EXHIBIT 10.1
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SALE AND SERVICING AGREEMENT
by and among
ANRC AUTO OWNER TRUST _____,
as Issuer,
AUTONATION RECEIVABLES CORPORATION,
as Seller,
AUTONATION FINANCIAL SERVICES CORP.,
as Servicer and Custodian
and
____________________________________,
as Indenture Trustee
Dated as of ____________, ______
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TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions...................................................1
SECTION 1.02. Usage of Terms...............................................20
SECTION 1.03. Section References...........................................21
SECTION 1.04. Calculations.................................................21
SECTION 1.05. Accounting Terms.............................................21
ARTICLE II
CONVEYANCE OF CONTRACTS;
REPRESENTATIONS AND WARRANTIES OF THE SELLER
SECTION 2.01. Conveyance of Contracts......................................22
SECTION 2.02. Representations and Warranties of the Seller.................25
SECTION 2.03. Repurchase of Certain Contracts..............................32
SECTION 2.04. Custody of Contract Files....................................33
SECTION 2.05. Duties of Servicer Relating to the Contracts.................36
SECTION 2.06. Instructions; Authority to Act...............................38
SECTION 2.07. Indemnification..............................................38
SECTION 2.08. Effective Period and Termination.............................38
SECTION 2.09. Nonpetition Covenant.........................................39
SECTION 2.10. Collecting Title Documents Not Delivered at the Closing
Date........................................................39
ARTICLE III
ADMINISTRATION AND SERVICING OF CONTRACTS
SECTION 3.01. Duties of Servicer...........................................41
SECTION 3.02. Collection of Contract Payments..............................44
SECTION 3.03. Realization upon Defaulted Contracts.........................44
SECTION 3.04. Maintenance of Security Interests in Financed Vehicles.......45
SECTION 3.05. Covenants, Representations and Warranties of Servicer........46
SECTION 3.06. Purchase of Contracts upon Breach by Servicer................49
SECTION 3.07. Servicing Compensation.......................................49
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SECTION 3.08. Reporting by the Servicer....................................50
SECTION 3.09. Annual Statement as to Compliance............................52
SECTION 3.10. Annual Independent Certified Public Accountant's Report......52
SECTION 3.11. Access to Certain Documentation and Information
Regarding Contracts.........................................53
SECTION 3.12. Indemnification; Third Party Claims..........................53
SECTION 3.13. Reports to Noteholders and the Rating Agencies...............54
ARTICLE IV
DISTRIBUTIONS; SPREAD ACCOUNT;
STATEMENTS TO NOTEHOLDERS
SECTION 4.01. Establishment of Trust Accounts..............................55
SECTION 4.02. Collections; Realization upon Insurance Policy; Net
Deposits; Transfers to Payment Account......................57
SECTION 4.03. Distributions................................................59
SECTION 4.04. Spread Account...............................................62
SECTION 4.05. Statements to Noteholders....................................65
ARTICLE V
THE SELLER
SECTION 5.01. Liability of Seller; Indemnities.............................68
SECTION 5.02. Merger or Consolidation of, or Assumption of the
Obligations of Seller; Certain Limitations..................69
SECTION 5.03. Limitation on Liability of Seller and Others.................69
SECTION 5.04. Seller Not to Resign.........................................70
SECTION 5.05. Seller May Own Notes.........................................70
ARTICLE VI
THE SERVICER
SECTION 6.01. Liability of Servicer; Indemnities...........................71
SECTION 6.02. Corporate Existence; Status as Servicer; Merger..............72
SECTION 6.03. Performance of Obligations...................................73
SECTION 6.04. Servicer Not to Resign; Assignment...........................73
SECTION 6.05. Limitation on Liability of Servicer and Others...............74
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ARTICLE VII
SERVICER DEFAULT
SECTION 7.01. Servicer Defaults............................................75
SECTION 7.02. Trustee to Act; Appointment of Successor.....................77
SECTION 7.03. Notification to Noteholders..................................78
SECTION 7.04. Waiver of Past Defaults......................................79
SECTION 7.05. Insurer Direction of Insolvency Proceedings..................79
ARTICLE VIII
TERMINATION
SECTION 8.01. Optional Purchase of All Contracts; Satisfaction and
Discharge of The Indenture..................................81
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendment....................................................82
SECTION 9.02. Protection of Title to Trust.................................83
SECTION 9.03. Governing Law................................................85
SECTION 9.04. Notices......................................................85
SECTION 9.05. Severability of Provisions...................................86
SECTION 9.06. Assignment...................................................87
SECTION 9.07. Third Party Beneficiaries....................................87
SECTION 9.08. Certain Matters Relating to the Insurer......................87
SECTION 9.09. Headings.....................................................88
SECTION 9.10. Assignment by Issuer.........................................88
SECTION 9.11. Limitation of Liability of Owner Trustee.....................88
EXHIBITS
Exhibit A -- List of Contracts
Exhibit B -- Location and Account Numbers of Trust Accounts
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This SALE AND SERVICING AGREEMENT, dated as of _________, ____ (as
amended, supplemented or otherwise modified and in effect from time to time,
this "Agreement"), is between ANRC AUTO OWNER TRUST __________, a Delaware
business trust (the "Issuer" or the "Trust"), AUTONATION RECEIVABLES
CORPORATION, a Delaware corporation (together with its permitted successors and
assigns, the "Seller"), AUTONATION FINANCIAL SERVICES CORP., a Delaware
corporation (together with its permitted successors and assigns, "AutoNation
Financial Services" or, in its capacity as servicer, the "Servicer") and
________________________________, a _________________________, as the Indenture
Trustee on behalf of the Noteholders (together with its permitted successors and
assigns in such capacity, the "Indenture Trustee").
In consideration of the premises and the mutual covenants herein
contained, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
"Additional Servicing Fee" shall mean the excess, if any, of (i) the
servicing fee of any Successor Servicer (other than the Indenture Trustee, in
its capacity as Successor Servicer), which has been approved in writing by the
Insurer over (ii) the Servicing Fee.
"Affiliate" of any specified Person shall mean any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person shall mean the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" or
"controlled" have meanings correlative to the foregoing.
"Amount Financed" shall mean, with respect to a Contract, the
aggregate amount advanced by the Originator under such Contract toward the
purchase price of the related Financed Vehicle and related costs, including
amounts
advanced in respect of accessories, extended service or warranty contracts and
other items customarily financed as part of retail automobile installment sales
contracts, excluding any collision and/or comprehensive insurance premiums.
"APR" of a Contract shall mean the annual percentage rate used to
determine the total interest expected to be charged over the term of a Contract
as of its inception, as shown on such Contract.
"AutoNation Dealer" shall mean a franchised automotive dealership or
used vehicle megastore owned by AutoNation Inc. and the used vehicle megastore
licensees.
"Available Funds" shall mean, with respect to any Distribution Date
and the related Collection Period, the sum of (i) all payments of Monthly
Scheduled Payments, all partial prepayments, all Full Prepayments, Net
Liquidation Proceeds and Net Insurance Proceeds in each case, collected with
respect to the Contracts during such Collection Period and (ii) the aggregate
Purchase Amount for Purchased Contracts deposited in or credited to the
Collection Account pursuant to Section 4.02(a) on the Business Day preceding the
Servicer Report Date next preceding such Distribution Date.
"Basic Documents" shall have the meaning specified in the Indenture.
"Business Day" shall mean any day other than (i) a Saturday or a
Sunday or (ii) a day on which commercial banking institutions or savings
associations located in New York, New York or in the city in which the Owner
Trustee Corporate Trust Office or the Corporate Trust Office is located are
authorized or obligated by law, regulation, executive order or governmental
decree to be closed.
"Class" shall mean all Notes whose form is identical except for
variation in denomination, principal amount or owner.
"Class A-1 Final Scheduled Distribution Date" shall mean the
Distribution Date occurring in _____________.
"Class A-1 Note" shall mean any Class A-1 Note in the form attached
to the Indenture as Exhibit B.
"Class A-1 Rate" shall mean ____% per annum.
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"Class A-2 Final Scheduled Distribution Date" shall mean the
Distribution Date occurring in _____________.
"Class A-2 Note" shall mean any Class A-2 Note in the form attached
to the Indenture as Exhibit C.
"Class A-2 Rate" shall mean ____% per annum.
"Class A-3 Final Scheduled Distribution Date" shall mean the
Distribution Date occurring in _____________.
"Class A-3 Note" shall mean any Class A-3 Note in the form attached
to the Indenture as Exhibit D.
"Class A-3 Rate" shall mean ____% per annum.
"Class A-4 Final Scheduled Distribution Date" shall mean the
Distribution Date occurring in _____________.
"Class A-4 Note" shall mean any Class A-4 Note in the form attached
to the Indenture as Exhibit E.
"Class A-4 Rate" shall mean ____% per annum.
"Clearing Agency" shall mean an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act.
"Closing Date" shall mean ____________, ____
"Collection Account" shall mean the account established and
maintained as such pursuant to Section 4.01.
"Collection Period" shall mean, with respect to any Distribution
Date, the calendar month immediately preceding the calendar month in which such
Distribution Date occurs.
"Contract" shall mean each motor vehicle retail installment sales
contract and all proceeds thereof and payments thereunder conveyed by the Seller
to the Servicer pursuant to this Agreement, which contract or agreement has been
executed by an Obligor and pursuant to which such Obligor purchased or financed
the Financed Vehicle described therein, agreed to pay the deferred purchase
price
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(i.e., the purchase price net of any down payment) or amount borrowed, together
with interest, as therein provided in connection with such purchase or loan,
granted a security interest in such Financed Vehicle, and undertook to perform
certain other obligations as specified in such contract or agreement. Each
Contract shall have been originated by the Originator from application referrals
received from a Dealer and subsequently conveyed by the Originator to the Seller
pursuant to the Receivables Purchase Agreement and (ii) in any case subsequently
conveyed by the Seller to the Issuer pursuant to this Agreement.
"Contract Documents" shall mean, with respect to each Contract, (a)
the Contract and the original credit application fully executed by the Obligor
thereunder; (b) either (i) the original Title Document for the related Financed
Vehicle or a duplicate copy thereof issued or certified by the Registrar of
Titles which issued the original thereof, together with evidence of perfection
of the security interest in the related Financed Vehicle granted by such
Contract, as reasonably determined by the Servicer to be permitted or required
to perfect such security interest under the laws of the applicable jurisdiction,
or (ii) written evidence that the Title Document for such Financed Vehicle
showing AutoNation Financial Services or a subsidiary of AutoNation Financial
Services as first lienholder has been applied for; (c) any agreement(s)
modifying the Contract (including, without limitation, any extension
agreement(s)); (d) a signed agreement by an Obligor to provide insurance with
AutoNation Financial Services or a subsidiary of AutoNation Financial Services
listed as loss payee; (e) a copy of the contract for any supplemental warranty
purchased with respect to the Financed Vehicle; (f) acceptable vehicle valuation
documentation and (g) any documents specifically relating to the Obligor or the
Financed Vehicle. The documents referred to above, other than the Contracts and
the Title Documents may be maintained in microfiche or electronic form.
"Contract Files" shall mean all papers and computerized records
customarily kept by the Servicer or its agents in servicing contracts and loans
comparable to the Contracts.
"Contract Number" shall mean, with respect to any Contract included
in the Trust, the number assigned to such Contract by the Servicer, which number
is set forth in the related Schedule of Contracts.
"Controlling Party" shall have the meaning set forth in the
Indenture.
"Corporate Trust Office" shall mean the principal office of the
Indenture Trustee at which at any particular time its corporate trust business
shall be administered, which office at the date of the execution of this
Agreement is located at
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________________________________, Attention: ______________________; or at
such other address as the Indenture Trustee may designate from time to time by
notice to the Noteholders, the Insurer, the Servicer and the Seller.
"Custodian" shall mean AutoNation Financial Services until such
time, if any, as a Successor Custodian is appointed and thereafter shall mean
such Successor Custodian.
"Cut-Off Date" shall mean _______________, _____
"Default" shall mean any occurrence which with the giving of notice
or the lapse of time or both would become a Servicer Default.
"Dealer" shall mean the seller of a Financed Vehicle, which seller
referred the application in respect of the related Contract to AutoNation
Financial Services.
"Defaulted Contract" shall mean, with respect to any Collection
Period, a Contract, the earlier of (i) which, at the end of such Collection
Period, is deemed uncollectible by the Servicer in accordance with its customary
procedures; (ii) in respect of which all amounts more than one hundred and
twenty (120) days past due represent in the aggregate $40 or more or (iii) in
respect of which the related Financed Vehicle has been repossessed and
liquidated.
"Deficiency Amount" shall mean, with regard to any Distribution
Date, the sum of (i) the excess, if any, of (a) the Note Interest Distributable
Amount for such Distribution Date over (b) the sum of (x) the Available Funds
for such Distribution Date (after giving effect to distribution in clauses (i),
(ii) and (iii) of Section 4.03(a) for such Distribution Date) and (y) the amount
to be on deposit in the Spread Account for such Distribution Date (prior to
giving effect to any withdrawals with respect to such Distribution Date) and
(ii) the Guaranteed Note Principal Amount for such Distribution Date.
"Deficiency Notice" shall mean, with respect to any Distribution
Date, the notice delivered pursuant to Section 4.02(c) by the Servicer to the
Indenture Trustee, with a copy to the Insurer.
"Definitive Notes" shall mean Notes issued in fully registered,
certificated form to Noteholders.
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"Delivery" when used with respect to Trust Account Property shall
mean:
(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 by
physical delivery to the Indenture Trustee endorsed to, or registered in the
name of, the indenture Trustee or endorsed in blank, and, with respect to a
certificated security (as defined in Section 8-102 of the UCC) transfer thereof
(i) by delivery of such certificated security endorsed to, or registered in the
name of the Indenture Trustee or (ii) by delivery thereof to a "clearing
corporation" (as defined in Section 8-102 of the UCC) and the making by such
clearing corporation of appropriate entries on its books reducing the
appropriate securities account of the transferor and increasing the appropriate
securities account of the Indenture Trustee by the amount of such certificated
security and the identification by the clearing corporation of the certificated
securities for the sole and exclusive account of the Indenture Trustee (all of
the foregoing, "Physical Property"), and, in any event, any such Physical
Property in registered form shall be in the name of the Indenture Trustee; and
such additional or alternative procedures as may hereafter become appropriate to
effect the complete transfer of ownership of any such Trust Account Property to
the Indenture Trustee or its nominee or custodian, consistent with changes in
applicable law or regulations or the interpretation thereof;
(b) with respect to any security issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal national Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to federal book-entry regulations, the following procedures, all
in accordance with applicable law, including applicable federal regulations and
Articles 8 and 9 of the UCC: book-entry registration of such Trust Account
Property to an appropriate book-entry account maintained with a Federal Reserve
Bank by a securities intermediary that is also a "depository" pursuant to
applicable federal regulations; the making by such securities intermediary of
entries in its books and records crediting such Trust Account Property to the
Indenture Trustee's security account at the securities intermediary and
identifying such book-entry security held through the Federal Reserve System
pursuant to federal book-entry regulations as belonging to the Indenture
Trustee; and such additional or alternative procedures as may hereafter become
appropriate to effect complete transfer of ownership of any such Trust Account
Property to the Indenture Trustee, consistent with changes in applicable law or
regulations or the interpretation thereof; and
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(c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not governed by
clause (b) above, registration on the books and records of the issuer thereof in
the name of the Indenture Trustee or its nominee or custodian who either (i)
becomes the registered owner on behalf of the Indenture Trustee or (ii) having
previously become the registered owner, acknowledges that it holds for the
Indenture Trustee.
"Depositor" shall mean the Seller in its capacity as Depositor under
the Owner Trust Agreement, and its successors.
"Distribution Account" means the Note Distribution Account.
"Distribution Date" shall mean the __th day of each month or if such
date shall not be a Business Day, the following Business Day, commencing on
__________, _____.
"Distribution Date Statement" shall have the meaning specified in
Section 3.09(a).
"Due Date" shall mean, as to any Contract, the date upon which a
Monthly Scheduled Payment is due.
"Eligible Account" shall mean (i) a trust account that is either (a)
maintained by the Indenture Trustee, (b) maintained with a depository
institution or trust company the commercial paper or other short-term debt
obligations of which have credit ratings from Standard & Poor's at least equal
to "A-1" and from Moody's equal to "P-1," which account is fully insured up to
applicable limits by the Federal Deposit Insurance Corporation or (c) maintained
with a depository institution acceptable to the Insurer, as evidenced by a
letter from the Insurer to that effect or (ii) a general ledger account or
deposit account at a depository institution acceptable to the Insurer, as
evidenced by a letter from the Insurer to that effect.
"Eligible Investments" shall mean any one or more of the following
obligations or securities, all of which shall be denominated in United States
dollars:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, the United States of America or any
agency or instrumentality of the United States of America the obligations of
which are backed by the full faith and credit of the United States of America
and, to the extent, at the time of investment, acceptable to the Insurer and
each Rating Agency for securities having a rating equivalent to the rating of
the Notes at the Closing
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Date, the direct obligations of, or obligations fully guaranteed by, the Federal
Home Loan Mortgage Corporation and the Federal National Mortgage Association;
(b) demand and time deposits in, certificates of deposit of,
banker's acceptances issued by, or federal funds sold by any depository
institution or trust company (including the Indenture Trustee or the Owner
Trustee) incorporated under the laws of the United States of America or any
State and subject to supervision and examination by Federal and/or State banking
authorities, so long as at the time of such investment or contractual commitment
providing for such investment either (i) the long-term, unsecured debt
obligations of such depository institution or trust company have credit ratings
from Standard & Poor's at least equal to "AA-" and from Moody's at least equal
to "Aa2" or (ii) such depository institution is acceptable to the Insurer as
evidenced by a letter from the Insurer to the Indenture Trustee (which
acceptability may be revoked at any time by the Insurer) and provided that each
such investment has an original maturity of no more than 365 days; provided that
any such demand and time deposits shall be fully insured by the FDIC and any
such certificates of deposit must be secured at all times by collateral
described in clause (a) above, such collateral must be held by a third party and
the Indenture Trustee must have a perfected first priority security interest in
such collateral, and (iii) any other demand or time deposit or deposit which is
fully insured by the Federal Deposit Insurance Corporation;
(c) repurchase obligations with respect to (i) any security
described in clause (a) above or (ii) any other security issued or guaranteed as
to timely payment of principal and interest by an agency or instrumentality of
the United States of America, in either case entered into with any depository
institution or trust company (including the Indenture Trustee and the Owner
Trustee), acting as principal, described in clause (b) above; provided,
however, that collateral transferred pursuant to such repurchase obligation must
be of the type described in clause (a) above and must (i) be valued weekly,
marked-to-market at current market price plus accrued interest, (ii) pursuant to
such valuation, be equal at all times to 105% of the cash transferred by the
Indenture Trustee in exchange for such collateral and (iii) be delivered to the
Indenture Trustee or, if the Indenture Trustee is supplying the collateral, an
agent for the Indenture Trustee, in such a manner as to accomplish perfection of
a security interest in the collateral by possession of certified securities;
(d) commercial paper having the highest rating by Standard & Poor's
and Moody's at the time of such investment;
(e) investments in money market funds or money market mutual funds
registered under the Investment Company Act of 1940, as amended, whose
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shares are registered under the Securities Act of 1933, having a rating from
Standard & Poor's and Moody's in the highest investment category granted
thereby, including funds for which the Indenture Trustee, the Owner Trustee or
any of their respective Affiliates is investment manager or advisor; and
(f) such other obligations or securities acceptable to the Insurer,
as evidenced by a letter from the Insurer to the Indenture Trustee (which
acceptability may be revoked at any time by the Insurer).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Final Scheduled Distribution Date" shall mean with respect to the
Notes, the Class A-1 Final Scheduled Distribution Date, the Class A-2 Final
Scheduled Distribution Date, the Class A-3 Final Scheduled Distribution Date or
the Class A-4 Final Scheduled Distribution Date, as the case may be.
"Financed Vehicle" shall mean, as to any Contract, a new or used
automobile and/or light-duty truck, together with all accessions thereto,
securing the related Obligor's indebtedness under such Contract.
"Fiscal Agent" shall have the meaning set forth in the Insurance
Policy.
"Full Prepayment" shall mean, with respect to any Contract, any of
the following: (a) payment by or on behalf of the Obligor of the total amount
required by the terms of such Contract to be paid thereunder, which amount shall
be at least equal to the sum of (i) 100% of the Principal Balance of such
Contract, (ii) interest accrued thereon to the date of such payment at the APR
and (iii) any overdue amounts; or (b) payment by the Seller to the Indenture
Trustee of the Purchase Amount of such Contract in connection with the purchase
of such Contract pursuant to Section 2.03, or payment by the Servicer of the
Purchase Amount of such Contract in connection with the purchase of such
Contract pursuant to Section 3.07 or the purchase of all Contracts pursuant to
Section 8.01.
