Exhibit 10.1
________________________________________________________________________________
SALE AND SERVICING AGREEMENT
by and among
ANRC AUTO OWNER TRUST ____,
as Issuer,
AUTONATION RECEIVABLES CORPORATION,
as Seller,
AUTONATION FINANCIAL SERVICES CORP.,
as Servicer and Custodian
and
______________________________,
as Indenture Trustee
Dated as of _______, ____
________________________________________________________________________________
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.............................................................. 1
Section 1.01. Definitions.............................................................. 1
Section 1.02. Usage of Terms........................................................... 20
Section 1.03. Section References....................................................... 20
Section 1.04. Calculations............................................................. 20
Section 1.05. Accounting Terms......................................................... 20
ARTICLE II CONVEYANCE OF CONTRACTS; REPRESENTATIONS
AND WARRANTIES OF THE SELLER............................................. 21
Section 2.01. Conveyance of Contracts.................................................. 21
Section 2.02. Representations and Warranties of the Seller............................. 23
Section 2.03. Repurchase of Certain Contracts.......................................... 33
Section 2.04. Custody of Contract Files................................................ 33
Section 2.05. Duties of Servicer Relating to the Contracts............................. 37
Section 2.06. Instructions; Authority to Act........................................... 39
Section 2.07. Indemnification.......................................................... 39
Section 2.08. Effective Period and Termination......................................... 39
Section 2.09. Nonpetition Covenant..................................................... 40
Section 2.10. Collecting Title Documents Not Delivered at the Closing Date............. 40
ARTICLE III ADMINISTRATION AND SERVICING OF CONTRACTS................................ 41
Section 3.01. Duties of Servicer....................................................... 41
Section 3.02. Collection of Contract Payments.......................................... 43
Section 3.03. Realization upon Defaulted Contracts..................................... 44
Section 3.04. Maintenance of Security Interests in Financed Vehicles................... 44
Section 3.05. Covenants, Representations and Warranties of Servicer.................... 45
Section 3.06. Purchase of Contracts upon Breach by Servicer; Third Party
Claims................................................................... 47
Section 3.07. Servicing Compensation................................................... 48
Section 3.08. Reporting by the Servicer................................................ 48
Section 3.09. Annual Statement as to Compliance........................................ 50
Section 3.10. Annual Independent Certified Public Accountant's Report.................. 51
Section 3.11. Access to Certain Documentation and Information Regarding Contracts...... 51
Section 3.12. Indemnification.......................................................... 52
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TABLE OF CONTENTS
(continued)
Page
Section 3.13. Reports to Noteholders and the Rating Agencies...................... 52
ARTICLE IV DISTRIBUTIONS; SPREAD ACCOUNT; STATEMENTS
TO NOTEHOLDERS...................................................... 53
Section 4.01. Establishment of Trust Accounts..................................... 53
Section 4.02. Collections; Realization upon Insurance Policy; Net Deposits;
Transfers to Payment Account........................................ 55
Section 4.03. Distributions....................................................... 56
Section 4.04. Spread Account...................................................... 58
Section 4.05. Statements to Noteholders........................................... 61
Section 4.06. Effect of Payments by the Insurer; Subrogation...................... 63
ARTICLE V THE SELLER.......................................................... 64
Section 5.01. Liability of Seller; Indemnities.................................... 64
Section 5.02 Merger or Consolidation of, or Assumption of the Obligations
of Seller; Certain Limitations...................................... 65
Section 5.03. Limitation on Liability of Seller and Others........................ 65
Section 5.04. Seller Not to Resign................................................ 66
Section 5.05. Seller May Own Notes................................................ 66
ARTICLE VI THE SERVICER........................................................ 67
Section 6.01. Liability of Servicer; Indemnities.................................. 67
Section 6.02. Corporate Existence; Status as Servicer; Merger..................... 67
Section 6.03. Performance of Obligations.......................................... 68
Section 6.04. Servicer Not to Resign; Assignment.................................. 68
Section 6.05. Limitation on Liability of Servicer and Others...................... 69
ARTICLE VII SERVICER DEFAULTS................................................... 71
Section 7.01. Servicer Defaults................................................... 71
Section 7.02. Trustee to Act; Appointment of Successor............................ 73
Section 7.03. Notification to Noteholders......................................... 74
Section 7.04. Waiver of Past Defaults............................................. 74
Section 7.05. Insurer Direction of Insolvency Proceedings......................... 75
ARTICLE VIII TERMINATION......................................................... 76
Section 8.01. Optional Purchase of All Contracts; Satisfaction and Discharge
of The Indenture.................................................... 76
Section 8.02. Termination of this Agreement....................................... 76
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TABLE OF CONTENTS
(continued)
Page
ARTICLE IX MISCELLANEOUS....................................................... 77
Section 9.01. Amendment........................................................... 77
Section 9.02. Protection of Title to Trust........................................ 78
Section 9.03. Governing Law....................................................... 80
Section 9.04. Notices............................................................. 80
Section 9.05. Severability of Provisions.......................................... 81
Section 9.06. Assignment.......................................................... 81
Section 9.07. Third Party Beneficiaries........................................... 82
Section 9.08. Certain Matters Relating to the Insurer............................. 82
Section 9.09. Headings............................................................ 82
Section 9.10. Assignment by Issuer................................................ 83
Section 9.11. Limitation of Liability of Owner Trustee............................ 83
EXHIBITS
Exhibit A - List of Contracts
Exhibit B - Location and Account Numbers of Trust Accounts
Exhibit C - Distribution Date Statement
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This SALE AND SERVICING AGREEMENT, dated as of ______, (as amended,
supplemented or otherwise modified and in effect from time to time, this
"Agreement"), is between ANRC AUTO OWNER TRUST, a Delaware business trust
---------
(the "Issuer" or the "Trust"), AUTONATION RECEIVABLES CORPORATION, a Delaware
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corporation (together with its permitted successors and assigns, the "Seller"),
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AUTONATION FINANCIAL SERVICES CORP., a Delaware corporation, as Servicer
(together with its permitted successors and assigns, the "Servicer") and as
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Custodian (together with its permitted successors and assigns, the "Custodian")
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and _______, a ______ banking corporation, as the Indenture Trustee on behalf
of the Noteholders (together with its permitted successors and assigns in such
capacity, the "Indenture Trustee").
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In consideration of the premises and the mutual covenants herein
contained, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions.
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Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
"Additional Servicing Fee" shall mean the excess, if any, of (i) the
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servicing fee of any Successor Servicer (other than the Indenture Trustee, in
its capacity as Successor Servicer), which has been approved in writing by the
Insurer over (ii) the Servicing Fee.
"Administrator" shall have the meaning set forth in the Indenture.
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"Affiliate" of any specified Person shall mean any other Person
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controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person shall mean the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" or
"controlled" have meanings correlative to the foregoing.
"Amount Financed" shall mean, with respect to a Contract, the
---------------
aggregate amount advanced by the Originator under such Contract toward the
purchase price of the related Financed Vehicle and related costs, including
amounts advanced in respect of accessories, extended service or warranty
contracts and other items customarily financed as part of retail automobile
installment sales contracts, excluding any collision and/or comprehensive
insurance premiums.
"APR" of a Contract shall mean the annual percentage rate used to
---
determine the total interest expected to be charged over the term of a Contract
as of its inception, as shown on such Contract.
"AutoNation Financial Services" shall mean AutoNation Financial
-----------------------------
Services Corp. and its successors and assigns.
"Available Funds" shall mean, with respect to any Distribution Date
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and the related Collection Period, the sum of (i) all payments of Monthly
Scheduled Payments, all partial prepayments, all Full Prepayments (pursuant to
clause (a) in the definition thereof), Net Liquidation Proceeds and Net
Insurance Proceeds in each case, collected with respect to the Contracts during
such Collection Period; (ii) the aggregate Purchase Amount for Purchased
Contracts deposited in or credited to the Collection Account pursuant to Section
4.02(a) on the Business Day preceding the Servicer Report Date next preceding
such Distribution Date; and (iii) income from Eligible Investments of funds on
deposit in the Trust Accounts.
"Basic Documents" shall have the meaning specified in the Indenture.
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"Business Day" shall mean any day other than (i) a Saturday or a
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Sunday, (ii) a day on which the Insurer is closed or (iii) a day on which
commercial banking institutions or savings associations located in New York, New
York or in the city in which the Owner Trustee Corporate Trust Office or the
Corporate Trust Office is located are authorized or obligated by law,
regulation, executive order or governmental decree to be closed.
"Class" shall mean a class of Notes whose form is identical except for
-----
variation in denomination, principal amount or owner.
"Class A-1 Final Scheduled Distribution Date" shall mean the
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Distribution Date occurring in _______.
"Class A-1 Note" shall mean any Class A-1 Note substantially in the
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form attached to the Indenture as Exhibit B.
"Class A-1 Rate" shall mean ______% per annum.
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"Class A-2 Final Scheduled Distribution Date" shall mean the
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Distribution Date occurring in _____.
"Class A-2 Note" shall mean any Class A-2 Note substantially in the
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form attached to the Indenture as Exhibit C.
"Class A-2 Rate" shall mean _____% per annum.
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"Class A-3 Final Scheduled Distribution Date" shall mean the
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Distribution Date occurring in _____.
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"Class A-3 Note" shall mean any Class A-3 Note substantially in the
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form attached to the Indenture as Exhibit D.
"Class A-3 Rate" shall mean ______% per annum.
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"Class A-4 Final Scheduled Distribution Date" shall mean the
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Distribution Date occurring in _____.
