayed for a period of 30 days,
or any of the actions sought in such proceeding (including, without
limitation, the entry of an order for relief against, or the appointment
of a receiver, trustee, custodian or other similar official for, it or
for any substantial part of its property) shall occur; or the Borrower
shall take any corporate action to authorize any of the actions set
forth above in this subsection (g); or
(h) Any final judgment or order for the payment of money which,
individually or in the aggregate, shall be in excess of $10,000 at any
time, 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) there shall be any period of thirty (30) consecutive
days during which a stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be in effect; or
(i) The balance in the Collateral Account for any two consecutive
Distribution Dates (after making any Distributions therefrom) shall be
less than the Specified Collateral Account Balance; or
(j) The credit quality of any of the providers of the ALPI
Insurance, the GAP Insurance, or the VSI Insurance shall at any time be
rated as less than "A-" by A. M. Best Company; or
(k) Uninsured Credit Losses determined as of the last day of each
month during this Agreement for the twelve-month period ending on such
date shall exceed $50,000; PROVIDED that
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if First Investors shall have repurchased any Receivable for the amount
equal to the outstanding Purchase Amount, such Receivable shall not be
included as an Uninsured Credit Loss for purposes of this calculation;
or
(l) A material breach (i) by the Servicer of its obligations
under the Servicing Agreement, (ii) by First Investors of its
obligations under (A) the Purchase Agreement, (B) any interest rate swap
or other exchange agreement which hedges interest payable under the
Enterprise Agreement, or (C) any interest rate cap on the interest rate
payable by FIARC under the Enterprise Agreement which offsets a counter
position of FIARC under such interest rate position, (iii) by the Bank
Collateral Agent of its obligations under the Loan Documents, or (iv) by
the provider of the ALPI Insurance, the GAP Insurance or the VSI
Insurance under such Credit Insurance shall occur and be continuing; or
(m) First Investors shall cease to own a majority of the issued
and outstanding stock of the Borrower; or
(n) With respect to any Future Plan (as such term is defined in
Section 6.02(h) hereof), other than a Multiemployer Plan within the
meaning of Section 4001(a)(3) of ERISA, (1) such Future Plan shall fail
to satisfy the minimum funding standard or a waiver of such standard or
extension of any amortization period is sought under Section 412 of the
Code; (2) such Future Plan is or is proposed to be terminated and as a
result thereof liability in excess of $1,000,000 can be asserted under
Title IV of ERISA as against the Borrower or ERISA Affiliate; (3) such
Future Plan shall have an unfunded current liability in excess of
$1,000,000; or (4) there has been a withdrawal from any such Future Plan
and as a result liability in excess of $1,000,000 can be asserted under
Section 4062(e) or 4063 of ERISA against the Borrower or any ERISA
Affiliate; or, with respect to any Future Plan that is a Multiemployer
Plan under Section 4001(a)(3) of ERISA, such Future Plan is insolvent or
in reorganization or the Borrower or an ERISA Affiliate has withdrawn,
or proposes to withdraw, either totally or partially, from such Future
Plan and, in any case, in the opinion of the Agent, the Borrower or its
ERISA Affiliate might reasonably be anticipated to incur a liability
which would have a Material Adverse Effect on the business, operations,
conditions (financial or otherwise) or prospects of the Borrower or
ERISA Affiliates; or with respect to any Plan other than a Future Plan,
the Borrower or its ERISA Affiliate could reasonably be anticipated to
incur a liability which would have a Material Adverse Effect on the
business, operations or conditions (financial or otherwise) or prospects
of the Borrower or its ERISA Affiliates; or
(o) The Agent shall have received notice of cancellation of any
of the Credit Insurance and such Credit Insurance has not been
reinstated or replaced in form and substance satisfactory to the Agent
within a period of 30 days after receipt of such notice; or
(p) (i) The Servicer's obligations shall have been terminated
pursuant to Section 8.01 of the Servicing Agreement and a successor
servicer shall not have been appointed and accepted such appointment
within 45 days of the Servicer's receipt of notice of termination, (ii)
the Servicer shall have terminated its obligations pursuant to Section
8.02 of the Servicing Agreement, or (iii) the Servicer's obligation to
accept new Receivables shall have terminated pursuant to Section 9.02(a)
or (b) of the Servicing Agreement and a successor servicer satisfactory
to the Agent shall not have been appointed and accepted such appointment
prior to the effective date of such termination; or
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(q) Aggregate claims submitted under the VSI Insurance and GAP
Insurance determined as of the last day of each month during this
Agreement for the twelve-month period ending on such date shall exceed
$750,000; or
(r) the occurrence of a "Termination Event", other than with
respect to the events specified in Section 6.1(f), (j), (t), or (u) of
the Enterprise Agreement;
then, and in any such event, the Agent (i) shall send notice of the occurrence
of such Default or Event of Default to the Borrower, the Bank Collateral Agent
and the Escrow Agent, (ii) shall at the request, or may with the consent, of the
Majority Banks, by notice to the Borrower, declare the obligation of each Bank
to make Advances to be terminated, whereupon the same shall forthwith terminate,
and (iii) shall at the request, or may with the consent, of the Majority Banks,
by notice to the Borrower, declare the Notes, all interest thereon and all other
amounts payable under this Agreement to be forthwith due and payable, whereupon
the Notes, all such interest and all such amounts shall become and be forthwith
due and payable, without presentment, demand, protest or further notice of any
kind, all of which are hereby expressly waived by the Borrower; PROVIDED,
HOWEVER, that in the event of an actual or deemed entry of an order for relief
with respect to the Borrower under the United States Bankruptcy Code, (A) the
obligation of each Bank to make Advances shall automatically be terminated and
(B) the Notes, all such interest and all such amounts shall automatically become
and be due and payable, without presentment, demand, protest or any notice of
any kind, all of which are hereby expressly waived by the Borrower.
ARTICLE IX
THE AGENT
Section 9.01. AUTHORIZATION AND ACTION. Each Bank hereby appoints and
authorizes the Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to the Agent by the terms
hereof, together with such powers as are reasonably incidental thereto. As to
any matters not expressly provided for by this Agreement (including, without
limitation, enforcement or collection of the Notes), the Agent shall not be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and shall be fully protected in so acting or
refraining from acting) upon the instructions of the Majority Banks, and such
instructions shall be binding upon all Banks and all holders of Notes; PROVIDED,
HOWEVER, that the Agent shall not be required to take any action which exposes
the Agent to personal liability or which is contrary to this Agreement or
applicable law. The Agent agrees to give to each Bank prompt notice of each
notice given to it by the Borrower pursuant to the terms of this Agreement.
Section 9.02. AGENT'S RELIANCE, ETC.. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection with this Agreement,
except for its or their own gross negligence or willful misconduct. Without
limitation of the generality of the foregoing, the Agent: (i) may treat the
payee of any Note as the holder thereof until the Agent receives written notice
of the assignment or transfer thereof signed by such payee and including the
agreement of the assignee or transferee to be bound hereby as it would have been
if it had been an original Bank party hereto, in form satisfactory to the Agent;
(ii) may consult with legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by it and shall not be
liable for any action taken or omitted to be taken in good faith by it in
accordance with the advice of such counsel, accountants or experts; (iii) makes
no warranty or
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representation to any Bank and shall not be responsible to any Bank for any
statements, warranties or representations (whether written or oral) made in or
in connection with this Agreement; (iv) shall not have any duty to ascertain or
to inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement on the part of the Borrower or to inspect the
property (including the books and records) of the Borrower; (v) shall not be
responsible to any Bank for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or any other
instrument or document furnished pursuant hereto; and (vi) shall incur no
liability under or in respect of this Agreement by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telecopier,
telegram, cable or telex) believed by it to be genuine and signed or sent by the
proper party or parties.
Section 9.03. NATIONSBANK AND AFFILIATES. With respect to its
Commitment, the Advances made by it and the Note issued to it, NationsBank shall
have the same rights and powers under this Agreement as any other Bank and may
exercise the same as though it were not the Agent; and the term "Bank" or
"Banks" shall, unless otherwise expressly indicated, include NationsBank in its
individual capacity. NationsBank and its Affiliates may accept deposits from,
lend money to, act as trustee under indentures of, and generally engage in any
kind of business with, the Borrower and any Person who may do business with or
own securities of the Borrower, all as if NationsBank were not the Agent and
without any duty to account therefor to the Banks.
Section 9.04. BANK CREDIT DECISION. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank and based on
the financial statements referred to in Sections 5.07 and 6.02 and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement. Each Bank also acknowledges
that it will, independently and without reliance upon the Agent or any other
Bank and based on such documents and information as it shall deem appropriate at
the time, continue to make its own credit decisions in taking or not taking
action under each Loan Document. The Agent shall not be required to keep itself
informed as to the performance or observance by the Borrower of any Loan
Document or to inspect the Properties or books of the Borrower. Except for
notices, reports, and other documents and information expressly required to be
furnished to the Banks by the Agent hereunder, the Agent shall not have any duty
or responsibility to provide any Bank with any credit or other information
concerning the affairs, financial condition, or business of the Borrower.
Section 9.05. INDEMNIFICATION. Notwithstanding anything to the contrary
herein contained, the Agent shall be fully justified in failing or refusing to
take any action hereunder unless it shall first be indemnified to its
satisfaction by the Banks against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, and
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against the Agent in any way relating to or arising out of its
taking or continuing to take any action. Each Bank agrees to indemnify the Agent
(to the extent not reimbursed by the Borrower), according to such Bank's
Commitments, from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, and
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by, or asserted against the Agent in any way relating to or arising out of any
Loan Document or any action taken or omitted by the Agent under any Loan
Document; PROVIDED that no Bank shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses, or disbursements resulting from the gross negligence or willful
misconduct of the Person being indemnified; and PROVIDED FURTHER that it is the
intention of each Bank to indemnify the Agent against the consequences of the
Agent's own negligence, whether such negligence be sole, joint, or concurrent,
active or passive. Without limitation of the foregoing, each Bank agrees to
reimburse the Agent promptly upon demand for
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its ratable share of any out-of-pocket expenses (including attorneys' fees)
incurred by the Agent in connection with the preparation, administration, or
enforcement of, or legal advice in respect of rights or responsibilities under,
any Loan Document, to the extent that the Agent is not reimbursed for such
expenses by the Borrower.
Section 9.06. SUCCESSOR AGENT. The Agent may resign at any time by
giving written notice thereof to the Banks and the Borrower and may be removed
at any time with cause by the Majority Banks. Upon any such resignation or
removal, the Majority Banks shall have the right to appoint a successor Agent.
If no successor Agent shall have been so appointed by the Majority Banks, and
shall have accepted such appointment, within thirty (30) days after the retiring
Agent's giving of notice of resignation or the Majority Banks' removal of the
retiring Agent, then the retiring Agent may, on behalf of the Banks, appoint a
successor Agent, which shall be a commercial bank organized under the laws of
the United States of America or of any state thereof and having a combined
capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Agent hereunder by a successor Agent, such successor Agent shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Agent, and the retiring Agent shall be discharged
from its duties and obligations under this Agreement. After any retiring Agent's
resignation or removal hereunder as Agent, the provisions of this Article IX
shall inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.
Section 9.07. AGENT'S RELIANCE. The Borrower shall notify the Agent in
writing of the names of its officers and employees authorized to request an
Advance on behalf of the Borrower and shall provide the Agent with a specimen
signature of each such officer or employee. The Agent shall be entitled to rely
conclusively on such officer's or employee's authority to request an Advance on
behalf of the Borrower until the Agent receives written notice from the Borrower
to the contrary. The Agent shall have no duty to verify the authenticity of the
signature appearing on any Notice of Borrowing, and, with respect to any oral
request for an Advance, the Agent shall have no duty to verify the identity of
any Person representing himself as one of the officers or employees authorized
to make such request on behalf of the Borrower. Neither the Agent nor any Bank
shall incur any liability to the Borrower in acting upon any telephonic notice
referred to above which the Agent or such Bank believes in good faith to have
been given by a duly authorized officer or other Person authorized to borrow on
behalf of the Borrower or for otherwise acting in good faith.
Section 9.08. DEFAULTS. The Agent shall not be deemed to have knowledge
of the occurrence of a Default (other than the nonpayment of principal of or
interest hereunder or of any fees payable hereunder) unless the Agent has
received notice from a Bank or the Borrower specifying such Default. In the
event that the Agent receives such a notice of the occurrence of a Default, the
Agent shall give prompt notice thereof to the Banks (and shall give each Bank
prompt notice of each such nonpayment). The Agent shall (subject to Section
8.01) take such action with respect to such Default, PROVIDED that, unless and
until the Agent shall have received the directions referred to in Section 8.01,
the Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default as it shall deem advisable and
in the best interest of the Banks.
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ARTICLE X
MISCELLANEOUS
Section 10.01.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 in any event be effective unless the same shall be in writing
and signed by the Majority Banks, and then such waiver or consent shall be
effective only in the specific instances and for the specific purpose for which
given; PROVIDED, HOWEVER, that no amendment, waiver or consent shall, unless in
writing and signed by all the Banks, do any of the following: (a) waive or amend
any of the conditions specified in Sections 4.01 and 4.02, (b) change the
definition of "Commitment", increase the Commitments of the Banks or subject the
Banks to any additional obligations, (c) reduce the principal of, or interest
on, the Notes or any fees or other amounts payable hereunder, (d) postpone or
extend the Termination Date or any date fixed for any payment of principal of,
or interest on, the Notes or any fees or other amounts payable hereunder, (e)
change the percentage of the Commitments or of the aggregate unpaid principal
amount of the Notes, or the number of Banks, which shall be required for the
Banks or any of them to take any action hereunder, (f) change the requirements
hereunder to exercise any waiver of a payment default or payment amount, (g)
release any Collateral, except with respect to sales as permitted by the
Security Agreement and for repurchases by First Investors pursuant to the terms
of the Purchase Agreement or (h) amend this Section 10.01; and PROVIDED FURTHER
that no amendment, waiver or consent shall, unless in writing and signed by the
Agent in addition to the Banks required above to take such action, affect the
rights or duties of the Agent under this Agreement or any Note.
Section 10.02.NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing (including by telex or facsimile
transmission) and shall be effective when actually delivered, or in the case of
telex notice, when sent, answerback received, or in the case of facsimile
transmission, when received and telephonically confirmed, addressed as follows:
if to the Borrower, at its address at 675 Bering, Suite 110, Houston, Texas
77057, Attention: President, Telephone: (713) 977-2600, Facsimile: (713)
972-2630; if to any Bank, at its Domestic Lending Office as specified opposite
its name on the signature page hereof; and if to the Agent, at its address at
700 Louisiana, Houston, Texas 77002, Attention: Mr. Billy B. Greer, Telephone:
(713) 247-6679, Facsimile: (713) 247-6719; PROVIDED, HOWEVER, that any Notices
of Borrowing or Notices of Interest Conversion shall be sent to the Agent at its
address at 901 Main Street, Dallas, Texas 75201, Attention: Ms. Renita Cummings;
with copies to the Agent at 700 Louisiana, Houston, Texas 77002, Attention: Mr.
Billy B. Greer; or, as to the Borrower, any Bank or the Agent, at such other
address as shall be designated by such party in a written notice to the other
parties.
Section 10.03.NO WAIVER; REMEDIES. No failure on the part of any Bank or
the Agent to exercise, and no delay in exercising, any right under any Loan
Document shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right 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 10.04.COSTS, EXPENSES AND TAXES. The Borrower agrees to pay on
demand all costs and expenses in connection with the preparation, execution,
delivery, administration, modification and amendment of the Loan Documents and
the other documents to be delivered under the Loan Documents, including, without
limitation, the reasonable fees and out-of-pocket expenses of counsel for the
Agent with respect thereto and with respect to advising the Agent as to its
rights and responsibilities under the
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Loan Documents. The Borrower further agrees to pay on demand all costs and
expenses, if any (including, without limitation, reasonable counsel fees and
expenses), in connection with the enforcement (whether through negotiations,
legal proceedings or otherwise) of the Loan Documents and the other documents to
be delivered under the Loan Documents, including, without limitation, reasonable
counsel fees and expenses in connection with the enforcement of rights under
this Section 10.04.
Section 10.05.RIGHT OF SET-OFF. Upon (i) the occurrence and during the
continuance of any Event of Default and (ii) the making of the request or the
granting of the consent specified by Section 8.01 to authorize the Agent to
declare the Notes due and payable pursuant to the provisions of Section 8.01,
each Bank is hereby authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all deposits (general or
special, time or demand, provisional or final) at any time held and other
indebtedness at any time owing by such Bank to or for the credit or the account
of the Borrower against any and all of the obligations of the Borrower now or
hereafter existing under any Loan Document, whether or not such Bank shall have
made any demand under this Agreement or such Note and although such obligations
may be unmatured. Each Bank agrees promptly to notify the Borrower after any
such set-off and application made by such Bank, PROVIDED that the failure to
give such notice shall not affect the validity of such set-off and application.
The rights of each Bank under this Section are in addition to other rights and
remedies (including, without limitation, other rights of set-off) which such
Bank may have.
Section 10.06.BINDING EFFECT. This Agreement shall become effective when
it shall have been executed by the Borrower and the Agent and when the Agent
shall have been notified by each Bank that such Bank has executed it and
thereafter shall be binding upon and inure to the benefit of the Borrower, the
Agent and each Bank 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 Banks.
Section 10.07.ASSIGNMENTS AND PARTICIPATIONS. (a) Subject to the prior
written consent of the Agent and the Borrower, such consent not to be
unreasonably withheld, each Bank may assign to any financial institution (the
"ASSIGNEE") all or a portion of its rights and obligations under this Agreement
(including, without limitation, all or a portion of its Commitments and the Note
held by it); PROVIDED, HOWEVER, that the parties to each such assignment shall
execute and deliver to the Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance Agreement in form and substance
satisfactory to the Agent (the "ASSIGNMENT AND ACCEPTANCE"), together with any
Note subject to such assignment and a processing fee of $2,500; and FURTHER
PROVIDED HOWEVER, that (i) each such assignment shall be of a constant, and not
a varying, percentage of all of the assigning Bank's rights and obligations
under this Agreement, and (ii) the amount of the Commitments so assigned shall
equal or exceed the lesser of (x) $10,000,000, or (y) the remaining Commitments
held by the assigning Bank. Upon such execution, delivery, acceptance, and
recordation by the Agent of such Assignment and Acceptance, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be the date on which such Assignment and Acceptance is accepted by the
Agent, (A) the Assignee thereunder shall be a party hereto and, to the extent
that rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Bank under the
Loan Documents, and (B) the Bank assignor thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Loan Documents (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of an assigning Bank's rights
and obligations under the Loan Documents, such Bank shall cease to be a party
thereto).
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(b) By executing and delivering an Assignment and Acceptance, the Bank
assignor thereunder and the Assignee (by execution and delivery of the
Assignment and Acceptance pursuant to this Section 10.07) confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning Bank makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties, or representations made in or in connection with any
Loan Document or the execution, legality, validity, enforceability, genuineness,
sufficiency, or value of any Loan Document or any other instrument or document
furnished pursuant thereto; (ii) such assigning Bank makes no representation or
warranty and assumes no responsibility with respect to the financial condition
of the Borrower or the performance or observance by the Borrower of any of its
respective obligations under any Loan Document or any other instrument or
document furnished pursuant thereto; (iii) such Assignee confirms that it has
received a copy of the Loan Documents, together with copies of the financial
statements referred to in Section 5.07 and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance; (iv) such Assignee, independently and
without reliance upon the Agent, such assigning Bank, or any Bank and based on
such documents and information as it shall deem appropriate at the time, will
continue to make its own credit decisions in taking or not taking action under
this Agreement; (v) such Assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under any Loan
Document as are delegated to the Agent by the terms thereof, together with such
powers as are reasonably incidental thereto; and (vi) such Assignee agrees that
it will perform in accordance with their terms all of the obligations which by
the terms of any Loan Document are required to be performed by it as a Bank.
(c) The Agent shall maintain at its address referred to in Section 10.02
a copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Banks and the
Commitment of, and principal amount of the Borrowings owing to, each Bank from
time to time (the "REGISTER"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the
Agent, and the Banks may treat each Person whose name is recorded in the
Register as a Bank hereunder for all purposes of the Loan Documents. The
Register shall be available for inspection by the Borrower or any Bank at any
reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
assigning Bank, together with any Note subject to such assignment and a
processing fee of $2,500, the Agent, if such Assignment and Acceptance has been
completed shall (i) accept such Assignment and Acceptance; (ii) record the
information contained therein in the Register; and (iii) give prompt notice
thereof to the Borrower. Simultaneously upon its receipt of such notice, the
Borrower at its own expense, shall execute and deliver to the Agent in exchange
for each surrendered Note a new Note payable to the order of such Assignee in an
amount equal to the Commitment assumed by it pursuant to such Assignment and
Acceptance and, if the assigning Bank has retained Commitments hereunder, new
Notes payable to the order of the assigning Bank in an amount equal to the
Commitments retained by it hereunder. The new Notes shall be in an aggregate
principal amount equal to the aggregate principal amount of the surrendered
Notes, shall be dated the effective date of such Assignment and Acceptance and
shall otherwise be in substantially the form of EXHIBIT F. Upon receipt by the
Agent of each such new Note conforming to the requirements set forth in the
preceding sentences, the Agent shall return to the Borrower each such
surrendered Note marked to show that each such surrendered Note has been
replaced, renewed, and extended by such new Note.
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(e) Each Bank may sell participations to one or more financial
institutions in or to all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion of its Commitments
and the Notes held by it), PROVIDED, HOWEVER, that an agreement in respect of a
participation hereunder may not restrict such Bank's voting rights hereunder,
other than in respect of a change in the principal of and interest on a Note,
the Collateral securing the Note and the maturity date of each such Note. A
participant holding an interest in a Note shall be entitled to the benefits of
Sections 2.07, 2.10, 3.01 and 3.03 of this Agreement; PROVIDED, FURTHER, that no
participant shall be entitled to recover under the aforedescribed provisions an
amount in excess of the proportionate share which such participant holds of the
original aggregate principal amount hereunder to which the selling Bank would
otherwise have been entitled.
Section 10.08.LIMITATION ON AGREEMENTS. (a) All agreements between the
Borrower, the Agent, or any Bank, whether now existing or hereafter arising and
whether written or oral, are hereby expressly limited so that in no contingency
or event whatsoever, whether by reason of demand being made in respect of an
amount due under any Loan Document or otherwise, shall the amount paid, or
agreed to be paid, to the Agent or any Bank for the use, forbearance, or
detention of the money to be loaned under this Agreement, the Notes or any other
Loan Document or otherwise or for the payment or performance of any covenant or
obligation contained herein or in any other Loan Document exceed the Highest
Lawful Rate. If, as a result of any circumstances whatsoever, fulfillment of any
provision hereof or of any of such documents, at the time performance of such
provision shall be due, shall involve transcending the limit of validity
prescribed by applicable usury law, then, IPSO FACTO, the obligation to be
fulfilled shall be reduced to the limit of such validity, and if, from any such
circumstance, the Agent or any Bank shall ever receive interest or anything
which might be deemed interest under applicable law which would exceed the
Highest Lawful Rate, such amount which would be excessive interest shall be
applied to the reduction of the principal amount owing on account of such Bank's
Note or the amounts owing on other obligations of the Borrower to the Agent or
any Bank under any Loan Document and not to the payment of interest, or if such
excessive interest exceeds the unpaid principal balance of any Note and the
amounts owing on other obligations of the Borrower to the Agent or any Bank
under any Loan Document, as the case may be, such excess shall be refunded to
the Borrower. All sums paid or agreed to be paid to the Agent or any Bank for
the use, forbearance, or detention of the indebtedness of the Borrower to the
Agent or any Bank shall, to the extent permitted by applicable law, be
amortized, prorated, allocated, and spread throughout the full term of such
indebtedness until payment in full of the principal (including the period of any
renewal or extension thereof) so that the interest on account of such
indebtedness shall not exceed the Highest Lawful Rate. Notwithstanding anything
to the contrary contained in any Loan Document, it is understood and agreed that
if at any time the rate of interest which accrues on the outstanding principal
balance of any Note shall exceed the Highest Lawful Rate, the rate of interest
which accrues on the outstanding principal balance of any Note shall be limited
to the Highest Lawful Rate, but any subsequent reductions in the rate of
interest which accrues on the outstanding principal balance of any Note shall
not reduce the rate of interest which accrues on the outstanding principal
balance of any Note below the Highest Lawful Rate until the total amount of
interest accrued on the outstanding principal balance of any Note equals the
amount of interest which would have accrued if such interest rate had at all
times been in effect. The terms and provisions of this Section 10.08 shall
control and supersede every other provision of all Loan Documents.
