Exhibit 99.1
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FORM OF SALE AND SERVICING AGREEMENT
among
USAA AUTO OWNER TRUST 200_-[ ],
as Issuer,
USAA ACCEPTANCE, LLC,
as Depositor,
and
USAA FEDERAL SAVINGS BANK,
as Seller and Servicer
Dated as of ___________, 200_
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Table of Contents
Page
ARTICLE I DEFINITIONS AND USAGE....................................................................1
ARTICLE II TRUST PROPERTY...........................................................................1
SECTION 2.1 Conveyance of Trust Property; Intent of the Parties......................................1
SECTION 2.2 Representations and Warranties of the Depositor regarding
the Receivables..........................................................................2
SECTION 2.3 Repurchase upon Breach...................................................................5
SECTION 2.4 Custody of Receivable Files..............................................................6
SECTION 2.5 Duties of Servicer as Custodian..........................................................6
SECTION 2.6 Instructions; Authority to Act...........................................................7
SECTION 2.7 Custodian's Indemnification..............................................................7
SECTION 2.8 Effective Period and Termination.........................................................7
ARTICLE III ADMINISTRATION AND SERVICING OF RECEIVABLES AND TRUST
PROPERTY.................................................................................8
SECTION 3.1 Duties of Servicer.......................................................................8
SECTION 3.2 Collection of Receivable Payments........................................................8
SECTION 3.3 Realization Upon Receivables.............................................................9
SECTION 3.4 Allocations of Collections..............................................................10
SECTION 3.5 Maintenance of Security Interests in Financed Vehicles..................................10
SECTION 3.6 Covenants of Servicer...................................................................10
SECTION 3.7 Purchase of Receivables Upon Breach.....................................................11
SECTION 3.8 Servicer Fees...........................................................................11
SECTION 3.9 Servicer's Certificate..................................................................11
SECTION 3.10 Annual Statement as to Compliance; Item 1122 Servicing Criteria
Assessment; Notice of Event of Servicing Termination....................................11
SECTION 3.11 Annual Independent Certified Public Accountant's Report.................................13
SECTION 3.12 Access to Certain Documentation and Information Regarding
Receivables.............................................................................13
SECTION 3.13 Servicer Expenses.......................................................................13
SECTION 3.14 Insurance...............................................................................13
ARTICLE IV DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS TO
NOTEHOLDERS AND CERTIFICATEHOLDERS......................................................14
SECTION 4.1 Accounts................................................................................14
SECTION 4.2 Collections.............................................................................15
SECTION 4.3 Application of Collections..............................................................16
SECTION 4.4 Advances................................................................................16
SECTION 4.5 Additional Deposits.....................................................................16
SECTION 4.6 Distributions...........................................................................17
SECTION 4.7 Reserve Account.........................................................................21
SECTION 4.8 Net Deposits............................................................................23
SECTION 4.9 Statements to Noteholders and Certificateholders........................................23
ARTICLE V THE DEPOSITOR...........................................................................25
SECTION 5.1 Representations, Warranties and Covenants of Depositor..................................25
SECTION 5.2 Liability of Depositor; Indemnities.....................................................26
SECTION 5.3 Merger or Consolidation of, or Assumption of the Obligations of
Depositor...............................................................................27
SECTION 5.4 Limitation on Liability of Depositor and Others.........................................27
SECTION 5.5 Depositor May Own Notes or Certificates.................................................27
ARTICLE VI THE SERVICER............................................................................27
SECTION 6.1 Representations of Servicer.............................................................27
SECTION 6.2 Indemnities of Servicer.................................................................29
SECTION 6.3 Merger or Consolidation of, or Assumption of the Obligations of Servicer................30
SECTION 6.4 Limitation on Liability of Servicer and Others..........................................30
SECTION 6.5 Delegation of Duties....................................................................31
SECTION 6.6 Servicer Not to Resign as Servicer......................................................31
SECTION 6.7 Servicer May Own Notes or Certificates..................................................31
ARTICLE VII SERVICING TERMINATION...................................................................32
SECTION 7.1 Events of Servicing Termination.........................................................32
SECTION 7.2 Appointment of Successor Servicer.......................................................33
SECTION 7.3 Repayment of Advances...................................................................34
SECTION 7.4 Notification to Noteholders and Certificateholders......................................34
SECTION 7.5 Waiver of Past Events of Servicing Termination..........................................35
ARTICLE VIII TERMINATION.............................................................................35
SECTION 8.1 Optional Purchase of All Receivables....................................................35
SECTION 8.2 Succession Upon Satisfaction and Discharge of Indenture.................................35
ARTICLE IX MISCELLANEOUS PROVISIONS................................................................36
SECTION 9.1 Amendment...............................................................................36
SECTION 9.2 Protection of Title to Trust Property...................................................37
SECTION 9.3 GOVERNING LAW...........................................................................39
SECTION 9.4 Notices.................................................................................39
SECTION 9.5 Severability of Provisions..............................................................40
SECTION 9.6 Assignment..............................................................................40
SECTION 9.7 Further Assurances......................................................................40
SECTION 9.8 No Waiver; Cumulative Remedies..........................................................40
SECTION 9.9 Third-Party Beneficiaries...............................................................40
SECTION 9.10 Actions by Noteholders or Certificateholders............................................40
SECTION 9.11 Limitation of Liability of Owner Trustee and Indenture Trustee..........................41
SECTION 9.12 Savings Clause..........................................................................41
ARTICLE X Exchange Act Reporting..................................................................41
SECTION 10.1 Further Assurances......................................................................41
SECTION 10.2 Form 10-D Filings.......................................................................42
SECTION 10.3 Form 8-K Filings........................................................................42
SECTION 10.4 Form 10-K Filings.......................................................................42
SECTION 10.5 Report on Assessment of Compliance and Attestation......................................43
SECTION 10.6 Back-up ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification....................................................43
SECTION 10.7 Use of Subcontractors...................................................................44
SECTION 10.8 Representations and Warranties..........................................................45
SECTION 10.9 Indemnification.........................................................................45
SECTION 10.10 Amendments..............................................................................46
Schedule A Schedule of Receivables................................................................A-1
Schedule B-1 Location of Receivable Files ..........................................................B-1
Schedule B-2 Location of Lien Certificates .........................................................B-2
Appendix A Definitions and Usage.........................................................Appendix A-1
Appendix B Item 1119 Parties.............................................................Appendix B-1
Appendix C Minimum Servicing Criteria Assessment.........................................Appendix C-1
Appendix D Performance Certification (Trustee/Reporting Subcontractor)...................Appendix D-1
Appendix E Performance Certification (Servicer)..........................................Appendix E-1
SALE AND SERVICING AGREEMENT, dated as of __________, 200_ (as from
time to time amended, supplemented or otherwise modified and in effect, this
"Agreement"), among USAA AUTO OWNER TRUST 200_-[ ] (the "Issuer"), a Delaware
statutory trust, USAA ACCEPTANCE, LLC, a Delaware limited liability company
(the "Depositor") and USAA FEDERAL SAVINGS BANK, a federally chartered savings
association, as seller of the Receivables to the Depositor (in such capacity,
the "Seller") and servicer (in such capacity, the "Servicer").
WHEREAS, the Issuer desires to purchase a portfolio of receivables
and related property consisting of motor vehicle installment loan contracts
originated by the Seller in the ordinary course of its business;
WHEREAS, the Seller is concurrently selling such portfolio of
receivables and related property to the Depositor pursuant to the Receivables
Purchase Agreement, and the Depositor is willing to sell such portfolio of
receivables and related property to the Issuer; and
WHEREAS, the Servicer is willing to service such receivables on
behalf of the Issuer.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto,
intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS AND USAGE
Except as otherwise specified herein or as the context may otherwise
require, capitalized terms used but not otherwise defined herein are defined
in Appendix A hereto, which also contains rules as to usage that shall be
applicable herein.
ARTICLE II
TRUST PROPERTY
SECTION 2.1 Conveyance of Trust Property; Intent of the Parties. In
consideration of the Issuer's delivery to, or upon the order of, the Depositor
of the Notes and the Certificates, the Depositor does hereby irrevocably sell,
transfer, assign and otherwise convey to the Issuer (i) without recourse
(subject to the obligations herein) all right, title and interest of the
Depositor, whether now owned or hereafter acquired, in and to the Trust
Property and (ii) funds in the amount of the Reserve Initial Deposit. The
sale, transfer, assignment and conveyance made hereunder shall not constitute
and is not intended to result in an assumption by the Issuer of any obligation
of the Depositor to the Obligors or any other Person in connection with the
Receivables and the other Trust Property or any agreement, document or
instrument related thereto. The Depositor and the Issuer intend that the sale,
transfer, assignment and conveyance of the Trust Property pursuant to this
Section 2.1 shall be a sale, and not a secured borrowing, for accounting
purposes.
SECTION 2.2 Representations and Warranties of the Depositor regarding
the Receivables. The Depositor makes the following representations and
warranties with respect to the Receivables, on which the Issuer relies in
purchasing the Receivables and pledging the same to the Indenture Trustee.
Such representations and warranties speak as of the execution and delivery of
this Agreement and as of the Transfer Date, but shall survive the sale,
transfer and assignment of the Receivables by the Depositor to the Issuer and
the pledge of the Receivables by the Issuer to the Indenture Trustee pursuant
to the Indenture.
(i) Schedule of Receivables. The information set forth in Schedule
A to this Agreement with respect to each Receivable is true and
correct in all material respects, and no selection procedures
adverse to the Securityholders have been used in selecting the
Receivables from all receivables owned by the Seller which meet
the selection criteria specified herein.
(ii) No Sale or Transfer. No Receivable has been sold, transferred,
assigned or pledged by the Depositor to any Person other than
the Issuer.
(iii) Good Title. Immediately prior to the transfer and assignment of
the Receivables to the Issuer herein contemplated, the
Depositor had good and marketable title to each Receivable free
and clear of all Liens and rights of others; and, immediately
upon the transfer thereof, the Issuer, has either (i) good and
marketable title to each Receivable, free and clear of all of
all Liens and rights of others, and the transfer has been
perfected under applicable law or (ii) a first priority
perfected security interest in each Receivable.
(iv) Receivable Files. The Receivable Files shall be kept at one or
more of the locations specified in Schedule B-1 hereto;
provided, that the Lien Certificates shall be kept at one or
more of the locations specified in Schedule B-2 hereto.
(v) 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 or semi-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.]
(vi) 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 Cut-off 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 ▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act, Federal
Reserve Board Regulations B and Z, state adaptations of the
National Consumer Act and of the Uniform Consumer Credit Code,
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and any other consumer credit, equal opportunity, and
disclosure laws applicable to such Receivable and sale.
(vii) 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.
(viii) No Government Obligor. No Receivable is due from the United
States of America or any state or from any agency, department,
instrumentality or political subdivision of the United States
of America or any state or local municipality and no Receivable
is due from a business except to the extent that such
receivable has a personal guaranty.
(ix) Security Interest in Financed Vehicle. Immediately prior to the
sale and assignment thereof to the Issuer 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 Depositor and by the
Depositor to the Issuer.
(x) Receivables in Force. No Receivable has been satisfied,
subordinated, or rescinded, nor has any Financed Vehicle been
released from the Lien granted by the related Receivable in
whole or in part.
(xi) 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 Depositor herein
with respect thereto pursuant to this Section 2.2.
(xii) No Amendments. No Receivable has been amended except pursuant
to instruments included in the Receivable Files and no such
amendment has caused such Receivable either to fail to meet all
of the representations and warranties made by the Depositor
herein with respect thereto pursuant to this Section 2.2.
(xiii) No Defenses. As of the Cut-off Date, there are no rights of
rescission, setoff, counterclaim, or defense, and the Depositor
has no knowledge of the same being asserted or threatened, with
respect to any Receivable.
(xiv) No Liens. As of the Cut-off Date, the Depositor has no
knowledge of any Liens, 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.
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(xv) No Default. Except for payment defaults continuing for a period
of not more than thirty (30) days as of the Cut-off Date, the
Depositor has no knowledge that a default, breach, violation,
or event permitting acceleration under the terms of any
Receivable exists; the Depositor 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
Depositor has not waived any of the foregoing.
(xvi) Insurance. Each Receivable requires that the Obligor thereunder
obtain comprehensive and collision insurance covering the
Financed Vehicle.
(xvii) Lawful Assignment. No Receivable has been originated in, or is
subject to the laws of, any jurisdiction under which the sale,
transfer, and assignment of such Receivable under the Agreement
is unlawful, void or voidable.
(xviii) All Filings Made. No filings (other than UCC filings which have
been made) or other actions are necessary in any jurisdiction
to give the Issuer a first priority perfected security interest
in the Receivables and to give the Indenture Trustee a first
priority perfected security interest in the Receivables.
(xix) 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 does not have
any marks or notations indicating that it has been pledged,
assigned or otherwise conveyed to any Person other than the
Seller and which, immediately prior to the delivery thereof to
the Servicer, as custodian for the Indenture Trustee, was in
the possession of the Seller.
(xx) Security. Each Receivable is secured by a new or used
automobile or light-duty truck.
(xxi) Maturity of Receivables. Each Receivable has a remaining
maturity, as of the Cut-off 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 not
less than 12 months nor greater than 72 months and (ii) with
respect to Receivables secured by used Financed Vehicles, an
original maturity of not less than 9 months nor greater than 72
months. No Receivable has a scheduled maturity later than
____________.
(xxii) Annual Percentage Rate. Each Receivable is a [fully-amortizing
fixed rate simple interest contract that provides for level
scheduled monthly payments (except for the last payment, which
may be minimally different from the level payments) over its
respective remaining term, and has an Annual Percentage Rate
that equals or exceeds _____%, is not secured by any interest
in real estate, and has not been identified on the computer
files of the Seller as relating to Obligors who have requested
a reduction in the periodic finance charges, as of the Cut-off
Date, by application of the Servicemembers Civil Relief Act].
(xxiii) No Repossessions. Each Receivable is secured by a Financed
Vehicle that, as of the Cut-off Date, has not been repossessed
without reinstatement of such Receivable.
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(xxiv) 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 Cut-off Date.
(xxv) No Overdue Payments. No Receivable has any payment that is more
than thirty (30) days past due as of the Cut-off Date.
(xxvi) Tangible Chattel Paper. The Receivables constitute "tangible
chattel paper" within the meaning of UCC Section 9-102.
(xxvii) Remaining Principal Balance. Each Receivable had a remaining
principal balance, as of the Cut-off Date, of at least $500.
(xxviii) Filing Statement Language. The financing statements referenced
in paragraph (xviii) above, will contain a statement to the
following effect "A purchase of or security interest in any
collateral described in this financing statement will violate
the rights of the Secured Party".
SECTION 2.3 Repurchase upon Breach. Each of the Depositor, the Servicer,
the Issuer and the Owner Trustee shall inform the other parties to this
Agreement promptly, in writing, upon the discovery by it of any breach of the
Depositor's representations and warranties pursuant to Section 2.2. Unless the
breach shall have been cured by the last day of the second Collection Period
following written notice to the Indenture Trustee of such breach, the
Indenture Trustee shall enforce the obligation of the Depositor under this
Section 2.3 to repurchase any Receivable, the Issuer's interest in which is
materially and adversely affected by the breach as of such last day (or, at
the Depositor's option, the last day of the first Collection Period following
the discovery). In consideration of the purchase of the Receivable, the
Depositor shall remit the Purchase Amount (less any Liquidation Proceeds
deposited, or to be deposited, in the Collection Account with respect to such
Receivable pursuant to Section 3.3), in the manner specified in Section 4.5.
The sole remedy of the Issuer, the Owner Trustee, the Indenture Trustee, the
Noteholders or the Certificateholders with respect to a breach of the
Depositor's representations and warranties pursuant to Section 2.2 shall be to
require the Depositor to repurchase such Receivables pursuant to this Section
2.3. The obligation of the Depositor to repurchase under this Section 2.3
shall not be solely dependent upon the actual knowledge of the Depositor of
any breached representation or warranty. Neither the Owner Trustee nor the
Indenture Trustee shall have any duty to conduct an affirmative investigation
as to the occurrence of any condition requiring the repurchase of any
Receivable pursuant to this Section 2.3 or the eligibility of any Receivable
for purposes of this Agreement. Notwithstanding anything herein to the
contrary, the Depositor shall only be obligated to pay such Purchase Amount
and repurchase the related Receivable to the extent it receives the Purchase
Amount from the Seller pursuant to Section 7.02 of the Receivables Purchase
Agreement.
SECTION 2.4 Custody of Receivable Files. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Issuer, upon
the execution and delivery of this Agreement, hereby revocably appoints the
Servicer, and the Servicer hereby accepts such appointment, to act as the
agent of the Issuer and the Indenture Trustee as custodian of the
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following documents or instruments, which are hereby constructively delivered
to the Indenture Trustee, as pledgee of the Issuer pursuant to the Indenture,
with respect to each Receivable:
(i) The original executed Receivable or, if no such original
exists, a copy thereof.
(ii) The original credit application fully executed by the
Obligor or a photocopy thereof or a record thereof on a computer
file, diskette or on microfiche.
(iii) The notice of recorded Lien or such documents that the
Servicer or the Depositor shall keep on file, in accordance with its
customary procedures, evidencing the first priority perfected
security interest of the Seller in the Financed Vehicle.
(iv) Any and all other documents (including any computer
file, diskette or microfiche) that the Servicer or the Seller 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 acknowledges that it holds the documents and instruments
relating to the Receivables for the benefit of the Issuer and the Indenture
Trustee. The Issuer and the Indenture 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 2.5 Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer shall hold the Receivable Files for the
benefit of the Issuer and the Indenture Trustee and shall maintain such
accurate and complete accounts, records and computer systems pertaining to
each Receivable File as shall enable the Servicer and the Issuer to comply
with the terms and conditions of this Agreement, and the Indenture Trustee to
comply with the terms and conditions of the Indenture. In performing its
duties as custodian, the Servicer shall act with reasonable care, using that
degree of skill and attention that the Servicer exercises with respect to the
receivable files relating to all comparable automotive receivables that the
Servicer services for itself or others. The Servicer shall conduct, or cause
to be conducted, periodic audits of the Receivable Files held by it under this
Agreement and of the related accounts, records and computer systems, in such a
manner as shall enable the Issuer or the Indenture Trustee to identify all
Receivables Files and such related accounts, records and computer systems and
verify the accuracy of the Servicer's record keeping. The Servicer shall
promptly report to the Issuer and the Indenture Trustee any failure on its
part to hold the Receivable Files and maintain its accounts, records, and
computer systems as herein provided and shall promptly take appropriate action
to remedy any such failure. Nothing herein shall be deemed to require an
initial review or any periodic review by the Issuer, the Owner Trustee or the
Indenture Trustee of the Receivable Files.
(b) Maintenance of and Access to Records. The Servicer shall maintain
each Receivable File at its offices specified in Schedule B-1 to this
Agreement, provided, that all Lien Certificates will be maintained at the
location specified in Schedule B-2, or at such other office as shall be
specified to the Issuer and the Indenture Trustee by 30 days' prior written
notice. The Servicer shall make available to the Issuer and the Indenture
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Trustee or their duly authorized representatives, attorneys, or auditors, the
Receivable Files and the related accounts, records and computer systems
maintained by the Servicer during normal business hours as the Issuer or the
Indenture Trustee shall reasonably request, which does not unreasonably
interfere with the Servicer's normal operations.
(c) Release of Documents. Upon written instructions from the Indenture
Trustee, the Servicer shall release or cause to be released any document in
the Receivable Files to the Indenture Trustee, the Indenture Trustee's agent
or the Indenture Trustee's designee, as the case may be, at such place or
places as the Indenture Trustee may reasonably designate, as soon as is
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 Indenture Trustee or its agent or
designee to return any document or any delay in doing so.
SECTION 2.6 Instructions; Authority to Act. All instructions from the
Indenture Trustee shall be in writing and signed by an Authorized Officer of
the Indenture Trustee, and the Servicer shall be deemed to have received
proper instructions with respect to the Receivable Files upon its receipt of
such written instructions.
SECTION 2.7 Custodian's Indemnification. The Servicer, as custodian,
shall indemnify the Issuer, the Owner Trustee and the Indenture Trustee for
any and all liabilities, obligations, losses, compensatory damages, payments,
costs, or expenses of any kind whatsoever that may be imposed on, incurred, or
asserted against the Issuer, the Owner Trustee or the Indenture Trustee 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 (i) to the Issuer for any
portion of any such amount resulting from the willful misfeasance, bad faith,
or negligence of the Indenture Trustee, the Owner Trustee or the Issuer, (ii)
to the Owner Trustee for any portion of any such amount resulting from the
willful misfeasance, bad faith, or negligence of the Indenture Trustee, the
Owner Trustee or the Issuer and (iii) to the Indenture Trustee for any portion
of any such amount resulting from the willful misfeasance, bad faith, or
negligence of the Indenture Trustee, the Owner Trustee or the Issuer.
SECTION 2.8 Effective Period and Termination. The Servicer's appointment
as custodian shall become effective as of the Cut-off Date and shall continue
in full force and effect until terminated pursuant to this Section 2.8. If the
Bank shall resign as Servicer in accordance with the provisions of this
Agreement or if all of the rights and obligations of the Servicer shall have
been terminated under Section 7.1, the appointment of the Servicer as
custodian hereunder may be terminated by the Indenture Trustee, or by the
holders of Notes evidencing not less than a majority of the principal amount
of the [Controlling Class] [Notes] Outstanding (or if no Notes are
Outstanding, by holders of Certificates evidencing not less than a majority of
the [Percentage Interests evidenced by the Certificates] [Certificate
Balance]), in the same manner as the Indenture Trustee or such Securityholders
may terminate the rights and obligations of the Servicer under Section 7.1. As
soon as practicable after any termination of such appointment, the Servicer
shall deliver to the Indenture Trustee or the Indenture Trustee's agent the
Receivable Files and the related accounts and records maintained by the
Servicer at such place or places as the Indenture Trustee may reasonably
designate.
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ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES AND TRUST PROPERTY
SECTION 3.1 Duties of Servicer. The Servicer shall manage, service,
administer and make collections on the Receivables with reasonable care, using
that degree of skill and attention that the Servicer exercises with respect to
all 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 of Obligors on such
Receivables, investigating delinquencies, sending payment coupons to Obligors,
reporting tax information to Obligors, accounting for collections, furnishing
monthly and annual statements to the Owner Trustee and the Indenture Trustee
with respect to distributions, making Advances pursuant to Section 4.4,
preparing (or causing to be prepared) the tax returns of the Trust in
accordance with Section 5.6 of the Trust Agreement and, if requested to do so,
providing the certifications required, pursuant to Section 5.1(b) hereof. 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 is hereby authorized and empowered to execute and
deliver, on behalf of itself, the Issuer, the Owner Trustee, the Indenture
Trustee, the Noteholders, the Certificateholders, or any of them, any and all
instruments of satisfaction or cancellation, or partial or full release or
discharge, and all other comparable instruments, with respect to such
Receivables or to the Financed Vehicles securing such Receivables. If the
Servicer shall commence a legal proceeding to enforce a Receivable, the Issuer
(in the case of a Receivable other than a Purchased Receivable) shall
thereupon be deemed to have automatically assigned, solely for the purpose of
collection, such Receivable to the Servicer. 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 Issuer shall, at the Servicer's
expense and direction, take steps to enforce the Receivable, including
bringing suit in its name or the names of the Indenture Trustee, the
Noteholders, the Certificateholders, or any of them. The Issuer shall furnish
the Servicer with any powers of attorney and other documents reasonably
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
SECTION 3.2 Collection of Receivable Payments. The Servicer shall make
reasonable efforts to collect all payments called for under the terms and
provisions of the Receivables as and when the same shall become due and shall
follow such collection procedures as it follows with respect to all comparable
new or used automobile and light-duty truck receivables that it services for
itself. The Servicer shall not change the amount of or reschedule the due date
of any scheduled payment of a Receivable 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 this 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,
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(c) the total number of credit-related extensions granted on the Receivable
will not exceed two, and (d) the maturity of such Receivable will not be
extended beyond ___________, 200__. If, as a result of inadvertently
rescheduling or extending 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 3.7. For
the purpose of such purchases pursuant to Section 3.7, 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.
