EXHIBIT 99.2
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EXECUTION COPY
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SALE AND SERVICING AGREEMENT
among
XXXXXX XXXXXXX AUTO LOAN TRUST 2003-HB1,
Issuer,
XXXXXX XXXXXXX ABS CAPITAL II INC.,
Depositor,
XXXXXX XXXXXXX ASSET FUNDING, INC.,
Seller,
THE HUNTINGTON NATIONAL BANK,
Servicer
and
XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
Indenture Trustee
Dated as of June 1, 2003
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01 Definitions.....................................................................................1
Section 1.02 Other Definitional Provisions..................................................................21
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.01 Conveyance of Receivables......................................................................22
ARTICLE III
THE RECEIVABLES
Section 3.01 Representations and Warranties of HNB..........................................................24
Section 3.02 Representations and Warranties of the Depositor................................................25
Section 3.03 Repurchase Upon Breach.........................................................................25
Section 3.04 Custody of Receivable Files....................................................................26
Section 3.05 Duties of Servicer as Custodian................................................................26
Section 3.06 Instructions; Authority to Act.................................................................28
Section 3.07 [Intentionally Omitted]........................................................................28
Section 3.08 Effective Period and Termination...............................................................28
ARTICLE IV
SERVICING OF RECEIVABLES
Section 4.01 Duties of Servicer.............................................................................29
Section 4.02 Collection of Receivable Payments; Modifications of Receivables; Monthly
Advances.......................................................................................30
Section 4.03 Realization upon Receivables...................................................................31
Section 4.04 Satisfaction of Receivable.....................................................................32
Section 4.05 Maintenance of Security Interests in Financed Vehicles.........................................32
Section 4.06 Additional Servicing Covenants.................................................................32
Section 4.07 [Intentionally Omitted]........................................................................33
Section 4.08 Purchase of Receivables Upon Breach............................................................33
Section 4.09 Servicing Fee; Costs and Expenses..............................................................33
Section 4.10 Servicer's Certificate and Servicer Reports....................................................35
Section 4.11 Annual Statement as to Compliance..............................................................35
Section 4.12 Annual Report of Accountants...................................................................36
Section 4.13 Access to Certain Documentation and Information Regarding Receivables..........................36
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Section 4.14 Access to Information Regarding Trust and Basic Documents......................................36
Section 4.15 Maintenance of Errors and Omission Policy......................................................37
ARTICLE V
DISTRIBUTIONS; STATEMENTS TO NOTEHOLDERS
Section 5.01 Establishment of Accounts......................................................................37
Section 5.02 Collections; Deposits into Collection Account..................................................39
Section 5.03 Application of Collections.....................................................................40
Section 5.04 Repurchase Amounts.............................................................................40
Section 5.05 Permitted Withdrawals from Collection Account..................................................40
Section 5.06 Distributions..................................................................................40
Section 5.07 Statements to Securityholders..................................................................44
Section 5.08 Subcertifications of Indenture Trustee in Connection with Xxxxxxxx-Xxxxx
Certifications.................................................................................45
ARTICLE VI
THE DEPOSITOR
Section 6.01 Representations of Depositor...................................................................47
Section 6.02 Corporate Existence............................................................................48
Section 6.03 Liability of Depositor; Indemnities............................................................49
Section 6.04 Merger or Consolidation of, or Assumption of the Obligations of, Depositor.....................49
Section 6.05 Limitation on Liability of Depositor and Others................................................49
Section 6.06 Depositor May Own Securities...................................................................49
Section 6.07 Depositor to Provide Copies of Relevant Securities Filings.....................................50
Section 6.08 Amendment of Depositor's Organizational Documents..............................................50
Section 6.09 Xxxxxxxx-Xxxxx Certifications..................................................................50
ARTICLE VII
THE SERVICER
Section 7.01 Representations of Servicer....................................................................50
Section 7.02 Indemnities of Servicer........................................................................58
Section 7.03 Merger or Consolidation of, or Assumption of the Obligations of, Servicer......................59
Section 7.04 Limitation on Liability of Servicer and Others.................................................60
Section 7.05 Servicer Not to Resign.........................................................................60
ARTICLE VIII
DEFAULT
Section 8.01 Event of Servicing Terminations and Additional Servicer Termination Events.....................61
Section 8.02 Consequences of a Servicer Termination Event or an Additional Event of
Servicing Termination..........................................................................62
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Section 8.03 Appointment of Successor Servicer..............................................................63
Section 8.04 Notification to Securityholders................................................................64
Section 8.05 Waiver of Past Defaults........................................................................64
ARTICLE IX
TERMINATION
Section 9.01 Optional Purchase of All Receivables...........................................................65
ARTICLE X
MISCELLANEOUS
Section 10.01 Amendment......................................................................................66
Section 10.02 Protection of Title to Trust...................................................................67
Section 10.03 Notices........................................................................................69
Section 10.04 Assignment by the Depositor or the Servicer....................................................69
Section 10.05 Limitations on Rights of Others................................................................69
Section 10.06 Severability...................................................................................69
Section 10.07 Counterparts...................................................................................69
Section 10.08 Headings.......................................................................................70
Section 10.09 Governing Law..................................................................................70
Section 10.10 Assignment by Issuer...........................................................................70
Section 10.11 Nonpetition Covenants..........................................................................70
Section 10.12 Limitation of Liability of Owner Trustee and Indenture Trustee.................................70
SCHEDULE A Schedule of Receivables (On file with the Indenture Trustee)
SCHEDULE B Location of Receivable Files
SCHEDULE C Cumulative Net Loss Ratio
EXHIBIT A Form of Distribution Date Statement to Noteholders
EXHIBIT B Form of Servicer's Certificate
EXHIBIT C Form of Servicer Annual Certification
EXHIBIT D Form of Depositor's Annual Xxxxxxxx-Xxxxx Certification
EXHIBIT E Form of Certification to be Provided to the Depositor by the Indenture Trustee
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This SALE AND SERVICING AGREEMENT, dated as of June 1, 2003, among XXXXXX
XXXXXXX AUTO LOAN TRUST 2003-HB1, a Delaware statutory trust (the "Issuer"),
XXXXXX XXXXXXX ABS CAPITAL II INC., a Delaware corporation, as depositor (the
"Depositor"), THE HUNTINGTON NATIONAL BANK, as servicer ("HNB," and in such
capacity, the "Servicer"), XXXXXX XXXXXXX ASSET FUNDING, INC., a Delaware
corporation, as seller (the "Seller"), and XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, a national banking association, as indenture trustee
(the "Indenture Trustee").
WHEREAS, the Issuer desires to acquire from the Depositor a portfolio of
Receivables arising in connection with retail automobile and light truck loan
and installment sale contracts purchased by the Seller in the ordinary course
of its business and sold by the Seller to the Depositor pursuant to the
Assignment, Assumption and Recognition Agreement (as defined herein);
WHEREAS, the Depositor is willing to transfer such Receivables to the
Issuer; and
WHEREAS, HNB is willing to service such Receivables.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and for other good and valuable consideration, the receipt
and adequacy of which is hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01 Definitions. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
following meanings:
"1934 Act Documents" shall have the meaning set forth in Section 5.08.
"Affiliate" means, when used with reference to a specified Person, any
Person that (a) directly or indirectly controls or is controlled by or is
under common control with the specified Person, (b) is an officer of, partner
in or trustee of, or serves in a similar capacity with respect to, the
specified Person or of which the specified Person is an officer, partner or
trustee, or with respect to which the specified Person serves in a similar
capacity or (c) directly or indirectly is the beneficial owner of 10% or more
of any class of equity securities of the specified Person or of which the
specified Person is directly or indirectly the owner of 10% or more of any
class of equity securities.
"Additional Event of Servicing Termination" shall have the meaning set
forth in Section 8.01(b).
"Agreement" means this Sale and Servicing Agreement, as the same may be
amended, supplemented or modified from time to time.
"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, Assumption and Recognition Agreement" means the Assignment,
Assumption and Recognition Agreement dated as of June 1, 2003, between Xxxxxx
Xxxxxxx Asset Funding, Inc., as assignor, Xxxxxx Xxxxxxx ABS Capital II Inc.,
as assignee, and HNB, as seller and servicer, as the same may be amended,
supplemented or otherwise modified from time to time.
"Basic Documents" means the Indenture, this Agreement, the Trust
Agreement, the Assignment, Assumption and Recognition Agreement and other
documents (including any Letter of Representations with the Depository Trust
Company) and certificates delivered in connection therewith.
"Business Day" means any day other than (a) a Saturday or Sunday or (b) a
day on which banking institutions in the States of New York and Delaware, the
jurisdiction of the principal place of business of the Servicer or the cities
in which the Corporate Trust Offices of the Indenture Trustee are located, are
authorized or required by law or executive order to be closed. Notwithstanding
the foregoing, with respect to payments to the Noteholders or
Certificateholders, Business Day shall mean any day other than (i) a Saturday
or Sunday or (ii) a day on which banking institutions in the State of New York
or the cities in which the Corporate Trust Offices of the Indenture Trustee
are located are authorized or required by law or executive order to be closed.
"Certificate" means a certificate evidencing the beneficial interest of a
Certificateholder in the Trust.
"Class" means any one of the classes of Notes.
"Class A Note" means any Class A-1 Note or Class A-2 Note.
"Class A Noteholders' Interest Distributable Amount" means, with respect
to any Distribution Date, the sum of the Class A-1 Interest Distributable
Amount for such Distribution Date and the Class A-2 Interest Distributable
Amount for such Distribution Date.
"Class A Principal Distributable Amount" means, with respect to any
Distribution Date, an amount equal to (i) the Outstanding Amount of the Class
A Notes immediately prior to such Distribution Date minus (ii) the lesser of
(A) 88.2% of the Pool Balance for such Distribution Date and (B) an amount
equal to (1) the Pool Balance for such Distribution Date minus (2) the
Overcollateralization Target Amount for such Distribution Date; provided,
however, that, unless
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the Class A Notes have been paid in full, for (I) any Distribution Date as of
which the Three-Month Annualized Net Loss Ratio is greater than or equal to
the Sequential Principal Payment Trigger Percentage in effect on that
Distribution Date and (II) each subsequent Distribution Date as of which the
Six-Month Annualized Net Loss Ratio is greater than or equal to the Sequential
Principal Payment Trigger Percentage in effect on that Distribution Date, the
Class A Principal Distributable Amount shall be 100% of the Regular Principal
Allocation for such Distribution Date; provided further, that on the Final
Scheduled Distribution Date of any Class of Class A Notes, the Class A
Principal Distributable Amount shall not be less than the amount that is
necessary to pay that Class of Class A Notes in full; and provided further,
that the Class A Principal Distributable Amount on any Distribution Date shall
not exceed the Outstanding Amount of the Class A Notes on that Distribution
Date.
"Class A-1 Final Scheduled Distribution Date" means the Distribution Date
in July 2007.
"Class A-1 Interest Carryover Shortfall" means, with respect to any
Distribution Date, the amount, if any, by which the sum of the Class A-1
Monthly Interest Distributable Amount for the preceding Distribution Date and
any outstanding Class A-1 Interest Carryover Shortfall on such preceding
Distribution Date exceeds the amount in respect of interest for the Class A-1
Notes actually deposited in the Note Interest Distribution Account on such
preceding Distribution Date, plus interest on the amount of interest due but
not paid to the Class A-1 Noteholders on such preceding Distribution Date, to
the extent permitted by law, at the Class A-1 Rate.
"Class A-1 Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-1 Monthly Interest Distributable
Amount for such Distribution Date and the Class A-1 Interest Carryover
Shortfall for such Distribution Date.
"Class A-1 Monthly Interest Distributable Amount" means, with respect to
any Distribution Date, interest accrued during the applicable Interest Accrual
Period on the Class A-1 Notes at the Class A-1 Rate on the Outstanding Amount
of the Class A-1 Notes on the immediately preceding Distribution Date (or, in
the case of the first Distribution Date, the Closing Date), after giving
effect to all distributions of principal to the Class A-1 Noteholders on or
prior to such preceding Distribution Date. For all purposes of this Agreement
and the other Basic Documents, interest with respect to the Class A-1 Notes
shall be computed on the basis of a 360-day year consisting of twelve 30-day
months.
"Class A-1 Noteholder" means the Person in whose name a Class A-1 Note is
registered in the Note Register.
"Class A-1 Notes" means the 1.46% Asset Backed Notes, Class A-1,
substantially in the form of Exhibit A-1 to the Indenture.
"Class A-1 Rate" means 1.46% per annum.
"Class A-2 Final Scheduled Distribution Date" means the Distribution Date
in April 2011.
"Class A-2 Interest Carryover Shortfall" means, with respect to any
Distribution Date, the amount, if any, by which the sum of the Class A-2
Monthly Interest Distributable Amount for the
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preceding Distribution Date and any outstanding Class A-2 Interest Carryover
Shortfall on such preceding Distribution Date exceeds the amount in respect of
interest for the Class A-2 Notes actually deposited in the Note Interest
Distribution Account on such preceding Distribution Date, plus interest on the
amount of interest due but not paid to the Class A-2 Noteholders on such
preceding Distribution Date, to the extent permitted by law, at the Class A-2
Rate.
"Class A-2 Interest Distributable Amount" means, with respect to any
Distribution Date, the sum of the Class A-2 Monthly Interest Distributable
Amount for such Distribution Date and the Class A-2 Interest Carryover
Shortfall for such Distribution Date.
"Class A-2 Monthly Interest Distributable Amount" means, with respect to
any Distribution Date, interest accrued during the applicable Interest Accrual
Period on the Class A-2 Notes at the Class A-2 Rate on the Outstanding Amount
of the Class A-2 Notes on the immediately preceding Distribution Date (or, in
the case of the first Distribution Date, the Closing Date), after giving
effect to all distributions of principal to the Class A-2 Noteholders on or
prior to such preceding Distribution Date. For all purposes of this Agreement
and the other Basic Documents, interest with respect to the Class A-2 Notes
shall be computed on the basis of a 360-day year consisting of twelve 30-day
months.
"Class A-2 Noteholder" means the Person in whose name a Class A-2 Note is
registered in the Note Register.
"Class A-2 Notes" means the 2.17% Asset Backed Notes, Class A-2,
substantially in the form of Exhibit A-2 to the Indenture.
"Class A-2 Rate" means 2.17% per annum.
"Class B Final Scheduled Distribution Date" means the Distribution Date
in April 2011.
"Class B Interest Carryover Shortfall" means, with respect to any
Distribution Date, the amount, if any, by which the sum of the Class B Monthly
Interest Distributable Amount for the preceding Distribution Date and any
outstanding Class B Interest Carryover Shortfall on such preceding
Distribution Date exceeds the amount in respect of interest for the Class B
Notes actually deposited in the Note Interest Distribution Account on such
preceding Distribution Date, plus interest on the amount of interest due but
not paid to the Class B Noteholders on such preceding Distribution Date, to
the extent permitted by law, at the Class B Rate.
"Class B Monthly Interest Distributable Amount" means, with respect to
any Distribution Date, interest accrued during the applicable Interest Accrual
Period on the Class B Notes at the Class B Rate on the Outstanding Amount of
the Class B Notes on the immediately preceding Distribution Date (or, in the
case of the first Distribution Date, the Closing Date), after giving effect to
all distributions of principal to the Class B Noteholders on or prior to such
preceding Distribution Date. For all purposes of this Agreement and the other
Basic Documents, interest with respect to the Class B Notes shall be computed
on the basis of a 360-day year consisting of twelve 30-day months.
"Class B Noteholder" means the Person in whose name a Class B Note is
registered in the Note Register.
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"Class B Noteholders' Interest Distributable Amount" means, with respect
to any Distribution Date, the sum of the Class B Monthly Interest
Distributable Amount for such Distribution Date and the Class B Interest
Carryover Shortfall for such Distribution Date.
"Class B Notes" means the 2.22% Asset Backed Notes, Class B,
substantially in the form of Exhibit B to the Indenture.
"Class B Principal Distributable Amount" means, with respect to any
Distribution Date, an amount equal to (a) the sum of (i) the Outstanding
Amount of the Class A Notes (after taking into account distribution of the
Class A Principal Distributable Amount on such Distribution Date) and (ii) the
Outstanding Amount of the Class B Notes immediately prior to such Distribution
Date minus (b) the lesser of (i) 92.5% of the Pool Balance for such
Distribution Date and (ii) an amount equal to (A) the Pool Balance for such
Distribution Date minus (B) the Overcollateralization Target Amount for such
Distribution Date; provided, however, that, for (I) any Distribution Date as
of which the Three-Month Annualized Net Loss Ratio is greater than or equal to
the Sequential Principal Payment Trigger Percentage in effect on that
Distribution Date and (II) each subsequent Distribution Date as of which the
Six-Month Annualized Net Loss Ratio is greater than or equal to the Sequential
Principal Payment Trigger Percentage in effect on that Distribution Date, the
Class B Principal Distributable Amount shall be an amount equal to (x) 100% of
the Regular Principal Allocation for such Distribution Date minus (y) the
Class A Principal Distributable Amount for such Distribution Date; provided
further that, on the Class B Final Scheduled Distribution Date, the Class B
Principal Distributable Amount shall not be less than the amount that is
necessary to pay the Class B Notes in full; and provided further that the
Class B Principal Distributable Amount on any Distribution Date shall not
exceed the Outstanding Amount of the Class B Notes on that Distribution Date.
"Class B Rate" means 2.22% per annum.
"Class C Final Scheduled Distribution Date" means the Distribution Date
in April 2011.
"Class C Interest Carryover Shortfall" means, with respect to any
Distribution Date, the amount, if any, by which the sum of the Class C Monthly
Interest Distributable Amount for the preceding Distribution Date and any
outstanding Class C Interest Carryover Shortfall on such preceding
Distribution Date exceeds the amount in respect of interest for the Class C
Notes actually deposited in the Note Interest Distribution Account on such
preceding Distribution Date, plus interest on the amount of interest due but
not paid to the Class C Noteholders on such preceding Distribution Date, to
the extent permitted by law, at the Class C Rate.
"Class C Monthly Interest Distributable Amount" means, with respect to
any Distribution Date, interest accrued during the applicable Interest Accrual
Period on the Class C Notes at the Class C Rate on the Outstanding Amount of
the Class C Notes on the immediately preceding Distribution Date (or, in the
case of the first Distribution Date, the Closing Date), after giving effect to
all distributions of principal to the Class C Noteholders on or prior to such
preceding Distribution Date. For all purposes of this Agreement and the other
Basic Documents, interest with respect to the Class C Notes shall be computed
on the basis of a 360-day year consisting of twelve 30-day months.
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"Class C Noteholder" means the Person in whose name a Class C Note is
registered in the Note Register.
"Class C Noteholders' Interest Distributable Amount" means, with respect
to any Distribution Date, the sum of the Class C Monthly Interest
Distributable Amount for such Distribution Date and the Class C Interest
Carryover Shortfall for such Distribution Date.
"Class C Notes" means the 3.48% Asset Backed Notes, Class C,
substantially in the form of Exhibit C to the Indenture.
"Class C Principal Distributable Amount" means, with respect to any
Distribution Date, an amount equal to (a) the sum of (i) the Outstanding
Amount of the Class A Notes (after taking into account distribution of the
Class A Principal Distributable Amount on such Distribution Date), (ii) the
Outstanding Amount of the Class B Notes (after taking into account
distribution of the Class B Principal Distributable Amount on such
Distribution Date) and (iii) the Outstanding Amount of the Class C Notes
immediately prior to such Distribution Date minus (b) the lesser of (i) 94.5%
of the Pool Balance for such Distribution Date and (ii) an amount equal to (A)
the Pool Balance for such Distribution Date minus (B) the
Overcollateralization Target Amount for such Distribution Date; provided,
however, that, for (I) any Distribution Date as of which the Three-Month
Annualized Net Loss Ratio is greater than or equal to the Sequential Principal
Payment Trigger Percentage in effect on that Distribution Date and (II) each
subsequent Distribution Date as of which the Six-Month Annualized Net Loss
Ratio is greater than or equal to the Sequential Principal Payment Trigger
Percentage in effect on that Distribution Date, the Class C Principal
Distributable Amount shall be an amount equal to (x) 100% of the Regular
Principal Allocation for such Distribution Date minus (y) an amount equal to
the sum of (1) the Class A Principal Distributable Amount for such
Distribution Date plus (2) the Class B Principal Distribution Amount for such
Distribution Date; provided further that, on the Class C Final Scheduled
Distribution Date, the Class C Principal Distributable Amount shall not be
less than the amount that is necessary to pay the Class C Notes in full; and
provided further that the Class C Principal Distributable Amount on any
Distribution Date shall not exceed the Outstanding Amount of the Class C Notes
on that Distribution Date.
"Class C Rate" means 3.48% per annum.
"Class D Final Scheduled Distribution Date" means the Distribution Date
in April 2011.
"Class D Interest Carryover Shortfall" means, with respect to any
Distribution Date, the amount, if any, by which the sum of the Class D Monthly
Interest Distributable Amount for the preceding Distribution Date and any
outstanding Class D Interest Carryover Shortfall on such preceding
Distribution Date exceeds the amount in respect of interest for the Class D
Notes actually deposited in the Note Interest Distribution Account on such
preceding Distribution Date, plus interest on the amount of interest due but
not paid to the Class D Noteholders on such preceding Distribution Date, to
the extent permitted by law, at the Class D Rate.