"Guaranteed Note Principal Amount" shall mean with regard to any
Distribution Date, the lesser of (a) the excess, if any, of (i) the Note
Principal Distributable Amount for such Distribution Date over (ii) the sum of
(x) the Available Funds for such Distribution Date (after giving effect to
distributions in clauses (i), (ii), (iii) and (iv) of Section 4.03(a) for such
Distribution Date) and (y) the amount to be on deposit in the Spread Account for
such Distribution Date (after
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giving effect to any withdrawals to pay amounts pursuant to Section 4.03(a)(iv)
for such Distribution Date) and (b) the excess, if any, of (i) the outstanding
principal amount of the Notes for such Distribution Date (after giving effect to
all distributions of principal on such Distribution Date) over (ii) the sum of
(x) the Pool Balance as of the last day of the preceding Collection Period and
(y) the amount to be on deposit in the Spread Account (after giving effect to
any withdrawals to pay amounts pursuant to clauses [(iv) and (v)] of Section
4.03(a) for such Distribution Date); provided, however, on the Final Scheduled
Distribution Date for such Class of Notes, the Guaranteed Note Principal Amount
shall include, without duplication, the outstanding principal amount of such
Class of Notes on such Final Scheduled Distribution Date (after giving effect to
all distributions of principal on such Final Scheduled Distribution Date).
"Indenture" shall mean the Indenture, dated as of _____________,
_____, between the Issuer and the Indenture Trustee, as the same may from time
to time be amended, supplemented or otherwise modified and in effect.
"Indenture Trustee" shall mean _________________________, a
____________________, not in its individual capacity but solely as the Indenture
Trustee under the Indenture, its successors in interest and any successor
Indenture Trustee under the Indenture.
"Insolvency Proceeding" shall have the meaning specified in Section
7.05.
"Insurance Agreement" shall mean the Insurance Agreement, dated as
of ____________, ________________, by and among the Insurer, the Seller,
AutoNation Financial Services, the Indenture Trustee, the Owner Trustee and the
Issuer, as the same may from time to time be amended, supplemented or otherwise
modified and in effect.
"Insurance Policy" shall mean the note guaranty insurance policy for
the Notes, number _______________, dated ______________, __________ and issued
by the Insurer in favor of the Indenture Trustee, guaranteeing payment of any
Insured Payment, as the same may be amended, supplemented or otherwise modified
and in effect.
"Insurance Policy Amount" shall mean, with respect to any
Distribution Date, the sum of (a) in the case of the first Distribution Date,
the initial aggregate principal amount of the Notes, or in the case of any
Distribution Date thereafter, the aggregate principal amount of the Notes
outstanding on the immediately preceding Distribution Date (after giving effect
to the payments and distributions of
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principal on the Notes on such preceding Distribution Date), (b) the amount of
interest payable in respect of the Notes on such Distribution Date and (c) the
Servicing Fee payable on such Distribution Date.
"Insurance Premium" shall have the meaning specified in the
Insurance Agreement.
"Insured Payment" shall mean the sum of (i) with respect to each
Distribution Date, the Deficiency Amount and (ii) the Preference Amount.
"Insurer" shall mean ___________________________, a
__________________________, and its permitted successors and assigns.
"Insurer Default" shall mean the occurrence and continuance of any
of the following:
(i) the Insurer shall have failed to make a payment required to be
made under the Insurance Policy in accordance with its terms;
(ii) the Insurer shall have (a) filed a petition or commenced any
case or proceeding in respect of the Insurer under any provision or
chapter of the United States Bankruptcy Code or any other similar federal
or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization, (b) made a general assignment for the
benefit of its creditors or (c) had an order for relief entered against it
under the United States Bankruptcy Code or any other similar federal or
state law relating to insolvency, bankruptcy, rehabilitation, liquidation
or reorganization which is final and nonappealable; or
(iii) a court of competent jurisdiction, the New York Department of
Insurance or other competent regulatory authority shall have entered a
final and nonappealable order, judgment or decree (a) appointing a
custodian, trustee, agent or receiver for the Insurer or for all or any
material portion of its property or (b) authorizing the taking of
possession by a custodian, trustee, agent or receiver of the Insurer (or
the taking of possession of all or any material portion of the property of
the Insurer).
"Interest Accrual Period" shall mean, with respect to any
Distribution Date, the period from and including the Distribution Date
immediately preceding such Distribution Date (or, in the case of the first
Distribution Date, from and including the Closing Date) to but excluding such
Distribution Date.
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"Issuer" shall mean ANRC Auto Owner Trust ______________, a Delaware
business trust, and its permitted successors and assigns.
"Lien" shall mean a security interest, lien, charge, pledge, equity
or encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Contract by operation of law.
"Liquidation Expenses" shall mean reasonable out-of-pocket expenses,
other than any overhead expenses, incurred by the Servicer in connection with
the realization of the full amounts due under any Defaulted Contract (including
the attempted liquidation of a Contract which is brought current and is no
longer in default during such attempted liquidation) and the sale of any
property acquired in respect thereof which are not recoverable as proceeds paid
by any insurer under any type of motor vehicle insurance policy related to the
Contract. Liquidation Expenses shall not include any late fees or other
administrative fees and expenses or similar charges collected with respect to a
Contract.
"Maturity Date" shall mean, with respect to any Contract, the date
on which the last scheduled payment of such Contract shall be due and payable as
such date may be extended pursuant to Section 3.02.
"Monthly Scheduled Payment" shall mean, with respect to any
Contract, in any given month, the amount of the scheduled payment of principal
and interest payable by the Obligor of such Contract for such month in
accordance with the terms thereof, exclusive of any charges which represent late
payment charges or extension fees.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc., and its
permitted successors and assigns.
"Net Insurance Proceeds" shall mean proceeds paid by any insurer
under a comprehensive and collision insurance policy related to a Contract
(other than funds used for the repair of the related Financed Vehicle or
otherwise released to the related Obligor in accordance with normal servicing
procedures), after reimbursement to the Servicer of expenses recoverable under
such policy.
"Net Liquidation Proceeds" shall mean, at any time, with respect to
any Contract that becomes a Defaulted Contract, the amount received by the
Servicer during or after the Collection Period in which such Contract becomes a
Defaulted Contract (net of Liquidation Expenses).
12
"Note" shall mean a Class A-1 Note, a Class A-2 Note, a Class A-3
Note or a Class A-4 Note.
"Note Distributable Amount" shall mean, with respect to any
Distribution Date, the sum of the Note Principal Distributable Amount and the
Note Interest Distributable Amount for such Distribution Date.
"Note Distribution Account" shall mean the account established and
maintained as such pursuant to Section 4.01.
"Noteholder" shall mean, with respect to any Note, the person in
whose name such Note is registered in the Note Register.
"Note Interest Carryover Shortfall" shall mean, with respect to any
Distribution Date and a Class of Notes, the sum of (i) the excess, if any, of
the Note Interest Distributable Amount for such Class for the immediately
preceding Distribution Date over the amount in respect of interest that is
actually deposited in the Note Distribution Account with respect to such Class
on such preceding Distribution Date, plus, (ii) to the extent permitted by
applicable law, interest on the amount of interest due but not paid to
Noteholders of such Class on the preceding Distribution Date at the related Note
Rate for the related Interest Accrual Period; provided that the Note Interest
Carryover Shortfall for the first Distribution Date shall be zero.
"Note Interest Distributable Amount" shall mean, with respect to any
Distribution Date and a Class of Notes, the sum of (i) an amount equal to the
interest accrued during the related Interest Accrual Period at the related Note
Rate for such Class of Notes on the outstanding principal amount of such Class
of Notes on the immediately preceding Distribution Date, after giving effect to
all payments of principal to Noteholders of such Class on or prior to such
Distribution Date (or, in the case of the first Distribution Date, on the
original outstanding principal amount of such Class of Notes) and (ii) the Note
Interest Carryover Shortfall for such Class of Notes for such Distribution Date.
"Note Principal Carryover Shortfall" shall mean, as of the close of
business on any Distribution Date, the excess of the Note Principal
Distributable Amount for such Distribution Date over the amount in respect of
principal that is actually deposited in the Note Distribution Account on such
Distribution Date.
"Note Principal Distributable Amount" shall mean, with respect to
any Distribution Date, the sum of (i) the Principal Distributable Amount for
such Distribution Date and (ii) any outstanding Note Principal Carryover
Shortfall for the
13
immediately preceding Distribution Date; provided that the Note Principal
Distributable Amount shall not exceed the aggregate outstanding principal
amount of the Notes. Notwithstanding the foregoing, the Note Principal
Distributable Amount on the Final Scheduled Distribution Date for each Class
shall not be less than the amount that is necessary to reduce the outstanding
principal amount of the related Class of Notes to zero.
"Note Rate" shall mean the Class A-1 Rate, the Class A-2 Rate, the
Class A-3 Rate or the Class A-4 Rate, as the case may be.
"Note Register" shall have the meaning specified in the Indenture.
"Obligee" shall mean, with respect to any Contract, the Person to
whom an Obligor is indebted under such Contract.
"Obligor" shall mean, with respect to any Contract, the purchaser or
co-purchasers of the Financed Vehicle and any other Person who owes payments
under such Contract.
"Officers' Certificate" shall mean a certificate signed by the
[Chairman, the President, a Vice President, the Treasurer, an Assistant
Treasurer, the Controller, an Assistant Controller, the Secretary or an
Assistant Secretary] of any Person delivering such certificate and delivered to
the Person to whom such certificate is required to be delivered. In the case of
an Officers' Certificate of the Servicer, at least one of the signing officers
must be a Servicing Officer. Unless otherwise specified, any reference herein to
an Officers' Certificate shall be to an Officers' Certificate of the Servicer.
"Opinion of Counsel" shall mean a written opinion of counsel (who
may be an employee of or counsel to the Seller or the Servicer) acceptable to
the Indenture Trustee or the Owner Trustee, as the case may be, and the Insurer.
"Optional Purchase" shall have the meaning specified in Section 8.01
"Original Pool Balance" shall mean $___________, which is the
aggregate principal balance.
"Originator" shall mean AutoNation Financial Services Corp., and its
permitted successors and assigns.
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"Outstanding" shall mean with respect to a Contract and as of the
time of reference thereto, a Contract that has not reached its Maturity Date,
has not been fully prepaid, has not become a Defaulted Contract and has not
otherwise been repurchased pursuant to Section 2.03, 3.07 or 8.01.
"Outstanding Principal Balance" shall mean, as of the Cut-Off Date,
the amount set forth as the Outstanding Principal Balance of such Contract on
the Schedule of Contracts, such amount being the total of all principal payments
due on or after the Cut-Off Date.
"Overcollateralization Amount" shall mean __% of the initial Pool
Balance.
"Owner Trust Agreement" shall mean the Amended and Restated Owner
Trust Agreement, dated as of __________________, ___________, between the
Depositor and the Owner Trustee, as the same may be further amended,
supplemented or otherwise modified and in effect.
"Owner Trustee" shall mean _________________, a _______________, not
in its individual capacity but solely as the Owner Trustee under the Owner Trust
Agreement acting on behalf of the Depositor, its successors in interest and any
successor Owner Trustee under the Owner Trust Agreement.
"Owner Trustee Corporate Trust Office" shall mean the principal
office of the Owner Trustee at which at any particular time its corporate trust
business shall be administered, which office at the date of the execution of
this Agreement is located at ______________________________, Attention:
________________, with a copy to _________________________________, Attention:
__________________; or at such other address as the Owner Trustee may designate
from time to time by notice to the Noteholders, the Insurer, the Servicer and
the Seller.
"Paying Agent" shall mean with respect to the Notes, the Person
acting as the "Paying Agent" under the Indenture or any other Person that meets
the eligibility standards for the Indenture Trustee specified in the Indenture
and is authorized by the Issuer to make the distributions from the Note
Distribution Account, including payment of principal of or interest on the Notes
on behalf of the Issuer.
"Payment Account" shall mean the account established and maintained
as such pursuant to Section 4.01.
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"Person" shall mean a legal person, including any individual,
corporation, estate, partnership, limited liability company or limited
liability partnership, joint venture, association, joint stock company, business
trust, trust (including any beneficiary thereof), unincorporated organization or
government or any agency or political subdivision thereof.
"Pool Balance" as of the time of determination shall mean the
aggregate of the Principal Balances of the Contracts, exclusive of the Principal
Balances of all Contracts that are not Outstanding at the end of the Collection
Period ending immediately prior to such time of determination.
"Pool Factor" shall mean, a six-digit decimal computed each month
indicating the Pool Balance at the end of the month, divided by the Original
Pool Balance. The Pool Factor will be 1.000000 as of the Closing Date;
thereafter, the Pool Factor will decline to reflect reductions in the Pool
Balance.
"Potential Preference Parties" shall have the meaning specified in
Section 4.04(d).
"Preference Amount" shall mean any amount previously distributed to
a Noteholder that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy with respect to AutoNation Financial
Services, the Seller or the Trust pursuant to the United States Bankruptcy Code
(11 U.S.C.), as amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.
"Preference Claim" shall have the meaning specified in Section 7.05.
"Principal Balance" shall mean, with respect to a Contract, as of
any date of determination, the Amount Financed under the terms of such Contract
minus (i) that portion of all Monthly Scheduled Payments in respect of such
Contract received on or prior to the end of the most recently ended Collection
Period and allocable to principal as determined by the Servicer. For purposes of
this definition, allocations between interest and principal of the Monthly
Scheduled Payment on each Contract by the Servicer shall be made in accordance
with the terms of such Simple Interest Contract.
"Principal Distributable Amount" shall mean, with respect to any
Distribution Date, the amount equal to the sum of the following amounts with
respect to the Collection Period: (i) collections received on Contracts (other
than Defaulted Contracts and Purchased Contracts) allocable to principal as
determined by the
16
Servicer, including full and partial principal prepayments; (ii) the Principal
Balance of all Contracts (other than Purchased Contracts) that become Defaulted
Contracts during the related Collection Period; and (iii) the Principal Balance
as of the date of purchase of all Contracts that became Purchased Contracts as
of the immediately preceding Record Date.
"Purchase Amount" shall mean, with respect to a Purchased Contract,
the Principal Balance of such Contract as of the date of purchase or repurchase
of such Contract plus accrued interest thereon at the applicable APR to the
extent not previously collected.
"Purchased Contract" shall mean a Contract that (i) has been
purchased by the Servicer or the Seller because of certain material defects in
documents related to such Contract or certain breaches of representations and
warranties regarding such Contract made by the Seller in this Agreement or by
the Originator in the Receivables Purchase Agreement that materially and
adversely affect the interests of the Noteholders or the Insurer, (ii) has been
purchased by the Servicer because of certain breaches by the Servicer of
servicing covenants or (iii) has been purchased by the Servicer in the event of
an optional purchase of all of the Contracts pursuant to Section 8.01.
"Rating Agencies" shall mean Moody's and Standard & Poor's, and if
either Moody's or Standard & Poor's no longer maintain a rating on the Notes,
such other nationally recognized statistical rating organization designated by
the Depositor and acceptable to the Insurer.
"Receivables Purchase Agreement" shall mean the Receivables Purchase
Agreement, dated as of ____________________, ____, between AutoNation Financial
Services Corp., as seller, and the Seller, as purchaser, as such agreement may
from time to time be amended, supplemented or otherwise modified and in effect.
"Record Date" shall mean, with respect to a Class of Notes, on each
Distribution Date and the Final Scheduled Distribution Date, the Business Day
immediately prior to such Distribution Date or, if Definitive Securities are
issued, the last day of the immediately preceding calendar month.
"Registrar of Titles" shall mean the agency, department or office
having the responsibility for maintaining records of titles to motor vehicles
and issuing documents evidencing such titles in the jurisdiction in which a
particular Financed Vehicle is registered.
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"Reimbursement Amount" shall mean the sum of (i) any unreimbursed
payments made by the Insurer under the Insurance Policy or pursuant to Section
5.02(e) of the Indenture, (ii) any expense paid by the Insurer pursuant to
Section 3.05(b), (iii) any unpaid Insurance Premium and (iv) all other amounts
due to the Insurer under the Insurance Agreement, in each case, together with
interest on such amounts at the Late Payment Rate (as defined in the Insurance
Agreement).
"Re-▇▇▇▇▇▇▇ Expenses" shall mean reasonable out-of-pocket expenses,
acceptable to the Insurer and incurred in connection with the retitling of the
Title Documents to name the Indenture Trustee as secured party with respect to
the Financed Vehicles.
"Residual Interest Certificate" shall have the meaning specified in
the Owner Trust Agreement.
"Responsible Officer" shall mean any officer of the Indenture
Trustee or the Owner Trustee within the Corporate Trust Office, including any
vice president, assistant vice president, assistant treasurer, assistant
secretary or any other officer of the Indenture Trustee or Owner Trustee
customarily performing functions similar to those performed by any of the above
designated officers with direct responsibility for the administration of this
Agreement.
"Schedule of Contracts" shall mean the list or lists of Contracts
attached as Exhibit A hereto. In addition, the information contained in Exhibit
A shall also be contained on a computer disk or tape (the "Disk") that shall be
delivered by the Servicer to the Indenture Trustee and the Insurer on or prior
to the Closing Date.
"Securities Control Account Agreement" shall have the meaning set
forth in the Indenture.
"Seller" shall mean AutoNation Receivables Corporation, a Delaware
corporation, in its capacity as the Seller of the Contracts under this
Agreement, and each successor thereto (in the same capacity) pursuant to Section
5.02.
"Servicer" shall mean AutoNation Financial Services Corp., a
Delaware corporation, in its capacity as the servicer of the Contracts under
Section 3.01, and, in each case upon succession in accordance herewith, each
successor servicer in the same capacity pursuant to Section 3.01 and each
successor servicer pursuant to Section 7.02.
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"Servicer Default" shall mean an event specified in Section 7.01.
"Servicer Report Date" shall mean, with respect to any Distribution
Date, the third Business Day prior to such Distribution Date.
"Servicing Fee" shall mean, as to any Distribution Date, the fee
payable to the Servicer for services rendered during the Collection Period
ending immediately prior to such Distribution Date, which shall be an amount
equal to the product of the Servicing Fee Percentage multiplied by the Pool
Balance as of the end of the Collection Period preceding the related Collection
Period or in the case of the first Distribution Date, the Pool Balance as of the
Cut-Off Date.
"Servicing Fee Percentage" shall mean a percentage equal to the
product of one-twelfth of __% per annum.
"Servicing Officer" shall mean any officer of the Servicer involved
in, or responsible for, the administration and servicing of the Contracts whose
name appears on a list of servicing officers furnished to the Indenture Trustee
and the Insurer by the Servicer pursuant to Section 3.01, as such list may be
amended or supplemented from time to time.
"Servicing Standards" shall mean, at any time, the quality of the
Servicer's performance with respect to (i) compliance with the terms of this
Agreement and (ii) adequacy, measured in accordance with industry standards and
current and historical standards of the Servicer, in respect of the servicing of
all Contracts serviced by the Servicer, regardless of whether any such Contract
is owned by the Servicer or otherwise.
"Simple Interest Contract" shall mean a Contract as to which the
portion of payments allocable to earned interest and principal thereunder is
deter mined according to the Simple Interest Method.
"Simple Interest Method" shall mean the method for calculating
interest on a Contract whereby interest due is calculated each day based on the
actual principal balance of the Contract on that day.
"Spread Account" shall mean the account established and maintained
as such pursuant to Section 4.01.
"Spread Account Required Amount" shall have the meaning set forth in
the Insurance Agreement.
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"Standard & Poor's" shall mean Standard & Poor's Ratings Services, a
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and its permitted successors and
assigns.
"Successor Custodian" shall have the meaning set forth in Section
2.04(b).
"Successor Servicer" shall have the meaning set forth in the
Indenture.
"Title Document" shall mean, with respect to any Financed Vehicle,
the certificate of title for, or other evidence of ownership of, such Financed
Vehicle issued by the Registrar of Titles in the jurisdiction in which such
Financed Vehicle is registered.
"Transition Costs" shall mean reasonable costs and expenses incurred
by or payable to the Successor Servicer in connection with the transfer of
servicing (whether due to termination, resignation or otherwise) from the
Servicer to such Successor Servicer, which shall be approved in writing by the
Insurer.
"Trust" shall mean the Issuer.
"Trust Account Property" shall mean the Trust Accounts, all amounts
and investments held from time to time in any Trust Account (whether in the form
of deposit accounts, physical property, book-entry securities, uncertificated
securities or otherwise) and all proceeds of the foregoing.
"Trust Accounts" shall have the meaning specified in Section
4.01(a).
"Trust Property" shall have the meaning set forth in Section 2.01
hereof.
"UCC" shall mean the Uniform Commercial Code as in effect in the
applicable jurisdiction.
SECTION 1.02. Usage of Terms.
With respect to all terms in this Agreement, the singular includes
the plural and the plural the singular; words importing any gender include the
other genders; references to "writing" include printing, typing, lithography and
other means of reproducing words in a visible form; references to agreements and
other contractual instruments include all amendments, modifications and
supplements thereto or
20
any changes therein entered into in accordance with their respective terms and
not prohibited by this Agreement; references to Persons include their permitted
successors and assigns; and the term "including" means "including without
limitation."
SECTION 1.03. Section References.
All section references, unless otherwise indicated, shall be to
Sections in this Agreement.
SECTION 1.04. Calculations.
Interest on the Class A-1 Notes will be calculated on the basis of
the actual number of days in the related Interest Accrual Period and a 360-day
year. Interest on the Class A-2 Notes, the Class A-3 Notes and the Class A-4
Notes will be calculated on the basis of a 360-day year consisting of twelve
30-day months. Collections of interest on Simple Interest Contracts will be
calculated in accordance with the terms thereof.
