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EXHIBIT 10.3
FORM OF SERVICING AGREEMENT
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SERVICING AGREEMENT
THIS SERVICING AGREEMENT, dated as of _____________, 199__, between
U.S. Automobile Acceptance Corporation, a Texas corporation, in its capacity as
Contract Servicer ("Servicer") of certain used motor vehicle promissory notes
("Contracts") of U.S. Automobile Acceptance SNP-IV, Inc., a Texas corporation
("Company"), herein enter into this Servicing Agreement as follows.
WITNESSETH:
WHEREAS, it is contemplated that following any purchase of designated
Automobile Finance Contracts (the "Contracts"), the Servicer will assist the
Company to collect the sums due thereon from the Obligors on the Purchased
Contracts so transferred and account to Company therefor as provided herein;
and
WHEREAS, Company has requested the Servicer to undertake to assist the
Company with the collection and servicing responsibilities with respect to any
and all of the Contracts;
NOW, THEREFORE, the parties agree as follows:
(1) Appointment of and Acceptance by the Servicer of Servicing
Obligations.
A. The Servicer, on behalf of Company, shall during the
term of this Agreement assist the Company to manage, administer and collect
each of the Contracts and shall exercise discretionary powers involved in such
management, administration and collection, and shall bear all costs and
expenses incurred in connection therewith, that may be necessary or advisable
in carrying out the Agreement. In the management, administration and
collection of the Contracts, the Servicer shall use at least the same care and
apply the same policies that a prudent man would exercise under the
circumstances if he owned the Contracts.
B. The Servicer shall have full power and authority to
do those things in connection with such servicing, administration and
collection activities which it may deem necessary or desirable in order to
maximize receipts collected from Obligors or enforce dealer recourse
agreements, and foreclose and sell vehicles related to defaulted Contracts, if
necessary. Without limiting the generality of the foregoing, the Servicer is
hereby authorized and empowered to execute and deliver, on behalf of Company,
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and all other comparable instruments. The Servicer shall not
commence any legal action against an Obligor in the name of Company without the
prior written consent of Company. Company shall furnish the Servicer with any
powers of attorney and other documents necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder.
(2) Term. This Agreement shall commence as of the date first
written above and shall continue so long as the Company has any outstanding
Contracts that remain to be collected, absent an Event of Default.
(3) Compensation. In exchange for the services provided to
Company as described and governed herein, Servicer shall receive before the
tenth day of the month following a month in which such services are provided, a
Servicing Fee equal to twenty-one and 50/100 dollars ($21.50) per month times
the aggregate number of Contracts serviced by Servicer during the previous
month. Such aggregate number of Contracts shall equal the sum of all Contracts
identified on Contracts Schedules to periodically be added as exhibits to this
Agreement. Monthly compensation shall be limited to a maximum of $120,000 in
any month. In addition, the Contract Servicing Fee will be adjusted, if
necessary, so that the total annual Allowed Expenses do not exceed $12,000 in
the event only the Minimum Subscription Amount is sold (as such terms are
defined in the Company's Prospectus). The Servicer's monthly per Contract
Servicing fee shall be increased each year by the pro rata annually published
Consumer Price Index inflation factor.
Additionally, any third-party expenditures pursuant to
collection of defaulted Contracts, repossession and sale of foreclosed vehicle,
and enforcement of dealer recourse agreements shall be paid by the Company as
reimbursement to the Servicer within ten (10) days after receipt of invoice
from Servicer.
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(4) Representations and Warranties of the Servicer. The Servicer
represents and warrants to Company that:
A. Organization and Good Standing. The Servicer is a
corporation duly organized, existing and in good standing under the laws of
Texas, and has full corporate power, authority and legal right to own its
properties and conduct its business as such properties are presently owned and
such business is presently contemplated, and to execute, deliver and perform
its obligations under this Agreement.
B. Due Qualification. The Servicer is duly qualified to
do business in the State of Texas and each other state where such qualification
is required in order to service the Contracts as required by this Agreement and
has obtained all necessary licenses, approvals or consents as are required
under applicable law to perform its duties hereunder.
C. Due Authorization. The execution, delivery and
performance of this Agreement has been duly authorized by the Servicer by all
necessary corporate action on the part of the Servicer.
D. Binding Obligation. This Agreement constitutes a
legal, valid and binding obligation of the Servicer, enforceable in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereinafter in effect, affecting the enforcement of creditors' rights in
general and such enforceability may be limited by general principles of equity
(whether considered in a proceeding at law or in equity).