"Class D Monthly Interest Distributable Amount" means, with respect to
any Distribution Date, interest accrued during the applicable Interest Accrual
Period on the Class D Notes at the Class D Rate on the Outstanding Amount of
the Class D Notes on the immediately preceding
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Distribution Date (or, in the case of the first Distribution Date, the Closing
Date), after giving effect to all distributions of principal to the Class D
Noteholders on or prior to such preceding Distribution Date. For all purposes
of this Agreement and the other Basic Documents, interest with respect to the
Class D Notes shall be computed on the basis of a 360-day year consisting of
twelve 30-day months.
"Class D Noteholder" means the Person in whose name a Class D Note is
registered in the Note Register.
"Class D Noteholders' Interest Distributable Amount" means, with respect
to any Distribution Date, the sum of the Class D Monthly Interest
Distributable Amount for such Distribution Date and the Class D Interest
Carryover Shortfall for such Distribution Date.
"Class D Notes" means the 5.50% Asset Backed Notes, Class D,
substantially in the form of Exhibit D to the Indenture.
"Class D Principal Distributable Amount" means, with respect to any
Distribution Date, an amount equal to (a) 100% of the Regular Principal
Allocation for such Distribution Date minus (b) an amount equal to the sum of
(i) the Class A Principal Distributable Amount for such Distribution Date,
(ii) the Class B Principal Distributable Amount for such Distribution Date and
(iii) the Class C Principal Distributable Amount for such Distribution Date;
provided, however, that, on the Class D Final Scheduled Distribution Date, the
Class D Principal Distributable Amount shall not be less than the amount that
is necessary to pay the Class D Notes in full; and provided further that the
Class D Principal Distributable Amount on any Distribution Date shall not
exceed the Outstanding Amount of the Class D Notes on that Distribution Date.
"Class D Rate" means 5.50% per annum.
"Closing Date" means July 24, 2003.
"Collateral" has the meaning specified in the Granting Clause of the
Indenture.
"Collection Account" means the account designated as such, established
and maintained pursuant to Section 5.01(a).
"Collection Period" means, with respect to the first Distribution Date,
the period from June 1 through July 31, 2003, and for each subsequent
Distribution Date, the calendar month preceding the month in which such
Distribution Date occurs.
"Collector" has the meaning set forth in Section 4.03(b).
"Contract" means a retail automobile and light truck loan and installment
sale contract.
"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.
"Controlling Class" means (i) if the Class A Notes have not been paid in
full, the Class A Notes, (ii) if the Class A Notes have been paid in full and
Class B Notes remain Outstanding, the
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Class B Notes, (iii) if the Class A Notes and the Class B Notes have been paid
in full and Class C Notes remain Outstanding, the Class C Notes, and (iv) if
the Class A Notes, the Class B Notes and the Class C Notes have been paid in
full and Class D Notes remain Outstanding, the Class D Notes.
"Conveyed Assets" has the meaning set forth 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
the Net Liquidation Losses for all Collection Periods 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.
"Dealer" means the dealer that sold a Financed Vehicle and that
originated and/or assigned a related Receivable to HNB under an existing
Dealer Agreement.
"Dealer Agreement" means the agreement between a Dealer and HNB relating
to the origination of, or assignment of, the related Receivables to HNB 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 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.
"Delivery" when used with respect to Trust Account Property means:
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(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9-105(1)(i) of the UCC and
are susceptible of physical delivery, transfer thereof to the Indenture
Trustee by physical delivery to the Indenture Trustee endorsed to, or
registered in the name of, the Indenture Trustee or endorsed in blank,
and, with respect to a certificated security (as defined in Section 8-102
of the UCC) transfer thereof (i) by delivery of such certificated
security endorsed to, or registered in the name of, the Indenture Trustee
or (ii) by delivery thereof to a "clearing corporation" (as defined in
Section 8-102 of the UCC) and the making by such clearing corporation of
appropriate entries on its books reducing the appropriate securities
account of the transferor and increasing the appropriate securities
account of the Indenture Trustee by the amount of such certificated
security and the identification by the clearing corporation of the
certificated securities for the sole and exclusive account of the
Indenture Trustee (all of the foregoing, "Physical Property"), and, in
any event, any such Physical Property in registered form shall be in the
name of the Indenture Trustee or its nominee; and such additional or
alternative procedures as may hereafter become appropriate to effect the
complete transfer of ownership of any such Trust Account Property to the
Indenture Trustee or its nominee or custodian, consistent with changes in
applicable law or regulations or the interpretation thereof;
(b) with respect to any security issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National
Mortgage Association that is a book-entry security held through the
Federal Reserve System pursuant to federal book-entry regulations, the
following procedures, all in accordance with applicable law, including
applicable federal regulations and Articles 8 and 9 of the UCC:
book-entry registration of such Trust Account Property to an appropriate
book-entry account maintained with a Federal Reserve Bank by a securities
intermediary that is also a "depository" pursuant to applicable federal
regulations; the making by such securities intermediary of entries in its
books and records crediting such Trust Account Property to the Indenture
Trustee's security account at the securities intermediary and identifying
such book-entry security held through the Federal Reserve System pursuant
to federal book-entry regulations as belonging to the Indenture Trustee;
and such additional or alternative procedures as may hereafter become
appropriate to effect complete transfer of ownership of any such Trust
Account Property to the Indenture Trustee, consistent with changes in
applicable law or regulations or the interpretation thereof;
(c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not
governed by clause (b) above, registration on the books and records of
the issuer thereof in the name of the Indenture Trustee or its nominee or
custodian who either (i) becomes the registered owner on behalf of the
Indenture Trustee or (ii) having previously become the registered owner,
acknowledges that it holds for the Indenture Trustee; and
(d) with respect to any item of Trust Account Property that is a
security entitlement causing the securities intermediary to indicate on
its books and records that such security entitlement has been credited to
a securities account of the Indenture Trustee.
9
"Depositor" means Xxxxxx Xxxxxxx ABS Capital II Inc. and its successors
in interest.
"Depositor's Annual Xxxxxxxx-Xxxxx Certification" has the meaning set
forth in Section 6.09.
"Determination Date" means the second Business Day preceding the
Remittance Date.
"Distribution Date" means, with respect to each Collection Period, the
fifteenth day of the following month or, if such day is not a Business Day,
the immediately following Business Day, commencing on August 15, 2003.
"Distribution Date Statement" means the monthly report to Securityholders
specified in Section 5.07, the form of which is set forth in Exhibit A.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States of America or any State, having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution shall have a credit rating from each
Rating Agency in one of its generic rating categories that signifies
investment grade.
"Eligible Institution" means (a) the corporate trust department of the
Indenture Trustee or the Owner Trustee or (b) a depository institution
organized under the laws of the United States of America or any State, that
(i) has either (A) a long-term unsecured debt rating of at least "AA-" by
Standard & Poor's and "A2" by Moody's or (B) a short-term unsecured debt
rating or certificate of deposit rating of at least "A-1+" by Standard &
Poor's and "Prime-1" by Moody's and (ii) the deposits of which are insured by
the FDIC.
"Eligible Investments" means securities, negotiable instruments or
security entitlements, excluding any security with an "r" attached to the
rating thereof, that evidence:
(a) direct obligations of, and obligations fully guaranteed as to
the full and timely payment by, the United States of America or any
agency or instrumentality thereof;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of
the United States of America or any State (or any domestic branch of a
foreign bank) and subject to supervision and examination by federal or
state banking or depository institution authorities; provided, however,
that at the time of the investment or contractual commitment to invest
therein, the commercial paper or other short-term unsecured debt
obligations (other than such obligations the rating of which is based on
the credit of a Person other than such depository institution or trust
company) thereof shall have a credit rating from each Rating Agency in
the highest investment category granted thereby;
10
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each Rating
Agency in the highest investment category granted thereby;
(d) investments in money market funds having a rating from each
Rating Agency in the highest investment category granted thereby
(including funds for which the Indenture Trustee or the Owner Trustee or
any of their respective Affiliates is investment manager or advisor);
(e) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of
America or any agency or instrumentality thereof the obligations of which
are backed by the full faith and credit of the United States of America,
in either case entered into with a depository institution or trust
company (acting as principal) described in clause (b) above; and
(g) any other investment with respect to which the Rating Agency
Condition is met and the Issuer, the Indenture Trustee or the Servicer
has received written notification from Standard & Poor's that the
acquisition of such investment will not result in a reduction, withdrawal
or downgrade of the then-current rating of any Class of Notes.
"Eligible Servicer" means (a) HNB or (b) any other Person that at the
time of its appointment as Servicer is either (i) a person that (A) is
servicing a portfolio of retail automobile and light truck loan and
installment sale contracts, (B) is legally qualified and has the capacity to
service the Receivables, (C) has demonstrated the ability professionally and
competently to service a portfolio of motor vehicle retail installment sale
contracts or motor vehicle installment loans similar to the Receivables with
reasonable skill and care and (D) has a minimum net worth of $50,000,000 or
(ii) otherwise acceptable to each Rating Agency.
"Event of Servicing Termination" has the meaning set forth in Section
8.01(a).
"FDIC" means the Federal Deposit Insurance Corporation or any successor
organization.
"Final Scheduled Distribution Date" means the Class A-1 Final Scheduled
Distribution Date, the Class A-2 Final Scheduled Distribution Date, the Class
B Final Scheduled Distribution Date, the Class C Final Scheduled Distribution
Date or the Class D Final Scheduled Distribution Date, as applicable.
"Financed Vehicle" means a new or used automobile or light truck securing
a Receivable.
"First Allocation of Principal" means, with respect to any Distribution
Date, the excess, if any, of (x) the aggregate Outstanding Amount of the Class
A Notes as of the day immediately preceding such Distribution Date over (y)
the Pool Balance with respect to such Distribution Date.
11
"First Tier Seller" means HNB in its capacity as seller under the
Purchase Agreement.
"Fitch" means Fitch, Inc. and its successors.
"GAP Amount" means the amount of the outstanding Principal Balance of a
Receivable which HNB 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 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.
"Indemnified Claim" shall have the meaning set forth in Section 7.02(b).
"Indemnified Parties" or "Indemnified Party" shall have the meaning set
forth in Section 7.02(a).
"Indenture" means the Indenture, dated as of June 1, 2003, between the
Issuer and the Indenture Trustee, as the same may be amended, supplemented or
otherwise modified from time to time.
"Indenture Trustee" means the Person acting as Indenture Trustee under
the Indenture, its successors in interest and any successor trustee under the
Indenture.
"Indenture Trustee Fee" means one twelfth of the sum of the fees payable
annually to the Indenture Trustee, as set forth in the fee letter from the
Indenture Trustee to the Depositor dated July 14, 2003.
"Initial Class A-1 Note Balance" means $408,175,000.
"Initial Class A-2 Note Balance" means $113,714,000.
"Initial Class B Note Balance" means $17,996,000.
"Initial Class C Note Balance" means $9,690,000.
"Initial Class D Note Balance" means $12,238,000.
12
"Initial Pool Balance" means an amount equal to the aggregate Principal
Balance, as of the Cut-Off Date, of the Receivables listed on Schedule A
hereto, which shall be $553,727,701.64.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or all or substantially all of its property
in an involuntary case under any applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and such
decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or (b) the commencement by such Person of a voluntary case
under any applicable federal or state bankruptcy, insolvency or other similar
law now or hereafter in effect, or the consent by such Person to the entry of
an order for relief in an involuntary case under any such law, or the consent
by such Person to the appointment of or taking possession by a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for all or substantially all of its property, or the making by
such Person of any general assignment for the benefit of creditors, or such
Person admits in writing its inability to pay its debts as such debts become
due, or the taking of action by such Person in furtherance of any of the
foregoing.
"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 Accrual Period" means, with respect to the Notes, the period
from and including the 15th day of the preceding calendar month (or, in the
case of the first Distribution Date, the Closing Date) to and including the
14th day of the calendar month in which such Distribution Date occurs.
"Investment Earnings" means, with respect to any Distribution Date, the
investment earnings (net of losses and investment expenses) on amounts on
deposit in a Trust Account to be applied on such Distribution Date pursuant to
Section 5.01(e).
"Issuer" means Xxxxxx Xxxxxxx Auto Loan Trust 2003-HB1.
"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, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective 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
13
through the sale or assignment of such Receivable, trustee's sale or
otherwise, including the sale or other disposition of the related Financed
Vehicle.
"Minimum Required Rating" means, with respect to HNB, a short-term senior
unsecured debt rating equal to or greater than "Prime-1" by Moody's and "A-1"
by Standard & Poor's.
"Monthly Advance" has the meaning set forth in Section 4.02(c).
"Monthly Payment" means the scheduled monthly payment of principal and
interest on a Receivable that is payable by an Obligor under the related
Contract.
"Moody's" means Xxxxx'x Investors Service, Inc., and its successors.
"Net Investment Losses" means, with respect to a Trust Account and any
Collection Period, the amount, if any, by which the aggregate of all losses
and expenses incurred during such period in connection with the investment of
funds in Eligible Investments in accordance with Section 5.01(e) exceeds the
aggregate of all interest and other income realized during such period on such
funds.
"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.
"Note Balance" means, as of any date of determination, an amount equal to
the sum of (i) the Initial Class A-1 Note Balance, (ii) the Initial Class A-2
Note Balance, (iii) the Initial Class B Note Balance, (iv) the Initial Class C
Note Balance and (v) the Initial Class D Note Balance, less all amounts
distributed to Noteholders on or prior to such date and allocable to
principal.
"Note Interest Distribution Account" means the account designated as
such, established and maintained pursuant to Section 5.01(b).
"Note Pool Factor" means, with respect to each Class of Notes as of the
close of business on the last day of a Collection Period, a seven-digit
decimal figure equal to the Outstanding Amount of such Class of Notes (after
giving effect to any reductions thereof to be made on the immediately
following Distribution Date) divided by the original Outstanding Amount of
such Class of Notes. The Note Pool Factor will be 1.0000000 as of the Closing
Date; thereafter, the Note Pool Factor will decline to reflect reductions in
the Outstanding Amount of each Class of Notes.
"Notes" means the Class A-1 Notes, the Class A-2 Notes, the Class B
Notes, the Class C Notes and the Class D Notes.
"Noteholders" means the Class A-1 Noteholders, the Class A-2 Noteholders,
the Class B Noteholders, the Class C Noteholders or the Class D Noteholders.
"Obligor" means the obligor or obligors on a Receivable.
14
"Officers' 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 Depositor or the Servicer, as appropriate.
"Opinion of Counsel" means one or more written opinions of counsel, who
may be an employee of or counsel to the Depositor, the Servicer or the Trust,
which counsel shall be acceptable to the Indenture Trustee, the Owner Trustee
or the Rating Agencies, as applicable, and which shall be addressed to the
Owner Trustee and the Indenture Trustee and which shall be at the expense of
the person required to provide such an Opinion of Counsel, except as otherwise
provided in the other Basic Documents or in the Purchase Agreement.
"Overcollateralization Target Amount" means, as of any Distribution Date,
the greater of (x) 2.00% of the outstanding Pool Balance for such Distribution
Date and (y) 1.00% of the Initial Pool Balance.
"Owner Trustee" means Wilmington Trust Company, acting not in its
individual capacity but solely as owner trustee under the Trust Agreement and
any successor Owner Trustee pursuant to the terms of the Trust Agreement.
"Owner Trustee Fee" means the fee payable to the Owner Trustee, as set
forth in a separate fee agreement between the Owner Trustee and the Depositor.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, association, joint-stock company, trust, national
banking association, unincorporated organization or government or any agency
or political subdivision thereof or any other entity.
"Physical Property" has the meaning assigned to such term in the
definition of "Delivery" above.
"Pool Balance" means, with respect to any Distribution Date, an amount
equal to the aggregate Principal Balance of the Receivables at the end of the
related Collection Period, after giving effect to all payments of principal
received from Obligors and Repurchase Amounts to be remitted by the Servicer
for the related Collection Period, and after adjustment for Cram Down Losses
and reduction to zero of the aggregate outstanding Principal Balance of all
Receivables that became Defaulted Receivables during such Collection Period.
"Pool Delinquency Percentage" means, for any Determination Date, the
average for the three preceding Collection Periods (or if prior to three
months from the Cut-Off Date, the number of whole Collection Periods since the
Cut-Off 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 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.
"Principal Balance" means, with respect to any Receivable, as of the
related date of determination, the Amount Financed minus an amount equal to
the sum, as of the close of
15
business on the last day of the related Collection Period, of (i) that portion
of all amounts received by the Servicer (which amounts shall include any
amounts received by (x) HNB or (y) the Servicer under the Purchase Agreement
prior to the Closing Date) from or on behalf of the related Obligor on or
prior to such date and allocable to principal using the Simple Interest Method
plus (ii) Cram Down Losses in respect of such Receivable.
"Principal Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.01(c).
"Purchase Agreement" means the Purchase and Servicing Agreement, dated as
of May 31, 2003, between HNB, as seller and servicer, and Xxxxxx Xxxxxxx Asset
Funding, Inc., as purchaser, as the same may be amended, restated or modified
from time to time.
"Purchase Agreement Collection Period" means a Collection Period as
defined in the Purchase Agreement.
"Rating Agency" means Moody's or Standard & Poor's, as the context may
require. If none of Moody's, Standard & Poor's or a successor thereto remains
in existence, "Rating Agency" shall mean any nationally recognized statistical
rating organization or other comparable Person designated by the Depositor.
"Rating Agency Condition" means, with respect to any specified action or
determination, that each Rating Agency shall have been given 10 days' (or such
shorter period as shall be acceptable to each Rating Agency) prior notice
thereof and that each Rating Agency shall have notified the Issuer or the
Indenture Trustee in writing that such action will not result in a reduction,
withdrawal or downgrade of the then-current rating of any Class of Notes.
"Realized Losses" means, as to any Distribution Date, the amount, if any,
by which the aggregate outstanding Principal Balance of all Receivables that
became Defaulted Receivables during the related Collection Period exceeds that
portion allocable to principal of all Liquidation Proceeds, Insurance Proceeds
and Deficiency Balance recoveries received with respect to such Defaulted
Receivables for such Collection Period.
"Receivable File" means the following documents or instruments with
respect to each Receivable:
(i) the original Receivable or a copy of the original Receivable
together with an affidavit of HNB 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 Issuer in the
related Financed Vehicle;
16
(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, in its capacity
as servicer under the Purchase Agreement prior to the date hereof, or in its
capacity as Servicer under this Agreement effective as of the date hereof, as
applicable, shall have kept on file in accordance with its customary
procedures relating to a Receivable, an Obligor or a Financed Vehicle.
"Receivables" means all of the retail automobile and light truck loan and
installment sale contracts listed on Schedule A (which Schedule may be in
electronic form).
"Record Date" means, as to any Distribution Date, the day immediately
preceding such Distribution Date unless Definitive Notes are issued, in which
case the Record Date with respect to such Definitive Notes as to any
Distribution Date shall be the last day of the immediately preceding calendar
month.
"Regular Principal Allocation" means, with respect to any Distribution
Date, the excess, if any, of the aggregate Outstanding Amount of the Notes as
of the day immediately preceding such Distribution Date over the result of (a)
the Pool Balance with respect to such Distribution Date minus (b) the
Overcollateralization Target Amount with respect to such Distribution Date;
provided, however, that the Regular Principal Allocation on any Distribution
Date shall not exceed the Outstanding Amount of the Notes; and provided
further that the Regular Principal Allocation on or after the Final Scheduled
Distribution Date of any Class of Notes shall not be less than the amount that
is necessary to reduce the Outstanding Amount of such Class of Notes to zero.
"Remittance Date" means, with respect to each Collection Period, the 11th
day of the following month, or if such day is not a Business Day, the first
Business Day immediately preceding such date.
"Repurchase Amount" means, as to each Repurchased Receivable, an amount
equal to (a) the remaining Principal Balance of the Receivable as of the last
day of the Collection Period related to the Distribution 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 Distribution 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.
"Repurchased Receivable" means a Receivable purchased by or on behalf of
HNB pursuant to Section 3.03 or by or on behalf of the Servicer pursuant to
Section 4.08.
"Responsible Officer" means the chairman of the board, the president, any
executive vice president, senior vice president, vice president, assistant
vice president, the treasurer, any assistant treasurer, the secretary, the
assistant secretary or any other officer or assistant officer of such Person
customarily performing (or supervising the performance of) functions similar
to those performed by any of the above designated officers and also, with
respect to a particular
17
matter, any other officer to whom such matter is required because of such
officer's knowledge and familiarity with the particular subject. Responsible
Officer of the Indenture Trustee or the Owner Trustee shall be as defined in
the Indenture.
"Review Period" shall have the meaning set forth in Section 4.11(a).
"Xxxxxxxx-Xxxxx Act" means the Xxxxxxxx-Xxxxx Act of 2002 and the rules
and regulations promulgated thereunder by the Commission with respect thereto.
"Xxxxxxxx-Xxxxx Certification" means as and to the extent required by the
Xxxxxxxx-Xxxxx Act, the certification or certifications as comply in form and
substance with the Xxxxxxxx-Xxxxx Act required to be filed in all Annual
Reports on Form 10-K filed with the Commission with respect to the Trust.