SECTION 1.05. Accounting Terms.
All accounting terms used but not specifically defined herein shall
be construed in accordance with generally accepted accounting principles in the
United States of America.
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ARTICLE II
CONVEYANCE OF CONTRACTS;
REPRESENTATIONS AND WARRANTIES OF THE SELLER
SECTION 2.01. Conveyance of Contracts.
(a) In consideration of the Issuer's delivery of the authenticated
Notes to or upon the order of the Seller, effective upon the Closing Date, the
Seller hereby sells, grants, transfers, conveys and assigns to the Issuer,
without recourse (except as expressly provided in Section 2.03 hereof), all of
the right, title and interest of the Seller in, to and under:
(i) the Contracts listed in the Schedule of Contracts;
(ii) all monies received with respect to all Contracts on or after
the Cut-Off Date, including any Purchase Amounts;
(iii) all Net Liquidation Proceeds and Net Insurance Proceeds with
respect to any Financed Vehicle to which a Contract relates received on or
after the Cut-Off Date;
(iv) certain documents relating to the Contracts, the Contract
Documents and Contract Files relating to the Contracts, including all
servicing records in hard and electronic form;
(v) all rights of the Seller, (but not its obligations) under the
Receivables Purchase Agreement;
(vi) any and all security interests in the Financed Vehicles and the
rights to receive proceeds from claims on certain insurance policies
covering the Financed Vehicles or the individual Obligors under each
related Contract; and
(vii) all proceeds in any way delivered with respect to the
foregoing, all rights to payments with respect to the foregoing and all
rights to enforce the foregoing.
22
The foregoing items of property listed in this Section 2.01,
together with the rights of the Indenture Trustee for the benefit of the
Noteholders under the Insurance Policy, are collectively referred to herein as
the "Trust Property".
It is the intention of the Seller and the Issuer that the assignment
and transfer contemplated herein constitute (and shall be construed and treated
for all purposes as) a true and complete sale of the Trust Property, conveying
good title thereto free and clear of any liens and encumbrances, from the Seller
to the Issuer. However, in the event that such conveyance is deemed to be a
pledge to secure a loan (in spite of the express intent of the parties hereto
that this conveyance constitutes, and shall be construed and treated for all
purposes, as a true and complete sale), the Seller hereby grants to the Issuer,
for the benefit of the Noteholders and the Insurer, a first priority perfected
security interest in all of the Seller's right, title and interest in, to and
under the Trust Property whether now existing or hereafter created and all
proceeds of the foregoing to secure the loan deemed to be made in connection
with such pledge and, in such event, this Agreement shall constitute a security
agreement under applicable law.
(b) As of the Closing Date, the Issuer acknowledges the conveyance
to it of the Trust Property from the Seller, including all right, title and
interest of the Seller in, to and under the Trust Property, receipt of which is
hereby acknowledged by the Issuer. Concurrently with such delivery and in
exchange therefor, the Issuer has pledged to the Indenture Trustee, for the
benefit of the Noteholders and the Insurer, the Trust Property and the Indenture
Trustee, pursuant to the written instructions of the Issuer, has executed and
caused to be authenticated and delivered the Notes to the Seller or its
designee, upon the order of the Issuer. In addition, concurrently with such
delivery and its exchange therefor, the Owner Trustee, pursuant to the
instructions of the Seller, has executed (not in its individual capacity, but
solely as Owner Trustee on behalf of the Issuer) and caused to be authenticated
and delivered, the Residual Interest Certificate to the Seller, upon the order
of the Seller.
(c) In connection with the sale of the Contracts pursuant to the
Receivables Purchase Agreement, AutoNation Financial Services has filed with the
office of the Secretary of State of the State of _____________ a UCC-1 financing
statement naming AutoNation Financial Services as debtor, naming the Seller as
secured party and the Indenture Trustee as assignee and including the Contracts
in the description of the collateral. In connection with the sale of the
Contracts pursuant to this Agreement, the Seller has filed or caused to be filed
with the Secretary of State of the State of ____________ a UCC-1 financing
statement naming the Seller as debtor, naming the Issuer as secured party,
naming the Indenture Trustee, on behalf of the Noteholders, as assignee, and
including the Contracts in the description of the
23
collateral. In connection with the pledge of the Contracts pursuant to the
Indenture, the Trust has filed with the offices of the Secretary of State of the
State of Delaware UCC-1 financing statements naming the Trust as debtor and the
Indenture Trustee, on behalf of the Noteholders and the Insurer, as secured
party. The grant of a security interest to the Indenture Trustee and the rights
of the Indenture Trustee in the Contracts shall be governed by the Indenture.
The Seller shall have caused UCC-2 termination statements to have
been filed with the office of Secretary of State of the State of _____________
terminating any effective UCC-1 financing statements with respect to any
outstanding security interests in the Contracts.
(d) From time to time, the Servicer shall cause to be taken such
actions as are necessary to continue the perfection of the respective interests
of the Trust and the Indenture Trustee in the Contracts and to continue the
first priority security interest of the Indenture Trustee in the Financed
Vehicles and their proceeds (other than, as to such priority, any statutory lien
arising by operation of law after the Closing Date which is prior to such
interest), including, without limitation, the filing of financing statements,
amendments thereto or continuation statements and the making of notations on
records or documents of title.
(e) The Owner Trustee, on behalf of the Issuer and the Indenture
Trustee, hereby authorizes the Servicer, and the Servicer hereby agrees, to take
such steps as are necessary to re-perfect such security interest in the event of
the relocation of a Financed Vehicle or for any other reason, in either case,
when the Servicer has knowledge of the need for such re-perfection. In the event
that the assignment of a Receivable to the Issuer and by the Issuer to the
Indenture Trustee pursuant to the Indenture is insufficient without a notation
on the related Financed Vehicle's certificate of title, or without fulfilling
any additional administrative requirements under the laws of the State in which
the Financed Vehicle is located, to grant to the Indenture Trustee a perfected
security interest in the related Financed Vehicle, the Seller and the Servicer
hereby agree that the Seller's listing as the secured party on the certificate
of title is deemed to be in its capacity as agent of the Indenture Trustee and
the Servicer further agrees to hold such certificate of title as the Indenture
Trustee's agent and custodian; provided, however, that the Servicer shall not,
nor shall the Owner Trustee, the Indenture Trustee or the Noteholders have the
right to require that the Servicer make any such notation on the related
Financed Vehicle's certificate of title or fulfill any such additional
administrative requirements of the laws of the State in which a Financed Vehicle
is located.
24
(f) During the term of this Agreement, the Seller and AutoNation
Financial Services shall each maintain its chief executive office in one of the
States of the United States.
SECTION 2.02. Representations and Warranties of the Seller.
The Seller hereby makes the following representations and warranties
on which (i) the Issuer is deemed to have relied in acquiring the Contracts and
(ii) the Insurer is deemed to have relied in issuing the Insurance Policy. 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 Contracts to the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture.
(a) As to the Seller:
(i) The Seller is duly organized and validly existing as a
corporation organized and existing and in good standing under the laws of
the State of Delaware, with power and authority to own its properties and
to conduct its business as currently owned and conducted and had at all
relevant times, and has, power, authority, and legal right to originate or
acquire, own and sell the Contracts.
(ii) The Seller is duly qualified to do business as a foreign
corporation in good standing, and shall have obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or
lease of property or the conduct of its business requires such
qualifications.
(iii) The Seller has the power and authority to execute and deliver
this Agreement and the other Basic Documents to which it is a party and to
carry out their respective terms; the Seller has full power and authority
to sell and assign the property to be sold and assigned to and deposited
with the Issuer and has duly authorized such sale and assignment to the
Issuer by all necessary corporate action; and the execution, delivery,
and performance of this Agreement and the other Basic Documents to which
it is a party have been duly authorized by the Seller by all necessary
corporate action.
(iv) This Agreement (A) constitutes a valid sale, transfer, and
assignment of the Contracts, enforceable against creditors of and
purchasers from the Seller and (B) and the other Basic Documents to which
it is a party constitute a legal, valid, and binding obligations of the
Seller enforceable in accordance with their respective terms, except as
such enforceability may be
25
limited by bankruptcy, insolvency, reorganization, or other similar laws
affecting the enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such enforceability shall be
considered in a proceeding in equity or at law.
(v) The consummation of the transactions contemplated by this
Agreement and the other Basic Documents and the fulfillment of their
respective terms shall not conflict with, result in any breach of any of
the terms and provisions of, nor constitute (with or without notice or
lapse of time) a default under, the certificate of incorporation or bylaws
of the Seller, or any indenture, agreement, or other instrument to which
the Seller is a party or by which it shall be bound; nor result in the
creation or imposition of any Lien upon any of the properties of the
Seller pursuant to the terms of any such indenture, agreement, or other
instrument (other than pursuant to the Basic Documents to which the Seller
is a party); nor violate any law or any order, rule, or regulation
applicable to the Seller of any court or of any federal or state
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Seller or its properties.
(vi) To the Seller's best knowledge after due inquiry, there are no
proceedings or investigations pending, or threatened, before any court,
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Seller or its properties: (A)
asserting the invalidity of this Agreement, the other Basic Documents or
the Notes, (B) seeking to prevent the issuance of the Notes or the
consummation of any of the transactions contemplated by this Agreement
and the other Basic Documents, (C) seeking any determination or ruling
that might materially and adversely affect the performance by the Seller
of its obligations under, or the validity or enforceability of, this
Agreement, the other Basic Documents or the Notes, or (D) naming the
Seller which might adversely affect the federal income tax attributes of
the Notes.
(vii) On the Closing Date, the chief executive office of the Seller
is located at ________________________.
(b) As to each Contract:
(i) The information pertaining to such Contract set forth in the
related Schedule of Contracts was true and correct in all material
respects at the Closing Date and the calculations of the Principal
Balances appearing in such
26
Schedule of Contracts for each such Contract at the Cut-Off Date have been
performed in accordance with this Agreement and are accurate.
(ii) As of the Closing Date, such Contract was secured by a valid
and enforceable first priority perfected security interest in favor of
AutoNation Financial Services or a subsidiary of AutoNation Financial
Services in the related Financed Vehicle; such security interest had been
assigned by AutoNation Financial Services to the Seller pursuant to the
Receivables Purchase Agreement, and, as of the Closing Date, has been
assigned by the Seller to the Issuer pursuant to Section 2.01(a) hereof.
(iii) (A) If the related Financed Vehicle was originated in a state
in which notation of a security interest on the Title Document is required
or permitted to perfect such security interest, the Title Document or the
electronic title records for such Financed Vehicle shows, or, if a new or
replacement Title Document is being applied for with respect to such
Financed Vehicle, the Title Document will be received within 180 days of
the Closing Date and will show, AutoNation Financial Services or a
subsidiary of AutoNation Financial Services named as the original and only
secured party under the related Contract as the holder of a first priority
security interest in such Financed Vehicle, and (B) if the related
Financed Vehicle was originated in a state in which the filing of a
financing statement under the UCC is required to perfect a security
interest in motor vehicles, such filings or recordings have been duly
made and show AutoNation Financial Services or a subsidiary of AutoNation
Financial Services named as the original secured party under the related
Contract, and in either case, the Indenture Trustee on behalf of the
Noteholders and the Insurer has the same rights as such secured party has
or would have (if such secured party were still the owner of such
Contract) (x) against all parties claiming an interest in such Financed
Vehicle and (y) to repossess or recover by legal process the Financed
Vehicle in its name. With respect to each Contract for which the Title
Document has not yet been returned from the Registrar of Titles,
AutoNation Financial Services has written evidence that such Title
Documents showing AutoNation Financial Services or a subsidiary of
AutoNation Financial Services as first lienholder have been applied for.
(iv) As of the Closing Date, the Seller had good and marketable
title to and was the sole owner of each Contract to be transferred to the
Issuer pursuant to Section 2.01 free of liens, claims, encumbrances and
rights of others and, upon transfer of such Contract to the Issuer
pursuant to Section 2.01, the Issuer will have good and marketable title
to, will have a first priority
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perfected security interest in and will be the sole owner of such Contract
free of liens, encumbrances and rights of others.
(v) As of the Cut-Off Date, no payment on each such Contract was
more than __ days past due.
(vi) As of the Closing Date, there is no lien against the related
Financed Vehicle for delinquent taxes.
(vii) As of the Closing Date, there is no right of rescission,
offset, defense, claim or counterclaim to the obligation of the related
Obligor(s) to pay the unpaid principal or interest due under such
Contract; the operation of the terms of such Contract or the exercise of
any right thereunder will not render such Contract unenforceable in whole
or in part nor subject such Contract to any right of rescission, offset,
defense, claim or counterclaim, and the Seller has no knowledge that such
right of rescission, offset, defense or counterclaim has been asserted or
threatened.
(viii) Such Contract is a retail installment sales contract, and
such Contract and the sale of the Financed Vehicle sold thereunder, at the
time it was made complied in all material respects with all requirements
of applicable federal, state and local laws and regulations thereunder,
including without limitation the Federal Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Fair Credit Reporting Act, the Federal Trade
Commission Act, the Fair Debt Collection Practices Act, the Fair Credit
Billing Act, the ▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act, the Federal Reserve Board's
Regulations B and Z, the Soldiers' and Sailors' Civil Relief Act of 1940,
state adaptations of the National Consumer Act and of the Uniform
Consumer Credit Code, and any other consumer credit, equal opportunity and
disclosure laws applicable to that contract and sale; and the consummation
of the transactions herein contemplated, including, without limitation,
the transfer of ownership of the Contracts to the Issuer, pledge to the
Indenture Trustee and the receipt of interest by the Noteholders, will not
violate any applicable federal, state or local law.
(ix) Such Contract is the legal, valid and binding obligation of the
related Obligor(s) thereunder and is enforceable in accordance with its
terms, except only as such enforcement may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally; [each party to such Contract had full legal capacity to execute
and deliver such Contract and all other documents related thereto and to
grant the security interest purported to be granted thereby;] the terms of
such Contract have not
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been waived, amended or modified in any respect, except by instruments
that are part of the related Contract Documents, and no such waiver,
amendment or modification has caused such Contract to fail to meet all of
the representations, warranties and conditions, set forth herein with
respect thereto.
(x) Such Contract contains customary and enforceable provisions such
as to render the rights and remedies of the holder or assignee thereof
adequate for the practical realization against the collateral of the
benefits of the security, subject, as to enforceability, to bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement of
creditors' rights generally.
(xi) As of the Closing Date, there was no default, breach, violation
or event permitting acceleration existing under such Contract (except
payment delinquencies permitted by subparagraph (v) above) and no event
which, with notice and the expiration of any grace or cure period, would
constitute such a default, breach, violation or event permitting
acceleration under such Contract, and the Seller has not waived any such
default, breach, violation or event permitting acceleration except payment
delinquencies permitted by subparagraph (v) above.
(xii) At the Closing Date, (a) such Contract will require that the
related Obligor(s) obtain and maintain in effect for the related Financed
Vehicle a comprehensive and collision insurance policy (i) in an amount at
least equal to the lesser of (x) its fair market value or (y) the
principal amount due from the related Obligor(s) under such Contract, (ii)
naming AutoNation Financial Services as a loss payee and (iii) insuring
against loss and damage due to fire, theft, transportation, collision and
other risks generally covered by comprehensive and collision coverage.
(xiii) Such Contract was originated by AutoNation Financial Services
and no adverse selection procedures have been utilized in selecting such
Contract from all other similar contracts originated by AutoNation
Financial Services.
(xiv) Payments under such Contract have been applied in accordance
with the Simple Interest Method, as provided in the applicable fixed rate
Contract, and are due monthly in substantially equal amounts through its
Maturity Date sufficient to fully amortize the principal balance of such
Contract by its Maturity Date.
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(xv) There is only one original of such Contract and such original,
together with all other related Contract Documents, is being held by the
Custodian or an agent acceptable to the Insurer on its behalf; provided
that upon the execution by the Indenture Trustee and the Trust with the
prior written consent of the Insurer of a letter agreement revocably
appointing the Servicer as Successor Custodian in accordance with Section
2.04, such original Contracts together with all other Contract Documents
may be held by the Servicer.
(xvi) As of the Closing Date, the Servicer has clearly marked its
electronic records to indicate that such Contract is owned by the Issuer.
(xvii) At the date of origination of the Contract, the original
principal balance of such Contract was not greater than the purchase price
to the related Obligor(s) (including taxes, warranties, licenses and
related charges) of the related Financed Vehicle.
(xviii) As of the Cut-Off Date, the Seller has not received notice
that any Obligor under such Contract has filed for bankruptcy, and to the
best of the Seller's knowledge without any independent investigation, no
Obligor under such Contract is in bankruptcy or similar proceedings.
(xix) As of the Cut-Off Date, such Contract had an original maturity
of not more than __ months and such Contract has a remaining maturity of
__ months or less.
(xx) Such contract constitutes "chattel paper" under the UCC as in
effect in the applicable jurisdiction.
(xxi) As of the Cut-Off Date, such Contract has a remaining
principal balance of not more than $_____ and not less than $______.
(xxii) As of the Cut-Off Date, such Contract is secured by a
Financed Vehicle that has not been repossessed without reinstatement.
(xxiii) Each related Obligor listed on such Contract had a mailing
address within the United States on the date of origination of such
Contract.
(xxiv) The rights with respect to such Contract are assignable by
the lender thereunder and its assignees without the consent of or notice
to any Person.
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(xxv) All payments on such Contract are required to be made in
United States dollars.
(xxvi) None of the Obligors is the United States of America or any
state, or agency, department or instrumentality or political subdivision
of the United States of America or any state.
(xxvii) At the time of origination of such Contract, the proceeds of
such Contract were fully disbursed. There is no requirement for future
advances thereunder and all fees and expenses in connection with the
origination of such Contract have been paid.
(xxviii) The scheduled payments on such Contracts are applicable
only to payment of principal and interest on such Contracts and not to the
payment of any insurance premiums (although the proceeds of the extension
of credit on such Contract may have been used to pay insurance premiums).
(xxix) Such Contract does not provide for the substitution, exchange
or addition of any Financed Vehicle subject to such Contract.
(xxx) Such Contract has a Maturity Date due no later than _________.
(c) As to all of the Contracts:
(i) The aggregate Outstanding Principal Balance payable by Obligors
of the Contracts as of the Cut-Off Date equals the Original Pool Balance.
(ii) As of the Cut-Off Date, Contracts representing approximately
__% of the Outstanding Principal Balance are secured by new Financed
Vehicles, and Contracts representing approximately __% of the Outstanding
Principal Balance of all Contracts is attributable to loans involving used
Financed Vehicles.
(d) None of the foregoing representations and warranties shall be
construed as, and the Seller is specifically not making, any representations and
warranties regarding the collectibility of the Contracts or the future
performance of the Contracts.
(e) The Seller has not prepared any financial statement which
accounts for the transfer of the Trust Property hereunder to the Issuer in any
manner
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other than as a sale of the Trust Property by it to the Issuer, and the Seller
has not in any other non-income tax respect (including, but not limited to, for
accounting purposes) accounted for or treated the transfer of the Trust Property
hereunder in any manner other than as a sale and absolute assignment to the
Issuer of the Seller's full right, title and ownership interest in the Trust
Property to the Issuer.
SECTION 2.03. Repurchase of Certain Contracts.
The representations and warranties of the Seller set forth in
Section 2.02(b) shall survive the Closing Date and shall continue until the
termination of this Agreement. Upon discovery by the Seller, the Servicer, the
Insurer or a Responsible Officer of the Owner Trustee or the Indenture Trustee
that any of such representations and warranties was incorrect or that any of
such conditions was unsatisfied as of the time made or that any of the Contract
Documents relating to any such Contract has not been properly executed by the
Obligor or contains a material defect or has not been received by the Custodian
or its agent, such Person making such discovery shall give prompt notice to the
other such Persons. If any such defect, incorrectness or omission materially and
adversely affects the interest in the Contract of the Noteholders, the Indenture
Trustee, the Issuer or the Insurer, the Seller shall cure the defect or
eliminate or otherwise cure the circumstances or condition in respect of which
such representation or warranty was incorrect as of the time made; provided that
if the Seller does not do so by the last day of the Collection Period following
the Collection Period (or, if the Seller elects, the last day of such Collection
Period) during which the Seller becomes aware of or receives written notice from
the Servicer, the Insurer or the Indenture Trustee of such defect, incorrectness
or omission, it shall repurchase such Contract on the last day of the
applicable Collection Period from the Issuer at the Purchase Amount. Upon any
such repurchase, the Issuer shall execute and deliver such instruments of
transfer or assignment, in each case without recourse, as shall be necessary to
vest in the Seller any Contract purchased hereunder. The sole remedy of the
Issuer, the Indenture Trustee or the Noteholders with respect to a breach of the
Seller's representations and warranties pursuant to Section 2.02 shall be to
require the Seller to repurchase Contracts pursuant to this Section; provided
that the Seller shall indemnify the Owner Trustee, the Indenture Trustee, the
Insurer, the Issuer and the Noteholders against all costs, expenses, losses,
damages, claims and liabilities, including reasonable fees and expenses of
counsel, which may be asserted against or incurred by any of them as a result of
third-party claims arising out of the events or facts giving rise to such
breach.
