USAA FEDERAL SAVINGS BANK
Seller and Servicer
and
THE CHASE MANHATTAN BANK
Trustee
on behalf of the Certificateholders
------------------------------------------
POOLING AND SERVICING AGREEMENT
Dated as of [ ], 1998
------------------------------------------
$[ ]
USAA Auto Loan Grantor Trust 1998-1
[ ]% Automobile Loan Pass-Through Certificates, Class A
[ ]% Automobile Loan Pass-Through Certificates, Class B
TABLE OF CONTENTS
Section Page
------- ----
ARTICLE I
Section 1.1 Creation of Trust........................................................... 1
ARTICLE II
Section 2.1 Conveyance of Receivables................................................... 2
ARTICLE III
[Reserved] . . . . . . . . . . . 3
ARTICLE IV
Section 4.1 Acceptance by Trustee....................................................... 3
ARTICLE V
Section 5.1 Incorporation of Standard Terms and Conditions of Agreement................. 4
ARTICLE VI
Section 6.1 Special Definitions and Terms............................................... 4
ARTICLE VII
Section 7.1 Additional Representations and Warranties of Seller......................... 5
ARTICLES VIII-X
[Reserved] . . . . . . . . . . . 7
ARTICLE XI
Definitions
Section 11.1 Definitions.................................................................... 11
Section 11.2 Usage of Terms. .............................................................. 29
Section 11.3 Simple Interest Method; Allocations............................................ 30
Section 11.4 References..................................................................... 30
Section 11.5 Section References............................................................. 30
Section 11.6 Separate Agreements............................................................ 30
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ARTICLE XII
The Receivables
Section 12.1 Representations and Warranties of Seller; Conditions Relating to Receivables.. 31
Section 12.2 Repurchase Upon Breach or Failure of a Condition............................... 35
Section 12.3 Custody of Receivable Files.................................................... 36
Section 12.4 Duties of Servicer as Custodian................................................ 37
Section 12.5 Instructions; Authority to Act................................................. 38
Section 12.6 Custodian's Indemnification.................................................... 38
Section 12.7 Effective Period and Termination............................................... 39
ARTICLE XIII
Administration and Servicing of Receivables
Section 13.1 Duties of Servicer............................................................. 40
Section 13.2 Collection of Receivable Payments.............................................. 40
Section 13.3 Realization Upon Receivables................................................... 41
Section 13.4 [Reserved]..................................................................... 42
Section 13.5 Maintenance of Security Interests in Financed Vehicles......................... 42
Section 13.6 Covenants of Servicer.......................................................... 43
Section 13.7 Purchase of Receivables Upon Breach............................................ 44
Section 13.8 Servicing Fee.................................................................. 44
Section 13.9 Servicer's Certificate......................................................... 45
Section 13.10 Annual Statement as to Compliance............................................. 46
Section 13.11 Annual Audit Report........................................................... 46
Section 13.12 Access to Certain Documentation and Information Regarding Receivables......... 47
Section 13.13 Reports to Certificateholders and the Rating Agencies......................... 47
Section 13.14 Insurance..................................................................... 48
ARTICLE XIV
Distributions; Statements to Certificateholders
Section 14.1 Accounts....................................................................... 48
Section 14.2 Collections.................................................................... 52
Section 14.3 Advances....................................................................... 52
Section 14.4 Additional Deposits............................................................ 53
Section 14.5 Distributions.................................................................. 54
Section 14.6 Reserve Account................................................................ 56
Section 14.7 Net Deposits................................................................... 57
Section 14.8 Statements to Certificateholders............................................... 57
ARTICLE XV
[Reserved] . . . . . . . . . . . 59
ARTICLE XVI
The Certificates
Section 16.1 The Certificates............................................................... 60
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Section 16.2 Execution, Authentication and Delivery of Certificates........................ 60
Section 16.3 Registration of Transfer and Exchange of Certificates.......................... 61
Section 16.4 Mutilated, Destroyed, Lost, or Stolen Certificates............................. 62
Section 16.5 Persons Deemed Owners.......................................................... 63
Section 16.6 Access to List of Certificateholders' Names and Addresses...................... 63
Section 16.7 Maintenance of Office or Agency................................................ 64
Section 16.8 Book-Entry Certificates........................................................ 64
Section 16.9 Notices to Clearing Agency..................................................... 66
Section 16.10 Definitive Certificates....................................................... 66
Section 16.11 Appointment of Paying Agent................................................... 67
Section 16.12 Authenticating Agent.......................................................... 68
Section 16.13 Actions of Certificateholders................................................. 70
ARTICLE XVII
The Seller
Section 17.1 Representations of Seller...................................................... 72
Section 17.2 Liability of Seller; Indemnities............................................... 74
Section 17.3 Merger or Consolidation of Seller.............................................. 74
Section 17.4 Limitation on Liability of Seller and Others.................................. 75
Section 17.5 Seller May Own Certificates.................................................... 75
ARTICLE XVIII
The Servicer
Section 18.1 Representations of Servicer.................................................... 76
Section 18.2 Liability of Servicer; Indemnities............................................. 78
Section 18.3 Merger or Consolidation of Servicer............................................ 79
Section 18.4 Limitation on Liability of Servicer and Others................................. 80
Section 18.5 Servicer Not To Resign......................................................... 81
Section 18.6 Delegation of Duties........................................................... 82
ARTICLE XIX
Events of Servicing Termination
Section 19.1 Events of Servicing Termination................................................ 83
Section 19.2 Trustee to Act; Appointment of Successor...................................... 85
Section 19.3 Notification to Certificate- holders.......................................... 86
Section 19.4 Waiver of Past Defaults........................................................ 86
ARTICLE XX
The Trustee
Section 20.1 No Power to Engage in Business or to Vary Investments.......................... 88
Section 20.2 Duties of Trustee.............................................................. 88
Section 20.3 Trustee's Assignment of Repurchased Receivables and Trustee's Certificate...... 91
Section 20.4 Certain Matters Affecting the Trustee.......................................... 91
Section 20.5 Trustee Not Liable for Certificates or Receivables..............................94
Section 20.6 Trustee May Own Certificates....................................................95
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Section 20.7 Trustee's Fees and Expenses.....................................................96
Section 20.8 Indemnity.......................................................................97
Section 20.9 Eligibility Requirements for Trustee............................................98
Section 20.10 Resignation or Removal of Trustee..............................................98
Section 20.11 Successor Trustee..............................................................99
Section 20.12 Merger or Consolidation of Trustee............................................100
Section 20.13 Appointment of Co-Trustee or Separate Trustee.................................100
Section 20.14 Representations and Warranties of Trustee.....................................102
Section 20.15 Tax Returns...................................................................103
Section 20.16 Trustee May Enforce Claims Without Possession of Certificates.................104
Section 20.17 Suits for Enforcement.........................................................104
Section 20.18 Maintenance of Office or Agency...............................................104
ARTICLE XXI
Termination
Section 21.1 Termination of the Trust.......................................................105
Section 21.2 Optional Purchase of All Receivables...........................................106
ARTICLE XXII
Miscellaneous Provisions
Section 22.1 Amendment......................................................................108
Section 22.2 Protection of Title to Trust...................................................109
Section 22.3 Limitation on Rights of Certificateholders.....................................112
Section 22.4 Governing Law..................................................................113
Section 22.5 Notices........................................................................113
Section 22.6 Severability of Provisions.....................................................114
Section 22.7 Assignment.....................................................................114
Section 22.8 Certificates Nonassessable and Fully Paid......................................114
Section 22.9 Third-Party Beneficiaries......................................................115
Schedule A -- Schedule of Receivables
Schedule B -- Locations of Receivable Files
iv
This Pooling and Servicing Agreement, dated as of [ ], 1998,
is made with respect to the formation of the USAA Auto Loan Grantor Trust 1998-1
(the "Trust"), between USAA Federal Savings Bank, a federally chartered savings
association (the "Seller" and the "Servicer" in its respective capacities as
such), and The Chase Manhattan Bank, a New York banking corporation, as trustee
(the "Trustee").
WITNESSETH THAT: In consideration of the premises and of the
mutual agreements herein contained, the parties hereto agree as follows:
ARTICLE I
Section 1.1 Creation of Trust. Upon the execution of this
Agreement by the parties hereto, there is hereby created the USAA Auto Loan
Grantor Trust 1998-1.
ARTICLE II
Section 2.1 Conveyance of Receivables. In consideration of the
Trustee's delivery to, or upon the order of, the Seller of authenticated
Certificates, in authorized denominations, in an aggregate amount equal to the
Original Pool Balance, the Seller does hereby sell, transfer, assign, and
otherwise convey to the Trustee on behalf of the Trust, without recourse
(subject to the Seller's obligations herein):
(i) all right, title, and interest of the Seller in and to
the Receivables listed in SCHEDULE A hereto, all proceeds thereof and all
monies paid thereon on and after the Cutoff Date (including proceeds of
the repurchase of Receivables by the Seller pursuant to Section 12.2 or
the purchase of Receivables by the Servicer pursuant to Section 13.7 or
21.2), together with the interest of the Seller in the security interests
in the Financed Vehicles granted by the Obligors pursuant to the
Receivables;
(ii) all right, title and interest of the Seller in any
Liquidation Proceeds and in any proceeds of any extended warranties,
comprehensive and collision, credit life, or credit disability policies
relating to the Financed Vehicles or the Obligors; and
(iii) all proceeds of the foregoing items (i) and (ii).
In connection with such sale, the Seller agrees to record and
file, at its own expense, financing statements (and continuation statements with
respect to such financing statements when applicable) with respect to the
Receivables for the sale of accounts and chattel paper meeting the requirements
of applicable state law in such manner and in such jurisdictions as are
necessary to perfect the sale and assignment of the Receivables to the Trust.
It is the intention of the Seller and the Trustee that the
assignment and transfer herein contemplated constitute a sale of the
Receivables, conveying good title thereto free and clear of any liens and
encumbrances, from the Seller to the Trust and that the Receivables not be part
of the Seller's estate in the event of an insolvency. In the event that such
conveyance is deemed to be a pledge to secure a loan, the Seller hereby grants
to the Trustee on behalf of the Trust for the benefit of the Certificateholders
a first priority perfected security interest in all of the Seller's right, title
and interest in the items of property listed in clauses (i) and (ii) above, and
all proceeds of the foregoing to secure the loan deemed to be made in connection
with such pledge and, in such event, this Agreement shall constitute a security
agreement under applicable law.
ARTICLE III
[Reserved]
ARTICLE IV
Section 4.1 Acceptance by Trustee. The Trustee does hereby accept
all consideration conveyed by the Seller pursuant to Section 2.1 and declares
that the Trustee shall hold such consideration upon the trusts herein set forth
for the benefit of the Certificateholders, subject to the terms and provisions
of this Agreement.
2
ARTICLE V
Section 5.1 Incorporation of Standard Terms and Conditions of
Agreement. This Pooling and Servicing Agreement does hereby incorporate herein
by reference the Standard Terms and Conditions of Agreement for the USAA Auto
Loan Grantor Trust 1998-1 effective [ ], 1998 (the "Standard Terms and
Conditions of Agreement") attached hereto as Annex I. The terms and conditions
of Articles I through X of this Pooling and Servicing Agreement, to the extent
they are inconsistent with the Standard Terms and Conditions of Agreement, shall
control.
ARTICLE VI
Section 6.1 Special Definitions and Terms. Whenever used in the
Standard Terms and Conditions of Agreement and in this Pooling and Servicing
Agreement, the following words and phrases shall have the following meanings:
The "Class A Pass-Through Rate" shall be [ ]% per annum,
calculated on the basis of a year of twelve 30-day months.
"Class A Percentage" means [ ]%.
The "Class B Pass-Through Rate" shall be [ ]% per annum,
calculated on the basis of a year of twelve 30-day months.
"Class B Percentage" means [ ]%.
"Closing Date" shall mean [ ], 1998.
The "Corporate Trust Office" at the date hereof is located at 000
Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
The "Cutoff Date" shall be the opening of business on July 1,
1998.
The first "Distribution Date" shall be August 17, 1998.
The "Final Distribution Date" shall be [ ] 15, [ ] or, if such day
is not a Business Day, the next succeeding Business Day.
The "Optional Purchase Percentage" shall be 5%.
The "Original Pool Balance" shall be $[ ].
The "Reserve Account Initial Deposit" shall be $[ ].
The "Required Deposit Rating" shall be a short-term certificate of
deposit rating from Xxxxx'x of P-1 and from Standard & Poor's of A-1+ and a
long-term unsecured debt rating of not less than "AA" by Standard & Poor's and
"Aa2" by Xxxxx'x.
"Servicing Fee Rate" shall mean 1.00% per annum.
"Specified Reserve Account Balance" means, with respect to any
Distribution Date, the greater of (i) [ ]% of the Pool Balance as of the last
day of the preceding Collection Period and (ii) [ ]% of the initial Pool Balance
(such amount not to exceed the outstanding Pool Balance as of the last day of
the preceding Collection Period); provided, however, that the Specified Reserve
Account Balance will be calculated using a percentage of [ ]% for any
Distribution Date (beginning with the August 17, 1998 Distribution Date) on
which the Average Net Loss Ratio exceeds [ ]% or the Average Delinquency Ratio
exceeds [ ]%. The Specified Reserve Account Balance may be reduced to a lesser
amount as determined by the Seller; provided, however, that the Rating Agency
Condition is satisfied.
3
ARTICLE VII
Section 7.1 Additional Representations and Warranties of Seller.
The Seller does hereby make the following representations and warranties to the
Trustee and the Certificateholders and the Trustee shall rely on such
representations and warranties in accepting the Receivables in trust and
authenticating the Certificates:
(i) Receivables. Each Receivable represents a motor vehicle
installment loan made to Obligors located in a State of the United States
or the District of Columbia;
(ii) Security. Each Receivable is secured by a new or used
automobile or light-duty truck;
(iii) Maturity of Receivables. Each Receivable has a
remaining maturity, as of the Cutoff Date, of not less than 6 months nor
greater than 72 months and, (i) with respect to Receivables secured by
new Financed Vehicles, an original maturity of at least 12 months and not
more than 72 months and (ii) with respect to Receivables secured by used
Financed Vehicles, an original maturity of at least 9 months and not more
than 60 months;
(iv) Annual Percentage Rate. Each Receivable is a
fully-amortizing fixed rate simple interest contract that provides for
level scheduled monthly payments (except for the last payment, which may
be minimally different from the level payments) over its respective
remaining term, and has an Annual Percentage Rate that equals or exceeds
7.5%, is not secured by any interest in real estate, and has not been
identified on the computer files of the Seller as relating to Obligors
who have requested a reduction in the periodic finance charges, as of the
Cutoff Date, by application of the Soldiers' and Sailors' Civil Relief
Act of 1940, as amended;
(v) No Repossessions. Each Receivable is secured by a
Financed Vehicle that, as of the Cutoff Date, has not been repossessed
without reinstatement of such Receivable;
(vi) Obligor Not Subject to Bankruptcy Proceedings. Each
Receivable has been entered into by an Obligor who has not been
identified on the computer files of the Seller as being a debtor in any
bankruptcy proceeding as of the Cutoff Date;
(vii) No Overdue Payments. No Receivable has any payment
that is more than 30 days past due as of the Cutoff Date;
(viii) Remaining Principal Balance. Each Receivable had a
remaining principal balance, as of the Cutoff Date, of at least $500; and
(ix) Receivable Files. The Receivable Files shall be kept at
one or more of the locations specified in SCHEDULE B hereto.
ARTICLES VIII THROUGH X
[RESERVED]
4
IN WITNESS WHEREOF, the parties have caused this Pooling and
Servicing Agreement to be duly executed by their respective officers as of the
day and year first above written.
USAA FEDERAL SAVINGS BANK
as Seller and Servicer
By:______________________
Name:
Title:
THE CHASE MANHATTAN BANK
as Trustee
By:______________________
Name:
Title:
5
SCHEDULE A
SCHEDULE A shall be deemed to be the computer data disk or printout relating
to the Receivables delivered by the Seller to the Trustee on the Closing Date.
6
SCHEDULE B
Location of Receivable Files
7
USAA AUTO LOAN GRANTOR
TRUST 1998-1 STANDARD TERMS
AND CONDITIONS OF AGREEMENT
EFFECTIVE [ ], 1998
for the USAA Auto Loan
Grantor Trust 1998-1 formed on or
subsequent to the date specified above
INTRODUCTION
These Standard Terms and Conditions of Agreement shall be
applicable to the USAA Auto Loan Grantor Trust 1998-1 formed on or after the
effective date hereof, with respect to which a Pooling and Servicing Agreement
relating to such trust and incorporating by reference these Standard Terms and
Conditions of Agreement shall have been executed.
ARTICLE XII
Definitions
Section 12.2 Definitions. Whenever used in the Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"Account Property" means the Reserve Account and all amounts,
Financial Assets and other investments held from time to time in the Reserve
Account and all proceeds of the foregoing.
"Advance" as of a Record Date means any payment made by the
Servicer pursuant to Section 14.3.
"Agent" means any of the Paying Agent, the Collateral Agent, the
Authenticating Agent and the Transfer Agent.
"Agreement" means a Pooling and Servicing Agreement executed by
the parties as of the related Cutoff Date, into which this Standard Terms and
Conditions of Agreement shall be incorporated by reference, and all amendments
and supplements thereto.
"Amount Financed" in respect of a Receivable means the amount
advanced under the Receivable toward the purchase price of the Financed Vehicle
and related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the annual
rate of interest stated in the Receivable.
"Authenticating Agent" shall have the meaning specified in Section
16.12.
"Authorized Officer" means any officer in the Corporate Trust
Department of the Trustee with direct responsibility for the administration of
the Agreement.
"Available Interest" means, with respect to any Distribution Date,
the excess of (a) the sum of (i) Interest Collections for such Distribution Date
and (ii) all Advances made by the Servicer with respect to such Distribution
Date pursuant to Section 14.3(a), over (b) the amount of Outstanding Advances to
be reimbursed on or with respect to such Distribution Date pursuant to Section
14.3(a).
"Available Principal" means, with respect to any Distribution
Date, the sum of the following amounts with respect to the preceding Collection
Period: (i) that portion of all Collections on the Receivables received during
such Collection Period and allocable to principal in accordance with the terms
of the Receivables and the Servicer's customary servicing procedures, (ii) to
the extent attributable to principal, the Purchase Amount received with respect
to each Receivable repurchased by the Seller or purchased by the Servicer under
an obligation which arose during the related Collection Period
8
and (iii) Liquidation Proceeds, to the extent allocable to principal, received
during such Collection Period. Available Principal on any Distribution Date
shall exclude all payments and proceeds of any Receivables the Purchase Amount
of which has been distributed on a prior Distribution Date.
"Available Reserve Amount" shall mean, as of any Distribution
Date, the lesser of (i) the amount on deposit in the Reserve Account (exclusive
of earnings and income from the investment of funds therein) as of such date and
(ii) the Specified Reserve Account Balance as of such date.
"Average Delinquency Ratio" means, as of any Distribution Date,
the average of the Delinquency Ratios for the preceding three Collection
Periods.
"Average Net Loss Ratio" means, as of any Distribution Date, the
average of the Net Loss Ratios for the preceding three Collection Periods.
"Book-Entry Certificates" means beneficial interests in the
Certificates described in Section 16.8, the ownership and transfers of which
shall be made through book entries by a Clearing Agency as described in Section
16.8.
"Business Day" means a day, other than a Saturday or a Sunday, on
which the Trustee and banks located in New York, New York are open for the
purpose of conducting a commercial banking business.
"Certificate" means any Class A Certificate or Class B Certificate.
"Certificate Account" means the account established and maintained
pursuant to Section 14.1.
"Certificateholder" or "Holder" means the Person in whose name a
Certificate is registered in the Certificate Register, except that, solely for
the purpose of giving any consent, request, waiver or demand pursuant to the
Agreement, the interest evidenced by any Certificate registered in the name of
the Seller, the Servicer or any Person controlling, controlled by, or under
common control with the Seller or the Servicer shall not be taken into account
in determining whether the requisite percentage necessary to effect any such
consent, request or waiver shall have been obtained; provided, however, that in
determining whether the Trustee shall be protected in relying upon any such
consent, request, waiver or demand, only Certificates that an Authorized Officer
of the Trustee knows to be so owned shall be so disregarded.
"Certificate Owner" means, with respect to a Book-Entry
Certificate, the Person who is the owner of such Book-Entry Certificate, as
reflected on the books of the Clearing Agency, or on the books of a direct or
indirect Clearing Agency Participant.
"Certificate Register" means the register maintained pursuant to
Section 16.3.
"Class A Certificate" means a certificate executed by the Trustee
on behalf of the Trust and authenticated by the Trustee, substantially in the
form of Exhibit A hereto.
"Class A Certificateholder" or "Class A Holder" means the Person
in whose name a Class A Certificate shall be registered in the Certificate
Register, except that, solely for the purpose of giving any consent, request or
waiver pursuant to this Agreement, the interest evidenced by any Class A
Certificate registered in the name of the Seller, the Servicer or any Person
actually known to an Authorized Officer of the Trustee to be an Affiliate of the
Seller or the Servicer shall not be taken into account in determining whether
the requisite percentage necessary to effect any such consent, request or waiver
shall have been obtained.
"Class A Certificate Balance" means, at any time, the Original
Class A Certificate Balance, as reduced by all principal amounts distributed to
Class A Certificateholders prior to such time.
"Class A Certificate Owner" means, with respect to a Book-Entry
Certificate representing a beneficial interest in the Class A Certificates, the
Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant in accordance
with the rules, regulations and procedures of such Clearing Agency).
"Class A Distribution Account" means the account established and
maintained as such pursuant to Section 14.1.
9
"Class A Interest Carryover Shortfall" means, (i) with respect to
the initial Distribution Date, zero and (ii) with respect to any other
Distribution Date, the excess of Class A Monthly Interest for the preceding
Distribution Date, and any outstanding Class A Interest Carryover Shortfall on
such preceding Distribution Date, over the amount in respect of interest that is
actually deposited in the Class A Distribution Account on such preceding
Distribution Date, plus 30 days of interest on such excess, to the extent
permitted by law, at the Class A Pass-Through Rate.
"Class A Interest Distribution" means, with respect to any
Distribution Date, the sum of Class A Monthly Interest for such Distribution
Date and the Class A Interest Carryover Shortfall for such Distribution Date.
