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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q/A
AMENDMENT NO. 1
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JANUARY 31, 2000
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 MARCH 1, 2000
---------------------------- --------------
COMMON STOCK-$.001 PAR VALUE 5,566,669
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PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)
Exhibit
Number Description
- -------------------------------------------------------------
10.62 -- Sale and Allocation Agreement dated
January 1, 2000 among First Investors
Financial Services, Inc., First
Investors Servicing Corporation,
First Investors Auto Investment
Corp., Norwest Bank Minnesota,
National Association and First
Investors Auto Owner Trust 2000-A.
10.63 -- Indenture dated as of January 1, 2000
$167,969,000 7.174% Asset-Backed
Notes among First Investors Auto
Owner Trust 2000-A, First Investors
Financial Services, Inc. and Norwest
Bank Minnesota, National Association.
10.64 -- Amended and Restated Trust Agreement
dated as of January 24, 2000 among
First Investors Auto Investment Corp.
and Bankers Trust (Delaware).
10.65 -- Servicing Agreement dated as of
January 1, 2000 by and among First
Investors Auto Owner Trust 2000-A,
Norwest Bank Minnesota, National
Association, First Investors Auto
Investment Corp. and First Investors
Servicing Corporation.
10.66 -- Insurance Agreement dated as of
January 1, 2000 among MBIA Insurance
Corporation, First Investors
Servicing Corporation, First
Investors Financial Services, Inc.,
First Investors Auto Investment
Corp., First Investors Auto Owner
Trust 2000-A, Bankers Trust
(Delaware) and Norwest Bank Min-
nesota, National Association.
10.67 -- Indemnification Agreement dated as of
January 12, 2000 among MBIA Insur-
ance Corporation, First Investors
Financial Services, Inc. and Banc of
America Securities LLC.
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: March 21, 2000 By: /s/ TOMMY A. MOORE, JR.
TOMMY A. MOORE, JR.
PRESIDENT AND CHIEF EXECUTIVE OFFICER
Date: March 21, 2000 By: /s/ BENNIE H. DUCK
BENNIE H. DUCK
SECRETARY, TREASURER AND
CHIEF FINANCIAL OFFICER
21
EXHIBIT 10.62
FIRST INVESTORS FINANCIAL SERVICES, INC.,
as Seller,
FIRST INVESTORS SERVICING CORPORATION,
as Servicer,
FIRST INVESTORS AUTO INVESTMENT CORP.
as Depositor,
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Indenture Trustee
and
FIRST INVESTORS AUTO OWNER TRUST 2000-A
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SALE AND ALLOCATION AGREEMENT
Dated as of January 1, 2000
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions............................................1
SECTION 1.2. Other Definitional Provisions.........................17
ARTICLE II
TRUST PROPERTY
SECTION 2.1. Conveyance of Trust Property..........................18
SECTION 2.2. Representations and Warranties of
the Seller as to the Contracts..................20
SECTION 2.3. Repurchase by Seller upon Breach......................25
ARTICLE III
DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS TO NOTEHOLDERS AND CERTIFICATEHOLDERS
SECTION 3.1. Accounts..............................................25
SECTION 3.2. Collections...........................................27
SECTION 3.3. Application of Collections............................28
SECTION 3.4. Additional Deposits...................................28
SECTION 3.5. Determination Date Calculations; Application of
Available Funds.......................................28
SECTION 3.6. Reserve Account.......................................33
SECTION 3.7. Statements to Noteholders.............................35
SECTION 3.8. Control of Securities Accounts........................36
SECTION 3.9. Policy Matters........................................37
ARTICLE IV
THE SELLER
SECTION 4.1. Representations and Warranties
of Seller.......................................37
SECTION 4.2. Liability of Seller; Indemnities......................39
SECTION 4.3. Merger or Consolidation of, or Assumption
of the Obligations of, Seller...................41
SECTION 4.4. Limitation on Liability of Seller
and Others......................................41
SECTION 4.5. Seller May Own Notes..................................42
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1. Amendment.............................................42
SECTION 5.2. Protection of Title to Trust..........................44
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SECTION 5.3. Governing Law.........................................46
SECTION 5.4. Notices...............................................47
SECTION 5.5. Severability of Provisions............................47
SECTION 5.6. Assignment............................................47
SECTION 5.7. Further Assurances....................................47
SECTION 5.8. No Waiver; Cumulative Remedies........................48
SECTION 5.9. Third-Party Beneficiaries.............................48
SECTION 5.10. Actions by Noteholders................................48
SECTION 5.11. Counterparts..........................................48
SECTION 5.12. Agent for Service.....................................48
SECTION 5.13. No Bankruptcy Petition................................49
SECTION 5.14. Limitation of Liability of Owner
Trustee and Indenture Trustee...................49
SECTION 5.15. Certain Rights of the Insurer.........................50
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SCHEDULES
SCHEDULE 1 Schedule of Initial Contracts
SCHEDULE 2 Location of Contract Files
EXHIBITS
EXHIBIT A Form of Monthly Servicer Report
EXHIBIT B Form of Statement to Noteholders
EXHIBIT C Credit and Collection Policy
EXHIBIT D Offering Memorandum
EXHIBIT E Form of Originator Agreement
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SALE AND ALLOCATION AGREEMENT, dated as of January 1, 2000 (as
amended, supplemented or otherwise modified and in effect from time to time,
this "AGREEMENT"), by and among FIRST INVESTORS AUTO OWNER TRUST 2000-A, a
Delaware business trust (the "TRUST"), FIRST INVESTORS FINANCIAL SERVICES, INC.,
a Texas corporation, as seller (the "SELLER"), FIRST INVESTORS AUTO INVESTMENT
CORP., as depositor (the "DEPOSITOR") NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Indenture Trustee, and FIRST INVESTORS SERVICING CORPORATION
("FISC"), a Georgia corporation, as Servicer (together with its successors and
assigns in such capacity, the "SERVICER").
WHEREAS, the Trust desires to purchase the Contracts purchased by
the Seller in the ordinary course of business;
WHEREAS, the Seller is willing to sell the Contracts to the Trust as
of the date hereof; and
WHEREAS, FISC is willing to service such Contracts on behalf of the
Trust;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1. DEFINITIONS. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, whenever capitalized
shall have the following meanings:
"ADDITIONAL NOTE INTEREST" shall mean, for any Payment Date, the sum
of (i) all accrued but unpaid Monthly Note Interest for previous Payment Dates
PLUS (ii) to the extent permitted by law, interest on such accrued but unpaid
Monthly Note Interest at the Note Rate.
"AFFILIATE" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with such Person. For purposes of this definition, "CONTROL" when
used with respect to any Person shall mean the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise.
"AMOUNT FINANCED" shall mean, with respect to any Contract, the
aggregate amount advanced to the related Obligor under such Contract toward the
purchase price of the Financed Vehicle and any related costs.
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"APPLICABLE TAX STATE" shall mean, as of any date of
determination,(i) any state in which the Owner Trustee maintains the Corporate
Trust Office, (ii) any state in which the Owner Trustee maintains its principal
executive offices and (iii) any state in which the Servicer regularly conducts
servicing and collection activities(other than purely ministerial activities)
with respect to a material portion of the Contracts.
"APR" shall mean, with respect to any Contract, the annual
percentage rate of interest stated in such Contract.
"AVAILABLE FUNDS" shall mean, for any Payment Date, (i) all Obligor
payments received with respect to the Contracts during the preceding Collection
Period, (ii) all Liquidation Proceeds received with respect to the Contracts
during the preceding Collection Period, (iii) all interest earned on funds on
deposit in the Collection Account during the preceding Collection Period, (iv)
the Purchase Amount for all Contracts that became Purchased Contracts during the
preceding Collection Period and (v) all prepayments received with respect to the
Contracts during the preceding Collection Period attributable to any refunded
item included in the Amount Financed (including amounts received as a result of
rebates of extended warranty contract costs and insurance premiums and proceeds
received under physical damage, credit life and credit disability insurance
policies); PROVIDED, HOWEVER, that Available Funds for any Payment Date shall
not include any payments or other amounts (including Liquidation Proceeds)
received with respect to any Purchased Contract the Purchase Amount for which
was included in Available Funds for a previous Payment Date.
"BACK-UP SERVICER" shall mean Norwest Bank Minnesota, National
Association, a national banking association, in its capacity as back-up
servicer, and its successors and assigns in such capacity.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or
a day on which banking institutions or trust companies in New York, New York,
Wilmington, Delaware, Houston, Texas, Minneapolis, Minnesota or Atlanta, Georgia
are authorized or obligated by law, executive order or governmental decree to
remain closed.
"CLOSING DATE" shall mean January 24, 2000.
"COLLECTION ACCOUNT" shall mean the account established and
maintained as such pursuant to Section 3.1(a).
"COLLECTION PERIOD" shall mean each calendar month during the term
of this Agreement or, in the case of the initial Collection Period, the period
from but excluding the Cutoff Date to and including January 31, 2000.
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"CONTRACT" shall mean a retail installment sale contract or
promissory note and security agreement identified on the Contract Schedule (as
such contract may be amended, supplemented or otherwise modified and in effect
from time to time).
"CONTRACT FILE" shall mean, with respect to any Contract:
(i) the original, executed copy of such Contract; and
(ii) the original certificate of title for the related
Financed Vehicle or such other documents that the Servicer or the Seller
shall keep on file, in accordance with its customary practices and
procedures, and in accordance with applicable state title registration
agency procedures evidencing the security interest of the Seller in such
Financed Vehicle.
"CONTRACT SCHEDULE" shall mean the list identifying the Contracts
attached as Schedule 1 to this Agreement (which list may be in the form of
microfiche or compact disk).
"CORPORATE TRUST OFFICE" shall mean, as applicable, (i) the
principal office of the Indenture Trustee at which at any particular time its
corporate trust business shall be administered, which office at the date of the
execution of this Agreement is located at Sixth Street and Marquette Avenue, MAC
N9311-161, Minneapolis, Minnesota 55479, Attention: Corporate Trust Services -
Asset-Backed Administration, or at such other address as the Indenture Trustee
may designate from time to time by notice to the Noteholders, the Owner Trustee
and the Seller, or the principal corporate trust office of any successor
Indenture Trustee at the address designated by such successor Indenture Trustee
by notice to the Noteholders, the Owner Trustee and the Seller or (ii) the
principal office of the Owner Trustee at which at any particular time its
corporate trust business shall be administered, which office at the date of the
execution of this Agreement is located at 1011 Centre Road, Suite 200,
Wilmington, DE 19805-1266, Attention: Corporate Trust, or at such other address
as the Owner Trustee may designate from time to time by notice to the Indenture
Trustee and the Seller, or the principal corporate trust office of any successor
Owner Trustee at the address designated by such successor Owner Trustee by
notice to the Indenture Trustee and the Seller.
"CREDIT AND COLLECTION POLICY" shall mean the credit and collection
policy of the Seller substantially in the form attached hereto as Exhibit C as
amended and restated from time to time with the consent of the Insurer and in
accordance with the Transaction Documents.
"CUMULATIVE NET LOSS RATE" means the ratio of (i) cumulative Net
Losses for the related Collection Period and all preceding Collection Periods to
(ii) the Pool Balance as of the Cutoff Date.
"CUSTODIAN" means Norwest Bank Minnesota, National Association, in
its capacity as custodian pursuant to the Indenture.
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<PAGE>
"CUTOFF DATE" shall mean December 31, 1999.
"DEFAULTED CONTRACT" shall mean any Contract as to which the first
of any of the following has occurred (i) a scheduled payment, or any portion
thereof in excess of $10.00, is more than 120 days delinquent (or if the related
obligor is insolvent or has sought protection under the United States Bankruptcy
Code and such Contract is more than 180 days delinquent), (ii) 90 days have
elapsed since the Servicer repossessed the Financed Vehicle, (iii) the related
Financed Vehicle has been repossessed and sold, or (iv) consistent with the
Servicer's Credit and Collection Policy, has been or should be written off as
uncollectible.
"DELINQUENT CONTRACT" means the entire principal balance of any
Contract (other than a Defaulted Contract) as to which more than ten dollars of
any scheduled payment remains unpaid for more than 30 days from the date at
which it is contractually due and payable.
"DELINQUENCY RATIO" means, with respect to any date of
determination, the ratio (expressed as a percentage) of (i) the Principal
Balance of Contracts that were Delinquent Contracts at the end of the preceding
Collection Period to (ii) the Principal Balance of all Contracts at the end of
such preceding Collection Period.
"DEPOSITOR" shall have the meaning specified in the Trust Agreement.
"DEPOSITOR ACCOUNT" shall mean the account established and
maintained as such pursuant to Section 3.1(c).
"DETERMINATION DATE" shall mean the third Business Day preceding
each Payment Date commencing on February 10, 2000.
"ELIGIBLE INVESTMENTS" shall mean, on any date of determination,
book-entry securities, negotiable instruments or securities represented by
instruments in bearer or registered form with maturities not exceeding the next
Payment Date which evidence:
(1) direct obligations of, and obligations fully guaranteed by, the
United States of America or any agency or instrumentality thereof the
obligations of which are backed by the full faith and credit of the United
States of America;
4
<PAGE>
(2) demand deposits, time deposits, bankers' acceptances or
certificates of deposit of any depository institution or trust company
incorporated under the laws of the United States of America or any state
thereof (or any domestic branch of a foreign bank) and subject to
supervision and examination by federal or state banking or depository
institution authorities; PROVIDED, HOWEVER, that, at the time of the
investment or contractual commitment to invest therein, the commercial
paper or other short-term unsecured debt obligations from each of the
Rating Agencies in the highest investment category granted thereby;
(3) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of America
or any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States of America, in
either case entered into with a depository institution or trust company
(acting as principal) described in clause (ii) above;
(4) short-term corporate securities bearing interest or sold at a
discount issued by any corporation incorporated under the laws of the
United States of America or any state thereof; PROVIDED, HOWEVER, that, at
the time of the investment or contractual commitment to invest therein,
the short-term unsecured debt obligations thereof shall have a rating from
each of the Rating Agencies in the highest investment category granted
thereby;
(5) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each of the Rating
Agencies in the highest investment category granted thereby;
(6) guaranteed investment contracts issued by an insurance company
or other corporation acceptable to the Rating Agencies and the Insurer
(provided that no Insurer Default shall have occurred and be continuing);
(7) investments in money market funds having a rating from each of
the Rating Agencies in the highest investment category granted thereby
(including funds for which the Indenture Trustee or the Owner Trustee or
any of their respective Affiliates is investment manager or advisor); and
(8) any other investment approved by the Insurer in writing
(provided that no Insurer Default shall have occurred and be continuing)
and with respect to which the Trust or the Servicer has received written
notification from the Rating Agencies that the acquisition of such
investment will not result in a withdrawal or downgrading of the ratings
on the Notes.
Each of the Eligible Investments may be purchased by or through the
Indenture Trustee or an Affiliate thereof.
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<PAGE>
"ELIGIBLE INSTITUTION" shall mean the corporate trust department of
the Indenture Trustee or the corporate trust department of any other depository
institution organized under the laws of the United States of America or any
state thereof or the District of Columbia or incorporated under the laws of a
foreign jurisdiction with a branch or agency located in the United States of
America or any state thereof or the District of Columbia qualified to take
deposits and subject to supervision and examination by federal or state banking
authorities which at all times has either a long-term unsecured debt rating of
at least Baa3 from Moody's or a long-term unsecured debt rating, a short-term
unsecured debt rating or a certificate of deposit rating acceptable to the
Rating Agencies and the Insurer (provided that no Insurer Default shall have
occurred and be continuing) and whose deposits are insured by the Federal
Deposit Insurance Corporation.
"ELIGIBLE SERVICER" shall mean First Investors Servicing
Corporation, as initial Servicer, and any other Person which, at the time of its
appointment as Servicer, (i) is approved in writing by the Insurer, (provided
that no Insurer Default shall have occurred and be continuing) (ii) has a net
worth of not less than $50,000,000, (iii) is servicing a portfolio of motor
vehicle retail installment sale contracts and/or motor vehicle loans, (iv) is
legally qualified, and has the capacity, to service the Contracts, (v) has
demonstrated the ability to service a portfolio of motor vehicle retail
installment sale contracts and/or motor vehicle loans similar to the Contracts
professionally and competently in accordance with standards of skill and care
that are consistent with prudent industry standards and (vi) is qualified and
entitled to use pursuant to a license or other written agreement, and agrees to
maintain the confidentiality of, the software which the Servicer uses in
connection with performing its duties and responsibilities under this Agreement
or obtains rights to use, or develops at its own expense, software which is
adequate to perform its duties and responsibilities under this Agreement.
"EVENT OF DEFAULT" shall have the meaning assigned thereto in the
Indenture.
"EVENT OF SERVICING TERMINATION" shall have the meaning assigned
thereto in Section 5.01 of the Servicing Agreement.
"FINAL ORDER" shall mean a final, non-appealable order of a court
exercising jurisdiction in a proceeding relating to an Insolvency Event with
respect to the Seller, the Servicer or the Depositor to the effect that all or
any portion of any payment made to the Noteholders must be returned prior to the
end of the Term of the Insurance Agreement (as defined in the Insurance
Agreement) as a voidable preference under the United States Bankruptcy Code (11
U.S.C.), as amended from time to time.
"FINAL NOTE PAYMENT DATE" shall mean February 15, 2006.
"FINANCED VEHICLE" shall mean a new or used automobile or light-duty
truck, together with all accessions thereto, securing an Obligor's indebtedness
under a Contract.
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"FISC" shall mean First Investors Servicing Corporation.
"FISCAL AGENT" shall have the meaning specified in the Policy.
"HOLDER" shall mean a Noteholder.
"INDENTURE" shall mean the Indenture, dated as of January 1, 2000,
between the Trust, the Indenture Trustee, and the Seller as the same may be
amended, supplemented or otherwise modified and in effect from time to time.
"INDENTURE TRUSTEE" shall mean Norwest Bank Minnesota, National
Association, not in its individual capacity but solely as Indenture Trustee
under the Indenture, its successors in interest and any successor trustee under
the Indenture.
"INITIAL NOTE BALANCE" shall mean, as the context may require, (i)
with respect to all of the Notes, $167,969,000, or (ii) with respect to any
Note, an amount equal to the initial denomination of such Note.
"INITIAL RESERVE ACCOUNT DEPOSIT" shall mean $3,499,372.83.
"INSOLVENCY EVENT" shall mean, with respect to any Person, (i) the
making by such Person of a general assignment for the benefit of creditors, (ii)
the filing by such Person of a voluntary petition in bankruptcy, (iii) such
Person being adjudged a bankrupt or insolvent, or having had entered against
such Person an order for relief in any bankruptcy or insolvency proceeding, (iv)
the filing by such Person of a petition or answer seeking reorganization,
arrangement, composition, readjustment, liquidation, dissolution or similar
relief under any statute, law or regulation, (v) the filing by such Person of an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against such Person in any proceeding specified
in clause (vii) below, (vi) seeking, consenting to or acquiescing in the
appointment of a trustee, receiver or liquidator of such Person or of all or any
substantial part of the assets of such Person or (vii) the failure to obtain
dismissal within 60 days of the commencement of any proceeding against such
Person seeking reorganization, arrangement, composition, readjustment,
liquidation, dissolution or similar relief under any statute, law or regulation,
or the entry of any order appointing a trustee, liquidator or receiver of such
Person of all or any substantial portion of the assets of such Person.
"INSURANCE AGREEMENT" shall mean the Insurance Agreement, dated as
of January 1, 2000 by and among the Seller, the Servicer, the Administrator, the
Depositor, the Issuer, the Backup Servicer, the Owner Trustee, the Insurer and
the Indenture Trustee as the same may be amended, supplemented or otherwise
modified and in effect from time to time.
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<PAGE>
"INSURER" shall mean MBIA Insurance Corporation, a stock insurance
corporation incorporated under the laws of the State of New York.
"INSURER DEFAULT" shall mean the failure of the Insurer to make any
required payment under the Policy or an Insolvency Event with respect to the
Insurer.
"LIEN" shall mean a security interest, lien, charge, pledge, equity
or encumbrance of any kind, other than tax liens, mechanics' or materialmen's
liens, judicial liens and any liens that may attach to a Financed Vehicle by
operation of law.
"LIQUIDATION PROCEEDS" shall mean all amounts received by the
Servicer with respect to any Defaulted Contract, net of the sum of (i) any
reasonable expenses incurred by the Servicer in connection with collection of
such Contract and the disposition of the related Financed Vehicle (to the extent
determinable by the Servicer and not previously reimbursed) PLUS (ii) any
amounts required by law to be remitted to the related Obligor.
"MONTHLY NOTE INTEREST" shall mean (i) for the initial Payment Date,
$702,922.27, and (ii) for any Payment Date thereafter, one-twelfth of the
product of (A) the Note Rate and (B) the outstanding principal balance of the
Notes as of the preceding Payment Date (after giving effect to all payments of
principal made to the Holders of the Notes on or before such preceding Payment
Date).
"MONTHLY NOTE PRINCIPAL" shall mean, for any Payment Date, the
lesser of (i) the Note Balance as of the day preceding such Payment Date and
(ii) the amount necessary to reduce the Note Balance as of the day preceding
such Payment Date to the product of (a) 96% and (b) Pool Balance as of the last
day of the related Collection Period; PROVIDED, HOWEVER, that the Monthly Note
Principal for the Final Note Payment Date for the Notes shall equal the amount
necessary to reduce the Note Balance to zero.
"MONTHLY SERVICER REPORT" shall have the meaning specified in the
Servicing Agreement.
"MONTHLY SERVICING FEE" shall mean, for any Collection Period, the
fee payable to the Servicer for services rendered during such Collection Period
as determined pursuant to Section 2.08 of the Servicing Agreement.
"MOODY'S" shall mean Moody's Investors Service, Inc., and its
successors.
"NET LOSSES" shall mean, with respect to any Collection Period, the
excess, if any, of (i) the aggregate Principal Balance of all Contracts that
became Defaulted Contracts during such Collection Period over (ii) the aggregate
Liquidation Proceeds received by the Servicer during such Collection Period.
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"NOTE BALANCE" shall mean, at any time, as the context may require,
(i) with respect to all of the Notes, an amount equal to, initially, the Initial
Note Balance and, thereafter, an amount equal to the Initial Note Balance as
reduced from time to time by all amounts allocable to principal previously
distributed to the Noteholders or (ii) with respect to any Note, an amount equal
to, initially, the initial denomination of such Note and, thereafter, an amount
equal to such initial denomination as reduced from time to time by all amounts
allocable to principal previously distributed in respect of such Note; PROVIDED,
HOWEVER, that in determining whether the Holders of Notes evidencing the
requisite percentage of the Note Balance have given any request, demand,
authorization, direction, notice, consent or waiver hereunder or under any other
Transaction Document, Notes owned by the Trust, any other obligor upon the
Notes, the Seller, the Servicer or any Affiliate of any of the foregoing Persons
shall be disregarded and deemed to be excluded from the Note Balance (unless
such Persons own 100% of the Note Balance), except that, in determining whether
the Indenture Trustee or the Owner Trustee shall be protected in relying on any
such request, demand, authorization, direction, notice, consent or waiver, only
Notes that a Responsible Officer of the Indenture Trustee or the Owner Trustee,
as applicable, actually knows to be so owned shall be so disregarded; and,
PROVIDED FURTHER, that Notes that, to the actual knowledge of a Responsible
Officer of the Indenture Trustee or the Owner Trustee, as applicable, have been
pledged in good faith may be regarded as included in the Note Balance if the
pledgee establishes to the satisfaction of the Indenture Trustee or the Owner
Trustee, as applicable, the pledgee's right so to act with respect to such Notes
and that the pledgee is not the Trust, any other obligor upon the Notes, the
Seller, the Servicer or any Affiliate of any of the foregoing Persons.
"NOTE PAYMENT ACCOUNT" shall mean the account established and
maintained as such pursuant to Section 3.1(b).
"NOTE POOL FACTOR" shall mean, with respect to the Notes, (i) as of
the Closing Date, 1.0000000 and (ii) as of the close of business on the last day
of any Collection Period ending after the Closing Date, a seven-digit decimal
figure equal to Note Balance as of such last day (after giving effect to any
reductions of the Note Balance to be made on the following Payment Date) divided
by the Initial Note Balance.
"NOTEHOLDER" shall mean a Person in whose name a Note is registered
on the Note Register.
"NOTE RATE" shall mean 7.174% per annum.
"NOTES" shall mean the 7.174% Asset-Backed Notes issued by the Trust
pursuant to the Indenture in the initial aggregate principal amount of
$167,969,000.
"OBLIGOR" shall mean the purchaser or co-purchasers of a new or used
automobile or light-duty truck purchased in whole or in part by the execution
and delivery of a Contract or any other Person who owes or may be liable for
payments under a Contract.
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<PAGE>
"OFFERING MEMORANDUM" shall mean that certain Offering Memorandum
dated as of January 12, 2000, attached hereto as Exhibit D.
"OFFICER'S CERTIFICATE" shall mean a certificate signed by the
chairman, the president, any executive vice president, senior vice president,
vice president or the treasurer of the Seller or the Servicer, as the case may
be, and delivered to the Owner Trustee and the Indenture Trustee.
"OPINION OF COUNSEL" shall mean one or more written opinions of
counsel who may, except as otherwise expressly provided in this Agreement, be
outside counsel to, the Seller or the Servicer and who shall be acceptable to
the Indenture Trustee, the Insurer the Owner Trustee or the Rating Agencies, as
applicable.
"ORIGINATOR" shall mean each Person from whom the Seller has
acquired a Contract.
"ORIGINATOR AGREEMENT" shall mean an agreement substantially in the
form of Exhibit E hereto.
"OUTSTANDING" shall have the meaning specified in the Indenture.
"OWNER TRUST ESTATE" shall have the meaning specified in the Trust
Agreement.
"OWNER TRUSTEE" shall mean Bankers Trust (Delaware) not in its
individual capacity but solely as Owner Trustee under the Trust Agreement, its
successors in interest and any successor trustee under the Trust Agreement.
"PAYMENT DATE" shall mean the 15th day of each month or, if such
15th day is not a Business Day, the following Business Day, commencing on
February 15, 2000.
"PERSON" shall mean a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, limited liability partnership, trust,
unincorporated organization, or government or any agency or political
subdivision thereof, or any other entity of whatever nature.
"POLICY" shall mean that certain insurance policy, dated as of
January 24, 2000, issued by MBIA Insurance Corporation in favor of the Indenture
Trustee for the benefit of the Noteholders.
"POLICY CLAIM AMOUNT" shall have the meaning specified in Section
3.5(c).
"POOL BALANCE" shall mean, as of the last day of any Collection
Period, the aggregate Principal Balance of the Contracts as of such last day.
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"PRINCIPAL BALANCE" shall mean, with respect to any Contract as of
any date, the Amount Financed under such Contract minus the sum of (i) that
portion of all Scheduled Payments actually received on or prior to such date
allocable to principal (to the extent collected) PLUS (ii) any rebates of
extended warranty contract costs or physical damage, credit life or credit
disability insurance premiums included in the Amount Financed PLUS (iii) any
full or partial prepayment applied to reduce the unpaid principal balance of
such Contract; PROVIDED, HOWEVER, that (i) the Principal Balance of a Defaulted
Contract shall be zero as of the last day of the Collection Period during which
it became a Defaulted Contract,(ii) the Principal Balance of a Purchased
Contract shall be zero as of the date on which the related Purchase Amount is
remitted by the Seller or the Servicer, and (iii) the Principal Balance of a
Contract that has been foreclosed upon by the Indenture Trustee at the direction
of the Insurer pursuant to Section 5.4(a) of the Indenture shall be zero as of
the date of such foreclosure.
"PRINCIPAL DEFICIT" means, as of any Payment Date, the excess, if
any, of (i) the Note Balance as of such Payment Date (after giving effect to all
amounts distributable to the Noteholders on such date by the Trust on such date
in reduction of the Note Balance)over (ii) the Pool Balance as of the last day
of the related Collection Period.
"PURCHASE AMOUNT" shall mean, with respect to any Payment Date and
any Contract to be repurchased by the Seller or purchased by the Servicer on
such Payment Date, an amount equal to the sum of (i) the Principal Balance of
such Contract PLUS (ii) the amount of accrued but unpaid interest on such
Principal Balance at the related APR to but excluding such Payment Date.
"PURCHASE PRICE" shall mean $174,968,641.29.
"PURCHASED CONTRACT" shall mean a Contract as to which payment of
the Purchase Amount has been made by the Seller pursuant to Section 2.3 hereof
or by the Servicer pursuant to Section 2.28 of the Servicing Agreement.
"RATING AGENCIES" shall mean Moody's and Standard & Poor's and their
respective successors; PROVIDED, HOWEVER, that if no such organization or
successor is any longer in existence, Rating Agency shall mean a nationally
recognized statistical rating organization or other comparable Person designated
by the Trust and acceptable to the Insurer (provided that no Insurer Default
shall have occurred and is continuing), notice of which designation shall have
been given to the Indenture Trustee, the Owner Trustee and the Servicer.
"RATING AGENCY CONDITION" shall mean, with respect to any action,
that each Rating Agency shall have been given prior notice thereof and shall
have notified the Seller, the Insurer, the Servicer, the Owner Trustee and the
Indenture Trustee that such action will not result in a reduction or withdrawal
of the then current rating of the Notes, without regard to the Policy.
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"RECORD DATE" shall mean, with respect to any Payment Date, the
close of business on the Business Day preceding such Payment Date; PROVIDED,
HOWEVER, that if Definitive Notes have been issued, Record Date shall mean, with
respect to any Payment Date, the last day of the calendar month preceding such
Payment Date.
"RELEVANT UCC" shall mean the Uniform Commercial Code as in effect
from time to time in any relevant jurisdiction.
"REQUIRED PAYMENT AMOUNT" shall have, for any Payment Date, the
meaning specified for such Payment Date in Section 3.5(a).
"REQUIRED RATING" shall mean a short-term unsecured debt rating of
P-1 by Moody's and A-1+ by Standard & Poor's.
"REQUIRED RESERVE ACCOUNT AMOUNT" shall mean, for any Payment Date,
(i) if a Reserve Account Increase Event has not occurred or is not continuing,
the Initial Reserve Account Deposit or (ii) if a Reserve Account Increase Event
has occurred and is continuing, the greater of (i) the Initial Reserve Account
Deposit, and (ii) 6% of the Pool Balance as of the last day of the related
Collection Period.
"RESERVE ACCOUNT" shall mean the account established and maintained
as such pursuant to Section 3.6(a).
"RESERVE ACCOUNT AMOUNT" shall mean, for any Payment Date, the
amount on deposit in and available for withdrawal from the Reserve Account on
such Payment Date (after giving effect to all deposits to and withdrawals from
the Reserve Account on the preceding Payment Date, or, in the case of the first
Payment Date, the Closing Date), including, without limitation, all interest and
other income (net of losses and investment expenses) earned on such amount
during the preceding Collection Period.
"RESERVE ACCOUNT DEFICIENCY" shall have, for any Payment Date, the
meaning specified for such Payment Date in Section 3.5(b).
"RESERVE ACCOUNT DRAW AMOUNT" shall have the meaning specified in
Section 3.5(b).
"RESERVE ACCOUNT INCREASE EVENT" shall mean the occurrence of either
of the following:
(1) the average Delinquency Ratio for any three Collection Periods
exceeds 6% during months one through twelve after the Closing
Date and the Delinquency Ratio exceeds 7.5% thereafter; or
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(2) the Cumulative Net Loss Rate at any month indicated in the
following table (measured as from the Closing Date), exceeds
the percentage corresponding thereto:
---------------- ----------
MONTHS
---------------- ----------
0-3 0.20%
---------------- ----------
4-6 1.50%
---------------- ----------
7-9 2.50%
---------------- ----------
10-12 3.60%
---------------- ----------
13-15 4.60%
---------------- ----------
16-18 5.50%
---------------- ----------
19-21 6.10%
---------------- ----------
22-24 6.70%
---------------- ----------
25-27 7.30%
---------------- ----------
28-30 7.80%
---------------- ----------
31-33 8.20%
---------------- ----------
34-36 8.50%
---------------- ----------
37-39 8.80%
---------------- ----------
40-42 9.00%
---------------- ----------
43 and
there-
after 9.10%
---------------- ----------
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"RESERVE ACCOUNT PROPERTY" shall mean all amounts, securities,
investments, financial assets and other property deposited in or credited to the
Reserve Account from time to time.
"RESPONSIBLE OFFICER" shall mean (i) in the case of the Indenture
Trustee, any officer within the Corporate Trust Department of the Indenture
Trustee with direct responsibility for the administration of the Indenture and
also, with respect to a particular matter, any other officer of the Indenture
Trustee to whom such matter is referred because of such officer's knowledge of
and familiarity with such matter or other similar matters and (ii) in the case
of the Owner Trustee, any officer within the Corporate Trust Office of the Owner
Trustee with direct responsibility for the administration of the Trust Agreement
or this Agreement and also, with respect to a particular matter, any other
officer of the Owner Trustee to whom such matter is referred because of such
officer's knowledge of and familiarity with such matter or other similar
matters.
"SCHEDULED PAYMENT" shall mean, for any Contract, each payment
required to be made by the related Obligor in accordance with the terms of such
Contract (after giving effect to any deferral of payments pursuant to the
Servicing Agreement or any rescheduling of payments as a result of any
Insolvency Event with respect to such Obligor).
"SELLER" shall mean First Investors Financial Services, Inc., a
Texas corporation, in its capacity as seller of the Contracts under this
Agreement, and its successors and assigns in such capacity.
"SERVICER" shall mean FISC, in its capacity as servicer of the
Contracts under this Agreement, and its successors and assigns (including, if
applicable, the Back-Up Servicer) in such capacity.
"SERVICING AGREEMENT" shall mean that certain Servicing Agreement,
dated as of January 1, 2000, between FISC, the Back-Up Servicer, the Indenture
Trustee, the Servicer and the Trust.
"SERVICING FEE" shall mean the amount paid to the Servicer on each
Payment Date for the preceding Collection Period equal to the product of the
Servicing Rate and the Pool Balance as of the close of business on the first day
of the related Collection Period.
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"SERVICING OFFICER" shall mean any officer of the Servicer involved
in, or responsible for, the administration and servicing of the Contracts whose
name appears on a list of servicing officers attached to an Officer's
Certificate furnished on the Closing Date to the Owner Trustee and the Indenture
Trustee by the Servicer, as such list may be amended from time to time by the
Servicer in writing.
"SERVICING RATE" shall mean 2.5% per annum or such other rate as
determined in the Servicing Agreement; PROVIDED, HOWEVER, that if the Back-Up
Servicer becomes the Successor Servicer, the Servicing Rate shall be equal to
the greater of (a) 2.5% per annum and (b) the lowest of three bids obtained by
the Back-Up Servicer from third-party servicers, who are qualified to act as
servicers, selected by the Back-Up Servicer and approved by the Insurer pursuant
to Section 2.08 of the Servicing Agreement.
"STANDARD & POOR'S" shall mean Standard & Poor's Ratings
Services, a division of The McGraw-Hill Companies, Inc., and its successors.
"TOTAL AVAILABLE FUNDS" shall mean, for any Payment Date, the sum of
(i) the Available Funds for such Payment Date PLUS (ii) the Reserve Account Draw
Amount, if any, for such Payment Date.
"TOTAL NOTE INTEREST" shall mean, for any Payment Date, the sum of
(i) the Monthly Note Interest for such Payment Date PLUS (ii) the Additional
Note Interest for such Payment Date.
"TOTAL SERVICING FEE" shall mean, for any Collection Period, the sum
of (i) the Monthly Servicing Fee for such Collection Period PLUS (ii) all
accrued but unpaid Monthly Servicing Fees for previous Collection Periods.
"TRANSACTION DOCUMENTS" shall have the meaning assigned thereto in
the Indenture.
"TRUST" shall mean the First Investors Auto Owner Trust 2000-A, a
Delaware business trust.
"TRUST AGREEMENT" shall mean the Trust Agreement, dated as of
January 12, 2000, between the Depositor and the Owner Trustee, as amended by the
Amended and Restated Trust Agreement, dated as of January 24, 2000, between the
Depositor and the Owner Trustee, as the same may be further amended,
supplemented or otherwise modified and in effect from time to time.
"TRUST OFFICER" shall mean (i) in the case of the Indenture Trustee,
any officer within the Corporate Trust Department of the Indenture Trustee with
direct responsibility for the administration of the Indenture and also, with
respect to a particular matter, any other officer of the Indenture Trustee to
whom such matter is referred because of such officer's knowledge of and
familiarity with such matter or other similar matters and (ii) in the case of
the Owner Trustee, any
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officer within the Corporate Trust Office of the Owner Trustee with direct
responsibility for the administration of the Trust Agreement and this Agreement
and also, with respect to a particular matter, any other officer of the Owner
Trustee to whom such matter is referred because of such officer's knowledge of
and familiarity with such matter or other similar matters
"TRUST PROPERTY" shall mean, as of any date of determination, (i)
the Contracts and other related property sold, transferred, assigned and
otherwise conveyed by the Seller to the Trust pursuant to Section 2.1(a), and
(ii) all monies deposited from time to time in the Collection Account, the Note
Payment Account, the Depositor Account and the Reserve Account.
1.2 OTHER DEFINITIONAL PROVISIONS
(1) Capitalized terms used herein and not otherwise defined herein
have the meanings assigned to them in the Indenture or the Servicing Agreement.
(2) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(3) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
assigned to them under generally accepted accounting principles. To the extent
that the definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Agreement or in any such certificate or other document shall control.
(4) The words "hereof," "herein," and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. Article, Section,
Schedule and Exhibit references contained in this Agreement are references to
Articles, Sections, Schedules and Exhibits in or to this Agreement unless
otherwise specified. The term "including" shall mean "including without
limitation."
(5) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(6) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns.
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ARTICLE II
TRUST PROPERTY
2.1 CONVEYANCE OF TRUST PROPERTY.
(1) In consideration of the Trust's delivery to the Seller of the
Purchase Price, the Seller hereby irrevocably sells, transfers, assigns and
otherwise conveys to the Trust, without recourse (subject to the obligations
herein), all right, title and interest of the Seller, whether now owned or
hereafter acquired, in, to and under the following:
(1) the Contracts;
(2) all amounts received on or in respect of the Contracts after the
Cutoff Date (except that interest accrued on the Contracts prior to the
Cutoff Date and received after the Cutoff Date will be remitted by the
Trust to the Seller);
(3) the Collection Account, the Reserve Account and the Note Payment
Account and all amounts, securities, financial assets, investments and
other property deposited in or credited to any of the foregoing and all
proceeds thereof;
(4) the security interests in the Financed Vehicles;
(5) any proceeds from claims on or refunds of premiums with respect
to extended warranties or physical damage, theft, credit life and credit
disability insurance policies relating to the Financed Vehicles or the
related Obligors;
(6) any Liquidation Proceeds;
(7) the Contract Files;
(8) rights under the Servicing Agreement to cause the Servicer to
purchase Contracts affected materially and adversely by breaches of the
representations and warranties of the Servicer made in the Servicing
Agreement; and
(9) all present and future claims, demands, causes of action and
choses in action in respect of any or all of the foregoing and all
payments on or under and all proceeds of every kind and nature whatsoever
in respect of any or all of the foregoing, including all proceeds of the
conversion thereof, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, insurance proceeds,
condemnation
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awards, rights to payment of any and every kind and other forms of
obligations and receivables, instruments and other property which at any
time constitute all or part of or are included in the proceeds of any of
the foregoing.
(2) The Seller and the Trust intend that the transfer of the Trust
Property contemplated by Section 2.1(a) constitute a sale of the Trust Property,
conveying good title to the Trust Property, from the Seller to the Trust. In
addition, without prejudicing the parties' intent that the transfer of the Trust
Property constitute a sale, in case that such transfer is deemed by a court of
competent jurisdiction to be a pledge to secure the payment of the Notes, or for
any other reason the Trust is not the owner thereof the Seller hereby grants to
the Trust a "security interest" in all of the Seller's right, title and interest
in, to and under the Trust Property, and all proceeds thereof, to secure the
payment of the Notes. In either event, it is understood by the parties hereto
that the transfer of the Trust Property shall constitute the grant of a
"security interest" in favor of the Trust under the Relevant UCC, it being
understood that "security interest" under the Relevant UCC includes any interest
of a buyer of "accounts" or "chattel paper".
(3) The sale, transfer, assignment and conveyance of the Trust
Property made under Section 2.1(a) shall not constitute and is not intended to
result in an assumption by the Trust of any obligation of the Seller to the
Obligors or any other Person in connection with the Contracts and the other
Trust Property or any agreement, document or instrument related thereto.
(4) Upon the transfer of the Trust Property pursuant to clause (a)
of this Section 2.1, the Seller shall clearly mark its files, documents, books
and any other records (including computer records) in the Seller's control
pertaining to the Trust Property, in order to indicate that the Trust Property
has been transferred to the Trust.
(5) It is explicitly agreed by the Seller, the Depositor and the
Trust that the Purchase Price delivered to the Seller by the Trust pursuant to
clause (a) of this Section 2.1 shall consist of the net proceeds from the sale
of the Notes (minus the Initial Reserve Account Deposit) and that the remaining
portion of the Purchase Price shall be deemed to constitute a capital
contribution by the Seller to the Depositor (it being understood that the Seller
has a 100% ownership interest in the Depositor and that the Depositor has a 100%
ownership interest in the Trust).
2.2 REPRESENTATIONS AND WARRANTIES OF THE SELLER AS TO THE
CONTRACTS. The Seller makes the following representations and warranties as to
the Contracts on which the Trust shall be deemed to have relied in accepting the
Contracts. The representations and warranties speak as of the execution and
delivery of this Agreement, except to the extent otherwise provided, but shall
survive the sale, transfer, assignment and conveyance of the Contracts to the
Trust pursuant to this Agreement and the pledge of the Contracts to the
Indenture Trustee pursuant to the Indenture.
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(1) CHARACTERISTICS OF CONTRACTS. Each Contract (i) has been
purchased in a bona fide sale by the Seller from a dealer, bank, finance company
or similar entity in the ordinary course of the Seller's business and was
originated by such Person in connection with an advance made for the sale or
re-financing of a new or used automobile or light-duty truck and has been fully
and properly executed by the parties thereto,(ii) has created a valid, binding
and enforceable security interest in favor of the Seller in the related Financed
Vehicle, which security interest has been validly assigned by the Seller to the
Trust, and by the Trust to the Indenture Trustee, (iii) contains customary and
enforceable provisions such that the rights and remedies of the holder thereof
are adequate for realization against the collateral of the benefits of the
security, (iv) provides for level monthly payments that fully amortize the
Amount Financed by maturity (except that the period between the date of such
Contract and the date of the first Scheduled Payment may be less than or greater
than one month and the amount of the first and last Scheduled Payments may be
less than or greater than the level payments) and yield interest at the related
APR, (v) provides for, in the event that such Contract is prepaid, a prepayment
that fully pays the Principal Balance of such Contract with interest at the
related APR through the date of payment, (vi) is secured by a new or used
automobile or light-duty truck, (vii) relates to an Obligor who has made a down
payment under such Contract as of the Cutoff Date, (viii) satisfies in all
material respects the requirements under the Credit and Collection Policy, and
(ix) requires the Obligor thereunder to obtain and maintain physical damage
insurance covering the related Financed Vehicle in accordance with the Seller's
normal requirements.
(2) CONTRACT SCHEDULE. The information set forth in the Contract
Schedule was true and correct in all material respects as of the opening of
business on the Cutoff Date, and no selection procedures believed to be adverse
to the Trust or the Noteholders were utilized in selecting the Contracts from
those retail installment sale contracts or security agreements and promissory
notes which met the criteria contained herein. The information set forth in the
compact disk or other listing regarding the Contracts made available to the
Trust and its assigns (which compact disk or other listing is required to be
delivered as specified herein) is true and correct in all material respects.
(3) COMPLIANCE WITH LAW. Each Contract and the sale of the related
Financed Vehicle complied, at the time such Contract was originated and
complies, as of the Closing Date, 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 Credit
Billing Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's
Regulations B, M and Z, the Soldiers' and Sailors' Civil Relief Act of 1940 and
state adaptations of the Uniform Consumer Credit Code.
(4) BINDING OBLIGATION. Each Contract represents the genuine, legal,
valid and binding payment obligation in writing of the related Obligor,
enforceable by the holder thereof in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency,
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reorganization or other similar laws affecting the enforcement of creditors'
rights generally and by general principles of equity.
(5) NO GOVERNMENT OR INCORPORATED OBLIGOR. No Contract is due from
the United States of America or any state thereof or from any agency, department
or instrumentality of the United States of America or any state thereof or from
any incorporated entity.
(6) SECURITY INTEREST IN FINANCED VEHICLES. Immediately prior to the
transfer of the Contracts by the Seller to the Trust, each Contract was secured
by a valid, binding and enforceable first priority perfected security interest
in favor of the Seller in the related Financed Vehicle and, at such time as
enforcement of such security interest is sought, there shall exist a valid,
binding and enforceable first priority perfected security interest in such
Financed Vehicle for the benefit of the Seller and the Trust, respectively,
which is subject to regulatory registration with a clear legal right of
repossession in favor of the Seller and the Trust.
(7) CONTRACTS IN FORCE. No Contract 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 Contract.
(8) NO WAIVER. No provision of a Contract has been waived in such a
manner that such Contract fails to meet all of the representations and
warranties made by the Seller in this Section 2.2 with respect thereto and no
provision of any Contract has been waived except as noted in the Contract Files.
(9) NO DEFENSES. No Contract is subject to any right of rescission,
setoff, counterclaim or defense, including the defense of usury, and the
operation of any of the terms of any Contract, or the exercise of any right
thereunder, will not render such Contract unenforceable in whole or in part or
subject to any right of rescission, setoff, counterclaim or defense, including
the defense of usury, and the Seller has not received written notice of the
assertion of any such right of rescission, setoff, counterclaim or defense
asserted with respect thereto.
(10) NO LIENS. No liens or claims exist or have been filed for work,
labor or materials or unpaid state or federal taxes relating to any Financed
Vehicle that are prior to, or equal or coordinate with, the security interest in
such Financed Vehicle created by the related Contract.
(11) NO DEFAULT; REPOSSESSION. No default, breach, violation or
event permitting acceleration under the terms of any Contract has occurred
(other than payments that are not more than 30 days past due), no continuing
condition that with notice or the lapse of time or both would constitute a
default, breach, violation or event permitting acceleration under the terms of
any Contract has arisen and no Financed Vehicle has been repossessed as of the
Cutoff Date.
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(12) TITLE. The Seller intends that the transfer of the Contracts
contemplated by Section 2.1(a) constitute a sale of the Contracts from the
Seller to the Trust and that the beneficial interest in, and title to, the
Contracts 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. The
Seller has not sold, transferred, assigned or pledged any Contract to any Person
other than the Trust and such Contract has not been released. Immediately prior
to the transfer of the Contracts contemplated by Section 2.1(a), the Seller had
good and marketable title to the Contracts free and clear of all Liens,
encumbrances, security interests and rights of others and, immediately upon such
transfer, the Trust shall have good and marketable title to the Contracts, free
and clear of all Liens, encumbrances, security interests and rights of others.
The transfer of the Contracts contemplated by Section 2.1(a) has been perfected
by all necessary action under the Relevant UCC.
(13) VALID ASSIGNMENT. No Contract has been originated in, or is
subject to the laws of, any jurisdiction under which the sale, transfer,
assignment and conveyance of such Contract under this Agreement or the pledge of
such Contract under the Indenture is unlawful, void or voidable. No Contract is
subject to any agreement with any account debtor that prohibits, restricts or
conditions the assignment of the Contracts.
(14) ALL FILINGS MADE. All filings (including, without limitation,
filings under the Relevant UCC) necessary in any jurisdiction to give the Trust
a first priority perfected security interest in the Contracts and to give the
Indenture Trustee a first priority perfected security interest in the Contracts
have been made or will be made on or prior to the Closing Date.
(15) CHATTEL PAPER. Each Contract constitutes "chattel paper" as
defined in the Relevant UCC.
(16) ONE ORIGINAL. There is only one original executed copy of each
Contract.
(17) PRINCIPAL BALANCE. Each Contract had a Principal Balance as of
the Cutoff Date of not more than $40,000.
(18) NO BANKRUPT OBLIGORS. As of the Cutoff Date, no Contract was
due from an Obligor that was the subject of a proceeding under the Bankruptcy
Code of the United States or was bankrupt.
(19) TERM TO MATURITY. Each Contract had an original term to
maturity of not more than 60 months.
(20) ANNUAL PERCENTAGE RATE. Each Contract has an APR of at least
13.00%.
(21) LOCATION OF CONTRACT FILES. The Contract Files have been
delivered to the Custodian and are maintained at the location listed in Schedule
2 to this Agreement.
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(22) NO DELINQUENT CONTRACTS. As of the Cutoff Date, no Contract was
a Delinquent Contract or a Defaulted Contract.
(23) OFFERING MEMORANDUM DATA. The tabular and numerical data
contained in the Offering Memorandum relating to the characteristics of the
Contracts is true and correct in all material respects.
(24) NO DEFAULTS. No Contract is due from an Obligor that has
previously defaulted on a retail installment sales contract or promissory note
and security agreement purchased by the Seller.
(25) FINAL SCHEDULED PAYMENT DATE. The final scheduled payment date
for each Contract is on or before January 31, 2005.
(26) ORIGINATOR AGREEMENT. Each Contract 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 by the Insurer.
(27) LOCKBOX. The Obligor with respect to each contract has been
instructed to make payments under the Contract to a Lockbox which is under the
control of the Servicer.
(28) UNITED STATES OBLIGOR. Each Contract is due from an Obligor
which has provided as its most recent billing address an address located in the
United States of America.
(29) U.S. DOLLARS. Each Contract is payable in the lawful money of
the United States of America.
(30) NO WAIVER OR MODIFICATION. No Contract has been waived or
modified as of the Closing Date except as permitted by the Servicing Agreement.
(31) SCHEDULED PAYMENTS. Each contract relates to an Obligor who has
made at least one Scheduled Payment; PROVIDED, that $5,000,000 of the initial
aggregate Principal Balance of the Contracts are exempt from this requirement.
2.3. REPURCHASE BY SELLER UPON BREACH. The Seller, the Insurer, the
Depositor, the Servicer or the Trust, as the case may be, shall inform the other
parties to this Agreement and the Indenture Trustee promptly, in writing, upon
the discovery of any breach or failure to be true of the representations and
warranties made by the Seller pursuant to Section 2.2. If such breach or failure
shall not have been cured by the close of business on the last day of the
Collection Period which includes the thirtieth (30th) day after the date on
which the Seller becomes aware of, or receives written notice from the Servicer,
the Depositor, the Insurer or the Trust of, such breach or failure, and such
breach or failure materially and adversely affects the interest of the Trust in
a Contract, the Seller shall repurchase such Contract from the Trust on the
Business Day next
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preceding the Payment Date immediately following such Collection Period. In
consideration of the repurchase of a Contract hereunder, the Seller shall remit
the Purchase Amount of such Contract in the manner specified in Section 3.4. The
sole remedy of the Trust, the Owner Trustee, the Indenture Trustee and the
Noteholders with respect to a breach or failure to be true of the
representations and warranties made by the Seller pursuant to Section 2.2 shall
be to require the Seller to repurchase Contracts pursuant to this Section 2.3.
Neither the Owner Trustee nor the Indenture Trustee shall have any duty to
conduct an affirmative investigation as to the occurrence of any condition
requiring the repurchase of any Contract pursuant to this Section 2.3 or the
eligibility of any Contract for purposes of this Agreement.
ARTICLE III
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO NOTEHOLDERS AND CERTIFICATEHOLDERS
3.1. ACCOUNTS.
(1) The Servicer shall establish, on or before the Closing Date, and
maintain in the name of the Indenture Trustee at an Eligible Institution (which
shall initially be the Indenture Trustee) a segregated trust account designated
as the Collection Account (the "COLLECTION ACCOUNT"). The Collection Account
shall be held in trust for the benefit of the Insurer, the Noteholders. The
Collection Account shall be under the sole dominion and control of the Indenture
Trustee; PROVIDED, HOWEVER, that the Servicer may make deposits to and direct
the Indenture Trustee in writing to make withdrawals from the Collection Account
in accordance with this Agreement and the Indenture. All monies deposited from
time to time in the Collection Account pursuant to this Agreement shall be held
by the Indenture Trustee as part of the Trust Property and shall be applied as
provided in this Agreement. All deposits to and withdrawals from the Collection
Account shall be made only upon the terms and conditions of the Transaction
Documents.
If the Servicer is required to remit collections within two Business
Days pursuant to the first sentence of Section 3.2, all amounts held in the
Collection Account shall, to the extent permitted by applicable law, rules and
regulations, be invested, as directed in writing by the Servicer, by the bank or
trust company then maintaining the Collection Account in Eligible Investments
that mature not later than the Business Day preceding the Payment Date following
the Collection Period to which such amounts relate. All such Eligible
Investments shall be held to maturity. If the Collection Account is no longer to
be maintained at the Indenture Trustee, the Servicer shall, with the Indenture
Trustee's assistance as necessary, cause the Collection Account to be moved to
an Eligible Institution within ten (10) Business Days (or such longer period not
to exceed thirty (30) calendar days as to which each Rating Agency and the
Insurer (provided that no Insurer Default shall have occurred and is continuing)
may consent). The Servicer shall
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promptly notify the Indenture Trustee, the Insurer (provided that no Insurer
Default shall have occurred and is continuing) and the Owner Trustee of any
change in the account number or location of the Collection Account.
(2) The Servicer shall establish, on or before the Closing Date, and
maintain in the name of the Indenture Trustee at an Eligible Institution (which
shall initially be the Indenture Trustee) a segregated trust account designated
as the Note Payment Account (the "NOTE PAYMENT ACCOUNT"). The Note Payment
Account shall be held in trust for the benefit of the Noteholders and the
Insurer. The Note Payment Account shall be under the sole dominion and control
of the Indenture Trustee; PROVIDED, HOWEVER, that the Servicer may make deposits
to and direct the Indenture Trustee in writing to make withdrawals from the Note
Payment Account in accordance with this Agreement and the Indenture. All monies
deposited from time to time in the Note Payment Account pursuant to this
Agreement and the Indenture shall be held by the Indenture Trustee as part of
the Trust Property and shall be applied as provided in this Agreement and the
Indenture. The amounts on deposit in the Note Payment Account shall not be
invested. If the Note Payment Account is no longer to be maintained at the
Indenture Trustee, the Servicer shall, with the Indenture Trustee's assistance
as necessary, cause the Note Payment Account to be moved to an Eligible
Institution within ten (10) Business Days (or such longer period not to exceed
thirty (30) calendar days as to which each Rating Agency and the Insurer
(provided that no Insurer Default shall have occurred and is continuing) may
consent). The Servicer shall promptly notify the Indenture Trustee, the Insurer
and the Owner Trustee of any change in the account number or location of the
Note Payment Account.
(3) The Servicer shall establish, on or before the Closing Date, and
maintain in the name of the Trust at an Eligible Institution (which shall
initially be the Owner Trustee) a segregated trust account designated as the
Depositor Account (the "DEPOSITOR ACCOUNT"). The Depositor Account shall be held
in trust for the benefit of the Depositor. The Depositor Account shall be under
the sole dominion and control of the Trust; PROVIDED, HOWEVER, that the Servicer
may direct the Indenture Trustee in writing to make deposits to the Depositor
Account in accordance with this Agreement and the Indenture and may direct the
Owner Trustee in writing to make withdrawals from the Depositor Account in
accordance with this Agreement and the Trust Agreement. All monies deposited
from time to time in the Depositor Account pursuant to this Agreement and the
Indenture shall be held by the Trust as part of the Trust Property and shall be
applied as provided in this Agreement and the Trust Agreement. The amounts on
deposit in the Depositor Account shall not be invested. If the Depositor Account
is no longer to be maintained at the Owner Trustee, the Servicer shall, with the
Owner Trustee's assistance as necessary, cause the Depositor Account to be moved
to an Eligible Institution within ten (10) Business Days (or such longer period
not to exceed thirty (30) calendar days as to which each Rating Agency and the
Insurer (provided that no Insurer Default shall have occurred and is continuing)
may consent). The Servicer shall promptly notify the Indenture Trustee, the
Insurer (provided that no Insurer Default shall have occurred and is continuing)
and the Owner Trustee of any change in the account number or location of the
Depositor Account.
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3.2. COLLECTIONS. The Servicer shall remit to the Collection Account
all amounts received by the Servicer on or in respect of the Contracts
(excluding payments with respect to Purchased Contracts) as soon as practicable
and in no event after the close of business on the second Business Day after
such receipt; PROVIDED, HOWEVER, that for so long as (i) FISC is the Servicer,
(ii) no Event of Servicing Termination shall have occurred and be continuing and
(iii) (A) the short-term unsecured debt of FISC (for so long as it is Servicer)
shall be rated at least P-1 by Moody's and at least A-1 by Standard & Poor's or
(B) the Rating Agency Condition shall have been satisfied and the written
consent of the Insurer shall have been obtained (each, a "MONTHLY REMITTANCE
CONDITION"), the Servicer may remit any such amounts received during any
Collection Period to the Collection Account in immediately available funds on
the Business Day preceding the Payment Date following such Collection Period.
The Owner Trustee and the Indenture Trustee shall not be deemed to have
knowledge of any event or circumstance under clause (ii) or (iii) of the
definition of Monthly Remittance Condition that would require daily remittance
by the Servicer to the Collection Account (and shall be entitled to presume and
be fully protected in presuming that no such event or circumstance has occurred
or exists)unless the Owner Trustee or the Indenture Trustee, as applicable, has
received written notice of such event or circumstance from the Seller or the
Servicer in an Officer's Certificate or written notice from the Insurer (if no
Insurer Default shall have occurred and be continuing), the Holders of Notes
evidencing not less than 25% of the Note Balance or a Responsible Officer of the
Owner Trustee or the Indenture Trustee, as applicable, has actual knowledge of
such event or circumstance.
3.3. APPLICATION OF COLLECTIONS. For purposes of this Agreement, all
amounts received on or in respect of a Contract during any Collection Period
(excluding payments with respect to Purchased Contracts) shall be applied by the
Servicer, on the date received, to interest and principal on such Contract in
accordance with the terms of such Contract.
3.4. ADDITIONAL DEPOSITS. The Seller and the Servicer shall deposit
or cause to be deposited in the Collection Account the aggregate Purchase Amount
with respect to Purchased Contracts pursuant to Section 2.3 hereof. All such
deposits with respect to a Collection Period shall be made in immediately
available funds no later than 5:00 p.m., New York City time, on the Business Day
preceding the Payment Date following such Collection Period.
3.5. DETERMINATION DATE CALCULATIONS; APPLICATION OF AVAILABLE
FUNDS.
(1) On each Determination Date, the Servicer shall calculate the
following amounts:
(1) the Available Funds for the following Payment Date;
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(2) the Total Servicing Fee for the preceding Collection Period;
(3) the Total Note Interest for the following Payment Date;
(4) the Monthly Note Principal for the following Payment Date;
(5) the Insurance Premium for the following Payment Date plus any
overdue Insurance Premiums for previous Payment Dates;
(6) the aggregate amount of any unreimbursed payments under the
Policy to the extent payable to the Insurer under the Insurance Agreement
PLUS accrued interest on any unreimbursed payments under the Policy at the
rate provided in the Insurance Agreement PLUS any other amounts due the
Insurer under the Insurance Agreement and the Policy;
(7) the sum of the amounts described in clauses (ii), (iii) and (iv)
above (the "REQUIRED PAYMENT AMOUNT");
(8) the sum of the amounts described in clauses (v) and (vi) above
(the "INSURANCE PAYMENT AMOUNT"); and
(9) any unpaid or unreimbursed fees and expenses (including but not
limited to, attorneys' fees and transition expenses) due to the Back-Up
Servicer, the Indenture Trustee and the Owner Trustee.
(2) On each Determination Date, the Servicer shall calculate the
following amounts:
(1) the lesser of (A) the amount, if any, by which the sum of the
Required Payment Amount PLUS the Insurance Payment Amount for the
following Payment Date exceeds the Available Funds for such Payment Date
and (B) the Reserve Account Amount for such Payment Date (before giving
effect to any deposits to or withdrawals from the Reserve Account on such
Payment Date) (such lesser amount, the "RESERVE ACCOUNT DRAW Amount");
(2) the Policy Claim Amount;
(3) the Reserve Account Amount for the following Payment Date (after
giving effect to the withdrawal of the Reserve Account Draw Amount for
such Payment Date); and
(4) the amount, if any, by which the Required Reserve Account Amount
for the following Payment Date exceeds the Reserve Account Amount for such
Payment
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Date (after giving effect to the withdrawal of the Reserve Account Draw
Amount for such Payment Date) (such excess, the "RESERVE ACCOUNT
DEFICIENCY").
On each Payment Date, the Servicer shall instruct the Indenture
Trustee to withdraw, and the Indenture Trustee upon receipt of such instructions
shall withdraw, the Reserve Account Draw Amount, if any, for such Payment Date
from the Reserve Account and apply such amount in accordance with paragraph (e)
of this Section 3.5.
(3) If the Servicer determines on any Determination Date that the
Available Funds for the following Payment Date PLUS the Reserve Account Draw
Amount (excluding that portion attributable to clause (ii) of Section 3.5(a))
for such Payment Date will be insufficient to pay in full the Required Payment
Amount (excluding that portion attributable to clause (ii) of Section 3.5(a))
for such Payment Date, the Servicer shall deliver to the Indenture Trustee, with
a copy to the Insurer, the Owner Trustee and the Fiscal Agent, no later than
2:00 p.m., New York City time, on such Determination Date, a written notice
specifying the Policy Claim Amount for such Payment Date. The Indenture Trustee
shall, no later than 12:00 p.m., New York City time, on the second Business Day
prior to such Payment Date, make a claim under the Policy for such Policy Claim
Amount by delivering to the Insurer and the Fiscal Agent, with a copy to the
Servicer, a Notice (as defined in the Policy) for such Policy Claim Amount. In
making any such claim, the Indenture Trustee shall comply with all the terms and
conditions of the Policy. The "POLICY CLAIM AMOUNT" with respect to a Payment
Date shall equal the sum of the following amounts:
(1) the excess, if any, of (a) the Total Note Interest for such
Payment Date over (b) the portion of Total Available Funds for such
Payment Date applied to the payment thereof pursuant to Sections 3.5(d)
and (e); and
(2) the Principal Deficit; and
(3) the Note Balance outstanding on the Final Note Payment Date,
after giving effect to all other distributions to the Noteholders to be
made on such Final Note Payment Date.
The Servicer shall instruct the Indenture Trustee to deposit, and
the Indenture Trustee upon receipt of such instructions shall deposit, the
proceeds of any drawing under the Policy in respect of clauses (i), (ii) and
(iii) above to the Note Payment Account.
It is understood that this Section 3.5(c) shall have no effect upon
the Insurer's obligations under the Policy, which are governed solely by the
Policy.
(4) On each Payment Date, the Servicer shall instruct the Indenture
Trustee to apply the Available Funds for such Payment Date to make the following
payments and deposits in the following order of priority:
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(1) to the Back-Up Servicer, Indenture Trustee, Custodian and Owner
Trustee in its individual capacity, respectively, any unpaid or
unreimbursed fees and expenses (including, but not limited to, attorneys'
fees and transition expenses); PROVIDED that any such expenses shall not
exceed $50,000 in the aggregate per year and (A) prior to an Event of
Servicing Termination, $100,000 in the total aggregate or (B) after an
Event of Servicing Termination, $200,000 in the total aggregate so long as
the Notes shall remain outstanding and the Policy has not been cancelled;
(2) to the Servicer, the Total Servicing Fee for the preceding
Collection Period;
(3) to the Note Payment Account, the Total Note Interest for such
Payment Date;
(4) to the Note Payment Account, the Monthly Note Principal for such
Payment Date;
(5) unless an Insurer Default has occurred and is continuing, to the
Insurer, the Insurance Premium for such Payment Date plus any overdue
Insurance Premiums for previous Payment Dates;
(6) to the Insurer, the aggregate amount of any unreimbursed
payments under the Policy to the extent payable to the Insurer under the
Insurance Agreement PLUS accrued interest on any unreimbursed payments
under the Policy at the rate provided in the Insurance Agreement PLUS any
other amounts due the Insurer under the Insurance Agreement and the
Policy;
(7) if the Notes have been declared immediately due and payable
following the occurrence of an Event of Default, to the Note Payment
Account, the lesser of (a) the amount of Available Funds available after
payment of items (i) through (vi) above and (b) the Note Balance;
(8) to the Reserve Account, the Reserve Account Deficiency, if any,
for such Payment Date;
(9) other amounts, if any, due the Owner Trustee in its individual
capacity, the Indenture Trustee, the Custodian, the Back-Up Servicer, the
Servicer and the Insurer, respectively, pursuant to the Transaction
Documents; and
(10) to the Depositor Account, any remaining amount of Available
Funds.
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On each Payment Date, the Servicer shall instruct the Indenture Trustee to
make the payments described in Section 2.8 of the Indenture, as applicable, from
the Note Payment Account.
(5) On each Payment Date, the Servicer shall instruct the Indenture
Trustee to apply, and the Indenture Trustee shall apply, the amount withdrawn
from the Reserve Account in respect of the Reserve Account Draw Amount in
accordance with paragraph (b) of this Section 3.5 to make the following payments
in the following order of priority:
(1) to the Servicer, the Total Servicing Fee for the preceding
Collection Period;
(2) to the Note Payment Account, the Total Note Interest for such
Payment Date;
(3) to the Note Payment Account, the Monthly Note Principal for such
Payment Date;
(4) unless an Insurer Default has occurred and is continuing, to the
Insurer, the Insurance Premium for such Payment Date plus any overdue
Insurance Premiums for previous Payment Dates; and
(5) to the Insurer, the aggregate amount of any unreimbursed
payments under the Policy to the extent payable to the Insurer under the
Insurance Agreement PLUS accrued interest on any unreimbursed payments
under the Policy at the rate provided in the Insurance Agreement PLUS any
other amounts due the Insurer under the Insurance Agreement and the
Policy.
(6) On any Payment Date on or after which the Notes have become due
and payable, the Servicer may, with the prior written consent (a copy of which
written consent shall be forwarded by the Servicer to the Indenture Trustee) of
the Insurer, and shall, at the written direction (a copy of which written
direction shall be forwarded by the Servicer to the Indenture Trustee) of the
Insurer (provided that no Insurer Default shall have occurred and be
continuing), instruct the Indenture Trustee to withdraw from the Reserve
Account, and the Indenture Trustee upon receipt of such instructions shall
withdraw from the Reserve Account, an amount equal to the remainder of the Note
Balance after the application of all other amounts distributable to the
Noteholders on such Payment Date pursuant to the Transaction Documents. The
Servicer may, with the prior written consent (a copy of which written consent
shall be forwarded
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by the Servicer to the Indenture Trustee) of the Insurer (provided that no
Insurer Default shall have occurred and be continuing), and shall, at the
written direction (a copy of which written direction shall be forwarded by the
Servicer to the Indenture Trustee) of the Insurer, instruct the Indenture
Trustee to apply, and the Indenture Trustee shall apply, such amount to the
payment of the Note Balance until the Note Balance has been reduced zero.
3.6. RESERVE ACCOUNT.
(1) The Servicer shall establish, on or before the Closing Date, and
maintain in the name of the Indenture Trustee at an Eligible Institution (which
shall initially be the Indenture Trustee) a segregated trust account designated
as the Reserve Account (the "RESERVE ACCOUNT"). The Reserve Account shall be
held in trust for the benefit of the Noteholders, the Servicer and the Insurer.
The Reserve Account shall be under the sole dominion and control of the
Indenture Trustee; PROVIDED, HOWEVER, that the Servicer may make deposits to and
direct the Indenture Trustee in writing to make withdrawals from the Reserve
Account in accordance with this Agreement and the Indenture. On the Closing
Date, the Trust shall deposit the Initial Reserve Account Deposit into the
Reserve Account from the net proceeds of the sale of the Notes. Pursuant to the
Indenture, the Trust will pledge all of its right, title and interest in, to and
under the Reserve Account and the Reserve Account Property and to the Indenture
Trustee on behalf of the Noteholders and the Insurer to secure its obligations
under the Notes and the Indenture.
(2) The Reserve Account Property shall, to the extent permitted by
applicable law, rules and regulations, be invested, as directed in writing by
the Servicer, by the bank or trust company then maintaining the Reserve Account
in Eligible Investments that mature not later than the Business Day preceding
the next Payment Date. All such Eligible Investments shall be held to maturity.
All interest and other income (net of losses and investment expenses) on funds
on deposit in the Reserve Account shall, at the written direction of the
Servicer, be paid to the Trust on any Payment Date to the extent that funds on
deposit therein, as certified by the Servicer, exceed the Required Reserve
Account Amount. If the Reserve Account is no longer to be maintained at the
Indenture Trustee, the Servicer shall, with the Indenture Trustee's assistance
as necessary, cause the Reserve Account to be moved to an Eligible Institution
within ten (10) Business Days (or such longer period not to exceed thirty (30)
calendar days as to which each Rating Agency and the Insurer (provided that no
Insurer Default shall have occurred and is continuing) may consent). The
Servicer shall promptly notify the Insurer (provided that no Insurer Default
shall have occurred and is continuing) and the Indenture Trustee of any change
in the account number or location of the Reserve Account.
(3) With respect to any Reserve Account Property:
(1) any Reserve Account Property that is a "financial asset" as
defined in Section 8-102(a)(9) of the UCC shall be physically delivered
to, or credited to an account in the name of, the Eligible Institution
maintaining the Reserve Account, in accordance with such institution's
customary procedures such that such institution establishes a "securities
entitlement" in favor of the Indenture Trustee with respect thereto;
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(2) any Reserve Account Property that is held in deposit accounts
shall be held solely in the name of the Indenture Trustee at one or more
depository institutions having the Required Rating and each such deposit
account shall be subject to the exclusive custody and control of the
Indenture Trustee and the Indenture Trustee shall have sole signature
authority with respect thereto; and
(3) except for any deposit accounts specified in clause (ii) above,
the Reserve Account shall only be invested in securities or in other
assets which the Eligible Institution maintaining the Reserve Account
agrees to treat as "financial assets" as defined in Section 8-102(a)(9) of
the UCC.
(4) If the Reserve Account Amount for any Payment Date (after giving
effect to the withdrawal of the Reserve Account Draw Amount for such Payment
Date) exceeds the Required Reserve Account Amount for such Payment Date, the
Servicer shall, unless an Event of Default has occurred and is continuing,
instruct the Indenture Trustee in writing to distribute, and the Indenture
Trustee upon receipt of such instructions shall distribute, the amount of such
excess to the Paying Agent under the Trust Agreement for the benefit of the
Depositor. The Indenture Trustee hereby releases, on each Payment Date, its
security interest in, to and under Reserve Account Property distributed to the
Depositor pursuant to this Section 3.6. If an Event of Default has occurred and
is continuing, the Servicer shall instruct the Indenture Trustee to apply, and
the Indenture Trustee upon receipt of such instructions shall apply, the amount
of such excess to the Collection Account for application to the Available Funds
pursuant to 3.5(d).
(5) If the Note Balance and all other amounts owing or to be
distributed hereunder or under the Indenture to the Noteholders and the Insurer
have been paid in full and the Trust has been terminated, any remaining Reserve
Account Property shall be distributed to the Depositor.
3.7. STATEMENTS TO NOTEHOLDERS. On or prior to each Determination
Date, the Servicer shall provide to the Indenture Trustee (with copies to the
Rating Agencies and each Paying Agent) for the Indenture Trustee to forward to
each Noteholder of record as of the most recent Record Date upon a written
request from any such Noteholder, a statement in substantially the form of
Exhibit B to this Agreement. Each such statement shall set forth at least the
following information as to the Notes (to the extent applicable) with respect to
the distribution to be made on such Payment Date:
(1) the amount of such distribution allocable to principal for the
Notes;
(2) the amount of such distribution allocable to interest for the
Notes;
(3) the Total Servicing Fee for the preceding Collection Period;
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(4) the Note Balance and the Note Pool Factor, in each case as of
the close of business on the last day of the preceding Collection Period
(after giving effect to payments allocated to principal reported under
clause (i) above);
(5) the Pool Balance as of the close of business on the last day of
the preceding Collection Period;
(6) the Reserve Account Amount on such Payment Date (after giving
effect to all deposits to or withdrawals from the Reserve Account on such
Payment Date);
(7) the aggregate Purchase Amount of Purchased Contracts, if any,
with respect to the preceding Collection Period;
(8) the number and aggregate Principal Balance of Contracts that
were 31-60 days, 61-90 days or 91 days or more delinquent as of the last
day of the preceding Collection Period; and
(9) Cumulative Net Loss Rate information with respect to the
preceding Collection Periods.
3.8. CONTROL OF SECURITIES ACCOUNTS.
(1) Notwithstanding anything else contained herein, the Servicer,
the Depositor and the Trust agrees that each of the Collection Account, the Note
Payment Account and the Reserve Account will only be established at an Eligible
Institution that agrees substantially as follows: (i) it will comply with
"entitlement orders" (as defined in Section 8-102(a)(8) of the UCC) relating to
such accounts issued by the Indenture Trustee without further consent by the
Trust, the Servicer or the Depositor; (ii) until the termination of the
Indenture, it will not enter into any other agreement relating to any such
account pursuant to which it agrees to comply with entitlement orders of any
Person other than the Indenture Trustee; (iii) all assets delivered or credited
to it in connection with such accounts and all investments thereof will be
promptly credited to such accounts; and (iv) that all property credited to such
accounts are "financial assets" as defined in Section 8-102(9) of the Relevant
UCC.
(2) Notwithstanding anything else contained herein, the Servicer,
the Depositor and the Trust agree that the Depositor Account will only be
established at an Eligible Institution that agrees substantially as follows: (i)
it will comply with "entitlement orders" (as defined in Section 8-102(a)(8) of
the UCC) relating to such accounts issued by the Trust without further consent
by the Depositor or the Servicer; (ii) until the termination of the Trust
Agreement, it will not enter into any other agreement relating to any such
account pursuant to which it agrees to comply with entitlement orders of any
Person other than the Trust; (iii) all assets delivered or credited to it in
connection with such accounts and all investments thereof will be promptly
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credited to such account; and (iv) that all property credited to such account
are "financial assets" as defined in Section 8-102(9) of the Relevant UCC.
3.9. POLICY MATTERS.
(1) The Indenture Trustee hereby agrees on behalf of the Noteholders
(and each Noteholder, by its acceptance of its Notes, hereby agrees) for the
benefit of the Insurer that the Indenture Trustee shall recognize that to the
extent the Insurer makes a payment under the Policy, either directly or
indirectly (as by paying through the Indenture Trustee), to the Noteholders, the
Insurer will be entitled to be subrogated to the rights of the Noteholders to
the extent of such payment made under the Policy. Any rights of subrogation
acquired by the Insurer as a result of any payment made under the Policy shall,
in all respects, be subordinate and junior in right of payment to the prior
indefeasible payment in full of all amounts due under the Notes.
