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USAA FEDERAL SAVINGS BANK
Seller and Servicer
and
[ ]
Trustee
on behalf of the Certificateholders
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POOLING AND SERVICING AGREEMENT
Dated as of _______ __, 1997
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$
USAA Auto Loan Grantor Trust 1997-1
__% Automobile Loan Pass-Through Certificates, Class A
__% Automobile Loan Pass-Through Certificates, Class B
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TABLE OF CONTENTS
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Section Page
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ARTICLE I
Section 1.1 Creation of Trust......................................... 1
ARTICLE II
Section 2.1 Conveyance of Receivables................................. 2
ARTICLE III
ARTICLE IV
Section 4.1 Acceptance by Trustee..................................... 5
ARTICLE V
Section 5.1 Incorporation of Standard Terms and
Conditions of Agreement................................... 6
ARTICLE VI
Section 6.1 Special Definitions and Terms............................. 7
ARTICLE VII
Section 7.1 Additional Representations and Warranties of Seller....... 8
ARTICLES VIII-X.........................11
ARTICLE XI
Definitions
Section 11.1 Definitions..............................................15
Section 11.2 Usage of Terms. .........................................34
Section 11.3 Simple Interest Method; Allocations......................34
Section 11.4 References...............................................34
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Section 11.5 Section References..................................... 35
Section 11.6 Separate Agreements.................................... 35
ARTICLE XII
The Receivables......................... 36
Section 12.1 Representations and Warranties of
Seller; Conditions Relating to Receivables............. 36
Section 12.2 Repurchase Upon Breach or Failure
of a Condition......................................... 40
Section 12.3 Custody of Receivable Files............................ 41
Section 12.4 Duties of Servicer as Custodian........................ 42
Section 12.5 Instructions; Authority to Act......................... 43
Section 12.6 Custodian's Indemnification............................ 43
Section 12.7 Effective Period and Termination....................... 44
ARTICLE XIII
Administration and Servicing of Receivables
Section 13.1 Duties of Servicer..................................... 45
Section 13.2 Collection of Receivable Payments...................... 45
Section 13.3 Realization Upon Receivables........................... 46
Section 13.4 [Reserved]............................................. 47
Section 13.5 Maintenance of Security Interests
in Financed Vehicles................................... 47
Section 13.6 Covenants of Servicer.................................. 48
Section 13.7 Purchase of Receivables Upon
Breach................................................. 49
Section 13.8 Servicing Fee.......................................... 49
Section 13.9 Servicer's Certificate................................. 50
Section 13.10 Annual Statement as to Compliance...................... 51
Section 13.11 Annual Audit Report.................................... 51
Section 13.12 Access to Certain Documentation and
Information Regarding Receivables...................... 52
Section 13.13 Reports to Certificateholders and
the Rating Agencies.................................... 52
Section 13.14 Insurance.............................................. 52
ARTICLE XIV
Section 14.1 Accounts............................................... 55
Section 14.2 Collections............................................ 56
Section 14.3 Advances............................................... 57
Section 14.4 Additional Deposits.................................... 60
Section 14.5 Distributions.......................................... 60
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Section 14.6 Reserve Account........................................ 60
Section 14.7 Net Deposits........................................... 63
Section 14.8 Statements to Certificateholders....................... 63
ARTICLE XV
[reserved].............................66
ARTICLE XVI
Section 16.1 The Certificates....................................... 67
Section 16.2 Execution, Authentication and
Delivery of Certificates............................... 67
Section 16.3 Registration of Transfer and Exchange of Certificates.. 68
Section 16.4 Mutilated, Destroyed, Lost, or
Stolen Certificates.................................... 69
Section 16.5 Persons Deemed Owners.................................. 70
Section 16.6 Access to List of Certificateholders'
Names and Addresses.................................... 70
Section 16.7 Maintenance of Office or Agency........................ 71
Section 16.8 Book-Entry Certificates................................ 71
Section 16.9 Notices to Clearing Agency............................. 73
Section 16.10 Definitive Certificates................................ 73
Section 16.11 Appointment of Paying Agent............................ 74
Section 16.12 Authenticating Agent................................... 75
Section 16.13 Actions of Certificateholders.......................... 77
ARTICLE XVII
The Seller
Section 17.1 Representations of Seller.............................. 79
Section 17.2 Liability of Seller; Indemnities....................... 81
Section 17.3 Merger or Consolidation of Seller...................... 81
Section 17.4 Limitation on Liability of Seller and Others........... 82
Section 17.5 Seller May Own Certificates............................ 82
ARTICLE XVIII
The Servicer
Section 18.1 Representations of Servicer............................ 83
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Section 18.2 Liability of Servicer; Indemnities..................... 85
Section 18.3 Merger or Consolidation of Servicer.................... 86
Section 18.4 Limitation on Liability of
Servicer and Others.................................... 87
Section 18.5 Servicer Not To Resign................................. 89
Section 18.6 Delegation of Duties................................... 89
ARTICLE XIX
Events of Servicing Termination
Section 19.1 Events of Servicing Termination........................ 90
Section 19.2 Trustee to Act; Appointment of
Successor.............................................. 92
Section 19.3 Notification to Certificateholders..................... 93
Section 19.4 Waiver of Past Defaults................................ 93
ARTICLE XX
The Trustee
Section 20.1 No Power to Engage in Business or
to Vary Investments.................................... 95
Section 20.2 Duties of Trustee...................................... 95
Section 20.3 Trustee's Assignment of Repurchased
Receivables and Trustee's Certificate.................. 98
Section 20.4 Certain Matters Affecting the Trustee.................. 98
Section 20.5 Trustee Not Liable for Certificates
or Receivables.........................................101
Section 20.6 Trustee May Own Certificates...........................102
Section 20.7 Trustee's Fees and Expenses............................102
Section 20.8 Indemnity of Trustee...................................103
Section 20.9 Eligibility Requirements for Trustee...................104
Section 20.10 Resignation or Removal of Trustee......................104
Section 20.11 Successor Trustee......................................105
Section 20.12 Merger or Consolidation of Trustee.....................106
Section 20.13 Appointment of Co-Trustee
or Separate Trustee....................................106
Section 20.14 Representations and Warranties of Trustee..............108
Section 20.15 Tax Returns............................................110
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Section 20.16 Trustee May Enforce Claims Without Possession
of Certificates........................................110
Section 20.17 Suits for Enforcement..................................110
Section 20.18 Maintenance of Office or Agency........................110
ARTICLE XXI
Termination
Section 21.1 Termination of the Trust...............................111
Section 21.2 Optional Purchase of All
Receivables............................................112
ARTICLE XXII
Miscellaneous Provisions
Section 22.1 Amendment..............................................114
Section 22.2 Protection of Title to Trust...........................115
Section 22.3 Limitation on Rights of Certificateholders.............118
Section 22.4 Governing Law..........................................119
Section 22.5 Notices................................................119
Section 22.6 Severability of Provisions.............................120
Section 22.7 Assignment.............................................120
Section 22.8 Certificates Nonassessable
and Fully Paid.........................................121
Section 22.9 Third-Party Beneficiaries..............................121
Schedule A -- Schedule of Receivables
Schedule B -- Locations of Receivable Files
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This Pooling and Servicing Agreement, dated as of _______ __,
1997, is made with respect to the formation of the USAA Auto Loan Grantor Trust
1997-1 (the "Trust"), between USAA Federal Savings Bank, a federally chartered
savings association (the "Seller" and the "Servicer" in its respective
capacities as such), and [ ], as trustee (the "Trustee").
WITNESSETH THAT: In consideration of the premises and of the
mutual agreements herein contained, the parties hereto agree as follows:
ARTICLE I
Section 1.1 Creation of Trust. Upon the execution of this
Agreement by the parties hereto, there is hereby created the USAA Auto Loan
Grantor Trust 1997-1.
ARTICLE II
Section 2.1 Conveyance of Receivables. In consideration of the
Trustee's delivery to, or upon the order of, the Seller of authenticated
Certificates, in authorized denominations, in an aggregate amount equal to the
Original Pool Balance, the Seller does hereby sell, transfer, assign, and
otherwise convey to the Trustee on behalf of the Trust, without recourse
(subject to the Seller's obligations herein):
(i) all right, title, and interest of the Seller in and to the
Receivables listed in Schedule A hereto, all proceeds thereof and all
monies paid thereon on and after the Cutoff Date (including proceeds of
the repurchase of Receivables by the Seller pursuant to Section 12.2 or
the purchase of Receivables by the Servicer pursuant to Section 13.7 or
21.2), together with the interest of the Seller in the security
interests in the Financed Vehicles granted by the Obligors pursuant to
the Receivables;
(ii) all right, title and interest of the Seller in any
Liquidation Proceeds and in any proceeds of any extended warranties,
comprehensive and collision, credit life, or credit disability policies
relating to the Financed Vehicles or the Obligors; and
(iii) all proceeds of the foregoing items (i) and (ii).
In connection with such sale, the Seller agrees to record and
file, at its own expense, financing statements (and continuation statements with
respect to such financing statements when applicable) with respect to the
Receivables for the sale of accounts and chattel paper meeting the requirements
of applicable state law in such manner and in such jurisdictions as are
necessary to perfect the sale and assignment of the Receivables to the Trust.
It is the intention of the Seller and the Trustee that the
assignment and transfer herein contemplated constitute a sale of the
Receivables, conveying good title thereto free and clear of any liens and
encumbrances, from the Seller to the Trust and that the Re-
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ceivables not be part of the Seller's estate in the event of an insolvency. In
the event that such conveyance is deemed to be a pledge to secure a loan, the
Seller hereby grants to the Trustee on behalf of the Trust for the benefit of
the Certificateholders a first priority perfected security interest in all of
the Seller's right, title and interest in the items of property listed in
clauses (i) and (ii) above, and all proceeds of the foregoing to secure the loan
deemed to be made in connection with such pledge and, in such event, this
Agreement shall constitute a security agreement under applicable law.
ARTICLE III
[Reserved]
ARTICLE IV
Section 4.1 Acceptance by Trustee. The Trustee does hereby accept
all consideration conveyed by the Seller pursuant to Section 2.1 and declares
that the Trustee shall hold such consideration upon the trusts herein set forth
for the benefit of the Certificateholders, subject to the terms and provisions
of this Agreement.
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ARTICLE V
Section 5.1 Incorporation of Standard Terms and Conditions of
Agreement. This Pooling and Servicing Agreement does hereby incorporate herein
by reference the Standard Terms and Conditions of Agreement for the USAA Auto
Loan Grantor Trust 1997-1 effective ________ __, 1997 (the "Standard Terms and
Conditions of Agreement") attached hereto as Annex I. The terms and conditions
of Articles I through X of this Pooling and Servicing Agreement, to the extent
they are inconsistent with the Standard Terms and Conditions of Agreement, shall
control.
ARTICLE VI
Section 6.1 Special Definitions and Terms. Whenever used in the
Standard Terms and Conditions of Agreement and in this Pooling and Servicing
Agreement, the following words and phrases shall have the following meanings:
The "Class A Pass-Through Rate" shall be __% per annum,
calculated on the basis of a year of twelve 30-day months.
"Class A Percentage" means __%.
The "Class B Pass-Through Rate" shall be __% per annum,
calculated on the basis of a year of twelve 30-day months.
"Class B Percentage" means _%.
"Closing Date" shall mean _____ __, 1997.
The "Corporate Trust Office" at the date hereof is located at
________________.
The "Cutoff Date" shall be the opening of business on _____ __,
1997.
The first "Distribution Date" shall be _____ __, 1997.
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The "Final Distribution Date" shall be ________ __ ____ or, if
such day is not a Business Day, the next succeeding Business Day.
The "Optional Purchase Percentage" shall be 5%.
The "Original Pool Balance" shall be $_______.
The "Reserve Account Initial Amount" shall be $___________.
The "Required Deposit Rating" shall be a short-term certificate
of deposit rating from Xxxxx'x of P-1 and from Standard & Poor's of A-1+ and a
long-term unsecured debt rating of not less than "AA" by Standard & Poor's and
"Aa2" by Xxxxx'x.
"Servicing Fee Rate" shall mean 1.00% per annum.
"Specified Reserve Account Balance" means, with respect to any
Distribution Date, __% of the Pool Balance as of the last day of the preceding
Collection Period, but in any event not less than the lesser of (i) $________
and (ii) the sum of such Pool Balance plus an amount sufficient to pay interest
on such Pool Balance at a rate equal to the sum of the weighted average of the
Class A Pass-Through Rate and the Class B Pass-Through Rate and the Servicing
Fee Rate through the Final Scheduled Distribution Date; provided, however, that
the Specified Reserve Account Balance will be calculated using a percentage of
__% for any Distribution Date (beginning with the _______ 199_ Distribution
Date) on which the Average Net Loss Ratio exceeds __% or the Average Delinquency
Ratio exceeds ___%. The Specified Reserve Account Balance may be reduced to a
lesser amount as determined by the Seller; provided, however, that the Rating
Agency Condition is satisfied.
ARTICLE VII
Section 7.1 Additional Representations and Warranties of Seller.
The Seller does hereby make the following representations and warranties to the
Trustee and the Certificateholders and the Trustee shall rely on
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such representations and warranties in accepting the Receivables in trust and
authenticating the Certificates:
(i) Receivables. Each Receivable represents a motor
vehicle installment loan made to Obligors located in a State of
the United States or the District of Columbia;
(ii) Security. Each Receivable is secured by a new or
used automobile or light-duty truck;
(iii) Maturity of Receivables. Each Receivable has a
remaining maturity, as of the Cutoff Date, of not less than 6
months nor greater than 66 months and, (i) with respect to
Receivables secured by new Financed Vehicles, an original
maturity of at least 12 months and not more than 72 months and
(ii) with respect to Receivables secured by used Financed
Vehicles, an original maturity of at least 12 months and not
more than 60 months;
(iv) Annual Percentage Rate. Each Receivable is a
fully-amortizing fixed rate simple interest contract that
provides for level scheduled monthly payments (except for the
last payment, which may be minimally different from the level
payments) over its respective remaining term, and has an Annual
Percentage Rate that equals or exceeds ___%, is not secured by
any interest in real estate, and has not been identified on the
computer files of the Seller as relating to Obligors who have
requested a reduction in the periodic finance charges, as of the
Cutoff Date, by application of the Soldiers' and Sailors' Civil
Relief Act of 1940, as amended;
(v) No Repossessions. Each Receivable is secured by a
Financed Vehicle that, as of the Cutoff Date, has not been
repossessed without reinstatement of such Receivable;
(vi) Obligor Not Subject to Bankruptcy Proceedings. Each
Receivable has been entered into by an Obligor who has not been
identified on the computer files of the Seller as being a debtor
in any bankruptcy proceeding as of the Cutoff Date;
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(vii) No Overdue Payments. No Receivable has any
payment that is more than [30] days past due as of the Cutoff
Date;
(viii) Remaining Principal Balance. Each Receivable had
a remaining principal balance, as of the Cutoff Date, of at
least $500; and
(ix) Receivable Files. The Receivable Files shall be
kept at one or more of the locations specified in Schedule B
hereto.
ARTICLEs VIII THROUGH X
[RESERVED]
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IN WITNESS WHEREOF, the parties have caused this Pooling and
Servicing Agreement to be duly executed by their respective officers as of the
day and year first above written.
USAA FEDERAL SAVINGS BANK
as Seller and Servicer
By __________________________________
Name:
Title:
[ ] as Trustee
By __________________________________
Name:
Title:
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Schedule A
Schedule A shall be deemed to be the computer data disk
or printout relating to the Receivables delivered by the
Seller to the Trustee on the Closing Date.
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Schedule B
Location of Receivable Files
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USAA AUTO LOAN GRANTOR
TRUST 1997-1 STANDARD TERMS
AND CONDITIONS OF AGREEMENT
EFFECTIVE ___________ ___, 1997
for the USAA Auto Loan
Grantor Trust 1997-1 formed on or
subsequent to the date specified above
INTRODUCTION
These Standard Terms and Conditions of Agreement shall be
applicable to the USAA Auto Loan Grantor Trust 1997-1 formed on or after the
effective date hereof, with respect to which a Pooling and Servicing Agreement
relating to such trust and incorporating by reference these Standard Terms and
Conditions of Agreement shall have been executed.
ARTICLE XI
Definitions
Section 11.1 Definitions. Whenever used in the Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"Account Property" means the Reserve Account and all amounts,
Financial Assets and other investments held from time to time in the Reserve
Account and all proceeds of the foregoing.
"Advance" as of a Record Date means any payment made by the
Servicer pursuant to Section 14.3.
"Agreement" means a Pooling and Servicing Agreement executed by
the parties as of the related Cutoff Date, into which this Standard Terms and
Conditions of Agreement shall be incorporated by reference, and all amendments
and supplements thereto.
"Amount Financed" in respect of a Receivable means the amount
advanced under the Receivable toward the purchase price of the Financed Vehicle
and related costs.
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"Annual Percentage Rate" or "APR" of a Receivable means the
annual rate of interest stated in the Receivable.
"Authenticating Agent" shall have the meaning specified in
Section 16.13.
"Authorized Officer" means any officer in the Corporate Trust
Department of the Trustee with direct responsibility for the administration of
the Agreement.
"Available Interest" means, with respect to any Distribution
Date, the excess of (a) the sum of (i) Interest Collections for such
Distribution Date and (ii) all Advances made by the Servicer with respect to
such Distribution Date pursuant to Section 14.3(a), over (b) the amount of
Outstanding Advances to be reimbursed on or with respect to such Distribution
Date pursuant to Section 14.3(a).
"Available Principal" means, with respect to any Distribution
Date, the sum of the following amounts with respect to the preceding Collection
Period: (i) that portion of all Collections on the Receivables received during
such Collection Period and allocable to principal in accordance with the terms
of the Receivables and the Servicer's customary servicing procedures, (ii) to
the extent attributable to principal, the Purchase Amount received with respect
to each Receivable repurchased by the Seller or purchased by the Servicer under
an obligation which arose during the related Collection Period and (iii)
Liquidation Proceeds, to the extent allocable to principal, received during such
Collection Period. Available Principal on any Distribution Date shall exclude
all payments and proceeds of any Receivables the Purchase Amount of which has
been distributed on a prior Distribution Date.
"Available Reserve Amount" shall mean, as of any Distribution
Date, the lesser of (i) the amount on deposit in the Reserve Account (exclusive
of earnings and income from the investment of funds therein) as of such date and
(ii) the Specified Reserve Account Balance as of such date.
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"Average Delinquency Ratio" means, as of any Distribution Date,
the average of the Delinquency Ratios for the preceding three Collection
Periods.
"Average Net Loss Ratio" means, as of any Distribution Date, the
average of the Net Loss Ratios for the preceding three Collection Periods.
"Book-Entry Certificates" means beneficial interests in the
Certificates described in Section 16.8, the ownership and transfers of which
shall be made through book entries by a Clearing Agency as described in Section
16.8.
"Business Day" means a day, other than a Saturday or a Sunday, on
which the Trustee and banks located in New York, New York are open for the
purpose of conducting a commercial banking business.
"Certificate" means any Class A Certificate or Class B
Certificate.
"Certificate Account" means the account established and
maintained pursuant to Section 14.1.
"Certificateholder" or "Holder" means the Person in whose name a
Certificate is registered in the Certificate Register, except that, solely for
the purpose of giving any consent, request, waiver or demand pursuant to the
Agreement, the interest evidenced by any Certificate registered in the name of
the Seller, the Servicer or any Person controlling, controlled by, or under
common control with the Seller or the Servicer shall not be taken into account
in determining whether the requisite percentage necessary to effect any such
consent, request or waiver shall have been obtained; provided, however, that in
determining whether the Trustee shall be protected in relying upon any such
consent, request, waiver or demand, only Certificates that an Authorized Officer
of the Trustee knows to be so owned shall be so disregarded.
"Certificate Owner" means, with respect to a Book-Entry
Certificate, the Person who is the owner of such Book-Entry Certificate, as
reflected on the books of the Clearing Agency, or on the books of a direct or
indirect Clearing Agency Participant.
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"Certificate Register" means the register maintained pursuant to
Section 16.3.
"Class A Certificate" means a certificate executed by the Trustee
on behalf of the Trust and authenticated by the Trustee, substantially in the
form of Exhibit A hereto.
"Class A Certificateholder" or "Class A Holder" means the Person
in whose name a Class A Certificate shall be registered in the Certificate
Register, except that, solely for the purpose of giving any consent, request or
waiver pursuant to this Agreement, the interest evidenced by any Class A
Certificate registered in the name of the Seller, the Servicer or any Person
actually known to an Authorized Officer of the Trustee to be an Affiliate of the
Seller or the Servicer shall not be taken into account in determining whether
the requisite percentage necessary to effect any such consent, request or waiver
shall have been obtained.
"Class A Certificate Balance" means, at any time, the Original
Class A Certificate Balance, as reduced by all principal amounts distributed to
Class A Certificateholders prior to such time.
"Class A Certificate Owner" means, with respect to a Book-Entry
Certificate representing a beneficial interest in the Class A Certificates, the
Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant in accordance
with the rules, regulations and procedures of such Clearing Agency).
"Class A Distribution Account" means the account established and
maintained as such pursuant to Section 14.1.
"Class A Interest Carryover Shortfall" means, (i) with respect to
the initial Distribution Date, zero and (ii) with respect to any other
Distribution Date, the excess of Class A Monthly Interest for the preceding
Distribution Date, and any outstanding Class A Interest Carryover Shortfall on
such preceding Distribution Date, over the amount in respect of interest that is
actually
14
deposited in the Class A Distribution Account on such preceding Distribution
Date, plus 30 days of interest on such excess, to the extent permitted by law,
at the Class A Pass-Through Rate.
"Class A Interest Distribution" means, with respect to any
Distribution Date, the sum of Class A Monthly Interest for such Distribution
Date and the Class A Interest Carryover Shortfall for such Distribution Date.
"Class A Monthly Interest" means, with respect to any
Distribution Date, one-twelfth of the Class A Pass-Through Rate multiplied by
the Class A Certificate Balance as of the preceding Distribution Date (after
giving effect to all payments of principal made on such Distribution Date) or,
in the case of the first Distribution Date, as of the Closing Date.
"Class A Monthly Principal" means, with respect to any
Distribution Date, the Class A Percentage of Available Principal for such
Distribution Date plus the Class A Percentage of Realized Losses with respect to
the related Collection Period.
"Class A Pool Factor" means, with respect to any Distribution
Date, the Class A Certificate Balance as of such Distribution Date (after giving
effect to all payments of principal to be made on such Distribution Date)
divided by the Original Class A Certificate Balance, expressed as a seven-digit
decimal.
"Class A Principal Carryover Shortfall" means, (i) with respect
to the initial Distribution Date, zero and (ii) with respect to any other
Distribution Date, the excess of Class A Monthly Principal for such Distribution
Date and any outstanding Class A Principal Carryover Shortfall from the
preceding Distribution Date over the amount in respect of principal that is
actually deposited in the Class A Distribution Account on such Distribution
Date.
"Class A Principal Distribution" means, (i) with respect to the
initial Distribution Date, the Class A Monthly Principal for such Distribution
Date and (ii) with respect to any other Distribution Date, the sum of Class A
Monthly Principal for such Distribution Date and
15
the Class A Principal Carryover Shortfall as of the preceding Distribution Date.
In addition, on the Final Scheduled Distribution Date, the Class A Principal
Distribution shall include any additional amount required to reduce the
outstanding principal balance of the Class A Certificates to zero.
"Class B Certificate" means a certificate executed by the Trustee
on behalf of the Trust and authenticated by the Trustee, substantially in the
form of Exhibit B hereto.
"Class B Certificateholder" or "Class B Holder" means the Person
in whose name a Class B Certificate shall be registered in the Certificate
Register, except that, solely for the purpose of giving any consent, request or
waiver pursuant to this Agreement, the interest evidenced by any Class B
Certificate registered in the name of the Seller, the Servicer or any Person
actually known to an Authorized Officer of the Trustee to be an Affiliate of the
Seller or the Servicer shall not be taken into account in determining whether
the requisite percentage necessary to effect any such consent, request or waiver
shall have been obtained.
"Class B Certificate Balance", at any time, equals the Original
Class B Certificate Balance, as reduced by all principal amounts distributed to
Class B Certificateholders prior to such time.
"Class B Certificate Owner" means, with respect to a Book-Entry
Certificate representing a beneficial interest in the Class B Certificates, the
Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant in accordance
with the rules, regulations and procedures of such Clearing Agency).
"Class B Distribution Account" means the account established and
maintained as such pursuant to Section 14.1.
"Class B Interest Carryover Shortfall" means, (i) with respect to
the initial Distribution Date, zero and (ii) with respect to any other
Distribution Date, the
16
excess of Class B Monthly Interest for the preceding Distribution Date, and any
outstanding Class B Interest Carryover Shortfall on such preceding Distribution
Date, over the amount in respect of interest that is actually deposited in the
Class B Distribution Account on such preceding Distribution Date, plus 30 days
of interest on such excess, to the extent permitted by law, at the Class B
Pass-Through Rate.
"Class B Interest Distribution" means, with respect to any
Distribution Date, the sum of Class B Monthly Interest for such Distribution
Date and the Class B Interest Carryover Shortfall for such Distribution Date.
"Class B Monthly Interest" means, with respect to any
Distribution Date, one-twelfth of the Class B Pass-Through Rate multiplied by
the Class B Certificate Balance as of the preceding Distribution Date (after
giving effect to all payments of principal made on such Distribution Date) or,
in the case of the first Distribution Date, as of the Closing Date.
"Class B Monthly Principal" means, with respect to any
Distribution Date, the Class B Percentage of Available Principal for such
Distribution Date plus the Class B Percentage of Realized Losses with respect to
the related Collection Period.