(b) The Agent, the Banks and the Borrower agree that (i) if Article
5069-1.04 of the Texas Revised Civil Statutes Annotated, as amended, is
applicable to the determination of the Highest Lawful Rate, the indicated rate
ceiling computed from time to time pursuant to Section (a) of such Article shall
apply, PROVIDED that, to the extent permitted by such Article, the Agent may
from time to time by notice
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to the Borrower revise the election of such interest rate ceiling as such
ceiling affects the then current or future balances of the Advances; and (ii)
the provisions of Chapter 15 of Title 79 of the Texas Revised Civil Statutes
Annotated, as amended, shall not apply to this Agreement or any Note.
Section 10.09.SEVERABILITY. In case any one or more of the provisions
contained in any Loan Document or in any instrument contemplated thereby, or any
application thereof, shall be invalid, illegal, or unenforceable in any respect,
the validity, legality, and enforceability of the remaining provisions contained
therein, and any other application thereof, shall not in any way be affected or
impaired thereby. Each covenant contained in any Loan Document shall be
construed (absent an express contrary provision herein) as being independent of
each other covenant contained therein, and compliance with any one covenant
shall not (absent such an express contrary provision) be deemed to excuse
compliance with one or more other covenants.
Section 10.10.GOVERNING LAW. This Agreement and the Notes shall be
governed by, and construed in accordance with, the laws of the State of Texas.
Section 10.11.SUBMISSION TO JURISDICTION; WAIVERS. THE BORROWER
IRREVOCABLY AND UNCONDITIONALLY:
(a) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR FOR
RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE
NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF TEXAS, THE
COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, AND
APPELLATE COURTS FROM ANY THEREOF;
(b) WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE
OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH PROCEEDING WAS
BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(c) AGREES THAT SERVICE OF PROCESS IN ANY SUCH LEGAL ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING OF A COPY THEREOF (BY REGISTERED OR
CERTIFIED MAIL OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL POSTAGE PREPAID) TO THE
BORROWER AT THE ADDRESS SPECIFIED IN SECTION 10.02 OR AT SUCH OTHER ADDRESS OF
WHICH THE AGENT OR ANY BANK SHALL HAVE BEEN NOTIFIED IN WRITING PURSUANT TO
SECTION 10.02.
(d) NOTWITHSTANDING THE FOREGOING, NOTHING HEREIN SHALL IN ANY WAY
AFFECT THE RIGHT OF THE AGENT OR ANY BANK OR THE BORROWER TO BRING ANY ACTION
ARISING OUT OF OR RELATING TO THE NOTES OR THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT IN ANY COMPETENT COURT ELSEWHERE HAVING JURISDICTION OVER THE BORROWER,
THE AGENT OR ANY BANK, AS THE CASE MAY BE, OR ITS PROPERTY.
Section 10.12.WAIVER OF JURY TRIAL. EACH OF THE BORROWER, THE AGENT AND
THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
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IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
Section 10.13.EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Section 10.14.NO INSOLVENCY PETITION AGAINST BORROWER. Each of the Agent
and the Banks hereby covenants and agrees that, prior to the date which is one
year and one day after the payment in full of the Notes and termination of the
Commitments, it will not institute against, or join any other Person in
instituting against, the Borrower any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any federal or
state bankruptcy or similar law. This Section 10.14 shall survive the
termination of this Agreement.
Section 10.15.INDEMNIFICATION. The Borrower shall indemnify the Agent,
the Banks and each affiliate thereof and their respective directors,
stockholders, officers, partners, employees, agents, attorneys, consultants,
representatives, successors, transferees and assignees from, and hold each of
them harmless against, any and all losses, liabilities, claims or damages to
which any of them may become subject, as a result of the existence, performance
or enforcement of this Agreement, the other Loan Documents and the transactions
contemplated thereby, the Receivables Documents, the Commitments or the
Advances, including without limitation such losses, liabilities, claims or
damages arising out of or resulting from any actual or proposed use by the
Borrower of the proceeds of any extension of credit by any Bank hereunder or
breach by the Borrower of this Agreement or any other Loan Document or breach by
First Investors of the Pledge Agreement or breach by the Servicer of the
Servicing Agreement or from any investigation, litigation or other proceeding
(including any threatened investigation or proceeding) relating to the
foregoing, and the Borrower shall reimburse the Agent, and each Bank, and each
Affiliate thereof and their respective directors, stockholders, officers,
partners, employees, agents, attorneys, consultants, representatives,
successors, transferees and assignees, upon demand for any reasonable expenses
(including reasonable legal fees) incurred in connection with any such
investigation or proceeding, regardless of whether resulting from the sole,
concurrent or comparative negligence of the indemnified Person, but excluding
any such losses, liabilities, claims damages or expenses incurred by such Person
by reason of the gross negligence or willful misconduct of such Person, PROVIDED
that it is the intention of the Borrower to indemnify the indemnified Person
against the consequences of its own negligence.
Section 10.16.SERVICING. In the event of a Servicer Event of Default (as
defined in the Servicing Agreement) pursuant to Section 8.01 of the Servicing
Agreement, the Borrower shall upon the written direction of the Agent, or may
with the consent of the Agent, exercise the Borrower's rights of termination
thereunder. The Agent shall also have the right to remove the Servicer for
cause, which shall include the material breach of any obligation or covenant
under the Servicing Agreement. Upon termination of the Servicer pursuant to
either Section 8.01 or Section 8.02 of the Servicing Agreement, the Borrower,
acting upon the written direction of the Agent, shall appoint a successor
Servicer and enter into a servicing agreement in form and substance acceptable
to the Agent, with such successor Servicer acceptable to the Agent at such time.
Section 10.17.FINAL AGREEMENT. THIS WRITTEN AGREEMENT AND THE NOTES
AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
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PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
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IN WITNESS WHEREOF, the parties hereto, by their officers duly
authorized, have executed this Agreement as of the date first above written.
F.I.R.C., INC., a Delaware corporation
By:TOMMY A. MOORE, JR.
Tommy A. Moore, Jr.
President
Note Face Principal NATIONSBANK OF TEXAS, N.A., in its
Amount: $25,000,000 individual capacity as a Bank and as
Agent
Domestic Lending Office:
901 Main Street
Dallas, Texas 75201 By: BILLY B. GREER
Billy B. Greer
Vice President
LIBOR Lending Office:
901 Main Street
Dallas, Texas 75201
Note Face Principal THE SUMITOMO BANK, LTD.,
Amount: $20,000,000 CHICAGO BRANCH
Domestic Lending Office:
233 S. Wacker Drive, Suite 5400
Chicago, Illinois 60606 By: JOHN J. O'NEILL
John J. O'Neill
LIBOR Lending Office: Vice President and Office Manager,
233 S. Wacker Drive, Suite 5400 Houston
Chicago, Illinois 60606
By: BRUCE PORTILLO
Bruce Portillo
Vice President, Houston
[Signature Page - Amended and Restated Credit Agreement - Page 1 of 2]
<PAGE>
Note Face Principal WELLS FARGO BANK (TEXAS),
Amount: $10,000,000 NATIONAL ASSOCIATION,
successor to First Interstate Bank of
Texas N.A.
Domestic Lending Office:
P.O. Box 4195
Portland, Oregon 97208-4195 By: DAVID M. ANDERSON
David M. Anderson
Vice President
LIBOR Lending Office:
P.O. Box 4195
Portland, Oregon 97208-4195
[Signature Page - Amended and Restated Credit Agreement - Page 2 of 2]
EXHIBIT 10.35
AMENDED AND RESTATED
COLLATERAL SECURITY AGREEMENT
THIS AMENDED AND RESTATED COLLATERAL SECURITY AGREEMENT (as the same
may be amended, modified, renewed or extended from time to time, this
"AGREEMENT"), dated as of October 30, 1996, is made by F.I.R.C., Inc., a
Delaware corporation (the "GRANTOR"), with Texas Commerce Bank National
Association, a national banking association, as collateral and paying agent (the
"BANK COLLATERAL AGENT"), for the ratable benefit of NationsBank of Texas, N.A.
(individually, "NATIONSBANK"), as the agent for the Banks (as defined below)
under the Credit Agreement referred to below (hereinafter referred to as the
"LOAN AGENT") and the financial institutions listed on the signature pages of
and any other financial institution that may thereafter become a party to the
Credit Agreement referred to below (hereinafter collectively referred to as the
"BANKS").
WITNESSETH:
WHEREAS, the Grantor, the Loan Agent, and the Banks are parties to that
certain Amended and Restated Credit Agreement dated as of even date herewith (as
may be amended, modified, renewed or extended from time to time, the "CREDIT
AGREEMENT"), pursuant to which the Banks will make revolving loans (the "LOANS")
to the Grantor from time to time;
WHEREAS, the Grantor will acquire certain Receivables (as defined in the
Credit Agreement) with the Loans advanced under the Credit Agreement;
WHEREAS, the Grantor previously entered into that certain Collateral
Security Agreement, dated as of October 16, 1992, as amended by a First
Amendment to Credit Agreement and Loan Documents, dated as of November 5, 1993,
and as further amended by a Second Amendment to Credit Agreement and Loan
Documents, dated as of March 3, 1994 (as amended, the "PRIOR SECURITY
AGREEMENT"), granting to the Bank Collateral Agent for the ratable benefit of
the Loan Agent and the Banks a security interest in, among other things, the
Receivables and the Collateral Account and the Escrow Account (as hereinafter
defined);
WHEREAS, it is a condition precedent to the making of the Loans under the
Credit Agreement that the Grantor enter into this Agreement to amend and restate
the Prior Security Agreement.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants herein set forth and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, and in order to induce
the Banks to make the Loans, the Grantor, the Bank Collateral Agent, the Loan
Agent and the Banks hereby agree as follows:
SECTION 1. DEFINITIONS. Unless the context clearly requires otherwise, all
initially capitalized terms defined in the Credit Agreement and not otherwise
defined herein shall have the meanings provided therein. In addition, unless the
context clearly requires otherwise, the following terms shall have the following
meanings:
"ACTUAL CREDIT LOSSES" has the meaning set forth in the Credit Agreement.
"BASE LEVEL COLLATERAL ACCOUNT BALANCE" means, with respect to any
Distribution Date, an amount equal to the greater of (a) the Initial Deposit or
(b) one percent (1%) of the most recently determined Receivable Portfolio
Balance.
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"COLLATERAL" shall have the meaning specified in Section 6.
"COLLATERAL ACCOUNT" shall have the meaning specified in Section 2.
"COLLATERAL ACCOUNT PROPERTY" shall have the meaning specified in Section
2.
"CORPORATE TRUST OFFICE" means the office of the Bank Collateral Agent at
which its corporate trust business shall be administered, which office at the
date of this Agreement shall be as set forth in Section 34 hereof.
"CREDIT LOSS PERCENTAGE" has the meaning set forth in the Credit
Agreement.
"DELIVERY" when used with respect to Collateral Account Property means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9.105(a)(9) of the UCC and are
susceptible of physical delivery, transfer thereof to the Bank Collateral
Agent by physical delivery to the Bank Collateral Agent endorsed to, or
registered in the name of, the Bank Collateral Agent or its nominee or
endorsed in blank;
(b) with respect to a "certificated security" (as defined in Section
8.102(a)(4) of the UCC), transfer thereof (i) by physical delivery of such
certificated security to the Bank Collateral Agent endorsed to, or
registered in the name of, the Bank Collateral Agent or its nominee, (ii)
by physical delivery of such certificated security to another Person,
other than a "securities intermediary" (as defined in Section 8.102(a)(14)
of the UCC), acting on behalf of the Bank Collateral Agent, or if such
Person has previously acquired possession of the certificated security, by
such Person's acknowledgment that it holds such security on behalf of the
Bank Collateral Agent, or (iii) by physical delivery of such certificated
security to a securities intermediary acting on behalf of the Bank
Collateral Agent, but only if the certificate is in registered form and
has been specially indorsed to the Bank Collateral Agent by an effective
indorsement (all of the foregoing Collateral Account property described in
clauses (a) and (b) of the definition of "Delivery" being referred to as
"PHYSICAL PROPERTY") and, in any event, any such Physical Property in
registered form shall be in the name of the Bank Collateral Agent;
(c) with respect to any financial asset issued by the U.S. Treasury,
the Federal Home Loan Mortgage Corporation or by the Federal National
Mortgage Association that is a book entry financial asset held through the
Federal Reserve System pursuant to federal book entry regulations, the
following procedures, all in accordance with applicable law, including
applicable federal regulations and Articles 8 and 9 of the UCC: book entry
registration of such Property to an appropriate book entry account
maintained with a Federal Reserve Bank by a securities intermediary and
issuance by such Federal Reserve Bank of a deposit advice or other written
confirmation of such book entry registration to the securities
intermediary of such book entry financial asset; the sending of a
confirmation by the securities intermediary of the purchase by the Bank
Collateral Agent of such book entry financial asset and the making by such
securities intermediary of entries in its books and records identifying
such book entry financial asset held through the Federal Reserve System
pursuant to federal book entry regulations as belonging to the Bank
Collateral Agent acting in its capacity hereunder and indicating that such
securities
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intermediary holds such Collateral Account Property solely as agent for
the Bank Collateral Agent;
(d) with respect to any "uncertificated security" (as defined in
Section 8.102(a)(18) of the UCC) that is not governed by clause (c) above,
registration thereof on the books and records of the issuer thereof (i) of
the Bank Collateral Agent as registered owner or (ii) of another Person,
other than an intermediary, as registered owner on behalf of the Bank
Collateral Agent (or if such Person has previously become the registered
owner of such security, such Person's acknowledgment that it holds such
security on behalf of the Bank Collateral Agent); and
(e) such additional or alternative procedures, in form and substance
satisfactory to the Bank Collateral Agent, as may be or hereafter become
appropriate to transfer "control" (as provided in Section 8.106 of the
UCC) of any such Collateral Account Property to the Bank Collateral Agent,
or otherwise to protect, assure or enforce the interests, rights and
remedies of the Bank Collateral Agent, consistent with changes in
applicable law or regulations or the interpretation thereof.
"ESCROW ACCOUNT" has the meaning set forth in the Credit Agreement.
"INCREMENTAL RESERVE AMOUNT" means an amount equal to (a) on any
Distribution Date when the Incremental Reserve Percentage determined as of the
preceding Determination Date is equal to or less than zero percent, zero and (b)
on any Distribution Date when the Incremental Reserve Percentage determined as
of the preceding Determination Date is greater than zero percent, the
Incremental Reserve Percentage times the Receivable Portfolio Balance.
"INCREMENTAL RESERVE PERCENTAGE" means, on any Determination Date, a
percentage equal to the Credit Loss Percentage MINUS 3.00 %.
"INITIAL DEPOSIT" means the $250,000 deposit transferred into the
Collateral Account by the Grantor on or prior to the Closing Date.
"LIQUIDATED RECEIVABLE" has the meaning set forth in the Credit Agreement.
"LOAN CALCULATION" has the meaning specified in Section 5.
"LOAN PERCENTAGE" has the meaning set forth in the Credit Agreement.
"PERMITTED INVESTMENTS" shall have the meaning provided in Section 4.
"PHYSICAL PROPERTY" has the meaning assigned to such term in the
definition of "Delivery" above.
"PRINCIPAL BALANCE" has the meaning set forth in the Credit Agreement.
"PURCHASED RECEIVABLE" means a Receivable repurchased as of the respective
Determination Date by the Servicer or the Grantor pursuant to the Servicing
Agreement or by First Investors pursuant to the Purchase Agreement.
"RECEIVABLE PORTFOLIO BALANCE" has the meaning set forth in the Credit
Agreement.
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"SERVICING FEE" has the meaning specified in Section 1.01 of the Servicing
Agreement.
"SIMPLE INTEREST METHOD" means the method of allocating a fixed level
payment to principal and interest, pursuant to which the portion of such payment
that is allocated to interest is equal to the product of the fixed rate of
interest multiplied by the unpaid principal balance multiplied by the period of
time elapsed since the preceding payment of interest was made.
"SPECIFIED COLLATERAL ACCOUNT BALANCE" means, with respect to any
Distribution Date, an amount equal to the sum of (a) the Base Level Collateral
Account Balance PLUS (b) the Incremental Reserve Amount (if any).
"TEXAS COMMERCE" shall have the meaning specified in Section 19.
"UCC" means the Uniform Commercial Code as in effect in any applicable
jurisdiction.
SECTION 2. ESTABLISHMENT AND MAINTENANCE OF COLLATERAL ACCOUNT.
(a) On or prior to the Closing Date, the Bank Collateral Agent shall
establish a separate trust account (the "COLLATERAL ACCOUNT") with Texas
Commerce Bank National Association's "trust department," as that term is
defined in 12 C.F.R. ss. 9.1(j) and, except as may be permitted by
applicable law including 12 C.F.R. ss. 9.18, at all times segregated,
separate and distinct from (i) any and all other property or assets Texas
Commerce Bank National Association holds, administers, maintains, or
manages for others in a fiduciary or other capacity or otherwise owned by
others and the accounts established therefor, and (ii) all properties or
assets owned by, on deposit with, held by, or in possession of, or
controlled by, Texas Commerce Bank National Association, whether as part
of its commercial banking or savings activities or otherwise and the
accounts established therefor. The Bank Collateral Agent shall maintain
all records concerning the Collateral Account as "fiduciary records" as
defined in 12 C.F.R. ss. 9.1(d), separate and distinct from all other
records of Texas Commerce Bank National Association. The Collateral
Account shall be styled upon the fiduciary records of Texas Commerce Bank
National Association as "Texas Commerce Bank National Association as Bank
Collateral Agent for NationsBank of Texas, N.A. under Amended and Restated
Credit Agreement dated as of October 30, 1996".
(b) On the Closing Date, the Grantor shall deposit the Initial
Deposit into the Collateral Account. The Grantor hereby sells, conveys and
transfers to the Bank Collateral Agent and its successors and assigns, the
Initial Deposit and all proceeds thereof, and all other amounts deposited
into the Collateral Account pursuant hereto (all of the foregoing, subject
to the limitations set forth below, the "COLLATERAL ACCOUNT PROPERTY"), to
have and to hold all the aforesaid property, rights and privileges unto
the Bank Collateral Agent, its successors and assigns, in trust for the
uses and purposes and subject to the terms and provisions, set forth
herein. The Bank Collateral Agent by execution of this Agreement
acknowledges such transfer and accepts the trust thereunder and shall hold
and distribute the Collateral Account Property in accordance with the
terms and provisions of this Agreement.
(c) The Collateral Account shall constitute a trust account held by
the Bank Collateral Agent solely for the benefit of the Loan Agent and the
Banks, subject to the terms and conditions of this Agreement. Except as
set forth in Section 12 hereof, the Grantor shall have no legal,
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equitable or beneficial interest in the Collateral Account, which shall be
within the sole dominion and control of the Bank Collateral Agent for the
benefit of the Loan Agent and the Banks. The Collateral Account shall be
segregated on the books and records of the Bank Collateral Agent pursuant
to subsection (a) hereof, and, to the extent permitted under applicable
laws, the funds deposited therein shall not be subject to, and shall be
protected from, all claims, liens, and encumbrances of any creditors or
depositors of the Bank Collateral Agent (whether made directly or
indirectly through a liquidator or receiver of the Bank Collateral Agent).
With respect to the Collateral Account and the funds deposited therein,
the Loan Agent and the Banks shall be entitled to the priorities afforded
to the beneficiaries of such a trust account (in addition to the claim
against the estate of the Bank Collateral Agent) as provided by Section
92a(e) of Title 12 of the United States Code.
SECTION 3. DEPOSITS INTO THE COLLATERAL ACCOUNT. Such deposits shall be
made by wire transfer of immediately available funds in accordance with
instructions provided by the Bank Collateral Agent. The Bank Collateral Agent
shall accept the amounts deposited into the Collateral Account pursuant to
Section 5 hereof and hold, invest, release and distribute same in the manner
specified in Sections 4 and 5 hereof.
(a) Any Collateral Account Property that is held in deposit or trust
accounts shall be held solely in the name of the Bank Collateral Agent in
the Corporate Trust Office. Each such account and Collateral Account
Property shall be subject to the exclusive custody and control of the Bank
Collateral Agent, and the Bank Collateral Agent shall have sole signature
authority with respect thereto.
(b) Any Collateral Account Property that constitutes Physical
Property shall be delivered to the Bank Collateral Agent in accordance
with clauses (a) and (b) of the definition of "Delivery" and shall be
held, pending maturity or disposition, solely by the Bank Collateral Agent
or another Person referred to and holding in the manner described in
subclause (ii) or (iii) of such clause (b).
(c) Any Collateral Account Property that is a book entry financial
asset held through the Federal Reserve System pursuant to federal book
entry regulations shall be delivered in accordance with clause (c) of the
definition of "Delivery" and shall be maintained by the Bank Collateral
Agent, pending maturity or disposition, through continued book entry
registration of such Collateral Account Property as described in such
paragraph.
(d) Any Collateral Account Property that is an "uncertificated
security" under Chapter 8 of the UCC and that is not governed by
subsection (c) above shall be delivered to the Bank Collateral Agent in
accordance with clause (d) of the definition of "Delivery" and shall be
maintained by the Bank Collateral Agent, pending maturity or disposition,
through continued registration of the Bank Collateral Agent's (or its
nominee's) ownership of such security.
SECTION 4. INVESTMENT OF AMOUNTS ON DEPOSIT IN THE COLLATERAL ACCOUNT. The
amounts from time to time on deposit in the Collateral Account shall be invested
in "PERMITTED INVESTMENTS" consisting of investments made on the basis of daily
cash sweeps in short-term investment funds utilized by the Bank Collateral Agent
for such cash sweeps which invest solely in marketable direct obligations
issued, or unconditionally guaranteed with respect to principal and interest by
the United States of
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America or issued by any agency or instrumentality thereof and backed by the
full faith and credit of the United States of America or in other investments as
may be permitted by the Majority Banks, in each case maturing (or payable on
demand) no later than the Distribution Date next succeeding the date of
investment. All investment earnings on amounts held in the Collateral Account
shall be credited to the Collateral Account and the Grantor shall have no
direction or control over such investment earnings. No Permitted Investment may
be disposed of prior to its maturity or required redemption. All Permitted
Investments made with amounts held in the Collateral Account shall be made in
the name of the Bank Collateral Agent and held in the Collateral Account.
Notwithstanding the foregoing, the Collateral Account may contain at
any time uninvested cash in an amount not to exceed the maximum amount insured
by the FDIC without giving rise to any obligation to withdraw such cash from the
Collateral Account. Realized losses, if any, on investment of the Collateral
Account Property shall be charged first against undistributed investment
earnings attributable to the Collateral Account Property and then against the
Collateral Account Property.
SECTION 5. DEPOSITS, DISTRIBUTIONS AND WITHDRAWALS FROM THE COLLATERAL
ACCOUNT.
(a) Pursuant to Section 5.02 of the Servicing Agreement, the
Servicer shall remit within ten Business Days after each Determination
Date to the Collateral Account all payments made by or on behalf of
Obligors (other than in respect of Purchased Receivables) and all
Liquidation Proceeds; PROVIDED that the Servicer may withhold from such
amounts (i) the Servicing Fee and (ii) amounts reimbursable to it under
the Servicing Agreement.
(b) Pursuant to Section 5.04 of the Servicing Agreement and Section
6.02 of the Purchase Agreement, the Servicer, the Grantor or First
Investors, as the case may be, shall remit or cause to be remitted to the
Collateral Account the aggregate Purchase Amount with respect to any
Purchased Receivables on the Business Day immediately following the
purchase of the Purchased Receivable.
(c) The Servicer may, at any time, withhold from the amounts to be
deposited under subsection (a) hereof, or direct the Bank Collateral Agent
to transfer to it, (i) amounts deposited to the Collateral Account in
error and (ii) chargebacks attributable to errors in posting, returned
checks or rights of offset for amounts that should not have been paid or
that must be refunded as a result of a successful claim or defense under
bankruptcy or similar laws.
(d) (i)(A) On or before the eighth day of each calendar month, the
Loan Agent shall deliver to the Bank Collateral Agent a calculation, which
shall be conclusive absent manifest error, of the interest due and owing
on the outstanding Advances to each Bank, and (B) prior to each
Distribution Date, the Loan Agent shall deliver to the Bank Collateral
Agent a calculation, which shall be conclusive absent manifest error, of
any mandatory prepayments required pursuant to Section 3.06 of the Credit
Agreement or other amounts due and owing to the Loan Agent or the Banks
under the Credit Agreement or the other Loan Documents, as of the
applicable Distribution Date (such calculations being herein collectively
referred to as the "LOAN CALCULATION") and (ii) on or before the
thirteenth day of each calendar month the Grantor shall deliver to the
Bank Collateral Agent a copy of the Compliance Certificate required to be
delivered pursuant to Section 6.02(g) of the Credit Agreement.
