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CHEVY CHASE BANK, F.S.B.,
Seller and Servicer
and
FIRST BANK NATIONAL ASSOCIATION,
Trustee
POOLING AND SERVICING AGREEMENT,
Dated as of December 1, 1996
$321,422,908.82
Chevy Chase Auto Receivables Trust 1996-2
___% Auto Receivables Backed Certificates
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Usage of Terms. . . . . . . . . . . . . . . . . . . . . . . . . 15
1.3 Cut-off Date and Record Date. . . . . . . . . . . . . . . . . . . 16
1.4 Section References. . . . . . . . . . . . . . . . . . . . . . . . 16
1.5 Interest Calculations. . . . . . . . . . . . . . . . . . . . . . . 16
ARTICLE II CREATION OF THE TRUST; CONVEYANCE OF RECEIVABLES. . . . . . . . . 16
2.1 Creation of Trust. . . . . . . . . . . . . . . . . . . . . . . . 16
2.2 Conveyance of Receivables. . . . . . . . . . . . . . . . . . . . 16
2.3 Acceptance by Trustee. . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE III THE RECEIVABLES. . . . . . . . . . . . . . . . . . . . . . . . . 18
3.1 Representations and Warranties of Seller. . . . . . . . . . . . . 18
3.2 Repurchase Upon Breach. . . . . . . . . . . . . . . . . . . . . . 22
3.3 Custody of Receivable Files. . . . . . . . . . . . . . . . . . . 22
3.4 Duties of Servicer and Sub-Servicer as Custodian. . . . . . . . . 23
3.5 Instructions; Authority to Act. . . . . . . . . . . . . . . . . . 24
3.6 Effective Period and Termination. . . . . . . . . . . . . . . . . 24
ARTICLE IV ADMINISTRATION AND SERVICING OF RECEIVABLES . . . . . . . . . . . 24
4.1 Duties of Servicer. . . . . . . . . . . . . . . . . . . . . . . . 24
4.2 Collection of Receivable Payments. . . . . . . . . . . . . . . . 25
4.3 Realization Upon Receivables. . . . . . . . . . . . . . . . . . . 25
4.4 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.5 Maintenance of Security Interests in Financed Vehicles. . . . . . 26
4.6 Covenants of Servicer. . . . . . . . . . . . . . . . . . . . . . 26
4.7 Purchase of Receivables Upon Breach. . . . . . . . . . . . . . . 29
4.8 Servicing Fees. . . . . . . . . . . . . . . . . . . . . . . . . . 29
4.9 Servicer's Certificate. . . . . . . . . . . . . . . . . . . . . . 30
4.10 Annual Statement as to Compliance; Notice of Default. . . . . . . 30
4.11 Annual Independent Certified Public Accountants' Report. . . . . 30
4.12 Access to Certain Documentation and Information Regarding
Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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4.13 Servicer Expenses. . . . . . . . . . . . . . . . . . . . . . . . 31
4.14 Reports to Certificateholders. . . . . . . . . . . . . . . . . . 31
ARTICLE V DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS. . . . . . . . . . 32
5.1 Establishment of Accounts. . . . . . . . . . . . . . . . . . . . . 32
5.2 Collections. . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
5.3 Purchase Amounts. . . . . . . . . . . . . . . . . . . . . . . . . 34
5.4 Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.5 Certificate Insurance Policy. . . . . . . . . . . . . . . . . . . 36
5.6 Reserve Account and Yield Maintenance Account. . . . . . . . . . . 38
5.7 Statements to Certificateholders. . . . . . . . . . . . . . . . . 39
ARTICLE VI THE CERTIFICATES. . . . . . . . . . . . . . . . . . . . . . . . . 40
6.1 The Certificates. . . . . . . . . . . . . . . . . . . . . . . . . 40
6.2 Authentication of Certificates. . . . . . . . . . . . . . . . . . 41
6.3 Registration of Transfer and Exchange of Certificates. . . . . . . 41
6.4 Mutilated, Destroyed, Lost, or Stolen Certificates. . . . . . . . 42
6.5 Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . . . 42
6.6 Access to List of Certificateholders' Names and Addresses. . . . 42
6.7 Maintenance of Office or Agency. . . . . . . . . . . . . . . . . . 43
6.8 Book-Entry Certificates. . . . . . . . . . . . . . . . . . . . . 43
6.9 Notices to Clearing Agency. . . . . . . . . . . . . . . . . . . . 44
6.10 Definitive Certificates. . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VII THE SELLER . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.1 Representations of Seller. . . . . . . . . . . . . . . . . . . . . 45
7.2 Liability of Seller. . . . . . . . . . . . . . . . . . . . . . . 46
7.3 Merger or Consolidation of, or Assumption of the Obligations of the
Seller. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
7.4 Limitation on Liability of Certain Persons of Seller. . . . . . . 47
ARTICLE VIII THE SERVICER. . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.1 Representations of Servicer. . . . . . . . . . . . . . . . . . . 48
8.2 Liabilities of Servicer, Indemnities. . . . . . . . . . . . . . . 49
8.3 Merger or Consolidation of, or Assumption of the Obligations of
the Servicer. . . . . . . . . . . . . . . . . . . . . . . . . . . 51
8.4 Limitation on Liability of Certain Persons of Servicer. . . . . . 51
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8.5 Servicer Not to Resign. . . . . . . . . . . . . . . . . . . . . . 52
8.6 Delegation of Duties. . . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE IX DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . . . 52
9.2 Appointment of Successor. . . . . . . . . . . . . . . . . . . . . 54
9.3 Notification to Certificateholders. . . . . . . . . . . . . . . . 55
9.4 Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . . . 55
9.5 Effect of Event of Default on Sub-Servicer. . . . . . . . . . . . 55
ARTICLE X THE TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
10.1 Duties of Trustee. . . . . . . . . . . . . . . . . . . . . . . . 55
10.2 Trustee's Certificate. . . . . . . . . . . . . . . . . . . . . . 57
10.3 Trustee's Assignment of Purchased Receivables. . . . . . . . . . 58
10.4 Certain Matters Affecting the Trustee. . . . . . . . . . . . . . 58
10.5 Trustee Not Liable for Certificates or Receivables. . . . . . . 59
10.6 Trustee May Own Certificates. . . . . . . . . . . . . . . . . . 60
10.7 Trustee's Fees. . . . . . . . . . . . . . . . . . . . . . . . . 60
10.8 Eligibility Requirements for Trustee. . . . . . . . . . . . . . 60
10.9 Resignation or Removal of Trustee. . . . . . . . . . . . . . . . 61
10.10 Successor Trustee. . . . . . . . . . . . . . . . . . . . . . . 61
10.11 Merger or Consolidation of Trustee. . . . . . . . . . . . . . . 62
10.12 Appointment of Co-Trustee or Separate Trustee. . . . . . . . . . 62
10.13 Representations and Warranties of Trustee. . . . . . . . . . . 64
10.14 Tax Returns. . . . . . . . . . . . . . . . . . . . . . . . . . 64
ARTICLE XI TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
11.1 Termination of the Trust. . . . . . . . . . . . . . . . . . . . . 65
11.2 Optional Purchase of All Receivables. . . . . . . . . . . . . . 66
ARTICLE XII MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . 66
12.1 Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
12.2 Protection of Title to Trust. . . . . . . . . . . . . . . . . . . 67
12.3 Limitation on Rights of Certificateholders. . . . . . . . . . . 69
12.4 GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . 70
12.5 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70
12.6 Severability of Provisions. . . . . . . . . . . . . . . . . . . 70
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12.7 Assignment. . . . . . . . . . . . . . . . . . . . . . . . . . . 70
12.8 Certificates Nonassessable and Fully Paid. . . . . . . . . . . . 71
12.9 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . 71
12.10 Benefits of Agreement. . . . . . . . . . . . . . . . . . . . . 71
12.11 Tax Treatment. . . . . . . . . . . . . . . . . . . . . . . . . 72
Exhibit A Schedule of Receivables
Exhibit B Form of Certificate
Exhibit C Form of Trustee's Certificate (assignment to Seller)
Exhibit D Form of Trustee's Certificate (assignment to Servicer)
Exhibit E Form of Servicer's Certificate
Exhibit F List of Designated Loans
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This POOLING AND SERVICING AGREEMENT (this "Agreement" or this "Pooling
and Servicing Agreement"), dated as of December 1, 1996, is made with
respect to the formation of the Chevy Chase Auto Receivables Trust 1996-2,
among CHEVY CHASE BANK, F.S.B., a federally chartered savings bank, as seller
and servicer (the "Seller" or the "Servicer" in its respective capacities as
such), and First Bank National Association, as trustee (the "Trustee").
WITNESSETH THAT: In consideration of the premises and of the mutual
agreements herein contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
"ACCOUNT" means any of the Collection Account, the Certificate
Account, the Yield Maintenance Account and the Reserve Account.
"ADDITIONAL FEES" means any late fees, prepayment charges,
extension fees or other administrative fees or similar charges allowed by
applicable law with respect to the Receivables and collected by the Servicer.
"AMOUNT FINANCED", with respect to a Receivable, means the amount
advanced under the Receivable toward the purchase price of the Financed Vehicle
and any related costs, except with respect to Receivables originated through
applications submitted by Obligors directly to the Seller, exclusive of the
amount allocable to the premium of credit life, disability or hospitalization
insurance covering the Financed Vehicle or the Obligor.
"ANNUAL PERCENTAGE RATE" or "APR" of a Receivable means the
annual interest rate stated in the Receivable.
"APR": see "Annual Percentage Rate."
"AVAILABLE DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the sum of the amounts described in clauses (w), (x) and (y)
of Section 5.4(a) on such Distribution Date.
"AVAILABLE FUNDS" means the amount defined as such in Section
5.2(c). The term "Available Funds" does not include Insured Payments and does
not include any amounts that
cannot be distributed to the Certificateholders by the Trustee as a result of
proceedings under the United States Bankruptcy Code.
"BALLOON PAYMENT" means, with respect to a Balloon Receivable,
the payment to be made by the Obligor on the stated maturity date of such
Balloon Receivable.
"BALLOON RECEIVABLE" means any Receivable that on the date of
origination provided for scheduled monthly payments in level amounts
substantially lower than the amount of the final scheduled payment.
"BOOK-ENTRY CERTIFICATES" means beneficial interests in the
Definitive Certificate described in Section 6.8, the ownership and transfers of
which shall be made through book entries by a Clearing Agency as described in
Section 6.8.
"BUSINESS DAY" means, unless otherwise specified in this
Agreement, any day other than a Saturday, a Sunday, or a day on which banking
institutions in New York, New York, St. Xxxx, Minnesota or Chevy Chase, Maryland
shall be authorized or obligated by law, executive order, or governmental decree
to be closed.
"CERTIFICATE" means a certificate executed on behalf of the
Trustee and authenticated by the Trustee substantially in the form attached as
Exhibit B.
"CERTIFICATEHOLDER" or "HOLDER" means the Person in whose name
the respective Certificate shall be registered in the Certificate Register,
except that, solely for the purposes of giving any consent, waiver, request, or
demand pursuant to this Agreement, the interest evidenced by any Certificate
registered in the name of the Seller or the Servicer, or any Person controlling,
controlled by, or under common control with the Seller or the Servicer, shall
not be taken into account in determining whether the requisite percentage
necessary to effect any such consent, waiver, request, or demand shall have been
obtained unless all of the Certificates outstanding are registered in the name
of the Seller, the Servicer and any such Persons.
"CERTIFICATE ACCOUNT" means the account designated as such,
established and maintained pursuant to Section 5.1.
"CERTIFICATE FACTOR" means, at any time, a seven digit decimal
number equal to the current Certificate Principal Balance divided by the Initial
Certificate Principal Balance.
"CERTIFICATE INSURANCE POLICY" means the certificate guaranty
insurance policy number _____, issued by the Certificate Insurer to the Trustee
for the benefit of the Certificateholders.
"CERTIFICATE INSURER" means MBIA Insurance Corporation, a New
York stock insurance corporation, and any successor thereto.
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"CERTIFICATE OWNER" means, with respect to a Book-Entry
Certificate, the Person who is the owner of such Book-Entry Certificate, as
reflected on the books of the Clearing Agency, or on the books of a direct or
indirect Clearing Agency Participant.
"CERTIFICATE PRINCIPAL BALANCE" means, at any time, the Initial
Certificate Principal Balance minus all distributions of Monthly Principal made
up to such time plus all amounts referred to in Section 5.4(c) unless paid
pursuant to the Certificate Insurance Policy.
"CERTIFICATE REGISTER" and "CERTIFICATE REGISTRAR" mean the
register maintained and the registrar appointed pursuant to Section 6.3.
"CLAIM DATE" shall have the meaning specified in Section 5.5(b).
"CLEARING AGENCY" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. The initial Clearing Agency shall be The Depository Trust Company.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other
financial institution or other person for whom from time to time a Clearing
Agency effects book-entry transfers of securities deposited with the Clearing
Agency.
"CLOSING DATE" means December ____, 1996.
"CODE" means the Internal Revenue Code of 1986, as it may be
amended from time to time, or any successor statute thereto, and applicable
temporary or final regulations of the U.S. Department of the Treasury
promulgated thereunder.
"COLLATERAL INSURANCE" shall have the meaning specified in
Section 4.4(b).
"COLLECTION ACCOUNT" means the account designated as such,
established and maintained pursuant to Section 5.1.
"COLLECTION PERIOD" means (i) initially, the period from and
including the Cut-off Date through and including the last day of the calendar
month in which the Cut-off Date occurs and (ii) thereafter, each calendar month
until the Trust shall terminate pursuant to Article XI.
"CORPORATE TRUST OFFICE" at the date hereof, is located at
000 Xxxx 0xx Xxxxxx, Xx. Xxxx, Xxxxxxxxx, 00000, Attention: Structured Finance;
the telecopy number for the Corporate Trust Office on the date of the execution
of this Agreement is (000) 000-0000.
"CUT-OFF DATE" means December 1, 1996.
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"DEALER" means the seller of a Financed Vehicle who arranged for
a sales contract or loan from a Lender to the purchaser of a Financed Vehicle
under an existing agreement with such Lender.
"DEFAULTED RECEIVABLE", with respect to a Distribution Date,
means a Receivable (other than a Purchased Receivable) as to which the
earlier of the following has occured (i) a scheduled payment is 180 days past
due as of the end of the most recently completed Collection Period or (ii)
the Servicer has determined in accordance with its customary servicing
practices, during the Collection Period preceding such Distribution Date,
that eventual payment in full of the Amount Financed is unlikely.
"DEFICIENCY AMOUNT" shall have the meaning specified in
Section 5.5(b).
"DEFINITIVE CERTIFICATES" shall have the meaning specified in
Section 6.8.
"DELINQUENCY PERCENTAGE" means, with respect to any Distribution
Date, the fraction, expressed as a percentage, equal to (x) the aggregate
principal balances of all Receivables 30 or more days delinquent (including any
Receivables relating to repossessed Financed Vehicles held in the Servicer's
inventory) as of the last day of the related Collection Period divided by (y)
the Pool Balance as of such date.
"DELIVERY" when used with respect to any Eligible Investments
means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that
constitute "instruments" within the meaning of Section 9-105(1)(i) of
the UCC and are susceptible of physical delivery, transfer thereof by
physical delivery to the Trustee endorsed to, or registered in the
name of, the Trustee or its nominee or endorsed in blank, and, with
respect to a certificated security (as defined in Section 8-102 of the
UCC) transfer thereof (i) by delivery of such certificated security to
the Trustee or by delivery of such certificated security to a
financial intermediary endorsed to, or registered in the name of, the
Trustee or its nominee or endorsed in blank to a financial
intermediary (as defined in Section 8-313 of the UCC) and the making
by such financial intermediary of entries on its books and records
identifying such certificated securities as belonging to the Trustee
and the sending by such financial intermediary of a confirmation of
the purchase of such certificated security by the Trustee, or (ii) by
delivery thereof to a "clearing corporation" (as defined in Section 8-
102 (3) of the UCC) and the making by such clearing corporation of
appropriate entries on its books reducing the appropriate securities
account of the transferor and increasing the appropriate securities
account of a financial intermediary by the amount of such certificated
security, the identification by the clearing corporation of the
certificated securities for the sole and exclusive account of the
financial intermediary, the maintenance of such certificated
securities by such clearing corporation or a "custodian bank" (as
defined in Section 8-102(4) of the UCC) or the nominee of either
subject to the clearing corporation's exclusive control, the sending
of a confirmation by the financial intermediary of the purchase by
the Trustee of such securities and the making by such financial
intermediary
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of entries on its books and records identifying such certificated
securities as belonging to the Trustee (all of the foregoing,
"Physical Property"), and such additional or alternative procedures
as may hereafter become appropriate to effect the complete transfer
of ownership of or a security interest in any such Eligible Investment
to the Trustee, consistent with changes in applicable law or
regulations or the interpretation thereof;
(b) with respect to any security issued by the U.S. Treasury,
the Federal Home Loan Mortgage Corporation or the Federal National
Mortgage Association that is a book-entry security held through the
Federal Reserve System pursuant to federal book-entry regulations, the
following procedures, all in accordance with applicable law, including
applicable federal regulations and Articles 8 and 9 of the UCC: book-
entry registration of such Eligible Investment to an appropriate book-
entry account maintained with a Federal Reserve Bank by a financial
intermediary which is also a "depositary" pursuant to applicable
federal regulations and issuance by such financial intermediary of a
deposit advice or other written confirmation of such book-entry
registration to the Trustee of the purchase by the Trustee of such
book-entry securities; the making by such financial intermediary of
entries in its books and records identifying such book-entry security
held through the Federal Reserve System pursuant to federal book-entry
regulations as belonging to the Trustee and indicating that such
financial intermediary holds such Eligible Investment solely as agent
for the Trustee; and such additional or alternative procedures as may
hereafter become appropriate to effect complete transfer of ownership
of or a security interest in any such Eligible Investment to the
Trustee, consistent with changes in applicable law or regulations or
the interpretation thereof; and
(c) with respect to any Eligible Investment that is an
uncertificated security under Article 8 of the UCC and that is not
governed by clause (b) above, registration on the books and records of
the issuer thereof in the name of the financial intermediary, the
sending of a confirmation by the financial intermediary of the
purchase by the Trustee or its nominee of such uncertificated
security, and the making by such financial intermediary of entries on
its books and records identifying such uncertificated certificates as
belonging to the Trustee.
"DEPOSIT DATE" means, with respect to any Distribution Date, the
Business Day immediately preceding such Distribution Date.
"DESIGNATED LOANS" means any Receivable with an APR below the
Required Rate, as listed on Exhibit F.
"DESIGNATED LOAN REQUIRED AMOUNT" means, with respect to any
Distribution Date, and with respect to each Designated Loan held by the Trust as
of the opening of business on the first day of the Collection Period in which
such Distribution Date occurs, the sum, for such Collection Period and each
future Collection Period (assuming that such Designated Loan amortizes in
accordance with its terms) of the products of (x) one-twelfth, (y) such
Designated Loan's principal balance as of the opening of business on the first
day of such Collection Period
5
and all future Collection Periods, assuming that such Designated Loan amortizes
according to its terms and (z) the excess of (i) the Required Rate over
(ii) such Designated Loan's APR.
"DETERMINATION DATE" means the earlier of the eighth Business Day
or the eleventh calendar day of the month (or, if such eleventh calendar day is
not a Business Day, the Business Day preceding the eleventh calendar day of the
month).
"DISTRIBUTION DATE", with respect to each Collection Period,
means the 15th day of the following month, or if the 15th day shall not be a
Business Day, the next following Business Day, commencing January 15, 1997.
"ELIGIBLE ACCOUNT" means either (a) a segregated account with an
Eligible Bank or (b) a segregated trust account with the corporate trust
department of a depository institution with corporate trust powers organized
under the laws of the United States of America or any state thereof or the
District of Columbia (or any United States branch of a foreign bank) and whose
deposits are insured by the FDIC, provided that such institution must have a net
worth in excess of $50,000,000 and must have a rating of Baa3 or higher from
Moody's and a rating of BBB- or higher from Standard & Poor's with respect to
long-term deposit obligations.
"ELIGIBLE BANK" shall mean a depository institution organized
under the laws of the United States or any one of the states thereof, including
the District of Columbia (or any United States branch or agency of a foreign
bank), which is subject to supervision and examination by federal or state
banking authorities, the deposits of which are insured by the Federal Deposit
Insurance Corporation ("FDIC") and which at all times (a) has a net worth in
excess of $50,000,000 and (b) has either (x) a long-term unsecured debt rating
of at least A2 by Moody's and AA by Standard & Poor's or (y) a short-term
certificate of deposit rating of P-1 by Moody's and A-1+ by Standard & Poor's.
"ELIGIBLE INVESTMENT" means any of the following:
(i) Direct obligations of the United States of America and
securities fully and unconditionally guaranteed as to the timely
payment of principal and interest by the United States of America,
provided, that the full faith and credit of the United States of
America must be pledged to any such direct obligation or guarantee
("Direct Obligations");
(ii) Direct Obligations and fully guaranteed certificates of
beneficial interest of the Export-Import Bank of the United States;
consolidated debt obligations and letter of credit-backed issues of
the Federal Home Loan Banks; participation certificates and senior
debt obligations of the Federal Home Loan Mortgage Corporation
("FHLMCs"); debentures of the Federal Housing Administration;
mortgage-backed securities (except stripped mortgage securities which
are valued greater than par on the portion of unpaid principal) and
senior debt obligations of the Federal National Mortgage Association
("FNMAs") ; participation certificates of the General Services
Administration; guaranteed mortgage backed securities and guaranteed
participation certificates of the Government National Mortgage
Association ("GNMAs"); guaranteed participation certificates and
6
guaranteed pool certificates of the Small Business Administration;
debt obligations and letter of credit-backed issues of the Student
Loan Marketing Association; local authority bonds of the U.S.
Department of Housing & Urban Development; guaranteed Title XI
financings of the U.S. Maritime Administration; guaranteed transit
bonds of the Washington Metropolitan Area Transit Authority; and
Resolution Funding Corporation securities; all of the foregoing rated,
at the time of purchase, "P-1" or "A2" by Moody's.
(iii) Direct obligations of any state of the United States of
America or any subdivision or agency thereof whose unsecured,
uninsured and unguaranteed general obligation debt is rated, at the
time of purchase "A2" or better by Moody's and "A" or better by
Standard & Poor's, or any obligation fully and unconditionally
guaranteed by any state, subdivision or agency whose unsecured,
uninsured and unguaranteed general obligation debt is rated, at the
time of purchase, "A2" or better by Moody's and "A" or better by
Standard & Poor's;
(iv) Commercial paper (having original maturities of not more
than 270 days) rated, at the time of purchase, "P-1" by Moody's and
"A-1" or better by Standard & Poor's;
(v) Federal funds, unsecured certificates of deposit, time
deposits or bankers acceptances (in each case having maturities of not
more than 365 days) of any domestic bank including a branch office of
a foreign bank which branch office is located in the United States,
provided legal opinions are received to the effect that full and
timely payment of such deposit or similar obligation is enforceable
against the principal office or any branch of such bank, which, at the
time of purchase, has a short-term "Bank Deposit" rating of "P-1" by
Moody's and a "Short-Term CD" rating of "A-1" or better by Standard &
Poor's and further provided that the bank is subject to the
supervision and examination of federal and state banking authorities.
