SERVICING AGREEMENT
This Servicing Agreement, dated as of January 1, 1998, is between First
Investors Auto Capital Corporation ("FIACC"), a Delaware corporation, and
General Electric Capital Corporation, as Servicer ("Servicer").
WITNESSETH THAT:
In consideration of the premises and of the mutual agreements herein
contained, the parties hereto agree as follows:
ARTICLE I
INTRODUCTION
Contemporaneously with the execution of this Agreement, (i) FIACC has
entered into a Note Purchase Agreement dated as of January 1, 1998 among FIACC,
the financial institutions listed on the signature pages thereof (the
"Investors"), Variable Funding Capital Corporation (the "Company"), First Union
Capital Markets Corp. (the "Deal Agent"), and First Union National Bank, whereby
FIACC has issued to the Deal Agent, as agent for the Company and the Investors,
its Note evidencing certain indebtedness on the terms and conditions set forth
therein (the "Indebtedness"); (ii) FIACC has entered into a Security Agreement
dated as of January 1, 1998 (the "Security Agreement") among FIACC, the Deal
Agent (also in its capacity as collateral agent, hereafter the "Collateral
Agent"), and First Investors Financial Services, Inc., whereby FIACC has granted
to the Collateral Agent for the benefit of the Secured Party (as defined
therein), a first priority security interest in the Receivables (as defined
therein ("Receivables")) and certain other properties and rights as provided in
the Security Agreement, to collateralize the Indebtedness, and (iii) in
accordance with the terms of the Security Agreement, the Collateral Agent has
agreed to administer the receipt and disbursement of funds generated from the
Receivables on the terms and conditions provided therein. In connection
therewith, the Servicer has agreed to service the Receivables on the terms and
conditions set forth below.
SERVICING AGREEMENT
ARTICLE II
DEFINITIONS
SECTION 2.01. DEFINITIONS.
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
"AGREEMENT" means this Servicing Agreement and all amendments and
supplements thereto; provided, however, that the Collateral Agent has
given its prior written consent to such amendments and supplements.
"AMOUNT FINANCED" with respect to a Receivable means the amount advanced
to or for the account of an Obligor under the Receivable toward the
purchase price of the Financed Vehicle and any related costs.
"ANNUAL PERCENTAGE RATE" or "APR" of a Receivable means the annual rate of
finance charges stated in the Receivable.
"BUSINESS DAY" means a day on which banks are open for business in New
York, New York, Charlotte, North Carolina, and Houston, Texas.
"COLLECTION ACCOUNT" means the account referred to in Section 5.01.
"COLLATERAL AGENT" AND "DEAL AGENT" mean First Union Capital Markets
Corp., in its capacity as collateral agent or deal agent under the
Security Agreement, as the context may require, and any successor
collateral agent or deal agent, as the case may be, appointed pursuant to
the provisions of the Security Agreement.
"COLLATERAL AGENT OFFICER" means the chairman or vice-chairman of the
board of directors, the chairman or vice-chairman of the executive
committee of the board or directors, the president, any vice president,
the secretary, any assistant secretary, the treasurer, any assistant
treasurer, the cashier, any assistant cashier, any trust officer or
assistant trust officer, the controller and any assistant controller or
any other officer of the Collateral Agent customarily performing functions
similar to those performed by any of the above designated officers and
also means, with respect to a
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SERVICING AGREEMENT
particular corporate trust matter, any other officer to whom such matter
is referred because of such officer's knowledge of and familiarity with
the particular subject.
"COLLECTION PERIOD" means a calendar month.
"COMPANY" means Variable Funding Capital Corporation, a
Delaware corporation.
"CREDIT INSURANCE" means VSI Insurance and any other insurance with
respect to the Receivables maintained in accordance with the Security
Agreement.
"DEALER" means the dealer who sold a Financed Vehicle and who originated
and assigned the related Receivable to First Investors under an existing
agreement between such dealer and First Investors.
"EFFECTIVE TIME" means the time at which the purchase of any Receivable by
FIACC from First Investors shall be effective in accordance with the terms
of the Purchase Agreement.
"ELIGIBLE SERVICER" means any established institution approved in writing
by the Collateral Agent and having a consolidated net worth of not less
than $100,000,000 or the accounts of which are consolidated for financial
accounting purposes with any established institution having such a
consolidated net worth and whose regular business shall include the
servicing of automotive receivables.
"ENDING DATE" means the last day of each Collection Period.
"FACILITY" means the revolving credit facility created and evidenced by
the Note Purchase Agreement and the Security Agreement.
"FINANCED VEHICLE" means an automobile or light truck, together with all
accessions thereto, securing an Obligor's indebtedness under the
respective Receivable.
"FIRST INVESTORS" means First Investors Financial Services, Inc., a
Texas corporation.
"FIACC" means First Investors Auto Capital Corporation, a
Delaware corporation.
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SERVICING AGREEMENT
"FIACC EVENT OF DEFAULT" means an event specified in Section 8.02.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever, including, without
limitation, any conditional sale or other title retention agreement, any
financing lease having substantially the same economic effect as any of
the foregoing and the filing of any financing statement under the UCC
(other than any such financing statement filed for informational purposes
only) or comparable law of any jurisdiction to evidence any of the
foregoing.
"LIQUIDATED RECEIVABLE" means any Defaulted Receivable (as defined in the
Security Agreement) liquidated by the Servicer through sale of the
Financed Vehicle or otherwise.
"LIQUIDATION PROCEEDS" means (i) proceeds of any claim under any Credit
Insurance and (ii) all monies collected in connection with the disposition
of any Financed Vehicle relating to a Liquidated Receivable, from whatever
source, net of the sum of (x) any amounts reasonably expended by the
Servicer in connection with the liquidation of such Financed Vehicle for
the account of the Obligor and, (y) any such amounts required by law to be
remitted to the Obligor.
"NOTE PURCHASE AGREEMENT" means the Note Purchase Agreement dated January
1, 1998 among FIACC, the Company and others evidencing the Facility, as
the same may be amended, modified and supplemented from time to time in
accordance with the terms thereof.
"OBLIGOR" on a Receivable means the purchaser or co-purchasers of the
Financed Vehicle or any other Person who owes payments under the
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,
the treasurer, the controller or any assistant treasurer or any assistant
controller of FIACC, First Investors, or a Servicing Employee of the
Servicer, as appropriate.
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SERVICING AGREEMENT
"OPINION OF COUNSEL" means a written opinion of counsel who may, but need
not, be counsel to FIACC or the Servicer, which counsel shall be
acceptable to the Collateral Agent and the Deal Agent and which opinion of
counsel shall, in addition to the addressee specified, be addressed to the
Collateral Agent and the Deal Agent.
"PERSON" means an individual, a partnership, a corporation, (including a
business trust), a joint stock company, a trust, an unincorporated
association, a joint venture or other entity or a government or an agency
or political subdivision thereof.
"PRECOMPUTED RECEIVABLE" means any Receivable under which the portion of a
payment allocable to earned interest (which may be referred to in the
Receivable as an add-on finance charge) and the portion allocable to the
Amount Financed is determined according to the sum of periodic balances or
the sum of monthly balances or any equivalent method of calculating
monthly actuarial receivables.
"PURCHASE AGREEMENT" means the agreement dated as of January 1, 1998
relating to the purchase by FIACC from First Investors of the Receivables,
as the same may be amended, modified and supplemented from time to time in
accordance with the terms thereof and of the Security Agreement, but only
with the written consent of the Collateral Agent.
"PURCHASE AMOUNT" means the amount, as of an Ending Date, required to
prepay in full the respective Receivable under the terms thereof including
interest to the end of the month of purchase. In the event a Receivable is
repurchased by First Investors from FIACC, the Purchase Amount shall
include any out-of-pocket expenses which are otherwise reimbursable
hereunder.
"PURCHASED RECEIVABLE" means a Receivable purchased as of the respective
Ending Date by the Servicer pursuant to Section 4.07 or by First Investors
pursuant to Section 3.02.
"RECEIVABLE" means indebtedness owed to FIACC under a retail installment
sales contract pledged to secure the Facility pursuant to the Security
Agreement, whether constituting an account, chattel paper, instrument,
mortgage, deed of trust or general intangible, arising out of or in
connection with the sale of new or used cars, or new or used light trucks
including the rendering of services by the Dealer in
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SERVICING AGREEMENT
connection therewith, and includes the right of payment of any finance
charges and other obligations of the Obligor with respect thereto.
Notwithstanding the foregoing, once the Collateral Agent has released its
security interest in a Receivable and FIACC shall have given notice
thereof to the Servicer pursuant to Section 3.03, it shall no longer
constitute a Receivable hereunder.
"RECEIVABLE FILES" means the documents specified in Section 3.04.