Notwithstanding anything to the contrary herein, the Servicer may
implement programs that grant payment extensions in respect of receivables
that are not delinquent. Any such program shall be implemented with the
approval of the senior officer's credit committee of the Servicer in
accordance with the Servicer's general lending and policy guidelines. Any such
payment extension may extend the maturity of the applicable receivable beyond
its original term to maturity. Notwithstanding anything to the contrary
herein, the Servicer may also reduce the interest rate on Receivables affected
by the application of the Servicemembers Civil Relief Act to a rate that is
lower than the maximum rate prescribed by the Servicemembers Civil Relief Act
and may readjust the payment schedule for any Receivable that is affected by
the application of the Servicemembers Civil Relief Act until the maturity of
the receivable.
The Servicer may at any time perform specific duties as servicer or
custodian under this Agreement through subcontractors; provided, however, that
no such delegation or subcontracting shall relieve the Servicer of its
responsibilities with respect to such duties as to which the Servicer shall
remain primarily responsible with respect thereto. All amounts payable to any
subcontractor shall be paid by the Servicer and shall not be obligations of
the Indenture Trustee, the Owner Trustee or the Issuer or paid from the
Indenture Trust Estate. References in this Agreement to actions taken or to be
taken by the Servicer include actions taken or to be taken by a subcontractor
on behalf of the Servicer.
SECTION 3.3 Realization Upon Receivables. On behalf of the Issuer, the
Servicer shall use reasonable efforts, consistent with its customary
standards, policies and procedures, to repossess or otherwise convert the
ownership of the Financed Vehicle securing any Receivable as to which the
Servicer shall have determined to be a Defaulted Receivable or otherwise (and
shall specify any such Defaulted Receivable to the Indenture 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 standards, policies and procedures as it shall deem necessary or
advisable in its servicing of comparable 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 Collection Account in the manner specified in Section 4.2 and shall be
applied to reduce (or to satisfy, as the case may be) the Purchase Amount of
the Receivable, if such Receivable is to be repurchased by the Depositor
pursuant to Section 2.3, or is to be purchased by the Servicer pursuant to
Section 3.7. The foregoing shall be subject to the provision that, in any case
in which the Financed Vehicle shall have suffered damage, the Servicer shall
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not be required to expend funds in connection with the repair or the
repossession of such Financed Vehicle unless it shall determine in its
discretion that such repair and/or repossession will increase the Liquidation
Proceeds by an amount greater than the amount of such expenses.
SECTION 3.4 Allocations of Collections. If an Obligor is obligated under
one or more Receivables and also under one or more other assets owned by the
Bank or assigned by the Bank to third parties, then any payment on any such
asset received from or on behalf of such Obligor shall, if identified as being
made with respect to a particular item or asset, be applied to such item, and
otherwise shall be allocated by the Bank in accordance with its customary
standards, policies and procedures.
SECTION 3.5 Maintenance of Security Interests in Financed Vehicles. The
Servicer shall, in accordance with its customary procedures, take such steps
as are necessary to maintain perfection of the security interest created by
each Receivable in the related Financed Vehicle. The Issuer hereby authorizes
the Servicer to take such steps as are necessary to re-perfect such security
interest on behalf of the Issuer and the Indenture Trustee in the event of the
relocation of a Financed Vehicle or for any other reason, in 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 Issuer is insufficient, without a
notation on the related Financed Vehicle's certificate of title, or without
fulfilling any additional administrative requirements under the laws of the
state in which the Financed Vehicle is located, to transfer to the Issuer 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 Issuer
and the Indenture Trustee and further agrees to hold such certificate of title
as the agent and custodian of the Issuer and the Indenture Trustee; provided
that the Servicer shall not, nor shall the Issuer or the Indenture Trustee
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 3.6 Covenants of Servicer. The Servicer shall not (i) release the
Financed Vehicle securing each such Receivable from the security interest
granted by such Receivable in whole or in part except in the event of payment
in full by or on behalf of the Obligor thereunder, (ii) impair the rights of
the Trust or the Indenture Trustee in the Receivables, or (iii) increase the
number of payments under a Receivable, increase the Amount Financed under a
Receivable or extend or forgive payments on a Receivable, except as provided
in Section 3.2. 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
Class B Final Scheduled Payment Date.
SECTION 3.7 Purchase of Receivables Upon Breach. (a) The Servicer, the
Depositor or the Owner Trustee, as the case may be, promptly shall inform the
other parties to this Agreement, in writing, upon the discovery of any breach
pursuant to Section 3.2, 3.5 or 3.6. Unless the breach shall have been cured
by the last day of the second Collection Period following such discovery (or,
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at the Servicer's election, the last day of the first following Collection
Period), the Servicer shall purchase any Receivable materially and adversely
affected by such breach as determined by the Indenture Trustee (which shall
include any Receivable as to which a breach of Section 3.6 has occurred) at
the Purchase Amount (less any Liquidation Proceeds deposited, or to be
deposited, in the Collection Account with respect to such Receivable pursuant
to Section 3.3). In consideration of the purchase of such Receivable, the
Servicer shall remit the Purchase Amount in the manner specified in Section
4.5. For purposes of this Section 3.7, the Purchase Amount shall consist in
part of a release by the Servicer of all rights of reimbursement with respect
to Outstanding Advances on the Receivable. The sole remedy of the Issuer, the
Owner Trustee, the Indenture Trustee, the Noteholders or the
Certificateholders with respect to a breach pursuant to Section 3.2, 3.5 or
3.6 shall be to require the Servicer to purchase Receivables pursuant to this
Section 3.7.
(b) With respect to all Receivables purchased pursuant to thisSection 3.7,
the Issuer shall assign to the Servicer or the Depositor, as applicable, without
recourse, representation or warranty, all of the Issuer's right, title and
interest in and to such Receivables and all security and documents relating
thereto.
SECTION 3.8 Servicer Fees. The Servicer shall be entitled to any interest
earned on the amounts deposited in the Collection Account during each
Collection Period plus all late fees, prepayment charges and other
administrative fees and expenses or similar charges, if any, allowed by
applicable law and the terms of the Receivables during each Collection Period
(the "Supplemental Servicing Fee"). The Servicer also shall be entitled to the
Servicing Fee, as provided herein.
SECTION 3.9 Servicer's Certificate. On or prior to the Determination Date
for each Payment Date, the Servicer shall deliver to the Depositor, the Owner
Trustee, each Note Paying Agent and Certificate Paying Agent, the Indenture
Trustee and the Seller, with a copy to the Rating Agencies, a Servicer's
Certificate containing all information (including all specific dollar amounts)
necessary to make the transfers and distributions pursuant to Sections 4.3,
4.4, 4.5, 4.6 and 4.7 hereof and Section 8.2 of the Indenture for the
Collection Period preceding the date of such Servicer's Certificate, together
with the written statements to be furnished by the Owner Trustee to
Certificateholders pursuant to Section 4.9 hereof and by the Indenture Trustee
to the Noteholders pursuant to Section 4.9 hereof and Section 6.6 of the
Indenture. Receivables purchased or to be purchased by the Servicer or the
Depositor shall be identified by the Servicer by the Seller's account number
with respect to such Receivable (as specified in the Schedule of Receivables).
SECTION 3.10 Annual Statement as to Compliance; Item 1122 Servicing
Criteria Assessment; Notice of Event of Servicing Termination. (a) The
Servicer shall deliver to the Owner Trustee, the Indenture Trustee and each
Rating Agency on or before March 31 of each year beginning March 31, 20__,
(i) an Officer's Certificate, with respect to the preceding 12-month
period (or such shorter period in the case of the first such certificate),
stating that (x) a review of the activities of the Servicer during the
preceding 12-month period (or such shorter period in the case of the first
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such certificate) and of its performance under this Agreement has been made
under such officer's supervision and (y) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all its
obligations in all material respects under this Agreement throughout such
period, or, if there has been a failure to fulfill any such obligation in any
material respect, specifying each such failure known to such officer and the
nature and status thereof, and
(ii) the servicing criteria assessment required to be filed in respect of
the Trust under the Exchange Act under Item 1122 of Regulation AB if periodic
reports under Section 15(d) of the Exchange Act, or any successor provision
thereto, were required to be filed in respect of the Trust. Such report shall
be signed by an authorized officer of the Servicer and shall at a minimum
address each of the Servicing Criteria specified on a certification
substantially in the form of Appendix C hereto delivered to the Depositor
concurrently with the execution of this Agreement. To the extent any of the
Servicing Criteria are not applicable to the Servicer, with respect to
asset-backed securities transactions taken as a whole involving the Servicer
and that are backed by the same asset type backing the Notes, such report
shall include such a statement to that effect. The Depositor and the Servicer,
and each of their respective officers and directors shall be entitled to rely
on upon each such servicing criteria assessment.
A copy of such Officer's Certificate and the report referred to in
Section 3.11 may be obtained by any Certificateholder by a request in writing
to the Owner Trustee, or by any Noteholder or Person certifying that it is a
Note Owner by a request in writing to the Indenture Trustee, in either case
addressed to the applicable Corporate Trust Office. Upon the telephone request
of the Owner Trustee, the Indenture Trustee shall promptly furnish the Owner
Trustee a list of Noteholders as of the date specified by the Owner Trustee.
(b) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee and each Rating Agency promptly after having obtained knowledge
thereof, but in no event later than five (5) Business Days thereafter, written
notice in an Officer's Certificate of any event which with the giving of
notice or lapse of time, or both, would become an Event of Servicing
Termination under Section 7.1. The Seller shall deliver to the Owner Trustee,
the Indenture Trustee and each Rating Agency promptly after having obtained
knowledge thereof, but in no event later than five (5) Business Days
thereafter, written notice in an Officer's Certificate of any event which with
the giving of notice or lapse of time, or both, would become an Event of
Servicing Termination under clause (a)(ii) of Section 7.1.
(c) The Servicer shall cause each Reporting Subcontractor to deliver to
the Depositor an assessment of compliance and accountant's attestation as and
when provided in paragraph (a)(ii) of this Section 3.10 and Section 3.11. The
Servicer shall execute (provided the Servicer is not an Affiliate of the
Depositor) (and shall cause each Reporting Subcontractor to execute) a
reliance certificate to enable the Certification Parties to rely upon each (i)
annual report on assessments of compliance with servicing criteria provided
pursuant to Section 3.10 and (ii) accountant's report provided pursuant to
Section 3.10 and shall include a certification that each such annual
compliance statement or report discloses any deficiencies or defaults
described to the registered public accountants of such Person to enable such
accountants to render the certificates provided for in Section 3.11.
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(d) In the event the Servicer, any Subservicer or Reporting Subcontractor
is terminated or resigns during the term of this Agreement, such Person shall
provide the documents and information pursuant to Section 3.10 and Section
3.11 with respect to the period of time it was subject to this Agreement or
provided services with respect to the Trust or the Receivables.
Notwithstanding anything to the contrary contained herein, if the Servicer has
exercised commercially reasonable efforts to obtain any assessment or
attestation required hereunder from a Reporting Subcontractor, the failure by
the Reporting Subcontractor to provide such attestation on or assessment shall
not constitute a breach hereunder by the Servicer.
SECTION 3.11 Annual Independent Certified Public Accountant's Report. The
Servicer shall cause a firm of independent certified public accountants, who
may also render other services to the Servicer, the Seller or the Depositor,
to deliver to the Owner Trustee and the Indenture Trustee on or before March
31 of each year beginning March 31, 20__ with respect to the prior calendar
year (or such shorter period in the case of the first such report) the
attestation report that would be required to be filed in respect of the Trust
under the Exchange Act if periodic reports under Section 15(d) of the Exchange
Act, or any successor provision thereto, were required to be filed in respect
of the Trust. Such attestation shall be in accordance with Rules 1-02(a)(3)
and 2-02(g) of Regulation S-X under the Securities Act and the Exchange Act,
including, without limitation that in the event that an overall opinion cannot
be expressed, such registered public accounting firm shall state in such
report why it was unable to express such an opinion.
SECTION 3.12 Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to the Certificateholders, the
Indenture Trustee and the Noteholders access to the Receivable Files in such
cases where the Certificateholders, the Indenture Trustee or the Noteholders
shall be required by applicable statutes or regulations to review such
documentation. Access shall be afforded without charge, but only upon
reasonable request and during the normal business hours at the respective
offices of the Servicer. Nothing in this Section 3.12 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 3.12.
SECTION 3.13 Servicer Expenses. The Servicer shall be required to pay all
expenses incurred by it in connection with its activities hereunder, including
fees, expenses (including counsel fees and expenses) and disbursements of the
Owner Trustee and the Indenture Trustee, independent accountants, taxes
imposed on the Servicer and expenses incurred in connection with distributions
and reports to Noteholders and Certificateholders.
SECTION 3.14 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 related 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.
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ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS TO NOTEHOLDERS AND
CERTIFICATEHOLDERS
SECTION 4.1 Accounts. (a) The Servicer shall, prior to the Closing Date,
cause to be established and maintained an Eligible Deposit Account in the name
"__________, as Indenture Trustee, as secured party from USAA Auto Owner Trust
200_-[ ]", initially at the corporate trust department of the Indenture
Trustee, which shall be designated as the "Collection Account". The Collection
Account shall be under the sole dominion and control of the Indenture Trustee;
provided, that the Servicer may make deposits to and direct the Indenture
Trustee in writing to make withdrawals from the Collection Account in
accordance with the terms of the Basic Documents. The Collection Account will
be established and maintained pursuant to an account agreement which specifies
New York law as the governing law. In addition, the Collection Account shall
be established and maintained at an institution which agrees in writing that
for so long as the Notes are outstanding it will comply with entitlement
orders (as defined in Article 8 of the UCC) originated by the Indenture
Trustee without further consent of the Issuer. All monies deposited from time
to time in the Collection Account shall be held by the Indenture Trustee as
secured party for the benefit of the Noteholders and, after payment in full of
the Notes, as agent of the Issuer and as part of the Trust Property. All
deposits to and withdrawals from the Collection Account shall be made only
upon the terms and conditions of the Basic Documents.
If the Servicer is required to remit collections pursuant to the first
sentence of Section 4.2, all amounts held in the Collection Account shall, to
the extent permitted by applicable law, rules and regulations, be invested, as
directed in writing by the Servicer, by the bank or trust company then
maintaining the Collection Account in specified Permitted Investments that
mature not later than the Business Day immediately prior to the Payment Date
for the Collection Period to which such amounts relate and such Permitted
Investments shall be held to maturity. All interest and other income (net of
losses and investment expenses) on funds on deposit in the Collection Account
shall be withdrawn from the Collection Account at the written direction of the
Servicer and shall be paid to the Servicer. The Indenture Trustee shall not be
liable for investment losses in Permitted Investments made in accordance with
directions from the Servicer. In the event that the Collection Account is no
longer to be maintained at the corporate trust department of the Indenture
Trustee, the Servicer shall, with the Indenture Trustee's or Issuer's
assistance as necessary, cause an Eligible Deposit Account to be established
as the Collection Account within ten (10) Business Days (or such longer period
not to exceed thirty (30) calendar days as to which each Rating Agency may
consent) and give written notice of the location and account number of such
account to the Indenture Trustee.
(b) The Servicer shall, prior to the Closing Date, establish and maintain
an administrative subaccount within the Collection Account at the bank or
trust company then maintaining the Collection Account, which subaccount shall
be designated as the "Principal Distribution Account". The Principal
Distribution Account is established and maintained solely for administrative
purposes.
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(c) The Servicer shall, prior to the Closing Date, cause an Eligible
Deposit Account to be established and maintained, in the name "USAA Auto Owner
Trust 200_-[ ] Certificate Distribution Account", initially at the corporate
trust department of the Owner Trustee, which shall be designated as the
"Certificate Distribution Account". The Certificate Distribution Account shall
be under the sole dominion and control of the Owner Trustee. All monies
deposited from time to time in the Certificate Distribution Account pursuant
to this Agreement and the Indenture shall be held by the Owner Trustee as part
of the Trust Property and shall be applied as provided in the Basic Documents.
In the event that the Certificate Distribution Account is no longer to be
maintained at the corporate trust department of the Owner Trustee, the
Servicer shall cause an Eligible Deposit Account to be established as the
Certificate Distribution Account within ten (10) Business Days (or such longer
period not to exceed thirty (30) calendar days as to which each Rating Agency
may consent) and give written notice of the location and account number of
such account to the Owner Trustee. The Certificate Distribution Account will
be established and maintained pursuant to an account agreement which specifies
New York law as the governing law.
SECTION 4.2 Collections. The Servicer shall remit to the Collection
Account within two (2) Business Days of the receipt thereof (i) all payments
by or on behalf of the Obligors (but excluding Purchased Receivables) and (ii)
all Liquidation Proceeds, both as collected during the Collection Period;
provided that the Bank, so long as it is acting as the Servicer and no Event
of Servicing Termination has occurred and is continuing, may make remittances
of collections on a less frequent basis than that specified in the immediately
preceding sentence. It is understood that such less frequent remittances may
be made only on the specific terms and conditions set forth below in this
Section 4.2 and only for so long as such terms and conditions are fulfilled.
Accordingly, notwithstanding the provisions of the first sentence of this
Section 4.2, the Servicer shall remit collections received during a Collection
Period to the Collection Account in immediately available funds on the
Business Day preceding the related Payment Date but only for so long as the
Monthly Remittance Condition is satisfied. The Owner Trustee or the Indenture
Trustee shall not be deemed to have knowledge of any event or circumstance in
the definition of Monthly Remittance Condition that would require remittance
by the Servicer to the Collection Account within two (2) Business Days of
receipt as aforesaid unless the Owner Trustee or the Indenture Trustee has
received written notice of such event or circumstance from the Seller or the
Servicer in an Officer's Certificate or from the holders of Notes evidencing
not less than 25% of the principal amount of the [Controlling Class] [Notes]
Outstanding or from the [Certificateholders of Certificates evidencing not
less than 25% of the Certificate Balance] [Certificateholders of Certificates
evidencing not less than 25% of the Percentage Interests evidenced by the
Certificates] or a Trustee Officer in the Corporate Trust Office with
knowledge hereof or familiarity herewith has actual knowledge of such event or
circumstance. For purposes of this Article IV the phrase "payments by or on
behalf of Obligors" shall mean payments made by Persons other than the
Servicer or by other means.
SECTION 4.3 Application of Collections. For the purposes of this
Agreement, as of the close of business on the last day of each Collection
Period, all collections for the Collection Period with respect to each
Receivable (other than a Purchased Receivable) shall be applied by the
Servicer 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
15
any outstanding fees under the terms of the Receivable. Amounts paid by the
Depositor, the Seller or the Servicer in respect of Purchased Receivables
shall be allocated first to any interest accrued on the related Receivable and
then to the Principal Balance of the related Receivable.
SECTION 4.4 Advances. (a) As of each Determination Date, the Servicer
shall 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 (as adjusted downward, as
the case may be, in accordance with the Servicemembers Civil Relief Act or
pursuant to Section 3.2) on such Receivable (calculated on the basis of a
360-day year of twelve 30-day months), over (y) the interest actually received
by the Servicer with respect to such Receivable from the Obligor or from
payment of the Purchase Amount during or with respect to such Collection
Period. The Servicer shall deposit all such Advances into the Collection
Account in immediately available funds no later than, 11:00 a.m. New York City
time, on the Determination Date. Notwithstanding the foregoing, 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 4.6(b). In addition, in the
event that a Receivable becomes a Defaulted Receivable, Outstanding Advances
in respect of that Receivable 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, and if such
amounts are not sufficient, from amounts on deposit in the Collection Account.
The Servicer shall not make any advance with respect to principal of
Receivables.
(b) The Servicer shall deposit in the Collection Account the
aggregate Advances on the Receivables pursuant to Section 4.4(a). To the
extent that the Servicer fails to make an Advance pursuant to Section 4.4(a)
on the date required, the Servicer shall so notify the Issuer and the
Indenture Trustee in writing specifying the amount of the Advance and the
Receivable to which such Advance related, and the Indenture Trustee shall
withdraw such amount (or, if determinable by the Servicer, such portion of
such amount as does not represent advances for delinquent interest) from the
Reserve Account and deposit such amount in the Collection Account.
SECTION 4.5 Additional Deposits. (a) The Depositor and the Servicer shall
deposit in the Collection Account the aggregate Purchase Amounts with respect
to Purchased Receivables pursuant to Sections 2.3 and 3.7, respectively, and
the Servicer shall deposit therein all Purchase Amounts to be paid under
Section 8.1. All such deposits with respect to a Collection Period shall be
made, in immediately available funds, on the Business Day preceding the
Payment Date related to such Collection Period.
(b) The Indenture Trustee, in accordance with the written instructions of
the Servicer, shall, on each Payment Date make a withdrawal from the Reserve
Account (i) first, in an amount equal to the Reserve Account Excess Amount for
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such Payment Date and (ii) second, in an amount equal to the amount
(if positive) calculated by the Servicer pursuant to the second sentence of
Section 4.6(b).
SECTION 4.6 Distributions. (a) On each Payment Date, the Indenture
Trustee shall cause the transfer and distribution of the amounts set forth in
the Servicer's Certificate for such Payment Date from the Collection Account
to the Servicer, in immediately available funds, for repayment of Outstanding
Advances pursuant to Section 4.4(a).
(b) The Servicer shall on or before each Determination Date calculate the
Available Collections, the Reserve Account Excess Amount, the Available Funds,
the Servicing Fee and all unpaid Servicing Fees from prior Collection Periods,
if any, the Accrued Class A Note Interest, [the Accrued Class B Note Interest]
[the Accrued Class B Certificate Interest], the First Priority Principal
Payment, if any, and the Regular Principal Distribution Amount. In addition,
the Servicer shall calculate on or before each Determination Date the
difference, if any, between the Total Required Payment and the Available Funds
and, pursuant to Section 4.5(b), the Indenture Trustee shall withdraw funds
from the Reserve Account in an amount equal to the lesser of such difference
(if positive) or the balance of such Reserve Account.
(c) On each Payment Date, the Servicer shall instruct the Indenture
Trustee (based on the information contained in the Servicer's Certificate
delivered on or before the related Determination Date pursuant to Section
3.9), to make the following withdrawals from the Collection Account and make
deposits, distributions and payments, to the extent of Available Funds for
such Payment Date (plus funds, if any, deposited in the Collection Account
from the Reserve Account pursuant to Section 4.5(b)), in the following order
of priority:
(i) first, to the Servicer, the Servicing Fee and all unpaid
Servicing Fees from prior Collection Periods;
(ii) second, to the [Class A] Noteholders, the Accrued Class A Note
Interest for such Payment Date; provided that if there are not sufficient
funds available to pay the entire amount of the Accrued Class A Note
Interest, the amounts available shall be applied to the payment of such
interest on the Class A Notes on a pro rata basis;
(iii) third, to the [Class A] Noteholders, the First Priority
Principal Payment, if any, for such Payment Date to be distributed in the
same priority as described under Section 4.6(d) of this Agreement;
(iv) fourth, to [the Class B Noteholders, the Accrued Class B Note
Interest for such Payment Date] [the Certificate Distribution Account,
the Accrued Class B Certificate Interest for such Payment Date];
(v) fifth, to the Principal Distribution Account, the Regular
Principal Distribution Amount (less any amounts distributed under clause
(iii) above) for such Payment Date;
(vi) sixth, if such Payment Date is a Final Scheduled Payment Date
for any Class, to the Principal Distribution Account, the amount
necessary to reduce the remaining principal amount of such Class to zero
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after giving effect to the amount, if any, to be applied on such Payment
Date to such Class from funds deposited pursuant to clauses (iii) and (v)
above;
(vii) seventh, to the Reserve Account, the amount, if any, required
to reinstate the amount in the Reserve Account up to the Specified
Reserve Balance for such Payment Date;
(viii) eighth, to the Indenture Trustee and the Owner Trustee, all
amounts due for fees, expenses and indemnification pursuant to Section
6.7 of the Indenture and Section 7.1 of the Trust Agreement,
respectively, and not previously paid; and
(ix) ninth, to [the Certificate Distribution Account, any remaining
Available Funds for such Payment Date] [the Depositor, any remaining
Available Funds for such Payment Date].