"Class B Pool Factor" means, with respect to any Distribution
Date, the Class B Principal Balance as of such Distribution Date (after giving
effect to all payments of principal to be made on such Distribution Date)
divided by the Original Class B Certificate Balance, expressed as a seven-digit
decimal.
"Class B Principal Carryover Shortfall" means, (i) with respect
to the initial Distribution Date, zero and (ii) with respect to any other
Distribution Date, the excess of Class B Monthly Principal for such Distribution
Date and any outstanding Class B Principal Carryover Shortfall from the
preceding Distribution Date over the amount in respect of principal that is
actually deposited in the Class B Distribution Account on such Distribution
Date.
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"Class B Principal Distribution" means, (i) with respect to the
initial Distribution Date, the Class B Monthly Principal for such Distribution
Date and (ii) with respect to any other Distribution Date, the sum of Class B
Monthly Principal for such Distribution Date and the Class B Principal Carryover
Shortfall as of the preceding Distribution Date. In addition, on the Final
Scheduled Distribution Date, the Class B Principal Distribution shall include
any additional amount required to reduce the outstanding principal balance of
the Class B Certificates to zero.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. The initial Clearing Agency shall be The Depository Trust Company.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers of securities deposited with the Clearing
Agency.
"Closing Date" means the date set forth as such in the Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Agent" means _________________, a banking
corporation, in its capacity as collateral agent for the benefit of the
Certificateholders with respect to the Reserve Account.
"Collection Period" means, during the term of this Agreement, the
calendar month preceding each Distribution Date. With respect to any
Determination Date, Deposit Date or Distribution Date, the "related Collection
Period" shall mean the Collection Period preceding the month in which such
Determination Date, Deposit Date or Distribution Date occurs.
"Collections" mean all collections on the Receivables.
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"Contract Rate" means, with respect to a Receivable, the rate per
annum of interest charged to the Obligor on the outstanding Principal Balance of
such Receivable in accordance with the terms thereof.
"Corporate Trust Office" means the office of the Trustee at which
its corporate trust business shall be principally administered, which office
shall be the office specified as such in the Agreement, or such office at some
other address as the Trustee may designate from time to time by notice to the
Certificateholders, the Seller, the Servicer, the Paying Agent and the Transfer
Agent and Certificate Registrar.
"Cutoff Date" means the date specified as such in the Agreement.
"Cutoff Date Principal Balance" means, with respect to any
Receivable, the initial Principal Balance of such Receivable minus the sum of
the portion of all payments received under such Receivable from or on behalf of
the related Obligor on or prior to the close of business of the Servicer on the
Cutoff Date and allocable to principal in accordance with the terms of the
Receivable and the Servicer's customary servicing practices.
"Defaulted Receivable" means a Receivable (other than a
Repurchased Receivable) as to which (i) more than 10% of a scheduled payment is
120 or more days delinquent as of the last day of the applicable Collection
Period or (ii) the Servicer has determined based on its usual collection
practices and procedures, during any Collection Period, that eventual payment in
full of the Amount Financed is unlikely.
"Definitive Certificates" shall have the meaning specified in
Section 16.8.
"Delinquency Ratio" means, for any Collection Period, the ratio,
expressed as a percentage, of (i) the principal amount of all outstanding
Receivables (other than Purchased Receivables and Defaulted Receivables) which
are sixty (60) or more days delinquent as of the end of such Collection Period,
determined in accordance with the Servicer's customary practices, divided by
(ii) the Pool Balance as of the last day of such Collection Period.
19
"Deposit Date" shall mean the Business Day immediately preceding
each Distribution Date.
"Depository Agreement" shall mean the agreement among the Seller,
the Trustee and the initial Clearing Agency, in the form attached hereto as
Exhibit F.
"Determination Date" means the 10th calendar day of the month
(or, if such 10th calendar day is not a Business Day, the Business Day preceding
such 10th calendar day) immediately succeeding the related Collection Period.
"Distribution Date" means, for each Collection Period, the 15th
day of the following month, or if the 15th day is not a Business Day, the next
following Business Day, commencing with the first Distribution Date specified in
the Agreement.
"Entitlement Order" has the meaning specified in Section
8-102(a)(8) of the UCC.
"Event of Servicing Termination" means an event specified in
Section 19.1.
"Excess Funds" shall have the meaning specified in Section
14.5(d).
"FDIC" means the Federal Deposit Insurance Corporation or any
successor thereto.
"FHLMC" means the Federal Home Loan Mortgage Corporation or any
successor thereto.
"Final Distribution Date" means the date specified as such in
the Agreement.
"Financed Vehicle" with respect to a Receivable means the new or
used automobile or light-duty truck, together with all accessions thereto,
securing an Obligor's indebtedness under such Receivable.
"Financial Asset" has the meaning specified in Section
8-102(a)(14) of the UCC.
20
"FNMA" means the Federal National Mortgage Association or any
successor thereto.
"Force Placed Insurance" shall have the meaning specified in
Section 13.14.
"Interest Collections" mean, with respect to any Distribution
Date, the sum of the following amounts for the preceding Collection Period: (i)
that portion of the Collections on the Receivables received during such
Collection Period that is allocable to interest in accordance with the terms of
the Receivables and the Servicer's customary servicing procedures, (ii)
Liquidation Proceeds, to the extent allocable to interest, received during such
Collection Period, (iii) all Recoveries and (iv) to the extent attributable to
interest, the Purchase Amount received with respect to each Receivable
repurchased by the Seller or purchased by the Servicer under an obligation which
arose during the related Collection Period. "Interest Collections" for any
Distribution Date shall exclude all payments and proceeds of any Receivables the
Purchase Amount of which has been distributed on a prior Distribution Date.
"Lien" means a security interest, lien, charge, pledge or
encumbrance of any kind other than tax liens, mechanics' liens or any other
liens that attach to a Receivable by operation of law.
"Liquidation Proceeds" means (i) insurance proceeds received by
the Servicer and (ii) the monies collected by the Servicer (from whatever
source, including but not limited to proceeds of a Financed Vehicle which is
sold after repossession) during a Collection Period on a Defaulted Receivable
net of any payments required by law to be remitted to the Obligor.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Net Loss Ratio" means, for any Collection Period, an amount,
expressed as an annualized percentage, equal to (i) the Realized Losses minus
Recoveries for such Collection Period, divided by (ii) the average of the Pool
Balances on the first day of such Collection Period and the last day of such
Collection Period.
21
"Obligor" on a Receivable means the purchaser or the
co-purchasers of the Financed Vehicle purchased in part or in whole by the
execution and delivery of such Receivable or any other Person who owes or may be
liable for payments under such Receivable.
"Officer's Certificate" means a certificate signed by the
chairman of the board, the president, the treasurer, the controller, any
executive or senior vice president or any vice president of the Seller or
Servicer, as appropriate.
"Opinion of Counsel" means a written opinion of counsel (who may
be counsel to the Seller or the Servicer) acceptable in form and substance to
the Trustee.
"Optional Purchase Percentage" means the percentage specified as
such in the Agreement.
"Original Pool Balance" means the Pool Balance as of the Cutoff
Date, as specified in the Agreement.
"Outstanding Advances" means, as of any date, the aggregate of
all Advances made by the Servicer with respect to prior Distribution Dates which
have not been reimbursed pursuant to Section 14.3.
"Outstanding Receivable" means, as of the time of reference
thereto, a Receivable that (i) has not been fully paid, (ii) has not become a
Defaulted Receivable, and (iii) has not become a Repurchased Receivable.
"Paying Agent" shall have the meaning specified in Section 16.12
and shall initially be _____________.
"Payment Deficiencies" shall have the meaning specified in
Section 15.1.
"Permitted Investments" means, at any time, any one or more of
the following obligations and securities:
(i) obligations of the United States of America or any
agency thereof, provided such obligations are backed by the full
faith and credit of the United States of America;
22
(ii) general obligations of or obligations guaranteed as
to the timely payment of interest and principal by any state of
the United States of America or the District of Columbia then
rated A-1+ or AAA by Standard & Poor's and P-1 or Aaa by Moody's
or such lower ratings (as approved in writing by the Rating
Agencies) as will not result in the qualification, downgrading
or withdrawal of the ratings then assigned to the Certificates
by the Rating Agencies;
(iii) commercial paper which is then rated P-1 by
Moody's and A-1+ by Standard & Poor's, or such lower rating
categories (as approved in writing by the Rating Agencies) as
will not result in the qualification, downgrading or withdrawal
of the ratings then assigned to the Certificates by the Rating
Agencies;
(iv) certificates of deposit, demand or time deposits,
federal funds or banker's acceptances issued by any depository
institution or trust company (including the Trustee acting in
its commercial banking capacity) incorporated under the laws of
the United States or of any state thereof or incorporated under
the laws of a foreign jurisdiction with a branch or agency
located in the United States of America and subject to
supervision and examination by federal or state banking
authorities, provided that the short term unsecured deposit
obligations of such depository institution or trust company is
then rated P-1 by Moody's and A-1+ by Standard & Poor's or such
lower rating categories (as approved in writing by the Rating
Agencies) as will not result in the qualification, downgrading
or withdrawal of the ratings then assigned to the Certificates
by the Rating Agencies;
(v) demand or time deposits of, or certificates of
deposit issued by, any bank, trust company, savings bank or
other savings institution provided that such deposits or
certificates of deposit are fully insured by the FDIC;
23
(vi) guaranteed reinvestment agreements issued by any
bank, insurance company or other corporation (A) the short term
unsecured debt or deposits of which are rated P-1 by Moody's and
A-1+ by Standard & Poor's or the long-term unsecured debt of
which are rated at least Aaa by Moody's and AAA by Standard &
Poor's or (B) are otherwise approved in writing by the Rating
Agencies as investments which will not result in the
qualification, downgrading or withdrawal of the ratings then
assigned to the Certificates by the Rating Agencies;
(vii) repurchase obligations with respect to any
security described in clauses (i), (ii) or (ix) herein or any
other security issued or guaranteed by the FHLMC, FNMA or any
other agency or instrumentality of the United States of America
which is backed by the full faith and credit of the United
States of America, in either case entered into with a federal
agency or a depository institution or trust company (acting as
principal) described in (iv) above or a corporation (acting as
principal) described in (vi) above;
(viii) investments in money market funds, which funds
(A) are not subject to any sales, load or other similar charge;
(B) are rated at least AAAm or AAAm-G by Standard & Poor's and
Aaa by Moody's and (C) are invested solely in obligations
described in clauses (i) through (vii) above.
(ix) interests in any open-end or closed-end management
type investment company or investment trust (a) registered under
the Investment Company Act of 1940, as from time to time
amended, the portfolio of which is limited to obligations of the
United States or obligations guaranteed by the United States and
to agreements to repurchase such obligations, which agreements,
with respect to principal and interest, are at least 100%
collateralized by such obligations marked to market on a daily
basis and pursuant to which the investment com-
24
pany or investment trust is required to take delivery of such
obligations either directly or through an independent custodian
designated in accordance with the Investment Company Act of
1940, as from time to time amended and (b) acceptable to the
Rating Agencies (as approved in writing by the Rating Agencies)
as collateral for securities having ratings equivalent to the
ratings of the Certificates on the Closing Date; and
(x) such other investments where either (A) the
short-term unsecured debt or deposits of the obligor on such
investments are rated A-1+ by Standard & Poor's and P-1 by
Moody's or (B) such investments are acceptable to the Rating
Agencies (as approved in writing by each of them) and will not
result in the qualification, downgrading or withdrawal of the
ratings then assigned to the Certificates by the Rating
Agencies.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, trust, unincorporated organization, or government or any agency or
political subdivision thereof, or any other entity of whatever nature.
"Pool Balance" as of any date of determination means the
aggregate Principal Balance of the Outstanding Receivables.
"Pool Factor" as of the last day of any Collection Period means
the Pool Balance divided by the Original Pool Balance, expressed as a
seven-digit decimal.
"Principal Balance" of a Receivable, as of the last day of the
preceding Collection Period, means the Amount Financed minus that portion of all
payments received on or prior to such date allocable to principal.
"Purchased Receivable" means, on any date of determination, a
Receivable as to which payment of the Purchase Amount has been made by the
Seller or the Servicer pursuant to the Agreement.
25
"Qualified Institution" means a depository institution organized
under the laws of the United States of America or any one of the states thereof
or incorporated under the laws of a foreign jurisdiction with a branch or agency
located in the United States of America or one of the States thereof and subject
to supervision and examination by federal or state banking authorities which at
all times has the Required Deposit Rating and, in the case of any such
institution organized under the laws of the United States of America, whose
deposits are insured by the FDIC.
"Qualified Trust Institution" means an institution organized
under the laws of the United States of America or any one of the states thereof
or incorporated under the laws of a foreign jurisdiction with a branch or agency
located in the United States of America or one of the States thereof and subject
to supervision and examination by federal or state banking authorities which at
all times (i) is authorized under such laws to act as a trustee or in any other
fiduciary capacity, (ii) has not less than one billion dollars in assets under
fiduciary management, (iii) has a minimum net worth of at least $50,000,000 and
(iv) has a long term deposits rating of not less than "BBB-" and "Baa3" from
Standard & Poor's and Moody's, respectively.
"Rating Agencies" means Standard & Poor's and Xxxxx'x.
"Rating Agency Condition" means, with respect to any action,
written confirmation by each Rating Agency that such action will not result in a
withdrawal or reduction of its rating of the Class A Certificates or the Class B
Certificates.
"Realized Losses" mean, for any Collection Period and for each
Receivable that became a Defaulted Receivable during such Collection Period, the
excess of (i) the aggregate Principal Balance of such Receivable over (ii)
Liquidation Proceeds received with respect to such Receivable during such
Collection Period, to the extent allocable to principal.
"Receivable" means a motor vehicle installment loan contract and
all proceeds thereof and payments thereunder (other than interest accrued and
unpaid as of
26
the Cutoff Date), which Receivable shall appear on Schedule A to the
Agreement.
"Receivable Files" means the documents specified in Section
12.3.
"Receivables Pool" means the pool of Receivables included in
the Trust.
"Record Date" means, with respect to any Distribution Date, the
Business Day prior to such Distribution Date unless Definitive Certificates are
issued, in which case Record Date shall mean the last day of the immediately
preceding calendar month.
"Recoveries" mean, with respect to any Collection Period, all
monies received by the Servicer with respect to any Defaulted Receivable during
any Collection Period following the Collection Period in which such Receivable
became a Defaulted Receivable, net of the sum of (i) any fees, costs or expenses
incurred by the Servicer in connection with the collection of such Receivable
and the disposition of the Financed Vehicle as permitted by Section 13.3 (to the
extent not previously reimbursed) and (ii) any payments required by law to be
remitted to the Obligor, but, in any event, not less than zero.
"Repurchase Amount" with respect to a Repurchased Receivable or
any Receivable purchased by the Servicer pursuant to Section 21.2 means the sum,
as of the last day of the preceding Collection Period on which such Receivable
becomes such, of the Principal Balance thereof plus the accrued interest thereon
at the weighted average of the Class A Pass-Through Rate and the Class B
Pass-Through Rate.
"Repurchase Date" shall have the meaning set forth in Section
12.2.
"Repurchased Receivable" means as of the last day of any
Collection Period a Receivable repurchased as of such date by the Seller
pursuant to Section 12.2 or purchased as of such date by the Servicer pursuant
to Section 13.7.
27
"Required Deposit Rating" means the ratings specified as such in
the Agreement.
"Reserve Account" shall mean the Reserve Account established and
maintained as such pursuant to Section 14.4.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Entitlement" has the meaning specified in Section
8-102(a)(17) of the UCC.
"Seller" means USAA Federal Savings Bank in its capacity as the
seller of the Receivables under the Agreement, and each successor to USAA
Federal Savings Bank (in the same capacity) pursuant to Section 17.3.
"Servicer" means USAA Federal Savings Bank in its capacity as the
servicer of the Receivables under the Agreement, each successor to USAA Federal
Savings Bank (in the same capacity) pursuant to Section 18.3, and each successor
Servicer pursuant to Section 19.2.
"Servicer's Certificate" means a certificate, substantially in
the form of Exhibit D attached hereto, completed and executed by the Servicer by
its chairman of the board, the president, treasurer, controller or any executive
vice president, senior vice president or vice president pursuant to Section
13.9.
"Servicing Fee" means with respect to a Collection Period the fee
payable to the Servicer for services rendered during the Collection Period
ending on the last day of such Collection Period, determined pursuant to Section
13.8.
"Servicing Fee Rate" means the rate specified as such in the
Agreement.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of XxXxxx-Xxxx Companies Inc.
"Total Collections" means with respect to any Collection Period
all amounts deposited in the Certifi-
28
cate Account relating to such Collection Period pursuant to Sections 14.2, 14.3
and 14.4.
"Transfer Agent and Certificate Registrar" shall have the meaning
specified in Section 16.3 and shall initially be _____________.
"Trust" means the trust created by the Agreement, the estate of
which shall consist of the property transferred thereto pursuant to the
Agreement; funds deposited in the Certificate Account, the Class A Distribution
Account and the Class B Distribution Account and such amounts as from time to
time may be held therein (including the Account Property related thereto) and
proceeds thereof; and the rights of the Trust to receive payments from the
Reserve Account in accordance with this Agreement (but not the Reserve Account
itself).
"Trustee" means the Person executing the Agreement as Trustee,
its successor in interest pursuant to Section 20.12, and any successor Trustee
pursuant to Section 20.11.
"Trustee's Certificate" means a certificate completed and
executed by an Authorized Officer pursuant to Section 20.3 and substantially in
the form attached hereto as Exhibit C-1 or C-2.
"UCC" means the Uniform Commercial Code as in effect in the
respective jurisdiction.
Section 11.2 Usage of Terms. With respect to all terms in the
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other gender; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein effected in accordance with
their respective terms and not prohibited by the Agreement; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation."
Section 11.3 Simple Interest Method; Allocations. All
allocations of payments to principal and interest and determinations of periodic
charges and the
29
like on the Receivables shall be based on a year with the actual number of days
in such year and twelve months with the actual number of days in each such
month. Each payment on a Receivable shall be applied first to the amount of
interest accrued on such Receivable to the date of receipt, then to reduce the
scheduled principal amount outstanding on the Receivable to the extent of the
remaining scheduled payment and then to any outstanding fees under the terms of
the Receivable. Amounts paid by the Seller or the Servicer in respect of
Repurchased Receivables shall be allocated first to any interest accrued on the
related Receivable and then to the Principal Balance of the related Receivable.
Section 11.4 References. All references to the Record Date prior
to the first Record Date in the life of the Trust shall be deemed to be
references to the Cutoff Date. All references to "as of a Record Date" shall
refer to the close of business on such Record Date. All references to the Pool
Balance "as of the first day of a Collection Period" shall refer to the Pool
Balance as of the last day of the preceding Collection Period.
Section 11.5 Section References. All section references shall be
to Sections in these Standard Terms and Conditions of Agreement unless otherwise
specified.
Section 11.6 Separate Agreements. Each Agreement which shall
incorporate by reference these Standard Terms and Conditions of Agreement shall
be separate and distinct from each other such Agreement, no provision of any
such Agreement shall be applicable to any other such Agreement, and all
references to "the Agreement" and to provisions thereof shall be references to a
particular Agreement which incorporates these Standard Terms and Conditions of
Agreement.
30
ARTICLE XII
The Receivables
Section 12.1 Representations and Warranties of Seller; Conditions
Relating to Receivables.
(a) The Seller makes the following representations and
warranties as to the Receivables on which the Trustee shall rely in
accepting the Receivables in trust and authenticating the Certificates.
Such representations and warranties shall speak as of the Cutoff Date
unless otherwise specified, but shall survive the sale, transfer, and
assignment of the Receivables to the Trustee.
(i) Schedule of Receivables. The information set forth
in Schedule A to the Agreement with respect to each Receivable
is true and correct in all material respects, and no selection
procedures adverse to the Certificateholders have been used in
selecting the Receivables from all receivables owned by the
Seller which meet the selection criteria specified herein and in
the Agreement.
(ii) No Sale or Transfer. No Receivable has been sold,
transferred, assigned or pledged by the Seller to any Person
other than the Trustee.
(iii) Good Title. Immediately prior to the transfer and
assignment of the Receivables to the Trustee on behalf of the
Trust herein contemplated, the Seller has good and marketable
title to each Receivable free and clear of all Liens,
encumbrances, security interests and rights of others; and,
immediately upon the transfer thereof, the Trustee, for the
benefit of the Certificateholders, has either (i) good and
marketable title to each Receivable, free and clear of all
Liens, encumbrances, security interests, and rights of others,
and the transfer has been perfected under applicable law or (ii)
a first priority perfected security interest in each Receivable.
31
(b) Each Receivable satisfies the following conditions as of
the Cutoff Date unless otherwise specified, but such conditions shall
survive the sale, transfer and assignment of the Receivables to the
Trustee.
(i) Characteristics of Receivables. Each Receivable (a)
has been originated for the retail financing of a Financed
Vehicle by an Obligor located in one of the States of the United
States or the District of Columbia; (b) contains customary and
enforceable provisions such that the rights and remedies of the
holder thereof are adequate for realization against the
collateral of the benefits of the security; and (c) provides for
fully amortizing level scheduled monthly payments (provided that
the payment in the last month in the life of the Receivable may
be different from the level scheduled payment) and for accrual
of interest at a fixed rate according to the simple interest
method.
(ii) Compliance with Law. Each Receivable and each sale
of the related Financed Vehicle complied at the time it was
originated or made, and complies on and after the Cutoff Date,
in all material respects with all requirements of applicable
federal, state, and local laws, and regulations thereunder,
including usury laws, the Federal Truth-in Lending Act, the
Equal Credit Opportunity Act, the Fair Credit Reporting Act, the
Federal Trade Commission Act, the Xxxxxxxx-Xxxx Warranty Act,
Federal Reserve Board Regulations B and Z, state adaptations of
the National Consumer Act and of the Uniform Consumer Credit
Code, and any other consumer credit, equal opportunity, and
disclosure laws applicable to such Receivable and sale.
(iii) Binding Obligation. Each Receivable constitutes
the legal, valid, and binding payment obligation in writing of
the Obligor, enforceable by the holder thereof in all material
respects in accordance with its
32
terms, subject, as to enforcement, to applicable bankruptcy,
insolvency, reorganization, liquidation and other similar laws
and equitable principles relating to or affecting the
enforcement of creditors' rights.
(iv) No Government Obligor. No Receivable is due from
the United States of America or any state or from any agency,
department, instrumentality or political subdivision of the
United States of America or any state or local municipality and
no Receivable is due from a business except to the extent that
such receivable has a personal guaranty.
(v) Security Interest in Financed Vehicle. Immediately
prior to the sale and assignment thereof to the Trust as herein
contemplated, each Receivable was secured by a validly perfected
first priority security interest in the Financed Vehicle in
favor of the Seller as secured party or all necessary and
appropriate action with respect to such Receivable had been
taken to perfect a first priority security interest in the
related Financed Vehicle in favor of the Seller as secured
party, which security interest is assignable and has been so
assigned by the Seller to the Trust.
(vi) Receivables in Force. No Receivable has been
satisfied, subordinated, or rescinded, nor has any Financed
Vehicle been released from the Lien granted by the related
Receivable in whole or in part.
(vii) No Waiver. No provision of a Receivable has been
waived in such a manner that such Receivable fails either to
meet all of the representations and warranties made by the
Seller herein with respect thereto or to meet all of the
conditions with respect thereto pursuant to this subsection
12.1(b).
(viii) No Amendments. No Receivable has been amended
except pursuant to either instruments included in the Receivable
Files or instruments to be included in the Receivable
33
Files pursuant to Section 13.2 and no such amendment has caused
such Receivable either to fail to meet all of the
representations and warranties made by the Seller herein with
respect thereto or to fail to meet all of the conditions with
respect thereto pursuant to this subsection 12.1(b).
(ix) No Defenses. As of the Cutoff Date, there are no
rights of rescission, setoff, counterclaim, or defense, and the
Seller has no knowledge of the same being asserted or
threatened, with respect to any Receivable.
(x) No Liens. As of the Cutoff Date, the Seller has no
knowledge of any Liens or claims that have been filed, including
Liens for work, labor, materials or unpaid taxes relating to a
Financed Vehicle, that would be Liens prior to, or equal or
coordinate with, the Lien granted by the Receivable.
(xi) No Default. Except for payment defaults continuing
for a period of not more than [30] days as of the Cutoff Date,
the Seller has no knowledge that a default, breach, violation,
or event permitting acceleration under the terms of any
Receivable exists; the Seller has no knowledge that a continuing
condition that with notice or lapse of time would constitute a
default, breach, violation, or event permitting acceleration
under the terms of any Receivable exists; and the Seller has not
waived any of the foregoing.
(xii) Insurance. Each Receivable requires that the
Obligor thereunder obtain comprehensive and collision insurance
covering the Financed Vehicle.
(xiii) Lawful Assignment. No Receivable has been
originated in, or is subject to the laws of, any jurisdiction
under which the sale, transfer, and assignment of such
Receivable under the Agreement or pursuant to transfers of the
Certificates is unlawful, void or voidable.
34
(xiv) All Filings Made. No filings (other than UCC
filings which have been made) or other actions are necessary in
any jurisdiction to give the Trustee a first perfected security
interest in the Receivables.
(xv) One Original. With respect to any Receivable for
which an original executed copy exists, there is no more than
one original executed copy of such Receivable which, immediately
prior to the delivery thereof to the Servicer, as custodian for
the Trustee, was in the possession of the Seller.