"SCHEDULED PAYMENTS" on a Precomputed Receivable means that portion of the
payment required to be made by the Obligor during the respective
Collection Period sufficient to amortize the principal balance over the
term of the Receivable and to provide interest at the APR.
"SECURITY AGREEMENT" means the Security Agreement dated January 1, 1998
among FIACC, the Collateral Agent and First Investors, as the same may be
amended, modified and supplemented from time to time in accordance with
the terms thereof.
"SERVICER" means General Electric Capital Corporation as the servicer of
the Receivables, and each successor to General Electric Capital
Corporation (in the same capacity) approved by the Collateral Agent in
writing pursuant to Section 7.03 or 8.03.
"SERVICER EVENT OF DEFAULT" means an event specified in Section 8.01.
"SERVICER'S CERTIFICATE" means a certificate completed and executed on
behalf of the Servicer by a Servicing Employee of the Servicer pursuant to
Section 4.09.
"SERVICING EMPLOYEE" means any employee of the Servicer authorized to
execute documents on behalf of the Servicer, involved in, or responsible
for, the administration and servicing of the Receivables whose name
appears on a list of servicing employees furnished to FIACC and the
Collateral Agent by the Servicer, as such list may from time to time be
amended.
"SERVICING FEE" means the fee payable to the Servicer for services
rendered during the respective Collection Period, determined pursuant to
Section 4.08.
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SERVICING AGREEMENT
"SIMPLE INTEREST METHOD" means the method of allocating a fixed level
payment to principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the product of the fixed
rate of interest multiplied by the unpaid principal balance multiplied by
the period of time elapsed since the preceding payment of interest was
made.
"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.
"STATE" means any state or commonwealth of the United States of
America, or the District of Columbia.
"SUB-SERVICER" means any Person appointed by the Servicer as a
sub-servicer pursuant to Section 4.12.
"UCC" means the Uniform Commercial Code as in effect from time to time in
the States of New York and Texas.
"VSI INSURANCE" means the blanket collateral protection insurance policy
or policies of insurance underwritten by Agricultural Excess and Surplus
Insurance Company covering each of the installment sales contracts held by
FIACC, including the Receivables, in the form attached hereto as Exhibit
"A".
SECTION 2.02. USAGE OF TERMS.
With respect to all terms in this Agreement, the singular includes the
plural and the plural the singular; words importing any gender include the other
genders; references to "writing" include printing, typing, lithography, and
other means of reproducing words in a visible form; references to agreements and
other contractual instruments include all 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."
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SERVICING AGREEMENT
ARTICLE III
THE RECEIVABLES
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF FIACC.
FIACC makes the following representations and warranties as to
the Receivables on which the Servicer may rely in accepting the responsibilities
of Servicer hereunder and on which the Collateral Agent may also rely. Such
representations and warranties speak (i) as of the execution and delivery of
this Agreement, but shall survive such execution and delivery, and (ii) as of
the Effective Time of the sale of each Receivable to FIACC under the Purchase
Agreement.
(i) CHARACTERISTICS OF RECEIVABLES. Each Receivable (a) shall have
been originated in the United States of America, shall have been fully and
properly executed by the parties thereto, shall have been purchased by
FIACC from First Investors and shall have been validly assigned to FIACC;
(b) shall have created a valid, subsisting and enforceable first priority
security interest in favor of First Investors in the Financed Vehicle,
which security interest has been assigned by First Investors to FIACC, (c)
shall contain customary and enforceable provisions such that the rights
and remedies of the holder thereof shall be adequate for realization
against the collateral of the benefits of the security, (d) shall provide
for level monthly payments (provided that the payment in the first or last
month in the life of the Receivable may be different from the level
payment) that fully amortize the Amount Financed by maturity and yield
interest at the Annual Percentage Rate, (e) is an "Eligible Receivable" as
defined in the Security Agreement, and (f) in the case of a Precomputed
Receivable, shall provide for, in the event that such contract is prepaid,
a prepayment that fully pays the principal balance and includes a full
month's interest, in the month of prepayment, at the Annual Percentage
Rate.
(ii) COMPLIANCE WITH LAW. Each Receivable and the sale of the
Financed Vehicle complies with all requirements of applicable federal,
State, and local laws, and regulations thereunder, including, without
limitation, usury laws, the Federal Truth-in-Lending Act, the Equal Credit
Opportunity Act, the Fair Credit Reporting Act, the Fair Debt
Collection-Practices Act, the Federal Trade Commission Act, the
Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B and
Z, the Texas Consumer Credit Code and State adaptations of the National
Consumer Act and of the Uniform
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SERVICING AGREEMENT
Consumer Credit Code, and other consumer credit laws and equal credit
opportunity and disclosure laws.
(iii) BINDING OBLIGATION. Each Receivable shall represent the
genuine, legal, valid, and binding payment obligation in writing of the
Obligor, enforceable by the holder thereof in accordance with its terms.
(iv) NO GOVERNMENT OBLIGOR. None of the Receivables shall be due
from the United States of America or any State or from any agency,
department, or instrumentality of the United States of America or any
State.
(v) SECURITY INTEREST IN FINANCED VEHICLE. Immediately prior to the
sale, assignment, and transfer thereof under the Purchase Agreement, each
Receivable shall be secured by a validly perfected first priority Lien and
security interest in the Financed Vehicle in favor of First Investors as
secured party or all necessary and appropriate actions shall have been
commenced that would result in the valid perfection of a first priority
security interest in the Financed Vehicle in favor of First Investors as
secured party.
(vi) RECEIVABLES IN FORCE. No Receivable shall have been satisfied,
subordinated, or rescinded, nor shall any Financed Vehicle have been
released from the lien granted by the related Receivable in whole or in
part.
(vii) NO WAIVER. No provision of a Receivable shall have been
waived.
(viii) NO AMENDMENTS. No Receivable shall have been amended such
that the number of the Obligor's Scheduled Payments in the case of a
Precomputed Receivable or the number of originally scheduled due dates in
the case of a Simple Interest Receivable shall have been increased.
(ix) NO DEFENSES. No right of rescission, cancellation, claim, set
off, counterclaim, or defense shall have been asserted or threatened with
respect to any Receivable, nor does any Obligor have any right or
rescission or cancellation, claim, defense, set off or counterclaim of any
kind with respect to any Receivable.
(x) NO LIENS. To the best of FIACC's knowledge, no liens or claims
shall have been filed for work, labor, or materials relating to a Financed
Vehicle that shall be liens
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SERVICING AGREEMENT
prior to, or equal or coordinate with, the security interest in the
Financed Vehicle granted by the Obligor.
(xi) NO DEFAULT. Except for payment delinquencies permitted for
Eligible Receivables as defined in the Security Agreement, no default,
breach, violation, or event permitting acceleration under the terms of
such Receivable shall have occurred; and no continuing condition that with
notice or the lapse of time would constitute a default, breach, violation
or event permitting acceleration under the terms of such Receivable shall
have arisen; and FIACC shall not waive any of the foregoing.
(xii) INSURANCE. First Investors, in accordance with its customary
procedures, shall have determined that the Obligor has obtained or agreed
to obtain physical damage insurance.
(xiii) TITLE. It is the intention of FIACC that each transfer and
assignment contemplated by the Purchase Agreement constitute a sale of the
Receivables from First Investors to FIACC and that the beneficial interest
in and title to the Receivables shall not be part of the debtor's estate
in the event of the filing of a bankruptcy petition by or against First
Investors under any bankruptcy law. No Receivable has been sold,
transferred, assigned or pledged by First Investors or FIACC to any Person
other than the pledge to the Collateral Agent pursuant to the Security
Agreement. FIACC has good and marketable title to each Receivable free and
clear of all Liens, encumbrances, security interests, and rights of others
except for the security interest of the Collateral Agent under the
Security Agreement.
(xiv) LAWFUL ASSIGNMENT. No Receivable shall have been originated
in, or shall be subject to the laws of, any jurisdiction under which the
sale, transfer, and assignment of such Receivable from First Investors to
FIACC under the Purchase Agreement, or the pledge of such Receivable by
FIACC to the Collateral Agent under the Security Agreement, shall be
unlawful, void, or voidable.
(xv) ALL FILINGS MADE. All filings (including, without limitation,
UCC filings) necessary in any jurisdiction to give the Collateral Agent a
first perfected security interest in each Receivable shall have been made
as of the relevant Effective Time.
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SERVICING AGREEMENT
(xvi) ONE ORIGINAL. There shall be only one original executed copy
of each Receivable, which shall be delivered to the Servicer in accordance
with Section 3.03.
(xvii) CHATTEL PAPER. Each Receivable constitutes "chattel paper"
under the UCC.
(xviii) MATURITY. Each Receivable shall have an original maturity of
not more than 60 months.
