EXHIBIT 99.5
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EXECUTION COPY
XXXXXX XXXXXXX ASSET FUNDING, INC.
AS PURCHASER
AND
THE HUNTINGTON NATIONAL BANK,
AS SELLER AND AS SERVICER
PURCHASE AND SERVICING AGREEMENT
DATED AS OF MAY 31, 2003
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS..................................................................1
Section 1.01 Definitions.................................................1
Section 1.02 Other Definitional Provisions..............................10
ARTICLE II
CONVEYANCE OF RECEIVABLES; POSSESSION OF RECEIVABLE FILES; BOOKS AND RECORDS;
DELIVERY OF DOCUMENTS.......................................................11
Section 2.01 Conveyance of Receivables; Possession of Receivable Files;
Maintenance of Receivable Files............................11
Section 2.02 Custody of the Receivables Files, Duties of Servicer as
Custodian..................................................13
Section 2.03 Receivable Schedule........................................14
Section 2.04 Closing....................................................14
Section 2.05 Closing Documents..........................................15
Section 2.06 UCC-1 Financing Statements.................................15
Section 2.07 Protection of Right, Title and Interest....................16
ARTICLE III
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH..........................17
Section 3.01. Bank Representations and Warranties........................17
Section 3.02 Repurchase.................................................28
Section 3.03 Purchaser Representations and Warranties...................29
Section 3.04 Indemnification by Seller..................................31
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES.................................32
Section 4.01 Servicer...................................................32
Section 4.02 Realization of Receivables.................................34
Section 4.03 Commingling of Collections Related to the Receivables......34
Section 4.04 Permitted Retention of Collections by the Servicer.........35
Section 4.05 Errors and Omissions Insurance.............................35
Section 4.06 Remittance of GAP Amounts..................................36
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ARTICLE V
PAYMENTS TO PURCHASER.......................................................36
Section 5.01 Remittances................................................36
Section 5.02 Servicer Reports...........................................37
Section 5.03 Monthly Advances by Servicer...............................37
ARTICLE VI
GENERAL SERVICING PROCEDURES................................................38
Section 6.01 Satisfaction of Receivables and Release of Receivable
Files......................................................38
Section 6.02 Annual Statement as to Compliance..........................38
Section 6.03 Annual Independent Certified Public Accountants' Report....39
Section 6.04 Right to Examine Servicer Records..........................39
Section 6.05 System Backup File.........................................39
ARTICLE VII
SELLER AND SERVICER TO COOPERATE............................................39
Section 7.01 Provision of Information...................................39
Section 7.02 Financial Statements; Servicing Facility...................40
ARTICLE VIII
THE SERVICER................................................................40
Section 8.01 Indemnification of Third Party Claims by the Servicer......40
Section 8.02 Merger or Consolidation of the Servicer....................41
Section 8.03 Limitation on Liability of Seller, Servicer and Others.....42
Section 8.04 Limitation on Resignation and Assignment by Servicer.......42
ARTICLE IX
PASS-THROUGH TRANSFER OR WHOLE LOAN TRANSFER................................43
Section 9.01. Effect of Pass-Through Transfer or Whole Loan Transfer.....43
ARTICLE X
DEFAULT.....................................................................46
Section 10.01 Events of Default..........................................46
Section 10.02 Waiver of Event of Defaults................................48
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ARTICLE XI
TERMINATION.................................................................48
Section 11.01 Termination................................................48
ARTICLE XII
MISCELLANEOUS PROVISIONS....................................................49
Section 12.01 Successor to Servicer......................................49
Section 12.02 Amendment..................................................50
Section 12.03 Governing Law; Jurisdiction; Waiver of Jury Trial..........50
Section 12.04 Duration of Agreement......................................50
Section 12.05 Notices....................................................50
Section 12.06 Severability of Provisions.................................52
Section 12.07 Entire Agreement...........................................52
Section 12.08 Relationship of Parties....................................52
Section 12.09 Counterparts...............................................52
Section 12.10 Successors and Assigns.....................................53
Section 12.11 Assignment by Purchaser....................................53
Section 12.12 No Waiver; Cumulative Remedies.............................53
Section 12.13 Further Assurances.........................................53
Section 12.14 Effect of Headings; Cross-References.......................53
Section 12.15 No Petition Covenant.......................................53
EXHIBITS
Exhibit A Receivable Schedule (on CD-ROM)
Exhibit B Data Dictionary (on CD-ROM)
Exhibit C Location of Receivable Files
Exhibit D Form of Assignment
Exhibit E Form of Seller's Closing Date Officer's Certificate
Exhibit F Form[s] of Retail Motor Vehicle Loan and Installment Sale
Contract
Exhibit G-1 List of Servicer Reports
Exhibit G-2 Form of Servicer Reports (on CD-ROM)
Exhibit H Servicing Procedures
Exhibit I-1 Form of Opinion of Counsel on Corporate and Related Matters
Exhibit I-2 Form of Opinion of Counsel on Sale of Receivables
Exhibit I-3 Form of Opinion of Counsel on Certificate of Title Statutes
Exhibit I-4 Form of Opinion of Counsel on Enforceability under New York
Law and Related Matters
Exhibit J Form of Seller Annual Statement as to Compliance
Exhibit K Form of Assignment, Assumption and Recognition Agreement
Exhibit L Wire Instructions for Purchaser
Exhibit M Form of Seller Disclosure
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Exhibit N Form of Receivable Information, Historical Loss and
Delinquency Data
Exhibit O Form of Indemnity Agreement
SCHEDULES
Schedule 1 Cumulative Net Loss Ratio Schedule and Six-Month Annualized
Net Loss Ratio
Schedule 2 Form of Lost Note Affidavit
Schedule 9.01(b) Representations and Warranties
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This is a Purchase and Servicing Agreement (this "Agreement") for
various retail automobile and light duty truck loan and installment sale
contracts, dated and effective as of May 31, 2003, and is executed between
Xxxxxx Xxxxxxx Asset Funding, Inc., as purchaser (together with its successors
and assigns, the "Purchaser"), and The Huntington National Bank, as seller and
servicer (together with its permitted successors and assigns, in such
capacities, the "Seller" and the "Servicer," respectively).
W I T N E S S E T H
WHEREAS, the Purchaser and the Seller are parties to the Purchase
Price and Terms Letter (such capitalized term and the other capitalized terms
used herein having the meanings assigned thereto pursuant to Article I),
pursuant to which the Purchaser has agreed to purchase from the Seller, and
the Seller has agreed to sell the Purchaser, the pool of retail automobile and
light truck loan and installment sale contracts described in Exhibit A
(collectively, the "Receivables") subject to the terms and conditions of the
Purchase Price and Terms Letter and this Agreement;
WHEREAS, the Purchaser desires for the Servicer to service the
Receivables, and the Servicer is willing to service the Receivables, in the
manner provided in this Agreement;
WHEREAS, the Receivables have an aggregate Principal Balance on the
Cut-Off Date of approximately $553,727,701;
WHEREAS, each Receivable is secured by a first priority security
interest in the related Financed Vehicle; and
WHEREAS, the Purchaser, the Seller and the Servicer wish to
prescribe the terms of the purchase of the Receivables and the conveyance,
servicing and control of the Receivables.
NOW, THEREFORE, in consideration of the mutual agreements
hereinafter set forth, and for other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto
(each, a "Party," and collectively, the "Parties") agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions.
Whenever used herein, the following words and phrases, unless the
content otherwise requires, shall have the following meanings:
"Affiliate" means, when used with reference to a specified Person,
any Person that directly or indirectly controls or is controlled by or is
under common control with the specified Person.
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"Agreement" means this Purchase and Servicing Agreement, including
all schedules and exhibits hereto, as the same may be amended, supplemented or
otherwise modified from time to time in accordance with the terms hereof.
"Amount Financed" means, with respect to a Receivable, the amount
advanced under the Receivable toward the purchase price of the Financed
Vehicle and any related costs, including but not limited to, service
warranties.
"Applicable Law" means all provisions of statutes, rules and
regulations, interpretations and orders of any Governmental Authority
applicable to a Person, and all orders and decrees of all courts and
arbitrators in proceedings or actions in which the Person in question is a
party including applicable federal, state and local laws and regulations
thereunder, including, without limitation, usury, truth in lending, consumer
credit protection, unfair and deceptive trade practice, equal credit
opportunity or disclosure laws.
"Assignment" means an assignment of the Conveyed Assets by the
Seller to the Purchaser, dated as of the Cut-Off Date, in substantially the
form of Exhibit D hereto.
"Assignment, Assumption and Recognition Agreement" means an
agreement in substantially the form of Exhibit K hereto.
"Bank" means HNB, in its capacity as Seller and Servicer hereunder.
"Business Day" means any day other than (a) a Saturday or Sunday, or
(b) a day on which banking or savings and loan institutions in the States of
New York or the jurisdiction of the principal place of business of the
Servicer are authorized or obligated by law or executive order to be closed.
"Closing Date" means June 30, 2003.
"Closing Documents" means each of the documents described in Section
2.05.
"Collateral" means the Financed Vehicles and any other property
securing a Receivable.
"Collection Period" means, with respect to each Remittance Date, the
calendar month preceding the month in which such Remittance Date occurs.
"Collections" means, with respect to each Receivable, without
duplication:
(i) all payments on account of interest and principal;
(ii) all Liquidation Proceeds;
(iii) all Insurance Proceeds (other than proceeds to be applied to
the restoration or repair of the related Financed Vehicle or released to the
related Obligor in accordance with the terms of the related Receivable);
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(iv) all GAP Amounts payable by the Seller pursuant to Section 4.06;
(v) any Monthly Advances required to be paid by the Servicer
pursuant to Section 5.03;
(vi) any amounts payable in connection with the purchase or
repurchase of any Receivable pursuant to this Agreement;
(vii) any Deficiency Balance recoveries payable pursuant to Section
4.02(b);
(viii) any rebate of an unearned insurance premium, service warranty
or other amount received by the Servicer which was financed in the contract
for a Financed Vehicle; and
(ix) any other amounts received by the Servicer in respect of a
Receivable;
provided, that "Collections" does not include (A) any payments and proceeds
(including Liquidation Proceeds and Insurance Proceeds) of any repurchased
Receivables, the Receivables Repurchase Price of which has been included in
the Collections in a prior Collection Period, (B) any Late Fees collected by
and paid to the Servicer and (C) costs and expenses incurred by the Servicer
for or on behalf of an Obligor (such as retitling costs) that such Obligor
repays to the Servicer.
"Collector" has the meaning assigned to such term in Section
4.02(b).
"Contract Rate" means, with respect to each Receivable, the annual
rate of interest applicable to such Receivable stated in the applicable loan
or installment sale contract.
"Conveyed Assets" has the meaning assigned to such term in Section
2.01(a).
"Cram Down Loss" means, with respect to a Receivable, any loss
resulting from an order issued by a court of appropriate jurisdiction in an
insolvency proceeding that reduces the amount owed on a Receivable or
otherwise modifies or restructures the scheduled payments to be made thereon.
The amount of any such Cram Down Loss will equal the excess of (i) the
Principal Balance of the Receivable immediately prior to such order over (ii)
the Principal Balance of such Receivable as so reduced, modified or
restructured. A Cram Down Loss will be deemed to have occurred at the end of
the Collection Period in which the Servicer enters the Cram Down Loss into its
computer system (and Servicer shall make such entry within two Business Days
after receipt of notice of such order).
"Cumulative Net Loss Ratio" means, for any Determination Date, a
fraction (expressed as a percentage), the numerator of which is equal to (x)
the sum of Net Liquidation Losses during the period from the Cut-Off Date
through and including the Collection Period immediately preceding such
Determination Date plus (y) the Cram Down Losses that occurred during such
period, and the denominator of which is equal to the aggregate Principal
Balance of the Receivables as of the Cut-Off Date.
"Cut-Off Date" means the close of business on May 31, 2003.
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"Dealer" means the dealer that sold a Financed Vehicle and that
originated and/or assigned a related Receivable to the Seller under an
existing Dealer Agreement.
"Dealer Agreement" means the agreement between a Dealer and the
Seller relating to the origination of, or assignment of, the related
Receivables to the Seller and all documents and instruments relating thereto,
as the same may be amended, supplemented or otherwise modified from time to
time.
"Defaulted Receivable" means, with respect to any Collection Period,
a Receivable (a) which, at the end of such Collection Period, is deemed
uncollectible by the Servicer in accordance with the Servicing Standard, (b)
in respect of which the related Financed Vehicle has been repossessed and
liquidated, (c) in respect of which the Servicer has repossessed and held the
related Financed Vehicle in its repossession inventory for 60 (sixty) days or
more, (d) which by the end of the month becomes 120 days past due and is not
in repossession inventory or (e) which by the end of the month becomes 180
days past due.
"Deficiency Balance" means the outstanding Principal Balance of a
Defaulted Receivable remaining unpaid after the application, to reduce the
Principal Balance of such Receivable, of all Liquidation Proceeds and
Insurance Proceeds received for such Defaulted Receivable and after all
proceeds have been received from the disposition of the related Financed
Vehicle.
"Determination Date" means the second Business Day preceding the
Remittance Date, or if such day is not a Business Day, the immediately
preceding Business Day.
"Event of Default" means any one of the conditions or circumstances
enumerated in Section 10.01(a).
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder.
"FDIC" means the Federal Deposit Insurance Corporation or any
successor organization.
"Financed Vehicle" means a new or used automobile or light truck
which secures a Receivable.
"First Remittance Date" means July 11, 2003.
"Fitch" means Fitch, Inc. and its successors.
"GAP Amount" means the amount of the outstanding Principal Balance
of a Receivable which Seller determines is required to be cancelled pursuant
to HNB GAP (as described in the related contract or other documents), if the
Obligor on such Receivable has purchased HNB GAP.
"Governmental Authority" means the government of the United States
of America, any other nation or any political subdivision thereof, whether
state, federal, provincial
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or local, and any agency, authority, instrumentality, regulatory body, court,
administrative court or judge, central bank or other entity exercising
executive, legislative, judicial, taxing, regulatory or administrative powers
or functions of or pertaining to government.
"HNB" means The Huntington National Bank, a national banking
association organized under the laws of the United States of America.
"HNB GAP" means HNB's debt cancellation plan pursuant to which some
or all of the outstanding Principal Balance of a Receivable is required to be
cancelled as provided under the terms of the debt cancellation plan as set
forth in the contract or related documents for the related Receivable.
"Insurance Proceeds" means proceeds of any insurance policy or
service warranty related to a Receivable or the related Collateral, to the
extent such proceeds are to be used to reduce the Principal Balance of such
Receivable and are not to be applied to the restoration of the related
Financed Vehicle or released to the Obligor in accordance with Applicable Law
or the procedures that the Servicer would follow in servicing retail
automobile and light duty truck loan and installment sale contracts or
repossessed collateral held for its own account.
"Interest Collections" means that portion of Collections that are
allocated or allocable to payment of interest in accordance with the Simple
Interest Method and the terms of each Receivable.
"Late Fees" means any late fees, prepayment charges, extension fees,
pass-a-payment fees, or other administrative fees or similar charges allowed
by applicable law with respect to the Receivables.
"Lien" means a security interest, lien, charge, claim, pledge,
equity or encumbrance of any kind other than tax liens, mechanics' liens and
any liens that attach to the applicable Receivable by operation of law.
"Liquidation Proceeds" means cash (other than Insurance Proceeds) in
excess of the costs of liquidation received in connection with the liquidation
of a Defaulted Receivable, whether through the sale or assignment of such
Receivable, trustee's sale or otherwise, including the sale or other
disposition of the related Financed Vehicle.
"Lost Note Affidavit" means an affidavit in substantially the form
of Schedule 2 hereto.
"Monthly Advance" means the interest portion of each Monthly Payment
that is delinquent with respect to each Receivable at the close of business on
the last day of the Collection Period required to be advanced by the Servicer
pursuant to Section 5.03 on the Business Day immediately preceding the
Remittance Date for the related month.
"Monthly Payment" means the scheduled monthly payment of principal
and interest on a Receivable that is payable by an Obligor under the related
Contract.
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"Moody's" means Xxxxx'x Investors Service, Inc., and its successors.
"Net Liquidation Losses" means, with respect to any Collection
Period, the amount, if any, by which (a) the aggregate Principal Balance of
all Receivables that became Defaulted Receivables during that Collection
Period exceeds (b) the Liquidation Proceeds, Insurance Proceeds and any
Deficiency Balance recoveries received during that Collection Period.
"Obligor" means the obligor or obligors on a Receivable.
"Officer's Certificate" means a certificate signed by (a) the
chairman of the board, the vice chairman of the board, the president, an
executive vice president, a senior vice president, a vice president, an
assistant vice president, the treasurer, the secretary or (b) two of the
assistant treasurers and/or assistant secretaries of the Seller, and delivered
to the Purchaser as required by this Agreement.
"Opinion of Counsel" means a written opinion of counsel in form and
substance acceptable to the Purchaser and its counsel.
"Party or Parties" has the meaning assigned to such term in the
recitals to this Agreement.
"Pass-Through Transfer" means the sale or transfer of some or all of
the Receivables by the Purchaser, directly or through one or more Affiliates,
to a trust or other entity to be formed as part of a publicly issued or
privately placed asset-backed securities transaction.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, joint venture, association, joint-stock
company, trust, national banking association, unincorporated organization or
Governmental Authority or any agency or political subdivision thereof or any
other entity.
