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SERVICING AGREEMENT
among
FIRSTCITY AUTO RECEIVABLES L.L.C.
as the Borrower
FIRSTCITY SERVICING CORPORATION OF CALIFORNIA
as the Servicer
FIRSTCITY CONSUMER LENDING CORPORATION
and
CONTITRADE SERVICES L.L.C.
as the Lender
---------------------------
Dated as of April 30, 1998
---------------------------
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS..........................................................1
SECTION 1.1 DEFINITIONS.......................................1
SECTION 1.2 USAGE OF TERMS....................................3
SECTION 1.3 CALCULATIONS......................................4
SECTION 1.4 SECTION REFERENCES................................4
SECTION 1.5 NO RECOURSE.......................................4
ARTICLE II ADMINISTRATION AND SERVICING OF CONTRACTS...........................4
SECTION 2.1 DUTIES OF THE SERVICER............................4
SECTION 2.2 COLLECTION OF CONTRACT PAYMENTS; MODIFICATION
AND AMENDMENT OF CONTRACTS; LOCKBOX AGREEMENTS..................5
SECTION 2.3 REALIZATION UPON CONTRACTS........................6
SECTION 2.4 INSURANCE.........................................7
SECTION 2.5 MAINTENANCE OF SECURITY INTERESTS IN VEHICLES.....8
SECTION 2.6 COVENANTS, REPRESENTATIONS AND WARRANTIES OF
SERVICER........................................................8
SECTION 2.7 INDEMNIFICATION..................................10
SECTION 2.8 SERVICING FEE; PAYMENT OF CERTAIN EXPENSES BY
SERVICER.......................................................11
SECTION 2.9 SERVICER'S CERTIFICATE...........................11
SECTION 2.10 ANNUAL INDEPENDENT ACCOUNTANTS' REPORT...........11
SECTION 2.11 ACCESS TO CERTAIN DOCUMENTATION AND
INFORMATION REGARDING CONTRACTS................................12
SECTION 2.12 PROVISION OF INFORMATION.........................12
SECTION 2.13 FIDELITY BOND....................................12
ARTICLE III LIABILITY AND INDEMNITIES.........................................12
SECTION 3.1 LIABILITY OF SERVICER; INDEMNITIES...............12
SECTION 3.2 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, THE SERVICER..................................13
SECTION 3.3 LIMITATION ON LIABILITY OF SERVICER AND
OTHERS.........................................................14
SECTION 3.4 DELEGATION OF DUTIES.............................14
SECTION 3.5 SERVICER NOT TO RESIGN...........................14
ARTICLE IV SERVICER TERMINATION EVENTS........................................15
SECTION 4.1 SERVICER TERMINATION EVENT.......................15
SECTION 4.2 CONSEQUENCES OF A SERVICER TERMINATION EVENT.....16
SECTION 4.3 APPOINTMENT OF SUCCESSOR.........................16
SECTION 4.4 WAIVER OF PAST DEFAULTS..........................17
ARTICLE V MISCELLANEOUS PROVISIONS............................................17
SECTION 5.1 AMENDMENT........................................17
SECTION 5.2 GOVERNING LAW....................................17
SECTION 5.3 SEVERABILITY OF PROVISIONS.......................17
SECTION 5.4 ASSIGNMENT.......................................17
SECTION 5.5 WAIVER...........................................17
SECTION 5.6 COUNTERPARTS.....................................18
SECTION 5.7 NOTICES..........................................18
SECTION 5.8 SUCCESSORS AND ASSIGNS...........................19
EXHIBIT A Form Of Servicer's Certificate
EXHIBIT B Form Of Servicer's Daily Report
THIS SERVICING AGREEMENT (this "Agreement"), dated as of April
30, 1998, among FIRSTCITY AUTO RECEIVABLES L.L.C., a Delaware limited liability
company (the "Borrower"), FIRSTCITY SERVICING CORPORATION OF CALIFORNIA, a
California corporation (the "Servicer"), FIRSTCITY CONSUMER LENDING CORPORATION,
a Texas corporation ("FC CONSUMER"), CONTITRADE SERVICES L.L.C., a Delaware
limited liability company, as Lender (the "Lender").
WHEREAS, the Borrower is entering into a Warehouse Credit
Agreement dated as of April 30, 1998 (the "Credit Agreement") with the Lender,
providing for the making of Advances by the Lender secured by the Contracts,
WHEREAS, the Servicer has agreed to service the Contracts,
pursuant to the terms of this Agreement,
NOW, THEREFORE, in consideration of the premises and the
mutual agreements herein contained, the Borrower, FC Consumer, the Servicer and
the Lender.
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.
As used in this Agreement, defined terms have their
respective meanings as set forth in the Definitions List attached to the Credit
Agreement, or as set forth below:
Accountants' Report: The report of a firm of nationally
recognized independent accountants described in Section 2.10 hereof.
(a) Basic Servicing Fee: With respect to any Collection
Period, the fee payable to the Servicer for services rendered during such
Collection Period, which shall be equal to one-twelfth of the Basic Servicing
Fee Rate multiplied by the sum of the Principal Balances for all Contracts
(other than any Contract which was 120 or more days delinquent as of the first
day of such Collection Period) as of the first day of the Collection Period.
Basic Servicing Fee Rate: 3.00% per annum, payable monthly at
one-twelfth of the annual rate for each contract originated by National Auto
Funding Corporation and FirstCity Funding, and 1.00% per annum for each contract
originated by FC Consumer Finance Corporation.
Blanket Policy: Shall have the meaning set forth in Section
2.4(c) hereof.
Collected Funds: With respect to any Determination Date, the
amount of funds in the Collection Account representing collections on the
Contracts during the related Collection Period, including all Recoveries
collected during the related Collection Period.
Collection Account: The account designated as the Collection
Account in, and which is established and maintained pursuant to, the Paying
Agent Agreement.
Collection Records: Computer generated records relating to
collection efforts, payment histories and account activity with respect to the
Contracts.
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Cram Down Loss: With respect to a Contract, if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the amount owed on a Contract or otherwise modifying or restructuring
the scheduled payments to be made on a Contract, an amount equal to the excess
of the Outstanding Contract Balance of such Contract immediately prior to such
order over the Outstanding Contract Balance of such Contract as so reduced. A
"Cram Down Loss" shall be deemed to have occurred on the date of issuance of
such order.
Dealer: A seller of new or used automobiles or light trucks
that originated one or more of the Contracts and sold the respective Contract,
directly or indirectly, to the Borrower.
Determination Date: With respect to a Collection Period, the
tenth day following the end of such Collection Period.
Electronic Ledger: The electronic master record of the retail
installment sales contracts or installment loans of the Servicer.