(xvi) Agreement. The additional representations and
warranties in Section 7.1 of the Agreement are true and correct.
Section 12.2 Repurchase Upon Breach or Failure of a Condition.
The Seller, the Servicer, or the Trustee, as the case may be, shall inform the
other parties promptly, in writing, upon the discovery by the Seller, the
Servicer or an Authorized Officer of the Trustee of either any breach of the
Seller's representations and warranties set forth in subsection 12.1(a) or the
failure of any Receivable to satisfy any of the conditions set forth in
subsection 12.1(b). Unless the breach or failed condition shall have been cured
by the last day of the Collection Period following the Collection Period during
which such discovery occurred (or, at the Seller's option, the last day of the
Collection Period during which such discovery occurred)(such date, the
"Repurchase Date"), the Seller shall repurchase any Receivable the Trust's
interest in which was materially and adversely affected by the breach or failed
condition, as determined by the Servicer and reported in an Officer's
Certificate, as of the Repurchase Date. In consideration of the repurchase of a
Receivable, the Seller shall remit the Repurchase Amount of such Receivable as
of the Repurchase Date (less any Liquidation Proceeds deposited, or to be
deposited, by the Servicer in the Certificate Account with respect to such
Receivable pursuant to Section 13.3) in the manner specified in Section 14.4. In
the event that, as of the Cutoff Date, any Receivable shall have an APR which is
lower than the sum of (i) the weighted average of the Class A Pass-through Rate
and the Class B Pass-through Rate and (ii) the Servicing Fee Rate, the
35
Seller shall repurchase such Receivable on the terms and in the manner specified
above, provided, however, that notwithstanding anything to the contrary
contained herein, the Seller shall repurchase such Receivable as of the last day
of the Collection Period during which the discovery thereof by the Seller or the
Servicer occurred or the notice thereof from the Trustee was received by the
Seller. The sole remedy of the Trust, the Trustee or the Certificateholders with
respect either to a breach of the Seller's representations and warranties set
forth in subsection 12.1(a) or to a failure of any of the conditions set forth
in subsection 12.1(b) shall be to require the Seller to repurchase Receivables
pursuant to this Section 12.2. The obligation of the Seller to repurchase under
this Section 12.2 shall not be solely dependent upon the actual knowledge of the
Seller of any breached representation or warranty. The Trustee shall have no
duty to conduct any affirmative investigation as to the occurrence of any
condition requiring the repurchase of any Receivable pursuant to this Section
12.2 or the eligibility of any Receivable for purposes of the Agreement.
Section 12.3 Custody of Receivable Files. To assure uniform
quality in servicing the Receivables and to reduce administrative costs, the
Trustee, upon the execution and delivery of the Agreement, agrees to have the
Servicer act as custodian of the following documents or instruments which are
hereby constructively delivered to the Trustee with respect to each Receivable:
(i) The original executed Receivable or, if no such
original exists, a copy of the original executed Receivable;
(ii) To the extent that a credit application with
respect to an Obligor exists, the original executed copy of such
credit application or, if no such original exists, a copy of
such original executed copy, fully executed by the Obligor;
(iii) The notice of recorded Lien or such documents that
the Servicer or the Seller shall keep on file, in accordance
with its customary procedures, evidencing the first
36
priority perfected security interest of the Seller in the
Financed Vehicle; and
(iv) Any and all other documents that the Seller or
Servicer, as the case may be, shall keep on file, in accordance
with its customary procedures, relating to a Receivable, an
Obligor (to the extent relating to a Receivable), or a Financed
Vehicle.
The Servicer hereby agrees to act as custodian of the Receivable
Files, as agent for the Trustee, hereunder. The Servicer acknowledges that it
holds the documents and instruments relating to the Receivables for the benefit
of the Trustee and the Certificateholders. The Trustee shall have no
responsibility to monitor the Servicer's performance as custodian and shall have
no liability in connection with the Servicer's performance of such duties
hereunder.
Section 12.4 Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer, in its capacity as custodian,
shall hold the Receivable Files on behalf of the Trustee for the use and
benefit of all present and future Certificateholders, and maintain such
accurate and complete accounts, records, and computer systems pertaining
to the Receivables as shall enable the Trustee to comply with its
obligations pursuant to these Standard Terms and Conditions of
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 of comparable
new or used automobile and light-duty truck receivables that the
Servicer services for itself or others. The Servicer shall conduct, or
cause to be conducted, periodic audits of the files of all receivables
owned or serviced by the Servicer which shall include the Receivable
Files held by it under the Agreement and the related accounts, records,
and computer systems, in such a manner as shall enable the Trustee to
identify all Receivable Files and such related accounts, records and
computer systems and to verify, if the Trustee so elects, the accuracy
of the Servicer's record-keeping. The Servicer shall promptly report to
the Trustee any failure on its part to hold the Receivable Files and
maintain its accounts, records, and computer
37
systems as herein provided, and promptly take appropriate action to remedy any
such failure.
(b) Maintenance of and Access to Records. The Servicer shall
maintain each Receivable File at one of its offices specified in
Schedule B to the Agreement, or at such other office as shall be
specified to the Trustee by 30 days' prior written notice. The Servicer
shall make available to the Trustee or its duly authorized
representatives, attorneys, or auditors the Receivable Files and the
related accounts, records, and computer systems maintained by the
Servicer at such times during normal operating hours as the Trustee
shall reasonably instruct which does not unreasonably interfere with the
Servicer's normal operations.
(c) Release of Documents. Upon instruction from the Trustee,
the Servicer shall release any document in the Receivable Files to the
Trustee, the Trustee's agent, or the Trustee's designee, as the case may
be, at such place or places as the Trustee may reasonably designate as
soon as reasonably practicable to the extent it does not unreasonably
interfere with the Servicer's normal operations. The Servicer shall not
be responsible for any loss occasioned by the failure of the Trustee,
its agent or its designee to return any document or any delay in doing
so.
Section 12.5 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 an Authorized Officer.
A certified copy of a by-law or of a resolution of the Board of Directors of the
Trustee shall constitute conclusive evidence of the authority of any such
Authorized 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 Trustee.
Section 12.6 Custodian's Indemnification. The Servicer, as
custodian, shall indemnify the Trustee, its officers, directors, employees and
agents for any and all liabilities, obligations, losses, damages, payments,
costs, or expenses of any kind whatsoever that may be imposed on, incurred, or
asserted against the Trustee, its officers, directors, employees or agents as
the result of any improper act or omission in any way relat-
38
ing to the maintenance and custody by the Servicer, as custodian, of the
Receivable Files; provided, however, that the Servicer shall not be liable for
any portion of any such amount resulting from the willful misfeasance, bad
faith, or negligence of the Trustee or any loss occasioned by the failure of the
Trustee, its agent or designee to return any document to the Servicer or any
delay in doing so.
Section 12.7 Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and shall
continue in full force and effect until terminated pursuant to this Section 12.7
or until the Agreement shall be terminated. If the Servicer shall resign as
Servicer under Section 18.5 or if all of the rights and obligations of the
Servicer shall have been terminated under Section 19.1, the appointment of the
Servicer as custodian may be terminated by the Trustee or by the Holders of
Certificates evidencing not less than 25% of the Pool Balance, in the same
manner as the Trustee or such Holders may terminate the rights and obligations
of the Servicer under Section 19.1. As soon as practicable after any termination
of such appointment, the Servicer shall, at its expense, deliver the Receivable
Files to the Trustee or the Trustee's agent at such place or places as the
Trustee may reasonably designate. Notwithstanding the termination of the
Servicer as custodian, the Trustee agrees that upon any such termination, the
Trustee shall provide, or cause its agent to provide, access to the Receivables
Files to the Servicer for the purpose of carrying out its duties and
responsibilities with respect to the servicing of the Receivables hereunder.
39
ARTICLE XIII
Administration and Servicing of Receivables
Section 13.1 Duties of Servicer. The Servicer shall manage,
service, administer and make collections on the Receivables (other than
Repurchased Receivables) with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to comparable new or used
automobile and light-duty truck receivables that it services for itself. The
Servicer's duties shall include collection and posting of all payments,
responding to inquiries by Obligors or by federal, state, or local governmental
authorities with respect to the Receivables, investigating delinquencies,
reporting tax information to Obligors in accordance with its customary
practices, accounting for collections, furnishing monthly and annual statements
to the Trustee with respect to distributions, and, if it elects to do so, making
Advances pursuant to Section 14.3. The Servicer shall follow its customary
standards, policies, and procedures in performing its duties as Servicer.
Without limiting the generality of the foregoing, the Servicer shall be
authorized and empowered by the Trustee to execute and deliver, on behalf of
itself, the Trust, the Trustee, the Certificateholders, 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, without recourse to the
Trustee, with respect to the Receivables or with respect to the Financed
Vehicles. If the Servicer shall commence a legal proceeding to enforce a
Receivable or a Defaulted Receivable, the Trustee shall thereupon be deemed to
have automatically assigned such Receivable and the related property conveyed to
the Trust pursuant to Section 2.1 with respect to such Receivable to the
Servicer, solely for the purpose of collection. The Trustee shall furnish the
Servicer with such documents as have been prepared by the Servicer for execution
by the Trustee and as are necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder.
Section 13.2 Collection of Receivable Payments. The Servicer
shall make reasonable efforts to collect all payments called for under the terms
and provisions of the Receivables and of the Agreement as and when the same
shall become due, and shall follow such
40
collection procedures as it follows with respect to comparable new or used
automobile and light-duty truck receivables that it services for itself or
others and that is consistent with prudent industry standards. The Servicer
shall not change the amount of or reschedule the due date of any scheduled
payment to a date more than 30 days from the original due date of such scheduled
payment, change the annual percentage rate of, or extend any Receivable or
change any material term of a Receivable, except as provided by the terms of the
Receivable or of the Agreement or as required by law or court order, provided,
however, that the Servicer may extend any Receivable that is in default or with
respect to which default is reasonably foreseeable and that would be acceptable
to the Servicer with respect to comparable new or used automobile and light-duty
truck receivables that it services for itself, if (a) the amount on deposit in
the Reserve Account is greater than zero at the time of the extension, (b) the
total credit-related extensions granted on the Receivable will not exceed four
months in the aggregate, (c) the total number of credit-related extensions
granted on the Receivable will not exceed two, (d) the maturity of such
Receivable would not be extended beyond the Collection Period immediately
preceding the Final Distribution Date and (e) the rescheduling or extension
would not modify the terms of such Receivable in such a manner as to constitute
a cancellation of such Receivable and the creation of a new receivable. If, as a
result of inadvertently rescheduling or extending of payments, such rescheduling
or extension breaches any of the terms of the proviso to the preceding sentence,
then the Servicer shall be obligated to purchase such Receivable pursuant to
Section 13.7. For the purpose of such purchases pursuant to Section 13.7, notice
shall be deemed to have been received by the Servicer at such time as shall make
purchase mandatory as of the last day of the Collection Period during which the
discovery of such breach occurred.
Section 13.3 Realization Upon Receivables. On behalf of the
Trust, the Servicer shall use reasonable efforts, consistent with its customary
servicing procedures, to repossess or otherwise take possession of the
Financed Vehicle securing any Receivable which the Servicer shall have
determined to be a Defaulted Receivable or otherwise (and shall specify any
such Defaulted Receivable to the Trustee no later than the Determination
41
Date following the Collection Period in which the Servicer shall have made such
determination). The Servicer shall follow such customary and usual practices and
procedures as it shall deem necessary or advisable in its servicing of new or
used automobile and light-duty truck receivables, which may include selling the
Financed Vehicle at public or private sale. The Servicer shall be entitled to
recover from proceeds all reasonable expenses incurred by it in the course of
converting the Financed Vehicle into cash proceeds. The Liquidation Proceeds
(net of such expenses) realized in connection with any such action with respect
to a Receivable shall be deposited by the Servicer in the Certificate Account in
the manner specified in Section 14.2 and shall be applied to reduce (or to
satisfy, as the case may be) the Repurchase Amount of the Receivable, if such
Receivable is to be repurchased by the Seller pursuant to Section 12.2, or is to
be purchased by the Servicer pursuant to Section 13.7. The foregoing shall be
subject to the provision that, in any case in which the Financed Vehicle shall
have suffered damage, the Servicer shall not expend funds in connection with the
repair or the repossession of such Financed Vehicle unless it shall determine in
its sole discretion that such repair and/or repossession will increase the
Liquidation Proceeds of the related Receivable by an amount equal to or greater
than the amount of such expenses.
Section 13.4 [Reserved]
Section 13.5 Maintenance of Security Interests in Financed
Vehicles. The Servicer, in accordance with its customary servicing procedures,
shall take such steps as are necessary to maintain (i) perfection of the
security interest created in any Financed Vehicle which secures a Receivable and
(ii) perfection of the Trust's interest in the Receivables including, without
limitation, the filing of financing statements and continuation statements. On
behalf of the Trust, the Servicer hereby agrees to take such steps as are
necessary to re-perfect such security interest in the event of the relocation of
a Financed Vehicle or for any other reason, in either case, when the Servicer
has knowledge of the need for such re-perfection. In the event that the
assignment of a Receivable to the Trust is insufficient, without a notation on
the related Financed Vehicle's certificate of title, or without fulfilling any
additional administra-
42
tive requirements under the laws of the state in which the Financed Vehicle is
located, to grant to the Trust a perfected security interest in the related
Financed Vehicle, the Servicer hereby agrees that the Servicer's listing as the
secured party on the certificate of title is deemed to be in its capacity as
agent of the Trust and further agrees to hold such certificate of title as the
Trustee's agent and custodian; provided that the Servicer shall not, nor shall
the Trustee or Certificateholders have the right to require that the Servicer,
make any such notation on the related Financed Vehicles' certificate of title or
fulfill any such additional administrative requirement of the laws of the state
in which a Financed Vehicle is located.
Section 13.6 Covenants of Servicer. The Servicer hereby makes the
following covenants on which the Trustee shall rely in accepting the Receivables
in trust and authenticating the Certificates:
(i) Security Interest to Remain in Force. The Financed
Vehicle securing each Receivable shall not be released from the
security interest granted by the Receivable in whole or in
part except as contemplated herein;
(ii) No Impairment. The Servicer shall not impair the
rights of the Trust in the Receivables; and
(iii) Extensions, Defaulted Receivables. The Servicer
shall not increase the number of payments under a Receivable,
nor increase the Amount Financed under a Receivable, nor extend
or forgive payments on a Receivable, except as provided in
Section 13.2. In the event that at the end of the scheduled term
of any Receivable, the outstanding principal amount thereof is
such that the final payment to be made by the related Obligor is
larger than the regularly scheduled payment of principal and
interest made by such Obligor, the Servicer may permit such
Obligor to pay such remaining principal amount in more than one
payment of principal and interest, provided that the last such
payment shall be due on or
43
prior to the Collection Period immediately preceding the Final
Distribution Date.
Section 13.7 Purchase of Receivables Upon Breach. The Servicer or
the Trustee, as the case may be, shall inform the other party promptly, in
writing, upon the discovery by the Servicer or an Authorized Officer of the
Trustee, as the case may be, of any breach by the Servicer of its covenants
under Section 13.6. Except as otherwise specified in Section 13.2, unless the
breach shall have been cured by the last day of the Collection Period following
the Collection Period during which such breach was discovered (or, at the
Servicer's election, the last day of the Collection Period during which such
breach was discovered), the Servicer shall purchase any Receivable materially
and adversely affected by such breach, as determined by the Servicer and
reported in an Officer's Certificate as of such date. For this purpose, any
breach of the covenant set forth in Section 13.6(iii) shall be deemed to
materially and adversely affect the interest of the Trust in a Receivable. In
consideration of the purchase of such Receivable, the Servicer shall remit the
Repurchase Amount (less any Liquidation Proceeds deposited, or to be deposited,
by the Servicer in the Certificate Account with respect to such Receivable
pursuant to Section 13.3) in the manner specified in Section 14.4. The sole
remedy of the Trust, the Trustee, or the Certificateholders against the Servicer
with respect to a breach pursuant to Section 13.6 shall be to require the
Servicer to purchase Receivables pursuant to this Section 13.7. The Trustee
shall have no duty to conduct any affirmative investigation as to the occurrence
of any condition requiring the repurchase of any Receivable pursuant to this
Section 13.7 or the eligibility of any Receivable for purposes of the Agreement.
Section 13.8 Servicing Fee. The Servicing Fee for a Collection
Period shall equal the product of one-twelfth of the Servicing Fee Rate and the
Pool Balance as of the first day of such Collection Period. In addition, the
Servicer shall be entitled to receive as additional servicing compensation
investment earnings on amounts on deposit in the Certificate Account or earned
on collections pending deposit in the Certificate Account; provided, however,
that, beginning with the Collection Period for which the Trustee is notified in
writing that the
44
Servicer has failed to deposit an Advance with respect to a Receivable other
than because such Receivable has been designated a Defaulted Receivable and
continuing until the Final Distribution Date, such investment earnings shall not
be paid to the Servicer, but shall be treated as Available Interest. The
Servicer shall be required to pay from its own account all expenses incurred by
it in connection with its activities hereunder (including fees and disbursements
of the Trustee, Trustee's counsel, the Paying Agent, the Transfer Agent and
Certificate Registrar and independent accountants, taxes imposed on the
Servicer, and expenses incurred in connection with distributions and reports to
Certificateholders) except expenses in connection with realizing upon a
Receivable under Section 13.3 which may be paid from Liquidation Proceeds from
such Receivable.
Section 13.9 Servicer's Certificate. On or before each
Determination Date, the Servicer shall deliver to the Trustee, the Paying Agent,
the Rating Agencies, a Servicer's Certificate substantially in the form of
Exhibit D hereto, for the Collection Period preceding such Determination Date,
containing all information necessary to make the distributions pursuant to
Section 14.5, all information necessary for the Paying Agent to send statements
to Certificateholders pursuant to Section 14.7 The Servicer shall deliver to the
Rating Agencies any information, to the extent it is available to the Servicer,
that the Rating Agencies reasonably request in order to monitor the Trust. The
Servicer shall also specify each Receivable which the Seller or the Servicer is
required to repurchase or purchase, as the case may be, as of the last day of
the preceding Collection Period, each Receivable which the Servicer shall have
determined to be a Defaulted Receivable during the preceding Collection Period,
and each Receivable for which the Servicer has failed to deposit an Advance
pursuant to Section 14.3 other than because such Receivable has been designated
a Defaulted Receivable. Subsequent to the Closing Date, the form of Servicer's
Certificate may be revised or modified to cure any ambiguities or
inconsistencies with the Agreement; provided, however, that no material
information shall be deleted from the form of Servicer's Certificate. In the
event that the form of Servicer's Certificate is revised or modified in
accordance with the preceding sentence, a form thereof, as so
45
revised or modified, shall be provided to the Trustee and each Rating Agency.
Section 13.10 Annual Statement as to Compliance. (a) The Servicer
shall deliver to the Trustee and the Rating Agencies, and on or before March 31
of each year commencing March 31, 1998, a certificate signed by the chairman of
the board, president, the treasurer, the controller, any executive or senior
vice president or any vice president of the Servicer, stating that (a) a review
of the activities of the Servicer during the year ended the preceding December
31 (or shorter period in the case of the first such certificate) and of its
performance under the Agreement has been made under such officer's supervision
and (b) to the best of such officer's knowledge, based on such review, the
Servicer has fulfilled all its obligations in all material respects under the
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof.
(b) The Servicer shall deliver to the Trustee, and each Rating
Agency promptly after having obtained knowledge thereof, but in no event later
than five Business Days thereafter, an Officer's Certificate specifying any
event which with the giving of notice or lapse of time, or both, would become an
Event of Servicing Termination under Section 19.1. The Seller shall deliver to
the Trustee, promptly after having obtained knowledge thereof, but in no event
later than five Business Days thereafter, an Officer's Certificate specifying
any event which with the giving of notice or lapse of time, or both, would
become an Event of Servicing Termination under Section 19.1.
Section 13.11 Annual Audit Report. The Servicer shall cause a
firm of independent public accountants (which may provide other services to the
Servicer or the Seller) to prepare a report addressed to the Board of Directors
of the Servicer, for the information and use of the Trustee, and the Rating
Agencies on or before March 31 of each year, beginning March 31, 1998, to the
effect that such firm has examined the automobile and light-duty truck
receivable servicing functions of the Servicer, including the Servicer's
procedures and records relating to servicing of the Receivables under this
46
Agreement and that, on the basis of such examination, such firm is of the
opinion such servicing has been conducted in compliance with this Agreement
except for (a) such exceptions as such firm believes to be immaterial and (b)
such other exceptions as shall be set forth in such firm's report. In addition,
such report shall state that such firm has compared the mathematical
calculations of each amount set forth in the monthly certificates forwarded by
the Servicer pursuant to Section 13.9 during the period covered by such report
(which shall be the preceding calendar year) with the Servicer's computer
reports which were the source of such amounts and that on the basis of such
comparison, such firm is of the opinion that such amounts are in agreement,
except for such exceptions as such firm believes to be immaterial and such other
exceptions as shall be set forth in such statement. In addition, such report
shall set forth the procedures performed in conjunction with the examination and
shall contain an opinion of such firm as to the accuracy of the amounts set
forth in the certificates delivered pursuant to Section 13.9 in such period.
The report of the independent certified public accountants shall
also indicate that such accounting firm is independent of the Servicer within
the meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants.
Section 13.12 Access to Certain Documentation and Information
Regarding Receivables. The Servicer shall provide to the Certificateholders
access to the Receivable Files in such cases where the Certificateholders shall
be required by applicable statutes or regulations to have access to such
documentation. Nothing in this Section 13.12 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 13.12.
Section 13.13 Reports to Certificateholders and the Rating
Agencies. (a) The Trustee shall provide to any Certificateholder who so requests
in writing (addressed to the Corporate Trust Office) a copy of any Servicer's
Certificate described in Section 13.9, the annual audit statement described in
Section 13.10, or the
47
annual audit report described in Section 13.11. The Trustee may require the
Certificateholder to pay a reasonable sum to cover the cost of the Trustee's
complying with such request.
(b) The Trustee shall forward to the Rating Agencies the
statement to Certificateholders described in Section 14.7 and any other reports
it may receive pursuant to this Agreement to (i) Standard & Poor's Corporation,
Asset-Backed Surveillance Group, 00 Xxxxxxxx, Xxxxxxxxx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, and (ii) Xxxxx'x Investors Service, Inc., ABS Monitoring Dept., 00
Xxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
Section 13.14 Insurance. The Servicer, in accordance with its
customary servicing procedures and underwriting standards, shall require that
each Obligor shall have obtained and shall maintain comprehensive and collision
insurance covering the Financed Vehicle as of the execution of the Receivable.
The Servicer shall enforce its rights under the Receivables to require the
Obligors to maintain comprehensive and collision insurance, in accordance with
the Servicer's customary practices and procedures with respect to comparable new
or used automobile and light-duty truck receivables that it services for itself
or others.
ARTICLE XIV
Distributions; Statements to
Certificateholders
Section 14.1 Accounts. (a) The Servicer shall establish the (i)
Certificate Account in the name of the Trustee for the benefit of the
Certificateholders, (ii) the Class A Distribution Account in the name of the
Trustee for the benefit of the Class A Certificateholders and (iii) the Class B
Distribution Account in the name of the Trustee for the benefit of the Class B
Certificateholders. Each such account shall be either:
(x) a segregated identifiable trust account established in
the trust department of a Qualified Trust Institution; or
48
(y) a separately identifiable deposit account established in the
deposit taking department of a Qualified Institution, which may be the Seller so
long as the Seller is a Qualified Institution.
The Certificate Account shall satisfy the requirements of clause
(x) above. The Seller hereby grants to the Collateral Agent for the benefit of
the Class A Certificateholders a security interest in the Class A Distribution
Account, likewise, the Seller hereby grants to the Collateral Agent for the
benefit of the Class B Certificateholders a security interest in the Class B
Distribution Account. Should any depositary of the Certificate Account, the
Class A Distribution Account or the Class B Distribution Account cease to be
either a Qualified Institution or a Qualified Trust Institution, then the
Servicer shall, with the Seller's assistance as necessary, cause such account to
be moved to a Qualified Institution or a Qualified Trust Institution, unless the
Servicer provides the Trustee with a letter from the Rating Agencies to the
effect that the current ratings assigned to the Certificates by the Rating
Agencies will not be adversely affected by such depositary's ceasing to be a
Qualified Institution or a Qualified Trust Institution, as the case may be.
All amounts held in the Certificate Account shall be invested by
the bank or trust company then maintaining the account at the written direction
of the Servicer in Permitted Investments that mature on a date proximate to but
not later than the Deposit Date next succeeding the date of investment;
provided, that if the Certificate Account is maintained with the Trustee, such
Permitted Investments may mature on the Distribution Date next succeeding the
date of investment, if the Trustee is the obligor on such investments (including
repurchase agreements on which the Trustee in its commercial capacity is liable
as principal).
(b) The Seller shall establish the Reserve Account in the name of
the Collateral Agent for the benefit of the Certificateholders. The Reserve
Account shall be under the sole dominion and control of the Collateral Agent.
The Reserve Account shall be a segregated identifiable trust account established
in the trust department of a Qualified Trust Institution.
49
Should any depositary of the Reserve Account cease to be either
a Qualified Institution or a Qualified Trust Institution, then the Collateral
Agent shall, with the Seller's assistance as necessary, cause such account to be
moved to a Qualified Institution or a Qualified Trust Institution, unless the
Seller provides the Trustee with a letter from the Rating Agencies to the effect
that the current ratings assigned to the Certificates by the Rating Agencies
will not be adversely affected by such depositary's ceasing to be a Qualified
Institution or a Qualified Trust Institution, as the case may be. The Reserve
Account shall not be property of the Trust.
