Exhibit 10.1
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HONDA AUTO RECEIVABLES 1999-1 OWNER TRUST,
as Issuer,
AMERICAN HONDA RECEIVABLES CORP.,
as Transferor,
and
AMERICAN HONDA FINANCE CORPORATION,
as Servicer
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SALE AND SERVICING AGREEMENT
Dated as of January 1, 1999
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TABLE OF CONTENTS
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ARTICLE ONE
DEFINITIONS
Section 1.01. General Definitions......................................................................... 1
Section 1.02. Other Definitional Provisions............................................................... 18
Section 1.03. Interpretive Provisions..................................................................... 18
ARTICLE TWO
CONVEYANCE OF RECEIVABLES; CUSTODY OF RECEIVABLES FILES
Section 2.01. Conveyance of Receivables................................................................... 19
Section 2.02. Custody of Receivable Files................................................................. 20
Section 2.03. Representations and Warranties of Transferor as to the Receivables.......................... 20
Section 2.04. Repurchase of Receivables Upon Breach....................................................... 23
Section 2.05. Duties of Servicer as Custodian............................................................. 24
Section 2.06. Instructions; Authority to Act.............................................................. 25
Section 2.07. Indemnification by Custodian................................................................ 25
Section 2.08. Effective Period and Termination............................................................ 25
ARTICLE THREE
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 3.01. Duties of Servicer.......................................................................... 27
Section 3.02. Collection of Receivable Payments........................................................... 27
Section 3.03. Rebates on Full Prepayments................................................................. 28
Section 3.04. Realization Upon Receivables................................................................ 28
Section 3.05. Maintenance of Physical Damage Insurance Policies........................................... 29
Section 3.06. Maintenance of Security Interests in Financed Vehicles...................................... 29
Section 3.07. Covenants of Servicer....................................................................... 29
Section 3.08. Purchase of Receivables Upon Breach......................................................... 29
Section 3.09. Total Servicing Fee; Payment of Certain Expenses by Servicer................................ 30
Section 3.10. Servicer's Certificate...................................................................... 30
Section 3.11. Annual Statement as to Compliance; Notice of Default........................................ 30
Section 3.12. Annual Accountants' Report.................................................................. 31
Section 3.13. Access to Certain Documentation and Information Regarding Receivables....................... 31
Section 3.14. Amendments to Schedule of Receivables....................................................... 31
Section 3.15. Reports to Securityholders and Rating Agencies.............................................. 31
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ARTICLE FOUR
DISTRIBUTIONS; RESERVE FUND; STATEMENTS TO SECURITYHOLDERS
Section 4.01. Establishment of Accounts................................................................... 33
Section 4.02. Collections................................................................................. 34
Section 4.03. Application of Collections.................................................................. 35
Section 4.04. Advances.................................................................................... 36
Section 4.05. Additional Deposits......................................................................... 37
Section 4.06. Distributions............................................................................... 37
Section 4.07. Reserve Fund................................................................................ 39
Section 4.08. Yield Supplement Account.................................................................... 39
Section 4.09. Net Deposits................................................................................ 39
Section 4.10. Statements to Securityholders............................................................... 39
ARTICLE FIVE
THE TRANSFEROR
Section 5.01. Representations of Transferor............................................................... 42
Section 5.02. Liability of Transferor; Indemnities........................................................ 43
Section 5.03. Merger, Consolidation or Assumption of the Obligations of Transferor; Certain Limitations... 44
Section 5.04. Limitation on Liability of Transferor and Others............................................ 46
Section 5.05. Transferor May Own Notes.................................................................... 46
ARTICLE SIX
THE SERVICER
Section 6.01. Representations of Servicer................................................................. 47
Section 6.02. Indemnities of Servicer..................................................................... 48
Section 6.03. Merger, Consolidation or Assumption of the Obligations of Servicer.......................... 48
Section 6.04. Limitation on Liability of Servicer and Others.............................................. 49
Section 6.05. AHFC Not to Resign as Servicer.............................................................. 49
ARTICLE SEVEN
SERVICER DEFAULTS
Section 7.01. Servicer Defaults........................................................................... 50
Section 7.02. Appointment of Successor Servicer........................................................... 51
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Section 7.03. Notification of Servicer Termination........................................................ 51
Section 7.04. Waiver of Past Defaults..................................................................... 52
Section 7.05. Repayment of Advances....................................................................... 52
ARTICLE EIGHT
TERMINATION
Section 8.01. Optional Purchase of All Receivables........................................................ 53
ARTICLE NINE
MISCELLANEOUS
Section 9.01. Amendment................................................................................... 54
Section 9.02. Protection of Title to Trust................................................................ 55
Section 9.03. Notices..................................................................................... 56
Section 9.04. Assignment.................................................................................. 57
Section 9.05. Limitations on Rights of Others............................................................. 57
Section 9.06. Severability. .............................................................................. 57
Section 9.07. Separate Counterparts. ..................................................................... 57
Section 9.08. Headings. .................................................................................. 58
Section 9.09. Governing Law. ............................................................................. 58
Section 9.10. Nonpetition Covenants....................................................................... 58
Section 9.11. Limitation of Liability of Owner Trustee and Indenture Trustee.............................. 58
SCHEDULES
Schedule A - Schedule of Receivables...................................................................... SA-1
Schedule B - Location of Receivable Files................................................................. SB-1
EXHIBITS
Exhibit A - Form of Distribution Statement to Securityholders............................................. A-1
Exhibit B - Form of Servicer's Certificate................................................................ B-1
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This Sale and Servicing Agreement, dated as of January 1, 1999, is among
American Honda Receivables Corp., a California corporation ("AHRC" or, in its
capacity as Transferor, the "Transferor"), American Honda Finance Corporation, a
California corporation ("AHFC" or, in its capacity as Servicer, the "Servicer"),
and Honda Auto Receivables 1999-1 Owner Trust, a Delaware business trust, as
issuer (the "Issuer").
WHEREAS the Issuer desires to purchase from the Transferor a portfolio of
receivables arising in connection with retail installment sale or conditional
sale contracts (the "Receivables") generated by AHFC in the ordinary course of
its business, which Receivables have been sold by AHFC to AHRC;
WHEREAS, AHRC is willing to sell the Receivables to the Issuer pursuant to
the terms hereof; and
WHEREAS, AHFC is willing to service the Receivables pursuant to the terms
hereof;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. GENERAL DEFINITIONS. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"ACCOUNTS" means the Collection Account, the Note Distribution Account, the
Payahead Account, the Yield Supplement Account and the Reserve Fund.
"ACCOUNT PROPERTY" means, with respect to each Account, such Account,
together with all cash, securities, financial assets and investments and other
property from time to time deposited or credited to such Account and all
proceeds thereof, including, with respect to the (i) Reserve Fund, the Reserve
Fund Initial Deposit and (ii) Yield Supplement Account, the Yield Supplement
Account Deposit.
"ACTUAL PAYMENT" means, with respect to a Receivable and a Collection
Period, all payments received by the Servicer from or for the account of the
related Obligor on such Receivable during such Collection Period, net of any
Supplemental Servicing Fees attributable to such Receivable. Actual Payments do
not include Applied Payments Ahead.
"ACTUARIAL RECEIVABLE" means any Receivable which provides for the
allocation of payments according to the "actuarial" method.
"ADMINISTRATIVE PURCHASE PAYMENT" means, with respect to a Distribution
Date and to an Administrative Receivable purchased by the Transferor or the
Servicer as of the end of the related Collection Period, which Receivable is (i)
a Precomputed Receivable, (a) the sum of (1) all Scheduled Payments on such
Receivable due after the last day of such Collection Period,
(2) an amount equal to any reimbursement of Outstanding Advances made pursuant
to the first sentence of Section 4.04(c) with respect to such Receivable (plus
all Outstanding Advances made in respect of such Receivable, in the case of an
Administrative Purchase Payment made by the Transferor) and (3) all past due
Scheduled Payments for which an Advance has not been made, minus (b) the sum of
(1) all Payments Ahead in respect of such Administrative Receivable held by the
Servicer or on deposit in the Payahead Account, (2) any Rebate and (3) any
proceeds of the liquidation of such Receivable previously received (to the
extent applied to reduce the Principal Balance of such Receivable) or (ii) a
Simple Interest Receivable, the sum of (a) the unpaid principal balance owed by
the related Obligor in respect of such Receivable and (b) interest on such
unpaid principal balance at a rate equal to the Required Rate to the last day of
such Collection Period.
"ADMINISTRATIVE RECEIVABLE" means a Receivable which the Transferor or the
Servicer is required to purchase pursuant to Section 2.04 or 3.08 or which the
Transferor or the Servicer, or any successor to the Servicer, has elected to
purchase pursuant to Section 8.01
"ADVANCE" means a Precomputed Advance or a Simple Interest Advance.
"AFFILIATE" means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purpose of this definition, "control", when used with respect to any
specified Person, means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"AGGREGATE NET LOSSES" means, with respect to a Collection Period, an
amount equal to the aggregate Principal Balance of all Receivables that became
Defaulted Receivables during such Collection Period minus all Net Liquidation
Proceeds collected during such Collection Period with respect to all Defaulted
Receivables.
"AGREEMENT" means this Sale and Servicing Agreement, and all amendments
hereof and supplements hereto.
"AHFC" means American Honda Finance Corporation, and its successors.
"AHRC" means American Honda Receivables Corp., and its successors.
"AMOUNT FINANCED" in respect of a Receivable means the aggregate amount
advanced under such Receivable toward the purchase price of the related Financed
Vehicle and any related costs, including but not limited to accessories,
insurance premiums, service and warranty contracts and other items customarily
financed as part of motor vehicle retail installment sale contracts.
"ANNUAL PERCENTAGE RATE" or "APR" of a Receivable means the annual rate of
finance charges stated in such Receivable.
"APPLIED PAYMENT AHEAD" means, with respect to a Precomputed Receivable and
a Collection Period as to which (i) the Actual Payment is less than the
Scheduled Payment and
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(ii) a Deferred Prepayment is on deposit in the Payahead Account or otherwise
retained by the Servicer pursuant to Section 4.02(c), an amount equal to the
lesser of (a) such Deferred Prepayment and (b) the amount by which the Scheduled
Payment exceeds the Actual Payment.
"AVAILABLE AMOUNT" means, with respect to any Distribution Date, the sum of
Available Interest and Available Principal.
"AVAILABLE INTEREST" means, with respect to any Distribution Date, the
total of the following amounts allocable to interest received by the Servicer on
or in respect of the Receivables during the related Collection Period (computed,
in the case of Precomputed Receivables, by the actuarial method and, in the case
of Simple Interest Receivables, by the simple interest method): (i) the sum of
the interest component of all (a) collections on or in respect of all
Receivables other than Defaulted Receivables (including the interest portion of
Applied Payments Ahead, but excluding Payments Ahead to be applied in one or
more future Collections Periods), (b) Net Liquidation Proceeds, (c) Advances
made by the Servicer, (d) Warranty Purchase Payments, (e) Administrative
Purchase Payments and (f) the Yield Supplement Withdrawal Amount, if any, for
the related Distribution Date, less (ii) the sum of all (a) amounts received on
or in respect of a particular Receivable (other than a Defaulted Receivable) to
the extent of the aggregate Outstanding Interest Advances in respect of such
Receivable and (b) Net Liquidation Proceeds with respect to a particular
Receivable to the extent of the aggregate Outstanding Interest Advances in
respect of such Receivable.
"AVAILABLE PRINCIPAL" means, with respect to any Distribution Date, the
total of the following amounts allocable to principal received by the Servicer
on or in respect of the Receivables during the related Collection Period
(computed, in the case of Precomputed Receivables, by the actuarial method and,
in the case of Simple Interest Receivables, by the simple interest method): (i)
the sum of the principal component of all (a) collections on or in respect of
all Receivables other than Defaulted Receivables (including the principal
portion of Applied Payments Ahead but excluding Payments Ahead), (b) Net
Liquidation Proceeds, (c) Advances made by the Servicer, (d) Warranty Purchase
Payments and (e) Administrative Purchase Payments, less (ii) an amount equal to
all (a) amounts received on or in respect of a particular Receivable (other than
a Defaulted Receivable) to the extent of the aggregate Outstanding Principal
Advances in respect of such Receivable and (b) Net Liquidation Proceeds with
respect to a particular Receivable to the extent of the aggregate Outstanding
Principal Advances in respect of such Receivable.
"BASIC DOCUMENTS" means this Agreement, the Administration Agreement, the
Indenture, the Note Depository Agreement, the Receivables Purchase Agreement,
the Amended and Restated Trust Agreement and the Control Agreement and any other
documents or certificates delivered in connection therewith as the same may be
amended, supplemented or otherwise modified and in effect.
"BASIC SERVICING FEE" means the fee payable pursuant to Section 3.09 to the
Servicer on each Distribution Date for services rendered during the related
Collection Period, which shall be equal to one-twelfth of the Servicing Fee Rate
multiplied by the Pool Balance as of the first day of the related Collection
Period or, with respect to the first Distribution Date, the Original Pool
Balance.
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"CERTIFICATE BALANCE" means, on any Distribution Date, the Original
Certificate Balance reduced by all distributions of principal previously made in
respect of the Certificates.
"CERTIFICATE DISTRIBUTABLE AMOUNT" means, with respect to any Distribution
Date, the sum of the Certificate Interest Distributable Amount and the
Certificate Principal Distributable Amount for such Distribution Date.
"CERTIFICATE DISTRIBUTION ACCOUNT" has the meaning specified in the Trust
Agreement.
"CERTIFICATE INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, interest accrued for the related Accrual Period at the
Certificate Rate on the Certificate Balance on the immediately preceding
Distribution Date after giving effect to all payments of principal to
Certificateholders on or prior to such Distribution Date (or, in the case of the
first Distribution Date, on the Original Certificate Balance).
"CERTIFICATE POOL FACTOR" means, with respect to the Certificates on any
Distribution Date, a seven-digit decimal figure equal to the outstanding
principal balance of the Certificates on such Distribution Date (after giving
effect to any reductions thereof to be made on such Distribution Date) divided
by the Original Certificate Balance.
"CERTIFICATE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, (i) the component of the Available Amount attributable to the
Principal Distributable Amount less (ii) the sum of (a) the Note Principal
Distributable Amount, (b) any amount that has been deposited into the Reserve
Fund as described in clause (vi) of Section 4.06(c) and (c) the Certificate
Interest Distributable Amount.
"CERTIFICATE RATE" means __% per annum (computed on the basis of a 360 day
year consisting of twelve 30-day months).
"CERTIFICATEHOLDERS" has the meaning specified in the Trust Agreement.
"CHARGE-OFF RATE" with respect to a Collection Period will equal the
Aggregate Net Losses with respect to the Receivables expressed, on an annualized
basis, as a percentage of the average of the (i) Pool Balance on the last day of
the immediately preceding Collection Period and (ii) Pool Balance on the last
day of such current Collection Period.
"CLASS" means all Securities whose form is identical except for variation
in denomination, principal amount or owner.
"CLASS A-1 FINAL DISTRIBUTION DATE" means the __________ ____ Distribution
Date.
"CLASS A-1 NOTEHOLDER" means a Person in whose name a Class A-1 Note is
registered in the Note Register.
"CLASS A-2 FINAL DISTRIBUTION DATE" means the __________ ____ Distribution
Date.
"CLASS A-2 NOTEHOLDER" means a Person in whose name a Class A-2 Note is
registered in the Note Register.
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"CLASS A-3 FINAL DISTRIBUTION DATE" means the __________ ____ Distribution
Date.
"CLASS A-3 NOTEHOLDER" means a Person in whose name a Class A-3 Note is
registered in the Note Register.
"CLASS A-4 FINAL DISTRIBUTION DATE" means the __________ ____ Distribution
Date.
"CLASS A-4 NOTEHOLDER" means the Person in whose name a Class A-4 Note is
registered in the Note Register.
"COLLECTION ACCOUNT" means the account designated as such, and established
and maintained pursuant to Section 4.01.
"COLLECTION PERIOD" means each calendar month during the term of this
Agreement (or, in the case of the first Collection Period, the period of time
since the Cutoff Date through the last day of the calendar month immediately
preceding the month in which the first Distribution Date occurs).
"COMMISSION" means the Securities and Exchange Commission, and its
successors.
"CONTROL" shall have the meaning specified in Section 8-106 of the UCC.
"CORPORATE TRUST OFFICE" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Agreement is
located at Four ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Structured Finance Group; or at such other address as the Indenture Trustee may
designate from time to time by notice to the Noteholders and the Transferor, or
the principal corporate trust office of any successor Indenture Trustee (of
which address such successor Indenture Trustee will notify the Noteholders and
the Transferor).
"CURRENT RECEIVABLE" means each Receivable that is not a Defaulted
Receivable or a Liquidated Receivable.
"CUTOFF DATE" means ____________, 1999.
"CUTOFF DATE POOL BALANCE" means $________________, the aggregate unpaid
principal balance of the Receivables as of the Cutoff Date.
"DEALER" means the dealer of motor vehicles who sold a Financed Vehicle and
who originated and assigned the Receivable relating to such Financed Vehicle to
AHFC under an existing agreement between such dealer and AHFC.
"DEALER RECOURSE" means, with respect to a Receivable, all recourse rights
against the Dealer which originated the Receivable, and any successor to such
Dealer.
"DEFAULTED RECEIVABLE" means a Receivable (other than an Administrative
Receivable or a Warranty Receivable) as to which (i) all or any part of a
Scheduled Payment is 120 or more days past due and the Servicer has not
repossessed the related Financed Vehicle or (ii) the
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Servicer has, in accordance with its customary servicing procedures, determined
that eventual payment in full is unlikely and either repossessed and liquidated
the related Financed Vehicle or repossessed and held the related Financed
Vehicle in its repossession inventory for 90 days, whichever occurs first.
"DEFERRED PREPAYMENT" means, with respect to a Receivable and a Collection
Period, the aggregate amount, if any, of Payments Ahead remitted to the Servicer
in respect of such Receivable during one or more prior Collection Periods and
currently held by the Servicer or in the Payahead Account.
"DELINQUENCY PERCENTAGE" means, with respect to a Collection Period, the
percentage equivalent of a fraction, the numerator of which is the number of (i)
outstanding Receivables 61 days or more delinquent (after taking into account
permitted extensions) as of the last day of such Collection Period, determined
in accordance with the Servicer's normal practices, plus (ii) all Receivables
the related Financed Vehicles of which have been repossessed but have not been
liquidated (to the extent the related Receivable is not otherwise reflected in
clause (i) above or is not a Defaulted Receivable), and the denominator of which
is the aggregate number of Current Receivables on the last day of such
Collection Period.
