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SALE AND SERVICING AGREEMENT
among
DEALER AUTO RECEIVABLES OWNER TRUST 2000-1,
as Issuer,
DEALER AUTO RECEIVABLES CORP.,
as Depositor,
PREMIER AUTO FINANCE, INC.,
as Servicer
and
THE BANK OF NEW YORK,
as Indenture Trustee
Dated as of August 24, 2000
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PAGE
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TABLE OF CONTENTS
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ARTICLE ONE DEFINITIONS...............................................................................1
SECTION 1.01. DEFINITIONS...............................................................................1
SECTION 1.02. USAGE OF TERMS...........................................................................18
SECTION 1.03. SECTION REFERENCES.......................................................................18
SECTION 1.04. CALCULATIONS.............................................................................18
SECTION 1.05. ACCOUNTING TERMS.........................................................................18
ARTICLE TWO TRANSFER OF CONTRACTS....................................................................19
SECTION 2.01. CLOSING..................................................................................19
SECTION 2.02. CONDITIONS TO THE CLOSING................................................................19
SECTION 2.03. ACCEPTANCE BY ISSUER.....................................................................21
ARTICLE THREE REPRESENTATIONS AND WARRANTIES...........................................................21
SECTION 3.01. REPRESENTATIONS AND WARRANTIES REGARDING THE DEPOSITOR...................................21
SECTION 3.02. REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICER....................................23
ARTICLE FOUR PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS..............................24
SECTION 4.01. CUSTODY OF CONTRACTS.....................................................................24
SECTION 4.02. FILING...................................................................................26
SECTION 4.03. NAME CHANGE OR RELOCATION................................................................26
SECTION 4.04. CHIEF EXECUTIVE OFFICE...................................................................27
SECTION 4.05. COSTS AND EXPENSES.......................................................................27
ARTICLE FIVE SERVICING OF CONTRACTS...................................................................27
SECTION 5.01. RESPONSIBILITY FOR CONTRACT ADMINISTRATION...............................................27
SECTION 5.02. STANDARD OF CARE.........................................................................27
SECTION 5.03. RECORDS..................................................................................27
SECTION 5.04. INSPECTION...............................................................................28
SECTION 5.05. TRUST ACCOUNTS...........................................................................28
SECTION 5.06. ENFORCEMENT..............................................................................30
SECTION 5.07. TRUSTEES TO COOPERATE....................................................................31
SECTION 5.08. COSTS AND EXPENSES.......................................................................32
SECTION 5.09. MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES...................................32
SECTION 5.10. MAINTENANCE OF INSURANCE.................................................................32
ARTICLE SIX THE DEPOSITOR............................................................................33
SECTION 6.01. COVENANTS OF THE DEPOSITOR...............................................................33
SECTION 6.02. LIABILITY OF DEPOSITOR; INDEMNITIES......................................................35
SECTION 6.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF, DEPOSITOR; CERTAIN
LIMITATIONS..............................................................................36
SECTION 6.04. LIMITATION ON LIABILITY OF DEPOSITOR AND OTHERS..........................................37
SECTION 6.05. DEPOSITOR NOT TO RESIGN..................................................................37
SECTION 6.06. DEPOSITOR MAY OWN NOTES OR CERTIFICATES..................................................37
ARTICLE SEVEN DISTRIBUTIONS; RESERVE FUND..............................................................38
SECTION 7.01. FEES.....................................................................................38
SECTION 7.02. ADVANCES.................................................................................38
SECTION 7.03. DISTRIBUTIONS............................................................................38
SECTION 7.04. RESERVE FUND.............................................................................39
SECTION 7.05. REPURCHASES OF CONTRACTS FOR BREACH OF REPRESENTATIONS AND WARRANTIES....................40
SECTION 7.06. REASSIGNMENT OF REPURCHASED CONTRACTS....................................................41
SECTION 7.07. SELLER'S REPURCHASE OPTION...............................................................41
ARTICLE EIGHT SERVICER DEFAULT; SERVICE TRANSFER......................................................41
SECTION 8.01. SERVICER DEFAULT.........................................................................41
SECTION 8.02. WAIVER OF SERVICER DEFAULT...............................................................42
SECTION 8.03. SERVICE TRANSFER.........................................................................42
SECTION 8.04. SUCCESSOR SERVICER TO ACT; APPOINTMENT OF SUCCESSOR SERVICER.............................43
SECTION 8.05. NOTIFICATION TO CERTIFICATEHOLDERS.......................................................44
SECTION 8.06. EFFECT OF TRANSFER.......................................................................44
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SECTION 8.07. DATABASE FILE............................................................................44
SECTION 8.08. SUCCESSOR SERVICER INDEMNIFICATION.......................................................44
SECTION 8.09. RESPONSIBILITIES OF THE SUCCESSOR SERVICER...............................................45
SECTION 8.10. LIABILITY OF SERVICER; INDEMNITIES.......................................................45
SECTION 8.11. LIMITATION OF LIABILITY OF SERVICER......................................................46
SECTION 8.12. MERGER OR CONSOLIDATION OF SERVICER......................................................46
SECTION 8.13. SERVICER NOT TO RESIGN...................................................................47
SECTION 8.14. APPOINTMENT OF SUBSERVICER...............................................................47
ARTICLE NINE REPORTS..................................................................................47
SECTION 9.01. MONTHLY REPORTS..........................................................................47
SECTION 9.02. OFFICER'S CERTIFICATE....................................................................47
SECTION 9.03. OTHER DATA...............................................................................48
SECTION 9.04. ANNUAL REPORT OF ACCOUNTANTS.............................................................48
SECTION 9.05. ANNUAL STATEMENT OF COMPLIANCE FROM SERVICER.............................................48
SECTION 9.06. MONTHLY REPORTS TO SECURITYHOLDERS.......................................................49
ARTICLE TEN TERMINATION..............................................................................50
SECTION 10.01. TERMINATION..............................................................................50
ARTICLE ELEVEN MISCELLANEOUS............................................................................50
SECTION 11.01. AMENDMENT................................................................................50
SECTION 11.02. PROTECTION OF TITLE TO ISSUER............................................................52
SECTION 11.03. GOVERNING LAW............................................................................53
SECTION 11.04. NOTICES..................................................................................53
SECTION 11.05. SEVERABILITY OF PROVISIONS...............................................................55
SECTION 11.06. THIRD PARTY BENEFICIARIES................................................................55
SECTION 11.07. COUNTERPARTS.............................................................................55
SECTION 11.08. HEADINGS.................................................................................55
SECTION 11.09. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE TRUSTEE...........................55
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EXHIBITS
Exhibit A Form of Assignment A-1
Exhibit B Form of Closing Certificate of Depositor B-1
Exhibit C-1 Form of Closing Certificate of Servicer C-1-1
Exhibit C-2 Form of Closing Certificate of Seller C-2-1
Exhibit D Form of Opinion of Counsel for Depositor regarding
general corporate matters (including perfection opinion) D-1
Exhibit E Form of Opinion of Counsel for Depositor regarding
the "TRUE SALE" nature of the transaction E-1
Exhibit F Form of Opinion of Counsel for Depositor regarding
non-consolidation F-1
Exhibit G Form of Certificate Regarding Repurchased Contracts G-1
Exhibit H List of Contracts H-1
Exhibit I Form of Monthly Report to Noteholders and Certificateholders I-1
Exhibit J Seller's Representations and Warranties J-1
Exhibit K Lockbox Bank and Lockbox Account K-1
Exhibit L Concentration Account Administration Agreement L-1
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SALE AND SERVICING AGREEMENT, dated as of August 24, 2000, among Dealer
Auto Receivables Owner Trust 2000-1 (together with its successors and assigns,
the "ISSUER"), Dealer Auto Receivables Corp. (together with its successor and
assigns, the "DEPOSITOR"), The Bank of New York (solely in its capacity as
Indenture Trustee together with its successors and assigns, the "INDENTURE
TRUSTEE") and Premier Auto Finance, Inc. (solely in its capacity as Servicer
together with its successor and assigns, "PREMIER AUTO FINANCE" or the
"SERVICER").
WHEREAS the Issuer desires to purchase from the Depositor a pool of
installment sale contracts relating to new or used automobiles and light-duty
trucks (collectively, the "CONTRACTS") originated or purchased by Premier Auto
Finance, L.P. and subsequently sold by Premier Auto Finance, L.P. to the
Depositor;
WHEREAS the Depositor is willing to sell, transfer and assign the
Contracts to the Issuer pursuant to the terms hereof; and
WHEREAS the Servicer is willing to service the Contracts pursuant to
the terms hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.01. DEFINITIONS. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"ADMINISTRATION AGREEMENT" means the Administration Agreement dated as
of the date hereof among the Issuer, Premier Auto Finance, Inc., as
administrator, the Depositor and the Indenture Trustee, as amended, supplemented
or otherwise modified from time to time.
"ADVANCE" means, with respect to any Distribution Date, the amounts, if
any, deposited by the Servicer in the Collection Account for such Distribution
Date pursuant to SECTION 7.02.
"AFFILIATE" of any specified Person means any other Person controlling
or controlled by, or under common control with, such specified Person. For the
purposes of this definition, "CONTROL" when used with respect to any specified
Person means 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; and the terms "CONTROLLING" or "CONTROLLED" have meanings
correlative to the foregoing.
"AGGREGATE PRINCIPAL BALANCE" means, as of any date of determination,
the sum of the Principal Balances of each outstanding Contract as of the close
of business on the last day of the preceding Due Period.
"AGGREGATE PRINCIPAL BALANCE DECLINE" means, with respect to any
Distribution Date, the amount by which the
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Certificate Balance and the outstanding aggregate principal balance of the
Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes and Class
B Notes as of the immediately preceding Distribution Date, after giving
effect to all payments of principal to Securityholders on such preceding
Distribution Date (or, in the case of the first Distribution Date, the sum of
the Initial Certificate Balance and the original principal balance of the
Notes) exceeds the Aggregate Principal Balance as of such Distribution Date.
"AGREEMENT" means this Sale and Servicing Agreement, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.
"AVAILABLE AMOUNTS" means, with respect to any Distribution Date, the
sum of the Available Interest, the Available Principal for such Distribution
Date and any amounts to be withdrawn from the Reserve Fund on such Distribution
Date pursuant to SECTION 7.04(e).
"AVAILABLE INTEREST" means, with respect to any Distribution Date, the
total (without duplication) of the following amounts received by the Servicer on
or in respect of the Contracts during the related Due Period: (i) all payments
received in respect of such Contract allocated to the payment of interest (ii)
the interest component of the aggregate of the Repurchase Prices for Contracts
repurchased by the Depositor pursuant to SECTION 7.05 as of the last day of the
related Due Period, (iii) the interest component of the aggregate of the
Repurchase Prices for Contracts repurchased by the Servicer pursuant to SECTION
5.06(f) as of the last day of the related Due Period, (iv) all Advances made by
the Servicer pursuant to SECTION 7.02 in respect of delinquent interest payments
on the related Determination Date, (v) the interest component of the amount paid
by the Seller in connection with an optional repurchase of the Contracts
pursuant to SECTION 7.07 and (vi) all amounts received in respect of interest,
dividends, gains, income and earnings on investment of funds in the Trust
Accounts as contemplated in SECTION 5.05(c).
"AVAILABLE PRINCIPAL" means, with respect to any Distribution Date, the
total (without duplication) of the following amounts received by the Servicer on
or in respect of the Contracts during the related Due Period: (i) all payments
received in respect of such Contract allocated to the payment of principal, (ii)
the principal component of the aggregate of the Repurchase Prices for Contracts
repurchased by the Depositor pursuant to SECTION 7.05 as of the last day of the
related Due Period, (iii) the principal component of the aggregate of the
Repurchase Prices for Contracts purchased by the Servicer pursuant to SECTION
5.06(f) as of the last day of the related Due Period, (iv) all Advances made by
the Servicer pursuant to SECTION 7.02 in respect of delinquent principal
payments and (v) the principal component of the amount paid by the Seller in
connection with an optional repurchase of the Contracts pursuant to SECTION
7.07.
"AVAILABLE RESERVE MONIES" means, with respect to any Distribution
Date, the amount of funds on deposit in the Reserve Fund on such Distribution
Date before giving effect to any reduction thereto on such date.
"AVERAGE DELINQUENCY RATIO" means, for any Distribution Date, the
arithmetic average of the Delinquency Ratios for such Distribution Date and the
two immediately preceding Distribution Dates.
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"AVERAGE NET LOSS RATIO" means, for any Distribution Date, the
arithmetic average of the Net Loss Ratios for such Distribution Date and the two
immediately preceding Distribution Dates.
"BUSINESS DAY" means any day other than a Saturday or a Sunday, or
another day on which banking institutions in the city of Chicago, Illinois,
Wilmington, Delaware, or New York, New York are authorized or obligated by law,
executive order, or governmental decree to be closed.
"CERTIFICATE BALANCE" equals $13,175,591.56 on the Closing Date, and,
thereafter, equals the Initial Certificate Balance, reduced by all amounts
allocable to principal previously distributed to Certificateholders.
"CERTIFICATE DEPOSITORY AGREEMENT" has the meaning specified in the
Trust Agreement.
"CERTIFICATE DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Certificate Principal Distributable Amount and
the Certificate Interest Distributable Amount for such Distribution Date.
"CERTIFICATE DISTRIBUTION ACCOUNT" shall have the meaning specified in
the Trust Agreement.
"CERTIFICATE FACTOR" means, as of the close of business on any
Distribution Date, a seven-digit decimal figure equal to the Certificate Balance
(after giving effect to any reductions therein to be made on such Distribution
Date) divided by the Initial Certificate Balance. The Certificate Factor will be
1.0000000 as of the Closing Date; thereafter, the Certificate Factor will
decline to reflect reductions in the Certificate Balance.
"CERTIFICATE FINAL SCHEDULED DISTRIBUTION DATE" means the January, 2007
Distribution Date.
"CERTIFICATE INTEREST CARRYOVER SHORTFALL" means, (a) for the initial
Distribution Date, zero, and (b) with respect to any other Distribution Date,
the excess of the Certificate Interest Distributable Amount with respect to the
immediately preceding Distribution Date, over the amount in respect of interest
on the Certificates that is actually deposited in the Certificate Distribution
Account on such preceding Distribution Date, plus interest on such excess, to
the extent permitted by law, at the Pass-Through Rate for the related Interest
Period.
"CERTIFICATE INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Certificate Monthly Interest Distributable
Amount with respect to such Distribution Date and the Certificate Interest
Carryover Shortfall with respect to such Distribution Date.
"CERTIFICATE MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with respect
to any Distribution Date, 30 days of interest (or, in the case of the first
Distribution Date, interest accrued from and including the Closing Date to but
excluding such Distribution Date) at the Pass-Through Rate on the Certificate
Balance on the immediately preceding Distribution Date,
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after giving effect to all payments of principal to the Certificateholders on
such preceding Distribution Date (or, in the case of the first Distribution
Date, on the Initial Certificate Balance).
"CERTIFICATE MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" will mean, with
respect to any Distribution Date, the Certificate Percentage of the Principal
Distributable Amount for such Distribution Date.
"CERTIFICATE PERCENTAGE" means (i) for each Distribution Date to but
excluding the Distribution Date on which the principal amount of all of the
Notes is reduced to zero, 0%; (ii) on the Distribution Date on which the
principal amount of all of the Notes is reduced to zero, such percentage that
equals 100% minus the Note Percentage for such Distribution Date; and (iii) 100%
thereafter.
"CERTIFICATE PRINCIPAL CARRYOVER SHORTFALL" means, with respect to any
Distribution Date, the excess of the Certificate Principal Distributable Amount
with respect to the immediately preceding Distribution Date, over the amount in
respect of principal that is actually deposited in the Certificate Distribution
Account on such preceding Distribution Date.
"CERTIFICATE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Certificate Monthly Principal Distributable
Amount with respect to such Distribution Date and the Certificate Principal
Carryover Shortfall; PROVIDED, HOWEVER, that the Certificate Principal
Distributable Amount shall not exceed the Certificate Balance. In addition, on
the Certificate Final Scheduled Distribution Date, the principal required to be
deposited into the Certificate Distribution Account will include the amount
necessary to reduce the Certificate Balance to zero.
"CERTIFICATE REGISTER" shall have the meaning specified in the Trust
Agreement.
"CERTIFICATEHOLDERS" shall have the meaning specified in the Trust
Agreement.
"CERTIFICATES" means the Trust Certificates (as such term is defined in
the Trust Agreement).
"CLASS" means all Notes whose form is identical except for variation in
denomination, principal amount or owner.
"CLASS A-1 FINAL SCHEDULED DISTRIBUTION DATE" means the August, 2001
Distribution Date.
"CLASS A-1 NOTEHOLDER" means the Person in whose name a Class A-1 Note
is registered in the Note Register.
"CLASS A-1 RATE" means 6.69% per annum.
"CLASS A-2 FINAL SCHEDULED DISTRIBUTION DATE" means the April, 2003
Distribution Date.
"CLASS A-2 NOTEHOLDER" means the Person in whose name a Class A-2 Note
is registered in the Note Register.
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"CLASS A-2 RATE" means 7.01% per annum.
"CLASS A-3 FINAL SCHEDULED DISTRIBUTION DATE" means the May, 2004
Distribution Date.
"CLASS A-3 NOTEHOLDER" means the Person in whose name a Class A-3 Note
is registered in the Note Register.
"CLASS A-3 RATE" means 7.07% per annum.
"CLASS A-4 FINAL SCHEDULED DISTRIBUTION DATE" means the March, 2005
Distribution Date.
"CLASS A-4 NOTEHOLDER" means the Person in whose name a Class A-4 Note
is registered in the Note Register.
"CLASS A-4 RATE" means 7.12% per annum.
"CLASS B FINAL SCHEDULED DISTRIBUTION DATE" means the November, 2005
Distribution Date.
"CLASS B NOTEHOLDER" means the Person in whose name a Class B Note is
registered in the Note Register.
"CLASS B RATE" means 7.46% per annum.
"CLOSING DATE" means August 24, 2000.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" has the meaning given such term in the "granting clause"
of the Indenture.
"COLLECTION ACCOUNT" means a trust account as described in SECTION 5.05
maintained in the name of the Indenture Trustee and which shall be an Eligible
Account.
"COMPUTER DISK" means the computer disk generated by the Servicer which
provides information relating to the Contracts and which was used by the Seller
in selecting the Contracts sold to the Depositor pursuant to the Transfer and
Sale Agreement and by the Depositor in selecting the Contracts sold to the Trust
pursuant to this Agreement, and includes the master file and the history file as
well as servicing information with respect to the Contracts.
"CONCENTRATION ACCOUNT" means the account identified on EXHIBIT L
hereto.
"CONCENTRATION ACCOUNT AGREEMENT" means the Agreement Regarding Blocked
Account Administration dated as of August 23, 2000 by and among the Seller, the
Servicer, the Depositor, the Indenture Trustee, Aon Corporation, Premier
Receivables Purchase Facility L.L.C., Bank One, NA and The Chase Manhattan Bank,
with respect to the Concentration Account.
"CONTRACT ASSETS" has the meaning assigned in SECTION 2.01 of the
Transfer and Sale Agreement.
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"CONTRACT FILE" means, as to each Contract, (a) the original copy of
the Contract, including the executed installment sale contract or other evidence
of the obligation of the Obligor, (b) the original title certificate to the
Financed Vehicle and, where applicable, the certificate of lien recordation, or,
if such title certificate has not yet been issued, an application for such title
certificate, or other appropriate evidence of a security interest in the covered
Financed Vehicle, (c) the assignments of the Contract; (d) the original copy of
any agreement(s) modifying the Contract including, without limitation, any
extension agreement(s) and (e) documents evidencing the existence of physical
damage insurance covering such Financed Vehicle.
"CONTRACT RATE" means, as to any Contract, the annual rate of interest
specified in the Contract.
"CONTRACTS" means the installment sale contracts described in the List
of Contracts and constituting part of the Trust Corpus, and includes, without
limitation, all related security interests and any and all rights to receive
payments which are collected pursuant thereto on or after the Cutoff Date, but
excluding any rights to receive payments which are collected pursuant thereto
prior to the Cutoff Date.
"CORPORATE TRUST OFFICE" means the office of the Indenture Trustee at
which at any particular time its corporate trust business shall be principally
administered, which office at the date of the execution of this Agreement is
located at the address set forth in SECTION 11.04.
"CUTOFF DATE" means July 1, 2000.
"DEFAULTED CONTRACT" means a Contract with respect to which there has
occurred one or more of the following: (i) all or part of a scheduled payment
under the Contract is 120 days or more than 120 days past due and the Servicer
has not repossessed the related Financed Vehicle, (ii) the Servicer, has in
accordance with its customary servicing procedures, determined that eventual
payment in full is unlikely and has either repossessed and liquidated the
related Financed Vehicle or repossessed and held the related Financed Vehicle in
its repossessed inventory for 90 days, whichever occurs first; PROVIDED,
HOWEVER, in no event shall the period of time referred to in clauses (i) or (ii)
extend for a combined period of longer than 120 days, or (iii) the relevant
Obligor has suffered an Insolvency Event.
"DELINQUENCY AMOUNT" means, as of any Distribution Date, the sum of the
outstanding Principal Balance of all Contracts that were delinquent 61 days or
more as of the close of business on the last day of the related Due Period
(including Contracts which are not Defaulted Contracts in respect of which the
related Financed Vehicles have been repossessed and are still inventory).
"DELINQUENCY RATIO" means, for any Distribution Date, the fraction
(expressed as a percentage) computed by dividing (a) the Delinquency Amount as
of such Distribution Date by (b) the Aggregate Principal Balance of the
Contracts as of the beginning of the related Due Period.
"DELINQUENT INTEREST" means, for each Due Period with respect to each
Contract an amount equal to the product of (x) the Principal Balance of such
Contract as of the first day of
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such Due Period and (y) the stated annual percentage rate of such Contract and
(z) the number of days in the period between the Due Dates on such Contract
divided by 360 minus the amount of interest received with respect to such
Contract during such Due Period.
"DEPOSITOR" has the meaning assigned such term in the preamble
hereunder or any successor thereto.
"DETERMINATION DATE" means the fourth Business Day following the
conclusion of a Due Period during the term of this Agreement.
"DISTRIBUTION DATE" means the fifteenth day of each calendar month
during the term of this Agreement, or if such day is not a Business Day, the
next succeeding Business Day, with the first such Distribution Date hereunder
being September 15, 2000.
"DUE DATE" means, with respect to any Contract, the day of the month on
which each scheduled payment of principal and interest is due on such Contract,
exclusive of days of grace.
"DUE PERIOD" means a calendar month during the term of this Agreement,
and the Due Period related to a Determination Date or Distribution Date shall be
the calendar month immediately preceding such date; PROVIDED, HOWEVER, that with
respect to the Initial Determination Date or Initial Distribution Date, the
related Due Period shall be the period from the Cutoff Date to and including
August 31, 2000.
"ELIGIBLE ACCOUNT" means an account maintained (i) with the Indenture
Trustee or Owner Trustee as long as the Indenture Trustee's or the Owner
Trustee's short-term unsecured debt obligations have a rating of "P-1" by
Moody's and a rating of "A-1+" by Standard & Poor's (the "REQUIRED DEPOSIT
RATING") or (ii) in a segregated trust account with a depository institution or
trust company organized under the laws of the United States of America, or any
of the States thereof, or the District of Columbia, having a certificate of
deposit, short-term deposit or commercial paper rating of at least "P-1" by
Moody's and "A-1+" by Standard & Poor's.
"ELIGIBLE INVESTMENTS" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form, denominated in United States dollars and that are not purchased at a
premium and which evidence:
(a) direct obligations of, and obligations fully guaranteed as
to timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit
of any depository institution or trust company incorporated under the
laws of the United States of America or any State (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
senior unsecured debt obligations (other than such obligations the
rating of which is based on the credit of a Person other than such
depository institution or trust company) thereof shall have a credit
rating from the Rating Agency in the highest investment category
granted thereby;
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(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from the Rating
Agency in the highest investment category granted thereby;
(d) investments in money market funds having a rating from the
Rating Agency 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);
(e) bankers' acceptances issued by any depository institution
or trust company referred to in CLAUSE (b); and
(f) repurchase obligations with respect to any security that
is a direct obligation of, or fully guaranteed as to timely payment 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
(b).
"EXCESS AMOUNTS" shall have the meaning specified in SECTION 7.03(b).
"EXCESS PAYMENT" shall have the meaning specified in SECTION 5.05(f).