"Pool Delinquency Percentage" means, for any Determination Date, the
average for the three (3) preceding Collection Periods (or if prior to three
(3) months from the Closing Date, the number of whole Collection Periods since
the Closing Date) of a fraction (expressed as a percentage), the numerator of
which is the aggregate Principal Balance of all Receivables that as of the end
of the immediately preceding Collection Period are thirty (30) or more days
delinquent (excluding Defaulted Receivables from such numerator), and the
denominator of which is the aggregate Principal Balance of the Receivables as
of the end of the immediately preceding Collection Period.
"Prime Rate" means the prime rate announced to be in effect from
time to time, as published as the average rate in The Wall Street Journal.
"Principal Balance" means, with respect to any Receivable, as of the
related date of determination on the last day of a Collection Period, the
Amount Financed minus an amount equal to the sum, as of the close of business
on the last day of the related Collection Period, of (i) that portion of all
amounts received by the Servicer, from or on behalf of the related Obligor on
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or prior to such date and allocable to principal using the Simple Interest
Method plus (ii) Cram Down Losses in respect of such Receivable.
"Purchase Price" means the amount set forth in the Purchase Price
and Terms Letter.
"Purchase Price and Terms Letter" means the letter agreement, dated
as of June 30, 2003, between the Purchaser and the Seller, relating to the
purchase of the Receivables by the Purchaser from the Seller, as the same may
be amended, supplemented or otherwise modified from time to time in accordance
with the terms thereof.
"Purchaser" means Xxxxxx Xxxxxxx Asset Funding, Inc., a Delaware
corporation, and its successors and permitted assigns.
"Rating Agency" means Moody's or Standard & Poor's and any other
nationally recognized statistical credit rating agency rating any security
issued in connection with any Pass-Through Transfer.
"Receivable File" means, with respect to each Receivable:
(i) the original Receivable or a copy of the original Receivable
together with an affidavit of the Seller as to the original Receivable;
(ii) the original credit application fully executed by the Obligor
or a photocopy thereof or a record thereof on a computer file or diskette or
on microfiche;
(iii) the original certificate of title, or if the original
certificate of title is required to be held by the agency, department or
office that issued such original certificate of title, a receipt thereof
(which for Michigan and Arizona shall be in the form of RD-108 and for
Kentucky shall be in the form of a "Lien Statement"), or such documents that
the Servicer shall keep on file, in accordance with its customary standards,
policies and procedures, evidencing the security interest of the Seller in the
related Financed Vehicle;
(iv) if the odometer reading of the Financed Vehicle at the time of
sale to the Obligor is not listed on the certificate of title or the original
credit application, the odometer statement; and
(v) any and all other documents that the Servicer shall have kept on
file in accordance with its customary procedures relating to a Receivable.
"Receivable Schedule" The schedule of retail automobile and light
truck loan and installment sale contracts annexed hereto as Exhibit A, which
list shall set forth the information listed on Exhibit B hereto with respect
to each loan and installment sale contract identified therein.
"Receivables" means all of the retail automobile and light truck
loan and installment sale contracts listed on the Receivable Schedule.
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"Receivables Repurchase Price" The price to be paid by the Seller or
the Servicer, as the case may be, in connection with the repurchase or
purchase of a Receivable from the Purchaser, which price shall be determined
as follows:
(i) if the purchase or repurchase is to occur on or before the
closing date of a Whole Loan Transfer or a Pass-Through Transfer related to
such Receivable, a price equal to (a) the product of (x) the remaining
Principal Balance of the Receivable as of the last day of the Collection
Period related to the Remittance Date on which the purchase or repurchase
occurs times (y) the price (expressed as a percentage) at which the Purchaser
purchased the Receivable from the Seller, plus (b) accrued interest on such
outstanding Principal Balance at the Contract Rate from the date the Obligor
on such Receivable last made a payment of interest through the last day of the
Collection Period related to the Remittance Date on which the purchase or
repurchase occurs, less (c) Monthly Advances which have not been reimbursed in
accordance with this Agreement; and
(ii) thereafter, at the Repurchase Price.
"Reconstitution Date" means the date on which any or all of the
Receivables serviced under this Agreement shall be reconstituted as part of a
Pass-Through Transfer or Whole Loan Transfer pursuant to Section 9.01 hereof.
The Reconstitution Date shall be such date the Purchaser shall designate in
writing to the Seller.
"Remittance Date" means the 11th day (or if such 11th day is not a
Business Day, the first Business Day immediately preceding such date) of any
month, beginning with the First Remittance Date.
"Repurchase Price" means, as to each Receivable, a price equal to
(a) the remaining Principal Balance of the Receivable as of the last day of
the Collection Period related to the Remittance Date on which the purchase or
repurchase occurs, plus (b) accrued interest on such outstanding Principal
Balance at the Contract Rate from the date the Obligor on such Receivable last
made a payment of interest through the last day of the Collection Period
related to the Remittance Date on which the purchase or repurchase occurs,
less (c) Monthly Advances in respect of such Receivable which have not been
reimbursed in accordance with this Agreement.
"Required Pool Balance" means $553,727,701.64, which is the required
aggregate Principal Balance of the Receivables as of the Cut-Off Date, plus or
minus 5% of such amount, pursuant to Section 2.04(a)(v).
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations promulgated thereunder.
"Seller" means HNB and its permitted successors and assigns under
this Agreement, as seller.
"Seller Indemnified Claim" has the meaning assigned to such term in
Section 3.04.
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"Seller Indemnified Parties" or "Seller Indemnified Party" has the
meaning assigned to such term in Section 3.04.
"Servicer" means HNB, acting in its capacity as servicer and
custodian of the Receivables hereunder on and after the Closing Date, unless a
successor shall have been appointed pursuant to Section 12.01.
"Servicer Annual Certification" has the meaning assigned to such
term in Section 6.02.
"Servicer Indemnified Claim" has the meaning assigned to such term
in Section 8.01.
"Servicer Indemnified Parties" or "Servicer Indemnified Party" has
the meaning assigned to such term in Section 8.01.
"Servicer Reports" has the meaning assigned to such term in Section
5.02.
"Servicing Advances" means all customary, reasonable and necessary
"out-of-pocket" costs and expenses other than Monthly Advances (including
reasonable attorney's fees and disbursements) incurred in the performance by
the Servicer of its servicing obligations, including, but not limited to, the
cost of (a) repossessing a Financed Vehicle, (b) restoring and reconditioning
a Financed Vehicle in preparation of such Financed Vehicle for auction, (c)
any enforcement or judicial proceedings or (d) the sale or other disposition
of repossessed Financed Vehicles.
"Servicing Fee" means the amount of the per annum fee the Purchaser
shall pay to the Servicer on each Remittance Date, which shall, for a period
of one full month, be equal to one-twelfth of the product of (a) the Servicing
Fee Rate and (b) the Principal Balance of the Receivables as of the first day
of the prior Collection Period. Such fee shall be payable monthly.
"Servicing Fee Rate" means 1.00% per annum.
"Servicing Rights" means all rights relating to the servicing of the
Receivables.
"Servicing Standard" has the meaning assigned to such term in
Section 4.01(a).
"Simple Interest Method" means the method of allocating a fixed
level payment between principal and interest, pursuant to which the portion of
such payment that is allocated to interest is equal to the product of the
Contract Rate multiplied by the unpaid Principal Balance multiplied by the
period of time (expressed as a fraction of a year, based on the actual number
of days in the month and a 365-day year or, in the event of a leap year, a
366-day year) elapsed since the preceding payment was made and the remainder
of such payment is allocable to principal.
"Simple Interest Receivable" means any Receivable under which the
portion of a payment allocated to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
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"Six-Month Annualized Net Loss Ratio" means, with respect to any
Determination Date, the average for the six (6) preceding Collection Periods
(or if prior to six (6) months from the Closing Date, the number of whole
Collection Periods since the Closing Date), of the product of 12 times a
fraction (expressed as a percentage), the numerator of which is equal to the
Net Liquidation Losses during the Collection Period plus the Cram Down Losses
that occurred during the Collection Period, and the denominator of which is
equal to the aggregate Principal Balance of the Receivables as of the first
day of the Collection Period.
"Standard & Poor's" means Standard & Poor's, a division of The
XxXxxx-Xxxx Companies, Inc., and its successors.
"Transfer Taxes" has the meaning assigned to such term in Section
3.01(b)(lvi).
"UCC" means the Uniform Commercial Code in effect in the relevant
jurisdiction.
"VSI Policy" means that certain "Ultimate Loss Insurance Blanket
Single Interest Policy" issued by Ohio Indemnity Company to HNB and currently
in force, together with all endorsements thereto.
"Whole Loan Transfer" means any sale or transfer of some or all of
the Receivables by the Purchaser to a third party, which sale or transfer is
not a Pass-Through Transfer.
Section 1.02 Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the defined
meanings when used in any instrument governed hereby and in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein.
(b) As used in this Agreement, in any instrument governed hereby and
in any certificate or other document made or delivered pursuant hereto or
thereto, accounting terms not defined in this Agreement or in any such
instrument, certificate or other document, and accounting terms partly defined
in this Agreement or in any such instrument, certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles as in effect on the date of this
Agreement or any such instrument, certificate or other document, as
applicable. To the extent that the definitions of accounting terms in this
Agreement or in any such instrument, certificate or other document are
inconsistent with the meanings of such terms under generally accepted
accounting principles, the definitions contained in this Agreement or in any
such instrument, certificate or other document shall control.
(c) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; Section, Schedule and
Exhibit references contained in this Agreement are references to Sections,
Schedules and Exhibits in or to this Agreement unless otherwise specified; the
term "including" shall mean "including without limitation"; and "or" shall
include "and/or".
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(d) The definitions contained in this Agreement are applicable to
the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to
herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or
instruments) references to all attachments thereto and instruments
incorporated therein; references to a Person are also to its permitted
successors and assigns.
ARTICLE II
CONVEYANCE OF RECEIVABLES; POSSESSION OF RECEIVABLE FILES; BOOKS
AND RECORDS; DELIVERY OF DOCUMENTS
Section 2.01 Conveyance of Receivables; Possession of Receivable
Files; Maintenance of Receivable Files. (a) Effective as of the Closing Date
and subject to satisfaction of each of the conditions precedent set forth in
Section 2.04, the Seller does hereby sell, transfer, assign, set over and
convey to the Purchaser, without recourse, but subject to the terms of this
Agreement, and the Purchaser hereby purchases, all the right, title and
interest of the Seller in, to and under each of the Receivables (collectively,
the "Conveyed Assets"), including:
(i) all interest, principal, and any other amounts received by the
Seller on or with respect to each of the Receivables after the Cut-Off
Date;
(ii) the security interests in the Financed Vehicles granted by the
Obligors pursuant to the Receivables and any other interest of the Seller
in the Financed Vehicles;
(iii) all other security interests or other property interests
created by or constituting each Receivable and on any property that shall
have secured the Receivable and that shall have been acquired by or on
behalf of the Seller;
(iv) all of the Seller's rights with respect to each Receivable and
the documentation relating to the Receivables, including, without
limitation, all rights under the VSI Policy with respect to such
Receivable and the contents of each Receivable File, including, without
limitation, all of the Seller's enforcement and other rights under the
UCC and other Applicable Law;
(v) rebates of premiums on insurance policies and all other items
financed as part of the Receivables in effect as of the Cut-Off Date,
including but not limited to, service warranties; and
(vi) all Servicing Rights with respect to, and all proceeds of and
rights to enforce, any of the foregoing, including, without limitation,
any Insurance Proceeds and Liquidation Proceeds.
(b) Upon the sale of the Receivables, the ownership of each
Receivable, including the contents of the related Receivable File, and all
rights, benefits, payments, proceeds and
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obligations arising from or in connection with any of the foregoing (but
excluding all rights and obligations under any Dealer Agreement), shall be
vested in the Purchaser, and the ownership of all records and documents with
respect to the related Receivable prepared by or which come into the
possession of the Seller shall immediately vest in the Purchaser and shall be
retained and maintained, in trust, by the Seller at the will of the Purchaser
and for the benefit of the Purchaser, as the owner thereof, in a custodial
capacity only. The sale of the Receivables by the Seller to the Purchaser will
not constitute and is not intended to result in an assumption by the Purchaser
of any obligation (other than the obligations set forth herein) of the Seller
to the Dealers, the Obligors, the insurers or any other Person in connection
with the Receivables, the Receivable Files or the other Conveyed Assets or any
agreement, instrument or other document related thereto.
(c) It is the intention of the Seller and the Purchaser that the
Seller convey good title to all of the Conveyed Assets, free and clear of any
liens or encumbrances, and that such Conveyed Assets shall not be treated as
property of the Seller by the FDIC or other Governmental Authority acting as
conservator or receiver of the Seller in a conservatorship, receivership,
insolvency or other similar proceeding in respect of the Seller under the
Federal Deposit Insurance Act, 12 U.S.C. Section 1811 et seq or other
Applicable Law. Further, it is not the intent of the Seller or the Purchaser
that any such transfer and conveyance be deemed a grant by the Seller to the
Purchaser of a security interest in any of the Conveyed Assets in order to
secure a debt or other obligation of the Seller. However, in the event and to
the extent that, notwithstanding the intent of the Seller and the Purchaser,
any or all of the Conveyed Assets are held or otherwise determined to have
been property of the Seller or not to have been conveyed to the Purchaser in a
true or absolute sale, then the conveyance of the Conveyed Assets pursuant
hereto shall also be deemed to be, and hereby constitutes, a first priority
security interest which is hereby granted by the Seller to the Purchaser in
the Conveyed Assets within the meaning of Article 9 of the UCC, securing a
payment obligation incurred by the Seller in the amount paid by the Purchaser
for the Conveyed Assets plus any other amounts incurred or owed as of the
Closing Date and from time to time by the Seller to the Purchaser under this
Agreement. The Seller shall file and deliver, prior to the Closing Date,
financing statements on UCC-1 in respect of such security interest, and the
Seller hereby authorizes, on or after the Closing Date, the filing of any
financing statements or continuation statements, and amendments to financing
statements, or any similar document in any jurisdictions and with any filing
offices as the Purchaser may determine, in its sole discretion, are necessary
or advisable to perfect the security interest granted to the Purchaser herein.
Such financing statements shall contain a statement to the following effect:
"A purchase of or security interest in any collateral described in this
financing statement other than by the Purchaser will violate the rights of the
Purchaser" and may describe the Conveyed Assets in the same manner as
described herein or may contain an indication or description of collateral
that describes such property as necessary, advisable or prudent to ensure the
perfection of the security interest in the Conveyed Assets granted to the
Purchaser herein.
(d) The Seller has determined that the Seller's disposition of the
Receivables pursuant to this Agreement will be afforded sale treatment for
accounting and tax purposes and shall treat the disposition of the Receivables
pursuant to this Agreement in such manner. The sale of each Receivable shall
be reflected on the Seller's balance sheet and other financial statements and
income tax returns as a sale of assets by the Seller and the Purchaser shall
treat the disposition of the Receivables hereunder as a sale for accounting
and tax purposes.
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Section 2.02 Custody of the Receivables Files, Duties of Servicer as
Custodian.
(a) To assure uniform quality in servicing the Receivables and to
reduce administrative costs, at the time of the sale of the Receivables to the
Purchaser, the Purchaser appoints the Servicer, and the Servicer accepts such
appointment, to act for the benefit of the Purchaser as custodian of the
Receivable Files. To the extent that original documents are not required for
purposes of realization of Liquidation Proceeds or Insurance Proceeds, as
certified in an Officer's Certificate to the Purchaser, documents maintained
by the Servicer may be in the form of microfilm or microfiche or such other
reliable means of recreating original documents, including but not limited to,
optical imagery techniques so long as the Servicer complies with the
requirements of all Applicable Laws.
(b) Each Receivable File shall be maintained by the Servicer at one
of the locations specified in Exhibit C attached hereto or such other location
in the United States as specified by the Servicer by written notice to
Purchaser not later than ninety (90) days prior to any change in location. The
Servicer shall also make available to the Purchaser or its designee a current
list of the locations of the Receivable Files upon written request. The
Servicer shall maintain with respect to the Receivables and shall make
available for inspection by any Purchaser or its designee the related
Receivable Files without charge during normal business hours at the offices of
the Servicer and shall permit any Purchaser or its designee to make copies of
and obtain abstracts from the Receivable Files, in each case during the time
the Purchaser retains ownership of a Receivable and thereafter in accordance
with Applicable Law.
(c) As custodian on behalf of the Purchaser, 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 motor vehicle receivables that the Servicer services for itself or
others. The Servicer shall conduct, or cause to be conducted, periodic
internal 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 Purchaser to verify the accuracy of the Servicer's record keeping.
The Servicer shall promptly report to the Purchaser any failure on its part to
hold the Receivable Files and maintain its accounts, records and computer
systems as herein provided and shall promptly take appropriate action to
remedy any such failure. Nothing herein shall be deemed to require an initial
review or any periodic review by the Purchaser of the Receivable Files.
