Exhibit 4.2
FORM OF POOLING AND SERVICING AGREEMENT
RELATING TO
TRIAD AUTO RECEIVABLES TRUST 199[ ]-[ ]
among
TRIAD FINANCIAL SPECIAL PURPOSE CORPORATION,
as Seller
and
TRIAD FINANCIAL CORPORATION,
as Servicer
and
[ ],
as Trustee, Backup Servicer and Collateral Agent
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Dated as of [ ]
--------------------------------
THIS POOLING AND SERVICING AGREEMENT (this "AGREEMENT") dated as of [ ] is
made with respect to the formation of the Triad Auto Receivables Trust 199[ ]-
[ ], among (1) Triad Financial Special Purpose Corporation, a Delaware
corporation, as seller (the "SELLER"), (2) Triad Financial Corporation, a
California corporation ("TRIAD"), as servicer (the "SERVICER") and (3) [ ], a
[ ] banking corporation, as trustee (the "TRUSTEE"), backup servicer (the
"BACKUP SERVICER") and collateral agent (the "COLLATERAL AGENT").
In consideration of the premises and of the mutual agreements herein
contained, and other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto, intending to be legally bound, hereby
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS. Whenever capitalized and used in this Agreement,
the following words and phrases, unless the context otherwise requires, shall
have the following meanings:
"ACCOUNTANT'S REPORT" shall have the meaning set forth in SECTION 3.11.
"ACCREDITED INVESTOR" means an entity meeting the requirements of an
institutional "accredited investor" under Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Act.
"ACT" means the Securities Act of 1933, as it may be amended from time to
time.
"ACTUARIAL METHOD" means the method of allocating a fixed level payment
between principal and interest, pursuant to which each scheduled monthly payment
is deemed to consist of an amount of interest equal to 1/12 of the stated APR of
the Receivable multiplied by the outstanding Principal Balance of the Receivable
and an amount of principal equal to the remainder of such scheduled monthly
payment.
"ACTUARIAL RECEIVABLE" means any Receivable under which the portion of a
payment allocable to interest and the portion allocable to principal is
determined in accordance with the Actuarial Method.
"ADDITIONAL SERVICING FEE" means the additional compensation payable to the
Servicer for services rendered during the respective Collection Period, which
shall be equal to all late payment penalties, prepayment penalties, extension
and administration fees payable by the Obligors in connection with
modifications, extensions and prepayments; PROVIDED, HOWEVER, that amounts paid
in connection with the prepayment in full of a Precomputed Receivable shall not
be considered part of the Additional Servicing Fee in accordance with Section
4.3(a) hereof.
"AFFILIATE" of any Person means any Person who directly or indirectly
controls, is controlled by, or is under direct or indirect common control with
such Person. For purposes of this definition of "Affiliate", the term "control"
(including the terms "controlling", "controlled by" and "under common control
with") means the possession, directly or indirectly, of the power to
direct or cause a direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
"AGREEMENT" shall have the meaning set forth in the first paragraph of this
Agreement.
"AMOUNT FINANCED" means, with respect to a Receivable, the aggregate amount
advanced under such Receivable toward the purchase price of the Financed Vehicle
and related costs, including amounts advanced in respect of accessories,
insurance premiums, service and warranty contracts, other items customarily
financed as part of retail automobile installment sale contracts or promissory
notes, and related costs.
"ANNUAL PERCENTAGE RATE" or "APR" of a Receivable means the annual rate of
finance charges stated in the Receivable.
"BACKUP SERVICING FEE" means the fee payable to the Backup Servicer on each
Distribution Date for services rendered during the respective Collection Period,
which shall be equal to the product of one-twelfth and $[ ].
"BACKUP SERVICER" shall have the meaning set forth in the first paragraph
of this Agreement.
"BUSINESS DAY" means any day other than a Saturday, Sunday, legal holiday
or other day on which commercial banking institutions or trust companies in the
City of New York, the state in which the Corporate Trust Office is located or
the state in which the executive offices of the Servicer are located shall be
authorized or obligated by law, executive order or governmental decree to be
closed.
"CASUALTY" means, with respect to a Financed Vehicle, the total loss or
destruction of such Financed Vehicle.
"CERTIFICATE" or "CERTIFICATES" means anyone of the Class A Certificates,
Class B Certificates or Class C Certificates executed by the Trustee on behalf
of the Trust and authenticated by the Trustee in substantially the form set
forth in EXHIBIT A, EXHIBIT B, or EXHIBIT C hereto, respectively.
"CERTIFICATE BALANCE" as of any day, means the sum of the Class A
Certificate Balance, the Class B Certificate Balance and the Class C Certificate
Balance.
"CERTIFICATE CUSTODIAN" means initially, the Trustee; thereafter, any other
certificate custodian acceptable to the Trustee.
"CERTIFICATE MAJORITY" means the Holders of Class A Certificates and the
Class B Certificates representing a majority of the sum of the Class A
Certificate Balance and the Class B Certificate Balance; PROVIDED, HOWEVER, if
there are no Class A Certificates outstanding, Certificateholders representing a
majority of the Class B Certificate Balance shall constitute a Certificate
Majority; and, PROVIDED, FURTHER, if there are no Class A Certificates
outstanding and
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no Class B Certificates outstanding, Certificateholders representing a majority
of the Class C Certificate Balance shall constitute a Certificate Majority.
"CERTIFICATE REGISTER" and "CERTIFICATE REGISTRAR" mean, respectively, the
register maintained and the Certificate Registrar appointed pursuant to SECTION
5.3.
"CERTIFICATEHOLDER" or "HOLDER" means the Person in whose name a
Certificate shall be registered in the Certificate Register, except that so long
as any Certificates are outstanding, solely for the purposes of giving any
consent, waiver, request or demand pursuant to this Agreement, the interest
evidenced by any Certificate registered in the name of the Seller or the
Servicer, or any Affiliate of either of them, shall not be taken into account in
determining whether the requisite percentage necessary to effect any such
consent, waiver, request or demand shall have been obtained.
"CLASS" means a class of Certificates.
"CLASS A CERTIFICATE" means any one of the Class A Certificates, executed
by the Trustee on behalf of the Trust and authenticated by the Trustee in
substantially the form set forth in EXHIBIT A hereto.
"CLASS A CERTIFICATEHOLDER" means the Person in whose name a Class A
Certificate shall be registered in the Certificate Register.
"CLASS A CERTIFICATE BALANCE" means initially, the Class A Percentage of
the Cutoff Date Pool Balance, and thereafter shall equal the initial Class A
Certificate Balance reduced by all amounts previously distributed to the Class A
Certificateholders and allocable to principal. If the date of determination is a
Distribution Date, then such Class A Certificate Balance shall be reduced by all
such amounts distributed on such date.
"CLASS A INTEREST CARRYOVER SHORTFALL" means, as of the close of business
on any Distribution Date, the excess of (a) the Class A Interest Distributable
Amount for such Distribution Date and any outstanding Class A Interest Carryover
Shortfall from the preceding Distribution Date plus interest on such outstanding
Class A Interest Carryover Shortfall, to the extent permitted by law, at the
Class A Pass-Through Rate from such preceding Distribution Date through the
current Distribution Date (calculated on the basis of a 360-day year consisting
of twelve 30-day months), over (b) the amount of interest that the Holders of
the Class A Certificates actually received on such current Distribution Date.
"CLASS A INTEREST DISTRIBUTABLE AMOUNT" means, for any Distribution Date,
an amount equal to thirty (30) days of interest at the Class A Pass-Through Rate
on the Class A Certificate Balance as of the close of business on the last day
of the related Collection Period (calculated on the basis of a 360-day year
consisting of twelve 30-day months).
"CLASS A PASS-THROUGH RATE" means [ ]% per annum.
"CLASS A PERCENTAGE" shall be [ ] percent ([ ]%).
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"CLASS A POOL FACTOR" means, as of a Distribution Date, a seven-digit
decimal figure equal to the Class A Certificate Balance as of the close of
business on such Distribution Date divided by the initial Class A Certificate
Balance. The Class A Pool Factor will be 1.0000000 as of the Closing Date;
thereafter, the Class A Pool Factor will decline to reflect reductions in the
Class A Certificate Balance.
"CLASS A PRINCIPAL CARRYOVER SHORTFALL" means, as of the close of business
on any Distribution Date, the excess of (a) the Class A Principal Distributable
Amount and any outstanding Class A Principal Carryover Shortfall from the
preceding Distribution Date, over (b) the amount of principal that the Holders
of the Class A Certificates actually received on such current Distribution Date.
"CLASS A PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date other than the Final Scheduled Distribution Date, the product
of the Class A Percentage and the Principal Distributable Amount. On and after
the Final Scheduled Distribution Date, the Class A Principal Distributable
Amount will equal the remaining Class A Certificate Balance.
"CLASS B CERTIFICATE" means any one of the Class B Certificates, executed
by the Trustee on behalf of the Trust and authenticated by the Trustee in
substantially the form set forth in EXHIBIT B hereto.
"CLASS B CERTIFICATE BALANCE" means, initially, the Class B Percentage of
the Cutoff Date Pool Balance, and thereafter shall equal the initial Class B
Certificate Balance reduced by all amounts previously distributed to the Class B
Certificateholders and allocable to principal. If the date of determination is a
Distribution Date, then such Class B Certificate Balance shall be reduced by all
such amounts distributed on such date.
"CLASS B CERTIFICATEHOLDER" means the Person in whose name a Class B
Certificate shall be registered in the Certificate Register.
"CLASS B INTEREST CARRYOVER SHORTFALL" means, as of the close of business
on any Distribution Date, the excess of (a) the Class B Interest Distributable
Amount for such Distribution Date and any outstanding Class B Interest Carryover
Shortfall from the preceding Distribution Date, plus interest on such
outstanding Class B Interest Carryover Shortfall, to the extent permitted by
law, at the Class B Pass-Through Rate from such preceding Distribution Date
through the current Distribution Date (calculated on the basis of a 360-day year
consisting of twelve 30-day months), over (b) the amount of interest that the
Holders of the Class B Certificates actually received on such current
Distribution Date.
"CLASS B INTEREST DISTRIBUTABLE AMOUNT" means, for any Distribution Date,
an amount equal to thirty (30) days of interest at the Class B Pass-Through Rate
on the Class B Certificate Balance as of the close of business on the last day
of the related Collection Period (calculated on the basis of a 360-day year
consisting of twelve 30-day months).
"CLASS B PASS-THROUGH RATE" means [ ]% per annum.
"CLASS B PERCENTAGE" shall be [ ] percent ([ ]%).
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"CLASS B POOL FACTOR" means, as of a Distribution Date, a seven-digit
decimal figure equal to the Class B Certificate Balance as of the close of
business on such Distribution Date divided by the initial Class B Certificate
Balance. The Class B Pool Factor will be 1.0000000 as of the Closing Date;
thereafter, the Class B Pool Factor will decline to reflect reductions in the
Class B Certificate Balance.
"CLASS B PRINCIPAL CARRYOVER SHORTFALL" means, as of the close of any
Distribution Date, the excess of (a) the Class B Principal Distributable Amount
and any outstanding Class B Principal Carryover Shortfall from the preceding
Distribution Date, over (b) the amount of principal that the Holders of the
Class B Certificates actually received on such current Distribution Date.
"CLASS B PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date other than the Final Scheduled Distribution Date, the product
of the Class B Percentage and the Principal Distributable Amount. On and after
the Final Scheduled Distribution Date, the Class B Principal Distributable
Amount will equal the remaining Class B Certificate Balance.
"CLASS C CERTIFICATE" means any one of the Class C Certificates, executed
by the Trustee on behalf of the Trust and authenticated by the Trustee in
substantially the form set forth in Exhibit C hereto.
"CLASS C CERTIFICATE BALANCE" means, initially, the Class C Percentage of
the Cutoff Date Pool Balance, and thereafter shall equal the initial Class C
Certificate Balance reduced by all amounts previously distributed to the Class C
Certificateholder and allocable to principal. If the date of determination is a
Distribution Date, then such Class C Certificate Balance shall be reduced by all
such amounts distributed on such date.
"CLASS C CERTIFICATEHOLDER" means the Person in whose name a Class C
Certificate shall be registered in the Certificate Register.
"CLASS C INTEREST CARRYOVER SHORTFALL" means, as of the close of business
on any Distribution Date, the excess of (a) the Class C Interest Distributable
Amount for such Distribution Date and any outstanding Class C Interest Carryover
Shortfall from the immediately preceding Distribution Date, plus interest on
such outstanding Class C Interest Carryover Shortfall, to the extent permitted
by law, at the Class C Pass-Through Rate from such preceding Distribution Date
through the current Distribution Date (calculated on the basis of a 360-day year
consisting of twelve 30-day months), over (b) the amount of interest that the
Holders of the Class C Certificates actually received on such current
Distribution Date.
"CLASS C INTEREST DISTRIBUTABLE AMOUNT" means, for any Distribution Date,
an amount equal to thirty (30) days of interest at the Class C Pass-Through Rate
on the Class C Certificate Balance as of the close of business on the last day
of the related Collection Period (calculated on the basis of a 360-day year
consisting of twelve 30-day months).
"CLASS C PASS-THROUGH RATE" means [ ]% per annum.
"CLASS C PERCENTAGE" shall be [ ] percent ([ ]%).
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"CLASS C POOL FACTOR" means, as of a Distribution Date, a seven-digit
decimal figure equal to the Class C Certificate Balance as of the close of
business on such Distribution Date divided by the initial Class C Certificate
Balance. The Class C Pool Factor will be 1.0000000 as of the Closing Date;
thereafter, the Class C Pool Factor will decline to reflect reductions in the
Class C Certificate Balance.
"CLASS C PRINCIPAL CARRYOVER SHORTFALL" means, as of the close of any
Distribution Date, the excess of (a) the Class C Principal Distributable Amount
and any outstanding Class C Principal Carryover Shortfall from the preceding
Distribution Date, over (b) the amount of principal that the Holders of the
Class C Certificates actually received on such current Distribution Date.
"CLASS C PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date other than the Final Scheduled Distribution Date, the product
of the Class C Percentage and the Principal Distributable Amount. On and after
the Final Scheduled Distribution Date, the Class C Principal Distributable
Amount will equal the remaining Class C Certificate Balance.
"CLOSING DATE" means [ ].
"CLOSING DATE CERTIFICATE BALANCE" means $[ ].
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL AGENT" means [ ], acting as the Collateral Agent pursuant to
the Reserve Account Agreement, and any successor thereto pursuant to the terms
of the Reserve Account Agreement.
"COLLATERAL INSURANCE" shall have the meaning specified in SECTION 3.4(a).
"COLLECTION ACCOUNT" means the account designated in, and which is
established and maintained pursuant to, SECTION 4.1.
"COLLECTION GUIDELINES AND PROCEDURES" means the guidelines and procedures
of the Servicer with respect to servicing contracts attached to the Purchase
Agreement as EXHIBIT C.
"COLLECTION PERIOD" means, with respect to a Determination Date or a
Distribution Date, the calendar month immediately preceding the month in which
such Determination Date or Distribution Date occurs, or, in the case of the
initial Determination Date or Distribution Date, the period from and excluding
the Cutoff Date to and including the last day of the month following the month
in which the Cutoff Date occurred.
"COLLECTOR TO CURRENT RECEIVABLE RATIO" means the ratio of collectors
employed by the Servicer to the aggregate number of Managed Receivables with
respect to which less than $40 of Scheduled Payments is 31 or more days past
due.
"COLLECTOR TO DELINQUENT RECEIVABLE RATIO" means the ratio of collectors
employed by the Servicer to the aggregate number of Managed Receivables with
respect to which $40 or more of all Scheduled Payments is 31 or more days past
due.
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"CORPORATE TRUST OFFICE" means the office of the Trustee at which its
corporate trust business shall be principally administered, which office as of
the date hereof is located at [ ].
"CRAM DOWN LOSS" means, with respect to a Receivable, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the amount owed on a Receivable or otherwise modifying or restructuring
the scheduled payments to be made on a Receivable, an amount equal to such
reduction in Principal Balance of such Receivable or the reduction in the net
present value (using as the discount rate the lower of the APR on such
Receivable or the rate of interest, if any, specified by the court in such
order) of the Scheduled Payments as so modified or restructured. A "Cram Down
Loss" shall be deemed to have occurred on the date of issuance of such order.
"CUMULATIVE DEFAULT RATIO" means, with respect to any Record Date, a
fraction, (a) the numerator of which is equal to the sum of (i) the aggregate of
the Principal Balances as of the related Record Date of all Receivables which
have become Defaulted Receivables, and (ii) the aggregate amount of any Cram
Down Losses, and (b) the denominator of which is equal to the Cutoff Date Pool
Balance.
"CUSTODIAN AGREEMENT" means that certain Custodian Agreement, dated as of
[ ], among ContiTrade Services L.L.C., as lender, the Servicer, as Borrower,
and the Trustee, as custodian.
"CUTOFF DATE" means the close of business on [ ].
"CUTOFF DATE POOL BALANCE" means $[ ] as set forth in SCHEDULE A.
"DEALER" means, with respect to a Receivable, the seller of the related
Financed Vehicle, who originated and assigned such Receivable to Triad.
"DEALER AGREEMENT" means an agreement between Triad and a Dealer relating
to the sale of retail installment sale contracts to Triad and all documents and
instruments relating thereto.
"DEALER ASSIGNMENT" means, with respect to a Receivable, the assignment
executed by a Dealer conveying such Receivable to Triad.
"DEEMED CURED" means, as of a Record Date, (a) with respect to a Servicer
Termination Trigger Event that has occurred, that no Servicer Termination
Trigger Event shall have occurred as of such Record Date or as of either of the
two immediately preceding Record Dates, and (b) with respect to a Reserve
Account Trigger Event that has occurred, that no Reserve Account Trigger Event
shall have occurred as of such Record Date or as of either of the two
immediately preceding Record Dates; PROVIDED, HOWEVER, that a Reserve Account
Trigger Event resulting from a Cumulative Default Ratio exceeding [ ]% shall
never be Deemed Cured until both the Class A Certificate Balance and the Class B
Certificate Balance have been reduced to zero.
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"DEFAULTED RECEIVABLE" means any Receivable (a) for which the related
Financed Vehicle has been repossessed by the Servicer or (b) for which the
Obligor is more than 120 days past due or (c) with respect to which the Servicer
has determined in good faith that no further proceeds are expected to be
received in respect of such Receivable.
"DEFICIENCY CLAIM AMOUNT" shall have the meaning specified in SECTION 4.7.
"DEFICIENCY CLAIM DATE" means, with respect to any Distribution Date, the
second Business Day preceding such Distribution Date.
"DEFICIENCY NOTICE" shall have the meaning specified in SECTION 4.7.
"DELINQUENCY RATIO" means, with respect to any Record Date, a fraction,
(a) the numerator of which is equal to the aggregate Principal Balances of
all Receivables which are not Defaulted Receivables and with respect to which
$40 or more of all Scheduled Payments is 61 or more days past due as of such
Record Date, and (b) the denominator of which is equal to the aggregate
Principal Balances of the Receivables as of such Record Date.
"DETERMINATION DATE" means, with respect to any Collection Period, the
[ ]th day of the following month, or if such day is not a Business Day, the next
Business Day.
"DISTRIBUTION DATE" means, for each Collection Period, the [ ]th day of the
following month, or if the [ ]th day is not a Business Day, the next succeeding
Business Day, commencing [ ].
"ELIGIBLE ACCOUNT" means a segregated direct deposit account maintained
with a depository institution or trust company organized under the laws of the
United States of America, or any of the States thereof, or the District of
Columbia, having a certificate of deposit, short-term deposit or commercial
paper rating of at least "D-1" by the Rating Agency, or if not rated by the
Rating Agency, then at least "A-1" by Standard & Poor's and "P-1" by Moody's.
"ELIGIBLE INVESTMENTS" mean book-entry securities, negotiable instruments
or securities represented by instruments in bearer or registered form which
evidence:
(a) direct obligations of, and obligations fully guaranteed as to the full
and timely payment of principal and interest by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any state thereof (or any domestic branch of a
foreign bank) and subject to supervision and examination by federal or state
banking or depository institution authorities; PROVIDED, HOWEVER, that at the
time of the investment or contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt obligations (other than such
obligations the rating of which is based on the credit of a Person other than
such depository institution or trust company) thereof shall be rated "D-1" by
the Rating Agency, or if not rated by the Rating Agency, then at least "A-1+" by
Standard & Poor's and "P-1" by Moody's;
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(c) commercial paper that, at the time of the investment or contractual
commitment to invest therein, is rated "D-1" by the Rating Agency, or if not
rated by the Rating Agency, then at least "A-1+" by Standard & Poor's and "P-1"
by Moody's;
(d) bankers' acceptances issued by any depository institution or trust
company referred to in clause (b) above;
(e) repurchase obligations with respect to any security that is a direct
obligation of, or fully guaranteed as to the full and timely payment of
principal and interest by, the United States of America or any agency or
instrumentality thereof the obligations of which are backed by the full faith
and credit of the United States of America, in either case entered into with (i)
a depository institution or trust company (acting as principal) described in
clause (b) or (ii) a depository institution or trust company whose commercial
paper or other short term unsecured debt obligations are rated "A-1+" by
Standard & Poor's and "P-1" by Moody's and if rated by the Rating Agency, "D-1",
and whose long term unsecured debt obligations are rated "AAA" by Standard &
Poor's and "Aaa" by Moody's and if rated by the Rating Agency, "AAA";
(f) money market mutual funds registered under the Investment Company Act
of 1940, as amended, having a rating, at the time of such investment, in the
highest investment category of Standard & Poor's and Moody's; and
(g) any other investment as may be acceptable to the Certificate Majority
and the Rating Agency, as may from time to time be confirmed in writing to the
Trustee by the Certificate Majority and the Rating Agency;
PROVIDED, HOWEVER, that no such instrument shall be an Eligible Investment if
(w) such instrument evidences a right to receive either (A) only interest
payments with respect to the obligations underlying such instrument or (B) both
principal and interest payments derived from obligations underlying such
instrument and the principal and interest payments with respect to such
instrument provide a yield to maturity of greater than 120% of the yield to
maturity at par of such underlying obligations; (x) its terms do not have a
predetermined fixed dollar amount of principal due at maturity that cannot vary
or change; (y) to the extent rated, an "r" highlighter is affixed to its rating;
or (z) to the extent the related interest rate is variable, interest thereon is
not tied to a single interest rate index plus a single fixed spread (if any), or
does not move proportionately with that index.
Any Eligible Investments may be purchased by or through the Trustee or any
of its Affiliates.
"ELIGIBLE SERVICER" means Triad, the Backup Servicer (so long as the Backup
Servicer is not in default of any of its obligations under this Agreement or any
other agreement relating hereto) or another Person which at the time of its
appointment as the successor Servicer, (a) is servicing a portfolio of motor
vehicle retail installment sale contracts and/or motor vehicle installment loans
of not less than $100 million, (b) is legally qualified and has the capacity and
all necessary licenses, permits and approvals to service the Receivables, (c)
has demonstrated the ability to service a portfolio of motor vehicle retail
installment sales contracts and/or motor vehicle installment loans similar to
the Receivables with reasonable skill and care, (d) is approved
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by the Rating Agency, (e) is approved by a Certificate Majority, (f) is
qualified and entitled to use, pursuant to a license or other written agreement,
and agrees to maintain the confidentiality of, the software which the Servicer
uses in connection with performing its duties and responsibilities under this
Agreement or otherwise has available software which is adequate to perform its
duties and responsibilities under this Agreement and (g) has a tangible net
worth as determined in accordance with generally accepted accounting principles
consistently applied of at least $15 million.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as it may be
amended from time to time.
"FINAL SCHEDULED DISTRIBUTION DATE" shall be the Distribution Date
occurring in [ ].
"FINANCED VEHICLE" means a new or used automobile or light duty truck,
together with all accessions thereto, securing an Obligor's indebtedness under a
Receivable.
"INDEPENDENT ACCOUNTANTS" shall have the meaning specified in SECTION 3.11.
"INFORMATION REQUEST" means a request for information delivered pursuant to
SECTION 3.11(d) or 4.8(a), substantially in the form of SCHEDULE 4.8 hereto.
"INSURANCE POLICY" means any insurance policy (a) covering physical damage,
theft, mechanical breakdown or similar event with respect to a Financed Vehicle
or loss of such Financed Vehicle or (b) such as credit life or credit disability
insurance with respect to payments due on a Receivable or (c) otherwise
benefiting the holder of the Receivable.
"LIEN" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, including tax liens, mechanics' liens, and any liens
that may attach by operation of law.
"LIEN CERTIFICATE" means, with respect to a Financed Vehicle, an original
certificate of title, certificate of lien or other notification issued by the
registrar of titles or comparable official or agency of the applicable state to
a secured party which indicates that the lien of the secured party on the
Financed Vehicle is recorded on the original certificate of title. In any
jurisdiction in which the original certificate of title is required to be given
to the Obligor, the term "LIEN CERTIFICATE" shall mean only a certificate or
notification issued to a secured party.
"LIQUIDATED RECEIVABLE" means any Receivable (a) which has been liquidated
by the Servicer through the sale of the Financed Vehicle or (b) for which the
Obligor is more than 120 days past due or (c) with respect to which the Servicer
has determined in good faith that no further proceeds are expected to be
received in respect of such Receivable.
"LOCKBOX ACCOUNT" means an account maintained with a Lockbox Bank, into
which payments from Obligors under Triad's portfolio of serviced contracts are
deposited.
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"LOCKBOX AGREEMENT" means an agreement with a Lockbox Bank between the
Servicer and such Lockbox Bank pursuant to which a Lockbox Account is
maintained.
"LOCKBOX BANK" means, as of any date, a depository institution which
provides a Lockbox as part of its normal and customary services named by the
Servicer at which the Lockbox Account is established and maintained as of such
date.
"MANAGED RECEIVABLE" means any retail installment sale contract (including
any related promissory note) for a financed vehicle, and all rights and
obligations thereunder, originated by and currently serviced by Triad for
non-prime Obligors.
["MOODY'S" means Xxxxx'x Investors Service, Inc., and any successors
thereof.]
"OBLIGOR" on a Receivable means the purchaser or co-purchasers of the
related Financed Vehicle or any other Person who owes or may be liable for
payments under such Receivable.
"OFFICER'S CERTIFICATE" means a certificate signed by the chairman of the
board, the president, any vice chairman of the board, any vice president or the
treasurer of Triad, the Seller, or the Servicer, as appropriate.
"OPINION OF COUNSEL" means a written opinion of counsel, which counsel
shall be acceptable to the Trustee and a Certificate Majority, which opinion
shall be in form and substance acceptable to the Trustee and a Certificate
Majority and which opinion shall not, except for the Opinion of Counsel referred
to in SECTION 9.3 hereof, be the expense of the Trustee.
"PERSON" means, any individual, corporation, limited liability company,
estate, partnership, joint venture, association, joint stock company, trust,
unincorporated organization, or government or any agency or political
subdivision thereof, or any other entity.
"PLAN" means an employee benefit plan subject to the fiduciary
responsibility provisions of ERISA or Code Section 4975, or a governmental plan
as defined in Section 3(32) of ERISA, or subject to any federal, state or local
law which is to a material extent similar to the foregoing provisions of ERISA
or the Code.
"POOL BALANCE" means the aggregate Principal Balance of the Receivables
(excluding Liquidated and Purchased Receivables) as of the close of business on
the last day of the immediately preceding Collection Period.
"PRECOMPUTED RECEIVABLE" means an Actuarial Receivable or a Rule of 78's
Receivable.
