EXHIBIT 10.2.1
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FORM OF SALE AND SERVICING AGREEMENT
among
CS FIRST BOSTON AUTO RECEIVABLES TRUST 199_-_,
as Issuer,
ASSET BACKED SECURITIES CORPORATION,
as Company,
and
_______________________,
as Servicer
Dated as of _______________
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TABLE OF CONTENTS
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Page
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ARTICLE I
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
Company with Respect to the Receivables..-17-
SECTION 3.02. Repurchase upon Breach...................-20-
SECTION 3.03. Custody of Receivable Files..............-20-
SECTION 3.04. Duties of Servicer as Custodian..........-21-
SECTION 3.05. Instructions: Authority To Act..........-22-
SECTION 3.06. Custodian's Indemnification..............-22-
SECTION 3.07. Effective Period and Termination.........-22-
ARTICLE IV
Administration and Servicing of
Receivables.........................-23-
SECTION 4.01. Duties of Servicer.......................-23-
SECTION 4.02. Collection and Allocation of Receivable
Payments.................................-23-
SECTION 4.03. Realization upon Receivables.............-24-
SECTION 4.04. Physical Damage Insurance................-24-
SECTION 4.05. Maintenance of Security Interests in
Financed Vehicles........................-24-
SECTION 4.06. Covenants of Servicer....................-24-
SECTION 4.07. Purchase of Receivables upon Breach......-25-
SECTION 4.08. Servicing Fee............................-25-
SECTION 4.09. Servicer's Certificate...................-25-
SECTION 4.10. Annual Statement as to Compliance;
Notice of Default........................-25-
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SECTION 4.11. Annual Independent Certified Public
Accountants' Report......................-26-
SECTION 4.12. Access to Certain Documentation and
Information Regarding Receivables........-26-
SECTION 4.13. Servicer Expenses........................-27-
SECTION 4.14. Appointment of Subservicer...............-27-
ARTICLE V
Distributions; Reserve Account;
Statements to Certificateholders and
Noteholders.........................-27-
SECTION 5.01. Establishment of Trust Accounts..........-27-
SECTION 5.02. Collections..............................-29-
SECTION 5.03. Application of Collections...............-30-
SECTION 5.04. Advances.................................-30-
SECTION 5.05. Additional Deposits......................-31-
SECTION 5.06. Distributions............................-31-
SECTION 5.07. Reserve Account..........................-33-
SECTION 5.08. Statements to Certificateholders and
Noteholders..............................-35-
SECTION 5.09. Net Deposits.............................-36-
ARTICLE VI
The Company....................-36-
SECTION 6.01. Representations of the Company...........-36-
SECTION 6.02. Corporate Existence......................-37-
SECTION 6.03. Liability of the Company.................-38-
SECTION 6.04. Merger or Consolidation of, or
Assumption of the Obligations of the
Company..................................-38-
SECTION 6.05. Limitation on Liability of the Company
and Others...............................-38-
SECTION 6.06. The Company May Own Certificates
or Notes.................................-38-
ARTICLE VII
The Servicer...................-39-
SECTION 7.01. Representations of Servicer..............-39-
SECTION 7.02. Indemnities of Servicer..................-40-
SECTION 7.03. Merger or Consolidation of, or
Assumption of the Obligations of,
Servicer.................................-41-
SECTION 7.04. Limitation on Liability of Servicer and
Others...................................-41-
SECTION 7.05. Servicer Not To Resign...................-42-
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ARTICLE VIII
Default........................-42-
SECTION 8.01. Servicer Default.........................-42-
SECTION 8.02. Appointment of Successor.................-43-
SECTION 8.03. Repayment of Advances....................-44-
SECTION 8.04. Notification to Noteholders and
Certificateholders.......................-44-
SECTION 8.05. Waiver of Past Defaults..................-44-
ARTICLE IX
Termination....................-44-
SECTION 9.01. Optional Purchase of All Receivables.....-44-
ARTICLE X
Miscellaneous..................-46-
SECTION 10.01. Amendment................................-46-
SECTION 10.02. Protection of Title to Trust.............-47-
SECTION 10.03. Notices..................................-49-
SECTION 10.04. Assignment by the Company or
the Servicer.............................-49-
SECTION 10.05. Limitations on Rights of Others..........-49-
SECTION 10.06. Severability.............................-50-
SECTION 10.07. Separate Counterparts....................-50-
SECTION 10.08. Headings.................................-50-
SECTION 10.09. Governing Law............................-50-
SECTION 10.10. Assignment by Issuer.....................-50-
SECTION 10.11. Nonpetition Covenant.....................-50-
SECTION 10.12. Limitation of Liability of Owner
Trustee and Indenture Trustee ...........-51-
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SALE AND SERVICING AGREEMENT dated as of ____________, among CS FIRST
BOSTON AUTO RECEIVABLES TRUST 199 - , a Delaware business trust (the "Issuer"),
- -
ASSET BACKED SECURITIES CORPORATION, a Delaware corporation (the "Company"), and
____________, a _____________ corporation (the "Servicer").
WHEREAS, the Issuer desires to purchase a portfolio of receivables
arising in connection with motor vehicle installment loan contracts and motor
vehicle retail installment sale contracts held by the Company;
WHEREAS, the Company is willing to sell such receivables to the
Issuer; and
WHEREAS, the Servicer 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
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SECTION 1.01. Definitions. Whenever used in this Agreement, the
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following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"Accelerated Principal Distribution Amount" means, with respect to any
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Distribution Date, an amount equal to the portion of the Total Distribution
Amount for such Distribution Date that remains after the payment of (i) the
Servicing Fee, (ii) the Noteholders' Interest Distributable Amount, (iii) the
Regular Principal Distribution Amount, (iv) the Certificateholders' Interest
Distributable Amount and (v) the amount, if any, required to be deposited into
the Reserve Account on such Distribution Date pursuant to Section
5.06(b)(ii)(F).
"Advance" means either a Precomputed Advance or Simple Interest
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Advance or both, as applicable.
"Amount Financed" means with respect to a Receivable, the amount
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advanced under the related Motor Vehicle Installment Contract toward the
purchase price of the Financed Vehicle and any related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the annual
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rate of finance charges stated in the related Motor Vehicle Installment
Contract.
"Available Amount" means, with respect to any Distribution Date, the
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amount of funds on deposit in the Reserve Account on such Distribution Date less
the Certificate Interest Reserve
Amount with respect to such Distribution Date before giving effect to any
reduction thereto on such date.
"Basic Documents" means the Certificate of Trust, the Trust Agreement,
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the Sale and Servicing Agreement, the Note Depository Agreement, the Certificate
Depository Agreement and other documents and certificates delivered in
connection therewith.
"Certificate Balance" equals, initially, $___________ and, thereafter,
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equals such initial Certificate Balance reduced by all amounts allocable to
principal previously distributed to Certificateholders.
"Certificate Distribution Account" has the meaning assigned to such
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term in the Trust Agreement.
"Certificateholders" has the meaning assigned to such term in the
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Trust Agreement.
"Certificateholders' Distributable Amount" means, with respect to any
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Distribution Date, the sum of the Certificateholders' Principal Distributable
Amount and the Certificateholders' Interest Distributable Amount for such date.
"Certificateholders' Interest Carryover Shortfall" means, with respect
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to any Distribution Date, the excess of the sum of the Certificateholders'
Monthly Interest Distributable Amount for the preceding Distribution Date and
any outstanding Certificateholders' Interest Carryover Shortfall on such
preceding Distribution Date, over the amount in respect of interest that is
actually deposited in the Certificate Distribution Account on such preceding
Distribution Date, plus 30 days' interest on such excess, to the extent
permitted by law, at the Pass-Through Rate.
"Certificateholders' Interest Distributable Amount" means, with
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respect to any Distribution Date, the sum of the Certificateholders' Monthly
Interest Distributable Amount for such Distribution Date and the
Certificateholders' Interest Carryover Shortfall for such Distribution Date.
Interest with respect to the Certificates shall be computed on the basis of a
360-day year consisting of twelve 30-day months for all purposes of this
Agreement and the Basic Documents.
"Certificateholders' Monthly Interest Distributable Amount" means,
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with respect to any Distribution Date, 30 days of interest (or, in the case of
the first Distribution Date, interest accrued from and including the Closing
Date to but excluding _________) at the Pass-Through Rate on the Certificate
Balance on the last day of the preceding Collection Period (or, in the case of
the first Distribution Date, on the Closing Date).
"Certificateholders' Monthly Principal Distributable Amount" means,
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with respect to any Distribution Date prior to the Distribution Date on which
the Notes are paid in full, zero; and with respect to any Distribution Date on
or after the Distribution Date on which the Notes are paid
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in full, the Regular Principal Distribution Amount for such Distribution Date
(less, on the Distribution Date on which the Notes are paid in full, the portion
thereof payable on the Notes).
"Certificateholders' Principal Carryover Shortfall" means, as of the
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close of any Distribution Date, the excess of the Certificateholders' Monthly
Principal Distributable Amount and any outstanding Certificateholders' Principal
Carryover Shortfall from the preceding Distribution Date, over the amount in
respect of principal that is actually deposited in the Certificate Distribution
Account on such current Distribution Date.
"Certificateholders' Principal Distributable Amount" means, with
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respect to any Distribution Date, the sum of the Certificateholders' Monthly
Principal Distributable Amount for such Distribution Date and the
Certificateholders' Principal Carryover Shortfall as of the close of the
preceding Distribution Date; provided, however, that the Certificateholders'
Principal Distributable Amount shall not exceed the Certificate Balance. In
addition, on the Final Scheduled Distribution Date, the principal required to be
included in the Certificateholders' Principal Distributable Amount will include
the lesser of (a) (i) any Scheduled Payments of principal due and remaining
unpaid on each Precomputed Receivable and (ii) any principal due and remaining
unpaid on each Simple Interest Receivable, in each case, in the Trust as of the
Final Scheduled Maturity Date or (b) the amount that is necessary (after giving
effect to the other amounts to be deposited in the Certificate Distribution
Account on such Distribution Date and allocable to principal) to reduce the
Certificate Balance to zero.
"Certificate Interest Reserve Amount" means, at the time of reference,
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the lesser of (i) $___________ less the amount of any application of the
Certificate Interest Reserve Amount to pay interest on the Certificates on any
prior Distribution Date and (ii) _____% of the Certificate Balance on such
Distribution Date (before giving effect to any reduction thereof on such
Distribution Date); provided, however, that the Certificate Interest Reserve
Amount shall be zero subsequent to any reduction by any Rating Agency of its
rating of any Class of Notes to less than "A-" or its equivalent, or withdrawal
by any Rating Agency of its rating of any Class of Notes, unless such rating has
been restored.
"Certificate Depository Agreement" has the meaning specified in
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Section 1.01 of the Trust Agreement.
"Certificate of Trust" means the certificate of trust of the Issuer
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substantially in the form of Exhibit B to the Trust Agreement.
"Certificate Pool Factor" means, as of the close of business on the
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last day of a Collection Period, a seven-digit decimal figure equal to the
Certificate Balance (after giving effect to any reductions therein to be made on
the immediately following Distribution Date) divided by the initial Certificate
Balance. The Certificate Pool Factor will be 1.0000000 as of the Closing Date;
thereafter, the Certificate Pool Factor will decline to reflect reductions in
the Certificate Balance.
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"Certificates" means the Trust Certificates (as defined in the Trust
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Agreement).
"Class" means any one of the classes of Notes.
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"Class A-1 Final Scheduled Distribution Date" means the ______________
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Distribution Date.
"Class A-1 Noteholder" means the Person in whose name a Class A-1 Note
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is registered in the Note Register.
"Class A-2 Final Scheduled Distribution Date" means the __________
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Distribution Date.
"Class A-2 Noteholder" means the Person in whose name a Class A-2 Note
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is registered in the Note Register.
"Clearing Agency" means an organization registered as a clearing
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agency pursuant to Section 17A of the Exchange Act.
"Collection Account" means the account designated as such, established
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and maintained pursuant to Section 5.01(a)(i).
"Collection Period" means a calendar month. Any amount stated as of
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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: (1) all applications of collections, (2)
all current and previous Payaheads, (3) all applications of Payahead Balances,
(4) all Advances and reductions of Outstanding Precomputed Advances or
Outstanding Simple Interest Advances and (4) all distributions to be made on the
following Distribution Date.
"Company" means Asset Backed Securities Corporation, a Delaware
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corporation and any successor in interest.
"Corporate Trust Office" means the principal office of the Indenture
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Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of execution of this Agreement is located
at ____________________; or at such other address as the Indenture Trustee may
designate from time to time by notice to the Noteholders and the Company, or the
principal corporate trust office of any successor Indenture Trustee (of which
address such successor Indenture Trustee will notify the Noteholders and the
Company).
"Cutoff Date" means ______________________________.
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"Cutoff Date Pool Balance" means the aggregate principal balance of
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the Receivables as of the Cutoff Date.