"FINAL SCHEDULED DISTRIBUTION DATE" means with respect to (i) the
Notes, the Class A-1 Final Scheduled Distribution Date, the Class A-2 Final
Scheduled Distribution Date, the Class A-3 Final Scheduled Distribution Date,
the Class A-4 Final Scheduled Distribution Date or the Class B Final Scheduled
Distribution Date, as the case may be, or (ii) the Certificates, the Certificate
Final Scheduled Distribution Date.
"FINANCED VEHICLE" means a new or used automobile or light-duty truck,
together with all accessions thereto, securing an Obligor's indebtedness under
the related Contract.
"HOLDER" means, with respect to a (i) Certificate, the Person in whose
name such Certificate is registered in the Certificate Register and (ii) Note,
the Person in whose name such Note is registered in the Note Register.
"INDEBTEDNESS" means, with respect to any Person at any time, (i)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (ii)
obligations of such Person as lessee under leases which should have been or
should be, in accordance with generally accepted accounting principles, recorded
as capital leases; (iii) current liabilities of such Person in respect of
unfunded vested benefits under plans covered by Title IV of ERISA; (iv)
obligations issued for or liabilities incurred on the account of such Person;
(v) obligations or liabilities of such Person arising under acceptance
facilities; (vi) obligations of such Person under any guaranties, endorsements
(other than for collection or deposit in the ordinary course of business) and
other contingent obligations to purchase, to provide funds for payment, to
supply funds to invest in any Person or otherwise to assure a creditor against
loss; (vii) obligations of such Person secured by any lien on property or assets
of
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such Person, whether or not the obligations have been assumed by such Person; or
(viii) obligations of such Person under any interest rate or currency exchange
agreement.
"INDENTURE" means the Indenture, dated as of the date hereof, between
the Issuer and the Indenture Trustee.
"INDENTURE TRUSTEE" means the Person acting as Indenture Trustee under
the Indenture, its successors in interest and any successor trustee under the
Indenture.
"INDENTURE TRUSTEE FEE" means, with respect to any Distribution Date,
$500.00.
"INDEPENDENT", when used with respect to any specified Person, means
such a Person who (i) is in fact independent of the Issuer, the Depositor or the
Servicer, (ii) is not a director, officer or employee of any Affiliate of the
Issuer, the Depositor or the Servicer, (iii) is not a person related to any
officer or director of the Issuer, the Depositor or the Servicer or any of their
respective Affiliates, (iv) is not a holder (directly or indirectly) of more
than 10% of any voting securities of Issuer, the Depositor or the Servicer or
any of their respective Affiliates, and (v) is not connected with the Issuer,
the Depositor or the Servicer as an officer, employee, promoter, underwriter,
trustee, partner, director or person performing similar functions.
"INITIAL CLASS A-1 NOTE BALANCE" means $190,000,000.00.
"INITIAL CLASS A-2 NOTE BALANCE" means $274,000,000.00.
"INITIAL CLASS A-3 NOTE BALANCE" means $168,000,000.00.
"INITIAL CLASS A-4 NOTE BALANCE" means $83,251,000.00.
"INITIAL CLASS B NOTE BALANCE" means $24,470,000.00.
"INITIAL CERTIFICATE BALANCE" means $13,175,591.56.
"INSOLVENCY EVENT" means, with respect to a specified Person, (i) the
entry of a decree or order for relief by a court or regulatory authority having
jurisdiction in respect of such Person in an involuntary case under the federal
bankruptcy laws, as now or hereafter in effect, or any other present or future,
federal or state, bankruptcy, insolvency or similar law, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or other
similar official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and the
continuance of any such decree or order unstayed and in effect for a period of
60 consecutive days; (ii) the commencement of an involuntary case under the
federal bankruptcy laws, as now or hereinafter in effect, or another present or
future federal or state bankruptcy, insolvency or similar law and such case is
not dismissed within 60 days; or (iii) the commencement by such Person of a
voluntary case under the federal bankruptcy laws, as now or hereinafter in
effect, or any other present or future federal or state, bankruptcy, insolvency
or similar law, or the consent by such Person to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
or other similar official for such Person or for any substantial part of its
property, or the making by such Person of an assignment
9
for the benefit of creditors or the failure by such Person generally to pay its
debts as such debts become due or the taking of corporate action by such Person
in furtherance of any the foregoing.
"INTEREST PERIOD" means, with respect to any Distribution Date, and (i)
the Class A-1 Notes, means the period from and including the preceding
Distribution Date (or, in the case of the first Distribution Date, the Closing
Date) to but excluding such Distribution Date; and (ii) in the case of the Class
A-2 Notes, the Class A-3 Notes, the Class A-4 Notes, the Class B Notes or the
Certificates, means the period from and including the fifteenth day of the month
of the Distribution Date immediately preceding such Distribution Date (or, in
the case of the first Distribution Date, the Closing Date) to but excluding the
fifteenth day of the month of such Distribution Date.
"INTEREST RATE" means the Class A-1 Rate, the Class A-2 Rate, the Class
A-3 Rate, the Class A-4 Rate or the Class B Rate, as applicable.
"ISSUER" means the Dealer Auto Receivables Owner Trust 2000-1, a
Delaware business trust.
"LATE PAYMENT PENALTY FEES" means any late payment fees paid by
Obligors on Contracts after all sums received have been allocated first to
regular installments due or overdue and all such installments are then paid in
full.
"LIEN" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Contract by operation of law.
"LIST OF CONTRACTS" means the list identifying each Contract
constituting part of the Trust Corpus, which list shall consist of the List of
Contracts reflecting the Contracts transferred to the Issuer on the Closing Date
and which list (a) identifies each Contract, (b) sets forth as to each Contract
(i) the Principal Balance as of the Cutoff Date, (ii) the amount of monthly
payments due from the Obligor, (iii) the Contract Rate and (iv) the maturity
date, and (c) which list (as in effect on the Closing Date) is attached to this
Agreement as EXHIBIT H.
"LOCKBOX" means the Lockboxes maintained by the Lockbox Banks
identified on EXHIBIT K hereto.
"LOCKBOX ACCOUNT" means the account maintained with the Lockbox Banks
and identified on EXHIBIT K hereto.
"LOCKBOX AGREEMENT" means the Agreement Regarding Lockbox
Administration dated as of August 23, 2000 by and among the Servicer, the
Depositor, Aon Corporation, the Seller, Premier Receivables Purchase Facility
L.L.C., the Indenture Trustee, The Chase Manhattan Bank and Xxxxx Fargo Bank,
National Association and the Agreement Regarding Lockbox Administration dated as
of August 23, 2000 by and among the Servicer, the Depositor, Aon Corporation,
the Seller, Premier Receivables Purchase Facility, L.L.C., the Indenture
Trustee, The Chase Manhattan Bank and Xxxxxx Trust and Savings Bank, unless such
agreement shall be terminated in accordance with its terms, in which event
"LOCKBOX AGREEMENT" shall mean such other agreement, in form and substance
acceptable to the above-described parties.
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"LOCKBOX BANK" means the financial institution maintaining the Lockbox
Agreement and identified on EXHIBIT K hereto or any successor thereto.
"LOCKOUT PERIOD" means the period from and including the date on which
the maturity of the Notes is accelerated pursuant to SECTION 5.02 of the
Indenture after the occurrence of an "Event of Default" described in SECTION
5.01(i) or (ii) of the Indenture and ending on the date on which the aggregate
unpaid principal balance of the Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes, the Class A-4 Notes and the Class B Notes has been reduced to zero
and all accrued and unpaid interest on the Class A-1 Notes, the Class A-2 Notes,
the Class A-3 Notes, the Class A-4 Notes and the Class B Notes has been paid in
full.
"MONTHLY REPORT" shall have the meaning specified in SECTION 9.06.
"MONTHLY SERVICING FEE" means, as to any Distribution Date, the product
of one-twelfth of 1% and the Aggregate Principal Balance as of the preceding
Distribution Date.
"MOODY'S" means Xxxxx'x Investors Service, Inc. or any successor
thereto.
"NET LIQUIDATION LOSSES" means, as of any Distribution Date, with
respect to a Defaulted Contract, the amount, if any, by which (a) the
outstanding Principal Balance of such Defaulted Contract exceeds (b) the Net
Liquidation Proceeds for such Defaulted Contract.
"NET LIQUIDATION PROCEEDS" means, as to any Defaulted Contract, the
proceeds realized on the sale or other disposition of the related Financed
Vehicle, including proceeds realized on the repurchase of such Financed Vehicle
by the originating dealer for breach of warranties, and the proceeds of any
insurance relating to such Financed Vehicle, after payment of all reasonable
expenses incurred thereby, together, in all instances, with the expected or
actual proceeds of any recourse rights relating to such Contract as well as any
post-disposition proceeds received by the Servicer.
"NET LOSS RATIO" means, for any Distribution Date, the product of (a)
twelve (12) and (b) the fraction (expressed as a percentage) derived by dividing
(x) Net Liquidation Losses for all Contracts that became Defaulted Contracts
during the immediately preceding Due Period multiplied by twelve by (y) the
outstanding Principal Balances of all Contracts as of the beginning of such Due
Period.
"NOTE DEPOSITORY AGREEMENT" shall have the meaning specified in the
Indenture.
"NOTE DISTRIBUTABLE AMOUNT" means, with respect to any Distribution
Date, the sum of the Note Principal Distributable Amount and the Note Interest
Distributable Amount for such Distribution Date.
"NOTE DISTRIBUTION ACCOUNT" means the account established and
maintained as such pursuant to SECTION 5.05.
"NOTE FACTOR" means with the respect to any Class of Notes as of the
close of business on any Distribution Date, a seven-digit decimal figure equal
to the outstanding principal amount of such Class of Notes (after giving effect
to any reductions thereof to be made on such
11
Distribution Date) divided by the original outstanding principal amount of such
Class of Notes. Each Note Factor will be 1.0000000 as of the Closing Date;
thereafter the Note Factor will decline to reflect reductions in the outstanding
principal amount of such Class of Notes.
"NOTE INTEREST CARRYOVER SHORTFALL" means, (a) with respect to the
Initial Distribution Date and each Class of Notes, zero and (b) with respect to
any other Distribution Date and a Class of Notes, the excess, if any, of the
Note Interest Distributable Amount for such Class for the immediately preceding
Distribution Date, over the amount in respect of interest that is actually
deposited in the Note Distribution Account with respect to such Class on such
preceding Distribution Date, plus, interest on such excess to the extent
permitted by applicable law, at the related Interest Rate for the related
Interest Period.
"NOTE INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date and a Class of Notes, the sum of the Note Monthly Interest
Distributable Amount and the Note Interest Carryover Shortfall for such Class of
Notes with respect to such Distribution Date.
"NOTE MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date for any Class of Notes, interest accrued for the related
Interest Period (calculated on the basis of, in the case of the Class A-1 Notes,
the actual number of days in such Interest Period and a year assumed to consist
of 360 days, and in the case of all other Classes of Notes, such Interest Period
being assumed to consist of 30 days and a year assumed to consist of 360 days)
at the related Interest Rate for such Class of Notes on the outstanding
principal amount of the Notes of such Class on the immediately preceding
Distribution Date, after giving effect to all payments of principal to
Noteholders of such Class on or prior to such preceding Distribution Date (or,
in the case of the first Distribution Date, on the original principal amount of
such Class of Notes).
"NOTE MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to
any Distribution Date, the Note Percentage of the Principal Distributable Amount
for such Distribution Date.
"NOTE PERCENTAGE" means, (i) for each Distribution Date to but
excluding the Distribution Date on which the principal amount of all of the
Notes is reduced to zero, 100%; (ii) for the Distribution Date on which the
principal amount of all of the Notes is reduced to zero, such percentage which
represents the fraction of the Principal Distributable Amount necessary to
reduce the principal amount of all of the Notes to zero; and (iii) for each
Distribution Date thereafter, 0%.
"NOTE PRINCIPAL CARRYOVER SHORTFALL" means, with respect to any
Distribution Date, the excess of the Note Principal Distributable Amount with
respect to the immediately preceding Distribution Date over the amount in
respect of principal that is actually deposited in the Note Distribution Account
on such preceding Distribution Date.
"NOTE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Note Monthly Principal Distributable Amount
with respect to such Distribution Date and the Note Principal Carryover
Shortfall with respect to such Distribution Date; PROVIDED, HOWEVER, that the
Note Principal Distributable Amount shall not exceed the outstanding principal
amount of the Notes; and PROVIDED, FURTHER, that the Note Principal
Distributable Amount (i) on the Class A-1 Final Scheduled Distribution Date
shall not be less than the amount that is
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necessary (after giving effect to other amounts to be deposited in the Note
Distribution Account on such Distribution Date and allocable to principal) to
reduce the outstanding principal amount of the Class A-1 Notes to zero, (ii) on
the Class A-2 Final Scheduled Distribution Date shall not be less than the
amount that is necessary (after giving effect to other amounts to be deposited
in the Note Distribution Account on such Distribution Date and allocable to
principal) to reduce the outstanding principal amount of the Class A-2 Notes to
zero, (iii) on the Class A-3 Final Scheduled Distribution Date shall not be less
than the amount that is necessary (after giving effect to other amounts to be
deposited in the Note Distribution Account on such Distribution Date and
allocable to principal) to reduce the outstanding principal amount of the Class
A-3 Notes to zero, (iv) on the Class A-4 Final Scheduled Distribution Date shall
not be less than the amount that is necessary (after giving effect to other
amounts to be deposited in the Note Distribution Account on such Distribution
Date and allocable to principal) to reduce the outstanding principal amount of
the Class A-4 Notes to zero and (v) on the Class B Final Scheduled Distribution
Date shall not be less than the amount that is necessary (after giving effect to
other amounts to be deposited in the Note Distribution Account on such
Distribution Date and allocable to principal) to reduce the outstanding
principal amount of the Class B Notes to zero.
"NOTE REGISTER" shall have the meaning specified in the Indenture.
"NOTES" means the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes, the Class A-4 Notes and the Class B Notes, in each case as executed and
authenticated in accordance with the Indenture.
"OBLIGOR" means such person who owes payments under a Contract.
"OFFICER'S CERTIFICATE" means a certificate signed by the Chairman, the
President, a Vice President, the Treasurer, an Assistant Treasurer, the
Controller, an Assistant Controller, the Secretary or an Assistant Secretary of
any Person delivering such certificate and delivered to the Person to whom such
certificate is required to be delivered. In the case of an Officer's Certificate
of the Servicer, at least one of the signing officers must be a Servicing
Officer. Unless otherwise specified, any reference herein to an Officer's
Certificate shall be to an Officer's Certificate of the Servicer.
"OPINION OF COUNSEL" means a written opinion of counsel (who may be
counsel to the Depositor or the Servicer) acceptable to the Indenture Trustee or
the Owner Trustee, as the case may be.
"OWNER TRUSTEE" means the Person acting, not in its individual
capacity, but solely as Owner Trustee under the Trust Agreement, its successors
in interest and any successor owner trustee under the Trust Agreement.
"OWNER TRUSTEE FEE" means, with respect to any Distribution Date,
$350.00.
"PASS-THROUGH RATE" means 7.93% per annum.
"PAYING AGENT" means as described in SECTION 6.11 of the Indenture and
SECTION 3.10 of the Trust Agreement.
13
"PERFORMANCE GUARANTEE" means the Performance Guarantee dated as of
the date hereof by the Performance Guarantor, as amended, supplemented or
otherwise modified from time to time.
"PERFORMANCE GUARANTOR" means Virginia Surety Company, Inc., an
Illinois corporation, or its successor, in its capacity as Performance
Guarantor under the Performance Guarantee.
"PERSON" means any individual, corporation, estate, partnership,
limited liability company, joint venture, association, joint stock company,
trust (including any beneficiary thereof), unincorporated organization or
government or any agency or political subdivision thereof.
"PRINCIPAL BALANCE" means, as of the close of business on the last
day of any Due Period, with respect to any Contract, an amount equal to the
unpaid principal balance of such Contract as of the opening of business on
the Cutoff Date, reduced by the sum of all payments received by the Servicer
as of such date allocable to principal; PROVIDED, HOWEVER, that (i) if (x) a
Contract is repurchased by the Seller pursuant to SECTION 5.01 of the
Transfer and Sale Agreement or by the Performance Guarantor pursuant to the
Performance Guarantee or by the Depositor pursuant to SECTION 7.05 or by the
Servicer pursuant to SECTION 5.06(f) as of the last day of such Due Period,
or if (y) the Seller gives notice of its intent to repurchase the Contracts
pursuant to SECTION 5.02 of the Transfer and Sale Agreement and SECTION 7.07
on the next succeeding Distribution Date, in each case the Principal Balance
of such Contract or Contracts shall be deemed as of the close of business on
the last day of such Due Period and each Due Period thereafter to be zero and
(ii) from and after the Due Period in which a Contract becomes a Defaulted
Contract, the Principal Balance of such Contract shall be deemed to be zero.
"PRINCIPAL DISTRIBUTABLE AMOUNT" means, for any Distribution Date,
the Aggregate Principal Balance Decline for such Distribution Date.
"QUALIFIED ELIGIBLE INVESTMENTS" means Eligible Investments acquired
by the Indenture Trustee in its name and in its capacity as Indenture
Trustee, which are held by the Indenture Trustee and with respect to which
(a) the Indenture Trustee has noted its interest therein on its books and
records, and (b) the Indenture Trustee has purchased such investments for
value without notice of any adverse claim thereto (and, if such investments
are securities or other financial assets or interests therein, within the
meaning of Section 8-102 of the UCC as enacted in Illinois, without acting in
collusion with a securities intermediary in violating such securities
intermediary's obligations to entitlement holders in such assets, under
Section 8-504 of such UCC, to maintain a sufficient quantity of such assets
in favor of such entitlement holders), and (c) either (i) such investments
are in the possession of the Indenture Trustee, or (ii) such investments, (A)
if certificated securities and in bearer form, have been delivered to the
Indenture Trustee, or in registered form, have been delivered to the
Indenture Trustee and either registered by the issuer thereof in the name of
the Indenture Trustee or endorsed by effective endorsement to the Indenture
Trustee or in blank; (B) if uncertificated securities, the ownership of which
has been registered to the Indenture Trustee on the books of the issuer
thereof (or another person, other than a securities intermediary, either
becomes the registered owner of the uncertified security on behalf of the
Indenture Trustee or, having previously become the registered owner,
acknowledges that it holds for the Indenture Trustee); or (C) if securities
14
entitlements (within the meaning of Section 8-102 of the UCC as enacted in
Illinois) representing interests in securities or other financial assets (or
interests therein) held by a securities intermediary (within the meaning of
said Section 8-102), a securities intermediary indicates by book entry that a
security or other financial asset has been credited to the Indenture
Trustee's securities account with such securities intermediary. Any such
Qualified Eligible Investment may be purchased by or through the Indenture
Trustee or any of its affiliates.
"RATING AGENCY" means each of Moody's and Standard & Poor's, so long
as such Persons maintain a rating on one or more classes of the Securities;
and if either Moody's or Standard & Poor's no longer maintains a rating on
any class of the Securities, such other nationally recognized statistical
rating organization selected by the Depositor.
"RECORD DATE" means, with respect to any Distribution Date, the last
Business Day of the preceding calendar month.
"REIMBURSEMENT AMOUNT" has the meaning assigned in SECTION 7.02.
"REPURCHASE PRICE" means, with respect to a Contract to be
repurchased hereunder as of the last day of any Due Period an amount equal to
(a) the Principal Balance of such Contract as of such day plus (b) accrued
and unpaid interest at the Contract Rate on such Contract through the end of
such Due Period.
"REQUIRED DEPOSIT RATING" has the meaning assigned in the definition
of "Eligible Account".
"RESERVE FUND" means the Reserve Fund established and maintained
pursuant to SECTION 7.04.
"RESERVE FUND INITIAL DEPOSIT" means $15,057,931.83.
"RESERVE FUND DEPOSITS" means all moneys deposited in the Reserve
Fund from time to time including, but not limited to, the Reserve Fund
Initial Deposit and any monies deposited therein pursuant to SECTION 7.03(b),
all investments and reinvestments thereof, earnings thereon, and proceeds of
the foregoing, whether now or hereafter existing.
"RESERVE FUND TRIGGER EVENT" shall be deemed to have occurred and be
continuing on any Distribution Date if (a) the Average Delinquency Ratio for
such Distribution Date is, or was for any of the preceding three Distribution
Dates, equal to or greater than 2.00% or (b) the Average Net Loss Ratio for
such Distribution Date is, or was for any of the preceding three Distribution
Dates, equal to or greater than 2.50%.
"RESPONSIBLE OFFICER" means, with respect to the Owner Trustee, any
officer in its Corporate Trust Administration Department (or any similar
group of a successor Owner Trustee) and with respect to the Indenture
Trustee, the chairman and any vice chairman of the board of directors, the
president, the chairman and vice chairman of any executive committee of the
board of directors, every vice president, assistant vice president, the
secretary, every assistant secretary, cashier or any assistant cashier,
controller or assistant controller, the treasurer, every assistant treasurer,
every trust officer, assistant trust officer and every other officer or
assistant officer of
15
the Trustee customarily performing functions similar to those performed by
persons who at the time shall be such officers having direct responsibility
for the administration of this Agreement, respectively, or to whom a
corporate trust matter is referred because of knowledge of, familiarity with,
and authority to act with respect to a particular matter.
"SECURITIES" means the Notes and the Certificates.
"SECURITYHOLDERS" means the Holders of the Notes or the Certificates.
"SELLER" means Premier Auto Finance, L.P., an Illinois limited
partnership, or its successor, in its capacity as Seller of Contract Assets
under the Transfer and Sale Agreement.
"SERVICER" means Premier Auto Finance, Inc., a Delaware corporation,
or its successor, until any Service Transfer hereunder and thereafter means
the Successor Servicer appointed pursuant to ARTICLE VIII below with respect
to the duties and obligations required of the Servicer under this Agreement.
"SERVICER DEFAULT" means an event specified in SECTION 8.01.
"SERVICE TRANSFER" has the meaning assigned in SECTION 8.03(a).
"SERVICING FEE" means, on any Determination Date, the sum of (a) the
Monthly Servicing Fee payable on the related Distribution Date, (b) Late
Payment Penalty Fees received by the Servicer during the related Due Period,
and (c) extension fees received by the Servicer during the related Due Period.
"SERVICING OFFICER" means any officer of the Servicer involved in,
or responsible for, the administration and servicing of Contracts whose name
appears on a list of servicing officers appearing in an Officer's Certificate
furnished to the Indenture Trustee by the Servicer, as the same may be
amended from time to time.
"SHORTFALL" means, with respect to a Distribution Date, the excess,
if any, of the sum of the amounts described in clauses (v) through (viii) of
SECTION 7.03 over the Available Amounts for such Distribution Date minus the
amounts payable pursuant to clauses (i) through (iv) of SECTION 7.03 on such
Distribution Date.
"SIMPLE INTEREST CONTRACT" means any Contract providing for the
allocation of payments made thereunder to principal and interest in
accordance with the Simple Interest Method.
"SIMPLE INTEREST METHOD" means the method of allocating a fixed
level payment to principal and interest pursuant to which the portion of such
payment that is allocated to the payment of interest is equal to the product
of the fixed rate of interest multiplied by the unpaid Principal Balance
multiplied by the period of time elapsed since the preceding payment of
interest was made and the remainder of such payment is allocated to the
payment of principal.
"SOLVENT" means, as to any Person at any time, that (a) the fair
value of the property of such Person is greater than the amount of such
Person's liabilities (including disputed, contingent and unliquidated
liabilities) as such value is established and liabilities evaluated for
purposes of
16
Section 101(31) of the Bankruptcy Code; (b) the present fair saleable value
of the property of such Person in an orderly liquidation of such Person is
not less than the amount that will be required to pay the probable liability
of such Person on its debts as they become absolute and matured; (c) such
Person is able to realize upon its property and pay its debts and other
liabilities (including disputed, contingent and unliquidated liabilities) as
they mature in the normal course of business; (d) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature; and (e) such
Person is not engaged in business or a transaction, and is not about to
engage in a business or a transaction, for which such Person's property would
constitute unreasonably small capital.
