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EXHIBIT 10.2
SUBSERVICING AGREEMENT
This SUBSERVICING AGREEMENT (the "Agreement") is entered into as of
September 15, 1997, but deemed to be effective, solely for purposes of the
calculation of the Servicing Fee pursuant to Section 2.4(a) hereof, from and
after 12:01 A.M., September 6, 1997 (the "Effective Time") by and between
KARS-YES FINANCIAL INC., a Delaware corporation, (fka Yes Financial Inc.), as
collection agent ("Collection Agent"); CHAMPION ACCEPTANCE CORPORATION, an
Arizona corporation, as servicer ("Servicer"), MBIA Insurance Corporation, a New
York stock insurance company ("MBIA") and, for the limited purpose of Section
5.16, UGLY DUCKLING CORPORATION ("UDC").
RECITALS
WHEREAS, pursuant to that certain Originator Sale Agreement by and between
Kars-Yes Financial Inc., a Delaware corporation, (fka Yes Financial Inc.) as
both seller ("Seller") and Collection Agent, and Yes Receivables Inc., a
Delaware corporation, as purchaser ("Purchaser"), dated as of October 1, 1995
(the "Sale Agreement"), Seller sold to Purchaser, and Purchaser purchased from
Seller, certain retail installment sales contracts each secured by a Financed
Vehicle (the "Loans");
WHEREAS, pursuant to Section 6.01(a) of the Sale Agreement, the servicing,
administering and collection of the Loans is conducted by Collection Agent for
the benefit of Purchaser, MBIA Insurance Corporation ("MBIA"), and Citicorp
North America, Inc., as Agent (the "Agent");
WHEREAS, pursuant to Section 6.01(d) of the Sale Agreement, Collection
Agent may subcontract with any other Person for the servicing, administering or
collecting of the Loans, with the prior consent of Purchaser, MBIA and the
Agent;
WHEREAS, pursuant to that certain Agreement for Purchase and Sale of
Certain Assets by and between Kars-Yes Holdings, Inc., a Texas corporation,
Collection Agent, and Kars-Yes, Inc., a Delaware corporation, as sellers (the
"Asset Sellers"), and Ugly Duckling Corporation, a Delaware corporation, as
buyer ("UDC"), dated as of September 15, 1997 (the "Purchase Agreement"), UDC
has agreed to purchase the operations of Collection Agent, including all
equipment owned by Collection Agent for such operations (the "Assets");
WHEREAS, in connection with the sale of Assets to UDC, Collection Agent
has agreed to subcontract with Servicer, a subsidiary of UDC, for the servicing,
administering and collecting of the Loans as subservicer of Collection Agent;
and
WHEREAS, for the purpose of effectuating the intent of the parties hereto,
Collection Agent and Servicer have agreed to enter into this Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
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ARTICLE I
DEFINITIONS
1.1. Defined Terms. Whenever used in this Agreement, the following words
and phrases shall have the following meanings:
"Affiliate" shall mean, as to any Person, any other Person that, directly
or indirectly, is in control of, is controlled by or is under common control
with such Person or is a director or officer of such person.
"Agent" shall have the meaning set forth in the Recitals hereto.
"Back-up Servicer" shall mean Norwest Bank Minnesota, National
Association, or such other Person who may be appointed by MBIA and be acting as
back-up servicer and custodian under the Back-up Servicing and Custodial
Agreement.
"Back-up Servicing and Custodial Agreement" shall mean the Back-up
Servicing and Custodial Agreement dated as of the date of the Master Transfer
Agreement, among Transferor, Collection Agent, Back-up Servicer, Agent and MBIA.
"Business Day" shall mean any day on which banks are not authorized or
required to close in New York City or in Texas.
"Charged-off Loan" shall mean a Loan that is charged-off pursuant to the
Collection Policy.
"Charged-Off Loss Ratio" means, for each Collection Period, the quotient
of (i) the net Principal Balance of all Loans which become Charged-Off Loans
during such Collection Period in accordance with the Collection Policy divided
by (ii) the aggregate of the Principal Balance of all Loans as of the beginning
of such Collection Period, which quotient shall be expressed as a percentage.
Calculations under this definition shall be made with respect to Loans covered
by this Agreement and the Receivables covered by the Other Servicing Agreement.
"Citibank" shall mean Citibank, N.A., a national banking association.
"Collection Account" shall mean the segregated account (account number
00000000) in the name of Agent maintained at the office of Citibank at 000 Xxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx. Agent and MBIA have exclusive control over the
Collection Account.
"Collection Period" means a calendar month.
"Collection Policy" shall mean that certain Collection and Account
Liquidations Policy and Procedures Manual, a copy of which is attached hereto as
Exhibit A as amended and modified in accordance herewith.
"Collections" shall mean, with respect to any Loan, all cash collections
and other cash proceeds of such Loan, including, without limitation, all cash
proceeds of Related Security with respect to such Loan, and any Collection of
such Loans deemed to have been received and paid pursuant to Section 2.04 of the
Sale Agreement plus all payments by the Rate Cap Provider under the Rate Cap
Agreement.
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"Custodian" shall mean Norwest Bank Minnesota, National Association, or
such other Person who may be acting as custodian under the Back-up Servicing and
Custodial Agreement.
"Dealer" shall mean Kars-Yes, Inc., a Delaware corporation, and any
subsidiary thereof.
"Defaulted Loan" shall mean a Loan:
(i) as to which any payment, or part thereof, remains unpaid for
ninety-one (91) days or more from the original due date for such payment;
(ii) as to which the Obligor thereof or any other Person obligated
thereon or owning any Related Security in respect thereof has taken any
action, or suffered any event to occur, of the type described in paragraph
(f) of Exhibit V to the Master Transfer Agreement; or
(iii) which is a Charged-off Loan.
"Delinquency Measurement" means, as of the end of the Collection Period,
the quotient of (i) the aggregate of the Principal Balance of all Loans which
have Scheduled Payments for which all or any part in excess of 10% of such
Scheduled Payment is due and unpaid more than thirty (30) days from the due date
of such Scheduled Payments, divided by (ii) the aggregate of the Principal
Balance of all Loans as of the end of the Collection Period which is two months
prior to such Collection Period, which quotient is expressed as a percentage.
Calculations under this definition shall be made with respect to Loans covered
by this Agreement and Receivables covered by the Other Servicing Agreement.
"Designated Deposit Accounts" means the depository bank accounts and the
consolidating depository bank accounts, established and maintained by the
Servicer and set forth on Exhibit B attached hereto, which (i) are not operating
accounts of Servicer, (ii) are not subject to any Lien in favor of any Person
and (iii) are deposit only accounts and withdrawals from such depository bank
accounts may only be made either (a) for sweeping into consolidating Designated
Deposit Accounts or (b) at the same time withdrawals from consolidating
Designated Deposit Accounts are made for remittances by Servicer in accordance
with the provisions of this Agreement.
"Event of Termination" has the meaning specified in Exhibit V to the
Master Transfer Agreement.
"Excepted Loan Files" has the meaning set forth in Section 2.3 below.
"Facility Termination Date" has the meaning set forth in the Master
Transfer Agreement.
"Financed Vehicle" shall mean any automobile, van, sport utility vehicle,
or light truck securing an Obligor's indebtedness under a Loan.
"Indebtedness" means, as applied to any Person at any time, (a) all
indebtedness, monetary obligations or other monetary liabilities of such Person
(i) for borrowed money or evidenced by debt securities, debentures, acceptances,
notes or other similar instruments, and any accrued interest, fees and charges
relating thereto, (ii) with respect to letters of credit issued for such
Person's account, (iii) to pay the deferred purchase price of property or
services, except accounts payable and accrued expenses arising in the ordinary
course of business, (iv) in respect of capital leases or (v) in respect of
guaranties in connection with any of the foregoing; (b) all indebtedness,
monetary
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obligations or other monetary liabilities of such Person secured by a lien on
any property of such Person whether or not such indebtedness, monetary
obligations or monetary liabilities are assumed by such Person; (c) all
preferred stock subject to mandatory redemptions; (d) all indebtedness, monetary
obligations or other monetary liabilities of such Person under, in connection
with or relating to a securitization facility; and (e) all contingent
contractual monetary obligations with respect to any of the foregoing.
"Insurance Agreement" shall have the meaning set forth in the Master
Transfer Agreement.
"Insurance Policy" shall mean, with respect to a Loan, the insurance
policy covering physical damage, collision, credit life, credit disability,
theft, mechanical breakdown or similar events relating to such Loan or the
related Financed Vehicle or Obligor.
"Insurance Proceeds" shall mean all amounts paid by an insurance company
for claims on any Financed Vehicle.
"Lien" shall mean a security interest, lien, charge, pledge, equity or
encumbrance of any kind.
"Loans" shall mean retail installment sales contracts (and all rights with
respect thereto) secured by a Financed Vehicle originated by a Dealer and
identified on Exhibit C hereto, including all Charged-Off Loans.
"Loan Documents" shall mean all of the documents, instruments and other
agreements evidencing, arising from, or pertaining to the Receivables, including
but not limited to, all documents that comprise the Loan Files.
"Loan File" shall mean, as to each Loan, and to the extent received by
Servicer from Collection Agent, (a) the executed original of the Loan, (b) the
original credit application, fully executed by each related Obligor, (c) the
original certificate of title (or application therefor) or such documents that
Servicer shall keep on file, in accordance with its customary procedures, and
with the procedures set forth in the Collection Policy, evidencing the security
interest in the related Financed Vehicle, (d) documents evidencing or relating
to any Insurance Policy, and (e) any and all other documents that Servicer shall
keep on file, in accordance with its customary procedures and with the
procedures set forth in the Collection Policy, relating to such Loan or the
related Obligor or Financed Vehicle. All or any part of a Loan File may be
maintained on Servicer's electronic data base or in the form of microfiche,
except for the certificate of title (or application therefor) and the original
of each Loan for which the originals must be maintained in hard copy form.
