EXHIBIT 4.3
HONDA AUTO RECEIVABLES 2001-2 OWNER TRUST,
as Issuer,
AMERICAN HONDA RECEIVABLES CORP.,
as Seller,
and
AMERICAN HONDA FINANCE CORPORATION,
as Servicer
SALE AND SERVICING AGREEMENT
Dated as of July 1, 2001
TABLE OF CONTENTS
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ARTICLE ONE
DEFINITIONS
Section 1.01. General Definitions.........................................................1
Section 1.02. Other Definitional Provisions..............................................19
Section 1.03. Interpretive Provisions....................................................19
ARTICLE TWO
CONVEYANCE OF RECEIVABLES; CUSTODY OF RECEIVABLES FILES
Section 2.01. Conveyance of Receivables..................................................20
Section 2.02. Custody of Receivable Files................................................21
Section 2.03. Representations and Warranties of Seller as to the Receivables.............21
Section 2.04. Repurchase of Receivables Upon Breach......................................25
Section 2.05. Duties of Servicer as Custodian............................................26
Section 2.06. Instructions; Authority to Act.............................................27
Section 2.07. Indemnification by Custodian...............................................27
Section 2.08. Effective Period and Termination...........................................27
ARTICLE THREE
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 3.01. Duties of Servicer.........................................................28
Section 3.02. Collection of Receivable Payments..........................................29
Section 3.03. Rebates on Full Prepayments................................................29
Section 3.04. Realization Upon Receivables...............................................29
Section 3.05. Maintenance of Physical Damage Insurance Policies..........................30
Section 3.06. Maintenance of Security Interests in Financed Vehicles.....................30
Section 3.07. Covenants of Servicer......................................................30
Section 3.08. Purchase of Receivables Upon Breach........................................30
Section 3.09. Total Servicing Fee; Payment of Certain Expenses by Servicer...............31
Section 3.10. Servicer's Certificate.....................................................31
Section 3.11. Annual Statement as to Compliance; Notice of Default.......................31
Section 3.12. Annual Accountants' Report.................................................32
Section 3.13. Access to Certain Documentation and Information Regarding Receivables......32
Section 3.14. Amendments to Schedule of Receivables......................................32
Section 3.15. Reports to Securityholders and Rating Agencies.............................33
Section 3.16. Appointment of Subservicer.................................................33
ARTICLE FOUR
DISTRIBUTIONS; RESERVE FUND; STATEMENTS TO SECURITYHOLDERS
Section 4.01. Establishment of Accounts..................................................33
Section 4.02. Collections................................................................34
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Section 4.03. Application of Collections.................................................36
Section 4.04. Advances...................................................................37
Section 4.05. Additional Deposits........................................................38
Section 4.06. Distributions..............................................................38
Section 4.07. Reserve Fund...............................................................39
Section 4.08. Yield Supplement Account...................................................40
Section 4.09. Net Deposits...............................................................40
Section 4.10. Statements to Securityholders..............................................40
ARTICLE FIVE
THE SELLER
Section 5.01. Representations of Seller..................................................42
Section 5.02. Liability of Seller; Indemnities...........................................43
Section 5.03. Merger, Consolidation or Assumption of the Obligations of Seller;
Certain Limitations.....................................................44
Section 5.04. Limitation on Liability of Seller and Others...............................46
Section 5.05. Seller May Own Notes.......................................................46
ARTICLE SIX
THE SERVICER
Section 6.01. Representations of Servicer................................................46
Section 6.02. Indemnities of Servicer....................................................47
Section 6.03. Merger, Consolidation or Assumption of the Obligations of Servicer.........48
Section 6.04. Limitation on Liability of Servicer and Others.............................48
Section 6.05. AHFC Not to Resign as Servicer.............................................49
ARTICLE SEVEN
SERVICER DEFAULTS
Section 7.01. Servicer Defaults..........................................................49
Section 7.02. Appointment of Successor Servicer..........................................50
Section 7.03. Notification of Servicer Termination.......................................51
Section 7.04. Waiver of Past Defaults....................................................51
Section 7.05. Repayment of Advances......................................................51
ARTICLE EIGHT
TERMINATION
Section 8.01. Optional Purchase of All Receivables.......................................51
ARTICLE NINE
MISCELLANEOUS
Section 9.01. Amendment..................................................................52
Section 9.02. Protection of Title to Trust...............................................53
Section 9.03. Notices....................................................................55
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Section 9.04. Assignment.................................................................55
Section 9.05. Limitations on Rights of Others............................................56
Section 9.06. Severability...............................................................56
Section 9.07. Separate Counterparts......................................................56
Section 9.08. Headings...................................................................56
Section 9.09. Governing Law..............................................................56
Section 9.10. Nonpetition Covenants......................................................56
Section 9.11. Limitation of Liability of Owner Trustee and Indenture Trustee.............57
SCHEDULES
Schedule A - Schedule of Receivables SA-1
Schedule B - Location of Receivable Files SB-1
EXHIBITS
Exhibit A - Form of Distribution Statement of Securityholders A-1
Exhibit B - Form of Servicer's Certificate B-1
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This
Sale and Servicing Agreement, dated as of July 1, 2001, is among
American Honda Receivables Corp., a California corporation ("AHRC" or, in its
capacity as Seller, the "Seller"), American Honda Finance Corporation, a
California corporation ("AHFC" or, in its capacity as Servicer, the "Servicer"),
and Honda Auto Receivables 2001-2 Owner Trust, a Delaware business trust, as
issuer (the "Issuer").
WHEREAS the Issuer desires to purchase from the Seller a portfolio of
receivables arising in connection with retail installment sale or conditional
sale contracts (the "Receivables") generated by AHFC in the ordinary course of
its business, which Receivables have been sold by AHFC to AHRC;
WHEREAS, AHRC is willing to sell the Receivables to the Issuer pursuant
to the terms hereof; and
WHEREAS, AHFC is willing to service the Receivables pursuant to the
terms hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. GENERAL DEFINITIONS. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"ABSOLUTE PREPAYMENT MODEL" means a model calculating prepayment of
receivables with respect to which the receivables prepay at a specified constant
monthly prepayment rate.
"ACCOUNTS" means the Collection Account, the Note Distribution Account,
the Payahead Account, the Yield Supplement Account and the Reserve Fund.
"ACCOUNT PROPERTY" means, with respect to each Account, such Account,
together with all cash, securities, financial assets and investments and other
property from time to time deposited or credited to such Account and all
proceeds thereof, including, with respect to the (i) Reserve Fund, the Reserve
Fund Initial Deposit and (ii) Yield Supplement Account, the Yield Supplement
Account Deposit.
"ACTUAL PAYMENT" means, with respect to a Receivable and a Collection
Period, all payments received by the Servicer from or for the account of the
related Obligor on such Receivable during such Collection Period, net of any
Supplemental Servicing Fees attributable to such Receivable. Actual Payments do
not include Applied Payments Ahead.
"ACTUARIAL RECEIVABLE" means any Receivable which provides for the
allocation of payments according to the "actuarial" method.
"ADMINISTRATION AGREEMENT" means the Administration Agreement, dated as
of July 1, 2001, among the Administrator, the Issuer, the Depositor and the
Indenture Trustee.
"ADMINISTRATOR" means AHFC, or any successor Administrator under the
Administration Agreement.
"ADMINISTRATIVE PURCHASE PAYMENT" means, with respect to a Payment Date
and to an Administrative Receivable purchased by the Seller or the Servicer as
of the end of the related Collection Period, which Receivable is (i) a
Precomputed Receivable, (a) the sum of (1) all Scheduled Payments on such
Receivable due after the last day of such Collection Period, (2) an amount equal
to any reimbursement of Outstanding Advances made pursuant to the first sentence
of Section 4.04(c) with respect to such Receivable, (3) all past due Scheduled
Payments for which an Advance has not been made, minus (b) the sum of (1) all
Payments Ahead in respect of such Administrative Receivable held by the Servicer
or on deposit in the Payahead Account, (2) any Rebate and (3) any proceeds of
the liquidation of such Receivable previously received (to the extent applied to
reduce the Principal Balance of such Receivable) or (ii) a Simple Interest
Receivable, the sum of (a) the unpaid principal balance owed by the related
Obligor in respect of such Receivable and (b) interest on such unpaid principal
balance at a rate equal to the APR of the related Receivable from the date of
last payment by such Obligor to the last day of such Collection Period.
"ADMINISTRATIVE RECEIVABLE" means a Receivable which the Servicer is
required to purchase pursuant to Section 3.08 or which the Servicer has elected
to purchase pursuant to Section 8.01.
"ADVANCE" means a Precomputed Advance or a Simple Interest Advance.
"AFFILIATE" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purpose of this definition, "control", when used with respect to
any specified Person, means 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" have meanings correlative to the foregoing.
"AGGREGATE NET LOSSES" means, with respect to a Collection Period, an
amount equal to the aggregate Principal Balance of all Receivables that became
Defaulted Receivables during such Collection Period minus all Net Liquidation
Proceeds collected during such Collection Period with respect to all Defaulted
Receivables.
"AGREEMENT" means this
Sale and Servicing Agreement, and all amendments
hereof and supplements hereto.
"AHFC" means American Honda Finance Corporation, and its successors.
"AHRC" means
American Honda Receivables Corp., and its successors.
AMOUNT FINANCED" in respect of a Receivable means the aggregate amount
advanced under such Receivable toward the purchase price of the related Financed
Vehicle and any related costs, including but not limited to accessories,
insurance premiums, service and warranty contracts and other items customarily
financed as part of motor vehicle retail installment sale contracts.
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"ANNUAL PERCENTAGE RATE" or "APR" of a Receivable means the annual rate
of finance charges stated in such Receivable.
"APPLIED PAYMENT AHEAD" means, with respect to a Precomputed Receivable
and a Collection Period as to which (i) the Actual Payment is less than the
Scheduled Payment and (ii) a Deferred Prepayment is on deposit in the Payahead
Account or otherwise retained by the Servicer pursuant to Section 4.02(c), an
amount equal to the lesser of (a) such Deferred Prepayment and (b) the amount by
which the Scheduled Payment exceeds the Actual Payment.
"AVAILABLE AMOUNT" means, with respect to any Payment Date, the sum of
Available Interest and Available Principal.
"AVAILABLE INTEREST" means, with respect to any Payment Date, the total
of the following amounts allocable to interest received by the Servicer on or in
respect of the Receivables during the related Collection Period (computed, in
the case of Precomputed Receivables, by the actuarial method and, in the case of
Simple Interest Receivables, by the simple interest method): (i) the sum of the
interest component of all (a) collections on or in respect of all Receivables
other than Defaulted Receivables (including the interest portion of Applied
Payments Ahead, but excluding Payments Ahead to be applied in one or more future
Collections Periods), (b) Net Liquidation Proceeds, (c) Advances made by the
Servicer, (d) Warranty Purchase Payments, (e) Administrative Purchase Payments
and (f) the Yield Supplement Withdrawal Amount, if any, for the related Payment
Date, less (ii) the sum of all (a) amounts received on or in respect of a
particular Receivable (other than a Defaulted Receivable) to the extent of the
aggregate Outstanding Interest Advances in respect of such Receivable and (b)
Net Liquidation Proceeds with respect to a particular Receivable to the extent
of the aggregate Outstanding Interest Advances in respect of such Receivable;
provided, however, that any Available Interest distributed to the Class A-1
Noteholders on the Special Payment Date will not be Available Interest with
respect to the Payment Date in August 2002.
"AVAILABLE PRINCIPAL" means, with respect to any Payment Date, the
total of the following amounts allocable to principal received by the Servicer
on or in respect of the Receivables during the related Collection Period
(computed, in the case of Precomputed Receivables, by the actuarial method and,
in the case of Simple Interest Receivables, by the simple interest method): (i)
the sum of the principal component of all (a) collections on or in respect of
all Receivables other than Defaulted Receivables (including the principal
portion of Applied Payments Ahead but excluding Payments Ahead), (b) Net
Liquidation Proceeds, (c) Advances made by the Servicer, (d) Warranty Purchase
Payments and (e) Administrative Purchase Payments, less (ii) an amount equal to
all (a) amounts received on or in respect of a particular Receivable (other than
a Defaulted Receivable) to the extent of the aggregate Outstanding Principal
Advances in respect of such Receivable and (b) Net Liquidation Proceeds with
respect to a particular Receivable to the extent of the aggregate Outstanding
Principal Advances in respect of such Receivable; provided, however, that any
Available Principal distributed to the Class A-1 Noteholders on the Special
Payment Date will not be Available Principal with respect to the Payment Date in
August 2002.
"BASIC DOCUMENTS" means this Agreement, the Administration Agreement,
the Indenture, the Note Depository Agreement, the Receivables Purchase
Agreement, the Trust Agreement and
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the Control Agreement and any other documents or certificates delivered in
connection therewith as the same may be amended, supplemented or otherwise
modified and in effect.
"BASIC SERVICING FEE" means the fee payable pursuant to Section 3.09 to
the Servicer on each Payment Date for services rendered during the related
Collection Period, which shall be equal to one-twelfth of the Servicing Fee Rate
multiplied by the Pool Balance as of the first day of the related Collection
Period or, with respect to the first Payment Date, the Original Pool Balance.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
on which banking institutions in
New York,
New York, Los Angeles, California,
Wilmington, Delaware or Chicago, Illinois are authorized or obligated by law,
executive order or governmental decree to be closed.
"CERTIFICATE BALANCE" means, on any Payment Date, the Original
Certificate Balance reduced by all distributions of principal previously made in
respect of the Certificates.
"CERTIFICATE DISTRIBUTABLE AMOUNT" means, with respect to any Payment
Date, the sum of the Certificate Interest Distributable Amount and the
Certificate Principal Distributable Amount for such Payment Date.
"CERTIFICATE DISTRIBUTION ACCOUNT" has the meaning specified in the
Trust Agreement.
"CERTIFICATE INTEREST CARRYOVER SHORTFALL" means, with respect to any
Payment Date, the excess, if any, of (x) the sum of (i) the Certificate Monthly
Interest Distributable Amount and (ii) any outstanding Certificate Interest
Carryover Shortfall for the preceding Payment Date, over (y) the amount in
respect of interest on the Certificates that is actually paid as interest on the
Certificates on such Payment Date, plus, to the extent permitted by applicable
law, interest on the Certificate Interest Carryover Shortfall at the Certificate
Rate for the Interest Accrual Period.
"CERTIFICATE INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Payment Date, the sum of the Certificate Monthly Interest Distributable Amount
for such Payment Date and the Certificate Interest Carryover Shortfall for such
Payment Date.
"CERTIFICATE MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with respect
to any Payment Date, interest accrued for the related Interest Accrual Period at
the Certificate Rate on the Certificate Balance on the immediately preceding
Payment Date after giving effect to all payments of principal to
Certificateholders on or prior to such Payment Date (or, in the case of the
first Payment Date, on the Original Certificate Balance).
"CERTIFICATE MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means, with
respect to any Payment Date, the Certificate Percentage of the Principal
Distributable Amount for such Payment Date.
"CERTIFICATE PERCENTAGE" means (i) for each Payment Date until the
principal amount of the Class A-1 Notes has been paid in full, 0%; (ii) for each
Payment Date to and including the Payment Date on which the principal amount of
the Class A-4 Notes has been paid in full, the percent equivalent of a fraction,
the numerator of which is the initial principal amount of the
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Certificates and the denominator of which is the sum of the initial aggregate
principal amount of the Class A-2, Class A-3 and Class A-4 Notes and the
initial principal amount of the Certificates; and (iii) for each Payment Date
after the Payment Date on which the principal amount of the Class A-4 Notes
has been paid in full, 100%; notwithstanding the foregoing, for each Payment
Date after the acceleration of the Notes following an Event of Default, the
Certificate Percentage shall be 0% until the Notes have been paid in full.
"CERTIFICATE POOL FACTOR" means, with respect to the Certificates on
any Payment Date, a seven-digit decimal figure equal to the outstanding
principal balance of the Certificates on such Payment Date (after giving effect
to any reductions thereof to be made on such Payment Date) divided by the
Original Certificate Balance.
"CERTIFICATE PRINCIPAL CARRYOVER SHORTFALL" means, with respect to any
Payment Date, the excess, if any, of (x) the sum of (i) the Certificate Monthly
Principal Distributable Amount and (ii) any outstanding Certificate Principal
Carryover Shortfall for the preceding Payment Date, over (y) the amount in
respect of principal that is actually paid as principal on the Certificates on
such Payment Date.
"CERTIFICATE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Payment Date, the sum of the Certificate Monthly Principal Distributable Amount
for each Payment Date and any outstanding Certificate Principal Carryover
Shortfall as of the close of the immediately preceding Payment Date; provided,
however, that the Certificate Principal Distributable Amount shall not exceed
the Certificate Balance. In addition, on the Payment Date as of which all of the
Receivables are to be purchased pursuant to Section 8.01, the principal required
to be deposited into the Certificate Distribution Account will include the
amount necessary to reduce the Certificate Balance to zero.
"CERTIFICATE RATE" means 5.09% per annum (computed on the basis of a
360 day year consisting of twelve 30-day months).
"CERTIFICATEHOLDERS" has the meaning specified in the Trust Agreement.
"CHARGE-OFF RATE" with respect to a Collection Period will equal the
Aggregate Net Losses with respect to the Receivables expressed, on an annualized
basis, as a percentage of the average of the (i) Pool Balance on the last day of
the immediately preceding Collection Period and (ii) Pool Balance on the last
day of such current Collection Period.
"CLASS" means all Securities whose form is identical except for
variation in denomination, principal amount or owner (i.e., each of Class A-1,
Class A-2, Class A-3 and Class A-4).
"CLASS A-1 FINAL PAYMENT DATE" means the Special Payment Date.
"CLASS A-1 NOTEHOLDER" means a Person in whose name a Class A-1 Note is
Registered the Note Register.
"CLASS A-2 FINAL PAYMENT DATE" means the October 2003 Payment Date.
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"CLASS A-2 NOTEHOLDER" means a Person in whose name a Class A-2 Note is
registered in the Note Register.
"CLASS A-3 FINAL PAYMENT DATE" means the March 2005 Payment Date.
"CLASS A-3 NOTEHOLDER" means a Person in whose name a Class A-3 Note is
registered in the Note Register.
"CLASS A-4 FINAL PAYMENT DATE" means the October 2006 Payment Date.
"CLASS A-4 NOTEHOLDER" means the Person in whose name a Class A-4 Note
is registered in the Note Register.
"CLOSING DATE" means July 24, 2001.
"COLLECTION ACCOUNT" means the account designated as such, and
established and maintained pursuant to Section 4.01.
"COLLECTION PERIOD" means each calendar month during the term of this
Agreement (or, in the case of the first Collection Period, the period of time
since the Cutoff Date through the last day of the calendar month immediately
preceding the month in which the first Payment Date occurs).