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"Delivery" when used with respect to Trust Account Property means:
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(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute "instruments"
within the meaning of Section 9-105(1)(i) of the UCC and are susceptible of
physical delivery, transfer thereof to the Indenture Trustee or its nominee or
custodian by physical delivery to the Indenture Trustee or its nominee or
custodian endorsed to, or registered in the name of, the Indenture Trustee or
its nominee or custodian or endorsed in blank, and, with respect to a
certificated security (as defined in Section 8-102 of the UCC) transfer thereof
(i) by delivery of such certificated security endorsed to, or registered in the
name of, the Indenture Trustee or its nominee or custodian or endorsed in blank
to a financial intermediary (as defined in Section 8-313 of the UCC) and the
making by such financial intermediary of entries on its books and records
identifying such certificated securities as belonging to the Indenture Trustee
or its nominee or custodian and the sending by such financial intermediary of a
confirmation of the purchase of such certificated security by the Indenture
Trustee or its nominee or custodian, or (ii) by delivery thereof to a "clearing
corporation" (as defined in Section 8-102(3) 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 a financial intermediary by the amount of such
certificated security, the identification by the clearing corporation of the
certificated securities for the sole and exclusive account of the financial
intermediary, the maintenance of such certificated securities by such clearing
corporation or a "custodian bank" (as defined in Section 8-102(4) of the UCC) or
the nominee of either subject to the clearing corporation's exclusive control,
the sending of a confirmation by the financial intermediary of the purchase by
the Indenture Trustee or its nominee or custodian of such securities and the
making by such financial intermediary of entries on its books and records
identifying such certificated securities as belonging to the Indenture Trustee
or its nominee or custodian (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 or custodian; and such additional or
alternative procedures as may hereafter become appropriate to effect the
complete transfer of ownership of any such Trust Account Property (as defined
herein) 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 securities 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
Property to an appropriate book-entry account maintained with a Federal Reserve
Bank by a financial intermediary which is also a "depository" pursuant to
applicable Federal regulations and issuance by such financial intermediary of a
deposit advice or other written confirmation of such book-entry registration to
the Indenture Trustee or its nominee or custodian of the purchase by the
Indenture Trustee or its nominee or custodian of such book-entry securities; the
making by such financial intermediary of entries in its books and records
identifying such book-entry security held through the Federal Reserve System
pursuant to Federal book-entry regulations as belonging to the Indenture Trustee
or its nominee or
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custodian and indicating that such custodian holds such Trust Account Property
solely as agent for the Indenture Trustee or its nominee or custodian; 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 or its nominee or custodian, consistent with changes in
applicable law or regulations or the interpretation thereof; and
(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 financial intermediary, the sending of a confirmation by the
financial intermediary of the purchase by the Indenture Trustee or its nominee
or custodian of such uncertificated security, the making by such financial
intermediary of entries on its books and records identifying such uncertificated
certificates as belonging to the Indenture Trustee or its nominee or custodian.
"Distribution Date" means, with respect to each Collection Period, the
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__________ day of the following month or, if such day is not a Business Day, the
immediately following Business Day, commencing on _______________.
"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 one of the states thereof or the District of
Columbia (or any domestic branch of a foreign bank), having corporate trust
powers and acting as trustee for funds deposited in such account, so long as any
of the securities of such depository institution 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
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Indenture Trustee, the Owner Trustee or _______________ so long as it shall be
Paying Agent under the Trust Agreement or (b) a depository institution organized
under the laws of the United States of America or any one of the states thereof
or the District of Columbia (or any domestic branch of a foreign bank), which
(i) has either (A) a long-term unsecured debt rating of AAA or better by
Standard & Poor's and A1 or better by Moody's or (B) a certificate of deposit
rating of A-1+ by Standard & Poor's and P-1, or better by Moody's, or any other
long-term or short-term or certificate of deposit rating acceptable to the
Rating Agencies and (ii) whose deposits are insured by the FDIC. If so
qualified, the Indenture Trustee, the Owner Trustee or _______________ may be
considered an Eligible Institution for the purposes of clause (b) of this
definition.
"Eligible Investments" means book-entry securities, negotiable
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instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as to the
full and timely payment by, the United States of America;
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(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any state thereof (or any domestic branch of a
foreign bank) and subject to supervision and examination by Federal or State
banking or depository institution authorities; provided, however, that at the
time of the investment or contractual commitment to invest therein, the
commercial paper or other short-term unsecured debt obligations (other than such
obligations the rating of which is based on the credit of a Person other than
such depository institution or trust company) thereof shall have a credit rating
from each of the Rating Agencies in the highest investment category granted
thereby;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each of the Rating
Agencies in the highest investment category granted thereby;
(d) investments in money market funds having a rating from each of the
Rating Agencies in the highest investment category granted thereby;
(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 (b); or
(g) any other investment with respect to which the Issuer or the
Servicer has received written notification from the Rating Agencies that the
acquisition of such investment as an Eligible Investment will not result in a
withdrawal or downgrading of the ratings on the Notes or Certificates.
"FDIC" means the Federal Deposit Insurance Corporation.
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"Final Scheduled Distribution Date" means the _______________
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Distribution Date.
"Final Scheduled Maturity Date" means _______________.
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"Financed Vehicle" means an automobile, van or light-duty truck,
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together with all accessions thereto, securing an Obligor's indebtedness under
the related Receivable.
"Indenture" means the Indenture dated as of _______________, between
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the Issuer and the Indenture Trustee.
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"Indenture Trustee" means the Person acting as Indenture Trustee under
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the Indenture, its successors in interest and any successor trustee under the
Indenture.
"Insolvency Event" means, with respect to a specified Person, (a) the
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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
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 Amount" means, with respect to any Distribution
----------------------------
Date, the sum of the following amounts, without duplication, with respect to the
Receivables for the Collection Period immediately preceding such Distribution
Date: (a) that portion of all collections on Receivables (including Payaheads)
allocable to interest plus that portion of Payaheads allocable to principal, (b)
Liquidation Proceeds with respect to the Receivables to the extent allocable to
interest due thereon in accordance with the Servicer's customary servicing
procedures, (c) all Advances made by the Servicer of interest due on
Receivables, (d) 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, and (e) Recoveries for such Collection Period;
provided, however, that in calculating the Interest Distribution Amount the
following will be excluded: (i) amounts received on Precomputed Receivables to
the extent of any unreimbursed Precomputed Advances of interest; (ii)
Liquidation Proceeds with respect to a particular Precomputed Receivable to the
extent of any unreimbursed Precomputed Advances of interest; (iii) all payments
and proceeds (including Liquidation Proceeds) of any Purchased Receivables the
Purchase Amount of which has been included in the Interest Distribution Amount
in a prior Collection Period; (iv) the sum for all Simple Interest Receivables
of collections on each such Simple Interest Receivable received during such
preceding Collection Period in excess of the amount of interest that would be
due on the aggregate Principal Balance of the Simple Interest Receivables during
such Collection Period at their respective APRs if a payment were received on
each Simple Interest Receivable during such Collection Period on the date
payment is due under the terms of such Simple Interest Receivable; and (v)
Liquidation Proceeds with respect to a Simple Interest Receivable attributable
to accrued and unpaid interest thereon (but not including interest for the then
current Collection Period) but only to the extent of any unreimbursed Simple
Interest Advances.
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"Investment Earnings" means, with respect to any Distribution Date,
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the investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts to be deposited into the Collection Account on
such Distribution Date pursuant to Section 5.01(b).
"Issuer" means CS First Boston Auto Receivables Trust 199 - .
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"Lien" means a security interest, lien, charge, pledge, equity or
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encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to a Receivable by operation of law.
"Liquidated Receivable" means any Receivable liquidated by the
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Servicer through the sale of a Financed Vehicle or otherwise.
"Liquidation Proceeds" means, with respect to any Liquidated
--------------------
Receivable, the moneys collected in respect thereof, from whatever source on a
Liquidated Receivable during the Collection Period in which such Receivable
became a Liquidated Receivable, net of the sum of any amounts expended by the
Servicer in connection with such liquidation and any amounts required by law to
be remitted to the Obligor on such Liquidated Receivable.
"Motor Vehicle Installment Contract" means a motor vehicle loan
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installment contract originated by a Seller or a motor vehicle retail
installment sale contract acquired by a Seller from a motor vehicle retail
dealer or another financial institution.
"Note Depository Agreement" means the agreement dated
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__________________, among the Issuer, the Indenture Trustee and the Depository
Trust Company, as the initial Clearing Agency, relating to the Notes.
"Note Distribution Account" means the account designated as such,
-------------------------
established and maintained pursuant to Section 5.01(a)(iii).
"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 principal balance of such Class of Notes
(after giving effect to any reductions thereof to be made on the immediately
following Distribution Date) divided by the original outstanding principal
balance of such Class of Notes. The Note Pool Factor for each Class of Notes
will be 1.0000000 as of the Closing Date; thereafter, the Note Pool Factor will
decline to reflect reductions in the outstanding principal balance of such Class
of Notes.
"Noteholders' Distributable Amount" means, with respect to any
---------------------------------
Distribution Date, the sum of the Noteholders' Principal Distributable Amount
and the Noteholders' Interest Distributable Amount for such Distribution Date.
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"Noteholders' Interest Carryover Shortfall" means, with respect to any
-----------------------------------------
Distribution Date, the excess of the sum of the Noteholders' Monthly Interest
Distributable Amount for the preceding Distribution Date and any outstanding
Noteholders' Interest Carryover Shortfall on such preceding Distribution Date,
over the amount in respect of interest that is actually deposited in the Note
Distribution Account on such preceding Distribution Date, plus interest on the
amount of interest due but not paid to Noteholders on the preceding Distribution
Date, to the extent permitted by law, at the Interest Rate borne by each Class
of the Notes for the related Interest Period.
"Noteholders' Interest Distributable Amount" means, with respect to
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any Distribution Date, the sum of the Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and the Noteholders' Interest
Carryover Shortfall for such Distribution Date. For all purposes of this
Agreement and the Basic Documents, interest with respect to all Classes of Notes
shall be computed on the basis of a 360-day year consisting of twelve 30-day
months.
"Noteholders' Monthly Interest Distributable Amount" means, with
--------------------------------------------------
respect to any Distribution Date, interest accrued for the related Interest
Accrual Period on each Class of Notes at the Interest Rate for such Class on the
outstanding principal balance of the Notes of such Class on the immediately
preceding Distribution Date (or, in the case of the first Distribution Date, the
Closing Date), after giving effect to all distributions of principal to Holders
of the Notes of such Class on or prior to such Distribution Date (or, in the
case of the first Distribution Date, on the Closing Date).
"Noteholders Monthly Principal Distributable Amount" means, with
--------------------------------------------------
respect to any Distribution Date, the sum of (i) the Regular Principal
Distribution Amount plus (ii) the Accelerated Principal Amount plus (iii) any
accelerated payments of principal required to be made from amounts on deposit in
the Reserve Account pursuant to Section 5.07(b)(ii).
"Noteholders' Principal Carryover Shortfall" means, as of the close of
------------------------------------------
any Distribution Date, the excess of the Noteholders' Monthly Principal
Distributable Amount and any outstanding Noteholders' Principal Carryover
Shortfall from the preceding Distribution Date, over the amount in respect of
principal that is actually deposited in the Note Distribution Account on such
current Distribution Date.
"Noteholders' Principal Distributable Amount" means, with respect to
-------------------------------------------
any Distribution Date, the sum of the Noteholders' Monthly Principal
Distributable Amount for such Distribution Date and the Noteholders' Principal
Carryover Shortfall as of the close of the preceding Distribution Date;
provided, however, that the Noteholders' Principal Distributable Amount shall
not exceed the outstanding principal balance of the Notes. In addition, (a) on
the Class A-1 Final Scheduled Distribution Date, the principal required to be
deposited in the Note Distribution Account will include the amount necessary
(after giving effect to the other amounts to be deposited in the Note
Distribution Account on such Distribution Date and allocable to principal) to
reduce the Outstanding Amount of the Class A-1 Notes to zero; and (b) on the
Class A-2 Final Scheduled Distribution Date, the principal required to be
deposited in the Note Distribution Account will include the amount necessary
(after giving effect to the other amounts to be deposited in the Note
Distribution Account
-10-
on such Distribution Date and allocable to principal) to reduce the Outstanding
Amount of the Class A-2 Notes to zero.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
-------
Financed Vehicle and any other Person who owes payments under the related Motor
Vehicle Installment Contract.
"Officers' Certificate" means a certificate signed by (a) the chairman
---------------------
of the board, the president, any vice president and (b) the treasurer, assistant
treasurer, secretary or assistant secretary of the Company or the Servicer, as
appropriate.
"Opinion of Counsel" means one or more written opinions of counsel,
------------------
who may be an employee of or counsel to the Company or the Servicer, which
counsel shall be acceptable to the Indenture Trustee, the Owner Trustee or the
Rating Agencies, as applicable.
"Outstanding Precomputed Advances" on the Precomputed Receivables
--------------------------------
means the sum, as of the close of business on the last day of a Collection
Period, of all Precomputed Advances as reduced as provided in Section 5.04(a).
"Outstanding Simple Interest Advances" on the Simple Interest
------------------------------------
Receivables means the sum, as of the close of business on the last day of a
Collection Period, of all Simple Interest Advances as reduced as provided in
Section 5.04(b).
"Owner Trust Estate" has the meaning assigned to such term in the
------------------
Trust Agreement.
"Owner Trustee" means the Person acting as Owner Trustee under the
-------------
Trust Agreement, its successors in interest and any successor owner trustee
under the Trust Agreement.
"Pass-Through Rate" means __________% per annum.
-----------------
"Payahead" means, with respect to any Receivable that is a Precomputed
--------
Receivable, the amount, as of the close of business on the last day of a
Collection Period, computed in accordance with Section 5.03.
"Payahead Balance" means, with respect to any Receivable that is a
----------------
Precomputed Receivable, the sum, as of the close of business on the last day of
a Collection Period, of all Payaheads made by or on behalf of the Obligor on
such Precomputed Receivable, as reduced by applications of previous Payaheads
with respect to such Precomputed Receivable pursuant to Section 5.05 and 5.04.
"Payment Distribution Date" means, with respect to any Distribution
-------------------------
Date, the Business Day immediately preceding such Distribution Date.
-11-
"Physical Property" has the meaning assigned to such term in the
-----------------
definition of "Delivery" above.
"Pool Balance" means, as of the close of business on the last day of
------------
a Collection Period, the aggregate Principal Balance of the Receivables as of
such day (excluding Purchased Receivables and Liquidated Receivables).
"Precomputed Advance" means the amount, as of the close of business on
-------------------
the last day of a Collection Period, that the Servicer is required to advance on
the related Precomputed Receivables pursuant to Section 5.04(a).
"Precomputed Receivable" means any Receivable (i) under which the
----------------------
portion of a payment allocable to earned interest (which may be referred to in
the related Motor Vehicle Installment Contract as an add-on finance charge) and
the portion allocable to the Amount Financed is determined according to the sum
of periodic balances or the sum of monthly balances or any equivalent method or
(ii) that is a monthly actuarial receivable.