(d) The Servicer shall maintain its computer systems, in accordance
with its customary standards, policies and procedures, so that, from and after
the time of conveyance hereunder of the Receivables to the Purchaser, the
Servicer's master computer records (including any back-up archives) that refer
to a Receivable shall indicate clearly the interest of the Purchaser in such
Receivable and that such Receivable is owned by the Purchaser through a unique
identification code that is reflected on the records of the Servicer as being
owned by the Purchaser. Indication of the Purchaser'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
within $25 thereof), transferred to a successor or assign of Purchaser (in
which case the Servicer shall cause its records to indicate the interest and
ownership of such successor or assign), or repurchased by the Seller or
purchased by the Servicer in accordance with the terms of this Agreement.
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(e) In the event the Receivable Files held by the Servicer are
destroyed due to fire or other casualty, the Servicer will bear the
responsibility for (i) having new titles issued for each Financed Vehicle and
providing printed copies of the destroyed title from the Servicer's imaging
system which shall remain in the Receivable File until such new titles are
received, (ii) replacing each Receivable (by printing a copy thereof held on
the Servicer's imaging system), and (iii) creating a Lost Note Affidavit to
accompany each replaced Receivable, certifying that the original Receivable
was destroyed; provided, however, that in the event any additional document is
needed in order to service the Receivable, the Servicer shall print a copy
thereof from its imaging system. All costs incurred in connection with this
clause (e) shall be paid by the Servicer and the Servicer shall indemnify the
Purchaser for any losses suffered by the Purchaser as a result of the loss or
destruction of the original Receivable Files.
(f) Upon written instruction from the Purchaser, the Servicer shall
release any Receivable File to the Purchaser at such place or places as the
Purchaser may designate, as soon as practicable (but in no event more than
five (5) days after the date of such instruction) and the Purchaser shall
reimburse the Servicer for its reasonable out-of-pocket expenses incurred in
connection with any such delivery. Upon the release and delivery of any such
document in accordance with the instructions of the Purchaser, the Servicer
shall be released from any further liability and responsibility with respect
to such documents and any other provision of this Agreement if the fulfillment
of the Servicer's responsibilities is dependent upon possession of such
documents, unless and until such time as such documents shall be returned to
the Servicer. In no event shall the Servicer be responsible for any loss
occasioned by the Purchaser's failure to return any Receivable File or any
portion thereof in a timely manner.
Section 2.03 Receivable Schedule. The Seller has provided the
Purchaser with the Receivable Schedule setting forth the information set forth
in Exhibit B with respect to each Receivable set forth on Exhibit A.
Section 2.04 Closing. The closing for the purchase and sale of the
Receivables shall take place at 10:00 a.m. (Eastern Time) on the Closing Date
at the offices of Sidley Xxxxxx Xxxxx & Xxxx LLP located at 000 Xxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place and/or time as the
Purchaser and the Seller may reasonably agree.
(a) The closing shall be subject to each of the following
conditions:
(i) all of the representations and warranties of the Seller and the
Purchaser under this Agreement shall be true and correct as of the
Closing Date and neither an Event of Default nor an event which, with
notice or the passage of time, would constitute an Event of Default under
this Agreement shall have occurred;
(ii) the Purchaser shall have received, or the Purchaser's attorneys
shall have received in escrow, all Closing Documents as specified in
Section 2.05, in such forms as are agreed upon and acceptable to the
Purchaser, duly executed by all signatories other than the Purchaser as
required pursuant to the respective terms thereof;
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(iii) the results of the Purchaser's due diligence review, if any,
to ensure conformity to the terms hereof shall have been satisfactory, in
the sole determination of the Purchaser;
(iv) the Seller, at its own expense, on or prior to the Closing
Date, shall have indicated in its computer files in accordance with its
customary standards, policies and procedures, that the Receivables have
been conveyed to the Purchaser pursuant to this Agreement;
(v) the aggregate Principal Balance of the Receivables as of the
Cut-Off Date is not below 95% or in excess of 105% of the Required Pool
Balance; and
(vi) all other terms and conditions of this Agreement shall have
been complied with except to the extent waived in writing by the
Purchaser.
(b) Subject to the conditions set forth in Section 2.04(a), the
Purchaser shall pay to the Seller on the Closing Date the Purchase Price by
wire transfer of immediately available funds to the account designated by the
Seller.
Section 2.05 Closing Documents. With respect to the Receivables, the
Closing Documents shall consist of the following documents:
(a) fully executed originals of this Agreement, dated as of the
Cut-Off Date;
(b) fully executed originals of the Assignment, dated as of the
Cut-Off Date, in the form attached as Exhibit D to this Agreement;
(c) the Receivable Schedule;
(d) copies of the UCC-1 financing statements filed pursuant to
Section 2.06;
(e) copies of the UCC-3 financing statements filed pursuant to
Section 2.07(e) and executed copies of the release letters specified in
Sections 2.07(e) and 2.07(f);
(f) an Officer's Certificate of the Seller substantially in the form
of Exhibit E attached hereto, including as an exhibit thereto, resolutions of
the board of directors of the Seller approving this Agreement and the
transactions contemplated hereunder;
(g) Opinions of Counsel of the Seller, in the form of Exhibit I-1
through I-4 hereto; and
(h) such other documents or opinions of the Seller as the Purchaser
may request.
Section 2.06 UCC-1 Financing Statements. On or prior to the Closing
Date, the Seller shall record and file, at its own expense, a UCC-1 financing
statement in each jurisdiction required by Applicable Law, naming the Seller,
as seller or debtor, and naming the Purchaser, as purchaser or secured party,
and containing a collateral description covering the Conveyed Assets or such
other description as approved by the Purchaser, meeting the requirements of
the laws of
15
each such jurisdiction and in such manner as is necessary to perfect the
transfer, assignment and conveyance of the Receivables to the Purchaser
pursuant to this Agreement. The Seller shall deliver a file-stamped copy of
each of such UCC-1 financing statements as soon as available following such
filing.
Section 2.07 Protection of Right, Title and Interest. The Seller
covenants and agrees with the Purchaser as follows:
(a) In addition to the UCC-1 financing statements to be filed by the
Seller on or prior to the Closing Date pursuant to Section 2.06, the Seller
shall file such additional financing statements and cause to be filed such
continuation statements, all in such manner and in such places as may be
required by Applicable Law fully to preserve, maintain, and protect the first
priority perfected security interest of the Purchaser in the Receivables and
in the proceeds thereof. The Seller shall deliver (or cause to be delivered)
to the Purchaser file-stamped copies of, or filing receipts for, any document
filed as provided in this clause (a), as soon as available following such
filing.
(b) The Seller shall not 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
Section 2.06 or clause (a) above seriously misleading within the meaning of
Section 9-506(b) of the UCC, unless the Seller shall have given the Purchaser
at least five (5) days' prior written notice thereof and shall have promptly
filed appropriate amendments to all previously filed financing statements or
continuation statements. The Seller hereby gives the Purchaser the authority
to file any continuation statements or amendments to financing statements, or
any similar document in any jurisdictions and with any filing offices as the
Purchaser may determine, in its sole discretion, are necessary or advisable to
continue or amend the security interest granted to the Purchaser herein.
(c) The Seller shall give the Purchaser at least ninety (90) days'
prior written notice of (i) any relocation of its registered location or (ii)
any change in its jurisdiction of organization, including the jurisdiction in
which the Seller maintains its main office under its national banking
association charter.
(d) If at any time the Seller shall propose to sell, grant a
security interest in, or otherwise transfer any interest in motor vehicle loan
and installment sale contracts to any prospective purchaser, lender, or other
transferee, the Seller 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 that such Receivable has been
conveyed to and is owned by the Purchaser.
(e) Prior to the Closing Date, with respect to (i) the UCC-1
financing statement naming HNB 2000-B (NQ) LLC as secured party (file number
APO258823) and (ii) the UCC-1 financing statement naming HNB 2000-B (Q) LLC as
secured party (file number APO258822), the Seller shall obtain from the
secured party, or its agent, a letter authorizing the filing of one or more
Form UCC-3 Financing Statements for the purpose of releasing the interest
collateral
16
described in such financing statements, to the extent such collateral is
comprised of the Receivables and (B) the Seller shall have filed such UCC-3
Financing Statements.
(f) The Seller shall obtain from the Federal Reserve Bank of
Cleveland, a release of any and all of its interest in the Receivables.
(g) Except as provided herein, the Seller will not sell, pledge,
assign or transfer any Conveyed Asset to any Person, or grant, create, incur,
assume or suffer to exist any Lien on any interest therein, and the Seller
shall defend the right, title, and interest of the Purchaser in, to and under
such Conveyed Assets against all claims of third parties claiming through or
under the Seller.
(h) The Seller agrees to pay all costs and disbursements in
connection with the perfection, as against all third parties, of the
Purchaser's right, title and interest in and to the Receivables.
(i) Immediately following the consummation of the transactions
contemplated under this Agreement, the Purchaser, or its designee, shall have
a right to access the location of the Receivable Files set forth on Exhibit C
hereto for the purpose of (x) stamping each Receivable File to reflect the
purchase of such contract by the Purchaser and its permitted assigns and (y)
for the purpose of reviewing the Receivable Files to determine the
completeness of the Receivables File. The Purchaser shall complete the process
of stamping and reviewing the Receivable Files as soon as reasonably
practicable and shall pay the expenses associated with such activities. The
Servicer shall take no action to remove, alter or obliterate the stamp placed
on the contract to show the ownership of the Receivable by the Purchaser
unless such Receivable has been released pursuant to the terms of the this
Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES REMEDIES AND BREACH
Section 3.01 Bank Representations and Warranties. (a) The Bank makes
the following representations and warranties to the Purchaser as of the date
of this Agreement and the Closing Date, on which the Purchaser relies in
entering into this Agreement and accepting the Receivables:
(i) Due Organization and Qualification. The Bank (A) is duly
organized and validly existing as a national banking association under
the laws of the United States of America, (B) is in good standing under
such laws and (C) is duly qualified to transact business and is in good
standing in each jurisdiction in the United States of America in which
the conduct of its business or the ownership of its property requires
such qualification. The Bank is an insured depository institution under
the provisions of the Federal Deposit Insurance Act, 12 U.S.C. Sections
1811-1831 and the Bank's status as an insured depository institution has
not been terminated under the provisions of Section 8 of the Federal
Deposit Insurance Act, 12 U.S.C. Section 1818.
(ii) Power and Authority; Due Authorization; Enforceability. The
Bank has full power and authority to convey and assign the Receivables
and to perform its
17
obligations under this Agreement and has duly authorized such sale and
assignment to the Purchaser and the performance of its obligations under
this Agreement by all necessary action. The Agreement has been duly
authorized, executed and delivered by the Bank and constitutes the legal,
valid, binding and enforceable obligation of the Bank except as the same
may be limited by insolvency, bankruptcy, reorganization or other laws
relating to or affecting the enforcement of creditors' rights or by
general equity principles.
(iii) No Violation. The Bank is not in default under any indenture,
mortgage, deed of trust, loan agreement, guarantee, lease financing
agreement or similar agreement or instrument to which the Bank is a
party, as borrower or guarantor, and the consummation of the transactions
contemplated by this Agreement, and the fulfillment of the terms hereof,
will not conflict with or result in a breach of any of the terms or
provisions of, or constitute (with or without notice or lapse of time or
both) a default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any of the property or assets of the
Bank pursuant to the terms of, any such indenture, mortgage, deed of
trust, loan agreement, guarantee, lease financing agreement or similar
agreement or instrument, in each case where such a default, conflict or
breach would materially and adversely affect the performance by the Bank
of its obligations under this Agreement and the consummation of the
transactions contemplated by this Agreement; and the fulfillment of the
terms hereof will not result in any violation of the provisions of the
organizational documents of the Bank.
(iv) No Proceedings. No legal or governmental proceedings are
pending to which the Bank is a party or of which any property of the Bank
is the subject, and no such proceedings are threatened or contemplated by
Governmental Authorities or threatened by others, other than such
proceedings which will not have a material adverse effect upon the
general affairs, financial position, net worth or operations of the Bank
and its subsidiaries considered as a whole and will not materially and
adversely affect the performance by the Bank of its obligations under, or
the validity and enforceability of, this Agreement.
(v) Ordinary Course of Business. The consummation of the
transactions contemplated by this Agreement are in the ordinary course of
business of the Seller, and the transfer, assignment and conveyance of
the Receivables by the Bank pursuant to this Agreement are not subject to
the bulk transfer or any similar statutory provisions in effect in any
applicable jurisdiction.
(vi) Licenses and Approvals. The Bank has obtained all the licenses
and approvals necessary for the conduct of Bank's business in the
jurisdictions where the failure to do so would materially and adversely
affect its performance of its obligations under this Agreement or render
any of the Receivables unenforceable.
(vii) Ability to Perform. The Bank has the facilities, procedures
and experienced personnel necessary for the servicing of retail motor
vehicle loan and installment sale contracts of the same type as the
Receivables in accordance with the Servicing Standard. The Bank does not
believe, nor does it have any reason or cause to
18
believe, that it cannot perform each and every one of its obligations
under this Agreement.
(viii)No Consent Required. The Bank is not required to obtain the
consent of any other Person, or any consent, license, approval or
authorization or registration or declaration with, any Governmental
Authority in connection with the execution, delivery or performance of
this Agreement, including, without limitation, the sale of the
Receivables by the Bank pursuant to this Agreement, except for such as
have been obtained, effected or made or will be obtained on or prior to
the Closing Date.
(ix) No Litigation Pending. There is no action, suit, proceeding or
investigation pending or, to the Bank's knowledge, threatened against the
Bank or any of its Affiliates which, if determined adversely against the
Bank, would materially adversely affect the sale of any of the
Receivables to the Purchaser, or the execution, delivery or
enforceablility of this Agreement, or draw into question the validity of
this Agreement or any of the Receivables or have a material adverse
effect on the financial condition of the Bank or the Bank's ability to
perform its obligations under the terms of this Agreement.
(x) No Untrue Information. Neither this Agreement nor any statement,
report or other document furnished or to be furnished in writing pursuant
to this Agreement or in connection with the transactions contemplated
hereby contains or will contain any untrue statement of a material fact
or omits or will omit to state any material fact necessary to make such
statement, document or report not misleading.
(xi) Solvency. Immediately prior to and after the transfer of the
Receivables by the Bank to the Purchaser, the Bank was solvent, had
reasonably adequate capital to carry on its business and the Bank will
not be made insolvent by the transfer of the Receivables. The Bank is
not, and, with the passage of time, does not expect to become, insolvent
or bankrupt, and no liquidation of the Bank is contemplated.
(xii) No Fraudulent Conveyance. The transfer of the Receivables by
the Bank to the Purchaser has a legitimate business purpose and was not
designed to hinder, delay or defraud creditors of the Bank or impair any
of their rights or interests. The Bank received reasonably equivalent
value and fair consideration for its transfer to the Purchaser of the
Receivables.
(xiii)Ordinary Banking Transaction. The transfer of the Receivables
by the Bank to the Purchaser pursuant to this Agreement has been approved
by the board of directors of the Bank, which approval is reflected in the
records of such board. The Bank shall maintain a record of this Agreement
in its official records for purposes of Sections 11(d)(9), 11(n)(4)(I)
and Section 13(e) of the Federal Deposit Insurance Act, as amended.
(xiv) Location. The location of the Bank is the State of Ohio within
the meaning of Section 9-307 of the UCC.
(xv) Non-Solicitation. Neither the Bank nor anyone acting on its
behalf has offered, transferred, pledged, sold or otherwise disposed of
any Receivables, any interest in any Receivables to, or solicited any
offer to buy or accept a transfer, pledge or other
19
disposition of any Receivables, any interest in any Receivables from, or
otherwise approached or negotiated with respect to any Receivables, any
interest in any Receivables with, any Person in any manner, or made any
general solicitation by means of general advertising or in any other
manner, or taken any other action which would constitute a distribution
of the Receivables under the Securities Act or which would render the
disposition of any Receivables a violation of Section 5 of the Securities
Act or require registration pursuant thereto, nor will it act, nor has it
authorized or will it authorize any Person to act, in such manner with
respect to the Receivables.
(xvi) No Broker. The Bank has not dealt with any broker or agent or
anyone else who might be entitled to a fee or commission in connection
with the transactions contemplated by this Agreement other than the
Purchaser.
(b) The Seller makes the following representations and warranties as
to each Receivable (or, as to (xlii), (xlviii), (li), (lii), (lv) and (lix)
the Receivables taken as a whole, to the extent such clauses refer to the
Receivables as a whole) on which the Purchaser relies in accepting the
Receivables. The following representations and warranties are made by the
Seller as of the Closing Date or such other date specified below and survive
the transfer, assignment and conveyance of the Receivables to the Purchaser
and any subsequent assignment and transfer in connection with a Pass-Through
Transfer or Whole Loan Transfer:
(i) Schedule of Receivables. As of the Cut-Off Date, the information
set forth in the Receivable Schedule is true and correct and was
consistent in all respects with the underlying computer file and includes
each item of information on the Receivables described in Exhibit B.