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(e) On each Distribution Date, the Bank Collateral Agent (based on
the Loan Calculation and to the extent relevant, on the information
contained in the Servicer's Certificate and other reports delivered with
respect to the related Determination Date pursuant to Section 4.09 of the
Servicing Agreement) shall, subject to subsection (g) hereof, make the
following distributions from the Collateral Account in the following order
or priority:
(i) to the Servicer, (A) the Servicing Fee and all unpaid
Servicing Fees from prior Collection Periods, in either case to the
extent not retained by the Servicer pursuant to Section 5.02 of the
Servicing Agreement and (B) any amounts reimbursable to the Servicer
under the Servicing Agreement and not previously retained by the
Servicer pursuant to Section 5.02 of the Servicing Agreement;
(ii) to the Bank Collateral Agent, any amounts due and owing
to it as set forth in Section 19(c) hereof;
(iii) to the Loan Agent, any amounts due and owing to it as
set forth on the Loan Calculation;
(iv) PARI PASSU to (A) the Loan Agent for the account of each
Bank, the amounts due and owing to such Banks as set forth on the
Loan Calculation and (B) NationsBank, any amounts due and owing by
the Borrower pursuant to any interest rate swap, interest rate cap
or other exchange or rate protection agreement now existing or
hereafter entered into between the Borrower and NationsBank or any
Affiliate of NationsBank; and
(v) subject to Section 5(g) hereof, to the Grantor, the
remainder, if any; PROVIDED, HOWEVER, that amounts otherwise
distributable to the Grantor under this clause (v) shall instead be
retained in the Collateral Account if a Default or Event of Default
has occurred and is continuing.
(f) If the amount available to be distributed is less than the sum
of the Servicing Fee due on such Distribution Date, any accrued and unpaid
Servicing Fees from prior Collection Periods, any amounts reimbursable to
the Servicer under the Servicing Agreement, the amount required to be paid
to the Bank Collateral Agent as provided in subsection (e)(ii) above and
the amounts required to be paid to the Loan Agent and the Banks as
provided in subsections (e)(iii) and (iv) above, the Servicer, the Bank
Collateral Agent, the Loan Agent and the Banks shall be entitled to
receive distributions in respect of the applicable deficiency from amounts
retained on deposit in the Collateral Account in respect of the Specified
Collateral Account Balance. Distributions pursuant to this subsection (f)
shall be made in the same order of priority as distributions pursuant to
Section 5(e).
(g) On each Distribution Date, if the amount of the Collateral
Account (after giving effect to all payments to be made from such Account
pursuant to Section 5(e) on such Date) is less than the Specified
Collateral Account Balance for such Distribution Date, the Bank Collateral
Agent, after payment of any amounts required to be distributed to the Bank
Collateral Agent, the Loan Agent, the Banks and the Servicer pursuant to
Section 5(f), shall withhold from amounts otherwise distributable to the
Grantor and not otherwise distributed to the Bank Collateral Agent, the
Loan Agent, the Banks or the Servicer all such amounts, or such lesser
amounts as are
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sufficient to restore the amount in the Collateral Account to the
Specified Collateral Account Balance. If the amount of the Collateral
Account (after taking into account any withdrawals therefrom pursuant to
Section 5(f)) is greater than the Specified Collateral Account Balance for
such Distribution Date, the Bank Collateral Agent shall release and shall
distribute the amount of the excess to the Grantor; PROVIDED that amounts
otherwise distributable to the Grantor shall instead be retained in the
Collateral Account if a Default or Event of Default has occurred and is
continuing.
(h) On the last day of any Interest Period with respect to a LIBOR
Rate Advance or an Agreed Rate Advance and at the direction of the Loan
Agent, the Bank Collateral Agent shall distribute amounts due and owing to
the Banks in respect of interest on the Advances to the Loan Agent for
distribution to the Banks.
SECTION 6. PLEDGE AND GRANT OF SECURITY INTEREST. The Grantor hereby
pledges, transfers and assigns to the Bank Collateral Agent for the benefit of
the Loan Agent and the Banks, and grants to the Bank Collateral Agent for the
benefit of the Loan Agent and the Banks, a security interest in and to, and a
first priority lien upon, its property described in clauses (a)-(h) of this
Section 6 (the "COLLATERAL"), whether now owned or hereafter acquired,
(a) all accounts, chattel paper and instruments, including, without
limitation, the Receivables and all monies due thereon;
(b) the Liens and security interests in the Financed Vehicles and
any accessions thereto granted by Obligors pursuant to the Receivables;
(c) any proceeds from claims on, and rights under, any physical
damage, credit life, credit disability or other insurance policies
covering Financed Vehicles or Obligors;
(d) the Purchase Agreement, including the right of the Grantor to
cause First Investors to repurchase Receivables from the Grantor under
certain circumstances, and the Servicing Agreement;
(e) all proceeds from claims on, and rights under, the ALPI
Insurance, VSI Insurance and GAP Insurance related to the Receivables;
(f) certain rebates of premiums and other amounts relating to
insurance policies and other items financed under the Receivables;
(g) all right, title and interest of the Grantor, if any, in and to
the Collateral Account and the Escrow Account and in all funds deposited
in such accounts from time to time, and all investments and securities
held in such accounts in accordance with the provisions hereof and all
rights, entitlements and benefits thereto; and
(h) the proceeds, in cash or otherwise, of any or all of the
foregoing (including, without limitation, the proceeds of any sale or
other disposition of such Collateral and all insurance proceeds of any
kind paid at any time in connection with such Collateral), all Liens
(whether possessory, contractual, statutory or otherwise) with respect to
such Collateral, and all
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rights, remedies and claims (whether in the nature of indemnities,
warranties, guaranties or otherwise) of Grantor with respect to such
Collateral including without limitation, the right of Grantor to bring
suit to enforce its rights with respect to such Collateral, in any case
whether now existing or hereafter at any time or from time to time
arising.
The pledge of proceeds in this Agreement does not authorize the Grantor to sell,
dispose of or otherwise use the Collateral in any manner not specifically
authorized by this Agreement.
SECTION 7. SECURITY FOR OBLIGATION. This Agreement secures the prompt and
complete (a) payment of all obligations of Grantor to the Loan Agent and to any
or each Bank now or hereafter existing under this Agreement, the Notes, the
Credit Agreement and the other Loan Documents to which Grantor is a party, as
each may be modified, amended, extended or renewed from time to time; and (b)
performance and observance by Grantor of all covenants and conditions contained
in the Loan Documents to which it is a party, as each may be modified, amended,
extended or renewed from time to time (including, without limitation, the
covenants and conditions contained herein) (all such obligations, covenants and
conditions described in the foregoing clauses (a) and (b), whether for
principal, interest, fees, expenses or otherwise, being hereinafter collectively
referred to as the "OBLIGATIONS").
SECTION 8. GRANTOR REMAINS LIABLE. Anything herein to the contrary
notwithstanding, (a) Grantor shall remain liable under the contracts and
agreements included in the Collateral to the extent set forth therein to perform
all of its duties and obligations thereunder to the same extent as if this
Agreement had not been executed; (b) the exercise by the Bank Collateral Agent,
the Loan Agent or any Bank of any of the rights hereunder shall not release
Grantor from any of its duties or obligations under the contracts and agreements
included in the Collateral; and (c) the Bank Collateral Agent, the Loan Agent or
any Bank shall not have any obligation or liability under the contracts and
agreements included in the Collateral by reason of this Agreement, nor shall the
Bank Collateral Agent, the Loan Agent or any Bank be obligated to perform any of
the obligations or duties of Grantor thereunder or to take any action to collect
or enforce any claim for payment assigned hereunder.
SECTION 9. REPRESENTATIONS AND WARRANTIES OF GRANTOR. Grantor hereby
represents and warrants as follows:
(a) Not later than the Closing Date, Grantor shall deliver to the
Bank Collateral Agent a completed Perfection Certificate in the form
attached hereto as SCHEDULE I. The information set forth therein shall be
true and complete. If the Bank Collateral Agent is requested to do so by
the Loan Agent, Grantor shall reimburse the Bank Collateral Agent for the
cost and expense of obtaining file search reports from each filing office
in which financing statements should be filed to perfect the security
interest created hereby, evidencing such filing.
(b) The principal place of business and chief executive office of
the Grantor is located at its address shown on SCHEDULE I or at such other
location in any jurisdiction where all actions required by Section 13
shall have been taken.
(c) All records concerning Grantor's Receivables and all originals
of all chattel paper which evidence Receivables are in the possession of
the Servicer as set forth on SCHEDULE I, or are at such other location in
any jurisdiction where all actions required by Section 13 shall have been
taken.
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(d) Grantor owns the Collateral free and clear of any Lien, except
for Permitted Liens. Except with respect to Permitted Liens, no effective
financing statement or other instrument similar in effect covering all or
any part of the Collateral is or will be on file in any recording office,
except as may be filed in favor of the Bank Collateral Agent for the
benefit of the Loan Agent and the Banks relating to this Agreement.
(e) Other than the filings and other actions described herein to
perfect the security interests created by this Agreement, no
authorization, approval or other action by, and no notice to or filing
with, any Governmental Authority is required(i) for the due execution,
delivery and performance of this Agreement by Grantor, and the other
documents and instruments executed in connection herewith; (ii) for the
grant by Grantor of the security interests granted hereby; (iii) for the
perfection of the security interests granted hereby; or (iv) for the
exercise by the Bank Collateral Agent and the Loan Agent and the Banks of
their rights and remedies hereunder.
(f) This Agreement is, and all other documents and instruments
executed in connection therewith, when delivered will be legal, valid and
binding obligations of Grantor enforceable against Grantor in accordance
with their respective terms, except as enforceability may be (i) limited
by applicable bankruptcy, reorganization, insolvency, moratorium or other
similar laws of general application relating to the enforcement of
creditors' rights generally and (ii) subject to the general effect of
general principles of equity.
(g) None of the Obligors on any of Grantor's Receivables is a
Governmental Authority.
(h) Upon the making of all filings and the taking of all other
actions necessary to perfect the security interests created hereby,
including without limitation, those actions specified in Section 13 below,
this Agreement will create a valid first priority security interest in the
Collateral (subject only to Permitted Liens), securing the payment of the
Obligations.
(i) Neither Grantor nor its predecessors has performed any acts
which might prevent the Bank Collateral Agent, the Loan Agent or the Banks
from enforcing any of the terms of this Agreement or which would limit the
Loan Agent and the Banks in any such enforcement.
SECTION 10. COVENANTS: Grantor hereby covenants as follows:
(a) Grantor shall keep its principal place of business and chief
executive office and the offices where it keeps records concerning the
Receivables, and all originals of all chattel paper which evidence
Receivables, at the location or locations therefor specified in Section
9(b) or at such other locations in jurisdictions where all actions
required by Section 13 shall have been taken with respect to the
Receivables.
(b) Grantor, either directly or through an agent, including, without
limitation, the Servicer, shall, except as otherwise provided in this
subsection, continue to collect, at the Grantor's expense, all amounts due
or to become due to it under the Receivables. In connection with such
collections, Grantor may take or cause to be taken (and, at the Bank
Collateral Agent's direction, shall take or cause to be taken) such action
as Grantor or the Bank Collateral Agent or the Banks may deem necessary or
advisable to enforce collection of the Receivables. Upon the
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occurrence and during the continuance of an Event of Default, the Bank
Collateral Agent shall have the right to notify the Servicer and to direct
the Servicer to deliver all amounts due or to become due to Grantor under
the Receivables directly to the Bank Collateral Agent and, at the expense
of Grantor, to direct the Servicer to enforce collection of any such
Receivables, and to adjust, settle or compromise the amount or payment
thereof in the same manner and to the same extent as Grantor might have
done. After the occurrence and during the continuation of an Event of
Default, all amounts and proceeds (including instruments) received by or
for the account of Grantor in respect of the Receivables shall be received
in trust for the benefit of the Bank Collateral Agent hereunder, shall be
segregated from other funds of or for the account of Grantor and shall be
forthwith paid over to the Bank Collateral Agent in the same form as so
received (with any necessary endorsement) to be held as cash collateral
and applied as provided by Section 18.
(c) Grantor shall not sell, discount or otherwise transfer, whether
with or without recourse, any notes or Receivables, other than (i) in the
ordinary course of business for the collection of delinquent notes or
Receivables or (ii) to First Investors pursuant to and in compliance with
the provisions of Section 7.04 of the Credit Agreement.
(d) Grantor shall not change its name, identity or corporate
structure in any manner which might make any financing or continuation
statement filed hereunder seriously misleading within the meaning of
Section 9.402 of the UCC (or any other then applicable provision of the
UCC or any other provision of law in effect in any applicable
jurisdiction) unless Grantor shall have given the Bank Collateral Agent at
least thirty (30) days' prior written notice thereof and shall have taken
all action (or made arrangements to take such action substantially
simultaneously with such change if it is impossible to take such action in
advance) necessary or reasonably requested by the Bank Collateral Agent to
amend such financing statement or continuation statement so that it is not
seriously misleading.
(e) Except as may be permitted by the Credit Agreement, Grantor
shall not sell, assign or otherwise dispose of any of the Collateral, or
create or suffer to exist any Lien upon or with respect to any of the
Collateral.
(f) Subject to the provisions of the Servicing Agreement, the
Grantor agrees to clearly and unambiguously mark its general ledger and
all accounting records and documents and all computer tapes and records to
show that the Receivables have been pledged to the Bank Collateral Agent
hereunder. In connection with the grant of the security interest pursuant
to Section 6, the Grantor agrees to direct the Servicer to indicate, on or
prior to the Closing Date, clearly and unambiguously in the Servicer's
computer files, and in any of the Grantor's files in possession of the
Servicer, that the Receivables have been pledged to the Bank Collateral
Agent pursuant to this Agreement. The Grantor agrees to direct the
Servicer, by the end of each Collection Period to indicate clearly and
unambiguously in its computer files that such Receivables have been
pledged to the Bank Collateral Agent pursuant to this Agreement.
SECTION 11. LIMITATIONS ON REMEDIES. The Bank Collateral Agent shall have
no rights hereunder to, and shall not, make any cash payments or other transfer
to or on behalf of the Grantor, the Loan Agent, the Banks or any other Person
except as specifically set forth herein.
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SECTION 12. THE GRANTOR TO BE OWNER OF COLLATERAL FOR TAX PURPOSES. The
Grantor shall be the owner of the Collateral Account for federal income tax
purposes and all state and local income tax purposes, and, for such purposes,
all income resulting from such ownership shall be for the account of the
Grantor. The Grantor shall be solely responsible for preparing and filing all
federal, state and local income tax returns relating to the ownership of the
Collateral.
SECTION 13. CONTINUATION STATEMENTS; FURTHER ASSURANCES. The Grantor
authorizes the Bank Collateral Agent to file financing statements (including
without limitation, Form UCC-1 or Form UCC-3, as the case may be) and such other
security documents to be executed by Grantor in such offices and locations as
are necessary in the opinion of the Bank Collateral Agent to perfect the
security interests granted herein. The Bank Collateral Agent is authorized to
and shall file or cause to be filed all necessary continuation statements for
any financing statements relating to the Collateral that were filed on or prior
to the Closing Date. The Grantor shall execute any such continuation statements.
The Bank Collateral Agent shall cause the Grantor to take, and the Grantor shall
take, at the expense of the Grantor, at any time and from time to time, any
additional action required by the Bank Collateral Agent or by the Majority Banks
in order to perfect, preserve and protect the first priority security interest
granted or purported to be granted hereby. Any such requirement shall be
evidenced by written direction of the Bank Collateral Agent or the Majority
Banks (as the case may be) delivered to the Grantor. Without limiting the
generality of the foregoing, the Grantor shall execute and file such financing
statements, or amendments thereto, continuation statements, and such other
instruments, documents or notices, as may be necessary in order to perfect,
preserve and protect the first priority security interest granted or purported
to be granted hereby.
SECTION 14. APPOINTMENT OF BANK COLLATERAL AGENT. Each of the Loan Agent
and the Banks hereby appoints the Bank Collateral Agent to act as its paying
agent and collateral agent hereunder, and the Grantor hereby appoints the Bank
Collateral Agent to act as its paying agent hereunder. The Bank Collateral Agent
hereby accepts its duties as paying agent and collateral agent hereunder for the
Loan Agent, the Banks and the Grantor.
SECTION 15. BANK COLLATERAL AGENT APPOINTED ATTORNEY-IN-FACT. Grantor
hereby irrevocably appoints the Bank Collateral Agent Grantor's
attorney-in-fact, effective upon and during the continuance of an Event of
Default, with full authority in the place and stead of Grantor and in the name
of Grantor, the Bank Collateral Agent or otherwise, from time to time in the
Bank Collateral Agent's discretion, to take any action and to execute any
instrument, or to cause the Servicer to take any action or execute any
instrument, which the Bank Collateral Agent, the Loan Agent or the Majority
Banks may deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation:
(a) to ask, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for amounts due and to become due under or
in respect of any of the Collateral,
(b) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (a) above, and
(c) to file any claims or take any action or institute any
proceedings which the Bank Collateral Agent, the Loan Agent or the
Majority Banks may deem necessary or desirable for the collection of any
of the Collateral or otherwise to enforce the rights of the Loan Agent,
the Banks and the Bank Collateral Agent with respect to any of the
Collateral.
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SECTION 16. BANK COLLATERAL AGENT MAY PERFORM. If Grantor fails to perform
any agreement contained herein, the Bank Collateral Agent may itself perform, or
cause performance of, such agreement, and the reasonable expenses of the Bank
Collateral Agent incurred in connection therewith shall be payable by Grantor as
set forth in Section 19.
SECTION 17. THE BANK COLLATERAL AGENT'S DUTIES. The powers conferred on
the Loan Agent and the Banks hereunder are solely to protect their interest in
the Collateral and shall not impose any duty upon the Loan Agent or any Bank to
exercise any such powers. Except for the safe custody of any Collateral in its
possession and the accounting for amounts actually received by it hereunder,
neither the Bank Collateral Agent, the Loan Agent nor any Bank shall have any
duty as to any Collateral or as to the taking of any necessary steps to preserve
rights against prior parties or any other rights pertaining to any Collateral
The Bank Collateral Agent shall promptly deliver to the Loan Agent a copy of any
notice received by it from the Servicer or the Grantor under the Servicing
Agreement.
SECTION 18. REMEDIES.
(a) Upon the occurrence of a Default or an Event of Default, the
Loan Agent shall send notice of such Default or Event of Default to the
Bank Collateral Agent and to the Grantor. The Bank Collateral Agent, or
the Servicer on behalf of the Bank Collateral Agent, may exercise in
respect of the Collateral and at the direction of the Loan Agent on behalf
of the Banks, in addition to other rights and remedies provided for herein
or otherwise available to it, all the rights and remedies of a secured
party on default under the UCC (whether or not the UCC applies to the
affected Collateral) and in addition thereto and cumulative thereof, the
following rights: the right to sell, lease or otherwise dispose of the
Collateral and the right to take possession of the Collateral, and for
that purpose, the Bank Collateral Agent or the Servicer may enter upon any
premises on which the Collateral may be situated and remove the same
therefrom and/or may render the Collateral inoperable; the Bank Collateral
Agent may require Grantor to, and Grantor hereby agrees that it will, at
its expense and upon the request of the Bank Collateral Agent, forthwith
assemble all or part of the Collateral and all documents relating to the
Collateral as directed by the Bank Collateral Agent and make the
Collateral available to the Bank Collateral Agent at a place to be
designated by the Bank Collateral Agent; without notice except as
specified below, sell the Collateral in one or more parcels at public or
private sale, at any of the Bank Collateral Agent's offices or elsewhere,
for cash, on credit or for future delivery, and upon such other terms as
the Bank Collateral Agent or the Servicer may deem commercially
reasonable. Grantor agrees that, to the extent notice of sale shall be
required by law, at least ten (10) days' notice to Grantor 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 Bank Collateral Agent
shall not be obligated to make any sale of Collateral regardless of notice
of sale having been given. The Bank Collateral Agent or the Servicer 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.
(b) All cash proceeds received by the Bank Collateral Agent in
respect of any sale of, collection from, or other realization upon all or
any part of the Collateral may (and shall at the direction of the Grantor)
be held by the Bank Collateral Agent as collateral for, and/or then or at
any time thereafter delivered to the Loan Agent to be applied in whole or
in part by the Loan Agent against, the Obligations and any amounts owing
to the Bank Collateral Agent in such order
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as the Loan Agent shall elect. Any surplus of such cash or cash proceeds
and interest accrued thereon, if any, held by the Bank Collateral Agent or
the Loan Agent and remaining after payment in full of all of the
Obligations shall be paid over to the Grantor or to whomsoever may be
lawfully entitled to receive such surplus; provided that the Bank
Collateral Agent and the Loan Agent shall have no obligation to invest or
otherwise pay interest on any amounts held by it in connection with or
pursuant to this Agreement.
(c) All rights and remedies of the Bank Collateral Agent, the Loan
Agent and the Banks expressed herein are in addition to all other rights
and remedies possessed by the Bank Collateral Agent, the Loan Agent and
the Banks in the Credit Agreement, the Notes, the other Loan Documents and
any other agreement or instrument relating to the Obligations.
SECTION 19. CERTAIN MATTERS REGARDING THE BANK COLLATERAL AGENT.
(a) The Bank Collateral Agent shall examine any directions, notices
or other communications received from the Grantor, any Bank or the Loan
Agent to determine if such directions, notices or other communications
appear on their face to have been made in accordance with, and to
substantially conform otherwise to, the requirements of this Agreement. As
long as the Bank Collateral Agent has acted in good faith and has not been
negligent in making the determinations required by this subsection, the
Bank Collateral Agent may conclusively rely on any such directions,
notices or other communications and shall incur no liability hereunder for
complying with, or assuming the truth of the statements contained in, any
such direction, notice or other communication. The Bank Collateral Agent
shall be obligated only for the performance of such duties as are
specifically set forth in the Agreement and shall not be liable for any
action taken or omitted by it in good faith, believed by it to be
authorized hereby or for any action taken or omitted by it in accordance
with the advice of counsel.
(b) The Bank Collateral Agent in its individual or any other
capacity may become the owner or pledgee of the Notes with the same rights
it would have if it were not the Bank Collateral Agent.
(c) The Grantor covenants and agrees to pay, from its own funds, to
the Bank Collateral Agent, and the Bank Collateral Agent shall be entitled
to, compensation for all services rendered by it in the exercise and
performance of any of its duties hereunder in the form of a fee in the
amount of $5,000 per annum, payable monthly on each Distribution Date
during the terms of this Agreement, and the Grantor will pay (out of its
own funds) or reimburse the Bank Collateral Agent, to the extent requested
by the Bank Collateral Agent, as the case may be, for all reasonable
expenses, disbursements and advances incurred or made by the Bank
Collateral Agent in accordance with any of the provisions of this
Agreement, the reasonable compensation and the expenses and disbursements
of its counsel and of all persons not regularly in its employ, except any
such expense, disbursement or advance as may arise from its gross
negligence, willful misconduct or bad faith; PROVIDED that the Grantor's
obligations under this Section 19(c) may be satisfied by the making of
distributions to the Bank Collateral Agent under Section 5(e) hereof. The
Grantor also covenants and agrees to indemnify (out of its own funds) the
Bank Collateral Agent for, and to hold the Bank Collateral Agent harmless
against, any loss, liability or expense incurred without gross negligence,
willful misconduct or bad faith on the part of the Bank Collateral Agent,
arising out of or in connection with the acceptance or administration of
this
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Agreement, including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or performance of
any of its duties hereunder. The covenants in this subsection (c) shall
survive the termination of this Agreement. TO THE EXTENT THE FOREGOING
INDEMNITY CONTEMPLATES INDEMNIFICATION OF THE BANK COLLATERAL AGENT FOR
ITS OWN NEGLIGENT ACTS OR OMISSIONS UNDER CERTAIN CIRCUMSTANCES, THAT IS
THE EXPRESS INTENT OF THE PARTIES;
(d) There shall at all times be a Bank Collateral Agent hereunder
which shall be either (i) Texas Commerce Bank National Association ("TEXAS
COMMERCE") or any other Person into which Texas Commerce is merged or
consolidated or to which substantially all of the properties and assets of
Texas Commerce are transferred as an entirety, provided that such other
Person has accepted appointment as Bank Collateral Agent under this
Agreement in accordance with subsection (f), and provided further, that
such entity is not an Affiliate of the Grantor, is authorized to exercise
corporate trust powers under the laws of the United States of America, any
State thereof or the District of Columbia and has all necessary trust
powers to perform its obligations hereunder, or (ii) a corporation or
banking association organized and doing business under the laws of the
United States of America, any State thereof or the District of Columbia,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least $100,000,000 and subject to
supervision or examination by Federal or State authority, provided,
however, that such institution is not an Affiliate of the Grantor and is
acceptable to the Loan Agent and the Banks, further provided that such
institution may be NationsBank of Texas, N.A. If the corporation or
banking association referred to in clause (ii) of the previous sentence
publishes reports of condition at least annually, pursuant to law or to
the requirements of said supervising or examining authority, then for the
purposes of this subsection, the combined capital and surplus of such
corporation or banking association shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Bank Collateral Agent shall cease to be
eligible in accordance with the provisions of this subsection, it shall
resign immediately in the manner and with the effect hereinafter specified
in this Section.