E. No Violation. The execution and delivery of this
Agreement by the Servicer, and the performance of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof applicable to the
Servicer, will not conflict with, violate, result in any breach of any of the
material terms and provisions of, or constitute (with or without notice or
lapse of time or both) a default under, any requirement of law applicable to
the Servicer or any indenture, contract, agreement, mortgage, deed of trust or
other instrument to which the Servicer is a party or by which it is bound.
(5) Covenants of the Servicer. The Servicer covenants that:
A. From and after the date hereof until such time as
this Agreement terminates, Servicer, shall at its own expense, direct all
Obligors on the Contracts and all Subcontract Servicers to remit all
collections and payments directly to, or otherwise cause all payments on the
Contracts to be deposited in, the Company's Master Collections Accounts.
Servicer shall have no ownership in or authority to amend, modify, change or
terminate the Master Collections Accounts. Servicer agrees and covenants that
it will utilize remittance instructions directing all payments be remitted
directly to the Master Collections Accounts, and Servicer additionally agrees
that all cash, checks, notes, drafts or other items which it receives
attributable to the Contracts including proceeds from dealer recourse
agreements, from resale of repossessed Financed Vehicles and recoveries on
insurance claims, shall be deposited in the Master Collections Accounts within
two business days of receipt.
B. Operations. The Servicer shall collect the Contracts
in an orderly and efficient manner consistent with good business practices and
in accordance with all applicable federal, state and local laws and
regulations.
C. Records. So long as Company has not given notice of
termination pursuant to Section 9, the Servicer shall (i) if required by
Company hold in trust and safely keep all Purchased Contract Closing Documents
and such other documents as may be required for the enforcement of the
Contracts; (ii) keep such accounts and other records as will enable Company to
determine the status of the Contracts; (iii) keep such books and records at its
offices or the offices of its subcontractors, identified in Section 3 herein;
and (iv) permit Company and its representatives at any time to inspect, audit,
check and make abstracts from Servicer's accounts, records, correspondence and
other papers pertaining to the Contracts. Servicer shall maintain its
respective records with respect to the Contracts in a manner such that the
Servicer can produce a computer file containing a listing (by Obligor) of all
Contracts, together with the account balance of such accounts and the payment
history related thereto. The Servicer shall provide Company with monthly
reports updating the information relating to account balances and activity and
certifying the amounts collected on the Contracts during the preceding month.
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D. Continuation Statements. The Servicer shall execute
and file documents which shall create a first priority security interest in
favor of Company in each Financed Vehicle, including registration of the
Certificates of Title in the name of Company, and/or any other documents
requested by Company or which may be required by law to preserve fully and
protect the interest of Company in and to the Contracts.
E. Principal Executive Office. The Servicer shall not,
without providing thirty days' notice to Company, and without filing such
amendments to any previously filed financing statements as Company may require,
(i) change the county where its principal executive office or the offices where
the records relating to the Contracts are kept, or (ii) change its name,
identity or corporate structure in any manner which would, could or might make
any financing statement or continuation statement filed by Company or the
Servicer or any provision hereof seriously misleading within the meaning any
applicable enactment of the Uniform Commercial Code.
F. No Impairment. The Servicer will duly fulfill all
obligations on its part to be fulfilled under or in connection with each
Contracts and will do nothing to materially impair the rights of Company in the
Contracts.
G. Compliance with Law. The Servicer will comply, in
all material respects, with all acts, rules, regulations, orders, decrees and
directions of any governmental authority applicable to the Contracts or any
part thereof; provided, however, that the Servicer may contest any act
regulation, order, decree or direction in any reasonable manner which shall not
materially and adversely affect the rights of Company in the Contracts. The
Servicer will comply, in all material respects, with any obligation of a holder
of a Purchased Contract to the Obligor thereof arising under such Purchased
Contract or under applicable laws.
H. Security Interest. The Servicer will not sell,
pledge, assign or transfer to any other person, or grant, create, incur, assume
or suffer to exist any lien on any Contracts, or the books or records relating,
to any Contracts, or any interest therein: the Servicer will immediately
notify Company of the existence of any lien on any Contracts: the Servicer
shall defend the right, title and interest of Company in, to and under the
Contracts, whether now existing or hereafter transferred to Company, against
all claims of third parties claiming through or under the Servicer.
(6) Maintenance or Internal Control and Procedures. Servicer
shall, at all times during the term of this Agreement, follow internal control
procedures consistent with loan servicing industry standards and, at the
request of Company, will supply same in written form for review purposes.
(7) Computer. Servicer shall, at all times during the term of
this Agreement, utilize in the operation of its business the industry standard
computer software and contract information maintenance system, such system to
be approved by Company.