"Master Transfer Agreement" shall mean the Master Transfer Agreement,
dated as of October 1, 1995 among Transferor, Agent and CXC Incorporated, as
transferee, as the same may be amended or modified from time to time in
accordance with the terms thereof.
"Monthly Servicer Report" shall mean reports, in the form of Exhibit D
attached hereto as required by Section 2.2(d) hereof.
"Obligor" shall mean a Person obligated to make payments pursuant to a
Loan.
"Other Servicing Agreement" means that certain Servicing Agreement between
Collection Agent, as owner, Citicorp USA, Inc., as Agent, and Servicer, as
servicer, dated of even date herewith, pursuant to which Servicer has agreed to
service certain Receivables, as defined therein, and which appear on Schedule A
attached thereto.
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"Person" shall mean an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof.
"Principal Balance" shall mean, (i) with respect to any Loan as of any
date, the principal balance of the Loan, and (ii) with respect to any
pre-computed loan, the gross amount of the loan less any unearned interest,
calculated in accordance with the simple interest method of accounting for
principal and interest.
"Purchase Date" has the meaning set forth in Section 2.02(a) of the Sale
Agreement.
"Purchaser" shall have the meaning set forth in the Recitals hereto.
"Rate Cap Agreement" shall have the meaning set forth in the Master
Transfer Agreement.
"Rate Cap Provider" shall have the meaning set forth in the Master
Transfer Agreement.
"Really Defaulted Loans" shall mean Loans as to which any payment, or part
thereof, remains unpaid for eighteen (18) months or more from the original due
date for such payment.
"Recoveries" shall mean all amounts recovered on Charged-off Loans whether
from realization on the Related Security or otherwise, less Recovery Costs.
"Recovery Costs" shall mean all reasonable costs of collection incurred in
compliance with the Collection Policy realizing on a Charged-off Loan or the
Related Security including, but not limited to, costs of repossession,
refurbishing and remarketing of the underlying Financed Vehicle.
"Related Security" shall mean, with respect to any Loan, and to the extent
Servicer obtains possession thereof:
(i) all of Seller's right, title and interest in the Financed
Vehicle securing such Loan;
(ii) all other security interests or liens and property subject
thereto from time to time purporting to secure payment of such Loan,
whether pursuant to such Loan or otherwise;
(iii) all guarantees, indemnities, warranties, representations,
insurance and other agreements or arrangements of whatever character from
time to time supporting or securing payment of such Loan whether pursuant
to such Loan or otherwise and all rights with respect to any agreements or
arrangements with the vendors, dealers or manufacturers of the Finance
Vehicle securing such Loan;
(iv) all of Seller's books and records, including data processing
records relating to all of the foregoing;
(v) all payments received on or with respect to the Loans, including
without limitation, all periodic payments due from the Obligors
thereunder, all amounts paid by guarantors under the Loans, all amounts
received pursuant to any Insurance Policy, all payments received from
liquidation of the Financed Vehicles securing the Loans or otherwise
received in respect of Defaulted Loans and all late payments charges paid
by
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Obligors and any other incidental charges or fees received from an
Obligor, including without limitation, late fees, collection fees and
bounced check charges.
(vi) the Loan Files, the original Loan contracts, original
certificates of title and applications for certificates of title relating
to the Loans; and
(vii) all income and proceeds of all of the foregoing or relating
thereto.
"Re-xxxxxxx Trigger Event" shall have the meaning set forth in the Master
Transfer Agreement.
"Responsible Officer" shall mean those officers of Servicer involved in,
or responsible for, the administration and servicing and collection of the
Loans, as identified in a list of such officers furnished by Servicer to
Purchaser, MBIA and Agent from time to time.
"Rolling Average Charged-Off Loss Ratio" means the monthly average of the
Charged-Off Loss Ratio for any three (3) consecutive months; provided that,
until the first three (3) months from the date hereof have expired, the Rolling
Average Charged-Off Loss Ratio shall be the monthly average of the Charged-Off
Loss Ratio for the prior months, including the Rolling Average Charged-Off Loss
Ratio of the Collection Agent and the "Owner" under the Other Servicing
Agreement. Calculations under this definition shall be made with respect to
Loans covered by this Agreement and the Receivables covered by the Other
Servicing Agreement.
"Rolling Average Delinquency" means the average of the Delinquency
Measurements for any three consecutive months; provided that, until the first
six months after the date hereof have expired, the Rolling Average Delinquency
shall be the average of the Delinquency Measurements for the prior months,
including the Rolling Average Delinquency of the Collection Agent and the
"Owner" under the Other Servicing Agreement. Calculations under this definition
shall be made with respect to Loans covered by this Agreement and the
Receivables covered by the Other Servicing Agreement.
"Scheduled Payment" means, for any Collection Period for any Loan, the
amount indicated in such Loan as required to be paid by the Obligor in such
Collection Period (without giving effect to any rescheduling of payments in any
insolvency or similar proceedings).
"Servicing Period" shall mean the period of time from the date of this
Agreement to December 31, 2001, unless this Agreement is terminated prior to
such date as provided herein.
"Settlement Date" shall mean the date which is the twentieth (20th) day of
each calendar month or if such twentieth (20th) day is not a Business Day, the
next succeeding Business Day.
"Successor Notice" shall have the meaning set forth in Section 6.01(b) of
the Sale Agreement.
"Surety Bond" shall have the meaning set forth in the Master Transfer
Agreement.
"Termination Penalty" shall mean the termination penalty identified in
Section 4.7 and in the amount set forth on Exhibit L.
"Total Collections" shall mean, for any Collection Period, the total of
all collections during such Collection Period pursuant to this Agreement and
pursuant to the Other Servicing Agreement
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of interest, principal and net proceeds from the sale or disposition of any
Financed Vehicle prior to the payment of any expenses, costs or other
deductions, but excluding the proceeds from any Charged-Off Receivable, as
defined in the Other Servicing Agreement, after the Receivable has become a
Charged-Off Receivable under the Other Servicing Agreement.
"Total Cumulative Collections" shall mean the aggregate of all collections
pursuant to this Agreement and pursuant to the Other Servicing Agreement of
interest, principal and net proceeds from the sale or disposition of any
Financed Vehicle prior to the payment of any expenses, costs or other deductions
[but excluding the proceeds from any Charged-Off Receivable after the Receivable
has become a Charged-Off Receivable.
"Transaction Documents" shall mean this Agreement, and all other documents
defined as such in the Master Transfer Agreement.
"Transferor" shall mean Yes Receivables Inc., a Delaware corporation.
"UCC" shall mean the Uniform Commercial Code as in effect in the State of
New York.
1.2. Other Terms. All capitalized terms used herein, and not otherwise
specifically defined, shall have the meaning ascribed thereto in the Sale
Agreement.
1.3. Usage of Terms. With respect to all terms in this Agreement, the
singular includes the plural and the plural the singular; words importing any
gender include the other genders; references to "writing" include printing,
typing, lithography, and other means of reproducing words in a visible form;
references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation."
1.4. Section References. All section references shall be to Sections in
this Agreement.
ARTICLE II
ADMINISTRATION AND SERVICING OF RECEIVABLES
2.1. Appointment.
(a) Pursuant to Section 6.01(d) of the Sale Agreement, Collection
Agent hereby subcontracts with, and Collection Agent, Purchaser, MBIA and Agent
hereby appoint Champion Acceptance Corporation, an Arizona corporation, as
Servicer for the benefit of Collection Agent, Purchaser, MBIA and Agent.
Servicer shall perform, during the Servicing Period, the services required
pursuant to the terms of this Agreement. In performing its duties, Servicer
shall have full power and authority to do or cause to be done any and all things
in connection with such servicing and administration which it may deem necessary
or desirable, within the terms of this Agreement and the Collection Policy, and
in accordance with Servicer's usual practice and the standard of care required
pursuant to Section 2.7 hereof. Notwithstanding the foregoing, Collection Agent
shall, at all times during the Servicing Period, remain liable for the
performance of the duties and obligations of Collection Agent pursuant to the
Sale Agreement and the Servicer shall, pursuant to the terms and limitations of
this Agreement, be liable to MBIA, the Collection Agent and the Agent for the
performance of its obligations under this Agreement.
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(b) The Collection Agent and the Servicer hereby agree that MBIA
shall have the right to direct the actions of the Servicer without obtaining the
prior consent of the Collection Agent and a directive of MBIA to the Servicer
shall have the same force and effect as a directive of the Collection Agent.
Servicer may rely and act on all directions of MBIA without liability to
Collection Agent, Agent or any other Person. The Collection Agent shall not
direct the Servicer without obtaining the prior consent of the MBIA.
(c) Servicer may resign as Servicer under this Agreement upon ninety
(90) days' prior written notice to Collection Agent, MBIA and Agent. Any
Successor Servicer under this Agreement shall be subject to the written approval
of MBIA. Servicer shall comply with the provisions of this Agreement until the
earlier of (i) the Back-up Servicer or a successor servicer acceptable to MBIA
is in place and such Back-up Servicer or successor servicer has been operating
parallel to the Servicer for a period of one month, or (ii) one hundred eighty
(180) days after such written notice of resignation.
2.2. Collection of Loans and Reporting Obligations.
(a) Servicer shall be responsible for collection of payments called
for under the terms and provisions of each Loan, as and when the same shall
become due, all in accordance with the standard of care set forth in Section
2.7, provided, however, that the Collection Agent shall not have any rights to
withdraw any amounts in the Collection Account.