(e) The Bank Collateral Agent at any time may resign and be
discharged from the agency and trusts hereby created by giving written
notice thereof to the Grantor and the Loan Agent. Upon receiving such
notice of resignation, the Loan Agent on behalf of itself and the Banks
promptly shall appoint a successor Bank Collateral Agent reasonably
acceptable to the Majority Banks and, unless a Default or Event of Default
has occurred and is continuing to the Grantor by written instrument, in
duplicate, one copy of which instrument shall be delivered to the
resigning Bank Collateral Agent and one copy to the successor Bank
Collateral Agent. Photocopies of such instrument shall also be delivered
to the Grantor. If no successor Bank Collateral Agent shall have been so
appointed and have accepted appointment within 30 days after the giving of
such notice of resignation, the resigning Bank Collateral Agent may
petition any court of competent jurisdiction for the appointment of a
successor Bank Collateral Agent reasonably acceptable to the Loan Agent,
the Majority Banks and, unless a Default or Event of Default shall have
occurred and is continuing, the Grantor.
If at any time the Bank Collateral Agent shall cease to be
eligible in accordance with the provisions of subsection (d) and shall
fail to resign after written request therefor by the Loan Agent, or if at
any time the Bank Collateral Agent shall become incapable of acting, or
shall be adjudged bankrupt or insolvent, or a receiver of the Bank
Collateral Agent or of its property
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shall be appointed, or any public officer shall take charge or control of
the Bank Collateral Agent or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, or if a Default or an Event
of Default shall have occurred and is continuing, then the Loan Agent may
remove the Bank Collateral Agent and appoint a successor Bank Collateral
Agent reasonably acceptable to the Loan Agent, the Majority Banks and,
unless a Default or Event of Default shall have occurred and is
continuing, the Grantor by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Bank Collateral Agent so
removed and one copy to the successor Bank Collateral Agent. Photocopies
of such instrument shall also be delivered to the Grantor.
Both any resignation or removal of the Bank Collateral Agent
and the appointment of a successor pursuant to any of the provisions of
this Section shall become effective only upon acceptance of appointment by
the successor as provided in subsection (f).
(f) Any successor Bank Collateral Agent appointed as provided in
subsection (e) shall execute, acknowledge and deliver to the Grantor, to
the Loan Agent and to its predecessor Bank Collateral Agent an instrument
accepting such appointment hereunder, and thereupon the resignation or
removal of the predecessor Bank Collateral Agent shall become effective
and such successor Bank Collateral Agent, without any further action, deed
or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor hereunder, with the like effect
as if originally named as Bank Collateral Agent herein. The predecessor
Bank Collateral Agent shall transfer all amounts and Permitted Investments
in the Collateral Account to the successor Bank Collateral Agent for
deposit in the new Collateral Account and execute and deliver such
instruments, and take such other actions, as reasonably may be required
for more fully and certainly vesting and confirming in the successor Bank
Collateral Agent all such rights, powers, duties and obligations.
No successor Bank Collateral Agent shall accept appointment as
provided in this Section unless at the time of such acceptance such
successor Bank Collateral Agent shall be eligible under the provisions of
subsection (d).
Upon acceptance of appointment by a successor Bank Collateral
Agent as provided in this Section, the Loan Agent shall mail notice of the
succession of such Bank Collateral Agent hereunder to the Banks at their
addresses as shown in the Register and to the Grantor. If the Loan Agent
fails to mail such notice within 10 days after acceptance of appointment
by the successor Bank Collateral Agent, the successor Bank Collateral
Agent shall cause such notice to be mailed at the expense of the Loan
Agent.
(g) Any corporation into which the Bank Collateral Agent 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 Bank Collateral Agent shall be a party, or any corporation
succeeding to the business of the Bank Collateral Agent, shall be the
successor of the Bank Collateral Agent hereunder, provided such
corporation shall be eligible under the provisions of subsection (d),
without the execution or filing of any paper or any further act on the
part of any of the parties hereto, anything herein to the contrary
notwithstanding.
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SECTION 20. REPRESENTATIONS AND WARRANTIES OF BANK COLLATERAL AGENT. The
Bank Collateral Agent shall make the following representations and warranties on
which the Loan Agent, the Banks and the Grantor may rely:
(a) The Bank Collateral Agent is a national banking association duly
organized, validly existing, and in good standing under the laws of the
United States of America;
(b) The Bank Collateral Agent has full corporate power, authority
and legal right to execute, deliver, and perform the Agreement, and shall
have taken all necessary action to authorize the execution, delivery, and
performance by it of the Agreement;
(c) The Agreement shall have been duly executed and delivered by the
Bank Collateral Agent; and
(d) The Agreement shall constitute a legal, valid and binding
obligation of the Bank Collateral Agent enforceable in accordance with its
terms subject as to the enforcement of remedies (i) to applicable
bankruptcy, insolvency, reorganization, moratorium and other similar laws
affecting creditors' rights generally and (ii) to general principles of
equity (regardless of whether the enforcement of such remedies is
considered in a proceeding in equity or at law).
SECTION 21. LIMITATION ON RIGHTS OF LOAN AGENT AND BANKS. The Loan Agent
and the Banks shall not have any rights by virtue of any provision 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 Loan Agent or Bank
previously shall have given to the Bank Collateral Agent a written notice of
default and of the continuance thereof, and unless also the Majority Banks shall
have made written request upon the Bank Collateral Agent to institute such
action, suit or proceeding in its own name as Bank Collateral Agent hereunder
and shall have offered to the Bank Collateral Agent such reasonable indemnity as
it may require against the costs, expenses and liabilities to be incurred
therein or thereby, and the Bank Collateral Agent, for thirty (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, it being understood
and intended, and being covenanted expressly by each of the Loan Agent and the
Banks with each other and the Bank Collateral Agent, that no one or more of the
Loan Agent and the Banks shall have any right in any manner whatever by virtue
of any provision of this Agreement to affect, disturb or prejudice the rights of
any other of the Loan Agent and the Banks, or to obtain or seek to obtain
priority over or preference to any such other, or to enforce any right under
this Agreement. For the protection and enforcement of the provisions of this
Section, each of the Loan Agent, the Banks and the Bank Collateral Agent shall
be entitled to such relief as can be given either at law or in equity.
SECTION 22. AMENDMENT. No amendment or waiver of any provision of this
Agreement, nor consent to any departure herefrom, shall in any event be
effective unless the same shall be in writing and signed by the Majority Banks;
provided, however, that no such amendment shall (i) effectively reduce in any
manner the amount of, or delay the timing of, the amounts to be distributed to
the Loan Agent and the Banks; (ii) reduce the aforesaid percentage of Banks
which are required to consent to any such amendment; or (iii) reduce the
Specified Collateral Account Balance, without in each such case the consent of
all Banks.
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SECTION 23. SECURITY INTEREST ABSOLUTE. All rights of the Bank Collateral
Agent and the Loan Agent and the Banks, all obligations of Grantor hereunder and
the security interests hereunder, shall, to the extent permitted by applicable
law, be absolute and unconditional, irrespective of:
(a) any lack of validity or enforceability of the Credit Agreement,
the Notes or any of the other Loan Documents or any other agreement or
security document relating thereto or executed in connection with or
pursuant to any Loan Document;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations or any other amendment or
waiver of or any consent to any departure from the Credit Agreement, the
Notes or any of the other Loan Documents or any other agreement or
security document relating thereto or executed in connection with or
pursuant to any Loan Document;
(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 of the Obligations; or
(d) any other circumstance which might otherwise constitute a
defense available to, or a discharge of, Grantor, or any other Person that
is a party to any Loan Document in respect of the Obligations.
SECTION 24. CONTINUING SECURITY INTEREST. This Agreement creates a
continuing security interest in the Collateral and shall (a) remain in full
force and effect until the termination of the obligations of the Banks to make
Loans under the Credit Agreement and the payment in full of the Obligations; (b)
be binding upon Grantor, its successors and assigns, provided that Grantor may
not assign any of its rights or obligations under this Agreement without the
prior written consent of the Banks; and (c) inure to the benefit of and be
enforceable by the Bank Collateral Agent, the Loan Agent and the Banks and their
respective successors, transferees and assigns. Without limiting the generality
of the foregoing clause (c), the Loan Agent and the Banks may assign or
otherwise transfer any of their respective rights under this Agreement to any
other Person in accordance with the terms and provisions of Section 10.07 of the
Credit Agreement, and to the extent of such assignment or transfer such Person
shall thereupon become vested with all the benefits in respect thereof granted
herein or otherwise to the Loan Agent or the Banks, as the case may be. Upon the
termination of the obligations of the Banks to make Loans under the Credit
Agreement and payment in full of the Obligations and all amounts owing to the
Bank Collateral Agent, Grantor shall be entitled to the return, upon its request
and at its expense, of such of the Collateral as shall not have been sold or
otherwise applied pursuant to the terms hereof. At any time and from time to
time prior to such termination of the security interests, the Bank Collateral
Agent may release any of the Collateral with the prior written consent of the
Loan Agent and the Banks or as may be required hereby or by the Credit
Agreement. Upon any such termination of the security interests or release of
Collateral, the Bank Collateral Agent will, at the expense of Grantor, execute
and deliver to Grantor such documents as Grantor shall reasonably request to
evidence the termination of the security interests or the release of such
Collateral, as the case may be. To the extent that the Bank Collateral Agent,
the Loan Agent or any Bank receives any payment on account of the Obligations,
or any proceeds of Collateral are applied on account of the Obligations, and any
such payment or proceeds or any part thereof are subsequently invalidated,
declared to be fraudulent or preferential, set aside, subordinated, required to
be repaid to a trustee, receiver or any other person or entity under any
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bankruptcy act, state or federal law, common law or equitable cause, or
recovered from the Bank Collateral Agent, the Loan Agent or any Bank for any
other reason, then, to the extent of such payment or proceeds received, the
Obligations or part thereof intended to be satisfied shall be revived and
continue in full force and effect, as if such payment or proceeds had not been
received by the Bank Collateral Agent, the Loan Agent or any Bank and applied on
account of the Obligations, and the security interests shall continue to secure
such Obligations, and all rights of Grantor in the Collateral shall be subject
to such security interests.
SECTION 25. WAIVER OF MARSHALLING. All rights of marshalling of assets of
Grantor, including any such right with respect to the Collateral, are hereby
waived by Grantor.
SECTION 26. LIMITATION BY LAW. All rights, remedies and powers provided in
this Agreement may be exercised only to the extent that the exercise thereof
does not violate any applicable provision of law, and all the provisions of this
Agreement are intended to be subject to all applicable mandatory provisions of
law which may be controlling and to be limited to the extent necessary so that
they will not render this Agreement invalid, unenforceable, in whole or in part,
or not entitled to be recorded, registered or filed under the provisions of any
applicable law.
SECTION 27. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained in this Agreement or made in writing by
or on behalf of Grantor in connection herewith, shall survive the execution and
delivery of this Agreement until 365 or 366 days, as the case may be, after the
date on which the Commitment of the Banks to make Loans under the Credit
Agreement has been terminated and the Obligations have been paid in full. Any
investigation by any of the Loan Agent or the Banks shall not diminish in any
respect whatsoever their rights to rely on such representations and warranties.
SECTION 28. SEVERABILITY. The invalidity of any one or more covenants,
phrases, clauses, sentences or paragraphs of this Agreement shall not affect the
remaining portions of this Agreement, or any part thereof, and in case of any
such invalidity, this Agreement shall be construed as if such invalid covenants,
phrases, clauses, sentences or paragraphs had not been inserted.
SECTION 29. CAPTIONS. The captions this Agreement have been inserted for
convenience only and shall be given no substantive meaning or significance
whatever in construing the terms and provisions of this Agreement.
SECTION 30. NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of the
Bank Collateral Agent, the Loan Agent or any Bank 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 such right 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 31. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
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SECTION 32. GOVERNING LAW; SUBMISSION TO JURISDICTION. (A) THIS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF TEXAS.
(B) THE GRANTOR IRREVOCABLY AND UNCONDITIONALLY:
(I) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR FOR
RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT IN RESPECT THEREOF, TO THE
NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF THE STATE OF TEXAS,
THE COURTS OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF
TEXAS, AND APPELLATE COURTS FROM ANY THEREOF;
(II) WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH
PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO PLEAD OR
CLAIM THE SAME;
(III) AGREES THAT SERVICE OF PROCESS IN ANY SUCH LEGAL ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING OF A COPY THEREOF (BY REGISTERED OR
CERTIFIED MAIL OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL POSTAGE PREPAID)
TO THE GRANTOR AT 675 BERING, SUITE 710, HOUSTON, TEXAS 77057, OR AT SUCH
OTHER ADDRESS OF WHICH THE BANK COLLATERAL AGENT SHALL HAVE BEEN NOTIFIED
IN WRITING PURSUANT TO SECTION 34.
(IV) NOTWITHSTANDING THE FOREGOING, NOTHING HEREIN SHALL IN ANYWAY
AFFECT THE RIGHT OF THE BANK COLLATERAL AGENT, THE LOAN AGENT OR ANY BANK
OR THE GRANTOR TO BRING ANY ACTION ARISING OUT OF OR RELATING TO THE NOTES
OR THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COMPETENT COURT
ELSEWHERE HAVING JURISDICTION OVER THE GRANTOR, THE BANK COLLATERAL AGENT,
THE LOAN AGENT OR ANY BANK, AS THE CASE MAY BE, OR ITS PROPERTY.
SECTION 33. WAIVER OF JURY TRIAL. EACH OF THE BANK COLLATERAL AGENT, THE
GRANTOR, THE LOAN AGENT AND THE BANKS HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 34. NOTICES. All directions, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at, or, if a telecopy number is provided, telecopied (with
transmission confirmed by telephone) to, or mailed by first class or registered
mail, postage prepaid, to (i) in the case of the Grantor, 675 Bering, Suite 710,
Houston, Texas 77057, Attention: President, Telephone: (713) 977-2600, Telecopy:
(713) 977-2630, (ii) in the case of the Bank Collateral Agent, 600 Travis, 8th
Floor, Houston, Texas 77002, Attention: Vice President, Global Trust
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Services - F.I.R.C., Telephone: (713) 216-4181 Telecopy: (713) 216-4880; (iii)
in the case of the Loan Agent, 700 Louisiana Street, Houston, Texas 77002,
Attention: Senior Vice President, Corporate Banking Group, Telephone: (713)
247-6513, Telecopy: (713) 247-6719; and (iv) to any Bank, at the address set
forth under the heading "Domestic Lending Office" on the signature pages of the
Credit Agreement. Any such address or telephone or telecopy number may be
changed by the applicable Person by written notice to each other Person referred
to in clauses (i) through (iv).
SECTION 35. MERGER AND INTEGRATION OF DOCUMENTS. Except as specifically
stated otherwise herein, this Agreement and the other Loan Documents set forth
the entire understanding of the parties relating to the subject matter hereof,
and all prior understandings, written or oral, are superseded by this Agreement
and such Loan Documents. This Agreement may not be modified, amended, waived or
supplemented except as provided herein.
SECTION 36. NO INSOLVENCY PETITION AGAINST GRANTOR. The Bank Collateral
Agent hereby covenants and agrees that, prior to the date which is one year and
one day after the payment in full of the Obligations, it will not institute
against, or join any other Person in instituting against, the Grantor any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any federal or state bankruptcy or similar law. This
Section 36 shall survive the termination of this Agreement.
SECTION 37. BANK COLLATERAL AGENT AS PLEDGEE IN POSSESSION. Throughout the
term of this Agreement, the Bank Collateral Agent shall be a pledgee in
possession of the funds in the Collateral Account and shall have sole dominion
and control over the Collateral Account and the sole and exclusive right to
withdraw or transfer such funds in accordance with the express terms of this
Agreement, and the Grantor hereby appoints the Bank Collateral Agent to be the
true and lawful attorney of the Grantor for the purpose of making any such
withdrawal or transfer of such funds from the Collateral Account.
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IN WITNESS WHEREOF, the parties hereto, by their officers duly authorized,
have executed this Agreement as of the date first above written.
F.I.R.C., INC., a Delaware corporation
By: TOMMY A. MOORE, JR.
Tommy A. Moore, Jr.
President
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Bank Collateral Agent for the Loan
Agent and the Banks
By: RAFAEL HERRERA
Name:Rafael Herrera
Title: Vice President and Trust Officer
NATIONSBANK OF TEXAS, N.A., as Loan Agent
and a Bank
By: BILLY B. GREER
Name: Billy B. Greer
Title: Vice President
[Signature Page - Amended and Restated
Collateral Security Agreement - Page 1 of 1]
EXHIBIT 10.36
AMENDED AND RESTATED PURCHASE AGREEMENT
This Amended and Restated Purchase Agreement is made as of the 30th day of
October, 1996, by and between First Investors Financial Services, Inc., a Texas
corporation (the "Seller"), having its principal executive office at 675 Bering
Drive, Suite 710, Houston, Texas 77057, and F.I.R.C., Inc., a Delaware
corporation ("FIRC"), having its principal executive office at 675 Bering Drive,
Suite 710, Houston, Texas 77057.
WHEREAS, the Seller and FIRC desire to amend and restate that certain
Purchase Agreement dated as of October 16, 1992, as amended by the First
Amendment to Purchase Agreement dated as of November 5, 1993, and as further
amended by the Second Amendment to Purchase Agreement dated as of March 3, 1994;
NOW THEREFORE, for and in consideration of the premises and the mutual
covenants herein set forth and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, 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):
"Agent" shall have the meaning ascribed to it in the Credit
Agreement.
"Agreement" shall mean this Amended and Restated Purchase Agreement, as
the same may be amended, restated, modified, renewed or extended from time to
time.
"ALPI Insurance" shall have the meaning ascribed to it in the
Credit Agreement.
"Amount Financed" shall mean, 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" shall mean, with respect to a
Receivable, the annual rate of finance charges stated in such Receivable.
"Assignment" shall mean the document of assignment substantially in the
form attached to this Agreement as Exhibit "A".
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"Banks" shall have the meaning ascribed to it in the Credit
Agreement.
"Bank Collateral Agent" shall mean Texas Commerce Bank National
Association and any successor thereto appointed pursuant to Section 19 of the
Security Agreement.
"Business Day" shall have the meaning ascribed to it in the
Credit Agreement.
"Credit Agreement" shall mean that certain Amended and Restated Credit
Agreement dated as of October 30, 1996, among FIRC, the Banks and the Agent, and
any amendments, modifications, renewals or extensions thereof.
"Credit Guidelines" shall mean policies and procedures of the Seller,
relating to the operation of the automotive financing business of the Seller,
including, without limitation, the policies and procedures for determining the
creditworthiness of retail automotive installment sales contract customers, the
extension of credit to such customers and relating to the maintenance of retail
automotive installment sales contract accounts and collection of retail
automotive installment sales contract receivables, as such policies and
procedures may be amended from time to time.
"Credit Insurance" shall have the meaning ascribed to it in
the Credit Agreement.
"Disbursement Authorization" shall have the meaning ascribed
to it in the Escrow Agreement.
"Effective Time" shall mean, with respect to the sale of any Receivable
pursuant to this Agreement, the time at which the Escrow Agent, pursuant to a
valid Disbursement Authorization, disburses to or for the account of Seller
(upon the order of FIRC), the Purchase Price of such Receivable.
"ERISA" and "ERISA Event" shall have the meanings ascribed to them in the
Credit Agreement.
"Escrow Agent" shall have the meaning ascribed to it in the
Credit Agreement.
"Escrow Agreement" shall have the meaning ascribed to it in
the Credit Agreement.
"Financed Vehicle" shall have the meaning ascribed to it in
the Credit Agreement.
"FIRC" shall mean F.I.R.C., Inc., a Delaware corporation.
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"Lien" shall have the meaning ascribed to it in the Credit
Agreement.
"Loan Package" shall have the meaning ascribed to it in the
Servicing Agreement.
"Obligor" shall have the meaning ascribed to it in the Credit
Agreement.
"Person" shall have the meaning ascribed to it in the Credit
Agreement.
"Precomputed Receivable" means any Receivable under which the portion of a
payment allocable to earned interest (which may be referred to in the Receivable
as an add-on finance charge) and the portion allocable to the Amount Financed is
determined according to the sum of periodic balances or the sum of monthly
balances or any equivalent method of calculating monthly actuarial receivables.
"Purchase Amount" shall have the meaning ascribed to it in the
Credit Agreement.
"Purchase Price" shall mean, with respect to any Receivable sold by Seller
to FIRC pursuant to this Agreement, the outstanding principal balance of such
Receivable, computed in accordance with the Simple Interest Method, as of the
applicable Effective Time.
"Receivable" shall mean all of the present and future rights to payment
under any retail installment sales contract, arising from the sale of a Financed
Vehicle, which (i) Seller selects and tenders for sale to FIRC pursuant to the
provisions of Article II of this Agreement, and (ii) has been reviewed and
verified by the Servicer for inclusion in a Loan Package in conformity with the
procedures set forth at Section 3.04(a) of the Servicing Agreement.
"Security Agreement" shall have the meaning ascribed to it in
the Credit Agreement.
"Seller" shall mean First Investors Financial Services, Inc.,
a Texas corporation.
"Servicer" shall mean General Electric Capital Corporation, a New York
corporation, or its duly constituted successor appointed in accordance with the
terms of the Servicing Agreement.
"Servicing Agreement" shall mean that certain Amended and Restated
Servicing Agreement dated as of October 30, 1996 between FIRC and the Servicer,
and any amendments, modifications, renewals or extensions thereof.
"Simple Interest Method" shall have the meaning ascribed to it
in the Security Agreement.
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"UCC" shall have the meaning ascribed to it in the Security
Agreement.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
From time to time until the termination of this Agreement, the Seller
shall sell and transfer Receivables to FIRC, and FIRC shall purchase and pay for
such Receivables, as follows:
(a) SELECTION OF RECEIVABLES. The Seller shall select Receivables for sale
to FIRC hereunder in such amounts and at such times as Seller shall determine in
its sole discretion. The Seller's selection of any Receivable for sale to FIRC
shall be conclusively evidenced by the tender of such Receivable pursuant to
clause (b) immediately following.
(b) TENDER OF RECEIVABLES. The Seller shall tender a Receivable for sale
to FIRC by inclusion of such Receivable in a Loan Package delivered to the
Servicer, together with the documentation pertaining to such Receivable as
contemplated by Section 3.04(a) of the Servicing Agreement, which documentation
shall include a validly executed Assignment with respect to such Receivable.
(c) TRANSFER OF RECEIVABLES. As of the Effective Time with respect to any
Receivable, the Seller shall sell, transfer, assign and otherwise convey to
FIRC, without recourse, a 100% interest in (i) all right, title and interest of
the Seller in and to such Receivable, and all monies paid thereon, and due
thereon, at or after the Effective Time; (ii) the interest of the Seller in all
security interests and Liens in or on the Financed Vehicle and any accessions
thereto granted by an Obligor pursuant to such Receivable; (iii) the interest of
the Seller in any proceeds from claims on any physical damage, credit life,
credit disability, Credit Insurance, or other insurance policies covering such
Financed Vehicle or Obligor; (iv) the interest of the Seller in all rebates of
premiums and other amounts relating to insurance policies and other items
financed under such Receivables as of the Effective Time; and (v) the proceeds
of any and all of the foregoing.
(d) PAYMENT FOR RECEIVABLES. As of the Effective Time with respect to any
Receivable, FIRC shall purchase and pay for such Receivable by causing the
Purchase Price thereof to be disbursed to the Seller by the Escrow Agent in
accordance with Section 2.1 of the Escrow Agreement.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.01 REPRESENTATIONS AND WARRANTIES OF FIRC.