"Class A Monthly Interest" means, with respect to any Distribution
Date, one-twelfth of the Class A Pass-Through Rate multiplied by the Class A
Certificate Balance as of the preceding Distribution Date (after giving effect
to all payments of principal made on such Distribution Date) or, in the case of
the first Distribution Date, as of the Closing Date.
"Class A Monthly Principal" means, with respect to any
Distribution Date, the Class A Percentage of Available Principal for such
Distribution Date plus the Class A Percentage of Realized Losses with respect to
the related Collection Period.
"Class A Pool Factor" means, with respect to any Distribution
Date, the Class A Certificate Balance as of such Distribution Date (after giving
effect to all payments of principal to be made on such Distribution Date)
divided by the Original Class A Certificate Balance, expressed as a seven-digit
decimal.
"Class A Principal Carryover Shortfall" means, (i) with respect to
the initial Distribution Date, zero and (ii) with respect to any other
Distribution Date, the excess of Class A Monthly Principal for such Distribution
Date and any outstanding Class A Principal Carryover Shortfall from the
preceding Distribution Date over the amount in respect of principal that is
actually deposited in the Class A Distribution Account on such Distribution
Date.
"Class A Principal Distribution" means, (i) with respect to the
initial Distribution Date, the Class A Monthly Principal for such Distribution
Date and (ii) with respect to any other Distribution Date, the sum of Class A
Monthly Principal for such Distribution Date and the Class A Principal Carryover
Shortfall as of the preceding Distribution Date. In addition, on the Final
Scheduled Distribution Date, the Class A Principal Distribution shall include
any additional amount required to reduce the outstanding principal balance of
the Class A Certificates to zero.
"Class B Certificate" means a certificate executed by the Trustee
on behalf of the Trust and authenticated by the Trustee, substantially in the
form of Exhibit B hereto.
"Class B Certificateholder" or "Class B Holder" means the Person
in whose name a Class B Certificate shall be registered in the Certificate
Register, except that, solely for the purpose of giving any consent, request or
waiver pursuant to this Agreement, the interest evidenced by any Class B
Certificate registered in the name of the Seller, the Servicer or any Person
actually known to an Authorized Officer of the Trustee to be an Affiliate of the
Seller or the Servicer shall not be taken into account in determining whether
the requisite percentage necessary to effect any such consent, request or waiver
shall have been obtained.
"Class B Certificate Balance", at any time, equals the Original
Class B Certificate Balance, as reduced by all principal amounts distributed to
Class B Certificateholders prior to such time.
"Class B Certificate Owner" means, with respect to a Book-Entry
Certificate representing a beneficial interest in the Class B Certificates, the
Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant in accordance
with the rules, regulations and procedures of such Clearing Agency).
"Class B Distribution Account" means the account established and
maintained as such pursuant to Section 14.1.
"Class B Interest Carryover Shortfall" means, (i) with respect to
the initial Distribution Date, zero and (ii) with respect to any other
Distribution Date, the excess of Class B Monthly Interest for the preceding
Distribution Date, and any outstanding Class B Interest Carryover Shortfall on
such preceding Distribution Date, over the amount in respect of interest that is
actually deposited in the Class B Distribution Account on such preceding
Distribution Date, plus 30 days of interest on such excess, to the extent
permitted by law, at the Class B Pass-Through Rate.
10
"Class B Interest Distribution" means, with respect to any
Distribution Date, the sum of Class B Monthly Interest for such Distribution
Date and the Class B Interest Carryover Shortfall for such Distribution Date.
"Class B Monthly Interest" means, with respect to any Distribution
Date, one-twelfth of the Class B Pass-Through Rate multiplied by the Class B
Certificate Balance as of the preceding Distribution Date (after giving effect
to all payments of principal made on such Distribution Date) or, in the case of
the first Distribution Date, as of the Closing Date.
"Class B Monthly Principal" means, with respect to any
Distribution Date, the Class B Percentage of Available Principal for such
Distribution Date plus the Class B Percentage of Realized Losses with respect to
the related Collection Period.
"Class B Pool Factor" means, with respect to any Distribution
Date, the Class B Principal Balance as of such Distribution Date (after giving
effect to all payments of principal to be made on such Distribution Date)
divided by the Original Class B Certificate Balance, expressed as a seven-digit
decimal.
"Class B Principal Carryover Shortfall" means, (i) with respect to
the initial Distribution Date, zero and (ii) with respect to any other
Distribution Date, the excess of Class B Monthly Principal for such Distribution
Date and any outstanding Class B Principal Carryover Shortfall from the
preceding Distribution Date over the amount in respect of principal that is
actually deposited in the Class B Distribution Account on such Distribution
Date.
"Class B Principal Distribution" means, (i) with respect to the
initial Distribution Date, the Class B Monthly Principal for such Distribution
Date and (ii) with respect to any other Distribution Date, the sum of Class B
Monthly Principal for such Distribution Date and the Class B Principal Carryover
Shortfall as of the preceding Distribution Date. In addition, on the Final
Scheduled Distribution Date, the Class B Principal Distribution shall include
any additional amount required to reduce the outstanding principal balance of
the Class B Certificates to zero.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. The initial Clearing Agency shall be The Depository Trust Company.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers of securities deposited with the Clearing
Agency.
"Closing Date" means the date set forth as such in the Agreement.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Agent" means The Chase Manhattan Bank, a New York
banking corporation, in its capacity as collateral agent for the benefit of the
Certificateholders with respect to the Reserve Account.
"Collection Period" means, during the term of this Agreement, the
calendar month preceding each Distribution Date, or in the case of the initial
Collection Period, the period from the Cutoff Date to [ ], 1998. With
respect to any Determination Date, Deposit Date or Distribution Date, the
"related Collection Period" shall mean the Collection Period preceding the
month in which such Determination Date, Deposit Date or Distribution Date
occurs.
"Collections" mean all collections on the Receivables.
"Contract Rate" means, with respect to a Receivable, the rate per
annum of interest charged to the Obligor on the outstanding Principal Balance of
such Receivable in accordance with the terms thereof.
"Corporate Trust Office" means the office of the Trustee at which
its corporate trust business shall be principally administered, which office
shall be the office specified as such in the Agreement, or such office at some
other address as the Trustee may designate from time to time by notice to the
Certificateholders, the Seller, the Servicer, the Paying Agent and the Transfer
Agent and Certificate Registrar.
"Cutoff Date" means the date specified as such in the Agreement.
"Cutoff Date Principal Balance" means, with respect to any
Receivable, the initial Principal Balance of such Receivable minus the sum of
the portion of all payments received under such Receivable from or on behalf of
the related
11
Obligor on or prior to the close of business of the Servicer on the Cutoff Date
and allocable to principal in accordance with the terms of the Receivable and
the Servicer's customary servicing practices.
"Defaulted Receivable" means a Receivable (other than a
Repurchased Receivable) as to which either (i) more than 10% of a scheduled
payment is 120 or more days delinquent as of the last day of the applicable
Collection Period or (ii) the Servicer has determined based on its usual
collection practices and procedures, during any Collection Period, that eventual
payment in full of the Amount Financed is unlikely, whichever occurs first.
"Definitive Certificates" shall have the meaning specified in
Section 16.8.
"Delinquency Ratio" means, for any Collection Period, the ratio,
expressed as a percentage, of (i) the principal amount of all outstanding
Receivables (other than Purchased Receivables and Defaulted Receivables) which
are sixty (60) or more days delinquent, including, without limitation, any
Account with respect to which the Collateral has been repossessed and not
liquidated, as of the end of such Collection Period, determined in accordance
with the Servicer's custom ary practices, divided by (ii) the Pool Balance as of
the last day of such Collection Period.
"Deposit Date" shall mean the Business Day immediately preceding
each Distribution Date.
"Depository Agreement" shall mean the agreement among the Seller,
the Trustee and the initial Clearing Agency, in the form attached hereto as
Exhibit F.
"Determination Date" means the 10th calendar day of the month (or,
if such 10th calendar day is not a Business Day, the Business Day preceding such
10th calendar day) immediately succeeding the related Collection Period.
"Distribution Date" means, for each Collection Period, the 15th
day of the following month, or if the 15th day is not a Business Day, the next
following Business Day, commencing with the first Distribution Date specified in
the Agreement.
"Entitlement Order" has the meaning specified in Section
8-102(a)(8) of the UCC.
"Event of Servicing Termination" means an event specified in
Section 19.1.
"Excess Funds" shall have the meaning specified in Section
14.5(d).
"FDIC" means the Federal Deposit Insurance Corporation or any
successor thereto.
"FHLMC" means the Federal Home Loan Mortgage Corporation or any
successor thereto.
"Final Distribution Date" means the date specified as such in the
Agreement.
"Financed Vehicle" with respect to a Receivable means the new or
used automobile or light-duty truck, together with all accessions thereto,
securing an Obligor's indebtedness under such Receivable.
"Financial Asset" has the meaning specified in Section 8-102(a)(9)
of the UCC.
"FNMA" means the Federal National Mortgage Association or any
successor thereto.
"Interest Collections" mean, with respect to any Distribution
Date, the sum of the following amounts for the preceding Collection Period: (i)
that portion of the Collections on the Receivables received during such
Collection Period that is allocable to interest in accordance with the terms of
the Receivables and the Servicer's customary servicing proce dures, (ii)
Liquidation Proceeds, to the extent allocable to interest, received during such
Collection Period, (iii) all Recoveries and (iv) to the extent attributable to
interest, the Purchase Amount received with respect to each Receivable
repurchased by the Seller or purchased by the Servicer under an obligation which
arose during the related Collection Period. "Interest Collections" for any
Distribution Date shall exclude all payments and proceeds of any Receivables the
Purchase Amount of which has been distributed on a prior Distribution Date.
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"Lien" means a security interest, lien, charge, pledge or
encumbrance of any kind other than tax liens, mechanics' liens or any other
liens that attach to a Receivable by operation of law.
"Liquidation Proceeds" means (i) insurance proceeds received by
the Servicer and (ii) the monies collected by the Servicer (from whatever
source, including but not limited to proceeds of a Financed Vehicle which is
sold after repossession) during a Collection Period on a Defaulted Receivable
net of any payments required by law to be remitted to the Obligor.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Net Loss Ratio" means, for any Collection Period, an amount,
expressed as an annualized percentage, equal to (i) the Realized Losses minus
Recoveries for such Collection Period, divided by (ii) the average of the Pool
Balances on the first day of such Collection Period and the last day of such
Collection Period.
"Obligor" on a Receivable means the purchaser or the co-purchasers
of the Financed Vehicle purchased in part or in whole by the execution and
delivery of such Receivable or any other Person who owes or may be liable for
payments under such Receivable.
"Officer's Certificate" means a certificate signed by the chairman
of the board, the president, the treasurer, the controller, any executive or
senior vice president or any vice president of the Seller or Servicer, as
appropriate.
"Opinion of Counsel" means a written opinion of counsel (who may
be counsel to the Seller or the Servicer) acceptable in form and substance to
the Trustee.
"Optional Purchase Percentage" means the percentage specified as
such in the Agreement.
"Original Pool Balance" means the Pool Balance as of the Cutoff
Date, as specified in the Agreement.
"Outstanding Advances" means, as of any date, the aggregate of all
Advances made by the Servicer with respect to prior Distribution Dates which
have not been reimbursed pursuant to Section 14.3.
"Outstanding Receivable" means, as of the time of reference
thereto, a Receivable that (i) has not been fully paid, (ii) has not become a
Defaulted Receivable, and (iii) has not become a Repurchased Receivable.
"Paying Agent" shall have the meaning specified in Section 16.11
and shall initially be The Chase Manhattan Bank.
"Permitted Investments" means, at any time, any one or more of the
following obligations and securities:
(i) obligations guaranteed as to timely payment of interest
and principal of the United States of America or any agency thereof,
provided such obligations are backed by the full faith and credit of the
United States of America;
(ii) general obligations of or obligations guaranteed as to
the timely payment of interest and principal by any state of the United
States of America or the District of Columbia then rated A-1+ or AAA by
Standard & Poor's and P-1 or Aaa by Moody's or such lower ratings (as
approved in writing by the Rating Agencies) as will not result in the
qualification, downgrading or withdrawal of the ratings then assigned to
the Certificates by the Rating Agencies;
(iii) commercial paper which is then rated P-1 by Moody's
and A-1+ by Standard & Poor's, or such lower rating categories (as
approved in writing by the Rating Agencies) as will not result in the
qualification, downgrading or withdrawal of the ratings then assigned to
the Certificates by the Rating Agencies;
(iv) certificates of deposit, demand or time deposits,
federal funds or banker's acceptances issued by any depository
institution or trust company (including the Trustee acting in its
commercial banking capacity) incorporated under the laws of the United
States or of any state thereof or incorporated under the laws of a
foreign jurisdiction with a branch or agency located in the United States
of
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America and subject to supervision and examination by federal or state
banking authorities, provided that the short term unsecured deposit
obligations of such depository institution or trust company is then rated
P-1 by Moody's and A-1+ by Standard & Poor's or such lower rating
categories (as approved in writing by the Rating Agencies) as will not
result in the qualification, downgrading or with drawal of the ratings
then assigned to the Certificates by the Rating Agencies;
(v) demand or time deposits of, or certificates of deposit
issued by, any bank, trust company, savings bank or other savings
institution provided that such deposits or certificates of deposit are
fully insured by the FDIC;
(vi) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation (A) the short term unsecured debt
or deposits of which are rated P-1 by Moody's and A-1+ by Standard &
Poor's or the long-term unsecured debt of which are rated at least Aaa by
Moody's and AAA by Standard & Poor's or (B) are otherwise approved in
writing by the Rating Agencies as investments which will not result in
the qualification, downgrading or withdrawal of the ratings then assigned
to the Certificates by the Rating Agencies;
(vii) repurchase obligations with respect to any security
described in clauses (i), (ii) or (ix) herein or any other security
issued or guaranteed by the FHLMC, FNMA or any other agency or
instrumentality of the United States of America which is backed by the
full faith and credit of the United States of America, in either case
entered into with a federal agency or a depository institution or trust
company (acting as principal) described in (iv) above or a corporation
(acting as principal) described in (vi) above;
(viii) investments in money market funds, which funds (A)
are not subject to any sales, load or other similar charge; (B) are rated
at least AAAm or AAAm-G by Standard & Poor's and Aaa by Moody's and (C)
are invested solely in obligations described in clauses (i) through (vii)
above.
(ix) interests in any open-end or closed-end management
type investment company or investment trust (a) registered under the
Investment Company Act of 1940, as from time to time amended, the
portfolio of which is limited to obligations of the United States or
obligations guaran xxxx by the United States and to agreements to
repurchase such obligations, which agreements, with respect to principal
and interest, are at least 100% collateralized by such obligations marked
to market on a daily basis and pursuant to which the investment company
or investment trust is required to take delivery of such obligations
either directly or through an independent custodian designated in
accordance with the Investment Company Act of 1940, as from time to time
amended and (b) acceptable to the Rating Agencies (as approved in writing
by the Rating Agencies) as collateral for securities having ratings
equivalent to the ratings of the Certificates on the Closing Date; and
(x) such other investments where either (A) the short-term
unsecured debt or deposits of the obligor on such investments are rated
A-1+ by Standard & Poor's and P-1 by Moody's or (B) such investments are
acceptable to the Rating Agencies (as approved in writing by each of
them) and will not result in the qualification, downgrading or withdrawal
of the ratings then assigned to the Certificates by the Rating Agencies.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, trust, unincorporated organization, or government or any agency or
political subdivision thereof, or any other entity of whatever nature.
"Pool Balance" as of any date of determination means the aggregate
Principal Balance of the Outstanding Receivables.
"Pool Factor" as of the last day of any Collection Period means
the Pool Balance divided by the Original Pool Balance, expressed as a
seven-digit decimal.
"Principal Balance" of a Receivable, as of the last day of the
preceding Collection Period, means the Amount Financed minus that portion of all
payments received on or prior to such date allocable to principal.
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"Purchased Receivable" means, on any date of determination, a
Receivable as to which payment of the Purchase Amount has been made by the
Seller or the Servicer pursuant to the Agreement.
"Qualified Institution" means a depository institution organized
under the laws of the United States of America or any one of the states thereof
or incorporated under the laws of a foreign jurisdiction with a branch or agency
located in the United States of America or one of the States thereof and subject
to supervision and examination by federal or state banking authorities which at
all times has the Required Deposit Rating and, in the case of any such
institution organized under the laws of the United States of America, whose
deposits are insured by the FDIC.
"Qualified Trust Institution" means an institution organized under
the laws of the United States of America or any one of the states thereof or
incorporated under the laws of a foreign jurisdiction with a branch or agency
located in the United States of America or one of the States thereof and subject
to supervision and examination by federal or state banking authorities which at
all times (i) is authorized under such laws to act as a trustee or in any other
fiduciary capacity, (ii) has not less than one billion dollars in assets under
fiduciary management, (iii) has a minimum net worth of at least $50,000,000 and
(iv) has a long term deposits rating of not less than "BBB-" and "Baa3" from
Standard & Poor's and Moody's, respectively.
"Rating Agencies" means Standard & Poor's and Xxxxx'x.
"Rating Agency Condition" means, with respect to any action,
written confirmation by each Rating Agency that such action will not result in a
withdrawal or reduction of its rating of the Class A Certificates or the Class B
Certificates.
"Realized Losses" mean, for any Collection Period and for each
Receivable that became a Defaulted Receivable during such Collection Period, the
excess of (i) the aggregate Principal Balance of such Receivable over (ii)
Liquidation Proceeds received with respect to such Receivable during such
Collection Period, to the extent allocable to principal.
"Receivable" means a motor vehicle installment loan contract and
all proceeds thereof and payments thereunder (other than interest accrued and
unpaid as of the Cutoff Date), which Receivable shall appear on Schedule A to
the Agreement.
"Receivable Files" means the documents specified in Section 12.3.
"Receivables Pool" means the pool of Receivables included in the
Trust.
"Record Date" means, with respect to any Distribution Date, the
Business Day prior to such Distribution Date unless Definitive Certificates are
issued, in which case Record Date shall mean the last day of the immediately
preceding calendar month.
"Recoveries" mean, with respect to any Collection Period, all
monies received by the Servicer with respect to any Defaulted Receivable during
any Collection Period following the Collection Period in which such Receivable
became a Defaulted Receivable, net of the sum of (i) any fees, costs or expenses
incurred by the Servicer in connection with the collection of such Receivable
and the disposition of the Financed Vehicle as permitted by Section 13.3 (to the
extent not previously reimbursed) and (ii) any payments required by law to be
remitted to the Obligor, but, in any event, not less than zero.
"Repurchase Amount" with respect to a Repurchased Receivable or
any Receivable purchased by the Servicer pursuant to Section 21.2 means the sum,
as of the last day of the preceding Collection Period on which such Receivable
becomes such, of the Principal Balance thereof plus the accrued interest thereon
at the weighted average of the Class A Pass-Through Rate and the Class B
Pass-Through Rate.
"Repurchase Date" shall have the meaning set forth in Section 12.2.
"Repurchased Receivable" means as of the last day of any
Collection Period a Receivable repurchased as of such date by the Seller
pursuant to Section 12.2 or purchased as of such date by the Servicer pursuant
to Section 13.7.
"Required Deposit Rating" means the ratings specified as such in
the Agreement.
15
"Reserve Account" shall mean the Reserve Account established and
maintained as such pursuant to Section 14.6.
"Securities Act" means the Securities Act of 1933, as amended.
"Security Entitlement" has the meaning specified in Section
8-102(a)(17) of the UCC.
"Seller" means USAA Federal Savings Bank in its capacity as the
seller of the Receivables under the Agreement, and each successor to USAA
Federal Savings Bank (in the same capacity) pursuant to Section 17.3.
"Servicer" means USAA Federal Savings Bank in its capacity as the
servicer of the Receivables under the Agreement, each successor to USAA Federal
Savings Bank (in the same capacity) pursuant to Section 18.3, and each successor
Servicer pursuant to Section 19.2.
"Servicer's Certificate" means a certificate, substantially in the
form of Exhibit D attached hereto, completed and executed by the Servicer by its
chairman of the board, the president, treasurer, controller or any executive
vice president, senior vice president or vice president pursuant to Section
13.9.
"Servicing Fee" means with respect to a Collection Period the fee
payable to the Servicer for services rendered during the Collection Period
ending on the last day of such Collection Period, determined pursuant to Section
13.8.
"Servicing Fee Rate" means the rate specified as such in the
Agreement.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of XxXxxx-Xxxx Companies Inc.
"Total Collections" means with respect to any Collection Period
all amounts deposited in the Certificate Account relating to such Collection
Period pursuant to Sections 14.2, 14.3 and 14.4.
"Transfer Agent and Certificate Registrar" shall have the meaning
specified in Section 16.3 and shall initially be The Chase Manhattan Bank.
"Trust" means the trust created by the Agreement, the estate of
which shall consist of the property transferred thereto pursuant to the
Agreement; funds deposited in the Certificate Account, the Class A Distribution
Account and the Class B Distribution Account and such amounts as from time to
time may be held therein (including the Account Property related thereto) and
proceeds thereof; and the rights of the Trust to receive payments from the
Reserve Account in accordance with this Agreement (but not the Reserve Account
itself).
"Trustee" means the Person executing the Agreement as Trustee, its
successor in interest pursuant to Section 20.12, and any successor Trustee
pursuant to Section 20.11.
"Trustee's Certificate" means a certificate completed and executed
by an Authorized Officer pursuant to Section 20.3 and substantially in the form
attached hereto as Exhibit C-1 or C-2.
"UCC" means the Uniform Commercial Code as in effect in the
respective jurisdiction.
Section 11.2 Usage of Terms. With respect to all terms in the
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other gender; references to "writing" include
printing, typing, lithography, and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein effected in accordance with
their respective terms and not prohibited by the Agreement; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation."
