Exhibit 10.1
EXECUTION COPY
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SALE AND SERVICING AGREEMENT
among
USAA AUTO OWNER TRUST 2006-3,
as Issuer,
USAA ACCEPTANCE, LLC,
as Depositor,
and
USAA FEDERAL SAVINGS BANK,
as Seller and Servicer
Dated as of August 1, 2006
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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......................................................8
SECTION 3.1 Duties of Servicer............................................8
SECTION 3.2 Collection of Receivable Payments.............................8
SECTION 3.3 Realization Upon Receivables..................................9
SECTION 3.4 Allocations of Collections...................................10
SECTION 3.5 Maintenance of Security Interests in Financed Vehicles.......10
SECTION 3.6 Covenants of Servicer........................................10
SECTION 3.7 Purchase of Receivables Upon Breach..........................10
SECTION 3.8 Servicer Fees................................................11
SECTION 3.9 Servicer's Certificate.......................................11
SECTION 3.10 Annual Statement as to Compliance; Item 1122 Servicing
Criteria Assessment; Notice of Event of Servicing
Termination..................................................11
SECTION 3.11 Annual Independent Certified Public Accountant's Report......13
SECTION 3.12 Access to Certain Documentation and Information
Regarding Receivables........................................13
SECTION 3.13 Servicer Expenses............................................13
SECTION 3.14 Insurance....................................................13
ARTICLE IV DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS TO NOTEHOLDERS AND
CERTIFICATEHOLDERS...........................................14
SECTION 4.1 Accounts.....................................................14
SECTION 4.2 Collections..................................................15
SECTION 4.3 Application of Collections...................................15
SECTION 4.4 Advances.....................................................16
SECTION 4.5 Additional Deposits..........................................16
SECTION 4.6 Distributions................................................17
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................................................25
SECTION 5.1 Representations, Warranties and Covenants of Depositor.......25
SECTION 5.2 Liability of Depositor; Indemnities..........................26
SECTION 5.3 Merger or Consolidation of, or Assumption of the
Obligations of Depositor.....................................27
SECTION 5.4 Limitation on Liability of Depositor and Others..............27
SECTION 5.5 Depositor May Own Notes or Certificates......................27
ARTICLE VI THE SERVICER.................................................27
SECTION 6.1 Representations of Servicer..................................27
SECTION 6.2 Indemnities of Servicer......................................29
SECTION 6.3 Merger or Consolidation of, or Assumption of the
Obligations of Servicer......................................30
SECTION 6.4 Limitation on Liability of Servicer and Others...............30
SECTION 6.5 Delegation of Duties.........................................31
SECTION 6.6 Servicer Not to Resign as Servicer...........................31
SECTION 6.7 Servicer May Own Notes or Certificates.......................31
ARTICLE VII SERVICING TERMINATION........................................32
SECTION 7.1 Events of Servicing Termination..............................32
SECTION 7.2 Appointment of Successor Servicer............................33
SECTION 7.3 Repayment of Advances........................................34
SECTION 7.4 Notification to Noteholders and Certificateholders...........34
SECTION 7.5 Waiver of Past Events of Servicing Termination...............35
ARTICLE VIII TERMINATION..................................................35
SECTION 8.1 Optional Purchase of All Receivables.........................35
SECTION 8.2 Succession Upon Satisfaction and Discharge of Indenture......35
ARTICLE IX MISCELLANEOUS PROVISIONS.....................................36
SECTION 9.1 Amendment....................................................36
SECTION 9.2 Protection of Title to Trust Property........................37
SECTION 9.3 GOVERNING LAW................................................39
SECTION 9.4 Notices......................................................39
SECTION 9.5 Severability of Provisions...................................39
SECTION 9.6 Assignment...................................................40
SECTION 9.7 Further Assurances...........................................40
SECTION 9.8 No Waiver; Cumulative Remedies...............................40
SECTION 9.9 Third-Party Beneficiaries....................................40
SECTION 9.10 Actions by Noteholders or Certificateholders.................40
SECTION 9.11 Limitation of Liability of Owner Trustee and Indenture
Trustee......................................................41
SECTION 9.12 Savings Clause...............................................41
ARTICLE X Exchange Act Reporting.......................................41
SECTION 10.1 Further Assurances...........................................41
SECTION 10.2 Form 10-D Filings............................................42
SECTION 10.3 Form 8-K Filings.............................................42
SECTION 10.4 Form 10-K Filings............................................42
SECTION 10.5 Report on Assessment of Compliance and Attestation...........43
SECTION 10.6 Back-up ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification.........................43
SECTION 10.7 Use of Subcontractors........................................44
SECTION 10.8 Representations and Warranties...............................44
SECTION 10.9 Indemnification..............................................45
SECTION 10.10Amendments...................................................46
Schedule A Schedule of Receivables.....................................A-1
Schedule B-1 Location of Receivable Files ...............................B-1
Schedule B-2 Location of Lien Certificates ..............................B-2
Appendix A Definitions and Usage..............................Appendix A-1
Appendix B Item 1119 Parties..................................Appendix B-1
Appendix C Minimum Servicing Criteria Assessment..............Appendix C-1
Appendix D Performance Certification (Trustee/Reporting
Subcontractor).....................................Appendix D-1
Appendix E Performance Certification (Servicer)...............Appendix E-1
SALE AND SERVICING AGREEMENT, dated as of August 1, 2006 (as from time to
time amended, supplemented or otherwise modified and in effect, this
"Agreement"), among USAA AUTO OWNER TRUST 2006-3 (the "Issuer"), a Delaware
statutory trust, USAA ACCEPTANCE, LLC, a Delaware limited liability company (the
"Depositor") and USAA FEDERAL SAVINGS BANK, a federally chartered savings
association, as seller of the Receivables to the Depositor (in such capacity,
the "Seller") and servicer (in such capacity, the "Servicer").
WHEREAS, the Issuer desires to purchase a portfolio of receivables and
related property consisting of motor vehicle installment loan contracts
originated by the Seller in the ordinary course of its business;
WHEREAS, the Seller is concurrently selling such portfolio of receivables
and related property to the Depositor pursuant to the Receivables Purchase
Agreement, and the Depositor is willing to sell such portfolio of receivables
and related property to the Issuer; and
WHEREAS, the Servicer is willing to service such receivables on behalf of
the Issuer.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound, agree as follows:
ARTICLE I
DEFINITIONS AND USAGE
Except as otherwise specified herein or as the context may otherwise
require, capitalized terms used but not otherwise defined herein are defined in
Appendix A hereto, which also contains rules as to usage that shall be
applicable herein.
ARTICLE II
TRUST PROPERTY
SECTION 2.1 Conveyance of Trust Property; Intent of the Parties. In
consideration of the Issuer's delivery to, or upon the order of, the Depositor
of the Notes and the Certificates, the Depositor does hereby irrevocably sell,
transfer, assign and otherwise convey to the Issuer (i) without recourse
(subject to the obligations herein) all right, title and interest of the
Depositor, whether now owned or hereafter acquired, in and to the Trust Property
and (ii) funds in the amount of the Reserve Initial Deposit. The sale, transfer,
assignment and conveyance made hereunder shall not constitute and is not
intended to result in an assumption by the Issuer of any obligation of the
Depositor to the Obligors or any other Person in connection with the Receivables
and the other Trust Property or any agreement, document or instrument related
thereto. The Depositor and the Issuer intend that the sale, transfer, assignment
and conveyance of the Trust Property pursuant to this Section 2.1 shall be a
sale, and not a secured borrowing, for accounting purposes.
SECTION 2.2 Representations and Warranties of the Depositor regarding the
Receivables. The Depositor makes the following representations and warranties
with respect to the Receivables, on which the Issuer relies in purchasing the
Receivables and pledging the same to the Indenture Trustee. Such representations
and warranties speak as of the execution and delivery of this Agreement and as
of the Transfer Date, but shall survive the sale, transfer and assignment of the
Receivables by the Depositor to the Issuer and the pledge of the Receivables by
the Issuer to the Indenture Trustee pursuant to the Indenture.
(i) Schedule of Receivables. The information set forth in Schedule A to
this Agreement with respect to each Receivable is true and correct
in all material respects, and no selection procedures adverse to the
Securityholders have been used in selecting the Receivables from all
receivables owned by the Seller which meet the selection criteria
specified herein.
(ii) No Sale or Transfer. No Receivable has been sold, transferred,
assigned or pledged by the Depositor to any Person other than the
Issuer.
(iii) Good Title. Immediately prior to the transfer and assignment of the
Receivables to the Issuer herein contemplated, the Depositor had
good and marketable title to each Receivable free and clear of all
Liens and rights of others; and, immediately upon the transfer
thereof, the Issuer, has either (i) good and marketable title to
each Receivable, free and clear of all of all Liens and rights of
others, and the transfer has been perfected under applicable law or
(ii) a first priority perfected security interest in each
Receivable.
(iv) Receivable Files. The Receivable Files shall be kept at one or more
of the locations specified in Schedule B-1 hereto; provided, that
the Lien Certificates shall be kept at one or more of the locations
specified in Schedule B-2 hereto.
(v) Characteristics of Receivables. Each Receivable (a) has been
originated for the retail financing of a Financed Vehicle by an
Obligor located in one of the States of the United States or the
District of Columbia; (b) contains customary and enforceable
provisions such that the rights and remedies of the holder thereof
are adequate for realization against the collateral of the benefits
of the security; and (c) provides for fully amortizing level
scheduled monthly or semi-monthly payments (provided that the
payment in the last month in the life of the Receivable may be
different from the level scheduled payment) and for accrual of
interest at a fixed rate according to the simple interest method.
(vi) Compliance with Law. Each Receivable and each sale of the related
Financed Vehicle complied at the time it was originated or made, and
complies on and after the Cut-off Date, in all material respects
with all requirements of applicable federal, state, and local laws,
and regulations thereunder, including usury laws, the Federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair
Credit Reporting Act, the Federal Trade Commission Act, the
▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act, Federal Reserve Board Regulations B and
Z, state adaptations of the National Consumer Act and of the Uniform
Consumer Credit Code, 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 does not have any marks or notations
indicating that it has been pledged, assigned or otherwise conveyed
to any Person other than the Seller and which, immediately prior to
the delivery thereof to the Servicer, as custodian for the Indenture
Trustee, was in the possession of the Seller.
(xx) Security. Each Receivable is secured by a new or used automobile or
light-duty truck.
(xxi) Maturity of Receivables. Each Receivable has a remaining maturity,
as of the Cut-off Date, of not less than 8 months and not more than
72 months and an original maturity of not less than 9 months and not
more than 72 months. No Receivable has a scheduled maturity later
than September 15, 2012.
(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 or semi-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.
(xxiii) No Repossessions. Each Receivable is secured by a Financed Vehicle
that, as of the Cut-off Date, has not been repossessed without
reinstatement of such Receivable.
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(xxiv) Obligor Not Subject to Bankruptcy Proceedings. Each Receivable has
been entered into by an Obligor who has not been identified on the
computer files of the Seller as being a debtor in any bankruptcy
proceeding as of the Cut-off Date.
(xxv) No Overdue Payments. No Receivable has any payment that is more than
thirty (30) days past due as of the Cut-off Date.
(xxvi) Tangible Chattel Paper. The Receivables constitute "tangible
chattel paper" within the meaning of UCC Section 9-102.
(xxvii) Remaining Principal Balance. Each Receivable had a remaining
principal balance, as of the Cut-off Date, of at least $800.00.
(xxviii) Filing Statement Language. The financing statements referenced in
paragraph (xviii) above, will contain a statement to the following
effect "A purchase of or security interest in any collateral
described in this financing statement will violate the rights of the
Secured Party".
SECTION 2.3 Repurchase upon Breach. Each of the Depositor, the Servicer,
the Issuer and the Owner Trustee shall inform the other parties to this
Agreement promptly, in writing, upon the discovery by it of any breach of the
Depositor's representations and warranties pursuant to Section 2.2. Unless the
breach shall have been cured by the last day of the second Collection Period
following written notice to the Indenture Trustee of such breach, the Indenture
Trustee shall enforce the obligation of the Depositor under this Section 2.3 to
repurchase any Receivable, the Issuer's interest in which is materially and
adversely affected by the breach as of such last day (or, at the Depositor's
option, the last day of the first Collection Period following the discovery). In
consideration of the purchase of the Receivable, the Depositor shall remit the
Purchase Amount (less any Liquidation Proceeds deposited, or to be deposited, in
the Collection Account with respect to such Receivable pursuant to Section 3.3),
in the manner specified in Section 4.5. The sole remedy of the Issuer, the Owner
Trustee, the Indenture Trustee, the Noteholders or the Certificateholders with
respect to a breach of the Depositor's representations and warranties pursuant
to Section 2.2 shall be to require the Depositor to repurchase such Receivables
pursuant to this Section 2.3. The obligation of the Depositor to repurchase
under this Section 2.3 shall not be solely dependent upon the actual knowledge
of the Depositor of any breached representation or warranty. Neither the Owner
Trustee nor the Indenture Trustee shall have any duty to conduct an affirmative
investigation as to the occurrence of any condition requiring the repurchase of
any Receivable pursuant to this Section 2.3 or the eligibility of any Receivable
for purposes of this Agreement. Notwithstanding anything herein to the contrary,
the Depositor shall only be obligated to pay such Purchase Amount and repurchase
the related Receivable to the extent it receives the Purchase Amount from the
Seller pursuant to Section 7.02 of the Receivables Purchase Agreement.
SECTION 2.4 Custody of Receivable Files. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Issuer, upon
the execution and delivery of this Agreement, hereby revocably appoints the
Servicer, and the Servicer hereby accepts such appointment, to act as the agent
of the Issuer and the Indenture Trustee as custodian of the
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following documents or instruments, which are hereby constructively delivered to
the Indenture Trustee, as pledgee of the Issuer pursuant to the Indenture, with
respect to each Receivable:
(i) The original executed Receivable or, if no such original exists,
a copy thereof.
(ii) The original credit application fully executed by the Obligor
or a photocopy thereof or a record thereof on a computer file, diskette or
on microfiche.
(iii) The notice of recorded Lien or such documents that the
Servicer or the Depositor shall keep on file, in accordance with its
customary procedures, evidencing the first priority perfected security
interest of the Seller in the Financed Vehicle.
(iv) Any and all other documents (including any computer file,
diskette or microfiche) that the Servicer or the Seller shall keep on
file, in accordance with its customary procedures, relating to a
Receivable, an Obligor (to the extent relating to a Receivable), or a
Financed Vehicle.
The Servicer acknowledges that it holds the documents and instruments
relating to the Receivables for the benefit of the Issuer and the Indenture
Trustee. The Issuer and the Indenture Trustee shall have no responsibility to
monitor the Servicer's performance as custodian and shall have no liability in
connection with the Servicer's performance of such duties hereunder.
SECTION 2.5 Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer shall hold the Receivable Files for the
benefit of the Issuer and the Indenture Trustee and shall maintain such accurate
and complete accounts, records and computer systems pertaining to each
Receivable File as shall enable the Servicer and the Issuer to comply with the
terms and conditions of this Agreement, and the Indenture Trustee to comply with
the terms and conditions of the Indenture. In performing its duties as
custodian, the Servicer shall act with reasonable care, using that degree of
skill and attention that the Servicer exercises with respect to the receivable
files relating to all comparable automotive receivables that the Servicer
services for itself or others. The Servicer shall conduct, or cause to be
conducted, periodic audits of the Receivable Files held by it under this
Agreement and of the related accounts, records and computer systems, in such a
manner as shall enable the Issuer or the Indenture Trustee to identify all
Receivables Files and such related accounts, records and computer systems and
verify the accuracy of the Servicer's record keeping. The Servicer shall
promptly report to the Issuer and the Indenture Trustee any failure on its part
to hold the Receivable Files and maintain its accounts, records, and computer
systems as herein provided and shall promptly take appropriate action to remedy
any such failure. Nothing herein shall be deemed to require an initial review or
any periodic review by the Issuer, the Owner Trustee or the Indenture Trustee of
the Receivable Files.
(b) Maintenance of and Access to Records. The Servicer shall maintain each
Receivable File at its offices specified in Schedule B-1 to this Agreement
provided, that all Lien Certificates will be maintained at the location
specified in Schedule B-2, or at such other office as shall be specified to the
Issuer and the Indenture Trustee by 30 days' prior written notice. The Servicer
shall make available to the Issuer and the Indenture Trustee or their duly
authorized
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representatives, attorneys, or auditors, the Receivable Files and the related
accounts, records and computer systems maintained by the Servicer during normal
business hours as the Issuer or the Indenture Trustee shall reasonably request,
which does not unreasonably interfere with the Servicer's normal operations.
(c) Release of Documents. Upon written instructions from the Indenture
Trustee, the Servicer shall release or cause to be released any document in the
Receivable Files to the Indenture Trustee, the Indenture Trustee's agent or the
Indenture Trustee's designee, as the case may be, at such place or places as the
Indenture Trustee may reasonably designate, as soon as is reasonably
practicable, to the extent it does not unreasonably interfere with the
Servicer's normal operations. The Servicer shall not be responsible for any loss
occasioned by the failure of the Indenture Trustee or its agent or designee to
return any document or any delay in doing so.
SECTION 2.6 Instructions; Authority to Act. All instructions from the
Indenture Trustee shall be in writing and signed by an Authorized Officer of the
Indenture Trustee, and the Servicer shall be deemed to have received proper
instructions with respect to the Receivable Files upon its receipt of such
written instructions.
SECTION 2.7 Custodian's Indemnification. The Servicer, as custodian, shall
indemnify the Issuer, the Owner Trustee and the Indenture Trustee for any and
all liabilities, obligations, losses, compensatory damages, payments, costs, or
expenses of any kind whatsoever that may be imposed on, incurred, or asserted
against the Issuer, the Owner Trustee or the Indenture Trustee as the result of
any improper act or omission in any way relating to the maintenance and custody
by the Servicer as custodian of the Receivable Files; provided, however, that
the Servicer shall not be liable (i) to the Issuer for any portion of any such
amount resulting from the willful misfeasance, bad faith, or negligence of the
Indenture Trustee, the Owner Trustee or the Issuer, (ii) to the Owner Trustee
for any portion of any such amount resulting from the willful misfeasance, bad
faith, or negligence of the Indenture Trustee, the Owner Trustee or the Issuer
and (iii) to the Indenture Trustee for any portion of any such amount resulting
from the willful misfeasance, bad faith, or negligence of the Indenture Trustee,
the Owner Trustee or the Issuer.