"Class A-4 Note" shall mean any Class A-4 Note substantially in the
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form attached to the Indenture as Exhibit E.
"Class A-4 Rate" shall mean ______% per annum.
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"Clearing Agency" shall mean an organization registered as a "clearing
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agency" pursuant to Section 17A of the Exchange Act.
"Closing Date" shall mean ______, _____.
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"Collection Account" shall mean the account established and maintained
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as such pursuant to Section 4.01.
"Collection Period" shall mean, with respect to any Distribution Date,
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the calendar month immediately preceding the calendar month in which such
Distribution Date occurs (or, in the case of the first Collection Period, the
period of time from but excluding the Cut-Off Date through the last day of the
calendar month immediately preceding the month in which the first Distribution
Date occurs).
"Collection Policy" shall mean the collection policy of the Issuer and
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the Servicer, which shall be (i) the practices and procedures employed by the
Servicer in its servicing of motor vehicle retail installment contracts as of
the Closing Date, which servicing procedures have been certified by a Servicing
Officer and delivered to the Insurer on the Closing Date, as such Collection
Policy may be amended in accordance with Section 3.05 hereof, and (ii) the
practices and procedures of any Successor Servicer which are acceptable to the
Insurer.
"Contract" shall mean each motor vehicle retail installment sales
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contract and all proceeds thereof and payments thereunder conveyed by the Seller
to the Issuer pursuant to this Agreement, which contract or agreement has been
executed by an Obligor and pursuant to which such Obligor purchased or financed
the Financed Vehicle described therein, agreed to pay the deferred purchase
price (i.e., the purchase price net of any down payment) or amount borrowed,
together with interest, as therein provided in connection with such purchase or
loan, granted a security interest in such Financed Vehicle, and undertook to
perform certain other obligations as specified in such contract or agreement.
Each Contract shall have been originated by the Originator from application
referrals received from a Dealer and subsequently conveyed by the Originator to
the Seller pursuant to the Receivables Purchase Agreement.
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"Contract Documents" shall mean, with respect to each Contract, (a)
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the original Contract and the original credit application fully executed by the
Obligor thereunder; (b) either (i) the original Title Document for the related
Financed Vehicle or a duplicate copy thereof issued or certified by the
Registrar of Titles which issued the original thereof, together with evidence of
perfection of the security interest in the related Financed Vehicle granted by
such Contract, as reasonably determined by the Servicer to be permitted or
required to perfect such security interest under the laws of the applicable
jurisdiction, or (ii) written evidence that the Title Document for such Financed
Vehicle showing AutoNation Financial Services as first lienholder has been
applied for; (c) any agreement(s) modifying the Contract (including, without
limitation, any extension agreement(s)); (d) a signed agreement by an Obligor to
provide insurance with AutoNation Financial Services listed as loss payee; (e) a
copy of the contract for any supplemental warranty purchased with respect to the
Financed Vehicle; (f) acceptable vehicle valuation documentation consisting of
the dealer invoice or sticker for new cars and reference to the most recently
published National Automobile Dealers Association Used Car Price Guide or ▇▇▇▇▇
Blue Book, based on year, make and model of the related Financed Vehicle for
used cars and (g) any documents specifically relating to the Obligor or the
Financed Vehicle. The documents referred to above, other than the Contracts and
the Title Documents may be maintained in microfiche or electronic form.
"Contract Files" shall mean all papers and computerized records
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customarily kept by the Servicer or its agents in servicing contracts and loans
comparable to the Contracts.
"Contract Number" shall mean, with respect to any Contract included in
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the Trust, the number assigned to such Contract by the Servicer, which number is
set forth in the related Schedule of Contracts.
"Controlling Party" shall have the meaning set forth in the Indenture.
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"Conveyed Property" shall have the meaning assigned to such term in
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Section 2.01(a).
"Corporate Trust Office" shall mean the principal office of the
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Indenture Trustee at which at any particular time its corporate trust business
shall be administered, which office at the date of the execution of this
Agreement is located at ________, Attention: _____: ANRC Auto Owner Trust ____;
or at such other address as the Indenture Trustee may designate from time to
time by notice to the Noteholders, the Insurer, the Servicer and the Seller.
"Cumulative Net Loss Ratio" shall have the meaning set forth in the
-------------------------
Insurance Agreement.
"Custodial Agreement" shall mean the Custodial Agreement, dated as
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of _____,_____ by and among the Originator, the Servicer, the Custodian, the
Issuer, World Omni Financial Corp. and the Indenture Trustee, as the same may be
amended, supplemented or otherwise modified and in effect from time to time.
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"Custodian" shall mean AutoNation Financial Services until such time,
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if any, as a Successor Custodian is appointed and thereafter shall mean such
Successor Custodian.
"Cut-Off Date" shall mean _____, ____.
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"Default" shall mean any occurrence that is, or with the giving of
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notice or the lapse of time or both, would become a Servicer Default.
"Dealer" shall mean each automotive dealership which sold a Financed
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Vehicle, and referred the application in respect of the related Contract to
AutoNation Financial Services.
"Defaulted Contract" shall mean, with respect to any Collection
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Period, a Contract (i) which, at the end of such Collection Period, is deemed
uncollectible by the Servicer in accordance with its customary procedures, (ii)
in respect of which all amounts more than one hundred and twenty (120) days past
due represent in the aggregate $40 or more, (iii) in respect of which the
related Financed Vehicle has been repossessed and liquidated, or (iv) in respect
of which the Servicer has repossessed and held the related Financed Vehicle in
its repossession inventory for 91 days or more, whichever occurs first.
"Deficiency Amount" shall mean, with regard to any Distribution Date,
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the sum of (i) the excess, if any, of (a) the Note Interest Distributable Amount
with respect to all Classes of Notes for such Distribution Date over (b) the sum
of (x) the Available Funds for such Distribution Date (after giving effect to
distributions pursuant to clauses (i) through (iii) of Section 4.03(a) for such
Distribution Date) and (y) the amount to be on deposit in the Spread Account for
such Distribution Date (after giving effect to any withdrawals to pay amounts
pursuant to clauses (i) through (iii) of Section 4.03(a) for such Distribution
Date) and (ii) the Guaranteed Note Principal Amount for such Distribution Date.
"Deficiency Notice" shall mean, with respect to any Distribution Date,
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the notice delivered pursuant to Section 4.02(c) by the Servicer to the
Indenture Trustee, with a copy to the Insurer.
"Definitive Notes" shall mean Notes issued in fully registered,
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certificated form to Noteholders.
"Delivery" when used with respect to Trust Account Property shall
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mean:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute "instruments"
within the meaning of Section 9-105(1)(i) of the UCC and are susceptible of
physical delivery, transfer thereof to the Indenture Trustee by physical
delivery to the Indenture Trustee endorsed to, or registered in the name of, the
Indenture Trustee or endorsed in blank, and, with respect to a certificated
security (as defined in Section 8-102 of the UCC) transfer thereof (i) by
delivery of such certificated security endorsed to, or registered in the name
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of the Indenture Trustee or (ii) by delivery thereof to a "clearing corporation"
(as defined in Section 8-102 of the UCC) and the making by such clearing
corporation of appropriate entries on its books reducing the appropriate
securities account of the transferor and increasing the appropriate securities
account of the Indenture Trustee by the amount of such certificated security and
the identification by the clearing corporation of the certificated securities
for the sole and exclusive account of the Indenture Trustee (all of the
foregoing, "Physical Property"), and, in any event, any such Physical Property
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in registered form shall be in the name of the Indenture Trustee; and such
additional or alternative procedures as may hereafter become appropriate to
effect the complete transfer of ownership of any such Trust Account Property to
the Indenture Trustee or its nominee or custodian, consistent with changes in
applicable law or regulations or the interpretation thereof;
(b) with respect to any security issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to federal book-entry regulations, the following procedures, all
in accordance with applicable law, including applicable federal regulations and
Articles 8 and 9 of the UCC: book-entry registration of such Trust Account
Property to an appropriate book-entry account maintained with a Federal Reserve
Bank by a securities intermediary that is also a "depository" pursuant to
applicable federal regulations; the making by such securities intermediary of
entries in its books and records crediting such Trust Account Property to the
Indenture Trustee's security account at the securities intermediary and
identifying such book-entry security held through the Federal Reserve System
pursuant to federal book-entry regulations as belonging to the Indenture
Trustee; and such additional or alternative procedures as may hereafter become
appropriate to effect complete transfer of ownership of any such Trust Account
Property to the Indenture Trustee, consistent with changes in applicable law or
regulations or the interpretation thereof; and
(c) with respect to any uncertificated security under Article 8 of the
UCC and that is not governed by clause (b) above, registration on the books and
records of the issuer thereof in the name of the Indenture Trustee or its
nominee or custodian who either (i) becomes the registered owner on behalf of
the Indenture Trustee or (ii) having previously become the registered owner,
acknowledges that it holds such uncertificated security for the Indenture
Trustee.
"Depositor" shall mean the Seller in its capacity as Depositor under
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the Owner Trust Agreement, and its successors.
"Distribution Account" means the Note Distribution Account.
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"Distribution Date" shall mean the ___th day of each month or if such
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date shall not be a Business Day, the following Business Day, commencing on
_______, ______.
"Distribution Date Statement" shall have the meaning specified in
---------------------------
Section 3.08(a).
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"Due Date" shall mean, as to any Contract, the date upon which a
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Monthly Scheduled Payment is due.