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SECTION 2.04. Custody of Contract Files.
(a) Duties of Custodian. The Custodian shall:
(i) maintain or cause to be maintained continuous custody of the
Contract Documents in secure and fire resistant facilities in accordance
with customary standards for such custody. Such Contract Documents shall
be electronically segregated to show the Issuer as owner thereof and the
Indenture Trustee as the pledgee thereof, unless the Insurer has waived
the requirement for such segregation by notice in writing to the
Indenture Trustee, the Custodian and the Servicer.
(ii) with respect to the Contract Documents, (A) act as the
Custodian exclusively for the benefit of the Indenture Trustee and (B)
hold or cause to be held all Contract Documents for the exclusive use
(notwithstanding Sections 2.04(a)(iii) and 2.04(a)(iv) below) and for the
benefit of the Indenture Trustee.
(iii) to the extent the Servicer directs the Custodian in writing,
deliver or cause to be delivered certain specified Contract Documents to
the Servicer to enable the Servicer to service the Contracts pursuant to
this Agreement. At such time as the Servicer returns such Contract
Documents to the Custodian or its agent, the Servicer shall provide
written notice of such return to the Custodian. The Custodian or its
agent shall acknowledge receipt of the returned materials by signing the
Servicer's notice and shall promptly send copies of such acknowledgment or
receipt to the Servicer.
(iv) upon reasonable prior written notice, permit the Servicer, the
Indenture Trustee and the Insurer to examine the Contract Documents in the
possession, or under the control, of the Custodian or its agent.
(v) at its own expense, maintain or cause to be maintained at all
times while acting as Custodian, and keep in full force and effect (A)
fidelity insurance, (B) theft of documents insurance, (C) fire insurance,
and (d) forgery insurance. All such insurance shall be in amounts, with
standard coverage and subject to deductibles, as are customary for similar
insurance typically maintained by banks that act as custodian in similar
transactions.
(vi) perform its duties as custodian in accordance with the terms of
the Agreement and applicable law, and to the extent consistent with such
terms, in the same manner in which, and with the same care, skill,
prudence and diligence with which, it administers files for other
portfolios, if any,
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giving due consideration to customary and usual standards of practice of
prudent custodians. The Custodian shall promptly report to the Indenture
Trustee, the Owner Trustee and the Insurer any failure by it to hold the
complete set of Contract Documents for each Contract as herein provided
and shall promptly take appropriate action to remedy such failure.
(vii) hold the Contract Documents for the exclusive use and benefit
of the Indenture Trustee on behalf of the Noteholders and the Insurer, in
order to maintain accurate records pertaining to each Contract to enable
it to comply with terms hereof and to maintain a current inventory
thereof.
(viii) not have and will not assert any beneficial ownership
interest in the Contracts or the Contract Documents.
(ix) agree that the Contract Documents shall be maintained at World
Omni Financial Corp.'s offices located at _____________________, and shall
not be moved to another location without the Insurer's prior written
consent.
(b) Appointment of Custodian. As of the Closing Date, AutoNation
Financial Services, as initial Servicer, shall be the Custodian of the Contract
Documents; provided that upon the execution by the Indenture Trustee, the
Issuer (or, if the Notes have been paid in full and the Indenture has been
satisfied and discharged, the Issuer alone) of a letter agreement with the prior
written consent of the Insurer (such consent not to be unreasonably withheld)
revocably appointing another entity acceptable to the Insurer as agent of and
bailee for the Indenture Trustee (or, if applicable, the Trust) to act as
Custodian (such Person, the "Successor Custodian") of the Contract Documents,
such Successor Custodian shall be so appointed and shall from the effective date
of such agreement retain custody of the Contract Documents and any and all other
documents relating to a Contract or the related Obligor or Financed Vehicle. As
of the effective date of any such appointment, the Contract Documents and any
and all other documents relating to a Contract or the related Obligor or
Financed Vehicle will be delivered by the predecessor Custodian to the Successor
Custodian in its capacity as agent of and bailee for the Indenture Trustee (or,
if applicable, the Trust). The Custodian may delegate or subcontract out its
duties as Custodian hereunder to an entity acceptable to the Insurer; provided
that no such delegation or subcontract arrangement shall relieve the Custodian
of its duties and obligations hereunder. The Indenture Trustee, the Seller and
the Insurer hereby consent to the delegation by the initial Custodian of World
Omni Financial Corp. as agent of the Custodian.
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(c) Certification.
(i) Within 90 days of the Closing Date, the Custodian shall
ascertain that all Contract Documents for each Contract are in its
possession or in the possession of its designated agent, and shall deliver
to the Issuer, the Indenture Trustee and the Insurer a certification to
the effect that, as to each Contract Document listed in Schedule A (other
than any Contract paid in full or any Contract specifically identified in
such certification as not covered by such certification): (i) all
documents required to be in the Contract Documents are in its possession
or the possession of its designated agent and (ii) such documents have
been reviewed by it and appear regular on their face and relate to such
Contract. In making this certification, the Custodian shall separately
list those Contracts for which an original certificate of title was not
found in the relevant Contract Documents and shall, within 180 days after
the Closing Date, deliver to the Issuer, the Indenture Trustee and the
Insurer a certification (the "Second Certification"), to the effect that,
as to each such set of Contract Documents that did not include an original
certificate of title in the initial certification (other than any Contract
paid in full or any Contract specifically identified in such certification
as not covered by such certification): (i) all documents required to be
in the Contract Documents are in its possession and (ii) such documents
have been reviewed by it and appear regular on their face and relate to
such Contract.
(ii) If the Custodian or its agent, during the process of reviewing
the Contract Documents, pursuant to this Section 2.04, finds any document
constituting a part of a Contract Document which is not executed, has not
been received, is unrelated to the Contract identified in Schedule A, or
does not conform to the requirements of clause (i) above or the loan
number set forth in Schedule A, then the Custodian shall, or shall cause
World Omni Financial Corp. to promptly so notify the Issuer, the Servicer,
the Insurer and the Indenture Trustee in writing of such discovery.
(iii) The Servicer will use reasonable efforts to remedy a material
defect in a document or omission of a Contract Document of which it is so
notified by the Custodian or its agent as set forth above. If, however,
within 15 days after the initial Custodian's certification to it
respecting such defect or omission (other than a defect or omission in
respect of a certificate of title) or within 15 days after the Second
Certification in respect of a defect or omission as to a certificate of
title the Servicer has not remedied or caused the Seller to remedy the
defect or omission, the Servicer shall give notice to the Indenture
Trustee of the date and price of repurchase and, on the next succeeding
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Servicer Report Date, cause the Seller to repurchase such Contract, which
Purchase Amount shall be deposited into the Collection Account.
SECTION 2.05. Duties of Servicer Relating to the Contracts.
(a) Safekeeping. The Servicer, in its capacity as servicer, shall
hold or cause to be held the Contract Files and any Contract Documents held by
it or any Custodian in accordance with this Agreement on behalf of the Issuer,
the Indenture Trustee and the Insurer for the use and benefit of all present and
future Noteholders, and maintain such accurate and complete accounts, records
and computer systems pertaining to each Contract File as shall enable the
Servicer and Issuer to comply with this Agreement. In performing its duties as
servicer, the Servicer shall act with reasonable care, using that degree of
skill and attention that the Servicer exercises with respect to the files
relating to all comparable automobile contracts that the Servicer owns or
services for itself or others. The Servicer shall (i) conduct, or cause to be
conducted, periodic physical inspections of the Contract Files (and the Contract
Documents, if the Servicer is acting as Custodian) held by it or its agents
under this Agreement and of the related accounts, records and computer systems;
(ii) maintain or cause to be maintained the Contract Files (and the Contract
Documents, if the Servicer is acting as Custodian) in such a manner as shall
enable the Issuer, the Indenture Trustee and the Insurer to verify the accuracy
of the Servicer's record keeping; (iii) promptly report to the Issuer, the
Indenture Trustee and the Insurer any failure on its part or the part of its
agents to hold the Contract Files (and the Contract Documents, if the Servicer
is acting as Custodian) and maintain its accounts, records and computer systems
as herein provided and (iv) promptly take appropriate action to remedy any such
failure.
(b) Maintenance of and Access to Records. The Servicer shall
maintain or cause to be maintained each Contract File (other than the Contract
Documents, unless the Servicer is acting as Custodian) at the address of the
Servicer or its agents set forth in Section 9.04, or at such other location as
shall be specified to the Issuer, the Indenture Trustee and the Insurer by 30
days' prior written notice. The Servicer shall permit the Issuer, the Indenture
Trustee and the Insurer or their respective duly authorized representatives,
attorneys or auditors to inspect the Contract Files and the related accounts,
records and computer systems maintained by the Servicer at such times as such
Persons may request.
(c) Release of Documents. If the Servicer is acting as Custodian
pursuant to Section 2.04, upon instruction from the Indenture Trustee (a copy of
which shall be furnished to the Issuer and the Insurer), the Servicer shall
release or cause to be released any document in the Contract Files to the
Indenture Trustee, the
36
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.
(d) Monthly Reports. On each Servicer Report Date, commencing with
the month next succeeding the month of the Closing Date, the Servicer shall
deliver to the Issuer, the Indenture Trustee and the Insurer a certificate of a
Servicing Officer stating (i) the number of Contracts and aggregate outstanding
principal balance of such Contracts that have become Defaulted Contracts since
the Business Day immediately preceding the date of the last statement delivered
pursuant to this subsection (or since the Closing Date in the case of the first
such statement); (ii) that, if such Contract has been the subject of a Full
Prepayment pursuant to clause (a) of the definition of the term "Full
Prepayment", all proceeds received in respect thereof have been deposited in or
credited to the Collection Account in accordance with Section 4.02; (iii) that,
if such Contract has been the subject of a Full Prepayment pursuant to clause
(b) of the definition of the term "Full Prepayment", the correct Purchase Amount
has been deposited in or credited to the Collection Account in accordance with
Section 2.03, 3.07 or 4.02; and (iv) that the Indenture Trustee is authorized to
release such Contract and the related Contract Documents as provided herein.
On each Servicer Report Date, the Servicer shall also deliver to the
Indenture Trustee, Owner Trustee and the Insurer a statement setting forth (i)
the amounts on deposit in the Collection Account; (ii) the sources of such
amounts; (iii) the amounts to be paid to Noteholders;
(e) Schedule of Title Documents. The Servicer shall deliver to the
Indenture Trustee, the Issuer and the Insurer (i) within 60 days of the Closing
Date, a schedule of Title Documents for Financed Vehicles which, as of the
Closing Date, did not show AutoNation Financial Services or a subsidiary of
AutoNation Financial Services as first lienholder and (ii) within 180 days of
the Closing Date, as to the Contracts, a schedule of Title Documents for
Financed Vehicles which, as of the date prior to such delivery, do not show
AutoNation Financial Services or a subsidiary of AutoNation Financial Services
as first lienholder and as to which the Seller is obligated to repurchase
pursuant to the provisions hereof.
(f) Electronic Marking of Contracts; Possession. The Servicer shall
cause the electronic record of the Contracts maintained by it to be clearly
marked to indicate that the Contracts have been sold to the Issuer and pledged
to the Indenture Trustee and shall not in any way assert or claim an ownership
interest in the Contracts. It is intended that pursuant to the applicable
provisions of Sections 2.04 and 2.05 hereof, the Custodian on behalf of the
Indenture Trustee and the Insurer shall be
37
deemed to have possession of the Contract Documents for purposes of Section
9-305 of the UCC of the state in which the Contract Documents are located.
SECTION 2.06. Instructions; Authority to Act.
The Servicer shall be deemed to have received proper instructions (a
copy of which shall be furnished to the Issuer and the Insurer) with respect to
the Contract Files upon its receipt of written instructions signed by a
Responsible Officer of the Indenture Trustee.
SECTION 2.07. Indemnification.
Subject to Section 7.02, the Servicer shall indemnify the Issuer,
the Owner Trustee, the Indenture Trustee, the Insurer, the Custodian and the
Noteholders for any and all liabilities, obligations, losses, compensatory
damages, payments, costs or expenses of any kind whatsoever (including the
reasonable fees and expenses of counsel) that may be imposed on, incurred by or
asserted against the Issuer, the Owner Trustee, the Indenture Trustee, the
Insurer, the Custodian or the Noteholders as the result of any improper act or
omission in any way relating to the maintenance and custody by the Servicer of
the Contract Files or the Contract Documents, or the failure of the Servicer to
perform its duties and service the Contracts in compliance with the terms of
this Agreement; provided that the Servicer shall not be liable to the Owner
Trustee, the Indenture Trustee, the Custodian or the Insurer for any portion of
any such amount resulting from the willful misfeasance, bad faith or negligence
of the Owner Trustee, the Indenture Trustee, the Custodian or the Insurer,
respectively.
SECTION 2.08. Effective Period and Termination.
The appointment of the initial Servicer as Custodian shall become
effective as of the Closing Date and shall continue in full force and effect
until the earlier of (i) the replacement of the initial Servicer as Custodian or
(ii) the Final Scheduled Distribution Date of the Notes. If AutoNation Financial
Services shall subsequently resign as Servicer in accordance with the terms of
this Agreement or if all of the rights and obligations of the Servicer shall
have been terminated pursuant to Section 7.01, any appointment of the Servicer
as Custodian may be terminated by the Insurer, or if an Insurer Default has
occurred and is continuing, (i) if the Notes have not been paid in full, by the
holders of Notes evidencing not less than 25% of the outstanding principal
amount of the Notes, acting together as a single class, or by the Indenture
Trustee. As soon as practicable after any termination of such appointment, the
Servicer shall, at the Servicer's expense, deliver or cause the delivery of all
Contract Documents and all Contract Files (including those held in microfiche or
38
electronic form) to the Indenture Trustee or its agent (or, if the Indenture has
been satisfied and discharged, as directed by the Trust, with the consent of the
Issuer) at such place or places as the applicable party may reasonably designate
and shall cooperate in good faith to effect such delivery. The foregoing
notwithstanding, if the Servicer is acting as Custodian, the Servicer shall, at
the request of the Insurer, deliver the Contract Documents to the Indenture
Trustee in the event that such delivery is required by any Rating Agency to
consider the Securities investment grade without consideration of the Insurance
Policy.
SECTION 2.09. Nonpetition Covenant.
(a) Neither the Seller nor the Servicer shall petition or otherwise
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Issuer under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Issuer or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Issuer.
(b) The Servicer shall not, nor cause the Seller to, petition or
other wise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Seller under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Seller or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Seller.
SECTION 2.10. Collecting Title Documents Not Delivered at the
Closing Date.
In the case of any Contract in respect of which, in place of a Title
Document, the Custodian received on or before the Closing Date written evidence
from the Dealer selling the related Financed Vehicle, or from AutoNation
Financial Services, that the Title Document for such Financed Vehicle showing
AutoNation Financial Services or a subsidiary of AutoNation Financial Services
as first lienholder has been applied for from the Registrar of Titles, the
Servicer shall use its best efforts to collect such Title Document from the
Registrar of Titles as promptly as possible. If such Title Document showing
AutoNation Financial Services or a subsidiary of AutoNation Financial Services
as first lienholder is not received by the Servicer within 180 days after the
Closing Date with respect to the Contracts, then the representation and
warranty in Section 2.02(b)(iii) as to such Contracts in respect of such
Contract shall be deemed to have been incorrect in a manner that materially and
39
adversely affects the Noteholders, and the Seller shall be obligated to
repurchase such Contract in accordance with Section 2.03.
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ARTICLE III
ADMINISTRATION AND SERVICING OF CONTRACTS
SECTION 3.01. Duties of Servicer.
The Servicer, for the benefit of the Indenture Trustee and the
Insurer, shall manage, service, administer, and make collections on the
Contracts and perform such other actions required of the Servicer under this
Agreement. The Servicer agrees that its servicing of the Contracts shall be
carried out in accordance with reasonable care consistent with customary and
usual procedures employed by institutions that service motor vehicle retail
installment contracts and, to the extent more exacting, the procedures used by
the Servicer in respect of such contracts serviced by it for its own account;
provided that, subject to Section 3.02 as to extensions, the Servicer shall not
release or waive the right to collect the unpaid balance of any Contract unless
the Insurer has provided its prior written consent. The Servicer's duties shall
include collection and posting of all payments, responding to inquiries of
Obligors on the Contracts, investigating delinquencies, sending payment coupons
to Obligors, reporting tax information to Obligors, monitoring the Trust
Property accounting for collections, furnishing monthly and annual statements to
the Indenture Trustee, the Issuer and the Insurer with respect to distributions
and any tax forms required by any federal, state or local tax authority, if any.
The Servicer shall have, subject to the terms hereof, full power and authority,
acting alone, and subject only to the specific requirements and prohibitions of
this Agreement, to do any and all things in connection with such managing,
servicing, administration, and collection of the Contracts that it may deem
necessary or desirable. Without limiting the generality of the foregoing, but
subject to the provisions of this Agreement, the Servicer is authorized and
empowered by the Indenture Trustee and the Issuer to execute and deliver, on
behalf of itself, the Issuer, the Insurer, the Noteholders, the Indenture
Trustee 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 Contracts or to the Financed Vehicles; provided, however,
that notwithstanding the foregoing, the Servicer shall not, except pursuant to
an order from a court of competent jurisdiction or with the prior written
consent of the Insurer, release an Obligor from payment of any unpaid amount due
under any Contract or reduce the related APR. The Issuer shall furnish to the
Servicer any documents necessary or appropriate to enable the Servicer to carry
out its servicing and administrative duties hereunder. The Servicer may engage
agents and subservicers to fulfill its duties hereunder with the prior written
consent of the Insurer and pursuant to an subservicing agreement acceptable to
the Insurer. __________________________ is an acceptable subservicer to
41
the Insurer. The Servicer may not terminate any subservicer, with respect to the
Contracts, without the Insurer's prior written consent. All amounts payable to
any subservicer shall be paid by the Servicer and shall not be obligations of
the Issuer or paid from the Trust Property. In addition, the Servicer shall pay
all costs and expenses (including, without limitations, reasonable fees and
expenses of counsel) associated with the transfer of subservicing from the
existing subservicer to a successor. The Servicer may also at any time perform
through agents or subcontractors the specified duties of (i) repossession and
subsequent sale of Financed Vehicles and (ii) pursuing collection of deficiency
balances on certain Defaulted Contracts, in each case without the prior written
consent of the Insurer. No such delegation or engagement of agents,
subservicers or subcontractors by the Servicer shall relieve the Servicer of its
responsibilities with respect to any of its duties hereunder.
On or prior to the Closing Date, the Servicer shall deliver to the
Owner Trustee, the Indenture Trustee and the Insurer a list of Servicing
Officers of the Servicer involved in, or responsible for, the administration and
servicing of the Contracts, which list shall from time to time be updated by the
Servicer on request of the Owner Trustee, the Indenture Trustee or the Insurer.
On the Closing Date, the Servicer shall deposit in the Collection
Account: (i) all installments of each Monthly Scheduled Payment due on or after
the Cut-Off Date and received by the Servicer at least two Business Days prior
to the Closing Date; (ii) the proceeds of each Full Prepayment of any Contract
and all partial prepayments on Contracts received by the Servicer on or after
the Cut-Off Date and at least two Business Days prior to the Closing Date; and
(iii) all Net Liquidation Proceeds and Net Insurance Proceeds received with
respect to a Financed Vehicle to which a Contract relates received on or after
the Cut-Off Date and at least two Business Days prior to the Closing Date.
The Servicer shall deposit in or credit to the Collection Account
within two Business Days of receipt (i) all collections of Monthly Scheduled
Payments due on or after the Cut-Off Date and received by it together with the
proceeds of all Full Prepayments on all Contracts and all partial prepayments on
Simple Interest Contracts, and any accompanying interest; (ii) all Net
Liquidation Proceeds and Net Insurance Proceeds; (iii) any amounts required to
purchase Contracts as to which the Servicer has breached certain servicing
covenants and (iv) any amounts received as a result of the Servicer exercising
its rights under certain circumstances to purchase all or a portion of the
Contracts. The foregoing requirements for deposit in the Collection Account are
exclusive, it being understood that collections in the nature of late payment
charges, extension fees and similar charges or fees may, but need not be
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deposited in the Collection Account and shall be retained by the Servicer as
additional servicing compensation.
In order to facilitate the servicing of the Contracts by the
Servicer, the Servicer shall retain, subject to and only to the extent permitted
by the provisions of this Agreement, all collections on the Contracts prior to
the time they are remitted or credited, in accordance with such provisions, to
the Collection Account. The Servicer acknowledges that the unremitted
collections on the Contracts are part of the Trust Property and the Servicer
agrees to act as custodian and bailee of the Indenture Trustee, the Issuer and
the Insurer in holding such monies and collections. The Servicer agrees, for the
benefit of the Indenture Trustee, the Issuer, the Noteholders and the Insurer,
to act as such custodian and bailee, and to hold and deal with such monies and
such collections, as custodian and bailee for the Indenture Trustee, the Issuer
and the Insurer, in accordance with the provisions of this Agreement.