(2) The Indenture Trustee, for itself and on behalf of the
Noteholders, hereby agrees that the Insurer may at any time during the
continuation of any proceeding relating to a Final Order, provided that no
Insurer Default shall have occurred and be continuing, direct all matters
relating to such Final Order, including, without limitation, the direction of
any appeal of any order relating to such Final Order and the posting of any
surety, supersedeas or performance bond pending any such appeal. In addition and
without limitation of the foregoing, the Insurer shall be subrogated, to the
extent of any payments made under the Policy relating to a Final Order, to the
rights of the Depositor, the Servicer, the Seller, the Trust, the Indenture
Trustee and the Noteholders in the conduct of any preference claim relating to a
Final Order, including, without limitation, all rights of any party to any
adversarial proceeding or action with respect to any court order issued in
connection with any such preference claim; PROVIDED, that such subrogation
rights shall remain subject to the last sentence of paragraph (a) of this
Section 3.9.
ARTICLE IV
THE SELLER
4.1. REPRESENTATIONS AND WARRANTIES OF SELLER. The Seller makes the
following representations and warranties on which the Trust shall be deemed to
have relied in accepting the Trust Property. The representations and warranties
speak as of the execution and delivery of this Agreement and shall survive the
sale, transfer, assignment and conveyance of the Trust Property to the Trust
pursuant to this Agreement and the pledge of the Trust Property to the Indenture
Trustee pursuant to the Indenture:
(1) ORGANIZATION AND GOOD STANDING. The Seller has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Texas, has the power, authority and legal right to own its
properties and to conduct its business as such
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properties are currently owned and such business is currently conducted, and has
the power, authority and legal right to acquire, own and sell the Contracts.
(2) DUE QUALIFICATION. The Seller is duly qualified to do business
as a foreign corporation in good standing and has obtained all necessary
licenses and approvals in each jurisdiction in which the failure to so qualify
or to obtain such licenses and approvals would, in the reasonable judgment of
the Seller, materially and adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, this Agreement, the
Indenture, the Trust Agreement, any of the other Transaction Documents, the
Contracts or the Notes.
(3) POWER AND AUTHORITY. The Seller has the power and authority to
execute, deliver and perform its obligations under this Agreement and the other
Transaction Documents to which it is a party. The Seller has the power and
authority to sell, assign, transfer and convey the property to be transferred to
and deposited with the Trust and has duly authorized such transfer and deposit
by all necessary corporate action, and the execution, delivery and performance
of this Agreement and the other Transaction Documents to which the Seller is a
party have been duly authorized by the Seller by all necessary corporate action.
(4) VALID TRANSFER; BINDING OBLIGATION. This Agreement effects a
valid sale, transfer, assignment and conveyance to the Trust of the Contracts
and the other Trust Property enforceable against creditors of and purchasers
from the Seller. This Agreement and the other Transaction Documents to which the
Seller is a party constitute legal, valid and binding obligations of the Seller,
enforceable against the Seller in accordance with their terms, subject, as to
enforceability, to applicable bankruptcy, insolvency, reorganization,
conservatorship, receivership, liquidation and other similar laws and to general
equitable principles.
(5) NO VIOLATION. The execution, delivery and performance by the
Seller of this Agreement and the other Transaction Documents to which the Seller
is a party, the consummation of the transactions contemplated hereby and thereby
and the fulfillment of the terms hereof and thereof will not conflict with,
result in a breach of any of the terms and provisions of or constitute (with or
without notice or lapse of time or both) a default under the articles of
organization or by-laws of the Seller or any material indenture, agreement,
mortgage, deed of trust or other instrument to which the Seller is a party or by
which the Seller is bound or to which any of its properties are subject, or
result in the creation or imposition of any lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of trust
or other instrument (other than pursuant to this Agreement), or violate any law,
order, rule or regulation applicable to the Seller or its properties of any
federal or state regulatory body, court, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or any of its
properties.
(6) NO PROCEEDINGS. There are no proceedings or investigations
pending, or, to the knowledge of the Seller, threatened, against the Seller
before any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the Seller or its
properties (i) asserting the invalidity of this Agreement, the Indenture, the
Trust
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Agreement, any of the other Transaction Documents or the Notes, (ii) seeking to
prevent the issuance of the Notes or the consummation of any of the transactions
contemplated by this Agreement, the Indenture, the Trust Agreement or any of the
other Transaction Documents, (iii) seeking any determination or ruling that, in
the reasonable judgment of the Seller, would materially and adversely affect the
performance by the Seller of its obligations under, or the validity or
enforceability of, this Agreement, the Indenture, the Trust Agreement, any of
the other Transaction Documents, the Contracts or the Notes, or (iv) that, in
the reasonable judgment of the Seller, would adversely affect the federal or
Applicable Tax State income, excise, franchise or similar tax attributes of the
Notes or the Trust.
4.2. LIABILITY OF SELLER; INDEMNITIES.
(1) The Seller shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Seller under this
Agreement.
(2) Notwithstanding any other provision in any Transaction Document,
the Seller shall indemnify, defend and hold harmless the Trust, the Owner
Trustee in its individual capacity, Bankers Trust Company, and the Indenture
Trustee from and against any taxes that may at any time be asserted against any
such Person with respect to, and as of the date of, the transfer of the
Contracts to the Trust or the issuance and original sale of the Notes, including
any sales, gross receipts, general corporation, tangible personal property,
privilege or license taxes (but, in the case of the Trust, not including any
taxes asserted with respect to ownership of the Contracts or federal or other
Applicable Tax State income taxes arising out of the transactions contemplated
by this Agreement and the other Transaction Documents), and all costs and
expenses in defending against such taxes.
(3) Notwithstanding any other provision in any Transaction Document,
the Seller shall indemnify, defend and hold harmless the Trust, the Owner
Trustee in its individual capacity, Bankers Trust Company, the Indenture Trustee
and the Noteholders from and against any loss, liability or expense incurred by
reason of (i) the Seller's willful misfeasance, bad faith or negligence in the
performance of its duties under this Agreement or any other Transaction Document
to which it is a party or by reason of a reckless disregard of its obligations
and duties under this Agreement or any other Transaction Document to which it is
a party and (ii) the Seller's violation of federal or state securities laws in
connection with the registration or the sale of the Notes and (iii) any action
taken, or failed to be taken, by the Seller in respect of any portion of the
Trust Property.
(4) Notwithstanding any other provision in any Transaction Document,
the Seller shall indemnify, defend and hold harmless the Owner Trustee in its
individual capacity, Bankers Trust Company, and the Indenture Trustee and their
respective officers, directors, employees and agents from and against all costs,
expenses, unpaid fees, losses, claims, damages and liabilities arising out of or
incurred in connection with the acceptance or performance of the trusts and
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<PAGE>
duties contained herein and in the Trust Agreement, in the case of the Owner
Trustee, and in the Indenture, in the case of the Indenture Trustee, except to
the extent that such cost, expense, loss, claim, damage or liability (i) shall
be due to the willful misfeasance, bad faith or gross negligence (except for
errors in judgment) of the Owner Trustee or the Indenture Trustee, as
applicable, (ii) in the case of the Owner Trustee, shall arise from the breach
by the Owner Trustee of any of its representations or warranties in its
individual capacity set forth in the Trust Agreement, (iii) in the case of the
Indenture Trustee, shall arise from the breach by the Indenture Trustee of any
of its representations and warranties set forth in the Indenture or (iv) relates
to any tax other than the taxes with respect to which either the Seller or the
Servicer shall be required to indemnify the Owner Trustee or the Indenture
Trustee, as applicable.
(5) The Seller shall pay any and all taxes levied or assessed upon
all or any part of the Owner Trust Estate.
Indemnification under this Section 4.2 shall survive the resignation
or removal of the Owner Trustee or the Indenture Trustee and the termination of
this Agreement and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Seller shall have made any indemnity payments
pursuant to this Section 4.2 and the Person to or on behalf of whom such
payments are made thereafter shall collect any of such amounts from others, such
Person shall promptly repay such amounts to the Seller, without interest.
4.3. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS
OF, SELLER. Any Person (i) into which the Seller shall be merged or
consolidated, (ii) resulting from any merger, conversion or consolidation to
which the Seller shall be a party or (iii) that shall succeed by purchase and
assumption to all or substantially all of the business of the Seller, which
Person in any of the foregoing cases executes an agreement of assumption to
perform every obligation of the Seller under this Agreement, shall be the
successor to the Seller under this Agreement without the execution or filing of
any other document or any further act on the part of any of the parties to this
Agreement; PROVIDED, HOWEVER, that (x) the Seller shall have delivered to the
Owner Trustee and the Indenture Trustee an Officer's Certificate and an Opinion
of Counsel each stating that such merger, conversion, consolidation or
succession and such agreement of assumption comply with this Section 4.3 and (y)
the Seller shall have delivered to the Owner Trustee and the Indenture Trustee
an Opinion of Counsel either (A) stating that, in the opinion of such counsel,
all financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary to fully preserve and protect the
interest of the Trust and the Indenture Trustee, respectively, in the Contracts
and the other Trust Property, and reciting the details of such filings, or (B)
stating that, in the opinion of such counsel, no such action shall be necessary
to fully preserve and protect such interest. The Seller shall provide notice of
any merger, conversion, consolidation or succession pursuant to this Section 4.3
to the Rating Agencies. Notwithstanding anything herein to the contrary, the
execution of the foregoing agreement of assumption and compliance with
36
<PAGE>
clauses (x) and (y) above shall be conditions to the consummation of the
transactions referred to in clauses (i), (ii) and (iii) above.
4.4. LIMITATION ON LIABILITY OF SELLER AND OTHERS.
(1) Neither the Seller nor any of the directors, officers, employees
or agents of the Seller shall be under any liability to the Trust or the
Noteholders for any action taken or for refraining from the taking of any action
pursuant to this Agreement or for errors in judgment; PROVIDED, however, that
this provision shall not protect the Seller or any such Person against any
liability that would otherwise be imposed by reason of willful misfeasance or
bad faith in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement, or by reason of negligence in the
performance of duties under this Agreement (except for errors in judgment). The
Seller, and its directors, officers, employees and agents, 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 in respect of any matters arising
under this Agreement.
(2) The Seller 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.
4.5. SELLER MAY OWN NOTES. The Seller, and any Affiliate of the
Seller, may, in its individual or any other capacity, become the owner or
pledgee of Notes with the same rights as it would have if it were not the Seller
or an Affiliate of the Seller, except as otherwise expressly provided herein
(including in the definition of "Note Balance") or in the other Transaction
Documents. Except as otherwise expressly provided herein (including the
definition of "Note Balance") or in the other Transaction Documents, Notes so
owned by or pledged to the Seller or such Affiliate shall have an equal and
proportionate benefit under the provisions of this Agreement and the other
Transaction Documents, without preference, priority or distinction as among the
Notes.
ARTICLE V
MISCELLANEOUS PROVISIONS
5.1. AMENDMENT.
(1) This Agreement may be amended from time to time by the Seller,
the Servicer, the Depositor and the Trust, with the consent of the Indenture
Trustee and the Insurer (provided that no Insurer Default shall have occurred
and be continuing), but without the consent of any of the Noteholders, to cure
any ambiguity, to correct or supplement any provision in this Agreement that may
be inconsistent with any other provisions in this Agreement or any
37
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offering document used in connection with the initial offer and sale of the
Notes or to add, change or eliminate any other provisions with respect to
matters or questions arising under this Agreement that are not inconsistent with
the provisions of this Agreement; PROVIDED, HOWEVER, that such amendment shall
not, as evidenced by an Opinion of Counsel delivered to the Owner Trustee, the
Indenture Trustee and the Insurer, materially and adversely affect the interests
of any Noteholder. Any such amendment shall be deemed not to materially and
adversely affect the interests of any Noteholder if the Rating Agency Condition
is satisfied or the Person requesting the amendment obtains an Opinion of
Counsel satisfactory to the Indenture Trustee and the Owner Trustee to that
effect.
(2) This Agreement may also be amended from time to time by the
Seller, the Servicer, the Depositor, the Trust and the Insurer (provided that no
Insurer Default shall have occurred and be continuing and if so, provided
further that such amendment shall not have a material adverse effect on the
Insurer), with the consent of the Indenture Trustee and the Holders of Notes
evidencing not less than 51% of the Note Balance, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement, or of modifying in any manner the rights of the Noteholders;
PROVIDED, HOWEVER, that no such amendment shall (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, or change the
allocation or priority of, collections on or in respect of the Contracts or
distributions that are required to be made for the benefit of the Noteholders or
change the Note Rate, or the Required Reserve Account Amount, without the
consent of all adversely affected Noteholders (ii) reduce the percentage
required to consent to any such amendment, without the consent of all adversely
affected Noteholders or (iii) adversely affect the rating of the Notes by the
Rating Agencies without the consent of the Holders of Notes evidencing not less
than 66-2/3% of the Note Balance.
(3) Prior to the execution of any amendment or consent pursuant to
Section 5.1(b), the Servicer shall provide written notification of the substance
of such amendment or consent to each Rating Agency and the Insurer.
(4) Promptly after the execution of any amendment or consent
pursuant to Section 5.1(b), the Trust shall furnish written notification of the
substance of such amendment or consent to the Indenture Trustee and each of the
Rating Agencies. It shall not be necessary for the consent of the Noteholders
pursuant to Section 5.1(b) to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents (and any other
consents of the Noteholders provided for in this Agreement) and of evidencing
the authorization of the execution thereof by the Noteholders shall be subject
to such reasonable requirements as the Owner Trustee and the Indenture Trustee
may prescribe.
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(5) Prior to the execution of any amendment pursuant to this Section
5.1, the Owner Trustee and the Indenture Trustee shall be entitled to receive
and rely upon (i) an Opinion of Counsel stating that the execution of such
amendment (A) is authorized or permitted by this Agreement, (B) will not
materially adversely affect the federal or any Applicable Tax State income or
franchise taxation of any Outstanding Note or any Holder thereof and (C) will
not cause the Trust to be taxable as a corporation for federal or any Applicable
Tax State income or franchise tax purposes and (ii) an Officer's Certificate of
the Servicer that all conditions precedent provided for in this Agreement to the
execution of such amendment have been complied with. The Owner Trustee or the
Indenture Trustee may, but shall not be obligated to, enter into any such
amendment which affects such Owner Trustee's or Indenture Trustee's own rights,
duties or immunities under this Agreement or otherwise.
5.2. PROTECTION OF TITLE TO TRUST.
(1) The Seller or the Servicer, or both, shall execute and file such
financing statements and cause to be executed and filed such continuation
statements, all in such manner and in such places as may be required by law
fully to preserve, maintain and protect the interest of the Trust and the
Indenture Trustee for the benefit of the Noteholders and the Insurer in the
Contracts and the proceeds thereof. The Seller or the Servicer, or both, shall
deliver (or cause to be delivered) to the Owner Trustee and the Indenture
Trustee file-stamped copies of, or filing receipts for, any document filed as
provided above as soon as available following such filing.
(2) Neither the Seller nor the Servicer shall change its name,
identity or corporate structure in any manner that would make any financing
statement or continuation statement filed by the Seller or the Servicer in
accordance with Section 5.2(a) seriously misleading within the meaning of
Section 9-402(7) of the Relevant UCC, unless it shall have given the Owner
Trustee and the Indenture Trustee at least sixty (60) days' prior written notice
thereof and shall have promptly filed such amendments to previously filed
financing statements or continuation statements or such new financing statements
as may be necessary to continue the perfection of the interest of the Trust and
the Indenture Trustee for the benefit of the Noteholders and the Insurer in the
Contracts and the proceeds thereof.
(3) The Seller and the Servicer shall give the Owner Trustee and the
Indenture Trustee at least sixty (60) days' prior written notice of any
relocation of its principal executive office if, as a result of such relocation,
the applicable provisions of the Relevant UCC would require the filing of any
amendment to any previously filed financing statement or continuation statement
or of any new financing statement and shall promptly file any such amendment,
continuation statement or any new financing statement. The Servicer shall at all
times maintain each office from which it shall service Contracts, and its
principal executive office, within the United States of America.
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(4) The Servicer shall maintain accounts and records as to each
Contract accurately and in sufficient detail to permit (i) the reader thereof to
know at any time the status of such Contract, including payments and recoveries
made and payments owing (and the nature of each) and (ii) reconciliation between
payments or recoveries on (or with respect to) each Contract and the amounts
from time to time deposited in the Collection Account and the Reserve Account in
respect of such Contract.
(5) The Servicer shall maintain its computer systems so that, from
and after the time of the transfer of the Contracts to the Trust pursuant to
this Agreement, the Servicer's master computer records (including any back-up
archives) that refer to a Contract shall indicate clearly the interest of the
Trust and the Indenture Trustee in such Contract and that such Contract is owned
by the Trust and has been pledged to the Indenture Trustee pursuant to the
Indenture. Indication of the Trust's and the Indenture Trustee's interest in a
Contract shall be deleted from or modified on the Servicer's computer systems
when, and only when, such Contract shall have been paid in full or repurchased
by the Seller or purchased by the Servicer.
(6) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in or otherwise transfer any interest in any motor
vehicle retail installment sale contract or security interest and promissory
note to any prospective purchaser, lender or other transferee, the Servicer
shall give to such prospective purchaser, lender or other transferee computer
tapes, compact disks, records or print-outs (including any restored from back-up
archives) that, if they shall refer in any manner whatsoever to any Contract,
shall indicate clearly that such Contract has been sold and is owned by the
Trust and has been pledged to the Indenture Trustee (unless such Contract has
been paid in full or repurchased by the Seller or purchased by the Servicer).
(7) The Servicer shall permit the Owner Trustee, the Indenture
Trustee and their respective agents at any time during normal business hours to
inspect, audit and make copies of and abstracts from the Servicer's records
regarding any Contract.
(8) Upon request, the Servicer shall furnish to the Owner Trustee
and the Indenture Trustee, within ten (10) Business Days, a list of all
Contracts (by contract number and name of Obligor) then held as part of the
Trust, together with a reconciliation of such list to the Contract Schedule and
to each of the Monthly Servicer Reports furnished before such request indicating
removal of Contracts from the Trust.
(9) The Servicer shall deliver to the Owner Trustee and the
Indenture Trustee:
(1) promptly after the execution and delivery of each
amendment to any financing statement, an Opinion of Counsel either
(A) stating that, in the opinion of such Counsel, all financing
statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the
Trust and the Indenture Trustee in the Contracts, and reciting the
details of such filings or referring to prior Opinions of Counsel in
which such details are
40
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given, or (B) stating that, in the opinion of such Counsel, no such
action shall be necessary to preserve and protect such interest; and
(2) within ninety (90) days after the beginning of each
calendar year (beginning with the year 2001), an Opinion of Counsel,
dated as of a date during such 90-day period, either (A) stating
that, in the opinion of such Counsel, all financing statements and
continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Trust
and the Indenture Trustee in the Contracts, and reciting the details
of such filings or referring to prior Opinions of Counsel in which
such details are given, or (B) stating that, in the opinion of such
Counsel, no such action shall be necessary to preserve and protect
such interest.
Each Opinion of Counsel referred to in clause (i)(1) or (i)(2) above
shall specify any action necessary (as of the date of such opinion) to be taken
in the following year to preserve and protect such interest.
5.3. 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.
5.4. NOTICES. All demands, notices and other communications under
this Agreement shall be in writing, personally delivered, sent by telecopier,
overnight courier or mailed by certified mail, return receipt requested, and
shall be deemed to have been duly given upon receipt (i) in the case of the
Seller, at the following address: 675 Bering Drive, Suite 710, Houston, Texas
77057 Attention: Bennie Duck,(ii) in the case of the Servicer, at the following
address: 675 Bering Drive, Suite 710, Houston, Texas 77057, Attention: Bennie
Duck, (iii) in the case of the Owner Trustee, at the related Corporate Trust
Office, with a copy to Bankers Trust Company, 4 Albany Street, 10th Floor, New
York, New York, 10006, Attention: Structured Finance Group, (iv) in the case of
the Indenture Trustee, at the related Corporate Trust Office, (v) in the case of
Moody's, at the following address: Moody's Investors Service, Inc., ABS
Monitoring Department, 99 Church Street, New York, New York 10007, and (vi) in
the case of Standard & Poor's, at the following address: Standard & Poor's
Ratings Services, a division of The McGraw-Hill Companies, Inc., 55 Water
Street, New York, New York 10041, Attention: Asset Backed Surveillance
Department, and (vi) in the case of the Insurer, at the following address: MBIA
Insurance Corporation, 113 King Street, Armonk, New York 10504, Attention:
Insured Portfolio Management, Structured Finance.
5.5. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this
41
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Agreement and shall in no way affect the validity or enforceability of the other
provisions of this Agreement, or of the Notes, or the rights of the Holders
thereof.
5.6. ASSIGNMENT. Notwithstanding anything to the contrary contained
herein this Agreement may not be assigned by the Seller or the Servicer without
the prior written consent of the Trust, the Indenture Trustee, the Holders of
Notes evidencing not less than 66-2/3% of the Note Balance.
5.7. FURTHER ASSURANCES. The Seller and the Servicer agree to do and
perform, from time to time, any and all acts and to execute any and all further
instruments required or reasonably requested by the Owner Trustee or the
Indenture Trustee more fully to effect the purposes of this Agreement,
including, without limitation, the execution of any financing statements or
continuation statements relating to the Contracts for filing under the
provisions of the Relevant UCC of any applicable jurisdiction.
5.8. NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no
delay in exercising, on the part of the Owner Trustee, the Indenture Trustee,
the Insurer, the Noteholders, any right, remedy, power or privilege hereunder,
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
The rights, remedies, powers and privileges provided in this Agreement are
cumulative and not exhaustive of any rights, remedies, powers and privileges
provided by law.
5.9. THIRD-PARTY BENEFICIARIES. This Agreement shall inure to the
benefit of and be binding upon the parties hereto, the Noteholders, the Insurer
and their respective successors and permitted assigns. Except as otherwise
provided in Section 4.2 and this Article V, no other Person shall have any right
or obligation hereunder. The parties hereto hereby acknowledge and consent to
the pledge of this Agreement by the Trust to the Indenture Trustee for the
benefit of the Noteholders and the Insurer pursuant to the Indenture.
5.10. ACTIONS BY NOTEHOLDERS .
(1) Wherever in this Agreement a provision is made that an action
may be taken or a notice, demand or instruction given by the Noteholders, such
action, notice or instruction may be taken or given by any Noteholder, as
applicable, unless such provision requires a specific percentage of the
Noteholders.
(2) Any request, demand, authorization, direction, notice, consent,
waiver or other act by a Noteholder shall bind such Noteholder and every
subsequent Holder of such Note issued upon the registration of transfer thereof
or in exchange therefor or in lieu thereof in respect
42
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of anything done or omitted to be done by the Owner Trustee, the Indenture
Trustee or the Servicer in reliance thereon, whether or not notation of such
action is made upon such Note.
5.11. COUNTERPARTS. For the purpose of facilitating the execution of
this Agreement and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and all of which counterparts shall constitute but
one and the same instrument. .1.
5.12. AGENT FOR SERVICE. The agent for service of the Seller and the
Servicer in respect of this Agreement shall be Bennie Duck, 675 Bering Drive,
Suite 710, Houston, Texas 77057.
5.13. NO BANKRUPTCY PETITION. The Owner Trustee, the Indenture
Trustee, the Trust, the Depositor and the Servicer each covenants and agrees
that, prior to the date which is one year and one day after the payment in full
of all securities issued by the Trust, which securities were rated by any
nationally recognized statistical rating organization, it will not institute
against, or join any other Person in instituting against, or knowingly or
intentionally cooperate or encourage any other Person in instituting against,
the Depositor or the Trust any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other proceedings under any federal or
state bankruptcy or similar law. This Section 5.13 shall survive the resignation
or removal of the Owner Trustee under the Trust Agreement and the Indenture
Trustee under the Indenture and shall survive the termination of the Trust
Agreement and the Indenture.
5.14. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE
TRUSTEE.
(1) Notwithstanding anything contained herein or contemplated hereby
to the contrary, this Agreement has been signed by the Owner Trustee not in its
individual capacity but solely in its capacity as Owner Trustee of the Trust,
and in no event shall the Owner Trustee in its individual capacity have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Trust hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto or contemplated hereby, as to all of which
recourse shall be had solely to the assets of the Trust. For all purposes of
this Agreement, the Owner Trustee (as such and in its individual capacity) shall
be subject to, and entitled to the benefits of, the terms and provisions of the
Trust Agreement.
(2) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by the Indenture Trustee not in its individual
capacity but solely as Indenture Trustee, and in no event shall the Indenture
Trustee in its individual capacity have any liability for
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the representations, warranties, covenants, agreements or other obligations of
the Trust hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had solely to
the assets of the Trust.
5.15. CERTAIN RIGHTS OF THE INSURER.
So long as no Insurer Default shall have occurred and be continuing,
the Insurer shall have the right to exercise all rights, including voting
rights, which the Noteholders are entitled to exercise pursuant to this Sale and
Allocation Agreement, without any consent of such Noteholders; PROVIDED,
HOWEVER, that the foregoing shall not apply to the rights of the Noteholders set
forth in the proviso to paragraph (b) of Section 5.1 of this Agreement.
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IN WITNESS WHEREOF, parties hereto have caused this Sale and
Allocation Agreement to be duly executed by their respective officers, thereunto
duly authorized, all as of the day and year first above written.
FIRST INVESTORS FINANCIAL SERVICES, INC., as
Seller
By: ______________________________
Name:
Title:
FIRST INVESTORS SERVICING CORPORATION,as
Servicer
By: ______________________________
Name:
Title:
FIRST INVESTORS AUTO OWNER TRUST 2000-A
By: BANKERS TRUST (DELAWARE),not in its
individual capacity butsolely as Owner
Trustee
By: ______________________________
Name:
Title:
FIRST INVESTORS AUTO INVESTMENT CORP.,
as Depositor
By: ______________________________
Name:
Title:
<PAGE>
Accepted and agreed:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Indenture Trustee
By: ______________________________
Name:
Title:
<PAGE>
Schedule 1
CONTRACT SCHEDULE
47
<PAGE>
Schedule 2
LOCATION OF CONTRACT FILES
Sixth Street and Marquette Avenue
MAC N9311-161
Minneapolis, MN 55479
48
<PAGE>
Exhibit A
FORM OF MONTHLY SERVICER REPORT
49
<PAGE>
Exhibit B
FORM OF STATEMENT TO NOTEHOLDERS
50
<PAGE>
Exhibit C
CREDIT AND COLLECTION POLICY
51
<PAGE>
Exhibit D
OFFERING MEMORANDUM
52
<PAGE>
Exhibit E
FORM OF ORIGINATOR AGREEMENT
53
EXHIBIT 10.63
FIRST INVESTORS AUTO OWNER TRUST 2000-A,
as Issuer,
FIRST INVESTORS FINANCIAL SERVICES, INC.,
as Seller,
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION
as Indenture Trustee
------------------------------
INDENTURE
Dated as of January 1, 2000
------------------------------
$167,969,000 7.174% Asset-Backed Notes
<PAGE>
TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS; INCORPORATION BY REFERENCE...........................2
SECTION 1.1. Definitions..............................................2
SECTION 1.2. Rules of Construction...................................12
ARTICLE II. THE NOTES.......................................................13
SECTION 2.1. Form....................................................13
SECTION 2.2. Execution, Authentication and Delivery..................13
SECTION 2.3. Temporary Notes.........................................14
SECTION 2.4. Tax Treatment...........................................15
SECTION 2.5. Registration; Registration of Transfer and Exchange.....15
SECTION 2.6. Mutilated, Destroyed, Lost or Stolen Notes..............16
SECTION 2.7. Persons Deemed Owners...................................18
SECTION 2.8. Payments................................................18
SECTION 2.9. Cancellation............................................21
SECTION 2.10. Release of Collateral...................................21
SECTION 2.11. Book-Entry Notes........................................21
SECTION 2.12. Notices to Clearing Agency..............................22
SECTION 2.13. Definitive Notes........................................23
SECTION 2.14. Authenticating Agents...................................23
SECTION 2.15. Restrictions............................................24
ARTICLE III. COVENANTS......................................................26
SECTION 3.1. Payment Covenant........................................26
SECTION 3.2. Maintenance of Office or Agency.........................26
SECTION 3.3. Money for Payments To Be Held in Trust..................27
SECTION 3.4. Existence...............................................28
SECTION 3.5. Protection of Trust Estate..............................29
SECTION 3.6. Opinions as to Trust Estate.............................29
SECTION 3.7. Performance of Obligations; Servicing of Contracts......30
SECTION 3.8. Negative Covenants......................................33
SECTION 3.9. Annual Statement as to Compliance.......................34
SECTION 3.10. Issuer May Not Merge....................................34
SECTION 3.11. No Other Business.......................................34
SECTION 3.12. No Borrowing............................................34
SECTION 3.13. Servicer's Obligations..................................34
SECTION 3.14. Guarantees, Loans, Advances and Other Liabilities.......34
SECTION 3.15. Capital Expenditures....................................35
SECTION 3.16. Restricted Payments.....................................35
SECTION 3.17. Notice of Events of Default.............................35
SECTION 3.18. Removal of Administrator................................35
SECTION 3.19. Further Instruments and Acts............................35
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SECTION 3.20. Rule 144A Information...................................35
SECTION 3.21. Re-Liening Trigger......................................36
ARTICLE IV. SATISFACTION AND DISCHARGE......................................36
SECTION 4.1. Satisfaction and Discharge of Indenture.................36
SECTION 4.2. Satisfaction, Discharge and Defeasance of the Notes.....37
SECTION 4.3. Application of Trust Money..............................39
SECTION 4.4. Repayment of Monies Held by Paying Agent................39
SECTION 4.5. Continuing Obligations of Indenture Trustee.............39
ARTICLE V. REMEDIES.........................................................39
SECTION 5.1. Events of Default.......................................39
SECTION 5.2. Acceleration of Maturity; Rescission and Annulment......42
SECTION 5.3. Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee.................................43
SECTION 5.4. Remedies................................................46
SECTION 5.5. Optional Preservation of the Contracts..................48
SECTION 5.6. Limitation of Suits.....................................48
SECTION 5.7. Unconditional Rights of Noteholders To Receive
Principal and Interest...............................49
SECTION 5.8. Restoration of Rights and Remedies......................49
SECTION 5.9. Rights and Remedies Cumulative..........................49
SECTION 5.10. Delay or Omission Not a Waiver..........................50
SECTION 5.11. Control by Noteholders..................................50
SECTION 5.12. Waiver of Past Defaults.................................51
SECTION 5.13. Undertaking for Costs...................................51
SECTION 5.14. Waiver of Stay or Extension Laws........................51
SECTION 5.15. Action on Notes.........................................52
SECTION 5.16. Performance and Enforcement of Certain Obligations......52
ARTICLE VI. THE INDENTURE TRUSTEE...........................................53
SECTION 6.1. Duties of Indenture Trustee.............................53
SECTION 6.2. Rights of Indenture Trustee.............................54
SECTION 6.3. Individual Rights of Indenture Trustee..................56
SECTION 6.4. Indenture Trustee's Disclaimer..........................56
SECTION 6.5. Notice of Defaults......................................56
SECTION 6.6. Reports by Indenture Trustee to Holders.................56
SECTION 6.7. Compensation and Indemnity..............................57
SECTION 6.8. Replacement of Indenture Trustee........................58
SECTION 6.9. Successor Indenture Trustee by Merger...................59
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate
Indenture Trustee....................................60
SECTION 6.11. Eligibility; Disqualification...........................61
ARTICLE VI-A................................................................62
SECTION 6A.1 Possession of Contract Files by the Custodian...........62
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SECTION 6A.2 Remedies................................................63
SECTION 6A.3 Release of Contract Files by the Custodian..............63
SECTION 6A.4 Regarding the Custodian.................................64
SECTION 6A.5 Resignation and Removal of the Custodian................66
ARTICLE VII. NOTEHOLDERS' LISTS AND REPORTS.................................67
SECTION 7.1. Issuer To Furnish Indenture Trustee Names and
Addresses of Noteholders.............................67
SECTION 7.2. Preservation of Information; Communications to
Noteholders..........................................67
SECTION 7.3. Reports by Issuer.......................................68
ARTICLE VIII. ACCOUNTS, DISBURSEMENTS AND RELEASES..........................68
SECTION 8.1. Collection of Money.....................................68
SECTION 8.2. Trust Accounts..........................................69
SECTION 8.3. General Provisions Regarding Accounts...................69
SECTION 8.4. Release of Trust Estate.................................70
SECTION 8.5. Opinion of Counsel......................................71
ARTICLE IX. SUPPLEMENTAL INDENTURES.........................................71
SECTION 9.1. Supplemental Indentures Without Consent of Noteholders..71
SECTION 9.2. Supplemental Indentures with Consent of Noteholders.....73
SECTION 9.3. Execution of Supplemental Indentures....................75
SECTION 9.4. Effect of Supplemental Indenture........................75
SECTION 9.5. Reference in Notes to Supplemental Indentures...........75
ARTICLE X. REDEMPTION OF NOTES..............................................76
SECTION 10.1. Redemption.............................................76
SECTION 10.2. Form of Redemption Notice..............................76
SECTION 10.3. Notes Payable on Redemption Date.......................77
ARTICLE XI. MISCELLANEOUS...................................................77
SECTION 11.1. Compliance Certificates and Opinions, etc..............77
SECTION 11.2. Form of Documents Delivered to Indenture Trustee.......79
SECTION 11.3. Acts of Noteholders....................................80
SECTION 11.4. Notices, etc., to Indenture Trustee, Issuer and
Rating Agencies.....................................81
SECTION 11.5. Notices to Noteholders; Waiver.........................81
SECTION 11.6. Alternate Payment and Notice Provisions................82
SECTION 11.7. Effect of Headings and Table of Contents...............82
SECTION 11.8. Successors and Assigns.................................82
SECTION 11.9. Severability...........................................83
SECTION 11.10. Benefits of Indenture..................................83
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SECTION 11.11. Legal Holiday..........................................83
SECTION 11.12. Governing Law..........................................83
SECTION 11.13. Counterparts...........................................83
SECTION 11.14. Recording of Indenture.................................83
SECTION 11.15. Trust Obligation.......................................83
SECTION 11.16. No Petition............................................84
SECTION 11.17. Inspection.............................................84
SECTION 11.18. Certain Matters Regarding the Insurer..................85
SECTION 11.19. Acknowledgment of Multiple Roles.......................85
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EXHIBITS
EXHIBIT A Form of Notes......................................A-1
EXHIBIT B Form of Issuer Opinion.............................B-1
EXHIBIT C Request for Release of Contract....................C-1
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INDENTURE, dated as of January 1, 2000 (as amended, supplemented or
otherwise modified and in effect from time to time, this "INDENTURE"), between
FIRST INVESTORS AUTO OWNER TRUST 2000-A, a Delaware business trust (the
"ISSUER"), FIRST INVESTORS FINANCIAL SERVICES, INC., a Texas corporation, as
seller (the "SELLER"), and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, a
national banking association, not in its individual capacity but solely as
indenture trustee (in such capacity, the "INDENTURE TRUSTEE").
Each party agrees as follows for the benefit of the other party and
for the equal and ratable benefit of the holders of the Issuer's 7.174%
Asset-Backed Notes (the "NOTES"):
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee on the Closing
Date, for the benefit of the Noteholders and the Insurer, all of the Issuer's
right, title and interest in, to and under, whether now owned or existing or
hereafter acquired or arising (i) the Contracts; (ii) all amounts received on or
in respect of the Contracts after the Cutoff Date (except interest received
which accrued before the Cutoff Date); (iii) the security interests in the
Financed Vehicles granted by the Obligors pursuant to the Contracts; (iv) all
proceeds from claims on or refunds of premiums with respect to any physical
damage, credit life or credit disability insurance policies covering the
Financed Vehicles or the Obligors; (v) any Liquidation Proceeds; (vi) all of the
Issuer's rights to the Contract Files; (vii) the Collection Account, the Reserve
Account and the Note Payment Account and all amounts, securities, financial
assets, investments and other property deposited in or credited to any of the
foregoing and all proceeds thereof; (viii) all of the Issuer's rights under the
Sale and Allocation Agreement and the Servicing Agreement, including the right
of the Issuer to cause the Seller or the Servicer, as applicable, to repurchase
Contracts from the Issuer and the right of the Issuer to cause the Servicer to
purchase Contracts from the Issuer; and (ix) all present and future claims,
demands, causes of action and choses in action in respect of any or all of the
foregoing and all payments on or under and all proceeds of every kind and nature
whatsoever in respect of any or all of the foregoing, including all proceeds of
the conversion thereof, voluntary or involuntary, into cash or other liquid
property, all cash proceeds, accounts, accounts receivable, notes, drafts,
acceptances, chattel paper, checks, deposit accounts, insurance proceeds,
condemnation awards, rights to payment of any and every kind and other forms of
obligations and receivables, instruments and other property which at any time
constitute all or part of or are included in the proceeds of any of the
foregoing (collectively, the "COLLATERAL").
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The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, equally and ratably without prejudice, priority or distinction, and to
secure compliance with the provisions of this Indenture, all as provided in this
Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the
Noteholders, acknowledges such Grant, accepts the trusts under this Indenture in
accordance with the provisions of this Indenture and agrees to perform its
duties required in this Indenture to the best of its ability to the end that the
interests of the Noteholders and the Insurer may be adequately and effectively
protected.
ARTICLE I
DEFINITIONS; INCORPORATION BY REFERENCE
1.1. DEFINITIONS.
(1) Except as otherwise specified herein or as the context may
otherwise require, the following terms shall have the respective meanings set
forth below for all purposes of this Indenture.
"ACT" shall have the meaning specified in Section 11.3(a).
"ADMINISTRATION AGREEMENT" shall mean the Administration Agreement,
dated as of January 1, 2000, by and among the Administrator, the Issuer and the
Indenture Trustee, as the same may from time to time be amended, supplemented or
otherwise modified and in effect.
"ADMINISTRATOR" shall mean First Investors or any successor
Administrator under the Administration Agreement.
"AFFILIATE" shall have the meaning specified in the Sale and
Allocation Agreement.
"AUTHENTICATING AGENT" shall have the meaning specified in Section
2.14.
"AUTHORIZED OFFICER" shall mean, with respect to the Issuer, any
officer of the Owner Trustee who is authorized to act for or on behalf of the
Owner Trustee in matters relating to the Issuer and who is identified on the
list of Authorized Officers delivered by the Owner Trustee to the Indenture
Trustee on the Closing Date (as such list may be modified or supplemented from
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time to time thereafter) and, for so long as the Administration Agreement is in
full force and effect, any officer of the Administrator who is authorized to act
for the Administrator in matters relating to the Issuer and to be acted upon by
the Administrator pursuant to the Administration Agreement.
"BACK-UP SERVICER" shall have the meaning specified in the Sale and
Allocation Agreement.
"BOOK-ENTRY NOTES" shall mean a beneficial interest in the Notes,
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.11.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or
a day on which banking institutions or trust companies in New York, New York,
Wilmington, Delaware, Houston, Texas, Minneapolis, Minnesota or Atlanta, Georgia
are authorized or obligated by law, executive order or governmental decree to
remain closed.
"CERTIFICATE OF TRUST" shall have the meaning specified in the Trust
Agreement.
"CERTIFICATE REGISTRAR" shall have the meaning specified in the
Trust Agreement.
"CLEARING AGENCY" shall mean an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act.
"CLEARING AGENCY PARTICIPANT" shall mean a broker, dealer, bank,
other financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of securities deposited
with the Clearing Agency.
"CLOSING DATE" shall mean January 24, 2000.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the Treasury Regulations promulgated thereunder.
"COLLATERAL" shall have the meaning specified in the Granting Clause
of this Indenture.
"COLLECTION ACCOUNT" shall have the meaning specified in the Sale
and Allocation Agreement.
"COMMISSION" shall mean the Securities and Exchange Commission.
"CORPORATE TRUST OFFICE" shall mean the principal
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office of the Indenture Trustee at which at any particular time its corporate
trust business shall be administered, which office at date of execution of this
Indenture is located at Sixth Street and Marquette Avenue MAC N9311-161,
Minneapolis, Minnesota 55479, Attention: Corporate Trust Services - Asset-Backed
Administration, or at such other address as the Indenture Trustee may designate
from time to time by notice to the Noteholders and the Issuer, or the principal
corporate trust office of any successor Indenture Trustee at the address
designated by such successor Indenture Trustee by notice to the Noteholders and
the Issuer.
"CUSTODIAN" shall mean Norwest Bank Minnesota, National Association,
not in its individual capacity but solely as custodian, as specified herein.
"CUTOFF DATE" shall mean December 31, 1999.
"DEFAULT" shall mean any event that, with notice or the lapse of
time or both, would become an Event of Default.
"DEFINITIVE NOTES" shall have the meaning specified in Section 2.11.
"DELINQUENCY RATIO" shall have the meaning specified in the Sale and
Allocation Agreement.
"DEPOSITOR" shall have the meaning specified in the Trust Agreement.
"DEPOSITOR ACCOUNT" shall have the meaning specified in the Sale and
Allocation Agreement.
"EVENT OF DEFAULT" shall have the meaning specified in Section 5.1.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXECUTIVE OFFICER" shall mean, with respect to any corporation, the
Chief Executive Officer, the Chief Operating Officer, the Chief Financial
Officer, the President, any Executive Vice President, any Senior Vice President,
any Vice President, the Secretary or the Treasurer of such corporation and with
respect to any partnership, any general partner of such partnership.
"FILE NUMBERS" shall have the meaning specified in Section 6A.1(f).
"FILE NUMBER LIST" shall have the meaning specified in Section
6A.1(f).
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"FINAL NOTE PAYMENT DATE" shall mean February 15, 2006.
"FINANCED VEHICLE" shall have the meaning assigned thereto in the
Sale and Allocation Agreement.
"FIRST INVESTORS" shall mean First Investors Financial Services,
Inc.
"FISC" shall mean First Investors Servicing Corporation, together
with its successors and assigns.
"FISCAL YEAR" shall mean the period commencing on May 1 and ending
on April 30 of the following year.
"GRANT" shall mean to mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create, and to grant a lien
upon and a security interest in and right of set-off against, and to deposit,
set over and confirm pursuant to this Indenture. A Grant of the Collateral or of
any other agreement or instrument shall include all rights, powers and options
(but none of the obligations) of the granting party thereunder, including the
immediate and continuing right to claim for, collect, receive and give receipt
for principal and interest payments in respect of the Collateral and all other
monies payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring Proceedings in the name of the granting party or otherwise, and generally
to do and receive anything that the granting party is or may be entitled to do
or receive thereunder or with respect thereto.
"GUARANTY" shall mean the guaranty entered into as of January 1,
2000 by the Seller, the Depositor, the Issuer, FISC, the Back-Up Servicer and
the Indenture Trustee.
"HOLDER" or "NOTEHOLDER" shall mean the Person in whose name a Note
is registered in the Note Register.
"INDEMNIFICATION AGREEMENT" means the Indemnification Agreement
dated as of January 12, 2000 among the Insurer, the Seller, and Banc of America
Securities LLC.
"INDENTURE TRUSTEE" shall mean Norwest Bank Minnesota, National
Association, a national banking association, not in its individual capacity but
solely as Indenture Trustee under this Indenture, and any successor indenture
trustee under this Indenture.
"INDEPENDENT" shall mean, when used with respect to any specified
Person, that such Person (i) is in fact independent of the Trust, any other
obligor on the Notes, the Seller, the Servicer and any Affiliate of any of the
foregoing Persons, (ii)
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does not have any direct financial interest or any material indirect financial
interest in the Trust, any such other obligor, the Seller, the Servicer or any
Affiliate (other than a special purpose securitization vehicle whose rating is
based in part on its being bankruptcy-remote) of any of the foregoing Persons
and (iii) is not connected with the Trust, any such other obligor, the Seller,
the Servicer or any Affiliate of any of the foregoing Persons as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions.
"INDEMNITEES" shall have the meaning specified in Section 6A.4(d).
"INDEPENDENT CERTIFICATE" shall mean a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1, made by
an Independent appraiser or other expert appointed by an Issuer Order and
approved by the Indenture Trustee in the exercise of reasonable care, and such
opinion or certificate shall state that the signer has read the definition of
"Independent" in this Indenture and that the signer is Independent within the
meaning thereof.
"INSOLVENCY EVENT" means (a) the entry against the Insurer of a
decree or order by a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a trustee, conservator,
receiver or liquidator in any insolvency, conservatorship, receivership,
readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding up or liquidation of the Insurer's affairs, and
the continuance of any such decree or under unstayed and in effect or (b) the
consent by the Insurer to the appointment of a trustee, conservator, receiver or
liquidator in any insolvency, conservatorship, receivership, readjustment of
debt, marshalling of assets and liabilities or similar proceedings of or
relating to such Insurer as of or relating to substantially all of its property,
or such Insurer shall admit in writing its liability to pay its debts generally
as they become due, file a petition (or have one filed against such Insurer) to
take advantage of any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors, or suspend (voluntarily or
involuntarily) payment of its obligations.
"INSURANCE AGREEMENT" shall mean the Insurance Agreement, dated as
of January 1, 2000, by and among the Seller, the Administrator, the Servicer,
the Back-Up Servicer, the Issuer, the Depositor, the Owner Trustee, the
Indenture Trustee and the Insurer, as the same may be amended, supplemented or
otherwise modified and in effect from time to time.
"INSURANCE PREMIUM" shall have the meaning specified in the Premium
Side Letter Agreement.
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"INSURER" shall mean MBIA Insurance Corporation, a corporation
domiciled in New York, and its successors.
"INSURER DEFAULT" shall mean a default by the Insurer under the
Policy, including an Insolvency Event (after giving effect to any applicable
cure period).
"ISSUER" shall mean First Investors Auto Owner Trust 2000-A or any
successor to First Investors Auto Owner Trust 2000-A and, for purposes of any
provision contained herein each other obligor on the Notes.
"ISSUER ORDER" shall mean a written order signed in the name of the
Issuer by an Authorized Officer of the Issuer and delivered to the Indenture
Trustee.
"ISSUER REQUEST" shall mean a written request signed in the name of
the Issuer by an Authorized Officer of the Issuer and delivered to the Indenture
Trustee.
"LIQUIDATION PROCEEDS" shall mean all amounts received by the
Servicer with respect to any Defaulted Contract, net of the sum of (i) any
reasonable expenses incurred by the Servicer in connection with collection of
such contract and the disposition of the related Financed Vehicle (to the extent
determinable by the Servicer and not previously reimbursed) PLUS (ii) any
amounts required by law to be remitted to the related Obligor.
"LOSSES" shall have the meaning specified in Sections 6.7(a) and
6A.3(d).
"MOODY'S" shall mean Moody's Investors Service, Inc., and its
successors.
"MONTHLY NOTE PRINCIPAL" shall have the meaning assigned thereto in
the Sale and Allocation Agreement.
"NOTE BALANCE" shall mean, at any time, the aggregate principal
amount of all Notes Outstanding at such time.
"NOTE DEPOSITORY AGREEMENT" shall mean the agreement dated as of
January 1, 2000, among the Issuer, the Indenture Trustee and The Depository
Trust Company, as the initial Clearing Agency, relating to the Notes.
"NOTE PAYMENT ACCOUNT" shall have the meaning assigned thereto in
the Sale and Allocation Agreement.
"NOTE OWNER" shall mean, with respect to any Book-Entry Note, the
Person who is the beneficial owner of such Book-Entry
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Note as reflected on the books of the Clearing Agency or on the books of a
Person maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"NOTE RATE" shall mean 7.174% per annum.
"NOTE REGISTER" shall have the meaning specified in Section 2.5.
"NOTE REGISTRAR" shall have the meaning specified in Section 2.5.
"NOTEHOLDERS" shall mean the Person in whose name a Note is
registered on the Note Register.
"NOTES" shall mean the Asset-Backed Notes issued by the Issuer
pursuant to this Indenture in the initial aggregate principal amount of
$167,969,000.
"OFFICER'S CERTIFICATE" shall mean a certificate signed by an
Authorized Officer of the Issuer and delivered to the Indenture Trustee, which
certificate shall comply with the applicable requirements of Section 11.1.
"OPINION OF COUNSEL" shall mean one or more written opinions of
counsel who may, except as otherwise expressly provided in this Indenture, be
outside counsel to, the Issuer, the Seller or the Servicer and who shall be
acceptable to the Indenture Trustee and the Insurer (provided that no Insurer
Default shall have occurred and is continuing), which opinion or opinions shall
be addressed to and delivered to the Indenture Trustee as Indenture Trustee and
the Insurer (provided that no Insurer Default shall have occurred and is
continuing), shall comply with any applicable requirements of Section 11.1 and
shall be in form and substance satisfactory to the Indenture Trustee.
"OUTSTANDING" shall mean, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore canceled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the Indenture
Trustee or any Paying Agent in trust for the Holders of such Notes;
PROVIDED, HOWEVER, that if such Notes are to be redeemed, notice of such
redemption must have been duly given pursuant to this Indenture or
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provision for such notice must have been made in a manner satisfactory to
the Indenture Trustee; and
(iii) Notes in exchange for or in lieu of which other Notes have
been authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes are
held by a protected purchaser;
PROVIDED, HOWEVER, that in determining whether the Holders of the requisite Note
Balance have given any request, demand, authorization, direction, notice,
consent or waiver hereunder or under any Transaction Document, Notes owned by
the Issuer, any other obligor upon the Notes, the Seller, the Servicer or any
Affiliate of any of the foregoing Persons shall be disregarded and deemed not to
be Outstanding, except that, in determining whether the Indenture Trustee shall
be protected in relying on any such request, demand, authorization, direction,
notice, consent or waiver, only Notes that a Responsible Officer knows to be so
owned shall be so disregarded. Notes so owned that have been pledged in good
faith may be regarded as Outstanding if the pledgee establishes to the
satisfaction of the Indenture Trustee the pledgee's right so to act with respect
to such Notes and that the pledgee is not the Issuer, any other obligor upon the
Notes, the Seller, the Servicer or any Affiliate of any of the foregoing
Persons.
"OWNER TRUSTEE" shall mean Bankers Trust (Delaware), a Delaware
banking corporation, not in its individual capacity but solely as Owner Trustee
under the Trust Agreement, and any successor owner trustee under the Trust
Agreement.
"PAYING AGENT" shall mean the Indenture Trustee or any other Person
that meets the eligibility standards for the Indenture Trustee specified in
Section 6.11 and is authorized by the Issuer to make payments to and
distributions from the Collection Account and the Note Payment Account,
including payment of principal of or interest on the Notes, on behalf of the
Issuer.
"PAYMENT DATE" shall mean the 15th day of each month, or if such
15th day is not a Business Day, the following Business Day, commencing on
February 15, 2000.
"POLICY" shall mean the irrevocable financial guaranty insurance
policy dated January 24, 2000, issued by the Insurer to the Indenture Trustee
for the benefit of the Noteholders.
"POLICY CLAIM AMOUNT" shall have the meaning specified in the Sale
and Allocation Agreement.
"POOL BALANCE" shall have the meaning specified in the Sale and
Allocation Agreement.
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"PREDECESSOR NOTE" shall mean, with respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note. Any Note authenticated and delivered under
Section 2.6 in lieu of a mutilated, lost, destroyed or stolen Note shall be
deemed, for purposes of this definition, to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"PREMIUM SIDE LETTER AGREEMENT" shall have the meaning specified in
the Insurance Agreement.
"PROCEEDING" shall mean any suit in equity, action at law or other
judicial or administrative proceeding.
"PURCHASE AGREEMENT" means that Purchase Agreement, dated as of
January 12, 2000, between the Issuer, the Seller and Banc of America Securities
LLC.
"RATING AGENCY" shall mean Standard & Poor's or Moody's or, if
Standard & Poor's and Moody's cease to exist, any nationally recognized
statistical rating organization or other comparable Person designated by the
Issuer and acceptable to the Insurer (provided that no Insurer Default shall
have occurred and be continuing), notice of which designation shall have been
given to the Indenture Trustee, the Owner Trustee and the Servicer.
"RATING AGENCY CONDITION" shall mean, with respect to any action,
that each Rating Agency shall have notified the Seller, the Servicer, the
Insurer, the Indenture Trustee and the Owner Trustee that such action shall not
result in a reduction or withdrawal of the then current rating assigned to the
Notes without regard to the Policy.
"RE-LIENING TRIGGER" means the occurrence of one or more of the
following:
(a) the shareholders' equity of First Investors (including its
consolidated subsidiaries) falls below $20,000,000;
(b) any Event of Default;
(c) one or more courts of competent jurisdiction have issued final,
non-appealable orders to the effect that the Indenture Trustee is not the
secured party with respect to Financed Vehicles securing any Contracts
where the aggregate initial principal balance of such affected Contracts
is equal to or greater than 5.0% or more of the Pool Balance as of the
date of such order.
"RECORD DATE" shall mean, with respect to any Payment
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Date or Redemption Date, the close of business on the Business Day preceding
such Payment Date or Redemption Date; PROVIDED, HOWEVER, that if Definitive
Notes have been issued pursuant to Section 2.13, Record Date shall mean, with
respect to any Payment Date or Redemption Date, the last day of the preceding
Collection Period.
"REDEMPTION DATE" shall mean the Payment Date specified by the
Servicer pursuant to Section 10.1 on which date the Indenture Trustee shall
withdraw any amount remaining in the Reserve Account and deposit the portion of
such amount payable to the Noteholders in the Note Payment Account.
"REDEMPTION PRICE" shall mean, in the case of a redemption of Notes
pursuant to Section 10.1, an amount equal to the unpaid principal amount of the
Notes redeemed plus accrued and unpaid interest thereon.
"RESERVE ACCOUNT" shall have the meaning assigned thereto in the
Sale and Allocation Agreement.
"RESPONSIBLE OFFICER" shall mean any officer within the Corporate
Trust Department of the Indenture Trustee with direct responsibility for the
administration of this Indenture and also, with respect to a particular matter,
any other officer of the Indenture Trustee to whom such matter is referred
because of such officer's knowledge of and familiarity with such matter or other
similar matters.
"RULE 144A" Rule 144A under the Securities Act of 1933. as amended.
"RULE 144A INFORMATION" shall be such information as is specified
pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision
thereto).
"SALE AND ALLOCATION AGREEMENT" shall mean the Sale and Allocation
Agreement, dated as of January 1, 2000, by and among the Issuer, the Seller, the
Servicer, the Indenture Trustee and the Depositor as the same may be amended,
supplemented or otherwise modified and in effect from time to time.
"SELLER" shall mean First Investors Financial Services, Inc. a Texas
corporation, in its capacity as seller under the Sale and Allocation Agreement,
and its successors in such capacity.
"SERVICER" shall mean FISC, in its capacity as servicer under the
Servicing Agreement, and any Successor Servicer.
"SERVICING AGREEMENT" shall mean that certain Servicing Agreement,
dated as of January 1, 2000, between FISC, the Depositor, the Back-Up Servicer,
the Indenture Trustee and the Trust.
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"SERVICING FEE" shall mean the amount paid to the Servicer on each
Payment Date for the preceding Collection Period equal to the product of the
Servicing Rate and the Pool Balance as of the close of business on the first day
of the related Collection Period.
"SERVICING RATE" shall mean 2.5% per annum or such other rate as
determined in the Servicing Agreement; PROVIDED, HOWEVER, that if the Back-Up
Servicer becomes the Successor Servicer, the Servicing Rate shall be equal to
the greater of (a) 2.5% per annum or (b) the lowest of three bids obtained by
the Back-Up Servicer from third party servicers, who are qualified to act as
servicers, selected by the Back-Up Servicer and approved by the Insurer pursuant
to Section 2.08 of the Servicing Agreement.
"STANDARD & POOR'S" shall mean Standard & Poor's, a division of The
McGraw-Hill Companies, Inc., and its successors.
"STATE" shall mean any of the fifty states of the United States of
America or the District of Columbia.
"SUCCESSOR SERVICER" shall have the meaning specified in Section
3.7(e).
"TOTAL AVAILABLE FUNDS" shall have the meaning assigned thereto in
the Sale and Allocation Agreement.
"TOTAL NOTE INTEREST" shall have the meaning assigned thereto in the
Sale and Allocation Agreement.
"TOTAL SERVICING FEE" shall have the meaning assigned thereto in the
Sale and Allocation Agreement.
"TRANSACTION DOCUMENTS" shall mean the Servicing Agreement, the Sale
and Allocation Agreement, the Premium Side Letter, the Trust Agreement, the
Indemnification Agreement, the Certificate of Trust, this Indenture, the
Administration Agreement, the Purchase Agreement, the Note Depository Agreement,
the Insurance Agreement, the Policy, the Guaranty and the other documents and
certificates delivered in connection therewith, in each case as the same may
from time to time be amended, supplemented or otherwise modified and in effect.
"TRUST ACCOUNTS" shall mean the Collection Account, the Note Payment
Account, the Depositor Account and the Reserve Account.
"TRUST ESTATE" shall mean all money, instruments, rights and other
property that are subject or intended to be
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subject to the lien and security interest of this Indenture for the benefit of
the Noteholders and the Insurer (including, but not limited to, all property and
interests Granted to the Indenture Trustee), including all proceeds thereof.
(2) Except as otherwise specified herein or as the context may
otherwise require, capitalized terms used but not otherwise defined herein have
the respective meanings set forth in, or incorporated by reference into, the
Sale and Allocation Agreement for all purposes of this Indenture.
1.2. RULES OF CONSTRUCTION. Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(3) "or" is not exclusive;
(4) "including" means including without limitation;
(5) words in the singular include the plural and words in the
plural include the singular;
(6) any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in
connection herewith means such agreement, instrument or statute as
from time to time amended, modified or supplemented and includes (in
the case of agreements or instruments) references to all attachments
thereto and instruments incorporated therein; and
(7) references to a Person are also to its permitted
successors and assigns.
ARTICLE II
THE NOTES
2.1. FORM.
(a) The Notes, together with the Indenture Trustee's certificates of
authentication, shall be substantially in the form set forth in Exhibit A, with
such appropriate insertions, omissions, substitutions and other variations as
are required or permitted by this Indenture, and may have such letters, numbers
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or other marks of identification and such legends or endorsements placed thereon
as may, consistently herewith, be determined by the officers executing such
Notes, as evidenced by their execution thereof. Any portion of the text of any
Note may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Note.
(b) The Definitive Notes shall be typewritten, printed, lithographed
or engraved, or produced by any combination of these methods (with or without
steel engraved borders), all as determined by the officers executing such Notes,
as evidenced by their execution of such Notes.
(c) Each Note shall be dated the date of its authentication. The
terms of the Notes set forth in Exhibit A hereto are part of the terms of this
Indenture and are incorporated herein by reference.
2.2. EXECUTION, AUTHENTICATION AND DELIVERY.
(a) The Notes shall be executed on behalf of the Issuer by any of
its Authorized Officers. The signatures of any such Authorized Officer on the
Notes may be manual or facsimile.
(b) Notes bearing the manual or facsimile signature of individuals
who were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices on the date of such Notes.
(c) The Indenture Trustee shall, upon Issuer Order, authenticate and
deliver the Notes for original issue in an aggregate principal amount of
$167,969,000. The Note Balance at any time may not exceed such amount except as
provided in this Indenture.
(d) Each Note shall be dated the date of its authentication. The
Notes shall be issuable as registered Notes in minimum denominations of $250,000
and integral multiples of $1,000 in excess thereof.
(e) No Note shall be entitled to any benefit under this Indenture or
be valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has
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been duly authenticated and delivered hereunder.
2.3. TEMPORARY NOTES.
(a) Pending the preparation of Definitive Notes, the Issuer may
execute, and upon receipt of an Issuer Order the Indenture Trustee shall
authenticate and deliver, temporary Notes that are printed, lithographed,
typewritten, mimeographed or otherwise produced of the tenor of the Definitive
Notes in lieu of which they are issued and with such variations not inconsistent
with the terms of this Indenture as the officers executing such Notes may
determine, as evidenced by their execution of such Notes.
(b) If temporary Notes are issued, the Issuer shall cause Definitive
Notes to be prepared without unreasonable delay. After the preparation of
Definitive Notes, the temporary Notes shall be exchangeable for Definitive Notes
upon surrender of the temporary Notes at the office or agency of the Issuer to
be maintained as provided in Section 3.2, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute, and the Indenture Trustee shall authenticate and deliver in exchange
therefor, a like principal amount of Definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as Definitive Notes.
2.4. TAX TREATMENT. The Issuer has entered into this Indenture, and
the Notes shall be issued, with the intention that, for federal, state and local
income and franchise tax purposes, the Notes shall qualify as indebtedness of
the Issuer secured by the Trust Estate. The Issuer, by entering into this
Indenture, and each Noteholder, by its acceptance of a Note (and each Note Owner
by its acceptance of an interest in the applicable Book-Entry Note), agree to
treat the Notes as indebtedness of the Issuer for federal, state and local
income and franchise tax purposes.
2.5. REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE.
(a) The Issuer shall cause to be kept a register (the "NOTE
REGISTER") in which, subject to such reasonable regulations as it may prescribe,
the Issuer shall provide for the registration of Notes and the registration of
transfers of Notes. The Indenture Trustee initially shall be the registrar (the
"NOTE REGISTRAR") for the purpose of registering Notes and transfers of Notes as
herein provided. Upon any resignation of any Note Registrar, the Issuer shall
promptly appoint a successor or, if it elects not to make such an appointment,
assume the
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duties of Note Registrar. In addition, the Indenture Trustee hereby accepts its
appointment as Certificate Registrar, as defined in and pursuant to Section 3.4
of the Trust Agreement.
(b) If a Person other than the Indenture Trustee is appointed by the
Issuer as Note Registrar, (i) the Issuer shall give the Indenture Trustee prompt
written notice of the appointment of such Note Registrar and of the location, or
any change in the location, of the Note Register, (ii) the Indenture Trustee
shall have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof and (iii) the Indenture Trustee shall have the right to
rely upon a certificate executed on behalf of the Note Registrar by an Executive
Officer thereof as to the names and addresses of the Noteholders and the
principal amounts and number of such Notes.
(c) Upon surrender for registration of transfer of any Note at the
office or agency of the Issuer to be maintained as provided in Section 3.2, if
the requirements of Section 8-401 of the Relevant UCC are met, the Issuer shall
execute, and the Indenture Trustee shall authenticate and deliver to the
Noteholder making such surrender, in the name of the designated transferee or
transferees, one or more new Notes in any authorized denomination, of a like
aggregate principal amount. The Indenture Trustee may rely upon the
Administrator with respect to the determination of whether the requirements of
Section 8-401 of the Relevant UCC are met.
(d) At the option of the Noteholder, Notes may be exchanged for
other Notes in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, if the requirements of
Section 8-401 the Relevant UCC are met, the Issuer shall execute, and the
Indenture Trustee shall authenticate and deliver to the Noteholder making such
exchange, the Notes which such Noteholder is entitled to receive. The Indenture
Trustee may rely upon the Administrator with respect to the determination of
whether the requirements of Section 8-401 of the Relevant UCC are met.
(e) All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
(f) All Notes presented or surrendered for registration of transfer
or exchange shall be duly endorsed by, or be accompanied by a written instrument
of transfer in the form of the Assignment attached to Exhibit A hereto
satisfactory to the Indenture Trustee duly executed by, the Holder thereof or
such Holder's attorney duly authorized in writing, with such signature
guaranteed by an "eligible guarantor institution"
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meeting the requirements of the Note Registrar.
(g) No service charge shall be made to a Holder for any registration
of transfer or exchange of Notes, but the Issuer may require payment by such
Holder of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Notes, other than exchanges pursuant to Section 2.3 or 9.5 not involving any
transfer.
(h) The Issuer shall not be required to make, and the Note Registrar
need not register, transfers or exchanges of Notes selected for redemption or
Notes with respect to which the due date for any payment will occur within 15
days.
2.6. MUTILATED, DESTROYED, LOST OR STOLEN NOTES.
(a) If (i) any mutilated Note is surrendered to the Indenture
Trustee, or the Indenture Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Note, and (ii) there is delivered to the
Indenture Trustee such security or indemnity as may be required by it to hold
the Issuer and the Indenture Trustee harmless, then, in the absence of notice to
the Issuer, the Note Registrar or the Indenture Trustee that such Note has been
acquired by a protected purchaser, and provided that the requirements of Section
8-405 of the Relevant UCC are met, the Issuer shall execute and the Indenture
Trustee shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Note, a replacement Note ; PROVIDED,
HOWEVER, that if any such destroyed, lost or stolen Note, but not a mutilated
Note, shall have become or within seven (7) days of the Indenture Trustee's
receipt of evidence to its satisfaction of such destruction, loss or theft shall
be due and payable, or shall have been called for redemption in whole pursuant
to Section 10.1, instead of issuing a replacement Note , the Issuer may pay such
destroyed, lost or stolen Note when so due or payable or upon the Redemption
Date without surrender thereof. The Indenture Trustee may rely upon the
Administrator with respect to the determination of whether the requirements of
Section 8-405 of the Relevant UCC are met. If, after the delivery of such
replacement Note or payment of a destroyed, lost or stolen Note pursuant to the
proviso to the preceding sentence, a protected purchaser of the original Note in
lieu of which such replacement Note was issued presents for payment such
original Note, the Issuer and the Indenture Trustee shall be entitled to recover
such replacement Note (or such payment) from the Person to whom such replacement
Note was delivered or any Person taking such replacement Note from such Person
to whom such replacement Note was delivered or any assignee of such Person,
except a protected purchaser, and shall
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be entitled to recover upon the security or indemnity provided therefor to the
extent of any loss, damage, cost or expense incurred by the Issuer or the
Indenture Trustee in connection therewith.
(b) Upon the issuance of any replacement Note under this Section
2.6, the Issuer may require the payment by the Holder of such Note of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with such issuance and any other reasonable expenses (including the
fees and expenses of the Indenture Trustee) related thereto.
(c) Every replacement Note issued pursuant to this Section 2.6 in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
(d) The provisions of this Section 2.6 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
2.7. PERSONS DEEMED OWNERS. Prior to due presentation of a Note for
registration of transfer, the Issuer, the Indenture Trustee and any agent of the
Issuer or the Indenture Trustee may treat the Person in whose name such Note is
registered in the Note Register (as of the day of determination) as the owner of
such Note for the purpose of receiving payments of principal of and interest on
such Note and for all other purposes whatsoever, whether or not such Note shall
be overdue, and none of the Issuer, the Indenture Trustee or any agent of the
Issuer or the Indenture Trustee shall be affected by any notice to the contrary.
2.8. PAYMENTS.
(a) On each Payment Date, upon receipt of instructions from the
Servicer pursuant to Section 3.5(d) of the Sale and Allocation Agreement, the
Indenture Trustee shall apply or cause to be applied the amount on deposit in
the Collection Account (including amounts deposited therein from all interest
earnings on the Collection Account) on such Payment Date to make the following
payments in the following order of priority:
(1) to the Back-Up Servicer, Indenture Trustee, Custodian and
Owner Trustee, in its individual capacity, respectively, any unpaid
or unreimbursed fees and expenses (including, but not limited to,
attorneys' fees and transaction expenses); PROVIDED that such
expenses shall not
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exceed $50,000 in the aggregate per year and (A) prior to an Event
of Servicing Termination, $100,000 in the total aggregate or (B)
after an Event of Servicing Termination, $200,000 in the total
aggregate, during such time as the Notes shall remain outstanding
and the Policy has not been cancelled;
(2) to the Servicer, the Total Servicing Fee for the preceding
Collection Period;
(3) to the Note Payment Account, the Total Note Interest for
such Payment Date;
(4) to the Note Payment Account, the Monthly Note Principal
for such Payment Date,
(5) unless an Insurer Default has occurred and is continuing,
to the Insurer, the Insurance Premium for such Payment Date plus any
overdue Insurance Premiums for previous Payment Dates;
(6) to the Insurer, the aggregate amount of any unreimbursed
payments under the Policy to the extent payable to the Insurer under
the Insurance Agreement PLUS accrued interest on any unreimbursed
payments under the Policy at the rate provided in the Insurance
Agreement PLUS any other amounts due the Insurer under the Insurance
Agreement and the Policy;
(7) if the Notes have been declared immediately due and
payable following the occurrence of an Event of Default, to the Note
Payment Account, the lesser of (a) the amount of Available Funds
available to be applied on such Payment Date to pay the Note Balance
and (b) the Note Balance;
(8) to the Reserve Account, the Reserve Account Deficiency, if
any, for such Payment Date;
(9) to the Owner Trustee, in its individual capacity,
Indenture Trustee, Custodian, Back-Up Servicer, Servicer, and
Insurer, respectively, any other amounts, if any, due under the
Transaction Documents; and
(10) to the Depositor Account, any remaining amount of
Available Funds.
(b) The principal of each Note shall be due and payable in
installments on each Payment Date in an aggregate amount (unless the Notes have
been declared immediately due and payable in accordance with Section 5.2
following the occurrence of an Event of Default) equal to the Monthly Note
Principal for such Payment Date. On each Payment Date (unless the Notes have
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been declared immediately due and payable in accordance with Section 5.2
following the occurrence of an Event of Default), upon receipt of instructions
from the Servicer pursuant to Section 3.5(d), (e) and (f) of the Sale and
Allocation Agreement, the Indenture Trustee shall apply or cause to be applied
the amount on deposit in the Note Payment Account on such Payment Date to make
the following payments in the following order of priority:
(i) to the Noteholders, the Total Note Interest payable for
such Payment Date; and
(ii) to the Noteholders, the Monthly Note Principal for that
Payment Date until the principal amount of the Notes has been paid in
full.
(c) The principal amount of the Notes, to the extent not previously
paid, shall be due on the Final Note Payment Date.
(d) The Notes shall accrue interest at 7.174% and such interest
shall be due and payable on each Payment Date. Interest on the Notes shall be
calculated on the basis a 360-day year consisting of twelve 30-day months.
Subject to Section 3.1, any installment of interest or principal, if any,
payable on any Note that is punctually paid or duly provided for by the Issuer
on the applicable Payment Date shall be paid to the Person in whose name such
Note (or one or more Predecessor Notes) is registered on the related Record Date
by check mailed first-class postage prepaid to such Person's address as it
appears on the Note Register on such Record Date; PROVIDED, HOWEVER, that,
unless Definitive Notes have been issued pursuant to Section 2.13, with respect
to Notes registered on the Record Date in the name of the nominee of the
Clearing Agency (initially, such nominee to be Cede & Co.), payment shall be
made by wire transfer in immediately available funds to the account designated
by such nominee, and except for the final installment of principal payable with
respect to such Note on a Payment Date or on the related Final Note Payment Date
(and except for the Redemption Price for any Note called for redemption in whole
pursuant to Section 10.1(a) or (b)), which shall be payable as provided below.
The funds represented by any such checks returned undelivered shall be held in
accordance with Section 3.3. The Indenture Trustee shall pay all Total Note
Interest for any Payment Date to the Noteholders on the related Record Date even
if a portion of such Total Note Interest relates to an earlier Payment Date.
(e) All principal and interest payments on the Notes shall be made
PRO RATA to the Noteholders. The Indenture Trustee shall, before the Payment
Date on which the Issuer expects to pay the final installment of principal of
and interest on any Note, notify the Holder of such Note as of the related
Record Date of such final installment. Such notice shall be mailed or
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transmitted by facsimile and shall specify that such final installment shall be
payable only upon presentation and surrender of such Note and shall specify the
place where such Note may be presented and surrendered for payment of such
installment. Notices in connection with redemption of Notes shall be mailed to
Noteholders as provided in Section 10.2.
(f) Notwithstanding the foregoing, the entire unpaid principal
amount of the Notes shall be due and payable, if not previously paid, on the
date on which the Notes have been declared or have automatically become
immediately due and payable in accordance with Section 5.2 following the
occurrence of an Event of Default. On each Payment Date following acceleration
of the Notes, upon receipt of instructions from the Servicer pursuant to Section
3.5(d) of the Sale and Allocation Agreement, the Indenture Trustee shall apply
or cause to be applied the amount on deposit in the Note Payment Account on such
Payment Date to make the following payments in the following order of priority:
(i) to the Noteholders, the Total Note Interest payable for
such Payment Date; and
(ii) to the Noteholders, the amount remaining on deposit in the
Note Payment Account on such Payment Date up to the Note Balance.
(g) the Indenture Trustee, upon receipt of instructions from the
Servicer, pursuant to Section 3.5(c) of the Sale and Allocation Agreement, shall
deposit the proceeds of any drawing under the Policy in respect of the Policy
Claim Amount in the Note Payment Account.
(h) the Indenture Trustee, upon receipt of instructions from the
Servicer pursuant to Section 3.5(e) or (f) of the Sale and Allocation Agreement,
shall apply the proceeds of any drawing from the Reserve Account as follows: (i)
amounts drawn in respect of the Total Servicing Fee shall be deposited to an
account designated by the Servicer; (ii) amounts drawn in respect of Total Note
Interest, Monthly Note Principal or the Note Balance shall be deposited into the
Note Payment Account; and (iii) amounts drawn in respect of the Insurance
Premium or unreimbursed payments under the Policy shall be deposited to an
account designated by the Insurer.
2.9. CANCELLATION. All Notes surrendered for payment, registration
of transfer, exchange or redemption in whole pursuant to Section 10.1(a) or (b)
shall, if surrendered to any Person other than the Indenture Trustee, be
delivered to the Indenture Trustee and shall be promptly canceled by the
Indenture Trustee. The Issuer may at any time deliver to the Indenture Trustee
for cancellation any Notes previously
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authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly canceled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes canceled as provided in this Section 2.9, except as expressly
permitted by this Indenture. All canceled Notes may be held or disposed of by
the Indenture Trustee in accordance with its standard retention or disposal
policy as in effect at the time unless the Issuer shall direct by an Issuer
Order that they be destroyed or returned to it, provided that such Issuer Order
is timely and the Notes have not been previously disposed of by the Indenture
Trustee.
2.10. RELEASE OF COLLATERAL. Subject to Section 11.1 and the terms
of the Transaction Documents, the Indenture Trustee shall release property from
the lien of this Indenture at any time before the Notes have been paid in full
only upon receipt of an Issuer Request accompanied by an Officer's Certificate
and an Opinion of Counsel.
2.11. BOOK-ENTRY NOTES. The Notes, upon original issuance, shall be
issued in the form of typewritten Notes representing the Book-Entry Notes, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Issuer. The Notes representing the Book-Entry Notes shall be
registered initially on the Note Register in the name of Cede & Co. , the
nominee of the initial Clearing Agency, and no Note Owner thereof shall receive
a definitive Note representing such Note Owner's interest in such Note, except
as provided in Section 2.13. Unless and until definitive, fully registered Notes
(the "DEFINITIVE NOTES") have been issued to such Note Owners pursuant to
Section 2.13:
(i) the provisions of this Section 2.11 shall be in full
force and effect;
(ii) the Note Registrar and the Indenture Trustee shall be
entitled to deal with the Clearing Agency for all purposes of this
Indenture (including the payment of principal of and interest on the Notes
and the giving of instructions or directions hereunder) as the sole Holder
of the Notes, and shall have no obligation to the Note Owners;
(iii) to the extent that the provisions of this Section 2.11
conflict with any other provisions of this Indenture, the provisions of
this Section shall control;
(iv) the rights of Note Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the
Clearing Agency Participants pursuant to the Note Depository Agreement;
unless and until Definitive Notes are issued pursuant to Section 2.13, the
initial Clearing Agency shall make book-entry transfers among the Clearing
Agency
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Participants and receive and transmit payments of principal of and
interest on the Notes to such Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Noteholders evidencing a
specified percentage of the Note Balance, the Clearing Agency shall be
deemed to represent such percentage only to the extent that it has
received instructions to such effect from Note Owners and/or Clearing
Agency Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Notes and has delivered such
instructions to the Indenture Trustee.