(8) Servicer Events or Default. The occurrence and continuation
of any one of the following events shall be a "Servicer Event of Default" under
this Agreement.
A. Failure on the part of the Servicer (i) to
immediately remit collections on the Contracts to the Master Collections
Accounts or (ii) remit payments to the Company or the Trustee under the
Indenture, when due and continuance of such failure for ten Business Days;
B. An involuntary case is commenced or filed against the
Servicer 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 for the appointment of a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Servicer or of any
substantial part of its property, or for the winding up of the affairs of,
liquidation, dissolution, or reorganization of the Servicer;
C. An order for relief shall be entered in a case under
title 11 of the United States Code in which the Servicer is a debtor, or the
Servicer shall become insolvent or admit in writing its inability to pay its
debts as they come due, or 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,
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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; or
D. Failure by Servicer to service and collect amounts
due from Obligors under Contracts and/or to adequately enforce dealer recourse
agreements as required by this Agreement.
(9) Remedies.
A. If a Servicer Event of Default shall have occurred,
Company may, by notice given in writing to the Servicer, terminate all of the
rights and obligations of the Servicer under this Agreement. Notwithstanding
any termination of the rights and obligations of the Servicer, the Servicer
shall remain responsible for any acts or omissions to act by it as Servicer
prior to such termination.
B. Company is hereby authorized and empowered (upon the
failure of the Servicer to cooperate) to execute and deliver, on behalf of the
Servicer as attorney-in-fact or otherwise, all documents and other instruments
upon the failure of the Servicer to execute or deliver such documents or
instruments, and to do and accomplish all other acts or things necessary or
appropriate to effect the purposes of a transfer of servicing rights to a
successor servicer.
C. The Servicer agrees to cooperate with Company and any
successor servicer in effecting the termination of the responsibilities and
rights of the Servicer to conduct servicing hereunder, including, without
limitation, the transfer to such successor servicer of all authority of the
Servicer to service the Contracts provided for under this Agreement, including,
without limitation, all authority over all collections which shall on the date
of transfer be held by the Servicer for deposit or which shall thereafter be
received with respect to the Contracts.
D. The Servicer shall promptly transfer its records
relating to the Contracts to a successor servicer in such form as such
successor servicer may reasonably request and shall promptly transfer to such
successor servicer all other records, correspondence and documents necessary
for the continued servicing of the Contracts in the manner and at such times as
the successor servicer shall reasonably request. To the extent that compliance
with this Section shall require the Servicer to disclose to such successor
servicer information of any kind which the Servicer reasonably deems to be
confidential, such successor servicer shall be required to enter into such
customary licensing and confidentiality agreements as the Servicer shall
reasonably deem necessary to protect its interest.
(10) Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns. Upon approval by the Company, the Servicer may contract with
industry-qualified third parties for the performance of any or all of its
obligations arising hereunder but no such contract shall relive Servicer from
liability for its performance hereunder.
(11) Company Event of Default Servicer's Remedies. In the event
that Company should fail to pay any fees or compensation due under this
Agreement, within ten (10) days of the date they are due, or are submitted for
payment, whichever is less, or shall fail to perform any of its duties or to
observe or perform any other term, covenant, condition or agreement provided
within this Agreement, said failure shall constitute an event of default by the
Company. In the event of such default, Purchaser shall have the option of
terminating this Agreement in addition to all remedies available in equity or
law.
(12) Modifications and Waivers. No delay on the part of any party
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof, nor shall any waiver of any right, power or privilege hereunder
operate as a waiver of any other right, power or privilege hereunder, nor shall
any single or partial exercise of any right, power or privilege hereunder
preclude any other or further exercise thereof, or the exercise of any other
right, power or privilege hereunder. All rights and remedies herein provided
are cumulative and are not exclusive of any rights or remedies which the
parties hereto may otherwise have at law or in equity. No waiver shall be
valid in the absence of the written and signed consent of the party against
which enforcement of such is sought.
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(13) Notice. Except as otherwise specifically provided herein, any
notice hereunder shall be in writing (including telegraphic or telecopy
communication) and, if mailed, shall be deemed to be given when sent by
registered or certified mail, postage prepaid, or if telegraphed when delivered
to the telegraph company, or if telecopied when transmitted, or otherwise when
delivered in person to the address and a receipt given for, in all such
instances addressed to the respective party, at such address as the addressee
may, by written notice received by the other party hereto, designate as the
appropriate address for purposes of notice hereunder.
(14) Amendment. This Agreement may be amended, supplemented or
modified only with the written consent of the parties hereto.