"SPECIFIED RESERVE FUND BALANCE" means, with respect to any
Distribution Date, an amount equal to the lesser of (i) the aggregate unpaid
principal balance of the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes, the Class A-4 Notes and the Class B Notes and the Certificate Balance
as of such Distribution Date, and (ii) the greater of:
(a) 4.25% of the aggregate unpaid principal balance of the
Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class
A-4 Notes and the Class B Notes and the Certificate Balance on such
Distribution Date, except that if a Reserve Fund Trigger Event shall
have occurred and be continuing on such Distribution Date, then the
percentage of the aggregate unpaid principal balance of the Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes
and the Class B Notes and the Certificate Balance referred to in this
clause (a), shall be equal to 6.50%; and
(b) 1.00% of the Aggregate Principal Balance as of the Cutoff
Date.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a
division of The McGraw Hill Companies, or any successor thereto.
"SUCCESSOR SERVICER" means a servicer described in SECTION 8.03(b).
"TRANSACTION DOCUMENTS" means this Agreement, the Transfer and Sale
Agreement, the Lockbox Agreement, the Indenture, the Trust Agreement, the
Administration Agreement, the Performance Guarantee, the Note Depository
Agreement, and the Certificate Depository Agreement.
"TRANSFER AND SALE AGREEMENT" means the Transfer and Sale Agreement
dated as of the date hereof by and between the Seller and the Depositor, as
amended, supplemented or otherwise modified from time to time.
"TRUST ACCOUNTS" means, collectively, the Collection Account, the
Note Distribution Account and the Reserve Fund, or any of them.
"TRUST ACCOUNT PROPERTY" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form
of deposit accounts, physical property, book-entry securities, uncertificated
securities or otherwise), including the Reserve Fund Initial Deposit, and all
proceeds of the foregoing.
17
"TRUST AGREEMENT" means the Trust Agreement, dated as of the date
hereof, between the Depositor and the Owner Trustee.
"TRUST CORPUS" has the meaning given to such term in SECTION 2.01.
"TRUST ESTATE" shall have the meaning specified in the Trust
Agreement.
"TRUSTEES" means the Owner Trustee and the Indenture Trustee.
"UCC" means the Uniform Commercial Code as enacted in Illinois or
Delaware, as applicable.
"UNCOLLECTIBLE ADVANCE" means with respect to any Determination Date
and any Contract, the amount, if any, if advanced by the Servicer in respect
of such Contract pursuant to SECTION 7.02, which the Servicer has as of such
Determination Date determined in good faith would not be ultimately
recoverable by the Servicer from insurance policies on the related Financed
Vehicle, the related Obligor or out of Net Liquidation Proceeds with respect
to such Contract. The determination by the Servicer that it has made an
Uncollectible Advance shall be evidenced by an Officer's Certificate
delivered to the Trustees.
"UNDERWRITERS" means Chase Securities Inc., Aon Capital Markets,
Xxxxxx Xxxxxxx Xxxx Xxxxxx and Xxxxxxx Xxxxx Xxxxxx.
"UNITED STATES" means the United States of America.
"VICE PRESIDENT" of any Person means any vice president of such
Person, whether or not designated by a number or words before or after the
title "VICE PRESIDENT" who is a duly elected officer of such Person.
SECTION 1.02. USAGE OF TERMS. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular;
words importing any gender include the other genders; references to "writing"
include printing, typing, lithography and other means of reproducing words in
a visible form; references to agreements and other contractual instruments
include all amendments, modifications and supplements thereto or any changes
therein entered into in accordance with their respective terms and not
prohibited by this Agreement; references to Persons include their permitted
successors and assigns; and the term "including" means "including without
limitation."
SECTION 1.03. SECTION REFERENCES. All section references, unless
otherwise indicated, shall be to Sections in this Agreement.
SECTION 1.04. CALCULATIONS. Except as otherwise provided herein, all
interest rate and basis point calculations hereunder will be made on the
basis of a 360-day year and twelve 30-day months and will be carried out to
at least three decimal places.
SECTION 1.05. ACCOUNTING TERMS. All accounting terms used but not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States.
18
ARTICLE TWO
TRANSFER OF CONTRACTS
SECTION 2.01. CLOSING. On the Closing Date, in consideration of the
Issuer's delivery of the Securities to and upon the order of the Depositor,
the Depositor does hereby sell, transfer, assign, set over and otherwise
convey to the Issuer by execution of an assignment substantially in the form
of EXHIBIT A hereto, without recourse other than as expressly provided
herein, (i) all the right, title and interest of the Depositor in and to the
Contracts listed on the List of Contracts in effect on the Closing Date
(including, without limitation, all security interests and all rights to
receive scheduled payments and prepayments which are collected pursuant
thereto on or after the Cutoff Date, including any liquidation proceeds
therefrom, but excluding any rights to receive scheduled payments due on or
after, but received prior to, the Cutoff Date), (ii) all security interests
in each Financed Vehicle, (iii) all rights of the Depositor to proceeds from
any claims on theft, physical damage, credit life or disability insurance or
other individual insurance policy relating to any such Contract, an Obligor
or a Financed Vehicle securing such Contract, (iv) all documents contained in
the related Contract Files, (v) all rights (but not the obligations) of the
Depositor against any originating dealer or other third party (i.e. the
originators of the Contracts) under any agreements between the Seller and
such originating dealers or third party, (vi) all rights of the Depositor in
the Lockbox, the Lockbox Account, related Lockbox Agreement, the
Concentration Account and related Concentration Account Agreement to the
extent they relate to such Contracts, (vii) any rebates of premiums and other
amounts relating to insurance policies, extended service contracts, other
repair agreements or any other items financed under such Contract, and (viii)
all rights (but not the obligations) of the Depositor under the Transfer and
Sale Agreement, including but not limited to the Depositor's rights under
ARTICLE V thereof, (ix) all rights of the Depositor under the Performance
Guarantee, (x) the remittances, deposits and payments made into the Trust
Accounts from time to time and amounts in the Trust Accounts from time to
time (and any investments of such amounts), and (xi) all proceeds and
products of the foregoing (the property in clauses (i)-(xi) above, being the
"TRUST CORPUS"). Although the Depositor and the Owner Trustee agree that such
transfer is intended to be a sale of ownership of the Trust Corpus, rather
than the granting of a security interest to secure a borrowing, and that the
Trust Corpus shall not be property of the Depositor, in the event such
transfer is deemed to be of a mere security interest to secure a borrowing,
the Depositor shall be deemed to have granted the Issuer a perfected first
priority security interest in such Trust Corpus and this Agreement shall
constitute a security agreement under applicable law.
SECTION 2.02. CONDITIONS TO THE CLOSING. On or before the Closing
Date, the Depositor shall deliver or cause to be delivered the following
documents to the Trust:
(a) The initial List of Contracts, certified by the Chairman
of the Board, President or any Vice President of the Depositor,
together with an assignment substantially in the form of EXHIBIT A
hereto.
(b) A certificate of an officer of the Seller substantially in
the form of EXHIBIT B to the Transfer and Sale Agreement and of an
officer of the Depositor substantially in the form of EXHIBIT B hereto.
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(c) Opinions of counsel for the Seller and the Depositor
substantially in the form of EXHIBITS D, E and F hereto (and including
as an addressee thereof each Rating Agency).
(d) A letter or letters from Ernst & Young LLP, or another
nationally recognized accounting firm, addressed to the Seller and the
Underwriters and stating that such firm has reviewed a sample of the
Contracts and performed specific procedures for such sample with
respect to certain contract terms and which identifies those Contracts
which do not conform.
(e) Copies of resolutions of the general partner of the Seller
and of the Board of Directors of each of the Servicer and the Depositor
or of the Executive Committee of the Board of Directors of each of the
Servicer and the Depositor approving the execution, delivery and
performance of this Agreement and the other Transaction Documents to
which any of them is a party, as applicable, and the transactions
contemplated hereunder and thereunder, certified in each case by the
Secretary or an Assistant Secretary of the general partner of the
Seller, the Servicer and the Depositor.
(f) Officially certified, recent evidence of due incorporation
and good standing of each of the Servicer and the Depositor under the
laws of Delaware.
(g) Evidence of proper filing with the appropriate offices in
Delaware and Illinois of UCC financing statements executed by the
Seller, as debtor, naming the Depositor as secured party (and the
Issuer as assignee) and identifying the Contract Assets as collateral;
and evidence of proper filing with the appropriate offices in Delaware
and Illinois of UCC financing statements executed by the Depositor, as
debtor, naming the Issuer as secured party and identifying the Trust
Corpus as collateral; and evidence of proper filing with appropriate
officers in Delaware of UCC financing statements executed by the Issuer
and naming the Indenture Trustee, as secured party and identifying the
Collateral, as collateral.
(h) An Officer's Certificate listing the Servicer's Servicing
Officers.
(i) Evidence of deposit in the Collection Account of all funds
received with respect to the Contracts on or after the Cutoff Date to
the second Business Day preceding the Closing Date, together with an
Officer's Certificate from the Depositor to the effect that such amount
is correct.
(j) The Officer's Certificate of the Seller specified in
SECTION 2.02(b) of the Transfer and Sale Agreement.
(k) Evidence of deposit in the Reserve Fund of the Reserve
Fund Initial Deposit by the Owner Trustee.
(l) A fully executed Transfer and Sale Agreement.
(m) A fully executed Trust Agreement.
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(n) A fully executed Administration Agreement.
(o) A fully executed Performance Guarantee.
(p) A fully executed Indenture.
SECTION 2.03. ACCEPTANCE BY ISSUER. On the Closing Date, upon the
acceptance by the Depositor of the Securities, the ownership of the Trust Corpus
will be vested in the Issuer, subject only to the lien of the Indenture Trustee.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
The Seller under the Transfer and Sale Agreement has made each of the
representations and warranties set forth in EXHIBIT J hereto and has consented
to the assignment by the Depositor to the Issuer of the Depositor's rights with
respect thereto. Such representations speak as of the execution and delivery of
this Agreement and as of the Closing Date, but shall survive the sale, transfer
and assignment of the Contracts to the Issuer. Pursuant to SECTION 2.01 of this
Agreement, the Depositor has sold, assigned, transferred and conveyed to the
Issuer as part of the Trust Corpus its rights under the Transfer and Sale
Agreement, including without limitation, the representations and warranties of
the Seller therein as set forth in EXHIBIT J attached hereto, together with all
rights of the Depositor with respect to any breach thereof including any right
to require the Seller to repurchase any Contract in accordance with the Transfer
and Sale Agreement. It is understood and agreed that the representations and
warranties set forth or referred to in this Section shall survive delivery of
the Contract Files to the Owner Trustee or any custodian and the assignment to
the Indenture Trustee.
The Depositor hereby represents and warrants to the Issuer and the
Indenture Trustee that it has entered into the Transfer and Sale Agreement with
the Seller, that the Seller has made the representations and warranties in the
Transfer and Sale Agreement as set forth in EXHIBIT J hereto, that such
representations and warranties run to and are for the benefit of the Depositor,
and that pursuant to SECTION 2.01 of this Agreement the Depositor has
transferred and assigned to the Issuer all rights of the Depositor to cause the
Seller under the Transfer and Sale Agreement to repurchase Contracts in the
event of a breach of such representations and warranties or, in the event of the
Seller's failure to repurchase such Contracts, to cause the Performance
Guarantor pursuant to the Performance Guarantee to repurchase such Contracts.
SECTION 3.01. REPRESENTATIONS AND WARRANTIES REGARDING THE DEPOSITOR.
By its execution of this Agreement, the Depositor represents and warrants to the
Issuer that:
(a) ASSUMPTION OF SELLER'S REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in EXHIBIT J are true and
correct.
(b) ORGANIZATION AND GOOD STANDING. The Depositor is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has the corporate
power to own its assets and to transact the business in
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which it is currently engaged. The Depositor is duly qualified to do
business as a foreign corporation and is in good standing in each
jurisdiction in which the character of the business transacted by it or
properties owned or leased by it requires such qualification and in
which the failure so to qualify would have a material adverse effect on
the business, properties, assets, or condition (financial or other) of
the Depositor or the Issuer.
(c) AUTHORIZATION; VALID SALE; BINDING OBLIGATIONS. The
Depositor has the power and authority to make, execute, deliver and
perform its obligations under this Agreement and the other Transaction
Documents to which it is a party and all of the transactions
contemplated under this Agreement and the other Transaction Documents
to which it is a party, and to create the Issuer and cause it to make,
execute, deliver and perform its obligations under this Agreement and
the other Transaction Documents to which it is a party and has taken
all necessary corporate action to authorize the execution, delivery and
performance of this Agreement and the other Transaction Documents to
which it is a party and to cause the Issuer to be created. This
Agreement shall effect a valid sale, transfer and assignment of the
Trust Corpus, enforceable against the Depositor and creditors of and
purchasers from the Depositor. This Agreement and the other Transaction
Documents to which the Depositor is a party constitute the legal, valid
and binding obligation of the Depositor enforceable in accordance with
their terms, except as enforcement of such terms may be limited by
bankruptcy, insolvency or similar laws affecting the enforcement of
creditors' rights generally and by the availability of equitable
remedies.
(d) NO CONSENT REQUIRED. The Depositor is not required to
obtain the consent of any other party or any consent, license, approval
or authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement or the other Transaction Documents to which it is a party.
(e) NO VIOLATIONS. The execution, delivery and performance of
this Agreement and the other Transaction Documents to which it is a
party by the Depositor, and the consummation of the transactions
contemplated hereby and thereby, will not violate any provision of any
existing law or regulation or any order or decree of any court or of
any Federal or state regulatory body or administrative agency having
jurisdiction over the Depositor or any of its properties or the
Articles of Incorporation or Bylaws of the Depositor, or constitute a
material breach of any mortgage, indenture, contract or other agreement
to which the Depositor is a party or by which the Depositor or any of
the Depositor's properties may be bound, or result in the creation or
imposition of any security interest, lien, charge, pledge, preference,
equity or encumbrance of any kind upon any of its properties pursuant
to the terms of any such mortgage, indenture, contract or other
agreement, other than as contemplated by the Transaction Documents.
(f) LITIGATION. No litigation or administrative proceeding of
or before any court, tribunal or governmental body is currently
pending, or to the knowledge of the Depositor threatened, against the
Depositor or any of its properties or with respect to this Agreement,
the other Transaction Documents to which it is a party or the
Securities (1)
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which, if adversely determined, would in the opinion of the Depositor
have a material adverse effect on the business, properties, assets or
condition (financial or otherwise) of the Depositor or the Issuer or
the transactions contemplated by this Agreement or the other
Transaction Documents to which the Depositor is a party, (2) which
might adversely affect the federal income tax or other federal, state
or local tax attributes of the Certificates or Notes, (3) asserting the
invalidity of this Agreement, any other Transaction Document, the Notes
or the Certificates or (4) seeking to prevent the issuance of the
Securities or the consummation of the transactions contemplated by the
Transaction Documents.
(g) PLACE OF BUSINESS; NO CHANGES. The Depositor's sole place
of business (within the meaning of Article 9 of the UCC) is as set
forth in SECTION 11.04. The Depositor has not changed its name, whether
by amendment of its Articles of Incorporation, by reorganization or
otherwise, and has not changed the location of its place of business,
within the four months preceding the Closing Date.
(h) The Depositor, at the time of and after giving effect to
the conveyance made hereunder, is Solvent.
Such representations speak as of the execution and delivery of this Agreement
and as of the Closing Date, but shall survive the sale, transfer and assignment
of the Contracts to the Issuer and the pledge thereof to the Indenture Trustee.
SECTION 3.02. REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICER.
The Servicer represents and warrants to the Issuer that:
(a) ORGANIZATION AND GOOD STANDING. The Servicer is a
corporation duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization and has the corporate
power to own its assets and to transact the business in which it is
currently engaged. The Servicer is duly qualified to do business as a
foreign corporation and is in good standing in each jurisdiction in
which the character of the business transacted by it or properties
owned or leased by it requires such qualification and in which the
failure so to qualify would have a material adverse effect on the
business, properties, assets, or condition (financial or otherwise) of
the Servicer or the Issuer. The Servicer is properly licensed in each
jurisdiction to the extent required by the laws of such jurisdiction to
service the Contracts in accordance with the terms hereof other than
such licenses the failure to obtain would not have a material adverse
effect on the business, properties, assets, or condition (financial or
otherwise) of the Servicer or on the ability of the Servicer to perform
its obligations hereunder.
(b) AUTHORIZATION; BINDING OBLIGATIONS. The Servicer has the
power and authority to make, execute, deliver and perform this
Agreement and the other Transaction Documents to which the Servicer is
a party and all of the transactions contemplated under this Agreement
and the other Transaction Documents to which the Servicer is a party,
and has taken all necessary corporate action to authorize the
execution, delivery and performance of this Agreement and the other
Transaction Documents to which the Servicer is a party. This Agreement
and the other Transaction Documents to which the
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Servicer is a party constitute the legal, valid and binding obligation
of the Servicer enforceable in accordance with their terms, except as
enforcement of such terms may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally
and by the availability of equitable remedies.
(c) NO CONSENT REQUIRED. The Servicer is not required to
obtain the consent of any other party or any consent, license, approval
or authorization from, or registration or declaration with, any
governmental authority, bureau or agency in connection with the
execution, delivery, performance, validity or enforceability of this
Agreement and the other Transaction Documents to which the Servicer is
a party.
(d) NO VIOLATIONS. The execution, delivery and performance of
this Agreement and the other Transaction Documents to which the
Servicer is a party by the Servicer will not violate any provisions of
any existing law or regulation or any order or decree of any court or
of any Federal or state regulatory body or administrative agency having
jurisdiction over the Servicer or any of its properties or the Articles
of Incorporation or Bylaws of the Servicer, or constitute a material
breach of any mortgage, indenture, contract or other agreement to which
the Servicer is a party or by which the Servicer or any of the
Servicer's properties may be bound, or result in the creation of or
imposition of any security interest, lien, pledge, preference, equity
or encumbrance of any kind upon any of its properties pursuant to the
terms of any such mortgage, indenture, contract or other agreement,
other than this Agreement.
(e) LITIGATION. No litigation or administrative proceeding of
or before any court, tribunal or governmental body is currently
pending, or to the knowledge of the Servicer threatened, against the
Servicer or any of its properties or with respect to this Agreement,
any other Transaction Document to which the Servicer is a party which,
if adversely determined, would in the opinion of the Servicer have a
material adverse effect on the business, properties, assets or
condition (financial or otherwise) of the Servicer or the Issuer or the
transactions contemplated by this Agreement or any other Transaction
Document to which the Servicer is a party.
ARTICLE FOUR
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS
SECTION 4.01. CUSTODY OF CONTRACTS. (a) Subject to the terms and
conditions of this SECTION 4.01, the contents of each Contract File shall be
held in the custody of the Servicer for the benefit of, and as agent for, the
Issuer as the owner thereof.
(b) The Servicer agrees to maintain the related Contract Files at its
offices where they are currently maintained, or at such other offices of the
Servicer in the State of Illinois as shall from time to time be identified to
the Trustees by written notice. The Servicer may temporarily move individual
Contract Files or any portion thereof without notice as necessary to conduct
collection and other servicing activities in accordance with its customary
practices and procedures; PROVIDED, HOWEVER, that the Servicer will take all
action necessary to maintain the
24
perfection of the Issuer's interest in the Contracts and the proceeds thereof.
It is intended that by the Servicer's agreement pursuant to SECTION 4.01(a)
above and this SECTION 4.01(b) the Issuer shall be deemed to have possession of
the Contract Files for purposes of Section 9-305 of the Uniform Commercial Code
of the State in which the Contract Files are located.
(c) As custodian, the Servicer shall have and perform the following
powers and duties:
(i) hold the Contract Files on behalf of the Issuer, maintain
accurate records pertaining to each Contract to enable it to comply
with the terms and conditions of this Agreement, maintain a current
inventory thereof, conduct annual physical inspections of Contract
Files held by it under this Agreement and certify to the Owner Trustee
and the Indenture Trustee annually that it continues to maintain
possession of such Contract Files;
(ii) implement policies and procedures in writing and signed
by a Servicing Officer with respect to persons authorized to have
access to the Contract Files on the Servicer's premises and the
receipting for Contract Files taken from their storage area by an
employee of the Servicer for purposes of servicing or any other
purposes;
(iii) attend to all details in connection with maintaining
custody of the Contract Files on behalf of the Issuer;
(iv) at all times maintain the original of the fully executed
Contract;
(v) clearly identify the assignment of the Contract and the
contemporaneous grant of a security interest therein to the Indenture
Trustee; and
(vi) within 60 days of the Closing Date deliver an Officer's
Certificate to the Owner Trustee and the Indenture Trustee certifying
that as of a date no earlier than the Closing Date it has conducted an
inventory of a random sample of the Contract Files and that there
exists a Contract File for each Contract and stating all exceptions to
such statement, if any.
(d) The Servicer shall promptly report to the Owner Trustee and the
Indenture Trustee any failure by it to hold the Contract Files as herein
provided and shall promptly take appropriate action to remedy any such failure.
In acting as custodian of the Contract Files, the Servicer further agrees not to
assert any legal or beneficial ownership interest in the Contracts or the
Contract Files, except as provided in SECTION 5.06. The Servicer agrees to
indemnify the Issuer and the Trustees for any and all liabilities, obligations,
losses, damages, payments, costs, or expenses of any kind whatsoever which may
be imposed on, incurred by or asserted against the Issuer or the Trustees as the
result of any act or omission by the Servicer relating to the maintenance and
custody of the Contract Files; PROVIDED, HOWEVER, that the Servicer will not be
liable for any portion of any such amount resulting from the gross negligence or
willful misconduct of the Issuer or the Trustees. The Trustees shall have no
duty to monitor or otherwise oversee the Servicer's performance as custodian
hereunder.
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(e) The Servicer shall make available to the Owner Trustee, the
Indenture Trustee or their respective duly authorized representatives, attorneys
or auditors, the Contract Files and the related accounts, records and computer
systems maintained by the Servicer at such times during normal operating hours
as the Owner Trustee or Indenture Trustee shall reasonably instruct which does
not unreasonably interfere with the Servicer's normal operations or customer or
employee relations.
(f) Upon instruction from the Indenture Trustee (or, if the Notes have
been paid in full, from the Owner Trustee), the Servicer shall release any
document in the Contract Files to the Indenture Trustee or Owner Trustee, or
their respective agents or designee, as the case may be, at such place or places
as such Person may reasonably designate as soon as reasonably practicable to the
extent it does not unreasonably interfere with the Servicer's normal operations
or customer or employee relations. The Servicer shall not be responsible for any
loss occasioned by the failure of the Owner Trustee or Indenture Trustee, or
their respective agents or designees, to return any document or any delay in
doing so.
(g) The Servicer's appointment as custodian shall become effective as
of the Cutoff Date and shall continue in full force and effect until terminated
pursuant to this SECTION 4.01(g) or until this Agreement shall be terminated. If
all of the rights and obligations of the Servicer shall have been terminated
under SECTION 8.03, the appointment of the Servicer as custodian will be
automatically terminated without any further action of the Indenture Trustee or
any Holder. As soon as practicable, and in any event within 10 Business Days
after any termination of such appointment, the Servicer shall, at its expense,
deliver the Contract Files to the Successor Servicer. Notwithstanding the
termination of the Servicer as custodian, the Owner Trustee agrees that upon any
such termination, the Issuer shall provide, or cause its agent to provide,
access to the Contract Files to the Servicer for the purpose of carrying out its
duties and responsibilities with respect to the servicing of the Contracts
hereunder.
SECTION 4.02. FILING. On or prior to the Closing Date, the Servicer
shall cause the UCC financing statement(s) referred to in SECTION 2.02(g) hereof
to be filed and from time to time the Servicer shall take and cause to be taken
such actions and execute such documents as are necessary or desirable or as the
Owner Trustee or Indenture Trustee may reasonably request to perfect and protect
the Issuer's first priority perfected interest in the Trust Corpus against all
other persons, including, without limitation, the filing of financing
statements, amendments thereto and continuation statements, the execution of
transfer instruments and the making of notations on or taking possession of all
records or documents of title.
SECTION 4.03. NAME CHANGE OR RELOCATION. (a) During the term of this
Agreement, neither the Seller nor the Depositor shall change its name, identity
or structure or relocate its chief executive office without first giving at
least 30 days' prior written notice to the Owner Trustee and the Indenture
Trustee.