"DEPOSIT DATE" means, with respect to any Collection Period and
Distribution Date, the Business Day immediately preceding such Distribution
Date.
"DEPOSITOR" means the Transferor in its capacity as Depositor under the
Trust Agreement.
"DETERMINATION DATE" means, with respect to any Distribution Date, the
tenth calendar day of the month in which such Distribution Date occurs or, if
such day is not a Business Day, the immediately succeeding Business Day.
"DISCOUNT RECEIVABLE" means any Receivable that has an APR which is less
than the Required Rate.
"DISTRIBUTION DATE" means, with respect to a Collection Period, the
fifteenth calendar day of the next succeeding calendar month or, if such day is
not a Business Day, the next succeeding Business Day, commencing _________,
1999.
"ELIGIBLE ACCOUNT" means either (A) a segregated deposit account over which
the applicable Trustee has sole signature authority, maintained with an Eligible
Institution meeting the requirements of clause (i) thereof or (B) a segregated
trust account maintained with an Eligible Institution meeting the requirements
of clause (ii) thereof, in each case bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the
Securityholders, the Noteholders or the Certificateholders, as the case may be.
"ELIGIBLE INSTITUTION" means a depository institution or trust company, (i)
the commercial paper or other short-term unsecured debt obligations of which
have the Required Deposit Rating or (ii) having corporate trust powers and
organized under the laws of the United States, any state thereof, the District
of Columbia or the Commonwealth of Puerto Rico which has a long-term deposit
rating from (A) Moody's of at least Baa3 or (B) Standard and Poor's of at least
AA- (or such lower rating as either Rating Agency shall approve in writing).
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"ENTITLEMENT HOLDER" shall have the meaning specified in Section 8-102 of
the UCC.
"ENTITLEMENT ORDER" shall have the meaning specified in Section 8-102 of
the UCC.
"EXCESS PAYMENT" means, with respect to a Receivable and a Collection
Period, the amount, if any, by which the Actual Payment exceeds the sum of (i)
the Scheduled Payment and (ii) any Overdue Payment.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"FHLMC" means the Federal Home Loan Mortgage Corporation, and its
successors.
"FNMA" means the Federal National Mortgage Association, and its successors.
"FINAL SCHEDULED DISTRIBUTION DATE" means, with respect to any Class of
Notes, the Final Scheduled Distribution Date for such Class of Notes.
"FINAL SCHEDULED MATURITY DATE" means __________ ____.
"FINANCED VEHICLE" means, with respect to any retail installment sale or
conditional sale contract, the related new or used Honda or Acura motor vehicle,
together with all accessions thereto, securing the related Obligor's
indebtedness under such retail installment sale or conditional sale contract.
"FINANCIAL ASSET" shall have the meaning specified in Section 8-102(a)(9)
of the UCC.
"FITCH" means Fitch Investors Service, Inc., or its successors.
"INDENTURE" means the indenture, dated as of ______ __, 1999 between the
Issuer and the Indenture Trustee.
"INDENTURE TRUSTEE" means the Person acting as Indenture Trustee under the
Indenture, its successors in interest and any successor trustee under the
Indenture.
"INDEPENDENT DIRECTOR" means a director of the Transferor who is not (i) a
director, officer or employee of any Affiliate of the Transferor, (ii) a natural
person related to any director or officer of any Affiliate of the Transferor,
(iii) a holder (directly or indirectly) of more than 10% of any voting
securities of any Affiliate of the Transferor or (iv) a natural person related
to a holder (directly or indirectly) of more than 10% of any voting securities
of any Affiliate of the Transferor.
"INSOLVENCY EVENT" means, with respect to a specified Person, (i) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any
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substantial part of its property, or ordering the winding-up or liquidation of
such Person's affairs, and such decree or order shall remain unstayed and in
effect for a period of 90 consecutive days; or (ii) the commencement by such
Person of a voluntary case under any applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or the consent by
such Person to the entry of an order for relief in an involuntary case under any
such law, or the consent by such Person to the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part of its property,
or the making by such Person of any general assignment for the benefit of
creditors, or the failure by such Person generally to pay its debts as such
debts become due, or the taking of action by such Person in furtherance of any
of the foregoing.
"INSURANCE POLICY" means, with respect to a Receivable, an insurance policy
covering physical damage, credit life, credit disability, theft, mechanical
breakdown or any similar event relating to the related Financed Vehicle or
Obligor.
"LETTER OF CREDIT BANK" means any Person who has provided a Servicer Letter
of Credit pursuant to Section 4.02(b).
"LIEN" means any security interest, lien, charge, pledge, equity or
encumbrance of any kind other than tax liens, mechanics' liens and any liens
that attach to a Receivable or any property, as the context may require, by
operation of law.
"LIQUIDATED RECEIVABLE" means a Receivable that (i) has been the subject of
a Prepayment in full or (ii) has been paid in full or the final amounts in
respect of such payment have been paid with respect to a Defaulted Receivable,
regardless of whether all or any part of such payment has been made by the
Obligor under such Receivable, the Transferor pursuant to this Agreement, AHFC
pursuant to the Receivables Purchase Agreement, the Servicer pursuant hereto, an
insurer pursuant to an Insurance Policy or otherwise.
"LIQUIDATION EXPENSES" means, with respect to a Defaulted Receivable, the
amount charged by the Servicer, in accordance with its customary servicing
procedures, to or for its account for repossessing, refurbishing and disposing
of the related Financed Vehicle and other out-of-pocket costs related to such
liquidation.
"LIQUIDATION PROCEEDS" means, with respect to a Defaulted Receivable, all
amounts realized with respect to such Receivable from whatever sources
(including, without limitation, proceeds of any Insurance Policy), net of
amounts that are required by law or such Receivable to be refunded to the
related Obligor.
"MONTHLY PAYMENT" means, with respect to any Receivable, the amount of each
fixed monthly payment payable to the obligee under such Receivable in accordance
with the terms thereof, net of any portion of such monthly payment that
represents late payment charges, extension fees or collections allocable to
payments to be made by Obligors for payment of insurance premiums, extended
service contracts or similar items.
"MOODY'S" means ▇▇▇▇▇'▇ Investors Service, Inc., or its successor.
"MOTOR VEHICLE RECEIVABLES" shall have the meaning specified in Section
5.03(b)(ii)(A).
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"NET LIQUIDATION PROCEEDS" means, with respect to a Defaulted Receivable,
Liquidation Proceeds less Liquidation Expenses.
"NONRECOVERABLE ADVANCE" shall have the meaning specified in Section
4.04(c).
"NOTE AMOUNT" means, with respect to any Distribution Date, the aggregate
outstanding principal amount of the Notes after giving effect to payments of
principal made on the Notes on such Distribution Date.
"NOTE DISTRIBUTABLE AMOUNT" means, with respect to any Distribution Date,
the sum of the Note Interest Distributable Amount and the Note Principal
Distributable Amount for such Distribution Date.
"NOTE DISTRIBUTION ACCOUNT" means the account designated as such, and
established and maintained pursuant to Section 4.01.
"NOTE INTEREST CARRYOVER SHORTFALL" means, with respect to any Distribution
Date and a Class of Notes, the excess, if any, of the sum of the Note Monthly
Interest Distributable Amount for such class for the preceding Distribution Date
over the amount in respect of interest that is actually paid on the Notes on
such preceding Distribution Date, plus interest on the Note Interest Carryover
Shortfall, to the extent permitted by law, at the respective Interest Rates
borne by each Class of Notes for the related Accrual Period.
"NOTE INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Note Monthly Interest Distributable Amount for
such Distribution Date and the Note Interest Carryover Shortfall for such
Distribution Date. For all purposes of this Agreement and the other Basic
Documents, interest with respect to the Class A-3 and Class A-4 Notes shall be
computed on the basis of a 360-day year consisting of twelve 30-day months; and
interest with respect to the Class A-1 and the Class A-2 Notes shall be computed
on the basis of the actual number of days in each applicable Accrual Period,
divided by 360.
"NOTE MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, interest accrued for the related Accrual Period at the
related Interest Rate for each Class of Notes on the Outstanding Amount of the
Notes of each such Class on the immediately preceding Distribution Date (or, in
the case of the first Distribution Date, the original principal amount of each
such Class of Notes), after giving effect to all distributions of principal to
the Noteholders of each such Class on or prior to such Distribution Date.
"NOTE POOL FACTOR" means, with respect to each Class of Notes as of any
Distribution Date, a seven-digit decimal figure equal to the Outstanding Amount
of such Class of Notes as of such Distribution Date (after giving effect to any
reductions thereof to be made on such Distribution Date) divided by the original
outstanding principal balance of such Class of Notes.
"NOTE PRINCIPAL CARRYOVER SHORTFALL" means, with respect to any
Distribution Date, the excess, if any, of the sum of the Note Monthly Principal
Distributable Amount and any outstanding Note Principal Carryover Shortfall as
of the close of the immediately preceding Distribution Date, over the amount in
respect of principal that is actually paid as principal of the Notes on such
Distribution Date.
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"NOTE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Principal Distributable Amount for such
Distribution Date, any Note Principal Carryover Shortfall as of the close of the
immediately preceding Distribution Date and, on the Final Scheduled Distribution
Date for a Class of Notes or the Distribution Date as of which all of the
Receivables are to be purchased pursuant to Section 8.01, the amount necessary
(after giving effect to all amounts allocable to principal required to be
deposited in the Note Distribution Account on such Distribution Date) to reduce
the Outstanding Amount of each related Class of Notes to zero; provided,
however, that the Note Principal Distributable Amount with respect to a Class of
Notes shall not exceed the Outstanding Amount of such Class of Notes.
"NOTES" means the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes
and the Class A-4 Notes.
"OBLIGOR" on a Receivable means the purchaser or co-purchasers of the
related Financed Vehicle purchased in part or in whole by the execution and
delivery of a retail installment contract or any other Person who owes or may be
liable for payments under such retail installment contract.
"OFFERED SECURITIES" shall have the meaning specified in Section
5.03(b)(ii)(B).
"OFFICERS' CERTIFICATE" means a certificate signed by the president, any
Vice President, the treasurer or the secretary of the Transferor or the
Servicer, as the case may be, and delivered to the Trustee.
"OPINION OF COUNSEL" means a written opinion of counsel (who, in the case
of counsel to the Transferor or the Servicer, may be an employee of or outside
counsel to the Transferor or the Servicer), which counsel shall be acceptable to
the Trustee.
"ORIGINAL CERTIFICATE BALANCE" means $___________________________________.
"ORIGINAL POOL BALANCE" means $__________.
"OUTSTANDING ADVANCES" means, with respect to a Receivable and the last day
of a Collection Period, the sum of all Advances made as of or prior to such
date, minus all payments or collections as of or prior to such date which are
specified in Section 4.04(b) as applied to reimburse all unpaid Advances with
respect to such Receivable.
"OUTSTANDING INTEREST ADVANCES" means, as of the last day of a Collection
Period with respect to a Receivable, the portion of Outstanding Advances
allocable to interest.
"OUTSTANDING PRINCIPAL ADVANCES" means, as of the last day of a Collection
Period with respect to a Receivable, the portion of Outstanding Advances
allocable to principal.
"OVERDUE PAYMENT" shall have the meaning specified in Section 4.03(a).
"OWNER TRUST ESTATE" shall have the meaning specified in the Trust
Agreement.
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"OWNER TRUSTEE" means the Person acting as Owner Trustee under the Trust
Agreement, its successors in interest and any successor owner trustee under the
Trust Agreement.
"PAYAHEAD ACCOUNT" means the account designated as such and established and
maintained pursuant to Section 4.01.
"PAYMENT AHEAD" means, with respect to a Precomputed Receivable and a
Collection Period, any Excess Payment (not representing prepayment in full of
such Precomputed Receivable) which the Servicer, in accordance with its
customary servicing practices, will apply towards the payment of Scheduled
Payments due in one or more future Collection Periods.
"PERCENTAGE INTERESTS" shall have the meaning specified in the Trust
Agreement.
"PERMITTED INVESTMENTS" means, at any time, any one or more of the
following obligations and securities:
(i) obligations of, and obligations fully guaranteed as to timely
payment of principal and interest by, the United States or any agency
thereof, provided such obligations are backed by the full faith and credit
of the United States;
(ii) general obligations of or obligations guaranteed by FNMA, any
state of the United States, the District of Columbia or the Commonwealth of
Puerto Rico then rated the highest available credit rating of each Rating
Agency for such obligations;
(iii) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or any state
thereof, the District of Columbia or the Commonwealth of Puerto Rico, so
long as at the time of such investment or contractual commitment providing
for such investment either the long-term unsecured debt of such corporation
has the highest available credit rating from each Rating Agency for such
obligations or the commercial paper or other short-term debt which is then
rated has the highest available credit rating of each Rating Agency for such
obligations;
(iv) certificates of deposit issued by any depository institution or
trust company (including the Trustee) incorporated under the laws of the
United States or any state thereof, the District of Columbia or the
Commonwealth of Puerto Rico and subject to supervision and examination by
banking authorities of one or more of such jurisdictions, provided that the
short-term unsecured debt obligations of such depository institution or
trust company has the highest available credit rating of each Rating Agency
for such obligations;
(v) certificates of deposit issued by any bank, trust company, savings
bank or other savings institution and fully insured by the FDIC;
(vi) repurchase obligations held by the Trustee that are acceptable to
the Trustee with respect to any security described in clauses (i) or (ii)
hereof or any other security issued or guaranteed by any other agency or
instrumentality of the United States, in either case entered into with a
federal agency or a depository institution or trust company (acting as
principal) described in clause (iv) above;
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(vii) any mutual fund, money market fund, common trust fund or other
pooled investment vehicle, the assets of which are limited to instruments
that otherwise would constitute Permitted Investments hereunder and which
has the highest applicable credit rating by each Rating Agency;
(viii) such other investments acceptable to each Rating Agency in
writing as will not result in the qualification, downgrading or withdrawal
of the rating then assigned to any Rated Securities by such Rating Agency;
provided that each of the foregoing investments shall mature no later than the
Deposit Date immediately following the date of purchase (other than in the case
of the investment of monies in instruments of which the entity at which the
related Account or the Certificate Distribution Account, as the case may be, is
located is the obligor, which may mature on the related Distribution Date), and
shall be required to be held to such maturity.
Notwithstanding anything to the contrary contained in this definition, (a)
no Permitted Investment may be purchased at a premium, and (b) no obligation or
security is a "Permitted Investment" unless (i) the Trustee has Control over
such obligation or security and (ii) at the time such obligation or security was
delivered to the Trustee or the Trustee became the related Entitlement Holder,
the Trustee did not have notice of any adverse claim with respect thereto within
the meaning of Section 8-105 of the UCC.
For purposes of this definition, any reference to the highest available
credit rating of an obligation shall mean the highest available credit rating
for such obligation, or such lower credit rating (as approved in writing by each
Rating Agency) as will not result in the qualification, downgrading or
withdrawal of the rating then assigned to any Rated Securities by such Rating
Agency.
"PERSON" means any legal person, including any individual, corporation,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"POOL BALANCE" means, as of any date, the aggregate Principal Balance of the
Receivables (exclusive of all Administrative Receivables for which the Servicer
has paid the Administrative Purchase Payment, Warranty Receivables for which the
Transferor has paid the Warranty Purchase Payment and Defaulted Receivables) as
of the close of business on such date.
"PRECOMPUTED ADVANCE" shall have the meaning specified in Section 4.04(a).
"PRECOMPUTED RECEIVABLE" means any Actuarial Receivable or Rule of 78s
Receivable.
"PREPAYMENT" means (i) with respect to any Precomputed Receivable, any
Excess Payment other than a Payment Ahead or (ii) with respect to any Simple
Interest Receivable, any prepayment, whether in part or in full, in respect of
such Simple Interest Receivable.
"PREPAYMENT SURPLUS" means, with respect to any Distribution Date on which a
Prepayment is to be applied with respect to a Precomputed Receivable, that
portion of such Prepayment, net of any Rebate, which is not attributable to
principal in accordance with the
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actuarial method, net of one month's interest at the Weighted Average Interest
Rate on the Principal Balance of such Receivable as of the first day of the
related Collection Period.
"PRINCIPAL BALANCE" means, with respect to any Receivable as of any date,
the Amount Financed minus the sum of the following amounts: (i) in the case of a
Precomputed Receivable, that portion of all Scheduled Payments due on or prior
to such date allocable to principal, computed in accordance with the actuarial
method, (ii) in the case of a Simple Interest Receivable, that portion of all
Scheduled Payments actually received on or prior to such date allocable to
principal, computed in accordance with the simple interest method, (iii) any
Warranty Purchase Payment or Administrative Purchase Payment with respect to
such Receivable allocable to principal and (iv) any Prepayments or other
payments applied to reduce the unpaid principal balance of such Receivable.
"PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any Distribution
Date, the sum of the following amounts (i) in the case of (a) Precomputed
Receivables, the principal portion of all Scheduled Payments due during the
related Collection Period, computed in accordance with the actuarial method and
(b) Simple Interest Receivables, the principal portion of all Scheduled Payments
actually received during the related Collection Period, computed in accordance
with the simple interest method, (ii) the principal portion of all Prepayments
received during such Collection Period (to the extent such amounts are not
included in clause (i) above) and (iii) the Principal Balance of each Receivable
that became an Administrative Receivable, a Warranty Receivable or a Defaulted
Receivable during such Collection Period (to the extent such amounts are not
included in clauses (i) or (ii) above).
"PRINCIPAL PAYMENT AMOUNT" means, with respect to any Distribution Date, the
lesser of (i) the Note Principal Distributable Amount and (ii) the Available
Amount remaining after all Trust Fees and Expenses have been paid and after
Noteholders have been paid the Note Interest Distributable Amount.
"RATED SECURITIES" means each Class of Securities that has been rated by a
Rating Agency at the request of the Transferor.
"RATING AGENCY" means Fitch, Moody's and Standard & Poor's.
"RATING AGENCY CONDITION" means, with respect to any action, that each
Rating Agency shall have been given ten days' (or such shorter period as shall
be acceptable to each Rating Agency) prior notice thereof and that each Rating
Agency shall have notified the Transferor, the Servicer and the Trustees in
writing that such action will not result in a reduction or withdrawal of the
then current rating of the Rated Securities.
"REBATE" means, with respect to a Precomputed Receivable and any date, the
rebate, calculated in accordance with the actuarial method, under such
Receivable that is or would be payable to the related Obligor for unearned
finance charges or any other charges rebatable to the Obligor if such Obligor
were to prepay such Receivable in full on such date.
"RECEIVABLE" means any retail installment contract executed by an Obligor in
respect of a Financed Vehicle, and all proceeds thereof and payments thereunder,
which Receivable shall be identified in a Schedule of Receivables.
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"RECEIVABLE FILES" means the documents specified in Section 2.02.