(b) Any Collections of Loans received by Servicer shall be wired or
deposited directly to the Collection Account for same day wire funds within two
(2) Business Days of Servicer's receipt thereof, net of any amounts that
represent Collections previously deposited in the Collection Account but as to
which the check or other form of non-cash payment by the Obligor has been
returned as noncollectible and as to which no subsequent collection of such
amount from the Obligor or recovery pursuant to this provision has previously
been made. Servicer shall not deposit or cause to be deposited into the
Collection Account funds other than Collections. Upon proof submitted to Agent's
reasonable satisfaction that funds have been deposited in the Collection Account
in error, such funds shall be withdrawn therefrom and remitted to the Servicer
for the account of the applicable party. Servicer shall prepare and make
available for inspection by MBIA and Agent daily collection and reconciliation
reports which account for all remittances to the Collection Account.
(c) Notwithstanding the provisions set forth in Section 2.2(b), if
Collection Agent does not timely and fully pay and reimburse to Servicer all
amounts required to be paid or reimbursed to Servicer pursuant to Sections
2.9(a), (b) or (c) of this Agreement, and, with respect to Section 2.9(b), as
such amounts are set forth in the Monthly Servicer Report and are not the
subject of a bona fide dispute by MBIA pursuant to written notice given to
Servicer of such dispute, commencing on the second Business Day after notice to
MBIA of such nonpayment, Servicer may retain from the Collections an amount
equal to all such due and unpaid or unreimbursed amounts in payment thereof.
Any expense reimbursement shall be for amounts which are consistent with
the provisions of this Agreement and shall be substantiated to the reasonable
satisfaction of MBIA. The Servicer shall provide to MBIA on a monthly basis, in
a form acceptable to MBIA, along with the Monthly Servicer's Report required
pursuant to Section 2.2(d) hereof, a report describing such expenses for which
the Servicer seeks or is paid reimbursement pursuant to Exhibit I hereto, broken
down into
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the categories provided in Exhibit I hereto. The Servicer shall provide such
other information respecting such expenses as MBIA may from time to time request
in order to review such expenses. MBIA shall have the right to review all of the
expenses for which the Servicer seeks or is paid reimbursement. Any payment to
Servicer of expenses pursuant to Section 2.9(b) shall not limit the right of
MBIA to review any such expense or to dispute any such expense. In the event any
expense obligation for which the Servicer seeks reimbursement is disputed by
MBIA, Servicer and MBIA shall each use their best efforts to reconcile such
dispute. If MBIA and the Servicer cannot agree on a disputed expense obligation,
such expense obligation shall not be the subject of reimbursement to Servicer
until such disputed expense obligation has been reviewed pursuant to the Payment
Reimbursement Dispute Resolution Policy, a copy of which is attached to this
Agreement as Exhibit M. Any expense which is paid to Servicer or which is
retained by Servicer pursuant to this Section 2.2(c) and which is subsequently
disputed by MBIA may be deducted from any subsequent reimbursable expenses or
any fees to be paid to Servicer pursuant to Section 2.9 or Section 4.7. Upon
resolution of any disputed amounts, any amounts owing to Servicer shall be paid
to or retained by Servicer pursuant to this Section 2.2(c).
(d) Servicer shall provide to Agent and MBIA Monthly Servicer
Reports substantially in the form attached hereto as Exhibit D, as it may be
amended from time to time in accordance with the terms hereof. Each Monthly
Servicer Report shall be accompanied by the Officer's Certificate substantially
in the form attached hereto as Exhibit E. Each Monthly Servicer Report and
Officer's Certificate relating to such reports shall be delivered within ten
(10) calendar days following the end of each Collection Period. Servicer shall
also provide to Agent and MBIA Weekly Delinquency Reports substantially in the
form attached hereto as Exhibit F. Such report shall be delivered within two (2)
Business Days following the end of each weekly period.
(e) Within ten (10) calendar days following the last day of each
Collection Period, Servicer shall forward to MBIA, via reputable overnight
courier or electronic transmission, (i) a computer diskette, in a format
mutually acceptable to Servicer and MBIA of its computerized records reflecting
(A) all collections received during such Collection Period with respect to the
Loan, (B) the Principal Balance of the Loans as of the last day of the
Collection Period, and (C) information as of the last day of such Collection
Period regarding the number of Loans for which an Obligor has failed to make any
required payments on the dates such payments were to have been made and such
failure has continued for ninety (90) days, and (ii) a manually prepared report
as of the last day of such Collection Period regarding the number of repossessed
Financed Vehicles and the number of sales of repossessed Financed Vehicles as of
the last day of such Collection Period.
2.3. Conveyance of Loan Files to Servicer. Upon execution of this
Agreement, Collection Agent shall deliver to Servicer the Loan Files (as defined
in the Master Transfer Agreement), and Servicer shall hold in trust for the
benefit of MBIA and the Agent and in accordance with the standard of care set
forth in Section 2.7 the Loan Files with respect to the Loans, other than those
Loan Files identified on Exhibit G which are in the possession of the Custodian
(the "Excepted Loan Files") and subject to any instruction consistent with
Section 2.02(i) or (i)(3) of Exhibit IV of the Master Transfer Agreement to
deliver the Loan Files to the Custodian. Possession of the Loan File by the
Servicer is for the sole purpose of servicing the related Loan. Upon the
Servicer's receipt of a joint written notice from Collection Agent, Agent and
MBIA of the release of the lien of the Master Transfer Agreement with respect to
any Loan, Servicer shall deliver the Loan File relating to such Loan to
Collection Agent. The original executed counterparts of the Loans and
certificates of title or such documents as shall evidence the security interest
in the related Financed Vehicles shall be stored in fireproof file cabinets or
safes. Servicer shall keep books and records pertaining to each Loan. Such
records may not be destroyed or otherwise disposed of except as provided herein,
the Collection Policy, or as allowed by applicable laws, regulations or decrees.
All documents, whether developed or originated by Servicer or not, reasonably
required to document or to properly
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administer any Loan shall at all times be held in trust by Servicer for the
benefit of MBIA. Servicer shall not acquire any property rights with respect to
such records, and shall not have the right to possession of them, except as
subject to the conditions stated in this Agreement. Servicer shall bear the
entire cost of restoration in the event any Loan Files shall become damaged,
lost or destroyed while in Servicer's possession or control.
2.4. Realization Upon Loans. On behalf of the Purchaser, MBIA and the
Agent, consistent with the Collection Policy, Servicer shall use its reasonable
best efforts, consistent with the standard of care described in Section 2.7, to
repossess or to otherwise convert the ownership of the Financed Vehicle securing
any Purchased Loan as to which Servicer shall have determined eventual payment
in full is unlikely, which may include selling the Financed Vehicle at a public
or private sale; provided, however, that in any case in which the Financed
Vehicle shall have suffered damage, Servicer shall not expend funds in
connection with the repair or the repossession of such Financed Vehicle unless
it shall determine in its discretion that such repair and/or repossession will
increase the proceeds to be received upon sale by an amount greater than the
amount of such expenses. All Recoveries in respect of such Loan and related
Financed Vehicle received by the Servicer shall be remitted for deposit in the
Collection Account within two (2) Business Days of receipt. Servicer shall not
release the Financed Vehicle securing any Purchased Loan from the security
interest granted by such Purchased Loan in whole or in part except in the event
of payment in full by Obligor thereunder or the discounted settlement of the
obligations of the Obligor thereunder in connection with a workout of such
Purchased Loan and consistent with the Collection Policy.
2.5. Maintenance of Security Interests in Financed Vehicles.
(a) Servicer shall use reasonable best efforts, consistent with the
standard of care described in Section 2.7, to make all UCC and Department of
Motor Vehicle filings and recordings as may be required pursuant to the terms of
this Agreement and the Collection Policy and shall use reasonable best efforts
to take such steps as are necessary to maintain first priority perfection of the
security interest created by each Loan in the related Financed Vehicle. Servicer
shall use reasonable best efforts, consistent with the standard of care
described in Section 2.7, to take such steps are necessary to perfect such
security interest on behalf of Purchaser in the event of the relocation of a
Financed Vehicle or for any other reason. The Purchaser hereby authorizes the
Servicer to re-perfect or cause the re-perfection of such security interest on
its behalf as Purchaser, as necessary.
(b) Upon the joint written notice from Agent and MBIA of the
occurrence of a Re-xxxxxxx Trigger Event, Servicer shall, at Collection Agent's
sole cost and expense, file applications with the appropriate state agencies for
new or amended certificates of title each noting Agent or Transferor, as
directed by MBIA, as lienholder for all of the Financed Vehicles securing the
Transferred Loans. No failure or delay by the MBIA and the Agent to provide such
notice described in the preceding sentence shall constitute a waiver of its
rights in connection with such Reliening Trigger Event. Servicer shall use its
reasonable best efforts to file applications of new or amended certificates of
title, as is appropriate, noting Agent or Transferor, as directed by MBIA, as
lienholder for all of the Financed Vehicles securing the Transferred Loans,
within ninety (90) days of such joint written notice of the occurrence of a
Re-xxxxxxx Trigger Event. Servicer shall inform Agent and MBIA no less than
weekly concerning the extent to which the filing of such applications have not
yet been made with respect to all Transferred Loans and the extent to which all
of the related certificates of title do not yet reflect the Agent or the
Transferor, as directed by MBIA, as lienholder, and provide such evidence of the
re-xxxxxxx of such Financed Vehicles as MBIA and Agent may request.
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After the occurrence of a Re-xxxxxxx Expense Account Trigger, the
Servicer shall cooperate with the Agent, MBIA and the Backup Servicer to
complete the filing of such applications for all Financed Vehicles as soon as
practicable.
