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SERVICING AGREEMENT
by and among
WESTERN FIDELITY FINANCE, INC.
as Depositor,
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
as Supervisory Servicer and as Trustee,
and
WESTERN FIDELITY FUNDING, INC.,
as Servicer
Dated as of
December 30, 1996
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TABLE OF CONTENTS
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Page
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ARTICLE I
DEFINITIONS.................................................................. 2
ARTICLE II
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 2.01. Appointment and Duties of the Supervisory Servicer and
the Servicer................................................ 3
Section 2.02. Collection of Receivable Payments; Defaulted Receivables;
Reporting Obligations....................................... 7
Section 2.03. Realization Upon Receivables................................ 9
Section 2.04. Physical Damage Insurance................................... 9
Section 2.05. Maintenance of Security Interests in Financed Vehicles and
Receivables................................................. 10
Section 2.06. Covenants of Servicer; Notices.............................. 10
Section 2.07. Repurchase of Receivables Upon Breach....................... 12
Section 2.08. Servicing Fee; Supervisory Servicing Fee.................... 12
Section 2.09. Annual Statement as to Compliance........................... 13
Section 2.10. Supervisory Servicer's Annual Statement as to Compliance.... 14
Section 2.11. Financial Statements; Annual Servicing Reports.............. 14
Section 2.12. Access to Certain Documentation and Information Regarding
Receivables................................................. 15
Section 2.13. Costs and Expenses.......................................... 15
Section 2.14. Responsibility for Insurance Policies; Processing of Claims
Under Insurance Policies; Daily Records and Reports......... 16
Section 2.14.A. Delivery of Documents to Trustee............................ 17
Section 2.15. Conveyance of Copies of Documents to the Servicer; Indication
of Trust Ownership.......................................... 17
Section 2.16. Possession of Servicer Files................................ 19
Section 2.17. Processing of Information................................... 19
Section 2.18. Warranties and Representations With Respect to Compliance with
Law and Enforcement......................................... 20
Section 2.19. Standard of Care............................................ 20
Section 2.20. Records..................................................... 21
Section 2.21. Inspection.................................................. 21
Section 2.22. Enforcement................................................. 22
Section 2.23. Payment in Full on Receivable............................... 23
Section 2.24. [Reserved].................................................. 23
Section 2.25. Duties of Supervisory Servicer............................... 23
Section 2.26. [Reserved]................................................... 26
Section 2.27. Errors and Omissions Insurance; Fidelity Bond................ 26
Section 2.28. Responsibilities of Supervisory Servicer and Servicer........ 27
ARTICLE III
ACCOUNTS; COLLECTIONS
Section 3.01. Accounts..................................................... 28
Section 3.02. Collections.................................................. 28
Section 3.03. Collection Account and Acknowledgement Letter................ 29
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the Servicer............... 30
Section 4.02. Representations and Warranties of the Supervisory Servicer... 31
Section 4.03. Representations and Warranties of the Depositor.............. 33
Section 4.04. Survival of Representations and Warranties................... 34
Section 4.05. Merger or Consolidation of, or Assumption of the Obligations
of, or Resignation of, Servicer............................. 34
ARTICLE V
DEFAULT, REMEDIES AND INDEMNITY
Section 5.01. Events of Servicing Default.................................. 35
Section 5.02. Remedies..................................................... 36
Section 5.03. Indemnity by the Servicer.................................... 40
Section 5.04. Indemnity by the Supervisory Servicer........................ 40
Section 5.05. Indemnity by the Depositor................................... 41
Section 5.06. Notification to Certificateholders........................... 42
Section 5.07. Waiver of Events of Servicing Default........................ 42
Section 5.08. Survival..................................................... 42
Section 5.09. Force Majeure................................................ 42
ARTICLE VI
TERMINATION OF AGREEMENT
Section 6.01. Term........................................................ 42
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Section 6.02. Effect of Termination........................................ 42
Section 6.03. Transfer of Servicing........................................ 43
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01. Amendment.................................................... 43
Section 7.02. Waivers...................................................... 43
Section 7.03. Notices...................................................... 43
Section 7.04. Severability of Provisions................................... 44
Section 7.05. Rights Cumulative............................................ 44
Section 7.06. No Offset.................................................... 45
Section 7.07. Inspection and Audit Rights.................................. 45
Section 7.08. Powers of Attorney........................................... 45
Section 7.09. [Reserved]................................................... 45
Section 7.10. Assignment and Binding Effect................................ 45
Section 7.11. Captions..................................................... 45
Section 7.12. Legal Holidays............................................... 45
Section 7.13. Counterparts................................................. 46
Section 7.14. Governing Law................................................ 46
Section 7.15. Parties...................................................... 46
Section 7.16. [Reserved]................................................... 46
Section 7.17. [Reserved]................................................... 46
Section 7.18. Relationship of the Parties.................................. 46
Section 7.19. No Bankruptcy Petition Against the Depositor................. 46
Section 7.20. Third Party Beneficiaries.................................... 46
Section 7.21. Other Agreements............................................. 46
Section 7.22. Procedure for Indemnification................................ 47
Section 7.23. Reports to Holders........................................... 47
Section 7.24. Purchase and Subsequent Pledge............................... 47
Section 7.25. Supervisory Servicer, Trustee or Servicer to Act On
Instructions................................................. 47
EXHIBIT A-1- Monthly Servicer Report....................................A-1-1
EXHIBIT A-2- Officers' Certificate..................................... A-2-1
EXHIBIT B- Form of Monthly Supervisory Servicer Report..................B-1
EXHIBIT C- Forms of Late Notices Sent to Obligors Regarding
Delinquencies................................................C-1
EXHIBIT D- Form of Request for Release..................................D-1
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SERVICING AGREEMENT
This Servicing Agreement ("Servicing Agreement") is made as of December 30,
1996 by and among Western Fidelity Finance, Inc., a Delaware corporation, as
depositor (the "Depositor"), Texas Commerce Bank National Association, a
national banking association, as supervisory servicer and as trustee
(respectively, the "Supervisory Servicer" and the "Trustee"), and Western
Fidelity Funding, Inc., a Colorado corporation, as servicer ("Western Fidelity"
or the "Servicer"). Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed thereto in that certain Pooling and Servicing
Agreement dated as of even date herewith (the "Pooling Agreement") by and
between the Depositor and Texas Commerce Bank National Association, a national
banking association, as trustee (the "Trustee").
PRELIMINARY STATEMENT
WHEREAS, Western Fidelity Funding, Inc., a Colorado corporation, has
acquired and will acquire certain motor vehicle receivables evidenced by retail
financing agreements (the "Receivables") secured by security interests in
Financed Vehicles (as defined in the Transfer and Assignment Agreement described
below); and
WHEREAS, pursuant to that certain Transfer and Assignment Agreement dated
as of December 30, 1996 (the "Transfer and Assignment Agreement") by and between
Western Fidelity, as seller, and the Depositor, as purchaser, Western Fidelity
will absolutely assign the Receivables identified on Exhibit A attached hereto
to the Depositor as of December 30, 1996 (the "Closing Date"); and
WHEREAS, pursuant to the Transfer and Assignment Agreement, the Seller will
absolutely assign the Subsequent Receivables identified on a schedule
substantially in the form of Schedule I to the Schedule of Receivables to the
Depositor as of the Funding Dates; and
WHEREAS, pursuant to the terms of the Pooling Agreement, on the Closing
Date and on Funding Dates, the Depositor will convey, inter alia, the
Receivables and a first priority security interest in the Financed Vehicles to
the Trustee on behalf of the Trust for the benefit of the Certificateholders;
and
WHEREAS, pursuant to the terms of the Transfer and Assignment Agreement,
Western Fidelity is obligated to deliver or cause to be delivered to the
Trustee, the Custodian Documents (as defined in Section 2.14A herein) some of
which are currently held by the Servicer and which are to be held by the Trustee
in its capacity as Custodian pursuant to the terms of the Pooling Agreement; and
WHEREAS, the Depositor, the Supervisory Servicer, the Trustee and the
Servicer wish to enter into this Servicing Agreement pursuant to which the
Servicer and the Supervisory Servicer will perform the duties as described
herein, including, with respect to the Servicer, making collections on all of
the Receivables absolutely assigned to the Depositor pursuant to the terms of
the Transfer and Assignment Agreement, realizing upon such Receivables,
administering claims made under the Insurance Policies and, with respect to the
Supervisory Servicer, preparing certain reports and performing the Servicer's
duties in the event the Servicer is terminated; and
WHEREAS, the Servicer and the Supervisory Servicer, desire to provide such
services to the Depositor.
NOW THEREFORE, in consideration of the covenants and conditions contained
in this Servicing Agreement, the parties, intending to be legally bound, hereby
agree as follows:
ARTICLE I
DEFINITIONS
Defined Terms. Capitalized terms used but not defined in this Servicing
Agreement shall have the respective meanings assigned thereto in the Pooling
Agreement, unless the context otherwise requires, and the definitions of such
terms are equally applicable both to the singular and plural forms of such terms
and to the masculine, feminine and neuter genders of such terms.
"Collection Account Depository" shall mean Wells Fargo Bank (Colorado)
National Association acting as Collection Account Depository hereunder, its
successors in interest and any successors in interest as described pursuant to
Section 3.03.
"Custodian Documents" shall have the meaning set forth in Section 2.14A
hereof.
"Event of Servicing Default" shall have the meaning set forth in Section
5.01 hereof.
"Servicer" shall mean Western Fidelity as the Servicer of the Receivables
or any other Eligible Servicer acting as servicer pursuant to this Servicing
Agreement. Unless the context otherwise requires "Servicer" also refers to any
successor Servicer appointed hereunder or pursuant to the Pooling Agreement.
"Servicer Files" shall have the meaning specified in Section 2.16 hereof.
"Subservicer" shall have the meaning specified in Section 2.01(g) hereof.
"Subservicing Agreement" shall have the meaning set forth in Section
2.01(g) hereof.
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ARTICLE II
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 2.01. Appointment and Duties of the Supervisory Servicer and the
Servicer.
(a) The Depositor hereby appoints Texas Commerce Bank National
Association, as Supervisory Servicer and Western Fidelity Funding, Inc. as
Servicer. The Supervisory Servicer and the Servicer shall perform the
services required of each pursuant to the terms of this Servicing
Agreement. In performing their respective duties hereunder, the Supervisory
Servicer and Servicer shall have full power and authority to do or cause to
be done any and all things in connection with such servicing and
administration which either may deem necessary or desirable, within the
terms of this Servicing Agreement.
(b) As of the date of this Servicing Agreement, each of the
Supervisory Servicer and the Servicer is, and shall remain, for so long as
it is acting as Supervisory Servicer or Servicer, an Eligible Servicer.
Compensation and expense reimbursement payable to the Supervisory
Servicer and Servicer under this Servicing Agreement shall be payable from
the Expense Account as defined in the Pooling Agreement, and, except as
provided herein or in the Pooling Agreement, none of the Depositor, the
Trustee or the Certificateholders will have any liability to the
Supervisory Servicer or the Servicer with respect thereto; provided,
however, that the Depositor shall remain liable for any fees, expenses and
indemnities due and payable to the Servicer and any fees, expenses and
indemnities due and payable to the Supervisory Servicer which have not been
paid from the Expense Account.
(c) The Trustee, the Depositor, the Supervisory Servicer or the
Holders constituting Certificateholder Approval shall be entitled to
terminate the services of the Servicer, and the Trustee or the Holders
evidencing Certificateholder Approval shall be entitled to terminate the
services of the Supervisory Servicer under this Servicing Agreement, upon
the occurrence of an Event of Servicing Default caused by the Servicer or
the Supervisory Servicer, respectively, in each case in accordance with the
terms and conditions hereof; provided, however, that in the event of
termination of the Servicer, the Supervisory Servicer shall act directly as
Servicer or, if the Supervisory Servicer is unable so to act lawfully (as
evidenced by an Opinion of Counsel in accordance with Section 5.02(c)
hereof), the Depositor and the Supervisory Servicer, with the approval of
the Rating Agency, shall enter into a servicing agreement with a Successor
Servicer (that shall be an Eligible Servicer) acceptable to the Rating
Agency which will be bound by the terms of such servicing agreement. In the
event of termination of the Supervisory Servicer or the Successor Servicer,
the Depositor, with the approval of the Trustee and the Rating Agency,
shall enter into a servicing agreement with a Successor Supervisory
Servicer (that shall be an Eligible Servicer) or Servicer (that shall be an
Eligible Servicer), as the case may be, which will be bound by the terms of
such servicing agreement.
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(d) Other than as set forth in Section 7.20 below, this Servicing
Agreement shall be deemed to be among the Supervisory Servicer, the
Trustee, the Servicer and the Depositor; the Certificateholders shall not
be deemed parties hereto and the Certificateholders shall not have any
obligations, duties or liabilities with respect to the Supervisory Servicer
and the Servicer except as set forth herein and in the Pooling Agreement.
In the Pooling Agreement, the Depositor has agreed that the Trustee, in its
capacity as Trustee or (to the extent required by law) in the name of the
Depositor, may (but is not required to) enforce all rights of the Depositor
and all obligations of the Servicer and the Supervisory Servicer under, and
shall be entitled to all benefits of, this Servicing Agreement for and on
behalf of the Certificateholders, whether or not the Depositor is in
default thereunder. The Servicer, in making collections of Receivable
payments pursuant to Section 2.02 hereof, shall be acting as agent for the
Trustee on behalf of the Trust, and shall be deemed to be holding such
funds in trust on behalf of, and as agent for, the Trust.
(e) In the event the Supervisory Servicer shall for any reason no
longer be acting as such (including by reason of an Event of Servicing
Default as specified in Section 5.01 hereof), the Successor Supervisory
Servicer shall thereupon assume all of the rights and obligations of the
outgoing Supervisory Servicer under this Servicing Agreement. In such
event, the Successor Supervisory Servicer shall be deemed to have assumed
all of the outgoing Supervisory Servicer's interest herein and to have
replaced the outgoing Supervisory Servicer as a party to this Servicing
Agreement to the same extent as if this Servicing Agreement had been
assigned to the Successor Supervisory Servicer, except that the outgoing
Supervisory Servicer shall not thereby be relieved of any liability or
obligations on its part under this Servicing Agreement arising prior to
such replacement. The outgoing Supervisory Servicer shall, at the
reasonable expense of the Depositor, deliver to the Successor Supervisory
Servicer all documents and records relating to this Servicing Agreement and
the Receivables then being serviced hereunder and an accounting of amounts
collected and held by it and otherwise use its best efforts to effect the
orderly and efficient transfer of this Servicing Agreement to the Successor
Supervisory Servicer. Compensation and expense reimbursement of the
outgoing Supervisory Servicer shall be due and payable through the date
that the outgoing Supervisory Servicer ceases to render services.
(f) The Depositor shall, at its own expense, duly and punctually
perform and observe its obligations to the Supervisory Servicer, the
Trustee and the Servicer under this Servicing Agreement in accordance with
the terms hereof. In addition, promptly following a request from the
Trustee to do so and at the Depositor's own expense, the Depositor shall
take all such lawful action as the Trustee may request to compel or secure
the performance and observance by the Supervisory Servicer and the Servicer
of each of its respective obligations to the Depositor under or in
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connection with this Servicing Agreement, in accordance with the terms
hereof, and in effecting such request shall exercise any and all
rights, remedies, powers and privileges lawfully available to the
Depositor under or in connection with this Servicing Agreement to the
extent and in the manner directed by the Trustee, including, without
limitation, the transmission of notices of default on the part of the
Supervisory Servicer or the Servicer hereunder and the institution of
legal or administrative actions or proceedings to compel or secure
performance by the Supervisory Servicer or the Servicer of its
respective obligations under this Servicing Agreement.
(g) The Servicer or the Supervisory Servicer, if applicable, may enter
into subservicing agreements (each, a "Subservicing Agreement") with one or
more qualified agents (each, a "Subservicer") for the servicing or
administration of the Receivables (other than duties relating to the
reporting obligations hereunder); provided, that the Servicer shall remain
responsible for the performance of all servicing functions in accordance
with this Servicing Agreement. The Servicer shall cause any such
Subservicer which the Servicer retains to timely notify the Servicer of
such matters as will allow the Servicer to provide the monthly reports
contemplated hereby. If the Servicer shall appoint a Subservicer and the
Servicer thereafter shall be terminated or resign, the appointment of the
Subservicer shall automatically terminate upon the Servicer's termination
or resignation unless reappointed by the Successor Servicer. Texas Commerce
Bank National Association, if it becomes Successor Servicer, may enter into
Subservicing Agreements with respect to any servicing functions and may,
upon receipt of written confirmation from the Rating Agency that the
ratings then assigned to the Certificates will not be downgraded, appoint a
successor Supervisory Servicer that may assume the duties of the
Supervisory Servicer hereunder. References in this Servicing Agreement to
actions taken or to be taken by the Servicer in servicing the Receivables
include actions taken or to be taken by a Subservicer on behalf of the
Servicer. Each Subservicing Agreement will be upon such terms and
conditions as are not inconsistent with this Servicing Agreement and as the
Servicer and the Subservicer have agreed. The Servicer and a Subservicer
may enter into amendments thereto; provided, however, that any such
amendments shall be consistent with and not violate the provisions of this
Servicing Agreement.