"Schedule of Receivables" means the list of Receivables set forth in
Schedule A.
"Second Allocation of Principal" means, with respect to any Distribution
Date, the excess, if any, of (x) the aggregate Outstanding Amount of the Class
A Notes and the Class B Notes as of the day immediately preceding such
Distribution Date over (y) the Pool Balance with respect to such Distribution
Date.
"Securities" means the Notes and the Certificates.
"Securityholders" means the Noteholders and/or the Certificateholders, as
the context may require.
"Seller" means Xxxxxx Xxxxxxx Asset Funding, Inc. and its successors in
interest, as assignor of the Receivables to the Depositor pursuant to the
Assignment, Assumption and Recognition Agreement.
"Sequential Principal Payment Trigger Percentage" means, with respect to
each Determination Date occurring in the time periods set forth below, the
percentage corresponding thereto:
Determination
Date Percentage
---- ----------
August 2003 through and including June 2004 1.50%
July 2004 through and including August 2005 2.25%
September 2005 and thereafter 2.50%
"Servicer" means HNB, as the servicer of the Receivables, and each
successor to HNB (in the same capacity) pursuant to Section 7.03 or 8.03.
"Servicer Annual Certification" means an Officers' Certificate of the
Servicer delivered pursuant to Section 4.11(a), substantially in the form of
Exhibit C.
18
"Servicer Employees" has the meaning set forth in Section 4.15.
"Servicer's Certificate" means a Certificate of the Servicer delivered
pursuant to Section 4.10(a), substantially in the form of Exhibit B.
"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" has the meaning set forth in Section 4.09(a).
"Servicing Fee Rate" means 1.00% per annum.
"Servicing Reimbursement Amount" has the meaning set forth in Section
4.09(c).
"Servicing Rights" means all rights relating to the servicing of the
Receivables.
"Servicing Standard" has the meaning set forth 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.
"Six-Month Annualized Net Loss Ratio" means, with respect to any
Determination Date, the average for the six preceding Collection Periods (or
if prior to six months from the Cut-Off Date, the number of whole Collection
Periods since the Cut-Off 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; provided, that, the first Collection Period shall be
treated as two such periods each having one-half of the numerator calculated
for the entire period.
"Standard & Poor's" means Standard & Poor's, a division of The
XxXxxx-Xxxx Companies, Inc., and its successors.
"Termination Trigger Event" means, with respect to any Determination
Date, any of the following conditions shall exist: (a) the Pool Delinquency
Percentage as of the last day of the related Collection Period is greater than
2.625%, (b) the Six-Month Annualized Net Loss Ratio as of such Determination
Date exceeds the percentages set forth for the period in which the
Determination Date occurs in the definition of "Sequential Principal Payment
Trigger
19
Percentage" and (c) for any Determination Date, the Cumulative Net Loss Ratio
exceeds the percentage set forth opposite such Determination Date on Schedule
C hereto.
"Third Allocation of Principal" means, with respect to any Distribution
Date, the excess, if any, of (x) the aggregate Outstanding Amount of the Class
A Notes, the Class B Notes and the Class C Notes as of the day immediately
preceding such Distribution Date over (y) the Pool Balance with respect to
such Distribution Date.
"Three-Month Annualized Net Loss Ratio" means, with respect to any
Determination Date, the average for the three preceding Collection Periods (or
if prior to three months from the Cut-Off Date, the number of whole Collection
Periods since the Cut-Off 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; provided, that, the first Collection Period shall be
treated as two such periods each having one-half of the numerator calculated
for the entire period.
"Total Distribution Amount" means, with respect to any Distribution Date,
the sum of the following amounts, without duplication, with respect to the
related Collection Period: (i) all collections on the Receivables during such
Collection Period allocable to interest in accordance with the Simple Interest
Method and all collections on the Receivables during such Collection Period
allocable to principal in accordance with the Simple Interest Method, (ii)
Liquidation Proceeds for such Collection Period, (iii) Insurance Proceeds for
such Collection Period, (iv) GAP Amounts for such Collection Period, (v)
Monthly Advances for such Collection Period, (vi) the Repurchase Amount of
each Receivable that became a Repurchased Receivable during or in respect of
such Collection Period, (vii) Deficiency Balance recoveries for such
Collection Period, (viii) any rebate of an unearned insurance premium, service
warranty or other amount received by the Servicer with respect to such
Collection Period which was financed in the contract for a Financed Vehicle;
(ix) Investment Earnings; and (x) any other amounts received by the Servicer
in respect of a Receivable; provided, however, that the Total Distribution
Amount shall not include: (A) all payments and proceeds (including Liquidation
Proceeds and Insurance Proceeds) of any Repurchased Receivables the Repurchase
Amount of which has been included in the Total Distribution Amount in a prior
Collection Period, (B) any Late Fees collected by and paid to the Servicer
during the related Collection Period 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.
"Trust" means the Issuer.
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form
of deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise) and all proceeds of the foregoing.
"Trust Accounts" shall mean the Collection Account, the Note Interest
Distribution Account and the Principal Distribution Account.
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"Trust Agreement" means the Amended and Restated Trust Agreement, dated
as of June 1, 2003, between the Depositor and the Owner Trustee, as the same
may be amended, supplemented or modified from time to time.
"Trust Officer" means, with respect to the Indenture Trustee, any officer
within the Corporate Trust Office of the Indenture Trustee, including any Vice
President, Assistant Vice President, Assistant Treasurer, Assistant Secretary
or any other officer of the Indenture Trustee customarily performing functions
with respect to corporate trust matters and having direct responsibility for
the administration of the Indenture and the other Basic Documents and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject, in each case having direct responsibility for the
administration of the Basic Documents.
"UCC" means the Uniform Commercial Code, as 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.
Section 1.02 Other Definitional Provisions.
(a) Capitalized terms used herein that are not otherwise defined
shall have the meanings ascribed thereto in the Indenture or, if not defined
therein, in the Trust Agreement.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement 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 certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate
or other document to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting principles. To the
extent that the definitions of accounting terms in this Agreement or in any
such 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 certificate or other document shall
control.
(d) 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; Article, Section,
Schedule and Exhibit references contained in this Agreement are references to
Articles, Sections, Schedules and Exhibits in or to this Agreement unless
otherwise specified; "or" shall include "and/or"; and the term "including"
shall mean "including without limitation".
(e) 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.
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(f) 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
Section 2.01 Conveyance of Receivables.
(a) In consideration of the Issuer's delivery to or upon the order
of the Depositor of the Notes and the Certificates, the Depositor does hereby
sell, transfer, assign, set over and otherwise convey to the Issuer on the
Closing Date, without recourse (subject to the obligations of the Depositor
set forth herein), and the Issuer hereby purchases, all right, title and
interest of the Depositor in, to and under each of the Receivables, including:
(i) all interest, principal, and any other amounts received on
or with respect to each of the Receivables after the Cut-Off Date;
(ii) the security interests in the Financed Vehicles granted by
Obligors pursuant to the Receivables and any other interest of the
Depositor in such Financed Vehicles;
(iii) all other security interests or other property interests
created by or constituting each Receivable and any property that shall
have secured the Receivables and that shall have been acquired by or on
behalf of the Depositor;
(iv) all of the Depositor'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 Depositor'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;
(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;
(vii) all of the Depositor's rights (but not its obligations)
under the Assignment, Assumption and Recognition Agreement;
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(viii) all funds on deposit from time to time in the Trust
Accounts and the Certificate Distribution Account and in all investments
therein and proceeds thereof (including all Investment Earnings thereon);
(ix) all accounts, money, chattel paper, securities,
instruments, documents, deposit accounts, certificates of deposit,
letters of credit, advices of credit, banker's acceptances,
uncertificated securities, general intangibles, contract rights, goods
and other property consisting of, arising from or relating to any and all
of the foregoing; and
(x) the proceeds of any and all of the foregoing (collectively,
with the assets listed in clauses (i) through (ix) above, the "Conveyed
Assets").
(b) Upon the sale of the Receivables, the ownership of each
Receivable (for non-tax purposes), including the contents of the related
Receivable File, and all rights, benefits, payments, proceeds and 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
Trust, and the ownership of all records and documents with respect to the
related Receivable prepared by or which come into the possession of the
Depositor shall immediately vest in the Trust and shall be retained and
maintained, in trust, by the Servicer for the benefit of the Trust, as the
owner thereof, in a custodial capacity only. The Depositor shall deliver a
computer file, microfiche list or printed list of the Schedule of Receivables
which shall be incorporated by reference herein in this Agreement.
(c) It is the intention of the parties hereto that the transfer and
assignment contemplated by this Agreement shall constitute a sale of the
Receivables and other related property from the Depositor to the Trust (for
non-tax purposes) and the beneficial interest in and title to the Receivables
and that such Conveyed Assets shall not be treated as property of the
Depositor as debtor-in-possession or by a bankruptcy trustee in any
insolvency, bankruptcy or other similar proceeding in respect of the Depositor
under any Applicable Law. Further, it is not the intent of the parties hereto
that any such transfer and conveyance be deemed a grant by the Depositor to
the Trust of a mere security interest (for non-tax purposes) in any of the
Conveyed Assets in order to secure a debt or other obligation of the
Depositor. However, in the event and to the extent that, notwithstanding the
intent of the parties hereto, the transfer and assignment contemplated hereby
is held not to be a true or absolute sale (for non-tax purposes), this
Agreement shall constitute a security agreement under Applicable Law, and, in
such event, the Depositor shall be deemed to have granted, and the Depositor
hereby grants, to the Issuer a first priority security interest in all
accounts, money, chattel paper, securities, instruments, documents, deposit
accounts, certificates of deposit, letters of credit, advices of credit,
banker's acceptances, uncertificated securities, general intangibles, contract
rights, goods and other property consisting of, arising from or relating to
such Conveyed Assets, for the benefit of the Trust and its assignees as
security for the Depositor's obligations hereunder and the Depositor consents
to the pledge of the foregoing Conveyed Assets under the Indenture to the
Indenture Trustee. The Depositor shall file and deliver, prior to the Closing
Date, financing statements on form UCC-1 in respect of such security interest,
and the Depositor 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
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filing offices as the Issuer or the Indenture Trustee may determine, in its
sole discretion, are necessary or advisable to perfect the security interest
granted to the Trust herein and assigned to the Indenture Trustee under the
Indenture. 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 Issuer or the
Indenture Trustee on behalf of the Noteholders will violate the rights of the
Issuer and the Indenture Trustee on behalf of the Noteholders" 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 Trust herein and
pledged to the Indenture Trustee under the Indenture.
(d) The Depositor has determined that the Depositor's disposition of
the Receivables pursuant to this Agreement will be afforded sale treatment for
accounting purposes and shall treat the disposition of the Receivables
pursuant to this Agreement in such manner. The sale of each Receivable (for
non-tax purposes) shall be reflected on the Depositor's balance sheet and
other financial statements as a sale of assets by the parties hereto and the
Depositor shall treat the disposition of the Receivables hereunder as a sale
for accounting and tax purposes.
ARTICLE III
THE RECEIVABLES
Section 3.01 Representations and Warranties of HNB.
(a) Pursuant to Section 1 of the Assignment, Assumption and
Recognition Agreement, the Seller, as assignor, has assigned to the Depositor,
as assignee, all of its right, title and interest in and to the Receivables
and the Purchase Agreement, to the extent relating to the Receivables (other
than the rights of the Seller to indemnification thereunder), and the
Depositor has thereby assumed all of the Seller's obligations under the
Purchase Agreement. Pursuant to Section 2.01 of this Agreement, the Depositor
has sold, assigned, transferred and conveyed to the Issuer, as part of the
assets of the Issuer, its rights under the Purchase Agreement, including the
representations and warranties of HNB made pursuant to Section 3.01 of the
Purchase Agreement with regard to the Receivables, upon which representations
and warranties the Issuer relies in accepting the Receivables and delivering
the Securities, together with all rights with respect to any breach thereof,
including the right to require HNB to repurchase Receivables in accordance
with the Purchase Agreement. It is understood and agreed that the
representations and warranties referred to in this Section 3.01 speak as of
the Cut-Off Date and/or the Closing Date (each as defined in the Purchase
Agreement) under the Purchase Agreement but shall survive the sale, assignment
and delivery of the Receivables to the Depositor and the Issuer and the pledge
of such Receivables to the Indenture Trustee and in connection herewith, HNB
hereby makes each such representation and warranty as of such Cut-Off Date
and/or such Closing Date, as applicable, under the Purchase Agreement, to, and
for the benefit of, the Issuer and the Indenture Trustee, as if the same were
set forth in full herein.
(b) HNB hereby agrees that the Issuer and the Indenture Trustee as
its assignee under the Indenture shall have the right to enforce any and all
rights under the Purchase Agreement assigned to the Issuer herein, including
the right to cause HNB to repurchase any
24
Receivable with respect to which it is in breach of any of its representations
and warranties set forth in Section 3.01 of the Purchase Agreement, directly
against HNB as though the Issuer and the Indenture Trustee were a party to the
Purchase Agreement, and the Issuer and the Indenture Trustee shall not be
obligated to exercise any such rights indirectly through the Depositor, in
each case, subject to the terms of this Agreement.
Section 3.02 Representations and Warranties of the Depositor.
The Depositor makes the following representations and warranties, on
which the Issuer relies in accepting the Receivables and delivering the
Securities. Such representations and warranties speak as of the execution and
delivery of this Agreement and as of the Closing Date, but shall survive the
sale, transfer and assignment of the Receivables by the Depositor to the
Issuer and the pledge thereof to the Indenture Trustee in accordance with the
terms of the Indenture:
(a) Title. The Depositor shall convey to the Issuer all right, title
and interest of the Depositor in and to the Receivables, including all right,
title and interest of the Depositor in and to the security interests in the
related Financed Vehicles.
(b) All Filings Made. The Depositor has caused all filings
(including UCC filings) to be made in Delaware with respect to the sale of the
Receivables to the Issuer and the pledge contemplated in the Basic Documents
to the Indenture Trustee.
(c) Liens. The Depositor has not taken any actions to create, incur
or suffer to exist any Lien on or restriction on transferability of any
Receivable except for the Lien of the Indenture and the restrictions on
transferability imposed by this Agreement.
Section 3.03 Repurchase Upon Breach.
(a) Each of the Depositor, the Owner Trustee, the Indenture Trustee,
the Seller and the Servicer shall inform the other parties to this Agreement
and HNB promptly, in writing, upon the discovery by it of any breach of HNB's
representations and warranties made pursuant to the Purchase Agreement. Within
sixty days of the earlier of either discovery by, or notice to, HNB of any
breach of a representation or warranty contained in the Purchase Agreement
with respect to a Receivable, (i) HNB shall use its best efforts promptly to
cure such breach in all material respects and (ii) if such breach cannot be
cured, HNB shall, at the option of the Issuer, repurchase such Receivable in
an amount equal to the Repurchase Amount. If such breach of a representation
or warranty is curable and HNB 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 day period, HNB shall, upon receipt of
written consent by the Issuer, the Indenture Trustee or the Owner Trustee,
have up to two additional thirty 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 of the Purchase
Agreement, and such breach cannot be cured within a maximum of 120 days of the
earlier of either discovery by, or notice to, HNB of such breach (or within
sixty or ninety days, if the applicable extension was not granted by the
written consent of the Issuer, the Indenture Trustee or the Owner Trustee),
the affected Receivable shall, at the
25
option of the Issuer, the Indenture Trustee or the Owner Trustee, be
repurchased by HNB in an amount equal to the Repurchase Amount; provided,
however, that the Repurchase Amount to be paid by HNB shall be reduced by any
amounts being held by the Servicer at the time of such repurchase with respect
to such Repurchased Receivable for remittance to the Collection Account in
accordance with Section 4.02(c). For so long as (i) HNB is the Servicer and
(ii) the Servicer has the Minimum Required Rating, HNB shall remit the amount
owed with respect to the Repurchased Receivable to the Servicer on the
Remittance Date relating to the Collection Period in which such repurchase was
determined to be required; provided, however, that if either clause (i) or
(ii) is not met, such amount shall be paid to the Servicer on the date of such
repurchase. The Servicer shall remit such amount to the Collection Account in
the manner specified in Section 5.04 and shall notify in writing the Indenture
Trustee of such deposit. It is understood and agreed that the obligations of
HNB set forth in this Section 3.03 constitute the sole remedy respecting a
breach of HNB's representations and warranties made pursuant to the Purchase
Agreement or deemed made pursuant to this Agreement.
(b) At the time of repurchase of a Receivable, the Issuer and HNB
shall arrange for the reassignment of the Repurchased Receivable to HNB. In
the event of a repurchase of a Receivable, HNB shall give written notice to
the Issuer and the Servicer that such repurchase has taken place and the
Schedule of Receivables shall be amended to reflect the withdrawal of the
Repurchased Receivable from the terms of this Agreement. Upon repurchase by
HNB, a Repurchased Receivable is not, and shall not be considered, a
Receivable for purposes of this Agreement or the Purchase Agreement.
(c) The Indenture Trustee shall not have any duty to conduct any
affirmative investigation as to the occurrence of any conditions requiring the
repurchase of any Receivable pursuant to this Section 3.03 and will not be
deemed to have discovered any breach hereunder or under Section 4.08 hereof
unless and until a Trust Officer shall have actual knowledge thereof.
Section 3.04 Custody of Receivable Files. To assure uniform quality
in servicing the Receivables and to reduce administrative costs, the Issuer
hereby appoints the Servicer, and the Servicer hereby accepts such
appointment, to act for the benefit of the Issuer and the Indenture Trustee as
custodian of the Receivable Files, which are hereby constructively delivered
by the Issuer to the Indenture Trustee.
Section 3.05 Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer shall hold the Receivable Files, in
trust, as custodian for the benefit of the Issuer and the Indenture Trustee,
and shall maintain such accurate and complete accounts, records and computer
systems pertaining to each Receivable File as shall enable the Issuer to
comply with this Agreement. In performing its duties as custodian, the
Servicer shall act with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to the receivable files
relating to all comparable 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 Issuer and the Indenture Trustee to verify
the accuracy of the Servicer's record keeping. The Servicer shall promptly
report to the Issuer and the Indenture Trustee any failure on its part to hold
the
26
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 Issuer or the Indenture Trustee of the Receivable
Files. In acting as custodian of the Receivable Files, the Servicer further
agrees not to assert any beneficial ownership interests in the Receivables or
the Receivable Files.
(b) Maintenance of and Access to Receivable Files. (i) The Servicer
shall maintain each Receivable File at one of its offices specified in
Schedule B to this Agreement or at such other office in the United States as
shall be specified to the Issuer and the Indenture Trustee by written notice
not later than ninety days prior to any change in location. Upon request, the
Servicer shall also make available to the Issuer and the Indenture Trustee or
their duly authorized representatives, attorneys or auditors a current list of
locations of the Receivable Files and shall allow the Issuer and the Indenture
Trustee or their duly authorized representatives, attorneys or auditors access
to the Receivables and the related accounts, records and computer systems
maintained by the Servicer. The Servicer shall be responsible for maintaining,
and shall maintain, a complete set of books and records for each Receivable
which shall be marked clearly to reflect the ownership of each Receivable by
the Issuer. 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 Issuer or the Indenture Trustee,
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.
(ii) 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 Issuer, the
Servicer's master computer records (including any back-up archives) that refer
to a Receivable shall indicate clearly the interest of the Issuer in such
Receivable and that such Receivable is owned by the Issuer through a unique
identification code that is reflected on the records of the Servicer as being
owned by the Issuer and pledged to the Indenture Trustee. Indication of the
Issuer's ownership of a Receivable may be deleted from or modified on the
Servicer's computer systems or from the contract itself when, and only when,
the lien on the related Financed Vehicle has been released in accordance with
the Basic Documents.
(c) Release of Documents. Upon written instruction from the
Indenture Trustee or, if the Notes have been paid in full, from the Owner
Trustee, the Servicer shall release any Receivable File to the Indenture
Trustee or the Owner Trustee, as the case may be, or to the agent or designee
of the Indenture Trustee or the Owner Trustee, as the case may be, at such
place or places as the Indenture Trustee or the Owner Trustee, as applicable,
may designate, as soon as practicable (but in no event more than five days
after the date of such instruction) and the Issuer shall reimburse the
Servicer for its reasonable out-of-pocket expenses incurred in connection with
any such release and delivery. Upon the release and delivery of any such
document in accordance with the instructions of the Indenture Trustee or the
Owner Trustee, as the case may be, the Servicer shall be released from any
further liability and responsibility under this Section 3.05 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,
27
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 Indenture Trustee's or the Owner Trustee's failure to return
any Receivable File or any portion thereof in a timely manner.
(d) Reimbursement for Reasonable Out-of-Pocket Expenses. Pursuant to
Section 4.09(c), the Servicer shall be entitled to reimbursement for all
reasonable out-of-pocket expenses incurred in connection with the performance
of its obligations as custodian of the Receivable Files under this Section
3.05.
(e) Destruction of Receivable Files. 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 Issuer and the Indenture Trustee for any losses suffered
by the Issuer as a result of the loss or destruction of the original
Receivable Files.