Section 11.2 Simple Interest Method; Allocations. All allocations
of payments to principal and interest and determinations of periodic charges and
the like on the Receivables shall be based on a year with the actual number of
days in such year and twelve months with the actual number of days in each such
month. Each payment on a Receivable shall be applied first to the amount of
interest accrued on such Receivable to the date of receipt, then to reduce the
scheduled principal amount outstanding on the Receivable to the extent of the
remaining scheduled payment and then to any outstanding fees under
16
the terms of the Receivable. Amounts paid by the Seller or the Servicer in
respect of Repurchased Receivables shall be allocated first to any interest
accrued on the related Receivable and then to the Principal Balance of the
related Receivable.
Section 11.4 References. All references to the Record Date prior
to the first Record Date in the life of the Trust shall be deemed to be
references to the Cutoff Date. All references to "as of a Record Date" shall
refer to the close of business on such Record Date. All references to the Pool
Balance "as of the first day of a Collection Period" shall refer to the Pool
Balance as of the last day of the preceding Collection Period.
Section 11.5 Section References. All section references shall be
to Sections in these Standard Terms and Conditions of Agreement unless otherwise
specified.
Section 11.6 Separate Agreements. Each Agreement which shall
incorporate by reference these Standard Terms and Conditions of Agreement shall
be separate and distinct from each other such Agreement, no provision of any
such Agreement shall be applicable to any other such Agreement, and all
references to "the Agreement" and to provisions thereof shall be references to
a particular Agreement which incorporates these Standard Terms and Conditions of
Agreement.
17
ARTICLE XII
The Receivables
Section 12.1 Representations and Warranties of Seller; Conditions
Relating to Receivables.
(a) The Seller makes the following representations and
warranties as to the Receivables on which the Trustee shall rely in accepting
the Receivables in trust and authenticating the Certificates. Such
representations and warranties shall speak as of the Cutoff Date unless
otherwise specified, but shall survive the sale, transfer, and assignment of the
Receivables to the Trustee.
(i) Schedule of Receivables. The information set forth in
Schedule A to the Agreement with respect to each Receivable is true and
correct in all material respects, and no selection procedures adverse to
the Certificateholders have been used in selecting the Receivables from
all receivables owned by the Seller which meet the selection criteria
specified herein and in the Agreement.
(ii) No Sale or Transfer. No Receivable has been sold,
transferred, as signed or pledged by the Seller to any Person other than
the Trustee.
(iii) Good Title. Immediately prior to the transfer and
assignment of the Receivables to the Trustee on behalf of the Trust
herein contemplated, the Seller has good and marketable title to each
Receivable free and clear of all Liens, encumbrances, security interests
and rights of others; and, immediately upon the transfer thereof, the
Trustee, for the benefit of the Certificateholders, has either (i) good
and marketable title to each Receivable, free and clear of all Liens,
encumbrances, security interests, and rights of others, and the transfer
has been perfected under applicable law or (ii) a first priority
perfected security interest in each Receivable.
(b) Each Receivable satisfies the following conditions as of
the Cutoff Date unless otherwise specified, but such conditions shall survive
the sale, transfer and assignment of the Receivables to the Trustee.
(i) Characteristics of Receivables. Each Receivable (a) has
been originated for the retail financing of a Financed Vehicle by an
Obligor located in one of the States of the United States or the District
of Columbia; (b) contains customary and enforceable provisions such that
the rights and remedies of the holder thereof are adequate for
realization against the collateral of the benefits of the security; and
(c) provides for fully amortizing level scheduled monthly payments
(provided that the payment in the last month in the life of the
Receivable may be different from the level scheduled payment) and for
accrual of interest at a fixed rate according to the simple interest
method.
(ii) Compliance with Law. Each Receivable and each sale of
the related Financed Vehicle complied at the time it was originated or
made, and complies on and after the Cutoff Date, in all material respects
with all requirements of applicable federal, state, and local laws, and
regulations thereunder, including usury laws, the Federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Federal Trade Commission Act, the Xxxxxxxx-Xxxx
Warranty Act, Federal Reserve Board Regulations B and Z, state
adaptations of the National Consumer Act and of the Uniform Consumer
Credit Code, and any other consumer credit, equal opportunity, and
disclosure laws applicable to such Receivable and sale.
(iii) Binding Obligation. Each Receivable constitutes the
legal, valid, and binding payment obligation in writing of the Obligor,
enforceable by the holder thereof in all material respects in accordance
with its terms, subject, as to enforcement, to applicable bankruptcy,
insolvency, reorganization, liquidation and other similar laws and
equitable principles relating to or affecting the enforcement of
creditors' rights.
(iv) No Government Obligor. No Receivable is due from the
United States of America or any state or from any agency, department,
instrumentality or political subdivision of the
18
United States of America or any state or local municipality and no
Receivable is due from a business except to the extent that such
receivable has a personal guaranty.
(v) Security Interest in Financed Vehicle. Immediately prior
to the sale and assignment thereof to the Trust as herein contemplated,
each Receivable was secured by a validly perfected first priority
security interest in the Financed Vehicle in favor of the Seller as
secured party or all necessary and appropriate action with respect to
such Receivable had been taken to perfect a first priority security
interest in the related Financed Vehicle in favor of the Seller as
secured party, which security interest is assignable and has been so
assigned by the Seller to the Trust.
(vi) Receivables in Force. No Receivable has been satisfied,
sub ordinated, or rescinded, nor has any Financed Vehicle been released
from the Lien granted by the related Receivable in whole or in part.
(vii) No Waiver. No provision of a Receivable has been
waived in such a manner that such Receivable fails either to meet all of
the representations and warranties made by the Seller herein with respect
thereto or to meet all of the conditions with respect thereto pursuant to
this subsection 12.1(b).
(viii) No Amendments. No Receivable has been amended except
pursuant to either instruments included in the Receivable Files or
instruments to be included in the Receivable Files pursuant to Section
13.2 and no such amendment has caused such Receivable either to fail to
meet all of the representations and warranties made by the Seller herein
with respect thereto or to fail to meet all of the conditions with
respect thereto pursuant to this subsection 12.1(b).
(ix) No Defenses. As of the Cutoff Date, there are no
rights of rescission, setoff, counterclaim, or defense, and the Seller
has no knowledge of the same being asserted or threat ened, with respect
to any Receivable.
(x) No Liens. As of the Cutoff Date, the Seller has no
knowledge of any Liens or claims that have been filed, including Liens
for work, labor, materials or unpaid taxes relating to a Financed
Vehicle, that would be Liens prior to, or equal or coordinate with, the
Lien granted by the Receivable.
(xi) No Default. Except for payment defaults continuing
for a period of not more than [30] days as of the Cutoff Date, the Seller
has no knowledge that a default, breach, violation, or event permitting
acceleration under the terms of any Receivable exists; the Seller has no
knowledge that a continuing condition that with notice or lapse of time
would constitute a default, breach, violation, or event permitting
acceleration under the terms of any Receivable exists; and the Seller has
not waived any of the foregoing.
(xii) Insurance. Each Receivable requires that the Obligor
thereunder obtain comprehensive and collision insurance covering the
Financed Vehicle.
(xiii) Lawful Assignment. No Receivable has been originated
in, or is sub ject to the laws of, any jurisdiction under which the sale,
transfer, and assignment of such Receivable under the Agreement or
pursuant to transfers of the Certificates is unlawful, void or voidable.
(xiv) All Filings Made. No filings (other than UCC filings
which have been made) or other actions are necessary in any jurisdiction
to give the Trustee a first perfected security interest in the
Receivables.
(xv) One Original. With respect to any Receivable for which
an original executed copy exists, there is no more than one original
executed copy of such Receivable which, immediately prior to the delivery
thereof to the Servicer, as custodian for the Trustee, was in the
possession of the Seller.
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(xvi) Agreement. The additional representations and
warranties in Section 7.1 of the Agreement are true and correct.
Section 12.2 Repurchase Upon Breach or Failure of a Condition. The
Seller, the Servicer, or the Trust ee, as the case may be, shall inform the
other parties promptly, in writing, upon the discovery by the Seller, the
Servicer or an Authorized Officer of the Trustee of either any breach of the
Seller's representations and warranties set forth in subsection 12.1(a) or the
failure of any Receivable to satisfy any of the conditions set forth in
subsection 12.1(b). Unless the breach or failed condition shall have been cured
by the last day of the Collection Period following the Collection Period during
which such discovery occurred (or, at the Seller's option, the last day of the
Collection Period during which such discovery occurred)(such date, the
"Repurchase Date"), the Seller shall repurchase any Receivable the Trust's
interest in which was materially and adversely affected by the breach or failed
condition, as determined by the Servicer and reported in an Officer's
Certificate, as of the Repurchase Date. In consideration of the repurchase of a
Receivable, the Seller shall remit the Repurchase Amount of such Receivable as
of the Repurchase Date (less any Liquidation Proceeds deposited, or to be
deposited, by the Servicer in the Certificate Account with respect to such
Receivable pursuant to Section 13.3) in the manner specified in Section 14.4. In
the event that, as of the Cutoff Date, any Receivable shall have an APR which is
lower than the sum of (i) the weighted average of the Class A Pass-through Rate
and the Class B Pass-through Rate and (ii) the Servicing Fee Rate, the Seller
shall repurchase such Receivable on the terms and in the manner specified above,
provided, however, that notwithstanding anything to the contrary contained
herein, the Seller shall repurchase such Receivable as of the last day of the
Collection Period during which the discovery thereof by the Seller or the
Servicer occurred or the notice thereof from the Trustee was received by the
Seller. The sole remedy of the Trust, the Trustee or the Certificateholders with
respect either to a breach of the Seller's representations and warranties set
forth in subsection 12.1(a) or to a failure of any of the conditions set forth
in subsection 12.1(b) shall be to require the Seller to repurchase Receivables
pursuant to this Section 12.2. The obligation of the Seller to repurchase under
this Section 12.2 shall not be solely dependent upon the actual knowledge of the
Seller of any breached representation or warranty. The Trustee shall have no
duty to conduct any affirmative investigation as to the occurrence of any
condition requiring the repurchase of any Receivable pursuant to this Section
12.2 or the eligibility of any Receivable for purposes of the Agreement.
Section 12.3 Custody of Receivable Files. To assure uniform
quality in servicing the Receivables and to reduce administrative costs, the
Trustee, upon the execution and delivery of the Agreement, agrees to have the
Servicer act as custodian of the following documents or instruments which are
hereby constructively delivered to the Trustee with respect to each Receivable:
(i) The original executed Receivable or, if no such
original exists, a copy of the original executed Receivable;
(ii) To the extent that a credit application with respect to
an Obligor ex ists, the original executed copy of such credit application
or, if no such original exists, a copy of such original executed copy,
fully executed by the Obligor;
(iii) The notice of recorded Lien or such documents that the
Servicer or the Seller shall keep on file, in accordance with its
customary procedures, evidencing the first priority perfected security
interest of the Seller in the Financed Vehicle; and
(iv) Any and all other documents that the Seller or
Servicer, as the case may be, shall keep on file, in accordance with its
customary procedures, relating to a Receivable, an Obligor (to the extent
relating to a Receivable), or a Financed Vehicle.
The Servicer hereby agrees to act as custodian of the Receivable
Files, as agent for the Trustee, hereunder. The Servicer acknowledges that it
holds the documents and instruments relating to the Receivables for the benefit
of the Trustee and the Certificateholders. The Trustee shall have no
responsibility to monitor the Servicer's performance as custodian and shall have
no liability in connection with the Servicer's performance of such duties
hereunder.
Section 12.4 Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer, in its capacity as custodian,
shall hold the Receivable Files on behalf of the Trustee for the use and benefit
of all present and future Certificateholders, and maintain such accurate and
complete accounts, records, and computer systems pertaining to the Receivables
as shall enable the Trustee to comply with its obligations pursuant to these
Standard Terms and Conditions of Agreement. In performing its duties as
custodian, the Servicer
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shall act with reasonable care, using that degree of skill and attention that
the Servicer exercises with respect to the receivable files of comparable new or
used automobile and light-duty truck receivables that the Servicer services for
itself or others. The Servicer shall conduct, or cause to be conducted, periodic
audits of the files of all receivables owned or serviced by the Servicer which
shall include the Receivable Files held by it under the Agreement and the
related accounts, records, and computer systems, in such a manner as shall
enable the Trustee to identify all Receivable Files and such related accounts,
records and computer systems and to verify, if the Trustee so elects, the
accuracy of the Servicer's record-keeping. The Servicer shall promptly report to
the Trustee any failure on its part to hold the Receivable Files and maintain
its accounts, records, and computer systems as herein provided, and promptly
take appropriate action to remedy any such failure.
(b) Maintenance of and Access to Records. The Servicer shall
maintain each Receivable File at one of its offices specified in Schedule B to
the Agreement, or at such other office as shall be specified to the Trustee by
30 days' prior written notice. The Servicer shall make available to the Trustee
or its duly authorized representatives, attorneys, or auditors the Receivable
Files and the related accounts, records, and computer systems maintained by the
Servicer at such times during normal operating hours as the Trustee shall
reasonably instruct which does not unreasonably interfere with the Servicer's
normal operations.
(c) Release of Documents. Upon instruction from the Trustee,
the Servicer, at its expense, shall release any document in the Receivable Files
to the Trustee, the Trustee's agent, or the Trustee's designee, as the case may
be, at such place or places as the Trustee may reasonably designate as soon as
reasonably practicable to the extent it does not unreasonably interfere with the
Servicer's normal operations. The Servicer shall not be responsible for any loss
occasioned by the failure of the Trustee, its agent or its designee to return
any document or any delay in doing so.
Section 12.5 Instructions; Authority to Act. The Servicer shall
be deemed to have received proper instructions with respect to the Receivable
Files upon its receipt of written instructions signed by an Authorized Officer.
A certified copy of a by-law or of a resolution of the Board of Directors of the
Trustee shall constitute conclusive evidence of the authority of any such
Authorized Officer to act and shall be considered in full force and effect until
receipt by the Servicer of written notice to the contrary given by the Trustee.
Section 12.6 Custodian's Indemnification. The Servicer, as
custodian, shall indemnify the Trustee, its officers, directors, employees and
agents for any and all liabilities, obligations, losses, damages, payments,
costs, or expenses of any kind whatsoever that may be imposed on, incurred, or
asserted against the Trustee, its officers, directors, employees or agents as
the result of any improper act or omission in any way relating to the
maintenance and custody by the Servicer, as custodian, of the Receivable Files;
provided, however, that the Servicer shall not be liable for any portion of any
such amount resulting from the willful misfeasance, bad faith, or negligence of
the Trustee or any loss occasioned by the failure of the Trustee, its agent or
designee to return any document to the Servicer or any delay in doing so.
Section 12.7 Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and shall
continue in full force and effect until terminated pursuant to this Section 12.7
or until the Agreement shall be terminated. If the Servicer shall resign as
Servicer under Section 18.5 or if all of the rights and obligations of the
Servicer shall have been terminated under Section 19.1, the appointment of the
Servicer as custodian may be terminated by the Trustee or by the Holders of
Certificates evidencing not less than 25% of the Pool Balance, in the same
manner as the Trustee or such Holders may terminate the rights and obligations
of the Servicer under Section 19.1. As soon as practicable after any termination
of such appointment, the Servicer shall, at its expense, deliver the Receivable
Files to the Trustee or the Trustee's agent at such place or places as the
Trustee may reasonably designate. Notwithstanding the termination of the
Servicer as custodian, the Trustee agrees that upon any such termination, the
Trustee shall provide, or cause its agent to provide, access to the Receivables
Files to the Servicer for the purpose of carrying out its duties and
responsibilities with respect to the servicing of the Receivables hereunder.
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ARTICLE XII
Administration and Servicing of Receivables
Section 13.1 Duties of Servicer. The Servicer shall manage,
service, administer and make collections on the Receivables (other than
Repurchased Receivables) with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to comparable new or used
automobile and light-duty truck receivables that it services for itself. The
Servicer's duties shall include collection and posting of all payments,
responding to inquiries by Obligors or by federal, state, or local governmental
authorities with respect to the Receivables, investigating delinquencies,
reporting tax information to Obligors in accordance with its customary
practices, accounting for collections, furnishing monthly and annual statements
to the Trustee with respect to distributions, and, if it elects to do so, making
Advances pursuant to Section 14.3. The Servicer shall follow its customary
standards, policies, and procedures in performing its duties as Servicer.
Without limiting the generality of the foregoing, the Servicer shall be
authorized and empowered by the Trustee to execute and deliver, on behalf of
itself, the Trust, the Trustee, the Certificateholders, or any of them, any and
all instruments of satisfaction or cancellation, or of partial or full release
or discharge, and all other comparable instruments, without recourse to the
Trustee, with respect to the Receivables or with respect to the Financed
Vehicles. If the Servicer shall commence a legal proceeding to enforce a
Receivable or a Defaulted Receivable, the Trustee shall thereupon be deemed to
have automatically assigned such Receivable and the related property conveyed to
the Trust pursuant to Section 2.1 with respect to such Receivable to the
Servicer, solely for the purpose of collection. The Trustee shall furnish the
Servicer with such documents as have been prepared by the Servicer for execution
by the Trustee and as are necessary or appropriate to enable the Servicer to
carry out its servicing and administrative duties hereunder.
Section 13.2 Collection of Receivable Payments. The Servicer shall
make reasonable efforts to collect all payments called for under the terms and
provisions of the Receivables and of the Agreement as and when the same shall
become due, and shall follow such collection procedures as it follows with
respect to comparable new or used automobile and light-duty truck receivables
that it services for itself or others and that is consistent with prudent
industry standards. The Servicer shall not change the amount of or reschedule
the due date of any scheduled payment to a date more than 30 days from the
original due date of such scheduled payment, change the annual percentage rate
of, or extend any Receivable or change any material term of a Receivable, except
as provided by the terms of the Receivable or of the Agreement or as required
by law or court order, provided, however, that the Servicer may extend any
Receivable that is in default or with respect to which default is reasonably
foreseeable and that would be acceptable to the Servicer with respect to
comparable new or used automobile and light-duty truck receivables that it
services for itself, if (a) the amount on deposit in the Reserve Account is
greater than zero at the time of the extension, (b) the total credit-related
extensions granted on the Receivable will not exceed four months in the
aggregate, (c) the total number of credit-related extensions granted on the
Receivable will not exceed two, (d) the maturity of such Receivable would not be
extended beyond the Collection Period immediately preceding the Final
Distribution Date and (e) the rescheduling or extension would not modify the
terms of such Receivable in such a manner as to constitute a cancellation of
such Receivable and the creation of a new receivable. If, as a result of
inadvertently rescheduling or extending of payments, such rescheduling or
extension breaches any of the terms of the proviso to the preceding sentence,
then the Servicer shall be obligated to purchase such Receivable pursuant to
Section 13.7. For the purpose of such purchases pursuant to Section 13.7,
notice shall be deemed to have been received by the Servicer at such time as
shall make purchase mandatory as of the last day of the Collection Period during
which the discovery of such breach occurred.
Section 13.3 Realization Upon Receivables. On behalf of the Trust,
the Servicer shall use reasonable efforts, consistent with its customary
servicing procedures, to repossess or otherwise take possession of the Financed
Vehicle securing any Receivable which the Servicer shall have determined to be a
Defaulted Receivable or otherwise (and shall specify any such Defaulted
Receivable to the Trustee no later than the Determination Date following the
Collection Period in which the Servicer shall have made such determination). The
Servicer shall follow such customary and usual practices and procedures as it
shall deem necessary or advisable in its servicing of new or used automobile and
light-duty truck receivables, which may include selling the Financed Vehicle at
public or private sale. The Servicer shall be entitled to recover from proceeds
all reasonable expenses incurred by it in the course of converting the Financed
Vehicle into cash proceeds. The Liquidation Proceeds (net of such expenses)
realized in connection with any such action with respect to a Receivable shall
be deposited by the Servicer in the Certificate Account in the manner specified
in Section 14.2 and shall be applied to reduce (or to satisfy, as the case may
be) the Repurchase Amount of the Receivable, if such Receivable is to be
repurchased by the Seller pursuant to Section 12.2, or is to be purchased by the
Servicer pursuant to Section 13.7. The foregoing shall be subject to the
provision that, in any case in which the Financed Vehicle shall have suffered
damage, the Servicer shall not expend funds in connection with the repair or the
repossession of such Financed Vehicle unless it shall determine in its sole
discretion that such repair and/or repossession will increase the Liquidation
Proceeds of the related Receivable by an amount equal to or greater than the
amount of such expenses.
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Section 13.4 [Reserved]
Section 13.5 Maintenance of Security Interests in Financed
Vehicles. The Servicer, in accordance with its customary servicing procedures,
shall take such steps as are necessary to maintain (i) perfection of the
security interest created in any Financed Vehicle which secures a Receivable and
(ii) perfection of the Trust's interest in the Receivables including, without
limitation, the filing of financing statements and continuation statements. On
behalf of the Trust, the Servicer hereby agrees to take such steps as are
necessary to re-perfect such security interest in the event of the relocation of
a Financed Vehicle or for any other reason, in either case, when the Servicer
has knowledge of the need for such re-perfection. In the event that the
assignment of a Receivable to the Trust is insufficient, without a notation on
the related Financed Vehicle's certificate of title, or without fulfilling any
additional administrative requirements under the laws of the state in which the
Financed Vehicle is located, to grant to the Trust a perfected security interest
in the related Financed Vehicle, the Servicer hereby agrees that the Servicer's
listing as the secured party on the certificate of title is deemed to be in its
capacity as agent of the Trust and further agrees to hold such certificate of
title as the Trustee's agent and custodian; provided that the Servicer shall
not, nor shall the Trustee or Certificateholders have the right to require that
the Servicer, make any such notation on the related Financed Vehicles'
certificate of title or fulfill any such additional administrative requirement
of the laws of the state in which a Financed Vehicle is located.
Section 13.6 Covenants of Servicer. The Servicer hereby makes the
following covenants on which the Trustee shall rely in accepting the Receivables
in trust and authenticating the Certificates:
(i) Security Interest to Remain in Force. The Financed
Vehicle securing each Receivable shall not be released from the security
interest granted by the Receivable in whole or in part except as
contemplated herein;
(ii) No Impairment. The Servicer shall not impair the rights
of the Trust in the Receivables; and
(iii) Extensions, Defaulted Receivables. The Servicer shall
not increase the number of payments under a Receivable, nor increase the
Amount Financed under a Receivable, nor extend or forgive payments on a
Receivable, except as provided in Section 13.2. In the event that at the
end of the scheduled term of any Receivable, the outstanding principal
amount thereof is such that the final payment to be made by the related
Obligor is larger than the regularly scheduled payment of principal and
interest made by such Obligor, the Servicer may permit such Obligor to
pay such remaining principal amount in more than one payment of principal
and interest, provided that the last such payment shall be due on or
prior to the Collection Period immediately preceding the Final
Distribution Date.