(vi) Deposits of any bank or savings and loan association which
has combined capital, surplus and undivided profits of not less than
$3 million, provided such deposits are continuously and fully insured
by the Bank Insurance Fund or the Savings Association Insurance Fund
of the FDIC;
(vii) Investments in money-market funds rated "AAAm" or "AAAm-G"
by Standard & Poor's and "Aaa" by Moody's;
(viii) Repurchase agreements collateralized by Direct
Obligations, GNMAs, FNMAs or FHLMCs, as defined above, with any
registered broker/dealer subject to the Securities Investors'
Protection Corporation jurisdiction or any commercial bank insured by
the FDIC, if such broker/dealer or bank has an uninsured, unsecured
and unguaranteed obligation rated "P-1" or "A2" or better by Moody's,
and "A-1" or "A-" or better by Standard Poor's, provided:
7
a. a master repurchase agreement or specific written
repurchase agreement governs the transaction; and
b. the securities are held free and clear of any lien by the
Trustee or an independent third party acting solely as
agent ("Agent") for the Trustee, and such third party is
(i) a Federal Reserve Bank, (ii) a bank which is a member
of the FDIC and which has combined capital, surplus and
undivided profits of not less than $50 million or (iii) a
bank approved in writing for such purpose by the
Certificate Insurer, and the Trustee shall have received
written confirmation from such third party that it holds
such securities, free and clear of any lien, as agent for
the Trustee; and
c. a perfected first security interest under the Uniform
Commercial Code, or book entry procedures prescribed at 31
C.F.R. 306.1 et seq. or 31 C.F.R. 350.0 et seq. in such
securities is created for the benefit of the Trustee; and
d. the repurchase agreement has a term of 180 days or less,
and the Trustee or the Agent will value the collateral
securities no less frequently than weekly and will
liquidate the collateral securities if any deficiency in
the required collateral percentage is not restored within
two business days of such valuation; and
e. the fair market value of the securities in relation to the
amount of the repurchase obligation, including principal
and interest, is equal to at least 103%.
f. the securities have a rating, at the time of purchase of
"P-1" or "A-2" or better by Moody's.
(ix) Investment agreements, the issuer, form and substance of
which are specifically approved by the Certificate Insurer with notice
to Standard & Poor's and Moody's.
Notwithstanding the foregoing, Eligible Investments shall not include (i)
"stripped securities" and investments which contractually may return less than
the purchase price therefore, and (ii) instruments with a purchase price greater
than par if such instrument may be prepaid or called at a price less than its
purchase price prior to its stated maturity.
"EVENT OF DEFAULT" means an event specified in Section 9.1.
8
"FINANCED VEHICLE" means an automobile, light duty truck or van,
together with all accessions thereto, securing an Obligor's indebtedness under
the respective Receivable.
"FITCH" means Fitch Investors Service, Inc.
"HOLDER" see "Certificateholder."
"INDEMNIFICATION AGREEMENT" means the Indemnification
Agreement dated as of December __, 1996 by and among MBIA Insurance
Corporation, Chevy Chase Bank, F.S.B., and CS First Boston Corporation, as
representative of itself, X.X. Xxxxxx Securities Inc. and Xxxxx Xxxxxx Inc.
"INITIAL CERTIFICATE PRINCIPAL BALANCE" shall be
$321,422,908.82.
"INITIAL YIELD MAINTENANCE AMOUNT" means $_________________.
"INSURANCE POLICIES" means the insurance policies described in
Section 3.1(xiii).
"INSURED PAYMENT" means (i) as of any Distribution Date, any
Deficiency Amount and (ii) any Preference Amount.
"LATE PAYMENT RATE" means, for any Distribution Date, the
"Prime Rate" of interest as published in THE WALL STREET JOURNAL in New York,
New York plus 2%. The Late Payment Rate shall be computed on the basis of a
360-day year consisting of twelve 30-day months.
"LENDERS" means, together, the Seller and the Seller's wholly-
owned subsidiary, Consumer Finance Corporation, a Virginia corporation, and
"Lender" means the Seller or Consumer Finance Corporation.
"LIEN" means a security interest, lien, charge, pledge, equity,
or encumbrance of any kind other than tax liens, mechanics' liens, and any liens
which attach to the respective Receivable by operation of law.
"LIQUIDATION PROCEEDS" means, with respect to a Distribution
Date, all monies collected on a Defaulted Receivable from whatever source (other
than withdrawals from the Reserve Account or the Yield Maintenance Account and
the proceeds of a claim under the Certificate Insurance Policy), including
insurance proceeds and proceeds of Financed Vehicles which have been sold or
otherwise disposed of, during the preceding Collection Period, net of the sum of
any amounts expended by the Servicer for the account of the Obligor plus any
amounts required by law to be remitted to the Obligor.
"MONTHLY INTEREST" for any Distribution Date will equal one-
twelfth of the product of the Pass-Through Rate on the Certificate Principal
Balance immediately prior to such Distribution Date.
9
"MONTHLY PRINCIPAL" for any Distribution Date will equal the
Principal Balances of the Receivables on the last day of the second preceding
Collection Period (or, in the case of the first Distribution Date, the Initial
Certificate Principal Balance) less the Pool Balance of the Receivables on the
last day of the preceding Collection Period; PROVIDED, HOWEVER, that Monthly
Principal on the Final Scheduled Distribution Date will equal the Certificate
Principal Balance on such date. For the purpose of determining Monthly
Principal, the Principal Balance of a Defaulted Receivable or a Purchased
Receivable is deemed to be zero on and after the last day of the Collection
Period in which such Receivable became a Defaulted Receivable or a Purchased
Receivable.
"MONTHLY SERVICING FEE" means, for any Distribution Date, one-
twelfth of the product of (a) the Pool Balance as of the beginning of the
Collection Period for the month prior to the month of such Distribution Date and
(b) the Servicing Fee Rate.
"MONTHLY TRUSTEE'S FEE" means, for any Distribution Date, one
twelfth of the product of (a) the Certificate Principal Balance as of the end
of the Collection Period for the month prior to the month of such
Distribution Date and (b) ___%.
"MOODY'S" means Xxxxx'x Investors Service, Inc.
"NET AVAILABLE DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the excess of (x) the Available Distribution Amount for such
Distribution Date over (y) the amounts described in clauses (i) and (ii) of
Section 5.4(a) on such Distribution Date.
"NET AVAILABLE FUNDS" means the amount defined as such in
Section 5.2(c).
"NET LOSSES" means with respect to a Collection Period and with
respect to each Receivable which became a Defaulted Receivable during such
Collection Period, the excess of (x) the principal balance of each such
Defaulted Receivable over (y) the Liquidation Proceeds, if any, collected during
such Collection Period.
"NET LOSS PERCENTAGE" means, with respect to any Distribution
Date, the fraction, expressed as a percentage, equal to (x) twelve times the Net
Losses for the related Collection Period divided, by (y) the Pool Balance as of
the last day of such Collection Period.
"OBLIGOR" on a Receivable means the purchaser or the co-
purchasers of the Financed Vehicle or any other Person who owes payments under
the Receivable. The phrase "payment made on behalf of an Obligor" shall mean
all payments made with respect to a Receivable except payments made by a Lender
or the Servicer.
"OFFICERS' CERTIFICATE" means a certificate signed by any two of
the chairman of the board, the president, any vice chairman of the board, any
executive vice president, any senior vice
10
president, any vice president, the treasurer, or the controller of the Seller or
the Servicer, as appropriate; provided that no individual shall sign in a dual
capacity.
"OPINION OF COUNSEL" means a written opinion of counsel, who may
be in-house counsel to the Seller or Servicer, which counsel shall be acceptable
to the Trustee and the Certificate Insurer.
"OPTIONAL PURCHASE PRICE" means the amount specified as such in
Section 11.2.
"ORIGINAL POOL BALANCE" shall be $321,422,908.82.
"PASS-THROUGH RATE" shall be ___% per annum.
"PERSON" means any individual, corporation, estate, partnership,
limited liability company, joint venture, association, joint stock company,
trust, unincorporated organization, or government or any agency or political
subdivision thereof.
"POOL BALANCE" as of any date means the aggregate Principal
Balance of the Receivables as of such date.
"PREFERENCE AMOUNT" means, as to any Distribution Date, any
amounts included in previous distributions to Certificateholders of Required
Payments (exclusive of Insured Payments) which are recovered from such
Certificateholders as a voidable preference by a trustee in bankruptcy pursuant
to the United States Bankruptcy Code (11 U.S.C.), as amended from time to time,
in accordance with a final, nonappealable order of a court having competent
jurisdiction and which have not theretofore been repaid to such
Certificateholders, provided such Certificateholders have complied with the
provisions of Section 5.5(e).
"PREFERENCE ORDER" shall have the meaning set forth in
Section 5.5(e).
"PREMIUM AMOUNT" means, as to any Distribution Date, one-twelfth
of the product of (x) the Premium Percentage and (y) the Certificate Principal
Balance on such Distribution Date (after taking into account any distributions
of Principal to the Certificateholders to be made on such Distribution Date).
"PREMIUM PERCENTAGE" has the meaning set forth in the letter
agreement between the Seller and the Certificate Insurer.
"PRINCIPAL BALANCE" of a Receivable, at any time, means the
Amount Financed minus that portion of all payments received by the Servicer on
or before such time allocable to principal of such Receivable.
"PURCHASE AMOUNT" means, with respect to a Purchased Receivable
as of a Distribution Date, the amount equal to the sum of the Principal Balance
of such Receivable as of
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the last day of the preceding Collection Period and any unpaid interest accrued
thereon through the date such Receivable is repurchased.
"PURCHASED RECEIVABLE" means, with respect to a Distribution
Date, a Receivable purchased not later than the Determination Date immediately
preceding such Distribution Date by the Servicer pursuant to Section 4.2, 4.7 or
11.2 or repurchased not later than such Determination Date by the Seller
pursuant to Section 3.2.
"RATING AGENCIES" means Moody's, Standard & Poor's and Fitch.
"RECEIVABLE" means any motor vehicle retail installment sales
contract or motor vehicle installment loan executed by an obligor in respect of
a Financed Vehicle, including, without limitation, any extension or revision
agreement relating thereto and all payments due thereunder on or after the Cut-
off Date and all proceeds thereof, which Receivable appears on the Schedule of
Receivables.
"RECEIVABLE FILES" means the documents specified in Section 3.3.
"RECORD DATE" means, as to any Distribution Date, the close of
business, if applicable, on the day (whether or not a Business Day) immediately
preceding such Distribution Date or, if Definitive Certificates are issued
pursuant to Section 6.8, the last day of the calendar month immediately
preceding the month in which such Distribution Date occurs.
"REIMBURSEMENT AMOUNT" means, as of any Distribution Date, the
sum of (i) all Insured Payments previously paid by the Certificate Insurer and
not previously repaid to the Certificate Insurer pursuant to Section 5.5(d),
plus the amount of any unpaid Premium Amount not paid to the Certificate Insurer
pursuant to Section 5.4(a)(ii), plus (ii) interest accrued on each such Insured
Payment not previously repaid and each such unpaid Premium Amount, calculated at
the Late Payment Rate in each case from the date the Certificate Insurer paid
the related Insured Payment, or the date the related Premium Amount was due, as
the case may be. The Certificate Insurer shall notify in writing the Trustee
and the Seller of the amount of any Reimbursement Amount due in respect of any
Distribution Date at least two days prior to the related Determination Date.
"REQUIRED PAYMENTS" means, with respect to any Distribution Date,
the sum of the Monthly Interest and the Monthly Principal for such Distribution
Date.
"REQUIRED RATE" means ____% per annum.
"RESERVE ACCOUNT" means the Reserve Account established pursuant
to Section 5.6.
"RESERVE ACCOUNT DEPOSIT AMOUNT" means, with respect to any
Distribution Date, the lesser of (x) the excess of (i) the Specified Reserve
Balance on such Distribution Date over (ii)
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the amount on deposit in the Reserve Account on such Distribution Date, after
taking into account the amount of any Reserve Account Withdrawal Amount on such
Distribution Date and (y) the amount remaining in the Certificate Account after
taking into account the distributions therefrom described in clauses (i) through
(v) of Section 5.4(a).
"RESERVE ACCOUNT WITHDRAWAL AMOUNT" means, with respect to any
Distribution Date, the lesser of (x) the excess of (i) the sum of the amounts
described in clauses (i) through (v) of Section 5.4 (a) over (ii) the Available
Funds for such Distribution Date and (y) the amount on deposit in the Reserve
Account on such Distribution Date before taking into account any withdrawal
therefrom on such Distribution Date.
"RESERVE INITIAL DEPOSIT" shall be $______________.
"RESPONSIBLE OFFICER" means, when used with respect to the
Trustee, any officer within the Corporate Trust Department (or any successor
group of the Trustee), including any senior vice president, vice president,
assistant vice president, assistant secretary, assistant treasurer or any other
officer or assistant officer of the Trustee customarily performing functions
similar to those performed by the persons who at the time shall be such
officers, respectively, or to whom any corporate trust matter is referred at
the Corporate Trust Department because of his knowledge of and familiarity with
the particular subject.
"SCHEDULE OF RECEIVABLES" shall be, as of any date, the schedule
of Receivables included in the Trust on such date. The initial Schedule of
Receivables as of the Cut-off Date is attached hereto as Exhibit A and sets
forth as to each Receivable, among other things, (a) its identifying number and
the state of residence of the related Obligor; (b) its date of origination;
(c) the original number of months to stated maturity; (d) the original stated
maturity; (e) the Amount Financed; (f) the Principal Balance as of the Cut-off
Date; (g) the original Principal Balance; (h) the APR; (i) the scheduled monthly
payment of principal and interest; (j) the amount of the Balloon Payment, if
any; and (k) whether such Receivable is with recourse to any Dealer and the type
of such recourse.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLER" means Chevy Chase Bank, F.S.B. in its capacity as the
seller of the Receivables under this Agreement, and each successor to Chevy
Chase Bank, F.S.B. (in the same capacity) pursuant to Section 2.2.
"SERVICER" means Chevy Chase Bank, F.S.B. in its capacity as the
servicer of the Receivables, and each successor to Chevy Chase Bank, F.S.B. (in
the same capacity) pursuant to Sections 3.3, 3.4 and 9.2.
"SERVICER'S CERTIFICATE" means a certificate completed and
executed by the Servicer by its chairman of the board, its president, any vice
chairman of its board, any executive vice
13
president, any senior vice president, any vice president, the treasurer, or the
controller of the Servicer pursuant to Section 4.9.
"SERVICING FEE RATE" means ____%.
"SERVICING OFFICE" means, at the date of this Agreement, the
office of the Servicer specified in this Agreement, or such other address as the
Servicer may designate from time to time by notice to the Seller, the Trustee
and the Certificate Insurer.
"SERVICING OFFICER" means any officer of the Servicer involved
in, or responsible for, the administration and servicing of the Receivables
whose name appears on a list of servicing officers annexed to an Officers,
Certificate furnished to the Trustee by the Servicer, as the case may be, as
such list may from time to time be amended.
"SPECIFIED RESERVE BALANCE" means, with respect to any
Distribution Date, the greater of (i) $_____________, and (ii) __% of the Pool
Balance on the first day of the related Collection Period; except that if on any
Distribution Date (a) the average of the Net Loss Percentage for the three
preceding Collection Periods exceeds __%, or (b) the average of the Delinquency
Percentages for the three preceding Collection Periods exceeds __%, then the
Specified Reserve Balance applicable to such Distribution Date shall be an
amount equal to the greater of (x) $______________ and (y) ____% of the Pool
Balance on the first day of the related Collection Period.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a
division of The McGraw Hill Companies, Inc.
"STATE" means (i) any state of the United States of America or
(ii) the District of Columbia.
"STATED FINAL DISTRIBUTION DATE" means the Distribution Date in
July, 2003.
"SUB-SERVICER" means, as to the Sub-Serviced Receivables, the
Servicer's wholly-owned subsidiary, Consumer Finance Corporation, a Virginia
corporation.
"SUB-SERVICED RECEIVABLES" means those Receivables sold to Chevy
Chase Bank, F.S.B. pursuant to the Purchase and Sale Agreement dated as of
_________________, 1996 between Chevy Chase Bank, F.S.B. as Purchaser and
Consumer Finance Corporation as Seller.
"TRUST" means the trust created by this Agreement, the estate of
which shall consist of the Receivables (other than Purchased Receivables) and
all monies due (including accrued interest) or received thereon on or after the
Cut-off Date; security interests in the Financed Vehicles, the Certificate
Account and the Collection Account; funds deposited in the Collection Account
and the Certificate Account; proceeds of Purchased Receivables; the right to
receive payments from funds deposited in the Reserve Account and the Yield
Maintenance Account
14
(under the conditions specified herein); all rights to receive payments under
the Certificate Insurance Policy; any property (including the right to receive
future Liquidation Proceeds) that shall have secured a Receivable and that shall
have been acquired by or on behalf of the Trust; proceeds from recourse to
Dealers relating to the Receivables; proceeds from claims on any physical
damage, lender's. single interest, credit life, disability, or hospitalization
insurance policies covering Financed Vehicles or obligors; the rights of
recourse of the Seller against any cosigner or under any personal guarantee and
any and all of the proceeds of the foregoing.
"TRUSTEE" means First Bank National Association, a national
banking association, or its successor in interest, or any successor trustee
appointed as herein provided.
"TRUSTEE'S CERTIFICATE" means a certificate completed and
executed by the Trustee by a Responsible Officer pursuant to Section 10.2,
substantially in the form of, in the case of an assignment to the Seller,
Exhibit C, and, in the case of an assignment to the Servicer, Exhibit D.
"UCC" means the Uniform Commercial Code as in effect in the
applicable jurisdiction.
"YIELD MAINTENANCE ACCOUNT" means the Yield Maintenance Account
established pursuant to Section 5.6.
"YIELD MAINTENANCE AMOUNT" means, with respect to any
Distribution Date, the sum of all Designated Loan Required Amounts as of such
Distribution Date.
"YIELD MAINTENANCE WITHDRAWAL AMOUNT" means, as of any
Distribution Date, the lesser of (i) the sum of, with respect to each Designated
Loan held by the Trust as of the opening of business on the first day of the
related Collection Period, the products of (x) one-twelfth, (y) such Designated
Loan's Principal Balance as of such time and (z) the excess of (1) the Required
Rate over (2) such Designated Loan's APR and (ii) the amount on deposit in the
Yield Maintenance Account on such Distribution Date, exclusive of any net
investment earnings.
SECTION 1.2 USAGE OF TERMS.
With respect to all terms in this Agreement, the singular
includes the plural and the plural the singular; words importing any gender
include the other genders; references to "writing" include printing, typing,
lithography, and other means of reproducing words in a visible form; references
to agreements and other contractual instruments include all subsequent
amendments thereto or changes therein entered into in accordance with their
respective terms and not prohibited by this Agreement; references to Persons
include their permitted successors and assigns; and the term "including" means
"including without limitation."
15
SECTION 1.3 CUT-OFF DATE AND RECORD DATE.
All references to the Record Date prior to the first Record Date
in the life of the Trust shall be to the Cut-off Date.
SECTION 1.4 SECTION REFERENCES.
All section references in this Agreement shall be to sections in
this Agreement.
SECTION 1.5 INTEREST CALCULATIONS.
(a) All allocations of payments with respect to a Receivable to
principal and interest and determinations of periodic charges and the like shall
be made using the simple interest method, based on the actual number of days
elapsed and the actual number of days in the calendar year. Each payment on a
Receivable (net of fees and charges) shall be applied first to the amount of
interest accrued on such Receivable to the date of receipt and then to reduce
the principal amount outstanding on the Receivable.
(b) All calculations of interest on the Certificates shall be made on
the basis of a 360-day year comprised of twelve 30-day months.
ARTICLE II
CREATION OF THE TRUST;
CONVEYANCE OF RECEIVABLES
SECTION 2.1 CREATION OF TRUST.
Upon the execution of this Pooling and Servicing Agreement by the
parties hereto and the concurrent conveyance of the Receivables by the Seller to
the Trustee pursuant to Section 2.2, there is hereby created the Chevy Chase
Auto Receivables Trust 1996-2.
SECTION 2.2 CONVEYANCE OF RECEIVABLES.
In consideration of the Trustee's delivery to or upon the order
of the Seller of authenticated Certificates with an initial Certificate
Principal Balance equal to $321,422,908.82, the Seller does hereby sell,
transfer, assign, and otherwise convey to the Trustee, in trust for the benefit
of the Certificateholders and the Certificate Insurer, without re-course
(subject to the obligations herein):
(i) all right, title, and interest of the Seller in and to the
Receivables listed in the Schedule of Receivables, including all monies
due or received thereunder on or after the Cut-off Date;
16
(ii) the security interests of the Seller in the Financed
Vehicles granted by obligors pursuant to the Receivables;
(iii) the Certificate Account and the Collection Account and
funds deposited therein;
(iv) the interest of the Seller in the documents constructively
delivered to the Trustee pursuant to Section 3.3;
(v) the interest of the Seller in any proceeds from recourse to
Dealers relating to the Receivables;
(vi) the interest of the Seller in any Liquidation Proceeds and
any proceeds from claims on any physical damage, theft, vendor's single
interest, credit life, disability or hospitalization insurance policies
covering Financed Vehicles or Obligors;
(vii) the rights of the Seller to proceeds of Insurance Policies;
(viii) the right to receive payments as set forth herein from the
Reserve Account and the Yield Maintenance Account;
(ix) the right to receive payments as set forth herein from the
Certificate Insurance Policy; and
(x) the proceeds of any and all of the foregoing.
It is the express intention of the Seller and the Trustee that
(a) the assignment and transfer herein contemplated constitute a sale of the
Receivables and the other property of the Trust described above, conveying good
title thereto free and clear of any liens, encumbrances, security interests or
rights of other Persons, from the Seller to the Trust and (b) the Receivables
and the other property of the Trust described above not be a part of the
Seller's estate in the event of an insolvency of the Seller. In the event that
such conveyance is deemed to be a pledge in connection with a financing, the
parties intend that the Seller shall have granted to the Trustee a first
priority perfected security interest in all of the Seller's right, title and
interest in the items of property listed in clauses (i) through (ix) above, and
all proceeds of the foregoing, and that this Agreement shall constitute a
security agreement under applicable law and the Trustee shall have all of the
rights and remedies of a secured party and creditor under the UCC as in force in
the relevant jurisdictions.
The Seller hereby pledges, grants, assigns and otherwise sets
over to the Trustee, in trust, the Yield Maintenance Account and the Reserve
Account and all amounts on deposit therein and all Eligible Investments held
therein from time to time and all proceeds thereof, and hereby grants to the
Trustee for the benefit of the Certificateholders and the Certificate Insurer a
first priority perfected security interest in such Accounts, amounts and
Eligible Investments. It is the intention of the Seller that, with respect to
such Accounts and such amounts and Eligible Investments, this Agreement shall
constitute a security agreement under applicable law and the
17
Trustee shall have all of the rights and remedies of a secured party and
creditor under the UCC and other applicable law as in force in the relevant
jurisdictions.
SECTION 2.3 ACCEPTANCE BY TRUSTEE.
The Trustee does hereby accept the assignment by the Seller
pursuant to Section 2.2 and declares that the Trustee accepts such assignment
upon the trusts herein set forth for the benefit of the Certificateholders and
the Certificate Insurer, as their respective interests may appear, subject to
the terms and provisions of this Agreement. The assignment will not constitute,
and is not intended to result in, an assumption by the Trustee, any
Certificateholder or the Certificate Insurer of any obligation of the Seller or
any other Persons in connection with the Receivables, the Receivables Files,
the Insurance Policies or under any agreements or instruments relating to any of
them.
ARTICLE III
THE RECEIVABLES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF SELLER.
The Seller makes, the following representations and warranties as
to the Receivables on which the Trustee relies in accepting the Receivables in
trust and executing and authenticating the Certificates and upon which the
Certificate Insurer relies in executing and delivering the Certificate Insurance
Policy. Such representations and warranties speak as of the Closing Date, but
shall survive the sale, transfer, and assignment of the Receivables to the
Trustee.