Eligible Servicer: FirstCity Servicing Corporation of
California, or another Person which at the time of its appointment as Servicer,
(i) is servicing a portfolio of motor vehicle retail installment sales contracts
and/or motor vehicle installment loans, (ii) is legally qualified and has the
capacity to service the Contracts, (iii) has demonstrated the ability
professionally and competently to service a portfolio of motor vehicle retail
installment sales contracts and/or motor vehicle installment loans similar to
the Contracts with reasonable skill and care, and (iv) is qualified and entitled
to use, pursuant to a license or other written agreement, and agrees to maintain
the confidentiality of, the software which the Servicer uses in connection with
performing its duties and responsibilities under this Agreement or otherwise has
available software which is adequate to perform its duties and responsibilities
under this Agreement.
Independent Accountants: Shall have the meaning set forth in
Section 2.10(a) hereof.
Insurance Policies: All insurance policies covering physical
damage, theft, mechanical breakdown or similar event with respect to a Vehicle
or loss of such Vehicle or credit life or credit disability insurance with
respect to payments due on a Contract or otherwise benefiting the holder of the
Contracts.
Lien Certificate: With respect to a Vehicle, an original
certificate of title, certificate of lien or other notification issued by the
Registrar of Titles of the applicable state to a secured party which indicates
that the lien of the secured party on the Vehicle is recorded on the original
certificate of title. In any jurisdiction in which the original certificate of
title is required to be given to the Obligor, the term "Lien Certificate" shall
mean only a certificate or notification issued to a secured party.
Lockbox Provider: Fiserv Corporation or any other depository
institution named by the Servicer and acceptable to the Lender and FC Consumer.
Opinion of Counsel: A written opinion of counsel reasonably
acceptable to the Lender, which opinion is acceptable in form and substance to
the Lender.
Paying Agent: Chase Bank of Texas, National Association,
acting in its capacity as paying agent under the Paying Agent Agreement.
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Paying Agent Agreement: The Paying Agent Agreement dated as of
April 30, 1998 among Borrower, Lender and the Paying Agent.
Program Administration Manual: The Program Administration
Manual in effect as of the date hereof, as modified from time to time.
Recoveries: With respect to any Collection Period, the
aggregate amount of all cash received by Borrower net of expenses during such
Collection Period in respect of any Contract which is a Liquidated Contract.
Registrar of Titles: With respect to any state, the
governmental agency or body responsible for the registration of, and the
issuance of certificates of title relating to, motor vehicles and liens thereon.
Servicer: FirstCity Servicing Corporation of California, a
California corporation.
Servicing Procedures Manual: The servicing manual previously
delivered to the Lender, as amended from time to time.
Servicing Records: All records and data maintained in
electronic form by the Servicer with respect to the Contracts, including the
following with respect to each Contract: the account number; the originating
Dealer; Obligor name; Obligor address; Obligor home phone number; Obligor
business phone number; original Outstanding Contract Balance; original term;
Annual Percentage Rate; current Outstanding Contract Balance; current remaining
term; origination date; first payment date; final scheduled payment date; next
payment due date; date of most recent payment; new/used classification;
Collateral description; days currently delinquent; number of contract extensions
(months) to date; amount of Scheduled Payment; current Insurance Policy
expiration date; and past due late charges.
Servicer's Certificate: With respect to each Determination
Date, a certificate, completed by and executed on behalf of the Servicer, in
accordance with Section 2.9 hereof, substantially in the form attached hereto as
Exhibit A hereto.
Simple Interest Method: The method of allocating a fixed level
payment on an obligation between principal and interest, pursuant to which the
portion of such payment that is allocated to interest is equal to (a) the
product of the fixed rate of interest on such obligation multiplied by the
period of time (expressed as a fraction of a year, based on the actual number of
days in the calendar month and 365 days in the calendar year) elapsed since the
preceding payment under the obligation was made plus (b) accrued and unpaid
interest.
Supplemental Servicing Fee: With respect to any Collection
Period, all administrative fees, expenses and charges paid by or on behalf of
Obligors, including late fees, prepayment fees and liquidation fees collected on
the Contracts during such Collection Period which have been approved by FC
Consumer for payment to the Servicer.
Vehicle: A new or used automobile or light truck, van or
mini-van together with all accessories thereto, securing or purporting to secure
an Obligor's indebtedness under a Contract.
Section 1.2 Usage of Terms.
With respect to all terms used in this Agreement, the
singular includes the plural and the plural the singular; words importing any
gender include the
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other gender; 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 terms "include" or "including" mean "include
without limitation" or "including without limitation."
Section 1.3 Calculations.
All calculations of the amount of the Basic Servicing Fee
shall be made on the basis of a 360-day year consisting of twelve 30-day months.
Section 1.4 Section References.
All references to Articles, Sections, paragraphs,
subsections, exhibits and schedules shall be to such portions of this Agreement
unless otherwise specified.
Section 1.5 No Recourse.
No recourse may be taken, directly or indirectly, under this
Agreement or any certificate or other writing delivered in connection herewith
or therewith, against any stockholder, officer, or director, as such, of the
Borrower, FC Consumer, the Servicer or the Lender or of any such stockholder,
officer or director of any predecessor or successor of any of them.
ARTICLE II
ADMINISTRATION AND SERVICING OF CONTRACTS
Section 2.1 Duties of the Servicer.
(a) The Servicer is hereby authorized to act as agent for
the Borrower and in such capacity shall manage, service, administer and make
collections on the Contracts, and perform the other actions required by the
Servicer under this Agreement. The Servicer agrees that its servicing of the
Contracts shall be carried out in accordance with customary and usual procedures
of institutions which service motor vehicle retail installment sales contracts
and, to the extent more exacting, the degree of skill and attention that the
Servicer exercises from time to time with respect to all comparable motor
vehicle receivables that it services for itself or others in accordance with the
Program Administration Manual as in effect at the current time for servicing all
its other comparable motor vehicle receivables or, if not addressed therein,
then in the Servicing Procedures Manual. The Servicer's duties shall include,
without limitation, collection and posting of all payments, responding to
inquiries of Obligors on the Contracts, investigating delinquencies, sending
payment statements to Obligors, reporting any required tax information to
Obligors, policing the Collateral, complying with the terms of the Lockbox
Agreement, accounting for collections, providing the Collateral Agent a daily
report containing the information necessary to calculate the Borrowing Base and
furnishing monthly and annual statements to the Collateral Agent and the Lender
with respect to distributions, monitoring the status of Insurance Policies with
respect to the Vehicles, providing information as required hereby, cooperating
with the reasonable requests of the Lender and performing the other duties
specified herein. The Servicer shall also administer and enforce all rights and
responsibilities of the holder of the Contracts provided for in the Dealer
Assignments and the Insurance Policies, to the extent that such Dealer
Assignments and Insurance Policies relate to the Contracts, the Vehicles or the
Obligors.