Section 3.06 Instructions; Authority to Act. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable
Files upon its receipt of written instructions signed by a Trust Officer of
the Indenture Trustee or, if the Notes have been paid in full, of the Owner
Trustee. A certified copy of a by-law or of a resolution of the Board of
Directors of the Indenture Trustee or Owner Trustee, as applicable, shall
constitute conclusive evidence of the authority of any such Trust Officer to
act and shall be considered in full force and effect until receipt by the
Servicer of written notice to the contrary given by the Indenture Trustee or
Owner Trustee, as applicable.
Section 3.07 [Intentionally Omitted]
Section 3.08 Effective Period and Termination. The Servicer shall
act as custodian of the Receivables and shall continue to act in such capacity
unless and until terminated pursuant to this Section 3.08. If the Servicer or
any successor Servicer shall resign as Servicer in accordance with the
provisions of this Agreement or if all of the rights and obligations of the
Servicer or any successor Servicer shall have been terminated under Section
8.02, (i) such Servicer shall also resign as custodian of the Receivables and
(ii) the appointment of such Servicer as custodian may be terminated by the
Issuer or by the Holders of Notes evidencing not less than 25% of the
Outstanding Amount of the Notes, or, if no Notes are outstanding, by Holders
of Certificates evidencing not less than 25% of the percentage interests in
the Certificates, in the same manner as the Indenture Trustee or such
Securityholders may terminate the rights and obligations of the Servicer under
Section 8.02. The Indenture Trustee or, with the consent of the Indenture
Trustee, the Owner Trustee may terminate the Servicer's appointment as
custodian, with cause, at any time upon written notification to the Servicer
and without cause, only by written notification to the Servicer pursuant to
Section 8.02. As soon as practicable after any
28
termination of such appointment (but in no event more than ten Business Days
after any such termination of appointment), the Servicer shall deliver the
Receivable Files to the Indenture Trustee or the Indenture Trustee's agent, at
such place or places as the Indenture Trustee may reasonably designate;
provided, however, that, if the Servicer shall have been terminated as
custodian without cause pursuant to this Section 3.08, the Servicer shall be
entitled to reimbursement by the Issuer for all reasonable out-of-pocket
expenses incurred in connection with such delivery of the Receivable Files.
Notwithstanding the termination of the Servicer as custodian, the Indenture
Trustee and the Owner Trustee agree that, upon any such termination and for so
long as the Servicer remains the Servicer hereunder, the Indenture Trustee or
the Owner Trustee, as the case may be, shall provide, or cause its agent to
provide, access to the Receivable Files to the Servicer for the purpose of
enabling the Servicer to perform its obligations under this Agreement with
respect to the servicing of the Receivables.
ARTICLE IV
SERVICING OF RECEIVABLES
Section 4.01 Duties of Servicer.
(a) The Servicer, as an independent contract servicer, for the
benefit of the Issuer and the Indenture Trustee, shall manage, service,
administer and make collections on the Receivables and perform the other
actions required by the Servicer under this Agreement. The Servicer will
service the Receivables in accordance with the servicing standard set forth in
the Purchase Agreement, or in the event that the Purchase Agreement 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 installment
sale 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's duties shall include, but not be limited to, the
collection and posting of all payments, responding to inquiries of Obligors on
the Receivables, investigating delinquencies, sending payment coupons to
Obligors, reporting tax information to Obligors, monitoring the Receivables,
accounting for collections, preparing tax forms required by any federal, state
or local tax authority, if any, furnishing Servicer Reports, including the
Servicer's Certificate, and annual statements as required herein, making
Monthly Advances and performing the other duties specified herein. The
Servicer is hereby authorized and empowered to execute and deliver, on behalf
of itself, the Issuer, the Owner Trustee, the Indenture Trustee, the
Certificateholders and the Noteholders, or any of them, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge, and all other comparable instruments with respect to the
Receivables and with respect to the Financed Vehicles; provided, however,
that, notwithstanding the foregoing, the Servicer shall not, except as
permitted by the Servicing Standard or pursuant to an order from a court of
competent jurisdiction or as otherwise required by Applicable Law, (i) release
the Financed Vehicle securing a 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 Trust or the Indenture Trustee in the Receivables, (iii) change
the Contract Rate with respect to any Receivable, (iv) waive the right to
collect the unpaid balance of any Receivable from an Obligor
29
or (v) modify the Principal Balance or the total number of originally
scheduled due dates of any Receivable.
(c) The Servicer is hereby authorized to commence, in its own name
or in the name of the Indenture Trustee or the Owner Trustee, a legal
proceeding to enforce a Receivable pursuant to Section 4.03 or to commence or
participate in any other legal proceeding (including a bankruptcy proceeding)
relating to or involving a Receivable, an Obligor or a Financed Vehicle. If
the Servicer commences or participates in any such legal proceeding in its own
name, the Indenture Trustee or the Issuer shall thereupon be deemed to have
automatically assigned the applicable Receivable to the Servicer solely for
purposes of commencing or participating in such proceeding as a party or
claimant. The Servicer is authorized and empowered by the Indenture Trustee to
execute and deliver in the Indenture Trustee's name any notices, demands,
claims, complaints, responses, affidavits or other documents or instruments in
connection with any such proceeding and to bring suit in the name of the
Indenture Trustee. 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 such Receivable,
the Owner Trustee shall, at the Servicer's direction, take steps to enforce
such Receivable, including bringing suit in its name or in the name of the
Indenture Trustee or, with the prior written permission of the Depositor, the
Issuer. The Owner Trustee and the Indenture Trustee shall upon the written
request of the Servicer furnish the Servicer with any powers of attorney and
other documents reasonably necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder, and the Owner
Trustee and the Indenture Trustee shall not be held responsible for any acts
by the Servicer in its uses of any such powers of attorney or other document
other than as authorized or permitted by this Agreement.
Section 4.02 Collection of Receivable Payments; Modifications of
Receivables; Monthly Advances.
(a) Consistent with the Servicing Standard, the Servicer shall make
reasonable efforts to collect all payments called for under the terms and
provisions of the Receivables. The Servicer is authorized, in accordance with
the Servicing Standard, to waive any Late Fees that may be collected in the
ordinary course of servicing any Receivable.
(b) The Servicer may, in accordance with the Servicing Standard,
grant payment extensions on a Receivable for which the related Obligor is
delinquent for failure of payment. The Servicer shall not grant more than one
extension on such Receivable in any calendar year and not more than three
extensions on any such Receivable; provided, however, that if the Servicer
extends the date for the final payment by any Obligor of any Receivable beyond
October 15, 2010 the Servicer shall promptly purchase such Receivable at the
Repurchase Amount. The use of a pass-a-payment coupon shall not be considered
an extension on a Receivable pursuant to this Section 4.02(b).
(c) On each Remittance Date, the Servicer shall remit to the
Collection Account from its own funds or from amounts held for future
distribution an amount (the "Monthly Advance") 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 the related
Distribution
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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 the use of a pass-a-payment
coupon). Any amounts held for future distribution used for purposes of making
the remittances 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 amounts required to be deposited into the
Collection Account on such Remittance Date. Notwithstanding the foregoing,
unless the Servicer has a long-term credit rating of at least "A" by Standard
& Poor's and "A2" by Xxxxx'x, the Servicer shall not be permitted to make any
Monthly Advances pursuant to this Section from amounts held for future
distribution, and instead shall be required to make all Monthly Advances from
its own funds. 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 remittance 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, the Servicer shall be obligated to make such Monthly
Advances through the Remittance Date prior to the Distribution 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 the Receivables.
Section 4.03 Realization upon 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 actions 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 the Trust. The Servicer shall begin
such repossession and conversion procedures as soon as practicable after a
default on such Receivable in accordance with the Servicing Standard. In
connection herewith, the Servicer shall from its own funds make all necessary
and proper Servicing Advances, subject to reimbursement pursuant to Section
4.09; provided, however, that the foregoing shall not be construed to require
the 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 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. The recovery of expenses incurred by the Servicer
shall be limited to Liquidation Proceeds, Insurance Proceeds and Deficiency
Balance recoveries with respect to such Receivable.
(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
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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 Issuer (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 5.02(a), remit 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 4.04 Satisfaction of Receivable. Upon payment in full on 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 eliminate 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.
Section 4.05 Maintenance of Security Interests in Financed Vehicles.
The Servicer shall, in accordance 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 on behalf of the Issuer and
the Indenture Trustee. The Servicer is hereby authorized to take such steps as
are necessary to re-perfect such security interest on behalf of the Issuer and
the Indenture Trustee in the event of the relocation of a Financed Vehicle, or
for any other reason. Notwithstanding the foregoing, the Servicer shall have
no obligation to audit the perfection or re-perfection of security interests
in the Financed Vehicles and the Servicer shall have no obligation to perfect
or re-perfect unless it is aware that perfection or re-perfection is
necessary. Pursuant to Section 4.09(c), the Servicer shall be reimbursed for
all reasonable out-of-pocket expenses incurred in connection with the
performance of its obligations under this Section 4.05.
Section 4.06 Additional Servicing Covenants.
The Servicer further agrees:
(a) 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 (x)
in the event of payment in full (or within $25.00 of payment in full) by or on
behalf of the Obligor thereunder or (y) upon repossession and liquidation of
such Financed Vehicle, (ii) impair the rights of the Issuer in the Receivables
or (iii) extend or otherwise amend the terms of any Contract (including any
change to the Contract Rate applicable to any Receivable, the Principal
Balance or the total number of originally scheduled due dates of any
Receivable), except as provided in Sections 4.01 and 4.02; and
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(b) The Servicer shall not (1) create or incur, or agree to create
or incur or consent to or permit in the future (upon the occurrence of a
contingency or otherwise) the creation, incurrence or existence of any Lien on
or restriction on transferability of any Receivable except for the Lien of the
Indenture and the restrictions on transferability imposed by this Agreement or
(2) other than as contemplated herein, sign or file any UCC financing
statements in any jurisdiction that names HNB, the Seller, the Depositor as a
debtor, and any Person other than the Seller, the Depositor, the Indenture
Trustee or the Issuer as a secured party, or sign any security agreement
authorizing any secured party thereunder to file any such financing statement,
in each case with respect to the Receivables or any other Conveyed Assets.
Section 4.07 [Intentionally Omitted].
Section 4.08 Purchase of Receivables Upon Breach. Upon discovery by
any of the Servicer, the Seller, the Depositor, the Owner Trustee or the
Indenture Trustee of a breach of any of the covenants set forth in Sections
4.02(b), 4.05 or 4.06 or of any of the representations and warranties made by
the Servicer as set forth in Section 7.01(b), the party discovering such
breach shall give prompt written notice to the others; provided, however, that
the failure to give any such notice shall not affect any obligation of the
Servicer under this Section 4.08. Within sixty days of the earlier of either
discovery by, or notice to, the Servicer of a breach of any covenant set forth
in Sections 4.02(b), 4.05 or 4.06 or any of the representations set forth in
Section 7.01(b), (i) the Servicer shall use its best efforts promptly to cure
such breach in all material respects and (ii) if such breach cannot be cured,
the Servicer shall be required to purchase the affected Receivable. If such
breach of a covenant set forth in Sections 4.02(b), 4.05 or 4.06 or a
representation or warranty set forth in Section 7.01(b) is curable and the
Servicer 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 day period, the Servicer shall, upon receipt of written
consent by the Issuer, the Indenture Trustee or the Owner Trustee, have up to
two additional thirty 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. In the event that such breach cannot be cured within a maximum of 120
days of the earlier of either discovery by, or notice to, the Servicer of such
breach (or within sixty or ninety days, if the applicable extension was not
granted), the affected Receivable shall, at the option of the Issuer, the
Indenture Trustee or the Owner Trustee, be purchased by the Servicer in an
amount equal to the Repurchase Amount. The Servicer shall remit such amount to
the Collection Account in the manner specified in Section 5.04 and shall
notify in writing the Indenture Trustee of such deposit. Subject to Section
7.02, it is understood and agreed that the obligation of the Servicer to
purchase any Receivable with respect to which such breach has occurred and is
continuing shall, if such obligation is fulfilled, be the sole remedy against
the Servicer for such breach available to the Issuer, the Indenture Trustee,
the Noteholders, or the Certificateholders. Notwithstanding anything to the
contrary, the Servicer shall not intentionally breach any of the covenants set
forth in Sections 4.02(b), 4.05 or 4.06 or any of the representations set
forth in Section 7.01(b) for the purpose of acquiring any Receivable.
Section 4.09 Servicing Fee; Costs and Expenses.
(a) In compensation for performing the servicing obligations
described in this Agreement during each Collection Period, the Servicer shall
be paid a monthly fee, for all
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Receivables that are not Defaulted Receivables serviced pursuant to this
Agreement, equal to one-twelfth of the product of (i) the Servicing Fee Rate
and (ii) the Principal Balance of the Receivables as of the first day of such
Collection Period, except for the first Collection Period, which shall be the
Pool Balance as of the July 1, 2003 (such monthly fee, the "Servicing Fee").
As additional servicing compensation, the Servicer 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) In addition to the Servicing Fee set forth above, the Servicer
shall also be entitled to receive on each Distribution Date reimbursement for
amounts set forth below for the related Collection Period. The Servicer shall
be paid the Servicing Fee and the Servicing Reimbursement Amount payable for
each Collection Period on the Distribution Date related to such Collection
Period in accordance with Sections 5.06(b)(i) and (xi).
(c) 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 as follows:
(i) The Servicer shall be entitled to reimbursement for Monthly
Advances; provided, that reimbursement for Monthly Advances shall be
limited to 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;
(ii) To the extent set forth under Section 4.03, the Servicer
shall be entitled to reimbursement for unreimbursed Servicing Advances in
connection with the realization upon a Receivable; provided that, in
accordance with Section 4.03, such right of reimbursement shall be
limited to the amount of Liquidation Proceeds, Insurance Proceeds and
Deficiency Balance recoveries with respect to such Receivable; and
(iii) The Servicer shall be entitled to the reimbursement of
certain reasonable out-of-pocket expenses to the extent permitted under
Sections 3.05(d), 4.05 and 10.02(g).
The aggregate amount of all amounts set forth in clauses (i) through (iii) of
this Section 4.09(c) that the Servicer shall incur during any Collection
Period shall be referred to herein as the "Servicing Reimbursement Amount" for
such Collection Period.
(d) For so long as (i) HNB is the Servicer, (ii) the Servicer has
the Minimum Required Rating and (iii) no Event of Servicing Termination shall
have occurred and be continuing, the Servicer may net the Servicing Fee and
the Servicing Reimbursement Amount payable to the Servicer on the related
Distribution Date from any remittance it makes pursuant to Section 5.02(a).
The Servicing Fee shall be retained from the interest portion of Monthly
Payments collected or the interest portion of Liquidation Proceeds received on
the Receivables. 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.
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Section 4.10 Servicer's Certificate and Servicer Reports.
(a) Servicer's Certificate. Not later than 10:00 a.m. (New York City
time) on each Determination Date, the Servicer shall deliver to the Owner
Trustee, the Indenture Trustee and the Depositor, with a copy to each Rating
Agency, a Servicer's certificate (a "Servicer's Certificate") substantially in
the form of Exhibit B which shall be delivered in electronic format or through
any other means mutually acceptable to the Indenture Trustee and the Servicer
and which shall contain the amount of collections received on the Receivables
during the related Collection Period. Such Servicer's Certificate shall be
certified by a Responsible Officer of the Servicer that the information
provided is accurate and complete and no defaults have occurred. With respect
to each Collection Period, Receivables to be repurchased by the Seller and
each Receivable that became a Defaulted Receivable, in each case, during such
Collection Period shall be identified by the Servicer by account number with
respect to such Receivable (as specified in the applicable Schedule of
Receivables).
(b) Servicer Reports. Not later than 10:00 a.m. (New York City time)
on each Determination Date, the Servicer shall deliver to the Owner Trustee
(for delivery to the Certificateholders pursuant to the Trust Agreement) each
of the Servicer Reports listed as an exhibit to the Purchase Agreement and
each Servicer Report shall be substantially in the form set forth in the
Purchase Agreement (it being understood that for purposes of the first
Determination Date, the Depositor shall deliver such reports for the first
Purchase Agreement Collection Period and the Servicer shall deliver such
reports for the second Purchase Agreement Collection Period (which together
cover the first Collection Period)). Each Servicer Report shall be certified
by a Responsible Officer of the Servicer that the information provided is
accurate and complete and no defaults have occurred. In addition, 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 Owner Trustee a copy of (i) the loan file tape and (ii) the extracts from
other applicable servicing systems of the Servicer.
Section 4.11 Annual Statement as to Compliance.
(a) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee, the Depositor and each Rating Agency, on or before March 15 each
year, beginning March 15, 2004, an Officer's Certificate (the "Servicer Annual
Certification") substantially in the form of Exhibit C, signed by a
Responsible Officer of the Servicer, 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
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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 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 4.10, 4.11 and 4.12 to the
parties to which such reports and certificates are required to be provided
with respect to the applicable Review Period.
(b) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee and each Rating Agency, promptly after having obtained knowledge
thereof, but in no event later than three Business Days thereafter, written
notice in an Officer's Certificate of any event that is, or with the giving of
notice or lapse of time or both would become, an Event of Servicing
Termination under Section 8.01(a) or an Additional Event of Servicing
Termination under Section 8.01(b).
Section 4.12 Annual Report of Accountants. 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
addressed to the Owner Trustee, the Indenture Trustee and each Rating Agency
to the effect that such firm of independent certified public accountants has
audited the documents or records of the Servicer relating to the Receivables
and issued its report thereon and that such audit (a) was conducted 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 through December
31 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 therewith during such calendar year or other applicable 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 4.13 Access to Certain Documentation and Information
Regarding Receivables. The Servicer shall provide to representatives of the
Owner Trustee, the Indenture Trustee and the Certificateholders reasonable
access to the documentation regarding the Receivables and the related Trust
property. Access shall be afforded without charge, but only upon reasonable
request, which does not unreasonably interfere with the Servicer's normal
business operations or employee or customer relations, and during the normal
business hours at the offices of the Servicer. Nothing in this Section shall
affect the obligation of the Servicer to observe any Applicable Law
prohibiting disclosure of information regarding the Obligors and the failure
of the Servicer to provide access to information as a result of such
obligation shall not constitute a breach of this Section.
Section 4.14 Access to Information Regarding Trust and Basic
Documents. The Servicer shall furnish to the Owner Trustee from time to time
such information regarding the Trust or the Basic Documents as the Owner
Trustee shall reasonably request. Upon written request, the Indenture Trustee
shall furnish to the Owner Trustee annually a copy of the Note
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Register; provided, however, the Indenture Trustee shall not be obligated to
furnish a copy of the Note Register more than once each calendar year. The
Servicer shall furnish to the Owner Trustee copies of all documents and
reports required to be provided by the Servicer pursuant to Sections 4.10,
4.11 and 4.12 of this Agreement.
Section 4.15 Maintenance of Errors and Omission Policy. 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 or papers relating to the
Receivables ("Servicer Employees"), which policy shall protect and insure the
Servicer against losses, including forgery, theft, embezzlement, fraud, errors
and omissions, and negligent acts of such Servicer Employees. Such errors and
omissions insurance policy shall also protect and insure the Servicer, against
losses in connection with the release or satisfaction of a Receivable without
having obtained payment in full of the indebtedness secured thereby.
Notwithstanding the foregoing, such errors and omission policy may have a
deductible consistent with prudent corporate practice. No provision of this
Section 4.15 requiring such errors and omissions insurance shall diminish or
relieve the Servicer from its duties and obligations as set forth in this
Agreement. Without limiting the generality of the indemnification provisions
of this Agreement, the Servicer hereby acknowledges that any amounts payable
by it pursuant to any such deductible are indemnified obligations payable by
it pursuant to Section 7.02. Upon the request of the Issuer or the Indenture
Trustee, the Servicer shall cause to be delivered to the Issuer or the
Indenture Trustee a certified true copy of such fidelity bond and insurance
policy.
ARTICLE V
DISTRIBUTIONS; STATEMENTS TO NOTEHOLDERS
Section 5.01 Establishment of Accounts.
(a) An Eligible Deposit Account (the "Collection Account") in the
name of the Indenture Trustee, for the benefit of the Noteholders and the
Certificateholders, shall be established and maintained, bearing a designation
clearly indicating that the funds deposited therein are held for the benefit
of the Noteholders and the Certificateholders. The Collection Account shall be
established initially at the Indenture Trustee.
(b) The Indenture Trustee shall establish and maintain, in the name
of the Indenture Trustee, for the benefit of the Noteholders, an Eligible
Deposit Account (the "Note Interest Distribution Account"), bearing a
designation clearly indicating that the funds deposited therein are held for
the benefit of the Noteholders. The Note Interest Distribution Account shall
be established initially at the Indenture Trustee.
(c) The Indenture Trustee shall establish and maintain, in the name
of the Indenture Trustee, for the benefit of the Noteholders, an Eligible
Deposit Account (the "Principal Distribution Account"), bearing a designation
clearly indicating that the funds deposited therein are held for the benefit
of the Noteholders. The Principal Distribution Account shall be established
initially at the Indenture Trustee.