(i) CHARACTERISTICS OF RECEIVABLES. Each Receivable (a) shall
have been originated or purchased by a Lender, (b) shall have been fully
and properly executed by the parties thereto, (c) is a fully-amortizing
simple interest installment contract or installment loan which provides
for level monthly payments over its original term, provided that (x) some
Receivables may include a payment in the last month in the life of the
Receivable which due to delinquencies or partial prepayments may be
different from the level monthly payment and (y) ___% of the Receivables
(measured as a percentage of the Original Pool Balance) may be Balloon
Receivables, (d) shall have created or shall create a valid, subsisting,
and enforceable first priority security interest in favor of such Lender
in the Financed Vehicle, which security interest shall be assignable and
shall have been validly assigned by the Seller to the Trustee, and
(e) shall contain customary and enforceable provisions such that the
rights and remedies of the holder thereof shall be adequate for
realization against the collateral of the benefits of the security.
(ii) SCHEDULE OF RECEIVABLES. The information set forth in the
Schedule of Receivables shall be true and correct in all material respects
as of the opening of business on the Cut-off Date. The Seller shall have
caused each Lender's electronic ledger
18
relating to each related Receivable to be clearly and unambiguously marked
to show that such Receivable has been sold to the Trust for the benefit of
the Certificateholders pursuant to this Agreement.
(iii) COMPLIANCE WITH LAW. Each Receivable and each sale of the
related Financed Vehicle shall have complied at the time it was originated
or made and at the execution of this Agreement shall comply in all
material respects with all requirements of applicable federal, State, and
local laws, and regulations thereunder, including, without limitation,
usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity
Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair
Debt Collection Practices Act, the Federal Trade Commission Act, the
Xxxxxxxx-Xxxx Warranty Act, the Federal Reserve Board's Regulations B and
Z, and State adaptations of the National Consumer Act and of the Uniform
Consumer Credit Code, and other applicable consumer credit laws and equal
credit opportunity and disclosure laws.
(iv) BINDING OBLIGATION. Each Receivable represents the genuine,
legal, valid, and binding payment obligation in writing of the related
Obligor, enforceable by the holder thereof in accordance with its terms.
All parties to such Receivable have full legal capacity to execute and
deliver such Receivable and all other documents related thereto and to
grant the security interest granted thereby and the terms of such
Receivable have not been waived or modified in any respect (other than
extensions of payments granted in the ordinary course of the Servicer's
collection procedures and the term of which does not extend beyond the
last day of the Collection Period immediately preceding the Stated Final
Distribution Date).
(v) NO GOVERNMENT OBLIGOR. None of the Receivables shall be due
from the United States of America or any State or local government or from
any agency, department, or instrumentality of the United States of America
or any State or local government.
(vi) SECURITY INTEREST IN FINANCED VEHICLE. Immediately prior to
the sale, assignment, and transfer thereof to the Trustee, each Receivable
shall be secured by a validly perfected first priority security interest
in the Financed Vehicle in favor of the Lender that originated or
purchased such Receivable as secured party and all necessary and
appropriate actions with respect to such Receivable shall have been taken
to perfect a first priority security interest in the Financed Vehicle in
favor of such Lender as secured party, which security interest is
assignable and has been so assigned to the Trustee.
(vii) RECEIVABLES IN FORCE. No Receivable shall have been
satisfied, subordinated, or rescinded, nor shall any Financed Vehicle have
been released from the lien granted by the related Receivable in whole or
in part.
(viii) NO WAIVER. No provision of a Receivable shall have been
waived (other than extensions of payments granted in the ordinary course
of the collection procedures
19
of the Servicer (or of the Sub-Servicer, with respect to the Sub-Serviced
Receivables) and the term of which does not extend beyond the last day of
the Collection Period immediately preceding the Stated Final Distribution
Date).
(ix) NO AMENDMENTS. No Receivable shall have been amended such
that the number of the Obligor's scheduled payments shall have been
increased.
(x) NO DEFENSES. No facts exist which would give rise to any
right of rescission, setoff, counterclaim or defense nor shall have any
right of rescission, setoff, counterclaim, or defense been asserted or
threatened with respect to any Receivable.
(xi) NO LIENS. No liens or claims shall have been filed,
including liens for work, labor, materials or taxes relating to a Financed
Vehicle, that shall be liens prior to, or equal or coordinate with, the
security interest in the Financed Vehicle granted by the Obligor pursuant
to the Receivable.
(xii) NO DEFAULT. Except for payment defaults continuing for a
period of not more than 59 days as of the Cut-off Date, no default,
breach, violation or event permitting acceleration under the terms of any
Receivable shall exist; no continuing condition that with notice or lapse
of time would constitute a default, breach, violation or event permitting
acceleration under the terms of any Receivable shall exist; and the
related Lender shall not have waived any of the foregoing.
(xiii) INSURANCE. The Servicer, in accordance with its customary
procedures, shall have (i) required that the Obligor obtain physical
damage and theft insurance covering the Financed Vehicle as of the date of
related contract and (ii) obtained vendor's single interest insurance
covering the Financed Vehicle.
(xiv) TITLE. It is the intention of the Seller that the transfer
and assignment herein contemplated, taken as a whole, constitutes a sale
of the Receivables and other property of the Trust from the Seller to the
Trust and that the beneficial interest in and title to the Receivables and
other Trust property not be part of the receivership or conservatorship
estate in the event of the appointment of a receiver or conservator for
the Seller. No Receivable has been sold, transferred, assigned, or
pledged by the Seller to any Person other than the Trustee. Immediately
prior to the transfer and assignment herein contemplated, the Seller had
good and marketable title to each Receivable free and clear of all Liens,
and, immediately upon the transfer thereof, the Trustee for the benefit of
the Certificateholders and the Certificate Insurer shall have good and
marketable title to each Receivable, free and clear of all Liens and
rights of others, except for the rights of the Certificateholders and the
Certificate Insurer; and the transfer has been perfected under the UCC.
(xv) LAWFUL ASSIGNMENT. No Receivable shall have been originated
in, or shall be subject to the laws of, any jurisdiction under which the
sale, transfer, and assignment of
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such Receivable under this Agreement or transfers of the Certificates
would be unlawful, void, or voidable.
(xvi) ALL FILINGS MADE. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give the Trustee
a first priority perfected ownership interest in the Receivables shall
have been made.
(xvii) ONE ORIGINAL. There shall be only one original executed
copy of each Receivable, and immediately prior to the constructive
delivery thereof to the Trustee pursuant to Section 3.3, such copy shall
have been in the custody and possession of the applicable Lender.
(xviii) NO BANKRUPT OBLIGOR. None of the Receivables shall be due
from an Obligor who has commenced a voluntary case under the United States
Bankruptcy Code or consented to the entry of or failed to have stayed
within 60 days of entry an order for relief against it in an involuntary
case under the United States Bankruptcy Code.
(xix) CHATTEL PAPER. The Receivables constitute "chattel paper"
within the meaning of the UCC as in effect in the State of Maryland.
The chief executive office of the Seller is located in the State of
Maryland.
(xx) MAXIMUM AMOUNT FINANCED. No Obligor shall be the Obligor on
Receivables on which the sum of the Principal Balances of such Receivables
is greater than $_________.
(xxi) NO ASSIGNMENT. The related Lender has not taken any action
to convey any right to any Person that would result in such Person having
a right to payments due under the Receivable that is senior to or equal
with that of the Trust.
(xxii) COMPOSITION OF RECEIVABLES. Each Receivable is secured by a
Financed Vehicle which is a new or used automobile, light duty truck or
van.
(xxiii) MATURITY OF RECEIVABLES. Each Receivable shall have an
original term to stated maturity of at least __ months and not more than
__ months.
(xxiv) MINIMUM AND MAXIMUM ANNUAL PERCENTAGE RATE. Each Receivable
shall have an Annual Percentage Rate no less than ____% and no more than
_____%.
(xxv) MINIMUM AND MAXIMUM PRINCIPAL BALANCE. Each Receivable
shall have a Principal Balance no less than $________ and no more than
$_________.
(xxvi) PAYMENT. With respect to Sub-Serviced Receivables only,
the Obligor under each Sub-Serviced Receivable has made at least one
payment with respect thereto as of the Cut-off Date.
(xxvii) STATES OF OBLIGOR RESIDENCE. Except with respect to
Receivables with an aggregate Principal Balance representing ___% of the
Original Pool Balance, the Obligor under each Receivable resides in
Maryland, Virginia or North Carolina.
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(xxviii) LOCATION OF RECEIVABLE FILES. The Receivable Files shall
be kept by the Servicer as custodian for the Trustee at 0000 Xxxxx Xxxxxx
Xxxxx, XxXxxx, Xxxxxxxx 00000, or at such other location or locations as
may be designated from time to time by notice to the Trustee and the
Certificate Insurer.
(xxix) ADVANCE PAYMENTS. No Receivable has been paid more than
___ months in advance.
(xxx) NO ADVERSE SELECTION. The Receivables were selected from
retail installment sales contracts and motor vehicle installment loans in
the Seller's portfolio that had met the applicable conditions specified in
this Section 3.1 utilizing no selection procedures adverse to the
Certificateholders or the Certificate Insurer relative to similar retail
installment sales contracts and motor vehicle installment loans in the
Seller's portfolio.
SECTION 3.2 REPURCHASE UPON BREACH.
The Seller, the Servicer, the Trustee or the Certificate Insurer,
as the case may be, shall inform the other parties promptly, in writing, upon
the discovery of any breach of the Seller's representations and warranties
contained in Section 3.1; PROVIDED, that the Trustee shall have no duty to
inquire concerning, or to investigate, the breach of any of such representations
and warranties. Unless the breach shall have been cured by the last day of the
Collection Period following the Collection Period during which the Seller
becomes aware of, or receives written notice of, such breach, the Seller shall
repurchase as of such day (or, at the Seller's option, as of the last day of the
month in which such breach was discovered) any Receivable materially and
adversely affected by such breach and any Receivable in which the interest of
the Trust is materially and adversely affected by such breach. In consideration
of the purchase of the Receivable, the Seller shall remit the Purchase Amount,
in the manner specified in Section 5.3. The sole remedy of the Trustee, the
Trust or the Certificateholders with respect to a breach of the Seller's
representations and warranties contained in Section 3.1 shall be to require the
Seller to repurchase Receivables pursuant to this Section 3.2. The Seller shall
notify the Certificate Insurer of any repurchase of any Receivable pursuant to
this Section.
SECTION 3.3 CUSTODY OF RECEIVABLE FILES.
To assure uniform quality in servicing the Receivables and to reduce
administrative costs, the Trustee, upon the execution and delivery of this
Agreement, hereby revocably appoints the Servicer, and the Servicer hereby
accepts such appointment, to act as the agent of the Trustee as custodian of the
following documents or instruments which are hereby constructively delivered to
the Trustee with respect to each Receivable:
(i) The original of the Receivable fully executed by the
Obligor.
(ii) The original credit application fully executed by the
Obligor.
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(iii) The original certificate of title held by the Lender that
originated or purchased such Receivable evidencing the security interest
of such Lender in the Financed Vehicle.
(iv) Any and all other documents that the Servicer or the
applicable Lender shall keep on file, in accordance with its customary
procedures, relating to a Receivable, an Obligor, or a Financed Vehicle.
SECTION 3.4 DUTIES OF SERVICER AND SUB-SERVICER AS CUSTODIAN.
(a) SAFEKEEPING. The Servicer, in its capacity as custodian, shall
hold the Receivable Files on behalf of the Trustee for the use and benefit of
all present and future Certificateholders and the Certificate Insurer and
maintain such accurate and complete accounts, records, and computer systems
pertaining to each Receivable File as shall enable the Trustee to comply with
this Agreement. In performing its duties as custodian, the Servicer shall act
with reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to the receivable files relating to all comparable
automotive receivables that the Servicer services for itself. The Servicer
shall conduct, or cause to be conducted, periodic audits of the Receivable Files
held by it under this Agreement, and of the related accounts, records, and
computer systems, in such a manner as shall enable the Trustee to verify the
accuracy of the Servicer's record keeping. The Servicer shall promptly report
to the Trustee and the Certificate Insurer any failure on the Servicer's part to
hold the Receivable Files and maintain its accounts, records, and computer
systems as herein provided and promptly take appropriate action to remedy any
such failure.
(b) MAINTENANCE OF AND ACCESS TO RECORDS. The Servicer shall
maintain each Receivable File at its office specified in this Agreement, or at
such other office or offices as shall be specified by the Servicer to the
Trustee and the Certificate Insurer by prior written notice. The Servicer shall
make available to the Trustee and the Certificate Insurer or their respective
duly authorized representatives, attorneys, or auditors a list of locations of
the Receivable Files, and the related accounts, records, and computer systems
maintained by the Servicer at such times during normal business hours as the
Trustee or the Certificate Insurer shall instruct, which does not unreasonably
interfere with the Servicer's normal operations or customer or employee
relations.
(c) RELEASE OF DOCUMENTS. Upon instruction from the Trustee, the
Servicer shall release any document in a Receivable File to the Trustee, the
Trustee's agent, or the Trustee's designee, as the case may be, at such place or
places as the Trustee may designate, as soon as practicable.
(d) The Servicer shall require the Sub-Servicer to comply with the
preceding provisions of this Section 3.4 with respect to the Sub-Serviced
Receivables. Notwithstanding anything to the contrary, the Servicer shall
remain primarily liable for its duties as Custodian with respect to all
Receivables, including the Sub-Serviced Receivables.
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SECTION 3.5 INSTRUCTIONS; AUTHORITY TO ACT.
The Servicer and the Sub-Servicer shall be deemed to have
received proper instructions with respect to the Receivable Files upon its
receipt of written instructions signed by a Responsible officer of the Trustee.
SECTION 3.6 EFFECTIVE PERIOD AND TERMINATION.
The appointment of the Servicer as custodian shall become
effective as of the Cut-off Date and shall continue in full force and effect for
the term of the Trust unless terminated earlier pursuant to this Section 3.6. If
the Servicer shall resign in accordance with the provisions of Section 8.5 or if
all of the rights and obligations of the Servicer shall have been terminated
under Section 9.1, the appointment of the Servicer and the Sub-Servicer as
custodian may be terminated (1) by the Trustee or by the Holders of Certificates
evidencing not less than a majority of the Certificate Principal Balance, in
either case, with the consent of the Certificate Insurer or (ii) by the
Certificate Insurer, by written notification to the Servicer. The Trustee with
the consent of the Certificate Insurer may terminate the Servicer's appointment
as custodian with cause at any time upon written notification to the Servicer,
in which case the Sub-Servicer shall also be terminated as a custodian. The
Trustee shall notify the Rating Agencies of any termination of the Servicer's
appointment as custodian pursuant to this Section 3.6. As soon as practicable
after any termination of such appointment, the Servicer and the Sub-Servicer
shall deliver the Receivable Files to the Trustee or the Trustee's agent at such
place or places as the Trustee may reasonably designate.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.1 DUTIES OF SERVICER.
The Servicer as agent for the Trustee shall manage, service,
administer, and make collections on the Receivables with reasonable care, using
that degree of skill and attention that the Servicer exercises with respect to
all comparable automotive receivables that it services for itself. The
Servicer' s duties shall include the collection and posting of all payments,
responding to inquiries of Obligors or of federal, state or local governmental
authorities with respect to the Receivables, investigating delinquencies,
sending payment coupons to Obligors, accounting for collections, and furnishing
monthly and annual statements to the Trustee and the Certificate Insurer with
respect to distributions. The Servicer shall follow its customary standards,
policies, and procedures in performing its duties as Servicer; provided, that
with respect to the Sub-Serviced Receivables and for so long as the Sub-Servicer
is sub-servicing the Sub-Serviced Receivables, the Servicer shall follow the
Sub-Servicer's customary standards, policies and procedures. Without limiting
the generality of the foregoing, the Servicer is authorized and empowered by the
Trustee to execute and deliver, on behalf of itself, the Trust, the
Certificateholders, or the Trustee or any of them, any and all instruments of
satisfaction or
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cancellation, or partial or full release or discharge, and all other comparable
instruments, with respect to such Receivables or to the Financed Vehicles
securing such Receivables. If the Servicer shall commence a legal proceeding to
enforce a Receivable, the Trustee shall thereupon be deemed to have
automatically assigned, solely for the purpose of collection, such Receivable to
the Servicer. The Trustee shall execute any documents prepared by the Servicer
and delivered to the Trustee for execution that are necessary or appropriate to
enable the Servicer to carry out its servicing and administrative duties
hereunder.
SECTION 4.2 COLLECTION OF RECEIVABLE PAYMENTS.
The Servicer shall use its best efforts to collect all payments
called for under the terms and provisions of the Receivables as and when the
same shall become due and shall follow such collection procedures as it follows
with respect to all comparable automotive receivables that it services for
itself. If payments are extended in the ordinary course of the Servicer's
collection procedures, and, as a result, any Receivable would be outstanding on
the first day after the end of the Collection Period immediately preceding the
Stated Final Distribution Date, then the Servicer shall be obligated to purchase
such Receivable in the manner set forth in Section 4.7 (unless such Receivable
is otherwise being purchased pursuant to Section 11.2) as of the last day of the
Collection Period following the Collection Period in which the extension was
made (or, at the Servicer's option, as of the last day of the Collection Period
in which the extension was made); PROVIDED, HOWEVER, that the purchase
obligation with respect to a Receivable shall be the obligation of the Servicer
which granted the extension, and not of any successor Servicer; and PROVIDED,
FURTHER, that the purchase obligation of any Servicer shall survive the
termination of such Servicer as Servicer. The Servicer may in its discretion
waive any Additional Fees.
SECTION 4.3 REALIZATION UPON RECEIVABLES.
On behalf of the Trust, the Servicer shall use its best efforts,
consistent with its customary servicing procedures, to repossess or otherwise
convert the ownership of the Financed Vehicle securing any Receivable as to
which the Servicer shall have determined that eventual payment in full is
unlikely. The Servicer shall follow such customary and usual practices and
procedures as it shall deem necessary or advisable in its servicing of
automotive receivables, which may include reasonable efforts to realize upon any
recourse to Dealers and selling the Financed Vehicle at a public or private
sale. The foregoing shall be subject to the provision that, in any case in
which the Financed Vehicle shall have suffered damage, the Servicer shall not
expend funds in connection with the repair or the repossession of such Financed
Vehicle unless it shall determine in its discretion that such repair and/or
repossession will increase the Liquidation Proceeds of the related Receivable by
an amount equal to or greater than the amount of such expenses.
SECTION 4.4 INSURANCE
(a) The Servicer may xxx to enforce or collect upon the Insurance
Policies, in its own name, if possible, or as agent of the Trust. If the
Servicer elects to commence a legal proceeding to enforce an Insurance Policy,
the act of commencement shall be deemed to be an automatic
25
assignment of the rights of the Trust under such Insurance Policy to the
Servicer for purposes of collection only. If, however, in any enforcement suit
or legal proceeding it is held that the Servicer may not enforce an Insurance
Policy on the grounds that it is not a real party in interest or a holder
entitled to enforce the Insurance Policy, the Trustee, on behalf of the Trust,
at the Servicer's expense, or the Seller, at the Seller's expense, shall take
such steps as the Servicer deems necessary to enforce such Insurance Policy,
including bringing suit in its name or the name of the Trustee for the benefit
of the Certificateholders.
(b) The Servicer shall maintain a vendor's single interest or other
collateral protection insurance policy with respect to all Financed Vehicles
("Collateral Insurance") which policy by its terms insures against physical
damage in the event any Obligor fails to maintain physical damage insurance with
respect to the related Financed Vehicles. The Seller will be the named insured
under all policies of Collateral Insurance. The Servicer shall maintain
Collateral Insurance at all times unless the Certificate Insurer otherwise
consents in writing.
(c) Costs incurred by the Servicer in maintaining Collateral
Insurance shall be paid by the Servicer.
SECTION 4.5 MAINTENANCE OF SECURITY INTERESTS IN FINANCED
VEHICLES.
The Servicer shall, in accordance with its customary servicing
procedures, take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed Vehicle.
The Trustee hereby authorizes the Servicer to take such steps as are necessary
to re-perfect such security interest on behalf of the Trust in the event of the
relocation of a Financed Vehicle or for any other reason. In the event that the
assignment of a Receivable to the Trust is insufficient, without a notation on
the related Financed Vehicle's certificate of title, or without fulfilling any
additional administrative requirements under the laws of the State in which the
Financed Vehicle is located, to grant to the Trust a perfected security interest
in the related Financed Vehicle, the Seller hereby agrees on behalf of itself
and the other Lender that the listing of the applicable Lender as the secured
party on the certificate of title is in its capacity as agent of the Trust.
SECTION 4.6 COVENANTS OF SERVICER.
(a) The Servicer shall not release the Financed Vehicle securing any
Receivable from the security interest granted by such Receivable in whole or in
part except in the event of payment in full by or on behalf of the Obligor
thereunder or repossession, nor shall the Servicer impair the rights of the
Trust or the Certificateholders in the Receivables, nor shall the Servicer
change the amount of the scheduled payment under a Receivable (except for an
extension permitted pursuant to Section 4.2) or change the APR of or the Amount
Financed under a Receivable, nor shall the Servicer fail to comply with the
provisions of any Insurance Policy, if the failure to so comply would impair the
protection or benefit to be afforded by such Insurance Policy.
(b) COMPLIANCE WITH APPLICABLE LAWS. The Servicer shall comply with
any law or, to the best of the Servicer's knowledge, any order, rule or
regulation applicable to the Servicer of
26
any court or of any federal or state regulatory body, administrative agency, or
other governmental instrumentality having jurisdiction over the Servicer or its
properties, the failure to comply with which may materially and adversely affect
the performance by the Sellers of its obligations under, or the validity or
enforceability of, this Agreement or the Certificates.
(c) CORPORATE EXISTENCE. The Servicer and its successors and assigns
shall maintain their corporate existence and shall at all times continue to be
duly organized under the laws of their respective jurisdictions of incorporation
and duly qualified and duly authorized and shall conduct their business in
accordance with the terms of their certificates of incorporation and bylaws,
PROVIDED, HOWEVER, that the Servicer shall not be required to maintain its
existence as a federally chartered thrift if the board of directors shall
determine that the preservation of such status is no longer desirable and that
the loss thereof is not disadvantageous in any material respect to the
Certificateholders or the Certificate Insurer.
(d) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER INFORMATION.
The Servicer shall keep or cause to be kept in reasonable detail books and
records of account of its assets and business, including, but not limited to,
books and records relating to this Agreement. The Servicer shall furnish or
cause to be furnished to the Certificate Insurer:
(i) ANNUAL FINANCIAL STATEMENTS. As soon as available, and in
any event within 120 days after the close of each fiscal year of the
Servicer, the audited consolidated balance sheets of the Servicer and its
subsidiaries as of the end of such fiscal year and the related audited
consolidated statements of income, changes in shareholders' equity and
cash flows for such fiscal year, all in reasonable detail and stating in
comparative form the respective figures for the corresponding date and
period in the preceding fiscal year, prepared in accordance with generally
accepted accounting principles, consistently applied, and accompanied by
the audit opinion of the Servicer's independent accountants (which shall
be a nationally recognized independent public accounting firm or
otherwise acceptable to the Certificate Insurer).
(ii) QUARTERLY FINANCIAL STATEMENTS. As soon as available, and
in any event within 90 days after each of the first three fiscal quarters
of each fiscal year of the Servicer, the unaudited consolidated balance
sheets of the Servicer and its subsidiaries as of the end of such fiscal
quarter and the related unaudited consolidated statements of income,
changes in shareholders' equity and cash flows for such fiscal quarter,
all in reasonable detail and stating in comparative form the respective
figures for the corresponding date and period in the preceding fiscal
year, prepared in accordance with generally accepted accounting
principles, consistently applied.