Notwithstanding the foregoing in this Section 4.6(c),
(A) if the Notes have been accelerated after an Event of Default
specified in Section 5.1(iii) of the Indenture, then the Available Funds
shall instead be applied in the following order of priority:
(1) to the Indenture Trustee and the Owner Trustee, all
amounts due for fees, expenses and indemnification under
Section 6.7 of the Indenture, Section 7.1 of the Trust
Agreement and Section 6.2 of this Agreement, respectively,
and not previously paid;
(2) to the Servicer, the Servicing Fee and all unpaid
Servicing Fees from prior Collection Periods;
(3) to the [Class A] Noteholders, the Accrued Class A Note
Interest for such Payment Date; provided that if there are
not sufficient funds available to pay the entire amount of
the Accrued Class A Note Interest, the amounts available
shall be applied to the payment of such interest on the
Class A Notes on a pro rata basis;
(4) to the [Class A] Noteholders, the First Priority Principal
Payment, if any, for such Payment Date to be distributed
in the same manner as described under Section 4.6(d) of
this Agreement;
(5) to the [Class B Noteholders, the Accrued Class B Note
Interest for such Payment Date] [Certificate Distribution
Account, the Accrued Class B Certificate Interest for such
Payment Date];
(6) first, to the holders of the Class [ ] Notes in reduction
of principal until the principal amount of the Class [ ]
Notes has been paid in full and then to the holders of the
Class [ ] Notes, the Class [ ] Notes and the Class [ ]
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Notes on a pro rata basis in reduction of principal until
the principal amount of such Class A Notes has been paid
in full;
(7) to [the holders of the Class [ ] Notes in reduction of
principal until the principal amount of the Class [ ]
Notes has been paid in full] [the Certificate Distribution
Account, the Certificate Balance of the Class B
Certificates]; and
(8) to [the Certificate Distribution Account, any remaining
Available Funds for such Payment Date] [the Depositor, any
remaining Available Funds for such Payment Date]; and
(B) if the Notes have been accelerated after an Event of Default
specified in Section 5.1(i), (ii), (iv) or (v) of the Indenture, then the
Available Funds shall instead be applied in the following order of
priority:
(1) to the Indenture Trustee and the Owner Trustee, all
amounts due for fees, expenses and indemnification under
Section 6.7 of the Indenture, Section 7.1 of the Trust
Agreement and Section 6.2 of this Agreement, respectively,
and not previously paid;
(2) to the Servicer, the Servicing Fee and all unpaid
Servicing Fees from prior Collection Periods;
(3) to the [Class A] Noteholders, the Accrued Class A Note
Interest for such Payment Date; provided that if there are
not sufficient funds available to pay the entire amount of
the Accrued Class A Note Interest, the amounts available
shall be applied to the payment of such interest on the
Class A Notes on a pro rata basis;
(4) first, to the holders of the Class [ ] Notes in reduction
of principal until the principal amount of the Class [ ]
Notes has been paid in full and then to the holders of the
Class [ ] Notes, the Class [ ] Notes and the Class [ ]
Notes on a pro rata basis in reduction of principal until
the principal amount of such Class A Notes has been paid
in full;
(5) to [the Class B Noteholders, first, the Accrued Class B
Note Interest for such Payment Date and second, in
reduction of principal until the principal amount of the
Class B Notes has been paid in full] [the Certificate
Distribution Account, the sum of (x) the Accrued Class B
Certificate Interest for such Payment Date and (y) the
Certificate Balance of the Class B Certificates]; and
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(6) to [the Certificate Distribution Account, any remaining
Available Funds for such Payment Date] [the Depositor, any
remaining Available Funds for such Payment Date].
(d) If the Notes have not been accelerated because of an Event of
Default, then on each Payment Date the Servicer shall instruct the
Indenture Trustee (based on the information contained in the Servicer's
Certificate delivered on or before the related Determination Date
pursuant to Section 3.9), to withdraw the funds deposited in the
Principal Distribution Account on such Payment Date and make
distributions and payments in the following order of priority:
(i) first, to the holders of the Class [ ] Notes on a pro rata
basis in reduction of principal until the principal amount of
the Class [ ] Notes has been paid in full;
(ii) second, to the holders of the Class [ ] Notes on a pro rata
basis in reduction of principal until the principal amount of
the Class [ ] Notes has been paid in full;
(iii) third, to the holders of the Class [ ] Notes on a pro rata
basis in reduction of principal until the principal amount of
the Class [ ] Notes has been paid in full;
(iv) fourth, to the holders of the Class [ ] Notes on a pro rata
basis in reduction of principal until the principal amount of
the Class [ ] Notes has been paid in full; and
(v) fifth, [to the holders of the Class [ ] Notes on a pro rata
basis in reduction of principal until the principal amount of
the Class [ ] Notes has been paid in full] [to the Certificate
Distribution Account in reduction of the Certificate Balance
of the Class B Certificates until the Certificate Balance of
the Class B Certificates has been reduced to zero].
Any funds remaining on deposit in the Principal Distribution Account shall be
paid to the Indenture Trustee and the Owner Trustee to the extent, if any, of
amounts due to them hereunder that are unpaid and then to [the Certificate
Distribution Account] [the Depositor].
If the Notes have been accelerated because of an Event of
Default, then on each Payment Date the Servicer shall instruct the Indenture
Trustee (based on the information contained in the Servicer's Certificate
delivered on or before the related Determination Date pursuant to Section
3.9), to withdraw the funds deposited in the Principal Distribution Account on
such Payment Date and pay them to the holders of the Class [ ] Notes until the
principal amount of the Class [ ] Notes has been paid in full, then to the
holders of the Class [ ] Notes, Class [ ] Notes and Class [ ] Notes on a pro
rata basis in reduction of principal until the principal amount of the Class [
] Notes has been paid in full and then to the holders of the Class [ ] Notes
in reduction of principal until the principal amount of the Class [ ] Notes
has been paid in full.
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SECTION 4.7 Reserve Account. (a) (i) The Servicer shall, prior to the
Closing Date, cause to be established and maintained an Eligible Deposit
Account in the name "__________, as Indenture Trustee, as secured party from
USAA Auto Owner Trust 200_-[ ]", initially at the corporate trust department
of the Indenture Trustee, which shall be designated as the "Reserve Account"
(the Reserve Account, together with the Collection Account (including the
Principal Distribution Account), the "Trust Accounts"). The Reserve Account
shall be under the sole dominion and control of the Indenture Trustee;
provided, that the Servicer may make deposits to the Reserve Account in
accordance with the Basic Documents. The Reserve Account will be established
and maintained pursuant to an account agreement which specifies New York law
as the governing law. In addition, the Reserve Account shall be established
and maintained at an institution which agrees in writing that for so long as
the Notes are Outstanding it will comply with entitlement orders (as defined
in Article 8 of the UCC) originated by the Indenture Trustee without further
consent of the Issuer. On the Closing Date, the Depositor shall deposit the
Reserve Initial Deposit into the Reserve Account. The Reserve Account and all
amounts, securities, investments, financial assets and other property
deposited in or credited to the Reserve Account (such amounts, the "Reserve
Account Property") shall be held by the Indenture Trustee as secured party for
the benefit of the Noteholders and, after payment in full of the Notes, as
agent of the Owner Trustee and as part of the Trust Property, and all deposits
to and withdrawals from there from shall be made only upon the terms and
conditions of the Basic Documents.
The Reserve Account Property shall, to the extent permitted by applicable
law, rules and regulations, be invested, as directed in writing by the
[holders of Certificates holding not less than a majority of the Percentage
Interest evidenced by the Certificates] [Depositor], by the bank or trust
company then maintaining the Reserve Account in Permitted Investments that
mature not later than the next Payment Date or such later date that satisfies
the Rating Agency Condition, and such Permitted Investments shall be held to
maturity. If __________ is the Indenture Trustee, in the absence of written
direction, all funds shall be invested in the ____________. Additionally,
amounts in the Reserve Account will be retained as provided in Section 8.3(c)
of the Indenture. All interest and other income (net of losses and investment
expenses) on funds on deposit in the Reserve Account shall be deposited
therein. The Indenture Trustee shall not be liable for investment losses in
Permitted Investments made in accordance with directions from the [investment
instructions received from holders of the Certificates as provided above]
[Depositor]. In the event the Reserve Account is no longer to be maintained at
the corporate trust department of the Indenture Trustee, the Servicer shall,
with the Indenture Trustee's or Owner Trustee's assistance as necessary, cause
an Eligible Deposit Account to be established as the Reserve Account within
ten (10) Business Days (or such longer period not to exceed thirty (30)
calendar days as to which each Rating Agency may consent) and give written
notice of the location and account number of such account to the Indenture
Trustee.
(ii) With respect to Reserve Account Property:
(A) any Reserve Account Property that is a
"financial asset" as defined in Section 8-102(a)(9) of the
UCC shall be physically delivered to, or credited to an
account in the name of, the institution maintaining the
Reserve Account in accordance with such institution's
customary procedures such that such institution establishes
21
a "securities entitlement" in favor of the Indenture Trustee
with respect thereto; and
(B) any Reserve Account Property that is held in
deposit accounts shall be held solely in the name of the
Indenture Trustee at one or more depository institutions
having the Required Rating and each such deposit account
shall be subject to the exclusive custody and control of the
Indenture Trustee and the Indenture Trustee shall have sole
signature authority with respect thereto.
(iii) Except for any deposit accounts specified in clause
(ii)(B) above, the Reserve Account shall only be invested in
securities or in other assets which the institution maintaining the
Reserve Account agrees to treat as "financial assets" as defined in
Section 8-102(a)(9) of the UCC.
(b) If the Servicer pursuant to Section 4.4 determines on or before
any Determination Date that it is required to make an Advance and does not do
so from its own funds, the Servicer shall promptly instruct the Indenture
Trustee in writing to draw funds, in an amount specified by the Servicer, from
the Reserve Account and deposit them in the Collection Account to cover any
shortfall. Such payment shall be deemed to have been made by the Servicer
pursuant to Section 4.4 for purposes of making distributions pursuant to this
Agreement, but shall not otherwise satisfy the Servicer's obligation to
deliver the amount of the Advances to the Indenture Trustee, and the Servicer
shall within two (2) Business Days replace any funds in the Reserve Account so
used.
(c) Following the payment in full of the aggregate principal amount
of the Notes [and the Certificate Balance] and of all other amounts owing or
to be distributed hereunder or under the Indenture or the Trust Agreement to
Noteholders [and Certificateholders], the Indenture Trustee and the Owner
Trustee and the termination of the Trust, any remaining Reserve Account
Property shall be distributed to the [Certificate Distribution Account]
[Depositor].
(d) [The Depositor shall be permitted to sell, transfer, convey or
assign in any manner its rights in the Reserve Account under Section 4.7(c),
together with its rights to receive amounts under Section 4.6(c) of this
Agreement and Sections 5.4(b)(v), 8.2(c) and 8.2(d) of the Indenture in
accordance with the priority of payments, provided that each of the following
conditions shall be satisfied:
(i) the Rating Agency Condition is satisfied with respect to
such action;
(ii) such action shall not, as evidenced by an Opinion of
Counsel, cause the Issuer to be characterized as an association (or a
publicly traded partnership) taxable as a corporation for federal
income tax purposes; and
(iii) the transferee or assignee agrees in writing to take
positions for federal income tax purposes consistent with the federal
income tax positions taken previously by the Depositor.]
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SECTION 4.8 Net Deposits. For so long as (i) the Bank shall be the
Servicer and (ii) the Servicer shall be entitled pursuant to Section 4.2 to
remit collections on a monthly basis rather than within two (2) Business Days
of receipt, the Bank may make the remittances pursuant to Sections 4.2 and 4.5
above, net of amounts to be distributed to the Bank pursuant to Section
4.6(c). Nonetheless, the Servicer shall account for all of the above described
remittances and distributions except for the Supplemental Servicing Fee in the
Servicer's Certificate as if the amounts were deposited and/or transferred
separately.
SECTION 4.9 Statements to Noteholders and Certificateholders. On the
Business Day prior to each Payment Date, the Servicer shall provide to the
Indenture Trustee (with copies to the Rating Agencies, each Note Paying Agent
and the Depositor) for the Indenture Trustee to make available to each
Noteholder of record as of the most recent Record Date and to the Owner
Trustee (with copies to the Rating Agencies and to each Certificate Paying
Agent) for the Owner Trustee to forward to each Certificateholder of record as
of the most recent Record Date a statement based on information in the
Servicer's Certificate furnished pursuant to Section 3.9, setting forth for
the Collection Period relating to such Payment Date the following information
as to the Notes and the Certificates to the extent applicable:
(i) the amount of such distribution allocable to principal
allocable to the Notes [and to the Certificates];
(ii) the amount of such distribution allocable to interest
allocable to the Notes [and the Certificates];
(iii) the amount of such distribution allocable to draws
from the Reserve Account, if any;
(iv) the number of receivables and the Pool Balance as of
the beginning of business on the first day of the preceding
Collection Period and the close of business on the last day of the
preceding Collection Period;
(v) the Specified Reserve Balance as of such Payment Date;
(vi) the amount of the Servicing Fee paid to the Servicer
with respect to the related Collection Period and the amount of any
unpaid Servicing Fees and the change in such amount from that of the
prior Payment Date;
(vii) the amounts of the Class A Noteholders' Interest
Carryover Shortfall and the [Class B Noteholders' Interest Carryover
Shortfall] [Class B Certificateholders' Interest Carryover
Shortfall], if any, on such Payment Date and the change in such
amounts from the preceding Payment Date;
(viii) the aggregate outstanding principal amount of each
Class of Notes and the Note Pool Factor for each Class of Notes, [the
Certificate Balance and the Certificate Pool Factor as of such
Payment Date];
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(ix) the amount of any previously due and unpaid payment of
principal of the Notes or of the Certificate Balance, as applicable,
and the change in such amount from that of the prior Payment Date;
(x) [reserved];
(xi) the balance of the Reserve Account on such Payment
Date, after giving effect to distributions made on such Payment Date
and the change in such balance from the preceding Payment Date;
(xii) the aggregate Purchase Amount of Receivables
repurchased by the Depositor or the Seller or purchased by the
Servicer, if any, with respect to the related Collection Period;
(xiii) the amount of Advances, if any, on such Payment Date;
(xiv) the aggregate Collections for the related Collection
Period;
(xv) the aggregate Principal Balance of the Receivables that
became designated as Defaulted Receivables during the related
Collection Period;
(xvi) the applicable Record Dates, Interest Period and
Determination Dates for calculating distributions and the actual
Payment Date;
(xvii) the amount of Collections received on the Receivables
and any other assets of the Trust for the related Collection Period
and any fees and expenses of the trust paid with respect to the
Collection Period;
(xviii) delinquency and loss information for the receivables
for the related Collection Period; and
(xix) information on any coverage ratios or performance
triggers, if applicable, and an indication if such triggers have been
reached.
In addition, such statements may be posted by the Indenture Trustee on
its website at _________________.
Each amount set forth on the Payment Date statement pursuant to
clauses (i), (ii), (vi), (vii) and (ix) above shall be expressed as a dollar
amount per $1,000 of original principal amount of a Note [or original
Certificate Balance of a Certificate, as applicable].
ARTICLE V
THE DEPOSITOR
SECTION 5.1 Representations, Warranties and Covenants of Depositor.
24
(a) The Depositor makes the following representations and warranties on
which the Issuer is deemed to have relied in acquiring the Trust Property. The
representations and warranties speak as of the execution and delivery of this
Agreement and shall survive the conveyance of the Trust Property, by the
Depositor to the Issuer and the pledge thereof by the Issuer to the Indenture
Trustee pursuant to the Indenture:
(i) Organization and Good Standing. The Depositor is a limited liability
company duly formed, validly existing and in good standing under the laws of
the State of Delaware, with all requisite 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 Depositor has all requisite power and
authority to execute and deliver this Agreement and the other Basic Documents
to which it is a party and to carry out their terms; the Depositor has full
power and authority to sell and assign the property to be sold, and assigned
to and deposited with the Issuer, and the Depositor shall have duly authorized
such sale and assignment to the Issuer by all necessary limited liability
company action; and the execution, delivery, and performance of this Agreement
and the other Basic Documents to which the Depositor is a party have been duly
authorized, executed and delivered by the Depositor by all necessary limited
liability company action.
(iii) Binding Obligations. This Agreement, when duly executed and
delivered by the other parties hereto, constitutes a legal, valid, and binding
obligation of the Depositor enforceable against the Depositor in accordance
with its terms, except as the enforceability hereof may be limited by
bankruptcy, insolvency, reorganization, or other similar laws affecting
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
this Agreement and the other Basic Documents to which the Depositor is a party
and the fulfillment of the terms hereof and thereof do not (i) 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 limited
liability company agreement of the Depositor, 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 Depositor is a party or by which it is bound, (ii)
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 (iii) violate any law or, to the best of the Depositor's knowledge, any
order, rule, or regulation applicable to the Depositor of any court or of any
federal or state regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Depositor or its properties.
(v) No Proceedings. There are no proceedings or investigations pending,
or, to the best of the Depositor's knowledge, threatened, before any court,
regulatory body, administrative agency, or other governmental instrumentality
having jurisdiction over the Depositor or its properties (i) asserting the
invalidity of this Agreement, any of the other Basic Documents or the
Securities, (ii) seeking to prevent the issuance of the Securities or the
25
consummation of any of the transactions contemplated by this Agreement or the
other Basic Documents, (iii) seeking any determination or ruling that might
materially and adversely affect the performance by the Depositor of its
obligations under, or the validity or enforceability of, this Agreement, any
of the other Basic Documents or the Securities or (iv) relating to the
Depositor and which might adversely affect the federal income tax attributes
of the Securities.
(vi) Security Interest Representation. This Agreement creates a valid and
continuing security interest (as defined in the applicable UCC) in the
Receivables that is in existence in favor of the Issuer, which security
interest is prior to all other liens, and is enforceable as such as against
creditors of and purchasers from the Depositor, which security interest will
be assigned to the Indenture Trustee pursuant to the Indenture. Other than the
security interest granted to the Issuer, the Depositor has not pledged,
assigned, transferred or sold, a security interest in, or otherwise conveyed
any of the Receivables, the Depositor has not authorized the filing of and is
not aware of any financing statements against the Depositor that include a
description of such Receivables other than the financing statements in favor
of the Issuer and the Indenture Trustee, and the Depositor is not aware of any
judgment or tax lien filing against it.
(b) The Depositor covenants that it shall provide, or cause the Servicer
to provide, in a timely manner the certifications required by Section 302 of
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002.
SECTION 5.2 Liability of Depositor; Indemnities. The Depositor shall be
liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Depositor under this Agreement, and hereby
agrees to the following:
(a) The Depositor shall indemnify, defend, and hold harmless the Issuer,
the Owner Trustee and the Indenture Trustee from and against any taxes that
may at any time be asserted against any such Person with respect to, and as of
the date of, the conveyance of the Receivables to the Issuer or the issuance
and original sale of the Notes and the Certificates, including any sales,
gross receipts, general corporation, tangible personal property, privilege, or
license taxes (but, in the case of the Issuer, not including any taxes
asserted with respect to ownership of the Receivables or federal or state
income taxes arising out of the transactions contemplated by this Agreement
and the other Basic Documents) and costs and expenses in defending against the
same.
(b) The Depositor shall indemnify, defend, and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders from and against any loss, liability or expense incurred by
reason of (i) the Depositor's willful misfeasance, bad faith, or negligence in
the performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement and (ii) the
Depositor's violation of federal or State securities laws in connection with
the registration or the sale of the Notes or the Certificates.
(c) Indemnification under this Section 5.2 shall survive the resignation
or removal of the Owner Trustee or the Indenture Trustee and the termination
of this Agreement and shall include, without limitation, reasonable fees and
expenses of counsel and expenses of litigation. If the Depositor shall have
made any indemnity payments pursuant to this Section 5.2 and the Person to or
on behalf of whom such payments are made thereafter shall collect any of such
26
amounts from others, such Person shall promptly repay such amounts to the
Depositor, without interest.
SECTION 5.3 Merger or Consolidation of, or Assumption of the Obligations
of Depositor. Any Person (i) into which the Depositor may be merged or
consolidated, (ii) resulting from any merger, conversion, or consolidation to
which the Depositor shall be a party, or (iii) succeeding to the business of
the Depositor, which Person in any of the foregoing cases executes an
agreement of assumption to perform every obligation of the Depositor under
this Agreement, will be the successor to the Depositor under this Agreement
without the execution or filing of any document or any further act on the part
of any of the parties to this Agreement. The Depositor shall provide notice of
any merger, conversion, consolidation, or succession pursuant to this Section
5.3 to the Rating Agencies.
SECTION 5.4 Limitation on Liability of Depositor and Others. The
Depositor and any officer or employee or agent of the Depositor may rely in
good faith on the advice of counsel or on any document of any kind, prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Depositor shall not be under any obligation to appear
in, prosecute, or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in
any expense or liability.
SECTION 5.5 Depositor May Own Notes or Certificates. The Depositor, and
any Affiliate of the Depositor, may in its individual or any other capacity
become the owner or pledgee of Notes or Certificates with the same rights as
it would have if it were not the Depositor or an Affiliate thereof, except as
otherwise expressly provided herein or in the other Basic Documents. Except as
set forth herein or in the other Basic Documents, Notes and Certificates so
owned by or pledged to the Depositor or any such Affiliate shall have an equal
and proportionate benefit under the provisions of this Agreement and the other
Basic Documents, without preference, priority, or distinction as among all of
the Notes and Certificates.
ARTICLE VI
THE SERVICER
SECTION 6.1 Representations of Servicer. The Servicer makes the following
representations on which the Issuer is deemed to have relied in acquiring the
Trust Property. The representations speak as of the execution and delivery of
this Agreement and shall survive the conveyance of the Trust Property to the
Issuer and the pledge thereof by the Issuer pursuant to the Indenture:
(a) Organization and Good Standing. The Servicer has been duly organized
and is validly existing as a federally chartered savings association or
corporation and is in good standing under the laws of the United States of
America or its state of incorporation, with power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted, and had at all relevant times, and
has, power, authority, and legal right to acquire, own, sell, and service the
Receivables and to hold the Receivable Files as custodian on behalf of the
Indenture Trustee.
27
(b) Power and Authority. The Servicer has the power and authority to
execute and deliver this Agreement and the other Basic Documents to which it
is a party and to carry out their terms; and the execution, delivery, and
performance of this Agreement and the other Basic Documents to which it is a
party shall have duly authorized, executed and delivered by the Servicer by
all necessary corporate action.