SECTION 2.8 Effective Period and Termination. The Servicer's appointment
as custodian shall become effective as of the Cut-off Date and shall continue in
full force and effect until terminated pursuant to this Section 2.8. If the Bank
shall resign as Servicer in accordance with the provisions of this Agreement or
if all of the rights and obligations of the Servicer shall have been terminated
under Section 7.1, the appointment of the Servicer as custodian hereunder may be
terminated by the Indenture Trustee, or by the holders of Notes evidencing not
less than a majority of the principal amount of the Controlling Class
Outstanding (or if no Notes are Outstanding, by holders of Certificates
evidencing not less than a majority of the Percentage Interests evidenced by the
Certificates), in the same manner as the Indenture Trustee or such
Securityholders may terminate the rights and obligations of the Servicer under
Section 7.1. As soon as practicable after any termination of such appointment,
the Servicer shall deliver to the Indenture Trustee or the Indenture Trustee's
agent the Receivable Files and the related accounts and records maintained by
the Servicer at such place or places as the Indenture Trustee may reasonably
designate.
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ARTICLE III
ADMINISTRATION AND SERVICING OF RECEIVABLES AND TRUST PROPERTY
SECTION 3.1 Duties of Servicer. The Servicer shall manage, service,
administer and make collections on the Receivables with reasonable care, using
that degree of skill and attention that the Servicer exercises with respect to
all comparable new or used automobile and light-duty truck receivables that it
services for itself. The Servicer's duties shall include collection and posting
of all payments, responding to inquiries of Obligors on such Receivables,
investigating delinquencies, sending payment coupons to Obligors, reporting tax
information to Obligors, accounting for collections, furnishing monthly and
annual statements to the Owner Trustee and the Indenture Trustee with respect to
distributions, making Advances pursuant to Section 4.4, preparing (or causing to
be prepared) the tax returns of the Trust in accordance with Section 5.6 of the
Trust Agreement and, if requested to do so, providing the certifications
required, pursuant to Section 5.1(b) hereof. The Servicer shall follow its
customary standards, policies and procedures in performing its duties as
Servicer. Without limiting the generality of the foregoing, the Servicer is
hereby authorized and empowered to execute and deliver, on behalf of itself, the
Issuer, the Owner Trustee, the Indenture Trustee, the Noteholders, the
Certificateholders, or any of them, any and all instruments of satisfaction or
cancellation, or partial or full release or discharge, and all other comparable
instruments, with respect to such Receivables or to the Financed Vehicles
securing such Receivables. If the Servicer shall commence a legal proceeding to
enforce a Receivable, the Issuer (in the case of a Receivable other than a
Purchased Receivable) shall thereupon be deemed to have automatically assigned,
solely for the purpose of collection, such Receivable to the Servicer. If in any
enforcement suit or legal proceeding it shall be held that the Servicer may not
enforce a Receivable on the ground that it shall not be a real party in interest
or a holder entitled to enforce the Receivable, the Issuer shall, at the
Servicer's expense and direction, take steps to enforce the Receivable,
including bringing suit in its name or the names of the Indenture Trustee, the
Noteholders, the Certificateholders, or any of them. The Issuer shall furnish
the Servicer with any powers of attorney and other documents reasonably
necessary or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
SECTION 3.2 Collection of Receivable Payments. The Servicer shall make
reasonable efforts to collect all payments called for under the terms and
provisions of the Receivables as and when the same shall become due and shall
follow such collection procedures as it follows with respect to all comparable
new or used automobile and light-duty truck receivables that it services for
itself. The Servicer shall not change the amount of or reschedule the due date
of any scheduled payment of a Receivable to a date more than 30 days from the
original due date of such scheduled payment, change the annual percentage rate
of or extend any Receivable or change any material term of a Receivable, except
as provided by the terms of the Receivable or of this Agreement or as required
by law or court order; provided, however, that the Servicer may extend any
Receivable that is in default or with respect to which default is reasonably
foreseeable and that would be acceptable to the Servicer with respect to
comparable new or used automobile and light-duty truck receivables that it
services for itself if (a) the amount on deposit in the Reserve Account is
greater than zero at the time of the extension, (b) the total credit-related
extensions granted on the Receivable will not exceed four months in
8
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 April 2012. If, as a result of inadvertently rescheduling or
extending payments, such rescheduling or extension breaches any of the terms of
the proviso to the preceding sentence, then the Servicer shall be obligated to
purchase such Receivable pursuant to Section 3.7. For the purpose of such
purchases pursuant to Section 3.7, notice shall be deemed to have been received
by the Servicer at such time as shall make purchase mandatory as of the last day
of the Collection Period during which the discovery of such breach occurred.
Notwithstanding anything to the contrary herein, the Servicer may
implement programs that grant payment extensions in respect of receivables that
are not delinquent. Any such program shall be implemented with the approval of
the senior officer's credit committee of the Servicer in accordance with the
Servicer's general lending and policy guidelines. Any such payment extension may
extend the maturity of the applicable receivable beyond its original term to
maturity. Notwithstanding anything to the contrary herein, the Servicer may also
reduce the interest rate on Receivables affected by the application of the
Servicemembers Civil Relief Act to a rate that is lower than the maximum rate
prescribed by the Servicemembers Civil Relief Act and may readjust the payment
schedule for any Receivable that is affected by the application of the
Servicemembers Civil Relief Act until the maturity of the receivable.
The Servicer may at any time perform specific duties as servicer or
custodian under this Agreement through subcontractors; provided, however, that
no such delegation or subcontracting shall relieve the Servicer of its
responsibilities with respect to such duties as to which the Servicer shall
remain primarily responsible with respect thereto. All amounts payable to any
subcontractor shall be paid by the Servicer and shall not be obligations of the
Indenture Trustee, the Owner Trustee or the Issuer or paid from the Indenture
Trust Estate. References in this Agreement to actions taken or to be taken by
the Servicer include actions taken or to be taken by a subcontractor on behalf
of the Servicer.
SECTION 3.3 Realization Upon Receivables. On behalf of the Issuer, the
Servicer shall use reasonable efforts, consistent with its customary standards,
policies and procedures, to repossess or otherwise convert the ownership of the
Financed Vehicle securing any Receivable as to which the Servicer shall have
determined to be a Defaulted Receivable or otherwise (and shall specify any such
Defaulted Receivable to the Indenture Trustee no later than the Determination
Date following the Collection Period in which the Servicer shall have made such
determination). The Servicer shall follow such customary standards, policies and
procedures as it shall deem necessary or advisable in its servicing of
comparable receivables, which may include selling the Financed Vehicle at public
or private sale. The Servicer shall be entitled to recover from proceeds all
reasonable expenses incurred by it in the course of converting the Financed
Vehicle into cash proceeds. The Liquidation Proceeds (net of such expenses)
realized in connection with any such action with respect to a Receivable shall
be deposited by the Servicer in the Collection Account in the manner specified
in Section 4.2 and shall be applied to reduce (or to satisfy, as the case may
be) the Purchase Amount of the Receivable, if such Receivable is to be
repurchased by the Depositor pursuant to Section 2.3, or is to be purchased by
the Servicer pursuant to Section 3.7. The foregoing shall be subject to the
provision that, in any case in which the Financed Vehicle shall have suffered
damage, the Servicer shall not be required to
9
expend funds in connection with the repair or the repossession of such Financed
Vehicle unless it shall determine in its discretion that such repair and/or
repossession will increase the Liquidation Proceeds by an amount greater than
the amount of such expenses.
SECTION 3.4 Allocations of Collections. If an Obligor is obligated under
one or more Receivables and also under one or more other assets owned by the
Bank or assigned by the Bank to third parties, then any payment on any such
asset received from or on behalf of such Obligor shall, if identified as being
made with respect to a particular item or asset, be applied to such item, and
otherwise shall be allocated by the Bank in accordance with its customary
standards, policies and procedures.
SECTION 3.5 Maintenance of Security Interests in Financed Vehicles. The
Servicer shall, in accordance with its customary procedures, take such steps as
are necessary to maintain perfection of the security interest created by each
Receivable in the related Financed Vehicle. The Issuer hereby authorizes the
Servicer to take such steps as are necessary to re-perfect such security
interest on behalf of the Issuer and the Indenture Trustee in the event of the
relocation of a Financed Vehicle or for any other reason, in either case, when
the Servicer has knowledge of the need for such re-perfection. In the event that
the assignment of a Receivable to the Issuer is insufficient, without a notation
on the related Financed Vehicle's certificate of title, or without fulfilling
any additional administrative requirements under the laws of the state in which
the Financed Vehicle is located, to transfer to the Issuer a perfected security
interest in the related Financed Vehicle, the Servicer hereby agrees that the
Servicer's listing as the secured party on the certificate of title is deemed to
be in its capacity as agent of the Issuer and the Indenture Trustee and further
agrees to hold such certificate of title as the agent and custodian of the
Issuer and the Indenture Trustee; provided that the Servicer shall not, nor
shall the Issuer or the Indenture Trustee have the right to require that the
Servicer, make any such notation on the related Financed Vehicles' certificate
of title or fulfill any such additional administrative requirement of the laws
of the state in which a Financed Vehicle is located.
SECTION 3.6 Covenants of Servicer. The Servicer shall not (i) release the
Financed Vehicle securing each such Receivable from the security interest
granted by such Receivable in whole or in part except in the event of payment in
full by or on behalf of the Obligor thereunder, (ii) impair the rights of the
Trust or the Indenture Trustee in the Receivables, or (iii) increase the number
of payments under a Receivable, increase the Amount Financed under a Receivable
or extend or forgive payments on a Receivable, except as provided in Section
3.2. In the event that at the end of the scheduled term of any Receivable, the
outstanding principal amount thereof is such that the final payment to be made
by the related Obligor is larger than the regularly scheduled payment of
principal and interest made by such Obligor, the Servicer may permit such
Obligor to pay such remaining principal amount in more than one payment of
principal and interest; provided that the last such payment shall be due on or
prior to the Collection Period immediately preceding the Class B Final Scheduled
Payment Date.
SECTION 3.7 Purchase of Receivables Upon Breach. (a) The Servicer, the
Depositor or the Owner Trustee, as the case may be, promptly shall inform the
other parties to this Agreement, in writing, upon the discovery of any breach
pursuant to Section 3.2, 3.5 or 3.6. Unless the breach shall have been cured by
the last day of the second Collection Period
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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.
(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 hereof, and Section 8.2 of the Indenture for the Collection
Period preceding the date of such Servicer's Certificate, together with the
written statements to be furnished by the Owner Trustee to Certificateholders
pursuant to Section 4.9 hereof and by the Indenture Trustee to the Noteholders
pursuant to Section 4.9 hereof and Section 6.6 of the Indenture. Receivables
purchased or to be purchased by the Servicer or the Depositor shall be
identified by the Servicer by the Seller's account number with respect to such
Receivable (as specified in the Schedule of Receivables).
SECTION 3.10 Annual Statement as to Compliance; Item 1122 Servicing
Criteria Assessment; Notice of Event of Servicing Termination. (a) The Servicer
shall deliver to the Owner Trustee, the Indenture Trustee and each Rating Agency
on or before March 31 of each year beginning March 31, 2007,
(i) an Officer's Certificate, with respect to the preceding 12-month
period (or such shorter period in the case of the first such certificate),
stating that (x) a review of the activities of the Servicer during the preceding
12-month period (or such shorter period in the case of the first
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such certificate) and of its performance under this Agreement has been made
under such officer's supervision and (y) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all its obligations
in all material respects under this Agreement throughout such period, or, if
there has been a failure to fulfill any such obligation in any material respect,
specifying each such failure known to such officer and the nature and status
thereof, and
(ii) the servicing criteria assessment required to be filed in respect of
the Trust under the Exchange Act under Item 1122 of Regulation AB if periodic
reports under Section 15(d) of the Exchange Act, or any successor provision
thereto, were required to be filed in respect of the Trust. Such report shall be
signed by an authorized officer of the Servicer and shall at a minimum address
each of the Servicing Criteria specified on a certification substantially in the
form of Appendix C hereto delivered to the Depositor concurrently with the
execution of this Agreement. To the extent any of the Servicing Criteria are not
applicable to the Servicer, with respect to asset-backed securities transactions
taken as a whole involving the Servicer and that are backed by the same asset
type backing the Notes, such report shall include such a statement to that
effect. The Depositor and the Servicer, and each of their respective officers
and directors shall be entitled to rely on upon each such servicing criteria
assessment.
A copy of such Officer's Certificate and the report referred to in Section
3.11 may be obtained by any Certificateholder by a request in writing to the
Owner Trustee, or by any Noteholder or Person certifying that it is a Note Owner
by a request in writing to the Indenture Trustee, in either case addressed to
the applicable Corporate Trust Office. Upon the telephone request of the Owner
Trustee, the Indenture Trustee shall promptly furnish the Owner Trustee a list
of Noteholders as of the date specified by the Owner Trustee.
(b) The Servicer shall deliver to the Owner Trustee, the Indenture Trustee
and each Rating Agency promptly after having obtained knowledge thereof, but in
no event later than five (5) Business Days thereafter, written notice in an
Officer's Certificate of any event which with the giving of notice or lapse of
time, or both, would become an Event of Servicing Termination under Section 7.1.
The Seller shall deliver to the Owner Trustee, the Indenture Trustee and each
Rating Agency promptly after having obtained knowledge thereof, but in no event
later than five (5) Business Days thereafter, written notice in an Officer's
Certificate of any event which with the giving of notice or lapse of time, or
both, would become an Event of Servicing Termination under clause (a)(ii) of
Section 7.1.
(c) The Servicer shall cause each Reporting Subcontractor to deliver to
the Depositor an assessment of compliance and accountant's attestation as and
when provided in paragraph (a)(ii) of this Section 3.10 and Section 3.11. The
Servicer shall execute (provided the Servicer is not an Affiliate of the
Depositor) (and shall cause each Reporting Subcontractor to execute) a reliance
certificate to enable the Certification Parties to rely upon each (i) annual
report on assessments of compliance with servicing criteria provided pursuant to
Section 3.10 and (ii) accountant's report provided pursuant to Section 3.10 and
shall include a certification that each such annual compliance statement or
report discloses any deficiencies or defaults described to the registered public
accountants of such Person to enable such accountants to render the certificates
provided for in Section 3.11.
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(d) In the event the Servicer, any Subservicer or Reporting Subcontractor
is terminated or resigns during the term of this Agreement, such Person shall
provide the documents and information pursuant to Section 3.10 and Section 3.11
with respect to the period of time it was subject to this Agreement or provided
services with respect to the Trust or the Receivables. Notwithstanding anything
to the contrary contained herein, if the Servicer has exercised commercially
reasonable efforts to obtain any assessment or attestation required hereunder
from a Reporting Subcontractor, the failure by the Reporting Subcontractor to
provide such attestation on or assessment shall not constitute a breach
hereunder by the Servicer.
SECTION 3.11 Annual Independent Certified Public Accountant's Report. The
Servicer shall cause a firm of independent certified public accountants, who may
also render other services to the Servicer, the Seller or the Depositor, to
deliver to the Owner Trustee and the Indenture Trustee on or before March 31 of
each year beginning March 31, 2007 with respect to the prior calendar year (or
such shorter period in the case of the first such report) the attestation report
that would be required to be filed in respect of the Trust under the Exchange
Act if periodic reports under Section 15(d) of the Exchange Act, or any
successor provision thereto, were required to be filed in respect of the Trust.
Such attestation shall be in accordance with Rules 1-02(a)(3) and 2-02(g) of
Regulation S-X under the Securities Act and the Exchange Act, including, without
limitation that in the event that an overall opinion cannot be expressed, such
registered public accounting firm shall state in such report why it was unable
to express such an opinion.
SECTION 3.12 Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to the Certificateholders, the Indenture
Trustee and the Noteholders access to the Receivable Files in such cases where
the Certificateholders, the Indenture Trustee or the Noteholders shall be
required by applicable statutes or regulations to review such documentation.
Access shall be afforded without charge, but only upon reasonable request and
during the normal business hours at the respective offices of the Servicer.
Nothing in this Section 3.12 shall affect the obligation of the Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Obligors, and the failure of the Servicer to provide access to information as a
result of such obligation shall not constitute a breach of this Section 3.12.
SECTION 3.13 Servicer Expenses. The Servicer shall be required to pay all
expenses incurred by it in connection with its activities hereunder, including
fees, expenses (including counsel fees and expenses) and disbursements of the
Owner Trustee and the Indenture Trustee, independent accountants, taxes imposed
on the Servicer and expenses incurred in connection with distributions and
reports to Noteholders and Certificateholders.
SECTION 3.14 Insurance. The Servicer, in accordance with its customary
servicing procedures and underwriting standards, shall require that each Obligor
shall have obtained and shall maintain comprehensive and collision insurance
covering the related Financed Vehicle as of the execution of the Receivable. The
Servicer shall enforce its rights under the Receivables to require the Obligors
to maintain comprehensive and collision insurance, in accordance with the
Servicer's customary practices and procedures with respect to comparable new or
used automobile and light-duty truck receivables that it services for itself or
others.
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ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS TO NOTEHOLDERS AND
CERTIFICATEHOLDERS
SECTION 4.1 Accounts. (a) The Servicer shall, prior to the Closing Date,
cause to be established and maintained an Eligible Deposit Account in the name
"JPMorgan Chase Bank, National Association, as Indenture Trustee, as secured
party from USAA Auto Owner Trust 2006-3", initially at the corporate trust
department of the Indenture Trustee, which shall be designated as the
"Collection Account". The Collection Account shall be under the sole dominion
and control of the Indenture Trustee; provided, that the Servicer may make
deposits to and direct the Indenture Trustee in writing to make withdrawals from
the Collection Account in accordance with the terms of the Basic Documents. The
Collection Account will be established and maintained pursuant to an account
agreement which specifies New York law as the governing law. In addition, the
Collection Account shall be established and maintained at an institution which
agrees in writing that for so long as the Notes are outstanding it will comply
with entitlement orders (as defined in Article 8 of the UCC) originated by the
Indenture Trustee without further consent of the Issuer. All monies deposited
from time to time in the Collection Account shall be held by the Indenture
Trustee as secured party for the benefit of the Noteholders and, after payment
in full of the Notes, as agent of the Issuer and as part of the Trust Property.
All deposits to and withdrawals from the Collection Account shall be made only
upon the terms and conditions of the Basic Documents.
If the Servicer is required to remit collections pursuant to the first
sentence of Section 4.2, all amounts held in the Collection Account shall, to
the extent permitted by applicable law, rules and regulations, be invested, as
directed in writing by the Servicer, by the bank or trust company then
maintaining the Collection Account in specified Permitted Investments that
mature not later than the Business Day immediately prior to the Payment Date for
the Collection Period to which such amounts relate and such Permitted
Investments shall be held to maturity. All interest and other income (net of
losses and investment expenses) on funds on deposit in the Collection Account
shall be withdrawn from the Collection Account at the written direction of the
Servicer and shall be paid to the Servicer. The Indenture Trustee shall not be
liable for investment losses in Permitted Investments made in accordance with
directions from the Servicer. In the event that the Collection Account is no
longer to be maintained at the corporate trust department of the Indenture
Trustee, the Servicer shall, with the Indenture Trustee's or Issuer's assistance
as necessary, cause an Eligible Deposit Account to be established as the
Collection Account within ten (10) Business Days (or such longer period not to
exceed thirty (30) calendar days as to which each Rating Agency may consent) and
give written notice of the location and account number of such account to the
Indenture Trustee.
(b) The Servicer shall, prior to the Closing Date, establish and maintain
an administrative subaccount within the Collection Account at the bank or trust
company then maintaining the Collection Account, which subaccount shall be
designated as the "Principal Distribution Account". The Principal Distribution
Account is established and maintained solely for administrative purposes.
14
(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 2006-3 Certificate Distribution Account", initially at the corporate trust
department of the Owner Trustee, which shall be designated as the "Certificate
Distribution Account". The Certificate Distribution Account shall be under the
sole dominion and control of the Owner Trustee. All monies deposited from time
to time in the Certificate Distribution Account pursuant to this Agreement and
the Indenture shall be held by the Owner Trustee as part of the Trust Property
and shall be applied as provided in the Basic Documents. In the event that the
Certificate Distribution Account is no longer to be maintained at the corporate
trust department of the Owner Trustee, the Servicer shall cause an Eligible
Deposit Account to be established as the Certificate Distribution Account within
ten (10) Business Days (or such longer period not to exceed thirty (30) calendar
days as to which each Rating Agency may consent) and give written notice of the
location and account number of such account to the Owner Trustee. The
Certificate Distribution Account will be established and maintained pursuant to
an account agreement which specifies New York law as the governing law.
SECTION 4.2 Collections. The Servicer shall remit to the Collection
Account within two (2) Business Days of the receipt thereof (i) all payments by
or on behalf of the Obligors (but excluding Purchased Receivables) and (ii) all
Liquidation Proceeds, both as collected during the Collection Period; provided
that the Bank, so long as it is acting as the Servicer and no Event of Servicing
Termination has occurred and is continuing, may make remittances of collections
on a less frequent basis than that specified in the immediately preceding
sentence. It is understood that such less frequent remittances may be made only
on the specific terms and conditions set forth below in this Section 4.2 and
only for so long as such terms and conditions are fulfilled. Accordingly,
notwithstanding the provisions of the first sentence of this Section 4.2, the
Servicer shall remit collections received during a Collection Period to the
Collection Account in immediately available funds on the Business Day preceding
the related Payment Date but only for so long as the Monthly Remittance
Condition is satisfied. The Owner Trustee or the Indenture Trustee shall not be
deemed to have knowledge of any event or circumstance in the definition of
Monthly Remittance Condition that would require remittance by the Servicer to
the Collection Account within two (2) Business Days of receipt as aforesaid
unless the Owner Trustee or the Indenture Trustee has received written notice of
such event or circumstance from the Seller or the Servicer in an Officer's
Certificate or from the holders of Notes evidencing not less than 25% of the
principal amount of the Notes Outstanding or from the Certificateholders of
Certificates evidencing not less than 25% of the Percentage Interests evidenced
by the Certificates or a Trustee Officer in the Corporate Trust Office with
knowledge hereof or familiarity herewith has actual knowledge of such event or
circumstance. For purposes of this Article IV the phrase "payments by or on
behalf of Obligors" shall mean payments made by Persons other than the Servicer
or by other means.
SECTION 4.3 Application of Collections. For the purposes of this
Agreement, as of the close of business on the last day of each Collection
Period, all collections for the Collection Period with respect to each
Receivable (other than a Purchased Receivable) shall be applied by the Servicer
first to the amount of interest accrued on such Receivable to the date of
receipt, then to reduce the scheduled principal amount outstanding on the
Receivable to the extent of the remaining scheduled payment and then to any
outstanding fees under the terms of the
15
Receivable. Amounts paid by the Depositor, the Seller or the Servicer in respect
of Purchased Receivables shall be allocated first to any interest accrued on the
related Receivable and then to the Principal Balance of the related Receivable.
SECTION 4.4 Advances. (a) As of each Determination Date, the Servicer
shall make a payment with respect to each Receivable (other than a Defaulted
Receivable) equal to the excess, if any, of (x) the product of the Principal
Balance of such Receivable as of the first day of the related Collection Period
and one-twelfth of the Annual Percentage Rate (as adjusted downward, as the case
may be, in accordance with the Servicemembers Civil Relief Act or pursuant to
Section 3.2) on such Receivable (calculated on the basis of a 360-day year of
twelve 30-day months), over (y) the interest actually received by the Servicer
with respect to such Receivable from the Obligor or from payment of the Purchase
Amount during or with respect to such Collection Period. The Servicer shall
deposit all such Advances into the Collection Account in immediately available
funds no later than, 11:00 a.m. New York City time, on the Determination Date.
Notwithstanding the foregoing, the Servicer may elect not to make any Advance
with respect to a Receivable to the extent that the Servicer, in its sole
discretion, shall determine that such Advance is not recoverable from subsequent
payments on such Receivable or from withdrawals from the Reserve Account. To the
extent that the amount set forth in clause (y) above with respect to a
Receivable is greater than the amount set forth in clause (x) above with respect
thereto, such excess amount shall be distributed to the Servicer pursuant to
Section 4.6(b). In addition, in the event that a Receivable becomes a Defaulted
Receivable, Outstanding Advances in respect of that Receivable shall be
reimbursed to the extent of interest Collections with respect to such Receivable
and, if such amounts are insufficient, from amounts on deposit in the Reserve
Account, and if such amounts are not sufficient, from amounts on deposit in the
Collection Account. The Servicer shall not make any advance with respect to
principal of Receivables.
(b) The Servicer shall deposit in the Collection Account the aggregate
Advances on the Receivables pursuant to Section 4.4(a). To the extent that the
Servicer fails to make an Advance pursuant to Section 4.4(a) on the date
required, the Servicer shall so notify the Issuer and the Indenture Trustee in
writing specifying the amount of the Advance and the Receivable to which such
Advance related, and the Indenture Trustee shall withdraw such amount (or, if
determinable by the Servicer, such portion of such amount as does not represent
advances for delinquent interest) from the Reserve Account and deposit such
amount in the Collection Account.
SECTION 4.5 Additional Deposits. (a) The Depositor and the Servicer shall
deposit in the Collection Account the aggregate Purchase Amounts with respect to
Purchased Receivables pursuant to Sections 2.3 and 3.7, respectively, and the
Servicer shall deposit therein all Purchase Amounts to be paid under Section
8.1. All such deposits with respect to a Collection Period shall be made, in
immediately available funds, on the Business Day preceding the Payment Date
related to such Collection Period.
(b) The Indenture Trustee, in accordance with the written instructions of
the Servicer, shall, on each Payment Date make a withdrawal from the Reserve
Account (i) first, in an amount equal to the Reserve Account Excess Amount for
such Payment Date and (ii) second, in an
16
amount equal to the amount (if positive) calculated by the Servicer pursuant to
the second sentence of Section 4.6(b).
SECTION 4.6 Distributions. (a) On each Payment Date, the Indenture Trustee
shall cause the transfer and distribution of the amounts set forth in the
Servicer's Certificate for such Payment Date from the Collection Account to the
Servicer, in immediately available funds, for repayment of Outstanding Advances
pursuant to Section 4.4(a).
(b) The Servicer shall on or before each Determination Date calculate the
Available Collections, the Reserve Account Excess Amount, the Available Funds,
the Servicing Fee and all unpaid Servicing Fees from prior Collection Periods,
if any, the Accrued Class A Note Interest, the Accrued Class B Note Interest,
the First Priority Principal Payment, if any, and the Regular Principal
Distribution Amount. In addition, the Servicer shall calculate on or before each
Determination Date the difference, if any, between the Total Required Payment
and the Available Funds and, pursuant to Section 4.5(b), the Indenture Trustee
shall withdraw funds from the Reserve Account in an amount equal to the lesser
of such difference (if positive) or the balance of such Reserve Account.
(c) On each Payment Date, the Servicer shall instruct the Indenture
Trustee (based on the information contained in the Servicer's Certificate
delivered on or before the related Determination Date pursuant to Section 3.9),
to make the following withdrawals from the Collection Account and make deposits,
distributions and payments, to the extent of Available Funds for such Payment
Date (plus funds, if any, deposited in the Collection Account from the Reserve
Account pursuant to Section 4.5(b)), in the following order of priority:
(i) first, to the Servicer, the Servicing Fee and all unpaid
Servicing Fees from prior Collection Periods;
(ii) second, to the Class A Noteholders, the Accrued Class A Note
Interest for such Payment Date; provided that if there are not sufficient
funds available to pay the entire amount of the Accrued Class A Note
Interest, the amounts available shall be applied to the payment of such
interest on the Class A Notes on a pro rata basis;
(iii) third, to the Class A Noteholders, the First Priority
Principal Payment, if any, for such Payment Date to be distributed in the
same priority as described under Section 4.6(d) of this Agreement;
(iv) fourth, to the Class B Noteholders, the Accrued Class B Note
Interest for such Payment Date;
(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
17
applied on such Payment Date to such Class from funds deposited pursuant
to clauses (iii) and (v) above;
(vii) seventh, to the Reserve Account, the amount, if any, required
to reinstate the amount in the Reserve Account up to the Specified Reserve
Balance for such Payment Date;
(viii) eighth, to the Indenture Trustee and the Owner Trustee, all
amounts due for fees, expenses and indemnification pursuant to Section 6.7
of the Indenture and Section 7.1 of the Trust Agreement, respectively, and
not previously paid; and
(ix) ninth, to the Certificate Distribution Account, any remaining
Available Funds for such Payment Date.
Notwithstanding the foregoing in this Section 4.6(c),
(A) if the Notes have been accelerated after an Event of
Default specified in Section 5.1(iii) of the Indenture, then the
Available Funds shall instead be applied in the following order of
priority:
(1) to the Indenture Trustee and the Owner Trustee, all
amounts due for fees, expenses and indemnification
under Section 6.7 of the Indenture, Section 7.1 of the
Trust Agreement and Section 6.2 of this Agreement,
respectively, and not previously paid;
(2) to the Servicer, the Servicing Fee and all unpaid
Servicing Fees from prior Collection Periods;
(3) to the Class A Noteholders, the Accrued Class A Note
Interest for such Payment Date; provided that if there
are not sufficient funds available to pay the entire
amount of the Accrued Class A Note Interest, the
amounts available shall be applied to the payment of
such interest on the Class A Notes on a pro rata basis;
(4) to the Class A Noteholders, the First Priority
Principal Payment, if any, for such Payment Date to be
distributed in the same manner as described under
Section 4.6(d) of this Agreement;
(5) to the Class B Noteholders, the Accrued Class B Note
Interest for such Payment Date;
(6) first, to the holders of the Class A-1 Notes in
reduction of principal until the principal amount of
the Class A-1 Notes has been paid in full and then to
the holders of the Class A-2 Notes, the Class A-3 Notes
and the Class A-4 Notes on a pro rata basis in
reduction of principal until the principal amount of
such Class A Notes has been paid in full;
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(7) to the holders of the Class B Notes in reduction of
principal until the principal amount of the Class B
Notes has been paid in full; and
(8) to the Certificate Distribution Account, any remaining
Available Funds for such Payment Date; and
(B) if the Notes have been accelerated after an Event of
Default specified in Section 5.1(i), (ii), (iv) or (v) of the
Indenture, then the Available Funds shall instead be applied in the
following order of priority:
(1) to the Indenture Trustee and the Owner Trustee, all
amounts due for fees, expenses and indemnification
under Section 6.7 of the Indenture, Section 7.1 of the
Trust Agreement and Section 6.2 of this Agreement,
respectively, and not previously paid;
(2) to the Servicer, the Servicing Fee and all unpaid
Servicing Fees from prior Collection Periods;
(3) to the Class A Noteholders, the Accrued Class A Note
Interest for such Payment Date; provided that if there
are not sufficient funds available to pay the entire
amount of the Accrued Class A Note Interest, the
amounts available shall be applied to the payment of
such interest on the Class A Notes on a pro rata basis;
(4) first, to the holders of the Class A-1 Notes in
reduction of principal until the principal amount of
the Class A-1 Notes has been paid in full and then to
the holders of the Class A-2 Notes, the Class A-3 Notes
and the Class A-4 Notes on a pro rata basis in
reduction of principal until the principal amount of
such Class A Notes has been paid in full;
(5) to the Class B Noteholders, first, the Accrued Class B
Note Interest for such Payment Date and second, in
reduction of principal until the principal amount of
the Class B Notes has been paid in full; and
(6) to the Certificate Distribution Account, 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 A-1 Notes on a pro rata
basis in reduction of principal until the principal amount of
the Class A-1 Notes has been paid in full;
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(ii) second, to the holders of the Class A-2 Notes on a pro rata
basis in reduction of principal until the principal amount of
the Class A-2 Notes has been paid in full;
(iii) third, to the holders of the Class A-3 Notes on a pro rata
basis in reduction of principal until the principal amount of
the Class A-3 Notes has been paid in full;
(iv) fourth, to the holders of the Class A-4 Notes on a pro rata
basis in reduction of principal until the principal amount of
the Class A-4 Notes has been paid in full; and
(v) fifth, to the holders of the Class B Notes on a pro rata basis
in reduction of principal until the principal amount of the
Class B Notes has been paid in full.
Any funds remaining on deposit in the Principal Distribution Account shall be
paid to the Indenture Trustee and the Owner Trustee to the extent, if any, of
amounts due to them hereunder that are unpaid and then to the Certificate
Distribution Account.
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 A-1 Notes until the principal amount of
the Class A-1 Notes has been paid in full, then to the holders of the Class A-2
Notes, Class A-3 Notes and Class A-4 Notes on a pro rata basis in reduction of
principal until the principal amount of the Class A Notes has been paid in full
and then to the holders of the Class B Notes in reduction of principal until the
principal amount of the Class B 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 "JPMorgan Chase Bank, National Association, as Indenture Trustee, as
secured party from USAA Auto Owner Trust 2006-3", 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
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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 holders of
Certificates holding not less than a majority of the Percentage Interests
evidenced by the Certificates, 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 JPMorgan Chase Bank,
National Association is the Indenture Trustee, in the absence of written
direction, all funds shall be retained uninvested. Additionally, amounts in the
Reserve Account will be retained uninvested in the circumstances described in
Section 8.3(c) of the Indenture. All interest and other income (net of losses
and investment expenses) on funds on deposit in the Reserve Account shall be
deposited therein. The Indenture Trustee shall not be liable for investment
losses in Permitted Investments made in accordance with directions from the
investment instructions received from holders of the Certificates as provided
above. In the event the Reserve Account is no longer to be maintained at the
corporate trust department of the Indenture Trustee, the Servicer shall, with
the Indenture Trustee's or Owner Trustee's assistance as necessary, cause an
Eligible Deposit Account to be established as the Reserve Account within ten
(10) Business Days (or such longer period not to exceed thirty (30) calendar
days as to which each Rating Agency may consent) and give written notice of the
location and account number of such account to the Indenture Trustee.
(ii) With respect to Reserve Account Property:
(A) any Reserve Account Property that is a "financial asset"
as defined in Section 8-102(a)(9) of the UCC shall be physically
delivered to, or credited to an account in the name of, the
institution maintaining the Reserve Account in accordance with such
institution's customary procedures such that such institution
establishes 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
21
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 of all other amounts owing or to be distributed hereunder or under the
Indenture or the Trust Agreement to Noteholders, the Indenture Trustee and the
Owner Trustee, any remaining Reserve Account Property shall be distributed to
the Certificate Distribution Account.
SECTION 4.8 Net Deposits. For so long as (i) the Bank shall be the
Servicer and (ii) the Servicer shall be entitled pursuant to Section 4.2 to
remit collections on a monthly basis rather than within two (2) Business Days of
receipt, the Bank may make the remittances pursuant to Sections 4.2 and 4.5
above, net of amounts to be distributed to the Bank pursuant to Section 4.6(c).
Nonetheless, the Servicer shall account for all of the above described
remittances and distributions except for the Supplemental Servicing Fee in the
Servicer's Certificate as if the amounts were deposited and/or transferred
separately.
SECTION 4.9 Statements to Noteholders and Certificateholders. On the
Business Day prior to each Payment Date, the Servicer shall provide to the
Indenture Trustee (with copies to the Rating Agencies, each Note Paying Agent
and the Depositor) for the Indenture Trustee to make available to each
Noteholder of record as of the most recent Record Date and to the Owner Trustee
(with copies to the Rating Agencies and to each Certificate Paying Agent) for
the Owner Trustee to forward to each Certificateholder of record as of the most
recent Record Date a statement based on information in the Servicer's
Certificate furnished pursuant to Section 3.9, setting forth for the Collection
Period relating to such Payment Date the following information as to the Notes
and the Certificates to the extent applicable:
(i) the amount of such distribution allocable to principal allocable
to the Notes and to the Certificates;
(ii) the amount of such distribution allocable to interest allocable
to the Notes and the Certificates;
(iii) the amount of such distribution allocable to draws from the
Reserve Account, if any;
(iv) the number of receivables and the Pool Balance as of the
beginning of business on the first day of the preceding Collection Period
and the close of business on the last day of the preceding Collection
Period;
(v) the Specified Reserve Balance as of such Payment Date;
22
(vi) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period and the amount of any unpaid
Servicing Fees and the change in such amount from that of the prior
Payment Date;
(vii) the amounts of the Class A Noteholders' Interest Carryover
Shortfall and the Class B Noteholders' Interest Carryover Shortfall, if
any, on such Payment Date and the change in such amounts from the
preceding Payment Date;
(viii) the aggregate outstanding principal amount of each Class of
Notes and the Note Pool Factor for each Class of Notes as of such Payment
Date;
(ix) the amount of any previously due and unpaid payment of
principal of the Notes, and the change in such amount from that of the
prior Payment Date;
(x) [reserved];
(xi) the balance of the Reserve Account on such Payment Date, after
giving effect to distributions made on such Payment Date and the change in
such balance from the preceding Payment Date;
(xii) [reserved];
(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;
(xvi) the aggregate Principal Balance of the Receivables that became
designated as Defaulted Receivables during the related Collection Period;
(xvii) the applicable Record Dates, Interest Period and
Determination Dates for calculating distributions and the actual Payment
Date;
(xviii) the amount of Collections received on the Receivables and
any other assets of the Trust for the related Collection Period and any
fees and expenses of the trust paid with respect to the Collection Period;
(xix) delinquency and loss information for the receivables for the
related Collection Period; and
(xx) information on any coverage ratios or performance triggers, if
applicable, and an indication if such triggers have been reached.
In addition, such statements may be made available to the Noteholders and
Certificateholders of record by being posted by the Indenture Trustee on its
website at
23
▇▇▇.▇▇▇▇▇▇▇▇.▇▇▇/▇▇▇. Access to such statements posted to such website shall be
limited to Noteholders and Certificateholders only. The Indenture Trustee shall
take whatever steps it believes in its sole discretion to be necessary to so
limit access to such statements on such website.
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.
24
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 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
25
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.
(vi) Security Interest Representation. This Agreement creates a valid and
continuing security interest (as defined in the applicable UCC) in the
Receivables that is in existence in favor of the Issuer, which security interest
is prior to all other liens, and is enforceable as such as against creditors of
and purchasers from the Depositor, which security interest will be assigned to
the Indenture Trustee pursuant to the Indenture. Other than the security
interest granted to the Issuer, the Depositor has not pledged, assigned,
transferred or sold, a security interest in, or otherwise conveyed any of the
Receivables, the Depositor has not authorized the filing of and is not aware of
any financing statements against the Depositor that include a description of
such Receivables other than the financing statements in favor of the Issuer and
the Indenture Trustee, and the Depositor is not aware of any judgment or tax
lien filing against it.
(b) The Depositor covenants that it shall provide, or cause the Servicer
to provide, in a timely manner the certifications required by Section 302 of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002.
SECTION 5.2 Liability of Depositor; Indemnities. The Depositor shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Depositor under this Agreement, and hereby agrees to the
following:
(a) The Depositor shall indemnify, defend, and hold harmless the Issuer,
the Owner Trustee and the Indenture Trustee from and against any taxes that may
at any time be asserted against any such Person with respect to, and as of the
date of, the conveyance of the Receivables to the Issuer or the issuance and
original sale of the Notes and the Certificates, including any sales, gross
receipts, general corporation, tangible personal property, privilege, or license
taxes (but, in the case of the Issuer, not including any taxes asserted with
respect to ownership of the Receivables or federal or state income taxes arising
out of the transactions contemplated by this Agreement and the other Basic
Documents) and costs and expenses in defending against the same.
(b) The Depositor shall indemnify, defend, and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders from and against any loss, liability or expense incurred by
reason of (i) the Depositor's willful misfeasance, bad faith, or negligence in
the performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement and (ii) the
Depositor's violation of
26
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 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:
27
(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.
(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.
28
(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, 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.
29
(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 prior notice of the effective date of any merger,
conversion, consolidation or succession pursuant to this Section 6.3 to the
Rating Agencies, the Indenture Trustee and the Depositor. The Servicer shall
provide the Depositor in writing such information as reasonably requested by the
Depositor to comply with its Exchange Act reporting obligations with respect to
a successor Servicer.
SECTION 6.4 Limitation on Liability of Servicer and Others. (a) Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Issuer, the Noteholders or the
Certificateholders, except as provided under this Agreement, for any action
taken or for refraining from the taking of any action pursuant to this Agreement
or for errors in judgment; provided, however, that this provision shall not
protect the Servicer or any such Person against any liability that would
otherwise be imposed by reason of willful misfeasance or bad faith in the
performance of duties or by reason of reckless disregard of obligations and
duties under this Agreement, or by reason of negligence in the performance of
its duties under this Agreement. The Servicer and any director, officer or
employee or agent of the Servicer may rely in good faith on any Opinion of
Counsel or on any Officer's Certificate of the Depositor or certificate of
auditors believed to be genuine and to have been signed by the proper party in
respect of any matters arising under this Agreement.
(b) Except as provided in this Agreement, the Servicer shall not be under
any obligation to appear in, prosecute, or defend any legal action that shall
not be incidental to its duties to service the Receivables in accordance with
this Agreement, and that in its opinion may involve it in any expense or
liability; provided, however, that the Servicer may undertake any reasonable
action that it may deem necessary or desirable in respect of this Agreement and
the rights and duties of the parties to this Agreement and the interests of the
Noteholders and Certificateholders under this Agreement. In such event, the
legal expenses and costs of such action and any liability resulting therefrom
shall be expenses, costs and liabilities of the Issuer, and the Servicer shall
be entitled to be reimbursed therefor. Any amounts due the Servicer
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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, the Indenture Trustee and the
Depositor at the earliest practicable time (and, if such communication is not in
writing, shall be confirmed in writing at the earliest practicable time) and any
such determination shall be evidenced by an Opinion of Counsel to such effect
delivered to the Owner Trustee and the Indenture Trustee concurrently with or
promptly after such notice. No such resignation shall become effective until the
Indenture Trustee or a Successor Servicer shall have (i) taken the actions
required by Section 7.1(b), (ii) assumed the responsibilities and obligations of
the Servicer in accordance with Section 7.2 and (iii) provided in writing the
information reasonably requested by the Depositor to comply with its reporting
obligations under the Exchange Act with respect to a replacement Servicer.
SECTION 6.7 Servicer May Own Notes or Certificates. The Servicer, and any
Affiliate of the Servicer, may, in its individual or any other capacity, become
the owner or
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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") shall occur and be
continuing:
(i) Any failure by the Servicer (or, so long as the Seller is the
Servicer, the Seller) to deliver to the Owner Trustee or the Indenture
Trustee any proceeds or payment required to be so delivered under the
terms of the Notes and the Certificates and this Agreement that shall
continue unremedied for a period of five (5) Business Days after written
notice of such failure is received by the Servicer or the Seller, as the
case may be, from the Owner Trustee or the Indenture Trustee or after
discovery of such failure by an officer of the Servicer or the Seller, as
the case may be; or
(ii) Failure on the part of the Servicer (or, so long as the Seller
is the Servicer, the Seller) duly to observe or to perform in any material
respect any other covenants or agreements, as the case may be, set forth
in the Notes, the Certificates or in this Agreement, which failure shall
(A) materially and adversely affect the rights of Noteholders or
Certificateholders and (B) continue unremedied for a period of ninety (90)
days after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given (1) to the Servicer or the
Seller, as the case may be, by the Owner Trustee or the Indenture Trustee,
or (2) to the Owner Trustee, the Indenture Trustee, the Seller and the
Servicer by the Noteholders of Notes evidencing not less than 25% of the
principal amount of the Controlling Class or, if no Notes are outstanding,
by Certificateholders of Certificates evidencing not less than 25% of the
Percentage Interests evidenced by the Certificates; or
(iii) So long as the Bank or another depository institution is not
the Servicer, the entry of a decree or order by a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver, or liquidator for the Servicer in
any insolvency, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings, or for the winding up or liquidation
of its respective affairs, and the continuance of any such decree or order
unstayed and in effect for a period of sixty (60) consecutive days; or
(iv) So long as the Bank or another depository institution is not
the Servicer, the consent by the Servicer to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshalling of assets and liabilities, or similar proceedings of or
relating to the Servicer of or relating to substantially all of its
property;
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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 Controlling Class
Outstanding (or, if no Notes are Outstanding, Certificates evidencing not less
than a majority of the Percentage Interests evidenced by the Certificates), by
notice then given in writing to the Servicer (and to the Indenture Trustee and
the Owner Trustee if given by the Noteholders and to the Owner Trustee if given
by the Certificateholders) (with a copy to the Rating Agencies) may terminate
all of the rights and obligations of the Servicer under this Agreement. On or
after the receipt by the Servicer of such written notice, all authority and
power of the Servicer under this Agreement, whether with respect to the Notes,
the Certificates or the Trust Property or otherwise, shall pass to and be vested
in the Indenture Trustee or such Successor Servicer as may be appointed under
Section 7.2; and, without limitation, the Indenture Trustee and the Owner
Trustee are hereby authorized and empowered to execute and deliver, on behalf of
the predecessor Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of the Receivables
and related documents, or otherwise.
(b) Upon termination of the Servicer under Section 7.1(a), the predecessor
Servicer shall cooperate with the Indenture Trustee, the Owner Trustee and such
Successor Servicer in effecting the termination of the responsibilities and
rights of the predecessor Servicer under this Agreement, including the transfer
to the Indenture Trustee or such Successor Servicer for administration of all
cash amounts that shall at the time be held by the predecessor Servicer for
deposit, or shall thereafter be received with respect to a Receivable and the
delivery of the Receivable Files and the related accounts and records maintained
by the Servicer. All reasonable costs and expenses (including attorneys' fees)
incurred in connection with transferring the Receivable Files to the Successor
Servicer and amending this Agreement to reflect such succession as Servicer
pursuant to this Section 7.1 shall be paid by the predecessor Servicer upon
presentation of reasonable documentation of such costs and expenses.
SECTION 7.2 Appointment of Successor Servicer. (a) Upon the Servicer's
receipt of notice of termination pursuant to Section 7.1 or the Servicer's
resignation in accordance with the terms of this Agreement, the predecessor
Servicer shall continue to perform its functions as Servicer under this
Agreement, in the case of termination, only until the date specified in such
termination notice or, if no such date is specified in a notice of termination,
until receipt of such notice and, in the case of resignation, until the later of
(x) the date 90 days from the delivery to the Indenture Trustee and the Owner
Trustee of written notice of such resignation (or written confirmation of such
notice) in accordance with the terms of this Agreement and (y) the date upon
which the predecessor Servicer shall become unable to act as Servicer, as
specified in the notice of resignation and accompanying Opinion of Counsel. In
the event of the Servicer's resignation or termination hereunder, the Issuer
shall appoint a Successor Servicer, and the
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Successor Servicer shall accept its appointment by a written assumption in form
acceptable to the Owner Trustee and the Indenture Trustee (with a copy to each
Rating Agency) and shall provide the Depositor in writing with such information
as reasonably requested by the Depositor to comply with its reporting
obligations under the Exchange Act with respect to a replacement servicer. In
the event that a Successor Servicer has not been appointed at the time when the
predecessor Servicer has ceased to act as Servicer in accordance with this
Section 7.2, the Indenture Trustee without further action shall automatically be
appointed the Successor Servicer and the Indenture Trustee shall be entitled to
the Servicing Fee and shall provide the Depositor in writing with such
information as reasonably requested by the Depositor to comply with its
reporting obligations under the Exchange Act with respect to a Master Servicer.
The Indenture Trustee may resign as the Servicer by giving written notice of
such resignation to the Issuer and in such event shall be released from such
duties and obligations, such release not to be effective until the date a
Successor Servicer enters into a written assumption as provided in this Section.
Upon delivery of any such notice to the Issuer, the Issuer shall obtain a new
servicer as the Successor Servicer in accordance with this Section.
Notwithstanding the above, if the Indenture Trustee shall be legally unable so
to act or if, within 30 days after the delivery of its notice of resignation,
the Issuer shall not have obtained a Successor Servicer, the Indenture Trustee
shall appoint, or petition a court of competent jurisdiction to appoint, any
established institution, having a net worth of not less than $100,000,000 and
whose regular business shall include the servicing of automotive receivables, as
the successor to the Servicer under this Agreement; provided that the Rating
Agency Condition shall be satisfied in connection with such appointment.
(b) Upon appointment, the Successor Servicer shall be the successor in all
respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties, and liabilities arising thereafter relating thereto
placed on the predecessor Servicer, by the terms and provisions of this
Agreement.
(c) In connection with such appointment, subject to Section 3.7(e) of the
Indenture, the Indenture Trustee may make such arrangements for the compensation
of such Successor Servicer out of payments on Receivables as it and such
Successor Servicer shall agree; provided, however, that no such compensation
shall be in excess of that permitted the predecessor Servicer under this
Agreement. The Indenture Trustee and such Successor Servicer shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession.
SECTION 7.3 Repayment of Advances. If the identity of the Servicer shall
change, the predecessor Servicer shall be entitled to receive to the extent of
available funds reimbursement for Outstanding Advances pursuant to Section 4.3
and 4.4, in the manner specified in Section 4.6, with respect to all Advances
made by the predecessor Servicer.
SECTION 7.4 Notification to Noteholders and Certificateholders. Upon any
termination of, or appointment of a successor to, the Servicer pursuant to this
Article VII, the Indenture Trustee shall give prompt written notice thereof to
Noteholders, and the Owner Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses of record and to each Rating
Agency.
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SECTION 7.5 Waiver of Past Events of Servicing Termination. The holders of
Notes evidencing not less than a majority of the principal amount of the
Controlling Class (or, if no Notes are Outstanding, holders of Certificates
evidencing not less than a majority of the Percentage Interests evidenced by the
Certificates) 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 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
▇▇▇▇▇'▇ 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, the Indenture Trustee will continue to
carry out its obligations hereunder as agent for the Owner Trustee, including
without limitation making distributions from the Collection Account in
accordance with Section 4.6, making withdrawals from the Reserve Account in
accordance with Section 4.5(b) and Section 4.7.
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ARTICLE IX
MISCELLANEOUS PROVISIONS
SECTION 9.1 Amendment. (a) This Agreement may be amended by the Depositor,
the Servicer and the Issuer, with the consent of the Indenture Trustee and the
Owner Trustee to the extent that their respective rights or obligations may be
affected thereby (which consent may not be unreasonably withheld), but without
the consent of any of the Noteholders or the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions in this Agreement, or to add
any provisions to or change or eliminate any provisions or to modify the rights
of the Noteholders or Certificateholders; provided, however, that (i) such
action shall not, as evidenced by either an Opinion of Counsel or an Officer's
Certificate delivered to the Owner Trustee and the Indenture Trustee, materially
and adversely affect the interests of any Noteholder or Certificateholder and
(ii) the Rating Agency Condition shall be satisfied.
(b) This Agreement may also be amended from time to time by the Depositor,
the Servicer and the Issuer, with the consent of the Indenture Trustee and the
Owner Trustee to the extent that their respective rights or obligations may be
affected thereby (which consent may not be unreasonably withheld) and with the
consent of (i) the Noteholders of Notes evidencing not less than a majority of
the principal amount of each Class of Notes and (ii) the Certificateholders of
Certificates evidencing not less than a majority of the Percentage Interests
evidenced by the Certificates (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 the amount required to be on deposit in the Reserve Account, without the
consent of all Noteholders or Certificateholders or (B) reduce the aforesaid
percentage required to consent to any such amendment, without the consent of the
holders of all Notes and holders of all Certificates. Notwithstanding the
foregoing, the Depositor may decrease the Specified Reserve Balance upon
satisfaction of the Rating Agency Condition without the consent of any other
party hereto or any Noteholder or Certificateholder.
(c) Prior to the execution of any such amendment the Servicer will provide
written notification of the substance of such amendment to each Rating Agency.
(d) Promptly after the execution of any such amendment, the Servicer shall
furnish written notification of the substance of such amendment to each
Certificateholder, the Indenture Trustee and each Rating Agency and the
Indenture Trustee will provide notification of the substance of such amendment
to each Noteholder. It shall not be necessary for the consent of
36
Noteholders or the Certificateholders pursuant to this Section 9.1 to approve
the particular form of any proposed amendment or consent, but it shall be
sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents (and any other consents of Noteholders and
Certificateholders provided for in this Agreement) and of evidencing the
authorization of the execution thereof by Noteholders and Certificateholders
shall be subject to such reasonable requirements as the Owner Trustee and the
Indenture Trustee may prescribe, including the establishment of record dates
pursuant to the Note Depository Agreement.
(e) Prior to the execution of any amendment to this Agreement, the Owner
Trustee and the Indenture Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement and the Opinion of Counsel referred to in Section
9.2(i)(1). The Owner Trustee or the Indenture Trustee may, but shall not be
obligated to, enter into any such amendment which affects such Owner Trustee's
or Indenture Trustee's own rights, duties or immunities under this Agreement or
otherwise.
SECTION 9.2 Protection of Title to Trust Property. (a) The Depositor and
the Seller shall file such financing statements and cause to be filed such
continuation statements, all in such manner and in such places as may be
required by law fully to preserve, maintain, and protect the interest of the
Issuer and the Indenture Trustee for the benefit of the Noteholders in the
Receivables and in the proceeds thereof. The Depositor or the Seller, as
applicable, shall deliver (or cause to be delivered) to the Owner Trustee and
the Indenture Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
(b) None of the Depositor, the Seller or the Servicer shall change its
name, identity, or corporate structure in any manner that would, could, or might
make any financing statement or continuation statement filed by the Seller or
the Depositor in accordance with paragraph (a) above seriously misleading within
the meaning of ss. 9-506 of the UCC, unless it shall have given the Owner
Trustee and the Indenture Trustee at least 10 days' prior written notice
thereof, with a copy to the Rating Agencies, and shall have promptly filed
appropriate amendments to all previously filed financing statements or
continuation statements.
(c) The Depositor, the Seller and the Servicer shall give the Owner
Trustee and the Indenture Trustee at least ten (10) days' prior written notice
of any relocation of its principal executive office or change in the
jurisdiction under whose laws it is formed if, as a result of such relocation or
change, the applicable provisions of the UCC would require the filing of any
amendment of any previously filed financing or continuation statement or of any
new financing statement and shall promptly file any such amendment or new
financing statement. The Servicer shall at all times maintain each office from
which it shall service Receivables, and its principal executive office, within
the United States of America.
(d) The Servicer shall maintain accounts and records as to each Receivable
accurately and in sufficient detail to permit (i) the reader thereof to know at
any time the status of such Receivable, including payments and recoveries made
and payments owing (and the nature of each) and (ii) reconciliation between
payments or recoveries on (or with respect to) each
37
Receivable and the amounts from time to time deposited in the Collection Account
and the Reserve Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of conveyance under this Agreement of the Receivables to the
Issuer, the Servicer's master computer records (including any back-up archives)
that refer to a Receivable shall indicate clearly, by numerical code or
otherwise, that such Receivable is owned by the Issuer and has been pledged to
the Indenture Trustee pursuant to the Indenture. Indication of the Issuer's and
the Indenture Trustee's interest in a Receivable shall not be deleted from or
modified on the Servicer's computer systems until, and only until, the
Receivable shall have been paid in full or repurchased.
(f) If at any time the Seller or the Servicer shall propose to sell, grant
a security interest in, or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender, or other transferee, the
Servicer shall give to such prospective purchaser, lender, or other transferee
computer tapes, records, or print-outs (including any restored from back-up
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been conveyed to and is owned by
the Issuer and has been pledged to the Indenture Trustee.
(g) The Servicer, upon receipt of reasonable prior notice, shall permit
the Owner Trustee, the Indenture Trustee and their respective agents at any time
during normal business hours to inspect, audit, and make copies of and to obtain
abstracts from the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Owner Trustee and the
Indenture Trustee, within five (5) Business Days, a list of all Receivables (by
contract number and name of Obligor) then owned by the Issuer, together with a
reconciliation of such list to the Schedule of Receivables and to each of the
Servicer's Certificates furnished before such request indicating removal of
Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee and the Indenture
Trustee:
(1) promptly after the execution and delivery of this Agreement and
of each amendment thereto, an Opinion of Counsel either (A) stating that,
in the opinion of such Counsel and subject to customary qualifications and
assumptions, all financing statements and continuation statements have
been filed that are necessary fully to preserve and protect the interest
of the Issuer and the Indenture Trustee in the Receivables, and reciting
the details of such filings or referring to prior Opinions of Counsel in
which such details are given, or (B) stating that, in the opinion of such
Counsel, no such action shall be necessary to preserve and protect such
interest; and
(2) within 120 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cut-off Date, an Opinion of Counsel, dated as of a date during
such 120-day period, either (A) stating that, in the opinion of such
counsel and subject to customary qualifications and assumptions, all
financing statements and continuation statements have been filed that are
necessary fully
38
to preserve and protect the interest of the Issuer and the Indenture
Trustee in the Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given, or
(B) stating that, in the opinion of such Counsel, no such action shall be
necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (i)(1) or (i)(2) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
(j) For the purpose of facilitating the execution of this Agreement and
for other purposes, this Agreement may be executed in any number of
counterparts, each of which counterparts shall be deemed to be an original, and
all of which counterparts shall constitute but one and the same instrument.
SECTION 9.3 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS CONFLICTS OF LAW
PROVISIONS (OTHER THAN SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW), AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
SECTION 9.4 Notices. All demands, notices, and communications under this
Agreement shall be in writing, personally delivered, sent by telecopier, over
night courier or mailed by certified mail, return receipt requested, and shall
be deemed to have been duly given upon receipt (a) in the case of the Seller or
the Servicer, at ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇ Broker, Vice President, or at such other address as shall be designated by
the Seller or the Servicer in a written notice to the Owner Trustee and the
Indenture Trustee, (b) in the case of the Depositor, at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇.,
▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: Vice President, Legal Counsel,
(c) in the case of the Owner Trustee, at the Corporate Trust Office of the Owner
Trustee, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, (d) in the case of the Indenture Trustee,
at the Corporate Trust Office of the Indenture Trustee, (e) in the case of
▇▇▇▇▇'▇ Investors Service, Inc., at the following address: ▇▇▇▇▇'▇ Investors
Service, Inc., ABS Monitoring Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, and (f) in the case of Standard & Poor's Ratings Services, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., at the following address: Standard & Poor's
Rating Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Asset Backed Surveillance
Department. Any notice required or permitted to be mailed to a Noteholder or
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Person as shown in the Note Register or the Certificate
Register, as applicable. Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given, whether or not
the Noteholder or Certificateholder shall receive such notice.
SECTION 9.5 Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way
39
affect the validity or enforceability of the other provisions of this Agreement
or of the Notes, the Certificates or the rights of the holders thereof.
SECTION 9.6 Assignment. Notwithstanding anything to the contrary contained
herein, except as provided in Sections 6.3 and 7.2 and as provided in the
provisions of this Agreement concerning the resignation of the Servicer, this
Agreement may not be assigned by the Depositor or the Servicer unless (i)(A) the
Rating Agency Condition is satisfied and (B) the Indenture Trustee and the Owner
Trustee have consented thereto, which consent shall not be unreasonably withheld
or (ii) the Owner Trustee, the Indenture Trustee, the Noteholders of Notes
evidencing not less than 66 2/3% of the principal amount of the Notes
Outstanding and the Certificateholders of Certificates evidencing not less than
66 2/3% of the Percentage Interests evidenced by the Certificates consent
thereto. Any transfer or assignment with respect to the Servicer of all its
rights, obligations and duties will not become effective until a successor
Servicer has assumed the Servicer's rights, duties and obligations under this
Agreement. In the event of a transfer or assignment pursuant to clause (ii)
above, the Rating Agencies shall be provided with notice of such transfer or
assignment.
SECTION 9.7 Further Assurances. The Depositor and the Servicer agree to do
and perform, from time to time, any and all acts and to execute any and all
further instruments required or reasonably requested by the Owner Trustee or the
Indenture Trustee more fully to effect the purposes of this Agreement.
SECTION 9.8 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of the Owner Trustee, the Indenture Trustee,
the Noteholders or the Certificateholders, any right, remedy, power or privilege
hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges therein provided are
cumulative and not exhaustive of any rights, remedies, powers and privileges
provided by law.
SECTION 9.9 Third-Party Beneficiaries. This Agreement will inure to the
benefit of and be binding upon the parties hereto, the Indenture Trustee and the
Owner Trustee and their respective successors and permitted assigns and each of
the Indenture Trustee and the Owner Trustee may enforce the provisions hereof as
if they were parties thereto. Except as otherwise provided in this Article IX,
no other Person will have any right or obligation hereunder. The parties hereto
hereby acknowledge and consent to the pledge of this Agreement by the Issuer to
the Indenture Trustee for the benefit of the Noteholders pursuant to the
Indenture.
SECTION 9.10 Actions by Noteholders or Certificateholders. (a) Wherever in
this Agreement a provision is made that an action may be taken or a notice,
demand, or instruction given by Noteholders or Certificateholders, such action,
notice, or instruction may be taken or given by any Noteholder or
Certificateholder, as applicable, unless such provision requires a specific
percentage of Noteholders or Certificateholders.
(b) Any request, demand, authorization, direction, notice, consent,
waiver, or other act by a Noteholder or Certificateholder shall bind such
Noteholder or Certificateholder and every subsequent holder of such Note or
Certificate issued upon the registration of transfer
40
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 ▇▇▇▇▇ Fargo Delaware Trust Company not in
its individual capacity but solely in its capacity as Owner Trustee of the
Issuer and in no event shall ▇▇▇▇▇ Fargo Delaware Trust Company, 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 JPMorgan Chase Bank, National Association, not in
its individual capacity but solely as Indenture Trustee, and in no event shall
JPMorgan Chase Bank, National Association, have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Issuer. For all purposes of this Agreement, in the performance of its
duties or obligations hereunder or in the performance of any duties or
obligations of the Issuer hereunder, the Indenture Trustee shall be subject to,
and entitled to the benefits of, the terms and provisions of Article VI of the
Indenture.
SECTION 9.12 Savings Clause. It is the intention of the Depositor and the
Issuer that the transfer of the Trust Property contemplated herein constitute an
absolute transfer of the Trust Property, conveying good title to the Trust
Property from the Depositor to the Issuer. However, in the event that such
transfer is deemed to be a pledge or other transfer for security, the Depositor
hereby grants to the Issuer a first priority security interest in all of the
Depositor's right, title and interest in, to and under the Trust Property, and
all proceeds thereof, to secure a loan in an amount equal to all amounts payable
under the Notes and the Certificates, and in such event, this Agreement shall
constitute a security agreement under applicable law.
ARTICLE X
EXCHANGE ACT REPORTING
SECTION 10.1 Further Assurances. The Indenture Trustee, the Owner Trustee
and the Servicer shall reasonably cooperate with the Depositor in connection
with the satisfaction of the Depositor's reporting requirements under the
Exchange Act with respect to the Trust. The Depositor shall not exercise its
right to request delivery of information or other performance under these
provisions other than in good faith. In addition to the information specified
below, if so requested by the Depositor for the purpose of satisfying its
reporting obligation under the Exchange Act, the Indenture Trustee, the Owner
Trustee and the Servicer shall provide the
41
Depositor with (a) such information which is available to such Person without
unreasonable effort or expense and within such timeframe as may be reasonably
requested by the Depositor to comply with the Depositor's reporting obligations
under the Exchange Act and (b) to the extent such Person is a party (and the
Depositor is not a party) to any agreement or amendment required to be filed,
copies of such agreement or amendment in ▇▇▇▇▇-compatible form. Each of the
Servicer, the Indenture Trustee and the Owner Trustee acknowledges that
interpretations of the requirements of Regulation AB may change over time,
whether due to interpretive guidance provided by the Commission or its staff,
consensus among participants in the asset-backed securities markets, advice of
counsel, or otherwise, and agrees to comply with requests made by the Depositor
in good faith for delivery of information under these provisions on the basis of
evolving interpretations of Regulation AB.
SECTION 10.2 Form 10-D Filings. So long as the Depositor is required to
file Exchange Act Reports with respect to the Issuer, no later than each Payment
Date, each of the Indenture Trustee, the Owner Trustee and the Servicer shall
notify (and the Servicer shall cause any Subservicer to notify) the Depositor of
any Form 10-D Disclosure Item with respect to such Person, together with a
description of any such Form 10-D Disclosure Item in form and substance
reasonably acceptable to the Depositor. In addition to such information as the
Servicer is obligated to provide pursuant to other provisions of this Agreement,
if so requested by the Depositor, the Servicer shall provide such information
which is available to the Servicer, without unreasonable effort or expense
regarding the performance or servicing of the Receivables as is reasonably
required to facilitate preparation of distribution reports in accordance with
Item 1121 of Regulation AB. Such information shall be provided concurrently with
the Statements to Noteholders pursuant to Section 4.9, commencing with the first
such report due not less than five Business Days following such request.
SECTION 10.3 Form 8-K Filings. So long as the Depositor is required to
file Exchange Act Reports with respect to the Issuer, each of the Indenture
Trustee, the Owner Trustee and the Servicer shall promptly notify the Depositor,
but in no event later than one (1) Business Day after its occurrence, of any
Reportable Event (in the case of the Owner Trustee, only an event in clause (d)
of the definition of "Reportable Event") of which such Person (or in the case of
the Owner Trustee and the Indenture Trustee, a Responsible Officer of such
Person) has actual knowledge. Each Person shall be deemed to have actual
knowledge of any such event to the extent that it relates to such Person or any
action or failure to act by such Person.
SECTION 10.4 Form 10-K Filings. So long as the Depositor is required to
file Exchange Act Reports: (i) if the Item 1119 Parties listed on Appendix B
have changed since the Closing Date, no later than March 1 of each year, the
Depositor shall provide each of the Indenture Trustee, the Owner Trustee and the
Servicer with an updated Appendix B setting forth the Item 1119 Parties and (ii)
no later than March 15 of each year, commencing in 2007, the Indenture Trustee,
the Owner Trustee and the Servicer shall notify the Depositor of any Form 10-K
Disclosure Item, together with a description of any such Form 10-K Disclosure
Item in form and substance reasonably acceptable to the Depositor.
42
SECTION 10.5 Report on Assessment of Compliance and Attestation. So long
as the Depositor is required to file Exchange Act Reports, on or before March 15
of each calendar year, commencing in 2007:
(a) The Indenture Trustee shall deliver to the Depositor and the Servicer
a report of the Indenture Trustee's assessment of compliance with the Servicing
Criteria during the immediately preceding calendar year, as set forth under
Rules 13a-18 and 15d-18 of the Exchange Act (or any successor provisions) and
Item 1122 of Regulation AB. Such report shall be signed by an authorized officer
of the Indenture Trustee and shall at a minimum address each of the Servicing
Criteria specified on a certification substantially in the form of Appendix C
hereto delivered to the Depositor concurrently with the execution of this
Agreement (provided that such certification may be revised after the date of
this Agreement as agreed by the Depositor and the Indenture Trustee to reflect
any guidance with respect to such criteria from the Commission). To the extent
any of the Servicing Criteria are not applicable to the Indenture Trustee, with
respect to asset-backed securities transactions taken as a whole involving the
Indenture Trustee and that are backed by the same asset type backing the Notes,
such report shall include such a statement to that effect. The Indenture Trustee
acknowledges and agrees that the Depositor and the Servicer with respect to its
duties as the Certifying Person, and each of their respective officers and
directors shall be entitled to rely on upon each such servicing criteria
assessment and the attestation delivered pursuant to Section 10.5(b) below.
(b) The Indenture Trustee shall deliver to the Depositor and the Servicer
a report of a registered public accounting firm that attests to, and reports on,
the assessment of compliance made by the Indenture Trustee and delivered
pursuant to the preceding paragraph. Such attestation shall be in accordance
with Rules 13a-18 and 15d-18 of the Exchange Act (or any successor provisions),
Rules 1-02(a)(3) and 2-02(g) of Regulation S-X (or any successor provisions)
under the Securities Act and the Exchange Act, including, without limitation
that in the event that an overall opinion cannot be expressed, such registered
public accounting firm shall state in such report why it was unable to express
such an opinion. Such report must be available for general use and not contain
restricted use language.
(c) The Indenture Trustee shall cause each Reporting Subcontractor to
deliver to the Depositor and the Servicer an assessment of compliance and
accountant's attestation as and when provided in paragraphs (a) and (b) of this
Section. An assessment of compliance provided by a Subcontractor need not
address any elements of the Servicing Criteria other than those specified by the
Indenture Trustee pursuant to Section 10.5(a).
(d) In the event the Indenture Trustee or Reporting Subcontractor is
terminated or resigns during the term of this Agreement, such Person shall
provide the documents and information pursuant to this Section 10.5 with respect
to the period of time it was subject to this Agreement or provided services with
respect to the Trust or the Receivables.
SECTION 10.6 Back-up ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification. No later than March 15
of each year, beginning in 2007, the Indenture Trustee and the Servicer shall
provide to the Person who signs the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification (the
"Certifying Person") a certification (each, a "Performance Certification") and
shall cause each Reporting Subcontractor, in the form attached
43
hereto as Appendix D (in the case of the Indenture Trustee or a Reporting
Subcontractor) and as Appendix E (in the case of the Servicer) on which the
Certifying Person, the entity for which the Certifying Person acts as an
officer, and such entity's officers, directors and Affiliates (collectively with
the Certifying Person, "Certification Parties") can reasonably rely. The
Depositor will not request delivery of a certification under this clause unless
the Depositor is required under the Exchange Act to file an annual report on
Form 10-K with respect to the Trust. So long as the Servicer is an Affiliate of
the Depositor, the Servicer may, but is not required to deliver the Performance
Certificate. In the event that prior to the filing date of the Form 10-K in
March of each year, the Indenture Trustee or the Servicer has actual knowledge
of information material to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Certification, the Indenture
Trustee or the Servicer shall promptly notify the Depositor. Each of the
Indenture Trustee and the Servicer agrees to cooperate with all reasonable
requests made by any Certifying Person or Certification Party in connection with
such Person's attempt to conduct any due diligence that such Person reasonably
believes to be appropriate in order to allow it to deliver any ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Certification or portion thereof with respect to the Trust.
SECTION 10.7 Use of Subcontractors.
(a) It shall not be necessary for the Indenture Trustee or the Servicer to
seek the consent of the Depositor or any other party hereto to the utilization
of any Subcontractor. Each of the Indenture Trustee and the Servicer shall
promptly upon request provide to the Depositor (or any designee of the
Depositor, such as the Servicer or the Administrator) a written description (in
form and substance satisfactory to the Depositor) of the role and function of
each Subcontractor utilized by such Person, specifying (i) the identity of each
such Subcontractor, (ii) which (if any) of such Subcontractors are
"participating in the servicing function" within the meaning of Item 1122 of
Regulation AB and (iii) which elements of the Servicing Criteria will be
addressed in assessments of compliance provided by each Subcontractor identified
pursuant to clause (ii) of this paragraph. As a condition to the utilization of
any Subcontractor determined to be a Reporting Subcontractor, the Indenture
Trustee shall cause any such Subcontractor for the benefit of the Depositor to
comply with the provisions of Sections 10.5 and 10.6 of this Agreement to the
same extent as if such Subcontractor were the Indenture Trustee. The Indenture
Trustee shall be responsible for obtaining from each Subcontractor and
delivering to the Depositor, any assessment of compliance and attestation
required to be delivered by such Subcontractor under Section 10.5 and Section
10.6, in each case as and when required to be delivered.
(b) As a condition to the utilization of any Subcontractor determined to
be a Reporting Subcontractor, the Servicer shall cause any such Subcontractor
for the benefit of the Depositor to comply with the provisions of Section
3.10(a)(ii), Section 3.11 and Section 10.6 of this Agreement to the same extent
as if such Subcontractor were the Servicer. The Servicer shall be responsible
for obtaining from each Subcontractor and delivering to the Depositor, any
assessment of compliance and attestation required to be delivered by such
Subcontractor under this Agreement, in each case as and when required to be
delivered.
SECTION 10.8 Representations and Warranties. Each of the Indenture Trustee
and the Owner Trustee represents that (i) there are no affiliations, relating to
such Person with respect to
44
any 1119 Party, (ii) there are no relationships or transactions with respect to
any 1119 Party and such Person that are outside the ordinary course of business
or on terms other than would be obtained in an arm's length transaction with an
unrelated third party, apart from the transactions contemplated under the Basic
Documents, and that are material to the investors' understanding of the Notes
and (iii) there are no legal proceedings pending, or known to be contemplated by
governmental authorities, against such Person, or of which the property of such
Person is subject, that is material to the Noteholders.
SECTION 10.9 Indemnification.
(a) Each of the Indenture Trustee and the Servicer shall indemnify the
Depositor, each affiliate of the Depositor, the Servicer with respect to its
duties as Certifying Person or each Person who controls any of such parties
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act) and the respective present and former directors, officers,
employees and agents of each of the foregoing, and shall hold each of them
harmless from and against any losses, damages, penalties, fines, forfeitures,
legal fees and expenses and related costs, judgments, and any other costs, fees
and expenses that any of them may sustain arising out of or based upon:
(i) (A) any untrue statement of a material fact contained or alleged to be
contained in (x) with respect to the Indenture Trustee, the servicing criteria
assessment provided under this Article X and (y) with respect to the Servicer,
Section 3.10 and Section 3.11 of this Agreement by or on behalf of such Person
(with respect to each such party, the "Provided Information"), or (B) the
omission or alleged omission to state in the Provided Information a material
fact required to be stated in the Provided Information, or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, by way of clarification, that clause (B) of
this paragraph shall be construed solely by reference to the related Provided
Information and not to any other information communicated in connection with a
sale or purchase of securities, without regard to whether the Provided
Information or any portion thereof is presented together with or separately from
such other information; or
(ii) with respect to the Indenture Trustee, any failure by the Indenture
Trustee to deliver any servicing criteria assessment when and as required under
this Article X and with respect to the Servicer, any failure by the Servicer to
deliver any information, report, certification, accountant's letter or other
material when and as required under Section 3.10, Section 3.11 or Article X, as
applicable.
(b) In the case of any failure of performance described in clause (ii) of
this Section, each of the Indenture Trustee and the Servicer shall promptly
reimburse the Depositor for all costs reasonably incurred by each such party in
order to obtain the information, report, certification, accountants' letter or
other material not delivered as required by the Indenture Trustee or the
Servicer, as applicable.
(c) Each of the Indenture Trustee and the Servicer shall require that any
Reporting Subcontractor agree to the provisions of paragraphs (a) and (b) of
this Section 10.9, or shall be responsible for all such indemnification, costs
or expenses if the Reporting Subcontractor will not agree to such provisions.
45
(d) Notwithstanding anything to the contrary contained herein, in no event
shall the Indenture Trustee be liable for special, indirect or consequential
damages of any kind whatsoever, including but not limited to lost profits, even
if the Indenture Trustee has been advised of the likelihood of such loss or
damage and regardless of the form of action.
SECTION 10.10 Amendments. In the event the parties to this Agreement
desire to further clarify or amend any provision of this Article X, this
Agreement shall be amended to reflect the new agreement between the parties
covering matters in this Article X pursuant to Section 9.01, provided such
amendment will not require any Opinion of Counsel or satisfaction of the Rating
Agency Condition or the consent of any Noteholder or Certificateholder.
46
IN WITNESS WHEREOF, the parties have caused this Sale and Servicing
Agreement to be duly executed by their respective officers thereunto duly
authorized as of the day and year first above written.
USAA AUTO OWNER TRUST 2006-3,
as Issuer
By: ▇▇▇▇▇ FARGO DELAWARE TRUST COMPANY,
not in its individual capacity but solely
as Owner Trustee
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
USAA FEDERAL SAVINGS BANK,
as Seller and Servicer
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President, Senior Financial
Officer and Treasurer
USAA ACCEPTANCE, LLC,
as Depositor
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
Sale and Servicing Agreement
Accepted and agreed:
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Indenture Trustee
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇ FARGO DELAWARE TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Vice President
Sales and Servicing Agreement
SCHEDULE A
SCHEDULE OF RECEIVABLES
[On File with the Indenture Trustee]
A-1
SCHEDULE B-1
Location of Receivable Files
c/o USAA Federal Savings Bank
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
B-1
SCHEDULE B-2
Location of Lien Certificates
FDI Consulting, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
B-2
Appendix A
DEFINITIONS AND USAGE
The following rules of construction and usage shall be applicable to any
agreement or instrument that is governed by this Appendix:
(a) All terms defined in this Appendix shall have the defined meanings
when used in any agreement or instrument governed hereby and in any
certificate or other document made or delivered pursuant thereto unless
otherwise defined therein.
(b) As used herein, in any agreement or instrument governed hereby and
in any certificate or other document made or delivered pursuant thereto,
accounting terms not defined in this Appendix or in any such agreement,
instrument, certificate or other document, and accounting terms partly defined
in this Appendix or in any such agreement, instrument, certificate or other
document, to the extent not defined, shall have the respective meanings given
to them under generally accepted accounting principles as in effect on the
date of such agreement or instrument. To the extent that the definitions of
accounting terms in this Appendix or in any such agreement, instrument,
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Appendix or in any such instrument, certificate or other document shall
control.
The words "hereof," "herein," "hereunder" and words of similar import
when used in an agreement or instrument refer to such agreement or instrument
as a whole and not to any particular provision or subdivision thereof;
references in an agreement or instrument to "Article," "Section" or another
subdivision or to an attachment are, unless the context otherwise requires, to
an article, section or subdivision of or an attachment to such agreement or
instrument; and the term "including" and its variations shall be deemed to be
followed by "without limitation."
The definitions contained in this Appendix are equally applicable to
both the singular and plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
Any agreement, instrument or statute defined or referred to below or in
any agreement or instrument that is governed by this Appendix means such
agreement or instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver
or consent and (in the case of statutes) by succession of comparable successor
statutes and includes (in the case of agreements or instruments) references to
all attachments thereto and instruments incorporated therein. References to a
Person are also to its permitted successors and assigns.
Definitions
"Accrued Class A Note Interest" shall mean, with respect to any Payment
Date, the sum of the Class A Noteholders' Monthly Accrued Interest for such
Payment Date and the Class A Noteholders' Interest Carryover Shortfall for
such Payment Date.
Appendix A-1
"Accrued Class B Note Interest" shall mean, with respect to any Payment
Date, the sum of the Class B Noteholders' Monthly Accrued Interest for such
Payment Date and the Class B Noteholders' Interest Carryover Shortfall for
such Payment Date.
"Act" shall have the meaning specified in Section 11.3(a) of the
Indenture.
"Administration Agreement" shall mean the Administration Agreement,
dated as of August 22, 2006, 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
Appendix A-2
particular matter, any other officer to whom such matter is referred because
of such officer's knowledge of and familiarity with the particular subject, in
each case having direct responsibility for the administration of the Indenture
or the Trust Agreement, as applicable, and shall also mean, with respect to
the Owner Trustee, any officer of the Administrator.
"Available Collections" shall mean, for any Payment Date, the sum of the
following amounts with respect to the Collection Period preceding such Payment
Date: (i) all payments collected with respect to Receivables; (ii) all
Liquidation Proceeds attributable to Receivables which were designated as
Defaulted Receivables in prior Collection Periods in accordance with the
Servicer's customary servicing procedures; (iii) all Advances made by the
Servicer of interest due on the Receivables; (iv) the Purchase Amount received
with respect to each Receivable that became a Purchased Receivable during such
Collection Period; and (v) partial prepayments of any refunded item included
in the principal balance of a Receivable, such as extended warranty protection
plan costs, or physical damage, credit life, disability insurance premiums, or
any partial prepayment which causes a reduction in the Obligor's periodic
payment to an amount below the Scheduled Payment as of the Cut-off Date;
provided however, that in calculating the Available Collections the following
will be excluded: (i) amounts received on any Receivable to the extent that
the Servicer has previously made an unreimbursed Advance on such Receivable
and the amount received exceeds the accrued and unpaid interest on such
Receivable that has not been advanced; (ii) amounts received on any of the
Receivables to the extent that the Servicer has previously made an
unreimbursed Advance on a Receivable which is not recoverable from collections
on the particular Receivable; (iii) all payments and proceeds (including
Liquidation Proceeds) of any Receivables the Purchase Amount of which has been
included in Available Funds in a prior Collection Period; (iv) Liquidation
Proceeds with respect to a Receivable attributable to accrued and unpaid
interest thereon (but not including interest for the then current Collection
Period) but only to the extent of any unreimbursed Advances; and (v) amounts
constituting the Supplemental Servicing Fee.
"Available Funds" shall mean, for any Payment Date, the sum of the
Available Collections for such Payment Date and the Reserve Account Excess
Amount for such Payment Date.
"Bank" shall mean USAA Federal Savings Bank, a federally chartered
savings association.
"Bankruptcy Code" shall mean the United States Bankruptcy Code, 11
U.S.C. 101 et seq., as amended.
"Basic Documents" shall mean the Certificate of Trust, the Trust
Agreement, the Sale and Servicing Agreement, the Receivables Purchase
Agreement, the Indenture, the Administration Agreement, the Underwriting
Agreement, the Note Depository Agreement and the other documents and
certificates delivered in connection therewith.
"Benefit Plan" or "Benefit Plan Investor" shall mean (a) an "employee
benefit plan" (as defined in Section 3(3) of ERISA), whether or not subject to
the provisions of Title I of ERISA, (b) any "plan" described in Section
4975(e)(1) of the Code, and (c) any entity whose underlying assets included
plan assets by reason of a plan's investment in the entity.
Appendix A-3
"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, the Class A-4 Notes and
the Class B Notes, in each case issued in book-entry form.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
day on which banking institutions or trust companies in the State of New York,
the State of Delaware or the State of Texas are authorized by law, regulation
or executive order to be closed.
"Certificate Distribution Account" shall mean the account established
and maintained as such pursuant to Section 4.1(c) of the Sale and Servicing
Agreement.
"Certificateholder" or "holder of a Certificate" shall mean a Person in
whose name a Certificate is registered in the Certificate Register.
"Certificate of Trust" shall mean the Certificate of Trust in the form
of Exhibit B to the Trust Agreement filed for the Trust pursuant to Section
3810(a) of the Statutory Trust Statute.
"Certificate Paying Agent" shall mean any paying agent or co-paying
agent appointed pursuant to Section 3.9 of the Trust Agreement and shall
initially be the Owner Trustee.
"Certificate Register" and "Certificate Registrar" shall have the
respective meanings specified in Section 3.4 of the Trust Agreement.
"Certificates" shall mean the asset backed Certificates evidencing the
beneficial interest of a Certificateholder in the property of the Trust,
substantially in the form of Exhibit A to the Trust Agreement; provided,
however, that the Owner Trust Estate has been pledged to the Indenture Trustee
to secure payment of the Notes and the rights of the Certificateholders to
receive distributions on the Certificates are subordinated to the rights of
the Noteholders as described in the Sale and Servicing Agreement, the
Indenture and the Trust Agreement.
"Certification Party" shall have the meaning set forth in Section 10.6
of the Sale and Servicing Agreement.
"Certifying Person" shall have the meaning set forth in Section 10.6 of
the Sale and Servicing Agreement.
"Class" shall mean a class of Notes, which may be the Class A-1 Notes,
the Class A-2 Notes, the Class A-3 Notes, the Class A-4 Notes or the Class B
Notes.
"Class A Noteholder" shall mean any holder of a Class A Note.
"Class A Noteholders' Interest Carryover Shortfall" shall mean, for any
Payment Date, the excess of the Accrued Class A Note Interest for the
preceding Payment Date over the amount in respect of interest that is actually
paid to Noteholders of Class A Notes on such preceding Payment Date, plus
interest on the amount of interest due but not paid to Noteholders of Class A
Notes on the preceding Payment Date, to the extent permitted by law, at the
respective Note Interest Rates borne by such Class A Notes for the related
Interest Period.
Appendix A-4
"Class A Noteholders' Monthly Accrued Interest" shall mean, with respect
to any Payment Date, the aggregate interest accrued for the related Interest
Period on the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and
the Class A-4 Notes at the respective Note Interest Rate for such Class in
accordance with its terms on the outstanding principal amount of the Notes of
each such Class on the immediately preceding Payment Date or the Closing Date,
as the case may be, after giving effect to all payments of principal to the
holders of the Notes of such Class on or prior to such preceding Payment Date.
"Class A Notes" shall mean, collectively, the Class A-1 Notes, the Class
A-2 Notes, the Class A-3 Notes and the Class A-4 Notes.
"Class A-1 Final Scheduled Payment Date" shall mean the August 2007
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 $257,000,000 aggregate initial
principal amount Class A-1 5.4047% 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 5.4047% 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 April 2009
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 $270,000,000 aggregate initial
principal amount Class A-2 5.47% 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 5.47% 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 February 2011
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 $442,000,000 aggregate initial
principal amount Class A-3 5.36% Asset Backed Notes issued by the Trust
pursuant to the Indenture, substantially in the form of Exhibit A-3 to the
Indenture.
Appendix A-5
"Class A-3 Rate" shall mean 5.36% 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 June 2012
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 $221,653,000 aggregate initial
principal amount Class A-4 5.36% Asset Backed Notes issued by the Trust
pursuant to the Indenture, substantially in the form of Exhibit A-4 to the
Indenture.
"Class A-4 Rate" shall mean 5.36% 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 Final Scheduled Payment Date" shall mean the March 2013 Payment
Date.
"Class B Noteholder" shall mean the Person in whose name a Class B Note
is registered on the Note Register.
"Class B Noteholders' Interest Carryover Shortfall" shall mean, for any
Payment Date, the excess of the Accrued Class B Note Interest for the
preceding Payment Date over the amount in respect of interest that is actually
paid to Noteholders of Class B Notes on such preceding Payment Date, plus
interest on the amount of interest due but not paid to the Noteholders of
Class B Notes on the preceding Payment Date, to the extent permitted by law,
at the Class B Rate borne for the related Interest Period.
"Class B Noteholders' Monthly Accrued Interest" shall mean, with respect
to any Payment Date, the aggregate interest accrued for the related Interest
Period on the Class B Notes at the Class B Rate for such Class in accordance
with its terms on the outstanding principal amount of the Class B Notes on the
immediately preceding Payment Date or the Closing Date, as the case may be,
after giving effect to all payments of principal to the holders of the Class B
Notes on or prior to such preceding Payment Date.
"Class B Notes" shall mean the $36,824,513 aggregate initial principal
amount Class B 5.66% Asset Backed Notes issued by the Trust pursuant to the
Indenture, substantially in the form of Exhibit B to the Indenture.
"Class B Rate" shall mean 5.66% per annum. Interest with respect to the
Class B Notes shall be computed on the basis of a 360-day year consisting of
twelve 30-day months for all purposes of the Basic Documents.
"Clearing Agency" shall mean an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
Appendix A-6
"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 August 22, 2006.
"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.
"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 August 31,
2006 and, with respect to each subsequent Payment Date, the calendar month
preceding the calendar month in which the Payment Date occurs.
"Collections" shall mean all amounts collected by the Servicer (from
whatever source) on or with respect to the Receivables.
"Commission" shall mean the Securities and Exchange Commission.
"Computer Tape" shall mean the computer tape generated by the Seller
which provides information relating to the Receivables and which was used by
the Seller in selecting the Receivables conveyed to the Trust hereunder.
"Controlling Class" shall mean the Class A Notes voting together as a
single class until they are paid in full; thereafter the Class B Notes will be
the controlling class.
"Controlling Person" shall mean a Person, other than a Benefit Plan
Investor, that has discretionary authority or control with respect to the
assets of the Trust or who provides investment advice for a direct or indirect
fee with respect to those assets, or any affiliate of such a Person.
"Corporate Trust Office" shall mean, (i) with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee located at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or at such
other address as the Owner Trustee may designate from time to time by notice
to the Certificateholders and the Depositor, or the principal corporate trust
office of any successor Owner Trustee (the address of which the successor
Owner Trustee will notify the Certificateholders and the Depositor); and (ii)
with respect to the Indenture Trustee, the principal corporate trust office of
the Indenture Trustee located at ▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: Worldwide Securities Services/Structured Finance
Services--USAA 2006-3 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).
Appendix A-7
"Cut-off Date" shall mean August 1, 2006.
"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.
"Depositor" shall mean USAA Acceptance, LLC, a Delaware limited
liability company.
"Determination Date" shall mean, with respect to any Collection Period,
the second Business Day immediately preceding the Payment Date following such
Collection Period.
"▇▇▇▇▇" shall mean the Commission's Electronic Data Gathering, Analysis
and Retrieval system.
"Eligible Deposit Account" shall mean either (i) a segregated account
with an Eligible Institution or (ii) a segregated trust account with the
corporate trust department of a depository institution organized under the
laws of the U.S. or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution have a credit rating from each
Rating Agency in one of its generic rating categories which signifies
investment grade.
"Eligible Institution" shall mean either (i) the corporate trust
department of the Indenture Trustee or the Owner Trustee, as applicable; or
(ii) a depository institution organized under the laws of the U.S. or any one
of the states thereof or the District of Columbia (or any domestic branch of a
foreign bank), (1) which has either (A) a long-term unsecured debt rating of
at least "AA-" by Standard & Poor's and "Baa3" by ▇▇▇▇▇'▇ 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.
Appendix A-8
"Exchange Act Reports" shall mean any reports on Form 10-D, Form 8-K and
Form 10-K required to be filed by the Depositor with respect to the Trust
under the Exchange Act.
"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 Notes, the Class B
Final Scheduled Payment Date.
"Financed Vehicle" shall mean a new or used automobile or light-duty
truck, together with all accessions thereto, securing an Obligor's
indebtedness under the respective Receivable.
"First Priority Principal Payment" shall mean, for each Payment Date, a
payment of principal equal to the excess, if any, of the aggregate principal
amount of the Class A Notes (before giving effect to any payments on that
Payment Date) over the Pool Balance at the end of the related Collection
Period.