(xix) LOCATION OF OFFICE. The principal executive office of FIACC is
located in Houston, Texas.
(xx) AGENT FOR SERVICE. The agent for service for FIACC shall be CT
Corporation System, 811 Dallas Avenue, Houston, Texas 77002.
(xxi) NO INSOLVENT OBLIGORS. As of the Effective Time with respect
to any Receivable, no Obligor on such Receivable is shown on the
Receivable Files to be the subject of a bankruptcy proceeding.
SECTION 3.02. REPURCHASE UPON BREACH.
FIACC and the Servicer shall each promptly inform the other, in writing,
with a copy to the Collateral Agent, upon the discovery of any breach of FIACC's
representations and warranties made pursuant to Section 3.01. Unless the breach
shall have been cured by the second Ending Date following such written notice,
FIACC shall exercise its rights under the Purchase Agreement to cause First
Investors to repurchase any Receivable materially and adversely affected by the
breach. FIACC shall remit the Purchase Amount, in the manner specified in
Section 5.04. For purposes of this Section 3.02, the Purchase Amount of a
Receivable which is not consistent with the warranty pursuant to Section
3.01(i)(d) or (f) shall include such additional amount as shall be necessary to
provide the full amount of interest as contemplated therein. The sole remedy of
the Servicer with respect to a breach of any representation and warranty
pursuant to Section 3.01 shall be to require FIACC to enforce First Investors'
obligation to FIACC to repurchase such Receivables pursuant to the Purchase
Agreement.
SECTION 3.03. DESIGNATION AND REMOVAL OF RECEIVABLES.
Prior to the transfer by FIACC of a security interest in Receivables to
the Collateral Agent pursuant to the Security Agreement, FIACC shall give
written notice of such transfer to the Servicer (i) identifying all such
Receivables, and (ii) specifying
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SERVICING AGREEMENT
the date on which such transfer is to be effected. On or prior to such date, the
Servicer shall clearly and unambiguously mark all computer tapes, files and
records to indicate that such security interest has been transferred to the
Collateral Agent as of the indicated date.
In the event that any Receivable should cease to be a Receivable by reason
of the release of the security interest of the Collateral Agent therein, FIACC
shall promptly give notice thereof to the Servicer and the Collateral Agent (i)
identifying such Receivable, and (ii) specifying the date as of which the same
shall cease to be a Receivable for purposes of this Agreement. The Servicer
shall promptly modify its computer tapes, files and records accordingly.
SECTION 3.04. CUSTODY OF RECEIVABLE FILES.
To assure uniform quality in servicing the Receivables and to reduce
administrative costs, FIACC, upon the execution and delivery of this Agreement,
hereby revocably appoints the Servicer, and the Servicer hereby accepts such
appointment, to act as the agent of the Collateral Agent as custodian (such
appointment being subject to revocation to the extent provided in Section 3.08)
of the following documents or instruments which shall be delivered to the
Servicer, as custodian for the Collateral Agent, with respect to each
Receivable:
1. Agreement of Obligor to provide physical damage insurance
or binder
2. Original application for title with lien of First Investors
disclosed therein which has been presented, together with tender of filing fee,
to designated agent of the Texas Department of Transportation in accordance with
Section 501.113 of Texas Certificate of Title Act (or equivalent documents under
other applicable state laws)
a. White Slip or original certificate of title (or
other title documents under applicable state law)
b. Letter of Guaranty
3. Original sales contract/security agreement evidencing the Receivable
signed by Obligor and the original of any assumption agreement or
any modification, extension or refinancing agreement
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SERVICING AGREEMENT
4. Factory invoice (new car) or loan to value evaluation (used car)
5. Original credit application (signed by Obligor)
6. Credit Bureau reports
7. Insurance score sheet
8. GAP and VSI insurance certificate
9. Credit life & disability insurance certificate, application or
policy to the extent obtained by the Obligor
10. (a) Assignment and Power of Attorney, transferring title from First
Investors to FIACC
(b) Power of Attorney in favor of Servicer from First
Investors
11. Equifax report
12. Any and all other documents that Servicer shall maintain on file, in
accordance with customary servicing practices, pertaining to such
Receivable or the related Obligor or Financed Vehicle.
The Servicer shall not be responsible for the custody and maintenance of
any of the foregoing documents that have not been delivered to it or obtained by
the Servicer in the course of servicing the Receivables pursuant to this
Agreement.
SECTION 3.05. DUTIES OF SERVICER AS CUSTODIAN.
(a) SAFEKEEPING. The Servicer shall hold the Receivable Files
on behalf of the Collateral Agent and maintain such accounts,
records, and computer systems pertaining to each Receivable File in
a manner that is consistent with customary servicing practices. In
performing its duties as custodian the Servicer shall act with
reasonable care, using that degree of skill and attention that the
Servicer exercises with respect to the receivable files relating to
comparable automotive receivables that the Servicer services for
itself or others. The Servicer shall promptly report to the
Collateral Agent any material failure on its part to hold the
Receivable Files and maintain its accounts, records,
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SERVICING AGREEMENT
and computer systems as herein provided and promptly take
appropriate action to remedy any such failure, it being understood
that the Servicer shall have no responsibility with respect to
Receivable Files (or any portion thereof) not delivered to the
Servicer. Nothing herein shall be deemed to require an initial
review or any periodic review by the Collateral Agent of the
Receivable Files.
(b) MAINTENANCE OF AND ACCESS TO RECORDS. The Servicer shall
maintain each Receivable File at one of its offices specified in
Exhibit "B" to this Agreement, or at such other office in the United
States as shall be specified to FIACC and the Collateral Agent by
written notice delivered promptly, but in no event later than 20
days after any change in location. The Servicer may temporarily move
individual Receivable Files or any portion thereof without notice as
necessary to conduct collection and other servicing activities in
accordance with its customary practices and procedures. The Servicer
shall make available to FIACC and the Collateral Agent a list of
locations of the Receivable Files, and the related accounts, records
and computer systems maintained by the Servicer at such times as
FIACC or the Collateral Agent shall reasonably request.
(c) RELEASE OF DOCUMENTS. Upon written instruction from the
Collateral Agent, the Servicer shall release any Receivable File to
the Collateral Agent, the Collateral Agent's agent, or the
Collateral Agent's designee, as the case may be, at such place or
places as the Collateral Agent may designate, as soon as
practicable. The Servicer shall not be responsible for any
Receivable File so released until such time, if any, as it has been
returned to the Servicer.
SECTION 3.06. INSTRUCTIONS; AUTHORITY TO ACT.
To the extent that the Servicer is authorized or required under this
Agreement to act upon the instructions of the Collateral Agent with respect to
the custody of the Receivable Files, the Servicer shall be deemed to have
received proper instructions with respect to the Receivable Files upon its
receipt of written instructions signed by a Collateral Agent Officer.
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SERVICING AGREEMENT
SECTION 3.07. CUSTODIAN'S INDEMNIFICATION.
The Servicer as custodian shall indemnify FIACC, for any breach of its
obligations as custodian hereunder, to the extent specified in Section 7.02.
SECTION 3.08. EFFECTIVENESS AND TERMINATION.
The Servicer's appointment as custodian shall become effective as of the
date hereof and shall continue in full force and effect until such time as all
of the rights and obligations of the Servicer shall have been terminated in
accordance with the provisions of this Agreement.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.01. DUTIES OF SERVICER.
The Servicer as agent for FIACC (to the extent provided herein) shall
manage, service, administer and make collections on the Receivables with
reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to automotive receivables that it services for itself or
others. The Servicer's duties shall include, to the extent specified herein,
collection and posting of payments, responding to inquiries of Obligors on such
Receivables, investigating delinquencies, sending payment coupons to Obligors,
accounting for collections, and furnishing monthly statements to FIACC and the
Collateral Agent as provided herein. Subject to the provisions of Section 4.02,
the Servicer shall follow its customary standards, policies, and procedures in
performing its duties as Servicer. Without limiting the generality of the
foregoing, and subject to the provisions of Section 4.06, the Servicer is
authorized and empowered to execute and deliver, on behalf of itself or FIACC
any and all instruments of satisfaction or cancellation, or partial or full
release or discharge, and all other comparable instruments, with respect to the
Financed Vehicles securing the Receivables. If the Servicer, in its sole
discretion, determines that it is necessary or desirable to commence a legal
proceeding to enforce a Receivable, the Servicer shall consult with FIACC to
determine whether to commence such a legal proceeding. If the Servicer and FIACC
agree to commence legal proceedings with respect to such Receivable, then (i)
the costs and expenses (including, without limitation, any legal fees) incurred
in connection with such legal proceeding shall be borne by FIACC, and (ii) the
Servicer may reimburse itself for its reasonable out-of-pocket expenses incurred
in connection with
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SERVICING AGREEMENT
such legal proceedings prior to depositing any recoveries received by the
Servicer from such legal proceeding in the Collection Account pursuant to
Section 5.02. FIACC shall furnish the Servicer with any powers of attorney,
including any requisite power of attorney from First Investors, and any other
documents reasonably necessary or appropriate to enable the Servicer to carry
out its servicing and administrative duties hereunder.