"PRINCIPAL BALANCE" of a Receivable (a) as of the Cutoff Date, means the
Amount Financed minus (i) in the case of a Precomputed Receivable, that
portion of all payments (including all Scheduled Payments and any prepayments
in full or partial prepayments) actually received on or prior to such date
and allocable to principal in accordance with the Actuarial Method and (ii)
in the case of a Simple Interest Receivable, that portion of all payments
(including all Scheduled Payments and any prepayments in full or partial
prepayments) actually received on
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or prior to such date and allocable to principal in accordance with the
Simple Interest Method, and (b) as of any date after the Cutoff Date, means
the Principal Balance as of the Cutoff Date minus (1) in the case of a
Precomputed Receivable, that portion of all payments (including all Scheduled
Payments and any prepayments in full or partial prepayments) actually
received on or prior to such date (but after the Cutoff Date) and allocable
to principal in accordance with the Actuarial Method, (2) in the case of a
Simple Interest Receivable, that portion of all payments (including all
Scheduled Payments and any prepayments in full or partial prepayments)
actually received on or prior to such date (but after the Cutoff Date) and
allocable to principal in accordance with the Simple Interest Method, and (3)
any Cram Down Loss in respect of such Receivable. The Principal Balance of a
Liquidated Receivable for purposes other than the definition of Principal
Distributable Amount shall be equal to $0.
"PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any Distribution
Date other than the Final Scheduled Distribution Date, the sum of the following
amounts, without duplication: (a) the principal portion of all Scheduled
Payments received during the preceding Collection Period on Precomputed
Receivables (calculated in accordance with the Actuarial Method) and all
payments of principal received on Simple Interest Receivables (calculated in
accordance with the Simple Interest Method) during such Collection Period; (b)
the principal portion of all prepayments received during the preceding
Collection Period; (c) the portion of the Purchase Amount allocable to principal
of each Receivable that became a Purchased Receivable as of the last day of the
preceding Collection Period and the Principal Balance of each Receivable that
was required to be but was not so purchased or repurchased; (d) the Principal
Balance of each Receivable that first became a Liquidated Receivable during the
preceding Collection Period; and (e) the aggregate amount of Cram Down Losses
with respect to the Receivables that have occurred during the preceding
Collection Period.
"PURCHASE AGREEMENT" means, the Purchase Agreement, dated as of [ ], by and
between Triad and the Seller, as amended, modified or supplemented from time to
time, relating to the purchase of Receivables from time to time by the Seller
from Triad.
"PURCHASE AMOUNT" means, with respect to a Purchased Receivable, the
Principal Balance plus interest thereon at the respective APR from the last date
through which interest has been paid to the last day of the immediately
preceding Collection Period if purchased prior to the Determination Date
immediately following the end of such Collection Period, and otherwise through
the last day of the month of repurchase.
"PURCHASED RECEIVABLE" means a Receivable purchased as of the close of
business on the last day of a Collection Period by the Servicer pursuant to
SECTION 3.7 or by the Seller pursuant to SECTION 2.6 or SECTION 2.9.
"RATING AGENCY" means [ ] and any successors thereof. If such organization
or successor is no longer in existence, "Rating Agency" shall be such nationally
recognized statistical rating organization or other comparable Person designated
by the Seller, notice of which designation shall be given to the Trustee and the
Servicer.
"RECEIVABLE" means each retail installment sale contract (including any
related promissory note) for a Financed Vehicle which is listed on the Schedule
of Receivables and all
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rights and obligations thereunder except for Receivables that shall have become
Purchased Receivables.
"RECEIVABLE FILES" means the documents, electronic entries, instruments and
writings specified in SECTION 2.8.
"RECORD DATE" means, with respect to any Distribution Date or Determination
Date, the last day of the immediately preceding calendar month.
"RECOVERIES" means, with respect to a Liquidated Receivable, the monies
collected from whatever source subsequent to the date on which such Receivable
became a Liquidated Receivable, net of the reasonable costs of liquidation
including reasonable out-of-pocket expenses of the Servicer including Servicer
Expenses in connection with such liquidation plus any amounts required by law to
be remitted to the Obligor.
"REGULATION D" means Regulation D under the Act.
"RELATED DOCUMENTS" means the Certificates, the Pooling and Servicing
Agreement, the Purchase Agreement, the Reserve Account Agreement, the Lockbox
Agreement, the Underwriting Agreement and any other documents to be executed in
connection with the transactions contemplated hereby and thereby. The Related
Documents to be executed by any party are referred to herein as "such party's
Related Documents," "its Related Documents" or by a similar expression.
"REPOSSESSION INVENTORY RATIO" means, with respect to any Record Date, a
fraction, (a) the numerator of which is equal to the aggregate Principal
Balances of all Receivables which have been repossessed by the Servicer and for
which the related Financed Vehicle has not been liquidated and (b) the
denominator of which is equal to the aggregate Principal Balances of the
Receivables as of such Record Date.
"RESERVE ACCOUNT" means, with respect to the Trust, the Reserve Account
established and maintained pursuant to the Reserve Account Agreement. The
Reserve Account shall be held by the Collateral Agent and shall in no event be
deemed part of the Trust.
"RESERVE ACCOUNT AGREEMENT" means the Reserve Account Agreement among the
Seller, the Collateral Agent and the Trustee, dated as of [ ], as the same may
be amended, supplemented or otherwise modified in accordance with the terms
thereof.
"RESERVE ACCOUNT REQUIREMENT" means an amount equal to (a) with respect to
the Closing Date, [ ]% of the initial Certificate Balance and (b) with respect
to each Distribution Date thereafter, [ ]% of the Certificate Balance, after
giving effect to distributions of principal to Certificateholders pursuant to
SECTION 4.5 hereof on such Distribution Date, as of the immediately preceding
Record Date unless a Reserve Account Trigger Event has occurred, in which case
the Reserve Account Requirement shall include all amounts required to be
deposited in the Reserve Account pursuant to SECTION 4.5(b) hereof, until such
Reserve Account Trigger Event has been Deemed Cured; PROVIDED, HOWEVER, that the
Reserve Account Requirement shall be [ ]% of the Certificate Balance for each
Distribution Date following the point in time that the Cumulative
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Default Ratio as described in clause (c)(v) of the definition of a Reserve
Account Trigger Event is greater than [ ]%, but less than [ ]%, notwithstanding
such Reserve Account Trigger Event being Deemed Cured.
"RESERVE ACCOUNT TRIGGER EVENT" means that any one of the following events
shall have occurred: (a) the Delinquency Ratio for each of the three preceding
Collection Periods exceeds [ ]%; (b) the Repossession Inventory Ratio is greater
than [ ]%; or (c) the Cumulative Default Ratio exceeds (i) [ ]% as of any Record
Date from the initial Record Date through and including the sixth Record Date,
(ii) [ ]% as of any Record Date from the seventh Record Date through and
including the twelfth Record Date, (iii) [ ]% as of any Record Date from the
thirteenth Record Date through and including the eighteenth Record Date, (iv)
[ ]% as of any Record Date from the nineteenth Record Date through and including
the twenty-fourth Record Date or (v) [ ]% as of any Record Date thereafter.
"RESPONSIBLE OFFICER" of a Person means the president, vice president,
controller, treasurer or chief financial officer of such Person.
"RULE OF 78'S RECEIVABLE" means any Receivable under which the portion of a
payment allocable to interest earned during that month is determined by
multiplying the total amount of add-on interest payable over the term of the
Receivable by a fraction, the denominator of which is equal to the sum of a
series of numbers beginning with one and ending with the number of scheduled
monthly payments due under the related Receivable, and the numerator of which is
the number of payments remaining under such Receivable before giving effect to
the payment to which the fraction is being applied. The difference between the
amount of the scheduled monthly payment made by the Obligor and the amount of
earned add-on interest calculated for the month is applied to principal
reduction.
"SCHEDULE OF RECEIVABLES" means the schedule of all retail installment sale
contracts and promissory notes originally held as part of the Trust which is
attached as SCHEDULE A hereto.
"SCHEDULED PAYMENT" means, for any Collection Period for any Receivable,
the amount indicated in such Receivable as required to be paid by the Obligor in
such Collection Period (without giving effect to deferments of payments to the
extent permitted pursuant to SECTION 3.2 or any rescheduling of payments in any
insolvency or similar proceeding).
"SELLER" means, Triad Financial Special Purpose Corporation, a Delaware
corporation.
"SELLER'S RETAINED YIELD" means that portion of the interest earned on the
Receivable which is retained by the Seller for any Distribution Date, in an
amount equal to the excess of such interest over the sum of (i) the weighted
average of the Class A Pass-Through Rate, the Class B Pass-Through Rate and the
Class C Pass-Through Rate divided by 12 multiplied by the sum of the Class A
Certificate Balance, Class B Certificate Balance and Class C Certificate
Balance, each as of the related Record Date, (ii) the Servicing Fee, Additional
Servicing Fee and Servicer Expenses payable on such Distribution Date, (iii) the
Trustee Fee payable on such Distribution Date and (iv) the Backup Servicing Fee
payable on such Distribution Date.
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"SERVICER" shall have the meaning set forth in the first paragraph of this
Agreement.
"SERVICER EXPENSES" means for any Collection Period (i) any reasonable
liquidation expenses not otherwise reimbursed to the Servicer, (ii) reasonable
out-of-pocket expenses incurred in connection with collection efforts relating
to skip trace services, legal fees and field calls and (iii) [ ]% of any
deficiencies recovered from an Obligor.
"SERVICER RECEIVABLE FILES" shall have the meaning set forth in SECTION
2.8(b).
"SERVICER TERMINATION EVENT" means an event specified in SECTION 8.1.
"SERVICER TERMINATION TRIGGER EVENT" means that any one of the following
events shall have occurred: (a) the average of the Delinquency Ratios for each
of the three preceding Collection Periods exceeds [ ]%; (b) the Repossession
Inventory Ratio is greater than [ ]%; or (c) the Cumulative Default Ratio
exceeds (i) [ ]% as of any Record Date from the initial Record Date through and
including the sixth Record Date, (ii) [ ]% as of any Record Date from the
seventh Record Date through and including the twelfth Record Date, (iii) [ ]% as
of any Record Date from the thirteenth Record Date through and including the
eighteenth Record Date or (iv) [ ]% as of any Record Date thereafter; PROVIDED,
HOWEVER, that following the appointment of a successor Servicer pursuant to
SECTION 8.3 hereof, no Servicer Termination Trigger Event shall have been deemed
to occur in accordance with this definition until the seventh Record Date
succeeding the appointment of such successor Servicer.
"SERVICING CERTIFICATE" means a certificate completed and executed by a
Servicing Officer pursuant to SECTION 3.9, substantially in the form of EXHIBIT
D.
"SERVICING FEE" means the fee payable to the Servicer for services rendered
during the respective Collection Period, which shall be equal to the product of
(i) one-twelfth, (ii) the Servicing Fee Rate and (iii) the Pool Balance as of
the close of business on the first day of the related Collection Period.
"SERVICING FEE RATE" shall be [ ]% per annum.
"SERVICING OFFICER" means any person whose name appears on a list of
Servicing Officers delivered to the Trustee, as the same may be amended from
time to time.
"SIMILAR LAW", as used in SECTION 5.3, means any federal, state or local
law which is to a material extent similar to the fiduciary responsibility
provisions of ERISA, Code Section 4975, or Section 3(32) of ERISA.
"SIMPLE INTEREST METHOD" means the method of allocating a fixed level
payment between principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the APR
multiplied by the unpaid balance multiplied by the period of time (based on the
number of days) elapsed since the preceding payment of interest was made and the
remainder of such payment is allocable to principal.
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"SIMPLE INTEREST RECEIVABLE" means any Receivable under which the portion
of a payment allocable to interest and the portion allocable to principal is
determined in accordance with the Simple Interest Method.
["STANDARD & POOR'S" means Standard & Poor's Ratings Services, a division
of The McGraw Hill Companies, Inc. and any successors thereof.]
"STATE" means any state of the United States of America, or the District
of Columbia.
"TOTAL DISTRIBUTION AMOUNT" means, for each Distribution Date, the sum
of the following amounts with respect to the preceding Collection Period,
without duplication: (a) all collections on Receivables; (b) proceeds from
Recoveries and liquidation proceeds; (c) the Purchase Amount of each
Receivable repurchased by the Seller or purchased by the Servicer as of the
immediately preceding Record Date; and (d) all interest, dividends, gains
upon sale and other income from, or earnings on, investments of funds in the
Collection Account.
"TRIAD" shall have the meaning set forth in the first paragraph of this
Agreement.
"TRUST" has the meaning set forth in SECTION 2.1.
"TRUST PROPERTY" means that property set forth in items (a) through (j) in
SECTION 2.2. Although the Certificateholders have directed that the Seller, as
their agent, place the Reserve Account in trust with and pledge the Reserve
Account to, the Trustee for the benefit of the Certificateholders pursuant to
the Reserve Account Agreement, the Reserve Account shall not under any
circumstances be deemed to be a part of or otherwise includable in the Trust or
the Trust Property.
"TRUSTEE" shall have the meaning set forth in the first paragraph of this
Agreement.
"TRUSTEE FEE" means the fee payable to the Trustee on each Distribution
Date for services rendered during the preceding Collection Period in an amount
equal to the product of one-twelfth and $[ ].
"TRUSTEE OFFICER" means any vice president, any assistant vice president,
any assistant secretary, any assistant treasurer, any trust officer, or any
other officer of the Trustee customarily performing functions similar to those
performed by any of the above designated officers and having direct
responsibility for the administration of this Agreement.
"TRUSTEE'S CERTIFICATE" means a certificate completed and executed for the
Trustee by a Trustee Officer pursuant to SECTION 9.2, substantially in the form
of, in the case of an assignment to the Seller, EXHIBIT E-1 and in the case of
an assignment to the Servicer, EXHIBIT E-2.
"UNDERWRITER" means [ ].
"UNDERWRITING AGREEMENT" means [ ].
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"UNDERWRITING CRITERIA" means the criteria used by Triad for purchasing
Contracts attached to the Purchase Agreement as Exhibit B.
"UNIFORM COMMERCIAL CODE" or "UCC" means the Uniform Commercial Code as in
effect in the respective jurisdiction.
SECTION 1.2. 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".
SECTION 1.3. SECTION REFERENCES. All references to Articles, Sections,
paragraphs, subsections, Exhibits and Schedules herein shall be to such portions
of this Agreement unless otherwise specified.
SECTION 1.4. LIMITATION ON TRUST FUND ACTIVITIES. Notwithstanding any other
provision in this Agreement to the contrary, the Trustee shall have no power to
vary the investment of the Certificateholders within the meaning of Treasury
Department Regulation 301.7701-4(c) or to engage in business on behalf of the
Trust unless the Trustee shall have received an Opinion of Counsel that such
activity shall not cause the Trust to be an association or a publicly traded
partnership taxable as a corporation for federal income tax purposes.
SECTION 1.5. CALCULATIONS. All calculations of the amount of interest
accrued on the Certificates and all calculations of the amount of fees to be
paid pursuant hereto, including without limitation, the fees to be paid to the
Servicer shall be made on the basis of a 360-day year consisting of twelve
30-day months.
SECTION 1.6. ACTION BY OR CONSENT OF CERTIFICATEHOLDERS. Whenever any
provision of this Agreement refers to action to be taken, or consented to, by
Certificateholders, such provision shall be deemed to refer to
Certificateholders of record as of the Record Date immediately preceding the
date on which such action is to be taken, or consent given, by
Certificateholders. The Trustee or Certificate Registrar may require such
additional proof of any matter referred to in this SECTION 1.6 as it shall
deem necessary.
ARTICLE II
THE TRUST AND TRUST PROPERTY
SECTION 2.1. CREATION OF TRUST. The Seller does hereby create and
establish, pursuant to the laws of the State of New York and this Agreement, a
trust (the "TRUST"), which for convenience shall be known as "Triad Auto
Receivables Trust 199[ ]-[ ]."
SECTION 2.2. CONVEYANCE OF RECEIVABLES. In consideration of the Trustee's
delivery of Certificates in an aggregate principal amount equal to the Closing
Date Certificate
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Balance to or upon the written order of the Seller, and subject
to the terms and conditions of this Agreement, the Seller does hereby sell,
transfer, assign, set over and otherwise convey to the Trustee, on behalf of the
Trust, in trust for the benefit of the Certificateholders, without recourse,
except as provided in SECTIONS 2.6, 2.8(b) and 2.9 (subject to the obligations
herein):
(a) all right, title and interest of the Seller in and to the Receivables
listed on the Schedule of Receivables and all monies paid or payable thereon or
in respect thereof after the Cutoff Date (including amounts due on or before the
Cutoff Date but received by Triad, the Seller or the Servicer after the Cutoff
Date) and all liquidation proceeds and Recoveries received with respect to such
Receivables;
(b) all right, title and interest of the Seller in and to the security
interests in the Financed Vehicles granted by Obligors pursuant to the
Receivables and any other interest of the Seller in such Financed Vehicles,
including, without limitation, the certificates of title and all other evidence
of ownership with respect to such Financed Vehicles;
(c) all right, title and interest of the Seller in and to any Insurance
Policies and any proceeds from any Insurance Policies relating to the
Receivables, the Financed Vehicles or the Obligors thereunder, including rebates
of unearned premiums;
(d) all right, title and interest (but none of the obligations) of the
Seller in and to the Purchase Agreement, including a direct right to cause Triad
to purchase Receivables from the Trust under certain circumstances;
(e) all right, title and interest of the Seller in and to refunds for the
costs of extended service contracts with respect to the Financed Vehicles;
(f) all right, title and interest of Triad and the Seller against Dealers
with respect to the Receivables, including any reserves or collateral
established or posted by Dealers with respect to the Receivables;
(g) all items contained in the Receivable File related to each Receivable,
and all other documents or electronic records that Triad keeps on file in
accordance with its customary procedures relating to the Receivables, the
Obligors or the Financed Vehicles;
(h) all amounts and property from time to time held in or credited to the
Collection Account or to the extent such amounts and property relate to the
Receivables;
(i) all property (including the right to receive Recoveries) that secures a
Receivable and that has been acquired by or on behalf of the Trust pursuant to
liquidation of such Receivable; and
(j) the payments on and proceeds of any and all of the foregoing.
SECTION 2.3. TRANSFER INTENDED AS SALE; PRECAUTIONARY SECURITY INTEREST;
TAX TREATMENT. (a) The conveyance of the Receivables and the other Trust
Property pursuant to this Agreement is intended by each of the parties hereto as
a sale free and clear of all Liens, and it is intended that the beneficial
interest in and title to the Receivables and the other Trust Property
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shall not be part of the Seller's estate in the event of the filing of a
bankruptcy petition by or against the Seller under any bankruptcy law. In the
event, however, that notwithstanding the intent of the parties hereto, the
transfer under this Agreement is held not to be a sale, this Agreement shall
constitute a grant of, and the Seller hereby grants, a security interest in the
Receivables and the other Trust Property to the Trustee for the benefit of the
Certificateholders. The execution and delivery of this Agreement shall
constitute an acknowledgment by the Seller that it intends to establish (for
federal tax purposes) a trust, rather than an association taxable as a
corporation.
(b) In connection with the grant of the security interest in paragraph (a)
above, the following financing statements will be filed by the Seller:
(i) Form UCC-1 filed with the Secretary of State of California,
naming Triad as the debtor, the Trust as the secured party and the
Receivables as collateral;
(ii) Form UCC-1 filed with the Secretary of State of Delaware and
the Secretary of State of New York and New York County, naming the
Seller as the debtor, the Trust as the secured party and the
Receivables as collateral; and
(iii) Form UCC-1 filed with the Secretary of State of Delaware,
naming the Trust as the debtor, the Trustee as the secured party and
the Receivables as collateral.
(c) The Seller has entered into this Agreement, and the Certificates will
be issued, with the intention that (i) the Trust will be classified as a grantor
trust under subpart E, part I of subchapter J of the Code and not as an
association taxable as a corporation or a publicly traded partnership taxable as
a corporation for purposes of federal income tax law, and (ii) the
Certificateholders will be treated as the owners of a pro rata undivided
interest in each Receivable and any other assets of the Trust (other than the
interest in the Trust represented by the Seller's Retained Yield). The Seller,
the Trustee, the Servicer, the Backup Servicer, the Collateral Agent, and each
Certificateholder agree to treat and to take no action inconsistent with the
treatment of the Certificates (or beneficial interest therein) as interests in a
grantor trust for purposes of federal, state and local income and franchise
taxes, and agree to take no action with respect to the Trust or any interest
therein which would cause the Trust to be treated as an association or publicly
traded partnership taxable as a corporation for purposes of federal income tax
law. Each Certificateholder, by acceptance of its Certificate, and each owner of
a Certificate, by acquisition of a beneficial interest in a Certificate, agree
to be bound by the provisions of this SECTION 2.3. Each Certificateholder agrees
that it will cause any owner of a Certificate acquiring an interest in a
Certificate through it to comply with this Agreement as to the tax treatment
described in this SECTION 2.3. The provisions of this Agreement shall be
construed in light of the foregoing intended tax treatment.
SECTION 2.4. ACCEPTANCE BY TRUSTEE. The Seller hereby directs the Trustee
to, and the Trustee, on behalf of the Trust, does hereby, accept the Trust
Property conveyed by the Seller pursuant to SECTION 2.2. The Trustee declares
that it shall hold such consideration upon
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the trusts herein set forth for the benefit of all present and future
Certificateholders, subject to the terms and provisions of this Agreement.
SECTION 2.5. REPRESENTATIONS AND WARRANTIES OF SELLER. The Seller hereby
makes the following representations and warranties as to the Receivables to the
other parties hereto, on which the Trustee on behalf of itself and the
Certificateholders relies in accepting the Receivables and the other Trust
Property in trust and issuing the Certificates. Unless otherwise specified, such
representations and warranties are made as of the Closing Date. Such
representations and warranties shall survive the sale, transfer, and assignment
of the Receivables to the Trustee.
(a) Each Receivable (1) arises from the delivery and acceptance of a
Financed Vehicle and which delivery and acceptance has been fully performed by
the Obligor and the Dealer party thereto, (2) arises from the normal course of
the Dealer's business, (3) as of the Cutoff Date, is not a Receivable for which
$40 or more of all Scheduled Payments is 31 or more days past due, (4) the
Obligor of which is a natural person residing in any State, (5) the Obligor of
which is not a government or a governmental subdivision or agency, (6) the
Obligor of which has full power and capacity to enter into such Receivable, (7)
is denominated and payable in dollars in the United States, (8) is in full force
and effect and constitutes the legal, valid and binding obligation of the
Obligor in accordance with its terms, (9) is not subject to any dispute,
litigation, counterclaim or defense, or any offset or right of offset, and to
the best of the Seller's knowledge, any exercisable right of rescission, (10)
has an original term to maturity of not less than [ ] nor more than [ ] months,
(11) provides for equal monthly payments which will cause the Receivable to
fully amortize during its term, (12) has an Amount Financed that has been fully
disbursed of not less than $[ ] or more than $[ ], (13) has an Annual Percentage
Rate of not less than the lesser of (A) [ ]% and (B) the maximum interest rate
permissible by law with respect to such Receivable, (14) together with the note
or contract applicable thereto, does not contravene any requirements of law
applicable thereto, (15) is a Receivable with respect to which all required
consents, approvals and authorizations have been obtained, (16) is a Receivable
secured by a security interest in the Financed Vehicle that has been recorded or
applied for in the name of Triad and assigned to the Seller, which security
interest is or is reasonably expected to be in full force and effect, in each
case, subject to no prior or equal liens, claims or encumbrances, (17) was
purchased by Triad using and materially conforming to the Underwriting Criteria,
(18) requires Triad to be named as loss payee or beneficiary (as applicable)
under an Insurance Policy (described in clause (a) of the definition of such
term), with respect to the Financed Vehicle related to such Receivable and
entitles Triad to the benefits of such Insurance Policy, (19) requires no
additional action by Triad or the Seller before becoming a valid and binding
obligation of the Obligor thereunder, enforceable against such Obligor in
accordance with its terms and (20) relates to a Financed Vehicle with respect to
which the Obligor made at least the minimum down payment as specified in the
Underwriting Criteria.
(b) As of the Cutoff Date at least [ ]% of the Receivables, based on the
outstanding Principal Balance of the Receivables as of the Cutoff Date, have had
the first Scheduled Payment, which payment was not delinquent, made by the
related Obligor.
(c) Each Receivable was originated by a Dealer that had all necessary
licenses and permits to originate Receivables in the State where such Dealer was
located, was fully and
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properly executed by the parties thereto, was purchased by Triad from such
Dealer under an existing Dealer Agreement with Triad and was validly assigned by
the Dealer to Triad.
(d) At least [ ]% of the Dealers originating Receivables are franchise
dealers.
(e) Each Receivable contains customary and enforceable provisions such as
to render the rights and remedies of the holder thereof adequate for realization
against the collateral security.
(f) To the best of the Seller's knowledge, each Receivable was originated
by a Dealer to an Obligor and was sold by the Dealer to Triad without any fraud
or material misrepresentation on the part of such Dealer or on the part of the
Obligor.
(g) No Receivable represents a loan exceeding [ ]% of the wholesale book
value of the related Financed Vehicle.
(h) The information set forth in the Schedule of Receivables attached
hereto as it relates to such Receivable is true and correct in all material
respects as of the close of business on the Cutoff Date.
(i) Such Receivable complied at the time it was purchased by Triad and each
Receivable, each and every sale of a Financed Vehicle and, to the best of the
Seller's knowledge, the sale of any physical damage, credit life and credit
accident and death insurance and any extended service contracts at the time it
was originated or made, as of the date hereof complies in all material respects
with all requirements of applicable federal, state and local laws and
regulations thereunder, including usury laws, the federal Truth-in-Lending Act,
the Equal Credit Opportunity Act, the Fair Credit Reporting Act, the
Xxxxxxxx-Xxxx Warranty Act, the Federal Reserve Board's Regulations B and Z, the
Fair Debt Collection Practices Act, the Federal Trade Commission Act, the
Xxxx-Xxxxxxxx Act, the Consumer Legal Remedies Act of California and state
adaptations of the National Consumer Act and of the Uniform Consumer Credit
Code, other consumer credit laws and equal credit opportunity and disclosure
laws and other applicable legal requirements.
(j) Such Receivables have not been satisfied, subordinated or rescinded,
nor has the related Financed Vehicle been released from the Lien granted by such
Receivable, in whole or in part.
(k) Since the Cutoff Date, no provision of any Receivable has been waived,
except in accordance with the Collection Guidelines and Procedures.
(l) Since the Cutoff Date, no Receivable has been amended, except in
accordance with the Collection Guidelines and Procedures and the terms of this
Agreement.
(m) Subject to SECTION 3.2(b) of this Agreement, no provision of any
Receivable has been waived, altered or modified in any respect since its
origination, except by instruments or documents identified in the Receivable
File held by the Trustee. No Receivable has been modified as a result of the
Soldier's and Sailor's Civil Relief Act of 1940, as amended.
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(n) No right of rescission, setoff, counterclaim or defense has been
asserted or, to the best of the Seller's knowledge, threatened against Triad or
the Seller with respect to such Receivable.
(o) The Lien Certificate for each Financed Vehicle either (i) shows Triad
named as of the original secured party under each Receivable or (ii) has been
applied for in the name of Triad. If the Receivable was originated in a State in
which a filing or recording is required of the secured party to perfect a
security interest in motor vehicles, such filing or recording has been duly made
to show Triad named as the original secured party under the Related Receivable.