To the extent consistent with the standards, policies and
procedures otherwise required hereby, the Servicer shall follow its customary
standards, policies, and procedures and shall have full power and authority,
acting alone, to do any and all things in connection with such managing,
servicing, administration and collection that it may deem necessary or
desirable.
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Without limiting the generality of the foregoing, the Servicer is
hereby authorized and empowered by the Borrower to execute and deliver, on
behalf of the Borrower, any and all instruments of satisfaction or cancellation,
or of partial or full release or discharge, and all other comparable
instruments, with respect to the Contracts and with respect to the Vehicles;
provided, however, that notwithstanding the foregoing, the Servicer shall not,
except pursuant to an order from a court of competent jurisdiction, release an
Obligor from payment of any unpaid amount under any Contract or waive the right
to collect the unpaid balance of any Contract from the Obligor, except that the
Servicer may forego collection efforts if the amount reasonably expected to be
recovered by the Servicer (net of the Servicer's expenses) is de minimis and if
it would forego collection in accordance with its customary procedures. The
Servicer is hereby authorized to commence, in its own name or in the name of the
Borrower, a legal proceeding to enforce a Contract pursuant to Section 2.3
hereof or to commence or participate in any other legal proceeding (including,
without limitation, a bankruptcy proceeding) relating to or involving a
Contract, an Obligor or a Vehicle. If the Servicer commences or participates in
such a legal proceeding in its own name, the Collateral Agent shall thereupon be
deemed to have automatically assigned such Contract to the Servicer solely for
purposes of commencing or participating in any such proceeding as a party or
claimant, and the Servicer is authorized and empowered by the Borrower to
execute and deliver in the Servicer's name any notices, demands, claims,
complaints, responses, affidavits or other documents or instruments in
connection with any such proceeding.
Section 2.2 Collection of Contract Payments; Modification and Amendment of
Contracts; Lockbox Agreements.
(a) Consistent with the standards, policies and procedures
required by this Agreement, the Servicer shall make reasonable efforts to
collect all payments called for under the terms and provisions of the Contracts
as and when the same shall become due, and shall follow such collection
procedures as it follows with respect to all comparable automobile receivables
that it services for itself or others and otherwise act with respect to the
Contracts, the Dealer Assignments, the Insurance Policies and the other
Collateral in such manner as will, in the reasonable judgment of the Servicer,
maximize the amount to be received by the Borrower with respect thereto. The
Servicer is authorized in its discretion to waive any prepayment charge, late
payment charge or any other similar fees that may be collected in the ordinary
course of servicing any Contract.
(b)(i) The Servicer may at any time agree to a modification or
amendment of a Contract in order to (x) change the Obligor's regular due date to
a date within 30 days in which such due date occurs or (y) re-amortize the
scheduled payments on the Contract following a partial prepayment of principal.
(ii) The Servicer may grant payment extensions on, or other
modifications or amendments to, a Contract (including those modifications
permitted by Section 2.2(b) hereof) in accordance with its customary procedures
attached hereto as Exhibit B if the Servicer believes in good faith that such
extension, modification or amendment is necessary to avoid a default on such
Contract, will maximize the amount to be received by the Borrower with respect
to such Contract, and is otherwise in the best interests of the Borrower.
Any Contract which is modified pursuant to this Section is
referred to herein as a "Modified Contract."
(c) The Servicer shall use its best efforts to cause Obligors
to make all payments on the Contracts, whether by check or through the Automated
Clearing House (ACH) system, to be made directly to one or more Lockbox
Providers, acting as agent for the Lender pursuant to a Lockbox Agreement.
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The Servicer shall use its best efforts to cause any Lockbox Provider to deposit
all payments on the Contracts in the Lockbox Account on the Business Day of
receipt, and to cause all amounts credited to the Lockbox Account on account of
such payments to be transferred to the Collection Account, no later than the
second Business Day after receipt of such payments. The Lockbox Account shall be
the demand deposit account #0221688385 held by the Wells Fargo Bank in the name
of the Servicer, or at the request of the Lender an Eligible Deposit Account
satisfying clause (i) of the definition thereof.
The Servicer has notified each Obligor with respect to the
Contracts serviced by the Servicer on the Closing Date to make such payments
thereafter directly to the Lockbox Provider.
Notwithstanding any Lockbox Agreement, or any of the
provisions of this Agreement relating to the Lockbox Agreement, the Servicer
shall remain obligated and liable to the Borrower and the Lender for servicing
and administering the Contracts and the other Collateral in accordance with the
provisions of this Agreement without diminution of such obligation or liability
by virtue thereof.
In the event the Servicer shall for any reason no longer be
acting as such, a successor Servicer shall thereupon assume all of the rights
and, from the date of assumption, all of the obligations of the outgoing
Servicer under the Lockbox Agreement. The successor Servicer shall not be liable
for any acts, omissions or obligations of the Servicer prior to such succession.
In such event, the successor Servicer shall be deemed to have assumed all of the
outgoing Servicer's interest therein and to have replaced the outgoing Servicer
as a party to each such Lockbox Agreement to the same extent as if such Lockbox
Agreement had been assigned to the successor Servicer, except that the outgoing
Servicer shall not thereby be relieved of any liability or obligations on the
part of the outgoing Servicer to the Lockbox Provider under such Lockbox
Agreement. The outgoing Servicer shall, upon request of the Borrower, but at the
expense of the outgoing Servicer, deliver to the successor Servicer all
documents and records relating to each such Agreement and an accounting of
amounts collected and held by the Lockbox Provider and otherwise use its best
efforts to effect the orderly and efficient transfer of any Lockbox Agreement to
the successor Servicer. In the event that the Lender elects to change the
identity of the Lockbox Provider, the Servicer, at its expense, shall cause the
Lockbox Provider to deliver, at the direction of the Lender, to the Collateral
Agent or a successor Lockbox Provider, all documents and records relating to the
Contracts and all amounts held (or thereafter received) by the Lockbox Provider
(together with an accounting of such amounts) and shall otherwise use its best
efforts to effect the orderly and efficient transfer of the lockbox arrangements
and the Servicer shall notify the Obligors to make payments to the Lockbox
Account established by the successor.
(d) The Servicer shall remit all payments by or on behalf of
the Obligors received directly by the Servicer to the Lockbox Account, without
deposit into any intervening account as soon as practicable, but in no event
later than the Business Day after receipt thereof.
Section 2.3 Realization Upon Contracts.
(a) Consistent with the standards, policies and procedures
required by this Agreement, the Program Administration Manual and the Servicing
Procedures Manual, the Servicer shall use its best efforts to repossess (or
otherwise comparably convert the ownership of) and liquidate any Vehicle
securing a Contract with respect to which the Servicer has determined that
payments thereunder are not likely to be resumed, as soon as is practicable
after default on such Contract.
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The Servicer is authorized to follow such customary practices
and procedures as it shall deem necessary or advisable, consistent with the
standard of care required by Section 2.1 hereof, which practices and procedures
may include reasonable efforts to realize upon any recourse to Dealers, selling
the related Vehicle at public or private sale, the submission of claims under an
Insurance Policy and other actions by the Servicer in order to realize upon such
a Contract. The foregoing is subject to the provision that in any case in which
the Vehicle shall have suffered damage, the Servicer shall not expend funds in
connection with any repair or towards the repossession of such Vehicle unless it
shall determine in its discretion that such repair and/or repossession shall
increase the proceeds of liquidation of the related Contract by an amount
greater than the amount of such expenses. All amounts received upon liquidation
of a Vehicle shall be remitted directly by the Servicer to the Lockbox Account
without deposit into any intervening account as soon as practicable, but in no
event later than the Business Day after receipt thereof. The Servicer shall be
entitled to recover all reasonable expenses incurred by it in the course of
repossessing and liquidating a Vehicle, which expenses shall be properly
documented by the Servicer and reviewed by FC Consumer, but only out of the cash
proceeds of such Vehicle, any deficiency obtained from the Obligor or any
amounts received from the related Dealer, as set forth in Section 2.03(a)(iii)
of the Paying Agent Agreement to the extent of such expenses. The Servicer shall
recover such reasonable expenses based on the information contained in the
Servicer's Certificate delivered on the related Determination Date. The Servicer
shall pay on behalf of the Borrower any personal property taxes assessed on
repossessed Vehicles; the Servicer shall be entitled to reimbursement of any
such tax from Recoveries with respect to such Contract, as set forth in Section
2.03(a)(iii) of the Paying Agent Agreement.
(b) If the Servicer elects to commence a legal proceeding to
enforce a Dealer Assignment, the act of commencement shall be deemed to be an
automatic assignment from the Collateral Agent to the Servicer of the rights
under such Dealer Assignment for purposes of collection only. If, however, in
any enforcement suit or legal proceeding, it is held that the Servicer may not
enforce a Dealer Assignment on the grounds that it is not a real party in
interest or a Person entitled to enforce the Dealer Assignment, the Collateral
Agent, at the Borrower's expense, shall take such steps as the Servicer deems
necessary to enforce the Dealer Assignment, including bringing suit in its name.
All amounts recovered shall be remitted directly by the Servicer to the Lockbox
Account without deposit into any intervening account as soon as practicable, but
in no event later than the Business Day after receipt thereof.
Section 2.4 Insurance.
(a) The Servicer shall monitor the status of the Insurance
Policies in accordance with its customary servicing procedures. If the Servicer
shall determine that an Obligor has failed to obtain or maintain a physical loss
and damage insurance policy covering the related Vehicle (including during the
repossession of such Vehicle) the Servicer shall be diligent in carrying on its
customary servicing procedures to enforce the rights of the holder of the
Contract thereunder to ensure that the Obligor obtains such physical loss and
damage insurance.
(b) The Servicer may sue to enforce or collect upon the
Insurance Policies, in its own name, if possible, or as agent of the Borrower.
If the Servicer elects to commence a legal proceeding to enforce an Insurance
Policy, the act of commencement shall be deemed to be an automatic assignment of
the rights of the Borrower under such Insurance Policy to the Servicer for
purposes of collection only.
(c) The Premiums incurred by the Borrower in maintaining such
Blanket Policy shall be paid by the Borrower as set forth in Section 2.03(a)(vi)
of the Paying Agent Agreement. Section 2.5 Maintenance of Security Interests in
Vehicles.
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Section 2.5 Maintenance of Security Intersts in Vehicles.
Consistent with the policies and procedures required by this
Agreement, the Servicer shall take such steps as are necessary to maintain
perfection of the security interest created by each Contract in the related
Vehicle on behalf of the Borrower, including but not limited to obtaining the
execution by the Obligors and the recording, registering, filing, re-recording,
re-filing, and re-registering of all security agreements, financing statements
and continuation statements as are necessary to maintain the security interest
granted by the Obligors under the respective Contracts. The Lender hereby
authorizes the Servicer, and the Servicer agrees, to take any and all steps
necessary to re-perfect such security interest on behalf of the Borrower as
necessary because of the relocation of a Vehicle or for any other reason.
Section 2.6 Covenants, Representations and Warranties of Servicer.
The Servicer hereby makes the following representations,
warranties and covenants to the other parties hereto and the Lender on which the
Collateral Agent shall rely in accepting the Contracts.
(a) The Servicer covenants as follows:
(i) Liens in Force. The Vehicle securing each Contract shall
not be released in whole or in part from the security interest granted by the
Contract, except upon payment in full of the Contract or as otherwise
contemplated herein;
(ii) No Impairment. The Servicer shall do nothing to impair
the rights of the Borrower in the Contracts, the Dealer Assignments, the
Insurance Policies or the other Collateral;
(iii) No Amendments. The Servicer shall not extend or
otherwise amend the terms of any Contract, except in accordance with Section 2.2
hereof;
(iv) Servicing of Contracts. The Servicer shall service the
Contracts as required by the terms of this Agreement and in material compliance
with the current Servicing Procedures Manual for servicing all its other
comparable motor vehicle receivables;
(v) Credit Bureaus. The Servicer shall supply such customary
payment history information to credit reporting bureaus on a monthly basis as is
permissible under applicable law;
(vi) Licenses and Approvals. The Servicer shall obtain and
maintain all necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business (involving the
servicing of the Contracts as required by this Agreement) requires;
(vii) Possession of Collateral. The Servicer shall hold all
Collateral items in its possession as custodian on behalf of the Lender;
(viii) Delivery of Loan Documents. The Servicer, as
requested by the Lender, shall deliver to the Lender any Lien Certificate,
credit application, Contract, or other Collateral item which is in possession of
the Servicer, within three Business Days of the Lender's request. To the extent
that the Servicer does not so deliver any requested item with respect to any
Contract by the opening of business on the fourth Business Day following such
request, the Servicer shall deposit on the Lockbox Account an amount not less
than 85% of such Contract's Outstanding Contract Balance;
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(ix) Lien Certificates; Tracking. The Servicer shall track
receipt of all Lien Certificates received by it, and shall report to FC Consumer
and the Lender on each Determination Date all Lien Certificates received by it
during the prior Collection Period, together with all Lien Certificates not yet
received as of the end of the prior Collection Period, as well as the
origination dates of the related Contracts; and
(x) Borrowing Base Report. The Servicer shall send to the
Collateral Agent a daily report by no later than 10 AM New York time containing
the information necessary to calculate the Borrowing Base.