FIRC hereby represents and warrants to the Seller as of the date hereof:
(a) ORGANIZATION, ETC. FIRC has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, and has full corporate power and authority to execute and deliver this
Agreement and to perform the terms and provisions hereof.
(b) DUE AUTHORIZATION AND NO VIOLATION. This Agreement has been duly
authorized, executed and delivered by FIRC, and is the valid, binding and
enforceable obligation of FIRC except as the same may be limited by insolvency,
bankruptcy, reorganization or other laws relating to or affecting the
enforcement of creditors' rights or by general equity principles. The
consummation of the transactions contemplated by this Agreement, and the
fulfillment of the terms thereof, will not conflict with or result in a breach
of any of the terms or provisions of, or constitute a default under (in each
case material to FIRC), or (except as contemplated by the Security Agreement)
result in the creation or imposition of any Lien, charge or encumbrance (in each
case material to FIRC) upon any of the property or assets of FIRC pursuant to
the terms of any indenture, mortgage, deed of trust, loan agreement, guarantee,
lease financing agreement or similar agreement or instrument under which FIRC is
a debtor or guarantor, nor will such action result in any violation of the
provisions of the Certificate of Incorporation or the By-laws of FIRC.
(c) NO LITIGATION. No legal or governmental proceedings are pending to
which FIRC is a party or of which any property of FIRC is the subject, and no
such proceedings are threatened or contemplated by governmental authorities or
threatened by others other than such proceedings which will not have a material
adverse effect upon the general affairs, financial position, net worth or
results of operations (on an annual basis) of FIRC and will not materially and
adversely affect the performance by FIRC of its obligations under, or the
validity and enforceability of, this Agreement.
3.02 REPRESENTATIONS AND WARRANTIES OF THE SELLER.
(a) The Seller hereby represents and warrants to FIRC as of
the date hereof:
(i) ORGANIZATION, ETC. The Seller has been duly
incorporated and is validly existing as a corporation in good
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standing under the laws of the State of Texas, and is duly qualified to
transact business and is in good standing in each jurisdiction in the
United States of America in which the conduct of its business or the
ownership of its property requires such qualification
(ii) POWER AND AUTHORITY. The Seller has full power and authority to
sell and assign the property to be sold and assigned to FIRC hereunder and
has duly authorized such sale and assignment to FIRC by all necessary
corporate action. This Agreement has been duly authorized, executed and
delivered by the Seller and shall constitute the legal, valid and binding
obligation of the Seller except as the same may be limited by insolvency,
bankruptcy, reorganization or other laws relating to or affecting the
enforcement of creditors' rights or by general equity principles.
(iii) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement, and the fulfillment of the terms thereof,
will not conflict with or result in a breach of any of the terms or
provisions of, or constitute a default under (in each case material to the
Seller and its subsidiaries considered as a whole), or result in the
creation or imposition of any Lien, charge or encumbrance (in each case
material to the Seller and its subsidiaries considered as a whole) upon
any of the property or assets of the Seller pursuant to the terms of any
indenture, mortgage, deed of trust, loan agreement, guarantee, lease
financing agreement or similar agreement or instrument under which the
Seller is a debtor or guarantor, nor will such action result in any
violation of the provisions of the Articles of Incorporation or the
By-laws of the Seller.
(iv) NO PROCEEDINGS. No legal or governmental proceedings are
pending to which the Seller is a party or of which any property of the
Seller is the subject, and no such proceedings are threatened or
contemplated by governmental authorities or threatened by others, other
than such proceedings which will not have a material adverse effect upon
the validity or collectability of the Receivables, or upon the general
affairs, financial position, net worth or results of operations (on an
annual basis) of the Seller and its subsidiaries considered as a whole and
will not materially and adversely affect the performance by the Seller of
its obligations under, or the validity and enforceability of, this
Agreement.
(v) NO ADVERSE EVENTS. No event has occurred that would
have a material adverse effect on the Receivables or the
ability of the Seller to collect the Receivables or to perform
its obligations hereunder.
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(vi) SOLVENCY. The Seller is not insolvent and will not be rendered
insolvent as a result of the sale of Receivables contemplated by this
Agreement.
(vii) PLACE OF BUSINESS. The chief place of business and chief
executive office of the Seller is located at Houston, Texas and the
location of the offices where the instruments, documents, agreements,
books and records relating to the Receivables are kept is Buffalo, New
York. The Seller has not operated under any trade names and has not
changed its name, merged with or into or consolidated with any other
corporation or been the subject of any proceeding under Title 11, United
States Code (Bankruptcy).
(viii) TAXES. The Seller has filed all tax returns required to be
filed and has paid or made adequate provision for the payment of all its
taxes, assessments and other governmental charges.
(ix) INVESTMENT COMPANY. The Seller is not an
"investment company" within the meaning of the Investment
Company Act of 1940, as amended, or is exempt from the
provisions of such act.
(x) ERISA. The Seller is in compliance with ERISA in all material
respects. No ERISA Event has occurred or is expected to occur that might
result, directly or indirectly, in any lien being imposed on the property
of the Seller.
(b) The Seller makes the following representations and warranties as to
the Receivables on which FIRC relies in purchasing the Receivables. Such
representations and warranties speak as of the execution and delivery of this
Agreement, and as of the Effective Time and each date of determination
thereafter (except with respect to item (xii), which representation and warranty
shall speak only as of the Effective Time) with respect to each Receivable, but
shall survive the sale, transfer, and assignment of the Receivables to FIRC:
(i) CHARACTERISTICS OF RECEIVABLES. Each Receivable (a) shall have
been originated in the United States of America, shall be payable in U.S.
dollars by an Obligor which has provided a U.S. address as its most recent
billing address, shall have been fully and properly executed by the
parties thereto, shall have been purchased by the Seller and shall have
been validly assigned to the Seller, (b) shall have created or shall
create a valid, subsisting, and enforceable first priority security
interest in favor of the Seller in the Financed Vehicle, which security
interest is assignable by the Seller to FIRC, (c) shall contain customary
and enforceable provisions such that the rights and remedies of the holder
thereof shall be adequate for realization against the
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collateral of the benefits of the security, (d) shall provide for level
monthly payments (provided that the payment in the first or last month in
the life of the Receivable may be minimally different from the level
payment) that fully amortize the Amount Financed by maturity and yield
interest at the Annual Percentage Rate, (e) is an "Eligible Loan" as
defined in the policy of ALPI Insurance covering the Receivables, (f)
complies with the terms and conditions of the Credit Insurance, and (g) in
the case of a Precomputed Receivable, shall provide for, in the event that
such contract is prepaid, a prepayment that fully pays the principal
balance and includes a full month's interest, in the month of prepayment,
at the Annual Percentage Rate.
(ii) SELECTION OF RECEIVABLES. No selection procedures adverse to
FIRC shall have been utilized in selecting the Receivables to be sold to
FIRC pursuant to this Agreement.
(iii) COMPLIANCE WITH LAW. Each Receivable and the related sale of
the Financed Vehicle shall, at the relevant Effective Time, comply 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, the Texas Consumer Credit Code and
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.
(iv) BINDING OBLIGATION. Each Receivable shall represent the
genuine, legal, valid and binding payment obligation in writing of the
Obligor, enforceable by the holder thereof in accordance with its terms
subject to the effect of bankruptcy, insolvency, reorganization, or other
similar laws affecting the enforcement of creditors' rights generally.
(v) NO GOVERNMENT OBLIGOR. None of the Receivables
shall be due from the United States of America or any State or
from any agency, department, or instrumentality of the United
States of America or any State.
(vi) SECURITY INTEREST IN FINANCED VEHICLE. Immediately prior to the
sale, assignment, and transfer thereof pursuant hereto, each Receivable
shall be secured by a validly perfected first priority Lien and security
interest in the Financed Vehicle in favor of the Seller as secured party
or all necessary and appropriate actions shall have been commenced that
would result in the valid perfection of a first
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priority security interest in the Financed Vehicle in favor of
the Seller as secured party.
(vii) RECEIVABLES IN FORCE. No Receivable shall have been satisfied,
subordinated, or rescinded, nor shall any Financed Vehicle have been
released from the Lien granted by the related Receivable in whole or in
part.
(viii) NO WAIVER. No provision of a Receivable shall
have been waived.
(ix) NO AMENDMENTS. No Receivable shall have been amended such that
the number of the scheduled payments or the number of originally scheduled
due dates shall have been increased.
(x) NO DEFENSES. No right of rescission, setoff,
counterclaim or defense shall have been asserted or threatened
with respect to any Receivable.
(xi) NO LIENS. No Liens or claims shall have been filed for work,
labor, or materials relating to a Financed Vehicle that shall be Liens
prior to, or equal or coordinate with, the security interest in the
Financed Vehicle granted by the Receivable.
(xii) NO DEFAULT. Except for payment defaults continuing for a
period of not more than thirty days as of the Effective Time, no default,
breach, violation, or event permitting acceleration under the terms of any
Receivable shall have 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 shall
have arisen; and the Seller shall not waive any of the foregoing. No
Obligor on a Receivable has been identified by the Servicer or the Seller
in its computer files as having (i) commenced, or been subject to at any
time after such Obligor has entered into the installment sales contract
which constitutes the Receivable, a case, action or proceeding under any
law of any jurisdiction relating to bankruptcy, insolvency, reorganization
or relief of debtors, seeking relief with respect to such Obligor's debts,
or seeking to have such Obligor adjudicated bankrupt or insolvent, or
seeking to have a receiver, trustee, custodian or other similar official
appointed for such Obligor or for all or any substantial part of such
Obligor's assets or (ii) made a general assignment of such Obligor's
creditors, which assignment is then in full force and effect.
(xiii) INSURANCE. The Seller, in accordance with its
customary procedures, shall have determined that the Obligor
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has obtained or agreed to obtain physical damage insurance
covering the Financed Vehicle.
(xiv) TITLE. It is the intention of the Seller that each transfer
and assignment herein contemplated constitute a sale of the Receivables
from the Seller to FIRC and that the beneficial interest in and title to
the Receivables shall not be part of the debtor's estate in the event of
the filing of a bankruptcy petition by or against the Seller under any
bankruptcy law. No Receivable shall have been sold, transferred, assigned,
or pledged by the Seller to any Person other than FIRC. Immediately prior
to any transfer and assignment herein contemplated, the Seller shall have
good and marketable title to each Receivable free and clear of all Liens,
encumbrances, security interests, and rights of others and, immediately
upon the transfer thereof, FIRC shall have good and marketable title to
each Receivable, free and clear of all Liens, encumbrances, security
interests, and rights of others, except for the security interest of the
Bank Collateral Agent pursuant to the Security Agreement; and the transfer
shall have been perfected under the UCC.
(xv) LAWFUL ASSIGNMENT. No Receivable shall have been originated in,
or shall be subject to the laws of, any jurisdiction under which the sale,
transfer, and assignment of such Receivable under this Agreement shall be
unlawful, void, or voidable.
(xvi) ALL FILINGS MADE. All filings (including, without limitation,
UCC filings) necessary in any jurisdiction to give FIRC a first perfected
ownership interest in the Receivables shall have been made.
(xvii) ONE ORIGINAL. There shall be only one original
executed copy of each Receivable.
(xviii) NEW OR USED VEHICLES. Each Financed Vehicle shall have been
a new or used automobile or light truck at the time the related Obligor
executed the retail installment sale contract. Each retail installment
sales contract was sold to the Seller in the ordinary course of the
Seller's business and was created as a result of an advance by a bank or
factory authorized dealer directly to or for the benefit of an Obligor.
(xix) CHATTEL PAPER. Each Receivable constitutes
"chattel paper" under the UCC.
(xx) MATURITY OF RECEIVABLES. Each Receivable shall
have an original maturity of not greater than 60 months.
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(xxi) CONFORMITY OF DOCUMENTATION. The documentation contained in
the Loan Package with respect to each Receivable, as delivered to the
Servicer in accordance with Section 3.04(a) of the Servicing Agreement,
conforms in all material respects with the requirements of the Servicing
Agreement.
(xxii) ACCURACY OF STATEMENTS. All statements made to the Purchaser
pertaining to the sale of a Receivable, each document, book, record or
report delivered to the Purchaser or the Escrow Agent in connection
therewith, and the information set forth in the related Assignment, are
true and correct in all material respects and do not contain any untrue
statement of a material fact or any omission to state a material fact
necessary in order to make the statements made, in the light of the
circumstances under which they were made, not misleading.
(xxiii) CREDIT GUIDELINES. Each Receivable shall have
been created in accordance with, or under standards no less
stringent than the Credit Guidelines.
(xxiv) MINIMUM APR. Each Receivable has a minimum APR
of at least 13%.
(xxv) PAYMENTS TO SERVICER. Each Obligor is required to
make payments to a lockbox under the control of the Servicer.
(xxvi) RECEIVABLE NOT IMPAIRED. The Seller has not, at the time of
the sale to FIRC of each Receivable hereunder, in any manner impaired the
rights of FIRC in such Receivable.
ARTICLE IV
CONDITIONS
4.01 CONDITIONS TO OBLIGATIONS OF FIRC.
The obligation of FIRC to purchase the Receivables is subject to the
satisfaction of the following conditions:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of the Seller hereunder shall be true and correct at the Effective
Time with respect to each Receivable, with the same effect as if then made.
(b) DOCUMENTS TO BE DELIVERED BY THE SELLER.
(i) THE ASSIGNMENT. As provided herein, the Seller
shall have executed and delivered an Assignment with respect
to each Receivable. The Assignment shall be substantially in
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the form of Exhibit A hereto.
(ii) EVIDENCE OF UCC FILING. The Seller shall have recorded and
filed, at its own expense, a UCC-1 financing statement in each
jurisdiction in which filing is required by applicable law, executed by
the Seller, as seller of the Receivables, and naming FIRC, as purchaser of
the Receivables, and the Bank Collateral Agent as assignee, describing the
Receivables and the other property conveyed hereunder, meeting the
requirements of the laws of each jurisdiction and in such manner as is
necessary to perfect the sale, transfer, assignment and conveyance of such
Receivables to FIRC. The Seller shall deliver to FIRC and to the Bank
Collateral Agent a file-stamped copy, or other evidence of such filing
satisfactory to FIRC and the Bank Collateral Agent.
(iii) OTHER DOCUMENTS. All other documents comprising the Loan
Package as specified in Section 3.04(a) of the Servicing Agreement shall
have been delivered to the Servicer and verified by the Servicer in
accordance therewith, and such other documents as FIRC may reasonably
request shall have been delivered to FIRC.
4.02 CONDITIONS TO OBLIGATIONS OF THE SELLER.
The obligation of the Seller to sell the Receivables to FIRC is subject to
the satisfaction of the following conditions:
(a) REPRESENTATION AND WARRANTIES TRUE. The representations and warranties
of FIRC shall be true and correct at the Effective Time and each date of
determination thereafter with the same effect as if then made.
(b) RECEIVABLES PURCHASE PRICE. At the Effective Time with respect to each
Receivable, FIRC shall have delivered to the Seller the Purchase Price of each
Receivable, as provided in clause (d) of Article II, above.
ARTICLE V
COVENANTS OF THE SELLER
The Seller agrees with FIRC as follows:
5.01 PROTECTION OF RIGHT, TITLE AND INTEREST.
(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 ownership interest of FIRC in the Receivables and in the proceeds thereof.
The Seller shall deliver (or cause to be delivered) to FIRC file-
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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 by the Seller in accordance with paragraph (a)
above seriously misleading within the meaning of Section 9-402 of the UCC,
unless it shall have given FIRC, the Bank Collateral Agent and the Agent (at the
address noted in the Credit Agreement) at least sixty days' prior written notice
thereof and shall have filed appropriate amendments to all previously filed
financing statements or continuation statements prior to such changes.
(c) The Seller shall give FIRC, the Bank Collateral Agent and the Agent
(at the address noted in the Credit Agreement) at least sixty days' prior
written notice of any relocation of its principal executive office if, as a
result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall file any such amendment
prior to any such relocation. The Seller shall at all time maintain its
principal executive office within the United States of America.
(d) The Seller shall maintain its computer systems so that, from and after
the time of sale hereunder of the Receivables to FIRC, the Seller's master
computer records (including any back-up archives) that refer to a Receivable
shall indicate clearly the interest of FIRC in such Receivable and that such
Receivable is owned by FIRC and has been pledged to the Bank Collateral Agent.
Indication of FIRC's ownership of a Receivable shall be deleted from or modified
on the Seller's computer systems when, and only when, the Receivable shall have
been paid in full or repurchased.
(e) If at any time the Seller shall propose to sell, grant a security
interest in, or otherwise transfer any interest in automotive receivables to any
prospective purchaser, lender, or other transferee, the Seller shall give to
such prospective purchaser, lender, or other transferee computer tapes, records,
or print-outs (including any restored from back-up archives) that, if they shall
refer in any manner whatsoever to any Receivable, the same shall indicate
clearly that such Receivable has been sold to and is owned by FIRC and has been
pledged to the Bank Collateral Agent.
(f) Prior to the Effective Time with respect to each
Receivable, the Seller shall cause the following notation to be
stamped on the face of the retail installment sales contract
evidencing such Receivable: "FIRST INVESTORS FINANCIAL SERVICES,
INC. HAS SOLD AND ASSIGNED ALL RIGHT, TITLE AND INTEREST IN THIS
CONTRACT TO F.I.R.C., INC., WHICH HAS GRANTED A SECURITY INTEREST
IN THIS CONTRACT TO TEXAS COMMERCE BANK, N.A. AS COLLATERAL AGENT
FOR NATIONSBANK OF TEXAS, N.A. AND OTHERS.
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(g) Within sixty days after the Effective Time with respect to each
Receivable, the Seller shall give written notice by regular mail, addressed to
the Obligor under such Receivable, in form acceptable to FIRC, to the effect
that such Receivable has been sold and assigned to FIRC.
(h) The Seller shall permit FIRC and its agents at any time during normal
business hours to inspect, audit, and make copies of and abstracts from the
Seller's records regarding any Receivable.
(i) Upon request, the Seller shall furnish to FIRC, within five Business
Days, a list of all Receivables (by contract number and name of Obligor)
previously sold to FIRC pursuant to this Agreement.
5.02 OTHER LIENS OR INTERESTS. Except for the conveyances hereunder, the
Seller will not sell, pledge, assign or transfer to any other Person, or grant,
create, incur, assume or suffer to exist any Lien on any interest in the
Receivables, and the Seller shall defend the right, title, and interest of FIRC
in, to and under the Receivables against all claims of third parties claiming
through or under the Seller.
5.03 COSTS AND EXPENSES. The Seller agrees to pay all reasonable costs and
disbursements in connection with the perfection, as against all third parties,
of FIRC's right, title and interest in and to the Receivables, and in and to the
Financed Vehicles and the Seller shall take, at its expense, any additional
action required by FIRC, the Bank Collateral Agent, or the Agent in order to
protect FIRC's and the Banks' interests in the Receivables and the Financed
Vehicles and, in connection therewith, shall execute and file such financing
statements, or amendments thereto, continuation statements, and such other
instruments, documents, or notices as may be requested by FIRC, the Bank
Collateral Agent, or the Agent.
5.04 INDEMNIFICATION. The Seller shall indemnify FIRC, the Bank Collateral
Agent, the Agent and the Banks for any liability as a result of the failure of a
Receivable to be originated in compliance with all requirements of law and for
any breach of any of its representations and warranties contained herein. These
indemnity obligations shall be in addition to any obligation that the Seller may
otherwise have.
5.05 SALE. Seller agrees to treat this conveyance for all purposes
(including without limitation tax and financial accounting purposes) as a sale
on all relevant books, records, tax returns, financial statements and other
applicable documents.
5.06 SELLER'S RECEIPT OF PAYMENTS. Seller agrees that any
amounts received by Seller in respect of any of the Receivables
after the Effective Time applicable thereto shall be received in
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trust for the benefit of the Purchaser, shall be segregated from other funds of
the Seller and shall forthwith be paid over to the Purchaser in the same form as
so received (with any necessary endorsement).
ARTICLE VI
MISCELLANEOUS PROVISIONS
6.01 OBLIGATION OF SELLER. The obligations of the Seller under this
Agreement shall not be affected by reason of the invalidity, illegality or
irregularity of any Receivable.
6.02 REPURCHASE EVENTS. The Seller hereby covenants and agrees with FIRC
(for the benefit of FIRC, the Agent, the Banks, or the Bank Collateral Agent, as
their interest may appear), that the Seller shall promptly repurchase from FIRC
any Receivable, for the Purchase Amount in cash, with respect to which either of
the following events ("Repurchase Events") shall have occurred: (i) any
representation or warranty of the Seller contained in Section 3.02(b) shall have
been breached with respect to such Receivable as of the Effective Time or as of
any date of determination, or (ii) FIRC, or any servicing agent who may at the
time be servicing such Receivable for FIRC, shall have failed to receive, within
sixty days following the applicable Effective Time, (A) a Tax Collector's
Receipt for Texas Title Application/Registration/Motor Vehicle Tax (commonly
known as a "white slip") in proper form, (B) a Certificate of Title in proper
form issued by the Texas Department of Transportation, or (C) the equivalent
certificates or registrations in proper form issued by the appropriate
authorities of other states if applicable, reflecting FIRC (or the Seller) as
the lienholder thereon with respect to the Financed Vehicle covered by such
Receivable. This repurchase obligation of the Seller shall constitute the sole
remedy of FIRC, the Agent, the Banks or the Bank Collateral Agent against the
Seller with respect to any Repurchase Event. With respect to all Receivables
repurchased by the Seller pursuant to this Agreement, upon payment of the
Purchase Amount for such repurchased Receivables, FIRC shall assign, without
recourse, representation or warranty, to the Seller all of FIRC's right, title
and interest in and to such Receivables, and all security and documents relating
thereto.
6.03 TERMINATION. The obligations of Seller to sell Receivables to FIRC,
and of FIRC to purchase Receivables from Seller, pursuant to this Agreement
shall terminate at such time as the Obligations, as defined in the Security
Agreement, are paid in full; provided, however, that (i) the representations and
warranties of Seller pursuant to Section 3.02(b) of this Agreement, insofar as
they relate to Receivables sold to FIRC pursuant to this Agreement prior to such
termination, shall survive such termination; (ii) with respect to such
Receivables, the obligations of Seller set forth in Sections 5.01, 5.02, 5.03
and 5.06
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pertaining to the protection of such Receivables, and the obligation of Seller
set forth in Section 5.04 pertaining to indemnification under certain
circumstances, shall survive such termination; and (iii) with respect to such
Receivables, the repurchase obligations of Seller pursuant to Section 6.02 shall
survive such termination.
6.04 AMENDMENT. This Agreement may be amended from time to time by a
written instrument duly executed and delivered by the Seller and the Purchaser;
PROVIDED, HOWEVER, that no such amendment shall be effective without the prior
written consent of the Agent.
6.05 COLLATERAL ASSIGNMENT. Notwithstanding anything to the contrary
contained herein, the Seller (i) acknowledges and consents that FIRC has
assigned its rights hereunder and its interest herein as collateral for its
indebtedness under the Credit Agreement and its Obligations (as defined in the
Security Agreement), and (ii) agrees to attorn to the Bank Collateral Agent or
the Agent in the event of their succession to the rights and interest of FIRC
hereunder by reason of foreclosure or otherwise.
6.06 POWER OF ATTORNEY. The parties recognize that, notwithstanding the
sale and assignment of a Receivable to FIRC pursuant to this Agreement, it may
not be practicable under applicable state recordation procedures to substitute
FIRC for the Seller as the lienholder identified on the certificate of title or
similarly recorded instrument pertaining to the related Financed Vehicle.
Accordingly, with respect to each Receivable, the Seller hereby grants to FIRC,
and to any servicing agent who may service such Receivable for FIRC, an
irrevocable power of attorney, coupled with an interest, to enforce, in the
name, place and stead of the Seller, all rights and remedies of the holder of
such Receivable and of the security interests in the related Financed Vehicle.
The Seller agrees to provide, promptly upon the request of FIRC or such
servicer, any additional documentation which they may reasonably require to
evidence, or otherwise to more perfectly vest, the irrevocable power of attorney
granted hereby. The Seller also agrees, at the Agent's request and at its
expense, to execute such documents as are required under Section 501.114 of the
Texas Certificate of Title act to assign the liens recorded on the Certificates
of Title covering the Financed Vehicles from the Seller to FIRC, if the Agent
shall have reasonably determined that such assignment is necessary to the
enforcement of the related Receivable or Receivables.