(ii) Title. Immediately prior to the Closing Date: (A) such
Receivable had not been sold, assigned, or pledged by the Seller to any
Person; (B) the Seller had good and marketable title to such Receivable
free and clear of all Liens; and (C) the Seller was the sole owner of
such Receivable and had full right to sell the Receivable to the
Purchaser and upon the sale thereof to the Purchaser, the Purchaser will
have good and marketable title thereto and will own such Receivables free
and clear of any Liens or rights of others. Upon consummation of the
transactions contemplated hereby, the Purchaser has a valid and perfected
first priority security interest in such Receivable and all proceeds
thereof, free and clear of all Liens and rights of others.
(iii) Security Interest in Financed Vehicle. Immediately prior to
the Closing Date, the Seller had a valid and enforceable first priority
security interest (as defined in the applicable UCC) in the related
Financed Vehicle (except to the extent that prior to the Closing Date,
such Receivable shall have been repaid in full (or within $25 thereof)
and the related security interest released) and such interest has been
duly perfected and is prior to all other Liens and is enforceable as such
as against all other creditors of and purchasers from the Obligor
(except, as to priority, for any lien for unpaid taxes or any liens that,
by statute, may be granted priority over previously perfected security
interests) and the Seller has the full right to assign such security
interest to the Purchaser.
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(iv) Assignment of Security Interest in Financed Vehicle. On and
after the Closing Date, there shall exist, in favor of the Purchaser, a
valid, subsisting, and enforceable first priority perfected security
interest in the related Financed Vehicle (except (i) to the extent that
prior to the Closing Date, such Receivable shall have been repaid in full
(or within $25 thereof) and the related security interest released or
(ii) to the extent that any court of competent jurisdiction modifies or
releases any security interest pursuant to rights granted to the Obligor
under the Soldiers' and Sailors' Civil Relief Act of 1940 or any similar
law providing such relief to military personnel).
(v) Perfection of Security Interest in Financed Vehicle. If such
Receivable was originated in a state in which notation of a security
interest on the certificate of title is required or permitted to perfect
the security interest in the related Financed Vehicle, the certificate of
title for such Financed Vehicle shows the Seller as the sole holder of a
security interest in such Financed Vehicle. If such Receivable was
originated in a state in which the filing of a financing statement under
the UCC is required to perfect a security interest in the related
Financed Vehicle, such filings have been duly made and show the Seller as
the sole holder of a first priority security interest in such Financed
Vehicle, and in either case the Purchaser following purchase of the
Receivable has the same rights as the Seller has or would have (if the
Seller were still the owner of a Receivable) against the Obligor and all
creditors of the Obligor claiming an interest in such Financed Vehicle.
(vi) All Filings Made. All filings, including, without limitation,
UCC filings, required to be made by any Person and actions required to be
taken or performed by any Person in any jurisdiction to give the
Purchaser a first priority perfected lien on, or ownership interest in,
such Receivable and the proceeds thereof have been made, taken or
performed.
(vii) Receivable Files. The Seller is in possession of a complete
set of the contents of the related Receivable File described in items (i)
through (iv) of the definition of "Receivable File".
(viii)Sale of Receivable. Such Receivable has not been sold,
transferred, assigned, pledged or otherwise conveyed by the Seller to any
Person other than the Purchaser and the Seller acquired title to such
Receivable in good faith, without notice of any adverse claim.
(ix) Lawful Assignment. Such Receivable was not originated in, and
is not subject to the laws of, any jurisdiction the laws of which would
make unlawful, void or voidable any sale, transfer and assignment of such
Receivable by the Seller under or as contemplated by this Agreement,
including any repurchase in accordance with this Agreement. The Seller
has not entered into any agreement with the Obligor on such Receivable
that prohibits, restricts or conditions the assignment of all or part of
such Receivable.
(x) Location of Receivable Files. The Receivable File with respect
to such Receivable is kept at one or more of the locations listed in
Exhibit C hereto.
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(xi) Marking of Servicer Computer Files. As of the Closing Date, the
Servicer, has clearly and unambiguously marked its computer files and any
other applicable electronic records to indicate that such Receivable has
a unique identification code that is reflected on the records of the
Servicer as being owned by the Purchaser.
(xii) No Notices. No notices of, or consent with respect to, the
sale of the Receivable are required to be made to, or received from, the
Obligor on such Receivable under any Applicable Law or under any document
or instrument in the related Receivable File.
(xiii)No Liens. As of the Closing Date, there is no lien against the
related Financed Vehicle for delinquent taxes. To the best of the
Seller's knowledge, no liens or claims have been filed for work, labor,
or materials relating to the related Financed Vehicle that are liens
prior to, or equal with, the security interest in the Financed Vehicle
granted by such Receivable.
(xiv) Compliance with Law. (A) The origination and acquisition of
such Receivable, and the sale of the Financed Vehicle securing such
Receivable, where applicable, complied, at the time it was made, in all
respects with Applicable Law and the servicing of such Receivable
complies in all respects with Applicable Law and (B) the sale of such
Receivable by the Seller to the Purchaser and the agreement of the Seller
to pay to the Purchaser GAP Amounts as required hereunder complies in all
respects with Applicable Law.
(xv) Doing Business. The Seller is, and each Person that has had any
interest in such Receivable prior to the Closing Date, whether as a
Dealer or otherwise, are (or, during the period in which any Dealer acted
as Dealer or held and disposed of such interest were) (A) in compliance
with any and all applicable licensing requirements of the Applicable Laws
of the state where the Receivable was originated and with any other
Applicable Laws, or (B) is otherwise exempt, except in each instance to
the extent that the failure to comply with such licensing requirements
would have no effect on the ability of the Purchaser to enforce the
Receivable or the ability of the Servicer to discharge its obligations
under this Agreement.
(xvi) Original Copies. There is only one original executed copy of
each Receivable and such original and the related certificate of title,
does not have any marks or notations indicating that it has been pledged,
assigned or otherwise conveyed to any Person other than the Seller
(except as to notations required under the terms of this Agreement).
(xvii)Form of Contract. The contract evidencing such Receivable is
substantially similar to one of the Seller's standard form retail motor
vehicle loan contracts or retail motor vehicle installment sale contracts
attached hereto as Exhibit F (and each Receivable originated in
Pennsylvania is evidenced by a retail motor vehicle loan contract),
except for immaterial modifications or deviations therefrom in accordance
with Applicable Law which will not have a material adverse effect on the
Purchaser and
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will not reduce the scheduled payments thereunder or other payments due
under such Receivable.
(xviii) Dealer. Such Receivable was originated by a Dealer located
in the United States of America to finance the retail sale of a Financed
Vehicle in the ordinary course of such Dealer's business, has been fully
and properly executed by each of the parties thereto whose signature is
required, and such Receivable either was originated by a Dealer and made
directly by Seller or was acquired by the Seller from the Dealer in the
ordinary course of business and validly assigned to the Seller directly
by the Dealer pursuant to a Dealer Agreement.
(xix) Underwriting and Documentation Standards. Such Receivable was
originated by the related Dealer in accordance with the Seller's
underwriting and documentation standards as in effect at the time such
Receivable was originated and the Seller has delivered to the Purchaser
true and complete copies of all underwriting standards under which any of
the Receivables were originated.
(xx) No Fraud. No material error, omission, misrepresentation,
negligence or fraud in respect of such Receivable has taken place on the
part of any Person (including any Dealer) in connection with the
origination, acquisition, servicing or sale of such Receivable.
(xxi) Compliance with Terms. The Seller has duly fulfilled all
obligations to be fulfilled on the Seller's part under or in connection
with the origination, acquisition and disposition of such Receivable,
including, without limitation, giving any notices or consents necessary
to effect the acquisition of such Receivable by the Purchaser, and has
done nothing to convey any right to any Person that would result in such
Person having a right to payments due under a Receivable to impair the
rights of the Purchaser in such Receivable or payments with respect
thereto.
(xxii)Servicing and Collection Practices. Prior to the Closing Date,
the servicing and collection practices used with respect to such
Receivable have been consistent with the Seller's servicing and
collection policies and procedures as in effect since the date of the
origination of such Receivable.
(xxiii) No Seller Defaults. There are no material breaches or
defaults by the Seller in complying with the terms of such Receivable.
(xxiv)No Defenses. No Receivable is subject to any right of
rescission, set-off, counterclaim or defense, including defenses arising
out of violations of usury laws, the Truth in Lending Act or any other
Applicable Law, and no such right or defense has been asserted or
threatened with respect to the unpaid principal or interest due under
such Receivable, nor will the operation of any of the terms of such
Receivable, or the exercise of any right under any of the foregoing,
render such Receivable unenforceable, in whole or in part, or subject
such Receivable to any right of rescission, set-off, counterclaim or
defense, including the defense of usury or any defense under or arising
as a result of a claim under or involving the Truth in Lending Act or any
other Applicable Law and no
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such right of rescission, set-off, counterclaim or defense has been
asserted with respect thereto.
(xxv) Full Disbursement of Proceeds. As of the Closing Date, the
proceeds of each Receivable were fully disbursed, and there is no
requirement for future advances thereunder, and all fees and expenses in
connection with the origination of such Receivable have been paid.
(xxvi)Enforceability. Such Receivable contains customary and
enforceable provisions such as to render the rights and remedies of the
holder thereof adequate for the realization against the related Financed
Vehicle of the benefits of the security.
(xxvii) Original Terms Unmodified. The terms of such Receivable have
not been impaired, waived, altered or modified in any respect (except as
permitted by the Servicing Standard).
(xxviii) Entire Agreement. Such Receivable constitutes the entire
agreement between the Seller and the related Obligor.
(xxix)Binding Obligation. Such Receivable represents the genuine,
legal, valid, and binding payment obligation of the related Obligor,
enforceable by the holder thereof in accordance with its terms subject to
the effect of bankruptcy, insolvency, reorganization, or other similar
laws affecting the enforcement of creditors' rights generally, including
the Soldiers' and Sailors' Civil Relief Act of 1940 or similar laws.
(xxx) Receivable in Force. Such Receivable has not been satisfied,
canceled, subordinated or rescinded, in whole or in part, and the related
Financed Vehicle has not been released from the lien of the Receivable,
in whole or in part, nor has any instrument been executed that would
effect any such release, cancellation, subordination or rescission
(except for such Receivables that have been repaid in full (or within $25
thereof) prior to the Closing Date).
(xxxi)Payments; No Obligor Defaults. As of the Cut-Off Date, (A)(x)
except for payment defaults continuing for a period of less than thirty
(30) days, all payments required to be made have been made and credited
and (y) no payment under such Receivable has been more than ninety (90)
days delinquent and (B) (i) there is no default, breach, violation or
event of acceleration existing under such Receivable and no event which,
with the passage of time or with notice or with both, would constitute a
default, breach, violation or event of acceleration under such
Receivable, (ii) the Seller has not waived any such default, breach or
violation or event of acceleration other than waivers made in the
ordinary course of business in accordance with the Seller's policies and
procedures for the servicing and collection of such loans, (iii) neither
the Seller nor the related Obligor has suspended or reduced any payments
or obligations due or to become due thereunder by reason of a default by
the other party to such Receivable, (iv) there are no proceedings
pending, or to the best of the Seller's knowledge, threatened, asserting
insolvency of the related Obligor and (v) there are no proceedings
pending, or to the best
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of the Seller's knowledge, threatened, wherein the related Obligor or any
governmental agency has alleged that such Receivable is illegal or
unenforceable.
(xxxii) Monthly Payments. Such Receivable provides for level monthly
payments that fully amortize the amount financed by maturity and yield
interest at the Contract Rate; provided, that the payment in the first
monthly period and the last monthly period of such Receivable may be
different but in no event more than twice the amount of the level
payment.
(xxxiii) Prepayment. Such Receivable provides for, in the event that
such Receivable is prepaid, an amount due on prepayment that fully pays
the Principal Balance of such Receivable and includes any accrued and
unpaid interest due on the date of prepayment at the applicable Contract
Rate pursuant to the related contract.
(xxxiv) Insurance Coverage. The Obligor with respect to each
Receivable is required pursuant to the terms of the related Receivable to
obtain insurance covering the Financed Vehicle insuring against loss and
damage due to fire, theft, collision and other risks generally covered by
comprehensive and collision insurance coverage and each Financed Vehicle
is covered by the VSI Policy.
(xxxv)No Adverse Selection. No selection procedures believed to be
adverse to the Purchaser have been utilized in selecting such Receivables
from those motor vehicle loan and installment sale contracts which meet
the criteria contained in this Agreement.
(xxxvi) Chattel Paper. Such Receivable constitutes "tangible chattel
paper" as defined in the UCC.
(xxxvii) Origination. Such Receivable (A) was originated in the
United States of America and (B) is payable in U.S. dollars.
(xxxviii) Soldiers' and Sailors'. The Receivable Schedule reflects
any relief allowed to any Obligor on such Receivable under the Soldiers'
and Sailors' Civil Relief Act of 1940 as of the Cut-Off Date.
(xxxix) No Government Obligor. The Obligor under such Receivable is
not, and such Receivable is not due in whole or in part from, the United
States of America or any State, political subdivision thereof, or from
any agency, department or instrumentality of the United States of America
or any State or political subdivision thereof.
(xl) Obligor Social Security Number. Such Receivable has a social
security number for the Obligor under such Receivable and such social
security number is a non-business social security number.
(xli) Obligor FICO Score. The Obligor under such Receivable had a
FICO score as of the origination date of such Receivable of at least 600.
(xlii)Geographic. No Receivable was originated in Maryland and no
Obligor under a Receivable has a current billing address in Maine. As of
the Cut-Off Date
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29.87%, 13.49%, 13.08%, 12.21%, 9.35%, 7.15% and 5.73% of the Receivables
(based on principal balance and the Obligor's current mailing address in
the Servicer's records as of the Cut-Off Date) were located in Ohio,
Michigan, Florida, Indiana, Kentucky, West Virginia and Tennessee,
respectively, and no other state had a concentration of Receivables
greater than or equal to 5.0% of the aggregate Principal Balance of the
Receivables as of the Cut-Off Date.
(xliii) No Bankruptcy. As of the Cut-Off Date, the Seller has not
received notice that the Obligor under such Receivable has filed for
bankruptcy, and to the best of the Seller's knowledge, as of the Cut-Off
Date, the Obligor under such Receivable is not in bankruptcy or similar
proceedings.
(xliv)No Extensions. The number or timing of scheduled payments on
such Receivable has not been changed on or before the Cut-Off Date,
except as reflected on the Receivables Schedule, and any such change was
consistent with the Servicer's collection and servicing policies as in
effect prior to the date of this Agreement.
(xlv) Application of Funds. The scheduled payments on such
Receivable are applicable only to payment of principal of and interest on
such Receivable and not to the payment of any insurance premiums
(although the proceeds of the extension of credit on such Receivable may
have been used to pay insurance premiums).
(xlvi)No Substitution. The Obligor under such Receivable does not
have the unilateral right to substitute, exchange or add any Financed
Vehicle under such Receivable.
(xlvii) Receivable Not Assumable. Such Receivable is not assumable
by another Person in a manner that would release the related Obligor from
such Obligor's obligations to the Seller with respect to such Receivable.
(xlviii) Principal Balance. As of the Cut-Off Date, (A) such
Receivable has a remaining Principal Balance of not more than $137,117.00
and not less than $1,059.00 and (B) the aggregate Principal Balance of
all Receivables was $553,727,701.64.
(xlix)Simple Interest Receivables. Such Receivable is a Simple
Interest Receivable.
(l) Date of Origination. Such Receivable has an origination date on
or after May 18, 2001.
(li) Original Maturity of Receivable. Such Receivable has an
original term to scheduled maturity of not less than 24 months and not
greater than 84 months. The percentage of Receivables by Principal
Balance with original terms greater than 72 months is 8.79%.
(lii) Remaining Maturity of Receivable. Such Receivable has a
remaining maturity of not less than 15 months and not greater than 81
months. The percentage of Receivables by Principal Balance with remaining
terms greater than 72 months is 2.06%.
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(liii)Contract Rate. As of the Cut-Off Date, such Receivable has a
Contract Rate that is a fixed rate of interest fixed for the term of the
Receivable that is not less than 3.000% and not greater than 19.700%.
(liv) First Scheduled Payment. Each Receivable has a first scheduled
due date on or after to June 18, 2001 and has had its first scheduled
payment made. With respect to each Receivable, a payment book, which
directs the Obligor to make all scheduled payments to the Seller has been
sent to the related Obligor (or to one of them if there is more than one
Obligor). To the best knowledge of the Seller, each Obligor has paid the
entire down payment called for by the contract.
(lv) Certain Additional Characteristics of Financed Vehicles. (A)
Approximately 52.80% of the aggregate Principal Balance of the
Receivables as of the Cut-Off Date represents Receivables that finance
new automobiles and light trucks and 47.20% of the aggregate Principal
Balance of the Receivables as of the Cut-Off Date represents Receivables
that finance used automobiles and light trucks; (B) approximately 43.05%
of the Financed Vehicles are new automobiles and light trucks and 56.95%
of the Financed Vehicles are used automobiles and light trucks; (C) no
Receivable finances more than one Financed Vehicle; and (D) approximately
22.18% of the Receivables are Receivables with respect to which the
Obligor has obtained GAP coverage in accordance with the related
contract.