"RECEIVABLES PURCHASE AGREEMENT" means the receivables purchase agreement,
dated as of January __, 1999, between AHFC and the Transferor, as amended or
supplemented from time to time.
"RELEASED ADMINISTRATIVE AMOUNT" means, with respect to a Distribution Date
and to an Administrative Receivable, the Deferred Prepayment, if any, for such
Administrative Receivable.
"RELEASED WARRANTY AMOUNT" means, with respect to a Distribution Date and to
a Warranty Receivable, the Deferred Prepayment, if any, for such Warranty
Receivable.
"REQUIRED RATE" means the sum of the Weighted Average Interest Rate and the
Servicing Fee Rate.
"REQUIRED DEPOSIT RATING" means the short-term credit rating of the related
entity is at least equal to Prime-1 by Moody's and A-1+ by Standard & Poor's.
"REQUIRED SERVICER RATING" means, with respect to the Servicer, that the
then short-term unsecured debt obligations of the Servicer are rated at least
equal to Prime-1 by Moody's and A-1 by Standard & Poor's.
"RESERVE FUND" means the account designated as such, and established and
maintained pursuant to Section 4.01.
"RESERVE FUND INITIAL DEPOSIT" means the initial deposit of cash in the
amount of $__________ made by the Transferor into the Reserve Fund on the
Closing Date.
"RESERVE FUND PROPERTY" means, the Reserve Fund Initial Deposit and all
proceeds thereof and all other amounts deposited in or credited to the Reserve
Fund from time to time under this Agreement, all Permitted Investments made with
amounts on deposit therein, all earnings and distributions thereon and proceeds
thereof (other than proceeds constituting net investment earnings attributable
to the Reserve Fund Property).
"RESPONSIBLE OFFICER" means, in the case of the Indenture Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee, including
any Principal, Managing Director, Vice President, assistant Vice President,
assistant treasurer, assistant secretary or any other officer of the Indenture
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also, with respect to a particular matter, any
other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject and, with respect to
the Owner Trustee, any officer in the Corporate Trust Administration Department
of the Owner Trustee with direct responsibility for the administration of the
Trust Agreement and the Basic Documents on behalf of the Owner Trustee.
"RETAIL INSTALLMENT CONTRACT" means a retail installment sale contract
and/or a conditional sale agreement.
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"RULE OF 78S RECEIVABLE" means any Receivable which provides for the
allocation of payments according to the "sum of periodic balances" or "sum of
monthly payments" method.
"SCHEDULE OF RECEIVABLES" means the schedule of Receivables attached as
Schedule A to this Agreement, as it may be amended from time to time.
"SCHEDULED PAYMENT" means, with respect to any Distribution Date and to a
Receivable, the payment set forth in such Receivable as due from the Obligor in
the related Collection Period; provided, however, that in the case of the first
Collection Period, the Scheduled Payment shall include all such payments due
from the Obligor on or after the Cutoff Date.
"SCHEDULED SURPLUS" means, with respect to any Distribution Date for any
Receivable having an APR which exceeds the Required Rate, the product of (i) the
interest portion of the related Scheduled Payment (determined in accordance with
the actuarial method if such Receivable is a Precomputed Receivable) and (ii)
the remainder of (a) one minus (b) a fraction, the numerator of which equals the
Required Rate and the denominator of which equals such APR.
"SECURED OBLIGATIONS" means collectively, the payments to Securityholders
pursuant to Section 8.02 of the Indenture and Section 5.02 of the Trust
Agreement.
"SECURITIES" means the Notes and the Trust Certificates.
"SECURITY ENTITLEMENT" shall have the meaning specified in Section
8-102(a)(17) of the UCC.
"SECURITYHOLDERS" means the Noteholders and the Certificateholders.
"SERVICER" means AHFC, in its capacity as servicer of the Receivables
pursuant to this Agreement, and each successor thereto (in the same capacity)
pursuant to Section 6.03.
"SERVICER DEFAULT" shall have the meaning specified in Section 7.01.
"SERVICER LETTER OF CREDIT" means, if the Servicer desires to remit
collections on or in respect of the Receivables to the Collection Account on a
monthly basis upon satisfaction of the conditions described in Section
4.02(b)(ii), (i) an irrevocable letter of credit, issued by a Letter of Credit
Bank and naming the Indenture Trustee a beneficiary or (ii) a surety bond,
insurance policy or deposit of cash or securities satisfactory to the Indenture
Trustee, in each case, which is satisfactory to each Rating Agency.
"SERVICER'S CERTIFICATE" means an Officers' Certificate of the Servicer
delivered pursuant to Section 3.10, substantially in the form of Exhibit B.
"SERVICING FEE RATE" means 1.00% per annum.
"SIMPLE INTEREST ADVANCE" shall have the meaning specified in Section
4.04(a).
15
"SIMPLE INTEREST RECEIVABLE" means any Receivable which provides for the
allocation of payments according to the "simple interest" method.
"SPECIFIED RESERVE FUND BALANCE" means, with respect to any Distribution
Date $_____________, except that, if on any Distribution Date (i) the average of
the Charge-off Rates for the three preceding Collection Periods exceeds ____% or
(ii) the average of the Delinquency Percentages for the three preceding
Collection Periods exceeds ____%, then the Specified Reserve Fund Balance will
be an amount equal to a specified percentage of the Pool Balance as of the last
day of the immediately preceding Collection Period. Such percentage shall be
determined by deducting from ____% the following fraction, expressed as a
percentage: (a) one minus (b) a fraction, the numerator of which is the
outstanding principal amount of the Notes with respect to such Distribution Date
and the denominator of which is such Pool Balance. Notwithstanding the
foregoing, in no event will the Specified Reserve Fund Balance be more than
$_____________ or more than the outstanding principal amount of the Notes or
less than $_____________. As of any Distribution Date, the amount of funds
actually on deposit in the Reserve Fund may, in certain circumstances, be less
than the Specific Reserve Fund Balance.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a division of
The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., or its successor.
"SUCCESSOR SERVICER" means any entity appointed as a successor to the
Servicer pursuant to Section 7.02.
"SUPPLEMENTAL SERVICING FEE" means any interest earned on investment of the
monies on deposit in the Accounts (other than the Yield Supplement Account and
the Reserve Fund) during a Collection Period, net of any investment expenses and
losses from such investments, plus all late fees, prepayment charges and other
administrative fees and expenses or similar charges allowed by applicable law
with respect to the Receivables, including, in the case of a Rule of 78s
Receivable and that is prepaid in full, the difference between the Principal
Balance of a Rule of 78s Receivable, minus the Principal Balance of such
Receivable computed according to the actuarial method (plus accrued interest to
the date of prepayment), received by the Servicer during such Collection Period.
"TOTAL SERVICING FEE" means the sum of the Basic Servicing Fee and the
Supplemental Servicing Fee.
"TRANSFEROR" means AHRC, in its capacity as Transferor of the Receivables
under this Agreement, and each successor thereto (in the same capacity) pursuant
to Section 5.03.
"TRUST" means the Issuer.
"TRUST AGREEMENT" means the trust agreement, dated as of June 16, 1998, as
amended and restated, dated as of ________, 199_, between the Depositor and the
Owner Trustee.
"TRUST FEES AND EXPENSES" means all accrued and unpaid Trustees' fees and
other administrative fees of the Trust.
16
"TRUSTEE" means either the Owner Trustee or the Indenture Trustee, as the
context requires.
"TRUSTEES" means the Owner Trustee and the Indenture Trustee.
"UCC" means the Uniform Commercial Code as in effect in the respective
jurisdiction.
"UNITED STATES" means the United States of America.
"VICE PRESIDENT" of any Person means any vice president of such Person,
whether or not designated by a number or words before or after the title "Vice
President", who is a duly elected officer of such Person.
"WARRANTY PURCHASE PAYMENT" means, with respect to a Distribution Date and
to a Warranty Receivable repurchased by the Transferor as of the end of the
related Collection Period, which Receivable is (i) a Precomputed Receivable, (a)
the sum of (1) all Scheduled Payments on such Receivable due after the last day
of such Collection Period, (2) all past due Scheduled Payments for which an
Advance has not been made, (3) all Outstanding Advances made in respect of such
Receivable and (4) an amount equal to any reimbursement of Outstanding Advances
made pursuant to the first sentence of Section 4.04(c) with respect to such
Receivable minus (b) the sum of (1) all Payments Ahead in respect of such
Warranty Receivable held by the Servicer or on deposit in the Payahead Account,
(2) any Rebate and (3) any proceeds of the liquidation of such Receivable
previously received (to the extent applied to reduce the Principal Balance of
such Receivable) or (ii) a Simple Interest Receivable, the sum of (a) the unpaid
principal balance owed by the related Obligor in respect of such Receivable and
(b) interest on such unpaid principal balance at a rate equal to the sum of the
Required Rate to the last day of such Collection Period.
"WARRANTY RECEIVABLE" means a Receivable which the Transferor is required to
repurchase pursuant to Section 2.04.
"WEIGHTED AVERAGE INTEREST RATE" means, with respect to any Collection
Period and the related Distribution Date, a per annum rate equal to (i) the sum
of (a) the product of the Interest Rate for each outstanding Class of Notes and
the aggregate principal amount of such Class of Notes as of the immediately
preceding Distribution Date (or, in the case of the first Distribution Date, the
aggregate initial principal amount of the Notes) and (b) the product of the
Certificate Rate and the Certificate Balance as of the immediately preceding
Distribution Date (or, in the case of the first Distribution Date, the Original
Certificate Balance) divided by (ii) the sum of the aggregate principal amount
of the Notes and the Certificate Balance as of the immediately preceding
Distribution Date (or, in the case of the first Distribution Date, the aggregate
initial principal amount of the Notes and the Original Certificate Balance), in
each case after giving effect to any principal payment made on such preceding
Distribution Date.
"YIELD SUPPLEMENT ACCOUNT" means the account designated as such, and
established and maintained pursuant to Section 4.01.
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"YIELD SUPPLEMENT ACCOUNT DEPOSIT" means the initial deposit of cash in the
amount of $____________________ made by the Transferor into the Yield Supplement
Account on the Closing Date.
"YIELD SUPPLEMENT AMOUNT" means, with respect to any Collection Period and
the related Deposit Date, the aggregate amount by which one month's interest on
the Principal Balance as of the first day of such Collection Period of each
Discount Receivable (other than a Discount Receivable that is a Defaulted
Receivable) at a rate equal to the Required Rate, exceeds one month's interest
on such Principal Balance at the APR of each such Receivable.
"YIELD SUPPLEMENT WITHDRAWAL AMOUNT" means, with respect to any Collection
Period and the related Deposit Date, the sum of (i) the Yield Supplement Amount
and (ii) after giving effect to the withdrawal of the Yield Supplement Amount,
the amount by which the amount on deposit in the Yield Supplement Account
exceeds the maximum amount required to be on deposit in the Yield Supplement
Account on the immediately succeeding Distribution Date.
Section 1.02. OTHER DEFINITIONAL PROVISIONS.
(a) Capitalized terms used herein that are not otherwise defined herein
shall have the meanings ascribed thereto in the Indenture.
(b) All terms defined in this Agreement shall have the defined meanings when
used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
Section 1.03. INTERPRETIVE PROVISIONS.
(a) For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, (i) terms used herein
include, as appropriate, all genders and the plural as well as the singular,
(ii) references to words such as "herein", "hereof" and the like shall refer to
this Agreement as a whole and not to any particular part, article or section
within this Agreement, (iii) references to a section such as "Section 1.01" and
the like shall refer to the applicable section of this Agreement, (iv) the term
"include" and all variations thereof shall mean "include without limitation",
(v) the term "or" shall include "and/or", and (vi) the term "proceeds" shall
have the meaning set forth in the applicable UCC.
(b) As used in this Agreement and in any certificate or other document made
or delivered pursuant hereto or thereto, accounting terms not defined in this
Agreement or in any such certificate or other document, and accounting terms
partly defined in this Agreement or in any such certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles. To the extent that the definitions of
accounting terms in this Agreement or in any such certificate or other document
are inconsistent with the meanings of such terms under generally accepted
accounting principles, the definitions contained in this Agreement or in any
such certificate or other document shall control.
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ARTICLE TWO
CONVEYANCE OF RECEIVABLES; CUSTODY OF RECEIVABLES FILES
Section 2.01. CONVEYANCE OF RECEIVABLES.
(a) In consideration of the Issuer's delivery to or upon the order of the
Transferor of the Certificates and $__________, less an amount equal to the
Reserve Fund Initial Deposit to be deposited to the Reserve Fund and the Yield
Supplement Account Deposit to be deposited to the Yield Supplement Account, each
on the Closing Date, the Transferor does hereby sell, transfer, assign, set over
and otherwise convey to the Issuer, without recourse (subject to the obligations
of the Transferor set forth herein), all right, title and interest of the
Transferor in and to:
(i) the Receivables and all monies due thereon or paid thereunder or in
respect thereof (including proceeds of the repurchase of Receivables by the
Transferor pursuant to Section 2.04 or 8.01 or the purchase of Receivables
by the Servicer pursuant to Section 3.08 or 8.01) on or after the Cutoff
Date;
(ii) the security interests in the Financed Vehicles;
(iii) any proceeds of any physical damage insurance policies covering
the Financed Vehicles and in any proceeds of any credit life or credit
disability insurance policies relating to the Receivables or the Obligors;
(iv) any proceeds of Dealer Recourse;
(v) the Receivables Purchase Agreement, but not the obligations of the
Transferor thereunder;
(vi) the right to realize upon any property (including the right to
receive future Liquidation Proceeds) that shall have secured a Receivable
and have been repossessed by or on behalf of the Trustee;
(vii) all funds on deposit from time to time in the Accounts, including
the Reserve Fund Initial Deposit and the Yield Supplement Account Deposit,
and in all investments and proceeds thereof (including all income thereon);
(viii) any Servicer Letter of Credit; and
(ix) the proceeds of any and all of the foregoing.
(b) The parties hereto intend that the conveyance hereunder be a sale. In
the event that the conveyance hereunder is not for any reason considered a sale,
the Transferor hereby grants to the Issuer a first priority perfected security
interest in all of its right, title and interest in, to and under the
Receivables, and all other property conveyed hereunder and all proceeds of any
of the foregoing. The parties hereto intend that this Agreement constitute a
security agreement under applicable law. Such grant is made to secure the
payment of all amounts payable hereunder.
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Section 2.02. CUSTODY OF RECEIVABLE FILES. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Issuer hereby
revocably appoints the Servicer, and the Servicer accepts such appointment, to
act for the benefit of the Issuer and the Indenture Trustee as custodian of the
following documents or instruments which are hereby constructively delivered to
the Indenture Trustee, as pledgee of the Issuer, as of the Closing Date with
respect to each Receivable:
(a) the fully executed original of the Receivable;
(b) documents evidencing or related to any Insurance Policy;
(c) the original credit application of each Obligor, fully executed by
such Obligor on AHFC's customary form, or on a form approved by AHFC for
such application;
(d) the original certificate of title (or evidence that such
certificate of title has been applied for) or such documents that the
Servicer shall keep on file, in accordance with its customary procedures,
evidencing the security interest in the related Financed Vehicle; and
(e) any and all other documents that the Transferor or the Servicer, as
the case may be, shall keep on file, in accordance with its customary
procedures, relating to such Receivable or the related Obligor or Financed
Vehicle.
Section 2.03. REPRESENTATIONS AND WARRANTIES OF TRANSFEROR AS TO THE
RECEIVABLES. The Transferor makes the following representations and warranties
as to the Receivables on which the Issuer shall rely in acquiring the
Receivables. Such representations and warranties speak as of the execution and
delivery of this Agreement and as of the Closing Date, but shall survive the
sale, transfer and assignment of the Receivables to the Issuer and the pledge
thereof to the Indenture Trustee.
(a) CHARACTERISTICS OF RECEIVABLES. Each Receivable (i) shall have been
originated in the United States by a Dealer for the retail sale of the
related Financed Vehicle in the ordinary course of such Dealer's business,
shall have been fully and properly executed by the parties thereto, shall
have been purchased by AHFC from such Dealer under an existing agreement
with AHFC, shall have been validly assigned by such Dealer to AHFC in
accordance with the terms of such agreement and shall have been subsequently
sold by AHFC to the Transferor pursuant to the Receivables Purchase
Agreement, (ii) shall have created or shall create a valid, subsisting and
enforceable first priority security interest in favor of AHFC in the related
Financed Vehicle, which security interest has been assigned by AHFC to the
Transferor and shall be assignable, and shall be so assigned, by the
Transferor to the Owner Trustee, (iii) shall contain customary and
enforceable provisions such that the rights and remedies of the holder
thereof shall be adequate for realization against the collateral of the
benefits of the security, (iv) shall, except as otherwise provided in this
Agreement, provide for level Monthly Payments (provided that the payment in
the first or last month in the life of the Receivable may be minimally
different from the level payment) that fully amortize the
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Amount Financed over its original term and shall provide for a finance
charge or shall yield interest at its APR, (v) shall provide for, in the
event that such Receivable is prepaid, a prepayment that fully pays the
Principal Balance and includes accrued but unpaid interest at least through
the date of prepayment in an amount calculated by using an interest rate at
least equal to its APR, (vi) shall have an Obligor that is not a federal,
state or local governmental entity and (vii) is a retail installment
contract.
(b) SCHEDULE OF RECEIVABLES. The information set forth in the Schedule
of Receivables shall be true and correct in all material respects as of the
opening of business on the Cutoff Date, and no selection procedures believed
to be adverse to the Securityholders were utilized in selecting the
Receivables from those motor vehicle receivables of AHFC which met the
selection criteria set forth in this Agreement.
(c) COMPLIANCE WITH LAW. Each Receivable and each sale of the related
Financed Vehicle shall have complied at the time it was originated or made,
and shall comply at the time of execution of this Agreement, in all material
respects with all requirements of applicable federal, state and local laws,
and regulations thereunder, including usury laws, the Federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Billing Act, the Fair Credit Reporting Act, the Fair Debt Collection
Practices Act, the Federal Trade Commission Act, the ▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty
Act, Federal Reserve Board Regulations B and Z, state adaptations of the
National Consumer Act and of the Uniform Consumer Credit Code and other
consumer credit, equal credit opportunity and disclosure laws.
(d) BINDING OBLIGATION. Each Receivable shall constitute the genuine,
legal, valid and binding payment obligation in writing of the related
Obligor, enforceable by the holder thereof in accordance with its terms,
except as enforceability may be subject to or limited by bankruptcy,
insolvency, reorganization, moratorium, liquidation or other similar laws
affecting the enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such enforceability shall be
considered in a proceeding in equity or at law.
(e) NO BANKRUPT OBLIGORS. According to the records of the Transferor,
as of the Cutoff Date, no Obligor is the subject of a bankruptcy proceeding.
(f) SECURITY INTEREST IN FINANCED VEHICLES. According to the records of
the Transferor, as of the Cutoff Date, no Financed Vehicle has been
repossessed and not reinstated and immediately prior to the sale, assignment
and transfer thereof, each Receivable shall be secured by a validly
perfected first priority security interest in the related Financed Vehicle
in favor of AHFC as secured party or all necessary and appropriate action
with respect to such Receivable shall have been taken to perfect a first
priority security interest in such Financed Vehicle in favor of AHFC as
secured party.
(g) RECEIVABLES IN FORCE. No Receivable shall have been satisfied,
subordinated or rescinded, nor shall any Financed Vehicle have been released
in whole or in part from the lien granted by the related Receivable.
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(h) NO WAIVERS. No provision of a Receivable shall have been waived in
such a manner that such Receivable fails to meet all of the other
representations and warranties made by the Transferor herein with respect
thereto.
(i) NO AMENDMENTS. No Receivable shall have been amended or modified in
such a manner that the total number of Scheduled Payments has been increased
or that the related Amount Financed has been increased or that such
Receivable fails to meet all of the other representations and warranties
made by the Transferor herein with respect thereto.
(j) NO DEFENSES. No facts shall be known to the Transferor which would
give rise to any right of rescission, setoff, counterclaim or defense, nor
shall the same have been asserted or threatened, with respect to any
Receivable.
(k) NO LIENS. To the knowledge of the Transferor, no liens or claims
shall have been filed, including liens for work, labor or materials relating
to a Financed Vehicle, that shall be liens prior to, or equal or coordinate
with, the security interest in such Financed Vehicle granted by the related
Receivable.
(l) NO DEFAULTS. Except for payment defaults that, as of the Cutoff
Date, have been continuing for a period of not more than 30 days, no
default, breach, violation or event permitting acceleration under the terms
of any Receivable shall have occurred as of the Cutoff Date and no
continuing condition that with notice or the lapse of time would constitute
a default, breach, violation or event permitting acceleration under the
terms of any Receivable shall have arisen; and the Transferor shall not have
waived any of the foregoing except as otherwise permitted hereunder.
(m) INSURANCE. Pursuant to the Receivables, each Obligor has been
required to obtain physical damage insurance covering the related Financed
Vehicle and the Obligor is required under the terms of the related
Receivable to maintain such insurance.
(n) TITLE. It is the intention of the Transferor that the transfer and
assignment herein contemplated, taken as a whole, constitute a sale of the
Receivables from the Transferor to the Issuer and that the beneficial
interest in and title to the Receivables not be part of the debtor's estate
in the event of the filing of a bankruptcy petition by or against the
Transferor under any bankruptcy law. No Receivable has been sold,
transferred, assigned or pledged by the Transferor to any Person other than
the Issuer, and no provision of a Receivable shall have been waived, except
as provided in clause (h) above; immediately prior to the transfer and
assignment herein contemplated, the Transferor had good and marketable title
to each Receivable free and clear of all Liens and rights of others;
immediately upon the transfer and assignment thereof, the Issuer shall have
good and marketable title to each Receivable, free and clear of all Liens
and rights of others; and the transfer and assignment herein contemplated
has been perfected under the UCC.
(o) LAWFUL ASSIGNMENT. No Receivable shall have been originated in, or
shall be subject to the laws of, any jurisdiction under which the sale,
transfer and assignment
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of such Receivable under this Agreement or pursuant to a transfer of the
Securities shall be unlawful, void or voidable.
(p) ALL FILINGS MADE. All filings (including UCC filings) necessary in
any jurisdiction to give the Issuer a first priority perfected security
interest in the Receivables, and to give the Indenture Trustee a first
priority perfected security interest therein, shall have been made.
(q) ONE ORIGINAL. There shall be only one original executed copy of
each Receivable.
(r) CHATTEL PAPER. Each Receivable constitutes "chattel paper" as
defined in the UCC.
(s) MATURITY OF RECEIVABLES. Each Receivable shall have an original
maturity of not less than __ months nor greater than __ months and, as of
the Cutoff Date, a remaining maturity of not less than __ months nor greater
than __ months.
(t) FINANCE CHARGE. Each Receivable provides for the payment of a
finance charge calculated on the basis of an APR ranging from ____% to
_____%.
(u) PRINCIPAL BALANCE. Each Receivable had an original principal
balance of not less than $________ nor more than $________ and an average
unpaid principal balance, as of the Cutoff Date, of $____________.
(v) ORIGINATION. Each Receivable was originated on or before June 30,
1998.
(w) NO OVERDUE PAYMENTS. No Receivable shall have a Scheduled Payment
that is more than 30 days past due as of the Cutoff Date.
(x) LOCATION OF RECEIVABLE FILES. Each Receivable File shall be kept at
one of the locations listed in Schedule B hereto.
(y) FINANCED VEHICLES. Each Financed Vehicle shall be a new or used
Honda or Acura motor vehicle.
(z) ADDRESSES OF OBLIGORS. The Obligor under each Receivable had a
current billing address in the United States as of the Cutoff Date.
Section 2.04. REPURCHASE OF RECEIVABLES UPON BREACH. Upon discovery by
the Transferor, the Servicer, the Owner Trustee or the Indenture Trustee of a
breach of any of the representations and warranties of the Transferor set forth
in Section 2.03 that materially and adversely affects the interests of the
Issuer, the Trustees or the Securityholders in any Receivable, the party
discovering such breach shall give prompt written notice to the others. As of
the last day of the second Collection Period following the Collection Period in
which it discovers or receives notice of such breach (or, at the Transferor's
election, the last day of the first Collection Period following the Collection
Period in which it discovers or receives notice of such breach), the Transferor
shall, unless such breach shall have been cured in all material
23
respects, repurchase such Receivable, and, if necessary, the Transferor shall
enforce the obligation of AHFC under the Receivables Purchase Agreement to
repurchase such Receivable from the Transferor. This repurchase obligation shall
apply to all representations and warranties of the Transferor contained in
Section 2.03 whether or not the Transferor has knowledge of the breach at the
time of the breach or at the time the representations and warranties were made.
In consideration of the repurchase of any such Receivable, on the related
Deposit Date, the Transferor shall remit the Warranty Purchase Payment in
respect of such Receivable to the Collection Account in the manner specified in
Section 4.05 and shall be entitled to receive the Released Warranty Amount. In
the event that, as of the date of execution and delivery of this Agreement, any
Liens or claims shall have been filed, including Liens for work, labor or
materials relating to a Financed Vehicle, that shall be prior to, or equal or
coordinate with, the lien granted by the related Receivable, which Liens or
claims shall not have been satisfied or otherwise released in full as of the
Closing Date, and such breach materially and adversely affects the interests of
the Issuer, the Trustees or the Securityholders in such Receivable, the
Transferor shall repurchase such Receivable on the terms and in the manner
specified above. Upon any such repurchase, the Issuer shall, without further
action, be deemed to transfer, assign, set-over and otherwise convey to the
Transferor, all right, title and interest of the Issuer in, to and under such
repurchased Receivable, all monies due or to become due with respect thereto and
all proceeds thereof. The Issuer and the Trustees shall execute such documents
and instruments of transfer and assignment and take such other actions as shall
be reasonably requested by the Transferor to effect the conveyance of such
Receivable pursuant to this Section. The sole remedy of the Issuer, the Trustees
and the Securityholders with respect to a breach of the Transferor's
representations and warranties pursuant to Section 2.03 or with respect to the
existence of any such Liens or claims shall be to require the Transferor to
repurchase the related Receivable pursuant to this Section and to enforce AHFC's
obligation to repurchase such Receivables from the Transferor pursuant to the
Receivables Purchase Agreement. Neither the Owner Trustee nor the Indenture
Trustee shall have any duty to conduct an affirmative investigation as to the
occurrence of any condition requiring the repurchase of any Receivable pursuant
to Section 2.04 or the eligibility of any Receivables for purposes of this
Agreement.
Section 2.05. DUTIES OF SERVICER AS CUSTODIAN.
(a) SAFEKEEPING. The Servicer, in its capacity as custodian, shall hold
the Receivable Files for the benefit of the Issuer and maintain such
accurate and complete accounts, records and computer systems pertaining to
each Receivable File as shall enable the Issuer to comply with this
Agreement. In performing its duties as custodian, the Servicer shall act
with reasonable care, using that degree of skill and attention that it
exercises with respect to the receivable files of comparable motor vehicle
receivables that the Servicer services for itself or others. The Servicer
shall conduct, or cause to be conducted, periodic examinations of the files
of all receivables owned or serviced by it which shall include the
Receivable Files held by it under this Agreement, and of the related
accounts, records and computer systems, in such a manner as shall enable the
Issuer or the Indenture Trustee to verify the accuracy of the Servicer's
record keeping. The Servicer shall promptly report to the Issuer and the
Indenture Trustee any failure on its part to hold the Receivable Files and
maintain its accounts, records and computer systems as herein provided and
promptly take appropriate action to remedy any such failure. Nothing herein
shall be deemed to require an initial review or any periodic review of the
Receivable Files by the Issuer or the Indenture Trustee.
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(b) MAINTENANCE OF AND ACCESS TO RECORDS. The Servicer shall maintain
each Receivable File solely in its capacity as Servicer at one of its
offices specified in Schedule B hereto or at such other office as shall be
specified to the Issuer and the Indenture Trustee by 30 days' prior written
notice. The Servicer shall make available to the Issuer and the Indenture
Trustee or its duly authorized representatives, attorneys or auditors the
Receivable Files and the related accounts, records and computer systems
maintained by the Servicer at such times as the Issuer and the Indenture
Trustee shall reasonably instruct.
(c) RELEASE OF DOCUMENTS. Upon instruction from the Indenture Trustee,
the Servicer shall release any document in the Receivable Files to the
Indenture Trustee or its agent or designee, as the case may be, at such
place or places as the Indenture Trustee may designate, as soon as
practicable. The Servicer shall not be responsible for any loss occasioned
by the failure of the Indenture Trustee to return any document or any delay
in doing so.
Section 2.06. INSTRUCTIONS; AUTHORITY TO ACT. The Servicer shall be deemed
to have received proper instructions with respect to the Receivable Files upon
its receipt of written instructions signed by a Responsible Officer of the
Indenture Trustee. A certified copy of a bylaw or of a resolution of the board
of directors of the Indenture Trustee shall constitute conclusive evidence of
the authority of any such Responsible Officer to act and shall be considered in
full force and effect until receipt by the Servicer of written notice to the
contrary given by the Indenture Trustee.
Section 2.07. INDEMNIFICATION BY CUSTODIAN. The Servicer, as custodian of
the Receivable Files, shall fully indemnify and hold harmless the Issuer and the
Trustees for any and all liabilities, obligations, losses, compensatory damages,
payments, costs or expenses of any kind whatsoever that may be imposed on,
incurred or asserted against the Issuer and the Trustees as the result of any
improper act or omission in any way relating to the maintenance and custody of
the Receivable Files by the Servicer, as custodian; provided, however, that the
Servicer shall not be liable for any portion of any such amount resulting from
the willful misfeasance, bad faith or negligence of the Owner Trustee or the
Indenture Trustee.
Section 2.08. EFFECTIVE PERIOD AND TERMINATION. The Servicer's
appointment as custodian of the Receivable Files shall become effective as of
the Cutoff Date and shall continue in full force and effect until terminated
pursuant to this Section. If the Servicer shall resign as Servicer pursuant to
Section 6.05 or if all of the rights and obligations of the Servicer have been
terminated pursuant to Section 7.02, the appointment of the Servicer as
custodian of the Receivable Files shall be terminated by the Indenture Trustee
or by the Holders of Notes evidencing not less than 25% of the Outstanding
Amount of the Notes or, with the consent of Holders of the Notes evidencing not
less than 25% of the Outstanding Amount of the Notes, by the Owner Trustee, in
the same manner as the Indenture Trustee or such Holders may terminate the
rights and obligations of the Servicer under Section 7.01. The Indenture Trustee
or, with the consent of the Indenture Trustee, the Owner Trustee may terminate
the Servicer's appointment as custodian of the Receivable Files with cause at
any time immediately upon written notification to the Servicer and, without
cause, upon 30 days' prior written notification by the Servicer. As soon as
practicable after any termination of such appointment, the Servicer shall
deliver the Receivable Files to the Indenture Trustee or its agent at such place
or places as the Indenture Trustee may reasonably designate. Notwithstanding the
termination of the Servicer as custodian
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of the Receivable Files, the Indenture Trustee agrees that upon any such
termination, the Indenture Trustee shall provide, or cause its agent to provide,
access to the Receivable Files to the Servicer for the purpose of carrying out
its duties and responsibilities with respect to the servicing of the Receivables
pursuant to this Agreement.
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ARTICLE THREE
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 3.01. DUTIES OF SERVICER. The Servicer, for the benefit of the
Issuer (to the extent provided herein), shall manage, service, administer and
make collections on the Receivables (other than Administrative Receivables and
Warranty Receivables) with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to all comparable motor
vehicle receivables that it services for itself or others. The Servicer's duties
shall include collection and posting of all payments, responding to inquiries of
Obligors or by federal, state or local government authorities with respect to
the Receivables, investigating delinquencies, sending payment coupons to
Obligors, reporting tax information to Obligors in accordance with its customary
practices, policing the collateral, accounting for collections and furnishing
monthly and annual statements to the Trustees with respect to distributions,
generating federal income tax information, making Advances and performing the
other duties specified herein. The Servicer shall follow its customary
standards, policies and procedures and shall have full power and authority,
acting alone, to do any and all things in connection with such managing,
servicing, administration and collection that it may deem necessary or
desirable. Without limiting the generality of the foregoing, the Servicer shall
be authorized and empowered to execute and deliver, on behalf of itself, the
Issuer, the Trustees, the Securityholders or any of them, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge and all other comparable instruments, with respect to the Receivables
and the Financed Vehicles. The Servicer is hereby authorized to commence, in its
own name or in the name of the Issuer, a legal proceeding to enforce a Defaulted
Receivable pursuant to Section 3.04 or to commence or participate in a legal
proceeding (including without limitation a bankruptcy proceeding) relating to or
involving a Receivable, including a Defaulted Receivable. If the Servicer
commences or participates in such a legal proceeding in its own name, the Issuer
shall thereupon be deemed to have automatically assigned, solely for the purpose
of collection on behalf of the party retaining an interest in such Receivable,
such Receivable and the other property conveyed to the Issuer pursuant to
Section 2.01 with respect to such Receivable to the Servicer for purposes of
commencing or participating in any such proceeding as a party or claimant, and
the Servicer is authorized and empowered by the Issuer to execute and deliver in
the Servicer's name any notices, demands, claims, complaints, responses,
affidavits or other documents or instruments in connection with any such
proceeding. If in any enforcement suit or legal proceeding it shall be held that
the Servicer may not enforce a Receivable on the grounds that it shall not be a
real party in interest or a holder entitled to enforce such Receivable, the
Owner Trustee shall, at the Servicer's expense and written direction, take steps
to enforce such Receivable, including bring suit in its name or the name of the
Owner Trustee, the Indenture Trustee, the Noteholders or the Certificateholders.
The Owner Trustee shall furnish the Servicer with any powers of attorney and
other documents and take any other steps which the Servicer may deem necessary
or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
Section 3.02. COLLECTION OF RECEIVABLE PAYMENTS. The Servicer shall make
reasonable efforts to collect all payments called for under the terms and
provisions of the Receivables as and when the same shall become due, and shall
follow such collection procedures as it follows with respect to all comparable
motor vehicle receivables that it services for itself or others. The Servicer
shall be authorized to grant extensions, rebates or adjustments on a Receivable
without
27
the prior consent of the Owner Trustee. If, as a result of the extending of
payments in accordance with the customary servicing standards of the Servicer,
any Receivable will be outstanding later than the Final Scheduled Maturity Date
occurs, the Servicer shall be obligated to repurchase such Receivable pursuant
to Section 3.08. In addition, in the event that any such rescheduling or
extension of a Receivable modifies the terms of such Receivable in such a manner
as to constitute a cancellation of such Receivable and the creation of a new
motor vehicle receivable that results in a deemed exchange thereof within the
meaning of Section 1001 of the Code, the Servicer shall purchase such Receivable
pursuant to Section 3.08, and the receivable created shall not be included in
the Issuer. Notwithstanding the foregoing, extensions or modifications of the
payment schedule of a Receivable can be made only in accordance with the
customary servicing procedures of the Servicer, provided that the amount of any
extension fee charged in connection with the extension of a Receivable is
deposited into the Collection Account by the Servicer in accordance with Section
4.05(a). The Servicer may, in accordance with its customary servicing
procedures, waive any prepayment charge, late payment charge or any other fees
that may be collected in the ordinary course of servicing the Receivables.
Section 3.03. REBATES ON FULL PREPAYMENTS. In the event that the amount
of a full Prepayment by an Obligor under a Precomputed Receivable, after
adjustment for the applicable Rebate, is less than the amount that would be
payable under the actuarial method if a full Prepayment were made at the end of
the billing month under such Precomputed Receivable, either because the Rebate
calculated under the terms of such Precomputed Receivable is greater than the
amount calculable under the actuarial method or because the Servicer's customary
servicing procedure is to credit a greater Rebate, the Servicer, as part of its
servicing duties, shall remit such difference to the Trust by deposit into the
Collection Account pursuant to Section 4.05(a).
Section 3.04. REALIZATION UPON RECEIVABLES. On behalf of the Issuer, the
Servicer shall use its best efforts, consistent with its customary servicing
procedures, to repossess or otherwise comparably convert the ownership of any
Financed Vehicle that it has reasonably determined should be repossessed or
otherwise converted following a default under the Receivable secured by the
Financed Vehicle (and shall specify such Receivables to the Trustees no later
than the Determination Date following the end of the Collection Period in which
the Servicer shall have made such determination). The Servicer shall follow such
practices and procedures as it shall deem necessary or advisable and as shall be
customary and usual in its servicing of motor vehicle receivables, which
practices and procedures may include reasonable efforts to realize upon any
Dealer Recourse, selling the related Financed Vehicle at public or private sale
and other actions by the Servicer in order to realize upon such a Receivable.
The Servicer shall be entitled to recover its reasonable Liquidation Expenses
with respect to each Defaulted Receivable. All Net Liquidation Proceeds realized
in connection with any such action with respect to a Receivable shall be
deposited by the Servicer in the Collection Account in the manner specified in
Section 4.02(a). The foregoing is subject to the proviso that, in any case in
which the Financed Vehicle shall have suffered damage, the Servicer shall not
expend funds in connection with any repair or towards the repossession of such
Financed Vehicle unless it shall determine in its discretion that such repair
and/or repossession shall increase the Liquidation Proceeds of the related
Receivable by an amount greater than the amount of such expenses.