"Form 10-D Disclosure Item" shall mean with respect to any Person, any
litigation or governmental proceedings pending against such Person, or any of
the Trust, the Depositor, the Indenture Trustee, the Owner Trustee or the
Servicer if such Person or in the case of the Owner Trustee or Indenture
Trustee, a Responsible Officer of such Person, has actual knowledge thereof,
in each case that would be material to the noteholders.
"Form 10-K Disclosure Item" shall mean with respect to any Person, (a)
any Form 10-D Disclosure Item and (b) any affiliations or relationships
between such Person and any Item 1119 Party to the extent a Responsible
Officer of such Person (in the case of the Indenture Trustee and the Owner
Trustee) has actual knowledge thereof.
"Grant" shall mean to mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create, and to ▇▇▇▇▇ ▇
▇▇▇▇ upon and a security interest in and right of set-off against, and to
deposit, set over and confirm pursuant to the Indenture. A Grant of the
Collateral or of any other agreement or instrument shall include all rights,
powers and options (but none of the obligations) of the granting party
thereunder, including the immediate and continuing right to claim for,
collect, receive and give receipt for principal and interest payments in
respect of the Collateral and all other monies payable thereunder, to give and
receive notices and other communications, to make waivers or other agreements,
to exercise all rights and options, to bring Proceedings in the name of the
granting party or otherwise, and generally to do and receive anything that the
granting party is or may be entitled to do or receive thereunder or with
respect thereto.
Appendix A-9
"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 August 22, 2006, by
and between the Trust and the Indenture Trustee, as supplemented from time to
time.
"Indenture Trust Estate" shall mean all money, instruments, rights and
other property that are subject or intended to be subject to the lien and
security interest of Indenture for the benefit of the Noteholders (including,
without limitation, all property and interests Granted to the Indenture
Trustee), including all proceeds thereof.
"Indenture Trustee" shall mean JPMorgan Chase Bank, National
Association, a banking association organized under the laws of the United
States, 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 Pool Balance" shall mean $1,227,477,513.49.
"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
Appendix A-10
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.
"Item 1119 Party" shall mean the Depositor, the Seller, the Servicer,
the Indenture Trustee, the Owner Trustee and any other material transaction
party, as identified in Appendix C to the Sale and Servicing Agreement.
"Investment Letter" shall have the meaning specified in Section 3.4(b)
of the Trust Agreement.
"Lien" shall mean a security interest, lien, charge, pledge, equity, or
encumbrance of any kind other than, in respect of a Receivable, tax liens,
mechanics' liens, and any liens which attach to the respective Receivable by
operation of law.
"Lien Certificate" shall mean the notice or other document referenced in
clause (iii) of the description of the Receivable Files.
"Liquidation Proceeds" shall mean with respect to any Receivable (a)
insurance proceeds received by the Servicer and (b) monies collected by the
Servicer on a Defaulted Receivable from whatever source, including but not
limited to proceeds of Financed Vehicles after repossession, net of any
payments required by law to be remitted to the Obligor and net of all
reasonable expenses incurred by the Servicer in converting to cash the
Financed Vehicle securing such Defaulted Receivable.
"Monthly Remittance Condition" shall mean either (a) the Servicer
obtains a short-term certificate of deposit rating of the Servicer from
Standard & Poor's and Moody's of "A-1+" and "Prime-1," respectively, or (b)
the Servicer provides the Indenture Trustee with a letter from each Rating
Agency to the effect that the current ratings assigned to the Securities by
such Rating Agency will not be adversely affected by the remittance of
Collections on a monthly, rather than a daily, basis.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc.
Appendix A-11
"Note Depository Agreement" shall mean the Letter of Representations,
dated as of August 21, 2006 by and between the Issuer and The Depository Trust
Company regarding the Notes and Certificates.
"Note Interest Rate" shall mean the Class A-1 Rate, the Class A-2 Rate,
the Class A-3 Rate, the Class A-4 Rate or the Class B Rate, as applicable.
"Note Owner" shall mean, with respect to any Book-Entry Note, the Person
who is the beneficial owner of such Book-Entry Note, as reflected on the books
of the Clearing Agency or on the books of a Person maintaining an account with
such Clearing Agency (directly as a Clearing Agency Participant or as an
indirect participant, in each case in accordance with the rules of such
Clearing Agency).
"Note Paying Agent" shall mean the Indenture Trustee or any other Person
that meets the eligibility standards for the Indenture Trustee specified in
Section 6.11 of the Indenture and is authorized by the Issuer to make payments
to and distributions from the Collection Account (including the Principal
Distribution Account), including payment of principal of or interest on the
Notes on behalf of the Issuer.
"Note Pool Factor" shall mean, with respect to each Class of Notes as of
the close of business on the last day of a Collection Period, a seven-digit
decimal figure calculated by the Servicer and equal to the outstanding
principal balance of such Class of Notes (after giving effect to any
reductions thereof to be made on the immediately following Payment Date)
divided by the original outstanding principal balance of such Class of Notes.
The Note Pool Factor will be 1.0000000 as of the Closing Date; thereafter, the
Note Pool Factor will decline to reflect reductions in the outstanding
principal amount of such Class of Notes.
"Note Register" and "Note Registrar" shall have the respective meanings
specified in Section 2.5 of the Indenture.
"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, the Class A-4 Notes and the Class B Notes, collectively.
"Obligor" on a Receivable shall mean the purchaser or co-purchasers of
the Financed Vehicle or any other Person who owes payments under the
Receivable.
"Officer's Certificate" shall mean (i) with respect to the Trust, a
certificate signed by any Authorized Officer of the Trust and (ii) with
respect to the Depositor, the Seller or the Servicer, a certificate signed by
the chairman of the board, the president, any executive or senior vice
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.
Appendix A-12
"Optional Purchase Percentage" shall mean 10%.
"Outstanding" shall mean with respect to the Securities, as of the date
of determination, all Securities theretofore authenticated and delivered under
the Indenture or the Trust Agreement, as applicable, except:
(a) Securities theretofore (i) cancelled by the Note
Registrar or the Certificate Registrar, as applicable, or (ii)
delivered to the Note Registrar or the Certificate Registrar, as
applicable, for cancellation;
(b) Securities or portions thereof the payment for which
money in the necessary amount has been theretofore deposited with
(i)in the case of the Notes, the Indenture Trustee or any Note
Paying Agent in trust for the Noteholders of such Notes (provided,
however, that if such Notes are to be prepaid, notice of such
prepayment has been duly given pursuant to the Indenture or
provision for such notice has been made, satisfactory to the
Indenture Trustee) or (ii) in the case of the Certificates, the
Owner Trustee or any Certificate Paying Agent in trust for the
Certificateholders of such Certificates (provided, however, that
if such Certificates are to be prepaid, notice of such prepayment
has been duly given pursuant to the Trust Agreement or provision
for such notice has been made, satisfactory to the Owner Trustee);
and
(c) Securities in exchange for or in lieu of which other
Securities have been authenticated and delivered pursuant to the
Indenture or the Trust Agreement, as applicable, unless proof
satisfactory to the Indenture Trustee or the Owner Trustee, as
applicable, is presented that any such Securities are held by a
protected purchaser;
provided, that in determining whether the holders of Notes or Certificates
evidencing the requisite principal amount of the Notes Outstanding or
Certificates Outstanding have given any request, demand, authorization,
direction, notice, consent, or waiver under any Basic Document, Securities owned
by the Issuer, any other obligor upon the Securities, the Depositor, the Seller,
the Servicer or any Affiliate of any of the foregoing Persons shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Indenture Trustee or Owner Trustee, as applicable, shall be
protected in relying on any such request, demand, authorization, direction,
notice, consent, or waiver, only (i) Notes that a Responsible Officer of the
Indenture Trustee knows to be so owned and (ii) Certificates that a Responsible
Officer of the Owner Trustee knows to be so owned, shall be so disregarded;
provided, however, if the Issuer, any other obligor upon the Securities, the
Depositor, the Seller, the Servicer or any Affiliate of any of the foregoing
Persons owns an entire Class of Securities, such Securities shall be deemed to
be Outstanding. Notes owned by the Issuer, any other obligor upon the Notes, the
Depositor, the Seller, the Servicer or any 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
Appendix A-13
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 ▇▇▇▇▇ Fargo Delaware Trust Company, a
Delaware limited purpose trust company, not in its individual capacity but
solely as Owner Trustee under the Trust Agreement, or any successor Owner
Trustee under the Trust Agreement.
"Owner Trust Estate" shall mean all right, title and interest of the
Trust in, to and under the property and rights assigned to the Trust pursuant
to Article II of the Sale and Servicing Agreement.
"Payment Date" shall mean the fifteenth (15th) day of each calendar
month or, if such day is not a Business Day, the next succeeding Business Day.
"Percentage Interest" shall mean, as to any Certificate, the percentage
interest, specified on the face thereof, in the distributions on the
Certificates pursuant to the Trust Agreement.
"Permitted Investments" shall mean, on any date of determination,
book-entry securities, negotiable instruments or securities represented by
instruments in bearer or registered form with maturities not exceeding the
Business Day preceding the next Payment Date which evidence:
(a) direct non-callable obligations of, and obligations
fully guaranteed as to timely payment by, the United States of
America;
(b) demand deposits, time deposits or certificates of
deposit of any depository institution or trust company
incorporated under the laws of the United States of America or any
state thereof (or any domestic branch of a foreign bank) and
subject to supervision and examination by federal or State banking
or depository institution authorities; provided, however, that at
the time of the investment or contractual commitment to invest
therein, the commercial paper or other short-term unsecured debt
obligations (other than such obligations the rating of which is
based on the credit of a Person other than such depository
institution or trust company) thereof shall have a credit rating
from each of the Rating Agencies in the highest investment
category granted thereby;
(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
Appendix A-14
funds for which the Indenture Trustee or the Owner Trustee or any
of their respective Affiliates is investment manager or advisor);
(e) bankers' acceptances issued by any depository
institution or trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that
is a direct non-callable obligation of, or fully guaranteed by,
the United States of America or any agency or instrumentality
thereof the obligations of which are backed by the full faith and
credit of the United States of America, in either case entered
into with a depository institution or trust company (acting as
principal) described in clause (b); and
(g) any other investment with respect to which the Issuer or
the Servicer has received written notification from the Rating
Agencies that the acquisition of such investment as a Permitted
Investment will not result in a withdrawal or downgrading of the
ratings on the Notes or the Certificates.
"Person" shall mean any individual, corporation, limited liability
company, estate, partnership, joint venture, association, joint stock company,
trust, unincorporated organization, or government or any agency or political
subdivision thereof.
"Plan" means an employee benefit plan (as defined in Section 3(3) of
ERISA) that is subject to Title I of ERISA, a plan (as defined in Section
4975(e)(1) of the Code) and any entity whose underlying assets include plan
assets by reason of a plan's investment in the entity or otherwise.
"Pool Balance" shall mean on any date of determination, the aggregate
outstanding Principal Balance of the Receivables (exclusive of Purchased
Receivables and Defaulted Receivables) as of such date of determination.
"Pool Factor" as of the last day of a Collection Period shall mean a
seven-digit decimal figure equal to the Pool Balance at that time divided by
the Initial Pool Balance.
"Predecessor Note" shall mean, with respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note and, for purposes of this definition, any
Note authenticated and delivered under Section 2.6 of the Indenture in lieu of
a mutilated, lost, destroyed or stolen Note shall be deemed to evidence the
same debt as the mutilated, lost, destroyed or stolen Note.
"Preliminary Prospectus Supplement" shall have the meaning specified in
the Underwriting Agreement.
"Prepayment Date" shall mean 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.
Appendix A-15
"Prepayment Price" shall mean in the case of a Class of Notes to be
prepaid, an amount equal to the unpaid principal amount of such Class of Notes
plus accrued and unpaid interest thereon at the applicable Note Interest Rate
plus interest on any overdue interest at the applicable Note Interest Rate (to
the extent lawful) to but excluding the Prepayment Date.
"Principal Balance" of a Receivable, as of any date of determination,
shall mean the Amount Financed minus that portion of all payments actually
received on or prior to such date allocable to principal.
"Principal Distribution Account" shall mean the administrative
sub-account of the Collection Account established and maintained as such
pursuant to Section 4.1(b) of the Sale and Servicing Agreement.
"Proceeding" shall mean any suit in equity, action at law or other
judicial or administrative proceeding.
"Prospectus" shall have the meaning specified in the Underwriting
Agreement.
"Prospectus Supplement" shall have the meaning specified in the
Underwriting Agreement.
"Purchase Amount" with respect to a Purchased Receivable shall mean the
sum, as of the last day of the related Collection Period, of the Principal
Balance thereof plus the accrued interest thereon at the weighted average of
the Note Interest Rates and the Class B Rate through the end of the related
Collection Period.
"Purchased Receivable" shall mean a Receivable purchased as of the close
of business on the last day of the respective Collection Period by the
Servicer pursuant to Section 3.7 of the Sale and Servicing Agreement, by the
Seller pursuant to Section 2.3 of the Sale and Servicing Agreement or by the
Servicer pursuant to Section 8.1 of the Sale and Servicing Agreement.
"Rating Agency" shall mean each of the nationally recognized statistical
rating organizations designated by the Depositor to provide a rating on the
Notes or the Certificates which is then rating such Notes or Certificates. If
no such organization or successor is any longer in existence, "Rating Agency"
shall be a nationally recognized statistical rating organization or other
comparable Person designated by the Depositor, notice of which designation
shall be given to the Indenture Trustee, the Owner Trustee and the Servicer.
"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.
"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.
Appendix A-16
"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 August 1, 2006, 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.
333-131356 filed by the Depositor with the Securities and Exchange Commission
as of the applicable effective date as to each part of the Registration
Statement pursuant to Rule 430B(f)(2).
"Regular Principal Distribution Amount" shall mean, with respect to any
Payment Date, an amount equal to the excess, if any, of (a) the sum of the
aggregate principal amount of the Notes for such Payment Date (before giving
effect to any payments on that Payment Date) over (b) the Pool Balance at the
end of the related Collection Period.
"Regulation AB" shall mean subpart 229.1100 - Asset Backed Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be amended
from time to time, and subject to such clarification and interpretation as
have been provided by the Commission in the adopting release (Asset-Backed
Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506, 1,531
(Jan. 7, 2005)) or by the staff of the Commission, or as may be provided by
the Commission or its staff from time to time.
"Related Agreements" shall have the meaning specified in the recitals to
the Administration Agreement.
"Reportable Event" shall mean any event required to be reported on Form
8-K, and in any event, the following:
(a) entry into a definitive agreement related to the Trust, the Notes or
the Receivables, or an amendment to a Basic Document, even if the
Depositor is not a party to such agreement (e.g., a servicing
agreement with a servicer contemplated by Item 1108(a)(3) of
Regulation AB);
Appendix A-17
(b) termination of a Basic Document (other than by expiration of the
agreement on its stated termination date or as a result of all
parties completing their obligations under such agreement), even if
the Depositor is not a party to such agreement (e.g., a servicing
agreement with a servicer contemplated by Item 1108(a)(3) of
Regulation AB);
(c) with respect to the Servicer only, the occurrence of a Servicing
Termination Event or an Event of Default;
(d) the resignation, removal, replacement, substitution of the Indenture
Trustee, the Owner Trustee or any Co-Trustee;
(e) with respect to the Indenture Trustee only, a required distribution
to holders of the Notes is not made as of the required Payment Date
under the Indenture; and
(f) with respect to the Servicer only, if the Servicer becomes aware of
any bankruptcy or receivership of the Seller, the Depositor, the
Indenture Trustee, the Owner Trustee, any enhancement or support
provider contemplated by Item 1114(b) or 1115 of Regulation AB, or
other material party contemplated by Item 1101(d)(1) of Regulation
AB.
"Reporting Subcontractor" shall mean with respect to the Indenture
Trustee, any Subcontractor determined by such Person pursuant to Section 10.7
to be "participating in the servicing function" within the meaning of Item
1122 of Regulation AB. References to a Reporting Subcontractor shall refer
only to the Subcontractor of such Person and shall not refer to Subcontractors
generally.
"Representatives" shall mean Banc of America Securities LLC and ▇.▇.
▇▇▇▇▇▇ Securities Inc., as representatives 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
Appendix A-18
therefrom relating to such Payment Date) over (ii) the Specified Reserve
Balance with respect to such Payment Date.
"Reserve Initial Deposit" shall mean $8,592,342.59.
"Rule 144 A Letter" shall have the meaning specified in Section 3.4(b)
of the Trust Agreement.
"Sale and Servicing Agreement" shall mean the Sale and Servicing
Agreement, dated as of August 1, 2006, by and among the Trust, as issuer, the
Depositor, and the Bank, as seller and servicer.
"Schedule of Receivables" shall mean the list of Receivables attached as
Schedule A to the Receivables Purchase Agreement, the Sale and Servicing
Agreement and the Indenture (which Schedules may be in the form of microfiche,
disk or other means acceptable to the Indenture Trustee).
"Scheduled Payment" shall mean, for any Collection Period for any
Receivable, the amount indicated in such Receivable as required to be paid by
the Obligor in such Collection Period (without giving effect to deferments of
payments pursuant to Section 3.2 of the Sale and Servicing Agreement or any
rescheduling in any insolvency or similar proceedings).
"Secretary of State" shall mean the Secretary of State of the State of
Delaware.
"Securities" shall mean the Notes and the Certificates, collectively.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securityholders" shall mean the Noteholders and the Certificateholders,
collectively.
"Seller" shall mean the Bank as the seller of the Receivables under the
Receivables Purchase Agreement and each successor to the Bank.
"Servicer" shall mean the Bank as the servicer of the Receivables under
the Sale and Servicing Agreement, and each successor to the Bank (in the same
capacity) pursuant to Section 6.3 of the Sale and Servicing Agreement.
"Servicer's Certificate" shall mean a certificate completed and executed
by the Servicer by the chairman of the board, the president, any executive
vice president, any vice president, the treasurer, any assistant treasurer,
the controller, or any assistant controller of the Servicer pursuant to
Section 3.9 of the Sale and Servicing Agreement.