"Eligible Account" shall mean (i) a segregated trust account that is
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either (a) maintained by the Indenture Trustee, (b) maintained with a depository
institution or trust company organized under the laws of the United States of
America or any state thereof the commercial paper or other short-term debt
obligations of which have credit ratings from Standard & Poor's at least equal
to "A-1+" and from Moody's equal to "P-1," which account is fully insured up to
applicable limits by the Federal Deposit Insurance Corporation or (c) maintained
with a depository institution organized under the laws of the United States of
America or any state thereof acceptable to the Insurer, as evidenced by a letter
from the Insurer to that effect or (ii) a general ledger account or deposit
account at a federal or state chartered depository institution acceptable to the
Insurer, as evidenced by a letter from the Insurer to that effect.
"Eligible Investments" shall mean any one or more of the following
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obligations or securities, all of which shall be denominated in United States
dollars:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, the United States of America or any
agency or instrumentality of the United States of America the obligations of
which are backed by the full faith and credit of the United States of America
and, to the extent, at the time of investment, acceptable to the Insurer and
each Rating Agency for securities having a rating equivalent to the rating of
the Notes at the Closing Date, the direct obligations of, or obligations fully
guaranteed by, the Federal Home Loan Mortgage Corporation and the Federal
National Mortgage Association;
(b) demand and time deposits in, certificates of deposit of, banker's
acceptances issued by, or federal funds sold by any depository institution or
trust company (including the Indenture Trustee or the Owner Trustee)
incorporated under the laws of the United States of America or any State and
subject to supervision and examination by Federal and/or State banking
authorities, so long as at the time of such investment or contractual commitment
providing for such investment, the short-term, unsecured debt obligations of
such depository institution or trust company have credit ratings from Standard &
Poor's at least equal to "A-1+" and from Moody's at least equal to "P-1";
provided that any such demand and time deposits shall be fully insured by the
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Federal Deposit Insurance Corporation and any such certificates of deposit must
be secured at all times by collateral described in clause (a) above, such
collateral must be held by a third party and the Indenture Trustee must have a
perfected first priority security interest in such collateral.
(c) repurchase obligations with a term not to exceed 30 days and with
respect to (i) any security described in clause (a) above or (ii) any other
security issued or guaranteed as to timely payment of principal and interest by
an agency or instrumentality of the United States of America, in either case
entered into with any depository institution or trust company (including the
Indenture Trustee and the Owner Trustee), acting as principal, described in
clause (b) above; provided, however, that collateral transferred
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pursuant to such repurchase obligation must be of the type described in clause
(a) above and must (x) be marked-to-market weekly at current market price plus
accrued interest, (y) pursuant to such valuation, be equal at all times to 105%
of the cash transferred by the Indenture Trustee in exchange for such collateral
and (z) be delivered to the Indenture Trustee or, if the Indenture Trustee is
supplying the collateral, an agent for the Indenture Trustee, in such a manner
as to accomplish perfection of a security interest in the collateral by
possession of certificated securities;
(d) commercial paper having the highest rating by Standard & Poor's
and Moody's at the time of such investment;
(e) investments in money market funds or money market mutual funds
registered under the Investment Company Act of 1940, as amended, whose shares
are registered under the Securities Act of 1933, having a rating from Standard &
Poor's and Moody's in the highest investment category granted thereby, including
funds for which the Indenture Trustee, the Owner Trustee or any of their
respective Affiliates is investment manager or advisor; and
(f) such other obligations or securities acceptable to the Insurer,
as evidenced by a letter from the Insurer to the Indenture Trustee (which
acceptability may be revoked at any time by the Insurer).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended.
"Fee Letter" shall mean the Fee Letter, dated as of ____, ___, between
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AutoNation, Inc. and the Indenture Trustee, as such agreement may be amended,
supplemented or otherwise modified and in effect from time to time.
"Final Scheduled Distribution Date" shall mean with respect to the
---------------------------------
Notes, the Class A-1 Final Scheduled Distribution Date, the Class A-2 Final
Scheduled Distribution Date, the Class A-3 Final Scheduled Distribution Date or
the Class A-4 Final Scheduled Distribution Date, as the case may be.
"Financed Vehicle" shall mean, as to any Contract, a new or used
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automobile and/or light-duty truck, together with all accessions thereto,
securing the related Obligor's indebtedness under such Contract.
"Fiscal Agent" shall have the meaning set forth in the Insurance
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Policy.
"Full Prepayment" shall mean, with respect to any Contract, any of the
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following: (a) payment by or on behalf of the Obligor of the total amount
required by the terms of such Contract to be paid thereunder, which amount shall
be at least equal to the sum of (i) 100% of the Principal Balance of such
Contract, (ii) unpaid interest accrued thereon to the date of such payment at
the APR and (iii) any overdue amounts; or (b) payment by the Seller to the
Indenture Trustee of the Purchase Amount of such Contract in connection with the
purchase of such Contract pursuant to Section 2.03, or payment by the Servicer
of the Purchase Amount of such Contract in connection with the
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purchase of such Contract pursuant to Section 3.06 or the purchase of all
Contracts pursuant to Section 8.01.
"Guaranteed Note Principal Amount" shall mean with regard to any
--------------------------------
Distribution Date, the lesser of (a) the excess, if any, of (i) the Note
Principal Distributable Amount for such Distribution Date over (ii) the sum of
(x) the Available Funds for such Distribution Date (after giving effect to
distributions pursuant to clauses (i) through (iv) of Section 4.03(a) for such
Distribution Date) and (y) the amount to be on deposit in the Spread Account for
such Distribution Date (after giving effect to any withdrawals to pay amounts
pursuant to clauses (i) through (iv) of Section 4.03(a) for such Distribution
Date) and (b) the excess, if any, of (i) the Outstanding Principal Amount of the
Notes for such Distribution Date (after giving effect to all payments of
principal of the Notes on such Distribution Date, other than from an Insured
Payment) over (ii) the sum of (x) the Pool Balance as of the last day of the
preceding Collection Period and (y) the amount to be on deposit in the Spread
Account (after giving effect to any withdrawals to pay amounts pursuant to
clauses (i) through (vi) of Section 4.03(a) for such Distribution Date);
provided, however, on the Final Scheduled Distribution Date for such Class of
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Notes, the Guaranteed Note Principal Amount shall be at least equal to the
Outstanding Principal Amount of such Class of Notes on such Final Scheduled
Distribution Date (after giving effect to all payments of principal of the Notes
on such Final Scheduled Distribution Date other than from an Insured Payment).
"Indenture" shall mean the Indenture, dated as of ______, ___, between
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the Issuer and the Indenture Trustee, as the same may be amended, supplemented
or otherwise modified and in effect from time to time.
"Indenture Trustee" shall mean __________, a ____ banking corporation,
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as the Indenture Trustee under the Indenture, its successors in interest and any
successor Indenture Trustee under the Indenture.
"Indenture Trustee Fee" shall equal the amount specified in the Fee
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Letter.
"Insolvency Proceeding" shall have the meaning specified in Section
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7.05.
"Insurance Agreement" shall mean the Insurance Agreement, dated as of
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_____, ____, by and among the Insurer, the Administrator, the Seller, the
Servicer, the Custodian, the Originator, the Indenture Trustee, the Owner
Trustee and the Issuer, as the same may be amended, supplemented or otherwise
modified and in effect from time to time.
"Insurance Policy" shall mean the note guaranty insurance policy for
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the Notes, number ____, dated _____, ____, and issued by the Insurer in favor of
the Indenture Trustee, guaranteeing payment of any Insured Payment, as the same
may be amended, supplemented or otherwise modified and in effect from time to
time.
"Insurance Premium" shall have the meaning specified in the Insurance
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Agreement.
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"Insured Payment" shall mean (i) as of any Distribution Date, any
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Deficiency Amount and (ii) any Preference Amount.
"Insurer" shall mean _______, a _____ stock insurance company, and its
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permitted successors and assigns.
"Insurer Default" shall mean the occurrence and continuance of any of
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the following:
(i) the Insurer shall have failed to make a payment required to be
made under the Insurance Policy in accordance with its terms;
(ii) the Insurer shall have (a) filed a petition or commenced any
case or proceeding in respect of the Insurer under any provision or chapter
of the United States Bankruptcy Code or any other similar federal or state
law relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization, (b) made a general assignment for the benefit of its
creditors or (c) had an order for relief entered against it under the
United States Bankruptcy Code or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization which is final and nonappealable; or
(iii) a court of competent jurisdiction, the New York Department of
Insurance or other competent regulatory authority shall have entered a
final and nonappealable order, judgment or decree (a) appointing a
custodian, trustee, agent or receiver for the Insurer or for all or any
material portion of its property or (b) authorizing the taking of
possession by a custodian, trustee, agent or receiver of the Insurer (or
the taking of possession of all or any material portion of the property of
the Insurer).
"Interest Accrual Period" shall mean, with respect to any Distribution
-----------------------
Date, the period from and including the Distribution Date immediately preceding
such Distribution Date (or, in the case of the first Distribution Date, from and
including the Closing Date) to but excluding such Distribution Date.
"Issuer" shall mean ANRC Auto Owner Trust _____, a Delaware business
------
trust, and its permitted successors and assigns.
"Lien" shall mean a security interest, lien, charge, pledge, equity or
----
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Contract by operation of law.