(c) Binding Obligations. This Agreement constitutes a legal, valid, and
binding obligation of the Servicer enforceable in accordance with their 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.
(d) No Violation. The consummation of the transactions contemplated by
this Agreement and the other Basic Documents to which the Servicer is a party
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 (i) (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, (ii) 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 (iii) 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.
(e) 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 (i) asserting the
invalidity of this Agreement, any of the other Basic Documents or the
Securities, (ii) seeking to prevent the issuance of the Securities or the
consummation of any of the transactions contemplated by this Agreement and the
other Basic Documents, (iii) seeking any determination or ruling that might
materially and adversely affect the performance by the Servicer of its
obligations under, or the validity or enforceability of, this Agreement, any
of the other Basic Documents or the Securities, or (iv) relating to the
Servicer and which might adversely affect the federal income tax attributes of
the Securities.
(f) 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 6.2 Indemnities of Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement, and hereby agrees to the
following:
(a) The Servicer shall defend, indemnify and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee, the Noteholders, the
28
Certificateholders and the Depositor 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.
(b) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Depositor and the Indenture Trustee from and against
any taxes that may at any time be asserted against any such Person with
respect to the transactions contemplated herein or in the other Basic
Documents, if any, including, without limitation, any sales, gross receipts,
general corporation, tangible personal property, privilege, or license taxes
(but, in the case of the Issuer, not including any taxes asserted with respect
to, and as of the date of, the conveyance of the Receivables to the Issuer or
the issuance and original sale of the Notes and the Certificates, or asserted
with respect to ownership of the Receivables, or federal or state income taxes
arising out of the transactions contemplated by this Agreement and the other
Basic Documents) and costs and expenses in defending against the same.
(c) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee, the Noteholders, the
Certificateholders and the Depositor from and against any and all costs,
expenses, losses, claims, damages, and liabilities to the extent that such
cost, expense, loss, claim, damage, or liability arose out of, or was imposed
upon any such Person through, the negligence, willful misfeasance, or bad
faith of the Servicer in the performance of its duties under this Agreement or
any other Basic Document to which it is a party, or by reason of reckless
disregard of its obligations and duties under this Agreement or any other
Basic Document to which it is a party.
(d) The Servicer shall indemnify, defend, and hold harmless the Owner
Trustee and the Indenture Trustee, as applicable, 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
contained herein and in the other Basic Documents, if any, except to the
extent that such cost, expense, loss, claim, damage, or liability: (i) shall
be due to the willful misfeasance, bad faith, or negligence (except for errors
in judgment) of the Owner Trustee or the Indenture Trustee, as applicable;
(ii) in the case of the Owner Trustee, shall arise from the Owner Trustee's
breach of any of its representations or warranties set forth in Section 6.9 of
the Trust Agreement or, in the case of the Indenture Trustee, from the
Indenture Trustee's breach of any of its representations or warranties set
forth in the Indenture; or (iii) in the case of the Indenture Trustee, shall
arise out of or be incurred in connection with the performance by the
Indenture Trustee of the duties of a Successor Servicer hereunder.
(e) Indemnification under this Section 6.2 by the Bank (or any successor
thereto pursuant to Section 7.2) as Servicer, with respect to the period such
Person was the Servicer, shall survive the termination of such Person as
Servicer or a resignation by such Person as Servicer as well as the
termination of this Agreement or the resignation or removal of the Owner
Trustee or the Indenture Trustee and 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 6.2 and the Person to or
on behalf of whom such payments are made thereafter shall collect any of such
amounts from others, such Person shall promptly repay such amounts to the
Servicer, without interest.
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SECTION 6.3 Merger or Consolidation of, or Assumption of the Obligations
of Servicer. Any Person (i) into which the Servicer may be merged or
consolidated, (ii) resulting from any merger, conversion, or consolidation to
which the Servicer shall be a party, (iii) succeeding to the business of the
Servicer or (iv) 50% or more of the equity of which is owned, directly or
indirectly, by the United Services Automobile Association, which Person in any
of the foregoing cases executes an agreement of assumption to perform every
obligation of the Servicer under this Agreement, will be the successor to the
Servicer under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties to this Agreement. The
Servicer shall provide prior notice of the effective date of any merger,
conversion, consolidation or succession pursuant to this Section 6.3 to the
Rating Agencies, the Indenture Trustee and the Depositor. The Servicer shall
provide the Depositor in writing such information as reasonably requested by
the Depositor to comply with its Exchange Act reporting obligations with
respect to a successor Servicer.
SECTION 6.4 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 Issuer, the Noteholders or
the Certificateholders, except as provided under this Agreement, for any
action taken or for refraining from the taking of any action pursuant to this
Agreement or for errors in judgment; provided, however, that this provision
shall not protect the Servicer or any such Person against any liability that
would otherwise be imposed by reason of willful misfeasance or bad faith in
the performance of duties or by reason of reckless disregard of obligations
and duties under this Agreement, or by reason of negligence in the performance
of its duties under this Agreement. The Servicer and any director, officer or
employee or agent of the Servicer may rely in good faith on any Opinion of
Counsel or on any Officer's Certificate of the Depositor or certificate of
auditors believed to be genuine and to have been signed by the proper party in
respect of any matters arising under this Agreement.
(b) Except as provided in this 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 duties to service the Receivables in accordance with
this 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 this Agreement
and the rights and duties of the parties to this Agreement and the interests
of the Noteholders and Certificateholders under this 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 Issuer, and the
Servicer shall be entitled to be reimbursed therefor. Any amounts due the
Servicer pursuant to this subsection shall be payable on a Payment Date from
the Available Collections on deposit in the Collection Account only after all
payments required to be made on such date to the Noteholders[, the
Certificateholders] and the Servicer have been made, and deposits of any
amount required to be deposited into the Reserve Account pursuant to Section
4.6(c)(vi) to maintain the amount on deposit therein (exclusive of investment
income and earnings on amounts on deposit therein) at the Specified Reserve
Balance on such date have been made.
(c) 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
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the Servicer's duties under this Agreement, other than (i) any loss or
liability otherwise reimbursable pursuant to this 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 this Agreement; and (iii) any loss, liability, or expense for which the
Issuer is to be indemnified by the Servicer under this Agreement. Any amounts
due the Servicer pursuant to this subsection shall be payable on a Payment
Date from the Available Funds on deposit in the Collection Account only after
all payments required to be made on such date to the Noteholders[, the
Certificateholders] and the Servicer have been made, and deposits of any
amount required to be deposited into the Reserve Account pursuant to Section
4.6(c)(vi) to maintain the amount on deposit therein (exclusive of investment
income and earnings on amounts on deposit therein) at the Specified Reserve
Balance on such date have been made.
SECTION 6.5 Delegation of Duties. The Servicer may at any time perform
specific duties as servicer under this Agreement through sub-contractors;
provided that no such delegation or subcontracting shall relieve the Servicer
of its responsibilities with respect to such duties as to which the Servicer
shall remain primarily responsible and the Servicer shall be solely
responsible for the fees of any such sub-contractors.
SECTION 6.6 Servicer Not to Resign as Servicer. Subject to the provisions
of Section 6.3, the Servicer shall not resign from its obligations and duties
under this Agreement except upon determination that the performance of its
duties under this Agreement shall no longer be permissible under applicable
law. Notice of any such determination permitting the resignation of the
Servicer shall be communicated to the Owner Trustee, the Indenture Trustee and
the Depositor at the earliest practicable time (and, if such communication is
not in writing, shall be confirmed in writing at the earliest practicable
time) and any such determination shall be evidenced by an Opinion of Counsel
to such effect delivered to the Owner Trustee and the Indenture Trustee
concurrently with or promptly after such notice. No such resignation shall
become effective until the Indenture Trustee or a Successor Servicer shall
have (i) taken the actions required by Section 7.1(b), (ii) assumed the
responsibilities and obligations of the Servicer in accordance with Section
7.2 and (iii) provided in writing the information reasonably requested by the
Depositor to comply with its reporting obligations under the Exchange Act with
respect to a replacement Servicer.
SECTION 6.7 Servicer May Own Notes or Certificates. The Servicer, and any
Affiliate of the Servicer, may, in its individual or any other capacity,
become the owner or pledgee of Notes or Certificates with the same rights as
it would have if it were not the Servicer or an Affiliate thereof, except as
otherwise expressly provided herein or in the other Basic Documents. Except as
set forth herein or in the other Basic Documents, Notes and Certificates so
owned by or pledged to the Servicer or such Affiliate shall have an equal and
proportionate benefit under the provisions of this Agreement, without
preference, priority or distinction as among all of the Notes and
Certificates.
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ARTICLE VII
SERVICING TERMINATION
SECTION 7.1 Events of Servicing Termination. (a) If any one of the
following events ("Events of Servicing Termination") shall occur and be
continuing:
(i) Any failure by the Servicer (or, so long as the Seller
is the Servicer, the Seller) to deliver to the Owner Trustee or the
Indenture Trustee any proceeds or payment required to be so delivered
under the terms of the Notes and the Certificates and this Agreement
that shall continue unremedied for a period of five (5) Business Days
after written notice of such failure is received by the Servicer or
the Seller, as the case may be, from the Owner Trustee or the
Indenture Trustee or after discovery of such failure by an officer of
the Servicer or the Seller, as the case may be; 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, as the case
may be, set forth in the Notes, the Certificates or in this
Agreement, which failure shall (A) materially and adversely affect
the rights of Noteholders or Certificateholders and (B) continue
unremedied for a period of ninety (90) 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 the Seller, as the case
may be, by the Owner Trustee or the Indenture Trustee, or (2) to the
Owner Trustee, the Indenture Trustee, the Seller and the Servicer by
the Noteholders of Notes evidencing not less than 25% of the
principal amount of the [Controlling Class] [Notes] or, if no Notes
are outstanding, by Certificateholders of Certificates evidencing not
less than 25% of the [Percentage Interests evidenced by the
Certificates] [Certificate Balance]; or
(iii) So long as the Bank or another depository institution
is not the Servicer, 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 its respective affairs, and the continuance of any
such decree or order unstayed and in effect for a period of sixty
(60) consecutive days; or
(iv) So long as the Bank or another depository institution
is not the Servicer, 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 of or relating to
substantially all of its 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 voluntary suspend payment of its obligations or become
insolvent;
then the Indenture Trustee shall promptly notify each Rating Agency, and in
each and every case, so long as an Event of Servicing Termination shall not
32
have been remedied, either the Indenture Trustee or the holders of Notes
evidencing not less than a majority of the principal amount of the
[Controlling Class] [Notes] Outstanding (or, if no Notes are Outstanding,
Certificates evidencing not less than a majority of the [Percentage Interests
evidenced by the Certificates] [Certificate Balance]), by notice then given in
writing to the Servicer (and to the Indenture Trustee and the Owner Trustee if
given by the Noteholders and to the Owner Trustee if given by the
Certificateholders) (with a copy to the Rating Agencies) may terminate all of
the rights and obligations of the Servicer under this Agreement. On or after
the receipt by the Servicer of such written notice, all authority and power of
the Servicer under this Agreement, whether with respect to the Notes, the
Certificates or the Trust Property or otherwise, shall pass to and be vested
in the Indenture Trustee or such Successor Servicer as may be appointed under
Section 7.2; and, without limitation, the Indenture Trustee and the Owner
Trustee are 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
Receivables and related documents, or otherwise.
(b) Upon termination of the Servicer under Section 7.1(a), the
predecessor Servicer shall cooperate with the Indenture Trustee, the Owner
Trustee and such Successor Servicer in effecting the termination of the
responsibilities and rights of the predecessor Servicer under this Agreement,
including the transfer to the Indenture Trustee or such Successor Servicer for
administration of all cash amounts that shall at the time be held by the
predecessor Servicer for deposit, or shall thereafter be received with respect
to a Receivable and the delivery of the Receivable Files and the related
accounts and records maintained by the Servicer. All reasonable costs and
expenses (including attorneys' fees) incurred in connection with transferring
the Receivable Files to the Successor Servicer and amending this Agreement to
reflect such succession as Servicer pursuant to this Section 7.1 shall be paid
by the predecessor Servicer upon presentation of reasonable documentation of
such costs and expenses.
SECTION 7.2 Appointment of Successor Servicer. (a) Upon the Servicer's
receipt of notice of termination pursuant to Section 7.1 or the Servicer's
resignation in accordance with the terms of this Agreement, the predecessor
Servicer shall continue to perform its functions as Servicer under this
Agreement, in the case of termination, only until the date specified in such
termination notice or, if no such date is specified in a notice of
termination, until receipt of such notice and, in the case of resignation,
until the later of (x) the date 90 days from the delivery to the Indenture
Trustee and the Owner Trustee of written notice of such resignation (or
written confirmation of such notice) in accordance with the terms of this
Agreement and (y) the date upon which the predecessor Servicer shall become
unable to act as Servicer, as specified in the notice of resignation and
accompanying Opinion of Counsel. In the event of the Servicer's resignation or
termination hereunder, the Issuer shall appoint a Successor Servicer, and the
Successor Servicer shall accept its appointment by a written assumption in
form acceptable to the Owner Trustee and the Indenture Trustee (with a copy to
each Rating Agency) and shall provide the Depositor in writing with such
information as reasonably requested by the Depositor to comply with its
reporting obligations under the Exchange Act with respect to a replacement
servicer. In the event that a Successor Servicer has not been appointed at the
time when the predecessor Servicer has ceased to act as Servicer in accordance
with this Section 7.2, the Indenture Trustee without further action shall
33
automatically be appointed the Successor Servicer and the Indenture Trustee
shall be entitled to the Servicing Fee and shall provide the Depositor in
writing with such information as reasonably requested by the Depositor to
comply with its reporting obligations under the Exchange Act with respect to a
Master Servicer. The Indenture Trustee may resign as the Servicer by giving
written notice of such resignation to the Issuer and in such event shall be
released from such duties and obligations, such release not to be effective
until the date a Successor Servicer enters into a written assumption as
provided in this Section. Upon delivery of any such notice to the Issuer, the
Issuer shall obtain a new servicer as the Successor Servicer in accordance
with this Section. Notwithstanding the above, if the Indenture Trustee shall
be legally unable so to act or if, within 30 days after the delivery of its
notice of resignation, the Issuer shall not have obtained a Successor
Servicer, the Indenture Trustee shall appoint, or petition a court of
competent jurisdiction to appoint, any established institution, having a net
worth of not less than $100,000,000 and whose regular business shall include
the servicing of automotive receivables, as the successor to the Servicer
under this Agreement; provided that the Rating Agency Condition shall be
satisfied in connection with such appointment.
(b) Upon appointment, the Successor Servicer shall be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties, and liabilities arising thereafter relating thereto
placed on the predecessor Servicer, by the terms and provisions of this
Agreement.
(c) In connection with such appointment, subject to Section 3.7(e) of the
Indenture, the Indenture 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 predecessor Servicer
under this Agreement. The Indenture Trustee and such Successor Servicer shall
take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
SECTION 7.3 Repayment of Advances. If the identity of the Servicer shall
change, the predecessor Servicer shall be entitled to receive to the extent of
available funds reimbursement for Outstanding Advances pursuant to Section 4.3
and 4.4, in the manner specified in Section 4.6, with respect to all Advances
made by the predecessor Servicer.
SECTION 7.4 Notification to Noteholders and Certificateholders. Upon any
termination of, or appointment of a successor to, the Servicer pursuant to
this Article VII, the Indenture Trustee shall give prompt written notice
thereof to Noteholders, and the Owner Trustee shall give prompt written notice
thereof to Certificateholders at their respective addresses of record and to
each Rating Agency.
SECTION 7.5 Waiver of Past Events of Servicing Termination. The holders
of Notes evidencing not less than a majority of the principal amount of the
[Controlling Class] [Notes] (or, if no Notes are Outstanding, holders of
Certificates evidencing not less than a majority of the [Percentage Interests
evidenced by the Certificates] [Certificate Balance]) may, on behalf of all
Noteholders and Certificateholders, waive any Event of Servicing Termination
hereunder and its consequences, except an event resulting from the failure to
make any required deposits to or payments from any of the Trust Accounts or
34
the Certificate Distribution Account in accordance with this Agreement, which
shall require the unanimous vote of all Holders of Outstanding Securities.
Upon any such waiver of a past Event of Servicing Termination, such Event of
Servicing Termination shall cease to exist, and shall be deemed to have been
remedied for every purpose of this Agreement. No such waiver shall extend to
any subsequent or other event or impair any right consequent thereon. The
Issuer shall provide written notice of any such waiver to the Rating Agencies.
ARTICLE VIII
TERMINATION
SECTION 8.1 Optional Purchase of All Receivables. As of the last day of
any Collection Period as of which the Pool Factor shall be equal to or less
than the Optional Purchase Percentage, the Servicer shall have the option to
purchase the Trust Property from the Trust. To exercise such option, the
Servicer shall deposit pursuant to Section 4.5 in the Collection Account an
amount equal to the lesser of (i) the aggregate Purchase Amount for the
Receivables and (ii) the fair market value of the Receivables, and shall
succeed to all interests in and to the Trust. Notwithstanding the foregoing,
the Servicer shall not be permitted to exercise such option unless the amount
to be deposited in the Collection Account pursuant to the preceding sentence
is greater than or equal to the sum of the outstanding principal amount of the
Notes [and the Certificate Balance] and all accrued but unpaid interest
(including any over due interest) thereon. The amount deposited in the
Collection Account pursuant to this Section 8.1 shall be used on the next
Payment Date to make payments in full to Noteholders and Certificateholders in
the manner set forth in Article IV. The purchase of the Trust Property
pursuant to this Section shall not be permitted unless either (i) the
Servicer's long-term unsecured debt is rated at the time of such purchase at
least Baa3 by Moody's or (ii) the Servicer provides to the Indenture Trustee
and the Owner Trustee an Opinion of Counsel in form reasonably satisfactory to
the Indenture Trustee and the Owner Trustee and in form and substance
satisfactory to Moody's to the effect that such purchase will not constitute a
fraudulent transfer of assets of the Servicer under applicable state and
federal law; provided that this sentence may be deleted or modified with the
consent of Moody's and without the consent of any Securityholder, the
Indenture Trustee or the Owner Trustee.
SECTION 8.2 Succession Upon Satisfaction and Discharge of Indenture.
Following the satisfaction and discharge of the Indenture and the payment in
full of the principal of and interest on the Notes, to the extent permitted by
applicable law and until the payment of all amounts owing or to be distributed
hereunder to the Certificateholders [or the Depositor], the Indenture Trustee
will continue to carry out its obligations hereunder as agent for the Owner
Trustee, including without limitation making distributions from the Collection
Account in accordance with Section 4.6 and making withdrawals from the Reserve
Account in accordance with Section 4.5(b) and Section 4.7.
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ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1 Amendment. (a) This Agreement may be amended by the
Depositor, the Servicer and the Issuer, with the consent of the Indenture
Trustee and the Owner Trustee to the extent that their respective rights or
obligations may be affected thereby (which consent may not be unreasonably
withheld), but without the consent of any of the Noteholders or the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement, or to add any provisions to or change or
eliminate any provisions or to modify the rights of the Noteholders or
Certificateholders; provided, however, that (i) such action shall not, as
evidenced by either an Opinion of Counsel or an Officer's Certificate
delivered to the Owner Trustee and the Indenture Trustee, materially and
adversely affect the interests of any Noteholder or Certificateholder and (ii)
the Rating Agency Condition shall be satisfied.
(b) This Agreement may also be amended from time to time by the
Depositor, the Servicer and the Issuer, with the consent of the Indenture
Trustee and the Owner Trustee to the extent that their respective rights or
obligations may be affected thereby (which consent may not be unreasonably
withheld) and with the consent of (i) the Noteholders of Notes evidencing not
less than a majority of the principal amount of each Class of Notes and (ii)
the Certificateholders of Certificates evidencing not less than a majority of
the [Percentage Interests evidenced by the Certificates] [Certificate Balance]
(which consent of any holder of a Note or holder of a Certificate given
pursuant to this Section 9.1 or pursuant to any other provision of this
Agreement shall be conclusive and binding on such Note or Certificate, as the
case may be, and on all future holders of such Note or holders of such
Certificate, as the case may be, and of any Note or Certificate, as
applicable, issued upon the transfer thereof or in exchange thereof or in lieu
thereof whether or not notation of such consent is made upon such Note or the
Certificate), for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement, or of modifying
in any manner the rights of the Noteholders or the Certificateholders;
provided, however, that no such amendment shall (A) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, or change the
allocation or priority of, collections of payments on Receivables or
distributions that shall be required to be made on any Note or Certificate or
change any Note Interest Rate [or any Certificate Rate] or the amount required
to be on deposit in the Reserve Account, without the consent of all
Noteholders or Certificateholders or (B) reduce the aforesaid percentage
required to consent to any such amendment, without the consent of the holders
of all Notes and holders of all Certificates. Notwithstanding the foregoing,
the Depositor may decrease the Specified Reserve Balance upon satisfaction of
the Rating Agency Condition without the consent of any other party hereto or
any Noteholder or Certificateholder.
(c) Prior to the execution of any such amendment the Servicer will
provide written notification of the substance of such amendment to each Rating
Agency.
(d) Promptly after the execution of any such amendment, the Servicer
shall furnish written notification of the substance of such amendment to each
Certificateholder, the Indenture Trustee and each Rating Agency and the
Indenture Trustee will provide notification of the substance of such amendment
36
to each Noteholder. It shall not be necessary for the consent of Noteholders
or the Certificateholders pursuant to this Section 9.1 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 any other consents of Noteholders and
Certificateholders provided for in this Agreement) and of evidencing the
authorization of the execution thereof by Noteholders and Certificateholders
shall be subject to such reasonable requirements as the Owner Trustee and the
Indenture Trustee may prescribe, including the establishment of record dates
pursuant to the Note Depository Agreement.
(e) Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Indenture Trustee shall be entitled to receive and rely upon
an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and the Opinion of Counsel referred
to in Section 9.2(i)(1). The Owner Trustee or the Indenture Trustee may, but
shall not be obligated to, enter into any such amendment which affects such
Owner Trustee's or Indenture Trustee's own rights, duties or immunities under
this Agreement or otherwise.
SECTION 9.2 Protection of Title to Trust Property. (a) The Depositor and
the Seller shall file such financing statements and cause to be 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 interest of the
Issuer and the Indenture Trustee for the benefit of the Noteholders in the
Receivables and in the proceeds thereof. The Depositor or the Seller, as
applicable, shall deliver (or cause to be delivered) to the Owner Trustee and
the Indenture Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
(b) None of the Depositor, the Seller or the Servicer shall change its
name, identity, or corporate structure in any manner that would, could, or
might make any financing statement or continuation statement filed by the
Seller or the Depositor in accordance with paragraph (a) above seriously
misleading within the meaning of ss. 9-506 of the UCC, unless it shall have
given the Owner Trustee and the Indenture Trustee at least 10 days' prior
written notice thereof, with a copy to the Rating Agencies, and shall have
promptly filed appropriate amendments to all previously filed financing
statements or continuation statements.
(c) The Depositor, the Seller and the Servicer shall give the Owner
Trustee and the Indenture Trustee at least ten (10) days' prior written notice
of any relocation of its principal executive office or change in the
jurisdiction under whose laws it is formed if, as a result of such relocation
or change, the applicable provisions of the UCC would require the filing of
any amendment of any previously filed financing or continuation statement or
of any new financing statement and shall promptly file any such amendment or
new financing statement. The Servicer shall at all times maintain each office
from which it shall service Receivables, and its principal executive office,
within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including payments
and recoveries made and payments owing (and the nature of each)
37
and (ii) reconciliation between payments or recoveries on (or with respect to)
each Receivable and the amounts from time to time deposited in the Collection
Account and the Reserve Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of conveyance under this Agreement of the Receivables to the
Issuer, the Servicer's master computer records (including any back-up
archives) that refer to a Receivable shall indicate clearly, by numerical code
or otherwise, that such Receivable is owned by the Issuer and has been pledged
to the Indenture Trustee pursuant to the Indenture. Indication of the Issuer's
and the Indenture Trustee's interest in a Receivable shall not be deleted from
or modified on the Servicer's computer systems until, and only until, the
Receivable shall have been paid in full or repurchased.