SECTION 4.02. COLLECTION OF RECEIVABLE PAYMENTS.
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 comparable automotive receivables that it services for itself or
others. The Servicer may in its discretion grant extensions, rebates or
adjustments on a Receivable or waive any late payment charge or any other fees
that may be collected in the ordinary course of servicing a Receivable
consistent with its customary servicing procedures. The foregoing
notwithstanding, no extension of a monthly payment shall be granted with respect
to a Receivable unless the first six consecutive monthly payments were made in
accordance with the terms of such Receivable, and in no event (i) shall more
than two extensions of monthly payments with respect to a Receivable be granted
during any 12-month period, or (ii) shall the total extensions of monthly
payments granted over the term of a Receivable exceed one such extension for
every 12 months in the stated term of such Receivable. Upon the written
instructions of FIACC, the Servicer shall take the necessary action to reduce
either the outstanding principal balance or the Annual Percentage Rate of any
Receivable as specified in such instructions.
SECTION 4.03. REALIZATION UPON RECEIVABLES.
The Servicer shall use its reasonable best efforts, consistent with its
customary servicing procedures, to repossess or otherwise convert the ownership
of the Financed Vehicle securing any Receivable as to which the Servicer shall
have determined that no satisfactory arrangement can be made for collection of
payments, and in the case of the repossession of Financed Vehicles, the Servicer
shall use its best efforts to remarket the repossessed Financed Vehicles in the
same manner that the Servicer remarkets its own financed vehicles. The foregoing
shall be subject to the provision that, in any case in which the Financed
Vehicle shall have suffered damage, the Servicer shall not expend funds in
connection with the repair or the repossession of such Financed Vehicle unless
it shall determine in good faith and in its
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SERVICING AGREEMENT
reasonable discretion that such repair and/or repossession will increase the
Liquidation Proceeds by an amount greater than the amount of such expenses;
provided, however, that the Servicer shall incur no liability hereunder if such
repair and/or possession does not, in fact, increase the Liquidation Proceeds by
an amount greater than the amount of such expenses. Notwithstanding any
provision of this Agreement to the contrary, the Servicer shall not be obligated
to institute any action for repossession through judicial proceedings unless it
shall determine in good faith and in its reasonable discretion that such action
would increase the Liquidation Proceeds by an amount greater than the amount of
expenses incurred by it in connection with such proceeding; provided, however,
that the Servicer shall incur no liability hereunder if such proceeding does
not, in fact, increase the Liquidation Proceeds by an amount greater than the
amount of expenses incurred by it in connection with such proceeding. The
Servicer may reimburse itself for its reasonable out-of-pocket expenses incurred
in connection with the repossession or disposition of a Financed Vehicle prior
to depositing any Liquidation Proceeds with respect thereto in the Collection
Account pursuant to Section 5.02.
With respect to any Receivable, the Obligor of which has filed bankruptcy,
if it is not referred by the Servicer to outside legal counsel the Servicer
shall be entitled to receive a one time fee of $250 in respect of such
Receivable, and, if it is so referred, the Servicer shall be entitled to
reimbursement of the fees and expenses of such counsel. The Servicer shall have
no obligation under the Agreement to take any action to realize upon any
recourse to Dealers.
SECTION 4.04. INSURANCE AND TITLE TRACKING.
The Servicer, in accordance with its customary servicing procedures, shall
monitor the contractual requirement that each Obligor shall maintain physical
damage insurance covering the Financed Vehicle as of the execution date of the
Receivable. The Servicer shall track the expirations and cancellations of
insurance policies required to be maintained by Obligors and shall send reminder
notices to Obligors whose insurance policies have expired and default letters to
Obligors who fail to obtain or maintain required coverages. The Servicer shall
notify the Collateral Agent and FIACC on a monthly basis of Obligors who have
failed to obtain or maintain such coverages. The Servicer may subcontract such
insurance services to a third party.
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SERVICING AGREEMENT
FIACC shall undertake to cause the proper Certificates of Title issued by
the Texas Department of Transportation, or the equivalent certificates or
registrations issued by the appropriate authorities of other States, if
applicable, to reflect FIACC (or First Investors) as the lienholder thereon with
respect to any Financed Vehicle covered by a Receivable. The Servicer shall
establish procedures to track and verify the receipt of proper Certificates of
Title issued by the Texas Department of Transportation, or the equivalent
certificates or registrations issued by the appropriate authorities of other
States if applicable, reflecting FIACC (or First Investors) as the lienholder
thereon with respect to any Financed Vehicle covered by a Receivable. In the
event that the Servicer does not receive such documentation with respect to any
Receivable, within 120 days after the Servicer enters such Receivable into its
tracking system, the Servicer shall promptly notify FIACC and the Collateral
Agent by delivery of a Notice of Title Discrepancy in the form attached hereto
as Exhibit "C". The Servicer shall have no obligations hereunder to cause any
such Certificate or Title or equivalent certificates to reflect FIACC (or First
Investors) as the lienholder thereon with respect to any Financed Vehicle
covered by a Receivable.
SECTION 4.05. MAINTENANCE OF SECURITY INTERESTS IN FINANCED
VEHICLES.
The Servicer shall, in accordance with its customary servicing procedures,
cooperate with FIACC in taking such steps as are necessary to maintain
perfection of the security interest created by each Receivable in the related
Financed Vehicle. FIACC hereby authorizes the Servicer to take such steps as are
necessary to reperfect such security interest on behalf of FIACC in the event of
the relocation of a Financed Vehicle or for any other reason. Without limiting
the foregoing, the Servicer shall take such steps as are necessary to assure
that any remarketing of repossessed Financed Vehicles under consignment
arrangements with dealers or other third parties are effected in such manner as
to assure that the priority of the security interest of FIACC therein is not
impaired.
Notwithstanding the foregoing or any other provision of this Agreement, the
Servicer shall have no obligation to effect any change in the notation of First
Investors as the lienholder on any title documents relating to the Financed
Vehicles or to cause any such title documents to be endorsed or delivered to
FIACC.
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SERVICING AGREEMENT
SECTION 4.06. COVENANTS OF SERVICER.
Except as may otherwise be required by any applicable law, rule,
regulation, order or decree, the Servicer shall not (i) impair FIACC's ownership
of the Receivables, or (ii) release the Financed Vehicle securing any such
Receivable from the security interest granted by such Receivable, in whole or in
part, except upon the expiration of twenty days following (a) payment in full by
the Obligor thereunder, (b) repossession, or (c) payment of final settlement
with a physical damage insurance carrier.
SECTION 4.07. PURCHASE OF RECEIVABLES UPON BREACH.
The Servicer and FIACC shall promptly inform the other, in writing (with a
copy to the Collateral Agent), upon the discovery of any breach of Section 4.06.
Unless the breach shall have been cured by the second Ending Date following such
discovery (or, at the Servicer's election, the first following Ending Date), the
Servicer shall purchase the related Receivable. In consideration of the purchase
of such Receivable, the Servicer shall remit the Purchase Amount in the manner
specified in Section 5.04. The sole remedy of FIACC with respect to a breach of
Section 4.06 shall be to require the Servicer to purchase Receivables pursuant
to this Section 4.07.
SECTION 4.08. SERVICING COMPENSATION.
The Servicing Fee with respect to each Collection Period, which shall be
withheld by the Servicer from collections on Receivables prior to remittance to
the Collection Account as provided in Section 5.02, shall equal (i) $12.45 for
each Receivable being serviced by the Servicer as of the tenth day of such
Collection Period, plus (ii) $13.25 for each new Receivable which is initially
received by the Servicer for servicing during such Collection Period, plus (iii)
$75.00 for each Financed Vehicle repossessed and remarketed.
SECTION 4.09. SERVICER'S MONTHLY REPORTS.
On or before the tenth day after each Ending Date, the Servicer shall
deliver to FIACC and the Collateral Agent the following reports with respect to
the preceding Collection Period: (i) a Servicer's Certificate substantially in
the form of Exhibit "D" hereto (on which the "principal portion of amount
collected", the "interest portion of amount collected" and the "aggregate
principal balance of the Receivables as of the Ending Date" shall be computed in
accordance with the Simple Interest Method), (ii) a Trial Balance and
Collections Report substantially in the form of Exhibit "D-1" hereto, and (iii)
a Monthly Delinquency Report substantially in the form of Exhibit "D-2" hereto.