6.07 WAIVERS. No failure or delay on the part of any party 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 further exercise thereof or the exercise of any other
power, right or remedy.
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6.08 NOTICES. All communications and notices directed to either party
pursuant to this Agreement shall be in writing addressed or delivered to it at
its address shown in the introductory paragraph of this Agreement or at such
other address as may be designated by it by notice to other party and, if mailed
or transmitted by facsimile transmission, shall be deemed given when mailed or
transmitted.
6.09 COSTS AND EXPENSES. The Seller will pay all expenses incident to the
performance of its obligations under this Agreement and the Seller agrees to pay
all reasonable out-of-pocket costs and expenses of FIRC, in connection with the
perfection as against third parties of FIRC's right, title and interest in and
to the Receivables and the enforcement of any obligation of the Seller
hereunder.
6.10 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 provisions of this
Agreement.
6.11 GOVERNING LAW. This Agreement and the Assignment shall
be governed by and construed in accordance with the laws of the
State of Texas.
6.12 COUNTERPARTS. This Agreement may be executed in two or more
counterparts and by different parties on separate counterparts, each of which
shall be an original, but all of which together shall constitute one and the
same instrument.
6.13 NO BANKRUPTCY PETITION AGAINST FIRC. The Seller hereby covenants and
agrees that, prior to the date which is one year and one day after the repayment
of all amounts borrowed by FIRC under the Credit Agreement, it will not
institute against or join any person in instituting against FIRC any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
similar proceedings under the laws of the United States of any state of the
United States.
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IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
and year first above written.
FIRST INVESTORS FINANCIAL SERVICES,
INC.
By: TOMMY A. MOORE
Tommy A. Moore, Jr., President
F.I.R.C., Inc.
By: TOMMY A. MOORE
Tommy A. Moore, Jr., President
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EXHIBIT 10.37
AMENDED AND RESTATED SERVICING AGREEMENT
This Amended and Restated Servicing Agreement dated as of October 30,
1996, is between F.I.R.C., Inc., a Delaware corporation ("FIRC"), and General
Electric Capital Corporation, as Servicer ("Servicer").
ARTICLE I
INTRODUCTION
Contemporaneously with the execution of this Agreement, FIRC has entered
into an Amended and Restated Credit Agreement of even date herewith among FIRC,
the Agent (as defined therein) and the Banks (as defined therein) and, in
connection therewith, FIRC and the Servicer desire hereby to amend and restate
that certain Servicing Agreement between them dated as of October 16, 1992, as
amended by the First Amendment to Servicing Agreement dated as of November 4,
1993, as further amended by the Second Amendment to Servicing Agreement dated as
of March 1, 1994, and as further amended by the Third Amendment to Servicing
Agreement dated as of June 1, 1995;
NOW THEREFORE, for and in consideration of the premises and the mutual
covenants herein set forth and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, FIRC and the Servicer
hereby agree as follows:
ARTICLE II
DEFINITIONS
SECTION 2.01. DEFINITIONS.
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
"AGREEMENT" means this Amended and Restated Servicing Agreement, as the
same may be amended, restated, modified, renewed or extended from time to
time.
"ALPI INSURANCE" means the policy or policies of insurance covering each
of the underlying installment sales contracts held by FIRC issued by (i)
National Union Fire Insurance
SERVICING AGREEMENT
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Company of Pittsburgh, Pa., or (ii) Agricultural Excess and Surplus
Insurance Company in the forms attached hereto as Exhibits "A" and "A-1",
respectively.
"AMOUNT FINANCED" with respect to a Receivable means the amount advanced
under the Receivable toward the purchase price of the Financed Vehicle and
any related costs.
"ANNUAL PERCENTAGE RATE" or "APR" of a Receivable means the annual rate of
finance charges stated in the Receivable.
"BANKS" means the financial institutions listed on the signature pages of
the Credit Agreement and any financial institutions that may hereafter
become a party thereto in accordance with the provisions thereof.
"BUSINESS DAY" means any day other than a Saturday, a Sunday, or a day on
which banking institutions in Dallas, Texas or the State of the location
of the Corporate Trust Office shall be authorized or obligated by law,
executive order, or governmental decree to be closed.
"COLLATERAL ACCOUNT" means the account referred to in Section 5.01.
"COLLATERAL AGENT" means, initially, Texas Commerce Bank National
Association, as collateral agent and any successor collateral agent
appointed pursuant to Section 19 of the Security Agreement.
"COLLATERAL AGENT OFFICER" means the chairman or vice-chairman of the
board of directors, the chairman or vice-chairman of the executive
committee of the board or directors, the president, any vice president,
the secretary, any assistant secretary, the treasurer, any assistant
treasurer, the cashier, any assistant cashier, any trust officer or
assistant trust officer, the controller and any assistant controller or
any other officer of the Collateral Agent 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 such officer's
knowledge of and familiarity with the particular subject.
"COLLECTION PERIOD" means a calendar month, which shall end on the
respective Determination Date for such calendar month.
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"CORPORATE TRUST OFFICE" means the office of the Collateral Agent at which
its corporate trust business shall be administered, which office at the
date of this Agreement is located at:
Texas Commerce Bank National Association
600 Travis, 8th Floor
Houston, Texas 77002
Attention: Vice President,
Corporate Trust Department
"CREDIT AGREEMENT" means the Amended and Restated Credit Agreement dated
as of October 30, 1996, among FIRC, the Banks and the Loan Agent,
individually and as agent for the Banks.
"CREDIT INSURANCE" means the ALPI Insurance, GAP Insurance and VSI
Insurance covering the Receivables issued in the name of FIRC with the
Loan Agent named as an additional insured for the ratable benefit of the
Banks.
"DEALER" means the dealer who sold a Financed Vehicle and who originated
and assigned the related Receivable to First Investors under an existing
agreement between such dealer and First Investors.
"DETERMINATION DATE" means the last day of each calendar month.
"EFFECTIVE TIME" means the time at which the purchase of any Receivable by
FIRC from First Investors shall be effective in accordance with the terms
of the Purchase Agreement.
"ELIGIBLE SERVICER" means any established institution, having a
consolidated net worth of not less than $100,000,000 or the accounts of
which are consolidated for financial accounting purposes with any
established institution having such a consolidated net worth and whose
regular business shall include the servicing of automotive receivables.
"FACILITY" means the $55,000,000 revolving credit facility created and
evidenced by the Credit Agreement.
"FINANCED AMOUNT" means, with respect to any Receivable included in a Loan
Package delivered to the Servicer pursuant to Section 3.04(a), the
outstanding principal balance thereof at the date of delivery as reflected
by the original sales contract/security agreement included in the
corresponding Receivable File.
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"FINANCED VEHICLE" means an automobile or light-duty truck, together with
all accessions thereto, securing an Obligor's indebtedness under the
related Receivable.
"FIRST INVESTORS" means First Investors Financial Services, Inc., a
Texas corporation.
"FIRC" means F.I.R.C., Inc., a Delaware corporation.
"FIRC EVENT OF DEFAULT" means an event specified in Section 8.02.
"GAP INSURANCE" means the policy or policies of insurance issued by
Agricultural Excess and Surplus Insurance Company in the form attached
hereto as Exhibit "A-2".
"LIEN" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind other than tax liens, mechanics' liens, and any
liens which attach to a Receivable by operation of law.
"LIQUIDATED RECEIVABLE" means any Receivable liquidated by the Servicer
through sale of the Financed Vehicle or otherwise.
"LIQUIDATION PROCEEDS" means the monies collected from whatever source,
during the respective Collection Period, on a Liquidated Receivable
(including, without limitation, all proceeds from the Credit Insurance)
net of the sum of any out-of-pocket amounts expended by the Servicer
(regardless of whether or not reimbursable under the related insurance
policy) plus any amounts required by law to be remitted to the Obligor.
"LOAN AGENT" shall mean NationsBank of Texas, N.A., as agent for the Banks
under the Credit Agreement.
"LOAN PACKAGE" shall have the meaning ascribed to it in Section
3.04(a).
"OBLIGOR" on a Receivable means the purchaser or co-purchasers of the
Financed Vehicle or any other Person who owes payments under the
Receivable.
"OFFICER'S CERTIFICATE" means a certificate signed by the chairman of the
board, the president, any vice chairman of the board, any vice president,
the treasurer, the controller or any assistant treasurer or any assistant
controller of FIRC, First Investors, or a Servicing Employee of the
Servicer, as appropriate.
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"OPINION OF COUNSEL" means a written opinion of counsel who may but need
not be counsel to FIRC or the Servicer, which counsel shall be acceptable
to the Collateral Agent and which opinion of counsel shall, in addition to
the addressee specified, be addressed to the Collateral Agent.
"PERSON" means any individual, corporation (including a business trust),
estate, partnership, joint venture, association, joint stock company,
trust, unincorporated organization or other entity, or government or any
agency or political subdivision thereof.
"PRECOMPUTED RECEIVABLE" means any Receivable under which the portion of a
payment allocable to earned interest (which may be referred to in the
Receivable as an add-on finance charge) and the portion allocable to the
Amount Financed is determined according to the sum of periodic balances or
the sum of monthly balances or any equivalent method of calculating
monthly actuarial receivables.
"PURCHASE AGREEMENT" means the Amended and Restated Purchase Agreement
dated as of October 30, 1996 relating to the purchase by FIRC from First
Investors of the Receivables.
"PURCHASE AMOUNT" means the amount, as of a Determination Date, required
to prepay in full the respective Receivable under the terms thereof
including interest to the end of the month of purchase. In the event a
Receivable is liquidated through payment by FIRC or repurchased by First
Investors pursuant to Section 3.02, the Purchase Amount shall include any
out-of-pocket expenses which are otherwise reimbursable hereunder.
"PURCHASED RECEIVABLE" means a Receivable (i) purchased as of the
respective Determination Date by the Servicer pursuant to Section 4.07 or
(ii) liquidated through payment by FIRC or repurchased by First Investors
as of the respective Determination Date pursuant to Section 3.02.
"RECEIVABLE" means any retail installment sales contract which has been
purchased by FIRC pursuant to the Purchase Agreement and is pledged as
collateral for the Facility pursuant to the terms of the Credit Agreement
and the Security Agreement.
"RECEIVABLE FILES" means the documents specified in Section 3.03.
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"SCHEDULED PAYMENTS" on a Precomputed Receivable means that portion of the
payment required to be made by the Obligor during the respective
Collection Period sufficient to amortize the principal balance over the
term of the Receivable and to provide interest at the APR.
"SECURITY AGREEMENT" means the Amended and Restated Collateral Security
Agreement dated October 30, 1996 among FIRC, the Collateral Agent, the
Loan Agent and the Banks whereby, among other things, in order to secure
the payment of its borrowings under the Facility, FIRC has granted to the
Collateral Agent a first priority security interest in and to, among other
things, the Receivables and the Collateral Account.
"SERVICER" means General Electric Capital Corporation as the servicer of
the Receivables, and each successor to General Electric Capital
Corporation (in the same capacity) pursuant to Section 7.03 or 8.03.
"SERVICER EVENT OF DEFAULT" means an event specified in Section 8.01.
"SERVICER'S CERTIFICATE" means a certificate completed and executed on
behalf of the Servicer by a Servicing Employee of the Servicer pursuant to
Section 4.09.
"SERVICING EMPLOYEE" means any employee of the Servicer involved in, or
responsible for, the administration and servicing of the Receivables whose
name appears on a list of servicing employees furnished to FIRC and the
Collateral Agent by the Servicer, as such list may from time to time be
amended.
"SERVICING FEE" means the fee payable to the Servicer for services
rendered during the respective Collection Period, determined pursuant to
Section 4.08.
"SIMPLE INTEREST METHOD" means the method of allocating a fixed level
payment to principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the fixed
rate of interest multiplied by the unpaid principal balance multiplied by
the period of time elapsed since the preceding payment of interest was
made.
"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.
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"STATE" means any state or commonwealth of the United States of
America, or the District of Columbia.
"SUB-SERVICER" means any Person appointed by the Servicer as a
sub-servicer pursuant to Section 4.12.
"UCC" means the Uniform Commercial Code as in effect from time to time in
the respective jurisdiction.
"VSI INSURANCE" means the policy or policies of insurance underwritten by
Agricultural Excess and Surplus Insurance Company in the form attached
hereto as Exhibit "A-2".
SECTION 2.02. USAGE OF TERMS.
With respect to all terms in this Agreement, the singular includes the
plural and the plural the singular; words importing any gender include the other
genders; references to "writing" include printing, typing, lithography, and
other means of reproducing words in a visible form; references to agreements and
other contractual instruments include all subsequent amendments thereto or
changes therein entered into in accordance with their respective terms and not
prohibited by this Agreement; references to Persons include their permitted
successors and assigns; and the term "including" means "including without
limitation."
ARTICLE III
THE RECEIVABLES
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF FIRC.
FIRC makes the following representations and warranties as to
the Receivables on which the Servicer may rely in accepting the responsibilities
of Servicer hereunder. Such representations and warranties speak (i) as of the
execution and delivery of this Agreement, but shall survive such execution and
delivery, and (ii) as of the Effective Time of the sale of each Receivable to
FIRC under the Purchase Agreement.
(i) CHARACTERISTICS OF RECEIVABLES. Each Receivable (a) shall have
been originated in the United States of America, shall have been fully and
properly executed by the parties thereto, shall have been purchased by
FIRC from First Investors and shall have been validly assigned to FIRC;
(b) shall have created a valid, subsisting and enforceable first priority
security interest in favor of First Investors in the
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SERVICING AGREEMENT
<PAGE>
Financed Vehicle, which security interest has been assigned by First
Investors to FIRC, (c) shall contain customary and enforceable provisions
such that the rights and remedies of the holder thereof shall be adequate
for realization against the collateral of the benefits of the security,
(d) shall provide 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 by
maturity and yield interest at the Annual Percentage Rate, (e) is an
"Eligible Loan" as defined in the policy of ALPI Insurance covering the
Receivables, and (f) in the case of a Precomputed Receivable, shall
provide for, in the event that such contract is prepaid, a prepayment that
fully pays the principal balance and includes a full month's interest, in
the month of prepayment, at the Annual Percentage Rate.
(ii) COMPLIANCE WITH LAW. Each Receivable and the sale of the
Financed Vehicle complies with all requirements of applicable federal,
State, and local laws, and regulations thereunder, including, without
limitation, usury laws, the Federal Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Fair Credit Reporting Act, the Fair Debt Collection-
Practices Act, the Federal Trade Commission Act, the Magnuson-Moss
Warranty Act, the Federal Reserve Board's Regulations B and Z, the Texas
Consumer Credit Code and 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.
(iii) BINDING OBLIGATION. Each Receivable shall represent the
genuine, legal, valid, and binding payment obligation in writing of the
Obligor, enforceable by the holder thereof in accordance with its terms.
(iv) NO GOVERNMENT OBLIGOR. None of the Receivables
shall be due from the United States of America or any State or
from any agency, department, or instrumentality of the United
States of America or any State.
(v) SECURITY INTEREST IN FINANCED VEHICLE. Immediately prior to the
sale, assignment, and transfer thereof under the Purchase Agreement, each
Receivable shall be secured by a validly perfected first priority Lien and
security interest in the Financed Vehicle in favor of First Investors as
secured party or all necessary and appropriate actions shall have been
commenced that would result in the valid perfection of a first
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<PAGE>
priority security interest in the Financed Vehicle in favor of First
Investors as secured party.
(vi) RECEIVABLES IN FORCE. No Receivable shall have been satisfied,
subordinated, or rescinded, nor shall any Financed Vehicle have been
released from the lien granted by the related Receivable in whole or in
part.
(vii) NO WAIVER. No provision of a Receivable shall
have been waived.
(viii) NO AMENDMENTS. No Receivable shall have been amended such
that the number of the Obligor's Scheduled Payments in the case of a
Precomputed Receivable or the number of originally scheduled due dates in
the case of a Simple Interest Receivable shall have been increased.
(ix) NO DEFENSES. No right of rescission, set off,
counterclaim, or defense shall have been asserted or threat-
ened with respect to any Receivable.
(x) NO LIENS. To the best of FIRC's knowledge, no liens or claims
shall have been filed for work, labor, or materials relating to a Financed
Vehicle that shall be liens prior to, or equal or coordinate with, the
security interest in the Financed Vehicle granted by the Receivable.
(xi) NO DEFAULT. Except for payment delinquencies continuing for a
period of not more than thirty days as of the Effective Time with respect
to any Receivable, no default, breach, violation, or event permitting
acceleration under the terms of such Receivable shall have 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 such Receivable shall have arisen; and FIRC shall not
waive any of the foregoing.
(xii) INSURANCE. First Investors, in accordance with its customary
procedures, shall have determined that the Obligor has obtained or agreed
to obtain physical damage insurance.
(xiii) TITLE. It is the intention of FIRC that each transfer and
assignment contemplated by the Purchase Agreement constitute a sale of the
Receivables from First Investors to FIRC and that the beneficial interest
in and title to the Receivables shall not be part of the debtor's estate
in the event of the filing of a bankruptcy petition by or against
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SERVICING AGREEMENT
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First Investors under any bankruptcy law. No Receivable has been sold,
transferred, assigned or pledged by First Investors or FIRC to any Person
other than the pledge to the Collateral Agent pursuant to the Security
Agreement. FIRC has good and marketable title to each Receivable free and
clear of all Liens, encumbrances, security interests, and rights of others
except for the security interest of the Collateral Agent under the
Security Agreement.
(xiv) LAWFUL ASSIGNMENT. No Receivable shall have been originated
in, or shall be subject to the laws of, any jurisdiction under which the
sale, transfer, and assignment of such Receivable from First Investors to
FIRC under the Purchase Agreement, or the pledge of such Receivable by
FIRC to the Collateral Agent under the Security Agreement, shall be
unlawful, void, or voidable.
(xv) ALL FILINGS MADE. All filings (including, without limitation,
UCC filings) necessary in any jurisdiction to give the Collateral Agent a
first perfected security interest in each Receivable shall have been made
as of the relevant Effective Time.
(xvi) ONE ORIGINAL. There shall be only one original
executed copy of each Receivable, which shall be delivered to
the Servicer in accordance with Section 3.03.
(xvii) CHATTEL PAPER. Each Receivable constitutes
"chattel paper" under the UCC.
(xviii) MATURITY. Each Receivable shall have an
original maturity of not more than 60 months.
(xix) LOCATION OF OFFICE. The principal executive
office of FIRC is located in Houston, Texas.
(xx) AGENT FOR SERVICE. The agent for service for FIRC shall be CT
Corporation System, 811 Dallas Avenue, Houston, Texas 77002.
(xxi) NO INSOLVENT OBLIGORS. As of the Effective Time
with respect to any Receivable, no Obligor on such Receivable
is shown on the Receivable Files to be the subject of a
bankruptcy proceeding.
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SECTION 3.02. LIQUIDATION OR REPURCHASE UPON BREACH.
FIRC and the Servicer shall each promptly inform the other, in writing,
with a copy to the Collateral Agent, upon the discovery of any breach of FIRC's
representations and warranties made pursuant to Section 3.01. Unless the breach
shall have been cured by the second Determination Date following such written
notice, FIRC shall pay to the Servicer an amount equal to the Purchase Amount of
any Receivable materially and adversely affected by the breach or shall cause
First Investors to repurchase the same pursuant to its obligations under the
Purchase Agreement. In either event, FIRC shall remit the Purchase Amount, in
the manner specified in Section 5.04. 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(i)(d) or (f) shall include such additional amount as
shall be necessary to provide the full amount of interest as contemplated
therein. The sole remedy of the Servicer with respect to a breach of
representations and warranties pursuant to Section 3.01 shall be to require the
liquidation or repurchase of the affected Receivables as above provided.
SECTION 3.03. CUSTODY OF RECEIVABLE FILES.
To assure uniform quality in servicing the Receivables and to reduce
administrative costs, FIRC, upon the execution and delivery of this Agreement,
hereby revocably appoints the Servicer, and the Servicer hereby accepts such
appointment, to act as the agent of the Collateral Agent as custodian (such
appointment being subject to revocation to the extent provided in Section 3.07)
of the following documents or instruments which shall be delivered to the
Servicer, as custodian for the Collateral Agent, with respect to each
Receivable:
1. Agreement of Obligor to provide physical damage insurance
or binder
2. Copy of application for title with lien of First Investors disclosed
therein which has been presented, together with tender of filing fee, to
designated agent of the Texas Department of Transportation in accordance with
Section 501.113 of Texas Certificate of Title Act (or equivalent documents under
other applicable state laws)
a. White Slip (or other title documents under
applicable state law)
b. Letter of Guaranty
3. Original sales contract/security agreement evidencing the
Receivable signed by Obligor
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SERVICING AGREEMENT
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4. Factory invoice (new car) or loan to value evaluation
(used car)
5. Original credit application (signed by Obligor)
6. Credit Bureau reports
7. Insurance score sheet
8. ALPI, GAP and VSI insurance certificate
9. Credit life & disability insurance certificate,
application or policy to the extent obtained by the
Obligor
10. (a) Assignment and Power of Attorney, transferring title
from First Investors to FIRC
(b) Power of Attorney in favor of Servicer from First
Investors
11. Equifax report
The Servicer shall not be responsible for the custody and maintenance of
any of the foregoing documents that have not been delivered to it or obtained by
the Servicer in the course of servicing the Receivables pursuant to this
Agreement.
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SECTION 3.04. DUTIES OF SERVICER AS CUSTODIAN.
(a) RECEIPT AND VERIFICATION OF RECEIVABLES. From time to
time, FIRC shall deliver or cause to be delivered to the Servicer a
loan package ("Loan Package") consisting of two or more Receivables,
each of which shall contain (i) the complete Receivable File
pertaining to each Receivable included in the Loan Package, together
with a documentation checklist itemizing the contents of each such
Receivable File, (ii) a copy of the Loan Disbursement and Data Sheet
in the form attached hereto as Exhibit "B-1", which FIRC shall have
delivered to the Loan Agent, pertaining to each Receivable included
in the Loan Package, and (iii) a copy of the Summary Loan
Disbursement and Data Sheet in the form attached hereto as Exhibit
"B-2", which FIRC shall have delivered to the Loan Agent,
identifying all Receivables included in the Loan Package and
reflecting the aggregate Financed Amounts all of such Receivables.
Promptly upon receipt of any complete Loan Package, the Servicer
shall review such Loan Package to confirm that (i) each Receivable
File included in such Loan Package contains the documents enumerated
in Section 3.03(2), and (ii) the Financed Amount set forth in the
accompanying Summary Loan Disbursement and Data Sheet accurately
reflects the aggregate Financed Amounts of all Receivables included
in such Loan Package. If the Servicer shall have confirmed the
foregoing, it shall deliver to the Loan Agent and FIRC a Loan
Verification Certificate in the form attached hereto as Exhibit
"B-3". Any other provision of this Agreement to the contrary
notwithstanding, the Servicer shall have no liability to FIRC or any
other Person as a result of any error or omission in the Loan
Verification Certificate, except for its own willful misconduct or
gross negligence, and in the event that liability should be imposed
on the Servicer by reason of its gross negligence, such liability
shall not exceed an amount equal to the outstanding balance
(including principal and interest accrued thereon) of any
Receivables affected or impaired by such error or omission.
(b) SAFEKEEPING. The Servicer shall hold the Receivable Files
on behalf of the Collateral Agent and maintain such accounts,
records, and computer systems pertaining to each Receivable File in
a manner that is consistent with customary servicing practices. In
performing its duties as custodian the Servicer shall act with
reasonable care, using that degree of skill and
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attention that the Servicer exercises with respect to the receivable
files relating to comparable automotive receivables that the
Servicer services for itself or others. The Servicer shall promptly
report to the Collateral Agent any material failure on its part to
hold the Receivable Files and maintain its accounts, records, and
computer systems as herein provided and promptly take appropriate
action to remedy any such failure, it being understood that the
Servicer shall have no responsibility with respect to Receivable
Files (or any portion thereof) not delivered to the Servicer.
Nothing herein shall be deemed to require an initial review or any
periodic review by the Collateral Agent of the Receivable Files.
(c) MAINTENANCE OF AND ACCESS TO RECORDS. The Servicer shall
maintain each Receivable File at one of its offices specified in
Exhibit "C" to this Agreement, or at such other office in the United
States as shall be specified to FIRC and the Collateral Agent by
written notice delivered promptly, but in no event later than 20
days after any change in location. The Servicer may temporarily move
individual Receivable 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 Servicer
shall make available to FIRC and the Collateral Agent a list of
locations of the Receivable Files, and the related accounts, records
and computer systems maintained by the Servicer at such times as
FIRC or the Collateral Agent shall reasonably request.