Section 13.7 Purchase of Receivables Upon Breach. The Servicer or
the Trustee, as the case may be, shall inform the other party promptly, in
writing, upon the discovery by the Servicer or an Authorized Officer of the
Trustee, as the case may be, of any breach by the Servicer of its covenants
under Section 13.6. Except as otherwise specified in Section 13.2, unless the
breach shall have been cured by the last day of the Collection Period following
the Collection Period during which such breach was discovered (or, at the
Servicer's election, the last day of the Collection Period during which such
breach was discovered), the Servicer shall purchase any Receivable materially
and adversely affected by such breach, as determined by the Servicer and
reported in an Officer's Certificate as of such date. For this purpose, any
breach of the covenant set forth in Section 13.6(iii) shall be deemed to
materially and adversely affect the interest of the Trust in a Receivable. In
consideration of the purchase of such Receivable, the Servicer shall remit the
Repurchase Amount (less any Liquidation Proceeds deposited, or to be deposited,
by the Servicer in the Certificate Account with respect to such Receivable
pursuant to Section 13.3) in the manner specified in Section 14.4. The sole
remedy of the Trust, the Trustee, or the Certificateholders against the
Servicer with respect to a breach pursuant to Section 13.6 shall be to require
the Servicer to purchase Receivables pursuant to this Section 13.7. The Trustee
shall have no duty to conduct any affirmative investigation as to the occurrence
of any condition requiring the repurchase of any Receivable pursuant to this
Section 13.7 or the eligibility of any Receivable for purposes of the Agreement.
Section 13.8 Servicing Fee. The Servicing Fee for a Collection
Period shall equal the product of one-twelfth of the Servicing Fee Rate and the
Pool Balance as of the first day of such Collection Period. In addition, the
Servicer shall be entitled to receive as additional servicing compensation
investment earnings on amounts on deposit in the Certificate Account or earned
on collections pending deposit in the Certificate Account; provided, however,
that, beginning with the Collection Period for which the Trustee is notified in
writing that the Servicer has failed to deposit an Advance with respect to a
Receivable other than because such Receivable has been designated a Defaulted
Receivable and continuing until the Final
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Distribution Date, such investment earnings shall not be paid to the Servicer,
but shall be treated as Available Interest. The Servicer shall be required to
pay from its own account all expenses incurred by it in connection with its
activities hereunder (including fees and disbursements of the Trustee, Trustee's
counsel, the Paying Agent, the Transfer Agent and Certificate Registrar and
independent accountants, taxes imposed on the Servicer, and expenses incurred in
connection with distributions and reports to Certificateholders) except expenses
in connection with realizing upon a Receivable under Section 13.3 which may be
paid from Liquidation Proceeds from such Receivable.
Section 13.9 Servicer's Certificate. On or before each
Determination Date, the Servicer shall deliver to the Trustee, the Paying Agent,
the Rating Agencies, a Servicer's Certificate substantially in the form of
Exhibit D hereto, for the Collection Period preceding such Determination Date,
containing all information necessary to make the distributions pursuant to
Section 14.5, all information necessary for the Paying Agent to send statements
to Certificateholders pursuant to Section 14.7 The Servicer shall deliver to the
Rating Agencies any information, to the extent it is available to the Servicer,
that the Rating Agencies reasonably request in order to monitor the Trust. The
Servicer shall also specify each Receivable which the Seller or the Servicer is
required to repurchase or purchase, as the case may be, as of the last day of
the preceding Collection Period, each Receivable which the Servicer shall have
determined to be a Defaulted Receivable during the preceding Collection Period,
and each Receivable for which the Servicer has failed to deposit an Advance
pursuant to Section 14.3 other than because such Receivable has been designated
a Defaulted Receivable. Subsequent to the Closing Date, the form of Servicer's
Certificate may be revised or modified to cure any ambiguities or
inconsistencies with the Agreement; provided, however, that no material
information shall be deleted from the form of Servicer's Certificate. In the
event that the form of Servicer's Certificate is revised or modified in
accordance with the preceding sentence, a form thereof, as so revised or
modified, shall be provided to the Trustee and each Rating Agency.
Section 13.10 Annual Statement as to Compliance. (a) The Servicer
shall deliver to the Trustee and the Rating Agencies, and on or before March 31
of each year commencing March 31, 1999, a certificate signed by the chairman of
the board, president, the treasurer, the controller, any executive or senior
vice president or any vice president of the Servicer, stating that (a) a review
of the activities of the Servicer during the year ended the preceding December
31 (or shorter period in the case of the first such certificate) and of its
performance under the Agreement has been made under such officer's supervision
and (b) to the best of such officer's knowledge, based on such review, the
Servicer has fulfilled all its obligations in all material respects under the
Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officer and the nature and status thereof.
(b) The Servicer shall deliver to the Trustee, and each
Rating Agency promptly after having obtained knowledge thereof, but in no event
later than five Business Days thereafter, an Officer's Certificate specifying
any event which with the giving of notice or lapse of time, or both, would
become an Event of Servicing Termination under Section 19.1. The Seller shall
deliver to the Trustee, promptly after having obtained knowledge thereof, but in
no event later than five Business Days thereafter, an Officer's Certificate
specifying any event which with the giving of notice or lapse of time, or both,
would become an Event of Servicing Termination under Section 19.1.
Section 13.11 Annual Audit Report. The Servicer shall cause a firm
of independent public accountants (which may provide other services to the
Servicer or the Seller) to prepare a report addressed to the Board of Directors
of the Servicer, for the information and use of the Trustee, and the Rating
Agencies on or before March 31 of each year, beginning March 31, 1999, to the
effect that such firm has examined the automobile and light-duty truck
receivable servicing functions of the Servicer, including the Servicer's
procedures and records relating to servicing of the Receivables under this
Agreement and that, on the basis of such examination, such firm is of the
opinion such servicing has been conducted in compliance with this Agreement
except for (a) such exceptions as such firm believes to be immaterial and (b)
such other exceptions as shall be set forth in such firm's report. In addition,
such report shall state that such firm has compared the mathematical
calculations of each amount set forth in the monthly certificates forwarded by
the Servicer pursuant to Section 13.9 during the period covered by such report
(which shall be the preceding calendar year) with the Servicer's computer
reports which were the source of such amounts and that on the basis of such
comparison, such firm is of the opinion that such amounts are in agreement,
except for such exceptions as such firm believes to be immaterial and such other
exceptions as shall be set forth in such statement. In addition, such report
shall set forth the procedures performed in conjunction with the examination and
shall contain an opinion of such firm as to the accuracy of the amounts set
forth in the certificates delivered pursuant to Section 13.9 in such period.
The report of the independent certified public accountants shall
also indicate that such accounting firm is independent of the Servicer within
the meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants.
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Section 13.12 Access to Certain Documentation and Information
Regarding Receivables. The Servicer shall provide to the Certificateholders
access to the Receivable Files in such cases where the Certificateholders shall
be required by applicable statutes or regulations to have access to such
documentation. Nothing in this Section 13.12 shall affect the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors, and the failure of the Servicer to provide access to
information as a result of such obligation shall not constitute a breach of this
Section 13.12.
Section 13.13 Reports to Certificateholders and the Rating
Agencies. (a) The Trustee shall provide to any Certificateholder who so requests
in writing (addressed to the Corporate Trust Office) a copy of any Servicer's
Certificate described in Section 13.9, the annual audit statement described in
Section 13.10, or the annual audit report described in Section 13.11. The
Trustee may require the Certificateholder to pay a reasonable sum to cover the
cost of the Trustee's complying with such request.
(b) The Trustee shall forward to the Rating Agencies the
statement to Certificateholders described in Section 14.8 and any other reports
it may receive pursuant to this Agreement to (i) Standard & Poor's Corporation,
Asset-Backed Surveillance Group, 00 Xxxxxxxx, Xxxxxxxxx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, and (ii) Xxxxx'x Investors Service, Inc., ABS Monitoring Dept., 00
Xxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000.
Section 13.14 Insurance. The Servicer, in accordance with its
customary servicing procedures and underwriting standards, shall require that
each Obligor shall have obtained and shall maintain comprehensive and collision
insurance covering the Financed Vehicle as of the execution of the Receivable.
The Servicer shall enforce its rights under the Receivables to require the
Obligors to maintain comprehensive and collision insurance, in accordance with
the Servicer's customary practices and procedures with respect to comparable new
or used automobile and light-duty truck receivables that it services for itself
or others.
ARTICLE XIV
Distributions; Statements to
Certificateholders
Section 14.1 Accounts. (a) The Servicer shall establish the (i)
Certificate Account in the name of the Trustee for the benefit of the
Certificateholders, (ii) the Class A Distribution Account in the name of the
Trustee for the benefit of the Class A Certificateholders and (iii) the Class B
Distribution Account in the name of the Trustee for the benefit of the Class B
Certificateholders. Each such account shall be either:
(x) a segregated identifiable trust account established in
the trust department of a Qualified Trust Institution; or
(y) a separately identifiable deposit account established in
the deposit taking department of a Qualified Institution, which may be the
Seller so long as the Seller is a Qualified Institution.
The Certificate Account shall satisfy the requirements of clause
(x) above. The Seller hereby grants to the Collateral Agent for the benefit of
the Class A Certificateholders a security interest in the Class A Distribution
Account, likewise, the Seller hereby grants to the Collateral Agent for the
benefit of the Class B Certificateholders a security interest in the Class B
Distribution Account. Should any depositary of the Certificate Account, the
Class A Distribution Account or the Class B Distribution Account cease to be
either a Qualified Institution or a Qualified Trust Institution, then the
Servicer shall, with the Seller's assistance as necessary, cause such account to
be moved, upon thirty (30) days notice to the Trustee, to a Qualified
Institution or a Qualified Trust Institution, unless the Servicer provides the
Trustee with a letter from the Rating Agencies to the effect that the current
ratings assigned to the Certificates by the Rating Agencies will not be
adversely affected by such depositary's ceasing to be a Qualified Institution
or a Qualified Trust Institution, as the case may be.
All amounts held in the Certificate Account shall be invested by
the bank or trust company then maintaining the account at the written direction
of the Servicer in Permitted Investments that mature on a date proximate to but
not later than the Deposit Date next succeeding the date of investment;
provided, that if the Certificate Account is main tained with the Trustee, such
Permitted Investments may mature on the Distribution Date next succeeding the
date of investment, if the Trustee is the obligor on such investments
(including repurchase agreements on which the Trustee in its commercial
capacity is liable as principal).
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(b) The Seller shall establish the Reserve Account in the name of
the Collateral Agent for the benefit of the Certificateholders. Subject to
Section 14.5(b), The Reserve Account shall be under the sole dominion and
control of the Collateral Agent. The Reserve Account shall be a segregated
identifiable trust account established in the trust department of a Qualified
Trust Institution.
Should any depositary of the Reserve Account cease to be a
Qualified Trust Institution, then the Collateral Agent shall, upon thirty (30)
days notice to the Trustee, with the Seller's assistance as necessary, cause
such account to be moved to a Qualified Trust Institution, unless the Seller
provides the Trustee and the Collateral Agent with a letter from the Rating
Agencies to the effect that the current ratings assigned to the Certificates by
the Rating Agencies will not be adversely affected by such depositary's ceasing
to be a Qualified Trust Institution. The Reserve Account shall not be property
of the Trust.
Funds on deposit in the Reserve Account shall be invested by the
Collateral Agent in Permitted Invest ments selected in writing by the Servicer;
provided, however, it is understood and agreed that the Collateral Agent shall
not be liable for any loss or charge arising from such investment in Permitted
Investments. All such Permitted Investments shall be held by the Collateral
Agent for the benefit of the Certificateholders in the manner specified in
subsection (c) below; provided, however, that on each Distribution Date all
interest and other investment income (net of losses and investment expenses) on
funds on deposit therein shall be withdrawn from the Reserve Account at the
written direction of the Servicer and paid to the Seller. Funds on deposit in
the Reserve Account shall be invested in Permitted Investments that will mature
so that all funds (including both principal and interest) will be available at
the opening of business on the next following Deposit Date; provided, however,
that subject to satisfaction of the Rating Agency Condition and notice thereof
to the Trustee and the Collateral Agent, all or a portion of such funds on
deposit in the Reserve Account may be invested in Permitted Investments that
mature later than such next following Deposit Date.
(c) Each Permitted Investment made with funds from the Reserve
Account shall be delivered to the Col lateral Agent by causing the financial
institution then maintaining the Reserve Account (such institution being
referred to as the "Reserve Account Securities Intermediary") to create a
Security Entitlement in the Reserve Account in favor of the Trustee with respect
to such Permitted Investment by indicating by book-entry that such Permitted
Investment has been credited to the Reserve Account. The Servicer shall only
invest in Eligible Investments which the Reserve Account Securities Intermediary
agrees to credit to the applicable Account.
(d) The Servicer shall have the power, revocable by the Collateral
Agent, to instruct the Collateral Agent to make withdrawals and payments from
the Reserve Account for the purpose of permitting the Servicer to carry out its
duties hereunder.
(e) 2. Each of the Seller (and any successor to the Seller in
accordance with Section 17.3) and the Servicer agree to take or cause to be
taken such further actions, to execute, deliver and file or cause to be
executed, delivered and filed such further documents and instruments (including,
without limitation, any financing statements under the UCC or this Agreement)
as may be determined to be necessary, in order to perfect the interests created
by this Section 14.4 and otherwise effectuate the purposes, terms and
conditions of this Section 14.4.
(f) Notwithstanding anything else contained herein, the Reserve
Account shall only be established at Qualified Trust Institution which agrees
that it will (i) comply with Entitlement Orders (i.e. orders directing the
transfer or redemption of any financial assets credited to the Reserve Account)
relating to the Reserve Account issued by the Collateral Agent without further
consent by the Seller; (ii) credit all Permitted Investments to the Reserve
Account; (iii) treat each item of property (including, without limitation,
investment property, securities, instruments and cash) credited to the Reserve
Account as a Financial Asset; (iv) not enter into, any agreement with any other
person relating to the Reserve Account pursuant to which agreement it has agreed
to comply with entitlement orders made by such person; (v) not accept for credit
to the Reserve Account any Permitted Investment which is registered in the name
of, or payable to the order of, or specially endorsed to, any person other than
such Qualified Trust Institution unless it has been endorsed to such Qualified
Trust Institution or is endorsed in blank and (vi) such Qualified Trust
Institution has agreed that it will waive any right of set-off unrelated to its
fees for such Account.
Section 14.2 Collections. The Servicer shall remit daily within
two Business Days of receipt to the Certificate Account all payments by or on
behalf of the Obligors on the Receivables and all Liquidation Proceeds (net of
expenses), both as collected during the Collection Period. Notwithstanding the
provisions of the first sentence of this Section 14.2, the Servicer, so long as
the Servicer is USAA Federal Savings Bank, shall be permitted to make deposits
on a monthly instead of a daily basis if either (a) the Servicer obtains a
short-term certificate of deposit rating of the Servicer from Standard &
26
Poor's and Moody's of A-1 and P-1, respectively, or (b) the Servicer provides
the Trustee with (1) a letter from the Rating Agencies to the effect that the
current ratings assigned to the Certificates by the Rating Agencies will not be
adversely affected by the remittance of Collections on a monthly, rather than a
daily, basis. Any such collections remitted to the Cer tificate Account on a
monthly basis shall be in immediately available funds and shall be remitted no
later than 11:00 a.m., New York City time on or before the Deposit Date. For
purposes of this Section 14.2 the phrase "payments made on behalf of the
Obligors" shall mean payments made by Persons other than the Seller or the
Servicer.
Section 14.3 Advances.
(a) As of each Deposit Date, the Servicer may, in its sole
discretion, make a payment with respect to each Receivable (other than a
Defaulted Receivable) equal to the excess, if any, of (x) the product of the
Principal Balance of such Receivable as of the first day of the related
Collection Period and one-twelfth of the Annual Percentage Rate of interest on
such Receivable (calculated on the basis of a 360-day year of twelve 30-day
months), over (y) the interest actu ally received by the Servicer with respect
to such Receivable from the Obligor or from payment of the Repurchase Amount
during or with respect to such Collection Period. The Servicer shall deposit all
such Advances into the Certificate Account in immediately available funds no
later than, 11:00 a.m. New York City time, on the Deposit Date. The Servicer may
elect not to make any Advance with respect to a Receivable to the extent that
the Servicer, in its sole discretion, shall determine that such Advance is not
recoverable from subsequent payments on such Receivable or from withdrawals from
the Reserve Account. To the extent that the amount set forth in clause (y) above
with respect to a Receivable is greater than the amount set forth in clause (x)
above with respect thereto, such excess amount shall be distributed to the
Servicer pursuant to Section 14.5(b); provided, however, that the Servicer shall
not be entitled to reimbursement for an Advance resulting from a payment being
made by or on behalf of the Obligor prior to the Due Date under the Receivable
(a "Simple Interest Advance"). In addition, in the event that a Receivable
becomes a Defaulted Receivable, Outstanding Advances up to the amount of accrued
and unpaid interest thereon shall be reimbursed to the extent of Interest
Collections with respect to such Receivable and, if such amounts are
insufficient, from amounts on deposit in the Reserve Account. The Servicer shall
not be required to make an Advance (other than a Simple Interest Advance) to the
extent that the Servicer, in its sole discretion, determines that such Advance
would not subsequently be recovered (whether from Interest Collections on such
Receivables (including Liquidation Proceeds) or the Reserve Account). The
Servicer shall not make any advance with respect to principal of Receivables.
Not withstanding anything else herein, the Servicer shall be reimbursed only
from accrued interest due from the Obligor under the Receivable.
(b) The Servicer shall deposit in the Certificate Account
the aggregate Advances on the Receivables pursuant to Section 14.3(a). To the
extent that the Servicer fails to make an Advance pursuant to Section 14.3(a) on
the date required, the Servicer shall so notify the Trustee in writing
specifying the amount of the Advance and the Receivable to which such Advance
relates, and the Trustee shall withdraw such amount (or, if determinable, such
portion of such amount as does not represent advances for delinquent interest)
from the Reserve Account and deposit such amount in the Certificate Account.
Section 14.4 Additional Deposits. The Servicer, or the Seller, as
the case may be, shall deposit into the Certificate Account the aggregate
Repurchase Amount pursuant to Sections 12.2, 13.7 and 21.2, as applicable. All
remittances shall be made to the Certificate Account, in immediately available
funds, no later than 11:00 a.m., on the Deposit Date.
SECTION 14.5 Distributions.
(a) On or before each Determination Date, the Servicer shall
calculate all amounts to be deposited in the Class A Distribution Account and
the Class B Distribution Account, which calculations shall be set forth in the
Servicer's Certificate delivered to the Trustee on or before such Determination
Date.
(b) On each Distribution Date, after making the
reimbursements to the Servicer from amounts on deposit in the Certificate
Account of Outstanding Advances pursuant to Section 14.3, the Trustee shall
withdraw from the Certificate Account, the Available Interest and Available
Principal for such Distribution Date, withdraw from the Reserve Account such
amounts as may be required to satisfy amounts requested by the Servicer for such
Distribution Date, make the following deposits and distributions, if necessary,
based solely on the information contained in the Servicer's Certificate, to the
extent of amounts available from the indicated sources, in the following
priority:
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(i) to the Servicer, first from Available Interest, and
then, if necessary, from the Available Reserve Amount, any unpaid
Servicing Fee owing to such Servicer for the related Collection Period
and all unpaid Servicing Fees from prior Collection Periods less any
amounts owing to the Trustee pursuant to Section 20.7 hereof, which shall
be paid to the Trustee;
(ii) to the Class A Distribution Account, first from
Available Interest, then, if necessary, from the Available Reserve
Amount, and finally, if necessary, from the Class B Percentage of
Available Principal, the Class A Interest Distribution for such
Distribution Date; and
(iii) to the Class B Distribution Account, first from
Available Interest, and then, if necessary, from the Available Reserve
Amount, the Class B Interest Distribution for such Distribution Date
based solely on the information contained in the Servicer's Certificate.
On each Distribution Date, the Trustee shall make the following deposits and
distributions (based on the information contained in the Servicer's
Certificate), to the extent of the portion of Available Principal, Available
Interest and the Available Reserve Amount (to be applied in that order of
priority) remaining after the application of clauses (i), (ii) and (iii) above,
in the following priority:
(iv) to the Class A Distribution Account, the Class A
Principal Distribution for such Distribution Date;
(v) to the Class B Distribution Account, the Class B
Principal Distribution for such Distribution Date;
(vi) to the Collateral Agent for deposit in the Reserve
Account, any amounts remaining, until the amount on deposit in the
Reserve Account equals the Specified Reserve Account Balance; and
(vii) to the Seller, any amount remaining less any accrued
and unpaid Trustee fees and expenses which shall be paid to the Trustee;
(c) On each Distribution Date, all amounts on deposit in the Class
A Distribution Account will be distributed pro rata to the Class A
Certificateholders by the Trustee and all amounts on deposit in the Class B
Distribution Account will be distributed pro rata to the Class B
Certificateholders by the Trustee. Except as provided in Section 21.1, payments
under this paragraph shall be made to the Certificateholders by check mailed by
the Trustee to each Holder's respective address of record (or, in the case of
Certificates registered in the name of a Clearing Agency, or its nominee, by
wire transfer of immediately available funds). To the extent that the Trustee is
required to wire funds to the Certificateholders from the Class A Distribution
Account or the Class B Distribution Account, as applicable, it shall request the
bank main taining the Class A Distribution Account or the Class B Distribution
Account, as applicable, to make a wire transfer of the amount to be distributed
and the bank maintaining the Class A Distribution Account or the Class B
Distribution Account, as applicable, shall promptly deliver to the Trustee a
confirmation of such wire transfer. To the extent that the Trustee is required
to make payments to Certificateholders by check hereunder, it shall request the
bank maintaining the Class A Distribution Account or the Class B Distribution
Account, as applicable, to provide it with a supply of checks to make such
payments. The bank shall, if a request is made by the Trustee for a wire
transfer by 9:00 A.M. (New York time) on any Distribution Date, wire such funds
in accordance with such instructions by 10:00 A.M. (New York time) on such
Distribution Date, and it will otherwise act in compliance with the provisions
of this paragraph and the other provisions of this Agreement applicable to it as
the bank maintaining the Class A Distribution Account or the Class B
Distribution Account, as applicable. The Servicer shall take all necessary
action (including requiring an agreement to such effect) to ensure that any bank
maintaining the Class A Distribution Account or the Class B Distribution
Account, as applicable, agrees to comply, and complies, with the provisions of
this paragraph and the other provisions of this Agreement applicable to it as
the bank maintaining the Class A Distribution Account or the Class B
Distribution Account, as applicable.