(h) The Supervisory Servicer may resign as Supervisory Servicer and,
if acting as Successor Servicer, may resign as Servicer under this
Servicing Agreement upon thirty (30) days' prior written notice to the
Depositor, the Servicer, the Trustee and the Rating Agency, and the
Supervisory Servicer may be removed by the Depositor and Holders of
Certificates constituting Certificateholder Approval with or without cause
upon thirty days' prior written notice to the Supervisory Servicer;
provided, however, that (A) such removal may be made immediately and shall
not require notice if: (i) the Supervisory Servicer shall consent to the
appointment of a conservator, receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities, or similar
proceedings of or relating to the Supervisory Servicer of or relating to
all or substantially all of its property; or (ii) a decree or order of a
court or agency or supervisory authority having jurisdiction in the
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premises for the appointment of a conservator or receiver or liquidator in
any insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings or for the winding up or liquidation of
its affairs shall have been entered against the Supervisory Servicer, and
such decree or order shall have remained in force undischarged or unstayed
for a period of 60 days; or (iii) the Supervisory Servicer shall become
insolvent or admit in writing its inability to pay its debts generally as
they become due, file a petition to take advantage of any applicable debtor
relief laws, make a general assignment for the benefit of its creditors or
voluntarily suspend payment of its obligations; or (iv) a petition is filed
against the Supervisory Servicer seeking relief under any applicable debtor
relief laws of the United States or any state or other competent
jurisdiction, such petition, order, judgment or decree shall have remained
in force undischarged or unstayed for a period of 60 days after its entry;
and (B) such resignation or removal shall not be effective unless and until
such Successor Supervisory Servicer or Successor Servicer, acceptable to
the Rating Agency, is appointed by the Depositor with Certificateholder
Approval; provided, that the Supervisory Servicer may petition a court of
competent jurisdiction to appoint a Successor Supervisory Servicer if one
is not chosen within 60 days. The provisions of Section 4.01 of the Pooling
Agreement shall not limit or affect the right of the Supervisory Servicer,
including if acting as Successor Servicer, to resign as provided in this
Section 2.01.
Upon removal without cause of Texas Commerce Bank National Association
acting as Supervisory Servicer or as Servicer, such Supervisory Servicer or
Servicer, as the case may be, shall be entitled to payment of Transition
Costs pursuant to clause (ii) of the definition thereof.
(i) The Servicer may resign as Servicer under this Servicing Agreement
upon 120 days' prior written notice to the Depositor, the Supervisory
Servicer, the Trustee and the Rating Agency, and the Servicer may be
removed by the Depositor and Holders of Certificates constituting
Certificateholder Approval with or without cause upon thirty days' written
notice to the Servicer; provided, however, that (A) such removal may be
made immediately and shall not require notice if: (i) the Servicer shall
consent to the appointment of a conservator, receiver or liquidator in any
insolvency, readjustment of debt, marshalling of assets and liabilities, or
similar proceedings of or relating to the Servicer of or relating to all or
substantially all of its property; or (ii) a decree or order of a court or
agency or supervisory authority having jurisdiction in the premises for the
appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshalling of assets and liabilities, or similar
proceedings, or for the winding up or liquidation of its affairs shall have
been entered against the Servicer, and such decree or order shall have
remained in force undischarged or unstayed for a period of 60 days; or
(iii) the Servicer shall become insolvent or admit in writing its inability
to pay its debts generally as they become due, file a petition to take
advantage of any applicable debtor relief laws, make a general assignment
for the benefit of its creditors or voluntarily suspend payment of its
obligations; or (iv) a petition is filed against the Servicer seeking
relief under any applicable debtor relief laws of the United States or any
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state or other competent jurisdiction, such petition, order, judgment or
decree shall have remained in force undischarged or unstayed for a period
of 60 days after its entry; and (B) such removal shall not be effective
unless and until a Successor Servicer, acceptable to the Rating Agency, is
appointed by the Depositor with Certificateholder Approval, which
Certificateholder Approval shall not be unreasonably withheld; provided,
that the Servicer may petition a court of competent jurisdiction to appoint
a Successor Servicer if one is not chosen within 150 days. The provisions
of Section 4.01 of the Pooling Agreement shall not limit or affect the
right of the Servicer to resign as provided in this Section 2.01.
Section 2.02. Collection of Receivable Payments; Defaulted Receivables;
Reporting Obligations.
(a) The Servicer shall be responsible for collection of payments
called for under the terms and provisions of the Receivables, as and when
the same shall become due and shall act in accordance with the standard of
care set forth in Section 2.19, and, to the extent not inconsistent with
the foregoing, shall follow such collection procedures as it follows with
respect to all comparable automobile receivables that it services for
itself or others. In the case of a Defaulted Receivable or a Receivable
with respect to which the Servicer believes default is reasonably
foreseeable, the Servicer may grant extensions, rebates or adjustments on a
Receivable, or modify the original due date of a Receivable if (i) such
extensions are limited to one extension with respect to any Receivable
which extension shall not exceed thirty (30) days for each twelve-month
period of the related Contract term; provided, that any such extension
shall not exceed a period of 90 days and, provided, further, that any such
extension shall not extend beyond the Final Scheduled Distribution Date of
any Class of Certificates, and (ii) six (6) consecutive payments have been
made by the Obligor at the time such extension is made. In no event shall
the principal balance of a Receivable be reduced, except in connection with
a settlement in the event the Receivable becomes a Defaulted Receivable and
then in accordance with the standard of care set forth in Section 2.19. The
Servicer shall also enforce all rights of the Depositor under the Dealer
Agreements, including, but not limited to, the right to require Dealers to
repurchase Receivables for breaches of representations and warranties made
by the respective Dealers. Notwithstanding anything herein to the contrary,
except as provided in this clause (a), the Servicer shall not agree to the
modification or waiver of any provision of a Receivable if such
modification or waiver would be treated as a taxable exchange under Section
1001 of the Code.
(b) If the full amount of a Scheduled Payment due under a Receivable
is not received within three (3) Business Days after its due date, the
Servicer will make reasonable and customary efforts to contact the Obligor
by telephone. The Servicer shall continue its efforts to obtain payment
from an Obligor whose payment has not been made within three (3) Business
Days after the due date for such payment until the Financed Vehicle with
respect to such Receivables has been repossessed and sold or the Servicer
has determined that all amounts collectable on the Receivable have been
collected. The Servicer shall use its reasonable best efforts, consistent
with the standard of care set forth in Section 2.19 hereof, to collect
funds on a Defaulted Receivable; such collections shall be deposited into
the Collection Account by the close of business on the Business Day
following receipt thereof.
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(c) The Servicer shall provide Monthly Servicer Reports substantially
in the form of Exhibit A-1 hereto under a certificate substantially in the
form of Exhibit A-2 hereto, to the Supervisory Servicer, the Depositor, the
Trustee, the Placement Agent, the Holders of the Certificates and the
Rating Agency. Such reports shall be delivered by 10:00 a.m., New York
time, no later than eight (8) calendar days following the day of the report
or the end of the reporting period, as the case may be.
(d) The Supervisory Servicer shall provide monthly reports to the
Trustee, the Rating Agency, the Placement Agent, the Certificateholders and
the Depositor substantially in the form of Exhibit B hereto. Such report
shall be dated as of the Determination Date for each Distribution Date and
delivered to the Trustee on or before the close of business ten (10)
calendar days following the Determination Date for such Distribution Date.
(e) The Servicer shall promptly, but no later than five Business Days
after the end of each calendar month provide, or cause to be provided, to
the Supervisory Servicer copies of all monthly bank statements, notices,
reports or other documents received from the Trustee and from the
Collection Account Depository regarding funds held in or transferred to or
from all applicable accounts.
(f) Within ten (10) calendar days following the last day of each
Collection Period, the Servicer shall forward to the Supervisory Servicer,
via reputable overnight courier or electronic transmission, (i) a computer
diskette, in a format mutually acceptable to the Servicer and the
Supervisory Servicer, of its computerized records reflecting (A) all
collections received during such Collection Period with respect to the
Receivables, (B) the principal balance of the Receivables as of the last
day of the Collection Period and (C) information as of the last day of such
Collection Period regarding the number of Defaulted Receivables and (ii) a
manually prepared report as of the last day of such Collection Period
regarding the number of repossessed Financed Vehicles and the number of
sales of repossessed Financed Vehicles as of the last day of such
Collection Period.
(g) The Servicer shall provide to the Trustee daily written
instructions regarding deposits to the Revenue Fund as contemplated by
Section 5.05(a) of the Pooling Agreement.
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Section 2.03. Realization Upon Receivables.
(a) In the event a Receivable becomes or is reasonably anticipated to
become a Defaulted Receivable, the Servicer, itself or through the use of
independent contractors or agents shall use its best efforts, consistent
with the standard of care set forth in Section 2.19, to repossess or
otherwise convert the ownership of the Financed Vehicle securing any
Receivable as to which the Servicer shall have determined eventual payment
in full is unlikely. All costs and expenses incurred by the Servicer in
connection with the repossession of the Financed Vehicles securing such
Receivables shall be reimbursed to the Servicer from the Expense Account on
the Distribution Date relating to the Collection Period in which the
Servicer delivered to the Trustee an itemized statement of such costs and
expenses. Notwithstanding the foregoing and consistent with the terms of
this Servicing Agreement, the Servicer shall not be obligated to repossess
or take any action with respect to a Defaulted Receivable if, in its
reasonable judgment consistent with the servicing standards specified in
Section 2.19, the Liquidation Proceeds are expected to be less than the
costs and expenses of such repossession or action.
(b) The Servicer, itself or through the use of independent contractors
or agents, shall follow customary and usual practices and procedures
consistent with the standard of care set forth in Section 2.19 in its
servicing of automotive receivables, which may include selling the Financed
Vehicle, from the Servicer's used car retail sales facility or at public or
private sale; provided, however, that the Servicer, itself or through the
use of independent contractors or agents, shall use its best efforts to
obtain at least the wholesale market value as indicated in the National
Automobile Dealers Association Guidebook for each repossessed Financed
Vehicle. 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 for the repair or the repossession of such Financed
Vehicle unless the Servicer shall determine in its discretion that such
repair or repossession should increase the Liquidation Proceeds by an
amount greater than the amount of such expenses; provided, however, that
the Servicer shall not expend funds in excess of $2,500 on mechanical
repairs (in addition to the proceeds of vehicle single interest collision
damage coverage) on any Financed Vehicle to restore such Financed Vehicle
to its physical and mechanical condition at the time the Receivable was
originated, reasonable wear and tear excepted, without the prior written
approval of the Depositor.
Section 2.04. Physical Damage Insurance.
(a) The Servicer, in accordance with customary and usual servicing
procedures for comparable automobile receivables consistent with the
standard of care set forth in Section 2.19, shall, upon receipt of notice
that an Obligor's physical damage insurance covering the Financed Vehicle
has lapsed or is otherwise not in force, (i) notify the Depositor of its
receipt of such notice and (ii) send written notice to such Obligor stating
that each Obligor is required to maintain physical damage insurance
covering the Financed Vehicle throughout the term of the Receivable.
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(b) In the event of any physical loss or damage to a Financed Vehicle
from any cause, whether through accidental means or otherwise, the Servicer
shall have no obligation to cause the affected Financed Vehicle to be
restored or repaired. However, the Servicer shall comply with the
provisions of any insurance policy or policies directly or indirectly
related to any physical loss or damage to a Financed Vehicle.
(c) The Servicer will administer the filings of claims under the
Insurance Policies as described under Section 2.14 hereof.
Section 2.05. Maintenance of Security Interests in Financed Vehicles and
Receivables.
(a) The Depositor hereby directs the Servicer to (i) provide written
notice to the Depositor, the Supervisory Servicer, the Rating Agency, the
Seller and the Trustee promptly upon its discovery of the relocation of a
Financed Vehicle out of state, (ii) take or cause to be taken such steps as
are necessary, in accordance with its customary servicing procedures
consistent with the standard of care set forth in Section 2.19, to maintain
perfection of the security interest created by each Receivable in the
related Financed Vehicle in the name of the Servicer and (iii) within one
(1) Business Day of its receipt thereof, forward to the Trustee at its
custodial address, on behalf of the Depositor, via reputable overnight
courier, any certificate of title to a Financed Vehicle received by the
Servicer with respect to a Receivable serviced hereunder, whether such
certificate of title was not previously delivered to the Trustee in
connection with the Closing Date or Funding Date, as the case may be, or
for any other reason.
(b) The Servicer shall, at the direction of the Depositor, take any
action necessary to preserve and protect the security interests of the
Depositor and the Trustee in the Receivables as contemplated by Section
3.05 of the Pooling Agreement, including any action specified in any
opinion of counsel delivered to the Depositor pursuant to Section 3.06 of
the Pooling Agreement.
Section 2.06. Covenants of Servicer; Notices.
(a) The Servicer shall (i) not release any Financed Vehicle securing
any Receivable from the security interest granted therein by such
Receivable in whole or in part except in the event of payment in full by
the Obligor thereunder or upon transfer of the Financed Vehicle to a
successor purchaser following repossession by the Servicer or a
Subservicer, (ii) not impair the rights of the Depositor, the
Certificateholders or the Trustee in the Receivables, (iii) not increase
the number of Scheduled Payments due under a Receivable except as permitted
herein, (iv) prior to the payment in full, not sell, pledge, assign, or
transfer to any other Person, or grant, create, incur, assume, or suffer to
exist any Lien on any Receivable conveyed to the Trustee or any interest
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therein, (v) immediately notify the Depositor, the Supervisory Servicer and
the Trustee of the existence of any Lien on any Receivable (other than the
Lien of the Trustee) if the Servicer has actual knowledge thereof, (vi)
defend the right, title, and interest of the Depositor, the
Certificateholders and the Trustee in, to and under the Receivables
conveyed to the Trustee, against all claims of third parties claiming
through or under the Servicer, (vii) deposit into the Collection Account
all payments received by the Servicer with respect to the Receivables in
accordance with this Servicing Agreement, (viii) comply, in all respects
with the terms and conditions of this Servicing Agreement relating to the
obligation of the Seller to repurchase Receivables from the Depositor
pursuant to the Transfer and Assignment Agreement, (ix) promptly notify the
Depositor, the Supervisory Servicer and the Trustee of the occurrence of
any Event of Servicing Default and any breach by the Servicer of any of its
covenants or representations and warranties contained herein, (x) upon the
relocation out of state of a Financed Vehicle or upon change of the
principal place of business of the Depositor, promptly notify the
Depositor, the Supervisory Servicer and the Trustee of the occurrence of
any event which, to the knowledge of the Servicer, would require that the
Depositor make or cause to be made any filings, reports, notices, or
applications or seek any consents or authorizations from any and all
government agencies, tribunals, or authorities in accordance with the UCC
and any state vehicle license or registration authority as may be necessary
or advisable to create, maintain, and protect a first-priority security
interest of the Trustee in, to, and on the Financed Vehicles and a
first-priority security interest of the Trustee in, to, and on the
Receivables conveyed to it, (xi) deliver or cause to be delivered to the
Depositor and the Supervisory Servicer no later than one (1) Business Day
preceding the Closing Date or Funding Date, as the case may be, the
Schedule of Receivables to be absolutely assigned to the Depositor on such
Closing Date or Funding Date, as the case may be, and (xii) deliver or
cause to be delivered to the Trustee no later than ten (10) Business Days
following the Closing Date or Funding Date, as the case may be, the
documents to be included in the Custodian Files with respect to the
Receivables assigned to the Depositor on such Closing Date or Funding Date,
as the case may be.
(b) The Servicer shall promptly notify the Depositor, the Supervisory
Servicer and the Trustee of any actual knowledge on its part of: any
abandonment of any Financed Vehicle; of any material change in the
condition or value of any Financed Vehicle (other than normal wear and
tear); of any waste committed with respect to any Financed Vehicle (other
than normal wear and tear); of any failure on the part of an Obligor to
keep the Financed Vehicle insured or in good condition and repair; of any
permanent or substantial injury to a Financed Vehicle caused by
unreasonable use, abuse or neglect; or, of any other matter which would
adversely affect or result in diminution of the value of any Financed
Vehicle.
(c) The Servicer shall promptly notify the Depositor, the Trustee and
the Supervisory Servicer upon learning of any insolvency or bankruptcy
proceedings in which any Obligor is seeking relief or is a defendant
debtor, or the death or incapacity of any Obligor.
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(d) The Servicer shall, within four (4) Business Days after its
receipt thereof, respond to reasonable written directions or written
requests for information that the Depositor, the Trustee or the Supervisory
Servicer might have with respect to the administration of the Receivables.
(e) The Servicer will promptly advise the Depositor, the Supervisory
Servicer and the Trustee of any inquiry received from an Obligor which
contemplates the consent of the Depositor or the Trustee. Inquiries
contemplating consent of the Depositor or the Trustee shall include, but
not be limited to, inquiries about settlement of any unasserted claim or
defense, or compromise of any amount an Obligor owes or any other matters
the Servicer should reasonably understand are not within the Servicer's
authority under this Servicing Agreement.
Section 2.07. Repurchase of Receivables Upon Breach. The Servicer shall
inform the Depositor, the Trustee and the Supervisory Servicer promptly, in
writing, upon the discovery of any breach pursuant to Section 3.02(b) of the
Transfer and Assignment Agreement; provided, however, that the Servicer shall
have no duty to investigate or determine the existence of any breach except as
specified herein. Unless the breach shall have been cured within the applicable
cure period following such discovery as set forth in Section 7.02 of the
Transfer and Assignment Agreement, the Servicer shall deliver to the Depositor a
written demand to cause the Seller to repurchase such Receivable from the
Depositor within five (5) Business Days following the expiration of such cure
period. The sole remedy of the Depositor, the Trustee or the Certificateholders
against the Seller with respect to a breach pursuant to Section 3.02(b) of the
Transfer and Assignment Agreement shall be as set forth in the Transfer and
Assignment Agreement. Promptly following a repurchase pursuant to Section 7.02
of the Transfer and Assignment Agreement, the Depositor shall give the Servicer
written notice thereof.