Such reports
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SERVICING AGREEMENT
shall be presumed correct and accurate unless, within thirty days after receipt
thereof, FIACC or the Collateral Agent delivers to the Servicer by registered or
certified mail, written objection specifying the error or errors contained in
such reports, in which event the Servicer's sole liability shall be to make
appropriate adjustments correcting such error.
SECTION 4.10. NOTICE OF DEFAULT.
The Servicer shall deliver to FIACC and the Collateral Agent 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
Event of Default under Section 8.01. FIACC shall deliver to the Collateral Agent
and the Servicer, 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 FIACC Event of Default under Section 8.02.
SECTION 4.11. SERVICER EXPENSES.
Except as otherwise reimbursable hereunder, the Servicer shall be required
to pay all expenses incurred by it in connection with its activities hereunder,
including taxes imposed on the Servicer.
SECTION 4.12. APPOINTMENT OF SUB-SERVICER.
The Servicer may at any time appoint a Sub-servicer to perform any of the
duties or obligations of the Servicer hereunder; provided, however, that such
appointment shall not relieve the Servicer of its responsibility with respect to
such duties and obligations. All Sub-servicing arrangements will be upon such
terms and conditions as are not inconsistent with this Agreement. The fees and
expenses of the Sub-servicer shall be as agreed between the Servicer and its
Sub-servicer from time to time and FIACC shall have no responsibility therefor.
SECTION 4.13. PROCESSING OF CLAIMS UNDER CREDIT INSURANCE.
The Servicer will administer the filings of claims under the policies of
Credit Insurance by filing the appropriate notices related to claims as well as
claims with the respective carriers or their authorized agents all in accordance
with the terms of such policies. The Servicer shall use reasonable efforts to
file such notices and claims on a timely basis after obtaining knowledge of the
events giving rise to such claims, subject to the servicing
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SERVICING AGREEMENT
standard set forth in Section 4.01; provided, however, that the Servicer shall
have no responsibility in connection with the resolution of any dispute that may
arise between FIACC and such carriers with respect to the settlement of any such
claims.
The Servicer shall not be required to pay any premiums or, other than
administering the filing of claims and performing reporting requirements
specified in the insurance policies, in connection with filing such claims
perform any obligations of the named insured under any of the foregoing
insurance policies, and shall not be required to institute any litigation or
proceeding or otherwise enforce the obligations of any insurer thereunder.
Notwithstanding any provision to the contrary in this Agreement, the Servicer
shall not be responsible to FIACC (i) for any act, or omission to act, done in
order to comply with the requirements or satisfy any provisions of any of the
foregoing insurance policies or (ii) for any act, absent willful misconduct or
gross negligence, or omission to act done in compliance with this Agreement. In
the case of any inconsistency between this Agreement and the terms of any
insurance policy, the Servicer shall comply with the latter.
SECTION 4.14. AGENCY STATUS.
The parties hereto agree and acknowledge that to the extent General
Electric Capital Corporation is named in any title document, UCC financing or
continuation statement, insurance policy, Receivable document or court document
as a lienholder, secured party, loss payee, owner of a Financed Vehicle or
agent, or in another similar capacity, General Electric Capital Corporation is
acting in such capacity as agent of FIACC for the sole purpose of facilitating
the servicing of the Receivables and has no equitable interest in the
Receivables, except such as it may have by virtue of its purchase of a
Receivable pursuant to this Agreement.
SECTION 4.15. INSPECTION.
At the request of FIACC or the Collateral Agent and upon reasonable
notice, the Servicer shall make available to authorized representatives of FIACC
or the Collateral Agent for inspection and copying, during regular business
hours, the computer disks, tapes or other records reflecting the payment status
and history, and related information maintained by the Servicer in accordance
with its customary servicing procedures, with respect to the Receivables.
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ARTICLE V
DISTRIBUTIONS
SECTION 5.01. COLLECTION ACCOUNT.
FIACC represents to the Servicer that, contemporaneously with the execution
of this Agreement, the Collateral Agent shall establish the Collection Account
in accordance with the requirements of Section 4.1(b) of the Security Agreement.
SECTION 5.02. COLLECTIONS.
The Servicer shall remit, within ten Business Days (but in no event more
than 14 calendar days) after each Ending Date, to the Collection Account all
payments by or on behalf of the Obligors (other than Purchased Receivables), and
all Liquidation Proceeds, both as collected during the Collection Period. The
Servicer shall remit such collections to the Collection Account in immediately
available funds and from the time of receipt of any of the amounts specified in
this paragraph until deposit thereof in the Collection Account, the Servicer
shall not be required to segregate such amounts from other funds held by it.
Except as otherwise provided in Section 5.04, the foregoing requirements for
deposit in the Collection Account shall be exclusive, it being understood and
agreed that, without limiting the generality of the foregoing, the Servicer
shall withhold from the Collection Account, (a) the Servicing Fee as provided in
Section 4.08 and (b) any reimbursable expenses incurred by the Servicer in
repossessing a Financed Vehicle pursuant to Section 4.03 or commencing a legal
proceeding to enforce a Receivable pursuant to Section 4.01. Moreover, the
Servicer may instruct the Collateral Agent to withdraw from the Collection
Account and deliver to the Servicer (a) amounts deposited in error, and (b)
chargebacks attributable to errors in posting, returned checks, or rights of
offset for amounts that should not have been paid or that must be refunded as a
result of a successful claim or defense under bankruptcy or similar laws.
SECTION 5.03. APPLICATION OF COLLECTIONS.
All collections for the Collection Period shall be applied by the Servicer
as follows:
With respect to each Receivable (other than a Purchased Receivable),
payments by or on behalf of the Obligor shall be applied first, in the case of
Precomputed Receivables, to the Scheduled Payment and, in the case of Simple
Interest Receivables, to be applied to interest and principal in accordance with
the
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Simple Interest Method. With respect to Precomputed Receivables,
any remaining excess shall be applied to prepay the Precomputed
Receivable.
SECTION 5.04. ADDITIONAL DEPOSITS.
The Servicer and FIACC, as the case may be, shall deposit or cause to be
deposited in the Collection Account the aggregate Purchase Amount required to be
paid by it pursuant to Section 4.07 or 3.02, respectively, with respect to
Purchased Receivables. All such deposits shall be made in immediately available
funds on the Business Day next following the purchase of the Purchased
Receivable.
SECTION 5.05. NET DEPOSITS.
As an administrative convenience, the Servicer will be permitted to make
the deposit of collections on the Receivables for or with respect to the
Collection Period net of distributions to be made to the Servicer, in accordance
with the express terms hereof, with respect to the Collection Period or amounts
payable to or withdrawable by the Servicer pursuant to this Agreement. The
Servicer, however, will account to FIACC and the Collateral Agent as if all
deposits, distributions and transfers were made individually.
ARTICLE VI
FIACC
SECTION 6.01. REPRESENTATIONS OF FIACC.
FIACC makes the following representations on which the Servicer may rely
in accepting the responsibilities of Servicer hereunder and on which the
Collateral Agent may also rely. The representations speak as of the execution
and delivery of the Agreement and shall survive such execution and delivery.
(i) ORGANIZATION AND GOOD STANDING. FIACC is 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 own its properties and to conduct its
business as such properties shall be currently owned and such business is
presently conducted, and had at all relevant times, and has, power, authority,
and legal right to acquire and own the Receivables.
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SERVICING AGREEMENT
(ii) DUE QUALIFICATION. FIACC is duly qualified to do business as a
foreign corporation and is in good standing under the laws of, and shall have
obtained all necessary licenses and approvals in, all jurisdictions in which the
ownership or lease of property or the conduct of its business shall require such
qualifications, licenses or approvals.
(iii) POWER AND AUTHORITY. FIACC 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 has been duly authorized by FIACC by
all necessary corporate action.
(iv) BINDING OBLIGATION. This Agreement constitutes a legal, valid, and
binding obligation of FIACC enforceable in accordance with its terms, subject as
to the enforcement of remedies (x) to applicable bankruptcy, insolvency,
reorganization, moratorium, and other similar laws affecting creditors' rights
generally and (y) to general principles of equity (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity or at law).
(v) NO VIOLATION. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof will not conflict with,
result in any breach of any of the terms and provisions of, nor constitute (with
or without notice or lapse of time) a default under, the certificate of
incorporation or bylaws of FIACC, or any indenture, agreement, or other
instrument to which FIACC is a party or by which it shall be bound; nor result
in the creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement, or other instrument (other than as
contemplated by this Agreement); nor violate any law or any order, rule, or
regulation applicable to FIACC of any court or of any federal or state
regulatory body, administrative agency, or other governmental instrumentality
having jurisdiction over FIACC or its properties and no consent, approval,
authorization, order, registration or qualification of or with any court,
regulatory authority or other governmental agency or body is required for the
execution and delivery of this Agreement, or the consummation of the
transactions contemplated thereby.