(b) If any change in either the Seller's or the Depositor's name,
identity or structure or other action would make any financing or continuation
statement or notice of lien filed under this Agreement seriously misleading
within the meaning of applicable provisions of the UCC or any title statute, the
Servicer, no later than five days after the effective date of such change, shall
file such amendments as may be required to preserve and protect the Issuer's
interests in the
26
Trust Corpus and the proceeds thereof. In addition, neither the Seller nor the
Depositor shall change its place of business (within the meaning of Article 9 of
the UCC) from the location specified in SECTION 11.04 unless it has first taken
such action as is advisable or necessary to preserve and protect the Issuer's
interest in the Trust Corpus. Promptly after taking any of the foregoing
actions, the Servicer shall deliver to the Owner Trustee and the Indenture
Trustee an opinion of counsel reasonably acceptable to the Owner Trustee and the
Indenture Trustee stating that, in the opinion of such counsel, all financing
statements or amendments necessary to preserve and protect the interests of the
Issuer in the Trust Corpus have been filed, and reciting the details of such
filing.
SECTION 4.04. CHIEF EXECUTIVE OFFICE. During the term of this
Agreement, the Depositor will maintain its chief executive office in one of the
States of the United States, except Louisiana, Tennessee, Colorado, Kansas, New
Mexico, Oklahoma, Utah or Wyoming.
SECTION 4.05. COSTS AND EXPENSES. The Servicer agrees to pay all
reasonable costs and disbursements in connection with the perfection and the
maintenance of perfection, as against all third parties, of the Issuer's right,
title and interest in and to the Contracts (including, without limitation, the
security interest in the Financed Vehicles granted thereby).
ARTICLE FIVE
SERVICING OF CONTRACTS
SECTION 5.01. RESPONSIBILITY FOR CONTRACT ADMINISTRATION. The Servicer
will have the sole obligation to manage, administer, service and make
collections on the Contracts and perform or cause to be performed all
contractual and customary undertakings of the holder of the Contracts to the
Obligor. The Owner Trustee, at the written request of a Servicing Officer, shall
furnish the Servicer with any powers of attorney or other documents necessary or
appropriate in the opinion of the Owner Trustee to enable the Servicer to carry
out its servicing and administrative duties hereunder. The Servicer is hereby
appointed the servicer hereunder until such time as any Service Transfer may be
effected under ARTICLE VIII.
SECTION 5.02. STANDARD OF CARE. In managing, administering, servicing
and making collections on the Contracts pursuant to this Agreement, the Servicer
will exercise that degree of skill and care consistent with the skill and care
that the Servicer exercises with respect to similar contracts serviced by the
Servicer for itself and others and, in any event, no less degree of skill and
care than would be exercised by a prudent servicer of motor vehicle retail
installment sale contracts; PROVIDED, HOWEVER, that notwithstanding the
foregoing, the Servicer shall not release or waive the right to collect the
unpaid balance of any Contract except that with respect to a Contract that has
become a Defaulted Contract, the Servicer, consistent with its collection
policies, may release or waive the right to collect the unpaid balance of such
Defaulted Contract in an effort to maximize collections thereon.
SECTION 5.03. RECORDS. The Servicer shall, during the period it is
servicer hereunder, maintain such books of account and other records as will
enable the Owner Trustee and the Indenture Trustee to determine the status of
each Contract.
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SECTION 5.04. INSPECTION. (a) At all times during the term hereof, the
Servicer shall afford the Owner Trustee and the Indenture Trustee and their
respective authorized agents reasonable access during normal business hours to
the Servicer's records relating to the Contracts and will cause its personnel to
assist in any examination of such records by the Owner Trustee or the Indenture
Trustee, or such authorized agents and allow copies of the same to be made. The
examination referred to in this Section 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
Owner Trustee or the Indenture Trustee may, using generally accepted audit
procedures, verify the status of each Contract and review the Computer Disk and
records relating thereto for conformity to Monthly Reports prepared pursuant to
ARTICLE IX and compliance with the standards represented to exist as to each
Contract in this Agreement.
(b) At all times during the term hereof, the Servicer shall keep
available a copy of the List of Contracts at its principal executive office for
inspection by the Trustees.
SECTION 5.05. TRUST ACCOUNTS. (a) On or before the Closing Date, the
Indenture Trustee shall establish the Collection Account, Note Distribution
Account and Reserve Fund, each in the name of the Indenture Trustee for the
benefit of the Noteholders and the Certificateholders, respectively. The
Indenture Trustee is hereby required to ensure that each of the Trust Accounts
is established and maintained as an Eligible Account.
(b) The Indenture Trustee shall deposit (or the Servicer shall deposit,
with respect to payments by or on behalf of the Obligors and Net Liquidation
Proceeds received by the Servicer) into the Collection Account as promptly as
practical (but in any case not later than the second Business Day following the
receipt thereof):
(i) All payments on the Contracts (as well as Late Payment
Penalty Fees and extension fees) received by the Servicer on or after
the Cutoff Date (which for the purpose of this paragraph (b)(i) shall
include those monies deposited in the Lockbox Account allocable to
principal and interest on the Contracts);
(ii) All Net Liquidation Proceeds related to the Contracts;
(iii) The aggregate of the Repurchase Prices for Contracts
repurchased by the Depositor as described in SECTION 7.05 which amounts
shall be funded with amounts coming from the Seller pursuant to SECTION
5.01 of the Transfer and Sale Agreement or from the Performance
Guarantor pursuant to the Performance Guarantee;
(iv) The aggregate of the Repurchase Prices for Contracts
repurchased by the Servicer as described in SECTION 5.06(f);
(v) All Advances made by the Servicer pursuant to SECTION
7.02;
(vi) All amounts paid by the Seller in connection with an
optional repurchase of the Contracts described in SECTION 7.07; and
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(vii) All amounts received in respect of interest, dividends,
gains, income and earnings on investments of funds in the Trust
Accounts (except the Reserve Fund) as contemplated herein.
(c) If the Servicer so directs, in writing, the Indenture Trustee shall
invest the amounts in the Trust Accounts in Qualified Eligible Investments that
mature not later than one Business Day prior to the next succeeding Distribution
Date. All funds to be distributed pursuant to SECTION 7.03 will be available and
for the benefit of the Indenture Trustee at least one Business Day prior to the
related Distribution Date. Once such funds are invested, the Indenture Trustee
shall not change the investment of such funds. Any loss on such investments
shall be deposited in the applicable Trust Account by the Servicer out of its
own funds immediately as realized. In the absence of written investment
instructions from the Servicer all amounts in the Trust Accounts shall be
invested in investments identified in paragraph (a) of the definition of
Eligible Investments. Funds in the Trust Accounts not so invested must be
insured to the extent permitted by law by the Bank Insurance Fund or the Savings
Association Insurance Fund of the Federal Deposit Insurance Corporation. Subject
to the restrictions herein, the Indenture Trustee may purchase a Qualified
Eligible Investment from itself or an Affiliate. Subject to the other provisions
hereof, the Indenture Trustee shall have sole control over each such investment
and the income thereon, and any certificate or other instrument evidencing any
such investment, if any, shall be delivered directly to the Indenture Trustee or
its agent, together with each document of transfer, if any, necessary to
transfer title to such investment to the Indenture Trustee in a manner which
complies with this SECTION 5.05(c). All interest, dividends, gains upon sale and
other income from, or earnings on, investments of funds in the Trust Accounts
(other than the Reserve Fund) shall be deposited in the Collection Account
pursuant to SECTION 5.05(b) and distributed on the next Distribution Date
pursuant to SECTION 7.03. The Depositor and the Issuer agree and acknowledge
that the Indenture Trustee is to have "CONTROL" (within the meaning of Section
8-102 of the UCC as enacted in Illinois) of collateral comprised of "INVESTMENT
PROPERTY" (within the meaning of Section 9-115 of the UCC as enacted in
Illinois) for all purposes of this Agreement.
(d) Notwithstanding anything to the contrary herein, the Servicer may
remit payments on the Contracts and Net Liquidation Proceeds to the Collection
Account in next-day funds or immediately available funds no later than 10:00
a.m., Central time, on the Business Day prior to the next succeeding
Distribution Date, but only for so long as (a)(i) the short-term certificate of
deposit ratings of the Servicer are at least P-1 by Moody's and "A-1" by
Standard & Poor's or (ii) the Rating Agency shall have notified the Servicer,
the Indenture Trustee and the Owner Trustee, in writing, that monthly
remittances of collections will not result in reduction or withdrawal of any
then outstanding rating of any outstanding Note or Certificate and (b) the
Servicer is Premier Auto Finance, Inc.
(e) The Servicer shall apply collections received in respect of a
Contract as follows:
(i) First, to reimburse any outstanding Advances made by the
Servicer with respect to such Contract;
(ii) Second, (x) to interest accrued on such Contract as of
such date and (y) to principal to the extent due and owing under such Contract;
and
29
(iii) Third, to pay any unpaid late charges or extension fees
(if any) due and owing under such Contract.
(f) Any collections on a Contract remaining after application by the
Servicer in accordance with the provisions of SECTION 5.05(e) shall constitute
an excess payment (an "EXCESS PAYMENT"). Excess Payments shall be applied as a
prepayment of the Principal Balance of such Contract.
(g) The Servicer will, from time to time as provided herein, be
permitted to withdraw from the Collection Account any amount deposited therein
that, based on the Servicer's good-faith determination, was deposited in error
or required to be repaid to the related Obligor.
SECTION 5.06. ENFORCEMENT. (a) The Servicer will, consistent with
SECTION 5.02, act with respect to the Contracts in such manner as will maximize
the receipt of all payments called for under the terms of the Contracts. The
Servicer shall use its best efforts to cause Obligors to make all payments on
the Contracts directly to the Lockbox Account. The Servicer will act in a
commercially reasonable manner with respect to the repossession and disposition
of a Financed Vehicle following a default under the related Contract with a view
to realizing proceeds at least equal to the Financed Vehicle's fair market
value. If the Servicer determines that eventual payment in full of a Contract is
unlikely, the Servicer will follow its normal practices and procedures to
recover all amounts due upon that Contract, including repossessing and disposing
of the related Financed Vehicle at a public or private sale or taking other
action permitted by applicable law. The Servicer will be entitled to recover all
reasonable out-of-pocket expenses incurred by it in liquidating a Contract and
disposing of the related Financed Vehicle.
(b) The Servicer may xxx to enforce or collect upon Contracts, in its
own name, if possible, or as agent for the Trustees. If the Servicer elects to
commence a legal proceeding to enforce a Contract, the act of commencement shall
be deemed to be an automatic assignment of the Contract 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 on the ground
that it is not a real party in interest or a holder entitled to enforce the
Contract, the Owner Trustee (or the Indenture Trustee) on behalf of the Issuer
shall, at the Servicer's expense, take such steps as the Servicer deems
reasonably necessary to enforce the Contract, 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
Servicer's usual practice. In exercising recourse rights, the Servicer is
authorized on the Issuer's behalf to reassign the Defaulted Contract or the
related Financed Vehicle to the Person against whom recourse exists at the price
set forth in the document creating the recourse; PROVIDED, HOWEVER, the Servicer
in exercising recourse against any third persons as described in the immediately
preceding sentence shall do so in such manner as to maximize the aggregate
recovery with respect to the Contract; and PROVIDED FURTHER, HOWEVER, that
notwithstanding the foregoing the Servicer in its capacity as such may exercise
such recourse only if such Contract (i) was not required to be repurchased by
the Seller pursuant to the Transfer and Sale Agreement or (ii) was required to
be repurchased by the Seller and the Seller has defaulted on such repurchase
obligation and the Performance Guarantor has defaulted on its obligation to
repurchase such Contract pursuant to the Performance Guarantee.
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(d) The Servicer will not permit any rescission or cancellation of any
Contract due to the acts or omissions of the Depositor.
(e) The Servicer may grant to the Obligor on any Contract an extension
of payments due under such Contract; PROVIDED that (i) the Servicer believes in
good faith that such extension is necessary to avoid liquidation of the Contract
and will maximize the amount received under the Contract, (ii) such extension is
consistent with the Servicer's customary servicing procedures and is consistent
with SECTION 5.02, (iii) such extension does not extend the maturity date of the
Contract beyond six (6) months preceding the Certificate Final Scheduled
Distribution Date and (iv) such extension does not modify the terms of the
Contract in a manner which constitutes a cancellation of the Contract and the
creation of a new contract for federal income tax purposes.
(f) The Servicer may agree to modify or amend any Contract if such
modification or amendment is consistent with the Servicer's customary servicing
procedures and is consistent with SECTION 5.02; provided that the Servicer
hereby covenants that it will not (i) release the Lien on a Financed Vehicle
granted in such Contract, (ii) undertake any action which would materially and
adversely impact the rights of the Issuer in such Contract, (iii) modify, alter
or change the Contract Rate of such Contract, (iv) modify, alter or change the
number of installment payments the related Obligor is obligated to make under
such Contract or (v) increase the Principal Balance of such Contract. The
Servicer hereby agrees that it shall purchase a Contract (together with all
related Contract Assets) as of the last day of the immediately preceding Due
Period, at its Repurchase Price, not later than the second Distribution Date
after the Servicer becomes aware, or should have become aware, or receives
written notice from the Depositor or either of the Trustees of any breach of a
covenant of the Servicer set forth in clauses (i) through (iv) above or in
SECTION 5.06(e) that materially adversely affects the interest of the Issuer or
the interest of the Noteholders or the Certificateholders in such Contract or
the collectibility of the Contract (without regard to the benefits of the
Reserve Fund) and which breach has not been cured.
(g) The Servicer will not add to the outstanding Principal Balance of
any Contract the premium of any physical damage or other individual insurance on
a Financed Vehicle securing such Contract it obtains on behalf of the Obligor
under the terms of such Contract, but may create a separate Obligor obligation
with respect to such premium if and as provided by the Contract; provided, that,
the payment of any such premium shall be subordinate to any and all payments on
the Contracts.
(h) If the Servicer shall have repossessed a Financed Vehicle on behalf
of the Issuer, the Servicer shall either (i) maintain at its expense physical
damage insurance with respect to such Financed Vehicle, or (ii) indemnify the
Issuer against any damage to such Financed Vehicle prior to resale or other
disposition. The Servicer shall not allow such repossessed Financed Vehicles to
be used in an active trade or business, but rather shall dispose of the Financed
Vehicle in a reasonable time in accordance with the Servicer's normal business
practices.
SECTION 5.07. TRUSTEES TO COOPERATE. Upon payment in full on any
Contract, the Servicer will notify the Trustees and the Depositor on the next
succeeding Distribution Date by certification of a Servicing Officer (which
certification shall include a statement to the effect that all amounts received
in connection with such Contract which are required to be deposited in the
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Collection Account pursuant to SECTION 5.05 have been so deposited) and shall
(if the Servicer is not then in possession of the Contracts and Contract Files)
request delivery of the Contract and Contract File to the Servicer. Upon receipt
of such delivery and request, the Trustees shall promptly release or cause to be
released such Contract and Contract File to the Servicer. Upon receipt of such
Contract and Contract File, each of the Depositor and the Servicer is authorized
to execute an instrument in satisfaction of such Contract and to do such other
acts and execute such other documents as the Servicer deems necessary to
discharge the Obligor thereunder and eliminate the security interest in the
Financed Vehicle related thereto. The Servicer shall determine when a Contract
has been paid in full; to the extent that insufficient payments are received on
a Contract credited by the Servicer as prepaid or paid in full and satisfied,
the shortfall shall be paid by the Servicer out of its own funds. From time to
time as appropriate for servicing and repossession in connection with any
Contract, if the Indenture Trustee, and not the Servicer is then in possession
of the Contracts and Contract Files, the Indenture Trustee shall, upon written
request of a Servicing Officer and delivery to the Indenture Trustee of a
receipt signed by such Servicing Officer, cause the original Contract and the
related Contract File to be released to the Servicer and shall execute such
documents as the Servicer shall deem reasonably necessary to the prosecution of
any such proceedings. Such receipt shall obligate the Servicer to return the
original Contract and the related Contract File to the Indenture Trustee when
the need by the Servicer has ceased unless the Contract shall be repurchased as
described in SECTION 7.07. Upon request of a Servicing Officer, the Indenture
Trustee shall perform such other acts as reasonably requested by the Servicer
and otherwise cooperate with the Servicer in the enforcement of the
Securityholders' rights and remedies with respect to the Contracts.
SECTION 5.08. COSTS AND EXPENSES. All costs and expenses incurred by
the Servicer in carrying out its duties hereunder, fees and expenses of
accountants and payments of all fees and expenses incurred in connection with
the enforcement of Contracts (including enforcement of Defaulted Contracts and
repossessions of Financed Vehicles securing such Contracts) and all other fees
and expenses not expressly stated hereunder to be for the account of the Issuer
shall be paid by the Servicer and the Servicer shall not be entitled to
reimbursement hereunder except as otherwise provided in SECTION 5.06(a).
SECTION 5.09. MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES.
The Servicer shall take such steps as are necessary to maintain continuous
perfection and the first priority of the security interest created by each
Contract in the related Financed Vehicles. The Owner Trustee and the Indenture
Trustee hereby authorize the Servicer to take such steps as are necessary to
perfect such security interest and to maintain the first priority thereof in the
event of a relocation of a Financed Vehicle or for any other reason.
SECTION 5.10. MAINTENANCE OF INSURANCE. The Servicer shall, at its own
cost and expense, during the term of its service as Servicer maintain in force
an insurance policy or financial guarantee bond to protect against losses due to
errors and omissions by the Servicer in the performance of its duties hereunder.
Such insurance policy or financial guarantee bond shall be in form and in an
amount as is generally customary among Persons which service a portfolio of
automobile retail installment sale contracts and which are generally regarded as
servicers acceptable to institutional investors.
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SECTION 5.11. SEPARATE ENTITY EXISTENCE. The Servicer agrees to take or
refrain from taking or engaging in with respect to the Depositor, as applicable,
each of the actions or activities specified in the "nonsubstantive
consolidation" opinion of Winston & Xxxxxx (or in any related Certificate of the
Servicer) delivered on the Closing Date, upon which the conclusions expressed
therein are based.
ARTICLE SIX
THE DEPOSITOR
SECTION 6.01. COVENANTS OF THE DEPOSITOR.
(a) CORPORATE EXISTENCE. During the term of this Agreement,
the Depositor will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and will 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 Agreement, the other Transaction
Documents and each other instrument or agreement necessary or appropriate to the
proper administration of this Agreement and the transactions contemplated
hereby.
(b) ARM'S LENGTH TRANSACTIONS. During the term of this
Agreement, all transactions and dealings between the Depositor and its
Affiliates will be conducted on an arm's-length basis.
(c) NO OTHER BUSINESS. The Depositor shall not engage in any
business other than financing, purchasing, owning, selling and managing the
Contracts in the manner contemplated by this Agreement and the other Transaction
Documents and activities incidental thereto; PROVIDED, HOWEVER, that the
Depositor may purchase and sell (or grant Liens in respect of) contracts and/or
other related assets similar to the Contracts to other Persons in securitization
or other non-recourse financing transactions involving the Seller, the Servicer
or any of their Affiliates (or with respect to the Contract Assets themselves,
following a release and reconveyance thereof from the Trust), on terms and
conditions (with respect to the liabilities imposed upon the Depositor by virtue
of such transactions, as well as in respect of agreements or restrictions
concerning activities of the Depositor and its relations or interactions with
the Seller or the Servicer or other applicable Affiliate relevant to "bankruptcy
remoteness" or "substantive consolidation" analysis), in each case substantially
similar to such terms and conditions applicable to the Depositor hereunder and
under the other Transaction Documents; PROVIDED, FURTHER, the Depositor provide
3 days written notice of such purchase and sale to each Rating Agency.
(d) NO BORROWING. The Depositor shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for (i)
any Indebtedness except for any Indebtedness permitted by or arising under the
Transaction Documents or (ii) obligations in connection with transactions
described in the proviso of SECTION 6.01(c), as limited thereby. The proceeds of
the Notes and the Certificates shall be used exclusively to fund the Depositor's
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purchase of the Contracts and the other assets specified in this Agreement and
to pay the transactional expenses of the Depositor.
(e) GUARANTEES, LOANS ADVANCES AND OTHER LIABILITIES. Except
as otherwise contemplated by the Transaction Documents or in connection with
transactions described in SECTION 6.01(c), as limited thereby, the Depositor
shall not make any loan or advance or credit to, or guarantee (directly or
indirectly or by an instrument having the effect of assuming another's payment
or performance on any obligation or capability of so doing or 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, any other interest in, or make any capital contribution
to, any other Person.
(f) CAPITAL EXPENDITURES. The Depositor shall not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(either realty or personalty).
(g) RESTRICTED PAYMENTS. Except as permitted by the
Transaction Documents, the Depositor shall not, directly or indirectly, (i) pay
any dividend or make any distribution (by reduction of capital or otherwise),
whether in cash, property, securities or a combination thereof, to any owner of
an equity interest in the Depositor, (ii) redeem, purchase, retire or otherwise
acquire for value any such equity interest or (iii) set aside or otherwise
segregate any amounts for any such purpose.
(h) SEPARATE ENTITY EXISTENCE. The Depositor shall:
(i) Maintain its own deposit account or accounts,
separate from those of any Affiliate, with commercial banking
institutions. The funds of the Depositor will not be diverted to any
other Person or for other than authorized uses of the Depositor.
(ii) Ensure that, to the extent that it shares the
same officers or other employees as any of its members or Affiliates,
the salaries of and the expenses related to providing benefits to such
officers and other employees shall be fairly allocated among such
entities, and each such entity shall bear its fair share of the salary
and benefit costs associated with all such common officers and
employees.
(iii) Ensure that, to the extent that it jointly
contracts with any of its members or Affiliates to do business with
vendors or service providers or to share overhead expenses, the costs
incurred in so doing shall be allocated fairly among such entities, and
each such entity shall bear its fair share of such costs. To the extent
that the Depositor contracts or does business with vendors or service
providers when the goods and services provided are partially for the
benefit of any other Person, the costs incurred in so doing shall be
fairly allocated to or among such entities for whose benefit the goods
and services are provided, and each such entity shall bear its fair
share of such costs. All material transactions between Depositor and
any of its Affiliates shall be only on an arm's length basis.
(iv) To the extent that the Depositor and any of its
members or Affiliates have offices in the same location, there shall be
a fair and appropriate
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allocation of overhead costs among them, and each such entity shall
bear its fair share of such expenses.
(v) Conduct its affairs strictly in accordance with
its By-laws and Certificate of Incorporation, and observe all
necessary, appropriate and customary limited liability company
formalities, including, but not limited to, holding all regular and
special members' and directors' meetings appropriate to authorize all
entity action, keeping separate and accurate records of such meetings
and its actions, passing all resolutions or consents necessary to
authorize actions taken or to be taken, and maintaining accurate and
separate books, records and accounts, including, but not limited to,
payroll and intercompany transaction accounts.
(vi) Take or refrain from taking or engaging in, as
applicable, each of the actions or activities specified in the "true
sale" and "nonsubstantive consolidation" opinions of Winston & Xxxxxx
delivered on the Closing Date (or in any related certificate delivered
in connection therewith), upon which the conclusions expressed therein
are based.
SECTION 6.02. LIABILITY OF DEPOSITOR; INDEMNITIES. The Depositor shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Depositor under this Agreement.
The Depositor shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Indenture Trustee and the Servicer from and against any taxes
that may at any time be asserted against any such Person with respect to the
transactions contemplated herein and in the other Transaction Documents,
including any sales, gross receipts, general corporation, tangible personal
property, Illinois personal property replacement privilege or license taxes
(but, in the case of the Issuer, not including any taxes asserted with respect
to, and as of the date of, the sale of the Contracts to the Issuer or the
issuance and original sale of the Securities, ownership of the Contracts, or
federal or other income taxes arising out of distributions on the Certificates
or the Notes) and costs and expenses in defending against the same.
The Depositor shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Indenture Trustee and the Securityholders from and against
any loss, liability or expense incurred by reason of the Depositor's willful
misfeasance, bad faith or negligence in the performance of its duties under this
Agreement, or by reason of reckless disregard of its obligations and duties
under this Agreement.
The Depositor shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee and the Indenture Trustee from and against all costs, expenses,
losses, claims, damages and liabilities arising out of or incurred in connection
with the acceptance or performance of the trusts and duties herein and, in the
case of the Owner Trustee, in the Trust Agreement and, in the case of the
Indenture Trustee, in the Indenture, except to the extent that such cost,
expense, loss, claim, damage or liability in the case of (i) the Owner Trustee
shall be due to the willful misfeasance, bad faith or negligence of the Owner
Trustee or shall arise from the breach by the Owner Trustee of any of its
representations or warranties set forth in SECTION 7.03 of the Trust
35
Agreement, or (ii) the Indenture Trustee, shall be due to the willful
misfeasance, bad faith or negligence of the Indenture Trustee.
Indemnification under this Section shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Depositor shall have made any indemnity payments pursuant to this Section 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 Depositor, without interest.