Section 2.08. Servicing Fee; Supervisory Servicing Fee.
(a) Pursuant to the Pooling Agreement, the Depositor has agreed to
cause the Trustee to pay out of collections with respect to the Receivables
to the Supervisory Servicer and the Servicer each a monthly servicing fee
("Supervisory Servicing Fee" and "Servicing Fee," respectively) with
respect to each Receivable serviced under this Servicing Agreement;
provided, however, that the Depositor hereby agrees not to amend or consent
to any amendment of any provision of the Pooling Agreement relating to
compensation of the Supervisory Servicer or the Servicer without the prior
written consent of such Person. Pursuant to the terms of the Pooling
Agreement, the Depositor has assumed liability for all liabilities
associated with the Conveyed Property or created under the Pooling
Agreement; provided, that the Depositor has and shall have no liability
with respect to the payment of principal and interest on the Certificates,
except as otherwise provided in the Pooling Agreement.
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(b) The Supervisory Servicing Fee shall be the greater of (i) 28 basis
points per annum based on the Aggregate Current Stated Principal Balance of
the Certificates of all Classes on the first day of the applicable
Collection Period, calculated and payable monthly or (ii) $800 per month.
The Supervisory Servicing Fee with respect to a Collection Period shall be
due on the succeeding Distribution Date. In the event the initial
Supervisory Servicer becomes a Successor Servicer pursuant to this
Servicing Agreement, the Supervisory Servicer shall be paid the sum of
$100,000 for conversion to the Supervisory Servicer's software system and
the Servicing Fee set forth in Section 2.08(c) hereof, based on the
Aggregate Receivable Balance on the first day of the applicable Collection
Period. In the calendar month in which the Supervisory Servicer assumes the
duties of the Servicer, the Supervisory Servicing Fee, as adjusted, shall
be prorated and shall accrue from the date of such assumption. In the case
of the calendar month in which the Pooling Agreement terminates, the
Supervisory Servicing Fee, if any, as adjusted, shall accrue and be
prorated from the first day of such month to the day on which such
termination occurs. In the event Texas Commerce Bank National Association
is terminated under this Agreement as Supervisory Servicer or Servicer
without cause, Texas Commerce Bank National Association shall be entitled
to the amount of costs specified in clause (ii) of the definition of
Transition Costs.
(c) The Servicing Fee shall be (i) 350 basis points per annum,
calculated and payable monthly, based on the Aggregate Receivable Balance
on the first day of the applicable Collection Period, plus (ii) all amounts
remitted by or on behalf of the Obligors for receipt during the prior
Collection Period under the terms of, or with respect to, the Receivables,
which amounts represent late fees, prepayment charges, including
administrative fees or similar charges allowed by applicable law. The
Servicing Fee with respect to a Collection Period shall be due on the
succeeding Distribution Date. In the event this Servicing Agreement is
terminated on a date other than the last day of a Collection Period or a
Receivable is designated to be no longer outstanding for purposes of this
Servicing Agreement, then the Servicing Fee for such period or with respect
to such Receivable, as the case may be, shall be determined on a pro rata
basis. In addition, the Servicer shall receive the additional fees
specified in Section 3.02(a) hereof.
(d) The Supervisory Servicer shall be entitled to payment of or
reimbursement for its expenses hereunder from the Trust Property in an
amount not to exceed 4.0% of the annual Trustee Fee.
Section 2.09. Annual Statement as to Compliance. The Servicer shall deliver
to the Depositor, the Supervisory Servicer, the Certificateholders, the
Placement Agent, the Rating Agency and the Trustee, on or before March 31 of
each year beginning March 31, 1998, an Officer's Certificate, dated effective as
of December 30 of the preceding year, stating that (i) a review of the
activities of the Servicer during the preceding 12-month period (or such shorter
period, as is applicable) and of its performance under this Servicing Agreement
during such period has been made under such officer's supervision, (ii) based on
such review, the Servicer has materially fulfilled all its obligations under
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this Servicing 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 and the remedies therefor being
pursued and (iii) to the best of such officer's knowledge, each Subservicer has
fulfilled its obligations under its subservicing agreement in all material
respects, or if there has been a material default in the fulfillment of such
obligations, specifying such default known to such employees and the nature and
status thereof.
Section 2.10. Supervisory Servicer's Annual Statement as to Compliance. The
Supervisory Servicer shall deliver to the Depositor, the Trustee, the
Certificateholders, the Placement Agent and the Rating Agency, on or before
April 30 of each year beginning April 30, 1998, an Officer's Certificate, dated
effective as of December 30 of the preceding calendar year, stating that, (i) a
review of the activities of the Supervisory Servicer during the preceding
12-month period (or such shorter period, as applicable) and of its performance
under this Servicing Agreement during such period has been made under such
officer's supervision and (ii) to the actual knowledge of such officer, based on
such review, the Supervisory Servicer has fulfilled in all material respects all
of its obligations under this Servicing Agreement throughout such year or, if
the Supervisory Servicer has actual knowledge of a default in the fulfillment of
any such obligation, specifying each such default actually known to such officer
and the nature and status thereof and remedies therefor being pursued.
Section 2.11. Financial Statements; Annual Servicing Reports. The Servicer,
other than Texas Commerce Bank National Association, as Successor Servicer,
shall deliver, in duplicate, to the Depositor, the Rating Agency, the
Certificateholders, the Placement Agent, the Supervisory Servicer and the
Trustee:
(a) as soon as available, but in no event later than 45 days after the
end of each fiscal quarter of the Servicer (commencing with the quarter
ending March 31, 1997), an unaudited balance sheet and income statement
(prepared in accordance with generally accepted accounting principles
applied on a consistent basis, other than the absence of notes, and subject
to year end adjustments) for the Servicer covering the preceding quarter,
in each case certified by an Authorized Officer of the Servicer to be true,
accurate and complete copies of such financial statements; and
(b) On or before ninety (90) days after the end of each fiscal year of
the Servicer (commencing with the fiscal year ending December 31, 1996) the
financial statements of the Servicer containing a report of a firm of
Independent Public Accountants selected by the Servicer to the effect that
such firm has examined the books and records of the Servicer and that, on
the basis of such examination conducted in compliance with generally
accepted audit standards, such financial statements accurately reflect the
financial condition of the Servicer, in each case certified by an
Authorized Officer of the Servicer to be true, accurate and complete copies
of such financial statements; and
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(c) As soon as practicable, but in any event within 120 days after the
end of each fiscal year, an annual review of the Servicer's management
personnel, procedures and operations, prepared by the same firm of
Independent Public Accountants which prepared the balance sheet and
financial statements required under the preceding clause (b), dated as of
December 31 of each year beginning December 31, 1997 and substantially
stating to the effect that (i) such accountants have examined the accounts
and records of the Servicer relating to the Conveyed Property (which
records shall be described in one or more schedules to such statement),
(ii) such firm has compared the information contained in the Monthly
Servicer Reports delivered in the relevant period with information
contained in the accounts and records for such period, and (iii) on the
basis of the procedures performed, whether (A) the information contained in
the Monthly Servicer Reports delivered on the relevant period reconciles
with the information contained in the accounts and records or (B) the
accounts and records of the Servicer related to the Conveyed Property agree
to the respective source documents except for such exceptions as the
accountants shall believe to be immaterial and such other exceptions as
shall be set forth in such statement.
Section 2.12. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide, or cause the Depositor and the
Certificateholders to have, access to its files relating to the Receivables;
provided, that the Depositor or the Certificateholders, as the case may be,
shall give the Servicer at least three (3) Business Days' prior written notice
of its intention to review such files. Access shall be afforded without charge,
but only during the normal business hours at the offices of the Servicer.
Nothing in this Section shall affect 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 to information as a result of
such obligation shall not constitute a breach of this Section 2.12.
Section 2.13. Costs and Expenses.
(a) Except as set forth in Section 2.13(b) below, all costs and
expenses incurred by the Servicer in carrying out its duties hereunder,
fees and expenses of Independent Public Accountants with respect to
preparation of the financial statements described in Section 2.11(a) and
(b) and all other fees and expenses not expressly stated hereunder to be
for the account of the Depositor, shall be paid or caused to be paid by the
Servicer out of the compensation to be paid to the Servicer pursuant to
Section 2.08.
(b) During the term of this Servicing Agreement, the Servicer shall be
reimbursed from the Expense Account for actual out-of-pocket costs and
expenses incurred in connection with the sale or other disposal of a
Financed Vehicle or collection of amounts due with respect to a Receivable,
including, but not limited to, the following (to the extent such cost or
expense relates to the sale or other disposal or collection of amounts due
with respect to a Receivable or a Financed Vehicle):
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(i) Any compensation paid to outside legal counsel retained to
protect the interests of the Depositor, the Certificateholders or the
Trustee in the assets administered under this Servicing Agreement as
the Servicer deems necessary in accordance with its normal procedures;
(ii) Any compensation paid to independent repossessors,
auctioneers or appraisers and any direct out of pocket expenses
arising from or related to realization of the Receivables administered
under this Servicing Agreement;
(iii) Any sales, franchise, income, excise, personal property or
other taxes arising from or related to any Receivables administered
under this Servicing Agreement;
(iv) Any parking or other fines, insurance, title or other such
fees arising from or related to any Receivables administered under
this Servicing Agreement; and
(v) Any expenses for special forms and materials, freight, tapes,
communications, lock-box or other bank service charges, and other
similar expenses approved by the Depositor.
Section 2.14. Responsibility for Insurance Policies; Processing of Claims
Under Insurance Policies; Daily Records and Reports.
(a) The Servicer, on behalf of the Depositor, will administer and
enforce all rights and responsibilities of the holder of the Receivables
provided for in the Insurance Policies relating to the Receivables.
(b) The Servicer will administer the filings of claims under any
insurance policies covering the Receivables by filing the appropriate
notices related to claims, including initial notices of loss, as well as
claims with the respective carriers or their authorized agents all in
accordance with the terms of the respective policies. The Servicer shall
use reasonable efforts to file such claims on a timely basis after
obtaining knowledge of the events giving rise to such claims, subject to
the servicing standard set forth in Section 2.19 hereof. The Servicer will
utilize such notices, claim forms and claim procedures as are required by
the respective insurance carriers.
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 the insurance policies,
and shall not be required to institute any litigation or proceeding or
otherwise enforce the obligations of any insurer thereunder. The Servicer
shall not be responsible to the Depositor, the Certificateholders or the
Trustee (i) for any act or omission to act done in order to comply with the
requirements or satisfy any provisions of the insurance policies or (ii)
for any act, absent willful misconduct or gross negligence, or omission to
act done in compliance with this Servicing Agreement.
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(c) The Servicer shall provide to the Depositor, the Trustee and the
Supervisory Servicer a written monthly report substantially in the form of
Exhibit A-1 hereto (and, upon the request of the Depositor, the Trustee or
the Supervisory Servicer, copies of notices substantially in the form of
Exhibit C hereto, verifying that such notices were sent to Obligors, as
appropriate) indicating a delinquency by any Obligor of (A) 30 to 59 days
and (B) 60 days or more. This report will include:
(i) Obligor's name;
(ii) Date of last payment; and
(iii) Current unpaid balance.
Section 2.14.A. Delivery of Documents to Trustee. The Servicer shall
deliver or cause to be delivered all of the following documents with respect to
the Receivables in its possession to the Trustee at its custodial address via
reputable overnight courier service for receipt by the Trustee within ten (10)
Business Days following the Closing Date or the applicable Funding Date, as the
case may be:
(a) the sole original counterpart of the Contract evidencing each such
Receivable and any and all amendments thereto; and
(b) (i) the original certificate of title or copies of correspondence
to the appropriate state title registration agency, and all enclosures
thereto, for issuance of the original certificate of title or (ii) if the
appropriate state title registration agency issues a letter or other form
of evidence of lien in lieu of a certificate of title, the original lien
entry letter or form or copies of correspondence to such state title
registration agency, and all enclosures thereto, for issuance of the
original lien entry letter or form (all of the items in (a) and (b) are
collectively referred to as the ("Custodian Files");
While in its possession, the Servicer shall hold the Custodian Files in
trust on behalf of the Trustee and shall only check out the Custodian Files with
a Request for Release of Receivable File in the form of Exhibit D hereto.
Section 2.15. Conveyance of Copies of Documents to the Servicer; Indication
of Trust Ownership.
(a) The Servicer shall maintain legible copies (in electronic or
hard-copy form, in the Servicer's discretion) or originals of the following
documents in its files with respect to each Receivable and the Financed
Vehicle related thereto (provided that such documents were provided to the
Servicer by the Seller):
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(i) application of the Obligor for credit;
(ii) a copy (but not the original) of the Contract and any
amendments thereto; provided, however, that the Servicer shall deliver
any original amendments to the Contract to the Trustee at its
custodial address immediately following execution thereof;
(iii) a copy (but not the original) of (A) a certificate of title
with a lien notation or an application therefor or (B) if the
appropriate state title registration agency issues a letter or other
form of evidence of lien in lieu of a certificate of title, the lien
entry letter or form or copies of correspondence to such state title
registration agency, and all enclosures thereto, for issuance of the
original lien entry letter or form;
(iv) either, as applicable, (A) a certificate of insurance or
application therefor with respect to the Financed Vehicle securing the
Receivable or (B) a copy of an agreement signed by the Obligor to
obtain insurance with respect to the Financed Vehicle and a signed
verification by the Seller's authorized representative that the
applicable insurance company has confirmed to such representative that
such insurance was obtained;
(v) a monthly delinquency report on all outstanding Receivables
in form and content reasonably acceptable to the Depositor;
(vi) a copy of the score sheet, proof of income and references,
credit report and approval sheet utilized by the Seller in the
underwriting of the Receivable;
(vii) the invoice for the Financed Vehicle or the NADA book
sheet, as applicable;
(viii) Obligor's order for the Financed Vehicle and the proof of
down payment;
(ix) a copy of the service contract, if any, on the Financed
Vehicle;
(x) a copy of the credit life insurance policy, if any, and the
credit disability insurance policy, if any, on the Obligor relating to
the Financed Vehicle; and
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(xi) such other documents as the Servicer may reasonably request
in order to accomplish its duties under this Servicing Agreement.
The Servicer shall keep books and records, satisfactory to the
Supervisory Servicer, pertaining to each Receivable and shall make periodic
reports in accordance with this Servicing Agreement. Such records may not
be destroyed or otherwise disposed of except as provided herein and as
allowed by applicable laws, regulations or decrees. All documents, whether
developed or originated by the Servicer or not, reasonably required to
document or to properly administer any loan shall remain at all times the
property of the Trust and shall be held in trust by the Servicer. The
Servicer shall not acquire any property rights with respect to such
records, and shall not have the right to possession of them, except as
subject to the conditions stated in this Servicing Agreement. The Servicer
shall bear the entire cost of restoration in the event any Servicer Files
(as defined below) shall become damaged, lost or destroyed while in the
Servicer's possession or control.
(b) The Servicer hereby agrees that the computer files and other
physical records of the Receivables maintained by the Servicer will bear an
indication reflecting that the Receivables are owned by the Trust on behalf
of the Certificateholders.
Section 2.16. Possession of Servicer Files. Unless otherwise specified
herein, the Servicer shall maintain physical possession of the instruments and
documents listed in paragraph 2.15(a) above; such other instruments or documents
that modify or supplement the terms or conditions of any of the foregoing; and,
all other instruments, documents, correspondence and memoranda generated by or
coming into the possession of the Servicer (including, but not limited to,
insurance premium receipts, ledger sheets, payment records, insurance claim
files, correspondence and current and historical computerized data files) that
are required to document or service any Receivable. Collectively, all of the
documents described in this Section 2.16 with respect to a Receivable are
referred to as the "Servicer Files". The Servicer hereby agrees that the
computer files and other physical records of the Receivables maintained by the
Servicer will bear an indication reflecting that the Receivables are owned by
the Trust for the benefit of the Certificateholders and that all Servicer Files
shall remain the property of the Trust and shall be held in trust by the
Servicer. The Servicer shall respond to all third party inquiries concerning
ownership of the Receivables by indicating that the Receivables have been
absolutely assigned by the Seller to the Depositor and conveyed by the Depositor
to the Trustee on behalf of the Trust for the benefit of the Certificateholders.
Section 2.17. Processing of Information. Information with respect to each
Receivable shall be recorded into the Servicer's loan management and accounting
system.
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Section 2.18. Warranties and Representations With Respect to Compliance
with Law and Enforcement.
(a) The Depositor hereby represents to the Servicer, based on certain
representations the Seller has made to the Depositor concerning the
Receivables in the Transfer and Assignment Agreement, and on which
representations the Depositor has relied in acquiring the Receivables and
pledging the Receivables to the Trustee, that each Receivable and the sale
of the related Financed Vehicle complied at the time it was originated or
made and on the Closing Date or Funding Date, as the case may be, does
comply in all material respects with all requirements of applicable
federal, state and local laws, and regulations thereunder.
(b) The Servicer warrants, represents and covenants that, in the event
that the Servicer realizes upon any Receivable, the methods utilized by the
Servicer to realize upon such Receivable or otherwise enforce any
provisions of the Receivable, will not subject the Servicer, the Depositor,
the Supervisory Servicer or the Trustee to liability under any federal,
state or local law, and that such enforcement by the Servicer will be
conducted in accordance with the provisions of this Servicing Agreement and
the standard of care set forth in Section 2.19.