(d) RELEASE OF DOCUMENTS. Upon written instruction from the
Collateral Agent, the Servicer shall release any Receivable File to
the Collateral Agent, the Collateral Agent's agent, or the
Collateral Agent's designee, as the case may be, at such place or
places as the Collateral Agent may designate, as soon as
practicable. The Servicer shall not be responsible for any
Receivable File so released until such time, if any, as it has been
returned to the Servicer.
SECTION 3.05. INSTRUCTIONS; AUTHORITY TO ACT.
To the extent that the Servicer is authorized or required under this
Agreement to act upon the instructions of the Collateral Agent with respect to
the custody of the Receivable Files, the Servicer shall be deemed to have
received proper instructions with
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SERVICING AGREEMENT
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respect to the Receivable Files upon its receipt of written instructions signed
by a Collateral Agent Officer.
SECTION 3.06. CUSTODIAN'S INDEMNIFICATION.
The Servicer as custodian shall indemnify FIRC, for any breach of its
obligations as custodian hereunder, to the extent specified in Section 7.02.
SECTION 3.07. EFFECTIVENESS AND TERMINATION.
The Servicer's appointment as custodian shall become effective as of the
date hereof and shall continue in full force and effect until such time as all
of the rights and obligations of the Servicer shall have been terminated in
accordance with the provisions of this Agreement.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.01. DUTIES OF SERVICER.
The Servicer as agent for FIRC (to the extent provided herein) shall
manage, service, administer and make collections on the Receivables (other than
Purchased Receivables and any Receivable assigned to any insurer) with
reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to comparable automotive receivables that it services for
itself or others. The Servicer's duties shall include, to the extent specified
herein, collection and posting of payments, responding to inquiries of Obligors
on such Receivables, investigating delinquencies, sending payment coupons to
Obligors, accounting for collections, and furnishing monthly statements to FIRC
and the Collateral Agent as provided herein. Subject to the provisions of
Section 4.02, the Servicer shall follow its customary standards, policies, and
procedures in performing its duties as Servicer. Without limiting the generality
of the foregoing, and subject to the provisions of Section 4.06, the Servicer is
authorized and empowered to execute and deliver, on behalf of itself or FIRC any
and all instruments of satisfaction or cancellation, or partial or full release
or discharge, and all other comparable instruments, with respect to the Financed
Vehicles securing the Receivables. If the Servicer, in its sole discretion,
determines that it is necessary or desirable to commence a legal proceeding to
enforce a Receivable, the Servicer shall consult with FIRC to determine whether
to commence such a legal proceeding. If the Servicer and FIRC agree to commence
legal proceedings with respect to such
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Receivable, then (i) the costs and expenses (including, without limitation, any
legal fees) incurred in connection with such legal proceeding shall be borne by
FIRC, and (ii) the Servicer may reimburse itself for its reasonable
out-of-pocket expenses incurred in connection with such legal proceedings prior
to depositing any recoveries received by the Servicer from such legal proceeding
in the Collateral Account pursuant to Section 5.02. FIRC shall furnish the
Servicer with any powers of attorney, including any requisite power of attorney
from First Investors, and any other documents reasonably necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties hereunder.
SECTION 4.02. COLLECTION OF RECEIVABLE PAYMENTS.
The Servicer shall make reasonable efforts to collect all payments called
for under the terms and provisions of the Receivables as and when the same shall
become due and shall follow such collection procedures as it follows with
respect to comparable automotive receivables that it services for itself or
others. The Servicer may in its discretion grant extensions, rebates or
adjustments on a Receivable or waive any late payment charge or any other fees
that may be collected in the ordinary course of servicing a Receivable
consistent with its customary servicing procedures.
SECTION 4.03. REALIZATION UPON RECEIVABLES.
The Servicer shall use its reasonable best efforts, consistent with its
customary servicing procedures, to repossess or otherwise convert the ownership
of the Financed Vehicle securing any Receivable as to which the Servicer shall
have determined that no satisfactory arrangement can be made for collection of
payments, and the Servicer shall use its best efforts to remarket the
repossessed Financed Vehicles in the same manner that the Servicer remarkets its
own financed vehicles of a like kind, and FIRC shall pay all third-party
expenses of remarketing in addition to all other fees and expenses payable by
FIRC hereunder. The foregoing shall be subject to the provision that, in any
case in which the Financed Vehicle shall have suffered damage, the Servicer
shall not expend funds in connection with the repair or the repossession of such
Financed Vehicle unless it shall determine in its discretion that such repair
and/or repossession will increase the Liquidation Proceeds by an amount greater
than the amount of such expenses; provided, however, that the Servicer shall
incur no liability hereunder if such repair and/or possession does not, in fact,
increase the Liquidation Proceeds by an amount greater than the amount of such
expenses. Notwithstanding any provision of this
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Agreement to the contrary, the Servicer shall not be obligated to institute any
action for repossession through judicial proceedings unless it shall determine
in its reasonable discretion that such action would increase the Liquidation
Proceeds by an amount greater than the amount of expenses incurred by it in
connection with such proceeding; provided, however, that the Servicer shall
incur no liability hereunder if such proceeding does not, in fact, increase the
Liquidation Proceeds by an amount greater than the amount of expenses incurred
by it in connection with such proceeding. The Servicer may reimburse itself for
its reasonable out-of-pocket expenses incurred in connection with the
repossession or disposition of a Financed Vehicle prior to depositing any
Liquidation Proceeds with respect thereto in the Collateral Account pursuant to
Section 5.02.
With respect to any Receivable, the Obligor of which has filed bankruptcy,
if it is not referred by the Servicer to outside legal counsel the Servicer
shall be entitled to receive a one time fee of $250 in respect of such
Receivable, and, if it is so referred, the Servicer shall be entitled to
reimbursement of the fees and expenses of such counsel. The Servicer shall have
no obligation under the Agreement to take any action to realize upon any
recourse to Dealers.
SECTION 4.04. INSURANCE AND TITLE TRACKING.
The Servicer shall promptly notify FIRC and the Collateral Agent, by
delivery of a Notice of Noninsurance in the form attached hereto as Exhibit "D",
identifying any Receivable with respect to which the Servicer has not received,
within 45 days after the Servicer enters the Receivable into its tracking
system, a certificate verifying insurance from each of the providers of Credit
Insurance.
The Servicer, in accordance with its customary servicing procedures, shall
monitor the contractual requirement that each Obligor shall maintain physical
damage insurance covering the Financed Vehicle as of the execution date of the
Receivable. The Servicer shall track the expirations and cancellations of
insurance policies required to be maintained by Obligors and shall send reminder
notices to Obligors whose insurance policies have expired and default letters to
Obligors who fail to obtain or maintain required coverages. The Servicer shall
notify the Collateral Agent and FIRC on a monthly basis of Obligors who have
failed to obtain or maintain such coverages. The Servicer may subcontract such
insurance services to a third party.
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FIRC shall undertake to cause the proper Certificates of Title issued by
the Texas Department of Transportation, or the equivalent certificates or
registrations issued by the appropriate authorities of other States, if
applicable, to reflect FIRC (or First Investors) as the lienholder thereon with
respect to any Financed Vehicle covered by a Receivable. The Servicer shall
establish procedures to track and verify the receipt of proper Certificates of
Title issued by the Texas Department of Transportation, or the equivalent
certificates or registrations issued by the appropriate authorities of other
States if applicable, reflecting FIRC (or First Investors) as the lienholder
thereon with respect to any Financed Vehicle covered by a Receivable. In the
event that the Servicer does not receive such documentation with respect to any
Receivable, within 120 days after the Servicer enters such Receivable into its
tracking system, the Servicer shall promptly notify FIRC and the Collateral
Agent by delivery of a Notice of Title Discrepancy in the form attached hereto
as Exhibit "E". The Servicer shall have no obligations hereunder to cause any
such Certificate or Title or equivalent certificates to reflect FIRC (or First
Investors) as the lienholder thereon with respect to any Financed Vehicle
covered by a Receivable.
SECTION 4.05. MAINTENANCE OF SECURITY INTERESTS IN FINANCED
VEHICLES.
The Servicer shall, in accordance with its customary servicing procedures,
cooperate with FIRC in taking such steps as are necessary to maintain perfection
of the security interest created by each Receivable in the related Financed
Vehicle. FIRC hereby authorizes the Servicer to take such steps as are necessary
to reperfect such security interest on behalf of FIRC in the event of the
relocation of a Financed Vehicle or for any other reason. Without limiting the
foregoing, the Servicer shall take such steps as are necessary to assure that
any remarketing of repossessed Financed Vehicles under consignment arrangements
with dealers or other third parties are effected in such manner as to assure
that the priority of the security interest of FIRC therein is not impaired.
Notwithstanding the foregoing or any other provision of this Agreement, the
Servicer shall have no obligation to effect any change in the notation of First
Investors as the lienholder on any title documents relating to the Financed
Vehicles or to cause any such title documents to be endorsed or delivered to
FIRC.
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SECTION 4.06. COVENANTS OF SERVICER.
Except as may otherwise be required by any applicable law, rule,
regulation, order or decree, the Servicer shall not (i) impair FIRC's ownership
of the Receivables, or (ii) release the Financed Vehicle securing any such
Receivable from the security interest granted by such Receivable, in whole or in
part, except upon the expiration of twenty days following (a) payment in full by
the Obligor thereunder, (b) repossession, or (c) payment of final settlement
with a physical damage insurance carrier.
SECTION 4.07. PURCHASE OF RECEIVABLES UPON BREACH.
The Servicer and FIRC shall promptly inform the other, in writing (with a
copy to the Collateral Agent), upon the discovery of any breach of Section 4.06.
Unless the breach shall have been cured by the second Determination Date
following such discovery (or, at the Servicer's election, the first following
Determination Date), the Servicer shall purchase the related Receivable. In
consideration of the purchase of such Receivable, the Servicer shall remit the
Purchase Amount in the manner specified in Section 5.04. The sole remedy of FIRC
with respect to a breach of Section 4.06 shall be to require the Servicer to
purchase Receivables pursuant to this Section 4.07.
SECTION 4.08. SERVICING COMPENSATION.
The Servicing Fee with respect to each Collection Period, which shall be
withheld by the Servicer from collections on Receivables prior to remittance to
the Collateral Account as provided in Section 5.02, shall equal (i) $12.45 for
each Receivable being serviced by the Servicer as of the tenth day of such
Collection Period, plus (ii) $13.25 for each new Receivable which is initially
received by the Servicer for servicing during such Collection Period, plus (iii)
$75.00 for each Financed Vehicle repossessed and remarketed.
SECTION 4.09. SERVICER'S MONTHLY REPORTS.
On or before the eighth day after each Determination Date, the Servicer
shall deliver to FIRC and the Collateral Agent the following reports with
respect to the preceding Collection Period: (i) a Servicer's Certificate
substantially in the form of Exhibit "F" hereto (on which the "principal portion
of amount collected", the "interest portion of amount collected" and the
"aggregate principal balance of the Receivables as of the Determination Date"
shall be computed in accordance with the Simple Interest Method),
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(ii) a Trial Balance and Collections Report substantially in the form of Exhibit
"F-1" hereto, and (iii) a Monthly Delinquency Report substantially in the form
of Exhibit "F-2" hereto. Such reports shall be presumed correct and accurate
unless, within thirty days after receipt thereof, FIRC or the Collateral Agent
delivers to the Servicer by registered or certified mail, written objection
specifying the error or errors contained in such reports, in which event the
Servicer's sole liability shall be to make appropriate adjustments correcting
such error.
SECTION 4.10. NOTICE OF DEFAULT.
The Servicer shall deliver to FIRC and the Collateral Agent promptly after
having obtained knowledge thereof, but in no event later than 5 Business Days
thereafter, written notice in an Officer's Certificate of any event which with
the giving of notice or lapse of time, or both, would become a Servicer Event of
Default under Section 8.01. FIRC shall deliver to the Collateral Agent and the
Servicer, promptly after having obtained knowledge thereof, but in no event
later than 5 Business Days thereafter, written notice in an Officer's
Certificate of any event which with the giving of notice or lapse of time, or
both, would become a FIRC Event of Default under Section 8.02.
SECTION 4.11. SERVICER EXPENSES.
Except as otherwise reimbursable hereunder, the Servicer shall be required
to pay all expenses incurred by it in connection with its activities hereunder,
including taxes imposed on the Servicer.
SECTION 4.12. APPOINTMENT OF SUB-SERVICER.
The Servicer may at any time appoint a Sub-servicer to perform any of the
duties or obligations of the Servicer hereunder; provided, however, that such
appointment shall not relieve the Servicer of its responsibility with respect to
such duties and obligations. The fees and expenses of the Sub-servicer shall be
as agreed between the Servicer and its Sub-servicer from time to time and FIRC
shall have no responsibility therefor.
SECTION 4.13. PROCESSING OF CLAIMS UNDER CREDIT INSURANCE.
The Servicer will administer the filings of claims under the policies of
Credit Insurance 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 such policies. The Servicer shall use reasonable efforts to
file such notices and claims on a timely basis after obtaining knowledge of
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the events giving rise to such claims, subject to the servicing standard set
forth in Section 4.01; provided, however, that the Servicer shall have no
responsibility in connection with the resolution of any dispute that may arise
between FIRC and such carriers with respect to the settlement of any such
claims.
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 insurance policies, in connection with filing such claims
perform any obligations of the named insured under any of the foregoing
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 this Agreement, the Servicer
shall not be responsible to FIRC (i) for any act or omission to act done in
order to comply with the requirements or satisfy any provisions of any of the
foregoing insurance policies or (ii) for any act, absent willful misconduct or
gross negligence, or omission to act done in compliance with this Agreement. In
the case of any inconsistency between this Agreement and the terms of any
insurance policy, the Servicer shall comply with the latter.
SECTION 4.14. AGENCY STATUS.
The parties hereto agree and acknowledge that to the extent General
Electric Capital Corporation is named in any title document, UCC financing or
continuation statement, insurance policy, Receivable document or court document
as a lienholder, secured party, loss payee, owner of a Financed Vehicle or
agent, or in another similar capacity, General Electric Capital Corporation is
acting in such capacity as agent of FIRC for the sole purpose of facilitating
the servicing of the Receivables and has no equitable interest in the
Receivables, except such as it may have by virtue of its purchase of a
Receivable pursuant to this Agreement.
ARTICLE V
DISTRIBUTIONS
SECTION 5.01. COLLATERAL ACCOUNT.
FIRC represents to the Servicer that, contemporaneously with the execution
of this Agreement, the Collateral Agent shall establish the Collateral Account
in accordance with the requirements of Section 2 of the Security Agreement.
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SECTION 5.02. COLLECTIONS.
The Servicer shall remit, within ten Business Days after each Determination
Date, to the Collateral Account all payments by or on behalf of the Obligors
(other than Purchased Receivables), and all Liquidation Proceeds, both as
collected during the Collection Period. The Servicer shall remit such
collections to the Collateral Account in immediately available funds and from
the time of receipt of any of the amounts specified in this paragraph until
deposit thereof in the Collateral Account, the Servicer shall not be required to
segregate such amounts from other funds held by it. Except as otherwise provided
in Section 5.04, the foregoing requirements for deposit in the Collateral
Account shall be exclusive, it being understood and agreed that, without
limiting the generality of the foregoing, the Servicer shall withhold from the
Collateral Account, (a) the Servicing Fee as provided in Section 4.08 and (b)
any amounts reimbursable to the Servicer under this Agreement, including,
without limitation, any out-of-pocket expenses incurred by the Servicer in
repossessing a Financed Vehicle pursuant to Section 4.03 or commencing a legal
proceeding to enforce a Receivable pursuant to Section 4.01. Moreover, the
Servicer may instruct the Collateral Agent to withdraw from the Collateral
Account and deliver to the Servicer (a) amounts deposited in error, and (b)
chargebacks attributable to errors in posting, returned checks, or rights of
offset for amounts that should not have been paid or that must be refunded as a
result of a successful claim or defense under bankruptcy or similar laws.
SECTION 5.03. APPLICATION OF COLLECTIONS.
All collections for the Collection Period shall be applied by the Servicer
as follows:
With respect to each Receivable (other than a Purchased Receivable),
payments by or on behalf of the Obligor shall be applied first, in the case of
Precomputed Receivables, to the Scheduled Payment and, in the case of Simple
Interest Receivables, to be applied to interest and principal in accordance with
the Simple Interest Method. With respect to Precomputed Receivables, any
remaining excess shall be applied to prepay the Precomputed Receivable.
SECTION 5.04. ADDITIONAL DEPOSITS.
The Servicer and FIRC, as the case may be, shall deposit or
cause to be deposited in the Collateral Account the aggregate
Purchase Amount required to be paid by it pursuant to Section 4.07
or 3.02, respectively, with respect to Purchased Receivables. All
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such deposits shall be made in immediately available funds on the Business Day
next following the purchase of the Purchased Receivable.
SECTION 5.05. NET DEPOSITS.
As an administrative convenience, the Servicer will be permitted to make
the deposit of collections on the Receivables for or with respect to the
Collection Period net of distributions to be made to the Servicer with respect
to the Collection Period or amounts payable to or withdrawable by the Servicer
pursuant to this Agreement. The Servicer, however, will account to FIRC and the
Collateral Agent as if all deposits, distributions and transfers were made
individually.
ARTICLE VI
FIRC
SECTION 6.01. REPRESENTATIONS OF FIRC.
FIRC makes the following representations on which the Servicer may rely in
accepting the responsibilities of Servicer hereunder. The representations speak
as of the execution and delivery of the Agreement and shall survive such
execution and delivery.
(i) ORGANIZATION AND GOOD STANDING. FIRC is duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Delaware, with power and authority to own its properties and to conduct its
business as such properties shall be currently owned and such business is
presently conducted, and had at all relevant times, and has, power, authority,
and legal right to acquire and own the Receivables.
(ii) DUE QUALIFICATION. FIRC is duly qualified to do business as a foreign
corporation and is in good standing under the laws of, and shall have obtained
all necessary licenses and approvals in, all jurisdictions in which the
ownership or lease of property or the conduct of its business shall require such
qualifications, licenses or approvals.
(iii) POWER AND AUTHORITY. FIRC has the power and authority to execute and
deliver this Agreement and to carry out its terms, and the execution, delivery,
and performance of this Agreement has been duly authorized by FIRC by all
necessary corporate action.
(iv) BINDING OBLIGATION. This Agreement constitutes a legal,
valid, and binding obligation of FIRC enforceable in accordance
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with its terms, subject as to the enforcement of remedies (x) to applicable
bankruptcy, insolvency, reorganization, moratorium, and other similar laws
affecting creditors' rights generally and (y) to general principles of equity
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law).
(v) NO VIOLATION. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof will not 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 FIRC, or any indenture, agreement, or other
instrument to which FIRC 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 as
contemplated by this Agreement); nor violate any law or any order, rule, or
regulation applicable to FIRC of any court or of any federal or state regulatory
body, administrative agency, or other governmental instrumentality having
jurisdiction over FIRC or its properties and no consent, approval,
authorization, order, registration or qualification of or with any court,
regulatory authority or other governmental agency or body is required for the
execution and delivery of this Agreement, or the consummation of the
transactions contemplated thereby.
(vi) NO PROCEEDINGS. There are no proceedings or investiga-
tions pending, or, to FIRC's best knowledge, threatened, before any
court, regulatory body, administrative agency, or other governmen-
tal instrumentality having jurisdiction over FIRC or its proper-
ties: 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 FIRC of
its obligations under, or the validity or enforceability, of this
Agreement.
SECTION 6.02. LIABILITY OF FIRC; INDEMNITIES.
FIRC shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by FIRC under this Agreement.
(i) FIRC shall indemnify, defend and hold harmless the Servicer and its
respective officers, directors, agents and employees from and against any taxes
that may at any time be asserted against the Servicer with respect to the
Receivables, including any sales, gross receipts, general corporation, tangible
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personal property, privilege, or license taxes and costs and expenses in
defending against the same.
(ii) FIRC shall indemnify, defend and hold harmless the Servicer, its
parents, subsidiaries, affiliates and the directors, officers, employees,
partners, agents, successors and assigns of each of such companies from and
against any claim, action, loss, damage, penalty, fine, cost, expense or other
liability, including all court costs and reasonable attorneys' fees incurred in
enforcing this indemnity or defending any claim or action, directly or
indirectly resulting from or arising out of the transactions contemplated by
this Agreement or FIRC's performance of its duties under this Agreement,
including without limitation, any misrepresentation or breached warranty under
this Agreement.
(iii) FIRC shall indemnify, defend and hold harmless the Servicer and any
director, officer, employee or agent of the Servicer from and against any and
all costs, expenses, losses, claims, damages and liabilities incurred in
connection with any legal action or proceeding relating to this Agreement, other
than any such cost, expense, loss, claim, damage or liability for which the
Servicer provides an indemnity pursuant to Section 7.02 or for which the
Servicer is otherwise entitled to reimbursement under this Agreement.
Indemnification and rights of reimbursement under this Section 6.02 shall
survive the termination of this Agreement and shall include, without limitation,
reasonable fees and expenses of counsel and any other expenses incurred in
connection with preparing for, investigating or defending any such claims,
damages, losses or liabilities, which FIRC shall reimburse as incurred by the
indemnified party. If FIRC shall have made any indemnity payments pursuant to
this Section and the recipient thereafter shall collect any of such amounts from
others, the recipient shall repay such amounts to FIRC, without interest.
SECTION 6.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF FIRC.
Any Person (a) into which FIRC may be merged or consolidated, (b) which may
result from any merger or consolidation to which FIRC shall be a party, or (c)
which may succeed to the properties and assets of FIRC substantially as a whole,
which Person in any of the foregoing cases executes an agreement or assumption
to perform every obligation of FIRC under this Agreement, shall be the successor
to FIRC 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
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effect to such transaction, no representation or warranty made pursuant to
Section 3.01 shall have been breached and no FIRC Event of Default, and no event
that, after notice or lapse of time, or both, would become a FIRC Event of
Default shall have happened and be continuing, (ii) FIRC shall have delivered to
the Collateral Agent an Officer's Certificate and an Opinion of Counsel each
stating that such consolidation, merger, or succession and such agreement or
assumption comply with this Section 6.03 and that all conditions precedent, if
any, provided for in this Agreement relating to such transaction have been
complied with and (iii) FIRC shall have delivered to the Collateral Agent an
Opinion of Counsel either (A) stating that, in the opinion of such counsel, all
financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary fully to preserve and protect the
security interest of the Collateral Agent 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.
Notwithstanding anything herein to the contrary, the execution of the foregoing
agreement or assumption and compliance with clauses (i), (ii) or (iii) above
shall be conditions to the consummation of the transactions referred to in
clauses (a), (b) or (c) above. The provisions of this Section 6.03 are expressly
subject to the covenant of FIRC under the Credit Agreement that it shall not
without the consent of the Loan Agent, merge or consolidate with or into, or
convey, transfer, lease, or otherwise dispose of (whether in one transaction or
in a series of transactions) any of its assets (whether now owned or hereafter
acquired).
SECTION 6.04. LIMITATION ON LIABILITY OF FIRC AND OTHERS.
FIRC and any director or officer or employee or agent of FIRC may rely in
good faith on the advice of counsel or on any document of any kind, PRIMA FACIE
properly executed and submitted by any Person respecting any matters arising
hereunder. FIRC shall not be under any obligation to appear in, prosecute, or
defend any legal action that shall not be incidental to its obligations under
this Agreement, and that in its opinion may involve it in any expense or
liability.
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ARTICLE VII
THE SERVICER
SECTION 7.01. REPRESENTATIONS OF SERVICER.
The Servicer makes the following representations to FIRC as of the
execution and delivery of this Agreement, which representations shall survive
such execution and delivery:
(i) ORGANIZATION AND GOOD STANDING. The Servicer is duly organized and
validly existing as a corporation in good standing under the laws of the state
of its incorporation, with power and authority to own its properties and to
conduct its business as such properties are currently owned and such business is
presently conducted, and had at all relevant times, and shall have, power,
authority, and legal right to service the Receivables and to hold the Receivable
Files as custodian as provided herein.
(ii) DUE QUALIFICATION. The Servicer is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary material
licenses and approvals in all jurisdictions in which the servicing of the
Receivables as required by this Agreement shall require such qualifications.
(iii) POWER AND AUTHORITY. The Servicer shall have the power and authority
to execute and deliver this Agreement and to carry out its terms; and the
execution, delivery, and performance of this Agreement shall have been duly
authorized by the Servicer by all necessary corporate action.
