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FORM OF
SALE AND SERVICING AGREEMENT
among
HYUNDAI AUTO RECEIVABLES [TRUST][LLC] 200[_],
Issuer,
HYUNDAI ABS FUNDING CORPORATION,
Depositor,
HYUNDAI MOTOR FINANCE COMPANY,
Seller and Servicer,
and
[________________________],
Indenture Trustee
Dated as of [______________], 200[_]
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TABLE OF CONTENTS
ARTICLE I.
DEFINITIONS
Section 1.01 Definitions.......................................................................1
Section 1.02 Other Definitional Provisions....................................................16
ARTICLE II.
CONVEYANCE OF RECEIVABLES
Section 2.01 Conveyance of Receivables........................................................17
ARTICLE III.
THE RECEIVABLES
Section 3.01 Representations and Warranties of the Seller.....................................18
Section 3.02 Representations and Warranties of the Depositor..................................18
Section 3.03 Repurchase Upon Breach...........................................................19
ARTICLE IV.
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 4.01 Duties of Servicer...............................................................19
Section 4.02 Collection of Receivable Payments; Modifications of Receivables..................20
Section 4.03 Realization upon Receivables.....................................................21
Section 4.04 Physical Damage Insurance........................................................21
Section 4.05 Maintenance of Security Interests in Financed Vehicles...........................21
Section 4.06 Covenants of Servicer............................................................22
Section 4.07 Purchase of Receivables Upon Breach..............................................22
Section 4.08 Servicing Fee....................................................................23
Section 4.09 Servicer's Certificate...........................................................23
Section 4.10 Annual Statement as to Compliance, Notice of Servicer Termination Event..........23
Section 4.11 Annual Independent Accountants' Report...........................................24
Section 4.12 Access to Certain Documentation and Information Regarding Receivables............24
Section 4.13 Term of Servicer.................................................................24
ARTICLE V.
DISTRIBUTIONS; STATEMENTS TO SECURITYHOLDERS
Section 5.01 Post Office Box..................................................................24
Section 5.02 Accounts.........................................................................24
Section 5.03 Application of Collections.......................................................26
Section 5.04 Purchase Amounts.................................................................27
Section 5.05 Distributions....................................................................27
Section 5.06 Reserve Account..................................................................29
Section 5.07 Statements to Securityholders....................................................29
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Section 5.08 Advances by the Servicer.........................................................31
ARTICLE VI.
THE DEPOSITOR
Section 6.01 Representations of Depositor.....................................................31
Section 6.02 Corporate Existence..............................................................32
Section 6.03 Liability of Depositor; Indemnities..............................................32
Section 6.04 Merger or Consolidation of, or Assumption of the Obligations of, Depositor.......33
Section 6.05 Amendment of Depositor's Organizational Documents................................33
ARTICLE VII.
THE SERVICER
Section 7.01 Representations of Servicer......................................................33
Section 7.02 Indemnities of Servicer..........................................................34
Section 7.03 Merger or Consolidation of, or Assumption of the Obligations of, Servicer........35
Section 7.04 Limitation on Liability of Servicer and Others...................................36
Section 7.05 Appointment of Subservicer.......................................................36
Section 7.06 Servicer Not to Resign...........................................................36
ARTICLE VIII.
DEFAULT
Section 8.01 Servicer Termination Events......................................................37
Section 8.02 Consequences of a Servicer Termination Event.....................................37
Section 8.03 Appointment of Successor Servicer................................................38
Section 8.04 Notification to Securityholders..................................................38
Section 8.05 Waiver of Past Defaults..........................................................39
ARTICLE IX.
TERMINATION
Section 9.01 Optional Purchase of All Receivables.............................................39
ARTICLE X.
MISCELLANEOUS
Section 10.01 Amendment........................................................................39
Section 10.02 Protection of Title..............................................................40
Section 10.03 Notices..........................................................................42
Section 10.04 Assignment by the Depositor or the Servicer......................................42
Section 10.05 Limitations on Rights of Others..................................................42
Section 10.06 Severability.....................................................................42
Section 10.07 Counterparts.....................................................................43
Section 10.08 Headings.........................................................................43
Section 10.09 GOVERNING LAW....................................................................43
Section 10.10 Assignment by Issuer.............................................................43
Section 10.11 Nonpetition Covenants............................................................43
Section 10.12 Limitation of Liability of Owner Trustee and Indenture Trustee...................43
Exhibit A Representations and Warranties of Hyundai Motor Finance Company
Under Section 3.02 of the Receivables Purchase Agreement
Exhibit B Form of Record Date Statement
Exhibit C Form of Servicer's Certificate
Exhibit D Extension Policy
Schedule A Schedule of Receivables
[Schedule B Required Yield Supplement Overcollateralization Amount]
This SALE AND SERVICING AGREEMENT, dated as of [___________], 200[_], among
HYUNDAI AUTO RECEIVABLES [TRUST][LLC] 200[_], a Delaware [statutory business
trust][limited liability company] (the "Issuer"), HYUNDAI ABS ------ FUNDING
CORPORATION, a Delaware corporation (the "Depositor"), HYUNDAI MOTOR FINANCE
COMPANY, a California --------- corporation, as servicer (in such capacity, the
"Servicer") and as seller (in such capacity, the "Seller"), and -------- ------
[_______________], a [_________] banking corporation, as indenture trustee (the
"Indenture Trustee").
WHEREAS, the Issuer desires to purchase a portfolio of receivables arising
in connection with motor vehicle retail installment sale contracts acquired by
Hyundai Motor Finance Company in the ordinary course of business and sold by
Hyundai Motor Finance Company to the Depositor;
WHEREAS, the Depositor is willing to sell such receivables to the Issuer;
and
WHEREAS, Hyundai Motor Finance Company is willing to service such motor
vehicle retail installment sale contracts.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01 Definitions. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
following meanings:
"Accelerated Principal Amount" means, with respect to any Payment Date, an
amount no less than zero equal to (i) the difference between (a) the sum of the
aggregate outstanding principal amount to the Class A Notes, Class B Notes,
Class C Notes and Class D Notes minus (b) the sum of the First Priority
Principal Distribution Amount, the Second Priority Distribution Amount, the
Third Priority Distribution Amount and the Regular Principal Distribution
Amount, in each case, as of such Payment Date, minus (ii) the Targeted Note
Balance.
"Administration Agreement" means the Administration Agreement, dated as of
[___________], 200[_] (as amended, supplemented, amended and restated or
otherwise modified from time to time) among Hyundai Auto Receivables
[Trust][LLC] 200[_], Hyundai Motor Finance Company, and [___________].
"Adjusted Pool Balance" means, as of any date of determination the
aggregate Principal Balance of the Receivables less the Required Yield
Supplement Overcollateralization Amount, in each case, as of such date of
determination.
"Advance" means, as to any Payment Date, an advance made by the Servicer on
such Payment Date pursuant to Section 5.08 in respect of the aggregate of all
Scheduled Payments of interest which were due during the related Collection
Period that remained unpaid at the end of
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such Collection Period, exclusive of any such Scheduled Payment which the
Servicer has determined would be a Nonrecoverable Advance if an advance in
respect of such Scheduled Payment were made.
"Agreement" means this Sale and Servicing Agreement, as the same may be
amended or supplemented from time to time.
"Amount Financed" means with respect to a Receivable, the amount advanced
under the Receivable toward the purchase price of the Financed Vehicle and any
related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the annual rate of
finance charges stated in the related Contract.
"Available Amounts" means, with respect to any Payment Date, the sum of
Available Principal and Available Interest.
"Available Amounts Shortfall" shall have the meaning set forth in Section
5.05(b).
"Available Interest" means, with respect to any Payment Date, the sum of
the following amounts, without duplication, allocable to interest received or
allocated by the Servicer on or in respect of the Receivables during the related
Collection Period: (a) that portion of all collections on Receivables allocable
to interest (including the amount, if any, of Advances for that Collection
Period), (b) the Purchase Amount of each Receivable that became a Purchased
Receivable during such Collection Period to the extent allocable to accrued
interest on such Receivable, (c) Recoveries for such Collection Period, (d)
Investment Earnings for the related Payment Date (other than the Collection
Account and the Note Distribution Account) and (e) Liquidation Proceeds for such
Collection Period to the extent allocable to interest; provided, however, that
in calculating the Available Interest the following will be excluded: (i)
amounts received on a particular Receivable (other than a Liquidated Receivable)
to the extent that the Servicer has previously made an unreimbursed Advance in
respect of that Receivable and (ii) Liquidation Proceeds with respect to a
particular Receivable to the extent of unreimbursed Advances in respect of that
Receivable, in each case, to the extent allocable to interest.
"Available Principal" means, with respect to any Payment Date, the sum of
the following amounts, without duplication, with respect to the related
Collection Period: (a) the portion of all collections on Receivables allocable
to principal, (b) Liquidation Proceeds for such Collection Period to the extent
allocable to principal and (c) that portion allocable to principal of the
Purchase Amount of all Receivables that became Purchased Receivables during or
in respect of such Collection Period; provided, however, that in calculating the
Available Principal the following will be excluded: (i) amounts received on a
particular Receivable (other than a Liquidated Receivable) to the extent that
the Servicer has previously made an unreimbursed Advance in respect of that
Receivable and (ii) Liquidation Proceeds with respect to a particular Receivable
to the extent of unreimbursed Advances in respect of that Receivable, in each
case, to the extent allocable to principal.
"Basic Documents" means the Trust Agreement, the Securities Account Control
Agreement, the Indenture, this Agreement, the Receivables Purchase Agreement,
the
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Administration Agreement, the Note Depository Agreement and other documents and
certificates delivered in connection therewith.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which a commercial banking institution in the states of California, Delaware or
New York are authorized or obligated by law or executive order to remain closed.
"Certificate" means a certificate evidencing the beneficial interest of a
Certificateholder in the Issuer.
"Certificateholders" has the meaning assigned to such term in the Trust
Agreement.
"Class" means any one of the classes of Notes.
"Class A Noteholders" means the Class A-1 Noteholders, the Class A-2
Noteholders and the Class A-3 Noteholders.
"Class A Notes" means the Class A-1 Notes, the Class A-2 Notes and the
Class A-3 Notes.
"Class A-1 Noteholder" means the Person in whose name a Class A-1 Note is
registered in the Note Register.
"Class A-1 Notes" means the [____]% Asset Backed Notes, Class A-1,
substantially in the form of Exhibit A-1 to the Indenture.
"Class A-1 Rate" means [____]% per annum, computed on the basis of an
actual/360-day year.
"Class A-2 Noteholder" means the Person in whose name a Class A-2 Note is
registered in the Note Register.
"Class A-2 Notes" means the [____]% Asset Backed Notes, Class A-2,
substantially in the form of Exhibit A-2 to the Indenture.
"Class A-2 Rate" means [____]% per annum, computed on the basis of a
360-day year consisting of twelve 30-day months.
"Class A-3 Noteholder" means the Person in whose name a Class A-3 Note is
registered in the Note Register.
"Class A-3 Notes" means the [____]% Asset Backed Notes, Class A-3,
substantially in the form of Exhibit A-3 to the Indenture.
"Class A-3 Rate" means [____]% per annum, computed on the basis of a
360-day year consisting of twelve 30-day months.
"Class B Final Scheduled Payment Date" means the [__________], 200[_]
Payment Date.
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"Class B Noteholder" means the Person in whose name a Class B Note is
registered in the Note Register.
"Class B Notes" means the [____]% Asset Backed Notes, Class B,
substantially in the form of Exhibit B to the Indenture.
"Class B Rate" means [____]% per annum, computed on the basis of a 360-day
year consisting of twelve 30-day months.
"Class C Final Scheduled Payment Date" means the [_________], 200[_]
Payment Date.
"Class C Noteholder" means the Person in whose name a Class C Note is
registered in the Note Register.
"Class C Notes" means the [____]% Asset Backed Notes, Class C,
substantially in the form of Exhibit C to the Indenture.
"Class C Rate" means [____]% per annum, computed on the basis of a 360-day
year consisting of twelve 30-day months.
"Class D Final Scheduled Payment Date" means [__________], 200[_] Payment
Date.
"Class D Noteholder" means the Person in whose name a Class D Note is
registered in the Note Register.
"Class D Notes" means the [____]% Asset Backed Notes, Class D,
substantially in the form of Exhibit D to the Indenture.
"Class D Rate" means [____]% per annum, computed on the basis of a 360-day
year consisting of twelve 30-day months.
"Closing Date" means [_________], 200[_].
"Collateral" shall have the meaning specified in the Granting Clause of the
Indenture.
"Collection Account" means the account designated as such, established and
maintained pursuant to Section 5.02(b)(i).
"Collection Period" means, with respect to any Payment Date other than the
first Payment Date, the calendar month preceding such Payment Date. The
Collection Period with respect to the first Payment Date will be the period
after the Cutoff Date to and including [________], 200[_]. Any amount stated as
of the last day of a Collection Period or as of the first day of a Collection
Period shall give effect to the following calculations as determined as of the
close of business on such last day: (i) all applications of collections and (ii)
all distributions to be made on the following Payment Date.
"Collections" shall have the meaning specified in Section 5.03.
"Contract" means a motor vehicle retail installment sale contract.
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"Controlling Class" means with respect to any Notes that are Outstanding,
the Class A Notes (voting together as a single class) so long as the Class A
Notes are Outstanding, and thereafter the Class B Notes so long as any Class B
Notes are Outstanding, and thereafter the Class C Notes so long as any Class C
Notes are Outstanding and thereafter the Class D Notes so long as any Class D
Notes are Outstanding, excluding in each case, Notes held by the Depositor, the
Servicer or their affiliates.
"Conveyed Assets" shall have the meaning provided in Section 2.01.
"Corporate Trust Administration Department" shall have the meaning set
forth in the Trust Agreement.
"Corporate Trust Office" shall have the meaning set forth in the Indenture.
"Credit and Collection Policy" means the credit and collection policy of
HMFC as in effect as of the Closing Date and any subsequent amendments thereto
unless the context indicates otherwise.
"Credit Enhancement Required Amount" means, with respect to any Payment
Date, the product of (i) the Credit Enhancement Required Percentage and (ii) the
Adjusted Pool Balance as of the end of the Collection Period preceding such
Payment Date.
"Credit Enhancement Required Percentage" means, as of any date of
determination, the greater of (i) [___]% and (ii) a fraction, expressed as a
percentage, the numerator of which is the Pool Balance of Receivables that (x)
are delinquent 90 days or more, including repossessions, and (y) have not been
charged off and the denominator of which is the Pool Balance of all Receivables,
in each case, as of such date; provided, that, notwithstanding the forgoing, if
the Credit Enhancement Required Percentage is on any date determined pursuant to
clause (ii), the Credit Enhancement Required Percentage shall be determined by
clause (ii) until the percentage in clause (i) is greater than the percentage
determined pursuant to clause (ii) for 30 consecutive days.
"Cutoff Date" means the close of business on [________], 200[_].
"Dealer" means the dealer who sold a Financed Vehicle and who originated
the related Receivable and assigned it to HMFC pursuant to a Dealer Agreement.
"Dealer Agreement" means an agreement between HMFC and a Dealer pursuant to
which such Dealer sells Contracts to HMFC.
"Defaulted Receivables" means any Receivable (a) on which any installment
is unpaid more than ninety (90) days past its original due date (as defined in
the Credit and Collection Policy) or (b) the Obligor of which has suffered an
Insolvency Event.
"Delivery" when used with respect to Trust Account Property means:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute "instruments"
within the
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meaning of Section 102(a)(47) of the UCC and are susceptible of physical
delivery, transfer thereof to the Indenture Trustee by physical delivery to
the Indenture Trustee endorsed to, or registered in the name of, the
Indenture Trustee or endorsed in blank, and, with respect to a certificated
security (as defined in Section 8-102 of the UCC) transfer thereof (i) by
delivery of such certificated security endorsed to, or registered in the
name of, the Indenture Trustee or (ii) by delivery thereof to a "clearing
corporation" (as defined in Section 8-102 of the UCC) and the making by
such clearing corporation of appropriate entries on its books reducing the
appropriate securities account of the transferor and increasing the
appropriate securities account of the Indenture Trustee by the amount of
such certificated security and the identification by the clearing
corporation of the certificated securities for the sole and exclusive
account of the Indenture Trustee (all of the foregoing, "Physical
Property"), and, in any event, any such Physical Property in registered
form shall be in the name of the Indenture Trustee; and such additional or
alternative procedures as may hereafter become appropriate to effect the
complete transfer of ownership of any such Trust Account Property to the
Indenture Trustee or its nominee or custodian, consistent with changes in
applicable law or regulations or the interpretation thereof;
(b) with respect to any security issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to federal book-entry regulations, the following
procedures, all in accordance with applicable law, including applicable
federal regulations and Articles 8 and 9 of the UCC: book-entry
registration of such Trust Account Property to an appropriate book-entry
account maintained with a Federal Reserve Bank by a securities intermediary
that is also a "depository" pursuant to applicable federal regulations; the
making by such securities intermediary of entries in its books and records
crediting such Trust Account Property to the Indenture Trustee's security
account at the securities intermediary and identifying such book-entry
security held through the Federal Reserve System pursuant to federal
book-entry regulations as belonging to the Indenture Trustee; and such
additional or alternative procedures as may hereafter become appropriate to
effect complete transfer of ownership of any such Trust Account Property to
the Indenture Trustee, consistent with changes in applicable law or
regulations or the interpretation thereof; and
(c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not governed
by clause (b) above, registration on the books and records of the issuer
thereof in the name of the Indenture Trustee or its nominee or custodian
who either (i) becomes the registered owner on behalf of the Indenture
Trustee or (ii) having previously become the registered owner, acknowledges
that it holds for the Indenture Trustee.
"Depositor" means Hyundai ABS Funding Corporation, a Delaware corporation,
and its successors in interest.
"Determination Date" means, with respect to each Payment Date, the earlier
of the [____] calendar day of the month in which such Payment Date occurs (or if
such [____] day is not a Business Day, the next succeeding Business Day).
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"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution acting in its capacity as a fiduciary
organized under the laws of the United States of America or any State, having
corporate trust powers and acting as trustee for funds deposited in such
account, so long as any of the securities of such depository institution shall
have a credit rating from each Rating Agency in one of its generic rating
categories that signifies investment grade.
"Eligible Institution" means (a) the corporate trust department of the
Indenture Trustee or the Owner Trustee or (b) a depository institution organized
under the laws of the United States of America or any State, that (i) has either
(A) a long-term unsecured debt rating acceptable to each Rating Agency or (B) a
short-term unsecured debt rating or certificate of deposit rating acceptable to
each Rating Agency and (ii) the deposits of which are insured by the FDIC.
"Eligible Investments" means book-entry securities, negotiable instruments
or securities represented by instruments in bearer or registered form and that
evidence:
(a) direct obligations of, and obligations fully guaranteed as to the
full and timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any State (or any domestic branch of a foreign
bank) and subject to supervision and examination by federal or state
banking or depository institution authorities; provided, however, that at
the time of the investment or contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt obligations (other than
such obligations the rating of which is based on the credit of a Person
other than such depository institution or trust company) thereof shall have
a credit rating from each Rating Agency in the highest investment category
granted thereby;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each Rating Agency
in the highest investment category granted thereby;
(d) investments in money market funds having a rating from each Rating
Agency in the highest investment category granted thereby (including funds
for which the Indenture Trustee or the Owner Trustee or any of their
respective Affiliates is investment manager or advisor);
(e) bankers' acceptances issued by any depository institution or trust
company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of America
or any agency or instrumentality thereof the obligations of which are
backed by the full faith and credit of the United States of America, in
either case entered into with a depository institution or trust company
(acting as principal) described in clause (b);
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(g) any other investment with respect to which the Issuer, the
Indenture Trustee or the Servicer has received written notification from
each Rating Agency that the acquisition of such investment will satisfy the
Rating Agency Condition.
"Eligible Servicer" means Hyundai Motor Finance Company or any other Person
that at the time of its appointment as Servicer (i) is servicing a portfolio of
motor vehicle retail installment sale contracts or motor vehicle installment
loans, (ii) is legally qualified and has the capacity to service the
Receivables, (iii) has demonstrated the ability professionally and competently
to service a portfolio of motor vehicle retail installment sale contracts or
motor vehicle installment loans similar to the Receivables with reasonable skill
and care and (iv) has a minimum net worth of $[100,000,000].
"Excess Amount" shall have the meaning provided in 5.05(b)(x).
"Extension Policy" shall mean the policies of the Servicer with respect to
granting extensions on the Contracts as set forth on Exhibit D hereto.
"FDIC" means the Federal Deposit Insurance Corporation, and its successors.
"Fee Letter" means the letter regarding fees dated [_________], 200[_]
between the Depositor, the Owner Trustee and HMFC.
"Financed Vehicle" means a new or used automobile, light-duty truck, van or
minivan, together with all accessions thereto, securing an Obligor's
indebtedness under the related Contract.
"First Priority Principal Distribution Amount" means, with respect to any
Payment Date, an amount, not less than zero, equal to the result of (i) the
aggregate outstanding principal amount of the Class A Notes as of the preceding
Payment Date (after giving effect to any principal payments made on the Class A
Notes on that preceding Payment Date), minus (ii) the Adjusted Pool Balance at
the end of the Collection Period preceding that Payment Date; provided, however,
that the First Priority Principal Distribution Amount shall not exceed the sum
of the aggregate outstanding principal amount of all of the Notes on that
Payment Date (after giving effect to any principal payments made on the Notes on
that preceding Payment Date); and provided further, that the First Priority
Principal Distribution Amount on and after the final scheduled Payment Date of a
class of Class A Notes shall not be less than the amount that is necessary to
reduce the outstanding principal amount of such class of the Class A Notes and
all earlier maturing classes of Class A Notes to zero.
"Fitch" means Fitch, Inc., and its successors.
"HMFC" means Hyundai Motor Finance Company, a California corporation, and
its successors.
"Indenture" means the Indenture, dated as of [________], 200[_] (as
amended, supplemented, amended and restated or otherwise modified from time),
between the Issuer and the Indenture Trustee.
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"Indenture Trustee" means the Person acting as Indenture Trustee under the
Indenture, its successors in interest and any successor trustee under the
Indenture.
"Initial Class A-1 Note Balance" means $[_________].
"Initial Class A-2 Note Balance" means $[_________].
"Initial Class A-3 Note Balance" means $[_________].
"Initial Class B Note Balance" means $[_________].
"Initial Class C Note Balance" means $[_________].
"Initial Class D Note Balance" means $[_________].
"Initial Pool Balance" means, an amount equal to the aggregate Principal
Balance of the Receivables as of the Cutoff Date.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or ordering the
winding-up or liquidation of such Person's affairs, and such decree or order
shall remain unstayed and in effect for a period of 60 consecutive days; or (b)
the commencement by such Person of a voluntary case under any applicable federal
or state bankruptcy, insolvency or other similar law now or hereafter in effect,
or the consent by such Person to the entry of an order for relief in an
involuntary case under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.
"Interest Distribution Account" means, the account designated as such,
established and maintained pursuant to Section 5.02(b)(iv).
"Interest Period" means, with respect to the Class A-1 Notes, the period
from and including the most recent Payment Date on which interest has been paid
(or, in the case of the first Payment Date, the Closing Date) to but excluding
the next succeeding Payment Date and, with respect to the Class A-2 Notes, Class
A-3 Notes, Class B Notes, Class C Notes and Class D Notes, the period from and
including the [____] day of the calendar month (or, in the case of the first
Payment Date, from and including the Closing Date) to but excluding the [____]
day of the next calendar month.
"Investment Earnings" means, with respect to any Payment Date, any
investment earnings (net of losses and investment expenses) on amounts on
deposit in a Trust Account to be deposited into the Collection Account on such
Payment Date pursuant to Section 5.02(b).
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"Issuer" means Hyundai Auto Receivables [Trust][LLC] 200[_].
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Receivable by operation of law as a result of any
act or omission by the related Obligor.
"Liquidated Receivable" means a Receivable with respect to which the
earlier of the following shall have occurred: (i) the related Financed Vehicle
has been repossessed and liquidated, (ii) the related Financed Vehicle has been
repossessed for 90 days or more and has not yet been liquidated, (iii) the end
of the Collection Period in which the Receivable becomes more than 120 days past
due, or (iv) the Servicer has determined in accordance with the Credit and
Collections Policy that eventual payment in full of the Amount Financed is
unlikely.
"Liquidation Proceeds" means, with respect to any Receivable that becomes a
Liquidated Receivable, the moneys collected in respect thereof, from whatever
source, during or after the Collection Period in which such Receivable became a
Liquidated Receivable, including liquidation of the related Financed Vehicle,
net of the sum of any reasonable out-of-pocket expenses of the Servicer in
connection with such liquidation and any amounts required by law to be remitted
to the Obligor on such Liquidated Receivable.
"Local Remittance Account" shall have the meaning provided in Section
5.02(a).
"Monthly Remittance Condition" means (i)(A) the short-term debt of the
Servicer is rated in the highest rating category of, or is otherwise acceptable
to, each Rating Agency and (B) no Servicer Termination Event has occurred or
(ii)(A) the Servicer obtains a letter of credit, surety bond or insurance policy
under which demands for payment may be made to secure the timely remittance of
Collections and Available Amounts to the Collection Account and (B) the
Indenture Trustee and the Owner Trustee are provided with confirmation from each
Rating Agency to the effect that the use of such alternative remittance schedule
will not result in the qualification, reduction or withdrawal of its
then-current rating on any class of Notes.
"Moody's" means Xxxxx'x Investors Service, Inc., and its successors.
"Nonrecoverable Advance" means any Advance made or proposed to be made
pursuant to Section 5.08, which the Servicer believes, in its good faith
judgment, is not, or if made would not be, ultimately recoverable from
Liquidation Proceeds or otherwise.
"Note Balance" means, as of any date of determination, an amount equal to
the sum of (i) the Initial Class A-1 Note Balance, (ii) the Initial Class A-2
Note Balance, (iii) the Initial Class A-3 Note Balance, (iv) the Initial Class B
Note Balance, (v) the Initial Class C Note Balance and (vi) the Initial Class D
Note Balance less all amounts distributed to Noteholders on or prior to such
date and allocable to principal thereon.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.02(b)(ii).
"Note Pool Factor" means, with respect to each Class of Notes as of the
close of business on the last day of a Collection Period, a seven-digit decimal
figure equal to the Outstanding
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Amount of such Class of Notes (after giving effect to any reductions thereof to
be made on the immediately following Payment Date) divided by the original
Outstanding Amount of such Class of Notes. The Note Pool Factor will be
1.0000000 as of the Closing Date; thereafter, the Note Pool Factor will decline
to reflect reductions in the Outstanding Amount of such Class of Notes.
"Noteholders" shall mean the Class A-1 Noteholders, the Class A-2
Noteholders, the Class A-3 Noteholders, the Class B Noteholders, the Class C
Noteholders or the Class D Noteholders.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
related Financed Vehicle, and any other Person obligated to make payments
thereunder.
"Officers' Certificate" means a certificate signed by (a) the chairman of
the board, any vice president, the controller or any assistant controller and
(b) the president, a treasurer, assistant treasurer, secretary or assistant
secretary of the Depositor or the Servicer, as appropriate.
"Opinion of Counsel" means one or more written opinions of counsel, who may
be an employee of or counsel to the Depositor or the Servicer, which counsel
shall be acceptable to the Indenture Trustee, the Owner Trustee or the Rating
Agencies, as applicable, and which shall be addressed to the Owner Trustee and
the Indenture Trustee.
"Outstanding Amount" means, as of any date of determination, the aggregate
principal amount of a Class of Notes outstanding as of such date of
determination.
"Overcollateralization Required Amount" means, with respect to any Payment
Date an amount no less than zero equal to the lesser of (1) the greater of (a)
(i) the Credit Enhancement Required Amount, minus (ii) the Reserve Account
Required Amount, in each case, on such Payment Date and (b) [___]% of the
Adjusted Pool Balance as of the Cutoff Date, and (2) (i) the Adjusted Pool
Balance on such Payment Date, minus (ii) the amount on deposit in the Reserve
Account on such Payment Date.
"Owner Trustee" means [__________________], acting not in its individual
capacity but solely as owner trustee under the Trust Agreement.
"Payment Date" means, with respect to each Collection Period, the
[_________] day of the following month or, if such day is not a Business Day,
the immediately following Business Day, commencing on [_________], 200[_].
"Physical Property" has the meaning assigned to such term in the definition
of "Delivery" above.
"Pool Balance" means, with respect to any Payment Date, an amount equal to
the aggregate Principal Balance of the Receivables at the end of the related
Collection Period, after giving effect to all payments of principal received
from Obligors and Purchase Amounts to be remitted by the Servicer for such
Collection Period and reduction to zero of the aggregate outstanding Principal
Balance of all Receivables that became Liquidated Receivables during such
Collection Period.
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"Post Office Box" means any post office boxes maintained by Citibank N.A.,
to which payments on receivables owned or serviced by HMFC are or will be sent.
"Principal Balance" means, with respect to any Receivable and a
Determination Date, the Amount Financed minus an amount equal to the sum, as of
the close of business on the last day of the related Collection Period, of that
portion of all amounts received on or prior to such day with respect to such
Receivable and allocable to principal using the Simple Interest Method (with
respect to Simple Interest Receivables).
"Principal Distribution Account" means that account designated as such
established and maintained pursuant to Section 5.02(b)(iv).
"Purchase Amount" means, with respect to any Receivable that became a
Purchased Receivable, the unpaid principal balance owed by the Obligor thereon
plus interest on such amount at the applicable APR to the last day of the
Collection Period of repurchase.
"Purchased Receivable" means a Receivable purchased as of the close of
business on the last day of a Collection Period by or on behalf of the Servicer
pursuant to Section 4.07 or by or on behalf of the Seller pursuant to the
Receivables Purchase Agreement.
"Rating Agency" means Moody's, Standard & Poor's [or Fitch], as the context
may require. If none of Moody's, Standard & Poor's [, Fitch] or a successor
thereto remains in existence, "Rating Agency" shall mean any nationally
recognized statistical rating organization or other comparable Person designated
by the Depositor and, written notice of which designation shall be given to the
Owner Trustee, the Indenture Trustee and the Servicer.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days' (or such shorter period as shall be
acceptable to each Rating Agency) prior notice thereof and that each Rating
Agency shall not have notified the Issuer or the Indenture Trustee in writing
that such action will result in a reduction, withdrawal or down-grade of the
then-current rating of each class of Notes.
"Realized Losses" means, with respect to any Receivable that becomes a
Liquidated Receivable, the excess of the Principal Balance thereof over the
portion of related Liquidation Proceeds allocable to principal.
"Receivable" means any Contract listed on Schedule A (which Schedule may be
in the form of microfiche).
"Receivable Files" means the following documents with respect to each
Financed Vehicle:
(i) the fully executed original of each Receivable (together with any
agreements modifying each such Receivable, including any extension
agreement);
(ii) the original credit application, or a copy thereof, fully
executed by each Obligor thereon;
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(iii) the original certificate of title or such other documents
evidencing the security interest of the Seller in the related Financed
Vehicle; and
(iv) any and all other documents that the Servicer shall have kept on
file in accordance with its customary procedures relating to Receivables,
Obligors or Financed Vehicles.
"Receivables Purchase Agreement" means the Receivables Purchase Agreement
dated as of [_________], 200[_] (as amended, supplemented, amended and restated
or otherwise modified from time to time), between HMFC, as Seller, and the
Depositor.
"Record Date" means, as to any Payment Date, the day immediately preceding
such Payment Date.
"Recoveries" means, with respect to any Receivable that becomes a
Liquidated Receivable, monies collected in respect thereof, from whatever
source, during any Collection Period following the Collection Period in which
such Receivable became a Liquidated Receivable, net of the sum of any amounts
expended by the Servicer for the account of the Obligor and any amounts required
by law to be remitted to the Obligor.
"Regular Principal Distribution Amount" means, with respect to any Payment
Date, an amount no less than zero equal to (i) the aggregate decrease in the
Principal Balance of the Receivables for the related Collection Period less (ii)
the sum of the First Priority Principal Distribution Amount, the Second Priority
Principal Distribution Amount and the Third Priority Principal Distribution
Amount, less (iii) the difference (but not less than zero) between the (a) the
Targeted Note Balance and (b) the sum of the aggregate outstanding principal
amount of the Class A Notes, the Class B Notes, the Class C Notes and the Class
D Notes minus the aggregate decrease in the Principal Balance of the Receivables
for the related Collection Period.
["Required Yield Supplement Overcollateralization Amount" means with
respect to any Payment Date, the dollar amount set forth next to such Payment
Date on Schedule B hereto.]
"Reserve Account" means the account designated as such, established by the
Issuer and maintained by the Indenture Trustee pursuant to Section 5.02(b)(iii).
"Reserve Account Deposit" means $[_________].
"Reserve Account Required Amount" means with respect to any Payment Date,
an amount equal to [____]% of the Adjusted Pool Balance as of the last day of
the immediately preceding Collection Period; provided, however, that in no event
shall the Reserve Account Required Amount on any Payment Date be less than the
lesser of (x) $[_________] ([____]% of the Adjusted Pool Balance, as of the
Cutoff Date) or (y) the aggregate outstanding principal amount of the Notes on
such Payment Date (after giving effect to the allocation of principal payments
on such Payment Date).
"Reserve Account Withdrawal Amount" means, with respect to each Payment
Date, the lesser of (x) the excess, if any, of (i) the amounts due under Section
5.05(b)(i) through (ix) over
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(ii) Available Amounts for such Payment Date and (y) and the amount on deposit
in the Reserve Account for such Payment Date.
"Responsible Officer" means the chairman of the board, the president, any
executive vice president, any vice president, the treasurer, any assistant
treasurer, the secretary, or any assistant secretary of the Servicer.
"Scheduled Payment" means, with respect to each Receivable, the scheduled
monthly payment amount set forth in the related Contract and required to be paid
by the Obligor during each Collection Period.
"Second Priority Principal Distribution Amount" means, with respect to any
Payment Date, an amount not less than zero equal to (i) the sum of the aggregate
outstanding principal amount of the Class A Notes and the Class B Notes as of
the preceding Payment Date (after giving effect to any principal payments made
on the Class A Notes and the Class B Notes on that preceding Payment Date),
minus (ii) the Adjusted Pool Balance at the end of the Collection Period
preceding that Payment Date, minus (iii) the First Priority Principal
Distribution Amount; provided, however, that the Second Priority Principal
Distribution Amount shall not exceed the sum of the aggregate outstanding
principal amount of all of the Notes on that Payment Date (after giving effect
to any principal payments made on the Notes on that preceding Payment Date); and
provided further, that the Second Priority Principal Distribution Amount on and
after the Class B Final Scheduled Payment Date shall not be less than the amount
that is necessary to reduce the outstanding principal amount of the Class B
Notes to zero.
"Securities" means the Notes and the Certificates.
"Securities Account Control Agreement" means the Securities Account Control
Agreement dated as of [_________], 200[_] (as amended, supplemented, amended and
restated or otherwise modified from time to time), between the Issuer, the
Indenture Trustee and the Securities Intermediary.
"Securities Intermediary" means [______________], in its capacity as the
securities intermediary in the Securities Account Control Agreement.
"Securityholders" means the Noteholders and/or the Certificateholders, as
the context may require.
"Seller" means HMFC and its successors in interest as seller of the
Receivables to the Depositor pursuant to the Receivables Purchase Agreement.
"Servicer" means HMFC, as the servicer of the Receivables, and each
successor to HMFC (in the same capacity) pursuant to Section 7.03 or 8.03.
"Servicer Termination Event" shall have the meaning set forth in Section
8.01.
"Servicer's Certificate" means an Officers' Certificate of the Servicer
delivered pursuant to Section 4.09, substantially in the form of Exhibit C.
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"Servicing Fee" means an amount equal to the product of the Servicing Fee
Rate and the Pool Balance as of the first day of the related Collection Period.
"Servicing Fee Rate" means [___]% per annum.
"Simple Interest Method" means the method of allocating the monthly
payments received with respect to a Receivable to interest in an amount equal to
the product of (i) the applicable APR, (ii) the period of time (expressed as a
fraction of a year, based on the actual number of days in the calendar month and
365 days in the calendar year) elapsed since the preceding payment was made
under such Receivable and (iii) the outstanding principal amount of such
Receivable, and allocating the remainder of each such monthly payment to
principal.
"Simple Interest Receivable" means any Receivable under which the portion
of a payment allocable to interest and the portion allocable to principal is
determined in accordance with the Simple Interest Method.
"Standard & Poor's" means Standard & Poor's, a division of The XxXxxx-Xxxx
Companies, Inc., and its successors.
"Targeted Note Balance" means, with respect to any Payment Date, an amount
no less than zero equal to (i) the Adjusted Pool Balance minus (ii) the
Overcollateralization Required Amount, in each case, as of such Payment Date.
"Third Priority Principal Distribution Amount" means, with respect to any
Payment Date, an amount not less than zero equal to (i) the sum of the aggregate
outstanding principal amount of the Class A Notes, the Class B Notes and the
Class C Notes as of the preceding Payment Date (after giving effect to any
principal payments made on the Class A Notes, the Class B Notes and the Class C
Notes on that preceding Payment Date), minus (ii) the Adjusted Pool Balance at
the end of the Collection Period, minus (iii) the First Priority Principal
Distribution Amount, minus (iv) the Second Priority Principal Distribution
Amount; provided, however, that the Third Priority Principal Distribution Amount
shall not exceed the sum of the aggregate outstanding principal amount of all of
the Notes on that Payment Date (after giving effect to any principal payments
made on the Notes on that preceding Payment Date); and provided further, that
the Third Priority Principal Distribution Amount on and after the Class C Final
Scheduled Payment Date shall not be less than the amount that is necessary to
reduce the outstanding principal amount of the Class C Notes to zero.
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account and all proceeds of the
foregoing.
"Trust Accounts" shall mean the Collection Account, the Note Distribution
Account and the Reserve Account.
["Trust Agreement" means the Trust Agreement, dated as of [_________],
200[_] (as amended, supplemented, amended and restated or otherwise modified
from time to time), between the Depositor, the Administrator and the Owner
Trustee.]
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"Trust Officer" means, in the case of the Indenture Trustee, any Officer
within the Corporate Trust Office of the Indenture Trustee, including any
Assistant Vice President, Assistant Treasurer, Assistant Secretary or any other
officer of the Indenture Trustee customarily performing functions similar to
those performed by any of the above designated officers and also, with respect
to a particular matter, any other officer to whom such matter is referred
because of such officer's knowledge of and familiarity with the particular
subject and, with respect to the Owner Trustee, any officer in the Corporate
Trust Administration Department of the Owner Trustee with direct responsibility
for the administration of the Trust Agreement and the other Basic Documents on
behalf of the Owner Trustee.
"UCC" means the Uniform Commercial Code, as in effect in the relevant
jurisdiction.
Section 1.02 Other Definitional Provisions.
(a) Capitalized terms used herein that are not otherwise defined shall
have the meanings ascribed thereto in the Indenture or, if not defined therein,
in the Trust Agreement.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Article, Section, Schedule
and Exhibit references contained in this Agreement are references to Articles,
Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; "or" shall include "and/or"; and the term "including" shall mean
"including without limitation".
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
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ARTICLE II.
CONVEYANCE OF RECEIVABLES
Section 2.01 Conveyance of Receivables.
In consideration of the Issuer's delivery to or upon the order of the
Depositor of $[___________], the Certificates and such other amounts to be
distributed to the Depositor on the Closing Date, the Depositor does hereby
sell, transfer, assign, set over and otherwise convey to the Issuer, without
recourse (subject to the obligations of the Depositor set forth herein), all
right, title and interest of the Depositor in and to:
(i) the Receivables and all moneys received thereon on or after
the Cutoff Date;
(ii) the security interests in the Financed Vehicles and any
accessions thereto granted by Obligors pursuant to the Receivables and any
other interest of the Depositor in such Financed Vehicles;
(iii) any Liquidation Proceeds and any other proceeds with
respect to the Receivables from claims on any physical damage, credit life
or disability insurance policies covering the Financed Vehicles or the
related Obligors, including any vendor's single interest or other
collateral protection insurance policy;
(iv) any property that shall have secured a Receivable and shall
have been acquired by or on behalf of the Depositor, the Servicer or the
Issuer;
(v) all documents and other items contained in the Receivable
Files;
(vi) all of the Depositor's rights (but not its obligations)
under the Receivables Purchase Agreement;
(vii) all right, title and interest in all funds on deposit from
time to time in the Trust Accounts and in all investments therein and
proceeds thereof (including all Investment Earnings thereon);
(viii) any proceeds from any Receivable repurchased by a Dealer
pursuant to a Dealer Agreement; and
(ix) the proceeds of any and all of the foregoing (collectively,
with the assets listed in clauses (i) through (viii) above, the "Conveyed
Assets").
It is the intention of the Depositor that the transfer and assignment
contemplated by this Agreement shall constitute a sale of the Conveyed Assets
from the Depositor to the Issuer and the beneficial interest in and title to the
Receivables and the related property shall not be part of the Depositor's estate
in the event of the filing of a bankruptcy petition by or against the Depositor
under any bankruptcy law. In the event that, notwithstanding the intent of the
Depositor, the transfer and assignment contemplated hereby is held not to be a
sale, this
17
Agreement shall constitute a grant by the Depositor to the Issuer of a security
interest in all accounts, money, chattel paper, securities, instruments,
documents, deposit uncertificated securities, general intangibles, contract
rights, goods and other property consisting of, arising from or relating to such
Conveyed Assets, for the benefit of the Securityholders.
ARTICLE III.
THE RECEIVABLES
Section 3.01 Representations and Warranties of the Seller.
(a) The Seller has made each of the representations and warranties set
forth in Exhibit A hereto under the Receivables Purchase Agreement and has
consented to the assignment by the Depositor to the Issuer of the Depositor's
rights with respect thereto. Such representations and warranties speak as of the
execution and delivery of this Agreement and as of the Closing Date, but shall
survive the sale, transfer and assignment of the Receivables to the Issuer and
the pledge of such Receivables to the Indenture Trustee. Pursuant to Section
2.01 of this Agreement, the Depositor has sold, assigned, transferred and
conveyed to the Issuer, as part of the assets of the Issuer, its rights under
the Receivables Purchase Agreement, including the representations and warranties
of the Seller therein as set forth in Exhibit A, upon which representations and
warranties the Issuer relies in accepting the Receivables and delivering the
Securities, together with all rights of the Depositor with respect to any breach
thereof, including the right to require the Seller to repurchase Receivables in
accordance with the Receivables Purchase Agreement. It is understood and agreed
that the representations and warranties referred to in this Section shall
survive the sale and delivery of the Receivables to the Issuer.
(b) The Seller hereby agrees that the Issuer shall have the right to
enforce any and all rights under the Receivables Purchase Agreement assigned to
the Issuer herein, including the right to cause the Seller to repurchase any
Receivable with respect to which it is in breach of any of its representations
and warranties set forth in Exhibit A, directly against the Seller as though the
Issuer were a party to the Receivables Purchase Agreement, and the Issuer shall
not be obligated to exercise any such rights indirectly through the Depositor.
Section 3.02 Representations and Warranties of the Depositor. The Depositor
makes the following representations and warranties, on which the Issuer relies
in accepting the Receivables and delivering the Securities. Such representations
and warranties speak as of the execution and delivery of this Agreement and as
of the Closing Date, but shall survive the sale, transfer and assignment of the
Receivables by the Depositor to the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture:
(a) Title. The Depositor shall convey to the Issuer all right, title
and interest of the Depositor in and to the Receivables.
(b) All Filings Made. The Depositor has caused all filings (including
UCC filings) to be made in New York and Delaware with respect to the sale of the
Receivables to the Issuer and the pledge contemplated in the Basic Documents to
the Indenture Trustee.
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(c) Liens. The Depositor has not taken any actions to create, incur or
suffer to exist any Lien on or restriction on transferability of any Receivable
except for the Lien of the Indenture and the restrictions on transferability
imposed by this Agreement.
Section 3.03 Repurchase Upon Breach. The Depositor, the Owner Trustee, the
Indenture Trustee, the Seller, and the Servicer shall inform the other parties
to this Agreement promptly, in writing, upon the discovery of any breach of the
Seller's representations and warranties made pursuant to Section 3.01 of this
Agreement or Section 3.02 of the Receivables Purchase Agreement, without regard
to any limitation set forth in such representation or warranty concerning the
knowledge of the Seller as to the facts stated therein. The occurrence of a
breach of any of the Seller's representations and warranties contained in
Section 3.02 (b) of the Receivables Purchase Agreement with respect to any
Receivable shall constitute an event obligating the Seller to repurchase such
Receivables if the interests of the Depositor, the Indenture Trustee, the Owner
Trustee, the Issuer and the Securityholders are materially and adversely
affected by such breach (each, a "Repurchase Event"), at the Purchase Amount,
from the Depositor or from the Issuer, as applicable, unless any such breach
shall have been cured by the last day of the first Collection Period following
the discovery or notice thereof by or to the Seller or the Servicer. In
consideration of the repurchase of any such Receivable, the Seller shall remit
the Purchase Amount to the Collection Account and notify in writing the
Indenture Trustee of such deposit, in the manner specified in Section 5.04. The
sole remedy of the Issuer, the Indenture Trustee, the Noteholders, or the
Certificateholders with respect to a breach of representations and warranties
pursuant to Section 3.01 of this Agreement or Section 3.02 of the Receivables
Purchase Agreement or the agreement contained in this Section shall be to
require the Seller to purchase Receivables pursuant to this Section or the
Seller to repurchase Receivables pursuant to the Receivables Purchase Agreement.
ARTICLE IV.
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 4.01 Duties of Servicer. The Servicer, for the benefit of the
Issuer and the Indenture Trustee, shall manage, service, administer and make
collections on the Receivables and perform the other actions required of the
Servicer under this Agreement. The Servicer shall service the Receivables in
accordance with its customary and usual procedures and consistent with the
procedures employed by institutions that service motor vehicle retail
installment sale contracts. The Servicer's duties shall include the collection
and posting of all payments, responding to inquiries of Obligors, investigating
delinquencies, sending payment statements to Obligors, reporting any required
tax information to Obligors, monitoring the Collateral, accounting for
collections, furnishing monthly and annual statements to the Owner Trustee and
the Indenture Trustee with respect to distributions and performing the other
duties specified herein. The Servicer also shall administer and enforce all
rights of the holder of the Receivables under the Receivables and the Dealer
Agreements. To the extent consistent with the standards, policies and procedures
otherwise required hereby and the Credit and Collection Policy, the Servicer
shall follow its customary standards, policies and procedures and shall have
full power and authority, acting alone, to do any and all things in connection
with the managing, servicing, administration and collection of the Receivables
that it may deem necessary or desirable. Without limiting the generality of the
foregoing, the Servicer is hereby authorized and
19
empowered to execute and deliver, on behalf of itself, the Issuer, the Owner
Trustee, the Indenture Trustee, the Certificateholders and the Noteholders, or
any of them, any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge, and all other comparable instruments with
respect to the Receivables and with respect to the Financed Vehicles; provided,
however, that notwithstanding the foregoing, the Servicer shall not, except
pursuant to an order from a court of competent jurisdiction or as required by
applicable law, release an Obligor from payment of any unpaid amount due under
any Receivable, reduce the related APR or waive the right to collect the unpaid
balance of any Receivable from an Obligor. The Servicer is hereby authorized to
commence, in its own name or in the name of the Issuer, the Indenture Trustee,
the Owner Trustee, the Certificateholders or the Noteholders, a legal proceeding
to enforce a Receivable pursuant to Section 4.03 or to commence or participate
in any other legal proceeding (including a bankruptcy proceeding) relating to or
involving a Receivable, an Obligor or a Financed Vehicle. If the Servicer
commences or participates in any such legal proceeding in its own name, the
Indenture Trustee or the Issuer shall thereupon be deemed to have automatically
assigned the applicable Receivable to the Servicer solely for purposes of
commencing or participating in such proceeding as a party or claimant, and the
Servicer is authorized and empowered by the Indenture Trustee or the Issuer to
execute and deliver in the Indenture Trustee's or the Issuer's name any notices,
demands, claims, complaints, responses, affidavits or other documents or
instruments in connection with any such proceeding. 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 such Receivable, the Owner Trustee shall, at the
Servicer's expense and direction, take steps to enforce such Receivable,
including bringing suit in its name or the name of the Issuer, the Indenture
Trustee, the Certificateholders or the Noteholders. The Owner Trustee and the
Indenture Trustee shall upon the written request of the Servicer furnish the
Servicer with any powers of attorney and other documents reasonably necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties hereunder.
Section 4.02 Collection of Receivable Payments; Modifications of
Receivables.
(a) Consistent with the standards, policies and procedures required by
this Agreement, the Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Receivables as and
when the same shall become due, and shall follow such collection procedures as
it follows with respect to all comparable motor vehicle retail installment sale
contracts that it services for itself or others and otherwise act with respect
to the Receivables in such a manner as will, in the reasonable judgment of the
Servicer, maximize the amount to be received by the Issuer with respect thereto.
The Servicer is authorized in its discretion to waive any prepayment charge,
late payment charge or any other similar fees that may be collected in the
ordinary course of servicing any Receivable.
(b) The Servicer may grant payment extensions in accordance with its
customary procedures if the Servicer believes in good faith that such extension
is necessary to avoid a default on such Receivable, will maximize the amount to
be received by the Issuer with respect to such Receivable and is otherwise in
the best interests of the Issuer; provided, that no such extension shall extend
the final payment date on any Receivable beyond the last day of the Collection
Period ending three months prior to the Final Scheduled Maturity Date. Anything
herein to the contrary notwithstanding, the Servicer shall grant payment
extensions with respect
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to a Receivable only to the extent permissible in its extension policy attached
hereto as Exhibit D. A Contract may be extended for at most six months beyond
the original maturity date of the Contract.
(c) Upon any extension not in accordance with this Section, the
Servicer shall be required to purchase the related Receivable in accordance with
Section 4.07.
Section 4.03 Realization upon Receivables. Consistent with the standards,
policies and procedures required by this Agreement and the Credit and Collection
Policy, the Servicer shall use its best efforts to repossess or otherwise
convert the ownership of and liquidate any Financed Vehicle securing a
Receivable with respect to which the Servicer shall have determined that
eventual payment in full is unlikely. The Servicer shall begin such repossession
and conversion procedures as soon as practicable after default on such
Receivable; provided, however, that the Servicer may elect not to repossess a
Financed Vehicle within such time period if in its good faith judgment it
determines that the proceeds ultimately recoverable with respect to such
Receivable would be increased by forbearance. In repossessing or otherwise
converting the ownership of a Financed Vehicle and liquidating a Receivable, the
Servicer is authorized to follow such customary practices and procedures as it
shall deem necessary or advisable, consistent with the standard of care required
by Section 4.01, which practices and procedures may include reasonable efforts
to realize upon any recourse to Dealers, the sale of the related Financed
Vehicle at public or private sale, the submission of claims under an insurance
policy and other actions by the Servicer in order to realize upon a Receivable;
provided, however, that in any case in which the Financed Vehicle shall have
suffered damage, the Servicer shall not expend funds in connection with any
repair or towards the repossession of such Financed Vehicle unless it shall
determine in its reasonable judgment that such repair or repossession shall
increase the related Liquidation Proceeds by an amount greater than the expense
for such repair or repossession. The Servicer shall be entitled to recover all
reasonable expenses incurred by it in the course of repossessing and liquidating
a Financed Vehicle into cash proceeds, but only out of the cash proceeds of the
sale of such Financed Vehicle, any deficiency obtained from the related Obligor
or any amounts received from recourse to the related Dealer.
Section 4.04 Physical Damage Insurance. The Servicer shall, in accordance
with its customary servicing procedures, require each Obligor to obtain and
maintain physical loss damage insurance covering the related Financed Vehicle as
of the execution of the related Receivable.
Section 4.05 Maintenance of Security Interests in Financed Vehicles.
(a) The Servicer shall, in accordance with its customary servicing
procedures, take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed Vehicle.
The Servicer is hereby authorized to take such steps as are necessary to
re-perfect such security interest on behalf of the Issuer and the Indenture
Trustee in the event of the relocation of a Financed Vehicle, or for any other
reason. In the event that the assignment of a Receivable to the Issuer is
insufficient, without a notation on the related Financed Vehicle's certificate
of title, or without fulfilling any additional administrative requirements under
the laws of the state in which such Financed Vehicle is located, to perfect a
security interest in the related Financed Vehicle in favor of the Issuer, the
Servicer hereby agrees
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that the designation of HMFC as the secured party on the certificate of title is
in its capacity as agent of the Issuer.
(b) The Depositor, the Issuer, the Indenture Trustee, and the Servicer
hereby agree that, upon a Servicer Termination Event, the successor Servicer may
take or cause to be taken such actions as may, in the opinion of counsel to the
successor Servicer, be necessary to perfect or re-perfect the security interests
in the Financed Vehicles in the name of the Issuer, including by amending the
title documents of the Financed Vehicles. The Servicer hereby agrees to pay all
expenses related to such perfection or reperfection and to take all action
necessary therefor.
Section 4.06 Covenants of Servicer. By its execution and delivery of this
Agreement, the Servicer hereby covenants as follows (upon which covenants the
Issuer, the Indenture Trustee and the Owner Trustee rely in accepting the
Receivables and delivering the applicable Securities):
(a) Liens in Force. No Financed Vehicle securing a Receivable shall be
released in whole or in part from the security interest granted by such
Receivable, except upon payment in full of such Receivable or as otherwise
contemplated herein;
(b) No Impairment. The Servicer shall do nothing to impair the rights
of the Issuer in the property of the Issuer;
(c) No Amendments. The Servicer shall not extend or otherwise amend
the terms of any Receivable, except in accordance with Section 4.02 and the
Servicer shall not amend or modify the Credit and Collection Policy if such
amendment or modification may have a material adverse effect on the interest of
the Noteholders; and
(d) Restrictions on Liens. The Servicer shall not (A) create, incur or
suffer to exist, or agree to create, incur or suffer to exist, or consent to or
permit in the future (upon the occurrence of a contingency or otherwise) the
creation, incurrence or existence of any Lien on or restriction on
transferability of any Receivable except for the Lien of the Indenture and the
restrictions on transferability imposed by this Agreement or (B) file any UCC
financing statements in any jurisdiction that names HMFC, the Servicer or the
Depositor as a debtor, and any Person other than the Depositor, the Indenture
Trustee or the Issuer as a secured party, or sign any security agreement
authorizing any secured party thereunder to file any such financing statement
with respect to the Receivables or the related property.
Section 4.07 Purchase of Receivables Upon Breach. Upon discovery by any of
the Servicer, the Seller, the Depositor, the Owner Trustee, or the Indenture
Trustee of a breach of any of the covenants set forth in Sections 4.02, 4.05 or
4.06, the party discovering such breach shall give prompt written notice to the
other parties; provided, however, that the failure to give any such notice shall
not affect any obligation of the Servicer under this Section 4.07. On or before
the last day of the first Collection Period following its discovery or receipt
of notice of the breach of any covenant set forth in Sections 4.02, 4.05 or 4.06
that materially and adversely affects the interests of the Issuer, the Indenture
Trustee, the Owner Trustee, the Certificateholders or the Noteholders in any
Receivable, the Servicer shall, unless such breach
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shall have been cured in all material respects by such date, purchase from the
Issuer the Receivable affected by such breach. In consideration of the purchase
of any such Receivable, the Servicer shall remit the related Purchase Amount
into the Collection Account, with written notice to the Indenture Trustee of
such deposit, in the manner specified in Section 5.04. Subject to Section 7.02,
it is understood and agreed that the obligation of the Servicer to purchase any
Receivable with respect to which such a breach has occurred and is continuing
shall, if such obligation is fulfilled, constitute the sole remedy against the
Servicer for such breach available to the Issuer, the Owner Trustee, the
Indenture Trustee, the Certificateholders or the Noteholders.
Section 4.08 Servicing Fee. The Servicing Fee shall be payable to the
Servicer on each Payment Date. The Servicing Fee shall be calculated on the
basis of a 360-day year comprised of twelve 30-day months. The Servicer shall be
required to pay all expenses incurred by it in connection with its activities
under this Agreement (including taxes imposed on the Servicer and expenses
incurred in connection with distributions and reports made by the Servicer to
the Owner Trustee and the Indenture Trustee). The Servicer shall be required to
pay all of the Indenture Trustee's fees, expenses, reimbursements and
indemnifications.
Section 4.09 Servicer's Certificate. Not later than [____] (New York City
time) on each Determination Date, the Servicer shall deliver to the Owner
Trustee, the Indenture Trustee, and the Depositor, with a copy to each Rating
Agency, a Servicer's Certificate containing all information necessary to make
the distributions to be made on the related Payment Date pursuant to Section
5.05 for the related Collection Period and any other information the Indenture
Trustee may reasonably request and such Servicer's Certificate shall be
certified by a Responsible Officer of the Servicer that the information provided
is complete and no defaults have occurred. If any defaults have occurred, such
Servicer's Certificate will provide an explanation of such defaults. Receivables
to be purchased by the Servicer or to be repurchased by the Seller and each
Receivable that became a Liquidated Receivable shall be identified by the
Servicer by account number with respect to such Receivable (as specified in the
applicable Schedule of Receivables).
Section 4.10 Annual Statement as to Compliance, Notice of Servicer
Termination Event.
(a) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee, and each Rating Agency, within 120 days after the end of the Servicer's
fiscal year (or, in the case of the first such certificate, not later than
[__________], 200[_]), an Officer's Certificate signed by a Responsible Officer
of the Servicer, stating that (i) a review of the activities of the Servicer
during the preceding 12-month period (or such shorter period in the case of the
first such Officer's Certificate) and of the performance of its obligations
under this Agreement has been made under such officer's supervision and (ii) to
such officer's knowledge, based on such review, the Servicer has fulfilled all
its obligations under this Agreement throughout such period 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 Owner Trustee, the Indenture
Trustee, and each Rating Agency, promptly after having obtained knowledge
thereof, but in no event later than two Business Days thereafter, written notice
in an Officer's Certificate of any event that
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with the giving of notice or lapse of time or both would become a Servicer
Termination Event under Section 8.01.
Section 4.11 Annual Independent Accountants' Report. The Servicer shall
cause a firm of independent certified public accountants, which may also render
other services to the Servicer or its Affiliates, to deliver to the Owner
Trustee, the Indenture Trustee, and each Rating Agency, within 120 days after
the end of each fiscal year (or, in the case of the first such report, not later
than [__________]), a report addressed to the Board of Directors of the
Servicer, the Owner Trustee, and the Indenture Trustee, to the effect that such
firm has audited the books and records of the Servicer and issued its report
thereon and that (i) such audit was made in accordance with generally accepted
auditing standards and accordingly included such tests of the accounting records
and such other auditing procedures as such firm considered necessary in the
circumstances and (ii) the firm is independent of the Depositor and the Servicer
within the meaning of the Code of Professional Ethics of the American Institute
of Certified Public Accountants.
Section 4.12 Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to representatives of the Owner Trustee,
the Indenture Trustee, the Certificateholders and the Noteholders reasonable
access to the documentation regarding the Receivables and the related Issuer
property. Access shall be afforded without charge, but only upon reasonable
request and during the normal business hours at the offices of the Servicer.
Nothing in this Section shall affect the obligation of the Servicer to observe
any applicable law prohibiting disclosure of information regarding the Obligors
and the failure of the Servicer to provide access to information as a result of
such obligation shall not constitute a breach of this Section.
Section 4.13 Term of Servicer. The Servicer hereby covenants and agrees to
act as Servicer under, and for the term of, this Agreement.
ARTICLE V.
DISTRIBUTIONS; STATEMENTS TO SECURITYHOLDERS
Section 5.01 Post Office Box. All payments and other proceeds of any type
and from any source on or with respect to the Receivables that are delivered to
a Post Office Box shall be the property of the Issuer, subject to the Lien of
the Indenture and the rights of the Indenture Trustee thereunder. On each
Business Day, Citibank N.A., as the remittance processor, will transfer any such
payments received by it to the Local Remittance Account.
Section 5.02 Accounts.
(a) The Servicer has established an account or accounts in the name of
HMFC (the "Local Remittance Account"). All payments on the Receivables mailed by
Obligors or any other Person to the Post Office Box or otherwise delivered to
the Servicer shall be deposited by Citibank N.A., as remittance processor, or
the Servicer, as applicable, on a daily basis into the Local Remittance Account,
from which the available funds related to the Receivables will be swept by the
Servicer within two Business Days to the Collection Account; provided, however,
that if the Servicer fails to transfer such payments to the Collection Account
within two Business Days or the Servicer shall for any reason no longer be
acting as Servicer, HMFC at its expense
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shall deliver to the successor Servicer all documents and records relating to
the Post Office Boxes and cause Citibank N.A. to transfer payments related to
the Receivables directly from the Post Office Box to the Collection Account.
Amounts on deposit in the Local Remittance Account shall not be invested.
(b) (i) On or prior to the Closing Date, the Indenture Trustee shall
establish, or cause to be established, an account with and in the name of
the Indenture Trustee (the "Collection Account"), which shall be maintained
as an Eligible Deposit Account and shall bear a designation clearly
indicating that the amounts deposited thereto are held for the benefit of
the Noteholders and Certificateholders.
(ii) The Issuer, for the benefit of the Noteholders, shall cause
the Indenture Trustee to establish with and maintain in the name of the
Indenture Trustee an Eligible Deposit Account (the "Note Distribution
Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Noteholders.
(iii) The Issuer, for the benefit of the Noteholders, shall cause
the Indenture Trustee to establish with and maintain in the name of the
Indenture Trustee an Eligible Deposit Account (the "Reserve Account"),
bearing a designation clearly indicating that the funds deposited therein
are held for the benefit of the Noteholders.
(iv) The Issuer shall also cause to be established two
administrative subaccounts within the Note Distribution Account at the
Eligible Institution then maintaining the Note Distribution Account, which
subaccounts shall be designated the "Interest Distribution Account" and the
"Principal Distribution Account", respectively. The Interest Distribution
Account and the Principal Distribution Account are established and
maintained solely for administrative purposes.
(v) Funds on deposit in the Collection Account and the Reserve
Account shall be invested by the Indenture Trustee in Eligible Investments
selected by the Servicer; provided, however, that if the Servicer fails to
select any Eligible Investment, the Indenture Trustee shall invest such
funds in an Eligible Investment described in clause (d) of such definition.
All such Eligible Investments shall be held by the Indenture Trustee for
the benefit of the Noteholders and/or the Certificateholders, as
applicable; provided, all interest and other investment income (net of
losses and investment expenses) on funds on deposit in the Collection
Account for the related Collection Period shall be paid to the Servicer as
part of the servicing compensation. Other than as permitted in writing by
the Rating Agencies, funds on deposit in certain of the Trust Accounts
shall be invested in Eligible Investments that will mature not later than
the Business Day immediately preceding the next Payment Date. Funds
deposited in a Trust Account on a day which immediately precedes a Payment
Date upon the maturity of any Eligible Investments are not required to be
invested overnight.
(c) (i) The Indenture Trustee shall possess all right, title and
interest in all funds received and all funds on deposit from time to time
in a Post Office Box and the Local Remittance Account in each case only
with respect to the Receivables, the Trust
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Accounts and in all proceeds thereof (including all income thereon). The Trust
Accounts shall be under the sole dominion and control of the Indenture Trustee
for the benefit of the Noteholders and the Certificateholders, as the case may
be. If, at any time, a Trust Account ceases to be an Eligible Deposit Account,
the Indenture Trustee (or the Servicer on its behalf) shall within 5 Business
Days (or such longer period, not to exceed 15 calendar days, as to which each
Rating Agency may consent) establish a new Trust Account as an Eligible Deposit
Account and shall transfer any cash or any investments from the account that is
no longer an Eligible Deposit Account to the Trust Account.
(ii) With respect to the Trust Account Property, the Indenture
Trustee agrees, by its acceptance hereof, that:
(A) any Trust Account Property that is held in deposit
accounts shall be held solely in the Eligible Deposit Accounts,
subject to the last sentence of Section 5.02(c)(i); and each such
Eligible Deposit Account shall be subject to the exclusive custody and
control of the Indenture Trustee, and the Indenture Trustee shall have
sole signature authority with respect thereto;
(B) any Trust Account Property that constitutes Physical
Property shall be delivered to the Indenture Trustee in accordance
with paragraph (a) of the definition of "Delivery" and shall be held,
pending maturity or disposition, solely by the Indenture Trustee or a
securities intermediary (as such term is defined in Section
8-102(a)(14) of the UCC) acting solely for the Indenture Trustee;
(C) any Trust Account Property that is a book-entry security
held through the Federal Reserve System pursuant to federal book-entry
regulations shall be delivered in accordance with paragraph (b) of the
definition of "Delivery" and shall be maintained by the Indenture
Trustee, pending maturity or disposition, through continued book-entry
registration of such Trust Account Property as described in such
paragraph; and
(D) any Trust Account Property that is an "uncertificated
security" under Article VIII of the UCC and that is not governed by
clause (C) above shall be delivered to the Indenture Trustee in
accordance with paragraph (c) of the definition of "Delivery" and
shall be maintained by the Indenture Trustee, pending maturity or
disposition, through continued registration of the Indenture Trustee's
(or its nominee's) ownership of such security.
(iii) The Servicer shall have the power, revocable by the
Indenture Trustee or by the Owner Trustee with the consent of the Indenture
Trustee, to instruct the Indenture Trustee in writing to make withdrawals
and payments from the Trust Accounts for the purpose of withdrawing any
amounts deposited in error into such accounts.
Section 5.03 Application of Collections. All payments received from or on
behalf of an Obligor ("Collections") during each Collection Period with respect
to each Receivable (other than a Purchased Receivable) shall be applied to
interest and principal in accordance with the
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Simple Interest Method. The Servicer shall make all deposits of Collections and
Available Amounts received into the Collection Account on the second Business
Day following receipt thereof. However, so long as the Monthly Remittance
Condition is satisfied, the Servicer may retain such amounts received during a
Collection Period until the Business Day immediately preceding the related
Payment Date.
Section 5.04 Purchase Amounts. The Servicer or the Seller shall deposit or
cause to be deposited in the Collection Account, on or prior to each
Determination Date, the aggregate Purchase Amount with respect to Purchased
Receivables and the Servicer shall deposit therein all amounts to be paid under
Section 4.07. Notice of this amount shall be provided in writing by the
applicable party to the Indenture Trustee.
Section 5.05 Distributions.
(a) On each Determination Date, the Servicer shall calculate all
amounts required to be deposited pursuant to this Section and deliver a
Servicer's Certificate pursuant to Section 4.09.
(b) On each Payment Date, the Servicer shall instruct the Indenture
Trustee in writing (based on the information contained in the Servicer's
Certificate delivered on the related Determination Date pursuant to Section
4.09) to make the following deposits and distributions from Available Amounts on
deposit in the Collection Account, and in the event of a shortfall in meeting
the payments described in clauses (i) through (ix) below (an "Available Amounts
Shortfall") from amounts withdrawn from the Reserve Account in the following
order and priority:
(i) to the Servicer, the Servicing Fee, including any unpaid
Servicing Fees with respect to one or more prior Collection Periods, and
Advances not previously reimbursed to the Servicer;
(ii) to the Interest Distribution Account, (a) the aggregate
amount of interest accrued for the related Interest Period on each of the
Class A Notes at their respective interest rates on the principal
outstanding as of the previous Payment Date after giving effect to all
payments of principal to the Class A Noteholders on the preceding Payment
Date; and (b) the excess, if any, of the amount of interest payable to the
Class A Noteholders on those prior Payment Dates over the amounts actually
paid to the Class A Noteholders on those prior Payment Dates, plus interest
on any such shortfall at their respective interest rates to the extent
permitted by law;
(iii) to the Principal Distribution Account, the First Priority
Principal Distribution Amount, if any;
(iv) to the Interest Distribution Account, (a) the aggregate
amount of interest accrued for the related Interest Period on each of the
Class B Notes at the Class B Rate on the principal outstanding as of the
previous Payment Date after giving effect to all payments of principal to
the Class B Noteholders on the preceding Payment Date; and (b) the excess,
if any, of the amount of interest payable to the Class B Noteholders on
prior Payment Dates over the amounts actually paid to the Class B
Noteholders on those
27
prior Payment Dates, plus interest on any such shortfall at the Class B
Rate to the extent permitted by law;
(v) to the Principal Distribution Account, the Second Priority
Principal Distribution Amount, if any;
(vi) to the Interest Distribution Account, (a) the aggregate
amount of interest accrued for the related Interest Period on each of the
Class C Notes at the Class C Rate on the principal outstanding as of the
previous Payment Date after giving effect to all payments of principal to
the Class C Noteholders on the preceding Payment Date; and (b) the excess,
if any, of the amount of interest payable to the Class C Noteholders on
prior Payment Dates over the amounts actually paid to the Class C
Noteholders on prior Payment Dates, plus interest on any such shortfall at
the Class C Rate to the extent permitted by law;
(vii) to the Principal Distribution Account, the Third Priority
Principal Distribution Amount, if any;
(viii) to the Interest Distribution Account, (a) the aggregate
amount of interest accrued for the related Interest Period on each of the
Class D Notes at the Class D Rate on the principal outstanding as of the
previous Payment Date after giving effect to all payments of principal to
the Class D Noteholders on the preceding Payment Date; and (b) the excess,
if any, of the amount of interest payable to the Class D Noteholders on
prior Payment Dates over the amounts actually paid to the Class D
Noteholders on prior Payment Dates, plus interest on any such shortfall at
the Class D Rate to the extent permitted by law;
(ix) to the Principal Distribution Account, the Regular Principal
Distribution Amount;
(x) to the Reserve Account, from Available Amounts remaining
(this amount being the "Excess Amount"), the amount, if any, necessary to
cause the amount on deposit in that account to equal the Reserve Account
Required Amount;
(xi) to the Indenture Trustee and the Owner Trustee, any accrued
and unpaid fees, reimbursements and expenses, in each case to the extent
such fees, reimbursements and expenses have not been previously paid by the
Servicer and to the Securities Intermediary, any accrued and unpaid
indemnification expenses owed to it;
(xii) to the Principal Distribution Account, the Accelerated
Principal Amount; and
(xiii) any Available Amounts remaining, if any, to the Owner
Trustee or its agent, for deposit into the Certificate Distribution Account
(as defined in the Trust Agreement) and subsequent distribution to the
Depositor, so long as the Depositor holds the Certificate, or otherwise to
the Certificateholders, pursuant to Section 5.02 of the Trust Agreement.
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Section 5.06 Reserve Account.
(a) On or prior to the Closing Date, the Issuer shall cause to be
deposited an amount equal to the Reserve Account Deposit into the Reserve
Account from the net proceeds of the sale of the Notes. The Reserve Account
shall be an asset of the Issuer.
(b) In the event that the Servicer's Certificate states that there is
an Available Amounts Shortfall, then the Indenture Trustee shall, upon written
directions from the Servicer, withdraw the Reserve Account Withdrawal Amount
from the Reserve Account and deposit such Reserve Account Withdrawal Amount into
the Collection Account no later than [____], New York City time, on the Business
Day prior to the related Payment Date.
(c) In the event that the amount on deposit in the Reserve Account
(after giving effect to all deposits thereto and withdrawals therefrom on such
Business Day on a Payment Date) is greater than the Reserve Account Required
Amount on any Payment Date, the Indenture Trustee shall distribute, upon written
directions from the Servicer, all such amounts to the Depositor as per the
monthly Servicer's Certificate. Upon any such distribution to the Depositor, the
Noteholders shall have no further rights in, or claims to, such amounts.
(d) In the event that on any Payment Date the amount on deposit in the
Reserve Account shall be less than the Reserve Account Required Amount, the
Available Amounts remaining after the payment of the amounts set forth in
Section 5.05(b)(i) through (ix), up to an amount equal to such shortfall, shall
be deposited by the Indenture Trustee, upon written directions from the
Servicer, to the Reserve Account on such Payment Date.
(e) Subject to Section 9.01, amounts will continue to be applied
pursuant to Section 5.05 following the payment in full of the Outstanding Amount
of Notes until the Pool Balance is reduced to zero. Following the payment in
full of the aggregate Outstanding Amount of the Notes and the Certificates and
of all other amounts owing or to be distributed hereunder or under the Indenture
or the Trust Agreement to the Noteholders and the termination of the Issuer, any
amount then allocated to the Reserve Account shall be distributed to the
Depositor.
Section 5.07 Statements to Securityholders. On each Payment Date, the
Servicer shall provide to the Indenture Trustee (with a copy to each Rating
Agency), for the Indenture Trustee to forward to each Noteholder of record as of
the most recent Record Date, and to the Owner Trustee, for the Owner Trustee to
forward to each Certificateholder of record as of the most recent Record Date, a
statement substantially in the form of Exhibit B, respectively, setting forth at
least the following information as to the Securities to the extent applicable:
(i) the amount of collections received with respect to the
Receivables during the related Collection Period and allocable to principal
allocable to each Class of Notes on such Payment Date;
(ii) the amount of collections received with respect to the
Receivables during the related Collection Period and allocable to interest
allocable to each Class of Notes on such Payment Date;
29
(iii) the Outstanding Amount of each Class of Notes, the Note
Pool Factor for each such Class, as of the close of business on the last
day of the preceding Collection Period, after giving effect to payments
allocated to principal reported under clause (i) above;
(iv) the amount of the Servicing Fee paid to the Servicer and the
amount of any fees payable to the Owner Trustee, or the Indenture Trustee
with respect to the related Collection Period;
(v) the aggregate amounts of Realized Losses, if any, with
respect to the related Collection Period;
(vi) the balance of the Reserve Account on the related
Determination Date after giving effect to deposits and withdrawals to be
made on the relevant Payment Date, if any;
(vii) the Pool Balance as of the close of business on the last
day of the related Collection Period, after giving effect to payments
allocated to principal reported under clause (i) above;
(viii) the amount of any deposit to the Reserve Account and the
amount and application of any funds withdrawn from the Reserve Account, in
each case with respect to such Payment Date;
(ix) the aggregate principal balance of all Receivables that
became Liquidated Receivables or Purchased Receivables during the related
Collection Period;
(x) the aggregate principal balance and number of Receivables
that are 30 to 60 days, 61 to 90 days, or 91 days or more delinquent as of
the last day of the related Collection Period;
(xi) any Available Amounts Shortfall after giving effect to
payments on such Payment Date, and any change in such amounts from the
preceding statement;
(xii) the aggregate Purchase Amounts for Receivables, if any,
that were purchased during or with respect to such Collection Period;
(xiii) the aggregate Principal Balance and number of all
Receivables with respect to which the related Financed Vehicle was
repossessed;
(xiv) the aggregate Principal Balance and number of Receivables
with respect to which the Servicer granted an extension;
(xv) [the Required Yield Supplement Overcollateralization Amount
for the next Collection Period;] and
(xvi) any amounts distributed to the Certificateholders.
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Each amount set forth on the Payment Date statement under clauses (i) and
(ii) above shall be expressed as a dollar amount per $1,000 of original
principal balance of a Certificate or Note, as applicable.
The Indenture Trustee may make any such statement (and, at its option, any
additional files containing the same information in an alternative format)
available to the applicable Noteholders via www.[_________].com. The Indenture
Trustee shall have the right to change the way such statements are distributed
in order to make such distributions more convenient and/or more accessible to
the above parties regarding any such changes; provided, however, that the
Indenture Trustee will also mail copies of any such statements to any requesting
Noteholder.
Section 5.08 Advances by the Servicer.
By the close of business on the day required by Section 5.02 hereof, the
Servicer shall deposit into the Collection Account, out of its own funds, the
related Advance.
ARTICLE VI.
THE DEPOSITOR
Section 6.01 Representations of Depositor. The Depositor makes the
following representations on which the Issuer relies in accepting the
Receivables and delivering the Securities. Such representations speak as of the
execution and delivery of this Agreement and as of the Closing Date and shall
survive the sale, transfer and assignment of the Receivables by the Depositor to
the Issuer and the pledge thereof to the Indenture Trustee pursuant to the
Indenture.
(a) Organization and Good Standing. The Depositor is duly organized
and validly existing as a corporation in good standing under the laws of the
State of Delaware, with the corporate power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is presently conducted.
(b) Due Qualification. The Depositor is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions where the failure to do so would
materially and adversely affect the Depositor's ability to transfer the
Receivables to the Issuer pursuant to this Agreement or the validity or
enforceability of the Receivables.
(c) Power and Authority. The Depositor has the corporate power and
authority to execute and deliver this Agreement and the other Basic Documents to
which it is a party and to carry out their respective terms; the Depositor has
full power and authority to sell and assign the property to be sold and assigned
to and deposited with the Issuer, and the Depositor shall have duly authorized
such sale and assignment to the Issuer by all necessary corporate action; and
the execution, delivery and performance of this Agreement and the other Basic
Documents to which the Depositor is a party have been and will be duly
authorized by the Depositor by all necessary corporate action.
(d) Binding Obligation. This Agreement and the other Basic Documents
to which the Depositor is a party, when duly executed and delivered by the other
parties hereto and
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thereto, shall constitute legal, valid and binding obligations of the Depositor,
enforceable against the Depositor in accordance with their respective terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or similar laws now or hereafter in effect relating to or
affecting creditors' rights generally and to general principles of equity
(whether applied in a proceeding at law or in equity).
(e) No Violation. The consummation of the transactions contemplated by
this Agreement and the other Basic Documents and the fulfillment of the terms of
this Agreement and the other Basic Documents shall not conflict with, result in
any breach of any of the terms or provisions of or constitute (with or without
notice or lapse of time, or both) a default under, the certificate of
incorporation or bylaws of the Depositor, or any indenture, agreement, mortgage,
deed of trust or other instrument to which the Depositor is a party or by which
it is bound; or result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement, mortgage,
deed of trust or other instrument, other than this Agreement and the other Basic
Documents; or violate any law, order, rule or regulation applicable to the
Depositor of any court or federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the
Depositor or its properties.
(f) No Proceedings. There are no proceedings or investigations pending
or, to the Depositor's knowledge, threatened, against the Depositor before any
court, regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Depositor or its properties: (i)
asserting the invalidity of this Agreement or any other Basic Document; (ii)
seeking to prevent the issuance of the Notes or the Certificates or the
consummation of any of the transactions contemplated by this Agreement or any
other Basic Document; (iii) seeking any determination or ruling that might
materially and adversely affect the performance by the Depositor of its
obligations under, or the validity or enforceability of, this Agreement or any
other Basic Document; or (iv) seeking to adversely affect the federal income tax
attributes of the Issuer, the Notes or the Certificates.
(g) No Consents. The Depositor is not required to obtain the consent
of any other party or any consent, license, approval, registration,
authorization, or declaration of or with any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement or any other Basic Document to which it is a
party that has not already been obtained.
Section 6.02 Corporate Existence. During the term of this Agreement, the
Depositor will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Basic Documents
and each other instrument or agreement necessary or appropriate to the proper
administration of this Agreement and the transactions contemplated hereby. In
addition, all transactions and dealings between the Depositor and its Affiliates
will be conducted on an arm's-length basis.
Section 6.03 Liability of Depositor; Indemnities. The Depositor shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the
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Depositor under this Agreement (which shall not include distributions on account
of the Notes or the Certificates).
Section 6.04 Merger or Consolidation of, or Assumption of the Obligations
of, Depositor. The Depositor shall not merge or consolidate with any other
Person or permit any other Person to become the successor to the Depositor's
business.
Section 6.05 Amendment of Depositor's Organizational Documents. The
Depositor shall not amend its organizational documents except in accordance with
the provisions thereof.
ARTICLE VII.
THE SERVICER
Section 7.01 Representations of Servicer. The Servicer makes the following
representations upon which the Issuer is deemed to have relied in acquiring the
Receivables. Such representations speak as of the execution and delivery of this
Agreement and as of the Closing Date and shall survive the sale of the
Receivables to the Issuer and the pledge thereof to the Indenture Trustee
pursuant to the Indenture.
(a) Organization and Good Standing. The Servicer is duly organized and
validly existing as a corporation in good standing under the laws of the State
of its incorporation, with the corporate power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted, and had at all relevant times, and
has, the corporate power, authority and legal right to acquire, own, and service
the Receivables.
(b) Due Qualification. The Servicer is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions where the failure to do so would
materially and adversely affect the Servicer's ability to acquire, own and
service the Receivables.
(c) Power and Authority. The Servicer has the power and authority to
execute and deliver this Agreement and the other Basic Documents to which it is
a party and to carry out their respective terms; and the execution, delivery and
performance of this Agreement and the other Basic Documents to which it is a
party have been duly authorized by the Servicer by all necessary corporate
action.
(d) Binding Obligation. This Agreement and the other Basic Documents
to which it is a party constitute legal, valid and binding obligations of the
Servicer, enforceable against the Servicer in accordance with their respective
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and to general principles of equity whether applied
in a proceeding in equity or at law.
(e) No Violation. The consummation of the transactions contemplated by
this Agreement and the other Basic Documents to which it is a party and the
fulfillment of their respective terms shall not conflict with, result in any
breach of any of the terms and provisions
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of, or constitute (with or without notice or lapse of time or both) a default
under, the articles of incorporation or bylaws of the Servicer, or any
indenture, agreement, mortgage, deed of trust or other instrument to which the
Servicer is a party or by which it is bound; or result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of any
such indenture, agreement, mortgage, deed of trust or other instrument, other
than this Agreement and the other Basic Documents, or violate any law, order,
rule or regulation applicable to the Servicer of any court or federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Servicer or any of its properties.
(f) No Proceedings. There are no proceedings or investigations pending
or, to the Servicer's knowledge, threatened, against the Servicer before any
court, regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Servicer or its properties: (i)
asserting the invalidity of this Agreement or any of the other Basic Documents;
(ii) seeking to prevent the issuance of the Securities or the consummation of
any of the transactions contemplated by this Agreement or any of the other Basic
Documents; (iii) seeking any determination or ruling that might materially and
adversely affect the performance by the Servicer of its obligations under, or
the validity or enforceability of, this Agreement or any of the other Basic
Documents; or (iv) seeking to adversely affect the federal income tax or other
federal, state or local tax attributes of the Securities.
(g) No Consents. The Servicer is not required to obtain the consent of
any other party or any consent, license, approval or authorization, or
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery, performance, validity or
enforceability of this Agreement.
Section 7.02 Indemnities of Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer and the representations made by the Servicer under
this Agreement:
(a) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee, the Securityholders and the Depositor
and any of the officers, directors, employees and agents of the Issuer, the
Owner Trustee and the Indenture Trustee 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, excluding any losses incurred in connection with the sale of
any repossessed Financed Vehicles in a commercially reasonable manner and in
compliance with the terms of this Agreement.
(b) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee and the Depositor and their respective
officers, directors, agents and employees, and the Securityholders, from and
against any taxes that may at any time be asserted against any of such parties
with respect to the transactions contemplated in this Agreement, including any
sales, gross receipts, tangible or intangible personal property, privilege or
license taxes (but not including any federal or other income taxes, including
franchise taxes asserted with respect to, and as of the date of, the transfer of
the Receivables to the Issuer or the issuance and original sale of the
Securities), and any costs and expenses in defending against the same.
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(c) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee, the Depositor, the Securityholders and
any of the officers, directors, employees or agents of the Issuer, the Owner
Trustee and the Indenture Trustee from and against any and all costs, expenses,
losses, claims, damages and liabilities to the extent that such cost, expense,
loss, claim, damage or liability arose out of, or was imposed upon any such
Person through, the negligence, misfeasance or bad faith of the Servicer in the
performance of its duties under this Agreement or by reason of reckless
disregard of its obligations and duties under this Agreement.
For purposes of this Section, in the event of the termination of the rights
and obligations of HMFC (or any successor thereto pursuant to Section 7.03) as
Servicer pursuant to Section 8.02, or the resignation by such Servicer pursuant
to this Agreement, such Servicer shall be deemed to be the Servicer pending
appointment of a successor Servicer (other than the Indenture Trustee) pursuant
to Section 8.03.
Indemnification under this Section shall survive the resignation or removal
of the Servicer or the termination of this Agreement, and shall include
reasonable fees and expenses of counsel and reasonable expenses of litigation.
If the Servicer shall have made any indemnity payments pursuant to this Section
and the Person to or on behalf of whom such payments are made thereafter
collects any of such amounts from others, such Person shall promptly repay such
amounts to the Servicer, without interest. The Servicer shall pay all amounts
due, pursuant to this Section, with respect to the Indenture Trustee and Owner
Trustee as set forth in Section 5.05(b)(xi).
Section 7.03 Merger or Consolidation of, or Assumption of the Obligations
of, Servicer. The Servicer shall not merge or consolidate with any other Person,
convey, transfer or lease substantially all its assets as an entirety to another
Person, or permit any other Person to become the successor to the Servicer's
business unless, after such merger, consolidation, conveyance, transfer, lease
or succession, the successor or surviving entity shall be capable of fulfilling
the duties of the Servicer contained in this Agreement. Any Person (i) into
which the Servicer may be merged or consolidated, (ii) resulting from any merger
or consolidation to which the Servicer shall be a party, (iii) that acquires by
conveyance, transfer or lease substantially all of the assets of the Servicer or
(iv) succeeding to the business of the Servicer, which Person shall execute an
agreement of assumption to perform every obligation of the Servicer under this
Agreement, shall be the successor to the Servicer under this Agreement without
the execution or filing of any paper or any further act on the part of any of
the parties to this Agreement. The Servicer shall provide notice of any merger,
consolidation or succession pursuant to this Section 7.03(a) to the Owner
Trustee, the Indenture Trustee and each Rating Agency. Notwithstanding the
foregoing, the Servicer shall not merge or consolidate with any other Person or
permit any other Person to become a successor to the Servicer's business unless
(i) immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 7.01 shall have been breached (for purposes
hereof, such representations and warranties shall speak as of the date of the
consummation of such transaction) and no event that, after notice or lapse of
time or both, would become a Servicer Termination Event shall have occurred,
(ii) the Servicer shall have delivered to the Owner Trustee and the Indenture
Trustee an Officer's Certificate and an Opinion of Counsel each stating that
such consolidation, merger or succession and such agreement of assumption comply
with this Section 7.03(a) and that all
35
conditions precedent provided for in this Agreement relating to such transaction
have been complied with and (iii) the Servicer shall have delivered to the Owner
Trustee and the Indenture Trustee an Opinion of Counsel stating that either (A)
all financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary to preserve and protect the interest
of the Issuer and the Indenture Trustee, respectively, in the assets of the
Issuer and reciting the details of such filings or (B) no such action shall be
necessary to preserve and protect such interest.
Section 7.04 Limitation on Liability of Servicer and Others. None of the
Servicer or any of its directors, officers, employees or agents shall be under
any liability to the Issuer, the Depositor, the Indenture Trustee, the Owner
Trustee, the Noteholders or the Certificateholders, except as provided in this
Agreement, for any action taken or for refraining from the taking of any action
pursuant to this Agreement; 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 a breach of this Agreement or willful
misfeasance, bad faith or negligence in the performance of duties. The Servicer
and any director, officer, employee or agent of the Servicer may conclusively
rely in good faith on the written advice of counsel or on any document of any
kind prima facie properly executed and submitted by any Person respecting any
matters arising under this Agreement.
Section 7.05 Appointment of Subservicer. The Servicer may at any time
appoint a subservicer to perform all or any portion of its obligations as
Servicer hereunder; provided, however, that 10 days' prior notice of such
appointment shall have been given to each Rating Agency, and each Rating Agency
shall have notified the Servicer, the Owner Trustee and the Indenture Trustee in
writing that such appointment satisfies the Rating Agency Condition; and
provided further, that the Servicer shall remain obligated and be liable to the
Owner Trustee, the Indenture Trustee and the Securityholders for the servicing
and administering of the Receivables in accordance with the provisions hereof
without diminution of such obligation and liability by virtue of the appointment
of such subservicer and to the same extent and under the same terms and
conditions as if the Servicer alone were servicing and administering the
Receivables. The fees and expenses of any subservicer shall be as agreed between
the Servicer and such subservicer from time to time, and none of the Owner
Trustee, the Indenture Trustee, the Issuer or the Securityholders shall have any
responsibility therefor.
Section 7.06 Servicer Not to Resign.
(a) Subject to the provisions of Section 7.03(a), the Servicer shall
not resign from the obligations and duties imposed on it by this Agreement as
Servicer except upon a determination that the performance of its duties under
this Agreement shall no longer be permissible under applicable law.
(b) Notice of any determination that the performance by the Servicer
of its duties hereunder is no longer permitted under applicable law shall be
communicated to the Owner Trustee and the Indenture Trustee at the earliest
practicable time (and, if such communication is not in writing, shall be
confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered by the Servicer to the Owner Trustee and the Indenture Trustee
concurrently with or promptly
36
after such notice. No resignation of the Servicer shall become effective until a
successor shall have assumed the responsibilities and obligations of the
Servicer in accordance with Section 8.03. If no successor Servicer has been
appointed within 30 days of resignation or removal, the Servicer, as the case
may be, may petition any court of competent jurisdiction for such appointment.
ARTICLE VIII.
DEFAULT
Section 8.01 Servicer Termination Events. For purposes of this Agreement,
the occurrence and continuance of any of the following shall constitute a
"Servicer Termination Event":
(a) Any failure by the Servicer to deposit into any Account any
proceeds or payment required to be so delivered or to direct the Indenture
Trustee to make the required payment from any Account under the terms of this
Agreement that continues unremedied for a period of five Business days after
written notice is received by the Servicer or after discovery of such failure by
a Responsible Officer of the Servicer;
(b) Failure on the part of the Servicer duly to observe or perform, in
any material respect, any covenants or agreements of the Servicer set forth in
this Agreement, which failure (i) materially and adversely affects the rights of
the Securityholders and (ii) continues unremedied for a period of 60 days after
discovery of such failure by a Responsible Officer of the Servicer or after the
date on which written notice of such failure requiring the same to be remedied
shall have been given to the Servicer by any of the Owner Trustee, the Indenture
Trustee or Noteholders evidencing not less than 50% of the Outstanding Amounts
of the Controlling Class of Notes; or
(c) The occurrence of an Insolvency Event with respect to the
Servicer.
Section 8.02 Consequences of a Servicer Termination Event. If a Servicer
Termination Event shall occur, the Indenture Trustee or Noteholders evidencing
more than 50% of the voting interests of the Controlling Class may, by notice
given in writing to the Servicer (and to the Indenture Trustee, the Owner
Trustee and the Depositor if given by such Noteholders), terminate all of the
rights and obligations of the Servicer under this Agreement. On or after the
receipt by the Servicer of such written notice, all authority, power,
obligations and responsibilities of the Servicer under this Agreement
automatically shall pass to, be vested in and become obligations and
responsibilities of the successor Servicer; provided, however, that the
successor Servicer shall have no liability with respect to any obligation that
was required to be performed by the terminated Servicer prior to the date that
the successor Servicer becomes the Servicer or any claim of a third party based
on any alleged action or inaction of the terminated Servicer. The successor
Servicer is authorized and empowered by this Agreement to execute and deliver,
on behalf of the terminated Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of the Receivables
and related documents to show the Indenture Trustee (or the
37
Owner Trustee if the Notes have been paid in full) as lienholder or secured
party on the related certificates of title of the Financed Vehicles or
otherwise. The terminated Servicer agrees to cooperate with the successor
Servicer in effecting the termination of the responsibilities and rights of the
terminated Servicer under this Agreement, including the transfer to the
successor Servicer for administration by it of all money and property held by
the Servicer with respect to the Receivables and other records relating to the
Receivables, including any portion of the Receivables File held by the Servicer
and a computer tape in readable form as of the most recent Business Day
containing all information necessary to enable the successor Servicer to service
the Receivables. The terminated Servicer shall also provide the successor
Servicer access to Servicer personnel and computer records in order to
facilitate the orderly and efficient transfer of servicing duties.
Section 8.03 Appointment of Successor Servicer.
(a) On and after the time the Servicer receives a notice of
termination pursuant to Section 8.02 or upon the resignation of the Servicer
pursuant to Section 7.06, the successor Servicer shall be the successor in all
respects to the Servicer in its capacity as Servicer under this Agreement and
shall be subject to all the rights, responsibilities, restrictions, duties,
liabilities and termination provisions relating to the Servicer under this
Agreement, except as otherwise stated herein. The Depositor, the Owner Trustee,
the Indenture Trustee and such successor Servicer shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession. If a successor Servicer is acting as Servicer hereunder, it shall be
subject to termination under Section 8.02 upon the occurrence of any Servicer
Termination Event after its appointment as successor Servicer. The original
Servicer shall pay any and all fees and expenses incurred as a result of a
transfer of servicing.
(b) On and after the time the Servicer receives a notice of
termination pursuant to Section 8.02 or upon the resignation of the Servicer
pursuant to Section 7.06, the Noteholders evidencing more than 50% of the voting
interests of the Controlling Class may exercise at any time its right to appoint
as successor to the Servicer a Person, and shall have no liability to the Owner
Trustee, the Indenture Trustee, the Servicer, the Depositor, any Noteholders,
any Certificateholders or any other Person if it does so. Pending appointment
pursuant to the preceding sentence, the outgoing Servicer shall continue to act
as Servicer until a successor has been appointed and accepted such appointment.
(c) Upon appointment, the successor Servicer shall be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on the predecessor Servicer, and shall be entitled to the Servicing Fee
and all the rights granted to the predecessor Servicer by the terms and
provisions of this Agreement.
Section 8.04 Notification to Securityholders. Upon any termination of, or
appointment of a successor to, the Servicer pursuant to this Article VIII, the
Administrator shall give prompt written notice thereof to the
Certificateholders, and the Indenture Trustee shall give prompt written notice
thereof to the Noteholders and each Rating Agency.
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Section 8.05 Waiver of Past Defaults. The Noteholders evidencing more than
50% of the voting interests of the Controlling Class may, on behalf of all
Securityholders, waive in writing any default by the Servicer in the performance
of its obligations hereunder and its consequences, except a default in making
any required deposits to or payments from any of the Trust Accounts in
accordance with this Agreement. Upon any such waiver of a past default, such
default shall cease to exist, and any Servicer Termination Event arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereto.
ARTICLE IX.
TERMINATION
Section 9.01 Optional Purchase of All Receivables.
(a) On each Determination Date as of which the Pool Balance is equal
to or less than [10]% of the Initial Pool Balance, the Servicer shall have the
option to purchase the Receivables. To exercise such option, the Servicer shall
deposit to the Collection Account pursuant to Section 5.04 an amount equal to
the aggregate Purchase Amount for the Receivables (including Liquidated
Receivables) and shall succeed to all interests in and to the Receivables. The
exercise of such option shall effect a retirement, in whole but not in part, of
all outstanding Notes.
(b) As described in Article IX of the Trust Agreement, notice of any
termination of the Issuer shall be given by the Servicer to the Owner Trustee
and the Indenture Trustee as soon as practicable after the Servicer has received
notice thereof.
(c) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder and
the Issuer will succeed to the rights of, and assume the obligations to make
payments to Certificateholders of, the Indenture Trustee pursuant to this
Agreement.
ARTICLE X.
MISCELLANEOUS
Section 10.01 Amendment.
(a) This Agreement may be amended by the Depositor, the Servicer, the
Indenture Trustee and the Issuer, but without the consent of any of the
Noteholders or the Certificateholders, to cure any ambiguity, to correct or
supplement any provisions in this Agreement or for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions in
this Agreement or of modifying in any manner the rights of the Noteholders or
the Certificateholders; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel delivered to the Owner Trustee and the
Indenture Trustee, adversely affect in any material respect the interests of any
Noteholder or Certificateholder.
39
(b) This Agreement may also be amended from time to time by the
Depositor, the Servicer and the Issuer, with the prior written consent of the
Indenture Trustee and Noteholders holding not less than a majority of the
Outstanding Amount of the Notes, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Securityholders; provided, however,
that no such amendment shall (i) increase or reduce in any manner the amount of,
or accelerate or delay the timing of, collections of payments on Receivables or
distributions that shall be required to be made for the benefit of the
Securityholders or (ii) reduce the aforesaid percentage of the Outstanding
Amount of the Notes, the Securityholders of which are required to consent to any
such amendment, without the consent of the Noteholders holding all Outstanding
Notes and Certificateholders holding all outstanding Certificates.
Promptly after the execution of any amendment or consent, the Administrator
shall furnish written notification of the substance of such amendment or consent
to each Securityholder, the Indenture Trustee and each Rating Agency.
It shall not be necessary for the consent of Securityholders pursuant to
this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee, on behalf of the Issuer and the Indenture Trustee shall be entitled to
receive and rely upon an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement and the Opinion of
Counsel referred to in Section 10.02(i)(A). The Owner Trustee, on behalf of the
Issuer, and the Indenture Trustee may, but shall not be obligated to, enter into
any such amendment that affects the Owner Trustee's or the Indenture Trustee's,
as applicable, own rights, duties or immunities under this Agreement or
otherwise.
Section 10.02 Protection of Title.
(a) The Servicer shall file such financing statements and cause to be
filed such continuation statements, all in such a manner and in such places as
may be required by law fully to preserve, maintain and protect the interest of
the Issuer and the Indenture Trustee in the Receivables and the proceeds
thereof. The Servicer shall deliver or cause to be delivered to the Owner
Trustee and the Indenture Trustee file-stamped copies of, or filing receipts
for, any document filed as provided above as soon as available following such
filing.
(b) Neither the Depositor nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed in accordance with
paragraph (a) above insufficient within the meaning of Section 9-503 of the UCC,
unless it shall have given the Owner Trustee and the Indenture Trustee at least
five days' prior written notice thereof and shall have promptly filed
appropriate amendments to all previously filed financing statements or
continuation statements.
(c) 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.
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(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 each such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on or with respect to each such
Receivable and the amounts from time to time deposited in the Collection Account
in respect of each such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables, the Servicer's
master computer records (including any backup archives) that refer to a
Receivable shall indicate clearly the interest of the Issuer in such Receivable
and that such Receivable is owned by the Issuer and has been pledged to the
Indenture Trustee. Indication of the Issuer's interest in a Receivable shall be
deleted from or modified on the Servicer's computer systems when, and only when,
the related Receivable shall have been paid in full or repurchased.
(f) If at any time the Depositor or the Servicer shall propose to
sell, grant a security interest in or otherwise transfer any interest in motor
vehicle receivables to any prospective purchaser, lender or other transferee,
the Servicer shall give to such prospective purchaser, lender or other
transferee computer tapes, records or printouts (including any restored from
backup archives) that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has been sold and is
owned by the Issuer and has been pledged to the Indenture Trustee.
(g) The Servicer shall permit the Indenture Trustee and its agents
upon reasonable notice and at any time during normal business hours to inspect,
audit and make copies of and abstracts from the Servicer's records regarding any
Receivable.
(h) Upon request, the Servicer shall furnish to the Owner Trustee or
the Indenture Trustee, within fifteen Business Days, a list of all Receivables
(by account number and name of Obligor) then held as part of the Issuer,
together with a reconciliation of such list to the Schedule of Receivables and
to each of the Servicer's Certificates furnished prior to such request
indicating removal of Receivables from the Issuer.
(i) Upon request, the Servicer shall deliver to the Owner Trustee and
the Indenture Trustee:
(A) promptly after the execution and delivery of this
Agreement and each amendment hereto, an Opinion of Counsel stating
that, in the opinion of such counsel, either (i) all financing
statements and continuation statements have been filed that are
necessary to fully preserve and protect the interest of the Issuer and
the Indenture Trustee in the Receivables, and reciting the details of
such filings or referring to prior Opinions of Counsel in which such
details are given, or (ii) no such action shall be necessary to
preserve and protect such interest; and
(B) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three
months after the
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Cutoff Date, an Opinion of Counsel, dated as of a date during such
90-day period, stating that, in the opinion of such counsel, either
(i) all financing statements and continuation statements have been
filed that are necessary to fully preserve and protect the interest of
the Issuer and the Indenture Trustee in the Receivables, and reciting
the details of such filings or referring to prior Opinions of Counsel
in which such details are given, or (ii) no such action shall be
necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (i) or (ii) above shall specify
any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
Section 10.03 Notices. All demands, notices, communications and
instructions upon or to the Depositor, the Servicer, the Issuer, the Owner
Trustee, the Indenture Trustee or any Rating Agency under this Agreement shall
be in writing, personally delivered, faxed and followed by first class mail, or
mailed by certified mail, return receipt requested, and shall be deemed to have
been duly given upon receipt (a) in the case of the Depositor, to 00000 Xxxxxxx
Xxxxxx, Xxxxxxxx Xxxxxx, Xxxxxxxxxx 00000, Attention: Vice President and
Secretary, with a copy to General Counsel; (b) in the case of the Servicer and
HMFC, to 00000 Xxxxxxx Xxxxxx, Xxxxxxxx Xxxxxx, Xxxxxxxxxx 00000, Attention:
Vice President, Finance, with a copy to General Counsel; (c) in the case of the
Issuer or the Owner Trustee, at the Corporate Trust Office (as defined in the
Trust Agreement); (d) in the case of Xxxxx'x, to 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: ABS Monitoring Department; (e) in the case of the
Indenture Trustee, at the Corporate Trust Office (as defined in the Indenture);
(f) in the case of Standard & Poor's, to 00 Xxxxx Xxxxxx (00xx Xxxxx), Xxx Xxxx,
Xxx Xxxx 00000, Attention: Asset Backed Surveillance Department; [and (g) in the
case of Fitch, to Fitch Rating, Xxx Xxxxx Xxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000;] or, as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.
Section 10.04 Assignment by the Depositor or the Servicer. Notwithstanding
anything to the contrary contained herein, except as provided in Sections 6.04
and 7.03 herein and as provided in the provisions of this Agreement concerning
the resignation of the Servicer, this Agreement may not be assigned by the
Depositor or the Servicer.
Section 10.05 Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Depositor, the Servicer, the Issuer,
the Owner Trustee, the Certificateholders, the Indenture Trustee and the
Noteholders, and nothing in this Agreement, whether express or implied, shall be
construed to give to any other Person any legal or equitable right, remedy or
claim in the Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
Section 10.06 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
42
Section 10.07 Counterparts. This Agreement may be executed by the parties
hereto in any number of counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together constitute but
one and the same instrument. Delivery of an executed counterpart of a signature
page to this Agreement by facsimile shall be effective as delivery of a manually
executed counterpart of this Agreement.
Section 10.08 Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
Section 10.09 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 10.10 Assignment by Issuer. The Depositor hereby acknowledges and
consents to any mortgage, pledge, assignment and grant of a security interest by
the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of
the Noteholders of all right, title and interest of the Issuer in, to and under
the Receivables or the assignment of any or all of the Issuer's rights and
obligations hereunder to the Indenture Trustee.
Section 10.11 Nonpetition Covenants. Notwithstanding any prior termination
of this Agreement, the parties hereto shall not, prior to the date that is one
year and one day after the termination of this Agreement with respect to the
Issuer or the Depositor, acquiesce, petition or otherwise invoke or cause the
Issuer or the Depositor to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the Issuer
or the Depositor under any federal or state bankruptcy, insolvency or similar
law, or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Issuer or the Depositor or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Issuer or the Depositor.
Section 10.12 Limitation of Liability of Owner Trustee and Indenture
Trustee.
(a) Notwithstanding anything contained herein to the contrary, this
Agreement has been executed by [_____________]not in its individual capacity but
solely in its capacity as Owner Trustee of the Issuer and in no event shall
[_____________] in its individual capacity or, except as expressly provided in
the Trust Agreement, as Owner Trustee of the Issuer have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Issuer in accordance with the priorities set forth herein. For all
purposes of this Agreement, in the performance of its duties or obligations
hereunder or in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles VI, VII and VIII of the Trust
Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by [_____________], not in its individual capacity
but solely as
43
Indenture Trustee, and in no event shall [_____________] have any liability for
the representations, warranties, covenants, agreements or other obligations of
the Issuer hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had solely to
the assets of the Issuer in accordance with the priorities set forth herein.
44
IN WITNESS WHEREOF, the parties hereto have caused this Sale and Servicing
Agreement to be duly executed by their respective officers as of the day and
year first above written.
HYUNDAI AUTO RECEIVABLES
[TRUST][LLC] 200[_]
By: [_______________], not in its individual
capacity but solely as Owner Trustee
By:
-----------------------------------------------
Name:
Title:
HYUNDAI ABS FUNDING CORPORATION,
as Depositor
By:
-----------------------------------------------
Name:
Title:
HYUNDAI MOTOR FINANCE COMPANY,
as Servicer and Seller
By:
-----------------------------------------------
Name:
Title:
[_______________], not in its individual capacity
but solely as Indenture Trustee
By:
-----------------------------------------------
Name:
Title:
EXHIBIT A
Representations and Warranties of Hyundai Motor Finance Company
Under Section 3.02 of the Receivables Purchase Agreement
Terms used in this Exhibit A shall have the meanings assigned to them
in the Receivables Purchase Agreement, dated as of [_________], 200[_] (the
"Receivables Purchase Agreement"), between Hyundai Motor Finance Company as
Seller (the "Seller") and Hyundai ABS Funding Corporation as depositor (the
"Depositor"). Terms not defined in the Receivables Purchase Agreement shall have
the meanings assigned to them in the Sale and Servicing Agreement.
(a) Seller hereby represents and warrants as follows to the Depositor
and the Indenture Trustee as of the date hereof and as of the Transfer Date:
(i) Organization and Good Standing. The Seller has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of California, with the corporate power and authority to own
its properties and to conduct its business as such properties are currently
owned and such business is presently conducted.
(ii) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business shall require such
qualifications.
(iii) Power and Authority. The Seller has the power and authority
to execute and deliver this Agreement and the other Basic Documents to which it
is a party and to carry out their respective terms; the Seller had at all
relevant times, and has, full power, authority and legal right to sell, transfer
and assign the property sold, transferred and assigned to the Depositor hereby
and has duly authorized such sale, transfer and assignment to the Depositor by
all necessary corporate action; and the execution, delivery and performance of
this Agreement and the other Basic Documents to which the Seller is a party have
been duly authorized by the Seller by all necessary corporate action.
(iv) No Violation. The consummation of the transactions
contemplated by this Agreement and the other Basic Documents to which the Seller
is a party and the fulfillment of their respective terms do not conflict with,
result in any breach of any of the terms and provisions of, or constitute (with
or without notice or lapse of time or both) a default under, the articles of
incorporation or bylaws of the Seller, or any indenture, agreement or other
instrument to which the Seller is a party or by which it is bound, or result in
the creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement or other instrument (other than this
Agreement), or 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
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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 Seller's knowledge, threatened against the Seller before any
court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties (i)
asserting the invalidity of this Agreement or any other Basic Document to which
the Seller is a party, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any other Basic Document to which
the Seller is a party or (iii) seeking any determination or ruling that might
materially and adversely affect the performance by the Seller of its obligations
under, or the validity or enforceability of, this Agreement or any other Basic
Document to which the Seller is a party.
(vi) Valid Sale, Binding Obligation. This Agreement and the other
Basic Documents to which the Seller is a party, when duly executed and delivered
by the other parties hereto and thereto, shall constitute legal, valid and
binding obligations of the Seller, enforceable against the Seller in accordance
with their respective terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization and similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and to general
principles of equity (whether applied in a proceeding at law or in equity).
(vii) Chief Executive Office. The chief executive office of the
Seller is located at 00000 Xxxxxxx Xxxxxx, Xxxxxxxx Xxxxxx, Xxxxxxxxxx 00000.
(viii) No Consents. The Seller is not required to obtain the
consent of any other party or any consent, license, approval, registration,
authorization, or declaration of or with any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity, or
enforceability of this Agreement or any other Basic Document to which it is a
party that has not already been obtained.
(ix) Seller Information. No certificate of an officer, statement
or document furnished in writing or report delivered pursuant to the terms
hereof by the Seller contains any untrue statement of a material fact or omits
to state any material fact necessary to make the certificate, statement,
document or report not misleading.
(x) Ordinary Course. The transactions contemplated by this
Agreement and the other Basic Documents to which the Seller is a party are in
the ordinary course of the Seller's business.
(xi) Solvency. The Seller is not insolvent, nor will the Seller
be made insolvent by the transfer of the Receivables, nor does the Seller
contemplate any pending insolvency.
(xii) Legal Compliance. The Seller is not in violation of, and
the execution and delivery of this Agreement and the other Basic Documents to
which the Seller is a party by it and its performance and compliance with the
terms of this Agreement and the other Basic Documents to which the Seller is a
party will not constitute a violation with respect to, any order or decree of
any court or any order or regulation of any federal, state, municipal or
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governmental agency having jurisdiction, which violation would materially and
adversely affect the Seller's condition (financial or otherwise) or operations
or any of the Seller's properties or materially and adversely affect the
performance of any of its duties under the Basic Documents.
(xiii) Creditors. The Seller represents and warrants that it did
not sell the Receivables to the Depositor with any intent to hinder, delay or
defraud any of its creditors.
(xiv) No Notice. The Seller represents and warrants that it
acquired title to the Receivables in good faith, without notice of any adverse
claim.
(xv) Bulk Transfer. The Seller represents and warrants that the
transfer, assignment and conveyance of the Receivables by the Seller pursuant to
this Agreement are not subject to the bulk transfer laws or any similar
statutory provisions in effect in any applicable jurisdiction.
(b) The Seller makes the following representations and warranties with
respect to the Receivables, on which the Depositor relies in accepting the
Receivables and in transferring the Receivables to the Issuer under the Sale and
Servicing Agreement, and on which the Issuer relies in pledging the same to the
Indenture Trustee. Such representations and warranties speak as of the execution
and delivery of this Agreement as of the Closing Date, but shall survive the
sale, transfer and assignment of the Receivables to the Depositor, the
subsequent sale, transfer and assignment of the Receivables by the Depositor to
the Issuer pursuant to the Sale and Servicing Agreement and the pledge of the
Receivables by the Issuer to the Indenture Trustee pursuant to the Indenture.
(i) Characteristics of Receivables. Each Receivable (A) was
originated in the United States of America by a Dealer located in the United
States of America for the retail sale of a Financed Vehicle in the ordinary
course of such Dealer's business in accordance with the Seller's Credit and
Collection Policy as of the date of origination of the related Receivable, is
payable in United States dollars, has been fully and properly executed by the
parties thereto, has been purchased by the Seller from such Dealer under an
existing Dealer Agreement and has been validly assigned by such Dealer to the
Seller, (B) has created or shall create a valid, subsisting and enforceable
first priority security interest in favor of the Seller in the Financed Vehicle,
which security interest is assignable by the Seller to the Depositor, and by the
Depositor to the Issuer, (C) 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, (D) provides for fixed
level monthly payments (provided that the payment in the last month of the term
of the Receivable may be insignificantly different from the level payments) that
fully amortize the Amount Financed by maturity and yield interest at the APR and
(E) amortizes using the simple interest method.
(ii) Compliance with Law. Each Receivable and the sale of the
related Financed Vehicle complied at the time it was originated or made, and at
the time of execution of this Agreement complies, in all material respects with
all requirements of applicable federal, state and local laws, rulings and
regulations thereunder, including usury laws, the Federal Truth-in-Lending Act,
the Equal Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the
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Xxxxxxxx-Xxxx Warranty Act, the Federal Reserve Board's Regulations "B" and "Z",
the Soldiers' and Sailors' Civil Relief Act of 1940, the Xxxxx-Xxxxx-Xxxxxx Act,
the Texas Consumer Credit Code and state adaptations of the National Consumer
Act and of the Uniform Consumer Credit Code, and other consumer credit laws and
equal credit opportunity and disclosure laws; and each Dealer has represented to
the Seller that such Dealer had all necessary licenses and permits to originate
such Receivables.
(iii) Binding Obligation. Each Receivable represents the genuine,
legal, valid and binding payment obligation of the Obligor thereon, enforceable
by the holder thereof in accordance with its terms, except (A) as enforceability
thereof may be limited by bankruptcy, insolvency, reorganization or similar laws
affecting the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies, regardless of whether such
enforceability is considered in a proceeding in equity or at law and (B) as such
Receivable may be modified by the application after the Transfer Date of the
Soldiers' and Sailors' Civil Relief Act of 1940, as amended.
(iv) No Government Obligor. No Receivable is due from the United
States of America or any State or any agency, department, subdivision or
instrumentality thereof.
(v) Obligor Bankruptcy. At the Cutoff Date, no Obligor is or has
been, since the origination of the related Receivable, the subject of a
bankruptcy proceeding.
(vi) Schedule of Receivables. The information set forth in
Schedule A to this Agreement is true and correct in all material respects as of
the close of business on the Cutoff Date.
(vii) Marking Records. By the Transfer Date, the Seller will have
caused its computer and accounting records relating to each Receivable to be
clearly and unambiguously marked to show that the Receivables have been sold to
the Depositor by the Seller and transferred and assigned by the Depositor to the
Issuer in accordance with the terms of the Sale and Servicing Agreement and
pledged by the Issuer to the Indenture Trustee in accordance with the terms of
the Indenture.
(viii) Computer Tape. The computer tape regarding the Receivables
made available by the Seller to the Depositor is complete and accurate in all
respects as of the Transfer Date.
(ix) No Adverse Selection. No selection procedures believed by
the Seller to be adverse to the Noteholders or the Certificateholder were
utilized in selecting the Receivables.
(x) Chattel Paper. Each Receivable constitutes chattel paper
within the meaning of the UCC as in effect in the state of origination.
(xi) One Original. There is only one original executed copy of
each Receivable.
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(xii) Receivables in Force. No Receivable has been satisfied,
subordinated or rescinded, nor has any Financed Vehicle been released from the
Lien of the related Receivable in whole or in part. None of the terms of any
Receivable has been waived, altered or modified in any respect since its
origination, except by instruments or documents identified in the related
Receivable File. No Receivable has been modified as a result of the application
of the Soldiers' and Sailors' Civil Relief Act of 1940, as amended.
(xiii) Lawful Assignment. No Receivable has been originated in,
or is subject to the laws of, any jurisdiction the laws of which would make
unlawful, void or voidable the sale, transfer and assignment of such Receivable
under this Agreement, the Sale and Servicing Agreement or the pledge of such
Receivable under the Indenture.
(xiv) Title. It is the intention of the Seller that the transfers
and assignments herein contemplated constitute sales of the Receivables from the
Seller to the Depositor and that the beneficial interest in and title to the
Receivables not be part of the debtor's estate in the event of the filing of a
bankruptcy petition by or against the Seller under any bankruptcy law. No
Receivable, other than the Receivables identified in the Reconveyance Documents,
has been sold, transferred, assigned or pledged by the Seller to any Person
other than to the Depositor or pursuant to this Agreement (or by the Depositor
to any other Person other than to the Issuer pursuant to the Sale and Servicing
Agreement). [Except with respect to the Liens under the Conduit Documents (which
such Liens shall be released in accordance with provisions of the Reconveyance
Documents)], immediately prior to the transfers and assignments herein
contemplated, the Seller has good and marketable title to each Receivable free
and clear of all Liens, and, immediately upon the transfer thereof, the
Depositor shall have good and marketable title to each Receivable, free and
clear of all Liens and, immediately upon the transfer thereof from the Depositor
to the Issuer pursuant to the Sale and Servicing Agreement, the Issuer shall
have good and marketable title to each Receivable, free and clear of all Liens
and, immediately upon the pledge thereof from the Issuer to the Indenture
Trustee pursuant to the Indenture, the Indenture Trustee shall have a first
priority perfected security interest in each Receivable.
(xv) Security Interest in Financed Vehicle. Immediately prior to
its sale, assignment and transfer to the Depositor pursuant to this Agreement,
each Receivable shall be secured by a validly perfected first priority security
interest in the related Financed Vehicle in favor of the Seller as secured
party, or all necessary and appropriate actions have been commenced that will
result in the valid perfection of a first priority security interest in such
Financed Vehicle in favor of the Seller as secured party. The Lien Certificate
for each Financed Vehicle shows, or if a new or replacement Lien Certificate is
being applied for with respect to such Financed Vehicle such Lien Certificate
shall be received within 120 days of the Closing Date and shall show, the Seller
named as the original secured party under each Receivable as the holder of a
first priority security interest in such Financed Vehicle. With respect to each
Receivable for which the Lien Certificate has not yet been returned from the
Registrar of Titles, the Seller has received written evidence that such Lien
Certificate showing the Seller as first lienholder has been applied for. Each
Dealer's security interest in any Receivable originated by such Dealer has been
validly assigned by the Dealer to the Seller. The Seller's security interest has
been validly assigned to the Depositor pursuant to this Agreement. The Seller
has the legal right to repossess or recover by legal process the Financed
Vehicle in its name.
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(xvi) All Filings Made. All filings (including UCC filings,
except for UCC releases required to be filed in accordance with the Reconveyance
Documents) required to be made in any jurisdiction to give the Issuer a first
perfected ownership interest in the Receivables and the Indenture Trustee a
first priority perfected security interest in the Receivables have been made.
(xvii) No Defenses. No Receivable is subject to any right of
rescission, setoff, counterclaim, dispute or defense, including the defense of
usury, whether arising out of transactions concerning the Receivable or
otherwise, and the operation of any terms of the Receivable or the exercise by
the Seller or the Obligor of any right under the Receivable will not render the
Receivable unenforceable in whole or in part, and no such right of rescission,
setoff, counterclaim, dispute or defense, including the defense of usury, has
been asserted with respect thereto.
(xviii) No Default. There has been no default, breach, violation
or event permitting acceleration under the terms of any Receivable (other than
payment delinquencies of not more than 30 days), and no condition exists or
event has occurred and is continuing that with notice, the lapse of time or both
would constitute a default, breach, violation or event permitting acceleration
under the terms of any Receivable, and there has been no waiver of any of the
foregoing. On or prior to the applicable Transfer Date, no Financed Vehicle has
been repossessed.
(xix) Insurance. The Seller, in accordance with its customary
procedures, has determined that the Obligor has obtained physical damage
insurance covering each Financed Vehicle and, under the terms of the related
Receivable, the Obligor is required to maintain such insurance and to name the
Seller as a loss payee.
(xx) Final Scheduled Maturity Date. No Receivable has a final
scheduled payment date after [___________], 200[_].
(xxi) Certain Characteristics of the Receivables. As of the
applicable Cutoff Date, (A) each Receivable had an original maturity of not less
than 11 or more than 72 months and (B) no Receivable was more than 30 days past
due.
(xxii) No Foreign Obligor. All of the Receivables are due from
Obligors who are citizens, or legal resident aliens, of the United States of
America.
(xxiii) No Extensions. The number or timing of scheduled payments
has not been changed on any Receivable on or before the Closing Date, as
applicable, except as reflected on the computer tape delivered in connection
with the sale of the Receivables; provided, however, that Receivables may have
had up to six extensions prior to the applicable representation date, subject to
the following: (A) each such extension was made in conformity with the Extension
Policy and (B) each extended Receivable satisfies in all material respects all
applicable requirements under Seller's Credit and Collection Policy in effect
from time to time.
(xxiv) Scheduled Payments. Each Obligor has been instructed to
make all scheduled payments to the Post Office Boxes. To the best knowledge of
the Seller, each Obligor has paid the entire down payment called for by the
contract.
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(xxv) Dealer Agreements. The representations and warranties of
the Dealer in the Dealer Agreement with respect to each Receivable purchased by
the Seller pursuant to such Dealer Agreement were true and correct in all
material respects as of the date the Seller acquired such Receivable from that
Dealer.
(xxvi) No Fleet Sales. No Receivable has been included in a
"fleet" sale (i.e., a sale to any single Obligor of more than five Financed
Vehicles).
(xxvii) Receivable Files Complete. There exists a Receivable File
pertaining to each Receivable and such Receivable File contains, without
limitation, (A) a fully executed original of the Receivable, (B) a certificate
of insurance, application form for insurance signed by the Obligor, or a signed
representation letter from the Obligor named in the Receivable pursuant to which
the Obligor has agreed to obtain physical damage insurance for the related
Financed Vehicle, (C) the original Lien Certificate or application therefor
together with an assignment of the Lien Certificate executed by such Dealer to
the Seller, (D) an original credit application signed by the Obligor and (E) the
other documents that are set forth on Schedule II hereto. Each of such documents
which is required to be signed by the Obligor has been signed by the Obligor in
the appropriate spaces. All blanks on any form described in clauses (A), (B),
(C), (D) and (E) above have been properly filled in and each form has otherwise
been correctly prepared. Notwithstanding the above, the complete Receivable File
for each Receivable, (x) shall fulfill the documentation requirements of the
Seller's Credit and Collection Policy as in effect on the date of origination of
such Receivable and (y) is in possession of the Servicer on the Transfer Date.
The blanket power of attorney granted to the Indenture Trustee and the original
Lien Certificate are the only documents necessary to permit the Indenture
Trustee to submit the Lien Certificate for each Financed Vehicle for retitling
in the name of the Indenture Trustee as secured party in the event such
retitling were required or otherwise permitted under the Basic Documents.
(xxviii) No Fraud or Misrepresentation. Each Receivable was
originated by a Dealer and was sold by the Dealer to the Seller, to the best of
the Seller's knowledge, without fraud or misrepresentation on the part of such
Dealer in either case.
(xxix) Receivables Not Assumable. No Receivable is assumable by
another person in a manner which would release the Obligor thereof from such
Obligor's obligations to the Seller with respect to such Receivable.
(xxx) No Impairment. The Seller has not done anything to convey
any right to any person that would result in such person having a right to
payments due under a Receivable or otherwise to impair the rights of the
Depositor in any Receivable or the proceeds thereof.
(xxxi) Tax Liens. There is no Lien against any Financed Vehicle
for delinquent taxes.
(xxxii) No Corporate Obligor. All of the Receivables are due from
Obligors who are natural persons.
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(xxxiii) No Liens. No Liens or claims have been filed for work,
labor, or materials relating to a Financed Vehicle that are prior to, or equal
or coordinate with, the security interest in the Financed Vehicle granted by the
related Receivable.
(xxxiv) Servicing. Each Receivable has been serviced in
conformity with all applicable laws, rules and regulation and in conformity with
the Seller's policies and procedures which are consistent with customary,
prudent industry standards.
(xxxv) APR. No Receivable has an APR of less than [__]% and the
weighted average coupon on the pool of Receivables is at least [____]%.
(xxxvi) Remaining Term. Each Receivable has a remaining term of
at least [_] months and no more than [__] months.
(xxxvii) Seasoning. The weighted average number of months since
the initial installment due date for the Receivables is at least [___] months.
(xxxviii) Remaining Balance. Each Receivable has a remaining
balance of at least $[_______] and not greater than $[________].
(xxxix) New Vehicles. At least [_____]% of the aggregate
principal balance of the Receivables is secured by Financed Vehicles which were
new at the date of origination.
(xl) No Advances. No advances have been made to Obligors in order
to meet any representation and warranties herein set forth.
(xli) No Repossessions. No Financed Vehicle has been repossessed
on or prior to the applicable Transfer Date.
(xlii) No Omissions. There have been no material omissions or
misstatements in any document provided or statement made to the Depositor
concerning the Receivables by or on behalf of the Seller in connection with the
transactions contemplated by this Agreement.
(xliii) No Proceedings Pending. As of the Cutoff Date, there are
no proceedings pending, or to the best of the Seller's knowledge, threatened,
wherein the Obligor or any governmental agency has alleged that any Receivable
is illegal or unenforceable.
(xliv) Dealer Agreements. Each Dealer from whom the Seller
purchases Receivables directly has entered into a Dealer Agreement with the
Seller providing for the sale of Receivables from time to time by such Dealer to
the Seller.
(xlv) Receivable Obligations. The Seller has duly fulfilled all
obligations to be fulfilled on its part under or in connection with the
origination, acquisition and assignment of the Receivables. To the best of the
Seller's knowledge, no notice to or consent from any Obligor is necessary to
effect the acquisition of the Receivables by the Indenture Trustee.
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(xlvi) Taxes. The sale, transfer, assignment and conveyance of
the Receivables by the Seller pursuant to this Agreement is not subject to and
will not result in any tax, fee or governmental charge payable by the Seller,
the Issuer or the Indenture Trustee to any federal, state or local government
("Transfer Taxes") other than Transfer Taxes which have or will be paid by the
Seller as due. In the event the Issuer or the Indenture Trustee receives actual
notice of any Transfer Taxes arising out of the transfer, assignment and
conveyance of the Receivables, on written demand by the Issuer or the Indenture
Trustee, or upon the Seller's otherwise being given notice thereof by the Issuer
or the Indenture Trustee, the Seller shall pay, and otherwise indemnify and hold
the Issuer and the Indenture Trustee harmless, on an after-tax basis, from and
against any and all such Transfer Taxes (it being understood that the
Noteholders, the Indenture Trustee and the Issuer shall have no obligation to
pay such Transfer Taxes).
(xlvii) Computer Tape. The computer tape from which the selection
of the Receivables being acquired on the Closing Date was made available to the
accountants that are providing a comfort letter to the Noteholders in connection
with the numerical information regarding the Receivables and the Notes.
(xlviii) No Future Disbursement. At the time each Receivable was
acquired from the Dealer, the Amount Financed was fully disbursed. There is no
requirement for future advances of principal thereunder, and, other than in
connection with Dealer participations, all fees and expenses in connection with
the origination of such Receivable have been paid.
(xlix) Physical Damage Insurance Policy. In connection with the
purchase of each Receivable, the Seller required the related Dealer to furnish
evidence that the related Financed Vehicle was covered by a physical damage
insurance policy (i) in an amount at least equal to the lesser of (a) the actual
cash value of the related Financed Vehicle or (b) the unpaid principal balance
owing on such Receivable, (ii) naming the Seller as a loss payee and (iii)
insuring against loss and damage due to fire, theft, transportation, collision
and other risks generally covered by comprehensive and collision coverage.
(l) Dealer Agreement. The Dealer that sold each Receivable to the
Seller has entered into the Dealer Agreement and such Dealer Agreement, together
with the assignment and related documentation signed by the Dealer, constitutes
the entire agreement between the Seller and the related Dealer with respect to
the sale of such Receivable to the Seller. Each such Dealer Agreement is in full
force and effect and is the legal, valid and binding obligation of such Dealer,
there have been no material defaults by such Dealer or by the Seller under such
Dealer Agreement; the Seller has fully performed all of its obligations under
such Dealer Agreement; the Seller has not made any statements or representations
to such Dealer (whether written or oral) inconsistent with any term of such
Dealer Agreement; the Purchase Price (as specified in the applicable Dealer
Agreement) for such Receivable has been paid in full by the Seller, there is no
other payment of principal due to such Dealer from the Seller for the purchase
of such Receivable; such Dealer has no right, title or interest in or to any
Receivable; there is no prior course of dealing between such Dealer and the
Seller which will materially and adversely affect the terms of such Dealer
Agreement; and any payment owed to such Dealer by the Seller is a corporate
obligation of the Seller.
A-9
(li) Condition of Financed Vehicle. Each Receivable requires the
Obligor to maintain the related Financed Vehicle in good and workable order.
(lii) Condition of Financed Vehicle as of Transfer Date. To the
best of the Seller's knowledge each Financed Vehicle was properly delivered to
the related Obligor in good repair, without defects and in satisfactory order,
and each Financed Vehicle is in good operating condition and repair as of the
Transfer Date.
(liii) Business of Obligor. To the best of the Seller's
knowledge, no Obligor is a Person involved in the business of leasing or selling
equipment of a type similar to the Financed Vehicles.
(liv) No Consumer Leases. No Receivable constitutes a "consumer
lease" under either (a) the UCC as in effect in the jurisdiction whose law
governs the Receivable or (b) the Consumer Leasing Act, 15 USC 1667.
(lv) Balance as of Cutoff Date. The aggregate principal balance
of the Receivables as of the Cutoff Date is equal to $[_____________].
(lvi) Prepayment or Termination. No Receivable permits early
termination or prepayment unless the amount to be paid by or on behalf of the
Obligor in respect of such prepayment or termination is at all times equal to or
in excess of what the related Purchase Amount would be.
A-10
EXHIBIT B
Form of Record Date Statement
B-1
EXHIBIT C
Form of Servicer's Certificate
X-0
XXXXXXX X
Xxxxxxxxx Xxxxxx
X-0
SCHEDULE A
Schedule of Receivables
Sched. A-1
SCHEDULE B
[Required Yield Supplement Overcollateralization Amount]
With respect to any Payment Date, the "Yield Supplement
Overcollateralization Amount" is the amount specified below:
Yield
Supplement
Overcollateralization
Payment Date Amount
------------ ---------------------
Closing Date $
Sched. B-1