2.6. Enforcement of Loans.
(a) Servicer may xxx to enforce or collect upon Loans, as agent for
Purchaser. If Servicer elects to commence a legal proceeding to enforce a Loan,
the act of commencement shall be deemed to be an automatic assignment of the
Loan to Servicer for purposes of collection only, and if the Loan File is an
Excepted Loan File, a Responsible Officer shall deliver by facsimile a Request
for Release of Documents, substantially in the form of Exhibit H hereto to the
Custodian requesting delivery to Servicer of the Loan and/or the related
certificate of title or application for certificate of title, as applicable.
Upon release of such items, Servicer is authorized to execute an instrument in
satisfaction of such Loan and to do such other acts and execute such other
documents as it deems necessary to discharge the Obligor thereunder and release
any security interest in the Financed Vehicle related thereto. Servicer shall
determine in accordance with the standard of care described in Section 2.7, when
a Loan has been paid in full. If in any enforcement suit or legal proceeding it
is held that Servicer may not enforce a Loan on the ground that it is not a real
party in interest or a holder entitled to enforce the Loan, Purchaser shall, at
Servicer's request, but at Collection Agent's sole cost and expense, take such
steps as Servicer deems necessary including bringing suit in its name or the
name of Purchaser, as beneficial owner of the Loan, or the name of MBIA, as
third party beneficiary thereunder.
(b) Servicer shall exercise any rights of recourse against third
parties that exist with respect to any Loan in accordance with Servicer's usual
practice and in any event, consistent with the standard of care described in
Section 2.7. In exercising recourse rights, Servicer is authorized, on
Purchaser's behalf, to reassign the Loan to the Person against whom recourse
exists to the extent necessary, and at the price set forth in the document
creating the recourse. Servicer will not reduce or diminish such recourse
rights, except to the extent that it exercised such right or acted consistent
with the Collection Policy.
(c) Servicer may waive, modify or vary any terms of any Loan or
consent to the postponement of strict compliance with any such term if in
Servicer's reasonable and prudent determination such waiver, modification or
postponement is not materially adverse to Purchaser, MBIA and Agent; provided,
however, that (A) Servicer shall not forgive any scheduled payment and (B) shall
not, except as permitted by the Collection Policy, (1) permit any modification
with respect to any Loan that would decrease the scheduled payment or the annual
percentage rate, (2) defer the payment of any principal or interest of any
scheduled payment, or (3) reduce the Loan balance (except in connection with
actual payments attributable to such Loan balance) provided that, in accordance
with the Collection Policy, Servicer shall have the ability to settle any Loan
that does not result in a charge-off of greater than $500. The Servicer shall
provide the Back-up Servicer, MBIA and the Purchaser with an amended Servicer's
Monthly Report reflecting any modification of any scheduled payment.
(d) Servicer shall not consent to the termination of any Loan in
connection with loss or damage to the related Financed Vehicle unless the
Obligor has paid an amount not less than an amount equal to the Loan balance of
such Loan plus any accrued interest thereon, or if less, the maximum amount
legally collectible under the related Loan unless Seller has repurchased such
Loan by deposit of the Loan balance thereof plus any accrued interest in the
Collection Account.
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(e) In the event that Servicer, in the enforcement of any Loan,
claims possession of a Financed Vehicle from an Obligor, Servicer shall use its
best efforts to sell such Financed Vehicle promptly and consistent with the
standard of care set forth in Section 2.7 hereof. Any Recoveries related thereto
shall be deposited into the Collection Account within two (2) Business Days of
receipt.
(f) Notwithstanding any provision to the contrary contained in this
Agreement, Servicer shall use its best efforts to exercise any right under a
Loan to accelerate the unpaid scheduled payments, due or to become due
thereunder in such a manner as to maximize the net proceeds available to
Purchaser consistent with the Collection Policy; provided, however, that
Servicer will not accelerate any scheduled payment unless permitted to do so by
the terms of the Loan or under applicable law.
2.7. Standard of Care. In managing, administering, servicing, enforcing
and making collections on the Loans and the Financed Vehicles pursuant to this
Agreement, Servicer will exercise that degree of skill and care consistent with
industry standards for servicing of motor vehicle loan portfolios, and that
which Servicer customarily exercises with respect to similar motor vehicle loan
contracts and interests in motor vehicle loans owned or originated by it, and in
any event, in a prudent and commercially reasonable manner and in accordance
with the Collection Policy including, without limitation, the taking of
appropriate actions to foreclose or otherwise liquidate any such defaulted Loan,
together with the related Financed Vehicle, to collect any guaranty amount and
to enforce the Purchaser's, the Agent's and MBIA's rights under this Agreement.
Servicer shall punctually perform all of its obligations and agreements under
this Agreement, shall comply with all applicable federal and state laws and
regulations, shall maintain all state and federal licenses and franchises
necessary for it to perform its servicing responsibilities hereunder and shall
not materially impair the rights of the Purchaser, MBIA and the Agent in a Loan
or payments thereunder.
2.8. Insurance Proceeds. Unless used to repair an insured vehicle, any
Insurance Proceeds received by Servicer under any Insurance Policy shall be
remitted to the Collection Account within two (2) Business Days of receipt by
Servicer.
2.9. Servicing Fee, Expenses, and Fees. In consideration of the servicing
obligations to be undertaken by Servicer pursuant to this Agreement, Collection
Agent shall (a) commencing as of the Effective Time, pay to Servicer a monthly
fee on the fifth (5th) day of each calendar month, in an amount equal to the
greater of (i) 3 1/4% per annum computed on a monthly basis of the aggregate
outstanding Principal Balance of all of the Loans, other than Charged-Off Loans,
as of the first day of the immediately preceding month, or (ii) $15.00 per
month, per Loan, other than Charged-Off Loans, that was being serviced by
Servicer as of the first day of the immediately preceding month; (b) reimburse
Servicer for all expenses incurred by Servicer as set forth on Exhibit I
attached hereto; (c) pay to Servicer an amount equal to, with respect to
Charged-Off Loans, 30% of all Collections arising from collateral recovery and
50% of all Collections or proceeds arising from non-collateral recoveries; and
(d) permit Servicer to collect and retain modification and extension fees
actually paid by Account Debtors but only after all Scheduled Payments which are
due from such Account Debtor have been collected in full, the Obligor is current
under the Obligor's Loan Documents and subject to the limitation that without
the prior written consent of MBIA, no more than 3% of all Loans serviced
hereunder may be the subject of such fees in any single Collection Period. To
the extent the amount specified in Section 2.9(a), (b) and (c) are paid to
Servicer by Agent or MBIA, or by retention by Servicer from the Collections
pursuant to Section 2.2(c), Collection Agent shall have no right to receive
compensation or reimbursement pursuant to the
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Purchase Agreement or the Master Transfer Agreement, and the Collection Agent
hereby expressly waives its right to the Collection Agent Fee.
2.10. Adequacy of Computer System. Subject to the terms of this Section
2.9, Servicer, in its sole discretion, may modify the computer hardware and
software transferred from Seller to Buyer pursuant to the Purchase Agreement in
such manner so that any problem associated with the "year 2000" is resolved and
handled appropriately by such computer system. Pursuant to the other Servicing
Agreement, Seller and Servicer have agreed to share the costs which may be
incurred by Servicer for any such modification. Following receipt of notice of
Servicer's determination of the inability to resolve the "year 2000" problem
pursuant to the Other Servicing Agreement, Seller and Agent thereunder may, in
their sole discretion, terminate the Other Servicing Agreement. Upon such
election, MBIA or the Agent (with the consent of MBIA) may also elect to
terminate this Agreement. In the event this Agreement is not terminated as to
Servicer pursuant to the preceding sentence, Servicer shall not be responsible
for information provided by it in accordance with this Agreement which is
affected by the problem intended to be corrected by this Section 2.10 and
Section 2.8 of the Other Servicing Agreement.
2.11. Crime Insurance. Servicer shall maintain, at its own expense, a
crime insurance policy, with broad coverage with responsible companies on all
officers, employees or other Persons acting on behalf of Servicer in any
capacity with regard to the Loans to handle funds, money, documents, and papers
relating to the Loans. Any such insurance shall protect and insure Servicer
against losses for dishonest acts of such Persons and shall be maintained in a
form that would meet the requirements of prudent institutional auto loan
servicers and in an amount of not less than $10,000 per occurrence. MBIA shall
be named as loss payee and as an additional named insured on such policy.
2.12. Responsibilities of Servicer. Servicer shall have no duties,
obligations or responsibilities other than those specifically expressed and set
forth herein, and no implied obligations of Servicer shall be read into this
Agreement.
2.13. Notice of Store Closing. Servicer shall provide at least sixty (60)
days advance written notice to Agent and MBIA of any closing of stores acquired
from the Sellers and shall include with such notice a description of the
Servicer's alternate arrangements for collecting Receivables associated with
such stores. Servicer agrees, in the absence of any other arrangement acceptable
to Servicer, Agent and MBIA to provide coupon payment books to the Obligors who
are affected by such store closing.
2.14. Inspection.
(a) At all times during the term hereof, Servicer shall afford Agent
and MBIA and their respective authorized agents, upon one (1) Business Day's
prior written notice, reasonable access, during normal business hours, to
Servicer's collection centers, payment centers and records relating to the
Receivables, without charge, and will cause its personnel to provide reasonable
assistance in any such examination. The examination referred to in this Section
2.14 will be conducted in a manner which does not unreasonably interfere with
Servicer's normal operations or customer or employee relations. Without
otherwise limiting the scope of the examination, Agent or MBIA may, using
generally accepting auditing principles, conduct a quarterly cash audit,
including, but not limited to, a review of the daily collection reports prepared
pursuant to Section 2.2(b) and the deposits relating thereto, verify the status
of each Loan and review Loan Files and records relating thereto for conformity
to Monthly Servicer Reports prepared pursuant to Section 2.2(d) and compliance
with the standards represented to exist as to each Loan subject to this
Agreement. Nothing herein shall require Agent or MBIA to conduct any inspection
pursuant to this Section, and
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any expense incurred by the inspecting party incident to the exercise by Agent
or MBIA of any right under this Section 2.14 shall be borne by the inspecting
party. In addition, nothing in this Section 2.14 shall affect the obligation of
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors, and the failure of Servicer to provide access to
prohibited information as a result of such obligation shall not constitute a
breach of this Section 2.14.
