USAA AUTO LOAN GRANTOR TRUST 1998
[ ]% AUTOMOBILE LOAN PASS-THROUGH
CERTIFICATES, CLASS A
USAA FEDERAL SAVINGS BANK
(Bank)
USAA FEDERAL SAVINGS BANK
(Seller and Servicer)
UNDERWRITING AGREEMENT
July __, 1998
X.X. Xxxxxx Securities Inc.
As Representative of the
Several Underwriters named
in Schedule I (the "Representative")
c/o X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
USAA Federal Savings Bank, a federally chartered savings association,
(the "Bank"), proposes to sell to the several Underwriters named in Schedule I
hereto (the "Underwriters") $673,320,000 principal amount of [ ]% Automobile
Loan Pass-Through Certificates, Class A (the "Class A Certificates") to be
issued by the USAA Auto Loan Grantor Trust 1998-1 (the "Trust"). Each Class A
Certificate will represent a specified percentage undivided interest in the
Trust. The assets of the Trust include, among other things, a pool of fixed rate
simple interest motor vehicle installment loans secured by new and used
automobiles and light-duty trucks (the "Receivables") and certain monies due
thereunder on or after July 1, 1998 (the "Cutoff Date"), such Receivables to be
sold to the Trust by the Bank (in such capacity, the "Seller") and to be
serviced for the Trust by the Bank (in such capacity, the "Servicer"). The Class
A Certificates will be issued in an aggregate principal amount of $673,320,000,
which is equal to approximately 96.25% of the aggregate principal balance of the
Receivables as of the Cutoff Date. Simultaneously with the issuance and sale of
the Class A Certificates as contemplated herein, the Trust will also issue the
[ ]% Automobile Loan Pass-Through Certificates, Class B (the "Class B
Certificates" and, together with the Class A Certificate, the "Certificates")
evidencing an undivided ownership interest of approximately 3.75% in the Trust,
payments in respect of which are, to the extent specified in the Pooling and
Servicing Agreement, subordinated to the rights of the holders of the Class A
Certificates. The Certificates will be issued pursuant to a Pooling and
Servicing Agreement dated as of [ ], 1998 (the "Pooling and Servicing
Agreement"), among the Bank, as Seller and Servicer, and The Chase Manhattan
Bank, as trustee (the "Trustee").
The Bank has prepared and filed with the Securities and Exchange
Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations of
the Commission thereunder (the "Rules and Regulations"), a registration
statement, including a prospectus, relating to the Certificates. Any preliminary
prospectus included in such registration statement or filed with the Commission
pursuant to Rule 424(a) of the Rules and Regulations is referred to in this
Agreement as the "Preliminary Prospectus." The registration statement as
amended at the time when it shall become effective, or, if a post-effective
amendment is filed with respect thereto, as amended by such post-effective
amendment at the time of its effectiveness, including in each case information
(if any) deemed to be part of the registration statement at the time of
effectiveness pursuant to Rule 430A under the Act, is referred to in this
Agreement as the "Registration Statement," and the prospectus in the form used
to confirm sales of the Class A Certificates is referred to in this Agreement as
the "Prospectus."
The terms which follow, when used in this Agreement, shall have the
meanings indicated. "Effective Date" shall mean each date that the Registration
Statement and any post-effective amendment or amendments thereto became or
become effective. "Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto. "Rule 424" and "Rule
430A" refer to such rules under the Act. To the extent not defined herein,
capitalized terms used herein shall have the meanings assigned to such terms in
the Pooling and Servicing Agreement.
The Bank agrees with the Underwriters as follows:
1. The Bank agrees to sell and deliver the Class A Certificates to
the several Underwriters as hereinafter provided, and each Underwriter, upon
the basis of the representations and warranties herein contained, but subject to
the conditions hereinafter stated, agrees to purchase, severally and not
jointly, from the Bank the respective principal amount of Class A Certificates
set forth opposite such Underwriter's name in Schedule I hereto. The Class A
Certificates are to be purchased by the Underwriters at the purchase price of
[ ]% of the aggregate principal amount thereof plus accrued interest on the
principal amount thereof at the Class A Pass-Through Rate (as defined in the
Prospectus) calculated from (and including) July 15 1998, to (but excluding) the
Closing Date.
2. The Bank understands that the Underwriters intend (i) to make a
public offering of their respective portions of the Class A Certificates as soon
after the Registration Statement and this Agreement have become effective as in
the judgment of the Representative is advisable and (ii) initially to offer the
Class A Certificates upon the terms set forth in the Prospectus.
3. Payment for the Class A Certificates shall be made to the Bank or
to its order by wire transfer of same day funds at the office of Skadden, Arps,
Slate, Xxxxxxx & Xxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 9:00
A.M., New York City time, on August [ ], 1998 (the "Closing Date"), or at such
other time on the same or such other date, not later than the fifth Business
Day thereafter, as the Representative and the Bank may agree upon in writing. As
used herein, the term "Business Day" means any day other than a day on which
banks are permitted or required to be closed in New York City.
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Payment for the Class A Certificates shall be made against delivery
to the Representative (for the respective accounts of the several Underwriters)
of the Class A Certificates registered in the name of Cede & Co. as nominee of
The Depository Trust Company and in such denominations, as permitted by the
Pooling and Servicing Agreement, as the Representative shall request in writing
not later than two full Business Days prior to the Closing Date, with any
transfer taxes payable in connection with the transfer to the Underwriters of
the Certificates duly paid by the Bank. The physical certificates representing
interests in the Class A Certificates will be made available for inspection and
packaging by the Representative at the office of Skadden, Arps, Slate, Xxxxxxx &
Xxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 not later than 1:00 P.M.,
New York City time, on the Business Day prior to the Closing Date.
