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
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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.................................................................5
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..............................7
SECTION 3.1 Duties of Servicer..........................................................................7
SECTION 3.2 Collection of Receivable Payments...........................................................8
SECTION 3.3 Realization Upon Receivables................................................................9
SECTION 3.4 Allocations of Collections..................................................................9
SECTION 3.5 Maintenance of Security Interests in Financed Vehicles......................................9
SECTION 3.6 Covenants of Servicer......................................................................10
SECTION 3.7 Purchase of Receivables Upon Breach........................................................10
SECTION 3.8 Servicer Fees..............................................................................11
SECTION 3.9 Servicer's Certificate.....................................................................11
SECTION 3.10 Annual Statement as to Compliance; Notice of Event of Servicing Termination................11
SECTION 3.11 Annual Independent Certified Public Accountant's Report....................................12
SECTION 3.12 Access to Certain Documentation and Information Regarding Receivables......................12
SECTION 3.13 Servicer Expenses..........................................................................13
SECTION 3.14 Insurance..................................................................................13
ARTICLE IV DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS TO NOTEHOLDERS AND CERTIFICATEHOLDERS...........13
SECTION 4.1 Accounts...................................................................................13
SECTION 4.2 Collections................................................................................14
SECTION 4.3 Application of Collections.................................................................15
SECTION 4.4 Advances...................................................................................15
SECTION 4.5 Additional Deposits........................................................................16
SECTION 4.6 Distributions..............................................................................16
SECTION 4.7 Reserve Account............................................................................20
SECTION 4.8 Net Deposits...............................................................................22
SECTION 4.9 Statements to Noteholders and Certificateholders...........................................22
ARTICLE V THE DEPOSITOR..............................................................................23
SECTION 5.1 Representations, Warranties and Covenants of Depositor.....................................23
SECTION 5.2 Liability of Depositor; Indemnities........................................................24
SECTION 5.3 Merger or Consolidation of, or Assumption of the Obligations of Depositor..................25
SECTION 5.4 Limitation on Liability of Depositor and Others............................................25
SECTION 5.5 Depositor May Own Notes or Certificates....................................................25
ARTICLE VI THE SERVICER...............................................................................26
SECTION 6.1 Representations of Servicer................................................................26
SECTION 6.2 Indemnities of Servicer....................................................................27
SECTION 6.3 Merger or Consolidation of, or Assumption of the Obligations of Servicer...................28
SECTION 6.4 Limitation on Liability of Servicer and Others.............................................28
SECTION 6.5 Delegation of Duties.......................................................................29
SECTION 6.6 Servicer Not to Resign as Servicer.........................................................29
SECTION 6.7 Servicer May Own Notes or Certificates.....................................................30
ARTICLE VII SERVICING TERMINATION......................................................................30
SECTION 7.1 Events of Servicing Termination............................................................30
SECTION 7.2 Appointment of Successor Servicer..........................................................31
SECTION 7.3 Repayment of Advances......................................................................32
SECTION 7.4 Notification to Noteholders and Certificateholders.........................................32
SECTION 7.5 Waiver of Past Events of Servicing Termination.............................................33
ARTICLE VIII TERMINATION................................................................................33
SECTION 8.1 Optional Purchase of All Receivables.......................................................33
SECTION 8.2 Succession Upon Satisfaction and Discharge of Indenture....................................33
ARTICLE IX MISCELLANEOUS PROVISIONS...................................................................34
SECTION 9.1 Amendment..................................................................................34
SECTION 9.2 Protection of Title to Trust Property......................................................35
SECTION 9.3 GOVERNING LAW..............................................................................37
SECTION 9.4 Notices....................................................................................37
SECTION 9.5 Severability of Provisions.................................................................38
SECTION 9.6 Assignment.................................................................................38
SECTION 9.7 Further Assurances.........................................................................38
SECTION 9.8 No Waiver; Cumulative Remedies.............................................................38
SECTION 9.9 Third-Party Beneficiaries..................................................................38
SECTION 9.10 Actions by Noteholders or Certificateholders...............................................38
SECTION 9.11 Limitation of Liability of Owner Trustee and Indenture Trustee.............................39
SECTION 9.12 Savings Clause.............................................................................39
Schedule A Schedule of Receivables...................................................................A-1
Schedule B Location of Receivable Files .............................................................B-1
Appendix A Definitions and Usage............................................................Appendix A-1
[Appendix B Servicer's Extension Policy.....................................................Appendix B-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 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 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, and any
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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, 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
simple interest contract which bears interest at a fixed rate
per annum and which 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, 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.]
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(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.
(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.
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 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:
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(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 to this Agreement,
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 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.
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(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 Notes
Outstanding (or if no Notes are Outstanding, by holders of Certificates
evidencing not less than a majority of the 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.