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Section 3.05. MAINTENANCE OF PHYSICAL DAMAGE INSURANCE POLICIES. The
Servicer shall, in accordance with its customary servicing procedures and
underwriting standards, require that each Obligor shall have obtained physical
damage insurance covering each Financed Vehicle as of the origination of the
related Receivable.
Section 3.06. MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES. The
Servicer shall, in accordance with its customary servicing procedures and at its
own expense, take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed Vehicle.
The Servicer is hereby authorized to take such steps as are necessary to
reperfect such security interest on behalf of the Issuer in the event of the
relocation of a Financed Vehicle or for any other reason. In the event that the
assignment of a Receivable to the Issuer is insufficient, without a notation on
the related Financed Vehicle's certificate of title, to grant to the Issuer a
first priority perfected security interest in the related Financed Vehicle, the
Servicer hereby agrees to serve as the agent of the Issuer for the purpose of
perfecting the security interest of the Issuer in such Financed Vehicle and
agrees that the Servicer's listing as the secured party on the certificate of
title is solely in its capacity as agent of the Issuer.
Section 3.07. COVENANTS OF SERVICER. The Servicer makes the following
covenants on which the Issuer shall rely in accepting the Receivables in trust
pursuant to Section 2.01:
(a) LIENS IN FORCE. Except as otherwise contemplated by this Agreement,
the Servicer shall not release in whole or in part any Financed Vehicle from
the security interest securing the related Receivable.
(b) NO IMPAIRMENT. The Servicer shall do nothing to impair the rights
of the Issuer in the Receivables.
(c) NO AMENDMENTS. Subject to Section 3.02, the Servicer shall not
amend or otherwise modify any Receivable such that the total number of
Scheduled Payments is extended beyond the Final Scheduled Maturity Date, or
either the Amount Financed or the APR is altered.
Section 3.08. PURCHASE OF RECEIVABLES UPON BREACH. Upon discovery by the
Transferor, the Servicer, the Owner Trustee or the Indenture Trustee of a breach
of any of the covenants of the Servicer set forth in Section 3.07 that
materially and adversely affects the interests of the Issuer, the Trustees or
the Securityholders in any Receivable, or if an improper extension, rescheduling
or modification of a Receivable is made by the Servicer as described in Section
3.02, the party discovering such breach shall give prompt written notice to the
others. As of the last day of the second Collection Period following the
Collection Period in which it discovers or receives notice of such breach (or,
at the Servicer's election, the last day of the first Collection Period
following the Collection Period in which it discovers or receives notice of such
breach), the Servicer shall, unless such breach or impropriety shall have been
cured in all material respects, purchase from the Issuer such Receivable. In
consideration of the purchase of any such Receivable, on the related Deposit
Date the Servicer shall remit the Administrative Purchase Payment to the
Collection Account in the manner specified in Section 4.05, and shall be
entitled to receive the Released Administrative Amount. Upon such deposit of the
29
Administrative Purchase Payment, the Servicer shall for all purposes of this
Agreement be deemed to have released all claims for reimbursement of Outstanding
Advances made in respect of such Receivable. The sole remedy of the Issuer, the
Trustees or the Securityholders against the Servicer with respect to a breach
pursuant to Section 3.02 or 3.07 shall be to require the Servicer to purchase
the related Receivables pursuant to this Section, except as otherwise provided
in Section 6.02. Neither the Owner Trustee nor the Indenture Trustee shall have
any duty to conduct any affirmative investigation as to the occurrence of any
condition requiring the repurchase of any Receivable pursuant to this Section.
Section 3.09. TOTAL SERVICING FEE; PAYMENT OF CERTAIN EXPENSES BY
SERVICER. As compensation for the performance of its obligations hereunder, the
Servicer shall be entitled to receive on each Distribution Date the Total
Servicing Fee. The Basic Servicing Fee in respect of a Collection Period shall
be calculated based on a 360 day year comprised of twelve 30-day months. Except
to the extent otherwise provided herein, the Servicer shall be required to pay
all expenses incurred by it in connection with its activities under this
Agreement (including fees and disbursements of the Trustees and independent
accountants, taxes imposed on the Servicer, expenses incurred in connection with
distributions and reports to Securityholders and all other fees and expenses not
expressly stated under this Agreement to be for the account of the
Securityholders).
Section 3.10. SERVICER'S CERTIFICATE. On or before each Determination
Date, the Servicer shall deliver to the Trustees and each Rating Agency a
Servicer's Certificate containing all information necessary to make the
distributions required by Sections 4.06 and 4.07 in respect of the related
Collection Period and all information necessary for the Trustees to send
statements to Securityholders pursuant to Section 4.10. The Servicer shall also
specify to the Trustees, no later than the Determination Date following the last
day of a Collection Period as of which the Transferor shall be required to
repurchase or the Servicer shall be required to purchase a Receivable, the
identity of any such Receivable and the identity of any Receivable which the
Servicer shall have determined to be a Defaulted Receivable during such
Collection Period. Receivables purchased or to be purchased by the Servicer or
the Transferor and Receivables as to which the Servicer has determined during
such Collection Period to be Defaulted Receivables and with respect to which
payment of the Administrative Purchase Payment or Warranty Purchase Payment has
been provided from whatever source as of last day of such Collection Period
shall be identified by the Transferor's account number with respect to such
Receivable (as specified in the Schedule of Receivables).
Section 3.11. ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT.
(a) The Servicer shall deliver to the Trustees and each Rating Agency,
on or before June 30 of each year, beginning June 30, 1999, an Officer's
Certificate of the Servicer, stating that (i) a review of the activities of
the Servicer during the preceding 12-month period ended March 31 (or, if
applicable, such shorter period in the case of the first such Officer's
Certificate) and of its performance under this Agreement has been made under
such officer's supervision, and (ii) to such officer's knowledge, based on
such review, the Servicer has fulfilled all its obligations under this
Agreement throughout such period, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof.
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(b) The Servicer shall deliver to the Trustees and each Rating Agency,
promptly after having obtained knowledge thereof, but in no event later than
five Business Days thereafter, an Officer's Certificate specifying the
nature and status of any event which with the giving of notice or lapse of
time, or both, would become a Servicer Default.
Section 3.12. ANNUAL ACCOUNTANTS' REPORT. The Servicer shall cause a firm
of independent accountants (who may also render other services to the Servicer
or to the Transferor) to deliver to the Trustees on or before June 30 of each
year, beginning with the June 30 that is at least six months after the Closing
Date, a report with respect to the preceding 12-month period ended March 31 (or,
if applicable, such shorter period in the case of the first such report) to the
effect that such accountants have examined certain records and documents
relating to the servicing of the Receivables under this Agreement (using
procedures specified in such report, which procedures shall be substantially in
compliance with generally accepted auditing standards) and that nothing has come
to their attention indicating that such servicing has not been conducted in
compliance with the customary servicing procedures of the Servicer, including
but not limited to the procedures set forth in this Agreement, except for (i)
such exceptions as such firm shall believe to be immaterial and (ii) such other
exceptions as shall be set forth in such report. Such report shall also indicate
that the firm is independent with respect to the Transferor and the Servicer
within the meaning of the Code of Professional Ethics of the American Institute
of Certified Public Accountants.
Section 3.13. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
RECEIVABLES. The Servicer shall provide to the Trustees reasonable access to the
documentation regarding the Receivables. The Servicer shall provide such access
to any Securityholder only in such cases where a Securityholder is required by
applicable statutes or regulations to review such documentation. In each case,
such access shall be afforded without charge but only upon reasonable request
and during normal business hours at the respective offices of the Servicer.
Nothing in this Section shall derogate from the obligation of the Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Obligors, and the failure of the Servicer to provide access as provided in this
Section as a result of such obligation shall not constitute a breach of this
Section.
Section 3.14. AMENDMENTS TO SCHEDULE OF RECEIVABLES. If the Servicer,
during a Collection Period, assigns to a Receivable an account number that
differs from the original account number identifying such Receivable on the
Schedule of Receivables, the Servicer shall deliver to the Transferor and the
Trustees on or before the Distribution Date relating to such Collection Period
an amendment to the Schedule of Receivables reporting the newly assigned account
number, together with the old account number of each such Receivable. The first
such delivery of amendments to the Schedule of Receivables shall include monthly
amendments reporting account numbers appearing on the Schedule of Receivables
with the new account numbers assigned to such Receivables during any prior
Collection Period.
Section 3.15. REPORTS TO SECURITYHOLDERS AND RATING AGENCIES.
(a) At the expense of the Issuer, the Indenture Trustee shall provide
to any Note Owner and the Owner Trustee shall provide to any
Certificateholder who so requests in writing a copy of (i) any Servicer's
Certificate, (ii) any annual statement as to compliance described in
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Section 3.11(a), (iii) any annual accountants' report described in Section
3.12, (iv) any statement to Securityholder pursuant to Section 4.10, (v) the
Trust Agreement, (vi) the Indenture or (vii) this Agreement (without
Exhibits). The Indenture Trustee or the Owner Trustee, as applicable, may
require such Securityholder or Note Owner to pay a reasonable sum to cover
the cost of the Trustee's complying with such request.
(b) The Servicer shall forward to each Rating Agency a copy of each (i)
Servicer's Certificate, (ii) annual statement as to compliance described in
Section 3.11(a), (iii) Officer's Certificate of the Servicer described in
Section 3.11(b), (iv) annual accountants' report pursuant to Section 3.12,
(v) statement to Securityholders pursuant to Section 4.10 and (vi) other
report it may receive pursuant to this Agreement, the Trust Agreement or the
Indenture.
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ARTICLE FOUR
DISTRIBUTIONS; RESERVE FUND;
STATEMENTS TO SECURITYHOLDERS
Section 4.01. ESTABLISHMENT OF ACCOUNTS.
(a) The Servicer shall establish and maintain an Eligible Account with
and in the name of the Indenture Trustee for the benefit of (i) the
Securityholders (the "Collection Account"), (ii) the Noteholders (the "Note
Distribution Account"), (iii) the Noteholders (the "Reserve Fund"), (iv) the
Securityholders (the "Yield Supplement Account") and (v) the Securityholders
(the "Payahead Account"), in each case, bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
related Securityholders. Except as otherwise provided in this Agreement, in
the event that the Indenture Trustee is no longer an Eligible Institution,
the Servicer shall, with the assistance of the Indenture Trustee as
necessary, cause the Accounts to be moved to an Eligible Institution.
(b) To the extent permitted by applicable laws, rules and regulations,
all amounts held in (i) the Collection Account, the Note Distribution
Account, the Reserve Fund and the Yield Supplement Account shall be either
invested by the Indenture Trustee in Permitted Investments selected in
writing by the Servicer or maintained in cash and (ii) the Payahead Account
shall be either invested by the Indenture Trustee in investments defined in
clause (vii) of the definition of the term "Permitted Investments" selected
in writing by the Servicer or maintained in cash. Earnings on investment of
funds in the Accounts (other than the Yield Supplement Account and the
Reserve Fund) (net of losses and investment expenses) shall be paid to the
Servicer as part of the Supplemental Servicing Fee and any losses and
investment expenses shall be charged against the funds on deposit in the
related Account.
(i) Except as otherwise provided in Section 4.01(b), the Indenture
Trustee shall possess all right, title and interest in all funds on
deposit from time to time in the Accounts and in all proceeds thereof
(including all income thereon) and all such funds, investments,
proceeds and income shall be part of the Owner Trust Estate. The
Accounts shall be under the sole dominion and control of the Indenture
Trustee for the benefit of the Noteholders or the Securityholders, as
the case may be.
(ii) Notwithstanding anything else contained herein, the Servicer
agrees that each Account and the Certificate Distribution Account will
be established only with an Eligible Institution which agrees
substantially as follows: (A) it will comply with Entitlement Orders
related to such account issued by the Indenture Trustee without further
consent by the Servicer; (B) until termination of this Agreement, it
will not enter into any other agreement related to such account
pursuant to which it agrees to comply with Entitlement Orders of any
Person other than the Indenture Trustee; (C) all Account Property
delivered or credited to it in connection with such account and all
proceeds thereof will be promptly credited to such account; (D) it will
treat all Account Property as Financial Assets; and (E) all Account
Property will be physically delivered (accompanied by any required
endorsements) to, or credited to an account in the name of, the
Eligible Institution maintaining the related Account in accordance with
such Eligible Institution's
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customary procedures such that such Eligible Institution establishes a
Security Entitlement in favor of the Indenture Trustee with respect
thereto over which the Indenture Trustee (or such other Eligible
Institution) has Control.
(iii) The Servicer shall have the power, revocable by the
Indenture Trustee or by the Owner Trustee with the consent of the
Indenture Trustee, to instruct the Indenture Trustee to make
withdrawals and payments from the Accounts for the purpose of
permitting the Servicer or the Owner Trustee to carry out its
respective duties hereunder or permitting the Indenture Trustee to
carry out its duties under the Indenture.
Section 4.02. COLLECTIONS.
(a) The Servicer shall remit daily to the Collection Account all
payments received from or on behalf of the Obligors on or in respect of the
Receivables (other than, in the case of Precomputed Receivables, payments
constituting Payments Ahead) and all Net Liquidation Proceeds within two
Business Days after receipt thereof.
(b) Notwithstanding the provisions of Section 4.02(a), so long as AHFC
is acting as the Servicer, and subject to the conditions set forth below,
the Servicer may be permitted to make remittances of collections on a less
frequent basis than that specified in Section 4.02(a) upon compliance with
the specific terms and conditions set forth below in this Section and for so
long as such terms and conditions are fulfilled. Accordingly,
notwithstanding the provisions of Section 4.02(a), the Servicer will be
permitted to remit such collections to the Collection Account in immediately
available funds no later than 9:00 A.M., Los Angeles time, on each Deposit
Date but only for so long as (i)(A) the Servicer shall be AHFC, (B) except
as provided in clause (ii) below, the short-term credit rating of the
Servicer is at least equal to the Required Servicer Rating by each Rating
Agency and (C) no Servicer Default shall have occurred and be continuing,
provided, however, that immediately following the non-compliance with clause
(B) above or in the event that an event of the nature specified in Section
7.01(c) has occurred (notwithstanding any period of grace contained in such
clause), the Servicer shall remit such collections to the Collection Account
on a daily basis within two Business Days of receipt thereof, or (ii)(A) if
the conditions specified in clause (i)(A) and (C) above are satisfied, and
(B) the Servicer shall have obtained (1) a Servicer Letter of Credit issued
by a depository institution or insurance company, as the case may be, having
a short-term credit rating at least equal to the Required Servicer Rating
and providing that the Indenture Trustee may draw thereon in the event that
the Servicer fails to deposit collections into the Collection Account on a
monthly basis or (2) a surety bond, insurance policy or other deposit of
cash or securities satisfactory to the Indenture Trustee and each Rating
Agency; provided that in connection with clause (ii) above, the Servicer
provides to the Indenture Trustee, from each Rating Agency for which the
Servicer's then-current short-term credit rating is not at least equal to
the Required Servicer Rating for such Rating Agency, a letter to the effect
that the satisfaction of the conditions in clause (ii) above and allowing
the Servicer to make monthly deposits will not result in a qualification,
reduction or withdrawal of its then-current rating of any Class of Notes
and, if applicable, an Officer's Certificate from the Servicer to the effect
that the Servicer's then-current short-term credit rating is at least equal
to the Required Servicer Rating from each other Rating Agency, if any; and,
provided further, that if the Servicer shall have obtained a Servicer Letter
of Credit in accordance with clause (ii) above, the Servicer shall be
required to remit collections to
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the Collection Account on each Business Day to the extent that the aggregate
amount of collections described in Section 4.02(a) and received during such
Collection Period exceeds the Servicer Letter of Credit Amount. The
Indenture Trustee shall not be deemed to have knowledge of any event or
circumstance under clause (i)(C) above that would require daily remittance
by the Servicer to the Collection Account unless a Responsible Officer has
received notice of such event or circumstance from the Transferor or the
Servicer in an Officer's Certificate, from Securityholders as provided in
Section 7.01 or from the Letter of Credit Bank. For purposes of this Article
the phrase "payments made on behalf of Obligors" shall mean payments made by
Persons other than the Transferor, the Servicer or the Letter of Credit
Bank, if any.
Any funds held by the Servicer which it determines are to be remitted (or
any of its own funds which the Transferor or the Servicer determines to pay
to the Letter of Credit Bank) in respect of a failure previously to remit
collections which failure resulted in a payment under the Servicer Letter of
Credit, if any, shall not be remitted to the Collection Account, but shall
instead be paid immediately and directly to the Letter of Credit Bank. Any
such payment to the Letter of Credit Bank shall be accompanied by a copy of
the Servicer's Certificate related to the previous failure to remit funds
and an Officer's Certificate which includes a statement identifying, by
reference to the items in such related Servicer's Certificate, each
shortfall in Servicer remittances to which such payment relates. The
Servicer will also provide the Indenture Trustee with copies of each such
Servicer's Certificate and Officer's Certificate delivered with any such
payment to the Letter of Credit Bank.
(c) The Servicer shall deposit all Payments Ahead in the Payahead
Account within two Business Days after receipt thereof, which Payments Ahead
shall be transferred to the Collection Account pursuant to Section
4.06(a)(i). Notwithstanding the foregoing, so long as the Servicer is
permitted to remit collections to the Collection Account on a monthly basis
pursuant to Section 4.02(b), the Servicer will not be required to deposit
Payments Ahead in the Payahead Account within two Business Days after
receipt thereof but shall be entitled to retain such Payments Ahead, without
segregation from its other funds, until such time as the Servicer shall be
required to remit Applied Payments Ahead to the Collection Account pursuant
to Section 4.06(a)(ii). Commencing with the first day of the first
Collection Period that begins at least two Business Days after the day on
which the Servicer is no longer permitted to remit collections to the
Collection Account on a monthly basis pursuant to Section 4.02(b), and until
such time as the Servicer is once again permitted by Section 4.02(b) to
remit collections to the Collection Account on a monthly basis, all Payments
Ahead then held by the Servicer shall be immediately deposited into the
Payahead Account and all future Payments Ahead shall be remitted by the
Servicer to the Payahead Account within two Business Days after receipt
thereof.