4. The Bank represents and warrants to and agrees with each
Underwriter that:
(a) The Registration Statement on Form S-3 (No. 333-59047),
including the Prospectus and such amendments thereto as may have been required
on or prior to the date hereof, relating to the Certificates, has been filed
with the Commission and such Registration Statement as amended has become
effective. With respect to the Registration Statement, the conditions to the use
of a registration statement on Form S-3 under the Act, as set forth in the
General Instructions to Form S-3, have been satisfied by the Bank;
(b) No stop order suspending the effectiveness of the
Registration Statement has been issued and no proceeding for that purpose has
been instituted or, to the knowledge of the Bank, threatened by the Commission,
and on the Effective Date of the Registration Statement, the Registration
Statement and the Prospectus conformed in all respects to the requirements of
the Act and the Rules and Regulations, and did not include any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and, on the
Closing Date, the Registration Statement and the Prospectus will conform in all
respects to the requirements of the Act and the Rules and Regulations, and
neither of such documents will include any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information furnished to the Bank in
writing by any Underwriter through the Representative expressly for use
therein;
(c) As of the Closing Date, the representations and warranties
of the Bank, in its capacity as Seller and Servicer under the Pooling and
Servicing Agreement, will be true and correct, and each Receivable will satisfy
the conditions set forth in Section 12.1(b) thereof;
(d) The Bank has been duly organized and is validly existing as
a federally chartered savings association and is a member of the Federal Home
Loan Bank System. The Bank is in good standing with the Office of Thrift
Supervision and has power and authority (corporate and other) to own, lease and
operate its properties and conduct its business as described in the Prospectus,
and to enter into and perform its obligations under this Agreement;
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(e) The Class A Certificates have been duly authorized, and,
when issued and delivered pursuant to the Pooling and Servicing Agreement, duly
authenticated by the Trustee and paid for by the Underwriters in accordance with
the terms of this Agreement, will be duly and validly issued, authenticated and
delivered and entitled to the benefits provided by the Pooling and Servicing
Agreement; each of the Pooling and Servicing Agreement, and this Agreement have
been duly authorized by the Bank and, when executed and delivered by the Bank
and the other party thereto (in the case of the Pooling and Servicing Agreement,
each of the Pooling and Servicing Agreement and this Agreement will constitute a
valid and binding agreement of the Bank; the Class A Certificates and the
Pooling and Servicing Agreement, will conform to the descriptions thereof in the
Prospectus in all material respects;
(f) No consent, approval, authorization or order of, or filing
with, any court or governmental agency or body is required to be obtained or
made by the Bank for the consummation of the transactions contemplated by this
Agreement or the Pooling and Servicing Agreement except such as have been
obtained and made under the Act, such as may be required under state securities
laws and the filing of any financing statements required to perfect the Trust's
interest in the Receivables;
(g) The Bank is not in violation of its By-laws or Charter or
in default in the performance or observance of any obligation, agreement,
covenant or condition contained in any agreement or instrument to which it is a
party or by which it or its properties is bound which would have a material
adverse effect on the transactions contemplated herein or in the Pooling and
Servicing Agreement. The execution, delivery and performance of this Agreement
and the Pooling and Servicing Agreement, and the issuance and sale of the Class
A Certificates and compliance with the terms and provisions hereof and thereof
will not result in a breach or violation of any of the terms and provisions of,
or constitute a default under, any statute, rule, regulation or order of any
governmental agency or body or any court having jurisdiction over the Bank or
any of its properties or any agreement or instrument to which the Bank is a
party or by which the Bank is bound or to which any of the properties of the
Bank is subject, or the By-laws or Charter of the Bank; and the Bank has full
power and authority to authorize and sell, and establish, the Trust that will
issue the Class A Certificates as contemplated by this Agreement and to enter
into this Agreement and the Pooling and Servicing Agreement and consummate the
transactions contemplated hereby and thereby;
(h) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, except as otherwise stated
therein, (A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Bank and its subsidiaries considered as one enterprise, whether
or not arising in the ordinary course of business, and (B) there have been no
transactions entered into by the Bank or any of its subsidiaries, other than
those in the ordinary course of business, which are material with respect to the
Bank and its subsidiaries considered as one enterprise;
(i) Other than as set forth or contemplated in the Prospectus,
there are no legal or governmental proceedings pending or, to the knowledge of
the Bank, threatened to which the Bank is or may be a party or to which any
property of the Bank is or may be the subject which, if determined adversely to
the Bank, could individually or in the aggregate reasonably be expected to have
a material adverse effect on the general affairs, business, prospects,
management, financial position, stockholders'
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equity or results of operations of the Bank or that would reasonably be expected
to materially adversely affect the interests of the holders of the Class A
Certificates; and there are no contracts or other documents of a character
required to be filed as an exhibit to the Registration Statement or required to
be described in the Registration Statement or the Prospectus which are not filed
or described as required; and
(j) By assignment and delivery of each of the Receivables to
the Trust as of the Closing Date, the Bank will transfer all of its right, title
and interest in, to and under the Receivables to the Trust, subject to no prior
lien, mortgage, security interest, pledge, adverse claim, charge or other
encumbrance.
5. The Bank covenants and agrees with the several Underwriters that:
(a) Prior to the termination of the offering of the Class A
Certificates, the Bank will not file or cause to be filed any amendment of the
Registration Statement or supplement to the Prospectus which shall be reasonably
disapproved of promptly by the Representative after reasonable notice thereof.