(iii) CERTAIN INFORMATION. Upon the reasonable request of the
Certificate Insurer, the Servicer shall promptly provide copies of any
requested proxy statements, financial statements, reports and registration
statements which the Servicer files with, or delivers to, the Securities
and Exchange Commission or any national securities exchange.
27
All financial statements specified in clause (i) above shall be
furnished in consolidated form for the Servicer and its subsidiaries in the
event the Servicer shall consolidate its financial statements with its
subsidiaries.
The Certificate Insurer, by the issuance of the Certificate
Insurance Policy, agrees that it and its agents, accountants and attorneys shall
keep confidential all financial statements, reports and other information
delivered by the Servicer pursuant to this Section 4.6(d).
(e) MAINTENANCE OF INSURANCE. The Servicer shall maintain with a
responsible company, and at its own expense, a blanket fidelity bond and an
errors and omissions insurance policy in a minimum amount generally maintained
by prudent federally chartered thrift institutions engaged in the servicing of
automotive receivables and having servicing portfolios of a similar size.
(f) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS. On
an annual basis, or upon the occurrence of an event that could have a material
adverse effect on the ability of the Servicer to perform its obligations under,
or the validity or enforceability of, this Agreement or the Certificates, the
Servicer shall, upon the reasonable request of the Certificate Insurer, permit
the Certificate Insurer or its authorized agents:
(i) to discuss the affairs, finances and accounts of the
Servicer with the chief operating officer and the chief financial officer
of the Servicer, in each case, to the extent related to the Receivables,
or the duty of the Servicer hereunder; and
(ii) with the Servicer's consent, which consent shall not be
unreasonably withheld, to discuss the affairs, finances and accounts of
the Servicer with the Servicer's independent accountants, in each case, to
the extent related to the Receivables, or the duty of the Servicer
hereunder, provided that an officer of the Servicer shall have the right
to be present during such discussions.
Such inspections and discussions shall be conducted during normal
business hours and shall not unreasonably disrupt the business of the Servicer.
The Certificate Insurer, by the issuance of the Certificate
Insurance Policy, agrees that it and its shareholders, directors, agents,
accountants and attorneys shall keep confidential any matter of which it becomes
aware through such inspections or discussions (unless readily available from
public sources), except as may be otherwise required by regulation, law or court
order or requested by appropriate governmental authorities or as necessary to
preserve its rights or security under or to enforce this Agreement, provided
that the foregoing shall not limit the right of the Certificate Insurer to make
such information available to its regulators, securities rating agencies,
reinsurers, credit and liquidity providers, counsel and accountants. If the
Certificate Insurer is requested or required (by oral questions,
interrogatories, requests for information or documents subpoena, civil
investigative demand or similar process) to disclose any information of which it
becomes aware through such inspections or discussions, the Certificate
28
Insurer will promptly notify the Servicer of such request(s) so that the
Servicer may seek an appropriate protective order and/or waive the Certificate
Insurer's compliance with the provisions of this Agreement. If, in the absence
of a protective order or the receipt of a waiver hereunder, the Certificate
Insurer is, nonetheless, in the opinion of its counsel, compelled to disclose
such information to any tribunal or else stand liable for contempt or suffer
other censure or significant penalty, the Certificate Insurer may disclose such
information to such tribunal that the Certificate Insurer is compelled to
disclose, provided that a copy of all information disclosed is provided to the
Servicer promptly upon such disclosure.
(g) NOTICE OF MATERIAL EVENTS. The Servicer shall promptly inform
the Certificate Insurer in writing of the receipt of notice of any proceeding by
any regulatory body seeking any determination or ruling that might materially
and adversely affect the performance by the Sellers of its obligations under, or
the validity or enforceability of, this Agreement or the Certificates.
(h) MAINTENANCE OF LICENSES. The Servicer, or any successors
thereof, shall maintain all licenses, permits, charters and registrations which
are material to the performance of its obligations under this Agreement or the
Certificates.
SECTION 4.7 PURCHASE OF RECEIVABLES UPON BREACH.
The Servicer, the Trustee or the Certificate Insurer shall inform
the other parties promptly, in writing, upon the discovery of any breach by the
Servicer of its obligations under Section 4.5 or 4.6; PROVIDED, that the Trustee
shall have no duty to inquire concerning, or to investigate, the breach of any
of such obligations. Unless the breach shall have been cured by the last day of
the Collection Period following the Collection Period during which the Seller
becomes aware of, or receives written notice of such breach, the Servicer shall
purchase as of such day (or, at the Servicer's option, as of the last day of the
month in which such breach was discovered) any Receivable materially and
adversely affected by such breach and any Receivable in which the interest of
the Trust is materially and adversely affected by such breach. In consideration
of the purchase of such Receivable, the Servicer shall remit the Purchase Amount
with respect to such Receivable in the manner specified in Section 5.3. The
sole remedy of the Trustee, the Trust or the Certificateholders with respect to
a breach pursuant to Section 4.5 or 4.6 shall be to require the Servicer to
purchase Receivables pursuant to this Section 4.7. The Servicer shall notify the
Certificate Insurer of any purchase of a Receivable pursuant to this Section
4.7.
SECTION 4.8 SERVICING FEES.
The servicing fee for a Collection Period shall equal the Monthly
Servicing Fee (except that in the case of a successor Servicer, the servicing
fee shall equal such amount as is arranged in accordance with Section 9.2). The
Servicer shall deposit into the Collection Account all Additional Fees.
Investment earnings on the Collection Account, the Certificate Account, the
Yield Maintenance Account and the Reserve Account, if any, shall be deposited
into the respective accounts. The Monthly Servicing Fee may be retained by
the Servicer from the aggregate interest collections on the Receivables
during the related Collection Period, prior to the deposit in the Collection
Account pursuant to Section 5.2; in no event shall the Servicer retain with
respect to any Collection
29
Period, an amount of base servicing compensation in excess of the Monthly
Servicing Fee, even if multiple payments ("advance payments" or "payaheads") are
received from the Obligors during such Collection Period.
SECTION 4.9 SERVICER'S CERTIFICATE.
On or before each Determination Date, the Servicer shall deliver
to the Trustee and the Certificate Insurer by 12:00 pm New York City time a
Servicer's Certificate in the form of Exhibit E attached hereto containing all
information necessary to make the distributions pursuant to Section 5.4, to make
any transfers of funds pursuant to Sections 5.1, 5.2 and 5.6, and to make any
demands on the Certificate Insurance Policy pursuant to Section 5.5 for the
Collection Period preceding the date of such Servicer's Certificate and all
information necessary for the Trustee to send statements to Certificateholders
pursuant to Section 5.7. Receivables purchased by the Servicer or repurchased by
the Seller as of the last day of such Collection Period shall be identified by
the Seller's account number with respect to such Receivable (as specified in the
Schedule of Receivables).
SECTION 4.10 ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF
DEFAULT.
(a) The Servicer shall deliver to the Trustee and the Certificate
Insurer, on or before December 31 of each year, beginning December 31, 1998, an
Officers' Certificate stating that (i) a review of the activities of the
Servicer during the preceding 12-month period ended September 30 of such year
(or such longer period since the date of this Agreement) and of its performance
under this Agreement has been made under such officers' supervision and (ii) to
the best of such officers' knowledge, based on such review, the Servicer has
fulfilled all of its obligations under this Agreement throughout such year, or,
if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officers and the nature and status
thereof.
(b) The Servicer shall deliver to the Trustee and the Certificate
Insurer, promptly after having obtained knowledge thereof, but in no event later
than one Business Day thereafter, written notice in an Officers' Certificate of
any event which with the giving of notice or lapse of time, or both, would
become an Event of Default under clause (i) of Section 9.1. The Seller shall
deliver to the Trustee and the Certificate Insurer, promptly after having
obtained knowledge thereof, but in no event later than five Business Days
thereafter, written notice in an Officers' Certificate of any event which with
the giving of notice or lapse of time, or both, would become an Event of Default
under any other clause of Section 9.1.
SECTION 4.11 ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS'
REPORT.
The Servicer shall cause a firm of independent certified public
accountants, who may also render other services to the Servicer, to deliver to
the Trustee and the Certificate Insurer on or before December 31 of each year
concerning the 12-month period ended September 30 of such year (or such longer
period since the date of this Agreement), beginning December 31, 1998, a report
addressed to the Board of Directors of the Servicer, the Trustee and the
Certificate Insurer, to the effect that such firm has read the monthly
Servicer's Certificates delivered pursuant
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to Section 4.9 with respect to each Collection Period during such one-year (or
longer) period and reviewed the servicing of the Receivables by the Servicer and
that such review (1) included tests relating to automobile, light duty truck and
van loans serviced for others in accordance with the requirements of the Uniform
Single Attestation Program for Mortgage Bankers, to the extent the procedures in
such program are applicable to the servicing obligations set forth in this
Agreement, and (2) except as described in the report, disclosed no exceptions or
errors in the records relating to automobile, light duty truck and van loans
serviced for others that, in the firm's opinion, paragraph four of such program
requires such firm to report.
The report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 4.12 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING RECEIVABLES.
The Servicer shall provide (and shall require the Sub-Servicer to
provide) to the Certificateholders and the Trustee access to the Receivables
Files in such cases where the Certificateholder or the Trustee shall be required
by applicable statutes or regulations to review such documentation. The
Certificate Insurer shall be afforded such access at any time, subject to the
requirements of the next sentence. Access shall be afforded without charge, but
only upon reasonable request and during the normal business hours at the
respective 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 4.12.
SECTION 4.13 SERVICER EXPENSES.
The Servicer shall be required to pay all expenses incurred by it
in connection with its activities hereunder, including fees and disbursements of
independent accountants and taxes imposed on the Servicer.
SECTION 4.14 REPORTS TO CERTIFICATEHOLDERS.
The Trustee shall provide to any Certificateholder, who so
requests in writing (addressed to the Corporate Trust Office) and the Rating
Agencies a copy of any certificate described in Section 4.9, or the annual
statement described in Section 4.10, or the annual report described in Section
4.11. The Trustee may require the Certificateholder to pay a reasonable sum to
cover the cost of the Trustee's compliance with such request.
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ARTICLE V
DISTRIBUTIONS; STATEMENTS TO
CERTIFICATEHOLDERS
SECTION 5.1 ESTABLISHMENT OF ACCOUNTS.
(a) The Trustee, on behalf of the Trust, shall establish the
Collection Account and the Certificate Account as segregated trust accounts in
the name of the Trust for the benefit of Certificateholders and the Certificate
Insurer with the Corporate Trust Office of the Trustee. The Servicer shall
direct the Trustee to invest the amounts in the Collection Account and the
Certificate Account in Eligible Investments that, with respect to the Collection
Account, mature not later than the Business Day prior to the next succeeding
Determination Date or, with respect to the Certificate Account, mature not later
than the next succeeding Deposit Date, and to hold such Eligible Investments to
maturity. The Collection Account and the Certificate Account shall always be
maintained as Eligible Accounts. The Trustee may trade with itself or an
affiliate in the purchase or sale of Eligible Investments.
(b) (i) The Seller shall establish and maintain the Reserve
Account and the Yield Maintenance Account in the name of the Trustee, each
as an Eligible Account for the benefit of the Trust, the
Certificateholders and the Certificate Insurer. The Reserve Account and
the Yield Maintenance Account shall not be property of the Trust.
(ii) Funds on deposit in the Reserve Account shall be
invested by the Trustee in Eligible Investments, in each case selected by
the Servicer by a written direction, which shall certify that any such
investment is authorized by this Section; PROVIDED, HOWEVER, the Trustee
shall not be liable for any loss arising from such investment in Eligible
Investments (other than as Obligor under any Eligible Investment). All
such Eligible Investments shall be held by the Trustee for the benefit of
the beneficiaries of the Reserve Account and the Yield Maintenance
Account; PROVIDED that on each Distribution Date all interest and other
investment income (net of investment losses and expenses) on funds on
deposit in the Yield Maintenance Account shall be withdrawn from the Yield
Maintenance Account at the direction of the Servicer and shall be paid to
the Seller; all interest and other investment income (net of investment
losses and expenses) on funds on deposit in the Reserve Account shall be
deposited to the Reserve Account. Funds on deposit in the Reserve
Account and the Yield Maintenance Account shall be invested in Eligible
Investments that will mature so that such funds will be available at the
close of business on the related Deposit Date. Funds deposited in the
Reserve Account and the Yield Maintenance Account on the day which
immediately precedes a Distribution Date upon the maturity of any
Eligible Investments are not required to be (but may be) invested
overnight in accordance with the investment provisions contained
herein. The Seller shall treat the funds and other assets in the
Reserve Account and the Yield Maintenance Account as its own for
federal, state and local income tax and franchise tax
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purposes and shall report on its tax returns all income and gain from the
Reserve Account and the Yield Maintenance Account.
(iii) The Trustee agrees as follows with respect to the
Eligible Investments, and the proceeds thereof, held from time to time in
the Reserve Account and the Yield Maintenance Account:
(A) any Eligible Investment that is held in deposit accounts
shall be subject to the exclusive custody and control of the Trustee,
and the Trustee shall have sole signature authority with respect
thereto;
(B) any Eligible Investment that constitutes Physical Property
(as defined in the definition of Delivery) shall be delivered to the
Trustee in accordance with paragraph (a) of the definition of
"Delivery" and shall be held, pending maturity or disposition, solely
by the Trustee or a financial intermediary (as such term is defined in
Section 8-313 (4) of the UCC) acting solely for the Trustee;
(C) any Eligible Investment that is a book-entry security held
through the Federal Reserve System pursuant to federal book-entry
regulations shall be delivered in accordance with paragraph (b) of the
definition of "Delivery" and shall be maintained by the Trustee,
pending maturity or disposition, through continued book entry
registration of such Eligible Investment as described in such
paragraph; and
(D) any Eligible Investment that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by
clause (C) above shall be delivered to the Trustee in accordance with
paragraph (c) of the definition of "Delivery" and shall be maintained
by the Trustee, pending maturity or disposition, through continued
registration of the Trustee's (or its nominee's) ownership of such
security directly or through one or more financial intermediaries.
(iv) The Servicer shall have the power, revocable by the
Trustee, to instruct the Trustee to make withdrawals and payments from the
Reserve Account and the Yield Maintenance Account for the purpose of
making distributions of funds on deposit in such Accounts in accordance
with the provisions hereof.
(c) In the event of any change of law regarding matters relating to
the perfection of security interests in any Account, the amounts or any Eligible
Investments held therein, the Seller shall cause to be furnished to the Trustee,
the Certificate Insurer and each Rating Agency, an opinion of Counsel addressing
such matters and if necessary, the Seller shall cooperate with the Trustee in
taking all actions necessary to comply with the change in law.
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SECTION 5.2 COLLECTIONS.
(a) The Servicer shall remit to the Collection Account within two
Business Days following receipt thereof all payments by or on behalf of the
obligors on the Receivables and all Liquidation Proceeds (including payments
made under any of the Insurance Policies or the Collateral Insurance to the
extent applicable to payments due on the Receivables) , both as collected during
the Collection Period, net of (i) the Servicer's actual out-of-pocket expenses
reasonably incurred with respect to Defaulted Receivables or Vehicles, which
shall be paid from amounts actually recovered with respect to any Defaulted
Receivable or Vehicle, (ii) charge backs attributable to errors in posting,
returned checks, or rights of offset for amounts that should not have been paid
or that must be refunded as the result of a successful claim or defense under
bankruptcy or similar laws and (iii) the Monthly Servicing Fee, as provided in
Section 4.8.
(b) On the Determination Date in each month, the Servicer shall
instruct the Trustee to withdraw from the Collection Account the amount
collected with respect to Receivables, including Additional Fees and Liquidation
Proceeds, received during the Collection Period and investment earnings related
to such Determination Date and deposit such amount in immediately available
funds or by wire transfer in immediately available funds into the Certificate
Account.
(c) On or before each Determination Date, the Servicer shall
determine (i) the sum of (x) the amount of payments on all Receivables,
including all Additional Fees and Liquidation Proceeds (including payments made
under any of the Insurance Policies or the Collateral Insurance to the extent
applicable to payments due on the Receivables), received during the related
Collection Period, investment earnings deposited in the Collection Account or
Certificate Account during the related Collection Period, investment earnings
earned through such Determination Date and not yet deposited in the Collection
Account or Certificate Account, and the Purchase Amounts for all Receivables to
be purchased or repurchased with respect to such Collection Period which have
been deposited in the Certificate Account (the "Net Available Funds") and (y)
the Yield Maintenance Withdrawal Amount for the related Distribution Date (the
sum of (x) and (y) being the "Available Funds"), and (ii) the amount of funds
necessary to make the distributions required pursuant to clauses (i) through
(iv) of Section 5.4(a) on the next Distribution Date. The Servicer shall by a
Servicer's Certificate notify the Trustee of such amounts by telecopy to the
Corporate Trust office (or such other number as the Trustee may from time to
time provide), followed promptly by mailing such notice to the Trustee at the
Corporate Trust Office, and the Trustee shall provide such notice to the
Certificate Insurer.
SECTION 5.3 PURCHASE AMOUNTS.
On the Determination Date following each Collection Period, the
Servicer or the Seller, as the case may be, shall remit to the Certificate
Account the aggregate Purchase Amount for such Collection Period pursuant to
Sections 3.2, 4.2 and 4.7.
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SECTION 5.4 DISTRIBUTIONS.
(a) On each Distribution Date, the Trustee shall apply or cause to be
applied the sum of (w) the Net Available Funds in the Certificate Account (after
withdrawing amounts deposited in error and Liquidation Proceeds relating to
Purchased Receivables) for the prior Collection Period, (x) the Yield
Maintenance Withdrawal Amount, (y) the Reserve Account Withdrawal Amount and (z)
the amount of any Insured Payment to make the following distributions in the
listed order of priority:
(i) the Monthly Trustee's Fee, including any overdue Monthly
Trustee's Fee, to the Trustee;
(ii) the Premium Amount, including any overdue Premium Amount, to
the Certificate Insurer;
(iii) Monthly Interest, including any overdue Monthly Interest, to
the Certificateholders;
(iv) Monthly Principal, including any overdue Monthly Principal,
to the Certificateholders;
(v) the Reimbursement Amount, to the Certificate Insurer;
(vi) the Reserve Account Deposit Amount, to the Reserve Account;
and
(vii) the remainder, to the Seller.
If the Servicer exercises the purchase option on any Distribution
Date pursuant to Section 11.2, the Optional Purchase Price shall be deposited
into the Certificate Account on the Determination Date related to such
Distribution Date.
In making such distributions, the Trustee shall be entitled to
rely upon (without investigation, confirmation or recalculation) all information
and calculations contained in the Servicer's Certificate delivered to the
Trustee pursuant to Section 4.9.
(b) All monthly distributions to Certificateholders shall be made by
wire transfer (if wiring instructions are received from the Certificateholders),
or, in the absence of such instructions, by check mailed to each
Certificateholder of record on the preceding Record Date at its address
appearing on the Certificate Register, or by such other means as the
Certificateholder and the Trustee shall agree. Payments to the Certificate
Insurer or the Seller shall be made by wire transfer based on instructions
received by the Trustee from either of them. Notwithstanding the foregoing, the
final payment on each Certificate shall be made only against the presentation
and surrender of the Certificate at the office or agency then maintained by the
Trustee.
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(c) Each Certificateholder shall promptly notify the Trustee and the
Certificate Insurer in writing upon the receipt of a nonappealable court order
of a court having competent jurisdiction seeking to recover payments to
Certificateholders or the Trust as a voidable preference by a trustee in
bankruptcy pursuant to the United States Bankruptcy Code and shall enclose a
copy of such order with such notice to the Trustee and the Certificate Insurer.
(d) If the Servicer has failed to provide the Trustee with the notice
required pursuant to Section 5.2, the Trustee may calculate Monthly Interest and
apply funds, if any, in the Certificate Account as of the last day of the prior
Collection Period, plus any payments from the Certificate Insurer, to make a
distribution of Monthly Interest to the Certificateholders.
SECTION 5.5 CERTIFICATE INSURANCE POLICY.
(a) By 12:00 noon New York City time on each Determination Date the
Trustee shall, based solely on the information set forth in the related
Servicer's Certificate, determine the Net Available Distribution Amount with
respect to the immediately following Distribution Date.
(b) If the Required Payments for any Distribution Date exceed the Net
Available Distribution Amount for such Distribution Date (such event giving
rise to a "Deficiency Amount") and the Certificate Insurer does not otherwise
fund such Deficiency Amount by 12:00 p.m. New York City time on the third
Business Day preceding the related Distribution Date (the "Claim Date"), the
Trustee shall complete a Notice in the form of Exhibit A attached to the
Certificate Insurance Policy and submit such notice to the Certificate Insurer
no later than 12:00 p.m. New York City time on the Claim Date as a claim for an
Insured Payment in an amount equal to such Deficiency Amount. The Notice shall
specify the amount of the Insured Payment and shall constitute a claim for an
Insured Payment pursuant to the Certificate Insurance Policy.
(c) The Trustee shall report to the Seller and the Certificate
Insurer with respect to the amounts then held in each Account held by the
Trustee and the identity of the investments included therein, as the Seller or
the Certificate Insurer may from time to time request. Without limiting the
generality of the foregoing, the Trustee shall, at the request of the Seller or
the Certificate Insurer, transmit promptly to the Certificate Insurer and the
Seller copies of all accountings of receipts in respect of the Receivables
furnished to it by the Servicer.
(d) The Trustee shall (i) receive as attorney-in-fact of the
Certificateholders any Insured Payment from the Certificate Insurer and
(ii) disburse the same to such Certificateholders as set forth in Section 5.4.
Insured Payments disbursed by the Trustee from proceeds of the Certificate
Insurance Policy shall not be considered payment by the Trust with respect to
the Certificates, and the Certificate Insurer shall become the owner of such
unpaid amounts due from the Trust in respect of Insured Payments as the deemed
assignee of such Certificateholders, as hereinafter provided. The Trust and the
Trustee hereby agree on behalf of each Certificateholder for the benefit of the
Certificate Insurer that to the extent the Certificate Insurer pays Insured
Payments, either directly or indirectly (as by paying through the Trustee), to
the Certificateholders, the Certificate Insurer shall be subrogated to the
rights of the
36
Certificateholders with respect to such Insured Payments, shall be deemed to the
extent of the Insured Payments so made to be a Certificateholder and shall
receive future distributions until all such Insured Payments by the Certificate
Insurer have been fully reimbursed, as described in the following paragraph. To
evidence such subrogation, the Trustee shall note the Certificate Insurer's
rights as subrogee on the Certificate Register upon receipt from the Certificate
Insurer of proof of the payment of any Insured Payment, after making the
distribution on any such future Distribution Date to the Certificateholders
other than to the Certificate Insurer.
The Certificate Insurer shall be entitled to receive the related
Reimbursement Amount pursuant to Section 5.4 with respect to each Insured
Payment made by the Certificate Insurer. The Trustee hereby agrees on behalf of
each Certificateholder and the Trust for the benefit of the Certificate Insurer
that it recognizes that to the extent the Certificate Insurer makes Insured
Payments, either directly or indirectly (as by paying through the Trustee), to
the Certificateholders, or to the extent any Premium Amount remains unpaid, as
the case may be, the Certificate Insurer shall be entitled to receive the
related Reimbursement Amount pursuant to Section 5.4.
It is understood and agreed that the intention of the parties is
that the Certificate Insurer shall not be entitled to reimbursement on any
Distribution Date for amounts previously paid by it unless on such Distribution
Date the Certificateholders shall also have received the full amount of the
Required Payments for such Distribution Date.