2.12. NOTICES TO CLEARING AGENCY. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to such Note Owners pursuant to
Section 2.13, the Indenture Trustee shall give all such notices and
communications specified herein to be given to Noteholders to the Clearing
Agency, and shall have no obligation to such Note Owners.
2.13. DEFINITIVE NOTES. If (i) the Issuer, the Administrator or the
Servicer advises the Indenture Trustee in writing that the Clearing Agency is no
longer willing or able to properly discharge its responsibilities with respect
to the Book-Entry Notes and the Indenture Trustee or the Administrator is unable
to locate a qualified successor, (ii) the Administrator, at its option, advises
the Indenture Trustee in writing that it elects to terminate the book-entry
system through the Clearing Agency or (iii) after the occurrence of an Event of
Default or an Event of Servicing Termination, Note Owners of the Book-Entry
Notes representing beneficial interests aggregating not less than 51% of the
principal amount of such Notes advise the Indenture Trustee and the Clearing
Agency in writing that the continuation of a book-entry system through the
Clearing Agency is no longer in the best interests of such Note Owners, then the
Clearing Agency shall notify all Note Owners and the Indenture Trustee of the
occurrence of such event and of the availability of Definitive Notes to Note
Owners requesting the same. Upon surrender to the Indenture Trustee of the
typewritten Note representing the Book-Entry Notes by the Clearing Agency,
accompanied by registration instructions, the Issuer shall execute and the
Indenture Trustee shall authenticate the Definitive Notes in accordance with the
instructions of the
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Clearing Agency. None of the Issuer, the Note Registrar or the Indenture Trustee
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the
Holders of the Definitive Notes as Noteholders.
2.14. AUTHENTICATING AGENTS. The Indenture Trustee may appoint one
or more Persons (each, an "AUTHENTICATING AGENT") with power to act on its
behalf and subject to its direction in the authentication of Notes in connection
with issuance, transfers and exchanges under Sections 2.2, 2.3, 2.5 and 2.6, as
fully to all intents and purposes as though each such Authenticating Agent had
been expressly authorized by those Sections to authenticate such Notes. For all
purposes of this Indenture, the authentication of Notes by an Authenticating
Agent pursuant to this Section 2.14 shall be deemed to be the authentication of
Notes "by the Indenture Trustee."
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of any Authenticating Agent, shall be the successor
of such Authenticating Agent hereunder, without the execution or filing of any
further act on the part of the parties hereto or such Authenticating Agent or
such successor corporation.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Indenture Trustee and the Owner Trustee. The
Indenture Trustee may at any time terminate the agency of any Authenticating
Agent by giving written notice of termination to such Authenticating Agent and
the Owner Trustee. Upon receiving such notice of resignation or upon such a
termination, the Indenture Trustee may appoint a successor Authenticating Agent
and shall give written notice of any such appointment to the Owner Trustee.
The Administrator agrees to pay to each Authenticating Agent from
time to time reasonable compensation for its services. The provisions of
Sections 2.9 and 6.4 shall be applicable to any Authenticating Agent.
2.15. RESTRICTIONS.
(1) The Notes have not been and will not be registered under the
Securities Act and no Note or any interest therein may be reoffered, resold,
pledged or otherwise transferred except as contemplated by the legend set forth
in paragraph (d) below. Any
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resale or other transfer, or attempted resale or other transfer which is not
made in compliance with the restrictions set forth in such legend shall not be
recognized by the Issuer. Authorization of the Issuer of a purchase, resale or
transfer of a Note will be granted only if made to a qualified institutional
buyer and, in each case, in accordance with the other requirements applicable to
a sale of Notes. Each purchaser acknowledges and is deemed to acknowledge that
no representation is made by the Issuer as to the availability of any exemption
under the Securities Act or any state securities laws for resale of the Notes
and that such purchaser may be required to bear the financial risks of this
investment for an indefinite period of time.
(2) Each purchaser and any account for which such purchaser is
acquiring the Notes are "Qualified Institutional Buyers" (as defined in Rule
144A under the Securities Act). Each purchaser has such knowledge and experience
in financial and business matters as to be capable of evaluating the merits and
risks of its investment in the Notes, and each purchaser and any account for
which such purchaser is acting are each able to bear the economic risk of such
investment.
(3) Each purchaser understands that the Notes, herein, are being
sold to it pursuant to an exemption from the registration requirements of the
Securities Act. Each purchaser is not purchasing the Notes with a view to
resale, distribute or dispose of in any other manner thereof in violation of the
Securities Act. Each purchaser has had access to such financial and other
information concerning the Issuer and the Notes as it deemed necessary or
appropriate in order to make an informed investment decision with respect to
such purchase of the Notes, including an opportunity to ask questions of and
request information from the Issuer.
(4) Each Note evidencing Book-Entry Notes and Definitive Notes (and
all Notes issued in exchange therefor or substitution thereof) shall bear a
legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION AND SUBJECT TO COMPLIANCE WITH OTHER APPLICABLE LAWS.
THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN (THE
"HOLDER")BY ITS ACCEPTANCE HEREOF OR OF SUCH INTEREST OR PARTICIPATION HEREIN
AGREES AND IS DEEMED TO AGREE TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY
OR ANY INTEREST OR PARTICIPATION HEREIN,
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IF SUCH SALE IS MADE (I) PRIOR TO THE DATE WHICH IS TWO YEARS (OR SUCH SHORTER
PERIOD THAT MAY HEREAFTER BE PROVIDED UNDER RULE 144(K) (OR ANY SUCCESSOR
PROVISION THEREOF) AS PERMITTING THE RESALE BY NON-AFFILIATES OF RESTRICTED
SECURITIES WITHOUT RESTRICTION) AFTER THE LATER OF THE ORIGINAL ISSUE DATE
HEREOF AND THE LAST DATE ON WHICH THE TRUST OR ANY AFFILIATE OF THE TRUST WAS
THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS SECURITY) (THE "TWO-YEAR
DATE"), ONLY (A) TO THE TRUST, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS
BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES
ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR ITS OWN ACCOUNT
OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,(D) PURSUANT TO ANOTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND
OTHERWISE IN COMPLIANCE WITH OTHER APPLICABLE LAWS, SUBJECT TO THE TRUST'S AND
THE INDENTURE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT
TO CLAUSE (D) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM OR (II) ON OR AFTER THE
TWO-YEAR DATE, SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS MADE IN COMPLIANCE
WITH, OR IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER, THE SECURITIES ACT AND
ANY OTHER APPLICABLE SECURITIES LAWS, AND SUCH PERSON FURTHER COVENANTS AND
AGREES THAT IT WILL, PRIOR TO ANY OFFER, SALE, PLEDGE OR OTHER TRANSFER OF THIS
SECURITY, NOTIFY THE PERSON TO WHOM SUCH RESALE, PLEDGE OR OTHER TRANSFER IS TO
BE MADE OF THE RESALE RESTRICTIONS SET FORTH ABOVE AND THE REPRESENTATIONS SUCH
PERSON SHALL BE DEEMED TO HAVE MADE UPON ITS ACQUISITION HEREOF IN COMPLIANCE
WITH THE SECURITIES ACT. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO ISSUER OR THE INDENTURE TRUSTEE FOR REGISTRATION OF TRANSFER, EXCHANGE, OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND
ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN."
(5) The purchaser of a Note or any interest therein understands and
agrees and is deemed to understand and agree by its acceptance of such purchase
that the Notes and related documentation may be amended or supplemented from
time to time to modify the restrictions on and procedures for resales and other
transfers of the Notes to reflect any change in applicable law or regulation (or
interpretation thereof) or in practice relating to the resale or transfer of
restricted securities generally.
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(6) The Holders of the Notes and all Note Owners are bound by, and
are deemed to have notice of, all provisions contained in the Indenture.
(7) The purchaser of a Note or any interest therein acknowledges and
is deemed to acknowledge by its acceptance of such purchase that the Issuer and
others will rely upon the truth and accuracy of the foregoing acknowledgments,
representations and agreements. If the purchaser is acquiring any Notes as a
fiduciary or agent for one or more investor accounts, it represents that it has
sole investment discretion with respect to each such account and that it has
full power to make the foregoing acknowledgments, representations and agreements
on behalf of each such account.
ARTICLE III
COVENANTS
3.1. PAYMENT COVENANT. The Issuer shall duly and punctually pay the
principal of and interest, if any, on the Notes in accordance with the terms of
the Notes and this Indenture. Amounts properly withheld under the Code by any
Person from a payment to any Noteholder of interest and/or principal shall be
considered as having been paid by the Issuer to such Noteholder for all purposes
of this Indenture.
3.2. MAINTENANCE OF OFFICE OR AGENCY. The Issuer shall maintain in
Minneapolis, Minnesota, an office or agency where Notes may be surrendered for
registration of transfer or exchange, and where notices and demands to or upon
the Issuer in respect of the Notes and this Indenture may be served. The Issuer
hereby initially appoints the Indenture Trustee to serve as its agent for the
foregoing purposes. The Issuer shall give prompt written notice to the Indenture
Trustee of the location, and of any change in the location, of any such office
or agency. If, at any time, the Issuer shall fail to maintain any such office or
agency or shall fail to furnish the Indenture Trustee with the address thereof,
such surrenders, notices and demands may be made or served at the Corporate
Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent
to receive all such surrenders, notices and demands.
3.3. MONEY FOR PAYMENTS TO BE HELD IN TRUST.
(a) As provided in Section 8.2, all payments of amounts due and
payable with respect to the Notes that are to be
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made from amounts withdrawn from the Trust Accounts shall be made on behalf of
the Issuer by the Indenture Trustee or by another Paying Agent, and no amounts
so withdrawn from the Trust Accounts shall be paid over to the Issuer, except as
provided in this Section 3.3.
(b) On or before each Payment Date and Redemption Date, the Issuer
shall deposit or cause to be deposited in the Note Payment Account an aggregate
sum sufficient to pay the amounts then becoming due under the Notes, such sum to
be held in trust for the benefit of the Persons entitled thereto, and (unless
the Paying Agent is the Indenture Trustee) shall promptly notify the Indenture
Trustee of its action or failure so to act.
(c) The Issuer shall cause each Paying Agent other than the
Indenture Trustee to execute and deliver to the Indenture Trustee an instrument
in which such Paying Agent shall agree with the Indenture Trustee (and if the
Indenture Trustee acts as Paying Agent, it hereby so agrees), subject to the
provisions of this Section 3.3, that such Paying Agent shall:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise
disposed of as herein provided and pay such sums to such Persons as herein
provided;
(ii) give the Indenture Trustee notice of any default by the
Issuer (or any other obligor upon the Notes) of which it has actual
knowledge in the making of any payment required to be made with respect to
the Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to
the Indenture Trustee all sums held by it in trust for payment of the
Notes if at any time it ceases to meet the standards required to be met by
a Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code and any state or
local tax law with respect to the withholding from any payments made by it
on the Notes of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection therewith.
(d) The Issuer may at any time, for the purpose of
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obtaining the satisfaction and discharge of this Indenture or for any other
purpose, by Issuer Order direct any Paying Agent to pay to the Indenture Trustee
all sums held in trust by such Paying Agent, such sums to be held by the
Indenture Trustee upon the same trusts as those upon which such sums were held
by such Paying Agent, and upon such payment by any Paying Agent to the Indenture
Trustee, such Paying Agent shall be released from all further liability with
respect to such sums.
(e) Subject to applicable laws with respect to escheat of funds, any
money held by the Indenture Trustee or any Paying Agent in trust for the payment
of any amount due with respect to any Note and remaining unclaimed for two (2)
years after such amount has become due and payable shall be discharged from such
trust and be paid to the Issuer on Issuer Request, and the Holder of such Note
shall thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; PROVIDED, HOWEVER, that the Indenture
Trustee or such Paying Agent, before being required to make any such repayment,
shall at the expense and direction of the Issuer cause to be published once, in
a newspaper published in the English language, customarily published on each
Business Day and of general circulation in The City of New York, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than thirty (30) days from the date of such publication, any
unclaimed balance of such money then remaining shall be repaid to the Issuer.
The Indenture Trustee shall also adopt and employ, at the expense and direction
of the Issuer, any other reasonable means of notification of such repayment
(including, but not limited to, mailing notice of such repayment to Holders
whose Notes have been called but have not been surrendered for redemption in
whole pursuant to Section 10.1 or whose right to or interest in monies due and
payable but not claimed is determinable from the records of the Indenture
Trustee or of any Paying Agent at the last address of record for each such
Holder).
3.4. EXISTENCE. The Issuer shall keep in full effect its existence,
rights and franchises as a business trust under the laws of the State of
Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other State or of the United States of America,
in which case the Issuer shall keep in full effect its existence, rights and
franchises under the laws of such other jurisdiction) and shall obtain and
preserve its qualification to do business in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Collateral and each other
instrument or agreement included in the Trust Estate.
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3.5. PROTECTION OF TRUST ESTATE. The Issuer shall from time to time
execute and deliver all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance
and other instruments, and shall take such other action necessary or advisable
to:
(i) maintain or preserve the lien and security interest (and
the priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
(ii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iii) enforce any of the Collateral; or
(iv) preserve and defend title to the Trust Estate and the
rights of the Indenture Trustee and the Noteholders in the Trust Estate
against the claims of all Persons.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute upon a written instruction from the Issuer or
Servicer any financing statement, continuation statement or other instrument
required to be executed pursuant to this Section 3.5.
3.6. OPINIONS AS TO TRUST ESTATE.
(a) On the Closing Date, the Issuer shall deliver to the Indenture
Trustee an Opinion of Counsel substantially in the form attached hereto as
Exhibit B.
(b) On or before March 31 of each year (commencing with the year
2001), the Issuer shall deliver to the Indenture Trustee an Opinion of Counsel
either stating that, in the opinion of such counsel, such action has been taken
with respect to the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental hereto and any other requisite documents
and with respect to the execution and filing of any financing statements and
continuation statements as is necessary to maintain the lien and security
interest created by this Indenture and reciting the details of such action or
stating that, in the opinion of such counsel, no such action is necessary to
maintain such lien and security interest. Such Opinion of Counsel shall also
describe the recording, filing, re-recording and refiling of this Indenture, any
indentures supplemental hereto and any other requisite documents and the
execution and filing of any financing statements and continuation statements
that shall, in the opinion of such counsel, be required to
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maintain the lien and security interest of this Indenture until March 31 in the
following year.
3.7. PERFORMANCE OF OBLIGATIONS; SERVICING OF CONTRACTS.
(a) The Issuer shall not take any action and shall use its best
efforts not to permit any action to be taken by others that would release any
Person from any of such Person's material covenants or obligations under any
instrument or agreement included in the Trust Estate or that would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture and the other Transaction Documents.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Indenture Trustee in an Officer's Certificate
shall be deemed to be action taken by the Issuer. Initially, the Issuer has
contracted with the Servicer and the Administrator to assist the Issuer in
performing its duties under this Indenture.
(c) The Issuer shall punctually perform and observe all of its
obligations and agreements contained in this Indenture, the other Transaction
Documents and the instruments and agreements included in the Trust Estate,
including, but not limited to, filing or causing to be filed all financing
statements and continuation statements required to be filed under the Relevant
UCC by the terms of this Indenture and the Servicing Agreement in accordance
with and within the time periods provided for herein and therein. Except as
otherwise expressly provided therein, the Issuer shall not waive, amend, modify,
supplement or terminate any Transaction Document or any provision thereof
without the consent of the Indenture Trustee or the Noteholders evidencing not
less than 51% of the Note Balance.
(d) If the Issuer shall have knowledge of the occurrence of an Event
of Servicing Termination under the Servicing Agreement, the Issuer shall
promptly notify the Indenture Trustee, the Insurer and the Rating Agencies
thereof and shall specify in such notice the action, if any, the Issuer is
taking in respect of such default. If an Event of Servicing Termination shall
arise from the failure of the Servicer to perform any of its duties or
obligations under the Servicing Agreement with respect to the Contracts, the
Issuer shall take all reasonable steps available to it to remedy such failure.
(e) As promptly as possible after the giving of notice of
termination to the Servicer and Back-Up Servicer of the
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Servicer's rights and powers pursuant to Section 5.02 of the Servicing
Agreement, the Issuer shall (subject to the rights of the Indenture Trustee to
direct such appointment pursuant to Section 5.02 of the Servicing Agreement)
appoint a successor servicer acceptable to the Insurer (the "SUCCESSOR
SERVICER"), and such Successor Servicer shall accept its appointment by a
written assumption in a form acceptable to the Indenture Trustee and the Insurer
(provided that no Insurer Default shall have occurred and be continuing). In the
event that a Successor Servicer has not been appointed and has not accepted its
appointment at the time when the Servicer ceases to act as Servicer, the
Indenture Trustee, without further action, shall automatically be appointed the
Successor Servicer. In its role as Successor Servicer, Norwest Bank Minnesota,
National Association its successors or assigns, shall have (i) no liability with
respect to any obligation which was required to be performed by the terminated
Servicer prior to the date that the Successor Servicer becomes the Servicer or
any claim of a third party based on any alleged action or inaction of the
terminated Servicer, (ii) no obligation to perform any repurchase or advancing
obligations, if any, of the Servicer, (iii) no obligation to pay any taxes
required to be paid by the Servicer, (iv) no obligation to pay any of the fees
and expenses of any other party involved in this transaction and (v) no
liability or obligation with respect to any Servicer indemnification obligations
of any prior Servicer including the original Servicer. Notwithstanding any other
provision in the Transaction Documents to the contrary, should the Back-Up
Servicer by any means become Successor Servicer, the Back-Up Servicer shall not
inherit any of the indemnification obligations of any prior servicer including
the original Servicer. The indemnification obligations of the Back-Up Servicer,
upon becoming Successor Servicer are expressly limited to those instances of
gross negligence or willful misconduct on behalf of the Back-Up Servicer in its
role as Successor Servicer. The Indenture Trustee may resign as the Servicer by
giving written notice of such resignation to the Issuer and the Insurer
(provided that no Insurer Default shall have occurred and be continuing) and in
such event shall be released from such duties and obligations, such release not
to be effective until the date a new servicer enters into a Servicing Agreement
with the Issuer as provided below. Upon delivery of any such notice to the
Issuer, the Issuer shall obtain a new servicer as the Successor Servicer under
the Servicing Agreement. Any Successor Servicer (other than the Indenture
Trustee) shall (i) be an established financial institution having a net worth of
not less than $50,000,000 and whose regular business includes the servicing of
installment sale contracts and (ii) enter into a Servicing Agreement with the
Issuer having substantially the same provisions as the provisions of the
Servicing Agreement applicable to the Servicer and (iii) shall otherwise be an
Eligible Servicer. If, within thirty (30) days after the delivery of the notice
referred to above, the
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Issuer shall not have obtained such a new servicer, the Indenture Trustee may
appoint, or may petition a court of competent jurisdiction to appoint, a
Successor Servicer. In connection with any such appointment, the Indenture
Trustee may make such arrangements for the compensation of such successor as it
and such successor shall agree, subject to the limitations set forth below and
in the Servicing Agreement, and, in accordance with Section 2.01 of the
Servicing Agreement, the Issuer shall enter into an agreement with such
successor for the servicing of the Contracts (such agreement to be in form and
substance satisfactory to the Indenture Trustee and the Insurer (provided that
no Insurer Default shall have occurred and be continuing) or if an Insurer
Default has occurred and is continuing, such agreement has been consented to by
the Noteholders evidencing not less than 51% of the Note Balance). If the
Indenture Trustee shall succeed to the Servicer's duties as servicer of the
Contracts as provided herein, it shall do so in its individual capacity and not
in its capacity as Indenture Trustee and, accordingly, the provisions of Article
VI shall be inapplicable to the Indenture Trustee in its duties as the successor
to the Servicer and the servicing of the Contracts. In case the Indenture
Trustee shall become successor to the Servicer under the Servicing Agreement,
the Indenture Trustee shall be entitled to subservice any and all of its duties
and responsibilities hereunder; PROVIDED, HOWEVER, that the Indenture Trustee,
in its capacity as the Servicer, shall be fully liable for the actions and
omissions of such subservicer in such capacity as Successor Servicer.
(f) Upon any termination of the Servicer's rights and powers
pursuant to Section 5.02 of the Servicing Agreement, the Issuer shall promptly
notify the Indenture Trustee and the Insurer of such termination. Upon any
appointment of a Successor Servicer by the Issuer, the Issuer shall promptly
notify the Indenture Trustee and the Insurer of such appointment, specifying in
such notice the name and address of such Successor Servicer.
(g) Without derogating from the absolute nature of the assignment
granted to the Indenture Trustee under this Indenture or the rights of the
Indenture Trustee hereunder, the Issuer shall not, without the prior written
consent of the Insurer (if no Insurer Default shall have occurred an be
continuing), the Indenture Trustee and the Holders of not less than 51% of the
Note Balance, amend, modify, waive, supplement, terminate or surrender, or agree
to any amendment, modification, waiver, supplement, termination or surrender of,
the terms of any Collateral (except to the extent otherwise provided in the
Servicing Agreement or the other Transaction Documents).
3.8. NEGATIVE COVENANTS. If any Notes are Outstanding or the Insurer
has not been paid all amounts owed to it, the Issuer shall not:
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(i) except as expressly permitted by this Indenture, the Trust
Agreement, the Servicing Agreement or the Sale and Allocation Agreement,
sell, transfer, exchange or otherwise dispose of any of the properties or
assets of the Issuer, including those included in the Trust Estate, unless
directed to do so by the Indenture Trustee with the prior written consent
of the Insurer;
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than amounts
properly withheld from such payments under the Code or applicable state
law) or assert any claim against any present or former Noteholder by
reason of the payment of taxes levied or assessed upon the Issuer;
(iii) dissolve or liquidate in whole or in part;
(iv) (A) permit the validity or effectiveness of this Indenture
to be impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any Person
to be released from any covenants or obligations with respect to the Notes
under this Indenture except as may be expressly permitted hereby, (B)
permit any lien, charge, excise, claim, security interest, mortgage or
other encumbrance (other than the lien of this Indenture) to be created on
or extend to or otherwise arise upon or burden the Trust Estate or any
part thereof or any interest therein or the proceeds thereof (other than
tax liens, mechanics' liens and other liens that arise by operation of
law, in each case on any of the Financed Vehicles and arising solely as a
result of an action or omission of the related Obligor) or (C) permit the
lien of this Indenture not to constitute a valid first priority (other
than with respect to any such tax, mechanics' or other lien) security
interest in the Trust Estate;
(v) engage in any activities other than financing, acquiring,
owning, pledging and managing the Contracts as contemplated by the
Servicing Agreement, the Trust Agreement, the Sale and Allocation
Agreement and this Indenture and activities incidental to such activities;
or
(vi) incur, assume or guarantee any indebtedness other than the
indebtedness evidenced by the Notes or indebtedness otherwise permitted by
the Servicing Agreement, the Trust Agreement, the Sale and Allocation
Agreement or this Indenture.
3.9. ANNUAL STATEMENT AS TO COMPLIANCE. On or before July 31 of each
year (commencing with the year 2001),
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the Issuer shall deliver to the Indenture Trustee and the Insurer an Officer's
Certificate stating, as to the Authorized Officer signing such Officer's
Certificate, that:
(i) a review of the activities of the Issuer during the
preceding Fiscal Year (or, in the case of the Officer's Certificate to be
delivered in the year 2001, during the period beginning on the Closing
Date and ending on April 30, 2001) and of its performance under this
Indenture has been made under such Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based
on such review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such preceding Fiscal Year (or, in the
case of the Officer's Certificate to be delivered in the year 2001, during
the period beginning on the Closing Date and ending on April 30, 2001) or,
if there has been a default in its compliance with any such condition or
covenant, specifying each such default known to such Authorized Officer
and the nature and status thereof.
3.10. ISSUER MAY NOT MERGE. The Issuer shall not enter into any
merger, consolidation or conveyance transaction regardless of the surviving
entity.
3.11. NO OTHER BUSINESS. The Issuer shall not engage in any business
other than financing, acquiring, owning and pledging the Contracts in the manner
contemplated by this Indenture and the other Transaction Documents and
activities incidental thereto.
3.12. NO BORROWING. The Issuer shall not issue, incur, assume,
guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes.
3.13. SERVICER'S OBLIGATIONS. The Issuer shall cause the Servicer to
comply with the Sale and Allocation Agreement and the Servicing Agreement.
3.14. GUARANTEES, LOANS, ADVANCES AND OTHER LIABILITIES. Except as
contemplated by this Indenture and the other Transaction Documents, the Issuer
shall not make any loan or advance or credit to, or guarantee (directly or
indirectly or by an instrument having the effect of assuring another's payment
or performance on any obligation or capability of so doing or
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otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
3.15. CAPITAL EXPENDITURES. The Issuer shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
3.16. RESTRICTED PAYMENTS. The Issuer shall not, directly or
indirectly, (i) make any distribution (by reduction of capital or otherwise),
whether in cash, property, securities or a combination thereof, to the Owner
Trustee or any owner of a beneficial interest in the Issuer or otherwise with
respect to any ownership or equity interest or security in or of the Issuer or
to the Servicer, (ii) redeem, purchase, retire or otherwise acquire for value
any such ownership or equity interest or security or (iii) set aside or
otherwise segregate any amounts for any such purpose; PROVIDED, HOWEVER, that
the Issuer may make, or cause to be made, (A) payments to the Servicer and the
Owner Trustee as contemplated by, and to the extent funds are available for such
purpose under, the Sale and Allocation Agreement or the Trust Agreement and (B)
payments to the Indenture Trustee pursuant to Section 2(a)(ii) of the
Administration Agreement. The Issuer shall not, directly or indirectly, make
payments to or distributions from the Collection Account except in accordance
with this Indenture and the other Transaction Documents.
3.17. NOTICE OF EVENTS OF DEFAULT. The Issuer shall give the
Indenture Trustee, the Insurer and the Rating Agencies prompt written notice of
each Event of Default hereunder, each default on the part of the Seller or the
Servicer of its obligations under the Sale and Allocation Agreement.
3.18. REMOVAL OF ADMINISTRATOR. For so long as any Notes are
Outstanding, the Issuer shall not remove the Administrator without cause unless
the Rating Agency Condition shall have been satisfied in connection therewith.
3.19. FURTHER INSTRUMENTS AND ACTS. Upon request of the Indenture
Trustee or the Insurer, the Issuer shall execute and deliver such further
instruments and do such further acts as may be reasonably necessary or proper to
carry out more effectively the purpose of this Indenture.
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3.20. RULE 144A INFORMATION. At any time when the Issuer is not
subject to Section 13 or 15(d) of the Exchange Act and is not exempt from
reporting pursuant to Rule 12g3-2(b) under the Exchange Act, upon the request of
any Noteholder or Note Owner, the Issuer shall promptly furnish or cause to be
furnished Rule 144A Information to such Noteholder or Note Owner or to a
prospective purchaser of a Note designated by such Noteholder or Note Owner, in
order to permit compliance by such Noteholder or Note Owner with Rule 144A in
connection with the resale of such Note.
3.21. RE-LIENING TRIGGER. Upon the occurrence of a Re-Liening
Trigger, the Seller shall request the Servicer to and, upon the receipt of such
request, the Servicer 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 Indenture Trustee as lien holder on behalf of the
Noteholders and the Insurer. Any costs associated with such revision of the
certificate of title shall be paid by the Seller, and to the extent not paid by
the Seller, by the Servicer.
It is understood that the Servicer shall remain obligated to perform
its duties pursuant to this Section 3.21, notwithstanding anything to the
contrary in this Indenture, until such time as all outstanding amounts under the
Transaction Documents have been paid to the Noteholders and the Insurer.
ARTICLE IV
SATISFACTION AND DISCHARGE
4.1. SATISFACTION AND DISCHARGE OF INDENTURE. This Indenture shall
cease to be of further effect with respect to the Notes except as to (i) rights
of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8,
3.10, 3.11, 3.12, 3.13, 3.15 and 3.16 and, (v) the rights, obligations and
immunities of the Indenture Trustee hereunder (including the rights of the
Indenture Trustee under Section 6.7 and the obligations of the Indenture Trustee
under Section 4.3), and (vi) the rights of Noteholders as beneficiaries hereof
with respect to the property so deposited with the Indenture Trustee payable to
all or any of them, and the Indenture Trustee, on demand of and at the expense
of the Issuer, shall execute proper instruments acknowledging satisfaction and
discharge of this Indenture with respect to the Collateral securing the Notes
and the Notes, when:
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(A) either
(1) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 2.6 and (ii) Notes for whose
payment money has theretofore been irrevocably deposited in trust or
segregated and held in trust by the Issuer and thereafter repaid to the
Issuer or discharged from such trust, as provided in Section 3.3) have
been delivered to the Indenture Trustee for cancellation and the Policy
has expired and has been returned to the Insurer for cancellation; or
(2) all Notes not theretofore delivered to the Indenture
Trustee for cancellation have become due and payable and the Issuer has
irrevocably deposited or caused to be irrevocably deposited with the
Indenture Trustee, in trust, cash or direct obligations of or obligations
guaranteed by the United States of America (which will mature prior to the
date needed), in an amount sufficient to pay and discharge the entire
indebtedness on such Notes when due on the Final Note Payment Date or
Redemption Date (if Notes shall have been called for redemption pursuant
to Section 10.1(a)), as the case may be;
(B) the Issuer has paid or caused to be paid all other sums payable
by the Issuer hereunder and under the other Transaction Documents;
(C) the Issuer has delivered to the Indenture Trustee and the
Insurer an Officer's Certificate, an Opinion of Counsel and (if required by the
Indenture Trustee) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of Section 11.1(a) and,
subject to Section 11.2, each stating that all conditions precedent provided for
in this Indenture relating to the satisfaction and discharge of this Indenture
have been complied with; and
(D) the Issuer has delivered to the Indenture Trustee an Opinion of
Counsel to the effect that the satisfaction and discharge of this Indenture
pursuant to this Section 4.1 will not cause any Noteholder to be treated as
having sold or exchanged any of its Notes for purposes of Section 1001 of the
Code.
4.2. SATISFACTION, DISCHARGE AND DEFEASANCE OF THE NOTES.
(a) Upon satisfaction of the conditions set forth in subsection (b)
below, the Issuer shall be deemed to have paid and
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discharged the entire indebtedness on all the Notes Outstanding, and the
provisions of this Indenture, as it relates to such Notes, shall no longer be in
effect (and the Indenture Trustee, at the expense of the Issuer, shall execute
proper instruments acknowledging the same), except as to:
(i) the rights of the Noteholders to receive, from the trust
funds described in subsection (b)(i) hereof, payment of the principal of
and interest on the Notes Outstanding at maturity of such principal or
interest;
(ii) the obligations of the Issuer with respect to the Notes
under Sections 2.5, 2.6, 3.2 and 3.3;
(iii) the obligations of the Issuer to the Indenture Trustee
under Section 6.7; and
(iv) the rights, powers, trusts and immunities of the Indenture
Trustee hereunder and the duties of the Indenture Trustee hereunder.
(b) The satisfaction, discharge and defeasance of the Notes pursuant
to subsection (a) of this Section 4.2 is subject to the satisfaction of all of
the following conditions:
(i) the Issuer has deposited or caused to be deposited
irrevocably (except as provided in Section 4.4) with the Indenture Trustee
as trust funds in trust, specifically pledged as security for, and
dedicated solely to, the benefit of the Noteholders, which, through the
payment of interest and principal in respect thereof in accordance with
their terms will provide, not later than one day prior to the due date of
any payment referred to below, money in an amount sufficient, in the
opinion of a nationally recognized firm of independent certified public
accountants expressed in a written certification thereof delivered to the
Indenture Trustee, to pay and discharge the entire indebtedness on the
Notes Outstanding, for principal thereof and interest thereon to the date
of such deposit (in the case of Notes that have become due and payable) or
to the maturity of such principal and interest, as the case may be;
(ii) such deposit will not result in a breach or violation of,
or constitute an event of default under, any Transaction Document or other
agreement or instrument to which the Issuer is bound;
(iii) no Event of Default has occurred and is continuing on
the date of such deposit or on the ninety-first (91st) day after such
date;
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(iv) the Issuer has delivered to the Indenture Trustee and the
Insurer an Opinion of Counsel to the effect that the satisfaction,
discharge and defeasance of the Notes pursuant to this Section 4.2 will
not cause any Noteholder to be treated as having sold or exchanged any of
its Notes for purposes of Section 1001 of the Code; and
(v) the Issuer has delivered to the Indenture Trustee an
Officer's Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for in this Indenture relating to the
defeasance contemplated by this Section 4.2 have been complied with; and
(vi) all amounts then owing to the Insurer have been paid.
4.3. APPLICATION OF TRUST MONEY. All monies deposited with the
Indenture Trustee pursuant to Section 4.1 shall be held in trust and applied by
the Indenture Trustee, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent, as the
Indenture Trustee may determine, to the Noteholders for the payment or
redemption of which such monies have been deposited with the Indenture Trustee,
of all sums due and to become due thereon for principal and interest, but such
monies need not be segregated from other funds except to the extent required
herein or in the Sale and Allocation Agreement or required by law.
4.4. REPAYMENT OF MONIES HELD BY PAYING AGENT. In connection with
the satisfaction and discharge of this Indenture with respect to the Notes, all
monies then held by any Paying Agent other than the Indenture Trustee under the
provisions of this Indenture with respect to such Notes shall, upon demand of
the Issuer, be paid to the Indenture Trustee to be held and applied according to
Section 3.3, and thereupon such Paying Agent shall be released from all further
liability with respect to such monies.
4.5. CONTINUING OBLIGATIONS OF INDENTURE TRUSTEE. It is understood
that the Indenture Trustee shall remain obligated to perform its duties pursuant
to Sections 2.8 (a)(i), (ii), (v), (vi), (vii), (viii), (ix) and (x) and Section
5.4(b)(i),(ii), (v) and (vi), notwithstanding anything to the contrary in this
Article IV or elsewhere in this Indenture, until such time as all outstanding
amounts have been paid pursuant to such sections.
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ARTICLE V
REMEDIES
5.1. EVENTS OF DEFAULT. "EVENT OF DEFAULT" means the occurrence of
any one of the following events (whatever the reason for such event and whether
such event shall be voluntary or involuntary or be effected by operation of law
or pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(1) default in the payment of any interest on any Note when the same
becomes due and payable;
(2) default in the payment of any principal due and payable on the
Notes on the date payable, including, the Final Note Payment Date;
(3) default in the observance or performance of any material
covenant or agreement of the Issuer, the Seller or the Servicer made in
the Transaction Documents (other than a covenant or agreement a default in
the observance or performance of which is specifically dealt with
elsewhere in this Section 5.1), and such default shall continue or not be
cured for a period of thirty (30) days after there shall have been given,
by registered or certified mail, to the Issuer by the Indenture Trustee or
to the Issuer and the Indenture Trustee by the Noteholders evidencing not
less than 25% of the Notes or the Insurer (provided that no Insurer
Default shall have occurred and be continuing), a written notice
specifying such default and requiring it to be remedied and stating that
such notice is a notice of Default hereunder;
(4) any representation or warranty of the Issuer, the Seller or the
Servicer made in the Transaction Documents or in any certificate delivered
pursuant hereto or in connection herewith proving to have been incorrect
in any material respect as of the time when the same shall have been made,
and the circumstance or condition in respect of which such representation
or warranty was incorrect shall not have been eliminated or otherwise
cured for a period of thirty (30) days after there shall have been given,
by registered or certified mail, to the Issuer by the Indenture Trustee or
to the Issuer and the Indenture Trustee by the Noteholders evidencing not
less than 25% of the Notes or the Insurer (provided that no Insurer
Default shall have occurred and be continuing), a written notice
specifying such incorrect representation or warranty and requiring it to
be remedied and stating that such notice is a notice of Default hereunder;
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(5) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Seller, the Servicer, the
Issuer or any substantial part of the Trust Estate in an involuntary case
under any applicable federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official
of the Issuer or for any substantial part of the Trust Estate, or ordering
the winding-up or liquidation of the Issuer's affairs, and such decree or
order shall remain unstayed and in effect for a period of sixty (60)
consecutive days;
(6) the cessation of a valid perfected first priority security
interest in the Contracts in favor of the Issuer which is not cured within
the applicable cure period;
(7) the merger or consolidation (including any conveyance
transaction) of the Issuer with or into any Person regardless of the
surviving entity;
(8) the merger or consolidation (including a conveyance transaction)
of the Servicer with or into any person whereby the Servicer is not the
surviving entity;
(9) the commencement by the Seller, the Servicer or the Issuer of a
voluntary case under any applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or the consent
by the Seller, the Servicer or the Issuer to the entry of an order for
relief in an involuntary case under any such law, or the consent by the
Seller, the Servicer or the Issuer to the appointment or taking possession
by a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Seller, the Servicer or the Issuer or for any
substantial part of the Trust Estate, or the making by the Seller, the
Servicer or the Issuer of any general assignment for the benefit of
creditors, or the failure by the Seller, the Servicer or the Issuer
generally to pay its debts as such debts become due, or the taking of any
action by the Seller, the Servicer or the Issuer in furtherance of any of
the foregoing;
(10) an Event of Servicing Termination shall have occurred under the
Servicing Agreement;
(11) the Seller or the Servicer shall have defaulted on any payment
required to be made by it under any material credit agreement or other
loan agreement pursuant to which it has borrowed money;
(12) a draw shall be made under the Policy;
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(13) the Insurer shall have given notice that an event of default
has occurred and is continuing under the Insurance Agreement;
(14) a material breach by the Seller of its obligations under the
Sale and Allocation Agreement;
(15) failure of the Servicer to make any required deposit or payment
when due under the Transaction Documents;
(16) an event of default under any Transaction Document which is not
cured within the applicable cure period set forth under the related
Transaction Document;
(17) the average Delinquency Ratio for any three Collection Periods
exceeds 7.0% during months one through twelve after closing and the
Delinquency Ratio exceeds 8.5% thereafter;
(18) Cumulative Net Losses at any month indicated in the following
table (measured from the Closing Date) shall exceed the percentage
corresponding thereto:
------------------
Month
------------------
0-3 | 0.25%
------------------
4-6 | 1.80%
------------------
7-9 | 3.00%
------------------
10-12 | 4.30%
------------------
13-15 | 5.60%
------------------
16-18 | 6.60%
------------------
19-21 | 7.40%
------------------
22-24 | 8.20%
------------------
25-27 | 8.80%
------------------
28-30 | 9.50%
------------------
31-33 | 10.00%
------------------
34-36 | 10.40%
------------------
37-39 | 10.70%
------------------
40-42 | 11.00%
------------------
43 and | 11.10%
there- |
after |
------------------
and
(1) the Servicer shall violate the servicing standards in the
Servicing Agreements;
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PROVIDED, HOWEVER, that if no Insurer Default shall have occurred and be
continuing, neither the Indenture Trustee nor the Noteholders may declare an
Event of Default under the Indenture. If no Insurer Default shall have occurred
and be continuing, an Event of Default shall occur only upon delivery by the
Insurer to the Indenture Trustee of notice of the occurrence of such Event of
Default.
The Issuer shall deliver to the Indenture Trustee, within five (5) days after
the occurrence of any event that, with notice or the lapse of time or both,
would become an Event of Default under clause (iii) or (iv), written notice of
such Default in the form of an Officer's Certificate, the status of such Default
and what action the Issuer is taking or proposes to take with respect to such
Default.
5.2. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.
(a) If no Insurer Default shall have occurred and be continuing and
if an Event of Default shall have occurred and be continuing, then the Insurer
shall have the right, but not the obligation, upon prior written notice to each
Rating Agency, to declare the Notes to be immediately due and payable by written
notice to the Issuer, the Servicer and the Indenture Trustee, and upon any such
declaration the unpaid principal amount of the Notes, together with accrued and
unpaid interest thereon through the date of acceleration, shall become
immediately due and payable. The Indenture Trustee shall have no discretion with
respect to the acceleration of the Notes under the foregoing circumstances. In
the event of any such acceleration of the Notes, the Indenture Trustee shall
continue to make claims under the Policy with respect to the Notes.
(b) If an Insurer Default has occurred and is continuing and an
Event of Default has occurred and is continuing, then and in every such case the
Indenture Trustee or the Noteholders evidencing not less than 66 2/3% of the
Note Balance may, upon prior written notice to each Rating Agency, declare the
Notes to be immediately due and payable by written notice to the Issuer (and to
the Indenture Trustee if given by Noteholders), and upon any such declaration
the unpaid principal amount of the Notes, together with accrued and unpaid
interest thereon through the date of acceleration, shall become immediately due
and payable.
Notwithstanding the foregoing, upon the occurrence of an Event of Default
specified in Section 5.1(ix) with respect to the Issuer, the Notes shall become
immediately due and payable, without declaration, notice or demand by or to any
Person.
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(c) At any time after a declaration of acceleration of maturity has
been made and before a judgment or decree for payment of the amount due has been
obtained by the Indenture Trustee as hereinafter provided in this Article V,
either (i) if the Noteholders accelerated, the Noteholders evidencing not less
than 66 2/3% of the Note Balance or (ii) if the Insurer accelerated, the
Insurer, by written notice to the Issuer and the Indenture Trustee, may rescind
and annul such declaration and its consequences if:
(i) the Issuer has paid or deposited with the Indenture Trustee
a sum sufficient to pay all principal of and interest on the Notes and all
other amounts that would then be due hereunder or upon the Notes if the
Event of Default giving rise to such acceleration had not occurred; and
(ii) all Events of Default, other than the nonpayment of the
principal of the Notes that has become due solely by such acceleration,
have been cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any right
consequent thereto.
(d) If an Event of Default has occurred and is continuing, the
Insurer may (i) if the Notes have been accelerated in accordance with 5.2(a) or
5.2(b) and not rescinded pursuant to 5.2(c), elect to prepay all or any portion
of the Notes, plus accrued but unpaid interest thereon to the date of payment
and (ii) terminate FISC as the servicer under the Servicing Agreement; PROVIDED,
HOWEVER, that the Insurer shall fulfill its obligations under the Policy.
5.3. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT BY
INDENTURE TRUSTEE.
(a) If (i) default is made in the payment of any interest on any
Note when the same becomes due and payable, and such default continues for a
period of five (5) Business Days, or (ii) default is made in the payment of the
principal of any Note when the same becomes due and payable, the Issuer shall
pay to the Indenture Trustee, for the benefit of the Noteholders, the amount
then due and payable on the Notes for principal and interest, with interest upon
the overdue principal at the applicable Note Interest Rate and, to the extent
payment at such rate of interest shall be legally enforceable, upon overdue
installments of interest at the applicable Note Interest Rate and in addition
thereto such further amount as shall be sufficient to
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cover the costs and expenses of collection, including the reasonable
compensation, expenses, disbursements and advances of the Indenture Trustee and
its agents and counsel and other amounts due and owing to the Indenture Trustee
pursuant to Section 6.7.
(b) If the Issuer shall fail forthwith to pay such amounts upon such
demand, the Indenture Trustee, in its own name and as trustee of an express
trust, may with the written consent of the Insurer (provided that no Insurer
Default shall be occurred and be continuing), and shall, at the direction of the
Insurer (provided that no Insurer Default shall have occurred and be
continuing), institute a Proceeding for the collection of the sums so due and
unpaid, and may prosecute such Proceeding to judgment or final decree, and may
enforce the same against the Issuer or any other obligor upon the Notes and
collect in the manner provided by law out of the property of the Issuer or such
other obligor, wherever situated, the monies adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee may, as more particularly provided in Section 5.4, in its discretion,
proceed to protect and enforce its rights and the rights of the Noteholders and
the Insurer by such appropriate Proceedings as the Indenture Trustee shall deem
most effective to protect and enforce such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein or to enforce any other proper remedy or
legal or equitable right vested in the Indenture Trustee by this Indenture or by
law.
(d) If there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Trust Estate, Proceedings under Title 11 of the United States Code or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or if a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or if there shall be pending any other comparable judicial Proceedings relative
to the Issuer or any other obligor upon the Notes, or to the creditors or
property of the Issuer or such other obligor, the Indenture Trustee,
irrespective of whether the principal of any Notes shall then be due and payable
as therein expressed or by declaration or otherwise and irrespective of whether
the Indenture Trustee shall have made any demand pursuant to the provisions of
this Section 5.3, shall be entitled and empowered, by intervention in such
Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount of
principal and interest owing and unpaid in
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respect of the Notes and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Indenture
Trustee (including any claim for reasonable compensation to the Indenture
Trustee and each predecessor Indenture Trustee, and their respective
agents, attorneys and counsel, and all other amounts due and owing to the
Indenture Trustee pursuant to Section 6.7) and of the Noteholders allowed
in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Noteholders in any election of a trustee, a standby
trustee or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any monies or other property payable
or deliverable on any such claims and to pay all amounts received with
respect to the claims of the Noteholders and of the Indenture Trustee on
their behalf; and
(iv) to file such proofs of claim and other papers or documents
as may be necessary or advisable in order to have the claims of the
Indenture Trustee or the Noteholders allowed in any judicial proceedings
relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of the Noteholders to make
payments to the Indenture Trustee and, in the event that the Indenture Trustee
shall consent to the making of payments directly to the Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee and each predecessor Indenture Trustee,
and their respective agents, attorneys and counsel, and all other amounts due
and owing to the Indenture Trustee pursuant to Section 6.7.
(e) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the Indenture Trustee
without the possession of any of the Notes or the production thereof in any
trial or other Proceedings relative thereto, and any such action or Proceedings
instituted by the
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Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Noteholders.
(g) In any Proceedings brought by the Indenture Trustee (and also
any Proceedings involving the interpretation of any provision of this Indenture
to which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Noteholders, and it shall not be necessary to make any
Noteholder a party to any such Proceedings.
5.4. REMEDIES.
(a) If an Event of Default has occurred and is continuing, the
Indenture Trustee shall, at the direction of the Insurer (if no Insurer Default
has occurred and is continuing), or at the direction of the Noteholders
evidencing not less than 66 2/3% of the Note Balance (if an Insurer Default has
occurred and is continuing), take one or more of the following actions as so
directed (subject to Section 5.5):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the Notes
or under this Indenture with respect thereto, whether by declaration or
otherwise, enforce any judgment obtained, and collect from the Issuer and
any other obligor upon the Notes monies adjudged due;
(ii) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Trust Estate;
(iii) exercise any remedies of a secured party under the
Relevant UCC and take any other appropriate action under applicable law to
protect and enforce the rights and remedies of the Indenture Trustee and
the Noteholders; and
(iv) sell the Trust Estate or any portion thereof or rights or
interest therein at one or more public or private sales called and
conducted in any manner permitted by law;
PROVIDED, HOWEVER, that the Indenture Trustee may not sell or otherwise
liquidate the Trust Estate following an Event of Default unless (A) if no
Insurer Default has occurred and is continuing, the Insurer consents thereto; or
if an Insurer Default has occurred, the Holders of 100% of the Notes consent
thereto, (B) the proceeds of such sale or liquidation are sufficient to pay in
full the Notes and all accrued but unpaid interest on the outstanding Notes and
all amounts due to the
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Insurer under the Insurance Agreement and the Policy and (C) if an Insurer
Default has occurred and is continuing, the Indenture Trustee determines that
the Trust Estate will not continue to provide sufficient funds for the payment
of principal of and interest on the Notes as they would have become due if the
Notes had not been declared due and payable, and the Indenture Trustee obtains
the consent of the Noteholders evidencing not less than 66 2/3% of the Note
Balance, or if no Insurer Default has occurred or is continuing, the Insurer
makes such determination. In determining such sufficiency or insufficiency with
respect to clauses (B) and (C) above, the Indenture Trustee may, but need not,
obtain and rely upon an opinion of an Independent investment banking or
accounting firm of national reputation as to the feasibility of such proposed
action and as to the sufficiency of the Trust Estate for such purpose.
(b) If the Indenture Trustee collects any money or property pursuant
to this Section 5.4, it shall pay out such money or property in the following
order of priority:
(i) to the Back-Up Servicer, Indenture Trustee and Owner
Trustee, in its individual capacity, respectively, any unpaid or
unreimbursed fees and any out-of-pocket expenses (including, but not
limited to, attorneys' fees and transition expenses); PROVIDED that such
expenses shall not exceed $50,000 in the aggregate per year and $100,000
in the total aggregate;
(ii) to the Servicer, all amounts due to the Servicer as
compensation pursuant to Sections 2.08 and 2.11 of the Servicing
Agreement;
(iii) to the Noteholders, all accrued but unpaid interest
on the Notes;
(iv) to the Noteholders, the outstanding Note Balance;
(v) to the Insurer, all amounts then owing to it; and
(vi) to the Depositor Account any remaining amounts.
The Indenture Trustee may fix a record date and payment date for any payment to
Noteholders pursuant to this Section 5.4. At least fifteen (15) days before such
record date, the Issuer shall mail to each Noteholder and the Indenture Trustee
a notice that states the record date, the payment date and the amount to be
paid.
5.5. OPTIONAL PRESERVATION OF THE CONTRACTS. If the Notes have been
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declared to be due and payable under Section 5.2 following an Event of Default,
and such declaration and its consequences have not been rescinded and annulled,
the Indenture Trustee may, but need not, elect to maintain possession of the
Trust Estate and apply proceeds as if there had been no declaration of
acceleration; PROVIDED, HOWEVER, that the Total Available Funds shall be applied
in accordance with such declaration of acceleration in the manner specified in
Sections 3.5(d), (e) and (f) of the Sale and Allocation Agreement. It is the
desire of the parties hereto and the Noteholders that there be at all times
sufficient funds for the payment of principal of and interest on the Notes, and
the Indenture Trustee shall take such desire into account when determining
whether or not to maintain possession of the Trust Estate. In determining
whether to maintain possession of the Trust Estate, the Indenture Trustee may,
but need not, obtain and rely upon an opinion of an Independent investment
banking or accounting firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Trust Estate for such purpose.
5.6. LIMITATION OF SUITS. No Holder of any Note shall have any right
to institute any Proceeding with respect to this Indenture or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(ii) the Noteholders evidencing not less than 25% of the Notes
have made written request to the Indenture Trustee to institute such
Proceeding in respect of such Event of Default in its own name as
Indenture Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture
Trustee reasonable indemnity against the costs, expenses and liabilities
to be incurred in complying with such request;
(iv) the Indenture Trustee for sixty (60) days after its receipt
of such notice, request and offer of indemnity has failed to institute
such Proceedings;
(v) no direction inconsistent with such written request has
been given to the Indenture Trustee during such 60-day period by the
Noteholders evidencing not less than 51% of the Note Balance; and
(vi) an Insurer Default has occurred and is continuing.
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It is understood and intended that no one or more Noteholders shall
have any right in any manner whatever by virtue of, or by availing of, any
provision of this Indenture to affect, disturb or prejudice the rights of any
other Noteholders or to obtain or to seek to obtain priority or preference over
any other Noteholders or to enforce any right under this Indenture, except in
the manner herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Noteholders, each
evidencing less than 51% of the Note Balance, the Indenture Trustee in its sole
discretion may determine what action, if any, shall be taken, notwithstanding
any other provisions of this Indenture.
5.7. UNCONDITIONAL RIGHTS OF NOTEHOLDERS TO RECEIVE PRINCIPAL AND
INTEREST. Notwithstanding any other provisions in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest, if any, on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture (or, in
the case of redemption, on or after the Redemption Date) and to institute suit
for the enforcement of any such payment, and such right shall not be impaired
without the consent of such Holder.
5.8. RESTORATION OF RIGHTS AND REMEDIES. If the Indenture Trustee,
the Insurer or any Noteholder has instituted any Proceeding to enforce any right
or remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Indenture
Trustee, the Insurer or such Noteholder, then and in every such case the Issuer,
the Indenture Trustee, the Insurer and the Noteholders shall, subject to any
determination in such Proceeding, be restored severally and respectively to
their former positions hereunder, and thereafter all rights and remedies of the
Indenture Trustee and the Noteholders shall continue as though no such
Proceeding had been instituted.
5.9. RIGHTS AND REMEDIES CUMULATIVE. No right or remedy herein
conferred upon or reserved to the Indenture Trustee, the Insurer or the
Noteholders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or
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employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
5.10. DELAY OR OMISSION NOT A WAIVER. No delay or omission of the
Indenture Trustee, the Insurer or any Holder of any Note to exercise any right
or remedy accruing upon any Default or Event of Default shall impair any such
right or remedy or constitute a waiver of any such Default or Event of Default
or any acquiescence therein. Every right and remedy given by this Article V or
by law to the Indenture Trustee, the Insurer or the Noteholders may be exercised
from time to time, and as often as may be deemed expedient, by the Indenture
Trustee, the Insurer or the Noteholders, as the case may be.
5.11. CONTROL BY NOTEHOLDERS. The Noteholders evidencing not less
than 51% of the Note Balance shall have the right to direct the time, method and
place of conducting any Proceeding for any remedy available to the Indenture
Trustee with respect to the Notes or exercising any trust or power conferred on
the Indenture Trustee; PROVIDED, HOWEVER, that:
(i) such direction shall not be in conflict with any rule
of law or with this Indenture;
(ii) subject to the express terms of Section 5.4, any direction
to the Indenture Trustee to sell or liquidate the Trust Estate shall be by
the Noteholders evidencing not less than 100% of the Notes;
(iii) if the conditions set forth in Section 5.5 have been
satisfied and the Indenture Trustee elects to retain the Trust Estate
pursuant to such section, then any direction to the Indenture Trustee by
the Noteholders evidencing less than 100% of the Notes to sell or
liquidate the Trust Estate shall be of no force and effect;
(iv) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such
direction; and
(v) an Insurer Default shall have occurred and is
continuing.
Notwithstanding the rights of Noteholders set forth in this Section
5.11, subject to Section 6.1, the Indenture Trustee need not take any action
that it reasonably believes might involve it in costs, expenses and liabilities
for which it will not be adequately indemnified or might materially adversely
affect the rights of any Noteholders not consenting to such
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action.
5.12. WAIVER OF PAST DEFAULTS. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.2, the
Insurer (if no Insurer Default shall have occurred and be continuing) or the
Noteholders evidencing not less than 51% of the Note Balance, with the consent
of the Insurer (if no Insurer Default shall have occurred and be continuing),
may waive any past Default or Event of Default and its consequences except a
Default or Event of Default (i) in the payment of principal of or interest on
any of the Notes or (ii) in respect of a covenant or provision hereof that
cannot be amended, supplemented or modified without the consent of all the
Holders. Upon any such waiver, the Issuer, the Indenture Trustee, the Insurer
and the Holders shall be restored to their former positions and rights
hereunder, respectively, but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto. Upon
any such waiver, such Default or Event of Default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured and not to have occurred,
for every purpose of this Indenture, but no such waiver shall extend to any
subsequent or other Default or Event of Default or impair any right consequent
thereto.
5.13. UNDERTAKING FOR COSTS. All parties to this Indenture agree,
and each Holder of any Note by such Holder's acceptance thereof shall be deemed
to have agreed, that any court may in its discretion require, in any suit for
the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; PROVIDED,
HOWEVER, that the provisions of this Section 5.13 shall not apply to (i) any
suit instituted by the Indenture Trustee, (ii) any suit instituted by any
Noteholder or group of Noteholders, in each case holding Notes evidencing in the
aggregate more than 10% of the Notes or (iii) any suit instituted by any
Noteholder for the enforcement of the payment of principal of or interest on any
Note on or after the respective due dates expressed in such Note and in this
Indenture (or, in the case of redemption, on or after the Redemption Date).
5.14. WAIVER OF STAY OR EXTENSION LAWS. The Issuer covenants (to the
extent that it may lawfully do so) that it
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shall not at any time insist upon, or plead or in any manner whatsoever, claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, that may affect the covenants or the
performance of this Indenture, and the Issuer (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such
law, and covenants that it shall not hinder, delay or impede the execution of
any power herein granted to the Indenture Trustee, but will suffer and permit
the execution of every such power as though no such law had been enacted.
5.15. ACTION ON NOTES. The Indenture Trustee's right to seek and
recover judgment on the Notes or under this Indenture shall not be affected by
the seeking, obtaining or application of any other relief under or with respect
to this Indenture. Neither the lien of this Indenture nor any rights or remedies
of the Indenture Trustee or the Noteholders shall be impaired by the recovery of
any judgment by the Indenture Trustee against the Issuer or by the levy of any
execution under such judgment upon any portion of the Trust Estate or upon any
of the assets of the Issuer. Any money or property collected by the Indenture
Trustee shall be applied in accordance with Section 5.4(b).
5.16. PERFORMANCE AND ENFORCEMENT OF CERTAIN OBLIGATIONS.
(a) Promptly following a request from the Indenture Trustee to do
so, and at the Administrator's expense, the Issuer shall take all such lawful
action as the Indenture Trustee may request to compel or secure the performance
and observance by the Seller and the Servicer, as applicable, of each of their
obligations to the Issuer under or in connection with the Sale and Allocation
Agreement or by the Seller of each of its obligations under or in connection
with the Servicing Agreement, and to exercise any and all rights, remedies,
powers and privileges lawfully available to the Issuer under or in connection
with the Sale and Allocation Agreement to the extent and in the manner directed
by the Indenture Trustee, including the transmission of notices of default on
the part of the Seller or the Servicer thereunder and the institution of legal
or administrative actions or proceedings to compel or secure performance by the
Seller or the Servicer of each of their obligations under the Sale and
Allocation Agreement.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may with prior written consent of the Insurer (provided that
no Insurer Default has occurred and is continuing), and at the direction (which
direction shall be in writing or by telephone (confirmed in writing promptly
thereafter)) of the Noteholders evidencing not less than 66 2/3%
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of the Note Balance (with the prior written consent of the Insurer, or, at the
direction of the Insurer, in each case provided that no Insurer Default has
occurred and is continuing) shall, exercise all rights, remedies, powers,
privileges and claims of the Issuer against the Seller or the Servicer under or
in connection with the Sale and Allocation Agreement or against the Servicer
under or in connection with the Servicing Agreement, including the right or
power to take any action to compel or secure performance or observance by the
Seller or the Servicer, as the case may be, of each of their obligations to the
Issuer thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Sale and Allocation Agreement or the Servicing
Agreement, as the case may be, and any right of the Issuer to take such action
shall be suspended.
ARTICLE VI
THE INDENTURE TRUSTEE
6.1. DUTIES OF INDENTURE TRUSTEE.
(a) If an Event of Default has occurred and is continuing, the
Indenture Trustee shall exercise the rights and powers vested in it by this
Indenture and use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the conduct of
such Person's own affairs.
(b) Except upon the occurrence and during the continuation of an
Event of Default:
(i) the Indenture Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Indenture and no
implied covenants or obligations shall be read into this Indenture against
the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and, if required by the terms
of this Indenture, conforming to the requirements of this Indenture;
PROVIDED, HOWEVER, that the Indenture Trustee shall examine the
certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own gross negligent failure to act or its own willful
misconduct, except that:
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(i) this paragraph does not limit the effect of paragraph
(b) of this Section 6.1;
(ii) the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Indenture Trustee shall not be liable with respect to
any action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 5.11.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b), (c) and (g) of this Section
6.1.
(e) The Indenture Trustee shall not be liable for interest on any
money received by it except as the Indenture Trustee may agree in writing with
the Issuer.
(f) Money held in trust by the Indenture Trustee need not be
segregated from other funds except to the extent required by law or the terms of
this Indenture or the Sale and Allocation Agreement.
(g) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers hereunder if the Indenture Trustee shall have reasonable
grounds to believe that repayment of such funds or adequate indemnity against
such risk or liability is not reasonably assured or provided to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section 6.1.
(i) The Indenture Trustee shall not be charged with knowledge of any
Event of Default unless either (1) a Responsible Officer shall have actual
knowledge of such Event of Default or (2) written notice of such Event of
Default shall have been given to the Indenture Trustee in accordance with the
provisions of this Indenture.
6.2. RIGHTS OF INDENTURE TRUSTEE.
(a) The Indenture Trustee may rely on any document believed by it to
be genuine and to have been signed or presented by the proper Person.
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(b) Before the Indenture Trustee acts or refrains from acting, it
may require an Officer's Certificate or an Opinion of Counsel. The Indenture
Trustee shall not be liable for any action it takes or omits to take in good
faith in reliance on an Officer's Certificate or Opinion of Counsel unless it is
proved that the Indenture Trustee was negligent in such reliance.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee, and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; PROVIDED, HOWEVER, that such action or omission by
the Indenture Trustee does not constitute willful misconduct, negligence or bad
faith.
(e) The Indenture Trustee may consult with counsel, and the advice
or opinion of counsel with respect to legal matters relating to this Indenture
and the Notes shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
(f) The Indenture Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Indenture at the request or
direction of any of the Noteholders pursuant to this Indenture, unless such
Noteholders shall have offered to the Indenture Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be incurred by
it in compliance with such request or direction.
(g) The Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture or other paper or document, but the Indenture Trustee, in
its discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit, and, if the Indenture Trustee shall determine to
make such further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Issuer, personally or by agent or attorney.
(h) Except where the Transaction Documents
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specifically state otherwise, the Indenture Trustee, provided it has sent out
notices in accordance with the applicable Transaction Document and is otherwise
acting in accordance with the Transaction Documents, may act as directed by the
majority of the outstanding Noteholders responding in writing to such request
for amendment or written direction; PROVIDED, HOWEVER, that the Noteholders
representing at least 51% of the Note Balance as of the time such voting
response is due back to the Indenture Trustee must have responded in writing to
the Indenture Trustee's notice to amend or for written direction. In addition,
the Indenture Trustee shall not have any liability to any Noteholder or Note
Owner with respect to any action taken pursuant to such notice if the Noteholder
or Note Owner does not respond to such notice within the time period set forth
in such notice. By acceptance of a Note, each Noteholder and Note owner is
deemed to agree to the foregoing provisions.
6.3. INDIVIDUAL RIGHTS OF INDENTURE TRUSTEE. The Indenture Trustee,
in its individual or any other capacity, may become the owner or pledgee of
Notes and may otherwise deal with the Issuer or its Affiliates with the same
rights it would have if it were not Indenture Trustee. Any Paying Agent, Note
Registrar, co-registrar or co-paying agent hereunder may do the same with like
rights.
6.4. INDENTURE TRUSTEE'S DISCLAIMER. The Indenture Trustee (i) shall
not be responsible for, and makes no representation as to, the validity or
adequacy of this Indenture or the Notes and (ii) shall not be accountable for
the Issuer's use of the proceeds from the Notes or responsible for any statement
of the Issuer in this Indenture or in any document issued in connection with the
sale of the Notes or in the Notes other than the Indenture Trustee's certificate
of authentication.
6.5. NOTICE OF DEFAULTS. If a Default occurs and is continuing and
if it is known to a Responsible Officer of the Indenture Trustee, the Indenture
Trustee shall mail to each Noteholder notice of such Default within ninety (90)
days after it occurs. Except in the case of a Default in payment of principal of
or interest on any Note (including payments pursuant to the mandatory redemption
provisions of such Note), the Indenture Trustee may withhold the notice if and
so long as a committee of its Responsible Officers in good faith determines that
withholding the notice is in the interests of Noteholders.
6.6. REPORTS BY INDENTURE TRUSTEE TO HOLDERS.
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The Indenture Trustee shall deliver, within a reasonable period of
time after the end of each calendar year, to each Person who at any time during
such calendar year was a Noteholder, such information as may be required to
enable such Person to prepare its federal and state income tax returns.
6.7. COMPENSATION AND INDEMNITY.
(a) The Issuer shall, or shall cause the Administrator to, pay to
the Indenture Trustee from time to time reasonable compensation for its
services. The Indenture Trustee's compensation shall not be limited by any law
on compensation of a trustee of an express trust. The Issuer shall, or shall
cause the Administrator to, reimburse the Indenture Trustee for all expenses
reasonably incurred or made by it, including costs of collection, in addition to
the compensation for its services; PROVIDED, HOWEVER, that neither the Issuer
nor the Administrator need reimburse the Indenture Trustee for any expense
incurred through the Indenture Trustee's willful misconduct, negligence, or bad
faith. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Indenture Trustee's agents, counsel,
accountants and experts. The Issuer shall, or shall cause the Administrator to,
indemnify the Indenture Trustee and the Custodian against any and all loss,
liability or expense (including attorneys' fees) (collectively, together with
the amounts specified as "Losses" in Section 6A.3(d), the "Losses") incurred by
it in connection with the administration of this trust and the performance of
its duties hereunder; PROVIDED, HOWEVER, that neither the Issuer nor the
Administrator need indemnify the Indenture Trustee or the Custodian for any such
loss, liability or expense incurred through the Indenture Trustee's or
Custodian's willful misconduct, negligence, or bad faith, as applicable. The
Indenture Trustee or Custodian shall notify the Issuer and the Administrator
promptly of any claim for which it may seek indemnity. Any failure by the
Indenture Trustee or the Custodian to so notify the Issuer and the Administrator
shall not, however, relieve the Issuer or the Administrator of its obligations
hereunder. The Issuer shall, or shall cause the Servicer to, defend any such
claim, and the Indenture Trustee or the Custodian, as applicable, may have
separate counsel and the Issuer shall, or shall cause the Servicer to, pay the
fees and expenses of such counsel. Notwithstanding the foregoing, Losses shall
be paid pursuant to this Section 6.7 solely from amounts in excess of funds
necessary to pay all outstanding interest and principal due to the Noteholders
in accordance with the priorities set forth in Section 3.5(d) of the Sale and
Allocation Agreement and shall in any case be nonrecourse as to the Issuer and,
to the extent funds are not so available to pay any Losses when due and owing,
the claims relating thereto shall not
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constitute a claim (as defined in Section 101 of Title 11 of the United States
Bankruptcy Code) against the Issuer but shall continue to accrue. Each party
hereto agrees that the payment of any claim of any such party in respect of
Losses shall be subordinated to the payment in full of all outstanding interest
and principal due to the Noteholders.
(b) Notwithstanding the foregoing, the Indenture Trustee and
the Custodian will not be liable:
(i) for any error of judgment made by it in good faith
unless it is proved that the Indenture Trustee or the Custodian, as
applicable, was negligent in ascertaining the pertinent facts;
(ii) for any action it takes or omits to take in good faith
in accordance with directions received by it from the requisite percentage
of Noteholders in accordance with the terms herein or in the other
applicable Transaction Documents; or
(iii) for interest on any money received by the Indenture
Trustee except as the Indenture Trustee and the Issuer may agree in
writing.
(c) The Issuer's payment obligations to the Indenture Trustee
pursuant to this Section 6.7 shall survive the resignation or removal of the
Indenture Trustee and the discharge of this Indenture. When the Indenture
Trustee incurs expenses after the occurrence of a Default specified in Section
5.1(v) or (ix) with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the United States Code
or any other applicable federal or state bankruptcy, insolvency or similar law.
6.8. REPLACEMENT OF INDENTURE TRUSTEE.
(a) No resignation or removal of the Indenture Trustee, and no
appointment of a successor Indenture Trustee, shall become effective until
either (i) the acceptance of appointment by the successor Indenture Trustee and
payment of fees and expenses owed to the outgoing Indenture Trustee pursuant to
this Section 6.8 and Section 6.7 or (ii) the Notes have been paid and discharged
in full in accordance with Section 4.2 of the this Indenture and all amounts
received, if any, in connection with the payment and discharge of the Notes have
been distributed to the Noteholders. The Indenture Trustee may resign at any
time by so notifying the Issuer and the Insurer. The Insurer, provided an
Insurer Default shall not have occurred and be continuing, or the Noteholders
evidencing not less than 51% of the Note Balance (with the prior written consent
of the Insurer
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(provided that no Insurer Default has occurred and is continuing)) may remove
the Indenture Trustee without cause by so notifying the Indenture Trustee and
the Issuer and shall appoint a successor Indenture Trustee. The Issuer shall
remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) an Insolvency Event occurs with respect to the Indenture
Trustee;
(iii) a receiver or other public officer takes charge of the
Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of
acting.
If (a) the Indenture Trustee resigns or is removed, (b) the
Noteholders fail to appoint a successor Indenture Trustee acceptable to the
Insurer (provided that no Insurer Default has occurred and is continuing)
following the removal of the Indenture Trustee without cause or (c) if a vacancy
exists in the office of Indenture Trustee for any reason (the Indenture Trustee
in such event being referred to herein as the retiring Indenture Trustee), the
Issuer shall promptly appoint a successor Indenture Trustee acceptable to the
Insurer (provided that no Insurer Default has occurred and is continuing).
(b) Any successor Indenture Trustee shall deliver a written
acceptance of its appointment to the retiring Indenture Trustee, the Insurer and
the Issuer. Upon delivery of such written acceptance, the resignation or removal
of the retiring Indenture Trustee shall become effective and the successor
Indenture Trustee shall have all the rights, powers and duties of the Indenture
Trustee under this Indenture. The successor Indenture Trustee shall mail a
notice of its succession to the Noteholders. The retiring Indenture Trustee
shall promptly transfer all property held by it as Indenture Trustee to the
successor Indenture Trustee.
(c) If a successor Indenture Trustee does not take office within
sixty (60) days after the retiring Indenture Trustee resigns or is removed, the
retiring Indenture Trustee, the Issuer or the Noteholders evidencing not less
than 51% of the Note Balance may petition any court of competent jurisdiction
for the appointment of a successor Indenture Trustee. If the Indenture Trustee
fails to comply with Section 6.11, any Noteholder may petition any court of
competent jurisdiction for the removal of the Indenture Trustee and the
appointment of a successor Indenture Trustee.
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(d) Notwithstanding the replacement of the Indenture Trustee
pursuant to this Section 6.8, the Issuer's and the Administrator's obligations
under Section 6.7 shall continue for the benefit of the retiring Indenture
Trustee.
6.9. SUCCESSOR INDENTURE TRUSTEE BY MERGER.
(a) If the Indenture Trustee consolidates with, merges or converts
into, or transfers all or substantially all its corporate trust business or
assets to, another corporation or banking association, the resulting, surviving
or transferee corporation or banking association without any further act shall
be the successor Indenture Trustee; PROVIDED, HOWEVER, that such corporation or
banking association must be otherwise qualified and eligible under Section 6.11.
The Indenture Trustee shall provide the Rating Agencies with prior written
notice of any such transaction.
(b) If at the time such successor or successors by consolidation,
merger or conversion to the Indenture Trustee shall succeed to the trusts
created by this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the certificate
of authentication of any predecessor trustee and deliver such Notes so
authenticated, and in case at that time any of the Notes shall not have been
authenticated, any such successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor trustee or in the name of the
successor to the Indenture Trustee. In all such cases such certificates shall
have the full force which the Notes or this Indenture provide that the
certificate of the Indenture Trustee shall have.
6.10. APPOINTMENT OF CO-INDENTURE TRUSTEE OR SEPARATE INDENTURE
TRUSTEE.
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(a) Notwithstanding any other provisions of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Trust Estate may at the time be located, the Indenture
Trustee shall have the power and may execute and deliver an instrument to
appoint one or more Persons to act as a co-trustee or co-trustees, jointly with
the Indenture Trustee, or separate trustee or separate trustees, of all or any
part of the Trust Estate, and to vest in such Person or Persons, in such
capacity and for the benefit of the Noteholders, such title to the Trust Estate,
or any part hereof, and, subject to the other provisions of this Section 6.10,
such powers, duties, obligations, rights and trusts as the Indenture Trustee may
consider necessary or desirable. No co-trustee or separate trustee under this
Indenture shall be required to meet the terms of eligibility as a successor
trustee under Section 6.11 and no notice of the appointment of any co-trustee or
separate trustee shall be required under Section 6.8.
(b) Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such separate trustee
or co-trustee jointly (it being understood that such separate trustee or
co-trustee shall not be authorized to act separately without the Indenture
Trustee joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed
the Indenture Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust Estate or any portion thereof
in any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Indenture Trustee;
(ii) no trustee under this Indenture shall be personally liable
by reason of any act or omission of any other trustee under this
Indenture; and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Indenture and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee. Each such instrument shall be filed with
the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute
the Indenture Trustee its agent or attorney-in-fact
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with full power and authority, to the extent permitted by law, to do any lawful
act under or in respect of this Indenture on its behalf and in its name. If any
separate trustee or co-trustee shall die, become incapable of acting, resign or
be removed, all of its estates, properties, rights, remedies and trusts shall
vest in and be exercised by the Indenture Trustee, to the extent permitted by
law, without the appointment of a new or successor trustee.
6.11. ELIGIBILITY; DISQUALIFICATION. The Indenture Trustee or its
parent shall have a combined capital, surplus and undivided profits of at least
$50,000,000 as set forth in its most recent published annual report of condition
and shall have a long-term debt rating of investment grade by each of the Rating
Agencies or shall otherwise be acceptable to each of the Rating Agencies and the
Insurer (provided that no Insurer Default has occurred and is continuing).
ARTICLE VI-A
SECTION 6A.1 POSSESSION OF CONTRACT FILES BY THE CUSTODIAN
(a) GRANT OF SECURITY INTEREST. The Seller hereby covenants and
agrees with the Indenture Trustee to deliver or cause to be delivered to the
Custodian all Contract Files no later than the Closing Date. The Custodian shall
hold the Contract Files (i) in trust for, and as bailee of, the Indenture
Trustee and as bailee for the Issuer for purposes of establishing the Issuer's
ownership thereof, (ii) for purposes of perfecting the Indenture Trustee's
security interest therein, to the extent available under applicable law, for the
benefit of the Noteholders and the Insurer, and establishing the Issuer's
ownership thereof subject to such security interest, (iii) to restrict the
possession thereof by any other person except as permitted in accordance with
the terms of this Article, and (iv) subject to and in accordance with the terms
and provisions of this Article.
(b) Subject to the terms and conditions hereof, the Indenture
Trustee hereby appoints the Custodian, and the Custodian hereby accepts such
appointment, to act as custodian and bailee of the Indenture Trustee, for the
benefit of the Noteholders and the Insurer, for purposes of Article 9 of the
Relevant UCC, to maintain custody of the Contract Files until the Servicer shall
have delivered a release with respect to any such Contract Files pursuant to
Section 6A.2 hereof.
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(c) The Custodian will promptly report to the Indenture Trustee and
the Insurer any failure on its part to hold the Contract Files as herein
provided and promptly take appropriate action to remedy any such failure.
(d) The Custodian shall (A) maintain in effect a fidelity bond and
errors and omissions insurance, affording coverage to such employees, directors,
officers and other Persons acting on the Custodian's behalf and in an amount
customary for custodians of automobile loans similar to the Contracts or (B)
self-insure at levels and in a manner acceptable to the Insurer.
(e) CUSTODY. All Contract Files held by the Custodian under this
Indenture shall be placed by the Issuer in a separate file for each Contract
File, properly fastened or secured.