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(d) Funds on deposit in the Collection Account shall be invested by
the Indenture Trustee, in Eligible Investments selected in writing by the
Seller (it being understood that the Seller may select a particular Eligible
Investment pursuant to an instruction letter which shall be executed by the
Seller as of the Closing Date); provided, however, that if the Seller fails to
select any Eligible Investment, the Indenture Trustee shall invest such funds
in an Eligible Investment described in clause (d) of the definition of
"Eligible Investment" herein. The Indenture Trustee shall have no duty or
obligation to confirm or verify whether any Eligible Investment selected by
the Seller is in fact an Eligible Investment. All such Eligible Investments
shall be held by the Indenture Trustee for the benefit of the Noteholders
and/or the Certificateholders, as applicable. Other than as permitted in
writing by the Rating Agencies, funds on deposit in the Trust Accounts shall
be invested in Eligible Investments that will mature not later than the
Business Day immediately preceding the next Distribution Date. Funds deposited
in a Trust Account on a day that immediately precedes a Distribution Date upon
the maturity of any Eligible Investments are not required to be invested
overnight.
(e) The Indenture Trustee shall possess all right, title and
interest in all funds and investment property on deposit from time to time in
or credited to the Trust Accounts and in all proceeds thereof (including
Investment Earnings thereon) and all such funds, investment property, proceeds
and income shall be part of the Trust Estate, except as otherwise set forth
herein. The Trust Accounts shall be under the sole dominion and control of the
Indenture Trustee for the benefit of the Noteholders and the
Certificateholders, as applicable. If, at any time, any Trust Account ceases
to be an Eligible Deposit Account, the Indenture Trustee, shall within ten
(10) Business Days (or such longer period, not to exceed thirty (30) calendar
days, as to which each Rating Agency shall have consented) establish a new
Trust Account as an Eligible Deposit Account and shall transfer any cash
and/or any investments from the account that is no longer an Eligible Deposit
Account to the new Trust Account.
(i) With respect to the Trust Account Property, the Indenture
Trustee agrees, by its acceptance hereof, that:
(A) any Trust Account Property that is held in deposit
accounts shall be held solely in the Eligible Deposit Accounts, subject
to the last sentence of Section 5.01(e)(i); and each such Eligible
Deposit Account shall be subject to the exclusive custody and control of
the Indenture Trustee, and the Indenture Trustee, shall have sole
signature authority with respect thereto;
(B) any Trust Account Property that constitutes Physical
Property shall be delivered to the Indenture Trustee, in accordance with
paragraph (a) of the definition of "Delivery" and shall be held, pending
maturity or disposition, solely by the Indenture Trustee, or a securities
intermediary (as such term is defined in Section 8-102 of the UCC) acting
solely for the Indenture Trustee;
(C) any Trust Account Property that is a book-entry
security held through the Federal Reserve System pursuant to federal
book-entry regulations shall be delivered in accordance with paragraph
(b) of the definition of "Delivery" and shall be maintained by the
Indenture Trustee, pending maturity or disposition, through continued
book-entry registration of such Trust Account Property as described in
such paragraph;
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(D) any Trust Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by clause
(C) above shall be delivered to the Indenture Trustee, in accordance with
paragraph (c) of the definition of "Delivery" and shall be maintained by
the Indenture Trustee, pending maturity or disposition, through continued
registration of the Indenture Trustee's (or its nominee's) ownership of
such security; and
(E) any Trust Account Property that is a security
entitlement shall be delivered in accordance with paragraph (d) of the
definition herein of "Delivery" and shall be held pending maturity or
disposition by the Indenture Trustee or a securities intermediary acting
solely for the Indenture Trustee.
(ii) The Servicer shall have the power, revocable by the
Indenture Trustee, or by the Owner Trustee with the consent of the
Indenture Trustee, following an Event of Servicing Termination to
instruct the Indenture Trustee in writing, to make withdrawals and
payments from the Trust Accounts and the Certificate Distribution Account
for the purpose of withdrawing any amounts deposited in error into such
accounts.
Section 5.02 Collections; Deposits into Collection Account.
(a) The Servicer shall remit to the Collection Account the Total
Distribution Amount on each Remittance Date for so long as (i) HNB is the
Servicer, (ii) the Servicer has the Minimum Required Rating and (iii) no Event
of Servicing Termination shall have occurred and be continuing.
Notwithstanding anything herein to the contrary, so long as the conditions set
forth in clauses (i) through (iii) above are satisfied, the Servicer may make
any remittance pursuant to the preceding sentence net of the Servicing Fee and
any Servicing Reimbursement Amount payable to the Servicer on the related
Distribution Date. If (i) HNB is no longer the Servicer, (ii) HNB no longer
has the Minimum Required Rating or (iii) an Event of Servicing Termination
shall have occurred and be continuing, the Servicer shall remit to the
Collection Account within two Business Days of receipt thereof any amounts
received by it that are to be included in the Total Distribution Amount for
such Collection Period. Notwithstanding anything to the contrary contained
herein, for purposes of the first Collection Period, the Servicer shall remit
to the Collection Account on the first Remittance Date, the Total Distribution
Amount with respect to the second Purchase Agreement Collection Period and the
Depositor shall remit the amounts pursuant to Section 5.02(b), together
comprising the Total Distribution Amount for the first Collection Period.
(b) The Issuer hereby directs the Depositor (in accordance with
Section 2.01(a)(i) hereof) to cause the Seller, and the Depositor hereby
directs the Seller (in accordance with the Assignment, Assumption and
Recognition Agreement) to deliver to the Indenture Trustee on the Closing Date
for deposit into the Collection Account all moneys received by the Seller in
respect of the Receivables from (but excluding) the Cut-Off Date to (and
including) the Closing Date, and the Indenture Trustee shall deposit all such
moneys so delivered to it into the Collection Account on the Closing Date.
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Section 5.03 Application of Collections. All payments received from
or on behalf of an Obligor during each Collection Period with respect to each
Receivable (other than a Receivable that is a Repurchased Receivable) shall be
applied to interest and principal in accordance with the Simple Interest
Method and the Servicer's customary procedures. Generally, subject to the
foregoing sentence, the Servicer applies obligor payments, first to interest,
second to Late Fees and third, to unpaid principal; provided, that with
respect to Defaulted Receivables for which the Servicer disposes of or sells a
Financed Vehicle, and the Liquidation Proceeds from the disposition of the
Financed Vehicle do not equal the Principal Balance of such Receivable, the
Servicer applies such Liquidation Proceeds, first to unpaid principal, second
to interest and third to unpaid Late Fees.
Section 5.04 Repurchase Amounts. For so long as (i) HNB is the
Servicer, (ii) HNB has the Minimum Required Rating, and (iii) no Event of
Servicing Termination shall have occurred and be continuing, the Servicer
shall be entitled, pursuant to the first sentence of Section 5.02, to deposit
or cause to be deposited the aggregate Repurchase Amounts (x) paid to the
Servicer by HNB pursuant to Section 3.03 or (y) owed by the Servicer pursuant
to Sections 4.08, in the Collection Account on the related Remittance Date.
If, however, (i) HNB no longer is the Servicer, (ii) HNB no longer has the
Minimum Required Rating, or (iii) an Event of Servicing Termination shall have
occurred and be continuing, the Servicer, in the case of a purchase by HNB
pursuant to Section 3.03 or a purchase by the Servicer pursuant to Section
4.08, shall deposit or cause to be deposited in the Collection Account the
aggregate Repurchase Amount pursuant to Sections 3.03 or 4.08 within two
Business Days' of the purchase of the Repurchased Receivable (by HNB pursuant
to Section 3.03 or by the Servicer pursuant to Section 4.08.
Section 5.05 Permitted Withdrawals from Collection Account.
(a) On each Distribution Date, the Indenture Trustee, at the written
direction of the Servicer, shall, in addition to, and prior to, the
withdrawals from the Collection Account on such Distribution Date pursuant to
Section 5.06(b), make withdrawals from the Collection Account to withdraw any
amount not required to be deposited in the Collection Account or deposited
therein in error.
(b) The Indenture Trustee shall make withdrawals from the Collection
Account to clear and terminate the Collection Account in connection with the
termination of this Agreement; provided that all conditions to the termination
of this Agreement set forth herein and in the other Basic Documents shall have
been met.
Section 5.06 Distributions.
(a) On each Distribution Date, the Indenture Trustee shall determine
all amounts required to be deposited pursuant to this Section.
(b) On each Distribution Date, the Indenture Trustee (based in
relevant part on the information provided by the Servicer in the Servicer's
Certificate delivered on the related Determination Date pursuant to Section
4.10(a)) shall make the following payments, deposits and distributions from
amounts on deposit in the Collection Account, to the extent of the Total
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Distribution Amount for such Distribution Date, to make required payments and
distributions on such date pursuant to clauses (i) through (xii) below, in the
following order and priority:
(i) to the Servicer, the Servicing Fee and Servicing
Reimbursement Amount for the related Collection Period (and any accrued
and unpaid Servicing Fees and Servicing Reimbursement Amounts from prior
Collection Periods);
(ii) (x) to the Indenture Trustee and the Owner Trustee pro
rata, the Indenture Trustee Fee for the related Collection Period (and
any accrued and unpaid Indenture Trustee Fees from prior Collection
Periods) and the Owner Trustee Fee for the related Collection Period (and
any accrued and unpaid Owner Trustee Fees from prior Collection Periods)
and then (y) to the Indenture Trustee and the Owner Trustee pro rata, any
other accrued and unpaid amounts (including reasonable legal fees and
expenses) owed to the Indenture Trustee and the Owner Trustee not to
exceed $100,000 in the aggregate in any consecutive twelve month period;
(iii) to the Note Interest Distribution Account for payment to
the Class A Noteholders pursuant to Section 5.06(c)(i), from the Total
Distribution Amount remaining after the application of clauses (i) and
(ii), the Class A Noteholders' Interest Distributable Amount;
(iv) to the Principal Distribution Account, for distribution
pursuant to Section 5.06(d), from the Total Distribution Amount remaining
after the application of clauses (i) through (iii), the First Allocation
of Principal, if any;
(v) to the Note Interest Distribution Account for payment to
the Class B Noteholders pursuant to Section 5.06(c)(ii), from the Total
Distribution Amount remaining after the application of clauses (i)
through (iv), the Class B Noteholders' Interest Distributable Amount;
(vi) to the Principal Distribution Account, for distribution
pursuant to Section 5.06(d), from the Total Distribution Amount remaining
after the application of clauses (i) through (v), the Second Allocation
of Principal, if any, reduced by any First Allocation of Principal paid
pursuant to clause (iv) above;
(vii) to the Note Interest Distribution Account for payment to
the Class C Noteholders pursuant to Section 5.06(c)(iii), from the Total
Distribution Amount remaining after the application of clauses (i)
through (vi), the Class C Noteholders' Interest Distributable Amount;
(viii) to the Principal Distribution Account, for distribution
pursuant to Section 5.06(d), from the Total Distribution Amount remaining
after the application of clauses (i) through (vii), the Third Allocation
of Principal, if any, reduced by any First Allocation of Principal paid
pursuant to clause (iv) above and any Second Allocation of Principal paid
pursuant to clause (vi) above;
(ix) to the Note Interest Distribution Account for payment to
the Class D Noteholders pursuant to Section 5.06(c)(iv), from the Total
Distribution Amount
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remaining after the application of clauses (i) through (viii), the Class
D Noteholders' Interest Distributable Amount;
(x) to the Principal Distribution Account, for distribution
pursuant to Section 5.06(d), from the Total Distribution Amount remaining
after the application of clauses (i) through (ix), the Regular Principal
Allocation, if any, reduced by any First Allocation of Principal paid
pursuant to clause (iv) above, any Second Allocation of Principal paid
pursuant to clause (vi) above and any Third Allocation of Principal paid
pursuant to clause (viii) above;
(xi) to the applicable party, from the Total Distribution
Amount remaining after the application of clauses (i) through (x), any
accrued and unpaid fees or expenses (including reasonable legal fees and
expenses) or any other amounts owed to such party under any of the Basic
Documents, to the extent not paid pursuant to clauses (i) through (x);
and
(xii) the remainder, if any, of the Total Distribution Amount,
to the Certificate Distribution Account for distribution to the
Certificateholders.
Notwithstanding that the Notes have been paid in full, the Indenture
Trustee, shall continue to maintain the Collection Account hereunder until all
amounts distributable on the Certificates have been distributed to the
Certificateholders.
(c) On each Distribution Date, the Indenture Trustee (based in
relevant part on the information provided to it by the Servicer in the
Servicer's Certificate delivered on the related Determination Date pursuant to
Section 4.10(a)) shall withdraw the funds on deposit in the Note Interest
Distribution Account with respect to the Collection Period preceding such
Distribution Date and make payments on such date pursuant to clauses (i)
through (iv) below, in the following order and priority:
(i) first, to the Class A Noteholders, ratably, the Class A
Noteholders' Interest Distributable Amount for such Distribution Date;
(ii) second, to the Class B Noteholders, the Class B
Noteholders' Interest Distributable Amount for such Distribution Date;
(iii) third, to the Class C Noteholders, the Class C
Noteholders' Interest Distributable Amount for such Distribution Date;
and
(iv) fourth, to the Class D Noteholders, the Class D
Noteholders' Interest Distributable Amount for such Distribution Date.
(d) On each Distribution Date, the Indenture Trustee (based in
relevant part on the information provided to it by the Servicer in the
Servicer's Certificate delivered on the related Determination Date pursuant to
Section 4.10(a)) shall withdraw the funds on deposit in the Principal
Distribution Account with respect to the Collection Period preceding such
Distribution Date and make payments on such date pursuant to clauses (i)
through (iv) below, in the following order and priority:
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(i) to the Class A Noteholders, in the following order and
priority, the Class A Principal Distributable Amount for such Payment
Date:
(A) first, to the Class A-1 Noteholders on account of
principal until the Outstanding Amount of the Class A-1 Notes is reduced
to zero; and
(B) second, to the Class A-2 Noteholders on account of
principal until the Outstanding Amount of the Class A-2 Notes is reduced
to zero;
(ii) to the Class B Noteholders, the Class B Principal
Distributable Amount for such Payment Date;
(iii) to the Class C Noteholders, the Class C Principal
Distributable Amount for such Payment Date; and
(iv) to the Class D Noteholders, the Class D Principal
Distributable Amount for such Payment Date.
(e) Notwithstanding the foregoing, subject to the provisions of
Section 5.04(b) of the Indenture:
(i) If the Notes have been accelerated following the occurrence
and during the continuation of an Event of Default specified in Section
5.01(i), 5.01(ii), 5.01(iv) or 5.01(v) of the Indenture but prior to any
liquidation of the Trust Estate, the Indenture Trustee shall (w) transfer
the funds on deposit in the Collection Account remaining after the
application of clauses 5.06(b)(i) through (iii) above to the Principal
Distribution Account to the extent necessary to reduce the Outstanding
Amount of all the Class A Notes to zero, or, (x) if the Class A Notes
shall have been paid in full, transfer the funds on deposit in the
Collection Account remaining after the application of clauses 5.06(b)(i)
through (v) above to the Principal Distribution Account to the extent
necessary to reduce the Outstanding Amount of all the Class B Notes to
zero, or, (y) if the Class A Notes and Class B Notes shall have been paid
in full, transfer the funds on deposit in the Collection Account
remaining after the application of clauses 5.06(b) (i) through (vii)
above to the Principal Distribution Account to the extent necessary to
reduce the Outstanding Amount of all the Class C Notes to zero, or, (z)
if the Class A Notes, Class B Notes and Class C Notes shall have been
paid in full, to transfer the funds on deposit in the Collection Account
remaining after the application of clauses 5.06(b)(i) through (ix) above
to the Principal Distribution Account to the extent necessary to reduce
the Outstanding Amount of all the Class D Notes to zero. Any amounts
transferred to the Principal Distribution Account pursuant to clause (w)
shall be applied to the repayment of principal of the Class A-1 Notes and
the Class A-2 Notes pro rata based on the respective Outstanding Amounts
of the Class A-1 Notes and the Class A-2 Notes.
(ii) If the Notes have been accelerated following the
occurrence and during the continuation of an Event of Default specified
in Section 5.01(iii) of the Indenture, the Indenture Trustee shall
transfer the funds on deposit in the Collection Account remaining after
the application of clauses 5.06(b)(i) through (x) to the Principal
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Distribution Account to the extent necessary to reduce the principal
amount of all the Notes to zero in the order and priority set forth in
Section 5.06(d).
Section 5.07 Statements to Securityholders. On each Distribution
Date, the Indenture Trustee shall prepare and make available via its website
at xxx.xxxxxx.xxx to each Noteholder of record as of the most recent Record
Date, and shall provide to each Rating Agency, the Seller and to the Owner
Trustee (with a copy to each Paying Agent (if any)) for the Owner Trustee to
forward to each Certificateholder of record as of the most recent Record Date,
a statement substantially in the form of Exhibit A setting forth at least the
following information as to the Securities to the extent applicable:
(a) the amount of collections received with respect to the
Receivables during the related Collection Period and allocable to principal
allocable to each Class of Notes on such Distribution Date;
(b) the amount of collections received with respect to the
Receivables during the related Collection Period and allocable to interest
allocable to each Class of Notes on such Distribution Date;
(c) the amount of the Regular Principal Allocation for such
Distribution Date;
(d) the amount of the First Allocation of Principal, if any, for
such Distribution Date;
(e) the amount of the Second Allocation of Principal, if any, for
such Distribution Date;
(f) the amount of the Third Allocation of Principal, if any, for
such Distribution Date;
(g) the Pool Balance with respect to such Distribution Date, after
giving effect to payments allocated to principal reported under clause (a)
above;
(h) the Outstanding Amount of each Class of Notes, the Note Pool
Factor for each such Class, and the Note Balance for each such Class as of the
close of business on the preceding Distribution Date, after giving effect to
payments allocated to principal reported under clause (a) above;
(i) the amount of the Servicing Fee and Servicing Reimbursement
Amount paid to the Servicer with respect to the related Collection Period;
(j) the respective amounts of the Owner Trustee Fee paid to the
Owner Trustee and the Indenture Trustee Fee paid to the Indenture Trustee in
each case with respect to the related Collection Period;
(k) the aggregate amounts of Realized Losses, if any, and Cram Down
Losses, if any, separately identified, with respect to the related Collection
Period;
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(l) the aggregate Principal Balance of all Receivables that became
Defaulted Receivables or Repurchased Receivables during the related Collection
Period;
(m) the aggregate Principal Balance and number of Receivables that
are 30 to 59 days, 60 to 89 days or 90 days or more delinquent as of the last
day of the related Collection Period;
(n) the Class A-1 Interest Carryover Shortfall, the Class A-2
Interest Carryover Shortfall, the Class B Interest Carryover Shortfall, the
Class C Interest Carryover Shortfall and the Class D Interest Carryover
Shortfall, in each case after giving effect to payments on such Distribution
Date, and any change in such amounts from the preceding statement;
(o) the aggregate Repurchase Amounts for Repurchased Receivables, if
any, that were or are to be purchased during or with respect to such
Collection Period;
(p) the aggregate Principal Balance and number of all Receivables
with respect to which the related Financed Vehicle was repossessed;
(q) the aggregate Principal Balance and number of Receivables with
respect to which the Servicer granted an extension;
(r) the Overcollateralization Target Amount for the next
Distribution Date;
(s) the Cumulative Net Loss Ratio as of such Determination Date;
(t) the Six-Month Annualized Net Loss Ratio as of such Determination
Date; (u) the Three-Month Annualized Net Loss Ratio as of such Determination
Date; and
(v) the Pool Delinquency Percentage as of such Determination Date.
Each amount set forth on the Distribution Date Statement under
clauses (a), (b), (c), (d), (e), (f), (i) or (j) above shall be expressed as a
dollar amount per $1,000 of original principal balance of a Note.
Section 5.08 Subcertifications of Indenture Trustee in Connection
with Xxxxxxxx-Xxxxx Certifications.
(a) The Indenture Trustee and the Servicer shall reasonably
cooperate with the Depositor in connection with the Trust's satisfying the
reporting requirements under the Exchange Act. The Indenture Trustee shall
prepare on behalf of the Trust any Forms 8-K and 10-K customary for similar
securities as required by the Exchange Act and the rules and regulations of
the Commission thereunder, and the Indenture Trustee shall file (via the
Commission's Electronic Data Gathering and Retrieval System) such Forms with
the Commission on behalf of the Depositor. The Depositor hereby grants to the
Indenture Trustee a limited power of attorney to execute and file each such
Form 8-K but only to the extent no
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accompanying certification is required to be filed on behalf of the Depositor.
Such power of attorney shall continue until either the earlier of (i) receipt
by the Indenture Trustee from the Depositor of written termination of such
power of attorney and (ii) the termination of the Trust. The Depositor shall
execute the Form 10-Ks. The Indenture Trustee shall have no liability with
respect to any failure to properly prepare or file such periodic reports
resulting from or relating to the Indenture Trustee's inability or failure to
obtain any information not resulting from its own negligence or willful
misconduct.