"Liquidation Expenses" shall mean reasonable out-of-pocket expenses,
--------------------
other than any overhead expenses, incurred by the Servicer in connection with
the collection and realization of the full amounts due under any Defaulted
Contract (including the attempted liquidation of a Contract which is brought
current and is no longer in default during such attempted liquidation) and the
repossession and sale of any property acquired in respect thereof which are not
recoverable as proceeds paid by any insurer under any type of motor vehicle
insurance policy related to the Contract. Liquidation Expenses shall not
include any late fees or other administrative fees and expenses or similar
charges collected with respect to a Contract.
10
Liquidation Expenses shall not include any late fees or other administrative
fees and expenses or similar charges collected with respect to a Contract.
"Maturity Date" shall mean, with respect to any Contract, the date on
-------------
which the last scheduled payment of such Contract shall be due and payable as
such date may be extended pursuant to Section 3.02.
"Monthly Scheduled Payment" shall mean, with respect to any Contract,
-------------------------
in any given month, the amount of the scheduled payment of principal and
interest payable by the Obligor of such Contract for such month in accordance
with the terms thereof, exclusive of any charges which represent late payment
charges or extension fees.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, and its permitted
-------
successors and assigns.
"Net Insurance Proceeds" shall mean proceeds paid by any insurer under
----------------------
a comprehensive and collision insurance policy related to a Contract (other than
funds used for the repair of the related Financed Vehicle or proceeds released
to the Obligor in excess of the Principal Balance of the Contract, and all
accrued interest thereon and all other amounts due thereunder), after
reimbursement to the Servicer of expenses recoverable under such policy.
"Net Liquidation Proceeds" shall mean, at any time, with respect to
------------------------
any Contract that becomes a Defaulted Contract, the amount received by the
Servicer in respect of such Contract during or after the Collection Period in
which such Contract becomes a Defaulted Contract (after deduction of Liquidation
Expenses with respect to such Contract).
"Non-Servicer Default" shall mean the occurrence and continuation of
--------------------
any one of the following events:
(a) failure on the part of the Custodian, any Subcustodian or any
Subservicer duly to observe or to perform any other covenants or agreements of
the Custodian, any Subcustodian or the Subservicer set forth in this Agreement,
the Sub-Servicing Agreement or any other Basic Document, which failure shall (i)
materially and adversely affect the rights of the Noteholders, the Insurer, the
Issuer, the Owner Trustee or the Indenture Trustee and (ii) continue unremedied
for a period of 30 days after the date on which the Custodian, any Subcustodian
or the Subservicer shall have knowledge of such failure or written notice of
such failure, requiring the same to be remedied, shall have been given to the
Custodian, any Subcustodian or any Subservicer, as the case may be, by the
Insurer, the Issuer, the Owner Trustee or the Indenture Trustee;
(b) the entry of a decree or order for relief by a court or
regulatory authority having jurisdiction in respect of the Custodian, any
Subcustodian or the Subservicer in an involuntary case under the federal
bankruptcy laws, as now or hereafter in effect, or any other present or future,
federal or state, bankruptcy, insolvency or similar law, or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Custodian, any Subcustodian or the Subservicer or of any
11
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Custodian, any Subcustodian or the Subservicer and the
continuance of any such decree or order unstayed and in effect for a period of
60 consecutive days or the commencement of an involuntary case under the federal
bankruptcy laws, as now or hereafter in effect, or another present or future
federal or state bankruptcy, insolvency or similar laws and such case is not
dismissed within 60 days;
(c) the commencement by the Custodian, any Subcustodian or the
Subservicer of a voluntary case under the federal bankruptcy laws, as now or
hereafter in effect, or any other present or future, federal or state,
bankruptcy, insolvency or similar law, or the consent by the Custodian, any
Subcustodian or the Subservicer to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Custodian, any Subcustodian or the Subservicer or of any
substantial part of its property or the making by the Custodian, any
Subcustodian or the Subservicer of an assignment for the benefit of creditors or
the failure by the Custodian, any Subcustodian or the Subservicer generally to
pay its debts as such debts become due or the taking of corporate action by the
Custodian, any Subcustodian or the Subservicer in furtherance of any of the
foregoing;
(d) any representation, warranty or statement of the Custodian, any
Subcustodian or the Subservicer made in this Agreement, the Sub-Servicing
Agreement or the other Basic Documents or any certificate, report or other
writing delivered pursuant hereto or thereto shall prove to be incorrect in any
material respect as of the time when the same shall have been made, and the
incorrectness of such representation, warranty or statement has a material
adverse effect on the Noteholders or the Insurer and, within 30 days after
written notice thereof shall have been given to the Custodian, any Subcustodian
or the Subservicer, as applicable, by the Indenture Trustee or the Issuer, or so
long as no Insurer Default has occurred and is continuing, by the Insurer, the
circumstance or condition in respect of which such representation, warranty or
statement was incorrect shall not have been eliminated or otherwise cured; or
(e) a Servicer Default.
"Note" shall mean a Class A-1 Note, a Class A-2 Note, a Class A-3 Note
----
or a Class A-4 Note.
"Notes" shall mean the Class A-1 Notes, the Class A-2 Notes, the Class
-----
A-3 Notes and the Class A-4 Notes, collectively.
"Note Distributable Amount" shall mean, with respect to any
-------------------------
Distribution Date, the sum of the Note Principal Distributable Amount and the
Note Interest Distributable Amount for such Distribution Date.
"Note Distribution Account" shall mean the account established and
-------------------------
maintained as such pursuant to Section 4.01.
"Noteholder" shall have the meaning specified in the Indenture.
----------
12
"Note Interest Carryover Shortfall" shall mean, with respect to any
---------------------------------
Distribution Date and a Class of Notes, the sum of (i) the excess, if any, of
the Note Interest Distributable Amount for such Class for the immediately
preceding Distribution Date over the amount in respect of interest that is
actually deposited in the Note Distribution Account with respect to such Class
on such preceding Distribution Date, and, (ii) to the extent permitted by
applicable law, interest on the amount of interest due but not paid to
Noteholders of such Class on the preceding Distribution Date at the related Note
Rate for the related Interest Accrual Period; provided that the Note Interest
--------
Carryover Shortfall for the first Distribution Date shall be zero.
"Note Interest Distributable Amount" shall mean, with respect to any
----------------------------------
Distribution Date and a Class of Notes, the sum of (i) an amount equal to the
interest accrued during the related Interest Accrual Period at the related Note
Rate for such Class of Notes on the Outstanding Principal Amount of such Class
of Notes on the immediately preceding Distribution Date (or, in the case of the
first Distribution Date, on the original Outstanding Principal Amount of such
Class of Notes) and (ii) the Note Interest Carryover Shortfall for such Class of
Notes for such Distribution Date.
"Note Principal Carryover Shortfall" shall mean, as of the close of
----------------------------------
business on any Distribution Date, the excess of the Note Principal
Distributable Amount for such Distribution Date over the amount in respect of
principal that is actually paid from the Note Distribution Account on such
Distribution Date.
"Note Principal Distributable Amount" shall mean, with respect to any
-----------------------------------
Distribution Date, the sum of (i) the Principal Distributable Amount for such
Distribution Date and (ii) any outstanding Note Principal Carryover Shortfall
for the immediately preceding Distribution Date; provided that the Note
--------
Principal Distributable Amount shall not exceed the aggregate Outstanding
Principal Amount of the Notes. Notwithstanding the foregoing, the Note Principal
Distributable Amount on the Final Scheduled Distribution Date for each Class
shall not be less than the amount that is necessary to reduce the Outstanding
Principal Amount of the related Class of Notes to zero.
"Note Rate" shall mean the Class A-1 Rate, the Class A-2 Rate, the
---------
Class A-3 Rate or the Class A-4 Rate, as the case may be.
"Note Register" shall have the meaning specified in the Indenture.
-------------
"Obligee" shall mean, with respect to any Contract, the Person to whom
-------
an Obligor is indebted under such Contract.
"Obligor" shall mean, with respect to any Contract, the purchaser or
-------
co-purchasers of the Financed Vehicle and any other Person who owes payments
under such Contract.
"Officers' Certificate" shall mean a certificate signed by the
---------------------
Chairman, the President, a Vice President, the Treasurer, an Assistant
Treasurer, the Controller, an Assistant Controller, the Secretary or an
Assistant Secretary of any Person delivering such certificate and delivered to
the Person to whom such certificate is required to be
13
delivered. In the case of an Officers' Certificate of the Servicer, the signing
officer must be a Servicing Officer. Unless otherwise specified, any reference
herein to an Officers' Certificate shall be to an Officers' Certificate of the
Servicer.
"Opinion of Counsel" shall mean a written opinion of counsel (who may
------------------
be an employee of or counsel to the Seller or the Servicer) acceptable to the
Indenture Trustee or the Owner Trustee, as the case may be, and the Insurer,
which opinion shall be acceptable in form and substance to the Indenture Trustee
and the Insurer and shall be addressed to the Indenture Trustee or Owner
Trustee, as the case may be, and the Insurer.
"Optional Purchase" shall have the meaning specified in Section 8.01
-----------------
"Original Pool Balance" shall mean $______, which is the aggregate
---------------------
principal balance.
"Originator" shall mean AutoNation Financial Services Corp., and its
----------
permitted successors and assigns.
"Outstanding" shall mean with respect to a Contract and as of the time
-----------
of reference thereto, a Contract that has not reached its Maturity Date, has not
been fully prepaid, has not become a Defaulted Contract and has not otherwise
been repurchased pursuant to Section 2.03, 3.06 or 8.01.
"Outstanding Principal Amount" shall mean, with respect to any
----------------------------
Distribution Date, the aggregate outstanding principal amount of the Notes after
giving effect to any payments of principal made on the Notes on such
Distribution Date.