"COMMISSION" means the Securities and Exchange Commission, and its
successors.
"CONTROL" shall have the meaning specified in Section 8-106 of the UCC.
"CONTROL AGREEMENT" means the control agreement, dated as of July 1,
2001, among AHRC, the Issuer, the Servicer, the Indenture Trustee and The Chase
Manhattan Bank, as securities intermediary, as amended or supplemented from time
to time.
"CORPORATE TRUST OFFICE" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Agreement is
located at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Structured Finance, Honda 2001-2 or at such other address as the
Indenture Trustee may designate from time to time by notice to the Noteholders
and the Seller, or the principal corporate trust office of any successor
Indenture Trustee (of which address such successor Indenture Trustee will notify
the Noteholders and the Seller).
"CURRENT RECEIVABLE" means each Receivable that is not a Defaulted
Receivable or a Liquidated Receivable.
"CUTOFF DATE" means July 1, 2001.
"DEALER" means the dealer of motor vehicles who sold a Financed Vehicle
and who originated and assigned the Receivable relating to such Financed Vehicle
to AHFC under an existing agreement between such dealer and AHFC.
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"DEALER RECOURSE" means, with respect to a Receivable, all recourse
rights against the Dealer which originated the Receivable, and any successor to
such Dealer.
"DEFAULTED RECEIVABLE" means a Receivable (other than an Administrative
Receivable or a Warranty Receivable as to which a Warranty Purchase Payment or
an Administrative Purchase Payment has been made) as to which (i) all or any
part of a Scheduled Payment is 120 or more days past due and the Servicer has
not repossessed the related Financed Vehicle or (ii) the Servicer has, in
accordance with its customary servicing procedures, determined that eventual
payment in full is unlikely and either repossessed and liquidated the related
Financed Vehicle or repossessed and held the related Financed Vehicle in its
repossession inventory for 90 days, whichever occurs first.
"DEFERRED PREPAYMENT" means, with respect to a Receivable and a
Collection Period, the aggregate amount, if any, of Payments Ahead remitted to
the Servicer in respect of such Receivable during one or more prior Collection
Periods and currently held by the Servicer or in the Payahead Account.
"DELINQUENCY PERCENTAGE" means, with respect to a Collection Period,
the percentage equivalent of a fraction, the numerator of which is the number of
(i) Receivables 61 days or more delinquent (after taking into account permitted
extensions) as of the last day of such Collection Period, determined in
accordance with the Servicer's normal practices, plus (ii) Receivables the
related Financed Vehicles of which have been repossessed but have not been
liquidated (to the extent the related Receivable is not otherwise reflected in
clause (i) above or is not a Defaulted Receivable), and the denominator of which
is the aggregate number of Current Receivables on the last day of such
Collection Period.
"DEPOSIT DATE" means, with respect to any Collection Period and Payment
Date, the Business Day immediately preceding such Payment Date.
"DEPOSITOR " means the Seller in its capacity as Depositor under the
Trust Agreement.
"DETERMINATION DATE" means, with respect to any Payment Date, the
thirteenth calendar day of the month in which such Payment Date occurs or, if
such day is not a Business Day, the immediately succeeding Business Day.
"DISCOUNT RECEIVABLE" means any Receivable that has an APR which is
less than the Required Rate.
"ELIGIBLE ACCOUNT" means either (A) a segregated deposit account over
which the applicable Trustee has sole signature authority, maintained with an
Eligible Institution meeting the requirements of clause (i) thereof or (B) a
segregated trust account maintained with an Eligible Institution meeting the
requirements of clause (ii) thereof, in each case bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Securityholders, the Noteholders or the Certificateholders, as the case may be.
"ELIGIBLE INSTITUTION" means a depository institution or trust company,
(i) the commercial paper or other short-term unsecured debt obligations of which
have the Required Deposit Rating or (ii) having corporate trust powers and
organized under the laws of the United States, any state
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thereof, the District of Columbia or the Commonwealth of Puerto Rico which
has a long-term deposit rating from (A) Moody's of at least Baa3 or (B)
Standard and Poor's of at least BBB- (or such lower rating as either Rating
Agency shall approve in writing).
"ELIGIBLE INVESTMENTS" means, at any time, any one or more of the
following obligations and securities:
(i) obligations of, and obligations fully guaranteed as
to timely payment of principal and interest by, the United States or
any agency thereof, provided such obligations are backed by the full
faith and credit of the United States;
(ii) general obligations of or obligations guaranteed by
FNMA, any state of the United States, the District of Columbia or the
Commonwealth of Puerto Rico then rated the highest available credit
rating of each Rating Agency for such obligations;
(iii) securities bearing interest or sold at a discount
issued by any corporation incorporated under the laws of the United
States or any state thereof, the District of Columbia or the
Commonwealth of Puerto Rico, so long as at the time of such investment
or contractual commitment providing for such investment either the
long-term unsecured debt of such corporation has the highest available
credit rating from each Rating Agency for such obligations or the
commercial paper or other short-term debt which is then rated has the
highest available credit rating of each Rating Agency for such
obligations;
(iv) certificates of deposit issued by any depository
institution or trust company (including the Trustee) incorporated under
the laws of the United States or any state thereof, the District of
Columbia or the Commonwealth of Puerto Rico and subject to supervision
and examination by banking authorities of one or more of such
jurisdictions, provided that the short-term unsecured debt obligations
of such depository institution or trust company has the highest
available credit rating of each Rating Agency for such obligations;
(v) certificates of deposit issued by any bank, trust
company, savings bank or other savings institution and fully insured by
the FDIC;
(vi) repurchase obligations held by the Trustee that are
acceptable to the Trustee with respect to any security described in
clauses (i) or (ii) hereof or any other security issued or guaranteed
by any other agency or instrumentality of the United States, in either
case entered into with a federal agency or a depository institution or
trust company (acting as principal) described in clause (iv) above;
(vii) any mutual fund, money market fund, common trust fund
or other pooled investment vehicle having a rating, at the time of such
investment, of no less than Aaa or its equivalent by Moody's, AAA or
its equivalent by Standard & Poor's and AAA or its equivalent by Fitch,
if rated by Fitch (including, but not limited to funds of which U.S.
Bank National Association or an affiliate thereof is the manager or
financial advisor);
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(viii) such other investments acceptable to each Rating
Agency in writing as will not result in the qualification, downgrading
or withdrawal of the rating then assigned to any Rated Securities by
such Rating Agency;
provided that each of the foregoing investments shall mature no later than the
Deposit Date immediately following the date of purchase (other than in the case
of the investment of monies in instruments of which the entity at which the
related Account or the Certificate Distribution Account, as the case may be, is
located is the obligor, which may mature on the related Payment Date), and shall
be required to be held to such maturity.
Notwithstanding anything to the contrary contained in this definition,
(a) no Eligible Investment may be purchased at a premium, and (b) no obligation
or security is a "Eligible Investment" unless (i) the Trustee has Control over
such obligation or security and (ii) at the time such obligation or security was
delivered to the Trustee or the Trustee became the related Entitlement Holder,
the Trustee did not have notice of any adverse claim with respect thereto within
the meaning of Section 8-105 of the UCC.
For purposes of this definition, any reference to the highest available
credit rating of an obligation shall mean the highest available credit rating
for such obligation, or such lower credit rating (as approved in writing by each
Rating Agency) as will not result in the qualification, downgrading or
withdrawal of the rating then assigned to any Rated Securities by such Rating
Agency.
"ENTITLEMENT HOLDER" shall have the meaning specified in Section 8-102
of the UCC.
"ENTITLEMENT ORDER" shall have the meaning specified in Section 8-102
of the UCC.
"EXCESS PAYMENT" means, with respect to a Receivable and a Collection
Period, the amount, if any, by which the Actual Payment exceeds the sum of (i)
the Scheduled Payment and (ii) any Overdue Payment.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"FHLMC" means the Federal Home Loan Mortgage Corporation, and its
successors.
"FNMA" means the Federal National Mortgage Association, and its
successors.
"FINAL PAYMENT DATES" means, collectively, the Class A-1 Final Payment
Date, the Class A-2 Final Payment Date, the Class A-3 Final Payment Date and the
Class A-4 Final Payment Date.
"FINAL SCHEDULED MATURITY DATE" means October 18, 2006.
"FINANCED VEHICLE" means, with respect to any retail installment sale
or conditional sale contract, the related new or used Honda or Acura motor
vehicle, together with all accessions
9
thereto, securing the related Obligor's indebtedness under such retail
installment sale or conditional sale contract.
"FINANCIAL ASSET" shall have the meaning specified in Section
8-102(a)(9) of the UCC.
"FITCH" means Fitch, Inc., or its successors.
"INDENTURE" means the indenture, dated as of July 1, 2001, between the
Issuer and the Indenture Trustee.
"INDENTURE TRUSTEE" means the Person acting as Indenture Trustee under
the Indenture, its successors in interest and any successor trustee under the
Indenture.
"INDEPENDENT DIRECTOR" means a director of the Seller who is not (i) a
director, officer or employee of any Affiliate of the Seller, (ii) a natural
person related to any director or officer of any Affiliate of the Seller, (iii)
a holder (directly or indirectly) of more than 10% of any voting securities of
any Affiliate of the Seller or (iv) a natural person related to a holder
(directly or indirectly) of more than 10% of any voting securities of any
Affiliate of the Seller.
"INSOLVENCY EVENT" means, with respect to a specified Person, (i) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or ordering the
winding-up or liquidation of such Person's affairs, and such decree or order
shall remain unstayed and in effect for a period of 90 consecutive days; or (ii)
the commencement by such Person of a voluntary case under any applicable federal
or state bankruptcy, insolvency or other similar law now or hereafter in effect,
or the consent by such Person to the entry of an order for relief in an
involuntary case under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.
"INSURANCE POLICY" means, with respect to a Receivable, an insurance
policy covering physical damage, credit life, credit disability, theft,
mechanical breakdown or any similar event relating to the related Financed
Vehicle or Obligor.
"LETTER OF CREDIT BANK" means any Person who has provided a Servicer
Letter of Credit pursuant to Section 4.02(b).
"LIEN" means any security interest, lien, charge, pledge, equity or
encumbrance of any kind other than tax liens, mechanics' liens and any liens
that attach to a Receivable or any property, as the context may require, by
operation of law.
"LIQUIDATED RECEIVABLE" means a Receivable that (i) has been the
subject of a Prepayment in full, (ii) has otherwise been paid in full or (iii)
the Servicer has determined that
10
the final amounts in respect of such payment have been paid with respect to a
Defaulted Receivable, regardless of whether all or any part of such payment
has been made by the Obligor under such Receivable, the Seller pursuant to
this Agreement, AHFC pursuant to the Receivables Purchase Agreement, the
Servicer pursuant hereto, an insurer pursuant to an Insurance Policy or
otherwise.
"LIQUIDATION EXPENSES" means, with respect to a Defaulted Receivable,
the amount charged by the Servicer, in accordance with its customary servicing
procedures, to or for its account for repossessing, refurbishing and disposing
of the related Financed Vehicle and other out-of-pocket costs related to such
liquidation.
"LIQUIDATION PROCEEDS" means, with respect to a Defaulted Receivable,
all amounts realized with respect to such Receivable from whatever sources
(including, without limitation, proceeds of any Insurance Policy), net of
amounts that are required by law or such Receivable to be refunded to the
related Obligor.
"MAXIMUM YIELD SUPPLEMENT AMOUNT" means with respect to any Collection
Period and the related Deposit Date, after giving effect to the Yield Supplement
Amount, the maximum amount required to be on deposit in the Yield Supplement
Account on the immediately succeeding Payment Date, which is equal to the
present value (using an interest rate of 2.5%) of the sum of all Yield
Supplement Amounts for all future Payment Dates, assuming that future Scheduled
Payments on the Discount Receivables are made on the date on which they are
scheduled as being due.
"MONTHLY PAYMENT" means, with respect to any Receivable, the amount of
each fixed monthly payment payable to the obligee under such Receivable in
accordance with the terms thereof, net of any portion of such monthly payment
that represents late payment charges, extension fees or collections allocable to
payments to be made by Obligors for payment of insurance premiums, extended
service contracts or similar items.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc., or its successors.
"MOTOR VEHICLE RECEIVABLES" shall have the meaning specified in Section
5.03(b)(ii)(A).
"NET LIQUIDATION PROCEEDS" means, with respect to a Defaulted
Receivable, Liquidation Proceeds less Liquidation Expenses.
"NONRECOVERABLE ADVANCE" shall have the meaning specified in Section
4.04(c).
"NOTE AMOUNT" means, with respect to any Payment Date, the aggregate
outstanding principal amount of the Notes after giving effect to payments of
principal made on the Notes on such Payment Date.
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"NOTE DISTRIBUTABLE AMOUNT" means, with respect to any Payment Date,
the sum of the Note Interest Distributable Amount and the Note Principal
Distributable Amount for such Payment Date.
"NOTE DISTRIBUTION ACCOUNT" means the account designated as such, and
established and maintained pursuant to Section 4.01.
"NOTE INTEREST CARRYOVER SHORTFALL" means, with respect to any Payment
Date and a Class of Notes, the excess, if any, of (x) the sum of (i) the Note
Monthly Interest Distributable Amount for such Class for the preceding Payment
Date and (ii) any outstanding Note Interest Carryover Shortfall for such Class
on such preceding Payment Date, over (y) the amount of interest that is actually
paid on the Notes on such preceding Payment Date, plus, to the extent permitted
by law, interest on the Note Interest Carryover Shortfall at the related
Interest Rate for the related Interest Accrual Period.
"NOTE INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any Payment
Date and a Class of Notes, the sum of the Note Monthly Interest Distributable
Amount for such Payment Date and the Note Interest Carryover Shortfall for such
Class of Notes. For all purposes of this Agreement and the other Basic
Documents, interest with respect to the Class A-2, Class A-3 and Class A-4 Notes
shall be computed on the basis of a 360-day year consisting of twelve 30-day
months; and interest with respect to the Class A-1 Notes shall be computed on
the basis of the actual number of days in each applicable Interest Accrual
Period, divided by 360.
"NOTE MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Payment Date, interest accrued for the related Interest Accrual Period at the
related Interest Rate for each Class of Notes on the Outstanding Amount of the
Notes of each such Class on the immediately preceding Payment Date (or, in the
case of the first Payment Date, the original principal amount of each such Class
of Notes), after giving effect to all distributions of principal to the
Noteholders of each such Class on or prior to such Payment Date.
"NOTE MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to
any Payment Date, the Note Percentage of the Principal Distributable Amount for
such Payment Date.
"NOTE PERCENTAGE" means (i) for each Payment Date until the principal
amount of the Class A-1 Notes has been paid in full, 100%; (ii) for each Payment
Date on or after the principal amount of the Class A-1 Notes has been paid in
full to and including the Payment Date on which the principal amount of the
Class A-4 Notes has been paid in full, the percent equivalent of a fraction, the
numerator of which is the initial aggregate principal amount of the Class A-2,
Class A-3 and Class A-4 Notes and the denominator of which is the sum of the
initial aggregate principal amount of the Class A-2, Class A-3 and Class A-4
Notes and the initial principal amount of the Certificates; and (iii) for each
Payment Date after the Payment Date on which the principal amount of the Class
A-4 Notes has been paid in full, 0%; notwithstanding the foregoing, for each
Payment Date after the acceleration of the Notes following an Event of Default,
the Note Percentage shall be 100% until the Notes have been paid in full.
"NOTE POOL FACTOR" means, with respect to each Class of Notes as of any
Payment Date, a seven-digit decimal figure equal to the Outstanding Amount of
such Class of Notes as of such Payment Date (after giving effect to any
reductions thereof to be made on such Payment Date) divided by the original
outstanding principal balance of such Class of Notes.
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"NOTE PRINCIPAL CARRYOVER SHORTFALL" means, with respect to any Payment
Date, the excess, if any, of the sum of the Note Monthly Principal Distributable
Amount plus any outstanding Note Principal Carryover Shortfall for the preceding
Payment Date, over the amount in respect of principal that is actually paid as
principal on the Notes on such Payment Date.
"NOTE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Payment Date, the sum of (i) the Note Monthly Principal Distributable Amount,
(ii) any outstanding Note Principal Carryover Shortfall as of the close of the
immediately preceding Payment Date and, (iii) on the Final Payment Date for a
Class of Notes or the Payment Date as of which all of the Receivables are to be
purchased pursuant to Section 8.01, the amount necessary (after giving effect to
all amounts allocable to principal required to be deposited in the Note
Distribution Account on such Payment Date) to reduce the Outstanding Amount of
each related Class of Notes to zero; provided, however, that the Note Principal
Distributable Amount with respect to a Class of Notes shall not exceed the
Outstanding Amount of such Class of Notes.
"NOTES" means the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes and the Class A-4 Notes.
"OBLIGOR " on a Receivable means the purchaser or co-purchasers of the
related Financed Vehicle purchased in part or in whole by the execution and
delivery of a retail installment contract or any other Person who owes or may be
liable for payments under such retail installment contract.
"OFFERED SECURITIES" shall have the meaning specified in Section
5.03(b)(ii)(B).
"OFFICERS' CERTIFICATE" means a certificate signed by the president,
any Vice President, the treasurer or the secretary of the Seller or the
Servicer, as the case may be, and delivered to the Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel (who, in the
case of counsel to the Seller or the Servicer, may be an employee of or outside
counsel to the Seller or the Servicer), which counsel shall be acceptable to the
Trustee.
"ORIGINAL CERTIFICATE BALANCE" means $44,603,016.50.
"ORIGINAL POOL BALANCE" means $1,618,603,016.50.
"OUTSTANDING ADVANCES" means, with respect to a Receivable and the last
day of a Collection Period, the sum of all Advances made as of or prior to such
date, minus (1) all payments or collections as of or prior to such date which
are specified in Section 4.04(b) and (c) as applied to reimburse all unpaid
Advances with respect to such Receivable and (2) all amounts for which the
Servicer has deemed to have released all claims for reimbursement of Outstanding
Advances pursuant to Section 3.08.
"OUTSTANDING AMOUNT" means the aggregate principal amount of all Notes,
or if indicated by the context, all Notes of any class, outstanding at the date
of the determination.
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"OUTSTANDING INTEREST ADVANCES" means, as of the last day of a
Collection Period with respect to a Receivable, the portion of Outstanding
Advances allocable to interest.
"OUTSTANDING PRINCIPAL ADVANCES" means, as of the last day of a
Collection Period with respect to a Receivable, the portion of Outstanding
Advances allocable to principal.
"OVERDUE PAYMENT" shall have the meaning specified in Section 4.03(a).
"OWNER TRUST ESTATE" shall have the meaning specified in the Trust
Agreement.
"OWNER TRUSTEE" means the Person acting as Owner Trustee under the
Trust Agreement, its successors in interest and any successor owner trustee
under the Trust Agreement.
"PAYAHEAD ACCOUNT" means the account designated as such and established
and maintained pursuant to Section 4.01.
"PAYMENT AHEAD" means, with respect to a Precomputed Receivable and a
Collection Period, any Excess Payment (not representing, when added to any
Deferred Prepayment with respect to such Precomputed Receivable, a prepayment in
full of such Precomputed Receivable) which the Servicer, in accordance with its
customary servicing practices, will apply towards the payment of Scheduled
Payments due in one or more future Collection Periods.
"PAYMENT DATE" means, with respect to a Collection Period, the
eighteenth calendar day of the next succeeding calendar month or, if such day is
not a Business Day, the next succeeding Business Day, commencing August 2001;
provided, however, that if any Class A-1 Notes are outstanding after the Payment
Date in July 2002, a payment of interest and principal on the Class A-1 Notes
only will be made on the Special Payment Date.
"PERCENTAGE INTERESTS" shall have the meaning specified in the Trust
Agreement.
"PERSON" means any legal person, including any individual, corporation,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"POOL BALANCE" means, as of any date, the aggregate Principal Balance
of the Receivables (exclusive of all Administrative Receivables for which the
Servicer has paid the Administrative Purchase Payment, Warranty Receivables for
which the Seller has paid the Warranty Purchase Payment and Defaulted
Receivables) as of the close of business on such date.
"PRECOMPUTED ADVANCE" shall have the meaning specified in Section
4.04(a).
"PRECOMPUTED RECEIVABLE" means any Actuarial Receivable or Rule of 78s
Receivable.
"PREPAYMENT" means any Excess Payment with respect to a Receivable
other than a Payment Ahead.
"PRINCIPAL BALANCE" means, with respect to any Receivable as of any
date, the Amount Financed minus the sum of the following amounts: (i) in the
case of a Precomputed Receivable,
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that portion of all Scheduled Payments due on or prior to such date allocable
to principal, computed in accordance with the actuarial method, (ii) in the
case of a Simple Interest Receivable, that portion of all Scheduled Payments
actually received on or prior to such date allocable to principal, computed
in accordance with the simple interest method, (iii) any Warranty Purchase
Payment or Administrative Purchase Payment with respect to such Receivable
allocable to principal and (iv) any Prepayments or other payments applied to
reduce the unpaid principal balance of such Receivable.
"PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any Payment
Date, the sum of the following amounts (i) in the case of (a) Precomputed
Receivables, the principal portion of all Scheduled Payments due during the
related Collection Period, computed in accordance with the actuarial method and
(b) Simple Interest Receivables, the principal portion of all Scheduled Payments
actually received during the related Collection Period, computed in accordance
with the simple interest method, (ii) the principal portion of all Prepayments,
received during such Collection Period (to the extent such amounts are not
included in clause (i) above) and (iii) the Principal Balance of each Receivable
that became an Administrative Receivable, a Warranty Receivable or a Defaulted
Receivable during such Collection Period (to the extent such amounts are not
included in clauses (i) or (ii) above).
"RATED SECURITIES" means each Class of Securities that has been rated
by a Rating at the request of the Seller.
"RATING AGENCY" means Fitch, Moody's and Standard & Poor's.
"RATING AGENCY CONDITION" means, with respect to any action, that each
Rating Agency shall have been given ten days' (or such shorter period as shall
be acceptable to each Rating Agency) prior notice thereof and that each Rating
Agency shall have notified the Seller, the Servicer and the Trustees in writing
that such action will not result in a reduction or withdrawal of the then
current rating of the Rated Securities.
"REBATE" means, with respect to a Precomputed Receivable and any date,
the rebate, calculated in accordance with the actuarial method, under such
Receivable that is or would be payable to the related Obligor for unearned
finance charges or any other charges rebatable to the Obligor if such Obligor
were to prepay such Receivable in full on such date.
"RECEIVABLE" means any retail installment sale contract executed by an
Obligor in respect of a Financed Vehicle, and all proceeds thereof and payments
thereunder, which Receivables shall be identified in a Schedule of Receivables.
"RECEIVABLE FILES" means the documents specified in Section 2.02.
"RECEIVABLES PURCHASE AGREEMENT" means the receivables purchase
agreement, dated as of July 1, 2001, between AHFC and the Seller, as amended or
supplemented from time to time.
"RELEASED ADMINISTRATIVE AMOUNT" means, with respect to a Payment Date
and to an Administrative Receivable, the Deferred Prepayment, if any, for such
Administrative Receivable.
15
"RELEASED WARRANTY AMOUNT" means, with respect to a Payment Date and to
a Warranty Receivable, the Deferred Prepayment, if any, for such Warranty
Receivable.
"REQUIRED RATE" means the sum of (a) the percent equivalent of a
fraction, the numerator of which is the sum for each Class of Notes of the
product of (1) the Interest Rate for such Class of Notes, (2) the original
principal balance of such Class of Notes and (3) the expected weighted average
life for such Class of Notes at the prepayment speed of 1.3% under the Absolute
Prepayment Model and the denominator of which is the sum for each such Class of
Notes of the product of (1) the original principal balance of such Class of
Notes and (2) the expected weighted average life for such Class of Notes at the
prepayment speed of 1.3% under the Absolute Prepayment Model and (b) the
Servicing Fee Rate.
"REQUIRED DEPOSIT RATING" means the short-term credit rating of the
related entity is at least equal to P-1 by Moody's, A-1 by Standard & Poor's and
F1 by Fitch.
"REQUIRED SERVICER RATING" means, with respect to the Servicer, that
the then short-term unsecured debt obligations of the Servicer are rated at
least equal to P-1 by Moody's, and A-1 by Standard & Poor's.
"RESERVE FUND" means the account designated as such, and established
and maintained pursuant to Section 4.01.
"RESERVE FUND INITIAL DEPOSIT" means the initial deposit of cash in the
amount of $8,093,015.08 made by or on behalf of the Seller into the Reserve Fund
on the Closing Date.
"RESERVE FUND PROPERTY" means, the Reserve Fund Initial Deposit and all
proceeds thereof and all other amounts deposited in or credited to the Reserve
Fund from time to time under this Agreement, all Eligible Investments made with
amounts on deposit therein, all earnings and distributions thereon and proceeds
thereof.
"RESPONSIBLE OFFICER" means, in the case of the Indenture Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee, including
any Principal, Managing Director, Vice President, assistant Vice President,
assistant treasurer, assistant secretary or any other officer of the Indenture
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also, with respect to a particular matter, any
other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject and, with respect to
the Owner Trustee, any officer in the Corporate Trust Administration Department
of the Owner Trustee with direct responsibility for the administration of the
Trust Agreement and the Basic Documents on behalf of the Owner Trustee.
"RETAIL INSTALLMENT CONTRACTS" means retail installment sale and
conditional sale contracts.
"RULE OF 78s RECEIVABLE" means any Receivable which provides for the
allocation of payments according to the "sum of periodic balances" or "sum of
monthly payments" method.
"SCHEDULE OF RECEIVABLES" means the schedule of Receivables attached as
Schedule A to this Agreement, as it may be amended from time to time.
16
"SCHEDULED PAYMENT" means, with respect to any Payment Date and to a
Receivable, the payment set forth in such Receivable as due from the Obligor in
the related Collection Period; provided, however, that in the case of the first
Collection Period, the Scheduled Payment shall include all such payments due
from the Obligor on or after the Cutoff Date.
"SECURITIES" means the Notes and the Trust Certificates.
"SECURITY ENTITLEMENT" shall have the meaning specified in Section
8-102(a)(17) of the UCC.
"SECURITYHOLDERS" means the Noteholders and the Certificateholders.
"SELLER" means AHRC, in its capacity as Seller of the Receivables under
this Agreement, and each successor thereto (in the same capacity) pursuant to
Section 5.03.
"SERVICER" means AHFC, in its capacity as servicer of the Receivables
pursuant to this Agreement, and each successor thereto (in the same capacity)
pursuant to Section 6.03.
"SERVICER DEFAULT" shall have the meaning specified in Section 7.01.
"SERVICER LETTER OF CREDIT" means, if the Servicer desires to remit
collections on or in respect of the Receivables to the Collection Account on a
monthly basis upon satisfaction of the conditions described in Section
4.02(b)(ii), (i) an irrevocable letter of credit, issued by a Letter of Credit
Bank and naming the Indenture Trustee a beneficiary or (ii) a surety bond,
insurance policy or deposit of cash or securities, which is satisfactory to each
Rating Agency.
"SERVICER'S CERTIFICATE" means an Officers' Certificate of the Servicer
delivered pursuant to Section 3.10, substantially in the form of Exhibit B.
"SERVICING FEE RATE" means 1.00% per annum.
"SIMPLE INTEREST ADVANCE" shall have the meaning specified in Section
4.04(a).
"SIMPLE INTEREST RECEIVABLE" means any Receivable which provides for
the allocation of payments according to the "simple interest" method.
"SPECIAL PAYMENT DATE" means August 16, 2002.
"SPECIFIED RESERVE FUND BALANCE" means, on the Closing Date
$8,093,015.08, and with respect to any Payment Date the greater of: (i) 0.50% of
the Pool Balance as of the Cutoff Date and (ii) 0.75% of the Pool Balance as of
the last day of the related Collection Period; except that, if on any Payment
Date (i) the average of the Charge-off Rates for the three preceding Collection
Periods exceeds 2.25% or (ii) the average of the Delinquency Percentages for the
three preceding Collection Periods exceeds 2.25%, then the Specified Reserve
Fund Balance will be an amount equal to a specified percentage of the Pool
Balance as of the last day of the immediately preceding Collection Period. Such
percentage shall be determined by deducting from 8.00% the following fraction,
expressed as a percentage: (a) one minus (b) a fraction, the numerator of which
is the outstanding principal amount of the Notes with respect to such Payment
Date and
17
the denominator of which is such Pool Balance. Notwithstanding the foregoing,
in no event will the Specified Reserve Fund Balance be more than the
outstanding principal amount of the Notes.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or its successors.
"SUCCESSOR SERVICER" means any entity appointed as a successor to the
Servicer pursuant to Section 7.02.
"SUPPLEMENTAL SERVICING FEE" means any interest earned on investment of
the monies on deposit in the Accounts (other than the Yield Supplement Account
and the Reserve Fund) during a Collection Period, net of any investment expenses
and losses from such investments, plus all late fees, prepayment charges and
other administrative fees and expenses or similar charges allowed by applicable
law with respect to the Receivables, including, in the case of a Rule of 78s
Receivable and that is prepaid in full, the difference between the Principal
Balance of a Rule of 78s Receivable, minus the Principal Balance of such
Receivable computed according to the actuarial method (plus accrued interest to
the date of prepayment), received by the Servicer during such Collection Period.
"TOTAL SERVICING FEE" means the sum of the Basic Servicing Fee and the
Supplemental Servicing Fee.
"TRUST" means the Issuer.
"TRUST AGREEMENT" means the trust agreement, dated as of June 18, 2001,
as amended and restated, on July 24, 2001, between the Depositor and the Owner
Trustee.
"TRUST FEES AND EXPENSES" means all accrued and unpaid Trustees' fees,
any amounts due to the Trustees for reimbursement of expenses or in respect of
indemnification and other administrative fees of the Trust.
"TRUSTEE" means either the Owner Trustee or the Indenture Trustee, as
the context requires.
"TRUSTEES" means the Owner Trustee and the Indenture Trustee.
"UCC" means the Uniform Commercial Code as in effect in the respective
jurisdiction.
"UNITED STATES" means the United States of America.
"VICE PRESIDENT" of any Person means any vice president of such Person,
whether or not designated by a number or words before or after the title "Vice
President", who is a duly elected officer of such Person.
"WARRANTY PURCHASE PAYMENT" means, with respect to a Payment Date and
to a Warranty Receivable repurchased by the Seller as of the end of the related
Collection Period, which Receivable is (i) a Precomputed Receivable, (a) the sum
of (1) all Scheduled Payments on such Receivable due after the last day of such
Collection Period, (2) all past due Scheduled Payments
18
for which an Advance has not been made, (3) all Outstanding Advances made in
respect of such Receivable and (4) an amount equal to any reimbursement of
Outstanding Advances made pursuant to the first sentence of Section 4.04(c)
with respect to such Receivable minus (b) the sum of (1) all Payments Ahead
in respect of such Warranty Receivable held by the Servicer or on deposit in
the Payahead Account, (2) any Rebate and (3) any proceeds of the liquidation
of such Receivable previously received (to the extent applied to reduce the
Principal Balance of such Receivable) or (ii) a Simple Interest Receivable,
the sum of (a) the unpaid principal balance owed by the related Obligor in
respect of such Receivable and (b) interest on such unpaid principal balance
at a rate equal to the APR of the related Receivable from the date of last
payment by such Obligor to the last day of such Collection Period.
"WARRANTY RECEIVABLE" means a Receivable which the Seller is required
to repurchase pursuant to Section 2.04.
"YIELD SUPPLEMENT ACCOUNT" means the account designated as such, and
established and maintained pursuant to Section 4.01.
"YIELD SUPPLEMENT ACCOUNT DEPOSIT" means the initial deposit of cash in
the amount of $3,859,646.81 made by or on behalf of the Seller into the Yield
Supplement Account on the Closing Date.
"YIELD SUPPLEMENT AMOUNT" means, with respect to any Collection Period
and the related Deposit Date, the aggregate amount by which one month's interest
on the Principal Balance as of the first day of such Collection Period of each
Discount Receivable (other than a Discount Receivable that is a Defaulted
Receivable) at a rate equal to the Required Rate, exceeds one month's interest
on such Principal Balance at the APR of each such Receivable.
"YIELD SUPPLEMENT WITHDRAWAL AMOUNT" means, with respect to any
Collection Period and the related Deposit Date, the lesser of (a) the amount on
deposit in the Yield Supplement Account and (b) the sum of (i) the Yield
Supplement Amount and (ii) after giving effect to the withdrawal of the Yield
Supplement Amount, the amount by which the amount on deposit in the Yield
Supplement Account exceeds the Maximum Yield Supplement Amount.
Section 1.02. OTHER DEFINITIONAL PROVISIONS.
(a) Capitalized terms used herein that are not otherwise defined herein
shall have the meanings ascribed thereto in the Indenture.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
Section 1.03. INTERPRETIVE PROVISIONS.
(a) For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, (i) terms used herein
include, as appropriate, all genders and the plural as well as the singular,
(ii) references to words such as "herein", "hereof" and the like shall refer to
this Agreement as a whole and not to any particular part, article or section
19
within this Agreement, (iii) references to a section such as "Section 1.01" and
the like shall refer to the applicable section of this Agreement, (iv) the term
"include" and all variations thereof shall mean "include without limitation",
(v) the term "or" shall include "and/or", and (vi) the term "proceeds" shall
have the meaning set forth in the applicable UCC.
(b) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate or
other document are inconsistent with the meanings of such terms under generally
accepted accounting principles, the definitions contained in this Agreement or
in any such certificate or other document shall control.
ARTICLE TWO
CONVEYANCE OF RECEIVABLES; CUSTODY OF RECEIVABLES FILES
Section 2.01. CONVEYANCE OF RECEIVABLES.
(a) In consideration of the Issuer's delivery to or upon the order
of the Seller of the Certificates and the net proceeds of the sale of the Notes,
less an amount equal to the Reserve Fund Initial Deposit to be deposited to the
Reserve Fund and the Yield Supplement Account Deposit to be deposited to the
Yield Supplement Account, each on the Closing Date, the Seller does hereby sell,
transfer, assign, set over and otherwise convey to the Issuer, without recourse
(subject to the obligations of the Seller set forth herein), all right, title
and interest of the Seller in, to and under:
(i) the Receivables and all monies due thereon or paid
thereunder or in respect thereof (including proceeds of the repurchase
of Receivables by the Seller pursuant to Section 2.04 or the purchase
of Receivables by the Servicer pursuant to Section 3.08 or 8.01) on or
after the Cutoff Date;
(ii) the security interests in the Financed Vehicles;
(iii) any proceeds of any physical damage insurance
policies covering the Financed Vehicles and in any proceeds of any
credit life or credit disability insurance policies relating to the
Receivables or the Obligors;
(iv) any proceeds of Dealer Recourse;
(v) the Receivables Purchase Agreement, but not the
obligations of the Seller thereunder;
(vi) the right to realize upon any property (including the
right to receive future Liquidation Proceeds) that shall have secured a
Receivable and have been repossessed by or on behalf of the Issuer;
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(vii) all funds on deposit from time to time in the
Accounts, including the Reserve Fund Initial Deposit and the Yield
Supplement Account Deposit, and in all investment income and proceeds
thereof;
(viii) any Servicer Letter of Credit; and
(ix) the proceeds of any and all of the foregoing.
(b) The parties hereto intend that the conveyance hereunder be a
sale. In the event that the conveyance hereunder is not for any reason
considered a sale, the Seller hereby grants to the Issuer a first priority
perfected security interest in all of its right, title and interest in, to and
under the Receivables, and all other property conveyed hereunder and all
proceeds of any of the foregoing. The parties hereto intend that this Agreement
constitute a security agreement under applicable law. Such grant is made to
secure the payment of all amounts payable hereunder.
Section 2.02. CUSTODY OF RECEIVABLE FILES. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Issuer hereby
revocably appoints the Servicer, and the Servicer accepts such appointment, to
act for the benefit of the Issuer and the Indenture Trustee as custodian of the
following documents or instruments which are hereby constructively delivered to
the Indenture Trustee, as pledgee of the Issuer, as of the Closing Date with
respect to each Receivable:
(a) the fully executed original of the Receivable;
(b) documents evidencing or related to any Insurance
Policy;
(c) the original credit application of each Obligor,
fully executed by such Obligor on AHFC's customary form, or on a form
approved by AHFC for such application;
(d) the original certificate of title (or evidence that
such certificate of title has been applied for) or such documents that
the Servicer shall keep on file, in accordance with its customary
procedures, evidencing the security interest in the related Financed
Vehicle; and
(e) any and all other documents that the Seller or the
Servicer, as the case may be, shall keep on file, in accordance with
its customary procedures, relating to such Receivable or the related
Obligor or Financed Vehicle.
Section 2.03. REPRESENTATIONS AND WARRANTIES OF SELLER AS TO THE
RECEIVABLES. The Seller makes the following representations and warranties as to
the Receivables on which the Issuer shall rely in acquiring the Receivables.
Such representations and warranties speak as of the execution and delivery of
this Agreement and as of the Closing Date, but shall survive the sale, transfer
and assignment of the Receivables to the Issuer and the pledge thereof to the
Indenture Trustee.
(a) CHARACTERISTICS OF RECEIVABLES. Each Receivable (i)
shall have been originated in the United States by a Dealer for the
retail sale of the related Financed
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Vehicle in the ordinary course of such Dealer's business, shall have
been fully and properly executed by the parties thereto, shall have
been purchased by AHFC from such Dealer under an existing agreement
with AHFC, shall have been validly assigned by such Dealer to AHFC
in accordance with the terms of such agreement and shall have been
subsequently sold by AHFC to the Seller pursuant to the Receivables
Purchase Agreement, (ii) shall have created or shall create a valid,
continuing and enforceable first priority security interest in favor
of AHFC in the related Financed Vehicle, which security interest has
been assigned by AHFC to the Seller and shall be assignable, and
shall be so assigned, by the Seller to the Owner Trustee, (iii)
shall contain customary and enforceable provisions such that the
rights and remedies of the holder thereof shall be adequate for
realization against the collateral of the benefits of the security,
(iv) shall, except as otherwise provided in this Agreement, provide
for level Monthly Payments (provided that the payment in the first
or last month in the life of the Receivable may be minimally
different from the level payment) that fully amortize the Amount
Financed over its original term and shall provide for a finance
charge or shall yield interest at its APR, (v) shall provide for, in
the event that such Receivable is prepaid, a prepayment that fully
pays the Principal Balance and includes accrued but unpaid interest
at least through the date of prepayment in an amount calculated by
using an interest rate at least equal to its APR, (vi) shall have an
Obligor that is not a federal, state or local governmental entity
and (vii) is a retail installment contract.
(b) SCHEDULE OF RECEIVABLES. The information set forth in
the Schedule of Receivables shall be true and correct in all material
respects as of the opening of business on the Cutoff Date, and no
selection procedures believed to be adverse to the Securityholders were
utilized in selecting the Receivables from those motor vehicle
receivables of AHFC which met the selection criteria set forth in this
Agreement.
(c) COMPLIANCE WITH LAW. Each Receivable and each sale of
the related Financed Vehicle shall have complied at the time it was
originated or made, and shall comply at the time of execution of this
Agreement, 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 Billing Act, the Fair Credit Reporting
Act, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the ▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act, Federal Reserve Board
Regulations B , M and Z, state adaptations of the National Consumer Act
and of the Uniform Consumer Credit Code and other consumer credit,
equal credit opportunity and disclosure laws.
(d) BINDING OBLIGATION. Each Receivable shall constitute
the genuine, legal, valid and binding payment obligation in writing of
the related Obligor, enforceable by the holder thereof in accordance
with its terms, except as enforceability may be subject to or limited
by bankruptcy, insolvency, reorganization, moratorium, liquidation or
other similar laws affecting the enforcement of creditors' rights in
general and by general principles of equity, regardless of whether such
enforceability shall be considered in a proceeding in equity or at law.
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(e) NO BANKRUPT OBLIGORS. According to the records of the
Seller, as of the Cutoff Date, no Obligor is the subject of a
bankruptcy proceeding.
(f) SECURITY INTEREST IN FINANCED VEHICLES. According to
the records of the Seller, as of the Cutoff Date, no Financed Vehicle
has been repossessed and not reinstated and immediately prior to the
sale, assignment and transfer thereof, all necessary steps shall be
taken so that each Receivable shall be secured by a validly perfected
first priority security interest in the related Financed Vehicle in
favor of AHFC as secured party or all necessary and appropriate action
with respect to such Receivable shall have been taken to perfect a
first priority security interest in such Financed Vehicle in favor of
AHFC as secured party.
(g) RECEIVABLES IN FORCE. No Receivable shall have been
satisfied, subordinated or rescinded, nor shall any Financed Vehicle
have been released in whole or in part from the lien granted by the
related Receivable.
(h) NO WAIVERS. No provision of a Receivable shall have
been waived in such a manner that such Receivable fails to meet all of
the other representations and warranties made by the Seller herein with
respect thereto.
(i) NO AMENDMENTS. No Receivable shall have been amended
or modified in such a manner that the total number of Scheduled
Payments has been increased or that the related Amount Financed has
been increased or that such Receivable fails to meet all of the other
representations and warranties made by the Seller herein with respect
thereto.
(j) NO DEFENSES. No facts shall be known to the Seller
which would give rise to any right of rescission, setoff, counterclaim
or defense, nor shall the same have been asserted or threatened, with
respect to any Receivable.
(k) NO LIENS. To the knowledge of the Seller, no liens or
claims shall have been filed, including liens for work, labor or
materials relating to a Financed Vehicle, that shall be liens prior to,
or equal or coordinate with, the security interest in such Financed
Vehicle granted by the related Receivable. To the knowledge of the
Seller, there are no tax liens against the Seller, or against an
Obligor affecting the related Receivable.
(l) NO DEFAULTS. Except for payment defaults that, as of
the Cutoff Date, have been continuing for a period of not more than 30
days, no default, breach, violation or event permitting acceleration
under the terms of any Receivable shall have occurred as of the Cutoff
Date and no continuing condition that with notice or the lapse of time
would constitute a default, breach, violation or event permitting
acceleration under the terms of any Receivable shall have arisen; and
the Seller shall not have waived any of the foregoing except as
otherwise permitted hereunder.
(m) INSURANCE. Pursuant to the Receivables, each Obligor
has been required to obtain physical damage insurance covering the
related Financed Vehicle and the Obligor is required under the terms of
the related Receivable to maintain such insurance.
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(n) TITLE. It is the intention of the Seller that the
transfer and assignment herein contemplated, taken as a whole,
constitute a sale of the Receivables from the Seller to the Issuer and
that the beneficial interest in and title to the Receivables not be
part of the debtor's estate in the event of the filing of a bankruptcy
petition by or against the Seller under any bankruptcy law. Other than
(1) the sale by the Seller to the Issuer pursuant to this Agreement and
(2) the security interest granted by the Issuer to the Indenture
Trustee in the Indenture, no Receivable has been sold, transferred,
assigned or pledged by the Seller to any Person other than the Issuer,
and no Receivable has been sold, transferred, assigned or pledged by
the Issuer to any Person other than the Indenture Trustee, and no
provision of a Receivable shall have been waived, except as provided in
clause (h) above; immediately prior to the transfer and assignment
herein contemplated, the Seller had good and marketable title to each
Receivable free and clear of all Liens and rights of any other Person
and immediately prior to the pledge of security interest contemplated
in the Indenture, the Issuer had good and marketable title to each
Receivable free and clear of all Liens and rights of any other Person;
immediately upon the transfer and assignment contemplated herein, the
Issuer shall have good and marketable title to each Receivable, free
and clear of all Liens and rights of any other Person and immediately
upon the pledge of the security interest contemplated in the Indenture,
the Indenture Trustee will have a valid and continuing security
interest in the Receivables; and both the transfer and assignment
herein contemplated and the pledge of security interest contemplated by
the Indenture have been perfected under the applicable UCC.
(o) LAWFUL ASSIGNMENT. No Receivable shall have been
originated in, or shall be subject to the laws of, any jurisdiction
under which the sale, transfer and assignment of such Receivable under
this Agreement or pursuant to a transfer of the Securities shall be
unlawful, void or voidable.
(p) ALL FILINGS MADE. Both the Seller and the Issuer,
respectively, have caused or will have caused, or have taken or will
take, within ten days of the Closing Date, all steps necessary,
including the filing of all appropriate financing statements (including
UCC filings) necessary in the appropriate jurisdictions under the
applicable law, 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 therein, shall have been made.
Except as contemplated hereby or in the Indenture, as applicable,
neither the Seller or the Issuer has authorized the filing of nor is
aware of any financing statements with respect to the Receivables,
other than such financing statements that have been terminated on or
prior to the Closing Date.
(q) ONE ORIGINAL. There shall be only one original
executed copy of each Receivable.
(r) CHATTEL PAPER. Each Receivable constitutes "tangible
chattel paper" as defined within the meaning of the applicable UCC.
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(s) MATURITY OF RECEIVABLES. Each Receivable shall have
an original maturity of not less than 12 months nor greater than 60
months and, as of the Cutoff Date, a remaining maturity of not less
than 6 months nor greater than 58 months.
(t) FINANCE CHARGE. Each Receivable provides for the
payment of a finance charge calculated on the basis of an APR ranging
from 1.90% to 16.55%.
(u) PRINCIPAL BALANCE. Each Receivable had an original
principal balance of not less than $2,054 nor more than $56,915 and an
average unpaid principal balance, as of the Cutoff Date, of $16,172.
(v) ORIGINATION. Each Receivable was originated on or
after November 13, 1996 and on or before April 1, 2001.
(w) NO OVERDUE PAYMENTS. No Receivable shall have a
Scheduled Payment that is more than 30 days past due as of the Cutoff
Date.
(x) LOCATION OF RECEIVABLE FILES. Each Receivable File
shall be kept at one of the locations listed in Schedule B hereto.
(y) FINANCED VEHICLES. Each Financed Vehicle shall be a
new or used Honda or Acura motor vehicle.
(z) ADDRESSES OF OBLIGORS. The Obligor under each
Receivable had a current billing address in the United States as of the
Cutoff Date.
(aa) SECURITY INTEREST. The Indenture creates a valid and
continuing security interest (as defined in the applicable UCC) in the
Receivables in favor of the Indenture Trustee, which security interest
is prior to all other Liens, and is enforceable as such as against
creditors of and purchasers from the Issuer.
(bb) POSSESSION OF DOCUMENTS. The Servicer has in its
possession all original copies of the agreements that constitute or
evidence the Receivables. The agreements that constitute or evidence
the Receivables do not have any marks or notations indicating that they
have been pledged, assigned or otherwise conveyed to any Person other
than the Indenture Trustee. All financing statements filed or to be
filed against the Issuer in favor of the Indenture Trustee in
connection herewith describing the Receivables 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 Indenture Trustee."
Section 2.04. REPURCHASE OF RECEIVABLES UPON BREACH. Upon discovery by
the Seller, the Servicer or the Owner Trustee or upon the actual knowledge of
the Indenture Trustee of a breach of any of the representations and warranties
of the Seller set forth in Section 2.03 that materially and adversely affects
the interests of the Issuer, the Trustees or the Securityholders in any
Receivable, the party discovering such breach shall give prompt written notice
to the others. As of the last day of the second Collection Period following the
Collection Period in which it discovers or receives notice of such breach (or,
at the Seller's election, the last day of the first Collection Period following
the Collection Period in which it discovers or receives notice of such
25
breach), the Seller shall, unless such breach shall have been cured in all
material respects, repurchase such Receivable, and, if necessary, the Seller
shall enforce the obligation of AHFC under the Receivables Purchase Agreement
to repurchase such Receivable from the Seller. This repurchase obligation
shall apply to all representations and warranties of the Seller contained in
Section 2.03 whether or not the Seller has knowledge of the breach at the
time of the breach or at the time the representations and warranties were
made. In consideration of the repurchase of any such Receivable, on the
related Deposit Date, the Seller shall remit the Warranty Purchase Payment in
respect of such Receivable to the Collection Account in the manner specified
in Section 4.05 and shall be entitled to receive the Released Warranty
Amount. In the event that, as of the date of execution and delivery of this
Agreement, any Liens or claims shall have been filed, including Liens for
work, labor or materials relating to a Financed Vehicle, that shall be prior
to, or equal or coordinate with, the lien granted by the related Receivable,
which Liens or claims shall not have been satisfied or otherwise released in
full as of the Closing Date, and such breach materially and adversely affects
the interests of the Issuer, the Trustees or the Securityholders in such
Receivable, the Seller shall repurchase such Receivable on the terms and in
the manner specified above. Upon any such repurchase, the Issuer shall,
without further action, be deemed to transfer, assign, set-over and otherwise
convey to the Seller, all right, title and interest of the Issuer in, to and
under such repurchased Receivable, all monies due or to become due with
respect thereto and all proceeds thereof. The Issuer and the Trustees shall
execute such documents and instruments of transfer and assignment and take
such other actions as shall be reasonably requested by the Seller to effect
the conveyance of such Receivable pursuant to this Section. The sole remedy
of the Issuer, the Trustees and the Securityholders with respect to a breach
of the Seller's representations and warranties pursuant to Section 2.03 or
with respect to the existence of any such Liens or claims shall be to require
the Seller to repurchase the related Receivable pursuant to this Section and
to enforce AHFC's obligation to repurchase such Receivables from the Seller
pursuant to the Receivables Purchase Agreement. 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 Section 2.04 or the eligibility of any
Receivables for purposes of this Agreement. In addition, no party to this
agreement may waive a material breach of any of the representations and
warranties contained in Section 2.03 above.
Section 2.05. DUTIES OF SERVICER AS CUSTODIAN.
(a) SAFEKEEPING. The Servicer, in its capacity as custodian, shall
hold the Receivable Files for the benefit of the Issuer and maintain such
accurate and complete accounts, records and computer systems pertaining to each
Receivable File as shall enable the Issuer to comply with this Agreement. In
performing its duties as custodian, the Servicer shall act with reasonable care,
using that degree of skill and attention that it exercises with respect to the
receivable files of comparable motor vehicle receivables that the Servicer
services for itself or others. The Servicer shall conduct, or cause to be
conducted, periodic examinations of the files of all receivables owned or
serviced by it which shall include 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 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 promptly take appropriate action to remedy any such failure.
Nothing herein shall
26
be deemed to require an initial review or any periodic review of the
Receivable Files by the Issuer or the Indenture Trustee.
(b) MAINTENANCE OF AND ACCESS TO RECORDS. The Servicer shall
maintain each Receivable File solely in its capacity as Servicer at one of its
offices specified in Schedule B hereto 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 its duly authorized representatives, attorneys or auditors the
Receivable Files and the related accounts, records and computer systems
maintained by the Servicer at such times as the Issuer and the Indenture Trustee
shall reasonably instruct.
(c) RELEASE OF DOCUMENTS. Upon instruction from the Indenture
Trustee, the Servicer shall release any document in the Receivable Files to the
Indenture Trustee or its agent or designee, as the case may be, at such place or
places as the Indenture Trustee may designate, as soon as practicable. The
Servicer shall not be responsible for any loss occasioned by the failure of the
Indenture Trustee to return any document or any delay in doing so.
Section 2.06. INSTRUCTIONS; AUTHORITY TO ACT. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable Files
upon its receipt of written instructions signed by a Responsible Officer of the
Indenture Trustee. A certified copy of a bylaw or of a resolution of the board
of directors of the Indenture Trustee shall constitute conclusive evidence of
the authority of any such Responsible Officer to act and shall be considered in
full force and effect until receipt by the Servicer of written notice to the
contrary given by the Indenture Trustee.
Section 2.07. INDEMNIFICATION BY CUSTODIAN. The Servicer, as custodian
of the Receivable Files, shall fully indemnify and hold harmless the Issuer and
the Trustees 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 and the Trustees as the result of
any improper act or omission in any way relating to the maintenance and custody
of the Receivable Files by the Servicer, as custodian; provided, however, that
the Servicer shall not be liable for any portion of any such amount resulting
from the willful misfeasance, bad faith or negligence of the Owner Trustee or
the Indenture Trustee.
Section 2.08. EFFECTIVE PERIOD AND TERMINATION. The Servicer's
appointment as custodian of the Receivable Files shall become effective as of
the Cutoff Date and shall continue in full force and effect until terminated
pursuant to this Section. If the Servicer shall resign as Servicer pursuant to
Section 6.05 or if all of the rights and obligations of the Servicer have been
terminated pursuant to Section 7.02, the appointment of the Servicer as
custodian of the Receivable Files shall be terminated without further action by
the Indenture Trustee or by the Holders of Notes. The Indenture Trustee or, with
the consent of the Indenture Trustee, the Owner Trustee may terminate the
Servicer's appointment as custodian of the Receivable Files with cause at any
time immediately upon written notification to the Servicer and, without cause,
upon 30 days' prior written notification by the Servicer. As soon as practicable
after any termination of such appointment, the Servicer shall deliver the
Receivable Files to the Indenture Trustee or its agent at such place or places
as the Indenture Trustee may reasonably designate. Notwithstanding the
termination of the Servicer as custodian of the Receivable Files, the
27
Indenture Trustee agrees that upon any such termination, the Indenture
Trustee shall provide, or cause its agent to provide, access to the
Receivable Files to the Servicer for the purpose of carrying out its duties
and responsibilities with respect to the servicing of the Receivables
pursuant to this Agreement.
ARTICLE THREE
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 3.01. DUTIES OF SERVICER. The Servicer, for the benefit of the
Issuer (to the extent provided herein), shall manage, service, administer and
make collections on the Receivables (other than Administrative Receivables and
Warranty Receivables) with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to all comparable motor
vehicle receivables that it services for itself or others. The Servicer's duties
shall include collection and posting of all payments, responding to inquiries of
Obligors or by federal, state or local government authorities with respect to
the Receivables, investigating delinquencies, sending payment coupons to
Obligors, reporting tax information to Obligors in accordance with its customary
practices, policing the collateral, accounting for collections and furnishing
monthly and annual statements to the Trustees with respect to distributions,
generating federal income tax information, making Advances and performing the
other duties specified herein. The Servicer shall follow its customary
standards, policies and procedures and shall have full power and authority,
acting alone, to do any and all things in connection with such managing,
servicing, administration and collection that it may deem necessary or
desirable. Without limiting the generality of the foregoing, the Servicer shall
be authorized and empowered to execute and deliver, on behalf of itself, the
Issuer, the Trustees, the Securityholders or any of them, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge and all other comparable instruments, with respect to the Receivables
and the Financed Vehicles. The Servicer is hereby authorized to commence, in its
own name or in the name of the Issuer, a legal proceeding to enforce a Defaulted
Receivable pursuant to Section 3.04 or to commence or participate in a legal
proceeding (including without limitation a bankruptcy proceeding) relating to or
involving a Receivable, including a Defaulted Receivable. If the Servicer
commences or participates in such a legal proceeding in its own name, the Issuer
shall thereupon be deemed to have automatically assigned, solely for the purpose
of collection on behalf of the party retaining an interest in such Receivable,
such Receivable and the other property conveyed to the Issuer pursuant to
Section 2.01 with respect to such Receivable to the Servicer for purposes of
commencing or participating in any such proceeding as a party or claimant, and
the Servicer is authorized and empowered by the Issuer to execute and deliver in
the Servicer's name any notices, demands, claims, complaints, responses,
affidavits or other documents or instruments in connection with any such
proceeding. If in any enforcement suit or legal proceeding it shall be held that
the Servicer may not enforce a Receivable on the grounds that it shall not be a
real party in interest or a holder entitled to enforce such Receivable, the
Owner Trustee on behalf of the Issuer shall, at the Servicer's expense and
written direction, take steps to enforce such Receivable, including bring suit
in its name or the name of the Issuer, the Indenture Trustee, the Noteholders or
the Certificateholders. The Owner Trustee on behalf of the Issuer shall furnish
the Servicer with any powers of attorney and other documents and take any other
steps which the Servicer may deem necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder.
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Section 3.02. 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
motor vehicle receivables that it services for itself or others. The Servicer
shall be authorized to grant extensions, rebates or adjustments on a Receivable
without the prior consent of the Issuer. If, as a result of the extending of
payments in accordance with the customary servicing standards of the Servicer,
any Receivable will be outstanding later than the Final Scheduled Maturity Date
occurs, the Servicer shall be obligated to repurchase such Receivable pursuant
to Section 3.08. In addition, in the event that any such rescheduling or
extension of a Receivable modifies the terms of such Receivable in such a manner
as to constitute a cancellation of such Receivable and the creation of a new
motor vehicle receivable that results in a deemed exchange thereof within the
meaning of Section 1001 of the Code, the Servicer shall purchase such Receivable
pursuant to Section 3.08, and the receivable created shall not be included in
the Issuer. Notwithstanding the foregoing, extensions or modifications of the
payment schedule of a Receivable can be made only in accordance with the
customary servicing procedures of the Servicer, provided that the amount of any
extension fee charged in connection with the extension of a Receivable is
deposited into the Collection Account by the Servicer in accordance with Section
4.05(a). The Servicer may, in accordance with its customary servicing
procedures, waive any prepayment charge, late payment charge or any other fees
that may be collected in the ordinary course of servicing the Receivables.
Section 3.03. REBATES ON FULL PREPAYMENTS. In the event that the amount
of a full Prepayment by an Obligor under a Precomputed Receivable, after
adjustment for the applicable Rebate, is less than the amount that would be
payable under the actuarial method if a full Prepayment were made at the end of
the billing month under such Precomputed Receivable, either because the Rebate
calculated under the terms of such Precomputed Receivable is greater than the
amount calculable under the actuarial method or because the Servicer's customary
servicing procedure is to credit a greater Rebate, the Servicer, as part of its
servicing duties, shall remit such difference to the Trust by deposit into the
Collection Account pursuant to Section 4.05(a).
Section 3.04. REALIZATION UPON RECEIVABLES. On behalf of the Issuer,
the Servicer shall use its best efforts, consistent with its customary servicing
procedures, to repossess or otherwise comparably convert the ownership of any
Financed Vehicle that it has reasonably determined should be repossessed or
otherwise converted following a default under the Receivable secured by the
Financed Vehicle (and shall specify such Receivables to the Trustees no later
than the Determination Date following the end of the Collection Period in which
the Servicer shall have made such determination). The Servicer shall follow such
practices and procedures as it shall deem necessary or advisable and as shall be
customary and usual in its servicing of motor vehicle receivables, which
practices and procedures may include reasonable efforts to realize upon any
Dealer Recourse, selling the related Financed Vehicle at public or private sale
and other actions by the Servicer in order to realize upon such a Receivable.
The Servicer shall be entitled to recover its reasonable Liquidation Expenses
with respect to each Defaulted Receivable. All Net Liquidation Proceeds 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 4.02(a). The foregoing is subject to the proviso that, in any case in
which the Financed Vehicle shall have suffered damage, the Servicer shall not
expend funds in connection with any repair or
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towards the repossession of such Financed Vehicle unless it shall determine
in its discretion that such repair and/or repossession shall increase the
Liquidation Proceeds of the related Receivable by an amount greater than the
amount of such expenses.
Section 3.05. MAINTENANCE OF PHYSICAL DAMAGE INSURANCE POLICIES. The
Servicer shall, in accordance with its customary servicing procedures and
underwriting standards, require that each Obligor shall have obtained physical
damage insurance covering each Financed Vehicle as of the origination of the
related Receivable.
Section 3.06. MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES.
The Servicer shall, in accordance with its customary servicing procedures and at
its own expense, take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed Vehicle.
The Servicer is hereby authorized to take such steps as are necessary to
reperfect such security interest on behalf of the Issuer in the event of the
relocation of a Financed Vehicle or for any other reason. In the event that the
assignment of a Receivable to the Issuer is insufficient, without a notation on
the related Financed Vehicle's certificate of title, to grant to the Issuer a
first priority perfected security interest in the related Financed Vehicle, the
Servicer hereby agrees to serve as the agent of the Issuer for the purpose of
perfecting the security interest of the Issuer in such Financed Vehicle and
agrees that the Servicer's listing as the secured party on the certificate of
title is solely in its capacity as agent of the Issuer.
Section 3.07. COVENANTS OF SERVICER. The Servicer makes the following
covenants on which the Issuer shall rely in accepting the Receivables in trust
pursuant to Section 2.01:
(a) LIENS IN FORCE. Except as otherwise contemplated by
this Agreement, the Servicer shall not release in whole or in part any
Financed Vehicle from the security interest securing the related
Receivable.
(b) NO IMPAIRMENT. The Servicer shall do nothing to
impair the rights of the Issuer in the Receivables.
(c) NO AMENDMENTS. Subject to Section 3.02, the Servicer
shall not amend or otherwise modify any Receivable such that the total
number of Scheduled Payments is extended beyond the Final Scheduled
Maturity Date, or either the Amount Financed or the APR is altered.
Section 3.08. PURCHASE OF RECEIVABLES UPON BREACH. Upon discovery by
the Seller, the Servicer or the Issuer or upon the actual knowledge of the
Indenture Trustee or Owner Trustee of a breach of any of the covenants of the
Servicer set forth in Section 3.07 that materially and adversely affects the
interests of the Issuer, the Indenture Trustee or the Securityholders in any
Receivable, or if an improper extension, rescheduling or modification of a
Receivable is made by the Servicer as described in Section 3.02, the party
discovering such breach shall give prompt written notice to the others. As of
the last day of the second Collection Period following the Collection Period in
which it discovers or receives notice of such breach (or, at the Servicer's
election, the last day of the first Collection Period following the Collection
Period in which it discovers or receives notice of such breach), the Servicer
shall, unless such breach or impropriety
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shall have been cured in all material respects, purchase from the Issuer such
Receivable. In consideration of the purchase of any such Receivable, on the
related Deposit Date the Servicer shall remit the Administrative Purchase
Payment to the Collection Account in the manner specified in Section 4.05,
and shall be entitled to receive the Released Administrative Amount. Upon
such deposit of the Administrative Purchase Payment, the Servicer shall for
all purposes of this Agreement be deemed to have released all claims for
reimbursement of Outstanding Advances made in respect of such Receivable. The
sole remedy of the Issuer, the Trustees or the Securityholders against the
Servicer with respect to a breach pursuant to Section 3.02 or 3.07 shall be
to require the Servicer to purchase the related Receivables pursuant to this
Section, except as otherwise provided in Section 6.02. Neither the Owner
Trustee nor the Indenture Trustee shall have any duty to conduct any
affirmative investigation as to the occurrence of any condition requiring the
repurchase of any Receivable pursuant to this Section.
Section 3.09. TOTAL SERVICING FEE; PAYMENT OF CERTAIN EXPENSES BY
SERVICER. As compensation for the performance of its obligations hereunder, the
Servicer shall be entitled to receive on each Payment Date the Total Servicing
Fee. The Basic Servicing Fee in respect of a Collection Period shall be
calculated based on a 360 day year comprised of twelve 30-day months. Except to
the extent otherwise provided herein, the Servicer shall be required to pay all
expenses incurred by it in connection with its activities under this Agreement
(including fees and disbursements of the Trustees and independent accountants,
taxes imposed on the Servicer, expenses incurred in connection with
distributions and reports to Securityholders and all other fees and expenses not
expressly stated under this Agreement to be for the account of the
Securityholders).
Section 3.10. SERVICER'S CERTIFICATE. On or before each Determination
Date, the Servicer shall deliver to the Trustees and each Rating Agency a
Servicer's Certificate containing all information necessary to make the
distributions required by Sections 4.06 and 4.07 in respect of the related
Collection Period and all information necessary for the Trustees to send
statements to Securityholders pursuant to Section 4.10. The Servicer shall also
specify to the Trustees, no later than the Determination Date following the last
day of a Collection Period as of which the Seller shall be required to
repurchase or the Servicer shall be required to purchase a Receivable, the
identity of any such Receivable and the identity of any Receivable which the
Servicer shall have determined to be a Defaulted Receivable during such
Collection Period. Receivables purchased or to be purchased by the Servicer or
the Seller and Receivables as to which the Servicer has determined during such
Collection Period to be Defaulted Receivables and with respect to which payment
of the Administrative Purchase Payment or Warranty Purchase Payment has been
provided from whatever source as of last day of such Collection Period shall be
identified by the Seller's account number with respect to such Receivable (as
specified in the Schedule of Receivables).
Section 3.11. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT.
(a) The Servicer shall deliver to the Trustees and each Rating
Agency, on or before 90 days after the end of each fiscal year, commencing with
the fiscal year ended March 31, 2002, an Officer's Certificate of the Servicer,
stating that (i) a review of the activities of the Servicer during the preceding
12-month period ended March 31 (or, if applicable, such shorter period in the
case of the first such Officer's Certificate) and of its performance under this
Agreement has
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been made under such officer's supervision, and (ii) to such officer's
knowledge, based on such review, the Servicer has fulfilled all its
obligations under this Agreement throughout such period, or, if there has
been a default in the fulfillment of any such obligation, specifying each
such default known to such officer and the nature and status thereof.
(b) The Servicer shall deliver to the Trustees and each Rating
Agency, promptly after having obtained knowledge thereof, but in no event later
than five Business Days thereafter, an Officer's Certificate specifying the
nature and status of any event which with the giving of notice or lapse of time,
or both, would become a Servicer Default.
Section 3.12. ANNUAL ACCOUNTANTS' REPORT. The Servicer shall cause a
firm of independent accountants (who may also render other services to the
Servicer or to the Seller) to deliver to the Trustees on or before June 30 of
each year, beginning with the June 30 that is at least six months after the
Closing Date, a report with respect to the preceding 12-month period ended March
31 (or, if applicable, such shorter period in the case of the first such report)
to the effect that such accountants have examined certain records and documents
relating to the servicing of the Receivables under this Agreement (using
procedures specified in such report, which procedures shall be substantially in
compliance with generally accepted auditing standards and which procedure shall
be specified to the Trustees by the Servicer in writing; and the Trustees make
no independent inquiry or investigation as to, and shall have no obligation or
liability in respect of, the sufficiency, validity or correctness of such
procedures) and that nothing has come to their attention indicating that such
servicing has not been conducted in compliance with the customary servicing
procedures of the Servicer, including but not limited to the procedures set
forth in this Agreement, except for (i) such exceptions as such firm shall
believe to be immaterial and (ii) such other exceptions as shall be set forth in
such report. Such report shall also indicate that the firm is independent with
respect to the Seller and the Servicer within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public Accountants.
Section 3.13. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
RECEIVABLES. The Servicer shall provide to the Trustees reasonable access to the
documentation regarding the Receivables. The Servicer shall provide such access
to any Securityholder only in such cases where a Securityholder is required by
applicable statutes or regulations to review such documentation. In each case,
such access shall be afforded without charge but only upon reasonable request
and during normal business hours at the respective offices of the Servicer.
Nothing in this Section shall derogate from 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 as provided in this
Section as a result of such obligation shall not constitute a breach of this
Section.
Section 3.14. AMENDMENTS TO SCHEDULE OF RECEIVABLES. If the Servicer,
during a Collection Period, assigns to a Receivable an account number that
differs from the original account number identifying such Receivable on the
Schedule of Receivables, the Servicer shall deliver to the Seller and the
Trustees on or before the Payment Date relating to such Collection Period an
amendment to the Schedule of Receivables reporting the newly assigned account
number, together with the old account number of each such Receivable. The first
such delivery of amendments to the Schedule of Receivables shall include monthly
amendments reporting
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account numbers appearing on the Schedule of Receivables with the new account
numbers assigned to such Receivables during any prior Collection Period.
Section 3.15. REPORTS TO SECURITYHOLDERS AND RATING AGENCIES.
(a) At the expense of the Issuer, the Indenture Trustee shall
provide to any Note Owner and the Owner Trustee shall provide to any
Certificateholder who so requests in writing a copy of (i) any Servicer's
Certificate, (ii) any annual statement as to compliance described in Section
3.1l(a), (iii) any annual accountants' report described in Section 3.12, (iv)
any statement to Securityholder pursuant to Section 4.10, (v) the Trust
Agreement, (vi) the Indenture or (vii) this Agreement (without Exhibits). The
Indenture Trustee or the Owner Trustee, as applicable, may require such
Securityholder or Note Owner to pay a reasonable sum to cover the cost of the
Trustee's complying with such request.
(b) The Servicer shall forward to each Rating Agency a copy of
each (i) Servicer's Certificate, (ii) annual statement as to compliance
described in Section 3.11(a), (iii) Officer's Certificate of the Servicer
described in Section 3.11(b), (iv) annual accountants' report pursuant to
Section 3.12, (v) statement to Securityholders pursuant to Section 4.10 and (vi)
other report it may receive pursuant to this Agreement, the Trust Agreement or
the Indenture.
Section 3.16. APPOINTMENT OF SUBSERVICER. The Servicer may at any time
appoint a subservicer to perform all or any portion of its obligations as
Servicer hereunder if each Rating Agency has received 10 days prior written
notice of the Servicer's intention to do so and has not notified the Servicer
that such an appointment would or might result in the qualification, reduction
or withdrawal of a rating then assigned by such Rating Agency to any Class of
Notes; provided, however, that the Servicer shall remain obligated and be liable
to the Issuer, the Owner Trustee, the Indenture Trustee, the Certificateholders
and the Noteholders for the servicing and administering of the Receivables in
accordance with the provisions hereof without diminution of such obligation and
liability by virtue of the appointment of such subservicer and to the same
extent and under the same terms and conditions as if the Servicer alone were
servicing and administering the Receivables. The fees and expenses of the
subservicer shall be as agreed between the Servicer and its subservicer from
time to time, and none of the Issuer, the Owner Trustee, the Indenture Trustee,
the Certificateholders or the Noteholders shall have any responsibility
therefor.
ARTICLE FOUR
DISTRIBUTIONS; RESERVE FUND;
STATEMENTS TO SECURITYHOLDERS
Section 4.01. ESTABLISHMENT OF ACCOUNTS.
(a) The Servicer shall establish and maintain an Eligible Account
with and in the name of the Indenture Trustee for the benefit of (i) the
Securityholders (the "Collection Account"), (ii) the Noteholders (the "Note
Distribution Account"), (iii) the Noteholders (the "Reserve Fund"), (iv) the
Securityholders (the "Yield Supplement Account") and (v) the Securityholders
(the "Payahead Account"), in each case, bearing a designation clearly indicating
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that the funds deposited therein are held for the benefit of the related
Securityholders. Except as otherwise provided in this Agreement, in the event
that the Indenture Trustee is no longer an Eligible Institution, the Servicer
shall, with the assistance of the Indenture Trustee as necessary, cause the
Accounts to be moved to an Eligible Institution.
(b) To the extent permitted by applicable laws, rules and
regulations, all amounts held in (i) the Collection Account, the Note
Distribution Account, the Reserve Fund and the Yield Supplement Account shall be
either invested by the Indenture Trustee in Eligible Investments selected in
writing by the Servicer or maintained in cash and (ii) the Payahead Account
shall be either invested by the Indenture Trustee in investments defined in
clause (vii) of the definition of the term "Eligible Investments" selected in
writing by the Servicer or maintained in cash. Earnings on investment of funds
in the Accounts (other than the Yield Supplement Account and the Reserve Fund)
(net of losses and investment expenses) shall be paid to the Servicer as part of
the Supplemental Servicing Fee and any losses and investment expenses shall be
charged against the funds on deposit in the related Account.
(i) Except as otherwise provided in Section 4.01(b), the
Indenture Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the Accounts and in all proceeds
thereof (including all income thereon) and all such funds, investments,
proceeds and income shall be part of the Owner Trust Estate. The
Accounts shall be under the sole dominion and control of the Indenture
Trustee for the benefit of the Noteholders or the Securityholders, as
the case may be.
(ii) Notwithstanding anything else contained herein, the
Servicer agrees that each Account and the Certificate Distribution
Account will be established only with an Eligible Institution which
agrees substantially as follows: (A) it will comply with Entitlement
Orders related to such account issued by the Indenture Trustee without
further consent by the Servicer; (B) until termination of this
Agreement, it will not enter into any other agreement related to such
account pursuant to which it agrees to comply with Entitlement Orders
of any Person other than the Indenture Trustee; (C) all Account
Property delivered or credited to it in connection with such account
and all proceeds thereof will be promptly credited to such account; (D)
it will treat all Account Property as Financial Assets; and (E) all
Account Property will be physically delivered (accompanied by any
required endorsements) to, or credited to an account in the name of,
the Eligible Institution maintaining the related Account in accordance
with such Eligible Institution's customary procedures such that such
Eligible Institution establishes a Security Entitlement in favor of the
Indenture Trustee with respect thereto over which the Indenture Trustee
(or such other Eligible Institution) has Control.
(iii) The Servicer shall have the power, revocable by the
Indenture Trustee or by the Owner Trustee with the consent of the
Indenture Trustee, to instruct the Indenture Trustee to make
withdrawals and payments from the Accounts for the purpose of
permitting the Servicer or the Owner Trustee to carry out its
respective duties hereunder or permitting the Indenture Trustee to
carry out its duties under the Indenture.
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Section 4.02. COLLECTIONS.
(a) The Servicer shall remit daily to the Collection Account all
payments received from or on behalf of the Obligors on or in respect of the
Receivables (other than, in the case of Precomputed Receivables, payments
constituting Payments Ahead) and all Net Liquidation Proceeds within two
Business Days after receipt thereof.