(b) The Servicer represents and warrants to the other
parties hereto as of the Closing Date as to itself:
(i) Organization and Good Standing. The Servicer has been
duly organized and is validly existing and in good standing under the laws of
the State of California, with power, authority and legal right to own its
properties and to conduct its business as such properties are currently owned
and such business is currently conducted, and had at all relevant times, and now
has, power, authority and legal right to enter into and perform its obligations
under this Agreement;
(ii) Due Qualification. The Servicer is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions as shall require such
qualification; in which the ownership or lease of property or the conduct of its
business (involving the servicing of the Contracts as required by this
Agreement) requires;
(iii) Power and Authority. The Servicer has the power and
authority to execute and deliver this Agreement and to carry out its terms and
their terms, and the execution, delivery and performance of this Agreement have
been duly authorized by the Servicer by all necessary corporate action;
(iv) Binding Obligation. This Agreement and the Servicer's
Facility Agreements shall constitute legal, valid and binding obligations of the
Servicer enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization, or
other similar laws affecting the enforcement of creditors' rights generally and
by equitable limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or at law;
(v) No Violation. The consummation of the transactions
contemplated by this Agreement, and the fulfillment of the terms of this
Agreement, shall not conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time) a default
under, the certificate of incorporation or bylaws of the Servicer, or any
indenture, agreement, mortgage, deed of trust or other instrument to which the
Servicer is a party or by which it is bound or any of its properties are
subject, or result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement, mortgage,
deed of trust or other instrument, other than this Agreement, or violate any
law, order, rule or regulation applicable to the Servicer of any court or of any
federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or any of its properties,
or in any way materially adversely affect the interest of the Borrower in any
Contract, or affect the Servicer's ability to perform its obligations under this
Agreement;
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(vi) No Proceedings. There are no proceedings or
investigations pending or, to the Servicer's knowledge, threatened against the
Servicer, before any court, regulatory body, administrative agency or other
tribunal or 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, (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, or (D) that could have a
material adverse effect on the Contracts.
(vii) Approvals. All approvals, authorizations, consents,
orders or other actions of any person, corporation or other organization, or of
any court, governmental agency or body or official, required in connection with
the execution and delivery by the Servicer of this Agreement and the
consummation of the transactions contemplated hereby have been or will be taken
or obtained on prior to the Closing Date.
(viii) No Consents. The Servicer is not required to obtain
the consent of any other party or any consent, license, approval or
authorization, or registration or declaration with, any governmental authority,
bureau or agency in connection with the execution, delivery, performance,
validity or enforceability of this Agreement;
(ix) Year 2000 Compliance. Services provided under this
Agreement are year 2000 compliant, will function and operate prior to, during
and after the calendar year 2000 in accordance with their specifications and
will provide the required output without experiencing abnormal ending dates
and/or invalid or incorrect years and shall incorporate century recognition date
data, calculations that use same century and multi-century formulas and date
values that reflect the correct century in all transactions.
Without limiting the generality of the foregoing, the Servicer
further represents and warrants that the services provided under this Agreement
will process, manage and manipulate data involving dates, including single
century and multi-century formulas, and will not cause an abnormally ending
scenario within the application or generate incorrect values or invalid results
involving such dates; provide that all date-related user interface
functionalities and data fields include the indication of century; and provide
that all date-related data interface functionalities include the indication of
century.
Notwithstanding any limitation on the Servicer's liability
contained elsewhere herein, the Servicer shall indemnify and hold harmless the
Lender, its subsidiaries and affiliates, and its and their directors, officers,
employees and agents from all costs, loss, damage and expense arising from any
breach of this warranty.
(x) Chief Executive Office. The chief executive office of the
Servicer is located at 14101 Myford Road, Tustin, California 92680.
Section 2.7 Indemnification.
The Servicer shall indemnify the Lender, the Collateral Agent
and the Borrower against all costs, expenses, losses, damages, claims and
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liabilities, including reasonable fees and expense; of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to a breach of the covenants or
representations and warranties set forth in Section 2.5 or 2.6 hereof.
Section 2.8 Servicing Fee; Payment of Certain Expenses by Servicer.
(a) On each Distribution Date, the Servicer shall be entitled
to receive out of the Collection Account the Basic Servicing Fee for the related
Collection Period pursuant to the Paying Agent Agreement. The Servicer may
retain any Supplemental Servicing Fee, or may receive such amounts from the
Collection Account payable pursuant to the Paying Agent Agreement.
(b) The Servicer shall be required to pay all expenses
incurred by it in connection with its activities under this Agreement. The
Servicer shall be liable for the fees and expenses of the Lockbox Provider (and
any fees under the Lockbox Agreement) and the Independent Accountants.
Section 2.9 Servicer's Certificate.
(a) No later than 10:00 a.m. Eastern time on each
Determination Date, the Servicer shall deliver to the Collateral Agent, FC
Consumer and the Lender a Servicer's Certificate executed by a Responsible
Officer of the Servicer substantially in the form of Exhibit A hereto, which
shall, among other things, state that (i) a review of the activities of the
Servicer during the preceding period (or such other period as shall have elapsed
from the Closing Date to the date of the first such certificate) and of its
performance under this Agreement has been made, under such officer's
supervision, and (ii) to such officer's knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement throughout such
period, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof.
(b) The Servicer shall deliver to the Borrower, the Collateral
Agent and the Lender, promptly after having obtained knowledge thereof, but in
no event later than two Business Days thereafter, written notice in an Officer's
Certificate of any event which with the giving of notice or lapse of time, or
both, would become a Servicer Termination Event under Section 4.1 hereof.
(c) On each Business Day, the Servicer shall deliver to the
Collateral Agent, by no later than 10:00 a.m. Eastern time, the Servicer's Daily
Report in the form set forth as Exhibit C hereto. Section 2.10 Annual
Independent Accountants' Report.
Section 2.10 Annual Independent Accountants' Report.
(a) The Servicer shall deliver to the Lender, the Borrower and
the Collateral Agent, on or before April 30th of each year beginning in the year
1998, an Officer's Certificate, dated as of the preceding December 31st, stating
that (i) a review of the activities of the Servicer during the preceding
12-month period and of its performance under this Agreement has been made under
such officer's supervision and (ii) to the best of such officer's knowledge,
based on such review, the Servicer has fulfilled all its obligations under this
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof.
(b) The Servicer will deliver to the Lender, the Borrower and
the Collateral Agent, on or before April 30th of each year beginning in the year
1999, a copy of a report prepared by a firm of nationally recognized independent
public accountants (the "Independent Accountants"), who may also render other
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services to the Servicer or any of its Affiliates or to the Seller addressed to
the Board of Directors of the Servicer or any of its Affiliates, the Lender and
the Collateral Agent and dated during the current year, to the effect that such
firm has examined the Servicer's policies and procedures and issued its report
thereon and expressing a summary of findings (based on certain procedures
performed on the documents, records and accounting records that such accountants
considered appropriate under the circumstances) relating to the servicing of its
portfolio of contracts during the preceding calendar year and that such
servicing and administration was conducted in compliance with the terms of this
Agreement, except for (i) such exceptions as such firm shall believe to be
immaterial and (ii) such other exceptions as shall be set forth in such report
and that such examination (1) was performed in accordance with standards
established by the American Institute of Certified Public Accountants, and (2)
included necessary procedures related to automotive loans serviced for others in
accordance with the Uniform Single Attestation Program.