Section 2.19. Standard of Care.
(a) In performing its duties and obligations hereunder and in
administering and enforcing the Insurance Policies relating to the
Receivables pursuant to this Servicing Agreement, the Servicer will comply
in all material respects with all applicable state and federal laws and
will service and administer the Receivables by employing such procedures
(including collection procedures) and degree of care, in each case
consistent with prudent industry standards, as are customarily employed by
the Servicer in servicing and administering motor vehicle retail
installment sales contracts and notes owned or serviced by the Servicer
comparable to the Receivables. In performing such duties, so long as
Western Fidelity is the Servicer (i) Western Fidelity shall comply with its
customary collection policy, and (ii) Western Fidelity shall not (A) with
respect to its collection policy, make any material amendment thereto
relating to its pursuit of collections regarding Delinquent or Defaulted
Receivables or extend the time period during which the Servicer will take
collection actions with respect thereto, or (B) make any other amendments
to its collection policy which is materially adverse to Certificateholders;
provided, however, that notwithstanding the foregoing, the Servicer shall
not, except pursuant to a judicial order from a court of competent
jurisdiction, or as otherwise required by applicable law or regulation,
release or waive the right to collect the unpaid balance on any Receivable.
In performing its duties and obligations hereunder, the Servicer shall
comply in all material respects with all applicable federal and state laws
and regulations, shall maintain all state and federal licenses and
franchises necessary for it to perform its servicing responsibilities
hereunder, and shall not impair the rights of the Depositor or the Trustee
on behalf of the Certificateholders in the Trust Property. For purposes of
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this Section 2.19, the word "material" shall include any action or inaction
on the part of the Servicer which would have an adverse impact on the
collectibility or enforcement of a Receivable or adversely affect the
security interest of the Trustee, on behalf of the Trust and the
Certificateholders, in a Receivable or a Financed Vehicle or the title of
the Trustee, on behalf of the Trust and the Certificateholders, in or to a
Receivable.
(b) In performing its duties and obligations hereunder, neither the
Servicer nor Supervisory Servicer shall make any material modification with
respect to a Receivable unless such modification is done pursuant to this
Servicing Agreement.
Section 2.20. Records. The Servicer shall maintain or cause to be
maintained such books of account and other records as will enable the Depositor
and the Supervisory Servicer to determine the status of each Receivable.
Section 2.21. Inspection.
(a) At all times during the term hereof, the Servicer shall afford the
Depositor, the Supervisory Servicer and the Trustee and their authorized
agents, upon three (3) Business Days' prior written notice, reasonable
access during normal business hours to the Servicer's records relating to
the Receivables and the other Conveyed Property and will cause its
personnel to assist in any examination of such records by the Depositor,
the Supervisory Servicer or the Trustee. The examination referred to in
this Section 2.21 will be conducted in a manner which does not unreasonably
interfere with the Servicer's normal operations or customer or employee
relations. Without otherwise limiting the scope of the examination, the
Depositor, the Supervisory Servicer or the Trustee may, using generally
accepted audit procedures, verify the status of each Receivable and review
the Servicer Files and records relating thereto for conformity to monthly
reports prepared pursuant to Section 2.02(c) and compliance with the
standards represented to exist as to each Receivable subject to this
Servicing Agreement. Nothing herein shall require the Depositor, the
Supervisory Servicer or the Trustee to conduct any inspection pursuant to
this Section.
(b) At all times during the term hereof, the Servicer shall keep
available at its office located at 4704 Harlan Street, Suite 260, Denver,
Colorado 80212 (or such other location as to which it shall give written
notice to the Trustee), for inspection by the Depositor, the Supervisory
Servicer, the Trustee and Certificateholders a copy of the Schedule of
Receivables.
(c) All information obtained by the Depositor, the Supervisory
Servicer or the Trustee regarding the Obligors and the Receivables, whether
upon exercise of its or their rights under this Section 2.21 or otherwise,
shall be maintained by the Depositor, the Supervisory Servicer or the
Trustee in confidence and shall not be disclosed to any other person,
except as otherwise required by applicable law or regulation.
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(d) The Servicer will, at the Depositor's or the Supervisory
Servicer's request, provide the Depositor or the Supervisory Servicer, as
the case may be, with a data extract disk of Receivable portfolio
information, in addition to any other disk required to be provided
hereunder. One such disk per month will be provided without charge, and the
Depositor will pay the Servicer $125.00 each for any additional disks;
provided, however, that such additional fee for additional disks shall not
apply to any disks provided to the Depositor or the Supervisory Servicer,
as the case may be, to correct information previously provided by the
Servicer to the Depositor or the Supervisory Servicer, as the case may be.
Section 2.22. Enforcement.
(a) The Servicer shall, to the extent consistent with the servicing
standards required by Section 2.19 hereof, act with respect to the
Receivables and the Insurance Policies in such manner as will, in the
reasonable judgment of the Servicer, maximize the amount to be received by
the Trustee with respect thereto. With respect to a Defaulted Receivable or
a Receivable with respect to which the Servicer believes default is
reasonably foreseeable, the Servicer may permit the assumption of the
obligations under such Receivable by a new Obligor thereunder, provided
that no other material term of such Receivable shall be modified.
Notwithstanding anything herein to the contrary, neither the Servicer nor
any Supervisory Servicer shall have any power to perform any act which if
consummated would cause the Trust to fail to be characterized as a trust
for federal income tax purposes.
(b) The Servicer shall, consistent with the standard of care set forth
in Section 2.19, sue to enforce or collect upon the Receivables and the
Insurance Policies (including unpaid claims), in its own name, if possible,
or as agent for the Depositor or the Trustee. If the Servicer commences a
legal proceeding to enforce a Receivable or an Insurance Policy, the act of
commencement shall be deemed to be an automatic assignment of the
Receivable and the related rights under the Insurance Policies by the Trust
to the Servicer for purposes of collection only. If, however, in any
enforcement suit or legal proceeding it is held that the Servicer may not
enforce a Receivable or an Insurance Policy on the grounds that it is not a
real party in interest or a holder entitled to enforce the Receivable or
the Insurance Policy, the Trustee on behalf of the Trust, shall, at the
Servicer's request, assign the Receivable or the Insurance Policy to the
Servicer for the limited extent necessary to enforce the Receivable or the
Insurance Policy, or take such steps as the Depositor deems necessary to
enforce the Receivable or the Insurance Policy, including bringing suit in
its name. The Servicer shall be entitled to reimbursement for expenses
incurred in connection with exercising such recourse rights with respect to
the Receivables pursuant to this Section 2.22(b).
(c) The Servicer shall exercise any rights of recourse against third
persons that exist with respect to any Receivable in accordance with the
Servicer's usual practice and the standard of care required by Section 2.19
hereof. In exercising such recourse rights, the Servicer is hereby
22
authorized on the Trust's behalf to reassign the Receivable and to deliver
the certificate of title to the Financed Vehicle to the person against whom
recourse exists at the price set forth in the document creating the
recourse. The Servicer shall be entitled to reimbursement for expenses
incurred in connection with exercising such recourse rights with respect to
the Receivables pursuant to this Section 2.22(c).
(d) The Servicer may grant to the Obligor on any Receivable that has
been repaid in full any rebate, refund or adjustment that the Servicer in
good faith believes is required because of prepayment in full of the
Receivable, and may deduct the amount of any such rebate, refund or
adjustment from the amount otherwise payable by the Servicer into the
Collection Account. The Servicer may not permit any rescission or
cancellation of any Receivable nor may it take any action with respect to
any Receivable or Insurance Policy which would materially impair the rights
of the Trustee or the Certificateholders therein or in the proceeds
thereof.
(e) The Servicer may not increase or reduce the amount of any
Scheduled Payments, change any Receivable APR or extend or modify any
material term of any Receivable, except as provided in Section 2.02(a). The
Servicer shall review at least annually whether all extensions granted
since the prior such review (or the Cutoff Date, in the case of the first
review) complied with Section 2.02(a).
Section 2.23. Payment in Full on Receivable. Upon payment in full on any
Receivable, the Servicer shall notify the Trustee prior to the next succeeding
Distribution Date by a certificate and request for release of Receivable file
substantially in the form of Exhibit D hereto (which certificate shall include a
statement of an officer of the Servicer to the effect that all amounts received
in connection with such payment in full which are required to be deposited in
the Collection Account pursuant to Sections 3.02 and 3.03 have been so
deposited).
Section 2.24. [Reserved].
Section 2.25. Duties of Supervisory Servicer.
(a) The Supervisory Servicer will perform the services set forth in
this Section 2.25 which shall not be delegated to the Servicer. The
Supervisory Servicer shall, unless it is prohibited as a matter of law, as
evidenced by an Opinion of Counsel provided for in Section 5.02(c) and
unless a different Successor Servicer has been appointed pursuant to the
provisions hereof, service the Receivables upon receipt of written notice
of an Event of Servicing Default by the Servicer under this Servicing
Agreement. The Supervisory Servicer in performing its duties as Supervisory
Servicer or Successor Servicer shall be bound by the terms and conditions
of this Servicing Agreement and shall not take any action with respect to
its duties unless so authorized herein. The Supervisory Servicer will, on a
periodic basis, perform the functions specified in this Section 2.25;
provided, that the Supervisory Servicer shall be entitled to request of and
receive from the Trustee and the Servicer, as appropriate, all information
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necessary to conduct tests or make reports in a timely manner as specified
below and, except as otherwise provided herein, the Supervisory Servicer
shall be entitled to assume for all purposes that the information received
by it is true, correct and complete, and the Supervisory Servicer shall be
fully protected in relying upon such information without any independent
investigation or audit to prove the facts stated therein. The Supervisory
Servicer shall utilize such methods as it deems reasonable and necessary to
reconcile information provided by the Servicer with the cash balances held
by the Trustee.
(b) Whether serving as Supervisory Servicer or as Successor Servicer,
the Supervisory Servicer shall provide monthly reporting to the Trustee,
the Rating Agency, the Depositor and the Certificateholders of information
and test results required under this Servicing Agreement and the Pooling
Agreement substantially in the form of Exhibit B hereto, which shall be
based upon information provided to the Supervisory Servicer by the Servicer
hereunder, or from the Trustee and the Collection Account Depository as
requested by the Supervisory Servicer. Results of the following reviews and
tests conducted by the Supervisory Servicer shall be reported monthly
(unless specified otherwise herein) and delivered by the 10th calendar day
following the Determination Date or following such other date for which
figures are reported to the foregoing persons, provided, that the required
reports are timely received from the Servicer, the Trustee and the
Collection Account Depository:
(i) Beginning February 15, 1997 and on the Distribution Date
occurring in each month thereafter, compare the balance on deposit in
the Reserve Fund with the then existing Reserve Fund Requirement to
determine if the balance on deposit in the Reserve Fund is less than
the Reserve Fund Requirement and the Reserve Fund Minimum. If the
balance on deposit in the Reserve Fund is less than the Reserve Fund
Requirement or the Reserve Fund Minimum, the Supervisory Servicer
shall promptly notify the Rating Agency, the Servicer, the Placement
Agent, the Certificateholders, the Trustee and the Depositor of such
event.
(ii) Beginning February 10, 1997 and on or before the tenth
(10th) calendar day of each Collection Period thereafter, and
calculated on the basis of the preceding Collection Period completed
prior to the date of such test, review the Monthly Servicer Report
with respect to such Collection Period to determine if an Accelerated
Reserve Fund Event has occurred and, if it has occurred, whether it is
continuing. The Supervisory Servicer shall promptly report the results
of such review to the Persons specified in the Monthly Supervisory
Servicer Report.
(iii) Beginning February 1997, the Supervisory Servicer shall
utilize such methods as it deems reasonable and necessary to review
the Monthly Servicer Report for the prior month within five Business
Days after its receipt and shall determine the following and take such
action as follows:
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(A) that the Monthly Servicer Report is complete on its
face;
(B) that the amounts deposited in, credited to or withdrawn
from the Revenue Fund, the Reserve Fund, the Collection Account,
the Pre-Funding Account and the Payment Account and the balance
of such funds and accounts, as set forth in the records of the
Trustee are consistent with the amounts set forth in such Monthly
Servicer Report;
(C) in the event of any discrepancy between the information
set forth in the Monthly Servicer Report from that determined by
the Supervisory Servicer, the Supervisory Servicer shall promptly
notify the Servicer and the Trustee of such discrepancy and shall
settle such discrepancy with the Servicer, and if within 15 days
after such notice, the Servicer and the Supervisory Servicer are
unable to resolve such discrepancy, the Supervisory Servicer
shall promptly notify the Persons specified in the Monthly
Supervisory Servicer Report.
(iv) Beginning February 1997, upon receipt of the diskette
specified in Section 2.02(f), the Supervisory Servicer shall promptly
verify that such diskette is in readable and usable form (and it not
readable or usable, promptly request a substitute diskette that is
readable and usable) and shall calculate and verify that all
information obtained from such diskette is in agreement with the
amounts set forth in the Monthly Servicer Report for the prior
Collection Period.
(v) Perform such other duties as specified hereunder.
(c) The Supervisory Servicer shall obtain from the Servicer, and the
Servicer shall provide to the Supervisory Servicer, a copy of the written
collection policies and procedures of the Servicer on or prior to the date
hereof and updates of such policies and procedures at least annually.
(d) The Supervisory Servicer shall consult fully with the Servicer as
may be necessary from time to time to perform or carry out the Supervisory
Servicer's obligations hereunder, including the obligation to succeed at
any time to the duties and obligations of the Servicer hereunder.
(e) The Supervisory Servicer shall promptly notify the Trustee and the
Rating Agency in writing on any event, circumstance or occurrence which may
adversely affect the ability of the Supervisory Servicer to perform and
carry out its duties, responsibilities and obligations under and in
accordance with this Servicing Agreement.
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(f) Based solely on the information included in the Schedule of
Receivables delivered on or before a Funding Date and the computer disks or
tapes provided each Distribution Date thereafter, the Supervisory Servicer
shall determine that the inclusion of Subsequent Receivables in the
Receivables pool as of the related Funding Date satisfies the criteria set
forth in Section 2.16 of the Pooling Agreement.
(g) Other than as specifically set forth elsewhere in this Servicing
Agreement, the Supervisory Servicer shall have no obligation to supervise,
verify, monitor or administer the performance of the Servicer and shall
have no liability for any action taken or omitted by the Servicer.
(h) Notwithstanding anything herein to the contrary, the Supervisory
Servicer shall have no obligation to take any action not specified or
referred to in this Section 2.25 without receipt of satisfactory
indemnification provided to it by the Person requesting such action or
otherwise as provided in Section 7.25 hereof.
Section 2.26. [Reserved]
Section 2.27. Errors and Omissions Insurance; Fidelity Bond. The Servicer,
other than Texas Commerce Bank National Association as Successor Servicer, shall
maintain, at its own expense, an errors and omissions insurance policy, with
coverage of at least $1 million and a fidelity bond in the amount of $100,000,
each naming the Trustee, in its capacity as trustee, as an additional loss payee
or beneficiary of each such insurance policy or fidelity bond, with responsible
companies on all officers, employees or other persons acting on behalf of the
Servicer in any capacity with regard to the Conveyed Property to handle funds,
money, documents and papers relating to the Conveyed Property. Any such errors
and omissions insurance and fidelity bond shall protect and insure the Servicer
against losses, including forgery, theft, embezzlement, fraud, errors and
omissions and negligent acts of such persons and shall be maintained in a form
and amount that would meet the requirements of prudent institutional automobile
receivables servicers. No provision of this Section 2.27 requiring such errors
and omissions insurance and fidelity bond shall diminish or relieve the Servicer
from its duties and obligations as set forth in this Servicing Agreement. The
Servicer shall be deemed to have complied with this provision if one of its
respective Affiliates has such errors and omissions insurance and fidelity bond
and, by the terms of such errors and omissions insurance and fidelity bond, the
coverage afforded thereunder extends to the Servicer. The Servicer shall cause
each and every subservicer for it to maintain an errors and omissions insurance
or a fidelity bond which would meet such requirements. Annually and more
frequently upon request of the Depositor, the Trustee or the Supervisory
Servicer, the Servicer shall cause to be delivered to the Trustee a
certification evidencing coverage under such insurance policy and fidelity bond.
Any such insurance policy or a fidelity bond shall not be cancelled or modified
in a materially adverse manner without thirty (30) days' prior written notice to
the Depositor, the Trustee and the Rating Agency. This Section 2.27 shall not
apply to the Supervisory Servicer acting as Servicer.
26
Section 2.28. Responsibilities of Supervisory Servicer and Servicer.