"Principal Balance" means (a) with respect to a Precomputed
-----------------
Receivable, the Amount Financed minus the sum, as of the close of business on
the last day of a Collection Period, of (i) that portion of all Scheduled
Payments due on or prior to such day allocable to principal using the actuarial
or constant yield method, (ii) any refunded portion of extended warranty
protection plan costs or of physical damage, credit life or disability insurance
premiums included in the Amount Financed, (iii) the portion of any related
Purchase Amount allocable to principal and (iv) any prepayment in full or any
partial prepayments applied to reduce the related Principal Balance and (b) with
respect to a Simple Interest Receivable, the Amount Financed minus the sum, as
of the close of business on the last day of a Collection Period, of (i) the
portion of all payments made by or on behalf of the related Obligor on or prior
to such day and allocable to principal using the Simple Interest Method and (ii)
the portion of any related Purchase Amount allocable to principal.
"Purchase Amount" means the amount, as of the close of business on the
---------------
last day of a Collection Period, required to prepay a Receivable in full under
the terms thereof, including interest to the end of the month of purchase.
"Purchased Receivable" means a Receivable purchased as of the close of
--------------------
business on the last day of a Collection Period by the Servicer pursuant to
Section 4.07 or by the Company pursuant to Section 3.02.
"Rating Agency" means _______________ or, if no such organization or
-------------
successor is any longer in existence, a nationally recognized statistical rating
organization or other comparable Person designated by the Company, notice of
which designation shall be given to the Indenture Trustee, the Owner Trustee and
the Servicer.
-12-
"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, within 7 days
of receipt of such notice, none of the Rating Agencies shall have notified the
Company, the Servicer, the Owner Trustee or the Indenture Trustee in writing
that such action will result in a reduction or withdrawal of the then current
rating of the Notes or the Certificates.
"Realized Losses" means, with respect to any Receivable that becomes a
---------------
Liquidated Receivable, the excess of the Principal Balance of such Liquidated
Receivable over Liquidation Proceeds to the extent allocable to principal.
"Receivable" means any Motor Vehicle Installment Contract listed on
----------
Schedule I (which Schedule may be in the form of microfiche).
"Receivable Files" means the documents specified in Section 3.03.
----------------
"Receivables Purchase Agreement" means an agreement, substantially in
------------------------------
the form of Exhibit H hereto, between the Company and a Seller, pursuant to
which such Seller sold Motor Vehicle Installment Contracts to be included in the
Trust to the Company.
"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 each
-------------------------------------
Receivable and any Distribution Date, the sum of the following amounts, without
duplication, in respect of the Collection Period immediately preceding such
Distribution Date: (a) that portion of all collections on Receivables allocable
to principal (exclusive of Payaheads allocable to principal that have not been
applied as payments under the related Receivables in such Collection Period and
inclusive of Payaheads allocable to principal that have been applied as payments
under the related Receivables in such Collection Period), (b) all Liquidation
Proceeds attributable to the principal amount of Receivables that became
Liquidated Receivables during such Collection Period in accordance with the
Servicer's customary servicing procedures, plus the amount of Realized Losses
with respect to such Liquidated Receivables, (c) all Precomputed Advances made
by the Servicer of principal due on the Precomputed Receivables, (d) to the
extent attributable to principal, the Purchase Amount of each Receivable that
became a Purchased Receivable during such Collection Period, (e) partial
prepayments on Precomputed Receivables relating to refunds of extended warranty
protection plan costs or of physical damage, credit life or disability insurance
policy premiums, but only if such costs or premiums were financed by the
respective Obligors thereon as of the date of the original contract and only to
the extent not included under clause (a) above, and (f) on the Final Scheduled
Distribution Date, any amounts advanced by the Servicer on such Final Scheduled
Distribution Date with respect
-13-
to principal on the Receivables: provided, however, that in calculating the
Regular Principal Distribution Amount the following will be excluded: (i)
amounts received on Precomputed Receivables to the extent that the Servicer has
previously made an unreimbursed Precomputed Advance of principal, (ii)
Liquidation Proceeds with respect to a particular Precomputed Receivable to the
extent of any unreimbursed Precomputed Advances of principal, (iii) all payments
and proceeds (including Liquidation Proceeds) of any Purchased Receivables the
Purchase Amount of which has been included in the Principal Distribution Amount
in a prior Collection Period, and (iv) Recoveries.
"Reserve Account" means the account designated as such, established
---------------
and maintained pursuant to Section 5.01(a)(iv).
"Reserve Account Initial Deposit" means an amount equal to the
-------------------------------
Specified Reserve Account Balance on the Closing Date (which is equal to
$______________).
"Scheduled Payment" on a Precomputed Receivable means that portion of
-----------------
the payment required to be made by the Obligor during each Collection Period
sufficient to amortize the Principal Balance under the actuarial method over the
term of the Receivable and to provide interest at the APR.
"Seller" means, with respect to any Receivable, the Person from whom
------
such Receivable was acquired by the Company pursuant to the related Receivables
Purchase Agreement.
"Servicer" means _______________, as the Servicer of the Receivables,
--------
and each successor to ______________ pursuant to Section 7.03 or 8.02.
"Servicer Default" means an event specified in Section 8.01.
----------------
"Servicer's Certificate" means an Officers' Certificate of the
----------------------
Servicer delivered pursuant to Section 4.09.
"Servicing Fee" means the fee payable to the Servicer for services
-------------
rendered during each Collection Period, determined pursuant to Section 4.08.
"Servicing Fee Rate" means __% per annum.
------------------
"Simple Interest Advance" means the amount of interest, as of the
-----------------------
close of business on the last day of a Collection Period, that the Servicer is
required to advance on the Simple Interest Receivables pursuant to Section
5.04(b).
"Simple Interest Method" means the method of allocating a fixed level
----------------------
payment to principal and interest, pursuant to which the portion of such payment
that is allocated to interest is equal to the product of the fixed rate of
interest multiplied by the unpaid principal balance multiplied
-14-
by the period of time elapsed since the preceding payment of interest was made
and the remainder of such payment is allocable to principal.
"Simple Interest Receivable" means any Receivable under which the
--------------------------
portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"Specified Reserve Account Balance" means [state formula].
---------------------------------
"Total Distribution Amount" means, for each Distribution Date, the sum
-------------------------
of the Interest Distribution Amount and the Regular Principal Distribution
Amount (other than the portion thereof attributable to Realized Losses).
"Trust" means the Issuer.
-----
"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), including the Reserve Account Initial Deposit, and all
proceeds of the foregoing.
"Trust Accounts" has the meaning assigned thereto in Section 5.01.
--------------
"Trust Agreement" means the Amended and Restated Trust Agreement dated
---------------
as of ____________________, between the Company and the Owner Trustee.
"Trust Officer" means, in the case of the Indenture Trustee, any
-------------
Officer within the Corporate Trust Office of the Indenture Trustee, including
any Vice President, Assistant Vice President, Secretary, Assistant Secretary or
any other officer of the Indenture Trustee customarily performing functions
similar to those performed by any of the above designated officers and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject and, with respect to the Owner Trustee, any officer in the
Corporate Trust Administration Department of the Owner Trustee with direct
responsibility for the administration of the Trust Agreement and the Basic
Documents on behalf of the Owner Trustee.
SECTION 1.02. Other Definitional Provisions. (a) Capitalized terms
-----------------------------
used and not otherwise defined herein have the meanings assigned to them in the
Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
-15-
(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 United States 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 United States 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; 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 Owner
--------------------------
Trustee's delivery on the Closing Date to or upon the order of the Company of
$_______________, the Company does hereby sell, transfer, assign, set over and
otherwise convey to the Issuer, without recourse (subject to the obligations as
set forth herein), all right, title and interest of the Company in and to:
(a) the Receivables and all moneys due thereon on and after the
Cutoff Date, in the case of Precomputed Receivables, and all moneys received
thereon on and after the Cutoff Date, in the case of Simple Interest
Receivables;
(b) the security interest in the Financed Vehicles granted by
Obligors pursuant to the Receivables and any other interest of the Company in
such Financed Vehicles;
-16-
(c) any proceeds with respect to the Receivables from claims on any
physical damage, theft, credit life or disability insurance policies covering
Financed Vehicles or Obligors;
(d) any Financed Vehicle that shall have secured any such Receivable
and shall have been acquired by or on behalf of the Company, the Servicer or the
Issuer; and
(e) the proceeds of any and all of the foregoing.
ARTICLE III
The Receivables
---------------
SECTION 3.01. Representations and Warranties of the Company with Respect
----------------------------------------------------------
to the Receivables. The Company makes the following representations and
-------------------
warranties as to the Receivables conveyed by it to the Issuer, on which the
Issuer is deemed to have relied in acquiring the Receivables. Such
representations and warranties speak as of the execution and delivery of this
Agreement and as of the Closing Date, but shall survive the sale, transfer and
assignment of the Receivables to the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture.
(a) Characteristics of Receivables. Each Receivable (1) was
------------------------------
originated by the Seller thereof or purchased from a motor vehicle dealer or
another financial institution by such Seller in the ordinary course of such
Seller's business, (2) has created a valid, subsisting and enforceable first
priority security interest in favor of the Seller in the Financed Vehicle, which
security interest is assignable by the Seller to the Company, by the Company to
the Issuer and by the Issuer to the Indenture Trustee, (3) contains customary
and enforceable provisions such that the rights and remedies of the holder
thereof are adequate for realization against the collateral of the benefits of
the security, (4) provides for level monthly payments (provided, that the
payment in the first or last month in the life of the Receivable may be
minimally different from the level payments) that fully amortize the Amount
Financed by maturity and yield interest at the Annual Percentage Rate, and (5)
in the case of a Precomputed Receivable, in the event that such contract is
prepaid, provides for a prepayment that fully pays the Principal Balance and
includes accrued but unpaid interest through the date of prepayment at the
Annual Percentage Rate.
(b) Schedule of Receivables. The information set forth in Schedule I
-----------------------
to this Agreement is true and correct in all material respects as of the opening
of business on the Cutoff Date, and no selection procedures believed to be
adverse to the Noteholders or the Certificateholders were utilized in selecting
the Receivables. The computer tape or other listing regarding the Receivables
made available to the Issuer and its assigns is true and correct in all material
respects as of the Cutoff Date.
(c) Compliance with Law. Each Receivable and the sale of the related
-------------------
Financed Vehicle complied at the time it was originated or made and at the
execution of this Agreement in all
-17-
material respects with all requirements of applicable federal, state and local
laws and regulations thereunder, including usury laws, the Federal Truth-in-
Lending Act, the Equal Credit Opportunity Act, the Fair Credit Reporting Act,
the Fair Debt Collection Practices Act, the Federal Trade Commission Act, the
▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act, the Federal Reserve Board's Regulations B and Z, and
State adaptations of the National Consumer Act and of the Uniform Consumer
Credit Code, and other consumer credit laws and equal credit opportunity and
disclosure laws.
(d) Binding Obligation. Each Receivable represents the genuine,
------------------
legal, valid and binding payment obligation in writing of the Obligor,
enforceable by the holder thereof in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization and similar laws now or
hereafter in effect relating to or affecting creditor's rights generally and to
general principles of equity (whether applied in a proceeding at law or in
equity).
(e) No Government Obligor. None of the Receivables is due from the
---------------------
United States of America or any State thereof or from any agency, department or
instrumentality of the United States of America or any State.
(f) Security Interest in Financed Vehicle. Immediately prior to the
-------------------------------------
sale, assignment and transfer thereof to the Issuer, each Receivable shall be
secured by a validly perfected first security interest in the Financed Vehicle
in favor of the related Seller as secured party of all necessary and appropriate
actions have been commenced that would result in the valid perfection of a first
security interest in the Financed Vehicle in favor of the related Seller as
secured party.
(g) Receivables in Force. No Receivable has been satisfied,
--------------------
subordinated or rescinded, nor has any Financed Vehicle been released from the
lien granted by the related Receivable in whole or in part.
(h) No Waiver. No provision of a Receivable has been waived in such
---------
a manner that the Receivable fails to meet any other representation or warranty
of the Company with respect thereto.
(i) No Amendments. No Receivable has been amended such that the
-------------
amount of the Obligor's Scheduled Payments has been increased except for
increases resulting from the inclusion of any premiums for forced placed
physical damage insurance covering the Financed Vehicle.
(j) No Defenses. No facts are known to the Company that would give
-----------
rise to any right of defense, nor shall the same have been asserted or
threatened, with respect to any Receivable.
(k) No Liens. To the best of the Company' s knowledge, no liens or
--------
claims have been filed for work, labor or materials relating to a Financed
Vehicle that are liens prior to, or equal to or coordinate with, the security
interest in the Financed Vehicle granted by any Receivable.
-18-
(l) No Default. No Receivable has a payment that is more than 90
----------
days overdue as of the Cutoff Date, and, except as permitted in this paragraph,
no default, breach, violation or event permitting acceleration under the terms
of any Receivable has occurred; no continuing condition that with notice or the
lapse of time would constitute a default, breach, violation or event permitting
acceleration under the terms of any Receivable has arisen; and the Company has
not waived and shall not waive any of the foregoing.
(m) Insurance. The related Seller, in accordance with its customary
---------
procedures, has determined that the Obligor has obtained physical damage
insurance covering the Financed Vehicle and under terms of the Receivable the
Obligor is required to maintain such insurance.
(n) Title. It is the intention of the Company that the transfer and
-----
assignment herein contemplated constitute a sale of the Receivables from the
Company to the Issuer and that the beneficial interest in and title to the
Receivables not be part of the debtor's estate in the event of the filing of a
bankruptcy petition by or against the Company. No Receivable has been sold,
transferred, assigned or pledged by the Company to any Person other than the
Issuer. Immediately prior to the transfer and assignment herein contemplated,
the Company had good and marketable title to each Receivable conveyed by it
hereunder to the Issuer, free and clear of all Liens and rights of others and,
immediately upon the transfer thereof, the Issuer shall have good and marketable
title to each Receivable, free and clear of all Liens and rights of others; and
the transfer has been perfected under the UCC.
(o) Lawful Assignment. No Receivable has been originated in, or is
-----------------
subject to the laws of, any jurisdiction under which the sale, transfer and
assignment of such Receivable or any Receivable under this Agreement or the
Indenture is unlawful, void or voidable.