(b) Notwithstanding the provisions of Section 4.02(a) and subject
to the conditions set forth below, the Servicer may be permitted to make
remittances of collections on a less frequent basis than that specified in
Section 4.02(a) upon compliance with the specific terms and conditions set forth
below in this Section and for so long as such terms and conditions are
fulfilled. Accordingly, notwithstanding the provisions of Section 4.02(a), the
Servicer will be permitted to remit such collections to the Collection Account
in immediately available funds, on each Deposit Date but only for so long as
(i)(A) the Servicer shall be AHFC, (B) except as provided in clause (ii) below,
the Required Servicer Rating is satisfied and (C) no Servicer Default shall have
occurred and be continuing, provided, however, that immediately following the
non-compliance with clause (B) above or in the event that an event of the nature
specified in Section 7.01(c) has occurred (notwithstanding any period of grace
contained in such clause), the Servicer shall remit such collections to the
Collection Account on a daily basis within two Business Days of receipt thereof,
or (ii)(A) if the conditions specified in clause (i)(A) and (C) above are
satisfied, and (B) the Servicer shall have obtained (1) a Servicer Letter of
Credit issued by a depository institution or insurance company, as the case may
be, having a short-term credit rating at least equal to the Required Deposit
Rating and providing that the Indenture Trustee may draw thereon in the event
that the Servicer fails to deposit collections into the Collection Account on a
monthly basis or (2) a surety bond, insurance policy or other deposit of cash or
securities satisfactory to the Indenture Trustee and each Rating Agency;
provided that in connection with clause (ii) above, the Servicer provides to the
Indenture Trustee, from each Rating Agency for which the Servicer's then-current
short-term credit rating is not at least equal to the Required Servicer Rating
for such Rating Agency, a letter to the effect that the satisfaction of the
conditions in clause (ii) above and allowing the Servicer to make monthly
deposits will not result in a qualification, reduction or withdrawal of its
then-current rating of any Class of Notes and, if applicable, an Officer's
Certificate from the Servicer to the effect that the Servicer's then-current
short-term credit rating is at least equal to the Required Servicer Rating from
each other Rating Agency, if any; and, provided further, that if the Servicer
shall have obtained a Servicer Letter of Credit in accordance with clause (ii)
above, the Servicer shall be required to remit collections to the Collection
Account on each Business Day to the extent that the aggregate amount of
collections described in Section 4.02(a) and received during such Collection
Period exceeds the Servicer Letter of Credit Amount. The Indenture Trustee shall
not be deemed to have knowledge of any event or circumstance under clause (i)(C)
above that would require daily remittance by the Servicer to the Collection
Account unless a Responsible Officer has received notice of such event or
circumstance from the Seller or the Servicer in an Officer's Certificate, from
Securityholders as provided in Section 7.01 or from the Letter of Credit Bank.
For purposes of this Article the phrase "payments made on behalf of Obligors"
shall mean payments made by Persons other than the Seller, the Servicer or the
Letter of Credit Bank, if any.
Any funds held by the Servicer which it determines are to be remitted
(or any of its own funds which the Seller or the Servicer determines to pay to
the Letter of Credit Bank) in respect of a failure previously to remit
collections which failure resulted in a payment under the Servicer Letter of
Credit, if any, shall not be remitted to the Collection Account, but shall
instead be paid
35
immediately and directly to the Letter of Credit Bank. Any such payment to
the Letter of Credit Bank shall be accompanied by a copy of the Servicer's
Certificate related to the previous failure to remit funds and an Officer's
Certificate which includes a statement identifying, by reference to the items
in such related Servicer's Certificate, each shortfall in Servicer
remittances to which such payment relates. The Servicer will also provide the
Indenture Trustee with copies of each such Servicer's Certificate and
Officer's Certificate delivered with any such payment to the Letter of Credit
Bank.
(c) The Servicer shall deposit all Payments Ahead in the Payahead
Account within two Business Days after receipt thereof, which Payments Ahead
shall be transferred to the Collection Account pursuant to Section 4.06(a)(i).
Notwithstanding the foregoing, so long as the Servicer is permitted to remit
collections to the Collection Account on a monthly basis pursuant to Section
4.02(b), the Servicer will not be required to deposit Payments Ahead in the
Payahead Account within two Business Days after receipt thereof but shall be
entitled to retain such Payments Ahead, without segregation from its other
funds, until such time as the Servicer shall be required to remit Applied
Payments Ahead to the Collection Account pursuant to Section 4.06(a)(ii).
Commencing with the first day of the first Collection Period that begins at
least two Business Days after the day on which the Servicer is no longer
permitted to remit collections to the Collection Account on a monthly basis
pursuant to Section 4.02(b), and until such time as the Servicer is once again
permitted by Section 4.02(b) to remit collections to the Collection Account on a
monthly basis, all Payments Ahead then held by the Servicer shall be immediately
deposited into the Payahead Account and all future Payments Ahead shall be
remitted by the Servicer to the Payahead Account within two Business Days after
receipt thereof.
Section 4.03. APPLICATION OF COLLECTIONS. On each Payment Date, all
collections for the related Collection Period shall be applied by the Servicer
as follows:
(a) With respect to each Receivable (other than an Administrative
Receivable or a Warranty Receivable), payments made by or on behalf of the
Obligor which are not Supplemental Servicing Fees shall be applied first to
reimburse the Servicer for Outstanding Advances made with respect to such
Receivable (each such payment, an "Overdue Payment"). Next, the amount of any
payment in excess of Supplemental Servicing Fees and Outstanding Advances with
respect to such Receivable shall be applied to the Scheduled Payment with
respect to such Receivable. If the amount of such payment remaining after the
applications described in the two preceding sentences (i) in the case of
Precomputed Receivables equals (together with any Deferred Prepayment) the
unpaid principal balance of such Receivable, it shall be applied to prepay the
principal balance of such Receivable, or (ii) in the case of Simple Interest
Receivables, it shall be applied to prepay the principal balance of such
Receivable.
(b) With respect to each Administrative Receivable and Warranty
Receivable, payments made by or on behalf of the Obligor shall be applied in the
same manner, except that any Released Administrative Amount or Released Warranty
Amount shall be remitted to the Servicer or the Seller, as applicable. A
Warranty Purchase Payment shall be applied to reduce Outstanding Advances and
such Warranty Purchase Payment or an Administrative Purchase Payment, as
applicable, shall then be applied to the Scheduled Payment, in each case to the
extent that the payments by the Obligor shall be insufficient, and then to
prepay the unpaid principal balance of such Receivable in full.
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Section 4.04. ADVANCES.
(a) As of the close of business on the last day of a Collection
Period, if the payments during such Collection Period by or on behalf of the
Obligor on or in respect of a Receivable (other than an Administrative
Receivable or a Warranty Receivable) after application under Section 4.03(a)
shall be less than the Scheduled Payment, whether as a result of any extension
granted to the Obligor or otherwise, then (i) in the case of a Precomputed
Receivable, the Deferred Prepayment, if any, with respect to such Precomputed
Receivable shall be applied by the Servicer to the extent of the shortfall, and
such Deferred Prepayment shall be reduced accordingly and the Servicer shall
advance to the Trust an amount equal to such shortfall (each, a "Precomputed
Advance") and (ii) in the case of a Simple Interest Receivable, the Servicer
shall advance to the Trust an amount equal to the product of the principal
balance of such Receivable as of the first day of such Collection Period and
one-twelfth of its APR minus the amount of interest actually received on such
Receivable during such Collection Period (each, a "Simple Interest Advance"). If
the calculation in clause (ii) above in respect of a Simple Interest Receivable
results in a negative number, an amount equal to such negative amount shall be
paid to the Servicer in reimbursement of any Outstanding Advances in respect of
Simple Interest Receivables. In addition, in the event that a Simple Interest
Receivable becomes a Liquidated Receivable, the amount of accrued and unpaid
interest thereon (but not including interest for the current Collection Period)
shall, up to the amount of Outstanding Advances in respect of Simple Interest
Receivables in respect thereof, be withdrawn from the Collection Account and
paid to the Servicer in reimbursement of such Outstanding Advances. No Advances
will be made with respect to the Principal Balance of Simple Interest
Receivables. Notwithstanding the foregoing, the Servicer shall not be required
to make any Advance (other than a Simple Interest Advance in respect of an
interest shortfall arising from the Prepayment of a Simple Interest Receivable)
to the extent that the Servicer, in its sole discretion, shall determine that
such Advance is unlikely to be recovered from subsequent payments made by or on
behalf of the related Obligor, Liquidation Proceeds, by the Administrative
Purchase Payment or by the Warranty Purchase Payment, in each case, with respect
to such Receivable or otherwise. On each Deposit Date, the Servicer will deposit
into the Collection Account an amount equal to all Advances to be made in
respect of the related Collection Period. The Successor Servicer shall only be
required to make Advances for payments on behalf of Obligors in respect of
Receivables arising on or after the Collection Period in which the (i) Successor
Servicer accepts its appointment or (ii) the Indenture Trustee is automatically
appointed Successor Servicer.
(b) The Servicer shall be entitled to reimbursement for
Outstanding Advances, without interest, with respect to a Receivable from the
following sources with respect to such Receivable: (i) subsequent payments made
by or on behalf of the related Obligor, (ii) Liquidation Proceeds, (iii) the
Administrative Purchase Payment and (iv) the Warranty Purchase Payment.
(c) To the extent that during any Collection Period any funds
described above in Section 4.04(b) with respect to a Receivable as to which the
Servicer previously has made an unreimbursed Advance are received by the Issuer
or the Servicer, and the Servicer determines that any Outstanding Advances
(other than a Simple Interest Advance in respect of an interest shortfall
arising from the Prepayment of a Simple Interest Receivable) with respect to
such Receivable are unlikely to be recovered from payments made on or with
respect to such Receivable (each, a "Nonrecoverable Advance"), then, on the
related Payment Date, upon the
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Servicer providing the Seller and the Trustees with an Officer's Certificate
setting forth the basis for its determination of any such Nonrecoverable
Advance, the Indenture Trustee shall promptly remit to the Servicer from the
Collection Account, (i) from Available Interest an amount equal to the
portion of such Nonrecoverable Advance allocable to interest and (ii) from
Available Principal an amount equal to the portion of such Nonrecoverable
Advance allocable to principal, in each case without interest, in accordance
with Section 4.06(c)(i). In lieu of causing the Indenture Trustee to remit
any such amounts or the amounts described in clauses (i) through (iv) in
Section 4.04(b), the Servicer may deduct such amounts from deposits otherwise
to be made into the Collection Account in accordance with Section 4.09.
Section 4.05. ADDITIONAL DEPOSITS.
(a) The following additional deposits shall be made to the
Collection Account: (i) the Seller shall remit the aggregate Warranty Purchase
Payments with respect to Warranty Receivables pursuant to Section 2.04 and (ii)
the Servicer shall remit (A) any extension fee charged in connection with the
extension of a Receivable pursuant to Section 3.02, (B) the amount required to
be remitted in respect of certain full Prepayments pursuant to Section 3.03, (C)
the aggregate Advances pursuant to Section 4.04(a), (D) the aggregate
Administrative Purchase Payments with respect to Administrative Receivables
pursuant to Section 3.08 and (E) the amount required upon the optional purchase
of all Receivables by the Servicer or any successor to the Servicer pursuant to
Section 8.01.
(b) All deposits required to be made in respect of a Collection
Period pursuant to this Section by the Seller or the Servicer, as the case may
be, may be made in the form of a single deposit and shall be made in immediately
available funds, on the related Deposit Date.
Section 4.06. DISTRIBUTIONS.
(a) On each Deposit Date, the Indenture Trustee shall cause to be
made the following transfers and distributions in immediately available funds in
the amounts set forth in the Servicer's Certificate for such Payment Date:
(i) from the Payahead Account (or directly from the
Servicer in the case of Payments Ahead held by the Servicer pursuant to
Section 4.02(b) or (c)) to the Collection Account, the aggregate
Applied Payments Ahead;
(ii) if the Servicer is not permitted to hold Payments
Ahead pursuant to Section 4.02(b) or (c), from the Collection Account
to the Payahead Account, the aggregate Payments Ahead for the related
Collection Period; and
(iii) from the Yield Supplement Account to the Collection
Account, an amount equal to the Yield Supplement Withdrawal Amount, if
any, for such Payment Date.
(b) On each Determination Date, the Servicer shall calculate all
amounts required to be deposited in the Note Distribution Account and the
Certificate Distribution Account and to make all distributions on the related
Payment Date.
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(c) On each Payment Date (or, with respect to payment of interest
and principal to the Class A-1 Notes only, on the Special Payment Date), the
Servicer shall instruct the Indenture Trustee in writing (based on the
information contained in the Servicer's Certificate delivered on the related
Determination Date pursuant to Section 3.10) to make the following deposits and
distributions for receipt by the Servicer or deposit in the applicable account,
to the extent of the Available Amount, in the following order of priority:
(i) to the Servicer, Nonrecoverable Advances;
(ii) to the Servicer, the Total Servicing Fee (including
any unpaid Total Servicing Fees from one or more prior Collection
Periods);
(iii) to the Indenture Trustee and the Owner Trustee, any
accrued and unpaid Trust Fees and Expenses, in each case to the extent
such fees and expenses have not been previously paid by the Servicer,
provided that, until the Notes have been paid in full, the annual
amount paid to the Trustees out of the Available Amount allocation as
described in this clause (iii) shall not exceed $100,000.00;
(iv) to the Note Distribution Account, the Note Interest
Distributable Amount to be distributed to the holders of the Notes at
their respective Interest Rates;
(v) to the Note Distribution Account, the Note Principal
Distributable Amount;
(vi) to the Reserve Fund, the amount, if any, necessary to
reinstate the balance in the Reserve Fund up to the
Specified Reserve Fund Balance;
(vii) after the Class A-1 Notes have been paid in full, to
the Certificate Distribution Account, the Certificate Interest
Distributable Amount to be distributed to Certificateholders;
(viii) to the Certificate Distribution Account, the
Certificate Principal Distributable Amount;
(ix) to the Indenture Trustee and the Owner Trustee, any
accrued and unpaid Trust Fees and Expenses remaining after application
of the payments described in clause (iii) above; and
(x) to the Seller, any Available Amount remaining (after
giving effect to the reduction in the Available Amount described in
clauses (i) through (ix) above.
Notwithstanding that the Notes have been paid in full, the Indenture
Trustee shall continue to maintain the Collection Account hereunder until the
Pool Balance has been reduced to zero.
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Section 4.07. RESERVE FUND.
(a) On the Closing Date, the Owner Trustee will deposit, on behalf
of the Seller, the Reserve Fund Initial Deposit into the Reserve Fund from the
net proceeds of the sale of the Notes. The Reserve Fund shall be the property of
the Issuer subject to the rights of the Indenture Trustee in the Reserve Fund
Property.
(b) In the event that the Note Distributable Amount exceeds the
sum of the amounts deposited into the Note Distribution Account pursuant to
Sections 4.06(c)(iv) and (v) on each Payment Date (or, if the Reserve Fund is
not maintained by the Indenture Trustee, on the related Deposit Date), the
Indenture Trustee shall cause an amount equal to the lesser of (A) the amount on
deposit in the Reserve Fund and (B) the amount by which the Note Distributable
Amount exceeds the sum of the amounts in the Note Distribution Account, to be
deposited into the Note Distribution Account in immediately available funds in
the amounts set forth in the Servicer's Certificate for such Payment Date;
provided that such amount shall be applied first, to the payment of interest due
on the Notes to the extent, if any, that the amount deposited pursuant to
Section 4.06(c)(iv) is not sufficient to cover such payment of interest and,
second, to the payment of principal of the Notes.
(c) On each Payment Date (or, if the Reserve Fund is not
maintained by the Indenture Trustee, on the related Deposit Date), all interest
and other income (net of losses and investment expenses) on funds on deposit in
the Reserve Fund shall upon the written direction of the Servicer, be paid to
the Seller to the extent that the funds therein exceed the Specified Reserve
Fund Balance. Upon any distribution to the Seller of amounts in excess of the
Specified Reserve Fund Balance, the Noteholders will not have any rights in, or
claims to, such amounts.
Section 4.08. YIELD SUPPLEMENT ACCOUNT. On the Closing Date, the Seller
will deposit the Yield Supplement Account Deposit to the Yield Supplement
Account from the net proceeds of the sale of the Notes. The Yield Supplement
Account shall be the property of the Issuer subject to the rights of the
Indenture Trustee for the benefit of the Securityholders.
Section 4.09. NET DEPOSITS. For so long as AHFC shall be the Servicer
and the Seller, the Servicer and the Indenture Trustee may make any remittances
pursuant to this Article net of amounts to be distributed by the applicable
recipient to such remitting party. Nonetheless, each such party shall account
for all of the above described remittances and distributions as if the amounts
were deposited and/or transferred separately.
Section 4.10. STATEMENTS TO SECURITYHOLDERS.
(a) On each Payment Date, the Servicer shall provide to the Owner
Trustee to forward to each Certificateholder of record and to the Indenture
Trustee to forward to each Noteholder of record a statement, based on the
Servicer's Certificate furnished pursuant to Section 3.10, setting forth at
least the following information as to the Securities, to the extent applicable:
(i) the amount of such distribution allocable to
principal, as allocated to each Class of Notes and to the Certificates
(stated separately for each Class of Notes and the Certificates);
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(ii) the amount of such distribution allocable to
interest, as allocated to each Class of Notes and to the Certificates
(stated separately for each Class of Notes and the Certificates);
(iii) the Yield Supplement Amount, the Yield Supplement
Withdrawal Amount and the amount on deposit in the Yield Supplement
Account after giving effect to the distributions made on such Payment
Date;
(iv) the Pool Balance as of the close of business on the
last day of the related Collection Period, after giving effect to
payments allocated to principal reported under clause (i) above;
(v) the Note Distributable Amount, the Certificate
Distributable Amount and the Available Amount;
(vi) the Total Servicing Fee paid to the Servicer with
respect to the related Collection Period;
(vii) the amount of non-recoverable Advances;
(viii) total Payments Ahead and the Applied Payments Ahead;
(ix) the amount of Trust Fees and Expenses;
(x) the amount of any Note Interest Carryover Shortfall
and Note Principal Carryover Shortfall on such Payment Date and the
change in such amounts from those with respect to the immediately
preceding Payment Date;
(xi) the amount of any Certificate Interest Carryover
Shortfall and Certificate Principal Carryover Shortfall on such Payment
Date and the change in such amounts from those with respect to the
immediately preceding Payment Date;
(xii) the Note Pool Factor for each Class of Notes and the
Certificate Pool Factor, in each case as of such Payment Date;
(xiii) the balance on deposit in the Reserve Fund on such
Payment Date, after giving effect to distributions made on the Payment
Date, if any, and the change in such balance from the immediately
preceding Payment Date; and
(xiv) the amount available under the Servicer Letter of
Credit, if any, and such amount as a percentage of the Pool Balance as
of the last day of such Collection Period.
Each amount set forth on the Payment Date statement under clauses (i),
(ii), (vi), (x) and (xi) above shall be expressed as a dollar amount per $1,000
of original principal balance of a Note or the Original Certificate Balance of a
Certificate, as the case may be.
(b) Within the prescribed period of time for tax reporting
purposes after the end of each calendar year during the term of the Issuer, but
not later than the latest date permitted by
41
law, the related Trustee shall mail to each Person who at any time during
such calendar year shall have been a Securityholder, a statement, prepared by
the Servicer, containing certain information for such calendar year or, in
the event such Person shall have been a Securityholder during a portion of
such calendar year, for the applicable portion of such year, for the purposes
of such Securityholder's preparation of federal income tax returns. In
addition, the Servicer shall furnish to the Trustees for distribution to such
Person at such time any other information necessary under applicable law for
the preparation of such income tax returns.