"Outstanding Principal Balance" shall mean, as of the Cut-Off Date,
-----------------------------
the amount set forth as the Outstanding Principal Balance of such Contract on
the Schedule of Contracts, such amount being the total of all principal payments
due after the Cut-Off Date.
"Overcollateralization Amount" shall mean approximately ______% of the
----------------------------
initial Pool Balance.
"Owner Trust Agreement" shall mean the Amended and Restated Owner
---------------------
Trust Agreement, dated as of _______, _______, between the Depositor and the
Owner Trustee, as the same may be further amended, supplemented or otherwise
modified and in effect from time to time.
"Owner Trustee" shall mean _____________, a ________, not in its
-------------
individual capacity but solely as the Owner Trustee under the Owner Trust
Agreement acting on behalf of the Issuer, its successors in interest and any
successor Owner Trustee under the Owner Trust Agreement.
"Owner Trustee Corporate Trust Office" shall mean the principal office
------------------------------------
of the Owner Trustee at which at any particular time its corporate trust
business shall be principally administered, which office at the date of the
execution of this Agreement is
14
located at ______________, Attention: _________, with a copy to ____________,
Attention: ________; or at such other address as the Owner Trustee may designate
from time to time by notice to the Noteholders, the Insurer, the Servicer and
the Seller.
"Owner Trustee Fee" shall equal the amount specified in the Owner
-----------------
Trust Agreement.
"Paying Agent" shall mean with respect to the Notes, the Person acting
------------
as the "Paying Agent" under the Indenture or any other Person that meets the
eligibility standards for the Indenture Trustee specified in the Indenture and
is authorized by the Issuer to make the distributions from the Note Distribution
Account, including payment of principal of or interest on the Notes on behalf of
the Issuer.
"Payment Account" shall mean the account established and maintained as
---------------
such pursuant to Section 4.01.
"Percentage Interest" shall have the meaning set forth in the Owner
-------------------
Trust Agreement.
"Person" shall mean a legal person, including any individual,
------
corporation, estate, partnership, limited liability company or limited liability
partnership, joint venture, association, joint stock company, business trust,
trust (including any beneficiary thereof), unincorporated organization or
government or any agency or political subdivision thereof.
"Pool Balance" as of the time of determination shall mean the
------------
aggregate of the Principal Balances of the Contracts, exclusive of the Principal
Balances of all Contracts that are not Outstanding at the end of the Collection
Period ending immediately prior to such time of determination.
"Pool Factor" shall mean, a six-digit decimal computed each month
-----------
indicating the Pool Balance at the end of the month, divided by the Original
Pool Balance. The Pool Factor will be 1.000000 as of the Closing Date;
thereafter, the Pool Factor will decline to reflect reductions in the Pool
Balance.
"Potential Preference Parties" shall have the meaning specified in
----------------------------
Section 4.04(e).
"Preference Amount" shall mean, any amount previously distributed to a
-----------------
Noteholder that is recoverable and sought to be recovered as a voidable
preference by a trustee in bankruptcy pursuant to the United States Bankruptcy
Code (11 U.S.C.), as amended from time to time, in accordance with a final
nonappealable order of a court having competent jurisdiction.
"Preference Claim" shall have the meaning specified in Section 7.05.
----------------
15
"Principal Balance" shall mean, with respect to a Contract, as of any
-----------------
date of determination, the Amount Financed under the terms of such Contract
minus (i) that portion of all Monthly Scheduled Payments and any full or partial
-----
prepayments in respect of such Contract received on or prior to the end of the
most recently ended Collection Period and allocable to principal as determined
by the Servicer. For purposes of this definition, allocations between interest
and principal of the Monthly Scheduled Payment on each Contract by the Servicer
shall be made in accordance with the terms of such Contract.
"Principal Distributable Amount" shall mean, with respect to any
------------------------------
Distribution Date, the amount equal to the sum of the following amounts with
respect to the Collection Period: (i) collections received on Contracts (other
than Defaulted Contracts and Purchased Contracts) allocable to principal as
determined by the Servicer, including full and partial principal prepayments;
(ii) the Principal Balance of all Contracts (other than Purchased Contracts)
that become Defaulted Contracts during the related Collection Period; and (iii)
the Principal Balance as of the date of purchase of all Contracts that became
Purchased Contracts as of the immediately preceding Servicer Report Date.
"Purchase Amount" shall mean, with respect to a Purchased Contract,
---------------
the Principal Balance of such Contract as of the date of purchase or repurchase
of such Contract plus accrued interest thereon to the date of purchase at the
----
applicable APR to the extent not previously collected.
"Purchased Contract" shall mean a Contract that (i) has been purchased
------------------
or repurchased by the Originator the Servicer or the Seller because of certain
material defects in documents related to such Contract, (ii) has been
repurchased by the Seller or the Originator because of certain breaches of
representations and warranties regarding such Contract made by the Seller in
this Agreement or by the Originator in the Receivables Purchase Agreement, as
applicable, pursuant to the terms thereof, (iii) has been purchased by the
Servicer because of certain breaches by the Servicer of representations or
servicing covenants pursuant to Section 3.06 or (iv) has been purchased by the
Servicer in the event of an optional purchase of all of the Contracts pursuant
to Section 8.01.
"Rating Agencies" shall mean Moody's and Standard & Poor's, and if
---------------
either Moody's or Standard & Poor's no longer maintains a rating on any Class of
Notes, such other nationally recognized statistical rating organization
designated by the Depositor and acceptable to the Insurer.
"Receivables Purchase Agreement" shall mean the Receivables Purchase
------------------------------
Agreement, dated as of ___________, _______, between AutoNation Financial
Services, as seller, and the Seller, as purchaser, as such agreement may be
amended, supplemented or otherwise modified and in effect from time to time.
"Record Date" shall mean, with respect to a Class of Notes, on each
-----------
Distribution Date and the Final Scheduled Distribution Date, the Business Day
16
immediately prior to such Distribution Date or Final Scheduled Distribution Date
or, if Definitive Securities are issued, the last day of the immediately
preceding calendar month.
"Registrar of Titles" shall mean the agency, department or office
-------------------
having the responsibility for maintaining records of titles to motor vehicles
and issuing documents evidencing such titles in the jurisdiction in which a
particular Financed Vehicle is registered.
"Reimbursement Amount" shall mean the sum of (i) any unreimbursed
--------------------
payments made by the Insurer under the Insurance Policy or pursuant to Section
5.02(c) of the Indenture, (ii) any expense paid by the Insurer pursuant to
Section 3.04(b) and not reimbursed by the Servicer pursuant to such Section
3.04(b), (iii) any unpaid Insurance Premium and (iv) all other amounts due to
the Insurer under the Insurance Agreement, in each case, together with interest
on such amounts at the Late Payment Rate (as defined in the Insurance
Agreement).
"Re-▇▇▇▇▇▇▇ Expenses" shall mean reasonable out-of-pocket expenses,
-------------------
acceptable to the Insurer and incurred in connection with the retitling of the
Title Documents to name the Indenture Trustee as secured party with respect to
the Financed Vehicles pursuant to Section 3.04(b).
"Request for Release of Documents" shall have the meaning set forth in
--------------------------------
the Custodial Agreement.
"Residual Interest Certificate" shall have the meaning specified in
-----------------------------
the Owner Trust Agreement.
"Responsible Officer" shall mean any officer of the Indenture Trustee
-------------------
or the Owner Trustee within the Corporate Trust Office or the Owner Trustee
Corporate Office, as applicable, including any vice president, assistant vice
president, assistant treasurer, assistant secretary or any other officer of the
Indenture Trustee or Owner Trustee customarily performing functions similar to
those performed by any of the above designated officers with direct
responsibility for the administration of this Agreement.
"Schedule of Contracts" shall mean the list or lists of Contracts
---------------------
attached as Exhibit A hereto. In addition, the information contained in Exhibit
A shall also be contained on a computer disk or tape (the "Disk") that shall be
----
delivered by the Servicer to the Indenture Trustee and the Insurer on or prior
to the Closing Date.
"Securities Account Control Agreement" shall have the meaning set
------------------------------------
forth in the Indenture.
"Seller" shall mean AutoNation Receivables Corporation, a Delaware
------
corporation, in its capacity as the Seller of the Contracts under this
Agreement, and each successor thereto (in the same capacity) pursuant to Section
5.02.
17
"Servicer" shall mean AutoNation Financial Services Corp., a Delaware
--------
corporation, in its capacity as the servicer of the Contracts under Section
3.01, and, in each case upon succession in accordance herewith, each successor
servicer in the same capacity pursuant to Section 3.01 and each successor
servicer pursuant to Section 7.02.
"Servicer Default" shall mean an event specified in Section 7.01.
----------------
"Servicer Report Date" shall mean, with respect to any Distribution
--------------------
Date, the third Business Day prior to such Distribution Date.
"Servicing Fee" shall mean, as to any Distribution Date, the fee
-------------
payable to the Servicer for services rendered during the Collection Period
ending immediately prior to such Distribution Date, which shall be an amount
equal to the product of the Servicing Fee Percentage multiplied by the Pool
Balance as of the end of the Collection Period preceding the related Collection
Period or in the case of the first Distribution Date, the Pool Balance as of the
Cut-Off Date.
"Servicing Fee Percentage" shall mean a percentage equal to the
------------------------
product of one-twelfth of _________% per annum.
"Servicing Officer" shall mean any officer of the Servicer involved
-----------------
in, or responsible for, the administration and servicing of the Contracts whose
name appears on a list of servicing officers furnished to the Indenture Trustee
and the Insurer by the Servicer pursuant to Section 3.01, as such list may be
amended or supplemented from time to time.