(vi) NO PROCEEDINGS. There are no proceedings or investigations pending,
or, to FIACC's best knowledge, threatened, before any court, regulatory body,
administrative agency, or other governmental instrumentality having jurisdiction
over FIACC or its properties: A) asserting the invalidity of this Agreement; B)
seeking to prevent the consummation of any of the transactions contemplated by
this Agreement, or C) seeking any determination or ruling that might materially
and adversely affect the performance
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SERVICING AGREEMENT
by FIACC of its obligations under, or the validity or
enforceability, of this Agreement.
SECTION 6.02. LIABILITY OF FIACC; INDEMNITIES.
FIACC shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by FIACC under this Agreement.
(i) FIACC shall indemnify, defend and hold harmless the Servicer and its
respective officers, directors, agents and employees from and against any taxes
that may at any time be asserted against the Servicer with respect to the
Receivables, including any sales, gross receipts, general corporation, tangible
personal property, privilege, or license taxes and costs and expenses in
defending against the same.
(ii) FIACC shall indemnify, defend and hold harmless the Servicer, its
parents, subsidiaries, affiliates and the directors, officers, employees,
partners, agents, successors and assigns of each of such companies from and
against any claim, action, loss, damage, penalty, fine, cost, expense or other
liability, including all court costs and reasonable attorneys' fees incurred in
enforcing this indemnity or defending any claim or action, directly or
indirectly resulting from or arising out of the transactions contemplated by
this Agreement or FIACC's performance of its duties under this Agreement,
including without limitation, any misrepresentation or breached warranty under
this Agreement.
(iii) FIACC shall indemnify, defend and hold harmless the Servicer and any
director, officer, employee or agent of the Servicer from and against any and
all costs, expenses, losses, claims, damages and liabilities incurred in
connection with any legal action or proceeding relating to this Agreement, other
than any such cost, expense, loss, claim, damage or liability for which the
Servicer provides an indemnity pursuant to Section 7.02 or for which the
Servicer is otherwise entitled to reimbursement under this Agreement.
Indemnification and rights of reimbursement under this Section 6.02 shall
survive the termination of this Agreement and shall include, without limitation,
reasonable fees and expenses of counsel and any other expenses incurred in
connection with preparing for, investigating or defending any such claims,
damages, losses or liabilities, which FIACC shall reimburse as incurred by the
indemnified party. If FIACC shall have made any indemnity payments pursuant to
this Section and the recipient thereafter
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SERVICING AGREEMENT
shall collect any of such amounts from others, the recipient shall repay such
amounts to FIACC, without interest.
SECTION 6.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF FIACC.
Any Person (a) into which FIACC may be merged or consolidated, (b) which
may result from any merger or consolidation to which FIACC shall be a party, or
(c) which may succeed to the properties and assets of FIACC substantially as a
whole, which Person in any of the foregoing cases executes an agreement or
assumption to perform every obligation of FIACC under this Agreement, shall be
the successor to FIACC hereunder without the execution or filing of any document
or any further act by any of the parties to this Agreement; provided, however,
that (i) the Collateral Agent has consented in writing to such consolidation,
merger or succession, (ii) immediately after giving effect to such transaction,
no representation or warranty made pursuant to Section 3.01 shall have been
breached and no FIACC Event of Default, and no event that, after notice or lapse
of time, or both, would become a FIACC Event of Default shall have happened and
be continuing, (iii) FIACC shall have delivered to the Collateral Agent an
Officer's Certificate and an Opinion of Counsel, addressed to the Collateral
Agent , each stating that such consolidation, merger, or succession and such
agreement or assumption comply with this Section 6.03 and that all conditions
precedent, if any, provided for in this Agreement relating to such transaction
have been complied with and (iv) FIACC shall have delivered to the Collateral
Agent an Opinion of Counsel, addressed to the Collateral Agent, either (A)
stating that, in the opinion of such counsel, all financing statements and
continuation statements and amendments thereto have been executed and filed that
are necessary fully to preserve and protect the security interest of the
Collateral Agent in the Receivables, and reciting the details of such filings,
or (B) stating that in the opinion of such Counsel, no such action shall be
necessary to preserve and protect such interest. Notwithstanding anything herein
to the contrary, the execution of the foregoing agreement or assumption and
compliance with clauses (i), (ii), (iii) and (iv) above shall be conditions to
the consummation of the transactions referred to in clauses (a), (b) or (c)
above.
SECTION 6.04. LIMITATION ON LIABILITY OF FIACC AND OTHERS.
FIACC and any director or officer or employee or agent of FIACC 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. FIACC shall
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SERVICING AGREEMENT
not be under any obligation to appear in, prosecute, or defend any legal action
that shall not be incidental to its obligations under this Agreement, and that
in its opinion may involve it in any expense or liability.
ARTICLE VII
THE SERVICER
SECTION 7.01. REPRESENTATIONS OF SERVICER.
The Servicer makes the following representations to FIACC as of the
execution and delivery of this Agreement, which representations shall survive
such execution and delivery:
(i) ORGANIZATION AND GOOD STANDING. The Servicer is duly organized and
validly existing as a corporation in good standing under the laws of the state
of its incorporation, with power and authority to own its properties and to
conduct its business as such properties are currently owned and such business is
presently conducted, and had at all relevant times, and shall have, power,
authority, and legal right to service the Receivables and to hold the Receivable
Files as custodian as provided herein.
(ii) DUE QUALIFICATION. The Servicer is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary material
licenses and approvals in all jurisdictions in which the servicing of the
Receivables as required by this Agreement shall require such qualifications.
(iii) POWER AND AUTHORITY. The Servicer shall have 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 shall have been duly
authorized by the Servicer by all necessary corporate action.
(iv) BINDING OBLIGATION. This Agreement shall constitute a legal, valid,
and binding obligation of the Servicer enforceable in accordance with its terms
subject as to the enforcement of remedies (x) to applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting
creditors' rights generally and (y) to general principles of equity (regardless
of whether the enforcement of such remedies is considered in a proceeding in
equity or at law).
(v) NO VIOLATION. The consummation by the Servicer of the transactions
contemplated by this Agreement and the fulfillment by the Servicer of the terms
hereof shall not conflict with, result in
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SERVICING AGREEMENT
any breach of any of the terms and provisions of, nor constitute (with or
without notice or lapse of time) a material default under, the articles of
incorporation or bylaws of the Servicer, or any indenture, agreement, or other
instrument to which the Servicer is a party or by which it shall be bound; nor
violate any law or any 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 its
properties, which conflict, breach, default or violation would have a material
and adverse affect on the ability of the Servicer to perform its obligations
hereunder.
(vi) NO PROCEEDINGS. There are no proceedings or investigations relating
to the Servicer pending, or to the Servicer's knowledge, threatened, before any
court, regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Servicer or its properties: A)
asserting the invalidity of this Agreement, B) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement, or C)
seeking any determination or ruling that might materially and adversely affect
the performance by the Servicer of its obligations under, or the validity or
enforceability of, this Agreement.
SECTION 7.02. INDEMNITIES OF SERVICER.
The Servicer shall indemnify, defend, and hold harmless FIACC, its
directors, officers, employees, agents, successors and assigns, respectively,
from and against any claim, action, loss, damage, penalty, fine, cost, expense
or other liability, including all court costs and reasonable attorneys' fees
incurred in enforcing this indemnity or defending any claim or action, directly
resulting from any breach of any representation or warranty made by the Servicer
in this Agreement or directly resulting from the Servicer's willful misconduct,
bad faith or gross negligence. The right of indemnification provided hereby
shall survive the termination of this Agreement. If the Servicer shall have made
any 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 7.03. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SERVICER.
Any Person (a) into which the Servicer may be merged or consolidated (b)
which may result from any merger or consolidation to which the Servicer shall be
a party, or (c) which may succeed to
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SERVICING AGREEMENT
the properties and assets of the Servicer substantially as a whole, which Person
executed an agreement of assumption to perform every obligation of the Servicer
hereunder, shall be the successor to the Servicer under this Agreement without
further act on the part of any of the parties to this Agreement; provided
however, that immediately after giving effect to such transaction, no Servicer
Event of Default specified in clauses (iii) or (iv) of Section 8.01, and no
event which, after notice or lapse of time, or both, would become such a
Servicer Event of Default shall have happened and be continuing.
SECTION 7.04. LIMITATION ON LIABILITY OF SERVICER AND OTHERS.
The Servicer shall be liable in accordance herewith only to the extent of
the obligations specifically undertaken by the Servicer under this Agreement.