(lvi) Transfer Taxes. The sale, transfer, assignment and conveyance
of such Receivable by the Seller pursuant to this Agreement is not
subject to and will not result in any tax, fee or governmental charge
payable by the Seller or the Purchaser to any federal, state or local
government ("Transfer Taxes") other than Transfer Taxes which have been
paid by Seller or will be paid by the Seller as and when due. In the
event the Purchaser receives actual notice of any Transfer Taxes arising
out of the transfer, assignment and conveyance of the Receivables, on
written demand by the Purchaser, or upon the Seller's otherwise being
given notice thereof by the Purchaser, the Seller shall pay, and
otherwise indemnify and hold the Purchaser harmless, on an after-tax
basis, from and against any and all such Transfer Taxes (it being
understood that the Purchaser shall have no obligation to pay such
Transfer Taxes).
(lvii)No Fleet Sales. None of the Receivables have been included in
a "fleet" sale (i.e., a sale to any single Obligor of more than seven
Financed Vehicles).
(lviii) No Foreign Obligor. All of the Receivables are due from
Obligors who are citizens, or legal resident aliens, of the United States
of America.
(lix) Seasoning. As of the Cut-Off Date, the weighted average number
of months since the initial installment due date for the Receivables is
at least 10 months.
(lx) No Advances. No advances have been made to Obligors by, or on
behalf of, the Seller in order to meet any representation or warranty
herein set forth.
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(lxi) No Consumer Leases. No Receivable constitutes a "consumer
lease" under either (a) the UCC as in effect in the jurisdiction whose
law governs the Receivable or (b) the Consumer Leasing Act, 15 U.S.C.
1667.
Section 3.02 Repurchase. It is understood and agreed that the
representations and warranties set forth in Section 3.01 shall survive the
sale of the Receivables to the Purchaser and shall inure to the benefit of the
Purchaser, notwithstanding any restrictive or qualified endorsement on any
Receivable or other document or instrument in the Receivable Files or the
examination or failure to examine any Receivable File. Upon discovery by the
Seller or the Purchaser of a breach of any of the representations and
warranties set forth in Section 3.01, the Party discovering such breach shall
give prompt written notice to the other.
(a) Within sixty (60) days of the earlier of either discovery by, or
notice to, the Seller of any breach of a representation or warranty with
respect to a Receivable, (i) the Seller shall use its best efforts promptly to
cure such breach in all material respects and (ii) if such breach cannot be
cured, the Seller shall, at the Purchaser's option, repurchase such Receivable
at the Receivable Repurchase Price. If such breach of a representation or
warranty is curable and the Seller shall have timely commenced such cure or
remedy but notwithstanding its due and diligent efforts, the remedy or cure
shall not be capable of cure within such sixty (60) day period, the Seller
shall, upon receipt of written consent by the Purchaser, have up to two
additional thirty (30) day periods to effectuate the cure (up to an aggregate
total of 120 days) so long as it is acting in good faith to effectuate such
cure. In the event that a breach shall involve any representation or warranty
set forth in Section 3.01, and such breach cannot be cured within a maximum of
120 days of the earlier of either discovery by, or notice to, the Seller of
such breach (or within sixty (60) or ninety (90) days, if the applicable
extension was not granted by the Purchaser), the affected Receivable shall, at
the Purchaser's option, be repurchased by the Seller at the Receivables
Repurchase Price. Any repurchase of a Receivable pursuant to the foregoing
provisions of this Section 3.02 shall be accomplished by payment to the
Purchaser or its successors and assigns of the Receivable Repurchase Price on
the Remittance Date for the month following the date of the repurchase, after
deducting therefrom any amount received in respect of such repurchased
Receivable and being held by the Servicer for future distribution for
application in accordance with Section 5.01.
(b) At the time of repurchase of a Receivable, the Purchaser and the
Seller shall arrange for the reassignment of the repurchased Receivable to the
Seller. In the event of a repurchase of a Receivable, the Seller shall give
written notice to the Purchaser and the Servicer that such repurchase has
taken place and the Receivable Schedule shall be amended to reflect the
withdrawal of the repurchased Receivable from the terms of this Agreement.
Upon repurchase by the Seller, a repurchased Receivable is not, and shall not
be considered, a Receivable for purposes of this Agreement.
(c) It is understood and agreed that the obligations of the Seller
set forth in this Section 3.02 to cure or repurchase a defective Receivable as
provided in this Section 3.02 and to indemnify the Seller Indemnified Parties
as provided in Section 3.04 constitute the sole remedies of the Seller
Indemnified Parties respecting a breach of the foregoing representations and
warranties.
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(d) Any cause of action against the Seller relating to or arising
out of the breach of any representations and warranties made in Section 3.01
shall accrue as to any Receivable upon demand upon the Seller by the Purchaser
for compliance with this Agreement.
Section 3.03 Purchaser Representations and Warranties. (a) The
Purchaser makes the following representations and warranties to the Seller as
of the date of this Agreement and the Closing Date:
(i) Due Organization and Qualification. The Purchaser (A) is a
corporation, duly organized and validly existing under the laws of the
State of Delaware, (B) is in good standing under such laws and (C) is
duly qualified to transact business and is in good standing in each
jurisdiction in the United States of America in which the conduct of its
business or the ownership of its property requires such qualification.
(ii) Power and Authority; Due Authorization; Enforceability. The
Purchaser has full power and authority to purchase the Receivables and to
perform its other obligations under this Agreement and has duly
authorized such purchase and the performance of its obligations under
this Agreement by all necessary action. The Agreement has been duly
authorized, executed and delivered by the Purchaser and constitutes the
legal, valid, binding and enforceable obligation of the Purchaser, except
as the same may be limited by insolvency, bankruptcy, reorganization or
other laws relating to or affecting the enforcement of creditors' rights
or by general equity principles.
(iii) No Violation. The Purchaser is not under default under any
indenture, mortgage, deed of trust, loan agreement, guarantee, lease
financing agreement or similar agreement or instrument to which the
Purchaser is a party as borrower or guarantor, and the consummation of
the transactions contemplated by this Agreement, and the fulfillment of
the terms hereof, will not conflict with or result in a breach of any of
the terms or provisions of, or constitute (with or without notice or
lapse of time or both) a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any of the property or
assets of the Purchaser pursuant to the terms of, any indenture,
mortgage, deed of trust, loan agreement, guarantee, lease financing
agreement or similar agreement or instrument under which the Purchaser is
a debtor or guarantor, nor will such action result in any violation of
the provisions of the organizational documents of the Purchaser.
(iv) No Proceedings. No legal or governmental proceedings are
pending to which the Purchaser is a party or of which any property of the
Purchaser is the subject, and no such proceedings are threatened or
contemplated by Governmental Authorities or threatened by others, other
than such proceedings which will not have a material adverse effect upon
the general affairs, financial position, net worth or results of
operations (on an annual basis) of the Purchaser and its subsidiaries
considered as a whole and will not materially and adversely affect the
performance by the Purchaser of its obligations under, or the validity
and enforceability of, this Agreement.
(v) No Litigation Pending. There is no action, suit, regulatory or
other proceeding of any kind pending or, to the Purchaser's knowledge,
threatened against or
29
materially affecting the Purchaser or the properties of the Purchaser
before any Governmental Authority which, if determined adversely to the
Purchaser, would adversely affect the Purchaser's ability to execute,
deliver and perform its obligations under this Agreement.
(vi) No Untrue Information. Neither this Agreement nor any
statement, report or other document furnished or to be furnished in
writing pursuant to this Agreement or in connection with the transactions
contemplated hereby contains or will contain any untrue statement of
material fact or omits or will omit to state any material fact necessary
to make such statement, document or report not misleading.
(vii) Solvency. Immediately prior to and after the transfer of the
Receivables by the Seller to the Purchaser, the Purchaser was solvent.
The Purchaser is not, and, with the passage of time, does not expect to
become, insolvent or bankrupt, and no liquidation of the Purchaser is
contemplated.
(viii) Location. The address of the Purchaser is as listed in
Section 12.05.
(ix) Investor Representations:
(I) The Purchaser is a sophisticated investor and its
decision to purchase the Receivables was based on its
own independent expert evaluation of all information and
other materials deemed relevant by the Purchaser. The
Purchaser considers itself a substantial, sophisticated
institutional investor having such knowledge and
experience in financial and business matters that it is
capable of evaluating the merits and risks of investment
in the Receivables.
(II) the Purchaser understands that the Receivables have not
been registered under the Securities Act or the
securities laws of any state.
(III) the Purchaser is acquiring the Receivables for its own
account only and not for any other Person.
(i) No Broker. The Purchaser has not employed or used a broker in
connection with the transaction contemplated herein.
(b) It is understood and agreed that the representations and
warranties set forth in Section 3.03 shall survive the sale of the Receivables
to the Purchaser and shall inure to the benefit of the Seller. Upon discovery
by the Purchaser or the Seller of a breach of any of the representations and
warranties set forth in Section 3.03, the Party discovering such breach shall
give prompt written notice to the other.
30
Section 3.04 Indemnification by Seller.
(a) The Seller shall indemnify the Purchaser, its Affiliates, any
subsequent purchaser of the Receivables, any trustee and any underwriter,
placement agent or initial purchaser or the equivalent in the offering and
sale of the securities issued in connection with any Pass-Through Transfer or
Whole Loan Transfer and any of their respective officers, directors, agents,
partners, members, shareholders and employees (collectively, the "Seller
Indemnified Parties" and each, a "Seller Indemnified Party") and hold each
Seller Indemnified Party harmless against (i) any and all claims, losses,
damages, penalties, fines, forfeitures, reasonable and necessary legal fees
and related costs, judgments, and any other costs, fees and expenses that any
Seller Indemnified Party may sustain in any way related to claims of third
parties related to (A) the failure of the Seller to perform its obligations as
seller under the terms of this Agreement, (B) the provision of any information
by the Seller on the Seller and its Affiliates, the Receivables (including
historical loss and delinquency data), the origination of the Receivables or
the Seller's underwriting criteria, (C) the breach of any representation or
warranty, covenant or other agreement set forth in this Agreement, (D) the
use, ownership or operation by the Seller or any Affiliate thereof of a
Financed Vehicle or (E) claims or disputes of Obligors with respect to HNB
GAP; (ii) any taxes that may at any time be asserted against any Seller
Indemnified Party with respect to, and as of the date of, the conveyance of
the Conveyed Assets to the Purchaser, including any sales, gross receipts,
tangible personal property, privilege or license taxes (but, in the case of
the Seller Indemnified Parties, not including any taxes asserted with respect
to the ownership of the Conveyed Assets or federal or state income taxes
arising out of the transactions contemplated by this Agreement); and (iii) any
breach by a Dealer of any of its obligations under a Dealer Agreement with
respect to any Receivable.
(b) The Seller or the Seller Indemnified Party, as applicable, shall
promptly notify the other upon becoming aware that a claim subject to
indemnification under Section 3.04(a) (a "Seller Indemnified Claim") has been
made by a third party with respect to this Agreement or the Receivables;
provided, however, that the failure of the Seller Indemnified Party to notify
the Seller of a Seller Indemnified Claim shall not relieve the Seller from any
liability which it may have to any Seller Indemnified Party, but only to the
extent such failure to notify does not prejudice the Seller's ability to
defend. The Seller shall assume the defense of any such Seller Indemnified
Claim and be responsible for all fees and expenses of counsel incurred
therewith as well as any other litigation expenses; provided, that counsel
chosen by the Seller shall be reasonably acceptable to the Purchaser; and
provided, however, that at any time the Seller Indemnified Party shall be
entitled to participate therein and, to the extent that it shall wish, hire
counsel (who shall not, except with the consent of the Seller, be counsel to
the Seller) and, jointly with the Seller, assume the defense thereof. The
Seller shall not be liable to the Seller Indemnified Party for the cost of the
Seller Indemnified Party's counsel. If, in connection with any Seller
Indemnified Claim, the actual or potential defendants in, or targets of, any
such action include both the Seller and the Seller Indemnified Party and the
Seller Indemnified Party shall have reasonably concluded that there may be
legal defenses available to it which are different from, adverse to or
additional to those available to the Seller, the Seller Indemnified Party
shall have the right to hire counsel to assume the defense of any such Seller
Indemnified Claim and the Seller shall be responsible for all fees and
expenses of counsel incurred therewith as well as any other litigation
expense. The Seller shall not, without the written consent of the Seller
Indemnified Party, effect the settlement or compromise of, or consent to the
entry of any
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judgment with respect to, any pending or threatened action or claim in respect
of which indemnification or contribution may be sought hereunder (whether or
not the Seller Indemnified Party is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment (i) includes
an unconditional release of the Seller Indemnified Party from all liability
arising out of such action or claim and (ii) does not include a statement as
to, or an admission of, fault, culpability or failure to act, by or on behalf
of the Seller Indemnified Party.
(c) The indemnification obligations of the Seller under this Section
3.04 shall survive the assignment and transfer of the Receivables in
connection with any Pass-Through Transfer or Whole Loan Transfer, the
termination of this Agreement and shall be in addition to any liability which
it may otherwise have.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 4.01 Servicer.
(a) From and after the Closing Date, the Servicer, as an independent
contractor, shall manage, service, administer and make Collections on the
Receivables and perform the other actions required by the Servicer under this
Agreement. The Servicer's duties include, but are not limited to, collection
and posting of all payments, responding to inquiries of the Obligors on such
Receivables, investigating delinquencies, sending payment coupons to Obligors,
reporting tax information to Obligors, monitoring the Conveyed Assets,
accounting for Collections, preparing tax forms required by any federal, state
or local tax authority, if any, furnishing the Servicer Reports and annual
statements required pursuant to Sections 5.02 and 6.03 and making Monthly
Advances pursuant to Section 5.03. The Servicer will service the Receivables
in accordance with the servicing standard set forth in Exhibit H or in the
event that Exhibit H does not specify a standard with respect to a particular
servicing function, in accordance with its usual and customary procedures
consistent with the procedures employed by institutions that service motor
vehicle retail installment contracts or motor vehicle installment loan notes
for their own account or for the account of third parties (the foregoing, the
"Servicing Standard").
(b) The Servicer may, in accordance with the Servicing Standard,
grant extensions on a Receivable with respect to a Receivable for which the
related Obligor is delinquent for failure of payment. The Servicer shall not
grant more than one (1) extension on such Receivable in any calendar year and
not more than three (3) extensions on any such Receivable and shall not extend
the date for the final payment by any Obligor of any Receivable beyond October
15, 2010, the Servicer shall promptly purchase such Receivable in the manner
provided in Section 6.01(b). As necessary to maximize collections on the
Receivables and in accordance with its Servicing Standards, the Servicer may
in its discretion waive any Late Fees that may be collected in the ordinary
course of servicing a Receivable. The use of a pass-a-payment coupon shall not
be considered an extension on a Receivable pursuant to this Section 4.01(b).
(c) Without limiting the generality of the foregoing, the Servicer
is hereby authorized and empowered, to execute and deliver on behalf of itself
and the Purchaser, all
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instruments of satisfaction or cancellation, or of partial or full release,
discharge and all other comparable instruments, with respect to the
Receivables and Financed Vehicles. If the Servicer commences a legal
proceeding to enforce a Receivable, the Purchaser will thereupon be deemed to
have automatically assigned, solely for the purpose of collection, such
Receivable to the Servicer. 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 is not a real party in interest or a holder entitled to enforce the
Receivable, the Servicer may, with the prior written approval of the
Purchaser, maintain such enforcement suit or legal proceeding in the name of
the Purchaser or an affiliate. If reasonably required by the Servicer, the
Purchaser shall furnish the Servicer, with any powers of attorney and other
documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties under this Agreement.
(d) The Servicer shall, consistent with the Servicing Standard, take
such steps as are necessary to maintain perfection of the security interest
created by each Receivable in the related Financed Vehicle in favor of the
Purchaser and its successors and assigns. The Servicer is hereby authorized to
take such steps as are necessary to re-perfect such security interest on
behalf of the Purchaser and its successors and assigns in the event of the
relocation of the related Financed Vehicle, or for any other reason.
Notwithstanding the foregoing, (i) the Servicer, shall have no obligation to
audit the perfection or re-perfection of security interests in the Financed
Vehicles; and (ii) the Seller shall have no obligation to perfect or
re-perfect unless it is aware that perfection or re-perfection is necessary.
(e) Except as permitted by the Servicing Standard, the Servicer
shall not (i) release the Financed Vehicle securing each 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, (ii) impair the rights of the Purchaser in the Receivables,
(iii) change the Contract Rate with respect to any Receivable, or (iv) modify
the Principal Balance or the total number of originally scheduled due dates of
any Receivable.
(f) The Servicer shall comply with Applicable Law in connection with
the satisfaction of a Receivable and the release of Receivable Files.
(g) The Servicer or the Purchaser, as the case may be, shall
promptly inform the other Party, in writing, upon the discovery of any breach
by the Servicer of Section 4.01(b), (d) or (e). If such breach is curable and
the Servicer shall have timely commenced such cure but notwithstanding its due
and diligent efforts, the breach shall not be capable of cure within sixty
(60) days of the earlier of either discovery by or notice to the Servicer of
such breach, the Servicer shall, upon receipt of written consent by the
Purchaser, have up to two additional thirty (30) day period to effectuate the
cure (up to an aggregate total of 120 days) so long as it is acting in good
faith to effectuate such cure. If such cure is not effectuated after 120 days
(or within sixty (60) or ninety (90) days, if the applicable extension was not
granted by the Purchaser), the Servicer shall purchase the Receivable affected
by such breach at the Receivable Repurchase Price by deposit of the Receivable
Repurchase Price on the next Remittance Date. The sole remedy of the Purchaser
with respect to a breach pursuant to Section 4.01(b), (d) or (e) or of any
breach of the Seller's representations and warranties shall be limited to the
purchase of Receivables in accordance with this clause (g) and the
indemnification provisions set forth in Section 8.01.