Neither the Supervisory Servicer nor the Servicer shall have any duties,
obligations or responsibilities other than those specifically expressed and set
forth herein, and no implied obligations of the Supervisory Servicer or the
Servicer shall be read into this Servicing Agreement. Neither the Supervisory
Servicer nor the Servicer nor any of their respective directors, officers,
agents or employees shall be liable to any person, including, without
limitation, the Servicer or the Supervisory Servicer, as the case may be, or the
Depositor, the Trustee or the Certificateholders in connection with this
Servicing Agreement, except for the breach of any of its representations and
warranties or obligations under this Servicing Agreement or for the negligence,
bad faith or willful misconduct of the Supervisory Servicer or the Servicer, as
the case may be, or any of their respective officers, directors, agents or
employees. The Supervisory Servicer may rely on and shall be protected in acting
upon, or in refraining from acting in accordance with, any resolution, officer's
certificate, certificate of auditors or any other certificate, instrument,
opinion, report, notice, request, consent, order appraisal, bond or other paper
or document reasonably believed by it to be genuine and correct and to have been
signed or presented by the proper person or persons. Without limiting the
foregoing, the Supervisory Servicer (i) may consult, at its expense, with legal
counsel (including the Trustee's or the Supervisory Servicer's), Independent
Public Accountants and other experts selected by it with reasonable care and
shall not be liable for any action reasonably taken or omitted to be taken by it
in accordance with the advice of such counsel, accountants or experts, (ii)
shall not be responsible to the Depositor or the Servicer, as the case may be,
the Trustee or any other person for any recitals, statements, warranties or
representations made in or in connection with any of this Servicing Agreement,
the Pooling Agreement, the Transfer and Assignment Agreement or any other
agreement, document or instrument executed in connection therewith (the
"Transaction Documents") by any other person, (iii) shall not be responsible for
the actions or omissions of any other person, including, without limitation, the
Servicer, the Seller, the Depositor, the Trustee and the Certificateholders
unless such act or omission was caused by an act or omission of the Supervisory
Servicer, (iv) except as provided in this Servicing Agreement or any Transaction
Documents, shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of the or
writing (which may be telex or telecopy) reasonably believed by it to be genuine
and signed, sent or communicated by the proper party or parties.
27
It is agreed and understood that the Supervisory Servicer is responsible
for providing the services described in Section 2.25 only in accordance with the
information as shall have been timely supplied to it by the Servicer, the
Trustee or the Collection Account Depository, as the case may be. The
Supervisory Servicer shall incur no liability for any failure by the Servicer,
the Trustee or the Collection Account Depository to furnish information required
of it, nor shall the Supervisory Servicer be responsible for the content or
accuracy of any information provided to it by any such Person, unless required
by the Transaction Documents to do so. Except as may be expressly provided
herein or in the Pooling Agreement, the Supervisory Servicer shall have no duty
to supervise, investigate or audit any records or activities of the Servicer
with respect to the servicing of the Conveyed Property. The Supervisory Servicer
shall have no responsibility or liability for any acts or omissions of the
Servicer with respect to the Conveyed Property.
The Supervisory Servicer shall not be required to expend or risk its own
funds or otherwise incur financial liability in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, if the
repayment of such funds or adequate written indemnity against such risk or
liability is not reasonably assured to it in writing prior to the expenditure or
risk of such funds or incurrence of financial liability. In no event shall Texas
Commerce Bank National Association be liable, for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if Texas Commerce Bank National Association has been
advised of the likelihood of such loss or damage and regardless of the form of
action.
ARTICLE III
ACCOUNTS; COLLECTIONS
Section 3.01. Accounts. There have been established pursuant to the Pooling
Agreement certain accounts in the name of the Trustee for the benefit of the
Certificateholders, including, without limitation, the Collection Account, the
Reserve Fund, the Pre-Funding Account, the Expense Account, the Revenue Fund and
the Payment Account.
Section 3.02. Collections.
(a) The Servicer shall remit or cause a Subservicer to remit to the
Collection Account described in Section 3.03 hereof, and to no other
account, as soon as practicable, but in no event later than the Collection
Account Depository's close of business on the Business Day after receipt
thereof by the Servicer or the Subservicer, as the case may be, all
payments made by or on behalf of the Obligors, including all Actual
Payments, Insurance Proceeds, Defaulted Receivable Recoveries, Principal
Collections, Liquidation Proceeds, Repurchase Prices and all proceeds
28
relating to the repossession or disposition of the Financed Vehicles
(including recourse payments received from Dealers with respect to a breach
of a representation or warranty of such Dealers under the Dealer
Agreements), all as collected during the Collection Period, in respect of a
Receivable being serviced by the Servicer or a Receivable subject to a
Repurchase Event, and all payments or other amounts, if any, made by or on
behalf of an Obligor or received by the Servicer with respect to any
Receivable; provided, however, that all amounts remitted by or on behalf of
Obligors under the terms of, or with respect to, the Receivables
representing non-sufficient fund charges, late fees, extension fees or
prepayment charges, including administrative fees or similar charges
allowed by applicable law shall be reimbursed to the Servicer by the
Trustee and shall be retained by the Servicer as additional compensation.
(b) With respect to checks or drafts (i) made payable to the named
insured, the Trustee or any other Person, and (ii) received by the
Servicer, the Servicer shall take all necessary action to document the
receipt of each such draft on the day of receipt thereof and forward the
original draft by reputable overnight courier to Texas Commerce Bank
National Association, Attention: Global Trust Services Group-Western
Fidelity 1996-A for receipt by the Trustee on the following Business Day.
Section 3.03. Collection Account and Acknowledgement Letter.
(a) The Depositor has appointed Wells Fargo Bank (Colorado) National
Association as the initial Collection Account Depository with respect to
the Receivables serviced under this Servicing Agreement. The Depositor
shall provide thirty (30) days' prior notice to the Trustee, the Servicer
and the Supervisory Servicer of its appointment of a successor Collection
Account Depository which shall be acceptable to the Rating Agency and the
Trustee and which shall hold the Collection Account under the terms and
conditions outlined herein and in the Pooling Agreement.
(b) Except as otherwise provided herein, the Servicer shall deposit or
cause to be deposited into the Collection Account all amounts (including
late payments) remitted by Obligors to the Servicer under the terms of the
Receivables within one (1) Business Days after receipt thereof; provided,
however, that the Servicer shall, pursuant to Section 3.02(a), be entitled
to reimbursement of all amounts remitted by or on behalf of the Obligors to
the Servicer under the terms of, or with respect to, the Receivables, which
amounts represent non-sufficient fund charges, late fees, extension fees,
prepayment charges, including administrative fees or similar charges
allowed by applicable law.
29
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. Representations and Warranties of the Servicer. The Servicer,
excluding Texas Commerce Bank National Association, as Successor Servicer,
hereby represents, warrants and covenants to the Supervisory Servicer, the
Depositor, the Certificateholders and the Trustee that as of the date of this
Servicing Agreement and, for so long as the Servicer shall continue to act as
Servicer hereunder:
(a) The Servicer is a corporation duly organized, validly existing and
in good standing under the laws of the State of Colorado and is qualified
to do business in each other state where the failure to be so qualified
would have a materially adverse effect on its business or properties;
(b) All necessary corporate, regulatory or other similar action has
been taken to authorize and empower the Servicer and the officers or
representatives acting on the Servicer's behalf, and the Servicer has full
power and authority to execute, deliver and perform this Servicing
Agreement;
(c) This Servicing Agreement has been duly authorized, executed and
delivered by the Servicer and the performance and compliance with the terms
of this Servicing Agreement will not violate the Servicer's certificate of
incorporation or bylaws or constitute a default (or an event which, with
notice or lapse of time, or both, would constitute a default) under, or
result in the breach of, any material contract, indenture, loan, lease,
credit agreement or any other agreement or instrument to which the Servicer
is a party or which may be applicable to the Servicer or any of its assets,
or create any adverse claim upon its assets;
(d) The Servicer is duly licensed and qualified to perform the
functions specified herein, and this Servicing Agreement constitutes a
valid, legal and binding obligation of the Servicer, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium and other laws affecting
the enforcement of creditors' rights generally and to general principles of
equity;
(e) The Servicer is not in violation of, and the execution, delivery
and performance of this Servicing Agreement by the Servicer will not
constitute a violation with respect to any order or decree of any court or
any order, regulation or demand of any federal, state, municipal or
governmental agency, which violation might have consequences that would
materially and adversely affect the condition (financial or other) or
operations of the Servicer or its properties or might have consequences
that would affect the performance of its duties hereunder;
30
(f) No proceeding of any kind, including but not limited to
litigation, arbitration, judicial or administrative, is pending or
threatened against or contemplated by the Servicer which would under any
circumstance have an adverse effect on the execution, delivery, performance
or enforceability of this Servicing Agreement. No injunction, writ,
restraining order or other order of any nature to which the Servicer is
subject that would adversely affect the Servicer's operations, including
the performance of its agreements and the transactions contemplated hereby;
(g) No information, Officer's Certificate or statement furnished in
writing or report delivered to the Trustee, the Depositor, the Supervisory
Servicer or any Certificateholder by the Servicer required under this
Servicing Agreement contains any untrue statement of a material fact or
omit a material fact necessary to make the information, certificate,
statement or report not misleading; provided, that the Servicer makes no
representation or warranty with respect to any information incorporated
into or forming the basis of any Officer's Certificate, information,
statement or report provided by the Servicer that is provided to the
Servicer by any other Person;
(h) The Servicer has the knowledge, the experience and the systems,
financial and operational capacity available to timely perform each of its
obligations hereunder;
(i) The Servicer has made or obtained all consents, filings or
governmental approvals required for the due execution, delivery and
performance of agreements and the servicing of the Receivables;
(j) No event has occurred which would adversely affect the Servicer's
ability to perform the agreements and transactions contemplated hereby;
(k) The Servicer's principal place of business and chief executive
office, and the office at which records are kept are at the address,
specified in Section 7.03 and there have been no other such locations
during the four-month period preceding the date hereof; and
(l) If payments with respect to the Receivables are not to be remitted
directly to the Servicer, each Obligor of the Receivables will be directed,
and will be required, to remit such payments to a lockbox or other similar
account.
Section 4.02. Representations and Warranties of the Supervisory Servicer.
The Supervisory Servicer hereby represents, warrants and covenants to the
Depositor, the Servicer and the Trustee that, as of the date hereof or as of
such date specifically provided herein:
(a) The Supervisory Servicer is a national banking association duly
organized, validly existing, in good standing and authorized to engage in a
banking business under the federal laws of the United States of America;
31
(b) All necessary corporate, regulatory or other action has been taken
to authorize and empower the Supervisory Servicer and the officers or
representatives acting on the Supervisory Servicer's behalf to perform and
comply with the Supervisory Servicer's obligations under this Servicing
Agreement, and the Supervisory Servicer has full power and authority, to
execute, deliver and perform this Servicing Agreement;
(c) The execution and delivery of this Servicing Agreement by the
Supervisory Servicer and its performance and compliance with the terms of
this Servicing Agreement will not violate the Supervisory Servicer's
articles of incorporation or bylaws or constitute a default (or an event
which, with notice or lapse of time, or both, would constitute a default)
under, or result in the breach of, any contract, indenture, loan, credit
agreement or any other agreement or instrument to which the Supervisory
Servicer is a party or which may be applicable to the Supervisory Servicer
or any of its assets;
(d) This Servicing Agreement constitutes a legal, valid and binding
obligation of the Supervisory Servicer, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting the enforcement of creditors'
rights generally and to general principles of equity;
(e) The Supervisory Servicer is not in violation of, and the
execution, delivery and performance of this Servicing Agreement by the
Supervisory Servicer will not constitute a violation with respect to, any
applicable order or decree of any court or any order, regulation or demand
of any federal, state, municipal or governmental agency, which violation
might have consequences that would materially and adversely affect the
condition (financial or other) or operations of the Supervisory Servicer or
its properties or might have consequences that would materially adversely
affect the performance of its duties hereunder;
(f) No proceeding of any kind, including, but not limited to,
litigation, arbitration, judicial or administrative, is pending or, to the
actual knowledge of the executing officer of the Supervisory Servicer,
contemplated or threatened against the Supervisory Servicer which would
under any circumstance have an adverse effect on the execution, delivery,
performance or enforceability of this Servicing Agreement by or against the
Supervisory Servicer;
(g) No certificate of an officer of the Supervisory Servicer,
statement of the Supervisory Servicer furnished in writing or report of the
Supervisory Servicer delivered to the Depositor, the Trustee, the Servicer
or any Certificateholder by the Supervisory Servicer required under this
Servicing Agreement contains any untrue statement of a material fact or
omits a material fact necessary to make the officer's certificate,
statement or report not misleading; provided, that the Supervisory Servicer
makes no representation or warranty with respect to any information
incorporated into or forming the basis of any certificate, statement or
report that is provided to the Supervisory Servicer by any other Person;
32
(h) The Supervisory Servicer has the knowledge, the experience and the
systems, financial and operational capacity available to timely perform
each of its obligations hereunder;
(i) This Servicing Agreement has been duly authorized, executed and
delivered by the Supervisory Servicer; and
(j) There are no injunctions, writs, restraining orders or similar
orders of any nature to which the Supervisory Servicer is subject that
would adversely affect the Supervisory Servicer's performance under this
Agreement and the transactions contemplated thereby.
Section 4.03. Representations and Warranties of the Depositor. The
Depositor hereby represents, warrants and covenants to the Supervisory Servicer,
the Servicer and the Trustee that as of the date of this Servicing Agreement or
as of such date specifically provided herein:
(a) The Depositor is a corporation duly organized under the laws of
the State of Delaware pursuant to a Certificate of Incorporation and is
validly existing as a corporation and in good standing under the laws of
the State of Delaware and has full power and authority to execute and
deliver this Servicing Agreement and to perform the terms and provisions
hereof.
(b) The execution, delivery and performance by the Depositor of this
Servicing Agreement have been duly authorized by all necessary action by
the Depositor, do not require any approval or consent of any Person, do not
and will not conflict with any material provision of a Certificate of
Incorporation of the Depositor, and do not and will not conflict with or
result in a breach which would constitute a default under any agreement
binding upon or applicable to it or such of its property which is material
to it, or any law or governmental regulation or court decree applicable to
it or such material property, and this Servicing Agreement is the legal,
valid and binding obligation of the Depositor enforceable in accordance
with its terms except as the same may be limited by insolvency, bankruptcy,
reorganization or other laws relating to or affecting the enforcement of
creditors' rights or by general equity principles.
(c) No litigation or administrative proceeding of or before any court,
tribunal or governmental body is presently pending, or to the knowledge of
the Depositor threatened, against the Depositor or its properties or with
respect to this Servicing Agreement, which, if adversely determined would,
in the opinion of the Depositor, have a material adverse effect on the
transactions contemplated by this Servicing Agreement.
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(d) There is no injunction, writ, restraining order or other order of
any nature to which the Depositor is subject that would adversely affect
the Depositor's performance of its obligations under this Agreement and any
transaction contemplated thereby.
(e) The Depositor has filed, on a timely basis, all required federal
and state tax returns.
(f) The legal name of the Depositor is as set forth in this Agreement,
and the Depositor has no tradenames, fictitious names, assumed names or
"doing business as" names.
(g) The Depositor's principal place of business and chief executive
office are at the address specified in Section 7.03.
Section 4.04. Survival of Representations and Warranties. The
representations and warranties set forth in this Article IV are continuous and
shall survive the date of this Servicing Agreement until the Trust is no longer
in effect. Upon discovery by any of the Depositor, the Supervisory Servicer or
the Servicer of a breach of any of the foregoing representations and warranties,
the party discovering such breach shall give prompt written notice to the other
parties hereto and to the Trustee.
Section 4.05. Merger or Consolidation of, or Assumption of the Obligations
of, or Resignation 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, (c) which may succeed to the properties and
assets of the Servicer substantially as a whole, or (d) which may succeed to the
duties and obligations of the Servicer under this Servicing Agreement following
the resignation of the Servicer subject to Section 2.01 hereof, which Person
executes an agreement of assumption to perform every obligation of the Servicer
hereunder, shall be the successor to the Servicer or under this Servicing
Agreement without further act on the part of any of the parties to this
Servicing Agreement; provided, however, that (i) immediately after giving effect
to such transaction, no Event of Servicing Default (as defined in Section 5.01),
and no event which, after notice or lapse of time, or both, would become an
Event of Servicing Default shall have occurred or be continuing, (ii) no Event
of Default would occur as a result of such merger, consolidation or assumption
of liability, (iii) the Servicer shall have delivered to the Depositor, the
Supervisory Servicer and the Trustee an Officer's Certificate and an opinion of
counsel each stating that such consolidation, merger, succession or resignation
and such agreement of assumption comply with this Section 4.05 and that all
conditions precedent provided for in this Servicing Agreement relating to such
transaction have been complied with and (iv) the Servicer shall have delivered
to the Depositor, the Supervisory Servicer and the Trustee an opinion of counsel
either (A) stating that, in the opinion of such counsel, all financing
statements, continuation statements and amendments and notations on certificates
of title thereto have been executed and filed that are necessary fully to
preserve and protect the interest of the Depositor, the Certificateholders and
the Trustee in the Receivables and the Financed Vehicles, 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.
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ARTICLE V
DEFAULT, REMEDIES AND INDEMNITY
Section 5.01. Events of Servicing Default. Any of the following acts or
occurrences shall constitute an "Event of Servicing Default" under this
Servicing Agreement, but only with respect to the party responsible for such act
or occurrence:
(a) any failure by the Servicer or Supervisory Servicer to make any
payment, transfer or deposit to the Trustee within five Business Days after
the date such payment transfer or deposit is required to be made;
(b) any failure by the Servicer or Supervisory Servicer to provide any
notices to the Trustee pursuant to this Servicing Agreement relating to the
transfer or calculation of funds which has not been cured within five
Business Days after the date of receipt of notice of such failure;
(c) failure on the part of the Servicer or Supervisory Servicer to
either duly observe or perform in any material respect any other covenants
or agreements of the Servicer or Supervisory Servicer, respectively, set
forth in this Servicing Agreement which 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 given to the Servicer or
Supervisory Servicer, as the case may be, by the Trustee or the Depositor;
or the Servicer or the Supervisory Servicer shall assign its respective
duties hereunder (except as expressly permitted herein);
(d) any representation, warranty or certification made by the Servicer
or Supervisory Servicer or any successor to either in this Servicing
Agreement, or any certificate delivered pursuant to this Servicing
Agreement, shall prove to have been incorrect when made, which has a
material adverse effect on the Certificateholders and which continues to be
incorrect in any material respect 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 given to the Servicer or the Supervisory Servicer, as the
case may be, by the Trustee or the Depositor;
(e) the Servicer or Supervisory Servicer shall consent 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 Supervisory Servicer,
respectively, or of or relating to all or substantially all of their
respective properties, or a decree or order of a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a conservator or receiver or liquidator in any insolvency,
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readjustment of debt, marshalling of assets and liabilities or similar
proceedings, or for the winding-up or liquidation of its affairs, shall
have been entered against the Servicer or Supervisory Servicer or Successor
Servicer or Successor Supervisory Servicer and such decree or order shall
have remained in force undischarged or unstayed for a period of 60 days; or
the Servicer or Supervisory Servicer or any successor to either shall admit
in writing its inability to pay its debts generally as they become due,
file or have filed against it a petition or commence an action to take
advantage of any applicable insolvency or reorganization statute, make any
assignment for the benefit of its creditors or voluntarily suspend payment
of its obligations;
(f) the Servicer or the Supervisory Servicer or any successor to
either shall fail to be an Eligible Servicer; or
(g) an Event of Insolvency shall have occurred.