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
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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, of this Agreement[, of the
Servicer's Extension Policy (attached hereto as Appendix B)] or as required by
law or court order; provided, however, that the Servicer may extend any
Receivable that is in default or with respect to which default is reasonably
foreseeable and that would be acceptable to the Servicer with respect to
comparable new or used automobile and light-duty truck receivables that it
services for itself, if (a) the amount on deposit in the Reserve Account is
greater than zero at the time of the extension, (b) the total credit-related
extensions granted on the Receivable will not exceed four months in the
aggregate, (c) the total number of credit-related extensions granted on the
Receivable will not exceed two, 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,
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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.
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 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.
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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, 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.
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(b) With respect to all Receivables purchased pursuant to this Section
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 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 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; 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, 200__, 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 (i) a review of the activities of the Servicer during
the preceding 12-month period (or such shorter period in the case of the first
such certificate) and of its performance under this Agreement has been made
under such officer's supervision and (ii) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all its obligations
under this Agreement throughout such period, or, if there has been a default in
the fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof. 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. Notwithstanding the foregoing in this
Section 3.10(a), the Servicer, in its sole discretion, may deliver, in addition
to or in lieu of the Officer's Certificate referred to above in this Section
3.10(a), the report on compliance with servicing criteria 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.
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(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.
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, 200__ with respect to the prior calendar year (or
such shorter period in the case of the first such report) a report addressed to
the board of directors of the Servicer and to the Owner Trustee and the
Indenture Trustee, to the effect that such firm has examined the automobile and
light-duty truck receivable servicing functions of the Servicer for such period,
including the Servicer's procedures and records relating to servicing of the
Receivables under this Agreement and that, on the basis of such examination,
such firm is of the opinion that such servicing has been conducted during such
period in compliance with this Agreement except for (a) such exceptions as such
firm believes to be immaterial and (b) such other exceptions as shall be set
forth in such firm's report. In addition, such report shall state that such firm
has compared the mathematical calculations of each amount set forth in the
Servicer's Certificates forwarded by the Servicer pursuant to Section 3.9 during
the period covered by such report (which shall be the preceding calendar year or
such shorter period in the case of the first such report) with the Servicer's
computer reports which were the source of such amounts and that on the basis of
such comparison, such firm is of the opinion that such amounts are in agreement,
except for such exceptions as such firm believes to be immaterial and such other
exceptions as shall be set forth in such statement. In addition, such report
shall set forth the procedures performed in conjunction with the examination and
shall contain a statement of such firm as to the accuracy of the amounts set
forth in the Servicer's Certificates delivered pursuant to Section 3.9 in such
period. Notwithstanding the foregoing in this Section 3.11, the Servicer, in its
sole discretion, may cause to be delivered, in lieu of the report referred to
above in this Section 3.11, the attestation report of a registered public
accounting firm 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.
The report or attestation report, as applicable, will also indicate
that the firm is independent of the Servicer within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public Accountants.
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
12
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.
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
13
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.
(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
14
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 Notes Outstanding or from the Certificateholders of
Certificates evidencing not less than 25% of the Certificate Balance 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 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.
15
(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
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
Certificate Interest, the Priority Note 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;
16
(ii) second, to the 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 Noteholders, the Priority Note 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 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 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 Depositor, any remaining Available Funds
for such Payment Date.
Notwithstanding the foregoing in this Section 4.6(c),
(A) if the Class A 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;
17
(3) to the 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 Noteholders, the Priority Note
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 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 [ ] 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 Certificate Distribution Account, the
Certificate Balance of the Class B
Certificates; and
(8) to the Depositor, any remaining Available
Funds for such Payment Date; and
(B) if the Class A 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 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
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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 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
(6) to 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 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 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 and then to the holders of the Class [ ]
Notes,
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Class [ ] Notes and Class [ ] Notes on a pro rata basis in reduction of
principal until the principal amount of the Notes has been paid in full.
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 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
__________. 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 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
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establishes 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 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 and each Note Paying
Agent) 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 Pool Balance as of 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 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, the Note Pool Factor for each Class of Notes, the
Certificate Balance and the Certificate Pool Factor as of such Payment
Date;
(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;
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(x) the Note Pool Factor and the Certificate Pool Factor for
such Payment Date;
(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 amount of the aggregate Realized Losses, if any,
with respect to the related Collection Period;
(xiii) 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;
(xiv) the amount of Advances, if any, on such Payment Date;
(xv) the aggregate Collections for the related Collection
Period; and
(xvi) the aggregate Principal Balance of the Receivables that
became designated as Defaulted Receivables during the related
Collection Period.
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.
(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
23
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
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.
(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
24
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
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
25
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.
(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.
26
(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
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,
27
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.
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 notice of any merger, conversion, consolidation or
succession pursuant to this Section 6.3 to the Rating Agencies and the Indenture
Trustee.
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.