(f) INVENTORY OF CONTRACT FILES. At the time of delivery by or on
behalf of the Issuer to the Custodian of any Contract File or other documents
related to a Contract, the Issuer shall also deliver a list in an electronic
format acceptable to the Custodian (the "FILE NUMBER LIST") of Contract File
numbers (the "FILE NUMBERS"). The Custodian shall check the File Numbers of the
Contract Files delivered pursuant to this Indenture and certify to the Seller,
the Insurer, the Issuer and the Indenture Trustee in writing within 48 hours
after delivery of the File Number List, that it has received all the Contract
Files corresponding to the File Number List. If upon examination of the Contract
Files, the Custodian determines that it does not have all the Contract Files on
the File Number List, the Custodian shall promptly give written notice of the
same to the Indenture Trustee, the Insurer, the Issuer and the Seller.
(g) POSSESSION OF CONTRACT FILES. Without any limitation of Section
6A.1(a) or (b) hereof, following the Custodian's receipt of each Contract File,
the Custodian shall retain possession and custody thereof, subject to the terms
of this Indenture, for the exclusive benefit of, in trust for, and as bailee of,
the Indenture Trustee and for purposes (i) of perfecting the Indenture Trustee's
security interest therein, to the extent available under applicable law, for the
benefit of the Noteholders and the Insurer and as bailee of the Issuer for
purposes of establishing the Issuer's ownership thereof and (ii) of restricting
the possession thereof by any person except as permitted in accordance with the
terms of this Article, until and unless such security interest in any Contract
File is released pursuant to the terms of Section 6A.3 hereof. Upon such receipt
the Custodian shall also make appropriate notations in the Custodian's books and
records reflecting that the Contract File has been pledged to the Indenture
Trustee for the benefit of the Noteholders and the Insurer and that the
Indenture Trustee has acquired and holds a security interest therein.
Notwithstanding any other provisions of this Indenture, the
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Custodian shall not at any time exercise or seek to enforce any claim, right or
remedy, including any statutory or common law rights of set-off, that it might
otherwise have against all or any of the Contract Files or related documents or
the proceeds thereof.
SECTION 6A.2 RELEASE OF CONTRACT FILES BY THE CUSTODIAN.
(a) The Custodian shall promptly release any Contract File then held
by it to the Servicer upon receipt of a written request for release of such
Contract File signed by an Authorized Officer of the Servicer in the form
attached hereto as Exhibit C; PROVIDED, HOWEVER, that the Custodian shall be
deemed to have received proper instructions with respect to the Contract Files
upon its receipt of such a written request from an Authorized Officer of the
Servicer. "Authorized Officer of the Servicer" shall mean an officer certified
by the Secretary of the Servicer as an officer who is authorized to give
instructions to the Custodian as set forth on a certificate delivered to the
Custodian, the Issuer, the Insurer and the Indenture Trustee on the Closing Date
or on any such subsequent certificate delivered to the Custodian, the Issuer,
the Insurer and the Indenture Trustee.
(b) The Custodian shall promptly deliver to the Indenture Trustee or
its designee any or all Contract Files in the Custodian's custody upon the
written request of an Authorized Officer of the Indenture Trustee. The Indenture
Trustee shall provide the Issuer, the Insurer and the Servicer with a copy of
any such request delivered to the Custodian. Written instructions as to the
method of shipment and shipper(s) the Custodian is directed to utilize in
connection with the delivery of Contract Files in the performance of the
Custodian's duties hereunder shall be delivered by the Indenture Trustee to the
Custodian prior to any shipment of Contract Files pursuant to the request of
Indenture Trustee hereunder. The Indenture Trustee will arrange for the
provision of such services at the cost and expense of the Issuer (or, at the
Custodian's option, the Custodian shall be reimbursed by the Issuer for all
costs and expenses incurred by the Custodian consistent with such instructions
(it being understood that any such reimbursement shall be paid in accordance
with the priorities set forth in Section 2.8 hereof)) and will maintain such
insurance against loss or damage to the Contract Files as the Indenture Trustee
and the Servicer reasonably deem appropriate. "Authorized Officer of the
Indenture Trustee" shall mean an officer certified by the Secretary of the
Indenture Trustee as an officer who is authorized to give instructions to the
Custodian as set forth on a certificate delivered to the Custodian, the Issuer
and the
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Insurer on the Closing Date or on any such subsequent certificate delivered to
the Custodian, the Issuer and the Insurer.
SECTION 6A.3 REGARDING THE CUSTODIAN.
(a) The Custodian undertakes to perform only such duties as are
expressly set forth herein.
(b) The Custodian may rely and shall be protected in acting or
refraining from acting upon any written notice, instruction or request furnished
to it hereunder and believed by it to be genuine and to have been signed or
presented by the proper party or parties. The Custodian shall be under no duty
to inquire into or investigate the validity, accuracy or content of any such
document. The Custodian shall have no duty to verify the authenticity,
genuineness or conformity to the requirements of this Indenture of any Contract
Files or related documents delivered to it hereunder, or to determine whether
the materials included in any Contract File conform to the requirements hereof.
(c) The Custodian shall not be liable for any action taken or
omitted by it in good faith unless a court of competent jurisdiction determines
that the Custodian's willful misconduct, gross negligence or bad faith was the
primary cause of any loss to the Issuer, the Insurer or the Indenture Trustee.
In the administration of the custodial account hereunder, the Custodian may
execute any of its powers and perform its duties hereunder directly or through
agents or attorneys and may consult with counsel, accountants and other skilled
persons to be selected and retained by it. The Custodian shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the
advice of counsel.
(d) The Issuer agrees to indemnify and hold the Custodian and its
directors, officers, agents and employees (collectively the "Indemnitees")
harmless from and against any and all claims, liabilities, losses, damages,
fines, penalties, and expenses, including out-of-pocket and incidental expenses
and legal fees and expenses (collectively, together with the amounts specified
as "Losses" pursuant to Section 6.7(a), the "LOSSES") that may be imposed on,
incurred by, or asserted against, the Indemnitees or any of them for following
any instructions or other directions upon which the Custodian is authorized to
rely pursuant to the terms of this Indenture (it being understood that such
Losses shall be paid pursuant to Section 2.8(ix) hereof).
(e) In addition to and not in limitation of paragraph (d)
immediately above, the Issuer also agrees to indemnify and hold the Indemnitees
and each of them harmless from and against any and all Losses that may be
imposed on, incurred by, or asserted against, the Indemnitees or any of them in
connection
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with or arising out of the Custodian's performance under this Indenture,
provided the Indemnitees have not acted with gross negligence or bad faith or
engaged in willful misconduct or breach of contract (it being understood that
such Losses shall be paid pursuant to Section 2.8(ix) hereof).
(f) The duties and responsibilities of the Custodian hereunder shall
be determined solely by the express provisions of this Indenture, and no other
or further duties or responsibilities shall be implied. The Custodian shall not
have any liability under, nor duty to inquire into the terms and provisions of,
any agreement or instructions, other than as specifically required by this
Indenture.
(g) The Custodian shall not incur any liability for following the
instructions herein contained or expressly provided for, or written instructions
given by the parties hereto in accordance with the express provisions hereof.
(h) In the event that the Custodian shall be uncertain as to its
duties or rights hereunder or shall receive instructions, claims or demands from
any party hereto which, in its opinion, conflict with any of the provisions of
this Indenture, it shall be entitled to refrain from taking any action and its
sole obligation shall be to request definitive instructions from the other
parties hereto and to keep safely all property held in custody until it shall be
directed otherwise in writing by all of the other parties hereto or by a final
order or judgment of a court of competent jurisdiction.
(i) Any corporation or association into which the Custodian in its
individual capacity may be merged or converted or with which it may be
consolidated, or any corporation or association resulting from any merger,
conversion or consolidation to which the Custodian in its individual capacity
shall be a party, or any corporation or association to which all or
substantially all of the corporate trust business of the Custodian in its
individual capacity may be sold or otherwise transferred, shall be the Custodian
under this Indenture without further act.
(j) Anything in this Agreement to the contrary notwithstanding, in
no event shall the Custodian be liable for special, indirect or consequential
loss or damage of any kind whatsoever (including but not limited to lost
profits), even if the Custodian has been advised of the likelihood of such loss
or damage and regardless of the form of action.
(k) The Custodian agrees to maintain the Contract Files which are
delivered to it at the offices of the Custodian located at Sixth Street and
Marquette Avenue, MAC N9311-160, Minneapolis, Minnesota 55479, and the Custodian
shall notify the
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Indenture Trustee, the Issuer and the Insurer by written notice of any change in
the location of the Contract Files. Subject to the foregoing, the Custodian may
temporarily move individual Contract Files or any portion thereof without notice
as necessary to allow the Servicer to conduct collection and other servicing
activities in accordance with its customary practices and procedures.
(l) The Custodian shall hold the Contract Files in its
fire-resistant storage vault under its exclusive custody and control in
accordance with customary standards for such custody and shall maintain a
fidelity bond plus document hazard insurance in such amounts and against such
risks as customarily are maintained by custodians acting in a similar capacity
to the Custodian hereunder with respect to receivables similar to the Contracts.
If the Indenture Trustee or the Issuer suffers losses or damages as a result of
the destruction or loss of any of the Contract Files or any item therein, the
Custodian shall, (i) at the request of the Indenture Trustee or the Issuer, make
any appropriate claim under such bond or insurance, and (ii) to the extent of
the Indenture Trustee's or the Issuer's losses or damages, pay the proceeds
thereof to the Indenture Trustee, or if all of the Issuer's obligations under
this Indenture and the Notes and the Insurance Agreement have been paid in full,
to the Issuer, unless the Custodian has replaced the lost or destroyed items or
has otherwise reimbursed the Indenture Trustee or the Issuer, as applicable, for
such losses or damages. The Custodian shall maintain the Contract Files
segregated from and not commingled with any other files of the Custodian.
(m) The Custodian shall not deliver physical possession of, or
otherwise transfer, assign, pledge, mortgage, convey or dispose of any Contract
Files in its possession to any Person except (i) as provided in this Article,
and (ii) upon termination of this Indenture.
(n) The Custodian hereby waives any and all rights of offset with
respect to any and all Contract Files in the Custodian's possession, whether
such right of offset arises by contract, operation of law or otherwise.
(o) The Custodian specifically acknowledges and agrees that so long
as Norwest Bank Minnesota, National Association, is acting as Custodian under
this Indenture in the event that Norwest Bank Minnesota, National Association
shall either be terminated or resign as Indenture Trustee pursuant to this
Indenture, then the Custodian shall similarly either be terminated or resign and
the Custodian shall deliver the Contract Files to the successor Indenture
Trustee, acting as successor Custodian, appointed pursuant to the terms of this
Indenture at such place as the successor Custodian may reasonably designate. Any
entity acting as Custodian hereunder may not resign as such
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unless such entity also resigns its capacity as Indenture Trustee.
(p) Except for actions expressly authorized by this Article, the
Custodian shall take no action which would or would be likely to impair the
security interests created or existing under any Contract or Financed Vehicle or
to impair the value of any Contract or Financed Vehicle.
(q) The Custodian hereby agrees not to assert (in its individual
capacity or otherwise) any liens of any kind with respect to the Contract Files
held by it or the related Contracts and hereby releases and waives any such
liens.
(r) The Custodian shall permit inspection at all reasonable times
upon at least two Business Days prior notice during regular business hours by
the Issuer, the Indenture Trustee or the Insurer (or by its auditors when
requested by the Insurer or the Indenture Trustee, as applicable) of the
Contract Files and the records of the Custodian relating to this Article (or its
auditors when requested by the Insurer or the Indenture Trustee, as applicable)
to make copies of the Contract Files and the records of the Custodian relating
to this Indenture.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
7.1. ISSUER TO FURNISH INDENTURE TRUSTEE NAMES AND ADDRESSES OF
NOTEHOLDERS. The Issuer shall furnish or cause to be furnished to the Indenture
Trustee (i) within five (5) days after each Record Date, a list, in such form as
the Indenture Trustee may reasonably require, of the names and addresses of the
Noteholders as of such Record Date and (ii) at such other times as the Indenture
Trustee may request in writing, within thirty (30) days after receipt by the
Issuer of any such request, a list of similar form and content as of a date not
more than ten (10) days prior to the time such list is furnished; PROVIDED,
HOWEVER, that so long as the Indenture Trustee is the Note Registrar or the
Notes are issued as Book-Entry Notes, no such list shall be required to be
furnished.
7.2. PRESERVATION OF INFORMATION; COMMUNICATIONS TO NOTEHOLDERS.
(a) The Indenture Trustee shall preserve, in as
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current a form as is reasonably practicable, the names and addresses of the
Noteholders contained in the most recent list furnished to the Indenture Trustee
as provided in Section 7.1 and the names and addresses of the Noteholders
received by the Indenture Trustee in its capacity as Note Registrar. The
Indenture Trustee may destroy any list furnished to it as provided in Section
7.1 upon receipt of a new list so furnished.
7.3. REPORTS BY ISSUER.
(a) The Issuer shall:
(i) file with the Indenture Trustee, within fifteen (15) days
after the Issuer is required to file the same with the Commission, copies
of the annual reports and of the information, documents and other reports
(or copies of such portions of any of the foregoing as the Commission may
from time to time by rules and regulations prescribe) that the Issuer may
be required to file with the Commission pursuant to Section 13 or 15(d) of
the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with the rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants of
this Indenture as may be required from time to time by such rules and
regulations; and
(iii) supply to the Indenture Trustee summaries of any
information, documents and reports required to be filed by the Issuer
pursuant to clauses (i) and (ii) of this Section 7.3(a) and by the rules
and regulations prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the Fiscal Year of the
Issuer shall end on April 30 of each year.
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
8.1. COLLECTION OF MONEY. Except as otherwise expressly provided
herein, the Indenture Trustee may demand payment or delivery of, and shall
receive and collect, directly and without intervention or assistance of any
fiscal agent or other intermediary, all money and other property payable to or
receivable by the Indenture
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Trustee pursuant to this Indenture and the Sale and Allocation Agreement. The
Indenture Trustee shall apply all such money received by it as provided in this
Indenture and the Sale and Allocation Agreement. Except as otherwise expressly
provided in this Indenture, if any default occurs in the making of any payment
or performance under any agreement or instrument that is part of the Trust
Estate, the Indenture Trustee may take such action as may be appropriate to
enforce such payment or performance, including the institution and prosecution
of appropriate Proceedings. Any such action shall be without prejudice to any
right to claim a Default or Event of Default under this Indenture and any right
to proceed thereafter as provided in Article V.
8.2. TRUST ACCOUNTS.
(a) On or before the Closing Date, the Issuer shall cause the
Servicer to establish and maintain, in the name of the Indenture Trustee, for
the benefit of the Insurer and the Noteholders, the Collection Account as
provided in Section 3.1 of the Sale and Allocation Agreement. The Servicer shall
deposit in the Collection Account all amounts required to be deposited therein
with respect to the preceding Collection Period as provided in Section 3.2 of
the Sale and Allocation Agreement.
(b) On or before the Closing Date, the Issuer shall cause the
Servicer to establish and maintain, in the name of the Indenture Trustee, for
the benefit of the Noteholders and the Insurer, the Reserve Account as provided
in Section 3.6(a) of the Sale and Allocation Agreement. On each Payment Date,
upon receipt of instructions from the Servicer pursuant to Section 3.5(b) of the
Sale and Allocation Agreement, the Indenture Trustee shall withdraw from the
Reserve Account (up to the amount on deposit in the Reserve Account) and apply
pursuant to Section 3.5(e) thereof the amount, if any, by which the Required
Payment Amount for such Payment Date exceeds the Available Funds for such
Payment Date.
(c) On each Payment Date, the Indenture Trustee shall apply or cause
to be applied the amount on deposit in the Collection Account on such Payment
Date in accordance with Section 2.8(a).
(e) On or before the Closing Date, the Issuer shall cause the
Servicer to establish and maintain, in the name of the Indenture Trustee, for
the exclusive benefit of the Noteholders, the Note Payment Account as provided
in Section 3.1 of the Sale and Allocation Agreement. On each Payment Date, the
Indenture Trustee shall apply or cause to be applied the amount on deposit in
the Note Payment Account on such Payment Date in accordance with Section 2.8(b)
or (f), as applicable.
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8.3. GENERAL PROVISIONS REGARDING ACCOUNTS.
(a) So long as no Default or Event of Default shall have occurred
and be continuing, all or a portion of the funds in the Trust Accounts shall be
invested by the Indenture Trustee at the direction of the Servicer in Eligible
Investments as provided in Sections 3.1 and 3.6(b) of the Sale and Allocation
Agreement. All income or other gain (net of losses and investment expenses) from
investments of monies deposited in the Trust Accounts shall be withdrawn by the
Indenture Trustee from such accounts and distributed (but only under the
circumstances set forth in the Sale and Allocation Agreement) as provided in
Sections 3.1 and 3.6(d) of the Sale and Allocation Agreement. The Servicer shall
not direct the Indenture Trustee to make any investment of any funds or to sell
any investment held in any of the Trust Accounts unless the security interest
Granted and perfected in such account will continue to be perfected in such
investment or the proceeds of such sale, in either case without any further
action by any Person, and, in connection with any direction to the Indenture
Trustee to make any such investment or sale, if requested by the Indenture
Trustee, the Issuer shall deliver to the Indenture Trustee an Opinion of
Counsel, acceptable to the Indenture Trustee, to such effect.
(b) Subject to Section 6.1(c), the Indenture Trustee shall not in
any way be held liable by reason of any insufficiency in any of the Trust
Accounts resulting from any loss on any Permitted Investment included therein,
except for losses attributable to the Indenture Trustee's failure to make
payments on such Eligible Investments issued by the Indenture Trustee, in its
commercial capacity as principal obligor and not as trustee, in accordance with
their terms.
(c) If (i) the Servicer shall have failed to give investment
directions for any funds on deposit in the Trust Accounts to the Indenture
Trustee by 11:00 A.M. (New York City time) (or such other time as may be agreed
upon by the Issuer and Indenture Trustee), on the Business Day preceding each
Payment Date, (ii) a Default or Event of Default shall have occurred and be
continuing with respect to the Notes but the Notes shall not have been declared
due and payable pursuant to Section 5.2 or (iii) if the Notes shall have been
declared due and payable following an Event of Default, amounts collected or
receivable from the Trust Estate are being applied in accordance with Section
5.4 as if there had not been such a declaration, then the Indenture Trustee
shall, to the fullest extent practicable, invest and reinvest funds in the Trust
Accounts in Eligible Investments described in clause (vii) of the definition
thereof.
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8.4. RELEASE OF TRUST ESTATE.
(a) Subject to the payment of its fees and expenses pursuant to
Section 6.7, the Indenture Trustee may, and when required by the provisions of
this Indenture shall, execute instruments to release property from the lien of
this Indenture, or convey the Indenture Trustee's interest in the same, in a
manner and under circumstances that are not inconsistent with the provisions of
this Indenture. No party relying upon an instrument executed by the Indenture
Trustee as provided in this Article VIII shall be bound to ascertain the
Indenture Trustee's authority, inquire into the satisfaction of any conditions
precedent or see to the application of any monies.
(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding, the Policy has been terminated in accordance with its terms and has
been returned to the Insurer for cancellation and all sums due the Indenture
Trustee and the Insurer pursuant to Section 6.7 have been paid in full, release
any remaining portion of the Trust Estate that secured the Notes from the lien
of this Indenture and release to the Issuer or any other Person entitled thereto
any funds then on deposit in the Trust Accounts. The Indenture Trustee shall
release property from the lien of this Indenture pursuant to this Section 8.4(b)
only upon receipt of an Issuer Request accompanied by an Officer's Certificate
and an Opinion of Counsel.
8.5. OPINION OF COUNSEL. The Indenture Trustee shall receive at
least seven (7) days notice when requested by the Issuer to take any action
pursuant to Section 8.4(a), accompanied by copies of any instruments involved,
and the Indenture Trustee shall also require, except in connection with any
action contemplated by Section 8.4(b), as a condition to such action, an Opinion
of Counsel, in form and substance satisfactory to the Indenture Trustee, stating
the legal effect of any such action, outlining the steps required to complete
such action, and concluding that all conditions precedent to the taking of such
action have been complied with and such action will not materially and adversely
impair the security for the Notes or the rights of the Noteholders or the
Insurer in contravention of the provisions of this Indenture; PROVIDED, HOWEVER,
that such Opinion of Counsel shall not be required to express an opinion as to
the fair value of the Trust Estate. Counsel rendering any such opinion may rely,
without independent investigation, on the accuracy and validity of any
certificate or other instrument delivered to the Indenture Trustee in connection
with any such action.
ARTICLE IX
SUPPLEMENTAL INDENTURES
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9.1. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF NOTEHOLDERS.
The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may, without the consent of the Holders of any Notes but with prior
notice to the Rating Agencies and the Insurer and with the consent of the
Insurer (if no Insurer Default shall have occurred and be continuing), at any
time and from time to time, enter into one or more indentures supplemental
hereto, in form satisfactory to the Indenture Trustee, for any of the following
purposes:
(i) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Indenture Trustee any property subject or
required to be subjected to the lien of this Indenture, or to subject to
the lien of this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein and
in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit
of the Noteholders and the Insurer, or to surrender any right or power
herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture that may be inconsistent
with any other provision herein or in any supplemental indenture or to
make any other provisions with respect to matters or questions arising
under this Indenture which will not be inconsistent with other provisions
of this Indenture;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes and
to add to or change any of the provisions of this Indenture as shall be
necessary to facilitate the administration of the trusts hereunder by more
than one trustee, pursuant to the requirements of Article VI; or
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(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualification
of this Indenture under any federal statute hereafter enacted.
PROVIDED, HOWEVER, that (i) such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Noteholder or the Insurer, (ii) the Rating Agency Condition shall have been
satisfied with respect to such action and (iii) such action shall not, as
evidenced by an Opinion of Counsel, cause the Issuer to be characterized for
federal income tax purposes as an association taxable as a corporation or
otherwise have any material adverse impact on the federal income taxation of any
Notes Outstanding or any Noteholder. The Indenture Trustee is hereby authorized
to join in the execution of any such supplemental indenture and to make any
further appropriate agreements and stipulations that may be therein contained.
9.2. SUPPLEMENTAL INDENTURES WITH CONSENT OF NOTEHOLDERS. The Issuer
and the Indenture Trustee, when authorized by an Issuer Order, may, with the
consent of the Insurer (if no Insurer Default shall have occurred and be
continuing) and the Noteholders evidencing not less than 51% of the Note Balance
and with prior notice to the Rating Agencies and the Insurer, by Act of such
Holders delivered to the Issuer and the Indenture Trustee, at any time and from
time to time, enter into one or more indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or modifying in any manner the rights
of the Noteholders under this Indenture; PROVIDED, HOWEVER, that (i) such action
shall not, as evidenced by an Opinion of Counsel, adversely affect in any
material respect the interests of any Noteholder or the Insurer, (ii) the Rating
Agency Condition shall have been satisfied with respect to such action and (iii)
such action shall not, as evidenced by an Opinion of Counsel, cause the Issuer
to be characterized for federal income tax purposes as an association taxable as
a corporation or otherwise have any material adverse impact on the federal
income taxation of any Notes Outstanding or any Noteholder; and, PROVIDED
FURTHER, that no such supplemental indenture shall, without the consent of the
Insurer and the Holder of each Outstanding Note affected thereby:
(i) change any Final Note Payment Date or the date of payment
of any installment of principal of or interest on any Note, or reduce the
principal amount thereof, the interest rate thereon or the Redemption
Price with respect thereto, change the provisions of this Indenture
relating to the application of collections on, or
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the proceeds of the sale of, the Trust Estate to payment of principal of
or interest on the Notes, or change any place of payment where, or the
coin or currency in which, any Note or the interest thereon is payable;
(ii) impair the right to institute suit for the enforcement of
the provisions of this Indenture requiring the application of available
funds, as provided in Article V, to the payment of any amount due on the
Notes on or after the respective due dates thereof (or, in the case of
redemption, on or after the Redemption Date);
(iii) reduce the percentage of the Notes the consent of the
Holders of which is required for any such supplemental indenture or for
any waiver of compliance with certain provisions of this Indenture or of
certain defaults hereunder and their consequences as provided in this
Indenture;
(iv) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(v) reduce the percentage of the Notes the consent of the
Holders of which is required to direct the Indenture Trustee to sell or
liquidate the Trust Estate pursuant to Section 5.4 if the proceeds of such
sale would be insufficient to pay in full the principal amount of and
accrued but unpaid interest on the Notes;
(vi) modify any provision of this Indenture specifying a
percentage of the principal amount of the Notes necessary to amend this
Indenture or the other Transaction Documents except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the other Transaction Documents cannot be
modified or waived without the consent of the Holders of each Outstanding
Note affected thereby;
(vii) modify any of the provisions of this Indenture in such a
manner as to affect the calculation of the amount of any payment of
interest or principal due on any Note on any Payment Date (including the
calculation of any of the individual components of such calculation) or to
affect the rights of the Noteholders to the benefit of any provisions for
the mandatory redemption of the Notes contained herein; or
(viii) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of the
Trust Estate or, except as otherwise permitted or contemplated herein,
terminate the lien of this Indenture on any such collateral at any time
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subject hereto or deprive the Holder of any Note of the security provided
by the lien of this Indenture.
The Indenture Trustee may in its discretion determine whether or not
any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
The Indenture Trustee may in its discretion determine whether or not
any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this
Section 9.2 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof. Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture pursuant to this Section 9.2, the Indenture Trustee
shall mail to the Noteholders to which such amendment or supplemental indenture
relates a notice setting forth in general terms the substance of such
supplemental indenture. Any failure of the Indenture Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or affect
the validity of any such supplemental indenture.
9.3. EXECUTION OF SUPPLEMENTAL INDENTURES. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modification thereby of the trusts created
by this Indenture, the Indenture Trustee shall be entitled to receive and,
subject to Sections 6.1 and 6.2, shall be fully protected in relying upon an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture and that all conditions precedent in
this Indenture to the execution and delivery of such supplemental indenture have
been satisfied. The Indenture Trustee may, but shall not be obligated to, enter
into any such supplemental indenture that affects the Indenture Trustee's own
rights, duties, liabilities or immunities under this Indenture or otherwise.
9.4. EFFECT OF SUPPLEMENTAL INDENTURE. Upon the execution of any
supplemental indenture pursuant to the
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provisions hereof, this Indenture shall be and shall be deemed to be modified
and amended in accordance therewith with respect to the Notes affected thereby,
and the respective rights, limitations of rights, obligations, duties,
liabilities and immunities under this Indenture of the Indenture Trustee, the
Issuer and the Noteholders shall thereafter be determined, exercised and
enforced hereunder subject in all respects to such modifications and amendments,
and all the terms and conditions of any such supplemental indenture shall be and
be deemed to be part of the terms and conditions of this Indenture for any and
all purposes.
9.5. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES. Any Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new Notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
ARTICLE X
REDEMPTION OF NOTES
10.1. REDEMPTION.
(a) The Notes are subject to redemption in whole, but not in part,
at the direction of the Issuer on any Payment Date on which the Depositor
exercises its option to purchase the assets of the Issuer pursuant to Section
9.3(a) of the Trust Agreement, and the amount paid by the Depositor pursuant to
such Section 9.3(a) shall be treated as collections in respect of the Contracts
and applied to pay the unpaid principal amount of the Notes plus all amounts
owed to the Insurer plus accrued and unpaid interest thereon. The Issuer shall
furnish notice of such redemption to the Insurer, the Rating Agencies and the
Noteholders. If the Notes are to be redeemed pursuant to this Section 10.1(a),
the Issuer shall furnish or cause the Depositor to furnish notice of such
election to the Indenture Trustee not later than fifteen (15) days prior to the
Redemption Date and the Issuer shall deposit the Redemption Price of the Notes
to be redeemed in the Note Payment Account by 10:00 A.M. (New York City time) on
the Business Day prior to the Redemption Date, whereupon all such Notes shall be
due and payable on the Redemption Date.
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(b) In the event that the assets of the Issuer are sold pursuant to
Section 9.3 of the Trust Agreement, all amounts on deposit in the Note Payment
Account shall be paid to the Noteholders up to the unpaid principal amount of
the Notes and all accrued and unpaid interest thereon. If such amounts are to be
paid to Noteholders pursuant to this Section 10.1(b), the Issuer shall, to the
extent practicable, furnish or cause the Servicer to furnish notice of such
event to the Indenture Trustee not later than fifteen (15) days prior to the
Redemption Date, whereupon all such amounts shall be payable on the Redemption
Date.
10.2. FORM OF REDEMPTION NOTICE. Notice of redemption of the Notes
under Section 10.1(a) shall be given by the Indenture Trustee by first-class
mail, postage prepaid, or by facsimile mailed or transmitted promptly following
receipt of notice from the Issuer or the Servicer pursuant to Section 10.1(a),
but not later than ten (10) days prior to the applicable Redemption Date, to
each Holder of the Notes as of the close of business on the Record Date
preceding the applicable Redemption Date, at such Holder's address or facsimile
number appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place where the Notes are to be surrendered for payment
of the Redemption Price (which shall be the office or agency of the Issuer
to be maintained as provided in Section 3.2).
Notice of redemption of the Notes shall be given by the Indenture
Trustee in the name and at the expense of the Issuer. Any failure to give notice
of redemption, or any defect therein, to any Holder of any Note shall not,
however, impair or affect the validity of the redemption of any other Note.
10.3. NOTES PAYABLE ON REDEMPTION DATE. The Notes to be redeemed
shall, following notice of redemption as required by Section 10.2 (in the case
of redemption pursuant to Section 10.1(a)), become due and payable on the
Redemption Date at the Redemption Price and (unless the Issuer shall default in
the payment of the Redemption Price) no interest shall accrue on the Redemption
Price for any period after the date to which accrued interest is calculated for
purposes of calculating the Redemption Price.
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ARTICLE XI
MISCELLANEOUS
11.1. COMPLIANCE CERTIFICATES AND OPINIONS, ETC.
(a) Upon any application or request by the Issuer to the Indenture
Trustee to take any action under any provision of this Indenture, the Issuer
shall furnish to the Indenture Trustee (i) an Officer's Certificate stating that
all conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating
that, in the opinion of such counsel, all such conditions precedent, if any,
have been complied with.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition and
the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is necessary
to enable such signatory to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this Indenture, the
Issuer shall, in addition to any obligation imposed in Section 11.1(a) or
elsewhere in this Indenture, deliver to the Indenture Trustee an Officer's
Certificate certifying or stating the opinion of each person signing such
certificate as to the fair value (within ninety (90) days of such deposit) to
the Issuer of the Collateral or other property or securities to be so deposited.
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(c) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in Section 11.1(b), the Issuer shall also
furnish to the Indenture Trustee an Independent Certificate as to the same
matters if the fair value to the Issuer of the property or securities to be so
deposited and of all other such property or securities made the basis of any
such withdrawal or release since the commencement of the then-current Fiscal
Year of the Issuer, as set forth in the certificates furnished pursuant to
Section 11.1(b) and this Section 11.1(c), is ten percent (10%) or more of the
Notes, but such a certificate need not be furnished with respect to any property
or securities so deposited if the fair value thereof to the Issuer as set forth
in the related Officer's Certificate is less than $25,000 or less than one
percent (1%) of the Notes.
(d) Whenever any property or securities are to be released from the
lien of this Indenture, the Issuer shall also furnish to the Indenture Trustee
an Officer's Certificate certifying or stating the opinion of each person
signing such certificate as to the fair value (within ninety (90) days of such
release) of the property or securities proposed to be released and stating that
in the opinion of such person the proposed release will not impair the security
under this Indenture in contravention of the provisions hereof.
(e) Whenever the Issuer is required to furnish to the Indenture
Trustee an Officer's Certificate certifying or stating the opinion of any signer
thereof as to the matters described in Section 11.1(d), the Issuer shall also
furnish to the Indenture Trustee an Independent Certificate as to the same
matters if the fair value of the property or securities and of all other
property, other than property as contemplated by Section 11.1(f) or securities
released from the lien of this Indenture since the commencement of the
then-current calendar year, as set forth in the certificates required by Section
11.1(d) and this Section 11.1(e), is ten percent (10%) or more of the Notes, but
such a certificate need not be furnished in the case of any release of property
or securities if the fair value thereof as set forth in the related Officer's
Certificate is less than $25,000 or less than one percent (1%) of the Notes.
(f) Notwithstanding Section 2.10 or any other provisions of this
Section 11.1, the Issuer may, without compliance with the requirements of the
other provisions of this Section 11.1, (i) collect, liquidate, sell or otherwise
dispose of Contracts and Financed Vehicles as and to the extent permitted or
required by the Transaction Documents and (ii) make cash payments out of the
Trust Accounts as and to the extent permitted or required by the Transaction
Documents.
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11.2. FORM OF DOCUMENTS DELIVERED TO INDENTURE TRUSTEE.
(a) In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
(b) Any certificate or opinion of an Authorized Officer of the
Issuer may be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which such officer's
certificate or opinion is based are erroneous. Any such certificate of an
Authorized Officer or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, one or
more officers of the Servicer, the Seller, the Administrator or the Issuer,
stating that the information with respect to such factual matters is in the
possession of the Servicer, the Seller, the Administrator or the Issuer, unless
such Authorized Officer or counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
such matters are erroneous.
(c) Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this Indenture, they may, but need not, be consolidated
and form one instrument.
(d) Whenever in this Indenture, in connection with any application
or certificate or report to the Indenture Trustee, it is provided that the
Issuer shall deliver any document as a condition of the granting of such
application, or as evidence of the Issuer's compliance with any term hereof, it
is intended that the truth and accuracy, at the time of the granting of such
application or at the effective date of such certificate or report (as the case
may be), of the facts and opinions stated in such document shall in such case be
conditions precedent to the right of the Issuer to have such application granted
or to the sufficiency of such certificate or report. The foregoing shall not,
however, be construed to affect the Indenture Trustee's right to rely upon the
truth and accuracy of any statement or opinion contained in any such document as
provided in Article VI.
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11.3. ACTS OF NOTEHOLDERS.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by the
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by the Noteholders in person or by agents
duly appointed in writing, and except as herein otherwise expressly provided
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "ACT" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.1) conclusive in
favor of the Indenture Trustee and the Issuer, if made in the manner provided in
this Section 11.3.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note
Register.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
11.4. NOTICES, ETC., TO INDENTURE TRUSTEE, ISSUER AND RATING
AGENCIES. Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other documents provided or permitted by this Indenture
shall be in writing and if such request, demand, authorization, direction,
notice, consent, waiver, Act of Noteholders is to be made upon, given or
furnished to or filed with:
(i) the Indenture Trustee by any Noteholder or by the Issuer,
shall be sufficient for every purpose hereunder if made, given, furnished
or filed in writing to or with the Indenture Trustee at its Corporate
Trust Office;
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(ii) the Issuer by the Indenture Trustee or by any Noteholder,
shall be sufficient for every purpose hereunder if in writing and mailed
first-class, postage prepaid to the Issuer addressed to: First Investors
Auto Owner Trust 2000-A, c/o Bankers Trust (Delaware), 1011 Centre Road,
Suite 200, Wilmington, Delaware 19805-1266, Attention: Corporate Trust,
with a copy to Bankers Trust Company, 4 Albany Street, 10th Floor, New
York, New York 10006, Attention: Structured Finance Group, or at any other
address previously furnished in writing to the Indenture Trustee by the
Issuer or the Administrator. The Issuer shall promptly transmit any notice
received by it from the Noteholders to the Indenture Trustee; or
(iii) the Insurer by the Indenture Trustee, the Servicer or any
Noteholder, shall be sufficient for every purpose hereunder if in writing
and mailed first-class, postage prepaid to the Insurer addressed to MBIA
Insurance Corporation, 113 King Street, Armonk, New York 10504, Attention:
Insured Portfolio Management, Structured Finance.
Notices required to be given to the Rating Agencies by the Issuer,
the Indenture Trustee or the Owner Trustee shall be in writing, personally
delivered, telecopied or mailed by certified mail, return receipt requested, to
(i) in the case of Moody's, at the following address: Moody's Investors Service,
Inc., ABS Monitoring Department, 99 Church Street, New York, New York 10007 and
(ii) in case of Standard & Poor's, at the following address: Standard & Poor's,
a division of The McGraw-Hill Companies, 55 Water Street (43rd Floor), New York,
New York 10041, Attention: Asset Backed Surveillance Department.
11.5. NOTICES TO NOTEHOLDERS; WAIVER.
(a) Where this Indenture provides for notice to Noteholders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class, postage prepaid to
each Noteholder affected by such event, at its address as it appears on the Note
Register, not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where notice to
Noteholders is given by mail, neither the failure to mail such notice nor any
defect in any notice so mailed to any particular Noteholder shall affect the
sufficiency of such notice with respect to other Noteholders, and any notice
that is mailed in the manner herein provided shall conclusively be presumed to
have been duly given.
(b) Where this Indenture provides for notice in any
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manner, such notice may be waived in writing by any Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Noteholders shall be filed with
the Indenture Trustee, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such a waiver.
(c) If, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
(d) Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
11.6. ALTERNATE PAYMENT AND NOTICE PROVISIONS. Notwithstanding any
provision of this Indenture or any of the Notes to the contrary, the Issuer may
enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Indenture Trustee or any Paying Agent to such Holder,
that is different from the methods provided for in this Indenture for such
payments or notices. The Issuer shall furnish to the Indenture Trustee a copy of
each such agreement and the Indenture Trustee shall cause payments to be made
and notices to be given in accordance with such agreements.
11.7. EFFECT OF HEADINGS AND TABLE OF CONTENTS. The Article and
Section headings herein and the Table of Contents are for convenience of
reference only and shall not define or limit any of the terms or provisions
hereof.
11.8. SUCCESSORS AND ASSIGNS. All covenants and agreements in this
Indenture and the Notes by the Issuer shall bind its successors and assigns,
whether so expressed or not. All agreements of the Indenture Trustee in this
Indenture shall bind its successors, co-trustees and agents.
11.9. SEVERABILITY. If any provision of this Indenture or the Notes
shall be invalid, illegal or unenforceable, the validity, legality, and
enforceability of the remaining provisions of this Indenture and the Notes shall
not in any way be affected or impaired thereby.
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11.10. BENEFITS OF INDENTURE. Nothing in this Indenture or in the
Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, the Insurer, the Noteholders, any other
party secured hereunder, and any other Person with an ownership interest in any
part of the Trust Estate, any benefit or any legal or equitable right, remedy or
claim under this Indenture.
11.11. LEGAL HOLIDAY. If the date on which any payment is due shall
not be a Business Day, then (notwithstanding any other provision of the Notes or
this Indenture) payment need not be made on such date but may be made on the
next succeeding Business Day with the same force and effect as if made on the
date on which nominally due, and no interest shall accrue for the period from
and after any such nominal date.
11.12. GOVERNING LAW. This Indenture 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 Indenture shall be determined in
accordance with such laws.
11.13. COUNTERPARTS. This Indenture may be executed in any number of
counterparts, each of which counterparts when so executed shall be deemed to be
an original, and all of which counterparts shall together constitute but one and
the same instrument.
11.14. RECORDING OF INDENTURE. If this Indenture is subject to
recording in any appropriate public recording office, such recording shall be
effected by the Issuer at its expense and shall be accompanied by an Opinion of
Counsel (which may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee) to the effect that such
recording is necessary either for the protection of the Noteholders or any other
Person secured hereunder or for the enforcement of any right or remedy granted
to the Indenture Trustee under this Indenture.
11.15. TRUST OBLIGATION. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith against (i) the
Indenture Trustee or the Owner Trustee in its individual capacity, (ii) any
holder of a beneficial interest in the Issuer or (iii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the
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Indenture Trustee or the Owner Trustee in its individual capacity, of any holder
of a beneficial interest in the Issuer, the Owner Trustee or the Indenture
Trustee or of any successor or assign of the Indenture Trustee or the Owner
Trustee in its individual capacity, except as any such Person may have expressly
agreed (it being understood that the Indenture Trustee and the Owner Trustee
have no such obligations in their individual capacities), and except that any
such partner, owner or beneficiary shall be fully liable, to the extent provided
by applicable law, for any unpaid consideration for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity. For
all purposes of this Indenture the Owner Trustee (as such and in its individual
capacity) shall be subject to, and entitled to the benefits of, the terms and
provisions of the Trust Agreement.
11.16. NO PETITION. The Indenture Trustee, by entering into this
Indenture, and each Noteholder or Note Owner, by accepting a Note or beneficial
interest in a Note, as the case may be, hereby covenant and agree that they will
not at any time institute against, join in any institution against, or knowingly
or intentionally cooperate or encourage any other Person in instituting against,
the Depositor or the Issuer, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other proceedings under any United
States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, this Indenture or any of the other
Transaction Documents.
11.17. INSPECTION. The Issuer shall, with reasonable prior notice,
permit any representative of the Indenture Trustee or the Insurer, during the
Issuer's normal business hours, to examine the books of account, records,
reports and other papers of the Issuer, to make copies and extracts therefrom,
to cause such books to be audited by Independent certified public accountants,
and to discuss the Issuer's affairs, finances and accounts with the Issuer's
officers, employees, and Independent certified public accountants, all at such
reasonable times and as often as may be reasonably requested. The Indenture
Trustee shall and shall cause its representatives to hold in confidence all such
information except to the extent disclosure may be required by law (and all
reasonable applications for confidential treatment are unavailing) and except to
the extent that the Indenture Trustee may reasonably determine that such
disclosure is consistent with its obligations hereunder.
11.18. CERTAIN MATTERS REGARDING THE INSURER. If no Insurer Default
shall have occurred and be continuing, the Insurer shall have the right to
exercise all rights, including voting rights, which the Noteholders are
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entitled to exercise pursuant to this Indenture, without any consent of such
Noteholders; PROVIDED, HOWEVER, that, without the consent of each Noteholder
affected thereby, the Insurer shall not exercise such rights to amend this
Indenture in any manner that would (i) reduce the amount of, or delay the timing
of, collections of payments on the Contracts or distributions which are required
to be made on any Note, (ii) adversely affect in any material respect the
interests of the Holders of any Notes or (iii) alter the rights of any such
Holder to consent to such amendment.
Notwithstanding any provision of this Indenture to the contrary, if
an Insurer Default has occurred and is continuing, the Insurer shall not have
the right to take any action under this Indenture or to control or direct the
actions of the Issuer, the Seller, the Indenture Trustee or the Owner Trustee
pursuant to the terms of this Indenture, nor shall the consent of the Insurer be
required with respect to any action (or waiver of a right to take action) to be
taken by the Issuer, the Seller, the Indenture Trustee, the Owner Trustee, the
Noteholders; PROVIDED, HOWEVER, that (i) the consent of the Insurer shall be
required at all times with respect to any amendment of this Indenture and (ii)
the Insurer shall be entitled to receive notices hereunder at all times whether
or not an Insurer Default has occurred.
11.19. ACKNOWLEDGMENT OF MULTIPLE ROLES. The parties expressly
acknowledge and consent to Norwest Bank Minnesota, National Association
("NORWEST") acting in the possible dual capacity of Back-Up Servicer or
successor Servicer and in the capacity as Indenture Trustee and Custodian.
Norwest may, in such dual capacity, discharge its separate functions fully,
without hindrance or regard to conflict of interest principles, duty of loyalty
principles or other breach of fiduciary duties to the extent that any such
conflict or breach arises from the performance by Norwest of express duties set
forth in this Indenture in any of such capacities, all of which defenses, claims
or assertions are hereby expressly waived by the other parties hereto except in
the case of negligence (other than errors in judgment) and willful misconduct by
Norwest.
SECTION 11.20. SELLER'S OBLIGATIONS. The Seller is a party to this
Indenture solely for the purpose of performing those duties which it is
explicitly obligated to perform pursuant to the terms hereof, including those
duties listed in Sections 3.21 and 6A.1 hereof.
89
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed by their respective officers, thereunto duly authorized and
duly attested, all as of the day and year first above written.
FIRST INVESTORS AUTO OWNER TRUST 2000-A
BANKERS TRUST (DELAWARE),
not in its individual capacity but
solely as Owner Trustee
By:______________________________
Name:
Title:
NORWEST BANK MINNESOTA,
NATIONAL ASSOCIATION,
not in its individual capacity but
as Indenture Trustee and Custodian
By:______________________________
Name:
Title:
FIRST INVESTORS FINANCIAL
SERVICES, INC.,
as Seller
By:______________________________
Name:
Title:
<PAGE>
STATE OF )
) ss. :
COUNTY OF )
The foregoing instrument was acknowledged before me this ____ day of
January, 2000, by ________________________, as ____________________ of BANKERS
TRUST (DELAWARE), Owner Trustee of FIRST INVESTORS AUTO OWNER TRUST 2000-A, a
Delaware business trust.
________________________
Notary Public in and for
the State of ____________
[SEAL]
My commission expires: ____________
<PAGE>
STATE OF )
) ss. :
COUNTY OF )
The foregoing instrument was acknowledged before me this ___ day of
January, 2000, by ____________________, as ____________________ of NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, Indenture Trustee of FIRST INVESTORS AUTO OWNER
TRUST 2000-A, a Delaware business trust.
________________________
Notary Public in and for
the State of ____________
[SEAL]
My commission expires: ____________
<PAGE>
STATE OF )
) ss. :
COUNTY OF )
The foregoing instrument was acknowledged before me this ___ day of
January, 2000, by ____________________, as ____________________ of FIRST
INVESTORS FINANCIAL SERVICES, INC.
________________________
Notary Public in and for
the State of ____________
[SEAL]
My commission expires: ____________
<PAGE>
EXHIBIT A
$167,969,000
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION AND SUBJECT TO COMPLIANCE WITH OTHER APPLICABLE LAWS.
THE HOLDER OF THIS SECURITY OR ANY INTEREST OR PARTICIPATION HEREIN (THE
"HOLDER")BY ITS ACCEPTANCE HEREOF OR OF SUCH INTEREST OR PARTICIPATION HEREIN
AGREES AND IS DEEMED TO AGREE TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY
OR ANY INTEREST OR PARTICIPATION HEREIN, IF SUCH SALE IS MADE (I) PRIOR TO THE
DATE WHICH IS TWO YEARS (OR SUCH SHORTER PERIOD THAT MAY HEREAFTER BE PROVIDED
UNDER RULE 144(K) (OR ANY SUCCESSOR PROVISION THEREOF) AS PERMITTING THE RESALE
BY NON-AFFILIATES OF RESTRICTED SECURITIES WITHOUT RESTRICTION) AFTER THE LATER
OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE TRUST OR ANY
AFFILIATE OF THE TRUST WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF
THIS SECURITY) (THE "TWO-YEAR DATE"), ONLY (A) TO THE TRUST, (B) PURSUANT TO A
REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES
IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A,(D)
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF
THE SECURITIES ACT AND OTHERWISE IN COMPLIANCE WITH OTHER APPLICABLE LAWS,
SUBJECT TO THE TRUST'S AND THE INDENTURE TRUSTEE'S RIGHT PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (D) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH
OF THEM OR (II) ON OR AFTER THE TWO-YEAR DATE, SUCH OFFER, SALE, PLEDGE OR OTHER
TRANSFER IS MADE IN COMPLIANCE WITH, OR IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER, THE SECURITIES ACT AND ANY OTHER APPLICABLE SECURITIES LAWS,
AND SUCH PERSON FURTHER COVENANTS AND AGREES THAT IT WILL, PRIOR TO ANY OFFER,
SALE, PLEDGE OR OTHER TRANSFER OF THIS SECURITY, NOTIFY THE PERSON TO WHOM SUCH
RESALE, PLEDGE OR OTHER TRANSFER IS TO BE MADE OF THE RESALE RESTRICTIONS SET
FORTH ABOVE AND THE REPRESENTATIONS SUCH PERSON SHALL BE DEEMED TO HAVE MADE
UPON ITS ACQUISITION HEREOF IN COMPLIANCE WITH THE SECURITIES ACT. UNLESS THIS
SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR THE INDENTURE TRUSTEE FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED
A-1
<PAGE>
REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN."
REGISTERED
No. R-1 CUSIP NO.32057TAA9____________
FIRST INVESTORS AUTO OWNERS TRUST 2000-A
ASSET-BACKED NOTES
First Investors Auto Owners Trust 2000-A, a business trust organized
and existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to Cede & Co., or its
registered assigns, the principal sum of $167,969,000 payable on each Payment
Date in the aggregate amount, if any, payable from the Note Payment Account in
respect of principal on the Notes pursuant to and in accordance with Section 2.8
of the Indenture, dated as of January 1, 2000 (as amended, supplemented or
otherwise modified and in effect from time to time, the "Indenture"), between
the Issuer and Norwest Bank Minnesota, National Association, a national banking
association, as Indenture Trustee (in such capacity the "Indenture Trustee");
PROVIDED, HOWEVER, that if not paid prior to such date, the entire unpaid
principal amount of this Note shall be due and payable on the earlier of
February 15, 2006 (the "Final Note Payment Date") and the Redemption Date, if
any, pursuant to Section 10.1(a) of the Indenture. Capitalized terms used but
not defined herein are defined in Article I of the Indenture, which also
contains rules as to construction that shall be applicable herein.
The Issuer shall pay interest on this Note at the rate per annum
shown above on each Payment Date until the principal of this Note is paid or
made available for payment, on the principal amount of this Note outstanding on
the preceding Payment Date (after giving effect to all payments of principal
made on the preceding Payment Date), subject to certain limitations contained in
Section 3.1 of the Indenture. Interest on this Note will accrue for each Payment
Date from and including the previous Payment Date (or, in the case of the
initial Payment Date or if no interest has been paid, from the Closing Date) to
but excluding such Payment Date. Interest will be computed on the basis of a
360-day year of twelve 30-day months. Such principal of and interest on this
Note shall be paid in the manner specified on the reverse hereof.
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<PAGE>
The principal of and interest on this Note are payable in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth
on the reverse hereof, which shall have the same effect as though fully set
forth on the face of this Note.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
[REMAINDER OF THIS PAGE LEFT INTENTIONALLY BLANK.]
A-3
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this instrument to be
signed, manually or in facsimile, as of the date set forth below.
Date: January 24, 2000
FIRST INVESTORS AUTO OWNER TRUST 2000-A,
By: BANKERS TRUST (DELAWARE), not in its
individual capacity but solely as Owner
Trustee under the Trust Agreement
By:___________________________________________
Authorized Signatory
INDENTURE TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
not in its individual capacity but solely as
Indenture Trustee
By:___________________________________________
Authorized Signatory
<PAGE>
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Asset-Backed Notes, are issued under the Indenture, to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights and obligations thereunder of the Issuer, the
Indenture Trustee and the Holders of the Notes. The Notes are subject to all
terms of the Indenture.
This Note is and will be equally and ratably secured by the
Collateral pledged as security therefor as provided in the Indenture.
Principal of this Note is due and payable on each Payment Date as
described on the face hereof. "Payment Date" means the fifteenth day of each
month or, if any such day is not a Business Day, the next succeeding Business
Day, commencing February 15, 2000.
As described above, the entire unpaid principal amount of this Note
shall be due and payable on the earlier of the Final Note Payment Date and the
Redemption Date, if any, pursuant to Section 10.1(a) of the Indenture.
Notwithstanding the foregoing, the entire unpaid principal amount of this Note
shall be due and payable on the date on which an Event of Default shall have
occurred and be continuing and, provided that no Insurer Default shall have
occurred and be continuing, the Insurer has, or, if an Insurer Default shall
have occurred and be continuing, the Noteholders evidencing not less that 66
2/3% of the Note Balance have, declared the Notes to be immediately due and
payable in the manner provided in Section 5.2 of the Indenture (subject to the
right of the Insurer to make such declaration provided that no Insurer Default
shall have occurred and be continuing). Notwithstanding the foregoing sentence,
this Note shall become immediately due and payable without declaration, notice
or demand by or to any Person upon the occurrence of an Event of Default
specified in Section 5.1(ix) of the Indenture with respect to the Issuer. All
principal payments on the Notes shall be made PRO RATA to the Holders entitled
thereto.
Payments of interest on this Note due and payable on each Payment
Date, together with the installment of principal, if any, to the extent not in
full payment of this Note, shall be made by check mailed to the Person in whose
name this Note is registered appears as the Registered Holder of this Note (or
one or more Predecessor Notes) on the related Record Date by check mailed
first-class postage prepaid to such Person's address as it appears on the Note
Register on such Record Date; provided, however, that, unless Definitive Notes
have been issued pursuant to Section 2.13 of the Indenture, if this Note is
registered in the name of the nominee of the Clearing Agency (initially, such
nominee to be Cede & Co.), payments will be made by wire transfer in immediately
available funds to the account designated by such
A-5
<PAGE>
nominee. Any reduction in the principal amount of this Note effected by any
payments made on any Payment Date shall be binding upon all future Holders of
this Note and of any Note issued upon the registration of transfer hereof or in
exchange hereof or in lieu hereof, whether or not noted hereon. If funds are
expected to be available, as provided in the Indenture, for payment in full of
the then remaining unpaid principal amount of this Note on a Payment Date, then
the Indenture Trustee, in the name of and on behalf of the Issuer, will notify
the Person who was the registered Holder hereof as of the Record Date preceding
such Payment Date by notice mailed or transmitted by facsimile prior to such
Payment Date, and the amount then due and payable shall be payable only upon
presentation and surrender of this Note at the Indenture Trustee's Corporate
Trust Office or at the office of the Indenture Trustee's agent appointed for
such purposes located at Sixth Street and Marquette Avenue MAC N9311-161,
Minneapolis, Minnesota 55479, Attention: Corporate Trust Services - Asset-Backed
Administration or such other address as the Indenture Trustee may designate from
time to time as its Corporate Trust Offices in accordance with the Indenture.
The Issuer shall pay interest on overdue installments of interest at
the Note Rate to the extent permitted by law.
As provided in the Indenture, the Notes may be redeemed in the
manner and to the extent described in Section 10.1(a) of the Indenture.
As provided in the Indenture, and subject to certain limitations set
forth therein, the transfer of this Note may be registered on the Note Register
upon surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Holder hereof or such Holder's attorney
duly authorized in writing, and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder or Note Owner, by its acceptance of this Note or, in
the case of a Note Owner, a beneficial interest in this Note, covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer, the Owner Trustee or the Indenture Trustee on
this Note or under the Indenture or any certificate or other writing delivered
in connection therewith, against (i) the Indenture Trustee or the
A-6
<PAGE>
Owner Trustee, each in its individual capacity, (ii) any owner of a beneficial
interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer,
director or employee of the Indenture Trustee or the Owner Trustee, each in its
individual capacity, any holder of a beneficial interest in the Issuer, the
Owner Trustee or the Indenture Trustee or of any successor or assign of the
Indenture Trustee or the Owner Trustee, each in its individual capacity, except
as any such Person may have expressly agreed (it being understood that the
Indenture Trustee and the Owner Trustee have no such obligations in their
individual capacities) and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution for stock, unpaid capital
contribution or failure to pay any installment or call owing to such entity.
Each Noteholder or Note Owner, by accepting this Note or a
beneficial interest in this Note, as the case may be, hereby covenants and
agrees that it will not at any time institute against, join in any institution
against, or knowingly or intentionally cooperate or encourage any other Person
in instituting against, the Depositor or the Issuer, any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings or other
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, the Indenture or any
of the other Transaction Documents.
The Issuer has entered into the Indenture and this Note is issued
with the intention that, for federal, state and local income, and franchise tax
purposes, the Notes will qualify as indebtedness of the Issuer secured by the
Trust Estate. The Issuer, by entering into the Indenture and this Note, and each
Noteholder, by its acceptance of this Note (and each Note Owner by its
acceptance of a beneficial interest in this Note), agree to treat this Note as
indebtedness of the Issuer for federal, state and local income and franchise tax
purposes.
Prior to the due presentment for registration of transfer of this
Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes, whether or not this Note be
overdue, and none of the Issuer, the Indenture Trustee or any such agent shall
be affected by notice to the contrary.
The Indenture allows, with certain exceptions as therein provided,
the Issuer and the Indenture Trustee to enter into one or more indentures that
are supplemental to the Indenture and which effect a modification of the rights
and obligations of the
A-7
<PAGE>
Issuer and the rights of the Holders of the Notes under the Indenture at any
time by the Issuer with the consent of the Noteholders evidencing not less than
51% of the Note Balance (subject to the right of the Insurer to exercise such
consent provided that no Insurer Default shall have occurred and be continuing).
The Indenture also permits the Indenture Trustee and the Issuer to enter into
supplemental indentures with respect to certain terms and conditions set forth
in the Indenture without the consent of Holders of the Notes issued thereunder.
The term "Issuer," as used in this Note, includes any successor to
the Issuer under the Indenture.
The Issuer is not permitted by the Indenture to enter into any
merger, consolidation or conveyance transaction regardless of the surviving
entity.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note and the Indenture shall be governed by, and construed in
accordance with the laws of the State of New York, and the obligations, rights
and remedies of the parties hereunder and thereunder shall be determined in
accordance with such laws.
No reference herein to the Indenture, and no provision of this Note
or of the Indenture, shall alter or impair the obligation of the Issuer, which
is absolute and unconditional, to pay the principal of and interest on this Note
at the times, place and rate, and in the coin or currency herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Transaction Documents, none of Norwest Bank Minnesota, National
Association, in its individual capacity, Bankers Trust (Delaware), in its
individual capacity, any owner of a beneficial interest in the Issuer, or any of
their respective partners, beneficiaries, agents, officers, directors, employees
or successors or assigns shall be personally liable for, nor shall recourse be
had to any of them for, the payment of principal or of interest on this Note or
performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in the Indenture. The Holder of this Note, by its
acceptance hereof (and each Note Owner, by its acceptance of a beneficial
interest herein), agrees that, except as expressly provided in the Transaction
Documents, in the case of an Event of Default under the Indenture, the Holder
shall have no claim against any of the foregoing for any deficiency, loss or
claim therefrom; PROVIDED, HOWEVER, that nothing contained herein shall be taken
to prevent recourse to, and enforcement against, the assets of the Issuer for
any and all liabilities, obligations and undertakings contained in the Indenture
or in this Note.
A-8
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:
________________________________________________________________________________
________________________________________________________________________________
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto:
________________________________________________________________________________
________________________________________________________________________________
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints _________________, attorney, to transfer said Note on the books
kept for registration thereof, with full power of substitution in the premises.
Dated:
*/
________________________________________________________________________________
Signature Guaranteed
*/
________________________________________________________________________________
Signature Guaranteed
__________________________________________
*/ NOTICE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar.
A-9
<PAGE>
Exhibit B
Form of Issuer Opinion
B-1
<PAGE>
EXHIBIT C
REQUEST FOR RELEASE OF CONTRACT
TO: Norwest Bank Minnesota, National Association
as Custodian
Sixth Street and Marquette Avenue
MAC N9311-161
Minneapolis, Minnesota 55479
Attention: Corporate Trust Services/Asset-Backed Administration
In connection with the Contract Files which are owned by First Investors
Auto Owner Trust 2000-A (the "Issuer") and are pledged by the Issuer to Norwest
Bank Minnesota, National Association, as Indenture Trustee (the "Indenture
Trustee"), the undersigned, as [Indenture Trustee][Servicer], requests the
release of the Contract File related to the Contract identified below by its
number. The undersigned shall return the documents to you when the undersigned's
need therefor no longer exists, except where the Contract is paid in full or
otherwise disposed of. Capitalized terms used but not otherwise defined herein
shall have the respective meanings assigned to such terms in the Indenture,
dated as of January 1, 2000, between you, the Issuer and First Investors
Financial Services, Inc.
By_______________________________________
Name:
Title:
CONTRACT NUMBER__________________________
CUSTOMER_________________________________
C-1
<PAGE>
TO CUSTODIAN: Please acknowledge below by your signature the execution of the
above request. You must retain this form for your file, and a copy of this form,
signed and dated by you, shall be returned to the Indenture Trustee and the
Issuer.
_______________________________________
Authorized Signature of Custodian
Release Date
RETURN OF RELEASED DOCUMENT(S) FILE
All documents identified above as previously released have been returned:
_______________________________________
Date of Return
C-2
EXHIBIT 10.64
FIRST INVESTORS AUTO INVESTMENT CORP.,
as Depositor,
and
BANKERS TRUST (DELAWARE),
as Owner Trustee
------------------------------
AMENDED AND RESTATED TRUST AGREEMENT
Dated as of January 24, 2000
------------------------------
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions...............................................1
SECTION 1.2. Other Definitional Provisions.............................4
ARTICLE II
ORGANIZATION OF THE TRUST
SECTION 2.1. Name......................................................5
SECTION 2.2. Office....................................................5
SECTION 2.3. Purposes and Powers.......................................6
SECTION 2.4. Appointment of Owner Trustee..............................6
SECTION 2.5. Initial Capital Contribution of Owner Trust
Estate..............................................7
SECTION 2.6. Declaration of Trust......................................7
SECTION 2.7. [RESERVED]................................................7
SECTION 2.8. Title to Trust Property...................................7
SECTION 2.9. Situs of Trust............................................7
SECTION 2.10. Representations and Warranties of the
Depositor...........................................8
SECTION 2.11. Federal Income Tax Matters................................9
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1. Initial Ownership........................................10
SECTION 3.2. The Depositor's Certificate..............................10
SECTION 3.3. Authentication of the Depositor's Certificate............11
SECTION 3.4. Registration of the Depositor's Certificate..............11
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen
Depositor's Certificate............................17
SECTION 3.6. Appointment of Paying Agent..............................19
<PAGE>
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1. Prior Notice with Respect to Certain Matters.............22
SECTION 4.2. Action by Owner Trustee with Respect to Certain Matters..23
SECTION 4.3. Action by Owner Trustee with Respect to Bankruptcy.......23
SECTION 4.4. Restrictions on Insurer's Power..........................23
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1. Establishment of Certificate Payment Account.............24
SECTION 5.2. Application of Trust Funds...............................24
SECTION 5.3. Method of Payment........................................25
SECTION 5.4. No Segregation of Monies; No Interest....................25
SECTION 5.5. Signature on Returns; Tax Matters Partner................26
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1. General Authority........................................27
SECTION 6.2. General Duties...........................................27
SECTION 6.3. Action upon Instruction..................................27
SECTION 6.4. No Duties Except as Specified in this Agreement or
in Instructions....................................29
SECTION 6.5. No Action Except Under Specified Documents or
Instructions.......................................29
SECTION 6.6. Restrictions.............................................29
ARTICLE VII
REGARDING THE OWNER TRUSTEE
SECTION 7.1. Acceptance of Trusts and Duties..........................30
SECTION 7.2. Furnishing of Documents..................................31
SECTION 7.3. Representations and Warranties...........................32
SECTION 7.4. Reliance; Advice of Counsel..............................33
SECTION 7.5. Not Acting in Individual Capacity........................33
SECTION 7.6. Owner Trustee Not Liable for Contracts...................33
SECTION 7.7. Owner Trustee May Own Notes..............................33
ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.1. Owner Trustee's Fees and Expenses........................34
SECTION 8.2. Indemnification..........................................34
SECTION 8.3. Payments to the Owner Trustee............................34
<PAGE>
ARTICLE IX
TERMINATION
SECTION 9.1. Termination of Trust Agreement...........................35
SECTION 9.2. Notification Regarding Bankruptcy of the
Depositor..........................................36
SECTION 9.3. Prepayment of the Certificates...........................36
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1. Eligibility Requirements for Owner Trustee...............38
SECTION 10.2. Resignation or Removal of Owner Trustee..................38
SECTION 10.3. Successor Owner Trustee..................................39
SECTION 10.4. Merger or Consolidation of Owner Trustee.................40
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee............40
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Supplements and Amendments...............................42
SECTION 11.2. No Legal Title to Owner Trust Estate in Depositor........44
SECTION 11.3. Limitation on Rights of Others...........................44
SECTION 11.4. Notices..................................................44
SECTION 11.5. Severability.............................................44
SECTION 11.6. Separate Counterparts....................................45
SECTION 11.7. Successors and Assigns...................................45
SECTION 11.8. Covenants of the Depositor...............................45
SECTION 11.9. No Petition..............................................45
SECTION 11.10. Headings.................................................46
SECTION 11.11. Governing Law............................................46
SECTION 11.12. Amendment of Trust Agreement.............................46
EXHIBITS
EXHIBIT A Form of Depositor's Certificate..........................A-1
EXHIBIT B Certificate of Trust.................................... B-1
<PAGE>
AMENDED AND RESTATED TRUST AGREEMENT, dated as of January 24, 2000
(as amended, supplemented or otherwise modified and in effect from time to time,
this "AGREEMENT"), between FIRST INVESTORS AUTO INVESTMENT CORP., a Delaware
corporation, as depositor (the "DEPOSITOR"), and BANKERS TRUST (DELAWARE), a
Delaware banking corporation, (in its capacity as owner trustee and not in its
individual capacity, the "OWNER TRUSTEE").
WHEREAS, the Depositor and the Owner Trustee have entered into a
Trust Agreement, dated as of January 12, 2000 (the "ORIGINAL TRUST Agreement");
and
WHEREAS, the Depositor and Owner Trustee desire to amend and restate
the Original Trust Agreement in its entirety as provided herein.
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, it is hereby agreed by
and between the Depositor and the Owner Trustee that the Original Trust
Agreement be amended and restated and replaced in its entirety as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. Except as otherwise specified herein or as
the context may otherwise require, the following terms shall have the respective
meanings set forth below for all purposes of this Agreement.
"ADMINISTRATOR" shall mean First Investors Financial Services, Inc.,
or any successor administrator.
"AFFILIATE" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under direct or indirect
common control with such Person. For purposes of this definition, "CONTROL" when
used with respect to any Person shall mean the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise.
"APPLICABLE TAX STATE" shall have the meaning specified in the Sale
and Allocation Agreement.
"BUSINESS DAY" shall mean any day other than a Saturday, a Sunday or
a day on which banking institutions or trust companies in New York, New York,
Wilmington, Delaware, Houston, Texas or Atlanta, Georgia are authorized or
obligated by law, executive order or governmental decree to remain closed.
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"BUSINESS TRUST STATUTE" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code section 3801 et seq., as the same may be amended,
supplemented or otherwise modified and in effect from time to time.
"CERTIFICATE OF TRUST" shall mean the Certificate of Trust attached
hereto as Exhibit B filed with the Secretary of the State of Delaware on January
12, 2000 for the Trust pursuant to Section 3810(a) of the Business Trust
Statute.
"CERTIFICATE REGISTER" shall have the meaning specified in Section
3.4.
"CERTIFICATE REGISTRAR" shall have the meaning specified in Section
3.4.
"CODE" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and the Treasury Regulations promulgated thereunder.
"COLLECTION ACCOUNT" shall have the meaning specified in the Sale
and Allocation Agreement.
"CORPORATE TRUST OFFICE" shall mean the principal office of the
Owner Trustee at which at any particular time its corporate trust business shall
be administered, which office at date of execution of this Agreement is located
at, 1011 Centre Road, Suite 200, Wilmington Delaware 19805-1266, Attention:
Corporate Trust, or at such other address as the Owner Trustee may designate
from time to time by notice to the Depositor, or the principal corporate trust
office of any successor Owner Trustee at the address designated by such
successor Owner Trustee by notice to the Depositor.
"DEPOSITOR" shall mean First Investors Auto Investment Corp., a
Delaware corporation, in its capacity as depositor under this Agreement, and its
successors.
"DEPOSITOR ACCOUNT" shall have the meaning specified in Section 5.1.
"DEPOSITOR'S CERTIFICATE" shall mean a physical certificate
evidencing the beneficial interest of the holder thereof in the Trust as
specified therein, substantially in the form of Exhibit A attached hereto.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
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"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended.
"EXPENSES" shall have the meaning specified in Section 8.2 and shall
include amounts in connection with all liabilities, losses, damages, taxes,
claims, actions and suits referred to in such section.
"FINAL NOTE PAYMENT DATE" shall mean February 15, 2006.
"INDEMNIFIED PARTIES" shall have the meaning specified in Section
8.2.
"INDENTURE" shall mean the Indenture, dated as of January 1, 2000,
between the Trust, the Seller and Norwest Bank Minnesota, National Association,
a national banking association, as indenture trustee, as amended, supplemented
or otherwise modified and in effect from time to time.
"INDEPENDENT" shall have the meaning specified in the Indenture.
"INITIAL POOL BALANCE" shall mean $174,968,641.29.
"INSURER" shall mean MBIA Insurance Corporation, a corporation
domiciled in New York, and its successors.
"NOTE PAYMENT ACCOUNT" shall have the meaning specified in the Sale
and Allocation Agreement.
"NOTE RATE" shall have the meaning specified in the Sale and
Allocation Agreement.
"NOTES" shall have the meaning specified in the Sale and Allocation
Agreement.
"OWNER TRUST ESTATE" shall mean all right, title and interest of the
Trust in, to and under the property and rights assigned to the Trust pursuant to
Article II of the Sale and Allocation Agreement and all monies deposited from
time to time in the Collection Account, the Note Payment Account and the Reserve
Account.
"OWNER TRUSTEE" shall mean Bankers Trust (Delaware), a Delaware
banking corporation, not in its individual capacity but solely as Owner Trustee
under this Agreement, and any successor Owner Trustee under this Agreement.
"PAYING AGENT" shall mean the Owner Trustee, Bankers Trust Company,
or any other Person appointed as Paying Agent in accordance with Section 3.6.
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"PERSON" shall have the meaning assigned thereto in the Sale and
Allocation Agreement.
"PREPAYMENT DATE" shall mean the Payment Date specified by the
Servicer pursuant to Section 9.3(a).
"RECORD DATE" shall mean, with respect to any Payment Date or
Prepayment Date, the close of business on the Business Day immediately preceding
such Payment Date or Prepayment Date.
"RESERVE ACCOUNT" shall have the meaning assigned thereto in the
Sale and Allocation Agreement.
"RESPONSIBLE OFFICER" shall have the meaning specified in the
Indenture.
"SALE AND ALLOCATION AGREEMENT" shall mean the Sale and Allocation
Agreement, dated as of January 1, 2000, by and among the Depositor, the
Indenture Trustee, the Trust, the Seller and the Servicer, as amended,
supplemented or otherwise modified and in effect from time to time.
"SECRETARY OF STATE" shall mean the Secretary of State of the State
of Delaware.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"TOTAL SERVICING FEE" shall have the meaning assigned thereto in the
Sale and Allocation Agreement.
"TRANSACTION DOCUMENTS" shall have the meaning specified in the
Indenture.
"TRANSFER" shall mean to sell, transfer, assign, participate, pledge
or otherwise dispose of.
"TREASURY REGULATIONS" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. All references herein to
specific provisions of proposed or temporary Treasury Regulations shall include
analogous provisions of final Treasury Regulations or other successor Treasury
Regulations.
"TRUST" shall mean the Delaware business trust established by this
Agreement.
"TRUST ACCOUNTS" shall have the meaning specified in the Indenture.
SECTION 1.2. OTHER DEFINITIONAL PROVISIONS.
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(a) Capitalized terms used herein and not otherwise defined herein
have the meanings assigned to them in the Sale and Allocation Agreement or, if
not defined therein, in the Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other
documents made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
assigned to them under generally accepted accounting principles. To the extent
that the definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Agreement or in any such certificate or other document shall control.
(d) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement. Article, Section
and Exhibit references contained in this Agreement are references to Articles,
Sections and Exhibits in or to this Agreement unless otherwise specified. The
term "including" shall mean "including without limitation."
(e) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns.
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ARTICLE II
ORGANIZATION OF THE TRUST
SECTION 2.1. NAME. The name of the Trust shall be "First Investors
Auto Owner Trust 2000-A," in which name the Trust and the Owner Trustee shall
have power and authority and each is hereby authorized and empowered to conduct
the business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued.
SECTION 2.2. OFFICE. The office of the Trust shall be in care of the
Owner Trustee at the Corporate Trust Office or at such other address in the
State of Delaware as the Owner Trustee may designate by written notice to the
Depositor.
SECTION 2.3. PURPOSES AND POWERS. The purpose of the Trust is, and
the Trust shall have power and authority and is hereby authorized and empowered,
without the need for further action on the part of the Trust, and the Owner
Trustee shall have power and authority and is hereby authorized and empowered,
in the name and on behalf of the Trust, to do or cause to be done all acts and
things necessary, appropriate or convenient to cause the Trust, to engage solely
in the following activities:
(i) to execute, issue and deliver the Notes pursuant to the
Indenture, to execute, authenticate, issue and deliver the Depositor's
Certificate pursuant to this Agreement, and to sell the Notes and issue
the Depositor's Certificate to the Depositor;
(ii) to use the proceeds of the sale of the Notes to fund the
Reserve Account, to pay the organizational, start-up and transactional
expenses of the Trust and to pay the balance to the Seller pursuant to the
Sale and Allocation Agreement in consideration for the purchase of
Contracts;
(iii) to pay interest on and principal of the Notes and
amounts distributable with respect to the Depositor's Certificate;
(iv) to assign, grant, transfer, pledge, mortgage and convey
the Collateral to the Indenture Trustee pursuant to the Indenture;
(v) to enter into, execute, deliver and perform its
obligations under the Transaction Documents to which it is to be a
party;
(vi) subject to compliance with the Transaction Documents, to
engage in such other activities as may be required in connection with
conservation of the Owner Trust Estate and the making of distributions to
the Noteholders and the Depositor; and
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(vii) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith.
The Trust is hereby authorized to engage in the foregoing
activities. The Trust shall not engage in any activity other than in connection
with the foregoing or other than as required or authorized by the terms of this
Agreement or the other Transaction Documents.
SECTION 2.4. APPOINTMENT OF OWNER TRUSTEE. The Depositor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and authority set forth herein and in the
Business Trust Statute.
SECTION 2.5. ORGANIZATIONAL MATTERS. The Depositor shall pay from
amounts payable to it pursuant to Section 3.5(d)(x) of the Sale and Allocation
Agreement, the organizational expenses of the Trust as they may arise or shall,
upon the request of the Owner Trustee, promptly reimburse the Owner Trustee, in
its individual capacity, for any such expenses paid by the Owner Trustee, in its
individual capacity. The net proceeds from the sale of the Notes shall be used
to purchase Contracts and related property from the Seller in accordance with
Section 2.1 of the Sale and Allocation Agreement and to fund the Reserve Account
in an amount equal to the Initial Reserve Account Deposit.
SECTION 2.6. DECLARATION OF TRUST. The Owner Trustee hereby declares
that it will hold the Owner Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Depositor, subject to
the obligations of the Trust under the Transaction Documents. It is the
intention of the parties hereto that (i) the Trust constitute a business trust
under the Business Trust Statute and that this Agreement constitute the
governing instrument of such business trust and (ii) solely for income and
franchise tax purposes, the Trust shall be treated as a non-entity. Unless
otherwise required by the appropriate tax authorities, the Trust shall file or
cause to be filed annual or other necessary returns, reports and other forms
consistent with the characterization of the Trust as a nonentity for such tax
purposes. Effective as of the date hereof, the Owner Trustee shall have all
rights, powers and authority set forth herein and in the Business Trust Statute
with respect to accomplishing the purposes of the Trust. The Owner Trustee shall
have power and authority and is hereby authorized and empowered to execute and
file any certificate to be filed under the Business Trust Statute.