Section 5.02. Remedies.
(a) If an Event of Servicing Default shall occur and be continuing
and, unless (i) such Event of Servicing Default shall have been waived by
the Certificateholders constituting Certificateholder Approval and (ii) the
Trustee and the Depositor have received written confirmation from the
Rating Agency that the rating then assigned to the Certificates will not be
downgraded, then, by notice given in writing to the defaulting party (the
"Terminated Party"), with a copy to the Depositor by (i) either the
Trustee, the Supervisory Servicer or the Certificateholders constituting
Certificateholder Approval with respect to an Event of Servicing Default by
the Servicer or (ii) the Trustee or the Certificateholders constituting
Certificateholder Approval, with respect to an Event of Servicing Default
by the Supervisory Servicer (either, a "Termination Notice"), all of the
rights and obligations of the Terminated Party, shall be terminated;
provided, however, that if any such Event of Servicing Default arises
solely as a result of actions or inactions on the part of the Supervisory
Servicer, the rights and obligations of the Servicer as Servicer under this
Servicing Agreement shall not terminate and shall remain in full force and
effect, and any Successor Supervisory Servicer shall retain the Servicer as
Servicer hereunder; provided, further, that if any such Event of Servicing
Default arises solely as a result of the actions or inactions on the part
of the Servicer, the rights and obligations of the Supervisory Servicer as
Supervisory Servicer under this Servicing Agreement shall not terminate and
shall remain in full force and effect. The rights and interest of the
Trustee or the Depositor under this Servicing Agreement will not be
affected by either such termination.
(b) After receipt by the Terminated Party of a Termination Notice, and
on the date that a Successor Servicer or Successor Supervisory Servicer
shall have been appointed pursuant hereto, all authority and power of the
Terminated Party under this Servicing Agreement shall pass to and be vested
in a Successor Servicer or Successor Supervisory Servicer, as the case may
be; and, without limitation, each of the Depositor and the Trustee is
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hereby authorized and empowered (upon the failure of the Terminated Party
within a period of 30 days to cooperate) to execute and deliver, on behalf
of the Terminated Party, as attorney-in-fact or otherwise, all documents
and other instruments upon the failure of the Terminated Party to execute
or deliver such documents or instruments, and to do and accomplish all
other acts or things necessary or appropriate to effect the purposes of
such transfer of servicing rights. The Servicer and Supervisory Servicer
hereby agree to cooperate with the Depositor and such Successor Servicer or
Successor Supervisory Servicer in effecting the termination of the
responsibilities and rights of the Terminated Party to conduct servicing
under this Servicing Agreement, including, without limitation, the transfer
to such Successor Servicer or Successor Supervisory Servicer of all
authority of the Terminated Party to service the Receivables provided for
under this Servicing Agreement, including, without limitation, the right to
receive all collections, all authority over all collections which shall on
the date of transfer be held by the Terminated Party for deposit or which
have been deposited by the Terminated Party in the Collection Account or
the Revenue Fund or which shall thereafter be received with respect to the
Receivables, and in assisting the Successor Servicer or Successor
Supervisory Servicer and in enforcing all rights relating to the
Receivables. In addition to the foregoing, the Successor Servicer or
Successor Supervisory Servicer, as the case may be, may, either directly or
through an agent or court appointed receiver, and without regard to the
adequacy of any security for the Certificates, (i) enter, take possession
of, manage or otherwise occupy the building or the portion of the building
in which payments under the Receivables are made by the Obligors for the
purpose of the collection of such payments; (ii) staff any and all
collection counters and windows of the Terminated Party (if the Servicer)
for the purpose of the collection of all cash, checks, drafts and other
evidence of payment relating to the Receivables, and the Servicer (if the
Terminated Party) agrees to any and all such actions; (iii) endorse, in the
name of the Terminated Party (if the Servicer), all cash, checks, drafts
and other evidences of payment relating to the Receivables, and receive,
open and dispose of all mail addressed to the Terminated Party (if the
Servicer) and notify the postal authorities to change the address for
delivery of such mail address to the Successor Servicer or Successor
Supervisory Servicer, and the Terminated Party (if the Servicer) hereby
grants to the Supervisory Servicer a power of attorney to take all such
action as may be necessary to effectuate the foregoing; and (iv) have
reasonable access to the facilities, equipment and personnel of the
Terminated Party. The Terminated Party, at its expense, shall promptly
transfer its electronic records relating to the Receivables to the
Successor Servicer or Successor Supervisory Servicer in such electronic
form as the Successor Servicer or Successor Supervisory Servicer may
reasonably request and shall, at its expense, promptly transfer to the
Successor Servicer or Successor Supervisory Servicer all other records,
correspondence and documents necessary for the continued servicing of the
Receivables in the manner and at such times as the Successor Servicer or
Successor Supervisory Servicer shall reasonably request. The Terminated
Party, at its expense, shall give notices of the transfer of servicing to
the Obligors in the manner and at such times as the Successor Servicer or
Successor Supervisory Servicer shall reasonably request and, without
limiting the foregoing, each Successor Servicer and Successor Supervisory
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Servicer, as the case may be, is hereby authorized and empowered, as
attorney-in-fact or otherwise, to execute and deliver all such notices on
behalf of the Terminated Party. To the extent that compliance with this
Section 5.02 shall require the Terminated Party to disclose to the
Successor Servicer or Successor Supervisory Servicer information of any
kind which the Terminated Party reasonably deems to be confidential, the
Successor Servicer or Successor Supervisory Servicer shall be required to
enter into such customary licensing and confidentiality agreements as the
Terminated Party reasonably shall deem necessary to protect its interest.
(c) On and after the receipt by the Terminated Party of a Termination
Notice pursuant to this Section 5.02, the Terminated Party shall continue
to perform all servicing functions under this Servicing Agreement until the
date specified in the Termination Notice or otherwise specified by the
Depositor in writing. In the event the Supervisory Servicer, as a matter of
law as evidenced by an Opinion of Counsel by counsel acceptable to the
Rating Agency, is unable to perform the duties and obligations of the
Servicer hereunder, the Depositor shall as promptly as possible after the
giving of a Termination Notice with respect to the Servicer appoint a
Successor Servicer acceptable to the Rating Agency, and such Successor
Servicer shall accept its appointment by a written assumption in a form
acceptable to the Supervisory Servicer and the Depositor. Within 30 days of
termination of the Servicer, the Supervisory Servicer shall send, or cause
to be sent, to each Obligor, a written notice of the name and mailing
address of the Successor Servicer to whom payments on the Receivables are
to be made.
(d) The Depositor, with the written consent of Holders of Certificates
representing Certificateholder Approval, shall as promptly as possible
appoint a Successor Supervisory Servicer following delivery of a
Termination Notice with respect to the Supervisory Servicer. In the event
that a Successor Supervisory Servicer has not been appointed and has not
accepted its appointment at the time when the Supervisory Servicer is to
cease to act as Supervisory Servicer, the Trustee pursuant to the Pooling
Agreement shall automatically be appointed Successor Supervisory Servicer
(or, if it is then so acting, continue so to act) to the extent it is
legally able to act as Supervisory Servicer until a Successor Supervisory
Servicer shall be appointed by the Holders of Certificates representing
Certificateholder Approval. If the Depositor, with the written consent of
Holders of Certificates representing Certificateholder Approval, shall fail
to approve a Successor Supervisory Servicer within 30 days of the date of a
Termination Notice, the Trustee may petition a court of competent
jurisdiction for the appointment of a Successor Supervisory Servicer.
Notwithstanding the above, the Trustee shall, if it is legally unable so to
act, petition a court of competent jurisdiction to appoint any Eligible
Servicer as the Successor Supervisory Servicer hereunder.
(e) Upon its appointment, the Successor Servicer or Successor
Supervisory Servicer, as the case may be, shall be the successor in all
respects to the Terminated Party, with respect to servicing functions under
this Servicing Agreement and shall be subject to all the responsibilities,
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duties and liabilities (arising on and after the time of such appointment)
relating thereto placed on the Servicer or Supervisory Servicer,
respectively, by the terms and provisions hereof (except as otherwise
provided in this Servicing Agreement with respect to the Supervisory
Servicer acting as Servicer), and all references in this Servicing
Agreement to the Servicer or Supervisory Servicer shall be deemed to refer
to the Successor Servicer or Successor Supervisory Servicer unless the
context otherwise requires. The Successor Supervisory Servicer shall
expressly be authorized to delegate any of its duties thereunder to the
Servicer on and after the date of any transfer of servicing pursuant to
this Article V; provided, that the Successor Supervisory Servicer shall
remain liable and responsible with respect to any duty so delegated.
(f) In connection with such appointment and assumption, the
Supervisory Servicer may make such arrangements for the compensation of
itself and the Successor Servicer out of collections of Receivable
payments, as it and such Successor Servicer shall agree; provided, however,
that no such compensation shall be in excess of the Supervisory Servicing
Fees and Servicing Fees permitted to the Supervisory Servicer and the
Servicer, respectively, pursuant to this Servicing Agreement without the
approval of the Depositor, the Trustee and the Certificateholders
constituting Certificateholder Approval.
(g) All authority and power granted to the Supervisory Servicer,
Successor Supervisory Servicer, Servicer or the Successor Servicer under
the Servicing Agreement shall automatically cease and terminate upon
termination of the Pooling Agreement, and shall pass to and be vested in
the Depositor and, without limitation, the Depositor is hereby authorized
and empowered to execute and deliver, on behalf of the Successor
Supervisory Servicer or the Successor Servicer, as attorney-in-fact or
otherwise, all documents and other instruments, and to do and accomplish
all other acts or things necessary or appropriate to effect the purposes of
such transfer of servicing rights. The Successor Supervisory Servicer and
the Successor Servicer agree to cooperate with the Depositor in effecting
the termination of the responsibilities and rights of the Successor
Supervisory Servicer and the Successor Servicer to conduct servicing on the
Receivables. The Successor Supervisory Servicer and the Successor Servicer
shall transfer their respective electronic records relating to the
Receivables to the Depositor in such electronic form as the Depositor may
reasonably request and shall transfer all other records, correspondence and
documents to the Depositor in the manner and at such times as the Depositor
shall reasonably request, provided that all fees and expenses owed to the
Servicer or the Supervisory Servicer (or the successor to either) have been
paid. To the extent that compliance with this Section 5.02 shall require
the Successor Supervisory Servicer and the Successor Servicer to disclose
to the Depositor information of any kind which the Successor Supervisory
Servicer and the Successor Servicer deem to be confidential, the Depositor
shall be required to enter into such reasonable and customary licensing and
confidentiality agreements as the Successor Supervisory Servicer and the
Successor Servicer reasonably shall deem necessary to protect their
respective interests.
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Section 5.03. Indemnity by the Servicer. The Servicer (excluding the
Supervisory Servicer if it is then serving as Successor Servicer) shall be
liable to the Seller, the Depositor, the Trustee, each Certificateholder and the
Supervisory Servicer (collectively, the "Indemnified Parties") to the extent of
the following:
(a) The Servicer shall indemnify, defend and hold harmless the
Indemnified Parties and any of the officers, directors, employees and
agents of the Indemnified Parties 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 a Financed Vehicle.
(b) The Servicer shall indemnify, defend and hold harmless the
Indemnified Parties and any of the officers, directors, employees and
agents of the Indemnified Parties 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 any such Person through the breach of this Servicing Agreement
by the Servicer, the negligence, misfeasance or bad faith of the Servicer
in the performance of its duties under this Servicing Agreement or by
reason of reckless disregard of its obligations and duties under this
Servicing Agreement.
(c) The Servicer shall be strictly accountable for all payments
actually received on the Receivables.
(d) The Servicer shall not be liable to any person for any action
taken or for refraining from the taking of any action in good faith
pursuant to this Servicing Agreement or for errors in judgment to the
extent consistent with the standard of care set forth in Section 2.19.
Section 5.04. Indemnity by the Supervisory Servicer. The Supervisory
Servicer and, if applicable, the Successor Servicer, shall indemnify and hold
the Servicer, the Depositor, the Trustee and the Certificateholders harmless
against any and all liability, loss, damage, penalty, fine, forfeiture, legal or
accounting fees, court reporting expenses, expert witness fees and all other
fees or costs of any kind, judgments or expenses, resulting from or arising out
of a material, intentional breach of this Servicing Agreement by the Supervisory
Servicer; provided, however, the Supervisory Servicer shall not be liable to the
Servicer, the Depositor, the Trustee and the Certificateholders (i) by reason of
any act, contract or transaction performed in good faith by the Supervisory
Servicer pursuant to this Servicing Agreement nor shall it be liable for any
loss resulting therefrom or for any lost profit derived therefrom or any errors
in judgment, so long as such act, contract or transaction shall, at the time at
which it was performed or entered into, have been reasonable and prudent under
the circumstances and shall have conformed in all material respects to the
express provisions of this Servicing Agreement or (ii) for any action taken or
for errors in judgment committed directly resulting from fraud, negligence or
willful misconduct of the Depositor, the Servicer, the Trustee or the
Certificateholders. The rights of the Servicer, the Depositor, the Trustee and
the Certificateholders to indemnity or reimbursement pursuant to this Section
5.04 shall survive the transfer of the rights, duties and obligations of the
Supervisory Servicer or the Servicer to another Person or any Event of Servicing
Default.
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Section 5.05. Indemnity by the Depositor. The Depositor will defend and
indemnify the Supervisory Servicer, the Servicer, the Trustee and the
Certificateholders against any and all costs, expenses, losses, damages, claims
and liabilities, including reasonable fees and expenses of counsel and expenses
of litigation, directly arising out of or directly resulting from the status of
the Depositor as legal owner of the related Receivables, the origination or
terms of any such Receivables, the creation of the Depositor or the issuance and
sale of the Certificates. The Depositor shall not be liable to the Supervisory
Servicer, the Servicer, the Trustee and the Certificateholders (i) by reason of
any act, contract or transaction performed in good faith by the Depositor
pursuant to this Servicing Agreement nor shall it be liable for any loss
resulting therefrom or for any lost profit derived therefrom so long as such
act, contract or transaction shall, at the time at which it was performed or
entered into, have been reasonable and prudent under the circumstances and shall
have conformed in all material respects to the express provisions of this
Servicing Agreement or (ii) for any action taken or errors committed directly
resulting from fraud, negligence or misconduct of the Supervisory Servicer, the
Servicer, the Trustee or the Certificateholders. The rights of the Supervisory
Servicer, the Servicer, the Trustee and the Certificateholders to indemnity or
reimbursement shall survive the transfer of the rights, duties and obligations
of the Supervisory Servicer or the Servicer to another Person or any Event of
Servicing Default.
The Supervisory Servicer, the Servicer and the Trustee and any director,
officer, employee or agent of the Supervisory Servicer, the Servicer or the
Trustee shall be indemnified by the Depositor and held harmless against any
loss, liability or expense incurred in connection with any legal action relating
in any way to or arising out of this Servicing Agreement or the Certificates or
the transactions contemplated thereby other than any loss, liability or expense
arising out of fraud, negligence or willful misconduct of the Supervisory
Servicer, the Servicer or the Trustee, respectively, or for which the
Supervisory Servicer or the Servicer is obligated to provide an indemnity as
provided in Section 5.04 or Section 5.03, respectively, (except as any such
loss, liability or expense shall be otherwise reimbursable pursuant to this
Servicing Agreement). Neither the Supervisory Servicer nor the Trustee shall be
under any obligation to appear in, prosecute or defend any legal action under
this Servicing Agreement and which in its opinion may involve it in any expense
or liability; provided, however, that the Supervisory Servicer may in its
discretion undertake any such action which it may deem necessary or desirable in
respect to this Servicing Agreement and the rights and duties of the parties
hereto. In such event, the reasonable legal expenses and costs of such action
and any liability resulting therefrom shall be expenses, costs and liabilities
of the Depositor, and the Supervisory Servicer or the Trustee shall be entitled
to be reimbursed therefor as provided by Section 2.13 and the Pooling Agreement.
The rights of the Supervisory Servicer or the Trustee to indemnity,
reimbursement or limitation on its liability pursuant to this Section 5.05 shall
survive the transfer of the rights, duties and obligations of the Supervisory
Servicer or the Servicer to another Person or any Event of Servicing Default.
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Section 5.06. Notification to Certificateholders. Upon discovery of the
occurrence of any Event of Servicing Default, after the applicable grace period
set forth in the applicable subparagraphs, which results in the removal of the
Servicer or the Supervisory Servicer, the Servicer or Supervisory Servicer shall
give prompt written notice thereof to the Trustee and the Depositor and the
Trustee shall give notice to the Certificateholders at their respective
addresses appearing in the Certificate Register. Upon any termination or
appointment of a Successor Servicer or Successor Supervisory Servicer pursuant
to this Article V, the Trustee shall give prompt written notice thereof to the
Certificateholders at their respective addresses appearing in the Certificate
Register.
Section 5.07. Waiver of Events of Servicing Default. The Certificateholders
evidencing Certificateholder Approval may, on behalf of the Certificateholders
of all Certificates Outstanding, waive any Event of Servicing Default by the
Servicer or Supervisory Servicer in the performance of its obligations hereunder
and its consequences, except a default in the failure to make any required
deposits or payments in accordance with this Servicing Agreement. Upon any such
waiver of an Event of Servicing Default, such default shall cease to exist, and
any default arising therefrom shall be deemed to have been remedied for every
purpose of this Servicing Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived.
Section 5.08. Survival. The agreements in this Article V shall survive the
termination of the Pooling Agreement and the payment in full of the
Certificates.
Section 5.09. Force Majeure. Notwithstanding anything herein to the
contrary, neither the Supervisory Servicer nor the Servicer shall be considered
in default hereunder or have any liability to any party for any failure to
perform if such failure arises solely out of the following causes beyond the
control of the Supervisory Servicer or the Servicer, as the case may be: acts of
God or a public enemy, fire, flood or war.
ARTICLE VI
TERMINATION OF AGREEMENT
Section 6.01. Term. Unless terminated in accordance with the provisions of
Section 5.02, this Servicing Agreement shall remain in effect until termination
of the Pooling Agreement.
Section 6.02. Effect of Termination. Upon termination of this Servicing
Agreement, the Servicer shall, at the direction of the Depositor, promptly
return all Servicer Files and any related files and correspondence in its
possession as are related to the management of the Receivables and the services
provided hereunder.
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Section 6.03. Transfer of Servicing. Upon termination of this Servicing
Agreement, the Servicer shall cooperate in the transfer of the Servicer Files.
Any matters pending at the effective termination date will continue to be
processed in an orderly and timely fashion; it being intended, however, that
responsibility for the Receivables shall transfer as quickly as practicable and
in any event within thirty (30) days after the termination date. All reasonable
expenses related to the foregoing shall be borne by the party causing the
termination; provided, that, the Servicer shall not be responsible for
transition costs if the Servicer resigns from its duties hereunder; provided,
further, that if this Servicing Agreement is terminated upon termination of the
Pooling Agreement, all reasonable fees and expenses related thereto shall be
borne by the Depositor.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 7.01. Amendment. This Servicing Agreement may only be amended by
mutual written consent of the parties hereto and with the prior written consent
of the Trustee. No amendment made to the Transfer and Assignment Agreement or
the Pooling Agreement, without the Supervisory Servicer's and the Servicer's
written consent, shall be effective as to the Supervisory Servicer or the
Servicer, respectively, to the extent such amendment is disadvantageous in any
respect to the Supervisory Servicer or the Servicer, respectively. The Rating
Agency shall be given by the Depositor prior notice of any proposed amendment to
the Servicing Agreement, the Transfer and Assignment Agreement or the Pooling
Agreement and, upon any such amendment, shall promptly be provided by the
Depositor a copy of any such amendment. For the purpose of obtaining the
Supervisory Servicer and Trustee consent to any amendment pursuant to this
Section 7.01, the Depositor shall provide to the Supervisory Servicer and
Trustee an Opinion of Counsel, upon which they may absolutely rely, that such
amendment is not adverse to the interests of the Certificateholders.
Section 7.02. Waivers. The provisions of this Servicing Agreement may only
be waived by written consent of the parties hereto; provided, that the Depositor
shall not waive any provision hereof without the prior written consent of the
Trustee. The failure of any party at any time to require performance by the
other of any provision of this Servicing Agreement shall in no way affect that
party's right to enforce such provision, nor shall the waiver by any party of
any breach of any provision of this Servicing Agreement be deemed or held to be
a waiver of any further breach of the same provision or any other provision. For
the purpose of obtaining the Supervisory Servicer and Trustee consent to any
amendment pursuant to this Section 7.02, the Depositor shall provide to the
Supervisory Servicer and Trustee an Opinion of Counsel, upon which they may
absolutely rely, that such waiver is not adverse to the interests of the
Certificateholders.
Section 7.03. Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered personally
or mailed by first-class registered or certified mail, postage prepaid, or by
telephonic facsimile transmission and overnight delivery service, postage
prepaid, in any case addressed as follows:
43
To the Servicer: Western Fidelity Funding, Inc.
4704 Harlan Street, Suite 260
Denver, Colorado 80212
Attention: Marya L. Brancio
Phone: (800) 223-9334
Fax: (303) 477-2158
To the Supervisory
Servicer
and Trustee: Texas Commerce Bank National Association
600 Travis Street
Houston, Texas 77002
Attention: Global Corporate Trust Services Group-
Western Fidelity 1996-A
Phone: (713) 216-4181
Fax: (713) 216-7757
To the Depositor: Western Fidelity Finance, Inc.
4704 Harlan Street, Suite 260
Denver, Colorado 80212
Attention: Marya L. Brancio
Phone: (800) 223-9334
Fax: (303) 477-2158
Such notice, request, consent or other communication shall be deemed given when
so delivered, if personally delivered or transmitted by facsimile, or if mailed,
two days after deposit with the U.S. Postal Service.
Section 7.04. Severability of Provisions. If one or more of the provisions
of this Servicing Agreement shall be held invalid for any reason, such
provisions shall be deemed severable from the remaining provisions of this
Servicing Agreement and shall in no way affect the validity or enforceability of
such remaining provisions. To the extent permitted by law, the parties hereto
hereby waive any law which renders any provision of this Servicing Agreement
prohibited or unenforceable.
Section 7.05. Rights Cumulative. All rights and remedies under this
Servicing Agreement are cumulative, and none is intended to be exclusive of
another. No delay or omission in insisting upon the strict observance or
performance of any provision of this Servicing Agreement, or in exercising any
right or remedy, shall be construed as a waiver or relinquishment of such
provision, nor shall it impair such right or remedy. Every right and remedy may
be exercised from time to time and as often as deemed expedient.
44
Section 7.06. No Offset. Prior to the termination of this Servicing
Agreement, the obligations of the Supervisory Servicer and the Servicer under
this Servicing Agreement shall not be subject to any defense, counterclaim or
right of offset which the Supervisory Servicer or the Servicer may have against
the other or against the Depositor, any Certificateholder or the Trustee,
whether in respect of this Servicing Agreement, any Receivable or otherwise.
Section 7.07. Inspection and Audit Rights. The Servicer agrees that, upon
prior written notice, it will permit the Depositor or the Trustee and their
respective representatives, during the Servicer's normal business hours, to
examine the Servicer Files, all the books of account, records, reports and other
papers of the Servicer relating to the Receivables, to make copies and extracts
therefrom, to cause such books to be audited by Independent Public Accountants
selected by the Depositor, and to discuss its affairs, finances and accounts
relating to the Receivables with its officers, employees and independent
certified public accountants, all at such reasonable times and as often as may
be reasonably requested. Any expense incident to the exercise by the Depositor
or the Trustee of any right under this paragraph 7.07 shall be borne by the
Depositor, provided that if an audit is made during the continuance of an Event
of Servicing Default, the expense incident to such audit shall be borne by the
Servicer.
Section 7.08. Powers of Attorney. The Depositor shall, from time to time,
provide to the employees of the Servicer and the Trustee limited, revocable
powers of attorney or other such written authorizations as may be reasonably
appropriate to enable the Servicer and the Trustee to perform its respective
obligations under this Servicing Agreement and the Pooling Agreement; provided
however, that the Depositor shall not be required to provide such powers with
respect to any matter for which the Depositor does not have authority to perform
itself.
Section 7.09. [Reserved].
Section 7.10. Assignment and Binding Effect. Except with respect to the
assignment of the rights under this Servicing Agreement by the Depositor to the
Trustee under the Pooling Agreement and as otherwise expressly provided herein,
this Servicing Agreement may be assigned only with the written consent of the
parties hereto; however, in the event of an assignment, all provisions of this
Servicing Agreement shall be binding upon and inure to the benefit of the
respective successors and assigns of the parties hereto.
Section 7.11. Captions. The article, paragraph and other headings contained
in this Servicing Agreement are for reference purposes only, and shall not limit
or otherwise affect the meaning hereof.
Section 7.12. Legal Holidays. In the case where the date on which any
action required to be taken, document required to be delivered or payment
required to be made is not a Business Day in Houston, Texas or Denver, Colorado
such action, delivery or payment need not be made on that date, but may be made
on the next succeeding Business Day.
45
Section 7.13. Counterparts. This Servicing Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 7.14. Governing Law. This Servicing Agreement shall be deemed
entered into with and shall be governed by and interpreted in accordance with
the internal laws of the State of Colorado, except to the extent that it is
mandatory that the laws of some other jurisdiction apply.
Section 7.15. Parties. Except as set forth in Section 7.20 hereof, this
Servicing Agreement shall inure solely to the benefit of and shall be binding
upon the parties hereto, and their respective successors, legal representatives
and assigns, and no other person shall have or be construed to have any
equitable right, remedy or claim under or in respect of or by virtue of this
Servicing Agreement or any provision contained herein.
Section 7.16. [Reserved].
Section 7.17. [Reserved].
Section 7.18. Relationship of the Parties. The relationship of the parties
to this Servicing Agreement is that of independent contractors. Neither this
Servicing Agreement nor any of the activities contemplated hereby shall be
deemed to create any partnership, joint venture, agency or employer/employee
relationship among the Supervisory Servicer, the Servicer and the Depositor.
Section 7.19. No Bankruptcy Petition Against the Depositor. The Supervisory
Servicer and the Servicer agree that, prior to the date that is one year and one
day after the payment in full of all outstanding Certificates, neither will
institute against the Depositor, or join any other Person in instituting against
the Depositor, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other proceedings under the laws of the United States
or any state of the United States. This Section 7.19 shall survive the
termination of this Servicing Agreement.
Section 7.20. Third Party Beneficiaries. This Servicing Agreement shall
inure to the benefit of each Certificateholder and their respective successors
and assigns. Without limiting the generality of the foregoing, all covenants and
agreements in this Servicing Agreement which expressly confer rights upon the
Depositor, the Certificateholders or the Trustee shall be for the benefit of and
run directly to each Certificateholder, and each Certificateholder shall be
entitled to rely on and enforce such covenants to the same extent as if it were
a party hereto.
Section 7.21. Other Agreements. The Servicer and the Supervisory Servicer
will not be obligated or bound by any provision or term of any other agreement,
including the Pooling Agreement and the Transfer and Assignment Agreement,
except to the extent, and only to the extent, expressly stated herein or
therein.
46
Section 7.22. Procedure for Indemnification. Notwithstanding anything to
the contrary in this Servicing Agreement, in the event that a Person is entitled
to indemnification pursuant to the terms of this Servicing Agreement, such
Person (hereinafter called the "Indemnified Party") shall promptly notify the
person against whom such indemnity may be sought (hereinafter called the
"Indemnifying Party") in writing and the Indemnifying Party, upon request of the
Indemnified Party, shall retain counsel reasonably satisfactory to the
Indemnified Party or, at the Indemnified Party's option, such Indemnified Party
may select its own counsel with the consent of the Indemnifying Party, which
consent shall not be unreasonably withheld or delayed, to represent the
Indemnified Party and any others the Indemnifying Party may designate in such
proceeding and shall pay the reasonable fees and disbursements of such counsel
related to such proceeding. It is understood that the Indemnifying Party shall
not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm at any one time (in addition to any local counsel) for all such
Indemnified Parties (unless necessary because of conflicts of interest), and all
such fees and expenses shall be reimbursed as they are incurred. Such firm shall
be designated in writing by the Indemnified Party. The Indemnifying Party shall
not be liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld or delayed, but if
settled with such consent or if there be a final judgment for the plaintiff, the
Indemnifying Party agrees to indemnify the Indemnified Party from and against
any loss or liability by reason of such settlement or judgment.
Section 7.23. Reports to Holders. Any report, notice or financial statement
delivered pursuant to this Servicing Agreement by the Servicer or the
Supervisory Servicer to the Certificateholders shall be provided by such Persons
to each Certificateholder at the address last provided to the Servicer or the
Supervisory Servicer by such Certificateholder.
Section 7.24. Purchase and Subsequent Pledge. The Servicer hereby
acknowledges that the Depositor, concurrently with the execution of this
Servicing Agreement, will acquire the Receivables and the other items included
in the Conveyed Property pursuant to the Transfer and Assignment Agreement and
convey the Receivables and the other items included in the Conveyed Property
along with certain of the Depositor's rights under the Transfer and Assignment
Agreement and this Servicing Agreement to the Trustee pursuant to the terms of
the Pooling Agreement, and that the representations and warranties contained in
the Transfer and Assignment Agreement and this Servicing Agreement and the
rights of the Depositor under Section 7.02 of the Transfer and Assignment
Agreement are intended to benefit the Certificateholders.
Section 7.25. Supervisory Servicer, Trustee or Servicer to Act On
Instructions. Notwithstanding any provision herein to the contrary (other than
Sections 2.02(a) and 7.01), in the event the Supervisory Servicer, the Trustee
or the Servicer, as the case may be, is uncertain as to the intention or
application of any provision of this Servicing Agreement or any other agreement
to which it is a party, or such intention or application is ambiguous as to its
purpose or application, or is, or appears to be, in conflict with any other
applicable provision hereof or thereof, or if this Servicing Agreement or any
other agreement to which it is a party permits or does not prohibit any
determination by the Supervisory Servicer, the Trustee or the Servicer, as the
47
case may be, or is silent or incomplete as to the course of action which the
Supervisory Servicer, the Trustee or the Servicer, as the case may be, is
required or is permitted or may be permitted to take with respect to a
particular set of facts or circumstances, the Supervisory Servicer, the Trustee
or the Servicer, as the case may be, shall, at the expense of the Trust, request
and rely upon the following: (i) written instructions of the Depositor directing
the Supervisory Servicer, the Trustee or the Servicer, as the case may be, to
take certain actions or refrain from taking certain actions, which written
instructions shall contain a certification that the taking of such actions or
refraining from taking certain actions is in the best interest of all of the
Certificateholders, and (ii) a written statement from the Rating Agency that the
proposed action or inaction will not have an adverse effect on the ratings then
assigned to the Certificates, and (iii) written consent of Holders constituting
Certificateholder Approval. In such case, the Supervisory Servicer, the Trustee
or the Servicer, as the case may be, shall have no liability to the Depositor or
the Certificateholders and the Depositor hereby holds harmless the Supervisory
Servicer or the Servicer, as the case may be, from any liability, costs or
expenses arising from or relating to any action taken by the Supervisory
Servicer, the Trustee or Servicer, as the case may be, acting in good faith upon
such instructions, and the Supervisory Servicer, the Trustee or the Servicer, as
the case may be, shall have no responsibility to the Certificateholders with
respect to any such liability, costs or expenses.
48
IN WITNESS WHEREOF, the Depositor, the Supervisory Servicer, the Trustee
and the Servicer, have caused this Servicing Agreement to be duly executed by
their respective authorized officers as of the date and year first above
written.
WESTERN FIDELITY FINANCE, INC.
as Depositor
By /s/ Gene R. Osborn
----------------------------------------
Gene E. Osborn, President
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Supervisory Servicer
By /s/ Eric C. Lokker
----------------------------------------
Eric C. Lokker, Assistant Vice President
WESTERN FIDELITY FUNDING, INC., as
Servicer
By /s/ Gene E. Osborn
---------------------------------------
Gene E. Osborn, President
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION, as Trustee
By /s/ Eric C. Lokker
---------------------------------------
Eric C. Lokker, Assistant Vice President
49
Pursuant to Section 2.02(c)
EXHIBIT A-1
MONTHLY SERVICER REPORT
TO THE SUPERVISORY SERVICER, THE TRUSTEE,
THE DEPOSITOR, THE HOLDERS OF THE CERTIFICATES,
THE PLACEMENT AGENT AND THE RATING AGENCY
WESTERN FIDELITY RECEIVABLES TRUST 1996-A
PASS-THROUGH CERTIFICATES
(Western Fidelity Automobile Receivables Program)
Date of Report:
For Month Ending:
A. Information Regarding Payments on Receivables
1. Beginning Unpaid Aggregate Receivable Balance $
2. Receipts of Principal Payments (other than Defaulted Receivables) ----------
3. Principal portion of Prepayments ----------
4. Principal portion of Repurchase Prices ----------
5. Principal portion of Liquidation Proceeds (other than Insurance ----------
Proceeds)
6. Other Recoveries
7. Net Change in Aggregate Receivable Balance ----------
8. Receivable Balances Charged Off (Non Cash) ----------
9. Ending Aggregate Receivable Balance ----------
10. Interest Receipts of Receivables (including Liquidation Proceeds,
Insurance Proceeds) ----------
11. Available Funds for Distribution (Sum of 2 through 6 plus 10) ----------
12. Defaulted Receivable Deposit Amount ----------
13. Servicing Fee Due ----------
14. Servicer Expenses Due ----------
15. Supervisory Servicing Fee Due ----------
16. Supervisory Servicer Expenses Due ----------
A-1-1
B. Information Regarding Current, Delinquent and Defaulted Receivables
(i) Aggregate Receivable Balance of Current Receivables $
-----------
(ii) Aggregate Receivable Balance of Defaulted Receivables not fully recovered
against for the Collection Period $
-----------
Date Due Date
Account of Last of Scheduled Principal
Number Name Payment Payment Balance
------- ---- ------- ------------ ---------
(iii) Delinquencies and Defaults in Payments.
(a) Receivables (other than Defaulted Receivables) as to
which the Obligors are 31-60 days past due in making
Scheduled Payments as of the last day of the
Collection Period set forth above
Aggregate Receivable Balance of Receivables.................... $-----------
Number of Receivables........................................... -----------
(b) Receivables (other than Defaulted Receivables) as to
which the Obligors are 61-90 days past due in making
Scheduled Payments as of the last day of the
Collection Period set forth above
Aggregate Receivable Balance of Receivables.................... $----------
Number of Receivables........................................... ----------
(c) Receivables (other than Defaulted Receivables) as to
which the Obligors are 91-180 days past due in making
Scheduled Payments as of the last day of the
Collection Period set forth above
Aggregate Principal Balance of Receivables.......................... $-----------
Number of Receivables ............................................... -----------
(d) Defaulted Receivables - Receivables as to which (1) a Scheduled Payment
or any portion thereof is more than 180 days delinquent, (2) the related
Obligor thereof is insolvent or has sought protection under the United
States Bankruptcy Code and the related Contract has been discharged,
(3) 90 days have elapsed since the Servicer repossessed the related
Financed Vehicle and any contractual or statutory Obligor cure period has
run, (4) the related Financed Vehicle has been repossessed and sold, (5)
proceeds have been received which, in the Servicer's good faith judgment,
A-1-2
constitute the final amounts recoverable in respect
of such Receivable or (6) consistent with the
Servicer's customary collection policy, has been or
should be written off as uncollectible.
Aggregate Receivable Balance of Receivables.................... $------------
Number of Receivables........................................... ------------
(iv) Repossessions.
(a) Receivables as to which the Financed Vehicle has been repossessed during
the Collection Period set forth above
Aggregate Receivable Balance of Receivables.................... $------------
Number of Receivables...........................................-------------
(b) Receivables as to which the Financed Vehicle has been sold during the
Collection Period set forth above
Amount of Proceeds received
from sale of Financed Vehicles......................... $------------
Number of Financed Vehicles sold................................ ------------
(c) Cumulative total of Receivables as to which the Financed Vehicle has been
repossessed but not sold as of the last day of the Collection Period set
forth above
Aggregate Receivable Balance of Receivables.................... $------------
Number of Receivables........................................... ------------
(v) Skips.
Receivables as to which the Financed Vehicle has not been located during the
Collection Period set forth above
Aggregate Receivable Balance of Receivables.................... $------------
Number of Receivables........................................... ------------
C. Realized Losses
(i) Realized Losses with respect to Defaulted Receivables for current Collection
Period.....................................................................................$------------
(ii) Realized Losses with respect to Defaulted Receivables for current Collection
Period and prior 2 Collection Periods......................................................$------------
A-1-3
D. Accelerated Reserve Fund Event
(i) As of the Determination Date with respect to each of the three (3)
most recent consecutive Collection Periods, the average for each such
period of the Aggregate Receivable Balance of Receivables (other than
Defaulted Receivables) for which the Scheduled Payments are 60 days or
more past due
Current Collection Period $-----------------
Previous Collection Period $-----------------
2nd Previous Collection Period $-----------------
(ii) As of the Determination Date with respect to the Collection Period
set forth above, Aggregate Receivable Balance of Receivables (other
than Defaulted Receivables) for which the Scheduled Payments are 60
days or more past due
$------------
(iii) As of the Determination Date with respect to each of the three
(3) most recent consecutive Collection Periods, the average for each
such period of the Realized Losses with respect to Defaulted
Receivables for each such period
Current Collection Period $-----------------
Previous Collection Period $-----------------
2nd Previous Collection Period $-----------------
(iv) As of the Determination Date with respect to the Collection Period set forth
above, Realized Losses (annualized) with respect to Defaulted Receivables $-------------
A-1-4
Pursuant to Section 2.02(c)
EXHIBIT A-2
OFFICERS' CERTIFICATE
The undersigned hereby certifies that (i) he or she is an Authorized
Officer of Western Fidelity Funding, Inc. (the "Servicer"), and (ii) Exhibit B
hereto complies with the requirements of, and is being delivered pursuant to,
Section 2.02(c) of the Servicing Agreement (the "Servicing Agreement") dated as
of December 30, 1996 by and among Western Fidelity Finance, Inc., as the
Depositor, Texas Commerce Bank National Association, as Supervisory Servicer and
Trustee, and the Servicer.
Dated: WESTERN FIDELITY FUNDING, INC.
-------------------------
By ---------------------------------
Name: ------------------------------
Title: -----------------------------
A-2-1
Pursuant to Section 2.02(d)
EXHIBIT B
MONTHLY SUPERVISORY SERVICER REPORT
TO THE TRUSTEE, THE RATING AGENCY, THE HOLDERS
OF THE CERTIFICATES AND THE DEPOSITOR
WESTERN FIDELITY RECEIVABLES TRUST 1996-A
PASS-THROUGH CERTIFICATES
(Western Fidelity Automobile Receivables Program)
Distribution Date:
Collection Period:
Date of Statement:
A. Distributions
(i) Interest portion of Initial Receivables Purchase Price with respect to
Initial Receivables payable to Seller on initial Distribution Date only and,
with respect to Subsequent Receivables, on the Distribution Date following each
Funding Date. $-----------
(ii) (A) To Expense Account, the aggregate amount of fees payable to the
Trustee/Custodian/Certificate Registrar for the Collection Period. -----------
(B) Transition Costs, if any -----------
(iii) (A) To Expense Account, the aggregate amount of fees payable to the
Supervisory Servicer for the Collection Period. -----------
(B) Transition Costs, if any -----------
(iv) To Expense Account, the aggregate amount of fees and other
compensation payable to the Servicer for the Collection Period.
- Aggregate Amount of Servicing Fees
paid to the Servicer............................. -----------
- Late fees, etc. paid to Servicer................. -----------
- Transition Costs, if any......................... -----------
B-1
(v) To Certificate Account, the amount distributable to the Class A
Certificateholders as Class A Certificate Interest and Class A Overdue Interest,
the amount distributable to the Class B Certificateholders as Class B
Certificate Interest and Class B Overdue Interest, the amount distributable to
the Class C Certificateholders as Class C Certificate Interest and Class C
Overdue Interest and the amount distributable to the Class D Certificateholders
as Class D Certificate Interest and Class D Overdue Interest.
- Aggregate Amount of Class A Certificate Interest..... -----------
- Aggregate Amount of Class A Overdue Interest..... -----------
- Class A Certificate Interest distribution per
$1,000 initial Certificate Principal
Balance.......................................... -----------
- Class A Overdue Interest per $1,000 initial
Certificate Receivable Balance................... -----------
- Aggregate Amount of Class B Certificate Interest.. -----------
- Aggregate Amount of Class B Overdue Interest..... -----------
- Class B Certificate Interest distribution per $1,000
initial Certificate Receivable Balance........... -----------
- Class B Overdue Interest per $1,000 initial
Certificate Receivable Balance................... -----------
- Aggregate Amount of Class C Certificate Interest.. -----------
- Aggregate Amount of Class C Overdue Interest..... -----------
- Class C Certificate Interest distribution per
$1,000 initial Certificate Principal
Balance.......................................... -----------
- Class C Overdue Interest per $1,000 initial
Certificate Receivable Balance................... -----------
- Aggregate Amount of Class D Certificate Interest.. -----------
- Aggregate Amount of Class D Overdue Interest..... -----------
- Class D Certificate Interest distribution per $1,000
initial Certificate Receivable Balance........... -----------
B-2
- Class D Overdue Interest per $1,000 initial
Certificate Receivable Balance................... -----------
- If an Accelerated Reserve Fund Event,
Amounts otherwise transferable
to Residual Interest Account..................... -----------
(vi) To the Certificate Account, Defaulted Receivable Deposit Amounts
payable to Certificateholders
(vii) To the Certificate Account, the amount distributable to the
applicable Certificateholders as the Principal Payment Amount
A. Class A Certificates
- Principal Payment Amount to Class A
Certificateholders.............................. -----------
- Principal Payment per $1,000 initial
Aggregate Current Stated Principal Balance...... -----------
- Balance of the Class A Aggregate Current Stated
Principal Balance............................... -----------
B. Class B Certificates
- Principal Payment Amount to Class B
Certificateholders.............................. -----------
- Principal Payment per $1,000 initial
Aggregate Current Stated Principal Balance...... -----------
- Balance of the Class B Aggregate Current Stated
Principal Balance............................... -----------
C. Class C Certificates
- Principal Payment Amount to Class C
Certificateholders.............................. -----------
- Principal Payment per $1,000 initial
Aggregate Current Stated Principal Balance...... -----------
- Balance of the Class C Aggregate Current Stated
Principal Balance............................... -----------
B-3
D. Class D Certificates
- Principal Payment Amount to Class D
Certificateholders.............................. -----------
- Principal Payment per $1,000 initial
Aggregate Current Stated Principal Balance...... -----------
- Balance of the Class D Aggregate Current Stated
Principal Balance............................... -----------
(viii) From the Revenue Fund, to the Certificate Account, the amounts, if
any, distributable to Holders of Certificates from funds remaining in the
Pre-Funding Account -----------
(ix) A. In the event of an optional repurchase only, to Certificate Account
any accrued Certificate interest on the Class A Certificates ---------
B. In the event of an optional repurchase only, to Certificate Account
any accrued Certificate interest on the Class B Certificates -----------
C. In the event of an optional repurchase only, to Certificate Account
any accrued Certificate interest on the Class C Certificates -----------
D. In the event of an optional repurchase only, to Certificate Account
any accrued Certificate interest on the Class D Certificates -----------
(x) To Expense Account, (A) expenses and indemnities, if any, due to (1)
the Trustee, (2) the Supervisory Servicer and (3) the Servicer, (B) certain
Transition Costs to TCB as (1) Supervisory Servicer or (2) Successor Servicer
and (C) pro rata portion of remaining Administrative Expenses to Trustee and
Rating Agency -----------
(xi) To the Reserve Fund, the deficiency, if any, in the Reserve Fund
Requirement -----------
(xii) To Residual Interest Account, remaining funds -----------
B. Remaining Balances
(i) The Aggregate Current Stated Principal Balance after taking into
account all distributions made on such Distribution Date.
B-4
- Certificate balance on which
interest will be calculated on the next
succeeding Distribution Date.................... -----------
(ii) Aggregate Receivable Balance at beginning
of related Collection Period.................... $-----------
Amount of distributions with respect to
Principal for the related Collection Period..... $-----------
Aggregate Receivable Balance for the Determination
Date............................................ $-----------
Total Number of Receivables..................... -----------
C. Calculations
(i) Reserve Fund
- Beginning Balance............................... $-----------
- Investment Income -----------
- Deductions
1. If Revenue Fund shortfall, fee
to Trustee...................................... -----------
2. If Revenue Fund shortfall, fee
to Supervisory Servicer......................... -----------
3. If Revenue Fund shortfall, fee
to Servicer..................................... -----------
4. If Revenue Fund shortfall, Class A Certificate
Interest and Class A Overdue Interest, if any... -----------
5. If Revenue Fund shortfall, Class B Certificate
Interest and Class B Overdue Interest, if any... -----------
6. If Revenue Fund shortfall, Class C Certificate
Interest and Class C Overdue Interest, if any... -----------
7. If Revenue Fund shortfall, Class D Certificate
Interest and Class D Overdue Interest, if any... -----------
8. If Revenue Fund shortfall, Defaulted Receivable
Deposit Amounts................................. -----------
9. If Revenue Fund shortfall, in event of optional
repurchase, Class A, Class B, Class C, Class D
Certificate Interest............................ -----------
B-5
10. If Revenue Fund shortfall, expenses and
Indemnities, if any to Trustee, Supervisory
Servicer and Servicer and other Administrative
Expenses........................................ -----------
- Ending Balance.................................. -----------
- Reserve Fund Requirement........................ -----------
- Excess/(Deficit) of Reserve Fund to Reserve Fund
Requirement..................................... -----------
(ii) Pre-Funding Account
(A) Withdrawals on Funding Dates........................ -----------
(B) Withdrawal in event of Refunding Event.............. -----------
(iii) Realized Losses
(A) Realized Losses (annualized) with respect to Defaulted
Receivables for current Collection Period ............... -----%
(B) Realized Losses (annualized) with respect to Defaulted
Receivables for current and prior 2 Collection Periods... -----%
(iv) Accelerated Reserve Fund Event
(A) As of the Determination Date with respect to each of the three
(3) most recent consecutive Collection Periods, is the average
for each such period of the Aggregate Receivable Balance of
Receivables included in the Trust Property for which the
Scheduled Payments are 60 days or more past due for each such
period divided by the Aggregate Receivable Balance with respect
to such Collection Period equal to or greater than 6.50%?
Yes----- No-----
(B) As of the Determination Date with respect to each of the three
(3) most recent consecutive Collection Periods, is the average
for each such period of the Aggregate Receivable Balance of
Receivables included in the Trust Property for which the
Scheduled Payments are 60 days or more past due equal to or
greater than 9.0% of the Aggregate Receivable Balance as of such
Determination Date?
Yes----- No-----
B-6
(C) As of the Determination Date with respect to each of the three
(3) most recent consecutive Collection Periods, is the average
for each such period of the Realized Losses (annualized) with
respect to Defaulted Receivables for each such period divided by
the Aggregate Receivable Balance with respect to such Collection
Period greater than 10.00%?
Yes----- No-----
(D) As of the Determination Date with respect to the current
Collection Period, are the Realized Losses (annualized) with
respect to Defaulted Receivables greater than 12.00% of the
Aggregate Receivable Balance with respect to such Determination
Date?
Yes----- No-----
(E) Has an Accelerated Reserve Fund Event occurred during the current
Collection Period?
Yes----- No-----
(F) Is an Accelerated Reserve Fund Event continuing during the
current Collection Period?
Yes----- No-----
(v) Capitalized Interest Account
(A) Withdrawals on Distribution Dates................... -----------
(B) Withdrawal following termination of Funding Period.. -----------
B-7
EXHIBIT C
FORMS OF LATE NOTICES SENT
TO OBLIGORS RE: DELINQUENCIES
[Date]
[Name]
[Address]
[Address]
Dear [Name]:
Our records indicate we have not received your payment in the amount of
$---------- which was due [due date].
If you have not already done so, please forward your check for $-------- by
return mail to bring your account current. If payment is not received by [date],
your account will be assessed a late charge of $---------.
If payment has been sent, please disregard this notice.
Sincerely,
WESTERN FIDELITY FUNDING, INC.
By: ------------------------------------
Name:-----------------------------------
Title:----------------------------------
C-1
EXHIBIT D
FORM OF REQUEST FOR RELEASE
To: Texas Commerce Bank National Association DATE PREPARED
600 Travis Street, 8th Floor -------------
Houston, Texas 77002
Attention: Global Corporate Trust Services Group-
Western Fidelity 1996-A
(fax) (713) 216-7757
In connection with the administration of the pool of receivables
("Receivables") held by you as trustee ("Trustee"), pursuant to the Pooling
Agreement dated as of December 30, 1996 (the "Pooling Agreement") by and between
Western Fidelity Finance, Inc., as depositor (the "Depositor"), and the Trustee,
the undersigned, as servicer ("Servicer") of the Receivables pursuant to the
Servicing Agreement dated as of December 30, 1996 by and among the Depositor,
Texas Commerce Bank National Association, as supervisory servicer and trustee,
and the Servicer (the "Servicing Agreement"), requests the release of the
Receivable file described below for the reason indicated. The undersigned shall
hold such documents in trust on behalf of the Trustee and shall return the
documents to the Trustee when the undersigned's need therefor no longer exists,
except where the Receivable is paid in full or otherwise disposed of (as
indicated below).
The undersigned hereby certifies that if this release is requested due to
payment in full of a Receivable, or repurchase upon breach, all amounts received
in connection therewith which are required to be deposited in the Collection
Account pursuant to Section 3.02 of the Servicing Agreement have been so
deposited.
REASON FOR REQUESTING DOCUMENTS:
- ------- RECEIVABLE PAID IN FULL
- ------- REPOSSESSION
- ------- LIQUIDATION
- ------- REPURCHASE UPON BREACH
Western Fidelity Funding, Inc.
4704 Harlan Street, Suite 260
Denver, Colorado 80212
WESTERN FIDELITY FUNDING, INC.
-------------------------------------
Authorized Signature of Servicer
D-1
COMMITMENT/POOL NUMBER --------------
LOAN NUMBER -------------------------
CUSTOMER ----------------------------
TO CUSTODIAN: Please acknowledge below by your signature the execution of the
above request. You must retain this form for your file, and a copy of this form,
signed and dated by you, shall be returned to the Servicer.
- --------------------------------------- -----------------------
Authorized Signature of Custodian Release Date
SERVICER RECEIPT
The undersigned, on behalf of the Servicer, hereby acknowledges that the
Servicer is holding the documents described below relating to the Receivables on
behalf of the Trustee and the Certificateholders, as their interests may appear.
Documents: --------------------------------
--------------------------------
--------------------------------
--------------------------------
------------------------------------
Authorized Signature of Servicer
RETURN OF RELEASED DOCUMENT(S)/FILE
All Documents Identified above as Previously Released Have Been Returned:
- --------------------------------------- -----------------------
Authorized Signature of Custodian Date of Return
D-2