(b) Each Form 8-K shall be filed by the Indenture Trustee with the
Commission within 15 days after each Distribution Date, including a Form 8-K
with a copy of the statement to the Noteholders for such Distribution Date as
an exhibit thereto. Prior to March 30th of each year (or such earlier date as
may be required by the Exchange Act and the Rules and Regulations of the SEC),
the Indenture Trustee shall file a Form 10-K, in substance as required by
applicable law or the Commission's staff interpretations. Such Form 10-K shall
include as exhibits the Servicer's annual statement of compliance described
under Section 4.11 (upon which the Indenture Trustee may rely) and the
accountant's report described under Section 4.12, in each case to the extent
they have been timely delivered to the Indenture Trustee. If they are not so
timely delivered, the Indenture Trustee shall file an amended Form 10-K
including such documents as exhibits reasonably promptly after they are
delivered to the Indenture Trustee. The Form 10-K shall also include the
Depositor's Annual Xxxxxxxx-Xxxxx Certification provided for in Section 6.09.
The Indenture Trustee shall prepare and deliver each Form 10-K to the
Depositor for execution no later than March 20th (or if such day is not a
Business Day, the immediately preceding Business Day) of each year. The
Depositor shall return the executed Form 10-K to the Indenture Trustee for
filing no later than March 25th (or if such day is not a Business Day, the
immediately preceding Business Day) of each year.
(c) Notwithstanding that the Depositor's Annual Xxxxxxxx-Xxxxx
Certification is to be signed by an officer of the Depositor, a Responsible
Officer of the Indenture Trustee shall sign a certification, in the form
attached hereto as Exhibit E for the benefit of the Depositor and its
officers, directors and Affiliates (provided, however, that the Indenture
Trustee shall not undertake an analysis of the accountant's report attached as
an exhibit to the Form 10-K). The forms of certification attached as Exhibit D
and Exhibit E hereto are subject to revision so as to conform to any
amendments made to the Xxxxxxxx-Xxxxx Act of 2002 or to any rules and
regulations promulgated thereto. Such certification shall be delivered to the
Depositor, no later than March 15th of each year (or if such day is not a
Business Day, the immediately preceding Business Day) and the Depositor shall
deliver the Depositor's Annual Xxxxxxxx-Xxxxx Certification to be filed to the
Indenture Trustee no later than March 20th of each year (or if such day is not
a Business Day, the immediately preceding Business Day). In the event that
prior to the filing date of the Form 10-K in March of each year, the Indenture
Trustee has actual knowledge of information material to the Depositor's Annual
Xxxxxxxx-Xxxxx Certification, the Indenture Trustee shall promptly notify the
Depositor. In addition, the Indenture Trustee shall indemnify and hold
harmless the Depositor and its officers, directors and Affiliates from and
against any losses, damages, penalties, fines, forfeitures, reasonable and
necessary legal fees and related costs, judgments and other costs and expenses
arising out of or based upon any breach of the Indenture Trustee's obligations
under this Section 5.08 or the Indenture Trustee's negligence, bad faith or
willful misconduct in connection therewith.
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(d) Upon any filing with the Commission, the Indenture Trustee shall
promptly deliver to the Depositor a copy of any such executed report,
statement or information.
(e) Prior to January 30 of the first year in which the Indenture
Trustee is able to do so under applicable law, the Indenture Trustee shall, in
accordance with applicable law, file a Form 15D Suspension Notification with
respect to the Issuer in a timely manner.
ARTICLE VI
THE DEPOSITOR
Section 6.01 Representations of Depositor. The Depositor makes the
following representations to the Issuer, the Servicer, the Indenture Trustee
and the Seller. The Issuer relies on such representations in accepting the
Receivables and delivering the Securities. Such representations and warranties
speak as of the execution and delivery of this Agreement and as of the Closing
Date, and shall survive the sale, transfer and assignment of the Receivables
by the Depositor to the Issuer and the pledge thereof to the Indenture Trustee
in accordance with the terms of the Indenture.
(a) Organization and Good Standing. The Depositor is duly organized
and validly existing as a corporation in good standing under the laws of the
State of Delaware, with the corporate power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted.
(b) Due Qualification. The Depositor is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions where the failure to do
so would materially and adversely affect the Depositor's ability to transfer
the Receivables to the Issuer pursuant to this Agreement or the validity or
enforceability of the Receivables.
(c) Power and Authority. The Depositor has the corporate power and
authority to execute and deliver this Agreement and the other Basic Documents
to which it is a party and to carry out their respective terms; the Depositor
has full power and authority to sell and assign the property to be sold and
assigned to and deposited with the Issuer, and the Depositor shall have duly
authorized such sale and assignment to the Issuer by all necessary corporate
action; and the execution, delivery and performance of this Agreement and the
other Basic Documents to which the Depositor is a party have been, duly
authorized by the Depositor by all necessary corporate action.
(d) Binding Obligation. This Agreement and the other Basic Documents
to which the Depositor is a party, when duly executed and delivered by the
other parties hereto and thereto, shall constitute legal, valid and binding
obligations of the Depositor, enforceable against the Depositor in accordance
with their respective terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization or similar laws now or
hereafter in effect relating to or affecting creditors' rights generally and
to general principles of equity (whether applied in a proceeding at law or in
equity).
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(e) No Violation. The consummation of the transactions contemplated
by this Agreement and the other Basic Documents and the fulfillment of the
terms of this Agreement and the other Basic Documents shall not conflict with,
result in any breach of any of the terms or provisions of or constitute (with
or without notice or lapse of time, or both) a default under, the certificate
of incorporation or bylaws of the Depositor, or any indenture, agreement,
mortgage, deed of trust or other instrument to which the Depositor is a party
or by which it is bound; or result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of any such indenture,
agreement, mortgage, deed of trust or other instrument, other than this
Agreement and the other Basic Documents; or violate any law, order, rule or
regulation applicable to the Depositor of any court or federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Depositor.
(f) No Proceedings. No legal or governmental proceedings are pending
to which the Depositor is a party or of which any property of the Depositor is
subject and no such proceedings are, to the Depositor's knowledge, threatened
or contemplated, against the Depositor before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality having
jurisdiction over the Depositor or its properties: (i) asserting the
invalidity of this Agreement or any other Basic Document; (ii) seeking to
prevent the issuance of the Securities or the consummation of any of the
transactions contemplated by this Agreement or any other Basic Document; (iii)
seeking any determination or ruling that might materially and adversely affect
the performance by the Depositor of its obligations under, or the validity or
enforceability of, this Agreement or any other Basic Document; or (iv) seeking
to adversely affect the federal income tax attributes of the Trust, the Notes
or the Certificates.
(g) No Litigation Pending. There is no action, suit, regulatory or
other proceeding of any kind pending or, to the Depositor's knowledge,
threatened against or materially affecting the Depositor or the properties of
the Depositor before any Governmental Authority which, if determined adversely
to the Depositor, would adversely affect the Depositor ability to execute,
deliver and perform its obligations under this Agreement.
(h) No Consents. The Depositor is not required to obtain the consent
of any other party or any consent, license, approval, registration,
authorization, or declaration of or with any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement or any other Basic Document to which it is a
party that has not already been obtained.
(i) 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.
Section 6.02 Corporate Existence. During the term of this Agreement,
the Depositor will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and 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, the Basic Documents
and each other instrument or
48
agreement necessary or appropriate to the proper administration of this
Agreement and the transactions contemplated hereby. In addition, all
transactions and dealings between the Depositor and its Affiliates will be
conducted on an arm's-length basis.
Section 6.03 Liability of Depositor; Indemnities. The Depositor
shall be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Depositor under this Agreement (which shall not
include distributions on account of the Notes or the Certificates).
Section 6.04 Merger or Consolidation of, or Assumption of the
Obligations of, Depositor. Any Person with which the Depositor shall merge or
consolidate or which the Depositor shall permit to become the successor to the
Depositor's business shall execute an agreement of assumption of every
obligation of the Depositor under this Agreement and the other Basic
Documents. Whether or not such assumption agreement is executed, such
successor Person shall be the successor to the Depositor under this Agreement
without the execution or filing of any document or any further act on the part
of any of the parties to this Agreement. The Depositor shall provide prompt
notice of any merger, consolidation or succession pursuant to this Section
6.04 to the Owner Trustee, the Indenture Trustee, the Servicer, the
Securityholders and the Rating Agencies. Notwithstanding the foregoing, the
Depositor shall not merge or consolidate with any other Person or permit any
other Person to become a successor to the Depositor's business unless (w)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 3.02 or 6.01 shall have been breached (for
purposes hereof, such representations and warranties shall speak as of the
date of the consummation of such transaction), (x) the Depositor shall have
delivered to the Owner Trustee, the Indenture Trustee and the Servicer an
Officer's Certificate and an Opinion of Counsel each stating that such
consolidation, merger or succession and such agreement of assumption comply
with this Section 6.04 and that all conditions precedent provided for in this
Agreement relating to such transaction have been complied with, (y) the Rating
Agency Condition shall have been satisfied and (z) the Depositor shall have
delivered to the Owner Trustee, the Indenture Trustee and the Servicer an
Opinion of Counsel stating that, in the opinion of such counsel, either (A)
all financing statements and continuation statements and amendments thereto
have been executed and filed that are necessary to preserve and protect the
interest of the Trust in the Receivables and reciting the details of such
filings or (B) no such action is necessary to preserve and protect such
interest.
Section 6.05 Limitation on Liability of Depositor and Others. The
Depositor and any director, officer, employee or agent of the Depositor may
rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any
matters arising hereunder. The Depositor shall be under no obligation to
appear in, prosecute or defend any legal action that shall not be incidental
to its obligations under this Agreement and that in its opinion may involve it
in any expense or liability.
Section 6.06 Depositor May Own Securities. The Depositor and any
Affiliate thereof may in its individual or any other capacity become the owner
or pledgee of Securities with the same rights as it would have if it were not
the Depositor or an Affiliate thereof, except as expressly provided herein or
in any Basic Document.
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Section 6.07 Depositor to Provide Copies of Relevant Securities
Filings. The Depositor shall provide or cause to be provided to the Indenture
Trustee a copy of any document filed by the Depositor subsequent to the date
hereof with the Commission pursuant to the Securities Act of 1933 or the
Securities Exchange Act of 1934 that relate specifically to the Trust, the
Notes or the Certificates.
Section 6.08 Amendment of Depositor's Organizational Documents. The
Depositor shall not amend its organizational documents except in accordance
with the provisions thereof.
Section 6.09 Xxxxxxxx-Xxxxx Certifications. The Depositor shall
provide on a timely basis for filing with the 1934 Act Documents, the
certification (the "Depositor's Annual Xxxxxxxx-Xxxxx Certification"),
substantially in the form of Exhibit D, required by Section 302 of the
Xxxxxxxx-Xxxxx Act to be included in those reports.
ARTICLE VII
THE SERVICER
Section 7.01 Representations of Servicer.
(a) The Servicer makes the following representations and warranties
to the Issuer, the Depositor, the Indenture Trustee, the Owner Trustee and the
Seller and upon which the Issuer is deemed to have relied in acquiring the
Receivables. Such representations speak as of the execution and delivery of
this Agreement and as of the Closing Date (and in the case of subsections (i),
(v) and (ix) as of any point during the term of the Agreement), and shall
survive the sale of the Receivables to the Issuer and the pledge thereof to
the Indenture Trustee in accordance with the terms of the Indenture.
(i) Due Organization and Qualification. The Servicer (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 Servicer is an insured depository
institution under the provisions of the Federal Deposit Insurance Act, 12
U.S.C. Sections 1811-1831 and the Servicer'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.
The Servicer has, and at all relevant times had, the power, authority and
legal right to service the Receivables.
(ii) Power and Authority; Due Authorization; Enforceability.
The Servicer has full power and authority to perform its obligations
under this Agreement and has duly authorized the performance of its
obligations under this Agreement by all necessary action. The Agreement
has been duly authorized, executed and delivered by the Servicer and
constitutes the legal, valid, binding and enforceable obligation of the
Servicer except as the same may be limited by insolvency, bankruptcy,
reorganization or
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other laws relating to or affecting the enforcement of creditors' rights
or by general equity principles.
(iii) No Violation. The Servicer 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
Servicer is a party, as borrower or guarantor, and the consummation of
the transactions contemplated by this Agreement and the other Basic
Documents to which it is a party, and the fulfillment of the respective
terms thereof, 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
Servicer pursuant to the terms of, any such indenture, mortgage, deed of
trust, loan agreement, guarantee, lease financing agreement or similar
agreement or instrument to which the Servicer is a party or by which it
is bound, in each case where such a default, conflict or breach would
materially and adversely affect the performance by the Servicer 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 Servicer.
(iv) No Proceedings. No legal or governmental proceedings or
investigations are pending to which the Servicer is a party or of which
any property of the Servicer is the subject, and no such proceedings are
threatened or contemplated by Governmental Authorities or threatened by
others against the Servicer before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality
having jurisdiction over the Servicer or its properties, other than such
proceedings which will not have a material adverse effect upon the
general affairs, financial position, net worth or operations of the
Servicer and its subsidiaries considered as a whole: (x) asserting the
invalidity of this Agreement or any of the other Basic Documents; (y)
seeking to prevent the issuance of the Securities or the consummation of
any of the transactions contemplated by this Agreement or any of the
other Basic Documents; or (z) seeking any determination or ruling that
might materially and adversely affect the performance by the Servicer of
its obligations under, or the validity and enforceability of, this
Agreement or any of the other Basic Documents to which it is a party.
(v) Licenses and Approvals. The Servicer has obtained all the
licenses and approvals necessary for the conduct of Servicer'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.
(vi) Ability to Perform. The Servicer 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
Servicer does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every one of its obligations
under this Agreement.
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(vii) No Consent Required. The Servicer 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 or any other Basic Document to which it is a party, except
for such as have been obtained, effected or made or will be obtained on
or prior to the Closing Date.
(viii) No Litigation Pending. There is no action, suit,
proceeding or investigation pending or, to the Servicer's knowledge,
threatened against the Servicer or any of its Affiliates which, if
determined adversely against the Servicer, would materially adversely
affect the execution, delivery or enforceablility of this Agreement, the
other Basic Documents to which the Servicer is a party, as applicable, or
draw into question the validity of this Agreement, the other Basic
Documents to which the Servicer is a party, as applicable, or any of the
Receivables or have a material adverse effect on the financial condition
of the Servicer or the Servicer's ability to perform its obligations
under the terms of this Agreement or the other Basic Documents to which
the Servicer is a party, as applicable.
(ix) No Untrue Information. None of this Agreement, the other
Basic Documents to which the Servicer is a party or any statement, report
or other document furnished or to be furnished in writing by the Servicer
pursuant to this Agreement, the other Basic Documents to which the
Servicer is a party, as applicable, or in connection with the
transactions contemplated hereby or thereby 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.
(b) The Servicer makes the following representations and warranties
with respect to the Receivables, to the Issuer, the Depositor, the Indenture
Trustee and the Seller and upon which the Issuer is deemed to have relied in
acquiring the Receivables and pledging the same to the Indenture Trustee. Such
representations and warranties speak as of the execution and delivery of this
Agreement and as of the Closing Date, but shall survive the sale, transfer and
assignment of the Receivables to the Issuer pursuant to this Agreement and the
pledge of the Receivables by the Issuer to the Indenture Trustee pursuant to
the Indenture:
(i) Receivables as Described. As of the Cut-Off Date, the
information set forth in the Receivable Schedule was true and correct,
and is consistent in all respects with the underlying computer file and
includes each item of information on the Receivables described in Exhibit
B.
(ii) 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 HNB 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
52
been duly made and show HNB as the sole holder of a first priority
security interest in such Financed Vehicle.
(iii) Receivable Files. Immediately prior to the conveyance of
such Receivable by the Depositor to the Issuer pursuant to Section
2.01(a), the Servicer 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."
(iv) Assignment. The Servicer 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.
(v) Location of Receivable Files. The Receivable File with
respect to such Receivable is kept at one or more of the locations listed
in Schedule B hereto.
(vi) 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 Issuer and pledged to the
Indenture Trustee.
(vii) No Liens. As of the Cut-Off Date, to the best of the
Servicer'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.
(viii) Compliance with Law. The servicing of such Receivable
has complied and now complies, in all respects with Applicable Law.
(ix) Doing Business. The Servicer is (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 Issuer to enforce the Receivable or the
ability of the Servicer to discharge its obligations under this
Agreement.
(x) 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 HNB
(except as to notations required under the terms of this Agreement and
the Purchase Agreement).
(xi) Form of Contract. The contract evidencing such Receivable
is substantially similar to one of HNB's standard form retail motor
vehicle loan contracts or retail motor vehicle installment sale contracts
to the Purchase Agreement 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
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with Applicable Law which will not have a material adverse effect on the
Issuer and will not reduce the scheduled payments thereunder or other
payments due under such Receivable.
(xii) No Fraud. No material error, omission, misrepresentation,
negligence or fraud in respect of such Receivable has taken place on the
part of any employee or agent in connection with the servicing of such
Receivable.
(xiii) Compliance with Terms. The Servicer has duly fulfilled
all obligations to be fulfilled on the Servicer's part under or in
connection with the servicing of such Receivable and has done nothing,
except as permitted under the terms of the Purchase Agreement, to impair
the rights of the Issuer in such Receivable or payments with respect
thereto.
(xiv) Servicing and Collection Practices. The servicing and
collection practices used with respect to such Receivable have been
consistent with the Servicer's servicing and collection policies and
procedures as in effect since the date of the origination of such
Receivable through the closing date of the Purchase Agreement, and
thereafter, the Servicer has serviced the Receivables in accordance with
the Servicing Standard (as defined in the Purchase Agreement).
(xv) 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.
(xvi) 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.
(xvii) Original Terms Unmodified. The Servicer has not
impaired, waived, altered or modified the terms of such Receivable in any
respect, except as permitted by the Servicing Standard (as defined in the
Purchase Agreement).
(xviii) Entire Agreement. To the best of the Servicer's
knowledge, such Receivable constitutes the entire agreement between the
Depositor and the related Obligor.
(xix) Binding Obligation. To the best of the Servicer's
knowledge, 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.
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(xx) 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 as permitted under the Purchase Agreement). As of the
Cut-Off Date, there are no proceedings pending, or to the best of the
Servicer's knowledge threatened, wherein the related Obligor or any
governmental agency has alleged that such Receivable is illegal or
unenforceable.
(xxi) 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 and (ii) there are no proceedings pending, or to the best
of the Servicer's knowledge, threatened, asserting insolvency of the
related Obligor.
(xxii) 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.
(xxiii) 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.
(xxiv) 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.
(xxv) Chattel Paper. Such Receivable constitutes "tangible
chattel paper" as defined in the UCC.
(xxvi) Currency. Such Receivable is payable in U.S. dollars.
(xxvii) Soldiers' and Sailors'. The Receivable Schedule
reflects any relief that was allowed to any Obligor on such Receivable
under the Soldiers' and Sailors' Civil Relief Act of 1940 as of the
Cut-Off Date.
(xxviii) 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
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instrumentality of the United States of America or any State or political
subdivision thereof.
(xxix) 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
(xxx) Obligor FICO Score. The Obligor under such Receivable had
a FICO score as of the origination date of such Receivable of at least
600.
(xxxi) Geographic. No Receivable was originated in Maryland and
no Obligor under a Receivable has a current mailing address in Maine. As
of the Cut-Off Date 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.
(xxxii) No Bankruptcy. As of the Cut-Off Date, the Servicer has
not received notice that the Obligor under such Receivable has filed for
bankruptcy, and to the best of the Servicer's knowledge, as of the
Cut-Off Date, the Obligor under such Receivable is not in bankruptcy or
similar proceedings.
(xxxiii) No Extensions. The number or timing of scheduled
payments on such Receivable (A) 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 closing date of the Purchase Agreement
(B) has not been changed after the Cut-Off Date, except as in accordance
with the Servicer's collection and servicing policies as in effect prior
to the closing date of the Purchase Agreement and thereafter in
accordance with the Servicing Standard set forth in the Purchase
Agreement.
(xxxiv) 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).
(xxxv) No Substitution. The Obligor under such Receivable does
not have the unilateral right to substitute, exchange or add any Financed
Vehicle under such Receivable.
(xxxvi) 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 Servicer with respect to
such Receivable.
(xxxvii) 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
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than $1,059.00 and (B) the aggregate Principal Balance of all Receivables
was $553,727,701.64.
(xxxviii) Simple Interest Receivables. Such Receivable is a
Simple Interest Receivable.
(xxxix) Date of Origination. Such Receivable has an origination
date on or after May 18, 2001.
(xl) 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%.
(xli) 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 3.51%.
(xlii) 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%.
(xliii) First Scheduled Payment. Each Receivable has a first
scheduled due date on or prior to June 18, 2001 and has had its first
scheduled payment made.
(xliv) 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.
(xlv) 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).
(xlvi) No Foreign Obligor. All of the Receivables are due from
Obligors who are citizens, or legal resident aliens, of the United States
of America.
(xlvii) Seasoning. The weighted average number of months since
the initial installment due date for the Receivables is at least 10
months.
(xlviii) No Advances. No advances have been made to Obligors
by, or on behalf of, the Servicer in order to meet any representation or
warranty herein set forth.
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(xlix) 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.