Funds on deposit in the Reserve Account shall be invested by the
Collateral Agent in Permitted Investments selected by the Servicer; provided,
however, it is understood and agreed that the Collateral Agent shall not be
liable for any loss or charge arising from such investment in Permitted
Investments. All such Permitted Investments shall be held by the Collateral
Agent for the benefit of the Certificateholders in the manner specified in
subsection (c) below; provided, however, that on each Distribution Date all
interest and other investment income (net of losses and investment expenses) on
funds on deposit therein shall be withdrawn from the Reserve Account at the
direction of the Servicer and paid to the Seller. Funds on deposit in the
Reserve Account shall be invested in Permitted Investments that will mature so
that all funds (including both principal and interest) will be available at the
opening of business on the next following Deposit Date; provided, however, that
subject to satisfaction of the Rating Agency Condition and notice thereof to the
Trustee and the Collateral Agent, all or a portion of such funds on deposit in
the Reserve Account may be invested in Permitted Investments that mature later
than such next following Deposit Date.
(c) Each Permitted Investment made with funds from the Reserve
Account shall be delivered to the Collateral Agent by causing the financial
institution then maintaining the Reserve Account (such institution being
referred to as the "Reserve Account Securities Intermediary") to create a
Security Entitlement in the Reserve Account in favor of the Trustee with respect
to such Permitted Investment by indicating by book-entry that such Permitted
Investment has been credited to the Reserve Account. The Servicer shall only
invest in Eligi-
50
ble Investments which the Reserve Account Securities Intermediary agrees to
credit to the applicable Account.
(d) The Servicer shall have the power, revocable by the
Collateral Agent, to instruct the Collateral Agent to make withdrawals and
payments from the Reserve Account for the purpose of permitting the Servicer to
carry out its duties hereunder.
(e) Each of the Seller (and any successor to the Seller in
accordance with Section 17.3) and the Servicer agree to take or cause to be
taken such further actions, to execute, deliver and file or cause to be
executed, delivered and filed such further documents and instruments (including,
without limitation, any financing statements under the UCC or this Agreement) as
may be determined to be necessary, in order to perfect the interests created by
this Section 14.4 and otherwise effectuate the purposes, terms and conditions of
this Section 14.4.
(f) Notwithstanding anything else contained herein, the Reserve
Account shall only be established at Qualified Trust Institution which agrees
that it will (i) comply with Entitlement Orders (i.e. orders directing the
transfer or redemption of any financial assets credited to the Reserve Account)
relating to the Reserve Account issued by the Collateral Agent without further
consent by the Seller; (ii) credit all Permitted Investments to the Reserve
Account; (iii) treat each item of property credited to the Reserve Account as a
Financial Asset; (iv) not enter into, any agreement with any other person
relating to the Reserve Account pursuant to which agreement it has agreed to
comply with entitlement orders made by such person; (v) not accept for credit to
the Reserve Account any Permitted Investment which is registered in the name of,
or payable to the order of, or specially indorsed to, any person other than such
Qualified Trust Institution unless it has been indorsed to such Qualified Trust
Institution or is indorsed in blank and (vi) such Qualified Trust Institution
has agreed that it will waive any right of set-off unrelated to its fees for
such Account.
Section 14.2 Collections. The Servicer shall remit daily within
two Business Days of receipt to the Certificate Account all payments by or on
behalf of the
51
Obligors on the Receivables and all Liquidation Proceeds (net of expenses), both
as collected during the Collection Period. Notwithstanding the provisions of the
first sentence of this Section 14.2, the Servicer, so long as the Servicer is
USAA Federal Savings Bank, shall be permitted to make deposits on a monthly
instead of a daily basis if either (a) the Servicer obtains a short-term
certificate of deposit rating of the Servicer from Standard & Poor's and Moody's
of A-1 and P-1, respectively, or (b) the Servicer provides the Trustee with (1)
a letter from the Rating Agencies to the effect that the current ratings
assigned to the Certificates by the Rating Agencies will not be adversely
affected by the remittance of Collections on a monthly, rather than a daily,
basis. Any such collections remitted to the Certificate Account on a monthly
basis shall be in immediately available funds and shall be remitted no later
than 11:00 a.m., New York City time on or before the Deposit Date. For purposes
of this Section 14.2 the phrase "payments made on behalf of the Obligors" shall
mean payments made by Persons other than the Seller or the Servicer.
Section 14.3 Advances.
(a) As of each Deposit Date, the Servicer may, in its sole
discretion, make a payment with respect to each Receivable (other than a
Defaulted Receivable) equal to the excess, if any, of (x) the product of the
Principal Balance of such Receivable as of the first day of the related
Collection Period and one-twelfth of the Annual Percentage Rate of interest on
such Receivable (calculated on the basis of a 360-day year of twelve 30-day
months), over (y) the interest actually received by the Servicer with respect to
such Receivable from the Obligor or from payment of the Repurchase Amount during
or with respect to such Collection Period. The Servicer shall deposit all such
Advances into the Certificate Account in immediately available funds no later
than, 11:00 a.m. New York City time, on the Deposit Date. The Servicer may elect
not to make any Advance with respect to a Receivable to the extent that the
Servicer, in its sole discretion, shall determine that such Advance is not
recoverable from subsequent payments on such Receivable or from withdrawals from
the Reserve Account. To the extent that the amount set forth in clause (y) above
with respect to a Receivable is greater than the amount set
52
forth in clause (x) above with respect thereto, such excess amount shall be
distributed to the Servicer pursuant to Section 14.5(b); provided, however, that
the Servicer shall not be entitled to reimbursement for an Advance resulting
from a payment being made by or on behalf of the Obligor prior to the Due Date
under the Receivable (a "Simple Interest Advance"). In addition, in the event
that a Receivable becomes a Defaulted Receivable, Outstanding Advances up to the
amount of accrued and unpaid interest thereon shall be reimbursed to the extent
of Interest Collections with respect to such Receivable and, if such amounts are
insufficient, from amounts on deposit in the Reserve Account. The Servicer shall
not be required to make an Advance (other than a Simple Interest Advance) to the
extent that the Servicer, in its sole discretion, determines that such Advance
would not subsequently be recovered (whether from Interest Collections on such
Receivables (including Liquidation Proceeds) or the Reserve Account). The
Servicer shall not make any advance with respect to principal of Receivables.
Notwithstanding anything else herein, the Servicer shall be reimbursed only from
accrued interest due from the Obligor under the Receivable.
(b) The Servicer shall deposit in the Certificate Account
the aggregate Advances on the Receivables pursuant to Section 14.3(a). To the
extent that the Servicer fails to make an Advance pursuant to Section 14.3(a) on
the date required, the Servicer shall so notify the Trustee in writing
specifying the amount of the Advance and the Receivable to which such Advance
relates, and the Trustee shall withdraw such amount (or, if determinable, such
portion of such amount as does not represent advances for delinquent interest)
from the Reserve Account and deposit such amount in the Certificate Account.
Section 14.4 Additional Deposits. The Servicer, or the Seller, as
the case may be, shall deposit into the Certificate Account the aggregate
Repurchase Amount pursuant to Sections 12.2, 13.7 and 21.2, as applicable. All
remittances shall be made to the Certificate Account, in immediately available
funds, no later than 11:00 a.m., on the Deposit Date.
SECTION 14.5 Distributions.
53
(a) On or before each Determination Date, the Servicer
shall calculate all amounts to be deposited in the Class A Distribution Account
and the Class B Distribution Account, which calculations shall be set forth in
the Servicer's Certificate delivered to the Trustee on or before such
Determination Date.
(b) On each Distribution Date, after making the
reimbursements to the Servicer of Outstanding Advances pursuant to Section 14.3,
the Trustee shall make the following deposits and distributions from the
Certificate Account and the Reserve Account, if necessary, based solely on the
information contained in the Servicer's Certificate, to the extent of amounts
available from the indicated sources, in the following priority:
(i) to the Servicer, first from Available Interest, and
then, if necessary, from the Available Reserve Amount, any
unpaid Servicing Fee owing to such Servicer for the related
Collection Period and all unpaid Servicing Fees from prior
Collection Periods;
(ii) to the Class A Distribution Account, first from
Available Interest, then, if necessary, from the Available
Reserve Amount, and finally, if necessary, from the Class B
Percentage of Available Principal, the Class A Interest
Distribution for such Distribution Date; and
(iii) to the Class B Distribution Account, first from
Available Interest, and then, if necessary, from the Available
Reserve Amount, the Class B Interest Distribution for such
Distribution Date based solely on the information contained in
the Servicer's Certificate.
On each Distribution Date, the Trustee shall make the following deposits and
distributions (based on the information contained in the Servicer's
Certificate), to the extent of the portion of Available Principal, Available
Interest and the Available Reserve Amount (to be applied in that order of
priority) remaining after the
54
application of clauses (i), (ii) and (iii) above, in the following priority:
(iv) to the Class A Distribution Account, the Class A
Principal Distribution for such Distribution Date;
(v) to the Class B Distribution Account, the Class B
Principal Distribution for such Distribution Date;
(vi) to the Collateral Agent for deposit in the Reserve
Account, any amounts remaining, until the amount on deposit in
the Reserve Account equals the Specified Reserve Account
Balance; and
(vii) to the Seller, any amount remaining.
(c) On each Distribution Date, all amounts on deposit in
the Class A Distribution Account will be distributed to the Class A
Certificateholders by the Trustee and all amounts on deposit in the Class B
Distribution Account will be distributed to the Class B Certificateholders by
the Trustee. Except as provided in Section 21.1, payments under this paragraph
shall be made to the Certificateholders by check mailed by the Trustee to each
Holder's respective address of record (or, in the case of Certificates
registered in the name of a Clearing Agency, or its nominee, by wire transfer of
immediately available funds). To the extent that the Trustee is required to wire
funds to the Certificateholders from the Class A Distribution Account or the
Class B Distribution Account, as applicable, it shall request the bank
maintaining the Class A Distribution Account or the Class B Distribution
Account, as applicable, to make a wire transfer of the amount to be distributed
and the bank maintaining the Class A Distribution Account or the Class B
Distribution Account, as applicable, shall promptly deliver to the Trustee a
confirmation of such wire transfer. To the extent that the Trustee is required
to make payments to Certificateholders by check hereunder, it shall request the
bank maintaining the Class A Distribution Account or the Class B Distribution
Account, as applicable, to provide it with a supply of checks to make such
payments. The bank shall, if a request is made by
55
the Trustee for a wire transfer by 9:00 A.M. (New York time) on any Distribution
Date, wire such funds in accordance with such instructions by 10:00 A.M. (New
York time) on such Distribution Date, and it will otherwise act in compliance
with the provisions of this paragraph and the other provisions of this Agreement
applicable to it as the bank maintaining the Class A Distribution Account or the
Class B Distribution Account, as applicable. The Servicer shall take all
necessary action (including requiring an agreement to such effect) to ensure
that any bank maintaining the Class A Distribution Account or the Class B
Distribution Account, as applicable, agrees to comply, and complies, with the
provisions of this paragraph and the other provisions of this Agreement
applicable to it as the bank maintaining the Class A Distribution Account or the
Class B Distribution Account, as applicable.
SECTION 14.6 Reserve Account. On the Closing Date, the Seller
shall deposit the Reserve Account Initial Deposit into the Reserve Account. The
Seller hereby grants to the Collateral Agent for the benefit of the
Certificateholders a security interest in and to the Reserve Account and any and
all Financial Assets or other property credited thereto from time to time,
including, but not limited to, Permitted Investments, to secure payment of the
Certificates according to their terms. Amounts held from time to time in the
Reserve Account will continue to be held by the Collateral Agent for the benefit
of Class A Certificateholders and the Class B Certificateholders, but the
Reserve Account shall not be an asset of the Trust. By acceptance of their
Certificates or interest therein, Certificateholders and Certificate Owners
shall be deemed to have appointed _________ as Collateral Agent. __________
hereby accepts such appointment as Collateral Agent.
Section 14.7 Net Deposits. USAA Federal Savings Bank (in whatever
capacity) may make the remittances pursuant to Section 14.2 and Section 14.4
above, net of amounts to be retained by it or distributed to it (also in
whatever capacity) pursuant to Section 14.5, if (a) it shall be the Servicer and
(b) it is entitled, pursuant to Section 14.2, to make deposits on a monthly
basis, rather than a daily basis. The Servicer may remit amounts to the
Certificate Account net of investment earnings accrued on such amounts pending
deposit into the
56
Certificate Account, whether or not the Servicer is then entitled to make
deposits on a monthly basis. Nonetheless, the Servicer shall account for all of
the above described amounts as if such amounts were deposited and distributed
separately.
Section 14.8 Statements to Certificateholders. On each
Distribution Date, the Servicer shall prepare and furnish to the Trustee and the
Paying Agent, and the Paying Agent shall include with the distribution to each
Certificateholder, a statement substantially in the form of Exhibit E, based on
information in the certificate furnished pursuant to Section 13.9, setting forth
for the related Collection Period the following information
(i) the amount of the distribution allocable to
principal on the Class A Certificates and the Class B
Certificates;
(ii) the amount of the distribution allocable to
interest on the Class A Certificates and the Class B
Certificates;
(iii) the amount of the Servicing Fee paid to the
Servicer with respect to the related Collection Period;
(iv) the Class A Certificate Balance, the Class A Pool
Factor, the Class B Certificate Balance and the Class B Pool
Factor as of such Distribution Date, after giving effect to
payments allocated to principal reported pursuant to clause (i)
above;
(v) the Pool Balance as of the close of business of the
Servicer on the last day of the preceding Collection Period;
(vi) the amount of the aggregate Realized Losses, if
any, for such Collection Period;
(vii) the aggregate Purchase Amount of Receivables
repurchased by the Seller or purchased by the Servicer;
57
(viii) the balance of the Reserve Account on such
Distribution Date, after giving effect to changes therein on
such Distribution Date; and
(ix) the Specified Reserve Account Balance as of the
close of business on such Distribution Date.
Each amount set forth pursuant to clauses (i), (ii) and (iv) above shall be
expressed in the aggregate and as a dollar amount per $1,000 of original
denomination of a Certificate.
Within a reasonable period of time after the end of each calendar
year, but not later than the latest date permitted by law, the Servicer shall
prepare and furnish to the Trustee and the Paying Agent, and the Paying Agent
shall furnish to each Person who at any time during such calendar year shall
have been a Certificateholder, a statement containing the sum of the amounts
determined in clauses (i) and (ii) for such calendar year, for the purposes of
such Certificateholder's preparation of federal income tax returns.
58
ARTICLE XV
[reserved]
59
ARTICLE XVI
The Certificates
Section 16.1 The Certificates. Unless otherwise specified in the
Agreement, the Certificates shall be issued in denominations of $1,000 and
integral multiples thereof; provided, however, that one Class A Certificate and
one Class B Certificate may be issued in a denomination that includes any
residual portion of the Original Class A Certificate Balance and the Original
Class B Balance. The Certificates shall be executed on behalf of the Trust by
manual or facsimile signature of an Authorized Officer or other authorized
signatory of the Trustee. Certificates bearing the manual or facsimile
signatures of individuals who were, at the time when such signatures shall have
been affixed, authorized to sign on behalf of the Trust, shall be valid and
binding obligations of the Trust, notwithstanding that such individuals shall
have ceased to be so authorized prior to the execution, authentication and
delivery of such Certificates or did not hold such offices or positions at the
date of such Certificates. No Certificate shall entitle the Holder to any
benefit under the Agreement, or shall be valid for any purpose, unless there
shall appear on such Certificate an authentication substantially in the form set
forth in Exhibit A and Exhibit B hereto executed by the Trustee by manual or
facsimile signature; such authentication shall constitute conclusive evidence
that such Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication.
Section 16.2 Execution, Authentication and Delivery of
Certificates. In exchange for the Receivables and the other assets of the Trust,
simultaneously with the sale, assignment and transfer to the Trustee of the
Receivables, the constructive delivery to the Trustee of the Receivable Files
and the delivery to the Trustee of the other components of the Trust, the
Trustee shall deliver to, or upon the order of, the Seller, Certificates duly
executed by the Trustee, on behalf of the Trust, and authenticated by the
Trustee in authorized denominations equaling in the aggregate the Original Pool
Balance, and evidencing the entire ownership of the Trust.
60
Section 16.3 Registration of Transfer and Exchange of
Certificates.
(a) The Trustee shall cause to be kept at the office or
agency to be maintained by a transfer agent and certificate registrar (the
"Transfer Agent and Certificate Registrar"), in accordance with the provisions
of Section 16.7, a register (the "Certificate Register") in which, subject to
such reasonable regulations as it may prescribe, the Transfer Agent and
Certificate Registrar shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided. The Certificate
Register shall list the names of the Certificateholders and their respective
ownership interests in the Trust, and shall be treated as definitive and binding
for all purposes hereunder. Only those persons registered as Certificateholders
in the Certificate Register shall be recognized as having any interest in the
Trust or Trust estate or as possessing the rights of a Certificateholder
hereunder. A transfer of ownership of a Certificate shall be effectuated only by
an appropriate entry in the Certificate Register. [ ] is
hereby initially appointed Transfer Agent and Certificate Registrar for the
purpose of registering Certificates and transfers and exchanges of Certificates
as herein provided. In the event that, subsequent to the date of issuance of the
Certificates, the Trustee is unable to act as Transfer Agent and Certificate
Registrar, the Trustee shall, with the consent of the Seller, appoint another
bank or trust company, having an office or agency located in New York City and
which agrees to act in accordance with the provisions of the Agreement
applicable to it, to act, as successor Transfer Agent and Certificate Registrar
under the Agreement.
[ ] shall be permitted to resign as
Transfer Agent and Certificate Registrar upon 30 days' written notice to the
Seller and the Servicer; provided, however, that such resignation shall not be
effective and [ ] shall continue to perform its duties as
Transfer Agent and Certificate Registrar until the Trustee has appointed a
successor Transfer Agent and Certificate Registrar with the consent of the
Seller.
Upon surrender for registration of transfer of any Class A
Certificate or Class B Certificate at the
61
office or agency of the Transfer Agent and Certificate Registrar maintained
pursuant to Section 16.7, the Transfer Agent and Certificate Registrar shall
make an appropriate entry in the Certificate Register to reflect such transfer,
and the Trustee shall execute, authenticate and (if the Transfer Agent and
Certificate Registrar is different than the Trustee, then the Transfer Agent and
Certificate Registrar shall) deliver, in the name of the designated transferee
or transferees, one or more new Certificates in authorized denominations of a
like aggregate amount. At the option of a Certificateholder, Class A
Certificates or Class B Certificates may be exchanged for other Class A
Certificates or Class B Certificates, as the case may be, in authorized
denominations of a like aggregate amount at such office or agency.
Whenever any Class A Certificate or Class B Certificate is
surrendered for exchange, the Trustee shall execute, authenticate and (if the
Transfer Agent and Certificate Registrar is different than the Trustee, then the
Transfer Agent and Certificate Registrar shall) deliver the Certificates which
the Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for registration of transfer or exchange
shall be accompanied by a written instrument of transfer in form satisfactory to
the Trustee and the Transfer Agent and Certificate Registrar duly executed by
the Holder, which signature on such assignment must be guaranteed by a member of
the New York Stock Exchange or a commercial bank or trust company.
Each Certificate surrendered for registration of transfer or
exchange shall be cancelled by the Transfer Agent and Certificate Registrar or
retained in accordance with its standard retention policy and disposed of or
retained in a manner satisfactory to the Trustee and the Seller.
No service charge shall be made for any registration of transfer
or exchange of Certificates, but the Transfer Agent and Certificate Registrar
may require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of Certificates.
Section 16.4 Mutilated, Destroyed, Lost, or Stolen Certificates.
If (a) any mutilated Class A Cer-
62
tificate or Class B Certificate shall be surrendered to the Transfer Agent and
Certificate Registrar, or if the Transfer Agent and Certificate Registrar shall
receive evidence to its satisfaction of the destruction, loss, or theft of any
Class A Certificate or Class B Certificate and (b) there shall be delivered to
the Trustee and the Transfer Agent and Certificate Registrar such security or
indemnity as may be required to save each of them harmless, then, in the absence
of notice to the Trustee that such, Class A Certificate or Class B Certificate
shall have been acquired by a bona fide purchaser, the Trustee on behalf of the
Trust shall execute, authenticate and (if the Transfer Agent and Certificate
Registrar is different from the Trustee, then Transfer Agent and Certificate
Registrar shall) deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost or stolen Class A Certificate or Class B Certificate, a new
Class A Certificate or Class B Certificate of like tenor and denomination but
bearing a number not contemporaneously outstanding. In connection with the
issuance of any new Class A Certificate or Class B Certificate under this
Section 16.4, the Trustee or the Transfer Agent and Certificate Registrar, as
the case may be, may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in connection therewith. Any
Replacement Class A Certificate or Class B Certificate issued pursuant to this
Section 16.4 shall constitute conclusive evidence of ownership in the Trust, as
if originally issued, whether or not a lost, stolen, or destroyed Certificate
shall be found at any time.
Section 16.5 Persons Deemed Owners. Prior to due presentation of
a Certificate for registration of transfer, the Trustee, the Paying Agent, the
Transfer Agent and Certificate Registrar or any agent of any of them may treat
the Person in whose name any Certificate shall be registered as the owner of
such Certificate for the purpose of receiving distributions pursuant to Section
14.5(b) and for all other purposes whatsoever, and none of the Trustee, the
Paying Agent, the Transfer Agent and Certificate Registrar or any agent of any
of them shall be bound by any notice to the contrary.
Section 16.6 Access to List of Certificateholders' Names and
Addresses. The Transfer Agent and Certificate Registrar shall furnish to the
Servicer or the Paying Agent (or to the Trustee if the Trustee is not
63
the Transfer Agent and Certificate Registrar), within 15 days after receipt by
the Transfer Agent and Certificate Registrar of a request therefor from the
Servicer, the Trustee or the Paying Agent in writing, a list of the names and
addresses of the Certificateholders as of the most recent Record Date, in such
form as the Servicer, the Trustee or the Paying Agent may reasonably require.
If, at such time, if any, as Definitive Certificates have been issued, three or
more Certificateholders, or one or more Holders of Certificates aggregating not
less than 25% of the Pool Balance apply in writing to the Transfer Agent and
Certificate Registrar (or the Trustee if the Trustee is acting as the Transfer
Agent and Certificate Registrar), and such application states that the
applicants desire to communicate with other Certificateholders with respect to
their rights under the Agreement or under the Certificates, and such application
is accompanied by a copy of the communication that such applicants propose to
transmit, then the Transfer Agent and Certificate Registrar shall, within five
Business Days after the receipt of such application, afford such applicants
access during normal business hours to the current list of Certificateholders.
Each Certificateholder, by receiving and holding a Certificate, shall be deemed
to have agreed not to hold any of the Servicer, the Trustee, the Transfer Agent
and Certificate Registrar or any of their respective agents accountable by
reason of the disclosure of its name and address, regardless of the source from
which such information was derived.
Section 16.7 Maintenance of Office or Agency. The Transfer Agent
and Certificate Registrar shall maintain in New York, New York an office or
offices or agency or agencies where Certificates may be surrendered for
registration of transfer or exchange. The Transfer Agent and Certificate
Registrar initially designates its agency located at 00 Xxxxx Xxxxxx, 0xx Xxxxx,
Xxx Xxxx, Xxx Xxxx 00000 as its office for such purposes. The Transfer Agent and
Certificate Registrar shall give prompt written notice to the Trustee, the
Servicer and to Certificateholders of any change in the location of such office
or agency.
Section 16.8 Book-Entry Certificates. Upon original issuance, the
Class A Certificates and the Class B Certificates, other than the Class A
Certificate and the Class B Certificate representing the residual amount
64
of the Original Class A Certificate Balance and the Original Class B Certificate
Balance, respectively, which shall be issued upon the written order of the
Seller, shall be issued in the form of one or more typewritten Certificates
representing the Book-Entry Certificates, to be delivered to the initial
Clearing Agency, by, or on behalf of, the Seller. The Certificates shall
initially be registered on the Certificate Register in the name of CEDE & Co.,
the nominee of the initial Clearing Agency, and no Certificate Owner will
receive a definitive certificate representing such Certificate Owner's interest
in the Class A Certificates or the Class B Certificates, as the case may be,
except as provided in Section 16.10. Unless and until definitive, fully
registered Certificates ("Definitive Certificates") have been issued to Class A
Certificateholders or the Class B Certificateholders pursuant to Section 16.10:
(i) the provisions of this Section 16.8 shall be in full
force and effect;
(ii) the Seller, the Servicer, the Paying Agent, the
Transfer Agent and Certificate Registrar and the Trustee may
deal with the Clearing Agency and the Clearing Agency
Participants for all purposes (including the making of
distributions in respect of the Certificates and the taking of
actions by the Certificateholders) as the authorized
representatives of the Certificate Owners;
(iii) to the extent that the provisions of this Section
16.8 conflict with any other provisions of the Agreement, the
provisions of this Section 16.8 shall control;
(iv) the rights of Certificate Owners shall be exercised
only through the Clearing Agency (or to the extent Certificate
Owners are not Clearing Agency Participants through the Clearing
Agency Participants through which such Certificate Owners own
Book-Entry Certificates) and shall be limited to those
established by law and agreements between such Certificate
Owners and the Clearing Agency and/or the Clearing Agency
Participants and all references in the Agreement to actions by
Certifi-
65
cateholders shall refer to actions taken by the Clearing Agency
upon instructions from the Clearing Agency Participants, and all
references in the Agreement to distributions, notices, reports
and statements to Certificateholders shall refer to
distributions, notices, reports and statements to the Clearing
Agency or its nominee, as registered holder of the Certificates,
as the case may be, for distribution to Certificate Owners in
accordance with the procedures of the Clearing Agency; and
(v) pursuant to the Depository Agreement, the initial
Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit
distributions of principal and interest on the Certificates to
the Clearing Agency Participants, for distribution by such
Clearing Agency Participants to the Certificate Owners or their
nominees.