Such security interest in the Financed Vehicle has been validly assigned by
Triad to the Seller pursuant to the Purchase Agreement and by the Seller to the
Trustee pursuant to this Agreement. Immediately after the sale, transfer and
assignment thereof to the Trust, each Receivable will be secured by an
enforceable and perfected security interest in the Financed Vehicle in favor of
the Trust as secured party, which security interest is prior to all other liens
and security interests in such Financed Vehicle (except, as to priority, for any
lien for taxes, labor or materials affecting a Financed Vehicle).
(p) To the best of Seller's knowledge, no Liens or claims have been
asserted or filed for taxes, work, labor or materials relating to the Financed
Vehicle that are Liens prior to, or equal or coordinate with, the security
interest in the Financed Vehicle granted by any Receivable, and the Obligor has
good and marketable title to the Financed Vehicles subject to no Liens other
than the security interest under the Receivable.
(q) Other than Scheduled Payment defaults not more than thirty (30) days
past due as of the Cutoff Date, defaults arising out of the failure of the
Obligor to obtain and maintain insurance as required by the Receivable or by
applicable law and other defaults which will not have a material adverse affect
on the ability of the Obligor to make Scheduled Payments under the Receivable:
(1) no default, breach, violation or event permitting acceleration under the
terms of such Receivable has occurred; (2) no continuing condition that with
notice or the lapse of time or both would constitute a default, breach,
violation or event permitting acceleration under the terms of any Receivable has
arisen; and (3) the Seller has not waived any of the foregoing.
(r) Such Receivable has not been sold, transferred, assigned or pledged by
the Seller to any Person other than the Trustee; the Seller has good and
marketable title to such Receivable free and clear of all Liens and rights of
others claiming by or through the Seller (other than the rights of the Obligor
to the Financed Vehicle thereunder) and, following the Closing Date, the Trustee
shall have good and marketable title to such Receivable, free and clear of all
Liens and rights of others claiming by or through the Seller (other than the
rights of the Obligor to the Financed Vehicle thereunder); and the transfer has
been perfected under the UCC for the applicable jurisdiction.
(s) Such Receivable has not been purchased by Triad from a Dealer in, nor
is subject to the laws of, any jurisdiction under which the sale, transfer and
assignment of such Receivable pursuant to this Agreement is unlawful, void or
voidable. No agreement has been entered into with any Obligor that prohibits,
restricts or conditions the assignment of any portion of the Receivables.
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(t) There is only one original executed contract for each Receivable.
(u) The related Financed Vehicle securing such Receivable is not in
repossession status.
(v) Such Receivable constitutes "chattel paper" as defined in the UCC.
(w) Such Receivable has not been included in a "fleet sale" (i.e., a sale
to a single Obligor of more than five vehicles).
(x) All amounts due and payable by Triad to the Dealer under the Dealer
Agreement with respect to such Receivable have been paid and no dealer has any
rights in, or claims against, the Receivables.
(y) The Seller has indicated in its computer files that such Receivable
has been sold to the Trustee and constitutes Trust Property.
(z) The Seller has taken such action as is necessary to obtain a first
perfected security interest in favor of the Trustee in such Receivable, the
proceeds thereof, other Trust Property and the Reserve Account.
(aa) The Seller has done nothing to convey any right to any Person that
would result in such Person having a right to payments due under such Receivable
or otherwise to impair the rights of the Trust and the Certificateholders in any
Receivable or the proceeds thereof.
(bb) No Receivable is assumable by another Person in a manner which would
release the Obligor thereof from such Obligor's obligations to the Seller with
respect to such Receivable.
(cc) No selection procedures adverse to the Certificateholders have been
utilized in selecting such Receivable from all other Receivables owned by Triad.
(dd) As of the Cutoff Date, no Obligor had been identified on the
records of Triad as being the subject of a current bankruptcy proceeding.
(ee) Each Receivable is a fully amortizing Simple Interest Receivable, Rule
of 78's Receivable or Actuarial Receivable which provides for level monthly
payments which, if made when due, shall fully amortize the Amount Financed over
the original term.
SECTION 2.6. REPURCHASE UPON BREACH. The Seller, the Servicer, the Trustee,
the Backup Servicer and the Collateral Agent, as the case may be, shall inform
the other parties to this Agreement promptly, in writing, upon the discovery of
any breach of the Seller's representations and warranties made pursuant to
SECTION 2.5 (without regard to any limitation therein as to the Seller's
knowledge) that has a material adverse effect on a Receivable or the interest
herein of the Trust or the Certificateholders; PROVIDED, HOWEVER, that the
failure to give any such notice shall not derogate from any obligation of the
Seller. Unless such breach shall have been cured by the last day of the first
full calendar month following the discovery by or notice to the Seller of such
breach, the Seller shall have an obligation on or prior to such date to
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repurchase any Receivable with respect to which such breach has a material
adverse effect on such Receivable or the interest therein of the Trust or the
Certificateholders. If necessary, to the extent that the Seller fails to effect
its repurchase obligation the Trustee shall notify Triad and Triad shall
(pursuant to the Purchase Agreement) repurchase any Receivable with respect to
which such breach has a material adverse effect on such Receivable or the
interest therein of the Trust or the Certificateholders. In consideration of the
purchase of the Receivables, the Seller shall remit, or the Seller, or upon a
failure by the Seller to act, the Trustee, shall notify Triad to remit, the
Purchase Amount, in the manner specified in SECTION 4.4. The sole remedy
hereunder (absent fraud, reckless disregard, willful misconduct or gross
negligence of the Seller) of the Trustee, the Trust and the Certificateholders
with respect to a breach of the Seller's representations and warranties pursuant
to SECTION 2.5 shall be to require the Seller to repurchase Receivables pursuant
to this Section or to enforce the obligation of Triad to repurchase such
Receivables pursuant to the Purchase Agreement; PROVIDED, HOWEVER,
notwithstanding whether the related Receivable shall have been purchased by the
Seller, or Triad, the Seller shall indemnify the Trustee, the Backup Servicer
and the Collateral Agent, and each of their respective officers, directors,
employees and agents, as well as the Trust and the Certificateholders against
all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel, which may be asserted against or
incurred by any of them as a result of third party claims arising out of the
events or facts giving rise to such breach. Upon receipt of the Purchase Amount
and written instructions from the Servicer, the Trustee shall release to the
Seller, or Triad, as applicable, or any of their designees, the related
Receivable File and shall execute and deliver all reasonable instruments of
transfer or assignment, without recourse, as are prepared by the Seller and
delivered to the Trustee and necessary to vest in the Seller, or Triad, as
applicable, or such designee, title to the Receivable. The Trustee shall be
under no duty or obligation (i) to inspect, review or examine any documents,
instruments, certificates or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are other
than what they purport to be on their face or (ii) to determine whether there is
a breach of any of the Seller's representations and warranties.
SECTION 2.7. CONDITIONS TO ACCEPTANCE BY TRUSTEE. As conditions to the
execution and delivery of the Certificates by the Trustee on the Closing Date,
the Trustee shall have received the following on or before the Closing Date:
(a) The Schedule of Receivables certified by a Responsible Officer of the
Seller;
(b) Copies of resolutions of the Board of Directors of the Seller approving
the execution, delivery and performance of this Agreement and the transactions
contemplated hereby, certified by the Secretary of the Seller;
(c) Copies of resolutions of the Board of Directors of the Servicer
approving the execution, delivery and performance of this Agreement and the
transactions contemplated hereby, certified by the Secretary of the Servicer;
(d) A certification from a Responsible Officer of the Seller stating that
all filings (including, without limitation, UCC filings) required to be made by
any Person and actions required to be taken or performed by any Person in any
jurisdiction to give the Trustee a first
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priority perfected lien on, or ownership interest in, the Receivables and the
other Trust Property have been made, taken or performed; and
(e) An executed copy of the Reserve Account Agreement and each other
Related Document.
SECTION 2.8. CUSTODY OF RECEIVABLE FILES. (a) On or prior to the Closing
Date, the Servicer shall cause to be transferred and delivered to the Trustee,
at the offices specified in SCHEDULE B to this Agreement with respect to each
Receivable the following (the "RECEIVABLE FILES"):
(i) The fully executed original of the Receivable (together with any
agreements modifying the Receivable, including without limitation, any
extension agreements); and
(ii) The Lien Certificate, or, if not yet received, a copy of the
application therefor or a representation from the Dealer certifying as to
the application thereof, showing Triad as secured party and such documents,
if any, that Triad keeps on file in accordance with its customary
procedures indicating that the Financed Vehicle is owned by the Obligor and
subject to the interest of Triad as first lienholder or secured party.
(b) In connection with the sale, transfer and assignment of the Receivables
and other Trust Property to the Trust pursuant to this Agreement, the Servicer
shall retain, on behalf of the Trustee, the following documents or instruments
in its possession with respect to each Receivable (the "SERVICER RECEIVABLE
FILES"):
(i) documents evidencing or relating to any Insurance Policy; and
(ii) any and all other documents (other than the documents referred
to in SECTION 2.8(a) hereof) (in original or electronic form) that the
Servicer keeps on file in accordance with its customary procedures relating
to the individual Receivable, Obligor or Financed Vehicle.
(c) The Servicer agrees that it shall duly discharge its duties of
receiving and holding the Servicer Receivable Files in accordance with this
Agreement. As to any matters not expressly provided for by this Agreement with
respect to the Servicer Receivable Files, the Servicer shall be required to act
or to refrain from acting (and shall be fully protected in so acting) upon the
written instructions of the Trustee.
(d) The Servicer acknowledges that with respect to each Receivable
identified in the Schedule of Receivables (a) it has possession of the
applicable Servicer Receivable File and (b) such Servicer Receivable File
contains the documents referred to in SECTION 2.8(b). The Servicer declares that
it holds and will continue to hold such files and any amendments, replacements
or supplements thereto as Servicer on behalf of the Trustee in trust for the use
and benefit of all present and future Certificateholders. If at a later date the
Servicer is unable to locate a file for a Receivable, or finds that a file is
unrelated to the Receivables identified in the
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Schedule of Receivables or that any of the documents referred to in SECTION
2.8(b) are not contained in a Servicer Receivable File, the Servicer shall
inform the Seller and the Trustee promptly, in writing, of the failure to locate
a file with respect to such Receivable (or of the failure of any of the
aforementioned documents to be included in the Servicer Receivable File) or
shall return to the Seller any file unrelated to a Receivable identified in the
Schedule of Receivables (it being understood that the Servicer's obligation to
review the contents of any Servicer Receivable File shall be limited as set
forth in the preceding sentence).
(e) In connection with the repurchase of a Receivable pursuant to SECTION
2.6 or 10.2 hereof, upon receipt of the Purchase Amount and written instructions
from the Trustee, the Servicer shall release to the Seller or its designee the
related Servicer Receivables File. The Trustee shall be under no duty or
obligation to inspect, review or examine any documents, instruments,
certificates or other papers to determine that they are genuine, enforceable, or
appropriate for the represented purpose or that they are other what they purport
to be on their face and shall have no responsibility for determining whether any
document is valid and binding, whether the text of any assignment or endorsement
is in proper or recordable form, whether any document has been recorded in
accordance with the requirements of any applicable jurisdiction, or whether a
blanket assignment is permitted in any applicable jurisdiction.
(f) Without in any way limiting the respective rights of the Trustee, the
Backup Servicer or the Certificateholders under SECTION 3.12 or otherwise set
forth in this Agreement, at any time from time to time upon the giving of
reasonable prior notice, during normal business hours, the Trustee, the Backup
Servicer, the Holder of a Certificate Majority and any of their respective
agents, employees or representatives (including, without limitation, an
independent accounting firm performing an audit of the Servicer), shall have the
right but not the obligation (which right the Trustee shall exercise upon the
written request of a Certificate Majority) (i) to visit the office of the
Servicer where the Servicer Receivable Files are kept, (ii) to examine the
facilities for the storage and safekeeping thereof, (iii) to review the
procedures with which such documents are stored and catalogued, (iv) to examine
and make copies of and abstracts from such documents, and (v) to discuss matters
relating to the Servicer Receivable Files and the Servicer's performance
hereunder with any of the officers or employees of the Servicer having knowledge
of such matters. Any expenses reasonably incurred by the Trustee or the Backup
Servicer in connection with such activities shall be paid by the Servicer to the
extent such visits and examinations are not more frequent than once in every 12
month period, unless a Servicer Termination Event has occurred and not been
deemed cured.
(g) From time to time, with not less than one Business Day's prior written
notice delivered to the Trustee, the Servicer may request the Trustee to release
certain Receivable Files held by the Trustee to the Servicer; PROVIDED, that the
Trustee shall release such Receivable Files only upon receipt of a certificate
of the Servicer (substantially in the form of EXHIBIT F-1 hereto) signed by a
Servicing Officer to the effect that (i) the applicable Receivables with respect
to such Receivable Files have been paid in full and the related Receivables have
been terminated in accordance with their terms, (ii) the Seller or Triad has
repurchased such Receivables in accordance with the terms of this Agreement or
the Purchase Agreement, as applicable or (iii) the Servicer requires such
Receivable Files in connection with the compromise, extension, release,
adjustment, foreclosure or repossession of the related Receivables or Financed
Vehicles, as
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applicable, in accordance with the terms of this Agreement and the Purchase
Agreement. Such certificate shall obligate the Servicer to return such
document(s) to the Trustee when the need therefor no longer exists unless the
Receivable shall be liquidated or repurchased, in each case, the Servicer shall
provide a certificate (substantially in the form of EXHIBIT F-2 hereto) of a
Servicing Officer to the effect that all amounts required to be deposited in the
Collection Account with respect to such Receivable have been so deposited.
(h) On or prior to the Closing Date, the Servicer shall cause to be
delivered to the Certificateholders and the Rating Agency certification of the
Trustee that it has received the Receivables Files, in its capacity as custodian
under the Custodian Agreement, and that such Receivables Files contain all
documents required to be contained therein, except for any Lien Certificates not
available on the Closing Date.
SECTION 2.9. COLLECTING LIEN CERTIFICATES NOT DELIVERED ON THE CLOSING
DATE. In the case of any Receivable in respect of which written evidence from
the Dealer selling the related Financed Vehicle that the Lien Certificate for
such Financed Vehicle showing Triad as first lienholder has been applied for
from the registrar of titles was delivered to the Trustee on the Closing Date in
lieu of a Lien Certificate, or in respect of which a Lien Certificate was
otherwise not delivered to the Trustee on the Closing Date, the Servicer shall
use its best efforts to collect such Lien Certificate from the registrar of
titles as promptly as practicable. If such Lien Certificate showing Triad as
first lienholder is not received by the Trustee within 120 days after the
Closing Date, the Servicer shall inform the Seller and the other parties to this
Agreement, and the Servicer shall repurchase any such Receivable as of the last
day of the then current Collection Period in accordance with the provisions of
SECTION 3.7 of this Agreement.
ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 3.1. DUTIES OF SERVICER. (a) The Servicer is hereby authorized to
act as agent for the Trust and the Certificateholders, and in such capacity
shall manage, service, administer and make collections on the Receivables, and
perform the other actions required by the Servicer under this Agreement. The
Servicer agrees that its servicing of the Receivables shall be carried out in
accordance with customary and usual procedures of institutions which service
motor vehicle retail installment sale contracts similar to the Receivables and
with the same degree of skill and care exercised by such institutions and, to
the extent more exacting, with the degree of skill and care that the Servicer
exercises with respect to all comparable motor vehicle receivables which it
services for itself or others and, in all cases, in accordance with the
Collection Guidelines and Procedures and all applicable laws. The Servicer's
duties shall include, without limitation, notifying each Obligor to make its
Scheduled Payments and all other payments on the Receivables directly to the
Lockbox Bank, collecting and posting of all payments, responding to inquiries of
Obligors on such Receivables, investigating delinquencies, sending payment
statements to Obligors, reporting tax information to Obligors, accounting for
collections, furnishing monthly and annual statements to the Trustee with
respect to distributions, monitoring the status of the Insurance Policies and
maintaining the Collateral Insurance and performing the other duties specified
herein. The Servicer shall also administer and enforce all rights and
responsibilities of the holder of the Receivables provided for in the Dealer
Agreements (and shall maintain
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possession of the Dealer Agreements, to the extent it is necessary to do so),
the Dealer Assignments and the Insurance Policies, to the extent that such
Dealer Agreements, Dealer Assignments and Insurance Policies relate to the
Receivables, the Financed Vehicles or the Obligors.
(b) Subject to SECTION 3.2(b), to the extent consistent with the standards,
policies and procedures otherwise required by this Agreement, the Servicer shall
follow its customary standards, policies and procedures and shall have full
power and authority, acting alone, to do any and all things in connection with
such managing, servicing, administration and collection that it may deem
necessary or desirable. Without limiting the generality of the foregoing, the
Servicer is hereby authorized and empowered by the Trustee to execute and
deliver, on behalf of the Certificateholders and the Trustee or any of them, any
and all instruments of satisfaction or cancellation, or of partial or full
release or discharge, and all other comparable instruments, with respect to the
Receivables and with respect to the Financed Vehicles; PROVIDED, HOWEVER, that
notwithstanding the foregoing, the Servicer shall not, except pursuant to an
order from a court of competent jurisdiction, release an Obligor from payment of
any unpaid amount under any Receivable or waive the right to collect the unpaid
balance of any Receivable from the Obligor, except that the Servicer may forego
collection efforts if the amount subject to collection is DE MINIMIS and if it
would forego collection of such amount in accordance with its customary
procedures.
(c) The Servicer is hereby authorized to commence, in its own name or in
the name of the Trustee (provided the Servicer has obtained the Trustee's
written consent, which consent shall not be unreasonably withheld), a legal
proceeding to enforce a Receivable pursuant to SECTION 3.3 or to commence or
participate in any other legal proceeding (including, without limitation, a
bankruptcy proceeding) relating to or involving a Receivable, an Obligor or a
Financed Vehicle. If the Servicer commences or participates in such a legal
proceeding in its own name, the Trustee shall thereupon be deemed to have
automatically assigned such Receivable to the Servicer solely for purposes of
commencing or participating in any such proceeding as a party or claimant, and
the Servicer is authorized and empowered by the Trustee to execute and deliver
in the Servicer's name any notices, demands, claims, complaints, responses,
affidavits or other documents or instruments in connection with any such
proceeding. The Trustee shall furnish the Servicer with any powers of attorney
and other documents which the Servicer may reasonably request in writing and
which the Servicer reasonably deems necessary or appropriate and take any other
steps which the Servicer may reasonably deem necessary or appropriate to enable
the Servicer to carry out its servicing and administrative duties under this
Agreement.
SECTION 3.2. COLLECTIONS; MODIFICATION AND AMENDMENT OF RECEIVABLES;
LOCKBOX ACCOUNT. (a) Consistent with the standards, policies and procedures
required by this Agreement, the Servicer shall make reasonable efforts to
collect all payments called for under the terms and provisions of the
Receivables as and when the same shall become due, and shall follow such
collection procedures as it follows with respect to all comparable motor vehicle
receivables that it services for itself or others and otherwise act with respect
to the Receivables, the Dealer Agreements, the Dealer Assignments, the Insurance
Policies and the other Trust Property in such manner as will, in the reasonable
judgment of the Servicer, maximize the amount to be received by the Trust with
respect thereto. The Servicer is authorized in its discretion to waive any
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prepayment charge, late payment charge or any other similar fees that may be
collected in the ordinary course of servicing any Receivable.
(b) Notwithstanding anything to the contrary provided in this Agreement,
the Servicer will not (i) forgive any periodic or other scheduled payment due on
such Receivable, (ii) unless the Obligor is in default under a Receivable or is
likely to default on such Receivable in the foreseeable future, permit any
modification with respect to any Receivable that would increase or decrease the
Annual Percentage Rate on such Receivable, or defer the payment of any principal
or interest or any periodic or other scheduled payment due on such Receivable
unless any such modification is required by court order, (iii) reduce or
increase the Principal Balance on such Receivable (except in connection with
actual payments of periodic or other scheduled payments or principal
prepayments) unless any such modification is required by court order or (iv)
extend the final maturity date of any Receivable; PROVIDED, HOWEVER, that the
Servicer may grant an extension of the final maturity date of a Receivable, if
the Servicer, in its sole discretion, determines that (A) the Receivable is in
default or default on such Receivable is likely to occur in the foreseeable
future, and (B) that the value of the Receivable will be enhanced by such
extension; and, PROVIDED, FURTHER, that the Servicer shall not (1) grant more
than three extensions with respect to a Receivable, (2) grant more than one
extension per calendar year with respect to a Receivable or (3) grant an
extension for more than one calendar month with respect to a Receivable.
(c) The Servicer shall, prior to the Closing Date, notify each Obligor to
make its payments with respect to the Receivables directly to the Lockbox Bank.
The Servicer shall use its best efforts to cause Obligors to make all payments
on the Receivables whether by check or by direct debit of the Obligor's bank
account, to be made to the Lockbox Bank. The Servicer shall use its best efforts
to cause the Lockbox Bank to deposit all Scheduled Payments with respect to the
Receivables in the Lockbox Accounts no later than the first Business Day after
receipt, and to cause all amounts on deposit in the Lockbox Accounts with
respect to such payments to be transferred to the Collection Account not later
than the second Business Day after receipt of such payments in the Lockbox
Account. All amounts received by the Servicer, Triad or the Seller in respect of
the Receivables in the form of checks with payments coupon shall be deposited
directly to the Lockbox Bank immediately upon receipt, but in no event later
than the second Business Day after receipt of such payment. Other payments
received by each of the Servicer, Triad and the Seller shall be deposited into a
local servicing account for processing immediately upon receipt, and then
transferred to the Collection Account no later than the second Business Day
after receipt of available amounts.
(d) On the Closing Date the Servicer shall deposit or cause to be deposited
into the Collection Account all amounts collected with respect to the
Receivables from the Cutoff Date to the fourth Business Day preceding the
Closing Date. As soon as possible thereafter and in accordance with the
provisions of this Agreement, amounts collected with respect to the Receivables
from such date to the Closing Date shall be deposited into the Collection
Account.
(e) In the event the Servicer shall for any reason no longer be acting as
such, the Backup Servicer or successor Servicer shall thereupon (i) assume the
rights and obligations of the Servicer relating to the Receivables and (ii)
(1) assume all of the rights and, from the date of assumption, all of the
obligations of the outgoing Servicer relating to the Receivables under any
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Lockbox Agreement to which the Servicer is a party or (2) establish a different
Lockbox Account for the benefit of the Trust and notify each Obligor of the new
Lockbox Bank to which its payments should be sent. If the Backup Servicer or
successor Servicer assumes an existing Lockbox Agreement to which the Servicer
is a party, the Backup Servicer or any other successor Servicer shall not be
liable for any acts, omissions or obligations of the Servicer prior to such
succession. In such event, the successor Servicer shall be deemed to have
assumed all of the outgoing Servicer's interest therein relating to the
Receivables and to have replaced the outgoing Servicer as a party to each such
Lockbox Agreement to the same extent as if such Lockbox Agreement had been
assigned to the successor Servicer, except that the outgoing Servicer shall not
thereby be relieved of any liability, or obligations on the part of the outgoing
Servicer to the Lockbox Bank under such Lockbox Agreement. The outgoing Servicer
shall, upon request of the Trustee, but at the expense of the outgoing Servicer,
deliver to the successor Servicer all documents and records relating to the
Lockbox Agreement and an accounting of amounts collected and held by the Lockbox
Bank and otherwise use its best efforts to effect the orderly and efficient
transfer of any Lockbox Agreement to the successor Servicer.
(f) Notwithstanding any third-party processing arrangement, or any of the
provisions of this agreement relating to any third-party processing arrangement,
the Servicer shall remain obligated and liable to the Trust and the Noteholders
for servicing and administering the Receivables and the other Trust Property
serviced by it in accordance with the provisions of this Agreement without
diminution of such obligation or liability by virtue thereof.
SECTION 3.3. REALIZATION UPON DEFAULTED RECEIVABLES. (a) Consistent with
the standards, policies and procedures required by this Agreement, the Servicer
shall use its best efforts to repossess (or otherwise comparably convert the
ownership of) and liquidate any Financed Vehicle securing a Receivable with
respect to which the Servicer has determined that payments thereunder are not
likely to be resumed, promptly after default on such Receivable. The Servicer is
authorized to follow such customary practices and procedures as it shall deem
necessary or advisable, consistent with the standard of care required by SECTION
3.1, which practices and procedures may include reasonable efforts to realize
upon any recourse to Dealers, selling the related Financed Vehicle at public or
private sale, the submission of claims under an Insurance Policy and other
actions by the Servicer in order to realize upon such a Receivable. The
foregoing is subject to the provision that, in any case in which the Financed
Vehicle shall have suffered damage, the Servicer shall not expend funds in
connection with any repair or towards the repossession of such Financed Vehicle
unless it shall determine in its discretion that such repair and/or repossession
shall increase the proceeds of liquidation of the related Receivable by an
amount greater than the amount of such expenses. All Recoveries and liquidation
proceeds received upon liquidation of a Financed Vehicle shall be remitted
directly by the Servicer, to a servicing account of the Servicer for transfer to
the Collection Account. The Servicer shall pay on behalf of the Trust any
personal property taxes assessed on repossessed Financed Vehicles; the Servicer
shall be entitled to reimbursement of any such tax from Recoveries with respect
to such Receivable. The Servicer shall not lease any repossessed Financed
Vehicle to any party. In selling or otherwise disposing of any repossessed
Financed Vehicle, the Servicer shall do so as expeditiously as possible and in a
manner such that such activities shall not rise to the level of a trade or
business of selling or otherwise transferring such repossessed Financed
Vehicles.
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(b) If the Servicer elects to commence a legal proceeding to enforce a
Dealer Agreement or Dealer Assignment, the act of commencement shall be deemed
to be an automatic assignment from the Trustee to the Servicer of the rights
under such Dealer Agreement and Dealer Assignment but only to the extent needed
for purposes of collection thereunder. If, however, in any enforcement suit or
legal proceeding, it is held that the Servicer may not enforce a Dealer
Agreement or Dealer Assignment on the grounds that it is not a real party in
interest or a Person entitled to enforce the Dealer Agreement or Dealer
Assignment, the Trustee, at the Seller's expense, shall take such steps as the
Servicer deems necessary to enforce the Dealer Agreement or Dealer Assignment,
including bringing suit in its name or the name of the Seller or of the Trustee
for the benefit of the Certificateholders. All amounts recovered shall be
remitted directly by the Servicer into the Collection Account, as applicable.
SECTION 3.4. INSURANCE. (a) The Servicer shall maintain a lenders
comprehensive single interest or other collateral protection insurance policy
with respect to all Financed Vehicles ("COLLATERAL INSURANCE"), a copy of which
is attached hereto as EXHIBIT I, which policy by its terms insures against
physical damage in the event any Obligor fails to maintain physical damage
insurance with respect to the related Financed Vehicle without reduction on
account of any co-insurance or deductible. The Servicer will be the named
insured and, the Trustee shall be named additional insured. Each Financed
Vehicle is covered by Collateral Insurance providing coverage upon repossession
of such Financed Vehicle without reduction on account of any co-insurance or
deductible. Costs incurred by the Servicer in maintaining such Collateral
Insurance shall be paid by the Servicer from its own funds.