Section 4.03. APPLICATION OF COLLECTIONS. On each Distribution Date, all
collections for the related Collection Period shall be applied by the Servicer
as follows:
(a) With respect to each Receivable (other than an Administrative
Receivable or a Warranty Receivable), payments made by or on behalf of the
Obligor which are not Supplemental Servicing Fees shall be applied first to
reimburse the Servicer for Outstanding Advances made with respect to such
Receivable (each such payment, an "Overdue Payment"). Next, the amount of
any payment in excess of Supplemental Servicing Fees and Outstanding
Advances with respect to such Receivable shall be applied to the Scheduled
Payment with
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respect to such Receivable. If the amount of such payment remaining after
the applications described in the two preceding sentences (i) equals
(together with any Deferred Prepayment) the unpaid principal balance of such
Receivable, it shall be applied to prepay the principal balance of such
Receivable, or (ii) is less than the unpaid principal balance of such
Receivable, it shall constitute an Excess Payment with respect to such
Receivable.
(b) With respect to each Administrative Receivable and Warranty
Receivable, payments made by or on behalf of the Obligor shall be applied in
the same manner, except that any Released Administrative Amount or Released
Warranty Amount shall be remitted to the Servicer or the Transferor, as
applicable. A Warranty Purchase Payment or an Administrative Purchase
Payment shall be applied to reduce Outstanding Advances and such Warranty
Purchase Payment or Administrative Purchase Payment, as applicable, shall be
applied to the Scheduled Payment, in each case to the extent that the
payments by the Obligor shall be insufficient, and then to prepay the unpaid
principal balance of such Receivable in full.
Section 4.04. ADVANCES.
(a) As of the last day of a Collection Period, if the payments during
such Collection Period by or on behalf of the Obligor on or in respect of a
Receivable (other than an Administrative Receivable or a Warranty
Receivable) after application under Section 4.03(a) shall be less than the
Scheduled Payment, whether as a result of any extension granted to the
Obligor or otherwise, then (i) in the case of a Precomputed Receivable, the
Deferred Prepayment, if any, with respect to such Precomputed Receivable
shall be applied by the Servicer to the extent of the shortfall, and such
Deferred Prepayment shall be reduced accordingly and the Servicer shall
advance to the Trust an amount equal to such shortfall (each, a "Precomputed
Advance") and (ii) in the case of a Simple Interest Receivable, the Servicer
shall advance to the Trust an amount equal to the product of the principal
balance of such Receivable as of the first day of such Collection Period and
one-twelfth of its APR minus the amount of interest actually received on
such Receivable during such Collection Period (each, a "Simple Interest
Advance"). If the calculation in clause (ii) above in respect of a Simple
Interest Receivable results in a negative number, an amount equal to such
negative amount shall be paid to the Servicer in reimbursement of any
Outstanding Advances in respect of Simple Interest Receivables. In addition,
in the event that a Simple Interest Receivable becomes a Liquidated
Receivable, the amount of accrued and unpaid interest thereon (but not
including interest for the current Collection Period) shall, up to the
amount of Outstanding Advances in respect of Simple Interest Receivables in
respect thereof, be withdrawn from the Collection Account and paid to the
Servicer in reimbursement of such Outstanding Advances. No Advances will be
made with respect to the Principal Balance of Simple Interest Receivables.
Notwithstanding the foregoing, the Servicer shall not be required to make
any Advance (other than a Simple Interest Advance in respect of an interest
shortfall arising from the Prepayment of a Simple Interest Receivable) to
the extent that the Servicer, in its sole discretion, shall determine that
such Advance is unlikely to be recovered from subsequent payments made by or
on behalf of the related Obligor, Liquidation Proceeds, by the
Administrative Purchase Payment or by the Warranty Purchase Payment, in each
case, with respect to such Receivable or otherwise. On each Deposit Date,
the Servicer will deposit into the Collection Account an amount equal to all
Advances to be made in respect of the related Collection Period.
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(b) The Servicer shall be entitled to reimbursement for Outstanding
Advances, without interest, with respect to a Receivable from the following
sources with respect to such Receivable: (i) subsequent payments made by or
on behalf of the related Obligor, (ii) Liquidation Proceeds, (iii) the
Administrative Purchase Payment and (iv) the Warranty Purchase Payment.
(c) To the extent that during any Collection Period any funds described
above in Section 4.04(b) with respect to a Receivable as to which the
Servicer previously has made an unreimbursed Advance are received by the
Issuer or the Servicer, and the Servicer determines that any Outstanding
Advances with respect to such Receivable are unlikely to be recovered from
payments made on or with respect to such Receivable (each, a "Nonrecoverable
Advance"), then, on the related Distribution Date, upon the Servicer
providing the Transferor and the Trustees with an Officer's Certificate
setting forth the basis for its determination of any such Nonrecoverable
Advance, the Indenture Trustee shall promptly remit to the Servicer from the
Collection Account, (i) from Available Interest an amount equal to the
portion of such Nonrecoverable Advance allocable to interest and (ii) from
Available Principal an amount equal to the portion of such Nonrecoverable
Advance allocable to principal, in each case without interest, in accordance
with Section 4.06(c)(i). In lieu of causing the Indenture Trustee to remit
any such amounts or the amounts described in clauses (i) through (iv) in
Section 4.04(b), the Servicer may deduct such amounts from deposits
otherwise to be made into the Collection Account in accordance with Section
4.09.
Section 4.05. ADDITIONAL DEPOSITS.
(a) The following additional deposits shall be made to the Collection
Account: (i) the Transferor shall remit the aggregate Warranty Purchase
Payments with respect to Warranty Receivables pursuant to Section 2.04 or
the amount required upon the optional purchase of all Receivables by the
Transferor pursuant to Section 8.01 and (ii) the Servicer shall remit (A)
any extension fee charged in connection with the extension of a Receivable
pursuant to Section 3.02, (B) the amount required to be remitted in respect
of certain full Prepayments pursuant to Section 3.03, (C) the aggregate
Advances pursuant to Section 4.04(a), (D) the aggregate Administrative
Purchase Payments with respect to Administrative Receivables pursuant to
Section 3.08 and (E) the amount required upon the optional purchase of all
Receivables by the Servicer or any successor to the Servicer pursuant to
Section 8.01.
(b) All deposits required to be made in respect of a Collection Period
pursuant to this Section by the Transferor or the Servicer, as the case may
be, may be made in the form of a single deposit and shall be made in
immediately available funds, no later than 2:00 P.M., Los Angeles time, on
the related Deposit Date.
Section 4.06. DISTRIBUTIONS.
(a) On each Deposit Date, the Indenture Trustee shall cause to be made
the following transfers and distributions in immediately available funds in
the amounts set forth in the Servicer's Certificate for such Distribution
Date:
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(i) from the Payahead Account (or directly from the Servicer in
the case of Payments Ahead held by the Servicer pursuant to Section
4.02(b) or (c)) to the Collection Account, the aggregate Applied
Payments Ahead;
(ii) if the Servicer is not permitted to hold Payments Ahead
pursuant to Section 4.02(b) or (c), from the Collection Account to the
Payahead Account, the aggregate Payments Ahead for the related
Collection Period; and
(iii) from the Yield Supplement Account to the Collection Account,
an amount equal to the Yield Supplement Withdrawal Amount, if any, for
such Distribution Date.
(b) On each Determination Date, the Servicer shall calculate all
amounts required to be deposited in the Note Distribution Account and the
Certificate Distribution Account and to make all distributions on the
related Distribution Date.
(c) On each Distribution Date, the Servicer shall instruct the
Indenture Trustee in writing (based on the information contained in the
Servicer's Certificate delivered on the related Determination Date pursuant
to Section 3.10) to make the following deposits and distributions for
receipt by the Servicer or deposit in the applicable account by 8:00 A.M.,
Los Angeles time, to the extent of the Available Amount, in the following
order of priority:
(i) to the Servicer, Nonrecoverable Advances;
(ii) to the Servicer, the Total Servicing Fee (including any
unpaid Total Servicing Fees from one or more prior Collection Periods);
(iii) to the Indenture Trustee and the Owner Trustee, any accrued
and unpaid Trust Fees and Expenses, in each case to the extent such
fees and expenses have not been previously paid by the Servicer;
(iv) to the Note Distribution Account, the Note Interest
Distributable Amount to be distributed to the holders of the Notes at
their respective Interest Rates;
(v) to the Note Distribution Account, the portion of the Principal
Payment Amount payable to the Noteholders as described in Section
8.02(d)(ii) of the Indenture;
(vi) to the Reserve Fund, from the Principal Payment Amount, the
amount, if any, necessary to reinstate the balance in the Reserve Fund
up to the Specified Reserve Fund Balance; and
(vii) to the Certificate Distribution Account, the Certificate
Interest Distributable Amount to be distributed to Certificateholders;
(viii) to the Certificate Distribution Account, the portion of the
Principal Payment Amount payable to Certificateholders as described in
Section 8.02(d)(ii) of the Indenture; and
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(ix) to the Transferor, any Available Amount remaining (after
giving effect to the reduction in the Available Amount described in
clauses (i) through (viii) above.
Notwithstanding that the Notes have been paid in full, the Indenture
Trustee shall continue to maintain the Collection Account hereunder until the
Pool Balance has been reduced to zero.
Section 4.07. RESERVE FUND.
(a) On the Closing Date, the Owner Trustee will deposit, on behalf of
the Transferor, the Reserve Fund Initial Deposit into the Reserve Fund from
the net proceeds of the sale of the Notes. The Reserve Fund shall be the
property of the Issuer subject to the rights of the Indenture Trustee in the
Reserve Fund Property.
(b) In the event that the Note Distributable Amount exceeds the sum of
the amounts deposited into the Note Distribution Account pursuant to
Sections 4.06(c)(iv) and (v) on each Distribution Date, (or, if the Reserve
Fund is not maintained by the Indenture Trustee, on the related Deposit
Date), the Indenture Trustee shall cause an amount equal to the lesser of
(A) the amount on deposit in the Reserve Fund and (B) such excess, and
deposit such amount into the Note Distribution Account in immediately
available funds in the amounts set forth in the Servicer's Certificate for
such Distribution Date; provided that such amount shall be applied first, to
the payment of interest due on the Notes to the extent, if any, that the
amount deposited pursuant to Section 4.06(c)(iv) is not sufficient to cover
such payment of interest and, second, to the payment of principal of the
Notes.
(c) All interest and other income (net of losses and investment
expenses) on funds on deposit in the Reserve Fund shall upon the written
direction of the Servicer, be paid to the Transferor to the extent that the
funds therein exceed the Specified Reserve Fund Balance. Upon any
distribution to the Transferor of amounts in excess of the Specified Reserve
Fund Balance, the Noteholders will not have any rights in, or claims to,
such amounts.
Section 4.08. YIELD SUPPLEMENT ACCOUNT. On the Closing Date, the
Transferor will deposit the Yield Supplement Account Deposit to the Yield
Supplement Account from the net proceeds of sale of the Notes. The Yield
Supplement Account shall be the property of the Issuer subject to the rights of
the Indenture Trustee for the benefit of the Securityholders.
Section 4.09. NET DEPOSITS. For so long as AHFC shall be the Servicer,
the Transferor, the Servicer and the Indenture Trustee may make any remittances
pursuant to this Article net of amounts to be distributed by the applicable
recipient to such remitting party. Nonetheless, each such party shall account
for all of the above described remittances and distributions as if the amounts
were deposited and/or transferred separately.
Section 4.10. STATEMENTS TO SECURITYHOLDERS.
(a) On each Distribution Date, the Servicer shall provide to the Owner
Trustee to forward to each Certificateholder of record and to the Indenture
Trustee to forward to each Noteholder of record a statement, based on the
Servicer's Certificate furnished pursuant to
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Section 3.10, setting forth at least the following information as to the
Securities, to the extent applicable:
(i) the amount of such distribution allocable to principal, as
allocated to each Class of Notes and to the Certificates (stated
separately for each Class of Notes and the Certificates);
(ii) the amount of such distribution allocable to interest, as
allocated to each Class of Notes and to the Certificates (stated
separately for each Class of Notes and the Certificates);
(iii) the Yield Supplement Amount, the Yield Supplement Withdrawal
Amount and the amount on deposit in the Yield Supplement Account after
giving effect to the distributions made on such Distribution Date;
(iv) the Pool Balance as of the close of business on the last day
of the related Collection Period, after giving effect to payments
allocated to principal reported under clause (i) above;
(v) the Total Servicing Fee paid to the Servicer with respect to
the related Collection Period;
(vi) the amount of non-recoverable Advances;
(vii) total Payments Ahead and the Applied Payments Ahead;
(viii) the amount of Trust Fees and Expenses;
(ix) the amount of any Note Interest Carryover Shortfall and Note
Principal Carryover Shortfall on such Distribution Date and the change
in such amounts from those with respect to the immediately preceding
Distribution Date;
(x) the Note Pool Factor for each Class of Notes and the
Certificate Pool Factor, in each case as of such Distribution Date;
(xi) the balance on deposit in the Reserve Fund on such
Distribution Date, after giving effect to distributions made on the
Distribution Date, if any, and the change in such balance from the
immediately preceding Distribution Date; and
(xii) the amount available under the Servicer Letter of Credit, if
any, and such amount as a percentage of the Pool Balance as of the last
day of such Collection Period.
Each amount set forth on the Distribution Date statement under clauses (i),
(ii) (iv) and (x) above shall be expressed as a dollar amount per $1,000 of
original principal balance of a Note or the Original Certificate Balance of a
Certificate, as the case may be.
(b) Within the prescribed period of time for tax reporting purposes
after the end of each calendar year during the term of the Issuer, but not
later than the latest date permitted by
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law, the related Trustee shall mail to each Person who at any time during
such calendar year shall have been a Securityholder, a statement, prepared
by the Servicer, containing the sum of the amounts set forth in clauses (i),
(ii), (iv) and (x) above for such calendar year or, in the event such Person
shall have been a Securityholder during a portion of such calendar year, for
the applicable portion of such year, for the purposes of such
Securityholder's preparation of federal income tax returns. In addition, the
Servicer shall furnish to the Trustees for distribution to such Person at
such time any other information necessary under applicable law for the
preparation of such income tax returns.
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ARTICLE FIVE
THE TRANSFEROR
Section 5.01. REPRESENTATIONS OF TRANSFEROR. The Transferor makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution and
delivery of this Agreement and as of the Closing Date, and shall survive the
sale of the Receivables to the Issuer and the pledge thereof to the Indenture
Trustee pursuant to the Indenture.
(a) ORGANIZATION AND GOOD STANDING. The Transferor has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of California, with power and authority to own its
properties and to conduct its business as such properties are currently
owned and such business is presently conducted, and had at all relevant
times, and has, power, authority and legal right to acquire, own and sell
the Receivables.
(b) DUE QUALIFICATION. The Transferor is duly qualified to do business
as a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease
of property or the conduct of its business shall require such
qualifications.
(c) POWER AND AUTHORITY. The Transferor has the power and authority to
execute and deliver this Agreement and to carry out its terms, the
Transferor has full power and authority to sell and assign the property to
be sold and assigned to and deposited with the Issuer and has duly
authorized such sale and assignment by all necessary corporate action; and
the execution, delivery and performance of this Agreement has been duly
authorized by the Transferor by all necessary corporate action.
(d) VALID SALE; BINDING OBLIGATION. This Agreement evidences a valid
sale, transfer and assignment of the Receivables, enforceable against
creditors of and purchasers from the Transferor, and constitutes a legal,
valid and binding obligation of the Transferor enforceable in accordance
with its terms, except as enforceability may be subject to or limited by
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such enforceability shall be
considered in a proceeding in equity or at law.
(e) NO VIOLATION. The execution, delivery and performance by the
Transferor of this Agreement and the consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms of this
Agreement does not conflict with, result in any breach of any of the terms
and provisions of, nor constitute (with or without notice or lapse of time)
a default under, the articles of incorporation or bylaws of the Transferor,
or conflict with or violate any of the material terms or provisions of, or
constitute (with or without notice or lapse of time) a default under, any
indenture, agreement or other instrument to which the Transferor is a party
or by which it shall be bound; nor result in the creation or imposition of
any Lien upon any of its properties
42
pursuant to the terms of any such indenture, agreement or other instrument
(other than this Agreement); nor violate any law or, to the Transferor's
knowledge, any order, rule or regulation applicable to the Transferor of any
court or of any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the Transferor
or its properties, which breach, default, conflict, lien or violation would
have a material adverse effect on the earnings, business affairs or business
prospects of the Transferor.
(f) NO PROCEEDINGS. There are no proceedings or investigations pending,
or to the Transferor's knowledge, threatened, before any court, regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Transferor or its properties: (i) asserting the
invalidity of this Agreement or any other Basic Document, (ii) seeking to
prevent the issuance of the Securities or the consummation of any of the
transactions contemplated by the Basic Documents, (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Transferor of its obligations under, or the validity or
enforceability of, the Basic Documents or the Securities or (iv) relating to
the Transferor and which might adversely affect the federal income tax
attributes of the Securities.
Section 5.02. LIABILITY OF TRANSFEROR; INDEMNITIES. The Transferor shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Transferor under this Agreement, such obligations
shall include the following:
(a) The Transferor shall indemnify, defend and hold harmless the
Issuer, the Trustees and the Servicer and any of the officers, directors,
employees and agents of the Issuer, the Owner Trustee and the Indenture
Trustee from and against any taxes that may at any time be asserted against
any such Person with respect to the transactions contemplated herein and in
the other Basic Documents, including any sales, gross receipts, general
corporation, tangible personal property, privilege or license taxes (but, in
the case of the Issuer, not including any taxes asserted with respect to,
and as of the date of, the sale of the Receivables to the Issuer or the
issuance and original sale of the Securities, or asserted with respect to
ownership of the Receivables, or federal or other income taxes arising out
of distributions on the Securities) and costs and expenses in defending
against the same.
(b) The Transferor shall indemnify, defend and hold harmless the
Issuer, the Trustees and the Securityholders and any of the officers,
directors, employees and agents of the Issuer, the Owner Trustee and the
Indenture Trustee from and against any loss, liability or expense incurred
by reason of (i) the Transferor's willful misfeasance, bad faith or
negligence in the performance of its duties under this Agreement, or by
reason of reckless disregard of its obligations and duties under this
Agreement and (ii) the Transferor's or the Issuer's violation of federal or
state securities laws in connection with the offering and sale of the
Securities.
(c) The Transferor shall indemnify, defend and hold harmless the
Trustees and their respective officers, directors, employees and agents from
and against all costs, expenses, losses, claims, damages and liabilities
arising out of or incurred in connection
43
with the acceptance or performance of the trusts and duties herein and
contained in the Trust Agreement, in the case of the Owner Trustee, and
contained in the Indenture, in the case of the Indenture Trustee, except to
the extent that such cost, expense, loss, claim, damage or liability: (i) in
the case of the Owner Trustee, shall be due to the willful misfeasance, bad
faith or negligence (except for errors in judgment) of the Owner Trustee or
shall arise from the breach by the Owner Trustee of any of its
representations or warranties set forth in Section 7.03 of the Trust
Agreement, or (ii) in the case of the Indenture Trustee, shall be due to the
willful misfeasance, bad faith or negligence (except for errors in judgment)
of the Indenture Trustee.