Notwithstanding anything to the contrary herein, the obligations of the
Depositor under this Section are solely the corporate obligations of the
Depositor and shall be payable by it solely as provided in this Section. The
Depositor shall only be required to make such contributions required under this
Section, (y) from funds available to it pursuant to, and in accordance with the
payment priorities set forth in SECTION 7.03(b) and (z) only to the extent that
it receives additional funds designated for such purposes or to the extent that
it has additional funds available (other than funds described in the preceding
clause (y)) that would be in excess of amounts that would be necessary to pay
the debt and other obligations of such entity incurred in accordance with its
certificate of incorporation and all financing documents to which it is a party
as they come due. In addition , no amount owing by the Depositor hereunder in
excess of the liabilities that it is required to pay in accordance with the
preceding sentence shall constitute a "claim" (as defined in Section 101(5) of
the Bankruptcy Code) against it. No recourse shall be had for the payment of any
amount owing hereunder or any other obligation of, or claim against the
Depositor arising out of or based up on this Section against any stockholder,
employee, officer, agent, director or authorized person of the Depositor or
Affiliate thereof; provided, however, that the foregoing shall not relieve any
such person or entity of any liability they might otherwise have as a result of
fraudulent actions or omissions taken by them.
SECTION 6.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, DEPOSITOR; CERTAIN LIMITATIONS.
Notwithstanding any other provision in this Section and any provision
of law, the Depositor shall not do any of the following:
(i) engage in any business or activity other than as set forth
in its Articles of Incorporation;
(ii) without the affirmative vote of a majority of the members
of the Board of Directors of the Depositor (which must include the
affirmative vote of at least one duly appointed Independent director)
(A) dissolve or liquidate, in whole or in part, or institute
proceedings to be adjudicated bankrupt or insolvent, (B) consent to the
institution of bankruptcy or insolvency proceedings against it, (C)
file a petition seeking or consent to reorganization or relief under
any applicable federal or state law relating to bankruptcy, (D) consent
to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the corporation or a
substantial part of its property, (E) make a general assignment for the
benefit of creditors, (F) admit in writing its inability to pay its
debts generally as they become due, or (G) take any corporate action in
furtherance of the actions set forth in clauses (A) through (F) above;
PROVIDED, HOWEVER, that no director
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may be required by any shareholder of the Depositor to consent to the
institution of bankruptcy or insolvency proceedings against the
Depositor so long as it is solvent; or
(iii) merge or consolidate with any other corporation, company
or entity or sell all or substantially all of its assets or acquire all
or substantially all of the assets or capital stock or other ownership
interest of any other corporation, company or entity.
SECTION 6.04. LIMITATION ON LIABILITY OF DEPOSITOR AND OTHERS. The
Depositor and any director or officer or employee or agent of the Depositor may
rely in good faith on any document of any kind, prima facie properly executed
and submitted by any Person respecting any matters arising hereunder. The
Depositor and any director or officer or employee or agent of the Depositor
shall be reimbursed by the Owner Trustee for any contractual damages, liability
or expense incurred by reason of the Owner Trustee's willful misfeasance, bad
faith or gross negligence (except errors in judgment) in the performance of
their respective duties hereunder, or by reason of reckless disregard of their
respective obligations and duties hereunder. The Depositor 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.
SECTION 6.05. DEPOSITOR NOT TO RESIGN. Subject to the provisions of
SECTION 6.03, the Depositor shall not resign from the obligations and duties
hereby imposed on it as Depositor hereunder.
SECTION 6.06. DEPOSITOR MAY OWN NOTES OR CERTIFICATES. The Depositor
and any Affiliate thereof may in its individual or any other capacity become the
owner or pledgee of Notes or Certificates with the same rights as it would have
if it were not the Depositor or an Affiliate thereof, except as expressly
provided herein or in any Transaction Document. Notes or Certificates so owned
by or pledged to the Depositor or such Affiliate shall have an equal and
proportionate benefit under the provisions of this Agreement, without
preference, priority or distinction as among all of the Notes or Certificates,
as the case may be.
SECTION 6.07. BANKRUPTCY LIMITATIONS. The Depositor shall not, without
the affirmative vote of each of the directors of the Depositor (which must
include the affirmative vote of at least one duly appointed Independent Director
as defined in the Certificate of Incorporation of the Depositor) (A) dissolve or
liquidate, in whole or in part, or institute proceedings to be adjudicated
bankrupt or insolvent, (B) consent to the institution of bankruptcy or
insolvency proceedings against it, (C) file a petition seeking or consent to
reorganization or relief under any applicable federal or state law relating to
bankruptcy, (D) consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator (or other similar official) of the Depositor or a
substantial part of its property, (E) make a general assignment for the benefit
of creditors, (F) admit in writing its inability to pay its debts generally as
they become due, or (G) take any entity action in furtherance of the actions set
forth in clauses (A) through (F) above; provided, however, that no director may
be required by any shareholder of the Depositor to consent to the institution of
bankruptcy or insolvency proceedings against the Depositor so long as it is
Solvent.
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ARTICLE SEVEN
DISTRIBUTIONS; RESERVE FUND
SECTION 7.01. FEES. The Indenture Trustee shall be paid the Indenture
Trustee Fee, the Owner Trustee shall be paid the Owner Trustee Fee and the
Servicer shall be paid the Monthly Servicing Fee, each of which shall be paid
solely from the monies and in accordance with the priorities described in
SECTION 7.03. No recourse may be had to the Seller, Depositor, Trustees,
Servicer, or any of their respective Affiliates in the event that amounts
available under SECTION 7.03 are insufficient for payment of the Indenture
Trustee Fee, the Owner Trustee Fee and the Monthly Servicing Fee.
SECTION 7.02. ADVANCES. On each Determination Date, the Servicer shall
compute the amount of Delinquent Interest for the immediately preceding Due
Period. Not later than each Determination Date, the Servicer shall advance
(each, an "ADVANCE") an amount equal to the Delinquent Interest for such
Determination Date by depositing such amount in the Collection Account;
PROVIDED, HOWEVER, that the Servicer shall be obligated to advance in respect of
a Contract only to the extent that the Servicer, in its sole discretion, expects
that such advance would not be an Uncollectible Advance. The Servicer shall
indicate on each Monthly Report (i) the amount of Delinquent Interest, if any,
for the related Due Period, and (ii) the amount of the Advance, if any, made by
the Servicer in respect of the Delinquent Interest pursuant to this SECTION
7.02. If the amount of such Advance is less than the amount of the Delinquent
Interest, the relevant Monthly Report shall be accompanied by a certificate of a
Servicing Officer setting forth in reasonable detail the basis for the
determination by the Servicer that the portion of the Delinquent Interest not
advanced would be an Uncollectible Advance. By each Determination Date, the
Servicer shall determine the amount of prior unreimbursed Advances for which it
shall be entitled to be reimbursed (such amount, the "REIMBURSEMENT AMOUNT").
The Servicer shall be entitled to be reimbursed for an Advance made in respect
of a delinquent payment under a Contract on the earlier of (i) the Distribution
Date following the Due Period in which that delinquent payment was paid and (ii)
the Distribution Date following the Due Period in which that Contract became a
Defaulted Contract.
SECTION 7.03. DISTRIBUTIONS.
(a) On each Distribution Date, the Indenture Trustee at the Servicer's
direction will make the following distributions in the following order of
priority:
(i) to the Servicer from Available Amounts, the Reimbursement
Amount for Advances previously made;
(ii) to the Indenture Trustee from Available Amounts, any
accrued and unpaid Indenture Trustee Fee with respect to one or more
prior Due Periods;
(iii) to the Owner Trustee from Available Amounts, any accrued
and unpaid Owner Trustee Fee with respect to one or more prior Due
Periods;
(iv) to the Servicer from Available Amounts, the Servicing
Fee, including any unpaid Servicing Fee with respect to one or more
prior Due Periods;
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(v) to the Note Distribution Account from Available Amounts,
together with any amounts deposited therein pursuant to SECTION 7.04,
the Note Interest Distributable Amount with respect to such
Distribution Date for each Class of Notes;
(vi) except during any Lockout Period, to the Certificate
Distribution Account from Available Amounts, together with any amounts
deposited therein pursuant to SECTION 7.04, the Certificate Interest
Distributable Amount with respect to such Distribution Date;
(vii) to the Note Distribution Account from Available Amounts,
together with any amounts deposited therein pursuant to SECTION 7.04,
the Note Principal Distributable Amount with respect to such
Distribution Date; and
(viii) to the Certificate Distribution Account from Available
Amounts, together with any amounts deposited therein pursuant to
SECTION 7.04, the Certificate Principal Distributable Amount with
respect to such Distribution Date.
(b) In the event that the distributions described in clauses (i)
through (viii) above have been funded exclusively from Available Amounts, the
Indenture Trustee at the written direction of the Servicer will deposit any
remaining Available Amounts ("EXCESS AMOUNTS") into the Reserve Fund in
accordance with SECTION 7.04(d), until the amount on deposit therein equals the
Specified Reserve Fund Balance with respect to such Distribution Date and the
Indenture Trustee will remit any excess over such Specified Reserve Fund Balance
to the Depositor.
SECTION 7.04. RESERVE FUND.
(a) On or prior to the Closing Date, the Owner Trustee on behalf of the
Trust shall deposit the Reserve Fund Initial Deposit into the Reserve Fund and
the Indenture Trustee shall acknowledge and confirm the receipt therefor. The
Indenture Trustee shall establish and maintain the Reserve Account as an
Eligible Account at The Bank of New York in the name of the Indenture Trustee
for the benefit of the Securityholders.
(b) The Indenture Trustee shall at the written direction of the
Servicer invest the funds in the Reserve Fund in Qualified Eligible Investments.
Funds in the Reserve Fund shall be invested in investments that mature on or
before the Business Day prior to each Distribution Date. Once such funds are
invested, the Indenture Trustee shall not change the investment of such funds
prior to maturity. Upon any such investment, the Indenture Trustee shall,
consistent with the definition of Qualified Eligible Investment herein, make an
appropriate notation of security interest in such Qualified Eligible Investment
on the Indenture Trustee's records, by book entry or otherwise. In the absence
of written investment instructions from the Servicer all amounts in the Reserve
Fund shall be invested in investments identified in paragraph (a) of the
definition of Eligible Investments. All income and gain realized from any such
investments as well as any interest earned on Reserve Fund Deposits shall be
deposited and retained in the Reserve Fund (subject to SECTION 7.04(d)). Losses,
if any, realized on amounts in the Reserve Fund invested pursuant to this
paragraph shall first be credited against undistributed investment earnings on
amounts in the Reserve Fund invested pursuant to this paragraph, and shall
thereafter
39
be deemed to reduce the amount on deposit in the Reserve Fund. The Depositor and
the Indenture Trustee shall not be liable for the amount of any loss incurred in
respect of any investment, or lack of investment, of funds held in the Reserve
Fund.
(c) On the Business Day immediately preceding each Distribution Date,
the Servicer shall instruct the Indenture Trustee in writing (based on the
information contained in the Monthly Report delivered on the related
Determination Date pursuant to SECTION 9.01) on such Distribution Date to
withdraw from the Reserve Account an amount equal to the Shortfall with respect
to such Distribution Date and apply such funds in the following order of
priority: first, to the Note Distribution Account; the amount of such Shortfall
relating to the Note Interest Distributable Amount, second, to the Certificate
Distribution Account, the amount of such Shortfall relating to the Certificate
Interest Distributable Amount; third, to the Note Distribution Account, the
amount of such Shortfall relating to the Note Principal Distributable Amount;
and fourth, to the Certificate Distribution Account, the amount of such
Shortfall relating to the Certificate Principal Distributable Amount. On each
Distribution Date, the Indenture Trustee shall withdraw funds from the Reserve
Fund and apply them in accordance with the Servicer's instructions.
(d) On each Distribution Date on which the amount on deposit in the
Reserve Fund (after giving effect to all deposits thereto and withdrawals
therefrom on such Distribution Date) is greater than the Specified Reserve Fund
Balance with respect to such Distribution Date the Indenture Trustee upon
written direction from the Servicer shall withdraw such excess funds and pay
them to the Depositor.
(e) On the Distribution Date on which all of the Notes have been paid
in full and the amount on deposit in the Reserve Fund on such Distribution Date
(after giving effect to all deposits thereto and withdrawals therefrom on such
Distribution Date) is equal to or greater than the Certificate Balance (after
giving effect to any reductions thereof to be made on such Distribution Date),
the Indenture Trustee upon written direction from the Servicer shall withdraw
from the Reserve Fund and deposit in the Certificate Distribution Account an
amount equal to such Certificate Balance.
SECTION 7.05. REPURCHASES OF CONTRACTS FOR BREACH OF REPRESENTATIONS
AND WARRANTIES.
Upon a discovery by the Servicer, the Depositor or the Trustees of a
breach of a representation or warranty of the Depositor as set forth in SECTION
3.01(a) or of the Seller as set forth in EXHIBIT J hereto that materially
adversely affects the Issuer's interest in or collectibility of such Contract
(without regard to the benefits of the Reserve Fund), the party discovering the
breach shall give prompt written notice to the other parties; PROVIDED, that the
Trustees shall have no duty or obligation to inquire or to investigate the
breach by the Depositor or the Seller of any of such representations or
warranties. Unless the breach shall have been cured by the last day of the Due
Period following the Due Period in which the Depositor becomes aware, or should
have become aware, or receives written notice from a Trustee or the Servicer of
such breach, the Depositor in accordance with this SECTION 7.05, shall
repurchase such Contract as of the last day of such Due Period at its Repurchase
Price, by depositing such Repurchase Price in the Collection Account on the
related Distribution Date. The repurchase obligation described in this SECTION
7.05 is in no way to be satisfied with monies in the Reserve Fund.
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SECTION 7.06. REASSIGNMENT OF REPURCHASED CONTRACTS. Upon receipt by
the Indenture Trustee for deposit in the Collection Account of the Repurchase
Price as described in SECTION 7.05 or SECTION 7.07, and upon receipt of a
certificate of a Servicing Officer in the form attached hereto as EXHIBIT G, the
Indenture Trustee shall release its lien on and the Owner Trustee shall assign
to the Seller all of the Issuer's right, title and interest in the repurchased
Contract without recourse, representation or warranty.
SECTION 7.07. SELLER'S REPURCHASE OPTION. As provided in the Transfer
and Sale Agreement, on written notice to the Indenture Trustee at least 20 days
prior to a Distribution Date, and provided that the sum of (i) the aggregate
unpaid principal balance of the Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes, the Class A-4 Notes and the Class B Notes and (ii) the Certificate
Balance on such Distribution Date is less than 10% of the Aggregate Principal
Balance as of the Cutoff Date, the Seller, through the Depositor, may (but is
not required to) repurchase on that Distribution Date pursuant to the Transfer
and Sale Agreement all outstanding Contracts (and related Contract Assets) at a
price equal to the sum of (i) the aggregate unpaid principal balance of the
Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes
and the Class B Notes and (ii) the Certificate Balance as of that Distribution
Date plus the aggregate of the Note Interest Distributable Amount and the
Certificate Interest Distributable Amount for the current Distribution Date, the
Reimbursement Amount (if any) as well as accrued and unpaid Monthly Servicing
Fees, the Owner Trustee Fees and the Indenture Trustee Fees to the date of such
repurchase. Such price will be deposited in the Collection Account not later
than one (1) Business Day before such Distribution Date, against the Trustees'
release of the Contracts and the Contract Files to the Seller.
ARTICLE EIGHT
SERVICER DEFAULT; SERVICE TRANSFER
SECTION 8.01. SERVICER DEFAULT. "Servicer Default" means the occurrence
of any of the following:
(a) Any failure by the Servicer (i) to make any payment or deposit
required to be made hereunder or (ii) to direct the Trustees to make any payment
or distribution required to be made hereunder and the continuance of either such
failure described in clauses (i) or (ii) above for a period of five (5) Business
Days after receipt of written notice from the Trustees or discovery by the
Servicer of such failure;
(b) Failure on the Servicer's part to observe or perform in any
material respect any covenant or agreement set forth herein (other than a
covenant or agreement, the breach of which is specifically addressed elsewhere
in this Agreement) which (i) materially and adversely affects the rights of the
Securityholders and (ii) continues unremedied for thirty (30) days after receipt
of written notice from the Trustees or by Noteholders of more than 25% of the
aggregate principal amount of the Class A-1 Notes, Class A-2 Notes, Class A-3
Notes and Class A-4 Notes, or, if there are no Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes or Class A-4 Notes outstanding, by Noteholders of more than 25%
of the aggregate principal amount of the Class B
41
Notes, or, if there are no Notes outstanding, by Certificateholders of more than
25% of the Certificate Balance;
(c) An involuntary case under any applicable bankruptcy, insolvency or
other similar law shall have been commenced in respect of the Servicer and shall
not have been dismissed within 60 days, or a court having jurisdiction in the
premises shall have entered a decree or order for relief in respect of the
Servicer in an involuntary case under any applicable 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 Servicer, or for any substantial liquidation or winding up of its affairs;
(d) The Servicer shall have commenced a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall have consented to the entry of an order for relief in an
involuntary case under any such law, or shall have consented to the appointment
of or taking possession by a receiver, liquidator, assignee, trustee, custodian
or sequestrator (or other similar official) of the Servicer or for any
substantial part of its property, or shall have made any general assignment for
the benefit of its creditors, or shall have failed to, or admitted in writing
its inability to, pay its debts as they become due, or shall have taken any
corporate action in furtherance of the foregoing;
(e) Any representation, warranty or statement of the Servicer made in
this Agreement, or any certificate, report or other writing delivered pursuant
hereto shall prove to be incorrect in any material respect as of the time when
the same shall have been made and the incorrectness of such representation,
warranty or statement has a material adverse effect on the Securityholders and,
within 30 days after written notice thereof shall have been given to the
Servicer by the Indenture Trustee or, if there are no Notes outstanding, the
Owner Trustee or by Noteholders of more than 25% of the aggregate principal
amount of the Class A-1 Notes, Class A-2 Notes, Class A-4 Notes and Class A-4
Notes or, if there are no Class A-1 Notes, Class A-2 Notes, Class A-3 Notes or
Class A-4 Notes outstanding, by Noteholders of more than 25% of the aggregate
principal amount of the Class B Notes, or, if there are no Notes outstanding, by
Certificateholders of more than 25% of the Certificate Balance, the
circumstances or condition in respect of which such representation, warranty or
statement was incorrect shall not have been eliminated or otherwise cured.
SECTION 8.02. WAIVER OF SERVICER DEFAULT. Noteholders representing more
than 50% of the outstanding balance of the Class A-1 Notes, the Class A-2 Notes,
the Class A-3 Notes and the Class A-4 Notes, voting as a single class, or if
there are no Class A-1 Notes, Class A-2 Notes, Class A-3 Notes or Class A-4
Notes outstanding, Noteholders representing more than 50% of the outstanding
balance of the Class B Notes or, if there are no Notes outstanding,
Certificateholders representing more than 50% of the Certificate Balance, may,
by written notice delivered to the parties hereto, waive any Servicer Default
other than a Servicer Default described in SECTION 8.01(a).
SECTION 8.03. SERVICE TRANSFER. (a) If a Servicer Default has occurred
and is continuing and has not been waived pursuant to SECTION 8.02, (i)
Noteholders representing more than 50% of the outstanding balance of the Class
A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes,
voting as a single class, or if there are no Class A-1 Notes, Class A-2 Notes,
42
Class A-3 Notes or Class A-4 Notes outstanding, Noteholders representing more
than 50% of the outstanding balance of the Class B Notes or, if there are no
Notes outstanding, Certificateholders representing more than 50% of the
Certificate Balance or (ii) the Indenture Trustee or, if there are no Notes
outstanding, the Owner Trustee may, by written notice delivered to the parties
hereto, terminate all (but not less than all) of the Servicer's management,
administrative, servicing, custodial and collection functions (such termination
being herein called a "SERVICE TRANSFER").
(b) Upon receipt of the notice required by SECTION 8.03(a) (or, if
later, on a date designated therein), all rights, benefits, fees, indemnities,
authority and power of the Servicer under this Agreement, whether with respect
to the Contracts, the Contract Files or otherwise, shall pass to and be vested
in the Indenture Trustee (the "SUCCESSOR SERVICER") pursuant to and under this
SECTION 8.03; and, without limitation, the Successor Servicer is authorized and
empowered to execute and deliver on behalf of the Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do any and all
acts or things necessary or appropriate to effect the purposes of such notice of
termination. The Servicer agrees to cooperate with the Successor Servicer in
effecting the termination of the responsibilities and rights of the Servicer
hereunder, including, without limitation, the transfer to the Successor Servicer
for administration by it of all cash amounts which shall at the time be held by
the Servicer for deposit, or have been deposited by the Servicer, in the
Collection Account, or for its own account in connection with its services
hereafter or thereafter received with respect to the Contracts. The Servicer, at
its expense, shall as soon as practicable, and in any event within 10 Business
Days, transfer to the Successor Servicer all records held by the Servicer
relating to the Contracts in such electronic form as the Successor Servicer may
reasonably request and (ii) any Contract Files in the Servicer's possession. In
addition, the Servicer shall permit access to its premises (including all
computer records and programs) to the Successor Servicer or its designee, and
shall pay the reasonable transition costs and expenses of the Successor
Servicer. Upon a Service Transfer, the Successor Servicer shall also be entitled
to receive the Monthly Servicing Fee for performing the obligations of the
Servicer.
SECTION 8.04. SUCCESSOR SERVICER TO ACT; APPOINTMENT OF SUCCESSOR
SERVICER. On or after a Service Transfer pursuant to SECTION 8.03, the Successor
Servicer shall be the successor in all respects to the Servicer in its capacity
as servicer under this Agreement and the transactions set forth or provided for
herein and shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Servicer by the terms and provisions hereof, and
the terminated Servicer shall be relieved of such responsibilities, duties and
liabilities arising after such Service Transfer; PROVIDED, HOWEVER, that (i) the
Successor Servicer will not assume any obligations of the Servicer described in
SECTION 8.08; (ii) the Successor Servicer shall not be liable for any acts or
omissions of the Servicer occurring prior to such Service Transfer or for any
breach by the Servicer of any of its representations and warranties contained
herein or in any related document or agreement; and (iii) the Successor Servicer
shall be entitled to terminate all subservicing agreements, if any, at the sole
cost and expense of the predecessor servicer. Notwithstanding the above, if the
Successor Servicer is legally unable or unwilling to act as Servicer, it may
appoint or petition a court of competent jurisdiction to appoint, an established
financial institution (x) having a net worth of not less than $100,000,000 as of
the last day of the most recent fiscal quarter for such institution and (y)
whose regular business shall include the servicing of automobile receivables, to
act as Servicer. As compensation therefor, the Successor Servicer
43
shall be entitled to receive reasonable compensation equal to the Monthly
Servicing Fee. The Trustees and such Successor Servicer shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. To the extent the terminated Servicer has made Advances, it shall be
entitled to reimbursement of the same notwithstanding its termination hereunder,
to the same extent as if it had continued to service the Contracts hereunder. In
the event that the Indenture Trustee acts as Successor Servicer it cannot be
removed for any reason (other than cause) unless all servicing transactions
expenses have been paid by the predecessor servicer.
SECTION 8.05. NOTIFICATION TO CERTIFICATEHOLDERS. (a) Promptly
following the occurrence of any Servicer Default, the Servicer shall give
written notice thereof to the Trustees, the Depositor and each Rating Agency at
the addresses described in SECTION 11.04. The Indenture Trustee shall give
written notice thereof to the Noteholders and the Owner Trustee shall give
written notice thereof to the Certificateholders at their respective addresses
appearing on the Note Register and the Certificate Register, respectively.
(b) Within 10 days following any termination or appointment of a
Successor Servicer pursuant to this ARTICLE VIII, the Indenture Trustee shall
give written notice thereof to each Rating Agency and the Depositor at the
addresses described in SECTION 11.04 and to the Noteholders at their addresses
appearing on the Note Register and the Owner Trustee shall give written notice
to the Certificateholders at their addresses appearing in the Certificate
Register.
SECTION 8.06. EFFECT OF TRANSFER. (a) After a Service Transfer, the
terminated Servicer shall have no further obligations with respect to the
management, administration, servicing, custody or collection of the Contracts
and the Successor Servicer appointed pursuant to SECTION 8.04 shall have all of
such obligations, except that the terminated Servicer will transmit or cause to
be transmitted directly to the Successor Servicer for its own account, promptly
on receipt and in the same form in which received, any amounts (properly
endorsed where required for the Successor Servicer to collect them) received as
payments upon or otherwise in connection with the Contracts.