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Section 4.02 Realization of Receivables.
(a) In the event that any payment due under any Receivable is not
paid when the same becomes due and payable, or in the event the related
Obligor fails to perform any other covenant or obligation under the Receivable
and such failure continues beyond any applicable grace period, the Servicer
shall take such action as (i) it would take under similar circumstances with
respect to a similar motor vehicle retail installment contract or motor
vehicle installment loan note held for its own account for investment, (ii)
shall be consistent with Servicing Standard, and (iii) it shall determine
prudently to be in the best interest of Purchaser. In connection herewith, the
Servicer shall from its own funds make all necessary and proper Servicing
Advances, subject to reimbursement pursuant to Section 4.04(c)(ii); provided,
however, that the foregoing shall not be construed to require Servicer to
undertake repossession, restoration or preservation of any Financed Vehicle,
unless the Servicer shall determine (x) that such preservation, restoration
and/or repossession will increase the proceeds of liquidation of the
Receivable to Purchaser after reimbursement to itself for such expenses and
(y) that expenses in connection with such repossession, restoration or
repossession will be recoverable either through Liquidation Proceeds or
through Insurance Proceeds.
(b) In connection with any Deficiency Balance, the Servicer in
accordance with the Servicing Standards will (A)(i) pursue collection of the
deficiency for a period of no more than 120 days, which may be extended an
additional 60 days if, in the Servicer's reasonable judgment such extension
will maximize recovery of the Deficiency Balance and then (ii) refer the
related account to (x) its routinely preferred third party collector or (y)
such other third party collector as approved by the Purchaser (the entity
hired pursuant to clause (x) or (y), the "Collector"), which will pursue
collection of such Deficiency Balance; or (B) refer the related account
directly to the Collector as provided in (A)(ii) above, if, in the Servicer's
reasonable judgment referral of such account to the Collector will maximize
recovery of the Deficiency Balance. In the event the Servicer refers the
related account to the Collector, the Servicer shall no longer remain
obligated or be liable to any other party for the collection of such
Receivable. The Servicer shall, in accordance with Section 5.01, remit to the
Purchaser any amounts collected by it or remitted to it by the Collector (from
which the Collector may net a portion of the Collector's costs, expenses and
other charges not to exceed an amount equal to 40% of the recovery amount
prior to deducting such costs, expenses and charges) in regards to such
Deficiency Balance.
Section 4.03 Commingling of Collections Related to the Receivables.
(a) For so long as the Servicer's short term senior unsecured debt
rating remains A-1 (by S&P) and P-1 (by Xxxxx'x) or better, the Servicer shall
be permitted to commingle all Collections relating to the Receivables received
in the immediately preceding Collection Period with its own corporate funds.
(b) In the event the Servicer's short term ratings fall below A-1 or
P-1, as the case may be, the Servicer shall within five (5) calendar days of
such ratings downgrade deliver all Collections in its possession relating to
the Receivables to an account designated by the Purchaser. Thereafter, the
Servicer shall remit to the account so designated all Collections relating to
the Receivables within two (2) Business Days of receipt thereof. Amounts in
such account with respect to a Collection Period shall remain on deposit
therein until the related
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Remittance Date and the Purchaser agrees that it shall cause to be remitted to
the Servicer on each Remittance Date, solely from Collections deposited in
such account, amounts which the Servicer is entitled to receive or retain for
itself (in respect of fees, reimbursement of expenses or advances or
otherwise) in accordance with the terms of this Agreement.
Section 4.04 Permitted Retention of Collections by the Servicer.
(a) As compensation for its services hereunder, the Servicer shall
be entitled to retain from the interest portion of Monthly Payments collected
or the interest portion of Liquidation Proceeds received on the Receivables
the amount of its Servicing Fee. To the extent the interest portions are
insufficient to pay the full amount of the Servicing Fee in a particular
month, the Servicer shall be entitled to retain the interest portions of
Monthly Payments collected and Liquidation Proceeds received in subsequent
months to recover the unpaid portion. The Servicing Fee shall be payable
monthly. As additional servicing compensation, the Seller shall be entitled to
receive all Late Fees with respect to the Receivables serviced pursuant to
this Agreement and all interest accrued on any funds held by the Servicer
constituting Collections of any of the Receivables.
(b) The Servicer shall pay all expenses incurred by it in connection
with its servicing activities hereunder and shall not be entitled to
reimbursement thereof except to the extent specifically provided for herein.
(c) On each Remittance Date, the Servicer shall retain amounts that
constitute Collections on the Receivables for the following purposes:
(i) to reimburse itself out of Interest Collections for Monthly
Advances of the Servicer's funds made pursuant to Section 5.03.
(ii) to reimburse itself for unreimbursed Servicing Advances;
provided that such reimbursement with respect to any Receivable shall be
limited to Liquidation Proceeds, Insurance Proceeds and Deficiency
Balance recoveries with respect to such Receivable.
(iii) to reimburse itself out of Interest Collections for unpaid
Servicing Fees.
Section 4.05 Errors and Omissions Insurance. The Servicer, shall
maintain, at its own expense, an errors and omissions insurance policy on all
officers, employees or other persons acting in any capacity with regard to the
Receivables to handle funds, money, documents and papers relating to the
Receivables, which policy shall protect and insure the Servicer, against
losses, including forgery, theft, embezzlement, fraud, errors and omissions
and negligent acts of such persons. Such errors and omissions insurance policy
shall also protect and insure the Servicer, against losses in connection with
the release or satisfaction of a Receivables without having obtained payment
in full of the indebtedness secured thereby. No provision of this Section 4.05
requiring such errors and omissions insurance shall diminish or relieve the
Servicer from its duties and obligations as set forth in this Agreement.
Notwithstanding the foregoing, such errors and omission policy may have a
deductible consistent with prudent corporate practice. Without limiting the
generality of the indemnification provisions of this Agreement, the
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Servicer hereby acknowledges that any amounts payable by it pursuant to any
such deductible are indemnified obligations payable by it pursuant to Section
8.01.
Section 4.06 Remittance of GAP Amounts.
(a) Seller shall handle all claims of Obligors in connection with
HNB GAP for any Receivable. Notwithstanding any other provision of this
Agreement, if Seller determines that all or some portion of the Principal
Balance of a Receivable is required to be cancelled pursuant to HNB GAP in
effect for such Receivable, Seller shall so notify Servicer, and Servicer
shall take the appropriate steps to reduce the Principal Balance of such
Receivable by the GAP Amount, and such reduction shall not be a violation of
any other provision of this Agreement. On the day on which the Seller
determines that all or some portion of the Principal Balance of a Receivable
is required to be cancelled pursuant to HNB GAP in effect for such Receivable,
the Seller shall remit to Servicer an amount equal to the GAP Amount to be
applied to such Receivable and the Servicer shall hold such amount in
accordance with Section 4.03, and shall remit such amount to Purchaser on such
Remittance Date, or as otherwise required by Section 4.03.
(b) Purchaser agrees that it shall have no right to collect from the
Obligor the amount of any GAP Amount determined by Seller to be applicable to
any Receivable, and that Purchaser shall not, on its own or through any agent,
attempt to collect any GAP Amount from any Obligor. Seller agrees that the
indemnification provisions of Section 3.04 of this Agreement shall apply to
any claim by any Obligor against Purchaser, or its successors or assigns, with
respect to HNB GAP.
ARTICLE V
PAYMENTS TO PURCHASER
Section 5.01 Remittances.
(a) On each Remittance Date, the Servicer, shall remit by wire
transfer of immediately available funds to the Purchaser at the wire transfer
instructions set forth on Exhibit L (or as otherwise directed by the Purchaser
from time to time in writing) all amounts constituting Collections on
Receivables for the related Collection Period, as determined on the related
Determination Date (net of amounts retained pursuant to Sections 4.04 as of
such date).
(b) With respect to any remittance received by the Purchaser after
the Business Day on which such payment was due, the Servicer, shall pay to the
Purchaser interest on any such late payment at an annual rate equal to the
Prime Rate, adjusted as of the date of each charge, plus two percentage
points, but in no event greater than the maximum amount permitted by
Applicable Law. Such interest shall be paid by the Servicer, to the Purchaser
on the date such late payment is made and shall cover the period commencing
with the Business Day on which such payment was due and ending with the
Business Day on which such payment is made, both inclusive. Such interest
shall be remitted along with the distribution payable on the next succeeding
Remittance Date. The payment by the Servicer of any such interest shall not be
deemed an extension of time for payment or a waiver of any Event of Default by
the Servicer.
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Section 5.02 Servicer Reports.
(a) By no later than the First Remittance Date, the Seller shall be
required to deliver to the Purchaser a copy of each monthly remittance report
(collectively, the "Servicer Reports") listed in Exhibit G-1 and each Servicer
Report shall be substantially in the applicable form set forth in Exhibit G-2
and be satisfactory to the Purchaser.
(b) On each Determination Date, the Servicer shall provide to the
Purchaser each of the Servicer Reports listed in Exhibit G-1 attached hereto,
with respect to Collections for the preceding Collection Period, in hard copy
or electronic format as mutually agreed by the Servicer and the Purchaser and
each Servicer Report shall contain a certification from an Officer of the
Servicer regarding the accuracy of the information contained therein.
Section 5.03 Monthly Advances by Servicer. On each Remittance Date,
the Servicer shall remit from its own funds or from amounts held for future
distribution an amount equal to the interest portion of all Monthly Payments
that were (i) due on the Receivables during the applicable Collection Period
and that were delinquent at the close of business on the last day of the
Collection Period immediately preceding such Remittance Date or (ii) not due
during the applicable Collection Period because payment in the Collection
Period was deferred by the Servicer (including for this purpose, any extension
made in connection with a pass-a-payment coupon). Any amounts held for future
distribution used in the manner provided in the preceding sentence shall be
reimbursed by the Servicer on or before any future Remittance Date, if funds
available on such Remittance Date shall be less than payments required to be
made to the Purchaser on such Remittance Date. Notwithstanding the foregoing,
the Servicer shall not be permitted to make any Monthly Advances pursuant to
this Section 5.03 from amounts held for future distribution, and instead shall
be required to make all Monthly Advances from its own funds, unless the
Servicer shall have a long-term credit rating of at least "A" by Standard &
Poor's and "A2" by Xxxxx'x. The Servicer's obligation to make such Monthly
Advances as to any Receivable shall continue through the earlier to occur of
(i) the last Monthly Payment due prior to the payment in full of the
Receivable or (ii) the last Remittance Date prior to the Remittance Date for
the distribution of all Liquidation Proceeds and other payments or recoveries
(including Insurance Proceeds) with respect to the Receivable; provided,
however, that if requested by a Rating Agency in connection with a
Pass-Through Transfer, the Servicer shall be obligated to make such Monthly
Advances through the Remittance Date prior to the date on which cash is
received in connection with the liquidation of the related Financed Vehicle;
provided, further, however, that the obligation to pay Monthly Advances shall
cease if the Servicer determines, in its sole reasonable opinion, that
advances with respect to such Receivable are non-recoverable by the Servicer
from Liquidation Proceeds or otherwise from amounts allocable to interest with
respect to a particular Receivable.
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ARTICLE VI
GENERAL SERVICING PROCEDURES
Section 6.01 Satisfaction of Receivables and Release of Receivable
Files.
(a) The Servicer shall comply with Applicable Law in connection with
the satisfaction of a Receivable and the release of Receivable Files. Subject
to the foregoing, upon the payment in full of any Receivable, or otherwise in
accordance with the Servicer's customary policies and procedures consistent
with the Servicing Standard, the Servicer is authorized to execute an
instrument in satisfaction of such Receivable and to do such other acts and
execute such other documents as the Servicer deems necessary to discharge the
Obligor thereunder and terminate the security interest in the Financed Vehicle
related thereto. To the extent that insufficient payments are received on a
Receivable credited by the Servicer as prepaid or paid in full and satisfied,
the shortfall shall be paid by the Servicer out of its own funds if the
shortfall is in excess of $25.
(b) If the Servicer (I) satisfies or releases the Collateral
securing a Receivable without first having either (x) obtained voluntary
payment in full (or within $25 of payment in full) of the indebtedness secured
by the Collateral or (y) repossessed and liquidated such Collateral, or
(II)(x) otherwise prejudices any rights the Purchaser may have under the
Collateral securing a Receivable (in addition to the rights of the Purchaser
in connection therewith set forth in Section 4.01(g))or (y) extends or
otherwise amends the terms of the Receivable (including any change of the
Contract Rate applicable to any Receivable or the Principal Balance or the
total number of originally scheduled due dates of any Receivable), except as
provided in Sections 4.01(b) and 4.01(e), upon written demand of the
Purchaser, the Servicer, shall repurchase the related Receivable at the
Receivable Repurchase Price and remit such amount to the Purchaser on the next
Remittance Date.
Section 6.02 Annual Statement as to Compliance. The Servicer shall
deliver to the Purchaser on or before March 15 each year, beginning March 15,
2004, an Officer's Certificate (the "Servicer Annual Certification") in
substantially the form of Exhibit J, stating, that (A) a review of the
activities of the Servicer and of the performance of its obligations under
this Agreement during the preceding calendar year (or, with respect to the
first Servicer Annual Certification, the period from the Closing Date to
December 31 of such year) (each such period being a "Review Period") has been
made under such officer's supervision and (B) based on the knowledge of the
officer of the Servicer who is signing such certification, (i) based on the
review described in clause (A), except as otherwise disclosed pursuant to
clause (ii) below, the Servicer has fulfilled its obligations under this
Agreement during the applicable Review Period and there is no default known to
such officer with respect to the applicable Review Period which has not been
disclosed, (ii) based on the review described in clause (A), to the extent
there has been a default in the fulfillment of any obligations of the Servicer
under this Agreement during the applicable Review Period, each such default
known to such officer and the nature and status thereof and the action being
taken by the Servicer to cure such default, (iii) the servicing information
provided by the Servicer in such Servicer Annual Certification in respect of
the Receivables, including information relating to actions of the Servicer
and/or payments and other collections on and characteristics of the
Receivables, taken as a whole, does not contain any
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untrue statement of material fact or omit to state a material fact necessary
to make the statements made, in light of the circumstances under which such
statements were made, not misleading as of the last day of the applicable
Review Period and (iv) the Servicer has provided all of the reports and
certificates required under Sections 5.02, 6.02 and 6.03 to the parties to
which such reports and certificates are required to be provided with respect
to the applicable Review Period.
Section 6.03 Annual Independent Certified Public Accountants'
Report. (a) On or before March 15 of each year beginning March 15, 2004, the
Servicer, at its expense, shall cause a firm of independent certified public
accountants that is a member of the American Institute of Certified Public
Accountants to furnish a statement to the Purchaser to the effect that such
firm has audited the documents or records of the Servicer relating to the
Receivables and issued its report thereon and that such audit (a) was made in
accordance with generally accepted auditing standards and (b) included tests
relating to retail motor vehicle loan and installment sale contracts serviced
for others and that such firm is of the opinion that the provisions of this
Agreement have been complied with during the preceding calendar year (or, with
respect to the first report, the period from the Closing Date to December 31st
of such year), and that, on the basis of such examination, nothing has come to
their attention that would indicate that such servicing has not been conducted
in compliance therewith during such calendar year or other period, except for
(x) such exceptions as such firm shall believe to be immaterial and (y) such
other exceptions as shall be set forth in such statement.
Section 6.04 Right to Examine Servicer Records. The Purchaser, or
its designee, shall have the right to examine and audit any and all of the
books, records, or other information of the Servicer, whether held by the
Servicer or by another on its behalf, with respect to or concerning this
Agreement or the Receivables, during business hours or at such other times as
may be reasonable under applicable circumstances, upon reasonable advance
notice. The Purchaser shall pay its expenses associated with such examination.
Section 6.05 System Backup File. Within forty-five (45) days after
the Closing Date, the Servicer shall provide to the Purchaser a copy (on a
medium mutually agreed upon between the Seller and the Purchaser) of a
complete image from the Servicer's imaging system of each item in a Receivable
File for each Receivable. The Servicer shall at all times maintain a complete
system backup file with respect to the Receivables and shall, by no later than
each Determination Date, deliver to the Purchaser a copy of (i) the loan file
tape (determined by the data dictionary, in the form of Exhibit B attached
hereto, as may hereafter be modified by mutual agreement of the Seller and the
Purchaser) and (ii) the extracts from other applicable servicing systems of
the Servicer's.
ARTICLE VII
SELLER AND SERVICER TO COOPERATE
Section 7.01 Provision of Information. (a) During the term of this
Agreement, the Servicer shall furnish to the Purchaser such periodic, special,
or other reports or information, and copies or originals of any other
documents contained in the Receivable File for each Receivable provided for
herein. All other special reports or information not provided for herein as
shall be necessary, reasonable, or appropriate with respect to the Purchaser
or any regulatory
39
agency shall be provided at the Purchaser's expense. All such reports,
documents or information shall be provided by and in accordance with all
reasonable instructions and directions which the Purchaser may give.