28
(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 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 and the Indenture
Trustee at the earliest practicable time (and, if such communication is not in
writing, shall be confirmed in writing at the earliest practicable time) and any
such determination shall be evidenced by an Opinion of Counsel to such effect
delivered to the Owner Trustee and the
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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) and (ii)
assumed the responsibilities and obligations of the Servicer in accordance with
Section 7.2.
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.
ARTICLE VII
SERVICING TERMINATION
SECTION 7.1 Events of Servicing Termination. (a) If any one of the
following events ("Events of Servicing Termination") 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 Notes
or, if no Notes are outstanding, by Certificateholders of Certificates
evidencing not less than 25% of the 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
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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 have been
remedied, either the Indenture Trustee or the holders of Notes evidencing not
less than a majority of the principal amount of the Notes Outstanding (or, if no
Notes are Outstanding, Certificates evidencing not less than a majority of the
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
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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). 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 automatically be appointed the
Successor Servicer and the Indenture Trustee shall be entitled to the Servicing
Fee. 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
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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
Notes (or, if no Notes are Outstanding, holders of Certificates evidencing not
less than a majority of the 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 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
33
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.
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
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.
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(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
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.
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(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the 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
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(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 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.
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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,
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 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
38
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
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.
39
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
Location of Receivable Files
c/o USAA Federal Savings Bank
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
B-1
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.
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"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.
"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
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
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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; (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]%.
"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.
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"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.
"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, 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
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.
"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.
A-A-4
"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 3.10 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 3.5 of the Trust Agreement.
"Certificateholder" or "holder of a Certificate" shall mean a Person
in whose name a Certificate is registered in the Certificate Register.
"Certificates" shall mean the Class B Certificates.
"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 (ii)
the Class B Certificates.
"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 Noteholder" shall mean a Noteholder.
"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.
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"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.
"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.
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"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
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 Rate" shall mean [ ]% per annum. Interest with respect to
the Class B Certificates 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.
"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.
"Definitive Certificates" shall have the meaning specified in Section
3.13 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
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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.
"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.
"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.
"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 Certificates,
the Class B Final Scheduled Payment Date.
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"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.
"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.
"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.
"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 $____________.
A-A-10
"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
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.
"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.
"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.
"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.
"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.
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"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
"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 collectively (i) the Letter
of Representations, dated as of ____________ by and among the Issuer,
____________, as agent and The Depository Trust Company regarding the Notes
and (ii) the Letter of Representations, dated as of ____________ by and among
the Issuer, ____________, as agent and The Depository Trust Company regarding
the Certificates.]
"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, 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.
"Noteholder" or "holder of a Note" shall mean the Person in whose
name a Note is registered on the Note Register.
"Notes" shall mean the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes and the Class A-4 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.
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"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
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
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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 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.
"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.
"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
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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.
"Priority Note 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.
"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.
"Projected Weighted Average Life" shall mean, with respect to (a) the
Class A-1 Notes, [ ], (b) the Class B-2 Notes, [ ], (c) the Class A-3 Notes, [
], (d) the Class A-4 Notes, [ ] and (e) the Class B Certificates, [ ].
"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.
A-A-16
"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.
"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 in the form in which it became effective on [_____________].
A-A-17
"Regular Principal Distribution Amount" shall mean, with respect to
any Payment Date, an amount equal to the sum of (i) the Collections on the
Receivables received during the related Collection Period and allocable to
principal and (ii) the aggregate Principal Balance (net of Liquidation
Proceeds received during the related Collection Period applied to principal)
of all Receivables that became designated as Defaulted Receivables in such
Collection Period; provided, however, that the Regular Principal Distribution
Amount shall not exceed the sum of the aggregate outstanding principal amount
of all of the Notes and the Certificate Balance on such Payment Date.
"Related Agreements" shall have the meaning specified in the recitals
to the Administration Agreement.
"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.
"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, $____________.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement, dated as of ___________, by and between 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).
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"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.
"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 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 ERISA or 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) $5,697,582.56 (0.50% of the principal balance of the Receivables as of
the Cut-off Date) and (b) the sum of the aggregate principal balance of the
Outstanding Notes and the principal balance of the Certificates as of the
current Payment Date. However, the Specified Reserve Balance will be
calculated using a percentage of 0.75% in (a) above for any Payment Date for
which the Average Net Loss Ratio exceeds 1.25% or the Average Delinquency
Ratio exceeds 1.25% (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 1.25% for at
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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, 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.
"Statutory Trust Statute" shall mean Chapter 38 of Title 12 of the
Delaware Code, 12 Delaware Code ss. 3801 et seq., as amended.
"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
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 Certificate Interest and the amount necessary to reduce the
outstanding principal amount of all the Securities to zero.
"Transfer Date" shall mean the Closing Date.
"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.
A-A-20
"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-21
"Underwritten Securities" shall mean the Notes and/or the
Certificates.
A-A-22
[APPENDIX B
Servicer's Extension Policy]
Appendix B-1