(b) At all times during the term hereof, Servicer shall keep
available a copy of the Loan Files at its office located at 000 Xxxxx Xxxxx
Xxxxxx, Xxxxxx, Xxxxx, or at such other location as to which it shall give
written notice to Agent and MBIA for inspection by either of them.
2.15. Covenants of Servicer; Notices. Except as otherwise provided in the
Collection Policy:
(a) Servicer shall (i) not release any Financed Vehicle securing any
Loan from the security interest granted therein by such Loan in whole or in part
except in the event of payment in full by the Obligor thereunder, or upon
transfer of the Financed Vehicle to a successor purchaser following repossession
by Servicer, (ii) not impair the rights of Collection Agent or MBIA in the
Loans, (iii) not sell, pledge, assign, or transfer to any other Person, or
grant, create, incur or assume any Lien on any Loan or any interest therein or
permit any creditor of Servicer to have any Lien on any Receivable or any
interest therein, (iv) immediately notify Collection Agent and MBIA of the
existence of any Lien on any Loan (other than the Lien of MBIA) if Servicer has
actual knowledge thereof other than normal mechanics liens and impound notices
which Servicer will treat in a customary manner, (v) defend the right, title,
and interest of Collection Agent and MBIA in, to and under the Loans against all
claims of third parties claiming through or under Servicer, (vi) deposit into
the Designated Deposit Accounts and to the Collection Account all payments
received by Servicer with respect to the Loans in accordance with this
Agreement, (vii) promptly notify Collection Agent and MBIA of the occurrence of
any Event of Servicing Termination and any breach by servicer of any of its
covenants or representations and warranties contained herein, and (viii) upon
the discovery of the relocation out of state of a Financed Vehicle, promptly
notify Collection Agent and MBIA of the occurrence of any event which, to the
knowledge of the Servicer, would require that Collection Agent or MBIA make or
cause to be made any filings, reports, notices, or applications or seek any
consents or authorizations from any and all government agencies, tribunals, or
authorities in accordance with the UCC and any state vehicle license or
registration authority as may be necessary or advisable to create, maintain, and
protect a first-priority security interest of Agent in, to and on the Financed
Vehicles and a first-priority security interest of MBIA in, to, and on the
Receivables. Any out-of-pocket expenses and costs incurred by Servicer in
complying with Subsection 2.15(a)(viii) shall be reimbursed to Servicer pursuant
to Exhibit I.
(b) Servicer shall, within four (4) Business Days after its receipt
thereof, respond to all reasonable written directions or written requests for
information or data extract disks that Collection Agent, MBIA, or Backup
Servicer might have with respect to the administration of the Loans; provided,
however, that in the event that any request received, requests information not
otherwise required to be set forth in the Monthly Servicer Report and not
reasonably available from the electronic files and the computer system, Servicer
shall have a reasonable period of time to meet such request and shall be
reimbursed for the cost of providing such information pursuant to Exhibit I.
(c) Servicer will promptly advise Collection Agent and MBIA of any
inquiry received from an Obligor which contemplates the consent of Collection
Agent and MBIA. Inquiries contemplating the consent of Collection Agent and MBIA
shall include, but shall not be limited to, inquiries about settlement of any
unasserted claim or defense, or compromise of any amount an Obligor owes or any
other matters Servicer should reasonably understand are not within Servicer's
authority under this Agreement, provided however, that, in accordance with the
Collection Policy,
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Servicer shall have the ability to settle any account that does not result in a
charge-off of greater than $500. Any amount over such limit will require that
Servicer notify Collection Agent and MBIA of such request, and that Collection
Agent and MBIA respond to Servicer within five (5) Business Days as to whether
or not Collection Agent and MBIA shall accept such proposal. If Owner or Agent
does not respond to Servicer within such time period, the proposal shall be
deemed approved by Collection Agent and MBIA.
2.16. Costs and Expenses. Except as set forth on Exhibit I and as
otherwise specifically provided in this Agreement, all costs and expenses
incurred by Servicer in carrying out its duties hereunder, and all other
customary fees and expenses shall be paid or caused to be paid by Servicer out
of the compensation to be paid to Servicer pursuant to Section 2.9.
2.17. Responsibility for Insurance Policies; Processing of Claims Under
Insurance Policies; Daily Records and Reports.
(a) Servicer, on behalf of Collection Agent, will administer and
enforce consistent with the standard of care set forth in Section 2.7 hereof,
all rights of Collection Agent provided for in the insurance policies relating
to the Financed Vehicles (the "Insurance Policies").
(b) Servicer will administer consistent with the standard of care
set forth in Section 2.7 hereof, the filings of claims under an Insurance
Policies covering the Loans by filing the appropriate notices related to claims,
including initial notices of loss, as well as claims with the respective
carriers or their authorized agents all in accordance with the terms of the
respective policies. Servicer shall use its best efforts to file such claims on
a timely basis after obtaining knowledge of the events giving rise to such
claims, subject to the servicing standard set forth in Section 2.9 hereof.
Servicer will utilize such notices, claim forms and claim procedures as are
required by the respective insurance carriers. Servicer shall not be required to
pay any premiums or, other than administering the filing of claims and
performing reporting requirements specified in the insurance policies in
connection with filing such claims, perform any obligations of the named insured
under the insurance policies, and shall not be required to institute any
litigation or proceeding or otherwise enforce the obligations of any insured
thereunder. Servicer shall not be responsible to Collection Agent with respect
to any Insurance Policies for any act or omission to act done in order to comply
with the requirements or satisfy any provisions of the insurance policies.
Notwithstanding anything else in this Section 2.17, Servicer shall have no
responsibility to monitor, report or track whether Insurance Policies are in
effect covering each Loan.
2.18. Processing of Information. Information with respect to each Loan
shall be recorded into Servicer's receivable management and accounting system.
2.19. Warranties and Representations with Respect to Compliance with Law
and Enforcement. Servicer warrants, represents and covenants that, in the event
that Servicer realizes upon any Loan, which realization may occur, without
limitation, by collection, repossession, sale or lawsuit, the methods utilized
by Servicer to realize upon such Receivable or to otherwise enforce any
provisions of the Receivable will be conducted in accordance with the provisions
of this Agreement and the standard of care set forth in Section 2.7.
2.20. Records. Servicer shall maintain or cause to be maintained such
books of account and other records as will enable MBIA to determine the status
of each Receivable.
2.21. Modifications. Except as provided in the Collection Policy or
otherwise in this Agreement, Servicer may not increase or reduce the amount of
any scheduled payments or extend or modify any term of any Loan.
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ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1. Representations and Warranties of Servicer. Servicer hereby
represents, warrants and covenants to the Purchaser and MBIA that as of the date
of this Agreement and, for so long as Servicer shall continue to act as Servicer
hereunder:
(a) Servicer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Arizona and is qualified to do
business in each other state where the failure to be so qualified would have a
materially adverse effect on its business or properties.
(b) All necessary corporate, regulatory or other similar action has
been taken to authorize and empower Servicer and the officers or representatives
acting on Servicer's behalf, and Servicer has full power and authority, to
execute, deliver and perform this Agreement.
(c) This Agreement has been duly authorized, executed and delivered
by Servicer and the performance and compliance with the terms of this Agreement
will not violate Servicer's articles of incorporation or bylaws or constitute a
default (or an event which, with notice or lapse of time, or both, would
constitute a default) under, or result in the breach of, any material contract
or agreement to which Servicer is a party or which may be applicable to Servicer
or any of its assets, or create any adverse claim upon its assets.
(d) Servicer is duly licensed and qualified to perform the functions
specified herein, and this Agreement constitutes a valid, legal and binding
obligation of Servicer, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium and other laws affecting the enforcement of creditor's' rights
generally and to general principles of equity.
(e) Servicer is not in violation of, and the execution, delivery and
performance of this Agreement by Servicer will not constitute a violation with
respect to any order or decree of any court or any order, regulation or demand
of any federal, state, municipal or governmental agency, which violation might
have consequences that would materially and adversely affect the condition
(financial or other) or operations of Servicer or its properties or might have
consequences that would affect the performance of its duties hereunder.
(f) No proceeding of any kind, including but not limited to
litigation, arbitration, judicial or administrative, is pending or threatened
against or contemplated by Servicer which would under any circumstance have an
adverse effect on the execution, delivery, performance or enforceability of this
Agreement. There is no injunction, writ, restraining order or other order of any
nature to which Servicer is subject that would adversely affect Servicer's
operations, including the performance of its agreements and the transactions
contemplated hereby.
(g) No information or statement furnished in writing or report
delivered or which will be delivered to Purchaser, MBIA, Agent, Collection Agent
or Back-up Servicer by Servicer required under this Agreement contains or shall
contain any untrue statement of a material fact or omits a material fact
necessary to make the information, certificate, statement or report not
misleading; provided, that Servicer makes no representation or warranty with
respect to any information incorporated into or forming the basis for any
information, statement or report provided by Servicer that is provided to
Servicer by any other Person.
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(h) Servicer has the knowledge, the experience and the systems,
financial and operational capacity available to timely perform each of its
obligations hereunder.
(i) Servicer has made or obtained all consents, filings or
governmental approvals required for the due execution, delivery and performance
of agreements and the servicing of the Loans.
(j) No event has occurred which would adversely affect Servicer's
ability to perform the agreements and transactions contemplated hereby.