(b) The Seller and the Servicer shall execute and deliver all such
instruments and take all such action as the Purchaser may reasonably request
from time to time, in order to effectuate the purposes, and to carry out the
terms, of this Agreement.
Section 7.02 Financial Statements; Servicing Facility. The Servicer
shall make available to the Purchaser and any prospective Purchaser a
knowledgeable financial or accounting officer for the purpose of answering
questions respecting recent developments affecting the Servicer or the
financial statements of the Servicer, and to permit the Purchaser and any
prospective Purchaser to inspect the Servicer's servicing facilities for the
purpose of satisfying the Purchaser and such prospective Purchaser that the
Servicer has the ability to service the Receivables as provided in this
Agreement.
ARTICLE VIII
THE SERVICER
Section 8.01 Indemnification of Third Party Claims by the Servicer.
(a) The Servicer shall indemnify the Purchaser, its Affiliates, any
subsequent purchaser of the Receivables, any trustee and any underwriter,
placement agent or initial purchaser or the equivalent in the offering and
sale of the securities issued in connection with any Pass-Through Transfer or
Whole Loan Transfer and any of their respective officers, directors, agents,
partners, members, shareholders and employees (collectively, the "Servicer
Indemnified Parties" and each, a "Servicer Indemnified Party") and hold each
Servicer Indemnified Party harmless against (i) any and all claims, losses,
damages, penalties, fines, forfeitures, reasonable and necessary legal fees
and related costs, judgments, and any other costs, fees and expenses that any
Servicer Indemnified Party may sustain in any way related to claims of third
parties arising from (A) the failure of the Servicer to perform its duties as
servicer and custodian and to service the Receivables in compliance with the
terms of this Agreement, (B) the provision of any information by the Servicer
on the Servicer and its Affiliates, the Receivables (including historical loss
and delinquency data) or the servicing of the Receivables, (C) the breach of
any representation or warranty, covenant or other agreement set forth in this
Agreement or (D) the use, ownership or operation by the Servicer or any
Affiliate thereof of a Financed Vehicle.
(b) The Servicer or the Servicer Indemnified Party, as applicable,
shall promptly notify the other upon becoming aware that a claim subject to
indemnification under Section 8.01(a) (a "Servicer Indemnified Claim") has
been made by a third party with respect to this Agreement or the Receivables;
provided, however, that the failure of the Servicer Indemnified Party to
notify the Servicer of a Servicer Indemnified Claim shall not relieve the
Servicer from any liability which it may have to any Servicer Indemnified
Party, but only to the extent such failure to notify does not prejudice the
Servicer's ability to defend. The Servicer shall assume the defense of any
such Servicer Indemnified Claim and be responsible for all fees and expenses
of
40
counsel incurred therewith as well as any other litigation expenses; provided,
that counsel chosen by the Servicer shall be reasonably acceptable to the
Purchaser; and provided, however, that at any time the Servicer Indemnified
Party shall be entitled to participate therein and, to the extent that it
shall wish, hire counsel (who shall not, except with the consent of the
Servicer, be counsel to the Servicer) and, jointly with the Servicer, assume
the defense thereof. The Servicer shall not be liable to the Servicer
Indemnified Party for the cost of the Servicer Indemnified Party's counsel.
If, in connection with any Servicer Indemnified Claim, the actual or potential
defendants in, or targets of, any such action include both the Servicer and
the Servicer Indemnified Party and the Servicer Indemnified Party shall have
reasonably concluded that there may be legal defenses available to it which
are different from, adverse to or additional to those available to the
Servicer, the Servicer Indemnified Party shall have the right to hire counsel
to assume the defense of any such Servicer Indemnified Claim and the Servicer
shall be responsible for all fees and expenses of counsel incurred therewith
as well as any other litigation expense. The Servicer shall not, without the
written consent of the Servicer Indemnified Party, effect the settlement or
compromise of, or consent to the entry of any judgment with respect to, any
pending or threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the Servicer Indemnified
Party is an actual or potential party to such action or claim) unless such
settlement, compromise or judgment (i) includes an unconditional release of
the Servicer Indemnified Party from all liability arising out of such action
or claim and (ii) does not include a statement as to, or an admission of,
fault, culpability or failure to act, by or on behalf of the Servicer
Indemnified Party.
(c) The indemnification obligations of the Servicer under Section
8.01(a) shall survive the assignment and transfer of the Receivables in
connection with any Pass-Through Transfer or Whole Loan Transfer, the
termination of the Servicer and the termination of this Agreement and shall be
in addition to any liability which it may otherwise have.
Section 8.02 Merger or Consolidation of the Servicer. The Servicer
shall preserve its qualification to do business in each jurisdiction in which
such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement or any of the Receivables and to perform its
duties under this Agreement.
Any Person into which the Servicer may be merged or consolidated, or
any entity resulting from any merger, conversion or consolidation to which the
Servicer shall be a party, or any Person succeeding to the business of the
Servicer, shall be the successor of the Servicer hereunder, without the
execution or filing of any paper or any further act on the part of either
Party, anything herein to the contrary notwithstanding; provided, however,
that (i) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Section 3.01(a) shall have been
breached (for purposes hereof, the representations and warranties set forth in
Sections 3.01(a)(i) through (ix) shall speak as of the date of consummation of
such transaction) and no event that, with notice or lapse of time or both,
would become an Event of Default shall have occurred and be continuing, (ii)
the Servicer shall have delivered to the Purchaser an Officer's Certificate
and Opinion of Counsel each stating that such consolidation, merger or
succession and any such related agreements comply with this Section 8.02 and
that all conditions precedent, if any, provided for in this Agreement relating
to such transaction have been complied with and (iii) the Servicer shall have
delivered to the Purchaser an Opinion of Counsel stating that, in the opinion
of such counsel, either (A) all financing statements and
41
continuation statements and amendments thereto have been executed and filed
that are necessary fully to preserve and protect the interest of the Purchaser
and its successors and assigns in the Receivables or (B) no such action shall
be necessary to preserve and protect such interest. Furthermore, in the event
the Servicer transfers or otherwise disposes of all or substantially all of
its assets to an Affiliate of the Servicer, such Affiliate shall satisfy the
condition described in the preceding sentence and shall also be fully liable
to the Purchaser for all of the Servicer's obligations and liabilities
hereunder.
Section 8.03 Limitation on Liability of Seller, Servicer and Others.
Neither the Seller or the Servicer, nor any of the directors, officers,
employees or agents of the Seller nor the Servicer, shall be under any
liability to the Purchaser for any action taken or for refraining from the
taking of any action in good faith pursuant to this Agreement, or for errors
in judgment; provided, however, that this Section 8.03 shall not protect the
Seller or the Servicer or any such Person against any breach of warranties or
representations made herein, or, as to the Servicer, the failure to perform
its obligations in compliance with any standard of care set forth in this
Agreement, or any other liability which would otherwise be imposed under this
Agreement. The Seller and the Servicer, and any director, officer, employee or
agent of the Seller or 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.
Section 8.04 Limitation on Resignation and Assignment by Servicer.
(a) The Purchaser has entered into this Agreement with the Servicer
and subsequent Purchasers will purchase the Receivables in reliance upon the
independent status of the Servicer, and the representations as to the adequacy
of its servicing facilities, plant, personnel, records and procedures, its
integrity, reputation and financial standing, and the continuance thereof.
Therefore, the Servicer shall neither assign this Agreement or its the
servicing or custodial obligations hereunder, nor delegate its rights or
duties hereunder or any portion hereof.
(b) The Servicer shall not resign from the obligations and duties
hereby imposed on it, except by mutual consent of the Servicer and the
Purchaser or upon the determination that its duties hereunder are no longer
permissible under Applicable Law and such incapacity cannot be cured by the
Servicer. Any such determination permitting the resignation of the Servicer
shall be evidenced by an Opinion of Counsel to such effect delivered to the
Purchaser. No such resignation shall become effective until a successor shall
have assumed the Servicer's responsibilities and obligations hereunder in the
manner provided in Section 12.01, unless the Servicer is prohibited by
Applicable Law from serving as Servicer, in which instance the Purchaser shall
immediately designate a successor Servicer. Notwithstanding the foregoing, the
Servicer may also resign in connection with a Whole Loan Transfer to a banking
institution that HNB reasonably considers to be a competitor in the indirect
auto business; provided, however, that (w) HNB shall have found a successor
Servicer reasonably acceptable to the Purchaser, (x) the Servicing Fee to be
paid to the successor Servicer shall be no greater than the Servicing Fee
provided for under this Agreement, (y) the successor Servicer shall have
assumed the Servicer's responsibilities and obligations hereunder in the
manner provided in Section 12.01 within no more than sixty (60) days of such
Whole Loan Transfer and (z) the Servicer shall pay all expenses associated
with such transfer to a successor Servicer.
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ARTICLE IX
PASS-THROUGH TRANSFER OR WHOLE LOAN TRANSFER
Section 9.01 Effect of Pass-Through Transfer or Whole Loan Transfer.
The Purchaser and the Bank agree that with respect to some or all of the
Receivables, the Purchaser, at its sole option, shall effect one or more
Pass-Through Transfers or Whole Loan Transfers, retaining the Bank as the
Servicer thereof or subservicer if a master servicer is employed; provided,
however, that the Purchaser shall not be permitted to make more than five (5)
transfers. From and after the Reconstitution Date, the Receivables transferred
shall remain covered by this Agreement, insofar as the Servicer shall continue
to service such Receivables on behalf of the transferee in accordance with the
terms and provisions of this Agreement. Each transferee of the Receivables
shall be permitted to make one (1) Whole Loan Transfer in respect of the
Receivables held by it; provided, however, that in connection with such Whole
Loan Transfer, the Servicer shall have the right to resign in accordance with
Section 8.04(b); and provided, further, that in the event the transferee
transfers Receivables to more than one successor transferee, the Servicer may
resign without regard to the requirements set forth in Section 8.04(b).
(a) The Bank shall use its reasonable best efforts to assist the
Purchaser and any prospective purchasers from the Purchaser and trustees or
other similar entities in connection with each Whole Loan Transfer or
Pass-Through Transfer, including, without limitation:
(i) making representations and warranties as of the closing date of
each Whole Loan Transfer or Pass-Through Transfer that the Bank has
serviced the Receivables in accordance with the terms of this Agreement,
and otherwise has complied with all covenants and obligations hereunder
and making other representations and warranties set forth in Schedule
9.01(b);
(ii) negotiating in good faith and executing any seller/servicer
agreements, as servicer, required by the purchaser of the Receivables,
the trustee or similar entity to effectuate the foregoing, including,
without limitation, setting forth the representations and warranties with
respect to the Servicer and the Receivables referred to in clause (i)
above and the remedies for breach of the same (it being understood that
any such agreement will be, as to terms relating to the servicing of the
Receivables and the remedies for any such breach, on substantially
similar terms and conditions to those of this Agreement);
(iii) providing to the Purchaser (A) a statement containing certain
information relating to the Bank, including, but not limited to, its
origination and servicing practices and procedures, in a form similar to
that set forth in Exhibit M, updated as necessary to reflect any changes
in the current circumstances of the Bank and (B) information relating to
the Receivables, including, but not limited to, historical loss and
delinquency data, as set forth in Exhibit N, it being understood that the
information provided pursuant to this clause (iii) shall be provided to
prospective investors in a public offering document or private placement
memorandum, and shall provide to the Purchaser upon request, prior to any
Pass Through Transfer or Whole Loan Transfer, updated quarterly static
pool data
43
covering losses, recoveries and defaults, which information the Purchaser
shall be permitted to deliver to any potential purchaser of securities
rated less that BBB- in connection with a Pass-Through Transfer or any
potential purchaser in a Whole Loan Transfer. The Bank shall represent
and warrant that, when delivered and as of the closing date of the
related transfer, all of such information shall not contain any untrue
statement of a material fact and will not omit to state any material fact
necessary to make the statements and information therein, in light of the
circumstances under which they were made, not misleading;
(iv) cooperating with the Purchaser and the trustee or similar
entity, at the expense of the Purchaser or such other trustee or entity,
to satisfy, in connection with any Pass-Through Transfer, the applicable
entity's reporting obligations under the Exchange Act and Applicable Law,
including any certification necessary to comply in form and substance
with the Xxxxxxxx-Xxxxx Act and the rules and regulations promulgated
thereunder;
(v) delivering opinions of counsel on the Bank and the transfer of
the Receivables by the Bank to the Purchaser in form and substance
acceptable to the Purchaser; provided, that any out-of-pocket, third
party expenses incurred by the Seller in connection with the foregoing
shall be paid by the Purchaser;
(vi) providing as applicable, at the expense of the Purchaser:
(A) any and all information and appropriate verification of
information which may be reasonably available to the Bank, whether
through letters of its auditors and counsel or otherwise, in each
case as the Purchaser shall reasonably request, including but not
limited to the agreed upon procedures letter of Ernst & Young LLP,
pertaining to information provided by the Bank as set forth in
clause (iii) above, covering such matters as shall in the judgment
of the Purchaser be customary or reasonably necessary for completion
of the applicable transfer;
(B) (x) an Officer's Certificate executed by a senior officer
of the Bank, responsible for the servicing of the Receivables; and
(y) such additional statements, certificates or other similar
documents of the Bank or reports from the Bank's accountants in
connection with a Pass-Through Transfer and in substance as required
by Applicable Law; and
(C) access for rating agencies, credit enhancers or investors
reasonable to each Bank representative with responsibility,
knowledge or experience with respect to the Seller's origination of
the Receivables and/or servicing of the Receivables, upon reasonable
prior notice and during regular business hours, for the purpose of
answering questions about the origination of the Receivables and the
servicing of the Receivables.
(vii) indemnifying the Purchaser for any material misstatements
contained in the information provided pursuant to subclauses (i), (iii)
and (vi)(A) and (B) above or for breaches of any representation and
warranty set forth above and, in connection with any
44
Pass-Through Transfer, entering into an indemnity agreement with the
depositor and the managing underwriter or initial purchaser substantially
in the form attached hereto as Exhibit O. If a claim is brought by a
third party in connection with a Pass-Through Transfer or Whole Loan
Transfer but indemnification pursuant to Section 3.04 is unavailable to
or insufficient to hold harmless a Seller Indemnified Party in respect of
any Seller Indemnified Claim related to clause 3.04(a)(i)(B), then the
Bank shall contribute to the amount paid or payable by such Indemnified
Party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to
reflect the relative benefits received by the Bank on the one hand and
the Purchaser on the other. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if
the Indemnified Party failed to give notice pursuant to Section 3.04(b),
thereby prejudicing the Bank's ability to defend a Seller Indemnified
Claim, then the Bank shall contribute to such amount paid or payable by
such Indemnified Party in such proportion as is appropriate to reflect
not only the relative benefits but also the relative fault of the Bank on
the one hand and the Purchaser on the other in connection with such
losses, claims, damages or liabilities (or actions in respect thereof),
as well as any other relevant equitable considerations. The Bank and the
Purchaser agree that it would not be just and equitable if contribution
pursuant to this Section 9.01(a)(vii) were determined by pro rata
allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above in this Section
9.01(a)(vii). The amount paid or payable by a Seller Indemnified Party as
a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this Section 9.01(vii) shall be
deemed to include any legal or other expenses reasonably incurred by such
Seller Indemnified Party in connection with investigating or defending
any such action or claim, unless the Seller Indemnified Party has jointly
assumed the defense thereof with the Bank pursuant to Section 3.04(b)
and, in accordance with such Section, is responsible for the costs of
counsel associated therewith. Notwithstanding the provisions of this
Section 9.01(a)(vii), the Purchaser shall not be required to contribute
any amount in excess of any underwriting discount, commission,
structuring or other fee earned in connection with a transfer as
contemplated in this Article IX.
(b) As requested by the Purchaser, the Bank shall also furnish to
the Purchaser information regarding the Bank necessary for the Purchaser
to effect a Whole Loan Transfer or Pass-Through Transfer, as applicable.
In addition, the Bank shall represent and warrant to the Purchaser that,
when delivered, such information shall not contain any untrue statement
of a material fact and will not omit to state any material fact necessary
to make the statements therein, in light of the circumstances under which
they were made, not misleading.