The Servicer shall retain all data (including, without limitation,
computerized title records) relating directly to or maintained in connection
with the servicing of the Contracts at the address of the Custodian or its Agent
set forth in Section 9.04 or, upon 15 days' prior written notice to the Issuer,
the Indenture Trustee and the Insurer, at such other place where the servicing
offices of the Servicer are located, and shall give the Issuer, the Indenture
Trustee and the Insurer access to all data (including, without limitation,
computerized title records, documentation and personnel having knowledge of such
documentation or software in such cases where the Indenture Trustee acts as
Successor Servicer) at all reasonable times and, while a Servicer Default shall
be continuing, the Servicer shall, on demand of the Issuer, the Indenture
Trustee or the Insurer deliver or cause to be delivered to the Issuer, the
Indenture Trustee or the Insurer, as the case may be, all data (including,
without limitation, computerized title records and, to the extent transferable,
related operating software) necessary for the servicing of the Contracts and all
monies collected by it and required to be deposited in or credited to the
Collection Account.
All deposits made by the Servicer in any Trust Account shall be made
in immediately available funds.
The Administrator shall be responsible for the payment of the fees
and expenses of the Indenture Trustee and the Owner Trustee; provided that any
such fees not paid as of a Distribution Date shall be paid as provided in
Section 4.03(a)(ii).
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SECTION 3.02. Collection of Contract Payments.
Consistent with the standards, policies and procedures required by
this Agreement, the Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Contracts as and when
the same shall become due and shall use its reasonable efforts to cause each
Obligor to make all payments in respect of his or her Contract to the Servicer.
Consistent with the foregoing, the Servicer may, on a case-by-case basis, in its
discretion (i) waive any late payment charges in connection with delinquent
payments on a Contract, (ii waive any prepayment charges or (iii) grant an
extension in order to work out a default or an impending default; provided that
following the extension there will have been no more than two extensions of the
related Contract in the last 12 months and the sum of the terms of all
extensions of the Contract does not exceed six months. The Servicer shall not
extend the Maturity Date of a Contract except as provided in clause (ii) of the
preceding sentence. Except as explicitly permitted by this paragraph, the
Servicer shall not change any material term of a Contract, including but not
limited to the interest rate, the payment amounts or due dates, or the property
securing such Contract unless the Insurer has provided prior written consent.
SECTION 3.03. Realization upon Defaulted Contracts.
The Servicer shall use its best efforts, consistent with the
servicing standard specified in Section 3.01, to repossess or otherwise convert
the ownership of the Financed Vehicle securing any Contract as to which no
satisfactory arrangements can be made for collection of delinquent payments.
Such servicing procedures may include reasonable efforts to realize upon any
recourse to Dealers and selling the Financed Vehicle at public or private sale.
In connection with such repossession or other conversion, the Servicer shall
follow such practices and procedures as it shall deem necessary or advisable and
as shall be normal and usual for prudent holders of retail installment sales
contracts and as shall be in compliance with all applicable laws, and, in
connection with the repossession of any Financed Vehicle or any contract in
default, may commence and prosecute any proceedings in respect of such Contract
in its own name or, if the Servicer deems it necessary, in the name of the
Issuer or the Indenture Trustee or on behalf of the Issuer or the Indenture
Trustee. The Servicer's obligations under this Section 3.03 are subject to the
provision that, in the case of damage to a Financed Vehicle from an uninsured
cause, the Servicer shall not expend its own funds in repairing such motor
vehicle unless it shall determine (i) that such restoration will increase the
proceeds of liquidation of the related Contract, after reimbursement to itself
for such expenses and (ii) that such expenses will be recoverable by it either
as Liquidation Expenses or as expenses recoverable under an
44
applicable insurance policy or under an insurance reserve established by the
Servicer. The Servicer shall be responsible for all other costs and expenses
incurred by it in connection with any action taken in respect of a Defaulted
Contract; provided that it shall be entitled to reimbursement of such costs and
expenses to the extent they constitute Liquidation Expenses or expenses
recoverable under an applicable insurance policy. All Net Liquidation Proceeds
and Net Insurance Proceeds shall be deposited directly in or credited to the
Collection Account (without deposit in any intervening account) to the extent
required by Section 4.02.
SECTION 3.04. Maintenance of Security Interests in Financed
Vehicles.
(a) The Servicer shall take such steps as are necessary to maintain
continuous perfection and priority of the security interest created by each
Contract in the related Financed Vehicle, including but not limited to,
obtaining the execution by the related Obligor and the recording, registering,
filing, re-recording, re-registering, and refiling of all security agreements,
financing statements, continuation statements or other instruments as are
necessary to maintain the security interest granted by such Obligor under each
respective Contract. The Issuer and the Indenture Trustee each hereby authorize
the Servicer to take such steps as are necessary to re-perfect such security
interest on behalf of the Issuer in the event of the relocation of a Financed
Vehicle or for any other reason. In the event that the assignment of a Contract
to the Issuer and the subsequent pledge thereof by the Issuer to the Indenture
Trustee is insufficient, without a notation on the related Financed Vehicle's
certificate of title, or without fulfilling any additional administrative
requirements under the laws of the state in which the Financed Vehicle is
located, to grant to the Issuer a perfected security interest in the related
Financed Vehicle and to pledge such perfected security interest to the Indenture
Trustee, the initial Servicer hereby agrees that the identification of
AutoNation Financial Services or a subsidiary of AutoNation Financial Services
as the secured party on the Title Document is deemed to be in its capacity as
agent of the Indenture Trustee and further agrees to hold such certificate of
title as the Indenture Trustee's agent and custodian; provided that, except as
provided in subsection (b) of this Section 3.04 and the Insurance Agreement,
neither the Servicer nor AutoNation Financial Services shall make, nor shall the
Issuer or Noteholders have the right to require that the Servicer or AutoNation
Financial Services make, any such notation on the related Financed Vehicles'
Title Document or fulfill any such additional administrative requirement of the
laws of the state in which a Financed Vehicle is located.
45
(b) The Seller, the Indenture Trustee, the Owner Trustee, the
Servicer and the Issuer hereby agree that upon the occurrence of a Servicer
Default, the Insurer may direct the Servicer and the Indenture Trustee to take
or to cause to be taken such action as may, in the Insurer's discretion, be
necessary to perfect or re-perfect the security interest in the Financed
Vehicles in the name of the Indenture Trustee, including the amending of the
Title Documents of the Financed Vehicles and the Indenture Trustee agrees to
execute any and all documents or instruments prepared by and at the expense of
the Servicer in this regard. The Servicer hereby agrees to pay all expenses
related to such perfection or reperfection, and the Servicer and the Indenture
Trustee hereby agree to take all action necessary therefor. If such expenses are
not paid within __ days after delivery of any invoice for such expenses to the
Servicer, such expenses shall be paid pursuant to Section 4.03(a)(viii). The
Insurer, in its sole discretion, may pay such costs and any such amounts shall
be included in amounts owed to the Insurer as Reimbursement Amounts; provided,
however, that if the Insurer requests the Title Documents to be amended prior to
the occurrence of a Re-▇▇▇▇▇▇▇ Trigger, the out-of-pocket expenses of the
Servicer or any other entity incurred in connection with such action shall be
reimbursed by the Insurer.
SECTION 3.05. Covenants, Representations and Warranties of Servicer.
The Servicer hereby makes the following covenants, representations
and warranties on which (i) the Issuer is deemed to have relied in acquiring the
Contracts and (ii) the Insurer is deemed to have relied in issuing the Insurance
Policy. Such covenants, 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 Contracts to the Issuer and the pledge
thereof to the Indenture Trustee pursuant to the Indenture.
(a) The Servicer covenants as to the Contracts:
(i) The Financed Vehicle securing each Contract shall not be
released from the lien granted by the Contract in whole or in part, except
as contemplated herein.
(ii) The Servicer shall not impair the rights of the Noteholders or
the Insurer in the Contracts or the other Trust Property.
(iii) The Servicer shall not increase the number of payments under a
Contract, nor increase the amount financed under a Contract, nor extend,
forgive payments on a Contract or otherwise amend the terms of any
Contract,
46
except as provided in Section 3.02 and the Servicer shall not amend in any
materially adverse respect, the Collection Policy without the Insurer's
prior written consent.
(iv) The Servicer shall not consent to the sale or transfer by an
Obligor of any Financed Vehicle unless the original Obligor under the
related Contract remains liable under such Contract and the transferee
assumes all of the Obligor's obligations thereunder and upon doing so the
credit profile with respect to such Obligor will not be changed from
adequate to speculative by virtue of the addition of the transferee's
obligation thereunder.
(v) The Servicer shall not (A) create, incur or suffer to exist, or
agree to create, incur or suffer to exist, or consent to or permit in the
future (upon the occurrence of a contingency or otherwise) the creation,
incurrence or existence of any Lien on or restriction on transferability
of any Contract except for the Lien of the Indenture and the restrictions
on transferability imposed by this Agreement or (B) sign or file any UCC
financing statements with respect to the Trust Property, in any
jurisdiction that names AutoNation Financial Services, the Servicer or the
Depositor as debtor other than those financing statements executed and
filed in connection with the Basic Documents to create or maintain the
first priority perfected security interest of the Indenture Trustee in the
Trust Property, or sign any security agreement authorizing any secured
party thereunder to file any financing statements with respect to the
Trust Property.
(b) The Servicer represents and warrants as of the Closing Date:
(i) The Servicer (1) is duly organized, is validly existing and in
good standing as a corporation organized and existing under the laws of
the State of Delaware, (2) is qualified to do business as a foreign
corporation, is in good standing and has obtained all necessary licenses
and approvals in each jurisdiction where the character of its properties
or the nature of its activities makes such qualification necessary, and
(3) has full power, authority and legal right to own its property, to
carry on its business as presently conducted, and to enter into and
perform its obligations under this Agreement and the other Basic
Documents.
(ii) The execution, delivery and performance by the Servicer of this
Agreement and the other Basic Documents are within the corporate power of
the Servicer and have been duly authorized by all necessary corporate
action on the part of the Servicer. Neither the execution, delivery and
performance of
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this Agreement, nor the consummation of the transactions herein
contemplated, nor compliance with the provisions hereof, will conflict
with or result in a breach of, or constitute a default under, any of the
provisions of any law, governmental rule, regulation, judgment, decree or
order binding on the Servicer or its properties or the Certificate of
Incorporation or Bylaws of the Servicer, or any of the provisions of any
indenture, mortgage, contract 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, charge or encumbrance upon any of its property pursuant to the
terms of any such indenture, mortgage, contract or other instrument.
(iii) Other than consents that have been obtained prior to the
Closing Date, the Servicer is not required to obtain the consent of any
other party or any consent, license, approval or authorization, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity
or enforceability of this Agreement.
(iv) This Agreement and the other Basic Documents have been duly
executed and delivered by the Servicer and, assuming the due
authorization, execution and delivery hereof by the Issuer and the
Indenture Trustee, constitutes legal, valid and binding obligations of
the Servicer enforceable against the Servicer in accordance with their
respective terms (subject to applicable bankruptcy and insolvency laws and
other similar laws affecting the enforcement of creditors' rights
generally).
(v) There are no actions, suits or proceedings pending or, to the
knowledge of the Servicer, threatened against or affecting the Servicer,
before or by any court, administrative agency, arbitrator or governmental
body with respect to any of the transactions contemplated by this
Agreement and the other Basic Documents, or which may, if determined
adversely to the Servicer, materially and adversely affect it or its
business, assets, operations or condition, financial or otherwise, or
materially and adversely affect the Servicer's ability to perform its
obligations under this Agreement and the other Basic Documents. The
Servicer is not in default with respect to any order of any court,
administrative agency, arbitrator or governmental body so as to materially
and adversely affect the transactions contemplated by the above-mentioned
documents.
(vi) The Servicer has obtained or made all necessary consents,
approvals, waivers and notifications of creditors, lessors and other
nongovernmental persons, in each case, in connection with the execution
and
48
delivery of this Agreement and the other Basic Documents to which it is a
party, and the consummation of all the transactions herein contemplated.
SECTION 3.06. Purchase of Contracts upon Breach by Servicer.
The Servicer or the Issuer shall inform the other party and the
Indenture Trustee and the Insurer promptly, in writing, upon the discovery of
any breach of the covenants, representations and warranties set forth in Section
3.05(b) or of the covenants set forth in Sections 3.02, 3.05 or 3.06(a)
provided, however, failure to give notice shall not affect any obligation of the
Servicer under this Section 3.06. Unless the breach shall have been cured within
30 days following such discovery or receipt of notice of such breach, the
Servicer shall purchase any Contract materially and adversely affected by such
breach from the Issuer. As consideration for the Contract, the Servicer shall
remit the Purchase Amount on the Business Day preceding the Servicer Report Date
next succeeding the end of such 30-day cure period in the manner specified in
Section 4.02(a). The sole remedy of the Issuer, the Indenture Trustee, or the
Noteholders with respect to a breach of Section 3.02, 3.05 or 3.06 shall be to
require the Servicer to purchase Contracts pursuant to this Section 3.07;
provided that the Servicer shall indemnify the Owner Trustee, the Indenture
Trustee, the Insurer, the Issuer, the Custodian and the Noteholders against all
costs, expenses, losses damages, claims and liabilities, including reasonable
fees and expenses of counsel, which may be asserted against or incurred by any
of them as a result of third-party claims arising out of the events or facts
giving rise to such breach.
Any successor Servicer appointed pursuant to Section 7.02 shall not
be obligated to purchase Contracts pursuant to this Section 3.07.
SECTION 3.07. Servicing Compensation.
As compensation for the performance of its obligations under this
Agreement and subject to the terms of this Section 3.08, the Servicer shall be
entitled to receive on each Distribution Date the Servicing Fee in respect of
each Contract that was Outstanding at the beginning of the Collection Period
ending immediately prior to such Distribution Date; provided that with respect
to the first Distribution Date the Servicer will be entitled to receive the
Servicing Fee in respect of each Outstanding Contract as of the Cut-Off Date. As
servicing compensation in addition to the Servicing Fee, the Servicer shall be
entitled to retain all late payment charges, extension fees and similar items
paid in respect of Contracts and (ii) to receive all investment earnings on
funds credited to the Collection Account. The Servicer shall pay all expenses
incurred by it in connection with its servicing activities hereunder
49
and shall not be entitled to reimbursement of such expenses except to the extent
provided in Section 3.03.
SECTION 3.08. Reporting by the Servicer.
(a) No later than 12:00 P.M (New York time) on each Servicer Report
Date, the Servicer shall deliver (by telex, facsimile, electronic transmission,
first class mail, overnight courier, personal delivery or such other format
mutually agreed to by the Issuer, the Indenture Trustee and the Insurer) to the
Issuer, the Indenture Trustee and the Insurer a statement (the "Distribution
Date Statement") setting forth with respect to the next succeeding Distribution
Date:
(i) the Note Principal Distributable Amount for such Distribution
Date;
(ii) the Note Interest Distributable Amount for such Distribution
Date;
(iii) the aggregate distribution amount for such Distribution Date;
(iv) the Insurance Premium payable to the Insurer;
(v) the amount to be deposited into the Spread Account on such
Distribution Date, before and after giving effect to deposits thereto and
withdrawals therefrom to be made in respect of such Distribution Date;
(vi) the amount of the withdrawal, if any, required to be made from
the Spread Account by the Indenture Trustee pursuant to Section 4.04(b);
(vii) the aggregate Servicing Fee paid to the Servicer with respect
to the related Contracts for the related Collection Period;
(viii) the amount of fees paid to the Owner Trustee and the
Indenture Trustee with respect to the related Collection Period to the
extent paid from Available Funds pursuant to Section 4.03;
(ix) the amount of any Note Interest Carryover Shortfall or Note
Principal Carryover Shortfall on such Distribution Date, the Insured
Payment required to pay any shortfall; and the change in such shortfall
amounts from those with respect to the immediately preceding Distribution
Date;
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(x) the number of, and aggregate amount of, monthly principal and
interest payments due on the related Contracts which are delinquent as of
the end of the related Collection Period presented in 30-day increments;
(xi) the Available Funds and the Insured Payment, if any, for such
Distribution Date;
(xii) the aggregate amount of Liquidation Proceeds received for
Defaulted Contracts;
(xiii) the number and net outstanding balance of Contracts for which
the Financed Vehicle has been repossessed; and
(xiv) the Pool Balance.
Each such Distribution Date Statement shall be accompanied by an
Officers' Certificate of the Servicer, which Officers' Certificate shall state
that the computations reflected in such statement were made in conformity with
the requirements of this Agreement.
(b) On each Servicer Report Date, no later than 12:00 P.M. New York
Time, the Servicer shall deliver to the Issuer, the Indenture Trustee and the
Insurer a report, in respect of the immediately preceding Collection Period,
setting forth the following:
(i) the aggregate amount, if any, paid by or due from it or the
Seller for the purchases of Contracts which the Seller or the Servicer has
become obligated to repurchase or purchase pursuant to Sections 2.03 or
3.07;
(ii) the net amount of funds which have been deposited in or
credited to the Collection Account in respect of such Collection Period
after giving effect to all permitted deductions therefrom pursuant to
Section 4.02;
(iii) with respect to all Contracts which were the subject of a Full
Prepayment during such Collection Period, the following information:
(A) the related Contract Number; and
(B) the dates of such Full Prepayment;
51
(iv) the Contract Numbers, Monthly Scheduled Payment, Principal
Balances and Maturity Dates of all Contracts which became Defaulted
Contracts during such Collection Period;
(v) any other information relating to the Contracts reasonably
requested by the Owner Trustee, the Indenture Trustee or the Insurer; and
(vi) the amount of Net Liquidation Proceeds and Net Insurance
Proceeds which have been deposited in or credited to the Collection
Account in respect of the Collection Period ending immediately prior to
such Servicer Report Date and the cumulative amount of Net Liquidation
Proceeds and Net Insurance Proceeds deposited in or credited to the
Collection Account during the preceding Collection Periods.
SECTION 3.09. Annual Statement as to Compliance.
(a) The Servicer shall deliver to the Issuer, the Owner Trustee, the
Indenture Trustee and the Insurer, on or before March 15, ____ and on or before
March 15 of each year thereafter, an Officers' Certificate of the Servicer
stating that (i) a review of the activities of the Servicer during the preceding
fiscal year (since the Closing Date in the case of the first of such Officers'
Certificates required to be delivered) and of its performance of its obligations
under this Agreement has been made under 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 the preceding
twelve months and that no default under this Agreement has occurred and is
continuing, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof.
(b) The Servicer shall deliver to the Issuer, the Owner Trustee, the
Indenture Trustee, the Insurer and each Rating Agency promptly after having
obtained knowledge thereof, but in no event later than five Business Days
thereafter, an Officer's Certificate specifying any event which with the giving
of notice or lapse of time, or both, would become a Servicer Default under
Section 7.01.
SECTION 3.10. Annual Independent Certified Public Accountant's
Report.
On or before April 30, ____ and on or before April 30 of each fiscal
year thereafter, the Servicer at its expense shall cause a firm of nationally
recognized independent certified public accountants (who may also render other
services to the
52
Servicer) to furnish a report to the Issuer, the Owner Trustee, the Indenture
Trustee and the Insurer to the effect that (i) they have audited the balance
sheet of the Servicer as of the last day of said fiscal year and the related
statements of operations, retained earnings and cash flows for such fiscal year
and have issued an opinion thereon, specifying the date thereof, (ii) they have
also reviewed the reports delivered by the Servicer pursuant to Section 3.09(b)
and certain other documents and the records relating to the servicing of the
Contracts and the distributions on the Notes under this Agreement, (iii) their
audit and review as described under clauses (i) and (ii) above was made in
accordance with generally accepted auditing standards and accordingly included
such tests of the accounting records and such other auditing procedures as they
considered necessary in the circumstances, and (iv) their audits and reviews
described under clauses (i) and (ii) above disclosed no exceptions which, in
their opinion, were material, relating to the servicing of such Contracts in
accordance with this Agreement and the making of distributions on the Notes in
accordance with this Agreement, or, if any such exceptions were disclosed
thereby, setting forth those exceptions which, in their opinion, were material.
SECTION 3.11. Access to Certain Documentation and Information
Regarding Contracts.
If the Servicer is acting as Custodian, the Servicer shall provide
to the Noteholders, the Issuer, the Indenture Trustee and the Insurer reasonable
access to the Contract Files and Contract Documents. Access shall be afforded
without charge, but only upon reasonable request and during normal business
hours at designated offices of the Servicer. Nothing in this Section 3.12 shall
affect the obligation of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors, and the failure of the
Servicer to provide access to information as a result of such obligation shall
not constitute a breach of this Section.
SECTION 3.12. Indemnification; Third Party Claims.
Subject to Section 7.02, the Servicer agrees to indemnify and hold
the Issuer, the Owner Trustee, the Indenture Trustee, the Insurer, the Custodian
and the Noteholders harmless against any and all claims, losses, penalties,
fines, forfeitures, reasonable legal fees and related costs, judgments, and any
reasonable other costs, fees and expenses that the Issuer, the Owner Trustee,
the Indenture Trustee, the Insurer, the Custodian or Noteholders may sustain
because of the failure of the Servicer to perform its duties and service the
Contracts in compliance with the terms of this Agreement. The Servicer shall (i)
immediately notify the Issuer, the Insurer and the Indenture Trustee if a claim
is made by a third party with respect to the Contracts, (ii) assume, with the
consent of the Issuer, the Indenture Trustee and the
53
Insurer, the defense of any such claim, (iii) pay all expenses in connection
therewith, including counsel fees, and (iv) promptly pay, discharge and satisfy
any judgment or decree which may be entered with respect to such claim against
the Servicer, the Issuer, the Owner Trustee, the Indenture Trustee, the Insurer,
the Custodian or the Noteholders.