(b) The Servicer or its agents shall monitor the status of the Insurance
Policies in accordance with its customary servicing procedures. If the Servicer
shall determine that an Obligor has failed to obtain or maintain an Insurance
Policy covering the related Financed Vehicle (including during the repossession
of such Financed Vehicle against loss and damage due to fire, theft,
transportation, collision and other risks generally covered by comprehensive and
collision insurance), the Servicer shall be diligent in carrying on its
customary servicing procedures to enforce the rights of the holder of the
Receivable thereunder to ensure that the Obligor obtains such Insurance Policy.
(c) The Servicer may xxx to enforce or collect upon the Insurance Policies,
in its own name, if possible, or as agent of the Trust. If the Servicer elects
to commence a legal proceeding to enforce an Insurance Policy, the act of
commencement shall be deemed to be an automatic assignment of the rights of the
Trust under such Insurance Policy to the Servicer for purposes of collection
only. If, however, in any enforcement suit or legal proceeding it is held that
the Servicer may not enforce an Insurance Policy on the grounds that it is not a
real party in interest or a holder entitled to enforce the Insurance Policy, the
Trustee, on behalf of the Trust, at the Seller's expense, shall take such steps
as the Servicer deems reasonably necessary to enforce such Insurance Policy,
including bringing suit in its name or the name of the Trustee for the benefit
of the Certificateholders.
SECTION 3.5. MAINTENANCE OF SECURITY INTERESTS IN FINANCED
VEHICLES. Consistent with the policies and procedures required by this
Agreement, the Servicer shall take such steps as are necessary to maintain
perfection of the first priority perfected security interest created by each
Receivable in the related Financed Vehicle, including but not limited to
obtaining
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the execution by the Obligors and the recording, registering, filing,
re-recording, re-registering and re-filing of all security agreements, financing
statements and continuation statements or instruments as are necessary to
maintain the first priority security interest granted by the Obligors to Triad
under the respective Receivables. The Trustee hereby authorizes the Servicer to
take such steps as are necessary to re-perfect or continue the perfection of
such security interest on behalf of the Trust in the event of the relocation of
a Financed Vehicle or for any other reason. In the event that the assignment of
a Receivable to the Trustee on behalf of the Trust is insufficient, without a
notation on the related Financed Vehicle's certificate of title, or without
fulfilling any additional administrative requirements under the laws of the
state in which the Financed Vehicle is located, to perfect a first priority
security interest in the related Financed Vehicle in favor of the Trust, the
parties hereto agree that Triad's designation as the secured party on the
certificate of title is in its capacity as agent of the Trust.
SECTION 3.6. ADDITIONAL COVENANTS OF SERVICER. The Servicer hereby
covenants to the Trustee and the Certificateholders that it (a) shall not
release the Financed Vehicle securing any Receivable from the security interest
granted by such Receivable in whole or in part except upon payment in full by
the Obligor thereunder, (b) shall not impair the rights of the
Certificateholders in such Receivables, the Dealer Agreements, the Dealer
Assignments, the Insurance Policies, or the other Trust Property, (c) shall not
amend a Receivable, other than in accordance with SECTION 3.2, and (d) shall not
amend, modify, supplement or waive any provision of any Related Document to
which it is a party, as it relates to the transactions contemplated in this
Agreement, in a manner that shall adversely affect any Certificateholder without
the consent of a Certificate Majority. The covenants contained in this SECTION
3.6 shall survive and be binding on the Servicer notwithstanding the resignation
of the Servicer pursuant to SECTION 7.5 or the termination of the Servicer
pursuant to SECTION 8.2.
SECTION 3.7. PURCHASE OF RECEIVABLES UPON BREACH. The Seller, the Servicer,
the Backup Servicer, the Collateral Agent or the Trustee, as the case may be,
shall, and a Certificate Majority may, inform the other parties to this
Agreement promptly, in writing, upon the discovery of any breach of SECTIONS
3.2, 3.4, 3.5 or 3.6; PROVIDED, HOWEVER, that the failure to give such notice
shall not affect any obligation of the Servicer hereunder. Unless the breach
shall have been cured by the last day of the first full calendar month following
such discovery by or notice to the Servicer of the breach, the Servicer shall
have an obligation, and the Trustee shall (provided that a Trustee Officer
either has made such discovery or has received notice thereof) enforce such
obligation of the Servicer, to repurchase any Receivable with respect to which
such breach has a material adverse effect on such Receivable or the interest
therein of the Trust or the Certificateholders. In consideration of the purchase
of such Receivable, the Servicer shall remit the Purchase Amount in the manner
specified in SECTION 4.4. The Servicer shall indemnify the Seller, the Trustee,
the Backup Servicer, the Collateral Agent and their respective officers,
directors, employees and agents, the Trust and the Certificateholders against
all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel, which may be asserted against or
incurred by any of them as a result of third party claims arising out of the
events or facts giving rise to such breach.
SECTION 3.8. SERVICING FEE, ADDITIONAL SERVICING FEE AND SERVICER EXPENSES.
On each Distribution Date, the Servicer shall be entitled to receive the
Servicing Fee,
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and so long as Triad is the Servicer, any Additional Servicing Fee and Servicer
Expenses for the related Collection Period pursuant to SECTION 4.5; PROVIDED,
HOWEVER, that the Servicer shall certify such Servicer Expenses to the Trustee
with a copy of such certification to the Rating Agency on or prior to each
Determination Date. The Servicer shall be required to pay all expenses incurred
by it in connection with its activities under this Agreement (including taxes
imposed on the Servicer and expenses incurred in connection with distributions
and reports to Certificateholders and all other fees and expenses of the Trust
including taxes levied or assessed against the Trust, and claims against the
Trust in respect of indemnification not expressly stated under this Agreement to
be for the account of the Trust). The Servicer shall be liable for the fees and
expenses of the Independent Accountants, the Lockbox Bank.
SECTION 3.9. SERVICING CERTIFICATE. No later than 12:00 noon, New York City
time, on each Determination Date, the Servicer shall deliver to the Trustee, the
Collateral Agent, the Rating Agency and the Seller, a Servicing Certificate
containing (a) all information necessary to enable the Trustee to make the
distributions pursuant to SECTION 4.5 (including, if required, withdrawals from
the Reserve Account) for the Collection Period preceding the date of such
Servicing Certificate, (b) all information necessary to enable the Trustee to
reconcile all deposits to, and withdrawals from, the Collection Account for the
related Collection Period and Distribution Date, and (c) all information
necessary for the Trustee to send statements to Certificateholders pursuant to
SECTION 4.8. A copy of such Servicing Certificate may be obtained by any
Certificateholder by a request in writing to the Trustee addressed to the
Corporate Trust Office. Receivables to be purchased by the Servicer, the Seller,
or by Triad and each Receivable which, during the preceding Collection Period
became a Liquidated Receivable or was paid in full, shall be identified by the
Servicer by account number with respect to such Receivable (as specified in the
Schedule of Receivables).
SECTION 3.10. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT. (a) The
Servicer shall deliver to the Trustee, the Backup Servicer, and the Rating
Agency, on or before [ ] of each year, commencing [ ], an Officer's Certificate,
dated as of December 31 of the prior year, stating that (i) a review of the
activities of the Servicer during the preceding 12-month period ended [ ] (or,
in the case of the first such certificate, the period from the Cutoff Date to
December 31, 1997) and of its performance under this Agreement has been made
under such officer's supervision and (ii) to such officer's knowledge, based on
such review, the Servicer has fulfilled all its obligations under this Agreement
throughout such period; or, if there has been a default in the fulfillment of
any such obligation, specifying each such default known to such officer and the
nature and status thereof. A copy of such certificate may be obtained by any
Certificateholder by a request in writing to the Trustee addressed to the
Corporate Trust Office.
(b) The Servicer shall deliver to the Trustee, the Backup Servicer and the
Rating Agency, promptly after having obtained knowledge thereof, but in no event
later than two Business Days thereafter, written notice in an Officer's
Certificate of any event which with the giving of notice or lapse of time, or
both, would become a Servicer Termination Event under SECTION 8.1.
SECTION 3.11. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S REPORT;
AUDITED FINANCIALS. (a) The Servicer shall cause a firm of nationally recognized
independent certified public accountants (the "INDEPENDENT ACCOUNTANTS"), who
may also render other services
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to the Servicer, to deliver to the Trustee, the Backup Servicer and the Rating
Agency on or before June 30 of each year, commencing June 30, [ ], with respect
to the fiscal year ended on the immediately preceding March 31, a report (the
"ACCOUNTANT'S REPORT") addressed to the Board of Directors of the Servicer, to
the Trustee for the benefit of the Certificateholders, the Backup Servicer and
the Rating Agency, to the effect that such firm has examined the financial
statements of the Servicer and issued its report therefor and that such
examination (1) was made in accordance with generally accepted auditing
standards, and accordingly included such tests of the accounting records and
such other auditing procedures as such firm considered necessary in the
circumstances; (2) included tests relating to auto loans serviced for others in
accordance with the requirements of the Uniform Single Audit Program for
Mortgage Bankers (the "PROGRAM"), to the extent the procedures in the Program
are applicable to the servicing obligations set forth in this Agreement; (3)
included an examination of the delinquency and loss statistics relating to the
Servicer's portfolio of automobile and light duty truck installment sales
contracts (setting forth the statistics so reviewed); and (4) except as
described in the report, disclosed no exceptions or errors in the records
relating to automobile and light duty truck loans serviced for others that, in
the firm's opinion, the Program requires such firm to report. The accountant's
report shall further state that (1) a review in accordance with agreed upon
procedures was made of three randomly selected Servicer Certificates; (2) except
as disclosed in the report, no exceptions or errors in the Servicer Certificates
were found; and (3) the delinquency and loss information, relating to the
Receivables contained in the Servicer Certificates were found to be accurate.
(b) The Accountant's Report shall also indicate that the firm is
independent of the Servicer within the meaning of the Code of Professional
Ethics of the American Institute of Certified Public Accountants.
(c) On or before June 30 of each year, commencing June 30, [ ], the
Servicer shall deliver to the Trustee, Backup Servicer and the Rating Agency,
the audited annual financial statements of the Servicer.
(d) Copies of the Accountant's Report and such audited annual financial
statements shall also be available to any Certificateholder from the Trustee
upon reasonable request. Any Certificateholder desiring such documents shall
have delivered to the Trustee an executed Information Request.
SECTION 3.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
RECEIVABLES. The Servicer shall provide to any Certificateholder, the Trustee,
the Backup Servicer and their respective representatives reasonable access to
documentation, computer systems and information regarding the Receivables. The
Servicer will permit any authorized representative or agent designated by the
Trustee, the Rating Agency, the Backup Servicer or any Certificateholder to
visit and inspect any of the properties of the Servicer, to examine the
corporate books and financial records of the Servicer, its records relating to
the Receivables, and make copies thereof or extracts therefrom and to discuss
the affairs, finances, and accounts of the Servicer with its principal officers,
as applicable, and its independent accountants. Any expense incident to the
exercise by the Trustee, the Rating Agency or the Backup Servicer of any right
under this Section shall be borne by the Servicer subject to the limitations set
forth in SECTION 2.8(f). Any expense incident to the exercise by any
Certificateholder of any right under this Section shall be borne by such
Certificateholder, and shall not be an expense of the Servicer, the
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Trust or the Trustee; PROVIDED, HOWEVER, that unless a Servicer Termination
Event shall have occurred, any such expense shall be borne by the Servicer. In
each case, such access to documentation, computer systems and information shall
be afforded without charge but only upon reasonable request and during normal
business hours. Nothing in this SECTION 3.12 shall derogate from the obligation
of the Servicer to observe any applicable law prohibiting disclosure of
information regarding the Obligors, and the failure of the Servicer to provide
access as provided in this SECTION 3.12 as a result of such obligation shall not
constitute a breach of this SECTION 3.12.
SECTION 3.13. MONTHLY TAPE; VERIFICATION OF SERVICING CERTIFICATE; BACKUP
SERVICER. (a) On or before the 16th calendar day of each month, the Servicer
shall prepare and deliver to the Trustee and the Backup Servicer a computer tape
or diskette (or any other electronic transmission acceptable to the Trustee and
the Backup Servicer) in a format acceptable to the Trustee and the Backup
Servicer, containing the information with respect to the Receivables as of the
close of business on the last day of the preceding Collection Period which is
necessary for preparation of the Servicing Certificate relating to the
immediately succeeding Determination Date. In the event that the Backup Servicer
reports any discrepancies, the Servicer and the Backup Servicer shall attempt to
reconcile such discrepancies prior to the second Business Day prior to the
related Distribution Date, but in the absence of a reconciliation, the Servicing
Certificate shall control for the purpose of calculations and distributions with
respect to the related Distribution Date. In the event that the Backup Servicer
and the Servicer are unable to reconcile discrepancies with respect to a
Servicing Certificate delivered by the Servicer during any calendar quarter, the
Servicer shall cause a firm of independent certified public accountants, at the
Servicer's expense, to audit the unreconciled Servicing Certificate or Servicing
Certificates delivered during such calendar quarter and, prior to the fifth
calendar day of the month of January, April, July or October, as applicable,
reconcile the discrepancies. The effect, if any, of such reconciliation shall be
reflected in the Servicing Certificate to be delivered on the next succeeding
Determination Date. Other than the duties specifically set forth in this
Agreement, the Backup Servicer shall have no obligations hereunder, including,
without limitation, to supervise, verify, monitor or administer the performance
of the Servicer. The Backup Servicer shall have no liability for any actions
taken or omitted by the Servicer. The duties and obligations of the Backup
Servicer shall be determined solely by the express provisions of this Agreement
and no implied covenants or obligations shall be read into this Agreement.
(b) The Backup Servicer shall review each Servicing Certificate delivered
pursuant to SECTION 3.13(a) and shall:
(i) confirm that such Servicing Certificate is complete on its face;
(ii) load the computer diskette (which shall be in a format acceptable
to the Backup Servicer) received from the Servicer pursuant to SECTION
3.13(a) hereof and confirm that such computer diskette is in a readable
form;
(iii) confirm that the Total Distribution Amount, the Class A
Interest Distributable Amount, the Class A Principal Distributable Amount,
the Class B Interest Distributable Amount, the Class B Principal
Distributable Amount, the Class C Interest Distributable Amount, the
Class C Principal Distributable Amount, the Backup Servicing Fee, the
Servicing Fee, the Trustee Fee and the
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amount on deposit in the Reserve Account are accurate based solely on the
recalculations of the Servicing Certificate; and
(iv) confirm the calculation of the Delinquency Ratio, Cumulative
Default Ratio, Repossession Inventory Ratio, Reserve Account Trigger
Events and Servicer Termination Trigger Events.
SECTION 3.14. FIDELITY COVERAGE; ERRORS AND OMISSIONS INSURANCE. The
Servicer shall maintain fidelity coverage in such form and amount as is
customary for entities acting as custodian of funds and documents in respect of
consumer contracts on behalf of institutional investors, but in no event less
than $1 million per occurrence. In addition, the Servicer shall use its best
efforts to obtain, and the Servicer shall thereafter maintain, an errors and
omissions insurance policy with such provisions as are customary for originators
and servicers of assets similar to the Receivables; and the Servicer shall
provide evidence of such insurance to the Trustee and the Initial
Certificateholder within 180 days following the Closing Date.
SECTION 3.15. DELEGATION OF DUTIES. So long as Triad is the Servicer, the
Servicer may delegate duties under this Agreement to sub-contractors who are in
the business of servicing motor vehicle receivables which are similar to the
Receivables and who are willing to accept such delegations and to perform such
duties in accordance with the customary procedures of Triad and this Agreement,
with the prior written consent of the Trustee, which consent shall not be
unreasonably withheld. The Servicer also may at any time, without the consent of
the Trustee, or any other Person, perform the specific duty of repossession of
Financed Vehicles through sub-contractors who are in the business of
repossessing motor vehicles. No such delegation or subcontracting duties by the
Servicer as described in this SECTION 3.15 shall relieve the Servicer of its
responsibility with respect to such duties. The Servicer shall pay the fees and
expenses of all such sub-contractors from its own funds.
ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO CERTIFICATEHOLDERS
SECTION 4.1. COLLECTION ACCOUNT. (a) The Servicer shall establish the
Collection Account in the name of the Trustee for the benefit of the
Certificateholders. The Collection Account shall be an Eligible Account and
initially shall be a segregated trust account established and maintained with
the Trustee.
(b) The Servicer shall cause the following amounts to be deposited into the
Collection Account no later than four Business Days following receipt of
available amounts thereof by the Lockbox Bank or the Servicer, but in any event
no later than the time specified in SECTION 3.2: (i) all Scheduled Payments,
(ii) all Recoveries, (iii) all Purchase Amounts, (iv) all amounts on deposit in
any Lockbox Account with respect to the Receivables, except as provided in
SECTION 4.3(a) hereof in connection with the prepayment of any Rule of 78's
Receivable, (v) the proceeds of any Insurance Policy, Collateral Insurance,
fidelity policy or other insurance policy relating to the Receivables or the
Servicer's activities with respect thereto, and (vi) all other amounts of any
nature whatsoever in respect of the Receivables.
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(c) All amounts held in the Collection Account shall, to the extent
permitted by applicable laws, rules and regulations, be invested, as directed in
writing by the Seller, in Eligible Investments that mature not later than one
Business Day prior to the Distribution Date for the Collection Period to which
such amounts relate. Any such written direction shall certify that any such
investment is authorized by this SECTION 4.1. Investments in Eligible
Investments shall be made in the name of the Trustee on behalf of the Trust, and
such investments shall not be sold or disposed of prior to their maturity. The
Trustee may trade with itself or an Affiliate in the purchase or sale of
Eligible Investments. Any investment of funds in the Collection Account shall be
made in Eligible Investments held by a financial institution with respect to
which (a) such institution has noted the Trustee's interest therein by book
entry or otherwise and (b) a confirmation of the Trustee's interest has been
sent to the Trustee by such institution, provided that such Eligible Investments
are (i) specific certificated securities (as such term is used in the UCC), and
(ii) either (A) in the possession of such institution or (B) in the possession
of a clearing corporation as such term is used in the UCC, registered in the
name of such clearing corporation, not endorsed for collection or surrender or
any other purpose not involving transfer, not containing any evidence of a right
or interest inconsistent with the Trustee's security interest therein, and held
by such clearing corporation in an account of such institution. Subject to the
other provisions hereof, the Trustee shall have sole control over each such
investment and the income thereon, and any certificate or other instrument
evidencing any such investment, if any, shall be delivered directly to the
Trustee or its agent, together with each document of transfer, if any, necessary
to transfer title to such investment to the Trustee in a manner which complies
with this SECTION 4.1. All interest, dividends, gains upon sale and other income
from, or earnings on, investments of funds in the Collection Account shall be
deposited in the Collection Account and distributed on the next Distribution
Date pursuant to SECTION 4.5. The Trustee shall not be liable for any investment
loss or other charge resulting therefrom unless the Trustee's failure to perform
in accordance with this Agreement is the cause of such loss or charge.
SECTION 4.2. REIMBURSEMENT FROM THE COLLECTION ACCOUNT. The Servicer will
be entitled to be reimbursed from amounts on deposit in the Collection Account
with respect to a Collection Period for amounts previously deposited in the
Collection Account but later determined by the Servicer or the Lockbox Bank to
have resulted from mistaken deposits or postings or checks returned for
insufficient funds or amounts required to be paid as prepayment rebates. The
amount to be reimbursed hereunder shall be paid to the Servicer on the related
Distribution Date pursuant to SECTION 4.5(a) upon certification by the Servicer
of such amounts and the provision of such information to the Trustee as may be
necessary in the opinion of the Trustee to verify the accuracy of such written
certification. In the event that the Trustee has not received evidence of the
Servicer's entitlement to reimbursement pursuant to this SECTION 4.2, the
Trustee shall not make a distribution to the Servicer in respect of such amount
pursuant to SECTION 4.5, or if the Servicer prior thereto has been reimbursed
pursuant to SECTION 4.5 or SECTION 4.6, the Trustee shall withhold such amounts
from amounts otherwise distributable to the Servicer on the next succeeding
Distribution Date and, to the extent necessary, subsequent Distribution Dates.
SECTION 4.3. APPLICATION OF COLLECTIONS. All collections for each
Collection Period shall be applied by the Servicer as follows:
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(a) With respect to each Receivable (other than a Purchased Receivable),
payments by or on behalf of the Obligor (other than of Additional Servicing Fees
with respect to such Receivable, to the extent collected) shall be applied, in
the case of a Simple Interest Receivable, to interest and principal in
accordance with the Simple Interest Method, and in the case of a Precomputed
Receivable, to interest and principal in accordance with the Actuarial Method.
With respect to Simple Interest Receivables, any prepayment of principal during
each Collection Period shall be applied to reduce the principal balance of the
Receivable during such Collection Period. Amounts received upon prepayment in
full of a Rule of 78's Receivable in excess of the then outstanding principal
balance of such Receivable and accrued interest thereon (calculated pursuant to
the Actuarial Method) will not be passed through to Certificateholders, but
shall be paid by the Servicer to the related Obligor to the extent required by
the terms of such Receivable and by law and otherwise paid to the Seller.
(b) With respect to each Receivable that has become a Purchased Receivable,
the Purchase Amount shall be applied, for purposes of this Agreement only, to
interest and principal on the Receivable in accordance with the terms of the
Receivable as if the Purchase Amount has been paid by the Obligor on the Record
Date. Nothing contained herein shall relieve any Obligor of any obligation
relating to any Receivable.
(c) All amounts collected that are payable to the Servicer as Additional
Servicing Fees hereunder shall be deposited in the Collection Account and paid
to the Servicer in accordance with SECTION 4.5(a).
SECTION 4.4. ADDITIONAL DEPOSITS. The Seller, Triad or the Servicer, as the
case may be, shall deposit or cause to be deposited in the Collection Account
the aggregate Purchase Amount with respect to Purchased Receivables and the
Servicer or the Seller, as the case may be, shall deposit therein all amounts to
be paid under SECTION 10.2. All such deposits shall be made, in immediately
available funds, on the Business Day preceding the Determination Date. On or
before the first Business Day preceding each Distribution Date, the Trustee
shall remit to the Collection Account any amounts delivered to the Trustee by
the Collateral Agent pursuant to SECTION 4.7.
SECTION 4.5. DISTRIBUTIONS. (a) On each Distribution Date, the Trustee
(based solely on the information contained in the Servicing Certificate
delivered on the related Determination Date pursuant to SECTION 3.9) shall,
subject to subsection (b) hereof, make the following distributions from the
amounts on deposit in the Collection Account, in the following order of
priority:
(i) first, to the Servicer, the Servicing Fee for the related
Collection Period, any Additional Servicing Fee for the related Collection
Period and, so long as Triad is the Servicer, any Servicer Expenses for the
related or any prior Collection Period and any amounts specified in SECTION
4.2, to the extent the Servicer has not reimbursed itself in respect of
such amounts pursuant to SECTION 4.6;
(ii) second, to any Lockbox Bank, the Trustee, the Backup Servicer and
the Collateral Agent (including the Trustee if acting in any such
additional
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capacity), any accrued and unpaid fees and expenses (including reasonable
legal fees and expenses) (in each case, to the extent such Person has not
previously received such amount from the Servicer or the Seller);
(iii) third, to the Class A Certificateholders, an amount equal to the
sum of the Class A Interest Distributable Amount for such Distribution
Date, and the Class A Interest Carryover Shortfall, if any;
(iv) fourth, to the Class B Certificateholders, an amount equal to the
sum of the Class B Interest Distributable Amount for such Distribution
Date, and the Class B Interest Carryover Shortfall, if any;
(v) fifth, to the Class A Certificateholders, an amount equal to the
sum of the Class A Principal Distributable Amount for such Distribution
Date, and the Class A Principal Carryover Shortfall, if any;
(vi) sixth, to the Class B Certificateholders, an amount equal to the
sum of the Class B Principal Distributable Amount for such Distribution
Date, and, the Class B Principal Carryover Shortfall, if any;
(vii) seventh, to the Class C Certificateholder, an amount equal to
the sum of the Class C Interest Distributable Amount for such Distribution
Date, and the Class C Interest Carryover Shortfall, if any;
(viii) eighth, to the Class C Certificateholder, an amount equal to
the sum of the Class C Principal Distributable Amount for such Distribution
Date, and the Class C Principal Carryover Shortfall, if any; and
(ix) ninth, to the Seller, the Seller's Retained Yield;
PROVIDED, HOWEVER, that (a) any amounts distributable to the Seller in respect
of item (ix) above shall instead be paid by the Trustee to the Collateral Agent
for deposit into the Reserve Account to the extent necessary to satisfy the
Reserve Account Requirement and (b) to the extent not satisfied with amounts
under clause (a) of this proviso, any amounts distributable to the Class C
Certificateholder in respect of items (viii) and (vii) above shall be paid,
respectively, by the Trustee to the Collateral Agent for deposit into the
Reserve Account to the extent necessary to satisfy the Reserve Account
Requirement.
(b) If a Reserve Account Trigger Event has occurred, all amounts otherwise
distributable to the Class C Certificateholder and the Seller shall be deposited
in the Reserve Account without regard to the Reserve Account Requirement; if a
Reserve Account Trigger Event shall have been Deemed Cured, the amounts on
deposit in the Reserve Account in excess of the Reserve Account Requirement
shall be distributed in accordance with the terms of the Reserve Account
Agreement.
(c) The rights of the Class B Certificateholders to receive distributions
in respect of the Class B Certificates pursuant to SECTION 4.5(a)(iv) on a
Distribution Date shall be
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and hereby are subordinated to the payment of the amounts distributable pursuant
to SECTIONS 4.5(a)(i) through and including (iii). The rights of the Class B
Certificateholders to receive distributions in respect of the Class B
Certificates pursuant to SECTION 4.5(a)(vi) on a Distribution Date shall be and
hereby are subordinated to the payment of the amounts distributable pursuant to
SECTIONS 4.5(a)(i) through and including (v). At such time as the Class A
Certificates are paid in full, the Class B Certificateholders shall be entitled
to exercise all rights granted to the Class A Certificateholders under this
Agreement to the extent that the exercise of such rights does not conflict with
the provisions of the Reserve Account Agreement. The rights of the Class C
Certificateholder to receive distributions in respect of the Class C
Certificates pursuant to SECTION 4.5(a)(vii) and (viii) on a Distribution Date
shall be and hereby are subordinated to the payment of the amounts distributable
pursuant to SECTIONS 4.5(a)(i) through and including (vi) and the satisfaction
of the Reserve Account Requirement. At such time as the Class A Certificates and
the Class B Certificates are paid in full, the Class C Certificateholder shall
be entitled to exercise all rights granted to the Class A Certificateholders
under this Agreement to the extent that the exercise of such rights does not
conflict with the provisions of the Reserve Account Agreement. The rights of the
holder of the Seller's Retained Yield to receive distributions pursuant to
SECTION 4.5(a)(ix) on a Distribution Date shall be and hereby are subordinated
to the payment of the amounts distributable pursuant to SECTION 4.5(a)(i)
through and including (viii) and the satisfaction of the Reserve Account
Requirement. At such time as the Certificates are paid in full, the holder of
the Seller's Retained Yield shall be entitled to exercise all rights granted to
the Certificateholders under this Agreement to the extent that the exercise of
such rights does not conflict with the provisions of the Reserve Account
Agreement.
(d) Subject to SECTION 10.1 respecting the final payment upon retirement of
each Certificate, and provided that the Trustee has received the applicable
Servicing Certificate, on each Distribution Date the Trustee shall distribute to
each Certificateholder of record on the preceding Record Date either (i) by wire
transfer, in immediately available funds to the account of such Holder at a bank
or other entity having appropriate facilities therefor, if such
Certificateholder shall have provided to the Trustee appropriate instructions
not later than fifteen days prior to the Record Date for such Distribution Date
and such Holder's Certificates in the aggregate evidence an original principal
balance of at least $1,000,000, or (ii) by check mailed to such
Certificateholder at the address of such Holder appearing in the Certificate
Register, the amounts to be distributed to such Certificateholder pursuant to
such Holder's Certificates, to the extent funds therefor are distributed under
SECTION 4.5(a).