Subject to the foregoing sentence, if the Registration Statement has become or
becomes effective pursuant to Rule 430A, or filing of the Prospectus is
otherwise required under Rule 424(b), the Bank will cause the Prospectus,
properly completed, and any supplement thereto, to be filed with the Commission
pursuant to the applicable paragraph of Rule 424(b) within the time period
prescribed and will provide evidence satisfactory to the Underwriters of such
timely filing. The Bank will promptly advise the Underwriters (i) when the
Prospectus, and any supplement thereto, shall have been filed (if required) with
the Commission pursuant to Rule 424(b), (ii) when, prior to termination of the
offering of the Class A Certificates, any amendment to the Registration
Statement shall have become effective, (iii) of any request by the Commission
for any amendment of the Registration Statement or supplement to the Prospectus
or for any additional information, (iv) of the receipt by the Bank of
notification with respect to the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (v) of the receipt by the
Bank of notification with respect to the suspension of the qualification of the
Class A Certificates for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Bank will use its reasonable
best efforts to prevent the issuance of any such stop order and, if issued, to
obtain as soon as possible the withdrawal thereof;
(b) The Bank will deliver, at its expense, to the
Representative, two signed copies of the Registration Statement (as originally
filed) and each amendment thereto, in each case including exhibits, and to each
other Underwriter a conformed copy of the Registration Statement and each
amendment thereto, in each case without exhibits, and, during the period
mentioned in paragraph (e) below, to each of the Underwriters as many copies of
the Prospectus (including all amendments and supplements thereto) as the
Representative may reasonably request. The Bank will furnish or cause to be
furnished to the Representative copies of all reports on Form SR required by
Rule 463 under the Act;
(c) The Bank will if (i) during such period of time after the
first date of the public offering of the Class A Certificates as in the opinion
of counsel for the Underwriters a Prospectus relating to the Class A
Certificates is required by law to be delivered in connection with sales by an
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Underwriter or dealer, (ii) any event shall occur as a result of which it is
necessary to amend or supplement the Prospectus in order to make the statements
therein, in the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or (iii) it is necessary to amend or supplement the
Prospectus to comply with the applicable law, forthwith prepare and furnish, at
the expense of the Bank, to the Underwriters and to the dealers (whose names and
addresses the Representative will furnish to the Bank) to which Class A
Certificates may have been sold by the Representative on behalf of the
Underwriters and upon request by the Representative to any other dealers
identified by the Representative, such amendments or supplements to the
Prospectus as may be necessary so that the statements in the Prospectus as so
amended or supplemented will not, in the light of the circumstances when the
Prospectus is delivered to a purchaser, be misleading or so that the Prospectus
will comply with the law;
(d) The Bank will endeavor to qualify the Class A Certificates
for offer and sale under the securities or "Blue Sky" laws of such jurisdictions
as the Representative shall reasonably request and will continue such
qualification in effect so long as reasonably required for distribution of the
Class A Certificates and will pay all fees and expenses (including fees and
disbursements of counsel to the Underwriters) reasonably incurred in connection
with such qualification and in connection with the determination of the
eligibility of the Class A Certificates for investment under the laws of such
jurisdictions as the Representative may designate; provided, however, that the
Bank shall not be obligated to qualify to do business in any jurisdiction in
which it is not currently so qualified; and provided further that the Bank shall
not be required to file a general consent to service of process in any
jurisdiction;
(e) On or before [January 31, 2000], the Bank will cause the
Trust to make generally available to the holders of the Certificates and to the
Representative as soon as practicable an earnings statement covering a period of
at least twelve months beginning with the first fiscal quarter of the Trust
occurring after the Effective Date of the Registration Statement, which shall
satisfy the provisions of Section 11(a) of the Act and Rule 158 of the
Commission promulgated thereunder;
(f) For the period from the date of this Agreement until the
retirement of the Class A Certificates, the Servicer will furnish to the
Representative (x) copies of each certificate and the annual statements of
compliance delivered to the Trustee pursuant to Article XIII of the Pooling and
Servicing Agreement and the annual independent certified public accountant's
servicing reports furnished to the Trustee pursuant to Article XIII of the
Pooling and Servicing Agreement, by first-class mail as soon as practicable
after such statements and reports are furnished to the Trustee and (y) copies of
each amendment to the Pooling and Servicing Agreement, and on each Determination
Date or as soon thereafter as practicable, the Servicer shall give notice
substantially in the form of Schedule II hereto by telex or telecopy to the
Representative of the Class A Pool Factor as of the related Record Date;
(g) During the period beginning on the date hereof and
continuing to and including the Business Day following the Closing Date, the
Bank will not offer, sell, contract to sell or otherwise dispose of any
securities of or guaranteed by the Bank which are substantially similar to the
Class A Certificates without the prior written consent of the Representative;
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(h) The Bank will register the Class A Certificates pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act") prior to
[March 31, 1999];
(i) On or before the Closing Date, the Bank shall cause its
computer records relating to the Receivables to be marked to show the Trust's
absolute ownership of the Receivables, and from and after the Closing Date the
Bank shall not, as Seller or Servicer, take any action inconsistent with the
Trust's ownership of such Receivables, other than as permitted by the Pooling
and Servicing Agreement;
(j) To the extent, if any, that the ratings provided with
respect to the Class A Certificates and the Class B Certificates by Xxxxx'x
Investors Service, Inc. ("Moody's") and Standard & Poor's Ratings Services, a
Division of The McGraw Hill Companies, Inc. ("S&P") are conditional upon the
furnishing of documents or the taking of any other action by the Bank agreed
upon on or prior to the Closing Date, the Bank shall furnish such documents and
take any such action;
(k) So long as any of the Class A Certificates are outstanding,
the Bank will furnish to the Representative by first class mail (i) as soon as
practical after the end of the Bank's fiscal year, copies of all documents,
records and financial statements required to be distributed to
Certificateholders (including Certificate Owners) or filed with the Commission
pursuant to the Exchange Act, or any order of the Commission thereunder and (ii)
from time to time, any other information concerning the Bank filed with any
government or regulatory authority or national securities exchange which is
otherwise publicly available, as the Representative may reasonably request; and
(l) The Bank is not, and upon the issuance and sale of the
Class A Certificates as herein contemplated and the application of the net
proceeds therefrom as described in the Prospectus will not be, an "investment
company" or an entity "controlled" by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended (the "1940 Act").