(iv) BINDING OBLIGATION. This Agreement shall constitute a legal, valid,
and binding obligation of the Servicer enforceable in accordance with its terms
subject as to the enforcement of remedies (x) to applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting
creditors' rights generally and (y) to general principles of equity (regardless
of whether the enforcement of such remedies is considered in a proceeding in
equity or at law).
(v) NO VIOLATION. The consummation by the Servicer of the transactions
contemplated by this Agreement and the fulfillment by the Servicer of the terms
hereof shall not 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
material default under, the articles of incorporation or bylaws of the Servicer,
or any indenture, agreement, or other instrument to which the Servicer is a
party or by which it shall be bound; nor violate any law or any
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order, rule, or regulation applicable to the Servicer of any court or of any
federal or state regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Servicer or its properties, which
conflict, breach, default or violation would have a material and adverse affect
on the ability of the Servicer to perform its obligations hereunder.
(vi) NO PROCEEDINGS. There are no proceedings or investiga-
tions relating to the Servicer pending, or to the Servicer's
knowledge, threatened, before any court, regulatory body,
administrative agency, or other governmental instrumentality having
jurisdiction over the Servicer or its properties: A) asserting the
invalidity of this Agreement, 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 Servicer of
its obligations under, or the validity or enforceability of, this
Agreement.
SECTION 7.02. INDEMNITIES OF SERVICER.
The Servicer shall indemnify, defend, and hold harmless FIRC, its
directors, officers, employees, agents, successors and assigns, respectively,
from and against any claim, action, loss, damage, penalty, fine, cost, expense
or other liability, including all court costs and reasonable attorneys' fees
incurred in enforcing this indemnity or defending any claim or action, directly
resulting from any breach of any representation or warranty made by the Servicer
in this Agreement or directly resulting from the Servicer's willful misconduct,
bad faith or gross negligence. The right of indemnification provided hereby
shall survive the termination of this Agreement. If the Servicer shall have made
any indemnity payments pursuant to this Section and the recipient thereafter
collects any of such amounts from others, the recipient shall promptly repay
such amounts to the Servicer, without interest.
SECTION 7.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SERVICER.
Any Person (a) into which the Servicer may be merged or consolidated (b)
which may result from any merger or consolidation to which the Servicer shall be
a party, or (c) which may succeed to the properties and assets of the Servicer
substantially as a whole, which Person executed an agreement of assumption to
perform every obligation of the Servicer hereunder, shall be the successor to
the Servicer under this Agreement without further act on the part of any of the
parties to this Agreement; provided however, that
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immediately after giving effect to such transaction, no Servicer Event of
Default specified in clauses (iii) or (iv) of Section 8.01, and no event which,
after notice or lapse of time, or both, would become such a Servicer Event of
Default shall have happened and be continuing.
SECTION 7.04. LIMITATION ON LIABILITY OF SERVICER AND OTHERS.
The Servicer shall be liable in accordance herewith only to the extent of
the obligations specifically undertaken by the Servicer under this Agreement.
Neither the Servicer nor any of the directors or officers or employees or
agents of the Servicer shall be under any liability to FIRC, except as expressly
provided under this Agreement, for any action taken or for refraining from the
taking of any action pursuant to this Agreement or any action taken in good
faith or for errors in judgment; provided, however, that this provision shall
not protect the Servicer or any such person against any liability that would
otherwise be imposed by reason of willful misconduct, bad faith or gross
negligence in the performance of duties under this Agreement. The Servicer and
any director or officer or employee or agent of the Servicer may rely in good
faith on any document of any kind PRIMA FACIE properly executed and submitted by
any Person respecting any matters arising under this Agreement. The Servicer
shall not be liable for an error of judgment made in good faith by a Servicing
Employee, unless it shall be proved that the Servicer shall have been grossly
negligent in ascertaining the pertinent facts. The Servicer and any director,
officer, employee or agent of the Servicer may consult with counsel respecting
any matters arising under this Agreement and shall be protected in relying in
good faith on the advice of such counsel.
Except as expressly provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute, or defend any legal action that
shall not be incidental to its duties to service the Receivables in accordance
with this Agreement; provided, however, that the Servicer may undertake any
reasonable action that it may deem necessary or desirable in respect of this
Agreement and the rights and duties of the parties to this Agreement. In such
event, the reasonable legal expenses and costs of such action and any liability
resulting therefrom shall be expenses, costs, and liabilities of FIRC and the
Servicer shall be entitled to be reimbursed therefor. Rights of reimbursement
under this Section 7.04 shall survive the termination of this Agreement.
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ARTICLE VIII
DEFAULT
SECTION 8.01. SERVICER EVENTS OF DEFAULT.
If any one of the following events ("Servicer Events of Default") shall
occur and be continuing:
(i) Any failure by the Servicer to deposit into the Collateral Account any
proceeds or payment, required to be so deposited under the terms of this
Agreement that shall continue unremedied for a period of three Business Days
after written notice of such failure is received by the Servicer from FIRC or
the Collateral Agent; or
(ii) Failure on the part of the Servicer duly to observe or to perform in
any material respect any other covenants or agreements of the Servicer set forth
in this Agreement, which failure shall (a) materially and adversely affect the
rights of FIRC and (b) 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 given to the Servicer by FIRC; 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, or liquidator for the 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; or
(iv) The consent by the 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 Servicer or
of or relating substantially to all of its property; or the Servicer shall admit
in writing its inability to pay its debts generally as they become due, file a
petition to avail itself 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 a Servicer Event of Default shall
not have been cured, FIRC may terminate all of the rights and obligations of the
Servicer under this Agreement, subject to accrued compensation, rights of
reimbursement and the survival of indemnity and limitation on liability
provisions, by notice in writing to the Servicer sent by certified mail, postage
prepaid, or by hand delivery. Upon the Servicer's receipt of notice of
termination pursuant to this Section 8.01, the Servicer
30
SERVICING AGREEMENT
<PAGE>
shall continue to perform its functions as Servicer under this Agreement until
the earlier of (i) the appointment of a successor Servicer pursuant to Section
8.03, and (ii) 45 days from its receipt of such notice of termination.
SECTION 8.02. FIRC EVENTS OF DEFAULT.
If any one of the following events ("FIRC Events of Default") shall occur
and be continuing:
(i) FIRC fails to timely remit to the Servicer any Servicing Fees
due and payable and such failure continues for a period of 30 days from
the date of the mailing or delivery of an invoice from the Servicer to
FIRC and the Collateral Agent; or
(ii) If any representation or warranty of FIRC in this Agreement is
false, incorrect or misleading in any material respect, or if any
representation or warranty contained in any reports, documents,
certificates or other papers delivered to the Servicer from time to time
is false, incorrect or misleading in any material respect, and is not
cured within 30 days of written notice thereof to FIRC; or
(iii) If FIRC breaches or fails to perform or observe any obligation
or condition to be performed or observed by it under this Agreement in any
material respect and such breach or default is not cured within 30 days
after the Servicer has given FIRC written notice demanding that such
breach or default be cured;
then, and in each and every case, so long as such FIRC Event of Default shall
not have been cured, the Servicer may terminate all of its rights and
obligations as Servicer under this Agreement by notice in writing to FIRC and
the Collateral Agent sent by certified mail, postage prepaid, or by hand
delivery. Upon FIRC's and the Collateral Agent's receipt of notice of
termination pursuant to this Section 8.02, the Servicer shall not be required to
accept for servicing any new Receivables created thereafter (although the
Servicer shall accept Receivables which were, at the time such notice was
received, in transit to the Servicer), but the Servicer shall continue to
perform its functions as Servicer under this Agreement until the earlier of (i)
the appointment of a successor Servicer pursuant to Section 8.03 and (ii) 45
days from the delivery of notice of termination to FIRC in accordance with the
preceding sentence; provided, however, that if the Servicer has exercised its
termination right hereunder on the basis of a FIRC Event of Default not
involving the failure by FIRC to timely pay
31
SERVICING AGREEMENT
<PAGE>
Servicing Fees or expenses reimbursable to the Servicer hereunder, then the
Servicer shall, after the expiration of such 45 day period, continue (for so
long as the Servicing Fees and reimbursable expenses are being timely paid) to
service Receivables then being serviced until (a) the appointment of a successor
Servicer, or (b) such Receivables are fully paid or otherwise liquidated; and,
provided further, that the Servicer shall not be obligated to continue to
service any such Receivables to the extent such FIRC Event of Default impairs or
prevents the Servicer from performing its obligations hereunder.
SECTION 8.03. APPOINTMENT OF SUCCESSOR.
(a) In the event that FIRC should exercise its rights of termination under
Section 8.01, or the Servicer should exercise its rights of termination under
Section 8.02, FIRC (with the consent of the Loan Agent, which will not be
unreasonably withheld) shall appoint a successor Servicer, which shall accept
its appointment by a written assumption in form acceptable to FIRC and the Loan
Agent; provided, however, that if an Event of Default shall have occurred under
the Credit Agreement and the indebtedness under the Facility shall have been
accelerated pursuant to the Credit Agreement, the Loan Agent shall have the
right to appoint a successor Servicer.
(b) Upon appointment, the successor Servicer shall be the successor in all
respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on the predecessor Servicer, and shall be entitled to the Servicing Fee
and all of the rights granted to the predecessor Servicer hereunder. Upon the
appointment of a successor Servicer in accordance herewith, all authority and
power of the Servicer under this Agreement, whether with respect to the
Receivables or otherwise, shall, without further action, pass to and be vested
in such successor Servicer; and, without limitation, FIRC is hereby authorized
and empowered to execute and deliver, on behalf of the predecessor Servicer, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement of the Receivables and related documents, or otherwise. The
predecessor Servicer shall cooperate with the successor Servicer and FIRC in
effecting the termination of the responsibilities and rights of the predecessor
Servicer under this Agreement, including the transfer to the successor Servicer
for administration by it of all cash amounts that shall at the time be held by
the predecessor Servicer for deposit, or shall thereafter be received with
respect to a Receivable, and delivery of the Receivable Files. All reasonable
costs and expenses (including attorneys' fees) incurred in connection with
transferring the Receivable Files to the
32
SERVICING AGREEMENT
<PAGE>
successor Servicer and amending this Agreement to reflect such succession as
Servicer shall be paid by (i) the predecessor Servicer in the case of
termination under Section 8.01, or (ii) FIRC in the case of termination under
Section 8.02.
SECTION 8.04. PAYMENT OF COMPENSATION; REPAYMENT OF ADVANCES.
If the identity of the Servicer shall change, the predecessor Servicer
shall be entitled to receive all accrued unpaid Servicing Fees, and other
accrued and unpaid compensation described in Section 4.08 hereof, in each case
through the date it performs its duties hereunder. The predecessor Servicer
shall also be entitled to receive reimbursement for all outstanding reimbursable
expenses.
SECTION 8.05. WAIVER OF PAST DEFAULTS.
FIRC (with the consent of the Loan Agent, which will not be unreasonably
withheld) may waive any default by the Servicer in the performance of its
obligations hereunder and its consequences, except a default in making any
required deposits to the Collateral Account in accordance with this Agreement.
Upon any such waiver of a past default, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereon.
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.01. AMENDMENT.
This Agreement may be amended, modified or supplemented only by a written
instrument executed by FIRC and the Servicer. Both FIRC and the Servicer shall
promptly notify the Collateral Agent in writing of any such amendment,
modification or supplement.
SECTION 9.02 TERMINATION.
The term of this Agreement shall begin on the date hereof and shall end on
October 31, 2000; provided, however, that the Servicer may terminate the
acceptance of new Receivables upon written notice to FIRC (with a copy to the
Collateral Agent and all others entitled to notice under the Security Agreement)
between January 1 and June 30, 1997, or, upon a failure of the parties to reach
agreement on or before October 31 of any year as to the terms of Section 4.08
hereof, which may be the subject of annual negotiation
33
SERVICING AGREEMENT
<PAGE>
during the term hereof upon the written request of either party on or before
June 30 of any year. Upon the expiration of the term of this Agreement on
October 31, 2000, or upon the earlier exercise by the Servicer of its right to
terminate the acceptance of new Receivables as above provided, (i) the
Servicer's obligation to accept new Receivables shall terminate on December 31
next following, and (ii) Servicer shall be obligated to service only the
Receivables being serviced hereunder as of such December 31 until the same are
fully paid or otherwise liquidated whereupon, after payment of all Servicing
Fees and other amounts due Servicer hereunder, this Agreement shall terminate.
In the event that the Servicer exercises its right to terminate the
acceptance of new Receivables pursuant to this Section 9.02 prior to the
expiration of the term of this Agreement, within 30 days thereafter FIRC, at its
discretion (with the written consent of the Collateral Agent), may terminate
this Agreement upon written notice to the Servicer, such termination to be
effective on the December 31 next following. If notice of termination is given
by FIRC pursuant to the preceding sentence, (i) the Servicer shall cooperate
with FIRC and any successor servicer in effecting the termination of the
responsibilities and rights of the Servicer under this Agreement, including the
transfer to FIRC or the successor servicer for administration by it of all cash
amounts that shall at the time be held by the Servicer for deposit, or shall
thereafter be received with respect to a Receivable, and delivery of the
Receivable Files, and (ii) upon payment of all Servicing Fees and other amounts
due Servicer hereunder, this Agreement shall terminate.
SECTION 9.03. PROTECTION OF THE RECEIVABLES.
(a) FIRC 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
first priority security interest of the Collateral Agent in the Receivables.
FIRC shall deliver (or cause to be delivered) to the Collateral Agent file
stamped copies of, or filing receipts for, any document filed as provided above,
as soon as available following such filing.
(b) In the event FIRC or the Servicer shall 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 Section 9.402 of the UCC, it shall
give the Servicer and the Collateral Agent (in the case of FIRC) or FIRC and the
Collateral Agent (in the case of the Servicer) written notice
34
SERVICING AGREEMENT
<PAGE>
thereof and shall promptly file appropriate amendments to all previously filed
financing statements or continuation statements.
(c) FIRC and the Servicer shall have an obligation to give the Servicer
and the Collateral Agent (in the case of FIRC) and FIRC and the Collateral Agent
(in the case of the Servicer) at least 60 days' prior written notice of any
relocation of its principal executive office and shall promptly file any
amendment or new financing statements required under the UCC. The Servicer shall
at all times maintain each office from which it shall service Receivables,
within the United States of America.
(d) The Servicer shall maintain records for each Receivable, which records
shall include (i) the original principal balance, the amount of each payment
applied to the Receivable, the date of each payment, the interest rate and the
current outstanding gross balance, and (ii) a reconciliation between payments or
recoveries on (or with respect to) the Receivable and the amounts from time to
time deposited in the Collateral Account in respect of the Receivable. The
Servicer's obligation to perform its servicing duties and maintain accurate
records hereunder is limited to the accuracy and availability of the information
the Servicer receives in the Receivable Files delivered to the Servicer
hereunder.
SECTION 9.04. 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.
SECTION 9.05. NOTICES.
All demands, notices and communications upon or to FIRC, the Servicer or
the Collateral Agent 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 FIRC, to 675
Bering, Suite 710, Houston, Texas 77057, Attention: President, (b) in the case
of the Servicer, to General Electric Capital Corporation, Automobile
Securitization, 600 Hart Road, Barrington, Illinois 60010, and (c) in the case
of the Collateral Agent, at the Corporate Trust Office, or in each case at such
other address as shall be designated in a written notice to the parties to this
Agreement.
35
SERVICING AGREEMENT
<PAGE>
SECTION 9.06. 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, to the extent
permitted by law, such covenants, agreements, provisions, or terms shall be
deemed severable from the remaining covenants, agreements, provisions, or terms
of this Agreement and shall in no way affect the validity or enforceability of
the other provisions of this Agreement.
SECTION 9.07. ASSIGNMENT.
Notwithstanding anything to the contrary contained herein, except as provided in
Section 9.08 below and in the provisions of this Agreement concerning the
appointment of a successor Servicer, this Agreement may not be assigned by FIRC
or the Servicer without the prior written consent of the other.
SECTION 9.08. COLLATERAL ASSIGNMENT.
Notwithstanding anything to the contrary contained herein, the Servicer (i)
acknowledges and consents that FIRC has assigned its rights hereunder and its
interest herein as collateral for its indebtedness under the Facility pursuant
to the Security Agreement, and (ii) agrees to attorn to the Collateral Agent or
the Loan Agent in the event of their succession to the rights and interest of
FIRC hereunder by reason of foreclosure or otherwise.
SECTION 9.09. GOODWILL.
FIRC hereby acknowledges that substantial goodwill exists with respect to the
trade names "GE", "GECC", "GE Capital Corporation" and "General Electric Capital
Corporation" in the United States and that the Servicer's reputation in the
financial services business is of substantial importance to the operations of
the Servicer. Accordingly, FIRC agrees to use its best efforts to conduct its
activities under this Agreement in a manner that will not detract from the
Servicer's goodwill and standing and will not otherwise damage the reputation or
the Servicer.
SECTION 9.10. EFFECT OF REPURCHASE RIGHTS.
Any other provision of this Agreement to the contrary notwithstanding, it
is agreed that First Investors may reserve the right to require one or more
Dealers to purchase Receivables (which First Investors may have been required to
repurchase from FIRC pursuant to the Purchase Agreement) upon the occurrence of
specified events, including default in payment by the Obligors
36
SERVICING AGREEMENT
<PAGE>
thereunder, and notwithstanding the reservation of such right by First
Investors, such Receivables shall constitute Receivables for all purposes
hereunder, including, without limitation, the management, servicing,
administration and collection of such Receivables by the Servicer under Section
4.01 hereof.
IN WITNESS WHEREOF, FIRC and the Servicer have caused this Amended and
Restated Servicing Agreement to be duly executed by their respective officers as
of the day and year first above written.
F.I.R.C., Inc.
By: TOMMY A. MOORE
Tommy A. Moore, Jr., President
GENERAL ELECTRIC CAPITAL CORPORATION
By:
Title: VP - OPERATIONS
37
SERVICING AGREEMENT
<PAGE>
EXHIBITS TO AMENDED AND RESTATED SERVICING AGREEMENT
"A" - National Union ALPI Policy
"A-1" - Agricultural Excess ALPI Policy
"A-2" - VSI/GAP Policy
"B-1" - Loan Disbursement and Data Sheet
"B-2" - Summary Loan Disbursement and Data Sheet
"B-3" - Loan Verification Certificate
"C" - Certificate of Servicer's Offices
"D" - Notice of Non-Insurance
"E" - Notice of Title Discrepancy
"F" - Servicer's Certificate
"F-1" - Trial Balance and Collections Report
"F-2" - Monthly Delinquency Report
<PAGE>
EXHIBIT "B-1"
LOAN DISBURSEMENT AND DATA SHEET
Buyer(s): _________________________ SS#: ____________
Buyer(s): _________________________ SS#: ___________
Address: _______________________________________________
City/State/Zip: _______________________________________________
Phone Numbers: _________________________
CoBuyer(s) Name: _________________________ SS#: ____________
CoBuyer(s) Name: _________________________ SS#: ____________
Address: _______________________________________________
City/State/Zip: _______________________________________________
*******************************************************************
DISBURSEMENT AUTHORIZATION
POOL NO.: ______
Financed Amount: ____________________ (1)
Finance Charge: ____________________ (2)
Total Contract Amount: ____________________ (1 + 2)
Term of Contract (Months): ____________________
Monthly Payments: ____________________
Payment x Months = ____________________ (3)
Purchase Price: ____________________ (1)
Pursuant to Escrow No. __________________ and the Pool referenced
hereinabove, Escrow Agent is hereby authorized and instructed to
disburse funds to set forth below to Account No. 2662374437:
(1) Financed Amount: _____________________ (1)
F.I.R.C., Inc.
By: ___________________________________ Dated: _______________
<PAGE>
EXHIBIT "B-2"
SUMMARY LOAN DISBURSEMENT AND DATA SHEET
F.I.R.C., Inc. ("FIRC") hereby certifies to NationsBank of
Texas, N.A. as follows:
1. FIRC has delivered to General Electric Capital Corporation, in its
capacity as Servicer under that certain Amended and Restated Servicing Agreement
between them dated as of October ____, 1996, a Loan Package consisting of the
Receivables listed below:
OBLIGOR DATE LOAN NO.
-------------------- ---------- ----------------------
-------------------- ---------- ----------------------
-------------------- ---------- ----------------------
-------------------- ---------- ----------------------
2. As of such delivery, the aggregate Financed Amount of all
such Receivables is $___________________.
F.I.R.C., Inc.
By: ______________________________ Dated: ____________________
<PAGE>
EXHIBIT "B-3"
LOAN VERIFICATION CERTIFICATE
Pursuant to Section 3.04(a) of the Amended and Restated Servicing
Agreement between the undersigned and F.I.R.C., Inc. ("FIRC") dated as of
October ____, 1996, the undersigned hereby certifies to FIRC and to NationsBank
of Texas, N.A. as follows:
1. We have received a package from FIRC ("Loan Package") consisting of the
supporting documentation for each of the loans identified on the copy of the
Summary Loan Disbursement and Data Sheet which is attached hereto, such loans to
be booked under Pool 200.
2. We have examined the documentation pertaining to each loan included in
the Loan Package and verified its completeness in accordance with the
documentation checklist delivered with it.
3. We have received Loan Disbursement and Data Sheets from FIRC covering
each of the loans included in the Loan Package and have confirmed that the
aggregate Financed Amounts of all such loans corresponds to the total Financed
Amount set forth on the attached Summary Loan Disbursement and Data Sheet.
Accordingly, the aggregate Financed Amount of all loans included in the
Loan Package, as of the date set forth below, is:
Financed Amount: $ ______________
GENERAL ELECTRIC CAPITAL CORP.
By: ______________________________ Date: ___________
<PAGE>
EXHIBIT "C"
CERTIFICATE OF SERVICER'S OFFICES
Subject to the terms and conditions of Section 3.04(c) of the
Amended and Restated Servicing Agreement, the Receivable Files are
to be maintained at the following offices:
General Electric Capital Corporation
15 Earhart Drive
Williamsville, NY 14231
<PAGE>
EXHIBIT "D"
NOTICE OF NON-INSURANCE
Excess Insurance Exposure Report as of ____________________.
LIST PURCHASE DATE EXP. CD ACCOUNT NAME PR. BAL
<PAGE>
EXHIBIT "E"
NOTICE OF TITLE DISCREPANCY
Collateral Exposure as of ________________________________.
CONTRACT DT BRANCH DEALER ACCOUNT TITLE CODE
<PAGE>
EXHIBIT "F"
SERVICER'S CERTIFICATE
Reporting Month _______________
Determination Date _______________
Principal portion of amount collected $________________
Interest portion of amount collected $________________
Late charges collected $________________
Liquidation Proceeds $________________
Total amount received and processed $________________
Less: Service Fees $(______________)
Less: Reimbursable expenses $(______________)
Amount of remittance to Collateral Agent $________________
Aggregate principal balance of the
Receivables as of the Determination Date $________________
<PAGE>
EXHIBIT "F-1"
TRIAL BALANCE AND COLLECTION REPORT
REPORT DATE:
<TABLE>
<CAPTION>
LAST REG NEXT COLLECTED PRIN. BAL
DR# DL# ACCT# TRANDT APR INST PAY DTE PAY AMT. PAYDATE PRINCIPAL INTEREST OTHER BEGIN END C/P
--- --- ----- ------ --- ---- ------- -------- ------- --------- -------- ----- ----- --- ---
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<PAGE>
EXHIBIT "F-2"
MONTHLY DELINQUENCY REPORT
REPORT DATE:
<TABLE>
<CAPTION>
LAST NEXT DELINQUENCY
DR# DL# ACCT # TRANDT APR PAY DTE INST. AMT. PAYDATE PRINCIPAL INTEREST OTHER PRIN. BAL
--- --- ------ ------ --- ------- ---------- ------- --------- -------- ----- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> APR-30-1997
<PERIOD-END> OCT-31-1996
<CASH> 6,116,137
<SECURITIES> 0
<RECEIVABLES> 110,320,726
<ALLOWANCES> 760,340
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 128,036,870
<CURRENT-LIABILITIES> 0
<BONDS> 102,432,154
0
0
<COMMON> 5,567
<OTHER-SE> 23,346,396
<TOTAL-LIABILITY-AND-EQUITY> 128,036,870
<SALES> 4,577,626
<TOTAL-REVENUES> 4,577,626
<CGS> 1,668,225
<TOTAL-COSTS> 1,668,225
<OTHER-EXPENSES> 1,542,041
<LOSS-PROVISION> 341,367
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 1,271,638
<INCOME-TAX> 464,177
<INCOME-CONTINUING> 807,461
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 807,461
<EPS-PRIMARY> 0.15
<EPS-DILUTED> 0.15
</TABLE>