SECTION 14.6 Reserve Account. On the Closing Date, the Seller
shall deposit the Reserve Account Initial Deposit into the Reserve Account. The
Seller hereby grants to the Collateral Agent for the benefit of the
Certificateholders a security interest in and to the Reserve Account and any and
all Financial Assets or other property credited thereto from time to time,
including, but not limited to, Permitted Investments, to secure payment of the
Certificates according to their terms. Amounts held from time to time in the
Reserve Account will continue to be held by the Collateral Agent for the benefit
of Class A Certificateholders and the Class B Certificateholders, but the
Reserve Account shall not be an asset of the Trust. By
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acceptance of their Certificates or interest therein, Certificateholders and
Certificate Owners shall be deemed to have appointed The Chase Manhattan Bank as
Collateral Agent. The Chase Manhattan Bank hereby accepts such appointment as
Collateral Agent. The Collateral Agent accepts such appointment and agrees to
establish the Reserve Account at the Corporate Trust Office and to comply with
Section 14.1(f).
Section 14.7 Net Deposits. USAA Federal Savings Bank (in whatever
capacity) may make the remit tances pursuant to Section 14.2 and Section 14.4
above, net of amounts to be retained by it or distributed to it (also in
whatever capacity) pursuant to Section 14.5, if (a) it shall be the Servicer and
(b) it is entitled, pursuant to Section 14.2, to make deposits on a monthly
basis, rather than a daily basis. The Servicer may remit amounts to the
Certificate Account net of investment earnings accrued on such amounts pending
deposit into the Certificate Account, whether or not the Servicer is then
entitled to make deposits on a monthly basis. Nonetheless, the Servicer shall
account for all of the above described amounts as if such amounts were deposited
and distributed separately.
Section 14.8 Statements to Certificateholders. On each
Distribution Date, the Servicer shall prepare and furnish to the Trustee and the
Paying Agent, and the Paying Agent shall include with the distribution to each
Certificateholder, a statement substantially in the form of Exhibit E, based on
information in the certificate furnished pursuant to Section 13.9, setting forth
for the related Collection Period the following information
2. (i) the amount of the distribution allocable to principal
on the Class A Certificates and the Class B Certificates;
(ii) the amount of the distribution allocable to interest on
the Class A Certificates and the Class B Certificates;
(iii) the amount of the Servicing Fee paid to the Servicer
with respect to the related Collection Period;
(iv) the Class A Certificate Balance, the Class A Pool
Factor, the Class B Certificate Balance and the Class B Pool Factor as of
such Distribution Date, after giving effect to payments allocated to
principal reported pursuant to clause (i) above;
(v) the Pool Balance as of the close of business of the
Servicer on the last day of the preceding Collection Period;
(vi) the amount of the aggregate Realized Losses, if any,
for such Collection Period;
(vii) the aggregate Purchase Amount of Receivables
repurchased by the Seller or purchased by the Servicer;
(viii) the balance of the Reserve Account on such
Distribution Date, after giving effect to changes therein on such
Distribution Date; and
(ix) the Specified Reserve Account Balance as of the
close of business on such Distribution Date.
Each amount set forth pursuant to clauses (i), (ii) and (iv) above shall be
expressed in the aggregate and as a dollar amount per $1,000 of original
denomination of a Certificate.
Within a reasonable period of time after the end of each calendar
year, but not later than the latest date permitted by law, the Servicer shall
prepare and furnish to the Trustee and the Paying Agent, and the Paying Agent
shall furnish to each Person who at any time during such calendar year shall
have been a Certificateholder, a statement containing the sum of the amounts
determined in clauses (i) and (ii) for such calendar year, for the purposes of
such Certificateholder's preparation of federal income tax returns.
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ARTICLE XX
[reserved]
30
ARTICLE XVI
The Certificates
Section 16.1 The Certificates. Unless otherwise specified in the
Agreement, the Certificates shall be issued in denominations of $1,000 and
integral multiples thereof; provided, however, that one Class A Certificate and
one Class B Certificate may be issued in a denomination that includes any
residual portion of the Original Class A Certificate Balance and the Original
Class B Balance. The Certificates shall be executed on behalf of the Trust by
manual or facsimile signature of an Authorized Officer or other authorized
signatory of the Trustee. Certificates bearing the manual or facsimile
signatures of individuals who were, at the time when such signatures shall have
been affixed, authorized to sign on behalf of the Trust, shall be valid and
binding obligations of the Trust, notwithstanding that such individuals shall
have ceased to be so authorized prior to the execution, authentication and
delivery of such Certificates or did not hold such offices or positions at the
date of such Certificates. No Certificate shall entitle the Holder to any
benefit under the Agreement, or shall be valid for any purpose, unless there
shall appear on such Certificate an authentication substantially in the form set
forth in Exhibit A and Exhibit B hereto executed by the Trustee by manual or
facsimile signature; such authentication shall constitute conclusive evidence
that such Certificate has been duly authenticated and delivered hereunder. All
Certificates shall be dated the date of their authentication.
Section 16.2 Execution, Authentication and Delivery of
Certificates. In exchange for the Receivables and the other assets of the Trust,
simultaneously with the sale, assignment and transfer to the Trustee of the
Receivables, the constructive delivery to the Trustee of the Receivable Files
and the delivery to the Trustee of the other components of the Trust, the
Trustee shall deliver to, or upon the order of, the Seller, Certificates duly
executed by the Trustee, on behalf of the Trust, and authenticated by the
Trustee in authorized denominations equaling in the aggregate the Original Pool
Balance, and evidencing the entire ownership of the Trust.
Section 16.3 Registration of Transfer and Exchange of
Certificates.
(a) The Trustee shall cause to be kept at the office or
agency to be maintained by a transfer agent and certificate registrar (the
"Transfer Agent and Certificate Registrar"), in accordance with the provisions
of Section 16.7, a register (the "Certificate Register") in which, subject to
such reasonable regulations as it may prescribe, the Transfer Agent and
Certificate Registrar shall provide for the registration of Certificates and of
transfers and exchanges of Certificates as herein provided. The Certificate
Register shall list the names of the Certificateholders and their respective
ownership interests in the Trust, and shall be treated as definitive and binding
for all purposes hereunder. Only those persons registered as Certificateholders
in the Certificate Register shall be recognized as having any interest in the
Trust or Trust estate or as possessing the rights of a Certificateholder
hereunder. A transfer of ownership of a Certificate shall be effectuated only by
an appropriate entry in the Certificate Register. The Chase Manhattan Bank is
hereby initially appointed Transfer Agent and Certificate Registrar for the
purpose of registering Certificates and transfers and exchanges of Certificates
as herein provided. In the event that, subsequent to the date of issuance of the
Certificates, the Trustee is unable to act as Transfer Agent and Certificate
Registrar, the Trustee shall, with the consent of the Seller, appoint another
bank or trust company, having an office or agency located in New York City and
which agrees to act in accordance with the provisions of the Agreement
applicable to it, to act, as successor Transfer Agent and Certificate
Registrar under the Agreement.
The Chase Manhattan Bank shall be permitted to resign as Transfer
Agent and Certificate Registrar upon 30 days' written notice to the Seller and
the Servicer; provided, however, that such resignation shall not be effective
and The Chase Manhattan Bank shall continue to perform its duties as Transfer
Agent and Certificate Registrar until the Trustee has appointed a successor
Transfer Agent and Certificate Registrar with the consent of the Seller.
Upon surrender for registration of transfer of any Class A
Certificate or Class B Certificate at the office or agency of the Transfer Agent
and Certificate Registrar maintained pursuant to Section 16.7, the Transfer
Agent and Certifi cate Registrar shall make an appropriate entry in the
Certificate Register to reflect such transfer, and the Trustee shall execute,
authenticate and (if the Transfer Agent and Certificate Registrar is different
than the Trustee, then the Transfer Agent and Certificate Registrar shall)
deliver, in the name of the designated transferee or transferees, one or more
new Certificates in authorized denominations of a like aggregate amount. At the
option of a Certificateholder, Class A Certificates or Class B Certificates may
be exchanged for other Class A Certificates or Class B Certificates, as the case
may be, in authorized denominations of a like aggregate amount at such office or
agency.
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Whenever any Class A Certificate or Class B Certificate is
surrendered for exchange, the Trustee shall execute, authenticate and (if the
Transfer Agent and Certificate Registrar is different than the Trustee, then the
Transfer Agent and Certificate Registrar shall) deliver the Certificates which
the Certificateholder making the exchange is entitled to receive. Every
Certificate presented or surrendered for registration of transfer or exchange
shall be accompanied by a written instrument of transfer in form satisfactory to
the Trustee and the Transfer Agent and Certificate Registrar duly executed by
the Holder, which signature on such assignment must be guaranteed by a member of
the New York Stock Exchange or a commercial bank or trust company.
Each Certificate surrendered for registration of transfer or
exchange shall be cancelled by the Transfer Agent and Certificate Registrar or
retained in accordance with its standard retention policy and disposed of or
retained in a manner satisfactory to the Trustee and the Seller.
No service charge shall be made for any registration of transfer
or exchange of Certificates, but the Transfer Agent and Certificate Registrar
may require payment of a sum sufficient to cover any tax or governmental charge
that may be imposed in connection with any transfer or exchange of Certificates.
Section 16.4 Mutilated, Destroyed, Lost, or Stolen Certificates.
If (a) any mutilated Class A Certificate or Class B Certificate shall be
surrendered to the Transfer Agent and Certificate Registrar, or if the Transfer
Agent and Certificate Registrar shall receive evidence to its satisfaction of
the destruction, loss, or theft of any Class A Certificate or Class B
Certificate and (b) there shall be delivered to the Trustee and the Transfer
Agent and Certificate Registrar such security or indemnity as may be required to
save each of them harmless, then, in the absence of notice to the Trustee that
such, Class A Certificate or Class B Certificate shall have been acquired by a
bona fide purchaser, the Trustee on behalf of the Trust shall execute,
authenticate and (if the Transfer Agent and Certificate Registrar is different
from the Trustee, then Transfer Agent and Certificate Registrar shall) deliver,
in exchange for or in lieu of any such mutilated, destroyed, lost or stolen
Class A Certificate or Class B Certificate, a new Class A Certificate or Class B
Certificate of like tenor and denomination but bearing a number not
contemporaneously outstanding. In connection with the issuance of any new Class
A Certificate or Class B Certificate under this Section 16.4, the Trustee or the
Transfer Agent and Certificate Registrar, as the case may be, may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith. Any Replacement Class A Certificate or
Class B Certificate issued pursuant to this Section 16.4 shall constitute
conclusive evidence of ownership in the Trust, as if originally issued, whether
or not a lost, stolen, or destroyed Certificate shall be found at any time.
Section 16.5 Persons Deemed Owners. Prior to due presentation of
a Certificate for registration of transfer, the Trustee, the Paying Agent, the
Transfer Agent and Certificate Registrar or any agent of any of them may treat
the Person in whose name any Certificate shall be registered as the owner of
such Certificate for the purpose of receiving distributions pursuant to Section
14.5(b) and for all other purposes whatsoever, and none of the Trustee, the
Paying Agent, the Transfer Agent and Certificate Registrar or any agent of any
of them shall be bound by any notice to the contrary.
Section 16.6 Access to List of Certificateholders' Names and
Addresses. The Transfer Agent and Certificate Registrar shall furnish to the
Servicer or the Paying Agent (or to the Trustee if the Trustee is not the
Transfer Agent and Certificate Registrar), within 15 days after receipt by the
Transfer Agent and Certificate Registrar of a request therefor from the
Servicer, the Trustee or the Paying Agent in writing, a list of the names and
addresses of the Certificateholders as of the most recent Record Date, in such
form as the Servicer, the Trustee or the Paying Agent may reasonably require.
If, at such time, if any, as Definitive Certificates have been issued, three or
more Certificateholders, or one or more Holders of Certificates aggregating not
less than 25% of the Pool Balance apply in writing to the Transfer Agent and
Certificate Registrar (or the Trustee if the Trustee is acting as the Transfer
Agent and Certificate Registrar), and such application states that the
applicants desire to communicate with other Certificateholders with respect to
their rights under the Agreement or under the Certificates, and such application
is accompanied by a copy of the communication that such applicants propose to
transmit, then the Transfer Agent and Certificate Registrar shall, within five
Business Days after the receipt of such application, afford such applicants
access during normal business hours to the current list of Certificateholders.
Each Certificateholder, by receiving and holding a Certificate, shall be deemed
to have agreed not to hold any of the Servicer, the Trustee, the Transfer Agent
and Certificate Registrar or any of their respective agents accountable by
reason of the disclosure of its name and address, regardless of the source from
which such information was derived.
Section 16.7 Maintenance of Office or Agency. The Transfer Agent
and Certificate Registrar shall maintain in New York, New York an office or
offices or agency or agencies where Certificates may be surrendered for
registration of transfer or exchange. The Transfer Agent and Certificate
Registrar initially designates its agency located at 000 Xxxx 00xx Xxxxxx,
0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Structured Finance Operations,
as its office for such purposes. The
32
Transfer Agent and Certificate Registrar shall give prompt written notice to the
Trustee, the Servicer and to Certificateholders of any change in the location of
such office or agency.
Section 16.8 Book-Entry Certificates. Upon original issuance, the
Class A Certificates and the Class B Certificates, other than the Class A
Certificate and the Class B Certificate representing the residual amount of the
Original Class A Certificate Balance and the Original Class B Certificate
Balance, respectively, which shall be issued upon the written order of the
Seller, shall be issued in the form of one or more typewritten Certificates
representing the Book-Entry Certificates, to be delivered to the initial
Clearing Agency, by, or on behalf of, the Seller. The Certificates shall
initially be registered on the Certificate Register in the name of CEDE & Co.,
the nominee of the initial Clearing Agency, and no Certificate Owner will
receive a definitive certificate representing such Certificate Owner's interest
in the Class A Certificates or the Class B Certificates, as the case may be,
except as provided in Section 16.10. Unless and until definitive, fully
registered Certificates ("Definitive Certificates") have been issued to Class A
Certificateholders or the Class B Certificateholders pursuant to Section 16.10:
(i) the provisions of this Section 16.8 shall be in full
force and effect;
(ii) the Seller, the Servicer, the Paying Agent, the
Transfer Agent and Certificate Registrar and the Trustee may deal with
the Clearing Agency and the Clearing Agency Participants for all purposes
(including the making of distributions in respect of the Certificates and
the taking of actions by the Certificateholders) as the authorized
representatives of the Certificate Owners;
(iii) to the extent that the provisions of this Section 16.8
conflict with any other provisions of the Agreement, the provisions of
this Section 16.8 shall control;
(iv) the rights of Certificate Owners shall be exercised
only through the Clearing Agency (or to the extent Certificate Owners are
not Clearing Agency Participants through the Clearing Agency Participants
through which such Certificate Owners own Book-Entry Certificates) and
shall be limited to those established by law and agreements between such
Certificate Owners and the Clearing Agency and/or the Clearing Agency
Participants and all references in the Agreement to actions by
Certificateholders shall refer to actions taken by the Clearing Agency
upon instructions from the Clearing Agency Participants, and all
references in the Agreement to distributions, notices, reports and
statements to Certificateholders shall refer to distributions, notices,
reports and statements to the Clearing Agency or its nominee, as
registered holder of the Certificates, as the case may be, for
distribution to Certificate Owners in accordance with the procedures
of the Clearing Agency; and
(v) pursuant to the Depository Agreement, the initial
Clearing Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit distributions of principal and
interest on the Certificates to the Clearing Agency Participants, for
distribution by such Clearing Agency Participants to the Certificate
Owners or their nominees.
Section 16.9 Notices to Clearing Agency. Whenever notice or other
communication to the Certificateholders is required under the Agreement, unless
and until Definitive Certificates shall have been issued to Certificate Owners
pursuant to Section 16.10, the Trustee and the Paying Agent shall give all such
notices and communications specified herein to be given by it to
Certificateholders to the Clearing Agency.
Section 16.10 Definitive Certificates. If (i) (A) the Servicer
advises the Trustee in writing that the Clearing Agency is no longer willing or
able to discharge properly its responsibilities under the Depository Agreement
and (B) the Trustee or the Servicer is unable to locate a qualified successor,
(ii) the Servicer, at its option, advises the Trustee in writing that it elects
to terminate the book-entry system through the Clearing Agency or (iii) after
the occurrence of an Event of Servicing Termination, Certificate Owners
representing in the aggregate not less than 50% of the Pool Balance advise the
Trustee and the Clearing Agency through the Clearing Agency Participants in
writing, and the Clearing Agency shall so notify the Trustee, that the
continuation of a book-entry system through the Clearing Agency, is no longer in
the best interests of the Certificate Owners, the Trustee shall notify the
Clearing Agency of the occurrence of any such event and of the avail ability of
Definitive Certificates to Certificate Owners requesting the same. Upon
surrender to the Trustee by the Clearing Agency of Certificates registered in
the name of the nominee of the Clearing Agency, accompanied by re-registration
instructions from the Clearing Agency for registration, the Trustee shall
execute, on behalf of the Trust, authenticate and deliver Definitive
Certificates in accordance with such instructions. The Servicer shall arrange
for, and will bear all costs of, the printing and issuance of such Definitive
Certificates. None of the Seller, the Servicer, the Transfer Agent and
Certificate Registrar or the Trustee
33
shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on such instructions.
Upon the issuance of Definitive Certificates, all references herein to
obligations imposed upon or to be performed by the Clearing Agency shall be
deemed to be imposed upon and performed by the Transfer Agent and Certificate
Registrar, to the extent applicable with respect to such Definitive Certificates
and the Trustee, the Paying Agent and the Transfer Agent and Certificate
Registrar shall recognize the Holders of the Definitive Certificates as
Certificateholders hereunder.
Section 16.11 Appointment of Paying Agent.
(a) The Paying Agent shall have the revocable power to
withdraw funds from the Certificate Account and make distributions to the
Certificateholders pursuant to Section 14.5 hereof. The Trustee may revoke such
power and remove the Paying Agent, if the Trustee determines in its sole
discretion that the Paying Agent shall have failed to perform its obligations
under the Agreement in any material respect or for other good cause. The Paying
Agent shall initially be The Chase Manhattan Bank. The Chase Manhattan Bank
shall be permitted to resign as Paying Agent upon 30 days' written notice to the
Servicer, the Trustee and the Collateral Agent. In the event that The Chase
Manhattan Bank shall no longer be the Paying Agent, the Trustee shall appoint a
successor to act as Paying Agent, which shall be a bank or trust company. If at
any time the Trustee shall be acting as the Paying Agent, the provisions of
Sections 20.2, 20.4 and 20.5 shall apply to the Trustee in its role as Paying
Agent.
(b) The Trustee shall cause the Paying Agent (if other than
itself) to execute and deliver to the Trustee an instrument in which such Paying
Agent shall agree with the Trustee that such Paying Agent will hold all sums, if
any, held by it for payment to the Certificateholders in trust for the benefit
of the Certificateholders or other party entitled thereto until such sums shall
be paid to such Certificateholders or other party entitled thereto and shall
agree, and if the Trust ee is the Paying Agent it hereby agrees, that it shall
comply with all requirements of the Code regarding the withholding by the
Trustee of payments in respect of federal income taxes due from Class A
Certificate Owners or Class B Certificateholders.
(c) The Chase Manhattan Bank in its capacity as initial Paying
Agent hereunder agrees that it (i) will hold all sums held by it hereunder for
payment to the Certificateholders in trust for the benefit of the
Certificateholders or other parties entitled thereto until such sums shall be
paid to such Certificateholders or other party entitled thereto and (ii) shall
comply with all requirements of the Code regarding the withholding by the
Trustee of payments in respect of federal income taxes due from Certificate
Owners.
Section 16.12 Authenticating Agent.
(a) The Trustee may appoint one or more authenticating
agents with respect to the Certificates which shall be authorized to act on
behalf of the Trustee in authenticating the Certificates in connection with the
issuance, delivery, registration of transfer, exchange or repayment of the
Certificates. Whenever reference is made in this Agreement to the authentication
of Certificates by the Trustee or the Trustee's certificate of authentication,
such reference shall be deemed to include authentication on behalf of the
Trustee by an authenticating agent and a certificate of authentication executed
on behalf of the Trustee by an authenticating agent. Any authenticating agent
appointed by the Trustee shall require the consent of the Seller, which consent
may not be unreasonably withheld.
(b) Any institution succeeding to the corporate agency
business of an authenticating agent shall continue to be an authenticating agent
without the execution or filing of any paper or any further act on the part of
the Trustee or such authenticating agent.
(c) An authenticating agent may at any time resign by giving
written notice of resignation to the Trustee and the Seller. The Trustee may at
any time terminate the agency of an authenticating agent by giving notice of
termination to such authenticating agent and to the Seller. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time an
authenticating agent shall cease to be acceptable to the Trustee or the Seller,
the Trustee promptly may appoint a successor authenticating agent with the
consent of the Seller. Any successor authenticating agent
upon acceptance of its appointment hereunder shall become vested with all the
rights, powers and duties of its predecessor hereunder, with like effect as if
originally named as an authenticating agent. Any successor authenticating agent
appointed by the Trustee shall require the consent of the Seller, which consent
may not be unreasonably withheld.
(d) The Servicer shall pay the Authenticating Agent from
time to time reasonable compensation for its services under this Section 16.13.
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(e) The provisions of Sections 20.2, 20.4 and 20.5 shall be
applicable to any authenticating agent.
(f) Pursuant to an appointment made under this Section
16.13, the Certificates may have endorsed thereon, in lieu of the Trustee's
certificate of authentication, an alternate certificate of authentication in
substantially the following form:
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This is one of the certificates referred to in the within
mentioned Agreement.