(d) The Transferor shall pay any and all taxes levied or assessed upon
all or any part of the Owner Trust Estate.
Indemnification under this Section shall survive the resignation or removal
of the Owner Trustee or the Indenture Trustee, as the case may be, and the
termination of this Agreement and shall include reasonable fees and expenses of
counsel and expenses of litigation. If the Transferor 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 Transferor, without
interest.
Section 5.03. MERGER, CONSOLIDATION OR ASSUMPTION OF THE OBLIGATIONS OF
TRANSFEROR; CERTAIN LIMITATIONS.
(a) Any corporation (i) into which the Transferor may be merged or
consolidated, (ii) which may result from any merger, conversion or
consolidation to which the Transferor shall be a party or (iii) which may
succeed to all or substantially all of the business of the Transferor, which
corporation in any of the foregoing cases executes an agreement of
assumption to perform every obligation of the Transferor under this
Agreement, shall be the successor to the Transferor under this Agreement
without the execution or filing of any document or any further act on the
part of any of the parties to this Agreement, except that if the Transferor
in any of the foregoing cases is not the surviving entity, then the
surviving entity shall execute an agreement of assumption to perform every
obligation of the Transferor hereunder. The Transferor shall provide notice
of any merger, consolidation or succession pursuant to this Section to each
Rating Agency and shall receive from each Rating Agency a letter to the
effect that such merger, consolidation or succession will not result in a
qualification, downgrading or withdrawal of its then-current rating of any
Class of Notes.
(b) (i)Subject to paragraph (ii) below, the purpose of the Transferor
shall be to engage in any lawful activity for which a corporation may be
organized under the general corporation law of California other than the
banking business, the trust company business or the practice of a profession
permitted to be incorporated by the California Corporations Code.
(ii) Notwithstanding paragraph (b)(i) above, the purpose of the
Transferor shall be limited to the following purposes, and activities
incident to and necessary or convenient to accomplish the following
purposes: (A) to acquire, own, hold,
44
sell, transfer, assign, pledge, finance, refinance and otherwise deal
with, retail installment contracts or wholesale loans secured by, new
and used Honda and Acura motor vehicles (the "Motor Vehicle
Receivables"); (B) to authorize, issue, sell and deliver one or more
series of obligations, consisting of one or more classes of
certificates and/or notes or other evidence of indebtedness (the
"Offered Securities") that are collateralized by or evidence an
interest in Motor Vehicle Receivables; and (C) to negotiate, authorize,
execute, deliver and assume the obligations or any agreement relating
to the activities set forth in clauses (A) and (B) above, including but
not limited to any pooling and servicing agreement, sale and servicing
agreement, indenture, reimbursement agreement, credit support
agreement, receivables purchase agreement or underwriting agreement and
to engage in any lawful activity which is incidental to the activities
contemplated by any such agreement. So long as any outstanding debt of
the Transferor or Offered Securities are rated by any nationally
recognized statistical rating organization, the Transferor shall not
issue notes or otherwise borrow money unless (1) the Transferor has
made a written request to the related nationally recognized statistical
rating organization to issue notes or incur borrowings, which notes or
borrowings are rated by the related nationally recognized statistical
rating organization the same as or higher than the rating afforded any
outstanding rated debt or Offered Securities, or (2) such notes or
borrowings (X) are fully subordinated (and which shall provide for
payment only after payment in respect of all outstanding rated debt
and/or Offered Securities) or are nonrecourse against any assets of the
Transferor other than the assets pledged to secure such notes or
borrowings, (Y) do not constitute a claim against the Transferor in the
event such assets are insufficient to pay such notes or borrowings and
(Z) where such notes or borrowings are secured by the rated debt or
Offered Securities, are fully subordinated (and which shall provide for
payment only after payment in respect of all outstanding rated debt
and/or Offered Securities) to such rated debt or Offered Securities.
(c) Notwithstanding any other provision of this Section and any
provision of law, the Transferor shall not do any of the following:
(i) engage in any business or activity other than as set forth in
clause (b) above;
(ii) without the affirmative vote of a majority of the members of
the Board of Directors of the Transferor (which must include the
affirmative vote of all duly appointed Independent Directors, as
required by the articles of incorporation and bylaws of the
Transferor), (A) dissolve or liquidate, in whole or in part, or
institute proceedings to be adjudicated bankrupt or insolvent, (B)
consent to the institution of bankruptcy or insolvency proceedings
against it, (C) file a petition seeking or consent to reorganization or
relief under any applicable federal or state law relating to
bankruptcy, (D) consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator or other similar official of the
corporation or a substantial part of its property, (E) make a general
assignment for the benefit of creditors, (F) admit in writing its
inability to pay its debts generally as they become due or (G) take any
corporate action in furtherance of the actions set forth in clauses (A)
through (F) above; provided, however, that no director may be required
by any shareholder of the Transferor to consent to the institution
45
of bankruptcy or insolvency proceedings against the Transferor so long
as it is solvent; or
(iii) merge or consolidate with any other corporation, company or
entity or sell all or substantially all of its assets or acquire all or
substantially all of the assets or capital stock or other ownership
interest of any other corporation, company or entity (except for the
acquisition of Motor Vehicle Receivables of AHFC and the sale of Motor
Vehicle Receivables to one or more trusts in accordance with the terms
of clause (b)(ii) above, which shall not be otherwise restricted by
this Section).
Section 5.04. LIMITATION ON LIABILITY OF TRANSFEROR AND OTHERS. The
Transferor and any director, officer, employee or agent of the Transferor may
rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Transferor shall not be under any obligation to appear
in, prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
Section 5.05. TRANSFEROR MAY OWN NOTES. The Transferor and any Affiliate
thereof may in its individual or any other capacity become the owner or pledgee
of Securities with the same rights as it would have if it were not the
Transferor or an Affiliate thereof, except as expressly provided herein or in
any other Basic Document.
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ARTICLE SIX
THE SERVICER
Section 6.01. REPRESENTATIONS OF SERVICER. The Servicer makes the following
representations on which the Issuer is deemed to have relied in acquiring the
Receivables. The representations speak as of the execution and delivery of this
Agreement and as of the Closing Date, and shall survive the sale of the
Receivables to the Issuer and the pledge thereof to the Indenture Trustee
pursuant to the Indenture:
(a) ORGANIZATION AND GOOD STANDING. The Servicer has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of California, with power and authority to own its
properties and to conduct its business as such properties are currently
owned and such business is presently conducted, and had at all relevant
times, and has, power, authority and legal right to acquire, own, sell and
service the Receivables and to hold the Receivable Files as custodian on
behalf of the Issuer.
(b) DUE QUALIFICATION. The Servicer is duly qualified to do business as
a foreign corporation in good standing, and has obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease
of property or the conduct of its business (including the servicing of the
Receivables as required by this Agreement) shall require such
qualifications.
(c) POWER AND AUTHORITY. The Servicer has the power and authority to
execute and deliver this Agreement and to carry out its terms; and the
execution, delivery and performance of this Agreement has been duly
authorized by the Servicer by all necessary corporate action.
(d) BINDING OBLIGATION. This Agreement constitutes a legal, valid and
binding obligation of the Servicer enforceable in accordance with its terms,
except as enforceability may be subject to or limited by bankruptcy,
insolvency, reorganization, moratorium, liquidation or other similar laws
affecting the enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such enforceability shall be
considered in a proceeding in equity or in law.
(e) NO VIOLATION. The execution, delivery and performance by the
Servicer of this Agreement and the execution, delivery and performance by
the Transferor of this Agreement and the consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms of this
Agreement shall not conflict with, result in any breach of any of the terms
and provisions of, nor constitute (with or without notice or lapse of time)
a default under, the articles of incorporation or bylaws of the Servicer, or
conflict with or breach any of the material terms or provisions of, or
constitute (with or without notice or lapse of time) a default under, any
indenture, agreement or other instrument to which the Servicer is a party or
by which it shall be bound; nor result in the creation or imposition of any
Lien upon any of its properties pursuant to the terms of any such indenture,
agreement or other instrument (other than this Agreement); nor violate
47
any law or, to the Servicer's knowledge, any order, rule or regulation
applicable to the Servicer of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Servicer or its properties, which breach,
default, conflict, lien or violation would have a material adverse effect on
the earnings, business affairs or business prospects of the Servicer.
(f) NO PROCEEDINGS. There are no proceedings or investigations pending,
or to the Servicer's best knowledge, threatened, before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Servicer or its properties: (i) asserting the
invalidity of this Agreement or any other Basic Document, (ii) seeking to
prevent the issuance of the Securities or the consummation of any of the
transactions contemplated by the Basic Documents, (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Servicer of its obligations under, or the validity or
enforceability of, the Basic Documents or the Securities or (iv) relating to
the Servicer and which might adversely affect the federal income tax
attributes of the Securities.
Section 6.02. INDEMNITIES OF SERVICER.
(a) The Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Servicer under this
Agreement. In this regard, the Servicer shall indemnify, defend and hold
harmless the Issuer, the Trustees, the Securityholders and the Transferor
and any of the officers, directors, employees and agents of the Issuer, the
Owner Trustee and the Indenture Trustee from and against any and all costs,
expenses, losses, damages, claims and liabilities (i) arising out of or
resulting from the use, ownership or operation by the Servicer or any
Affiliate thereof of a Financed Vehicle, and (ii) to the extent that such
cost, expense, loss, claim, damage or liability arose out of, or was imposed
upon any such Person through, the negligence, willful misfeasance or bad
faith of the Servicer in the performance of its duties under this Agreement
or by reason of reckless disregard of its obligations and duties under this
Agreement.
For purposes of this Section, in the event of the termination of the rights
and obligations of AHFC (or any successor thereto pursuant to Section 6.03) as
Servicer pursuant to Section 7.01, or a resignation by such Servicer pursuant to
this Agreement, such Servicer shall be deemed to be the Servicer pending
appointment of a Successor Servicer (other than the Indenture Trustee) pursuant
to Section 7.02.
(b) Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee, as the case may be,
or the termination of this Agreement and shall include reasonable fees and
expenses of counsel and expenses of litigation. If the Servicer shall have
made any indemnity payments pursuant to this Section and the Person to or on
behalf of whom such payments are made thereafter collects any of such
amounts from others, such Person shall promptly repay such amounts to the
Servicer, without interest.
Section 6.03. MERGER, CONSOLIDATION OR ASSUMPTION OF THE OBLIGATIONS OF
SERVICER. Any corporation (i) into which the Servicer may be merged or
consolidated, (ii) which may result from any merger, conversion or consolidation
to which the Servicer shall be a party or (iii) which
48
may succeed to all or substantially all of the business of the Servicer, which
corporation in any of the foregoing cases executes an agreement of assumption to
perform every obligation of the Servicer under this Agreement, shall be the
successor to the Servicer under this Agreement without the execution or filing
of any paper or any further act on the part of any of the parties to this
Agreement. The Servicer shall provide notice of any merger, consolidation or
succession pursuant to this Section to the Trustees and each Rating Agency.
Section 6.04. LIMITATION ON LIABILITY OF SERVICER AND OTHERS. Neither the
Servicer nor any of the directors, officers, employees or agents of the Servicer
shall be under any liability to the Issuer or any Securityholder, except as
provided under this Agreement, for any action taken or for refraining from the
taking of any action pursuant to this Agreement or for errors in judgment;
provided, however, that this provision shall not protect the Servicer or any
such person against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations and duties under this Agreement. The
Servicer and any director, officer, employee or agent of the Servicer may rely
in good faith on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising under this Agreement.
Except as otherwise provided in this Agreement, the Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the Receivables in accordance
with this Agreement and that in its opinion may involve it in any expense or
liability; provided, however, that the Servicer may undertake any reasonable
action that it may deem necessary or desirable in respect of this Agreement and
the other Basic Documents and the rights and duties of the parties to this
Agreement and the other Basic Documents and the interests of the
Certificateholders under this Agreement and the Noteholders under the Indenture.
The legal expenses and costs of such action and any liability resulting
therefrom will be expenses, costs and liabilities of the Issuer.
Section 6.05. AHFC NOT TO RESIGN AS SERVICER. Subject to the provisions of
Section 6.03, AHFC shall not resign from the obligations and duties hereby
imposed on it as Servicer under this Agreement except upon a determination that
the performance of its duties under this Agreement shall no longer be
permissible under applicable law. Notice of any such determination permitting
the resignation of AHFC shall be communicated to the Trustees at the earliest
practicable time (and, if such communication is not in writing, shall be
confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to the Trustees concurrently with or promptly after such notice. No
such resignation shall become effective until the Indenture Trustee or a
Successor Servicer shall have (i) assumed the responsibilities and obligations
of AHFC in accordance with Section 7.02 and (ii) become the Administrator
pursuant to Section 1.09 of the Administration Agreement.
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ARTICLE SEVEN
SERVICER DEFAULTS
Section 7.01. SERVICER DEFAULTS. If any one of the following events (each,
a "Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to deliver to the related Trustee for
deposit in any of the Accounts or the Certificate Distribution Account any
required payment or to direct the Indenture Trustee to make any required
distributions therefrom, which failure continues unremedied for a period of
three Business Days after discovery of such failure by an officer of the
Servicer or after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given (i) to the Servicer
by the related Trustee or (ii) to the Servicer and to the Trustees by the
Holders of Notes or Certificates, as the case may be, evidencing not less
than 25% of the Outstanding Amount of the Notes or Percentage Interests
aggregating at least 25%;
(b) failure by the Servicer (or so long as the Servicer is AHFC, the
Transferor) duly to observe or to perform in any material respect any other
covenants or agreements of the Servicer (or so long as the Servicer is AHFC,
the Transferor) set forth in this Agreement or any other Basic Document,
which failure shall (i) materially and adversely affect the rights of
Certificateholders or Noteholders and (ii) continue unremedied for a period
of 90 days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given (A) to the Servicer or the
Transferor (as the case may be) by the related Trustee or (B) to the
Servicer or the Transferor (as the case may be), and to the Trustees by the
Holders of Notes or Certificates, as the case may be, evidencing not less
than 25% of the Outstanding Amount of the Notes or Percentage Interests
aggregating at least 25%; or
(c) the occurrence of an Insolvency Event with respect to the
Transferor or the Servicer;
then, and in each and every case, so long as the Servicer Default shall not have
been remedied, either the Indenture Trustee or the Holders of Notes evidencing
not less than 25% of the Outstanding Amount of the Notes (or, if the Notes have
been paid in full and the Indenture has been discharged in accordance with its
terms, by holders of Certificates evidencing not less than 25% of the Percentage
Interests) by notice then given in writing to the Servicer (and to the Indenture
Trustee and the Owner Trustee if given by the Noteholders) may terminate all the
rights and obligations (other than the obligations set forth in Section 6.02) of
the Servicer under this Agreement. On or after the receipt by the Servicer of
such written notice, all authority and power of the Servicer under this
Agreement, whether with respect to the Notes, the Certificates or the
Receivables or otherwise, shall, without further action, pass to and be vested
in the Indenture Trustee or such Successor Servicer as may be appointed under
Section 7.02; and, without limitation, the Indenture Trustee and the Owner
Trustee are hereby authorized and empowered to execute and deliver, for the
benefit of the predecessor Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to
50
complete the transfer and endorsement of the Receivables and related documents,
or otherwise. The predecessor Servicer shall cooperate with the Successor
Servicer and the Trustees in effecting the termination of the responsibilities
and rights of the predecessor Servicer under this Agreement, including the
transfer to the Successor Servicer for administration by it of all cash amounts
that shall at the time be held by the predecessor Servicer for deposit, or have
been deposited by the predecessor Servicer, in the Accounts or the Certificate
Distribution Account or thereafter received with respect to the Receivables and
all Payments Ahead that shall at that time by held by the predecessor Servicer.
All reasonable costs and expenses (including servicer conversion costs and
attorneys' fees) incurred in connection with transferring the Receivable Files
to the Successor Servicer and amending this Agreement to reflect such succession
as Servicer pursuant to this Section shall be paid by the predecessor Servicer
upon presentation of reasonable documentation of such costs and expenses. Upon
receipt of notice of the occurrence of a Servicer Default, the Indenture Trustee
shall give notice thereof to each Rating Agency.
Section 7.02. APPOINTMENT OF SUCCESSOR SERVICER.
(a) Upon the Servicer's receipt of notice of termination pursuant to
Section 7.01 or the Servicer's resignation pursuant to Section 6.05, the
predecessor Servicer shall continue to perform its functions as Servicer
under this Agreement, in the case of termination, only until the date
specified in such termination notice or, if no such date is specified in a
notice of termination, until receipt of such notice and, in the case of
resignation, until the later of (i) the date 45 days from the delivery to
the Trustees of written notice of such resignation (or written confirmation
of such notice) in accordance with the terms of this Agreement and (ii) the
date upon which the predecessor Servicer shall become unable to act as
Servicer, as specified in the notice of resignation and accompanying Opinion
of Counsel. In the event of the Servicer's termination hereunder, the
Indenture Trustee shall appoint a Successor Servicer, and the Successor
Servicer shall accept its appointment (including its appointment as
Administrator under the Administration Agreement as set forth in Section
7.02(b)) by a written assumption in form acceptable to the Trustees. In the
event that a Successor Servicer has not been appointed at the time when the
predecessor Servicer has ceased to act as Servicer in accordance with this
Section, the Indenture Trustee without further action shall automatically be
appointed the Successor Servicer and the Indenture Trustee shall be entitled
to receive the Total Servicing Fee. Notwithstanding the above, the Indenture
Trustee shall, if it shall be legally unable so to act, appoint or petition
a court of competent jurisdiction to appoint any established institution,
having a net worth of not less than $50,000,000 and whose regular business
shall include the servicing of motor vehicle receivables, as the successor
to the Servicer under this Agreement.
(b) Upon appointment, the Successor Servicer (including the Indenture
Trustee acting as Successor Servicer) shall (i) be the successor in all
respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on the predecessor Servicer and shall be entitled to the Total
Servicing Fee and all the rights granted to the predecessor Servicer by the
terms and provisions of this Agreement and (ii) become the Administrator
pursuant to Section 1.09 of the Administration Agreement.
Section 7.03. NOTIFICATION OF SERVICER TERMINATION. Upon any termination
of, or appointment of a successor to, the Servicer pursuant to this Article, the
Owner Trustee shall give
51
prompt written notice thereof to Certificateholders, and the Indenture Trustee
shall give prompt written notice thereof to Noteholders and each Rating Agency.