ARTICLE FIVE
THE SELLER
Section 5.01. REPRESENTATIONS OF SELLER. The Seller makes the following
representations on which the Issuer is deemed to have relied in acquiring the
Receivables. The representations speak as of the execution and delivery of this
Agreement and as of the Closing Date, and shall survive the sale of the
Receivables to the Issuer and the pledge thereof to the Indenture Trustee
pursuant to the Indenture.
(a) ORGANIZATION AND GOOD STANDING. The Seller has been
duly organized and is validly existing as a corporation in good
standing under the laws of the State of California, 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 and sell the Receivables.
(b) DUE QUALIFICATION. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall
require such qualifications.
(c) POWER AND AUTHORITY. The Seller has the power and
authority to execute and deliver this Agreement and to carry out its
terms, the Seller has full power and authority to sell and assign the
property to be sold and assigned to and deposited with the Issuer and
has duly authorized such sale and assignment by all necessary corporate
action; and the execution, delivery and performance of this Agreement
has been duly authorized by the Seller by all necessary corporate
action.
(d) VALID SALE; BINDING OBLIGATION. This Agreement
evidences a valid sale, transfer and assignment of the Receivables,
enforceable against creditors of and purchasers from the Seller, and
constitutes a legal, valid and binding obligation of the Seller
enforceable in accordance with its terms, except as enforceability may
be subject to or limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of
creditors' rights in general and by general principles of equity,
regardless of whether such enforceability shall be considered in a
proceeding in equity or at law.
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(e) NO VIOLATION. The execution, delivery and performance
by the Seller of this Agreement and the consummation of the
transactions contemplated by this Agreement and the fulfillment of the
terms of this Agreement does not conflict with, result in any breach of
any of the terms and provisions of, nor constitute (with or without
notice or lapse of time) a default under, the articles of incorporation
or bylaws of the Seller, or conflict with or violate any of the
material terms or provisions of, or constitute (with or without notice
or lapse of time) a default under, any indenture, agreement or other
instrument to which the Seller is a party or by which it shall be
bound; nor result in the creation or imposition of any Lien upon any of
its properties pursuant to the terms of any such indenture, agreement
or other instrument (other than this Agreement); nor violate any law
or, to the Seller's knowledge, any order, rule or regulation applicable
to the Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Seller or its properties, which breach, default,
conflict, lien or violation would have a material adverse effect on the
earnings, business affairs or business prospects of the Seller.
(f) NO PROCEEDINGS. There are no proceedings or
investigations pending, or to the Seller's knowledge, threatened,
before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or its
properties: (i) asserting the invalidity of this Agreement or any other
Basic Document, (ii) seeking to prevent the issuance of the Securities
or the consummation of any of the transactions contemplated by the
Basic Documents, (iii) seeking any determination or ruling that might
materially and adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, the Basic
Documents or the Securities or (iv) relating to the Seller and which
might adversely affect the federal income tax attributes of the
Securities.
Section 5.02. LIABILITY OF SELLER; INDEMNITIES. The Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement, which obligations shall include
the following:
(a) The Seller shall indemnify, defend and hold harmless
the Issuer, the Trustees and the Servicer and any of the officers,
directors, employees and agents of 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 the transactions
contemplated herein and in the other Basic Documents, 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, and as of the date of,
the sale of the Receivables to the Issuer or the issuance and original
sale of the Securities, or asserted with respect to ownership of the
Receivables, or federal or other income taxes arising out of
distributions on the Securities) and costs and expenses in defending
against the same.
(b) The Seller shall indemnify, defend and hold harmless
the Issuer, the Trustees and the Securityholders and any of the
officers, directors, employees and agents of the Issuer, the Owner
Trustee and the Indenture Trustee from and against any loss, liability
or expense incurred by reason of (i) the Seller's willful misfeasance,
bad faith or
43
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 Seller's or the Issuer's violation of
federal or state securities laws in connection with the offering and
sale of the Securities.
(c) The Seller shall indemnify, defend and hold harmless
the Trustees and their respective officers, directors, employees and
agents from and against all costs, expenses, losses, claims, damages
and liabilities arising out of or incurred in connection with the
acceptance or performance of the trusts and duties herein and contained
in the Trust Agreement, in the case of the Owner Trustee, and contained
in the Indenture, in the case of the Indenture Trustee, except to the
extent that such cost, expense, loss, claim, damage or liability: (i)
in the case of the Owner Trustee, shall be due to the willful
misfeasance, bad faith or negligence (except for errors in judgment) of
the Owner Trustee or shall arise from the breach by the Owner Trustee
of any of its representations or warranties set forth in Section 7.03
of the Trust Agreement, or (ii) in the case of the Indenture Trustee,
shall be due to the willful misfeasance, bad faith or negligence
(except for errors in judgment) of the Indenture Trustee.
(d) The Seller shall pay any and all taxes levied or
assessed upon all or any part of the Owner Trust Estate.
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee, as the case may be, and
the termination of this Agreement and shall include reasonable fees and expenses
of counsel and expenses of litigation. If the Seller shall have made any
indemnity payments pursuant to this Section 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 Seller, without
interest.
Section 5.03. MERGER, CONSOLIDATION OR ASSUMPTION OF THE OBLIGATIONS OF
SELLER; CERTAIN LIMITATIONS.
(a) Any corporation (i) into which the Seller may be merged or
consolidated, (ii) which may result from any merger, conversion or consolidation
to which the Seller shall be a party or (iii) which may succeed to all or
substantially all of the business of the Seller, which corporation in any of the
foregoing cases executes an agreement of assumption to perform every obligation
of the Seller under this Agreement, shall be the successor to the Seller 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, except that if the
Seller in any of the foregoing cases is not the surviving entity, then the
surviving entity shall execute an agreement of assumption to perform every
obligation of the Seller hereunder. The Seller shall provide notice of any
merger, consolidation or succession pursuant to this Section to each Rating
Agency and shall receive from each Rating Agency a letter to the effect that
such merger, consolidation or succession will not result in a qualification,
downgrading or withdrawal of its then-current rating of any Class of Notes.
(b) (i) Subject to paragraph (ii) below, the purpose of the
Seller shall be to engage in any lawful activity for which a corporation may be
organized under the general
44
corporation law of California other than the banking business, the trust
company business or the practice of a profession permitted to be incorporated
by the California Corporations Code.
(ii) Notwithstanding paragraph (b)(i) above, the purpose
of the Seller shall be limited to the following purposes, and
activities incident to and necessary or convenient to accomplish the
following purposes: (A) to acquire, own, hold, sell, transfer, assign,
pledge, finance, refinance and otherwise deal with, retail installment
contracts or wholesale loans secured by, new and used Honda and Acura
motor vehicles (the "Motor Vehicle Receivables"); (B) to authorize,
issue, sell and deliver one or more series of obligations, consisting
of one or more classes of certificates and/or notes or other evidence
of indebtedness (the "Offered Securities") that are collateralized by
or evidence an interest in Motor Vehicle Receivables; and (C) to
negotiate, authorize, execute, deliver and assume the obligations or
any agreement relating to the activities set forth in clauses (A) and
(B) above, including but not limited to any pooling and servicing
agreement,
sale and servicing agreement, indenture, reimbursement
agreement, credit support agreement, receivables purchase agreement or
underwriting agreement and to engage in any lawful activity which is
incidental to the activities contemplated by any such agreement. So
long as any outstanding debt of the Seller or Offered Securities are
rated by any nationally recognized statistical rating organization, the
Seller shall not issue notes or otherwise borrow money unless (1) the
Seller has made a written request to the related nationally recognized
statistical rating organization to issue notes or incur borrowings,
which notes or borrowings are rated by the related nationally
recognized statistical rating organization the same as or higher than
the rating afforded any outstanding rated debt or Offered Securities,
or (2) such notes or borrowings (X) are fully subordinated (and which
shall provide for payment only after payment in respect of all
outstanding rated debt and/or Offered Securities) or are nonrecourse
against any assets of the Seller other than the assets pledged to
secure such notes or borrowings, (Y) do not constitute a claim against
the Seller in the event such assets are insufficient to pay such notes
or borrowings and (Z) where such notes or borrowings are secured by the
rated debt or Offered Securities, are fully subordinated (and which
shall provide for payment only after payment in respect of all
outstanding rated debt and/or Offered Securities) to such rated debt or
Offered Securities.
(c) Notwithstanding any other provision of this Section and any
provision of law, the Seller shall not do any of the following:
(i) engage in any business or activity other than as set
forth in clause (b) above;
(ii) without the affirmative vote of a majority of the
members of the Board of Directors of the Seller (which must include the
affirmative vote of all duly appointed Independent Directors, as
required by the articles of incorporation and bylaws of the Seller),
(A) dissolve or liquidate, in whole or in part, or institute
proceedings to be adjudicated bankrupt or insolvent, (B) consent to the
institution of bankruptcy or insolvency proceedings against it, (C)
file a petition seeking or consent to reorganization or relief under
any applicable federal or state law relating to bankruptcy, (D) consent
to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator or other similar
45
official of the corporation or a substantial part of its property, (E)
make a general assignment for the benefit of creditors, (F) admit in
writing its inability to pay its debts generally as they become due or
(G) take any corporate action in furtherance of the actions set forth
in clauses (A) through (F) above; provided, however, that no director
may be required by any shareholder of the Seller to consent to the
institution of bankruptcy or insolvency proceedings against the Seller
so long as it is solvent; or
(iii) merge or consolidate with any other corporation,
company or entity or sell all or substantially all of its assets or
acquire all or substantially all of the assets or capital stock or
other ownership interest of any other corporation, company or entity
(except for the acquisition of Motor Vehicle Receivables of AHFC and
the sale of Motor Vehicle Receivables to one or more trusts in
accordance with the terms of clause (b)(ii) above, which shall not be
otherwise restricted by this Section).
Section 5.04. LIMITATION ON LIABILITY OF SELLER AND OTHERS. The Seller
and any director, officer, employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Seller shall not be under any obligation 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 5.05. SELLER MAY OWN NOTES. The Seller and any Affiliate
thereof may in its individual or any other capacity become the owner or pledgee
of Notes with the same rights as it would have if it were not the Seller or an
Affiliate thereof, except as expressly provided herein or in any other Basic
Document.
ARTICLE SIX
THE SERVICER
Section 6.01. REPRESENTATIONS OF SERVICER. The Servicer makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution and
delivery of this Agreement and as of the Closing Date, and shall survive the
sale of the Receivables to the Issuer and the pledge thereof to the Indenture
Trustee pursuant to the Indenture:
(a) ORGANIZATION AND GOOD STANDING. The Servicer has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of California, 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 Issuer.
(b) DUE QUALIFICATION. The Servicer is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions in which the ownership or
lease of property or the conduct of its business (including the servicing of the
Receivables as required by this Agreement) shall require such qualifications.
46
(c) POWER AND AUTHORITY. The Servicer has the power and authority
to execute and deliver this Agreement and to carry out its terms; and the
execution, delivery and performance of this Agreement has been duly authorized
by the Servicer by all necessary corporate action.
(d) BINDING OBLIGATION. This Agreement constitutes a legal, valid
and binding obligation of the Servicer enforceable in accordance with its terms,
except as enforceability may be subject to or limited by bankruptcy, insolvency,
reorganization, moratorium, liquidation or other similar laws affecting the
enforcement of creditors' rights in general and by general principles of equity,
regardless of whether such enforceability shall be considered in a proceeding in
equity or in law.
(e) NO VIOLATION. The execution, delivery and performance by the
Servicer of this Agreement and the execution, delivery and performance by the
Seller of this Agreement and the consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms of this Agreement shall not
conflict with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under, the
articles of incorporation 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; nor
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than this Agreement); nor violate any law or, to 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, which breach, default, conflict, lien or violation would have a
material adverse effect on the earnings, business affairs or business prospects
of the Servicer.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending, or to the Servicer's best 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 or any other Basic Document, (ii) seeking to
prevent the issuance of the Securities or the consummation of any of the
transactions contemplated by the 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, the Basic Documents or the Securities or (iv) relating to the
Servicer and which might adversely affect the federal income tax attributes of
the Securities.
Section 6.02. INDEMNITIES OF SERVICER.
(a) The Servicer shall be liable in accordance herewith only to
the extent of the obligations specifically undertaken by the Servicer under this
Agreement. In this regard, the Servicer shall indemnify, defend and hold
harmless the Issuer, the Trustees, the Securityholders and the Seller and any of
the officers, directors, employees and agents of the Issuer, the Owner Trustee
and the Indenture Trustee from and against any and all costs, expenses, losses,
damages, claims and liabilities (i) arising out of or resulting from the use,
ownership or operation by the Servicer or any Affiliate thereof of a Financed
Vehicle, and (ii) to the extent that such cost, expense, loss, claim, damage or
liability arose out of, or was imposed upon any such Person
47
through, the negligence, willful misfeasance or bad faith of the Servicer in
the performance of its duties under this Agreement or by reason of reckless
disregard of its obligations and duties under this Agreement.
For purposes of this Section, in the event of the termination of the
rights and obligations of AHFC (or any successor thereto pursuant to Section
6.03) as Servicer pursuant to Section 7.01, or a resignation by such Servicer
pursuant to this Agreement, such Servicer shall be deemed to be the Servicer
pending appointment of a Successor Servicer (other than the Indenture Trustee)
pursuant to Section 7.02. For the avoidance of doubt, AHFC shall not be liable
for any claims described in the first sentence of this Section which relate to a
date or period on or after the date on which AHFC is terminated or removed as
the Servicer or which are cause by a successor servicer.
(b) Indemnification under this Section shall survive the
resignation or removal of the Owner Trustee or the Indenture Trustee, as the
case may be, or the termination of this Agreement 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 and the Person to or
on behalf of whom such payments are made thereafter collects any of such amounts
from others, such Person shall promptly repay such amounts to the Servicer,
without interest.
Section 6.03. MERGER, CONSOLIDATION OR ASSUMPTION OF THE OBLIGATIONS OF
SERVICER. Any corporation (i) into which the Servicer may be merged or
consolidated, (ii) which may result from any merger, conversion or consolidation
to which the Servicer shall be a party or (iii) which may succeed to all or
substantially all of the business of the Servicer, which corporation in any of
the foregoing cases executes an agreement of assumption to perform every
obligation of the Servicer under this Agreement, shall be the successor to the
Servicer under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties to this Agreement. The
Servicer shall provide notice of any merger, consolidation or succession
pursuant to this Section to the Trustees and each Rating Agency.
Section 6.04. LIMITATION ON LIABILITY OF SERVICER AND OTHERS. Neither
the Servicer nor any of the directors, officers, employees or agents of the
Servicer shall be under any liability to the Issuer or any Securityholder,
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, bad faith or negligence in the performance of
duties or by reason of reckless disregard of obligations and duties under this
Agreement. The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising under this
Agreement.
Except as otherwise 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 other Basic Documents and the rights and duties of the parties to this
Agreement and the other
48
Basic Documents and the interests of the Certificateholders under this
Agreement and the Noteholders under the Indenture. The legal expenses and
costs of such action and any liability resulting therefrom will be expenses,
costs and liabilities of the Issuer.
Section 6.05. AHFC NOT TO RESIGN AS SERVICER. Subject to the provisions
of Section 6.03, AHFC shall not resign from the obligations and duties hereby
imposed on it as Servicer under this Agreement except upon a 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 AHFC shall be communicated to the Trustees 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 Trustees concurrently with or promptly after such notice. No
such resignation shall become effective until the Indenture Trustee or a
Successor Servicer shall have (i) assumed the responsibilities and obligations
of AHFC in accordance with Section 7.02 and (ii) become the Administrator
pursuant to Section 1.09 of the Administration Agreement.
ARTICLE SEVEN
SERVICER DEFAULTS
Section 7.01. SERVICER DEFAULTS. If any one of the following events
(each, a "Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to deliver to the related
Trustee for deposit in any of the Accounts or the Certificate
Distribution Account any required payment or to direct the Indenture
Trustee to make any required distributions therefrom, which failure
continues unremedied for a period of three Business Days after
discovery of such failure by an officer of the Servicer or after the
date on which written notice of such failure, requiring the same to be
remedied, shall have been given (i) to the Servicer by the related
Trustee or (ii) to the Servicer and to the Trustees by the Holders of
Notes, evidencing not less than 25% of the Outstanding Amount of the
Notes;
(b) failure by the Servicer (or so long as the Servicer
is AHFC, the Seller) duly to observe or to perform in any material
respect any other covenants or agreements of the Servicer (or so long
as the Servicer is AHFC, the Seller) set forth in this Agreement or any
other Basic Document, which failure shall (i) materially and adversely
affect the rights of Certificateholders or Noteholders and (ii)
continue unremedied for a period of 90 days after the date on which
written notice of such failure, requiring the same to be remedied,
shall have been given (A) to the Servicer or the Seller (as the case
may be) by the related Trustee or (B) to the Servicer or the Seller (as
the case may be), and to the related Trustee by the Holders of Notes,
evidencing not less than 25% of the Outstanding Amount of the Notes; or
(c) the occurrence of an Insolvency Event with respect to
the Seller or the Servicer;
49
then, and in each and every case, so long as the Servicer Default shall not have
been remedied, either the Indenture Trustee or the Holders of Notes evidencing
not less than 25% of the Outstanding Amount of the Notes (or, if the Notes have
been paid in full and the Indenture has been discharged in accordance with its
terms, by holders of Certificates evidencing not less than 25% of the Percentage
Interests) by notice then given in writing to the Servicer (and to the Indenture
Trustee and the Owner Trustee if given by the Noteholders) may terminate all the
rights and obligations (other than the obligations set forth in Section 6.02
that accrued on or prior to the effective date of the termination) of the
Servicer under this Agreement. On or after the date specified in such written
notice, all authority and power of the Servicer under this Agreement, whether
with respect to the Notes, the Certificates or the Receivables or otherwise,
shall, without further action, pass to and be vested in the Indenture Trustee or
such Successor Servicer as may be appointed under Section 7.02; and, without
limitation, the Indenture Trustee and the Owner Trustee are hereby authorized
and empowered to execute and deliver, for the benefit 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. The predecessor Servicer shall cooperate with the Successor
Servicer and the Trustees in effecting the termination of the responsibilities
and rights of the predecessor Servicer under this Agreement, including the
transfer to the Successor Servicer for administration by it of all cash amounts
that shall at the time be held by the predecessor Servicer for deposit, or have
been deposited by the predecessor Servicer, in the Accounts or the Certificate
Distribution Account or thereafter received with respect to the Receivables and
all Payments Ahead that shall at that time by held by the predecessor Servicer.