[NAME OF TRUSTEE]
as Trustee
By:______________________
Authorized Signatory
or
-------------------------
as Authenticating Agent
for the Trustee,
By:______________________
Authorized Signatory
Section 15.13 Actions of Certificateholders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by the Agreement to be given or taken
by Certificateholders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Certificateholders in
person or by an agent duly appointed in writing; and except as herein otherwise
expressly provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, when required, to the Seller or
the Servicer. Proof of execution of any such instrument or of a writing
appointing any such agent shall be sufficient for any purpose of the Agreement
and conclusive in favor of the Trustee, the Seller and the Servicer, if made in
the manner provided in this Section 16.14.
(b) The fact and date of the execution by any
Certificateholder of any such instrument or writing may be proved in any
reasonable manner which the Trustee deems sufficient.
(c) Any request, demand, authorization, direction, notice,
consent, waiver or other act by a Certificateholder shall bind every Holder of
every Certificate issued upon the registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, or omitted to
be done, by the Trustee, the Seller or the Servicer in reliance thereon, whether
or not notation of such action is made upon such Certificate.
(d) The Trustee may require such additional proof of any
matter referred to in this Section 16.13 as it shall deem necessary.
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ARTICLE XVII
The Seller
Section 17.1 Representations of Seller. The Seller makes the
following representations on which the Trustee shall rely in accepting the
Receivables in trust and authenticating the Certificates. The representations
shall speak as of the execution and delivery of the Agreement, and shall survive
the sale of the Receivables to the Trustee.
(i) Organization and Good Standing. The Seller has been
duly organized and is validly existing as a federally chartered savings
association in good standing under the laws of the United States of
America, with power and authority to own its properties and to conduct
its business as such properties are currently owned and such business is
presently conducted, and had at all relevant times, and has, power,
authority, and legal right to acquire and own the Receivables.
(ii) Power and Authority. The Seller has the power and
authority to execute and deliver the Agreement and to carry out its
terms; the Seller has full power and authority to sell and assign the
property to be sold and assigned to the Trustee as part of the Trust and
has duly authorized such sale and assignment to the Trustee by all
necessary corporate action; and the execution, delivery, and performance
of the Agreement has been duly authorized by the Seller by all necessary
corporate action.
(iii) Valid Sale; Binding Obligations. The Agreement effects
a valid sale, transfer, and assignment of the Receivables, enforceable
against creditors of and purchasers from the Seller and constitutes a
legal, valid, and binding obligation of the Seller enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other similar laws affecting
the enforcement of creditors' rights in general and by general principles
of equity, regardless of whether such enforceability is considered in a
proceeding in equity or at law.
(iv) No Violation. The consummation of the transactions
contemplated by the Agreement and the fulfillment of the terms hereof do
not (a) conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time) a
default under, the charter or bylaws of the Seller, or conflict with or
breach any of the material terms or provisions of, or constitute (with or
without notice or lapse of time) a default under, any indenture,
agreement, or other instrument to which the Seller is a party or by which
it is bound, (b) result in the creation or imposition of any lien upon
any of its properties pursuant to the terms of any such indenture,
agreement, or other instrument, or (c) violate any law or, to the best of
the Seller's knowledge, any order, rule, or regulation applicable to the
Seller of any court or of any federal or state regulatory body,
administrative agency, or other governmental instrumentality having
jurisdiction over the Seller or its properties.
(v) No Proceedings. There are no proceedings or
investigations pending, or, to the best of the Seller's knowledge,
threatened, before any court, regulatory body, administrative agency, or
other governmental instrumentality having jurisdiction over the Seller or
its properties (a) asserting the invalidity of the Agreement or the
Certificates, (b) seeking to prevent the issuance of the Certificates or
the consummation of any of the transactions contemplated by the
Agreement, (c) seeking any determination or ruling that might materially
and adversely affect the performance by the Seller of its obligations
under, or the validity or enforceability of, the Agreement or the
Certificates or (d) relating to the Seller and which might adversely
affect the federal income tax attributes of the Certificates.
Section 17.2 Liability of Seller; Indemnities. The Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller in such capacity under the Agreement and shall have no
other obligations or liabilities hereunder.
The Seller shall indemnify, defend and hold harmless the Trustee
and the Trust from and against any taxes that may at any time be asserted
against the Trustee or the Trust with respect to, and as of the date of, the
sale of the Receivables to the Trust or the issuance and original sale of the
Certificates, including any sales, gross receipts, general
37
corporation, tangible or intangible personal property, privilege, or license
taxes (but not, in the case of the Trust, including any taxes asserted with
respect to ownership of the Receivables or federal or other income taxes,
including franchise taxes measured by net income), arising out of the
transactions contemplated by the Agreement, and costs and expenses in defending
against the same.
The Seller shall indemnify, defend, and hold harmless the Trustee,
its officers, directors, employees and agents or the Trust from and against any
loss, liability or expense incurred by reason of (i) the Seller's willful
misfeasance, bad faith, or negligence in the performance of its duties
hereunder, or by reason of reckless disregard of the obligations and duties
hereunder and (ii) the Seller's violation of federal or state securities laws in
connection with the registration of the sale of the Certificates.
Indemnification under this Section 17.2 shall survive the
termination of this Agreement and the resignation or removal of the Trustee and
shall include reasonable fees and expenses of counsel and expenses of
litigation. If the Seller shall have made any indemnity payments to the Trust or
the Trustee pursuant to this Section 17.2 and the Trust or the Trustee
thereafter shall collect any of such amounts from others, the Trust shall repay
such amounts to the Seller, without interest.
Section 17.3 Merger or Consolidation of Seller. Any corporation or
other entity (i) into which the Seller may be merged or consolidated, (ii) which
may result from any merger, conversion, or consolidation to which the Seller
shall be a party, or (iii) which may succeed to all or substantially all of the
business of the Seller, which corporation or other entity executes an agreement
of assumption to perform every obligation of the Seller under the Agreement,
shall be the successor to the Seller hereunder without the execution or filing
of any document or any further act by any of the parties to the Agreement. The
Seller shall give prompt written notice of any merger or consolidation to the
Trustee, the Servicer and the Rating Agencies.
Section 17.4 Limitation on Liability of Seller and Others. The
Seller and any director, officer, employee or agent of the Seller may rely in
good faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Seller shall not be under any obligation under this Agreement to
appear in, prosecute, or defend any legal action that shall be unrelated to its
obligations under the Agreement, and that in its opinion may involve it in any
expense or liability.
Section 17.5 Seller May Own Certificates. The Seller and any
Person controlling, controlled by, or under common control with the Seller may
in its individual or any other capacity become the owner or pledgee of
Certificates with the same rights as it would have if it were not the Seller
or an affiliate thereof, except as otherwise provided in the definition of
"Certificateholder", "Class A Certificateholder" and "Class B Certificateholder"
specified in Section 11.1. Certificates so owned by or pledged to the Seller or
such controlling or commonly controlled Person shall have an equal and
proportionate benefit under the provisions of the Agreement, without preference,
priority, or distinction as among all of the Certificates.
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ARTICLE XVIII
The Servicer
Section 18.1 Representations of Servicer. The Servicer makes the
following representations on which the Trustee shall rely in accepting the
Receivables in trust and authenticating the Certificates. The representations
shall speak as of the execution and delivery of the Agreement, and shall survive
the sale of the Receivables to the Trustee.
(i) Organization and Good Standing. The Servicer has been
duly organized and is validly existing as a federally chartered savings
association or corporation and is in good stand ing under the laws of the
United States of America or its state of incorporation, with power and
authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted,
and had at all relevant times, and has, power, authority, and legal right
to acquire, own, sell, and service the Receivables and to hold the
Receivable Files as custodian on behalf of the Trustee.
(ii) Power and Authority. The Servicer has the power and
authority to execute and deliver the Agreement and to carry out its
terms; and the execution, delivery, and performance of the Agreement has
been duly authorized by the Servicer by all necessary corporate action.
(iii) Binding Obligations. The Agreement constitutes a legal,
valid, and binding obligation of the Servicer enforceable in accordance
with its terms subject, as to enforcement, to applicable bankruptcy,
insolvency, reorganization, liquidation or other similar laws and
equitable principles relating to or affecting the enforcement of
creditors' rights in general and by general principles of equity
regardless of whether such enforceability is considered in a proceeding
in equity or law.
(iv) No Violation. The consummation of the transactions
contemplated by the Agreement and the fulfillment of the terms hereof do
not conflict with, result in any breach of any of the terms and
provisions of, nor constitute (a) (with or without notice or lapse of
time) a default under, the articles of association or bylaws of the
Servicer, or conflict with or breach any of the material terms or
provisions of, or constitute (with or without notice or lapse of time) a
default under, any indenture, agreement, or other instrument to which the
Servicer is a party or by which it shall be bound, (b) result in the
creation or imposition of any lien upon any of its properties pursuant to
the terms of any such indenture, agreement, or other instrument or (c)
violate any law or, to the best of the Servicer's knowledge, any order,
rule, or regulation applicable to the Servicer of any court or of any
federal or state regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over the Servicer or its
properties.
(v) No Proceedings. There are no proceedings or
investigations pending, or to the best of the Servicer's knowledge,
threatened, before any court, regulatory body, administrative agency, or
other governmental instrumentality having jurisdiction over the Servicer
or its properties (a) asserting the invalidity of the Agreement or the
Certificates, (b) seeking to prevent the issuance of the Certificates or
the consummation of any of the transactions contemplated by the
Agreement, (c) seeking any determination or ruling that might materially
and adversely affect the performance by the Servicer of its obligations
under, or the validity or enforceability of, the Agreement or the
Certificates, or (d) relating to the Servicer and which might adversely
affect the federal income tax attributes of the Certificates.
(vi) Fidelity Bond. The Servicer maintains a fidelity bond
in such form and amount as is customary for banks acting as custodian of
funds and documents in respect of retail automotive installment sales
contracts.
Section 18.2 Liability of Servicer; Indemnities. The Servicer
shall be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Servicer under the Agreement and shall have no
other obligations or liabilities hereunder.
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(i) The Servicer shall defend, indemnify, and hold harmless
the Trustee, its officers, directors, employees and agents, the Trust and
the Certificateholders from and against any and all costs, expenses,
losses, damages, claims, and liabilities, arising out of or resulting
from the use, ownership, or operation by the Servicer or any affiliate
thereof of a Financed Vehicle.
(ii) The Servicer shall indemnify, defend, and hold harmless
the Trustee, its officers, directors, employees and agents from and
against any taxes that may at any time be asserted against the Trustee or
the Trust with respect to the transactions contemplated in the Agreement,
includ ing, without limitation, any sales, gross receipts, general
corporation, tangible or intangible personal property, privilege, or
license taxes (but not including any taxes asserted with respect to, and
as of the date of, the sale of the Receivables to the Trust or the
issuance and original sale of the Class A Certificates and the Class B
Certificates, or asserted with respect to ownership of the Receivables or
federal or other income taxes, including franchise taxes measured by net
income) arising out of distributions on the Certificates and costs and
expenses in defending against the same.
(iii) The Servicer shall indemnify, defend, and hold harmless
the Trustee, its officers, directors, employees and agents and the Trust
and the Certificateholders from and against any and all costs, expenses,
losses, claims, damages, and liabilities to the extent that such cost,
expense, loss, claim, damage, or liability arose out of, or was imposed
upon the Trustee and the Trust or the Certificateholders through the
willful misfeasance, negligence, or bad faith of the Servicer in the
performance of its duties under the Agreement or by reason of reckless
disregard of its obligations and duties under the Agreement.
(iv) The Servicer shall indemnify, defend, and hold
harmless the Trustee, its officers, directors, employees and agents, from
and against all costs, expenses, losses, claims, damages, and liabilities
arising out of or incurred in connection with the acceptance or
performance of the trusts and duties herein contained, except to the
extent that such costs, expenses, losses, claims, damage or liabilities:
(1) shall be due to the willful misfeasance, bad faith or negligence of
the Trustee; (2) shall arise from the Trustee's breach of any of its
representations or warranties set forth in Section 20.14; or (3) shall
be one as to which the Seller is required to indemnify the Trustee.
Indemnification under this Section 18.2 shall include reasonable
fees and expenses of counsel and expenses of litigation. If the Servicer shall
have made any indemnity payments pursuant to this Section 18.2 and the
recipient thereafter collects any of such amounts from others, the recipient
shall promptly repay such amounts to the Servicer, without interest. The
indemnification obligations of the Servicer set forth in this Section 18.2 shall
survive the termination of this Agreement, the termination of the Servicer with
respect to any act or failure to act which occurs prior to such Servicer's
termination and the resignation or removal of the Trustee.
Section 18.3 Merger or Consolidation of Servicer. Any corporation
or other entity (i) into which the Servicer may be merged or consolidated, (ii)
which may result from any merger, conversion, or consolidation to which the
Servicer shall be a party, or (iii) which may succeed to all or substantially
all of the business of the Servicer, which corporation or other entity executes
an agreement of assumption to perform every obligation of the Servicer
hereunder, shall be the successor to the Servicer under the Agreement without
the execution or filing of any document or any further act on the part of any of
the parties to the Agreement. The Servicer shall promptly inform the Trustee,
the Seller and the Rating Agencies in writing of any such merger or
consolidation.
Section 18.4 Limitation on Liability of Servicer and Others.
(a) Neither the Servicer nor any of the directors or
officers or employees or agents of the Servicer shall be under any liability to
the Trust, the Trustee, or the Certificateholders, except as provided under the
Agreement, for any action taken or for refraining from the taking of any action
pursuant to the Agreement or for errors in judgment; provided, however, that
this provision shall not protect the Servicer or any such Person against any
liability that would otherwise be imposed by reason of willful misfeasance,
negligence, or bad faith in the performance of duties or by reason of reckless
disregard of obligations and duties under the Agreement. The Servicer and any
director or officer or employee or agent of the Servicer may rely in good faith
on the advice of counsel or on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising under the
Agreement.
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(b) The Servicer and any director or officer or employee or
agent of the Servicer shall be indemnified by the Trust and held harmless
against any loss, liability, or expense including reasonable attorneys' fees and
expenses incurred in connection with any legal action relating to the
performance of the Servicer's duties under the Agreement, other than (i) any
loss or liability otherwise reimbursable pursuant to the Agreement; (ii) any
loss, liability, or expense incurred solely by reason of the Servicer's willful
misfeasance, negligence, or bad faith in the performance of its duties hereunder
or by reason of reckless disregard of its obligations and duties under the
Agreement; (iii) any loss, liability, or expense for which the Trust is to be
indemnified by the Servicer under the Agreement, and (iv) any loss, liability,
or expense incurred by the Person to be indemnified for which loss, liability,
or expense, such Person shall be indemnified by the Trust. Any amounts due the
Servicer pursuant to this subsection shall be payable on a Distribution Date
from the Total Collections on deposit in the Certificate Account only after all
payments required to be made on such date to the Certificateholders and the
Servicer have been made, payments of amounts, if any, due the Trustee from the
Trust pursuant to Section 20.8 have been made, and deposits of any amount
required to be deposited into the Reserve Account pursuant to Section
14.5(b)(vi) to maintain the amount on deposit therein (exclusive of investment
income and earnings on amounts on deposit therein) at the Specified Reserve
Account Balance on such date have been made.
(c) Except as provided in the Agreement, the Servicer shall
not be under any obligation to appear in, prosecute, or defend any legal action
that shall not be incidental to its obligations under the Agreement, and that in
its opinion may involve it in any expense or liability; provided, however, that
the Servicer may undertake any reasonable action that it may deem necessary or
desirable in respect of the Agreement and the rights and duties of the parties
to the Agreement and the interests of the Certificateholders under the
Agreement. In such event, the legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs, and liabilities of the
Trust, and the Servicer shall be entitled to be reimbursed therefor. Any amounts
due the Servicer pursuant to this subsection shall be payable on a Distribution
Date from the Total Collections on deposit in the Certificate Account only after
all payments required to be made on such date to the Certificateholders and the
Servicer have been made, payments of amounts, if any, due the Trustee from the
Trust pursuant to Section 20.8 have been made and deposits of any amount
required to be deposited into the Reserve Account pursuant to Section
14.5(b)(vi) to maintain the amount on deposit therein (exclusive of investment
income and earnings on amounts on deposit therein) at the Specified Reserve
Account Balance on such date have been made.
The Person to be indemnified shall provide the Trustee with a
certificate and accompanying Opinion of Counsel requesting indemnification and
setting forth the basis for such request.
Section 18.5 Servicer Not To Resign. The Servicer shall not
resign from its obligations and duties under the Agreement except (i) upon
determination that the performance of its duties shall no longer be permissible
under applicable law or (ii) in the event of the appointment of a successor
Servicer pursuant to Section 19.2, upon satisfaction of the Rating Agency
Condition. Notice of any such determination permitting the resignation of USAA
Federal Savings Bank shall be communicated to the Trustee, and the Rating
Agencies at the earliest practicable time (and, if such communication is not in
writing, shall be confirmed in writing at the earliest practicable time) and any
such determination permitting the resignation of the Servicer shall be evidenced
by an Opinion of Counsel to such effect delivered to the Trustee concurrently
with such notice. No such resignation shall become effective until the Trustee
or a successor Servicer shall have assumed the responsibilities and obligations
of the Servicer in accordance with Section 19.2.
Section 18.6 Delegation of Duties. So long as USAA Federal
Savings Bank or the Trustee acts as Servicer, the Servicer shall have the right,
in the ordinary course of its business, to delegate any of its duties under this
Agreement to any Person. Any compensation payable to such Person shall be paid
by the Servicer from its own funds and none of the Trust, the Trustee or the
Certificateholders shall have any liability to such Person with respect thereto.
Notwithstanding any delegation of duties by the Servicer pursuant to this
Section 18.6, the Servicer shall not be relieved of its liability and
responsibility with respect to such duties, and any such delegation shall not
constitute a resignation within the meaning of Section 18.5 hereof. Any
agreement that may be entered into by the Servicer and a Person that provides
for any delegation of the Servicer's duties hereunder shall be deemed to be
between the Servicer and such Person alone, and the Trustee and
Certificateholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect thereto.
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ARTICLE XIX
Events of Servicing Termination
Section 19.1 Events of Servicing Termination. If any one of the
following events (an "Event of Servicing Termination") shall occur and be
continuing:
(i) Any failure by the Servicer to deliver to the Trustee
the Servicer's Certificate for the related Collection Period, or any
failure by the Servicer (or so long as the Seller is the Servicer, the
Seller) to deliver to the Trustee, for distribution to
Certificateholders, any proceeds or payment required to be so delivered
under the terms of the Certificates and the Agreement (or, in the case of
a payment or deposit to be made not later than any Deposit Date, the
failure to make such payment or deposit on the related Distribution
Date), in each case that continues unremedied for a period of five
Business Days after (A) discovery by an officer of the Servicer (or so
long as the Seller is the Servicer, the Seller) or (B) written notice (1)
to the Servicer by the Trustee or (2) to the Trustee and the Servicer (or
so long as the Seller is the Servicer, the Seller) by the Holders of
Certificates evidencing not less than 25% of the Pool Balance; or
(ii) Failure on the part of the Servicer (or so long as the
Seller is the Servicer, the Seller) duly to observe or to perform in any
material respect any other covenants or agreements of the Servicer (or so
long as the Seller is the Servicer, the Seller) set forth in the
Certificates or in the Agreement, which failure shall (a) materially and
adversely affect the rights of the Trust or the Certificateholders
(which determination shall be made without regard to whether funds on
deposit in the Reserve Account are available to the Certificateholders)
and (b) continues unremedied for a period of 60 days after the date on
which written notice of such failure, requiring the same to be remedied,
shall have been given (1) to the Servicer (or so long as the Seller is
the Servicer, the Seller) by the Trustee or (2) to the Trustee and the
Servicer (or so long as the Seller is the Servicer, the Seller) by the
Holders of Certificates evidencing not less than 25% of the Pool
Balance; provided, however, that a failure on the part of the Servicer,
other than USAA Federal Savings Bank for so long as it is the Servicer,
to observe and comply with the provisions of Section 18.6 or to meet the
eligibility criteria set forth in Section 19.2 shall constitute an Event
of Servicing Termination without regard to (a) and (b) above; or
(iii) The entry of a decree or order by a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver, or liquidator for the Servicer in
any insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings, or for the winding up or liquidation
of their respective affairs, and the continuance of any such decree or
order unstayed and in effect for a period of 60 consecutive days; or
(iv) The consent by the Servicer to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities, or similar proceedings of or
relating to the Servicer or of or relating to substantially all of their
property; or the Servicer shall admit in writing its inability to pay its
debts generally as they become due, file a petition to take advantage of
any applicable insolvency or reorganization statute, make an assignment
for the benefit of its creditors, or voluntarily suspend payment of its
obligations;
then, and in each and every case and so long as an Event of Servicing
Termination shall not have been remedied, either the Trustee, or the
Holders of Certificates evidencing not less than 25% of the Pool Balance, by
notice given in writing to the Servicer (and to the Trustee if given by the
Certificateholders) may terminate all of the rights and obligations of the
Servicer under the Agreement. On or after the receipt by the Servicer of such
written notice, all authority and power of the Servicer under the Agreement,
whether with respect to the Certificates or the Receivables or otherwise, shall
pass to and be vested in the Trustee pursuant to this Section 19.1; and, without
limitation, the Trustee shall be hereby authorized and empowered to execute and
deliver, on behalf of the predecessor Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement of the
Receivable Files, or otherwise. The predecessor Servicer shall cooperate with
the successor Servicer and the Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer under the Agreement,
including the transfer to the successor Servicer for administration by it of all
cash amounts that shall at the time be held by the predecessor Servicer for
deposit, shall have been deposited by the Servicer in the Certificate Account,
or shall thereafter be received with respect to
42
a Receivable. All reasonable costs and expenses (including attorneys' fees and
disbursements) incurred in connection with transferring the Receivable Files to
the successor Servicer and amending the Agreement to reflect such succession as
Servicer pursuant to this Section 19.1 shall be paid by the predecessor Servicer
upon presentation of reasonable documentation of such costs and expenses. The
Trustee shall give written notice of any termination of the Servicer to the
Certificateholders and the Rating Agencies.