Section 7.04. WAIVER OF PAST DEFAULTS. The Holders of Notes evidencing not
less than a majority of the Outstanding Amount of the Notes or the Holders (as
defined in the Trust Agreement) of Certificates evidencing not less than a
majority of the Percentage Interests (in the case of a default by the Servicer
that does not adversely affect the Indenture Trustee or the Noteholders or if
all Notes have been paid in full and the Indenture Trustee has been discharged
in accordance with its terms) may, on behalf of all Securityholders waive in
writing any default by the Servicer in the performance of its obligations
hereunder and its consequences, except a default in making any required deposits
to or payments from any of the Accounts or the Certificate Distribution Account
in accordance with this Agreement or in respect of a covenant or provision
hereof that cannot be modified with the consent of each Securityholder. Upon any
such waiver of a past default, such default shall cease to exist, and any
Servicer Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereto except to the extent
expressly so waived.
Section 7.05. REPAYMENT OF ADVANCES. If a Successor Servicer replaces the
Servicer, the predecessor Servicer shall be entitled to receive reimbursement
for all outstanding Advances made by the predecessor Servicer.
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ARTICLE EIGHT
TERMINATION
Section 8.01. OPTIONAL PURCHASE OF ALL RECEIVABLES.
(a) On the Distribution Date following the last day of any Collection
Period as of which the Pool Balance is 10% or less of the Original Pool
Balance, the Transferor, the Servicer or any successor to the Servicer shall
have the option to purchase the Owner Trust Estate, other than the Accounts
and the Certificate Distribution Account. Notwithstanding the foregoing, the
Transferor, the Servicer or any successor to the Servicer, as the case may
be, may not effect any such purchase if the long-term unsecured debt
obligations of the related entity are rated less than Baa3 by Moody's or
BBB- by Standard & Poor's unless the Owner Trustee and the Indenture Trustee
shall have received an Opinion of Counsel to the effect that such purchase
would not constitute a fraudulent conveyance or the Rating Agency is
otherwise satisfied as evidenced by written notice from the Rating Agency to
the Indenture Trustee. To exercise such option, on the related Deposit Date
the Servicer shall deposit pursuant to Section 4.05(a) in the Collection
Account an amount equal to the aggregate Administrative Purchase Payments
for the Receivables (including Defaulted Receivables), plus the appraised
value of any such other property held by the Issuer other than the Accounts
and the Certificate Distribution Account, such value to be determined by an
appraiser mutually agreed upon by the Servicer and the Trustees, and shall
succeed to all interests in and to the Issuer. Notwithstanding the
foregoing, the Transferor, the Servicer or any successor to the Servicer
shall not be permitted to exercise such option if the amount to be
distributed to Securityholders on the related Distribution Date would be
less than the Note Distributable Amount and Certificate Distributable
Amount. In the event that both the Transferor and the Servicer, or any
successor to the Servicer, elect to purchase the Receivables pursuant to
this Section, the party first notifying the Indenture Trustee (based on the
Indenture Trustee's receipt of such notice) shall be permitted to purchase
the Receivables.
(b) As described in Article Nine of the Trust Agreement, notice of any
termination of the Trust shall be given by the Servicer to the Owner Trustee
and the Indenture Trustee as soon as practicable after the Servicer has
received notice thereof.
(c) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder
and the Owner Trustee will succeed to the rights of, and assume the
obligations of, the Indenture Trustee pursuant to this Agreement.
53
ARTICLE NINE
MISCELLANEOUS
Section 9.01. AMENDMENT.
(a) This Agreement may be amended by the Transferor, the Servicer and
the Issuer, with the consent of the Indenture Trustee, but without the
consent of any Securityholders, (i) to cure any ambiguity, to correct or
supplement any provision in this Agreement which may be inconsistent with
any other provision of this Agreement, to add, change or eliminate any other
provision of this Agreement with respect to matters or questions arising
under this Agreement that shall not be inconsistent with the provisions of
this Agreement, (ii) to change the formula for determining the Specified
Reserve Fund Balance or the manner in which the Reserve Fund is funded or to
amend or modify any provisions of this Agreement relating to the remittance
schedule with respect to collections deposited into the Collection Account
or the Payahead Account pursuant to Section 4.02 or (iii) to amend or modify
any provisions in this Agreement relating to the Servicer Letter of Credit,
if any, or the acquisition thereof and including replacing the Servicer
Letter of Credit with a surety bond, insurance policy or deposit of cash or
securities satisfactory to the Indenture Trustee and each Rating Agency;
provided, however, that any such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests
of any Securityholder and provided, further, that in connection with any
amendment pursuant to clause (ii) or (iii) above, the Servicer shall deliver
to the Trustees a letter from each Rating Agency to the effect that such
amendment will not cause its then-current rating on the Rated Securities to
be qualified, reduced or withdrawn.
(b) This Agreement may also be amended from time to time by the
Transferor, the Servicer and the Issuer, with the consent of the Indenture
Trustee, the consent of the Holders of Notes evidencing not less than a
majority of the Outstanding Amount of the Notes and the Owner Trustee,
consent of the Holders (as defined in the Trust Agreement) of outstanding
Certificates evidencing not less than a majority of the Percentage
Interests, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Securityholders; provided,
however, that no such amendment shall (i) except as otherwise provided in
Section 9.01(a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Receivables or
distributions that shall be required to be made for the benefit of the
Securityholders or (ii) reduce the aforesaid percentage of the Outstanding
Amount of the Notes and the Percentage Interests, the Holders of which are
required to consent to any such amendment, without the consent of all of the
Securityholders.
(c) Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee and
each Rating Agency. It shall not be necessary for the consent of
Securityholders pursuant to this Section to approve the particular form of
any proposed amendment or consent, but it shall be sufficient if such
consent shall approve the substance thereof. The manner of obtaining such
consents and of evidencing the authorization of Certificateholders of the
execution thereof shall be subject to such reasonable requirements as the
Owner Trustee may require.
54
(d) Prior to the execution of any amendment to this Agreement, the
Trustees shall be entitled to receive and rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by
this Agreement and the Opinion of Counsel referred to in Section 9.02(i)(1).
The Trustees may, but shall not be obligated to, enter into any such
amendment which affects the Owner Trustee's or the Indenture Trustee's, as
applicable, own rights, duties or immunities under this Agreement or
otherwise.
Section 9.02. PROTECTION OF TITLE TO TRUST.
(a) The Transferor shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such
manner and in such places as may be required by law fully to preserve,
maintain and protect the interest of the Issuer and of the Indenture Trustee
in the Receivables and in the proceeds thereof. The Transferor shall deliver
(or cause to be delivered) to the Trustees file-stamped copies of, or filing
receipts for, any document filed as provided above, as soon as available
following such filing.
(b) Neither the Transferor nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might
make any financing statement or continuation statement filed in accordance
with Section 9.02(a) seriously misleading within the meaning of Section
9-402(7) of the UCC, unless it shall have given the Trustees at least 30
days' prior written notice thereof and shall have promptly filed appropriate
amendments to all previously filed financing statements or continuation
statements.
(c) Each of the Transferor and the Servicer shall give the Trustees at
least 60 days' prior written notice of any relocation of its principal
executive office if, as a result of such relocation, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement and shall promptly file any such amendment or new financing
statement. The Servicer shall at all times maintain each office from which
it shall service Receivables, and its principal executive office, within the
United States.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including
payments and recoveries made and payments owing (and the nature of each) and
(ii) reconciliation between payments or recoveries on (or with respect to)
each Receivable and the amounts from time to time deposited in the Accounts
and any Payments Ahead held by the Servicer in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables, the
Servicer's master computer records (including any backup archives) that
refer to a Receivable shall indicate clearly the interest of the Issuer and
the Indenture Trustee in such Receivable and that such Receivable is owned
by the Issuer and has been pledged to the Indenture Trustee. Indication of
the Issuer's and the Indenture Trustee's interest in a Receivable shall be
deleted from or modified on the Servicer's computer systems when, and only
when, the related Receivable shall have been paid in full or repurchased.
55
(f) If at any time the Transferor or the Servicer shall propose to
sell, grant a security interest in, or otherwise transfer any interest in
motor vehicle receivables to any prospective purchaser, lender or other
transferee, the Servicer shall give to such prospective purchaser, lender or
other transferee computer tapes, records or printouts (including any
restored from backup archives) that, if they shall refer in any manner
whatsoever to any Receivable, shall indicate clearly that such Receivable
has been sold and is owned by the Issuer and has been pledged to the
Indenture Trustee.
(g) The Servicer shall permit the Indenture Trustee and its agents at
any time during normal business hours to inspect, audit and make copies of
and abstracts from the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Owner Trustee or to
the Indenture Trustee, within five Business Days, a list of all Receivables
(by contract number and name of Obligor) then held as part of the Issuer,
together with a reconciliation of such list to the Schedule of Receivables
and to each of the Servicer's Certificates furnished before such request
indicating removal of Receivables from the Issuer.
(i) The Servicer shall deliver to the Trustees:
(1) promptly after the execution and delivery of this Agreement
and of each amendment hereto, an Opinion of Counsel stating that, in
the opinion of such counsel, either (A) all financing statements and
continuation statements have been executed and filed that are necessary
fully to preserve and protect the interest of the Trustees in the
Receivables, and reciting the details of such filings or referring to
prior Opinions of Counsel in which such details are given, or (B) no
such action shall be necessary to preserve and protect such interest;
and
(2) within 90 days after the beginning of each fiscal year
beginning with the first fiscal year beginning more than three months
after the Cutoff Date, an Opinion of Counsel, dated as of a date during
such 90-day period, stating that, in the opinion of such counsel,
either (A) all financing statements and continuation statements have
been executed and filed that are necessary fully to preserve and
protect the interest of the Trustees in the Receivables, and reciting
the details of such filings or referring to prior Opinions of Counsel
in which such details are given, or (B) no such action shall be
necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (1) or (2) above shall specify
any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
(j) The Transferor shall, to the extent required by applicable law,
cause the Notes to be registered with the Commission pursuant to Section
12(b) or Section 12(g) of the Exchange Act within the time periods specified
in such sections.
Section 9.03. NOTICES. All demands, notices, communications under this
Agreement shall be in writing, personally delivered or mailed by certified mail,
return receipt requested, and shall be deemed to have been duly given upon
receipt (i) in the case of the Transferor, to CT
56
Corp., ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, (ii) in
the case of the Servicer, to American Honda Finance Corporation, ▇▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: President, (iii) in the
case of the Issuer or the Owner Trustee, at the Corporate Trust Office (as such
term is defined in the Trust Agreement), (iv) in the case of the Indenture
Trustee, at the Corporate Trust Office (as such term is herein defined), (v) in
the case of Moody's, to ▇▇▇▇▇'▇ Investors Service, Inc., ABS Monitoring
Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and (vi) in the case of
Standard & Poor's, to Standard & Poor's Ratings Services, a division of The
▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., ▇▇ ▇▇▇▇▇▇▇▇ (▇▇▇▇ ▇▇▇▇▇), ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Asset Backed Surveillance Department or (vii) as to each of the
foregoing, at such other address as shall be designated by written notice to the
other parties.
Section 9.04. ASSIGNMENT.
(a) Notwithstanding anything to the contrary contained herein, except
as provided in the remainder of this Section, as provided in Sections 5.03,
6.03 and 6.05, this Agreement may not be assigned by the Transferor or the
Servicer without the prior written consent of Holders of Notes evidencing
not less than a majority of the Outstanding Amount of the Notes and Holders
(as such term is defined in the Trust Agreement) of Certificates evidencing
not less than a majority of the Percentage Interests. And as provided in the
provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by the Transferor or the Servicer.
(b) The Transferor hereby acknowledges and consents to the mortgage,
pledge, assignment and grant of a security interest by the Issuer to the
Indenture Trustee pursuant to the Indenture for the benefit of the
Noteholders of all right, title and interest of the Issuer in, to and under
the Receivables and/or the assignment of any or all of the Issuer's rights
and obligations hereunder to the Indenture Trustee.
Section 9.05. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of this
Agreement are solely for the benefit of the Transferor, the Servicer, the
Issuer, the Owner Trustee, the Certificateholders, the Indenture Trustee and the
Noteholders, and nothing in this Agreement, whether express or implied, shall be
construed to give to any other Person any legal or equitable right, remedy or
claim in the Owner Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
Section 9.06. SEVERABILITY. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other covenants, agreements, provisions or terms of this
Agreement.
Section 9.07. SEPARATE COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
57
Section 9.08. HEADINGS. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
Section 9.09. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of California, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
Section 9.10. NONPETITION COVENANTS.
(a) Notwithstanding any prior termination of this Agreement, the
Servicer and the Transferor shall not, prior to the date which is one year
and one day after the termination of this Agreement with respect to the
Issuer, acquiesce, petition or otherwise invoke or cause the Issuer to
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Issuer under any federal or
state bankruptcy, insolvency or similar law, or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official of the Issuer or any substantial part of its property, or ordering
the winding up or liquidation of the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement, the
Servicer shall not, prior to the date which is one year and one day after
the termination of this Agreement with respect to the Transferor, acquiesce,
petition or otherwise invoke or cause the Transferor to invoke the process
of any court or government authority for the purpose of commencing or
sustaining a case against the Transferor 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
Transferor or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Transferor.
Section 9.11. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE
TRUSTEE.
(a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by The Bank of New York (Delaware) not in
its individual capacity but solely in its capacity as Owner Trustee of the
Issuer and in no event shall The Bank of New York (Delaware) in its
individual capacity or, except as expressly provided in the Trust Agreement,
as beneficial owner of the Issuer have any liability for the
representations, warranties, covenants, agreements or other obligations of
the Issuer hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had solely
to the assets of the Issuer. For all purposes of this Agreement, in the
performance of its duties or obligations hereunder or in the performance of
any duties or obligations of the Issuer hereunder, the Owner Trustee shall
be subject to, and entitled to the benefits of, the terms and provisions of
Articles Six, Seven and Eight of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by Bankers Trust Company, not in its individual
capacity but solely as Indenture Trustee and in no event shall Bankers Trust
Company have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
58
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
59
IN WITNESS WHEREOF, the parties hereto have caused this Sale and Servicing
Agreement to be duly executed by their respective officers as of the day and
year first above written.
HONDA AUTO RECEIVABLES 1999-1 OWNER
TRUST
By: THE BANK OF NEW YORK
(DELAWARE), not in its individual capacity
but solely as Owner Trustee on behalf of the
Trust
By:
---------------------------------------------
Name:
Title:
AMERICAN HONDA RECEIVABLES CORP.,
as Transferor
By:
---------------------------------------------
Name:
Title:
AMERICAN HONDA FINANCE
CORPORATION, as Servicer
By:
---------------------------------------------
Name:
Title:
Acknowledged and accepted as of the day
and year first above written:
BANKERS TRUST COMPANY, not in its
individual capacity but solely as Indenture
Trustee
By:
----------------------------------------
Name:
Title:
60
SCHEDULE A
SCHEDULE OF RECEIVABLES
Delivered to the Owner Trustee and Indenture Trustee at Closing.
SA-1
SCHEDULE B
LOCATION OF RECEIVABLE FILES
American Honda Finance Corporation
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
American Honda Finance Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
American Honda Finance Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
American Honda Finance Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇
▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
American Honda Finance Corporation
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇-▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
American Honda Finance Corporation
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
American Honda Finance Corporation
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
American Honda Finance Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
American Honda Finance Corporation
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
SB-1
EXHIBIT A
FORM OF DISTRIBUTION STATEMENT TO SECURITYHOLDERS
Honda Auto Receivables 1999-1 Owner Trust
NOTE PRINCIPAL DISTRIBUTABLE AMOUNT
Note Monthly Principal Distributable Amount $-------------------
Note Principal Carryover Shortfall $-------------------
change from immediately preceding Distribution Date $-------------------
Total $-------------------
NOTE INTEREST DISTRIBUTABLE AMOUNT
Note Monthly Interest Distributable Amount $-------------------
Class A-1 Notes: ($ per $1,000 original principal amount)
Class A-2 Notes: ($ per $1,000 original principal amount)
Class A-3 Notes: ($ per $1,000 original principal amount)
Class A-4 Notes: ($ per $1,000 original principal amount)
NOTE PRINCIPAL CARRYOVER SHORTFALL
change from immediately preceding Distribution Date $-------------------
Total $-------------------
NOTE INTEREST CARRYOVER SHORTFALL $-------------------
change from immediately preceding Distribution Date $-------------------
Total $-------------------
AVAILABLE AMOUNT
Available Interest $-------------------
Available Principal $-------------------
CERTIFICATE INTEREST DISTRIBUTABLE AMOUNT $-------------------
CERTIFICATE PRINCIPAL DISTRIBUTABLE AMOUNT $-------------------
POOL BALANCE $-------------------
NOTE POOL FACTOR $-------------------
Class A-1 Notes $-------------------
Class A-2 Notes $-------------------
Class A-3 Notes $-------------------
Class A-4 Notes $-------------------
CERTIFICATE POOL FACTOR $-------------------
RESERVE FUND BALANCE $-------------------
change from immediately preceding Distribution Date $-------------------
Total $-------------------
PAYMENTS AHEAD $-------------------
APPLIED PAYMENTS AHEAD $-------------------
A-1
TOTAL SERVICING FEE $-------------------
AMOUNT OF NOTEHOLDERS DISTRIBUTION ALLOCABLE TO PRINCIPAL $-------------------
Class A-1 Notes: ($ per $1,000 original principal amount)
Class A-2 Notes: ($ per $1,000 original principal amount)
Class A-3 Notes: ($ per $1,000 original principal amount)
Class A-4 Notes: ($ per $1,000 original principal amount)
AMOUNT OF NOTEHOLDERS DISTRIBUTION ALLOCABLE TO INTEREST $-------------------
Class A-1 Notes: ($ per $1,000 original principal amount)
Class A-2 Notes: ($ per $1,000 original principal amount)
Class A-3 Notes: ($ per $1,000 original principal amount)
Class A-4 Notes: ($ per $1,000 original principal amount)
AMOUNT OF CERTIFICATEHOLDERS DISTRIBUTION ALLOCABLE TO INTEREST $-------------------
AMOUNT OF CERTIFICATEHOLDERS DISTRIBUTION ALLOCABLE TO PRINCIPAL $-------------------
NONRECOVERABLE ADVANCES $-------------------
YIELD SUPPLEMENT WITHDRAWAL AMOUNT $-------------------
YIELD SUPPLEMENT AMOUNT $-------------------
AMOUNT ON DEPOSIT IN YIELD SUPPLEMENT ACCOUNT $-------------------
TRUST FEES AND EXPENSES $-------------------
PRINCIPAL PAYMENT AMOUNT $-------------------
A-2
EXHIBIT B
FORM OF SERVICER'S CERTIFICATE
[CURRENTLY UNDER REVIEW]
B-1