(p) All Filings Made. All filings (including UCC filings) necessary
----------------
in any jurisdiction to give the Issuer a first perfected ownership interest in
the Receivables, and to give the Indenture Trustee a first perfected security
interest therein, shall have been made.
(q) One Original. There is only one original executed copy of each
------------
Receivable.
(r) Maturity of Receivables. The weighted average remaining term of
-----------------------
the Receivables as of the Cutoff Date is _________ months.
(s) Scheduled Payments. (1) No Receivable has payment that is more
------------------
than 90 days overdue as of the Cutoff Date; and (2) no Receivable has a final
scheduled payment date that is later than the Final Scheduled Maturity Date.
(t) Location of Receivable Files. The Receivable Files are kept at
----------------------------
one or more of the locations listed in Schedule II.
-19-
(u) No Bankruptcies. No Obligor on any Receivable as of the Cutoff
---------------
Date was noted in the related Receivable File as having filed for bankruptcy.
(v) No Repossessions. No Financed Vehicle securing any Receivable is
----------------
in repossession status.
(w) Chattel Paper. Each Receivable constitutes "chattel paper" as
-------------
defined in the UCC.
(x) Agreement. The representations and warranties of the Company in
---------
Section 6.01 are true and correct.
(y) Financing. Approximately __% of the aggregate principal balance
---------
of the Receivables, constituting ___% of the number of the Receivables as of the
Cutoff Date represents financing of new vehicles and the remainder of the
Receivables represents financing of used vehicles; and approximately ____% of
the aggregate principal balance of the Receivables as of the Cutoff Date
represents Precomputed Receivables and the remainder of the Receivables
represents Simple Interest Receivables. The Principal Balance of the Receivables
as of the Cutoff Date is $___________.
(z) APR. The weighted average Annual Percentage Rate of the
---
Receivables as of the Cutoff Date is approximately ____%.
SECTION 3.02. Repurchase upon Breach. The Company, the Servicer or the
----------------------
Owner Trustee, as the case may be, shall inform the other parties to this
Agreement and the Indenture Trustee promptly, in writing, upon the discovery of
any breach of the Company's representations and warranties made pursuant to
Section 3.01 or 6.01. Unless any such breach shall have been cured in all
material respects by the last day of the second Collection Period following the
discovery thereof (and notice to the Company) by the Owner Trustee or receipt by
the Owner Trustee of written notice from the Company or the Servicer of such
breach, the Company shall be obligated to repurchase any Receivable materially
and adversely affected by any such breach as of such last day (or, at the
Company's option, the last day of the first Collection Period following the
discovery). In consideration of the repurchase of any such Receivable, the
Company shall remit the Purchase Amount, in the manner specified in Section
5.05. The sole remedy of the Issuer, the Owner Trustee, the Indenture Trustee,
the Noteholders or the Certificateholders with respect to a breach or
representations and warranties pursuant to Section 3.01 and the agreement
contained in this Section shall be to require the Company to repurchase
Receivables pursuant to this Section, subject to the conditions contained
herein.
SECTION 3.03. 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 following documents or instruments which are hereby or will
hereby be constructively delivered to the Indenture Trustee, as pledgee of the
Issuer as of the Closing Date:
-20-
(a) the fully executed original of each Receivable;
(b) a filmed copy of each original credit application as executed by
the Obligor;
(c) the original certificate of title or such documents that the
Servicer shall keep on file, in accordance with its customary procedures,
evidencing the security interest of the related Seller in each Financed Vehicle;
and
(d) any and all other documents that the Servicer shall keep on file,
in accordance with its customary procedures, relating to a Receivable, an
Obligor or a Financed Vehicle.
SECTION 3.04. Duties of Servicer as Custodian. (a) Safekeeping. The
------------------------------- -----------
Servicer shall hold the Receivable Files as custodian for the benefit of the
Issuer and maintain such accurate and complete accounts, records and computer
systems pertaining to each Receivable File as shall enable the Issuer to comply
with this Agreement. In performing its duties as custodian, the Servicer shall
act with reasonable care using that degree of skill and attention that the
Servicer exercises with respect to the Receivable Files relating to all
comparable automotive receivables that the Servicer services for itself or
others. The Servicer shall conduct, or cause to be conducted, periodic audits
of the Receivable Files held by it under this Agreement and of the related
accounts, records and computer systems, in such a manner as shall enable the
Issuer or the Indenture Trustee to verify the accuracy of the Servicer's record
keeping. The Servicer shall promptly report to the Issuer and the Indenture
Trustee any failure on its part to hold the Receivable Files and maintain its
accounts, records and computer systems as herein provided and shall promptly
take appropriate action to remedy any such failure. Nothing herein shall be
deemed to require an initial review or any periodic review by the Issuer or the
Indenture Trustee of the Receivables Files.
(b) Maintenance of and Access to Records. The Servicer shall maintain
------------------------------------
each Receivable File at one of its offices specified in Schedule II or at such
other office as shall be specified to the Issuer and the Indenture Trustee by
written notice not later than 90 days after any change in location. The
Servicer shall make available to the Issuer and the Indenture Trustee or their
respective 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 or the Indenture Trustee shall instruct.
(c) Release of Documents. Upon instruction from the Indenture
--------------------
Trustee, the Servicer shall release any Receivable File to the Indenture
Trustee, the Indenture Trustee's agent or the Indenture Trustee's designee, as
the case may be, at such place or places as the Indenture Trustee may designate,
as soon as practicable, and upon the release and delivery of any such document
in accordance with the instructions of the Indenture Trustee, the Servicer shall
be released from any further liability and responsibility under this Section
3.04 with respect to such documents unless and until such time as such documents
shall be returned to the Servicer, and in no event shall the Servicer be
responsible for any loss occasioned by the Indenture Trustee's failure to return
any documents in a timely manner.
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SECTION 3.05. 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.
SECTION 3.06. Custodian's Indemnification. The Servicer as custodian
---------------------------
shall indemnify the Trust, the Owner Trustee and the Indenture Trustee and each
of their respective 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
respective officers, directors, employees and 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 for any portion of any such
amount resulting from the willful misfeasance, bad faith or negligence of the
Owner Trustee, and the Servicer shall not be liable to the Indenture Trustee for
any portion of any such amount resulting from the willful misfeasance, bad faith
or negligence of the Indenture Trustee.
SECTION 3.07. Effective Period and Termination. The Servicer's
--------------------------------
appointment as custodian shall become effective as of the Closing Date and shall
continue in full force and effect until terminated pursuant to this Section. If
the Servicer shall resign as Servicer in accordance with the provisions of this
Agreement or if all of the rights and obligations of any Servicer shall have
been terminated under Section 8.01, the appointment of such Servicer as
custodian shall be terminated by the Indenture Trustee or by the Holders of
Notes evidencing not less than 25% of the Outstanding Amount of the Notes or,
with the consent of Holders of the Notes evidencing not less than 25% the
Outstanding Amount of the Notes or, with the consent of Holders of the Notes
evidencing not less than 25% of the Outstanding Amount of the Notes, by the
Owner Trustee or by Certificateholders evidencing not less than 25% of the
Certificate Balance, in the same manner as the Indenture Trustee or such Holders
may terminate the rights and obligations of the Servicer under Section 8.01.
The Indenture Trustee or, with the consent of the Indenture Trustee, the Owner
Trustee may terminate the Servicer's appointment as custodian, with cause, at
any time upon written notification to the Servicer, and without cause upon 30
days' prior written notification to the Servicer. As soon as practicable after
any termination of such 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 any
termination of the Servicer as custodian, the Indenture Trustee or Owner
Trustee, as applicable, shall provide, or shall cause its agent to provide,
access to the Receivable Files to the Servicer for the purpose of carrying out
its duties and responsibilities with respect to the servicing of the Receivables
hereunder.
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ARTICLE IV
Administration and Servicing of Receivables
-------------------------------------------
SECTION 4.01. Duties of Servicer. The Servicer, for the benefit of the
------------------
Issuer (to the extent provided herein), shall manage, service, administer and
make collections on the Receivables (other than Purchased Receivables) with
reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to all comparable automotive receivables that it services
for itself or others. The Servicer's duties shall include collection and
posting of all payments, responding to inquiries of Obligors on such
Receivables, investigating delinquencies, sending payment coupons to Obligors,
reporting tax information to Obligors, accounting for collections, furnishing
monthly and annual statements to the Owner Trustee and the Indenture Trustee
with respect to distributions and making Advances pursuant to Section 5.04.
Subject to the provisions of Section 4.02, the Servicer shall follow its
customary standards, policies and procedures in performing its duties as
Servicer. Without limiting the generality of the foregoing, the Servicer is
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 partial or full release or discharge, and all other comparable
instruments, with respect to the Receivables or to the Financed Vehicles
securing such Receivables. If the Servicer shall commence a legal proceeding to
enforce a Receivable, the Issuer (in the case of a Receivable other than a
Purchased Receivable) shall thereupon be deemed to have automatically assigned,
solely for the purpose of collection, such Receivable to the Servicer. If in
any enforcement suit or legal proceeding it shall be held that the Servicer may
not enforce a Receivable on the ground that it shall not be a real party in
interest or a holder entitled to enforce 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 Owner
Trustee, the Indenture Trustee, the Certificateholders or the Noteholders. The
Owner 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 and Allocation of Receivable Payments. The
------------------------------------------------
Servicer shall make reasonable efforts to collect all payments called for under
the terms and provisions of the Receivables as and when the same shall become
due and shall follow such collection procedures as it follows with respect to
all comparable automotive receivables that it services for itself or others. The
Servicer shall allocate collections between principal and interest in accordance
with the customary servicing procedures it follows with respect to all
comparable automotive receivables that it services for itself or others. The
Servicer may grant extensions, rebates or adjustments on Receivable, which shall
not, for the purposes of this Agreement, modify the original due dates or
amounts of the Scheduled Payments on a Precomputed Receivable or the original
due dates or amounts of the originally scheduled payments of interest on Simple
Interest Receivables; provided, however, that if the Servicer extends the date
for final payment by the Obligor of any Receivable beyond the Final Scheduled
Maturity Date, it shall promptly repurchase the Receivable from the
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Issuer in accordance with the terms of Section 4.07. The Servicer may in its
discretion waive any late payment charge or any other fees that may be collected
in the ordinary course of servicing a Receivable. The Servicer shall not agree
to any alteration of the interest rate on any Receivable or of the amount of any
Scheduled Payment on Precomputed Receivables or the originally Scheduled
Payments on Simple Interest Receivables.
SECTION 4.03. Realization upon Receivables. On behalf of the Issuer,
----------------------------
the Servicer shall use its best efforts, consistent with its customary servicing
procedures, to repossess or otherwise convert the ownership of the Financed
Vehicle securing any Receivable as to which the Servicer shall have determined
eventual payment in full is unlikely. The Servicer shall follow such customary
and usual practices and procedures as it shall deem necessary or advisable in
its servicing of automotive receivables, which may include reasonable efforts to
realize upon any recourse to Dealers and selling the Financed Vehicle at public
or private sale. The Servicer shall be entitled to recover all out-of-pocket
expenses incurred by it in the course of converting a Financed Vehicle into cash
proceeds. The foregoing shall be subject to the provision that, in any case in
which the Financed Vehicle shall have suffered damage, the Servicer shall not
expend funds in connection with the repair or the repossession of such Financed
Vehicle unless it shall determine in its discretion that such repair and/or
repossession will increase the Liquidation Proceeds by an amount greater than
the amount of such expenses.
SECTION 4.04. Physical Damage Insurance. The Servicer shall, in
-------------------------
accordance with its customary servicing procedures, require that each Obligor
shall have obtained physical damage insurance covering the Financed Vehicle as
of the execution of the Receivable.
SECTION 4.05. Maintenance of Security Interests in Financed Vehicles.
------------------------------------------------------
The Servicer shall, in accordance with its customary servicing procedures, take
such steps as are necessary to maintain perfection of the security interest
created by each Receivable in the related Financed Vehicle. The Servicer is
hereby authorized to take such steps as are necessary to re-perfect such
security interest on behalf of the Issuer and the Indenture Trustee in the event
of the relocation of a Financed Vehicle or for any other reason. In the event
that the assignment of a Receivable to the Trust is insufficient, without a
notation on the related Financed Vehicle's's certificate of title, to grant to
the Trust a first perfected security interest in the relaxed Financed Vehicle,
the Servicer hereby agrees to serve as the agent of the Trust for the purposes
of perfecting the security interest in such Financed Vehicle and that the
Servicer's listing as the secured party on the certificate of title is in its
capacity as agent of the Trust.
SECTION 4.06. Covenants of Servicer. The Servicer shall not release the
---------------------
Financed Vehicle securing any Receivable from the security interest granted by
such Receivable in whole or in part except in the event of payment in full by
the Obligor thereunder or repossession, nor shall the Servicer impair the rights
of the Issuer, the Indenture Trustee, the Certificateholders or the Noteholders
in such Receivable, nor shall the Servicer increase the number of scheduled
payments due under a Receivable.
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SECTION 4.07. Purchase of Receivables upon Breach. The Servicer or the
-----------------------------------
Owner Trustee shall inform the other party and the Indenture Trustee and the
Company promptly, in writing, upon the discovery of any breach pursuant to
Section 4.02, 4.05 or 4.06 that materially and adversely affects the interests
of the Trust in any Receivable. Unless the breach shall have been cured by the
last day of the second Collection Period following such discovery (or, at the
Servicer's election, the last day of the first following Collection Period), the
Servicer shall purchase, as of such last day, any Receivable that is materially
and adversely affected by such breach. In consideration of the purchase of any
such Receivable pursuant to either of the two preceding sentences, the Servicer
shall remit the Purchase Amount in the manner specified in Section 5.05. For
purposes of this Section, the Purchase Amount shall consist in part of a release
by the Servicer of all rights of reimbursement with respect to Outstanding
Precomputed Advances and Outstanding Simple Interest Advances on the Receivable.
The sole remedy of the Issuer, the Owner Trustee, the Indenture Trustee, the
Certificateholders or the Noteholders with respect to a breach pursuant to
Section 4.02, 4.05 or 4.06 shall be to require the Servicer to purchase
Receivables pursuant to this Section. The Owner Trustee shall have no duty to
conduct any affirmative investigation as to the occurrence of any condition
requiring the repurchase of any Receivable pursuant to this Section.