(b) A Service Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities of the Servicer)
other than those relating to the management, administration, servicing, custody
or collection of the Contracts.
SECTION 8.07. DATABASE FILE. The Servicer will provide the Successor
Servicer with a magnetic tape containing the database file for each Contract (i)
as of the Cutoff Date, (ii) thereafter, as of the last day of the preceding Due
Period on each Determination Date prior to a Servicer Default and (iii) on and
as of the Business Day before the actual commencement of servicing functions by
the Successor Servicer following the occurrence of a Servicer Default.
SECTION 8.08. SUCCESSOR SERVICER INDEMNIFICATION. The Servicer shall
defend, indemnify and hold the Successor Servicer and any officers, directors,
employees or agents of the Successor Servicer harmless against any and all
claims, losses, penalties, fines, forfeitures, legal fees and related costs,
judgments and any other costs, fees, and expenses that the Successor Servicer
may sustain in connection with the claims asserted at any time by third parties
against the Successor Servicer which result from (i) any willful or grossly
negligent act taken or omission by the
44
Servicer or (ii) a breach of any representations of the Servicer in SECTION
3.02. The indemnification provided by this SECTION 8.08 shall survive the
termination of this Agreement.
SECTION 8.09. RESPONSIBILITIES OF THE SUCCESSOR SERVICER. The Successor
Servicer will not be responsible for delays attributable to the Servicer's
failure to deliver information, defects in the information supplied by the
Servicer or other circumstances beyond the control of the Successor Servicer.
The Successor Servicer will make arrangements with the Servicer for the
prompt and safe transfer of, and the Servicer shall provide to the Successor
Servicer, all necessary servicing files and records, including (as deemed
necessary by the Successor Servicer at such time): (i) microfiche loan
documentation, (ii) servicing system tapes, (iii) Contract payment history, (iv)
collections history and (v) the trial balances, as of the close of business on
the day immediately preceding conversion to the Successor Servicer, reflecting
all applicable loan information.
The Successor Servicer shall have no responsibility and shall not be in
default hereunder nor incur any liability for any failure, error, malfunction or
any delay in carrying out any of its duties under this Agreement if any such
failure or delay results from the Successor Servicer acting in accordance with
information prepared or supplied by a Person other than the Successor Servicer
or the failure of any such Person to prepare or provide such information. The
Successor Servicer shall have no responsibility, shall not be in default and
shall incur no liability (i) for any act or failure to act by any third party,
including the Servicer, the Depositor or the Trustees or for any inaccuracy or
omission in a notice or communication received by the Successor Servicer from
any third party or (ii) which is due to or results from the invalidity,
unenforceability of any Contract with applicable law or the breach or the
inaccuracy of any representation or warranty made with respect to any Contract.
SECTION 8.10. LIABILITY OF SERVICER; INDEMNITIES. (a) The Servicer
shall indemnify, defend and hold harmless the Issuer, the Owner Trustee, the
Indenture Trustee and the Securityholders from and against any loss, liability
or expense incurred by reason of the Servicer's willful misfeasance, bad faith
or gross negligence (other than errors in judgment) in the performance of its
duties under this Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement or as a result of any breach of the
Servicer's covenants set forth in clauses (i) through (iv) of SECTION 5.06(f) or
in SECTION 5.06(e).
(b) The Servicer shall defend, indemnify, and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee and the Securityholders from and
against any and all costs, expenses, losses, damages, claims, and liabilities,
arising out of or resulting from the use, ownership, or operation by the
Servicer or any Affiliate thereof of a Financed Vehicle.
(c) The Servicer shall indemnify, defend, and hold harmless the Issuer,
the Owner Trustee and the Indenture Trustee from and against any taxes that may
at any time be asserted against the Issuer with respect to the transactions
contemplated in this Agreement, including, without limitation, any sales, gross
receipts, general corporation, tangible or intangible personal property,
privilege, or license taxes (but not including any taxes asserted with respect
to, and as of the date of, the sale of the Contracts to the Issuer or the
issuance and original sale of the Notes or the Certificates, or asserted with
respect to ownership of the Contracts or federal, state or other
45
income taxes, including franchise taxes measured by net income) arising out of
distributions on the Notes or the Certificates and costs and expenses in
defending against the same.
(d) The Servicer agrees to indemnify the Indenture Trustee and the
Owner Trustee for, and to hold them harmless against, any loss, liability or
expense incurred without negligence or bad faith on the part of the Indenture
Trustee or the Owner Trustee, arising out of or in connection with the
acceptance or administration of this Trust and their duties hereunder, including
the costs and expenses of defending against any claim or liability in connection
with the exercise or performance of any of their powers or duties hereunder. The
Servicer agrees to pay or reimburse the Trustees, upon their written request,
for all reasonable expenses, disbursements or advances incurred or made by the
Trustees in connection with the administration of this Trust (including the
reasonable compensatory expenses and disbursements of counsel and of all persons
not regularly in the employ of the Trustees).
(e) Indemnification under this Section shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation.
If the Servicer shall have made any indemnity payments pursuant to this Section
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 Servicer, without interest.
SECTION 8.11. LIMITATION OF LIABILITY OF SERVICER.
(a) Neither the Servicer nor any of the directors, officers, employees
or agents of the Servicer shall be under any liability to the Issuer, the Owner
Trustee, the Indenture Trustee, the Certificateholders or the Noteholders,
except as provided under this Agreement, 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 Servicer
or any such person against any liability that would otherwise be imposed by
reason of willful misfeasance, bad faith or negligence in the performance of
duties or by reason of reckless disregard of obligations and duties under this
Agreement. The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on the advice of counsel or on any document of
any kind, prima facie properly executed and submitted by any Person respecting
any matters arising under this Agreement.
(b) Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the Contracts in accordance
with this Agreement, and that in its opinion may cause it to incur any expense
or liability; PROVIDED, HOWEVER, that the Servicer may undertake any reasonable
action that it may deem necessary or desirable in respect of the Transaction
Documents and the rights and duties of the parties to the Transaction Documents
and the interests of the Certificateholders under the Trust Agreement and the
Noteholders under the Indenture. In such event, the legal expenses and costs of
such action and any liability resulting therefrom shall be expenses, costs and
liabilities of the Servicer and the Servicer will not be entitled to be
reimbursed therefor.
SECTION 8.12. MERGER OR CONSOLIDATION OF SERVICER. Any Person into
which the Servicer may be merged or consolidated, or any corporation, or other
entity resulting from any merger
46
conversion or consolidation to which the Servicer shall be a party, or any
Person succeeding to all or substantially all of the business of the Servicer
(which Person assumes the obligations of the Servicer), shall be the successor
of the Servicer hereunder, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. The Servicer shall give prior written notice of any
such merger or consolidation to which it is a party to the Issuer, the Owner
Trustee, the Indenture Trustee and the Rating Agencies.
SECTION 8.13. SERVICER NOT TO RESIGN. Subject to the provisions of
SECTION 8.03, Servicer shall not resign from the obligations and duties hereby
imposed on it as Servicer under this Agreement except upon determination that
the performance of its duties under this Agreement shall no longer be
permissible under applicable law. Notice of any such determination permitting
the resignation of Servicer shall be communicated to the Owner Trustee and the
Indenture Trustee at the earliest practicable time (and, if such communication
is not in writing, shall be confirmed in writing at the earliest practicable
time) and any such determination shall be evidenced by an Opinion of Counsel to
such effect delivered to the Owner Trustee and the Indenture Trustee
concurrently with or promptly after such notice. No such resignation shall
become effective until the Indenture Trustee shall have assumed the
responsibilities and rights of the predecessor Servicer in accordance with
SECTION 8.04.
SECTION 8.14. APPOINTMENT OF SUBSERVICER. So long as Premier Auto
Finance, Inc. acts as the Servicer, the Servicer may at any time without notice
or consent (a) subcontract substantially all its duties under this Agreement to
any corporation more than 50% of the voting stock of which is owned, directly or
indirectly, by Aon Corporation or (b) perform specific duties as servicer under
this Agreement through other subcontractors; PROVIDED, HOWEVER, that, in each
case, no such delegation or subcontracting shall relieve the Servicer of its
responsibilities with respect to such duties as to which the Servicer shall
remain primarily responsible with respect thereto.
ARTICLE NINE
REPORTS
SECTION 9.01. MONTHLY REPORTS. No later than 10:00 a.m. Chicago,
Illinois time on each Determination Date, the Servicer shall cause the Trustees
and each Rating Agency to receive a Monthly Report.
SECTION 9.02. OFFICER'S CERTIFICATE. On or before January 31 of each
year, the Servicer shall deliver to each Trustee and Rating Agency a certificate
of a Servicing Officer substantially in the form of EXHIBIT C, certifying the
accuracy of the Monthly Reports delivered during the preceding year and that no
Servicer Default or event that with notice or lapse of time or both would become
a Servicer Default has occurred, or if such event has occurred and is
continuing, specifying the event and its status.
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SECTION 9.03. OTHER DATA. In addition, the Depositor and the Servicer
shall, upon the request of the Trustees, Moody's or Standard & Poor's, furnish
the Trustees, Moody's or Standard & Poor's, as the case may be, such underlying
data as may be reasonably requested.
SECTION 9.04. ANNUAL REPORT OF ACCOUNTANTS.
(a) The Servicer shall cause a firm of nationally recognized
independent certified public accountants (the "INDEPENDENT ACCOUNTANTS"), who
may also render other services to the Servicer, the Seller or to the Depositor,
to deliver to the Trustees and each Rating Agency, on or before March 31 (or 90
days after the end of the Servicer's fiscal year, if other than December 31) of
each year, beginning on March 31, 2001, with respect to the twelve months ended
the immediately preceding December 31 (or other applicable date), a statement
(the "ACCOUNTANT'S REPORT") addressed to the Board of Directors of the Servicer
and to the Trustees to the effect that such firm has audited the financial
statements of the direct or indirect parent of the Servicer and issued its
report thereon and that such audit:
(1) was made in accordance with generally accepted auditing
standards, and accordingly included such tests of the accounting
records and such other auditing procedures as such firm considered
necessary in the circumstances;
(2) included an examination of documents and records relating
to the servicing of motor vehicle installment sale contracts under
pooling and servicing agreements substantially similar to one another
(such statement to have attached thereto a schedule setting forth the
pooling and servicing agreements covered thereby, including this
Agreement);
(3) included an examination of the delinquency and loss
statistics relating to the Servicer's portfolio of motor vehicle
installment sale contracts; and
(4) except as described in the statement, disclosed no
exceptions or errors in the records relating to motor vehicle loans
serviced for others that, in the firm's opinion, generally accepted
auditing standards requires such firm to report.
The Accountant's Report shall further state that:
(1) a review in accordance with agreed upon procedures was
made of one randomly selected Monthly Report; and
(2) except as disclosed in the Report, no exceptions or errors
in the Monthly Report so examined were found.
(b) The Accountant's Report shall also indicate that the firm is
independent of the Seller and the Servicer and the Servicer's direct or indirect
parent within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 9.05. ANNUAL STATEMENT OF COMPLIANCE FROM SERVICER. The
Servicer will deliver to the Trustees and each of the Rating Agencies, on or
before January 31 of each year commencing January 31, 2001, an Officer's
Certificate stating that (a) a review of the activities
48
of the Servicer during the prior calendar year and of its performance under this
Agreement was made under the supervision of the officer signing such certificate
and (b) to such officer's knowledge, based on such review, the Servicer has
fully performed all its obligations under this Agreement, or, if there has been
a default in the performance of any such obligation, specifying each such
default known to such officer and the nature and status thereof. A copy of such
certificate may be obtained by any Securityholder by a request in writing to the
Indenture Trustee or Owner Trustee.
SECTION 9.06. MONTHLY REPORTS TO SECURITYHOLDERS. (a) On or before each
Determination Date, the Servicer shall prepare and, concurrently with each
distribution to Certificateholders and Noteholders, deliver to the Trustees and
the Trustees shall cause to be delivered and mailed to each Noteholder and each
Certificateholder at the addresses appearing on the Note Register and
Certificate Register, respectively, a statement as of the related Distribution
Date substantially in the form of EXHIBIT I hereto (the "MONTHLY REPORT")
setting forth:
(i) the amount of distribution allocable to principal of each
Class of the Notes and the amount of distribution allocable to the
Certificate Balance;
(ii) the amount of the distribution allocable to interest on
each Class of Notes and the amount of Certificateholder's interest
distribution;
(iii) the amount of fees payable on such Distribution Date,
separately identifying the Monthly Servicing Fee, the Owner Trustee Fee
and the Indenture Trustee Fee;
(iv) the amount of any Note Interest Carryover Shortfall, Note
Principal Carryover Shortfall, Certificate Interest Carryover Shortfall
and Certificate Principal Carryover Shortfall for the next succeeding
Distribution Date and the change in such amounts from those with
respect to such Distribution Date;
(v) the outstanding principal amount and Note Factor for each
Class of Notes and the Certificate Balance and Certificate Factor, in
each case as of such Distribution Date each after giving effect to the
distribution of principal to each Class of Notes and the Certificates;
(vi) the amount of the distributions described in (i) or (ii)
above payable with funds withdrawn from the Reserve Fund and the amount
remaining in the Reserve Fund after giving effect to all deposits and
withdrawals from the Reserve Fund on such date;
(vii) the amount otherwise distributable to the Class B Notes
or the Certificates that has instead been distributed to one or more
senior Class of Notes on such Distribution Date;
(viii) the amount of Advances made by the Servicer in respect
of the related Contracts and the related Due Period and the amount of
unreimbursed Advances in respect of the related Contracts determined by
the Servicer to be a Defaulted Contract; and
49
(ix) the Aggregate Principal Balance as of the end of the
immediately preceding Due Period.
(b) Within the prescribed period of time for tax reporting purposes
after the end of each calendar year, the Servicer shall prepare and the
Indenture Trustee and Owner Trustee, respectively, shall mail to each Noteholder
or Certificateholder of record at any time during such year a report as to the
aggregate amounts reported pursuant to subsections (i), (ii), (iii) and (iv) of
this Section, attributable to such Noteholder or Certificateholder.
(c) In the event that Virginia Surety Company, Inc.'s long term debt
rating by Standard & Poor's or its claims paying ability rating by A.M. Best is
downgraded from the ratings existing on the Closing Date, the Servicer will
provide written notice thereof to each Rating Agency. Upon receipt of such
notice any of the Rating Agencies may require the Indenture Trustee, or in the
event of the Indenture Trustee's refusal, a third party mutually acceptable to
the Rating Agencies and the Servicer, to confirm certain information in the
Monthly Reports as agreed upon by the Rating Agencies and the Servicer.
ARTICLE TEN
TERMINATION
SECTION 10.01. TERMINATION.
(a) NOTICE. As described in Article Nine of the Trust Agreement, notice
of any termination of the Issuer shall be given by the Servicer to the Owner
Trustee and the Indenture Trustee as soon as practicable after the Servicer has
received notice thereof.
(b) DURATION OF THE POSITION OF THE INDENTURE TRUSTEE FOR THE BENEFIT
OF CERTIFICATEHOLDERS. Notwithstanding (i) the earlier payment in full of all
principal and interest due to the Noteholders under the terms of the Notes of
each Class, (ii) the cancellation of the Notes pursuant to SECTION 2.08 of the
Indenture and (iii) the discharge of the Indenture Trustee's duties under the
Indenture with respect to the Notes, the Indenture Trustee shall continue to act
in the capacity of the Indenture Trustee under the Indenture for the benefit of
the Certificateholders, and the Indenture Trustee, for the benefit of the
Certificateholders, shall comply with its obligations hereunder, as appropriate,
until such time as all distributions in respect of the Certificate Balance and
interest due to the Certificateholders have been paid in full.
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. AMENDMENT.
(a) This Agreement may be amended from time to time by the Depositor,
the Servicer, the Indenture Trustee and the Owner Trustee on behalf of the
Issuer, collectively, with notice to each Rating Agency, but without the consent
of any of the Securityholders, to correct
50
manifest error, to cure any ambiguity, to correct or supplement any provisions
herein which may be ambiguous or inconsistent with any other provision herein or
in any other Transaction Document, as the case may be, or to add any other
provisions with respect to matters or questions arising under this Agreement
that shall not be inconsistent with the provisions of this Agreement; PROVIDED,
HOWEVER that any such action shall not, as evidenced by an Opinion of Counsel,
materially and adversely affect the interests of any Securityholder.
(b) This Agreement may also be amended from time to time by the
Depositor, the Servicer, the Indenture Trustee and the Owner Trustee on behalf
of the Issuer, with the consent of the Noteholders of more than 50% of the
aggregate principal amount of the Class A-1 Notes, Class A-2 Notes, Class A-3
Notes and Class A-4 Notes or, if there are no Class A-1 Notes, Class A-2 Notes,
Class A-3 Notes or Class A-4 Notes outstanding, with the consent of the
Noteholders of more than 50% of the aggregate principal amount of the Class B
Notes or, if there are no Notes outstanding, with the consent of
Certificateholders of more than 50% of the Certificate 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 or the Certificateholders; PROVIDED, HOWEVER, that no such amendment
shall (i) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, collections of payments on the Contracts or distributions which
are required to be made on any Note or Certificate, (ii) change the interest
rate on any Notes or Certificates which such change adversely affects the
priority of payment of principal or interest made to the Noteholders or
Certificateholders or (iii) reduce the aforesaid percentage required to consent
to any such amendment, without the consent of the Noteholders and
Certificateholders then outstanding; and PROVIDED, FURTHER, that no such
amendment or consent shall be effective unless each Rating Agency delivers
written confirmation that such amendment or consent will not cause its
then-current rating on any Class of Notes or Certificates to be qualified,
reduced or withdrawn.
(c) Promptly after the execution of any amendment or consent, the
Indenture Trustee shall furnish written notification of the substance of such
amendment or consent, together with a copy thereof, to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Owner Trustee and the Indenture Trustee, as the case may be, shall forward
written notification, prepared by the Administrator, of the substance of such
amendment or consent to each Certificateholder and Noteholder, respectively. It
shall not be necessary for the consent of Noteholders and Certificateholders
pursuant to SECTION 11.01(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 of evidencing
the authorization by Noteholders and Certificateholders of the execution thereof
shall be subject to such reasonable requirements as the Trustees may prescribe.
(e) Prior to the execution of any amendment to this Agreement, each of
the Indenture Trustee and the Owner Trustee shall be entitled to receive and
rely upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement. The Indenture Trustee and the Owner
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Indenture Trustee's or the Owner Trustee's own rights, duties or
immunities under this Agreement or otherwise.
51
(f) Upon the execution of any amendment or consent pursuant to this
SECTION 11.01, this Agreement shall be modified in accordance therewith, and
such amendment or consent shall form a part of this Agreement for all purposes,
and every holder of Notes and Certificates theretofore or thereafter issued
hereunder shall be bound thereby.
SECTION 11.02. PROTECTION OF TITLE TO ISSUER.
(a) The Servicer 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 Issuer, the Securityholders and the Indenture
Trustee in the Contracts and in the proceeds thereof. The Servicer 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.
(b) Neither the Seller, the Depositor nor the Servicer shall change its
name, identity or corporate structure in any manner that would, could or might
make any financing statement or continuation statement filed in accordance with
SECTION 4.02 seriously misleading within the meaning of Section 9-402(7) of the
UCC, unless it shall have given the Issuer, the Owner Trustee and the Indenture
Trustee at least 30 days' prior written notice thereof and shall have promptly
filed appropriate amendments to all previously filed financing statements or
continuation statements.
(c) The Seller, the Depositor and the Servicer shall give the Issuer,
the Owner Trustee and the Indenture Trustee at least 30 days' prior written
notice of any relocation of the principal executive office of Premier Auto
Finance, Inc., the Depositor and the Servicer (in the case of notice provided by
the Servicer) if, as a result of such relocation, the applicable provisions of
the UCC would require filing of any amendment of any previously filed financing
or continuation statement or of any new financing statement and shall promptly
file any such amendment or 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.
(d) The Servicer shall maintain or cause to be maintained 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 or credited to the
Collection Account in respect of each Contract.
(e) The Servicer shall maintain or cause to be maintained its computer
systems so that, from and after the time of sale under this Agreement of the
Contracts, the Servicer's master computer records (including any backup
archives) that shall refer to a Contract indicate clearly the interest of the
Issuer and the Indenture Trustee in such Contract and that such Contract is
owned by the Issuer and has been pledged to the Indenture Trustee. Indication of
the Issuer's ownership of 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, the related Contract shall have been paid in full or repurchased or
shall have become a Defaulted Contract.
52
(f) If at any time the Depositor or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in motor
vehicle retail installment sale contracts to any prospective purchaser, lender
or other transferee, the Servicer shall give or cause to be given to such
prospective purchaser, lender or other transferee computer tapes, records or
print-outs (including any restored from back-up archives) that, if they shall
refer in any manner whatsoever to any Contract, shall indicate clearly that such
Contract has been sold and is owned by the Issuer and has been pledged to the
Indenture Trustee.
(g) The Servicer shall permit the Indenture Trustee and the Owner
Trustee and their 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.
(h) Upon request, the Servicer shall furnish to the Owner Trustee and
the Indenture Trustee, within five Business Days, a list of all Contracts then
held as part of the Trust Estate, together with a reconciliation of such list to
the List of Contracts and to each of the Monthly Reports furnished before such
request indicating removal of Contracts from the Issuer.
(i) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee and each Rating Agency upon the execution and delivery of this Agreement
and promptly after the execution and delivery of each amendment hereto, 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 Owner
Trustee and the Indenture Trustee and reciting the details of each 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.
SECTION 11.03. 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 the Agreement shall be determined in
accordance with such laws, except that the duties of the Owner Trustee shall be
governed by the laws of the State of Delaware.
SECTION 11.04. NOTICES. All notices, demands, certificates, requests
and communications hereunder ("notices") shall be in writing and shall be
effective (a) upon receipt when sent through the U.S. mails, registered or
certified mail, return receipt requested, postage prepaid, with such receipt to
be effective the date of delivery indicated on the return receipt, or (b) one
Business Day after delivery to an overnight courier, or (c) on the date
personally delivered to an Authorized Officer of the party to which sent, or (d)
on the date transmitted by legible telecopier transmission with a confirmation
of receipt, in all cases addressed to the recipient as follows:
(i) If to the Servicer or Seller:
Premier Auto Finance, Inc.
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx Xxxxx
Telecopier No.: 312/456-1068
53
(ii) If to the Depositor:
Dealer Auto Receivables Corp.
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxxx Xxxxx
Telecopier No.: 312/456-1068
(iii) If to the Indenture Trustee:
The Bank of New York
000 Xxxxxxx Xxxxxx, 00-X
Xxx Xxxx, Xxx Xxxx
Attention: ABS Department
Telecopier No.: 212/815-5544
(iv) If to the Owner Trustee:
Chase Manhattan Bank USA, National
Association
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trustee Administration
Department
Telecopier No.: 302/984-4903
(v) If to Moody's:
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: ABS Monitoring Department
Telecopier No.: (000) 000-0000
(vi) If to Standard & Poor's:
Standard & Poor's Ratings Services, A
Division of The McGraw Hill Companies
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
(vii) If to the Underwriters:
Chase Securities Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
Telecopier No.: (000) 000-0000
54
Each party hereto may, by notice given in accordance herewith to each of the
other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
SECTION 11.05. SEVERABILITY OF PROVISIONS. If one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Notes or
Certificates or the rights of the Holders thereof.
SECTION 11.06. THIRD PARTY BENEFICIARIES. This Agreement will inure to
the benefit of and be binding upon the parties hereto, and their respective
successors and permitted assigns. The Administrator and the Owner Trustee,
individually and on behalf of the Certificateholders are third-party
beneficiaries to this Agreement and are entitled to the rights and benefits
hereunder and may enforce the provisions hereof as if it were a party hereto.
Except as otherwise provided in this Agreement, no other person will have any
right or obligation hereunder.
SECTION 11.07. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall together
constitute but one and the same instrument.
SECTION 11.08. HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 11.09. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE
TRUSTEE.