(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 automotive
receivables to any prospective purchaser, lender, or other transferee, the
Servicer shall give to such prospective purchaser, lender, or other transferee
computer tapes, records, or print-outs (including any restored from back-up
archives) that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has been conveyed to
and is owned by the Issuer and has been pledged to the Indenture Trustee.
(g) The Servicer, upon receipt of reasonable prior notice, shall permit
the Owner Trustee, the Indenture Trustee and their respective agents at any
time during normal business hours to inspect, audit, and make copies of and to
obtain abstracts from the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Owner Trustee and the
Indenture Trustee, within five (5) Business Days, a list of all Receivables
(by contract number and name of Obligor) then owned by the Issuer, together
with a reconciliation of such list to the Schedule of Receivables and to each
of the Servicer's Certificates furnished before such request indicating
removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee and the Indenture
Trustee:
(1) promptly after the execution and delivery of this
Agreement and of each amendment thereto, an Opinion of Counsel either
(A) stating that, in the opinion of such Counsel and subject to
customary qualifications and assumptions, all financing statements
and continuation statements have been filed that are necessary fully
to preserve and protect the interest of the Issuer and the Indenture
Trustee in the Receivables, and reciting the details of such filings
or referring to prior Opinions of Counsel in which such details are
given, or (B) stating that, in the opinion of such Counsel, no such
action shall be necessary to preserve and protect such interest; and
(2) within 120 days after the beginning of each calendar
year beginning with the first calendar year beginning more than three
months after the Cut-off Date, an Opinion of Counsel, dated as of a
date during such 120-day period, either (A) stating that, in the
opinion of such counsel and subject to customary qualifications and
38
assumptions, all financing statements and continuation statements
have been filed that are necessary fully to preserve and protect the
interest of the Issuer and the Indenture Trustee in the Receivables,
and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (B) stating
that, in the opinion of such Counsel, no such action shall be
necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (i)(1) or (i)(2) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
(j) For the purpose of facilitating the execution of this Agreement and
for other purposes, this Agreement may be executed 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 9.3 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS
CONFLICTS OF LAW PROVISIONS (OTHER THAN SECTION 5-1401 OF THE GENERAL
OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 9.4 Notices. All demands, notices, and communications under this
Agreement shall be in writing, personally delivered, sent by telecopier, over
night courier or mailed by certified mail, return receipt requested, and shall
be deemed to have been duly given upon receipt (a) in the case of the Seller
or the Servicer, at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇ Broker, Vice President, or at such other address as shall be
designated by the Seller or the Servicer in a written notice to the Owner
Trustee and the Indenture Trustee, (b) in the case of the Depositor, at ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: Vice
President, Legal Counsel, (c) in the case of the Owner Trustee, at the
Corporate Trust Office of the Owner Trustee, Attention: __________, (d) in the
case of the Indenture Trustee, at the Corporate Trust Office of the Indenture
Trustee, (e) in the case of ▇▇▇▇▇'▇ Investors Service, Inc., at the following
address: ▇▇▇▇▇'▇ Investors Service, Inc., ABS Monitoring Department, ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and (f) in the case of Standard & Poor's
Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., at the
following address: Standard & Poor's Rating Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: Asset Backed Surveillance Department. Any notice required or
permitted to be mailed to a Noteholder or Certificateholder shall be given by
first class mail, postage prepaid, at the address of such Person as shown in
the Note Register or the Certificate Register, as applicable. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Noteholder or
Certificateholder shall receive such notice.
SECTION 9.5 Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this 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,
39
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the Notes,
the Certificates or the rights of the holders thereof.
SECTION 9.6 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 6.3 and 7.2 and as provided
in the provisions of this Agreement concerning the resignation of the
Servicer, this Agreement may not be assigned by the Depositor or the Servicer
unless (i)(A) the Rating Agency Condition is satisfied and (B) the Indenture
Trustee and the Owner Trustee have consented thereto, which consent shall not
be unreasonably withheld or (ii) the Owner Trustee, the Indenture Trustee, the
Noteholders of Notes evidencing not less than 66 2/3% of the principal amount
of the Notes Outstanding and the Certificateholders of Certificates evidencing
not less than 66 2/3% of the [Percentage Interests evidenced by the
Certificates] [Certificate Balance] consent thereto. Any transfer or
assignment with respect to the Servicer of all its rights, obligations and
duties will not become effective until a successor Servicer has assumed the
Servicer's rights, duties and obligations under this Agreement. In the event
of a transfer or assignment pursuant to clause (ii) above, the Rating Agencies
shall be provided with notice of such transfer or assignment.
SECTION 9.7 Further Assurances. The Depositor and the Servicer agree to
do and perform, from time to time, any and all acts and to execute any and all
further instruments required or reasonably requested by the Owner Trustee or
the Indenture Trustee more fully to effect the purposes of this Agreement.
SECTION 9.8 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Owner Trustee, the Indenture Trustee,
the Noteholders or the Certificateholders, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
therein provided are cumulative and not exhaustive of any rights, remedies,
powers and privileges provided by law.
SECTION 9.9 Third-Party Beneficiaries. This Agreement will inure to the
benefit of and be binding upon the parties hereto, the Indenture Trustee and
the Owner Trustee and their respective successors and permitted assigns and
each of the Indenture Trustee and the Owner Trustee may enforce the provisions
hereof as if they were parties thereto. Except as otherwise provided in this
Article IX, no other Person will have any right or obligation hereunder. The
parties hereto hereby acknowledge and consent to the pledge of this Agreement
by the Issuer to the Indenture Trustee for the benefit of the Noteholders
pursuant to the Indenture.
SECTION 9.10 Actions by Noteholders or Certificateholders. (a) Wherever
in this Agreement a provision is made that an action may be taken or a notice,
demand, or instruction given by Noteholders or Certificateholders, such
action, notice, or instruction may be taken or given by any Noteholder or
Certificateholder, as applicable, unless such provision requires a specific
percentage of Noteholders or Certificateholders.
(b) Any request, demand, authorization, direction, notice, consent,
waiver, or other act by a Noteholder or Certificateholder shall bind such
40
Noteholder or Certificateholder and every subsequent holder of such Note or
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 Owner Trustee, the Indenture Trustee or the Servicer in reliance
thereon, whether or not notation of such action is made upon such Note or
Certificate.
SECTION 9.11 Limitation of Liability of Owner Trustee and Indenture
Trustee. (a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by __________ not in its individual capacity
but solely in its capacity as Owner Trustee of the Issuer and in no event
shall __________, in its individual capacity or, except as expressly provided
in the Trust Agreement, as Owner Trustee of the Issuer have any liability for
the representations, warranties, covenants, agreements or other obligations of
the Issuer hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had solely to
the assets of the Issuer. For all purposes of this Agreement, in the
performance of its duties or obligations hereunder or in the performance of
any duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles VI and VII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by __________, not in its individual capacity but
solely as Indenture Trustee, and in no event shall __________ have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer. For all purposes of this Agreement, in the
performance of its duties or obligations hereunder or in the performance of
any duties or obligations of the Issuer hereunder, the Indenture Trustee shall
be subject to, and entitled to the benefits of, the terms and provisions of
Article VI of the Indenture.
SECTION 9.12 Savings Clause. It is the intention of the Depositor and the
Issuer that the transfer of the Trust Property contemplated herein constitute
an absolute transfer of the Trust Property, conveying good title to the Trust
Property from the Depositor to the Issuer. However, in the event that such
transfer is deemed to be a pledge or other transfer for security, the
Depositor hereby grants to the Issuer a first priority security interest in
all of the Depositor's right, title and interest in, to and under the Trust
Property, and all proceeds thereof, to secure a loan in an amount equal to all
amounts payable under the Notes and the Certificates, and in such event, this
Agreement shall constitute a security agreement under applicable law.
ARTICLE X
EXCHANGE ACT REPORTING
SECTION 10.1 Further Assurances. The Indenture Trustee, the Owner Trustee
and the Servicer shall reasonably cooperate with the Depositor in connection
with the satisfaction of the Depositor's reporting requirements under the
Exchange Act with respect to the Trust. The Depositor shall not exercise its
right to request delivery of information or other performance under these
provisions other than in good faith. In addition to the information specified
below, if so requested by the Depositor for the purpose of satisfying its
41
reporting obligation under the Exchange Act, the Indenture Trustee, the Owner
Trustee and the Servicer shall provide the Depositor with (a) such information
which is available to such Person without unreasonable effort or expense and
within such timeframe as may be reasonably requested by the Depositor to
comply with the Depositor's reporting obligations under the Exchange Act and
(b) to the extent such Person is a party (and the Depositor is not a party) to
any agreement or amendment required to be filed, copies of such agreement or
amendment in ▇▇▇▇▇-compatible form. Each of the Servicer, the Indenture
Trustee and the Owner Trustee acknowledges that interpretations of the
requirements of Regulation AB may change over time, whether due to
interpretive guidance provided by the Commission or its staff, consensus among
participants in the asset-backed securities markets, advice of counsel, or
otherwise, and agrees to comply with requests made by the Depositor in good
faith for delivery of information under these provisions on the basis of
evolving interpretations of Regulation AB.
SECTION 10.2 Form 10-D Filings. So long as the Depositor is required to
file Exchange Act Reports with respect to the Issuer, no later than each
Payment Date, each of the Indenture Trustee, the Owner Trustee and the
Servicer shall notify (and the Servicer shall cause any Subservicer to notify)
the Depositor of any Form 10-D Disclosure Item with respect to such Person,
together with a description of any such Form 10-D Disclosure Item in form and
substance reasonably acceptable to the Depositor. In addition to such
information as the Servicer is obligated to provide pursuant to other
provisions of this Agreement, if so requested by the Depositor, the Servicer
shall provide such information which is available to the Servicer, without
unreasonable effort or expense regarding the performance or servicing of the
Receivables as is reasonably required to facilitate preparation of
distribution reports in accordance with Item 1121 of Regulation AB. Such
information shall be provided concurrently with the Statements to Noteholders
pursuant to Section 4.9, commencing with the first such report due not less
than five Business Days following such request.
SECTION 10.3 Form 8-K Filings. So long as the Depositor is required to
file Exchange Act Reports with respect to the Issuer, each of the Indenture
Trustee, the Owner Trustee and the Servicer shall promptly notify the
Depositor, but in no event later than one (1) Business Day after its
occurrence, of any Reportable Event (in the case of the Owner Trustee, only an
event in clause (d) of the definition of "Reportable Event") of which such
Person (or in the case of the Owner Trustee and the Indenture Trustee, a
Responsible Officer of such Person) has actual knowledge. Each Person shall be
deemed to have actual knowledge of any such event to the extent that it
relates to such Person or any action or failure to act by such Person.
SECTION 10.4 Form 10-K Filings. So long as the Depositor is required to
file Exchange Act Reports: (i) if the Item 1119 Parties listed on Appendix B
have changed since the Closing Date, no later than March 1 of each year, the
Depositor shall provide each of the Indenture Trustee, the Owner Trustee and
the Servicer with an updated Appendix B setting forth the Item 1119 Parties
and (ii) no later than March 15 of each year, commencing in 20__, the
Indenture Trustee, the Owner Trustee and the Servicer shall notify the
Depositor of any Form 10-K Disclosure Item, together with a description of any
such Form 10-K Disclosure Item in form and substance reasonably acceptable to
the Depositor.
42
SECTION 10.5 Report on Assessment of Compliance and Attestation. So long
as the Depositor is required to file Exchange Act Reports, on or before March
15 of each calendar year, commencing in 20__:
(a) The Indenture Trustee shall deliver to the Depositor and the Servicer
a report of the Indenture Trustee's assessment of compliance with the
Servicing Criteria during the immediately preceding calendar year, as set
forth under Rules 13a-18 and 15d-18 of the Exchange Act (or any successor
provisions) and Item 1122 of Regulation AB. Such report shall be signed by an
authorized officer of the Indenture Trustee and shall at a minimum address
each of the Servicing Criteria specified on a certification substantially in
the form of Appendix C hereto delivered to the Depositor concurrently with the
execution of this Agreement (provided that such certification may be revised
after the date of this Agreement as agreed by the Depositor and the Indenture
Trustee to reflect any guidance with respect to such criteria from the
Commission). To the extent any of the Servicing Criteria are not applicable to
the Indenture Trustee, with respect to asset-backed securities transactions
taken as a whole involving the Indenture Trustee and that are backed by the
same asset type backing the Notes, such report shall include such a statement
to that effect. The Indenture Trustee acknowledges and agrees that the
Depositor and the Servicer with respect to its duties as the Certifying
Person, and each of their respective officers and directors shall be entitled
to rely on upon each such servicing criteria assessment and the attestation
delivered pursuant to Section 10.5(b) below.
(b) The Indenture Trustee shall deliver to the Depositor and the Servicer
a report of a registered public accounting firm that attests to, and reports
on, the assessment of compliance made by the Indenture Trustee and delivered
pursuant to the preceding paragraph. Such attestation shall be in accordance
with Rules 13a-18 and 15d-18 of the Exchange Act (or any successor
provisions), Rules 1-02(a)(3) and 2-02(g) of Regulation S-X (or any successor
provisions) under the Securities Act and the Exchange Act, including, without
limitation that in the event that an overall opinion cannot be expressed, such
registered public accounting firm shall state in such report why it was unable
to express such an opinion. Such report must be available for general use and
not contain restricted use language.
(c) The Indenture Trustee shall cause each Reporting Subcontractor to
deliver to the Depositor and the Servicer an assessment of compliance and
accountant's attestation as and when provided in paragraphs (a) and (b) of
this Section. An assessment of compliance provided by a Subcontractor need not
address any elements of the Servicing Criteria other than those specified by
the Indenture Trustee pursuant to Section 10.5(a).
(d) In the event the Indenture Trustee or Reporting Subcontractor is
terminated or resigns during the term of this Agreement, such Person shall
provide the documents and information pursuant to this Section 10.5 with
respect to the period of time it was subject to this Agreement or provided
services with respect to the Trust or the Receivables.
SECTION 10.6 Back-up ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification. No later than March 15
of each year, beginning in 20__, the Indenture Trustee and the Servicer shall
provide to the Person who signs the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification (the
"Certifying Person") a certification (each, a "Performance Certification") and
shall cause each Reporting Subcontractor, in the form attached hereto as
43
Appendix D (in the case of the Indenture Trustee or a Reporting Subcontractor)
and as Appendix E (in the case of the Servicer) on which the Certifying
Person, the entity for which the Certifying Person acts as an officer, and
such entity's officers, directors and Affiliates (collectively with the
Certifying Person, "Certification Parties") can reasonably rely. The Depositor
will not request delivery of a certification under this clause unless the
Depositor is required under the Exchange Act to file an annual report on Form
10-K with respect to the Trust. So long as the Servicer is an Affiliate of the
Depositor, the Servicer may, but is not required to deliver the Performance
Certificate. In the event that prior to the filing date of the Form 10-K in
March of each year, the Indenture Trustee or the Servicer has actual knowledge
of information material to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification, the Indenture
Trustee or the Servicer shall promptly notify the Depositor. Each of the
Indenture Trustee and the Servicer agrees to cooperate with all reasonable
requests made by any Certifying Person or Certification Party in connection
with such Person's attempt to conduct any due diligence that such Person
reasonably believes to be appropriate in order to allow it to deliver any
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification or portion thereof with respect to the Trust.
SECTION 10.7 Use of Subcontractors.
(a) It shall not be necessary for the Indenture Trustee or the Servicer
to seek the consent of the Depositor or any other party hereto to the
utilization of any Subcontractor. Each of the Indenture Trustee and the
Servicer shall promptly upon request provide to the Depositor (or any designee
of the Depositor, such as the Servicer or the Administrator) a written
description (in form and substance satisfactory to the Depositor) of the role
and function of each Subcontractor utilized by such Person, specifying (i) the
identity of each such Subcontractor, (ii) which (if any) of such
Subcontractors are "participating in the servicing function" within the
meaning of Item 1122 of Regulation AB and (iii) which elements of the
Servicing Criteria will be addressed in assessments of compliance provided by
each Subcontractor identified pursuant to clause (ii) of this paragraph. As a
condition to the utilization of any Subcontractor determined to be a Reporting
Subcontractor, the Indenture Trustee shall cause any such Subcontractor for
the benefit of the Depositor to comply with the provisions of Sections 10.5
and 10.6 of this Agreement to the same extent as if such Subcontractor were
the Indenture Trustee. The Indenture Trustee shall be responsible for
obtaining from each Subcontractor and delivering to the Depositor, any
assessment of compliance and attestation required to be delivered by such
Subcontractor under Section 10.5 and Section 10.6, in each case as and when
required to be delivered.
(b) As a condition to the utilization of any Subcontractor determined to
be a Reporting Subcontractor, the Servicer shall cause any such Subcontractor
for the benefit of the Depositor to comply with the provisions of Section
3.10(a)(ii), Section 3.11 and Section 10.6 of this Agreement to the same
extent as if such Subcontractor were the Servicer. The Servicer shall be
responsible for obtaining from each Subcontractor and delivering to the
Depositor, any assessment of compliance and attestation required to be
delivered by such Subcontractor under this Agreement, in each case as and when
required to be delivered.
SECTION 10.8 Representations and Warranties. Each of the Indenture
Trustee and the Owner Trustee represents that (i) there are no affiliations,
44
relating to such Person with respect to any 1119 Party, (ii) there are no
relationships or transactions with respect to any 1119 Party and such Person
that are outside the ordinary course of business or on terms other than would
be obtained in an arm's length transaction with an unrelated third party,
apart from the transactions contemplated under the Basic Documents, and that
are material to the investors' understanding of the Notes and (iii) there are
no legal proceedings pending, or known to be contemplated by governmental
authorities, against such Person, or of which the property of such Person is
subject, that is material to the Noteholders.
SECTION 10.9 Indemnification.
(a) Each of the Indenture Trustee and the Servicer shall indemnify the
Depositor, each affiliate of the Depositor, the Servicer with respect to its
duties as Certifying Person or each Person who controls any of such parties
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act); and the respective present and former directors, officers,
employees and agents of each of the foregoing, and shall hold each of them
harmless from and against any losses, damages, penalties, fines, forfeitures,
legal fees and expenses and related costs, judgments, and any other costs,
fees and expenses that any of them may sustain arising out of or based upon:
(i) (A) any untrue statement of a material fact contained or alleged to
be contained in (x) with respect to the Indenture Trustee, the servicing
criteria assessment provided under this Article X and (y) with respect to the
Servicer, Section 3.10 and Section 3.11 of this Agreement by or on behalf of
such Person (with respect to each such party, the "Provided Information"), or
(B) the omission or alleged omission to state in the Provided Information a
material fact required to be stated in the Provided Information, or necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, by way of clarification,
that clause (B) of this paragraph shall be construed solely by reference to
the related Provided Information and not to any other information communicated
in connection with a sale or purchase of securities, without regard to whether
the Provided Information or any portion thereof is presented together with or
separately from such other information; or
(ii) with respect to the Indenture Trustee, any failure by the Indenture
Trustee to deliver any servicing criteria assessment when and as required
under this Article X and with respect to the Servicer, any failure by the
Servicer to deliver any information, report, certification, accountant's
letter or other material when and as required under Section 3.10, Section 3.11
or Article X, as applicable.
(b) In the case of any failure of performance described in clause (ii) of
this Section, each of the Indenture Trustee and the Servicer shall promptly
reimburse the Depositor for all costs reasonably incurred by each such party
in order to obtain the information, report, certification, accountants' letter
or other material not delivered as required by the Indenture Trustee or the
Servicer, as applicable.
(c) Each of the Indenture Trustee and the Servicer shall require that any
Reporting Subcontractor agree to the provisions of paragraphs (a) and (b) of
this Section 10.9, or shall be responsible for all such indemnification, costs
or expenses if the Reporting Subcontractor will not agree to such provisions.
45
(d) Notwithstanding anything to the contrary contained herein, in no
event shall the Indenture Trustee be liable for special, indirect or
consequential damages of any kind whatsoever, including but not limited to
lost profits, even if the Indenture Trustee has been advised of the likelihood
of such loss or damage and regardless of the form of action.
SECTION 10.10 Amendments. In the event the parties to this Agreement
desire to further clarify or amend any provision of this Article X, this
Agreement shall be amended to reflect the new agreement between the parties
covering matters in this Article X pursuant to Section 9.1, provided such
amendment will not require any Opinion of Counsel or satisfaction of the
Rating Agency Condition or the consent of any Noteholder or Certificateholder.
46
IN WITNESS WHEREOF, the parties have caused this Sale and Servicing
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
USAA AUTO OWNER TRUST 200_-[ ],
as Issuer
By
---------------------------------------
not in its individual capacity but solely as
Owner Trustee
By:
-------------------------------------
Name:
Title:
USAA FEDERAL SAVINGS BANK,
as Seller and Servicer
By:
-------------------------------------
Name:
Title:
USAA ACCEPTANCE, LLC,
as Depositor
By:
-------------------------------------
Name:
Title:
Accepted and agreed:
-------------------------------,
not in its individual capacity
but solely as Indenture Trustee
By:
------------------------------------------
Name:
Title:
------------------------------,
not in its individual capacity
but solely as Owner Trustee
By:
------------------------------------------
Name:
Title:
SCHEDULE A
SCHEDULE OF RECEIVABLES
[On File with the Indenture Trustee]
A-1
SCHEDULE B-1
Location of Receivable Files
c/o USAA Federal Savings Bank
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
B-1
SCHEDULE B-2
Location of Lien Certificates
FDI Consulting, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
B-2
Appendix A
DEFINITIONS AND USAGE
The following rules of construction and usage shall be applicable to
any agreement or instrument that is governed by this Appendix:
(a) All terms defined in this Appendix shall have the defined
meanings when used in any agreement or instrument governed hereby and in any
certificate or other document made or delivered pursuant thereto unless
otherwise defined therein.
(b) As used herein, in any agreement or instrument governed hereby
and in any certificate or other document made or delivered pursuant thereto,
accounting terms not defined in this Appendix or in any such agreement,
instrument, certificate or other document, and accounting terms partly defined
in this Appendix or in any such agreement, instrument, certificate or other
document, to the extent not defined, shall have the respective meanings given
to them under generally accepted accounting principles as in effect on the
date of such agreement or instrument. To the extent that the definitions of
accounting terms in this Appendix or in any such agreement, instrument,
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Appendix or in any such instrument, certificate or other document shall
control.
The words "hereof," "herein," "hereunder" and words of similar import
when used in an agreement or instrument refer to such agreement or instrument
as a whole and not to any particular provision or subdivision thereof;
references in an agreement or instrument to "Article," "Section" or another
subdivision or to an attachment are, unless the context otherwise requires, to
an article, section or subdivision of or an attachment to such agreement or
instrument; and the term "including" and its variations shall be deemed to be
followed by "without limitation."
The definitions contained in this Appendix are equally applicable to
both the singular and plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
Any agreement, instrument or statute defined or referred to below or
in any agreement or instrument that is governed by this Appendix means such
agreement or instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver
or consent and (in the case of statutes) by succession of comparable successor
statutes and includes (in the case of agreements or instruments) references to
all attachments thereto and instruments incorporated therein. References to a
Person are also to its permitted successors and assigns.