Such report shall also indicate that the firm is independent
of the Servicer and its Affiliates within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public Accountants.
Section 2.11 Access to Certain Documentation and Information Regarding
Contracts.
The Servicer shall provide to representatives of the Borrower,
the Lender and the Collateral Agent reasonable access to the documentation
regarding the Contracts. Each of the Borrower and the Servicer will permit any
authorized representative or agent designated by the Lender to visit and inspect
any of the properties of the Borrower or the Servicer, as the case may be, to
examine the corporate books and financial records of the Borrower or Servicer,
as the case may be, its records relating to the Contracts, and make copies
thereof or extracts therefrom and to discuss the affairs, finances, and accounts
of the Borrower or Servicer, as the case may be, with its principal officers, as
applicable, and its independent accountants. Any expense incidental to the
exercise by the Lender of any right under this Section 2.11 shall be borne by
the Servicer. Such access shall be afforded without charge but only upon
reasonable request and during normal business hours. Nothing in this Section
2.11 shall derogate from the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors, and
the failure of the Servicer to provide access as provided in this Section 2.11
as a result of such obligation shall not constitute a breach of this Section
2.11.
Section 2.12 Provision of Information.
On the first Business Day of each month, the Servicer will
deliver to the Lender a computer tape or a diskette (or any other electronic
transmission acceptable to the Lender) in a format reasonably acceptable to the
Lender containing the Collection Records with respect to the Contracts as of the
last Business Day of the prior month.
Section 2.13 Fidelity Bond.
The Servicer shall maintain a fidelity bond in such form and
amount as is customary in the industry for entities acting as servicers of
consumer contracts on behalf of institutional investors, which amount shall
provide coverage of not less than $4,000,000 in the aggregate and
single-occurrence coverage of $2,000,000.
ARTICLE III
LIABILITY AND INDEMNITIES
Section 3.1 Liability of Servicer; Indemnities.
(a) The Servicer shall be liable hereunder only to the
extent of the obligations in this Agreement specifically undertaken by the
Servicer and the representations made by the Servicer.
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(b) The Servicer shall defend, indemnify and hold harmless the
Borrower, the Collateral Agent, FC Consumer, the Lender and their respective
officers, directors, agents and employees from and against any and all costs,
expenses losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel and expenses of litigation arising out of or resulting from
the use, ownership or operation by the Servicer or any Affiliate thereof of any
Vehicle;
(c) The Servicer shall indemnify, defend and hold harmless the
Borrower, the Lender, FC Consumer, and the Collateral Agent, their respective
officers, directors, agents and employees from and against any and all costs,
expenses, losses, claims, damages, and liabilities to the extent that such cost,
expense, loss, claim, damage, or liability arose out of, or was imposed upon
such indemnified party through the breach of this Agreement, the negligence,
willful misfeasance, or bad faith of the Servicer in the performance of its
duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement;
(d) For purposes of this Section 3.1, in the event of the
termination of the rights and obligations of the Servicer (or any successor
thereto pursuant to Section 3.2 hereof) as Servicer pursuant to Section 4.1
hereof, or a resignation by such Servicer pursuant to this Agreement, such
Servicer shall be deemed to be the Servicer pending appointment of a successor
Servicer pursuant to Section 4.3 hereof. The provisions of this Section 3.1(d)
shall in no way affect the survival pursuant to Section 3.1(e) hereof of the
indemnification by the Servicer provided by Sections 3.1(a) and 3.1(b) hereof;
and
(e) Indemnification under this Article shall survive the
termination of this Agreement and shall include reasonable fees and expenses of
counsel and expenses of litigation. If the Servicer shall have made any
indemnity payments pursuant to this Article and the recipient thereafter
collects any of such amounts from others, the recipient shall promptly repay
such amounts collected to the Servicer, without interest. Notwithstanding any
other provision of this Agreement, the obligations of the Servicer described in
this Section shall not terminate or be deemed released upon the resignation or
termination of FirstCity Servicing Corporation of California as the Servicer and
shall survive any termination of this Agreement. Section 3.2 Merger or
Consolidation of, or Assumption of the Obligations of, the Servicer.
Section 3.2 Merger or Consolidation of, or Assumption of the Obligations
of, the Servicer
The Servicer shall not merge or consolidate with any other
Person, convey, transfer or lease substantially all its assets as an entirety to
another Person, or permit any other Person to become the successor to the
Servicer's business unless, after the merger, consolidation, conveyance,
transfer, lease or succession, the successor or surviving entity shall be an
Eligible Servicer and shall be capable of fulfilling the duties of the Servicer
contained in this Agreement. Any Person (i) into which the Servicer may be
merged or consolidated, (ii) resulting from any merger or consolidation to which
the Servicer shall be a party, (iii) which acquires by conveyance, transfer, or
lease substantially all of the assets of the Servicer, or (iv) succeeding to the
business of the Servicer, in any of the foregoing cases shall execute an
agreement of assumption to perform every obligation of the Servicer under this
Agreement and, whether or not such assumption agreement is executed, shall be
the successor to the Servicer under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties to this
Agreement, anything in this Agreement to the contrary notwithstanding; provided,
however, that nothing contained herein shall be deemed to release the Servicer
from any obligation. The Servicer shall provide notice of any merger,
consolidation or succession pursuant to this Section 3.2(a) to the Borrower, FC
Consumer, the Lender and the Collateral Agent. Notwithstanding the foregoing, as
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a condition to the consummation of the transactions referred to in clauses (i),
(ii), (iii) and (iv) above, (x) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Section 2.6 hereof
shall have been breached (for purposes hereof, such representations and
warranties shall speak as of the date of the consummation of such transaction),
(y) the Servicer shall have delivered to the Borrower, the Collateral Agent, FC
Consumer and the Lender an Officer's Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section 3.2(a) and that all conditions precedent, if
any, provided for in this Agreement relating to such transaction have been
complied with, and (z) the Servicer shall have delivered an opinion of counsel
to the Borrower, the Collateral Agent, FC Consumer, and the Lender, stating, in
the opinion of such counsel, either (A) all financing statements and
continuation statements and amendments thereto have been executed and filed that
are necessary to preserve and protect the interest of the Collateral Agent in
the Collateral and reciting the details of the filings or (B) no such action
shall be necessary to preserve and protect such interest.
Section 3.3 Limitation on Liability of Servicer and Others.