(e) Each Certificateholder which pays any Preference Amounts
theretofore received by such Certificateholder on account of such Certificate
will be entitled to receive reimbursement for such amounts from the Certificate
Insurer in accordance with the terms of the Certificate Insurance Policy, but
only after (i) delivering a copy to the Certificate Insurer of a final,
nonappealable order (a "Preference Order") of a court having competent
jurisdiction under the United States Bankruptcy Code demanding payment of such
amount to the bankruptcy court and (ii) irrevocably assigning such
Certificateholder's claim with respect to such Preference Order to the
Certificate Insurer in such form as is required by the Certificate Insurer. In
no event shall the Certificate Insurer pay more than one Insured Payment in
respect of any Preference Amount. Consequently, the Trustee shall not be
entitled to reimbursement with respect to any Preference Order relating to the
Certificateholder's receipt of funds representing Insured Payments made by the
Certificate Insurer in respect of such Distribution Date.
The Trustee, for itself and on behalf of the Certificateholders,
agrees that the Certificate Insurer may at any time during the continuation of
any proceeding relating to a Preference Order direct all matters relating to
such Preference Order, including, without limitation, the direction of any
appeal of any order relating to such Preference Order and the posting of any
surety, supersedeas or performance bond pending any such appeal. In addition
and without limitation of the foregoing, the Certificate Insurer shall be
subrogated, to the extent of Insured Payments, to the rights of the Seller, the
Servicer, the Trustee and each Certificateholder in the conduct of any such
preference claim, including, without limitation, all rights of any party to
37
any adversarial proceeding or action with respect to any court order issued in
connection with any such preference claim.
(f) The Trustee shall keep a complete and accurate record of the
amount of interest and principal paid in respect of any Certificate from moneys
received under the Certificate Insurance Policy. The Certificate Insurer shall
have the right to inspect such records at reasonable times during normal
business hours upon one Business Day's prior notice to the Trustee.
(g) The Certificate Insurer shall have the right to give
participations in its rights under this Agreement and to enter into contracts of
reinsurance with respect to the Certificate Insurance Policy; provided that no
such grant of participation shall operate to relieve the Certificate Insurer of
liability on the Certificate Insurance Policy, and provided further that no such
participation or contract of reinsurance shall require the Servicer, the Trustee
or the Seller to deal with any person other than the Certificate Insurer.
SECTION 5.6 RESERVE ACCOUNT AND YIELD MAINTENANCE ACCOUNT.
(a) On the Closing Date, the Seller shall deposit the Reserve Initial
Deposit into the Reserve Account. Amounts held from time to time in the Reserve
Account shall be held by the Trustee for the benefit of Seller, subject to the
first priority security interest granted under Section 2.2 hereof to the Trustee
for the benefit of the Certificateholders and the Certificate Insurer, but the
Reserve Account shall not be an asset of the Trust.
The Certificate Insurer may, by written notice to the Trustee,
direct the Trustee to reduce the amount of the Specified Reserve Balance;
PROVIDED, HOWEVER, that no such notice given to the Trustee shall be effective
unless accompanied by written evidence from each Rating Agency that such
reduction in the Specified Reserve Balance will not result in the reduction or
withdrawal of any rating then assigned to the Certificates.
On each Distribution Date (i) if the amount on deposit in the
Reserve Account is less than the Specified Reserve Balance, the Trustee shall,
after payment of any amounts required to be distributed pursuant to clauses
(i) through (iv) of Section 5.4(a) deposit in the Reserve Account the Reserve
Account Deposit Amount and (ii) if the amount on deposit in the Reserve Account
on any Distribution Date (after giving effect to all other deposits thereto and
withdrawals therefrom to be made on such Distribution Date) is greater than the
Specified Reserve Balance, the Trustee shall distribute the amount of such
excess to the Seller on such Distribution Date.
(b) On each Distribution Date, the Servicer shall instruct the
Trustee (based on the information contained in the Servicer's Certificate
delivered on the related Determination Date) to withdraw the Reserve Account
Withdrawal Amount from the Reserve Account and deposit such amount in the
Certificate Account.
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(c) On the Closing Date, the Seller shall deposit the Initial Yield
Maintenance Amount into the Yield Maintenance Account. Amounts held from time
to time in the Yield Maintenance Account shall be held by the Trustee for the
benefit of the Seller, subject to the first priority security interest granted
under Section 2.2 hereof to the Trustee for the benefit of the
Certificateholders and the Certificate Insurer, but the Yield Maintenance
Account shall not be an asset of the Trust.
On each Distribution Date (i) the Trustee shall withdraw the
Yield Maintenance Withdrawal Amount from the Yield Maintenance Account and
distribute such amount to the Certificateholders pursuant to Section 5.4 hereof,
(ii) the Trustee shall withdraw from the Yield Maintenance Account the net
investment earnings then on deposit thereon and distribute such amount to the
Seller and (iii) if the amount then on deposit in the Yield Maintenance Account
(after giving effect to all withdrawals therefrom to be made on such
Distribution Date) is greater than the Yield Maintenance Amount, the Trustee
shall distribute the amount of such excess to the Seller on such Distribution
Date.
(d) Amounts properly received by the Seller pursuant to this
Agreement shall not be available to the Trustee or the Trust for the purpose of
making deposits to the Reserve Account, or making payments to the
Certificateholders, nor shall the Seller be required to refund any amount
properly received by it.
SECTION 5.7 STATEMENTS TO CERTIFICATEHOLDERS.
On each Distribution Date, the Trustee shall mail or send by
facsimile to the Certificateholders, the Rating Agencies and the Certificate
Insurer a statement, based on information in the Servicer's Certificate
furnished to the Trustee by the Servicer pursuant to Section 4.9, setting forth
for the Collection Period relating to such Distribution Date the following
information (which in the case of items (i), (ii) and (iii) shall be based on a
Certificate in a principal amount of $1,000):
(i) the amount of the distribution allocable to principal,
including any overdue principal;
(ii) the amount of the distribution allocable to interest,
including any overdue interest;
(iii) the Monthly Servicing Fee, including any overdue Monthly
Servicing Fee, and the Monthly Trustee's Fee;
(iv) the amount of any Insured Payments;
(v) the Reserve Account Withdrawal Amount and the Yield
Maintenance Withdrawal Amount;
39
(vi) the aggregate Net Losses on the Receivables for the related
Collection Period;
(vii) the Pool Balance and Certificate Factor as of the end of the
related Collection Period;
(viii) the aggregate Principal Balance of all Receivables which
were delinquent 30 days or more as of the last day of the related
Collection Period;
(ix) the Certificate Principal Balance (after giving effect to
any distribution of Monthly Principal made on such Distribution Date) on
which Monthly Interest will be calculated with respect to the next
succeeding Distribution Date;
(x) the Delinquency Percentage relating to such Distribution
Date;
(xi) the aggregate of all Purchase Amounts received on the
related Determination Date;
(xii) the aggregate amount received with respect to Defaulted
Receivables, including Liquidation Proceeds, during the related Collection
Period; and
(xiii) the Reimbursement Amount for such Distribution Date.
Within the prescribed period of time for tax reporting purposes
after the end of each calendar year during the term of this Agreement, the
Trustee shall mail, to each Person who at any time during such calendar year
shall have been a Certificateholder, a statement containing the sum of the
amounts determined in clauses (i), (ii) and (iii) for such calendar year or, in
the event such Person shall have been a Certificateholder during a portion of
such calendar year, for the applicable portion of such year, unless
substantially comparable information has been provided to such
Certificateholder, for the purposes of such Certificateholder's preparation of
federal income tax returns.
ARTICLE VI
THE CERTIFICATES
SECTION 6.1 THE CERTIFICATES.
(a) The Certificates shall be issued in denominations of $1,000 and
integral multiples thereof; PROVIDED, HOWEVER, that one Certificate may be
issued in a denomination that includes any residual amount. The Certificates
shall be executed on behalf of the Trust by manual signature of a Responsible
Officer of the Trustee. Certificates bearing the signatures of individuals who
were, at the time when such signatures shall have been affixed, authorized to
sign on behalf of the Trust, shall be valid and binding obligations of the
Trust, notwithstanding that such individuals or any of
40
them shall have ceased to be so authorized prior to the authentication and
delivery of such Certificates or did not hold such offices at the date of such
Certificates.
(b) The Certificates are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein with
respect to the Certificates as to "principal" and "interest" no debt of any
Person is represented thereby, nor are the Certificates or the underlying
Receivables guaranteed by any Person (except that the Receivables may be
recourse to the Obligors thereof to the extent permitted by law and except for
the rights of the Trustee with respect to the Certificate Insurance Policy).
Distributions on the Certificates are payable solely from payments received on
or with respect to the Receivables, moneys in the Collection Account and the
Certificate Account, except as otherwise provided herein, from earnings on
moneys and the proceeds of property held as a part of the Trust and, upon the
occurrence of certain events as herein provided, from draws on the Reserve
Account and the Yield Maintenance Account and claims under the Certificate
Insurance Policy. Each Certificate entitles the Certificate Owner thereof to
receive monthly on each Distribution Date a specified portion of such payments
with respect to the Receivables, earnings, proceeds and withdrawals from the
Reserve Account and the Yield Maintenance Account and claims under the
Certificate Insurance Policy PRO RATA in accordance with the ownership interest
of such Certificate Owner.
SECTION 6.2 AUTHENTICATION OF CERTIFICATES.
The Trustee shall cause the Certificates to be executed on behalf
of the Trust, authenticated, and delivered to or upon the written order of the
Seller, signed by its chairman of the board, any vice chairman of the board, its
president, any executive vice president, any senior vice president or any vice
president, without further corporate action by the Seller, in authorized
denominations, pursuant to this Agreement. No Certificate shall entitle its
holder to any benefit under this Agreement, or shall be valid for any purpose,
unless there shall appear on such Certificate a certificate of authentication,
substantially as set forth in the form of Certificate attached as Exhibit B
hereto, executed by the Trustee by manual signature; such authentication shall
constitute conclusive evidence that such Certificate shall have been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication.
SECTION 6.3 REGISTRATION OF TRANSFER AND EXCHANGE OF
CERTIFICATES.
The Certificate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 6.7, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Trustee shall be the initial
Certificate Registrar.
Upon surrender for registration of transfer of any Certificate at
the Corporate Trust Office, the Trustee shall execute, authenticate, and
deliver, in the name of the designated transferee or transferees, one or more
new Certificates in authorized denominations of a like aggregate amount dated
the date of authentication by the Trustee. At the option of a Holder,
Certificates may be exchanged for other Certificates of authorized denominations
of a like
00
xxxxxxxxx xxxxxx xxxx xxxxxxxxx of the Certificates to be exchanged at the
Corporate Trust Office.
Every Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Trustee and the Certificate Registrar duly executed by
the Holder or his or her attorney duly authorized in writing. Each Certificate
surrendered for registration of transfer and exchange shall be canceled and
subsequently destroyed by the Trustee.
No service charge shall be made for any registration of transfer
or exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
SECTION 6.4 MUTILATED, DESTROYED, LOST, OR STOLEN CERTIFICATES.
If (a) any mutilated Certificate shall be surrendered to the
Certificate Registrar, or if the Certificate Registrar shall receive evidence to
its satisfaction of the destruction, loss, or theft of any Certificate and (b)
there shall be delivered to the Certificate Registrar or the Trustee such
security or indemnity as may be required by them to save each of them harmless,
then in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser other than the Person who requested a replacement
Certificate, the Trustee on behalf of the Trust shall execute and the Trustee
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost, or stolen Certificate, a new Certificate of like
tenor and denomination. in connection with the issuance of any new Certificate
under this Section 6.4, the Trustee and the Certificate Registrar may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection therewith. Any duplicate Certificate issued
pursuant to this Section 6.4 shall constitute conclusive evidence of ownership
in the Trust, as if originally issued, whether or not the lost, stolen, or
destroyed Certificate shall be found at any time.
SECTION 6.5 PERSONS DEEMED OWNERS.
Prior to registration of transfer, the Trustee or the Certificate
Registrar may treat the Person in whose name any Certificate shall be registered
as the owner of such Certificate for the purpose of receiving distributions
pursuant to Section 5.4 and for all other purposes whatsoever, and neither the
Trustee, the Certificate Insurer nor the Certificate Registrar shall be bound by
any notice to the contrary.
SECTION 6.6 ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
ADDRESSES.
The Trustee shall furnish or cause to be furnished to the
Servicer and the Certificate Insurer, within 15 days after receipt by the
Trustee of a request therefor from such party in writing, a list, in such form
as such party may reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date. If three or more
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Certificateholders, or one or more Holders of Certificates aggregating not less
than 25% of the Certificate Principal Balance, apply in writing to the Trustee,
and such application states that the applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Certificates and such application shall be accompanied by a copy of the
communication that such applicants propose to transmit, then the Trustee shall,
within five Business Days after the receipt of such application, afford such
applicants access during normal business hours to the current list of
Certificateholders. Each Holder, by receiving and holding a Certificate, shall
be deemed to have agreed to hold neither the Servicer nor the Trustee
accountable by reason of the disclosure of its name and address, regardless of
the source from which such information was derived.
SECTION 6.7 MAINTENANCE OF OFFICE OR AGENCY.
The Trustee shall maintain an office or offices or agency or
agencies where Certificates may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Trustee in respect of the
Certificates and this Agreement may be served. The Trustee initially designates
the Corporate Trust Office as specified in this Agreement as its office for such
purposes. The Trustee shall give prompt written notice to the Servicer, the
Certificate Insurer and Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
SECTION 6.8 BOOK-ENTRY CERTIFICATES.
The Certificates (other than a Certificate representing any
residual portion of the Pool Balance as of the Cut-Off Date), upon original
issuance, shall be issued in the form of typewritten Certificates representing
the Book-Entry Certificates, to be delivered to The Depository Trust Company,
the initial Clearing Agency, by the Seller or on its behalf. The Certificates
shall initially be registered on the Certificate Register in the name of CEDE &
Co., the nominee of the initial Clearing Agency, and no Certificate Owner will
receive a definitive certificate representing such Certificate Owner's interest
in the Certificates, except as provided in Section 6.10. Unless and until
definitive, fully registered Certificates ("Definitive Certificates") have been
issued to Certificateholders pursuant to Section 6.10:
(i) the provisions of this Section 6.8 shall be in full force
and effect;
(ii) the Seller, the Servicer and the Trustee may deal with the
Clearing Agency and the Clearing Agency Participants for all purposes
(including the making of distributions on the Certificates and the taking
of actions by the Certificateholders) as the authorized representatives of
the Certificate Owners;
(iii) to the extent that the provisions of this Section 6.8
conflict with any other provisions of this Agreement, the provisions of
this Section 6.8 shall control;
(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency (or to the extent Certificate Owners are not
Clearing Agency Participants through
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the Clearing Agency Participants through which such Certificate Owners own
Book-Entry Certificates) and shall be limited to those established by law
and agreements between such Certificate Owners and the Clearing Agency
and/or the Clearing Agency Participants, and all references in this
Agreement to actions by Certificateholders shall refer to actions taken by
the Clearing Agency upon instructions from the Clearing Agency
Participants, and all references in this Agreement to distributions,
notices, reports and statements to Certificateholders shall refer to
distributions, notices, reports and statements to the Clearing Agency or
its nominee, as registered Holder of the Certificates, as the case may be,
for distribution to Certificate Owners in accordance with the procedures
of the Clearing Agency; and
(v) pursuant to an agreement between the Clearing Agency and the
Seller, the initial Clearing Agency will make Book-Entry transfers among
the Clearing Agency Participants and receive and transmit distributions of
principal and interest on the Certificates to the Clearing Agency
Participants, for distribution by such Clearing Agency Participants to the
Certificate Owners or their nominees.
SECTION 6.9 NOTICES TO CLEARING AGENCY.
Whenever notice or other communication to the Certificateholders
is required under this Agreement, unless and until Definitive Certificates shall
have been issued to Certificate Owners pursuant to Section 6.10, the Trustee
shall give to the Clearing Agency all such notices and communications specified
herein to be given to Certificateholders.
SECTION 6.10 DEFINITIVE CERTIFICATES.
If (i)(A) the Servicer advises the Trustee in writing that the
Clearing Agency is no longer willing or able properly to discharge its
responsibilities as Clearing Agency with respect to the Certificates, and
(B) the Trustee or the Servicer is unable to locate a qualified successor,
(ii) the Servicer, at its option, elects to terminate the Book-Entry system
through the Clearing Agency or (iii) after the occurrence of an Event of
Default, Certificate Owners representing in the aggregate not less than a
majority of the Certificate Principal Balance advise the Clearing Agency
through the Clearing Agency Participants in writing that the continuation
of a Book-Entry system through the Clearing Agency is no longer in the best
interests of the Certificate Owners, the Trustee shall notify the Clearing
Agency of the occurrence of any such event and of the availability of
Definitive Certificates to Certificate Owners requesting the same. Upon
surrender to the Trustee by the Clearing Agency, accompanied by
re-registration instructions from the Clearing Agency for registration and
instructions and directions from the Servicer to execute and authenticate new
Certificates, the Trustee shall issue authenticated Definitive Certificates.
The Servicer shall arrange for, and will bear all costs of, the printing and
issuance of such Definitive Certificates. None of the Seller, the Servicer,
the Trustee or the Certificate Insurer shall be liable for any delay in delivery
of such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Certificates,
all references herein to obligations imposed upon or to be performed by the
Clearing Agency shall be deemed to be imposed upon and performed by the Trustee,
to the extent applicable with respect to such
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Definitive Certificates and the Trustee shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder.
ARTICLE VII
THE SELLER
SECTION 7.1 REPRESENTATIONS OF SELLER.
The Seller makes the following representations on which the
Trustee relies in accepting the Receivables in trust and executing and
authenticating the Certificates and upon which the Certificate Insurer relies in
executing and delivering the Certificate Insurance Policy. The representations
speak as of the Closing Date and shall survive the sale of the Receivables to
the Trustee.
(i) DUE ORGANIZATION AND GOOD STANDING. The Seller shall have
been duly organized and shall be validly existing as a federal savings
bank in good standing under the laws of the United States of America, with
the corporate power and authority to own its properties and to conduct its
business as such properties shall be currently owned and such business is
presently conducted, and had at all relevant times, and shall have, the
corporate power and authority and legal right to acquire and own the
Receivables.
(ii) DUE QUALIFICATION. The Seller shall be duly qualified to do
business as a foreign corporation in good standing, and shall have
obtained all necessary licenses and approvals in all jurisdictions in
which the ownership or lease of property or the conduct of its business
shall require such qualifications, except where the failure to be so
qualified or to have obtained such licenses or approvals would not have a
material adverse effect on the transactions contemplated by this
Agreement.
(iii) POWER AND AUTHORITY. The Seller shall have the corporate
power and authority to execute and deliver this Agreement and to carry out
its terms, the Seller shall have full power and authority to sell and
assign the property to be sold and assigned to and deposited with the
Trustee as part of the Trust and shall have duly authorized such sale and
assignment to the Trustee by all necessary corporate action; and the
execution, delivery, and performance of this Agreement shall have been
duly authorized by the Seller by all necessary corporate action.
(iv) VALID SALE; BINDING OBLIGATIONS. This Agreement shall
evidence a valid sale, transfer, and assignment of the Receivables,
enforceable against creditors of and purchasers from the Seller; and shall
evidence a legal, valid, and binding obligation of the Seller enforceable
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other similar laws affecting
the enforcement of creditors' rights or other obligees' rights in general
or the rights of creditors or obligees of federally chartered stock
savings banks, the deposits of which are insured by the FDIC,
45
and by general principles of equity, regardless of whether such
enforceability shall be considered in a proceeding in equity or at law.
(v) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof
shall not conflict with, result in any breach of any of the terms and
provisions of, nor constitute (with or without notice or lapse of time) a
default under, the charter or by-laws of the Seller, or any indenture,
agreement, or other instrument to which the Seller is a party or by which
it shall be bound; nor result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of any such indenture,
agreement, or other instrument (other than this Agreement); nor violate
any law or, to the best of the Seller's knowledge, any order, rule, or
regulation applicable to the Seller of any court or of any federal or
state regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Seller or its properties.
(vi) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the Seller's best knowledge, threatened before any court,
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Seller or its properties (A)
asserting the invalidity of this Agreement or the Certificates, (B)
seeking to prevent the issuance of the Certificates or the consummation of
any of the transactions contemplated by this Agreement, (C) seeking any
determination or ruling that might materially and adversely affect the
performance by the Seller of its obligations under, or the validity or
enforceability of, this Agreement or the Certificates, or (D) which might
adversely affect the federal income tax attributes of the Certificates.
(vii) NO CONSENT REQUIRED. The Seller is not required to obtain
the consent of any other Person or any consent, license, approval or
authorization of, or make any registration or declaration with, any
governmental authority or agency in connection with the execution,
delivery and performance of this Agreement (except as have been obtained),
other than as may be required under the Blue Sky laws of any state or the
Securities Act.
(viii) NO INSOLVENCY. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby were not made
in contemplation of the insolvency of the Seller or after the commission
of any act of insolvency by the Seller.
(ix) NOT AN INVESTMENT COMPANY. The Trust is not required to be
registered as an "investment company" under the Investment Company Act of
1940, as amended.
(x) OFFICIAL RECORD. This Agreement and all other documents
related hereto to which the Seller is a party have been approved by the
Seller's board of directors, which approval is reflected in the minutes
of such board, and shall continuously from the time of each such
document's execution, be maintained as an official record of the Seller.
SECTION 7.2 LIABILITY OF SELLER.
The Seller shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken and the representations made
by the Seller under this Agreement.
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SECTION 7.3 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF THE SELLER.
Any Person (a) into which the Seller may be merged or
consolidated, (b) which may result from any merger or consolidation to which
the Seller shall be a party, or (c) which may succeed to the properties and
assets of the Seller substantially as a whole, which Person in any of the
foregoing cases executes an agreement of assumption to perform every obligation
of the Seller under this Agreement, shall be the successor to the Seller
hereunder without the execution or filing of any document or any further act by
any of the parties to this Agreement; PROVIDED, HOWEVER, that (x) the Seller
shall have delivered to the Trustee and the Certificate Insurer an Officers'
Certificate and an Opinion of Counsel each stating that such consolidation,
merger, or succession and such agreement of assumption comply with this Section
7.3, and (y) all conditions precedent, if any, provided for in this Agreement
relating to such merger, consolidation or succession have been complied with.
Notwithstanding the above, no such transaction shall result in the Seller
becoming subject to the provisions of the United States Bankruptcy Code or
similar laws of any State. The Seller or its successor hereunder shall provide
the Trustee, the Servicer, the Certificate Insurer and the Rating Agencies with
prompt notice of any such transaction.
SECTION 7.4 LIMITATION ON LIABILITY OF CERTAIN PERSONS OF
SELLER.
No recourse under or upon any obligation or covenant of this
Agreement, or of any Certificate or for any claim based thereon or otherwise in
respect thereof, shall be had against any incorporator, shareholder, officer or
director as such, of the Seller or of any successor corporation, either directly
or through the Seller, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise. This
Agreement and the obligations created hereunder are solely corporate
obligations, and no personal liability whatever shall attach to, or is or shall
be incurred by the incorporators, shareholders, officers or directors, as such,
of the Seller, or any of them, because of the issuance of the Certificates, or
under or by reason of the obligations, covenants or agreements contained in this
Agreement or in any of the Certificates or implied therefrom. Any and all such
personal liability, either at common law or in equity or by constitution or
statute, of, and any and all such rights and claims against, every such
incorporator, shareholder, officer or director, as such, because of the issuance
of the Certificates, or under or by reason of the obligations, covenants or
agreements contained in this Agreement or in any of the Certificates or implied
therefrom, are hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Agreement and the issuance of the
Certificates. The Seller and any director, officer, employee or agent of the
Seller may rely in good faith on any document of any kind PRIMA FACIE properly
executed and submitted by any Person respecting any matters arising hereunder.