SECTION 4.08. Servicing Fee. As compensation for servicing the
-------------
Receivables, the Servicer shall be entitled to receive the Servicing Fee on each
Distribution Date, from the Interest Distribution Amount available on such
Distribution Date, in an amount equal to the product of (a) one-twelfth, (b) the
Servicing Fee Rate and (c) the Pool Balance as of the first day of the preceding
Collection Period. The Servicer shall also be entitled to all late fees,
prepayment charges (including, in the case of a Receivable that provides for
payments according to the "Rule of 78s" and that is prepaid in full, the
difference between the Principal Balance of such Receivable (plus accrued
interest to the date of prepayment) and the principal balance of such Receivable
computed according to the "Rule of 78s"), and other administrative fees or
similar charges allowed by applicable law with respect to the Receivables,
collected (from whatever source) on the Receivables, as and when collected, plus
any reimbursement pursuant to the last paragraph of Section 7.02.
SECTION 4.09. Servicer's Certificate. Not later than 11:00 a.m. (New
----------------------
York time) on each Payment Determination Date, the Servicer shall deliver to the
Owner Trustee, each Paying Agent, the Indenture Trustee and the Company, with a
copy to the Rating Agencies, a Servicer's Certificate containing all information
necessary to make the distributions to be made on the related Distribution Date
pursuant to Section 5.06 and 5.07 for the related Collection Period.
Receivables to be purchased by the Servicer or to be repurchased by the Company
shall be identified by the Servicer by account number with respect to such
Receivable (as specified in Schedule I).
SECTION 4.10. Annual Statement as to Compliance; Notice of Default. (a)
----------------------------------------------------
The Servicer shall deliver to the Owner Trustee and the Indenture Trustee, on or
before _____________________ of each year beginning _________________, 199____,
an Officers' Certificate, dated as of _________________ of the preceding year,
stating that (i) a review of the activities of the Servicer during the preceding
12-month period (or such shorter period as shall have elapsed since the Closing
Date) and of its performance under this Agreement has been made under
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such officers' supervision and (ii) to the best of such officers' knowledge,
based on such review, the Servicer has fulfilled all its obligations under this
Agreement throughout such year or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officers and the nature and status thereof. The Indenture Trustee shall send a
copy of such certificate and the report referred to in Section 4.11 to the
Rating Agencies. A copy of such certificate and the report referred to in
Section 4.11 may be obtained by any Certificateholder, Certificate Owner,
Noteholder or Note Owner by a request in writing to the Owner Trustee addressed
to the Corporate Trust Office. Upon the telephone request of the Owner Trustee,
the Indenture Trustee will promptly furnish the Owner Trustee a list of
Noteholders as of the date specified by the Owner Trustee.
(b) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee and the Rating Agencies, promptly after having obtained knowledge
thereof, but in no event later than five (5) Business Days thereafter, written
notice in an Officers' Certificate of any event which with the giving of notice
or lapse of time, or both, would become a Servicer Default under Section 8.01(a)
or (b).
SECTION 4.11. Annual Independent Certified Public Accountants' Report.
-------------------------------------------------------
The Servicer shall deliver to the Owner Trustee and the Indenture Trustee on or
before _____________ of each year beginning _____________, a report of a firm of
independent certified public accountants, addressed to the Board of Directors of
the Servicer, to the effect that such firm has examined the financial statements
of the Servicer and issued its report thereon and that such examination (a) was
made in accordance with generally accepted auditing standards and accordingly
included such tests of the accounting records and such other auditing procedures
as such firm considered necessary in the circumstances; (b) included tests
relating to automotive loans serviced for others in accordance with the
requirements of the Uniform Single Audit Program for Mortgage Bankers (the
"Program"), to the extent the procedures in such Program are applicable to the
servicing obligations set forth in this Agreement; and (c) except as described
in the report, disclosed no exceptions or errors in the records relating to
automobile and light-duty truck loans serviced for others that, in the firm's
opinion, paragraph four of such Program requires such firm to report.
Such report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 4.12. Access to Certain Documentation and Information Regarding
---------------------------------------------------------
Receivables. The Servicer shall provide to the Certificateholders and
-----------
Noteholders access to the Receivable Files in such cases where the
Certificateholders or Noteholders shall be required by applicable statutes or
regulations to review such documentation. Access shall be afforded without
charge, but only upon reasonable request and during the normal business hours at
the respective offices of the Servicer. Nothing in this Section 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. Servicer Expenses. The Servicer shall be required to pay
-----------------
all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of independent accountants, taxes imposed on
the Servicer and expenses incurred in connection with distributions and reports
to Certificateholders and Noteholders.
SECTION 4.14. 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 Rating Agency Condition shall
have been satisfied in connection therewith; and provided, further, that the
Servicer shall remain obligated and be liable to the Issuer, the Owner Trustee,
the Indenture Trustee, the Certificateholders and the Noteholders for the
servicing and administering of the Receivables in accordance with the provisions
hereof without diminution of such obligation and liability by virtue of the
appointment of such subservicer and to the same extent and under the same terms
and conditions as if the Servicer alone were servicing and administering the
Receivables. The fees and expenses of the subservicer shall be as agreed
between the Servicer and its subservicer from time to time, and none of the
Issuer, the Owner Trustee, the Indenture Trustee, the Certificateholders or the
Noteholders shall have any responsibility therefor.
ARTICLE V
Distributions; Reserve Account; Statements to Certificateholders and Noteholders
--------------------------------------------------------------------------------
SECTION 5.01. Establishment of Trust Accounts. (a) (i) 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.
(ii) The Servicer, for the benefit of the Noteholders, shall establish
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.
(iii) 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 "Reserve Account"),
bearing a designation clearly indicating that the funds deposited therein
are held for the benefit of the Noteholders and the Certificateholders.
(b) Funds on deposit in the Collection Account, the Note Distribution
Account and the Reserve Account (collectively the "Trust Accounts") shall be
invested (1) by the Indenture Trustee in Eligible Investments selected in
writing by the Servicer or an investment manager selected by the Servicer, which
investment manager shall have agreed to comply with the terms of this Agreement
as it relates to investing such funds or (2) by an investment manager in
Eligible Investments selected
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by such investment manager, provided that (A) such investment manager shall be
selected by the Servicer, (B) such investment manager shall have agreed to
comply with the terms of this Agreement as it relates to investing such funds,
(C) any investment so selected by such investment manager shall be made in the
name of the Indenture Trustee and shall be settled by a Delivery to the
Indenture Trustee that complies with the terms of this Agreement as it relates
to investing such funds, and (D) prior to the settlement of any investment so
selected by such investment manager the Indenture Trustee shall affirm that such
investment is an Eligible Investment. It is understood and agreed that the
Indenture Trustee shall not be liable for any loss arising from an investment in
Eligible Investments made in accordance with this Section 5.01(b). All such
Eligible Investments shall be held by the Indenture Trustee for the benefit of
the Noteholders and the Certificateholders or the Noteholders, as applicable;
provided, that on each Payment Determination Date all interest and other
investment income (net of losses and investment expenses) on funds on deposit in
the Trust Accounts shall be deposited into the Collection Account and shall be
deemed to constitute a portion of the Interest Distribution Amount for the
related Distribution Date. Unless otherwise permitted by the Rating Agencies,
funds on deposit in the Collection Account, the Reserve Account and the Note
Distribution Account shall be invested in Eligible Investments that will mature
(A) not later than the Business Day immediately preceding the next Distribution
Date or (B) on such next Distribution Date if either (x) such investment is held
in the trust department of the institution with which the Collection Account,
the Reserve Account, the Note Distribution Account or the Certificate
Distribution Account, as applicable, is then maintained and is invested in a
time deposit of _____________________ rated at least A-1 by Standard & Poor's
and P-1 by Moody's (such account being maintained within the trust department of
_____________________) or (y) the Indenture Trustee (so long as the short-term
unsecured debt obligations of the Indenture Trustee are either (i) rated at
least P-1 by Moody's and A-1 by Standard & Poor's on the date such investment is
made or (ii) guaranteed by an entity whose short-term unsecured debt obligations
are rated at least P-1 by Moody's and A-1 by Standard & Poor's on the date such
investment is made) has agreed to advance funds on such Distribution Date to the
Note Distribution Account and the Certificate Distribution Account in the amount
payable on such investment on such Distribution Date pending receipt thereof to
the extent necessary to make distributions on such Distribution Date. The
guarantee referred to in clause (y) of the preceding sentence shall be subject
to the Rating Agency Condition. For the purpose of the foregoing, unless the
Indenture Trustee affirmatively agrees in writing to make such advance with
respect to such investment prior to the time an investment is made, it shall not
be deemed to have agreed to make such advance. Funds deposited in a Trust
Account on a day which immediately precedes a Distribution Date upon the
maturity of any Eligible Investments are not required to be invested overnight.
(c) (i) The Indenture Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Trust Accounts
and in all proceeds thereof (including all income thereon) and all such
funds, investments, proceeds and income shall be part of the Trust Estate.
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 the case may be. If, at any time, any of the Trust
Accounts ceases to be an Eligible Deposit Account, the Indenture Trustee
(or the Servicer on its behalf) shall within 10 Business Days (or such
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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 to such new
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(c)(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
financial intermediary (as such term is defined in Section 8-313(4))
of the UCC acting solely for the Indenture Trustee;
(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; and
(D) any Trust Account Property that is an "uncertificated
security" under Article VIII 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.
(iii) The Servicer shall have the power, revocable by the Indenture
Trustee or by the Owner Trustee with the consent of the Indenture Trustee,
to instruct the Indenture Trustee to make withdrawals and payments from the
Trust Accounts for the purpose of permitting the Servicer or the Owner
Trustee to carry out its respective duties hereunder or permitting the
Indenture Trustee to carry out its duties under the Indenture.
SECTION 5.02. Collections. The Servicer shall remit within two Business
-----------
Days of receipt thereof to the Collection Account all payments by or on behalf
of the Obligors with respect to the Receivables (other than Purchased
Receivables) and all Liquidation Proceeds, both as collected during the
Collection Period. Notwithstanding the foregoing, for so long as (i)
___________ remains
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the Servicer, (ii) no Servicer Default shall have occurred and be continuing and
(iii)(x) _____________ maintains a short-term rating of at least A-1 by Standard
& Poor's and P-1 by Moody's (and for five Business Days following a reduction in
either such rating) or (y) prior to ceasing daily remittances, the Rating Agency
Condition shall have been satisfied (and any conditions or limitations imposed
by the Rating Agencies in connection therewith are complied with), the Servicer
may remit such collections with respect to the preceding calendar month to the
Collection Account on a less frequent basis, but in no event later than the
Payment Determination Date immediately preceding each Distribution Date. 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.
SECTION 5.03. Application of Collections. All collections for the
--------------------------
Collection Period shall be applied by the Servicer as follows:
With respect to each Receivable (other than a Purchased Receivable),
payments by or on behalf of the Obligor shall be applied first, in the case
of Precomputed Receivables, to reduce Outstanding Precomputed Advances as
described in Section 5.04(a) and, in the case of Simple Interest
Receivables, to reduce Outstanding Simple Interest Advances to the extent
described in Section 5.04(b). Next, any excess shall be applied, in the
case of Precomputed Receivables, to the Scheduled Payment and, in the case
of Simple Interest Receivables, to interest and principal in accordance
with the Simple Interest Method. With respect to Precomputed Receivables,
any remaining excess shall be added to the Payahead Balance, and shall be
applied to prepay the Precomputed Receivable, but only if the sum of such
excess and the previous Payahead Balance shall be sufficient to prepay the
Receivable in full. Otherwise, any such remaining excess payments shall
constitute a Payahead and shall increase the Payahead Balance.
If the Servicer is required to return a Payahead to the related Obligor, the
amount to be returned shall be retained by the Servicer from collections on the
Receivables allocable to principal and paid by the Servicer to such Obligor.
SECTION 5.04. Advances. (a) As of the close of business on the last day
--------
of each Collection Period, if the payments by or on behalf of the Obligor on a
Precomputed Receivable (other than a Purchased Receivable) shall be less than
the Scheduled Payment, the Payahead Balance shall be applied by the Servicer to
the extent of the shortfall and such Payahead Balance shall be reduced
accordingly. Next, the Servicer shall advance any remaining shortfall (such
amount, a "Precomputed Advance"), to the extent that the Servicer, at its sole
discretion, shall determine that the Precomputed Advance shall be recoverable
from the Obligor, the Purchase Amount, Liquidation Proceeds or proceeds of any
other Precomputed Receivables. With respect to each Precomputed Receivable, the
Precomputed Advance shall increase Outstanding Precomputed Advances.
Outstanding Precomputed Advances shall be reduced by subsequent payments by or
on behalf of the Obligor, collections of Liquidation Proceeds in respect of such
Precomputed Receivables or payments of the Purchase Amount with respect to such
Precomputed Receivables.
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If the Servicer shall determine that an Outstanding Precomputed Advance
with respect to any Precomputed Receivable shall not be recoverable as
aforesaid, the Servicer shall be reimbursed from any collections made on other
Precomputed Receivables in the Trust and Outstanding Precomputed Advances with
respect to such Precomputed Receivables shall be reduced accordingly.
(b) As of the close of business on the last day of each Collection Period,
the Servicer shall advance an amount equal to the amount of interest due on the
Simple Interest Receivables at their respective APR's for the related Collection
Period (assuming the Simple Interest Receivables pay on their respective due
dates) minus the amount of interest actually received on the Simple Interest
Receivables during the related Collection Period (such amount, a "Simple
Interest Advance"). With respect to each Simple Interest Receivable, the Simple
Interest Advance shall increase Outstanding Simple Interest Advances. If such
calculation results in a negative number, an amount equal to such negative
number shall be paid to the Servicer and the amount of Outstanding Simple
Interest Advances shall be reduced by such amount. In addition, in the event
that a Simple Interest Receivable becomes a Liquidated Receivable, Liquidation
Proceeds with respect to such Simple Interest Receivable attributable to accrued
and unpaid interest thereon (but not including interest for the then current
Collection Period) shall be paid to the Servicer to reduce Outstanding Simple
Interest Advances, but only to the extent of any Outstanding Simple Interest
Advances.