(k) Servicer's principal place of business and chief executive
office are at the address specified in Section 5.3 and there have been no other
such locations during the four (4) month period preceding the date hereof.
(l) If payments with respect to the Loans are not to be remitted
directly to Servicer, each Obligor will be directed, and will be required, to
remit such payments to a lockbox or other similar account acceptable to MBIA.
(m) The Servicer has made no change to the Collection Policy except
as permitted by this Agreement.
3.2. Representations; Warranties and Additional Covenants of Collection
Agent. Collection Agent hereby represents and warrants to Servicer that:
(a) With respect to each Loan, Collection Agent has conveyed to
Servicer or will convey to Servicer, Loan Files other than the Excepted Loan
Files.
(b) At the time of transfer of each Loan File (other than the
Excepted Loan Files) to Servicer, all information contained in such Loan File
with respect to the Loan has been, or will be, so conveyed.
(c) The equipment and computer system purchased by Buyer from
Collection Agent pursuant to the Purchase Agreement is fully operational and
capable, without any material modification, of being utilized by Servicer to
service the Loans pursuant to this Agreement.
3.3. Survival of Representations and Warranties. The representations and
warranties set forth in this Article III are continuous and shall survive the
date of this Agreement. Upon discovery by Servicer or Collection Agent of a
breach of any of the foregoing representations and warranties, Servicer or
Collection Agent shall give prompt written notice to the breaching party and to
MBIA.
3.4. Affirmative Covenants of the Servicer. The Servicer shall, unless the
Purchaser and MBIA shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all material respects with
all applicable laws, rules, regulations and orders and maintain its corporate
existence, rights, franchises, qualifications and privileges except to the
extent that the failure to so comply with such laws, rules and regulations or
the failure to so preserve and maintain such existence, rights, franchises and
privileges would not materially adversely affect the collectibility of the Loans
or the Related Security or the ability of the Servicer to perform its
obligations under this Agreement.
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(b) Preservation of Corporate Existence. Preserve and maintain its
corporate existence, rights, franchises and privileges in the jurisdiction of
its incorporation, and qualify and remain qualified in good standing as a
foreign corporation in each jurisdiction where the failure to preserve and
maintain such existence, rights, franchises, privileges and qualification would
materially adversely affect (i) the interests of the Purchaser or MBIA
hereunder, or (ii) the ability of the Servicer to perform its obligations
hereunder.
(c) Audits. At any time and from time to time during regular
business hours (but subject to two Business Days notice at any time when no
Event of Servicing Termination Event exists), permit MBIA or their respective
agents or representatives or assigns, (i) to examine and make copies of the
abstracts from all books, records and documents (including, without limitation,
computer tapes and disks) in the possession or under the control of the Servicer
relating to Loans or Related Security, and (ii) to visit the offices and
properties of the Service for the purpose of examining such materials described
in clause (i) above, and to discuss matters relating to Loans and Related
Security or the Servicer's performance hereunder, under the Loans with any of
the officers or employees of the Servicer having knowledge of such matters.
(d) Keeping of Records and Books of Account. Maintain and implement
administrative and operating procedures and keep and maintain all documents,
books, records and other information reasonably necessary or advisable for the
collection of all Loans.
(e) Location of Records. Keep its chief executive office at the
location stated in Section 5.3, and keep the offices where it keeps its records
concerning the Loans, the Related Security and related Loan Files, at 000 Xxxxx
Xxxxx Xxxxxx, Xxxxxx, Xxxxx or, upon 30 days' prior written notice to the
Purchaser and MBIA, at such other locations specified in such notice.
(f) Collection Policy. Comply, at its expense (except as otherwise
provided in this Agreement), in all material respects with the Collection Policy
in regard to each Loan.
(g) Repurchase. Upon the repurchase of any Transferred Loans by the
Transferor pursuant to Sections 1.04(g)(ii), 1.04(g)(iii) or 3.01(c) of the
Master Transfer Agreement, the Servicer shall execute such assignments and other
documents as may be necessary to effect the retransfer to the Transferor of such
Transferred Loans and the Related Security with respect thereto.
(h) Back-Up Servicer. The Servicer shall cooperate with the Back-up
Servicer in connection with the obligations and rights of the Back-up Servicer
under the Back-up Servicing and Custodial Agreement.
(i) Xxxxxx Xxxxx. Servicer will not terminate the employment of
Xxxxxx Xxxxx for a period of one year from the date of this Agreement, other
than for cause. For purposes of the preceding sentence, "cause" shall mean (i)
Xxxxx fails to perform his duties with Servicer, or engages in gross misconduct,
gross negligence or acts in bad faith in the performance of such duties; (ii)
Xxxxx refuses or fails to follow any lawful direction of any of the officers or
directors of Servicer or any of his supervisors within the management of
Servicer, or violates any lawful rule or regulation established by Servicer from
time to time regarding the conduct of its business; (iii) Xxxxx knowingly
violates any law, rule or regulation applicable to the business of Servicer; or
(iv) Xxxxx is convicted of committing a felony or crime involving moral
turpitude or engages in conduct that is detrimental to Servicer or that could
reasonably be expected to have an adverse impact on the standing or reputation
of Xxxxx or Servicer.
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(j) Deposits. All payments received by Servicer with respect to the
Loans will be received in trust by Servicer for the benefit of Collateral Agent
and MBIA and will be deposited into the Designated Deposit Accounts which are
not subject to any Lien in favor of any other Person.
(k) Collection Center. Servicer will not close or relocate its
Dallas, Texas collection center for a period of two years from the date of this
Agreement without the prior consent of MBIA, which consent shall not be
unreasonably withheld.
3.5. Reporting Requirements of the Servicer. The Servicer shall, unless
the Purchaser and MBIA shall otherwise consent in writing, furnish to the
Purchaser and MBIA:
(a) Other Information. Promptly, from time to time, such other
information, documents, records or reports respecting the Loans, the Related
Security or as the Purchaser or MBIA may from time to time otherwise reasonably
request in order to protect the Purchaser's and MBIA's interests under or as
contemplated by the Sale Agreement.
(b) Collection Policy. Promptly, all changes or amendments to the
Collection Policy.
(c) Annual Statement as to Compliance. On or before January 31st of
each year, an Annual Officer's Certificate (the "Annual Officers Certificate"),
dated effective as of December 31 of the preceding year, stating that (i) a
review of the activities of the Servicer during the preceding twelve (12) month
period (or such shorter period, as is applicable) and of its performance under
this Agreement during such period has been made under such officer's
supervision, and (ii) based on such review, Servicer has materially fulfilled
all its obligations under this Agreement throughout such period, or if there has
been a material default in the fulfillment of any such obligation, specifying
each such default known to such officer and the nature and status thereof and
the remedies thereof being pursued.
(d) Required Reports. The reports as set forth on Exhibit J of this
Agreement (the "Required Reports").
(e) Litigation. As soon as possible and in any event within three
(3) Business Days of the Servicer's knowledge thereof, notice of (i) any
litigation, investigation or proceeding which could reasonably be expected to
materially impair the ability of the Servicer to perform its obligations under
this Agreement or have a material adverse effect on the collectibility of the
Purchased Loans, and (ii) any material adverse development in previously
disclosed litigation.
(f) Termination Events. As soon as possible and in any event with
three (3) Business Days after Servicer has knowledge of the occurrence of an
Event of Servicing Termination or each which, with the giving of notice or lapse
of time or both, would constitute an Event of Servicing Termination, a written
statement of the chief financial officer or chief accounting officer of the
Servicer setting forth the details of such event and the action the Servicer
proposes to take with respect thereto.
3.6. Negative Covenants of the Servicer. The Servicer shall not, without
the written consent of the Purchaser and MBIA:
(a) Sales, Liens, Etc. Except as otherwise provided herein, create
or suffer to exist (by operation of law or otherwise) or otherwise dispose of,
or create or suffer to exist any
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Adverse Claim upon or with respect to, any Loan or Collections or Related
Security, or upon or with respect to any collection account to which any
Collections of Loans are deposited, or assign any right to receive income in
respect thereof.
(b) Extension or Amendment of Loans. Except as provided in the
Collection Policy, extend, amend or otherwise modify the terms of any Loan.
(c) No Petition. So long as this Agreement is in effect, file any
involuntary petition or otherwise institute a bankruptcy, reorganization,
arrangement, insolvency or liquidation proceeding or other proceeding under any
federal or state bankruptcy or similar law against the Purchaser.
(d) Amendments to Collection Policy. Amend or modify the Collection
Policy.