(e) Each Certificateholder, by its acceptance of its Certificate, will be
deemed to have consented to the provisions of paragraph (b) above relating to
the priority of distributions. Each Certificateholder, by its acceptance of its
Certificate, further specifically acknowledges that it has no right to or
interest in any moneys at any time held pursuant to the Reserve Account
Agreement prior to the release of such moneys as aforesaid, such moneys being
held in trust for the benefit of the Certificateholders, as their interests may
appear prior to such release. Notwithstanding the foregoing, the provisions of
this Agreement and the Reserve Account Agreement shall be considered to
constitute a security agreement and the Seller hereby grants to the Collateral
Agent a first priority perfected security interest in such amounts, to be
applied as set forth in SECTION 3.03 of the Reserve Account Agreement in the
case of Reserve Account moneys.
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SECTION 4.6. NET DEPOSITS. The Servicer may make the remittances to be made
by it pursuant to SECTIONS 3.2, 4.1 and 4.4 without including amounts (which
amounts may be excluded prior to any such remittance for a Collection Period) to
be distributed to it pursuant to SECTION 4.2 and 4.5(a)(i), for so long as no
Servicer Termination Event has occurred and is continuing; PROVIDED, HOWEVER,
that the Servicer shall account for all of such amounts in the related Servicing
Certificate as if such amounts were deposited and distributed separately; and,
PROVIDED, FURTHER, that if an error is made by the Servicer in calculating the
amount to be deposited or retained by it, with the result that an amount less
than required is deposited in the Collection Account, the Servicer shall make a
payment of the deficiency to the Collection Account, immediately upon becoming
aware, or receiving notice from the Trustee, the Backup Servicer or any
Certificateholder of such error.
SECTION 4.7. THE RESERVE ACCOUNT. In order to effectuate and to secure the
subordination provided for herein, there shall be established and maintained
with the Collateral Agent, the Reserve Account to include the money and other
property deposited and held therein pursuant to this SECTION 4.7, and the Seller
agrees, simultaneously with the execution and delivery of this Agreement, to
execute and deliver the Reserve Account Agreement and, pursuant to the terms
thereof, to deposit $[ ] in the Reserve Account. Although the Seller has pledged
the Reserve Account to the Collateral Agent pursuant to the Reserve Account
Agreement, the Reserve Account shall not under any circumstances be deemed to be
a part of or otherwise includable in the Trust or the Trust Property, but
instead represents property beneficially owned by the Seller and the Class C
Certificateholder, which has been pledged and deposited with the Collateral
Agent (as secured party on behalf of the Class A Certificateholders, Class B
Certificateholders, Class C Certificateholder and the Servicer) in accordance
with the terms hereof and of the Reserve Account Agreement. The Seller and the
Class C Certificateholder, by the acceptance of its Certificate, hereby
acknowledge and accept that the assets in the Reserve Account (and all earnings
thereon) are owned beneficially by them, and the Seller and the Class C
Certificateholder agree to treat such assets (and all earnings thereon) as their
assets (and earnings) for federal, state, and local tax and all other purposes,
as their interest shall appear, and not to sell, transfer, or otherwise dispose
of their interests therein. In the event that the Servicing Certificate with
respect to any Determination Date shall state that the Total Distribution Amount
with respect to such Determination Date is insufficient to make the payments
required to be made on the related Distribution Date pursuant to SECTION
4.5(a)(i) through (vi), (the amount of such deficiency being a "DEFICIENCY CLAIM
AMOUNT"), then on the second Business Day immediately following the related
Determination Date, the Trustee shall deliver to the Collateral Agent, and the
Servicer, by hand delivery, telex or facsimile transmission, a written notice (a
"DEFICIENCY NOTICE") specifying the Deficiency Claim Amount for such
Distribution Date. Such Deficiency Notice shall direct the Collateral Agent to
remit such Deficiency Claim Amount (to the extent of the funds available to be
distributed pursuant to the Reserve Account Agreement) to the Trustee for
deposit in the Collection Account and distribution pursuant to SECTIONS
4.5(a)(i) through (vi), as applicable.
Any Deficiency Notice shall be delivered by 10:00 a.m., New York City time,
on the second Business Day following such Determination Date. The amounts
distributed by the Collateral Agent to the Trustee pursuant to a Deficiency
Notice shall be deposited by the Trustee into the Collection Account pursuant to
SECTION 4.4.
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SECTION 4.8. STATEMENTS TO CERTIFICATEHOLDERS; TAX RETURNS. (a) On each
Distribution Date, the Trustee shall include with each distribution to each
Certificateholder and shall forward by mail to the Rating Agency, a statement
based solely on the information in the Servicing Certificate delivered on the
related Determination Date pursuant to SECTION 3.9, setting forth the following
information, among other things, with respect to the Collection Period relating
to such Distribution Date:
(i) the amount of such distribution allocable to principal of the
Class A Certificates, the Class B Certificates and the Class C
Certificates, respectively;
(ii) the amount of such distribution allocable to interest on the
Class A Certificates, the Class B Certificates and the Class C
Certificates, respectively;
(iii) the Pool Balance, the Class A Pool Factor, the Class B Pool
Factor, and the Class C Pool Factor (A) as of the close of business on the
last day of the preceding Collection Period and (B) after giving effect to
distributions made on such Distribution Date;
(iv) the Class A Certificate Balance, the Class B Certificate Balance,
and the Class C Certificate Balance as of the close of business on the last
day of the preceding Collection Period, after giving effect to
distributions allocated to principal reported under (i) above;
(v) the amount of the Servicing Fee, the Additional Servicing Fee and
the Servicer Expenses paid to the Servicer with respect to the related
Collection Period and the Class A Percentage, the Class B Percentage, and
the Class C Percentage of the Servicing Fee, the amount of any unpaid
Servicing Fees and the change in such amount from that of the prior
Distribution Date, and the amount of any other fees paid by the Trust with
respect to such Collection Period;
(vi) the amount of the Class A Interest Carryover Shortfall, if
applicable, on such Distribution Date and the Class A Principal Carryover
Shortfall, if applicable, on such Distribution Date, and the change in such
amounts from the prior Distribution Date;
(vii) the amount of the Class B Interest Carryover Shortfall, if
applicable, on such Distribution Date and the amount of the Class B
Principal Carryover Shortfall, if applicable, on such Distribution Date,
and the change in such amounts from the prior Distribution Date;
(viii) the amount of the Class C Interest Carryover Shortfall, if
applicable, on such Distribution Date and the amount of the Class C
Principal Carryover Shortfall, if applicable, on such Distribution Date,
and the change in such amounts from the prior Distribution Date;
(ix) the aggregate amount in the Reserve Account and the change in
such amount from the preceding Distribution Date;
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(x) the number of Receivables and the aggregate Principal Balance due
thereof, for which the related Obligors are delinquent in making scheduled
payments (A) between 31 and 60 days, (B) between 61 and 90 days, (C)
between 91 and 120 days and (D) more than 120 days;
(xi) the number of Receivables which became Liquidated Receivables,
and the aggregate principal amount thereof net of Recoveries;
(xii) the number of Receivables which became Defaulted Receivables,
and the aggregate principal amount thereof;
(xiii) the number and the aggregate Purchase Amount of Receivables
that became Purchased Receivables during the related Collection Period and
the number and aggregate Purchase Amount of Receivables that were required
to be repurchased during the related Collection Period but were not so
repurchased;
(xiv) the number and aggregate Principal Balance of Receivables with
respect to which, to the knowledge of the Servicer, Obligors became the
subject of bankruptcy proceedings during such Collection Period (or during
a prior Collection Period, if the Servicer first became aware of such
proceedings during the current Collection Period);
(xv) the Seller's Retained Yield for such Distribution Date and the
portion thereof (A) distributed to the Seller and (B) deposited in the
Reserve Account;
(xvi) the Cumulative Default Ratio;
(xvii) the Delinquency Ratio;
(xviii) the Repossession Inventory Ratio;
(xix) the amount of any Deficiency Claim Amounts deposited in the
Collection Account from the Reserve Account;
(xx) whether a Reserve Fund Trigger Event, Servicer Termination
Trigger Event or Servicer Termination Event has occurred; and
(xxi) the Collector to Current Receivable Ratio and the Collector to
Delinquent Receivable Ratio;
PROVIDED, HOWEVER, the Trustee may deliver a copy of the Servicing Certificate
to each Certificateholder and the Rating Agency in satisfaction of the
requirements set forth in this Section if such Servicing Certificate otherwise
contains the information required to be distributed to each Certificateholder in
accordance herewith. Each amount set forth pursuant to SUBCLAUSES (i), (ii),
(iv), (v), (vi), (vii) and (viii) above shall be expressed in the aggregate and
as a dollar amount per $1,000 of original principal balance of a Certificate of
the related Class.
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(b) Within the prescribed period of time for tax reporting purposes after
the end of each calendar year during the term of this Agreement, the Trustee
shall mail, provided it has received the necessary information from the
Servicer, to each Person who at any time during such calendar year shall have
been a Holder of a Certificate and received any payment thereon, a report as to
the aggregate of amounts reported pursuant to clauses (i), (ii) and (v) of
SECTION 4.8(a) (separately indicating amounts in respect of each Class of
Certificates) and such other information reasonably requested in writing by the
Certificateholder necessary to permit the Certificateholder to ascertain its
share of the gross income and deductions of the Trust (exclusive of the
Additional Servicing Fee), for such calendar year or, in the event such Person
shall be a Holder of a Certificate during a portion of such calendar year for
the applicable portion of such year, for the purposes of such
Certificateholder's preparation of federal and state income tax returns. The
Trustee shall furnish such statements to the Internal Revenue Service annexed to
Form 1041 in the manner and at the time provided by the Code and applicable
Regulations thereunder. The obligation of the Trustee set forth in this
paragraph shall be deemed to have been satisfied to the extent that
substantially comparable information shall be provided by the Servicer pursuant
to any requirements of the Code.
(c) The Trustee shall prepare and file any tax returns required to be filed
by the Trust. The Servicer will furnish the Trustee with all such information
known to it as may be reasonably required in connection with the preparation of
all tax returns of the Trust. The fees and expenses incurred in connection with
the preparation and filing of all tax returns of the Trust shall be paid for by
the Trustee out of the Trustee Fee.
(d) The Trustee shall provide any Holder of Certificates representing at
least 25% of the Certificate Balance, with such additional information available
to the Trustee relating to the Certificates, the Trust Property or the Reserve
Account as such Holder may reasonably request from time to time. Such additional
information (to the extent provided to the Trustee by the Servicer) shall also
be available to any Certificateholder from the Trustee upon reasonable request
and upon payment of the Trustee's and the Servicer's reasonable fees and
expenses in connection with providing and preparing such information. Any
Certificateholder desiring such additional information shall have delivered to
the Trustee an executed Information Request.
ARTICLE V
THE CERTIFICATES
SECTION 5.1. THE CERTIFICATES. The Certificates shall be issued only in
fully registered form in minimum denominations of $250,000 and integral
multiples of $1,000 in excess thereof; provided, however, that one Certificate
of each Class may be issued in a different amount if the aggregate initial
Certificate Principal Balance of the Certificates is not an integral multiple of
$1,000. The Certificates shall be executed on behalf of the Trust by manual or
facsimile signature of a Trustee Officer of the Trustee. Certificates bearing
the manual or facsimile signatures of individuals who were, at the time when
such signatures were affixed, authorized to sign on behalf of the Trustee, shall
be valid and binding obligations of the Trust, notwithstanding that such
individuals or any of them shall have ceased to be so authorized prior to the
authentication and delivery of such Certificates.
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SECTION 5.2. AUTHENTICATION OF CERTIFICATES. The Trustee shall cause the
Certificates to be executed on behalf of the Trust, authenticated, and delivered
to the or upon the written order of the Seller, such order signed by the
Seller's chairman of the board, president, or any vice president, without
further corporate action by the Seller, in authorized denominations, pursuant to
this Agreement. No Certificate shall entitle its Holder to any benefit under
this Agreement, or shall be valid for any purpose, unless there shall appear on
such Certificate a certificate of authentication substantially in the form set
forth in EXHIBIT A, EXHIBIT B, or EXHIBIT C hereto, executed by the Trustee by
manual signature of an authorized signatory; such authentication shall
constitute conclusive evidence that such Certificate shall have been duly
authenticated and delivered hereunder. All Certificates issued on the Closing
Date shall be dated the Closing Date. All Certificates issued upon transfer or
exchange thereafter shall be dated the date of their authentication.
REGISTRATION OF TRANSFER AND EXCHANGE OF CERTIFICATES; RESTRICTIONS ON
TRANSFER OF CLASS C CERTIFICATES.
(i) The Trustee shall keep or cause to be kept at the Corporate Trust
Office books (the "CERTIFICATE REGISTER") for the registration, transfer
and exchange of Certificates (the Trustee, in such capacity, being the
"CERTIFICATE REGISTRAR"). The names and addresses of all Certificateholders
and the names and addresses of the transferees of any Certificates shall be
registered in the Certificate Register. The Person in whose name any
Certificate is so registered shall be deemed and treated as the sole owner
and Holder thereof for all purposes of this Agreement and the Certificate
Registrar and the Trustee and any agent of any of them shall not be
affected by any notice or knowledge to the contrary. A Certificate is
transferable or exchangeable only upon the surrender of such Certificate to
the Certificate Registrar at the Corporate Trust Office together with an
assignment and transfer (executed by the Holder or his duly authorized
attorney), subject to the requirements of SECTIONS 5.3(c), (d), (e), (f)
and (g). Upon request of the Trustee, the Certificate Registrar shall
provide the Trustee with the names, addresses and percentage interests of
the Holders.
(ii) Upon surrender for registration of transfer of any Certificate,
subject to the requirements of SECTIONS 5.3(c), (d), (e), (f) and (g), the
Trustee shall execute and the Trustee shall duly authenticate in the name
of the designated transferee or transferees, one or more new Certificates
in authorized denominations of a like aggregate initial Certificate
Balance. Such Certificates shall be delivered by the Certificate Registrar
in accordance with Section 5.3(e). Each Certificate surrendered for
registration of transfer shall be canceled and subsequently destroyed by
the Certificate Registrar. Each new Certificate issued pursuant to this
Section 5.3 shall be registered in the name of any Person as the
transferring Holder may request, subject to the provisions of SECTIONS
5.3(c), (d), (e), (f) and (g).
(iii) Notwithstanding anything to the contrary provided in this
Agreement, no sale, transfer, or other disposition of the Class C
Certificate shall be made unless: (i) the Trustee is provided with an
opinion of independent counsel or
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a ruling of the Internal Revenue Service that establishes to the reasonable
satisfaction of the majority of the Holders of each of the Class A
Certificates, and the Class B Certificates, that such disposition will not
have any material adverse consequences under federal or state tax laws
resulting from the classification or status of this Agreement, or the Trust
created hereunder, or otherwise, and (ii) the Rating Agency shall have
indicated in writing that such sale, transfer, or other disposition will
not result in a reduction or withdrawal of the then current rating of the
Class A Certificates and the Class B Certificates.
SECTION 5.3. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES. If (a) any
mutilated Certificate is surrendered to the Certificate Registrar, or the
Certificate Registrar receives evidence to its satisfaction of the destruction,
loss, or theft of any Certificate and (b) there is delivered to the Certificate
Registrar and the Trustee such security or indemnity as may be required by them
to save each of them harmless which in the case of (i) the Underwriter or (ii)
any other investor with a credit rating of at least "BBB" by Standard & Poor's,
"Baa" by Xxxxx'x or "BBB" by the Rating Agency shall be deemed satisfied by the
delivery of an unsecured agreement of indemnity), then in the absence of notice
that such Certificate shall have been acquired by a bona fide purchaser, the
Trustee on behalf of the Trust shall execute, authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Certificate, a new Certificate of like tenor and denomination. In connection
with the issuance of any new Certificate under this SECTION 5.4, the Trustee and
the Certificate Registrar may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee and the
Certificate Registrar) connected therewith. Any duplicate Certificate issued
pursuant to this SECTION 5.4 shall constitute conclusive evidence of a
beneficial interest in the Trust Property, as if originally issued, whether or
not the lost, stolen, or destroyed Certificate shall be found at any time.
SECTION 5.4. PERSONS DEEMED OWNERS. Prior to due presentation of a
Certificate for registration of transfer, the Trustee, the Certificate Registrar
and any agent of the Trustee or the Certificate Registrar may treat the Person
in whose name any Certificate shall be registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to SECTION 4.5
and for all other purposes whatsoever, and neither the Trustee, nor the
Certificate Registrar nor any agents of the Trustee or the Certificate Registrar
shall be bound by any notice to the contrary.
SECTION 5.5. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND ADDRESSES. The
Trustee shall furnish or cause to be furnished to the Servicer, at the expense
of the Trust, within 10 days after receipt by the Trustee of a request therefor
from the Servicer, a written list of the names and addresses of the
Certificateholders as of the most recent Record Date for payment of
distributions to Certificateholders. If three or more Certificateholders, or one
Certificateholder evidencing not less than [ ]% of any Class of Certificates, so
request in writing to the Trustee, then the Trustee shall, within five Business
Days after the receipt of such request furnish to the requesting
Certificateholder or Certificateholders a copy of the current list of
Certificateholders. Each Holder, by receiving and holding a Certificate, shall
be deemed to have agreed with the Servicer and the Trustee that neither the
Servicer nor the Trustee shall be held accountable by
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reason of the disclosure of its name and address, regardless of the source from
which such information was derived.
SECTION 5.6. MAINTENANCE OF OFFICE OR AGENCY. The Trustee shall maintain in
New York, New York, an office or offices or agency or agencies where
Certificates may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Trustee in respect of the Certificates
and this Agreement may be served. The Trustee initially designates [ ] as its
office for such purposes. The Trustee shall give prompt written notice to the
Servicer and to Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
ARTICLE VI
THE SELLER
SECTION 6.1. REPRESENTATIONS OF SELLER. The Seller hereby makes the
following representations and warranties to the other parties hereto, on which
the Trustee on behalf of itself and the Certificateholders relies in accepting
the Receivables and the other Trust Property in trust and executing and
authenticating the Certificates. Unless otherwise specified, the representations
are made as of the execution and delivery of this Agreement, but shall survive
the sale, transfer and assignment of the Receivables to the Trustee.
(a) ORGANIZATION AND GOOD STANDING. The Seller has been duly organized and
is validly existing as a corporation in good standing under the laws of the
State of Delaware, with power and authority to execute, deliver and perform its
obligations under this Agreement and its Related Documents and to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted, and had at all relevant times, and now
has, power, authority, and legal right to acquire, own and sell the Receivables.
(b) DUE QUALIFICATION. The Seller is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary licenses
and approvals, in all jurisdictions in which the ownership or lease of its
property or the conduct of its business requires such qualifications, licenses
or approvals.
(c) POWER AND AUTHORITY. The Seller has the power and authority to execute
and deliver this Agreement and each of its Related Documents and to carry out
their respective terms and the transactions contemplated thereby; the Seller has
full power and authority to sell and assign the Trust Property to be sold and
assigned to and deposited with the Trustee and has duly authorized such sale and
assignment to the Trustee by all necessary corporate action; and the execution,
delivery and performance of this Agreement and each of its Related Documents has
been duly authorized by the Seller by all necessary corporate action.
(d) VALID SALE; BINDING OBLIGATION. This Agreement and each of its Related
Documents has been duly executed and delivered by the Seller and shall effect a
valid sale, transfer and assignment of the Receivables and the other Trust
Property, and the grant of a valid security interest in the Reserve Account, in
each case enforceable against the Seller and creditors of and purchasers from
the Seller, and this Agreement and each of its Related Documents, when
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duly executed and delivered, shall constitute the legal, valid and binding
obligations of the Seller enforceable in accordance with their terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
(e) NO VIOLATION. The execution, delivery and performance by the Seller of
this Agreement and its Related Documents and the consummation of the
transactions contemplated hereby and thereby and the fulfillment of the terms
hereof and thereof do not and shall not conflict with, result in any breach of
any of the terms and provisions of or constitute (with or without notice, lapse
of time or both) a default under, the articles of incorporation or by-laws of
the Seller, or any indenture, agreement, mortgage, deed of trust or other
instrument to which the Seller is a party or by which it is bound or to which
any of its properties is subject, or result in the creation or imposition of any
Lien upon any of its properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust or other instrument (other than this
Agreement), or violate any law, order, rule or regulation applicable to the
Seller of any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the Seller
or its properties, or in any way materially adversely affect the interest of the
Certificateholders or the Trust in any Receivable, or affect the Seller's
ability to perform its obligations under this Agreement.
(f) NO PROCEEDINGS. There are no proceedings or investigations pending, or
to the Seller's knowledge, threatened, before any court, regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Seller or its properties: (1) asserting the invalidity of this
Agreement, any of its Related Documents or the Certificates, (2) seeking to
prevent the issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement or any of its Related Documents, (3)
seeking any determination or ruling that might materially and adversely affect
the performance by the Seller of its obligations under, or the validity or
enforceability of, this Agreement, any of its Related Documents or the
Certificates, (4) relating to the Seller and which might adversely affect the
federal or state income, excise, franchise or similar tax attributes of the
Certificates, or (5) that could have a material adverse effect on the
Receivables or the interest of the Trustee therein.
(g) NO CONSENTS. No consent, approval, authorization or order of or
declaration or filing with any governmental authority is required for the
issuance or sale of the Certificates or the consummation of the transactions
contemplated by this Agreement or any of the Seller's Related Documents, except
such as have been duly made or obtained on or prior to the Closing Date.
(h) TAX RETURNS. The Seller has filed on a timely basis all tax returns
required to be filed by it and paid all taxes, to the extent that such taxes
have become due.
(i) CHIEF EXECUTIVE OFFICE. The principal place of business and chief
executive office of the Seller is, and for the four months preceding the date of
this Agreement has been, located at: 0000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx
Xxxxx, Xxxxxxxxxx 00000.
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(j) NO INJUNCTIONS. There are no existing injunctions, writs, restraining
orders or other similar orders which might adversely affect the performance by
the Seller of its obligations under, or the validity and enforceability of, this
Agreement or any of the Related Documents.
(k) COMPLIANCE WITH LAW. The Seller is in compliance with all requirements
of federal and state laws, rules, regulations and orders, except where the
failure so to comply would not have a material adverse effect on the Seller, its
business or its properties, or the ability of the Seller to perform its
obligations under this Agreement, or any of the Related Documents.
(l) SOLVENCY; NO FRAUDULENT TRANSFER. (A) The Seller is assigning the
Receivables to the Trust without any intent to hinder, delay, or defraud any
current or future creditor of the Seller; (B) the Seller is not insolvent and
will not become insolvent as a result of the assignment; (C) the Seller is not
engaged and is not about to engage in any business or transaction for which any
property remaining with the Seller is an unreasonably small capital or for which
the remaining assets of the Seller are unreasonably small in relation to the
business of the Seller or the transaction; (D) the Seller does not intend to
incur, and does not believe or reasonably should not believe that it would
incur, debts beyond its ability to pay as they become due; and (E) the
consideration paid by the Certificateholders to the Seller for the Receivables
absolutely assigned by the Seller hereunder is equivalent to a fair market value
of such Receivables under the circumstances of the transaction, including but
not limited to, timing of such assignment.
(m) LEGAL NAME. "Triad Financial Special Purpose Corporation" is the only
legal name under which the Seller has ever operated its business, and the Seller
does not have any tradenames, fictitious names, assumed names or "doing business
as" names.
(n) SUBSIDIARIES. The Seller does not own, directly or indirectly, any
equity securities of any entity or enterprise and does not conduct any of its
business through any subsidiary, entity or enterprise.
(o) OTHER ACTIVITIES. The Seller has not in the past, and does not
currently, engage in any business activity other than transactions of the type
contemplated pursuant to this Agreement and the Related Documents.
SECTION 6.2. LIABILITY OF SELLER; INDEMNITIES. (a) The Seller shall be
liable hereunder only to the extent of the obligations specifically undertaken
by the Seller under this Agreement and the representations made by the Seller in
this Agreement. The Seller shall indemnify, defend and hold harmless the
Trustee, the Certificateholders, the Backup Servicer, the Servicer, the
Collateral Agent and their respective officers, directors, employees and agents
from and against any loss, liability or expense incurred by reason of (a) the
Seller's willful misfeasance, bad faith, or gross negligence in the performance
of its duties under this Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement or (b) the inaccuracy of any
representation made in SECTION 6.1, or (c) the Seller's violation of federal or
state securities laws in connection with the sale of the Certificates. The
indemnification provided for in this SECTION 6.2 shall survive the termination
of this Agreement and the resignation or removal of the Trustee, the Backup
Servicer and the Collateral Agent.
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(b) Indemnification under this SECTION 6.2 shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation.
If the Seller shall have made full indemnity payments to the Trustee, the
Certificateholders, the Servicer or the Backup Servicer pursuant to this Section
and the Trustee, the Certificateholders, the Servicer or the Backup Servicer
thereafter shall collect any of such amounts from others, the Trustee, the
Certificateholders, the Servicer or the Backup Servicer shall repay such amounts
to the Seller, without interest.
(c) The Seller shall be liable for the fees and expenses of the Trustee and
the Backup Servicer only to the extent such parties are not compensated in full
in accordance with the provisions of SECTION 4.5.
SECTION 6.3. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS
OF SELLER, AMENDMENT OF CERTIFICATE OF INCORPORATION AND CERTAIN COVENANTS OF
THE SELLER. (a) The Seller shall not (i) consolidate or merge with or into any
other entity or Person, or dissolve, liquidate or transfer, in whole or in part,
its properties and assets substantially as an entirety to any entity (other than
to a trust established by the Seller), or lend or advance any moneys to, or make
an investment in, any Person or amend or repeal its Certificate of Incorporation
or (ii) engage in any other activity that bears on whether the separate legal
identity of the Seller will be respected including, without limitation, (A)
forming, or causing to be formed, any subsidiaries or (B) acting other than in
its corporate name and through its officers or directors;
(b) The Seller shall not engage in any joint activity or transaction of any
kind with or for the benefit of any related company, including loans to or from
any related company and any guarantee of the indebtedness of any related
company, except for (i) purchasing management services and leasing office space
or equipment, in each case only to the extent necessary for the conduct of the
corporation's business, (ii) purchasing assets or subordinate interests in any
pool of assets created or serviced by one or more related companies for fair and
reasonable consideration, (iii) payment of capital dividends to the
shareholders, (iv) arranging for letters of credit to be provided without
recourse to the Seller beyond the extent contemplated in its Certificate of
Incorporation by banks with which such related company maintains banking
relationships and (v) obtaining any financial guaranty insurance policy without
recourse to the Seller beyond the extent contemplated in its Certificate of
Incorporation;
(c) The Seller shall not create, incur, assume or in any manner become
liable in respect of any indebtedness or assume or guaranty any indebtedness of
any other entity, other than (i) indebtedness pursuant to which the Seller is
liable solely to the extent contemplated by its Certificate of Incorporation,
(ii) accounts payable and expense accruals incurred in the ordinary course of
business of the Seller and which are incidental to the business purpose of the
Seller as stated in its Certificate of Incorporation, but excluding any
liability in respect of the unpaid purchase price of any subordinate interest,
(iii) indebtedness without recourse to the Seller other than to the extent of
any security interest in one or more residual or subordinate interests and (iv)
indebtedness relating to the letters of credit or obligations arising out of a
financial guaranty insurance policy described in (c) above;
(d) The Seller shall not (i) institute proceedings to be adjudicated
bankrupt or insolvent, or consent to the institution of bankruptcy or insolvency
proceedings against it, or
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consent to, or file a petition seeking, reorganization or relief under
applicable federal or state law relating to bankruptcy, or consent to the
appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Seller or a substantial part of its property, or make
any assignment for the benefit of creditors, (ii) admit in writing its inability
to pay its debts generally as they become due, or (iii) take corporate action in
furtherance of any such action; and
(e) The Seller shall: (i) maintain books and records separate from any
other person or entity; (ii) maintain its accounts separate from any other
person or entity; (iii) not commingle assets with those of any other entity;
(iv) conduct its own business in its own name; (v) maintain separate financial
statements; (vi) pay its own liabilities out of its own funds; (vii) observe all
corporate formalities; (viii) maintain an arm's-length relationship with each
related company; (ix) pay the salaries of its own employees and maintain a
sufficient number of employees in light of its contemplated business operations;
(x) not guarantee or become obligated for the debts of any other entity or hold
out its credit as being available to satisfy the obligations of others; (xi) not
acquire obligations or securities of its shareholders; (xii) allocate fairly and
reasonably any overhead for shared office space; (xiii) use separate stationery,
invoices and checks; (xiv) not pledge its assets for the benefit of any other
entity or make any loans or advances to any entity; (xv) hold itself out as a
separate entity; (xvi) correct any known misunderstanding regarding its separate
identity; and (xvii) maintain adequate capital in light of its contemplated
business operations.