Neither the Servicer nor any of the directors or officers or employees or
agents of the Servicer shall be under any liability to FIACC, except as
expressly provided under this Agreement, for any action taken or for refraining
from the taking of any action pursuant to this Agreement or any action taken in
good faith or for errors in judgment; provided, however, that this provision
shall not protect the Servicer or any such person against any liability that
would otherwise be imposed by reason of willful misconduct, bad faith or gross
negligence in the performance of duties under this Agreement. The Servicer and
any director or officer or employee or agent of the Servicer may 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. The Servicer
shall not be liable for an error of judgment made in good faith by a Servicing
Employee, unless it shall be proved that the Servicer shall have been grossly
negligent in ascertaining the pertinent facts. The Servicer and any director,
officer, employee or agent of the Servicer may consult with counsel respecting
any matters arising under this Agreement and shall be protected in relying in
good faith on the advice of such counsel.
Except as expressly provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute, or defend any legal action that
shall not be incidental to its duties to service the Receivables in accordance
with this Agreement; provided, however, that the Servicer may undertake any
reasonable action that it may deem necessary or desirable in respect of this
Agreement and the rights and duties of the parties to this Agreement. In such
event, the reasonable legal expenses and costs of such action and any liability
resulting therefrom shall be
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SERVICING AGREEMENT
expenses, costs, and liabilities of FIACC and the Servicer shall be entitled to
be reimbursed therefor. Rights of reimbursement under this Section 7.04 shall
survive the termination of this Agreement.
ARTICLE VIII
DEFAULT
SECTION 8.01. SERVICER EVENTS OF DEFAULT.
If any one of the following events ("Servicer Events of Default") shall
occur and be continuing:
(i) Any failure by the Servicer to deposit or transfer into the Collection
Account any proceeds or payment, required to be so deposited or transferred
under the terms of this Agreement that shall continue unremedied for a period of
three Business Days after written notice of such failure is received by the
Servicer from FIACC or the Collateral Agent; or
(ii) Failure on the part of the Servicer duly to observe or to perform in
any material respect any other covenants or agreements of the Servicer set forth
in this Agreement, or the material breach by the Servicer or any of its
representations and warranties set forth in this Agreement, which failure or
breach shall (a) materially and adversely affect the rights of FIACC and (b)
continue unremedied for a period of 30 days after the date on which written
notice of such failure or breach, requiring the same to be remedied, shall have
been given to the Servicer by FIACC or the Collateral Agent; or
(iii) The entry of a decree or order by a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a
conservator, receiver, or liquidator for the Servicer in any insolvency,
readjustment of debt, marshalling of assets and liabilities, or similar
proceedings, or for the winding up or liquidation of its affairs; or
(iv) The consent by the Servicer to the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, marshalling of
assets and liabilities, or similar proceedings of or relating to the Servicer or
of or relating substantially to all of its property; or the Servicer shall admit
in writing its inability to pay its debts generally as they become due, file a
petition to avail itself of any applicable insolvency or reorganization statute,
make an assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations;
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then, and in each and every case, so long as a Servicer Event of Default shall
not have been cured, FIACC may with the written consent of the Collateral Agent
and shall at the written direction of the Collateral Agent, terminate all of the
rights and obligations of the Servicer under this Agreement, subject to accrued
compensation, rights of reimbursement and the survival of indemnity and
limitation on liability provisions, by notice in writing to the Servicer sent by
certified mail, postage prepaid, or by hand delivery. Upon the Servicer's
receipt of notice of termination pursuant to this Section 8.01, the Servicer
shall continue to perform its functions as Servicer under this Agreement until
the earlier of (i) the appointment of a successor Servicer pursuant to Section
8.03, and (ii) 45 days from its receipt of such notice of termination.
SECTION 8.02. FIACC EVENTS OF DEFAULT.
If any one of the following events ("FIACC Events of Default") shall occur
and be continuing:
(i) FIACC fails to timely remit to the Servicer any Servicing Fees
due and payable and such failure continues for a period of 30 days from
the date of the mailing or delivery of an invoice from the Servicer to
FIACC and the Collateral Agent; or
(ii) If any representation or warranty of FIACC in this Agreement is
false, incorrect or misleading in any material respect, or if any
representation or warranty contained in any reports, documents,
certificates or other papers delivered to the Servicer from time to time
is false, incorrect or misleading in any material respect, and is not
cured within 30 days of written notice thereof to FIACC; or
(iii) If FIACC breaches or fails to perform or observe any
obligation or condition to be performed or observed by it under this
Agreement in any material respect and such breach or default is not cured
within 30 days after the Servicer has given FIACC written notice demanding
that such breach or default be cured;
then, and in each and every case, so long as such FIACC Event of Default shall
not have been cured, the Servicer may terminate all of its rights and
obligations as Servicer under this Agreement by notice in writing to FIACC and
the Collateral Agent sent by certified mail, postage prepaid, or by hand
delivery. Upon FIACC's and the Collateral Agent's receipt of notice of
termination pursuant to this Section 8.02, the Servicer shall not be required
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to accept for servicing any new Receivables created thereafter (although the
Servicer shall accept Receivables which were, at the time such notice was
received, in transit to the Servicer), but the Servicer shall continue to
perform its functions as Servicer under this Agreement until the earlier of (i)
the appointment of a successor Servicer (approved in writing by the Collateral
Agent) pursuant to Section 8.03 and (ii) 120 days from the delivery of notice of
termination to FIACC in accordance with the preceding sentence; provided,
however, that if the Servicer has exercised its termination right hereunder on
the basis of a FIACC Event of Default not involving the failure by FIACC to
timely pay Servicing Fees or expenses reimbursable to the Servicer hereunder,
then the Servicer shall, after the expiration of such 120 day period, continue
(for so long as the Servicing Fees and reimbursable expenses are being timely
paid) to service Receivables then being serviced until (a) the appointment of a
successor Servicer acceptable to the Collateral Agent, or (b) such Receivables
are fully paid or otherwise liquidated; and, provided further, that the Servicer
shall not be obligated to continue to service any such Receivables to the extent
such FIACC Event of Default impairs or prevents the Servicer from performing its
obligations hereunder.
SECTION 8.03. APPOINTMENT OF SUCCESSOR.
(a) In the event that FIACC (with the written consent or at the written
direction of the Collateral Agent) should exercise its rights of termination
under Section 8.01, or the Servicer should exercise its rights of termination
under Section 8.02, FIACC (with the consent of the Collateral Agent, which will
not be unreasonably withheld) shall appoint a successor Servicer, which shall
accept its appointment by a written assumption in form acceptable to FIACC and
the Collateral Agent; provided, however, that if a Termination Event shall have
occurred under the Security Agreement and the indebtedness secured thereby shall
have been accelerated pursuant to the terms thereof, the Collateral Agent shall
have the right to appoint a successor Servicer.
(b) Upon appointment, the successor Servicer shall be the successor in all
respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on the predecessor Servicer, and shall be entitled to the Servicing Fee
and all of the rights granted to the predecessor Servicer hereunder. Upon the
appointment of a successor Servicer in accordance herewith, all authority and
power of the Servicer under this Agreement, whether with respect to the
Receivables or otherwise, shall, without further action, pass to and be vested
in such successor Servicer; and, without limitation, FIACC is hereby authorized
and empowered to execute and deliver, on behalf of the predecessor Servicer, as
attorney-in-fact or otherwise, any and all documents and other
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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 related documents,
or otherwise. The predecessor Servicer shall cooperate with the successor
Servicer and FIACC in effecting the termination of the responsibilities and
rights of the predecessor Servicer under this Agreement, including the transfer
to the successor Servicer for administration by it of all cash amounts that
shall at the time be held by the predecessor Servicer for deposit, or shall
thereafter be received with respect to a Receivable, and delivery of the
Receivable Files. All reasonable costs and expenses (including attorneys' fees)
incurred in connection with transferring the Receivable Files to the successor
Servicer and amending this Agreement to reflect such succession as Servicer
shall be paid by (i) the predecessor Servicer in the case of termination under
Section 8.01, or (ii) FIACC in the case of termination under Section 8.02.
SECTION 8.04. PAYMENT OF COMPENSATION; REPAYMENT OF ADVANCES.
If the identity of the Servicer shall change, the predecessor Servicer
shall be entitled to receive all accrued unpaid Servicing Fees, and other
accrued and unpaid compensation described in Section 4.08 hereof, in each case
through the date it performs its duties hereunder. The predecessor Servicer
shall also be entitled to receive reimbursement for all outstanding reimbursable
expenses.
SECTION 8.05. WAIVER OF PAST DEFAULTS.
FIACC (with the written consent of the Collateral Agent) may waive any
default by the Servicer in the performance of its obligations hereunder and its
consequences, except a default in making any required deposits to the Collection
Account in accordance with this Agreement. Upon any such waiver of a past
default, such default shall cease to exist, and any Event of Default 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.