SECTION 3.13. Reports to Noteholders and the Rating Agencies.
(a) The Owner Trustee or the Indenture Trustee at its own expense
shall provide to each Noteholder a copy of each Distribution Date Statement
described in Section 3.09(a) concurrently with the delivery of the statement
described in Section 4.05 below.
(b) The Indenture Trustee shall provide to any Noteholder who so
requests in writing (addressed to the Corporate Trust Office of the Indenture
Trustee) a copy of the annual audit statement described in Section 3.09, or the
annual audit report described in Section 3.10.
(c) The Indenture Trustee shall forward to the Rating Agencies and
the Insurer the statement to Noteholders described in Section 4.05 and any other
reports it may receive pursuant to this Agreement to (i) Standard & Poor's
Ratings Services, Asset-Backed Surveillance Group, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, (ii) ▇▇▇▇▇'▇ Investors Service, Inc., ABS Monitoring Dept., ▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, and (iii) the Insurer at the
address set forth in the Insurance Agreement.
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ARTICLE IV
DISTRIBUTIONS; SPREAD ACCOUNT;
STATEMENTS TO NOTEHOLDERS
SECTION 4.01. Establishment of Trust Accounts.
(a) Prior to the Closing Date, the Indenture Trustee shall open, at
a depository institution (which shall be the same depository institution which
is acting in the capacity as Indenture Trustee), the following accounts:
(i) an account denominated "Collection Account, ANRC Auto Owner
Trust ____, ______________, Indenture Trustee" (the "Collection Account");
and
(ii) an account denominated "Note Distribution Account, ANRC Auto
Owner Trust ____, ______________, Indenture Trustee" (the "Note
Distribution Account").
In addition, the Indenture Trustee shall establish (i) an account
denominated "Spread Account, ANRC Auto Owner Trust ____, ______________,
Indenture Trustee" (the "Spread Account") and (ii) a trust account to be
maintained in the Corporate Trust Office of the Indenture Trustee denominated
"Payment Account, ANRC Auto Owner Trust ____, ______________, Indenture Trustee"
(the "Payment Account" and, together with the accounts described in clauses (i)
and (ii) above, the "Trust Accounts"). The Trust Accounts shall be Eligible
Accounts (subject to the requirement that the Payment Account must be maintained
as provided in the immediately preceding sentence) and relate solely to the
Notes and to the Contracts and, if applicable, the related Eligible Investments,
and the Indenture Trustee shall have sole dominion over the Trust Accounts. The
location and account numbers of the Trust Accounts as of the Closing Date are
set forth on Exhibit B. If at any time a Trust Account ceases to be an Eligible
Account, the Indenture Trustee (or the Servicer on its behalf) shall within 5
Business Days establish a new Trust Account, which is an Eligible Account, and
shall transfer any cash or any investments from the prior account to the new
Trust Account. The Indenture Trustee shall give the Issuer, the Owner Trustee,
the Servicer and the Insurer at least five Business Days' written notice of any
change in the location of any Trust Account and shall not change any related
account identification information without the Insurer's prior written consent.
All amounts, financial assets and investment property held in, deposited in or
credited to, from time to time, the Trust Accounts shall be part of the Trust
Property and all amounts, financial assets and investment property held in,
deposited in or credited to,
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from time to time, the Collection Account and the Spread Account shall be
invested by the Indenture Trustee in Eligible Investments pursuant to Section
4.01(b).
(b) All funds in the Collection Account and the Spread Account shall
be invested by the Indenture Trustee (so long as the Indenture Trustee maintains
the applicable account) in Eligible Investments. Subject to the limitations set
forth herein, the Servicer may direct the Indenture Trustee to invest funds in
the Collection Account and the Spread Account in Eligible Investments (which
instructions may be in the form of standing instructions); provided that (i) in
the absence of such directions from the Servicer, the Insurer may so direct, and
(ii) at any time during the continuance of a Servicer Default, only the Insurer,
or for so long as an Insurer Default shall have occurred and be continuing, only
the Issuer, may give such investment directions. All such investments shall be
in the name of the Indenture Trustee for the benefit of the Noteholders. All
income or other gain from investment of monies (net of losses) deposited in or
credited to the Collection Account shall be paid by the depository institution
maintaining the Collection Account to the Servicer monthly and any investment
losses shall be payable by the Servicer. All income or other gain from
investment of monies deposited in or credited to the Spread Account shall be
deposited in or credited to the Spread Account immediately upon receipt, and any
loss resulting from such investment shall be charged to the Spread Account.
Eligible Investments made with respect to the Collection Account and the Spread
Account will mature no later than the next following Distribution Date. No
investment in Eligible Investments may be sold prior to its maturity and, except
as permitted in writing by the Rating Agencies and the Insurer, funds on deposit
in the Collection Account and Spread Account shall be invested in Eligible
Investments that will mature no later than the Business Day immediately
preceding the next Distribution Date. The funds on deposit in the Payment
Account and the Note Distribution Account shall remain uninvested.
(c) In the absence of written direction as provided above, all funds
held in the Spread Account and the Collection Account shall be invested in
Eligible Accounts as described in clause (e) of the definition thereof. In
addition, if the applicable depository institution receives what it perceives to
be conflicting directions regarding the investment of funds in the Collection
Account or the Spread Account, the directions of the Insurer shall control
unless an Insurer Default shall have occurred and be continuing, in which case
the directions of the Servicer shall control unless a Servicer Default shall
have occurred and be continuing, in which case the directions of the Issuer
shall control. In addition, the Indenture Trustee shall not in any way be held
liable by reason of any insufficiency in any of the foregoing Trust Accounts
held by or on behalf of the Indenture Trustee resulting from any investment loss
on any Eligible Investments, except in its capacity as obligor thereunder.
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(d) With respect to the Trust Account Property, the Indenture
Trustee agrees, by its acceptance hereof, that, subject at all times to the
terms of the Securities Control Agreement:
(i) any Trust Account Property that is held in deposit accounts
shall be held solely in Eligible Accounts, subject to the last sentence of
Section 5.2(c)(i); and each such Eligible 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;
(ii) any Trust Account Property that constitutes Physical Property
shall be delivered to the Indenture Trustee in accordance with paragraph
(a) of the definition of "Delivery" and shall be held, pending maturity or
disposition, solely by the Indenture Trustee or a securities intermediary
(as such term is defined in Section 8-102(a)(14) of the UCC) acting solely
for the Indenture Trustee;
(iii) 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
(iv) any Trust Account Property that is an "uncertificated security"
under Article VIII of the UCC and that is not governed by clause (iii)
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, though continued
registration of the Indenture Trustee's (or its nominee's) ownership of
such security.
SECTION 4.02. Collections; Realization upon Insurance Policy; Net
Deposits; Transfers to Payment Account.
(a) Subject to the last sentence of this Section 4.02(a), the
Servicer shall remit or credit all Full Prepayments and partial prepayments on a
daily basis, within two Business Days of receipt, by or on behalf of Obligors on
the Contracts, and all Net Liquidation Proceeds and Net Insurance Proceeds and
other monies as required to the Collection Account. The Servicer or the Seller,
as the case may be, each shall remit or credit to the Collection Account each
Purchase Amount to be
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remitted by it with respect to Purchased Contracts on the Business Day preceding
the Servicer Report Date next succeeding (i) the end of the Collection Period in
which the applicable Contract is repurchased by the Seller pursuant to Section
2.03, in the case of the Seller or (ii) the last day of the related cure period
specified in Section 3.07, in the case of the Servicer. On the date of receipt,
the Servicer shall remit to the Collection Account any Purchase Amounts received
from AutoNation Financial Services pursuant to the Receivables Purchase
Agreement.
(b) On the Servicer Report Date, the Servicer shall determine the
Insured Payment, if any, which exists with respect to the related Distribution
Date.
(c) The Indenture Trustee, based solely on the Distribution Date
Statement, shall, no later than 12:00 noon, New York City time, on the second
Business Day prior to each Distribution Date, make a claim under the Insurance
Policy for the Insured Payment, if any, for such Distribution Date by delivering
to the Fiscal Agent, with a copy to the Insurer and the Servicer, by hand
delivery, telex or facsimile transmission, a written notice (a "Deficiency
Notice") specifying the Insured Payment, if any, for such Distribution Date. In
addition, the Indenture Trustee shall make claims under the Insurance Policy for
Preference Amounts as provided in the Insurance Policy. Each Deficiency Notice
shall be in the form set forth as Exhibit A to the Insurance Policy. In making
any such claim, the Indenture Trustee shall comply with all the terms and
conditions of the Insurance Policy. Upon receipt of the Insured Payment, the
Indenture Trustee shall apply the portion thereof, if any, representing the
Deficiency Amount with respect to a Distribution Date as provided in Section
4.03(a). Any amounts received by the Indenture Trustee under the Insurance
Policy that represent Preference Amounts shall be paid, in accordance with the
Insurance Policy, to the applicable Noteholder(s).
(d) In connection with any Preference Amount payable under the
Insurance Policy, the Indenture Trustee shall furnish to the Insurer its records
evidencing the distributions of principal of and interest on the Notes that have
been made and subsequently recovered from Noteholders and the dates on which
such payments were made.
(e) The Indenture Trustee shall keep a complete and accurate record
of the amount of interest and principal paid in respect of any Notes from monies
received under the Policy. The Insurer shall have the right to inspect such
records at reasonable times during normal business hours upon three (3) Business
Day's prior notice to the Indenture Trustee, at the expense of the Insurer.
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All notices, statements, reports, notes or opinions required by this
agreement to be sent to any other party hereto or to the Noteholders at any time
shall also be sent to the Insurer unless the Insurance Policy is no longer in
effect (and the Insurer has been paid in full).
(f) So long as AutoNation Financial Services is the Servicer, the
Servicer may make deposits in or credits to the Collection Account net of
amounts to be paid to the Servicer under this Agreement. Notwithstanding the
foregoing, the Servicer shall maintain the records and accounts for such
deposits and credits on a gross basis.
(g) On the Business Day immediately preceding each Distribution
Date, the Indenture Trustee shall cause funds equal to the amount of Available
Funds available with respect to such Distribution Date to be withdrawn from the
Collection Account and deposited into the Payment Account to be distributed
pursuant to Section 4.03(a).
SECTION 4.03. Distributions.
(a) On the Business Day immediately preceding each Distribution
Date, the Indenture Trustee will cause funds equal to the amount of Available
Funds available with respect to such Distribution Date to be withdrawn from the
Collection Account and deposited into the Payment Account. On each Distribution
Date, the Indenture Trustee, based solely on the Distribution Date Statement,
will apply the Available Funds on deposit in the Payment Account, together with
amounts, if any, withdrawn from the Spread Account or representing payment of
the Insured Payment, to make the following deposits and distributions in the
following amounts and order of priority; provided, however, payments under the
Insurance Policy shall be used solely to make distributions pursuant to clauses
(iv), (v) and (vi) of this Section 4.03(a):
(i) to the Servicer, from Available Funds and amounts, if any,
withdrawn from the Spread Account, the Servicing Fee, including any unpaid
Servicing Fees with respect to one or more prior Collection Periods;
(ii) to the Indenture Trustee and the Owner Trustee, from Available
Funds (after giving effect to the reduction in Available Funds described
in clause (i) above) and amounts, if any, withdrawn from the Spread
Account, any accrued and unpaid fees and expenses of the Indenture Trustee
and the Owner Trustee, in each case to the extent those fees and expenses
have not been previously paid by the Servicer; provided that such payments
pursuant to
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this clause (ii) will not on any Distribution Date exceed $________ and
will not during any calendar year exceed $______;
(iii) to the Insurer, from Available Funds (after giving effect to
the reduction in Available Funds described in clauses (i) and (ii) above)
and amounts, if any, withdrawn from the Spread Account, the Insurance
Premium for such Distribution Date;
(iv) to the Note Distribution Account, from Available Funds (after
giving effect to the reduction in Available Funds described in clauses
(i), (ii) and (iii) above) and amounts, if any, withdrawn from the Spread
Account and any amounts representing payment of the Insured Payment, the
Note Interest Distributable Amount to be distributed to the holders of the
Notes at their respective Note Rates;
(v) to the Note Distribution Account, if such Distribution Date is a
Final Scheduled Distribution Date for any Class of Notes, the Note
Principal Distributable Amount to the extent of the remaining outstanding
principal amount of such Class of Notes, from Available Funds (after
giving effect to the reduction in Available Funds described in clauses (i)
through (iv) above), and amounts, if any, withdrawn from the Spread
Account or representing payment of the Insured Payment to be paid to the
holders of such Class of Notes;
(vi) to the Note Distribution Account, from Available Funds (after
giving effect to the reduction in Available Funds described in clauses (i)
through (v) above) and amounts, if any, withdrawn from the Spread Account
and any amounts representing payment of the Insured Payment to be paid to
the Noteholders as follows, the remaining Note Principal Distributable
Amount (after giving effect to the payment, if any, described in clause
(v) above), to be distributed first to the holders of the Class ▇- ▇ Notes
until the outstanding principal amount of the Class A-1 Notes has been
reduced to zero, second, to the holders of the Class A-2 Notes until the
outstanding principal amount of the Class A-2 Notes has been reduced to
zero, third, to the holders of the Class A-3 Notes until the outstanding
principal amount of the Class A-3 Notes has been reduced to zero, and
fourth, to the holders of the Class A-4 Notes until the outstanding
principal amount of the Class A-4 Notes has been reduced to zero;
(vii) to the Insurer, from Available Funds (after giving effect to
the reduction in Available Funds described in clauses (i) through (vi)
above) and
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amounts, if any, withdrawn from the Spread Account, any Reimbursement
Amounts owing to the Insurer;
(viii) to the Indenture Trustee or the Successor Servicer, if
applicable, from Available Funds (after giving effect to the reduction in
Available Funds described in clauses (i) through (vii) above), the amount
of any fees and reasonable expenses not paid under clause (ii) above as a
result of the dollar limitation on fees and reasonable expenses set forth
in clause (ii);
(ix) to the Indenture Trustee or the Successor Servicer from
Available Funds (after giving effect to the reduction in Available Funds
described in clauses (i) through (viii) above), any Re-▇▇▇▇▇▇▇ Expenses,
to the extent not paid by the Servicer as required pursuant to Section
3.04;
(x) to the Successor Servicer, if applicable, from Available Funds
(after giving effect to the reduction in Available Funds described in
clauses (i) through (ix) above), reasonable expenses not paid by the
Servicer incurred in connection with the transfer of servicing from the
Servicer to the Successor Servicer and the amount of any additional
servicing fee owing to the Successor Servicer in excess of the Servicing
Fee;
(xi) to the Spread Account, from Available Funds (after giving
effect to the reduction in Available Funds described in clauses (i)
through (x) above), the amount, if any, required to increase the amount
therein to the Spread Account Required Amount;
(xii) to the Note Distribution Account, after the occurrence of a
Servicer Default, all remaining Available Funds (after giving effect to
the reduction in Available Funds described in clauses (i) through (xi)
above) and, upon the direction of the Insurer, all amounts on deposit in
the Spread Account for distribution to the Noteholders until the
outstanding principal amount for all Notes is reduced to zero;
(xiii) any remaining Available Funds will be distributed to the
Seller, as holder of the Residual Interest Certificate.
Any amounts deposited in the Payment Account pursuant to 4.04(b) with respect to
a Distribution Date and any Insured Payment that represent the Deficiency Amount
with respect to such Distribution Date shall be applied by the Indenture Trustee
solely to make the deposits and distributions referred to in clauses (iii)
through (vii) above, in that order of priority, but only to the extent that the
Available Funds with respect to
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such Distribution Date, after application as provided above, were insufficient
to make such deposit or distribution.
SECTION 4.04. Spread Account.
(a) The Spread Account will be held for the benefit of the
Noteholders and the Insurer. On or prior to the Closing Date, the Issuer shall
deposit or cause to have deposited an amount equal to the Spread Account Initial
Deposit into the Spread Account from the net proceeds of the sale of the Notes.
(b) On each Distribution Date, the Indenture Trustee, based solely
on the Distribution Date Statement, shall withdraw funds from the Spread
Account, to the extent funds are on deposit therein, equal to the amount by
which the sum of the amounts set forth in Section 4.03(a), clauses (i) though
(vii), with respect to such Distribution Date exceeds the amount of Available
Funds for such Distribution Date. The Indenture Trustee shall deposit any such
funds withdrawn from the Spread Account into the Payment Account to be
distributed pursuant to Section 4.03(a). Funds shall also be withdrawn from the
Spread Account by the Indenture Trustee, as directed by the Insurer to reimburse
the Insurer for any draws under the Insurance Policy with respect to any
Preference Amount. If the amount on deposit in the Spread Account on any
Distribution Date (after giving effect to all deposits thereto or withdrawals
therefrom on such Distribution Date other than withdrawals relating to
distributions to be made pursuant to this sentence) exceeds the Spread Account
Required Amount set forth in the Insurance Agreement, the Indenture Trustee
shall, based solely on the Distribution Date Statement, distribute any excess
first, to the Insurer, to the extent of any amounts owing to the Insurer
pursuant to the Insurance Agreement, and then to the Seller. Upon any such
distributions to the Insurer the Noteholders will have no further rights in, or
claims to, such distributed amounts. None of the Noteholders, the Indenture
Trustee, the Owner Trustee, the Seller or the Insurer will be required to refund
any amounts properly distributed to them, whether or not there are sufficient
funds on any subsequent Distribution Date to make full distributions to the
Noteholders. The obligations of the Insurer under the Insurance Policy will not
be diminished or otherwise affected by any amounts distributed to the Insurer.
(c) Amounts held in the Spread Account shall be invested in the
manner specified in Section 4.01(b) and (c), and such investments shall be made
in accordance with written instructions from the Servicer; provided that, if the
Indenture Trustee does not receive any such written instructions prior to any
date on which an investment decision must be made, the funds held in the Spread
Account shall be invested in Eligible Investments as described in clause (e) of
the definition thereof.
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All such investments shall be made in the name of the Indenture Trustee or its
nominee and such investments shall not be sold or disposed of prior to their
maturity. In no event shall the Indenture Trustee be liable for investment
losses pursuant to this Section 4.04(c).
(d) With respect to the Trust Account Property relating to the
Spread Account, the Indenture Trustee agrees that, subject at all times to the
terms of the Securities Account Control Agreement:
(i) any Trust Account Property that is held in deposit
accounts shall be held solely in the name of the Indenture Trustee,
as collateral agent, with the Indenture Trustee. The Spread Account
shall be subject to the exclusive custody and control of the
Indenture Trustee, and the Indenture Trustee shall have sole
signatory authority with respect thereto.
(ii) Any Trust Account Property that constitutes Physical
Property shall be delivered to the Indenture Trustee, as collateral
agent, in accordance with clause (a) of the definition of "Delivery"
and shall be held, pending maturity or disposition, solely by the
Indenture Trustee, as collateral agent, or a securities
intermediary, as such term is defined in Section 8-102(a)(14) of the
UCC, acting solely for the Indenture Trustee, as collateral agent.
(iii) 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 clause
(b) of the definition of "Delivery" and shall be maintained by the
Indenture Trustee, as collateral agent, pending maturity or
disposition, through continued book-entry registration of such Trust
Account Property as described in such paragraph.
(iv) Any Trust Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by
clause (iii) above shall be delivered to the Indenture Trustee, as
collateral agent, in accordance with clause (c) of the definition of
"Delivery" and shall be maintained by the Indenture Trustee, as
collateral agent, pending maturity or disposition through continued
registration of the Indenture Trustee's or its securities
intermediary's (or its custodian's or its nominee's) ownership of
such security, in its capacity as collateral agent.
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Effective upon delivery of any Trust Account Property in the form of
physical property, book-entry securities or uncertficiated securities, the
Indenture Trustee shall be deemed to have purchased such Trust Account Property
for value, in good faith and without notice of any adverse claim thereto.
The Indenture Trustee shall not enter into any subordination or
intercreditor agreement with respect to the Trust Account Property.
(e) Ninety-one (91) days following the termination of the Trust
pursuant to Section 9.01 of the Owner Trust Agreement, any amounts on deposit in
the Spread Account, after payments of amounts due to the Noteholders and all
amounts due to the Insurer pursuant to the Insurance Agreement, shall be paid to
the Seller; provided, however, that if an insolvency preceding with respect to
any of the Seller, the Servicer, the Indenture Trustee or the Noteholders
(collectively, the "Potential Preference Parties") shall have occurred during
the period ending ninety-one (91) days after payment in full to the Noteholders
of all amounts payable with respect to the Notes and the payment in full of the
Repayment Amount then the funds on deposit in the Spread Account shall be
retained until the date all applicable statute of limitation periods with
respect to all applicable preference actions and periods have expired and during
which time no preference action or similar proceeding at law or in equity is
commenced, at which time, the Indenture Trustee shall release all amounts in the
Spread Account to the Seller. In the event that any preference action referred
to above is commenced during any applicable statute of limitations period, funds
deposited in the Spread Account shall be retained until the date on which there
is a final determination by a court of competent jurisdiction as to whether any
payment or payments made pursuant to this Agreement, the Indenture or the
Insurance Agreement is recoverable from the Insurer or the Noteholders. If it is
so determined that a payment is so recoverable, funds deposited in the Spread
Account shall be applied by the Indenture Trustee at the written direction of
the Insurer, first to pay any and all such claims with respect to such
preference actions as the Noteholders and the Insurer may be required to pay and
then to the Seller. If it is determined that any such payment is not
recoverable, the Indenture Trustee shall release all amounts on deposit in the
Spread Account to the Seller, upon receipt from the Insurer of both a final
order determining that such payments are not recoverable and an opinion of
nationally recognized bankruptcy counsel to the effect that such appeal is final
and not subject to appeal. For purposes of compliance with this Section 4.04,
the Indenture Trustee shall be entitled to rely on written instructions from the
Insurer.