Neither the Servicer, nor any of the directors or officers or
employees or agents of the Servicer shall be under any liability to the
Borrower, the Lender or FC Consumer, except as provided in this Agreement, for
any action taken or for refraining from the taking of any action pursuant to
this Agreement; provided, however, that this provision shall not protect the
Servicer, or any such person against any liability that would otherwise be
imposed by reason of willful misfeasance, bad faith or negligence (excluding
errors in judgment) in the performance of duties (including negligence with
respect to the Servicer' s indemnification obligations hereunder), by reason of
reckless disregard of obligations and duties under this Agreement or any
violation of law by the Servicer, or such person, as the case may be; further
provided, that this provision shall not affect any liability to indemnify the
Collateral Agent for costs, taxes, expenses, claims, liabilities, losses or
damages paid by the Collateral Agent in its individual capacity. The Servicer,
and any director, officer, employee or agent of the Servicer may rely in good
faith on the advice of counsel or on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
under this Agreement.
Section 3.4 Delegation of Duties.
So long as FirstCity Servicing Corporation of California is
the Servicer, the Servicer may delegate duties under this Agreement to an
Affiliate of FirstCity Servicing Corporation of California with the prior
written consent of the FC Consumer, the Lender and the Borrower. The Servicer
also may at any time perform the specific duty of repossession of Vehicles
through sub-contractors who are in the business of repossessing vehicles which
secure automotive receivables, and may perform other specific duties through
such sub-contractors with the prior written consent of the Lender, provided,
however, that no such delegation or subcontracting duties by the Servicer shall
relieve the Servicer of its responsibility with respect to such duties.
Section 3.5 Servicer Not to Resign.
(a) Subject to the provisions of Section 3.2 hereof, the
Servicer shall not resign from the obligations and duties imposed on it by this
Agreement as Servicer except with the prior written consent of the Lender. No
resignation of the Servicer shall become effective until an entity acceptable to
the Lender shall have assumed the responsibilities and obligations of the
Servicer.
(b) The Borrower may, with the prior written consent of the
Lender upon 45 days' notice to the Servicer, terminate the Servicer as Servicer
hereunder without cause.
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ARTICLE IV
SERVICER TERMINATION EVENTS
Section 4.1 Servicer Termination Event.
For purposes of this Agreement, each of the following shall
constitute a "Servicer Termination Event":
(a) Any failure by the Servicer to deliver to the Lockbox or
to the Collateral Agent for distribution any proceeds or payment required to be
so delivered under the terms hereof that continues unremedied for a period of
two Business Days after written notice is received by the Servicer or after
discover of such failure by a Responsible Officer of the Servicer;
(b) Failure by the Servicer (i) to deliver the Servicer's
Certificate required by Section 2.9 hereof within five (5) days after the date
such certificate is required to be delivered;
(c) Failure on the part of the Servicer to observe its
covenants any agreements set forth in Section 3.2(a) hereof;
(d) Failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of the
Servicer which failure continues unremedied for a period of 30 days after the
date on which written notice of such failure, requiring the same to be remedied,
shall have been give to the Servicer by the Collateral Agent or the Lender;
(e) The entry of a decree or order for relief by a court or
regulatory authority having jurisdiction in respect of the Servicer in an
involuntary case under the federal bankruptcy laws, as now or hereafter in
effect, or another present or future, federal or state, bankruptcy, insolvency
or similar law, or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Servicer or of any
substantial part of their respective properties or ordering the winding up or
liquidation of the affairs of the Servicer and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive days or
the commencement of an involuntary case under the federal bankruptcy laws, as
now or hereinafter in effect, or another present or future federal or state
bankruptcy, insolvency or similar law and such case is not dismissed within 60
days; or
(f) The commencement by the Servicer of a voluntary case under
the federal bankruptcy laws, as now or hereafter in effect, or any other present
or future, federal or state, bankruptcy, insolvency or similar law, or the
consent by the Servicer to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Servicer or of any substantial part of its property or
the making by the Servicer of an assignment for the benefit of creditors or the
failure by the Servicer generally to pay its debts as such debts become due or
the taking of corporate action by the Servicer in furtherance of any of the
foregoing;
(g) Any representation, warranty or statement of the Servicer
made in this Agreement or any certificate, report or other writing delivered
pursuant hereto shall prove to be incorrect in any material respect as of the
time when the same shall have been made, and the incorrectness of such
representation, warranty or statement has a material adverse effect on the
Borrower or the Lender and, within 30 days after written notice thereof shall
have been given to the Servicer by the Lender, the circumstances or condition in
respect of which such representation, warranty or statement was incorrect shall
not have been eliminated or otherwise cured;
15
(h) A material adverse change from the date hereof in the
business, properties, operations, prospects or financial or other condition of
the Servicer, as determined by Lender in its reasonable, good faith business
judgment; or
(i) The occurrence of an "Event of Default" under the Credit
Agreement which is not waived by the Lender. Section 4.2 Consequences of a
Servicer Termination Event.
Section 4.2 Consequences of a Servicer Termination Event.
If a Servicer Termination Event shall occur and be continuing,
the Lender shall thereafter have the right to direct all activities of the
Servicer with respect to the Collateral, including the right to direct the
Servicer to deliver any portion of the Collateral then held by the Servicer to
the location designated by the Lender; in addition, by notice given in writing
to the Servicer may terminate all of the rights and obligations of the Servicer
under this Agreement. On or after the receipt by the Servicer of such written
notice, all authority, power, obligations and responsibilities of the Servicer
under this Agreement automatically shall pass to, be vested in and become
obligations and responsibilities of the successor Servicer selected by the
Lender pursuant to Section 4.3 hereof.
Section 4.3 Appointment of Successor.
(a) On and after (i) the time the Servicer receives a notice
of termination pursuant to Section 4.2 hereof or (ii) upon the resignation of
the Servicer pursuant to Section 3.5, hereof the successor Servicer shall be the
successor in all respects to the Servicer in its capacity as servicer under this
Agreement and the transactions set forth or provided for in this Agreement, and
shall be subject to all the responsibilities, restrictions, duties, liabilities
and termination provisions relating thereto placed on the Servicer by the terms
and provisions of this Agreement; provided, however, that the successor Servicer
(i) shall not be liable for any acts, omissions or obligations of the Servicer
prior to such succession or for any breach by the Servicer or any of its
representations and warranties contained in this Agreement or in any related
document or agreement and (ii) shall have no duty or obligation with respect to
the Servicer's obligations set forth in Section 2.8(b) hereof. The successor
Servicer is authorized and empowered by this Agreement to execute and deliver,
on behalf of the prior Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement of the Contracts and the other
Collateral and related documents to show the Collateral Agent as lienholder or
secured party on the related Lien Certificates, or otherwise. The prior Servicer
agrees to cooperate with the successor Servicer in effecting the termination of
the responsibilities and rights of the prior Servicer under this Agreement,
including, without limitation, the transfer to the successor Servicer for
administration by it of all cash amounts that shall at the time be held by the
prior Servicer for deposit, or have been deposited by the prior Servicer, in the
Collection Account or thereafter received with respect to the Contracts and the
delivery to the successor Servicer of all Contract Files, Servicing Records and
Collection Records and a computer tape in readable form containing all
information necessary to enable the successor Servicer or a successor Servicer
to service the Contracts and the other Collateral. If requested by the Lender,
the successor Servicer or successor Servicer shall terminate the Lockbox
Agreement and direct the Obligors to make all payments under the Contracts
directly to the successor Servicer (in which event the successor Servicer shall
process such payments in accordance with Section 2.2(e) hereof), or to a lockbox
established by the successor Servicer at the direction of the Lender, at the
prior Servicer's expense. The successor Servicer may set off and deduct any
amounts owed by the terminated Servicer from any amounts payable to the
terminated Servicer pursuant to the preceding sentence. The terminated Servicer
shall grant the Collateral Agent, the successor Servicer and the Lender
reasonable access to the terminated Servicer's premises at the terminated
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Servicer's expense. If a successor Servicer is acting as Servicer hereunder, it
shall be subject to termination under Section 4.2 hereof upon the occurrence of
any Servicer Termination Event applicable to it as Servicer.