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SECTION 2.7. TITLE TO TRUST PROPERTY. Legal title to the entirety of
the Owner Trust Estate shall be vested at all times in the Trust as a separate
legal entity, except where applicable law in any jurisdiction requires title to
any part of the Owner Trust Estate to be vested in a trustee or trustees, in
which case title shall be deemed to be vested in the Owner Trustee, a co-trustee
and/or a separate trustee, as the case may be.
SECTION 2.8. SITUS OF TRUST. The Trust shall be located and
administered in the State of Delaware. All bank accounts maintained by the Owner
Trustee on behalf of the Trust shall be located in the State of Delaware or the
State of New York. The Trust shall not have any employees in any state other
than the State of Delaware; PROVIDED, HOWEVER, that nothing herein shall
restrict or prohibit the Owner Trustee from having employees within or without
the State of Delaware. Payments will be received by the Trust only in the State
of Delaware or the State of New York, and payments will be made by the Trust
only from the State of Delaware or the State of New York. The only office of the
Trust will be at the Corporate Trust Office in the State of Delaware.
SECTION 2.9. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR. The
Depositor hereby represents and warrants to the Owner Trustee (as such and in
its individual capacity) that:
(i) the Depositor is duly organized and 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 are currently owned and such business is presently
conducted;
(ii) the Depositor is duly qualified to do business as a foreign
corporation in good standing, and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of property
or the conduct of its business requires such qualifications;
(iii) the Depositor has the power and authority to execute and
deliver this Agreement and each other Transaction Document to which it is
a party and to carry out their respective terms, and the Depositor has
full power and authority to sell and assign the property to be sold and
assigned to, and deposited with, the Trust; the Depositor has duly
authorized such sale and assignment and deposit to the Trust by all
necessary action and the execution, delivery and performance of this
Agreement and each other Transaction Document to which it is a party has
been duly authorized by the Depositor by all necessary action;
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(iv) the consummation by the Depositor of the transactions
contemplated by this Agreement and each other Transaction Document to
which it is a party and the fulfillment of the terms hereof and thereof do
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, the articles of organization or operating agreement of the
Depositor, or any indenture, agreement or other instrument to which the
Depositor is a party or by which it is bound do not result in the creation
or imposition of any Lien upon any of its properties pursuant to the terms
of any such indenture, agreement or other instrument (other than pursuant
to the Transaction Documents) and do not violate any law or, to the
knowledge of the Depositor, any order, rule or regulation applicable to
the Depositor of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Depositor or its properties;
(v) there are no proceedings or investigations pending or, to
the knowledge of the Depositor, threatened before any court, regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Depositor or its properties (i) asserting the
invalidity of this Agreement, the Indenture, any of the other Transaction
Documents or the Notes, (ii) seeking to prevent the issuance of the Notes
or the consummation of any of the transactions contemplated by this
Agreement, the Indenture or any of the other Transaction Documents, (iii)
seeking any determination or ruling that might materially and adversely
affect the performance by the Depositor of its obligations under, or the
validity or enforceability of, this Agreement or any other Transaction
Document to which the Depositor is a party or (iv) which might adversely
affect the federal income tax attributes, or Applicable Tax State
franchise or income tax attributes, of the Notes; and
(vi) the representations and warranties of the Seller in Section
2.2 of the Sale and Allocation Agreement are true and correct.
SECTION 2.10. FEDERAL INCOME TAX MATTERS. It is the intent of the
Depositor and the Servicer that, for purposes of federal income, state and local
income and franchise tax and any other income taxes, the Trust will be treated
as a "nonentity" under Treasury Regulation section 301.7701-3. The Depositor by
acceptance of its interest in the Depositor's Certificate agrees to such
treatment and agrees to take no action inconsistent with such treatment.
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ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1. OWNERSHIP. The Depositor shall be the sole beneficial
owner of the Trust.
SECTION 3.2. THE DEPOSITOR'S CERTIFICATE. The Depositor's
Certificate shall be issued to the Depositor as a registered, definitive,
physical certificate, substantially in the form set forth in Exhibit A attached
hereto. The Depositor's Certificate shall not be Transferred by the Depositor to
any other Person.
The Depositor's Certificate may be in printed or typewritten form
and shall be executed on behalf of the Trust by manual or facsimile signature of
an authorized officer of the Owner Trustee. If the Depositor's Certificate bears
the manual or facsimile signatures of individuals who were, at the time when
such signatures shall have been affixed, authorized to sign on behalf of the
Trust, it shall be validly issued and entitled to the benefits of this
Agreement, notwithstanding that such individuals or any of them shall have
ceased to be so authorized prior to the authentication and delivery of the
Depositor's Certificate or did not hold such offices at the date of
authentication and delivery of the Depositor's Certificate.
SECTION 3.3. AUTHENTICATION OF THE DEPOSITOR'S CERTIFICATE. As of
the date hereof, the Owner Trustee shall cause the Depositor's Certificate to be
executed on behalf of the Trust, authenticated, issued and delivered upon
written order of the Depositor signed by its manager, its president, any vice
president, its secretary or its treasurer, without further action by the
Depositor. Thereupon, such Depositor's Certificate shall be duly authorized,
validly issued and entitled to the benefits of this Agreement. The Depositor's
Certificate shall not entitle its holder to any benefit under this Agreement, or
be valid for any purpose, unless there shall appear on such Depositor's
Certificate a certificate of authentication substantially in the form set forth
in Exhibit A executed by the Owner Trustee or Bankers Trust Company, as the
Owner Trustee's authenticating agent, by manual signature, which authentication
shall constitute conclusive evidence that the Depositor's Certificate is
entitled to the benefits of this Agreement and has been duly authenticated, duly
authorized, validly issued and delivered hereunder. The Depositor's Certificate
shall be dated the date of its authentication.
SECTION 3.4. REGISTRATION OF THE DEPOSITOR'S CERTIFICATE. The
Certificate Registrar (defined below) shall cause to be kept, at its Corporate
Trust Office (as defined in the Sale and Allocation Agreement) a register (the
"CERTIFICATE REGISTER") in which, subject to such reasonable regulations as it
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may prescribe, the Certificate Registrar shall provide for the registration of
the Depositor's Certificate. The Indenture Trustee initially shall be the
registrar (the "CERTIFICATE REGISTRAR") for the purpose of registering the
Depositor's Certificate as herein provided. The Certificate Registrar shall,
promptly upon request, furnish to the Owner Trustee information regarding the
Certificate Register, including a copy thereof. Upon any resignation of any
Certificate Registrar, the Owner Trustee shall promptly appoint a successor or,
if it elects not to make such an appointment, assume the duties of Certificate
Registrar.
SECTION 3.5. MUTILATED, DESTROYED, LOST OR STOLEN DEPOSITOR'S
CERTIFICATE.
(a) If (i) a mutilated Depositor's Certificate is surrendered to the
Certificate Registrar, or the Certificate Registrar receives evidence to its
satisfaction of the destruction, loss or theft of the Depositor's Certificate,
and (ii) there is delivered to the Certificate Registrar and Owner Trustee (as
such and in its individual capacity) such security or indemnity as may be
required by them to hold each of the Trust, the Certificate Registrar and the
Owner Trustee (as such and in its individual capacity) harmless, then, in the
absence of notice to the Trust, the Certificate Registrar or the Owner Trustee
that the Depositor's Certificate has been acquired by a protected purchaser, the
Owner Trustee shall execute and the Owner Trustee or Bankers Trust Company, as
the Owner Trustee's authenticating agent, shall authenticate and deliver, in
exchange for, or in lieu of, such mutilated, destroyed, lost or stolen
Depositor's Certificate, a replacement Depositor's Certificate of like tenor and
denomination. If, after the delivery of such replacement Depositor's
Certificate, a protected purchaser of the original Depositor's Certificate in
lieu of which such replacement Depositor's Certificate was issued presents for
payment such original Depositor's Certificate, the Trust shall be entitled to
recover such replacement Depositor's Certificate (or such payment) from the
Person to whom such replacement Depositor's Certificate was delivered or any
Person taking such replacement Depositor's Certificate from such Person to whom
such replacement Depositor's Certificate was delivered or any assignee of such
Person, except a protected purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Trust or the Owner Trustee (as such or in its
individual capacity) in connection therewith.
(b) Upon the issuance of any replacement Depositor's Certificate
under this Section 3.5, the Trust may require the payment by the Depositor of a
sum sufficient to cover any tax or other governmental charge that may be imposed
in connection with such issuance and any other reasonable expenses (including
the
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fees and expenses of the Owner Trustee (as such and in its individual capacity))
related thereto.
(c) Any replacement Depositor's Certificate issued pursuant to this
Section 3.5 in replacement of the mutilated, destroyed, lost or stolen
Depositor's Certificate shall constitute an original additional contractual
obligation of the Trust, whether or not the mutilated, destroyed, lost or stolen
Depositor's Certificate shall be at any time enforceable by anyone, and shall be
duly authorized, validly issued and entitled to all the benefits of this
Agreement.
(d) The provisions of this Section 3.5 are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of any mutilated, destroyed, lost or stolen
Depositor's Certificate.
SECTION 3.6. APPOINTMENT OF PAYING AGENT. The Paying Agent shall
initially be Bankers Trust Company, and any co-paying agent chosen by the Owner
Trustee. Bankers Trust Company shall be permitted to resign as Paying Agent upon
thirty (30) days' written notice to the Owner Trustee. In the event that Bankers
Trust Company shall no longer be the Paying Agent, the Owner Trustee, with the
consent of the Insurer, shall appoint a successor to act as Paying Agent (which
shall be a bank or trust company). The Paying Agent shall return all unclaimed
funds to the Owner Trustee and upon removal of a Paying Agent such Paying Agent
shall also return all funds in its possession to the Owner Trustee. The rights,
benefits, protections, privileges and immunities of the Owner Trustee (as such
or in its individual capacity) under this Agreement shall apply to the Owner
Trustee also in its role as Paying Agent, for so long as the Owner Trustee shall
act as Paying Agent and, to the extent applicable, to any other paying agent
appointed hereunder. Any reference in this Agreement to the Paying Agent shall
include any co-paying agent unless the context requires otherwise.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
SECTION 4.1. PRIOR NOTICE WITH RESPECT TO CERTAIN MATTERS. With
respect to the following matters, the Trust shall not take action unless (i) at
least thirty (30) days before the taking of such action, the Owner Trustee shall
have notified the Insurer and the Rating Agencies in writing of the proposed
action and (ii) the Insurer, if an Insurer Default shall not have occurred and
be continuing, shall have consented in writing thereto and the Depositor shall
not have (A) notified the Owner Trustee in writing prior to the 30th day after
such notice is given that it has withheld consent or (B) provided alternative
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written direction prior to the 30th day after such notice is given:
(i) the initiation of any claim or lawsuit by the Trust
(except claims or lawsuits brought by the Servicer in connection with the
collection of the Contracts) and the settlement of any action, claim or
lawsuit brought by or against the Trust (except with respect to the
aforementioned claims or lawsuits for collection by the Servicer of the
Contracts);
(ii) the election by the Trust to file an amendment to the
Certificate of Trust (unless such amendment is required to be filed under
the Business Trust Statute);
(iii) the amendment of the Indenture by a supplemental
indenture in circumstances where the consent of any Noteholder is
required;
(iv) the appointment pursuant to the Indenture of a successor
Note Registrar, Paying Agent for the Notes or Indenture Trustee or
pursuant to this Agreement of a successor Certificate Registrar, or the
consent to the assignment by the Note Registrar, Paying Agent for the
Notes or Indenture Trustee or Certificate Registrar of its obligations
under the Indenture or this Agreement, as applicable;
(v) the consent to the calling or waiver of any default of any
Transaction Document;
(vi) the consent to the assignment by the Indenture Trustee or
Servicer of their respective obligations under any Transaction Document,
unless permitted in the Transaction Documents;
(vii) cause the Trust to incur, assume or guaranty any
indebtedness other than as set forth in this Agreement or the Transaction
Documents;
(viii) possess Trust assets, or assign the Trust's
right to property, for other than a Trust purpose;
(ix) cause the Trust to lend any funds to any entity, unless
permitted in this Agreement or the Transaction Documents;
(x) except as provided in Article IX hereof, dissolve,
terminate or liquidate the Trust in whole or in part;
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(xi) merge or consolidate the Trust with or into any other
entity, or convey or transfer all or substantially all of the Trust's
assets to any other entity;
(xii) do any act that conflicts with any other Transaction
Document;
(xiii) do any act which would make it impossible to carry on
the ordinary business of the Trust as described in Section 2.3 hereof;
(xiv) confess a judgment against the Trust; or
(xv) change the Trust's purpose and powers from those set
forth in this Agreement.
In addition, the Trust shall not commingle its assets with those of
any other entity. The Trust shall maintain its financial and accounting books
and records separately from those of any other entity. Except as expressly set
forth herein, the Trust shall not pay any indebtedness, operating expenses or
liabilities of any other entity. The Trust shall maintain appropriate minutes or
other records of all appropriate actions and shall maintain its offices separate
from the offices of the Depositor and the Servicer.
SECTION 4.2. ACTION BY DEPOSITOR WITH RESPECT TO CERTAIN Matters.
The Owner Trustee may not, except upon the occurrence of an Event of Servicing
Termination subsequent to the payment in full of the Notes and in accordance
with the written direction of the Insurer, if an Insurer Default shall not have
occurred and be continuing, or the Depositor (with the consent of the Insurer,
provided that an Insurer Default shall not have occurred and be continuing) (i)
remove the Servicer pursuant to 5.02 of the Servicing Agreement, (ii) appoint a
successor Servicer pursuant to 5.02 of the Servicing Agreement, (iii) remove the
Administrator pursuant to Section 9 of the Administration Agreement, (iv)
appoint a successor Administrator pursuant to Section 9 of the Administration
Agreement or (v) sell the Contracts after the termination of the Indenture,
except as expressly provided in the Transaction Documents.
SECTION 4.3. ACTION BY OWNER TRUSTEE WITH RESPECT TO BANKRUPTCY.
(a) The Trust shall not, without the prior written consent of the
Owner Trustee, (i) institute any proceedings to adjudicate the Trust as bankrupt
or insolvent, (ii) consent to the institution of bankruptcy or insolvency
proceedings against the Trust, (iii) file a petition seeking or consenting to
reorganization or relief under any applicable federal or state law relating to
bankruptcy with respect to the Trust, (iv)
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consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Trust or a substantial part of
its property, (v) make any assignment for the benefit of the Trust's creditors,
(vi) admit in writing its inability to pay its debts generally as they become
due, or (vii) take any action in furtherance of any of the foregoing (any of the
above foregoing actions, a "Bankruptcy Action"). In considering whether to give
or withhold written consent to any Bankruptcy Action by the Trust, the Owner
Trustee, with the consent of the Depositor (hereby given, which consent the
Depositor believes to be in the Trust's and its best interests), shall consider
the interest of the Noteholders and the Insurer in addition to the interests of
the Trust and whether the Trust is insolvent. The Owner Trustee shall have no
duty to give such written consent to Bankruptcy Action by the Trust if the Owner
Trustee shall not have been furnished (at the expense of the Person that
requested that such letter be furnished to the Owner Trustee) a letter from an
independent accounting firm of national reputation stating that in the opinion
of such firm the Trust is then insolvent.
The Owner Trustee (as such and in its individual capacity) shall not
be personally liable to any Person on account of the Owner Trustee's good faith
reliance on the provisions of this Section or in connection with the Owner
Trustee's giving prior written consent to Bankruptcy Action by the Trust in
accordance herewith, or withholding such consent, in good faith, and neither the
Trust nor the Depositor shall have any claim for breach of fiduciary duty or
otherwise against the Owner Trustee (as such and in its individual capacity) for
giving or withholding its consent to any such Bankruptcy Action.
(b) The parties hereto stipulate and agree that the Depositor has no
power to commence any Bankruptcy Action on the part of the Trust or to direct
the Owner Trustee to take any Bankruptcy Action on the part of the Trust. To the
extent permitted by applicable law, the consent of the Insurer (provided that no
Insurer Default has occurred and is continuing) and the Indenture Trustee shall
be obtained prior to taking any Bankruptcy Action by the Trust.
(c) The provisions of this Section do not constitute an
acknowledgment or admission by the Trust, the Owner Trustee, or any creditor
of the Trust that the Trust is eligible to be a debtor under the United
States Bankruptcy Code, 11 U.S.C.ss.ss. 101 et. Seq., as amended.
SECTION 4.4. RESTRICTIONS ON INSURER'S POWER. Neither the Insurer
nor the Depositor shall direct the Owner Trustee to take or refrain from taking
any action if such action or inaction would be contrary to any obligation of the
Trust or the Owner Trustee under this Agreement or any of the other Transaction
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Documents or would be contrary to Section 2.3, nor shall the Owner Trustee be
obligated to follow any such direction, if given.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1. ESTABLISHMENT OF DEPOSITOR ACCOUNT. Pursuant to Section
3.1(c) of the Sale and Allocation Agreement, there shall be maintained in the
name of the Trust at an Eligible Institution a segregated trust account
designated as the Depositor Account (the "DEPOSITOR ACCOUNT"). The Depositor
Account shall be held in trust for the benefit of the Depositor. Except as
expressly provided in Section 3.1 (c) of the Sale and Allocation Agreement, the
Depositor Account shall be under the sole dominion and control of the Trust. All
monies deposited from time to time in the Depositor Account pursuant to the Sale
and Allocation Agreement or the Indenture shall be applied as provided in this
Agreement, the Sale and Allocation Agreement and the Indenture.
SECTION 5.2. APPLICATION OF TRUST FUNDS. (a) On each Payment Date
the Paying Agent shall distribute all amounts on deposit in the Depositor
Account to the Depositor.
In addition, the Paying Agent shall promptly remit to the Depositor
any amounts received from the Indenture Trustee for the benefit of the Depositor
in respect of excess amounts from the Reserve Account pursuant to Section 3.6(d)
of the Sale and Allocation Agreement.
(b) In the event that any withholding tax is imposed on any payment
(or allocations of income) by the Trust to the Depositor, such tax shall reduce
the amount otherwise distributable to the Depositor in accordance with this
Section 5.2. The Owner Trustee and each Paying Agent is hereby authorized and
directed to retain (as directed in writing by the Administrator) from amounts
otherwise distributable to the Depositor sufficient funds for the payment of any
such withholding tax that is legally owed by the Trust (but such authorization
shall not prevent the Trust from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings). The amount of any withholding tax imposed with
respect to the Depositor shall be treated as cash distributed to the Depositor
at the time it is withheld by the Trust and remitted to the appropriate taxing
authority. If there is a possibility that withholding tax is payable with
respect to a distribution, the Owner Trustee or the Paying Agent may, in its
sole discretion, withhold such amounts in accordance with this Section 5.2. If
the Depositor wishes to apply for a refund of
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any such withholding tax, the Owner Trustee shall reasonably cooperate with the
Depositor in making such claim so long as the Depositor agrees to reimburse the
Owner Trustee, as such and in its individual capacity, for any expenses
incurred.
SECTION 5.3. METHOD OF PAYMENT. Subject to Section 9.1(c),
distributions required to be made to the Depositor on any Payment Date shall be
made to the Depositor by wire transfer, in immediately available funds, to the
account (reasonably identified to the Paying Agent in writing) of the Depositor
at a bank or other entity having appropriate facilities therefor.
Notwithstanding the foregoing, the final distribution in respect of the
Depositor's Certificate (whether on the Final Note Payment Date or otherwise)
will be payable only upon presentation and surrender of the Depositor's
Certificate at the office of the Paying Agent.
SECTION 5.4. NO SEGREGATION OF MONIES; NO INTEREST. Subject to
Sections 5.1 and 5.2, monies received by the Owner Trustee hereunder need not be
segregated in any manner except to the extent required by law, the Indenture or
the Sale and Allocation Agreement and may be deposited under such general
conditions as may be prescribed by law, and the Owner Trustee shall not be
personally liable for any interest thereon.
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE
SECTION 6.1. GENERAL AUTHORITY. The Owner Trustee shall have power
and authority and is hereby authorized and empowered in the name and on behalf
of the Trust to execute and deliver the Transaction Documents to which the Trust
is to be a party and each certificate or other document attached as an exhibit
to or contemplated by the Transaction Documents to which the Trust is to be a
party and any amendment or other agreement, in each case in such form as the
Depositor shall approve, as evidenced conclusively by the Owner Trustee's
execution thereof and the Depositor's execution of this Agreement, and to direct
the Indenture Trustee to authenticate and deliver Notes in the aggregate
principal amount of $167,969,000. In addition to the foregoing, the Owner
Trustee shall have power and authority and is hereby authorized and empowered in
the name and on behalf of the Trust to take all actions required of or permitted
to be taken by the Trust pursuant to the Transaction Documents. The Owner
Trustee shall have power and authority and is hereby authorized and empowered in
the name and on behalf of the Trust from time to time to take such action on
behalf of the Trust as is permitted by the Transaction Documents and which the
Servicer or the Administrator recommends with respect to the Transaction
Documents.
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SECTION 6.2. GENERAL DUTIES. It shall be the duty of the Owner
Trustee to perform (or cause to be performed) all of the duties expressly
required to be performed by the Owner Trustee under this Agreement and the other
Transaction Documents to which the Trust is a party. Notwithstanding the
foregoing, the Owner Trustee shall be deemed to have discharged its duties and
responsibilities hereunder and under the Transaction Documents to the extent the
Administrator or any other Person is required in the Administration Agreement or
any other Transaction Document to perform any act or to discharge such duty of
the Owner Trustee or the Trust hereunder or under any other Transaction
Document, and the Owner Trustee shall not be held personally liable for the
default or failure of the Administrator or any other Person to carry out its
obligations under the Administration Agreement or any other Transaction
Document.
SECTION 6.3. ACTION UPON INSTRUCTION.
(a) Subject to Article IV, and in accordance with the terms of the
Transaction Documents, the Depositor may, by written instruction, direct the
Owner Trustee in the management of the Trust.
(b) Notwithstanding any other provision herein or in any other
Transaction Document, the Owner Trustee shall not be required to take any action
hereunder or under any Transaction Document if the Owner Trustee shall have
reasonably determined, or shall have been advised by counsel, that such action
is likely to result in personal liability on the part of the Owner Trustee or is
contrary to the terms hereof or of any other Transaction Document or is
otherwise contrary to law.
(c) Whenever the Owner Trustee is unable to decide between
alternative courses of action permitted or required by the terms of this
Agreement or any other Transaction Document, the Owner Trustee shall promptly
give notice (in such form as shall be appropriate under the circumstances) to
the Insurer (so long as no Insurer Default has occurred and is continuing)and
the Depositor requesting instruction as to the course of action to be adopted,
and to the extent the Owner Trustee acts in good faith in accordance with any
written instruction of the Insurer or the Depositor received, the Owner Trustee
shall not be personally liable on account of such action to any Person. If the
Owner Trustee shall not have received appropriate written instruction within ten
(10) days of such notice (or within such shorter period of time as reasonably
may be specified in such notice or may be necessary under the circumstances) it
may, but shall be under no duty to, take or refrain from taking such action as
it shall deem to be in the best interests of the Depositor and shall have no
personal liability to any Person for such action or inaction.
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(d) In the event the Owner Trustee is unsure as to the application
of any provision of this Agreement or any other Transaction Document or any such
provision is ambiguous as to its application, or is, or appears to be, in
conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Owner Trustee or is silent or is
incomplete as to the course of action that the Owner Trustee is required or
permitted to take with respect to a particular set of facts, the Owner Trustee
may give notice (in such form as shall be appropriate under the circumstances)
to the Insurer (so long as no Insurer Default has occurred and is continuing)
and the Depositor requesting instruction and, to the extent that the Owner
Trustee acts or refrains from acting in good faith in accordance with any such
instruction received, the Owner Trustee shall not be personally liable, on
account of such action or inaction, to any Person. If the Owner Trustee shall
not have received appropriate instruction within ten (10) days of such notice
(or within such shorter period of time as reasonably may be specified in such
notice or may be necessary under the circumstances) it may, but shall be under
no duty to, take or refrain from taking such action as it shall deem to be in
the best interests of the Depositor and shall have no personal liability to any
Person for such action or inaction.
SECTION 6.4. NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT OR IN
INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to manage,
make any payment with respect to, register, record, sell, dispose of or
otherwise deal with the Owner Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, this Agreement or any document
contemplated hereby, except the duties expressly required to be performed by the
Owner Trustee by the terms of this Agreement or in any document or written
instruction received by the Owner Trustee pursuant to Section 6.3, and no
implied duties or obligations shall be read into this Agreement or any other
Transaction Document against the Owner Trustee. The Owner Trustee shall have no
responsibility for filing any financing or continuation statement in any public
office at any time or otherwise to perfect or maintain the perfection of any
security interest or lien or to prepare or file any Securities and Exchange
Commission filing for the Trust or to record this Agreement or any other
Transaction Document. The Owner Trustee, in its individual capacity, shall,
however, at its own cost and expense, promptly take all action as may be
necessary to discharge any lien (other than the lien of the Indenture) on any
part of the Owner Trust Estate that results from actions by, or claims against,
the Owner Trustee, in its individual capacity, that are not related to the
ownership or the administration of the Owner Trust Estate or the Trust or the
Owner Trustee's serving as trustee of the Trust.
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SECTION 6.5. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Owner Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the Owner
Trustee pursuant to this Agreement, (ii) in accordance with the other
Transaction Documents to which the Trust or the Owner Trust is a party and (iii)
in accordance with any document or instruction delivered to the Owner Trustee
pursuant to Section 6.3.
SECTION 6.6. RESTRICTIONS. The Owner Trustee shall not take any
action (i) that is inconsistent with the purposes of the Trust set forth in
Section 2.3 or (ii) that, to the actual knowledge of the Owner Trustee, would
(A) affect the treatment of the Notes as indebtedness for federal income or
Delaware income or franchise tax purposes, (B) be deemed to cause a taxable
exchange of the Notes for federal income or Delaware income or franchise tax
purposes or (C) cause the Trust or any portion thereof to be taxable as an
association or publicly traded partnership taxable as a corporation for federal
income or Delaware income or franchise tax purposes.
The Depositor shall not direct the Owner Trustee to take action that would
violate the provisions of this Section 6.6.
ARTICLE VII
REGARDING THE OWNER TRUSTEE
SECTION 7.1. ACCEPTANCE OF TRUSTS AND DUTIES. The Owner Trustee
accepts the trusts hereby created and agrees to perform the duties expressly
required to be performed by the Owner Trustee hereunder. The Owner Trustee also
agrees to disburse all monies actually received by it constituting part of the
Owner Trust Estate upon the terms of this Agreement and the other Transaction
Documents to which the Trust is a party. The Owner Trustee shall not be
personally answerable or accountable hereunder or under any other Transaction
Document under any circumstances, except for liability to the Trust and the
Depositor (i) for its own willful misconduct, bad faith or gross negligence or
(ii) in the case of the breach of any representation or warranty contained in
Section 7.3 expressly made by the Owner Trustee in its individual capacity. In
particular, but not by way of limitation (and subject to the exceptions set
forth in the preceding sentence):
(i) the Owner Trustee shall not be personally liable for any
error of judgment made in good faith by the Owner Trustee unless it is
proved that the Owner Trustee was grossly negligent in ascertaining the
pertinent facts;
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(ii) the Owner Trustee shall not be personally liable with
respect to any action taken or omitted to be taken in good faith by it in
accordance with the provisions of this Agreement at the instructions of
the Indenture Trustee, the Insurer, the Depositor, the Administrator or
the Servicer or other instructions given in accordance with this Agreement
or any other Transaction Document;
(iii) no provision of this Agreement or any other Transaction
Document shall require the Owner Trustee to expend or risk its own funds
or otherwise incur personal financial liability in the performance of any
of its duties or in the exercise of any of its rights or powers hereunder
or under any other Transaction Document if the Owner Trustee shall have
reasonable grounds to believe that repayment of such funds or indemnity
satisfactory to it in its individual capacity against such risk or
liability is not reasonably assured or provided to it in its individual
capacity;
(iv) under no circumstances shall the Owner Trustee be
personally liable for indebtedness evidenced by or arising under any of
the Transaction Documents, the Depositor's Certificate, the Notes or other
indebtedness of the Trust, including the principal of and interest on the
Notes;
(v) the Owner Trustee shall not be responsible or personally
liable for or in respect of the validity or sufficiency of this Agreement
or for the due execution hereof by the Depositor or for the form,
character, genuineness, sufficiency, value or validity of any of the Owner
Trust Estate or Transaction Documents and the Owner Trustee shall in no
event assume or incur any personal liability, duty, or obligation to any
Noteholder, the Depositor or any other Person other than as expressly
provided for herein;
(vi) the Owner Trustee shall not be personally liable for the
default or misconduct of the Servicer, the Administrator, the Depositor,
the Indenture Trustee or any other Person under any of the Transaction
Documents or otherwise, and the Owner Trustee shall have no duty to
monitor or supervise any other trustee hereunder, if any, the Certificate
Registrar (if other than the Owner Trustee), the Administrator, the Paying
Agent (if other than the Owner Trustee), any agent or independent
contractor of the Trust, any delegatee of any trustee or any other Person
and the Owner Trustee (as such in its individual capacity) shall have no
obligation or liability to perform the obligations of the Trust under this
Agreement or the other Transaction Documents that are not expressly
required to be performed by the Owner Trustee or that are required to be
performed by
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the Administrator under the Administration Agreement, the Servicer under
the Sale and Allocation Agreement or the Indenture Trustee under the
Indenture;
(vii) the Owner Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement or any other
Transaction Document or to institute, conduct or defend any litigation
under this Agreement or otherwise or in relation to this Agreement or any
other Transaction Document at the request, order or direction of the
Depositor or otherwise, unless the Owner Trustee (as such and in its
individual capacity) has been offered security or indemnity satisfactory
to it against the costs, expenses and liabilities that may be incurred by
the Owner Trustee therein or thereby. The right of the Owner Trustee to
perform any discretionary act enumerated in this Agreement or any other
Transaction Document shall not be construed as a duty, and the Owner
Trustee shall not be answerable or liable in its individual capacity
except to the Trust or the Depositor for its own willful misconduct, bad
faith or gross negligence in the performance of any such act;
(viii) under no circumstances shall the Owner Trustee be
personally liable for any representation, warranty, covenant, agreement or
indebtedness of the Trust; and
(ix) in any capacity in which it may act (or refrain from
acting) pursuant to this Agreement or the other Transaction Documents, the
Owner Trustee (as such and in its individual capacity) shall be entitled
to the benefits of the Trust Agreement.
SECTION 7.2 FURNISHING OF DOCUMENTS. The Owner Trustee shall furnish
to the Depositor promptly upon receipt of a written request therefor, duplicates
or copies of all reports, notices, requests, demands, certificates, financial
statements and any other instruments furnished to the Owner Trustee under the
Transaction Documents.
SECTION 7.3. REPRESENTATIONS AND WARRANTIES. The Owner Trustee, in
its individual capacity, hereby represents and warrants to the Depositor that:
(i) it is a banking corporation duly organized and validly
existing in good standing under the laws of the State of Delaware and has
all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement;
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(ii) it has taken all necessary action to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to
execute and deliver this Agreement on its behalf; and
(iii) neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will constitute any default under its charter documents or by-laws or any
indenture, mortgage, contract, agreement or instrument to which it is a
party or by which any of its properties may be bound.
SECTION 7.4. RELIANCE; ADVICE OF COUNSEL.
(a) The Owner Trustee may rely upon, shall be fully protected in
relying upon, and shall incur no personal liability to anyone in acting upon any
signature, instrument, notice, resolution, request, consent, order, certificate,
report, opinion, bond or other document or paper believed by it to be genuine
and believed by it to be signed by an appropriate Person. The Owner Trustee may
conclusively rely (and shall be fully protected in relying) upon an Opinion of
Counsel. The Owner Trustee may accept a certified copy of a resolution of the
board of directors or other governing body of any Person as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the method of the determination
of which is not specifically prescribed herein, the Owner Trustee may for all
purposes hereof rely on a certificate, signed by the president or any vice
president or by the treasurer or other authorized officer of an appropriate
Person, as to such fact or matter and such certificate shall constitute full
protection to the Owner Trustee (as such and in its individual capacity) for any
action taken or omitted to be taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under this Agreement or the other
Transactions Documents, the Owner Trustee (i) may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them, and
the Owner Trustee shall not be personally liable for the conduct or misconduct
of such agents or attorneys if such agents or attorneys shall have been selected
by the Owner Trustee with reasonable care and (ii) may consult with counsel,
accountants and other skilled Persons to be selected with reasonable care and
employed by it. The Owner Trustee shall not be personally liable for anything
done, suffered or omitted in good faith by it in
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accordance with the written opinion or advice of any such counsel, accountants
or other such Persons.
SECTION 7.5. NOT ACTING IN INDIVIDUAL CAPACITY. Except as provided
in this Article VII, in accepting the trusts hereby created, Bankers Trust
(Delaware), acts solely as Owner Trustee hereunder and not in its individual
capacity, and all Persons having any claim against the Owner Trustee by reason
of the transactions contemplated by this Agreement or any other Transaction
Document shall look only to the Owner Trust Estate for payment or satisfaction
thereof.
SECTION 7.6. OWNER TRUSTEE NOT LIABLE FOR CONTRACTS. The recitals
contained herein and in the Depositor's Certificate (other than the signature
and countersignature of the Owner Trustee on the Depositor's Certificate) shall
be taken as the statements of the Depositor, and the Owner Trustee assumes no
personal responsibility for the correctness thereof. The Owner Trustee (as such
or in its individual capacity) makes no representations as to the validity or
sufficiency of this Agreement, any other Transaction Document or the Depositor's
Certificate (other than the signature and countersignature of the Owner Trustee
on the Depositor's Certificate) or the Notes, or of any Contract or related
documents. The Owner Trustee shall at no time have any responsibility or
personal liability for or with respect to the legality, validity and
enforceability of any Contract, or the perfection and priority of any security
interest created by any Contract in any Financed Vehicle or the maintenance of
any such perfection and priority, or for or with respect to the sufficiency of
the Owner Trust Estate or its ability to generate the payments to be distributed
to the Depositor under this Agreement or the Noteholders under the Indenture,
including, without limitation, the existence, condition and ownership of any
Financed Vehicle, the existence and enforceability of any insurance thereon, the
existence and contents of any Contract on any computer or other record thereof,
the validity of the assignment of any Contract to the Trust or any intervening
assignment, the completeness of any Contract, the performance or enforcement of
any Contract, the compliance by the Depositor or the Servicer with any warranty
or representation made under any Transaction Document or in any related
document, or the accuracy of any such warranty or representation or any action
of the Indenture Trustee, the Administrator or the Servicer or any subservicer
or any other Person taken in the name of the Owner Trustee.
SECTION 7.7. OWNER TRUSTEE MAY OWN NOTES. The Owner Trustee, in its
individual or any other capacity, may become the owner or pledgee of Notes and
may deal with the Depositor, the Servicer, the Administrator and the Indenture
Trustee in banking transactions with the same rights as it would have if it were
not Owner Trustee.
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ARTICLE VIII
COMPENSATION OF OWNER TRUSTEE
SECTION 8.1. OWNER TRUSTEE'S FEES AND EXPENSES. The Owner Trustee in
its individual capacity shall receive as compensation for its services hereunder
such fees as have been separately agreed upon before the date hereof between the
Depositor and the Owner Trustee in its individual capacity in accordance with
the priorities set forth in Section 3.5(d) of the Sale and Allocation Agreement,
and the Owner Trustee shall be reimbursed in its individual capacity by the
Depositor in accordance with the priorities set forth in Section 3.5(d) of the
Sale and Allocation Agreement for its other reasonable expenses hereunder,
including the reasonable compensation, expenses and disbursements of such
agents, representatives, experts and counsel as the Owner Trustee may employ in
connection with the exercise and performance of its rights, powers, authorities
and duties.
SECTION 8.2. INDEMNIFICATION. The Depositor shall be liable as prime
obligor for, and shall indemnify, from funds available to it pursuant to Section
3.5(d)(x) of the Sale and Allocation Agreement, the Owner Trustee in its
individual capacity and its successors, assigns, directors, officers, employees,
agents and servants (collectively, the "INDEMNIFIED PARTIES") from and against,
any and all liabilities, obligations, losses, damages, taxes, claims, actions
and suits, and any and all reasonable costs, expenses and disbursements
(including reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "EXPENSES") which may at any time be imposed on, incurred by, or
asserted against the Owner Trustee in its individual capacity or any other
Indemnified Party in any way relating to or arising out of this Agreement, the
other Transaction Documents, the Owner Trust Estate, the administration of the
Owner Trust Estate or the action or inaction of the Owner Trustee hereunder;
PROVIDED, HOWEVER, that the Depositor shall not be liable for or required to
indemnify an Indemnified Party from and against Expenses arising or resulting
from any of the matters described in clauses (i) and (ii) of the third sentence
of Section 7.1. Neither the Owner Trustee nor the Depositor will in any event be
entitled to make any claim upon the Trust Property for the payment or
reimbursement of any Expenses. The indemnities contained in this Section 8.2 and
the other benefits, protections and immunities of the Owner Trustee (as such and
in its individual capacity) under this Agreement shall survive the resignation
or termination of the Owner Trustee and the termination of this Agreement.
Notwithstanding the foregoing Section 8.2, Expenses shall be paid pursuant to
this Section 8.2 solely from amounts in excess of funds necessary to pay all
outstanding interest and principal due to the Noteholders in
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accordance with the priorities set forth in Sections 3.5(d) of the Sale and
Allocation Agreement and shall in any case be nonrecourse to the Depositor and,
to the extent funds are not so available to pay any Expenses when due and owing,
the claims relating thereto shall not constitute a claim (as defined in Section
101 of Title 11 of the United States Bankruptcy Code) against the Depositor but
shall continue to accrue. Each party hereto agrees that the payment of any claim
of any such party in respect of Expenses shall be subordinated to the payment in
full of all outstanding interest and principal due to the Noteholders.
SECTION 8.3. PAYMENTS TO THE OWNER TRUSTEE. Any amounts paid to the
Owner Trustee in its individual capacity pursuant to this Article VIII shall be
deemed not to be a part of the Owner Trust Estate immediately after such
payment.
ARTICLE IX
TERMINATION
SECTION 9.1. TERMINATION OF TRUST AGREEMENT.
(a) The Trust shall dissolve at the earlier of (i) the payment to
the Noteholders, the Depositor and the Insurer of all amounts required to be
paid to them pursuant to the terms of the Indenture, the Sale and Allocation
Agreement, the Insurance Agreement and Article V herein or (ii) the Payment Date
next succeeding the month which is one year after the maturity or other
liquidation of the last Contract and the disposition of any amounts received
upon liquidation of any property remaining in the Trust; PROVIDED, HOWEVER, in
each case, that the Policy shall have been terminated in accordance with its
terms and returned to the Insurer for cancellation. The bankruptcy, liquidation,
dissolution, death or incapacity of the Depositor shall not operate to terminate
or dissolve this Agreement or the Trust, entitle the Depositor's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of all or any part of the
Trust or Owner Trust Estate or otherwise affect the rights, obligations and
liabilities of the parties hereto.
(b) The Depositor shall not be entitled to revoke or terminate
the Trust.
(c) Notice of any dissolution of the Trust, specifying the Payment
Date upon which the Depositor shall surrender the Depositor's Certificate to the
Paying Agent for payment of the final distribution and cancellation, shall be
given by the Owner Trustee by letter to the Depositor mailed within five (5)
Business Days of receipt by the Owner Trustee of written notice of such
dissolution from the Servicer, stating (i) the Payment Date upon or with respect
to which final payment of the
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Depositor's Certificate shall be made upon presentation and surrender of the
Depositor's Certificate at the office of the Paying Agent therein specified,
(ii) the amount of any such final payment and (iii) that the Record Date
otherwise applicable to such Payment Date is not applicable, payments being made
only upon presentation and surrender of the Depositor's Certificate at the
office of the Paying Agent therein specified. The Owner Trustee shall give such
notice to the Certificate Registrar (if other than the Owner Trustee) and the
Paying Agent at the time such notice is given to the Depositor. Upon
presentation and surrender of the Depositor's Certificate, the Paying Agent
shall cause to be distributed to the Depositor amounts distributable on such
Payment Date pursuant to Section 5.2. In the event that the Depositor shall not
surrender the Depositor's Certificate for cancellation within six (6) months
after the date specified in the above mentioned written notice, the Owner
Trustee shall give a second written notice to the Depositor to surrender the
Depositor's Certificate for cancellation and receive the final distribution with
respect thereto. If within one year after the second notice the Depositor's
Certificate shall not have been surrendered for cancellation, the Owner Trustee
may take appropriate steps, or may appoint an agent to take appropriate steps,
to contact the Depositor concerning surrender of the Depositor's Certificate and
the cost thereof shall be paid out of the funds and other assets that shall
remain subject to this Agreement. Subject to applicable escheat laws, any funds
remaining in the Trust after exhaustion of such remedies shall be distributed by
the Paying Agent to the Depositor.
(d) Upon the completion of the winding up of the Trust, the Owner
Trustee, at the written direction of the Administrator, shall cause the
Certificate of Trust to be canceled by filing a certificate of cancellation with
the Secretary of State in accordance with the provisions of Section 3810 of the
Business Trust Statute, and thereupon, this Agreement shall terminate.
SECTION 9.2. NOTIFICATION REGARDING BANKRUPTCY OF THE Depositor.
Promptly after the occurrence of any Insolvency Event with respect to the
Depositor, (i) the Depositor shall give the Owner Trustee, the Indenture Trustee
and the Insurer written notice of such Insolvency Event, (ii) the Owner Trustee
shall, upon receipt of such written notice from the Depositor, give prompt
written notice to the Indenture Trustee of the occurrence of such event and
(iii) the Indenture Trustee shall, upon receipt of such written notice from the
Depositor or the Owner Trustee, give prompt written notice to the Noteholders of
the occurrence of such event.
SECTION 9.3. PREPAYMENT.
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(a) If, as of the last day of any Collection Period, the Pool
Balance shall be less than or equal to 15% of the Initial Pool Balance, the
Depositor shall have the option to purchase on the following Payment Date the
Owner Trust Estate, other than the Collection Account, the Note Payment Account
and the Reserve Account. To exercise such option, the Depositor shall notify in
writing the Owner Trustee, the Indenture Trustee and the Insurer no later than
fifteen (15) days prior to the Payment Date on which such repurchase is to be
effected (the "PREPAYMENT DATE") and shall deposit into the Collection Account
on the Business Day preceding such Payment Date an amount equal to the aggregate
Purchase Amount for the Contracts, PLUS the appraised value of any other Trust
Property, other than the Collection Account, the Note Payment Account or the
Reserve Account, such value to be determined by an appraiser mutually agreed
upon by the Servicer, the Trust, the Indenture Trustee and the Insurer;
PROVIDED, HOWEVER, that the Depositor shall not be permitted to exercise such
option unless the amount to be deposited in the Collection Account pursuant to
this Section 9.3(a) is at least equal to the sum of the Note Balance PLUS all
accrued but unpaid interest (including any overdue interest) on the Notes PLUS
all amounts due the Insurer under the Insurance Agreement and the Policy. Upon
such payment, the Depositor shall succeed to and own all interests in and to the
Owner Trust Estate other than the Collection Account, the Note Payment Account
and the Reserve Account. Such payment amount, PLUS, to the extent necessary, all
amounts in the Collection Account, the Note Payment Account and the Reserve
Account, shall be used to make payments in full to the Noteholders and the
Insurer in the manner set forth in Article III of the Sale and Allocation
Agreement.
(b) If, at the time the Depositor exercises its purchase option
hereunder, the Depositor's long-term unsecured debt has a rating lower than
investment grade by the Rating Agencies, the Depositor shall deliver to the
Owner Trustee and the Indenture Trustee on such Payment Date (i) a letter from
an Independent investment bank or an Independent public accountant to the effect
that the price paid by the Depositor for the Owner Trust Estate other than the
Collection Account, the Note Payment Account and the Reserve Account at the time
of transfer pursuant to such purchase option represented a fair market price for
such assets or (ii) a letter from the Rating Agencies to the effect that no such
letter is required.
ARTICLE X
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
SECTION 10.1. ELIGIBILITY REQUIREMENTS FOR OWNER TRUSTEE. The Owner
Trustee shall at all times (i) be a Person satisfying the provisions of Section
3807(a) of the Business Trust Statute, (ii) be authorized to exercise corporate
trust
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powers, (iii) have a combined capital, surplus and undivided profits of at least
$50,000,000 and be subject to supervision or examination by federal or state
authorities and (iv) have (or have a parent that has) a long-term debt rating of
investment grade by each of the Rating Agencies or otherwise be acceptable to
each of the Rating Agencies and the Insurer (provided that no Insurer Default
shall have occurred and be continuing). If such Person shall publish reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purpose of this
Section 10.1 the combined capital and surplus of such Person 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 Owner Trustee shall cease to be
eligible in accordance with the provisions of this Section 10.1, the Owner
Trustee shall resign immediately in the manner and with the effect specified in
Section 10.2.
SECTION 10.2. RESIGNATION OR REMOVAL OF OWNER TRUSTEE. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Administrator and the Insurer. Upon
receiving such notice of resignation, the Administrator shall promptly appoint a
successor Owner Trustee, with the consent of the Insurer, by written instrument,
in duplicate, one copy of which instrument shall be delivered to the resigning
Owner Trustee and one copy to the successor Owner Trustee. If no successor Owner
Trustee shall have been so appointed and have accepted appointment within thirty
(30) days after the giving of such notice of resignation, the resigning Owner
Trustee may petition any court of competent jurisdiction at the expense of the
Administrator for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.1 and shall fail to resign after
written request therefor by the Administrator, or if at any time the Owner
Trustee shall be legally unable to act, or shall be adjudged bankrupt or
insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, then the Administrator may remove the Owner
Trustee. If the Administrator shall remove the Owner Trustee under the authority
of the immediately preceding sentence, the Administrator shall promptly appoint
a successor Owner Trustee, with the consent of the Insurer, by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
removed Owner Trustee and one copy to the successor Owner Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to this Section
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10.2 shall not become effective until either (i) acceptance of appointment by
the successor Owner Trustee pursuant to Section 10.3 and payment of all amounts
owed to the outgoing Owner Trustee in its individual capacity or (ii) the Trust
has been dissolved pursuant to Section 9.1 hereof and all amounts received, if
any, in connection with the liquidation of the Trust shall have been distributed
to the Noteholders and the Depositor and all amounts owing to the Insurer have
been paid. The Administrator shall provide notice of such resignation or removal
of the Owner Trustee to the Indenture Trustee, the Depositor, the Noteholders
and each of the Rating Agencies.
SECTION 10.3. SUCCESSOR OWNER TRUSTEE. Any successor Owner Trustee
appointed pursuant to Section 10.2 shall execute, acknowledge and deliver to the
Administrator and to its predecessor Owner Trustee an instrument accepting such
appointment under this Agreement, and thereupon the resignation or removal of
the predecessor Owner Trustee shall become effective and such successor Owner
Trustee, without any further act, deed or conveyance, shall become fully vested
with all the rights, powers, duties and obligations of its predecessor under
this Agreement, with like effect as if originally named as Owner Trustee. The
predecessor Owner Trustee shall, upon payment of amounts owing to it in its
individual capacity, deliver to the successor Owner Trustee all documents,
statements and monies held by it under this Agreement, and the Administrator and
the predecessor Owner Trustee shall execute and deliver such instruments and do
such other things as may reasonably be required for fully and certainly vesting
and confirming in the successor Owner Trustee all such rights, powers, duties
and obligations.
No successor Owner Trustee shall accept appointment as provided in
this Section 10.3 unless, at the time of such acceptance, such successor Owner
Trustee shall be eligible pursuant to Section 10.1.
Any successor Owner Trustee appointed pursuant to this Section 10.3
shall file an amendment to the Certificate of Trust with the Secretary of State
reflecting the name and principal place of business of such successor in the
State of Delaware.
Upon acceptance of appointment by a successor Owner Trustee pursuant
to this Section 10.3, the Administrator shall mail notice of such appointment to
the Depositor, the Indenture Trustee, the Noteholders and the Rating Agencies.
If the Administrator shall fail to mail such notice within ten (10) days after
acceptance of appointment by the successor Owner Trustee, the successor Owner
Trustee shall cause such notice to be mailed at the expense of the
Administrator.
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SECTION 10.4. MERGER OR CONSOLIDATION OF OWNER TRUSTEE. (a) If the
Owner Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another Person, the
resulting, surviving or transferee Person without any further act shall be the
successor Owner Trustee; PROVIDED, HOWEVER, that such Person must be otherwise
qualified and eligible under Section 10.1. The Owner Trustee shall provide the
Rating Agencies with prior written notice of any such transaction.
(b) If at the time such successor or successors by consolidation, merger
or conversion to the Owner Trustee shall succeed to the trusts created by this
Agreement a Depositor's Certificate shall have been authenticated but not
delivered, any such successor to the Owner Trustee may adopt the certificate of
authentication of any predecessor trustee and deliver the Depositor's
Certificate so authenticated, and in case at that time the Depositor's
Certificate shall not have been authenticated, such successor to the Owner
Trustee may authenticate the Depositor's Certificate either in the name of any
predecessor trustee or in the name of the successor to the Owner Trustee. In all
such cases such certificate shall have the full force which the Depositor's
Certificate or this Agreement provide that the certificate of the Owner Trustee
shall have.
SECTION 10.5. APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
(a) Notwithstanding any other provisions of this Agreement, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Owner Trust Estate or any Financed Vehicle may at the time
be located, the Administrator and the Owner Trustee acting jointly shall have
the power and authority (with the consent of the Insurer, provided that no
Insurer Default shall have occurred and be continuing) and may execute and
deliver an instrument to appoint one or more Persons approved by the Owner
Trustee to act as co-trustee or co-trustees, jointly with the Owner Trustee, or
separate trustee or separate trustees, of all or any part of the Owner Trust
Estate, and to vest in such Person or Persons, in such capacity and for the
benefit of the Depositor, such title to the Owner Trust Estate, or any part
thereof, and, subject to the other provisions of this Section 10.5, such powers,
authority, duties, obligations, rights and trusts as the Administrator and the
Owner Trustee may consider necessary or desirable. If the Administrator shall
not have joined in such appointment within fifteen (15) days after the receipt
by it of a request so to do, the Owner Trustee alone shall have the power to
make such appointment. No co-trustee or separate trustee under this Agreement
shall be required to meet the terms of eligibility as a successor trustee under
Section 10.1 and no notice of the
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<PAGE>
appointment of any co-trustee or separate trustee shall be required under
Section 10.3.
(b) Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Owner Trustee shall be conferred or imposed upon and
exercised or performed by the Owner Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee shall not be authorized to act separately without the Owner
Trustee joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed
the Owner Trustee shall be incompetent or unqualified to perform such act
or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Owner Trust Estate or any portion
thereof in any such jurisdiction) shall be exercised and performed singly
by such separate trustee or co-trustee, but solely at the direction of the
Owner Trustee;
(ii) no trustee under this Agreement shall be personally liable
by reason of any act or omission of any other trustee under this
Agreement; and
(iii) the Administrator and the Owner Trustee acting jointly may
at any time accept the resignation of or remove any separate trustee or
co-trustee.
(c) Any notice, request or other writing given to the Owner Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article X. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Owner
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Owner Trustee. Each such instrument shall be filed with the Owner
Trustee and a copy thereof given to the Administrator.
(d) Any separate trustee or co-trustee may at any time constitute
the Owner Trustee its agent or attorney-in-fact with full power and authority,
to the extent permitted by law, to do any lawful act under or in respect of this
Agreement on its
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<PAGE>
behalf and in its name. If any separate trustee or co-trustee shall die, become
incapable of acting, resign or be removed, all of its estates, properties,
rights, remedies and trusts shall vest in and be exercised by the Owner Trustee,
to the extent permitted by law, without the appointment of a new or successor
trustee.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. SUPPLEMENTS AND AMENDMENTS.
(a) This Agreement may be amended from time to time by the Depositor
and the Owner Trustee in its individual capacity, with prior written notice to
the Rating Agencies and the Insurer, without the consent of any of the
Noteholders, and with the consent of the Insurer (if no Insurer Default shall
have occurred and be continuing) to cure any ambiguity, to correct or supplement
any provision herein that may be inconsistent with any other provision herein or
in the offering document used in connection with the initial sale of the Notes
or for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions in this Agreement; PROVIDED, HOWEVER, that (i)
such action shall not, as evidenced by an Opinion of Counsel satisfactory to the
Owner Trustee and the Indenture Trustee, adversely affect in any material
respect the interests of any Noteholder and (ii) an Opinion of Counsel shall be
furnished to the Owner Trustee and the Indenture Trustee to the effect that such
amendment (A) will not materially adversely affect the federal or any Applicable
Tax State income or franchise taxation of any outstanding Note or any Noteholder
and (B) will not cause the Trust to be taxable as a corporation for federal or
any Applicable Tax State income or franchise tax purposes.
(b) This Agreement may be amended from time to time by the Depositor
and the Owner Trustee in its individual capacity, with prior written notice to
the Rating Agencies and the Insurer, with the consent of the Insurer (if no
Insurer Default shall have occurred and be continuing) and with the consent of
the Holders (as defined in the Indenture) of Notes evidencing not less than 51%
of the Note Balance, for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Agreement or modifying
in any manner the rights of the Noteholders; PROVIDED, HOWEVER, that, subject to
the express rights of the Insurer under the Transaction Documents, no such
amendment shall (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, or change the allocation or priority of,
collections of payments on the Contracts or distributions that are required to
be made on any Note, or change any Note Rate, or (ii) reduce the aforesaid
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<PAGE>
percentage of the Note Balance required to consent to any such amendment,
without the consent of all the Noteholders affected thereby or (iii) adversely
affect the ratings of the Notes by the Rating Agencies without the consent of
the Holders (as defined in the Indenture) of Notes evidencing not less than 66
2/3% of the aggregate principal amount of the then outstanding Notes; and,
PROVIDED FURTHER, that (i) such action shall not, as evidenced by an Opinion of
Counsel satisfactory to the Owner Trustee and the Indenture Trustee, adversely
affect in any material respect the interests of any Noteholder and (ii) an
Opinion of Counsel shall be furnished to the Indenture Trustee and the Owner
Trustee to the effect that such amendment (A) will not materially adversely
affect the federal or any Applicable Tax State income or franchise taxation of
any outstanding Note or any Noteholder and (B) will not cause the Trust to be
taxable as a corporation for federal or any Applicable Tax State income or
franchise tax purposes.
(c) Promptly after the execution of any such amendment or consent,
the Owner Trustee shall furnish, at the expense of the Depositor, written
notification of the substance of such amendment or consent to the Indenture
Trustee and each of the Rating Agencies.
(d) It shall not be necessary for the consent of the Noteholders or
the Indenture Trustee pursuant to this Section 11.1 to approve the particular
form of any proposed amendment or consent, but it shall be sufficient if such
consent shall approve the substance thereof. The manner of obtaining such
consents (and any other consents provided for in this Agreement or in any other
Transaction Document) and of evidencing the authorization of the execution
thereof shall be subject to such reasonable requirements as the Owner Trustee
may prescribe.
(e) Promptly after the execution of any amendment to the Certificate
of Trust, the Owner Trustee shall file such amendment or cause such amendment to
be filed with the Secretary of State.
(f) The Owner Trustee may, but shall not be obligated to, enter into
any such amendment that affects the Owner Trustee's own rights, duties,
liabilities or immunities (as such or in its individual capacity) under this
Agreement or otherwise.
(g) Prior to the execution of any amendment to this Agreement or any
amendment to any other agreement to which the Trust is a party, the Owner
Trustee shall be entitled to receive and shall be fully protected in relying
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent in
this Agreement to the execution and delivery of such
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<PAGE>
amendment have been satisfied. Notwithstanding any other provision herein or
elsewhere, no amendment, supplement, waiver or consent of or with respect to any
other Transaction Document that affects any right, power, authority, duty,
benefit, protection, privilege, immunity or indemnity of the Owner Trustee (as
such or in its individual capacity) shall be binding on the Owner Trustee (as
such or in its individual capacity) unless the Owner Trustee (as such and in its
individual capacity) shall have expressly consented thereto in writing.
SECTION 11.2. NO LEGAL TITLE TO OWNER TRUST ESTATE IN THE DEPOSITOR.
The Depositor shall not have legal title to any part of the Owner Trust Estate.
The Depositor shall be entitled to receive distributions with respect to its
undivided beneficial interest therein only in accordance with Articles V and IX.
No transfer, by operation of law or otherwise, of any right, title or interest
of the Depositor in and to its beneficial interest in the Owner Trust Estate
shall operate to terminate or dissolve this Agreement, the Trust, or the trusts
hereunder or entitle any transferee to an accounting or to the transfer to it of
legal title to any part of the Owner Trust Estate.
SECTION 11.3. LIMITATION ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of the Owner Trustee (as such and in its
individual capacity), the Insurer, the Depositor, the Administrator, the
Servicer, the Indemnified Parties and, to the extent expressly provided herein,
the Indenture Trustee and the Noteholders, and nothing in this Agreement or the
Depositor's Certificate, whether express or implied, shall be construed to give
to any other Person any legal or equitable right, remedy or claim in the Owner
Trust Estate or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
SECTION 11.4. NOTICES. All demands, requests, directions,
instructions, notices and other communications under this Agreement shall be in
writing, personally delivered, sent by telecopier, overnight courier or mailed
by certified mail, return receipt requested, and shall be deemed to have been
duly given upon receipt (i) in the case of the Owner Trustee, at the Corporate
Trust Office, with a copy to Bankers Trust Company, 4 Albany Street, 10th Floor,
New York, New York 10006, Attention: Structured Finance Group(ii) in the case of
the Depositor, at the following address: 675 Bering Drive, Suite 710, Houston,
Texas 77057, (iii) in the case of the Indenture Trustee, at the following
address: Sixth Street and Marquette Avenue MAC N9311-161, Minneapolis, Minnesota
55479, Attention: Corporate Trust Services - Asset-Backed Administration, (iv)
in the case of Moody's, at the following address: Moody's Investors Service,
Inc., ABS Monitoring Department, 99 Church Street, New York, New York 10007, (v)
in the case of Standard & Poor's, at the following address: Standard & Poor's
Ratings Services, a division
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<PAGE>
of The McGraw-Hill Companies, Inc., 55 Water Street, 43rd Floor, New York, New
York 10041, Attention: Asset Backed Surveillance Department, and (vi) in the
case of the Insurer, at the following address: MBIA Insurance Corporation, 113
King Street, Armonk, New York 10504, Attention: Insured Portfolio Management,
Structured Finance.
SECTION 11.5. SEVERABILITY. If any provision of this Agreement or
the Depositor's Certificate shall be held for any reason whatsoever invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions of this Agreement and the Depositor's Certificate shall not
in any way be affected or impaired thereby.
SECTION 11.6. SEPARATE COUNTERPARTS. This Agreement may be executed
in any number of counterparts, each of which counterparts when so executed shall
be deemed to be an original, and all of which counterparts shall together
constitute but one and the same instrument.
SECTION 11.7. SUCCESSORS AND ASSIGNS. All covenants and agreements
in this Agreement shall be binding upon, and inure to the benefit of the
Depositor, the Insurer and the Owner Trustee (as such and in its individual
capacity) and its successors as herein provided.
SECTION 11.8. COVENANTS OF THE DEPOSITOR. The Depositor shall not at
any time institute against the Trust, or join in any institution against the
Trust of, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations relating to the
Notes, this Agreement or any of the other Transaction Documents.
SECTION 11.9. NO PETITION. The Owner Trustee (not in its individual
capacity but solely as Owner Trustee), by entering into this Agreement and the
Depositor, the Indenture Trustee and each Noteholder, by accepting the benefits
of this Agreement, hereby covenant and agree and shall be deemed to covenant and
agree that they will not at any time institute against or knowingly or
intentionally cooperate or encourage any other Person in instituting against,
the Depositor or the Trust, in any, bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, this Agreement or any of the other
Transaction Documents.
SECTION 11.10. HEADINGS. The Article and Section headings herein and
the Table of Contents are for convenience
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<PAGE>
only and shall not define or limit any of the terms or provisions hereof.
SECTION 11.11. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of Delaware and the obligations, rights
and remedies of the parties under this Agreement shall be determined in
accordance with such laws.
SECTION 11.12. AMENDMENT OF TRUST AGREEMENT. This Agreement amends,
restates and replaces in its entirety the Original Trust Agreement.
SECTION 11.13. OWNER TRUSTEE PRESUMPTION. For all purposes, the
Owner Trustee shall be entitled to presume (and shall be fully protected in
presuming) that no Insurer Default has occurred or exists unless a Responsible
Officer of the Owner Trustee has obtained actual knowledge or received written
notice to the contrary.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers, thereunto duly
authorized and duly attested, all as of the day and year first above written.
FIRST INVESTORS AUTO INVESTMENT CORP.,
as Depositor
By:______________________________
Name:
Title:
BANKERS TRUST (DELAWARE)
as Owner Trustee
By:______________________________
Name:
Title:
<PAGE>
STATE OF )
) ss. :
COUNTY OF )
The foregoing instrument was acknowledged before me this ____ day of
January, 2000, by ____________________, as ____________________ of FIRST
INVESTORS AUTO INVESTMENT CORP.
________________________
Notary Public in and for
the State of____________
[SEAL]
My commission expires: ____________
<PAGE>
STATE OF )
) ss. :
COUNTY OF )
The foregoing instrument was acknowledged before me this ____ day of
January, 2000, by ____________________, as ____________________ of BANKERS TRUST
(DELAWARE), a Delaware banking corporation.
________________________
Notary Public in and for
the State of ____________
[SEAL]
My commission expires: ____________
<PAGE>
EXHIBIT A
FORM OF DEPOSITOR'S CERTIFICATE
THIS DEPOSITOR'S CERTIFICATE OR ANY INTEREST HEREIN MAY NOT BE TRANSFERRED,
ASSIGNED, EXCHANGED OR CONVEYED.
FIRST INVESTORS AUTO OWNER TRUST 2000-A
DEPOSITOR'S CERTIFICATE
evidencing a beneficial interest in the property of the Trust, as defined below,
which property includes a pool of retail installment sales contracts secured by
new and used automobiles and light-duty trucks sold to the Trust by First
Investors Financial Services, Inc. The property of the Trust (other than the
Depositor Account and the proceeds thereof) has been pledged to the Indenture
Trustee pursuant to the Indenture to secure the payment of the Notes issued
thereunder.
(This Depositor's Certificate does not represent an interest in or obligation
of, First Investors Auto Investment Corp., Bankers Trust (Delaware), First
Investors Financial Services, Inc. or any of their respective affiliates,
except to the extent described below.)
THIS CERTIFIES THAT First Investors Auto Investment Corp. is the
registered owner of a beneficial interest in First Investors Auto Owner Trust
2000-A (the "Trust") formed by First Investors Auto Investment Corp., a
Delaware company (the "Depositor").
The Trust was created pursuant to a Trust Agreement, dated as of
January 12, 2000 (as amended, supplemented or otherwise modified and in effect
from time to time, the "Trust Agreement"), by and between the Depositor and
Bankers Trust (Delaware), as owner trustee (the "Owner Trustee"), a summary of
certain of the pertinent provisions of which is set forth below. To the extent
not otherwise defined herein, the capitalized terms used herein have the
meanings assigned to them in the Trust Agreement or the Sale and Allocation
Agreement, dated as of January 1, 2000 (as amended, supplemented or otherwise
modified and in effect from time to time, the "Sale and Allocation Agreement"),
by and among the Trust, the Indenture Trustee, the Depositor, First Investors
Financial Services, Inc., as seller (in such capacity, the "Seller"), and First
Investors Servicing Corporation, as servicer (the "Servicer"), as applicable.
A-1
<PAGE>
This certificate is the Depositor's Certificate. This Depositor's
Certificate is issued under and is subject to the terms, provisions and
conditions of the Trust Agreement, to which Trust Agreement the Depositor by
virtue of the acceptance hereof assents and by which the Depositor is bound. The
property of the Trust includes (i) the Contracts; (ii) all amounts received on
or in respect of the Contracts after the Cutoff Date (except interest received
which is accrued prior to the Cutoff Date); (iii) the Collection Account, the
Reserve Account and the Note Payment Account and all amounts, securities,
financial assets, investments and other property deposited in or credited to any
of the foregoing and all proceeds thereof; (iv) the security interests in the
Financed Vehicles; (v) any proceeds from claims on or refunds of premiums with
respect to physical damage, theft, credit life and credit disability insurance
policies and extended warranties relating to the Financed Vehicles or the
related Obligors; (vi) any Liquidation Proceeds; (vii) the Contract Files;
(viii) rights under the Servicing Agreement and the Sale and Allocation
Agreement to cause the Servicer and the Seller, respectively, to purchase
Contracts affected materially and adversely by breaches of the representations
and warranties of the Servicer made in the Servicing Agreement and (ix) all
present and future claims, demands, causes of action and chooses in action in
respect of any or all of the foregoing and all payments on or under and all
proceeds of every kind and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion thereof, voluntary or
involuntary, into cash or other liquid property, all cash proceeds, accounts,
accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of any and
every kind and other forms of obligations and receivables, instruments and other
property which at any time constitute all or part of or are included in the
proceeds of any of the foregoing. THE RIGHTS OF THE TRUST IN THE FOREGOING
PROPERTY OF THE TRUST (OTHER THAN THE DEPOSITOR ACCOUNT AND THE PROCEEDS
THEREOF) HAVE BEEN PLEDGED TO THE INDENTURE TRUSTEE TO SECURE THE PAYMENT OF THE
NOTES.
Under the Trust Agreement, there will be distributed on the
fifteenth day of each month or, if such fifteenth day is not a Business Day, the
next Business Day (each, a "Payment Date"), commencing on February 15, 2000, to
the Depositor such amount to be distributed to the Depositor in accordance with
the Indenture and Sale and Allocation Agreement on such Payment Date.
Notwithstanding the foregoing, following the occurrence and during the
continuation of an Event of Default under the Indenture which has resulted in an
acceleration of the Notes or following certain events of insolvency with respect
to the Depositor, no distributions will be made on the Depositor's Certificate
until all the Notes have been paid in full.
A-2
<PAGE>
THE HOLDER OF THIS DEPOSITOR'S CERTIFICATE ACKNOWLEDGES AND AGREES
THAT ITS RIGHTS TO RECEIVE DISTRIBUTIONS IN RESPECT OF THIS DEPOSITOR'S
CERTIFICATE ARE SUBORDINATED TO THE RIGHTS OF THE NOTEHOLDERS AS DESCRIBED IN
THE SALE AND ALLOCATION AGREEMENT, THE INDENTURE AND THE TRUST AGREEMENT.
It is the intent of the Depositor and the Servicer that, for
purposes of federal income, state and local income tax and any other income
taxes, the Trust will be treated as a "nonentity" under Treasury Regulation
Section 301.7701-3. The Depositor by acceptance of its interest in the
Depositor's Certificate agrees to such treatment and agrees to take no action
inconsistent with such treatment.
The Depositor, by its acceptance of a Depositor Certificate or any
beneficial interest therein, covenants and agrees and shall be deemed to
covenant and agree that the Depositor will not at any time institute against or
knowingly or intentionally cooperate or encourage any other Person in
instituting against the Trust, or join in any institution against the Trust, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceedings,
or other proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the Trust
Agreement or any of the other Transaction Documents (as defined in the Trust
Agreement).
Distributions on this Depositor's Certificate will be made as
provided in the Trust Agreement by the Paying Agent by wire transfer or check
mailed to the Depositor without the presentation or surrender of this
Depositor's Certificate or the making of any notation hereon. Except as
otherwise provided in the Trust Agreement and notwithstanding the above, the
final distribution on this Depositor's Certificate will be made after due notice
by the Owner Trustee of the pendency of such distribution and only upon
presentation and surrender of this Depositor's Certificate at the office or
agency maintained for the purpose by the Paying Agent.
Reference is hereby made to the further provisions of this
Depositor's Certificate set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set forth at this
place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Owner Trustee, or its authenticating
agent by manual signature, this Depositor's Certificate shall not entitle the
Depositor to any benefit under the Trust Agreement or the Sale and Allocation
Agreement or be valid for any purpose.
A-3
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This Depositor's Certificate shall be construed in accordance with
the laws of the State of Delaware, and the obligations, rights and remedies of
the parties hereunder shall be determined in accordance with such laws.
A-4
<PAGE>
In WITNESS WHEREOF, the Owner Trustee, on behalf of the Trust and not in
its individual capacity, has caused this Depositor's Certificate to be duly
executed.
FIRST INVESTORS AUTO OWNER TRUST 2000-A
By: Bankers Trust (Delaware)
not in its individual capacity but
solely as Owner Trustee
By:________________________________
Authorized Officer
OWNER TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is the Depositor's Certificate referred to in the
within-mentioned Trust Agreement.
Dated: [____________], 2000
BANKERS TRUST (DELAWARE)
not in its individual capacity
but solely as Owner Trustee
By:________________________ By:________________________
Authorized Officer as Authenticating Agent
A-5
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EXHIBIT B
B-1
EXHIBIT 10.65
SERVICING AGREEMENT
by and among
First Investors Auto Owner Trust 2000-A
as Issuer
Norwest Bank Minnesota, National Association
as Back-up Servicer and Indenture Trustee
First Investors Auto Investment Corp.
as Depositor
and
First Investors Servicing Corporation
as Servicer
Dated as of
January 1, 2000
<PAGE>
SERVICING AGREEMENT
This Servicing Agreement ("Servicing Agreement") is made as of the 1st
day of January, 2000, by and among First Investors Auto Owner Trust 2000-A, a
Delaware business trust, as issuer (the "Issuer"), Norwest Bank Minnesota,
National Association, a national banking association, as back-up servicer (the
"Back-up Servicer") and as indenture trustee (the "Indenture Trustee"), First
Investors Auto Investment Corp., a Delaware corporation, as the depositor (the
"Depositor"), and First Investors Servicing Corporation, a Delaware corporation,
as servicer ("the Servicer"). Capitalized terms used herein and not otherwise
defined shall have the meanings ascribed thereto in that certain Indenture of
even date herewith among the Issuer and the Indenture Trustee (hereafter as such
agreement may have been, or may from time to time be, amended, supplemented or
otherwise modified, the "Indenture").
PRELIMINARY STATEMENT
WHEREAS, pursuant to the Indenture, the Issuer has issued the Notes; and
WHEREAS, the Insurer has issued the Policy to provide for the full and
timely payment of all amounts of interest due on and principal (to the extent
the Note Balance exceeds the Pool Balance) of the Notes; and
WHEREAS, First Investors Financial Services, Inc. (the "Seller") has
acquired and will acquire certain Contracts secured by security interests in
Financed Vehicles; and
WHEREAS, pursuant to the Sale and Allocation Agreement of even date
herewith among the Seller, the Servicer, the Depositor, the Indenture Trustee,
and the Issuer (the "Sale and Allocation Agreement"), the Seller has absolutely
assigned Contracts to the Issuer; and
WHEREAS, pursuant to the Indenture, the Issuer has pledged, among other
things, the Contracts to the Indenture Trustee for the benefit of the
Noteholders and the Insurer; and
WHEREAS, pursuant to the terms of the Indenture, the Seller is obligated
to deliver or cause to be delivered to the Indenture Trustee, the documents to
be included in the Custodian Files, which are to be held by the Indenture
Trustee in its capacity as custodian pursuant to the terms of the Indenture; and
WHEREAS, the Issuer, the Indenture Trustee, the Back-up Servicer, the
Depositor and the Servicer desire to enter into this Servicing Agreement
pursuant to which the Servicer and the Back-up Servicer will perform the duties
as described herein.
NOW THEREFORE, in consideration of the covenants and conditions
contained in this Servicing Agreement, the parties, intending to be legally
bound, hereby agree as follows:
<PAGE>
ARTICLE I.
DEFINITIONS
1.01. DEFINED TERMS. Capitalized and defined terms used but not defined
in this Servicing Agreement shall have the respective meanings assigned to them
in the Indenture or the Sale and Allocation Agreement, unless the context
otherwise requires, and the definitions of such terms are equally applicable
both to the singular and plural forms of such terms and to the masculine,
feminine and neuter genders of such terms.
"BACK-UP SERVICING FEE" shall have the meaning set forth in
Section 2.08(a) hereof.
"COLLECTION ACCOUNT DEPOSITORY" shall mean the depository for the
Collection Account established pursuant to Section 3.1(a) of the Sale and
Allocation Agreement.
"COLLECTION POLICY" shall mean the Servicer's statement of
policies and procedures for the collection of Contracts substantially in the
form of Exhibit D to the Sale and Allocation Agreement, as amended and restated
from time to time with the consent of the Insurer and in accordance with the
Transaction Documents.
"CUSTODIAN" shall mean the Indenture Trustee in its capacity as
custodian of the Custodian Files.
"CUSTODIAN FILES" shall have the meaning set forth in Section
2.13 hereof.
"EVENT OF SERVICING TERMINATION" shall have the meaning set forth
in Section 5.01 hereof.
"EXTENSION" shall have the meaning set forth in Section 2.02(a)
hereof.
"FIFSGI" shall mean First Investors Financial Services Group,
Inc., a Texas corporation.
"INSURANCE POLICIES" means insurance policies covering the
Financed Vehicles or the Obligors, including VSI Insurance.
"LOCKBOX BANK" means First Union National Bank, or such other
bank chosen by the Servicer from time to time, with the prior consent of the
Insurer (if no Insurer Default shall have occurred and be continuing) and the
Indenture Trustee.
"MONTHLY SERVICER REPORT" shall mean the monthly report provided
by the Servicer as contemplated by Section 2.02(c) hereof.
"SERVICER FILES" shall have the meaning set forth in Section 2.15
hereof.
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"SUBSERVICER" shall have the meaning set forth in Section 2.01(g)
hereof.
"SUBSERVICING AGREEMENT" shall have the meaning set forth in
Section 2.01(g) hereof.
"SUCCESSOR SERVICER" shall mean the Back-up Servicer or any other
Eligible Servicer who succeeds to the authority, power, obligations and
responsibilities of the Servicer hereunder in accordance with the provisions of
Article V hereof.
"SUCCESSOR BACK-UP SERVICER" shall mean any Eligible Servicer who
succeeds to the authority, power, obligations and responsibilities of the
Back-up Servicer hereunder in accordance with the provisions of Article V
hereof.
ARTICLE II.
ADMINISTRATION AND SERVICING OF CONTRACTS
2.01. APPOINTMENT AND DUTIES OF THE BACK-UP SERVICER AND THE SERVICER.
(a) The Issuer hereby appoints Norwest Bank Minnesota, National
Association as Back-up Servicer and First Investors Servicing Corporation as
Servicer. The Back-up Servicer and the Servicer shall perform the services
required of each pursuant to the terms of this Servicing Agreement. In
performing their respective duties hereunder, the Back-up Servicer and Servicer
shall have full power and authority to do or cause to be done any and all things
in connection with such servicing and administration which either may deem
necessary or desirable, within the terms of this Servicing Agreement.