(l) Waiver; Reduction. As of the Closing Date (i) the Servicer
has not waived any default, breach, violation or event of acceleration
other than waivers made in the ordinary course of business in accordance
with the Servicer's policies and procedures for the servicing and
collection of such loans as in effect prior to the closing date of the
Purchase Agreement or thereafter, in accordance with the Servicing
Standard set forth in the Purchase Agreement and (ii) neither the
Servicer 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, except as permitted under the Servicer's
collection and servicing policies as in effect prior to the closing date
of the Purchase Agreement or thereafter, in accordance with the Servicing
Standard set forth in the Purchase Agreement.
Section 7.02 Indemnities of Servicer. The Servicer shall be liable
in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer and the representations made by the Servicer under
this Agreement and:
(a) The Servicer shall indemnify, defend and hold harmless the
Seller, the Issuer, the Owner Trustee, the Indenture Trustee, the
Securityholders and the Depositor and any of the officers, directors, agents,
partners, members, shareholders and employees of the Seller, the Issuer, the
Owner Trustee, the Indenture Trustee (collectively, the "Indemnified Parties"
and each, an "Indemnified Party") from and against any and all claims, losses,
damages, penalties, fines, forfeitures, liabilities, reasonable and necessary
legal fees and related costs, judgments, and any other costs, fees and
expenses, arising out of or resulting from claims of third parties arising
from (i) 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, (ii) the breach of any representation or warranty, covenant or
other agreement set forth in this Agreement or the other Basic Documents
applicable to it, (iii) the use, ownership or operation by the Servicer or any
Affiliate thereof of a Financed Vehicle or (iv) any information delivered by
the Servicer to the Indenture Trustee and/or the Depositor pursuant to this
Agreement that is false, incorrect, incomplete or misleading in any material
respect when delivered.
(b) The Servicer or the Indemnified Party, as applicable, shall
promptly notify the other upon becoming aware that a claim subject to
indemnification under Section 7.02(a) (an "Indemnified Claim") has been made
by a third party with respect to this Agreement or the Receivables; provided,
however, that the failure of the Indemnified Party to notify the Servicer of
an Indemnified Claim shall not relieve the Servicer from any liability which
it may have to any 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 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 Servicer shall be
reasonably acceptable to the Issuer; and provided, however, that at any time
the 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
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defense thereof. The Servicer shall not be liable to the Indemnified Party for
the cost of the Indemnified Party's counsel. If, in connection with any
Indemnified Claim, the actual or potential defendants in, or targets of, any
such action include both the Servicer and the Indemnified Party and the
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 Indemnified Party shall have the right to
hire counsel to assume the defense of any such 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 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 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
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 Indemnified Party.
For purposes of this Section, in the event of the termination of the
rights and obligations of HNB (or any successor thereto pursuant to Section
7.03) as Servicer pursuant to Section 8.02, or the resignation by such
Servicer pursuant to this Agreement, such Servicer shall have the rights and
obligations of "Servicer" pursuant to Section 7.02(b) with respect to any
Indemnified Claim arising from its capacity as Servicer under this Agreement.
The Servicer shall have no obligation to indemnify any of the
Indemnified Parties in connection with (x) a Receivable being deemed to be
unenforceable in a jurisdiction or (y) any impairment of receipt of
collections on a Receivable if either of the foregoing occurs as a result of
the Issuer's, the Indenture Trustee's or the Owner Trustee's failure to obtain
any license or consent necessary in connection with the ownership or
enforcement of the Receivables or the inability of the Servicer to pursue
litigation as a result of the restrictions set forth in Section 4.01(c).
Indemnification under this Section shall survive the resignation or
removal of the Servicer or the termination of this Agreement with respect to
acts of the Servicer prior thereto, and shall include reasonable fees and
expenses of counsel and reasonable expenses of litigation. If the Servicer
shall have made any indemnity payments pursuant to this Section 7.02 and the
Person to or on behalf of whom such payments are made thereafter collects any
of such amounts from others, such Person shall promptly repay such amounts to
the Servicer, without interest.
Section 7.03 Merger or Consolidation of, or Assumption of the
Obligations of, 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 (i) into which the Servicer may be merged or
consolidated, (ii) resulting from any merger, conversion or consolidation to
which the Servicer shall be a party, (iii) that acquires by conveyance,
transfer or lease substantially all of the assets of the Servicer, or (iv)
succeeding to the business of the Servicer, which Person shall execute an
agreement of assumption to perform every obligation of the Servicer under this
Agreement, shall be the successor to the
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Servicer under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties to this Agreement anything
herein to the contrary notwithstanding; provided, that, the Servicer shall
provide prompt notice of any merger, consolidation or succession pursuant to
this Section 7.03 to the Owner Trustee, the Indenture Trustee, the Depositor
and the Rating Agencies and immediately after giving effect to such
transaction, (i) no representation or warranty made pursuant to Section 7.01
shall have been breached (for purposes hereof, such representations and
warranties shall speak as of the date of the consummation of such
transaction), (ii) no event that, after notice or lapse of time or both, would
become an Event of Servicing Termination or an Additional Event of Servicing
Termination shall have occurred and be continuing, (iii) the Servicer shall
have delivered to the Indenture Trustee and the Owner Trustee 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
7.03 and that all conditions precedent, if any, provided for in this Agreement
relating to such transaction have been complied with and (iv) the Servicer
shall have delivered to the Indenture Trustee and the Owner Trustee an Opinion
of Counsel stating that, in the opinion of such counsel, either (A) all
financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary fully to preserve and protect the
interest of the Trust and the Indenture Trustee 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 for all of the Servicer's obligations and
liabilities hereunder.
Section 7.04 Limitation on Liability of Servicer and Others. Neither
the Servicer nor any of its shareholders, directors, officers, employees or
agents shall be under any liability to the Seller, the Issuer, the Depositor,
the Indenture Trustee, the Owner Trustee or the Noteholders for any action
taken or for refraining from the taking of any action pursuant to this
Agreement, or for errors in judgment; provided, however, that this Section
7.04 shall not protect the Servicer against any liability that would otherwise
be imposed by reason of a breach of warranties or representation made in this
Agreement or 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 Servicer and any
director, officer, employee or agent of the Servicer may conclusively rely in
good faith on the advice of counsel or on any document of any kind prima facie
properly executed and submitted by any Person respecting any matters arising
under this Agreement.
Section 7.05 Servicer Not to Resign.
(a) Subject to the provisions of Section 7.03, the Servicer shall
not resign from the obligations and duties imposed on it by this Agreement as
Servicer except upon mutual consent of the Servicer, the Depositor, the
Indenture Trustee and the Owner Trustee or upon the determination that the
performance of its duties under this Agreement shall no longer be permissible
under Applicable Law and such incapacity cannot be cured by the Servicer.
(b) Notice of any determination that the performance by the Servicer
of its duties hereunder is no longer permitted under Applicable Law shall be
communicated to the Owner Trustee and the Indenture Trustee at the earliest
practicable time (and, if such
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communication is not in writing, shall be confirmed in writing at the earliest
practicable time) and any such determination shall be evidenced by an Opinion
of Counsel to such effect delivered by the Servicer to the Owner Trustee and
the Indenture Trustee. No resignation of the Servicer shall become effective
until a successor Servicer (or if one is not appointed, the Indenture Trustee)
shall have assumed the responsibilities and obligations of the Servicer in
accordance with Section 8.03, unless the Servicer is prohibited by Applicable
Law from serving as Servicer, in which instance the Indenture Trustee shall
act as successor Servicer or immediately appoint another Person to do so. If
the Indenture Trustee is legally unable to act as Servicer and if no successor
Servicer shall have been appointed within thirty days of resignation or
removal of the resigning Servicer, the Indenture Trustee, the Owner Trustee or
the Certificateholders evidencing not less than 25% of the percentage
interests in the Certificates may petition any court of competent jurisdiction
for such appointment.
ARTICLE VIII
DEFAULT
Section 8.01 Event of Servicing Terminations and Additional Event of
Servicing Terminations.
(a) For purposes of this Agreement, the occurrence and continuance
of any of the following shall constitute a "Event of Servicing Termination":
(i) any failure by the Servicer to deposit into the Collection
Account (x) any proceeds or payment required to be so delivered on a
Remittance Date under the terms of this Agreement that continues
unremedied for a period of one 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 Business
Days after the date upon which such payment was due;
(ii) failure on the part of the Servicer duly to observe or
perform in any material respect any other covenants or agreements of the
Servicer set forth in this Agreement, which failure continues unremedied
for a period of thirty days after discovery of such failure by a
Responsible Officer of the Servicer or after the date on which written
notice of such failure requiring the same to be remedied shall have been
given to the Servicer by Noteholders evidencing not less than 25% of the
Outstanding Amount of the Controlling Class;
(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;
(iv) the occurrence of an Insolvency Event with respect to the
Servicer;
(v) any assignment or delegation by the Servicer of its duties
or rights hereunder except as specifically permitted hereunder, or any
attempt to make such assignment or delegation;
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(vi) the indictment of the 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 days; or
(vii) any disqualification of the Servicer as an Eligible
Servicer.
(b) For purposes of this Agreement, the occurrence and continuance
of the following shall constitute an "Additional Event of Servicing
Termination":
(i) the occurrence of a Termination Trigger Event;
(ii) any change in the business, assets, operations, prospects
or condition, financial or otherwise, of the Servicer that has a material
adverse effect on the ability of the Servicer to perform any of its
obligations under this Agreement;
(iii) the long-term unsecured debt rating of the Servicer is
withdrawn or reduced to "Baa2" or below by Xxxxx'x, "BBB" or below by
Standard & Poor's or "BBB" or below by Fitch; or
(iv) the Servicer 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.
(c) The Servicer shall deliver to the Indenture Trustee and the
Owner Trustee, promptly after having obtained knowledge thereof, but in no
event later than three 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 Servicing Termination under Section
8.01(a) or an Additional Event of Servicing Termination under Section 8.01(b).
(d) Any delinquencies, repossessions or losses on the Receivables
caused by (i) the failure of the Issuer, the Indenture Trustee or the Owner
Trustee to have any licenses or consents necessary in connection with the
ownership or enforcement of the Receivables or (ii) the inability of the
Servicer to pursue litigation as a result of the restrictions set forth in
bringing suit at the direction of the Servicer as required by Section 4.01(c)
shall not be considered in determining the existence of an Additional Event of
Servicing Termination.
Section 8.02 Consequences of an Event of Servicing Termination or an
Additional Event of Servicing Termination.
(a) If an Event of Servicing Termination shall occur and be
continuing, the Indenture Trustee may, and at the written direction of
Noteholders evidencing not less than 25% of the Outstanding Amount of the
Controlling Class, or, if no Notes are Outstanding, Certificateholders
evidencing 25% of the percentage interests in the Certificates, shall
terminate all of the rights and obligations of the Servicer under this
Agreement by notice in writing to the Servicer. If an Additional Event of
Servicing Termination shall occur, the Indenture Trustee
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may, and at the written direction of Certificateholders evidencing not less
than 75% of the percentage interests in the Certificates shall, terminate all
of the rights and obligations of the Servicer under this Agreement by notice
in writing to the Servicer. At the time a notice of termination is delivered
to the Servicer or as soon thereafter as possible, a successor Servicer shall
be appointed pursuant to Section 8.03.
(b) The Indenture Trustee or such other successor Servicer is
authorized and empowered by this Agreement to execute and deliver, on behalf
of the terminated Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of the
Receivables and related documents to show the Indenture Trustee (or the Owner
Trustee if the Notes have been paid in full) as lienholder or secured party on
the related certificates of title of the Financed Vehicles or otherwise. In
the event of termination pursuant to Section 8.02(a), the terminated Servicer
agrees to cooperate with the Indenture Trustee or the successor Servicer, as
applicable, in effecting the termination of the responsibilities and rights of
the terminated Servicer under this Agreement, including the transfer to the
Indenture Trustee or such other successor Servicer for administration by it of
all money and property held by the Servicer with respect to the Receivables
and other records relating to the Receivables, including any portion of the
Receivables File held by the Servicer and a computer tape in readable form as
of the most recent Business Day containing all information necessary to enable
the successor Servicer or the Indenture Trustee to service the Receivables.
The terminated Servicer shall also provide the Indenture Trustee or such other
successor Servicer computer records in order to facilitate the orderly and
efficient transfer of servicing duties. Upon such termination, the terminated
Servicer, upon the request of the Indenture Trustee, shall give notice to each
Obligor of the sale of the related Receivable to the Issuer and that such
Obligor shall, effective as of the date of such notice, remit all Monthly
Payments to an account specified by the Indenture Trustee or such other
successor Servicer.
Section 8.03 Appointment of Successor Servicer.
(a) On and after the receipt by the Servicer of a notice of
termination pursuant to Section 8.02 or upon resignation of the Servicer
pursuant to Section 7.05, the Servicer shall continue to perform all servicing
functions under this Agreement until the earlier of the date specified in such
notice of termination or otherwise specified by the Indenture Trustee or until
a date mutually agreed upon by the Servicer and the Indenture Trustee. As
promptly as possible after a notice of termination has been received by the
Servicer, the Certificateholders evidencing not less than a majority of the
percentage interests in the Certificates shall appoint an Eligible Servicer
who satisfies the Rating Agency Condition as successor Servicer, and such
successor Servicer shall accept its appointment by a written assumption in a
form acceptable to the Indenture Trustee. In the event that a successor
Servicer has not been appointed by the requisite percentage of
Certificateholders or has not accepted its appointment at the time when the
Servicer ceases to act as Servicer, the Indenture Trustee without further
action shall automatically be appointed the successor Servicer.
Notwithstanding the above, if (x) a successor Servicer has not been selected
by the Certificateholders or has not accepted its appointment at the time when
the Servicer ceases to act as Servicer and (y) the Indenture Trustee is
legally unable to act as Servicer, the Indenture Trustee, the Owner Trustee or
Noteholders evidencing
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not less that 25% of the Outstanding Amount of the Controlling Class or, if no
Notes are outstanding, Certificateholders evidencing not less than 25% of the
percentage interests in the Certificates, may petition a court of competent
jurisdiction to appoint an Eligible Servicer as the successor to the Servicer.
Except as provided in Section 7.05, pending appointment pursuant to the
preceding sentence, the outgoing Servicer shall continue to act as Servicer
until a successor has been appointed and accepted such appointment. The
Indenture Trustee shall be entitled to withdraw from the Collection Account
and remit to the successor Servicer (including the Indenture Trustee as
successor Servicer) or such other party entitled thereto (but not including
the terminated Servicer) all reasonably incurred Servicer transition costs.
The sole remedy for termination under Section 8.01(b)(i) shall be the
termination of the Servicer.
(b) The successor Servicer (including the Indenture Trustee in its
capacity as successor Servicer), shall be the successor in all respects to the
Servicer in its capacity as Servicer under this Agreement and all rights,
including to the Servicing Fee, authority, power, obligations and
responsibilities of the Servicer under this Agreement automatically shall pass
to, be vested in and become obligations and responsibilities of such successor
Servicer and such successor Servicer shall be subject to all the rights,
responsibilities, restrictions, duties, liabilities and termination provisions
relating to the Servicer under this Agreement, except as otherwise stated
herein; provided, however, that such successor Servicer shall have no
liability with respect to any obligation that was required to be performed by
the terminated Servicer prior to the date that such successor Servicer becomes
the Servicer or any claim of a third party based on any alleged action or
inaction of the terminated Servicer; and provided, further that the Indenture
Trustee as successor Servicer shall have no obligation to make Monthly
Advances (as provided in Section 4.02(c)) or to repurchase Receivables related
to a breach of a representation or warranty set forth in Section 7.01(b). The
Depositor, the Owner Trustee, the Indenture Trustee and the successor Servicer
shall take such action, consistent with this Agreement, as shall be necessary
to effectuate any such succession. The Servicing Fee to which a successor
Servicer is entitled may be modified, with the prior written consent of
Certificateholders evidencing not less than 100% of the percentage interests
in the Certificates and subject to satisfaction of the Rating Agency Condition
with respect to such modification of the Servicing Fee.
Section 8.04 Notification to Securityholders. Upon any termination
of, or appointment of a successor to, the Servicer pursuant to this Article
VIII, the Owner Trustee shall give prompt written notice thereof to the
Certificateholders, and the Indenture Trustee shall give prompt written notice
thereof to the Noteholders and each Rating Agency.
Section 8.05 Waiver of Past Defaults. Noteholders evidencing not
less than a majority of the Outstanding Amount of the Controlling Class, or,
if no Notes are Outstanding, Certificateholders evidencing not less than a
majority of the percentage interests in the Certificates, may, on behalf of
all Securityholders, waive in writing any Event of Servicing Termination or
default by the Servicer in the performance of its obligations hereunder and
its consequences, except (i) a default in making any required deposits to or
payments from any of the Trust Accounts in accordance with this Agreement or
(ii) a default that is an Insolvency Event. Certificateholders evidencing not
less than 100% of the percentage interests in the Certificates, may, on behalf
of all Certificateholders, waive in writing any default by the Servicer in the
performance of its obligations hereunder and its consequences that is, or with
the giving of notice or lapse of time or both would become, an Additional
Event of Servicing Termination.
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Upon any such waiver of a past default, such default shall cease to exist, and
any Event of Servicing Termination or Additional Event of Servicing
Termination, as applicable, 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 thereto except
to the extent so expressly waived.
ARTICLE IX
TERMINATION
Section 9.01 Optional Purchase of All Receivables.
(a) On each Determination Date as of which the Pool Balance with
respect to the related Distribution Date will be equal to or less than 10% of
the Initial Pool Balance, the Servicer shall have the option to purchase the
Receivables. If the Servicer shall elect not to exercise such option, a
Certificateholder evidencing 100% of the percentage interests in the
Certificates shall have the option to purchase the Receivables; provided that
such Certificateholder shall not be the Seller, the Depositor or any Affiliate
thereof. To exercise such option, the Servicer or the Certificateholder, shall
deposit to the Collection Account on the Business Day prior to the Redemption
Date, an amount equal to the lesser of (i) the fair market value of the
Receivables and (ii) aggregate Repurchase Amount for the Receivables
(including Receivables that became Defaulted Receivables during the related
Collection Period) and shall succeed to all interests in and to the
Receivables; provided, however, that in order for the Servicer or such
Certificateholder to exercise such option the amount deposited into the
Collection Account shall be sufficient to pay the full amount of principal and
interest then due and payable on any Outstanding Notes and to pay any amounts
due to the Indenture Trustee and the Owner Trustee; and provided further, that
the Certificateholder shall also be required to deposit into the Collection
Account on the date of such purchase, an amount sufficient reimburse the
Servicer for any Monthly Advances which have not been reimbursed in accordance
with this Agreement. The exercise of such option shall effect a retirement, in
whole but not in part, of all outstanding Notes.
(b) As described in Article IX of the Trust Agreement, notice of any
termination of the Trust shall be given by the Servicer to the Owner Trustee
and the Indenture Trustee as soon as practicable after the Servicer has
received notice thereof.
(c) If the Servicer shall exercise its option to purchase the
Receivables pursuant to Section 9.01(a), any Certificateholder (unless such
Certificateholder is the Seller, the Depositor or any Affiliate thereof) shall
have the option to purchase such Receivables from the Servicer at a price
equal to the price that the Servicer paid for such Receivables pursuant to
Section 9.01(a).
(d) Following the satisfaction and discharge of the Indenture and
the payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder and
the Owner Trustee, on behalf of the Issuer, will succeed to the rights of the
Indenture Trustee pursuant to this Agreement.
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ARTICLE X
MISCELLANEOUS
Section 10.01 Amendment.
(a) This Agreement may be amended by the Depositor, the Servicer,
the Indenture Trustee and the Issuer, without the consent of any of the
Noteholders or Certificateholders, to cure any ambiguity, to correct or
supplement any provisions in this Agreement or for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
in this Agreement or of modifying in any manner the rights of the Noteholders
or the Certificateholders; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel delivered to the Owner Trustee and the
Indenture Trustee, adversely affect in any material respect the interests of
any Noteholder or Certificateholder; provided further, that such action shall
be deemed not to adversely affect in any material respect the interests of any
Noteholder or Certificateholder and no Opinion of Counsel to that effect shall
be required if the person requesting the amendment obtains a letter from each
Rating Agency stating that the amendment would not result in the downgrading
or withdrawal of the ratings then assigned to the Notes.
(b) This Agreement may also be amended from time to time by the
Depositor, the Servicer and the Issuer, with the prior written consent of the
Indenture Trustee, Noteholders holding not less than a majority of the
Outstanding Amount of the Class A Notes, Noteholders holding not less than a
majority of the Outstanding Amount of the Class B Notes, Noteholders holding
not less than a majority of the Outstanding Amount of the Class C Notes,
Noteholders holding not less than a majority of the Outstanding Amount of the
Class D Notes and Certificateholders evidencing not less than a majority of
the percentage interests in the Certificates, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of this Agreement or of modifying in any manner the rights of the
Securityholders; provided, however, that no such amendment shall (i) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables or distributions that shall be required
to be made for the benefit of the Securityholders, (ii) reduce the aforesaid
percentage of the Outstanding Amount of the Class A Notes, the Class B Notes,
the Class C Notes or the Class D Notes, the Noteholders of which are required
to consent to any such amendment, without the consent of the Noteholders
holding all Outstanding Class A Notes, Class B Notes, Class C Notes and Class
D Notes or (iii) reduce the aforesaid percentage of the percentage interests
in the Certificates, the Certificateholders of which are required to consent
to any such amendment, without the consent of all of the Certificateholders.