(f) In the event the Seller seeks to have the amounts remaining on
deposit in the Spread Account released to it prior to the expiration of the
ninety-one
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(91) day period specified in Section 4.04(d) above, then, if (i) amounts payable
with respect to the Notes have been fully paid to the Noteholders, (ii) the
Repayment Amount and all other amounts owing to the Insurer pursuant to the
Insurance Agreement have been paid in full, (iii) no insolvency proceeding
described in Section 7.01 (d) or (e) has occurred with respect to the Potential
Preference Parties, and (iv) either (A) the long term unsecured debt of the
Seller and the Servicer is rated BBB- or better by Standard & Poor's and Baa3 or
better by Moody's, (B) the Insurer shall have received a favorable opinion or
opinions, satisfactory in form and substance to the Insurer, from counsel to
AutoNation Financial Services, the Seller and the Servicer, to the effect that
in the event an insolvency proceeding described in Sections 7.01 (d) or (e) were
to occur with respect to the Potential Preference Parties, no payment pursuant
to this Agreement or the Insurance Agreement would be recoverable from either
the Insurer or the Noteholders, and such other matters as the Insurer may
reasonably request, or (C) the Insurer, in its sole discretion, elects to have
the remaining amounts on deposit in the Spread Account paid to the Seller, then,
in any such event, all remaining amounts on deposit in the Spread Account shall
be paid to the Seller.
SECTION 4.05. Statements to Noteholders.
(a) On each Distribution Date, the Indenture Trustee and the Owner
Trustee shall include with each distribution to a Noteholder of record as of the
related Record Date, a statement, prepared by the Servicer, based solely on the
information in the Distribution Date Statement furnished pursuant to Section
3.09, setting forth for such Distribution Date at least the following
information as of the Distribution Date, as the case may be:
(i) the amount of such distribution on or with respect to each Class
of Notes allocable to principal;
(ii) the amount of such distribution on or with respect to each
Class of Notes allocable to interest;
(iii) the aggregate Distribution Amount for such Distribution Date;
(iv) the Insurance Premium payable to the Insurer;
(v) the balance, if any, of any fund or account with respect to any
credit or liquidity enhancement on such date, after giving effect to
changes thereto on such date;
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(vi) the Spread Account Required Amount and the amount on deposit in
the Spread Account on such Distribution Date, before and after giving
effect to deposits thereto and withdrawals therefrom to be made in respect
of such Distribution Date;
(vii) the amount of the withdrawal, if any, required to be made from
the Spread Account by the Indenture Trustee pursuant to Section 4.04(b);
(viii) the aggregate Servicing Fee paid to the Servicer with respect
to the Contracts for the related Collection Period;
(ix) the amount of fees paid to the Owner Trustee and the Indenture
Trustee, with respect to the related Collection Period to the extent not
paid by the Servicer;
(x) the amount available in the Collection Account for payment of
the aggregate amount payable or distributable on such Securities, the
amount of the Servicing Fee, the amount of any principal or interest
shortfall with respect to each Class of Notes and the amount required from
the Insurer pursuant to the related Insurance Policy to pay any shortfall;
(xi) the number of, and aggregate amount of, monthly principal and
interest payments due on the Contracts which are delinquent as of the end
of the related Collection Period presented in 30-day increments;
(xii) the Available Funds, the Deficiency Amount and the Insured
Payment, if any, for such Distribution Date;
(xiii) the aggregate amount of Liquidation Proceeds received by the
Servicer, net of recoverable out-of-pocket expenses, in respect of a
Contract which is a Defaulted Contract;
(xiv) the number and net outstanding balance of Contracts for which
the Financed Vehicle has been repossessed;
(xv) The Overcollateralization Amount; and
(xvi) the Pool Balance.
Each amount set forth pursuant to subclauses (i) or (ii) above shall be
expressed as a dollar amount per $1,000.00 of Original Principal Amount of a
Note.
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(b) No later than the latest date permitted by law, the Servicer
shall prepare and furnish to the Issuer, the Indenture Trustee and each Paying
Agent, and the Paying Agent for the Notes and the Paying Agent for the Notes
shall furnish to each Person who on any Record Date during such calendar year
shall have been a Noteholder, a statement or statements containing the sum of
the amounts set forth in clauses (i) and (ii) above for such calendar year and
such other information as is reasonably necessary for the preparation of such
Person's federal income tax return in respect of the Notes or, in the event such
Person shall have been a Noteholder during a portion of such calendar year, for
the applicable portion of such year, for the purposes of such Noteholder's
preparation of federal income tax returns.
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ARTICLE V
THE SELLER
SECTION 5.01. Liability of Seller; Indemnities.
The Seller shall be liable in accordance herewith only to the extent
of the obligations specifically undertaken by the Seller under this Agreement.
The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Indenture Trustee, the Insurer, the Servicer and the
Custodian and their respective officers, directors, agents and employees from
and against any taxes that may at any time be asserted against any such Person
with respect to the transactions contemplated herein and in the other Basic
Documents, including any sales, gross receipts, general corporation, tangible or
intangible personal property, privilege or license taxes (but, not including (i)
in the case of the Issuer, any taxes asserted with respect to, and as of the
date of, the sale of the Contracts to the Issuer or the issuance and original
sale of the Securities, or (ii) any taxes asserted with respect to ownership of
the Contracts, or (iii) any federal or other income taxes arising out of
distributions on the Securities) and costs and expenses in defending against the
same.
The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Indenture Trustee, the Custodian their respective officers,
directors, agents and employees and the Noteholders from and against any loss,
liability or expense incurred by reason of the Seller's willful misfeasance, bad
faith or negligence (other than errors in judgment) in the performance of its
duties under this Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement.
The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Indenture Trustee, the Custodian and their respective
officers, directors, agents and employees from and against all costs, expenses,
losses, claims, damages and liabilities arising out of or incurred in connection
with the acceptance or performance of the trusts and duties herein and, in the
case of the Owner Trustee, in the Owner Trust Agreement and, in the case of the
Indenture Trustee, in the Indenture as well as the other Basic Documents, except
to the extent that such cost, expense, loss, claim, damage or liability, in the
case of (i) the Owner Trustee, shall be due to the willful misfeasance, bad
faith or negligence of the Owner Trustee or shall arise from the breach by the
Owner Trustee of any of its representations or warranties set forth in the Owner
Trust Agreement, (ii) the Indenture Trustee, shall be due to the willful
misfeasance, bad faith or negligence of the Indenture Trustee or (iii) the
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Custodian, shall be due to the willful misfeasance, bad faith or negligence of
the Custodian, respectively.
Indemnification under this Section 5.01 shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation.
Indemnification under this Section 5.01 shall be payable solely from amounts
payable to the Seller pursuant to clause (xiii) of Section 4.03(a) and shall not
otherwise be payable from the Trust Property. If the Seller shall have made any
indemnity payments pursuant to this section and the Person to or on behalf of
whom such payments are made thereafter shall collect any of such amounts from
others, such Person shall promptly repay such amounts to the Seller, without
interest.
SECTION 5.02. Merger or Consolidation of, or Assumption of the
Obligations of Seller; Certain Limitations.
(a) The Seller shall keep in full effect its existence, rights and
franchises as a corporation incorporated under the laws of the State of
Delaware, and will obtain and preserve its qualification to do business as a
foreign corporation in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of the Contract
Documents and this Agreement.
(b) The Seller shall not consolidate with or merge into any other
corporation or convey, transfer or lease substantially all of its assets as an
entirety to any Person unless the corporation formed by such consolidation or
into which the Seller has merged or the Person which acquires by conveyance,
transfer or lease substantially all the assets of the Seller as an entirety, can
lawfully perform the obligations of the Seller hereunder and executes and
delivers to the Issuer, the Indenture Trustee and the Insurer an agreement in
form and substance reasonably satisfactory to the Issuer, the Indenture Trustee
and the Insurer, which contains an assumption by such successor entity of the
due and punctual performance and observance of each covenant and condition to be
performed or observed by the Seller under this Agreement.
SECTION 5.03. Limitation on Liability of Seller and Others.
The Seller and any director or officer or employee or agent of the
Seller may rely in good faith on any document of any kind, prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Seller shall not be under any obligation to appear in, prosecute or defend
any legal
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action that shall not be incidental to its obligations under this Agreement, and
that in its opinion may involve it in any expense or liability.
SECTION 5.04. Seller Not to Resign.
Subject to the provisions of Section 5.02, the Seller shall not
resign from the obligations and duties hereby imposed on it as Seller under this
Agreement.
SECTION 5.05. Seller May Own Notes.
The Seller and any Affiliate thereof may in its individual or any
other capacity become the owner or pledgee of Notes with the same rights as it
would have if it were not the Seller or an Affiliate thereof, except as
expressly provided herein or in any Basic Document. Notes so owned by or pledged
to the Seller or such Affiliate shall have an equal and proportionate benefit
under the provisions of this Agreement, without preference, priority or
distinction as among all of the Notes.
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ARTICLE VI
THE SERVICER
SECTION 6.01. Liability of Servicer; Indemnities.
Subject to Section 7.02, the Servicer shall be liable in accordance
herewith only to the extent of the obligations specifically undertaken by the
Servicer under this Agreement. Such obligations shall include the following:
(a) The Servicer shall defend, indemnify and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Insurer, the Seller, the
Custodian, their respective officers, directors, agents and employees, and the
Noteholders 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 Insurer, the Seller, the
Custodian and their respective officers, directors, agents and employees from
and against any taxes that may at any time be asserted against the Issuer, the
Owner Trustee, the Indenture Trustee, the Insurer, the Seller or the Custodian
with respect to the transactions contemplated herein, including, without
limitation, any sales, gross receipts, general corporation, tangible or
intangible personal property, privilege or license taxes (but, not including (i)
in the case of the Issuer, any taxes asserted with respect to, and as of the
date of, the sale of the Contracts to the Issuer or the issuance and original
sale of the Securities, or (ii) any taxes asserted with respect to ownership of
the Contracts, or (iii) any federal or other income taxes arising out of
distributions on the Securities) and costs and expenses in defending against the
same.
(c) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Insurer, the Seller, the
Custodian, their respective officers, directors, agents and employees and the
Noteholders 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.
Indemnification under this Section 6.01 shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation.
If the Servicer shall have made any indemnity payments pursuant to this Section
and the
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recipient thereafter collects any of such amounts from others, the recipient
Person shall promptly repay such amounts to the Servicer, without interest.
This Section 6.01 shall survive the resignation or removal of the
Owner Trustee, the Custodian and the Indenture Trustee and the termination of
this Agreement.
SECTION 6.02. Corporate Existence; Status as Servicer; Merger.
(a) The Servicer shall keep in full effect its existence, rights and
franchises as a corporation incorporated under the laws of the State of
Delaware, and will obtain and preserve its qualification to do business as a
foreign corporation in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of the Contract
Documents and this Agreement.
(b) The Servicer shall not consolidate with or merge into any other
corporation or convey, transfer or lease all or substantially all of its assets
as an entirety to any Person or engage in any corporate transaction pursuant to
which the surviving or successor entity is not AutoNation Financial Services,
unless (i) such entity is at least rated investment grade by the Rating Agencies
and (ii) such entity executes and delivers to the Issuer, the Indenture Trustee
and the Insurer an agreement in form and substance reasonably satisfactory to
the Issuer, the Indenture Trustee and the Insurer, which contains an assumption
by such successor entity of the due and punctual performance and observance of
each covenant and condition to be performed or observed by the Servicer under
this Agreement.
(c) The Servicer shall provide notice of any merger, consolidation
or succession pursuant to this Section 6.02 to the Owner Trustee, the Indenture
Trustee, the Insurer and each Rating Agency. Notwithstanding the foregoing, the
Servicer shall not merge or consolidate with any other Person or permit any
other Person to become a successor to the Servicer's business unless (i)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 3.05 shall have been breached (for purposes
hereof, such representations and warranties shall speak as of the date of the
consummation of such transaction) and no event that, after notice or lapse of
time or both, would become a Servicer Default shall have occurred, (ii) the
Servicer shall have delivered to the Owner Trustee, the Indenture Trustee and
the Insurer an Officer's Certificate and an Opinion of Counsel, each stating
that such consolidation, merger or succession and such agreement of assumption
comply with this Section 6.02 and that all conditions precedent provided for in
this Agreement relating to such transaction have been complied with and (iii)
the Servicer shall have delivered to the Owner Trustee, the Indenture Trustee
and the
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Insurer an Opinion of Counsel stating that either (A) all financing statements
and continuation statements and amendments thereto have been duly executed and
filed that are necessary to preserve and protect the interest of the Trust and
the Indenture Trustee, respectively, in the assets of the Trust and reciting the
details of such filings or (B) no such action shall be necessary to preserve and
protect such interest.
SECTION 6.03. Performance of Obligations.
(a) The Servicer shall punctually perform and observe all of its
obligations and agreements contained in this Agreement.
(b) The Servicer shall not take any action, or permit any action to
be taken by others, which would excuse any person from any of its covenants or
obligations under any of the Contract Documents or under any other instrument
included in the Trust Property, or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any of the Contract Documents or any such
instrument, except as expressly provided herein and therein.
SECTION 6.04. Servicer Not to Resign; Assignment.
(a) The Servicer shall not resign from the duties and obligations
hereby imposed on it except upon determination by its Board of Directors that by
reason of change in applicable legal requirements the continued performance by
the Servicer of its duties hereunder would cause it to be in violation of such
legal requirements in a manner which would result in a material adverse effect
on the Servicer or its financial condition, said determination to be evidenced
by a resolution of its Board of Directors to such effect accompanied by an
Opinion of Counsel, satisfactory to the Issuer, the Insurer and the Indenture
Trustee, to such effect. No such resignation shall become effective unless and
until (i) the Indenture Trustee assumes all of the Servicer's obligations under
this Agreement or (ii) a new servicer acceptable to the Insurer assumes the
servicing of the Contracts and enters into a servicing agreement with the
Issuer, the Indenture Trustee and the Insurer in form and substance
substantially similar to this Agreement and satisfactory to the Issuer, the
Indenture Trustee and the Insurer, and each Rating Agency confirms that the
selection of such new servicer will not result in the qualification, reduction
or withdrawal of its then-current rating of each Class of Notes assigned by such
Rating Agency, without regard to the Insurance Policy. No such resignation by
the Servicer shall affect the obligation of the Servicer to repurchase Contracts
pursuant to Section 3.07.
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(b) Except as specifically permitted in this Agreement, the Servicer
may not assign this Agreement or any of its rights, powers, duties or
obligations hereunder; provided that (i) the Servicer may assign this Agreement
in connection with a consolidation, merger, conveyance, transfer or lease made
in compliance with Section 6.02(b).
(c) Except as provided in Sections 6.04(a) and (b), the duties and
obligations of the Servicer under this Agreement shall continue until this
Agreement shall have been terminated as provided in Section 8.01 or the Trust
shall have been terminated as provided by the terms of the Trust Agreement, and
shall survive the exercise by the Issuer, the Indenture Trustee or the Insurer
of any right or remedy under this Agreement, or the enforcement by the Issuer,
the Indenture Trustee, any Noteholder, or the Insurer of any provision of the
Notes, the Insurance Agreement or this Agreement.
(d) The resignation of the Servicer in accordance with this Section
shall not affect the rights of the Seller hereunder. If the Servicer resigns
pursuant to this Section, its appointment as custodian may be terminated
pursuant to Section 2.08.
SECTION 6.05. Limitation on Liability of Servicer and Others.
Neither the Servicer nor any of the directors, officers, employees
or agents of the Servicer shall be under any liability to the Issuer or the
Noteholders, 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 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 (except errors in
judgment) 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 incidental to its duties to service the Contracts in accordance
with this Agreement, and that in its opinion may involve it in any expense or
liability; provided that the Servicer may undertake any reasonable action that
it may deem necessary or desirable in respect of this Agreement and the other
Basic Documents and the rights and duties of the parties to this Agreement and
the other Basic Documents and the interests of the Noteholders under this
Agreement and the other Basic Documents.
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ARTICLE VII
SERVICER DEFAULTS
SECTION 7.01. Servicer Defaults.
If any one of the following events (each, a "Servicer Default")
shall occur and be continuing:
(a) any failure by the Servicer to deposit or credit to the
Collection Account any amount required under this Agreement to be so deposited
or credited, which failure continues unremedied for a period of three Business
Days after discovery by the Servicer or receipt by the Servicer of written
notice of such failure from the Issuer, the Indenture Trustee or the Insurer or
after discovery of such failure by an officer of the Servicer;
(b) the Insurer, the Indenture Trustee or the Issuer shall not have
received a report in accordance with Section 3.09 by the Servicer Report Date
with respect to which such report is due and which shall continue unremedied for
a period of one day after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given;
(c) failure on the part of the Seller, the Issuer or the Servicer
duly to observe or to perform in any material respect any other covenants or
agreements of the Seller or the Servicer set forth in this Agreement or any
other Basic Document, which failure shall (i) materially and adversely affect
the rights of the Noteholders, the Insurer, the Issuer, the Owner Trustee or the
Indenture Trustee and (ii) continue unremedied for a period of 30 days after the
date on which the Seller, the Issuer, the Custodian or the Servicer shall have
knowledge of such failure or written notice of such failure, requiring the same
to be remedied, shall have been given (A) to the Seller or the Servicer, as the
case may be, by the Insurer, the Issuer, the Owner Trustee or the Indenture
Trustee or (B) to the Seller or the Servicer, as the case may be, and to the
Issuer and the Indenture Trustee by Noteholders, acting together as a single
class, evidencing in the aggregate not less than 25% of the outstanding
principal amount of the Notes or, so long as no Insurer Default has occurred and
is continuing, by the Insurer;
(d) the entry of a decree or order for relief by a court or
regulatory authority having jurisdiction in respect of the Servicer or the
Seller in an involuntary case under the federal bankruptcy laws, as now or
hereafter in effect, or another
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present or future, federal or state, bankruptcy, insolvency or similar law, or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Servicer or the Seller or of any substantial part
of its property, or ordering the winding up or liquidation of the affairs of the
Servicer or the Seller and the continuance of any such decree or order unstayed
and in effect for a period of 60 consecutive days or the commencement of an
involuntary case under the federal bankruptcy laws, as now or hereinafter in
effect, or another present or future federal or state bankruptcy, insolvency or
similar law and such case is not dismissed within 60 days;
(e) the commencement by the Servicer or the Seller of a voluntary
case under the federal bankruptcy laws, as now or hereafter in effect, or any
other present or future, federal or state, bankruptcy, insolvency or similar
law, or the consent by the Servicer or the Seller to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Servicer or the Seller or of any
substantial part of its property or the making by the Servicer or the Seller of
an assignment for the benefit of creditors or the failure by the Servicer or the
Seller generally to pay its debts as such debts become due or the taking of
corporate action by the Servicer or the Seller in furtherance of any of the
foregoing;
(f) any change of control of the Servicer in violation of the
covenant set forth in Section 6.02 hereof;
(g) the Servicer shall have failed in the reasonable opinion of the
Insurer to service the Contracts in accordance with the Servicing Standards and
such failure shall have continued unremedied for 30 days after written notice of
such failure shall have been delivered to the Servicer by the Insurer;
(h) any representation, warranty or statement of the Servicer or the
Seller made in this Agreement or any certificate, report or other writing
delivered pursuant hereto shall prove to be incorrect in any material respect as
of the time when the same shall have been made (excluding, however, any
representation or warranty as to which Section 2.03 or 3.07 shall be applicable
so long as the Servicer or the Seller shall be in compliance with Section 2.03
or 3.07, as the case may be), and the incorrectness of such representation,
warranty or statement has a material adverse effect on the Noteholders or the
Insurer and, within 30 days after written notice thereof shall have been given
to the Servicer or the Seller by the Indenture Trustee or the Issuer or by
Noteholders, acting together as a single class, evidencing in the aggregate not
less than 25% of the outstanding principal amount of the Notes, or so long as no
Insurer Default has occurred, by the Insurer, the circumstance or condition
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in respect of which such representation, warranty or statement was incorrect
shall not have been eliminated or otherwise cured;
then and in each and every case, so long as such Servicer Default shall not have
been remedied, (i) if no Insurer Default has occurred and is continuing, the
Insurer or (ii) if an Insurer Default has occurred and is continuing, the
Indenture Trustee acting at the direction of (a) if the Notes have not been paid
in full, the Noteholders evidencing not less than 25% of the outstanding amount
of the Notes, acting together as a single Class, by notice then given in writing
to the Servicer (and to the Insurer, the Indenture Trustee and the Issuer if
given by the Noteholders) may terminate all the rights and obligations of the
Servicer under this Agreement. Upon such termination, termination of the
Servicer as custodian, if the Servicer is acting as such, can be made pursuant
to Section 2.08.