(b) As of the date of this Servicing Agreement, each of the
Back-up Servicer and the Servicer is, and shall remain, for so long as it is
acting as Back-up Servicer or Servicer, an Eligible Servicer.
Compensation and expense reimbursement payable to the Back-up
Servicer and Servicer under this Servicing Agreement shall be payable from the
amounts on deposit in the Collection Account pursuant to the priority of payment
set forth in Section 2.8 of the Indenture, and except as provided herein or in
the Indenture, none of the Issuer, the Insurer, the Indenture Trustee or the
Noteholders will have any liability to the Back-up Servicer or the Servicer with
respect thereto; provided, however, that the Issuer shall remain liable to the
extent of funds available pursuant to Section 2.8(a)(ix) of the Indenture (and
not from any other source) for any fees, expenses and indemnities due and
payable to the Servicer and any fees, expenses and indemnities due and payable
to the Back-up Servicer which have not been paid from the amounts on deposit in
the Collection Account.
(c) The Insurer, or if an Insurer Default has occurred and is
continuing, the Indenture Trustee or the Issuer, shall be entitled to terminate
the services of the Servicer or the Back-up Servicer under this Servicing
Agreement, upon the occurrence of an Event of Servicing
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Termination, in each case in accordance with the terms and conditions hereof;
provided, however, that in the event of termination of the Servicer, the Back-up
Servicer shall act directly as Servicer unless a different Successor Servicer is
appointed in accordance herewith and, with prior written notice to the Rating
Agencies, the Insurer shall direct the Issuer to enter into a servicing
agreement with such Successor Servicer (that shall be an Eligible Servicer)
acceptable to the Rating Agencies and the Insurer and which will be bound by the
terms of such servicing agreement. In the event of termination of the Back-up
Servicer or the Successor Servicer, the Insurer, or if an Insurer Default has
occurred and is continuing, the Indenture Trustee, the Issuer, or the Indenture
Trustee at the direction of Noteholders evidencing not less than 51% of the Note
Balance shall appoint a Successor Servicer or a Successor Back-up Servicer, as
the case may be, and shall direct the Issuer to enter into a servicing agreement
with a Successor Back-up Servicer (that shall be an Eligible Servicer) or
Servicer (that shall be an Eligible Servicer), as the case may be, which will be
bound by the terms of such servicing agreement.
(d) Other than as set forth in Section 7.16 below, this Servicing
Agreement shall be deemed to be among the Back-up Servicer, the Indenture
Trustee, the Servicer, the Depositor and the Issuer; the Insurer and the
Noteholders shall not be deemed parties hereto and neither the Insurer, the
Indenture Trustee nor the Noteholders shall have any obligations, duties or
liabilities with respect to the Back-up Servicer or the Servicer except as set
forth herein and in the Indenture. The Issuer has agreed that the Indenture
Trustee, in its name or (to the extent required by law) in the name of the
Issuer, may (but is not required to) enforce all rights of the Issuer and all
obligations of the Servicer and the Back-up Servicer under, and shall be
entitled to all benefits of, this Servicing Agreement for and on behalf of the
Noteholders and the Insurer, whether or not the Issuer is in default thereunder.
The Servicer, in making collections of Contract payments pursuant to Section
2.02 hereof, shall be acting as agent for the Indenture Trustee, and shall be
deemed to be holding such funds in trust on behalf of, and as agent for, the
Indenture Trustee.
(e) In the event the Back-up Servicer shall for any reason no
longer be acting as such (including by reason of an Event of Servicing
Termination as specified in Section 5.01 hereof), the Successor Back-up Servicer
shall thereupon assume all of the rights and obligations of the outgoing Back-up
Servicer under this Servicing Agreement. In such event, the Successor Back-up
Servicer shall be deemed to have assumed all of the outgoing Back-up Servicer's
interest herein and to have replaced the outgoing Back-up Servicer as a party to
this Servicing Agreement to the same extent as if this Servicing Agreement had
been assigned to the Successor Back-up Servicer, except that the outgoing
Back-up Servicer shall not thereby be relieved of any liability or obligations
on its part under this Servicing Agreement arising prior to such replacement.
The outgoing Back-up Servicer shall, at the reasonable expense of the Issuer
pursuant to the priority of payment set forth in Section 2.8 of the Indenture,
deliver to the Successor Back-up Servicer all documents and records relating to
this Servicing Agreement and the Contracts then being serviced hereunder and an
accounting of amounts collected and held by it and otherwise use its best
efforts to effect the orderly and efficient transfer of this Servicing Agreement
to the Successor Back-up Servicer. Compensation and expense reimbursement of the
outgoing Back-up Servicer shall be payable through the date that the outgoing
Back-up Servicer ceases to render services.
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(f) The Issuer shall, at its own expense, duly and punctually
perform and observe its obligations to the Back-up Servicer and the Servicer
under this Servicing Agreement in accordance with the terms hereof. In addition,
promptly following a request from the Indenture Trustee to do so and at the
Issuer's own expense, the Issuer shall take all such lawful action as the
Indenture Trustee (which shall so request if directed by Noteholders evidencing
not less than 51% of the Note Balance, with the consent of the Insurer, to do
so) may request to compel or secure the performance and observance by the
Back-up Servicer and the Servicer of each of its respective obligations to the
Issuer under or in connection with this Servicing Agreement, in accordance with
the terms hereof, and in effecting such request shall exercise any and all
rights, remedies, powers and privileges lawfully available to the Issuer under
or in connection with this Servicing Agreement to the extent and in the manner
directed by the Indenture Trustee, including, without limitation, the
transmission of notices of default on the part of the Back-up Servicer or the
Servicer hereunder and the institution of legal or administrative actions or
proceedings to compel or secure performance by the Back-up Servicer or the
Servicer of its respective obligations under this Servicing Agreement.
(g) The Servicer or the Back-up Servicer, if applicable, may
enter into one or more subservicing agreements (each, a "Subservicing
Agreement") with one or more Subservicers (each, a "Subservicer") for the
servicing and administration of certain of the Contracts; provided that, unless
the Insurer otherwise agrees in writing, the only servicing functions that may
be performed by Subservicers of the initial Servicer are (i) sending "welcome
letters" to new Obligors, (ii) sending payment coupons to each Obligor on a
monthly basis, (iii) receipt and posting of all payments received with respect
to the Contracts, (iv) tracking of Obligor compliance with physical damage
insurance, (v) repossessing Financed Vehicles, (vi) preparing Financed Vehicles
for sale and representing the Servicer throughout the related vehicle auction
process and (vii) other functions pursuant to any other Subservicing Agreement
approved in writing by the Insurer; provided, that entering into a Subservicing
Agreement shall not relieve the Servicer or the Back-up Servicer from any of
their respective obligations hereunder. References in this Servicing Agreement
to actions taken or to be taken by the Servicer in servicing the Contracts
include actions taken or to be taken by a Subservicer on behalf of the Servicer.
Each Subservicing Agreement will be upon such terms and conditions as are not
inconsistent with this Servicing Agreement and as the Servicer and the
Subservicer have agreed. The Servicer and a Subservicer may enter into
amendments thereto; provided, however, that any such amendments shall be
consistent with and not violate the provisions of this Servicing Agreement.
(h) The Back-up Servicer may be removed by the Insurer or, if an
Insurer Default has occurred and is continuing, by the Indenture Trustee, the
Issuer, or the Indenture Trustee at the direction of the Noteholders evidencing
not less than 51% of the Note Balance, with or without cause upon thirty days'
written notice to the Back-up Servicer; provided, however, that (A) such removal
may be made immediately and shall not require notice if: (i) the Back-up
Servicer shall consent to the appointment of a conservator, receiver or
liquidator in any insolvency, readjustment of
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<PAGE>
debt, marshalling of assets and liabilities, or similar proceedings of or
relating to the Back-up Servicer or relating to all or substantially all of its
property; or (ii) a decree or order of a court or agency or 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
Back-up Servicer, and such decree or order shall have remained in force
undischarged or unstayed for a period of 60 days; or (iii) the Back-up Servicer
shall become insolvent or admit in writing its inability to pay its debts
generally as they become due, file a petition to take advantage of any
applicable debtor relief laws, make an assignment for the benefit of its
creditors or voluntarily suspend payment of its obligations; or (iv) a petition
is filed against the Back-up Servicer seeking relief under any applicable debtor
relief laws of the United States or any state or other competent jurisdiction,
and such petition, order, judgment or decree shall have remained in force
undischarged or unstayed for a period of 60 days after its entry; and (B) such
removal shall not be effective unless and until a Successor Back-up Servicer is
appointed by the Insurer or, if an Insurer Default has occurred and is
continuing, by the Indenture Trustee at the direction of Noteholders evidencing
not less than 51% of the Note Balance; provided, that the Back-up Servicer may
petition a court of competent jurisdiction to appoint a Successor Back-up
Servicer if one is not chosen within 60 days.
2.02. COLLECTION OF CONTRACT PAYMENTS; DEFAULTED CONTRACTS; REPORTING
OBLIGATIONS.
(a) The Servicer shall be responsible for collection of payments
called for under the terms and provisions of the Contracts, as and when the same
shall become due. The Servicer, consistent with the standard of care set forth
in Section 2.18, shall service, manage, administer and make collections on the
Contracts on behalf of the Issuer and shall have full power and authority,
acting alone and/or through Subservicers as provided in Section 2.01(g), to do
any and all things which it may deem necessary or desirable in connection
therewith which are consistent with this Servicing Agreement. The Servicer may
extend the then-current maturity date of any Contract by one month (an
"Extension"); provided however, that (i) no Extension may be granted with
respect to any Contract unless at least six scheduled payments have been
received with respect to such Contract; (ii) Extensions may be granted in the
aggregate for no more than one month for each twelve months of the original term
of a Contract, and (iii) Extensions may be granted no more than twice for
periods of one month each during any consecutive 12-month period. In the event
that an Extension causes a Contract to remain outstanding on the Final Note
Payment Date, the Servicer shall purchase such Contract as of the last day of
the month preceding the Final Note Payment Date. In consideration of the
repurchase of such Contract hereunder, the Servicer shall remit the Purchase
Amount of such Contract in the manner specified in Section 3.4 of the Sale and
Allocation Agreement. The sole remedy of the Issuer, the Indenture Trustee, or
the Noteholders for any Extension that causes a Contract to remain outstanding
on the Final Note Payment Date shall be the repurchase thereof as provided
herein. The Servicer may in its discretion waive any late payment charge or any
other fees that may be collected in the ordinary course of servicing a Contract.
In no event shall the principal balance of a Contract be reduced, except in
connection with a settlement in the event the Contract becomes a Defaulted
Contract. The Servicer shall also enforce all rights of the Issuer under the
Originator Agreements including, but not limited to, the right to require an
Originator to repurchase Contracts for breaches of representations and
warranties made by the respective Originators.
(b) If the full amount of a scheduled payment due under a
Contract is not timely received, the Servicer shall make reasonable and
customary efforts to collect such Contract
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in accordance with this Servicing Agreement and the procedures set forth in the
Collection Policy. The Servicer shall use its best efforts, consistent with the
standard of care set forth in Section 2.18 hereof, to collect funds on a
Defaulted Contract; such collections shall be deposited into the Collection
Account no later than two Business Days following receipt thereof.
(c) The Servicer shall provide monthly reports substantially in
the form of Exhibit A-1 hereto, each under a certificate substantially in the
form of Exhibit A-2 hereto, to the Indenture Trustee. The Servicer shall also
provide, by mail and facsimile transmission, copies of such reports and
certificates to the Back-up Servicer, the Insurer, the Rating Agencies and any
other Persons identified on a list provided to the Servicer by the Issuer, as
such list may be amended from time to time, regarding (i) payments received from
or on behalf of the Obligors and deposited to the Collection Account (identified
in Section 3.03 hereof) representing collections with respect to the Contracts,
(ii) other amounts received with respect to the Contracts, including Liquidation
Proceeds or the proceeds of repurchases under the Sale and Allocation Agreement,
(iii) other matters relating to the Contracts including delinquencies,
repossessions and filing and payment of claims under Insurance Policies, (iv)
financial information used to calculate whether certain Events of Default have
occurred, and (v) other items reflected on Exhibit A-1. Such reports shall be
delivered to the parties specified above no later than the Determination Date
related to each Collection Period.
(d) The Back-up Servicer shall provide monthly reports to the
Indenture Trustee, and the Indenture Trustee shall provide copies of such
reports to the Rating Agencies, the Insurer, the Issuer and any other Persons
identified on a list provided to the Back-up Servicer by the Issuer, as such
list may be amended from time to time, substantially in the form of Exhibit B
hereto. Such report shall be dated as of the Determination Date for each Payment
Date and delivered to the Indenture Trustee on or before such Payment Date.
(e) The Servicer shall, upon request, promptly, but no later than
two Business Days after receipt of a request provide, or cause to be provided,
to the Back-up Servicer and the Insurer copies of all monthly bank statements,
notices, reports or other documents received from the Indenture Trustee and from
the Collection Account Depository regarding funds held in or transferred to or
from all applicable accounts.
(f) No later than the Determination Date related to each
Collection Period, the Servicer shall forward to the Back-up Servicer, via
reputable overnight courier or electronic transmission, a computer diskette in a
format mutually acceptable to the Servicer and the Back-up Servicer, of its
computerized records reflecting (i) all collections received during such
Collection Period with respect to the Contracts, (ii) the Pool Balance as of the
last day of the Collection Period, (iii) information as of the last day of such
Collection Period regarding the number of Defaulted Contracts, (iv) the number
of repossessed Financed Vehicles and the number of sales of repossessed Financed
Vehicles as of the last day of such Collection Period and (v) all other
information necessary for the Back-up Servicer to perform its duties under
Section 2.23. Promptly upon discovery by the Back-up Servicer or receipt by the
Back-up Servicer of notice of an Event of Servicing Termination with respect to
the Servicer, the Back-up Servicer shall input
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such information onto its computer system so that such information is
immediately available to the Back-up Servicer.
2.03. REALIZATION UPON CONTRACTS.
(a) Unless otherwise contemplated by the Collection Policy, in
the event a Contract becomes or is reasonably anticipated to become a Defaulted
Contract, the Servicer, itself or through the use of independent contractors or
agents shall, consistent with the standard of care set forth in Section 2.18,
repossess or otherwise convert the ownership of the Financed Vehicle securing
such Contract. In accordance with the priority of payment set forth in Section
2.8(ix) of the Indenture, all costs and expenses incurred by the Servicer in
connection with the repossession of the Financed Vehicles securing such
Contracts shall be reimbursed to the Servicer from the Collection Account on the
Payment Date relating to the Collection Period in which the Servicer delivered
to the Indenture Trustee an itemized statement of such costs and expenses.
Notwithstanding the foregoing and consistent with the terms of this Servicing
Agreement, the Servicer shall not be obligated to repossess or take any action
with respect to a Defaulted Contract if, in its reasonable judgment consistent
with the servicing standards specified in Section 2.18, the Liquidation Proceeds
are expected to be a negative number.
(b) The Servicer, itself or through the use of independent
contractors or agents to the extent allowed by Section 2.01(g), shall follow
practices consistent with the standard of care set forth in Section 2.18,
including the Collection Policy, in its servicing of automotive contracts, which
may include selling the Financed Vehicle, or requesting a Subservicer to sell
the Financed Vehicle, at public or private sale; provided, however, that the
Servicer, itself or through the use of independent contractors or agents to the
extent allowed by Section 2.01(g), shall, in accordance with its Collection
Policy, maximize the sales proceeds for each repossessed Financed Vehicle. 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
for the repair or the repossession of such Financed Vehicle unless the Servicer
shall determine in its discretion that such repair or repossession should
increase the Liquidation Proceeds.
2.04. PHYSICAL DAMAGE INSURANCE.
(a) The Servicer, itself or through the use of independent
contractors or agents to the extent allowed by Section 2.01(g), in accordance
with the standard of care set forth in Section 2.18, shall, upon receipt of
notice that an Obligor's physical damage insurance covering the Financed Vehicle
has lapsed or is otherwise not in force, send written notice to such Obligor
stating that such Obligor is required to maintain physical damage insurance
covering the Financed Vehicle throughout the term of the Contract.
(b) In the event of any physical loss or damage to a Financed
Vehicle from any cause, whether through accidental means or otherwise, the
Servicer shall have no obligation to cause the affected Financed Vehicle to be
restored or repaired. However, the Servicer shall comply with the provisions of
any insurance policy or policies directly or indirectly related to any physical
loss or damage to a Financed Vehicle.
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(c) The Servicer will administer the filing of claims under the
Insurance Policies as described under Section 2.12 hereof.
2.05. MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES AND
CONTRACTS.
(a) The Issuer hereby directs the Servicer, and the Servicer
agrees, to (i) take or cause to be taken such steps as are necessary, in
accordance with the standard of care set forth in Section 2.18, to maintain
perfection of the security interest created by any Contract covering a Financed
Vehicle which has been relocated in such a manner as to require such steps, and
(ii) within two Business Days of its receipt thereof forward to the Custodian,
on behalf of the Issuer, via reputable overnight courier, any certificate of
title to a Financed Vehicle received by the Servicer for any reason with respect
to a Financed Vehicle relating to a Contract serviced hereunder.
(b) The Servicer shall, at the direction of the Issuer, the
Insurer or the Indenture Trustee (which shall so direct if directed by
Noteholders evidencing not less than 51% of the Note Balance to do so), take any
action necessary to preserve and protect the security interests of the Issuer
and the Indenture Trustee in the Contracts, including any action specified in
any opinion of counsel delivered to the Servicer.
2.06. COVENANTS OF SERVICER; NOTICES.
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(a) The Servicer shall (i) not release any Financed Vehicle
securing any Contract from the security interest granted therein by such
Contract in whole or in part except in the event of payment in full by the
Obligor thereunder or upon transfer of the Financed Vehicle to a successor
purchaser following repossession by the Servicer or a Subservicer, (ii) not
impair the rights of the Issuer, the Noteholders, the Insurer or the Indenture
Trustee in the Contracts, (iii) not increase the number of scheduled payments
due under a Contract except as permitted herein, (iv) prior to the payment in
full, not sell, pledge, assign, or transfer to any other Person, or grant,
create, incur, assume, or suffer to exist any Lien on any Contract pledged to
the Indenture Trustee or any interest therein, (v) immediately notify the
Issuer, the Back-up Servicer, the Insurer and the Indenture Trustee of the
existence of any Lien on any Contract (other than the Lien of the Indenture
Trustee) if the Servicer has actual knowledge thereof, (vi) defend the right,
title, and interest of the Issuer, the Noteholders, the Insurer and the
Indenture Trustee in, to and under the Contracts pledged to the Indenture
Trustee, against all claims of third parties claiming through or under the
Servicer, (vii) deposit into Collection Account or cause to be deposited into
the lockbox account maintained at the Lockbox Bank all payments received by the
Servicer with respect to the Contracts in accordance with this Servicing
Agreement, (viii) comply in all respects with the terms and conditions of this
Servicing Agreement relating to the obligation of the Issuer to remove Contracts
from the Collateral pursuant to the Indenture, and the obligation of the Seller
to reacquire the Contracts from the Issuer pursuant to the Sale and Allocation
Agreement, (ix) promptly notify the Issuer, the Back-up Servicer, the Insurer
and the Indenture Trustee of the occurrence of any Event of Servicing
Termination and any breach by the Servicer of any of its covenants or
representations and warranties contained herein, (x) promptly notify the Issuer,
the Insurer, the Back-up Servicer and the Indenture Trustee of the occurrence of
any event which, to the knowledge of the Servicer, would require that the Issuer
make or cause to be made any filings, reports, notices, or applications or seek
any consents or authorizations from any and all government agencies, tribunals,
or authorities in accordance with the UCC and any state vehicle license or
registration authority as may be necessary or advisable to create, maintain, and
protect a first-priority security interest of the Indenture Trustee in, to, and
on the Financed Vehicles and a first-priority security interest of the Indenture
Trustee in, to, and on the Contracts pledged to the Indenture Trustee, and (xi)
take all reasonable action necessary to maximize the returns pursuant to the
Insurance Policies.
(b) The Servicer shall, within three Business Days of its receipt
thereof, respond to reasonable written directions or written requests for
information that the Issuer, the Indenture Trustee, the Insurer, or the
Indenture Trustee at the direction of Noteholders evidencing not less than 51%
of the Note Balance might have with respect to the administration of the
Contracts.
(c) The Servicer will promptly advise the Issuer, the Insurer,
the Back-up Servicer and the Indenture Trustee of any inquiry received from an
Obligor which requires the consent of the Issuer or the Indenture Trustee.
Inquiries requiring consent of the Issuer or the Indenture Trustee may include,
but are not limited to, inquiries about settlement of any unasserted claim or
defense, or compromise of any amount an Obligor owes.
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(d) The Servicer will not make any material change to the
Collection Policy with respect to the Contracts without the consent of the
Insurer (unless an Insurer Default shall have occurred and be continuing), which
consent shall not be unreasonably withheld; and if an Insurer Default shall have
occurred and be continuing, the Servicer will not make any material change to
the Collection Policy with respect to the Contracts if such change would have a
materal adverse effect on the Contracts.
2.07. REPURCHASE OF CONTRACTS BY SELLER UPON BREACH. The Servicer shall
inform the Issuer, the Insurer, the Indenture Trustee and the Back-up Servicer
promptly, in writing, upon the discovery of the occurrence of any event which
would require the Seller to repurchase a Contract under Section 2.3 of the Sale
and Allocation Agreement; provided, however, that the Servicer shall have no
duty to investigate or determine the existence of any breach except as specified
herein. Unless waived by the Insurer, the Servicer shall deliver to the Issuer a
written demand to cause the Seller to reacquire the affected Contract as
provided in the Sale and Allocation Agreement. The sole remedy of the Issuer,
the Indenture Trustee, the Insurer (except as otherwise provided in the
Insurance Agreement), or the Noteholders against the Seller with respect to any
Contract shall be the repurchase thereof as provided in the Sale and Allocation
Agreement.
2.08. SERVICING FEE; BACK-UP SERVICING FEE.
(a) Pursuant to the Indenture, the Issuer has agreed to cause the
Indenture Trustee to pay out of monthly collections with respect to the
Contracts to the Back-up Servicer a monthly servicing fee ("Back-up Servicing
Fee") and to the Servicer the Servicing Fee with respect to the Contracts
serviced under this Servicing Agreement; provided, however, that the Issuer
hereby agrees not to amend or consent to any amendment of any provision of the
Indenture relating to compensation of the Back-up Servicer or the Servicer
without the prior written consent of such Person and the Insurer.
(b) The Back-up Servicing Fee with respect to each Collection
Period shall be equal to the greater of (A) the quotient obtained by dividing
(i) 0.03% of the Note Balance as of the beginning of such Collection Period, by
(ii) 12 and (B) $1,000. The Back-Up Servicer shall also be entitled to
reimbursement of its conversion costs and other transition expenses associated
herewith pursuant to Section 2.8(a)(i) of the Indenture, up to the limit set
forth therein, and any excess pursuant to Section 2.8(a)(ix) of the Indenture.
The Back-up Servicing Fee with respect to a Collection Period shall be due on
the succeeding Payment Date. In the event the initial Back-up Servicer becomes a
Successor Servicer pursuant to this Servicing Agreement, the Back-up Servicer
shall be paid a fee not to exceed the greater of (i) the Servicing Fee or (ii)
the current market rate at the time for servicing Contracts similar in nature to
the Contracts. Such current market rate shall be determined by taking the lowest
of three servicing bids obtained by the Back-up Servicer from third party
servicers selected by the Back-up Servicer and approved by the Insurer.
(c) The Servicing Fee with respect to each Collection Period
shall be equal to the quotient obtained by dividing (i) the Servicing Fee Rate
times the Note Balance as of the
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beginning of such Collection Period, by (ii) 12. The Servicing Fee with respect
to a Collection Period shall be due on the succeeding Payment Date. In the event
this Servicing Agreement is terminated on a date other than the last day of a
Collection Period or a Contract is designated to be no longer outstanding for
purposes of this Servicing Agreement, then the Servicing Fee for such period or
with respect to such Contract, as the case may be, shall be determined on a pro
rata basis.
2.09. ANNUAL STATEMENT AS TO COMPLIANCE. The Servicer shall deliver to
the Indenture Trustee, and the Indenture Trustee shall deliver to the Issuer,
the Back-up Servicer, the Insurer, the Rating Agencies and any Persons
identified on a list provided to the Servicer by the Issuer, as such list may be
amended from time to time, on or before July 31 of each year beginning July 31,
2000, an Officer's Certificate, dated effective as of the preceding April 30,
stating that (i) a review of the activities of the Servicer during the preceding
12-month period (or such shorter period, as is applicable) and of its
performance under this Servicing Agreement during such period has been made
under such officer's supervision, (ii) based on such review, the Servicer has
fulfilled all its obligations under this Servicing Agreement throughout such
period, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof and the remedies therefor being pursued; and (iii) to the
best of such officer's knowledge, each Subservicer has fulfilled its obligations
under its Subservicing Agreement in all material respects, or if there has been
a material default in the fulfillment of such obligations, specifying such
default known to such officers and the nature and status thereof. This Section
shall not apply to the Back-up Servicer acting as Servicer.
2.10. FINANCIAL STATEMENTS; ANNUAL SERVICING REVIEW.
(a) The Servicer, shall deliver, in duplicate, to the Rating
Agencies, the Insurer, the Back-up Servicer, the Indenture Trustee and any other
Persons identified on a list provided to the Servicer by the Issuer, as such
list may be amended from time to time:
(i) as soon as available, but in no event later than 45
days after the end of each fiscal quarter of FIFSGI (commencing with the quarter
ending July 31, 2000), an unaudited consolidated balance sheet and income
statement (prepared in accordance with generally accepted accounting principles
applied on a consistent basis, and subject to year end adjustments) for FIFSGI
covering the preceding quarter, in each case certified by the chief financial
officer of FIFSGI to be true, accurate and complete copies of such financial
statements; and
(ii) on or before ninety (90) days after the end of each
fiscal year of FIFSGI (commencing with the fiscal year ending April 30, 2000)
the consolidated financial statements of FIFSGI containing a report of a firm of
independent public accountants selected by FIFSGI to the effect that such firm
has examined the books and records of FIFSGI and that, on the basis of such
examination conducted in compliance with generally accepted audit standards,
such financial statements accurately reflect the financial condition of FIFSGI,
in each case certified by the chief financial officer of FIFSGI, to be true,
accurate and complete copies of such financial statements.
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(b) The Servicer will cause the same firm of independent public
accountants which prepared the audited financial statements pursuant to
paragraph (a)(ii) of this Section to deliver to the Rating Agencies, the
Insurer, the Back-up Servicer, the Indenture Trustee and any Persons identified
on a list provided to the Servicer, as such list may be amended from time to
time, upon receipt of such covenants and representations from such Persons as
the independent public accountants may require, and as soon as practicable, but
in any event within 120 days after the end of each fiscal year, an annual review
of the Servicer's procedures and operations in form and substance reasonably
satisfactory to the Insurer, prepared by such firm of independent public
accountants, dated as of April 30 of each year beginning 2000 and substantially
stating to the effect that (i) such accountants have examined the accounts and
records of the Servicer relating to the Collateral and the conveyed property in
all similar asset-based financing transactions sponsored by the Issuer or an
affiliate thereof (which records shall be described in one or more schedules to
such statement), (ii) such firm has compared the information contained in
certain Monthly Servicer Reports (and similar reports for other similar
asset-based financing transactions sponsored by the Issuer or an affiliate
thereof) delivered in the relevant period with information contained in the
accounts and records or other relevant source documents for such period, and
(iii) on the basis of the procedures performed, whether the information examined
and contained in such Monthly Servicer Reports (and similar reports for such
other similar asset-based financing transactions) delivered on the relevant
period reconciles and agrees with the information contained in the accounts and
records or other relevant source documents except for such exceptions as such
independent public accountants believe to be immaterial and such other
exceptions as shall be set forth in such statement.
2.11. COSTS AND EXPENSES.
(a) Except as set forth in Section 2.11(b) below, all costs and
expenses incurred by the Servicer in carrying out its duties hereunder, fees and
expenses of independent public accountants with respect to preparation of the
financial statements and reports described in Section 2.10(b) and (c) and all
other fees and expenses (including all fees and expenses arising as a result of
the occurrence of a Re-Liening Trigger) not expressly permitted pursuant to the
priorities of Section 2.8 of the Indenture to be for the account of the Issuer,
shall be paid or caused to be paid by the Servicer out of the compensation to be
paid to the Servicer pursuant to Section 2.08.
(b) During the term of this Servicing Agreement, the Servicer
shall be reimbursed pursuant to Section 2.8(a)(ix) of the Indenture for actual
out-of-pocket costs and expenses incurred in connection with the sale or other
disposal of a Financed Vehicle or collection of amounts due with respect to a
Contract including, but not limited to, the following (to the extent such cost
or expense relates to the sale or other disposal or collection of amounts due
with respect to a Contract or a Financed Vehicle):
(i) Any compensation paid to outside legal counsel
retained to protect the interests of the Issuer, the Indenture Trustee, the
Insurer or the Noteholders in the assets
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administered under this Servicing Agreement as the Servicer deems necessary in
accordance with its normal procedures;
(ii) Any compensation paid to independent repossessors,
auctioneers or appraisers and any direct out of pocket expenses arising from or
related to realization of the Contracts administered under this Servicing
Agreement;
(iii) Any sales, franchise, income, excise, personal
property or other taxes arising from or related to any Contracts administered
under this Servicing Agreement;
(iv) Any parking or other fees, insurance, title or
similar fees arising from or related to any Contracts administered under this
Servicing Agreement;
(v) Any expenses for special forms and materials, freight,
tapes, communications, lock-box and other bank service charges, and other
expenses approved by the Issuer; and
(vi) Any expenses and fees paid to outside accountants in
connection with the procedures required to be performed pursuant to Section
2.10(b) hereof.
2.12. RESPONSIBILITY FOR INSURANCE POLICIES; PROCESSING OF CLAIMS UNDER
INSURANCE POLICIES; DAILY RECORDS AND REPORTS.
(a) The Servicer, on behalf of the Issuer, will administer and
enforce all rights and responsibilities of the holder of the Contracts provided
for in the Insurance Policies relating to the Contracts.
(b) The Servicer will administer the filings of claims under the
Insurance Policies by filing the appropriate notices related to claims,
including initial notices of loss, as well as claims with the respective
carriers or their authorized agents all in accordance with the terms of the
Insurance Policies. The Servicer shall use reasonable efforts to file such
claims on a timely basis after obtaining knowledge of the events giving rise to
such claims, subject to the servicing standard set forth in Section 2.18 hereof.
The Servicer will utilize such notices, claim forms and claim procedures as are
required by the respective insurance carriers.
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 such Insurance Policies. The
Servicer shall not be responsible to the Issuer, the Insurer, the Noteholders or
the Indenture Trustee (i) for any act or omission to act done in order to comply
with the requirements or satisfy any provisions of the Insurance Policies or
(ii) for any act, absent willful misconduct or negligence, or omission to act
done in compliance with this Servicing Agreement. In the case of any
inconsistency between this Servicing Agreement and the terms of any Insurance
Policy, the Servicer shall comply with the latter. A copy of any claim shall be
furnished to the Insurer upon the Insurer's request.
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2.13. DELIVERY OF DOCUMENTS TO INDENTURE TRUSTEE. The Servicer shall
deliver or cause to be delivered all of the following documents with respect to
the Contracts in its possession to the Indenture Trustee via reputable overnight
courier service for receipt by the Indenture Trustee within two (2) Business
Days preceding the Closing Date:
(a) the sole original counterpart of the retail installment
contract or promissory note and security agreement evidencing each such Contract
and any and all amendments thereto; and
(b) (i) the original certificate of title or copies of
correspondence to the appropriate State title registration agency, and all
enclosures thereto, for issuance of the original certificate of title or (ii) if
the appropriate State title registration agency issues a letter or other form of
evidence of lien in lieu of a certificate of title, the original lien entry
letter or form or copies of correspondence to such State title registration
agency, and all enclosures thereto, for issuance of the original lien entry
letter or form (the items in (a) - (b) are collectively referred to as the
"Custodian Files").
While in its possession, the Servicer shall hold the Custodian
Files in trust on behalf of the Indenture Trustee.
2.14. MAINTENANCE OF COPIES OF DOCUMENTS BY THE SERVICER.
(a) The Servicer shall maintain legible copies (in electronic or
hard-copy form, in the discretion of the Servicer) or originals of the following
documents in its files with respect to each Contract and the Financed Vehicle
related thereto:
(i) application of the Obligor for credit;
(ii) a copy (but not the original) of the retail
installment contract or promissory note and security agreement and any
amendments thereto, provided, however, that the Servicer shall deliver any
original amendments to the retail installment contract or promissory note and
security agreement to the Indenture Trustee immediately following execution
thereof;
(iii) a copy (but not the original) of a certificate of
title with a lien notation or an application therefor;
(iv) a certificate of insurance or application therefor
with respect to the Financed Vehicle securing the Contract;
(v) a copy of the proof of income and references, credit
report and approval sheet utilized by the Seller in the underwriting of the
Contract;
(vi) the invoice for the Financed Vehicle (in the case of
a new vehicle) or the bookout sheet (in the case of a used vehicle);
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(vii) Obligor's order for the Financed Vehicle, together
with proof (if any) of down payment;
(viii) a copy of the service contract, if any, on the
Financed Vehicle;
(ix) a copy of the credit life insurance policy, if any,
and the credit disability insurance policy, if any, on the Obligor relating to
the Financed Vehicle and a copy of a certificate evidencing physical damage
insurance covering the related Financed Vehicle, if any; and
(x) such other documents as the Servicer may reasonably
request in order to accomplish its duties under this Servicing Agreement.
(b) The Servicer shall keep books and records, satisfactory to
the Insurer, pertaining to each Contract and shall make periodic reports in
accordance with this Servicing Agreement. Such records may not be destroyed or
otherwise disposed of except as provided herein and as allowed by applicable
laws, regulations or decrees. All documents, whether developed or originated by
the Servicer or not, reasonably required to document or to properly administer
any loan shall remain at all times the property of the Issuer and shall be held
in trust by the Servicer. The Servicer shall not acquire any property rights
with respect to such records, and shall not have the right to possession of them
except as subject to the conditions stated in this Servicing Agreement. The
Servicer shall bear the entire cost of restoration in the event any Servicer
Files (as defined below) shall become damaged, lost or destroyed while in the
Servicer's possession or control.
2.15. POSSESSION OF SERVICER FILES. Unless otherwise specified herein,
the Servicer shall maintain physical possession of the instruments and documents
listed in paragraph 2.14(a) above; such other instruments or documents that
modify or supplement the terms or conditions of any of the foregoing; and, all
other instruments, documents, correspondence and memoranda generated by or
coming into the possession of the Servicer (including, but not limited to,
insurance premium receipts, ledger sheets, payment records, insurance claim
files, correspondence and current and historical computerized data files) that
are required to document or service any Contract. Collectively, all of the
documents described in this Section 2.15 with respect to a Contract are referred
to as the "Servicer Files". The Servicer hereby agrees that the computer files
and other physical records of the Contracts maintained by the Servicer will bear
an indication reflecting that the Contracts are owned by the Issuer and pledged
to the Indenture Trustee for the benefit of the Noteholders and the Insurer and
that all Servicer Files shall remain the property of the Issuer and shall be
held in trust by the Servicer. The Servicer shall respond to all third party
inquiries concerning ownership of the Contracts by indicating that the Contracts
have been assigned by the Seller to the Issuer and pledged to the Indenture
Trustee for the benefit of the Noteholders and the Insurer.
2.16. PROCESSING OF INFORMATION. Information with respect to each
Contract is to be recorded into the Servicer's loan management and accounting
system.
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2.17. WARRANTIES AND REPRESENTATIONS WITH RESPECT TO COMPLIANCE WITH LAW
AND ENFORCEMENT.
(a) The Issuer hereby represents to the Servicer, based on
certain representations the Seller has made to the Issuer concerning the
Contracts in the Sale and Allocation Agreement, and on which representations the
Issuer has relied in acquiring the Contracts and with respect to the pledge of
the Contracts to the Indenture Trustee, that each Contract and the sale of the
related Financed Vehicle complied at the time it was originated or made and on
the Cutoff Date, as the case may be, does comply in all material respects with
all requirements of applicable federal, state and local laws, and regulations
thereunder.
(b) The Servicer warrants, represents and covenants that in the
event that the Servicer realizes upon any Contract, the methods utilized by the
Servicer to realize upon such Contract or otherwise enforce any provisions of
the Contract, will not subject the Servicer, the Issuer, the Noteholders, the
Insurer or the Indenture Trustee to liability under any federal, state or local
law, and that such enforcement by the Servicer will be conducted in accordance
with the provisions of this Servicing Agreement and the standard of care set
forth in Section 2.18 hereof including the Collection Policy.
2.18. STANDARD OF CARE. In performing its duties and obligations
hereunder and in administering and enforcing the Insurance Policies relating to
the Contracts pursuant to this Servicing Agreement, the Servicer will comply
with all applicable state and federal laws and shall service and administer the
Contracts by employing such procedures (including collection procedures) and
degree of care, in each case consistent with prudent industry standards, as are
customarily employed by the Servicer in servicing and administering motor
vehicle retail installment sales contracts and notes owned or serviced by the
Servicer comparable to the Contracts. In performing such duties, so long as
First Investors Servicing Corporation is the Servicer (i) it shall comply with
the Collection Policy, and (ii) it shall not make any material amendment to such
Collection Policy without the prior written consent of the Insurer (provided
that no Insurer Default shall have occurred and be continuing) which consent
shall not be unreasonably withheld; provided, however, that notwithstanding the
foregoing, the Servicer shall not, except pursuant to a judicial order from a
court of competent jurisdiction, or as otherwise required by applicable law or
regulation, release or waive the right to collect the unpaid balance on any
Contract. In performing its duties and obligations hereunder, the Servicer shall
comply with all applicable federal and state laws and regulations, shall
maintain all state and federal licenses and franchises necessary for it to
perform its servicing responsibilities hereunder, and shall not impair the
rights of the Issuer, the Insurer or the Indenture Trustee on behalf of the
Noteholders in the Collateral.
2.19. RECORDS. The Servicer shall maintain or cause to be maintained
such books of account and other records as will enable the Issuer and the
Insurer to determine the status of each Contract and any Insurance Policy
relating thereto.
2.20. INSPECTION.
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(a) At all times during the term hereof, the Servicer shall
afford the Issuer, the Insurer, the Back-up Servicer and the Indenture Trustee
and their authorized agents, upon three Business Days' prior written notice,
reasonable access during normal business hours to the Servicer's records and
files relating to the Contracts and the Collateral and will cause its personnel
to assist in any examination of such records by the Issuer, the Insurer, the
Back-up Servicer or the Indenture Trustee, and will permit such parties to
discuss the affairs, finances and accounts of the Servicer with the chief
operating officer and chief financial officer of the Servicer. The examination
referred to in this Section 2.20 will be conducted in a manner which does not
unreasonably interfere with the Servicer's normal operations or customer or
employee relations. Without otherwise limiting the scope of the examination the
Issuer, the Insurer, the Back-up Servicer or the Indenture Trustee may, using
generally accepted audit procedures, verify the status of each Contract and
review the Servicer Files and records relating thereto for conformity to Monthly
Servicer Reports prepared pursuant to Section 2.02(c) and compliance with the
standards represented to exist as to each Contract in this Servicing Agreement.
Nothing herein shall require the Issuer, the Insurer, the Back-up Servicer or
the Indenture Trustee to conduct any inspection pursuant to this Section. Such
parties may, with the Servicer's consent, which shall not be unreasonably
withheld or delayed, discuss the affairs, finances and accounts of the Servicer
with the Servicer's independent accountants, provided that an officer of the
Servicer shall have the right to be present during such discussions.
(b) At all times during the term hereof, the initial Servicer
shall keep available at its office located at 300 Interstate North, Atlanta,
Georgia 30559 (or such other location as to which it shall give written notice
to the Issuer, the Indenture Trustee, and the Insurer), for inspection by the
Issuer, the Insurer, the Back-up Servicer, and the Indenture Trustee a copy of
the Contracts Schedule, as amended.
(c) All information obtained by the Issuer, the Insurer, the
Back-up Servicer or the Indenture Trustee regarding the Obligors and the
Contracts, whether upon exercise of its rights under this Section 2.20 or
otherwise, shall be maintained by the Issuer, the Insurer, the Back-up Servicer
or the Indenture Trustee in confidence and shall not be disclosed to any other
person, except as otherwise required by applicable law or regulation.
(d) The Servicer will, at the Issuer's or the Insurer's request,
provide the Issuer or the Insurer with a data extract disk of portfolio
information.
(e) The Servicer and the Insurer and their agents and
representatives shall at all times have full and free access during normal
business hours to all computer tapes, books, correspondence and records of the
Back-up Servicer insofar as they relate to the Contracts and the Insurer and its
agents and representatives may examine the same, take extracts therefrom and
make photocopies thereof. The Servicer and the Insurer each agree that all such
information, practices, books, correspondence and records are to be regarded as
confidential information and that (a) 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
Back-up Servicer any or all of such information practices, books, correspondence
and records furnished to it and (b) it will not, and it will use its best
efforts (in the case of the Insurer,
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consistent with Section 2.02 of the Insurance Agreement) to ensure that its
agents and representatives will not, make any use whatsoever (other than for
purposes contemplated by this Agreement) of any of such information practices,
computer tapes books, correspondence and records without the prior written
consent of the Back-up Servicer, unless such information (i) is generally
available to the public, (ii) is required by law, regulation, or court order to
be disclosed or is requested by any governmental authority having authority over
the Servicer and the Insurer, or is necessary to preserve any of such Persons'
rights under or to enforce any provision of the Indenture, or (iii) is required
by the Rating Agencies in connection with their rating of the related Notes or
the implied rating of the facility.
2.21. ENFORCEMENT.
(a) The Servicer will, consistent with the standard of care
required by Section 2.18 hereof, act with respect to the Contracts and the
Insurance Policies in such manner as will, in the reasonable judgment of the
Servicer, maximize the amount to be received by the Indenture Trustee with
respect thereto.
(b) The Servicer shall to the extent consistent with the
servicing standards set forth in Section 2.18, including the Collection Policy,
or at the written direction of the Insurer sue to enforce or collect upon the
Contracts and the Insurance Policies (including unpaid claims), in its own name,
if possible, or as agent for the Issuer or the Indenture Trustee. If the
Servicer commences a legal proceeding to enforce a Contract or an Insurance
Policy, the act of commencement shall be deemed to be an automatic assignment of
the Contract and the related rights under the Insurance Policies by the Issuer
to the Servicer for purposes of collection only. If, however, in any enforcement
suit or legal proceeding it is held that the Servicer may not enforce a Contract
or an Insurance Policy on the grounds that it is not a real party in interest or
a holder entitled to enforce the Contract or the Insurance Policy, the Issuer
shall, at the Servicer's request, assign the Contract or the Insurance Policy to
the Servicer to the limited extent necessary to enforce the Contract or the
Insurance Policy, or take such steps as the Issuer deems necessary to enforce
the Contract or the Insurance Policy, including bringing suit in its name.
(c) The Servicer shall exercise any rights of recourse against
third persons that exist with respect to any Contract in accordance with the
standard of care required by Section 2.18 hereof. In exercising such recourse
rights, the Servicer is hereby authorized on the Issuer's behalf to reassign the
Contract and to deliver the certificate of title to the Financed Vehicle to the
person against whom recourse exists at the price set forth in the document
creating the recourse.
(d) The Servicer may grant to the Obligor on any Contract that
has been repaid in full any rebate, refund or adjustment that the Servicer in
good faith believes is required because of prepayment in full of the Contract,
and may deduct the amount of any such rebate, refund or adjustment from the
amount otherwise payable by the Servicer into the Collection Account. The
Servicer may not permit any rescission or cancellation of any Contract nor may
it take any action with respect to any Contract, except as required by
applicable law, regulation or court order, or Insurance Policy which would
materially impair the rights of the Indenture Trustee, the Insurer or the
Noteholders therein or in the proceeds thereof.
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2.22. PAYMENT IN FULL ON CONTRACT. Upon payment in full on any Contract,
the Servicer shall notify the Custodian prior to the next succeeding
Determination Date by a written request for the release of such Contract (which
shall include a statement of an officer of the Servicer to the effect that all
amounts received in connection with such payment in full which are required to
be deposited in the Collection Account pursuant to Sections 3.02 and 3.03 hereof
have been so deposited).
2.23. DUTIES OF BACK-UP SERVICER.
(a) The Back-up Servicer will perform the services set forth in
this Section 2.23 which shall not be delegated to the Servicer. The Back-up
Servicer shall, unless it is prohibited as a matter of law, as evidenced by an
opinion of counsel provided for in Section 5.08 and unless a different Successor
Servicer is appointed by the Insurer, service the Contracts upon receipt of
written notice of an Event of Servicing Termination by the Servicer under this
Servicing Agreement. The Back-up Servicer will, on a periodic basis, perform the
functions specified in this Section 2.23, provided that the Back-up Servicer
shall be entitled to request of and receive from the Indenture Trustee and the
Servicer, as appropriate, all information necessary to conduct tests or make
reports in a timely manner as specified below and, except as otherwise specified
herein, the Back-up Servicer shall be entitled to assume for all purposes that
the information received by it is true, correct and complete, and the Back-up
Servicer shall be fully protected in relying upon such information without any
independent investigation or audit to prove the facts stated therein. The
Back-up Servicer shall utilize such methods as it deems reasonable and necessary
to reconcile information provided by the Servicer with the cash balances held by
the Indenture Trustee.
(b) Prior to each Payment Date, the Back-up Servicer shall review
the Monthly Servicer Report related thereto and shall:
(i) determine that such Monthly Servicer Report is
complete on its face;
(ii) review the amounts on deposit in the Collection
Account against the monthly distribution amounts set forth in such Monthly
Servicer Report and reasonably determine whether the amount on deposit is
sufficient to pay such distribution amounts; and
(iii) determine the amount on deposit in the Reserve
Account.
(c) No later than each Payment Date, the Back-up Servicer shall
load the computer tape or diskette received from the Servicer pursuant to
Section 2.02(f) hereof, and confirm that such computer tape or diskette is in
readable form and calculate and confirm the aggregate Principal Balance of
Contracts as of the most recent Payment Date.
In addition, the Back-up Servicer shall confirm that the average
Delinquency Ratio for any three Collection Periods and the Cumulative Net Loss
Rate as set forth in the Monthly
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Servicer Report, are accurate based solely on a comparison to the computer tape
referred to above.
(d) In the event of any discrepancy between the information set
forth in subparagraphs (b) and (c), as calculated by the Servicer, from that
determined or calculated by the Back-up Servicer, the Back-up Servicer shall
promptly notify the Servicer, the Indenture Trustee, and the Insurer of such
discrepancy. If within ten days of such notice being provided to the Servicer,
the Back-up Servicer and the Servicer are unable to resolve such discrepancy,
the Back-up Servicer shall promptly notify the Rating Agencies, the Insurer, the
Indenture Trustee, and any other Persons identified on a list provided to the
Back-up Servicer, as such list may be amended from time to time, of such
discrepancy.
(e) Other than as specifically set forth elsewhere in this
Servicing Agreement, the Back-up Servicer shall have no obligation to supervise,
verify, monitor or administer the performance of the Servicer and shall have no
liability for any action taken or omitted by the Servicer.
(f) The Back-up Servicer shall consult fully with the Servicer as
may be necessary from time to time to perform or carry out the Back-up
Servicer's obligations hereunder, including the obligation, if requested by the
Insurer, to succeed at any time to the duties and obligations of the Servicer as
servicer under Section 5.02 hereof.
2.24. ASSUMPTION OF DUTIES BY BACK-UP SERVICER. At any time following
the assumption of duties of the Servicer by the Back-up Servicer or the
designation of a Successor Servicer pursuant to section 2.01(c), the Servicer
shall, at the Indenture Trustee's or the Insurer's request, (A) assemble all of
the records relating to the Collateral including all Contract Files, and shall
make the same available to the Indenture Trustee and the Insurer at a place
selected by the Indenture Trustee and the Insurer 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
Indenture Trustee and the Insurer and shall promptly upon receipt but no later
than two Business Days after receipt, remit all such cash, checks and
instruments, duly endorsed or with duly executed instruments of transfer, to the
lockbox account maintained by the Lockbox Bank or its designee.
2.25. ERRORS AND OMISSIONS INSURANCE. The Servicer has obtained, and
shall continue to maintain in full force and effect, errors and omissions
insurance and employee theft insurance of a type and in such amount as is
customary for servicers engaged in the business of servicing automobile
contracts. The scope of such insurance coverage shall include the acts and
omissions of Subservicers or, if that is not the case with respect to any
Subservicer, the Servicer shall require such Subservicer to maintain such
insurance or a bond substantially equivalent thereto. Annually and more
frequently upon request of the Issuer, the Insurer, the Indenture Trustee or the
Back-up Servicer, the Servicer shall cause to be delivered to the Indenture
Trustee a certification evidencing coverage under such insurance. Any such
insurance shall not be canceled or modified in a materially adverse manner
without thirty days' prior written notice to the Issuer, the Insurer, the
Indenture Trustee and the Rating Agencies. No provision of this Section 2.25
requiring the
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maintenance of insurance shall diminish or relieve the Servicer from its duties
and obligations as set forth in this Servicing Agreement.
2.26. RESPONSIBILITIES OF BACK-UP SERVICER AND SERVICER. Neither the
Back-up Servicer nor the Servicer shall have any duties, obligations or
responsibilities other than those specifically expressed and set forth herein
and no implied obligations of the Back-up Servicer or the Servicer shall be read
into this Servicing Agreement. Neither the Back-up Servicer nor the Servicer nor
any of their respective directors, officers, agents or employees shall be liable
to any person, including, without limitation, the Servicer or the Back-up
Servicer, as the case may be, or the Issuer, the Insurer, the Indenture Trustee
or the Noteholders in connection with this Servicing Agreement, except for the
breach of any of its representations and warranties or obligations under this
Servicing Agreement or for the negligence, bad faith or willful misconduct of
the Back-up Servicer or the Servicer, as the case may be, or any of their
respective officers, directors, agents or employees. The Back-up Servicer may
rely on and shall be protected in acting upon, or in refraining from acting in
accordance with, any resolution, officer's certificate, certificate of auditors
or any other certificate, instrument, opinion, report, notice, request, consent,
order, appraisal, bond or other paper or document reasonably believed by it to
be genuine and correct and to have been signed or presented by the proper person
or persons. Without limiting the foregoing, the Back-up Servicer (i) may consult
with legal counsel (including the Indenture Trustee's or the Back-up
Servicer's), independent public accountants and other experts selected by it
with reasonable care and shall not be liable for any action reasonably taken or
omitted to be taken by it in accordance with the advice of such counsel,
accountants or experts, (ii) shall not be responsible to the Issuer, the
Insurer, the Servicer, the Indenture Trustee or any other person for any
recitals, statements, warranties or representations made in or in connection
with this Servicing Agreement, the Transaction Documents or any other agreement,
document or instrument executed in connection therewith by any other person,
(iii) shall not be responsible for the actions or omissions of any other person,
including, without limitation, the Servicer, the Seller, the Issuer, the
Insurer, the Indenture Trustee and the Noteholders unless such act or omission
was caused by an act or omission of the Back-up Servicer, (iv) except as
provided in this Servicing Agreement or any Transaction Document, 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 the Indenture or any other Transaction
Document on the part of any person, or to inspect the property (including the
books and records) of the Seller, the Insurer, the Issuer or the Servicer, (v)
except as otherwise provided herein, shall not be charged with the knowledge of
any breach of representation or warranty by any other Person, or the failure of
any other Person to comply with its obligations, hereunder or under any other
Transaction Document, or of the occurrence of any Event of Servicing Termination
unless a responsible officer of the Back-up Servicer has received written notice
of the same from the Servicer, the Insurer or the Indenture Trustee, as the case
may be, or otherwise has actual knowledge of such breach or Event of Servicing
Termination, (vi) shall not be responsible to any Person for the due execution,
legality, validity and enforceability against the other parties of this
Servicing Agreement, and (vii) shall incur no liability under or in respect of
this Servicing Agreement by acting upon any notice (including notice by
telephone), consent, certificate or other instrument or writing (which may be
telex or telecopy) reasonably believed by it to be genuine and signed, sent or
communicated by the proper party or parties.
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It is agreed and understood that the Back-up Servicer is
responsible for providing the services described in Section 2.23 only in
accordance with the information as shall have been timely supplied to it by the
Servicer, the Indenture Trustee or the Collection Account Depository, as the
case may be. The Back-up Servicer shall incur no liability for any failure by
the Servicer, the Indenture Trustee or the Collection Account Depository to
furnish information required of it, nor shall the Back-up Servicer be
responsible for the content or accuracy of any information provided to it by any
such Person, unless required by the Transaction Documents to do so. Except as
may be expressly provided herein or in the Indenture, the Back-up Servicer shall
have no duty to supervise, investigate or audit any records or activities of the
Servicer with respect to the servicing of the Collateral. The Back-up Servicer
shall have no responsibility or liability for any acts or omissions of the
Servicer with respect to the Collateral.
The Back-up Servicer 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 the
repayment of such funds or adequate written indemnity against such risk or
liability is not reasonably assured to it in writing prior to the expenditure or
risk of such funds or incurrence of financial liability.
2.27. RE-LIENING. Upon the occurrence of a Re-Liening Trigger, the
Insurer may instruct the Servicer to take or cause to be taken such actions as
may, in the judgment of the Insurer or its counsel, be necessary to perfect or
re-perfect the security interests in the Financed Vehicles in the name of the
Indenture Trustee by amending the title documents relating to such Financed
Vehicles or by such other reasonable means as may, in the judgment of the
Insurer or its counsel, be necessary or prudent. The Servicer shall take or
cause to be taken such actions. The Servicer hereby agrees to pay for all fees
and expenses arising as a result of the occurrence of a Re-Liening Trigger
related to such perfection or re-perfection and to take all action necessary
therefor, including the preparation, execution and delivery of all such
documents as may be requested by the Indenture Trustee or the Servicer in
connection therewith. The Servicer shall grant to the Successor Servicer an
irrevocable power of attorney, pursuant to which the Servicer shall appoint the
Successor Servicer as its attorney-in-fact, such appointment being coupled with
an interest, to take any and all steps required to be performed by it pursuant
to this Section 2.27 including execution of certificates of title or any other
documents in the name and stead of the Servicer. If at any time a Person other
than First Investors Servicing Corporation becomes the Servicer, First Investors
Servicing Corporation shall grant to such Successor Servicer, promptly after its
appointment as such, a power of attorney as described in the preceding sentence.
2.28. REPURCHASE BY SERVICER UPON BREACH. The Seller, the Insurer, the
Depositor, the Servicer or the Issuer, as the case may be, shall inform the
other parties to this Agreement and the Indenture Trustee promptly, in writing,
upon the discovery of any breach or failure to be true of the representations
and warranties made by the Servicer pursuant to this Agreement. If such breach
or failure shall not have been cured by the close of business on the last day of
the Collection Period which includes the thirtieth (30th) day after the date on
which the Servicer becomes aware of, or receives written notice from the Seller,
the Depositor, the Insurer or the Issuer of, such breach or failure, and such
breach or failure materially and adversely affects the interest of the Issuer or
the Insurer in a Contract, the Servicer shall repurchase such Contract
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from the Issuer on the Business Day next preceding the Payment Date immediately
following such Collection Period. In consideration of the repurchase of a
Contract hereunder, the Servicer shall remit the Purchase Amount of such
Contract in the manner specified in Section 3.4 of the Sale and Allocation
Agreement. The sole remedy of the Issuer, the Indenture Trustee, the Insurer
(except as otherwise specified in the Insurance Agreement), and the Noteholders
with respect to a breach or failure to be true of the representations and
warranties made by the Servicer pursuant to this Agreement shall be to require
the Servicer to repurchase Contracts pursuant to this Section 2.28. Neither the
Owner Trustee nor the Indenture Trustee shall have any duty to conduct an
affirmative investigation as to the occurrence of any condition requiring the
repurchase of any Contract pursuant to this Section 2.28 or the eligibility of
any Contract for purposes of this Agreement.
ARTICLE III.
ACCOUNTS; COLLECTIONS
3.01. ACCOUNTS. There has been established pursuant to the Indenture the
Collection Account in the name of the Indenture Trustee for the benefit of the
Noteholders and the Insurer.
3.02. COLLECTIONS. The Servicer shall remit or cause a Subservicer to
remit first, to a lockbox account maintained with the Lockbox Bank and second,
to the Collection Account described in Section 3.03 hereof, and to no other
account, as soon as practicable, but in no event later than the Collection
Account Depository's close of business two Business Days after receipt thereof
in the lockbox, all Collections received during the Collection Period, in
respect of a Contract being serviced by the Servicer, and all payments or other
amounts, if any, made by or on behalf of an Obligor or received by the Servicer
with respect to any Contract.
3.03. COLLECTION ACCOUNT AND ACKNOWLEDGMENT LETTER.
(a) The Issuer shall provide thirty days' notice to the Servicer,
the Indenture Trustee, the Insurer and the Back-up Servicer of its appointment
of a successor Collection Account Depository which shall be acceptable to the
Rating Agencies, the Insurer and the Indenture Trustee and which shall hold the
Collection Account under the terms and conditions outlined herein and in the
Indenture.
(b) Except as otherwise provided herein, the Servicer shall
deposit or cause to be deposited into the Collection Account all amounts
(including late payments) remitted by Obligors to the Servicer under the terms
of the Contracts within two Business Days after receipt thereof by the lockbox;
provided, however, that the Servicer shall be entitled to reimbursement of all
amounts remitted by or on behalf of the Obligors to the Servicer under the terms
of, or with respect to, the Contracts, which amounts represent late fees or
prepayment charges, including administrative fees or similar charges allowed by
applicable law.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
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4.01. REPRESENTATIONS AND WARRANTIES OF THE SERVICER. The initial
Servicer hereby represents, warrants and covenants to the Back-up Servicer, the
Issuer, the Insurer, the Noteholders, the Depositor and the Indenture Trustee
that as of the date of this Servicing Agreement and, for so long as the initial
Servicer shall continue to act as Servicer hereunder:
(a) The Servicer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware;
(b) All necessary corporate, regulatory or other similar action
has been taken to authorize and empower the Servicer and the officers or
representatives acting on the Servicer's behalf, and the Servicer has full power
and authority to execute, deliver and perform this Servicing Agreement;
(c) This Servicing Agreement and the Sale and Allocation
Agreement have been duly authorized, executed and delivered by the Servicer and
the performance and compliance with the terms of this Servicing Agreement and
the Sale and Allocation Agreement will not violate the Servicer's certificate of
incorporation or bylaws or constitute a default (or an event which, with notice
or lapse of time, or both, would constitute a default) under, or result in the
breach of, any Transaction Document or any other contract, loan, lease, credit
agreement or any other agreement or instrument to which the Servicer is a party
or which may be applicable to the Servicer or any of its assets;
(d) The Servicer is duly licensed and qualified to perform the
functions specified herein and this Servicing Agreement and the Sale and
Allocation Agreement constitutes a valid, legal and binding obligation of the
Servicer, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other laws affecting the
enforcement of creditors' rights generally and to general principles of equity;
(e) The Servicer is not in violation of, and the execution,
delivery and performance of this Servicing Agreement and the Sale and Allocation
Agreement by the Servicer will not constitute a violation with respect to any
order or decree of any court or any order, regulation or demand of any federal,
state, municipal or governmental agency, which violation might have consequences
that would materially and adversely affect the condition (financial or other) or
operations of the Servicer or its properties or might have consequences that
would affect the performance of its duties hereunder;
(f) No proceeding of any kind, including but not limited to
litigation, arbitration, judicial or administrative, is pending or threatened
against or contemplated by the Servicer which would under any circumstance have
an adverse effect on the execution, delivery, performance or enforceability of
this Servicing Agreement or the Sale and Allocation Agreement;
(g) No information, officer's certificate or statement furnished
in writing or report delivered to the Indenture Trustee, the Issuer, the
Insurer, the Back-up Servicer or the Noteholders by the Servicer required under
this Servicing Agreement or the Sale and Allocation
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Agreement contains any untrue statement of a material fact or omits a material
fact necessary to make the information, certificate, statement or report not
misleading; provided, that the Servicer makes no representation or warranty with
respect to any information incorporated into or forming the basis of any
officer's certificate, information, statement or report provided by the Servicer
that is provided to the Servicer by any other Person;
(h) The Servicer has the knowledge, the experience and the
systems, financial and operational capacity available to timely perform each of
its obligations hereunder; and
(i) The Servicer has, with respect to the Contracts, complied in
all material respects with the Collection Policy.
4.02. REPRESENTATIONS AND WARRANTIES OF THE BACK-UP SERVICER. The
Back-up Servicer hereby represents, warrants and covenants to the Issuer, the
Insurer, the Noteholders, the Servicer, the Depositor and the Indenture Trustee
that as of the date hereof or as of such date specifically provided herein:
(a) The Back-up Servicer is a national banking association duly
organized, validly existing and authorized to engage in a banking business under
the federal laws of the United States of America;
(b) All necessary corporate, regulatory or other action has been
taken to authorize and empower the Back-up Servicer and the officers or
representatives acting on the Back-up Servicer's behalf to perform and comply
with the Back-up Servicer's obligations under this Servicing Agreement, and the
Back-up Servicer has full power and authority, to execute, deliver and perform
this Servicing Agreement;
(c) The execution and delivery of this Servicing Agreement by the
Back-up Servicer and its performance and compliance with the terms of this
Servicing Agreement will not violate the Back-up Servicer's articles of
association or bylaws or constitute a default (or an event which, with notice or
lapse of time, or both, would constitute a default) under, or result in the
breach of, any material contract, security agreement, loan, credit agreement or
any other agreement or instrument to which the Back-up Servicer is a party or
which may be applicable to the Back-up Servicer or any of its assets;
(d) This Servicing Agreement constitutes a legal, valid and
binding obligation of the Back-up Servicer, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and other similar laws affecting the enforcement of creditors' rights generally
and to general principles of equity;
(e) The Back-up Servicer is not in violation of, and the
execution, delivery and performance of this Servicing Agreement by the Back-up
Servicer will not constitute a violation with respect to, any applicable order
or decree of any court or any order, regulation or demand of any federal, state,
municipal or governmental agency, which violation might have consequences that
would materially and adversely affect the condition (financial or other) or
operations of the
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Back-up Servicer or its properties or might have consequences that would
materially adversely affect the performance of its duties hereunder; and
(f) No proceeding of any kind, including but not limited to
litigation, arbitration, judicial or administrative, is pending or, to the
knowledge of the Back-up Servicer, contemplated or threatened against the
Back-up Servicer which would under any circumstance have an adverse effect on
the execution, delivery, performance or enforceability of this Servicing
Agreement by or against the Back-up Servicer.
4.03. REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The Issuer hereby
represents, warrants and covenants to the Back-up Servicer, the Servicer, the
Noteholders, the Insurer, the Depositor and the Indenture Trustee that as of the
date of this Servicing Agreement or as of such date specifically provided
herein:
(a) The Issuer is a Delaware business trust duly organized and
validly existing under the laws of the State of Delaware and has full power and
authority to execute and deliver this Servicing Agreement and to perform the
terms and provisions hereof;
(b) The execution, delivery and performance by the Issuer of this
Servicing Agreement have been duly authorized by all necessary action by the
Issuer, do not require any approval or consent of any Person, do not and will
not conflict with any material provision of the organizational documents of the
Issuer, and do not and will not conflict with or result in a breach which would
constitute a material default under any agreement binding upon or applicable to
it or such of its property which is material to it, or any law or governmental
regulation or court decree applicable to it or such material property, and this
Servicing Agreement is the legal, valid and binding obligation of the Issuer
enforceable in accordance with its terms 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; and
(c) No litigation or administrative proceeding of or before any
court, tribunal or governmental body is presently pending, or to the knowledge
of the Issuer threatened, against the Issuer or its properties or with respect
to this Servicing Agreement, which, if adversely determined would, in the
opinion of the Issuer, have a material adverse effect on the transactions
contemplated by this Servicing Agreement.
4.04. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations
and warranties set forth in this Article IV are continuous and shall survive the
date of this Servicing Agreement. Upon discovery by any of the Issuer, the
Indenture Trustee, the Back-up Servicer, the Depositor or the Servicer of a
breach of any of the foregoing representations and warranties, the party
discovering such breach shall give prompt written notice to the other parties
hereto, including the Insurer and the Indenture Trustee.
4.05. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF,
OR RESIGNATION OF Servicer. Any Person (a) into which the Servicer may be merged
or consolidated, (b) which may result from any merger or consolidation to which
the Servicer shall be a party, (c) which may succeed to the properties and
assets of the Servicer substantially as a whole, or (d) which may
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succeed to the duties and obligations of the Servicer under this Servicing
Agreement following the resignation of the Servicer subject to Section 2.01
hereof, which Person executes an agreement of assumption to perform every
obligation of the Servicer hereunder, shall be the successor to the Servicer
under this Servicing Agreement with the prior written consent of the Insurer (if
no Insurer Default shall have occurred and be continuing) and without further
act on the part of any of the parties to this Servicing Agreement; provided,
however, that (i) written notice of such merger, consolidation or assumption of
liabilities shall be delivered by the Servicer to the Insurer and the
Noteholders, (ii) immediately after giving effect to such transaction, no Event
of Servicing Termination (as defined in Section 5.01), and no event which, after
notice or lapse of time, or both, would become an Event of Servicing Termination
shall have occurred or be continuing, (iii) no Event of Default, Event of
Servicing Termination or Re-Liening Trigger would occur as a result of such
merger, consolidation or assumption of liability, (iv) the Servicer shall have
delivered to the Issuer, the Insurer, the Back-up Servicer and the Indenture
Trustee an officer's certificate and an opinion of counsel each stating that
such consolidation, merger, succession or resignation and such agreement of
assumption comply with this Section 4.05 and that all conditions precedent
provided for in this Servicing Agreement relating to such transaction have been
complied with and (v) the Servicer shall have delivered to the Issuer, the
Insurer, the Back-up Servicer and the Indenture Trustee an opinion of counsel
either (A) stating that, in the opinion of such counsel, all financing
statements, continuation statements and amendments and notations on certificates
of title thereto have been executed and filed that are necessary fully to
preserve and protect the interest of the Issuer, the Noteholders, the Insurer
and the Indenture Trustee in the Contracts and the Financed Vehicles, and
reciting the details of such filings, or (B) stating that, in the opinion of
such counsel, no such action shall be necessary to preserve and protect such
interest.
ARTICLE V.
DEFAULT, REMEDIES AND INDEMNITY
5.01. EVENT OF SERVICING TERMINATION. Any of the following acts or
occurrences shall constitute an "Event of Servicing Termination" under this
Servicing Agreement:
(a) any failure by the Servicer to make any payment, transfer or
deposit to the Indenture Trustee on the date such payment, transfer or deposit
is required to be made;
(b) any failure by the Servicer to provide any notices to the
Indenture Trustee and the Insurer pursuant to this Servicing Agreement relating
to the transfer or calculation of funds;
(c) failure on the part of the Servicer to duly observe or
perform in any material respect any other covenants or agreements of the
Servicer set forth in this Servicing Agreement; or the Servicer shall assign its
duties hereunder (except as expressly permitted herein);
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(d) any representation, warranty or certification made by the
Servicer or any successor thereto in this Servicing Agreement, or any
certificate delivered pursuant to this Servicing Agreement (other than any
representation or warranty relating to a Contract that has been purchased by the
Servicer), shall prove to have been incorrect when made, which has a material
adverse effect on the Noteholders or the Insurer;
(e) the Servicer or Back-up 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 Servicer or Back-up Servicer, respectively, or
of or relating to all or substantially all of their respective properties; or a
decree or order of a court or agency or 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 Servicer or Back-up Servicer or
Successor Servicer or Successor Back-up Servicer and such decree or order shall
have remained in force undischarged or unstayed for a period of 60 days; or the
Servicer or Back-up Servicer or any successor to either shall admit in writing
its inability to pay its debts generally as they become due, file or have filed
against it a petition or commence an action to take advantage of any applicable
insolvency or reorganization statute, make any assignment for the benefit of its
creditors or voluntarily suspend payment of its obligations;
(f) the Servicer or the Back-up Servicer or any successor to
either shall fail to be an Eligible Servicer as determined by the Insurer;
(g) the Servicer makes any material changes to its Collection
Policy with respect to the Contracts without the consent of the Insurer, which
consent shall not be unreasonably withheld; or
(h) an Event of Default (as defined in the Indenture) occurs
which has not been waived by the Insurer or, if an Insurer Default has occurred
and is continuing, Noteholders evidencing not less than 51% of the Note Balance.
5.02. REMEDIES.
(a) If an Event of Servicing Termination shall occur and be
continuing, the Insurer (or, if an Insurer Default shall have occurred and be
continuing, any of the Indenture Trustee (to the extent an officer of the
Indenture Trustee has actual knowledge thereof), the Issuer, or the Indenture
Trustee at the direction of Noteholders evidencing not less than 51% of the Note
Balance), by notice given in writing to the Servicer or the Back-up Servicer, as
the case may be ("Termination Notice") (with copies to the Indenture Trustee and
the Issuer if given by the Insurer), may terminate all of the rights and
obligations of the Servicer or the Back-up Servicer, as the case may be, under
this Servicing Agreement (except as set forth in Section 5.03). On or after the
receipt by the Servicer of such Termination Notice, all authority, power,
obligations and responsibilities of the Servicer under this Servicing Agreement,
whether with respect to the Contracts, or otherwise, automatically shall pass
to, be vested in and become
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obligations and responsibilities of the Back-up Servicer (or such other
Successor Servicer appointed in accordance herewith); provided, however, that
the Successor Servicer shall have no liability with respect to any obligation
which was required to be performed by the terminated Servicer prior to the date
that the Successor Servicer becomes the Servicer or any claim based on any
alleged action or inaction of the terminated Servicer. The Successor Servicer is
authorized and empowered by this Agreement to execute and deliver, on behalf of
the terminated 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 Termination Notice, whether to
complete the transfer and endorsement of the Contracts and related documents to
show the Issuer or the Indenture Trustee as lienholder or secured party on the
related title documents, or otherwise. The terminated Servicer agrees to
cooperate with the Successor Servicer in effecting the termination of the
responsibilities and rights of the terminated Servicer under this Servicing
Agreement, including, without limitation, the transfer to the Successor Servicer
for administration by it of all cash amounts that shall at the time be held by
the terminated Servicer for deposit, or have been deposited by the terminated
Servicer, in the Collection Account or thereafter received with respect to the
Contracts and the delivery to the Successor Servicer of all Servicer Files,
collection records and a computer tape in readable form as of the most recent
Business Day containing all information necessary to enable the Back-up Servicer
or other Successor Servicer, as the case may be, to service the Contracts. The
terminated Servicer shall grant the Issuer, the Indenture Trustee, the Successor
Servicer and the Insurer reasonable access to the terminated Servicer's premises
at the terminated Servicer's expense. Subject to Section 2.08(b), the Successor
Servicer shall be entitled to be reimbursed pursuant to Section 2.8(a)(i) of the
Indenture, to the extent described therein, and any excess pursuant to Section
2.8(a)(ix) of the Indenture for reasonable costs incurred by it in connection
with a transfer of servicing from the Servicer to such Successor Servicer.
(b) On and after the time the Servicer receives a Termination
Notice pursuant to Section 5.02(a), the Back-up Servicer (unless the Insurer
shall have exercised its option pursuant to the following paragraph to appoint
an alternate Successor Servicer) shall be the successor in all respects to the
Servicer in its capacity as servicer under this Servicing Agreement and the
transactions set forth or provided for in this Servicing Agreement, and shall be
subject to all the rights, responsibilities, restrictions, duties, liabilities
and termination provisions relating thereto placed on the Servicer by the terms
and provisions of this Servicing Agreement except as otherwise stated herein.
The Issuer and such successor shall take such action, consistent with this
Servicing Agreement, as shall be necessary to effectuate any such succession. If
a Successor Servicer is acting as Servicer hereunder, it shall only be subject
to termination under Section 5.02 upon the occurrence of any Event of Servicing
Termination with respect to such Successor Servicer.
(c) On and after the receipt by the terminated Servicer of a
Termination Notice pursuant to this Section 5.02, the terminated Servicer shall
continue to perform all servicing functions under this Servicing Agreement until
the date specified in the Termination Notice. The Insurer (provided that no
Insurer Default shall have occurred and be continuing) may exercise at any time
(after a Termination Notice is given) its right to appoint as Successor Back-up
Servicer or as Successor Servicer a Person other than the Person serving as
Indenture Trustee or Back-up
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<PAGE>
Servicer, as the case may be, at the time, and (without limiting the Insurer's
obligations under the Policy with respect to the Note) shall have no liability
to the Issuer, the Indenture Trustee, the Person then serving as Back-up
Servicer, any Noteholder or any other Person if it does so. If a Successor
Servicer is not chosen within 90 calendar days after the receipt by the Servicer
of the Termination Notice, the Back-up Servicer shall act as Successor Servicer
unless it is legally unable to do so, in which event the outgoing Servicer shall
continue to act as Servicer until a successor has been appointed and accepted
such appointment. If the Back-up Servicer shall be legally unable to act as
Servicer, and an Insurer Default shall have occurred and be continuing, the
Back-up Servicer, the Indenture Trustee, Noteholders evidencing not less than
51% of the Note Balance or the Issuer may petition a court of competent
jurisdiction to appoint an Eligible Servicer as the Successor Servicer.
Notwithstanding the above, no provision of this Servicing Agreement shall be
construed as relieving the Back-up Servicer of its obligation to succeed as
Successor Servicer upon the termination of the Servicer pursuant to this Section
5.02 or the resignation of the Servicer pursuant to Section 5.08. If, upon the
termination of the Servicer pursuant to this Section 5.02 or the resignation of
the Servicer pursuant to Section 5.08, the Insurer appoints a Successor Servicer
other than the Back-up Servicer, the Back-up Servicer shall not be relieved of
its duties as Back-up Servicer hereunder. Within 30 days of termination of the
Servicer, if such termination causes a change in the address to which Obligor
payments are to be sent, the Successor Servicer shall send, or cause to be sent,
to each Obligor, a written notice of the name and mailing address of the
Successor Servicer to which payments on the Contracts are to be made.
(d) The Insurer or, if an Insurer Default has occurred and is
continuing, the Indenture Trustee, the Issuer, or the Indenture Trustee at the
direction of Noteholders evidencing not less than 51% of the Note Balance shall
as promptly as possible appoint a Successor Back-up Servicer following delivery
of a Termination Notice with respect to the Back-up Servicer. If the Insurer or
Indenture Trustee, as applicable, shall fail to approve a Successor Back-up
Servicer within 30 days of the date of a Termination Notice, the Indenture
Trustee may petition a court of competent jurisdiction for the appointment of a
Successor Back-up Servicer that is an Eligible Servicer. Notwithstanding the
above, the Indenture Trustee shall, if it is legally unable so to act, petition
a court of competent jurisdiction to appoint any Eligible Servicer as the
Successor Back-up Servicer hereunder.