47
ARTICLE VIII
THE SERVICER
SECTION 8.1 REPRESENTATIONS OF SERVICER.
The Servicer makes the following representations on which the
Trustee relies in accepting the Receivables in trust and executing and
authenticating the Certificates and upon which the Certificate Insurer relies in
executing and delivering the Certificate Insurance Policy. The representations
speak as of the Closing Date and shall survive the sale of the Receivables to
the Trustee.
(a) DUE ORGANIZATION AND GOOD STANDING. The Servicer shall have been
duly organized and shall be validly existing as a federal savings bank in good
standing under the laws of the United States of America, with the corporate
power and authority to own its properties and to conduct its business as such
properties shall be currently owned and such business is presently conducted,
and had at all relevant times, and shall have, the corporate power and authority
and legal right to acquire, own, sell, and service the Receivables and to hold
the Receivable Files as custodian on behalf of the Trustee.
(b) DUE QUALIFICATION. The Servicer shall be duly qualified to do
business as a foreign corporation in good standing, and shall have obtained all
necessary licenses and approvals in all jurisdictions in which the ownership or
lease of property or the conduct of its business (including the servicing of the
Receivables as required by this Agreement) shall require such qualifications,
except where the failure to be so qualified or to have obtained such licenses or
approvals would not have a material adverse effect on the transactions
contemplated by this Agreement and would not render any Receivable unenforceable
by the Trustee on behalf of the Certificateholders and the Certificate Insurer.
(c) POWER AND AUTHORITY. The Servicer shall have the corporate power
and authority to execute and deliver this Agreement and to carry out its terms,
and the execution, delivery, and performance of this Agreement shall have been
duly authorized by the Servicer by all necessary corporate action.
(d) BINDING OBLIGATIONS. This Agreement shall constitute a legal,
valid, and binding obligation of the Servicer enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of creditors' or
other obligees' rights in general or the rights of creditors or obligees of
federally chartered stock savings banks, the deposits of which are insured by
the Federal Deposit Insurance Corporation, and by general principles of equity,
regardless of whether such enforceability shall be considered in a proceeding in
equity or at law.
(e) NO VIOLATION. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof shall not conflict
with, result in any breach of
48
any of the terms and provisions of, nor constitute (with or without notice or
lapse of time) a default under, the charter or by-laws of the Servicer, or any
indenture, agreement, or other instrument to which the Servicer is a party or by
which it shall be bound; nor result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of any such indenture,
agreement, or other instrument (other than this Agreement); nor violate any law
or, to the best of the Servicer's knowledge any order, rule, or regulation
applicable to the Servicer of any court or of any federal or State regulatory
body, administrative agency, or other governmental instrumentality having
jurisdiction over the Servicer or its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the Servicer's best knowledge, threatened before any court,
regulatory body, administrative agency, or other governmental instrumentality
having jurisdiction over the Servicer or its properties (A) asserting the
invalidity of this Agreement or the Certificates, (B) seeking to prevent the
issuance of the Certificates or the consummation of any of the transactions
contemplated by this Agreement, (C) seeking any determination or ruling that
might materially and adversely affect the performance by the Servicer of its
obligations under, or the validity or enforceability of, this Agreement or the
Certificates, or (D) which might adversely affect the federal income tax
attributes of the Certificates.
SECTION 8.2 LIABILITIES OF SERVICER, INDEMNITIES.
(a) The Servicer shall be liable in accordance herewith only to
the extent of the obligations specifically undertaken and the representations
made by the Servicer under this Agreement, including its duties as custodian of
the Receivable Files.
(i) The Servicer, except as set forth in this Section 8.2, shall
not be under any liability to the Trust or the Certificateholders for
taking any action or for refraining from taking any action pursuant to
this Agreement, or for errors in judgment; PROVIDED, HOWEVER, that this
provision shall not protect the Servicer against any liability which would
otherwise be imposed upon the Servicer by reason of its willful
misfeasance, bad faith or negligence in the performance of its duties or
by reason of its reckless disregard of its obligations and duties as
Servicer hereunder.
(ii) The Servicer shall indemnify, defend, and hold harmless the
Trustee, its officers, directors, agents and employees, the Trust, the
Certificateholders and the Certificate Insurer from and against any and
all costs, expenses, losses, damages, claims, and liabilities, arising out
of or resulting from the use, ownership or operation by the Servicer or
any affiliate thereof of a Financed Vehicle; PROVIDED, that the Servicer
shall have no obligation to indemnify any Person against any credit losses
on any Receivable serviced by the Servicer in accordance with the
requirements of this Agreement.
(iii) The Servicer shall indemnify, defend and hold harmless the
Trust, the Trustee and its officers, directors, employees and agents and
the Certificate Insurer from and against any loss, liability, expense,
damage or injury, including any judgment, award, settlement and other
costs or expenses incurred in connection with the defense of any
49
action, proceeding or claim, to the extent such loss, liability, expense,
damage or injury arose out of, or was imposed upon such persons through,
the willful misfeasance, bad faith or negligence of the Servicer in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties as Servicer hereunder.
(iv) The initial Servicer shall indemnify, defend and hold
harmless the Trustee, its officers, directors, employees and agents from
and against any loss, liability or expense incurred without negligence or
bad faith on the part of the Trustee or its officers, directors, employees
or agents and arising out of or in connection with the acceptance or
administration by the Trustee of this Trust, as applicable, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of the Trustee's powers
or duties hereunder.
(v) The Servicer shall defend, indemnify and hold harmless the
Trust and the Trustee, its respective officers, directors, agents and
employees, the Certificate Insurer and the Certificateholders from and
against any taxes that may at any time be asserted against the Trust, the
Trustee, the Certificate Insurer or the Certificateholders with respect to
the transactions contemplated in this Agreement, including, without
limitation, any sales, gross receipts, general corporation, tangible
personal property, privilege or license taxes (but not including any
personal property taxes asserted with respect to ownership of the
Receivables, or federal or other income taxes arising out of distributions
on the Certificates) and costs and expenses in defending against the same.
Indemnification under this Section 8.2 shall include reasonable
fees and expenses of counsel and expenses of litigation.
Within a reasonable period after receipt by the Trustee, the
Trust, the Certificate Insurer or the Certificateholders of notice of the
commencement of any action with respect to which indemnification is sought under
this Section 8.2, such party shall notify the Servicer in writing of the
commencement thereof. In case any such action shall be brought, the Servicer
shall be entitled to participate in and, to the extent that it shall wish, to
assume the defense thereof, with counsel satisfactory to such indemnified party,
and after notice from the Servicer to the indemnified party of its election so
to assume the defense thereof, the Servicer shall not be liable to such
indemnified party for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation.
The Servicer shall not be liable for any settlement of any
litigation or proceeding effected without the written consent of the Servicer
(which shall not be unreasonably withheld). The indemnified party shall not,
without the Servicer's written consent (which shall not be unreasonably
withheld), settle or compromise any claim or consent to entry of any judgment
which would impose an injunction or other equitable relief on the Servicer or
which does not include as an unconditional term thereof the release by the
claimant or the plaintiff of the Servicer from all liability in respect of such
claim.
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The rights to indemnification under this Section 8.2 shall
survive the termination, resignation or removal of the Servicer with respect to
acts and omissions to act of the Servicer giving rise to such rights and
occurring prior to such termination, resignation or removal. In addition, the
rights to indemnification under this Section 8.2 shall survive the termination
of the Trust.
SECTION 8.3 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF THE SERVICER.
Any Person (a) into which the Servicer may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Servicer shall be a party, or (c) which may succeed to the properties and assets
of the Servicer substantially as a whole, which Person in any of the foregoing
cases executes an agreement of assumption to perform every obligation of the
Servicer hereunder, shall be the successor to the Servicer under this Agreement
without the execution or filing of any document or any further act on the part
of any of the parties to this Agreement; PROVIDED, HOWEVER, that (x) the
Servicer shall have delivered to the Trustee and the Certificate Insurer an
Officers' Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply with
this Section 8.3 and (y) all conditions precedent, if any, provided for in this
Agreement relating to such merger, consolidation or succession have been
complied with. The Servicer or its successor hereunder shall provide the
Trustee, the Seller, the Certificate Insurer and the Rating Agencies with prompt
notice of any such transaction.
SECTION 8.4 LIMITATION ON LIABILITY OF CERTAIN PERSONS OF
SERVICER.
No recourse under or upon any obligation or covenant of this
Agreement, or of any Certificate or for any claim based thereon or otherwise in
respect thereof, shall be had against any incorporator, shareholder, officer or
director as such, of the Servicer or of any successor corporation, either
directly or through the Servicer, whether by virtue of any constitution, statute
or rule of law, or by the enforcement of any assessment or penalty or otherwise.
This Agreement and the obligations created hereunder are solely corporate
obligations, and no personal liability whatever shall attach to, or is or shall
be incurred by the incorporators, shareholders, officers or directors, as such,
of the Servicer, or any of them, because of the issuance of the Certificates, or
under or by reason of the obligations, covenants or agreements contained in this
Agreement or in any of the Certificates or implied therefrom. Any and all such
personal liability, either at common law or in equity or by constitution or
statute, of, and any and all such rights and claims against, every such
incorporator, shareholder, officer or director, as such, because of the issuance
of the Certificates, or under or by reason of the obligations, covenants or
agreements contained in this Agreement or in any of the Certificates or implied
therefrom, are hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Agreement and the issuance of the
Certificates. The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on any document of any kind PRIMA FACIE properly
executed and submitted by any Person respecting any matters arising hereunder.
51
Except as provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute, or defend any legal action that
shall not be incidental to its duties to service the Receivables in accordance
with this Agreement (collection actions with respect to Defaulted Receivables
are understood to be incidental to the Servicer's duties to service the
Receivables), and that in its opinion may involve it in any expense or
liability.
SECTION 8.5 SERVICER NOT TO RESIGN.
The Servicer shall not resign from its obligations and duties
under this Agreement except upon determination that the performance of its
duties shall no longer be permissible under applicable law (any such
determination permitting the resignation of the Servicer shall be evidenced by
an Opinion of Counsel to such effect delivered to the Trustee and the
Certificate Insurer). Notice of any such determination permitting the
resignation of the Servicer, shall be communicated to the Trustee, the
Certificate Insurer and the Rating Agencies at the earliest practicable time and
any such determination permitting the resignation of the Servicer shall be
evidenced by an Opinion of Counsel to such effect delivered to the Trustee
concurrently with such notice. No such resignation shall become effective until
the Trustee or other successor Servicer shall have assumed the responsibilities
and obligations of the Servicer in accordance with Section 9.2.
SECTION 8.6 DELEGATION OF DUTIES.
The Servicer may at any time delegate any duties hereunder to any
Person, including, without limitation, the Sub-Servicer, who agrees to conduct
such duties in accordance with this Agreement; PROVIDED, HOWEVER, that the
Servicer may not delegate its duties as Custodian except (i) with the consent
of the Certificate Insurer, or (ii) as provided in Section 3.3 and 3.4 of
this Agreement. Such delegation shall not relieve the Servicer of its
responsibilities and liabilities with respect to such duties, and shall not
constitute a resignation within the meaning of Section 8.5.
ARTICLE IX
DEFAULT
SECTION 9.1 EVENTS OF DEFAULT.
If any one of the following events ("Events of Default") shall
occur and be continuing:
(i) any failure by the Servicer to deliver to the Trustee the
Servicer's Certificate for a Collection Period or to deliver to the
Trustee for distribution to Certificateholders any proceeds or payment
required to be so delivered under the terms of the Certificates and this
Agreement that shall continue unremedied for a period of more than three
Business Days after written notice from (x) the Trustee or the Holders of
Certificates evidencing not less than 25% of the Certificate Principal
Balance, which
52
notice, in either case, shall be consented to by the Certificate Insurer,
or (y) the Certificate Insurer is received by the Servicer as specified in
this Agreement; or
(ii) failure on the part of the Servicer or the Seller duly to
observe or to perform in any material respect any other covenants or
agreements of the Servicer or the Seller, as the case may be, set forth in
the Certificates or in this Agreement, which failure shall (a) materially
and adversely affect the rights of Certificateholders (determined without
regard to the availability of the Certificate Insurance Policy) and (b)
continue unremedied for a period of more than 30 days after the date on
which written notice of such failure, requiring the same to be remedied,
shall have been given (x) (1) to the Servicer or the Seller, as the case
may be, by the Trustee, or (2) to the Servicer or the Seller, as the case
may be, and to the Trustee by the Holders of Certificates evidencing not
less than 25% of the Certificate Principal Balance, which notice, in
either case, shall be consented to by the Certificate Insurer, or (y) to
the Servicer or the Seller, as the case may be, by the Certificate
Insurer; or
(iii) the entry of a decree or order by a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver, or liquidator for the Servicer in
any insolvency, readjustment of debt, marshaling of assets and
liabilities, or similar proceedings, or for the winding up or liquidation
of its affairs, and the continuance of any such decree or order unstayed
and in effect for a period of 60 consecutive days; or
(iv) the consent by the Servicer to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshaling of assets and liabilities, or similar proceedings of or
relating to the Servicer or of or relating to substantially all of its
property; or the admission by the Servicer in writing of its inability to
pay its debts generally as they become due, the filing by the Servicer of
a petition to take advantage of any applicable insolvency or
reorganization statute, the making by the servicer of an assignment for
the benefit of its creditors, or the voluntary suspension by the Servicer
of payment of its obligations;
then, and in each and every case, so long as an Event of Default shall not have
been remedied, (x) the Trustee or the Holders of Certificates evidencing not
less than 51% of the Certificate Principal Balance, in either case with the
consent of the Certificate Insurer or (y) the Certificate Insurer, by notice
then given in writing to the Servicer (and to the Trustee if given by the
Certificate Insurer or the Certificateholders), may terminate all of the rights
and obligations of the Servicer under this Agreement.
On or after the receipt by the Servicer of such written notice,
all authority and power of the Servicer under this Agreement, whether with
respect to the Certificates or the Receivables or otherwise, shall, without
further action, pass to and be vested in the Trustee or such successor Servicer
as may be appointed under Section 9.2 pursuant to and under this Section 9.1;
and, without limitation, the Servicer, the Trustee or such other successor
Servicer, as the case may be, is hereby authorized and empowered to execute and
deliver, on behalf of the predecessor
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Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of the Receivables and related documents,
or otherwise; PROVIDED, HOWEVER, that the Trustee or any successor Servicer
shall not be liable for any acts, omissions or obligations of the Servicer prior
to such succession. The predecessor Servicer shall cooperate with the successor
Servicer and the Trustee in effecting the termination of the responsibilities
and rights of the predecessor Servicer under this Agreement, including the
transfer to the successor Servicer of electronic records related to the
Receivables or such form as the successor Servicer may reasonably request and
the transfer to the successor Servicer for administration by it of all cash
amounts that shall at the time be held by the predecessor Servicer for deposit,
or shall thereafter be received with respect to a Receivable. The Trustee shall
give the Rating Agencies and the Certificate Insurer notice of any termination
of the Servicer pursuant to the terms of this Section 9.1.
SECTION 9.2 APPOINTMENT OF SUCCESSOR.
(a) Upon the Servicer's receipt of notice of termination pursuant to
Section 9.1 or the Servicer's resignation in accordance with the terms of this
Agreement, the predecessor Servicer shall continue to perform its functions as
Servicer under this Agreement, in the case of termination, only until the date
specified in such termination notice or, if no such date is specified in a
notice of termination, until receipt of such notice and, in the case of
resignation, until the later of (x) the date 45 days from the delivery to the
Trustee and the Certificate Insurer of written notice of such resignation (or
written confirmation of such notice) in accordance with the terms of this
Agreement and (y) the date upon which the predecessor Servicer shall become
unable to act as Servicer, as specified in the notice of resignation and
accompanying Opinion of Counsel. In the event of the Servicer's resignation or
termination hereunder, the Trustee shall, with the consent of the Certificate
Insurer, appoint a successor Servicer, and the successor Servicer shall accept
its appointment by a written assumption in form acceptable to the Trustee. In
the event that a successor Servicer has not been appointed at the time when the
predecessor Servicer has ceased to act as Servicer in accordance with this
Section 9.2, the Trustee without further action shall automatically be appointed
the successor Servicer; PROVIDED, HOWEVER, that the Trustee shall not be liable
for any acts, omissions or obligations of the Servicer prior to such succession.
Notwithstanding the above, the Trustee shall, if it shall be legally unable so
to act, appoint, or petition a court of competent jurisdiction to appoint, any
established financial institution, having a net worth of not less than
$50,000,000 and whose regular business shall include the servicing of automotive
receivables, as the successor to the Servicer under this Agreement.
(b) Upon appointment, the successor Servicer shall be the successor
in all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties, and liabilities arising thereafter relating thereto
placed on the predecessor Servicer, and shall be entitled to all of the rights
granted to the predecessor Servicer, by the terms and provisions of this
Agreement.
(c) In connection with such appointment, the Trustee may make such
arrangements for the compensation of a successor Servicer out of payments on
Receivables as it and such successor Servicer shall agree; PROVIDED, HOWEVER,
that no such compensation shall be in excess
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of that permitted the original Servicer under this Agreement. The Trustee and
such successor Servicer shall take such action, consistent with this Agreement,
as shall be necessary to effectuate any such succession.
The Servicer shall cooperate with the successor Servicer in
effecting the transfer of the rights and responsibilities of the Servicer under
this Agreement.
SECTION 9.3 NOTIFICATION TO CERTIFICATEHOLDERS.
Upon any notice of an Event of Default or upon any termination
of, or appointment of a successor to, the Servicer pursuant to this Article IX,
the Trustee shall give prompt written notice thereof to Certificateholders at
their respective addresses appearing in the Certificate Register, to the Rating
Agencies and to the Certificate Insurer.
SECTION 9.4 WAIVER OF PAST DEFAULTS.
The Certificate Insurer or, provided they have obtained the prior
consent of the Certificate Insurer, the Holders of Certificates evidencing not
less than 51% of the Certificate Principal Balance may, on behalf of all Holders
of Certificates, waive any default by the Servicer or the Seller in the
performance of its obligations hereunder and its consequences, except a default
in making any required deposits to or payments from the Certificate Account in
accordance with this Agreement. Upon any such waiver of a past default, such
default shall cease to exist, and any Event of Default arising therefrom shall
be deemed to have been remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon.
SECTION 9.5 EFFECT OF EVENT OF DEFAULT ON SUB-SERVICER.
Any removal of the Servicer pursuant to this Article IX shall
IPSO FACTO constitute a removal of the Sub-Servicer.
ARTICLE X
THE TRUSTEE
SECTION 10.1 DUTIES OF TRUSTEE.
The Trustee both prior to and after the occurrence of an Event of
Default, shall undertake to perform such duties as are specifically set forth in
this Agreement. If an Event of Default shall have occurred and shall not have
been cured, the Trustee shall exercise such of the rights and powers vested in
it by this Agreement, and shall use the same degree of care and skill in their
exercise, as a prudent man or woman would exercise or use under the
circumstances in the conduct of his or her own affairs; PROVIDED, HOWEVER, that
if the Trustee shall assume the duties of the Servicer pursuant to Section 9.2,
the Trustee in performing such duties shall use the degree of
55
skill and attention customarily exercised by a servicer with respect to
automobile receivables that it services for itself or others.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that shall be specifically required to be furnished pursuant to
any provision of this Agreement, shall examine them to determine whether they
conform as to form to the requirements of this Agreement.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own bad faith; PROVIDED, HOWEVER, that:
(i) prior to the occurrence of an Event of Default, and after
the curing of all such Events of Default that may have occurred, the
duties and obligations of the Trustee shall be determined solely by the
express provisions of this Agreement, the Trustee shall not be liable
except for the performance of such duties and obligations as shall be
specifically set forth in this Agreement, no implied covenants or
obligations shall be read into this Agreement against the Trustee and, in
the absence of bad faith on the part of the Trustee, or manifest error,
the Trustee may conclusively rely on the truth of the statements and the
correctness of the opinions expressed in any certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Agreement;
(ii) the Trustee shall not be liable for an error of judgment
made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee shall have been negligent in ascertaining the pertinent
facts;
(iii) the Trustee shall not be liable with respect to any action
taken, suffered, or omitted to be taken in good faith in accordance with
this Agreement or at the direction of the Certificate Insurer or the
Holders of Certificates evidencing not less than 25% of the Certificate
Principal Balance with the consent of the Certificate Insurer relating to
the time, method, and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Agreement;
(iv) the Trustee shall not be charged with knowledge of any
failure by the Servicer to comply with the obligations of the Servicer
referred to in clause (i) or (ii) of Section 9.1, or of any failure by the
Seller to comply with the obligations of the Seller referred to in clause
(ii) of Section 9.1, unless a Responsible Officer of the Trustee receives
written notice of such failure (it being understood that knowledge of the
Servicer or the Servicer as custodian, in its capacity as agent for the
Trustee, is not attributable to the Trustee) from the Servicer, the Seller
or the Certificate Insurer, as the case may be, or the Holders of
Certificates evidencing not less than 25% of the Certificate Principal
Balance; and
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(v) without limiting the generality of this Section or Section
10.4, the Trustee shall have no duty (i) to see to any recording, filing,
or depositing of this Agreement or any agreement referred to therein or
any financing statement evidencing a security interest in the Receivables
or the Financed Vehicles, or to see to the maintenance of any such
recording or filing or depositing or to any rerecording, refiling or
redepositing of any thereof, (ii) to see to any insurance of the Financed
Vehicles or Obligors or to effect or maintain any such insurance, (iii) to
see to the payment or discharge of any tax, assessment, or other
governmental charge or any Lien or encumbrance of any kind owing with
respect to, or assessed or levied against, any part of the Trust, (iv) to
confirm or verify the contents of any reports or certificates of the
Servicer delivered to the Trustee pursuant to this Agreement believed by
the Trustee to be genuine and to have been signed or presented by the
proper party or parties, or (v) to inspect the Financed Vehicles at any
time or ascertain or inquire as to the performance or observance of any of
the Seller's or the Servicer's representations, warranties or covenants or
the Servicer's duties and obligations as Servicer and as custodian of the
Receivable Files under this Agreement.
The Trustee shall not be required to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there shall be
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability shall not be reasonably assured to it,
and none of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Servicer under this Agreement except during
such time, if any, as the Trustee shall be the successor to, and be vested with
the rights, duties, powers, and privileges of, the Servicer in accordance with
the terms of this Agreement.
SECTION 10.2 TRUSTEE'S CERTIFICATE.
On or as soon as practicable after each Distribution Date on
which Receivables shall be (i) assigned to the Seller pursuant to Section 3.2 or
(ii) assigned to the Servicer pursuant to Section 4.2, 4.7 or 11.2, the Trustee
shall execute a Trustee's Certificate, substantially in the form of, in the case
of an assignment to the Seller, Exhibit C, or, in the case of an assignment to
the Servicer, Exhibit D, based on the information contained in the Servicer's
Certificate for the related Collection Period, amounts deposited to the
Certificate Account, and notices received pursuant to this Agreement,
identifying the Receivables repurchased by the Seller pursuant to Section 3.2 or
purchased by the Servicer pursuant to Section 4.2, 4.7 or 11.2 with respect to
such Collection Period, and shall deliver such Trustee's Certificate,
accompanied by a copy of the Servicer's Certificate for such Collection Period
to the Seller or the Servicer, as the case may be, with a copy to the
Certificate Insurer. The Trustee's Certificate shall be an assignment pursuant
to Section 10.3.
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SECTION 10.3 TRUSTEE'S ASSIGNMENT OF PURCHASED RECEIVABLES.