45
ARTICLE X
DEFAULT
Section 10.01 Events of Default. (a) Each of the following shall
constitute an Event of Default on the part of the Bank:
(i) any failure by the Bank to remit to the Purchaser (x) any
payment to be made on a Remittance Date that continues unremedied for a
period of one (1) Business Day after the date upon which such payment was
due or (y) any payment required to be made under the terms of this
Agreement (other than any payment to be made on a Remittance Date) that
continues unremedied for a period of three (3) Business Days after the
date upon which such payment was due; or
(ii) failure by the Bank duly to observe or perform in any material
respect any other of the covenants or agreements on the part of the Bank
set forth in this Agreement which continues unremedied for a period of
thirty (30) days after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given to the Bank, by
the Purchaser; or
(iii) failure by the Servicer to maintain its license to do business
in any jurisdiction where the Servicer is required to be licensed in
connection with the servicing of the Receivables or the performance of
its other obligations under this Agreement; or
(iv) any change in the business, assets, operations, prospects or
condition, financial or otherwise, of the Bank that has a material
adverse effect on the ability of the Bank to perform any of its
obligations under this Agreement; or
(v) the long-term unsecured debt rating of the Bank is withdrawn or
reduced to "Baa2" by Xxxxx'x, "BBB" by Standard & Poor's or "BBB" by
Fitch; or
(vi) the Bank shall default in the payment of indebtedness for any
borrowed monies (after giving effect to all applicable cure periods in
any agreement governing such indebtedness) in an amount in excess of
$10,000,000; or
(vii) a decree or order of a court or agency or supervisory
authority having jurisdiction for the appointment of a conservator or
receiver or liquidator in any insolvency, readjustment of debt, including
bankruptcy, marshaling of assets and liabilities or similar proceedings,
or for the winding-up or liquidation of its affairs, shall have been
entered against the Servicer and such degree or order shall have remained
in force undischarged or unstayed for a period of sixty (60) days; or
(viii)the Servicer shall consent 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 either the Servicer or of or relating to all or substantially
all of its property; or
46
(ix) the Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of
any applicable insolvency, bankruptcy or reorganization statute, make an
assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations; or
(x) the Servicer attempts to assign its right to servicing
compensation hereunder or to assign this Agreement or the servicing
responsibilities or custodial responsibilities hereunder or to delegate
its duties hereunder or any portion thereof in violation of Section 8.04;
or
(xi) the indictment of Servicer, any director or employee thereof,
any Affiliate or any director or employee thereof for criminal activity
related to the origination or servicing activities of the Servicer, in
each case, where such indictment materially and adversely affects the
ability of the Servicer, as applicable, to perform its obligations under
this Agreement subject to the condition that such indictment is not
dismissed within ninety (90) days; or
(xii) for any Determination Date on or after the Determination Date
occurring in July 2003, the Cumulative Net Loss Ratio exceeds the
percentage set forth opposite such Determination Date on Schedule 1
hereto; or
(xiii)for any Determination Date, as of the last day of any
Collection Period, the Pool Delinquency Percentage exceeds 2.625%; or
(xiv) for any Determination Date, the Six Month Annualized Net Loss
Ratio occurring in the time periods set forth opposite such Determination
Date on Schedule 1 hereto, exceed the corresponding percentages;
(b) The Bank shall deliver to the Purchaser, promptly after having
obtained knowledge thereof, but in no event later than three (3) Business Days
thereafter, written notice in an Officer's Certificate of any event which with
the giving of notice or lapse of time, or both, would become an Event of
Default under Section 10.01(a).
(c) In each case, so long as an Event of Default shall not have been
remedied, in addition to whatever rights the Purchaser may have at law or
equity to damages, including injunctive relief and specific performance, the
Purchaser, by notice in writing to the Seller and the Servicer, may (i)
terminate the Bank as Servicer under this Agreement and the servicing of the
Receivables and the proceeds thereof, including the Servicer's custodial
responsibilities hereunder; (ii) give notice to each Obligor of the sale of
the related Receivable to the Purchaser and that such Obligor shall, effective
as of the date of such notice, remit all Monthly Payments to an account
specified by the Purchaser or (iii) require the Servicer to deliver within
five (5) Business Days all Receivable Files to an entity designated by the
Purchaser. Notwithstanding the foregoing, in connection with an Event of
Default as set forth in clauses (xii), (xiii) and (xiv), the Purchaser may
only exercise the rights described in clauses (i) through (iii) of this clause
(c).
(d) Upon receipt by the Servicer of such written notice pursuant to
clause (c)(i) above, all authority and power of the Servicer under this
Agreement, whether with respect to the Receivables or otherwise, shall pass to
and be vested in the successor appointed pursuant to
47
Section 12.01. Upon written request from any Purchaser, the Servicer shall
prepare, execute and deliver to the successor servicer designated by the
Purchaser any and all documents and other instruments, place in such
successor's possession all Receivable Files, and do or cause to be done all
other acts or things necessary or appropriate to effect the purposes of such
notice of termination, including but not limited to the transfer and
endorsement or assignment of the Receivable Files, at the Servicer's sole
expense. The Servicer shall cooperate with the Purchaser and such successor
servicer in effecting the termination of the Servicer's responsibilities and
rights hereunder, including without limitation, the transfer to such successor
for administration by it of all cash amounts which shall at the time be held
by the Servicer with respect to the Receivables or thereafter received with
respect to the Receivables.
(e) The Servicer shall not be required to repurchase a Receivable
pursuant to Section 4.01(g) or to indemnify the Purchaser pursuant to Section
8.01 in connection with (x) a Receivable being deemed to be unenforceable in a
jurisdiction or (y) the impairment of receipt by the Purchaser of Collections
on a Receivable if either (x) or (y) above occurs as a result of the
Purchaser's failure to obtain any license or consent necessary in connection
with its ownership of the Receivables. Any delinquencies, repossessions or
losses on the Receivables caused by the failure of the Purchaser to have any
such license or consent shall not be considered in determining any Event of
Default under clause (xii), (xiii) or (xiv) of Section 10.01(a) above. In
addition, the Servicer shall not be required to repurchase a Receivable
pursuant to Section 4.01(g) or to indemnify the Purchaser pursuant to Section
8.01 in connection with (A) the impairment of the Servicer's ability to
collect amounts due on the Receivables or (B) a negative effect on servicing
performance, if either (A) or (B) above occurs as a result of the inability of
the Servicer to pursue litigation due to the restrictions set forth in Section
4.01(c).
Section 10.02 Waiver of Event of Defaults. By a written notice, the
Purchaser may waive any Event of Default (other than an Event of Default
pursuant to clauses (vii) or (viii) above) by the Seller or Servicer in the
performance of their respective obligations hereunder and its consequences.
Upon any 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 except to the extent
expressly so waived. Notwithstanding the foregoing, if any Event of Default
that has occurred is continuing, unless and until the Purchaser shall waive
such Event of Default by written notice, the Purchaser may by notice in
writing to the Servicer in the manner provided in Section 10.01(c), terminate
the rights of the Servicer under this Agreement and in and to the servicing
and the custody of the Receivables and the proceeds thereof at any time
thereafter.
ARTICLE XI
TERMINATION
Section 11.01 Termination. This Agreement shall terminate upon the
earlier of (i) the later to occur of (A) the final payment or other
liquidation (or any advance with respect thereto) of the last maturing
Receivable and (B) the disposition of any Financed Vehicle with respect to the
last Receivable and the remittance of all funds due hereunder or (ii) the
mutual consent of the Servicer and the Purchaser in writing. The
representations and warranties made
48
by the Seller in Sections 3.01 and 3.02, the indemnification obligations of
the Seller under Section 3.04(a) and the indemnification obligations of the
Servicer under Section 8.01(a) shall survive the termination of this
Agreement.
ARTICLE XII
MISCELLANEOUS PROVISIONS
Section 12.01 Successor to Servicer. (a) Prior to termination of any
of the Servicer's responsibilities and duties under this Agreement pursuant to
Section 8.04, 10.01(c) or 11.01, the Purchaser shall (i) succeed to and assume
all of the Seller's responsibilities, rights, duties and obligations under
this Agreement, or (ii) appoint a successor satisfying the conditions set
forth in Section 8.02 and which shall succeed to all rights and assume all of
the responsibilities, duties and liabilities of the Servicer under this
Agreement, including as servicer and custodian, prior to the termination of
the Servicer's responsibilities, duties and liabilities under this Agreement.
In connection with such appointment and assumption, the Purchaser may make
such arrangements for the compensation of such successor out of payments on
Receivables as it and such successor shall agree. In the event that the
Servicer's duties, responsibilities and liabilities under this Agreement
should be terminated pursuant to the aforementioned sections, the Servicer
shall discharge such duties and responsibilities during the period from the
date it acquires knowledge of such termination until the effective date
thereof with the same degree of diligence and prudence which it is obligated
to exercise under this Agreement, and shall take no action whatsoever that
might impair or prejudice the rights or financial condition of its successor
and shall continue to receive the Servicing Fee and any other amounts payable
to the Servicer hereunder through but not including the day on which a
successor Servicer is appointed. The resignation or removal of the Servicer
pursuant to the aforementioned sections shall not become effective until a
successor shall be appointed pursuant to this Section 12.01 and shall in no
event relieve the Servicer of the representations and warranties made pursuant
to Section 3.01 and the remedies available to the Purchaser under Sections
4.01(g) and 6.01, it being understood and agreed that the provisions of such
Sections 3.01, 4.01(g) and 6.01 shall be applicable to the Servicer
notwithstanding any such termination of the Servicer, or the termination of
this Agreement.
(b) Any successor appointed as provided herein shall execute,
acknowledge and deliver to the Servicer and to the Purchaser an instrument
accepting such appointment, wherein the successor shall make the
representations and warranties set forth in Section 3.01, except for the
portion of Section 3.01(a)(ix) relating to the sale of the Conveyed Assets and
all of Sections 3.01(a)(xi) through (xvi), whereupon such successor shall
become fully vested with all the rights, powers, duties, responsibilities,
obligations and liabilities of the Servicer, with like effect as if originally
named as a party to this Agreement. Any termination of the Servicer or
termination of this Agreement pursuant to Section 8.04, 10.01 or 11.01 shall
not affect any claims that any Purchaser may have against the Servicer arising
out of the Servicer's actions or failure to act prior to any such termination.
(c) The Servicer shall deliver promptly to the successor servicer
all Collections held by it in respect of the Receivables and all Receivable
Files and related documents and statements held by it hereunder and the
Servicer shall account for all funds and shall execute and
49
deliver such instruments and do such other things as may reasonably be
required to more fully and definitively vest in the successor all such rights,
powers, duties, responsibilities, obligations and liabilities of the Servicer.
(d) Any successor servicer shall be required to remit to the
Purchaser all collections received with respect to the Receivables on a daily
basis unless otherwise agreed to by the Purchaser.
Section 12.02 Amendment. This Agreement may only be amended from
time to time by written agreement signed by the Servicer and the Purchaser.
Section 12.03 Governing Law; Jurisdiction; Waiver of Jury Trial.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS.
(a) In connection with any suit, claim, action or proceeding arising
out of or relating to this Agreement and the transactions contemplated hereby,
(i) each of the Bank and the Purchaser hereby consents to the in personam
jurisdiction of any court of the State of New York or any U.S. federal court
located in the Borough of Manhattan in the State of New York; (ii) each of the
Bank and the Purchaser agrees that service by prepaid certified or registered
mail, or any other form equivalent thereto (or, in the alternative, by any
other means sufficient under applicable law, rules and regulations) at the
addresses set forth in Section 12.05 shall be valid and sufficient for all
purposes; and (iii) each the Bank and the Purchaser agrees to, and irrevocably
waives any objection based on forum non conveniens or venue not to, appear in
such state or U.S. federal court located in the Borough of Manhattan.
(b) EACH OF THE BANK AND THE PURCHASER HEREBY IRREVOCABLY AND
UNCONDITIONALLY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY AND ALL
RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING BASED
ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY
OTHER DOCUMENTS AND INSTRUMENTS EXECUTED IN CONNECTION HEREWITH, OR ANY COURSE
OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN), OR
ACTIONS OF THE BANK OR THE PURCHASER. THIS PROVISION IS A MATERIAL INDUCEMENT
FOR THE PURCHASER TO ENTER INTO THIS AGREEMENT.
Section 12.04 Duration of Agreement. This Agreement shall continue
in existence and effect until terminated as herein provided. This Agreement
shall continue notwithstanding transfers of the Receivables by the Purchaser.
Section 12.05 Notices.
(a) Any notice pursuant to this Agreement shall be in writing signed
by or on behalf of the Party giving it and may be served by sending it by
confirmed facsimile, personal delivery or overnight courier to the address of
the addressee set forth below (or to such other address as the addressee shall
have specified to such Party by not less than fifteen (15) days prior
50
notice given in accordance with this Section 12.05). Notice given is deemed
for purposes of this Agreement:
(i) in the case of a facsimile transmission, on the day a
confirmation of receipt is confirmed, or, if such day is not a Business
Day, on the first Business Day thereafter; and
(ii) in the case of personal delivery or delivery by overnight
courier, on the day of delivery at the address of the addressee or, if
such day is not a Business Day, on the first Business Day thereafter.
(b) The details for notices are:
(i) if to Purchaser:
Xxxxxx Xxxxxxx Asset Funding, Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxx
Tel.: (000) 000-0000
Fax.: (000) 000-0000
with a copy to:
Xxxxxx Xxxxxxx Asset Funding, Inc.
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx Xxxxx
Tel.: (000) 000-0000
Fax.: (000) 000-000-0000
(ii) if to the Seller or Servicer:
The Huntington National Bank
Huntington Center
00 Xxxxx Xxxx Xxxxxx - XX0000
Xxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Tel.: (000) 000-0000
Fax.: (000) 000-0000
with a copy to:
The Huntington National Bank
Huntington Center
00 Xxxxx Xxxx Xxxxxx
Xxxxxxxx, XX 00000
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Attention: Xxxxxx X. Xxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
Section 12.06 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be held
unenforceable or invalid in any jurisdiction, then such covenants, agreements,
provisions or terms shall be deemed severable from the remaining covenants,
agreements, provisions or terms of this Agreement in such jurisdiction to the
extent of such unenforceability or invalidity, and such unenforceability or
invalidity shall in no way affect the validity or enforceability of the other
provisions of this Agreement or of such provisions in any other jurisdiction.
Section 12.07 Entire Agreement. This Agreement and the Purchase
Price and Terms Letter constitute the entire agreement between the Parties
relating to the transactions contemplated herein and supersede and extinguish
any prior drafts, agreements, undertakings, representations, warranties and
arrangements of any nature whatsoever, whether or not in writing, relating
thereto.
Section 12.08 Relationship of Parties. Nothing contained herein
shall be deemed or construed to create a partnership or joint venture between
the Purchaser and the Seller or Servicer.
Section 12.09 Counterparts. This Agreement may be executed in one or
more counterparts and by each Party on separate counterparts, each of which,
when so executed, shall be deemed to be an original; such counterparts,
together, shall constitute one and the same agreement. Transmission by
facsimile of an executed counterpart hereof shall be deemed to constitute due
and sufficient delivery of such counterpart.
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Section 12.10 Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon, and shall be enforceable by, the Seller,
the Servicer and the Purchaser and their permitted successors and assigns,
including without limitation, any trustee or similar party appointed by the
Purchaser or anyone or more of its Affiliates with respect to any Whole Loan
Transfer or Pass-Through Transfer. Neither the Seller nor the Servicer may
assign all or any portion of their respective rights or obligations under this
Agreement without the prior written consent of the Purchaser. Any such
purported assignment without such consent shall be null and void.
Section 12.11 Assignment by Purchaser. The Purchaser shall have the
right, without the consent of the Seller or the Servicer, to assign, in whole
or in part, its interest under this Agreement with respect to some or all of
the Receivables, and designate any Person to exercise any rights of the
Purchaser hereunder, by executing one or more Assignment, Assumption and
Recognition Agreements substantially in the form of Exhibit K hereto and each
assignee or designee shall accede to the rights and obligations hereunder of
the Purchaser with respect to such Receivables. All references to the
Purchaser in this Agreement shall be deemed to include such assignees and
designees.
Section 12.12 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of the Purchaser, the Seller or the
Servicer, any right, remedy, power or privilege hereunder, will operate as a
waiver thereof; nor will any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges therein provided are cumulative and not
exhaustive of any rights, remedies, powers and privileges provided by law.
Section 12.13 Further Assurances. The Seller, the Servicer and the
Purchaser agree to do and perform, from time to time, any and all acts and to
execute any and all further instruments required or reasonably requested to
more fully to effect the purposes of this Agreement, including, without
limitation, the execution of any financing statements or continuation
statements relating to the Receivables for filing under the provisions of the
UCC of any applicable jurisdiction.
Section 12.14 Effect of Headings; Cross-References. The article,
section and subsection headings herein and the table of contents of this
Agreement are for convenience only and shall not affect the construction of
this Agreement. References in this Agreement to article, section and
subsection numbers are to such article, section and subsection numbers of this
Agreement.
Section 12.15 No Petition Covenant. Each of the Seller, the Servicer
and the Purchaser, by entering into this Agreement, covenants that it shall
not, prior to the date that is one year and one day after the payment in full
of all securities issued in connection with any Pass-Through Transfer,
acquiesce, petition or otherwise invoke or cause the issuer of such securities
or trustee or other similar entity for such securities to invoke the process
of any court or government authority for the purpose of commencing or
sustaining a case against such issuer or trustee or other entity under any
bankruptcy, insolvency or similar law, or for the purpose of appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar
53
official of such issuer or trustee or other entity or any substantial part of
its properties, or ordering the winding up or liquidation of the affairs of
such issuer, trustee or other entity. This Section 12.15 shall survive the
termination of this Agreement.
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IN WITNESS WHEREOF, the Seller, Servicer and the Purchaser have
caused their names to be signed hereto by their respective duly authorized
officers as of the day and year first above written.
XXXXXX XXXXXXX ASSET FUNDING, INC.,
as Purchaser
By: /s/ J. Xxxxxxx Xxx Xxxx
--------------------------------
Name: J. Xxxxxxx Xxx Xxxx
Title: Vice President
THE HUNTINGTON NATIONAL BANK, as
Seller and as Servicer
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
55