(e) Upon its appointment, the Successor Servicer or Successor
Back-up Servicer, as the case may be, shall be the successor in all respects to
the terminated Servicer or Back-up Servicer, as the case may be, with respect to
servicing functions under this Servicing Agreement and shall be subject to all
the responsibilities, duties and liabilities (arising on and after the time of
such appointment except for liability arising from the condition of the
Servicer's records at the time the servicing duties are transferred to the
Back-up Servicer or other Successor Servicer or for actions or omissions of
other Persons) relating thereto placed on the Servicer or Back-up Servicer,
respectively, by the terms and provisions hereof (except as otherwise provided
in this Servicing Agreement with respect to the Back-up Servicer acting as
Servicer), any Successor Servicer shall become the successor Administrator in
accordance with Section 20 of the Administration Agreement, and all references
in this Servicing Agreement to the Servicer or
31
<PAGE>
Back-up Servicer shall be deemed to refer to the Successor Servicer or Successor
Back-up Servicer unless the context otherwise requires.
(f) In connection with such appointment and assumption, the
Back-up Servicer may make such arrangements for the compensation of itself and
the Successor Servicer out of collections of Contract payments, as it and such
Successor Servicer shall agree; provided, however, that no such compensation
shall be in excess of the Back-up Servicing Fees and Servicing Fees permitted to
the Back-up Servicer and the Servicer, respectively, pursuant to this Servicing
Agreement without the approval of the Insurer or, if an Insurer Default has
occurred and is continuing, Noteholders evidencing not less than 51% of the Note
Balance.
5.03. INDEMNITY BY THE SERVICER. The Servicer shall be liable to the
Issuer, the Insurer, the Indenture Trustee, the Noteholders and the Back-up
Servicer (collectively, the "Indemnified Parties") to the extent of the
following:
(a) The Servicer shall indemnify, defend and hold harmless the
Indemnified Parties and any of the officers, directors, employees and agents of
the Indemnified Parties from and against any and all costs, expenses, losses,
damages, claims and liabilities, including reasonable fees and expenses of
counsel and expenses of litigation, arising out of or resulting from the use,
ownership or operation by the Servicer or any affiliate thereof of a Financed
Vehicle.
(b) The Servicer shall indemnify, defend and hold harmless the
Indemnified Parties and any of the officers, directors, employees and agents of
the Indemnified Parties from and against any and all costs, expenses, losses,
claims, damages and liabilities to the extent that such cost, expense, loss,
claim, damage or liability arose out of, or was imposed upon any such Person
through the breach of this Servicing Agreement by the Servicer, the negligence,
misfeasance or bad faith of the Servicer in the performance of its duties under
this Servicing Agreement or by reason of reckless disregard of its obligations
and duties under this Servicing Agreement.
(c) The Servicer shall be strictly accountable for all payments
actually received on the Contracts.
THE FOREGOING INDEMNIFICATION SHALL APPLY WHETHER OR NOT SUCH
SECTION 5.03 LIABILITIES AND COSTS ARE IN ANY WAY OR TO ANY EXTENT OWED, IN
WHOLE OR IN PART, UNDER ANY CLAIM OR THEORY OF STRICT LIABILITY, OR ARE CAUSED,
IN WHOLE OR IN PART BY ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY ANY
INDEMNIFIED PARTY.
5.04. LIABILITY OF THE BACK-UP SERVICER. The Back-up Servicer shall not
be liable to the Servicer, the Issuer, the Insurer, the Indenture Trustee or the
Noteholders (i) by reason of any act, contract or transaction performed in good
faith by the Back-up Servicer pursuant to this Servicing Agreement nor shall it
be liable for any loss resulting therefrom or for any lost profit derived
therefrom or any errors in judgment, so long as such act, contract or
transaction shall, at the time at which it was performed or entered into, have
been reasonable and prudent under the
32
<PAGE>
circumstances and shall have conformed in all material respects to the express
provisions of this Servicing Agreement or (ii) for any action taken or for
errors in judgment committed directly resulting from fraud, negligence or
willful misconduct of the Seller, the Issuer, the Servicer, the Insurer, the
Indenture Trustee or the Noteholders.
5.05. NOTIFICATION. Upon discovery of the occurrence of any Event of
Servicing Termination, after the expiration of any applicable grace period, the
Servicer or the Back-up Servicer shall give written notice of the occurrence of
an Event of Servicing Termination to the Insurer, the Indenture Trustee, and the
Owner Trustee. Unless the Insurer or, if an Insurer Default has occurred and is
continuing, Noteholders evidencing not less than 51% of the Note Balance, gives
written notice to the Servicer or the Back-up Servicer, as the case may be,
within seven Business days of receipt of such notice from the Servicer or the
Back-up Servicer that the Insurer or Noteholders evidencing not less than 51% of
the Note Balance, as the case may be, have waived such Event of Servicing
Termination, the Servicer or the Back-up Servicer, as the case may be, shall
then give notice in writing to the Rating Agencies, the Issuer and any other
Persons identified on a list provided to the Servicer or the Back-up Servicer,
as the case may be, by the Issuer as such list may be amended from time to time,
and the Indenture Trustee shall give notice to the Noteholders.
5.06. WAIVER OF EVENT OF DEFAULTS. The Insurer or the Indenture Trustee
at the direction of Noteholders evidencing not less than 51% of the Note Balance
(with the prior written consent of the Insurer if no Insurer Default shall have
occurred and be continuing) may waive any Event of Servicing Termination, except
for an Event of Servicing Termination arising under Section 5.01(e).
Notwithstanding the preceding sentence, the Insurer (if no Insurer Default shall
have occurred and be continuing) may, on behalf of all Noteholders, waive any
Event of Servicing Termination. Upon any such waiver of an Event of Servicing
Termination, such default shall cease to exist, and any default arising
therefrom shall be deemed to have been remedied for every purpose of this
Servicing Agreement. No such waiver shall extend to any subsequent or other
default or impair any right consequent thereon except to the extent expressly so
waived.
5.07. SURVIVAL. The agreements in Section 5.03 shall survive the
termination of the Indenture and the payment in full of the Note.
5.08. SERVICER AND BACK-UP SERVICER NOT TO RESIGN. Subject to the
provisions of Section 5.02, neither the Servicer nor the Back-up Servicer shall
resign from the obligations and duties imposed on it by this Servicing Agreement
as Servicer or Back-up Servicer except upon a determination that by reason of a
change in legal requirements the performance of its duties under this Servicing
Agreement would cause it to be in violation of such legal requirements in a
manner which would have a material adverse effect on the Servicer or the Back-up
Servicer, as the case may be, and the Insurer does not elect to waive the
obligations of the Servicer or the Back-up Servicer, as the case may be, to
perform the duties which render it legally unable to act or to delegate those
duties to another Person. Any such determination permitting the resignation of
the Servicer or Back-up Servicer shall be evidenced by an opinion of counsel to
such effect delivered and acceptable to the Issuer, the Indenture Trustee, and
the Insurer. No resignation of the Servicer shall become effective until the
Back-up Servicer or an entity acceptable to the Insurer
33
<PAGE>
shall have assumed the responsibilities and obligations of the Servicer. No
resignation of the Back-up Servicer shall become effective until an entity
acceptable to the Insurer shall have assumed the responsibilities and
obligations of the Back-up Servicer; provided, however, that in the event a
successor Back-up Servicer is not appointed within 60 days after the Back-up
Servicer has given notice of its resignation and has provided the opinion of
counsel required by this Section 5.08, the Back-up Servicer may petition a court
of competent jurisdiction for its removal.
ARTICLE VI.
TERMINATION OF AGREEMENT
6.01. TERM. This Servicing Agreement shall remain in effect until
termination of the Indenture.
6.02. EFFECT OF TERMINATION. Upon termination of this Servicing
Agreement, the Servicer shall, at the direction of the Issuer, promptly deliver
to the Issuer or its designee all Servicer Files and any related files and
correspondence in its possession as are related to the management of the
Contracts and the services provided hereunder.
6.03. TRANSFER OF SERVICING. Upon termination of this Servicing
Agreement, the Servicer shall cooperate in the transfer of the Servicer Files.
Any matters pending at the effective termination date will continue to be
processed in an orderly and timely fashion; it being intended, however, that
responsibility for the Contracts shall transfer as quickly as practicable and in
any event within thirty days after the termination date.
ARTICLE VII.
MISCELLANEOUS PROVISIONS
7.01. AMENDMENT. This Servicing Agreement may only be amended by mutual
written consent of the parties hereto and with the prior written consent of the
Insurer and Noteholders evidencing not less than 51% of the Note Balance. No
amendment made to the Sale and Allocation Agreement or the Indenture, without
the Back-up Servicer's or the Servicer's written consent, shall be effective as
to the Back-up Servicer or the Servicer, respectively, to the extent such
amendment is disadvantageous in any respect to the Back-up Servicer or the
Servicer, respectively. The Rating Agencies and any other Persons identified on
a list provided to the Issuer, as such list may be amended from time to time,
shall be given by the Issuer prior notice of any proposed amendment to the
Servicing Agreement, the Sale and Allocation Agreement or the Indenture and,
upon any such amendment, shall promptly be provided by the Issuer a copy of any
such amendment.
7.02. WAIVERS. The provisions of this Servicing Agreement may only be
waived by written consent of the Insurer or, if an Insurer Default has occurred
and is continuing, Noteholders evidencing not less than 51% of the Note Balance,
and the parties hereto. The failure of any party at any time to require
performance by the other of any provision of this
34
<PAGE>
Servicing Agreement shall in no way affect that party's right to enforce such
provision, nor shall the waiver by any party of any breach of any provision of
this Servicing Agreement be taken or held to be a waiver of any further breach
of the same provision or any other provision.
7.03. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be delivered personally or mailed by
first-class registered or certified mail, postage prepaid, or by telephonic
facsimile transmission and overnight delivery service, postage prepaid, in any
case addressed as follows:
To the Servicer:
First Investors Servicing Corporation
c/o First Investors Financial Services, Inc.
675 Bering, Suite 710
Houston, Texas 77057
Attention: Bennie H. Duck
Telephone: (713) 977-2600
Fax: (713) 260-0028
To the Indenture Trustee/Back-up Servicer:
Norwest Bank Minnesota, National Association
Norwest Center
MAC N9311-161
Sixth Street and Marquette Avenue
Minneapolis, Minnesota 55479
Attention: Corporate Trust Services
Telephone: (612) 667-8058
Fax: (612) 667-3464
35
<PAGE>
To the Issuer:
First Investors Auto Owner Trust 2000-A
c/o Bankers Trust (Delaware), as Owner Trustee
1011 Centre Road, Suite 200
Wilmington, Delaware 19805
Attention: Corporate Trust
Telephone: (302) 636-3305
Fax: (302) 636-3222
with a copy to:
Bankers Trust Company
4 Albany Street, 10th Floor
New York, New York 10006
Attention: Structured Finance Group
Telephone: (212) 250-6501
Fax: (212) 250-6439
To the Rating Agencies:
Moody's Investors Service, Inc.
99 Church Street
New York, New York 10007
Attention: Irina Faynzilberg
Phone: (212) 553-7297
Fax: (212) 553-3856
Standard & Poor's
55 Water Street
New York, New York 10041
Attention: Nick Danzis
Phone: (212) 438-8436
Fax: (212) 438-2649
To the Insurer:
MBIA Insurance Corporation
113 King Street
Armonk, New York 10504
Attention: Insured Portfolio Management-
Structured Finance (IPM-SF)
Phone: (914) 273-4545
Fax: (914) 765-3810
36
<PAGE>
Such notice, request, consent or other communication shall be deemed given when
so delivered, or if mailed, two days after deposit with the U.S. Postal Service.
7.04. SEVERABILITY OF PROVISIONS. If one or more of the provisions of
this Servicing Agreement shall be held invalid for any reason, such provisions
shall be deemed severable from the remaining provisions of this Servicing
Agreement and shall in no way affect the validity or enforceability of such
remaining provisions. To the extent permitted by law, the parties hereto hereby
waive any law which renders any provision of this Servicing Agreement prohibited
or unenforceable.
7.05. RIGHTS CUMULATIVE. All rights and remedies under this Servicing
Agreement are cumulative, and none is intended to be exclusive of another. No
delay or omission in insisting upon the strict observance or performance of any
provision of this Servicing Agreement, or in exercising any right or remedy,
shall be construed as a waiver or relinquishment of such provision, nor shall it
impair such right or remedy. Every right and remedy may be exercised from time
to time and as often as deemed expedient.
7.06. NO OFFSET. Prior to the termination of this Servicing Agreement,
the obligations of the Back-up Servicer and the Servicer under this Servicing
Agreement shall not be subject to any defense, counterclaim or right of offset
which the Back-up Servicer or the Servicer may have against the other or against
the Issuer, the Seller, the Insurer, any Noteholder or the Indenture Trustee,
whether in respect of this Servicing Agreement, any Contract or otherwise.
7.07. INSPECTION AND AUDIT RIGHTS. The Servicer agrees that, upon prior
written notice, it will permit the Issuer, the Insurer, the Back-up Servicer, or
the Indenture Trustee and their respective representatives, during the
Servicer's normal business hours, to examine the Servicer Files, all the books
of account, records, reports and other papers of the Servicer relating to the
Contracts, to make copies and extracts therefrom, to cause such books to be
audited by independent public accountants selected by the Issuer, and to discuss
its affairs, finances and accounts relating to the Contracts with its officers,
employees and independent certified public accountants, all at such reasonable
times and as often as may be reasonably requested. Any expense incident to the
exercise by the Issuer, the Insurer or the Indenture Trustee of any right under
this paragraph 7.07 shall be borne by the Servicer. The Servicer shall allow
such examination within two Business Days of receipt of the required notice if
so requested by the requesting party.
7.08. POWERS OF ATTORNEY. The Issuer shall, from time to time, provide
to the employees of the Servicer and the Indenture Trustee limited, revocable
powers of attorney or other such written authorizations as may be appropriate to
enable the Servicer and the Indenture Trustee to perform its respective
obligations under this Servicing Agreement and the Indenture; provided however,
that the Issuer shall not be required to provide such powers with respect to any
matter for which the Issuer does not have authority to perform itself.
7.09. ASSIGNMENT AND BINDING EFFECT. Except with respect to the pledge
of its rights under this Servicing Agreement by the Issuer to the Indenture
Trustee pursuant to the Indenture
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<PAGE>
and as expressly provided herein, this Servicing Agreement may be assigned by
the Issuer only with the written consent of the parties hereto and the Insurer
or, if an Insurer Default has occurred and is continuing, Noteholders evidencing
not less than 51% of the Note Balance; however, in the event of an assignment,
all provisions of this Servicing Agreement shall be binding upon and inure to
the benefit of the respective successors and assigns of the parties hereto.
7.10. CAPTIONS. The article, paragraph and other headings contained in
this Servicing Agreement are for reference purposes only, and shall not limit or
otherwise affect the meaning hereof.
7.11. COUNTERPARTS. This Servicing Agreement may be executed in any
number of counterparts, each of which counterparts shall be deemed to be an
original, and such counterparts shall constitute but one and the same
instrument.
7.12. GOVERNING LAW. This Servicing Agreement shall be deemed entered
into under and shall be governed by and interpreted in accordance with the laws
of the State of Texas, except to the extent that it is mandatory that the laws
of some other jurisdiction apply.
7.13. PARTIES. Except as set forth in Section 7.16 hereof, this
Servicing Agreement shall inure solely to the benefit of and shall be binding
upon the parties hereto, and their respective successors, legal representatives
and assigns, and no other person shall have or be construed to have any
equitable right, remedy or claim under or in respect of or by virtue of this
Servicing Agreement or any provision contained herein.
7.14. RELATIONSHIP OF THE PARTIES. The relationship of the parties to
this Servicing Agreement is that of independent contractors. Neither this
Servicing Agreement nor any of the activities contemplated hereby shall be
deemed to create any partnership, joint venture, agency or employer/employee
relationship among the Back-up Servicer, the Servicer and the Issuer.
7.15. NO BANKRUPTCY PETITION AGAINST THE ISSUER OR DEPOSITOR. The
Back-up Servicer, the Servicer and the Indenture Trustee agree that, prior to
the date that is one year and one day after the payment in full of the Notes,
none of them will institute against the Issuer, or join any other Person in
instituting against the Issuer or the Depositor, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other proceedings under
the laws of the United States or any state of the United States. This Section
7.15 shall survive the termination of this Servicing Agreement.
7.16. THIRD PARTY BENEFICIARIES. This Servicing Agreement shall inure to
the benefit of the Noteholders and the Insurer and their respective successors
and assigns. Without limiting the generality of the foregoing, all covenants and
agreements in this Servicing Agreement which expressly confer rights upon the
Insurer or the Noteholders shall be for the benefit of and run directly to them,
and each shall be entitled to rely on and enforce such covenants to the same
extent as if it were a party hereto. Notwithstanding the foregoing, the
Noteholder shall have no rights to enforce the provisions of this Servicing
Agreement so long as there is no Insurer Default that is continuing.
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<PAGE>
7.17. OTHER AGREEMENTS. The Servicer and the Back-up Servicer will not
be obligated or bound by any provision or term of any other agreement, including
the Indenture and the Sale and Allocation Agreement, except to the extent, and
only to the extent, expressly stated herein or therein.
7.18. PROCEDURE FOR INDEMNIFICATION. Notwithstanding anything to the
contrary in this Servicing Agreement, in the event that a Person is entitled to
indemnification pursuant to the terms of this Servicing Agreement, such Person
(hereinafter called the "Indemnified Party") shall promptly notify the person
against whom such indemnity may be sought (hereinafter called the "Indemnifying
Party") in writing and the Indemnifying Party, upon request of the Indemnified
Party, shall retain counsel reasonably satisfactory to the Indemnified Party or,
at the Indemnified Party's option, such Indemnified Party may select its own
counsel with the consent of the Indemnifying Party, which consent shall not be
unreasonably withheld or delayed, to represent the Indemnified Party and any
others the Indemnified Party may designate in such proceeding and shall pay the
reasonable fees and disbursements of such counsel related to such proceeding. It
is understood that the Indemnifying Party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm at any one time (in
addition to any local counsel) for all such Indemnified Parties (unless
necessary because of conflicts of interest), and all such fees and expenses
shall be reimbursed as they are incurred. Such firm shall be designated in
writing by the Indemnified Party. The Indemnifying Party shall not be liable for
any settlement of any proceeding effected without its written consent, which
consent shall not be unreasonably withheld or delayed, but if settled with such
consent or if there be an adverse final judgment, the Indemnifying Party agrees
to indemnify the Indemnified Party from and against any loss or liability by
reason of such settlement or judgment.
7.19. RESERVED.
7.20. PURCHASE AND SUBSEQUENT PLEDGE. The Servicer hereby acknowledges
that the Issuer will acquire the Contracts and the other items included in the
Collateral pursuant to the Sale and Allocation Agreement and will pledge the
Contracts and the other items included in the Collateral along with the Issuer's
rights under this Servicing Agreement and the Sale and Allocation Agreement to
the Indenture Trustee for the benefit of the Secured Parties pursuant to the
terms of the Indenture, and that the representations and warranties contained in
the Sale and Allocation Agreement, this Servicing Agreement and the Indenture
and the rights of the Issuer under the Indenture, this Servicing Agreement and
the Sale and Allocation Agreement are intended to benefit the Noteholders and
the Insurer.
7.21. EXERCISE OF RIGHTS BY INSURER. All rights granted to the Insurer
pursuant to this Servicing Agreement shall terminate during the pendency of an
Insurer Default and during such time the Insurer's rights may be exercised by
Noteholders evidencing not less than 51% of the Note Balance, PROVIDED, HOWEVER,
the Insurer's rights shall be reinstated in full, immediately upon the cure of
such Insurer Default.
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<PAGE>
7.22 LIMITATION OF LIABILITY. Notwithstanding any other provision herein
or elsewhere, this Servicing Agreement has been executed and delivered by
Bankers Trust (Delaware), not in its individual capacity, but solely in its
capacity as Owner Trustee of the Issuer, in no event shall Bankers Trust
(Delaware) or the Owner Trustee have any liability in respect of the
representations, warranties, or obligations of the Issuer hereunder or under any
other Transaction Document and for all purposes of this Agreement and each other
Transaction Document the Owner Trustee and Bankers Trust (Delaware) shall be
entitled to the benefits of the Trust Agreement.
[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
40
<PAGE>
IN WITNESS WHEREOF, the Issuer, the Back-up Servicer, the Servicer, the
Depositor, and the Indenture Trustee have caused this Servicing Agreement to be
duly executed by their respective authorized officers as of the date and year
first above written.
<TABLE>
<CAPTION>
<S> <C>
First Investors Auto Owner Trust 2000-A, as Issuer
By: Bankers Trust (Delaware), not in its individual capacity
but solely as Owner Trustee on behalf of the Trust
By: ______________________________
Name:
Title:
Norwest Bank Minnesota, National Association, not in its
individual capacity but solely as Back-up Servicer
By: ______________________________
Name:
Title:
Norwest Bank Minnesota, National Association, not in its
individual capacity but solely as Indenture Trustee
By: ______________________________
Name:
Title:
First Investors Servicing Corporation, as Servicer
By: _______________________________
Bennie H. Duck, Vice President
First Investors Auto Investment Corp., as Depositor
By: _______________________________
Bennie H. Duck, Vice President
</TABLE>
<PAGE>
MONTHLY SERVICER REPORT
FIRST INVESTORS AUTO OWNER TRUST 2000-A
Determination Date
Payment Date
Collection Period
================================================================================
COLLATERAL BALANCES
Beginning Pool Balance
Scheduled Principal Received
Contracts Defaulted During Collection Period
Ending Pool Balance 0
================================================================================
AVAILABLE FUNDS
Principal Cash Received
Interest, Fees and other amounts Received on Contracts
Liquidation Proceeds
Interest Earned on Collection Accounts
Purchase Amounts
Available Funds 0
Reserve Account Draw Amount
Total Available Funds 0
Policy Claim Amount
================================================================================
ALLOCATION OF AVAILABLE FUNDS ---------
Trustee Fee
Trustee Expenses
Back-up Servicing Fee
Back-up Servicer Expenses
Total Servicing Fee to Servicer
Monthly Note Interest
Unreimbursed payments to Insurer
If notes accelerated, to the Note Payment Account
Deposit to Reserve Account
Any other amounts due under Transaction Documents
Distribution to the Depositor
================================================================================
<PAGE>
RESERVE ACCOUNT:
Beginning Reserve Account Amount
Reserve Account Draw Amount
Deposits to Reserve Account
Interest Earned
Ending Reserve Account Amount 0
Required Reserve Account Amount
Excess (Deficiency) 0
================================================================================
NOTE INFORMATION
Original Note Balance
Beginning Note Balance
Monthly Note Principal
Ending Note Balance
Note Pool Factor #DIV/0!
Monthly Note Interest
================================================================================
DELINQUENCY INFORMATION:
% of Total
Principal Principal
Number Balance Balance
--------------------------------
Contracts current to 30 days delinquent #DIV/0!
--------------------------------
Contracts 31 to 60 days delinquent #DIV/0!
--------------------------------
Contracts 61 to 90 days delinquent #DIV/0!
--------------------------------
Contracts more than 90 days delinquent #DIV/0!
--------------------------------
Total 0 0 #DIV/0!
================================================================================
DELINQUENCY RATIO:
Prin Balance Ending Prin
of Delinquent Balance of Delinquency
Contracts all Contracts Ratio
-----------------------------------------
Collection Period #DIV/0!
-----------------------------------------
Previous Collection Period #DIV/0!
-----------------------------------------
Second Preceding Collection Period #DIV/0!
-----------------------------------------
three month average Delinquency Ratio #DIV/0!
-----------------------------------------
================================================================================
OTHER FINANCIAL COVENANTS OF FIFSG:
A. Minimum GAAP Equity as % of GAAP Equity as of the most recent quarter
total portfolio end
-----------
Aggregate balance of on-balance sheet
receivables
-----------
Ratio of GAAP Equity/receivables #DIV/0!
Previous Current 6 Month
Quarter Quarter Total
B. Minimum EBITDA Coverage EBITDA 0
Interest Expense 0
Ratio of EBITDA/Interest Expense #DIV/0!
<PAGE>
CONTRACT CHARACTERISTICS:
weighted average APR of the Contracts ---------
weighted average remaining term to maturity of the Contracts (months)
================================================================================
TRIGGER EVENTS (A "Y" in any box below indicates that a Trigger Event has
occurred):
RE-LIENING TRIGGERS
Has any event listed under "Re-Liening Trigger" in section 1.1 of the
Indenture occurred (Y or N)
RESERVE ACCOUNT INCREASE EVENT
Is the three month average Delinquency Ratio greater than 6% in months 1-12
or 7.5% thereafter? (Y or N)
Is the Cumulative Net Loss Rate greater than the corresponding percentage
designated below? (Y or N)
EVENT OF DEFAULT
Is the three month average Delinquency Ratio greater than 7% in months 1-12
or 8.5% thereafter? (Y or N)
Is the Cumulative Net Loss Rate greater than the corresponding percentage
designated below? (Y or N)
Maximum Level
--------------------------
Month Cumulative Reserve
after Net Loss Account Event of
closing Percentage Increase Event Default
-------- ---------- -------------- --------
3 -- 0.20% 0.25%
6 -- 1.50% 1.80%
9 -- 2.50% 3.00%
12 -- 3.60% 4.30%
15 -- 4.60% 5.60%
18 -- 5.50% 6.60%
21 -- 6.10% 7.40%
24 -- 6.70% 8.20%
27 -- 7.30% 8.80%
30 -- 7.80% 9.50%
33 -- 8.20% 10.00%
36 -- 8.50% 10.40%
39 -- 8.80% 10.70%
42 -- 9.00% 11.00%
45 -- 9.10% 11.10%
Has FIFSG failed to maintain a minimum GAAP Equity as a % of on-balance
sheet receivables of 10%? (Y or N)?
Has FIFSG failed to maintain a minimum EBITDA coverage of 1.1 to 1 (Y or N)?
Has any other event listed in Article V of the Indenture occurred? (Y or N)
================================================================================
<PAGE>
IN WITNESS WHEREOF, THE UNDERSIGNED HAS DULY EXECUTED AND DELIVERED THIS
MONTHLY SERVICER REPORT AS DATED ABOVE.
FIRST INVESTORS SERVICING CORPORATION, AS SERVICER
BY:
NAME:
TITLE:
<PAGE>
EXHIBIT A-2
CERTIFICATE OF OFFICER
FIRST INVESTORS SERVICING CORPORATION
The undersigned, a duly elected and qualified Officer of First Investors
Servicing Corporation, makes this certificate pursuant to Section 2.02(c) of the
Servicing Agreement dated as of January 1, 2000 by and among First Investors
Auto Owner Trust 2000-A, as Issuer, Norwest Bank Minnesota, National
Association, as Back-up Servicer and Indenture Trustee, First Investors Auto
Investment Corp., as Depositor and First Investors Servicing Corporation, as
Servicer, and does hereby certify to the best of his knowledge that the attached
monthly Servicer report hereby being furnished to the Indenture Trustee pursuant
to Section 2.02 (c) has been prepared in accordance with the terms and
conditions of the Transaction Documents, is true and correct in all material
respects and presents fairly the results covered thereby for the Collection
Period ended ______________________. This certification is being provided as of
the Determination Date of _____________________.
By:__________________________________
Authorized Officer
<PAGE>
EXHIBIT B
MONTHLY VERIFICATION CERTIFICATE
FIRST INVESTORS AUTO OWNER TRUST 2000-A
Date:
TO: DISTRIBUTION LIST ATTACHED
RE:
This certificate is furnished pursuant to Section 2.02(d) of the
Servicing Agreement (Agreement), dated January 1, 2000, by Norwest Bank
Minnesota, National Association (the Back-up Servicer) as the Back-up Servicer
for the above-entitled issue. Terms used but not defined herein shall have the
meanings provided in the Agreement. The Back-up Servicer has made no independent
examination of the Monthly Servicer Report beyond the review specifically
required in the Agreement.
THE UNDERSIGNED HEREBY CERTIFIES THAT:
1. I am a duly elected Corporate Trust Officer of Norwest Bank Minnesota,
National Association. (Back-up Servicer).
2. The file received by the Back-up Servicer on [insert date], is in readable
and usable form.
3. The Back-up Servicer has verified that the following obtained from the file
is in agreement with amount for such items reported in the Monthly Statement
with respect to the month ending [insert date], except as noted on the attached
report:
(i) Aggregate Principal balance of Contracts
(ii) Delinquency ratio
(iii) Average delinquency Ratio
(iv) Cumulative Net Loss Ratio
The foregoing certifications are delivered this [insert date].
_______________________________
Name:
Title:
EXHIBIT 10.66
EXECUTION COPY
MBIA INSURANCE CORPORATION,
as Insurer
FIRST INVESTORS SERVICING CORPORATION,
as Servicer
FIRST INVESTORS FINANCIAL SERVICES, INC.
as Seller and as Administrator
FIRST INVESTORS AUTO INVESTMENT CORP.,
as Depositor
FIRST INVESTORS AUTO OWNER TRUST 2000-A,
as Issuer
BANKERS TRUST (DELAWARE),
as Owner Trustee
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION,
as Back-up Servicer and Indenture Trustee
INSURANCE AGREEMENT
First Investors Auto Owner Trust 2000-A
$167,969,000 7.174% Asset-Backed Notes
Dated as of January 1, 2000
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS.............................................................. 1
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations and Warranties of the Servicer, the
Seller and the Depositor .................................. 6
Section 2.02. Affirmative Covenants of the Servicer, the Seller
and the Depositor ......................................... 10
Section 2.03. Negative Covenants of the Servicer, the Seller and
the Depositor ............................................. 17
Section 2.04. Representations and Warranties of the Issuer .............. 18
Section 2.05. Affirmative Covenants of the Issuer ....................... 21
Section 2.06. Negative Covenants of the Issuer .......................... 24
Section 2.07. Representations, Warranties and Covenants of Indenture
Trustee and Back-up Servicer .............................. 25
Section 2.08. Representations, Warranties and Covenants of Owner Trustee 27
Section 2.09. Negative Covenant of the Administrator..................... 28
ARTICLE III
THE POLICY; REIMBURSEMENT
Section 3.01. Issuance of the Policy..................................... 28
Section 3.02. Payment of Fees and Insurance Premium ..................... 30
Section 3.03. Reimbursement and Additional Payment Obligation ........... 31
Section 3.04. Indemnification; Limitation of Liability .................. 32
Section 3.05. Payment Procedure ......................................... 35
ARTICLE IV
FURTHER AGREEMENTS
Section 4.01. Effective Date; Term of the Insurance Agreement .......... 35
Section 4.02. Further Assurances and Corrective Instruments ............. 35
Section 4.03. Obligations Absolute ...................................... 36
Section 4.04. Assignments; Reinsurance; Third-Party Rights .............. 37
Section 4.05. Liability of the Insurer .................................. 38
Section 4.06. Parties Will Not Institute Insolvency Proceedings ......... 39
<PAGE>
Section 4.07. Indenture Trustee, Depositor, Back-up Servicer, Seller
and Servicer To Join in Enforcement Action................. 39
Section 4.08. Subrogation ............................................... 39
ARTICLE V
DEFAULTS; REMEDIES
Section 5.01. Defaults .................................................. 39
Section 5.02. Remedies; No Remedy Exclusive ............................. 41
Section 5.03. Waivers ................................................... 42
ARTICLE VI
MISCELLANEOUS
Section 6.01. Amendments, Etc ........................................... 42
Section 6.02. Notices ................................................... 42
Section 6.03. Severability .............................................. 44
Section 6.04. Governing Law ............................................. 45
Section 6.05. Consent to Jurisdiction ................................... 45
Section 6.06. Consent of the Insurer..................................... 45
Section 6.07. Counterparts .............................................. 46
Section 6.08. Headings .................................................. 46
Section 6.09. Trial by Jury Waived ...................................... 46
Section 6.10. Limited Liability ......................................... 46
Section 6.11. Entire Agreement .......................................... 46
Section 6.12. Limitation of Liability ................................... 46
ii
<PAGE>
INSURANCE AGREEMENT
This INSURANCE AGREEMENT (this "Insurance Agreement"), dated as of January
1, 2000 by and among FIRST INVESTORS FINANCIAL SERVICES, INC. as seller
(together with its permitted successors and assigns, the "Seller") and as
Administrator, FIRST INVESTORS SERVICING CORPORATION, as Servicer (together with
its permitted successors and assigns, the "Servicer"), FIRST INVESTORS AUTO
INVESTMENT CORP., as Depositor (the "Depositor"), FIRST INVESTORS AUTO OWNER
TRUST 2000-A, as Issuer (the "Issuer"), BANKERS TRUST (DELAWARE), as Owner
Trustee (the "Owner Trustee") MBIA INSURANCE CORPORATION, as Insurer (the
"Insurer"), NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Back-up Servicer
(the "Back-up Servicer") and as Indenture Trustee (the "Indenture Trustee").
WHEREAS, the Indenture dated as of January 1, 2000 relating to the First
Investors Auto Owner Trust 2000-A $167,969,000 7.174% Asset-Backed Notes (the
"Obligations"), between the Issuer and the Indenture Trustee (the "Indenture")
provides for, among other things, the issuance of asset backed notes and the
Insurer has issued its note guaranty insurance policy (the "Policy") that
guarantees certain payments on the Obligations;
WHEREAS, the Insurer shall be paid an insurance premium pursuant to the
Indenture, and the details of such premium are set forth herein; and
WHEREAS, the Servicer, the Seller, the Depositor and the Issuer have
undertaken certain obligations in consideration for the Insurer's issuance of
the Policy;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
The terms defined in this Article I shall have the meanings provided
herein for all purposes of this Insurance Agreement, unless the context clearly
requires otherwise, in both singular and plural form, as appropriate. Unless the
context clearly requires otherwise, all capitalized terms used herein and not
otherwise defined in this Article I shall have the meanings assigned to them in
the Indenture. All words used herein shall be construed to be of such gender or
number as the circumstances require. This "Insurance Agreement" shall mean this
Insurance 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 Insurance Agreement as a whole and not to any particular paragraph, clause
or other subdivision hereof, unless otherwise specifically noted.
<PAGE>
"ADMINISTRATION AGREEMENT" means the Administration Agreement dated as of
January 1, 2000, between the Administrator, the Issuer and the Indenture Trustee
as the same may be amended or supplemented from time to time in accordance with
the terms thereof.
"ADMINISTRATOR" means First Investors Financial Services, Inc. or any
successor Administrator under the Administration Agreement.
"ADVERSE SELECTION PROCEDURE" means any method of selecting or identifying
a Contract eligible to be included in the Trust Estate, other than in accordance
with the Transaction Documents, that materially and adversely affects the
representative nature of the sample of Contracts so selected.
"BUSINESS DAY" means any day other than (i) a Saturday or a Sunday or (ii)
a day on which banking institutions in New York City or in the city in which the
corporate trust office of the Indenture Trustee under the Indenture is located
are authorized or obligated by law or executive order to close.
"CHANGE IN CONTROL" shall mean the occurrence of any of the following (a)
any Person shall, at any time following the Closing Date, acquire 51% or more of
the total outstanding shares of FIFSG; (b) any Person shall, at any time
following the Closing Date, acquire directly or indirectly 51% or more of the
voting control with respect to the total outstanding shares of FIFSG; (c) FIFSG
shall cease to own, directly or indirectly, 51% or more of the total outstanding
shares of the Seller or the Servicer; or (d) FIFSG shall not have directly or
indirectly 51% or more of the voting control with respect to the total
outstanding shares of the Seller or the Servicer.
"CODE" means the Internal Revenue Code of 1986, including, unless the
context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"COMMISSION" means the Securities and Exchange Commission.
"DATE OF ISSUANCE" means the date on which the Policy is issued as
specified therein.
"DEFAULT" means any event which results, or which with the giving of
notice or the lapse of time or both would result, in an Event of Default.
"DOCUMENTS" shall have the meaning set forth in section 2.01(k) hereof.
"EVENT OF DEFAULT" means any event of default specified in Section 5.01
hereof.
"FIFSG" means First Investors Financial Services Group, Inc.
"FINANCIAL STATEMENTS" means, with respect to FIFSG, the balance sheets
and the statements of income, retained earnings and cash flows and the notes
thereto which have been provided to the Insurer.
2
<PAGE>
"FISCAL AGENT" means the Fiscal Agent, if any, designated pursuant to the
terms of the Policy.
"GUARANTY" means the Guaranty entered into as of January 1, 2000, by First
Investors Financial Services, Inc., as Guarantor, the Depositor, the Issuer, the
Servicer, the Back-up Servicer and the Indenture Trustee.
"INDEMNIFICATION AGREEMENT" means the Indemnification Agreement dated as
of January 12, 2000, among the Insurer, the Seller and the Initial Purchaser.
"INDENTURE" means the Indenture dated as of January 1, 2000 between the
Issuer, the Seller and the Indenture Trustee as the same may be amended or
supplemented from time to time in accordance with the terms thereof.
"INDENTURE TRUSTEE" means Norwest Bank Minnesota, National Association, a
national banking association, as Indenture Trustee under the Indenture, and any
successor Indenture Trustee under the Indenture.
"INITIAL PURCHASER" means Banc of America Securities LLC.
"INSURANCE PREMIUM" means the premium payable in accordance with Section
3.02 hereof.
"INSURER DEFAULT" means the occurrence and continuance of any failure of
the Insurer to make payments under the Policy in accordance with its terms.
"INSURER INSOLVENCY" means (i) the entry of a decree or order of a court
or agency having jurisdiction in respect of the Insurer 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 Insurer 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 Insurer and the continuance of any such decree or order
undischarged or unstayed and in force for a period of 90 consecutive days; (ii)
the Insurer 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 Insurer or of or relating to all or substantially all of its
property; or (iii) the Insurer 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.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended.
"LATE PAYMENT RATE" means, for any date of determination, the rate of
interest as it is publicly announced by Citibank, N.A. at its principal office
in New York, New York as its prime
3
<PAGE>
rate (any change in such prime rate of interest to be effective on the date such
change is announced by Citibank, N.A.) plus 3%. 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 any applicable law limiting interest rates.
"LIABILITIES" shall have the meaning ascribed to such term in Section
3.04(a) hereof.
"LOSSES" means (i) any actual out-of-pocket loss paid by the Insurer or
its respective parents, subsidiaries and affiliates or any shareholder,
director, officer, employee, agent or any "controlling person" (as such term is
used in the Securities Act) of any of the foregoing, and (ii) any actual
out-of-pocket costs and expenses paid by such party, including reasonable fees
and expenses of its counsel, to the extent not paid, satisfied or reimbursed
from funds provided by any other Person (provided that the foregoing shall not
create or imply any obligation to pursue recourse against any such other
Person).
"MATERIAL ADVERSE CHANGE" means, in respect of any Person, a material
adverse change in (i) the business, financial condition, results of operations
or properties of such Person or (ii) the ability of such Person to perform its
obligations under any of the Transaction Documents.
"MOODY'S" means Moody's Investors Service, Inc., a Delaware corporation,
and any successor thereto, 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 Insurer.
"OBLIGATIONS" shall have the meaning as defined in the Policy.
"OBLIGOR" means the original obligor under each Contract, including any
guarantor of such obligor and their respective successors.
"OFFERING DOCUMENT" means the offering memorandum dated January 12, 2000
of the Issuer in respect of the Obligations (and any amendment or supplement
thereto) and any other offering document in respect of the Obligations prepared
by the Servicer, the Seller, Depositor or the Issuer that makes reference to the
Policy.
"OPINION FACTS AND ASSUMPTIONS" means the facts and assumptions contained
in the insolvency opinion dated January 24, 2000 by Thompson & Knight under the
heading "Facts and Assumptions" insofar as they relate to the Seller, the Issuer
and the Depositor.
"OWNERS" means registered holders of Obligations.
"OWNER TRUSTEE" means Bankers Trust (Delaware), not in its individual
capacity, but solely as Owner Trustee of the Issuer.
4
<PAGE>
"PERSON" means an individual, joint stock company, trust, unincorporated
association, joint venture, corporation, business or owner trust, limited
liability company, partnership or other organization or entity (whether
governmental or private).
"PREMIUM PERCENTAGE" shall have the meaning ascribed to such term in
Section 3.02 hereof.
"PREMIUM SIDE LETTER AGREEMENT" means that certain Premium Letter dated as
of January 21, 2000 between the Seller and the Insurer specifying the up-front
Insurance Premium payable on the Closing Date and the monthly Insurance Premium
payable to the Insurer pursuant to the Indenture.
"PURCHASE AGREEMENT" means the Purchase Agreement between the Initial
Purchaser and the Depositor with respect to the offer and sale of the
Obligations, as the same may be amended from time to time.
"SALE AND ALLOCATION AGREEMENT" means the Sale and Allocation Agreement
dated as of January 1, 2000, among the Servicer, the Indenture Trustee and the
Issuer and the Seller as the same may be amended or supplemented from time to
time in accordance with the terms thereof.
"SECURITIES ACT" means the Securities Act of 1933, including, unless the
context otherwise requires, the rules and regulations thereunder, as amended
from time to time.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of 1934,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"SERVICING AGREEMENT" means the Servicing Agreement dated as of January 1,
2000 between the Servicer, the Back-up Servicer, and the Issuer.
"S&P" means Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc., and any successor thereto, and, if such corporation
shall for any reason no longer perform the functions of a securities rating
agency, "S&P" shall be deemed to refer to any other nationally recognized rating
agency designated by the Insurer.
"TERM OF THE INSURANCE AGREEMENT" shall be determined as provided in
Section 4.01 hereof.
"TRANSACTION" means the transactions contemplated by the Transaction
Documents, including the transactions described in the Offering Document.
"TRANSACTION DOCUMENTS" means this Insurance Agreement, the
Indemnification Agreement, the Premium Side Letter Agreement, the Indenture, the
Offering Document, the Guaranty, the Trust Agreement, the Certificate of Trust,
the Sale and Allocation Agreement, the Servicing Agreement, the Administration
Agreement, the Purchase Agreement, and the Obligations.
5
<PAGE>
"TRUST" means the trust created pursuant to the Indenture.
"TRUST AGREEMENT" means the Amended and Restated Trust Agreement dated as
of January 24, 2000 among the Depositor and the Owner Trustee as the same may be
amended or supplemented from time to time in accordance with the terms thereof.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939, including,
unless the context otherwise requires, the rules and regulations thereunder, as
amended from time to time.
ARTICLE II
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 2.01. REPRESENTATIONS AND WARRANTIES OF THE SERVICER, THE SELLER
AND THE DEPOSITOR. The Servicer, the Seller and the Depositor represent, warrant
and covenant as of the Date of Issuance, each as to those matters relating to
itself, as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. The Servicer, the Seller and
the Depositor are each a corporation, duly organized, validly existing and
in good standing under the laws of its respective jurisdiction of
incorporation. Each of the Servicer, the Seller and the Depositor is duly
qualified to do business, is in good standing and has obtained all
licenses, permits, charters, registrations and approvals (together,
"approvals") necessary for the conduct of its business as currently
conducted and as described in the Offering Document and the performance of
its obligations under the Transaction Documents, in each jurisdiction in
which the failure to be so qualified or to obtain such approvals would
render any Transaction Document unenforceable in any respect or would have
a material adverse effect upon the Transaction, the Owners or the Insurer.
(b) POWER AND AUTHORITY. Each of the Servicer, the Seller and the
Depositor has all necessary corporate power and authority to conduct its
business as currently conducted and, as described in the Offering
Document, to execute, deliver and perform its obligations under the
Transaction Documents and to consummate the Transaction.
(c) DUE AUTHORIZATION. The execution, delivery and performance of
the Transaction Documents by the Servicer, the Seller and the Depositor
have been duly authorized by all necessary corporate action and do not
require any additional approvals or consents of, or other action by or any
notice to or filing with any Person, including, without limitation, any
governmental entity or the Servicer's, the Seller's or the Depositor's
stockholders, which have not previously been obtained or given by the
Servicer, the Seller or the Depositor.
(d) NONCONTRAVENTION. None of the execution and delivery of the
Transaction Documents by the Servicer, the Seller or the Depositor, the
consummation of the Transaction contemplated thereby or the satisfaction
of the terms and conditions of the Transaction Documents:
6
<PAGE>
(i) conflicts with or results in any breach or violation of
any provision of the certificate of incorporation or bylaws of the
Servicer, the Seller or the Depositor or any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award
currently in effect having applicability to the Servicer, the Seller
or the Depositor or any of their material properties, including
regulations issued by an administrative agency or other governmental
authority having supervisory powers over the Servicer, the Seller or
the Depositor;
(ii) constitutes a default by the Servicer, the Seller or the
Depositor under or a breach of any provision of any loan agreement,
mortgage, indenture or other agreement or instrument to which the
Servicer, the Seller or the Depositor is a party or by which any of
its or their respective properties, which are individually or in the
aggregate material to the Servicer, the Seller or the Depositor, is
or may be bound or affected; or
(iii) results in or requires the creation of any lien upon or
in respect of any assets of the Servicer, the Seller or the
Depositor, except as contemplated by the Transaction Documents.
(e) LEGAL PROCEEDINGS. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Servicer, the Seller, the
Depositor or any of its or their subsidiaries, or any properties or rights
of the Servicer, the Seller, the Depositor or any of its or their
subsidiaries, pending or, to the Servicer's, the Seller's or the
Depositor's knowledge after reasonable inquiry, threatened, which, in any
case, could reasonably be expected to result in a Material Adverse Change
with respect to the Servicer, the Seller or Depositor.
(f) VALID AND BINDING OBLIGATIONS. The Obligations, when executed,
authenticated and issued in accordance with the Indenture, and the
Transaction Documents (other than the Obligations), when executed and
delivered by the Servicer, the Seller and the Depositor, will constitute
the legal, valid and binding obligations of the Servicer, the Seller, the
Depositor and the Trust, as applicable, enforceable in accordance with
their respective terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting creditors' rights generally and general equitable principles and
public policy considerations as to rights of indemnification for
violations of federal securities laws. None of the Servicer, the Seller or
the Depositor will at any time in the future deny that the Transaction
Documents constitute the legal, valid and binding obligations of the
Servicer, the Seller, the Depositor or the Trust, as applicable.
(g) FINANCIAL STATEMENTS. The Financial Statements of FIFSG, copies
of which have been furnished to the Insurer, (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
7
<PAGE>
accepted accounting principles consistently applied, except as noted
therein (subject as to interim statements to normal year-end adjustments).
Since the date of the most recent Financial Statements, there has been no
Material Adverse Change in respect of the Servicer or the Seller. Except
as disclosed in the Financial Statements, the Servicer and the Seller are
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 Servicer or the Seller.
(h) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed, or proposed to be employed, by the Servicer, the Seller or the
Depositor in the conduct of its business violates any law, regulation,
judgment, agreement, order or decree applicable to any of them that, if
enforced, could reasonably be expected to result in a Material Adverse
Change with respect to the Servicer, the Seller or the Depositor. The
Servicer, the Seller and the Depositor are not in breach of or in default
under any applicable law or administrative regulation of its respective
jurisdiction of 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 Servicer, the Seller or the Depositor is
a party or is otherwise subject which, if enforced, would have a material
adverse effect on the ability of the Servicer, the Seller or the
Depositor, as the case may be, to perform its respective obligations under
the Transaction Documents.
(i) TAXES. The Servicer, the Seller and the Depositor and the
Servicer's, the Seller's and the Depositor's 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 Servicer, the Seller or the Depositor.
(j) ACCURACY OF INFORMATION. Neither the Transaction Documents, nor
other information relating to the Contracts, the operations of the
Servicer, the Seller or the Depositor (including servicing or origination
of loans) or the financial condition of the Servicer, the Seller or the
Depositor (collectively, the "Documents"), as amended, supplemented or
superseded, furnished to the Insurer by the Servicer, the Seller or the
Depositor contains any statement of a material fact by the Servicer, the
Seller or Depositor which was untrue or misleading in any material adverse
respect when made. None of the Servicer, the Seller or the Depositor has
any knowledge of circumstances that could reasonably be expected to cause
a Material Adverse Change with respect to the Servicer, the Seller or the
Depositor. Since the furnishing of the Documents, there has been no change
or any development or event involving a prospective change known to the
Servicer, the Seller or the Depositor that would render any of the
Documents untrue or misleading in any material respect.
8
<PAGE>
(k) COMPLIANCE WITH SECURITIES LAWS. The offer and sale of the
Obligations comply in all material respects with all requirements of law,
including all registration requirements of applicable securities laws.
Without limitation of the foregoing, the Offering Document does not
contain any untrue statement of a material fact and does not omit to state
a material fact necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading; provided,
however, that no representation is made with respect to the information in
the Offering Document set forth under the heading "Description of the
Insurer and the Insurance Policy" or the consolidated financial statements
of the Insurer incorporated by reference in the Offering Document. Neither
the offer nor the sale of the Obligations has been or will be in violation
of the Securities Act or any other federal or state securities laws. The
Issuer is not required to be registered as an "investment company" under
the Investment Company Act.
(l) TRANSACTION DOCUMENTS. Each of the representations and
warranties of the Servicer, the Seller and the Depositor contained in the
Transaction Documents is true and correct in all material respects, and
the Servicer, the Seller and the Depositor hereby make each such
representation and warranty to, and for the benefit of, the Insurer as if
the same were set forth in full herein.
(m) SOLVENCY, FRAUDULENT CONVEYANCE. The Servicer, the Seller and
the Depositor are solvent and will not be rendered insolvent by the
Transaction and, after giving effect to the Transaction, none of the
Servicer, the Seller or the Depositor will be left with an unreasonably
small amount of capital with which to engage in its business, nor does the
Servicer, the Seller or the Depositor intend to incur, or believe that it
has incurred, debts beyond its ability to pay as they mature. None of the
Servicer, the Seller or the Depositor 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 Servicer, the Seller or the Depositor or any of
their assets. The amount of consideration being received by the Issuer
upon the sale of the Obligations to the Initial Purchaser constitutes
reasonably equivalent value and fair consideration for the interest in the
Contracts evidenced by the Obligations. The Seller is not transferring the
Contracts to the Issuer and the Issuer is not selling the Obligations to
any Initial Purchaser, as provided in the Transaction Documents, with any
intent to hinder, delay or defraud any of the Seller's or the Depositor's
creditors.
(n) PRINCIPAL PLACE OF BUSINESS. The principal place of business of
the Servicer is located in Atlanta, Georgia, the principal place of
business of the Seller is located in Houston, Texas, and the principal
place of business of the Depositor is located in Houston, Texas.
(o) OPINION FACTS AND ASSUMPTIONS. The Opinion Facts and Assumptions
insofar as they relate to the Seller and the Depositor are true and
correct as of the Date of Issuance.
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(p) REQUIREMENTS FOR RECEIVABLES. The Seller and the Depositor
represent and warrant with respect to each Contract 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
Contract; (b) the obligation created by the contract evidencing each
Contract is a bonafide sale in the ordinary course of the Originator's
business; (c) the contract evidencing such Contract complies with all
state and federal laws and regulations; (d) the contract evidencing each
Contract, 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 SERVICER, THE SELLER AND THE
DEPOSITOR. The Servicer, the Seller and the Depositor hereby agree that during
the Term of the Insurance Agreement, unless the Insurer shall otherwise
expressly consent in writing:
(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. The Servicer,
the Seller and the Depositor shall not be in default under the Transaction
Documents and shall comply with all material requirements of any law, rule
or regulation applicable to it. So long as no Insurer Default or Insurer
Insolvency exists, unless the Insurer shall otherwise consent, none of the
Servicer, the Seller or the Depositor shall agree to any amendment to or
modification of the terms of any Transaction Documents unless the Insurer
shall have given its prior written consent.
(b) CORPORATE EXISTENCE. The Servicer, its successors and assigns,
the Seller, its successors and assigns, and the Depositor, its successors
and assigns, shall maintain their corporate existence and shall at all
times continue to be duly organized under the laws of their respective
jurisdictions of incorporation and duly qualified and duly authorized (as
described in sections 2.01(a), (b) and (c) hereof) and shall conduct its
business in accordance with the terms of its certificate or articles of
incorporation and bylaws. The Seller, the Depositor and the Servicer shall
notify the Insurer within sixty (60) days prior to any change in its name,
identify or corporate structure. The Seller, the Servicer and the
Depositor shall notify the Insurer within sixty (60) days prior to any
relocation of its principal office.
(c) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER INFORMATION.
The Servicer, the Seller and the Depositor shall keep or cause to be kept
in reasonable detail books and records of account of their assets and
business, including, but not limited to, books and records relating to the
Transaction. The Servicer and the Seller shall furnish or cause to be
furnished to the Insurer:
(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 and its
subsidiaries as of the end of such fiscal year and the related
audited consolidated statements of income, changes in
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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 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) INITIAL AND CONTINUING REPORTS. On or before the Closing
Date, the Servicer will provide the Insurer a copy of the magnetic
tape to be delivered to the Indenture Trustee on the Closing Date
setting forth as to each Contract, the information required under
the definition of "Contract Schedule" in Section 1.1 of the Sale and
Allocation Agreement. Thereafter, the Servicer shall deliver to the
Insurer not later than 12:00 noon, New York City time, on each
Determination Date the report required by Section 3.7 of the Sale
and Allocation Agreement.
(iv) COMPUTER DISKETTE. Beginning in February 2000, the
Servicer will deliver to the Insurer on a monthly basis, a computer
diskette or other electronic file in a format acceptable to the
Insurer, containing the information provided to the Insurer pursuant
to clause (iii) of this subsection 2.02(c) and also containing
information similar to the information provided in the Contract
Schedule delivered to the Indenture Trustee pursuant to the Sale and
Allocation Agreement and described in Schedule 1 of the Sale and
Allocation Agreement.
(v) CERTAIN INFORMATION. Upon the reasonable request of the
Insurer, the Servicer and the Seller shall promptly provide copies
of any requested proxy statements, financial statements, reports and
registration statements which the Servicer or the Seller files with,
or delivers to, the Commission or any national securities exchange.
(vi) OTHER INFORMATION. Promptly upon receipt thereof, copies
of all schedules, list of contracts, financial statements or other
similar reports delivered to or by the Servicer, the Seller or the
Depositor pursuant to the terms of the Transaction Documents and,
promptly upon request, such other data as the Insurer
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may reasonably request. The Seller agrees, in the event of any
merger, consolidation or asset transfer of the Seller as described
in Section 4.3 of the Sale and Allocation Agreement, to deliver the
certificates and opinions described therein to the Insurer.
The Insurer agrees that it and its agents, accountants and attorneys
shall keep confidential all financial statements, reports and other
information delivered by the Servicer, the Seller or the Depositor
pursuant to this Section 2.02(c) to the extent provided in Section 2.02(f)
hereof.
(d) THE DEPOSITOR SHAREHOLDER MEETINGS. The Depositor shall have
annual shareholder meetings and at least annual board of director meetings
and shall prepare income and franchise tax returns as appropriate. The
Depositor shall deliver to the Insurer copies of the minutes of such
meetings no later than April 30 of each year and such tax returns promptly
upon filing but in no event later than August 31 of each year, beginning
in 2000.
(e) COMPLIANCE CERTIFICATE. The Servicer and the Seller shall
deliver to the Insurer, concurrently with the delivery of the financial
statements required pursuant to Sections 2.02(c)(i) and (ii) hereof, one
or more certificates signed by an officer of the Servicer and an officer
of the Seller authorized to execute such certificates on behalf of the
Servicer and the Seller stating that:
(i) a review of the Servicer's performance under the
Transaction Documents during such period has been made under such
officer's supervision;
(ii) to the best of such individual's knowledge following
reasonable inquiry, no Default or Event of Default has occurred, or
if a Default or Event of Default has occurred, specifying the nature
thereof and, if the Servicer has a right to cure pursuant to Section
5.1 of the Indenture, stating in reasonable detail (including, if
applicable, any supporting calculations) the steps, if any, being
taken by the Servicer to cure such Default or Event of Default or to
otherwise comply with the terms of the agreement to which such
Default or Event of Default relates;
(iii) the attached financial statements submitted in
accordance with Sections 2.02(c)(i) or (ii) hereof, as the case may
be, are complete and correct in all material respects and present
fairly the financial condition and results of operations of FIFSG as
of the dates and for the periods indicated, in accordance with
generally accepted accounting principles consistently applied; and
(iv) the Servicer has in full force and effect a blanket
fidelity bond (or direct insurer bond) and an errors and omissions
insurance policy in accordance with the terms and requirements of
Section 2.25 of the Servicing Agreement.
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(f) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS. On
an annual basis, or upon the occurrence of a Material Adverse Change, the
Servicer and the Seller shall, upon the reasonable request of the Insurer,
permit the Insurer or its authorized agents:
(i) to inspect, audit and make copies of abstracts from, the
books and records of the Servicer and of the Seller as they may
relate to the Obligations, the Contracts, the obligations of the
Servicer or of the Seller under the Transaction Documents, and the
Transaction;
(ii) to discuss the affairs, finances and accounts of the
Servicer or of the Seller with the chief operating officer and the
chief financial officer of the Servicer or of the Seller, as the
case may be; and
(iii) with the Servicer's or the Seller's consent, as
applicable, which consent shall not be unreasonably withheld, to
discuss the affairs, finances and accounts of the Servicer or the
Seller with the Servicer's or the Seller's independent accountants,
provided that an officer of the Servicer or the Seller shall have
the right to be present during such discussions.
Such inspections and discussions shall be conducted during normal
business hours and shall not unreasonably disrupt the business of the
Servicer or the Seller. The books and records of the Servicer shall be
maintained at the address of the Servicer designated herein for receipt of
notices, unless the Servicer shall otherwise advise the parties hereto in
writing, and the books and records of the Seller shall be maintained at
the address of the Seller designated herein for receipt of notices, unless
the Seller shall otherwise advise the parties hereto in writing.
The Insurer agrees that it and its shareholders, directors, agents,
accountants and attorneys shall keep confidential any matter of which it
becomes aware through such inspections or discussions (unless readily
available from public sources), except as may be otherwise required by
regulation, law or court order or requested by appropriate governmental
authorities or as necessary to preserve its rights or security under or to
enforce the Transaction Documents, provided that the foregoing shall not
limit the right of the Insurer to make such information available to its
regulators, securities rating agencies, reinsurers, credit and liquidity
providers, counsel and accountants.
(g) NOTICE OF MATERIAL EVENTS. The Servicer, the Seller and the
Depositor shall be obligated (which obligation shall be satisfied as to
each if performed by the Servicer, the Seller or the Depositor) promptly
to inform the Insurer in writing of the occurrence of any of the following
to the extent any of the following relate to it:
(i) the submission of any claim or the initiation or threat of
any legal process, litigation or administrative or judicial
investigation, or rule making or disciplinary proceeding by or
against the Servicer, the Seller or the Depositor that
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(A) could be required to be disclosed to the Commission or to the
Servicer's, the Seller's or the Depositor's shareholders or (B)
could result in a Material Adverse Change with respect to the
Servicer, the Seller or the Depositor, or the promulgation of any
proceeding or any proposed or final rule which would result in a
Material Adverse Change with respect to the Servicer, the Seller or
the Depositor;
(ii) the submission of any claim or the initiation or threat
of any legal process, litigation or administrative or judicial
investigation in any federal, state or local court or before any
arbitration board, or any such proceeding threatened by any
government agency, which, if adversely determined, would have a
material adverse effect on the Issuer, the Owners or the Insurer;
(iii) any change in the location of the Servicer's, the
Seller's or the Depositor's principal office, any change in the
location of the Servicer's, the Seller's or the Depositor's books
and records, or any change in the location of the Corporate Trust
Office (as defined in the Sale and Allocation Agreement), or any
change in the account number or location of the Collection Account,
the Note Payment Account, the Certificate Payment Account or the
Reserve Account;
(iv) the occurrence of any Event of Servicing Termination,
Default or Event of Default or of any Material Adverse Change;
(v) the commencement of any proceedings by or against the
Servicer, the Seller or the Depositor under any applicable
bankruptcy, reorganization, liquidation, rehabilitation, insolvency
or other similar law now or hereafter in effect or of any proceeding
in which a receiver, liquidator, conservator, trustee or similar
official shall have been, or may be, appointed or requested for the
Servicer, the Seller or the Depositor or any of its or their assets;
or
(vi) the receipt of notice that (A) the Servicer, the Seller
or the Depositor is being placed under regulatory supervision, (B)
any license, permit, charter, registration or approval necessary for
the conduct of the Servicer's, the Seller's or the Depositor's
business is to be, or may be suspended or revoked, or (C) the
Servicer, the Seller or the Depositor is to cease and desist any
practice, procedure or policy employed by the Servicer, the Seller
or the Depositor in the conduct of its business, and such cessation
may result in a Material Adverse Change with respect to the
Servicer, the Seller or the Depositor.
(vii) The occurrence of any merger, consolidation or asset
transfer of the Seller as described in Section 4.3 of the Sale and
Allocation Agreement.
(h) FINANCING STATEMENTS AND FURTHER ASSURANCES. The Seller shall
cause the Depositor to file all necessary financing statements or other
instruments, and any amendments or continuation statements relating
thereto, necessary to be kept and filed in
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such manner and in such places as may be required by law to preserve and
protect fully the interest of the Indenture Trustee in the Trust. The
Servicer, the Seller and the Depositor shall, upon the request of the
Insurer, 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. In addition, each
of the Servicer, the Seller and the Depositor agrees to cooperate with S&P
and Moody's in connection with any review of the Transaction that may be
undertaken by S&P and Moody's after the date hereof and to provide all
information reasonably requested by S&P or Moody's.
(i) MAINTENANCE OF LICENSES. The Servicer, the Seller and the
Depositor, respectively, or any successors thereof shall maintain or cause
to be maintained all licenses, permits, charters and registrations which
are material to the conduct of its business.
(j) REDEMPTION OF OBLIGATIONS. The Servicer, the Seller and the
Depositor shall instruct the Indenture Trustee, upon redemption or payment
of all of the Obligations pursuant to the Indenture or otherwise, to
furnish to the Insurer a notice of such redemption and, upon a redemption
or payment of all of the Obligations, to surrender the Policy to the
Insurer for cancellation.
(k) DISCLOSURE DOCUMENT. Each Offering Document delivered with
respect to the Obligations shall clearly disclose that the Policy is not
covered by the property/casualty insurance security fund specified in
Article 76 of the New York Insurance Law.
(l) SERVICING OF CONTRACTS. The Servicer shall perform such actions
with respect to the Contracts as are required by or provided for in the
Servicing Agreement. The Servicer will provide the Insurer with written
notice of any change or amendment to any Transaction Document as currently
in effect.
(m) MAINTENANCE OF TRUST. On or before each March 31, beginning in
2001, so long as any of the Obligations are outstanding, and promptly
after the execution and delivery of each amendment to any financing
statement, the Servicer shall furnish to the Insurer and the Indenture
Trustee an officers' certificate and an opinion of counsel as described in
Section 3.6(b) of the Indenture, 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
maintain the interest of the Indenture Trustee created by the Indenture
with respect to the Trust and reciting the details of such action or
stating that no such action is necessary to maintain such interests. Such
officers' 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 Indenture
Trustee in the Trust until the date such next officers' certificate is
due. The Servicer will use its best efforts to cause any necessary
recordings or filings to be made with respect to the Trust.
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(n) SELLER'S INDEMNITY. Notwithstanding anything in subsection 3.03
hereof, the Seller shall pay to the Insurer an amount equal to any amount
paid by the Insurer 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 or the Sale and Allocation 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.
(o) CLOSING DOCUMENTS. The Servicer, the Seller and the Depositor
shall provide or cause to be provided to the Insurer a bound volume or
volumes of the Transaction Documents and an executed original copy of each
document executed in connection with the Transaction within 60 days after
the date of closing. Upon the request of the Insurer, the Servicer, the
Seller and the Depositor shall provide or cause to be provided to the
Insurer a copy of each of the Transaction Documents on computer diskette,
in a format acceptable to the Insurer.
(p) PREFERENCE PAYMENTS. With respect to any Preference Amount (as
defined in the Policy), the Servicer shall provide to the Insurer upon the
request of the Insurer:
(i) a certified copy of the final nonappealable order of a
court having competent jurisdiction ordering the recovery by a
trustee in bankruptcy as voidable preference amounts included in
previous distributions under Section 3.3 of the Sale and Allocation
Agreement to any Owner pursuant to the United States Bankruptcy
Code, 11 U.S.C. ss.ss. 101 et seq., as amended (the "Bankruptcy
Code");
(ii) an opinion of counsel satisfactory to the Insurer, and
upon which the Insurer shall be entitled to rely, stating that such
order is final and is not subject to appeal;
(iii) an assignment in such form as reasonably required by the
Insurer, irrevocably assigning to the Insurer all rights and claims
of the Servicer, the Indenture Trustee and any Owner relating to or
arising under the Contracts against the debtor which made such
preference payment or otherwise with respect to such preference
amount; and
(iv) appropriate instruments to effect (when executed by the
affected party) the appointment of the Insurer as agent for the
Indenture Trustee and any Owner in any legal proceeding relating to
such preference payment being in a form satisfactory to the Insurer.
(q) SELLER TO HOLD COMMON STOCK OF DEPOSITOR. The Seller shall hold,
either directly or indirectly, all of the common stock of the Depositor
during the Term of the Insurance Agreement. The Seller shall not sell,
pledge or otherwise transfer such stock without the prior written consent
of the Insurer.
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(r) YEAR 2000 PROGRAM. The Servicer has taken steps necessary and
appropriate to prevent any problems in its computer and information
systems arising from or in connection with the information processing
challenges associated with the Year 2000, and will provide to the Insurer
such information and reports as the Insurer may reasonably request from
time to time with respect to such steps as have or will be taken with
respect thereto.
(s) PURCHASE OPTION. In the event the Depositor exercises its
purchase option pursuant to Section 9.3 of the Trust Agreement, the
Depositor shall promptly deliver to the Insurer the documents described in
Section 9.3(b) of the Trust Agreement.
SECTION 2.03. NEGATIVE COVENANTS OF THE SERVICER, THE SELLER AND THE
DEPOSITOR. The Servicer, the Seller and the Depositor hereby agree that during
the Term of the Insurance Agreement, unless the Insurer shall otherwise
expressly consent in writing:
(a) IMPAIRMENT OF RIGHTS. None of the Servicer, the Seller or the
Depositor shall take any action, or fail to take any action, if reasonably
requested by the Insurer at a time when no Insurer Default or Insurer
Insolvency exists or if such action or failure to take action may result
in a material adverse change as described in clause (ii) of the definition
of Material Adverse Change with respect to the Servicer, the Seller or the
Depositor, or may interfere with the enforcement of any rights of the
Insurer under or with respect to the Transaction Documents. The Servicer,
the Seller or the Depositor shall give the Insurer 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 Servicer, the Seller
and the Depositor shall furnish to the Insurer all information requested
by it that is reasonably necessary to determine compliance with this
Section (a).
(b) ADVERSE SELECTION PROCEDURE. The Servicer, the Seller and the
Depositor will not use any Adverse Selection Procedure in selecting
Contracts to be transferred to the Indenture Trustee from the outstanding
contracts that qualify under the Sale and Allocation Agreement for
inclusion in the Trust.
(c) WAIVER, AMENDMENTS, ASSIGNMENTS, ETC. None of the Servicer, the
Seller or the Depositor shall waive, modify or amend, or consent to any
waiver, modification or amendment of, any of the terms, provisions or
conditions of any of the Transaction Documents without the prior written
consent of the Insurer; and (if no Insurer Default or Insurer Insolvency
exists) none of the Servicer, the Seller or the Depositor shall assign any
of the Transaction Documents to which it is a party without the prior
written consent of the Insurer.
(d) CONTRACTS; CHARGE-OFF POLICY. Except as otherwise permitted in
the Sale and Allocation Agreement or the Servicing Agreement, the
Servicer, the Seller and the Depositor shall not alter or amend any
Contract, their respective collection policies or
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their respective charge-off policies in a manner that materially adversely
affects the Insurer unless the Insurer shall have previously given its
consent, which consent shall not be withheld unreasonably.
SECTION 2.04. REPRESENTATIONS AND WARRANTIES OF THE ISSUER. As of the Date
of Issuance, the Issuer represents, warrants and covenants as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. The Issuer is a business
trust and is duly organized, validly existing and in good standing under
the laws of the State of Delaware. The Issuer is duly qualified to do
business, is in good standing and has obtained all licenses, permits,
charters, registrations and approvals (together, "approvals") necessary
for the conduct of its business as currently conducted and as described in
the Offering Document and the performance of its obligations under the
Transaction Documents to which it is a party, in each jurisdiction in
which the failure to be so qualified or to obtain such approvals would
render any Transaction Document to which it is a party unenforceable in
any respect or would have a material adverse effect upon the Transaction,
the Owner or the Insurer.
(b) POWER AND AUTHORITY. The Issuer has all necessary power and
authority to conduct its business as currently conducted and, as described
in the Offering Document, to execute, deliver and perform its obligations
under the Transaction Documents to which it is a party and to consummate
the Transaction.
(c) DUE AUTHORIZATION. The execution, delivery and performance of
the Transaction Documents by the Issuer have been duly authorized by all
necessary corporate action 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 Issuer's
stockholders, which have not previously been obtained or given by the
Issuer.
(d) NONCONTRAVENTION. Neither the execution and delivery of the
Transaction Documents by the Issuer, the consummation of the Transaction
contemplated thereby nor the satisfaction of the terms and conditions of
the Transaction Documents:
(i) conflicts with or results in any breach or violation of
any provision of the Trust Agreement or any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award
currently in effect having applicability to the Issuer or any of its
material properties, including regulations issued by an
administrative agency or other governmental authority having
supervisory powers over the Issuer;
(ii) constitutes a default by the Issuer under or a breach of
any provision of any loan agreement, mortgage, indenture or other
agreement or instrument to which the Issuer is a party or by which
any of its properties, which
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are individually or in the aggregate material to the Issuer, is or
may be bound or affected; or
(iii) results in or requires the creation of any lien upon or
in respect of any assets of the Issuer except as contemplated by the
Transaction Documents.
(e) LEGAL PROCEEDINGS. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Issuer or any properties or
rights of the Issuer pending or, to the Issuer's knowledge after
reasonable inquiry, threatened, which, in any case, could reasonably be
expected to result in a Material Adverse Change with respect to the
Issuer.
(f) VALID AND BINDING OBLIGATIONS. The Obligations, when executed,
authenticated and issued in accordance with the Indenture and the
Transaction Documents (other than the Obligations), when executed and
delivered by the Issuer, will constitute the legal, valid and binding
obligations of the Issuer enforceable in accordance with their respective
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and general equitable principles and public
policy considerations as to rights of indemnification for violations of
federal securities laws. The Issuer will not at any time in the future
deny that the Transaction Documents constitute the legal, valid and
binding obligations of the Issuer.
(g) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed, or proposed to be employed, by the Issuer in the conduct of its
business violates any law, regulation, judgment, agreement, order or
decree applicable to it that, if enforced, could reasonably be expected to
result in a Material Adverse Change with respect to the Issuer. The Issuer
is not in breach of or default under any applicable law or administrative
regulation of its respective jurisdiction or 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 Issuer
is a party or is otherwise subject which, if enforced, would have a
material adverse effect on the ability of the Issuer, to perform its
obligations under the Transaction Documents.
(h) COMPLIANCE WITH SECURITIES LAWS. The offer and sale of the
Obligations comply in all material respects with all requirements of law,
including all registration requirements of applicable securities laws.
Without limitation of the foregoing, the Offering Document does not
contain any untrue statement of a material fact and does not omit to state
a material fact necessary to make the statements made therein, in light of
the circumstances under which they were made, not misleading; provided,
however, that no representation is made with respect to the information in
the Offering Document set forth under the heading "Description of the
Insurer and the Insurance Policy" or the consolidated financial statements
of the Insurer incorporated by reference in the Offering
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Document. Neither the offer nor the sale of the Obligations has been or
will be in violation of the Securities Act or any other federal or state
securities laws.
(i) TAXES. The Issuer has 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 Issuer.
(j) TRANSACTION DOCUMENTS. Each of the representations and
warranties of the Issuer contained in the Transaction Documents is true
and correct in all material respects, and the Issuer hereby makes each
such representation and warranty to, and for the benefit of, the Insurer
as if the same were set forth in full herein; provided that the remedy for
any breach of this paragraph shall be limited to the remedies specified in
the related Transaction Document or in this Insurance Agreement.
(k) SOLVENCY. The Issuer is solvent and will not be rendered
insolvent by the Transaction and, after giving effect to the Transaction,
the Issuer will not be left with an unreasonably small amount of capital
with which to engage in its respective business, nor does the Issuer
intend to incur, or believe that it has incurred, debts beyond its ability
to pay as they mature. The Issuer does not contemplate 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 Issuer or any of its assets.
(l) PRINCIPAL PLACE OF BUSINESS. The principal place of business of
the Issuer is located in Houston, Texas.
(m) INVESTMENT COMPANY ACT. The Issuer is not an "investment
company," or an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company," as such terms are defined in
the Investment Company Act. The Issuer is not required to be registered as
an "investment company" under the Investment Company Act.
(n) NO CONSENTS. No authorization or approval or other action by,
and no notice to or filing with, any Person, including, without
limitation, any governmental entity or regulatory body, is required for
the due execution, delivery and performance by the Issuer of the
Transaction Documents or any other material document or instrument to be
delivered thereunder, except (in each case) such as have been obtained or
the failure of which to be obtained would not be reasonably likely to have
a material adverse effect on the Transaction.
(o) NO MATERIAL EVENT OF DEFAULT. There is no material event of
default on the part of the Issuer under any agreement involving financial
obligations which would materially adversely impact the financial
conditions or operations of the Trust or its obligations under any
document associated with this Transaction.
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(p) OPINION FACTS AND ASSUMPTIONS. The opinion Facts and Assumptions
insofar as they relate to the Issuer are true and correct as of the Date
of Issuance.
SECTION 2.05. AFFIRMATIVE COVENANTS OF THE ISSUER. The Issuer hereby
agrees that during the Term of the Insurance Agreement, unless the Insurer shall
otherwise expressly consent in writing:
(a) COMPLIANCE WITH AGREEMENTS AND APPLICABLE LAWS. The Issuer shall
not be in default under the Transaction Documents and shall comply with
all material requirements of any law, rule or regulation applicable to it.
The Issuer shall not agree to any material amendment to or modification of
the terms of any Transaction Documents unless the Insurer shall have given
its prior written consent.
(b) MAINTAIN EXISTENCE. The Issuer and its successors and assigns
shall maintain their existence and shall at all times continue to be duly
organized under the laws of its respective jurisdiction and duly qualified
and duly authorized and shall conduct its business in accordance with the
terms of its organizational documents.