All reasonable costs and expenses (including servicer conversion costs and
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 shall be paid by the predecessor Servicer
upon presentation of reasonable documentation of such costs and expenses. Any
costs or expenses incurred in connection with a Servicer Default shall
constitute an expense of administration under Title 11 of the United States
Bankruptcy Code or any other applicable Federal or State bankruptcy laws. Upon
receipt of notice of the occurrence of a Servicer Default, the Indenture Trustee
shall give notice thereof to each Rating Agency.
Section 7.02. APPOINTMENT OF SUCCESSOR SERVICER.
(a) Upon the Servicer's receipt of notice of termination pursuant
to Section 7.01 or the Servicer's resignation pursuant to Section 6.05, 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 (i) the date 45 days from the delivery to the Trustees of written
notice of such resignation (or written confirmation of such notice) in
accordance with the terms of this Agreement and (ii) 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 termination hereunder, the Indenture Trustee shall appoint a
Successor Servicer, and the Successor Servicer shall accept its appointment
(including its appointment as Administrator under the Administration Agreement
as set forth in Section 7.02(b)) by a written assumption in
50
form acceptable to the Trustees. 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, the Indenture Trustee
without further action shall automatically be appointed the Successor
Servicer and the Indenture Trustee shall be entitled to receive the Total
Servicing Fee. Notwithstanding the above, the Indenture Trustee shall, if it
shall be legally unable or unwilling so to act, appoint or petition a court
of competent jurisdiction to appoint any established institution, having a
net worth of not less than $50,000,000 and whose regular business shall
include the servicing of motor vehicle receivables, as the successor to the
Servicer under this Agreement.
(b) Upon appointment, the Successor Servicer (including the
Indenture Trustee acting as Successor Servicer) shall (i) be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on the predecessor Servicer and shall be entitled to the Total Servicing
Fee and all the rights granted to the predecessor Servicer by the terms and
provisions of this Agreement and (ii) become the Administrator pursuant to
Section 1.09 of the Administration Agreement.
Section 7.03. NOTIFICATION OF SERVICER TERMINATION. Upon any
termination of, or appointment of a successor to, the Servicer pursuant to this
Article, the Owner Trustee shall give prompt written notice thereof to
Certificateholders, and the Indenture Trustee shall give prompt written notice
thereof to Noteholders and each Rating Agency.
Section 7.04. WAIVER OF PAST DEFAULTS. The Holders of Notes evidencing
not less than a majority of the Outstanding Amount of the Notes or the Holders
(as defined in the Trust Agreement) of Certificates evidencing not less than a
majority of the Percentage Interests (in the case of a default by the Servicer
that does not adversely affect the Indenture Trustee or the Noteholders or if
all Notes have been paid in full and the Indenture Trustee has been discharged
in accordance with its terms) may, on behalf of all Securityholders waive in
writing any default by the Servicer in the performance of its obligations
hereunder and its consequences, except a default in making any required deposits
to or payments from any of the Accounts or the Certificate Distribution Account
in accordance with this Agreement or in respect of a covenant or provision
hereof that cannot be modified with the consent of each Securityholder. Upon any
such waiver of a past default, such default shall cease to exist, and any
Servicer Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereto except to the extent
expressly so waived.
Section 7.05. REPAYMENT OF ADVANCES. If a Successor Servicer replaces
the Servicer, the predecessor Servicer shall be entitled to receive
reimbursement for all outstanding Advances made by the predecessor Servicer.
51
ARTICLE EIGHT
TERMINATION
Section 8.01. OPTIONAL PURCHASE OF ALL RECEIVABLES.
(a) On the Payment Date following the last day of any Collection
Period as of which the Pool Balance is 10% or less of the Original Pool Balance,
the Servicer or any successor to the Servicer shall have the option to purchase
the Owner Trust Estate, other than the Accounts and the Certificate Distribution
Account. To exercise such option, on the related Deposit Date the Servicer shall
deposit pursuant to Section 4.05(a) in the Collection Account an amount equal to
the aggregate Administrative Purchase Payments for the Receivables (including
Defaulted Receivables), and shall succeed to all interests in and to the Issuer.
Notwithstanding the foregoing, the Servicer or any successor to the Servicer
shall not be permitted to exercise such option if the amount to be distributed
to Securityholders on the related Payment Date would be less than the Note
Distributable Amount and Certificate Distributable Amount.
(b) As described in Article Nine of the Trust Agreement, notice of
any termination of the Trust shall be given by the Servicer to the Owner Trustee
and the Indenture Trustee as soon as practicable after the Servicer has received
notice thereof.
(c) Following the satisfaction and discharge of the Indenture and
the payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of the Indenture Trustee pursuant
to this Agreement.
ARTICLE NINE
MISCELLANEOUS
Section 9.01. AMENDMENT.
(a) This Agreement may be amended by the Seller, the Servicer and
the Issuer, with the consent of the Indenture Trustee, but without the consent
of any Securityholders, (i) to cure any ambiguity, to correct or supplement any
provision in this Agreement which may be inconsistent with any other provision
of this Agreement, to add, change or eliminate any other provision of this
Agreement with respect to matters or questions arising under this Agreement that
shall not be inconsistent with the provisions of this Agreement, (ii) to change
the formula for determining the Specified Reserve Fund Balance or the manner in
which the Reserve Fund is funded or to amend or modify any provisions of this
Agreement relating to the remittance schedule with respect to collections
deposited into the Collection Account or the Payahead Account pursuant to
Section 4.02 or (iii) to amend or modify any provisions in this Agreement
relating to the Servicer Letter of Credit, if any, or the acquisition thereof
and including replacing the Servicer Letter of Credit with a surety bond,
insurance policy or deposit of cash or securities satisfactory to the Indenture
Trustee and each Rating Agency; provided, however, that in connection with any
amendment pursuant to clause (i) above, any such action shall not, as evidenced
by an Opinion of Counsel, adversely affect in any material respect the interests
of any Securityholder and provided, further, that in connection with any
amendment pursuant to clause (ii) or (iii) above, the Servicer shall deliver to
the Trustees a letter from each Rating Agency to the effect that such amendment
will not cause its then-current rating on the Rated Securities to be qualified,
reduced or withdrawn.
52
(b) This Agreement may also be amended from time to time by the
Seller, the Servicer and the Issuer, with the consent of the Indenture Trustee,
the consent of the Holders of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes and the Owner Trustee, consent of the Holders
(as defined in the Trust Agreement) of outstanding Certificates evidencing not
less than a majority of the Percentage Interests, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Securityholders;
provided, however, that no such amendment shall (i) except as otherwise provided
in Section 9.01(a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Receivables or
distributions that shall be required to be made for the benefit of the
Securityholders or (ii) reduce the aforesaid percentage of the Outstanding
Amount of the Notes and the Percentage Interests, the Holders of which are
required to consent to any such amendment, without the consent of all of the
Securityholders.
(c) Promptly after the execution of any such amendment or consent,
the Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee and each
Rating Agency. It shall not be necessary for the consent of Securityholders
pursuant to this Section to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of Certificateholders of the execution thereof shall be
subject to such reasonable requirements as the Owner Trustee may require.
(d) Prior to the execution of any amendment to this Agreement, the
Trustees 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 9.02(i)(1). The
Trustees may, but shall not be obligated to, enter into any such amendment which
affects the Owner Trustee's or the Indenture Trustee's, as applicable, own
rights, duties or immunities under this Agreement or otherwise.
Section 9.02. PROTECTION OF TITLE TO TRUST.
(a) The Seller shall execute and file such financing statements
and cause to be executed and filed such continuation statements, all in such
manner and in such places as may be required by law fully to preserve, maintain
and protect the interest of the Issuer and of the Indenture Trustee in the
Receivables and in the proceeds thereof. The Seller shall deliver (or cause to
be delivered) to the Trustees file-stamped copies of, or filing receipts for,
any document filed as provided above, as soon as available following such
filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed in accordance with
Section 9.02(a) seriously misleading within the meaning of Section 9-402(7) of
the UCC, unless it shall have given the Trustees at least 30 days' prior written
notice thereof and shall have promptly filed appropriate amendments to all
previously filed financing statements or continuation statements.
53
(c) Each of the Seller and the Servicer shall give the Trustees at
least 60 days' prior written notice of any relocation of its principal executive
office if, as a result of such relocation, the applicable provisions of the UCC
would require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing 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.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Accounts and any
Payments Ahead held by the Servicer in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from
and after the time of sale under this Agreement of the Receivables, the
Servicer's master computer records (including any backup archives) that refer to
a Receivable shall indicate clearly the interest of the Issuer and the Indenture
Trustee in such Receivable and that such Receivable is owned by the Issuer and
has been pledged to the Indenture Trustee. Indication of the Issuer's and the
Indenture Trustee's interest in a Receivable shall be deleted from or modified
on the Servicer's computer systems when, and only when, the related Receivable
shall have been paid in full or repurchased.
(f) If at any time the Seller or the Servicer shall propose to
sell, grant a security interest in, or otherwise transfer any interest in motor
vehicle receivables to any prospective purchaser, lender or other transferee,
the Servicer shall give to such prospective purchaser, lender or other
transferee computer tapes, records or printouts (including any restored from
backup archives) that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has been sold and is
owned by the Issuer and has been pledged to the Indenture Trustee.
(g) The Servicer shall permit the Indenture Trustee and its agents
at any time during normal business hours to inspect, audit and make copies of
and abstracts from the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Owner Trustee
or to the Indenture Trustee, within five Business Days, a list of all
Receivables (by contract number and name of Obligor) then held as part of the
Issuer, together with a reconciliation of such list to the Schedule of
Receivables and to each of the Servicer's Certificates furnished before such
request indicating removal of Receivables from the Issuer.
(i) The Servicer shall deliver to the Trustees:
(1) promptly after the execution and delivery of this
Agreement and of each amendment hereto, an Opinion of Counsel stating
that, in the opinion of such counsel, either (A) all financing
statements and continuation statements have been executed and
54
filed that are necessary fully to preserve and protect the interest of
the Trustees 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) no such action shall be necessary to
preserve and protect such interest; and
(2) within 90 days after the beginning of each fiscal
year of the Issuer beginning with the first fiscal year beginning more
than three months after the Cutoff Date, an Opinion of Counsel, dated
as of a date during such 90-day period, stating that, in the opinion of
such counsel, either (A) all financing statements and continuation
statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Trustees 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) no such action shall
be necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (1) or (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) The Seller shall, to the extent required by applicable law,
cause the Notes to be registered with the Commission pursuant to Section 12(b)
or Section 12(g) of the Exchange Act within the time periods specified in such
sections.
Section 9.03. NOTICES. All demands, notices and communications under
this Agreement shall be in writing, personally delivered or mailed by certified
mail, return receipt requested, and shall be deemed to have been duly given upon
receipt (i) in the case of the Seller, to CT Corp., ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (ii) in the case of the Servicer, to
American Honda Finance Corporation, ▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇, Attention: President, (iii) in the case of the Issuer or the Owner
Trustee, at the Corporate Trust Office (as such term is defined in the Trust
Agreement), (iv) in the case of the Indenture Trustee, at the Corporate Trust
Office (as such term is herein defined), (v) in the case of Moody's, to ▇▇▇▇▇'▇
Investors Service, Inc., ABS Monitoring Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, (vi) in the case of Standard & Poor's, to Standard & Poor's
Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Asset Backed Surveillance
Department, (vii) in the case of Fitch, to Fitch, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Asset Backed Surveillance Department or
(viii) as to each of the foregoing, at such other address as shall be designated
by written notice to the other parties.
Section 9.04. ASSIGNMENT.
(a) Notwithstanding anything to the contrary contained herein,
except as provided in the remainder of this Section, as provided in Sections
5.03, 6.03 and 6.05, this Agreement may not be assigned by the Seller or the
Servicer without the prior written consent of Holders of Notes evidencing not
less than a majority of the Outstanding Amount of the Notes and Holders (as such
term is defined in the Trust Agreement) of Certificates evidencing not less than
a majority of the Percentage Interests. And as provided in the provisions of
this Agreement
55
concerning the resignation of the Servicer, this Agreement may not be
assigned by the Seller or the Servicer.
(b) The Seller hereby acknowledges and consents to the mortgage,
pledge, assignment and grant of a security interest by the Issuer to the
Indenture Trustee pursuant to the Indenture for the benefit of the Noteholders
of all right, title and interest of the Issuer in, to and under the Receivables
and/or the assignment of any or all of the Issuer's rights and obligations
hereunder to the Indenture Trustee.
Section 9.05. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of the Seller, the Servicer, the Issuer,
the Owner Trustee, the Certificateholders, the Indenture Trustee and the
Noteholders, and nothing in this Agreement, whether express or implied, shall be
construed to give to any other Person any legal or equitable right, remedy or
claim in the Owner Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein. The Owner Trustee is a
third-party beneficiary of Sections 2.07 and 6.02 of this Agreement and is
entitled to the rights and benefits thereof and may enforce the provisions as if
it were a party hereto.
Section 9.06. SEVERABILITY. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other covenants, agreements, provisions or terms of this
Agreement.
Section 9.07. SEPARATE COUNTERPARTS. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 9.08. HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 9.09. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, EXCEPT THAT
THE DUTIES OF THE INDENTURE TRUSTEE SHALL BE GOVERNED BY THE LAWS OF THE STATE
OF
NEW YORK.
Section 9.10. NONPETITION COVENANTS.
(a) Notwithstanding any prior termination of this Agreement, the
Servicer and the Seller shall not, prior to the date which is one year and one
day after the termination of this Agreement with respect to the Issuer,
acquiesce, petition or otherwise invoke or cause the Issuer to invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Issuer under any federal or state bankruptcy,
insolvency or similar law, or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar
56
official of the Issuer or any substantial part of its property, or ordering
the winding up or liquidation of the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement, the
Servicer shall not, prior to the date which is one year and one day after the
termination of this Agreement with respect to the Seller, acquiesce, petition or
otherwise invoke or cause the Seller to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
the Seller under any federal or state bankruptcy, insolvency or similar law, or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Seller or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Seller.
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 Bankers Trust (Delaware), not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Bankers Trust (Delaware), 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 Six, Seven and Eight of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary,
this Agreement has been accepted by The Chase Manhattan Bank, not in its
individual capacity but solely as Indenture Trustee and in no event shall The
Chase Manhattan Bank 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.
57
IN WITNESS WHEREOF, the parties hereto have caused this
Sale and
Servicing Agreement to be duly executed by their respective officers as of the
day and year first above written.
HONDA AUTO RECEIVABLES 2001-2 OWNER TRUST
By: BANKERS TRUST (DELAWARE), not in its
individual capacity but solely as
Owner Trustee on behalf of the Trust
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
AMERICAN HONDA RECEIVABLES CORP., as Seller
By: /s/ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇. ▇▇▇▇▇▇
Title: President
AMERICAN HONDA FINANCE CORPORATION, as Servicer
By: /s/ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇. ▇▇▇▇▇▇
Title: President
Acknowledged and accepted as of the day
and year first above written:
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as
Indenture Trustee
By: /s/ ▇▇▇▇ ▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Trust Officer
58
SCHEDULE A
SCHEDULE OF RECEIVABLES
Delivered to the Owner Trustee and Indenture Trustee at Closing.
A-1
SCHEDULE B
LOCATION OF RECEIVABLE FILES
American Honda Finance Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
American Honda Finance Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
American Honda Finance Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
American Honda Finance Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇
▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
American Honda Finance Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇ ▇▇▇
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American Honda Finance Corporation
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B-1
EXHIBIT A
FORM OF DISTRIBUTION STATEMENT TO SECURITYHOLDERS
Honda Auto Receivables 2001-2 Owner Trust
NOTE PRINCIPAL DISTRIBUTABLE AMOUNT $_________
Class A-1 Notes: ($____ per $1,000 original principal amount)
Class A-2 Notes: ($____ per $1,000 original principal amount)
Class A-3 Notes: ($____ per $1,000 original principal amount)
Class A-4 Notes: ($____ per $1,000 original principal amount)
NOTE INTEREST DISTRIBUTABLE AMOUNT $_________
Class A-1 Notes: ($____ per $1,000 original principal amount)
Class A-2 Notes: ($____ per $1,000 original principal amount)
Class A-3 Notes: ($____ per $1,000 original principal amount)
Class A-4 Notes: ($____ per $1,000 original principal amount)
NOTE PRINCIPAL CARRYOVER SHORTFALL $_________
change from immediately preceding Payment Date
Class A-1 Notes: ($____ per $1,000 original principal amount)
Class A-2 Notes: ($____ per $1,000 original principal amount)
Class A-3 Notes: ($____ per $1,000 original principal amount)
Class A-4 Notes: ($____ per $1,000 original principal amount)
NOTE INTEREST CARRYOVER SHORTFALL $_________
change from immediately preceding Payment Date $_________
Class A-1 Notes: ($____ per $1,000 original principal amount)
Class A-2 Notes: ($____ per $1,000 original principal amount)
Class A-3 Notes: ($____ per $1,000 original principal amount)
Class A-4 Notes: ($____ per $1,000 original principal amount)
AVAILABLE AMOUNT $_________
Available Interest $_________
Available Principal $_________
CERTIFICATE INTEREST DISTRIBUTABLE AMOUNT $_________
($_______ per 1,000 original principal amount)
CERTIFICATE PRINCIPAL DISTRIBUTABLE AMOUNT $_________
($_______ per 1,000 original principal amount)
NOTE DISTRIBUTABLE AMOUNT $_________
CERTIFICATE DISTRIBUTABLE AMOUNT $_________
CERTIFICATE PRINCIPAL CARRYOVER SHORTFALL $_________
change from immediately preceding Payment Date $_________
CERTIFICATE INTEREST CARRYOVER SHORTFALL $_________
change from immediately preceding Payment Date $_________
POOL BALANCE $_________
A-1
NOTE POOL FACTOR $_________
Class A-1 Notes $_________
Class A-2 Notes $_________
Class A-3 Notes $_________
Class A-4 Notes $_________
CERTIFICATE POOL FACTOR $_________
RESERVE FUND BALANCE $_________
change from immediately preceding Payment Date $_________
PAYMENTS AHEAD $_________
APPLIED PAYMENTS AHEAD $_________
TOTAL SERVICING FEE $_________
($_______ per 1,000 original principal amount)
NONRECOVERABLE ADVANCES $_________
YIELD SUPPLEMENT WITHDRAWAL AMOUNT $_________
YIELD SUPPLEMENT AMOUNT $_________
AMOUNT ON DEPOSIT IN YIELD SUPPLEMENT ACCOUNT $_________
TRUST FEES AND EXPENSES $_________
PRINCIPAL PAYMENT AMOUNT $_________
A-2
EXHIBIT B
FORM OF SERVICER'S CERTIFICATE
[On File with ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP]
B-1