"Servicing Criteria" shall mean the "servicing criteria" set forth in
Item 1122(d) of Regulation AB.
"Servicing Fee" shall mean, with respect to a Collection Period, the fee
payable to the Servicer for services rendered during such Collection Period,
which shall be equal to one-twelfth
Appendix A-19
of the Servicing Fee Rate multiplied by the Pool Balance as of the first day
of the Collection Period.
"Servicing Fee Rate" shall mean 0.50% per annum.
"Similar Laws" shall mean federal, state or local laws that impose
requirements similar to Section 406 of ERISA or Section 4975 of the Code.
"Simple Interest Method" shall mean the method of allocating a fixed
level payment to principal and interest, pursuant to which the portion of such
payment that is allocated to interest is equal to the amount accrued from the
date of the preceding payment to the date of the current payment.
"Specified Reserve Balance" shall mean for a Payment Date the greater of
(a) 0.95% of the Pool Balance as of the last day of the related Collection
Period and (b) 0.50% of the Pool Balance as of the Cut-off Date, but in any
event shall not be greater than the sum of the aggregate principal balance of
the Outstanding Notes as of the current Payment Date. 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 Notes.
"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.
"Subcontractor" shall mean any vendor, subcontractor or other Person
that is not responsible for the overall servicing (as "servicing" is commonly
understood by participants in the mortgage-backed securities market) of
Receivables but performs one or more discrete functions identified in Item
1122(d) of Regulation AB with respect to the Receivables under the direction
or authority of the Indenture Trustee.
"Successor Servicer" shall mean an institution appointed as successor
Servicer pursuant to Section 7.2 of the Sale and Servicing Agreement.
"Supplemental Servicing Fee" shall mean the fee payable to the Servicer
for certain services rendered during the respective Collection Period,
determined pursuant to and defined in Section 3.8 of the Sale and Servicing
Agreement.
"Total Required Payment" shall mean, with respect to any Payment Date,
the sum of the Servicing Fee and all unpaid Servicing Fees from prior
Collection Periods, the Accrued Class A Note Interest, the Accrued Class B
Note Interest 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
Appendix A-20
Required Payment; provided, further, that following the occurrence and during
the continuation of an Event of Default, on any Payment Date until the Payment
Date on which the outstanding principal amount of all the Securities has been
paid in full, the Total Required Payment shall mean the sum of the fees,
expenses and indemnification of the Indenture Trustee and the Owner Trustee,
the Servicing Fee and all unpaid Servicing Fees from prior Collection Periods,
the Accrued Class A Note Interest, the Accrued Class B Note Interest and the
amount necessary to reduce the outstanding principal amount of all the Notes
to zero.
"Transfer Date" shall mean the Closing Date.
"Transferor Certificate" shall have the meaning specified in Section
3.4(b) of the Trust Agreement.
"Treasury Regulations" shall mean regulations, including proposed or
temporary regulations, promulgated under the Code. References to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"Trust" shall mean USAA Auto Owner Trust 2006-3, 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.
"Trust Agreement" shall mean the Amended and Restated Trust Agreement of
the Trust dated as of August 22, 2006, 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,
Appendix A-21
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.
"Underwriters" shall mean the underwriters named in Schedule I to the
Underwriting Agreement.
"Underwriting Agreement" shall mean the Underwriting Agreement, dated
August 14, 2006 among the Seller, the Depositor and the Representatives.
"Underwritten Securities" shall mean the Notes.
Appendix ▇-▇▇
▇▇▇▇▇▇▇▇ ▇-▇
APPENDIX B
Item 1119 Parties
USAA Auto Owner Trust 2006-3
USAA Acceptance, LLC
USAA Federal Savings Bank
▇▇▇▇▇ Fargo Delaware Trust Company
JPMorgan Chase Bank, National Association
Appendix B-1
APPENDIX C
Minimum Servicing Criteria to be Addressed in
Assessment of Compliance Statement
The assessment of compliance to be delivered by the [Trustee]
[Servicer] shall address, at a minimum, the criteria identified as below as
"Applicable Servicing Criteria":
--------------------------------------------------------------------------------
Applicable Servicing
Reg AB Reference Servicing Criteria Criteria
--------------------------------------------------------------------------------
General Servicing Considerations
--------------------------------------------------------------------------------
Policies and procedures are
instituted to monitor any
performance or other triggers and
events of default in accordance
1122(d)(1)(i) with the transaction agreements.
--------------------------------------------------------------------------------
If any material servicing
activities are outsourced to
third parties, policies and
procedures are instituted to
monitor the third party's
performance and compliance with
1122(d)(1)(ii) such servicing activities.
--------------------------------------------------------------------------------
Any requirements in the
transaction agreements to
maintain a back-up servicer for
1122(d)(1)(iii) the Pool Assets are maintained.
--------------------------------------------------------------------------------
A fidelity bond and errors and
omissions policy is in effect on
the party participating in the
servicing function throughout the
reporting period in the amount of
coverage required by and
otherwise in accordance with the
terms of the transaction
1122(d)(1)(iv) agreements.
--------------------------------------------------------------------------------
Cash Collection and Administration
--------------------------------------------------------------------------------
Payments on pool assets are
deposited into the appropriate
custodial bank accounts and
related bank clearing accounts no
more than two business days
following receipt, or such other
number of days specified in the
1122(d)(2)(i) transaction agreements.
--------------------------------------------------------------------------------
Disbursements made via wire
transfer on behalf of an obligor
or to an investor are made only
1122(d)(2)(ii) by authorized personnel.
--------------------------------------------------------------------------------
Advances of funds or guarantees
regarding collections, cash flows
or distributions, and any
interest or other fees charged
for such advances, are made,
reviewed and approved as
specified in the transaction
1122(d)(2)(iii) agreements.
--------------------------------------------------------------------------------
The related accounts for the
transaction, such as cash reserve
accounts or accounts established
as a form of over
collateralization, are separately
maintained (e.g., with respect to
commingling of cash) as set forth
1122(d)(2)(iv) in the transaction agreements.
--------------------------------------------------------------------------------
Each custodial account is
maintained at a federally insured
depository institution as set
forth in the transaction
agreements. For purposes of this
criterion, "federally insured
depository institution" with
respect to a foreign financial
institution means a foreign
financial institution that meets
the requirements of Rule
13k-1(b)(1) of the Securities
1122(d)(2)(v) Exchange Act.
--------------------------------------------------------------------------------
Appendix C-1
--------------------------------------------------------------------------------
Applicable Servicing
Reg AB Reference Servicing Criteria Criteria
--------------------------------------------------------------------------------
Unissued checks are safeguarded
so as to prevent unauthorized
1122(d)(2)(vi) access.
--------------------------------------------------------------------------------
Reconciliations are prepared on a
monthly basis for all
asset-backed securities related
bank accounts, including
custodial accounts and related
bank clearing accounts. These
reconciliations are (A)
mathematically accurate; (B)
prepared within 30 calendar days
after the bank statement cutoff
date, or such other number of
days specified in the transaction
agreements; (C) reviewed and
approved by someone other than
the person who prepared the
reconciliation; and (D) contain
explanations for reconciling
items. These reconciling items
are resolved within 90 calendar
days of their original
identification, or such other
number of days specified in the
1122(d)(2)(vii) transaction agreements.
--------------------------------------------------------------------------------
Investor Remittances and Reporting
--------------------------------------------------------------------------------
Reports to investors, including
those to be filed with the
Commission, are maintained in
accordance with the transaction
agreements and applicable
Commission requirements.
Specifically, such reports (A)
are prepared in accordance with
timeframes and other terms set
forth in the transaction
agreements; (B) provide
information calculated in
accordance with the terms
specified in the transaction
agreements; (C) are filed with
the Commission as required by its
rules and regulations; and (D)
agree with investors' or the
trustee's records as to the total
unpaid principal balance and
number of Pool Assets serviced by
1122(d)(3)(i) the Servicer.
--------------------------------------------------------------------------------
Amounts due to investors are
allocated and remitted in
accordance with timeframes,
distribution priority and other
terms set forth in the
1122(d)(3)(ii) transaction agreements.
--------------------------------------------------------------------------------
Disbursements made to an investor
are posted within two business
days to the Servicer's investor
records, or such other number of
days specified in the transaction
1122(d)(3)(iii) agreements.
--------------------------------------------------------------------------------
Amounts remitted to investors per
the investor reports agree with
cancelled checks, or other form
of payment, or custodial bank
1122(d)(3)(iv) statements.
--------------------------------------------------------------------------------
Pool Asset Administration
--------------------------------------------------------------------------------
Collateral or security on pool
assets is maintained as required
by the transaction agreements or
1122(d)(4)(i) related pool asset documents.
--------------------------------------------------------------------------------
Pool assets and related
documents are safeguarded as
required by the transaction
1122(d)(4)(ii) agreements
--------------------------------------------------------------------------------
Any additions, removals or
substitutions to the asset pool
are made, reviewed and approved
in accordance with any conditions
or requirements in the
1122(d)(4)(iii) transaction agreements.
--------------------------------------------------------------------------------
Payments on pool assets,
including any payoffs, made in
accordance with the related pool
asset documents are posted to the
Servicer's obligor records
maintained no more than two
business days after receipt, or
such other number of days
specified in the transaction
agreements, and allocated to
1122(d)(4)(iv) principal,
--------------------------------------------------------------------------------
Appendix C-2
--------------------------------------------------------------------------------
Applicable Servicing
Reg AB Reference Servicing Criteria Criteria
--------------------------------------------------------------------------------
interest or other items (e.g.,
escrow) in accordance with the
related pool asset documents.
--------------------------------------------------------------------------------
The Servicer's records regarding
the pool assets agree with the
Servicer's records with respect
to an obligor's unpaid principal
1122(d)(4)(v) balance.
--------------------------------------------------------------------------------
Changes with respect to the terms
or status of an obligor's pool
assets (e.g., loan modifications
or re-agings) are made, reviewed
and approved by authorized
personnel in accordance with the
transaction agreements and
1122(d)(4)(vi) related pool asset documents.
--------------------------------------------------------------------------------
Loss mitigation or recovery
actions (e.g., forbearance plans,
modifications and deeds in lieu
of foreclosure, foreclosures and
repossessions, as applicable) are
initiated, conducted and
concluded in accordance with the
timeframes or other requirements
established by the transaction
1122(d)(4)(vii) agreements.
--------------------------------------------------------------------------------
Records documenting collection
efforts are maintained during the
period a pool asset is delinquent
in accordance with the
transaction agreements. Such
records are maintained on at
least a monthly basis, or such
other period specified in the
transaction agreements, and
describe the entity's activities
in monitoring delinquent pool
assets including, for example,
phone calls, letters and payment
rescheduling plans in cases where
delinquency is deemed temporary
1122(d)(4)(viii) (e.g., illness or unemployment).
--------------------------------------------------------------------------------
Adjustments to interest rates or
rates of return for pool assets
with variable rates are computed
based on the related pool asset
1122(d)(4)(ix) documents.
--------------------------------------------------------------------------------
Regarding any funds held in trust
for an obligor (such as escrow
accounts): (A) such funds are
analyzed, in accordance with the
obligor's pool asset documents,
on at least an annual basis, or
such other period specified in
the transaction agreements; (B)
interest on such funds is paid,
or credited, to obligors in
accordance with applicable pool
asset documents and state laws;
and (C) such funds are returned
to the obligor within 30 calendar
days of full repayment of the
related pool assets, or such
other number of days specified in
1122(d)(4)(x) the transaction agreements.
--------------------------------------------------------------------------------
Payments made on behalf of an
obligor (such as tax or insurance
payments) are made on or before
the related penalty or expiration
dates, as indicated on the
appropriate bills or notices for
such payments, provided that such
support has been received by the
servicer at least 30 calendar
days prior to these dates, or
such other number of days
specified in the transaction
1122(d)(4)(xi) agreements.
--------------------------------------------------------------------------------
Any late payment penalties in
connection with any payment to be
made on behalf of an obligor are
paid from the Servicer's funds
and not charged to the obligor,
unless the late payment was due
to the obligor's error or
1122(d)(4)(xii) omission.
--------------------------------------------------------------------------------
Disbursements made on behalf of
an obligor are posted within two
1122(d)(4)(xiii) business days to the obligor's
--------------------------------------------------------------------------------
Appendix C-3
--------------------------------------------------------------------------------
Applicable Servicing
Reg AB Reference Servicing Criteria Criteria
--------------------------------------------------------------------------------
records maintained by the
servicer, or such other number of
days specified in the transaction
agreements.
--------------------------------------------------------------------------------
Delinquencies, charge-offs and
uncollectible accounts are
recognized and recorded in
accordance with the transaction
1122(d)(4)(xiv) agreements.
--------------------------------------------------------------------------------
Any external enhancement or other
support, identified in Item
1114(a)(1) through (3) or Item
1115 of Regulation AB, is
maintained as set forth in the
1122(d)(4)(xv) transaction agreements.
--------------------------------------------------------------------------------
[JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION] [USAA FEDERAL SAVINGS BANK]
By:
---------------------------------------
Name:
Title:
Date:
-------------------------------------
Appendix C-4
APPENDIX D
Form of Performance Certification
CERTIFICATION
Re: USAA Auto Owner Trust 2006-3
----------------------------
The undersigned [Indenture Trustee] [Reporting Subcontractor] hereby
certifies to the [ ] and its officers, directors and Affiliates (collectively,
the "Certification Parties") as follows, with the knowledge and intent that the
Certification Parties will rely on this Certification in connection with the
certification concerning the Trust to be signed by an officer of the Servicer
and submitted to the Securities and Exchange Commission pursuant to the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002:
1. The [Indenture Trustee] [Reporting Subcontractor] has reviewed the
information and reports provided by it to the Depositor and the Servicer
pursuant to the Sale and Servicing Agreement with respect to the servicing
criteria assessment under Section 10.5 of the Sale and Servicing Agreement (the
"Information");
2. Based on the [Indenture Trustee] [Reporting Subcontractor]'s knowledge,
the Information, taken as a whole, does not contain any untrue statement of a
material fact or omit to state a material fact required in the Information and
necessary to make the statements made, in the light of the circumstances under
which such statements were made, not misleading with respect to the period
covered by the 10-K report; and
3. The servicing criteria assessment required to be provided by the
[Indenture Trustee] [Reporting Subcontrator] pursuant to the Agreement, has been
provided to the Depositor and the Servicer. Any material instance of
noncompliance with the applicable Servicing Criteria has been disclosed in such
report.
[4. Any assessment of compliance with servicing criteria required to be
provided by any Reporting Subcontractor of the Indenture Trustee have been
provided by such Reporting Subcontractor.]
▇▇▇▇▇▇▇▇ ▇-▇
Capitalized terms not otherwise defined herein have the meanings ascribed
thereto in the Sale and Servicing Agreement dated as of August 1, 2006 among
USAA Federal Savings Bank, as Seller and Servicer, USAA Auto Owner Trust 2006-3
and USAA Acceptance, LLC.
[JPMORGAN CHASE BANK, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Indenture Trustee]
[REPORTING SUBCONTRACTOR]
By:
----------------------------------------
Name:
Title:
Date:
--------------------------------------
▇▇▇▇▇▇▇▇ ▇-▇
APPENDIX E
Form of Performance Certification
CERTIFICATION
Re: USAA Auto Owner Trust 2006-3
----------------------------
The undersigned Servicer hereby certifies to the [ ] and its officers,
directors and Affiliates (collectively, the "Certification Parties") as follows,
with the knowledge and intent that the Certification Parties will rely on this
Certification in connection with the certification concerning the Trust to be
signed by an officer of the Servicer and submitted to the Securities and
Exchange Commission pursuant to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002:
1. I have reviewed the servicer compliance statement of the Servicer
provided in accordance with Item 1123 of Regulation AB (the "Compliance
Statement"), the report on assessment of the Servicer's compliance with the
servicing criteria set forth in Item 1122(d) of Regulation AB (the "Servicing
Criteria"), provided in accordance with Rules 13a-18 and 15d-18 under Securities
Exchange Act of 1934, as amended (the "Exchange Act") and Item 1122 of
Regulation AB (the "Servicing Assessment"), the registered public accounting
firm's attestation report provided in accordance with Rules 13a-18 and 15d-18
under the Exchange Act and Section 1122(b) of Regulation AB (the "Attestation
Report"), and all servicing reports, officer's certificates and other
information relating to the servicing of the Receivables by the Servicer during
200[ ] that were delivered by the Servicer to the Indenture Trustee pursuant to
the Agreement (collectively, the "Servicer Servicing Information");
2. Based on my knowledge, the Servicer Servicing Information, taken as a
whole, does not contain any untrue statement of a material fact or omit to state
a material fact necessary to make the statements made, in the light of the
circumstances under which such statements were made, not misleading with respect
to the period of time covered by the Servicer Servicing Information;
3. Based on my knowledge, all of the Servicer Servicing Information
required to be provided by the Servicer under the Agreement has been provided to
the Indenture Trustee;
4. I am responsible for reviewing the activities performed by the Servicer
as servicer under the Sale and Servicing Agreement dated August 1, 2006 among
USAA Auto Owner Trust 2006-3, USAA Acceptance, LLC and USAA Federal Savings Bank
(the "Agreement"), and based on my knowledge and the compliance review conducted
in preparing the Compliance Statement and except as disclosed in the Compliance
Statement, the Servicing Assessment or the Attestation Report, the Servicer has
fulfilled its obligations under the Agreement in all material respects; and
5. The Compliance Statement required to be delivered by the Servicer
pursuant to the Agreement, and the Servicing Assessment and Attestation Report
required to be provided by the Servicer and by any Reporting Subcontractor
pursuant to the Agreement, have been provided
E-1
to the Indenture Trustee. Any material instances of noncompliance described in
such reports have been disclosed to the Depositor. Any material instance of
noncompliance with the Servicing Criteria has been disclosed in such reports.
Capitalized terms not otherwise defined herein have the meanings ascribed
thereto in the Sale and Servicing Agreement dated as of August 1, 2006 among
USAA Federal Savings Bank, as Seller and Servicer, USAA Auto Owner Trust 2006-3
and USAA Acceptance, LLC.
USAA FEDERAL SAVINGS BANK
By:
----------------------------------------
Name:
Title:
Date:
--------------------------------------
E-2