With respect to each Receivable repurchased by the Seller
pursuant to Section 3.2 or purchased by the Servicer pursuant to Section 4.2,
4.7 or 11.2, the Trustee shall assign, on the day on which the Trustee receives
payment for such Receivable, effective as of the last day of the Collection
Period during which such Receivable became subject to repurchase by the Seller
or purchase by the Servicer, without recourse, representation, or warranty, to
the Seller or the Servicer (as the case may be) all the Trustee's right, title,
and interest in and to such Receivables, and all security and documents relating
thereto, and all proceeds thereof, such assignment being an assignment outright
and not for security. If in any enforcement suit or legal proceeding it shall
be held that the Servicer may not enforce a Receivable on the ground that it
shall not be a real party in interest or a holder entitled to enforce the
Receivable, the Trustee shall, at the Servicer's expense, take such steps as the
Trustee deems necessary to enforce the Receivable, including bringing suit in
its name or the name of the Certificateholders.
SECTION 10.4 CERTAIN MATTERS AFFECTING THE TRUSTEE.
Except as otherwise provided in Section 10.1:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate,
Servicer's Certificate, certificate of auditors, or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond, or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties.
(ii) The Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in respect
of any action taken or suffered or omitted by it under this Agreement in
good faith and in accordance with such Opinion of Counsel.
(iii) The Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute,
conduct, or defend any litigation under this Agreement or in relation to
this Agreement, at the request, order, or direction of any of the
Certificateholders pursuant to the provisions of this Agreement, unless
such Certificateholders shall have offered to the Trustee reasonable
security or indemnity against the costs, expenses, and liabilities that
may be incurred therein or thereby; nothing contained in this Agreement,
however, shall relieve the Trustee of the obligations, upon the occurrence
of an Event of Default (that shall not have been cured) , to exercise such
of the rights and powers vested in it by this Agreement, and to use the
same degree of care and skill in their exercise as a prudent man or woman
would exercise or use under the circumstances in the conduct of his or her
own affairs.
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(iv) The Trustee shall not be liable for any action taken,
suffered, or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Agreement.
(v) Prior to the occurrence of an Event of Default and after the
curing of all Events of Default that may have occurred, the Trustee shall
not be bound to make any investigation into the facts or matters stated in
any resolution, certificate, statement, instrument, opinion, report,
notice, request, consent, order, approval, bond, or other paper or
document, unless requested in writing to do so by the Holders of
Certificates evidencing not less than 25% of the Certificate Principal
Balance or the Certificate Insurer; PROVIDED, HOWEVER, that if the payment
within a reasonable time to the Trustee of the costs, expenses, or
liabilities likely to be incurred by it in the making of such
investigation shall be, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of this
Agreement, the Trustee may require reasonable indemnity against such cost,
expense, or liability as a condition to so proceeding. Nothing in this
clause (v) shall affect the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the
Obligors.
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties under this Agreement either directly or by
or through agents or attorneys or a custodian and shall not be liable for
the negligence of any of such agents, attorneys or custodians appointed
with due care. The Trustee shall not be responsible for any misconduct or
negligence solely attributable to the acts or omissions of the Servicer in
its capacity as Servicer or custodian.
(vii) Subsequent to the sale of the Receivables by the Seller to
the Trustee, the Trustee shall have no duty of independent inquiry, except
as may be required by Section 10.1, and the Trustee may rely upon the
representations and warranties and covenants of the Seller and the
Servicer contained in this Agreement with respect to the Receivables and
the Receivable Files.
SECTION 10.5 TRUSTEE NOT LIABLE FOR CERTIFICATES OR RECEIVABLES.
The recitals contained herein and in the Certificates (other than
the certificate of authentication on the Certificates) shall be taken as the
statements of the Seller or the Servicer, as the case may be, and the Trustee
assumes no responsibility for the correctness thereof. The Trustee shall make
no representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the certificate of authentication on the Certificates),
or of any Receivable or related document. The Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity, and
enforceability of any security interest in any Financed Vehicle or any
Receivable, or the perfection and priority of such a security interest or the
maintenance of any such perfection and priority, or for or with respect to the
efficacy of the Trust or its ability to generate the payments to be distributed
to Certificateholders under this Agreement, including, without limitation, the
existence, condition, location, and ownership of any Financed Vehicle; the
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existence and enforceability of any physical damage insurance, lender's single
interest insurance, or credit life or disability and hospitalization insurance
with respect to any Receivable; the existence and contents of any Receivable or
any computer or other record thereof; the validity of the assignment of any
Receivable to the Trust or of any intervening assignment; the completeness of
any Receivable; the performance or enforcement of any Receivable; the compliance
by the Seller or the Servicer with any warranty or representation made under
this Agreement or in any related document and the accuracy of any such warranty
or representation prior to the Trustee's receipt of notice or other discovery of
any noncompliance therewith or any breach thereof; any investment of monies by
the Servicer or any loss resulting therefrom other than investments in
obligations of or guaranteed by the Trustee (it being understood that the
Trustee shall remain responsible for any Trust property that it may hold); the
acts or omissions of the Seller, the Servicer, or any Obligor; any action of the
Servicer taken in the name of the Trustee; or any action by the Trustee taken at
the instruction of the Servicer; PROVIDED, HOWEVER, that the foregoing shall not
relieve the Trustee of its obligation to perform its duties under this
Agreement. Except with respect to a claim based on the failure of the Trustee
to perform its duties under this Agreement or based on the Trustee's negligence
or willful misconduct, no recourse shall be had for any claim based on any
provision of this Agreement, the Certificates, or any Receivable or assignment
thereof against the Trustee in its individual capacity, the Trustee shall not
have any personal obligation, liability, or duty whatsoever to any
Certificateholder or any other Person with respect to any such claim, and any
such claim shall be asserted solely against the Trust or any indemnitor who
shall furnish indemnity as provided in this Agreement. The Trustee shall not be
accountable for the use or application by the Seller of any of the Certificates
or of the proceeds of such Certificates, or for the use or application of any
funds paid to the Seller or the Servicer in respect of the Receivables. The
Trustee shall not be responsible for any statement in any document prepared,
executed or delivered in connection with the sale and issuance of the
Certificates other than any such document prepared, executed or delivered by the
Trustee in connection therewith on the Closing Date.
SECTION 10.6 TRUSTEE MAY OWN CERTIFICATES.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Certificates with the same rights as it would have if it
were not Trustee.
SECTION 10.7 TRUSTEE'S FEES.
The Trustee's fee for a Collection Period shall equal the Monthly
Trustee's Fee. The Monthly Trustee's Fee will be paid from the funds of the
Trust in accordance with Section 5.4.
SECTION 10.8 ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
The Trustee under this Agreement shall at all times be a
corporation having an office in the same State as the location of the
Corporate Trust Office as specified in this Agreement, or another state of
the United States of America or the District of Columbia; and organized and
doing business under the laws of such State, district or the United States of
America; authorized under such laws to exercise corporate trust powers;
60
having a combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by federal or State authorities; having a rating
of its long-term debt obligations by Moody's of no less than Baa3; and
reasonably satisfactory to the Certificate Insurer. If such corporation
shall publish reports of condition at least annually, pursuant to law or to
the requirements of the aforesaid supervising or examining authority, then
for the purpose of this Section 10.8, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. In case at
any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 10.8, the Trustee shall resign immediately in the
manner and with the effect specified in Section 10.9.
SECTION 10.9 RESIGNATION OR REMOVAL OF TRUSTEE.
The Trustee may at any time resign and be discharged from the
trusts hereby created by giving written notice thereof to the Servicer. Upon
receiving such notice of resignation, the Servicer shall, with the consent of
the Certificate Insurer, promptly appoint a successor Trustee by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor Trustee. If no successor
Trustee shall have been so appointed and have accepted appointment within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.
If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 10.8 and shall fail to resign after
written request therefor by the Servicer or the Certificate Insurer, or if at
any time the Trustee shall be legally unable to act, or shall be adjudged a
bankrupt or insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation, or
liquidation, then the Servicer or the Certificate Insurer may remove the
Trustee. If it shall remove the Trustee under the authority of the immediately
preceding sentence, the Servicer shall promptly appoint a successor Trustee by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the Trustee so removed and one copy to the successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 10.9 shall
not become effective without the consent of the Certificate Insurer and until
acceptance of appointment by the successor Trustee pursuant to Section 10.10.
SECTION 10.10 SUCCESSOR TRUSTEE.
Any successor Trustee appointed pursuant to Section 10.9 shall
execute, acknowledge, and deliver to the Servicer and to its predecessor Trustee
an instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Trustee shall become effective and
such successor Trustee, without any further act, deed, or conveyance, shall
become fully vested with all the rights, powers, duties, and obligations of its
predecessor under this Agreement, with like effect as if originally named as
Trustee. The
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predecessor Trustee shall deliver to the successor Trustee all documents and
statements held by it under this Agreement; and the Servicer and the predecessor
Trustee shall execute and deliver such instruments and do such other things as
may reasonably be required for fully and certainly vesting and confirming in the
successor Trustee all such rights, powers, duties, and
obligations.
No successor Trustee shall accept appointment as provided in this
Section 10.10 unless at the time of such acceptance such successor Trustee shall
be eligible pursuant to Section 10.8.
Upon acceptance of appointment by a successor Trustee pursuant to
this Section 10.10, the Servicer shall mail notice of the successor of such
Trustee under this Agreement to all Holders of Certificates at their addresses
as shown in the Certificate Register, to the Certificate Insurer and to the
Rating Agencies. If the Servicer shall fail to mail such notice within 10 days
after acceptance of appointment by the successor Trustee, the successor Trustee
shall cause such notice to be mailed at the expense of the Servicer.
SECTION 10.11 MERGER OR CONSOLIDATION OF TRUSTEE.
Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion, or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided such corporation shall be eligible pursuant to Section 10.8, without
the execution or filing of any instrument or any further act on the part of any
of the parties hereto, anything herein to the contrary notwithstanding. The
Trustee or its successor hereunder shall provide the Servicer, the Certificate
Insurer and the Rating Agencies with prompt notice of any such transaction.
SECTION 10.12 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any
time, for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Trust or any Financed Vehicle may at the time be located,
the Servicer and the Trustee with the consent of the Certificate Insurer acting
jointly shall have the power and shall execute and deliver all instruments to
appoint one or more Persons approved by the Trustee to act as co-trustee,
jointly with the Trustee, or separate trustee or separate trustees, of all or
any part of the Trust, and to vest in such Person, in such capacity and for the
benefit of the Certificateholders and the Certificate Insurer, such title to the
Trust, or any part thereof, and, subject to the other provisions of this Section
10.12, such powers, duties, obligations, rights, and trusts as the Servicer and
the Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in the case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee under this Agreement shall be required to meet
the terms of eligibility as a successor Trustee pursuant to Section 10.8 and no
notice to
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Certificateholders of the appointment of any co-trustee or separate trustee
shall be required pursuant to Section 10.10.
Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties, and obligations conferred or
imposed upon the Trustee shall be conferred upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee under this
Agreement or as successor to the Servicer under this Agreement), the
Trustee shall be incompetent or unqualified to perform such act or acts,
in which event such rights, powers, duties, and obligations (including the
holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Trustee;
(ii) no trustee under this Agreement shall be personally liable
by reason of any act or omission of any other trustee under this
Agreement; and
(iii) the Servicer, the Trustee and the Certificate Insurer acting
jointly may at any time accept the resignation of or remove any separate
trustee or co-trustee.
Any notice, request, or other writing given to the Trustee shall
be deemed to have been given to each of the then separate trustees and co-
trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article X. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of, or affording protection to, the
Trustee. Each such instrument shall be filed with the Trustee and a copy
thereof given to the Servicer and the Certificate Insurer.
Any separate trustee or co-trustee may at any time appoint the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign, or be removed, all of its
estates, properties, rights, remedies, and trusts shall vest in and be exercised
by the Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
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SECTION 10.13 REPRESENTATIONS AND WARRANTIES OF TRUSTEE.
The Trustee shall make the following representations and
warranties on which the Seller, the Certificate Insurer and Certificateholders
may rely:
(i) DUE ORGANIZATION AND GOOD STANDING. The Trustee is a
national banking association duly organized, validly existing, and in good
standing under the laws of the United States of America.
(ii) POWER AND AUTHORITY. The Trustee has full power, authority,
and legal right to execute, deliver, and perform this Agreement, and shall
have taken all necessary action to authorize the execution, delivery, and
performance by it of this Agreement.
(iii) NO VIOLATION. The execution, delivery, and performance by
the Trustee of this Agreement shall not violate any provision of any law
governing the banking and trust powers of the Trustee or, to the best of
the Trustee's knowledge, any order, writ, judgment, or decree of any
court, arbitrator, or governmental authority applicable to the Trustee or
any of its assets.
(iv) NO PROCEEDINGS. The execution, delivery, and performance by
the Trustee of this Agreement shall not require the authorization,
consent, or approval of, the giving of notice to, the filing or
registration with, or the taking of any other action in respect of any
governmental authority or agency regulating the banking and corporate
trust activities of the Trustee.
(v) DULY EXECUTED. This Agreement shall have been duly executed
and delivered by the Trustee and shall constitute the legal, valid, and
binding agreement of the Trustee, enforceable in accordance with its
terms.
(vi) SECURITIES INTERMEDIARY. The Trustee is a securities
intermediary as defined under Article 8 of the Minnesota Uniform
Commercial Code.
SECTION 10.14 TAX RETURNS.
The Servicer shall prepare or shall cause to be prepared any tax
returns required to be filed by the Trust and the Trustee shall promptly sign
and file such returns. In no event shall the Trustee be liable for any
liabilities, costs or expenses of the Trust or the Certificateholders under any
tax law, including without limitation federal, state or local income or excise
taxes or any other tax imposed on or measured by income (or any interest or
penalty with respect thereto or arising from a failure to comply therewith).
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ARTICLE XI
TERMINATION
SECTION 11.1 TERMINATION OF THE TRUST.
The respective obligations and responsibilities of the Seller,
the Servicer, and the Trustee created hereby and the Trust created by this
Agreement shall terminate upon (i) the purchase as of the last day of any
Collection Period by the Servicer at its option, pursuant to Section 11.2, of
the corpus of the Trust or (ii) the payment to Certificateholders and the
Certificate Insurer of all amounts required to be paid to them pursuant to this
Agreement and the disposition of all property held as part of the Trust;
PROVIDED, HOWEVER, that in no event shall the trust created by this Agreement
continue beyond the expiration of 21 years from the death of the last survivor
of the descendants of Xxxxxx X. Xxxxxxx, the late ambassador of the Court of St.
Xxxxx, living on the date of this Agreement. The Servicer shall promptly notify
the Trustee and the Certificate Insurer of any prospective termination pursuant
to this Section 11.1.
Notice of any termination, specifying the Distribution Date upon
which the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be given promptly by
the Trustee by letter to Certificateholders mailed not later than the first day
of the month in which the specified Distribution Date occurs, stating (A) the
Distribution Date upon which final payment of the Certificates shall be made
upon presentation and surrender of the Certificates at the office of the Trustee
therein designated, (B) the amount of any such final payment, and (C) that the
Record Date otherwise applicable to such Distribution Date is not applicable,
payments being made only upon presentation and surrender of the Certificates at
the office of the Trustee therein specified. The Trustee shall give such notice
to the Certificate Registrar (if other than the Trustee) at the time such notice
is given to Certificateholders. Upon presentation and surrender of the
Certificates, the Trustee shall cause to be distributed to Certificateholders
and the Certificate Insurer amounts distributable on such Distribution Date
pursuant to Section 5.4.
In the event that all of the Certificateholders shall not
surrender their Certificates for cancellation within six months after the date
specified in the above-mentioned written notice, the Trustee shall give a second
written notice to the remaining Certificateholders to surrender their
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Trustee may take appropriate
steps, or may appoint an agent to take appropriate steps, to contact the
remaining Certificateholders concerning surrender of their Certificates, and the
cost thereof shall be paid out of the funds and other assets that shall remain
subject to this Agreement. Any funds remaining in the Trust after exhaustion of
such remedies shall, upon notice to the Trustee, be paid by the Trustee to the
Servicer for deposit into an escrow account, and thereafter Certificateholders
shall look only to such escrow account with respect to any claims in respect of
such funds.
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SECTION 11.2 OPTIONAL PURCHASE OF ALL RECEIVABLES.
The Seller shall have the option to purchase the corpus of the
Trust on any Distribution Date following a Record Date on which the Pool Balance
is 5% or less of the Original Pool Balance. To exercise such option, the
Seller shall deposit in the Certificate Account an amount equal to the
aggregate Purchase Amounts for the Receivables, together with any Reimbursement
Amount then owed to the Certificate Insurer (the "Optional Purchase Price");
PROVIDED, HOWEVER, that the Seller may not effect any such purchase unless the
Trustee and the Certificate Insurer shall have received an Opinion of Counsel
acceptable to them that such purchase does not constitute a fraudulent
conveyance under applicable federal and state laws. Such price shall be
deposited to the Certificate Account in immediately available funds by 12:00
noon, New York City time, on the Distribution Date and, upon notice to the
Trustee of such deposit, the Trustee shall release the Receivables and the
Receivable Files and all other property of the Trust to the Seller, whereupon
the Certificates shall no longer evidence any right or interest in the
Receivables or other property of the Trust or any proceeds thereof.
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.1 AMENDMENT.
This Agreement may be amended by the Seller, the Servicer and the
Trustee, without the consent of any of the Certificateholders but with the
consent of the Certificate Insurer, to cure any ambiguity or defect, to correct
or supplement any provisions in this Agreement, to correct any typographical
error or to add any other provisions with respect to matters or questions
arising under this Agreement; PROVIDED, HOWEVER, that such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any material respect the
interests of any Certificateholder.
This Agreement may also be amended from time to time by the
Seller, the Servicer and the Trustee with the consent of the Certificate Insurer
and the Holders of Certificates evidencing not less than 51% of the Certificate
Principal Balance for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement, or of modifying
in any manner the rights of the Holders of Certificates; PROVIDED, HOWEVER, that
no such amendment shall, without the consent of the Holders of all Certificates
then outstanding, reduce the aforesaid percentage required to consent to any
such amendment. In no case may any such amendment increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Receivables or distributions that shall be required to be made on
any Certificate without the consent of the Holder of such Certificate.
The Trustee shall notify each Rating Agency prior to any
amendment of this Agreement; to the extent practicable, such notice shall be
given not less than 10 days prior to the date on which such amendment is
executed.
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Promptly after the execution of any amendment or consent, the
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder, each Rating Agency and the Certificate
Insurer; a copy of any proposed amendment shall be furnished to the Certificate
Insurer by the Seller prior to its execution by the Seller.
It shall not be necessary for the consent of Certificateholders
pursuant to this Section 12.1 to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement and the Opinion of Counsel referred to in Section 12.2(i)(1). The
Trustee may, but shall not be obligated to, enter into any such amendment which
affects the Trustee's own rights, duties, or immunities under this Agreement.
SECTION 12.2 PROTECTION OF TITLE TO TRUST.
(a) The Seller shall execute and file, or cause to be executed and
filed, such financing statements and cause to be executed and filed such
continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain, and protect the interest of the
Certificateholders, the Certificate Insurer and the Trustee under this Agreement
in the Receivables and in the proceeds thereof. The Seller shall deliver (or
cause to be delivered) to the Trustee and the Certificate Insurer file-stamped
copies of, or filing receipts for, any document filed as provided above, as soon
as available following such filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity, or corporate structure in any manner that would, could, or might make
any financing statement or continuation statement filed by the Seller in
accordance with paragraph (a) above seriously misleading within the meaning of
Section 9-402(7) of the UCC, unless the Seller or Servicer shall have filed (or
cause to be filed) UCC financing statements upon any of the stated events.
(c) If, as a result of a relocation of the Seller's or Servicer's
principal executive office, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement, then the Seller or the Servicer
shall file or cause to be filed such amendment or continuation statement or new
financing statement within the period of time necessary fully to preserve and
protect the interest of the Trustee in the Receivables. The Servicer shall at
all times maintain each office from which it shall service Receivables, and its
principal executive office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such
67
Receivable, including payments and recoveries made and payments owing (and the
nature of each) and (ii) reconciliation between payments or recoveries on (or
with respect to) each Receivable and the amounts from time to time deposited in
the Certificate Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from
and after the time of sale under this Agreement of the Receivables to the
Trustee, the Servicer's master computer records (including any back-up archives)
that refer to a Receivable shall indicate clearly with reference to the
particular grantor trust that such Receivable is owned by the Trustee.
Indication of the Trustee's ownership of a Receivable shall be deleted from or
modified on the Servicer's computer systems when, and only when, the Receivable
shall have been paid in full or repurchased.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender, or other transferee, the
Servicer shall give to such prospective purchaser, lender, or other transferee
computer tapes, records, or print-outs (including any restored from back-up
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been sold and is owned by the
Trustee.
(g) The Servicer shall permit the Trustee and the Certificate Insurer
and their respective agents at any time during normal business hours to inspect,
audit, and make copies of and abstracts from the Servicer's records regarding
any Receivable to the extent permitted by applicable banking, privacy and other
laws limiting such access.
(h) Upon request, the Servicer shall furnish to the Trustee and to
the Certificate Insurer, within five Business Days, a list of all Receivables
(by contract number and name of Obligor) then held as part of the Trust,
together with a reconciliation of such list to the Schedule of Receivables and
to each of the Servicer's Certificates furnished before such request indicating
removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Trustee and the Certificate
Insurer:
(1) promptly after the execution and delivery of
this Agreement and of each amendment hereto and at the time of
any merger, consolidation or succession of the Seller or the
Servicer, an Opinion of Counsel either (a) stating that, in the
opinion of such counsel, all financing statements and
continuation statements have been executed and filed that are
necessary fully to preserve and protect the first priority
perfected security interest of the Trustee in the Receivables,
and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (b)
stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interest; and
(2) by December 31 of each calendar year beginning
December 31, 1996, an Opinion of Counsel, dated as of a date
during the 90-day
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period ending on such date, either (a) stating that, in the
opinion of such counsel, all financing statements and
continuation statements have been executed and filed that are
necessary fully to preserve and protect the first priority
perfected security interest of the Trustee in the Receivables,
and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (b)
stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interest.
SECTION 12.3 LIMITATION ON RIGHTS OF CERTIFICATEHOLDERS.
The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust, nor entitle such
Certificateholder's legal representatives or heirs to claim an accounting or to
take any action or commence any proceeding in any court for a partition or
winding up of the Trust, nor otherwise affect the rights, obligations, and
liabilities of the parties to this Agreement or any of them.
No Certificateholder shall have any right to vote (except as
provided in Section 9.1, 9.4, 12.1, 12.3 or 12.7) or in any manner otherwise
control the operation and management of the Trust, or the obligations of the
parties to this Agreement, nor shall anything in this Agreement set forth, or
contained in the terms of the Certificates, be construed so as to constitute the
Certificateholders from time to time as partners or members of an association;
nor shall any Certificateholder be under any liability to any third person by
reason of any action taken pursuant to any provision of this Agreement.
No Certificateholder shall have any right by virtue or by
availing itself of any provisions of this Agreement to institute any suit,
action, or proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Holder previously shall have received the written consent
of the Certificate Insurer and shall have given to the Trustee a written notice
of default and of the continuance thereof, as hereinbefore provided, and unless
also the Holders of Certificates evidencing not less than 25% of the Certificate
Principal Balance shall have made written request upon the Trustee to institute
such action, suit, or proceeding in its own name as Trustee under this Agreement
and shall have offered to the Trustee such reasonable indemnity as it may
require against the costs, expenses, and liabilities to be incurred therein or
thereby, and the Trustee, for 30 days after its receipt of such notice, request,
and offer of indemnity, shall have neglected or refused to institute any such
action, suit, or proceeding and during such 30-day period no direction
inconsistent with such written request has been given to the Trustee pursuant to
Section 9.4; no one or more Holders of Certificates shall have any right in any
manner whatever by virtue or by availing itself or themselves of any provisions
of this Agreement to affect, disturb, or prejudice the rights of the Holders of
any other of the Certificates, or to obtain or seek to obtain priority over or
preference to any other such Holder, or to enforce any right, under this
Agreement except in the manner provided in this Agreement and for the equal,
ratable, and common benefit of all Certificateholders. For the protection and
enforcement of the provisions of this Section 12.3, each Certificateholder and
the Trustee shall be entitled to such relief as can be given either at law or in
equity.