Section 16.9 Notices to Clearing Agency. Whenever notice or other
communication to the Certificateholders is required under the Agreement, unless
and until Definitive Certificates shall have been issued to Certificate Owners
pursuant to Section 16.10, the Trustee and the Paying Agent shall give all such
notices and communications specified herein to be given by it to
Certificateholders to the Clearing Agency.
Section 16.10 Definitive Certificates. If (i) (A) the Servicer
advises the Trustee in writing that the Clearing Agency is no longer willing or
able to discharge properly its responsibilities under the Depository Agreement
and (B) the Trustee or the Servicer is unable to locate a qualified successor,
(ii) the Servicer, at its option, advises the Trustee in writing that it elects
to terminate the book-entry system through the Clearing Agency or (iii) after
the occurrence of an Event of Servicing Termination, Certificate Owners
representing in the aggregate not less than 50% of the Pool Balance advise the
Trustee and the Clearing Agency through the Clearing Agency Participants in
writing, and the Clearing Agency shall so notify the Trustee, that the
continuation of a book-entry system through the Clearing Agency, is no longer in
the best interests of the Certificate Owners,
66
the Trustee shall notify the Clearing Agency of the occurrence of any such event
and of the availability of Definitive Certificates to Certificate Owners
requesting the same. Upon surrender to the Trustee by the Clearing Agency of
Certificates registered in the name of the nominee of the Clearing Agency,
accompanied by re-registration instructions from the Clearing Agency for
registration, the Trustee shall execute, on behalf of the Trust, authenticate
and deliver Definitive Certificates in accordance with such instructions. The
Servicer shall arrange for, and will bear all costs of, the printing and
issuance of such Definitive Certificates. None of the Seller, the Servicer, the
Transfer Agent and Certificate Registrar or the Trustee shall be liable for any
delay in delivery of such instructions and may conclusively rely on, and shall
be protected in relying on such instructions. Upon the issuance of Definitive
Certificates, all references herein to obligations imposed upon or to be
performed by the Clearing Agency shall be deemed to be imposed upon and
performed by the Transfer Agent and Certificate Registrar, to the extent
applicable with respect to such Definitive Certificates and the Trustee, the
Paying Agent and the Transfer Agent and Certificate Registrar shall recognize
the Holders of the Definitive Certificates as Certificateholders hereunder.
Section 16.11 Appointment of Paying Agent.
(a) The Paying Agent shall have the revocable power to
withdraw funds from the Certificate Account and make distributions to the
Certificateholders pursuant to Section 14.5 hereof. The Trustee may revoke such
power and remove the Paying Agent, if the Trustee determines in its sole
discretion that the Paying Agent shall have failed to perform its obligations
under the Agreement in any material respect or for other good cause. The Paying
Agent shall initially be _________. _____________ shall be permitted to resign
as Paying Agent upon 30 days' written notice to the Servicer, the Trustee and
the Collateral Agent. In the event that ____________ shall no longer be the
Paying Agent, the Trustee shall appoint a successor to act as Paying Agent,
which shall be a bank or trust company. If at any time the Trustee shall be
acting as the Paying Agent, the provisions of Sections 20.2, 20.4 and 20.5 shall
apply to the Trustee in its role as Paying Agent.
67
(b) The Trustee shall cause the Paying Agent (if other
than itself) to execute and deliver to the Trustee an instrument in which such
Paying Agent shall agree with the Trustee that such Paying Agent will hold all
sums, if any, held by it for payment to the Certificateholders in trust for the
benefit of the Certificateholders or other party entitled thereto until such
sums shall be paid to such Certificateholders or other party entitled thereto
and shall agree, and if the Trustee is the Paying Agent it hereby agrees, that
it shall comply with all requirements of the Code regarding the withholding by
the Trustee of payments in respect of federal income taxes due from Class A
Certificate Owners or Class B Certificateholders.
(c) _____________ in its capacity as initial Paying
Agent hereunder agrees that it (i) will hold all sums held by it hereunder for
payment to the Certificateholders in trust for the benefit of the
Certificateholders or other parties entitled thereto until such sums shall be
paid to such Certificateholders or other party entitled thereto and (ii) shall
comply with all requirements of the Code regarding the withholding by the
Trustee of payments in respect of federal income taxes due from Certificate
Owners.
Section 16.12 Authenticating Agent.
(a) The Trustee may appoint one or more authenticating
agents with respect to the Certificates which shall be authorized to act on
behalf of the Trustee in authenticating the Certificates in connection with the
issuance, delivery, registration of transfer, exchange or repayment of the
Certificates. Whenever reference is made in this Agreement to the authentication
of Certificates by the Trustee or the Trustee's certificate of authentication,
such reference shall be deemed to include authentication on behalf of the
Trustee by an authenticating agent and a certificate of authentication executed
on behalf of the Trustee by an authenticating agent. Any authenticating agent
appointed by the Trustee shall require the consent of the Seller, which consent
may not be unreasonably withheld.
(b) Any institution succeeding to the corporate agency
business of an authenticating agent shall continue to be an authenticating agent
without the
68
execution or filing of any paper or any further act on the part of the Trustee
or such authenticating agent.
(c) An authenticating agent may at any time resign by
giving written notice of resignation to the Trustee and the Seller. The Trustee
may at any time terminate the agency of an authenticating agent by giving notice
of termination to such authenticating agent and to the Seller. Upon receiving
such a notice of resignation or upon such a termination, or in case at any time
an authenticating agent shall cease to be acceptable to the Trustee or the
Seller, the Trustee promptly may appoint a successor authenticating agent with
the consent of the Seller. Any successor authenticating agent upon acceptance of
its appointment hereunder shall become vested with all the rights, powers and
duties of its predecessor hereunder, with like effect as if originally named as
an authenticating agent. Any successor authenticating agent appointed by the
Trustee shall require the consent of the Seller, which consent may not be
unreasonably withheld.
(d) The Servicer shall pay the Authenticating Agent
from time to time reasonable compensation for its services under this Section
16.13.
(e) The provisions of Sections 20.2, 20.4 and 20.5
shall be applicable to any authenticating agent.
(f) Pursuant to an appointment made under this Section
16.13, the Certificates may have endorsed thereon, in lieu of the Trustee's
certificate of authentication, an alternate certificate of authentication in
substantially the following form:
69
This is one of the certificates referred to in the within
mentioned Agreement.
[NAME OF TRUSTEE]
as Trustee
By:______________________
Authorized Signatory
or
_________________________
as Authenticating Agent
for the Trustee,
By:______________________
Authorized Signatory
Section 16.13 Actions of Certificateholders.
(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by the Agreement to be given or
taken by Certificateholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Certificateholders in
person or by an agent duly appointed in writing; and except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, when required, to the Seller or
the Servicer. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of the Agreement
and conclusive in favor of the Trustee, the Seller and the Servicer, if made in
the manner provided in this Section 16.14.
(b) The fact and date of the execution by any
Certificateholder of any such instrument or writing may be proved in any
reasonable manner which the Trustee deems sufficient.
(c) Any request, demand, authorization, direction,
notice, consent, waiver or other act by a Certificateholder shall bind every
Holder of every Certificate issued upon the registration of transfer thereof or
in exchange therefor or in lieu thereof, in respect of
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anything done, or omitted to be done, by the Trustee, the Seller or the Servicer
in reliance thereon, whether or not notation of such action is made upon such
Certificate.
(d) The Trustee may require such additional proof of
any matter referred to in this Section 16.14 as it shall deem necessary.
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ARTICLE XVII
The Seller
Section 17.1 Representations of Seller. The Seller makes the
following representations on which the Trustee shall rely in accepting the
Receivables in trust and authenticating the Certificates. The representations
shall speak as of the execution and delivery of the Agreement, and shall survive
the sale of the Receivables to the Trustee.
(i) Organization and Good Standing. The Seller has been
duly organized and is validly existing as a federally chartered savings
association in good standing under the laws of the United States of
America, with power and authority to own its properties and to conduct
its business as such properties are currently owned and such business is
presently conducted, and had at all relevant times, and has, power,
authority, and legal right to acquire and own the Receivables.
(ii) Power and Authority. The Seller has the power and
authority to execute and deliver the Agreement and to carry out its
terms; the Seller has full power and authority to sell and assign the
property to be sold and assigned to the Trustee as part of the Trust and
has duly authorized such sale and assignment to the Trustee by all
necessary corporate action; and the execution, delivery, and performance
of the Agreement has been duly authorized by the Seller by all necessary
corporate action.
(iii) Valid Sale; Binding Obligations. The Agreement
effects a valid sale, transfer, and assignment of the Receivables,
enforceable against creditors of and purchasers from the Seller and
constitutes a legal, valid, and binding obligation of the Seller
enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, or other similar
laws affecting the enforcement of creditors' rights in
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general and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(iv) No Violation. The consummation of the transactions
contemplated by the Agreement and the fulfillment of the terms hereof do
not (a) conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time) a
default under, the charter or bylaws of the Seller, or conflict with or
breach any of the material terms or provisions of, or constitute (with
or without notice or lapse of time) a default under, any indenture,
agreement, or other instrument to which the Seller is a party or by
which it is bound, (b) result in the creation or imposition of any lien
upon any of its properties pursuant to the terms of any such indenture,
agreement, or other instrument, or (c) violate any law or, to the best
of the Seller's knowledge, any order, rule, or regulation applicable to
the Seller of any court or of any federal or state regulatory body,
administrative agency, or other governmental instrumentality having
jurisdiction over the Seller or its properties.
(v) No Proceedings. There are no proceedings or
investigations pending, or, to the best of the Seller's knowledge,
threatened, before any court, regulatory body, administrative agency, or
other governmental instrumentality having jurisdiction over the Seller
or its properties (a) asserting the invalidity of the Agreement or the
Certificates, (b) seeking to prevent the issuance of the Certificates or
the consummation of any of the transactions contemplated by the
Agreement, (c) seeking any determination or ruling that might materially
and adversely affect the performance by the Seller of its obligations
under, or the validity or enforceability of, the Agreement or the
Certificates or (d) relating to the Seller and which might adversely
affect the federal income tax attributes of the Certificates.
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Section 17.2 Liability of Seller; Indemnities. The Seller shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Seller in such capacity under the Agreement and
shall have no other obligations or liabilities hereunder.
The Seller shall indemnify, defend and hold harmless the Trustee
and the Trust from and against any taxes that may at any time be asserted
against the Trustee or the Trust with respect to, and as of the date of, the
sale of the Receivables to the Trust or the issuance and original sale of the
Certificates, including any sales, gross receipts, general corporation, tangible
or intangible personal property, privilege, or license taxes (but not, in the
case of the Trust, including any taxes asserted with respect to ownership of the
Receivables or federal or other income taxes, including franchise taxes measured
by net income), arising out of the transactions contemplated by the Agreement,
and costs and expenses in defending against the same.
The Seller shall indemnify, defend, and hold harmless the
Trustee, its officers, directors, employees and agents or the Trust from and
against any loss, liability or expense incurred by reason of (i) the Seller's
willful misfeasance, bad faith, or negligence in the performance of its duties
hereunder, or by reason of reckless disregard of the obligations and duties
hereunder and (ii) the Seller's violation of federal or state securities laws in
connection with the registration of the sale of the Certificates.
Indemnification under this Section 17.2 shall survive the
termination of this Agreement and the resignation or removal of the Trustee and
shall include reasonable fees and expenses of counsel and expenses of
litigation. If the Seller shall have made any indemnity payments to the Trust or
the Trustee pursuant to this Section 17.2 and the Trust or the Trustee
thereafter shall collect any of such amounts from others, the Trust shall repay
such amounts to the Seller, without interest.
Section 17.3 Merger or Consolidation of Seller. Any corporation
or other entity (i) into which the Seller may be merged or consolidated, (ii)
which may result from any merger, conversion, or consolidation to which the
Seller shall be a party, or (iii) which may succeed to all
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or substantially all of the business of the Seller, which corporation or other
entity executes an agreement of assumption to perform every obligation of the
Seller under the Agreement, shall be the successor to the Seller hereunder
without the execution or filing of any document or any further act by any of the
parties to the Agreement. The Seller shall give prompt written notice of any
merger or consolidation to the Trustee, the Servicer and the Rating Agencies.
Section 17.4 Limitation on Liability of Seller and Others. The
Seller and any director, officer, employee or agent of the Seller 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 Seller shall not be under any obligation under this Agreement to
appear in, prosecute, or defend any legal action that shall be unrelated to its
obligations under the Agreement, and that in its opinion may involve it in any
expense or liability.
Section 17.5 Seller May Own Certificates. The Seller and any
Person controlling, controlled by, or under common control with the Seller may
in its individual or any other capacity become the owner or pledgee of
Certificates with the same rights as it would have if it were not the Seller or
an affiliate thereof, except as otherwise provided in the definition of
"Certificateholder", "Class A Certificateholder" and "Class B Certificateholder"
specified in Section 11.1. Certificates so owned by or pledged to the Seller or
such controlling or commonly controlled Person shall have an equal and
proportionate benefit under the provisions of the Agreement, without preference,
priority, or distinction as among all of the Certificates.
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ARTICLE XVIII
The Servicer
Section 18.1 Representations of Servicer. The Servicer makes the
following representations on which the Trustee shall rely in accepting the
Receivables in trust and authenticating the Certificates. The representations
shall speak as of the execution and delivery of the Agreement, and shall survive
the sale of the Receivables to the Trustee.
(i) Organization and Good Standing. The Servicer has been
duly organized and is validly existing as a federally chartered savings
association or corporation and is in good standing under the laws of the
United States of America or its state of incorporation, with power and
authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted,
and had at all relevant times, and has, power, authority, and legal
right to acquire, own, sell, and service the Receivables and to hold the
Receivable Files as custodian on behalf of the Trustee.
(ii) Power and Authority. The Servicer has the power and
authority to execute and deliver the Agreement and to carry out its
terms; and the execution, delivery, and performance of the Agreement has
been duly authorized by the Servicer by all necessary corporate action.
(iii) Binding Obligations. The Agreement constitutes a
legal, valid, and binding obligation of the Servicer enforceable in
accordance with its terms subject, as to enforcement, to applicable
bankruptcy, insolvency, reorganization, liquidation or other similar
laws and equitable principles relating to or affecting the enforcement
of creditors' rights in general and by general principles of equity
regardless of whether such enforceability is considered in a proceeding
in equity or law.
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(iv) No Violation. The consummation of the transactions
contemplated by the Agreement and the fulfillment of the terms hereof do
not conflict with, result in any breach of any of the terms and
provisions of, nor constitute (a) (with or without notice or lapse of
time) a default under, the articles of association or bylaws of the
Servicer, or conflict with or breach any of the material terms or
provisions of, or constitute (with or without notice or lapse of time) a
default under, any indenture, agreement, or other instrument to which
the Servicer is a party or by which it shall be bound, (b) result in the
creation or imposition of any lien upon any of its properties pursuant
to the terms of any such indenture, agreement, or other instrument or
(c) violate any law or, to the best of the Servicer's knowledge, any
order, rule, or regulation applicable to the Servicer of any court or of
any federal or state regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over the Servicer or
its properties.
(v) No Proceedings. There are no proceedings or
investigations pending, or to the best of the Servicer's knowledge,
threatened, before any court, regulatory body, administrative agency, or
other governmental instrumentality having jurisdiction over the Servicer
or its properties (a) asserting the invalidity of the Agreement or the
Certificates, (b) seeking to prevent the issuance of the Certificates or
the consummation of any of the transactions contemplated by the
Agreement, (c) seeking any determination or ruling that might materially
and adversely affect the performance by the Servicer of its obligations
under, or the validity or enforceability of, the Agreement or the
Certificates, or (d) relating to the Servicer and which might adversely
affect the federal income tax attributes of the Certificates.
(vi) Fidelity Bond. The Servicer maintains a fidelity bond
in such form and amount as is customary for banks acting as cus-
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todian of funds and documents in respect of retail automotive
installment sales contracts.
Section 18.2 Liability of Servicer; Indemnities. The Servicer
shall be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Servicer under the Agreement and shall have no
other obligations or liabilities hereunder.
(i) The Servicer shall defend, indemnify, and hold
harmless the Trustee, its officers, directors, employees and agents, the
Trust and the Certificateholders from and against any and all costs,
expenses, losses, damages, claims, and liabilities, arising out of or
resulting from the use, ownership, or operation by the Servicer or any
affiliate thereof of a Financed Vehicle.
(ii) The Servicer shall indemnify, defend, and hold
harmless the Trustee, its officers, directors, employees and agents from
and against any taxes that may at any time be asserted against the
Trustee or the Trust with respect to the transactions contemplated in
the Agreement, including, without limitation, any sales, gross receipts,
general corporation, tangible or intangible personal property,
privilege, or license taxes (but not including any taxes asserted with
respect to, and as of the date of, the sale of the Receivables to the
Trust or the issuance and original sale of the Class A Certificates and
the Class B Certificates, or asserted with respect to ownership of the
Receivables or federal or other income taxes, including franchise taxes
measured by net income) arising out of distributions on the Certificates
and costs and expenses in defending against the same.
(iii) The Servicer shall indemnify, defend, and hold
harmless the Trustee, its officers, directors, employees and agents and
the Trust and the Certificateholders from and against any and all costs,
expenses, losses, claims, damages, and liabilities to the extent that
such cost, expense, loss, claim, damage, or
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liability arose out of, or was imposed upon the Trustee and the Trust or
the Certificateholders through the willful misfeasance, negligence, or
bad faith of the Servicer in the performance of its duties under the
Agreement or by reason of reckless disregard of its obligations and
duties under the Agreement.
(iv) The Servicer shall indemnify, defend, and hold
harmless the Trustee, its officers, directors, employees and agents,
from and against all costs, expenses, losses, claims, damages, and
liabilities arising out of or incurred in connection with the acceptance
or performance of the trusts and duties herein contained, except to the
extent that such costs, expenses, losses, claims, damage or liabilities:
(1) shall be due to the willful misfeasance, bad faith or negligence of
the Trustee; (2) shall arise from the Trustee's breach of any of its
representations or warranties set forth in Section 20.14; or (3) shall
be one as to which the Seller is required to indemnify the Trustee.
Indemnification under this Section 18.2 shall include reasonable
fees and expenses of counsel and expenses of litigation. If the Servicer shall
have made any indemnity payments pursuant to this Section 18.2 and the recipient
thereafter collects any of such amounts from others, the recipient shall
promptly repay such amounts to the Servicer, without interest. The
indemnification obligations of the Servicer set forth in this Section 18.2 shall
survive the termination of this Agreement, the termination of the Servicer with
respect to any act or failure to act which occurs prior to such Servicer's
termination and the resignation or removal of the Trustee.
Section 18.3 Merger or Consolidation of Servicer. Any corporation
or other entity (i) into which the Servicer may be merged or consolidated, (ii)
which may result from any merger, conversion, or consolidation to which the
Servicer shall be a party, or (iii) which may succeed to all or substantially
all of the business of the Servicer, which corporation or other entity executes
an agreement of assumption to perform every obligation of the Servicer
hereunder, shall be the successor to the Servicer under the Agreement without
the execution or filing of any
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document or any further act on the part of any of the parties to the Agreement.
The Servicer shall promptly inform the Trustee, the Seller and the Rating
Agencies in writing of any such merger or consolidation.
Section 18.4 Limitation on Liability of Servicer and Others.
(a) Neither the Servicer nor any of the directors or
officers or employees or agents of the Servicer shall be under any liability to
the Trust, the Trustee, or the Certificateholders, except as provided under the
Agreement, for any action taken or for refraining from the taking of any action
pursuant to the Agreement or for errors in judgment; provided, however, that
this provision shall not protect the Servicer or any such Person against any
liability that would otherwise be imposed by reason of willful misfeasance,
negligence, or bad faith in the performance of duties or by reason of reckless
disregard of obligations and duties under the Agreement. The Servicer and any
director or officer or employee or agent of the Servicer may rely in good faith
on the advice of counsel or on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising under the
Agreement.
(b) The Servicer and any director or officer or
employee or agent of the Servicer shall be indemnified by the Trust and held
harmless against any loss, liability, or expense including reasonable attorneys'
fees and expenses incurred in connection with any legal action relating to the
performance of the Servicer's duties under the Agreement, other than (i) any
loss or liability otherwise reimbursable pursuant to the Agreement; (ii) any
loss, liability, or expense incurred solely by reason of the Servicer's willful
misfeasance, negligence, or bad faith in the performance of its duties hereunder
or by reason of reckless disregard of its obligations and duties under the
Agreement; (iii) any loss, liability, or expense for which the Trust is to be
indemnified by the Servicer under the Agreement, and (iv) any loss, liability,
or expense incurred by the Person to be indemnified for which loss, liability,
or expense, such Person shall be indemnified by the Trust. Any amounts due the
Servicer pursuant to this subsection shall be payable on a Distribution Date
from the Total Collections on deposit in the Certificate Account only after all
payments
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required to be made on such date to the Certificateholders and the Servicer have
been made, payments of amounts, if any, due the Trustee from the Trust pursuant
to Section 20.8 have been made, and deposits of any amount required to be
deposited into the Reserve Account pursuant to Section 14.5(b)(vi) to maintain
the amount on deposit therein (exclusive of investment income and earnings on
amounts on deposit therein) at the Specified Reserve Account Balance on such
date have been made.
(c) Except as provided in the Agreement, the Servicer
shall not be under any obligation to appear in, prosecute, or defend any legal
action that shall not be incidental to its obligations under the Agreement, and
that in its opinion may involve it in any expense or liability; provided,
however, that the Servicer may undertake any reasonable action that it may deem
necessary or desirable in respect of the Agreement and the rights and duties of
the parties to the Agreement and the interests of the Certificateholders under
the Agreement. In such event, the legal expenses and costs of such action and
any liability resulting therefrom shall be expenses, costs, and liabilities of
the Trust, and the Servicer shall be entitled to be reimbursed therefor. Any
amounts due the Servicer pursuant to this subsection shall be payable on a
Distribution Date from the Total Collections on deposit in the Certificate
Account only after all payments required to be made on such date to the
Certificateholders and the Servicer have been made, payments of amounts, if any,
due the Trustee from the Trust pursuant to Section 20.8 have been made and
deposits of any amount required to be deposited into the Reserve Account
pursuant to Section 14.5(b)(vi) to maintain the amount on deposit therein
(exclusive of investment income and earnings on amounts on deposit therein) at
the Specified Reserve Account Balance on such date have been made.
The Person to be indemnified shall provide the Trustee with a
certificate and accompanying Opinion of Counsel requesting indemnification and
setting forth the basis for such request.
Section 18.5 Servicer Not To Resign. The Servicer shall not
resign from its obligations and duties under the Agreement except (i) upon
determination that the performance of its duties shall no longer be permissible
under applicable law or (ii) in the event of the appoint-
81
ment of a successor Servicer pursuant to Section 19.2, upon satisfaction of the
Rating Agency Condition. Notice of any such determination permitting the
resignation of USAA Federal Savings Bank shall be communicated to the Trustee,
and the Rating Agencies at the earliest practicable time (and, if such
communication is not in writing, shall be confirmed in writing at the earliest
practicable time) and any such determination permitting the resignation of the
Servicer shall be evidenced by an Opinion of Counsel to such effect delivered to
the Trustee concurrently with such notice. No such resignation shall become
effective until the Trustee (which shall not be obligated to act as successor
Servicer if the Servicer has resigned for a reason other than the performance of
its duties are no longer permissible under applicable law) or a successor
Servicer shall have assumed the responsibilities and obligations of the Servicer
in accordance with Section 19.2.
Section 18.6 Delegation of Duties. So long as USAA Federal
Savings Bank or the Trustee acts as Servicer, the Servicer shall have the right,
in the ordinary course of its business, to delegate any of its duties under this
Agreement to any Person. Any compensation payable to such Person shall be paid
by the Servicer from its own funds and none of the Trust, the Trustee or the
Certificateholders shall have any liability to such Person with respect thereto.
Notwithstanding any delegation of duties by the Servicer pursuant to this
Section 18.6, the Servicer shall not be relieved of its liability and
responsibility with respect to such duties, and any such delegation shall not
constitute a resignation within the meaning of Section 18.5 hereof. Any
agreement that may be entered into by the Servicer and a Person that provides
for any delegation of the Servicer's duties hereunder shall be deemed to be
between the Servicer and such Person alone, and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect thereto.