(c) Promptly after the execution of any amendment or consent, the
Indenture Trustee shall furnish written notification of the substance of such
amendment or consent to each Securityholder and each Rating Agency.
(d) It shall not be necessary for the consent of Noteholders or
Certificateholders pursuant to this Section to approve the particular form of
any proposed
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amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof.
(e) Prior to the execution of any amendment to this Agreement, the
Owner Trustee, on behalf of the Issuer and the Indenture Trustee, shall be
entitled to receive and rely upon an Opinion of Counsel stating that the
execution of such amendment is authorized or permitted by this Agreement and,
if applicable, the Opinion of Counsel referred to in Section 10.01(a). The
Owner Trustee and the Indenture Trustee, may, but shall not be obligated to,
enter into any such amendment that affects the Owner Trustee's or the
Indenture Trustee's, as applicable, own rights, duties or immunities under
this Agreement or otherwise.
Section 10.02 Protection of Title to Trust.
(a) The Seller and the Depositor shall file such financing
statements and cause to be filed such continuation statements, all in such a
manner and in such places as may be required by law fully to preserve,
maintain and protect the interest of the Issuer and the Indenture Trustee in
the Receivables and the proceeds thereof. The Seller and/or the Depositor, as
applicable, shall deliver or cause to be delivered to the Owner Trustee and
the Indenture Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above as soon as available following such filing.
In addition, the Seller and the Depositor hereby authorize the Issuer and the
Indenture Trustee at any time and from time to time to prepare and file, at
the Depositor's sole cost and expense, financing statements and amendments
thereto in any jurisdiction as may be necessary or desirable to preserve,
maintain and protect the interests of the Issuer and the Indenture Trustee in
the Receivables and the proceeds thereof.
(b) None of the Seller, the Depositor or the Servicer shall change
its name, identity or corporate structure in any manner that would, could or
might make any financing statement or continuation statement filed in
accordance with paragraph (a) above seriously misleading within the meaning of
Section 9-506(b) of the UCC, unless it shall have given the Owner Trustee and
the Indenture Trustee 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. Each of the Seller and the
Depositor hereby gives the Issuer 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 Issuer (or the Indenture
Trustee on behalf of the Issuer) may determine, in its sole discretion, are
necessary or advisable to continue or amend the security interest granted to
the Issuer and the Indenture Trustee herein.
(c) Each of Seller, the Depositor and the Servicer shall have an
obligation to give the Owner Trustee and the Indenture Trustee at least sixty
days' prior written notice of (i) any relocation of its registered location or
(ii) any change in the jurisdiction of its organization (including, with
respect to the Servicer, the jurisdiction in which the Servicer maintains its
main office under its national banking association charter). In addition, the
Servicer shall at all times maintain each office from which it shall service
Receivables, and its principal executive office, within the United States of
America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of
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each such Receivable, including payments and recoveries made and payments
owing (and the nature of each) and (ii) reconciliation between payments or
recoveries on or with respect to each such Receivable and the amounts from
time to time held by the Servicer or deposited in the Collection Account in
respect of each such Receivable.
(e) The Servicer shall maintain its computer systems so that, from
and after the time of sale under this Agreement of the Receivables, the
Servicer's master computer records (including any backup archives) that refer
to a Receivable shall be coded to reflect that such Receivable is part of the
portfolio of Receivables that is the subject of this Agreement and is owned by
Xxxxxx Xxxxxxx Auto Loan Trust 2003-HB1 and pledged to the Indenture Trustee.
Indication of such Receivables' inclusion in the portfolio shall be deleted
from or modified on the Servicer's computer systems when, and only when, the
lien on the related Financed Vehicle has been released in accordance with the
Basic Documents.
(f) If at any time the Depositor or the Servicer shall propose to
sell, grant a security interest in or otherwise transfer any interest in motor
vehicle receivables to any prospective purchaser, lender or other transferee,
the Servicer shall give to such prospective purchaser, lender or other
transferee computer tapes, records or printouts (including any restored from
backup archives) that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has been sold and is
owned by the Issuer and has been pledged to the Indenture Trustee.
(g) The Servicer shall, without charge, permit the Indenture Trustee
and its agents upon reasonable notice and at any time during normal business
hours, which does not unreasonably interfere with the Servicer's normal
operations or customer or employee relations to, at the expense of the
Indenture Trustee (which reasonable expenses shall be reimbursed by the Issuer
pursuant to Section 5.06(b)), inspect, audit and make copies of and abstracts
from the Servicer's records regarding any Receivable.
(h) The Depositor shall deliver to the Owner Trustee and the
Indenture Trustee:
(i) promptly after the execution and delivery of this Agreement
and each amendment hereto, an Opinion of Counsel stating that, in the
opinion of such counsel, either (i) all financing statements and
continuation statements have been executed and filed that are necessary
to fully preserve and protect the interest of the Trust and the Indenture
Trustee in the Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given,
or (ii) no such action shall be necessary to preserve and protect such
interest; and
(ii) within ninety days after the beginning of each calendar
year beginning with the first calendar year beginning more than three
months after the Cut-Off Date, an Opinion of Counsel, dated as of a date
during such 90-day period, stating that, in the opinion of such counsel,
either (i) all financing statements and continuation statements have been
executed and filed that are necessary to fully preserve and protect the
interest of the Trust and the Indenture Trustee in the Receivables, and
reciting the
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details of such filings or referring to prior Opinions of Counsel in
which such details are given, or (ii) no such action shall be necessary
to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (i) or (ii) above shall
specify any action necessary (as of the date of such opinion) to be taken in
the following year to preserve and protect such interest.
Section 10.03 Notices. All demands, notices, communications and
instructions upon or to the Depositor, the Servicer, the Issuer, the Owner
Trustee, the Indenture Trustee or any Rating Agency under this Agreement shall
be in writing, personally delivered, faxed and followed by first class mail,
or mailed by certified mail, return receipt requested, and shall be deemed to
have been duly given upon receipt (a) in the case of the Depositor, to 0000
Xxxxxxxx, Xxx Xxxx, XX 00000 (fax no.: (000) 000-0000), Attention: Xxxx
Xxxxxx, with a copy to Xxxxxxxx Xxxxx at 0000 Xxxxxxxx, Xxx Xxxx, XX 00000
(fax no.: (000) 000-0000), (b) in the case of the Servicer and the custodian,
to The Huntington National Bank, 00 Xxxxx Xxxx Xxxxxx - XX0000, Xxxxxxxx, Xxxx
00000 (fax no.: (000) 000-0000), Attention: Xxxxxxx X. Xxxxxx, (c) in the case
of the Issuer or the Owner Trustee, at the Corporate Trust Administration
Department (as defined in the Trust Agreement); (d) in the case of the
Indenture Trustee, to Xxxxx Fargo Bank Minnesota, National Association, Sixth
and Marquette Avenue, MAC N9311-161, Xxxxxxxxxxx, XX 00000 (fax no.: (612)
000-0000), Attention: CTS/Asset Backed Securities Administration, Xxxxxx
Xxxxxxx Auto Loan Trust 2003-HB1, (e) in the case of Xxxxx'x, to 00 Xxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (fax no.: (000) 000-0000), Attention: ABS
Monitoring Department, and (f) in the case of Standard & Poor's, to 00 Xxxxx
Xxxxxx (00xx Xxxxx), Xxx Xxxx, Xxx Xxxx 00000 (fax no.: (000) 000-0000),
Attention: Asset Backed Surveillance Department; or, as to each of the
foregoing, at such other address as shall be designated by written notice to
the other parties.
Section 10.04 Assignment by the Depositor or the Servicer.
Notwithstanding anything to the contrary contained herein, except as provided
in Sections 6.04 and 7.03 herein and as provided in the provisions of this
Agreement concerning the resignation of the Servicer, this Agreement may not
be assigned by the Depositor or the Servicer.
Section 10.05 Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Depositor, the Servicer, the
Seller, the Issuer, the Owner Trustee, the Certificateholders, the Indenture
Trustee and the Noteholders, and nothing in this Agreement, whether express or
implied, shall be construed to give to any other Person any legal or equitable
right, remedy or claim in the Trust Estate or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein.
Section 10.06 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
Section 10.07 Counterparts. This Agreement may be executed by the parties
hereto in any number of counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together constitute but
one and the same instrument. Transmission by
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facsimile of an executed counterpart hereof shall be deemed to constitute due
and sufficient delivery of such counterpart.
Section 10.08 Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
Section 10.09 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 10.10 Assignment by Issuer. The Depositor hereby acknowledges and
consents to any mortgage, pledge, assignment and grant of a security interest
by the Issuer to the Indenture Trustee in accordance with the terms of the
Indenture for the benefit of the Noteholders of all right, title and interest
of the Issuer in, to and under the Receivables or the assignment of any or all
of the Issuer's rights and obligations hereunder to the Indenture Trustee.
Section 10.11 Nonpetition Covenants. Notwithstanding any prior
termination of this Agreement, the parties hereto shall not, prior to the date
that is one year and one day after the termination of this Agreement with
respect to the Issuer or the Depositor, acquiesce, petition or otherwise
invoke or cause the Issuer or the Depositor to invoke the process of any court
or government authority for the purpose of commencing or sustaining a case
against the Issuer or the Depositor under any federal or state bankruptcy,
insolvency or similar law, or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or
the Depositor or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Issuer or the Depositor.
Section 10.12 Limitation of Liability of Owner Trustee and Indenture
Trustee.
(a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Wilmington Trust Company not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Wilmington Trust Company in its individual capacity or,
except as expressly provided in the Trust Agreement, as Owner Trustee of the
Issuer have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer in accordance
with the priorities set forth herein. For all purposes of this Agreement, in
the performance of its duties or obligations hereunder or in the performance
of any duties or obligations of the Issuer hereunder, the Owner Trustee shall
be subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by Xxxxx Fargo Bank Minnesota, National
Association, not in its individual capacity but solely as Indenture Trustee,
and in no event shall Xxxxx Fargo Bank Minnesota, National Association have
any liability for the representations, warranties, covenants,
70
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer in accordance
with the priorities set forth herein.
71
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers as of the day and year first
above written.
XXXXXX XXXXXXX AUTO LOAN
TRUST 2003-HB1
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Financial Services Officer
XXXXXX XXXXXXX ABS CAPITAL II INC.,
as Depositor
By: /s/ Xxxxx Xxxx
----------------------------------
Name: Xxxxx Xxxx
Title: Vice President
XXXXXX XXXXXXX ASSET FUNDING, INC.,
as Seller
By: /s/ J. Xxxxxxx Xxx Xxxx
----------------------------------
Name: J. Xxxxxxx Xxx Xxxx
Title: Vice President
THE HUNTINGTON NATIONAL BANK,
as Servicer, custodian and
First Tier Seller
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Vice President
72
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as
Indenture Trustee
By: /s/ Xxxxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: Vice President
73
SCHEDULE A
Schedule of Receivables
(On file with the Indenture Trustee)
SCHEDULE B
Location of Receivable Files
----------------------------
1. The Huntington National Bank
0000 Xxxxxxxxxx Xxxx Xxxxx
Xxxxxxxx, XX 00000
SCHEDULE C
Cumulative Net Loss Ratio
Determination Cumulative Net
Date Loss Ratio
---- ----------
Jul-03 0.07%
Aug-03 0.07%
Sep-03 0.07%
Oct-03 0.31%
Nov-03 0.31%
Dec-03 0.31%
Jan-04 0.64%
Feb-04 0.64%
Mar-04 0.64%
Apr-04 0.93%
May-04 0.93%
Jun-04 0.93%
Jul-04 1.19%
Aug-04 1.19%
Sep-04 1.19%
Oct-04 1.42%
Nov-04 1.42%
Dec-04 1.42%
Jan-05 1.61%
Feb-05 1.61%
Mar-05 1.61%
Apr-05 1.78%
May-05 1.78%
Jun-05 1.78%
Jul-05 1.93%
Aug-05 1.93%
Sep-05 1.93%
Oct-05 2.05%
Nov-05 2.05%
Dec-05 2.05%
Jan-06 2.16%
Feb-06 2.16%
Mar-06 2.16%
Apr-06 2.24%
May-06 2.24%
Jun-06 2.24%
Jul-06 2.32%
Aug-06 2.32%
Sep-06 2.32%
Determination Cumulative Net
Date Loss Ratio
---- ----------
Oct-06 2.38%
Nov-06 2.38%
Dec-06 2.38%
Jan-07 2.42%
Feb-07 2.42%
Mar-07 2.42%
Apr-07 2.46%
May-07 2.46%
Jun-07 2.46%
Jul-07 2.49%
Aug-07 2.49%
Sep-07 2.49%
Oct-07 2.50%
Nov-07 2.50%
Dec-07 2.50%
Jan-08 2.52%
Feb-08 2.52%
Mar-08 2.52%
Apr-08 2.52%
May-08 2.52%
Jun-08 2.52%
2
EXHIBIT A
Form of Distribution Date Statement to Noteholders
Xxxxxx Xxxxxxx Auto Loan Trust 2003-HB1 Distribution Date Statement to Securityholders
Principal Distribution Amount
Class A-1 Notes: ($ per $1,000 original Principal Balance)
Class A-2 Notes ($ per $1,000 original Principal Balance)
Class B Notes: ($ per $1,000 original Principal Balance)
Class C Notes: ($ per $1,000 original Principal Balance)
Class D Notes: ($ per $1,000 original Principal Balance)
Interest Distribution Amount
Class A-1 Notes: ($ per $1,000 original Principal Balance)
Class A-2 Notes ($ per $1,000 original Principal Balance)
Class B Notes: ($ per $1,000 original Principal Balance)
Class C Notes: ($ per $1,000 original Principal Balance)
Class D Notes: ($ per $1,000 original Principal Balance)
Regular Principal Allocation ($ per $1,000 original Principal Balance)
First Allocation of Principal ($ per $1,000 original Principal Balance)
Second Allocation of Principal ($ per $1,000 original Principal Balance)
Third Allocation of Principal ($ per $1,000 original Principal Balance)
Class A-1 Interest Carryover Shortfall ($ per $1,000 original Principal Balance)
Class A-2 Interest Carryover Shortfall ($ per $1,000 original Principal Balance)
Class B Interest Carryover Shortfall ($ per $1,000 original Principal Balance)
Class C Interest Carryover Shortfall ($ per $1,000 original Principal Balance)
Class D Interest Carryover Shortfall ($ per $1,000 original Principal Balance)
Note Balance
Class A-1 Notes:
Class A-2 Notes:
Class B Notes:
Class C Notes:
A-1
Class D Notes:
Note Pool Factor
Class A-1 Notes:
Class A-2 Notes:
Class B Notes:
Class C Notes:
Class D Notes:
Servicing Fee ($ per $1,000 original principal balance)
Servicing Reimbursement Amount ($ per $1,000 original principal balance)
Owner Trustee Fee ($ per $1,000 original principal balance)
Indenture Trustee Fee ($ per $1,000 original principal balance)
Pool Balance
Realized Losses
Cram Down Losses
Repossessed Receivables
Defaulted Receivables or Repurchased Receivables
Receivables granted extensions
Repurchase Amounts
Principal Balance of Receivables that were delinquent
30 to 59 days:
60 to 89 days:
90 days or more:
Overcollateralization Target Amount for next Distribution Date
Cumulative Net Loss Ratio as of related Determination Date
Six-Month Annualized Net Loss Ratio as of related Determination Date
Three-Month Annualized Net Loss Ratio as of related Determination Date
Pool Delinquency Percentage as of related Determination Date
A-2
EXHIBIT B
FORM OF SERVICER'S CERTIFICATE
------------------------------
(Available from Servicer)
B-1
EXHIBIT C
FORM OF SERVICER ANNUAL CERTIFICATION
-------------------------------------
I, [ ] certify that I am the duly authorized representative of The Huntington
National Bank ("Huntington"), as servicer (the "Servicer") pursuant to the
Sale and Servicing Agreement dated as of June 1, 2003, as amended from time to
time (the Sale and Servicing Agreement"), among Xxxxxx Xxxxxxx Auto Loan Trust
2003-HB1, as issuer (the "Issuer"), Xxxxxx Xxxxxxx Asset Funding, Inc. (the
"Seller"), as seller, Xxxxxx Xxxxxxx ABS Capital II Inc., as depositor (the
"Depositor"), Huntington and Xxxxx Fargo Bank Minnesota, National Association,
as indenture trustee (the "Indenture Trustee"), and I do hereby certify in the
name of and on behalf of the Servicer that:
1. A review of the activities of the Servicer and of the performance
of its obligations under the Sale and Servicing Agreement during the period
from [ ], 200[ ] to and including December 31, 200[ ] (the "Review Period")
[or, with respect to the first Officer's Certificate, the period from the
Closing Date to December 31 of such year] was conducted under the supervision
of the undersigned.
2. Based on such review, except as otherwise disclosed pursuant to
paragraph 3 below, to undersigned's knowledge, the Servicer has fulfilled its
obligations under the Sale and Servicing Agreement during the applicable
Review Period and there is no default known the undersigned with respect to
the applicable Review Period which has not been disclosed herein.
3. Based on such review, to the undersigned's knowledge, the
following is a description of each default in the performance of the
Servicer's obligations under the provisions of the Sale and Servicing
Agreement made during the Review Period, which sets forth in detail (i) the
nature and status of each such default and (ii) the action taken by the
Servicer, if any, to remedy each such default: [List Out]
4. To the undersigned's knowledge, the servicing information
provided by the Servicer herein 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 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.
5. To the knowledge of the undersigned, the Servicer has provided
all of the reports and certificates required under Sections 4.10, 4.11 and
4.12 to the parties to which such reports and certificates are required to be
provided with respect to the applicable Review Period.
C-1
IN WITNESS WHEREOF, the undersigned has duly executed this certificate
this [ ] day of [ ], 200[ ].
Responsible Officer of the Servicer
By:
---------------------------------
Name:
Title:
C-2
EXHIBIT D
FORM OF DEPOSITOR'S ANNUAL XXXXXXXX-XXXXX CERTIFICATION
-------------------------------------------------------
I, [identify the certifying individual], certify that:
1. I have reviewed this annual report on Form 10-K (the "Annual Report"),
and all reports on Form 8-K containing distribution reports (collectively
with this Annual Report, the "Report") filed in respect of periods
included in the year covered by this Annual Report, of the Trust;
2. Based on my knowledge, the information in the Reports, taken as a whole,
does not contain any untrue statement of a 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 period covered by this Annual Report;
3. Based on my knowledge, the distribution or servicing information required
to be provided to the Indenture Trustee by the Servicer under the Sale
and Servicing Agreement, for inclusion in the Reports is included in the
Reports;
4. Based on my knowledge and upon the annual compliance statement included
in this Annual Report and required to be delivered to the Indenture
Trustee in accordance with the terms of the Sale and Servicing Agreement,
and except as disclosed in the Reports, the Servicer has fulfilled its
obligations under the Sale and Servicing Agreement; and
5. The Reports disclose all significant deficiencies relating to the
Servicer's compliance with the minimum servicing standards based upon the
report provided by an independent public accountant, after conducting a
review in compliance with the Uniform Single Attestation Program for
Mortgage Bankers or similar procedure, as set forth in the Sale and
Servicing Agreement, that is included in the Reports.
In giving the certifications above, I have reasonably relied on information
provided to me by the following unaffiliated parties: the Indenture Trustee
and the Servicer.
Date:__________
---------------------------
Name:
Title:
D-1
EXHIBIT E
Form of Certification to be Provided to the Depositor by the Indenture Trustee
------------------------------------------------------------------------------
Xxxxxx Xxxxxxx ABS Capital II Inc.
0000 Xxxxxxxx
Xxx Xxxx, XX 00000
Re: Xxxxxx Xxxxxxx Auto Loan Trust 2003-HB1
Reference is made to the Sale and Servicing Agreement (the "Sale and
Servicing Agreement"), dated as of June 1, 2003, among Xxxxxx Xxxxxxx Auto
Loan Trust 2003-HB1 (the "Issuer"), Xxxxxx Xxxxxxx ABS Capital II Inc. (the
"Depositor"), Xxxxxx Xxxxxxx Asset Funding, Inc. (the "Seller"), The
Huntington National Bank (the "Servicer") and Xxxxx Fargo Bank Minnesota,
National Association (the "Indenture Trustee"). The Indenture Trustee hereby
certifies to the Depositor, and its officers, directors and affiliates, and
with the knowledge and intent that they will rely upon this certification,
that:
(i) The Indenture Trustee has reviewed the [ ] reports on Form 8-K
containing distribution reports filed in respect of periods included in the
fiscal year ending in [ ], relating to the above-referenced trust
(collectively, the "Reports"); and
(ii) Based on my knowledge, the distribution information required to
be provided by the Indenture Trustee under the Sale and Servicing Agreement is
included in these Reports. Based on my knowledge, the information in the
Reports, taken as a whole, does not contain any untrue statement of a 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.
In giving the certifications above, I have reasonably relied on
information provided to me by the following unaffiliated party: The Huntington
National Bank, as Servicer.
Date:
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION,
as Indenture Trustee
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
E-1