(a) Notwithstanding anything contained herein to the contrary, this
instrument has been countersigned by Chase Manhattan Bank USA, National
Association, not in its individual capacity but solely in its capacity as Owner
Trustee of the Issuer, and in no event shall Chase Manhattan Bank USA, National
Association, in its individual capacity or any beneficial owner of the Issuer
have any liability for the representations, warranties, covenants, agreements or
other obligations of the Issuer hereunder, as to all of which recourse shall be
had solely to the assets of the Issuer. For all purposes of this Agreement, in
the performance of any duties or obligations of the Issuer hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits of, the terms and
provisions of ARTICLES SIX, SEVEN and EIGHT of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by The Bank of New York, not in its individual
capacity but solely as Indenture Trustee, and in no event shall The Bank of New
York have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer 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 Issuer.
SECTION 11.10. NO BANKRUPTCY PETITION; DISCLAIMER AND SUBORDINATION.
55
(a) The Servicer covenants and agrees that it will not institute
against the Depositor, or the Trust, or solicit or join in or cooperate with or
encourage any other Person in instituting against the Depositor or the Trust,
any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceedings under the laws of the United States or
any state of the United States.
(b) The provisions of this SECTION 11.10 shall be for the third party
benefit of those entitled to rely thereon and shall survive the termination of
this Agreement.
[signature page follows]
56
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
DEALER AUTO RECEIVABLES OWNER TRUST
2000-1
By: Chase Manhattan Bank USA, National Association,
not in its individual capacity but solely as
Owner Trustee on behalf of the Issuer
By: /s/ Xxxxx Xxxxx
-------------------------------------------------
Printed Name: Xxxxx Xxxxx
----------------------------------
Title: Assistant Vice President
-----------------------------------------
DEALER AUTO RECEIVABLES CORP.
By: /s/ Xxxxxxx Xxxxxxxx Xxxxx
-------------------------------------------------
Printed Name: Xxxxxxx Xxxxxxxx Xxxxx
----------------------------------
Title: EVP & CFO
-----------------------------------------
PREMIER AUTO FINANCE, INC., as Servicer
By: /s/ Xxxxxxx X. Van Over
-------------------------------------------------
Printed Name: Xxxxxxx X. Van Over
----------------------------------
Title: EVP & COO
-----------------------------------------
THE BANK OF NEW YORK, not in its
individual capacity but solely as Indenture Trustee
By: /s/ Xxxxx Xxxxxxx
-------------------------------------------------
Printed Name: Xxxxx Xxxxxxx
----------------------------------
Title: Assistant Treasurer
-----------------------------------------
EXHIBIT A
[Form of Assignment]
In accordance with the Sale and Servicing Agreement (the "SALE AND
SERVICING AGREEMENT") dated as of August 24, 2000 made by and between the
undersigned, as Depositor ("DEPOSITOR"), Premier Auto Finance, Inc., as
Servicer, The Bank of New York, as Indenture Trustee and Dealer Auto
Receivables Owner Trust 2000-1 (the "Trust"), as assignee thereunder, the
undersigned does hereby sell, transfer, convey and assign, set over and
otherwise convey to the Trust (i) all the right, title and interest of the
Depositor in and to the Contracts listed on the List of Contracts in effect
on the Closing Date (including, without limitation, all security interests
and all rights to receive scheduled payments and prepayments which are
collected pursuant thereto on or after the Cutoff Date, including any
liquidation proceeds therefrom, but excluding any rights to receive scheduled
payments due on or after, but received prior to, the Cutoff Date), (ii) all
security interests in each Financed Vehicle, (iii) all rights of the
Depositor to proceeds from any claims on theft, physical damage, credit life
or disability insurance or other individual insurance policy relating to any
such Contract, an Obligor or a Financed vehicle securing such Contract, (iv)
all documents contained in the related Contract Files, (v) all rights (but
not the obligations) of the Depositor against any originating dealer or third
party (i.e. the originators of the Contracts) under any agreements between
the Seller and such originating dealers or other third party, (vi) all rights
of the Depositor in the Lockbox, the Lockbox Account, related Lockbox
Agreement, the Concentration Account and related Concentration Account
Agreement to the extent they relate to such Contracts, (vii) any rebates of
premiums and other amounts relating to insurance policies, extended service
contracts, other repair agreements or any other items financed under such
Contract, (viii) all rights (but not the obligations) of the Depositor under
the Transfer and Sale Agreement, including but not limited to the Depositor's
rights under ARTICLE V thereof, (ix) all rights of the Depositor under the
Performance Guarantee, (x) the remittances, deposits and payments made into
the Trust Accounts from time to time and amounts in the Trust Accounts from
time to time (and any investments of such amounts), and (xi) all proceeds and
products of the foregoing.
This Assignment is made pursuant to and in reliance upon the
representation and warranties on the part of the undersigned contained in
Article III of the Sale and Servicing Agreement and no others.
Capitalized terms used herein but not otherwise defined shall have
the meanings assigned to such terms in the Sale and Servicing Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be
duly executed this 24th day of August, 2000.
DEALER AUTO RECEIVABLES CORP.
By:
---------------------------------
Printed Name:
Title:
A-1
EXHIBIT B
[Form of Closing Certificate of Depositor]
DEALER AUTO RECEIVABLES CORP.
PRESIDENT'S CERTIFICATE
The undersigned certifies that he is President of Dealer Auto
Receivables Corp., a Delaware corporation (the "DEPOSITOR"), and that as such
is duly authorized to execute and deliver this certificate on behalf of the
Depositor in connection with the Sale and Servicing Agreement (the
"AGREEMENT") dated as of August 24, 2000 (the "EFFECTIVE DATE") by and among
the Depositor, The Bank of New York (the "INDENTURE TRUSTEE"), as Indenture
Trustee, Premier Auto Finance, Inc. ("PREMIER"), as Servicer, and Dealer Auto
Receivables Owner Trust 2000-1 ("ISSUER") (all capitalized terms used herein
without definition have the respective meanings set forth in the Agreement),
and further certifies as follows:
(1) Attached hereto as EXHIBIT I is a true and correct copy of
the Articles of Incorporation of the Depositor, together with all
amendments thereto as in effect on the date hereof.
(2) There has been no other amendment or other document filed
affecting the Articles of Incorporation of the Depositor since _____,
and no such amendment has been authorized by the Board of Directors or
shareholders of the Depositor.
(3) Attached hereto as EXHIBIT II is a Certificate of the
Secretary of State of the State of Delaware dated August __, 2000
stating that the Depositor is duly incorporated under the laws of the
State of Delaware and is in good standing.
(4) Attached hereto as EXHIBIT III is a true and correct copy
of the By-laws of the Depositor, as amended, which were in full force
and effect on August 1, 2000, and at all times subsequent thereto.
(5) Attached hereto as EXHIBIT IV is a true and correct copy
of resolutions adopted pursuant to the unanimous written consent of the
Board of Directors of the Depositor relating to the execution, delivery
and performance of the Agreement; the Transfer and Sale Agreement dated
as of the Effective Date between the Depositor and Premier Auto
Finance, L.P.; the Trust Agreement dated as of the Effective Date
between the Depositor and the Chase Manhattan Bank USA, National
Association (the "OWNER TRUSTEE"), as Owner Trustee; the Administration
Agreement dated as of the Effective Date among the Depositor, the
Issuer, the Indenture Trustee and Premier, as Administrator; the
Underwriting Agreement dated August 17, 2000 among the Depositor,
Premier, Virginia Surety Company and Chase Securities Inc. as
representative of the underwriters (collectively, the "PROGRAM
AGREEMENTS"). Said resolutions have not been amended, modified,
annulled or revoked, and are on the date hereof in full force and
B-1
effect and are the only resolutions relating to these matters which
have been adopted by the Board of Directors.
(6) To the best of my knowledge after reasonable
investigation, there has been no material adverse change in the
condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Depositor, whether or not arising in the
ordinary course of business since August 17, 2000.
(7) To the best of my knowledge after reasonable
investigation, all federal, state and local taxes of the Depositor due
and owing as of the date hereof have been paid.
(8) All representations and warranties of the Depositor
contained in the Program Agreements or any other related documents, or
in any document, certificate or financial or other statement delivered
in connection therewith are true and correct as of the date hereof.
(9) There is no action, investigation or proceeding pending
or, to our knowledge, threatened against the Depositor before any
court, administrative agency or other tribunal (a) asserting the
invalidity of the Program Agreements; (b) seeking to prevent the
consummation of any of the transactions contemplated by the Program
Agreements; or (c) which is likely materially and adversely to affect
the Depositor's performance of its obligations under, or the validity
or enforceability of, the Program Agreements.
(10) No consent, approval, authorization or order of, and no
notice to or filing with, any governmental agency or body or state or
federal court is required to be obtained by the Depositor for the
Depositor's consummation of the transactions contemplated by the
Program Agreements, except such as have been obtained or made and such
as may be required under the blue sky laws of any jurisdiction in
connection with the issuance and sale of the Certificates.
(11) The Depositor is not a party to any agreements or
instruments evidencing or governing indebtedness for money borrowed or
by which the Depositor or its property is bound (other than the Program
Agreements). Neither Premier Auto Finance L.P.'s transfer and
assignment of the Contract Assets to the Depositor, the Depositor's
concurrent transfer and assignment of the Trust Corpus to the Trust,
nor the concurrent pledge of the Collateral by the Trust to the
Indenture Trustee nor the issuance and sale of the Certificates and the
Notes, nor the execution and delivery of the Program Agreements, nor
the consummation of any other of the transactions contemplated therein,
will violate or conflict with any agreement or instrument to which the
Depositor is a party or by which it is otherwise bound.
(12) In connection with the transfer of Contracts and related
collateral contemplated in the Agreement, (a) the Depositor has not
made such transfer with actual intent to hinder, delay or defraud any
creditor of the Depositor, and (b) the Depositor has not received less
than a reasonably equivalent value in exchange for such transfer, is
not on the date thereof insolvent (nor will become insolvent as a
result thereof), is not
B-2
engaged (or about to engage) in a business or transaction for which it
has unreasonably small capital, and does not intend to incur or believe
it will incur debts beyond its ability to pay when matured.
(13) Each of the agreements and conditions of the Depositor to
be performed on or before the Closing Date pursuant to the Program
Agreements have been performed in all material respects.
(14) The undersigned holds the position set forth under
his/her name below. The undersigned has diligently investigated and has
taken all steps reasonably necessary to verify the information set
forth in this Certificate. The undersigned has examined such corporate
records, and has made such inquiries of officers, directors, executives
and financial advisers of DARC as the undersigned has deemed reasonable
or necessary to ensure the accuracy of the representations set forth
herein.
It is understood and acknowledged that the undersigned is executing
this Certificate not in an individual capacity but solely in his/her capacity
as an officer and is without any personal liability as to the matters
contained in this Certificate.
* * * *
B-3
IN WITNESS WHEREOF, I have affixed my signature hereto this 24th day
of August 2000.
DEALER AUTO RECEIVABLES CORP.
By:
---------------------------
Printed Name:
---------
Title: President
EXHIBIT C-1
[Form of Closing Certificate of Servicer]
PREMIER AUTO FINANCE, INC.
PRESIDENT'S CERTIFICATE
The undersigned certifies that he is President of Premier Auto
Finance, Inc. ("PREMIER"), and that as such is duly authorized to execute and
deliver this certificate on behalf of Premier, as Servicer, in connection
with the Sale and Servicing Agreement (the "SALE AND SERVICING AGREEMENT")
dated as of August 24, 2000 (the "EFFECTIVE DATE") by and among Premier, as
Servicer, Dealer Auto Receivables Corp. ("DARC"), The Bank of New York, as
Indenture Trustee and Dealer Auto Receivables Owner Trust 2000-1 ("ISSUER"),
(all capitalized terms used herein without definition having the respective
meanings set forth in the Sale and Servicing Agreement), and further
certifies as follows:
(1) Attached hereto as EXHIBIT I is a true and correct copy of
the Articles of Incorporation of Premier, together with all amendments
thereto as in effect on the date hereof.
(2) There has been no other amendment or other document filed
affecting the Articles of Incorporation of Premier since ____________,
and no such amendment has been authorized by the Board of Directors or
shareholders of Premier.
(3) Attached hereto as EXHIBIT II is a Certificate of the
Secretary of State of the State of Delaware dated August __, 2000
stating that Premier is duly incorporated under the laws of the State
of Delaware and is in good standing.
(4) Attached hereto as EXHIBIT III is a true and correct copy
of the By-laws of Premier which were in full force and effect on August
1, 2000 and at all times subsequent thereto.
(5) Attached hereto as EXHIBIT IV is a true and correct copy
of resolutions adopted pursuant to a unanimous written consent of the
Board of Directors of Premier and relating to the authorization,
execution, delivery and performance of the Sale and Servicing
Agreement; the Underwriting Agreement dated August 17, 2000 among
Premier, DARC, Virginia Surety Company, Inc. and Chase Securities Inc.
as representative of the underwriters (the "UNDERWRITING AGREEMENT");
and the Administration Agreement dated August 24, 2000 among Premier,
DARC, the Issuer and The Bank of New York, as Indenture Trustee (the
"INDENTURE TRUSTEE") (the "ADMINISTRATION AGREEMENT"). Said resolutions
have not been amended, modified, annulled or revoked, and are on the
date hereof in full force and effect and are the only resolutions
relating to these matters which have been adopted by the Board of
Directors.
C-1-1
(6) No event with respect to Premier has occurred and is
continuing which would constitute a Servicer Default or an event that,
with notice or the passage of time, would constitute a Servicer Default
under the Sale and Servicing Agreement. To the best of my knowledge
after reasonable investigation, there has been no material adverse
change in the condition, financial or otherwise, or the earnings,
business affairs or business prospects of Premier, whether or not
arising in the ordinary course of business, since August 17, 2000.
(7) To the best of my knowledge after reasonable
investigation, all federal, state and local taxes of Premier due and
owing as of the date hereof have been paid.
(8) All representations and warranties of Premier contained in
the Sale and Servicing Agreement, the Underwriting Agreement and the
Administration Agreement (collectively, the "PROGRAM AGREEMENTS") or in
any document, certificate or financial or other statement delivered in
connection therewith are true and correct as of the date hereof.
(9) There is no action, investigation or proceeding pending
or, to my knowledge, threatened against Premier before any court,
administrative agency or other tribunal (a) asserting the invalidity of
any Program Agreement to which Premier is a party; or (b) which is
likely materially and adversely to affect Premier's performance of its
obligations under, or the validity or enforceability of, the Program
Agreements.
(10) No consent, approval, authorization or order of, and no
notice to or filing with, any governmental agency or body or state or
federal court is required to be obtained by Premier for Premier's
consummation of the transactions contemplated by the Program
Agreements, except such as have been obtained or made and such as may
be required under the blue sky laws of any jurisdiction in connection
with the issuance and sale of the Notes or Certificates.
(11) SCHEDULE A hereto contains a complete list of all
material agreements or instruments evidencing or governing indebtedness
for money borrowed to which Premier is a party or by which Premier or
its property is bound. Neither the Seller's transfer and assignment of
the Contract Assets to DARC, DARC's concurrent assignment of the Trust
Corpus to the Trust, nor the concurrent assignment by the Trust of the
Collateral to the Indenture Trustee, nor the issuance and sale of the
Notes or Certificates or the entering into of the Program Agreements,
nor the consummation of any other of the transactions contemplated
therein, will violate or conflict with any agreement or instrument to
which Premier or the Seller is a party or by which it is otherwise
bound.
(12) The sole shareholder of Premier is Aon Credit Services
Corporation, a Delaware corporation, which has its chief executive
office and only office in Chicago, Illinois, and has no other offices
in any other state.
(13) Each of the agreements and conditions of Premier to be
performed or satisfied on or before the Closing Date under the Program
Agreements has been performed or satisfied in all material respects.
C-1-2
(14) The undersigned holds the position set forth under
his/her name below. The undersigned has diligently investigated and has
taken all steps reasonably necessary to verify the information set
forth in this Certificate. The undersigned has examined such corporate
records, and has made such inquiries of officers, directors, executives
and financial advisers of Premier as the undersigned has deemed
reasonable or necessary to ensure the accuracy of the representations
set forth herein.
It is understood and acknowledged that the undersigned is
executing this Certificate not in an individual capacity but solely in
his/her capacity as an officer and is without any personal liability as
to the matters contained in this Certificate.
* * * * * *
C-1-3
IN WITNESS WHEREOF, I have affixed my signature hereto this
24th day of August, 2000.
PREMIER AUTO FINANCE, INC.
By:
-----------------------
Printed Name:
Title: President
EXHIBIT C-2
[Form of Closing Certificate of Seller]
PREMIER AUTO FINANCE, L.P.
GENERAL PARTNER'S CERTIFICATE
The undersigned certifies that he is President of The Auto Conduit
Corporation ("TACC"), the sole general partner of Premier Auto Finance, L.P.
("PREMIER"), and that as such is duly authorized to execute and deliver this
certificate on behalf of Premier, as Seller, in connection with the Transfer and
Sale Agreement dated as of the Effective Date (the "TRANSFER AND SALE
AGREEMENT") by and between Premier and Dealer Auto Receivables Corp. ("DARC")
(all capitalized terms used herein without definition having the respective
meanings set forth in Sale and Servicing Agreement (the "SALE AND SERVICING
AGREEMENT") dated as of August 1, 2000 (the "EFFECTIVE DATE") by and among
Premier, as Servicer, DARC, The Bank of New York, as Indenture Trustee and
Dealer Auto Receivables Owner Trust 2000-1 ("ISSUER") and further certifies as
follows:
(1) Attached hereto as EXHIBIT I is a true and correct copy of
the Certificate of Limited Partnership of Premier, together with all
amendments thereto as in effect on the date hereof.
(2) There has been no other amendment or other document filed
affecting the Certificate of Limited Partnership of Premier since
____________, and no such amendment has been authorized by TACC or
limited partners of Premier.
(3) Attached hereto as EXHIBIT II is a Certificate of the
Secretary of State of the State of Illinois dated August __, 2000
stating that Premier is duly formed under the laws of the State of
Illinois and is in good standing.
(4) Attached hereto as EXHIBIT III is a true and correct copy
of the Limited Partnership Agreement of Premier which was in full force
and effect on August 1, 2000 and at all times subsequent thereto.
(5) Attached hereto as EXHIBIT IV is a true and correct copy
of resolutions adopted pursuant to a unanimous written consent of the
Board of Directors of TACC and relating to the authorization,
execution, delivery and performance of the Transfer and Sale Agreement.
Said resolutions have not been amended, modified, annulled or revoked,
and are on the date hereof in full force and effect and are the only
resolutions relating to these matters which have been adopted by TACC.
(6) Attached hereto as EXHIBIT VI is a Certificate of the
Secretary of State of the State of Delaware dated August __, 2000
stating that DARC is duly incorporated under the laws of the State of
Delaware and is in good standing.
C-2-1
(7) Attached hereto as EXHIBIT VII is a true and correct copy
of the By-laws of DARC which were in full force and effect on August 1,
2000 and at all times subsequent thereto.
(8) To the best of my knowledge after reasonable
investigation, all federal, state and local taxes of Premier due and
owing as of the date hereof have been paid.
(9) All representations and warranties of Premier contained in
the Transfer and Sale Agreement (collectively, the "PROGRAM
AGREEMENTS") or in any document, certificate or financial or other
statement delivered in connection therewith are true and correct as of
the date hereof.
(10) There is no action, investigation or proceeding pending
or, to my knowledge, threatened against Premier before any court,
administrative agency or other tribunal (a) asserting the invalidity of
any Program Agreement to which Premier is a party; or (b) which is
likely materially and adversely to affect Premier's performance of its
obligations under, or the validity or enforceability of, the Program
Agreements.
(11) No consent, approval, authorization or order of, and no
notice to or filing with, any governmental agency or body or state or
federal court is required to be obtained by Premier for Premier's
consummation of the transactions contemplated by the Program
Agreements.
(12) SCHEDULE A hereto contains a complete list of all
material agreements or instruments evidencing or governing indebtedness
for money borrowed to which Premier is a party or by which Premier or
its property is bound. Neither the Premier's transfer and assignment of
the Contract Assets to DARC, DARC's concurrent transfer and assignment
of the Trust Corpus to the Trust, nor the concurrent pledge by the
Trust of the Collateral to the Indenture Trustee, nor the issuance and
sale of the Notes or Certificates or the entering into of the Program
Agreements, nor the consummation of any other of the transactions
contemplated therein, will violate or conflict with any agreement or
instrument to which Premier is a party or by which it is otherwise
bound.
(13) In connection with the transfers of Contracts and related
assets contemplated in the Transfer and Sale Agreement, (a) Premier has
not made such transfer with actual intent to hinder, delay or defraud
any creditor of Premier and (b) Premier has not received less than a
reasonably equivalent value in exchange for such transfer, is not on
the date hereof insolvent (nor will Premier become insolvent as a
result thereof), is not engaged (or about to engage) in a business or
transaction for which it has unreasonably small capital, and does not
intend to incur or believe it will incur debts beyond its ability to
pay when matured.
(14) Each of the agreements and conditions of Premier to be
performed or satisfied on or before the Closing Date under the Program
Agreements has been performed or satisfied in all material respects.
C-2-2
(15) Each Contract being transferred pursuant to the Transfer
and Sale Agreement is evidenced by a written agreement providing for a
repayment obligation as well as a security interest in the related
Financed Vehicle securing such obligation, and conforms as to these
matters in all material respects with the form of written Contract
provided as EXHIBIT A hereto (with such minor variations as to specific
terms as may be required or deemed desirable in respect of the laws or
requirements of particular states).
(16) Premier has not executed for filing any UCC financing
statements listing the Contract Assets as collateral other than
financing statements relating to the transactions contemplated in the
Transfer and Sale Agreement and in the agreements listed on SCHEDULE A
hereto.
(17) The undersigned holds the position set forth under
his/her name below. The undersigned has diligently investigated and has
taken all steps reasonably necessary to verify the information set
forth in this Certificate. The undersigned has examined such corporate
records, and has made such inquiries of officers, directors, executives
and financial advisers of Premier as the undersigned has deemed
reasonable or necessary to ensure the accuracy of the representations
set forth herein.
It is understood and acknowledged that the undersigned is
executing this Certificate not in an individual capacity but solely in
his/her capacity as an officer and is without any personal liability as
to the matters contained in this Certificate.
* * * * * *
C-2-3
IN WITNESS WHEREOF, I have affixed my signature hereto this
24th day of August, 2000.
PREMIER AUTO FINANCE, L.P.
By: THE AUTO CONDUIT
CORPORATION,
Its General Partner
By:
-----------------------------
Printed Name:
Title: President
EXHIBIT D
[Form of Opinion of Counsel for Depositor
Regarding General Corporate Matters
(Including Perfection Opinion)]
See Attached
D-1
EXHIBIT E
[Form of Opinion of Counsel for Trust
Depositor Regarding the "TRUE SALE" Nature
of the Transaction]
See Attached
E-1
EXHIBIT F
[Form of Opinion of Counsel for Trust
Depositor Regarding Non-consolidation]
See Attached
F-1
EXHIBIT G
[Form of Certificate Regarding Repurchased Contracts]
Premier Auto Finance, Inc.
Certificate Regarding Repurchased Contracts
The undersigned certifies that he is the [______________] of Premier
Auto Finance, Inc., a Delaware corporation (the "SERVICER"), and that as such is
duly authorized to execute and deliver this certificate on behalf of the
Servicer pursuant to SECTION 7.07 of the Sale and Servicing Agreement (the
"AGREEMENT") dated as of August ___, 2000 by and among Dealer Auto Receivables
Corp., as Depositor, the Servicer, The Bank of New York, as Indenture Trustee,
and Dealer Auto Receivable Owner Trust 2000-1 (all capitalized terms used herein
without definition having the respective meanings specified in the Agreement),
and further certifies that:
1. The Contracts on the attached schedule are to be repurchased
on the date hereof pursuant to [SECTION 7.05 or SECTION 7.07]
of the Agreement and [SECTION 5.01 or SECTION 5.02] of the
Transfer and Sale Agreement.
2. Upon deposit of the Repurchase Price for such Contracts, such
Contracts may, pursuant to [SECTION 7.05 or SECTION 7.07] of
the Agreement, be assigned by the Issuer to the Seller.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ______
day of _____________________.
PREMIER AUTO FINANCE, INC.
By:
-------------------------------
Printed Name:
Title:
G-1
EXHIBIT H
[List of Contracts]
See Attached.