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ARTICLE XIX
Events of Servicing Termination
Section 19.1 Events of Servicing Termination. If any one of the
following events ("Events of Servicing Termination") shall occur and be
continuing:
(i) Any failure by the Servicer to deliver to the Trustee
the Servicer's Certificate for the related Collection Period, or any
failure by the Servicer (or so long as the Seller is the Servicer, the
Seller) to deliver to the Trustee, for distribution to
Certificateholders, any proceeds or payment required to be so delivered
under the terms of the Certificates and the Agreement (or, in the case
of a payment or deposit to be made not later than any Deposit Date, the
failure to make such payment or deposit on the related Distribution
Date), in each case that continues unremedied for a period of five
Business Days after (A) discovery by an officer of the Servicer (or so
long as the Seller is the Servicer, the Seller) or (B) written notice
(1) to the Servicer by the Trustee or (2) to the Trustee and the
Servicer (or so long as the Seller is the Servicer, the Seller) by the
Holders of Certificates evidencing not less than 25% of the Pool
Balance; or
(ii) Failure on the part of the Servicer (or so long as
the Seller is the Servicer, the Seller) duly to observe or to perform in
any material respect any other covenants or agreements of the Servicer
(or so long as the Seller is the Servicer, the Seller) set forth in the
Certificates or in the Agreement, which failure shall (a) materially and
adversely affect the rights of the Trust or the Certificateholders
(which determination shall be made without regard to whether funds on
deposit in the Reserve Account are available to the Certificateholders)
and (b) continues unremedied for a period of 60 days after the date on
which written notice of such failure, requiring the same to be remedied,
shall have been given (1) to the Servicer (or so long as the Seller is
the
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Servicer, the Seller) by the Trustee or (2) to the Trustee and the
Servicer (or so long as the Seller is the Servicer, the Seller) by the
Holders of Certificates evidencing not less than 25% of the Pool
Balance; provided, however, that a failure on the part of the Servicer,
other than USAA Federal Savings Bank for so long as it is the Servicer,
to observe and comply with the provisions of Section 18.6 or to meet the
eligibility criteria set forth in Section 19.2 shall constitute an Event
of Servicing Termination without regard to (a) and (b) above; or
(iii) The entry of a decree or order by a court or agency
or supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver, or liquidator for the Servicer
in any insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings, or for the winding up or
liquidation of their respective affairs, and the continuance of any such
decree or order unstayed and in effect for a period of 60 consecutive
days; or
(iv) The consent by the Servicer to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities, or similar proceedings of
or relating to the Servicer or of or relating to substantially all of
their property; or the Servicer shall admit in writing its inability to
pay its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations;
then, and in each and every case and so long as an Event of Servicing
Termination shall not have been remedied, either the Trustee, or the Holders of
Certificates evidencing not less than 25% of the Pool Balance, by notice given
in writing to the Servicer (and to the Trustee if given by the
Certificateholders) may terminate all of the rights and obligations of the
Servicer under the Agreement. On or after the receipt by the Servicer of such
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written notice, all authority and power of the Servicer under the Agreement,
whether with respect to the Certificates or the Receivables or otherwise, shall
pass to and be vested in the Trustee pursuant to this Section 19.1; and, without
limitation, the Trustee shall be hereby authorized and empowered to execute and
deliver, on behalf of the predecessor 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
Receivable Files, or otherwise. The predecessor Servicer shall cooperate with
the successor Servicer and the Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer under the Agreement,
including the transfer to the successor Servicer for administration by it of all
cash amounts that shall at the time be held by the predecessor Servicer for
deposit, shall have been deposited by the Servicer in the Certificate Account,
or shall thereafter be received with respect to a Receivable. All reasonable
costs and expenses (including attorneys' fees and disbursements) incurred in
connection with transferring the Receivable Files to the successor Servicer and
amending the Agreement to reflect such succession as Servicer pursuant to this
Section 19.1 shall be paid by the predecessor Servicer upon presentation of
reasonable documentation of such costs and expenses. The Trustee shall give
written notice of any termination of the Servicer to the Certificateholders and
the Rating Agencies.
Section 19.2 Trustee to Act; Appointment of Successor. Upon the
Servicer's receipt of notice of termination pursuant to Section 19.1 the Trustee
shall, and upon the Servicer's resignation pursuant to Section 18.5 the Trustee
may, be the successor in all respects to the Servicer in its capacity as
Servicer under the Agreement, and, in such case, shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on the Servicer by the terms and provisions of the Agreement. As
compensation therefor, the Trustee shall be entitled to such compensation
(whether payable out of the Certificate Account or otherwise) as the Servicer
would have been entitled to under the Agreement if no such notice of termination
or resignation had been given. Notwithstanding the above, the Trustee may, if it
shall be unwilling so to act, or shall, if it shall
85
be legally unable so to act, appoint, or petition a court of competent
jurisdiction to appoint, any established financial institution, having a net
worth of not less than $100,000,000 as of the last day of the most recent fiscal
quarter for such institution and whose regular business shall include the
servicing of automobile receivables, as successor Servicer under the Agreement;
provided, that the appointment of any such successor Servicer will not result in
the withdrawal or reduction of the outstanding ratings assigned to the
Certificates by the Rating Agencies. In connection with such appointment, the
Trustee may make such arrangements for the compensation of such successor
Servicer out of payments on Receivables as it and such successor Servicer shall
agree; provided, however, that no such compensation shall be in excess of that
permitted the Servicer under the Agreement. The Trustee and such successor
Servicer shall take such action, consistent with the Agreement, as shall be
necessary to effectuate any such succession. Unless the Trustee shall be
prohibited by law from so acting, the Trustee shall not be relieved of its
duties as successor Servicer under this Section 19.2 until the newly appointed
successor Servicer shall have assumed the responsibilities and obligations of
the Servicer under the Agreement.
Section 19.3 Notification to Certificateholders. Upon delivery of
written notice by the Trustee to the Servicer or receipt by the Trustee of
written notice from Holders of Certificates evidencing not less than 25% of the
Pool Balance of an Event of Servicing Termination or upon any Servicer
termination, or appointment of a successor Servicer pursuant to this Article
XIX, the Trustee shall give prompt written notice thereof to Certificateholders
at their respective addresses of record, to the Seller and to the Rating
Agencies.
Section 19.4 Waiver of Past Defaults. The Holders of Certificates
evidencing not less than 51% of the Pool Balance, may, on behalf of all Holders
of Certificates, waive any default by the Servicer in the performance of its
obligations hereunder and its consequences, except a default in the failure to
make any required deposits to or payments from the Certificate Account in
accordance with this Agreement. Upon any such waiver of a past default, such
default shall cease to exist, and any Event of Servicing Termination arising
therefrom shall be deemed to have been remedied for every purpose of this
86
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly so waived.
The Servicer shall give prompt written notice of any waiver to the Rating
Agencies.
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ARTICLE XX
The Trustee
Section 20.1 No Power to Engage in Business or to Vary
Investments. Notwithstanding any provision or agreement to the contrary in this
Agreement or in any other agreement, the Trustee, acting on behalf of the Trust
(but not individually), shall not have any power to engage in any business,
commercial or other activity for profit, and the Trustee and the Servicer shall
not have any power to vary the Trust estate, whether consisting of a Receivable,
a Permitted Investment or any other amount (other than cash payments received
with respect to Receivables) in any account maintained for the benefit of the
Trust or the Certificateholders or Certificate Owners, by disposition of said
property, investment or amount and the reinvestment of the proceeds realized or
by any other action calculated to take advantage of any variation or change in
the market or in market conditions, for the purpose of improving the investment
or return of the Certificateholders or Certificate Owners.
Section 20.2 Duties of Trustee. The Trustee, both prior to and
after the occurrence of an Event of Servicing Termination, shall undertake to
perform such duties and only such duties as are specifically set forth in the
Agreement. If an Event of Servicing Termination known to the Trustee shall have
occurred and shall not have been cured, the Trustee shall exercise such of the
rights and powers vested in it by the Agreement, and shall use the same degree
of care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs; provided,
however, that if the Trustee shall assume the duties of the Servicer pursuant to
Section 19.2, the Trustee in performing such duties shall use the degree of
skill and attention customarily exercised by a servicer with respect to
automobile and light-duty truck receivables that it services for itself.
The Trustee, upon receipt of any resolutions, certificates,
statements, opinions, reports, documents, orders, or other instruments furnished
to the Trustee that shall be specifically required to be furnished pursuant to
any provision of the Agreement, shall examine them to determine whether they
conform to the requirements of the
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Agreement; provided, however, that the Trustee shall not be responsible for the
accuracy or content of any such resolution, certificate, statement, opinion,
report, document, order or other instrument furnished by the Servicer to the
Trustee pursuant to this Agreement.
No provision of the Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own bad faith or willful misfeasance; provided, however, that:
(i) Prior to the occurrence of an Event of Servicing
Termination, and after the curing of all such Events of Servicing
Termination that may have occurred, the duties and obligations of the
Trustee shall be determined solely by the express provisions of the
Agreement, the Trustee shall not be liable except for the performance of
such duties and obligations as shall be specifically set forth in the
Agreement, no implied covenants or obligations shall be read into the
Agreement against the Trustee, the permissible right of the Trustee to
do things enumerated in the Agreement shall not be construed as a duty
and, in the absence of bad faith on the part of the Trustee, or manifest
error, the Trustee may conclusively rely upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
the Agreement as to the truth of the statements made and the correctness
of the opinions expressed therein;
(ii) The Trustee shall not be personally liable for an
error of judgment made in good faith by an Authorized Officer of the
Trustee, unless it shall be proved that the Trustee shall have been
negligent in ascertaining the pertinent facts; and
(iii) The Trustee shall not be personally liable with
respect to any action taken, suffered, or omitted to be taken in good
faith in accordance with the Agreement or at the direction of the
Holders of Certificates evidencing not less than 25% of the Pool Balance
relating to the time, method, and place of conducting
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any proceeding or any remedy available to the Trustee, or exercising any
trust or power conferred upon the Trustee, under the Agreement.
The Trustee shall not be required to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there shall be
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability shall not be reasonably assured to it,
and none of the provisions contained in the Agreement shall in any event require
the Trustee to perform, or be responsible for the manner of performance of, any
of the obligations of the Servicer (including its obligations as custodian)
under the Agreement except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicer in accordance with the terms of the Agreement.
The Trustee shall not be charged with knowledge of an Event of
Servicing Termination until such time as an Authorized Officer shall have actual
knowledge or have received written notice thereof.
Except for actions expressly authorized by the Agreement or,
based upon an Opinion of Counsel, in the best interests of Certificateholders,
the Trustee shall take no action reasonably likely to impair the security
interests created or existing under any Receivable or to impair the value of any
Receivable.
All information obtained by the Trustee regarding the Obligors
and the Receivables, whether upon the exercise of its rights under the Agreement
or otherwise, shall be maintained by the Trustee in confidence and shall not be
disclosed to any other Person, other than internal counsel, unless such
disclosure is pursuant to the terms of the Agreement or required by any
applicable law or regulation.
In the event that the Paying Agent or the Transfer Agent and
Certificate Registrar shall fail to perform any obligation, duty or agreement in
the manner or on the day required to be performed by the Paying Agent or the
Transfer Agent and Certificate Registrar, as the case may be, under the
Agreement, the Trustee shall be obligated
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promptly upon an Authorized Officer obtaining knowledge thereof to perform such
obligation, duty or agreement in the manner so required to the extent the
information necessary to such performance is reasonably available to the Trustee
after the Trustee has made a reasonable effort to obtain such information. The
Trustee shall not be liable for the acts or omissions of any Paying Agent, any
Authenticating Agent or the Transfer Agent and Certificate Registrar appointed
hereunder with due care by the Trustee hereunder.
Section 20.3 Trustee's Assignment of Repurchased Receivables and
Trustee's Certificate. With respect to any Receivable repurchased by the Seller
pursuant to Section 12.2 or purchased by the Servicer pursuant to Section 13.7
or 21.2, the Trustee shall (i) assign, without recourse, representation, or
warranty, to the Seller or the Servicer, as the case may be, all the Trust's
right, title, and interest in and to such Receivable and the other property
conveyed to the Trust pursuant to Section 2.1 with respect to such Receivable,
and all security and documents relating thereto, such assignment being an
assignment outright and not for security and (ii) as soon as practicable after a
Receivable shall have been assigned to the Seller or the Servicer, as the case
may be, execute a Trustee's Certificate, including the date of execution of such
Trustee's Certificate and the date of the Agreement, and accompanied by a copy
of the Servicer's Certificate specified for the related Collection Period. If,
in any enforcement suit or legal proceeding, it shall be held that the Servicer
may not enforce a Receivable on the ground that it shall not be a real party in
interest or a holder entitled to enforce the Receivable, the Trustee shall, at
the Servicer's expense, take such steps as the Trustee or the Servicer deems
necessary to enforce the Receivable, including bringing suit in the Trustee's
name or the names of the Trust or the Certificateholders; provided, that nothing
in this Section 20.3 shall require the Trustee to qualify to do business in a
state in which it is not so qualified on the date of this Agreement.
Section 20.4 Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 20.2:
(i) The Trustee may request, and may rely and shall be
protected in acting or re-
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fraining from acting upon, any resolution, certificate of auditors or
any other certificate, statement, instrument, opinion, report, notice,
request, consent, order, appraisal, bond, or other paper or document
(including the annual auditor's report and the letter of independent
certified public accountants described in Section 13.11, the Servicer's
Certificate described in Section 13.9, and the annual compliance
statement described in Section 13.10) believed by it to be genuine and
to have been signed or presented by the proper party or parties.
(ii) The Trustee may consult with counsel and any advice
or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
under the Agreement in good faith and in accordance with such advice or
Opinion of Counsel, which counsel has been selected by the Trustee with
due care. A copy of any such Opinion of Counsel shall be provided to the
Seller and the Servicer.
(iii) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by the Agreement, or to
institute, conduct or defend any litigation under the Agreement or in
relation to the Agreement, at the request, order or direction of any of
the Certificateholders pursuant to the provisions of the Agreement,
unless such Certificateholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses, and
liabilities that may be incurred therein or thereby; provided, however,
that the Trustee shall have the right to decline to follow any such
request, order or direction if the Trustee, in accordance with an
Opinion of Counsel determines that the action or proceeding may not
lawfully be taken or if the Trustee in good faith determines that the
action or proceeding so directed would involve it in personal liability
or be unjustly prejudicial to the non-assenting Certificateholders;
nothing contained in the Agreement, however, shall relieve the Trustee
of the obligations, upon the occurrence of an
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Event of Servicing Termination (that shall not have been cured), to
exercise such of the rights and powers vested in it by the Agreement,
and to use the same degree of care and skill in their exercise as a
prudent person would exercise or use under the circumstances in the
conduct of his or her own affairs.
(iv) The Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by it
to be authorized or within the discretion or rights or powers conferred
upon it by the Agreement.
(v) Prior to the occurrence of an Event of Servicing
Termination and after the curing of all Events of Servicing Termination
that may have occurred, the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond, or other paper or document, unless
requested in writing to do so by Holders of Certificates evidencing not
less than 25% of the Pool Balance; provided, however, that if the
payment within a reasonable time to the Trustee of the costs, expenses,
or liabilities likely to be incurred by it in the making of such
investigation shall be, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of
the Agreement, the Trustee may require reasonable indemnity against such
cost, expense, or liability or payment of such expenses as a condition
precedent to so proceeding. The reasonable expense of every such
examination shall be paid by the Servicer or, if paid by the Trustee,
shall be reimbursed by the Servicer upon demand. Nothing in this clause
(v) shall affect the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the
Obligors.
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any
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duties under the Agreement either directly or by or through agents or
attorneys or a custodian, which agents or attorneys shall have any or
all of the rights, powers, duties and obligations of the Trustee
conferred on them by such appointment.
Section 20.5 Trustee Not Liable for Certificates or Receivables.
The recitals contained in the Agreement and in the Certificates shall be taken
as the statements of the Seller or the Servicer, as the case may be, and the
Trustee assumes no responsibility for the correctness thereof. The Trustee shall
make no representations as to the validity or sufficiency of the Agreement or of
the Certificates (other than execution by the Trustee on behalf of the Trust of,
or the authentication on, the Certificates), or of any Receivable or related
document. The Trustee shall have no obligation to perform any of the duties of
the Seller or Servicer unless explicitly set forth in the Agreement. The Trustee
shall at no time have any responsibility or liability for or with respect to the
legality, validity, and enforceability of any security interest in any Financed
Vehicle or any Receivable, or the perfection and priority of such a security
interest or the maintenance of any such perfection and priority; the filing of
any financing or continuation statement in any public office; the preparation or
filing of any report or statement with the Securities and Exchange Commission;
the efficacy of the Trust or its ability to generate the payments to be
distributed to Certificateholders under the Agreement; the existence, condition,
location, and ownership of any Financed Vehicle; the existence and
enforceability of any comprehensive and collision insurance or credit life or
credit disability insurance or Force Placed Insurance; the existence and
contents of any Receivable or any computer or other record thereof; the validity
of the assignment of any Receivable to the Trust or of any intervening
assignment; the completeness of any Receivable; any claim or default asserted
against a Receivable; the performance or enforcement of any Receivable; the
compliance by the Seller or the Servicer with any warranty or representation
made under the Agreement or in any related document and the accuracy of any such
warranty or representation (except after the Trustee's receipt of notice or
other discovery of any noncompliance therewith or any breach thereof or as
otherwise provided herein); the satisfaction of any condition
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relating to the Receivables; any investment of funds by the Servicer or any loss
resulting therefrom (it being understood that the Trustee shall remain
responsible for any Trust property that it may hold); the acts or omissions of
the Seller, Servicer (including in its capacity as custodian hereunder), or any
Obligor; any action of the Servicer taken in the name of the Trustee; or any
action by the Trustee taken at the instruction of the Servicer; provided,
however, that the foregoing shall not relieve the Trustee of its obligation to
perform its duties under the Agreement. Except with respect to a claim based on
the failure of the Trustee to perform its duties under the Agreement or based on
the Trustee's willful misconduct, negligence, or bad faith, or based on the
Trustee's breach of a representation and warranty specified in Section 20.14, no
recourse shall be had for any claim or defense based on any provision of the
Agreement, the Certificates, or any Receivable or assignment thereof against the
Trustee in its individual capacity. The Trustee shall not have any personal
obligation, liability, or duty whatsoever to any Certificateholder or any other
Person with respect to any such claim or defense, and any such claim or defense
shall be asserted solely against the Trust or any indemnitor who shall furnish
indemnity as provided in the Agreement. The Trustee shall not be accountable for
the use or application by the Seller of any of the Certificates or of the
proceeds of such Certificates, or for the use or application of any funds paid
to the Servicer in respect of the Receivables.
Section 20.6 Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
and may deal with the Seller and the Servicer in banking transactions with the
same rights as it would have if it were not Trustee.
Section 20.7 Trustee's Fees and Expenses. By execution and
delivery of the Agreement, the Servicer shall covenant and agree to pay to the
Trustee, and the Trustee shall be entitled to, reasonable compensation (which
shall not be limited by any provision of law in regard to the compensation of a
trustee of an express trust) for all services rendered by it in the execution of
the trusts created by the Agreement and in the exercise and performance of any
of the powers and duties under the Agreement of the Trustee, and the Servicer
shall pay or reimburse the Trustee upon its request for all reasonable
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expenses, disbursements, and advances (including the reasonable compensation and
the expenses and disbursements of its counsel and of all persons not regularly
in its employ) incurred or made by the Trustee under the Agreement (including
expenses, disbursements, and advances incurred in defense of any action brought
against it in connection with the Agreement) except any such expense,
disbursement, or advance as may arise from its negligence, willful misfeasance,
or bad faith or that is the responsibility of Certificateholders under the
Agreement. The Servicer's obligation to pay such compensation and expenses shall
survive the termination of such Servicer to the extent that such obligation is a
result of services rendered prior to such Servicer's termination. Additionally,
the Servicer, pursuant to Section 20.8, shall indemnify the Trustee with respect
to certain matters, and Certificateholders, pursuant to Section 22.3, shall upon
the circumstances therein set forth, indemnify the Trustee under certain
circumstances. The provisions of this Section 20.7 shall survive the termination
of this Agreement and the resignation or removal of the Trustee.
Section 20.8 Indemnity of Trustee. The Trustee and its officers,
directors, agents and employees shall be indemnified by the Servicer and held
harmless against any loss, liability, or expense (including reasonable
attorneys' fees and expenses and expenses of litigation) arising out of or
incurred in connection with the acceptance or performance of the trusts and
duties contained in the Agreement to the extent that (i) such loss, liability,
or expense shall not have been incurred by reason of the Trustee's willful
misfeasance, bad faith, or negligence, and (ii) such loss, liability, or expense
shall not have been incurred by reason of the Trustee's breach of its
representations and warranties pursuant to Section 20.14; provided, however,
that the obligations of the Servicer in this Section 20.8 shall survive such
Servicer's termination with respect to the performance of such Servicer prior to
such Servicer's termination and provided, further, that if the Servicer fails to
indemnify the Trustee and its officers, directors, agents and employees pursuant
to this Section 20.8, then such indemnity shall be provided by the Trust, but
any amounts so payable to the Trustee by the Trust pursuant to this Section 20.8
shall be payable on a Distribution Date only after all payments required to be
made on such date to the Certificateholders have been made, and, with respect to
a successor Servicer,
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if any, the Servicing Fee has been paid. The provisions of this Section 20.8
shall survive the termination of this Agreement and the resignation or removal
of the Trustee.
Section 20.9 Eligibility Requirements for Trustee. The Trustee
under the Agreement shall at all times be a state banking corporation or
national banking association organized and doing business under the laws of such
state or the United States of America; authorized under such laws to exercise
corporate trust powers; and having a combined capital and surplus of at least
$100,000,000 as of the last day of the most recent fiscal quarter for such
institution and subject to supervision or examination by federal or state
authorities. If such state banking corporation or national banking association
shall publish reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purpose of this Section 20.9, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. The Trustee shall at all
times be rated not lower than BBB- and Baa3 by Xxxxx'x or such other ratings as
are acceptable to the Rating Agencies. In case at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section 20.9, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 20.10.
Section 20.10 Resignation or Removal of Trustee. The Trustee may
at any time resign and be discharged from the trust hereby created by giving
written notice thereof to the Servicer. Upon giving such notice of resignation,
the Trustee shall promptly appoint a successor Trustee by written instrument
which instrument shall be delivered to the successor Trustee. If no successor
Trustee shall have been so appointed and have accepted appointment within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee. The Servicer shall provide notice to the Rating Agencies of any
resignation of the Trustee.
If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 20.9 or shall be legally unable to
act, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee
or of
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its property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation, or liquidation, then the Trustee shall promptly
resign. The Trustee shall promptly appoint a successor Trustee by written
instrument which instrument shall be delivered to the successor Trustee. If the
Trustee fails to resign, the Certificateholders shall remove the Trustee and
appoint a successor Trustee by written instrument in duplicate, one copy of
which instrument shall be delivered to the Trustee so removed and one copy to
the successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 20.10 shall
not become effective until acceptance of appointment by the successor Trustee
pursuant to Section 20.11.
Section 20.11 Successor Trustee. Any successor Trustee appointed
pursuant to Section 20.10 shall execute, acknowledge, and deliver to the
Servicer and to its predecessor Trustee an instrument accepting such appointment
under the Agreement, and thereupon the resignation or removal of the predecessor
Trustee shall become effective and such successor Trustee, without any further
act, deed or conveyance, shall become fully vested with all the rights, powers,
duties, and obligations of its predecessor under the Agreement with like effect
as if originally named as Trustee. The predecessor Trustee shall deliver to the
successor Trustee all documents and statements held by it under the Agreement,
and the Servicer and the predecessor Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Trustee all such rights,
powers, duties, and obligations.
No successor Trustee shall accept appointment as provided in this
Section 20.11 unless at the time of such acceptance such successor Trustee shall
be eligible pursuant to Section 20.9.
Upon acceptance of appointment by a successor Trustee pursuant to
this Section 20.11, the Servicer shall mail notice of the successor of such
Trustee under the Agreement to all Certificateholders at their respective
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addresses of record, and to the Rating Agencies. If the Servicer shall fail to
mail such notice within 10 days after acceptance of appointment by successor
Trustee, the successor Trustee shall cause such notice to be mailed at the
expense of the Servicer.
Section 20.12 Merger or Consolidation of Trustee. Any corporation
or other entity (i) into which the Trustee may be merged or consolidated, (ii)
which may result from any merger, conversion, or consolidation to which the
Trustee shall be a party, or (iii) which may succeed to all or substantially all
of the corporate trust business of the Trustee, which corporation or other
entity executes an agreement of assumption to perform every obligation of the
Trustee under the Agreement, shall be the successor of the Trustee hereunder,
provided such corporation or other entity shall be eligible pursuant to Section
20.9, without the execution or filing of any instrument or any further act on
the part of any of the parties hereto. The Trustee shall provide prompt written
notice of any merger or consolidation to the Seller, the Servicer and the Rating
Agencies.
Section 20.13 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of the Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or any Financed Vehicle may at the time be located, the Servicer
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
to act as co-trustee, jointly with the Trustee, or separate trustee or separate
trustees, of all or any part of the Trust, and to vest in such Person, in such
capacity and for the benefit of the Certificateholders, such title to the Trust,
or any part thereof, and, subject to the other provisions of this Section 20.13,
such powers, duties, obligations, rights, and trusts as the Servicer and the
Trustee may consider necessary or desirable. The Servicer will pay all
reasonable fees and expenses of any co-trustee or separate trustee or separate
trustees. The appointment of any separate trustee or co-trustee shall not
absolve the Trustee of its obligations under this Agreement. If the Servicer
shall not have joined in such appointment within 15 days after the receipt by it
of a request so to do, or in the case an Event of Servicing Termination shall
have occurred and be continuing, the
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Trustee alone shall have the power to make such appointment. No co-trustee or
separate trustee or separate trustees under the Agreement shall be required to
meet the terms of eligibility as a successor trustee pursuant to Section 20.9
and no notice to Certificateholders of the appointment of any co-trustee or
separate trustee or separate trustees shall be required pursuant to Section
20.11.
Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) All rights, powers, duties, and obligations conferred
or imposed upon the Trustee shall be conferred upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee under the
Agreement or as successor to the Servicer under the Agreement), the
Trustee shall be incompetent or unqualified to perform such act or acts,
in which event such rights, powers, duties, and obligations (including
the holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Trustee.