(15) Choice of Law. THIS AGREEMENT, AND THE VALIDITY AND
ENFORCEMENT HEREOF, SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
SUBSTANTIVE LAWS OF THE STATE OF OKLAHOMA.
(16) Severability. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under present or future laws effective
during the term of this Agreement, the legality, validity and enforceability of
the remaining provisions of this Agreement shall not be affected thereby, and
in lieu of each such illegal, invalid or unenforceable provision there shall be
added automatically as a part of this Agreement a provision as similar in terms
of such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
(17) Entire Agreement. This instrument embodies the entire
agreement between the parties relating to the subject matter hereof and
supersedes all prior agreements and understandings, if any, relating to the
subject matter hereof.
(18) Counterparts. This Agreement may be executed in one or more
counterparts, each of which for all purposes is to be deemed an original.
(19) Survival. All covenants, agreements, undertakings,
indemnities, representations and warranties made herein shall survive both the
execution and the termination hereof and shall not be affected by any
investigation made by any party.
(20) Further Assurances. Servicer shall furnish to Company at the
request of the Company such additional information concerning the Contracts as
Company may from time to time reasonably request in order to establish
compliance with the terms and conditions of this Agreement, and shall execute,
acknowledge and deliver, or cause to be executed, acknowledged or delivered,
such supplements hereto and such further instruments as may reasonably be
required or appropriate and permitted by law to further express the intention,
or to facilitate the performance of, this Agreement.
"COMPANY"
U.S. AUTOMOBILE ACCEPTANCE SNP-IV, INC.
By:
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Its:
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"SERVICER"
U.S. AUTOMOBILE ACCEPTANCE CORPORATION
By:
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Its:
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EXHIBIT TO SERVICING AGREEMENT
SERVICING CRITERIA
At all times during the term of the Servicing Agreement therein,
Servicer shall perform its duties in material accordance with the Servicing
Agreement, and observe the following covenants and criteria (referred to as the
"servicing criteria"):
I. SERVICING ACTIVITY REPORT
1. Servicer shall prepare, and deliver monthly to Company,
Servicing Activity Certificate (the "Certificate'), and the
president of Servicer shall certify as to the authenticity and
accuracy therein, that all Contacts managed by Servicer were
serviced in material accordance with the terms and conditions
of the Servicing Agreement, and that no Servicer Event of
Default as described in the Servicing Agreement has occurred
since the date of the last such Certificate.
2. The Certificate shall contain collection information on each
Contract since the date of the last such Certificate,
including adequately segregated information of all past due
accounts, repossessions, charge-offs, and extensions.
Supporting documents shall be made available to Company on a
demand basis, and such records shall be properly and safely
maintained.
3. The Certificate shall be delivered to Company on or before the
fifteenth day of the month following the month covered
thereunder.
II. COLLECTION POLICY
1. Contracts and all subcontract servicers will be issued advice
or instructions which will specifically request that all
payments be made to Company's Master Collections Accounts.
2. Servicer shall contact any Obligor on a past due Contract
within ten days after the payment due date for the purpose of
pursuing collection and shall adequately update all credit and
collection file records with respect to such activities.
3. Any material extensions, modifications, or acceptances of
partial payments by Obligors, and any related necessary
Contract amendments and/or default waivers by Servicer, shall
be approved by the chief credit officer or president of
Company or its assigns, and all necessary third party charges
and explanations relating thereto shall be documented.
III. FORECLOSURE/REPOSSESSION POLICY
1. The Servicer will take immediate appropriate action to enforce
dealer recourse agreement on behalf of the Company. The
Company will, if necessary, pursue repossession action,
subject to compliance with all state and Federal laws relating
thereto, against the Financed Vehicle underlying any Contract
whose Obligor is (i) four payments past due in the case of
biweekly or semi-monthly Notes, (ii) two payments past due in
the case of monthly notes, and who have failed for (i) sixty
consecutive days to remit any sums against payment obligations
under the respective Contract for biweekly or semi-monthly
Contracts, and (ii) seventy-five days for monthly Contracts.
Nothing contained in this Section shall be construed to limit
Servicer from pursuing repossession or any other collection
technique, subject to related state and Federal laws, sooner
than the time contemplated in (i) and (ii) above if Servicer
in its discretion deems such activity to be prudent and in the
best interests of Servicer, Company, or their assigns.
2. For each chargeoff of any material unpaid amount from an
Obligor under any Contract, Servicer shall document the
reasons for such chargeoff, shall maintain all third-party
related documentation for such chargeoff and shall notify (and
document such notification) customary credit bureaus regarding
the Obligor's deficiency.
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