Section 19.2 Trustee to Act; Appointment of Successor. Upon the
Servicer's receipt of notice of termination pursuant to Section 19.1 the Trustee
shall, and upon the Servicer's resignation pursuant to Section 18.5 the Trustee
may, be the successor in all respects to the Servicer in its capacity as
Servicer under the Agreement, and, in such case, shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on the Servicer by the terms and provisions of the Agreement. As
compensation therefor, the Trustee shall be entitled to such compensation
(whether payable out of the Certificate Account or otherwise) as the Servicer
would have been entitled to under the Agreement if no such notice of termination
or resignation had been given. Notwithstanding the above, the Trustee may, if it
shall be unwilling so to act, or shall, if it shall be legally unable so to act,
appoint, or petition a court of competent jurisdiction to appoint, any
established financial institution, having a net worth of not less than
$100,000,000 as of the last day of the most recent fiscal quarter for such
institution and whose regular business shall include the servicing of automobile
receivables, as successor Servicer under the Agreement; provided, that the
appointment of any such succes sor Servicer will not result in the withdrawal or
reduction of the outstanding ratings assigned to the Certificates by the Rating
Agencies. In connection with such appointment, the Trustee may make such
arrangements for the compensation of such successor Servicer out of payments on
Receivables as it and such successor Servicer shall agree; provided, however,
that no such compensation shall be in excess of that permitted the Servicer
under the Agreement. The Trustee and such successor Servicer shall take such
action, consistent with the Agreement, as shall be necessary to effectuate any
such succession. Unless the Trustee shall be prohibited by law from so acting,
the Trustee shall not be relieved of its duties as successor Servicer under this
Section 19.2 until the newly appointed successor Servicer shall have assumed the
re sponsibilities and obligations of the Servicer under the Agreement.
Section 19.3 Notification to Certificateholders. Upon delivery of
written notice by the Trustee to the Servicer or receipt by the Trustee of
written notice from Holders of Certificates evidencing not less than 25% of the
Pool Balance of an Event of Servicing Termination or upon any Servicer
termination, or appointment of a successor Servicer pursuant to this Article
XIX, the Trustee shall give prompt written notice thereof to Certificateholders
at their respective addresses of record, to the Seller and to the Rating
Agencies.
Section 19.4 Waiver of Past Defaults. The Holders of Certificates
evidencing not less than 51% of the Pool Balance, may, on behalf of all Holders
of Certificates, waive any default by the Servicer in the performance of its
obligations hereunder and its consequences, except a default in the failure to
make any required deposits to or payments from the Certificate Account in
accordance with this Agreement. Upon any such waiver of a past default, such
default shall cease to exist, and any Event of Servicing Termination arising
therefrom shall be deemed to have been remedied for every purpose of this
Agreement. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereon except to the extent expressly so waived.
The Servicer shall give prompt written notice of any waiver to the Rating
Agencies.
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ARTICLE XX
The Trustee
Section 20.1 No Power to Engage in Business or to Vary
Investments. Notwithstanding any provision or agreement to the contrary in this
Agreement or in any other agreement, the Trustee, acting on behalf of the Trust
(but not individually), shall not have any power to engage in any business,
commercial or other activity for profit, and the Trustee and the Servicer shall
not have any power to vary the Trust estate, whether consisting of a Receivable,
a Permitted Investment or any other amount (other than cash payments received
with respect to Receivables) in any account maintained for the benefit of the
Trust or the Certificateholders or Certificate Owners, by disposition of said
property, investment or amount and the reinvestment of the proceeds realized or
by any other action calculated to take advantage of any variation or change in
the market or in market conditions, for the purpose of improving the investment
or return of the Certificateholders or Certificate Owners.
Section 20.2 Duties of Trustee. The Trustee, both prior to and
after the occurrence of an Event of Servicing Termination, shall undertake to
perform such duties and only such duties as are specifically set forth in the
Agreement. If an Event of Servicing Termination known to the Trustee shall have
occurred and shall not have been cured, the Trustee shall exercise such of the
rights and powers vested in it by the Agreement, and shall use the same degree
of care and skill in their exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs; provided,
however, that if the Trustee shall assume the duties of the Servicer pursuant to
Section 19.2, the Trustee in performing such duties shall use the degree of
skill and attention customarily exercised by a servicer with respect to
automobile and light-duty truck receivables that it services for itself.
The Trustee, upon receipt of any resolutions, certificates,
statements, opinions, reports, documents, orders, or other instruments furnished
to the Trustee that shall be specifically required to be furnished pursuant to
any provision of the Agreement, shall examine them to determine whether they
conform to the requirements of the Agreement; provided, however, that the
Trustee shall not be responsible for the accuracy or content of any such
resolution, certificate, statement, opinion, report, document, order or other
instrument furnished by the Servicer to the Trustee pursuant to this Agreement.
No provision of the Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own bad faith or willful misfeasance; provided, however, that:
(i) Prior to the occurrence of an Event of Servicing
Termination, and after the curing of all such Events of Servicing
Termination that may have occurred, the duties and obligations of the
Trustee shall be determined solely by the express provisions of the
Agreement, the Trustee shall not be liable except for the performance of
such duties and obligations as shall be specifically set forth in the
Agreement, no implied covenants or obligations shall be read into the
Agreement against the Trustee, the permissible right of the Trustee to do
things enumerated in the Agreement shall not be construed as a duty and,
in the absence of bad faith on the part of the Trustee, or manifest
error, the Trustee may conclusively rely upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of
the Agreement as to the truth of the statements made and the correctness
of the opinions expressed therein;
(ii) The Trustee shall not be personally liable for an error
of judgment made in good faith by an Authorized Officer of the Trustee,
unless it shall be proved that the Trustee shall have been negligent in
ascertaining the pertinent facts; and
(iii) The Trustee shall not be personally liable with respect
to any action taken, suffered, or omitted to be taken in good faith in
accordance with the Agreement or at the direction of the Holders of
Certificates evidencing not less than 25% of the Pool Balance relating to
the time, method, and place of conducting any proceeding or any remedy
available to the Trustee, or exercising any trust or power conferred upon
the Trustee, under the Agreement.
The Trustee shall not be required to expend, advance or risk its
own funds or otherwise incur financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or powers, if
there shall be reasonable ground for believing that the repayment of such funds
or adequate indemnity against such risk or liability shall not be reasonably
assured to it, and none of the provisions contained in the Agreement shall in
any event require the
44
Trustee to perform, or be responsible for the manner of performance of, any of
the obligations of the Servicer (including its obligations as custodian) under
the Agreement except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges of,
the Servicer in accordance with the terms of the Agreement.
The Trustee shall not be charged with knowledge of an Event of
Servicing Termination until such time as an Authorized Officer shall have actual
knowledge or have received written notice thereof.
Except for actions expressly authorized by the Agreement or, based
upon an Opinion of Counsel, in the best interests of Certificateholders, the
Trustee shall take no action reasonably likely to impair the security interests
created or existing under any Receivable or to impair the value of any
Receivable.
All information obtained by the Trustee regarding the Obligors and
the Receivables, whether upon the exercise of its rights under the Agreement or
otherwise, shall be maintained by the Trustee in confidence and shall not be
disclosed to any other Person, other than internal counsel, unless such
disclosure is pursuant to the terms of the Agreement or required by any
applicable law or regulation.
In the event that the Paying Agent or the Transfer Agent and
Certificate Registrar shall fail to perform any obligation, duty or agreement in
the manner or on the day required to be performed by the Paying Agent or the
Transfer Agent and Certificate Registrar, as the case may be, under the
Agreement, the Trustee shall be obligated promptly upon an Authorized Officer
obtaining knowledge thereof to perform such obligation, duty or agreement in the
manner so required to the extent the information necessary to such performance
is reasonably available to the Trustee after the Trustee has made a reasonable
effort to obtain such information. The Trustee shall not be liable for the acts
or omissions of any Paying Agent, any Authenticating Agent or the Transfer Agent
and Certificate Registrar appointed hereunder with due care by the Trustee
hereunder.
Section 20.3 Trustee's Assignment of Repurchased Receivables and
Trustee's Certificate. With re spect to any Receivable repurchased by the Seller
pursuant to Section 12.2 or purchased by the Servicer pursuant to Section 13.7
or 21.2, the Trustee shall (i) assign, without recourse, representation, or
warranty, to the Seller or the Servicer, as the case may be, all the Trust's
right, title, and interest in and to such Receivable and the other property
conveyed to the Trust pursuant to Section 2.1 with respect to such Receivable,
and all security and documents relating thereto, such assignment being an
assignment outright and not for security and (ii) as soon as practicable after a
Receivable shall have been assigned to the Seller or the Servicer, as the case
may be, execute a Trustee's Certificate, including the date of execution of such
Trustee's Certificate and the date of the Agreement, and accompanied by a copy
of the Servicer's Certificate specified for the related Collection Period. If,
in any enforcement suit or legal proceeding, it shall be held that the Servicer
may not enforce a Receivable on the ground that it shall not be a real party in
interest or a holder entitled to enforce the Receivable, the Trustee shall, at
the Servicer's expense, take such steps as the Trustee or the Servicer deems
necessary to enforce the Receivable, including bringing suit in the Trustee's
name or the names of the Trust or the Certificateholders; provided, that nothing
in this Section 20.3 shall require the Trustee to qualify to do business in a
state in which it is not so qualified on the date of this Agreement.
Section 20.4 Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 20.2:
(i) The Trustee may request, and may rely and shall be
protected in acting or refraining from acting upon, any resolution,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond, or
other paper or document (including the annual auditor's report and the
letter of independent certified public accountants described in Section
13.11, the Servicer's Certificate described in Section 13.9, and the
annual compliance statement described in Section 13.10) believed by it
to be genuine and to have been signed or presented by the proper party or
parties.
(ii) The Trustee may consult with counsel and any advice or
Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
under the Agreement in good faith and in accordance with such advice or
Opinion of Counsel, which counsel has been selected by the Trustee with
due care. A copy of any such Opinion of Counsel shall be provided to the
Seller and the Servicer.
(iii) The Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by the Agreement, or to
institute, conduct or defend any litigation under the
45
Agreement or in relation to the Agreement, at the request, order or
direction of any of the Certificateholders pursuant to the provisions of
the Agreement, unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses, and
liabilities that may be incurred therein or thereby; provided, however,
that the Trustee shall have the right to decline to follow any such
request, order or direction if the Trustee, in accordance with an Opinion
of Counsel determines that the action or proceeding may not lawfully be
taken or if the Trustee in good faith determines that the action or
proceeding so directed would involve it in personal liability or be
unjustly prejudicial to the non-assenting Certificateholders; nothing
contained in the Agreement, however, shall relieve the Trustee of the
obligations, upon the occurrence of an Event of Servicing Termination
(that shall not have been cured), to exercise such of the rights and
powers vested in it by the Agreement, and to use the same degree of care
and skill in their exercise as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(iv) The Trustee shall not be personally liable for any
action taken, suffered or omitted by it in good faith and believed by it
to be authorized or within the discretion or rights or powers conferred
upon it by the Agreement.
(v) Prior to the occurrence of an Event of Servicing
Termination and after the curing of all Events of Servicing Termination
that may have occurred, the Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond, or other paper or document, unless
requested in writing to do so by Holders of Certificates evidencing not
less than 25% of the Pool Balance; provided, however, that if the payment
within a reasonable time to the Trustee of the costs, expenses, or
liabilities likely to be incurred by it in the making of such
investigation shall be, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of the
Agreement, the Trustee may require reasonable indemnity against such
cost, expense, or liability or payment of such expenses as a condition
precedent to so proceeding. The reasonable expense of every such
examination shall be paid by the Servicer or, if paid by the Trustee,
shall be reimbursed by the Servicer upon demand. Nothing in this clause
(v) shall affect the obligation of the Servicer to observe any applicable
law prohibiting disclosure of information regarding the Obligors.
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties under the Agreement either directly or by
or through agents or attorneys or a custodian, which agents or attorneys
shall have any or all of the rights, powers, duties and obligations of
the Trustee conferred on them by such appointment.
(viii) In the event that the Trustee is also acting as
Paying Agent, Collateral Agent, Authenticating Agent or Transfer Agent and
Registrar hereunder, the rights and protections afforded to the Trustee pursuant
to this Article 20 shall also be afforded to each Paying Agent, Collateral
Agent, Authenticating Agent or Transfer Agent and Registrar.
Section 20.5 Trustee Not Liable for Certificates or Receivables.
The recitals contained in the Agreement and in the Certificates shall be taken
as the statements of the Seller or the Servicer, as the case may be, and the
Trustee assumes no responsibility for the correctness thereof. The Trustee shall
make no representations as to the validity or sufficiency of the Agreement or of
the Certificates (other than execution by the Trustee on behalf of the Trust of,
or the authentication on, the Certificates), or of any Receivable or related
document. The Trustee shall have no obligation to perform any of the duties of
the Seller or Servicer unless explicitly set forth in the Agreement. The Trustee
shall at no time have any responsibility or liability for or with respect to the
legality, validity, and enforceability of any security interest in any Financed
Vehicle or any Receivable, or the perfection and priority of such a security
interest or the maintenance of any such perfection and priority; the filing of
any financing or continuation statement in any public office; the preparation or
filing of any report or statement with the Securities and Exchange Commission;
the efficacy of the Trust or its ability to generate the payments to be
distributed to Certificateholders under the Agreement; the existence, condition,
location, and ownership of any Financed Vehicle; the existence and
enforceability of any comprehensive and collision insurance or credit life or
credit disability insurance or Force Placed Insurance; the existence and
contents of any Receivable or any computer or other record thereof; the validity
of the assignment of any Receivable to the Trust or of any intervening
assignment; the completeness of any Receivable; any claim or default asserted
against a Receivable; the performance or enforcement of any Receivable; the
compliance by the Seller or the Servicer with any warranty or representation
made under the Agreement or in any related document and the accuracy of any such
warranty or representation (except after the Trustee's receipt of
46
notice or other discovery of any noncompliance therewith or any breach thereof
or as otherwise provided herein); the satisfaction of any condition relating to
the Receivables; any investment of funds by the Servicer or any loss resulting
therefrom (it being understood that the Trustee shall remain responsible for any
Trust property that it may hold); the acts or omissions of the Seller, Servicer
(including in its capacity as custodian hereunder), or any Obligor; any action
of the Servicer taken in the name of the Trustee; or any action by the Trustee
taken at the instruction of the Servicer; provided, however, that the foregoing
shall not relieve the Trustee of its obligation to perform its duties under the
Agreement. Except with respect to a claim based on the failure of the Trustee to
perform its duties under the Agreement or based on the Trustee's willful
misconduct, negligence, or bad faith, or based on the Trustee's breach of a
representation and warranty specified in Section 20.14, no recourse shall be had
for any claim or defense based on any provision of the Agreement, the
Certificates, or any Receivable or assignment thereof against the Trustee in its
individual capacity. The Trustee shall not have any personal obligation,
liability, or duty whatsoever to any Certificateholder or any other Person with
respect to any such claim or defense, and any such claim or defense shall be
asserted solely against the Trust or any indemnitor who shall furnish indemnity
as provided in the Agreement. The Trustee shall not be accountable for the use
or application by the Seller of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Servicer in respect of the Receivables.
Section 20.6 Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
and may deal with the Seller and the Servicer in banking transactions with the
same rights as it would have if it were not Trustee.
Section 20.7 Trustee's Fees and Expenses. By execution and
delivery of the Agreement, the Servicer shall covenant and agree to pay to the
Trustee, and the Trustee shall be entitled to, an annual fee agreed upon in
writing between the Servicer and the Trustee payable in advance on the Closing
Date and on each one year anniversary thereof (which shall not be limited by any
provision of law in regard to the compensation of a trustee of an express trust)
for all services rendered by it in the execution of the trusts created by the
Agreement and in the exercise and performance of any of the powers and duties
under the Agreement of the Trustee, and the Servicer shall pay or reimburse the
Trustee upon its request for all reasonable expenses, disbursements, and
advances (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ)
incurred or made by the Trustee under the Agreement (including expenses,
disbursements, and advances incurred in defense of any action brought against it
in connection with the Agreement) except any such expense, disbursement, or
advance as may arise from its negligence, willful misfeasance, or bad faith or
that is the responsibility of Certificateholders under the Agreement. To the
extent that the Trustee has not been paid for any of the foregoing items by the
Servicer, the Trustee shall be entitled to be paid such amounts from amounts
which are payable to the Servicer pursuant to Section 14.5(b)(i) before payment
to the Servicer of any portion thereof; provided, however, that in the event
that the Servicer shall have elected to waive its rights to payment of the
Servicing Fee or the Servicing Fee is deferred, the Trustee shall nonetheless be
entitled to receive such amounts from payments which would ordinarily be applied
to the payment of the Servicing Fee, in the same order of priority as though
such Servicing Fee were payable. The Trustee shall be entitled to reimbursement
by the Servicer for any out-of-pocket costs or expenses (including, without
limitation reasonable fees and disbursements of one counsel to the Trustee)
incurred in connection with the review, negotiation, preparation, execution and
delivery of this Agreement or in connection with the issuance of any Certificate
on the Closing Date. The Servicer's obligation to pay such compensation and
expenses shall survive the termination of such Servicer to the extent that such
obligation is a result of services rendered prior to such Servicer's
termination. Additionally, the Servicer, pursuant to Section 20.8, shall
indemnify the Trustee with respect to certain matters, and Certificateholders,
pursuant to Section 22.3, shall upon the circumstances therein set forth,
indemnify the Trustee under certain circumstances. The provisions of this
Section 20.7 shall survive the termination of this Agreement and the resignation
or removal of the Trustee.
To the extent that the Trustee has not been paid by the Servicer
for any of the items described in the preceding paragraph for which the Servicer
is obligated, the Trustee shall be entitled to be paid for such items from
amounts which would otherwise be distributable to the Seller under Section 14.5
of this Agreement. The covenants and agreements contained in this Section 20.7
shall survive the termination of this Agreement and shall be binding, as
applicable, on the Servicer, and any successor Servicer and the Seller.
Section 20.8 Indemnity. The Trustee, the Agents and their
officers, directors, agents and employees (each of the foregoing, an
"Indemnified Person") shall be indemnified by the Servicer and the Seller and
held harmless against any loss, liability, or expense (including reasonable
attorneys' fees and expenses and expenses of litigation) arising out of or
incurred in connection with the acceptance or performance of the trusts and
duties contained in the Agreement to the extent that (i) such loss, liability,
or expense shall not have been incurred by reason of the Indemnified Person's
willful misfeasance, bad faith, or negligence, and (ii) such loss, liability, or
expense shall not have been incurred by reason of the
47
Trustee's breach of its representations and warranties pursuant to Section
20.14; provided, however, that the obligations of the Servicer in this Section
20.8 shall survive such Servicer's termination with respect to the performance
of such Servicer prior to such Servicer's termination and provided, further,
that if the Servicer fails to indemnify the Indemnified Person and their
officers, directors, agents and employees pursuant to this Section 20.8, then
such indemnity shall be provided by the Trust, but any amounts so payable to the
Indemnified Person by the Trust pursuant to this Section 20.8 shall be payable
on a Distribution Date only after all payments required to be made on such date
to the Certificateholders have been made, and, with respect to a successor
Servicer, if any, the Servicing Fee has been paid. The provisions of this
Section 20.8 shall survive the termination of this Agreement and the resignation
or removal of the Trustee.
Section 20.9 Eligibility Requirements for Trustee. The Trustee
under the Agreement shall at all times be a state banking corporation or
national banking association organized and doing business under the laws of such
state or the United States of America; authorized under such laws to exercise
corporate trust powers; and having a combined capital and surplus of at least
$100,000,000 as of the last day of the most recent fiscal quarter for such
institution and subject to supervision or examination by federal or state
authorities. If such state banking corporation or national banking association
shall publish reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purpose of this Section 20.9, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. The Trustee shall at all
times be rated not lower than BBB- and Baa3 by Xxxxx'x or such other ratings as
are acceptable to the Rating Agencies. In case at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section 20.9, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 20.10.
Section 20.10 Resignation or Removal of Trustee. The Trustee may
at any time resign and be discharged from the trust hereby created by giving
written notice thereof to the Servicer. Upon giving such notice of resignation,
the Trustee shall promptly appoint a successor Trustee by written instrument
which instrument shall be deliv ered to the successor Trustee. If no successor
Trustee shall have been so appointed and have accepted appointment within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee. The Servicer shall provide notice to the Rating Agencies of any
resignation of the Trustee.
If at any time the Trustee shall cease to be eligible in
accordance with the provisions of Section 20.9 or shall be legally unable to
act, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee
or of its property shall be appointed, or any public officer shall take charge
or control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation, or liquidation, then the Trustee shall promptly
resign. The Trustee shall promptly appoint a successor Trustee by written
instrument which instrument shall be delivered to the successor Trustee. If the
Trustee fails to resign, the Certificateholders shall remove the Trustee and
appoint a successor Trustee by written instrument in duplicate, one copy of
which instrument shall be delivered to the Trustee so removed and one copy to
the successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 20.10 shall
not become effective until acceptance of appointment by the successor Trustee
pursuant to Section 20.11.
Section 20.11 Successor Trustee. Any successor Trustee appointed
pursuant to Section 20.10 shall execute, acknowledge, and deliver to the
Servicer and to its predecessor Trustee an instrument accepting such
appointment under the Agreement, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor Trustee, without
any further act, deed or conveyance, shall become fully vested with all the
rights, powers, duties, and obligations of its predecessor under the Agreement
with like effect as if originally named as Trustee. The predecessor Trustee
shall deliver to the successor Trustee all documents and statements held by it
under the Agreement, and the Servicer and the predecessor Trustee shall execute
and deliver such instruments and do such other things as may reasonably be
required for fully and certainly vesting and confirming in the successor Trustee
all such rights, powers, duties, and obligations.
No successor Trustee shall accept appointment as provided in this
Section 20.11 unless at the time of such acceptance such successor Trustee shall
be eligible pursuant to Section 20.9.
Upon acceptance of appointment by a successor Trustee pursuant to
this Section 20.11, the Servicer shall mail notice of the successor of such
Trustee under the Agreement to all Certificateholders at their respective
addresses
48
of record, and to the Rating Agencies. If the Servicer shall fail to mail such
notice within 10 days after acceptance of appointment by successor Trustee, the
successor Trustee shall cause such notice to be mailed at the expense of the
Servicer.