(ii) No trustee under the Agreement shall be personally
liable by reason of any act or omission of any other trustee under the
Agreement.
(iii) The Trustee may at any time accept the resignation
of or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing
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any separate trustee or co-trustee shall refer to the Agreement and the
conditions of this Article XX. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or
properties specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of the Agreement, specifically including every provision of the Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Each such instrument shall be filed with the Trustee and a copy
thereof given to the Servicer.
Any separate trustee or co-trustee may at any time appoint the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of the
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
Section 20.14 Representations and Warranties of Trustee. The
Trustee makes the following representations and warranties on which the Seller,
the Servicer, and the Certificateholders may rely:
(i) Organization and Good Standing. The Trustee is a
[national banking association duly organized, validly existing, and in
good standing under the laws of the United States].
(ii) Power and Authority. The Trustee has full power,
authority and legal right to execute, deliver, and perform the
Agreement, and has taken all necessary action to authorize the
execution, delivery, and performance by it of the Agreement.
(iii) No Violation. The execution and delivery of the
Agreement and the performance by the Trustee of its obligations under
the Agree- ment do not (a) violate any provision of any law governing
the trust powers of the Trustee or, to the best of the Trustee's
knowledge, any order,
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writ, judgment, or decree of any court, arbitrator, or governmental
authority applicable to the Trustee or any of its assets, (b) violate
any provision of the articles of association or by laws of the Trustee
or (c) conflict with, result in any breach of any of the terms or
provisions of, or constitute (with or without notice or lapse of time) a
default under, any indenture, agreement or other instrument to which the
Trustee is a party or by which it is bound to the extent such conflict,
breach or default would impair the Trustee's obligation or ability to
perform under this Agreement.
(iv) No Governmental Authorization Required. The
execution, delivery and performance by the Trustee of the Agreement do
not require the authorization, consent, or approval of, the giving of
notice to, the filing or registration with, or the taking of any other
action in respect of, any governmental authority or agency regulating
the corporate trust activities of the Trustee.
(v) Due Authorization, Execution and Delivery. The
Agreement has been duly authorized, executed and delivered by the
Trustee and shall constitute the legal, valid, and binding agreement of
the Trustee, enforceable in accordance with its terms except that (1)
such enforcement may be subject to bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereafter in effect
relating to creditors' rights generally, and (2) the remedy of specific
performance and injunctive and other forms of equitable relief may be
subject to certain equitable defenses and to the discretion of the court
before which any proceeding thereof may be brought.
Section 20.15 Tax Returns. The Servicer shall prepare or shall
cause to be prepared any tax returns required to be filed by the Trust and
furnish to Certificateholders any information required by the Code or the
regulations thereunder and shall remit such returns to the Trustee for signature
at least five days before such returns are due to be filed. The Trustee, upon
request,
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will furnish the Servicer with all such information known to the Trustee as may
be reasonably required in connection with the preparation of all tax returns of
the Trust, and shall, upon request, execute such returns.
Section 20.16 Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under the Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name or in its capacity as Trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Certificateholders in respect of which such
judgment has been recovered.
Section 20.17 Suits for Enforcement. In case an Event of
Servicing Termination or other default by the Servicer or the Seller hereunder
shall occur and be continuing, the Trustee, in its discretion, may proceed to
protect and enforce its rights and the rights of the Certificateholders under
the Agreement by a suit, action or proceeding in equity or at law or otherwise
whether for the specific performance of any covenant or agreement contained in
the Agreement or in aid of the execution of any power granted in the Agreement
or the enforcement of any other legal, equitable or other remedy, as the
Trustee, being advised by counsel, shall deem most effectual to protect and
enforce any of the rights of the Trustee or the Certificateholders.
Section 20.18 Maintenance of Office or Agency. The Trustee shall
maintain at its expense in _________, an office or offices or agency or agencies
where notices and demands to or upon the Trustee in respect of the Certificates
and this Agreement may be served. The Trustee initially designates the Corporate
Trust Office as its office for such purposes. The Trustee will give prompt
written notice to the Servicer, the Paying Agent, the Transfer Agent and
Certificate Registrar, and to Certificateholders of any change in the location
of such office or agency.
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ARTICLE XXI
Termination
Section 21.1 Termination of the Trust. The Trust, and the
respective obligations and responsibilities of the Seller, the Servicer and the
Trustee shall terminate with respect to the Certificateholders upon the first to
occur of (i) the Distribution Date next succeeding the month which is six months
after the maturity or other liquidation of the last Receivable and the
disposition of any amounts received upon liquidation of any property remaining
in the Trust and (ii) the payment to Certificateholders of all amounts required
to be paid to them pursuant to the Agreement; provided, however, that in no
event shall the Trust created by the Agreement continue beyond the expiration of
21 years from the death of the last survivor of the descendants of Xxxxxx
Xxxxxxx Xxxxxx Xxxx, the former President of the United States, living on the
date of the Agreement. The Servicer shall promptly (but in any event not later
than the first day of the month of the specified Distribution Date) notify the
Trustee, the Paying Agent, the Transfer Agent and Certificate Registrar, and the
Rating Agencies in writing of any prospective termination pursuant to this
Section 21.1.
Notice of any termination, specifying the Distribution Date upon
which the Certificateholders may surrender their Certificates to the Transfer
Agent and Certificate Registrar for payment of the final distribution and
cancellation, shall be given promptly by the Trustee by letter to
Certificateholders mailed not earlier than the 15th day and not later than the
25th day of the month next preceding the specified Distribution Date stating the
amount of any such final payment, and that the Record Date otherwise applicable
to such Distribution Date is not applicable, payments being made only upon
presentation and surrender of the Certificates at the office of the Transfer
Agent and Certificate Registrar therein specified. The Trustee shall give such
notice to the Transfer Agent and Certificate Registrar, the Paying Agent and the
Rating Agencies at the time such notice is given to Certificateholders. Upon
presentation and surrender of the Certificates, the Paying Agent shall cause to
be distributed to Certificateholders amounts distributable on such Distribution
Date pursuant to Section 14.5.
104
In the event that all of the Certificateholders shall not
surrender their Certificates for cancellation within six months after the date
specified in the above-mentioned written notice, the Trustee shall give a second
written notice to the remaining Certificateholders upon receipt of the
appropriate records from the Transfer Agent and Certificate Registrar to
surrender their Certificates for cancellation and receive the final distribution
with respect thereto. If within one year after the second notice all the
Certificates shall not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds and other
assets that shall remain subject to the Agreement.
All Certificates surrendered for payment of the final
distribution with respect to such Certificates and cancellation shall be
cancelled by the Transfer Agent and Certificate Registrar and shall be disposed
of in a manner satisfactory to the Trustee and the Seller.
Section 21.2 Optional Purchase of All Receivables. As of the
last Business Day in any Collection Period as of which the Pool Balance
(expressed as a percentage) of initial Pool Balance shall be equal to or less
than the Optional Purchase Percentage, the Servicer shall have the option to
purchase the corpus of the Trust. To exercise such option, the Servicer shall
notify the Trustee, the Paying Agent, and the Transfer Agent and Certificate
Registrar and in writing, no later than the fifth calendar day of the month in
which such purchase is to be effected of its intention to effect such purchase.
On the Deposit Date in such month, the Servicer shall pay the aggregate
Repurchase Amount for the Receivables (including Defaulted Receivables) and
shall succeed to all interests in and to the Trust property. The payment shall
be made in the manner specified in Section 14.4, and shall be distributed
pursuant to Section 14.5. The Trustee shall not permit the purchase of the
corpus of the Trust pursuant to this Section unless either (i) the Servicer's
long term unsecured debt is rated at the time of such purchase at least BBB and
Baa3 by the Rating Agencies or (ii) the Servicer provides to the Trustee an
Opinion of Counsel in form reasonably satisfactory to the Trustee and in form
and substance satisfactory to the Rating Agencies to the
105
effect that such purchase will not constitute a fraudulent transfer of assets of
the Servicer under applicable state and federal law.
106
ARTICLE XXII
Miscellaneous Provisions
Section 22.1 Amendment. The Agreement may be amended by the
Seller, the Servicer and the Trustee, without prior notice to or the consent of
any of the Certificateholders, (i) to cure any ambiguity, to correct or
supplement any provision in the Agreement which may be inconsistent with any
other provision herein or therein, to evidence a succession to the Servicer or
the Seller pursuant to the Agreement or to add any other provisions with respect
to matters or questions arising under the Agreement that shall not be
inconsistent with the provisions of the Agreement; provided, however, that such
action shall not, as evidenced by an Officer's Certificate and/or an Opinion of
Counsel delivered to the Trustee, adversely and materially affect the interests
of the Trust or any of the Certificateholders and provided, further, that the
Servicer shall deliver written notice of such changes to each Rating Agency
prior to the execution of any such amendment, or (ii) to effect a transfer or
assignment in compliance with Section 22.7(i) of the Agreement.
The Agreement may also be amended from time to time by the
Seller, the Servicer and the Trustee, with the consent of the Holders of
Certificates evidencing not less than 51% of the Pool Balance, for the purpose
of adding any provision to or changing in any manner or eliminating any of the
provisions of the Agreement, or of modifying in any manner the rights of the
Certificateholders (including effecting a transfer or assignment in compliance
with Section 22.7(ii) of the Agreement); provided, however, that no such
amendment, except with the consent of the Holders of all Certificates then
outstanding, shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments of Receivables, or
distributions that shall be required to be made on any Certificate, (b) reduce
the aforesaid percentage of the Pool Balance required to consent to any such
amendment or (c) reduce in any way the shortfalls for which the Trustee may draw
under the Reserve Account pursuant to Article XIV hereof or change the formula
for determining the Specified Reserve Account Balance.
107
Promptly after the execution of any amendment or consent referred
to in this Section 22.1, the Trustee shall furnish a copy of such amendment or
consent to each Certificateholder and to the Rating Agencies.
It shall not be necessary for the consent of Certificateholders
pursuant to this Section 22.1 to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
Prior to the execution of any amendment to the Agreement, the
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by the
Agreement. The Trustee shall not be obligated to enter into any such amendment
which affects the Trustee's own rights, duties or immunities under the
Agreement.
Prior to the execution of any amendment to this Agreement, other
than an amendment permitted pursuant to clause (i) of the first paragraph of
this Section 22.1, the Servicer shall have received written notice from each of
the Rating Agencies that the rating of the Certificates will not be reduced or
withdrawn as a result of such amendment.
Section 22.2 Protection of Title to Trust.
(a) The Servicer shall execute and file such financing
statements and cause to be executed and filed such continuation statements, all
in such manner and in such places as may be required by law fully to preserve,
maintain, and protect the interests of the Trustee under the Agreement in the
Receivables and in the proceeds thereof. The Servicer shall deliver (or cause to
be delivered) to the Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
(b) Neither the Seller nor the Servicer shall change its
name, identity, or corporate structure in any manner that would, could, or might
make any financing
108
statement or continuation statement filed by the Servicer in accordance with
paragraph (a) above seriously misleading within the meaning of ss. 9-402(7) of
the UCC, unless it shall have given the Trustee at least 30 days prior written
notice thereof.
(c) The Seller and the Servicer shall give the Trustee at
least 60 days prior written notice of any relocation of its principal executive
office if, as a result of such relocation, the applicable provisions of the UCC
would require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement. The Servicer shall at
all times maintain each office from which it shall service Receivables, and its
principal executive office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to
each Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including payments
and recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Certificate
Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so
that, from and after the time of sale under the Agreement of the Receivables to
the Trustee, the Servicer's master computer records (including archives) that
shall refer to a Receivable indicate clearly, by numerical code or otherwise,
that such Receivable is owned by the Trust. Indication of the Trust's ownership
of a Receivable shall be deleted from or modified on the Servicer's computer
systems when, and only when, the Receivable shall have been paid in full,
repurchased, purchased or assigned pursuant hereto.
(f) If at any time the Seller or the Servicer shall
propose to sell, grant a security interest in, or otherwise transfer any
interest in a new or used automobile or light-duty truck to any prospective
purchaser, creditor, or other transferee, the Seller or the Servicer, as the
case may be, shall give to such prospective purchaser, creditor, or other
transferee computer tapes, records, or print-outs (including any restored from
109
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
Trust.
(g) The Servicer shall permit the Trustee and its agents
upon reasonable notice at any time during normal business hours which does not
unreasonably interfere with the Servicer's normal operations to inspect, audit,
and make copies of and abstracts from the Servicer's records regarding the
Receivables.
(h) Upon request, the Servicer shall furnish to the
Trustee, within five Business Days of any request therefor, a list of all
Receivables by contract number and name of Obligor then held as part of the
Trust, together with a reconciliation of such list to the Schedule of
Receivables attached as Schedule A to the Agreement and to each of the Servicer
Certificates indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Trustee:
(1) upon the execution and delivery of the Agreement, an Opinion
of Counsel either (a) stating that, in the opinion of such counsel, all
financing statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the Trust in
the Receivables, and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (b) stating that, in the
opinion of such counsel, no such action shall be necessary to preserve and
protect such interest; and
(2) on March 31 of each year, commencing with March 31, 1995, an
Opinion of Counsel, dated as of such date, either (a) stating that, in the
opinion of such counsel, all financing statements and continuation statements
have been executed and filed that are necessary fully to preserve and protect
the interest of the Trustee in the Receivables, and reciting the details of such
filings or referring to prior Opinions of Counsel in which such details are
given, or (b) stating that, in the opinion of such counsel, no such action shall
be necessary to preserve and protect such interest.
110
(j) The Servicer shall, to the extent required by applicable law,
cause the Certificates to be registered with the Securities and Exchange
Commission pursuant to Section 12(b) or Section 12(g) of the Securities Exchange
Act of 1934 within the time periods specified in such sections.
(k) For the purpose of facilitating the execution of the
Agreement and for other purposes, the Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and all of which counterparts shall constitute but one and the same
instrument.
Section 22.3 Limitation on Rights of Certificateholders. The
death or incapacity of any Certificateholder shall not operate to terminate the
Agreement or the Trust, nor entitle the Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations, and liabilities of the parties to
the Agreement or any of them.
No Certificateholder shall have any right to vote (except as
provided in Section 19.1, Section 19.4, Section 22.1 and this Section 22.3) or
in any manner otherwise control the operation and management of the Trust, or
the obligations of the parties to the Agreement, nor shall anything set forth in
the Agreement or contained in the terms of the Certificates, be construed so as
to constitute the Holders as partners or members of an association; nor shall
any Certificateholder be under any liability to any third person by reason of
any action taken pursuant to any provision of the Agreement.
No Certificateholder shall have any right by virtue or by
availing itself of any provision of the Agreement to institute any suit, action,
or proceeding in equity or at law upon or under or with respect to the
Agreement, unless such Holder previously shall have given to the Trustee a
written notice of default and of the continuance thereof, as hereinbefore
provided, and unless also the Holders of Certificates evidencing not less than
25% of the Pool Balance shall have made written request upon the Trustee to
institute such action, suit, or proceeding in its own name as Trustee under the
Agreement and
111
shall have offered to the Trustee such reasonable indemnity as it may require
against the costs, expenses, and liabilities to be incurred therein or thereby,
and the Trustee, for 30 days after its receipt of such notice, request, and
offer of indemnity, shall have either neglected or refused to institute any such
action, suit or proceeding; no one or more Holders of Certificates shall have
any right in any manner whatever by virtue or by availing itself or themselves
of any provisions of the Agreement to affect, disturb, or prejudice the rights
of the Holders of any other of the Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right,
under the Agreement, except in the manner provided in the Agreement and for the
equal, ratable, and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section 22.3, each Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.
Section 22.4 Governing Law. THE AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS,
AND REMEDIES OF THE PARTIES UNDER THE AGREEMENT SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
Section 22.5 Notices. All demands, notices, and communications
under the Agreement shall be in writing, personally delivered or mailed by
certified mail, return receipt requested, or sent by telecopy or other similar
form of rapid transmission and shall be deemed to have been duly given upon
receipt (a) in the case of the Seller, at USAA Federal Savings Bank, XxXxxxxxx
Xxxxxxx, Xxx Xxxxxxx, Xxxxx 00000 Attention: Vice President and Banking Counsel,
Telecopy Number: (000) 000-0000, or at such other address as shall be designated
by the Seller in a written notice to the Trustee, (b) in the case of the
Servicer, at USAA Federal Savings Bank, XxXxxxxxx Xxxxxxx, Xxx Xxxxxxx, Xxxxx
00000, Attention: Vice President and Banking Counsel, Telecopy Number: (210)
498-7210, or at such other address as shall be designated by the Servicer in a
written notice to the Trustee, and (c) in the case of the Trustee and the
Collateral Agent, at ________ ___________ Attention: __________, Telecopy
Number: (___) ___-____ or at such other address as shall be designated in a
written notice to the Trustee. Any notice required
112
or permitted to be mailed to a Certificateholder shall be given by first class
mail, postage prepaid, at the address of record of such Holder. Any notice to a
Certificateholder so mailed within the time prescribed in the Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder shall receive such notice.
Section 22.6 Severability of Provisions. If any one or more of
the covenants, agreements, provisions, or terms of the Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements, provisions,
or terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of the Agreement and shall in no way affect the validity or
enforceability of the other provisions of the Agreement or of the Certificates
or the rights of the Holders thereof.
Section 22.7 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 17.3 and 18.3, neither the
Seller nor the Servicer may transfer or assign all, or a portion of, its rights,
obligations and duties under the Agreement unless such transfer or assignment
(i) (A) will not result in a reduction or withdrawal by Standard & Poor's or
Moody's of the rating then assigned to the Certificates and (B) the Trustee has
consented to such transfer or assignment, which consent shall not be
unreasonably withheld or (ii) the Trustee and Holders of Certificates evidencing
not less than 51% of the Pool Balance consent thereto. Any transfer or
assignment with respect to the Servicer of all of its rights, obligations and
duties will not become effective until a successor Service has assumed the
Servicer's rights, duties and obligations under the Agreement. In the event of a
transfer or assignment pursuant to clause (ii) above, the Rating Agencies shall
be provided with notice of such transfer or assignment.
Section 22.8 Certificates Nonassessable and Fully Paid. The
interests represented by the Certificates shall be nonassessable for any losses
or expenses of the Trust or for any reason whatsoever, and, upon authentication
thereof by the Trustee pursuant to Section 16.2, each Certificate shall be
deemed fully paid.
Section 22.9 Third-Party Beneficiaries. This Agreement will inure
to the benefit of and be binding upon
113
the parties hereto, the Certificateholders and the Certificate Owners and their
respective successors and permitted assigns. Except as otherwise provided in
this Agreement, no other person will have any right or obligation hereunder.
114
EXHIBIT A: FORM OF CLASS A SEE REVERSE FOR
CERTIFICATE CERTAIN DEFINITIONS
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE, OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
USAA AUTO LOAN GRANTOR TRUST 1997-1
__% AUTOMOBILE LOAN PASS-THROUGH CERTIFICATE, CLASS A
evidencing a fractional undivided interest in the Trust, as defined
below, the property of which includes a pool of simple interest motor
vehicle installment loans, secured by new and used automobiles and
light-duty trucks financed thereby and sold to the Trustee, as defined
below, on behalf of the Trust by USAA Federal Savings Bank.
(This Certificate does not represent an interest in or obligation of
USAA Federal Savings Bank or United Services Automobile Association or
any of their respective affiliates.)
NUMBER CUSIP __________
___________ $ ______________
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a
nonassessable, fully paid, fractional undivided interest, in the amount set
forth above, in the USAA Auto
A-1
Loan Grantor Trust 1997-1 (the "Trust") formed by USAA Federal Savings Bank, a
federally chartered savings association (the "Seller"). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as of _______ __, 1997 (the
"Agreement") between the Seller, acting as Seller and Servicer, and
as trustee
(the trustee and any successor in interest under the Agreement, the "Trustee"),
a summary of certain of the pertinent provisions of which is set forth below.
This Certificate is one of the duly authorized Certificates designated as "__%
Automobile Loan Pass-Through Certificates, Class A" (herein called the "Class A
Certificates"). This Class A Certificate is issued under and is subject to the
terms, provisions, and conditions of the Agreement, to which Agreement the
Holder of this Class A Certificate by virtue of the acceptance hereof assents
and by which such Holder is bound. The property of the Trust includes a pool of
simple interest motor vehicle installment loans (the "Receivables") for the
purchase of new and used automobiles and light-duty trucks financed thereby, all
monies due thereunder on or after the Cutoff Date, security interests in the
vehicles securing the Receivables (the "Financed Vehicles"); such amounts as
from time to time may be held in the Class A Certificate Account established and
maintained by the Servicer in the name of the Trustee, benefits under the
Reserve Account (described below); an assignment of the rights of the Seller to
receive proceeds from any claims on comprehensive and collision, credit life and
credit disability insurance policies covering the Financed Vehicles or the
Obligors, as the case may be, to the extent that such insurance policies relate
to the Receivables; and the rights with respect to any Financed Vehicle that has
been repossessed by the Servicer, on behalf of the Trustee.
Under the Agreement, there will be distributed on the 15th day of each
month or, if such 15th day is not a Business Day, the next succeeding Business
Day (the "Distribution Date"), commencing on __________ __, 1997, to the Person
in whose name this Class A Certificate is registered at the close of business on
the Record Date, such Certificateholder's fractional undivided interest in all
amounts allocable to interest from any source with respect to each Receivable in
an amount equal to the Class A Pass Through Rate of __% per annum on or with
respect to the outstanding Pool Balance as of the first day of the pre-
A-2
ceding Collection Period after giving effect to any amounts distributed with
respect to principal on the Distribution Date occurring in such Collection
Period (calculated on the basis of a 360-day year comprised of twelve 30-day
months), and the aggregate amount allocable to principal from any source, all as
more fully described in the Agreement.
Distributions on this Class A Certificate will be made by the Paying
Agent by check mailed to the Certificateholder of record in the Certificate
Register without the presentation or surrender of this Class A Certificate or
the making of any notation hereon, except that if directed by the Seller in the
case of Certificates registered in the name of a Clearing Agency distributions
will be made in the form of immediately available funds. Except as otherwise
provided in the Agreement and notwithstanding the above, the final distribution
on this Class A Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Class A Certificate at the office or agency maintained for that purpose by the
Transfer Agent and Certificate Registrar in New York, New York.
Reference is hereby made to the further provisions of this Class A
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
All capitalized terms used herein not otherwise defined shall have the
meaning assigned thereto in the Agreement.
A-3
Unless the authentication hereon shall have been executed by an
authorized officer of the Trustee or an authenticating agent acting on behalf of
the Trustee, by manual signature, this Class A Certificate shall not entitle the
holder hereof to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust, and not in its
individual capacity, has caused this Class A Certificate to be duly executed.
USAA AUTO LOAN GRANTOR
TRUST 1997-1
[ ]
as Trustee
By:
-------------------------------
Authorized Signatory
This is one of the Class A Certificates referred
to in the within-mentioned Agreement.
[ ]
as Trustee
By:
-------------------------------
Authorized Signatory
or
,
---------------------------------
as Authenticating Agent
for the Trustee
By:
-------------------------------
Authorized Officer
A-4
USAA AUTO LOAN GRANTOR TRUST 1997-1
% AUTOMOBILE LOAN PASS-THROUGH CERTIFICATES, CLASS A
The Class A Certificates do not represent an obligation of, or an
interest in, the Seller, the Servicer, the Trustee or any affiliate of any of
them. The Class A Certificates are limited in right of payment to certain
collections and recoveries in respect of the Receivables, all as more
specifically set forth in the Agreement. The Trust will have the benefit of a
Reserve Account. On the Business Day preceding each Distribution Date (the
"Deposit Date"), the Trustee, or the Servicer on behalf of the Trustee, shall
make a demand under the Reserve Account to the extent (1) the sum of (a) the
aggregate principal balance of, and accrued and unpaid interest on (such accrued
interest for the Collection Period in which such Receivable became a Defaulted
Receivable to be calculated at a rate equal to one-twelfth of the sum of the
Class A Pass-Through Rate and the Servicing Rate to the extent not otherwise
collected), Receivables that the Servicer has determined to be Defaulted
Receivables during the preceding Collection Period to the extent not covered by
certain amounts described in the Agreement, any accrued interest due and not
paid to Certificateholders on a previous Distribution Date and any Servicing Fee
due and not paid to the Servicer on a previous Distribution Date (b) any
Principal Carryover Shortfall to the extent not covered by certain amounts
described in the Agreement, and (c) any additional amount necessary to make
distributions to Certificateholders and pay the Servicing Fee to the Servicer on
such Distribution Date exceeds (2) the amount of Total Collections on deposit in
the Certificate Account with respect to the preceding Collection Period (net of
investment income and Excess Collections), but in no event in an amount greater
than the Available Reserve Amount with respect to such Distribution Date. A copy
of the Agreement may be examined during normal business hours at the Corporate
Trust Office of the Trustee, and at such other places, if any, designated by the
Trustee, by any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights of the Certificateholders
under the Agreement
A-5
at any time by the Seller, the Servicer and the Trustee with the consent of the
Holders of Certificates evidencing not less than 51% of the Pool Balance. Any
such consent by the Holder of this Class A Certificate shall be conclusive and
binding on such Holder and on all future Holders of this Class A Certificate and
of any Certificate issued upon registration of transfer hereof or in exchange
herefor or in lieu hereof whether or not notation of such consent is made upon
this Class A Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances and with certain exceptions provided therein,
without prior notice to or the consent of the Holders of any of the Class A
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Class A Certificate is registrable in the
Certificate Register upon surrender of this Class A Certificate for registration
of transfer at the office or agency maintained by the Transfer Agent and
Certificate Registrar, in New York, New York, accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Transfer
Agent and Certificate Registrar duly executed by the Holder hereof, which
signature to such assignment has been guaranteed by a member of the New York
Stock Exchange or a commercial bank or trust company, and thereupon one or more
new Class A Certificates of authorized denominations evidencing the same
aggregate interest in the Trust will be issued to the designated transferee.