ARTICLE IV
TERMINATION, REMEDIES AND INDEMNITY
4.1. Events of Servicing Termination. Any of the following acts or
occurrences shall constitute an "Event of Servicing Termination" under this
Agreement:
(a) any failure by Servicer to make any payment, transfer or deposit
to the Collection Account on the date such payment, transfer or deposit is
required to be made;
(b) any failure by Servicer to provide the Monthly Servicer Report,
the Weekly Delinquency Report, the Officer's Certificate, the Annual Officer's
Certificate or any of the Required Reports as and when due, and such failure has
not been cured within five (5) Business Days after the date of such failure;
(c) the Rolling Average Delinquency exceeds fifteen percent (15%);
(d) the Rolling Average Charged-Off Losses attributable to
Charged-Off Loans exceeds three and fifteen hundredths percent (3.15%) for any
month;
(e) the Total Collections for the period indicated do not equal or
exceed the amount in the total cash column for the same period and the Total
Cumulative Collections for the period indicated do not equal or exceed the
amount in the cumulative cash column for the same period set forth on Exhibit K
attached to this Agreement;
(f) except with the consent of MBIA, which shall not be unreasonably
withheld, there shall occur a "Change of Control of Servicer" or a "Change of
Control of UDC." For purposes of the preceding sentence, a "Change of Control of
Servicer" shall mean the occurrence of any event following which at least
fifty-one percent (51%) of the outstanding voting securities of Servicer shall
not at such time be beneficially owned by UDC or a direct or indirect subsidiary
of UDC. A "Change of Control of UDC" shall mean any one or more of the following
events:
(1) A change of control of UDC of a nature that would be required to
be reported in response to Item 6(e) of Schedule 14A of the
Securities Exchange Act of 1934, as amended ("1934 Act");
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(2) A change of control of UDC through a transaction or series of
transactions, such that any person (as that term is used in Section
13 and 14(d)(2) of the 1934 Act), excluding affiliates of UDC as of
the date hereof, is or becomes the beneficial owner (as that term is
used in Section 13(d) of the 1934 Act), directly or indirectly, of
securities of UDC representing eighty percent (80%) or more of the
combined voting power of UDC's then outstanding securities;
(3) Any consolidation or merger of UDC in which UDC is not the
continuing or surviving company or pursuant to which stock would be
converted into cash, securities or other property, other than a
merger of UDC in which the holders of the shares of stock
immediately before the merger have at least fifty-one percent (51%)
of the ownership of common stock of the surviving company
immediately after the merger;
(4) The shareholders of UDC approve any plan or proposal for the
liquidation or dissolution of UDC; or
(5) Substantially all of the assets or UDC are sold or otherwise
transferred to parties that are not within a "controlled group of
corporations" (as defined in Section 1563 of the Internal Revenue
Code of 1986, as amended) in which UDC is a member.
Notwithstanding anything to the contrary above, this provision shall not apply
to any "Change of Control of Servicer" or "Change of Control of UDC" if the
person obtaining such control has a net worth equal to or greater that the net
worth of UDC as of the date of such Change of Control.
(g) any failure, other than as set forth in paragraphs (a) - (e)
above, on the part of Servicer to either duly observe or perform in any material
respect any other covenants or agreements of Servicer set forth in this
Agreement and such failure continues unremedied after the date which is the
earlier of ten (10) days from (i) the date of knowledge of such failure by
Servicer or (ii) the date of receipt by Servicer of written notice of such
failure by MBIA provided such time period may be extended in writing by MBIA, to
the extent Servicer is diligently pursuing a cure of such failure;
(h) any representation, warranty or certification made by Servicer
in this Agreement, or any certificate delivered pursuant to this Agreement,
shall prove to have been incorrect when made in any material respect;
(i) an involuntary case shall be commenced against UDC or Servicer
and the petition shall not be dismissed, stayed, bonded or discharged within
sixty (60) days after commencement of the case; or a court having jurisdiction
in the premises shall enter a decree or order for relief in respect of UDC or
the Servicer in an involuntary case, under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect; or any other similar relief
shall be granted under any applicable federal, state, local or foreign law; or
the board of directors of UDC or the Servicer adopts any resolution or otherwise
authorizes any action to approve any of the foregoing. A decree or order of a
court having jurisdiction in the premises for the appointment of a receiver,
liquidator, sequestrator, trustee, custodian or other officer having similar
powers over UDC or the Servicer or over all or a substantial part of the assets
of UDC or the Servicer shall be entered; or an interim receiver, trustee or
other custodian of UDC or the Servicer or of all of a
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substantial part of the assets of UDC or the Servicer shall be appointed or a
warrant of attachment, execution or similar process against any substantial part
of the assets of UDC or the Servicer shall be issued and any such event shall
not be stayed, dismissed, bonded or discharged within sixty (60) days after
entry, appointment or issuance; or the board of directors of UDC or the Servicer
adopts any resolution or otherwise authorizes any action to approve any of the
foregoing;
(j) UDC or the Servicer shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or shall consent to the entry of an order of relief in an involuntary
case, or to the conversion of an involuntary case to a voluntary case, under any
such law, or shall consent to the appointment of or taking possession by a
receiver, trustee, or other custodian for all or a substantial part of its
assets; or UDC or the Servicer shall make any assignment for the benefit of
creditors or shall be unable or fail, or admit in writing its inability, to pay
its debts as such debts become due, or the board of directors of UDC or the
Servicer adopts any resolution or otherwise authorizes any action to approve any
of the foregoing;
(k) at any time, for any reason, any Designated Deposit Account is
subject to a Lien;
(l) there is a draw on the Surety Bond;
(m) there shall have occurred any event which materially adversely
affects the ability of the Servicer to perform its obligations hereunder;
(n) there is a material adverse change in the financial condition or
operations of the Servicer or UDC;
(o) Xxxxxx Xxxxx ceases to hold a senior position with the Servicer
having primary responsibility for collections of the Receivables during the
period from the date of this agreement to the first annual anniversary of this
Agreement, except in connection with his termination for cause. For purposes of
the preceding sentence, "cause" shall mean (i) Xxxxx fails to perform his duties
with Servicer, or engages in gross misconduct, gross negligence or acts in bad
faith in the performance of such duties; (ii) Xxxxx refuses or fails to follow
any lawful direction of any of the officers or directors of Servicer or any of
his supervisors within the management of Servicer, or violates any lawful rule
or regulation established by Servicer from time to time regarding the conduct of
its business; (iii) Xxxxx knowingly violates any law, rule or regulation
applicable to the business of Servicer; or (iv) Xxxxx is convicted of committing
a felony or crime involving moral turpitude or engages in conduct that is
detrimental to Servicer or that could reasonably be expected to have an adverse
impact on the standing or reputation of Xxxxx or Servicer; or
(p) UDC or the Servicer shall fail to make any payment when due with
respect to any Indebtedness of UDC or the Servicer (other than an obligation
payable hereunder), or any breach, default or event of default shall occur, or
any other condition shall exist under any instrument, agreement or indenture
pertaining to any such Indebtedness, if the effect thereof is to permit the
holder or holders of such Indebtedness to accelerate the maturity of any such
Indebtedness or require a redemption or other repurchase of such Indebtedness
and such failure relates to the acceleration of an amount in excess of
$10,000,000, in the case of UDC and $2,000,000, in the case of the Servicer, and
such failure shall continue for a period of sixty (60) days following the
occurrence of such failure.
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4.2. Remedies.
(a) If an Event of Servicing Termination shall occur and be
continuing, unless such Event of Servicing Termination shall have been waived in
writing by MBIA pursuant to Section 4.4, or if MBIA and Agent elects to
terminate this Agreement pursuant to Section 2.10, then, by written notice to
Servicer (a "Termination Notice"), all of the rights of Servicer under this
Agreement shall be terminated in accordance with the provisions of such notice.
(b) After receipt by Servicer of a Termination Notice pursuant to
this Section 4.2, all authority and power of Servicer under this Agreement shall
terminate in accordance with the provisions of such notice. Servicer hereby
agrees to cooperate with Purchaser and Agent in effecting the termination of the
responsibilities and rights of Servicer to conduct servicing under this
Agreement.
(c) On and after the receipt by Servicer of a Termination Notice
pursuant to this Section 4.2, Servicer shall continue to perform all servicing
functions under this Agreement until the date specified in the Termination
Notice or otherwise specified by MBIA in writing. During such period, Servicer
shall continue to receive the Servicing Fee and reimbursement pursuant to the
terms of this Agreement. Any successor servicer shall be acceptable to MBIA
4.3. Accountability and Liability. Servicer shall be strictly accountable
and liable for all payments actually received by Servicer on the Loans. Servicer
shall be liable under this Agreement for (i) a breach in the performance of its
obligations under this Agreement, and (ii) for its own willful misconduct and
(iii) for Servicer's gross negligence. Servicer shall not be liable to
Collection Agent, MBIA, Agent or to any other Person for any action taken or for
refraining from the taking of any action in accordance with this Agreement or
for errors in judgment other than gross negligence or willful misconduct, or for
any Event of Servicing Termination contained in Section 4.1 (c), (d), (e), (f),
(i), (j), (l), (m), (n), (o) or (p). In no event shall Servicer be liable to
MBIA, Purchaser or the Agent for any consequential or punitive damages.
4.4. Waiver of Events of Servicing Default. MBIA may waive in writing any
Event of Servicing Termination by Servicer in the performance of its obligations
hereunder and its consequences. Upon any such waiver of an Event of Servicing
Termination, such termination event shall cease to exist, and any terminating
event arising therefrom shall be deemed to have been remedied for every purpose
of this Agreement. No such waiver shall extend to any subsequent or other Event
of Servicing Termination or impair any right consequent thereon except to the
extent expressly so waived.
4.5. Survival. The agreements in this Article IV shall survive the
termination of the Purchase Agreement and payment in full of the Loans.
4.6. Force Majeure. Notwithstanding anything herein to the contrary,
Servicer shall not be considered in default hereunder or have any liability to
any party for any failure to perform if such failure arises solely out of the
following causes beyond the control of Servicer, as the case may be: acts of God
or a public enemy, fire, flood or war.
4.7. Termination Other than an Event of Servicing Default. If MBIA or
Agent (with the prior written consent of MBIA) or their successors or assigns or
any future owner of the Loans
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terminates this Agreement or any of the rights of Servicer other than pursuant
to Section 4.2 or Section 2.10 above (any party terminating pursuant to this
Section shall be referred to herein as the "Terminating Party"), each
acknowledges that Servicer will suffer economic loss that is difficult to
calculate at this time and, as such, the Terminating Party (and MBIA if
terminated by Agent with the consent of MBIA) agrees that it shall pay to
Servicer as liquidated damages an amount equal to the Termination Penalty set
forth on Exhibit L hereto.
4.8. Effect of Termination. Upon termination of this Agreement, Servicer
shall, at the direction of MBIA, promptly deliver all Loan Files, electronic
files, and any related files and correspondence in its possession as are related
to the management of the Loans and the services provided hereunder to the Person
designated by MBIA. All reasonable expenses related to the foregoing shall be
borne by Servicer, except in connection with a termination under Section 2.10 or
4.7, in which case MBIA shall pay such reasonable expenses.