6. The Bank will pay all expenses incident to the performance of its
obligations under this Agreement, including (i) the printing and filing of the
Registration Statement as originally filed and of each amendment thereto, (ii)
the Trustee's acceptance fee and the fees and disbursements of the counsel to
the Trustee, (iii) the fees and disbursements of the accountants, (iv) the fees
of the Rating Agencies and (v) "Blue Sky" expenses; provided, however, that the
Underwriters may reimburse the Bank for certain expenses incurred by the Bank as
agreed to by the Underwriters and the Bank.
7. The obligations of the several Underwriters to purchase and pay
for the Class A Certificates will be subject to the accuracy of the
representations and warranties on the part of the Bank herein, to the accuracy
of the statements of officers of the Bank made pursuant to the provisions
hereof, to the performance by the Bank of its obligations hereunder and to the
following additional conditions precedent:
(a) At the time this Agreement is executed and delivered by the
Bank KPMG Xxxx Xxxxxxx shall have furnished to the Representative a letter
dated, as of the date of this Agreement substantially in the form of the draft
to which the Representative previously agreed.
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(b) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the Rules and Regulations and in accordance with Section 5(a) of this
Agreement; no stop order suspending the effectiveness of the Registration
Statement shall be in effect, and no proceedings for such purpose shall be
pending before or, to the knowledge of the Bank, threatened by the Commission;
and all requests for additional information from the Commission with respect to
the Registration Statement shall have been complied with to the satisfaction of
the Representative.
(c) Subsequent to the execution and delivery of this Agreement,
there shall have not occurred (i) any change, or any development involving a
prospective change, in or affecting particularly the business or properties of
the Bank or USAA Capital Corporation which, in the reasonable judgment of the
Representative materially impairs the investment quality of the Class A
Certificates that makes it impracticable or inadvisable to proceed with
completion of the sale of, and any payment for, the Class A Certificates, or
(ii) any downgrading in the rating of any debt securities of the Bank or any
of its direct or indirect subsidiaries by any "nationally recognized
statistical rating organization" (as defined for purposes of Rule 436(g)
under the Act), or any public announcement that any such organization has
under surveillance or review its rating of any such debt securities (other
than an announcement with positive implications of a possible upgrading,
and no implication of a possible downgrading, of such rating).
(d) Xxxxxxx X. Xxxxxx, Vice President and Banking Counsel of
the Bank, shall have furnished to the Representative his written opinion dated
the Closing Date, in form and substance satisfactory to the Representative, to
the effect that:
(i) The Bank (1) has been duly chartered and is validly
existing as a federal savings association under the laws of the United
States, (2) has the power and authority to own its properties and conduct
its business as described in the Prospectus and (3) had at all relevant
times, and now has, the power, authority and legal right to acquire, own,
sell and service the Receivables;
(ii) The Bank has the power and authority to execute and
deliver this Agreement and the Pooling and Servicing Agreement and to
consummate the transactions contemplated herein and therein;
(iii) No consent, approval, authorization or order of, or
filing with, any Texas or federal governmental agency or body or any court
is required by the Bank to perform the transactions contemplated by this
Agreement or the Pooling and Servicing Agreement except for (1) filing of
a Uniform Commercial Code financing statement in the State of Texas with
respect to the transfer of the Receivables to the Trust pursuant to the
Pooling and Servicing Agreement and (2) such consents, approvals,
authorizations, orders or filings as may be required under the federal and
state securities laws;
(iv) None of the execution, delivery and performance by the
Bank of this Agreement or the Pooling and Servicing Agreement, the
transfer of the Receivables to the
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Trust, the assignment of the security interests of the Bank in the
Financed Vehicles, the issuance and sale of the Class A Certificates or
the consummation of any other of the transactions contemplated herein or
in the Pooling and Servicing Agreement, will conflict with, result in a
breach, violation or acceleration of any of the terms of, or constitute a
default under, the By-Laws or the Charter of the Bank, as amended, or, to
the best of such counsel's knowledge, any rule, order, statute or
regulation known to such counsel to be currently applicable to the Bank of
any court, regulatory body, administrative agency or governmental body
having jurisdiction over the Bank or the terms of any material indenture
or other material agreement or instrument known to such counsel to which
the Bank is a party or by which it or its properties are bound;
(v) To the best knowledge of such counsel, after due
inquiry, there are no actions, proceedings or investigations pending or
threatened before any court, administrative agency or other tribunal (1)
asserting the invalidity of this Agreement, or the Pooling and Servicing
Agreement, or either Class of the Certificates, (2) seeking to prevent the
issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement or the Pooling and Servicing
Agreement, or (3) seeking adversely to affect the federal income tax
attributes of either Class of Certificates as described in the Prospectus
under the headings "Prospectus Summary -- Tax Status" and "Certain Federal
Income Tax Consequences";
(vi) The Pooling and Servicing Agreement, has been duly
authorized, executed and delivered by the Bank;
(vii) This Agreement has been duly authorized, executed and
delivered by the Bank; and
(viii) The statements in the Prospectus under the caption
"Certain Legal Aspects of the Receivables," to the extent they constitute
matters of law or legal conclusions, are correct in all material respects.