H-1
EXHIBIT I
[Form of Monthly Report to Noteholders And Certificateholders]
Dealer Auto Receivables Owner Trust 2000-1
$190,000,000.00 6.69% Dealer Auto Receivables Asset-Backed Notes, Class A-1
$274,000,000.00 7.01% Dealer Auto Receivables Asset-Backed Notes, Class A-2
$168,000,000.00 7.07% Dealer Auto Receivables Asset-Backed Notes, Class A-3
$83,251,000.00 7.12% Dealer Auto Receivables Asset-Backed Notes, Class A-4
$24,470,000.00 7.46% Dealer Auto Receivables Asset-Backed Notes, Class B
$13,175,591.56 7.93% Dealer Auto Receivables Asset-Backed Certificates
Monthly Report
For the [ ] Distribution Date
A. Calculation of Available Amounts
1. Available Principal (as defined in Article I of the
Sale and Servicing Agreement) $____________
2. Available Interest (as defined in Article I of the Sale
and Servicing Agreement) $____________
3. Available Amounts (1. plus 2.) $____________
B. Calculation of Principal Distributable Amount (as defined in
Article I of the Sale and Servicing Agreement) $____________
C. Calculation of Note Monthly Principal Distributable Amount $____________
1. Note Percentage for such Distribution Date
(a) for each Distribution Date to but
excluding the Distribution Date on which the
principal amount of the Class B Notes is
reduced to zero 100.00%
(b) after the principal amount of the
Class B Notes have been reduced to zero 0.00%
2. Principal Distributable Amount (from B) $____________
I-1
3. Note Monthly Principal Distributable Amount for
(a) Class A-1 Notes $____________
(b) Class A-2 Notes $____________
(c) Class A-3 Notes $____________
(d) Class A-4 Notes $____________
(e) Class B Notes $____________
(f) Note Principal Carryover Shortfall $____________
D. Calculation of Note Monthly Interest Distributable Amount
1. Class A-1 Interest Rate 6.69%
2. Class A-2 Interest Rate 7.01%
3. Class A-3 Interest Rate 7.07%
4. Class A-4 Interest Rate 7.12%
5. Class B Interest Rate 7.46%
6. The Class A-1 Note Interest Rate times the Class A-1 Note
Balance times the number of days from and including the
immediately preceding Distribution Date (or from and
including the Closing Date with respect to the first
Distribution Date) to but excluding the next Distribution
Date divided by 360 $_____________
7. One-twelfth of the Class A-2 Note Interest Rate times the
Class A-2 Note Balance from and including the fifteenth day
of the month based on a 360-day year of 12 months of 30 days
each (or from and including the Closing Date with respect to
the first Distribution Date) to but excluding the fifteenth
day of the month of the current Distribution Date $_____________
I-2
8. One-twelfth of the Class A-3 Note Interest Rate times the
Class A-3 Note Balance from and including the fifteenth day
of the month based on a 360-day year of 12 months of 30 days
each (or from and including the Closing Date with respect to
the first Distribution Date) to but excluding the fifteenth
day of the month of the current Distribution Date $_____________
9. One-twelfth of the Class A-4 Note Interest Rate times the
Class A-4 Note Balance from and including the fifteenth day
of the month based on a 360-day year of 12 months of 30 days
each (or from and including the Closing Date with respect to
the first Distribution Date) to but excluding the fifteenth
day of the month of the current Distribution Date $_____________
10. One-twelfth of the Class B Note Interest Rate times the Class
B Note Balance from and including the fifteenth day of the
month based on a 360-day year of 12 months of 30 days each
(or from and including the Closing Date with respect to the
first Distribution Date) to but excluding the fifteenth day
of the month of the current Distribution Date $_____________
11. Aggregate Interest Carryover Shortfall for each Class for such
Distribution Date $_____________
12. Note Monthly Interest Distributable Amount (the sum of items
X.0, X.0, X.0, X.0, X.00 xxx X.00 $_____________
E. Calculation of Note Distributable Amount (sum of C.3(f) plus D.12.) $_____________
I-3
F. Calculation of Certificate Principal Distributable Amount $____________
1. Certificate Balance $____________
2. Principal Distributable Amount
3. Certificate Percentage for each respective Distribution Date
3(a). for each Distribution Date to but excluding the Distribution
Date on which the Principal Amount of the Class B Notes is
reduced to zero 0.00%
3(b). on the Distribution Date on which the Principal Amount of the
Class B Notes is reduced to zero ____%
3(c). thereafter 100.00%
4(a). Principal Distributable Amount multiplied by the Certificate
Percentage for such Distribution Date $____________
4(b). Certificate Principal Carryover Shortfall for such Distribution
Date $____________
5. Certificate Principal Distributable Amount (the sum of 4.(a)
and 4.(b)) $____________
G. Calculation of Certificate Interest Distributable Amount
1. Certificate Pass-Through Rate 7.93%
2(a). One-twelfth of the Certificate Pass-Through Rate times the
Certificate Balance on the immediately preceding Distribution
Date, after giving effect to all payments of principal to the
Certificateholders and such preceding Distribution Date (or in
case of the first Distribution Date on the original Principal
Amount of the Certificates) based on a 360-day year of 12
months of 30 days each. $__________
2(b). Certificate Interest Carryover Shortfall for such Distribution
Date $__________
3. Certificate Interest Distributable Amount (sum of 2.(a) and
2.(b)) $__________
H. Calculation of Certificate Distributable Amount (sum of F.5 and G.3) $__________
I-4
I. Fees
1. The Monthly Servicing Fee for such Distribution Date (1/12
of the product of 1% and the Aggregate Principal Balance of
the Contracts as of the beginning of the preceding
Distribution Date) $____________
2. Late Payment Penalty Fees for such Distribution Date $____________
3. Extension Fees for such Distribution Date $____________
4. Indenture Trustee Fee for such Distribution Date $____________
5. Owner Trustee Fee for such Distribution Date $_____________
J. Calculation of the Available Amounts for such Distribution Date
1. The amount of funds deposited into the Collection Account
pursuant to SECTION 5.05(b) of the Sale and Servicing
Agreement with respect to the related Due Period $_____________
a. All amounts received by the Indenture
Trustee or the Servicer with respect to principal
and interest on the Contracts, as well as Late
Payment Penalty Fees and Extensions Fees for the
related Due Period $_____________
b. All Net Liquidation Proceeds $_____________
c. The aggregate of the Repurchase Prices for
Contracts required to be repurchased by the Depositor
as described in SECTION 7.05 of the Sale and Servicing
Agreement $_____________
d. All Advances made by Servicer pursuant to
SECTION 7.02 of the Sale and Servicing Agreement $_____________
e. All amounts paid by the Seller in connection
with an optional repurchase of the Contracts described
in SECTION 7.07 of the Sale and Servicing Agreement $_____________
I-5
f. All amounts received in respect of
interest, dividends, gains, income and earnings on
investments of funds in the Trust Accounts as
contemplated in SECTION 5.05(b) of the Sale and
Servicing Agreement $_____________
g. Total amount of funds deposited into the
Collection Account pursuant to SECTION 5.05(b) (the
sum of a. through g.) $_____________
2. The amount of funds permitted to be withdrawn from the
Collection Account pursuant to clauses (i) through (iii) of
SECTION 7.03(a) of the Sale and Servicing Agreement with
respect to the related Due Period $_____________
a. Amounts to be paid to the Servicer as the
Reimbursement Amount in accordance with SECTION 7.02
of the Sale and Servicing Agreement $_____________
b. Amounts to be paid to the Servicer in respect
to the Servicing Fee for the related Due Period $_____________
c. Amounts to be paid to the Indenture Trustee
in respect of the Indenture Trustee Fee for the
related Due Period $_____________
d. Amounts to be paid to the Owner Trustee in
respect of the Owner Trustee Fee for the related Due
Period $_____________
e. Total amount of funds permitted to be
withdrawn from the Collection Account pursuant to
clauses (i) through (iii) SECTION 7.03(a) of the Sale
and Servicing Agreement with respect to the related
Due Period (sum of a. through d.) $_____________
3. The Available Amounts (not including amounts from Reserve
Fund Account) for such Distribution Date available to pay
Note Distributable Amounts and Certificate Distributable
Amounts (1(h) minus 2(e)) $____________
I-6
4. The Available Amounts otherwise distributable to the
Certificateholders that will be distributed to the
Noteholders on such Distribution Date $____________
K. The shortfall of Available Amounts for such Distribution Date to pay
either the Note Distributable Amount or the Certificate Distributable
Amount (the Available Amounts for such Distribution Date minus the sum
of the Note Distributable Amount as set forth in E. and the
Certificate Distributable Amount as set forth in H.) $____________
L. The amount to be withdrawn from the Reserve Fund on such Distribution
Date to cover the Note Interest Distributable Amount $____________
M. The amount to be withdrawn from the Reserve Fund on such Distribution
Date to cover the Certificate Interest Distributable Amount $____________
N. The amount to be withdrawn from the Reserve Fund on such Distribution
Date to cover the Note Principal Distributable Amount $____________
O. The amount to be withdrawn from the Reserve Fund on such Distribution
Date to cover the Certificate Principal Distributable Amount $____________
P. Interest Earnings on the Reserve Fund. $____________
Q. The amount on deposit in the Reserve Fund after giving
effect to deposits and withdrawals therefrom on such Distribution Date $____________
I-7
R. The Specified Reserve Fund Amount for such Distribution Date
will be an amount equal to the lesser of (i) the aggregate unpaid
principal balance of the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes, the Class A-4 Notes and the Class B Notes and the
Certificate Balance as of such Distribution Date, and (ii) the greater
of:
(a) 4.25% of the aggregate unpaid principal balance
of the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes, the Class A-4 Notes and the Class B Notes and the
Certificate Balance on such Distribution Date, except that if
a Reserve Fund Trigger Event shall have occurred and be
continuing on such Distribution Date, then the percentage of
the aggregate unpaid principal balance of the Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes, the Class
A-4 Notes and the Class B Notes and the Certificate Balance
referred to in this clause (a), shall be equal to 6.50%; and
(b) 1.00% of the Aggregate Principal Balance as
of the Cutoff Date. $____________
S. The Pool Factor
1. The Class A-1 Note Factor immediately before such Distribution
Date ____________
2. The Class A-2 Note Factor immediately before such Distribution
Date ____________
3. The Class A-3 Note Factor immediately before such Distribution
Date ____________
4. The Class A-4 Note Factor immediately before such Distribution
Date ____________
5. The Class B Note Factor immediately before such Distribution
Date ____________
6. The Certificate Factor immediately before such Distribution
Date ____________
7. The Class A-1 Note Factor immediately after such Distribution
Date ____________
I-8
8. The Class A-2 Note Factor immediately after such Distribution
Date ____________
9. The Class A-3 Note Factor immediately after such Distribution
Date ____________
10. The Class A-4 Note Factor immediately after such Distribution
Date ____________
11. The Class B Note Factor immediately after such Distribution
Date ____________
12. The Certificate Factor immediately after such Distribution Date ____________
T. Delinquent Contracts
1. 31-59 Days #______ $____________
2. 60-89 Days #______ $____________
3. 90 or More Days #______ $____________
U. Defaulted Contracts
1. Total Defaulted Contracts #______ $____________
2. Identity (attach)
3. Liquidation proceeds for the Due Period $____________
4. Liquidation expenses for the Due Period $____________
5. Net Liquidation Proceeds for the Due Period $____________
6. Net Liquidation Losses for the Due Period $____________
V. Advances
1. Unreimbursed Advances prior to such Distribution Date $____________
2. Amount paid to Servicer on such Distribution Date to reimburse
Servicer for such unreimbursed Advances $____________
I-9
3. Amount of Delinquent Interest for the related Due Period $____________
4. Amount of new Advances on such Distribution Date (if such
amount is less than the amount of Delinquent Interest,
attach the certificate required by SECTION 7.02 of the Sale
and Servicing Agreement) $____________
5. Total of unreimbursed Advances after new Advances on such
Distribution Date $____________
W. Repurchased Contracts
1. Number of Contracts to be repurchased pursuant to SECTION 7.07
of the Sale and Servicing Agreement $____________
2. Principal Amount of such Contracts $____________
3. Related Repurchase Price of such Contracts $____________
X. Contracts
1. Number of Contracts as of beginning of Due Period $____________
2. Principal Balance of Contracts as of beginning of Due Period $____________
3. The weighted average Contract Rate of the Contracts as of the
beginning of the Due Period $____________
4. The weighted average remaining term to maturity of the
Contracts as of the beginning of the Due Period $____________
5. Number of Contracts as of end of Due Period $____________
6. Principal Balance of Contracts as of end of Due Period $____________
7. The weighted average Contract Rate of the Contracts as of the
end of the Due Period $____________
8. The weighted average remaining term to maturity of the
Contracts as of the end of the Due Period $____________
I-10
EXHIBIT J
[Seller's Representations and Warranties]
REPRESENTATIONS AND WARRANTIES REGARDING EACH CONTRACT. The Seller
represents and warrants as to each Contract as of the Closing Date that:
(a) LIST OF CONTRACTS. The information set forth in the List
of Contracts is true, complete and correct in all material respects as
of the Cutoff Date.
(b) PAYMENTS. As of the Cutoff Date, the most recent scheduled
payment with respect to any Contract either had been made or was not
delinquent for more than 30 days. To the best of the Seller's
knowledge, all payments made on each Contract were made by or on behalf
of the respective Obligor.
(c) NO WAIVERS. As of the Closing Date, the terms of the
Contracts have not been waived, altered or modified in any respect,
except by instruments or documents included in the related Contract
File.
(d) BINDING OBLIGATION. Each Contract is a valid and binding
payment obligation of the Obligor thereunder and is enforceable in
accordance with its terms, except as such enforceability may be limited
by insolvency, bankruptcy, moratorium, reorganization, or other similar
laws affecting the enforcement of creditors' rights generally.
(e) 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 such Contract or the
exercise of any right thereunder will not render the Contract
unenforceable in whole or in part or subject to any right of
rescission, setoff, counterclaim or defense, including the defense of
usury, and no such right of rescission, setoff, counterclaim or defense
has been asserted or threatened with respect thereto.
(f) INSURANCE. Each Contract requires the related Obligor to
maintain physical damage insurance (i) in an amount not less than the
value of the Financed Vehicle at the time of origination of the
Contract, (ii) naming the Seller as a loss payee and (iii) insuring
against loss and damage due to fire, theft, transportation, collision
and other risks covered by comprehensive coverage, and all premiums due
on such insurance have been paid in full from the date of the
Contract's origination.
(g) ORIGINATION. Each Contract was originated by a retailer of
new or used automobiles or other third party that finances the sale of
new or used motor vehicles in the ordinary course of its business which
dealer or third party had all necessary licenses and permits to
originate the Contracts in the state where such dealer or third party
was located, was fully and properly executed by the parties thereto,
and has been purchased by the Seller in the regular course of its
business or directly originated by the Seller in the ordinary course of
its business. To the best of the Seller's knowledge, each Contract was
sold by such dealer or other third party to the Seller without any
fraud on the part of such dealer or third party.
J-1
(h) LAWFUL ASSIGNMENT. No Contract was originated in or is
subject to the laws of any jurisdiction whose laws would make the sale,
transfer and assignment of the Contract under this Agreement or under
the Sale and Servicing Agreement or the pledge of the Contract under
the Indenture unlawful, void or voidable.
(i) COMPLIANCE WITH LAW. None of the Contracts, the
origination of the Contracts by the dealers or other third parties, the
purchase of the Contracts by the Seller, the sale of the Contracts by
the Seller to the Depositor or by the Depositor to the Issuer, or any
combination of the foregoing, violated at the time of origination or as
of the Closing Date any requirement of any federal, state or local law
and regulations thereunder, including, without limitation, usury, truth
in lending, motor vehicle installment loan and equal credit opportunity
laws, applicable to the Contracts and the sale of the Financed
Vehicles. The Seller shall, for at least the period of this Agreement,
maintain in its possession, available for the Depositor's and the
Trustees' inspection, and shall deliver to the Depositor or the Trustee
upon demand, evidence of compliance with all such requirements.
(j) CONTRACT IN FORCE. As of the Closing Date, no Contract has
been satisfied or subordinated in whole or in part or rescinded, and
the related Financed Vehicle securing any Contract has not been
released from the lien of the Contract in whole or in part.
(k) VALID SECURITY INTEREST. Each Contract creates a valid,
subsisting and enforceable first priority perfected security interest
in favor of the Seller in the Financed Vehicle covered thereby, and
such security interest has been assigned by the Seller to the
Depositor. The original certificate of title, certificate of lien or
other notification (the "LIEN CERTIFICATE") issued by the body
responsible for the registration of, and the issuance of certificates
of title relating to, motor vehicles and liens thereon (the "REGISTRAR
OF TITLES") of the applicable state to a secured party which indicates
the lien of the secured party on the Financed Vehicle is recorded on
the original certificate of title, and the original certificate of
title for each Financed Vehicle, show, or if a new or replacement Lien
Certificate is being applied for with respect to such Financed Vehicle
the Lien Certificate will be received within 180 days of the Closing
Date and will show, the Seller as original secured party under each
Contract as the holder of a first priority security interest in such
Financed Vehicle. With respect to each Contract for which the Lien
Certificate has not yet been returned from the Registrar of Titles, the
Seller has received written evidence from the related dealer or other
third party that such Lien Certificate showing the Seller as lienholder
has been applied for.
(l) CAPACITY OF PARTIES. All parties to any Contract had
capacity to execute such Contract and all other documents related
thereto and to grant the security interest purported to be granted
thereby.
(m) GOOD TITLE. Each Contract was originated by the Seller or
purchased by the Seller for value and taken into possession prior to
the Cutoff Date in the ordinary course of its business, without
knowledge that the Contract was subject to a security interest. No
Contract has been sold, assigned or pledged to any person other than
the
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Depositor and the Issuer as the transferee of the Depositor, and prior
to the transfer of the Contract to the Depositor, the Seller had good
and marketable title to each Contract free and clear of any
encumbrance, equity, loan, pledge, charge, claim or security interest
and was the sole owner thereof and had full right to transfer the
Contract to the Depositor and to permit the Depositor to transfer the
same to the Issuer, and, as of the Closing Date, the Issuer will have a
first priority perfected security interest therein.
(n) NO DEFAULTS. As of the Cutoff Date, no default, breach,
violation or event permitting acceleration existed with respect to any
Contract and no event had occurred which, with notice and the
expiration of any grace or cure period, would constitute such a
default, breach, violation or event permitting acceleration under such
Contract. The Seller has not waived any such default, breach, violation
or event permitting acceleration. As of the Cutoff Date, no Financed
Vehicle had been repossessed.
(o) NO LIENS. As of the Closing Date there are no liens or
claims which have been filed for work, labor, materials or unpaid taxes
affecting the Financed Vehicle securing any Contract which are or may
be liens prior to, or equal with, the lien of such Contract.
(p) ENFORCEABILITY. Each Contract contains customary and
enforceable provisions such as to render the rights and remedies of the
holder thereof adequate for the realization against the Financed
Vehicle of the benefits of the security.
(q) ONE ORIGINAL. Each Contract is evidenced by only one
original executed Contract, which original is being held by the
Servicer as custodian.
(r) NO GOVERNMENT CONTRACTS. No Obligor is the United States
or any State government or an agency, authority, instrumentality or
other political subdivision of the United States government or any
state government or municipality.
(s) OBLIGOR BANKRUPTCY. At the Cutoff Date, no Obligor was
subject to a bankruptcy proceeding or other insolvency proceeding.
(t) CHATTEL PAPER. The Contracts constitute chattel paper
within the meaning of the UCC as in effect in the State of Illinois.
(u) NO IMPAIRMENT. Neither the Seller nor the Depositor has
done anything to convey any right to any Person that would result in
such Person having a right to payments due under the Contract or
otherwise to impair the rights of the Issuer in any Contract or the
proceeds thereof.
(v) CONTRACT NOT ASSUMABLE. No Contract is assumable by
another Person in a manner which would release the Obligor thereof from
such Obligor's obligations to the Depositor with respect to such
Contract.
(w) OBLIGOR LOCATION. Each Contract is a U.S.
dollar-denominated obligation and each Obligor's billing address is
located in one of the states of the United States, the District of
Columbia or Puerto Rico.
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(x) LOCKBOX BANK. The Lockbox Bank is the only institution
holding any Lockbox Account for receipt of payments from Obligors, and
all Obligors, and only such Obligors, have been instructed to make
payments to the Lockbox Account, and no person claiming through or
under Seller has any claim or interest in the Lockbox or the Lockbox
Account other than the Lockbox Bank; PROVIDED, HOWEVER, The Chase
Manhattan Bank, N.A., shall have an interest in certain other
collections therein not related to the Contracts.
(y) CONCENTRATION ACCOUNT. No person claiming through or under
Seller has any claim or interest in the Concentration Account;
provided, however, The Chase Manhattan Bank, N.A. shall have an
interest in certain other collections therein not related to the
Contracts.
REPRESENTATIONS AND WARRANTIES REGARDING THE CONTRACTS IN THE
AGGREGATE. The Seller represents and warrants as of the Closing Date that:
(a) AMOUNTS. The sum of the aggregate Principal Balances
payable by Obligors under the Contracts as of the Cutoff Date equals
the sum of the principal balance of the Class A-1 Notes, the Class A-2
Notes, the Class A-3 Notes, the Class A-4 Notes, the Class B Notes and
the Certificates on the Closing Date.
(b) CHARACTERISTICS. The Contracts have the following
characteristics: (i) all the Contracts are secured by Financed
Vehicles; (ii) no Contract has a remaining maturity of less than 7
months or more than 72 months; (iii) no Contract had an original term
to maturity of less than 12 months or more than 72 months; (iv) the
final scheduled payment on the Contract with the latest maturity is due
no later than June 30, 2006; (v) each Contract is a fully-amortizing
fixed rate Simple Interest Contract; and (vi) each Contract had a
remaining Principal Balance of no less than $598.11 and no more than
$60,181.84. Approximately 42.00% of the Principal Balance of the
Contracts as of the Cutoff Date is attributable to loans for purchases
of new Financed Vehicles and approximately 58.00% is attributable to
loans for purchases of used Financed Vehicles. No Contract has a
Contract Rate of less than 1.900%. No Contract was originated after the
Cutoff Date. The first scheduled Distribution Date of the Contracts is
due no later than September 15, 2000.
(c) MARKING RECORDS. As of the Closing Date, the Seller has
caused the Computer Disk relating to the Contracts sold under the
Transfer and Sale Agreement and concurrently reconveyed by the
Depositor to the Issuer and pledged by the Issuer to the Indenture
Trustee to be clearly and unambiguously marked to indicate that such
Contracts constitute part of the Trust Corpus, are owned by the Issuer
and constitute security for the Notes.
(d) NO ADVERSE SELECTION. No selection procedures adverse to
Noteholders and Certificateholders have been employed in selecting the
Contracts.
(e) TRUE SALE. The transaction contemplated by this Agreement
constitutes a valid sale, transfer and assignment from the Seller to
the Depositor and from the
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Depositor to the Issuer of all of the Seller's right, title and
interest in the Contract Assets as of the Closing Date or creates a
first priority security interest in the Contract Assets for the benefit
of the Issuer as of the Closing Date.
(f) ALL FILINGS MADE. All filings (including, without
limitation, UCC filings) required to be made by any Person and actions
required to be taken or performed by any Person in any jurisdiction to
give the Trustees a first priority perfected lien on, or ownership
interest in, the Contracts and the proceeds thereof have been made,
taken or performed.
REPRESENTATIONS AND WARRANTIES REGARDING THE CONTRACT FILES. The Seller
represents and warrants as of the Closing Date that:
(a) POSSESSION. Immediately prior to the Closing Date, the
Servicer will have possession of each original Contract and the related
complete Contract File, and there are and there will be no custodial
agreements relating to the same in effect. Each of such documents which
is required to be signed by the Obligor has been signed by the Obligor
in the appropriate spaces. All blanks on any form have been properly
filled in and each form has otherwise been correctly prepared. The
complete Contract File for each Contract currently is in the possession
of the Servicer.
(b) BULK TRANSFER LAWS. The transfer, assignment and
conveyance of the Contracts and the Contract Files by the Seller
pursuant to the Transfer and Sale Agreement and by the Depositor
pursuant to the Sale and Servicing Agreement is not subject to the bulk
transfer or any similar statutory provisions in effect in any
applicable jurisdiction.
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EXHIBIT K
[Lockbox Bank and Lockbox Account]
Lockbox Lockbox Bank
------- ------------
Account No. 0000000 Xxxxxx Trust and Savings Bank
Lockbox #: 6216 and 6253
Account No. 4159-260025 Xxxxx Fargo Bank
Lockbox #: 7186
K-1
EXHIBIT L
[Concentration Account]
Account No. 0000000 at Bank One, NA
Concentration Account Agreement: See Attached.
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