4.9. Limitation or Termination. Notwithstanding any provision in the
Purchase Agreement or the Master Transfer Agreement, including without
limitation the occurrence of an Event of Termination or Re-Xxxxxxx Trigger Event
thereunder, or the exercise of any rights pursuant thereto, the Servicer shall
not be terminated and this Agreement shall not be terminated except (i) as
permitted pursuant to Sections 4.2 or 2.10 hereof, or (ii) upon payment to
Servicer of the Termination Penalty. Collection Agent shall have no right or
power to terminate this Agreement or to terminate the Servicer.
ARTICLE V
MISCELLANEOUS PROVISIONS
5.1. Amendments. This Agreement may only be amended by mutual written
consent of the parties hereto, and by Purchaser and Agent.
5.2. Waivers. The provisions of this Agreement may only be waived by
written consent of the parties hereto. The failure of any party at any time to
require performance by the other of any provision of this Agreement shall in no
way affect that party's right to enforce such provision, nor shall the waiver by
any party of any breach of any provision of this Agreement be deemed or held to
be a waiver of any further breach of the same provision or any other provision.
5.3. Notices.
(a) All notices, requests and other communications provided for
hereunder shall be in writing (including, unless the context expressly otherwise
provides, by facsimile transmission, provided, that, any matter transmitted by
facsimile (i) shall be immediately confirmed by a telephone call to the
recipient, and (ii) shall be followed promptly by a hard copy original thereof)
and mailed, faxed, telecopied or delivered, to the address or facsimile number
set forth below; or, as to Servicer, Collection Agent, Purchaser, MBIA or Agent,
to such other address as shall be designated by such party in a written notice
to the other parties, and as directed to each other party, at such other address
as shall be designated by such party in a written notice to Servicer, Collection
Agent, Purchaser, MBIA or Agent.
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If to Servicer: CHAMPION ACCEPTANCE CORPORATION
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Attn: Xxxxxx Xxxxxxx
Facsimile No: (000) 000-0000
With a copy to: XXXXX & XXXXXX L.L.P.
One Arizona Center
000 Xxxx Xxx Xxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
If to Collection KARS-YES FINANCIAL, INC.
Agent: X.X. Xxx 0000
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxxxx Xxxxx
Facsimile No: (000) 000-0000
If to Purchaser: KARS-YES RECEIVABLES INC.
X.X. Xxx 0000
Xxxxxx, Xxxxx 00000-0000
Attn: Xxxxxx Xxxxx
Facsimile No: (000) 000-0000
If to MBIA: MBIA INSURANCE CORPORATION
000 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attn: Insured Portfolio Management - SF
Facsimile No.: (000) 000-0000
Confirmation: (000) 000-0000
If to Agent: CITICORP NORTH AMERICA, INC.
000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: U.S. Securitization Dept.
Facsimile No.: (000) 000-0000
If to Back-up Norwest Bank Minnesota, National Association
Servicer: Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attn: Corporate Trust Department
Facsimile No.: (000) 000-0000
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery or faxed, be effective when delivered for
overnight (next day) delivery, transmitted by facsimile machine, respectively,
or if delivered, upon delivery.
5.4. Severability of Provisions. If one or more of the provisions of this
Agreement shall be held invalid for any reason, such provisions shall be deemed
severable from the remaining provisions of this Agreement and shall in no way
affect the validity or enforceability of such
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remaining provisions. To the extent permitted by law, the parties hereto waive
any law which renders any provision of this Agreement prohibited or
unenforceable.
5.5. Rights Cumulative. All rights and remedies under this Agreement are
cumulative, and none is intended to be exclusive of another. No delay or
omission in insisting upon the strict observance or performance of any provision
of this Agreement, or in exercising any right or remedy, shall be construed as a
waiver or relinquishment of such provision, nor shall it impair such right or
remedy. Every right and remedy may be exercised from time to time and as often
as deemed expedient.
5.6. No Offset. Prior to the termination of this Agreement, the
obligations of Collection Agent under this Agreement shall not be subject to any
defense, counterclaim or right of offset which Collection Agent may have against
Servicer whether in respect of this Agreement, any Loan or otherwise.
5.7. Powers of Attorney. Collection Agent shall, from time to time,
provide to the employees of Servicer limited, revocable powers of attorney or
other such written authorizations as may be reasonably appropriate to enable
Servicer to perform its respective obligations under this Agreement; provided,
however, that Collection Agent shall not be required to provide such powers with
respect to any matter for which Collection Agent does not have authority to
perform itself.
5.8. Assignment and Binding Effect. This Agreement may be assigned only
with the written consent of the parties hereto; however, in the event of an
assignment, all provisions of this Agreement shall be binding upon and inure to
the benefit of the respective successors and assigns of the parties hereto.
Notwithstanding the forgoing, Servicer may assign its rights and delegate its
obligations under this Agreement to any affiliate or subsidiary of Servicer,
provided that Servicer shall remain responsible for the performance of all
obligations of the Servicer under this Agreement.
5.9. Captions. The article, paragraph and other headings contained in this
Agreement are for reference purposes only, and shall not limit or otherwise
affect the meaning hereof.
5.10. Counterparts. This Agreement may be executed simultaneously in any
number of counterparts, each of which counterparts shall be deemed to be an
original and such counterparts shall constitute but one and the same instrument.
One or more counterparts of this Agreement may be delivered via telecopies with
the intention that they shall have the same effect as an original executed
counterpart hereof, with the understanding that originals of such facsimile
signature will follow.
5.11. Governing Law. This Agreement shall be deemed entered into with and
shall be governed by and interpreted in accordance with the internal laws of the
State of Arizona, except to the extent that it is mandatory that the laws of
some other jurisdiction apply.
5.12. Parties. This Agreement shall inure solely to the benefit of and
shall be binding upon the parties hereto, and their respective successors, legal
representatives and assigns, and no other person shall have or be construed to
have any equitable right, remedy or claim under or in respect of or by virtue of
this Agreement or any provision contained herein.
5.13. Relationship of the Parties. The relationship of the parties to this
Agreement is that of independent contractors. Neither this Agreement nor any of
the activities contemplated hereby shall be deemed to create any partnership,
joint venture, agency or employer/employee relationship between Servicer and
Collection Agent.
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5.14. Incorporation by Reference. Each of the Exhibits to this Agreement,
including but not limited to the Collection Policy, are incorporated by
reference into this Agreement and shall be binding on the parties hereto to the
same extent as if said Exhibits were set forth in their entirety in this
Agreement. Notwithstanding anything else in this Agreement, to the extent there
is a conflict between this Agreement and the Collection Policy, this Agreement
shall control.
5.15. Servicer Obligations. In order to more fully assure the monetary
obligations and liability, consistent with Section 4.3, of Servicer to
Collection Agent, MBIA and Agent, UDC is executing this Agreement for the
limited purpose of this Section 5.15. In the event any monetary obligation of
Champion Acceptance Corporation is undisputed and is due and owing by Champion
Acceptance Corporation to Collection Agent, MBIA or Agent, UDC will, upon
written notice of same, make payment of such amount to Owner or Agent, as
directed in the notice, within thirty (30) days of receipt of the notice. Any
disputed amounts owing by Champion Acceptance Corporation shall be resolved in
accordance with Exhibit M hereto.
5.16. Undertaking by Servicer. Servicer agrees to obtain the
acknowledgment of General Electric Capital Corporation ("GECC") and of
SunAmerica Life Insurance Company ("SunAmerica") and Xxxxxx Bank and Trust
Company, as Trustee ("Xxxxxx"), that none of them have a Lien on the Designated
Deposit Accounts.
5.17. MBIA Payment. Any payment obligation of MBIA under Sections 4.7, 4.8
and 2.14 hereof, shall first be satisfied by retention from the Collections by
Servicer and, to the extent Servicer is unable, to so retain for any reason or
there are not sufficient Collections, then MBIA shall promptly pay such
obligations.
IN WITNESS WHEREOF, the parties hereby have caused this Agreement to be
executed as of the date first written above.
CHAMPION ACCEPTANCE CORPORATION, an
Arizona corporation
By: /s/ XXXXXXX XXXXXXXX
-----------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: President
"Servicer"
KARS-YES FINANCIAL, INC., a Delaware
corporation
By: /s/ XXXXXX XXXXX
-----------------------------------------
Name: Xxxxxx Xxxxx
Title: President
"Collection Agent"
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MBIA INSURANCE CORPORATION, a New York
stock insurance company
By: /s/ XXXX X. XXXXX
-----------------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President
"MBIA"
UDC executes this Agreement as to Section 5.15 only as of the date first
written above.
UGLY DUCKLING CORPORATION, a Delaware
corporation
By: /s/ XXXXXXX X. XXXXXXXX
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: President
CONSENTED AND AGREED:
YES RECEIVABLES INC.,
a Delaware corporation
By: /s/ XXXXXX XXXXX
-------------------------------------
Name: Xxxxxx Xxxxx
Title: Vice President
"Purchaser"
CITICORP NORTH AMERICA, INC.,
a Delaware corporation
By: /s/ XXXXXXX X. XXXXX
-------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
"Agent"
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EXHIBITS
Exhibit A Collection Policy
Exhibit B Designated Depository Account
Exhibit C Loans
Exhibit D Monthly Servicer Report
Exhibit E Officers' Certificate
Exhibit F Weekly Delinquency Reports
Exhibit G Excepted Loan Files
Exhibit H Request for Release of Documents
Exhibit I Reimbursed Expenses
Exhibit J Required Reports
Exhibit K Cash Collection Schedule
Exhibit L Termination Penalty
Exhibit M Payment Reimbursement Resolution Policy
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