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 Contracts or otherwise, shall, without further action, pass to
and be vested in the Indenture Trustee or such Successor Servicer as may be
appointed under Section 7.02 and, without limitation, the Indenture Trustee and
the Issuer are hereby authorized and empowered to execute and deliver on behalf
of the 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 Contracts and related documents, or
otherwise. The Servicer shall cooperate with the Indenture Trustee, the Insurer
and the Issuer in effecting the transfer of the responsibilities and rights of
the Servicer under this Agreement (whether due to termination, resignation or
otherwise), including the transfer to the Indenture Trustee or such Successor
Servicer, as applicable, for administration by it of all cash amounts that (i)
shall at the time be held by the Servicer for deposit in, or shall have been
deposited by the Servicer in, the Collection Account or (ii) shall thereafter be
received by it with respect to any Contract. The predecessor Servicer shall pay
all costs of the Successor Servicer associated with its transition to the role
of Successor Servicer (whether due to termination, resignation or otherwise).
SECTION 7.02. Trustee to Act; Appointment of Successor.
Upon the termination of the Servicer by the Insurer pursuant to
Section 7.01 or resignation of the Servicer pursuant to Section 6.04 or
otherwise, the Insurer may appoint a successor servicer ("Successor Servicer")
other than the Indenture Trustee. Until the Insurer has appointed a successor
servicer, the Indenture Trustee shall be the Successor Servicer for all purposes
of this Agreement. In the event that
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the Indenture Trustee is unwilling or unable to so act, it may, with the consent
of the insurer, which consent will not be unreasonably withheld, appoint, or
petition a court of competent jurisdiction for the appointment of, a successor
with a net worth of at least $50,000,000 and whose regular business includes the
servicing of automobile and light-duty truck retail installment sales contracts.
Upon the termination of the Servicer by the Indenture Trustee, the Noteholders
shall appoint a Successor Servicer, pursuant to Section 7.01, or upon the
resignation of the Servicer pursuant to Section 6.04 in the event that the
Insurer is not entitled to appoint a successor servicer by operation of Section
9.08, (i) if the Notes have not been paid in full, the Indenture Trustee shall
be the Successor Servicer and (ii) if the Notes have been paid in full, the
Depositor shall appoint the Successor Servicer. The Successor Servicer shall
succeed to all the responsibilities, duties and liabilities of the Servicer
under this Agreement, except that such Successor Servicer shall not be obligated
to purchase Contracts pursuant to Section 3.07. The Successor Servicer has the
right to terminate the services of any subservicer in respect of the contracts
any agreement between the predecessor servicer and any subservicer which is in
effect at the time such Successor Servicer assumes its responsibilities as
Successor Servicer and any termination fees assessed in connection therewith
shall be paid by the predecessor servicer. If the Indenture Trustee acts as
Successor Servicer, the Indenture Trustee shall be entitled to such compensation
(whether payable out of the Collection Account or otherwise) as the Servicer
would have been entitled to under this Agreement, and as well as reasonable
transition costs and expenses if no such notice of termination shall have been
given. Notwithstanding the foregoing, if the Notes have not been paid in full,
the Indenture Trustee may, if it shall be unwilling to act, or shall, if it
shall be legally unable to so act, appoint, or petition a court of competent
jurisdiction to appoint, any established financial institution acceptable to the
Insurer, having a net worth of not less than $50,000,000 and whose regular
business shall include the servicing of automobile and light duty truck
receivables, as the successor to the Servicer under this Agreement. Pending
appointment of any such Successor Servicer, the Indenture Trustee shall act in
such capacity as provided above. In connection with any appointment of a
Successor Servicer, the Indenture Trustee may make arrangements for the
compensation of such successor out of payments on Contracts as the Indenture
Trustee, the Insurer and such Successor Servicer shall agree; provided (i) that
such amount shall equal the product of a fixed percentage rate and the Principal
Balance, as of the commencement of each Collection Period, of each Contract and
(ii) that no such compensation shall be in excess of that previously permitted
the Servicer under this Agreement. The Indenture Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
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SECTION 7.03. Notification to Noteholders.
Upon any termination of, or appointment of a successor to, the
Servicer pursuant to this Article, the Owner Trustee and the Indenture Trustee
shall give prompt written notice thereof to each Noteholder of record at their
respective addresses appearing in the Note Register.
SECTION 7.04. Waiver of Past Defaults.
Upon the occurrence of a Servicer Default, unless an Insurer Default
shall have occurred and be continuing, the Insurer, and only the Insurer, may
waive any default by the Servicer in the performance of its obligations under
this Agreement or any Servicer Default. Upon the occurrence of a Servicer
Default, if an Insurer Default has occurred and is continuing, (i) the
Noteholders evidencing not less than 51% of the outstanding principal amount of
the Notes, acting together as a single Class on behalf of all Noteholders, shall
have the right to waive any default by the Servicer in the performance of its
obligations under this Agreement or any Servicer Default except a Servicer
Default in making any required deposits to or payment from the Trust Accounts in
accordance with this Agreement. No such waiver shall impair the Insurer's or the
Noteholders' rights with respect to subsequent defaults.
SECTION 7.05. Insurer Direction of Insolvency Proceedings.
(a) The Indenture Trustee, upon the actual knowledge of a
Responsible Officer of the Indenture Trustee, shall promptly notify the Insurer
of (i) the commencement of any of the events or proceedings by or against any
Obligor, the Servicer, the Seller, the Issuer or AutoNation Financial Services
under the United States Bankruptcy Code or any other applicable federal or state
bankruptcy, insolvency, receivership, rehabilitation or similar law
(individually, an "Insolvency Proceeding") described in the Section 7.01(d) or
7.01(e) hereof and (ii) the making of any claim in connection with any
Insolvency Proceeding seeking the avoidance as a preferential transfer (a
"Preference Claim") of any payment of principal of, or interest on, any Notes.
Any Preference Amounts paid by the Insurer shall be reimbursed to the Insurer as
provided in Section 4.03(a) and 4.04(b). Each Noteholder, by its purchase of
Notes, the Owner Trustee and the Indenture Trustee hereby agree that, so long as
no Insurer Default has occurred and is continuing, the Insurer may at any time
during the continuation of an Insolvency Proceeding direct all matters relating
to such Insolvency Proceeding, including, without limitation, (i) all matters
relating to any Preference Claim, (ii) the direction of any appeal of any order
relating to any Preference Claim and (iii) the posting of any surety or
performance bond pending any such appeal. The Insurer shall be subrogated to,
and each Noteholder and the Indenture Trustee hereby delegate and assign, to the
fullest extent permitted by law, the rights of the Indenture Trustee, the Owner
Trustee and each Noteholder in the conduct of any
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Insolvency Proceeding, including, without limitation, all rights of any party to
an adversary proceeding action with respect to any court order issued in
connection with any such Insolvency Proceeding.
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ARTICLE VIII
TERMINATION
SECTION 8.01. Optional Purchase of All Contracts; Satisfaction and
Discharge of The Indenture.
(a) On any Distribution Date as of which the Pool Balance is 10% or
less of the Original Pool Balance, the Servicer shall have the option to
purchase the remaining Contracts from the Trust (such purchase an "Optional
Purchase"). Notice of the exercise of such option shall be given by the Servicer
to the Issuer, the Indenture Trustee and the Insurer not later than the 10th day
prior to the specified Distribution Date and not earlier than the 15th day of
the month prior to the month of the specified Distribution Date. To exercise
such option, the Servicer shall pay to the Indenture Trustee for the benefit of
the Noteholders and the Insurer, by deposit in the Collection Account on the
Business Day immediately preceding the related Distribution Date, the greater of
(i) the sum of (x) the Pool Balance on the date of repurchase, plus (y) any
accrued and unpaid interest on the Contracts and (ii) the sum of (x) the
aggregate unpaid principal amount of the Securities, plus (y) any accrued and
unpaid interest thereon to such Distribution Date plus (z) all amounts due to
the Indenture Trustee under the Indenture and the other Basic Documents and the
Insurer hereunder and under the Insurance Agreement and the Servicer, the
Indenture Trustee and the Owner Trustee under the Basic Documents. Such purchase
shall be deemed to have occurred on the last day of the related Collection
Period.
Any Outstanding Notes will be redeemed concurrently with any
Optional Purchase described above.
(b) Notice of any termination of the Trust shall be given by the
Servicer to the Owner Trustee, the Insurer and the Indenture Trustee as soon as
practicable after the Servicer has received notice thereof. Such notice shall
conform to the notice described in Section 9.01(c) of the Owner Trust Agreement.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendment.
(a) This Agreement may be amended by the Issuer, the Seller, the
Servicer and the Indenture Trustee, collectively without the consent of any
Noteholders but with the consent of the Insurer (so long as the Insurer is the
Controlling Party), to cure any ambiguity, to correct or supplement any
provisions in this Agreement which are inconsistent with the provisions herein,
or to make any other provisions with respect to matters or questions arising
under this Agreement which are not inconsistent with the provisions of this
Agreement; provided that any such action shall not materially and adversely
affect the interests of any Noteholder or the Insurer; and provided, further,
that any such amendment shall be deemed not to materially and adversely affect
the interests of any Noteholder if the Person requesting the amendment obtains
(i) a letter from each Rating Agency to the effect that such amendment would not
result in a downgrading or withdrawal of the ratings then assigned to the
applicable Securities by such Rating Agency, without regard to the Insurance
Policy and (ii) an Opinion of Counsel to such effect.
(b) This Agreement may also be amended by the Issuer, the Seller,
the Servicer and the Indenture Trustee, with the consent of the Insurer and (i)
for so long as the Notes are outstanding, the Noteholders evidencing in the
aggregate not less than 51% of the principal amount of the Notes then
outstanding, acting together as a single Class, 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;
provided that no such amendment may (i) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on the
Contracts or distributions that shall be required to be made for the benefit of
the Noteholders, (ii) reduce the aforesaid percentage of the Noteholders which
are required to consent to any such amendment, without the consent of the
Holders of all the outstanding Notes or (iii) result in a taxable event to any
of the Noteholders for federal income tax purposes or result in the Owner Trust
being taxable as a corporation for federal income tax purposes.
(c) Promptly after the execution of any such amendment or consent,
the Owner Trustee and the Indenture Trustee shall furnish the written
notification of the substance of such amendment or consent to each Noteholder.
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(d) It shall not be necessary for the consent of Noteholders
pursuant to Section 9.01(b) to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization by Noteholders of the execution thereof shall be subject to
such reasonable requirements as the Owner Trustee and the Indenture Trustee may
prescribe. Any consent by a Noteholder to an amendment of the Agreement shall be
conclusive and binding on such Noteholder and upon all future Noteholders, of
such Note and of any Note issued upon the transfer thereof or in exchange
thereof or in lieu thereof whether or not notation of such consent is made upon
such Security.
(e) The Indenture Trustee may, but shall not be obligated to, enter
into any such amendment which affects the Indenture Trustee's own rights, duties
or immunities under this Agreement or otherwise and any such amendment shall be
unenforceable in its entirety absent the execution of such amendment by the
Indenture Trustee. Before consenting to any amendment, the Indenture Trustee
shall, if it requests, be entitled to receive an opinion of counsel (not at its
own expense) stating that such amendment is authorized and permitted under the
terms of this Agreement and the Indenture.
SECTION 9.02. Protection of Title to Trust.
(a) The Servicer shall execute and file such financing statements
and cause to be executed and filed such continuation statements, all in such
manner and in such places as may be required by law fully to preserve, maintain
and protect the interest of the Issuer, the Noteholders, the Indenture Trustee
and the Insurer in the Contracts and in the proceeds thereof. The Servicer shall
deliver (or cause to be delivered) to 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 Seller nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed in accordance with
Section 9.02(a) seriously misleading within the meaning of Section 9-402(7) of
the UCC, unless it shall have given the Insurer, and the Indenture Trustee at
least 30 days' prior written notice thereof.
(c) The Seller and the Servicer shall give the Insurer, the Owner
Trustee and the Indenture Trustee at least 30 days' prior written notice of any
relocation of the principal executive office of the Seller and the Servicer if,
as a result of such relocation, the applicable provisions of the UCC would
require the filing of any
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amendment of any previously filed financing or continuation statement or of any
new financing statement and shall promptly file appropriate amendments or new
financing statements. The Servicer shall at all times maintain each office from
which it shall service Contracts, and its principal executive office, within the
United States.
(d) The Servicer shall maintain or cause to be maintained accounts
and records as to each Contract accurately and in sufficient detail to permit
(i) the reader thereof to know at any time the status of such Contract,
including payments and recoveries made and payments owing (and the nature of
each) and (ii) reconciliation between payments or recoveries on (or with respect
to) each Contract and the amounts from time to time deposited in or credited to
the Collection Account in respect of such Contract.
(e) The Servicer shall maintain or cause to be maintained its or its
agent's computer systems so that, from and after the time of sale under this
Agreement of the Contracts to the Issuer, the Servicer's master computer records
(including any backup archives) that shall refer to a Contract indicate clearly
the interest of the Issuer and the Indenture Trustee in such Contract and that
such Contract is owned by the Issuer and has been pledged to the Indenture
Trustee.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in automotive
retail installment sales contracts to any prospective purchaser, lender or other
transferee, the Servicer shall give or cause to be given to such prospective
purchaser, lender or other transferee computer tapes, records or print-outs
(including any restored from back-up archives) that, if they shall refer in any
manner whatsoever to any Contract, shall indicate clearly that such Contract has
been sold and is owned by the Issuer and has been pledged to the Indenture
Trustee.
(g) The Servicer shall permit the Owner Trustee, the Indenture
Trustee and the Insurer and their respective agents, at any time during normal
business hours, to inspect, audit and make copies of and abstracts from the
Servicer's records regarding any Contract.
(h) Upon request, the Servicer shall furnish to the Owner Trustee,
the Indenture Trustee and the Insurer, within five Business Days, a list of all
Contracts then held as part of the Trust Property.
(i) The Servicer shall deliver to the Indenture Trustee and the
Insurer:
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(i) 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, all financing statements and continuation
statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Issuer and the Indenture Trustee
in the Contracts, and reciting the details of such filings or referring to
prior Opinions of Counsel in which such details are given, or (B) stating
that, in the opinion of such counsel, no such action shall be necessary to
preserve and protect such interest; and
(ii) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cut-Off Date an Opinion of Counsel, dated as of a date during
such 90-day period, either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
interest of the Issuer and the Indenture Trustee in the Contracts, and
reciting the details of such filings or referring to prior Opinions of
Counsel in which such details are given or (B) stating that, in the
opinion of such counsel, no such action shall be necessary to preserve and
protect such interest.
(j) The Seller shall, to the extent required by applicable law,
cause the Notes to be registered with the Securities and Exchange Commission
pursuant to Section 12(b) or Section 12(g) of the Securities Exchange Act of
1934, as amended, within the time periods specified in such sections.
(k) For the purpose of facilitating the execution of this Agreement
and for other purposes, this Agreement may be executed simultaneously in any
number of counterparts, each of which counterpart shall be deemed to be an
original, and all of which counterparts shall constitute but one and the same
instrument.
SECTION 9.03. Governing Law.
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York.
SECTION 9.04. Notices.
All demands, notices and communications under this Agreement shall
be in writing, personally delivered or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt in the case
of
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(i) the Seller, at _________________________, Attention:
_________________________, facsimile _________________________;
(ii) the Servicer, at _________________________, Attention:
________________________, facsimile _________________________, with a copy
to __________________________ as Custodian;
(iii) the Insurer, at _________________________, Attention:
_________________________, facsimile _________________________;
(iv) the Issuer or the Owner Trustee, at the Owner Trustee Corporate
Trust Office (with, in the case of the Issuer, a copy to the Seller);
(v) the Indenture Trustee, at the Corporate Trust Office;
(vi) Moody's, to ▇▇▇▇▇'▇ Investors Service, Inc., ABS Monitoring
Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇;
(vii) Standard & Poor's, to Standard & Poor's Ratings Services, ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Asset Backed
Surveillance Department; and
(viii) the Custodian, to _________________________, Attention:
_________________________, facsimile _________________________;
or, as to each of the foregoing, at such other address as shall be designated by
written notice to the other parties. Any notice required or permitted to be
mailed to a Noteholder shall be given by first class mail, postage prepaid, at
the address of such Noteholder as shown in the Note Register. Any notice so
mailed within the time prescribed herein shall be conclusively presumed to have
been duly given, whether or not such Noteholder shall receive such notice.
SECTION 9.05. Severability of Provisions.
If the covenants, agreements, provisions or terms of this Agreement
shall be for any reason whatsoever held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and shall in no way
affect the validity or enforceability of the other provisions of this Agreement
or of the Notes or the rights of the Noteholders thereof.
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SECTION 9.06. Assignment.
Notwithstanding anything to the contrary contained herein, except as
provided in Sections 5.02 and 6.02, neither the Seller nor the Servicer may
transfer or assign all, or a portion of, its rights, obligations and duties
under this Agreement unless such transfer or assignment (i) (A) will not result
in a reduction or withdrawal by any Rating Agency of the rating then assigned by
it to the Notes, without regard to the Insurance Policy and (B) the Issuer, the
Indenture Trustee, acting at the direction of 51% of the Noteholders, and the
Insurer have consented to such transfer or assignment, or (ii) the Insurer, the
Issuer, the Indenture Trustee and the Noteholders of each Class evidencing not
less than 51% of the outstanding amount of Notes of such Class consent thereto.
Any transfer or assignment with respect to the Servicer of all of its rights,
obligations and duties will not become effective until a Successor Servicer has
assumed the Servicer's rights, duties and obligations under this Agreement. In
the event of a transfer or assignment pursuant to clause (ii) above, each Rating
Agency shall be provided with notice of such transfer or assignment.
SECTION 9.07. Third Party Beneficiaries.
Except as otherwise specifically provided herein, the parties to
this Agreement hereby manifest their intent that no third party other than the
Insurer shall be deemed a third party beneficiary of this Agreement, and
specifically that the Obligors are not third party beneficiaries of this
Agreement. The parties hereto intend for the Insurer to be, and the Insurer
hereby is an express third party beneficiary entitled to enforce the provisions
hereof as if it were a party hereto.
SECTION 9.08. Certain Matters Relating to the Insurer.
So long as an Insurer Default shall not have occurred and be
continuing, the Insurer shall have the right to exercise all rights, including
voting rights, which the Noteholders are entitled to exercise pursuant to this
Agreement, without any consent of such Noteholders; provided that without the
consent of each Noteholder affected thereby, the Insurer shall not exercise such
rights to amend this Agreement in any manner that would (i) reduce the amount
of, or delay the timing of, collections of payments on the Contracts or
distributions which are required to be made on any Note, (ii) adversely affect
in any material respect the interests of any Noteholders or (iii) alter the
rights of any such Noteholder to consent to such amendment.
Notwithstanding any provision in this Agreement to the contrary, for
so long as an Insurer Default shall have occurred and be continuing, the Insurer
shall
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not have the right to take any action under this Agreement or to control or
direct the actions of the Trust, the Seller, the Indenture Trustee pursuant to
the terms of this Agreement, nor shall the consent of the Insurer be required
with respect to any action (or waiver of a right to take action) to be taken by
the Trust, the Seller, the Indenture Trustee or the Noteholders; provided that
the consent of the Insurer shall be required at all times during which there is
no Insurer Default and the Notes are still Outstanding with respect to any
amendment of this Agreement.
SECTION 9.09. Headings.
The headings of the various Articles and Sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
SECTION 9.10. Assignment by Issuer.
The Seller 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 and the
Insurer of all right, title and interest of the Issuer in, to and under the
Contracts and/or the assignment of any or all of the Issuer's rights and
obligations hereunder to the Indenture Trustee.
SECTION 9.11. Limitation of Liability of Owner Trustee.
Notwithstanding anything contained herein to the contrary, this
instrument has been executed by _____________ not in its individual capacity but
in its capacity as Owner Trustee of the Issuer and by _____________ not in its
individual capacity but in its capacity as Indenture Trustee, and in no event
shall _____________ in its individual capacity, _____________ in its individual
capacity or any beneficial owner of the Issuer have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder, 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 Sale and
Servicing Agreement to be duly executed by their respective officers as of the
day and year first above written.
ANRC AUTO OWNER TRUST ______________,
as Issuer
By: ____________________________, not in its
individual capacity but solely as Owner Trustee
By: _______________________________________________
Name:
Title:
AUTONATION RECEIVABLES
CORPORATION, as Seller
By: _______________________________________________
Name:
Title:
AUTONATION FINANCIAL SERVICES CORP.,
as Servicer and as Custodian
By: _______________________________________________
Name:
Title:
_____________________, not in its individual capacity
but solely as Indenture Trustee
By: _______________________________________________
Name:
Title:
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EXHIBIT A
List of Contracts
(Delivered to the Indenture Trustee at Closing)
A-1
EXHIBIT B
Location and Account Numbers of Trust Accounts
B-1