(c) NOTICE OF MATERIAL EVENTS. The Issuer shall be obligated
promptly to inform the Insurer in writing of the occurrence of any of the
following to the extent any of the following relate to it and to the
extent that it receives actual notice of the occurrence of any of the
following events:
(i) the submission of any claim or the initiation or threat of
any legal process, litigation or administrative or judicial
investigation, or rule making or disciplinary proceeding by or
against the Issuer that (A) could be required to be disclosed to the
Commission or to the Issuer's owners or (B) could result in a
Material Adverse Change with respect to the Issuer or the
promulgation of any proceeding or any proposed or final rule which
would result in a Material Adverse Change with respect to the
Issuer;
(ii) any change in the location of the Issuer's or the Owner
Trustee's principal place of business or any change in the location
of the Issuer's books and records;
(iii) the occurrence of any Default or Event of Default or of
any Material Adverse Change;
(iv) the commencement of any proceedings by or against the
Issuer under any applicable bankruptcy, reorganization, liquidation,
rehabilitation, insolvency or other similar law now or hereafter in
effect or of any proceeding in which a receiver, liquidator,
conservator, trustee or similar official shall have been, or may be,
appointed or requested for the Issuer or any of its assets; or
(v) the receipt of notice that (A) the Issuer is being placed
under regulatory supervision, (B) any license, permit, charter,
registration or approval
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necessary for the conduct of the Issuer's business is to be, or may
be suspended or revoked, or (C) the Issuer is to cease and desist
any practice, procedure or policy employed by the Issuer in the
conduct of its business, and such cessation may result in a Material
Adverse Change with respect to the Issuer.
(d) FINANCING STATEMENTS AND FURTHER ASSURANCES. To the extent
provided in the Indenture, the Issuer will cause to be filed 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 Indenture Trustee. The Issuer shall,
upon the request of the Insurer, 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 to which it is a party. In addition, the Issuer agrees to
cooperate with S&P and Moody's in connection with any review of the
Transaction that may be undertaken by S&P and Moody's after the date
hereof.
(e) MAINTENANCE OF LICENSES. The Issuer, or any successors thereof,
shall maintain all licenses, permits, charters and registrations which are
material to the conduct of its business.
(f) THIRD-PARTY BENEFICIARY. The Issuer agrees that the Insurer
shall have all rights of a third-party beneficiary in respect of each
Transaction Document and hereby incorporates and restates its
representations, warranties and covenants as set forth therein for the
benefit of the Insurer.
(g) TAX MATTERS. The Issuer will take all actions necessary to
ensure that the Issuer is treated as a "non-entity" for federal and state
income tax purposes and not as an association (or publicly traded
partnership), taxable as a corporation.
(h) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER INFORMATION.
The Issuer shall keep or cause to be kept in reasonable detail books and
records of account of its assets and business, including, but not limited
to, books and records relating to the Transaction. The Issuer shall
furnish or cause to be furnished to the Insurer promptly upon receipt
thereof, copies of all schedules, opinions of counsel or accountants,
officer's certificates, financial statements or other similar reports
delivered to or by the Issuer pursuant to the terms of the Transaction
Documents and, promptly upon request, such other data as the Insurer may
reasonably request.
(i) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS. On
an annual basis, or upon the occurrence of a Material Adverse Change, the
Issuer shall, upon the reasonable request of the Insurer, at its expense,
permit the Insurer or its authorized agents:
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(i) to inspect the books and records of the Issuer as they may
relate to the Obligations, the obligations of the Issuer under the
Transaction Documents, and the Transaction;
(ii) to discuss the affairs, finances and accounts of the
Issuer; and
(iii) with the Issuer's consent, as the case may be, which
consent shall not be unreasonably withheld, to discuss the affairs,
finances and accounts of the Issuer with the Issuer's independent
accountants, provided that a representative of the Seller or the
Issuer shall have the right to be present during such discussions.
Such inspections and discussions shall be conducted during normal
business hours and shall not unreasonably disrupt the business of the
Issuer. The books and records of the Issuer will be maintained at the
address of the Issuer designated herein for receipt of notices, unless the
Issuer shall otherwise advise the parties hereto in writing.
The Insurer agrees that it and its shareholders, directors, agents,
accountants and attorneys shall keep confidential any matter of which it
becomes aware through such inspections or discussions (unless readily
available from public sources), except as may be otherwise required by
regulation, law or court order or requested by appropriate governmental
authorities or as necessary to preserve its rights or security under or to
enforce the Transaction Documents, provided that the foregoing shall not
limit the right of the Insurer to make such information available to its
regulators, securities rating agencies, reinsurers, credit and liquidity
providers, counsel and accountants.
SECTION 2.06. NEGATIVE COVENANTS OF THE ISSUER. The Issuer hereby agrees
that during the Term of the Insurance Agreement, unless the Insurer shall
otherwise expressly consent in writing:
(a) IMPAIRMENT OF RIGHTS. The Issuer shall not take any action, or
fail to take any action, if such action or failure to take action may
result in a material adverse change as described in clause (ii) of the
definition of Material Adverse Change with respect to the Issuer, or may
interfere with the enforcement of any rights of the Insurer under or with
respect to the Transaction Documents. The Issuer shall give the Insurer
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 Issuer shall
furnish to the Insurer all information requested by it that is reasonably
necessary to determine compliance with this paragraph.
(b) WAIVER, AMENDMENTS, ETC. Except in accordance with the
Transaction Documents, the Issuer shall not waive, modify or amend, or
consent to any waiver, modification or amendment of, any of the material
terms, provisions or conditions of the Transaction Documents without the
consent of the Insurer which consent shall not unreasonably be withheld.
Except upon the prior written consent of the Insurer which
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consent shall not unreasonably be withheld, the Issuer shall not allow the
transfer, modification or amendment, nor consent to any transfer,
modification or amendment of the Certificate of Trust unless such
amendment is required under the Delaware Business Trust Act.
(c) RESTRICTIONS ON LIENS. The Issuer shall not, except as
contemplated by the Transaction Documents, (i) create, incur or suffer to
exist, or agree to create, incur or suffer to exist, or consent to cause
or permit in the future (upon the happening of a contingency or otherwise)
the creation, incurrence or existence of any lien of the Contracts or (ii)
sign or file under the Uniform Commercial Code of any jurisdiction any
financing statement which names the Issuer as a debtor, or sign any
security agreement authorizing any secured party thereunder to file such
financing statement, with respect to the Contracts.
(d) SUCCESSORS. The Issuer shall not remove or replace, or cause to
be removed or replaced, the Servicer, the Indenture Trustee or the Owner
Trustee without the prior written approval of the Insurer.
(e) SUBSIDIARIES. The Issuer shall not form, or cause to be formed,
any subsidiaries.
(f) NO MERGERS. The Issuer shall not consolidate with or merge into
any Person or transfer all or any material amount of its assets to any
Person, liquidate or dissolve except as permitted by the Trust Agreement
and as contemplated by the Transaction Documents.
(g) OTHER ACTIVITIES. The Issuer shall not (i) sell, pledge,
transfer exchange or otherwise dispose of any of its assets except as
permitted under the Transaction Documents; or (ii) engage in any business
or activity except as contemplated by the Transaction Documents and as
permitted by the Trust Agreement.
(h) TRUST AGREEMENT. The Issuer shall not amend the Trust Agreement
without the prior written consent of the Insurer.
SECTION 2.07. REPRESENTATIONS, WARRANTIES AND COVENANTS OF INDENTURE
TRUSTEE AND BACK-UP SERVICER. The Indenture Trustee and the Back-up Servicer
represents and warrants to, as of the Date of Issuance, and covenants with the
other parties hereto as follows:
(a) DUE ORGANIZATION AND QUALIFICATION. The Indenture Trustee and
the Back-up Servicer are each a national banking association or
corporation, duly organized, validly existing and in good standing under
the laws of its respective jurisdiction of incorporation. Each of the
Indenture Trustee and the Back-up Servicer is duly qualified to do
business, is in good standing and has obtained all licenses, permits,
charters, registrations and approvals (together, "approvals") necessary
for the conduct of its business as currently conducted and as described in
the Offering Document and the
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performance of its obligations under the Transaction Documents, in each
jurisdiction in which the failure to be so qualified or to obtain such
approvals would render any Transaction Document unenforceable in any
respect or would have a material adverse effect upon the Transaction, the
Owners or the Insurer.
(b) DUE AUTHORIZATION. The execution, delivery and performance of
the Transaction Documents by the Indenture Trustee and the Back-up
Servicer have been duly authorized by all necessary corporate action and
do not require any additional approvals or consents of, or other action by
or any notice to or filing with any Person, including, without limitation,
any governmental entity or the Indenture Trustee's or the Back-up
Servicer's stockholders, which have not previously been obtained or given
by the Indenture Trustee or the Back-up Servicer, as applicable.
(c) NONCONTRAVENTION. None of the execution and delivery of the
Transaction Documents by the Indenture Trustee or the Back-up Servicer,
the consummation of the Transaction contemplated thereby or the
satisfaction of the terms and conditions of the Transaction Documents:
(i) conflicts with or results in any breach or violation of
any provision of the certificate or articles of incorporation or
bylaws of the Indenture Trustee or the Back-up Servicer or any law,
rule, regulation, order, writ, judgment, injunction, decree,
determination or award currently in effect having applicability to
the Indenture Trustee or the Back-up Servicer or any of their
material properties, including regulations issued by an
administrative agency or other governmental authority having
supervisory powers over the Indenture Trustee or the Back-up
Servicer;
(ii) constitutes a default by the Indenture Trustee or the
Back-up Servicer under or a breach of any provision of any loan
agreement, mortgage, indenture or other agreement or instrument to
which the Indenture Trustee or the Back-up Servicer is a party or by
which any of their respective properties, which are individually or
in the aggregate material to the Indenture Trustee or the Back-up
Servicer, is or may be bound or affected; or
(iii) results in or requires the creation of any lien upon or
in respect of any assets of the Indenture Trustee or the Back-up
Servicer, except as contemplated by the Transaction Documents.
(d) LEGAL PROCEEDINGS. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting the Indenture Trustee, the
Back-up Servicer, or any of their subsidiaries, or any properties or
rights of the Indenture Trustee, the Back-up Servicer or any of their
subsidiaries, pending or, to the Indenture Trustee's or the Back-up
Servicer's knowledge after reasonable inquiry, threatened, which, in any
case, could reasonably be expected to result
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in a Material Adverse Change with respect to the Indenture Trustee or the
Back-up Servicer.
(e) VALID AND BINDING OBLIGATIONS AND AGREEMENTS. The Obligations,
when executed, authenticated and issued in accordance with the Indenture,
and the Transaction Documents (other than the Obligations), to which they
are parties when executed and delivered by the Indenture Trustee and the
Back-up Servicer, will constitute the legal, valid and binding obligations
of the Indenture Trustee and the Back-up Servicer, as applicable,
enforceable in accordance with their respective terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally and
general equitable principles. Neither the Indenture Trustee nor the
Back-up Servicer will at any time in the future deny that the Transaction
Documents constitute the legal, valid and binding obligations of the
Indenture Trustee and the Back-up Servicer, as applicable.
(f) COMPLIANCE WITH LAW, ETC. No practice, procedure or policy
employed, or proposed to be employed, by the Indenture Trustee or the
Back-up Servicer in the conduct of their business violates any law,
regulation, judgment, agreement, order or decree applicable to any the
Indenture Trustee or the Back-up Servicer that, if enforced, could
reasonably be expected to result in a Material Adverse Change with respect
to the Indenture Trustee or the Back-up Servicer. Neither the Indenture
Trustee nor the Back-up Servicer is in breach of or in default under any
applicable law or administrative regulation of its respective jurisdiction
of organization, 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 Indenture Trustee or the Back-up Servicer is a
party or is otherwise subject which, if enforced, would have a material
adverse effect on the ability of the Indenture Trustee or the Back-up
Servicer, as the case may be, to perform their respective obligations
under the Transaction Documents.
(g) TRANSACTION DOCUMENTS. Each of the representations and
warranties of the Indenture Trustee and the Back-up Servicer contained in
the Transaction Documents is true and correct in all material respects,
and the Indenture Trustee and the Back-up Servicer hereby makes each such
representation and warranty to, and for the benefit of, the Insurer as if
the same were set forth in full herein.
(h) COMPLIANCE AND AMENDMENTS. The Indenture Trustee and the Back-up
Servicer shall comply in all material respects with the terms and
conditions of the Transaction Documents to which it is a party and the
Indenture Trustee and the Back-up Servicer shall not agree to any
amendment to or modification of the terms of any of the Transaction
Documents to which it is a party unless the Insurer shall otherwise give
its prior written consent.
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(i) NOTICES. The Indenture Trustee shall promptly notify the Insurer
of any merger, consolidation or asset transfer with respect to it as
described in Section 6.9 of the Indenture.
SECTION 2.08. REPRESENTATIONS, WARRANTIES AND COVENANTS OF OWNER TRUSTEE.
The Owner Trustee hereby represents and warrants as follows:
(a) REPRESENTATIONS AND WARRANTIES. As of the Date of Issuance, each
of the representations and warranties of the Owner Trustee set forth in
the Transaction Documents is true and correct in all material respects and
the Owner Trustee makes each such representation and warranty to, and for
the benefit of, the Insurer as if the same were set forth in full herein.
(b) COMPLIANCE AND AMENDMENTS. The Owner Trustee shall comply in all
material respects with the terms and conditions of the Transaction
Documents to which it is a party and the Owner Trustee shall not agree to
any amendment to or modification of the terms of any of the Transaction
Documents to which it is a party unless the Insurer shall otherwise give
its prior written consent.
(c) PRINCIPAL PLACE OF BUSINESS. The principal place of business of
the Owner Trustee is located in Wilmington, Delaware.
(d) FURNISHING OF DOCUMENTS; NOTICES. The Owner Trustee hereby
agrees to furnish to the Insurer the documents described in Section 7.2 of
the Trust Agreement to the same extent as required with respect to the
Depositor. The Owner Trustee shall provide the Insurer with prior written
notice of any merger, consolidation or asset transfer with respect to it
as described in Section 10.4 of the Trust Agreement.
SECTION 2.09. NEGATIVE COVENANT OF THE ADMINISTRATOR. The Administrator
shall not remove the Owner Trustee pursuant to Section 10.2 of the Trust
Agreement unless it has obtained the prior written consent of the Insurer if no
Insurer Default or Insurer Insolvency exists.
ARTICLE III
THE POLICY; REIMBURSEMENT
SECTION 3.01. ISSUANCE OF THE POLICY. The Insurer agrees to issue the
Policy on the Closing Date subject to satisfaction of the conditions precedent
set forth below:
(a) PAYMENT OF INITIAL INSURANCE PREMIUM AND EXPENSES. The Insurer
shall have been paid by the Servicer that portion of a nonrefundable
Insurance Premium payable on the Date of Issuance and the Servicer shall
agree to reimburse or pay directly other fees and expenses identified in
Section 3.02 hereof as payable.
(b) TRANSACTION DOCUMENTS. The Insurer shall have received a fully
executed copy of the Premium Side Letter Agreement and a copy of each of
the Transaction
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Documents, in form and substance satisfactory to the Insurer, duly
authorized, executed and delivered by each party thereto.
(c) CERTIFIED DOCUMENTS AND RESOLUTIONS. The Insurer shall have
received a copy of (i) the certificate or articles of incorporation and
bylaws of the Servicer, the Seller and the Depositor and (ii) the
resolutions of the Seller's Board of Directors authorizing the sale of the
Contracts and (iii) the execution, delivery and performance by the
Servicer, the Seller and the Depositor of the Transaction Documents and
the Transaction contemplated thereby, certified by the Secretary or an
Assistant Secretary of the Servicer, the Seller and the Depositor (which
certificate shall state that such certificate or articles of
incorporation, bylaws and resolutions are in full force and effect without
modification on the Date of Issuance).
(d) INCUMBENCY CERTIFICATE. The Insurer shall have received a
certificate of the Secretary or an Assistant Secretary of the Servicer,
the Seller and the Depositor certifying the names and signatures of the
officers of the Servicer, the Seller and the Depositor authorized to
execute and deliver the Transaction Documents and that shareholder consent
to the execution and delivery of such documents is not necessary.
(e) REPRESENTATIONS AND WARRANTIES; CERTIFICATE. The representations
and warranties of the Servicer, the Seller and the Depositor set forth or
incorporated by reference in this Insurance Agreement shall be true and
correct as of the Date of Issuance as if made on the Date of Issuance and
the Insurer shall have received a certificate of appropriate officers of
the Servicer, the Seller and the Depositor to that effect.
(f) OPINIONS OF COUNSEL.
(i) The law firm of Thompson & Knight LLP shall have issued
its favorable opinion, in form and substance acceptable to the
Insurer and its counsel, regarding and the validity and
enforceability of the Transaction Documents against the Depositor,
the Servicer, the Issuer and the Seller.
(ii) The law firm of Thompson & Knight LLP shall have issued
its favorable opinions, in form and substance acceptable to the
Insurer and its counsel, regarding the sale of the Contracts from
the Seller to the Issuer, and consolidation of the Depositor and the
Issuer and the Depositor and the Seller in the event of the
Depositor's bankruptcy.
(iii) The law firm of Thompson & Knight LLP shall have issued
its favorable opinions, in form and substance acceptable to the
Insurer and its counsel, regarding the perfection of the Indenture
Trustee's interest in the Trust Estate, including in the Reserve
Account Property.
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(iv) The Insurer shall have received such other opinions of
counsel, in form and substance acceptable to the Insurer and its
counsel, including tax opinions, addressing such other matters as
the Insurer may reasonably request.
(g) APPROVALS, ETC. The Insurer shall have received true and correct
copies of all approvals, licenses and consents, if any, including, without
limitation, any required approval of the shareholders of the Servicer, the
Seller and the Depositor, required in connection with the Transaction.
(h) NO LITIGATION, ETC. 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.
(i) LEGALITY. 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 Transaction
contemplated by any of the Transaction Documents illegal or otherwise
prevent the consummation thereof.
(j) ISSUANCE OF RATINGS. The Insurer shall have received
confirmation that the risk secured by the Policy constitutes at least an
investment grade risk by S&P and Moody's, and that the Obligations, when
issued, will be rated "AAA" by S&P and "Aaa" by Moody's.
(k) NO DEFAULT. No Default or Event of Default shall have occurred.
(l) ADDITIONAL ITEMS. The Insurer shall have received such other
documents, instruments, approvals or opinions requested by the Insurer or
its counsel as may be reasonably necessary to effect the Transaction,
including, but not limited to, evidence satisfactory to the Insurer and
its counsel that the conditions precedent, if any, in the Transaction
Documents have been satisfied.
(m) CONFORM TO DOCUMENTS. The Insurer and its counsel shall have
determined that all documents, certificates and opinions to be delivered
in connection with the Obligations conform to the terms of the Transaction
Documents.
(n) SATISFACTION OF CONDITIONS OF THE PURCHASE AGREEMENT. All
conditions in the Purchase Agreement relating to the Initial Purchaser's
obligation to purchase the Obligations shall have been satisfied.
(o) PURCHASE AGREEMENT. The Insurer shall have received copies of
each of the documents, and shall be entitled to rely on each of the
documents, required to be delivered to the Initial Purchaser pursuant to
the Purchase Agreement.
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(p) GUARANTY. The Guaranty shall be executed by all parties thereto
and delivered to the Indenture Trustee.
SECTION 3.02. PAYMENT OF FEES AND INSURANCE PREMIUM.
(a) LEGAL AND ACCOUNTING FEES. The Servicer shall pay or cause to be
paid, on the Date of Issuance, legal fees and disbursements incurred by
the Insurer in connection with the issuance of the Policy and any fees of
the Insurer's auditors. Any fees of the Insurer's auditors payable in
respect of any amendment or supplement to the Offering Document or any
other Offering Document incurred after the Date of Issuance shall be paid
by the Servicer on demand.
(b) INSURANCE PREMIUM. In consideration of the issuance by the
Insurer of the Policy, the Insurer shall be entitled to receive the
Insurance Premium, so long as no Insurer Default or Insurer Insolvency has
occurred, as and when due in accordance with the terms of the Premium Side
Letter Agreement (i) in the case of Insurance Premium due on or before the
Date of Issuance, directly from the Servicer and (ii) in the case of
Insurance Premium due after the Date of Issuance, FIRST, pursuant to the
Sale and Allocation Agreement, and SECOND, to the extent the amounts in
subclause FIRST are not sufficient, directly from the Servicer. For
purposes of the Sale and Allocation Agreement, the term "Premium
Percentage" shall have the meaning set forth in the Premium Side Letter
Agreement. The Insurance Premium shall be calculated according to the
Premium Side Letter Agreement for the amount due on or before the Date of
Issuance and for the amount due on each Payment Date. The Insurance
Premium paid hereunder or under the Sale and Allocation Agreement shall be
nonrefundable without regard to whether the Insurer makes any payment
under the Policy or any other circumstances relating to the Obligations or
provision being made for payment of the Obligations prior to maturity. All
payments of Insurance Premium to be made to the Insurer shall be made by
wire transfer to an account designated from time to time by the Insurer by
written notice to the Servicer and the Indenture Trustee.
SECTION 3.03. REIMBURSEMENT AND ADDITIONAL PAYMENT OBLIGATION.
(a) In accordance with the priorities established in Section 2.8 of
the Indenture and 3.5 of the Sale and Allocation Agreement, the Insurer
shall be entitled to reimbursement for any payment made by the Insurer
under the Policy, which reimbursement shall be due and payable on the date
that any amount is to be paid pursuant to a Notice (as defined in the
Policy), 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.
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(b) Notwithstanding anything in Section 3.03(a) to the contrary, the
Servicer and the Seller agree to reimburse the Insurer as follows: (i)
from the Seller, for payments made under the Policy arising as a result of
the Seller's failure to repurchase any Contract required to be repurchased
pursuant to Section 2.3 of the Sale and Allocation Agreement, 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, and (ii) from the Servicer, for payments made under the
Policy, arising as a result of (A) the Servicer's failure to deposit into
the Collection Account any amount required to be so deposited pursuant to
the Sale and Allocation Agreement or the Servicing Agreement or (B) the
Servicer's failure to repurchase any contract to be repurchased under
Section 2.28 of 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.
(c) The Servicer and the Seller agree to pay to the Insurer as
follows: any and all charges, fees, costs and expenses that the Insurer
may reasonably pay or incur, including, but not limited to, attorneys' and
accountants' fees and expenses, in connection with (i) any accounts
established to facilitate payments under the Policy to the extent the
Insurer has not been immediately reimbursed on the date that any amount is
paid by the Insurer under the Policy, (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, (iii) any
amendment, transfer of servicing, reliening, consent, waiver or other
action with respect to, or related to, any Transaction Document, whether
or not executed or completed, or (iv) preparation of bound volumes of the
Transaction Documents; costs and expenses shall include a reasonable
allocation of compensation and overhead attributable to the time of
employees of the Insurer spent in connection with the actions described in
clause (ii) above, and the Insurer 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 Servicer, the Seller and the Depositor agree to pay to the
Insurer as follows: interest on any and all amounts described in
subsections (b), (c), (e) and (f) of this Section 3.03 from the date
payable or paid by such party until payment thereof in full, and interest
on any and all amounts described in Section 3.02 hereof from the date due
until payment thereof in full, in each case, payable to the Insurer at the
Late Payment Rate per annum.
(e) The Servicer, the Seller and the Depositor agree to pay to the
Insurer as follows: any payments made by the Insurer on behalf of, or
advanced to, the Servicer, the
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Seller or the Depositor, respectively, including, without limitation, any
amounts payable by the Servicer, the Seller or the Depositor pursuant to
the Obligations or any other Transaction Documents.
(f) Following termination of the Indenture pursuant to Section 10.1
thereof, the Servicer agrees to reimburse the Insurer for any Insured
Payments (including, without limitation, any Insured Payments relating to
Preference Amounts as defined in the Policy) required to be made pursuant
to the Policy subsequent to the date of such termination.
All such amounts are to be immediately due and payable without demand.
SECTION 3.04. INDEMNIFICATION; LIMITATION OF LIABILITY.
(a) In addition to any and all rights of indemnification or any
other rights of the Insurer pursuant hereto or under law or equity, the
Seller, the Servicer and any successors thereto agree to pay, and to
protect, indemnify and save harmless, the Insurer and its officers,
directors, shareholders, employees, agents, and each person, if any, who
controls the Insurer within the meaning of either Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act 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 paid by the Insurer (herein collectively referred
to as "Liabilities") of any nature arising out of or relating to the
Transaction contemplated by the Transaction Documents by reason of:
(i) any untrue statement or alleged untrue statement of a
material fact contained in the Offering Document or in any amendment
or supplement thereto or in any preliminary offering document, or
arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except
insofar as such Liabilities arise out of or are based upon any such
untrue statement or omission or allegation thereof based upon
information set forth in the Offering Document under the caption
"Description of the Insurer and the Insurance Policy" or in the
financial statements of the Insurer, including any information in
any amendment or supplement to the Offering Document furnished by
the Insurer in writing expressly for use therein that amends or
supplements such information (all such information being referred to
herein as "Insurer Information");
(ii) to the extent not covered by clause (i) above, any act or
omission of the Seller, the Depositor, the Servicer, or the
allegation thereof, in connection with the offering, issuance, sale
or delivery of the Obligations other than by reason of false or
misleading information provided by the Insurer in writing for
inclusion in the Offering Document as specified in clause (i) above;
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(iii) the misfeasance or malfeasance of, or negligence or
theft committed by, any director, officer, employee or agent of the
Servicer, the Seller or the Depositor;
(iv) the violation by the Depositor, the Seller or the
Servicer of any federal or state securities, banking or antitrust
laws, rules or regulations in connection with the issuance, offer
and sale of the Obligations or the Transaction contemplated by the
Transaction Documents;
(v) the violation by the Depositor, the Seller or the Servicer
of any federal or state laws, rules or regulations relating to the
Transaction, including without limitation the maximum amount of
interest permitted to be received on account of any loan of money or
with respect to the Contracts;
(vi) the breach by the Depositor, the Seller or the Servicer
of any of its obligations under this Insurance Agreement or any of
the other Transaction Documents; and
(vii) the breach by the Servicer, the Seller or the Depositor
of any representation or warranty on the part of the Servicer, the
Seller or the Depositor contained in the Transaction Documents or in
any certificate or report furnished or delivered to the Insurer
thereunder.
This indemnity provision shall survive the termination of this
Insurance 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.
(b) The Seller agrees to indemnify the Trust and the Insurer for any
and all Liabilities incurred by the Trust and the Insurer due to any
claim, counterclaim, rescission, setoff or defense asserted by an Obligor
under any Contract subject to the Federal Trade Commission regulations
provided in 16 C.F.R. Part 433.
(c) 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 Servicer, the Seller or
the Depositor under this Section 3.04, notify the Servicer, the Seller or
the Depositor 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 Servicer, the Seller or the Depositor of the commencement
thereof, the Servicer, the Seller or the Depositor shall be entitled to
participate in, and, to the extent that it shall wish, to assume the
defense thereof, with counsel satisfactory to such indemnified
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party, and after notice from the Servicer, the Seller or the Depositor to
such indemnified party of its election so to assume the defense thereof,
the Servicer, the Seller or the Depositor 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 Servicer, the Seller or the Depositor in accordance with
the terms of this subsection (c), 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
Servicer, the Seller or the Depositor. The Servicer, the Seller or the
Depositor shall not be liable for any settlement of any action or claim
effected without its consent.
(d) In addition to any and all rights of indemnification or any
other rights of the Insurer pursuant hereto or under law or equity, the
Indenture Trustee agrees to pay, and to protect, indemnify and save
harmless, the Insurer and its officers, directors, shareholders,
employees, agents, including each person, if any, who controls the Insurer
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 of any nature arising out of the
breach by the Indenture Trustee of any of its obligations under this
Insurance Agreement or the Indenture. This indemnity provision shall
survive the termination of this Insurance 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.
(e) In addition to any and all rights of indemnification or any
other rights of the Insurer pursuant hereto or under law or equity, the
Back-up Servicer agrees to pay, and to protect, indemnify and save
harmless, the Insurer and its officers, directors, shareholders,
employees, agents, including each person, if any, who controls the Insurer
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 of any nature arising out of the
breach by the Back-up Servicer of any of its obligations under this
Insurance Agreement or the Servicing Agreement. This indemnity provision
shall survive the termination of this Insurance 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.
SECTION 3.05. PAYMENT PROCEDURE. In the event of any payment by the
Insurer, the Indenture Trustee, the Servicer, the Back-up Servicer, the Seller
and the Depositor agree to accept the voucher or other evidence of payment as
prima facie evidence of the propriety thereof and the liability therefor to the
Insurer. All payments to be made to the Insurer under this Insurance Agreement
shall be made to the Insurer in lawful currency of the United States of
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America in immediately available funds at the notice address for the Insurer as
specified in Section 6.02 hereof on the date when due or as the Insurer shall
otherwise direct by written notice to the other parties hereto. In the event
that the date of any payment to the Insurer or the expiration of any time period
hereunder occurs on a day which is not a Business Day, then such payment or
expiration of time period shall be made or occur on the next succeeding Business
Day with the same force and effect as if such payment was made or time period
expired on the scheduled date of payment or expiration date. Payments to be made
to the Insurer under this Insurance Agreement shall bear interest at the Late
Payment Rate from the date when due to the date paid.
ARTICLE IV
FURTHER AGREEMENTS
SECTION 4.01. EFFECTIVE DATE; TERM OF THE INSURANCE AGREEMENT. This
Insurance Agreement shall take effect on the Date of Issuance and shall remain
in effect until the later of (a) such time as the Insurer is no longer subject
to a claim under the Policy and the Policy shall have been surrendered to the
Insurer for cancellation and (b) all amounts payable to the Insurer by the
Servicer, the Indenture Trustee, the Back-up Servicer, the Seller or the
Depositor or from any other source under the Transaction Documents and all
amounts payable under the Obligations have been paid in full; provided, however,
that the provisions of Sections 3.02, 3.03, 3.04 and 4.06 hereof shall survive
any termination of this Insurance Agreement.
SECTION 4.02. FURTHER ASSURANCES AND CORRECTIVE INSTRUMENTS.
(a) Excepting at such times as an Insurer Insolvency or an Insurer
Default shall exist or shall have occurred and be continuing, none of the
Servicer, the Indenture Trustee, the Back-up Servicer, the Seller, the
Depositor, the Issuer, the Owner Trustee or the Indenture Trustee shall
grant any waiver of rights under any of the Transaction Documents to which
any of them is a party without the prior written consent of the Insurer,
and any such waiver without the prior written consent of the Insurer shall
be null and void and of no force or effect.
(b) To the extent permitted by law, the Servicer, the Indenture
Trustee, the Back-up Servicer, the Seller, the Issuer, the Owner Trustee
and the Depositor agree that they 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
Insurer may request and as may be required in the Insurer's judgment to
effectuate the intention of or facilitate the performance of this
Insurance Agreement.
SECTION 4.03. OBLIGATIONS ABSOLUTE.
(a) The obligations of the Servicer, the Indenture Trustee, the
Back-up Servicer, the Seller, the Issuer, the Owner Trustee and the
Depositor hereunder shall be
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absolute and unconditional and shall be paid or performed strictly in
accordance with this Insurance Agreement under all circumstances
irrespective of:
(i) any lack of validity or enforceability of, or any
amendment or other modifications of, or waiver, with respect to any
of the Transaction Documents, the Obligations or the Policy;
(ii) any exchange or release of any other obligations
hereunder;
(iii) the existence of any claim, setoff, defense, reduction,
abatement or other right that the Servicer, the Indenture Trustee,
the Back-up Servicer, the Seller, the Issuer, the Owner Trustee or
the Depositor may have at any time against the Insurer or any other
Person;
(iv) any document presented in connection with the Policy
proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any
respect;
(v) any payment by the Insurer under the Policy against
presentation of a certificate or other document that does not
strictly comply with terms of the Policy;
(vi) any failure of the Servicer, the Indenture Trustee, the
Back-up Servicer, the Seller, the Issuer or the Depositor to receive
the proceeds from the sale of the Obligations; or
(vii) any breach by the Servicer, the Indenture Trustee, the
Back-up Servicer, the Seller, the Issuer, the Owner Trustee or the
Depositor of any representation, warranty or covenant contained in
any of the Transaction Documents.
(b) The Servicer, the Indenture Trustee, the Back-up Servicer, the
Seller, the Depositor, the Issuer, the Owner Trustee and any and all
others who are now or may become liable for all or part of the obligations
of the Servicer, the Indenture Trustee, the Back-up Servicer, the Seller,
the Issuer, the Owner Trustee or the Depositor under this Insurance
Agreement agree to be bound by this Insurance Agreement and (i) to the
extent permitted by law, waive and renounce any and all redemption and
exemption rights and the benefit of all valuation and appraisement
privileges against the indebtedness and obligations evidenced by any
Transaction Document or by any extension or renewal thereof; (ii) waive
presentment and demand for payment, notices of nonpayment and of dishonor,
protest of dishonor and notice of protest; (iii) waive all notices in
connection with the delivery and acceptance hereof and all other notices
in connection with the performance, default or enforcement of any payment
hereunder, except as required by the Transaction Documents; (iv) waive all
rights of abatement, diminution, postponement or deduction, or any defense
other than payment, or to any right of setoff or recoupment
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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 Servicer, the Indenture Trustee, the Back-up Servicer,
the Seller, the Issuer, the Owner Trustee or the Depositor; (v) agree that
its liabilities hereunder shall, except as otherwise expressly provided in
this Section 4.03, be unconditional and without regard to any setoff,
counterclaim or the liability of any other Person for the payment hereof;
(vi) agree that any consent, waiver or forbearance hereunder with respect
to an event shall operate only for such event and not for any subsequent
event; (vii) consent to any and all extensions of time that may be granted
by the Insurer with respect to any payment hereunder or other provisions
hereof and to the release of any security at any time given for any
payment hereunder, or any part thereof, with or without substitution, and
to the release of any Person or entity liable for any such payment; and
(viii) consent to the addition of any and all other makers, endorsers,
guarantors and other obligors for any payment hereunder, and to the
acceptance of any and all other security for any payment hereunder, and
agree that the addition of any such obligors or security shall not affect
the liability of the parties hereto for any payment hereunder.
(c) Nothing herein shall be construed as prohibiting the Servicer,
the Indenture Trustee, the Back-up Servicer, the Seller, the Issuer, the
Owner Trustee or the Depositor from pursuing any rights or remedies it may
have against any other Person in a separate legal proceeding.
SECTION 4.04. ASSIGNMENTS; REINSURANCE; THIRD-PARTY RIGHTS.
(a) This Insurance Agreement shall be a continuing obligation of the
parties hereto and shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. None
of the Servicer, the Indenture Trustee, the Back-up Servicer, the Seller,
the Issuer, the Owner Trustee nor the Depositor may assign its rights
under this Insurance Agreement, or delegate any of its duties hereunder,
without the prior written consent of the Insurer. Any assignment made in
violation of this Insurance Agreement shall be null and void.
(b) The Insurer shall have the right to give participations in its
rights under this Insurance Agreement and to enter into contracts of
reinsurance with respect to the Policy upon such terms and conditions as
the Insurer may in its discretion determine; provided, however, that no
such participation or reinsurance agreement or arrangement shall relieve
the Insurer of any of its obligations hereunder or under the Policy.
(c) In addition, the Insurer shall be entitled to assign or pledge
to any bank or other lender providing liquidity or credit with respect to
the Transaction or the obligations of the Insurer in connection therewith
any rights of the Insurer under the Transaction Documents or with respect
to any real or personal property or other interests pledged to the
Insurer, or in which the Insurer has a security interest, in connection
with the Transaction.
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(d) Except as provided herein with respect to participants and
reinsurers, nothing in this Insurance Agreement shall confer any right,
remedy or claim, express or implied, upon any Person, including,
particularly, any Owner, other than the Insurer against the Servicer, the
Indenture Trustee, the Back-up Servicer, the Seller, the Issuer, the Owner
Trustee or the Depositor, 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 and permitted
assigns. Neither the Indenture Trustee nor any Owner shall have any right
to payment from any Insurance Premiums paid or payable hereunder or under
the Sale and Allocation Agreement or from any other amounts paid by the
Servicer, the Indenture Trustee, the Back-up Servicer, the Seller or the
Depositor pursuant to Section 3.02, 3.03 or 3.04 hereof.
(e) The Servicer, the Seller, the Depositor , the Back-up Servicer,
the Issuer, the Owner Trustee and the Indenture Trustee agree that the
Insurer shall have all rights of a third-party beneficiary in respect of
the Indenture and each other Transaction Document to which it is not a
signing party and hereby incorporate and restate their representations,
warranties and covenants as set forth therein for the benefit of the
Insurer.
SECTION 4.05. LIABILITY OF THE INSURER. Neither the Insurer nor any of its
officers, directors or employees shall be liable or responsible for: (a) the use
that may be made of the Policy by the Indenture Trustee or for any acts or
omissions of the Indenture Trustee in connection therewith; or (b) the validity,
sufficiency, accuracy or genuineness of documents delivered to the Insurer (or
its Fiscal Agent) in connection with any claim under the Policy, or of any
signatures thereon, even if such documents or signatures should in fact prove to
be in any or all respects invalid, insufficient, fraudulent or forged (unless
the Insurer shall have actual knowledge thereof). In furtherance and not in
limitation of the foregoing, the Insurer (or its Fiscal Agent) may accept
documents that appear on their face to be in order, without responsibility for
further investigation.
SECTION 4.06. PARTIES WILL NOT INSTITUTE INSOLVENCY PROCEEDINGS. So long
as this Agreement is in effect, and for one year following its termination, none
of the parties hereto will file any involuntary petition or otherwise institute
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other proceedings under any federal or state bankruptcy or similar
law against the Depositor or the Issuer.
SECTION 4.07. INDENTURE TRUSTEE, DEPOSITOR, BACK-UP SERVICER, SELLER AND
SERVICER TO JOIN IN ENFORCEMENT ACTION. To the extent necessary to enforce any
right of the Insurer in or remedy of the Insurer under any Contract, the
Indenture Trustee, the Depositor, the Back-up Servicer, the Seller, the Issuer,
the Owner Trustee and the Servicer agree to join in any action initiated by the
Trust or the Insurer for the protection of such right or exercise of such
remedy.
SECTION 4.08. SUBROGATION. To the extent of any payments under the Policy,
the Insurer shall be fully subrogated to any remedies against the Depositor, the
Seller or the Servicer or in respect of the Contracts available to the Indenture
Trustee under the Indenture or Sale and Allocation Agreement. The Indenture
Trustee acknowledges such subrogation and, further,
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agrees to execute such instruments prepared by the Insurer and to take such
reasonable actions as, in the sole judgment of the Insurer, are necessary to
evidence such subrogation and to perfect the rights of the Insurer to receive
any moneys paid or payable under the Indenture or Sale and Allocation Agreement.
ARTICLE V
DEFAULTS; REMEDIES
SECTION 5.01. DEFAULTS. The occurrence of any of the following events
shall constitute an Event of Default hereunder:
(a) Any representation or warranty made by the Servicer, the
Indenture Trustee, the Back-up Servicer, the Seller or the Depositor
hereunder or under the Transaction Documents, or in any certificate
furnished hereunder or under the Transaction Documents, shall prove to be
untrue or incomplete in any material respect;
(b) (i) The Servicer, the Indenture Trustee, the Back-up Servicer,
the Seller, the Issuer, the Owner Trustee or the Depositor shall fail to
pay when due any amount payable by the Servicer, the Indenture Trustee,
the Back-up Servicer, the Seller or the Depositor hereunder or (ii) a
legislative body has enacted any law that declares or a court of competent
jurisdiction shall find or rule that this Insurance Agreement or any of
the Transaction Documents are not valid and binding on the Servicer, the
Indenture Trustee, the Back-up Servicer, the Seller, the Issuer, the Owner
Trustee or the Depositor;
(c) the occurrence and continuance of an "Event of Default" under
the Indenture (as defined therein);
(d) Any failure on the part of the Servicer, the Indenture Trustee,
the Back-up Servicer, the Seller, the Issuer, the Owner Trustee or the
Depositor duly to observe or perform in any material respect any other of
the covenants or agreements on the part of the Servicer, the Indenture
Trustee, the Back-up Servicer, the Seller, the Issuer, the Owner Trustee
or the Depositor contained in this Insurance Agreement or in any other
Transaction Document which continues unremedied for a period of 30 days
with respect to this Insurance Agreement, or, with respect to any other
Transaction Document, beyond any cure period provided for therein, after
the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer, the Seller, the Issuer,
the Owner Trustee or the Depositor, as applicable, by the Insurer (with a
copy to the Indenture Trustee) or by the Indenture Trustee (with a copy to
the Insurer);
(e) 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, marshalling of
assets and liabilities or similar proceedings, or for the winding-up or
liquidation of its
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affairs, shall have been entered against the Servicer, the Seller, the
Back-up Servicer, the Issuer, the Owner Trustee or the Depositor and such
decree or order shall have remained in force undischarged or unstayed for
a period of 90 consecutive days;
(f) The Servicer, the Seller, the Back-up Servicer, the Issuer, the
Owner Trustee or the Depositor shall consent to the appointment of a
conservator or receiver or liquidator or other similar official in any
insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings of or relating to the Servicer, the Seller, the
Back-up Servicer, the Issuer, the Owner Trustee or the Depositor or of or
relating to all or substantially all of the property of either;
(g) The Servicer, the Seller, the Back-up Servicer, the Issuer, the
Owner Trustee or the Depositor 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;
(h) The occurrence and continuance of an "Event of Servicing
Termination" under the Servicing Agreement as defined therein;
(i) The failure of the Seller, the Issuer or the Depositor to comply
with, or maintain the accuracy of, the Opinion Facts and Assumptions;
(j) The occurrence of final rulings against the Seller or its
affiliates by a court of competent jurisdiction assessing monetary damages
in excess of $1,000,000 or settlements resulting in the payment by the
Seller or its affiliates of amounts in excess of $1,000,000;
(k) The departure of any two of the following executives from the
Seller or its consolidated subsidiaries: Tommy Moore, Bennie Duck, and
Joseph Pisano, if a replacement for such individuals(s) acceptable to the
Insurer is not made within 90 days;
(l) The Seller fails to maintain a minimum GAAP Equity as a
percentage of on-balance sheet portfolio of 10%. Equity may include 50% of
subordinated debt with a maturity equal to or greater than five years,
subject to MBIA review of and satisfaction with the subordinated debt
agreement;
(m) The Seller fails to maintain either (i) a $10 million non-MBIA
insured, non-asset backed financing facility or (ii) an issuance of $20
million in subordinated debt with a maturity of five to seven years;
(n) The Seller fails to maintain a minimum EBITDA Coverage of
1.1:1.0. The test shall be measured quarterly (coinciding with FIFS
quarterly fiscal reporting) on a rolling six months basis;
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(o) A Change in Control occurs; or
(p) A material change occurs in the operations of the Servicer which
materially adversely affects the ability of the Servicer to service the
Contracts or to perform its obligations under the Servicing Agreement.
SECTION 5.02. REMEDIES; NO REMEDY EXCLUSIVE.
(a) Upon the occurrence of an Event of Default, the Insurer may
exercise any one or more of the rights and remedies set forth below:
(i) exercise any rights and remedies under the Transaction
Documents in accordance with the terms of the Transaction Documents
or direct the Indenture Trustee to exercise such remedies in
accordance with the terms of the Transaction Documents; or
(ii) take whatever action at law or in equity as may appear
necessary or desirable in its judgment to collect the amounts then
due under the Transaction Documents or to enforce performance and
observance of any obligation, agreement or covenant of the Servicer,
the Indenture Trustee, the Back-up Servicer, the Seller, the Issuer,
the Owner Trustee or the Depositor under the Transaction Documents.
(b) Unless otherwise expressly provided, no remedy herein conferred
upon or reserved 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 the Transaction Documents or existing at law or
in equity. No delay or omission to exercise any right or power accruing
under 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 Insurer to exercise any remedy reserved to the
Insurer in this Article, it shall not be necessary to give any notice,
other than such notice as may be required in this Article V.
SECTION 5.03. WAIVERS.
(a) No failure by the Insurer to exercise, and no delay by the
Insurer in exercising, any right hereunder shall operate as a waiver
thereof. The exercise by the Insurer of any right hereunder shall not
preclude the exercise of any other right, and the remedies provided herein
to the Insurer are declared in every case to be cumulative and not
exclusive of any remedies provided by law or equity.
(b) The Insurer 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 Insurer and delivered to the Servicer, the Indenture Trustee, the
Back-up Servicer, the Seller, the Issuer and the Depositor. Unless
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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.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. AMENDMENTS, ETC. This Insurance Agreement may be amended,
modified or terminated only by written instrument or written instruments signed
by the parties hereto. The Servicer agrees to promptly provide a copy of any
amendment to this Insurance Agreement to the Indenture Trustee, S&P and Moody's.
No act or course of dealing shall be deemed to constitute an amendment,
modification or termination hereof.
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
telecopied to the recipient as follows:
(a) To the Insurer:
MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
Attention: Insured Portfolio Management-Structured Finance
(IPM-SF)(First Investors Auto Owner Trust 2000-A)
Telecopy No.: (914) 765-3810
Confirmation: (914) 273-4545
(in each case in which notice or other communication to the
Insurer refers to an Event of Default, a claim on the Policy
or with respect to which failure on the part of the Insurer to
respond shall be deemed to constitute consent or acceptance,
then a copy of such notice or other communication should also
be sent to the attention of each of the general counsel and
the Insurer and shall be marked to indicate "URGENT MATERIAL
ENCLOSED.")
(b) To the Seller and Administrator:
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First Investors Financial Services, Inc.
Suite 710
675 Bering Drive
Houston, TX 77057
Attention: Tommy A. Moore, Jr.
Telecopy No.: (713) 977-0657
Confirmation: (713) 977-2600
(c) To the Servicer:
First Investors Servicing Corporation
675 Bering Drive
Houston, TX 77057
Attention: Tommy A. Moore, Jr.
Telecopy No.: (713) 977-0657
Confirmation: (713) 977-2600
(d) To the Indenture Trustee:
Norwest Bank Minnesota, National Association
Sixth & Marquette
Minneapolis, MN 55479-0070
Attention: Asset-Backed Trust Administration
(e) To the Depositor:
First Investors Auto Investment Corp.
675 Bering Drive
Houston, TX 77057
Attention: Tommy A. Moore, Jr.
Telecopy No.: (713) 977-0657
Confirmation: (713) 977-2600
(f) To the Issuer:
First Investors Auto Owner Trust 2000-A
c/o Bankers Trust (Delaware)
1011 Centre Road
Suite 200
Wilmington, DE 19805-1266
Attention: Corporate Trust
(g) To the Owner Trustee:
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<PAGE>
Bankers Trust (Delaware)
1011 Centre Road
Suite 200
Wilmington, DE 19805-1266
Attention: Corporate Trust
with a copy to:
Bankers Trust Company
4 Albany Street, 10th Floor
New York, NY 10006
Attention: Structured Finance Group
(h) To the Back-up Servicer:
Norwest Bank Minnesota, National Association
Sixth and Marquette Streets
Minneapolis, MN 55479-0070
Attention: Asset-Backed Trust Administration
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 receipt.
SECTION 6.03. SEVERABILITY. In the event that any provision of this
Insurance 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 any party hereto is unavailable or unenforceable
shall not affect in any way the ability of such party to pursue any other remedy
available to it.
SECTION 6.04. GOVERNING LAW. This Insurance Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
SECTION 6.05. CONSENT TO JURISDICTION.
(a) The parties hereto hereby irrevocably submit to the jurisdiction
of the United States District Court for the Southern District of New York
and any court in the State of New York located in the City and County of
New York, and any appellate court from any thereof, in any action, suit or
proceeding brought against it and to or in connection with any of the
Transaction Documents or the Transaction contemplated thereunder or for
recognition or enforcement of any judgment, and the parties hereto hereby
irrevocably and unconditionally agree that all claims in respect of any
such action or proceeding may be heard or determined in such New York
state court or, to the extent permitted by law, in such federal court. The
parties hereto agree that a final judgment in any such action, suit or
proceeding shall be conclusive and may be enforced in other
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jurisdictions by suit on the judgment or in any other manner provided by
law. To the extent permitted by applicable law, the parties hereto hereby
waive and agree not to assert by way of motion, as a defense or otherwise
in any such suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of such courts, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue
of the suit, action or proceeding is improper or that the related
documents or the subject matter thereof may not be litigated in or by such
courts.
(b) To the extent permitted by applicable law, the parties hereto
shall not seek and hereby waive the right to any review of the judgment of
any such court by any court of any other nation or jurisdiction which may
be called upon to grant an enforcement of such judgment.
(c) Except as provided in Section 4.06 herein, nothing contained in
this Insurance Agreement shall limit or affect the Insurer's right to
serve process in any other manner permitted by law or to start legal
proceedings relating to any of the Transaction Documents any party hereto
or its or their property in the courts of any jurisdiction.
SECTION 6.06. CONSENT OF THE INSURER. In the event that the consent of the
Insurer is required under any of the Transaction Documents, the determination
whether to grant or withhold such consent shall be made by the Insurer in its
sole discretion without any implied duty towards any other Person.
SECTION 6.07. COUNTERPARTS. This Insurance Agreement may be executed in
counterparts by the parties hereto, and all such counterparts shall constitute
one and the same instrument.
SECTION 6.08. HEADINGS. The headings of Articles and Sections and the
Table of Contents contained in this Insurance Agreement are provided for
convenience only. They form no part of this Insurance Agreement and shall not
affect its construction or interpretation. Unless otherwise indicated, all
references to Articles and Sections in this Insurance Agreement refer to the
corresponding Articles and Sections of this Insurance Agreement.
SECTION 6.09. TRIAL BY JURY WAIVED. Each party hereto hereby waives, to
the fullest extent permitted by law, any right to a trial by jury in respect of
any litigation arising directly or indirectly out of, under or in connection
with any of the Transaction Documents or any of the Transaction contemplated
thereunder. Each party hereto (A) certifies that no representative, agent or
attorney of any party hereto has represented, expressly or otherwise, that it
would not, in the event of litigation, seek to enforce the foregoing waiver and
(B) acknowledges that it has been induced to enter into the Transaction
Documents to which it is a party by, among other things, this waiver.
SECTION 6.10. LIMITED LIABILITY. No recourse under any Transaction
Document shall be had against, and no personal liability shall attach to, any
officer, employee, director, affiliate or shareholder of any party hereto, as
such, by the enforcement of any assessment or by any legal or equitable
proceeding, by virtue of any statute or otherwise in respect of any of the
Transaction
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<PAGE>
Documents, the Obligations or the Policy, it being expressly agreed and
understood that each Transaction Document is solely a corporate obligation of
each party hereto, and that any and all personal liability, either at common law
or in equity, or by statute or constitution, of every such officer, employee,
director, affiliate or shareholder for breaches by any party hereto of any
obligations under any Transaction Document is hereby expressly waived as a
condition of and in consideration for the execution and delivery of this
Insurance Agreement.
SECTION 6.11. ENTIRE AGREEMENT. The Transaction Documents and the Policy
set forth the entire agreement between the parties with respect to the subject
matter thereof, and this Insurance Agreement supersedes and replaces any
agreement or understanding that may have existed between the parties prior to
the date hereof in respect of such subject matter.
SECTION 6.12. LIMITATION OF LIABILITY. Notwithstanding any other provision
herein or elsewhere, this Insurance Agreement has been executed and delivered by
Bankers Trust (Delaware), not in its individual capacity, but solely in its
capacity as Owner Trustee of the Issuer, in no event shall Bankers Trust
(Delaware) or the Owner Trustee have any liability in respect of the
representation, warranties or obligations of the Issuer hereunder or under any
other documents, as to all of which recourse shall be solely to the assets of
the Issuer, and for all purposes of this Insurance Agreement and each other
document, the Owner Trustee and Bankers Trust (Delaware) shall be entitled to
the benefits of the Trust Agreement.
[REMAINDER OF PAGE INTENTIONALLY BLANK;
SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Insurance
Agreement, all as of the day and year first above mentioned.
MBIA INSURANCE CORPORATION
By ______________________________________
Assistant Secretary
FIRST INVESTORS SERVICING
CORPORATION, as Servicer
By ______________________________________
Title ___________________________________
FIRST INVESTORS FINANCIAL SERVICES, INC., as
Seller and as Administrator
By ______________________________________
Title ___________________________________
FIRST INVESTORS AUTO INVESTMENT CORP., as
Depositor
By ______________________________________
Title ___________________________________
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Back-up Servicer and
Indenture Trustee
By ______________________________________
Title ___________________________________
<PAGE>
FIRST INVESTORS AUTO OWNER TRUST 2000-A, as
Issuer,
By: BANKERS TRUST (DELAWARE), not in its
individual capacity, but solely as Owner
Trustee
By ______________________________________
Title ___________________________________
BANKERS TRUST (DELAWARE), not in its
individual capacity, but solely as Owner
Trustee
By ______________________________________
Title ___________________________________
EXHIBIT 10.67
EXECUTION COPY
================================================================================
MBIA INSURANCE CORPORATION,
as Insurer
FIRST INVESTORS FINANCIAL SERVICES, INC.,
as Seller
and
BANC OF AMERICA SECURITIES LLC,
as Initial Purchaser
INDEMNIFICATION AGREEMENT
First Investors Auto Owner Trust 2000-A
$167,969,000
7.174% Asset-Backed Notes
Dated as of January 12, 2000
================================================================================
<PAGE>
TABLE OF CONTENTS
Section 1. Definitions.............................................1
Section 2. Representations and Warranties of the Insurer...........2
Section 3. Agreements, Representations and Warranties of
the Initial Purchaser.................................3
Section 4. Agreements, Representations and Warranties of
the Seller............................................4
Section 5. Indemnification.........................................5
Section 6. Notice To Be Given......................................5
Section 7. Contribution............................................7
Section 8. Notices.................................................9
Section 9. Governing Law, Etc......................................9
Section 10. Insurance Agreement; Purchase Agreement; Sale
and Allocation Agreement..............................9
Section 11. Limitations.............................................9
Section 12. Counterparts...........................................10
Section 13. Nonpetition............................................10
TESTIMONIUM
SIGNATURES AND SEALS
<PAGE>
INDEMNIFICATION AGREEMENT
This Agreement, dated as of January 12, 2000, is by and among MBIA
Insurance Corporation (the "Insurer"), as the Insurer under the Note Guaranty
Insurance Policy (the "Policy") issued in connection with the Notes described
below, First Investors Financial Services, Inc. (the "Seller") and Banc of
America Securities LLC (the "Initial Purchaser").
Section 1. DEFINITIONS. As used in this Agreement, the following terms
shall have the respective meanings stated herein, 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 Indenture (as described below).
"ACT" means the Securities Act of 1933, as amended, together with all
related rules and regulations.
"AGREEMENT" means this Indemnification Agreement by and among the
Insurer, the Seller and the Initial Purchaser.
"INDEMNIFIED PARTY" means any party entitled to any indemnification
pursuant to Section 5 below, as the context requires.
"INDEMNIFYING PARTY" means any party required to provide indemnification
pursuant to Section 5 below, as the context requires.
"INDENTURE" means the Indenture dated January 1, 2000 between the
Issuer, the Seller and the Indenture Trustee as the same may be amended or
supplemented from time to time in accordance with the terms thereof.
"INITIAL PURCHASER PARTY" means the Initial Purchaser and its parent,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent or "controlling person" (as such term is used in the Act) of any of the
foregoing.
"INSURANCE AGREEMENT" means the Insurance Agreement, dated as of January
1, 2000, by and among the Insurer, the Servicer, the Seller, as Seller and as
Administrator, First Investors Auto Investment Corp., as Depositor, First
Investors Auto Owner Trust 2000-A, as Issuer, Bankers Trust (Delaware), as Owner
Trustee and Norwest Bank Minnesota, National Association, as Back-up Servicer
and Indenture Trustee (the "Indenture Trustee").
<PAGE>
"INSURER PARTY" means the Insurer and its respective parents,
subsidiaries and affiliates and any shareholder, director, officer, employee,
agent or any "controlling person" (as such term is used in the Act) of any of
the foregoing.
"LOSSES" means (i) any actual out-of-pocket loss paid by the party
entitled to indemnification or contribution hereunder and (ii) any actual
out-of-pocket costs and expenses paid by such party, including reasonable fees
and expenses of its counsel, to the extent not paid, satisfied or reimbursed
from funds provided by any other Person (provided that the foregoing shall not
create or imply any obligation to pursue recourse against any such other
Person).
"NOTES" means the First Investors Auto Owner Trust 2000-A $167,969,000
7.174% Asset-Backed Notes issued pursuant to the Indenture.
"OFFERING MEMORANDUM" means the offering memorandum dated January 12,
2000 in respect of the Notes (and any amendment or supplement thereto.)
"PERSON" means any individual, partnership, joint venture, corporation,
trust or unincorporated organization or any government or agency or political
subdivision thereof.
"PURCHASE AGREEMENT" means the Purchase Agreement by and between the
Initial Purchaser and the Depositor, dated January 12, 2000.
"SALE AND ALLOCATION AGREEMENT" means the Sale and Allocation Agreement,
dated as of January 1, 2000, by and among the Seller, the Servicer, the
Depositor, the Indenture Trustee and the Issuer.
"SELLER PARTY" means the Seller, each of its parents, subsidiaries and
affiliates and any shareholder, director, officer, employee, agent or any
"controlling person" (as such term is used in the Act) of any of the foregoing.
"SERVICER" means First Investors Servicing Corporation, as Servicer.
Section 2. REPRESENTATIONS AND WARRANTIES OF THE INSURER. The Insurer
represents and warrants to the Initial Purchaser and the Seller as follows:
(a) ORGANIZATION AND LICENSING. The Insurer is a duly
incorporated and existing New York stock insurance company licensed to
do business in the State of New York and is in good standing under the
laws of such state.
(b) CORPORATE POWER. The Insurer has the corporate power and
authority to issue the Policy and execute and deliver this Agreement and
the Insurance Agreement and to perform all of its obligations hereunder
and thereunder.
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<PAGE>
(c) AUTHORIZATION; APPROVALS. The issuance of the Policy and the
execution, delivery and performance of this Agreement and the Insurance
Agreement have been duly authorized by all necessary corporate
proceedings. No further approvals or filings of any kind, including,
without limitation, any further approvals of or further filings with any
governmental agency or other governmental authority, or any approval of
the Insurer's board of directors or stockholders, are necessary for the
Policy, this Agreement and the Insurance Agreement to constitute the
legal, valid and binding obligations of the Insurer.
(d) ENFORCEABILITY. The Policy, when issued, and this Agreement
and the Insurance Agreement will each constitute legal, valid and
binding obligations of the Insurer, enforceable in accordance with their
terms, subject to applicable laws affecting the enforceability of
creditors' rights generally.
(e) FINANCIAL INFORMATION. The consolidated financial statements
of the Insurer as of December 31, 1997 and December 31, 1998 and for the
three years ended December 31, 1998 incorporated by reference in the
Offering Memorandum (the "Insurer Audited Financial Statements"), fairly
present in all material respects the financial condition of the Insurer
as of such date and for the period covered by such statements in
accordance with generally accepted accounting principles consistently
applied. The consolidated financial statements of the Insurer and its
subsidiaries as of September 30, 1999 incorporated by reference in the
Offering Memorandum (the "Insurer Unaudited Financial Statements")
present fairly in all material respects the financial condition of the
Insurer as of such date and for the period covered by such statements in
accordance with generally accepted accounting principles applied in a
manner consistent with the accounting principles used in preparing the
Insurer Audited Financial Statements, and, since September 30, 1999
there has been no material change in such financial condition of the
Insurer which would materially and adversely affect its ability to
perform its obligations under the Policy.
(f) INSURER INFORMATION. The information in the Offering
Memorandum as of the date hereof under the caption "DESCRIPTION OF THE
INSURER AND THE INSURANCE POLICY" (the "Insurer Information") is limited
and does not purport to provide the scope of disclosure required to be
included in a prospectus for a registrant under the Securities Act of
1933, in connection with the public offer and sale of securities of such
registrant. Within such limited scope of disclosure, the Insurer
Information does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading.
(g) NO LITIGATION. There are no actions, suits, proceedings or
investigations pending or, to the best of the Insurer's knowledge,
threatened against it at law or in equity or before or by any court,
governmental agency, board or commission or any arbitrator
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<PAGE>
which, if decided adversely, would materially and adversely affect its
condition (financial or otherwise) or its operations or would materially
and adversely affect its ability to perform its obligations under this
Agreement, the Policy or the Insurance Agreement.
Section 3. AGREEMENTS, REPRESENTATIONS AND WARRANTIES OF THE INITIAL
PURCHASER. The Initial Purchaser represents and warrants to and agrees with the
Seller and the Insurer that the statements in the Offering Memorandum made in
reliance upon and in conformity with written information relating to the Initial
Purchaser furnished to the Seller specifically for use in the preparation of the
Offering Memorandum, and acknowledged in writing (referred to herein as the
"Initial Purchaser Information"), are true and correct in all material respects.
Section 4. AGREEMENTS, REPRESENTATIONS AND WARRANTIES OF THE SELLER. The
Seller represents, warrants to and agrees with the Insurer and the Initial
Purchaser as follows:
(a) OFFERING MEMORANDUM. The information in the Offering
Memorandum, other than the Insurer Information and the Initial Purchaser
Information, is true and correct in all material respects and does not
contain any untrue statement of a fact that is material or omit to state
a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading.
(b) ORGANIZATION. The Seller is duly incorporated and existing
under the laws of the State of Texas and is in good standing as a
foreign corporation in each jurisdiction in which the nature of its
business, or the properties owned or leased by it, makes such
qualification necessary.
(c) CORPORATE POWER. The Seller has the corporate power and
authority to execute and deliver this Agreement, the Indenture, the Sale
and Allocation Agreement and the Insurance Agreement and to perform all
of its obligations hereunder and thereunder in all material respects.
(d) AUTHORIZATION; APPROVALS. The execution, delivery and
performance of this Agreement, the Sale and Allocation Agreement, the
Indenture and the Insurance Agreement by the Seller have been duly
authorized by all necessary corporate proceedings. No further approvals
or filings of any kind, including, without limitation, any further
approvals of or further filing with any governmental agency or other
governmental authority, or any approval of the Seller's board of
directors or stockholders, are necessary for this Agreement, the Sale
and Allocation Agreement, the Indenture and the Insurance Agreement to
constitute the legal, valid and binding obligations of the Seller.
(e) ENFORCEABILITY. This Agreement, the Sale and Allocation
Agreement, the Indenture and the Insurance Agreement will each
constitute legal, valid and binding obligations of the Seller,
enforceable in accordance with their terms, subject, as to the
enforcement of remedies, to bankruptcy, insolvency, reorganization,
moratorium and other
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<PAGE>
similar laws affecting the enforceability of creditors' rights generally
applicable in the event of the bankruptcy, insolvency or reorganization
of the Seller and to general principles of equity.
(f) NO LITIGATION. There are no actions, suits, proceedings or
investigations pending or, to the best of the Seller's knowledge,
threatened against it at law or in equity or before any court,
governmental agency, board or commission or any arbitrator which, if
decided adversely, would materially and adversely affect its condition
(financial or otherwise) or its operations or would materially and
adversely affect its ability to perform its obligations under this
Agreement, the Indenture, the Sale and Allocation Agreement or the
Insurance Agreement.
Section 5. INDEMNIFICATION.
(a) The Insurer hereby agrees, upon the terms and subject to the
conditions of this Agreement, to indemnify, defend and hold harmless
each Seller Party and each Initial Purchaser Party against any and all
Losses incurred by them with respect to the offer and sale of any of the
Notes and resulting from the Insurer's breach of any of its
representations and warranties set forth in Section 2 of this Agreement.
(b) The Initial Purchaser Party hereby agrees, upon the terms
and subject to the conditions of this Agreement, to indemnify, defend
and hold harmless each Insurer Party against any and all Losses incurred
by it with respect to the offer and sale of any of the Notes which
results from the Initial Purchaser's breach of any of its
representations and warranties set forth in Section 3 of this Agreement.
(c) The Seller hereby agrees, upon the terms and subject to the
conditions of this Agreement, to indemnify, defend and hold harmless
each Insurer Party and Initial Purchaser Party against any and all
Losses incurred by it with respect to the offer and sale of any of the
Notes and resulting from the Seller's breach of any of its
representations and warranties set forth in Section 4 of this Agreement.
(d) Upon the incurrence of any Losses entitled to
indemnification hereunder, the Indemnifying Party shall reimburse the
Indemnified Party promptly upon establishment by the Indemnified Party
to the Indemnifying Party of the Losses incurred.
Section 6. NOTICE TO BE GIVEN.
(a) Except as provided in Section 7 below with respect to
contribution, the indemnification provided herein by the Indemnifying
Party shall be the exclusive remedy of each Indemnified Party for the
Losses resulting from the Indemnifying Party's breach of a
representation, warranty or agreement hereunder; provided, however, that
each Indemnified Party shall be entitled to pursue any other remedy at
law or in equity for any
5
<PAGE>
such breach so long as the damages sought to be recovered shall not
exceed the Losses incurred thereby resulting from such breach.
(b) In the event that any action or regulatory proceeding shall
be commenced or claim asserted which may entitle an Indemnified Party to
be indemnified under this Agreement, such party shall give the
Indemnifying Party written or facsimile notice of such action or claim
reasonably promptly after receipt of written notice thereof.
(c) Upon request of the Indemnified Party, the Indemnifying
Party shall retain counsel reasonably satisfactory to the Indemnified
Party to represent the Indemnified Party and any others the Indemnifying
Party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. The
Indemnifying Party may, at its option, at any time upon written notice
to the Indemnified Party, assume the defense of any proceeding and may
designate counsel reasonably satisfactory to the Indemnified Party in
connection therewith, provided that the counsel so designated would have
no actual or potential conflict of interest in connection with such
representation. Unless it shall assume the defense of any proceeding the
Indemnifying Party shall not be liable for any settlement of any
proceeding, effected without its written consent, but if settled with
such consent or if there be a final judgment for the plaintiff, the
Indemnifying Party agrees to indemnify the Indemnified Party from and
against any loss or liability by reason of such settlement or judgment.
The Indemnifying Party shall be entitled to participate in the defense
of any such action or claim in reasonable cooperation with, and with the
reasonable cooperation of, each Indemnified Party.
(d) The Indemnified Party will have the right to employ its own
counsel in any such action, but the fees and expenses of such counsel
will be at the expense of such Indemnified Party unless (i) the
employment of counsel by the Indemnified Party at the Indemnifying
Party's expense has been authorized in writing by the Indemnifying
Party, (ii) the Indemnifying Party has not in fact employed counsel to
assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action or (iii) the named
parties to any such action include the Indemnifying Party on the one
hand and, on the other hand, the Indemnified Party, and representation
of both parties by the same counsel would be inappropriate due to actual
or potential differing interests between them (in which case if such
Indemnified Party notifies the Indemnifying Party in writing that it
elects to employ separate counsel at the expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to assume the
defense of such action or proceeding on such Indemnified Party's
behalf), in each of which cases the reasonable fees and expenses of
counsel (including local counsel) will be at the expense of the
Indemnifying Party, and all such fees and expenses will be reimbursed
promptly as they are incurred. In the event that any expenses so paid by
the Indemnifying Party are subsequently determined not to be required to
be borne by the Indemnifying Party hereunder, the party which received
such payment shall promptly refund to the
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<PAGE>
Indemnifying Party the amount so paid by such Indemnifying Party.
Notwithstanding the foregoing, in connection with any one action or
separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or
circumstances, the Indemnifying Party shall not be liable for the fees
and expenses of more than one counsel for all Seller Parties, more than
one counsel for all Initial Purchaser Parties and more than one counsel
for all Insurer Parties, as applicable.
(e) The Indemnified Parties shall cooperate with the
Indemnifying Parties in resolving any event which would give rise to an
indemnity obligation pursuant to Section 5 hereof in the most efficient
manner.
(f) No settlement of any such claim or action shall be entered
into without the consent of each Indemnified Party who is subject to
such claim or action, on the one hand, and each Indemnifying Party who
is subject to such claim or action, on the other hand; provided,
however, that the consent of such Indemnified Party shall not be
required if such settlement fully discharges, with prejudice against the
plaintiff, the claim or action against such Indemnified Party.
(g) Any failure by an Indemnified Party to comply with the
provisions of this Section shall relieve the Indemnifying Party of
liability only if such failure is materially prejudicial to any legal
pleadings, grounds, defenses or remedies in respect thereof or the
Indemnifying Party's financial liability hereunder, and then only to the
extent of such prejudice.
Section 7. CONTRIBUTION.
(a) To provide for just and equitable contribution if the
indemnification provided by the Insurer is determined to be unavailable
for any Initial Purchaser Party (other than pursuant to Section 5 or 6
of this Agreement), or if the indemnification provided by the Initial
Purchaser is determined to be unavailable for any Insurer Party (other
than pursuant to Section 5 or 6 of this Agreement), the Insurer and the
Initial Purchaser shall contribute to the aggregate costs of liabilities
arising from any breach of their respective representations and
warranties set forth in this Agreement on the basis of the relative
fault of all Insurer Parties and all Initial Purchaser Parties.
(b) To provide for just and equitable contribution if the
indemnification provided by the Insurer is determined to be unavailable
for any Seller Party (other than pursuant to Section 5 or 6 of this
Agreement), or if the indemnification provided by the Seller is
determined to be unavailable for any Insurer Party (other than pursuant
to Section 5 or 6 of this Agreement), the Insurer and the Seller shall
contribute to the aggregate cost of liabilities arising from any breach
of their respective representations and warranties set forth in this
Agreement on the basis of the relative fault of all Insurer Parties and
all Seller Parties.
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<PAGE>
(c) To provide for just and equitable contribution if the
indemnification provided by the Seller is determined to be unavailable
for any Initial Purchaser Party (other than pursuant to Section 5 or 6
of this Agreement), the Seller and the Initial Purchaser shall
contribute to the aggregate cost of liabilities arising from any breach
of their respective representations and warranties set forth in this
Agreement on the basis of the relative fault of all Initial Purchaser
Parties and all Seller Parties.
(d) The relative fault of each Indemnifying Party, on the one
hand, and of each Indemnified Party, on the other hand, shall be
determined by reference to, among other things, whether the breach of,
or alleged breach of, any of its representations and warranties set
forth in Section 2, 3 or 4 of this Agreement relates to information
supplied by, or action within the control of, the Indemnifying Party or
the Indemnified Party and the Parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such breach.
(e) The parties agree that the Insurer shall be solely
responsible for the Insurer Information and for the Insurer Financial
Statements, that the Initial Purchaser shall be solely responsible for
the Initial Purchaser Information provided by the Initial Purchaser in
writing for use in the Offering Memorandum and that the Seller shall be
responsible for all other information in the Offering Memorandum.
(f) No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
(g) The indemnity and contribution agreements contained in this
Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Initial
Purchaser Party, any Seller Party or any Insurer Party, (ii) the
issuance of any Notes or the Policy or (iii) any termination of this
Agreement.
(h) Upon the incurrence of any Losses entitled to contribution
hereunder, the contributor shall reimburse the party entitled to
contribution promptly upon establishment by the party entitled to
contribution to the contributor of the Losses incurred.
(i) Notwithstanding anything in this Section 7 to the contrary,
(i) the Insurer shall not be required to contribute an amount in excess
of the amount by which the total of the insurance premiums that have
been received by the Insurer under the Insurance Agreement exceeds the
amount of any damages that the Insurer has otherwise been required to
pay in respect of any breach by the Insurer of the representations and
warranties contained in Section 2 hereof, and (ii) the Initial Purchaser
shall not be required to contribute an amount in excess of the amount by
which the total underwriting fees, discounts and commissions received by
the Initial Purchaser in connection with the resale of the Notes exceeds
the amount of any damages that the Initial Purchaser has otherwise
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<PAGE>
been required to pay in respect of any breach by the Initial Purchaser
of the representations and warranties contained in Section 3 hereof.
Section 8. NOTICES. All notices and other communications provided for
under this Agreement shall be addressed to the address set forth below as to
each party or at such other address as shall be designated by a party in a
written notice to the other party.
If to the Insurer: MBIA Insurance Corporation
113 King Street
Armonk, NY 10504
Attention: Insured Portfolio Management--Structured
Finance (IPM-SF)
If to the Seller: First Investors Financial Services, Inc.
675 Bering Drive, Suite 710
Houston, TX 77057
Attention: Mr. Tommy Moore
If to the Placement Banc of America Securities LLC
Agent: 100 North Tryon Street
NC1-007-10-07
Charlotte, NC 28255
Attention: Mr. Curt Sidden,
Global Asset-Backed Securitization
Section 9. GOVERNING LAW, ETC. This Agreement shall be deemed to be a
contract under the laws of the State of New York and shall be governed by and
construed in accordance with the laws of the State of New York without regard to
its conflicts of laws provisions. This Agreement may not be assigned by any
party without the express written consent of each other party. Amendments of
this Agreement shall be in writing signed by each party. This Agreement shall
not be effective until executed by each of the Insurer, the Seller and the
Initial Purchaser.
Section 10. INSURANCE AGREEMENT; PURCHASE AGREEMENT; SALE AND ALLOCATION
AGREEMENT. This Agreement in no way limits or otherwise affects the
indemnification obligations of the Seller, if any, under (a) the Insurance
Agreement, (b) the Indenture, (c) the Purchase Agreement or (d) the Sale and
Allocation Agreement. To the extent that this Agreement conflicts with or does
not address the relative rights of the Initial Purchaser and Seller as between
themselves as set forth in the Purchase Agreement, the Purchase Agreement shall
govern.
Section 11. LIMITATIONS. Nothing in this Agreement shall be construed as
a representation or undertaking by the Insurer concerning maintenance of the
rating currently assigned to its claims-paying ability by Moody's Investors
Service, Inc. ("Moody's") and/or
9
<PAGE>
Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies,
Inc. ("S&P") or any other rating agency (collectively, the "Rating Agencies").
Section 12. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall together constitute but one and the same
instrument.
Section 13. NONPETITION. So long as the Insurance Agreement is in
effect, and for one year following its termination, none of the parties 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
Issuer or the Depositor.
[Remainder of this page intentionally left blank.]
10
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indemnification
Agreement to be duly executed and delivered by their respective officers
thereunto duly authorized, all as of the date first above written.
MBIA INSURANCE CORPORATION
By ___________________________________
Assistant Secretary
FIRST INVESTORS FINANCIAL SERVICES,
INC.
By ___________________________________
Title ________________________________
BANC OF AMERICA SECURITIES LLC
By ___________________________________
Title ________________________________
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> APR-30-1999
<PERIOD-END> JAN-31-2000
<CASH> 24,673,323
<SECURITIES> 0
<RECEIVABLES> 221,997,395
<ALLOWANCES> 2,006,818
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 292,018,241
<CURRENT-LIABILITIES> 0
<BONDS> 246,762,821
0
0
<COMMON> 5,567
<OTHER-SE> 29,448,010
<TOTAL-LIABILITY-AND-EQUITY> 292,018,241
<SALES> 30,257,181
<TOTAL-REVENUES> 30,257,181
<CGS> 12,006,724
<TOTAL-COSTS> 12,006,724
<OTHER-EXPENSES> 12,899,282
<LOSS-PROVISION> 4,611,372
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 3,599,524
<INCOME-TAX> 1,313,826
<INCOME-CONTINUING> 2,285,698
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,285,698
<EPS-BASIC> 0.41
<EPS-DILUTED> 0.41
</TABLE>