"Servicing Standards" shall mean, at any time, the quality of the
-------------------
Servicer's performance with respect to (i) compliance with the terms of this
Agreement and the Collection Policy and (ii) adequacy, measured in accordance
with industry standards and current and historical standards of the Servicer, in
respect of the servicing of all Contracts serviced by the Servicer, regardless
of whether any such Contract is owned by the Servicer or otherwise.
"Simple Interest Contract" shall mean a Contract as to which the
------------------------
portion of payments allocable to earned interest and principal thereunder is
determined according to the Simple Interest Method.
"Simple Interest Method" shall mean the method for calculating
----------------------
interest on a Contract whereby interest due is calculated each day based on the
actual principal balance of the Contract on that day.
"Spread Account" shall mean the account established and maintained as
--------------
such pursuant to Section 4.01.
"Spread Account Initial Deposit" shall equal the amount set forth in
------------------------------
the Insurance Agreement.
18
"Spread Account Property" shall mean the Spread Account, all amounts
-----------------------
and investments held from time to time in the Spread Account (whether in the
form of deposit accounts, physical property, book-entry securities,
uncertificated securities or otherwise) and all proceeds of the foregoing.
"Spread Account Required Amount" shall have the meaning set forth in
------------------------------
the Insurance Agreement.
"Standard & Poor's" shall mean Standard & Poor's Ratings Services, a
-----------------
division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc., and its permitted successors and
assigns.
"Subcustodian" shall mean World Omni Financial Corp., a Florida
------------
corporation and any successor.
"Subservicer" shall mean World Omni Financial Corp., a Florida
-----------
corporation, in its capacity as the subservicer of the Contracts under Section
3.01, and, upon succession in accordance herewith, each successor subservicer in
the same capacity pursuant to Section 3.01.
"Sub-Servicing Agreement" shall mean the Amended and Restated
-----------------------
Servicing Agreement, dated as of ___________, ________, between AutoNation
Financial Services and the Subservicer, as the same may be amended, supplemented
or otherwise modified and in effect from time to time.
"Successor Custodian" shall have the meaning set forth in Section
-------------------
2.04(b).
"Successor Servicer" shall have the meaning set forth in Section 7.02.
------------------
"Title Document" shall mean, with respect to any Financed Vehicle, the
--------------
certificate of title for, or other evidence of ownership of, such Financed
Vehicle issued by the Registrar of Titles in the jurisdiction in which such
Financed Vehicle is registered.
"Transition Costs" shall mean reasonable costs and expenses incurred
----------------
by or payable to the Successor Servicer in connection with the transfer of
servicing (whether due to termination, resignation or otherwise) from the
Servicer to such Successor Servicer, which shall be approved in writing by the
Insurer.
"Trust" shall mean the Issuer.
-----
"Trust Account Property" shall mean the Trust Accounts, all amounts
----------------------
and investments held from time to time in any Trust Account (whether in the form
of deposit accounts, physical property, book-entry securities, uncertificated
securities or otherwise) and all proceeds of the foregoing.
"Trust Accounts" shall have the meaning specified in Section 4.01(a).
--------------
"Trust Estate" shall mean all right, title and interest of the Trust
------------
in and to the property and rights pledged to the Indenture Trustee pursuant to
the Indenture.
19
"Trust Property" shall have the meaning set forth in Section 2.01(a).
--------------
"UCC" shall mean the Uniform Commercial Code as in effect in the
---
applicable jurisdiction.
"Underwriting Guidelines" shall have the meaning set forth in the
-----------------------
Insurance Agreement.
SECTION 1.02. Usage of Terms.
--------------
With respect to all terms in this Agreement, the singular includes the
plural and the plural the singular; words importing any gender include the other
genders; references to "writing" include printing, typing, lithography and other
means of reproducing words in a visible form; references to agreements and other
contractual instruments include all amendments, modifications and supplements
thereto or any changes therein entered into in accordance with their respective
terms and not prohibited by this Agreement; references to Persons include their
permitted successors and assigns; and the term "including" means "including
without limitation."
SECTION 1.03. Section References.
------------------
All section references, unless otherwise indicated, shall be to
Sections in this Agreement.
SECTION 1.04. Calculations.
------------
Interest on the Class A-1 Notes will be calculated on the basis of the
actual number of days in the related Interest Accrual Period and a 360-day year.
Interest on the Class A-2 Notes, the Class A-3 Notes and the Class A-4 Notes
will be calculated on the basis of a 360-day year consisting of twelve 30-day
months. Collections of interest on Simple Interest Contracts will be calculated
in accordance with the terms thereof.
SECTION 1.05. Accounting Terms.
----------------
All accounting terms used but not specifically defined herein shall be
construed in accordance with generally accepted accounting principles in the
United States of America.
20
ARTICLE II
CONVEYANCE OF CONTRACTS;
REPRESENTATIONS AND WARRANTIES OF THE SELLER
SECTION 2.01. Conveyance of Contracts.
-----------------------
(a) In consideration of the Issuer's delivery of the authenticated
Notes to or upon the order of the Seller, effective upon the Closing Date, the
Seller hereby sells, grants, transfers, conveys and assigns to the Issuer,
without recourse (except as expressly provided in Section 2.03 hereof), all of
the right, title and interest of the Seller in, to and under:
(i) the Contracts listed in the Schedule of Contracts;
(ii) all monies received with respect to all Contracts after the Cut-
Off Date, including any Purchase Amounts;
(iii) all Net Liquidation Proceeds and Net Insurance Proceeds with
respect to any Financed Vehicle to which a Contract relates received after
the Cut-Off Date;
(iv) all documents relating to the Contracts, the Contract Documents
and Contract Files relating to the Contracts, including all servicing
records in hard and electronic form;
(v) all rights of the Seller (but not its obligations) under the
Receivables Purchase Agreement;
(vi) any and all security interests in the Financed Vehicles and the
rights to receive proceeds from claims on any insurance policies covering
the Financed Vehicles or the individual Obligors under each related
Contract; and
(vii) all proceeds in any way delivered with respect to the foregoing,
all rights to payments with respect to the foregoing and all rights to
enforce the foregoing.
The foregoing items of property listed in this Section 2.01(a) (the
"Conveyed Property"), together with the Trust Account Property, are collectively
------------------
referred to herein as the "Trust Property". In addition, the Issuer shall cause
--------------
the Insurer to issue the Insurance Policy.
It is the intention of the Seller and the Issuer that the assignment
and transfer contemplated herein constitute (and shall be construed and treated
for all purposes as) a true and complete sale of the Conveyed Property,
conveying good title thereto free and clear of any liens and encumbrances, from
the Seller to the Issuer. However, in the event that such conveyance is deemed
to be a pledge to secure a loan (in spite of the express intent of the parties
hereto that this conveyance constitutes, and shall
21
be construed and treated for all purposes as a true and complete sale), the
Seller hereby grants to the Issuer, for the benefit of the Noteholders and the
Insurer, a security interest which security interest shall be a first priority
perfected security interest in all of the Seller's right, title and interest in,
to and under the Trust Property whether now existing or hereafter created and
all proceeds of the foregoing to secure the loan deemed to be made in connection
with such pledge and, in such event, this Agreement shall constitute a security
agreement under applicable law.
(b) As of the Closing Date, the Issuer acknowledges the conveyance to
it of the Conveyed Property from the Seller, including all right, title and
interest of the Seller in, to and under the Conveyed Property, receipt of which
is hereby acknowledged by the Issuer. Concurrently with such conveyance and in
exchange therefor, the Issuer has pledged to the Indenture Trustee, for the
benefit of the Noteholders and the Insurer, the Trust Property, and the
Indenture Trustee, pursuant to the written instructions of the Issuer, has
executed and caused to be authenticated and delivered the Notes to the Seller or
its designee, upon the order of the Issuer. In addition, concurrently with such
delivery and in exchange therefor, the Owner Trustee, pursuant to the
instructions of the Seller, has executed (not in its individual capacity, but
solely as Owner Trustee on behalf of the Issuer) and caused to be authenticated
and delivered, the Residual Interest Certificate to the Seller, upon the order
of the Seller.
(c) In connection with the sale of the Contracts pursuant to the
Receivables Purchase Agreement, AutoNation Financial Services has filed with the
office of the Secretary of State of the State of ________ a UCC-1 financing
statement naming AutoNation Financial Services as debtor, naming the Seller as
secured party and the Indenture Trustee as assignee and including the Contracts
in the description of the collateral. In connection with the sale of the
Contracts pursuant to this Agreement, the Seller has filed or caused to be filed
with the Secretary of State of the State of _________ a UCC-1 financing
statement naming the Seller as debtor, naming the Issuer as secured party and
naming the Indenture Trustee, on behalf of the Noteholders and the Insurer, as
assignee, and including the Contracts in the description of the collateral. In
connection with the pledge of the Contracts pursuant to the Indenture, the Trust
has filed or caused to be filed with the offices of the Secretary of State of
the State of Delaware UCC-1 financing statements naming the Trust as debtor and
the Indenture Trustee, on behalf of the Noteholders and the Insurer, as secured
party. The grant of a security interest to the Indenture Trustee and the rights
of the Indenture Trustee in the Contracts shall be governed by the Indenture.
The Seller shall have caused UCC-2 termination statements to have been
filed with the office of Secretary of State of the State of ________ terminating
any effective UCC-1 financing statements with respect to any outstanding
security interests in the Contracts.