(b)Any successor Servicer shall be entitled to such
compensation (whether payable out of the Collection Account or otherwise) as the
Servicer would have been entitled to under the Agreement if the Servicer had not
resigned or been terminated hereunder. If any successor Servicer is appointed
for any reason, the Lender and such successor Servicer may agree on additional
compensation to be paid to such successor Servicer, which additional
compensation shall be payable out of funds on deposit in the Collection Account.
In addition, any successor Servicer shall be entitled, out of funds in the
Collection Account, to reasonable transition expenses incurred in acting as
successor Servicer.
Section 4.4 Waiver of Past Defaults.
The Lender may waive any default by the Servicer in the
performance of its obligations hereunder and its consequences. Upon any such
waiver of a past default, such default shall cease to exist, and any Servicer
Termination Event arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereon.
ARTICLE V
MISCELLANEOUS PROVISIONS
Section 5.1 Amendment.
This Agreement may be amended from time to time by the parties
hereto only by a written instrument executed by all such parties and consented
to by the Lender.
Section 5.2 Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York without regard to the
principles of conflicts of laws thereof and the obligations, rights and remedies
of the parties under this Agreement shall be determined in accordance with such
laws.
Section 5.3 Severability of Provisions.
If any one or more of the covenants, agreements, provisions or
terms of this Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions or terms shall be deemed severable from
the remaining covenants, agreements, provisions or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions of
this Agreement.
Section 5.4 Assignment.
Notwithstanding anything to the contrary contained in this
Agreement, except as provided in Section 3.2 hereof and as provided in the
provisions of the Agreement concerning the resignation of the Servicer, this
Agreement may not be assigned by any party hereto without the prior written
consent of the other parties hereto.
Section 5.5 Waiver.
EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(i) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER FACILITY AGREEMENTS TO WHICH
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IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT OF THE COURTS
OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(ii) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE
BROUGHT IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT
SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES NOT TO
PLEAD OR CLAIM THE SAME;
(iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED
MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO IT AT THE
RESPECTIVE ADDRESS SET FORTH IN SECTION 5.7 HEREOF OR AT SUCH OTHER ADDRESS OF
WHICH ALL OF THE OTHER PARTIES HERETO SHALL HAVE BEEN NOTIFIED PURSUANT THERETO;
(iv) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO
EFFECT SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT
THE RIGHT TO SUE IN ANY OTHER JURISDICTION:
(v) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVED IN ANY LEGAL ACTION OR PROCEEDING REFERRED
TO IN THIS SECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL, DAMAGES;
AND
(vi) EACH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS SERVICING
AGREEMENT OR ANY OTHER FACILITY AGREEMENT AND FOR ANY COUNTERCLAIM THEREIN.
Section 5.6 Counterparts.
This Agreement may be executed simultaneously in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
all of which counterparts shall constitute but one and the same instrument.
Section 5.7 Notices.
All demands, notices and communications 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 the Servicer, the Borrower or FC Consumer, at the following
address: Box 8216, 6400 Imperial Drive, Waco, Texas 76714-8216, (b) in the case
of the Collateral Agent, at the following address: Chase Bank of Texas, National
Association, 2200 Ross Avenue, 5th Floor, Dallas, Texas 75201, Attention: Mike
Scrivner, FirstCity Auto Receivables L.L.C., fax 214-965-3577, and (c) in the
case of the Lender, at the following address: ContiTrade Services L.L.C., 277
Park Avenue, New York, New York 10172, phone 212-207-2822, fax 212-207-2935,
Attention: Chief Counsel, or at such other address as shall be designated by any
such party in a written notice to the other parties.
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Section 5.8 Successors and Assigns.
This Agreement shall be binding upon the parties hereto and
their respective successors and assigns, and shall inure to the benefit of and
be enforceable by the parties hereto and their respective successors and assigns
permitted hereunder. All covenants and agreements contained herein shall be
binding upon, and inure to the benefit of, the Borrower, the Servicer, FC
Consumer, the Lender and the Collateral Agent and their respective permitted
successors and assigns, if any.
IN WITNESS WHEREOF, the Borrower, the Servicer, FC Consumer
and the Lender have caused this Servicing Agreement to be duly executed by their
respective officers, effective as of the day and year first above written.
FIRSTCITY AUTO RECEIVABLES L.L.C.
By
--------------------------------------------
Name:
Title:
FIRSTCITY SERVICING CORPORATION OF CALIFORNIA
By
--------------------------------------------
Name:
Title:
FIRSTCITY CONSUMER LENDING CORPORATION
By
--------------------------------------------
Name:
Title:
CONTITRADE SERVICES L.L.C.
By
--------------------------------------------
Name:
Title:
By
--------------------------------------------
Name:
Title:
20
EXHIBIT A
---------
FORM OF SERVICER'S CERTIFICATE
------------------------------
FIRSTCITY SERVICING CORPORATION OF CALIFORNIA
---------------------------------------------
Monthly Servicing Report:
FirstCity Auto Receivables L.L.C.
Collection Period Ending: dd/mm/yy
21
EXHIBIT B
---------
FORM OF SERVICER'S DAILY REPORT
-------------------------------
FIRSTCITY SERVICING CORPORATION OF CALIFORNIA
---------------------------------------------
Daily Report:
FirstCity Auto Receivables L.L.C.
Date: dd/mm/yy
Aggregate Contract Balance (Gross) $-----------------
Less Defaulted Contracts ($ )
-----------------
Less Liquidated Contracts ($ )
-----------------
Equals Aggregate Contract Balance $-----------------
Aggregate Contract Balance of Contracts that
lack a certificate of title within 121 days o $-----------------
origination
22