SECTION 6.4. LIMITATION ON LIABILITY OF SELLER AND OTHERS. The Seller and
any director or officer or employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder.
SECTION 6.5. SELLER MAY OWN CERTIFICATES. Each of the Seller and any
Affiliate of the Seller may in its individual or any other capacity become the
owner or pledgee of Certificates with the same rights as it would have if it
were not the Seller or an Affiliate thereof. Certificates so owned by or pledged
to the Seller or such Affiliate shall have an equal and proportionate benefit
under the provisions of this Agreement, without preference, priority, or
distinction as among all of the Certificates except as otherwise provided herein
or by the definition of Certificateholder. The Seller shall notify the Trustee
promptly after it or any of its Affiliates become the owner or pledgee of a
Certificate.
ARTICLE VII
THE SERVICER AND BACKUP SERVICER
SECTION 7.1. REPRESENTATIONS AND WARRANTIES OF SERVICER. The Servicer
hereby makes the following representations and warranties to the other parties
hereto, on which the Trustee on behalf of itself and the Certificateholders
relies in accepting the Receivables in trust and executing and authenticating
the Certificates. Unless otherwise specified, the representations and warranties
are made as of the Closing Date and shall survive the sale, transfer and
assignment of the Receivables to the Trustee.
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(a) ORGANIZATION AND GOOD STANDING. The Servicer has been duly organized
and is validly existing as a corporation in good standing under the laws of the
State of California, with power, authority and legal right to own its properties
and to conduct its business as such properties are currently owned and such
business is presently conducted, and had at all relevant times, and now has,
power, authority and legal right to acquire, own and service the Receivables and
to enter into and perform its obligations under this Agreement and each of its
Related Documents.
(b) DUE QUALIFICATION. The Servicer is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary licenses
and approvals, in all jurisdictions in which the ownership or lease of property
or the conduct of its business (including the servicing of the Receivables as
required by this Agreement) requires or shall require such qualifications,
licenses or approvals.
(c) POWER AND AUTHORITY. The Servicer has the power and authority to
execute and deliver this Agreement and to carry out its terms; and the
execution, delivery, and performance of this Agreement have been duly authorized
by the Servicer by all necessary corporate action.
(d) BINDING OBLIGATION. This Agreement has been duly executed and delivered
by the Servicer and constitutes a legal, valid and binding obligation of the
Servicer enforceable in accordance with its terms except as enforceability may
be limited by bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(e) NO VIOLATION. The execution, delivery and performance by the Servicer
of this Agreement and the consummation of the transactions contemplated hereby
and the fulfillment of the terms hereof as each of the foregoing relate to the
Servicer shall not conflict with, result in any breach of any of the terms and
provisions of or constitute (with or without notice, lapse of time or both) a
default under, the articles of incorporation or by-laws of the Servicer, or any
indenture, agreement, mortgage, deed of trust or other instrument to which the
Servicer is a party or by which it is bound or to which any of its properties is
subject, or result in the creation or imposition of any lien upon any of its
properties pursuant to the terms of any indenture, agreement, mortgage, deed of
trust or other instrument (other than this Agreement), nor violate any law,
order, rule, or regulation applicable to the Servicer of any court or of any
federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or any its properties, or
in any way materially adversely affect the interest of the Certificateholders or
the Trust in any Receivable, or affect the Servicer's ability to perform its
obligations under this Agreement.
(f) NO PROCEEDINGS. There are no proceedings or investigations pending, or
to the Servicer's knowledge, threatened against the Servicer, before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Servicer or its properties: (1) asserting the
invalidity of this Agreement, (2) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement as the same relate to the
Servicer, (3) seeking any determination or ruling that might materially and
adversely affect the
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performance by the Servicer of its obligations under, or the validity or
enforceability of, this Agreement, (4) relating to the Servicer and which might
adversely affect the federal or state income, excise, franchise or similar tax
attributes of the Certificates, or (5) that could have a material adverse effect
on the Receivables or the Trust Property.
(g) NO CONSENTS. No consent, approval, license, authorization or order of
or declaration or filing with any governmental authority, bureau or agency is
required for the consummation of the other transactions contemplated by this
Agreement as the same relate to the Servicer, except such as have been duly made
or obtained.
(h) TAXES. The Servicer has filed on a timely basis all tax returns
required to be filed by it and paid all taxes, to the extent that such taxes
have become due.
(i) CHIEF EXECUTIVE OFFICE. The principal place of business and chief
executive office of the Servicer is, and for the four months preceding the date
of this Agreement has been, located at 0000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxxxx
Xxxxx, Xxxxxxxxxx.
(j) NO INJUNCTIONS. There are no existing injunctions, writs, restraining
orders or other similar orders which might adversely affect the performance by
the Servicer or its obligations under, or the validity and enforceability of,
this Agreement.
(k) COMPLIANCE WITH LAW. The Servicer is in compliance with all
requirements of federal and state laws, rules, regulations and orders, except
where the failure so to comply would not have a material adverse effect on the
Servicer, its business or its properties, or the ability of the Servicer to
perform its obligations under this Agreement.
SECTION 7.2. INDEMNITIES OF SERVICER. (a) The Servicer shall be liable
hereunder only to the extent of the obligations specifically undertaken by the
Servicer under this Agreement and the representations made by the Servicer
herein.
(b) The Servicer shall defend, indemnify, and hold harmless the Trustee,
the Backup Servicer, the Collateral Agent, the Seller, their respective
officers, directors, agents and employees, the Trust and the Certificateholders
from and against any and all costs, expenses, losses, damages, claims and
liabilities arising out of or resulting from the use, ownership, or operation by
the Servicer or any Affiliate or agent thereof of a Financed Vehicle.
(c) The Servicer shall defend, indemnify and hold harmless the Trustee, the
Backup Servicer, the Collateral Agent, the Seller, their respective officers,
directors, agents and employees, the Trust and the Certificateholders from and
against any taxes (other than franchise and income taxes other than income taxes
imposed on the Trust) that may at any time be asserted against the Trustee, the
Backup Servicer, the Collateral Agent, the Trust, the Seller or the
Certificateholders, with respect to the transactions contemplated herein,
including, without limitation, any sales, gross receipts, general corporation,
tangible personal property, privilege or license taxes and costs and expenses in
defending against the same.
(d) The Servicer shall defend, indemnify, and hold harmless the Trustee,
the Backup Servicer, the Collateral Agent, the Seller, their respective
officers, directors, agents and
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employees, the Trust and the Certificateholders from and against any and all
costs, expenses, losses, claims, damages, fines, forfeitures, legal fees and
related costs, judgments and liabilities to the extent that such cost, expense,
loss, claim, damage, fine, forfeiture, legal fee, related cost, judgment or
liability arose out of, or was imposed upon the Trustee, the Backup Servicer,
the Collateral Agent, the Seller, the Trust or the Certificateholders through
the negligence, willful misfeasance or bad faith of the Servicer in the
performance of its duties under this Agreement or by reason of reckless
disregard of its obligations and duties under this Agreement or because of a
breach of any representation in SECTION 7.1 hereof.
(e) For purposes of this Section, in the event of the termination of the
rights and obligations of a Servicer (or any successor thereto pursuant to
SECTION 7.3) as Servicer pursuant to SECTION 8.2, or a resignation by such
Servicer pursuant to this Agreement, such Servicer shall be deemed to be the
Servicer pending appointment of a successor Servicer pursuant to SECTION 8.3.
The provisions of this SECTION 7.2(d) shall in no way affect the survival
pursuant to SECTION 7.2(e) of the indemnification by the Servicer provided by
SECTION 7.2(a), (b), (c) or (d).
(f) Indemnification under this SECTION 7.2 shall survive the termination of
this Agreement and any resignation or removal of Triad as Servicer or any
successor Servicer and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Servicer shall have made full indemnity payments
pursuant to this Section and the recipient thereafter collects any of such
amounts from others, the recipient shall promptly repay such amounts to the
Servicer, without interest.
SECTION 7.3. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS
OF, SERVICER OR BACKUP SERVICER. (a) The Servicer shall not merge or consolidate
with any other Person or, other than sales of assets in its ordinary course of
business, convey, transfer or lease substantially all its assets as an entirety
to another Person, or permit any other Person to become the successor to the
Servicer's business or its duties hereunder unless, after the merger,
consolidation, conveyance, transfer, lease or succession, the successor or
surviving entity shall be an Eligible Servicer, as determined by the Trustee,
and shall be capable of fulfilling the duties of the Servicer contained in this
Agreement. Any Person (i) into which the Servicer may be merged or consolidated,
(ii) resulting from any merger or consolidation to which the Servicer shall be a
party, (iii) which acquires by conveyance, transfer or lease substantially all
of the assets of the Servicer, or (iv) succeeding to the business of the
Servicer, in any of the foregoing cases shall execute an agreement of assumption
to perform every obligation of the Servicer under this Agreement and making
representations substantially equivalent to those made by the Servicer hereunder
and, whether or not such assumption agreement is executed, shall be the
successor to the Servicer under this Agreement without the execution or filing
of any paper or any further act on the part of any of the parties to this
Agreement, anything in this Agreement to the contrary notwithstanding; PROVIDED,
HOWEVER, that nothing contained herein shall be deemed to release the Servicer
from any obligation. The Servicer shall provide notice of any proposed merger,
consolidation or succession pursuant to this SECTION 7.3(a) to the Seller, the
Backup Servicer, the Trustee, the Rating Agency and the Certificateholders.
Notwithstanding the foregoing, as a condition to the consummation of the
transactions referred to in clauses (i), (ii), (iii) and (iv) above, (x)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to SECTION 7.1 shall have been breached (for purposes
hereof, such representations and
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warranties shall speak as of the date of the consummation of such transaction),
(y) the Servicer shall have delivered to the Trustee an Officer's Certificate
and an Opinion of Counsel each stating that such consolidation, merger or
succession and such agreement of assumption comply with this SECTION 7.3(a) and
that all conditions precedent, if any, provided for in this Agreement relating
to such transaction have been complied with, and (z) the Servicer shall have
delivered to the Trustee an Opinion of Counsel stating, in the opinion of such
counsel, either (A) all financing statements and continuation statements and
amendments thereto have been executed and filed that are necessary to preserve
and protect the interest of the Trustee in the Trust Property and reciting the
details of the filings or (B) no such action shall be necessary to preserve and
protect such interest.
(b) Any Person (i) into which the Backup Servicer may be merged or
consolidated, (ii) resulting from any merger or consolidation to which the
Backup Servicer shall be a party, (iii) which acquires by conveyance, transfer
or lease substantially all of the assets of the Backup Servicer, or (iv)
succeeding to the business of the Backup Servicer, in any of the foregoing cases
shall execute an agreement of assumption to perform every obligation of the
Backup Servicer under this Agreement and, whether or not such assumption
agreement is executed, shall be the successor to the Backup Servicer under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties to this Agreement, anything in this Agreement to the
contrary notwithstanding; PROVIDED, HOWEVER, that nothing contained herein shall
be deemed to release the Backup Servicer from any obligation under this
Agreement.
SECTION 7.4. LIMITATION ON LIABILITY OF SERVICER, BACKUP SERVICER AND
OTHERS. Neither the Servicer, the Backup Servicer nor any of the directors or
officers or employees or agents of the Servicer or Backup Servicer shall be
under any liability to the Seller, the Trust or the Certificateholders, except
as provided under this Agreement, for any action taken or for refraining from
the taking of any action pursuant to this Agreement; PROVIDED, HOWEVER, that
this provision shall not protect the Servicer, the Backup Servicer or any such
Person against any liability that would otherwise be imposed by reason of a
breach of this Agreement or willful misfeasance, bad faith, or negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties under this Agreement or any violation of law, or the inaccuracy of any
representation made, by the Servicer, Backup Servicer or such Person, as the
case may be; and, PROVIDED, FURTHER, that this provision shall not affect any
liability to indemnify the Trustee for costs, expenses, claims, liabilities,
losses or damages paid by the Trustee in its individual capacity. The Servicer,
the Backup Servicer and any director or officer or employee or agent of the
Servicer or the Backup Servicer may reasonably rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising under this Agreement.
Except as provided in this Agreement, neither the Servicer nor the Backup
Servicer shall be under any obligation to appear in, prosecute, or defend any
legal action that shall not be incidental to its duties to service the
Receivables in accordance with this Agreement, and that in its opinion may
involve it in any expense or liability.
Other than the duties specifically set forth in this Agreement, the Backup
Servicer shall have no obligation hereunder, including, without limitation, to
supervise, verify, monitor or administer the performance of the Servicer
(however, in the event the Backup Servicer shall have
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knowledge of the Servicer's failure to perform its duties as required in this
Agreement, the Backup Servicer shall promptly notify the Trustee and the Initial
Certificateholder of such failure). The Backup Servicer shall have no liability
for any action taken or omitted by the Servicer. The duties and obligations of
the Backup Servicer shall be determined solely by the express provisions of this
Agreement and no implied covenants or obligations shall be read into this
Agreement against the Backup Servicer.
The Backup Servicer shall not be required to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its duties
hereunder (unless as a result of the Backup Servicer's failure to perform its
duties as required therein), or in the exercise of any of its rights or powers,
if the repayment of such funds or adequate written indemnity against such risk
or liability is not reasonably assured to it in writing prior to the expenditure
or risk of such funds or incurrence of financial liability.
The Backup Servicer will not be responsible for delays attributable to the
Servicer's failure to deliver information, defects in the information supplied
by the Servicer or other circumstances beyond the control of the Backup
Servicer.
The Backup Servicer shall have no responsibility and shall not be in
default hereunder nor incur any liability for any failure, error, malfunction or
any delay in carrying out any of its duties under this Agreement if any such
failure or delay results from the Backup Servicer acting in accordance with the
terms of this Agreement and in accordance with information prepared or supplied
by a Person other than the Backup Servicer or the agent of the Backup Servicer
or the failure of any such Person to prepare or provide such information. The
Backup Servicer shall have no responsibility, shall not be in default and shall
incur no liability (i) for any act or failure to act by any third party,
including the Servicer, the Seller, or the Trustee (if the Person acting in such
capacity is other than the Person acting as Backup Servicer) or for any
inaccuracy or omission in a notice or communication received by the Backup
Servicer from any third party (other than the Trustee if the Person acting as
Trustee and Backup Servicer is one and the same) or (ii) which is due to or
results from the invalidity, unenforceability of any Receivable with applicable
law or the breach or the inaccuracy of any representation or warranty made with
respect to any Receivable.
SECTION 7.5. SERVICER AND BACKUP SERVICER NOT TO RESIGN. Subject to the
provisions of SECTION 7.3, neither the Servicer nor the Backup Servicer may
resign from the obligations and duties hereby imposed on it as Servicer or
Backup Servicer, as the case may be, under this Agreement except upon
determination that by reason of a change in legal requirements the performance
of its duties under this Agreement would cause it to be in violation of such
legal requirements in a manner which would result in a material adverse effect
on the Servicer or the Backup Servicer, as the case may be. Notice of any such
determination permitting the resignation of the Servicer or the Backup Servicer,
as the case may be, shall be evidenced by an Opinion of Counsel to such effect
delivered to the Trustee. No such resignation of the Servicer shall become
effective until the Backup Servicer or other successor Servicer shall have
assumed the responsibilities and obligations of the Servicer in accordance with
SECTION 8.3. No such resignation of the Backup Servicer shall become effective
until the Trustee or an entity appointed by the Trustee acceptable to a
Certificate Majority shall have assumed the responsibilities of the Backup
Servicer; PROVIDED, HOWEVER, that if no such entity shall have assumed such
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responsibilities and obligations of the Backup Servicer within 60 days of the
resignation of the Backup Servicer, the Backup Servicer may petition a court of
competent jurisdiction for the appointment of a successor to the Backup
Servicer. No resignation of the Servicer or the Backup Servicer shall relieve
the Servicer or the Backup Servicer, as the case may be, of any liability to
which it has previously become subject under this Agreement or any Related
Document.
SECTION 7.6. REPRESENTATIONS AND WARRANTIES OF BACKUP SERVICER. The Backup
Servicer hereby makes the following representations and warranties to the other
parties hereto, on which the Trustee on behalf of itself and the
Certificateholders relies in accepting the Receivables in trust and executing
and authenticating the Certificates. Unless otherwise specified, the
representations and warranties are made as of the Closing Date and shall survive
the sale, transfer and assignment of the Receivables to the Trustee.
(a) ORGANIZATION AND GOOD STANDING. The Backup Servicer has been duly
organized and is validly existing as a New York banking corporation in good
standing under the laws of the State of New York, with power, authority and
legal right to own its properties and to conduct its business as such properties
are currently owned and such business is presently conducted, and had at all
relevant times, and now has, power, authority and legal right to service the
Receivables and to enter into and perform its obligations under this Agreement
and each of its Related Documents.
(b) DUE QUALIFICATION. The Backup Servicer is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or lease of
property or the conduct of its business (including the servicing of the
Receivables) requires or shall require such qualifications, licenses or
approvals.
(c) POWER AND AUTHORITY. The Backup Servicer has the power and authority to
execute and deliver this Agreement and each of its Related Documents has been
duly executed and delivered by the Backup Servicer, and to carry out its terms;
and the execution, delivery, and performance of this Agreement and each of its
Related Documents have been duly authorized by the Backup Servicer by all
necessary corporate action.
(d) BINDING OBLIGATION. This Agreement and each of its Related Documents
constitutes a legal, valid and binding obligation of the Backup Servicer
enforceable in accordance with its terms except as enforceability may be limited
by bankruptcy, insolvency, reorganization, or other similar laws affecting the
enforcement of creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
(e) NO VIOLATION. The execution, delivery and performance by the Backup
Servicer of this Agreement and each of its Related Documents, and the
consummation of the transactions contemplated hereby and the fulfillment of the
terms hereof shall not conflict with, result in any breach of any of the terms
and provisions of or constitute (with or without notice, lapse of time or both)
a default under, the articles of incorporation or by-laws of the Backup
Servicer, or any indenture, agreement, mortgage, deed of trust or other
instrument to which the Backup Servicer is a party or by which it is bound or to
which any of its properties is subject, or
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result in the creation or imposition of any lien upon any of its properties
pursuant to the terms of any indenture, agreement, mortgage, deed of trust or
other instrument (other than this Agreement), nor violate any law, order, rule,
or regulation applicable to the Backup Servicer of any court or of any federal
or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Backup Servicer or any its
properties, or in any way materially adversely affect the interest of the
Certificateholders or the Trust in any Receivable, or affect the Backup
Servicer's ability to perform its obligations under this Agreement.
(f) NO PROCEEDINGS. There are no proceedings or investigations pending, or
to the Backup Servicer's knowledge, threatened against the Backup Servicer,
before any court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Backup Servicer or its properties:
(A) asserting the invalidity of this Agreement or any of its Related Documents,
(B) seeking to prevent the issuance of the Certificates or the consummation of
any of the transactions contemplated by this Agreement or any of its Related
Documents, (C) seeking any determination or ruling that might materially and
adversely affect the performance by the Backup Servicer of its obligations
under, or the validity or enforceability of, this Agreement or any of its
Related Documents, (D) relating to the Backup Servicer and which might adversely
affect the federal or state income, excise, franchise or similar tax attributes
of the Certificates, or (E) that could have a material adverse effect on the
Receivables or the Trust Property.
(g) NO CONSENTS. No consent, approval, license, authorization or order of
or declaration or filing with any governmental authority, bureau or agency is
required for the consummation of the other transactions contemplated by this
Agreement or any of the Backup Servicer's Related Documents, except such as have
been duly made or obtained.
(h) TAXES. The Backup Servicer has filed on a timely basis all tax returns
required to be filed by it and paid all taxes, to the extent that such taxes
have become due.
(i) NO INJUNCTIONS. There are no existing injunctions, writs, restraining
orders or other similar orders which might adversely affect the performance by
the Backup Servicer or its obligations under, or the validity and enforceability
of, this Agreement.
(j) COMPLIANCE WITH LAW. The Backup Servicer is in compliance with all
requirements of federal and state laws, rules, regulations and orders, except
where the failure so to comply would not have a material adverse effect on the
Backup Servicer, its business or its properties, or the ability of the Backup
Servicer to perform its obligations under this Agreement.
SECTION 7.7. DUTIES OF BACKUP SERVICER. (a) The Backup Servicer hereby
agrees, on the date (the "ASSUMPTION DATE") specified in the written notice to
the Backup Servicer from the Trustee of the termination of the rights and
obligations of the Servicer pursuant to SECTION 8.2 hereof or the resignation of
the Servicer pursuant to SECTION 7.5 hereof, and without any further notice, to
assume the obligations of the Servicer hereunder, to be the successor in all
respects to the Servicer and to be subject to all the responsibilities, duties
and liabilities arising thereafter relating thereto placed on the Servicer. From
and after the Assumption Date, the Backup Servicer shall be entitled to all of
the rights granted to the Servicer by the terms and provisions of this
Agreement.
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(b) Notwithstanding the Backup Servicer's assumption of, and its agreement
to perform and observe, all duties, responsibilities and obligations of the
Servicer under this Agreement arising on and after the Assumption Date, the
Backup Servicer shall not be deemed to have assumed or to become liable for, or
otherwise have any liability for, any duties, responsibilities, obligations or
liabilities of the Servicer arising on or before the Assumption Date, whether
provided for by the terms of this Agreement, arising by operation of law or
otherwise, including, without limitation, any liability for any duties,
responsibilities, obligations or liabilities of the Servicer arising on or
before the Assumption Date regardless of when the liability, duty,
responsibility or obligation of the Servicer arose, whether provided by the
terms of this Agreement, arising by operation of law or otherwise.
(c) Up to but not including the Assumption Date, the Backup Servicer shall
be paid the Backup Servicing Fee, as provided in SECTION 4.5 of this Agreement,
for services rendered hereunder on each Distribution Date.
(d) On each Distribution Date following the Assumption Date, the Backup
Servicer shall be entitled to the Servicing Fee.
(e) The Backup Servicer agrees to execute, acknowledge and deliver from
time to time all such further instruments and documents and to take all
reasonable actions as the Trustee may from time to time request to better assure
the Trustee and to preserve the rights and obligations created hereunder.
ARTICLE VIII
SERVICER TERMINATION EVENTS
SECTION 8.1. SERVICER TERMINATION EVENTS. For purposes of this Agreement,
each of the following shall constitute a "SERVICER TERMINATION EVENT":
(a) Any failure by the Servicer to deliver to the Trustee for distribution
to Certificateholders or deposit in the Reserve Account any proceeds or payment
required to be so delivered under the terms of the Certificates or this
Agreement (including deposits of the Purchase Amount pursuant to SECTION 2.6 and
SECTION 3.7) that continues unremedied for a period of two Business Days (or one
Business Day with respect to payment of Purchase Amounts) after the date such
payment is due;
(b) Failure by the Servicer to deliver to the Trustee (i) any Servicing
Certificate required by SECTION 3.9, (ii) any annual statement as to compliance
pursuant to SECTION 3.10, in each case within five (5) Business Days after the
date such certificate is required to be delivered and (iii) any Accountant's
Report pursuant to SECTION 3.11;
(c) Failure on the part of the Servicer to observe its covenants and
agreements set forth in SECTION 7.3(a) or repudiation by the Servicer of any of
its covenants and agreements in this Agreement;
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(d) Failure on the part of the Servicer duly to observe or perform in any
material respect any other covenants or agreements of the Servicer set forth in
this Agreement, which failure continues unremedied for a period of 30 days after
the earlier of the date on which (i) it obtains actual knowledge of such failure
and (ii) written notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer by the Trustee or Certificateholders
evidencing not less than [ ]% of the Certificate Balance;
(e) The entry of a decree or order for relief by a court or regulatory
authority having jurisdiction in respect of the Servicer in an involuntary case
under the federal bankruptcy laws, as now or hereafter in effect, or another
present or future, federal or state, bankruptcy, insolvency or similar law, or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Servicer or of any substantial part of its
property or ordering the winding up or liquidation of the affairs of the
Servicer and the continuance of any such decree or order unstayed and in effect
for a period of 60 consecutive days or the commencement of an involuntary case
under the federal bankruptcy laws, as now or hereinafter in effect, or another
present or future federal or state bankruptcy, insolvency or similar law and
such case is not dismissed within 60 days;
(f) The commencement by the Servicer of a voluntary case under the federal
bankruptcy laws, as now or hereafter in effect, or any other present or future,
federal or state, bankruptcy, insolvency or similar law, or the consent by the
Servicer to the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Servicer or of any substantial part of its property or the making by the
Servicer of an assignment for the benefit of creditors or the failure by the
Servicer generally to pay its debts as such debts become due or the taking of
corporate action by the Servicer in furtherance of any of the foregoing;
(g) Any representation, warranty or statement of the Servicer made in
this Agreement or any certificate, report or other writing delivered pursuant
hereto shall prove to be incorrect in any material respect as of the time
when the same shall have been made, and the incorrectness of such
representation, warranty or statement has a material adverse effect on the
Trust and, within 30 days after the earlier of the date on which (i) it
obtains actual knowledge of such inaccuracy and (ii) written notice thereof
shall have been given to the Servicer by the Trustee the circumstances or
condition in respect of which such representation, warranty or statement was
incorrect shall not have been eliminated or otherwise cured; and
(h) The occurrence of a Servicer Termination Trigger Event that has not
been Deemed Cured.