SECTION 5.05. Additional Deposits. The Servicer shall deposit in the
-------------------
Collection Account on the Payment Determination Date for the related Collection
Period the aggregate Advances pursuant to Section 5.04. To the extent that the
Servicer fails to make a Simple Interest Advance pursuant to Section 5.04(b) on
the date required, the Servicer shall notify the Indenture Trustee to withdraw
such amount (or, if determinable, such portion of such amount as does not
represent advances for delinquent interest) from the Reserve Account and deposit
such amount in the Collection Account. The Servicer and the Company shall
deposit or cause to be deposited in the Collection Account the aggregate
Purchase Amount with respect to Purchased Receivables and the Servicer shall
deposit therein all amounts to be paid under Section 9.01. The Servicer will
deposit the aggregate Purchase Amount with respect to Purchased Receivables when
such obligations are due, unless the Servicer shall not be required to make
daily deposits pursuant to Section 5.02. All such other deposits shall be made
on the Payment Determination Date for the related Collection Period.
SECTION 5.06. Distributions. (a) So long as (i) the long-term unsecured
-------------
indebtedness of the Servicer is rated Baa3 or better by Moody's or (ii) the
Rating Agency Condition is otherwise satisfied, the Servicer will be entitled to
receive the payment of the Servicing Fee in respect of a Collection Period (and
all unpaid Servicing Fees from prior Collection Periods) at the beginning of
each Collection Period from payments on the Receivables received during such
Collection Period.
(b) (i) On each Payment Determination Date, the Servicer shall calculate
all amounts required to be deposited in the Note Distribution Account and
the Certificate Distribution Account.
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(ii) On each Distribution Date, the Servicer shall instruct the
Indenture Trustee (based on the information contained in the Servicer's
Certificate delivered on the related Payment Determination Date pursuant to
Section 4.09) to make the following deposits and distributions for receipt
by the Servicer or deposit in the applicable account by 11:00 a.m. (New
York time), to the extent of the Total Distribution Amount, in the
following order of priority:
(A) to the extent the Servicer has not received the payment of
the Servicing Fee at the beginning of the related Collection Period
pursuant to clause (a) above, to the Servicer, from the Interest
Distribution Amount, the Servicing Fee (and all unpaid Servicing Fees
from prior Collection Periods);
(B) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of Section 5.06(a)
and clause (A), the Noteholders' Interest Distributable Amount;
(C) to the Note Distribution Account, from the Total
Distribution Amount remaining after the application of Section 5.06(a)
and clauses (A) and (B), the Noteholders' Principal Distributable
Amount;
(D) to the Certificate Distribution Account, from the Total
Distribution Amount remaining after the application of Section 5.06(a)
and clauses (A) through (C), the Certificateholders' Interest
Distributable Amount;
(E) to the Certificate Distribution Account, from the Total
Distribution Amount remaining after the application of Section 5.06(a)
and clauses (A) through (D), the Certificateholders' Principal
Distributable Amount;
(F) to the Reserve Account, from the Total Distribution Amount
remaining after the application of Section 5.06(a) and clauses (A)
through (E) (it being understood that the Acceleration Principal
Distribution Amount is a function of and subject to the amount
required to be deposited in the Reserve Account pursuant to this
clause (F)), the amount, if any, necessary to reinstate the balance in
the Reserve Account up to the Specified Reserve Account Balance; and
(G) to the Reserve Account, the portion, if any, of the Total
Distribution Amount remaining after the application of Section 5.06(a)
and clauses (A) through (F).
Notwithstanding that the Notes have been paid in full, the Indenture Trustee
shall continue to maintain the Collection Account hereunder until the
Certificate Balance is reduced to zero.
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SECTION 5.07. Reserve Account. (a) On the Closing Date, the Owner
---------------
Trustee will deposit, on behalf of the Company, the Reserve Account Initial
Deposit into the Reserve Account from the net proceeds of the sale of the Notes
and the Certificates.
(b) (i) After giving effect to clause (ii) below, if the amount on
deposit in the Reserve Account on any Distribution Date (after giving
effect to all deposits thereto or withdrawals therefrom on such
Distribution Date) is greater than the Specified Reserve Account Balance
for such Distribution Date, the Servicer shall instruct the Indenture
Trustee to distribute the amount of such excess to the Company.
(ii) On each Distribution Date subsequent to any reduction or
withdrawal by any Rating Agency of its rating of any Class of Notes, unless
such rating has been restored, if the amount on deposit in the Reserve
Account (taking into account any deposits therein pursuant to Section
5.06(b) and withdrawals therefrom on such date pursuant to Section 5.07(c),
(d) or (e)) is greater than the Specified Reserve Account Balance for such
Distribution Date, then the Servicer shall instruct the Indenture Trustee
to include the amount of such excess in the Noteholders' Monthly Principal
Distribution Amount and to deposit the amount of such excess (up to the
amount of cash or cash equivalents in the Reserve Account) to the
Collection Account for deposit to the Note Distribution Account for
distribution to Noteholders as an accelerated payment of principal on such
Distribution Date; provided, that the amount of such deposit shall not
exceed the outstanding principal balance of the Notes after giving effect
to all other payments of principal to be made on such date.
(c) If the Servicer determines pursuant to Section 5.04 that it is
required to make an Advance on a Payment Determination Date and does not do
so from its own funds, the Servicer shall instruct the Indenture Trustee to
withdraw funds from the Reserve Account and deposit them in the Collection
Account to cover any shortfall. Such payment shall be deemed to have been
made by the Servicer pursuant to Section 5.04 for purposes of making
distributions pursuant to this Agreement, but shall not otherwise satisfy
the Servicer's obligation to deliver the amount of the Advances, and the
Servicer shall within two Business Days replace any funds in the Reserve
Account so used.
(d) (i) In the event that the Noteholders' Distributable Amount for
a Distribution Date exceeds the sum of the amounts deposited into the Note
Distribution Account pursuant to Section 5.06(b)(ii)(B) and (C) on such
Distribution Date, the Servicer shall instruct the Indenture Trustee to
withdraw from the Reserve Account on such Distribution Date an amount equal
to such excess, to the extent of funds available therein up to the
Available Amount, and deposit such amount into the Note Distribution
Account.
(ii) In the event that the Noteholders' Principal Distributable Amount
on the Class A-1 Final Scheduled Distribution Date or the Class A-2 Final
Scheduled Distribution Date exceeds the amount deposited into the Note
Distribution Account pursuant to Section 5.06(b)(ii)(C) on such
Distribution Date, the Servicer shall instruct the Indenture Trustee to
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withdraw from the Reserve Account on such Distribution Date an amount equal
to such excess, to the extent of funds available therein up to the
Available Amount, and deposit such amount into the Note Distribution
Account.
(e) (i) In the event that the Certificateholders' Distributable
Amount for a Distribution Date exceeds the sum of the amounts deposited
into the Certificate Distribution Account pursuant to Section
5.06(b)(ii)(D) and (E) on such Distribution Date, the Servicer shall
instruct the Indenture Trustee to withdraw from the Reserve Account on such
Distribution Date an amount equal to such excess, to the extent of funds
available therein up to the Available Amount after giving effect to
paragraphs (c) and (d) above, and deposit such amount into the Certificate
Distribution Account on such Distribution Date.
(ii) In the event that the Certificateholders' Monthly Interest
Distributable Amount for a Distribution Date exceeds the amount deposited
in the Certificate Distribution Account pursuant to Section 5.06(b)(ii)(D),
the Servicer shall instruct the Indenture Trustee to withdraw from the
Reserve Account on such Distribution Date an amount equal to such excess,
to the extent of funds available therein, after giving effect to paragraphs
(d)(i) and (e)(i) above, up to the Certificate Interest Reserve Amount with
respect to such Distribution Date, and deposit such amount into the
Certificate Distribution Account.
(iii) In the event that the Certificateholders' Principal
Distributable Amount on the Final Scheduled Distribution Date exceeds the
amount deposited in the Certificate Distribution Account pursuant to
Section 5.06(b)(ii)(E), the Servicer shall instruct the Indenture Trustee
to withdraw from the Reserve Account on such Distribution Date an amount
equal to such excess, to the extent of funds available therein after giving
effect to paragraphs (d) and (e)(i) above, and deposit such amount into the
Certificate Distribution Account.
(f) Subject to Section 9.01, amounts will continue to be applied
pursuant to Section 5.06(b) following payment in full of the Outstanding
Amount of the Notes and the Certificate Balance until the Pool Balance is
reduced to zero. Following the payment in full of the aggregate Outstanding
Amount of the Notes and the Certificate Balance and of all other amounts
owing or to be distributed hereunder or under the Indenture or the Trust
Agreement to Noteholders and Certificateholders and the termination of the
Trust, any amount remaining on deposit in the Reserve Account shall be
distributed to the Company.
(g) On the Final Scheduled Distribution Date, if the amount of funds
remaining in the Reserve Account (after all other distributions to be made
from the Reserve Account pursuant to this Section have been made, other
than paragraphs (b)(i) and (f)) is in excess of the amounts described
below, a portion of such excess according to the following schedule shall
be deposited in the Certificate Distribution Account for distribution to
Certificateholders:
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(i) with respect to all such funds in the Reserve Account in excess
of $________ but which do not exceed $_______________, 20% of such amount;
(ii) with respect to all such funds in the Reserve Account in excess
of $________ but which do not exceed $_______________, 40% of such amount;
(iii) with respect to all such funds in the Reserve Account in excess
of $________ but which do not exceed $_______________, 60% of such amount;
(iv) with respect to all such funds in the Reserve Account in excess
of $________ but which do not exceed $_______________, 80% of such amount;
and
(v) with respect to all such funds in the Reserve Account in excess
of $________, 100% of such amount.
The amounts to be deposited in the Certificate Distribution Account pursuant to
the preceding sentence are in excess of all amounts otherwise required to be
deposited in the Certificate Distribution Account pursuant to this Agreement,
notwithstanding anything to the contrary contained herein.
SECTION 5.08. Statements to Certificateholders and Noteholders. (a) On
------------------------------------------------
each Distribution Date, the Servicer shall provide to the Indenture Trustee
(with a copy to the Rating Agencies and each Paying Agent) 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) 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 Notes and the Certificates to the
extent applicable:
(i) the amount of such distribution allocable to principal allocable
to each Class of Notes and to the Certificates;
(ii) the amount of such distribution allocable to interest allocable
to each Class of Notes and to the Certificates;
(iii) the outstanding principal balance of each Class of Notes, the
Note Pool Factor for each such Class, the Certificate Balance and the
Certificate Pool Factor as of the close of business on the last day of the
preceding Collection Period, after giving effect to payments allocated to
principal reported under clause (i) above;
(iv) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period;
(v) the amount of Realized Losses, if any, with respect to the
related Collection Period;
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(vi) the balance of the Reserve Account on such Payment Determination
Date after giving effect to deposits and withdrawals to be made on the next
following Distribution Date, if any;
(vii) the aggregate Payahead Balance; and
(viii) 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 subsection (a)(i) above, as reconciled.
Each amount set forth reconciling amounts on the Distribution Date
statement under clauses (i), (ii) or (iv) above shall be expressed as a dollar
amount per $1,000 of original principal balance of a Certificate or Note, as
applicable.
SECTION 5.09. Net Deposits. As an administrative convenience, unless the
------------
Servicer is required to remit collections daily, the Servicer will be permitted
to make the deposit of collections on the Receivables, aggregate Advances and
Purchase Amounts for or with respect to the Collection Period net of
distributions to be made to the Servicer with respect to the Collection Period.
The Servicer, however, will account to the Owner Trustee, the Indenture Trustee,
the Noteholders and the Certificateholders as if all deposits, distributions and
transfers were made individually.
ARTICLE VI
The Company
-----------
SECTION 6.01. Representations of the Company. The Company makes the
------------------------------
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution and
delivery of this Agreement and as of the Closing Date and shall survive the sale
of the Receivables to the Issuer and the pledge thereof to the Indenture Trustee
pursuant to the Indenture.
(a) Organization and Good Standing. The Company is duly organized and
------------------------------
validly existing as a corporation 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, and had at all relevant times, and has, the corporate
power, authority and legal right to acquire and own the Receivables.
(b) Due Qualification. The Company is duly qualified to do business as a
-----------------
foreign corporation in good standing, and has obtained all necessary licenses
and approvals, in all jurisdictions in which the ownership or lease of property
or the conduct of its business shall require such qualifications.
-36-
(c) Power and Authority. The Company has the corporate power and authority
-------------------
to execute and deliver this Agreement and to carry out its terms; the Company
has full power and authority to sell and assign the property to be sold and
assigned to and deposited with the Issuer, and the Company 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 has been
duly authorized by the Company by all necessary corporate action.
(d) Binding Obligation. This Agreement constitutes a legal, valid and
------------------
binding obligation of the Company enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization and 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).
(e) No Violation. The consummation of the transactions contemplated by
------------
this Agreement and the fulfillment of the terms hereof do 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) a default under, the articles of
incorporation or bylaws of the Company, or any material term of any indenture,
agreement or other instrument to which the Company 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 or other
instrument (other than pursuant to the Basic Documents); or violate any law or,
to the best of the Company's knowledge, any order, rule or regulation applicable
to the Company of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Company or its properties.
(f) No Proceedings. There are no proceedings or investigations pending or,
--------------
to the Company's knowledge, threatened, before any court, regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Company or its properties: (i) asserting the invalidity of this
Agreement, the Indenture or any of the other Basic Documents, the Notes or the
Certificates, (ii) seeking to prevent the issuance of the Notes or the
Certificates or the consummation of any of the transactions contemplated by this
Agreement, the Indenture or any of the other Basic Documents, (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Company of its obligations under, or the validity or
enforceability of, this Agreement, the Indenture, any of the other Basic
Documents, the Notes or the Certificates or (iv) relating to the Company and
which might materially and adversely affect the federal or state income tax
attributes of the Notes or the Certificates.