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SECTION 12.4 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS
OF LAW PRINCIPLES) APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED WITHIN THE
STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES
UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 12.5 NOTICES.
All demands, notices, and communications under this Agreement
shall be in writing, personally delivered or mailed by certified mail, return
receipt requested, and shall be deemed to have been duly given upon receipt (a)
in the case of the Seller or the Servicer, to the agent for service as specified
in this Agreement, at the following address: Chevy Chase Bank, F.S.B., 0000
Xxxxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxx Xxxxx, Xxxxxxxx 00000, Attention: General
Counsel, or at such other address as shall be designated by the Seller or the
Servicer in a written notice to the Trustee and (b) in the case of the Trustee,
at the Corporate Trust Office, (c) in the case of the Certificate Insurer, at
000 Xxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000, Attention: Insured Portfolio Management
- Structured Finance. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder shall
receive such notice.
SECTION 12.6 SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions, or
terms of this Agreement shall be for any reason whatsoever held invalid, then
such covenants, agreements, provisions, or terms shall be deemed severable from
the remaining covenants, agreements, provisions, or terms of this Agreement and
shall in no way affect the validity or enforceability of the other provisions of
this Agreement or of the Certificates or the rights of the Holders thereof or
the rights of the Certificate Insurer.
SECTION 12.7 ASSIGNMENT.
Notwithstanding anything to the contrary contained herein, except
as provided in Sections 7.3 and 8.3 and as provided in the provisions of this
Agreement concerning the resignation of the Servicer, this Agreement may not be
assigned by the Seller or the Servicer without the prior written consent of (x)
the Certificate Insurer or (y) the Trustee or the Holders of Certificates
evidencing not less than 66% of the Certificate Principal Balance, in either
case acting with the consent of the Certificate Insurer.
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SECTION 12.8 CERTIFICATES NONASSESSABLE AND FULLY PAID.
Certificateholders shall not be personally liable for obligations
of the Trust. The interests represented by the Certificates shall be
nonassessable for any losses or expenses of the Trust or for any reason
whatsoever, and, upon authentication thereof by the Trustee pursuant to
Section 6.2, Certificates shall be deemed fully paid.
SECTION 12.9 COUNTERPARTS.
For the purpose of facilitating the execution of this Agreement
and for other purposes, this Agreement may be executed simultaneously in any
number of counterparts, each of which counterparts shall be deemed to be an
original, and all of which counterparts shall constitute but one and the same
instrument.
SECTION 12.10 BENEFITS OF AGREEMENT.
This Agreement shall inure to the benefit of and be binding upon
the parties hereto, the Certificateholders and their respective successors and
assigns, and to the extent provided herein, the Certificate Insurer. Without
limiting the generality of the foregoing, all covenants and agreements in this
Agreement which expressly confer rights upon the Certificate Insurer shall be
for the benefit of and run directly to the Certificate Insurer, and the
Certificate Insurer shall be entitled to rely on and enforce such covenants to
the same extent as if it were a party hereto. Except as otherwise provided in
this Agreement, no other person shall have any rights or obligations hereunder.
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SECTION 12.11 TAX TREATMENT.
The parties hereto agree that the Trust created hereby will at
all times be characterized as a grantor trust for federal, state and local
income tax purposes.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
CHEVY CHASE BANK, F.S.B.,
as Seller and Servicer
By:
-------------------------------------
Name: Xxxx X. Xxxxxx
Title: Vice President
FIRST BANK NATIONAL ASSOCIATION,
as Trustee
By:
-------------------------------------
Name:
----------------------------
Title:
----------------------------
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EXHIBIT A
SCHEDULE OF RECEIVABLES
EXHIBIT B
FORM OF CERTIFICATE
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
CHEVY CHASE AUTO RECEIVABLES TRUST 1996-2
____% AUTO RECEIVABLES BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below,
the property of which includes a pool of simple interest retail installment
sales contracts and installment loans and other similar evidences of
installment indebtedness, secured by new and used automobiles, light duty
trucks and vans and sold to the Trustee by Chevy Chase Bank, F.S.B.
This Certificate does not represent an interest in or obligation of Chevy Chase
Bank, F.S.B. or any of its affiliates. This Certificate is not a savings
account or a deposit and neither this Certificate nor the underlying Receivables
(as defined below) and other property are insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. This Certificate
is limited in right of payment to certain collections in respect of the
Receivables and payments made pursuant to the Certificate Insurance Policy and,
under certain circumstances, amounts available in the Reserve Account and the
Yield Maintenance Account.
NUMBER: CUSIP:___________
$______________
THIS CERTIFIES THAT _________ is the registered owner of a $___________
dollars nonassessable, fully paid, fractional undivided interest in the Chevy
Chase Auto Receivables Trust 1996-2 (the "Trust") formed by Chevy Chase Bank,
F.S.B., a federally chartered savings bank (the "Bank", or the "Seller" or
the "Servicer" in its respective capacities as such). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as of December 1, 1996
(the "Agreement") between Chevy Chase Bank, F.S.B., as Seller and Servicer,
and First Bank National Association, as trustee (the "Trustee"), a summary of
certain of the pertinent provisions of which is set forth below. To the
extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Agreement. This Certificate is one of
the duly authorized Certificates designated as "____% Auto Receivables Backed
Certificates" (the "Certificates"). This Certificate is issued under and is
subject to the terms, provisions, and conditions of the Agreement, to which
Agreement the holder of this Certificate by virtue of the acceptance hereof
assents and by which such holder is bound. The property of the Trust
includes a pool of simple interest retail installment sales contracts and
installment loans for new and used automobiles, light duty trucks and vans
(the "Receivables"), all monies due or received thereon on or after December 1,
1996, security interests in the vehicles financed thereby, such amounts
as from time to time may be held in the Collection Account and the
Certificate Account, all rights to receive payments under certain
circumstances from the Reserve Account and the Yield Maintenance Account, the
Certificate Insurance Policy (described below), proceeds from claims on
physical damage, credit life, and disability or hospitalization insurance
policies covering vehicles financed thereby and the obligors thereunder, any
property (including the right to receive future Liquidation Proceeds) that
secures a Receivable that may from time to time be acquired by or on behalf
of the Trustee, proceeds from recourse to Dealers relating to the
Receivables, and the proceeds of any and all of the foregoing.
Under the Agreement, there will be distributed on the first Business Day
on or after the 15th day of each month (the "Distribution Date"), commencing
on January 15, 1997, to the person in whose name this Certificate is
registered at the close of business, if applicable, on the day (whether or
not a Business Day) immediately preceding such Distribution Date (the "Record
Date"), such Certificateholder's fractional interest in Monthly Interest and
Monthly Principal. Each Certificateholder's "fractional interest" is equal
to the original principal amount of such Certificateholder's Certificate, as
set forth on the face thereof, divided by the aggregate original principal
amount of all of the Certificates.
Distributions on this Certificate will be made by the Trustee by wire
transfer (if wiring instructions are received from the Certificateholder), by
check or money order mailed to the Person entitled thereto, or by such other
means as the Certificateholder and the Trustee shall agree, without the
presentation or surrender of this Certificate or the making of any notation
hereon. Except as otherwise provided in the Agreement and notwithstanding the
above, the final distribution on this Certificate will be made after due notice
by the Trustee of the pendency of such distribution and only upon presentation
and surrender of this Certificate at the office or agency
2
maintained for that purpose by the Trustee in Minneapolis, Minnesota, or at such
other office as the Trustee may designate.
Unless the certificate of authentication hereon shall have been executed by
a Responsible Officer of the Trustee, by manual signature, this Certificate
shall not entitle the holder hereof to any or benefit under the Agreement or be
valid for any purpose.
Pursuant to the Certificate Insurance Policy, the Certificate Insurer is
required, to the extent of any insufficiency in the Available Distribution
Amount, to make Insured Payments available to the Trustee necessary to
distribute the full amount of the Required Payments with respect to the
Certificates on each Distribution Date.
The Certificates do not represent an obligation of, or an interest in, the
Bank or any affiliate of the Bank. The Certificates are limited in right of
payment to certain collections and recoveries respecting the Receivables and
rights to payments under certain circumstances from the Reserve Account, the
Yield Maintenance Account and the Certificate Insurance Policy, all as more
specifically set forth in the Agreement. A copy of the Agreement may be
examined during normal business hours at the principal office of the Seller, and
at such other places, if any, designated by the Seller, by any Certificateholder
upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller and the rights of the Certificateholders under the Agreement at any time
by the Seller, the Servicer and the Trustee with the consent of the Certificate
Insurer and the Holders of Certificates evidencing not less than 51% of the
Certificate Principal Balance. Any such consent by the Holder of this
Certificate shall be conclusive and binding on such Holder and on all future
Holders of this Certificate and of any Certificate issued upon the transfer
hereof or in exchange herefor or in lieu hereof whether or not notation of such
consent is made upon this Certificate. The Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the Holders of
any of the Certificates.
As provided in the Agreement and subject to certain limitations therein set
forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee in its capacity as Certificate
Registrar, or by any successor Certificate Registrar, accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Certificate
Registrar duly executed by the holder hereof or such holder's attorney duly
authorized in writing, and thereupon one or more new Certificates of authorized
denominations evidencing the same aggregate interest in the Trust will be issued
to the designated transferee.
The Certificates are issuable only as registered Certificates without
coupons in integral multiples of $1,000; PROVIDED, HOWEVER, that one Certificate
may be issued in a denomination that includes any residual amount. As provided
in the Agreement and subject to certain limitations therein set forth,
Certificates are exchangeable for new Certificates of authorized
3
denominations evidencing the same aggregate denomination, as requested by the
holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or governmental charges payable in connection therewith.
The Trustee, the Certificate Registrar, and any agent of the Trustee or the
Certificate Registrar may treat the person in whose name this Certificate is
registered as the owner hereof for all purposes, and neither the Trustee, the
Certificate Registrar, nor any such agent shall be affected by any notice to the
contrary.
The obligations and responsibilities created by the Agreement and the Trust
created thereby shall terminate upon the payment to Certificateholders and the
Certificate Insurer of all amounts required to be paid to them pursuant to the
Agreement or the disposition of all property held as part of the Trust. The
Seller of the Receivables may at its option purchase the corpus of the Trust
at a price specified in the Agreement, and such purchase of the Receivables and
other property of the Trust will effect early retirement of the Certificates;
however, such right of purchase is exercisable on any Distribution Date
following a Record Date on which the Pool Balance is 5% or less of the original
aggregate principal balance of the Receivables.
STATEMENT OF INSURANCE
The Certificate Insurer has issued the Certificate Insurance Policy
containing the following provisions, such Certificate Insurance Policy being
on file at the offices of the Trustee at 000 Xxxx 0xx Xxxxxx, Xx. Xxxx,
Xxxxxxxxx 00000.
The Certificate Insurer, in consideration of the payment of the premium
and subject to the terms of the Certificate Guaranty Insurance Policy (the
"Certificate Insurance Policy"), thereby unconditionally and irrevocably
guarantees to any Owner that an amount equal to each full and complete
Insured Payment will be received by First Bank National Association, or its
successor, as trustee for the Owners (the "Trustee"), on behalf of the Owners
from the Certificate Insurer, for distribution by the Trustee to each Owner of
each Owner's proportionate share of the Insured Payment. The Certificate
Insurer's obligations under the Certificate Insurance Policy with respect to
a particular Insured Payment shall be discharged to the extent funds equal to
the applicable Insured Payment are received by the Trustee, whether or not
such funds are properly applied by the Trustee. Insured Payments shall be
made only at the time set forth in the Certificate Insurance Policy and no
accelerated Insured Payments shall be made regardless of any acceleration of
the Certificates, unless such acceleration is at the sole option of the
Certificate Insurer.
Notwithstanding the foregoing paragraph, the Certificate Insurance Policy
does not cover shortfalls, if any, attributable to the liability of the Trust
or the Trustee for withholding taxes, if any (including interest and
penalties in respect of any such liability).
The Certificate Insurer will pay any Insured Payment that is a Preference
Amount on the Business Day following receipt on a Business Day by the Fiscal
Agent (as described below) of (i) a certified copy of the order requiring the
return of a preference payment, (ii) an opinion of counsel satisfactory to
the Certificate Insurer that such order is final and not subject to appeal,
(iii) an assignment in such form as is reasonably required by the Certificate
Insurer, irrevocably assigning to the Certificate Insurer all rights and
claims of the Owner relating to or arising under the Certificates against the
debtor which made such preference payment or otherwise with respect to such
preference payment and (iv) appropriate instruments to effect the appointment
of the Certificate Insurer as agent for such Owner in any legal proceeding
related to such preference payment, such instruments being in a form
satisfactory to the Certificate Insurer, provided that if such dcouments are
received after 12:00 noon New York City time on such Business Day, they will
be deemed to be received on the following Business Day. Such payments shall
be disbursed to the receiver or trustee in bankruptcy named in the final order
of the court exercising jurisdiction on behalf of the Owner and not to any
Owner directly unless such Owner has retured principal or interest paid on the
Certificates to such receiver or trustee in bankruptcy, in which case such
payment shall be disbursed to such Owner.
The Certificate Insurer will pay any other amount payble under the
Certificate Insurance Policy no later than 12:00 noon New York City time on
the later of the Distribution Date on which the related Deficiency Amount is
due or the third Business Day following receipt in New York, New York on a
Business Day by State Street Bank and Trust Company, N.A., as Fiscal Agent for
the Certificate Insurer or any successor fiscal agent appointed by the
Certificate Insurer (the "Fiscal Agent") of a Notice (as described below);
provided that if such Notice is received after 12:00 noon New York City time
on such Business Day, it will be deemed to be received on the following
Business Day. If any such Notice received by the Fiscal Agent is not in
proper form or is otherwise insufficient for the purpose of making claim
under the Certificate Insurance Policy it shall be deemed not to have been
received by the Fiscal Agent for purposes of this paragraph, and the
Certificate Insurer or the Fiscal Agent, as the case may be, shall promptly
so advise the Trustee and the Trustee may submit an amended Notice.
Insured Payments due under the Certificate Insurance Policy unless
otherwise stated therein will be disbursed by the Fiscal Agent to the Trustee
on behalf of the Owners by wire transfer of immediately available funds in
the amount of the Insured Payment less, in respect of Insured Payments
related to Preference Amounts, any amount held by the Trustee for the payment
of such Insured Payment and legally available therefor.
The Fiscal Agent is the agent of the Certificate Insurer only and the
Fiscal Agent shall in no event be liable to Owners for any acts of the Fiscal
Agent or any failure of the Certificate Insurer to deposit, or cause to be
deposited, sufficient funds to make payments due under the Certificate
Insurance Policy.
As used in the Certificate Insurance Policy, the following terms shall
have the following meanings:
"AGREEMENT" means the Pooling and Servicing Agreement dated as of December
1, 1996 among Chevy Chase Bank, F.S.B., as Seller and as Servicer, and the
Trustee, as trustee, without regard to any amendment or supplement thereto,
unless such amendment or modification has been approved in writing by the
Certificate Insurer.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day on
which banking institutions in New York City, Chevy Chase, Maryland or in the
city in which the corporate trust office of the Trustee under the Agreement
or the Certificate Insurer is located are authorized or obligated by law or
executive order to close.
"DEFICIENCY AMOUNT" means the excess, if any, of Required Payments over
Net Available Distribution Amount for such Distribution Date.
"INSURED PAYMENT" means (i) as of any Distribution Date, any Deficiency
Amount and (ii) any Preference Amount.
"NOTICE" means the telephonic or telegraphic notice, promptly confirmed in
writing by telecopy substantially in the form of Exhibit A attached to the
Certificate Insurance Policy, the original of which is subsequently delivered
by registered or certified mail, from the Trustee specifying the Insured
Payment which shall be due and owing on the applicable Distribution Date.
"OWNER" means each Holder (as defined in the Agreement) who, on the
applicable Distribution Date, is entitled under the terms of the applicable
Certificates to payment thereunder.
"PREFERENCE AMOUNT" means any amount previously distributed to an Owner on
the Certificates that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code (11 U.S.C.), as amended from time to time, in accordance
with a final nonappealable order of a court having competent jurisdiction.
Capitalized terms used in the Certificate Insurance Policy and not
otherwise defined in the Certificate Insurance Policy shall have the
respective meanings set forth in the Agreement as of the date of execution
of the Certificate Insurance Policy, without giving effect to any subsequent
amendment or modification to the Agreement unless such amendment or
modification has been approved in writing by the Certificate Insurer.
Any notice under the Certificate Insurance Policy or service of process on
the Fiscal Agent of the Certificate Insurer may be made at the address listed
below for the Fiscal Agent of the Certificate Insurer or such other address
as the Certificate Insurer shall specify in writing to the Trustee.
The notice address of the Fiscal Agent is 00xx Xxxxx, 00 Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 Attention: Municipal Registrar and Paying Agency, or
such other address as the Fiscal Agent shall specify to the Trustee in
writing.
The Certificate Insurance Policy is being issued under and pursuant to,
and shall be construed under, the laws of the State of New York, without
giving effect to the conflict of laws principles thereof.
The insurance provided by the Certificate Insurance Policy is not covered
by the Property/Casualty Insurance Security Fund specified in Article 76 of
the New York Insurance Law.
The Certificate Insurance Policy is not cancelable for any reason. The
premium on the Certificate Insurance Policy is not refundable for any reason
including payment, or provision being made for payment, prior to maturity of
the Certificates.
MBIA Insurance Corporation
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Certificate to be duly executed.
Dated: ____________, 1996
CHEVY CHASE AUTO RECEIVABLES TRUST 1996-2
By: FIRST BANK NATIONAL ASSOCIATION, as Trustee
By: ____________________________________
[name]
4
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to
in the within-mentioned Agreement
First Bank National Association, as Trustee
By: ____________________________________
[name]
Dated: ____________, 1996
5
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY _______________________________
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE _______________________________
______________________________________________________________________________
(Please print or typewrite name and address, including postal zip code, of
assignee)
______________________________________________________________________________
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
_______________________________________________________________________ Attorney
to transfer said Certificate on the books of the Certificate Registrar, with
full power of substitution in the premises.
Dated:
_________________________________________*
Signature Guaranteed
_________________________________________*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such a signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank or
trust company.
6
EXHIBIT C
FORM OF TRUSTEE'S CERTIFICATE
PURSUANT TO SECTION 10.2
OF THE POOLING AND SERVICING AGREEMENT
First Bank National Association, as trustee (the "Trustee") of the Chevy
Chase Auto Receivables Trust 1996-2 created pursuant to the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), dated as of
December 1, 1996, between Chevy Chase Bank, F.S.B. (the "Seller") and the
Trustee, does hereby sell, transfer, assign and otherwise convey to the
Seller, without recourse, representation or warranty, all of the Trustee's
right, title and interest in and to all of the Receivables (as defined in the
Pooling and Servicing Agreement) identified in the attached Servicer's
Certificate as "Purchased Receivables," which are to be repurchased by the
Seller pursuant to Section 3.2, and all Insurance Policies, security and
documents relating thereto IN WITNESS WHEREOF, I have hereunto set my
hand this ___ day of __________, 1996.
___________________________________
EXHIBIT D
FORM OF TRUSTEE'S CERTIFICATE
PURSUANT TO SECTION 10.2
OF THE POOLING AND SERVICING AGREEMENT
First Bank National Association, as trustee (the "Trustee") of the Chevy
Chase Auto Receivables Trust 1996-2 created pursuant to the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), dated as of
December 1, 1996, between Chevy Chase Bank, F.S.B. (the "Seller") and the
Trustee, does hereby sell, transfer, assign and otherwise convey to the
Servicer, without recourse, representation or warranty, all of the Trustee's
right, title and interest in and to all of the Receivables (as defined in the
Pooling and Servicing Agreement) identified in the attached Servicer's
Certificate as "Purchased Receivables," which are to be purchased by the
Servicer pursuant to Sections 4.2, 4.7 or 11.2, and all Insurance Policies,
security and documents relating thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this ___ day of __________,
1996.
___________________________________
EXHIBIT E
FORM OF SERVICER'S CERTIFICATE
CHEVY CHASE AUTO RECEIVABLES TRUST 1996-2
_____% AUTO RECEIVABLES BACKED CERTIFICATES
Distribution Date: _______________
Collection Period: _______________
Record Date: _______________
Under the Pooling and Servicing Agreement, dated as of December 1, 1996,
between Chevy Chase Bank, F.S.B. (as "Seller" and "Servicer") and First Bank
National Association, as trustee, the Servicer is required to prepare certain
information each month regarding current distributions to Certificateholders and
the performance of the Chevy Chase Auto Receivables Trust 1996-2 (the "Trust")
during the previous month. The information which is required to be prepared
with respect to the Distribution Date and Collection Period listed above is set
forth below. Certain of the information is presented on the basis of an
original principal amount of $1,000 per Certificate, and certain other
information is presented based upon the aggregate amounts for the Trust as a
whole.
A. INFORMATION REGARDING THE CURRENT MONTHLY DISTRIBUTION.
1. CERTIFICATES.
(a) The aggregate amount of the distribution to
Certificateholders on the Distribution Date
set forth above. . . . . . . . . . . . . . . . . $__________
(b) The amount of the distribution set forth in
paragraph (a) above allocable to principal,
including any overdue principal. . . . . . . . . $__________
(c) The amount of the distribution set forth in
paragraph (a) above allocable to interest,
including any overdue interest . . . . . . . . . $__________
(d) The Insured Payments, if any, with respect to
such Distribution Date . . . . . . . . . . . . . $__________
(e) The Premium Amount, with respect to such
Distribution Date . . . . . . . . . . . . . . . $__________
1
(f) The amount of the distribution set forth in
paragraph (a) above, per Certificate in a
principal amount of $1,000 . . . . . . . . . . . $__________
(g) The amount of the distribution set forth in
paragraph (b) above, per Certificate in a
principal amount of $1,000 . . . . . . . . . . . $__________
(h) The amount of the distribution set forth in
paragraph (c) above, per Certificate in a
principal amount of $1,000 . . . . . . . . . . . $__________
(i) The amount set forth in paragraph (d) above, per
Certificate in a principal amount of $1,000 . . $__________
(j) The Certificate Principal Balance as of such
Distribution Date (after giving effect to any
distribution on such Distribution Date) . . . . $__________
(k) The balance of the Reserve Account, after giving
effect to distributions and deposits and the
change in the balances from that of the prior
Distribution Date . . . . . . . . . . . . . . . $__________
(l) The balance of the Yield Maintenance Account,
after giving effect to distributions from the
prior Distribution Date . . . . . . . . . . . . $__________
B. INFORMATION REGARDING THE PERFORMANCE OF THE TRUST.
1. NET LOSSES, DELINQUENCIES AND POOL BALANCE.
(a) The aggregate net losses on the Receivables
for the related Collection Period . . . . . . . $__________
(b) The aggregate principal balance of all
Receivables which were delinquent 30 days or
more as of the last day of the related
Collection Period . . . . . . . . . . . . . . . $__________
(c) The Pool Balance as of the end of the related
Collection Period . . . . . . . . . . . . . . . $__________
(d) The Certificate Factor as of the end of the
related Collection Period . . . . . . . . . . . $__________
2
EXHIBIT F
LIST OF DESIGNATED LOANS