The Class A Certificates are issuable only as registered Certificates
without coupons in denominations of $1,000 and integral multiples thereof
(except for a single Certificate in a smaller minimum denomination representing
any residual portion of the Pool Balance on the Cutoff Date). As provided in the
Agreement and subject to certain limitations therein set forth, Class A
Certificates are exchangeable for new Class A Certificates of authorized
denominations evidencing the same aggregate denomination, as requested by the
Holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Transfer Agent and Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge payable in connection therewith.
A-6
In the event that the Holder of this Class A Certificate does not
surrender this Class A Certificate for cancellation within six months after the
date specified in the notice regarding the pendency of the final distribution
described on the face hereof, the Trustee shall give a second notice with
respect thereto. If within one year after such second notice this Class A
Certificate shall not have been surrendered for cancellation, the Trustee may
take appropriate steps to contact the Holder hereof. As provided in the
Agreement, any funds remaining in the Trust after exhaustion of such steps shall
be distributed to the Seller, such distribution to occur not later than three
years from the date of the final Distribution Date.
The Trustee, the Paying Agent and the Transfer Agent and Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Trustee, the Paying Agent or
the Transfer Agent and Certificate Registrar shall be affected by any notice to
the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby with respect to the Certificateholders shall terminate
upon the payment to Certificateholders of all amounts required to be paid to
them pursuant to the Agreement on the Distribution Date next succeeding the
month which is six months after the maturity or liquidation of the last
Receivable and the disposition of all property held as part of the Trust. The
Servicer may, at its option, purchase the corpus of the Trust at a price
specified in the Agreement, and such purchase of the Receivables and other
property of the Trust will effect early retirement of the Class A Certificates;
however, such right of purchase is exercisable only as of the last day of a
month immediately preceding any Distribution Date as of which the Pool Balance
is equal to or less than 5% of the original Pool Balance.
A-7
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
--------------------------------------------------------------------------------
(Please print or typewrite name and address, including
postal zip code, of assignee)
--------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing
_______________________________________________________________________ Attorney
to transfer said Certificate on the books of the Transfer Agent and Certificate
Registrar, with full power of substitution in the premises.
Dated:
_________________________*
Signature Guaranteed:
_________________________*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank or
trust company.
A-8
EXHIBIT B: FORM OF CLASS B SEE REVERSE FOR
CERTIFICATE CERTAIN DEFINITIONS
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE, OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
USAA AUTO LOAN GRANTOR TRUST 1997-1
__% AUTOMOBILE LOAN PASS-THROUGH CERTIFICATE, CLASS B
evidencing a fractional undivided interest in the Trust, as defined
below, the property of which includes a pool of simple interest motor
vehicle installment loans, secured by new and used automobiles and
light-duty trucks financed thereby and sold to the Trustee, as defined
below, on behalf of the Trust by USAA Federal Savings Bank.
(This Certificate does not represent an interest in or obligation of
USAA Federal Savings Bank or United Services Automobile Association or
any of their respective affiliates.)
NUMBER CUSIP __________
___________ $ ______________
THIS CERTIFIES THAT CEDE & CO. is the registered owner of a
nonassessable, fully paid, fractional undivided interest, in the amount set
forth above, in the USAA Auto
B-1
Loan Grantor Trust 1997-1 (the "Trust") formed by USAA Federal Savings Bank, a
federally chartered savings association (the "Seller"). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as of _______ __, 1997 (the
"Agreement") between the Seller, acting as Seller and Servicer, and
as trustee
(the trustee and any successor in interest under the Agreement, the "Trustee"),
a summary of certain of the pertinent provisions of which is set forth below.
This Certificate is one of the duly authorized Certificates designated as "__%
Automobile Loan Pass-Through Certificates, Class B" (herein called the "Class B
Certificates"). This Class B Certificate is issued under and is subject to the
terms, provisions, and conditions of the Agreement, to which Agreement the
Holder of this Class B Certificate by virtue of the acceptance hereof assents
and by which such Holder is bound. The property of the Trust includes a pool of
simple interest motor vehicle installment loans (the "Receivables") for the
purchase of new and used automobiles and light-duty trucks financed thereby, all
monies due thereunder on or after the Cutoff Date, security interests in the
vehicles securing the Receivables (the "Financed Vehicles"); such amounts as
from time to time may be held in the Class B Certificate Account established and
maintained by the Servicer in the name of the Trustee, benefits under the
Reserve Account (described below); an assignment of the rights of the Seller to
receive proceeds from any claims on comprehensive and collision, credit life and
credit disability insurance policies covering the Financed Vehicles or the
Obligors, as the case may be, to the extent that such insurance policies relate
to the Receivables; and the rights with respect to any Financed Vehicle that has
been repossessed by the Servicer, on behalf of the Trustee.
Under the Agreement, there will be distributed on the 15th day of each
month or, if such 15th day is not a Business Day, the next succeeding Business
Day (the "Distribution Date"), commencing on ________ __, 1997, to the Person in
whose name this Class B Certificate is registered at the close of business on
the Record Date, such Certificateholder's fractional undivided interest in all
amounts allocable to interest from any source with respect to each Receivable in
an amount equal to the Class B PassThrough Rate of __% per annum on or with
respect to the outstanding Pool Balance as of the first day of the pre-
B-2
ceding Collection Period after giving effect to any amounts distributed with
respect to principal on the Distribution Date occurring in such Collection
Period (calculated on the basis of a 360-day year comprised of twelve 30-day
months), and the aggregate amount allocable to principal from any source, all as
more fully described in the Agreement.
Distributions on this Class B Certificate will be made by the Paying
Agent by check mailed to the Certificate-holder of record in the Certificate
Register without the presentation or surrender of this Class B Certificate or
the making of any notation hereon, except that if directed by the Seller in the
case of Certificates registered in the name of a Clearing Agency distributions
will be made in the form of immediately available funds. Except as otherwise
provided in the Agreement and notwithstanding the above, the final distribution
on this Class B Certificate will be made after due notice by the Trustee of the
pendency of such distribution and only upon presentation and surrender of this
Class B Certificate at the office or agency maintained for that purpose by the
Transfer Agent and Certificate Registrar in New York, New York.
Reference is hereby made to the further provisions of this Class B
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
All capitalized terms used herein not otherwise defined shall have the
meaning assigned thereto in the Agreement.
B-3
Unless the authentication hereon shall have been executed by an
authorized officer of the Trustee or an authenticating agent acting on behalf of
the Trustee, by manual signature, this Class B Certificate shall not entitle the
holder hereof to any benefit under the Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Trustee, on behalf of the Trust, and not
in its individual capacity, has caused this Class B Certificate to be duly
executed.
USAA AUTO LOAN GRANTOR
TRUST 1997-1
[ ]
as Trustee
By:
-------------------------------
Authorized Signatory
This is one of the Class B Certificates referred
to in the within-mentioned Agreement.
[ ]
as Trustee
By:
-------------------------------
Authorized Signatory
or
,
---------------------------------
as Authenticating Agent
for the Trustee
By:
-------------------------------
Authorized Officer
B-4
USAA AUTO LOAN GRANTOR TRUST 1997-1
% AUTOMOBILE LOAN PASS-THROUGH CERTIFICATES, CLASS B
The Class B Certificates do not represent an obligation of, or an
interest in, the Seller, the Servicer, the Trustee or any affiliate of any of
them. The Class B Certificates are limited in right of payment to certain
collections and recoveries in respect of the Receivables, all as more
specifically set forth in the Agreement. The Trust will have the benefit of a
Reserve Account. On the Business Day preceding each Distribution Date (the
"Deposit Date"), the Trustee, or the Servicer on behalf of the Trustee, shall
make a demand under the Reserve Account to the extent (1) the sum of (a) the
aggregate principal balance of, and accrued and unpaid interest on (such accrued
interest for the Collection Period in which such Receivable became a Defaulted
Receivable to be calculated at a rate equal to one-twelfth of the sum of the
Class B Pass-Through Rate and the Servicing Rate to the extent not otherwise
collected), Receivables that the Servicer has determined to be Defaulted
Receivables during the preceding Collection Period to the extent not covered by
certain amounts described in the Agreement, any accrued interest due and not
paid to Certificateholders on a previous Distribution Date and any Servicing Fee
due and not paid to the Servicer on a previous Distribution Date (b) any
Principal Carryover Shortfall to the extent not covered by certain amounts
described in the Agreement, and (c) any additional amount necessary to make
distributions to Certificateholders and pay the Servicing Fee to the Servicer on
such Distribution Date exceeds (2) the amount of Total Collections on deposit in
the Certificate Account with respect to the preceding Collection Period (net of
investment income and Excess Collections), but in no event in an amount greater
than the Available Reserve Amount with respect to such Distribution Date. A copy
of the Agreement may be examined during normal business hours at the Corporate
Trust Office of the Trustee, and at such other places, if any, designated by the
Trustee, by any Certificateholder upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights of the Certificateholders
under the Agreement
B-5
at any time by the Seller, the Servicer and the Trustee with the consent of the
Holders of Certificates evidencing not less than 51% of the Pool Balance. Any
such consent by the Holder of this Class B Certificate shall be conclusive and
binding on such Holder and on all future Holders of this Class B Certificate and
of any Certificate issued upon registration of transfer hereof or in exchange
herefor or in lieu hereof whether or not notation of such consent is made upon
this Class B Certificate. The Agreement also permits the amendment thereof, in
certain limited circumstances and with certain exceptions provided therein,
without prior notice to or the consent of the Holders of any of the Class B
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Class B Certificate is registrable in the
Certificate Register upon surrender of this Class B Certificate for registration
of transfer at the office or agency maintained by the Transfer Agent and
Certificate Registrar, in New York, New York, accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Transfer
Agent and Certificate Registrar duly executed by the Holder hereof, which
signature to such assignment has been guaranteed by a member of the New York
Stock Exchange or a commercial bank or trust company, and thereupon one or more
new Class B Certificates of authorized denominations evidencing the same
aggregate interest in the Trust will be issued to the designated transferee.
The Class B Certificates are issuable only as registered Certificates
without coupons in denominations of $1,000 and integral multiples thereof
(except for a single Certificate in a smaller minimum denomination representing
any residual portion of the Pool Balance on the Cutoff Date). As provided in the
Agreement and subject to certain limitations therein set forth, Class B
Certificates are exchangeable for new Class B Certificates of authorized
denominations evidencing the same aggregate denomination, as requested by the
Holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Transfer Agent and Certificate
Registrar may require payment of a sum sufficient to cover any tax or
governmental charge payable in connection therewith.
B-6
In the event that the Holder of this Class B Certificate does not
surrender this Class B Certificate for cancellation within six months after the
date specified in the notice regarding the pendency of the final distribution
described on the face hereof, the Trustee shall give a second notice with
respect thereto. If within one year after such second notice this Class B
Certificate shall not have been surrendered for cancellation, the Trustee may
take appropriate steps to contact the Holder hereof. As provided in the
Agreement, any funds remaining in the Trust after exhaustion of such steps shall
be distributed to the Seller, such distribution to occur not later than three
years from the date of the final Distribution Date.
The Trustee, the Paying Agent and the Transfer Agent and Certificate
Registrar may treat the Person in whose name this Certificate is registered as
the owner hereof for all purposes, and none of the Trustee, the Paying Agent or
the Transfer Agent and Certificate Registrar shall be affected by any notice to
the contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby with respect to the Certificateholders shall terminate
upon the payment to Certificateholders of all amounts required to be paid to
them pursuant to the Agreement on the Distribution Date next succeeding the
month which is six months after the maturity or liquidation of the last
Receivable and the disposition of all property held as part of the Trust. The
Servicer may, at its option, purchase the corpus of the Trust at a price
specified in the Agreement, and such purchase of the Receivables and other
property of the Trust will effect early retirement of the Class B Certificates;
however, such right of purchase is exercisable only as of the last day of a
month immediately preceding any Distribution Date as of which the Pool Balance
is equal to or less than 5% of the original Pool Balance.
B-7
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
--------------------------------------------------------------------------------
(Please print or typewrite name and address, including
postal zip code, of assignee)
--------------------------------------------------------------------------------
the within Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing
_______________________________________________________________________ Attorney
to transfer said Certificate on the books of the Transfer Agent and Certificate
Registrar, with full power of substitution in the premises.
Dated:
_________________________*
Signature Guaranteed:
_________________________*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank or
trust company.
B-8
EXHIBIT C-1
Trustee's Certificate
pursuant to Section 20.3
of the Pooling and Servicing
Agreement
(the "Trustee") of the USAA
Auto Loan Grantor Trust 1997-1 created pursuant to the Pooling and Servicing
Agreement (the "Pooling and Servicing Agreement"), dated as of , 1997,
between USAA Federal Savings Bank, as Seller (the "Seller") and Servicer, and
the Trustee, does hereby sell, transfer, assign, and otherwise convey to the
Seller, without recourse, representation, or warranty, all of the Trustee's
right, title, and interest in and to all of the Receivables (as defined in the
Pooling and Servicing Agreement) identified in the attached Servicer's
Certificate as "Repurchased Receivables," which are to be repurchased by the
Seller pursuant to Section 12.2 of the Pooling and Servicing Agreement and all
security and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this ____ day of _____________ ,
19__ .
C-1
EXHIBIT C-2
Trustee's Certificate
pursuant to Section 20.3
of the Pooling and Servicing
Agreement
(the "Trustee") of the USAA
Federal Savings Grantor Trust 1997-1 created pursuant to the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), dated as of
_____________, 1997 between USAA Federal Savings Bank, as Seller and Servicer
(the "Servicer"), and the Trustee, does hereby sell, transfer, assign, and
otherwise convey to the Servicer, without recourse, representation, or warranty,
all of the Trustee's right, title, and interest in and to all of the Receivables
(as defined in the Pooling and Servicing Agreement) identified in the attached
Servicer's Certificate as "Repurchased Receivables," which are to be purchased
by the Servicer pursuant to Section 13.7 or 21.2 of the Pooling and Servicing
Agreement, and all security and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this ___ day of _______,
19___.
C-2
EXHIBIT D
USAA Auto Loan Grantor Trust 1997-1
5% Automobile Loan Pass-Through Certificates
MONTHLY SERVICER CERTIFICATE REPORT
Collection Period # Beginning Date
Collection Period # End Date
Determination Date
Distribution Date
I. Available Amount in the Certificate Account
A. Credits
1. Payments from Obligors Applied to Collection
Period
a. Principal Payments (PSA 14.2) $
b. Interest Payments (PSA 14.2) $
c. Total (a+b) $
2. Repurchase Amount From Repurchased
Receivables
a. Principal Payments (PSA 14.4) $
b. Interest Payments (PSA 14.4) $
c. Total (a+b) $
3. Recovery of Defaulted Receivables
(PSA 14.2) $
4. Advance by Servicer (PSA 14.3) $
5. Investment Earnings on Certificate
Account (as of month end) $
6. Overpayment from Obligors $
7. Net Adjustments $
8. Total Credits (sum 1 thru 7) $
B. Debits
1. Overpayment From Obligors $
2. Total Debits $
C. Collections (A-B)(PSA 14.5) $
D. Cash Collateral Draw (XVIII.C)(PSA 14.4) $
E. Total Collections (C+D) $
II. Scheduled Monthly Disbursements
D-1
A. Reimbursement of Advance (PSA 14.5a) $
B. Principal and Interest to
Certificateholders
1. Monthly Interest (PSA 14.5b) $
2. Unpaid Interest (PSA 14.5b) $
3. Monthly Principal
a. Principal Payment (PSA 14.5b) $
b. From Repurchased Receivables
(PSA 14.5b) $
c. From Defaulted Receivables
(PSA 14.5b) $
d. Total (sum a thru c) $
4. Principal Carryover Shortfall (PSA
14.5b) $
5. Total (sum 1 thru 4) $
C. Servicing Fee to Servicer
1. Monthly Servicing Fee (PSA 14.5c) $
2. Overdue Monthly Servicing Fee (PSA
14.5c) $
3. Investment Earnings on Certificate
Account (PSA 13.8) $
4. Total (sum 1 thru 3) $
D. Total (sum A thru C) $
III. Average Certificate Principal
A. Beginning Balance $
B. Ending Balance (III.A-II.B.3-II.B.4) $
C. Average Balance ((A+B)/2) $
IV. Deposit to Cash Collateral Account
(PSA 14.5d.1) $
A. Excess Funds From Certificate Account
(I-II)(PSA 14.5) $
B. Reinvestment on CCA (USAA Portion-
Date prior to Dist. Date) $
C. Required Deposit to Cash Collateral Account
1. Required Cash Collateral Account for
Next Period (XIV.C) $
2. Available Cash Collateral Amount (V.A) $
3. Cash Collateral Account Draw (XVIII.C) $
4. Required Deposit Amount (max: 0 or
sum 1-2+3) $
D. Cash Collateral Account Deposit
(Min: A+B or C) $
V. Cash Collateral Account Surplus (LA 3.a.ii) $
A. Available Cash Collateral Amount $
B. Cash Collateral Account Deposit (IV.D) $
C. Cash Collateral Account Draw (XVIII.C) $
D-2
D. Required Cash Collateral Next Period $
E. Cash Collateral Account Surplus (max
0 or sum A+B-C-D) $
VI. Scheduled Disbursement to Cash Collateral
Depositor
A. Scheduled Interest
1. Interest on Deposit Rate Portion
$ (LA Def.) $
2. Interest on Base Rate Portion $
(LA Def.)/Reinv CCA - CS Portion) $
3. Unpaid interest $
4. Total (sum 1 thru 3) $
B. Fees and Expenses
1. Fees and Expenses $
2. Overdue Fees and Expenses $
3. Total (sum 1 thru 2) $
C. Total (A+B) $
VII. Memorandum Spread Account Unfunded Amount
(LA Def.)
A. Memorandum Spread Account Cap
1. Cash Collateral Account Balance $
2. Memorandum Spread Account Cap
Percentage $
a. Average Three Period Charge Off Rate %
b. Charge Off Rate Trigger %
c. Maximum Memorandum Spread Account
Percentage %
d. Minimum Memorandum Spread Account
Percentage %
e. Memorandum Spread Account Percentage
Applied (if > ) %
f. Original Pool Principal Balance $
g. Memorandum Spread Account Cap
Percentage %
h. Possible Amount (f*g) $
3. Memorandum Spread Account Cap
(Min: 1 or 2) $
B. Memorandum Spread Account Amount
1. Available Cash Collateral Amount $
2. Cash Collateral Account Deposit (IV.D) $
3. Cash Collateral Account Withdrawal
(XVIII.C) $
4. Principal Balance on Cash Collateral
Loan (IX.B.3) $
5. Memorandum Spread Account Amount (Max:
0 or 1+2-3-4) (LA D) $
C. Memorandum Spread Account Unfunded Amount
(Max: 0 or A-B) (LA Def.) $
D-3
VIII. Excess from Memorandum Spread Account
A. Memorandum Spread Account Cap (VII.A.3) $
B. Memorandum Spread Account Deposit
1. Memorandum Spread Account Unfunded
Amount (VII.C) $
2. Excess Funds from Certificate Account
(IV.A) $
3. Fees (VI.B.3) $
4. Reinvestment on CCA (USAA Portion-
Date prior to Dist. Date) $
5. Memorandum Spread Account Deposit
(min B.1 or B.2-B.3+B.4) $
6. Next Period Memorandum Spread Account
Amount $
C. Excess From Memorandum Spread Account $
IX. Disbursement of Available Cash Collateral
Payment Funds $
A. Available Cash Collateral Amount
B. Principal Payment to Cash Collateral
Loan
1. Memorandum Spread Account
Deposit (VIII.B.5) $
2. Cash Collateral Account Surplus (V.E) $
3. Principal Balance on Cash
Collateral Loan $
4. Principal Payment (Min: 1 + 2 or 3) $
C. Ending Balance on Cash Collateral Loan $
D. Excess Amount to Seller (VIII.C) $
X. Available $ Cash Collateral Amount for
Next Distribution Date
A. Available Cash Collateral Amount
1. Available Cash Collateral Amount $
2. Cash Collateral Account Deposit (IV.D) $
3. Cash Collateral Account Draw (XVIII.C) $
4. Cash Collateral Account Surplus (V.E) $
5. Available Cash Collateral Amount
for Next Period (1+2-3-4) $
XI. Delinquency and Default Information
A. Automobiles Delinquency Information
Delinquency
31-60 days $
61-90 days $
91-120 days $
Total $
Delinquency Units
31-60 days
61-90 days
91-120 days
D-4
Total
B. Principal Amount of Loans in Defaulted
Receivables $
C. Delinquency Percentage
1. Outstanding Principal Balance
for Delinquency >=60 days $
2. Portfolio Principal Ending Balance
for Collection Period $
3. Delinquency Percentage (1/2) %
XII. Portfolio Average Delinquency Rate
A. Delinquency Rate for Period #-2 %
B. Delinquency Rate for Period #-1 %
C. Delinquency Rate for Period # %
D. Average Delinquency Rate (Sum A thru C)/3) %
XIII. Portfolio Average Charge Off Rate
1. Principal Recoveries of Defaulted
Receivables $
2. Principal on Defaulted Receivables $
3. Average Pool Balance for Collection
Period $
4. Charge Off Rate (2-1)/3) %
A. Portfolio Charge Off Rate for
Period #-2 %
B. Portfolio Charge Off Rate for
Period #-1 %
C. Portfolio Charge Off Rate for
Period # %
D. Average Charge Off Rate (Sum A thru C)/3) %
XIV. Required Cash Collateral Amount for Next
Distribution Date (Def. PSA) $
A. Cash Collateral Floor Amount (Def. PSA)
1. Maximum Amount $
2. Possible Amount $
a. Pool Principal Balance at Beginning
of Collection Period $
b. Months Remaining to Legal Final
c. Cumulative Monthly Interest Through
Final Distribution
d. Cumulative Monthly Servicing Fee
Through Final Distribution $
e. Total (sum a thru c) $
3. Cash Collateral Floor Amount
(Min: 1 or 2) $
B. Possible Cash Collateral Amount
1. Cash Collateral Percentage
a. Average Three Period Delinquency
D-5
Percentage %
b. Delinquency Percentage Trigger %
c. Average Three Period Charge Off Rate %
d. Charge Off Rate Trigger %
e. Maximum Cash Collateral Percentage
Specified %
f. Minimum Cash Collateral Percentage
Specified %
g. Cash Collateral Percentage Applied
(if a < b or c < d then e[)] %
2. Pool Principal Ending Balance $
3. Possible Amount (2*g) $
C. Required Cash Collateral Amount for Next
Period (Max: A or B) (PSA Def.) $
XV. Excess Spread Amounts for Collection Period
(PSA Def.)
A. Interest Payments $
B. Advance by Servicer $
C. Reimbursement of Advance $
D. Monthly Interest $
E. Monthly Servicing Fee $
F. Excess Spread Amount (Lines A+B-C-D-E) $
XVI. Excess Collections for Collection Period
(PSA Def.) $
A. Excess Spread Amount $
B. Net Recovery of Defaulted Receivables
C. Excess Spread Amount to this Period's
Defaulted Receivables
1. Balance on Defaulted Receivables
a. Principal $
b. Interest $
c. Total (Lines a+b) $
2. Amount Applied to Default Balance
(Min: Lines (A+B) or C.1.c) $
D. Principal Carryover Shortfall $
E. Excess Collections (Max: 0 or Lines
A+B-C-D) $
XVII. Payment Deficiency Amount (PSA 15.1) $
A. Scheduled Monthly Disbursements $
B. Available Distribution Amount
1. Collections (I.C) $
C. Payment Deficiences Amount (Max: 0
or A-B) $
XVIII. Cash Collateral Account Draw
D-6
A. Available Cash Collateral Amount
for Collection Period $
B. Payment Deficiency Amount (XVII.C) $
C. Cash Collateral Account Draw (Min: A or B) $
D-7
EXHIBIT E
FORM OF CERTIFICATEHOLDER REPORT
--------------------------------
USAA Auto Loan Grantor Trust 1997-1
5% Automobile Loan Pass-Through Certificates
On ___________, 19___ , interest earned and principal paid on the underlying
assets for the month of ____________, 19___ were paid to you in connection with
the above referenced issue. The following information is being provided pursuant
to Section 14.7 of the Pooling and Servicing Agreement, dated as of ___________,
1997. This payment per $1000 of original issuance of your holdings is allocated
as follows:
1) Principal _______
2) Interest _______
Total per each individual certificate _______
3) Fees and Compensation paid to Servicer _______
(a) Total _______
(b) Per individual certificate _______
4) The amount deposited into the Cash
Collateral Account _______
5) Aggregate Unreimbursed Advances
Previous Month _______
Change From Previous Month _______
This Month _______
6) (a) Pool Balance before this payment _______
(b) Pool Factor before this payment _______
7) (a) Available Cash Collateral Amount _______
(b) % of Pool Balance _______
8) Required Cash Collateral Amount _______
ANNEX I
USAA FEDERAL SAVINGS BANK
Seller and Servicer
Standard Terms and Conditions of Agreement
Effective October __, 1997
SCHEDULE A
----------
Schedule A shall be deemed to be the computer data disk or
printout relating to the Receivables delivered by the Seller to the Trustee on
the Closing Date.
SCHEDULE B
----------
Location of Receivable Files
----------------------------
USAA Federal Savings Bank
00000 XxXxxxxxx Xxxxxxx
Xxx Xxxxxxx, XX 00000