SECTION 6.02. Corporate Existence. During the term of this Agreement,
-------------------
the Company will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation 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
-37-
contemplated hereby. In addition, all transactions and dealings between the
Company and its Affiliates will be conducted on an arm's-length basis.
SECTION 6.03. Liability of the Company. The Company shall be liable in
------------------------
accordance herewith only to the extent of the obligations specifically
undertaken and the representations and warranties made by the Company under this
Agreement.
SECTION 6.04. Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of the Company. Any Person (a) into which the Company may be merged
--------------------------
or consolidated, (b) which may result from any merger or consolidation to which
the Company shall be a party or (c) which may succeed to substantially all of
the properties and assets of the Company, which person in any of the foregoing
cases executes an agreement of assumption to perform every obligation of the
Company under this Agreement, shall be the successor to the Company hereunder
without the execution or filing of any document or any further act by any of the
parties to this Agreement; provided, however, that (i) immediately after giving
effect to such transaction, no representation or warranty made pursuant to
Section 3.01 shall have been breached and no Servicer Default, and no event
that, after notice or lapse of time, or both, would become a Servicer Default
shall have occurred and be continuing, (ii) the Company shall have delivered to
the Owner Trustee and the Indenture Trustee an Officers' Certificate and an
Opinion of Counsel each stating that such consolidation, merger or succession
and such agreement of assumption comply with this Section and that all
conditions precedent, if any, provided for in this Agreement relating to such
transaction have been complied with, (iii) the Rating Agency Condition shall
have been satisfied with respect to such transaction and (iv) the Company shall
have delivered to the Owner Trustee and the Indenture Trustee an Opinion of
Counsel either (A) stating that, in the opinion of such counsel, all financing
statements and continuation statements and amendments thereto have been executed
and filed that are necessary fully to preserve and protect the interest of the
Owner Trustee and Indenture Trustee, respectively, in the Receivables and
reciting the details of such filings, or (B) stating that, in the opinion of
such counsel, no such action shall be necessary to preserve and protect such
interests. Notwithstanding anything herein to the contrary, the execution of
the foregoing agreement of assumption and compliance with clauses (i), (ii),
(iii) and (iv) above shall be conditions to the consummation of the transactions
referred to in clauses (a), (b) or (c) above.
SECTION 6.05. Limitation on Liability of the Company and Others. The
-------------------------------------------------
Company and any director, officer, employee or agent of the Company 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 Company shall not be under any obligation to appear in,
prosecute or defend any legal action that shall not be related to its respective
obligations under this Agreement, and that in the Company's opinion may involve
it in any expense or liability.
SECTION 6.06. The Company May Own Certificates or Notes. The Company and
-----------------------------------------
any Affiliate thereof may in their individual or any other capacity become the
owner or pledgee of Certificates or Notes with the same rights as they would
have if it were not the Company or an Affiliate thereof, except as expressly
provided herein or in any Basic Document.
-38-
ARTICLE VII
The Servicer
------------
SECTION 7.01. Representations of Servicer. The Servicer makes the
---------------------------
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution and
delivery of this Agreement and as of the Closing Date, and shall survive the
sale of the Receivables to the Issuer and the pledge thereof to the Indenture
Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Servicer is duly organized and
------------------------------
validly existing as a corporation in good standing under the laws of the state
of its incorporation 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, and had at all relevant times, and
has, the corporate power, authority and legal right to acquire, own, sell and
service the Receivables and to hold the Receivable Files as custodian on behalf
of the Trust and the Indenture Trustee.
(b) Due Qualification. The Servicer is duly qualified to do business as a
-----------------
foreign corporation in good standing, and has obtained all necessary licenses
and approvals, in all jurisdictions in which the ownership or lease of property
or the conduct of its business (including the servicing of the Receivables as
required by this Agreement) shall require such qualifications.
(c) Power and Authority. The Servicer has the corporate power and
-------------------
authority to execute and deliver this Agreement and to carry out its terms; and
the execution, delivery and performance of this Agreement have been duly
authorized by the Servicer by all necessary corporate action.
(d) Binding Obligation. This Agreement constitutes a legal, valid and
------------------
binding obligation of the Servicer enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization and similar laws
now or hereafter in effect relating to or affecting creditor's rights generally
and to general principles of equity (whether applied in a proceeding at law or
in equity).
(e) No Violation. The consummation of the transactions contemplated by
------------
this Agreement and the fulfillment of the terms hereof 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) a default under, the articles of
incorporation or bylaws of the Servicer, or any material term of any indenture,
agreement or other instrument to which the Servicer 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 or other
instrument (other than this Agreement); or violate any law or, to the best of
the Servicer's knowledge, any order, rule or regulation applicable to the
Servicer of any court or of any federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the
Servicer or its properties.
-39-
(f) No Proceedings. To the Servicer's best knowledge, there are no
--------------
proceedings or investigations pending, or threatened, before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Servicer or its properties: (i) asserting the
invalidity of this Agreement, the Indenture, any of the other Basic Documents,
the Notes or the Certificates, (ii) seeking to prevent the issuance of the Notes
or the Certificates or the consummation of any of the transactions contemplated
by this Agreement, the Indenture 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, the Indenture, any of the other Basic
Documents, the Notes or the Certificates or (iv) relating to the Servicer and
which might materially and adversely affect the federal or state income tax
attributes of the Notes or the Certificates.
(g) No Insolvent Obligors. As of the related Cutoff Date, no Obligor on a
---------------------
Receivable is shown on the Receivable Files as the subject of a bankruptcy
proceeding.
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 under this Agreement:
(a) The Servicer shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Indenture Trustee, the Noteholders, the Certificateholders
and the Company 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.
(b) The Servicer shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Indenture Trustee, the Company, the Certificateholders and
the Noteholders 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, claims, damages and liabilities to the extent that such
cost, expense, loss, claim, damage or liability arose out of, or was imposed
upon any such Person through, the negligence, willful misfeasance or bad faith
of the Servicer in the performance of its duties under this Agreement or 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 the Servicer (or any successor thereto pursuant to Section
7.03) as Servicer pursuant to Section 8.01, or a resignation by such Servicer
pursuant to this Agreement, such Servicer shall be deemed to be the Servicer
pending appointment of a successor Servicer (other than the Indenture Trustee)
pursuant to Section 8.02.
Indemnification under this Section shall survive the resignation or removal
of the Owner Trustee or the Indenture Trustee or the termination of this
Agreement and shall include reasonable
-40-
fees and expenses of counsel and expenses of litigation. If the Servicer shall
have made any indemnity payments pursuant to this Section and the Person to or
on behalf of whom such payments are made thereafter collects any of such amounts
from others, such Person shall promptly repay such amounts to the Servicer,
without interest.
SECTION 7.03. Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, Servicer. Any Person (a) into which the Servicer may be merged
------------------------
or consolidated, (b) which may result from any merger or consolidation to which
the Servicer shall be a party or (c) which may succeed to substantially all of
the properties and assets of the Servicer, which Person executed an agreement of
assumption to perform every obligation of the Servicer hereunder, shall be the
successor to the Servicer under this Agreement without further act on the part
of any of the parties to this Agreement; provided, however, that (i) immediately
after giving effect to such transaction, no Servicer Default and no event which,
after notice or lapse of time, or both, would become a Servicer Default shall
have occurred and be continuing, (ii) the Servicer shall have delivered to the
Owner Trustee and the Indenture Trustee an Officers' Certificate and an Opinion
of Counsel each stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section and that all conditions
precedent provided for in this Agreement to such transaction have been complied
with, (iii) the Rating Agency Condition shall have been satisfied with respect
to such transaction and (iv) the Servicer shall have delivered to the Owner
Trustee and the Indenture Trustee 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 fully to preserve and protect the interest of the Owner Trustee and
the Indenture Trustee, respectively, in the Receivables and reciting the details
of such filings or (B) no such action shall be necessary to preserve and protect
such interests. Notwithstanding anything herein to the contrary, the execution
of the foregoing agreement of assumption and compliance with clauses (i), (ii),
(iii) and (iv) above shall be conditions to the consummation of the transactions
referred to in clause (a), (b) or (c) above.
SECTION 7.04. Limitation on Liability of Servicer and Others. Neither
----------------------------------------------
the Servicer nor any of the directors, officers, employees or agents of the
Servicer shall be under any liability to the Issuer, the Owner Trustee, the
Indenture Trustee, the Noteholders or the Certificateholders, except as provided
under this Agreement, for any action taken or for refraining from the taking of
any action pursuant to this Agreement or for errors in judgment; provided,
however, that this provision shall not protect the Servicer or any such person
against any liability that would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of duties or by reason
of reckless disregard of obligations and duties under this Agreement. The
Servicer and any director, officer, employee or agent of the Servicer may rely
in good faith on any document of any kind prima facie properly executed and
submitted by any person respecting any matters arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not be under any
obligation to appear in, prosecute or defend any legal action that shall not be
related to its duties to service the Receivables in accordance with this
Agreement and that in its opinion may involve it in any expense or liability;
-41-
provided, however, that the Servicer may undertake any reasonable action that it
may deem necessary or desirable in respect of this Agreement and the Basic
Documents and the rights and duties of the parties to this Agreement and the
Basic Documents and the interests of the Certificateholders under this Agreement
and the Noteholders under the Indenture.
SECTION 7.05. Servicer Not To Resign. Subject to the provisions of
----------------------
Section 7.03, the Servicer shall not resign from the obligations and duties
hereby imposed on it as Servicer under this Agreement except upon a
determination that the performance of its duties under this Agreement shall no
longer be permissible under applicable law. Notice of any such determination
permitting the resignation of the Servicer shall be communicated to the Owner
Trustee and the Indenture Trustee at the earliest practicable time (and, if such
communication is not in writing, shall be confirmed in writing at the earliest
practicable time) and any such determination shall be evidenced by an Opinion of
Counsel to such effect delivered to the Owner Trustee and the Indenture Trustee
concurrently with or promptly after such notice. No such resignation shall
become effective until the Indenture Trustee or a successor Servicer shall have
assumed the responsibilities and obligations of the Servicer in accordance with
Section 8.02.
ARTICLE VIII
Default
-------
SECTION 8.01. Servicer Default. If any one of the following events (a
----------------
"Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to deliver to the Indenture Trustee for
deposit in any of the Trust Accounts or the Certificate Distribution Account any
required payment or to direct the Indenture Trustee to make any required
distributions therefrom, which failure continues unremedied for a period of
three Business Days after written notice of such failure is received by the
Servicer from the Owner Trustee or the Indenture Trustee or after discovery of
such failure by an officer of the Servicer; or
(b) failure by the Servicer or the Company, as the case may be, duly to
observe or to perform in any material respect any other covenants or agreements
of the Servicer or the Company (as the case may be) set forth in this Agreement
or any other Basic Document, which failure shall (i) materially and adversely
affect the rights of Certificateholders or Noteholders and (ii) continue
unremedied for a period of 60 days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given (A) to
the Servicer or the Company (as the case may be) by the Owner Trustee or the
Indenture Trustee or (B) to the Servicer or the Company (as the case may be),
and to the Owner Trustee and the Indenture Trustee by the Holders of Notes or
Certificates, as applicable, evidencing not less than 25% of the Outstanding
Amount of the Notes or 25% of the outstanding Certificate Balance; or
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(c) the occurrence of an Insolvency Event with respect to the Company, the
Servicer or the Company;
then, and in each and every case, so long as the Servicer Default shall not have
been remedied, either the Indenture Trustee or the Holders of Notes evidencing
not less than a majority of the Outstanding Amount of the Notes, by notice then
given in writing to the Servicer (and to the Indenture Trustee and the Owner
Trustee if given by the Noteholders) may terminate all the rights and
obligations (other than the obligations set forth in Section 7.02 hereof) of the
Servicer under this Agreement. On or after the receipt by the Servicer of such
written notice, all authority and power of the Servicer under this Agreement,
whether with respect to the Notes, the Certificates or the Receivables or
otherwise, shall, without further action, pass to and be vested in the Indenture
Trustee or such successor Servicer as may be appointed under Section 8.02; and,
without limitation, the Indenture Trustee and the Owner Trustee are hereby
authorized and empowered to execute and deliver, for the benefit of the
predecessor Servicer, as attorney-in-fact, or otherwise, any and all documents
and other instruments, and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement of the Receivables and related
documents, or otherwise. The predecessor Servicer shall cooperate with the
successor Servicer, the Indenture Trustee and the Owner Trustee in effecting the
termination of the responsibilities and rights of the predecessor Servicer under
this Agreement, including the transfer to the successor Servicer for
administration by it of all cash amounts that shall at the time be held by the
predecessor Servicer for deposit, or shall thereafter be received by it with
respect to any Receivable. All reasonable costs and expenses (including
attorneys' fees) incurred in connection with transferring the Receivable Files
to the successor Servicer and amending this Agreement to reflect such succession
as Servicer pursuant to this Section shall be paid by the predecessor Servicer
upon presentation of reasonable documentation of such costs and expenses. Upon
receipt of notice of the occurrence of a Servicer Default, the Owner Trustee
shall give notice thereof to the Rating Agencies.
SECTION 8.02. Appointment of Successor. (a) Upon the Servicer's receipt
------------------------
of notice of termination pursuant to Section 8.01 or the Servicer's resignation
in accordance with the terms of this Agreement, the predecessor Servicer shall
continue to perform its functions as Servicer under this Agreement, in the case
of termination, only until the date specified in such termination notice or, if
no such date is specified in a notice of termination, until receipt of such
notice and, in the case of resignation, until the earlier of (i) the date 45
days from the delivery to the Owner Trustee and the Indenture Trustee of written
notice of such resignation (or written confirmation of such notice) in
accordance with the terms of this Agreement and (ii) the date upon which the
predecessor Servicer shall become unable to act as Servicer, as specified in the
notice of resignation and accompanying Opinion of Counsel. In the event of the
Servicer's termination hereunder, the Indenture Trustee shall appoint a
successor Servicer, and the successor Servicer shall accept its appointment by a
written assumption in form acceptable to the Owner Trustee and the Indenture
Trustee. In the event that a successor Servicer has not been appointed at the
time when the predecessor Servicer has ceased to act as Servicer in accordance
with this Section, the Indenture Trustee without further action shall
automatically be appointed the successor Servicer and shall be entitled to the
Servicing Fee. Notwithstanding the above, the Indenture Trustee shall, if it
shall be legally unable so to act, appoint
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or petition a court of competent jurisdiction to appoint any established
institution, having a net worth of not less than $100,000,000 and whose regular
business shall include the servicing of automotive receivables, as the successor
to the Servicer under this Agreement.