Definitions
"Accrued Class A Note Interest" shall mean, with respect to any
Payment Date, the sum of the Class A Noteholders' Monthly Accrued Interest for
such Payment Date and the Class A Noteholders' Interest Carryover Shortfall
for such Payment Date.
A-A-1
["Accrued Class B Certificate Interest" shall mean, with respect to
any Payment Date, the sum of the Class B Certificateholders' Monthly Accrued
Interest for such Payment Date and the Class B Certificateholders' Interest
Carryover Shortfall for such Payment Date.]
["Accrued Class B Note Interest" shall mean, with respect to any
Payment Date, the sum of the Class B Noteholders' Monthly Accrued Interest for
such Payment Date and the Class B Noteholders' Interest Carryover Shortfall
for such Payment Date.]
"Act" shall have the meaning specified in Section 11.3(a) of the
Indenture.
"Administration Agreement" shall mean the Administration Agreement,
dated as of ____________, by and among the Administrator, the Issuer and the
Indenture Trustee.
"Administrator" shall mean the Bank, in its capacity as administrator
under the Administration Agreement, or any successor Administrator thereunder.
"Advance" shall mean the amount of interest, as of a Determination
Date, which the Servicer is required to advance on the Receivables pursuant to
Section 4.4(a) of the Sale and Servicing Agreement.
"Affiliate" shall mean, with respect to any specified Person, any
other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used
with respect to any Person shall mean the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling"
and "controlled" shall have meanings correlative to the foregoing.
"Amount Financed" shall mean, with respect to a Receivable, the
amount advanced under the Receivable toward the purchase price of the Financed
Vehicle and any related costs.
"Annual Percentage Rate" or "APR" of a Receivable shall mean the
annual rate of finance charges stated in the Receivable.
"Applicable Tax State" shall mean, as of any date of determination,
each State as to which any of the following is then applicable: (a) a State in
which the Owner Trustee maintains its Corporate Trust Office and (b) the State
of Texas.
"Authenticating Agent" shall have the meaning specified in Section
2.14 of the Indenture or 3.14 of the Trust Agreement, as applicable.
"Authorized Officer" shall mean, (i) with respect to the Issuer, any
officer within the Corporate Trust Office of the Owner Trustee, including any
vice president, assistant vice president, secretary, assistant secretary or
any other officer of the Owner Trustee customarily performing functions
similar to those performed by any of the above designated officers and, for so
long as the Administration Agreement is in full force and effect, any officer
of the Administrator who is authorized to act for the Administrator in matters
relating to the Issuer and to be acted upon by the Administrator pursuant to
the Administration Agreement; and (ii) with respect to the Indenture Trustee
or the Owner Trustee, any officer within the Corporate Trust Office of the
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Indenture Trustee or the Owner Trustee, as the case may be, including any vice
president, assistant vice president, secretary, assistant secretary or any
other officer of the Indenture Trustee or the Owner Trustee, as the case may
be, customarily performing functions similar to those performed by any of the
above designated officers and also, with respect to a particular matter, any
other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject, in each case having
direct responsibility for the administration of the Indenture or the Trust
Agreement, as applicable, and shall also mean, with respect to the Owner
Trustee, any officer of the Administrator.
"Available Collections" shall mean, for any Payment Date, the sum of
the following amounts with respect to the Collection Period preceding such
Payment Date: (i) all payments collected with respect to Receivables; (ii) all
Liquidation Proceeds attributable to Receivables which were designated as
Defaulted Receivables in prior Collection Periods in accordance with the
Servicer's customary servicing procedures; (iii) all Advances made by the
Servicer of interest due on the Receivables; (iv) the Purchase Amount received
with respect to each Receivable that became a Purchased Receivable during such
Collection Period; and (v) partial prepayments of any refunded item included
in the principal balance of a Receivable, such as extended warranty protection
plan costs, or physical damage, credit life, disability insurance premiums, or
any partial prepayment which causes a reduction in the Obligor's periodic
payment to an amount below the Scheduled Payment as of the Cut-off Date;
provided however, that in calculating the Available Collections the following
will be excluded: (i) amounts received on any Receivable to the extent that
the Servicer has previously made an unreimbursed Advance on such Receivable
and the amount received exceeds the accrued and unpaid interest on such
Receivable that has not been advanced; (ii) amounts received on any of the
Receivables to the extent that the Servicer has previously made an
unreimbursed Advance on a Receivable which is not recoverable from collections
on the particular Receivable; (iii) all payments and proceeds (including
Liquidation Proceeds) of any Receivables the Purchase Amount of which has been
included in Available Funds in a prior Collection Period; (iv) Liquidation
Proceeds with respect to a Receivable attributable to accrued and unpaid
interest thereon (but not including interest for the then current Collection
Period) but only to the extent of any unreimbursed Advances; and (v) amounts
constituting the Supplemental Servicing Fee.
"Available Funds" shall mean, for any Payment Date, the sum of the
Available Collections for such Payment Date and the Reserve Account Excess
Amount for such Payment Date.
"Average Delinquency Ratio" shall mean, for any Payment Date, the
average of the Delinquency Ratios for the preceding three Collection Periods.
"Average Delinquency Trigger Percentage" shall mean [1.25]%.
"Average Net Loss Ratio" shall mean, for any Payment Date, the
average of the Net Loss Ratios for the preceding three Collection Periods.
"Average Net Loss Trigger Percentage" shall mean [1.25]%.
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"Bank" shall mean USAA Federal Savings Bank, a federally chartered
savings association.
"Bankruptcy Code" shall mean the United States Bankruptcy Code, 11
U.S.C. 101 et seq., as amended.
"Basic Documents" shall mean the Certificate of Trust, the Trust
Agreement, the Sale and Servicing Agreement, the Receivables Purchase
Agreement, the Indenture, the Administration Agreement, the Underwriting
Agreement, the Note Depository Agreement and the other documents and
certificates delivered in connection therewith.
"Benefit Plan" or "Benefit Plan Investor" shall mean (a) an "employee
benefit plan" (as defined in Section 3(3) of ERISA), whether or not subject to
the provisions of Title I of ERISA, (b) any "plan" described in Section
4975(e)(1) of the Code, and (c) any entity whose underlying assets included
plan assets by reason of a plan's investment in the entity.
["Book-Entry Certificate" shall mean, a beneficial interest in any of
the Class B Certificates issued in book-entry form as described in Section 3.2
of the Trust Agreement.]
"Book-Entry Note" shall mean a beneficial interest in any of the
Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes[,] [and] the Class
A-4 Notes [and the Class B Notes], in each case issued in book-entry form.
"Business Day" shall mean any day other than a Saturday, a Sunday or
a day on which banking institutions or trust companies in the State of New
York, the State of Delaware or the State of Texas are authorized by law,
regulation or executive order to be closed.
["Certificate Balance" shall mean, as the context so requires, (i)
with respect to all the Class B Certificates, an amount equal to, initially,
the Initial Certificate Balance of the Class B Certificates and, thereafter,
an amount equal to the Initial Certificate Balance of the Class B
Certificates, reduced by all amounts distributed to Class B Certificateholders
and allocable to principal or (ii) with respect to any Class B Certificate, an
amount equal to, initially, the initial denomination of such Class B
Certificate and, thereafter, an amount equal to such initial denomination,
reduced by all amounts distributed in respect of such Class B Certificate and
allocable to principal; provided, that, unless all of the Certificates are
owned by the Depositor or an Affiliate of the Depositor, in determining
whether the holders of Class B Certificates evidencing the requisite portion
or percentage of the Certificate Balance have given any request, demand,
authorization, direction, notice, consent, or waiver hereunder or under any
Basic Document, Class B Certificates owned by the Issuer, any other obligor
upon the Class B Certificates, the Depositor, the Seller, the Servicer or any
Affiliate of any of the foregoing Persons shall be disregarded and deemed to
be excluded from the Certificate Balance except that, in determining whether
the Indenture Trustee and Owner Trustee shall be protected in relying on any
such request, demand, authorization, direction, notice, consent, or waiver,
only Class B Certificates that a Trustee Officer of the Indenture Trustee, if
applicable, and an Authorized Officer of the Owner Trustee with direct
responsibility for the administration of the Trust Agreement, if applicable,
knows to be so owned shall be so disregarded. Class B Certificates so owned
that have been pledged in good faith may be regarded as included in the
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Certificate Balance if the pledgee establishes to the satisfaction of the
Indenture Trustee or the Owner Trustee, as applicable, the pledgee's right so
to act with respect to such Class B Certificates and that the pledgee is not
the Issuer, any other obligor upon the Certificates, the Depositor, the
Seller, the Servicer or any Affiliate of any of the foregoing Persons.]
"Certificate Distribution Account" shall mean the account established
and maintained as such pursuant to Section 4.1(c) of the Sale and Servicing
Agreement.
"Certificateholder" or "holder of a Certificate" shall mean a Person
in whose name a Certificate is registered in the Certificate Register.
"Certificate of Trust" shall mean the Certificate of Trust in the
form of Exhibit B to the Trust Agreement filed for the Trust pursuant to
Section 3810(a) of the Statutory Trust Statute.
["Certificate Owner" shall mean, with respect to any Book-Entry
Certificate, the Person who is the beneficial owner of the 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 as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).]
"Certificate Paying Agent" shall mean any paying agent or co-paying
agent appointed pursuant to Section 3.9 of the Trust Agreement and shall
initially be the Owner Trustee.
["Certificate Pool Factor" shall mean, as of the close of business on
the last day of a Collection Period, a seven-digit decimal figure calculated
by the Servicer and equal to the Certificate Balance of the Class B
Certificates (after giving effect to any reductions therein to be made on the
immediately following Payment Date) divided by the Initial Certificate Balance
of the Class B Certificates. Each Certificate Pool Factor will be 1.0000000 as
of the Closing Date; thereafter, each Certificate Pool Factor will decline to
reflect reductions in the Certificate Balance of the Class B Certificates.]
"Certificate Register" and "Certificate Registrar" shall have the
respective meanings specified in Section 3.4 of the Trust Agreement.
"Certificates" shall mean the [Asset Backed Certificates evidencing
the beneficial interest of a Certificateholder in the property of the Trust,
substantially in the form of Exhibit A to the Trust Agreement; provided,
however, that the Owner Trust Estate has been pledged to the Indenture Trustee
to secure payment of the Notes and that the rights of the Certificateholders
to receive distributions on the Certificates are subordinated to the rights of
the Noteholders as described in the Sale and Servicing Agreement, the
Indenture and the Trust Agreement] [Class B Certificates].
"Certification Party" shall have the meaning set forth in Section
10.6 of the Sale and Servicing Agreement.
"Certifying Person" shall have the meaning set forth in Section 10.6
of the Sale and Servicing Agreement.
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"Class" shall mean [(i)] a class of Notes, which may be the Class A-1
Notes, the Class A-2 Notes, the Class A-3 Notes[,] [or] the Class A-4 Notes
[or the Class B Notes] [or (ii) the Class B Certificates].
["Class A Noteholder" shall mean any holder of a Class A Note.]
"Class A Noteholders' Interest Carryover Shortfall" shall mean, for
any Payment Date, the excess of the Accrued Class A Note Interest for the
preceding Payment Date over the amount in respect of interest that is actually
paid to Noteholders of Class A Notes on such preceding Payment Date, plus
interest on the amount of interest due but not paid to Noteholders of Class A
Notes on the preceding Payment Date, to the extent permitted by law, at the
respective Note Interest Rates borne by such Class A Notes for the related
Interest Period.
"Class A Noteholders' Monthly Accrued Interest" shall mean, with
respect to any Payment Date, the aggregate interest accrued for the related
Interest Period on the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes and the Class A-4 Notes at the respective Note Interest Rate for such
Class in accordance with its terms on the outstanding principal amount of the
Notes of each such Class on the immediately preceding Payment Date or the
Closing Date, as the case may be, after giving effect to all payments of
principal to the holders of the Notes of such Class on or prior to such
preceding Payment Date.
"Class A Notes" shall mean, collectively, the Class A-1 Notes, the
Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes.
"Class A-1 Final Scheduled Payment Date" shall mean the ___________
Payment Date.
"Class A-1 Noteholder" shall mean the Person in whose name a Class
A-1 Note is registered on the Note Register.
"Class A-1 Notes" shall mean the $__________ aggregate initial
principal amount Class A-1 [ ]% Asset Backed Notes issued by the Trust
pursuant to the Indenture, substantially in the form of Exhibit A-1 to the
Indenture.
"Class A-1 Rate" shall mean [ ]% per annum. Interest with respect to
the Class A-1 Notes shall be computed on the basis of actual days elapsed in
the applicable Interest Period divided by 360 for all purposes of the Basic
Documents.
"Class A-2 Final Scheduled Payment Date" shall mean the ___________
Payment Date.
"Class A-2 Noteholder" shall mean the Person in whose name a Class
A-2 Note is registered on the Note Register.
"Class A-2 Notes" shall mean the $___________ aggregate initial
principal amount Class A-2 [ ]% Asset Backed Notes issued by the Trust
pursuant to the Indenture, substantially in the form of Exhibit A-2 to the
Indenture.
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"Class A-2 Rate" shall mean [ ]% per annum. Interest with respect to
the Class A-2 Notes shall be computed on the basis of a 360-day year
consisting of twelve 30-day months for all purposes of the Basic Documents.
"Class A-3 Final Scheduled Payment Date" shall mean the ___________
Payment Date.
"Class A-3 Noteholder" shall mean the Person in whose name a Class
A-3 Note is registered on the Note Register.
"Class A-3 Notes" shall mean the $___________ aggregate initial
principal amount Class A-3 [ ]% Asset Backed Notes issued by the Trust
pursuant to the Indenture, substantially in the form of Exhibit A-3 to the
Indenture.
"Class A-3 Rate" shall mean [ ]% per annum. Interest with respect to
the Class A-3 Notes shall be computed on the basis of a 360-day year
consisting of twelve 30-day months for all purposes of the Basic Documents.
"Class A-4 Final Scheduled Payment Date" shall mean the ___________
Payment Date.
"Class A-4 Noteholder" shall mean the Person in whose name a Class
A-4 Note is registered on the Note Register.
"Class A-4 Notes" shall mean the $___________ aggregate initial
principal amount Class A-4 [ ]% Asset Backed Notes issued by the Trust
pursuant to the Indenture, substantially in the form of Exhibit A-4 to the
Indenture.
"Class A-4 Rate" shall mean [ ]% per annum. Interest with respect to
the Class A-4 Notes shall be computed on the basis of a 360-day year
consisting of twelve 30-day months for all purposes of the Basic Documents.
["Class B Certificateholder" shall mean the Person in whose name a
Class B Certificate is registered in the Certificate Register.]
["Class B Certificateholders' Interest Carryover Shortfall" shall
mean, with respect to any Payment Date, the excess of the Accrued Class B
Certificate Interest for the preceding Payment Date over the amount in respect
of interest that is actually paid to Class B Certificateholders on such
preceding Payment Date, plus thirty (30) days of interest on such excess, to
the extent permitted by law, at the Class B Rate.]
["Class B Certificateholders' Monthly Accrued Interest" shall mean,
with respect to any Payment Date, thirty (30) days of interest (or, in the
case of the first Payment Date, interest accrued from and including the
Closing Date to but excluding such Payment Date) at the Class B Rate on the
Certificate Balance on the immediately preceding Payment Date or the Closing
Date, as the case may be, after giving effect to all distributions allocable
to the reduction of the Certificate Balance made on or prior to such preceding
Payment Date.]
["Class B Certificates" shall mean the $___________ aggregate initial
principal balance Class B [ ]% Asset Backed Certificates evidencing the
beneficial interest of a Class B Certificateholder in the property of the
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Trust, substantially in the form of Exhibit A to the Trust Agreement;
provided, however, that the Owner Trust Estate has been pledged to the
Indenture Trustee to secure payment of the Notes and that the rights of the
Class B Certificateholders to receive distributions on the Class B
Certificates are subordinated to the rights of the Noteholders as described in
the Sale and Servicing Agreement, the Indenture and the Trust Agreement.]
"Class B Final Scheduled Payment Date" shall mean the ___________
Payment Date.
["Class B Noteholder" shall mean the Person in whose name a Class B
Note is registered on the Note Register.]
["Class B Noteholders' Interest Carryover Shortfall" shall mean, for
any Payment Date, the excess of the Accrued Class B Note Interest for the
preceding Payment Date over the amount in respect of interest that is actually
paid to Noteholders of Class B Notes on such preceding Payment Date, plus
interest on the amount of interest due but not paid to the Noteholders of
Class B Notes on the preceding Payment Date, to the extent permitted by law,
at the Class B Rate borne for the related Interest Period.]
["Class B Noteholders' Monthly Accrued Interest" shall mean, with
respect to any Payment Date, the aggregate interest accrued for the related
Interest Period on the Class B Notes at the Class B Rate for such Class in
accordance with its terms on the outstanding principal amount of the Class B
Notes on the immediately preceding Payment Date or the Closing Date, as the
case may be, after giving effect to all payments of principal to the holders
of the Class B Notes on or prior to such preceding Payment Date.]
"[Class B Notes" shall mean the $__________ aggregate initial
principal amount Class B [ ]% Asset Backed Notes issued by the Trust pursuant
to the Indenture, substantially in the form of Exhibit B to the Indenture.]
"Class B Rate" shall mean [ ]% per annum. Interest with respect to
the Class B [Certificates] [Notes] shall be computed on the basis of a 360-day
year consisting of twelve 30-day months for all purposes of the Basic
Documents.
"Clearing Agency" shall mean an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" shall mean a broker, dealer, bank,
other financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of securities
deposited with the Clearing Agency.
"Closing Date" shall mean ___________.
"Code" shall mean the Internal Revenue Code of 1986, as amended, and
Treasury Regulations promulgated thereunder.
"Collateral" shall have the meaning specified in the Granting Clause
of the Indenture.
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"Collection Account" shall mean the account or accounts established
and maintained as such pursuant to Section 4.1(a) of the Sale and Servicing
Agreement.
"Collection Period" shall mean, with respect to the first Payment
Date, the period from and including the Cut-off Date to and including
___________ and, with respect to each subsequent Payment Date, the calendar
month preceding the calendar month in which the Payment Date occurs.
"Collections" shall mean all amounts collected by the Servicer (from
whatever source) on or with respect to the Receivables.
"Commission" shall mean the Securities and Exchange Commission.
"Computer Tape" shall mean the computer tape generated by the Seller
which provides information relating to the Receivables and which was used by
the Seller in selecting the Receivables conveyed to the Trust hereunder.
["Controlling Class" shall mean the Class A Notes voting together as
a single class until they are paid in full; thereafter the Class B Notes will
be the controlling class.]
"Controlling Person" shall mean a Person, other than a Benefit Plan
Investor, that has discretionary authority or control with respect to the
assets of the Trust or who provides investment advice for a direct or indirect
fee with respect to those assets, or any affiliate of such a Person.
"Corporate Trust Office" shall mean, (i) with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located at
___________ or at such other address as the Owner Trustee may designate from
time to time by notice to the Certificateholders and the Depositor, or the
principal corporate trust office of any successor Owner Trustee (the address
of which the successor Owner Trustee will notify the Certificateholders and
the Depositor); and (ii) with respect to the Indenture Trustee, the principal
corporate trust office of the Indenture Trustee located at ___________ or at
such other address as the Indenture Trustee may designate from time to time by
notice to the Noteholders and the Issuer, or the principal corporate trust
office of any successor Indenture Trustee (the address of which the successor
Indenture Trustee will notify the Noteholders and the Issuer).
"Covered Plan" shall mean any "employee benefit plan" within the
meaning of Section 3(3) of ERISA, whether or not subject to Title I of ERISA,
including any U.S. governmental or non-U.S. pension plan, or any "plan"
subject to Section 4975 of the Code.
"Cut-off Date" shall mean ________________.
"Default" shall mean any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
"Defaulted Receivable" shall mean a Receivable (i) that the Servicer
determines is unlikely to be paid in full or (ii) with respect to which at
least 5% of a Scheduled Payment is 120 or more days delinquent as of the end
of a calendar month.
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"Definitive Certificates" shall have the meaning specified in Section
3.12 of the Trust Agreement.
"Definitive Notes" shall have the meaning specified in Section 2.11 of
the Indenture.
"Delinquency Ratio" shall mean, for any Collection Period, the ratio,
expressed as a percentage, of (a) the Principal Balance of all outstanding
Receivables (other than Purchased Receivables and Defaulted Receivables) that
are 60 or more days delinquent as of the end of such Collection Period,
determined in accordance with the Servicer's customary practices, plus
Receivables as to which the related Financial Vehicle has been repossessed but
not sold, to (b) the Pool Balance as of the last day of such Collection
Period.
"Depositor" shall mean USAA Acceptance, LLC, a Delaware limited
liability company.
"Determination Date" shall mean, with respect to any Collection
Period, the second Business Day immediately preceding the Payment Date
following such Collection Period.
"▇▇▇▇▇" shall mean the Commission's Electronic Data Gathering,
Analysis and Retrieval system.
"Eligible Deposit Account" shall mean either (i) a segregated account
with an Eligible Institution or (ii) a segregated trust account with the
corporate trust department of a depository institution organized under the
laws of the U.S. or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution have a credit rating from each
Rating Agency in one of its generic rating categories which signifies
investment grade.
"Eligible Institution" shall mean either (i) the corporate trust
department of the Indenture Trustee or the Owner Trustee, as applicable; or
(ii) a depository institution organized under the laws of the U.S. or any one
of the states thereof or the District of Columbia (or any domestic branch of a
foreign bank), (1) which has either (A) a long-term unsecured debt rating of
at least "AA-" by Standard & Poor's and "Baa3" by Moody's or (B) a short-term
unsecured debt rating or certificate of deposit rating of "A-1+" by Standard &
Poor' and "Prime-1" by Moody's and (2) whose deposits are insured by the FDIC.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Event of Default" shall have the meaning specified in Section 5.1 of
the Indenture.
"Event of Servicing Termination" shall mean an event specified in
Section 7.1 of the Sale and Servicing Agreement.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Act Reports" shall mean any reports on Form 10-D, Form 8-K
and Form 10-K required to be filed by the Depositor with respect to the Trust
under the Exchange Act.
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"Executive Officer" shall mean, with respect to any corporation or
depository institution, the Chief Executive Officer, Chief Operating Officer,
Chief Financial Officer, President, Executive Vice President, any Vice
President, the Secretary or the Treasurer of such corporation and, with respect
to any partnership, any general partner thereof.
"Expenses" shall have the meaning assigned to such term in Section
7.1 of the Trust Agreement.
"FDIC" shall mean the Federal Deposit Insurance Corporation.
"Final Scheduled Payment Date" shall mean, with respect to (i) the
Class A-1 Notes, the Class A-1 Final Scheduled Payment Date, (ii) the Class
A-2 Notes, the Class A-2 Final Scheduled Payment Date, (iii) the Class A-3
Notes, the Class A-3 Final Scheduled Payment Date, (iv) the Class A-4 Notes,
the Class A-4 Final Scheduled Payment Date and (v) the [Class B Notes] [Class
B Certificates], the Class B Final Scheduled Payment Date].
"Financed Vehicle" shall mean a new or used automobile or light-duty
truck, together with all accessions thereto, securing an Obligor's
indebtedness under the respective Receivable.
"First Priority Principal Payment" shall mean, for each Payment Date,
a payment of principal equal to the excess, if any, of the aggregate principal
amount of the Class A Notes (before giving effect to any payments on that
Payment Date) over the Pool Balance at the end of the related Collection
Period.