SECTION 8.2. CONSEQUENCES OF A SERVICER TERMINATION EVENT. If a Servicer
Termination Event shall occur and be continuing, any of the Trustee or the
Holders of Certificates evidencing not less than a Certificate Majority, by
notice given in writing to the Servicer (and to the Trustee if given by the
Certificateholders) may terminate all of the rights and obligations of the
Servicer under this Agreement; PROVIDED, HOWEVER, that no termination shall
relieve the Servicer of any liability to which it has previously become subject
under this Agreement. Upon receipt by the Servicer of such written notice, all
authority, power, obligations and responsibilities of the Servicer under this
Agreement, whether with respect to the Certificates or the Trust Property or
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otherwise, automatically shall pass to, be vested in and become obligations and
responsibilities of the Backup Servicer; and, PROVIDED, FURTHER, that the Backup
Servicer shall have no liability with respect to any obligation which was
required to be performed by the prior Servicer prior to the date that the Backup
Servicer becomes the Servicer or any claim of a third party based on any alleged
action or inaction of the prior Servicer. Each successor Servicer is authorized
and empowered by this Agreement to execute and deliver, on behalf of the prior
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of the Receivables and the other Trust
Property and the applicable Related Documents to show the Trustee as lienholder
or secured party on the related Lien Certificates, or otherwise. The prior
Servicer agrees to cooperate with the Backup Servicer in effecting the
termination of the responsibilities and rights of the prior Servicer under this
Agreement, including, without limitation, the transfer to the Backup Servicer
for administration by it of all cash amounts that shall at the time be held by
the prior Servicer for deposit, or have been deposited by the prior Servicer, in
the Collection Account or thereafter received with respect to the Receivables
and the delivery to the Backup Servicer of all Receivable Files and a computer
tape in readable form containing all information necessary to enable the Backup
Servicer or a successor Servicer to service the Receivables and the other Trust
Property. The Servicer shall, if requested, cooperate with the successor
Servicer in the establishment of a new Lockbox Account pursuant to SECTION
3.2(e) hereof. The Trustee and the Backup Servicer may set off and deduct any
amounts owed by the terminated Servicer from any amounts payable to the
terminated Servicer pursuant to this Agreement. The terminated Servicer shall
grant the Trustee and the Backup Servicer reasonable access to the terminated
Servicer's premises at the terminated Servicer's expense.
SECTION 8.3. APPOINTMENT OF SUCCESSOR. (a) On and after (i) the time the
Servicer receives a notice of termination pursuant to SECTION 8.2 or (ii) upon
the resignation of the Servicer pursuant to SECTION 7.5, the Backup Servicer
shall be the successor in all respects to the Servicer in its capacity as
servicer under this Agreement and the transactions set forth or provided for in
this Agreement, and shall be subject to all the responsibilities, restrictions,
duties, liabilities and termination provisions relating thereto placed on the
Servicer by the terms and provisions of this Agreement; PROVIDED, HOWEVER, that
the Backup Servicer shall not be liable for any acts, omissions or obligations
of the Servicer prior to such succession or for any breach by the Servicer of
any of its representations and warranties contained in this Agreement or in any
of its Related Documents. The Trustee and such successor Servicer shall take
such action, consistent with this Agreement, as shall be necessary to effectuate
any such succession. If a successor Servicer is acting as Servicer hereunder, it
shall be subject to termination under SECTION 8.2 upon the occurrence of any
Servicer Termination Event applicable to it as Servicer.
(b) Any successor Servicer shall be entitled to such compensation (whether
payable out of the Collection Account or otherwise) as the Servicer would have
been entitled to under the Agreement if the Servicer had not resigned or been
terminated hereunder. If any successor Servicer is appointed for any reason, a
Certificate Majority and such successor Servicer may agree on additional
compensation to be paid to such successor Servicer. In addition, any successor
Servicer shall be entitled to reasonable transition expenses incurred in acting
as successor Servicer, such expenses to be paid by the outgoing Servicer.
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SECTION 8.4. NOTIFICATION TO CERTIFICATEHOLDERS. Upon any termination of,
or appointment of a successor to, the Servicer pursuant to this Article VIII,
the Trustee shall give prompt written notice thereof to Certificateholders at
their respective addresses appearing in the Certificate Register and to the
Rating Agency.
SECTION 8.5. ACTION UPON CERTAIN FAILURES OF THE SERVICER. If either the
Seller or the Backup Servicer shall obtain actual knowledge of any Servicer
Termination Event or event but for the lapse of time or the giving of notice, or
both, would constitute a Servicer Termination Event, it shall be obligated to
notify promptly the Trustee and the Rating Agency of such occurrence or
circumstance. In the event a Trustee Officer of the Trustee shall have received
such notice (or any comparable notice from the Servicer or by a
Certificateholder) or otherwise obtained actual knowledge of any failure of the
Servicer specified in SECTION 8.1 which would give rise to a right of
termination under such Section upon the Servicer's failure to remedy the same
after notice, the Trustee shall give prompt notice thereof to the Servicer, the
Rating Agency and the Certificateholders. The Trustee shall be under no duty or
obligation to investigate or inquire as to any potential failure of the Servicer
specified in SECTION 8.1.
SECTION 8.6. WAIVER OF PAST DEFAULTS. A Certificate Majority may, on behalf
of all Holders of all Certificates, waive in writing any default by the Servicer
in the performance of its obligations hereunder and its consequences. Upon any
such waiver of a past default, such default shall cease to exist, and any
Servicer Termination 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 default or impair any right consequent thereon.
ARTICLE IX
THE TRUSTEE
SECTION 9.1. DUTIES OF TRUSTEE. (a) Subject to paragraph (c) of this
SECTION 9.1, the Trustee, in its capacity as trustee, shall undertake to perform
such duties and only such duties as are specifically set forth in this Agreement
with the same degree of skill and care as a prudent person would exercise under
the circumstance in the conduct of such Person's own affairs.
(b) The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that are specifically required to be furnished pursuant to any provision
of this Agreement, shall examine them to determine whether they conform to the
requirements of this Agreement; PROVIDED, HOWEVER, that the Trustee shall not be
responsible for the accuracy or content of any resolution, certificate,
statement, opinion, report, document, order or other instrument furnished by the
Servicer or the Seller hereunder.
(c) No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own bad faith or willful misfeasance; PROVIDED, HOWEVER, that:
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(i) The duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee shall not
be liable except for the performance of such duties and obligations as
shall be specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, in
the absence of bad faith on the part of the Trustee, the Trustee may
conclusively rely on the truth of the statements and the correctness of the
opinions expressed in any certificates or opinions furnished to the Trustee
and conforming to the requirements of this Agreement;
(ii) The Trustee shall not be liable for an error of judgment made in
good faith by a Trustee Officer, unless it shall be proven that the Trustee
shall have been negligent in performing its duties in accordance with the
terms of this Agreement; and
(iii) The Trustee shall not be liable for any action taken, suffered
or omitted by it in good faith and reasonably believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Agreement.
(d) Notwithstanding any other provision of this Agreement, the Trustee
shall not be required to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties hereunder (unless as
a result of the Trustee's failure to perform its duties as required herein), or
in the exercise of any of its rights or powers, if there shall be reasonable
grounds for believing that the repayment of such funds or indemnity satisfactory
to it against such risk or liability shall not be reasonably assured to it, and
none of the provisions contained in this Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Servicer under this Agreement except during such time,
if any, as the Trustee, shall be the successor to, and be vested with the
rights, duties, powers and privileges of, the Servicer in accordance with the
terms of this Agreement.
(e) The Trustee shall not be charged with knowledge of any failure by the
Servicer to comply with the obligations of the Servicer referred to in this
Agreement, or of any failure by the Seller to comply with the obligations of the
Seller in this Agreement, unless a Trustee Officer obtains actual knowledge of
such failure or the Trustee receives written notice of such failure from the
Servicer or the Seller, as the case may be, or the Holders of Certificates
evidencing not less than [ ]% of the Certificate Balance.
(f) Except for actions expressly authorized by this Agreement, the Trustee
shall take no action reasonably likely to impair the security interests created
or existing under any Receivable or Financed Vehicle or to impair the value of
any Receivable or Financed Vehicle. All information obtained by the Trustee
regarding the Obligors and the Receivables, whether upon the exercise of its
rights under this Agreement or otherwise, shall be maintained by the Trustee in
confidence and shall not be disclosed to any other Person, unless such
disclosure is required by this Agreement or any applicable law or regulation.
(g) Except as expressly provided in this Agreement and without limiting the
generality of this Section 9.1, the Trustee shall have no duty (A) to see to any
recording, filing, or
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depositing of this Agreement or any agreement referred to herein or any
financing statement or continuation statement evidencing a security interest, or
to see to the maintenance of any such recording or filing or depositing or to
any rerecording, refiling or redepositing of any thereof, (B) to see to any
insurance, (C) to see to the payment or discharge of any tax, assessment, or
other governmental charge or any lien or encumbrance of any kind owing with
respect to, assessed or levied against, any part of the Trust Fund from funds
available in the Collection Account, or (D) to confirm or verify the contents of
any reports or certificates of the Servicer delivered to the Trustee pursuant to
this Agreement believed by the Trustee to be genuine and to have been signed or
presented by the proper party or parties.
SECTION 9.2. TRUSTEE'S CERTIFICATE. On or as soon as practicable after each
Distribution Date on which Receivables shall be assigned to the Seller or the
Servicer, as applicable, pursuant to this Agreement, based on amounts deposited
to the Collection Account, notices received pursuant to this Agreement and the
information contained in the Servicing Certificate for the related Collection
Period, identifying the Receivables purchased by the Seller pursuant to SECTION
2.6 or 10.2 or purchased by the Servicer pursuant to SECTION 2.9, 3.7 or 10.2,
the Trustee shall execute a Trustee's Certificate (in the form of EXHIBIT E-1 or
E-2, as applicable), and shall deliver such Trustee's Certificate, accompanied
by a copy of the Servicing Certificate for such Collection Period to the Seller
or the Servicer, as the case may be. The Trustee's Certificate submitted with
respect to such Distribution Date shall operate, as of such Distribution Date,
as an assignment, without recourse, representation, or warranty, to the Seller
or the Servicer, as the case may be, of all the Trustee's right, title, and
interest in and to such repurchased Receivable, and all security and documents
relating thereto, such assignment being an assignment outright and not for
security. In addition, the Trustee shall execute and deliver additional
documents and releases as necessary for the release of the Trustee's right,
title and interest in and to such Repurchased Receivable.
SECTION 9.3. CERTAIN MATTERS AFFECTING TRUSTEE. Except as otherwise
provided in SECTION 9.1:
(a) The Trustee may conclusively rely and shall be fully protected in
acting or refraining from acting upon any resolution, Officer's Certificate,
Servicing Certificate, certificate of auditors, or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond or other paper or document reasonably believed by it to be
genuine and to have been signed or presented by the proper party or parties;
(b) The Trustee may consult with counsel, and any written advice of counsel
or Opinion of Counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it under this Agreement in
good faith and in accordance with such written advice of counsel or Opinion of
Counsel;
(c) The Trustee shall be under no obligation to exercise any of the rights
or powers vested in it by this Agreement, or to institute, conduct, or defend
any litigation under this Agreement or in relation to this Agreement, at the
request, order or direction of any of the Certificateholders pursuant to the
provisions of this Agreement, unless such Certificateholders shall have offered
to the Trustee reasonable security or indemnity against the costs, expenses and
liabilities that may be incurred therein or thereby; PROVIDED, HOWEVER, that the
Trustee shall, upon
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the occurrence of a Servicer Termination Event (that shall not have been cured
or waived), exercise the rights and powers vested in it by this Agreement with
reasonable care and skill;
(d) The Trustee shall not be bound to make any investigation into the facts
of matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond or other paper
or document, unless requested in writing to do so by Holders of Certificates
evidencing not less than [ ]% of the Certificate Balance; PROVIDED, HOWEVER,
that if the payment within a reasonable time to the Trustee of the costs,
expenses, or liabilities likely to be incurred by it in the making of such
investigation shall be, in the opinion of the Trustee, not reasonably assured to
the Trustee by the security afforded to it by the terms of this Agreement, the
Trustee may require indemnity satisfactory to it against such cost, expense, or
liability as a condition to so proceeding. The reasonable expense of every such
examination shall be paid by the Person making such request or, if paid by the
Trustee, shall be reimbursed by the Person making such request upon demand,
unless a Servicer Termination Event shall have occurred and is continuing, in
which case such reasonable expenses shall be paid by the Servicer; PROVIDED,
HOWEVER, if Triad shall no longer be the Servicer, such expenses shall be paid
by the requesting party. Nothing in this clause (d) shall affect the obligation
of the Servicer to observe any applicable law prohibiting disclosure of
information regarding the Obligors;
(e) The Trustee may execute any of the trusts or powers hereunder or
perform any duties under this Agreement either directly or by or through agents
or attorneys or a custodian. The Trustee shall not be responsible for any
misconduct or negligence of any such agent or attorney appointed with due care
by it hereunder. The Trustee shall not be responsible for any misconduct or
negligence attributable to the acts or omissions of the Servicer;
(f) The Trustee may conclusively rely, as to factual matters relating to
the Seller or the Servicer, on an Officer's Certificate of the Seller or
Servicer, respectively;
(g) The Trustee shall not be required to take any action or refrain from
taking any action under this Agreement, or any Related Documents referred to
herein, nor shall any provision of this Agreement, or any such related document
be deemed to impose a duty on the Trustee to take action, if the Trustee shall
have been advised by counsel that such action is contrary to (i) the terms of
this Agreement, (ii) any such related document or (iii) law; and
(h) The Trustee shall not be personally liable for any taken, suffered or
omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement.
SECTION 9.4. TRUSTEE NOT LIABLE FOR CERTIFICATES OR RECEIVABLES. The
Trustee makes no representations as to the validity or sufficiency of this
Agreement or of the Certificates (other than the execution and authentication of
the Certificates) or of any Receivable or related document, except to the extent
otherwise expressly provided herein. The Trustee shall at no time (except during
such time, if any, as it is acting as successor Servicer) have any
responsibility or liability for or with respect to the legality, validity and
enforceability of any security interest in any Financed Vehicle or any
Receivable, or the perfection and priority of such a security interest or the
maintenance of any such perfection and priority, or for or with respect to the
efficiency of the Trust or its ability to generate the payments to be
distributed to
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Certificateholders under this Agreement, including, without limitation, the
existence, condition, location and ownership of any Financed Vehicle; the
existence and enforceability of any insurance thereon; the existence of any
Receivable or any computer or other record thereof (it being understood that the
Trustee has not reviewed and does not intend to review such matters, the sole
responsibility for such review being vested in the Seller and the Servicer as
applicable); the completeness of any Receivable; the receipt by the Servicer of
any Receivable; the performance or enforcement of any Receivable; the compliance
by the Seller and the Servicer with any covenant or the breach by the Seller and
the Servicer of any warranty or representation made under this Agreement or in
any related document and the accuracy of any such warranty or representation
prior to the Trustee's receipt of notice or other discovery of any noncompliance
therewith or any breach thereof, any investment of monies by or at the direction
of the Servicer or any loss resulting therefrom (it being understood, however,
that the Trustee shall remain responsible for any Trust Property that it may
hold directly); the acts or omissions of the Seller, the Servicer, or any
Obligor; any action of the Servicer taken in the name of the Trustee; the
accuracy, content or completeness of any offering documents used in connection
with the sale of the Certificates or any action by the Trustee taken at the
instruction of the Servicer, the Seller or the Certificateholders holding the
requisite percentage of Certificates; PROVIDED, HOWEVER, that the foregoing
shall not relieve the Trustee of its obligation to perform its duties under this
Agreement in accordance with the standard of care set forth in SECTION 9.1
hereof, whether as Trustee or as successor Servicer. It is expressly understood
and agreed by the parties hereto that (a) this Agreement and the Certificates
are executed and delivered by [ ], not individually or personally but solely as
Trustee of the Trust, in the exercise of the powers and authority conferred and
vested in it, and (b) under no circumstances shall [ ] be personally liable for
the payment of any indebtedness or expenses of the Trust or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by the Trust under this Agreement and the Certificates. The
Trustee shall not be accountable for the use or application by the Seller of any
of the Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Servicer in respect of the Receivables
prior to the time such funds are deposited in the Collection Account.
SECTION 9.5. TRUSTEE MAY OWN CERTIFICATES. The Trustee in its individual or
any other capacity may become the owner or pledgee of Certificates and may deal
with the Seller and the Servicer in banking transactions with the same rights as
it would have if it were not Trustee.
SECTION 9.6. INDEMNITY OF TRUSTEE. The Seller and the Trustee hereby agree
that the Trustee shall be entitled to the Trustee Fee (which shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust) for all services rendered by it in the execution of the trusts
created by this Agreement and in the exercise and performance of any of the
powers and duties under this Agreement of the Trustee. To the extent not covered
by Article VII, the Seller shall indemnify, defend, and hold harmless the
Trustee and the Backup Servicer, and their respective officers, directors,
employees and agents, from and against all costs, expenses, losses, claims,
damages and liabilities arising out of or incurred in connection with the
acceptance of the performance of the trusts and duties contained in this
Agreement, except to the extent that such cost, expense, loss, claim, damage or
liability is due to the bad faith or negligence (except for errors in judgment)
of the Trustee or the Backup Servicer, respectively. Such
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indemnity shall be made from the Seller's own funds and not from any Trust
Property or the Reserve Account. In addition, the Seller in SECTION 6.2 has
agreed to indemnify the Trustee with respect to certain matters, the Servicer in
SECTION 7.2 has agreed to indemnify the Trustee with respect to certain matters,
and the Certificateholders in their individual capacity under SECTION 9.3(c) or
(d) may agree to indemnify the Trustee under certain circumstances.
SECTION 9.7. ELIGIBILITY REQUIREMENTS FOR TRUSTEE. The Trustee under this
Agreement shall at all times be organized and doing business under the laws of
the United States of America; authorized under such laws to exercise corporate
trust powers; having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal or state authorities; and
having a rating, both with respect to long-term and short-term unsecured
obligations, of not less than investment grade by the Rating Agency. If such
corporation shall publish reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising or examining authority,
then for the purpose of this SECTION 9.7, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. In case at any time
the Trustee shall cease to be eligible in accordance with the provisions of this
SECTION 9.7, the Trustee shall resign immediately in the manner and with the
effect specified in SECTION 9.8.
SECTION 9.8. RESIGNATION OR REMOVAL OF TRUSTEE. (a) Subject to the
provisions of subsection (c) of this SECTION 9.8, the Trustee and the Collateral
Agent may at any time resign and be discharged from the trusts hereby created by
giving 30 days' prior written notice thereof to the Servicer and the Seller, and
resignation of discharge of the Trustee shall result in resignation or discharge
of the Collateral Agent. Upon receiving such notice of resignation, the Seller,
with the prior written consent of a Certificate Majority, shall promptly appoint
a successor Trustee and Collateral Agent by written instrument, in duplicate,
one copy of which instrument shall be delivered to the resigning Trustee and
Collateral Agent, one copy to the successor Trustee and Collateral Agent and one
copy to the Rating Agency. If no successor Trustee or Collateral Agent shall
have been so appointed and have accepted appointment within 60 days after the
giving of such notice of resignation, the resigning Trustee or Collateral Agent
may petition any court of competent jurisdiction for the appointment of a
successor Trustee or Collateral Agent.
(b) If at any time the Trustee shall cease to be eligible in accordance
with the provisions of SECTION 9.7 and shall fail to resign after written
request therefor by the Seller, or if at any time the Trustee shall be unable to
act, or shall be adjudged bankrupt or insolvent, or a receiver, conservator or
liquidator of the Trustee, or of its property shall be appointed, or any public
officer shall take charge or control of the Trustee, or of its property or
affairs for the purpose of rehabilitation, conservation or liquidation, then the
Seller or a Certificate Majority may remove the Trustee. A Certificate Majority
may also remove the Trustee at any time with cause by written request to the
Trustee by the Certificate Majority with a copy to the Seller. If the Trustee
shall be removed under the authority of the immediately preceding two sentences,
the Seller, with the prior written consent of a Certificate Majority, shall
promptly appoint a successor Trustee by written instrument, in duplicate, one
copy of which instrument shall be delivered to the Trustee or so removed and one
copy to the successor Trustee, and pay all fees and expenses
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owed to the outgoing Trustee. A copy of such notice shall be furnished promptly
to the Rating Agency.
(c) Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this SECTION 9.8 shall
not become effective until acceptance of appointment by the successor Trustee
pursuant to SECTION 9.9 and payment of all fees and expenses owed to the
outgoing Trustee. The Seller shall provide prompt notice of such resignation or
removal of the Trustee to the Rating Agency.
(d) The retiring Trustee shall not be liable for the acts or omissions of
any successor Trustee.
(e) All reasonable fees, charges and expenses shall be paid to the retiring
Trustee upon the appointment of a successor Trustee pursuant to SECTION 9.9.
SECTION 9.9. SUCCESSOR TRUSTEE. (b) Any successor Trustee appointed as
provided in SECTION 9.8 shall execute, acknowledge and deliver to the Servicer,
the Seller and to its predecessor Trustee an instrument accepting such
appointment under this Agreement, and thereupon the resignation or removal of
the predecessor Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance (except as provided below), shall
become fully vested with all the rights, powers, duties and obligations of its
predecessor under this Agreement, with like effect as if originally named as
Trustee; but, on request of the Seller or the successor Trustee, such
predecessor Trustee shall, upon payment of its charges then unpaid, execute and
deliver an instrument transferring to such successor Trustee all of the rights,
powers and trusts of the Trustee so ceasing to act, and shall duly assign,
transfer and deliver to such successor Trustee all property and money held by
such Trustee so ceasing to act hereunder. Upon request of any such successor
Trustee, the Seller, on behalf of the Trust, shall execute any and all
instruments for more fully and certainly vesting in and confirming to such
successor Trustee all such rights, powers and trusts. The predecessor Trustee
shall deliver to the successor Trustee all documents and statements held by it
under this Agreement or any Related Document; and the predecessor Trustee and
the other parties to such Related Documents shall amend any related document to
make the successor Trustee the successor to the predecessor Trustee thereunder;
and the Servicer and the predecessor Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Trustee all such rights,
powers, duties and obligations. No successor Trustee shall accept appointment as
provided in this SECTION 9.9 unless at the time of such acceptance such
successor Trustee shall be eligible under the provisions of SECTION 9.7. Upon
acceptance of appointment by a successor Trustee as provided in this SECTION
9.9, the Seller shall mail notice by first-class mail of the successor of such
Trustee and the address of the successor Trustee's Corporate Trust Office under
this Agreement, to the Rating Agency, and all Holders of Certificates at their
addresses as shown in the Certificate Register. If the Seller fails to mail such
notice within 10 days after acceptance of appointment by the successor Trustee,
the successor Trustee shall cause such notice to be mailed at the expense of the
Seller.
SECTION 9.10. MERGER OR CONSOLIDATION OF TRUSTEE. Any Person into which the
Trustee may be merged or converted or with which it may be consolidated, or any
Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or
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any Person succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such Person shall be eligible pursuant to SECTION 9.7, without the
execution or filing of any instrument or any further act on the part of any of
the parties hereto, anything herein to the contrary notwithstanding; PROVIDED,
HOWEVER, that the Trustee shall mail notice of such merger or consolidation to
the Rating Agency and the Certificateholders.
SECTION 9.11. CO-TRUSTEE; SEPARATE TRUSTEE. Notwithstanding any other
provisions of this Agreement, at any time, for the purpose of meeting any legal
requirements of any jurisdiction in which any part of the Trust or any Financed
Vehicle may at the time be located, the Seller and the Trustee acting jointly
shall have the power and shall execute and deliver all instruments to appoint
one or more persons approved by the Trustee to act as co-trustee, jointly with
the Trustee, or separate trustee or separate trustees, of all or any part of the
Trust, and to vest in such Person, in such capacity and for the benefit of the
Certificateholders, such title to the Trust, or any part thereof, and, subject
to the other provisions of this SECTION 9.11, such powers, duties, obligations,
rights, and trusts as the Seller and the Trustee may consider necessary or
desirable. If the Seller shall not have joined in such appointment within 15
days after the receipt by it of a request so to do, the Trustee alone shall have
the power to make such appointment. No co-trustee or separate trustee under this
Agreement shall be required to meet the terms of eligibility as a successor
Trustee pursuant to SECTION 9.7, except that the co-trustee or its parent shall
comply with the rating requirements set forth therein, and no notice of a
successor Trustee pursuant to SECTION 9.9 and no notice to Certificateholders of
the appointment of any co-trustee or separate trustee shall be required pursuant
to SECTION 9.9.
Each separate trustee and co-trustee shall, to the extent permitted by law,
be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties, and obligations conferred or imposed
upon the Trustee shall be conferred upon and exercised or performed by the
Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized to
act separately without the Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any particular act
or acts are to be performed (whether as Trustee under this Agreement or, as
successor to the Servicer under this Agreement), the Trustee shall be
incompetent or unqualified to perform such act or acts, in which event such
rights, powers, duties, and obligations (including the holding of title to
the Trust or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee, but
solely at the direction of the Trustee;
(ii) No trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
(iii) The Servicer and the Trustee acting jointly may, at any time
accept the resignation of or remove any separate trustee or co-trustee.
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Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the other then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement, and the conditions
of this Article IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Each
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.
Any separate trustee or co-trustee may at any time appoint the Trustee, its
agent or attorney-in-fact with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement on
its behalf and in its name. If any separate trustee or co-trustee shall die,
become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
SECTION 9.12. REPRESENTATIONS AND WARRANTIES OF TRUSTEE, AND COLLATERAL
AGENT. Each of the Trustee, and the Collateral Agent hereby makes the following
representations and warranties with respect to itself as of the date of this
Agreement on which the Seller and the Certificateholders shall rely:
(a) it is a New York banking corporation duly organized, validly existing
and in good standing under the laws of the state of its incorporation;
(b) it has full power, authority and legal right to execute, deliver and
perform this Agreement and its Related Documents, and has taken all necessary
action to authorize the execution, delivery and performance by it of this
Agreement and its Related Documents;
(c) the execution, delivery and performance by it of this Agreement and its
Related Documents (i) do not violate any provision of any law or regulation
governing the banking and trust powers of it or any order, writ, judgment, or
decree of any court, arbitrator, or governmental authority applicable to it or
any of its assets, (ii) do not violate any provision of its corporate charter or
by-laws, or (iii) to the best of its knowledge do not violate any provision of,
or constitute, with or without notice or lapse of time, a default under, or
result in the creation or imposition of any lien on any of the Trust Property
pursuant to the provisions of any mortgage, indenture, contract, agreement or
other undertaking other than this Agreement to which it is a party;
(d) the execution, delivery and performance by it of this Agreement and its
Related Documents do not require the authorization, consent or approval of, the
giving of notice to, the filing or registration with, or the taking of any other
action in respect of, any governmental authority or agency regulating its
banking and corporate trust activities; and
(e) this Agreement and its Related Documents has been duly executed and
delivered by it and constitutes the legal, valid and binding agreement of it,
enforceable in
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accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and by equitable limitations on the
availability of specific remedies, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
SECTION 9.13. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
CERTIFICATES. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name as Trustee. Any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Certificateholders in respect of which such judgment has
been obtained.
SECTION 9.14. SUIT FOR ENFORCEMENT. If a Servicer Termination Event shall
occur and be continuing, the Trustee, in its discretion may (but shall have no
duty or obligation so to proceed), subject to the provisions of SECTION 9.1,
proceed to protect and enforce its rights and the rights of the
Certificateholders under this Agreement by a suit, action or proceeding in
equity or at law or otherwise, whether for the specific performance of any
covenant or agreement contained in this Agreement or in the execution of any
power granted in this Agreement or for the enforcement of any other legal,
equitable or other remedy as the Trustee, being advised by counsel, shall deem
most effectual to protect and enforce any of the rights of the Trustee or the
Certificateholders.
SECTION 9.15. APPOINTMENT OF CUSTODIANS. The Trustee may, with the consent
of the Servicer, appoint one or more Custodians to hold all or a portion of the
Trust Property as agent for the Trustee, by entering into a Custodial Agreement.
Subject to this Article IX, the Trustee agrees to comply with the terms of each
Custodial Agreement and to enforce the terms and provisions thereof against the
Custodian for the benefit of the Certificateholders. The Trustee shall be liable
for the fees of any Custodian appointed hereunder. Each Custodian shall be a
depository institution subject to supervision by federal or state authority and
shall be qualified to do business in the jurisdiction in which it holds any
Trust Property. Each Custodial Agreement may be amended only as provided in
Section 11.1.
ARTICLE X
TERMINATION
SECTION 10.1. TERMINATION OF THE TRUST. (c) The respective obligations and
responsibilities of the Seller, the Servicer, the Backup Servicer and the
Trustee created by this Agreement and the Trust created by this Agreement shall
terminate upon the earlier of (i) the latest of (A) the payment in full at
maturity or other liquidation of the last Receivable (including the purchase by
the Seller or the Servicer at its option of the corpus of the Trust as described
in SECTION 10.2) and the subsequent distribution to Certificateholders pursuant
to SECTION 4.5 of the amount required to be deposited pursuant to SECTION 10.2
or (B) the payment to Certificateholders of all amounts required to be paid to
them pursuant to this Agreement and the expiration of any preference period
related thereto and the disposition of all property held as part
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of the Trust; and (ii) the expiration of 21 years from the death of the last
survivor of the descendants of Xxxxxx X. Xxxxxxx, the late ambassador of the
United States of America to the Court of St. Xxxxx, living on the date of this
Agreement. The Servicer or Seller, as applicable, shall promptly notify the
Trustee and the Rating Agency of any prospective termination pursuant to this
SECTION 10.1.
(b) Notice of any termination, specifying the Distribution Date upon which
the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be given promptly by
the Trustee by letter to Certificateholders mailed not earlier than the 15th day
and not later than the 25th day of the month next preceding the specified
Distribution Date stating (A) the Distribution Date upon which final payment of
the Certificates shall be made upon presentation and surrender of the
Certificates at the office of the Trustee therein designated, (B) the amount of
any such final payment, and (C) if applicable, that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments shall be made
only upon presentation and surrender of the Certificates at the office of the
Trustee therein specified. The Trustee shall give such notice to the Certificate
Registrar (if other than the Trustee) at the time such notice is given to
Certificateholders. Upon presentation and surrender of the Certificates, the
Trustee shall cause to be distributed to Certificateholders amounts
distributable on such Distribution Date pursuant to SECTION 4.5. Notwithstanding
the foregoing, if on the Distribution Date upon which final payment of the
Certificates is to be made, there are only five or less initial
Certificateholders of record, the amounts distributable to such initial
Certificateholders pursuant to SECTION 4.5 will be paid on the final
Distribution Date by wire transfer or check as set forth in SECTION 4.5(d), and
each such initial Certificateholder shall present and surrender its Certificates
at the office of the Trustee designated in the notice referred to above as
promptly as practicable after such Distribution Date.
(c) In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above-mentioned written notice, the Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all the Certificates shall not have been
surrendered for cancellation, the Trustee shall take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that shall remain
subject to this Agreement or, if none, from such Certificateholders.
SECTION 10.2. OPTIONAL PURCHASE OF ALL RECEIVABLES. On the last day of any
Collection Period as of which the Pool Balance shall be less than or equal to
ten percent (10%) multiplied by the Cutoff Date Pool Balance, the Seller may at
its option, and if such option is not exercised, the Servicer may at its option,
purchase the corpus of the Trust; PROVIDED, HOWEVER, that the Seller or the
Servicer, as applicable, may not effect any such purchase unless the Trustee
shall have received an Opinion of Counsel to the effect that such purchase would
not constitute a fraudulent conveyance. To exercise such option the Seller or
the Servicer, as applicable, shall deposit pursuant to SECTION 4.4 in the
Collection Account an amount equal to the aggregate Purchase Amount for the
Receivables (including any Liquidated Receivables not previously deposited),
plus the appraised value of any other property held by the Trust, such value to
be
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determined by an appraiser mutually agreed upon by the Seller or the Servicer,
as applicable, the Trustee, and the Initial Certificateholder, and shall succeed
to all interests in and to the Trust. Such deposit shall be allocated and paid
as set forth in SECTION 4.5 hereof. The fees and expenses related to such
appraisal shall be paid by the party exercising the option to purchase.
ARTICLE XI
MISCELLANEOUS PROVISIONS
SECTION 11.1. AMENDMENT.
(a) This Agreement may be amended from time to time by the Seller, the
Servicer, the Trustee, the Backup Servicer and the Collateral Agent with the
consent (which consent of any Certificateholder given pursuant to this Section
or pursuant to any other provision of this Agreement shall be conclusive and
binding on such Holder and on all future Holders of such Certificate and of any
Certificate issued upon the transfer thereof or in exchange thereof or in lieu
thereof whether or not notation of such consent is made upon the Certificate) of
the Holders of a Certificate Majority for the purpose of adding any provisions
to or changing in any manner or eliminating any of the provisions of this
Agreement, or of modifying in any manner the rights of the Holders of the
Certificates; PROVIDED, HOWEVER, that no such amendment shall (i) increase or
reduce in any manner the amount of, or accelerate or delay the timing of, or
change the allocation or priority of, collections of payments on Receivables or
distributions that shall be required to be made on any Certificate or change the
Class A Pass-Through Rate, the Pass-Through Rate or the Class C Pass-Through
Rate without the consent of each Certificateholder affected thereby, (ii) reduce
the aforesaid percentage of the Class A Certificate Balance, the Certificate
Balance or the Class C Certificate Balance required to consent to any such
amendment, without the consent of the Holders of all Certificates of the
applicable Class then outstanding, (iii) result in a downgrade or withdrawal of
the then current rating of any Class of Certificates by the Rating Agency
without the consent of each Certificateholder, or (iv) change the Reserve
Account Requirement without the consent of each Certificateholder and the Rating
Agency. This Agreement may be amended from time to time by the Seller, the
Servicer, the Trustee and the Collateral Agent, without the consent of the
Certificateholders, to cure any ambiguity, correct or supplement any provision
therein which may be inconsistent with any other provision therein, or make any
other provisions with respect to matters or questions arising under this
Agreement which are not inconsistent with the provisions of this Agreement;
provided that such action will not, in the opinion of counsel satisfactory to
the Trustee, which opinion shall not be delivered at the expense of the Trustee,
materially and adversely affect the interest of any Certificateholder.
(b) Prior to the execution of any such amendment or consent, the Trustee
shall furnish written notification of the substance of such amendment or consent
to the Rating Agency. Prior to the execution of any such amendment or consent,
the Trustee shall furnish a true copy of such amendment or consent to each
Certificateholder.
(c) The manner of obtaining such consents (and any other consents of
Certificateholders provided for in this Agreement) and of evidencing the
authorization of the
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execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Trustee may prescribe.
(d) Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement.
The Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Trustee's own rights, duties or immunities under this
Agreement or otherwise.
SECTION 11.2. PROTECTION OF TITLE TO TRUST. (a) The Seller or the Servicer
or both shall take or cause to be taken such actions and execute and file such
documents and instruments including without limitation, financing statements and
cause to be executed and filed such continuation and other statements, all in
such manner and in such places as may be required by law (or deemed reasonably
necessary by a Certificate Majority) fully to preserve, maintain and protect the
interest of the Certificateholders, the Trust and the Trustee under this
Agreement in the Trust Property and in the proceeds thereof against all other
Persons. The Seller shall deliver (or cause to be delivered) to the Trustee
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing.
(b) The Seller shall not change its name, identity or corporate structure
in any manner that would, could or might make any financing statement or
continuation statement filed by the Seller in accordance with paragraph (a)
above seriously misleading within the meaning of Section 9-402(7) of the UCC,
unless it shall have given the Trustee at least 60 days' prior written notice
thereof, shall have promptly filed appropriate amendments to all previously
filed financing statements and continuation statements and shall have delivered
an Opinion of Counsel (i) stating that, in the opinion of such counsel, all
amendments to all previously filed financing statements and continuation
statements have been executed and filed that are necessary fully to preserve and
protect the interest of the Trustee in the Receivables and the other Trust
Property, and reciting the details of such filings, or (ii) stating that, in the
opinion of such counsel, no such action shall be necessary to preserve and
protect such interest.
(c) The Seller shall give the Trustee at least 30 days' prior written
notice of any relocation of its chief executive office or principal place of
business if, as a result of such relocation, the applicable provisions of the
UCC would require the filing of any amendment of any previously filed financing
or continuation statement or of any new financing statement, shall promptly file
any such amendment and shall deliver an Opinion of Counsel (i) stating that, in
the opinion of such counsel, all amendments to all previously filed financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Trustee in the
Receivables and the other Trust Property, and reciting the details of such
filings, or (ii) stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interest. The Servicer shall at
all times maintain each office from which it services Receivables and its chief
executive office and principal place of business within the United States of
America.
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(d) The Servicer shall maintain accounts and records as to each Receivable
accurately and in sufficient detail to permit (i) the reader thereof to know at
any time the status of such Receivable, including payments and recoveries made
and payments owing (and the nature of each) and (ii) reconciliation between
payments or recoveries on (or with respect to) each Receivable and the amounts
from time to time deposited in the Collection Account in respect of such
Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables to the Trustee,
the Servicer's master computer records (including any backup archives) that
refer to any Receivable indicate clearly the interest of Triad Auto Receivables
Trust 199[ ]-[ ] in such Receivable and that the Receivable is owned by the
Trust. Indication of the Trust's ownership of a Receivable shall be deleted from
or modified on the Servicer's computer systems when, and only when, the
Receivable has been paid in full or repurchased by Triad, the Seller or the
Servicer.
(f) If at any time the Seller or the Servicer shall propose to sell, grant
a security interest in, or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender or other transferee, the
Servicer shall give to such prospective purchaser, lender or other transferee
computer tapes, records or printouts (including any restored from backup
archives) that, if they refer in any manner whatsoever to any Receivable,
indicate clearly that such Receivable has been sold and is owned by the Trust
(unless such Receivable has been paid in full or repurchased by Triad, the
Seller, the Seller or the Servicer).
(g) The Servicer shall permit the Trustee, the Rating Agency, the Backup
Servicer, the Seller and their respective agents, at any time during normal
business hours, to inspect, audit and make copies of and abstracts from the
Servicer's records regarding any Receivable or any other portion of the Trust
Property in its possession; any Certificateholder shall be afforded the same
rights as described in this clause (g), provided that such Certificateholder
agrees to pay for its own fees and expenses incurred in such inspection, audit
and making copies and abstracts.
(h) The Servicer shall promptly furnish to the Trustee, the Backup Servicer
and the Seller at any time upon reasonable prior request a list of all
Receivables then held as part of the Trust, together with a reconciliation of
such list to the Schedule of Receivables and to each of the Servicing
Certificates furnished before such request indicating removal of Receivables
from the Trust. A copy of such list and reconciliation may be obtained by any
Certificateholder by a request in writing to the Trustee addressed to the
Corporate Trust Office.
(i) In the event any of the events described in SECTION 8.1(e) or (f) shall
have occurred, or in the event Triad shall have been removed or replaced as
Servicer for any reason, then Triad and/or the Servicer shall immediately cause,
at the expense of Triad, each Certificate of Title for a Financed Vehicle to be
marked to reflect the security interest of the Trustee in the Financed Vehicle,
and Triad hereby appoints the Trustee its attorney-in-fact to effect such
marking, and the Trustee hereby accepts such appointment. The appointment of the
Trustee hereunder shall not operate to relieve Triad and/or the Servicer of its
obligations to xxxx each certificate of title under this provision. Triad shall
be liable for all costs, fees and expenses incurred under this SECTION 11.2(i).
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SECTION 11.3. LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS. (a) The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations and liabilities of the parties to
this Agreement or any of them.
(b) No Certificateholder shall have any right to vote (except as
specifically provided herein including in SECTION 11.1) or in any manner
otherwise control the operation and management of the Trust, or the obligations
of the parties to this Agreement, nor shall anything set forth in this
Agreement, or contained in the terms of the Certificates, be construed so as to
constitute the Certificateholders from time to time as partners or members of an
association; nor shall any Certificateholder be under any liability to any third
person by reason of any action taken by the parties to this Agreement pursuant
to any provision of this Agreement.
(c) No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action, or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless (i) such Holder previously shall have given to the Trustee a written
notice of default and of the continuance thereof, (ii) the Holders of
Certificates evidencing not less than [ ]% of the Certificate Balance shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee under this Agreement and shall have
offered to the Trustee such indemnity as it may require against the costs,
expenses, and liabilities to be incurred therein or thereby, (iii) the Trustee,
for 30 days after its receipt of such notice, request, and offer of indemnity,
shall have neglected or refused to institute any such action, suit or proceeding
and (iv) during such 30-day period, no request or waiver inconsistent with such
written request has been given to the Trustee pursuant to this Section or
SECTION 8.6; it being understood and intended, and being expressly covenanted by
each Certificateholder with every other Certificateholder and the Trustee, that
no one or more Holders of Certificates shall have any right in any manner
whatever by virtue or by availing itself or themselves of any provisions of this
Agreement to affect, disturb, or prejudice the rights of the Holders of any
other of the Certificates, or to obtain or seek to obtain priority over or
preference to any other such Holder, or to enforce any right, under this
Agreement except in the manner provided in this Agreement and for the equal,
ratable, and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this SECTION 11.3, each Certificateholder and
the Trustee shall be entitled to such relief as can be given either at law or in
equity.
SECTION 11.4. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD
TO CONFLICT OF LAWS PRINCIPLES, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 11.5. SUBMISSION TO JURISDICTION; WAIVERS. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY:
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(1) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT
TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK, THE COURTS
OF THE UNITED STATES OF AMERICA FOR THE SOUTHERN DISTRICT OF NEW YORK, AND
APPELLATE COURTS FROM ANY THEREOF;
(2) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN SUCH COURTS
AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY
SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR PROCEEDING
WAS BROUGHT IN ANY INCONVENIENT COURT AND AGREES NOT TO PLEAD OR CLAIM THE SAME;
(3) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR PROCEEDING MAY BE
EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED MAIL (OR ANY
SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS ADDRESS SET FORTH
IN SECTION 11.12 OR AT SUCH OTHER ADDRESS OF WHICH ALL OF THE OTHER PARTIES
HERETO SHALL HAVE BEEN NOTIFIED PURSUANT THERETO;
(4) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT SERVICE OF
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT TO XXX IN
ANY OTHER JURISDICTION; AND
(5) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE
TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED TO IN THIS
SUBSECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.
SECTION 11.6. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
SECTION 11.7. SEVERABILITY OF PROVISIONS. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
SECTION 11.8. ASSIGNMENT. Notwithstanding anything to the contrary
contained in this Agreement, except as provided in SECTIONS 6.3 and 7.3 and as
provided in the provisions of the Agreement concerning the resignation of the
Servicer and the Backup Servicer, this Agreement may not be assigned by the
Seller or the Servicer without the prior written consent of a Certificate
Majority. The Assignor shall furnish prompt written notice of any proposed
assignment to the Rating Agency.
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SECTION 11.9. CERTIFICATES NONASSESSABLE AND FULLY PAID. Certificateholders
shall not be personally liable for obligations of the Trust. The interests
represented by the Certificates shall be nonassessable for any losses or
expenses of the Trust or for any reason whatsoever, and Certificates upon
authentication thereof by the Trustee pursuant to SECTION 5.2 are and shall be
deemed fully paid.
SECTION 11.10. THIRD PARTY BENEFICIARIES. Except as otherwise specifically
provided herein with respect to Certificateholders, the parties to this
Agreement hereby manifest their intent that no third party shall be deemed a
third party beneficiary of this Agreement, and specifically that the Obligors
are not third party beneficiaries of this Agreement.
SECTION 11.11. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which counterpart shall be deemed to be an original,
and all of which counterparts taken together shall constitute but one and the
same instrument.
SECTION 11.12. NOTICES. All demands, notices and communications under this
Agreement shall be in writing, and delivered (a) personally, (b) by certified
mail, return receipt requested, (c) by Federal Express or similar overnight
courier service or (d) by telecopy (with telephonic confirmation of receipt),
and shall be deemed to have been duly given upon receipt (i) in the case of
Triad or the Servicer, at the following address: One Pacific Plaza, 0000 Xxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxxxxx Xxxxx, Xxxxxxxxxx 00000 (Telecopy: (714)
894-8617), (ii) in the case of the Seller, at the following address: 0000 Xxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxxxxx Xxxxx, Xxxxxxxxxx 00000 (Telecopy: (714)
894-8617), (iii) in the case of the Trustee or the Collateral Agent, at the
following address: [ ], (iv) in the case of the Backup Servicer, at the
following address: [ ], and (v) in the case of the Rating Agency, at the
following address: [ ], or at such other address as shall be designated by any
such party in a written notice to each of the other parties. Any notice required
or permitted to be mailed to a Certificateholder shall be given by Federal
Express or similar overnight courier service, postage prepaid, at the address of
such Holder as shown in the Certificate Register. Any notice so mailed within
the time prescribed in this Agreement shall be conclusively presumed to have
been duly given upon receipt by such Certificateholder.
SECTION 11.13. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
the parties hereto and their respective successors and assigns, and shall inure
to the benefit of and be enforceable by the parties hereto and their respective
successors and assigns permitted hereunder. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the
Trustee, the Backup Servicer, the Collateral Agent and the Certificateholders
and their respective permitted successors and assigns, if any. Any request,
notice, direction, consent, waiver or other instrument or action by any
Certificateholder shall bind its successors and assigns.
SECTION 11.14. NONPETITION COVENANT. Until the date that is one year plus
one day shall have elapsed since the termination of the Trust, none of the
Seller, the Servicer, the Trustee, the Backup Servicer, the Collateral Agent or
any Holder of a Certificate shall petition or otherwise invoke the process of
any court or government authority for the purpose of commencing or sustaining a
case against the Trust or the Seller under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee,
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custodian, sequestrator or other similar official of the Trust or the Seller or
any substantial part of its property, or ordering the winding up or liquidation
of the affairs of the Trust or the Seller.
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IN WITNESS WHEREOF, the Seller, the Servicer, the Trustee, the Backup
Servicer and the Collateral Agent have caused this Pooling and Servicing
Agreement to be duly executed by their respective officers, effective as of the
day and year first above written.
TRIAD FINANCIAL SPECIAL PURPOSE CORPORATION,
as Seller
By:___________________________
Name:
Title:
By:___________________________
Name:
Title:
TRIAD FINANCIAL CORPORATION,
as Servicer
By:___________________________
Name:
Title:
[ ], as Trustee, Backup
Servicer and Collateral Agent
By:___________________________
Name:
Title:
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Schedule A
Schedule of Receivables
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Schedule B
[ ]
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS.................................................................................................. 1
SECTION 1.1. Definitions.......................................................................... 1
SECTION 1.2. Usage of Terms....................................................................... 17
SECTION 1.3. Section References................................................................... 17
SECTION 1.4. Limitation on Trust Fund Activities.................................................. 17
SECTION 1.5. Calculations......................................................................... 17
SECTION 1.6. Action by or Consent of Certificateholders........................................... 17
ARTICLE II THE TRUST AND TRUST PROPERTY..................................................................... 17
SECTION 2.1. Creation of Trust.................................................................... 17
SECTION 2.2. Conveyance of Receivables............................................................ 17
SECTION 2.3. Transfer Intended as Sale; Precautionary Security Interest; Tax Treatment............ 18
SECTION 2.4. Acceptance by Trustee................................................................ 19
SECTION 2.5. Representations and Warranties of Seller............................................. 20
SECTION 2.6. Repurchase Upon Breach............................................................... 23
SECTION 2.7. Conditions to Acceptance by Trustee.................................................. 24
SECTION 2.8. Custody of Receivable Files.......................................................... 25
SECTION 2.9. Collecting Lien Certificates Not Delivered on the Closing Date....................... 27
ARTICLE III ADMINISTRATION AND SERVICING OF RECEIVABLES..................................................... 27
SECTION 3.1. Duties of Servicer................................................................... 27
SECTION 3.2. Collections; Modification and Amendment of Receivables; Lockbox Account.............. 28
SECTION 3.3. Realization Upon Defaulted Receivables............................................... 30
SECTION 3.4. Insurance............................................................................ 31
SECTION 3.5. Maintenance of Security Interests in Financed Vehicles............................... 31
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SECTION 3.6. Additional Covenants of Servicer..................................................... 32
SECTION 3.7. Purchase of Receivables Upon Breach.................................................. 32
SECTION 3.8. Servicing Fee, Additional Servicing Fee and Servicer Expenses........................ 32
SECTION 3.9. Servicing Certificate................................................................ 33
SECTION 3.10. Annual Statement as to Compliance; Notice of Default................................ 33
SECTION 3.11. Annual Independent Certified Public Accountant's Report; Audited Financials......... 33
SECTION 3.12. Access to Certain Documentation and Information Regarding Receivables............... 34
SECTION 3.13. Monthly Tape; Verification of Servicing Certificate; Backup Servicer................ 35
SECTION 3.14. Fidelity Coverage; Errors and Omissions Insurance................................... 36
SECTION 3.15. Delegation of Duties................................................................
ARTICLE IV DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS TO CERTIFICATEHOLDERS................................. 36
SECTION 4.1. Collection Account................................................................... 36
SECTION 4.2. Reimbursement from the Collection Account............................................ 37
SECTION 4.3. Application of Collections........................................................... 37
SECTION 4.4. Additional Deposits.................................................................. 38
SECTION 4.5. Distributions........................................................................ 38
SECTION 4.6. Net Deposits......................................................................... 41
SECTION 4.7. The Reserve Account.................................................................. 41
SECTION 4.8. Statements to Certificateholders; Tax Returns........................................ 42
ARTICLE V THE CERTIFICATES.................................................................................. 44
SECTION 5.1. The Certificates...................................................................... 44
SECTION 5.2 Authentication of Certificates........................................................ 45
SECTION 5.3. Mutilated, Destroyed, Lost or Stolen Certificates..................................... 46
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SECTION 5.4. Persons Deemed Owners................................................................. 46
SECTION 5.5. Access to List of Certificateholders' Names and Addresses............................. 46
SECTION 5.6. Maintenance of Office or Agency.......................................................
ARTICLE VI THE SELLER....................................................................................... 47
SECTION 6.1. Representations of Seller............................................................. 47
SECTION 6.2. Liability of Seller; Indemnities...................................................... 49
SECTION 6.3. Merger or Consolidation of, or Assumption of the Obligations of Seller,
Amendment of Certificate of Incorporation and Certain Covenants of the Seller....................... 50
SECTION 6.4. Limitation on Liability of Seller and Others.......................................... 51
SECTION 6.5. Seller May Own Certificates...........................................................
ARTICLE VII THE SERVICER AND BACKUP SERVICER................................................................. 51
SECTION 7.1. Representations and Warranties of Servicer............................................ 51
SECTION 7.2. Indemnities of Servicer............................................................... 53
SECTION 7.3. Merger or Consolidation of, or Assumption of the Obligations.......................... 54
SECTION 7.4. Limitation on Liability of Servicer, Backup Servicer and Others....................... 55
SECTION 7.5. Servicer and Backup Servicer Not to Resign............................................ 56
SECTION 7.6. Representations and Warranties of Backup Servicer..................................... 57
SECTION 7.7. Duties of Backup Servicer............................................................. 58
ARTICLE VIII SERVICER TERMINATION EVENTS..................................................................... 59
SECTION 8.1. Servicer Termination Events........................................................... 59
SECTION 8.2. Consequences of a Servicer Termination Event.......................................... 60
SECTION 8.3. Appointment of Successor.............................................................. 61
SECTION 8.4. Notification to Certificateholders.................................................... 62
SECTION 8.5. Action Upon Certain Failures of the Servicer.......................................... 62
SECTION 8.6. Waiver of Past Defaults............................................................... 62
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ARTICLE IX THE TRUSTEE....................................................................................... 62
SECTION 9.1. Duties of Trustee..................................................................... 62
SECTION 9.2. Trustee's Certificate................................................................. 64
SECTION 9.3. Certain Matters Affecting Trustee..................................................... 64
SECTION 9.4. Trustee Not Liable for Certificates or Receivables.................................... 65
SECTION 9.5. Trustee May Own Certificates.......................................................... 66
SECTION 9.6. Indemnity of Trustee.................................................................. 66
SECTION 9.7. Eligibility Requirements for Trustee.................................................. 67
SECTION 9.8. Resignation or Removal of Trustee..................................................... 67
SECTION 9.9. Successor Trustee..................................................................... 68
SECTION 9.10. Merger or Consolidation of Trustee................................................... 68
SECTION 9.11. Co-Trustee; Separate Trustee......................................................... 69
SECTION 9.12. Representations and Warranties of Trustee, and Collateral Agent...................... 70
SECTION 9.13. Trustee May Enforce Claims Without Possession of Certificates........................ 71
SECTION 9.14. Suit for Enforcement................................................................. 71
SECTION 9.15. Appointment of Custodians............................................................ 71
ARTICLE X TERMINATION....................................................................................... 71
SECTION 10.1. Termination of the Trust............................................................. 71
SECTION 10.2. Optional Purchase of All Receivables................................................. 72
ARTICLE XI................................................................................................... 73
MISCELLANEOUS PROVISIONS..................................................................................... 73
SECTION 11.1. Amendment............................................................................ 73
SECTION 11.2. Protection of Title to Trust......................................................... 74
SECTION 11.3. Limitation on Rights of Certificateholders........................................... 76
SECTION 11.4. GOVERNING LAW........................................................................ 76
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SECTION 11.5. SUBMISSION TO JURISDICTION; WAIVERS.................................................. 76
SECTION 11.6. WAIVER OF JURY TRIAL................................................................. 77
SECTION 11.7. Severability of Provisions........................................................... 77
SECTION 11.8. Assignment........................................................................... 77
SECTION 11.9. Certificates Nonassessable and Fully Paid............................................ 78
SECTION 11.10. Third Party Beneficiaries........................................................... 78
SECTION 11.11. Counterparts........................................................................ 78
SECTION 11.12. Notices............................................................................. 78
SECTION 11.13. Successors and Assigns.............................................................. 78
SECTION 11.14. Nonpetition Covenant................................................................ 78
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SCHEDULES PAGE
SCHEDULE A - SCHEDULE OF RECEIVABLES..............................
SCHEDULE B - LOCATION OF RECEIVABLE FILES.........................
SCHEDULE 4.8- FORM OF INFORMATION REQUEST..........................
EXHIBITS
EXHIBIT A - FORM OF CLASS A CERTIFICATE..........................
EXHIBIT B - FORM OF CLASS B CERTIFICATE..........................
EXHIBIT C - FORM OF CLASS C CERTIFICATE..........................
EXHIBIT D - FORM OF SERVICING CERTIFICATE........................
EXHIBIT E-1 - FORM OF TRUSTEE'S CERTIFICATE (SELLER ASSIGNMENT)....
EXHIBIT E-2 - FORM OF TRUSTEE'S CERTIFICATE (SERVICER ASSIGNMENT)..
EXHIBIT F-1 - FORM OF TRUST RECEIPT................................
EXHIBIT F-2 - FORM OF SERVICING OFFICER'S CERTIFICATE..............
EXHIBIT G - FORM OF COLLATERAL INSURANCE.........................
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