In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
Texas and the United States, to the extent deemed proper and stated in such
opinion, upon the opinion of other qualified counsel of good standing, and (B)
as to matters of fact, to the extent deemed proper and as stated therein, on
certificates of responsible officers of the Trust, the Bank and public
officials. References to the Prospectus in this paragraph (d) include any
supplements thereto.
(e) Jones, Day, Xxxxxx & Xxxxx, special counsel to the Bank,
shall have furnished to the Representative their written opinion dated the
Closing Date, in form and substance satisfactory to the Representative, to the
effect that:
(i) The Certificates have been duly and validly authorized
and, when executed, authenticated and issued in accordance with the terms
of the Pooling and Servicing Agreement, and delivered to and paid for by
the Underwriters pursuant to this Agreement, in the case of the Class A
Certificates, and when delivered to and paid for by the purchaser
9
thereof, in the case of the Class B Certificates, will be duly and validly
issued and outstanding and will be entitled to the benefits of the Pooling
and Servicing Agreement;
(ii) Assuming the authorization, execution and delivery
thereof by the Trustee with respect to the Pooling and Servicing
Agreement, such agreement constitutes the legal, valid and binding
agreement of the Bank, enforceable against the Bank in accordance with its
terms, subject, as to enforcement, to (1) the effect of bankruptcy,
insolvency, reorganization, moratorium, conservatorship, receivership or
other similar laws of general application relating to or affecting
creditors' rights generally or the rights of creditors of federal savings
associations; (2) the application of general principles of equity
(regardless of whether such enforceability is considered in a proceeding
in equity or at law); and (3) the unenforceability under certain
circumstances of provisions indemnifying a party against liability where
such indemnification is contrary to public policy;
(iii) The Registration Statement became effective under the
Act as of the date and time specified in such opinion; after due inquiry,
to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are pending or
contemplated under the Act; the Registration Statement, and each amendment
thereof or supplement thereto as of its Effective Date and the Prospectus
as of its date of issuance and as of the Closing Date complied as to form
in all material respects with the requirements of the Act and the Rules
and Regulations; and such counsel has no reason to believe that either the
Registration Statement or the Prospectus or any such amendment thereof or
supplement thereto as of its Effective Date or date of issuance, as the
case may be, and as of the Closing Date contained any untrue statement of
a material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; it being
understood that such counsel need express no opinion as to the financial
statements or other financial data contained in the Registration Statement
or the Prospectus;
(iv) The Class A Certificates, the Pooling and Servicing
Agreement and this Agreement, conform in all material respects to the
descriptions thereof set forth in the Registration Statement and the
Prospectus;
(v) The Pooling and Servicing Agreement is not required to
be qualified under the Trust Indenture Act of 1939, as amended; and
(vi) The Trust is not now, and immediately following the
sale of the Certificates pursuant to this Agreement will not be, required
to be registered under the Investment Company Act of 1940, as amended.
In addition, such counsel shall opine as to certain matters relating
to the acquisition by the Bank of a perfected first priority security interest
in the vehicles financed by motor vehicle installment loans made by the Bank and
that, based upon certain representations made by the Bank, the Receivables
constitute "chattel paper" (as defined in Section 9.105(a)(2) of the Uniform
Commercial Code of the State of Texas).
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In rendering such opinion, such counsel may rely (A) as to matters
involving the application of laws of any jurisdiction other than the State of
Texas, New York and the United States, to the extent deemed proper and stated in
such opinion, upon the opinion of other qualified counsel of good standing, and
(B) as to matters of fact, to the extent deemed proper and as stated therein, on
certificates of responsible officers of the Trust, the Bank and public
officials. References to the Prospectus in this paragraph (e) include any
supplements thereto.
(f) Jones, Day, Xxxxxx & Xxxxx, special counsel to the Bank,
shall have furnished to he Representative a written opinion or opinions dated
the Closing Date, in form and substance satisfactory to the Representative, with
respect to certain matters relating to the transfer of the Receivables to the
Trust, with respect to the perfection of the Trust's interests in the
Receivables and with respect to certain other matters.
(g) Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, counsel to the
Underwriters, shall have furnished to the Representative a written opinion or
opinions dated the Closing Date, in form and substance satisfactory to the
Representative, with respect to the validity of the Class A Certificates, the
Registration Statement, the Prospectus and other related matters as the
Underwriters may require, and the Bank shall have furnished to such counsel such
documents as they reasonably request for the purpose of enabling them to pass
upon such matters.
(h) Jones, Day, Xxxxxx & Xxxxx, special tax counsel to the
Bank, shall have furnished to the Representative a written opinion dated as of
the Closing Date, in form and substance satisfactory to the Representative, to
the effect that:
(i) the Trust will be treated as a grantor trust, under
subpart E, part I of subchapter J of the Internal Revenue Code of 1986, as
amended, and not as a partnership or an association taxable as a
corporation for federal income tax purposes and the holders of the Class A
Certificates will each be treated as owning their respective shares of the
Trust's assets and income for federal income tax purposes;
(ii) The statements in the Registration Statement and
Prospectus under the headings "Prospectus Summary -- Tax Status" and
"Certain Federal Income Tax Consequences" to the extent that they address
matters of law or legal conclusions with respect thereto, are correct in
all material respects; and
(iii) the Trust created by the Pooling and Servicing
Agreement will not be subject to Texas franchise taxes.
(i) The Trustee shall have furnished to the Representative a
written opinion dated as of the Closing Date, in form and substance satisfactory
to the Representative, to the effect that:
(i) the Trustee has been duly incorporated and is validly
existing as a banking organization organized under the laws of the state
of New York;
11
(ii) The Trustee has full corporate trust power and
authority to enter into and perform its obligations under the Pooling and
Servicing Agreement;
(iii) The Pooling and Servicing Agreement has been duly
authorized, executed and delivered by the Trustee and constitutes a valid
and legally binding agreement of the Trustee, enforceable against the
Trustee in accordance with its terms, subject, as to enforcement of
remedies, (a) to applicable bankruptcy, insolvency, reorganization, and
other similar laws affecting the rights of creditors generally, and (b) to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
(iv) The Trustee has duly executed and authenticated the
Certificates issued on the date hereof on behalf of the Trust;
(v) No consent, approval or authorization of, or
registration, declaration or filing with, or giving of notice to or the
taking of any other act with respect to any court or governmental
authority, agency or body of the United States of America or of any state
governing the trust powers of the Trustee is required under any existing
laws or regulation for the consummation on the part of the Trustee of any
of the transactions contemplated in the Pooling and Servicing Agreement,
except such as have been obtained; and
(vi) The execution and delivery of the Pooling and
Servicing Agreement and the performance by the Trustee of the terms
thereof do not conflict with or result in a violation of (1) any laws or
regulations of the United States of America or of any state governing the
trust powers of the Trustee, (2) the Articles of Incorporation or By-Laws
of the Trustee or (3) any material agreement, instrument, order, writ,
judgment or decree known to such counsel to which the Trustee is a party
or is subject.
In rendering such opinions, counsel to the Trustee may rely on the
opinion of the office of the general counsel to the Trustee.
(j) The Underwriters shall have received a letter, dated the
Closing Date, of KPMG Peat Marwick which meets the requirements of the
subsection (a) of this Section 7, except that the specified date referred to in
such subsection will be a date not more than three days prior to the Closing
Date for the purposes of this subsection.
(k) The Underwriters shall have received evidence satisfactory
to them that the Class A Certificates have been rated in the highest rating
category by each of Xxxxx'x and by S&P and that the Class B Certificates have
been rated at least "BBB" or its equivalent by each of the foregoing Rating
Agencies.
(l) The Bank shall have furnished to the Representative a
certificate, in form and substance satisfactory to the Representative, signed by
a Vice President or more senior officer of the Bank and dated the Closing Date,
in which such officer shall state that, to the best of his or her knowledge
after reasonable investigation the representations and warranties of the Bank in
this Agreement are true and correct on and as of the Closing Date, that the
Bank has complied with all agree-
12
ments and satisfied all conditions on its part to be performed or satisfied
hereunder at or prior to the Closing Date, that the representations and
warranties of the Bank, as Seller and as Servicer, in the Pooling and Servicing
Agreement and the conditions set forth in Section 12.1(b) of the Pooling and
Servicing Agreement, are true and correct as of the dates specified in the
Pooling and Servicing Agreement, that no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings
for that purpose have been instituted or are threatened by the Commission and
that, subsequent to the date of the Prospectus, there has been no material
adverse change in the financial position or results of operation of the Bank's
motor vehicle installment loan business except as set forth in or contemplated
by the Prospectus or as described in such certificate.
The Bank will furnish or cause to be furnished to the Underwriters such
number of conformed copies of such opinions, certificates, letters and documents
as the Underwriters reasonably request.
(m) The Class B Certificates shall have been issued by the
Trust and an affiliate of the Seller shall have entered into a valid and binding
agreement to purchase the full aggregate principal amount of such Class B
Certificates.
(n) The Representative shall have received a letter or letters
from each counsel delivering any written opinion to any Rating Agency in
connection with the transaction described herein which is not otherwise
described in this Agreement allowing the Underwriters to rely on such opinion as
if it were addressed to the Underwriters.
(o) On the Closing Date, the representations and warranties of
the Bank in the Pooling and Servicing Agreement will be true and correct.
(p) Any taxes, fees and other governmental charges which are
due and payable in connection with the execution, delivery and performance of
this Agreement, the Pooling and Servicing Agreement, and the Certificates shall
have been paid by the Bank at or prior to the Closing Date.
8. The Bank agrees to indemnify and hold harmless each Underwriter
and each person, if any, who controls any Underwriter within the meaning of
either Section 15 of the Act or Section 20 of the Exchange Act, from and against
any and all losses, claims, damages and liabilities (including, without
limitation, the legal fees and other expenses reasonably incurred in connection
with investigating, preparing or defending any suit, action or proceeding or any
claim asserted, except as otherwise provided below regarding the limitation on
use of counsel) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus (as
amended or supplemented if the Bank shall have furnished such amendments or
supplements thereto) or any preliminary prospectus, or caused by any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, except insofar as
such losses, claims, damages or liabilities are caused by any untrue statement
or omission or alleged untrue statement or omission made in reliance upon and in
conformity with information furnished to the Bank in writing by any Underwriter
through the Representative expressly for use therein; provided that the
foregoing indemnity with respect to any preliminary prospectus shall not inure
to the benefit of any Underwriter (or to the benefit of any person controlling
such Underwriter)
13
from whom the person asserting any losses, claims or damages purchased
Certificates if such untrue statement or omission or alleged untrue statement or
omission made in such preliminary prospectus is eliminated or remedied in the
Prospectus (as amended or supplemented if the Bank shall have furnished any
amendments or supplements thereto) and, if the furnishing of a copy of the
Prospectus (as so amended or supplemented) to such person was required by law or
was requested in writing by the Bank, a copy of the Prospectus (as so amended or
supplemented) shall not have been furnished to such person at or prior to the
written confirmation of the sale of such Certificates to such person.
Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Bank, each director and officer of the Bank who signed the
Registration Statement, and each person who controls the Bank within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act to the same extent as
the foregoing indemnity from the Bank to each Underwriter, but only with
reference to information furnished to the Bank in writing by such Underwriter
through the Representative expressly for use in the Registration Statement, the
Prospectus, any amendment or supplement thereto, or any preliminary prospectus.
If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against
any person in respect of which indemnity may be sought pursuant to either of the
two preceding paragraphs, such person (the "Indemnified Person") shall promptly
notify the person against whom such indemnity may be sought (the "Indemnifying
Person") in writing, and the Indemnifying Person, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to the
Indemnified Person to represent the Indemnified Person and any others the
Indemnifying Person may designate in such proceeding and shall pay the fees and
expenses of such counsel related to such proceeding. In any such proceeding, any
Indemnified Person shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have
mutually agreed to the contrary, (ii) the Indemnifying Person has failed within
a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person or (iii) the named parties in any such proceeding (including any
impleaded parties) include both the Indemnifying Person and the Indemnified
Person and representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between them, in
which case such counsel for the Indemnified Person shall be reasonably
satisfactory to the Indemnifying Person. It is understood that the Indemnifying
Person shall not, in connection with any proceeding or related proceeding in the
same jurisdiction, be liable for the fees and expenses of more than one separate
firm (in addition to one local counsel in each applicable jurisdiction) for all
Indemnified Persons, and that all such fees and expenses shall be reimbursed as
they are incurred. Any such separate firm for the Underwriters and such control
persons of Underwriters shall be designated in writing by the Representative and
any such separate firm for the Bank or of its directors and officers who sign
the Registration Statement or control persons shall be designated in writing by
the Bank. The Indemnifying Person shall not be liable for any settlement of any
claim or proceeding effected without its written consent. Notwithstanding the
foregoing sentence, if at any time an Indemnified Person shall have requested an
Indemnifying Person to reimburse the Indemnified Person for fees and expenses of
counsel as contemplated by the third sentence of this paragraph, the
Indemnifying Person agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 days after receipt by such Indemnifying Person of the
aforesaid request and (ii) such Indemnifying Person shall not have
14
reimbursed the Indemnified Person in accordance with such request prior to the
date of such settlement. No Indemnifying Person shall, without the prior written
consent of the Indemnified Person, effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Person is or could
have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release of
such Indemnified Person from all liability on claims that are the subject matter
of such proceeding.
If the indemnification provided for in the first and second
paragraphs of this Section 8 is unavailable other than in accordance with its
terms to an Indemnified Person in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such
paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall
contribute to the amount paid or payable by such Indemnified Person as a result
of such losses, claims, damages or liabilities (i) in such proportion as is
appropriate to reflect the relative benefits received by the Bank on the one
hand and the Underwriters on the other hand from the offering of the Class A
Certificates or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Bank on the one hand and the Underwriters on the other in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Bank on the one hand and
the Underwriters on the other shall be deemed to be in the same respective
proportions as the net proceeds from the offering (before deducting expenses)
received by the Bank and the total underwriting discounts and the commissions
received by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate public offering price of the
Class A Certificates. The relative fault of the Bank on the one hand and the
Underwriters on the other shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Bank or by any of the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission.
The Bank and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Person as a result of the losses,
claims, damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified
Person in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 8, in no event shall an
Underwriter be required to contribute any amount in excess of the amount by
which the total price at which the Class A Certificates underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay by reason of
such untrue or alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 8 are several in
15
proportion to the respective principal amount of Class A Certificates set forth
opposite their names in Schedule I hereto, and not joint.
The indemnity and contribution agreements contained in this Section
8 are in addition to any liability which the Indemnifying Persons may otherwise
have to the Indemnified Persons referred to above.
The indemnity and contribution agreements contained in this Section
8 and the representations and warranties of the Bank set forth in this Agreement
shall remain operative and in full force and effect regardless of (i) any
termination of this Agreement, (ii) any investigation made by or on behalf of
any Underwriter or any person controlling any Underwriter or by or on behalf of
the Bank, or any of their officers or directors or any other person controlling
the Bank and (iii) acceptance of and payment for any of the Certificates.
9. Notwithstanding anything herein contained, this Agreement may be
terminated in the absolute discretion of the Representative, by notice given to
the Bank, if after the execution and delivery of this Agreement and prior to the
Closing Date (i) trading generally shall have been suspended or materially
limited on or by, as the case may be, the New York Stock Exchange or the
American Stock Exchange; (ii) trading of any securities issued or guaranteed by
the Bank or USAA Capital Corporation shall have been suspended on any exchange
or in any over-the-counter market; (iii) a general moratorium on commercial
banking activities shall have been declared by Federal, Texas or New York State
authorities; or (iv) there shall have occurred any outbreak or escalation of
hostilities or any change in financial markets or any calamity or crisis that,
in the judgment of the Representative is material and adverse and which, in the
judgment of the Representative, makes it impracticable to market the Class A
Certificates on the terms and in the manner contemplated in the Prospectus.
10. This Agreement shall become effective upon the later of (x)
execution and delivery hereof by the parties hereto and (y) release of
notification of the effectiveness of the Registration Statement (or, if
applicable, any post-effective amendment) by the Commission.
If on the Closing Date any one or more of the Underwriters shall
fail or refuse to purchase Class A Certificates which it or they have agreed to
purchase hereunder on such date, and the aggregate principal amount of Class A
Certificates which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase is not more than one-tenth of the aggregate principal
amount of the Class A Certificates to be purchased on such date, the other
Underwriters shall be obligated severally in the proportions that the principal
amount of Class A Certificates set forth opposite their respective names in
Schedule I bears to the aggregate principal amount of Class A Certificates set
forth opposite the names of all such non-defaulting Underwriters, or in such
other proportions as the Representative may specify, to purchase the Class A
Certificates which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase on such date; provided that in no event shall the
principal amount of Class A Certificates that any Underwriter has agreed to
purchase pursuant to Section 1 be increased pursuant to this Section 10 by an
amount in excess of one-ninth of such principal amount of Class A Certificates
without the written consent of such Underwriter. If on the Closing Date any
Underwriter or Underwriters shall fail or refuse to purchase Class A
Certificates which it or they have agreed to purchase hereunder on such date,
and the aggregate principal amount of Class A Certifi-
16
xxxxx with respect to which such default occurs is more than one-tenth of the
aggregate principal amount of Class A Certificates to be purchased on such date,
and arrangements satisfactory to the Representative and the Bank for the
purchase of such Class A Certificates are not made within 36 hours after such
default, this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Bank. In any such case either the
Representative or the Bank shall have the right to postpone the Closing Date,
but in no event for longer than seven days, in order that the required changes,
if any, in the Registration Statement and in the Prospectus or in any other
documents or arrangements may be effected. Any action taken under this
paragraph shall not relieve any defaulting Underwriter from liability in respect
of any default of such Underwriter under this Agreement.
11. X.X. Xxxxxx Securities Inc. ("JPMSI") and the Bank agree that
JPMSI shall act as the agent of the Bank in connection with the sale of the
Class B Certificates by the Seller to [ ], an affiliate of the Seller.
The indemnification and contribution provisions set forth in Section 8 hereof
shall apply to JPMSI in its capacity as such agent in respect of the Class B
Certificates to the extent such provisions apply to each Underwriter in respect
of the Class A Certificates. No compensation shall be payable by the Bank to
JPMSI in connection with acting as such agent.
12. If this Agreement shall be terminated by the Underwriters, or
any of them, because of any failure or refusal on the part of the Bank to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Bank shall be unable to perform its obligations under this
Agreement or any condition of the Underwriters' obligations cannot be fulfilled,
the Bank agrees to reimburse the Underwriters or such Underwriters as have so
terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and expenses of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
13. Any action by the Underwriters hereunder may be taken by the
Representative alone on behalf of the Underwriters, and any such action taken by
the Representative alone shall be binding upon the Underwriters. All notices and
other communications hereunder shall be in writing and shall be deemed to have
been duly given if mailed, delivered by hand or transmitted by any standard form
of telecommunication. Notices to the Underwriters shall be given to the
Representative, c/o X.X. Xxxxxx Securities Inc., 00 Xxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 (Facsimile No.: 212-648-5909), Attention: Syndicate Desk. Notices to
the Bank shall be given to it at USAA Federal Savings Bank, 00000 XxXxxxxxx
Xxxxxxx, Xxx Xxxxxxx, Xxxxx 00000 (Facsimile No.: 210-498-3207), Attention:
Xxxxxxx X. Xxxxxx.
14. This Agreement shall inure to the benefit of and be binding upon
the Bank, the Underwriters, any controlling persons referred to herein and their
respective successors and assigns. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person, firm or
corporation any legal or equitable right, remedy or claim under or in respect of
this Agreement or any provision herein contained. No purchaser of Class A
Certificates from any Underwriter shall be deemed to be a successor by reason
merely of such purchase.
15. This Agreement may be signed in counterparts, each of which
shall be an original and all of which together shall constitute one and the same
instrument. THIS AGREEMENT SHALL
17
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF.
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicate hereof, whereupon
it will become a binding agreement among the Bank and the Underwriters in
accordance with its terms.
Very truly yours,
USAA FEDERAL SAVINGS BANK
By:____________________________________________________
Name:
Title:
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first above written.
X.X. XXXXXX SECURITIES INC.
As Representative of the
Underwriters
By:_______________________
Name:
Title:
SCHEDULE I
UNDERWRITERS
Principal Amount of Class A Certificates
X.X. Xxxxxx Securities Inc............... $[ ]
[ ]...................... [ ]
[ ]...................... [ ]
[ ]...................... [ ]
---------------------
Total............................ $[ ]
=====================
SCHEDULE II
FORM OF SERVICER'S CERTIFICATE
X.X. Xxxxxx Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention:
Re: Pooling and Servicing Agreement dated as of [ ] (the
"Pooling and Servicing Agreement") between USAA Federal Savings
Bank, as Seller and Servicer, and the Chase Manhattan Bank, as
Trustee
Determination Date to which this Certificate relates:
___________, 19__
For Monthly Period ending on _________, 19__
1. The undersigned Servicing Officer does hereby certify that
the Class A Pool Factor is __________.
2. Capitalized terms used in this Certificate shall have the
same meanings as in the Pooling and Servicing Agreement.
IN WITNESS WHEREOF, I have hereunto set my hand as of the
above-referenced Determination Date.
USAA FEDERAL SAVINGS BANK,
as Servicer
By:________________________________________
Servicing Officer