"Form 10-D Disclosure Item" shall mean with respect to any Person,
any litigation or governmental proceedings pending against such Person, or any
of the Trust, the Depositor, the Indenture Trustee, the Owner Trustee or the
Servicer if such Person or in the case of the Owner Trustee or Indenture
Trustee, a Responsible Officer of such Person, has actual knowledge thereof,
in each case that would be material to the noteholders.
"Form 10-K Disclosure Item" shall mean with respect to any Person,
(a) any Form 10-D Disclosure Item and (b) any affiliations or relationships
between such Person and any Item 1119 Party to the extent a Responsible
Officer of such Person (in the case of the Indenture Trustee and the Owner
Trustee) has actual knowledge thereof.
"Grant" shall mean to mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create, and to ▇▇▇▇▇ ▇
▇▇▇▇ upon and a security interest in and right of set-off against, and to
deposit, set over and confirm pursuant to the Indenture. A Grant of the
Collateral or of any other agreement or instrument shall include all rights,
powers and options (but none of the obligations) of the granting party
thereunder, including the immediate and continuing right to claim for,
collect, receive and give receipt for principal and interest payments in
respect of the Collateral and all other monies payable thereunder, to give and
receive notices and other communications, to make waivers or other agreements,
to exercise all rights and options, to bring Proceedings in the name of the
granting party or otherwise, and generally to do and receive anything that the
granting party is or may be entitled to do or receive thereunder or with
respect thereto.
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"Indemnified Parties" shall have the meaning assigned to such term in
Section 7.2 of the Trust Agreement.
"Indenture" shall mean the Indenture, dated as of ____________, by
and between the Trust and the Indenture Trustee, as supplemented from time to
time.
"Indenture Trust Estate" shall mean all money, instruments, rights
and other property that are subject or intended to be subject to the lien and
security interest of Indenture for the benefit of the Noteholders (including,
without limitation, all property and interests Granted to the Indenture
Trustee), including all proceeds thereof.
"Indenture Trustee" shall mean ____________, a ____________, not in
its individual capacity but solely as Indenture Trustee under the Indenture,
or any successor Indenture Trustee under the Indenture.
"Independent" shall mean, when used with respect to any specified
Person, that such Person (a) is in fact independent of the Issuer, any other
obligor on the Notes, the Seller and any Affiliate of any of the foregoing
Persons, (b) does not have any direct financial interest or any material
indirect financial interest in the Issuer, any such other obligor, the Seller
or any Affiliate of any of the foregoing Persons and (c) is not connected with
the Issuer, any such other obligor, the Seller or any Affiliate of any of the
foregoing Persons as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
"Independent Certificate" shall mean a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1 of the
Indenture, made by an Independent appraiser, firm of certified public
accountants or other expert appointed by an Issuer Order and approved by the
Indenture Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of
"Independent" in the Indenture and that the signer is Independent within the
meaning thereof.
["Initial Certificate Balance" shall mean $____________.]
"Initial Pool Balance" shall mean $____________.
"Insolvency Event" shall mean, with respect to any Person, (i) the
making of a general assignment for the benefit of creditors, (ii) the filing
of a voluntary petition in bankruptcy, (iii) being adjudged a bankrupt or
insolvent, or having had entered against such Person an order for relief in
any bankruptcy or insolvency proceeding, (iv) the filing by such Person of a
petition or answer seeking reorganization, arrangement, composition,
readjustment, liquidation, dissolution or similar relief under any statute,
law or regulation, (v) the filing by such Person of an answer or other
pleading admitting or failing to contest the material allegations of a
petition filed against such Person in any proceeding specified in (vii) below,
(vi) seeking, consent to or acquiescing in the appointment of a trustee,
receiver or liquidator of such Person or of all or any substantial part of the
assets of such Person or (vii) the failure to obtain dismissal within 60 days
of the commencement of any proceeding against such Person seeking
reorganization, arrangement, composition, readjustment, liquidation,
dissolution or similar relief under any statute, law or regulation, or the
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entry of any order appointing a trustee, liquidator or receiver of such Person
or of such Person's assets or any substantial portion thereof.
"Interest Period" shall mean, with respect to any Payment Date (i)
with respect to the Class A-1 Notes, from and including the Closing Date (in
the case of the first Payment Date) or from and including the most recent
Payment Date on which interest has been paid to but excluding the following
Payment Date and (ii) with respect to each Class of Notes (other than the
Class A-1 Notes) and the Certificates, from and including the Closing Date (in
the case of the first Payment Date) or from and including the 15th day of the
calendar month preceding each Payment Date to but excluding the 15th day of
the calendar month of such Payment Date.
"Investment Letter" shall have the meaning specified in Section
3.4(b) of the Trust Agreement.
"IRS" shall mean the Internal Revenue Service.
"Issuer" shall mean the Trust unless a successor replaces it and,
thereafter, shall mean the successor.
"Issuer Order" and "Issuer Request" shall mean a written order or
request signed in the name of the Issuer by any one of its Authorized Officers
and delivered to the Indenture Trustee.
"Item 1119 Party" shall mean the Depositor, the Seller, the Servicer,
the Indenture Trustee, the Owner Trustee and any other material transaction
party, as identified in Appendix C to the Sale and Servicing Agreement.
"Lien" shall mean a security interest, lien, charge, pledge, equity,
or encumbrance of any kind other than, in respect of a Receivable, tax liens,
mechanics' liens, and any liens which attach to the respective Receivable by
operation of law.
"Lien Certificate" shall mean the notice or other document referenced
in clause (iii) of the description of the Receivable Files.
"Liquidation Proceeds" shall mean with respect to any Receivable (a)
insurance proceeds received by the Servicer and (b) monies collected by the
Servicer on a Defaulted Receivable from whatever source, including but not
limited to proceeds of Financed Vehicles after repossession, net of any
payments required by law to be remitted to the Obligor net of all reasonable
expenses incurred by the Servicer in converting to cash the Financed Vehicle
securing such Defaulted Receivable.
"Monthly Remittance Condition" shall mean either (a) the Servicer
obtains a short-term certificate of deposit rating of the Servicer from
Standard & Poor's and Moody's of "A-1+" and "Prime-1," respectively, or (b)
the Servicer provides the Indenture Trustee with a letter from each Rating
Agency to the effect that the current ratings assigned to the Securities by
such Rating Agency will not be adversely affected by the remittance of
Collections on a monthly, rather than a daily, basis.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
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"Net Loss Ratio" shall mean, for any Collection Period, the ratio,
expressed as an annualized percentage, of (a) Realized Losses minus Recoveries
for such Collection Period, to (b) the average of the Pool Balances on the
first day of such Collection Period and the last day of such Collection
Period.
"Note Depository Agreement" shall mean the Letter of Representations,
dated as of ____________ by and between the Issuer and The Depository Trust
Company regarding the Notes and the Certificates.
"Noteholder" or "holder of a Note" shall mean the Person in whose
name a Note is registered on the Note Register.
"Note Interest Rate" shall mean the Class A-1 Rate, the Class A-2
Rate, the Class A-3 Rate[,] [or] the Class A-4 Rate [or the Class B Rate], as
applicable.
"Note Owner" shall mean, with respect to any Book-Entry Note, the
Person who is the beneficial owner of such Book-Entry Note, as reflected on
the books of the Clearing Agency or on the books of a Person maintaining an
account with such Clearing Agency (directly as a Clearing Agency Participant
or as an indirect participant, in each case in accordance with the rules of
such Clearing Agency).
"Note Paying Agent" shall mean the Indenture Trustee or any other
Person that meets the eligibility standards for the Indenture Trustee
specified in Section 6.11 of the Indenture and is authorized by the Issuer to
make payments to and distributions from the Collection Account (including the
Principal Distribution Account), including payment of principal of or interest
on the Notes on behalf of the Issuer.
"Note Pool Factor" shall mean, with respect to each Class of Notes as
of the close of business on the last day of a Collection Period, a seven-digit
decimal figure calculated by the Servicer and equal to the outstanding
principal balance of such Class of Notes (after giving effect to any
reductions thereof to be made on the immediately following Payment Date)
divided by the original outstanding principal balance of such Class of Notes.
The Note Pool Factor will be 1.0000000 as of the Closing Date; thereafter, the
Note Pool Factor will decline to reflect reductions in the outstanding
principal amount of such Class of Notes.
"Note Register" and "Note Registrar" shall have the respective
meanings specified in Section 2.5 of the Indenture.
"Notes" shall mean the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes[,] [and] the Class A-4 Notes [and the Class B Notes],
collectively.
"Obligor" on a Receivable shall mean the purchaser or co-purchasers
of the Financed Vehicle or any other Person who owes payments under the
Receivable.
"Officer's Certificate" shall mean (i) with respect to the Trust, a
certificate signed by any Authorized Officer of the Trust and (ii) with
respect to the Depositor, the Seller or the Servicer, a certificate signed by
the chairman of the board, the president, any executive or senior vice
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president, any vice president, the treasurer or the controller of the
Depositor or the Servicer, as applicable.
"Opinion of Counsel" shall mean a written opinion of counsel which
counsel shall be acceptable to the Indenture Trustee, the Owner Trustee or the
Rating Agencies, as applicable.
"Optional Purchase Percentage" shall mean [ ]%.
"Outstanding" shall mean with respect to the Securities, as of the
date of determination, all Securities theretofore authenticated and delivered
under the Indenture or the Trust Agreement, as applicable, except:
(a) Securities theretofore (i) cancelled by the
Note Registrar or the Certificate Registrar, as applicable,
or (ii) delivered to the Note Registrar or the Certificate
Registrar, as applicable, for cancellation;
(b) Securities or portions thereof the payment for
which money in the necessary amount has been theretofore
deposited with (i)in the case of the Notes, the Indenture
Trustee or any Note Paying Agent in trust for the
Noteholders of such Notes (provided, however, that if such
Notes are to be prepaid, notice of such prepayment has been
duly given pursuant to the Indenture or provision for such
notice has been made, satisfactory to the Indenture Trustee)
or (ii) in the case of the Certificates, the Owner Trustee
or any Certificate Paying Agent in trust for the
Certificateholders of such Certificates (provided, however,
that if such Certificates are to be prepaid, notice of such
prepayment has been duly given pursuant to the Trust
Agreement or provision for such notice has been made,
satisfactory to the Owner Trustee); and
(c) Securities in exchange for or in lieu of which
other Securities have been authenticated and delivered
pursuant to the Indenture or the Trust Agreement, as
applicable, unless proof satisfactory to the Indenture
Trustee or the Owner Trustee, as applicable, is presented
that any such Securities are held by a protected purchaser;
provided, that in determining whether the holders of Notes or Certificates
evidencing the requisite principal amount of the Notes Outstanding or
Certificates Outstanding have given any request, demand, authorization,
direction, notice, consent, or waiver under any Basic Document, Securities
owned by the Issuer, any other obligor upon the Securities, the Depositor, the
Seller, the Servicer or any Affiliate of any of the foregoing Persons shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Indenture Trustee or Owner Trustee, as applicable, shall be
protected in relying on any such request, demand, authorization, direction,
notice, consent, or waiver, only (i) Notes that a Responsible Officer of the
Indenture Trustee knows to be so owned and (ii) Certificates that a
Responsible Officer of the Owner Trustee knows to be so owned, shall be so
disregarded; provided, however, if the Issuer, any other obligor upon the
Securities, the Depositor, the Seller, the Servicer or any Affiliate of any of
the foregoing Persons owns an entire Class of Securities, such Securities
shall be deemed to be Outstanding. Notes owned by the Issuer, any other
obligor upon the Notes, the Depositor, the Seller, the Servicer or any
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Affiliate of any of the foregoing Persons that have been pledged in good faith
may be regarded as Outstanding if the pledgee establishes to the satisfaction
of the Indenture Trustee the pledgee's right so to act with respect to such
Notes and that the pledgee is not the Issuer, any other obligor upon the
Notes, the Depositor, the Seller, the Servicer or any Affiliate of any of the
foregoing Persons. Certificates owned by the Issuer, any other obligor upon
the Certificates, the Seller, the Servicer or any Affiliate of any of the
foregoing Persons that have been pledged in good faith may be regarded as
Outstanding if the pledgee establishes to the satisfaction of the Owner
Trustee the pledgee's right so to act with respect to such Certificates and
that the pledgee is not the Issuer, any other obligor upon the Certificates,
the Depositor, the Seller, the Servicer or any Affiliate of any of the
foregoing Persons.
"Outstanding Advances" on the Receivables shall mean the sum, as of
the close of business on the last day of a Collection Period, of all Advances
as reduced as provided in Section 4.4(a) of the Sale and Servicing Agreement.
"Owner Trustee" shall mean ____________, a ____________, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement, or
any successor Owner Trustee under the Trust Agreement.
"Owner Trust Estate" shall mean all right, title and interest of the
Trust in, to and under the property and rights assigned to the Trust pursuant
to Article II of the Sale and Servicing Agreement.
"Payment Date" shall mean the [fifteenth (15th)] day of each calendar
month or, if such day is not a Business Day, the next succeeding Business Day.
[Percentage Interest" shall mean, as to any Certificate, the
percentage interest, specified on the face thereof, in the distributions on
the Certificates pursuant to the Trust Agreement.]
"Permitted Investments" shall mean, on any date of determination,
book-entry securities, negotiable instruments or securities represented by
instruments in bearer or registered form with maturities not exceeding the
Business Day preceding the next Payment Date which evidence:
(a) direct non-callable obligations of, and
obligations fully guaranteed as to timely payment by, the
United States of America;
(b) demand deposits, time deposits or certificates
of deposit of any depository institution or trust company
incorporated under the laws of the United States of America
or any state thereof (or any domestic branch of a foreign
bank) and subject to supervision and examination by federal
or State banking or depository institution authorities;
provided, however, that at the time of the investment or
contractual commitment to invest therein, the commercial
paper or other short-term unsecured debt obligations (other
than such obligations the rating of which is based on the
credit of a Person other than such depository institution or
trust company) thereof shall have a credit rating from each
of the Rating Agencies in the highest investment category
granted thereby;
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(c) commercial paper having, at the time of the
investment or contractual commitment to invest therein, a
rating from each of the Rating Agencies in the highest
investment category granted thereby;
(d) investments in money market funds having a
rating from each of the Rating Agencies in the highest
investment category granted thereby (including funds for
which the Indenture Trustee or the Owner Trustee or any of
their respective Affiliates is investment manager or
advisor);
(e) bankers' acceptances issued by any depository
institution or trust company referred to in clause (b)
above;
(f) repurchase obligations with respect to any
security that is a direct non-callable obligation of, or
fully guaranteed by, the United States of America or any
agency or instrumentality thereof the obligations of which
are backed by the full faith and credit of the United States
of America, in either case entered into with a depository
institution or trust company (acting as principal) described
in clause (b); and
(g) any other investment with respect to which the
Issuer or the Servicer has received written notification
from the Rating Agencies that the acquisition of such
investment as a Permitted Investment will not result in a
withdrawal or downgrading of the ratings on the Notes or the
Certificates.
"Person" shall mean any individual, corporation, limited liability
company, estate, partnership, joint venture, association, joint stock company,
trust, unincorporated organization, or government or any agency or political
subdivision thereof.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) that is subject to Title I of ERISA, a plan (as defined in Section
4975(e)(1) of the Code) and any entity whose underlying assets include plan
assets by reason of a plan's investment in the entity or otherwise.
"Pool Balance" shall mean on any date of determination, the aggregate
outstanding Principal Balance of the Receivables (exclusive of Purchased
Receivables and Defaulted Receivables) as of such date of determination.
"Pool Factor" as of the last day of a Collection Period shall mean a
seven-digit decimal figure equal to the Pool Balance at that time divided by
the Initial Pool Balance.
"Predecessor Note" shall mean, with respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note and, for purposes of this definition, any
Note authenticated and delivered under Section 2.6 of the Indenture in lieu of
a mutilated, lost, destroyed or stolen Note shall be deemed to evidence the
same debt as the mutilated, lost, destroyed or stolen Note.
"Preliminary Prospectus Supplement" shall have the meaning specified
in the Underwriting Agreement.
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"Prepayment Date" shall mean [(i) with respect to a prepayment of the
Certificates pursuant to Section 8.2(a) of the Trust Agreement or a
distribution to Certificateholders pursuant to Section 8.1(c) of the Trust
Agreement, the Payment Date specified by the Owner Trustee pursuant to said
Section 8.2(a) or 8.1(c), as applicable, and (ii)] with respect to a
prepayment of the Notes pursuant to Section 10.1(a) of the Indenture, the
Payment Date specified by the Servicer pursuant to Section 10.1(a) or (b) of
the Indenture, as applicable.
"Prepayment Price" shall mean [(i) in the case of the Certificates,
an amount equal to the Certificate Balance plus accrued and unpaid interest
thereon at the applicable Class B Rate plus interest on any overdue interest
at the applicable Class B Rate (to the extent lawful) to but excluding the
Prepayment Date and (ii)] in the case of a Class of Notes to be prepaid, an
amount equal to the unpaid principal amount of such Class of Notes plus
accrued and unpaid interest thereon at the applicable Note Interest Rate plus
interest on any overdue interest at the applicable Note Interest Rate (to the
extent lawful) to but excluding the Prepayment Date.
"Principal Balance" of a Receivable, as of any date of determination,
shall mean the Amount Financed minus that portion of all payments actually
received on or prior to such date allocable to principal.
"Principal Distribution Account" shall mean the administrative
sub-account of the Collection Account established and maintained as such
pursuant to Section 4.1(b) of the Sale and Servicing Agreement.
"Proceeding" shall mean any suit in equity, action at law or other
judicial or administrative proceeding.
"Prospectus" shall have the meaning specified in the Underwriting
Agreement.
"Prospectus Supplement" shall have the meaning specified in the
Underwriting Agreement.
"Purchase Amount" with respect to a Purchased Receivable shall mean
the sum, as of the last day of the related Collection Period, of the Principal
Balance thereof plus the accrued interest thereon at the weighted average of
the Note Interest Rates [and the Class B Rate] through the end of the related
Collection Period.
"Purchased Receivable" shall mean a Receivable purchased as of the
close of business on the last day of the respective Collection Period by the
Servicer pursuant to Section 3.7 of the Sale and Servicing Agreement, by the
Seller pursuant to Section 2.3 of the Sale and Servicing Agreement or by the
Servicer pursuant to Section 8.1 of the Sale and Servicing Agreement.
"Rating Agency" shall mean each of the nationally recognized
statistical rating organizations designated by the Depositor to provide a
rating on the Notes or the Certificates which is then rating such Notes or
Certificates. If no such organization or successor is any longer in existence,
"Rating Agency" shall be a nationally recognized statistical rating
organization or other comparable Person designated by the Depositor, notice of
which designation shall be given to the Indenture Trustee, the Owner Trustee
and the Servicer.
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"Rating Agency Condition" shall mean, with respect to any action,
that each of the Rating Agencies shall have notified the Servicer, the
Depositor, the Owner Trustee and the Indenture Trustee in writing that such
action will not result in a reduction or withdrawal of the then current
ratings of the Notes or the Certificates.
"Realized Losses" shall mean, for any Collection Period and for each
Receivable that became a Defaulted Receivable during such Collection Period,
the excess, for each such Receivable, of (i) the 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" shall mean a motor vehicle installment loan contract
listed on Schedule A to the Receivables Purchase Agreement and all proceeds
thereof and payments thereunder, which Receivable shall not have been released
by the Indenture Trustee and the Owner Trustee from the Trust.
"Receivable Files" shall mean the documents specified in Section 2.4
of the Sale and Servicing Agreement.
"Receivables Purchase Agreement" shall mean the Receivables Purchase
Agreement, dated as of____________, by and between the Bank, as seller, and the
Depositor, as purchaser.
"Record Date" shall mean, with respect to any Payment Date or
Prepayment Date and any Book-Entry Security, the close of business on the day
prior to such Payment Date or Prepayment Date or, with respect to any
Definitive Note or Definitive Certificate, the last day of the month preceding
the month in which such Payment Date or Prepayment Date occurs.
"Recoveries" shall mean, with respect to any Collection Period, all
amounts 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 any fees, costs and expenses
incurred by the Servicer in connection with the collection of such Receivable
and any payments required by law to be remitted to the Obligor.
"Registered Noteholder" shall mean the Person in whose name a Note is
registered on the Note Register on the applicable Record Date.
"Registration Statement" shall mean Registration Statement No.
333-____________ filed by the Depositor with the Securities and Exchange
Commission as of the applicable effective date as to each part of the
Registration Statement pursuant to Rule 430B(f)(2).
"Regular Principal Distribution Amount" shall mean, with respect to
any Payment Date, an amount equal to the excess, if any, of (a) the sum of the
aggregate principal amount of the Notes [and the aggregate Certificate
Balance] for such Payment Date (before giving effect to any payments on that
Payment Date) over (b) the Pool Balance at the end of the related Collection
Period.
"Regulation AB" shall mean subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended
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from time to time, and subject to such clarification and interpretation as
have been provided by the Commission in the adopting release (Asset-Backed
Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531
(Jan. 7, 2005)) or by the staff of the Commission, or as may be provided by
the Commission or its staff from time to time.
"Related Agreements" shall have the meaning specified in the recitals
to the Administration Agreement.
"Reportable Event" shall mean any event required to be reported on
Form 8-K, and in any event, the following:
(a) entry into a definitive agreement related to the Trust, the Notes
or the Receivables, or an amendment to a Basic Document, even if the Depositor
is not a party to such agreement (e.g., a servicing agreement with a servicer
contemplated by Item 1108(a)(3) of Regulation AB);
(b) termination of a Basic Document (other than by expiration of the
agreement on its stated termination date or as a result of all parties
completing their obligations under such agreement), even if the Depositor is
not a party to such agreement (e.g., a servicing agreement with a servicer
contemplated by Item 1108(a)(3) of Regulation AB);
(c) with respect to the Servicer only, the occurrence of a Servicing
Termination Event or an Event of Default;
(d) the resignation, removal, replacement, substitution of the
Indenture Trustee, the Owner Trustee or any Co-Trustee;
(e) with respect to the Indenture Trustee only, a required
distribution to holders of the Notes is not made as of the required Payment
Date under the Indenture; and
(f) with respect to the Servicer only, if the Servicer becomes aware
of any bankruptcy or receivership of the Seller, the Depositor, the Indenture
Trustee, the Owner Trustee, any enhancement or support provider contemplated
by Item 1114(b) or 1115 of Regulation AB, or other material party contemplated
by Item 1101(d)(1) of Regulation AB.
"Reporting Subcontractor" shall mean with respect to the Indenture
Trustee, any Subcontractor determined by such Person pursuant to Section 10.7
to be "participating in the servicing function" within the meaning of Item
1122 of Regulation AB. References to a Reporting Subcontractor shall refer
only to the Subcontractor of such Person and shall not refer to Subcontractors
generally.
"Representative[s]" shall mean ____________ [and ____________], as
representative[s] of the several Underwriters.
"Repurchase Event" shall have the meaning specified in Section 7.02
of the Receivables Purchase Agreement.
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"Required Rating" shall mean a rating on (i) short-term unsecured
debt obligations of "Prime-1" by Moody's and (ii) short-term unsecured debt
obligations of "A-1+" by Standard & Poor's; and any requirement that
short-term unsecured debt obligations have the "Required Rating" shall mean
that such short-term unsecured debt obligations have the foregoing required
ratings from each of such Rating Agencies.
"Reserve Account" shall mean the account established and maintained
as such pursuant to Section 4.7(a) of the Sale and Servicing Agreement.
"Reserve Account Property" shall have the meaning specified in
Section 4.7(a) of the Sale and Servicing Agreement.