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SERVICING AGREEMENT
ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.01. AMENDMENT.
This Agreement may be amended, modified or supplemented only by a written
instrument executed by FIACC (with the written consent of the Collateral Agent)
and the Servicer. Both FIACC and the Servicer shall promptly notify the
Collateral Agent in writing of any such amendment, modification or supplement.
SECTION 9.02 TERM.
The term of this Agreement shall begin on the date hereof and shall end on
October 31, 2000; provided, however, that the Servicer may terminate the
acceptance of new Receivables upon written notice to FIACC (with a copy to the
Collateral Agent and all others entitled to notice under the Security Agreement)
upon a failure of the parties to reach agreement on or before October 31 of any
year as to the terms of Section 4.08 hereof, which may be the subject of annual
negotiation during the term hereof upon the written request of either party on
or before June 30 of any year. Upon the expiration of the term of this Agreement
on October 31, 2000, or upon the earlier exercise by the Servicer of its right
to terminate the acceptance of new Receivables as above provided, (i) the
Servicer's obligation to accept new Receivables shall terminate on the December
31 next following, and (ii) Servicer shall be obligated to service only the
Receivables being serviced hereunder as of such December 31 until the same are
fully paid or otherwise liquidated whereupon, after payment of all Servicing
Fees and other amounts due Servicer hereunder, this Agreement shall terminate.
In the event that the Servicer exercises its right to terminate the
acceptance of new Receivables pursuant to this Section 9.02 prior to the
expiration of the term of this Agreement, within 30 days thereafter FIACC, at
its discretion (with the written consent of the Collateral Agent), may terminate
this Agreement upon written notice to the Servicer, such termination to be
effective on the December 31 next following. If notice of termination is given
by FIACC pursuant to the preceding sentence, (i) the Servicer shall cooperate
with FIACC and any successor servicer (acceptable to the Collateral Agent) in
effecting the termination of the responsibilities and rights of the Servicer
under this Agreement, including the transfer to FIACC or the successor servicer
for administration by it of all cash amounts that shall at the time be held by
the Servicer for deposit, or shall thereafter be received with respect to a
Receivable, and
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delivery of the Receivable Files, and (ii) upon payment of all Servicing Fees
and other amounts due Servicer hereunder, this Agreement shall terminate.
SECTION 9.03. PROTECTION OF THE RECEIVABLES.
(a) FIACC shall execute and file such financing statements and cause to be
executed and filed such continuation statements, all in such manner and in such
places as may be required by law fully to preserve, maintain, and protect the
first priority security interest of the Collateral Agent in the Receivables.
FIACC shall deliver (or cause to be delivered) to the Collateral Agent file
stamped copies of, or filing receipts for, any document filed as provided above,
as soon as available following such filing.
(b) In the event FIACC or the Servicer shall change its name, identity, or
corporate structure in any manner that would, could, or might make any financing
statement or continuation statement filed in accordance with paragraph (a) above
seriously misleading within the meaning of Section 9.402 of the UCC, it shall
give the Servicer and the Collateral Agent (in the case of FIACC) or FIACC and
the Collateral Agent (in the case of the Servicer) written notice thereof and
shall promptly file appropriate amendments to all previously filed financing
statements or continuation statements.
(c) FIACC and the Servicer shall have an obligation to give the Servicer
and the Collateral Agent (in the case of FIACC) and FIACC and the Collateral
Agent (in the case of the Servicer) at least 60 days' prior written notice of
any relocation of its principal executive office and shall promptly file any
amendment or new financing statements required under the UCC. The Servicer shall
at all times maintain each office from which it shall service Receivables,
within the United States of America.
(d) The Servicer shall maintain records for each Receivable, which records
shall include (i) the original principal balance, the amount of each payment
applied to the Receivable, the date of each payment, the interest rate and the
current outstanding gross balance, and (ii) a reconciliation between payments or
recoveries on (or with respect to) the Receivable and the amounts from time to
time deposited in the Collection Account in respect of the Receivable. The
Servicer's obligation to perform its servicing duties and maintain accurate
records hereunder is limited to the accuracy and availability of the information
the Servicer receives in the Receivable Files delivered to the Servicer
hereunder.
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SECTION 9.04. GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES UNDER THIS
AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 9.05. NOTICES.
All demands, notices and communications upon or to FIACC, the Servicer or
the Collateral Agent under this Agreement shall be in writing, personally
delivered or mailed by certified mail, return receipt requested, and shall be
deemed to have been duly given upon receipt (a) in the case of FIACC, to 675
Bering, Suite 710, Houston, Texas 77057, Attention: President, (b) in the case
of the Servicer, to General Electric Capital Corporation, Automobile
Securitization, 600 Hart Road, Barrington, Illinois 60010, and (c) in the case
of the Deal Agent or the Collateral Agent, , to First Union Capital Markets
Corp., One First Union Center, 301 South College Street, TW-6, Charlotte, North
Carolina 28288-0610, Attention: Mr. Bennett Cole, Director, or in each case at
such other address as shall be designated in a written notice to the parties to
this Agreement.
SECTION 9.06. 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, to the
extent permitted by law, 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.
SECTION 9.07. ASSIGNMENT.
Notwithstanding anything to the contrary contained herein, except as
provided in Section 9.08 below and in the provisions of this Agreement
concerning the appointment of a successor Servicer, this Agreement may not be
assigned by FIACC or the Servicer without the prior written consent of the other
and the Collateral Agent.
SECTION 9.08. COLLATERAL ASSIGNMENT.
Notwithstanding anything to the contrary contained herein, the Servicer
(i) acknowledges and consents that FIACC has assigned its rights hereunder and
its interests herein to the Collateral Agent as collateral pursuant to the
Security Agreement, and (ii) agrees
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SERVICING AGREEMENT
to attorn to the Collateral Agent in the event of its succession to the rights
and interests of FIACC hereunder pursuant to the provisions of the Security
Agreement.
SECTION 9.09. GOODWILL.
FIACC hereby acknowledges that substantial goodwill exists with respect to the
trade names "GE", "GECC", "GE Capital Corporation" and "General Electric Capital
Corporation" in the United States and that the Servicer's reputation in the
financial services business is of substantial importance to the operations of
the Servicer. Accordingly, FIACC agrees to use its best efforts to conduct its
activities under this Agreement in a manner that will not detract from the
Servicer's goodwill and standing and will not otherwise damage the reputation or
the Servicer.
SECTION 9.10. CERTAIN PROCEEDINGS.
Until one year and one day have expired since the payment in full of all
obligations of FIACC under or in connection with the Facility, the Servicer
hereby agrees that it will not file any involuntary petition or otherwise
institute any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceeding or other proceeding under any federal or state bankruptcy or similar
law against FIACC.
SECTION 9.11. LIMITED RECOURSE OF THE SERVICER.
Any provisions of this Agreement to the contrary notwithstanding, the sole
recourse of the Servicer for the payment of monies due and owing to it under the
terms of this Agreement shall be as follows:
(i) with respect to Servicing Fees as provided in Section 4.08 and
reimbursable expenses as provided in Sections 4.01 and 4.03, the Servicer's
right to withhold the same from deposit in the Collection Account as provided in
Section 5.02 shall be exclusive of any other recourse, and no other amounts
shall be withheld by the Servicer from deposits in the Collection Account
pursuant to the terms of Sections 5.02 and 5.05;
(ii) with respect to any other amounts of any nature that may become due
and owing by FIACC to the Servicer hereunder (including, without limitation, any
Purchase Amount payable by FIACC pursuant to Section 3.02 and any amounts
payable by FIACC pursuant to its indemnification obligations under Section
6.02), such amounts shall be payable only from funds available to FIACC as a
result of distributions to it from the Collection Account in accordance with the
priorities set forth in the Security Agreement; and
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(iii) except as expressly provided in clause (i) of this Section 9.11, the
Servicer hereby irrevocably and unconditionally waives all rights of setoff that
it may have under contract (including this Agreement), applicable law or
otherwise with respect to any funds or monies of FIACC at any time held by or in
the possession of the Servicer.
SECTION 9.12. THIRD PARTY BENEFICIARY.
Each of the parties agrees that the Collateral Agent is a third-party
beneficiary of this Agreement.
IN WITNESS WHEREOF, FIACC and the Servicer have caused this Servicing
Agreement to be duly executed by their respective officers as of the day and
year first above written.
FIRST INVESTORS AUTO CAPITAL
CORPORATION
By: /s/ BENNIE H. DUCK
Bennie H. Duck, Vice President
GENERAL ELECTRIC CAPITAL CORPORATION
By: [SIGNATURE ILLEGIBLE]
Title: Manager - Doc
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SERVICING AGREEMENT