(d) From time to time, the Servicer shall cause to be taken such
actions as are necessary to continue the perfection of the respective interests
of the Trust and the Indenture Trustee in the Contracts and to continue the
first priority security interest of the Originator in the Financed Vehicles and
their proceeds and the effectiveness of the
22
assignment of the security interest in the Financed Vehicles and their proceeds
to the Indenture Trustee (other than, as to such priority, any statutory lien
arising by operation of law after the Closing Date which is prior to such
interest), including, without limitation, the filing of financing statements,
amendments thereto or continuation statements and the making of notations on
records or documents of title; provided, however, the Servicer will not be
-------- -------
required to submit the Title Documents for retitling in the name of the
Indenture Trustee except as provided in Section 3.04(b).
(e) The Owner Trustee, on behalf of the Issuer and the Indenture
Trustee, hereby authorizes the Servicer, and the Servicer hereby agrees, to take
such steps as are necessary to re-perfect such security interest in the event of
the relocation of a Financed Vehicle or for any other reason, in either case,
when the Servicer has knowledge of the need for such re-perfection. In the event
that the assignment of a security interest in a Contract by the Servicer, as
Originator, to the Seller pursuant to the Receivables Purchase Agreement, by the
Seller to the Issuer pursuant to the terms of this Agreement and by the Issuer
to the Indenture Trustee pursuant to the Indenture is insufficient without a
notation on the related Financed Vehicle's certificate of title, or without
fulfilling any additional administrative requirements under the laws of the
State in which the Financed Vehicle is located, to assign to the Indenture
Trustee a perfected security interest in the related Financed Vehicle, the
Seller and the Servicer hereby agree that the Originator's listing as the
secured party on the certificate of title is deemed to be in its capacity as
agent of the Indenture Trustee and the Servicer further agrees to hold or cause
to be held such certificate of title as the Indenture Trustee's agent and
custodian; provided, however, that the Servicer shall not, nor shall the Owner
-------- -------
Trustee, the Indenture Trustee or the Noteholders have the right to require that
the Servicer make any such notation on the related Financed Vehicle's
certificate of title or fulfill any such additional administrative requirements
of the laws of the State in which a Financed Vehicle is located, except as
otherwise provided in Section 3.04.
(f) During the term of this Agreement, the Seller and AutoNation
Financial Services shall each maintain its chief executive office in one of the
States of the United States.
(g) The Servicer shall pay all reasonable costs and disbursements in
connection with the perfection and the maintenance of perfection, as against all
third parties, of the Indenture Trustee's right, title and interest in and to
the Contracts and in connection with maintaining the first priority security
interest of the Indenture Trustee in the Financed Vehicles and the proceeds
thereof; provided, however, the parties acknowledge that the Title Documents
-------- -------
will not be submitted for retitling in the name of the Indenture Trustee as
secured party except as provided in Section 3.04(b).
SECTION 2.02. Representations and Warranties of the Seller.
--------------------------------------------
The Seller hereby makes the following representations and warranties
on which (i) the Issuer is deemed to have relied in acquiring the Contracts and
(ii) the Insurer is deemed to have relied in issuing the Insurance Policy. Such
representations and warranties speak as of the Closing Date, but shall survive
the sale, transfer and
23
assignment of the Contracts to the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture.
(a) As to the Seller:
(i) The Seller is duly organized and validly existing as a
corporation organized and existing and in good standing under the laws of
the State of Delaware, with power and authority to own its properties and
to conduct its business as currently owned and conducted and had at all
relevant times, and has, power, authority, and legal right to originate or
acquire, own and sell the Contracts.
(ii) The Seller is duly qualified to do business as a foreign
corporation in good standing, and shall have obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or lease
of property or the conduct of its business requires such qualifications.
(iii) The Seller has the power and authority to execute and deliver
this Agreement and the other Basic Documents to which it is a party and to
carry out their respective terms; the Seller has full power, authority and
legal right to sell and assign the property to be sold and assigned to and
deposited with the Issuer and has duly authorized such sale and assignment
to the Issuer by all necessary corporate action; and the execution,
delivery, and performance of this Agreement and the other Basic Documents
to which it is a party have been duly authorized by the Seller by all
necessary corporate action.
(iv) This Agreement constitutes a valid sale, transfer and assignment
of the Contracts, enforceable against creditors of and purchasers from the
Seller. This Agreement and the other Basic Documents to which it is a party
constitute legal, valid, and binding obligations of the Seller enforceable
in accordance with their respective terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, or other similar
laws affecting the enforcement of creditors' rights in general and by
general principles of equity, regardless of whether such enforceability
shall be considered in a proceeding in equity or at law.
(v) The consummation of the transactions contemplated by this
Agreement and the other Basic Documents and the fulfillment of their
respective terms shall not conflict with, result in any breach of any of
the terms and provisions of, nor constitute (with or without notice or
lapse of time) a default under, the certificate of incorporation or bylaws
of the Seller, or any indenture, agreement, or other instrument to which
the Seller is a party or by which it shall be bound; nor result in the
creation or imposition of any Lien upon any of the properties of the Seller
pursuant to the terms of any such indenture, agreement, or other instrument
(other than pursuant to the Basic Documents to which the Seller is a
party); nor violate any law or any order, rule, or regulation applicable to
the Seller of any court or of any federal or state regulatory body,
administrative
24
agency, or other governmental instrumentality having jurisdiction over the
Seller or its properties.
(vi) There are no proceedings or investigations pending, or, to the
Seller's best knowledge after due inquiry, threatened, before any court,
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Seller or its properties: (A)
asserting the invalidity of this Agreement, the other Basic Documents or
the Notes, (B) seeking to prevent the issuance of the Notes or the
consummation of any of the transactions contemplated by this Agreement and
the other Basic Documents, (C) seeking any determination or ruling that
might materially and adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, this Agreement,
the other Basic Documents or the Notes, or (D) naming the Seller which
might adversely affect the federal income tax attributes of the Notes.
(vii) On the Closing Date, the chief executive office of the Seller
is located at ____________.
(viii) The legal name of the Seller is the name used by it in this
Agreement and the Seller has not changed its name since the date of its
incorporation and does not have any trade names, fictitious names, assumed
names or "doing business" names .
(ix) The transactions contemplated by this Agreement and the other
Basic Documents are being consummated by the Seller in furtherance of its
ordinary business purposes, with no contemplation of insolvency and no
intent to hinder, delay or defraud any of its present or future creditors
and the Seller has received fair consideration having value reasonably
equivalent or in excess of the value of the Contracts and the other
conveyed property and the performance of the Seller's obligations
hereunder. Both immediately before and after the transactions contemplated
by this Agreement and the other Basic Documents, (a) the Seller is solvent
and will not become insolvent and will have adequate capital to conduct its
business after giving effect to the transactions contemplated in this
Agreement and the other Basic Documents and is paying its debts as they
become due and (b) the sum of the Seller's assets was or will be greater
than the sum of its debts and in excess of the amount that will be required
to pay its probable liabilities as they then exist and as they become
absolute and matured.
(x) No consent, approval, license, authorization or order of, or
declaration, registration or filing with, any governmental authority or
other Person is required to be made by the Seller in connection with the
execution, delivery or performance of this Agreement or the Basic Documents
to which it is a party or the consummation of the transactions contemplated
hereby or thereby, except such as have been duly made, effected or
obtained.
(xi) The Seller (a) is not in violation in any material respect of
any laws, ordinances, governmental rules or regulations to which it is
subject and
25
(b) is not in violation in any material respect of any term of any
agreement, charter instrument, bylaw or instrument to which it is a party
or by which it may be bound which violation or failure to obtain might
materially and adversely affect the business or condition (financial or
otherwise) of the Seller or affect its ability to perform its obligations
under this Agreement and the other Basic Documents.
(b) As to each Contract:
(i) The information pertaining to such Contract set forth in the
related Schedule of Contracts, the Disk and the computer file provided to
the Insurer prior to the Closing Date describing the characteristics of the
Contracts was true and correct in all material respects at the Closing Date
and the calculations of the Principal Balances appearing in such Schedule
of Contracts for each such Contract at the Cut-Off Date have been performed
in accordance with this Agreement and are accurate.
(ii) As of the Closing Date, such Contract creates a valid and
enforceable first priority security interest in favor of AutoNation
Financial Services in the Financed Vehicle securing such Contract, and such
security interest has been duly perfected and is prior to all other liens
upon and security interests in such Financed Vehicle which now exist or may
hereafter arise or be created (except, as to priority, for any lien for
unpaid taxes or unpaid storage or repair charges which may arise after the
Closing Date in accordance with the UCC); such security interest has been
duly assigned by AutoNation Financial Services to the Seller pursuant to
the Receivables Purchase Agreement, and, as of the Closing Date, has been
assigned by the Seller to the Issuer pursuant to Section 2.01(a) hereof and
pledged by the Issuer to the Indenture Trustee pursuant to the Indenture.