(b) Upon appointment, the successor Servicer (including the Indenture
Trustee acting as 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.
(c) The Servicer may not resign unless it is prohibited from serving as
such by law.
SECTION 8.03. Repayment of Advances. If the Servicer shall change, the
---------------------
predecessor Servicer shall be entitled to receive reimbursement for Outstanding
Advances pursuant to Sections 5.03 and 5.04 with respect to all Advances made by
the predecessor Servicer.
SECTION 8.04. Notification to Noteholders and Certificateholders. 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
Certificateholders, and the Indenture Trustee shall give prompt written notice
thereof to Noteholders and the Rating Agencies.
SECTION 8.05. Waiver of Past Defaults. The Holders of Notes evidencing
-----------------------
not less than a majority of the Outstanding Amount of the Notes or the Holders
(as defined in the Trust Agreement) of Certificates evidencing not less than a
majority of the outstanding Certificate Balance (in the case of any default
which does not adversely affect the Indenture Trustee or the Noteholders) may,
on behalf of all Noteholders and Certificateholders, 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
Default arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto.
ARTICLE IX
Termination
-----------
SECTION 9.01. Optional Purchase of All Receivables. (a) As of the last
------------------------------------
day of any Collection Period immediately preceding a Distribution Date as of
which the then outstanding Pool Balance is 10% or less of the Original Pool
Balance and the Class A-1 Notes have been paid in full, the Servicer shall have
the option to purchase the Owner Trust Estate, other than the Trust Accounts and
the Certificate Distribution Account; provided, however, that, unless Moody's
-------- -------
agrees otherwise, the Servicer may not effect any such purchase if the rating of
the Servicer's long-term debt obligations
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is less than Baa3 by Moody's, unless the Owner Trustee and the Indenture Trustee
shall have received an Opinion of Counsel to the effect that such purchase would
not constitute a fraudulent conveyance. To exercise such option, the Servicer
shall deposit pursuant to Section 5.05 in the Collection Account an amount equal
to the aggregate Purchase Amount for the Receivables (including defaulted
Receivables), plus the appraised value of any such other property held by the
Trust other than the Trust Accounts and the Certificate Distribution Account,
such value to be determined by an appraiser mutually agreed upon by the
Servicer, the Owner Trustee and the Indenture Trustee, and shall succeed to all
interests in and to the Trust. Notwithstanding the foregoing, the Servicer
shall not be permitted to exercise such option unless the amount to be deposited
in the Collection Account pursuant to the preceding sentence is greater than or
equal to the sum of the outstanding principal balance of the Notes and the
Certificate Balance and all accrued but unpaid interest (including any overdue
interest and premium) thereon.
(b) Upon any sale of the assets of the Trust pursuant to Section 9.02 of
the Trust Agreement, the Servicer shall instruct the Indenture Trustee to
deposit the proceeds from such sale after all payments and reserves therefrom
have been made (the "Insolvency Proceeds") in the Collection Account. On the
Distribution Date on which the Insolvency Proceeds are deposited in the
Collection Account (or, if such proceeds are not so deposited on a Distribution
Date, on the Distribution Date immediately following such deposit), the Servicer
shall instruct the Indenture Trustee to make the following deposits (after the
application on such Distribution Date of the Total Distribution Amount and funds
on deposit in the Reserve Account pursuant to Sections 5.06 and 5.07) from the
Insolvency Proceeds and any funds remaining on deposit in the Reserve Account
(including the proceeds of any sale of investments therein as described in the
following sentence):
(i) to the Note Distribution Account, any portion of the
Noteholders' Interest Distributable Amount not otherwise deposited into the
Note Distribution Account on such Distribution Date;
(ii) to the Note Distribution Account, the outstanding principal
balance of the Notes (after giving effect to the reduction in the
outstanding principal balance of the Notes to result from the deposits made
in the Note Distribution Account on such Distribution Date and on prior
Distribution Dates);
(iii) to the Certificate Distribution Account, any portion of the
Certificateholders' Interest Distributable Amount not otherwise deposited
into the Certificate Distribution Account on such Distribution Date; and
(iv) to the Certificate Distribution Account, the Certificate Balance
(after giving effect to the reduction in the Certificate Balance to result
from the deposits made in the Certificate Distribution Account on such
Distribution Date).
Any investments on deposit in the Reserve Account or Note Distribution Account
which will not mature on or before such Distribution Date shall be sold by the
Indenture Trustee at such time as will
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result in the Indenture Trustee receiving the proceeds from such sale not later
than the Payment Determination Date preceding such Distribution Date. Any
Insolvency Proceeds remaining after the deposits described above shall be paid
to the Company.
(c) 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.
(d) 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 other
than Section 5.07(b) and the Owner Trustee will succeed to the rights of, and
assume the obligations of, the Indenture Trustee pursuant to this Agreement.
ARTICLE X
Miscellaneous
-------------
SECTION 10.01. Amendment. This Agreement may be amended by the
---------
Company, the Servicer and the Issuer, with the consent of the Indenture Trustee,
but without the consent of any of the Noteholders or the Certificateholders, to
cure any ambiguity, to correct or supplement any provisions in this Agreement or
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.
This Agreement may also be amended from time to time by the Company, the
Servicer and the Issuer, with the consent of the Holders of Notes evidencing not
less than a majority of the Outstanding Amount of the Notes and the consent of
the Holders (as defined in the Trust Agreement) of outstanding Certificates
evidencing not less than a majority of the outstanding Certificate Balance, for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or of modifying in any manner the rights
of the Noteholders or the Certificateholders; provided, however, that no such
-------- -------
amendment shall (a) except as otherwise provided in the first paragraph of this
Section, 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 Noteholders or the
Certificateholders or (b) reduce the aforesaid percentage of the Outstanding
Amount of the Note and the Certificate Balance, the Holders of which are
required to consent to any such amendment, without the consent of the Holders of
all the outstanding Notes and the Holders (as defined in the Trust Agreement) of
all the outstanding Certificates.
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Promptly after the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to each Certificateholder, the Indenture Trustee and each of the Rating
Agencies.
It shall not be necessary for the consent of Certificateholders or
Noteholders 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 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)(1). The Owner Trustee and the Indenture Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Owner Trustee's or
the Indenture Trustee's, as applicable, own rights, duties or immunities under
this Agreement or otherwise.
SECTION 10.02. Protection of Title to Trust. (a)The Company
----------------------------
and the Servicer shall execute and file such financing statements and cause to
be executed and filed such continuation statements, all in such manner and in
such places as may be required by law fully to preserve, maintain and protect
the interest of the Issuer and of the Indenture Trustee in the Receivables and
in the proceeds thereof. The Company and 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 Company nor the Servicer shall change their respective
name, identity or corporate structure in any manner that would, could or might
make any financing statement or continuation statement or continuation statement
filed in accordance with paragraph (a) above seriously misleading within the
meaning of (S) 9-4.02(7) of the UCC, unless the Company or the Servicer, as the
case may be, 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) The Company and the Servicer shall have an obligation to give the Owner
Trustee and the Indenture Trustee at least 60 days' prior written notice of any
relocation of its principal executive office if, as a result of such relocation,
the applicable provisions of the UCC would require the filing of any amendment
of any previously filed financing or continuation statement or of any new
financing statement and shall promptly file any such amendment or new financing
statement. The Servicer shall at all times maintain each office from which it
shall service Receivables, and its principal executive office, within the United
States of America.
(d) The Servicer shall maintain accounts and records as to each Receivable
accurately and in sufficient detail to permit (i) the reader thereof to know at
any time the status of such Receivable, including payments and recoveries made
and payments owing (and the nature of each) and (ii)
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reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
and the Payahead Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables, the Servicer's
master computer records (including any backup archives) that refer to a
Receivable shall indicate clearly the interest of the Issuer and the Indenture
Trustee in such Receivable and that such Receivable is owned by the Issuer and
has been pledged to the Indenture Trustee. Indication of the Issuer's and the
Indenture Trustee's interest in a Receivable shall be deleted from or modified
on the Servicer's computer systems when, and only when, the related Receivable
shall have been paid in full or repurchased.
(f) If at any time the Company or the Servicer shall propose to sell, grant
a security interest in or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender or other transferee, the
Servicer shall give to such prospective purchaser, lender or other transferee
computer tapes, records or 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 to
inspect, audit and make copies of and abstracts from the Servicer's records
regarding any Receivable at any time during normal business hours upon
reasonable notice.
(h) Upon request, the Servicer shall furnish to the Owner Trustee or to the
Indenture Trustee, within five Business Days, a list of all Receivables (by
contract number and name of Obligor) then held as part of the Trust, together
with a reconciliation of such list to the Schedule of Receivables and to each of
the Servicer's Certificates furnished before such request indicating removal of
Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee and the Indenture
Trustee:
(1) promptly after the execution and delivery of this Agreement and of
each amendment hereto, an Opinion of Counsel stating that, in the opinion
of such counsel, either (A) all financing statements and continuation
statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Owner Trustee and the Indenture
Trustee in the Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given, or
(B) no such action shall be necessary to preserve and protect such
interest; and
(2) within 90 days after the beginning of each calendar year beginning
with the first calendar year beginning more than three months after the
Cutoff Date to occur, an Opinion of Counsel, dated as of a date during such
90-day period, stating that, in the opinion of such counsel, either (A) all
financing statements and continuation statements have been
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executed and filed that are necessary fully to preserve and protect the
interest of the Owner Trustee and the Indenture Trustee in the Receivables,
and reciting the details of such filings or referring to prior Opinions of
Counsel in which such details are given, or (B) no such action shall be
necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (1) or (2) above shall specify any
action necessary (as o the date of such opinion) to be taken in the following
year to preserve and protect such interest.
(j) The Company shall, to the extent required by applicable law, cause the
Certificates and the Notes to be registered with the Commission pursuant to
Section 12(b) or Section 12(g) of the Exchange Act within the time periods
specified in such sections.
SECTION 10.03. Notices. All demands, notices, communications and
-------
instructions upon or to the Company, the Servicer, the Owner Trustee, the
Indenture Trustee or the Rating Agencies under this Agreement shall be in
writing, personally delivered or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt (a) in the
case of the Company, _____________________, Attention _______________; (b) in
the case of the Servicer, to _________________________________, Attention
_____________; (c) in the case of the Indenture Trustee, at the Corporate Trust
Office; (d) in the case of the Owner Trustee, at the Corporate Trust Office; (e)
in the case of the Rating Agencies, -----------------------------------------
; 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 Company or the Servicer.
-----------------------------------------
Notwithstanding anything to the contrary contained herein, except as provided in
the remainder of this Section, 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 Company or the Servicer.
The Issuer and the Servicer hereby acknowledge and consent to the conveyance and
assignment by the Company to_______________________, of any and all of the
Company rights and interests (and corresponding obligations, if any) hereunder
with respect to receiving amounts from the Reserve Account, and the Issuer and
the Servicer hereby agree that any such assignee of the Company, shall be
entitled to enforce such rights and interests directly against the Issuer as if
such assignee of the Company, were itself a party to this Agreement.
SECTION 10.05. Limitations on Rights of Others. The provisions of this
-------------------------------
Agreement are solely for the benefit of the Company (and any assignee of the
Company pursuant to Section 10.04), the Servicer, the Issuer, the Owner Trustee,
the Certificateholders, the Indenture Trustee and the Noteholders, and nothing
in this Agreement, whether express or implied, shall be construed to give to any
other Person any legal or equitable right, remedy or claim in the Owner Trust
Estate or under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.
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
-49-
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. Separate Counterparts. This Agreement may be executed by
---------------------
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 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, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 10.10. Assignment by Issuer. The Company 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 and/or the assignment of any or all of the Issuer's rights and
obligations hereunder to the Indenture Trustee.
SECTION 10.11. Nonpetition Covenant. Notwithstanding any prior
--------------------
termination of this Agreement, the Servicer shall not, prior to the date which
is one year and one day after the termination of this Agreement with respect to
the Issuer or the Company, acquiesce, petition or otherwise invoke or cause the
Issuer or the Company (or any assignee of the Company pursuant to Section 10.04)
to invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Issuer or the Company (or any
assignee of the Company pursuant to Section 10.04) 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 Company (or any assignee of the Company pursuant to Section 10.04)
or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Issuer or the Company (or any assignee of the
Company pursuant to Section 10.04).
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 ___________________ not in its individual
capacity but solely in its capacity as Owner Trustee of the Issuer and in no
event shall _______________ in its individual capacity or, except as expressly
provided in the Trust Agreement, as beneficial owner of the Issuer have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or
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in any of the certificates, notices or agreements delivered pursuant hereto, as
to all of which recourse shall be had solely to the assets of the Issuer. For
all purposes of this Agreement, in the performance of its duties or obligations
hereunder or in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles VI, VII and VIII of the Trust
Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by The Bank of New York, not in its individual
capacity but solely as Indenture Trustee and in no event shall The Bank of New
York 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.
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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.
CS FIRST BOSTON AUTO RECEIVABLES TRUST 199__-__
By: _____________, not in its individual capacity
but solely as Owner Trustee on behalf of the Trust
By:_________________________________________
Name:
Title:
ASSET BACKED SECURITIES CORPORATION, as Company
By: _________________________________________________
Name:
Title:
____________________________, as Servicer
By: _________________________________________________
Name:
Title:
Acknowledged and accepted as of the
day and year first above written:
_________________________________
not in its individual capacity
but solely as Indenture Trustee
By: ___________________________________________
Name:
Title:
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SCHEDULE I
Schedule of Receivables
-----------------------
[To be Delivered to the Trust at Closing]
-53-
SCHEDULE II
Location of Receivable Files
----------------------------
[To be supplied]
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EXHIBIT A
[To be supplied]
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EXHIBIT B
[To be supplied]
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