"Reserve Account Excess Amount" shall mean, with respect to any
Payment Date, an amount equal to the excess, if any, of (i) the amount of cash
or other immediately available funds in the Reserve Account on such Payment
Date (prior to giving effect to any withdrawals therefrom relating to such
Payment Date) over (ii) the Specified Reserve Balance with respect to such
Payment Date.
"Reserve Initial Deposit" shall mean, $____________.
"Rule 144 A Letter" shall have the meaning specified in Section
3.4(b) of the Trust Agreement.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement, dated as of ___________, by and among the Trust, as issuer, the
Depositor, and the Bank, as seller and servicer.
"Schedule of Receivables" shall mean the list of Receivables attached
as Schedule A to the Receivables Purchase Agreement, the Sale and Servicing
Agreement and the Indenture (which Schedules may be in the form of microfiche,
disk or other means acceptable to the Indenture Trustee).
"Scheduled Payment" shall mean, for any Collection Period for any
Receivable, the amount indicated in such Receivable as required to be paid by
the Obligor in such Collection Period (without giving effect to deferments of
payments pursuant to Section 3.2 of the Sale and Servicing Agreement or any
rescheduling in any insolvency or similar proceedings).
"Secretary of State" shall mean the Secretary of State of the State
of Delaware.
"Securities" shall mean the Notes and the Certificates, collectively.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securityholders" shall mean the Noteholders and the
Certificateholders, collectively.
"Seller" shall mean the Bank as the seller of the Receivables under
the Receivables Purchase Agreement and each successor to the Bank.
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"Servicer" shall mean the Bank as the servicer of the Receivables
under the Sale and Servicing Agreement, and each successor to the Bank (in the
same capacity) pursuant to Section 6.3 of the Sale and Servicing Agreement.
"Servicer's Certificate" shall mean a certificate completed and
executed by the Servicer by the chairman of the board, the president, any
executive vice president, any vice president, the treasurer, any assistant
treasurer, the controller, or any assistant controller of the Servicer
pursuant to Section 3.9 of the Sale and Servicing Agreement.
"Servicing Criteria" shall mean the "servicing criteria" set forth in
Item 1122(d) of Regulation AB.
"Servicing Fee" shall mean, with respect to a Collection Period, the
fee payable to the Servicer for services rendered during such Collection
Period, which shall be equal to one-twelfth of the Servicing Fee Rate
multiplied by the Pool Balance as of the first day of the Collection Period.
"Servicing Fee Rate" shall mean [1.00]% per annum.
"Similar Laws" shall mean federal, state or local laws that impose
requirements similar to Section 406 ERISA or Section 4975 of the Code.
"Simple Interest Method" shall mean the method of allocating a fixed
level payment to principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the amount accrued from the
date of the preceding payment to the date of the current payment.
"Specified Reserve Balance" shall mean, for a payment date, the
lesser of (a) $[ ] ([ ]% of the principal balance of the receivables as of the
Cut-off Date) and (b) the sum of the outstanding principal amount of the notes
and the certificate balance of the certificates as of the current payment
date. However, the Specified Reserve Balance will be calculated using a
percentage of [ ]% in (a) above for any Payment Date for which the Average Net
Loss Ratio exceeds [ ]% or the Average Delinquency Ratio exceeds [ ]% (the
"specified trigger level"). Also, that higher percentage will remain in effect
until each of the Average Net Loss Ratio and the Average Delinquency Ratio is
equal to or less than [ ]% for at least six consecutive payment dates. In no
event will the Specified Reserve Balance for any payment date exceed the
aggregate outstanding principal balance of the receivables at the end of the
related Collection Period. The Specified Reserve Balance may be reduced to a
lesser amount as determined by the Depositor without the consent of any
securityholder, if each of Moody's and Standard & Poor's shall have confirmed
in writing to the Indenture Trustee that such action will not result in a
withdrawal or reduction in any of its ratings of the Securities.
"Standard & Poor's" shall mean Standard & Poor's Ratings Services, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.
"State" shall mean any state or commonwealth of the United States of
America, or the District of Columbia.
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"Statutory Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Delaware Code ss. 3801 et seq., as amended.
"Subcontractor" shall mean any vendor, subcontractor or other Person
that is not responsible for the overall servicing (as "servicing" is commonly
understood by participants in the mortgage-backed securities market) of
Receivables but performs one or more discrete functions identified in Item
1122(d) of Regulation AB with respect to the Receivables under the direction
or authority of the Indenture Trustee.
"Successor Servicer" shall mean an institution appointed as successor
Servicer pursuant to Section 7.2 of the Sale and Servicing Agreement.
"Supplemental Servicing Fee" shall mean the fee payable to the
Servicer for certain services rendered during the respective Collection
Period, determined pursuant to and defined in Section 3.8 of the Sale and
Servicing Agreement.
"Total Required Payment" shall mean, with respect to any Payment
Date, the sum of the Servicing Fee and all unpaid Servicing Fees from prior
Collection Periods, the Accrued Class A Note Interest, [,the Accrued Class B
Note Interest], [the Accrued Class B Certificate Interest] and the Regular
Principal Distribution Amount; provided, however, that on any Final Scheduled
Payment Date the amount required to be paid pursuant to Section 4.6(c)(vi) of
the Sale and Servicing Agreement shall be included in the Total Required
Payment; provided, further, that following the occurrence and during the
continuation of an Event of Default, on any Payment Date until the Payment
Date on which the outstanding principal amount of all the Securities has been
paid in full, the Total Required Payment shall mean the sum of the fees,
expenses and indemnification of the Indenture Trustee and the Owner Trustee,
the Servicing Fee and all unpaid Servicing Fees from prior Collection Periods,
the Accrued Class A Note Interest [,the Accrued Class B Note Interest], [the
Accrued Class B Certificate Interest] and the amount necessary to reduce the
outstanding principal amount of all the [Notes] [Securities] to zero.
"Transfer Date" shall mean the Closing Date.
"Transferor Certificate" shall have the meaning specified in Section
3.4(b) of the Trust Agreement.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean USAA Auto Owner Trust 200__-__, a Delaware
statutory trust governed by the Trust Agreement.
"Trust Accounts" shall have the meaning specified in Section 4.7(a)
of the Sale and Servicing Agreement.
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"Trust Agreement" shall mean the Amended and Restated Trust Agreement
of the Trust dated as of ___________, by and between the Depositor and the Owner
Trustee, as amended and/or restated from time to time.
"Trust Indenture Act" or "TIA" shall mean the Trust Indenture Act of
1939, as amended, unless otherwise specifically provided.
"Trust Property" shall mean, collectively, (i) the Receivables; (ii)
monies received thereunder on or after the Cut-off Date; (iii) the security
interests in the Financed Vehicles granted by Obligors pursuant to the
Receivables and any other interest of the Issuer in the Financed Vehicles;
(iv) rights to receive proceeds with respect to the Receivables from claims on
any theft, physical damage, credit life, credit disability, or other insurance
policies covering Financed Vehicles or Obligors; (v) all of the Seller's
rights to the Receivable Files; (vi) the Trust Accounts and all amounts,
securities, investments, investment property and other property deposited in
or credited to any of the foregoing, all security entitlements relating to the
foregoing and all proceeds thereof; (vii) the Receivables Purchase Agreement;
(viii) payments and proceeds with respect to the Receivables held by the
Servicer; (ix) all property (including the right to receive Liquidation
Proceeds) securing a Receivable (other than a Receivable repurchased by the
Servicer or purchased by the Seller); (x) rebates of premiums and other
amounts relating to insurance policies and other items financed under the
Receivables in effect as of the Cut-off Date; and (xi) all present and future
claims, demands, causes of action and choses in action in respect of any or
all of the foregoing and all payments on or under and all proceeds of every
kind and nature whatsoever in respect of any or all of the foregoing,
including all proceeds of the conversion thereof, voluntary or involuntary,
into cash or other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit
accounts, insurance proceeds, condemnation awards, rights to payment of any
and every kind and other forms of obligations and receivables, instruments and
other property which at any time constitute all or part of or are included in
the proceeds of any of the foregoing.
"Trustee Officer" shall mean, with respect to the Indenture Trustee,
any officer within the Corporate Trust Office of the Indenture Trustee and
also, with respect to a particular matter, any other officer to whom such
matter is referred because of such officer's knowledge of and familiarity with
the particular subject, in each case having direct responsibility for the
administration of the Indenture and the other Basic Documents on behalf of the
Indenture Trustee and, with respect to the Owner Trustee, any officer within
the Corporate Trust Office of the Owner Trustee with direct responsibility for
the administration of the Trust Agreement and the other Basic Documents on
behalf of the Owner Trustee.
"UCC" shall mean the Uniform Commercial Code as in effect in any
relevant jurisdiction.
"Underwriter[s]" shall mean the underwriter[s] named in Schedule I to
the Underwriting Agreement.
"Underwriting Agreement" shall mean the Underwriting Agreement, dated
___________ among the Seller, the Depositor and the Representatives.
A-A-24
"Underwritten Securities" shall mean the Notes and/or the
Certificates.
A-A-25
APPENDIX B
Item 1999 Parties
[list as applicable for each deal]
Appendix B-1
APPENDIX C
Minimum Servicing Criteria to be Addressed in
Assessment of Compliance Statement
The assessment of compliance to be delivered by the
[Trustee] [Servicer] shall address, at a minimum, the criteria identified as
below as "Applicable Servicing Criteria":
------------------------------ -------------------------------------------------- ------------------------------------
Reg AB Reference Servicing Criteria Applicable Servicing Criteria
------------------------------ -------------------------------------------------- ------------------------------------
General Servicing Considerations
------------------------------ -------------------------------------------------- ------------------------------------
Policies and procedures are instituted to
monitor any performance or other triggers and
events of default in accordance with the
1122(d)(1)(i) transaction agreements.
------------------------------ -------------------------------------------------- ------------------------------------
If any material servicing activities are
outsourced to third parties, policies and
procedures are instituted to monitor the third
party's performance and compliance with such
1122(d)(1)(ii) servicing activities.
------------------------------ -------------------------------------------------- ------------------------------------
Any requirements in the transaction agreements
to maintain a back-up servicer for the Pool
1122(d)(1)(iii) Assets are maintained.
------------------------------ -------------------------------------------------- ------------------------------------
A fidelity bond and errors and omissions policy
is in effect on the party participating in the
servicing function throughout the reporting
period in the amount of coverage required by and
otherwise in accordance with the terms of the
1122(d)(1)(iv) transaction agreements.
------------------------------ -------------------------------------------------- ------------------------------------
Cash Collection and Administration
------------------------------ -------------------------------------------------- ------------------------------------
Payments on pool assets are deposited into the
appropriate custodial bank accounts and related
bank clearing accounts no more than two business
days following receipt, or such other number of
1122(d)(2)(i) days specified in the transaction agreements.
------------------------------ -------------------------------------------------- ------------------------------------
Disbursements made via wire transfer on behalf
of an obligor or to an investor are made only by
1122(d)(2)(ii) authorized personnel.
------------------------------ -------------------------------------------------- ------------------------------------
Advances of funds or guarantees regarding
collections, cash flows or distributions, and
any interest or other fees charged for such
advances, are made, reviewed and approved as
1122(d)(2)(iii) specified in the transaction agreements.
------------------------------ -------------------------------------------------- ------------------------------------
The related accounts for the transaction, such
as cash reserve accounts or accounts
established as a form of over
collateralization, are separately maintained
(e.g., with respect to commingling of cash) as
set forth in the
1122(d)(2)(iv) transaction agreements.
------------------------------ -------------------------------------------------- ------------------------------------
Each custodial account is maintained at a
federally insured depository institution as set
forth in the transaction agreements. For
purposes of this criterion, "federally insured
depository institution" with respect to a
foreign financial institution means a foreign
financial institution that meets the
requirements of Rule 13k-1(b)(1) of the
1122(d)(2)(v) Securities Exchange Act.
------------------------------ -------------------------------------------------- ------------------------------------
Unissued checks are safeguarded so as to prevent
1122(d)(2)(vi) unauthorized access.
------------------------------ -------------------------------------------------- ------------------------------------
Appendix C-1
------------------------------ -------------------------------------------------- ------------------------------------
Reconciliations are prepared on a monthly basis
for all asset-backed securities related bank
accounts, including custodial accounts and
related bank clearing accounts. These
reconciliations are (A) mathematically accurate;
(B) prepared within 30 calendar days after the
bank statement cutoff date, or such other number
of days specified in the transaction agreements;
(C) reviewed and approved by someone other than
the person who prepared the reconciliation; and
(D) contain explanations for reconciling items.
These reconciling items are resolved within 90
calendar days of their original identification,
or such other number of days specified in the
1122(d)(2)(vii) transaction agreements.
------------------------------ -------------------------------------------------- ------------------------------------
Investor Remittances and Reporting
------------------------------ -------------------------------------------------- ------------------------------------
Reports to investors, including those to be
filed with the Commission, are maintained in
accordance with the transaction agreements and
applicable Commission requirements.
Specifically, such reports (A) are prepared in
accordance with timeframes and other terms set
forth in the transaction agreements; (B) provide
information calculated in accordance with the
terms specified in the transaction agreements;
(C) are filed with the Commission as required by
its rules and regulations; and (D) agree with
investors' or the trustee's records as to the
total unpaid principal balance and number of
1122(d)(3)(i) Pool Assets serviced by the Servicer.
------------------------------ -------------------------------------------------- ------------------------------------
Amounts due to investors are allocated and
remitted in accordance with timeframes,
distribution priority and other terms set forth
1122(d)(3)(ii) in the transaction agreements.
------------------------------ -------------------------------------------------- ------------------------------------
Disbursements made to an investor are posted
within two business days to the Servicer's
investor records, or such other number of days
1122(d)(3)(iii) specified in the transaction agreements.
------------------------------ -------------------------------------------------- ------------------------------------
Amounts remitted to investors per the investor
reports agree with cancelled checks, or other
1122(d)(3)(iv) form of payment, or custodial bank statements.
------------------------------ -------------------------------------------------- ------------------------------------
Pool Asset Administration
------------------------------ -------------------------------------------------- ------------------------------------
1122(d)(4)(i) Collateral or security on pool assets is
maintained as required by the transaction
agreements or related pool asset documents.
------------------------------ -------------------------------------------------- ------------------------------------
1122(d)(4)(ii) Pool assets and related documents are
safeguarded as required by the transaction
agreements
------------------------------ -------------------------------------------------- ------------------------------------
1122(d)(4)(iii) Any additions, removals or substitutions to the
asset pool are made, reviewed and approved in
accordance with any conditions or requirements
in the transaction agreements.
------------------------------ -------------------------------------------------- ------------------------------------
Payments on pool assets, including any payoffs,
made in accordance with the related pool asset
documents are posted to the Servicer's obligor
records maintained no more than two business
days after receipt, or such other number of
days specified in the transaction agreements,
and allocated to principal, interest or other
items (e.g., escrow) in accordance with the
related
1122(d)(4)(iv) pool asset documents.
------------------------------ -------------------------------------------------- ------------------------------------
Appendix C-2
------------------------------ -------------------------------------------------- ------------------------------------
The Servicer's records regarding the pool
assets agree with the Servicer's records with
respect
1122(d)(4)(v) to an obligor's unpaid principal balance.
------------------------------ -------------------------------------------------- ------------------------------------
Changes with respect to the terms or status of
an obligor's pool assets (e.g., loan
modifications or re-agings) are made, reviewed
and approved by authorized personnel in
accordance with the transaction agreements and
1122(d)(4)(vi) related pool asset documents.
------------------------------ -------------------------------------------------- ------------------------------------
Loss mitigation or recovery actions (e.g.,
forbearance plans, modifications and deeds in
lieu of foreclosure, foreclosures and
repossessions, as applicable) are initiated,
conducted and concluded in accordance with the
timeframes or other requirements established by
1122(d)(4)(vii) the transaction agreements.
------------------------------ -------------------------------------------------- ------------------------------------
Records documenting collection efforts are
maintained during the period a pool asset is
delinquent in accordance with the transaction
agreements. Such records are maintained on at
least a monthly basis, or such other period
specified in the transaction agreements, and
describe the entity's activities in monitoring
delinquent pool assets including, for example,
phone calls, letters and payment rescheduling
plans in cases where delinquency is deemed
1122(d)(4)(viii) temporary (e.g., illness or unemployment).
------------------------------ -------------------------------------------------- ------------------------------------
Adjustments to interest rates or rates of return
for pool assets with variable rates are computed
1122(d)(4)(ix) based on the related pool asset documents.
------------------------------ -------------------------------------------------- ------------------------------------
Regarding any funds held in trust for an
obligor (such as escrow accounts): (A) such
funds are analyzed, in accordance with the
obligor's pool asset documents, on at least an
annual basis, or such other period specified in
the transaction agreements; (B) interest on
such funds is paid, or credited, to obligors in
accordance with applicable pool asset documents
and state laws; and (C) such funds are returned
to the obligor within 30 calendar days of full
repayment of the related pool assets, or such
other number of
1122(d)(4)(x) days specified in the transaction agreements.
------------------------------ -------------------------------------------------- ------------------------------------
Payments made on behalf of an obligor (such as
tax or insurance payments) are made on or
before the related penalty or expiration dates,
as indicated on the appropriate bills or
notices for such payments, provided that such
support has been received by the servicer at
least 30 calendar days prior to these dates, or
such other number of days specified in the
1122(d)(4)(xi) transaction agreements.
------------------------------ -------------------------------------------------- ------------------------------------
Any late payment penalties in connection with
any payment to be made on behalf of an obligor
are paid from the Servicer's funds and not
charged to the obligor, unless the late payment
1122(d)(4)(xii) was due to the obligor's error or omission.
------------------------------ -------------------------------------------------- ------------------------------------
Disbursements made on behalf of an obligor are
posted within two business days to the
obligor's records maintained by the servicer,
or such other number of days specified in the
1122(d)(4)(xiii) transaction agreements.
------------------------------ -------------------------------------------------- ------------------------------------
Appendix C-3
------------------------------ -------------------------------------------------- ------------------------------------
Delinquencies, charge-offs and uncollectible
accounts are recognized and recorded in
1122(d)(4)(xiv) accordance with the transaction agreements.
------------------------------ -------------------------------------------------- ------------------------------------
Any external enhancement or other support,
identified in Item 1114(a)(1) through (3) or
Item 1115 of Regulation AB, is maintained as
1122(d)(4)(xv) set forth in the transaction agreements.
------------------------------ -------------------------------------------------- ------------------------------------
[Indenture Trustee] [USAA FEDERAL SAVINGS
BANK]
By:________________________________
Name:
Title:
Date: _________________________
Appendix C-4
APPENDIX D
Form of Performance Certification
CERTIFICATION
Re: USAA Auto Owner Trust 200[ ]-[]
The undersigned [Indenture Trustee] [Reporting Subcontractor] hereby
certifies to the [ ] and its officers, directors and Affiliates (collectively,
the "Certification Parties") as follows, with the knowledge and intent that
the Certification Parties will rely on this Certification in connection with
the certification concerning the Trust to be signed by an officer of the
Servicer and submitted to the Securities and Exchange Commission pursuant to
the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002:
1. The [Indenture Trustee] [Reporting Subcontractor] has reviewed the
information and reports provided by it to the Depositor and the Servicer
pursuant to the Sale and Servicing Agreement with respect to the servicing
criteria assessment under Section 10.5 of the Sale and Servicing Agreement
(the "Information");
2. Based on the [Indenture Trustee] [Reporting Subcontractor]'s
knowledge, the Information, taken as a whole, does not contain any untrue
statement of a material fact or omit to state a material fact required in the
Information and necessary to make the statements made, in the light of the
circumstances under which such statements were made, not misleading with
respect to the period covered by the 10-K report; and
3. The servicing criteria assessment required to be provided by the
[Indenture Trustee] [Reporting Subcontrator] pursuant to the Agreement, has
been provided to the Depositor and the Servicer. Any material instance of
noncompliance with the applicable Servicing Criteria has been disclosed in
such report.
[4. Any assessment of compliance with servicing criteria required to
be provided by any Reporting Subcontractor of the Indenture Trustee have been
provided by such Reporting Subcontractor.]
▇▇▇▇▇▇▇▇ ▇-▇
Capitalized terms not otherwise defined herein have the meanings
ascribed thereto in the Sale and Servicing Agreement dated as of [ ] among
USAA Federal Savings Bank, as Seller and Servicer, USAA Auto Owner Trust
20__-__ and USAA Acceptance, LLC.
[Indenture Trustee], not in its individual capacity
but solely as Indenture Trustee] [REPORTING
SUBCONTRACTOR]
By:________________________________
Name:
Title:
Date: _________________________
▇▇▇▇▇▇▇▇ ▇-▇
APPENDIX E
Form of Performance Certification
CERTIFICATION
Re: USAA Auto Owner Trust 2006-1
The undersigned Servicer hereby certifies to the [ ] and its officers,
directors and Affiliates (collectively, the "Certification Parties") as
follows, with the knowledge and intent that the Certification Parties will
rely on this Certification in connection with the certification concerning the
Trust to be signed by an officer of the Servicer and submitted to the
Securities and Exchange Commission pursuant to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002:
1. I have reviewed the servicer compliance statement of the Servicer
provided in accordance with Item 1123 of Regulation AB (the "Compliance
Statement"), the report on assessment of the Servicer's compliance with the
servicing criteria set forth in Item 1122(d) of Regulation AB (the "Servicing
Criteria"), provided in accordance with Rules 13a-18 and 15d-18 under
Securities Exchange Act of 1934, as amended (the "Exchange Act") and Item 1122
of Regulation AB (the "Servicing Assessment"), the registered public
accounting firm's attestation report provided in accordance with Rules 13a-18
and 15d-18 under the Exchange Act and Section 1122(b) of Regulation AB (the
"Attestation Report"), and all servicing reports, officer's certificates and
other information relating to the servicing of the Receivables by the Servicer
during 200[ ] that were delivered by the Servicer to the Indenture Trustee
pursuant to the Agreement (collectively, the "Servicer Servicing
Information");
2. Based on my knowledge, the Servicer Servicing Information, taken as a
whole, does not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements made, in the light of
the circumstances under which such statements were made, not misleading with
respect to the period of time covered by the Servicer Servicing Information;
3. Based on my knowledge, all of the Servicer Servicing Information
required to be provided by the Servicer under the Agreement has been provided
to the Indenture Trustee;
4. I am responsible for reviewing the activities performed by the
Servicer as servicer under the Sale and Servicing Agreement dated [ ] among
USAA Auto Owner Trust 20__-__, USAA Acceptance, LLC and USAA Federal Savings
Bank (the "Agreement"), and based on my knowledge and the compliance review
conducted in preparing the Compliance Statement and except as disclosed in the
Compliance Statement, the Servicing Assessment or the Attestation Report, the
Servicer has fulfilled its obligations under the Agreement in all material
respects; and
5. The Compliance Statement required to be delivered by the Servicer
pursuant to the Agreement, and the Servicing Assessment and Attestation Report
required to be provided by the Servicer and by any Reporting Subcontractor
pursuant to
E-1
the Agreement, have been provided to the Indenture Trustee. Any material
instances of noncompliance described in such reports have been disclosed to
the Depositor. Any material instance of noncompliance with the Servicing
Criteria has been disclosed in such reports.
Capitalized terms not otherwise defined herein have the meanings ascribed
thereto in the Sale and Servicing Agreement dated as of [ ] among USAA Federal
Savings Bank, as Seller and Servicer, USAA Auto Owner Trust 20__-__ and USAA
Acceptance, LLC.
USAA FEDERAL SAVINGS BANK
By:________________________________
Name:
Title:
Date: _________________________
E-2