Section 20.12 Merger or Consolidation of Trustee. Any corporation
or other entity (i) into which the Trustee may be merged or consolidated, (ii)
which may result from any merger, conversion, or consolidation to which the
Trustee shall be a party, or (iii) which may succeed to all or substantially all
of the corporate trust business of the Trustee, which corporation or other
entity executes an agreement of assumption to perform every obligation of the
Trustee under the Agreement, shall be the successor of the Trustee hereunder,
provided such corporation or other entity shall be eligible pursuant to Section
20.9, without the execution or filing of any instrument or any further act on
the part of any of the parties hereto. The Trustee shall provide prompt written
notice of any merger or consolidation to the Seller, the Servicer and the Rating
Agencies.
Section 20.13 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of the Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or any Financed Vehicle may at the time be located, the Servicer
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
to act as co-trustee, jointly with the Trustee, or separate trustee or separate
trustees, of all or any part of the Trust, and to vest in such Person, in such
capacity and for the benefit of the Certificateholders, such title to the Trust,
or any part thereof, and, subject to the other provisions of this Section 20.13,
such powers, duties, obligations, rights, and trusts as the Servicer and the
Trustee may consider necessary or desirable. The Servicer will pay all
reasonable fees and expenses of any co-trustee or separate trustee or separate
trustees. The appointment of any separate trustee or co-trustee shall not
absolve the Trustee of its obligations under this Agreement. If the Servicer
shall not have joined in such appointment within 15 days after the receipt by it
of a request so to do, or in the case an Event of Servicing Termination shall
have occurred and be continuing, the Trustee alone shall have the power to make
such appointment. No co-trustee or separate trustee or separate trustees under
the Agreement shall be required to meet the terms of eligibility as a successor
trustee pursuant to Section 20.9 and no notice to Certificateholders of the
appointment of any co-trustee or separate trustee or separate trustees shall be
required pursuant to Section 20.11.
Each separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) All rights, powers, duties, and obligations conferred
or imposed upon the Trustee shall be conferred upon and exercised or
performed by the Trustee and such separate trustee or co-trustee jointly
(it being understood that such separate trustee or co-trustee is not
authorized to act separately without the Trustee joining in such act),
except to the extent that under any law of any jurisdiction in which any
particular act or acts are to be performed (whether as Trustee under the
Agreement or as successor to the Servicer under the Agreement), the
Trustee shall be incompetent or unqualified to perform such act or acts,
in which event such rights, powers, duties, and obligations (including
the holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, but solely at the direction of the Trustee.
(ii) No trustee under the Agreement shall be personally
liable by reason of any act or omission of any other trustee under the
Agreement.
(iii) The Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to the Agreement and the conditions
of this Article XX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or properties specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of the Agreement,
specifically including every provision of the Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Each
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.
49
Any separate trustee or co-trustee may at any time appoint the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of the
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor Trustee.
Section 20.14 Representations and Warranties of Trustee. The
Trustee makes the following representations and warranties on which the Seller,
the Servicer, and the Certificateholders may rely:
(i) Organization and Good Standing. The Trustee is a
[national banking association duly organized, validly existing, and in
good standing under the laws of the United States].
(ii) Power and Authority. The Trustee has full power,
authority and legal right to execute, deliver, and perform the Agreement,
and has taken all necessary action to authorize the execution, delivery,
and performance by it of the Agreement.
(iii) No Violation. The execution and delivery of the
Agreement and the performance by the Trustee of its obligations under the
Agreement do not (a) violate any provision of any law governing the trust
powers of the Trustee or, to the best of the Trustee's knowledge, any
order, writ, judgment, or decree of any court, arbitrator, or
governmental authority applicable to the Trustee or any of its assets,
(b) violate any provision of the articles of association or by laws of
the Trustee or (c) conflict with, result in any breach of any of the
terms or provisions of, or constitute (with or without notice or lapse of
time) a default under, any indenture, agreement or other instrument to
which the Trustee is a party or by which it is bound to the extent such
conflict, breach or default would impair the Trustee's obligation or
ability to perform under this Agreement.
(iv) No Governmental Authorization Required. The
execution, delivery and performance by the Trustee of the Agreement do
not require the authorization, consent, or approval of, the giving of
notice to, the filing or registration with, or the taking of any other
action in respect of, any governmental authority or agency regulating the
corporate trust activities of the Trustee.
(v) Due Authorization, Execution and Delivery. The Agreement
has been duly authorized, executed and delivered by the Trustee and shall
constitute the legal, valid, and bind ing agreement of the Trustee,
enforceable in accordance with its terms except that (1) such
enforcement may be subject to bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereafter in effect relating to
creditors' rights generally, and (2) the remedy of specific performance
and injunctive and other forms of equitable relief may be subject to
certain equitable defenses and to the discretion of the court before
which any proceeding thereof may be brought.
Section 20.15 Tax Returns. The Servicer shall prepare or shall
cause to be prepared any tax returns required to be filed by the Trust and
furnish to Certificateholders any information required by the Code or the
regulations thereunder and shall remit such returns to the Trustee for signature
at least five days before such returns are due to be filed. The Trustee, upon
request, will furnish the Servicer with all such information known to the
Trustee as may be reasonably required in connection with the preparation of all
tax returns of the Trust, and shall, upon request, execute such returns.
Section 20.16 Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under the Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name or in its capacity as Trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Certificateholders in respect of which such
judgment has been recovered.
Section 20.17 Suits for Enforcement. In case an Event of Servicing
Termination or other default by the Servicer or the Seller hereunder shall occur
and be continuing, the Trustee, in its discretion, may proceed to protect and
enforce its rights and the rights of the Certificateholders under the Agreement
by a suit, action or proceeding in equity or at law or otherwise whether for the
specific performance of any covenant or agreement contained in the Agreement or
in aid of the execution of any power granted in the Agreement or the enforcement
of any other legal, equitable or other reme-
50
dy, as the Trustee, being advised by counsel, shall deem most effectual to
protect and enforce any of the rights of the Trustee or the Certificateholders.
Section 20.18 Maintenance of Office or Agency. The Trustee shall
maintain at its expense in New York, an office or offices or agency or agencies
where notices and demands to or upon the Trustee in respect of the Certificates
and this Agreement may be served. The Trustee initially designates the Corporate
Trust Office as its office for such purposes. The Trustee will give prompt
written notice to the Servicer, the Paying Agent, the Transfer Agent and
Certificate Registrar, and to Certificateholders of any change in the location
of such office or agency.
ARTICLE XXI
Termination
Section 21.1 Termination of the Trust. The Trust, and the
respective obligations and responsibilities of the Seller, the Servicer and the
Trustee shall terminate with respect to the Certificateholders upon the first to
occur of (i) the Distribution Date next succeeding the month which is six months
after the maturity or other liquidation of the last Receivable and the
disposition of any amounts received upon liquidation of any property remaining
in the Trust and (ii) the payment to Certificateholders of all amounts required
to be paid to them pursuant to the Agreement; provided, however, that in no
event shall the Trust created by the Agreement continue beyond the expiration of
21 years from the death of the last survivor of the descendants of Xxxxxx
Xxxxxxx Xxxxxx Xxxx, the former President of the United States, living on the
date of the Agreement. The Servicer shall promptly (but in any event not later
than the first day of the month of the specified Distribution Date) notify the
Trustee, the Paying Agent, the Transfer Agent and Certificate Registrar, and
the Rating Agencies in writing of any prospective termination pursuant to this
Section 21.1.
Notice of any termination, specifying the Distribution Date upon
which the Certificateholders may surrender their Certificates to the Transfer
Agent and Certificate Registrar for payment of the final distribution and
cancellation, shall be given promptly by the Trustee by letter to
Certificateholders mailed not earlier than the 15th day and not later than the
25th day of the month next preceding the specified Distribution Date stating the
amount of any such final payment, and that the Record Date otherwise applicable
to such Distribution Date is not applicable, payments being made only upon
presentation and surrender of the Certificates at the office of the Transfer
Agent and Certificate Registrar therein specified. The Trustee shall give such
notice to the Transfer Agent and Certificate Registrar, the Paying Agent and the
Rating Agencies at the time such notice is given to Certificateholders. Upon
presentation and surrender of the Certificates, the Paying Agent shall cause to
be distributed to Certificateholders amounts distributable on such Distribution
Date pursuant to Section 14.5.
In the event that all of the Certificateholders shall not
surrender their Certificates for cancellation within six months after the date
specified in the above-mentioned written notice, the Trustee shall give a second
written notice to the remaining Certificateholders upon receipt of the
appropriate records from the Transfer Agent and Certificate Registrar to
surrender their Certificates for cancellation and receive the final distribution
with respect thereto. If within one year after the second notice all the
Certificates shall not have been surrendered for cancellation, the Trustee may
take appropriate steps, or may appoint an agent to take appropriate steps, to
contact the remaining Certificateholders concerning surrender of their
Certificates, and the cost thereof shall be paid out of the funds and other
assets that shall remain subject to the Agreement.
All Certificates surrendered for payment of the final distribution
with respect to such Certificates and cancellation shall be cancelled by the
Transfer Agent and Certificate Registrar and shall be disposed of in a manner
satisfactory to the Trustee and the Seller.
Section 21.2 Optional Purchase of All Receivables . As of the last
Business Day in any Collection Period as of which the Pool Balance (expressed as
a percentage) of initial Pool Balance shall be equal to or less than the
Optional Purchase Percentage, the Servicer shall have the option to purchase the
corpus of the Trust. To exercise such option, the Servicer shall notify the
Trustee, the Paying Agent, and the Transfer Agent and Certificate Registrar and
in writing, no later than the fifth calendar day of the month in which such
purchase is to be effected of its intention to effect such purchase. On the
Deposit Date in such month, the Servicer shall pay the aggregate Repurchase
Amount for the Receivables (including Defaulted Receivables) and shall succeed
to all interests in and to the Trust property. The payment shall be made in the
manner specified in Section 14.4, and shall be distributed pursuant to Section
14.5. The Trustee shall not permit the purchase of the corpus of the Trust
pursuant to this Section unless either (i) the Servicer's long term unsecured
51
debt is rated at the time of such purchase at least BBB and Baa3 by the Rating
Agencies or (ii) the Servicer provides to the Trustee an Opinion of Counsel in
form reasonably satisfactory to the Trustee and in form and substance
satisfactory to the Rating Agencies to the effect that such purchase will not
constitute a fraudulent transfer of assets of the Servicer under applicable
state and federal law.
52
ARTICLE XXII
Miscellaneous Provisions
Section 22.1 Amendment. The Agreement may be amended by the
Seller, the Servicer and the Trustee, without prior notice to or the consent of
any of the Certificateholders, (i) to cure any ambiguity, to correct or
supplement any provision in the Agreement which may be inconsistent with any
other provision herein or therein, to evidence a succession to the Servicer or
the Seller pursuant to the Agreement or to add any other provisions with respect
to matters or questions arising under the Agreement that shall not be
inconsistent with the provisions of the Agreement; provided, however, that such
action shall not, as evidenced by an Officer's Certificate and/or an Opinion of
Counsel delivered to the Trustee, adversely and materially affect the interests
of the Trust or any of the Certificateholders and provided, further, that the
Servicer shall deliver written notice of such changes to each Rating Agency
prior to the execution of any such amendment, or (ii) to effect a transfer or
assignment in compliance with Section 22.7(i) of the Agreement.
The Agreement may also be amended from time to time by the Seller,
the Servicer and the Trustee, with the consent of the Holders of Certificates
evidencing not less than 51% of the Pool Balance, for the purpose of adding any
provision to or changing in any manner or eliminating any of the provisions of
the Agreement, or of modifying in any manner the rights of the
Certificateholders (including effecting a transfer or assignment in compliance
with Section 22.7(ii) of the Agreement); provided, however, that no such
amendment, except with the consent of the Holders of all Certificates then
outstanding, shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments of Receivables, or
distributions that shall be required to be made on any Certificate, (b) reduce
the aforesaid percentage of the Pool Balance required to consent to any such
amendment or (c) reduce in any way the shortfalls for which the Trustee may draw
under the Reserve Account pursuant to Article XIV hereof or change the formula
for determining the Specified Reserve Account Balance.
Promptly after the execution of any amendment or consent referred
to in this Section 22.1, the Trustee shall furnish a copy of such amendment or
consent to each Certificateholder and to the Rating Agencies.
It shall not be necessary for the consent of Certificateholders
pursuant to this Section 22.1 to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
Prior to the execution of any amendment to the Agreement, the
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by the
Agreement. The Trustee shall not be obligated to enter into any such amendment
which affects the Trustee's own rights, duties or immunities under the
Agreement.
Prior to the execution of any amendment to this Agreement, other
than an amendment permitted pursuant to clause (i) of the first paragraph of
this Section 22.1, the Servicer shall have received written notice from each of
the Rating Agencies that the rating of the Certificates will not be reduced or
withdrawn as a result of such amendment.
Section 22.2 Protection of Title to Trust.
(a) The Servicer shall execute and file such financing
statements and cause to be executed and filed such continuation statements, all
in such manner and in such places as may be required by law fully to preserve,
maintain, and protect the interests of the Trustee under the Agreement in the
Receivables and in the proceeds thereof. The Servicer shall deliver (or cause to
be delivered) to the Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
(b) Neither the Seller nor the Servicer shall change its
name, identity, or corporate structure in any manner that would, could, or might
make any financing statement or continuation statement filed by the Servicer in
accordance with paragraph (a) above seriously misleading within the meaning of
'SS' 9-402(7) of the UCC, unless it shall have given the Trustee at least 30
days prior written notice thereof.
(c) The Seller and the Servicer shall give the Trustee at
least 60 days prior written notice of any relocation of its principal executive
office if, as a result of such relocation, the applicable provisions of the UCC
would require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing
53
statement. The Servicer shall at all times maintain each office from which it
shall service Receivables, and its principal executive office, within the United
States of America.
(d) The Servicer shall maintain accounts and records as to
each Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including payments
and recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Certificate
Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so
that, from and after the time of sale under the Agreement of the Receivables to
the Trustee, the Servicer's master computer records (including archives) that
shall refer to a Receivable indicate clearly, by numerical code or otherwise,
that such Receivable is owned by the Trust. Indication of the Trust's ownership
of a Receivable shall be deleted from or modified on the Servicer's computer
systems when, and only when, the Receivable shall have been paid in full,
repurchased, purchased or assigned pursuant hereto.
(f) If at any time the Seller or the Servicer shall propose
to sell, grant a security interest in, or otherwise transfer any interest in a
new or used automobile or light-duty truck to any prospective purchaser,
creditor, or other transferee, the Seller or the Servicer, as the case may be,
shall give to such prospective purchaser, creditor, or other transferee computer
tapes, records, or print-outs (including any restored from archives) that, if
they shall refer in any manner whatsoever to any Receivable, shall indicate
clearly that such Receivable has been sold and is owned by the Trust.
(g) The Servicer shall permit the Trustee and its agents
upon reasonable notice at any time during normal business hours which does not
unreasonably interfere with the Servicer's normal operations to inspect, audit,
and make copies of and abstracts from the Servicer's records regarding the
Receivables.
(h) Upon request, the Servicer shall furnish to the Trustee,
within five Business Days of any request therefor, a list of all Receivables by
contract number and name of Obligor then held as part of the Trust, together
with a reconciliation of such list to the Schedule of Receivables attached as
Schedule A to the Agreement and to each of the Servicer Certificates indicating
removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Trustee:
(1) upon the execution and delivery of the Agreement, an Opinion
of Counsel either (a) stating that, in the opinion of such counsel, all
financing statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the Trust in
the Receivables, and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (b) stating that, in the
opinion of such counsel, no such action shall be necessary to preserve and
protect such interest; and
(2) on March 31 of each year, commencing with March 31, 1995, an
Opinion of Counsel, dated as of such date, either (a) stating that, in the
opinion of such counsel, all financing statements and continuation statements
have been executed and filed that are necessary fully to preserve and protect
the interest of the Trustee in the Receivables, and reciting the details of such
filings or referring to prior Opinions of Counsel in which such details are
given, or (b) stating that, in the opinion of such counsel, no such action shall
be necessary to preserve and protect such interest.
(j) The Servicer shall, to the extent required by applicable
law, cause the Certificates to be registered with the Securities and Exchange
Commission pursuant to Section 12(b) or Section 12(g) of the Securities Exchange
Act of 1934 within the time periods specified in such sections.
(k) For the purpose of facilitating the execution of the
Agreement and for other purposes, the Agreement may be executed simultaneously
in any number of counterparts, each of which counterparts shall be deemed to be
an original, and all of which counterparts shall constitute but one and the same
instrument.
Section 22.3 Limitation on Rights of Certificateholders. The death
or incapacity of any Certificateholder shall not operate to terminate the
Agreement or the Trust, nor entitle the Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations, and liabilities of the parties to
the Agreement or any of them.
54
No Certificateholder shall have any right to vote (except as
provided in Section 19.1, Section 19.4, Section 22.1 and this Section 22.3) or
in any manner otherwise control the operation and management of the Trust, or
the obligations of the parties to the Agreement, nor shall anything set forth in
the Agreement or contained in the terms of the Certificates, be construed so as
to constitute the Holders as partners or members of an association; nor shall
any Certificateholder be under any liability to any third person by reason of
any action taken pursuant to any provision of the Agreement.
No Certificateholder shall have any right by virtue or by availing
itself of any provision of the Agreement to institute any suit, action, or
proceeding in equity or at law upon or under or with respect to the Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of default and of the continuance thereof, as hereinbefore provided, and unless
also the Holders of Certificates evidencing not less than 25% of the Pool
Balance shall have made written request upon the Trustee to institute such
action, suit, or proceeding in its own name as Trustee under the Agreement and
shall have offered to the Trustee such reasonable indemnity as it may require
against the costs, expenses, and liabilities to be incurred therein or thereby,
and the Trustee, for 30 days after its receipt of such notice, request, and
offer of indemnity, shall have either neglected or refused to institute any such
action, suit or proceeding; no one or more Holders of Certificates shall have
any right in any manner whatever by virtue or by availing itself or themselves
of any provisions of the Agreement to affect, disturb, or prejudice the rights
of the Holders of any other of the Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right,
under the Agreement, except in the manner provided in the Agreement and for the
equal, ratable, and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section 22.3, each Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.
Section 22.4 Governing Law. THE AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS,
AND REMEDIES OF THE PARTIES UNDER THE AGREEMENT SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
Section 22.5 Notices. All demands, notices, and communications
under the Agreement shall be in writing, personally delivered or mailed by
certified mail, return receipt requested, or sent by telecopy or other similar
form of rapid transmission and shall be deemed to have been duly given upon
receipt (a) in the case of the Seller, at USAA Federal Savings Bank, XxXxxxxxx
Xxxxxxx, Xxx Xxxxxxx, Xxxxx 00000 Attention: Vice President and Banking Counsel,
Telecopy Number: (000) 000-0000, or at such other address as shall be designated
by the Seller in a written notice to the Trustee, (b) in the case of the
Servicer, at USAA Federal Savings Bank, XxXxxxxxx Xxxxxxx, Xxx Xxxxxxx, Xxxxx
00000, Attention: Vice President and Banking Counsel, Telecopy Number: (210)
498-7210, or at such other ad dress as shall be designated by the Servicer in a
written notice to the Trustee, and (c) in the case of the Trustee and the
Collateral Agent, at 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Structured Finance Services, Telecopy Number: (000) 000-0000 or at
such other address as shall be designated in a written notice to the Trustee.
Any notice required or permitted to be mailed to a Certificateholder shall be
given by first class mail, postage prepaid, at the address of record of such
Holder. Any notice to a Certificateholder so mailed within the time prescribed
in the Agreement shall be conclusively presumed to have been duly given, whether
or not the Certificateholder shall receive such notice.
Section 23.6 Severability of Provisions. If any one or more of
the covenants, agreements, provisions, or terms of the Agreement shall be for
any reason whatsoever held invalid, then such covenants, agreements, provisions,
or terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of the Agreement and shall in no way affect the validity or
enforceability of the other provisions of the Agreement or of the Certificates
or the rights of the Holders thereof.
Section 22.7 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 17.3 and 18.3, neither the
Seller nor the Servicer may transfer or assign all, or a portion of, its rights,
obligations and duties under the Agreement unless such transfer or assignment
(i) (A) will not result in a reduction or withdrawal by Standard & Poor's or
Moody's of the rating then assigned to the Certificates and (B) the Trustee has
consented to such transfer or assignment, which consent shall not be
unreasonably withheld or (ii) the Trustee and Holders of Certificates evidencing
not less than 51% of the Pool Balance consent thereto. Any transfer or
assignment with respect to the Servicer of all of its rights, obligations and
duties will not become effective until a successor Service has assumed the
Servicer's rights, duties and obligations under the Agreement. In the event of a
transfer or assignment pursuant to clause (ii) above, the Rating Agencies shall
be provided with notice of such transfer or assignment.
55
Section 22.8 Certificates Nonassessable and Fully Paid. The
interests represented by the Certificates shall be nonassessable for any losses
or expenses of the Trust or for any reason whatsoever, and, upon authentication
thereof by the Trustee pursuant to Section 16.2, each Certificate shall be
deemed fully paid.
Section 22.9 Third-Party Beneficiaries. This Agreement will inure
to the benefit of and be binding upon the parties hereto, the Certificateholders
and the Certificate Owners and their respective successors and permitted
assigns. Except as otherwise provided in this Agreement, no other person will
have any right or obligation hereunder.
56
Schedule A
Schedule A shall be deemed to be the computer data disk or
printout relating to the Receivables delivered by the Seller to the Trustee on
the Closing Date.
Schedule B
Location of Receivable Files
USAA Federal Savings Bank
00000 XxXxxxxxx Xxxxxxx
Xxx Xxxxxxx, XX 00000
IN WITNESS WHEREOF, the parties have caused this Pooling and
Servicing Agreement to be duly executed by their respective officers as of the
day and year first above written.
USAA FEDERAL SAVINGS BANK
as Seller and Servicer
By:___________________________
Name:
Title:
THE CHASE MANHATTAN BANK
as Trustee
By:___________________________
Name:
Title:
