Exhibit 10.2
SALE AND SERVICING AGREEMENT
among
BMW VEHICLE OWNER TRUST 2002-A,
Issuer,
BMW FS SECURITIES LLC,
Depositor,
BMW FINANCIAL SERVICES NA, LLC,
Seller, Servicer, Administrator and Custodian,
and
JPMORGAN CHASE BANK,
Indenture Trustee
Dated as of May 1, 2002
This SALE AND SERVICING AGREEMENT (this "Agreement"), dated as of May
1, 2002, among BMW VEHICLE OWNER TRUST 2002-A, a Delaware business trust (the
"Issuer"), BMW FS SECURITIES LLC, a Delaware limited liability company (the
"Depositor"), BMW FINANCIAL SERVICES NA, LLC, a Delaware limited liability
company, as a seller (in such capacity, the "Seller"), as servicer (in such
capacity, the "Servicer"), as administrator (in such capacity, the
"Administrator") and as custodian (in such capacity, the "Custodian"), and
JPMORGAN CHASE BANK, a New York banking corporation, as indenture trustee (the
"Indenture Trustee").
WHEREAS, the Issuer desires to purchase a portfolio of receivables
arising in connection with automobile retail installment sale contracts
generated by BMW FS in the ordinary course of its business and sold by BMW FS to
the Depositor;
WHEREAS, the Depositor is willing to sell such receivables to the
Issuer; and
WHEREAS, BMW FS is willing to service such receivables.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"Advance" means, as to any Payment Date, the aggregate of all scheduled
payments of interest which were due during the related Collection Period that
remained unpaid at the end of such Collection Period and were not collected
during such Collection Period, exclusive of any such scheduled payment which the
Servicer has determined would be a Nonrecoverable Advance if an advance in
respect of such scheduled payment were made.
"Advance Reimbursement Amount" means any amount received or deemed to
be received by the Servicer pursuant to Section 5.11 in reimbursement of an
Advance made out of its own funds.
"Agreement" means this Sale and Servicing Agreement, as the same may be
amended or supplemented from time to time.
"Amount Financed" means with respect to a Receivable, the amount
advanced under the Receivable toward the purchase price of the Financed Vehicle
and any related costs, exclusive of any amount allocable to the premium of
force-placed physical damage insurance covering the Financed Vehicle.
"Annual Percentage Rate" or "APR" of a Receivable means the annual rate
of finance charges stated in the related Contract.
"Available Amounts" means, with respect to any Payment Date, the sum of
Available Principal and Available Interest.
"Available Amounts Shortfall" shall have the meaning set forth in
Section 5.06(b).
"Available Interest" means, with respect to any Payment Date, the sum
of the following amounts, without duplication, allocable to interest received or
allocated by the Servicer on or in respect of the Receivables during the related
Collection Period: (a) that portion of all collections on Receivables allocable
to interest (including the amount, if any, of Advances for that Collection
Period, but excluding the amount, if any, of reimbursements of Advance
previously made to the Servicer), (b) the Purchase Amount of each Receivable
that became a Purchased Receivable during such Collection Period to the extent
attributable to accrued interest on such Receivable, (c) Recoveries for such
Collection Period, (d) Investment Earnings for the related Payment Date, (e)
Liquidation Proceeds for such Collection Period to the extent allocable to
interest and (f) Net Investment Losses deposited by the Servicer; provided,
however, that in calculating the Available Interest the following will be
excluded: all payments and proceeds (including Liquidation Proceeds) of any
Purchased Receivables the Purchase Amount of which has been included in the
Available Interest in a prior Collection Period.
"Available Principal" means, with respect to any Payment Date, the sum
of the following amounts, without duplication, with respect to the related
Collection Period: (a) the portion of all collections on Receivables allocable
to principal, (b) Liquidation Proceeds for such Collection Period to the extent
allocable to principal and (c) that portion allocable to principal of the
Purchase Amount of all Receivables that became Purchased Receivables during or
in respect of such Collection Period.
"Basic Documents" means the Trust Agreement, the Indenture, this
Agreement, the Receivables Purchase Agreement, the Administration Agreement, and
the Note Depository Agreement and other documents and certificates delivered in
connection therewith.
"BMW Capital" means BMW US Capital LLC, a Delaware limited liability
company.
"BMW FS" means BMW Financial Services NA, LLC, a Delaware limited
liability company.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which a national banking association or a commercial banking institution in
the State of New Jersey, the State of Delaware or the State of New York is
authorized or obligated by law or executive order to remain closed.
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"Certificate" means a certificate evidencing the beneficial interest of
a Certificateholder in the Trust.
"Certificate Distribution Account" has the meaning assigned to such
term in the Trust Agreement.
"Certificate Final Scheduled Payment Date" means the Payment Date in
May 2008.
"Certificate Percentage Interest" has the meaning assigned to such term
in the Trust Agreement.
"Certificateholders" has the meaning assigned to such term in the Trust
Agreement.
"Class" means any one of the classes of Notes.
"Class A-1 Final Scheduled Payment Date" means the Payment Date in May
2003.
"Class A-1 Note Balance" means, as of any date of determination, the
Initial Class A-1 Note Balance less all amounts distributed to Class A-1
Noteholders on or prior to such date and allocable to principal.
"Class A-1 Noteholder" means the Person in whose name a Class A-1 Note
is registered in the Note Register.
"Class A-1 Notes" means the 1.91% Asset Backed Notes, Class A-1,
substantially in the form of Exhibit A-1 to the Indenture.
"Class A-1 Rate" means 1.91% per annum.
"Class A-2 Final Scheduled Payment Date" means the Payment Date in
December 2004.
"Class A-2 Noteholder" means the Person in whose name a Class A-2 Note
is registered in the Note Register.
"Class A-2 Notes" means the 2.83% Asset Backed Notes, Class A-2,
substantially in the form of Exhibit A-2 to the Indenture.
"Class A-2 Rate" means 2.83% per annum.
"Class A-3 Final Scheduled Payment Date" means the Payment Date in May
2006.
"Class A-3 Noteholder" means the Person in whose name a Class A-3 Note
is registered in the Note Register.
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"Class A-3 Notes" means the 3.80% Asset Backed Notes, Class A-3,
substantially in the form of Exhibit A-3 to the Indenture.
"Class A-3 Rate" means 3.80% per annum.
"Class A-4 Final Scheduled Payment Date" means the Payment Date in May
2007.
"Class A-4 Noteholder" means the Person in whose name a Class A-4 Note
is registered in the Note Register.
"Class A-4 Notes" means the 4.46% Asset Backed Notes, Class A-4,
substantially in the form of Exhibit A-4 to the Indenture.
"Class A-4 Rate" means 4.46% per annum.
"Class B Final Scheduled Payment Date" means the Payment Date in May
2008.
"Class B Noteholder" means the Person in whose name a Class B Note is
registered in the Note Register.
"Class B Notes" means the 4.85% Asset Backed Notes, Class B,
substantially in the form of Exhibit A-5 to the Indenture.
"Class B Rate" means 4.85% per annum.
"Closing Date" means May 23, 2002.
"Collateral" has the meaning specified in the Granting Clause of the
Indenture.
"Collection Account" means the account designated as such, established
and maintained pursuant to Section 5.01(a).
"Collection Period" means with respect to any Payment Date, the
calendar month preceding such Payment Date. Any amount stated as of the last day
of a Collection Period or as of the first day of a Collection Period shall give
effect to the following calculations as determined as of the close of business
on such last day: (i) all applications of collections and (ii) all distributions
to be made on the following Payment Date.
"Commission" means the Securities and Exchange Commission.
"Contract" means a motor vehicle retail installment sale contract.
"Controlling Class" means with respect to any Notes Outstanding, the
Class A Notes (voting together as a single class) so long as the Class A Notes
are Outstanding, and thereafter the Class B Notes so long as any Class B Notes
are outstanding (excluding Notes held by the Depositor, the Servicer or their
Affiliates).
"Conveyed Assets" shall have the meaning set forth in Section 2.01.
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"Corporate Trust Administration Department" shall have the meaning set
forth in the Trust Agreement.
"Corporate Trust Office" shall have the meaning set forth in the
Indenture.
"Custodian" means BMW FS, in its capacity as custodian of the
Receivables.
"Cutoff Date" means the close of business on April 30, 2002.
"Dealer" means the dealer who sold a Financed Vehicle and who
originated the related Receivable and assigned it to BMW FS pursuant to a Dealer
Agreement.
"Dealer Agreement" means an agreement between BMW FS and a Dealer
pursuant to which such Dealer sells Contracts to BMW FS, substantially in the
form of Exhibit D hereto.
"Delinquent Receivable" means a Receivable with respect to which more
than 20% of any Scheduled Payment is more than 29 days delinquent as of the last
day of the related Collection Period, excluding Receivables with respect to
which the related Financed Vehicle has been repossessed and Liquidated
Receivables.
"Delivery" when used with respect to Trust Account Property means:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute "instruments"
within the meaning of Section 9-102(a)(47) of the UCC and are susceptible of
physical delivery, transfer thereof to the Indenture Trustee by physical
delivery to the Indenture Trustee endorsed to, or registered in the name of, the
Indenture Trustee or endorsed in blank, and, with respect to a certificated
security (as defined in Section 8-102(a)(4) of the UCC) transfer thereof (i) by
delivery of such certificated security endorsed to, or registered in the name
of, the Indenture Trustee or (ii) by delivery thereof to a "clearing
corporation" (as defined in Section 8-102(a)(5) of the UCC) and the making by
such clearing corporation of appropriate entries on its books reducing the
appropriate securities account of the transferor and increasing the appropriate
securities account of the Indenture Trustee by the amount of such certificated
security and the identification by the clearing corporation of the certificated
securities for the sole and exclusive account of the Indenture Trustee (all of
the foregoing, "Physical Property"), and, in any event, any such Physical
Property in registered form shall be in the name of the Indenture Trustee or its
nominee; and such additional or alternative procedures as may hereafter become
appropriate to effect the complete transfer of ownership of any such Trust
Account Property to the Indenture Trustee or its nominee or custodian,
consistent with changes in applicable law or regulations or the interpretation
thereof;
(b) with respect to any security issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to federal book-entry regulations, the following procedures, all
in accordance with applicable law, including applicable federal regulations and
Articles 8 and 9 of the UCC: book-entry registration of such Trust Account
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Property to an appropriate book-entry account maintained with a Federal Reserve
Bank by a securities intermediary that is also a "depository" pursuant to
applicable federal regulations; the making by such securities intermediary of
entries in its books and records crediting such Trust Account Property to the
Indenture Trustee's security account at the securities intermediary and
identifying such book-entry security held through the Federal Reserve System
pursuant to federal book-entry regulations as belonging to the Indenture
Trustee; and such additional or alternative procedures as may hereafter become
appropriate to effect complete transfer of ownership of any such Trust Account
Property to the Indenture Trustee, consistent with changes in applicable law or
regulations or the interpretation thereof;
(c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not governed by
clause (b) above, registration on the books and records of the issuer thereof in
the name of the Indenture Trustee or its nominee or custodian who either (i)
becomes the registered owner on behalf of the Indenture Trustee or (ii) having
previously become the registered owner, acknowledges that it holds for the
Indenture Trustee; and
(d) with respect to any item of Trust Account Property that is a
security entitlement causing the securities intermediary to indicate on its
books and records that such security entitlement has been credited to a
securities account of the Indenture Trustee.
"Depositor" means BMW FS Securities LLC and its successors in interest.
"Determination Date" means, with respect to each Payment Date, the
eighteenth calendar day of the month in which such Payment Date occurs (or if
such eighteenth day is not a Business Day, the next succeeding Business Day).
"Eligible Deposit Account" means either (a) a segregated account with
an Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States of America or any State, having corporate trust powers and acting
as trustee for funds deposited in such account, so long as any of the securities
of such depository institution shall have a credit rating from each Rating
Agency in one of its generic rating categories that signifies investment grade.
"Eligible Institution" means (a) the corporate trust department of the
Indenture Trustee or the Owner Trustee or (b) a depository institution organized
under the laws of the United States of America or any State, that (i) has either
(A) a long-term unsecured debt rating of at least "AA-" by Standard & Poor's and
acceptable to Moody's and Fitch or (B) a short-term unsecured debt rating or
certificate of deposit rating of at least "A-1+" by Standard & Poor's and
acceptable to Moody's and Fitch and (ii) the deposits of which are insured by
the FDIC.
"Eligible Investments" means securities, negotiable instruments or
security entitlements that evidence:
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(a) direct obligations of, and obligations fully guaranteed as to the
full and timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any State (or any domestic branch of a foreign bank)
and subject to supervision and examination by federal or state banking or
depository institution authorities; provided, however, that at the time of the
investment or contractual commitment to invest therein, the commercial paper or
other short-term unsecured debt obligations (other than such obligations the
rating of which is based on the credit of a Person other than such depository
institution or trust company) thereof shall have a credit rating from each
Rating Agency in the highest investment category granted thereby;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each Rating Agency in
the highest investment category granted thereby;
(d) investments in money market funds having a rating from each Rating
Agency in the highest investment category granted thereby (including funds for
which the Indenture Trustee or the Owner Trustee or any of their respective
Affiliates is investment manager or advisor);
(e) bankers' acceptances issued by any depository institution or trust
company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of America or
any agency or instrumentality thereof the obligations of which are backed by the
full faith and credit of the United States of America, in either case entered
into with a depository institution or trust company (acting as principal)
described in clause; and
(g) any other investment with respect to which the Issuer, the
Indenture Trustee or the Servicer has received written notification from each
Rating Agency that the acquisition of such investment will satisfy the Rating
Agency Condition.
"Eligible Servicer" means BMW FS or any other Person that at the time
of its appointment as Servicer (i) is servicing a portfolio of motor vehicle
retail installment sale contracts or motor vehicle installment loans, (ii) is
legally qualified and has the capacity to service the Receivables, (iii) has
demonstrated the ability professionally and competently to service a portfolio
of motor vehicle retail installment sale contracts or motor vehicle installment
loans similar to the Receivables with reasonable skill and care and (iv) has a
minimum net worth of $50,000,000.
"Exchange Act" means the Securities and Exchange Act of 1934, as
amended.
"FDIC" means the Federal Deposit Insurance Corporation, and its
successors.
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"Financed Vehicle" means a new or used automobile, sport utility
vehicle or motorcycle, together with all accessions thereto, securing an
Obligor's indebtedness under the related Contract.
"First Priority Principal Distribution Amount" means, with respect to
any Payment Date, an amount equal to the excess, if any of (a) the aggregate
outstanding principal amount of the Class A Notes as of the preceding Payment
Date (after giving effect to any principal payments made on the Class A Notes on
such preceding Payment Date) over (b) the Pool Balance at the end of the
Collection Period preceding such Payment Date less the Yield Supplement
Overcollateralization Amount for such Payment Date; provided however, that the
First Priority Principal Distribution Amount shall not exceed the sum of the
aggregate outstanding principal amount of all of the Notes on such Payment Date
(after giving effect to any principal payments made on the Notes on such
preceding Payment Date); and provided further, that the First Priority Principal
Distribution Amount on and after the Final Scheduled Payment Date of a class of
Class A Notes shall not be less than the amount that is necessary to reduce the
outstanding principal amount of such class of Class A Notes and all earlier
maturing classes of Class A Notes to zero.
"Fitch" means Fitch Inc., and its successors.
"Indenture" means the Indenture, dated as of May 1, 2002, 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.
"Initial Class A-1 Note Balance" means $311,000,000.
"Initial Class A-2 Note Balance" means $358,426,000.
"Initial Class A-3 Note Balance" means $446,779,000.
"Initial Class A-4 Note Balance" means $251,253,000.
"Initial Class B Note Balance" means $27,907,000.
"Initial Pool Balance" means an amount equal to the aggregate Principal
Balance of the Receivables as of the Cutoff Date.
"Insolvency Event" means, with respect to a specified Person, (a) 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 60 consecutive days; or (b)
the commencement by such Person of a voluntary case under any applicable federal
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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.
"Interest Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.01(b).
"Interest Period" means (a) with respect to the Class A-1 Notes, the
period from and including the most recent Payment Date on which interest has
been paid (or, in the case of the first Payment Date, the Closing Date) to but
excluding the next succeeding Payment Date and (b) with respect to the Class
A-2, Class A-3, Class A-4 Notes and Class B Notes, the period from and including
the 25th day of the calendar month (or, in the case of the first Payment Date,
from and including the Closing Date) to but excluding the 25th day of the next
calendar month.
"Investment Earnings" means, with respect to any Payment Date, the
investment earnings (net of losses and investment expenses) on amounts on
deposit in a Trust Account (other than the Collection Account and the Reserve
Account) to be applied on such Payment Date pursuant to Section 5.01(d).
"Issuer" means BMW Vehicle Owner Trust 2002-A.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Receivable by operation of law as a result of any
act or omission by the related Obligor.
"Liquidated Receivable" means a Receivable with respect to which the
earliest of the following shall have occurred: (i) the related Financed Vehicle
has been repossessed and liquidated, (ii) the related Financed Vehicle has been
repossessed in excess of 90 days and has not yet been liquidated, (iii) the
Servicer has determined in accordance with its credit policies that all amounts
that it expects to receive with respect to the Receivable have been received or
(iv) the end of the Collection Period in which the Receivable becomes 150 days
or more past due.
"Liquidation Proceeds" means, with respect to any Receivable that
becomes a Liquidated Receivable, the moneys collected in respect thereof, from
whatever source, during or after the Collection Period in which such Receivable
became a Liquidated Receivable, including liquidation of the related Financed
Vehicle, net of the sum of any out-of-pocket expenses of the Servicer reasonably
allocated to such liquidation and any amounts required by law to be remitted to
the Obligor on such Liquidated Receivable.
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"Minimum Required Rating" means, with respect to BMW Capital, a
short-term unsecured debt rating of the commercial paper of BMW Capital (which
commercial paper is guaranteed by Bayerische Motoren Werke Aktiengesellschaff)
equal to or greater than "Prime-1" by Moody's and "A-1" by Standard & Poor's.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., and its successors.
"Net Investment Losses" means, with respect to a Trust Account and any
Collection Period, the amount, if any, by which the aggregate of all losses and
expenses incurred during such period in connection with the investment of funds
in Eligible Investments in accordance with Section 5.01(d) exceeds the aggregate
of all interest and other income realized during such period on such funds.
"Nonrecoverable Advance" means any advance made or proposed to be made
pursuant to Section 5.11, which the Servicer believes, in its good faith
judgment, is not, or if made would not be, ultimately recoverable from
Liquidation Proceeds or otherwise. In determining whether an advance is or will
be nonrecoverable, the Servicer need not take into account that it might receive
any amounts in a deficiency judgment.
"Note Balance" means, as of any date of determination, an amount equal
to the sum of (i) the Initial Class A-1 Note Balance, (ii) the Initial Class A-2
Note Balance, (iii) the Initial Class A-3 Note Balance, (iv) the Initial Class
A-4 Note Balance and (v) the Initial Class B Note Balance, less all amounts
distributed to Noteholders on or prior to such date and allocable to principal.
"Note Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.01(b).
"Note Pool Factor" means, with respect to each Class of Notes as of the
close of business on the last day of a Collection Period, a seven-digit decimal
figure equal to the Outstanding Amount of such Class of Notes (after giving
effect to any reductions thereof to be made on the immediately following Payment
Date) divided by the original Outstanding Amount of such Class of Notes. The
Note Pool Factor will be 1.0000000 as of the Closing Date; thereafter, the Note
Pool Factor will decline to reflect reductions in the Outstanding Amount of such
Class of Notes.
"Noteholders" shall mean the Class A-1 Noteholders, the Class A-2
Noteholders, the Class A-3 Noteholders, the Class A-4 Noteholders or the Class B
Noteholders.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
related Financed Vehicle, and any other Person obligated to make payments
thereunder.
"Officers' Certificate" means a certificate signed by (a) the chairman
of the board, any vice president, the controller or any assistant controller and
(b) the president, a treasurer, assistant treasurer, secretary or assistant
secretary of the Depositor or the Servicer, as appropriate.
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"Opinion of Counsel" means one or more written opinions of counsel, who
may be an employee of or counsel to the Depositor or the Servicer, which counsel
shall be acceptable to the Indenture Trustee, the Owner Trustee or the Rating
Agencies, as applicable, and which shall be addressed to the Owner Trustee and
the Indenture Trustee and which shall be at the expense of the person required
to provide such an Opinion of Counsel.
"Outstanding Amount" means, as of any date of determination, the
aggregate principal amount of a Class of Notes outstanding as of such date of
determination.
"Outstanding Amount Advanced" means, as to any Payment Date, the
aggregate of all Advances remitted by the Servicer out of its own funds pursuant
to Section 5.11, less the aggregate of all related Advance Reimbursement Amounts
actually received prior to such Payment Date.
"Owner Trustee" means Wilmington Trust Company, acting not in its
individual capacity but solely as owner trustee under the Trust Agreement.
"Payment Date" means, with respect to each Collection Period, the
twenty-fifth day of the following month or, if such day is not a Business Day,
the immediately following Business Day, commencing on June 25, 2002.
"Physical Property" has the meaning assigned to such term in the
definition of "Delivery" above.
"Pool Balance" means, with respect to any Payment Date, an amount equal
to the aggregate Principal Balance of the Receivables at the end of the related
Collection Period, after giving effect to all payments of principal received
from Obligors and Purchase Amounts to be remitted by the Servicer for the
related Collection Period, and after reduction to zero of the aggregate
outstanding Principal Balance of all Receivables that became Liquidated
Receivables during such Collection Period.
"Principal Balance" means, with respect to any Receivable and a
Determination Date, the Amount Financed minus an amount equal to, as of the
close of business on the last day of the related Collection Period, that portion
of all amounts received on or prior to such day with respect to such Receivable
and allocable to principal using the Simple Interest Method.
"Principal Distribution Account" means the account designated as such,
established and maintained pursuant to Section 5.01(b).
"Principal Distribution Amount" means, with respect to any Payment
Date, the sum of the First Priority Principal Distribution Amount and the
Regular Principal Distribution Amount with respect to such Payment Date.
"Purchase Amount" means, with respect to any Receivable that became a
Purchased Receivable, the unpaid principal balance owed by the Obligor thereon
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plus unpaid interest on such amount at the applicable APR to the last day of the
month of repurchase.
"Purchased Receivable" means a Receivable purchased as of the close of
business on the last day of a Collection Period by or on behalf of the Servicer
pursuant to Section 4.07 or by or on behalf of the Seller pursuant to Section
3.03 and the Receivables Purchase Agreement.
"Rating Agency" means Moody's, Standard & Poor's or Fitch, as the
context may require. If none of Moody's, Standard & Poor's, Fitch or a successor
thereto remains in existence, "Rating Agency" shall mean any nationally
recognized statistical rating organization or other comparable Person designated
by the Depositor.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days' (or such shorter period as shall be
acceptable to each Rating Agency) prior notice thereof and that each Rating
Agency shall not have notified the Issuer or the Indenture Trustee in writing
that such action will result in a reduction, withdrawal or down-grade of the
then-current rating of each class of Notes.
"Realized Losses" means, with respect to any Receivable that becomes a
Liquidated Receivable, the excess of the Principal Balance thereof over the
portion of related Liquidation Proceeds allocable to principal.
"Receivable Files" means the following documents with respect to each
Financed Vehicle:
(i) the fully executed original of each Receivable (together
with any agreements modifying each such Receivable, including any
deferment agreement);
(ii) the original credit application, or an electronic copy
thereof;
(iii) the original certificate of title or such other
documents that the Servicer or the Seller shall keep on file in
accordance with its customary procedures evidencing the security
interest of the Seller in the related Financed Vehicle; and
(iv) any and all other documents that the Servicer shall have
kept on file in accordance with its customary procedures relating to a
Receivable, an Obligor or a Financed Vehicle.
"Receivables" means any Contract listed on Schedule A (which Schedule
may be in the form of microfiche).
"Receivables Purchase Agreement" means the Receivables Purchase
Agreement dated as of May 1, 2002, between BMW FS, as the seller, and the
Depositor.
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"Record Date" means, as to any Payment Date, the day immediately
preceding such Payment Date.
"Recoveries" means, with respect to any Receivable that becomes a
Liquidated Receivable, monies collected in respect thereof, from whatever
source, during any Collection Period following the Collection Period in which
such Receivable became a Liquidated Receivable, net of the sum of any amounts
expended by the Servicer for the account of the Obligor and any amounts required
by law to be remitted to the Obligor.
"Regular Principal Distribution Amount" means, with respect to any
Payment Date, an amount not less than zero equal to the excess, if any, of (a)
an amount equal to the aggregate outstanding principal amount of all the Notes
as of the preceding Payment Date (after giving effect to any principal payments
made on the Notes on such preceding Payment Date) or the Closing Date, as the
case may be, minus the Pool Balance at the end of the Collection Period
preceding such Payment Date less the Yield Supplement Overcollateralization
Amount with respect to such Payment Date, over (b) the First Priority Principal
Distribution Amount, if any, with respect to such Payment Date; provided
however, that the Regular Principal Distribution Amount shall not exceed the sum
of the aggregate outstanding principal amount of all of the Notes on such
Payment Date (after giving effect to any principal payments made on the Notes on
such preceding Payment Date in respect of the First Priority Principal
Distribution Amount, if any); provided, further, that the Regular Principal
Distribution Amount on and after the Final Scheduled Payment Date of such Class
of Notes shall not be less than the amount that is necessary to reduce the
outstanding principal amount of that Class of Notes and all earlier maturing
classes of Notes to zero.
"Required Payment" means, with respect to each Payment Date, the amount
required to be distributed to the Securityholders pursuant to Section
5.06(b)(i), (ii), (iii), (iv) and (v).
"Reserve Account" means the account designated as such, established by
the Issuer and maintained by the Indenture Trustee pursuant to Section
5.01(c)(i).
"Reserve Account Initial Deposit" means $14,017,630.32.
"Reserve Account Required Amount" means (a) on the Closing Date, the
Reserve Account Initial Deposit and (b) with respect to any Payment Date, an
amount equal to 2.00% of the Pool Balance as of the end of the related
Collection Period; provided, however, that in no event shall the Reserve Account
Required Amount be less than $10,513,222.74.
"Reserve Account Withdrawal Amount" means, with respect to each Payment
Date, the lesser of (x) the excess of (i) the amounts due under Section
5.06(b)(i) through (v) over (ii) Available Amounts for such Payment Date and (y)
and the amount on deposit in the Reserve Account for such Payment Date.
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"Responsible Officer" means the chairman of the board, the president,
any executive vice president, any vice president, the treasurer, any assistant
treasurer, the secretary, or any assistant secretary of the Servicer.
"Scheduled Payment" means, with respect to each Receivable, the
scheduled monthly payment amount set forth in the related Contract and required
to be paid by the Obligor during each Collection Period.
"Securities" means the Notes and the Certificates.
"Securities Intermediary" means JPMorgan Chase Bank, in its capacity as
the securities intermediary in the Securities Account Control Agreement dated as
of May 1, 2002.
"Securityholders" means the Noteholders and/or the Certificateholders,
as the context may require.
"Seller" means BMW FS and its successor in interest, as the seller of
the Receivables to the Depositor pursuant to the Receivables Purchase Agreement.
"Servicer" means BMW FS, as the servicer of the Receivables, and each
successor to BMW FS (in the same capacity) pursuant to Section 7.03 or 8.03.
"Servicer Termination Event" shall have the meaning set forth in
Section 8.01.
"Servicer's Certificate" means an Officers' Certificate of the Servicer
delivered pursuant to Section 4.09, substantially in the form of Exhibit C.
"Servicing Fee" means an amount equal to the sum of (i) the product of
the Servicing Fee Rate and the Pool Balance as of the first day of the related
Collection Period, and (ii) any late fees, prepayment charges, extension fees
and other administrative fees or similar charges collected on the Receivables.
"Servicing Fee Rate" means 1.00% per annum.
"Simple Interest Method" means the method of allocating the monthly
payments received with respect to a Receivable to interest in an amount equal to
the product of (i) the applicable APR, (ii) the period of time (expressed as a
fraction of a year, based on the actual number of days in the calendar month and
365 days in the calendar year) elapsed since the preceding payment was made
under such Receivable and (iii) the outstanding principal amount of such
Receivable, and allocating the remainder of each such monthly payment to
principal.
"Standard & Poor's" means Standard & Poor's Ratings Group, a division
of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and its successors.
"Trust" means the Issuer.
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"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise) and all proceeds of the foregoing.
"Trust Accounts" shall mean the Collection Account, the Note
Distribution Account and the Reserve Account.
"Trust Agreement" means the Amended and Restated Trust Agreement, dated
as of May 1, 2002, between the Depositor and the Owner Trustee.
"Trust Fees and Expenses" will mean all accrued and unpaid Owner
Trustee and Indenture Trustee's fees and any amounts due to the Owner Trustee
and the Indenture Trustee for reimbursement of expenses or in respect of
indemnification and other administrative fees of the Trust.
"Trust Officer" means, in the case of the Indenture Trustee, any
Officer within the Global Trust Service Department of the Indenture Trustee,
including any 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, in each case having direct responsibility for the
administration of the Basic Documents 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 other Basic Documents on behalf of the Owner Trustee.
"UCC" means the Uniform Commercial Code, as in effect in the relevant
jurisdiction.
"Weighted Average Security Rate" means the percentage equivalent of a
fraction, the numerator of which is the sum of (1) the product of the Class A-1
Rate times the Initial Class A-1 Note Balance, (2) the product of the Class A-2
Rate times the Initial Class A-2 Note Balance, (3) the product of the Class A-3
Rate times the Initial Class A-3 Note Balance, (4) the product of the Class A-4
Rate times the Initial Class A-4 Note Balance and (5) the product of the Class B
Rate times the Initial Class B Note Balance, and the denominator of which is the
sum of the Initial Class A-1 Note Balance, the Initial Class A-2 Note Balance,
the Initial Class A-3 Note Balance, the Initial Class A-4 Note Balance and the
Initial Class B Note Balance.
"Yield Supplement Overcollateralization Amount" means, with respect to
any Payment Date, the dollar amount set forth next to such Payment Date on
Schedule C hereto.
Section 1.02. Other Definitional Provisions.
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(a) Capitalized terms used herein that are not otherwise defined shall
have the meanings ascribed thereto in the Indenture or, if not defined therein,
in the Trust Agreement.
(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.
(c) 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.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; Article, Section, Schedule
and Exhibit references contained in this Agreement are references to Articles,
Sections, Schedules and Exhibits in or to this Agreement unless otherwise
specified; "or" shall include "and/or"; and the term "including" shall mean
"including without limitation".
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means such
agreement, instrument or statute as from time to time amended, modified or
supplemented and includes (in the case of agreements or instruments) references
to all attachments thereto and instruments incorporated therein; references to a
Person are also to its permitted successors and assigns.
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.01. Conveyance of Receivables.
In consideration of the Issuer's delivery to or upon the order of the
Depositor of the Notes and the Certificates, the Depositor does hereby sell,
transfer, assign, set over and otherwise convey to the Issuer, without recourse
(subject to the obligations of the Depositor set forth herein), all right, title
and interest of the Depositor in and to:
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(i) the Receivables and all moneys received thereon after the
Cutoff Date;
(ii) the security interests in the Financed Vehicles and any
accessions thereto granted by Obligors pursuant to the Receivables and
any other interest of the Depositor in such Financed Vehicles;
(iii) any Liquidation Proceeds and any other proceeds with
respect to the Receivables from claims on any physical damage, credit
life or disability insurance policies covering the Financed Vehicles or
the related Obligors, including any vendor's single interest or other
collateral protection insurance policy;
(iv) any property that shall have secured a Receivable and
shall have been acquired by or on behalf of the Depositor, the Servicer
or the Trust;
(v) all documents and other items contained in the Receivable
Files;
(vi) all of the Depositor's rights (but not its obligations)
under the Receivables Purchase Agreement;
(vii) all right, title and interest in all funds on deposit
from time to time in the Trust Accounts and the Certificate
Distribution Account and in all investments therein and proceeds
thereof (including all Investment Earnings thereon); and
(viii) the proceeds of any and all of the foregoing
(collectively, with the assets listed in clauses (i) through (vii)
above, the "Conveyed Assets").
It is the intention of the Depositor that the transfer and assignment
contemplated by this Agreement shall constitute a sale of the Receivables and
other related property from the Depositor to the Trust and the beneficial
interest in and title to the Receivables and the related property shall not be
part of the Depositor's estate in the event of the filing of a bankruptcy
petition by or against the Depositor under any bankruptcy law. In the event
that, notwithstanding the intent of the Depositor, the transfer and assignment
contemplated hereby is held not to be a sale, this Agreement shall constitute a
grant by the Depositor to the Issuer of a security interest in all accounts,
money, chattel paper, securities, instruments, documents, deposit accounts,
certificates of deposit, letters of credit, advices of credit, banker's
acceptances, uncertificated securities, general intangibles, contract rights,
goods and other property consisting of, arising from or relating to such
Conveyed Assets, for the benefit of the Securityholders as security for the
Depositor's obligations hereunder.
ARTICLE III
THE RECEIVABLES
Section 3.01. Representations and Warranties of the Seller.
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(a) The Seller has made each of the representations and warranties set
forth in Exhibit A hereto under the Receivables Purchase Agreement and has
consented to the assignment by the Depositor to the Issuer of the Depositor's
rights with respect thereto. 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 of such Receivables to the Indenture Trustee. Pursuant to Section
2.01 of this Agreement, the Depositor has sold, assigned, transferred and
conveyed to the Issuer, as part of the assets of the Issuer, its rights under
the Receivables Purchase Agreement, including the representations and warranties
of the Seller therein as set forth in Exhibit A, upon which representations and
warranties the Issuer relies in accepting the Receivables and delivering the
Securities, together with all rights of the Depositor with respect to any breach
thereof, including the right to require the Seller to repurchase Receivables in
accordance with the Receivables Purchase Agreement. It is understood and agreed
that the representations and warranties referred to in this Section shall
survive the sale and delivery of the Receivables to the Issuer or the Custodian.
(b) The Seller hereby agrees that the Issuer shall have the right to
enforce any and all rights under the Receivables Purchase Agreement assigned to
the Issuer herein, including the right to cause the Seller to repurchase any
Receivable with respect to which it is in breach of any of its representations
and warranties set forth in Exhibit A, directly against the Seller as though the
Issuer were a party to the Receivables Purchase Agreement, and the Issuer shall
not be obligated to exercise any such rights indirectly through the Depositor.
Section 3.02. Representations and Warranties of the Depositor. The
Depositor makes the following representations and warranties, on which the
Issuer relies in accepting the Receivables and delivering the Securities. 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 by the Depositor to the Issuer and the pledge
thereof to the Indenture Trustee pursuant to the Indenture:
(a) Title. The Depositor shall convey to the Issuer all right, title
and interest of the Depositor in and to the Receivables.
(b) All Filings Made. The Depositor has caused all filings (including
UCC filings) to be made in New Jersey and Delaware with respect to the sale of
the Receivables to the Issuer and the pledge contemplated in the Basic
Agreements to the Indenture Trustee.
(c) Liens. The Depositor has not taken any actions to create, incur or
suffer to exist any Lien on or restriction on transferability of any Receivable
except for the Lien of the Indenture and the restrictions on transferability
imposed by this Agreement.
Section 3.03. Repurchase Upon Breach. Each of the Depositor, the Owner
Trustee, the Indenture Trustee, the Seller and the Servicer shall inform the
other parties to this Agreement promptly, in writing, upon the discovery by it
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of any breach of the Seller's representations and warranties made pursuant to
Section 3.01 of this Agreement or Section 3.02 of the Receivables Purchase
Agreement, without regard to any limitation set forth in such representation or
warranty concerning the knowledge of the Seller as to the facts stated therein.
Unless any such breach shall have been cured by the last day of the first
Collection Period following the discovery or notice thereof, the Seller shall be
obligated and, if necessary, the Issuer shall enforce the obligations of the
Seller under the Receivables Purchase Agreement, to purchase as of such last day
any Receivable materially and adversely affected by any such breach. In
consideration of the repurchase of any such Receivable, the repurchasing Seller
shall remit the Purchase Amount to the Collection Account and notify in writing
the Indenture Trustee of such deposit, in the manner specified in Section 5.04.
The sole remedy of the Issuer, the Indenture Trustee, the Noteholders, or the
Certificateholders with respect to the unpaid balance plus accrued interest on
any Receivable as to which a breach of a representation or warranty has occurred
pursuant to Section 3.01 of this Agreement or Section 3.02 of the Receivables
Purchase Agreement or the agreement contained in this Section shall be to
require the Seller to purchase such Receivable pursuant to this Section or to
repurchase such Receivable pursuant to the Receivables Purchase Agreement.
Section 3.04. 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 hereby accepts such
appointment, to act for the benefit of the Issuer and the Indenture Trustee as
custodian of the Receivable Files, which are hereby constructively delivered by
the Issuer to the Indenture Trustee.
Section 3.05. Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer shall hold the Receivable Files as
custodian for the benefit of the Issuer and the Indenture Trustee, and shall
maintain such accurate and complete accounts, records and computer systems
pertaining to each Receivable File as shall enable the 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 the Servicer
exercises with respect to the receivable files relating to all comparable
automotive and motorcycle receivables that the Servicer services for itself or
others and the Servicer acknowledges that for purposes of Section 9-313(c) of
the UCC that it is retaining possession of and acting as custodian for the
Receivable Files for the benefit of the Indenture Trustee. The Servicer shall
conduct, or cause to be conducted, periodic reviews of the Receivable Files held
by it under this Agreement in a manner consistent with its reviews of other
receivables serviced for its own account 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
material failure on its part to hold the Receivable Files and maintain its
accounts, records and computer systems as herein provided and shall promptly
take appropriate action to remedy any such material failure. Nothing herein
shall be deemed to require an initial review or any periodic review by the
Issuer or the Indenture Trustee of the Receivable Files.
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(b) Maintenance of and Access to Records. The Servicer shall maintain
each Receivable File at one of its offices specified in Schedule B to this
Agreement or at such other office as shall be specified to the Issuer and the
Indenture Trustee by written notice not later than 30 days after any change in
location. The Servicer shall make available to the Issuer and the Indenture
Trustee or their duly authorized representatives, attorneys or auditors a list
of locations of the Receivable Files and the related accounts, records and
computer systems maintained by the Servicer at such times during normal business
hours as the Issuer shall reasonably instruct, which does not unreasonably
interfere with the Servicer's normal operations or customer or employee
relations.
Section 3.06. 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 Trust Officer of the
Indenture Trustee or, if the Notes have been paid in full, of the Owner Trustee.
Section 3.07. Custodian's Indemnification. The Servicer, as custodian,
shall indemnify the Trust, the Owner Trustee and the Indenture Trustee and each
of their officers, directors, employees and agents for any and all liabilities,
obligations, losses, compensatory damages, payments, costs, or expenses of any
kind whatsoever that may be imposed on, incurred by or asserted against the
Trust, the Owner Trustee or the Indenture Trustee or any of their officers,
directors, employees or agents as the result of any improper act or omission in
any way relating to the maintenance and custody by the Servicer as custodian of
the Receivable Files; provided, however, that the Servicer shall not be liable
to the Owner Trustee, the Indenture Trustee or any such officer, director,
employee or agent of the Owner Trustee or the Indenture Trustee for any portion
of any such amount resulting from the willful misfeasance, bad faith or
negligence of the Owner Trustee or the Indenture Trustee, as the case may be, or
any such officer, director, employee or agent of the Owner Trustee or the
Indenture Trustee, as the case may be.
Indemnification under this Section shall survive the resignation or
removal of the Servicer or the termination of this Agreement with respect to
acts or omissions of such Servicer preceding such resignation or removal and
shall include reasonable fees and expenses of counsel and expenses of
litigation, each of which is duly documented. 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 3.08. Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and shall
continue in full force and effect unless and until terminated pursuant to this
Section 3.08. If BMW FS or any successor Servicer shall resign as Servicer in
accordance with the provisions of this Agreement or if all of the rights and
obligations of BMW FS or any successor Servicer shall have been terminated under
Section 8.02, the appointment of such Servicer as custodian may be terminated by
the Issuer or by the Holders of Notes evidencing not less than 50% of the
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Outstanding Amount of the Controlling Class of Notes (or, if no Notes are then
Outstanding, the Certificateholders representing not less than 50% of the
Certificate Percentage Interests, or by the Owner Trustee) in the same manner as
the Indenture Trustee or such Securityholders may terminate the rights and
obligations of the Servicer under Section 8.02. As soon as practicable after any
termination of such appointment (but in no event more than ten (10) Business
Days after any such termination of appointment), the Servicer shall deliver the
Receivable Files to the Indenture Trustee or the Indenture Trustee's agent at
such place or places as the Indenture Trustee may reasonably designate.
Notwithstanding the termination of BMW FS as custodian, the Indenture Trustee
and the Owner Trustee agree that, upon any such termination and for so long as
BMW FS remains the Servicer hereunder, the Indenture Trustee or the Owner
Trustee, as the case may be, shall provide, or cause its agent to provide,
access to the Receivable Files to the Servicer for the purpose of enabling the
Servicer to perform its obligations under this Agreement with respect to the
servicing of the Receivables.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 4.01. Duties of Servicer. The Servicer, for the benefit of the
Issuer and the Indenture Trustee, shall manage, service, administer and make
collections on the Receivables and perform the other actions required by the
Servicer under this Agreement. The Servicer shall service the Receivables in
accordance with its customary and usual procedures. The Servicer's duties shall
include the collection and posting of all payments, responding to inquiries of
Obligors, investigating delinquencies, sending payment coupons to Obligors,
reporting any required tax information to Obligors, monitoring the Collateral,
accounting for collections, furnishing monthly and annual statements to the
Owner Trustee, and the Indenture Trustee with respect to distributions and
performing the other duties specified herein. The Servicer also shall administer
and enforce all rights of the holder of the Receivables under the Receivables
and the Dealer Agreements. To the extent consistent with the standards, policies
and procedures otherwise required hereby, 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 the
managing, servicing, administration and collection of the Receivables that it
may deem necessary or desirable. Without limiting the generality of the
foregoing, the Servicer is hereby authorized and empowered to execute and
deliver, on behalf of itself, the Issuer, the Owner Trustee, the Indenture
Trustee, the Certificateholders and the Noteholders, 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 with respect to the Financed Vehicles; provided, however, that,
notwithstanding the foregoing, the Servicer shall not, except pursuant to an
order from a court of competent jurisdiction, release an Obligor from payment of
any unpaid amount due under any Receivable, reduce the related APR or waive the
right to collect the unpaid balance of any Receivable from an Obligor. The
Servicer is hereby authorized to commence, in its own name or in the name of the
Issuer, the Indenture Trustee, the Owner Trustee, the Certificateholders or the
Noteholders, a legal proceeding to enforce a Receivable pursuant to Section 4.03
or to commence or participate in any other legal proceeding (including a
bankruptcy proceeding) relating to or involving a Receivable, an Obligor or a
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Financed Vehicle or self help as permitted by applicable law. If the Servicer
commences or participates in any such legal proceeding in its own name, the
Indenture Trustee or the Issuer shall thereupon be deemed to have automatically
assigned the applicable Receivable to the Servicer solely for purposes of
commencing or participating in such proceeding as a party or claimant, and the
Servicer is authorized and empowered by the Indenture Trustee or the Issuer to
execute and deliver in the Indenture Trustee's or the Issuer'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 ground that it shall not be a real party in interest or a
holder entitled to enforce such Receivable, the Owner Trustee shall, at the
Servicer's expense and direction, take steps to enforce such Receivable,
including bringing suit in its name or the name of the Issuer, the Indenture
Trustee, the Certificateholders or the Noteholders. The Owner Trustee and the
Indenture Trustee shall upon the written request of the Servicer furnish the
Servicer with any powers of attorney and other documents reasonably necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties hereunder.
Section 4.02. Collection of Receivable Payments; Modifications of
Receivables.
(a) Consistent with the standards, policies and procedures required by
this Agreement, 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 and otherwise act with respect to the Receivables in such a
manner as will, in the reasonable judgment of the Servicer, maximize the amount
to be received by the Trust with respect thereto. The Servicer is authorized in
its discretion to waive any prepayment charge, late payment charge or any other
similar fees that may be collected in the ordinary course of servicing any
Receivable.
(b) The Servicer may grant payment extensions only to the extent
permissible in its Collection and Servicing Guidelines as in effect from time to
time; provided, that no such extension shall extend the final payment date on
any Receivable beyond the last day of the Collection Period ending six months
prior to the Certificate Final Scheduled Payment Date.
(c) Upon any extension not in accordance with this Section, the
Servicer shall be required to purchase the related Receivable in accordance with
Section 4.07.
Section 4.03. Realization upon Receivables. Consistent with its
customary procedures, the Servicer shall use its best efforts to repossess or
otherwise convert the ownership of and liquidate any Financed Vehicle securing a
Receivable with respect to which the Servicer shall have determined that
eventual payment in full is unlikely and with respect to which the Servicer
determines that such repossession or other action to be in the best interest of
the Trust.
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Section 4.04. Physical Damage Insurance. The Servicer shall, in
accordance with its customary servicing procedures, require each Obligor to
obtain and maintain physical loss damage insurance covering the related Financed
Vehicle as of the execution of the related Receivable.
Section 4.05. Maintenance of Security Interests in Financed Vehicles.
(a) The Servicer shall, in accordance with its customary servicing
procedures, take such steps as are reasonably 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 re-perfect such security interest 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, or without fulfilling any additional
administrative requirements under the laws of the State in which such Financed
Vehicle is located, to perfect a security interest in the related Financed
Vehicle in favor of the Issuer, the Servicer hereby agrees that the designation
of BMW FS as the secured party on the certificate of title is in its capacity as
agent of the Issuer.
(b) The Depositor, the Owner Trustee, the Indenture Trustee and the
Servicer hereby agree that, upon the occurrence of a Servicer Termination Event,
the Indenture Trustee may take or cause to be taken such actions as may, in the
opinion of counsel to the Indenture Trustee, be necessary to perfect or
re-perfect the security interests in the Financed Vehicles in the name of the
Issuer, including by amending the title documents of the Financed Vehicles. The
Servicer hereby agrees to pay all expenses related to such perfection or
reperfection and to take all action necessary therefor.
Section 4.06. Covenants of Servicer. By its execution and delivery of
this Agreement, the Servicer hereby covenants as follows (upon which covenants
the Issuer, the Indenture Trustee and the Owner Trustee rely in accepting the
Receivables and delivering the applicable Securities):
(a) Liens in Force. No Financed Vehicle securing a Receivable shall be
released in whole or in part from the security interest granted by such
Receivable, except upon payment in full of such Receivable or as otherwise
contemplated herein.
(b) No Impairment. The Servicer shall do nothing to impair the rights
of the Trust in the property of the Trust.
(c) No Amendments. The Servicer shall not extend or otherwise amend the
terms of any Receivable, except in accordance with Section 4.02.
(d) Restrictions on Liens. The Servicer shall not (A) create, incur or
suffer to exist, or agree to create, incur or suffer to exist, or consent to or
permit in the future (upon the occurrence of a contingency or otherwise) the
creation, incurrence or existence of any Lien on or restriction on
transferability of any Receivable except for the Lien of the Indenture and the
restrictions on transferability imposed by this Agreement or (B) other than as
contemplated herein, sign or file any UCC financing statements in any
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jurisdiction that names BMW FS or the Depositor as a debtor, and any Person
other than the Depositor, the Indenture Trustee or the Issuer as a secured party
or sign any security agreement authorizing any secured party thereunder to file
any such financing statement, in each case with respect to the Receivables or
the related property.
Section 4.07. Purchase of Receivables Upon Breach. Upon discovery by
any of the Servicer, the Seller, the Depositor, the Owner Trustee or the
Indenture Trustee of a breach of any of the covenants set forth in Sections
4.02(b), 4.05(a) or 4.06, the party discovering such breach shall give prompt
written notice to the other; provided, however, that the failure to give any
such notice shall not affect any obligation of the Servicer under this Section
4.07. On or before the last day of the first Collection Period following its
discovery or receipt of notice of the breach of any covenant set forth in
Sections 4.02(b), 4.05(a) or 4.06 that materially and adversely affects the
interests of the Issuer, the Indenture Trustee, the Owner Trustee, the
Certificateholders or the Noteholders in any Receivable, the Servicer shall,
unless such breach shall have been cured in all material respects by such date,
purchase from the Issuer the Receivable affected by such breach. In
consideration of the purchase of any such Receivable, the Servicer shall remit
the related Purchase Amount into the Collection Account, with written notice to
the Indenture Trustee of such deposit, in the manner specified in Section 5.04.
Subject to Section 7.02, it is understood and agreed that the obligation of the
Servicer to purchase any Receivable with respect to which such a breach has
occurred and is continuing shall, if such obligation is fulfilled, constitute
the sole remedy against the Servicer for such breach available to the Issuer,
the Owner Trustee, the Indenture Trustee, the Certificateholders or the
Noteholders.
Section 4.08. Servicing Fee. The Servicing Fee shall be payable to the
Servicer on each Payment Date. That part of the Servicing Fee based on the
Servicing Fee Rate shall be calculated on the basis of a 360-day year comprised
of twelve 30-day months. The Servicer shall be required to pay all expenses
incurred by it in connection with its activities under this Agreement (including
taxes imposed on the Servicer and expenses incurred in connection with
distributions and reports made by the Servicer to the Owner Trustee and the
Indenture Trustee).
Section 4.09. Servicer's Certificate. Not later than 10:00 a.m. (New
York City time) on each Determination Date, the Servicer shall deliver to the
Owner Trustee, the Indenture Trustee and the Depositor, with a copy to each
Rating Agency, a Servicer's Certificate containing all information necessary to
make the distributions to be made on the related Payment Date pursuant to
Section 5.06 for the related Collection Period and any other information the
Indenture Trustee may reasonably request. Such Servicer's Certificate shall be
certified by a Responsible Officer of the Servicer that the information provided
is complete and no defaults have occurred. Receivables to be purchased by the
Servicer or to be repurchased by the Seller and each Receivable that became a
Liquidated Receivable shall be identified by the Servicer by account number with
respect to such Receivable (as specified in the Schedule of Receivables).
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Section 4.10. Annual Statement as to Compliance; Notice of Servicer
Termination Event.
(a) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee and each Rating Agency, within 120 days after the end of the Servicer's
fiscal year, an Officer's Certificate signed by a Responsible Officer of the
Servicer, stating that (i) a review of the activities of the Servicer during the
preceding 12-month period (or such shorter period in the case of the first such
Officer's Certificate) and of the performance of its obligations under this
Agreement has 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 Owner Trustee, the Indenture
Trustee and each Rating Agency, promptly after having obtained knowledge
thereof, but in no event later than two Business Days thereafter, written notice
in an Officer's Certificate of any event that is a Servicer Termination Event
under Section 8.01.
Section 4.11. Annual Independent Accountants' Report. The Servicer
shall cause a firm of independent certified public accountants, which may also
render other services to the Servicer or its Affiliates, to deliver to the Owner
Trustee, the Indenture Trustee and each Rating Agency, within 120 days after the
end of each fiscal year, a report addressed to the Board of Directors, or
similar body, of the Servicer, the Owner Trustee and the Indenture Trustee, to
the effect that (i) the firm is independent of the Depositor and the Servicer
within the meaning of the Code of Professional Ethics of the American Institute
of Certified Public Accountants; (ii) a review in accordance with agreed-upon
procedures was made of the Servicer's Certificates relating to such fiscal year,
including the delinquency, default and loss statistics required to be specified
therein and, except as disclosed in the accountants' report, no exceptions or
errors in the Servicer's Certificates were found; and (iii) a review in
accordance with agreed-upon procedures was made of the Servicer's compliance
with its servicing obligations in this Agreement, including without limitation
the obligations of the Servicer set forth in Section 4.02(b) hereof, and, except
as disclosed in the accountants' report, no exceptions to such compliance were
found.
Section 4.12. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to representatives of the Owner Trustee,
the Indenture Trustee, the Certificateholders and the Noteholders reasonable
access to the documentation regarding the Receivables and the related Trust
property. Access shall be afforded without charge, but only upon reasonable
request, which does not unreasonably interfere with the Servicer's normal
business operations or employee or customer relations, and during the normal
business hours at the offices of the Servicer. Nothing in this Section shall
affect the obligation of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors and the failure of the Servicer
to provide access to information as a result of such obligation shall not
constitute a breach of this Section.
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Section 4.13. Term of Servicer. The Servicer hereby covenants and
agrees to act as Servicer under, and for the term of, this Agreement.
Section 4.14. Access to Information Regarding Trust and Basic
Documents. The Servicer shall furnish to the Owner Trustee from time to time
such information regarding the Trust or the Basic Documents as the Owner Trustee
shall reasonably request. The Indenture Trustee shall furnish to the Owner
Trustee annually a copy of the Note Register. The Servicer shall furnish to the
Owner Trustee copies of all documents and reports required to be provided by the
Servicer pursuant to this Article IV of the Sale and Servicing Agreement.
ARTICLE V
DISTRIBUTIONS; STATEMENTS TO SECURITYHOLDERS
Section 5.01. Establishment of Accounts.
(a) The Servicer, for the benefit of the Noteholders and the
Certificateholders, shall establish and maintain in the name of the Indenture
Trustee an Eligible Deposit Account (the "Collection Account"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Noteholders and the Certificateholders.
(b) The Issuer, for the benefit of the Noteholders, shall cause the
Indenture Trustee to establish with and maintain in the name of the Indenture
Trustee an Eligible Deposit Account (the "Note Distribution Account"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Noteholders. The Issuer shall also cause to be established two
administrative subaccounts within the Note Distribution Account at the Eligible
Institution then maintaining the Note Distribution Account, which subaccounts
shall be designated the "Interest Distribution Account" and the "Principal
Distribution Account", respectively. The Interest Distribution Account and the
Principal Distribution Account are established and maintained solely for
administrative purposes.
(c) The Issuer, for the benefit of the Noteholders and the
Certificateholders, shall cause the Indenture Trustee to establish with and
maintain in the name of the Indenture Trustee an Eligible Deposit Account (the
"Reserve Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Noteholders and the
Certificateholders.
(d) Funds on deposit in the Collection Account and the Reserve Account
shall be invested by the Indenture Trustee in Eligible Investments selected in
writing by the Servicer; provided, however, that if the Servicer fails to select
any Eligible Investment, the Indenture Trustee shall invest such funds in an
Eligible Investment described in clause (d) of the definition of "Eligible
Investment" herein. All such Eligible Investments shall be held by the Indenture
Trustee for the benefit of the Noteholders and/or the Certificateholders, as
applicable; provided, that such amount shall be calculated on the Determination
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Date and on each Payment Date all interest and other investment income (net of
Net Investment Losses) on funds on deposit in the Collection Account for the
related Collection Period shall be paid to the Servicer as part of the servicing
compensation or to the Indenture Trustee as compensation. Other than as
permitted in writing by the Rating Agencies, funds on deposit in the Trust
Accounts shall be invested in Eligible Investments that will mature not later
than the Business Day immediately preceding the next Payment Date. Funds
deposited in a Trust Account on a day that immediately precedes a Payment Date
upon the maturity of any Eligible Investments are not required to be invested
overnight.
(e) In the event that there are Net Investment Losses in Eligible
Investments chosen by the Servicer, the Servicer shall deposit into the
Collection Account, no later than one (1) Business Day prior to the Payment
Date, the amount of the Net Investment Losses. The Indenture Trustee shall not
be held liable in any way for any Net Investment Losses, except for losses
attributable to the Indenture Trustee's failure to make payments on such
Eligible Investments issued by the Indenture Trustee, in its commercial capacity
as principal obligor and not as Indenture Trustee, in accordance with their
terms.
(f) (i) The Indenture Trustee shall possess all right, title and
interest in all funds and investment property on deposit from time to time in or
credited to the Trust Accounts and in all proceeds thereof (including all income
thereon) and all such funds, investment property, proceeds and income shall be
part of the Trust Estate, except as otherwise set forth herein. The Trust
Accounts shall be under the sole dominion and control of the Indenture Trustee
for the benefit of the Noteholders and the Certificateholders, as applicable.
If, at any time, any Trust Account ceases to be an Eligible Deposit Account, the
Indenture Trustee (or the Servicer on its behalf) shall within 10 Business Days
(or such longer period, not to exceed 30 calendar days, as to which each Rating
Agency may consent) establish a new Trust Account as an Eligible Deposit Account
and shall transfer any cash and/or any investments from the account that is no
longer an Eligible Deposit Account to the Trust Account.
(ii) With respect to the Trust Account Property, the Indenture
Trustee agrees, by its acceptance hereof, that:
A. any Trust Account Property that is held in deposit accounts
shall be held solely in the Eligible Deposit Accounts, subject to the last
sentence of Section 5.01(f)(i); and each such Eligible Deposit Account shall be
subject to the exclusive custody and control of the Indenture Trustee, and the
Indenture Trustee shall have sole signature authority with respect thereto;
B. any Trust Account Property that constitutes Physical
Property shall be delivered to the Indenture Trustee in accordance with
paragraph (a) of the definition of "Delivery" and shall be held, pending
maturity or disposition, solely by the Indenture Trustee or a securities
intermediary (as such term is defined in Section 8-102(a)(14) of the UCC) acting
solely for the Indenture Trustee;
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C. any Trust Account Property that is a book-entry security
held through the Federal Reserve System pursuant to federal book-entry
regulations shall be delivered in accordance with paragraph (b) of the
definition of "Delivery" and shall be maintained by the Indenture Trustee,
pending maturity or disposition, through continued book-entry registration of
such Trust Account Property as described in such paragraph;
D. any Trust Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by clause (C)
above shall be delivered to the Indenture Trustee in accordance with paragraph
(c) of the definition of "Delivery" and shall be maintained by the Indenture
Trustee, pending maturity or disposition, through continued registration of the
Indenture Trustee's (or its nominee's) ownership of such security; and
E. any Trust Account Property that is a security entitlement
shall be delivered in accordance with paragraph (d) of the definition herein of
"Delivery" and shall be held pending maturity or disposition by the Indenture
Trustee or a securities intermediary acting solely for the Indenture Trustee.
(iii) The Servicer shall have the power, revocable by the
Indenture Trustee or by the Owner Trustee with the consent of the
Indenture Trustee, following a Servicer Termination Event to instruct
the Indenture Trustee to make withdrawals and payments from the Trust
Accounts and the Certificate Distribution Account for the purpose of
withdrawing any amounts deposited in error into such accounts.
Section 5.02. Collections. The Servicer shall remit to the Collection
Account all payments by or on behalf of the Obligors with respect to the
Receivables (other than Purchased Receivables), all Liquidation Proceeds and any
subsequent Recoveries on the Business Day prior to the Payment Date for so long
as BMW Capital has the Minimum Required Rating. So long as BMW Capital has the
Minimum Required Rating, the Servicer will remit all such amounts described in
the preceding sentence within two (2) Business Days of receipt to an account
established and maintained by BMW Capital. If BMW Capital no longer has the
Minimum Required Rating, the Servicer shall remit to the Collection Account all
payments by or on behalf of the Obligors with respect to the Receivables (other
than Purchased Receivables), all Liquidation Proceeds and any subsequent
Recoveries within two Business Days of receipt thereof. Notwithstanding anything
herein to the contrary, so long as BMW FS is the Servicer, BMW FS may withhold
from the deposit into the Collection Account any amounts indicated on the
related Servicer's Certificate as being due and payable to the Seller and pay
such amounts directly to the Seller. For purposes of this Article V, the phrase
"payments by or on behalf of Obligors" shall mean payments made with respect to
the Receivables by Persons other than the Servicer or the Seller.
Section 5.03. Application of Collections.
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All payments received from or on behalf of an Obligor during each
Collection Period with respect to each Receivable (other than a Purchased
Receivable), shall be applied to interest and principal in accordance with the
Simple Interest Method.
Section 5.04. Purchase Amounts. If BMW Capital has the Minimum Required
Rating, the Servicer and the Seller shall deposit or cause to be deposited in
the Collection Account the Purchase Amount as described in the first sentence of
Section 5.02. So long as BMW Capital has the Minimum Required Rating, the
Servicer will deposit the Purchase Amount into an account established and
maintained by BMW Capital, such deposit being made within two (2) Business Days
of the event giving rise to such Purchase Amounts. If BMW Capital no longer has
the Minimum Required Rating, the Servicer or the Seller shall deposit or cause
to be deposited in the Collection Account, on or prior to each Determination
Date, the aggregate Purchase Amount with respect to Purchased Receivables and
the Servicer shall deposit therein all amounts to be paid under Section 4.07 and
Section 9.01.
Section 5.05. Reserved.
Section 5.06. Distributions.
(a) On each Determination Date, the Servicer shall calculate all
amounts required to be deposited pursuant to this Section and deliver a
Servicer's Certificate pursuant to Section 4.09.
(b) On each 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
4.09) to make the following deposits and distributions from Available Amounts on
deposit in the Collection Account, and in the event of a shortfall in meeting
the payments described in clauses (i) through (v) below (an "Available Amounts
Shortfall") from amounts withdrawn from the Reserve Account, in the following
order and priority:
(i) to the Servicer, the Servicing Fee (and any accrued and
unpaid Servicing Fees from prior Collection Periods), and
Nonrecoverable Advances;
(ii) to the Interest Distribution Account, (a) the aggregate
amount of interest accrued for the related Interest Period on each of
the Class A Notes at their respective interest rates on the principal
outstanding as of the previous Payment Date after giving effect to all
payments of principal to the Class A Noteholders on the preceding
Payment Date; and (b) the excess, if any, of the amount of interest
payable to the Class A Noteholders on prior payment Dates over the
amounts actually paid to the Class A Noteholders on those prior Payment
Dates, plus interest on any such shortfall at the related Interest Rate
(as defined in the Indenture) to the extent permitted by law;
(iii) to the Principal Distribution Account, the First
Priority Principal Distribution Amount, if any;
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(iv) to the Interest Distribution Account, (a) the aggregate
amount of interest accrued for the related Interest Period on each of
the Class B Notes at the interest rate on such notes on the principal
outstanding as of the previous Payment Date after giving effect to all
payments of principal to the Class B Noteholders on the preceding
Payment Date and (b) the excess, if any, of the amount of interest
payable to the Class B Noteholders on prior Payment Dates over the
amounts actually paid to the Class B Noteholders on those prior Payment
Dates, plus interest on any such shortfall to the extent permitted by
law;
(v) to the Principal Distribution Account, the Regular
Principal Distribution Amount;
(vi) to the Reserve Account, the amount, if any, necessary to
cause the amount on deposit in the Reserve Account to equal the Reserve
Account Required Amount;
(vii) 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 Available Amounts described in this
clause (vii) shall not exceed $10,000; and
(viii) any Available Amounts remaining, if any, to the
Certificate Distribution Account.
Notwithstanding that the Notes have been paid in full, the Indenture
Trustee shall continue to maintain the Collection Account hereunder until the
Certificate Percentage Interest is reduced to zero.
Section 5.07. Reserve Account.
(a) On or prior to the Closing Date, the Issuer shall cause to have
deposited an amount equal to the Reserve Account Initial Deposit into the
Reserve Account from the net proceeds of the sale of the Securities. The Reserve
Account shall be an asset of the Issuer.
(b) In the event that the Servicer's Certificate states that there is
an Available Amounts Shortfall, then the Indenture Trustee shall withdraw the
Reserve Account Withdrawal Amount from the Reserve Account and deposit such
Reserve Account Withdrawal Amount into the Collection Account no later than
12:00 noon, New York City time, on the Business Day prior to the related Payment
Date.
(c) In the event that the amount on deposit in the Reserve Account
(after giving effect to all deposits thereto and withdrawals therefrom on such
Business Day prior to a Payment Date) is greater than the Reserve Account
Required Amount on any Payment Date, the Indenture Trustee shall release and
distribute all such amounts on such Payment Date to the Certificateholders. Upon
30
any such distribution to the Certificateholders, the Noteholders shall have no
further rights in, or claims to, such amounts.
(d) In the event that, on any Payment Date, the amount on deposit in
the Reserve Account shall be less than the Reserve Account Required Amount, the
Available Amounts remaining after the payment of the amounts set forth in
Section 5.06(b)(i) through (v), up to an amount equal to such shortfall, shall
be deposited by the Indenture Trustee to the Reserve Account on such Payment
Date.
(e) Subject to Section 9.01, amounts will continue to be applied
pursuant to Section 5.06 following payment in full of the Outstanding Amount of
the Notes until the Pool Balance is reduced to zero. Following the payment in
full of the aggregate Outstanding Amount of the Notes and of all other amounts
owing or to be distributed hereunder or under the Indenture or the Trust
Agreement to Noteholders and the termination of the Trust, any amount then
allocated to the Reserve Account shall be paid to the Certificateholders.
Section 5.08. Statements to Securityholders. On each Determination
Date, the Servicer shall provide to the Indenture Trustee (with a copy to each
Rating Agency and each Paying Agent (if any)) for the Indenture Trustee to
forward to each Noteholder of record as of the most recent Record Date and to
the Owner Trustee (with a copy to each Paying Agent (if any)) for the Owner
Trustee to forward to each Certificateholder of record as of the most recent
Record Date a statement substantially in the form of Exhibit B setting forth at
least the following information as to the Securities to the extent applicable:
(a) the amount of collections received with respect to the Receivables
during the related Collection Period and allocable to principal allocable to
each Class of Notes on such Payment Date;
(b) the amount of collections received with respect to the Receivables
during the related Collection Period and allocable to interest allocable to each
Class of Notes on such Payment Date;
(c) the Outstanding Amount of each Class of Notes, the Note Pool Factor
for each such Class as of the close of business on the preceding Payment Date,
after giving effect to payments allocated to principal reported under clause (a)
above;
(d) the amount of the Servicing Fee paid to the Servicer and the amount
of any fees payable to the Owner Trustee, the Custodian or the Indenture Trustee
with respect to the related Collection Period;
(e) the aggregate amounts of Realized Losses, if any, with respect to
the related Collection Period;
(f) 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 (a) above;
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(g) the balance of the Reserve Account on the related Determination
Date after giving effect to deposits and withdrawals to be made on such Payment
Date, if any;
(h) the amount of any deposit to the Reserve Account and the amount and
application of any funds withdrawn from the Reserve Account with respect to such
Payment Date;
(i) the aggregate principal balance of all Receivables that became
Liquidated Receivables or Purchased Receivables during the related Collection
Period;
(j) the aggregate principal balance and number of Receivables that are
30 to 59 days, 60 to 89 days or 90 days or more delinquent as of the last day of
the related Collection Period;
(k) any Available Amounts Shortfall after giving effect to payments on
such Payment Date, and any change in such amounts from the preceding statement;
(l) the aggregate Purchase Amounts for Receivables, if any, that were
or are to be purchased during or with respect to such Collection Period;
(m) the aggregate Principal Balance and number of all Receivables with
respect to which the related Financed Vehicle was repossessed;
(n) the aggregate Principal Balance and number of Receivables with
respect to which the Servicer granted a deferment; and
(o) the Yield Supplement Overcollateralization Amount for the next
Payment Date.
Each amount set forth on the Payment Date statement under clauses (a),
(b) or (k) above shall be expressed as a dollar amount per $1,000 of original
principal balance of a Note.
Section 5.09. Reserved.
Section 5.10. Reserved.
Section 5.11. Advances by the Servicer.
(a) By the close of business on the day required by Section 5.02
hereof, the Servicer shall deposit into the Collection Account, out of its own
funds, the related Advance.
(b) On each Payment Date, the Servicer shall reimburse itself for the
Outstanding Amount Advanced to the extent of actual collections of late
scheduled payments.
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(c) If the Servicer determines that any advance made pursuant to this
Section 5.11 has become a Nonrecoverable Advance and at the time of such
determination there exists an Outstanding Amount Advanced, then the Servicer
shall reimburse itself out of funds in the Collection Account for the amount of
such Nonrecoverable Advance, but only to the extent of such Outstanding Amount
Advanced.
ARTICLE VI
THE DEPOSITOR
Section 6.01. Representations of Depositor. The Depositor makes the
following representations to the Issuer, the Servicer, the Indenture Trustee and
the Seller and on which the Issuer relies in accepting the Receivables and
delivering the Securities. Such representations speak as of the execution and
delivery of this Agreement and as of the Closing Date, and shall survive the
sale, transfer and assignment of the Receivables by the Depositor to the Issuer
and the pledge thereof to the Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Depositor is duly organized and
validly existing as a limited liability company in good standing under the laws
of the State of Delaware, with the corporate power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted.
(b) Due Qualification. The Depositor is duly qualified to do business
as a foreign limited liability company in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions where the failure to do so
would materially and adversely affect the Depositor's ability to transfer the
Receivables to the Trust pursuant to this Agreement or the validity or
enforceability of the Receivables.
(c) Power and Authority. The Depositor has the corporate power and
authority to execute and deliver this Agreement and the other Basic Documents to
which it is a party and to carry out their respective terms; the Depositor has
full power and authority to sell and assign the property to be sold and assigned
to and deposited with the Issuer, and the Depositor shall have duly authorized
such sale and assignment to the Issuer by all necessary corporate action; and
the execution, delivery and performance of this Agreement and the other Basic
Documents to which the Depositor is a party have been duly authorized by the
Depositor by all necessary corporate action.
(d) Binding Obligation. This Agreement and the other Basic Documents to
which the Depositor is a party, when duly executed and delivered by the other
parties hereto and thereto, shall constitute legal, valid and binding
obligations of the Depositor, enforceable against the Depositor in accordance
with their respective terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization or similar laws now or hereafter in
effect relating to or affecting creditors' rights generally and to general
principles of equity (whether applied in a proceeding at law or in equity).
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(e) No Violation. The consummation of the transactions contemplated by
this Agreement and the other Basic Documents and the fulfillment of the terms of
this Agreement and the other Basic Documents shall not conflict with, result in
any breach of any of the terms or provisions of or constitute (with or without
notice or lapse of time, or both) a default under, the limited liability company
agreement of the Depositor, or any indenture, agreement, mortgage, deed of trust
or other instrument to which the Depositor is a party or by which it is bound;
or result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of trust
or other instrument, other than this Agreement and the other Basic Documents; or
violate any law, order, rule or regulation applicable to the Depositor of any
court or federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Depositor.
(f) No Proceedings. There are no proceedings or investigations pending
or, to the Depositor's knowledge, threatened, against the Depositor before any
court, regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Depositor or its properties: (i)
asserting the invalidity of this Agreement or any other Basic Document; (ii)
seeking to prevent the issuance of the Notes or the Certificates or the
consummation of any of the transactions contemplated by this Agreement or any
other Basic Document; (iii) seeking any determination or ruling that might
materially and adversely affect the performance by the Depositor of its
obligations under, or the validity or enforceability of, this Agreement or any
other Basic Document; or (iv) seeking to adversely affect the federal income tax
or other federal, state or local tax attributes of the Trust, the Notes or the
Certificates.
(g) No Consents. The Depositor is not required to obtain the consent of
any other party or any consent, license, approval, registration, authorization,
or declaration of or with any governmental authority, bureau or agency in
connection with the execution, delivery, performance, validity or enforceability
of this Agreement or any other Basic Document to which it is a party that has
not already been obtained.
Section 6.02. Company Existence. During the term of this Agreement, the
Depositor will keep in full force and effect its existence, rights and
franchises as a limited liability company under the laws of the jurisdiction of
its formation and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Basic Documents
and each other instrument or agreement necessary or appropriate to the proper
administration of this Agreement and the transactions contemplated hereby. In
addition, all transactions and dealings between the Depositor and its Affiliates
will be conducted on an arm's-length basis.
Section 6.03. Liability of Depositor; Indemnities. The Depositor shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Depositor under this Agreement (which shall not
include distributions on account of the Notes or the Certificates).
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Section 6.04. Merger or Consolidation of, or Assumption of the
Obligations of, Depositor. Any Person with which the Depositor shall merge or
consolidate or which the Depositor shall permit to become the successor to the
Depositor's business shall execute an agreement of assumption of every
obligation of the Depositor under this Agreement and the other Basic Documents.
Whether or not such assumption agreement is executed, such successor Person
shall be the successor to the Depositor under this Agreement without the
execution or filing of any document or any further act on the part of any of the
parties to this Agreement. The Depositor shall provide prompt notice of any
merger, consolidation or succession pursuant to this Section 6.04 to the Owner
Trustee, the Indenture Trustee, the Servicer, the Securityholders and the Rating
Agencies. Notwithstanding the foregoing, the Depositor shall not merge or
consolidate with any other Person or permit any other Person to become a
successor to the Depositor's business unless (w) immediately after giving effect
to such transaction, no representation or warranty made pursuant to Section 3.02
or 6.01 shall have been breached (for purposes hereof, such representations and
warranties shall speak as of the date of the consummation of such transaction),
(x) the Depositor shall have delivered to the Owner Trustee, the Indenture
Trustee and the Servicer an Officer's Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section 6.04 and that all conditions precedent
provided for in this Agreement relating to such transaction have been complied
with, (y) the Rating Agency Condition shall have been satisfied and (z) the
Depositor shall have delivered to the Owner Trustee, the Indenture Trustee and
the Servicer an Opinion of Counsel stating that, in the opinion of such counsel,
either (A) all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary to preserve and protect
the interest of the Trust in the Receivables and reciting the details of such
filings or (B) no such action is necessary to preserve and protect such
interest.
Section 6.05. Limitation on Liability of Depositor and Others. The
Depositor and any director, officer, employee or agent of the Depositor may rely
in good faith on the advice of counsel or on any document of any kind, prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Depositor shall be under no 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 6.06. Depositor May Own Securities. The Depositor and any
Affiliate thereof may in its individual or any other capacity become the owner
or pledgee of Securities with the same rights as it would have if it were not
the Depositor or an Affiliate thereof, except as expressly provided herein or in
any Basic Document.
Section 6.07. Depositor to Provide Copies of Relevant Securities
Filings. The Depositor shall provide or cause to be provided to the Servicer a
copy of any document filed by the Depositor subsequent to the date hereof with
the Commission pursuant to the Securities Act of 1933 or the Exchange Act that
relate specifically to the Trust, the Notes or the Certificates.
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Section 6.08. Amendment of Depositor's Organizational Documents. The
Depositor shall not amend its organizational documents except in accordance with
the provisions thereof.
ARTICLE VII
THE SERVICER
Section 7.01. Representations of Servicer. The Servicer makes the
following representations upon which the Issuer is deemed to have relied in
acquiring the Receivables. Such 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 is a limited liability
company duly organized and validly existing under the laws of the State of
Delaware. The Servicer is duly authorized to own its properties and transact its
business and is in good standing in each jurisdiction in which the character of
the business transacted by it or any properties owned or leased by it requires
such authorization and in which the failure to be so authorized would have a
material adverse effect on the business, properties, assets, or condition
(financial or other) of the Servicer and its subsidiaries, considered as one
enterprise. The Servicer has, and at all relevant times had, the power,
authority and legal right to acquire, own, and service the Receivables.
(b) Licenses and Approvals. The Servicer has obtained all necessary
licenses and approvals, in all jurisdictions where the failure to do so would
materially and adversely affect the Servicer's ability to acquire, own and
service the Receivables.
(c) Power and Authority. The Servicer has the power and authority to
execute and deliver this Agreement and the other Basic Documents to which it is
a party and to carry out their respective terms; and the execution, delivery and
performance of this Agreement and the other Basic Documents to which it is a
party have been duly authorized by the Servicer by all necessary action.
(d) Binding Obligation. This Agreement and the other Basic Documents to
which it is a party constitute legal, valid and binding obligations of the
Servicer, enforceable against the Servicer in accordance with their respective
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and to general principles of equity whether applied
in a proceeding in equity or at law.
(e) No Violation. The consummation of the transactions contemplated by
this Agreement and the other Basic Documents to which it is a party and the
fulfillment of their respective terms shall not conflict with, result in any
breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time or both) a default under, the limited liability company
agreement of the Servicer, or any indenture, agreement, mortgage, deed of trust
or other instrument to which the Servicer is a party or by which it is bound; or
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result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of trust
or other instrument, other than this Agreement and the other Basic Documents, or
violate any law, order, rule or regulation applicable to the Servicer of any
court or federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Servicer or any of its
properties.
(f) No Proceedings. There are no proceedings or investigations pending
or, to the Servicer's knowledge, threatened, against the Servicer before any
court, regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Servicer or its properties: (i)
asserting the invalidity of this Agreement or any of the other Basic Documents;
(ii) seeking to prevent the issuance of the Securities or the consummation of
any of the transactions contemplated by this Agreement or any of the other Basic
Documents; (iii) seeking any determination or ruling that might materially and
adversely affect the performance by the Servicer of its obligations under, or
the validity or enforceability of, this Agreement or any of the other Basic
Documents; or (iv) seeking to adversely affect the federal income tax or other
federal, state or local tax attributes of the Securities.
Section 7.02. Indemnities of Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer and the representations made by the Servicer under
this Agreement:
(a) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee, the Securityholders and the Depositor
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 arising out of or resulting
from the use, ownership or operation by the Servicer or any Affiliate thereof of
a Financed Vehicle, excluding any losses incurred in connection with the sale of
any repossessed Financed Vehicles in a commercially reasonable manner and in
compliance with the terms of this Agreement.
(b) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee, the Depositor, and their respective
officers, directors, agents and employees, and the Securityholders, from and
against any taxes that may at any time be asserted against any of such parties
with respect to the transactions contemplated in this Agreement, including any
sales, gross receipts, tangible or intangible personal property, privilege or
license taxes (but not including any federal or other income taxes, including
franchise taxes), and any reasonable costs and expenses in defending against the
same.
(c) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee, the Depositor, the Securityholders and
any of the officers, directors, employees or agents of the Issuer, the Owner
Trustee, the Depositor and the Indenture Trustee from and against any and all
costs, expenses, losses, claims, damages and liabilities to the extent that such
cost, expense, loss, claim, damage or liability arose out of, or was imposed
upon any such Person through, the gross negligence, willful misfeasance or bad
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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 BMW FS (or any successor thereto pursuant to Section
7.03) as Servicer pursuant to Section 8.02, or the 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 8.03.
Indemnification under this Section shall survive the resignation or
removal of the Servicer or the termination of this Agreement with respect to
acts of the Servicer prior thereto, and shall include reasonable fees and
expenses of counsel and reasonable 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 7.03. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer. Any Person (i) into which the Servicer may be merged
or consolidated, (ii) resulting from any merger or consolidation to which the
Servicer shall be a party, (iii) that acquires by conveyance, transfer or lease
substantially all of the assets of the Servicer or (iv) succeeding to the
business of the Servicer, which Person shall execute 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 7.03 to the Owner Trustee, the Indenture
Trustee and each Rating Agency. Notwithstanding the foregoing, the Servicer
shall not merge or consolidate with any other Person or permit any other Person
to become a successor to the Servicer's business unless (i) immediately after
giving effect to such transaction, no representation or warranty made pursuant
to Section 7.01 shall have been breached (for purposes hereof, such
representations and warranties shall speak as of the date of the consummation of
such transaction) and no event that, after notice or lapse of time or both,
would become a Servicer Termination Event shall have occurred, (ii) the Servicer
shall have delivered to the Owner Trustee and the Indenture Trustee an Officer's
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this Section
7.03 and that all conditions precedent provided for in this Agreement relating
to such transaction have been complied with and (iii) the Servicer shall have
delivered to the Owner Trustee and the Indenture Trustee an Opinion of Counsel
stating that either (A) all financing statements and continuation statements and
amendments thereto have been executed and filed that are necessary to preserve
and protect the interest of the Trust and the Indenture Trustee, respectively,
in the assets of the Trust and reciting the details of such filings or (B) no
such action shall be necessary to preserve and protect such interest. The
Servicer shall be permitted to transfer and assign its duties and obligations
under this Agreement to an affiliate that has succeeded to substantially all of
the assets and liabilities of the Servicer in connection with a reorganization
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of the Servicer; provided that the resulting entity represents and warrants that
it is not less creditworthy than the Servicer immediately prior to such
reorganization.
Section 7.04. Limitation on Liability of Servicer and Others.
(a) Neither the Servicer nor any of its directors, officers, employees
or agents shall be under any liability to the Issuer, the Depositor, the
Indenture Trustee, the Owner Trustee, the Noteholders or the Certificateholders,
except as provided in this Agreement, for any action taken or for refraining
from the taking of any action pursuant to this Agreement; 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 a breach of this
Agreement or willful misfeasance, bad faith or negligence in the performance of
duties. The Servicer and any director, officer, employee or agent of the
Servicer may conclusively rely in good faith on the written advice of counsel or
on any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising under this Agreement.
(b) The parties expressly acknowledge and consent to the Indenture
Trustee simultaneously acting in the capacity of successor Servicer and
Indenture Trustee. The Indenture Trustee may, in such capacities, discharge its
separate functions fully, without hindrance or regard to conflict of interest
principles, duty of loyalty principles or other breach of fiduciary duties to
the extent that any such conflict or breach arises from the performance by the
Indenture Trustee of express duties set forth in this Agreement in any of such
capacities.
Section 7.05. Appointment of Subservicer. The Servicer may at any time
appoint a subservicer to perform all or any portion of its obligations as
Servicer hereunder; provided however, that the Servicer shall remain obligated
and be liable to the Owner Trustee, the Indenture Trustee and the
Securityholders 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 any
subservicer shall be as agreed between the Servicer and such subservicer from
time to time, and none of the Owner Trustee, the Indenture Trustee, the Issuer
or the Securityholders shall have any responsibility therefor.
Section 7.06. Servicer Not to Resign.
(a) Subject to the provisions of Section 7.03, the Servicer shall not
resign from the obligations and duties imposed on it by this Agreement as
Servicer except upon a determination that the performance of its duties under
this Agreement shall no longer be permissible under applicable law.
(b) Notice of any determination that the performance by the Servicer of
its duties hereunder is no longer permitted under applicable law shall be
communicated to the Owner Trustee and the Indenture Trustee at the earliest
practicable time (and, if such communication is not in writing, shall be
39
confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered by the Servicer to the Owner Trustee and the Indenture Trustee
concurrently with or promptly after such notice. No resignation of the Servicer
shall become effective until a successor Servicer acceptable to the Indenture
Trustee has assumed the responsibilities and obligations of the resigning
Servicer in accordance with Section 8.03. If no Servicer has been appointed
within 30 days of resignation or removal, or the date upon which any regulatory
authority requires such resignation, the Indenture Trustee may petition any
court of competent jurisdiction for such appointment.
Section 7.07. Servicer May Own Securities. The Servicer, and any
Affiliate of the Servicer, may, in its individual or any other capacity, become
the owner or pledgee of Securities with the same rights as it would have if it
were not the Servicer or an Affiliate thereof, except as expressly provided
herein or in any Basic Document. Except as set forth herein or in the other
Basic Documents, Securities so owned by or pledged to Servicer or any such
Affiliate shall have an equal and proportionate benefit under the provisions of
this Agreement and the other Basic Documents, without preference, priority, or
distinction as among all of the Securities of the same class.
ARTICLE VIII
DEFAULT
Section 8.01. Servicer Termination Events. For purposes of this
Agreement, the occurrence and continuance of any of the following shall
constitute a "Servicer Termination Event":
(a) any failure by the Servicer to deposit into the Collection Account
any proceeds or payment required to be so delivered under the terms of this
Agreement that continues unremedied for a period of five Business Days after
written notice is received by the Servicer or after discovery of such failure by
a Responsible Officer of the Servicer;
(b) failure on the part of the Servicer duly to observe or perform, in
any material respect, any covenants or agreements of the Servicer set forth in
this Agreement, which failure (i) materially and adversely affects the rights of
the Securityholders and (ii) continues unremedied for a period of 60 days after
discovery of such failure by a Responsible 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 to the Servicer by any of the Owner Trustee, the Indenture
Trustee or Noteholders evidencing not less than 50% of the Outstanding Amounts
of the Controlling Class of Notes; or
(c) the occurrence of an Insolvency Event with respect to the Servicer.
Section 8.02. Consequences of a Servicer Termination Event. (a) If a
Servicer Termination Event shall occur, the Indenture Trustee may, and at the
direction of Noteholders evidencing 50% of the Outstanding Amount of the
Controlling Class of Notes shall, terminate all of the rights and obligations of
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the Servicer under this Agreement by notice in writing to the Servicer. On or
after the receipt by the Servicer of such written notice, all authority, power,
obligations and responsibilities of the Servicer under this Agreement
automatically shall pass to, be vested in and become obligations and
responsibilities of the successor Servicer appointed by the Controlling Class;
provided, however, that such successor Servicer shall have no liability with
respect to any obligation that was required to be performed by the terminated
Servicer prior to the date that such successor Servicer becomes the Servicer or
any claim of a third party based on any alleged action or inaction of the
terminated Servicer. The successor Servicer is authorized and empowered by this
Agreement to execute and deliver, on behalf of the terminated 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 to show the Indenture
Trustee (or the Owner Trustee if the Notes have been paid in full) as lienholder
or secured party on the related certificates of title of the Financed Vehicles
or otherwise.
(b) All reasonable costs and expenses (including attorneys' fees)
incurred in connection with transferring the servicing duties to the successor
Servicer and amending this agreement to reflect such succession as Servicer,
shall be paid by the predecessor Servicer.
(c) The predecessor Servicer shall cooperate with the Indenture Trustee
and any successor Servicer in effecting the termination of the predecessor
Servicer's responsibilities and rights hereunder including, without limitation,
providing the Indenture Trustee and successor Servicer, as applicable, all
documents and records in electronic or other form reasonably requested by it to
enable it to perform the Servicer's functions hereunder and the transfer to the
Indenture Trustee or such successor Servicer, as applicable, all amounts which
shall at the time or thereafter be or should have been deposited by the
predecessor Servicer in the Collection Account and any other Trust Account
maintained with respect to the Securities. Neither the Indenture Trustee nor any
other successor Servicer shall be deemed to be in default hereunder by reason of
any failure to make, or any delay in making, any distribution hereunder or any
portion thereof caused by (i) the failure of the predecessor Servicer to
deliver, or any delay in delivering, cash, documents or records to it, (ii) the
failure of the predecessor Servicer to cooperate or (iii) restrictions imposed
by any regulatory authority having jurisdiction over the predecessor Servicer.
(d) The successor Servicer will not be responsible for delays
attributable to the predecessor Servicer's failure to deliver information,
defects in the information supplied by the predecessor Servicer or other
circumstances beyond the control of the successor Servicer.
(e) The successor Servicer will make arrangements with the predecessor
Servicer for the prompt and safe transfer of, and the predecessor Servicer shall
provide to the successor Servicer, all necessary servicing files and records
held by the predecessor Servicer with respect to the Receivables including the
Receivable File and a computer tape in readable form as of the most recent
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Business Day containing all information necessary to enable the successor
Servicer to service the Receivables. The predecessor Servicer shall be obligated
to pay the reasonable costs associated with the transfer of the servicing files
and records to the successor Servicer.
(f) The successor Servicer shall have no responsibility and shall not
be in default hereunder nor incur any liability for any failure, error,
malfunction or any delay in carrying out any of its duties if any such failure
or delay results from the successor Servicer acting in accordance with
information prepared or supplied by a person other than the successor Servicer
of the failure of any such person to prepare or provide such information. The
successor Servicer shall have no responsibility, shall not be in default and
shall incur no liability (i) for any act or failure to act by any third party,
including the predecessor Servicer, the Issuer, the Owner Trustee or the
Indenture Trustee or for any inaccuracy or omission in a notice or communication
received by the successor Servicer from any third party or (ii) which is due to
or results from the invalidity, unenforceability of any Receivable with
applicable law or the breach or the inaccuracy of any representation or warranty
made with respect to any Receivable.
Section 8.03. Appointment of Successor Servicer.
(a) On and after the time the Servicer receives a notice of termination
pursuant to Section 8.02 or upon the resignation of the Servicer pursuant to
Section 7.06, the Indenture Trustee shall be the successor in all respects to
the Servicer in its capacity as Servicer under this Agreement and shall be
subject to all the rights, responsibilities, restrictions, duties, liabilities
and termination provisions relating to the Servicer under this Agreement, except
as otherwise stated herein. The Depositor, the Owner Trustee, the Indenture
Trustee and such successor Servicer shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. If a
successor Servicer is acting as Servicer hereunder, it shall be subject to
termination under Section 8.02 upon the occurrence of any Servicer Termination
Event after its appointment as successor Servicer.
(b) On and after the time the Servicer receives a notice of termination
pursuant to Section 8.02 or upon the resignation of the Servicer pursuant to
Section 7.06, or if the Indenture Trustee is legally unable or unwilling to act
as Servicer, the Controlling Class may exercise at any time its right to appoint
a successor to the Servicer, and shall have no liability to the Owner Trustee,
the Indenture Trustee, the Servicer, the Depositor, any Noteholders, any
Certificateholders or any other Person if it does so. Notwithstanding the above,
if the Indenture Trustee shall be legally unable or unwilling to act as
Servicer, the Indenture Trustee, the Owner Trustee or Noteholders evidencing 50%
of the Outstanding Amount of the Controlling Class of Notes may petition a court
of competent jurisdiction to appoint any Eligible Servicer as the successor to
the Servicer. Pending appointment pursuant to the preceding sentence, the
Indenture Trustee shall act as successor Servicer unless it is legally unable to
do so, in which event the outgoing Servicer shall continue to act as Servicer
until a successor has been appointed and accepted such appointment.
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(c) Upon appointment, the successor Servicer shall be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on the predecessor Servicer, and shall be entitled to the Servicing Fee
and all the rights granted to the predecessor Servicer by the terms and
provisions of this Agreement.
Section 8.04. Notification to Securityholders. Upon any termination of,
or appointment of a successor to, the Servicer pursuant to this Article VIII,
the Owner Trustee shall give prompt written notice thereof to the
Certificateholders, and the Indenture Trustee shall give prompt written notice
thereof to the Noteholders and each Rating Agency.
Section 8.05. Waiver of Past Defaults. Noteholders evidencing not less
than a majority of the Outstanding Amount of the Controlling Class of Notes 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 Trust
Accounts in accordance with this Agreement. Upon any such waiver of a past
default, such default shall cease to exist, and any Servicer Termination Event
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.
ARTICLE IX
TERMINATION
Section 9.01. Optional Purchase of All Receivables.
(a) On each Determination Date as of which the Pool Balance is equal to
or less than 10% of the sum of the Initial Pool Balance, the Servicer shall have
the option to purchase the Receivables. To exercise such option, the Servicer
shall deposit to the Collection Account pursuant to Section 5.04 an amount equal
to the aggregate Purchase Amount for the Receivables (including Liquidated
Receivables) and shall succeed to all interests in and to the Receivables. The
exercise of such option shall effect a retirement, in whole but not in part, of
all outstanding Notes.
(b) As described in Article IX 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, and assume the obligations to
make payments to Certificateholders of, the Indenture Trustee pursuant to this
Agreement.
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ARTICLE X
MISCELLANEOUS
Section 10.01. Amendment.
(a) This Agreement may be amended by the Depositor, the Servicer, the
Indenture Trustee and the Issuer, without the consent of any of the Noteholders
or the Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions in this Agreement or
of modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, however, that such action shall not, as evidenced
by an Opinion of Counsel delivered to the Owner Trustee and the Indenture
Trustee, adversely affect in any material respect the interests of any
Noteholder or Certificateholder; provided further, that such action shall not be
deemed to adversely affect in any material respect the interests of any
Noteholder and no Opinion of Counsel to that effect shall be required if the
person requesting the amendment obtains a letter from the Rating Agencies
stating that the amendment would not result in the downgrading or withdrawal of
the ratings then assigned to the Notes.
(b) This Agreement may also be amended from time to time by the
Depositor, the Servicer and the Issuer, with the prior written consent of the
Indenture Trustee, Noteholders holding not less than a majority of the Note
Balance and the Holders (as defined in the Trust Agreement) of outstanding
Certificates evidencing not less than a majority of the outstanding Certificate
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) 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 or Controlling Class and the Certificate Percentage
Interests, the Securityholders of which are required to consent to any such
amendment, without the consent of the Noteholders holding all Outstanding Notes
and Certificateholders holding all outstanding Certificates.
Promptly after the execution of any amendment or consent, the
Administrator shall furnish written notification of the substance of such
amendment or consent to each Securityholder, 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.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee, on behalf of the Issuer, and the Indenture Trustee shall be entitled to
receive and rely upon an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement and the Opinion of
Counsel referred to in Section 10.02(i). The Owner Trustee, on behalf of the
44
Issuer, and the Indenture Trustee may, but shall not be obligated to, enter into
any such amendment that affects the Owner Trustee's or the Indenture Trustee's,
as applicable, own rights, duties or immunities under this Agreement or
otherwise.
Section 10.02. Protection of Title to Trust.
(a) The Servicer shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such a
manner and in such places as may be required by law fully to preserve, maintain
and protect the interest of the Issuer and the Indenture Trustee in the
Receivables and the proceeds thereof. The Servicer shall deliver or cause to be
delivered to the Owner Trustee and the Indenture Trustee file-stamped copies of,
or filing receipts for, any document filed as provided above as soon as
available following such filing.
(b) Neither the Depositor nor the Servicer shall change its name or
corporate structure in any manner that would, could or might make any financing
statement or continuation statement filed in accordance with paragraph (a) above
seriously misleading within the meaning of Section 9-507 of the UCC, unless it
shall have given the Owner Trustee and the Indenture Trustee at least five days'
prior written notice thereof and shall have promptly filed appropriate
amendments to all previously filed financing statements or continuation
statements.
(c) Each of the Depositor and the Servicer shall have an obligation to
give the Owner Trustee and the Indenture Trustee at least five Business Days'
prior written notice of any change of its jurisdiction of organization (within
the meaning of the UCC) if, as a result of such change, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement, and shall promptly file any such amendment or new financing
statement. The Servicer shall at all times maintain each office from which it
shall service Receivables, and its chief executive office, within the United
States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) a person adequately
trained in the use of the Servicer's data system to know at any time the status
of each 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 such Receivable and the amounts from time
to time deposited in the Collection Account in respect of each 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 be coded to reflect that such Receivable is part of the
portfolio of Receivables that is the subject of this Agreement and is held by
the Indenture Trustee for BMW Vehicle Owner Trust 2002-A. Indication of such
Receivable's inclusion in the portfolio shall be deleted from or modified on the
45
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 Depositor 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 upon
reasonable notice and at any time during normal business hours, which does not
unreasonably interfere with the Servicer's normal operations or customer or
employee relations, 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
the Indenture Trustee, within fifteen Business Days, a list of all Receivables
(by contract number and name of Obligor) then held as part of the Trust,
together with a reconciliation of such list to the Schedule of Receivables and
to each of the Servicer's Certificates furnished prior to such request
indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee and the Indenture
Trustee promptly after the execution and delivery of this Agreement and each
amendment hereto, an Opinion of Counsel stating that, in the opinion of such
counsel, either (i) all financing statements and continuation statements have
been executed and filed that are necessary to fully preserve and protect the
interest of the Trust and the Indenture Trustee in the Receivables, and reciting
the details of such filings or referring to prior Opinions of Counsel in which
such details are given, or (ii) no such action shall be necessary to preserve
and protect such interest.
Each Opinion of Counsel referred to in clause (i) or (ii) 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.
Section 10.03. Notices. All demands, notices, communications and
instructions upon or to the Depositor, the Servicer, the Issuer, the Owner
Trustee, the Indenture Trustee or any Rating Agency under this Agreement shall
be in writing, personally delivered, faxed and followed by first class mail, or
mailed by certified mail, return receipt requested, and shall be deemed to have
been duly given upon receipt (a) in the case of the Depositor, ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Vice President Finance
and Risk; (b) in the case of the Servicer, Administrator and Custodian, to BMW
FS, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Vice
President Finance and Risk, (c) in the case of the Indenture Trustee, to ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Capital
Markets Fiduciary Services, Attention: BMW Vehicle Owner Trust 2002-A; (d) in
46
the case of the Issuer or the Owner Trustee, at the Corporate Trust
Administration Department (as defined in the Trust Agreement); (e) in the case
of Moody's, to ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ABS
Monitoring Department, (g) in the case of Standard & Poor's, to ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
(▇▇▇▇ ▇▇▇▇▇), ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Asset Backed Surveillance
Department, and (h) in the case of Fitch, to ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (telecopier no. (▇▇▇) ▇▇▇-▇▇▇▇) Attention: Asset Backed
Surveillance; or, as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.
Section 10.04. Assignment by the Depositor or the Servicer.
Notwithstanding anything to the contrary contained herein, except as provided in
Sections 6.04 and 7.03 herein and as provided in the provisions of this
Agreement concerning the resignation of the Servicer, this Agreement may not be
assigned by the Depositor or the Servicer.
Section 10.05. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Depositor, the Servicer, the Seller,
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 Trust Estate or under or in respect of this Agreement or
any covenants, conditions or provisions contained herein.
Section 10.06. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 10.07. Counterparts. This Agreement may be executed by the
parties hereto in any number of counterparts, each of which when so executed and
delivered shall be an original, but all of which shall together constitute but
one and the same instrument.
Section 10.08. 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 10.09. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
Section 10.10. Assignment by Issuer. The Depositor hereby acknowledges
and consents to any 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 or the assignment of any or all of the Issuer's
rights and obligations hereunder to the Indenture Trustee.
47
Section 10.11. Nonpetition Covenants. Notwithstanding any prior
termination of this Agreement, the parties hereto shall not, prior to the date
that is one year and one day after the termination of this Agreement with
respect to the Issuer or the Depositor, acquiesce, petition or otherwise invoke
or cause the Issuer or the Depositor to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
the Issuer or the Depositor 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 Issuer or the Depositor or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Issuer or the Depositor.
Section 10.12. Limitation of Liability of Owner Trustee and Indenture
Trustee.
(a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Wilmington Trust Company not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Wilmington Trust Company in its individual capacity or,
except as expressly provided in the Trust Agreement, as Owner Trustee of the
Issuer have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer in accordance
with the priorities set forth herein. For all purposes of this Agreement, in the
performance of its duties or obligations hereunder or in the performance of any
duties or obligations of the Issuer hereunder, the Owner Trustee shall be
subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by JPMorgan Chase Bank, not in its individual
capacity but solely as Indenture Trustee, and in no event shall JPMorgan Chase
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 in accordance
with the priorities set forth herein.
Section 10.13. Depositor Payment Obligation. The Depositor shall be
responsible for the payment of all fees and expenses of the Trust, the Owner
Trustee and the Indenture Trustee paid by any of them in connection with any of
their obligations under the Basic Documents to obtain or maintain or monitor the
renewal of any required license of the Trust under the Pennsylvania Motor
Vehicle Sales Finance Act.
48
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
BMW VEHICLE OWNER TRUST 2002-A
By: WILMINGTON TRUST COMPANY,
not in its individual capacity
but solely as Owner Trustee
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Vice President
BMW FS SECURITIES LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Treasurer
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President - Finance & Risk
BMW FINANCIAL SERVICES NA, LLC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Title: Treasurer
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President - Finance & Risk
JPMORGAN CHASE BANK, not in its individual capacity
but solely as Indenture Trustee
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Assistant Vice President
49
SCHEDULE A
Schedule of Receivables
-----------------------
[To be Delivered to the Indenture Trustee at Closing]
SCHEDULE B
Location of Receivable Files
----------------------------
BMW Financial Services NA, LLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
SCHEDULE C
Yield Supplement Overcollateralization Amount
---------------------------------------------
EXHIBIT A
Representations and Warranties of the Seller
--------------------------------------------
Under Section 3.02 of the Receivables Purchase Agreement
--------------------------------------------------------
A-1
EXHIBIT B
Form of Payment Date Statement to Securityholders
-------------------------------------------------
BMW Financial Services NA, LLC.
BMW Vehicle Owner Trust 2002-A Payment Date Statement to Securityholders
Principal Distribution Amount
-------------------------------------------------------------------------------
Class A-1 Notes: ($ per $1,000 original principal balance)
Class A-2 Notes: ($ per $1,000 original principal balance)
Class A-3 Notes: ($ per $1,000 original principal balance)
Class A-4 Notes: ($ per $1,000 original principal balance)
Class B Notes: ($ per $1,000 original principal balance)
Available Interest
Class A-1 Notes: ($ per $1,000 original principal balance)
Class A-2 Notes: ($ per $1,000 original principal balance)
Class A-3 Notes: ($ per $1,000 original principal balance)
Class A-4 Notes: ($ per $1,000 original principal balance)
Class B Notes ($ per $1,000 original principal balance)
Available Amounts Shortfall
Reserve Account Withdrawal Shortfall
Note Balance:
Class A-1 Notes:
Class A-2 Notes:
Class A-3 Notes:
Class A-4 Notes:
Class B Notes:
Note Pool Factor:
Class A-1 Notes:
Class A-2 Notes:
Class A-3 Notes:
Class A-4 Notes:
Class B Notes:
Servicing Fee
Owner Trustee Fee
Indenture Trustee Fee
Pool Balance
B-1
Realized Losses
Liquidated Receivables or Purchased Receivables
Purchase Amounts
Reserve Account Balance
Amount Deposited to Reserve Account
Principal Balance of Receivables that were delinquent:
30 to 59 days
60 to 89 days
90 days or more
Amount Withdrawn from Reserve Account
B-2
EXHIBIT C
Form of Servicer's Certificate
------------------------------
[Available from Servicer]
C-1
EXHIBIT D
Form Of Dealer Agreement
------------------------
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.......................................................................1
Section 1.01. Definitions..................................................................1
Section 1.02. Other Definitional Provisions...............................................15
ARTICLE II CONVEYANCE OF RECEIVABLES........................................................16
Section 2.01. Conveyance of Receivables...................................................16
ARTICLE III THE RECEIVABLES..................................................................17
Section 3.01. Representations and Warranties of the Seller................................17
Section 3.02. Representations and Warranties of the Depositor.............................18
Section 3.03. Repurchase Upon Breach......................................................18
Section 3.04. Custody of Receivable Files.................................................19
Section 3.05. Duties of Servicer as Custodian.............................................19
Section 3.06. Instructions; Authority to Act..............................................20
Section 3.07. Custodian's Indemnification.................................................20
Section 3.08. Effective Period and Termination............................................20
ARTICLE IV ADMINISTRATION AND SERVICING OF RECEIVABLES......................................21
Section 4.01. Duties of Servicer..........................................................21
Section 4.02. Collection of Receivable Payments; Modifications of Receivables.............22
Section 4.03. Realization upon Receivables................................................22
Section 4.04. Physical Damage Insurance...................................................22
Section 4.05. Maintenance of Security Interests in Financed Vehicles......................23
Section 4.06. Covenants of Servicer.......................................................23
Section 4.07. Purchase of Receivables Upon Breach.........................................24
Section 4.08. Servicing Fee...............................................................24
Section 4.09. Servicer's Certificate......................................................24
Section 4.10. Annual Statement as to Compliance; Notice of Servicer Termination Event.....24
Section 4.11. Annual Independent Accountants' Report......................................25
Section 4.12. Access to Certain Documentation and Information Regarding Receivables.......25
Section 4.13. Term of Servicer............................................................25
i
TABLE OF CONTENTS
(continued)
Page
Section 4.14. Access to Information Regarding Trust and Basic Documents...................25
ARTICLE V DISTRIBUTIONS; STATEMENTS TO SECURITYHOLDERS.....................................26
Section 5.01. Establishment of Accounts...................................................26
Section 5.02. Collections.................................................................28
Section 5.03. Application of Collections..................................................28
Section 5.04. Purchase Amounts............................................................28
Section 5.05. Reserved....................................................................29
Section 5.06. Distributions...............................................................29
Section 5.07. Reserve Account.............................................................30
Section 5.08. Statements to Securityholders...............................................31
Section 5.09. Reserved....................................................................32
Section 5.10. Reserved....................................................................32
Section 5.11. Advances by the Servicer....................................................32
ARTICLE VI THE DEPOSITOR....................................................................33
Section 6.01. Representations of Depositor................................................33
Section 6.02. Company Existence...........................................................34
Section 6.03. Liability of Depositor; Indemnities.........................................34
Section 6.04. Merger or Consolidation of, or Assumption of the Obligations of, Depositor..34
Section 6.05. Limitation on Liability of Depositor and Others.............................35
Section 6.06. Depositor May Own Securities................................................35
Section 6.07. Depositor to Provide Copies of Relevant Securities Filings..................35
Section 6.08. Amendment of Depositor's Organizational Documents...........................35
ARTICLE VII THE SERVICER.....................................................................36
Section 7.01. Representations of Servicer.................................................36
Section 7.02. Indemnities of Servicer.....................................................37
Section 7.03. Merger or Consolidation of, or Assumption of the Obligations of, Servicer...38
Section 7.04. Limitation on Liability of Servicer and Others..............................39
ii
TABLE OF CONTENTS
(continued)
Page
Section 7.05. Appointment of Subservicer..................................................39
Section 7.06. Servicer Not to Resign......................................................39
Section 7.07. Servicer May Own Securities.................................................40
ARTICLE VIII DEFAULT..........................................................................40
Section 8.01. Servicer Termination Events.................................................40
Section 8.02. Consequences of a Servicer Termination Event................................40
Section 8.03. Appointment of Successor Servicer...........................................42
Section 8.04. Notification to Securityholders.............................................43
Section 8.05. Waiver of Past Defaults.....................................................43
ARTICLE IX TERMINATION......................................................................43
Section 9.01. Optional Purchase of All Receivables........................................43
ARTICLE X MISCELLANEOUS....................................................................43
Section 10.01. Amendment...................................................................43
Section 10.02. Protection of Title to Trust................................................44
Section 10.03. Notices.....................................................................46
Section 10.04. Assignment by the Depositor or the Servicer.................................47
Section 10.05. Limitations on Rights of Others.............................................47
Section 10.06. Severability................................................................47
Section 10.07. Counterparts................................................................47
Section 10.08. Headings....................................................................47
Section 10.09. Governing Law...............................................................47
Section 10.10. Assignment by Issuer........................................................47
Section 10.11. Nonpetition Covenants.......................................................47
Section 10.12. Limitation of Liability of Owner Trustee and Indenture Trustee..............48
Section 10.13. Depositor Payment Obligation................................................48
Schedule A Schedule of Receivables
Schedule B Location of Receivable Files
Schedule C Yield Supplement Overcollateralization Amount
iii
TABLE OF CONTENTS
(continued)
Exhibit A Representations and Warranties of the Seller under
Section 3.02 of the Receivables Purchase Agreement
Exhibit B Form of Payment Date Statement to Securityholders
Exhibit C Form of Servicer's Certificate
Exhibit D Form of Dealer Agreement
iv