(iii) (A) If the related Financed Vehicle was originated in a state in
which notation of a security interest on the Title Document is required or
permitted to perfect such security interest, the Title Document or the
electronic title records for such Financed Vehicle shows, or, if a new or
replacement Title Document is being applied for with respect to such
Financed Vehicle, the Title Document will be received within 180 days of
the Closing Date and will show, AutoNation Financial Services named as the
original and only secured party under the related Contract as the holder of
a first priority security interest in such Financed Vehicle, and (B) if the
related Financed Vehicle was originated in a state in which the filing of a
financing statement under the UCC is required to perfect a security
interest in motor vehicles, such filings or recordings have been duly made
and show AutoNation Financial Services named as the original and only
secured party under the related Contract, and in either case, the Indenture
Trustee on behalf of the Noteholders and the Insurer has the same rights as
such secured party has or would have (if such secured party were still the
owner of such Contract) (x) against all parties claiming an interest in
such Financed Vehicle and (y) to repossess or recover by legal process the
Financed Vehicle in
26
its name. With respect to each Contract for which the Title Document has
not yet been returned from the Registrar of Titles, AutoNation Financial
Services has written evidence that such Title Documents showing AutoNation
Financial Services as first lienholder have been applied for. AutoNation
Financial Services has given and delivered an irrevocable power of attorney
to the Indenture Trustee, and such power of attorney together with the
Title Documents are all the documents necessary to permit the Indenture
Trustee to submit the Title Documents for each Financed Vehicle to the
applicable Registrar of Titles for retitling in the name of the Indenture
Trustee as secured party.
(iv) It is the intention of the Seller that the transfer and
assignment herein contemplated constitute a sale of the Contracts from the
Seller to the Issuer and that the beneficial interest in and title to such
Contracts not be part of the Seller's estate in the event of the filing of
a bankruptcy petition by or against the Seller under any Insolvency
Proceeding. No Contract has been sold, transferred, assigned or pledged by
the Seller to any Person other than the Issuer and the Seller acquired
title to the Contracts in good faith, without notice of any adverse claim.
As of the Closing Date, the Seller had good and marketable title to and was
the sole owner of each Contract to be transferred to the Issuer pursuant to
Section 2.01 free of liens, claims, encumbrances and rights of others and,
upon the transfer of such Contract to the Issuer pursuant to Section 2.01,
the Issuer will have good and marketable title to and will be the sole
owner of such Contract free of any liens, encumbrances and rights of
others, and upon the pledge of such Contract to the Indenture Trustee
pursuant to the Indenture, the Indenture Trustee will have a first
priority, perfected security interest in such Contract free of liens,
encumbrances and rights of others.
(v) As of the Cut-Off Date, no payment of $____ or more on such
Contract was _______ or more days past due.
(vi) As of the Closing Date there is no lien against the related
Financed Vehicle for delinquent taxes.
(vii) As of the Closing Date, there is no right of rescission,
offset, defense, claim or counterclaim to the obligation of the related
Obligor(s) to pay the unpaid principal or interest due under such Contract;
the operation of the terms of such Contract or the exercise of any right
thereunder will not render such Contract unenforceable in whole or in part
nor subject such Contract to any right of rescission, offset, defense,
claim or counterclaim, and no right of rescission, offset, defense or
counterclaim has been asserted or threatened.
(viii) Such Contract is a retail installment sales contract, and such
Contract and the sale of the Financed Vehicle sold thereunder, at the time
it was made complied and has complied through the Closing Date in all
material respects with all requirements of applicable federal, state and
local laws and regulations thereunder, including without limitation the
Federal Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair
Credit Reporting Act, the Federal Trade
27
Commission Act, the Fair Debt Collection Practices Act, the Fair Credit
Billing Act, the ▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act, the Federal Reserve Board's
Regulations B and Z, the Soldiers' and Sailors' Civil Relief Act of 1940,
state adaptations of the National Consumer Act and of the Uniform Consumer
Credit Code, and any other consumer credit, equal opportunity and
disclosure laws applicable to that contract and sale; and the consummation
of the transactions herein contemplated, including, without limitation, the
transfer of ownership of the Contracts to the Issuer, the pledge to the
Indenture Trustee and the receipt of interest by the Noteholders, will not
violate any applicable federal, state or local law.
(ix) Such Contract is in full force and effect in accordance with its
respective terms and is the legal, valid and binding obligation of the
related Obligor(s) thereunder and is enforceable in accordance with its
terms, except only as such enforcement may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors' rights
generally; each party to such Contract had full legal capacity to execute
and deliver such Contract and all other documents related thereto and to
grant the security interest purported to be granted thereby; the terms of
such Contract have not been waived, amended or modified (including, without
limitation, extensions) in any respect, except by instruments that are part
of the related Contract Documents, and no such waiver, amendment or
modification has caused such Contract to fail to meet all of the
representations, warranties and conditions, set forth herein with respect
thereto. To the best of the Seller's knowledge, there are no proceedings
pending or threatened, wherein the Obligor or any governmental agency has
alleged that such Contract is illegal or unenforceable. Such Contract and
the related Contract Documents constitute the entire agreement between the
Seller (as assignee of AutoNation Financial Services) and the related
Obligor.
(x) Such Contract contains customary and enforceable provisions such
as to render the rights and remedies of the holder or assignee thereof
adequate for the practical realization against the collateral of the
benefits of the security, subject, as to enforceability, bankruptcy,
insolvency, reorganization or similar laws affecting the enforcement of
creditors' rights generally.
(xi) As of the Closing Date, there was no default, breach, violation
or event permitting acceleration existing under such Contract (except
payment delinquencies permitted by subparagraph (v) above) and no event
which, with notice and the expiration of any grace or cure period, would
constitute such a default, breach, violation or event permitting
acceleration under such Contract, and the Seller has not waived any such
default, breach, violation or event permitting acceleration, except payment
delinquencies permitted by subparagraph (v) above.
(xii) As of the Closing Date, such Contract requires that the related
Obligor(s) obtain and maintain in effect for the related Financed Vehicle a
comprehensive and collision insurance policy (i) in an amount at least
equal to the lesser of (x) its fair market value or (y) the principal
amount due from the related
28
Obligor(s) under such Contract, (ii) naming AutoNation Financial Services
as a loss payee and (iii) insuring against loss and damage due to fire,
theft, transportation, collision and other risks generally covered by
comprehensive and collision coverage.
(xiii) Such Contract was originated in the United States of America
by AutoNation Financial Services and no adverse selection procedures have
been utilized in selecting such Contract from all other similar contracts
originated by AutoNation Financial Services.
(xiv) Payments under such Contract have been applied in accordance
with the Simple Interest Method, as provided in the applicable fixed rate
Contract, and are due monthly in substantially equal amounts through its
Maturity Date sufficient to fully amortize the principal balance of such
Contract by its Maturity Date.
(xv) There is only one manually executed original of such Contract
and such original, together with all other related Contract Documents, is
being held by World Omni Financial Corp. as agent of the Custodian;
(xvi) As of the Closing Date, the Servicer has clearly marked its
electronic records to indicate that such Contract is owned by the Issuer.
(xvii) At the date of origination of the Contract, the original
principal balance of such Contract was not greater than the purchase price
to the related Obligor(s) (including taxes, warranties, licenses and
related charges) of the related Financed Vehicle.
(xviii) As of the Cut-Off Date, the Seller has not received notice
that any Obligor under such Contract has filed for bankruptcy, and to the
best of the Seller's knowledge without any independent investigation, no
Obligor under such Contract is in bankruptcy or similar proceedings.
(xix) As of the Cut-Off Date, such Contract had an original maturity
of not more than _________ months and such Contract has a remaining
maturity of ______________ months or less.
(xx) Such Contract constitutes "chattel paper" under the UCC as in
effect in the applicable jurisdiction.
(xxi) As of the Cut-Off Date, such Contract has a remaining
principal balance of not more than $ _________ and not less than $
____________ .
(xxii) As of the Cut-Off Date, such Contract is secured by a Financed
Vehicle that has not been repossessed without reinstatement.
(xxiii) Each related Obligor listed on such Contract had a mailing
address within the United States on the date of origination of such
Contract.
29
(xxiv) The rights with respect to such Contract are assignable by
the lender thereunder and its assignees without the consent of or notice to
any Person.
(xxv) All payments on such Contract are required to be made in
United States dollars.
(xxvi) None of the Obligors is the United States of America or any
state, or agency, department or instrumentality or political subdivision of
the United States of America or any state.
(xxvii) At the time of origination of such Contract, the proceeds of
such Contract were fully disbursed. There is no requirement for future
advances thereunder and all fees and expenses in connection with the
origination of such Contract have been paid.
(xxviii) The scheduled payments on such Contracts are applicable only
to payment of principal of and interest on such Contracts and not to the
payment of any insurance premiums (although the proceeds of the extension
of credit on such Contract may have been used to pay insurance premiums).
(xxix) The related Obligor under the Contract does not have the
unilateral right to substitute, exchange or add any Financed Vehicle under
such Contract.
(xxx) Such Contract has a Maturity Date no later than _________
prior to the Final Scheduled Maturity Date of the Class A-4 Notes.
(xxxi) All filings (including UCC filings), notices, transfers and
recordings required under this Agreement and the other Basic Documents or
applicable law to perfect the first priority ownership or security interest
of the Issuer and the Indenture Trustee in the Contracts and the other
Trust Property have been accomplished and are in full force and effect or
will be accomplished within the time period specified in the Basic
Documents.
(xxxii) Such Contract was not originated in, and is not subject to
the laws of, any jurisdiction, the laws of which would make unlawful the
sale, transfer or assignment of such document under any of the Basic
Documents, including any repurchase in accordance with the Basic Documents.
(xxxiii) Such Contract being acquired by the Issuer and pledged to the
Indenture Trustee is identical to one of the Seller's standard form loan
contracts attached to the Receivables Purchase Agreement as Exhibit C
except for immaterial modifications or deviations from the form loan
contracts. Any such modifications or deviations from the form loan
contracts will not have a material adverse effect on the Noteholders or the
Insurer and will not reduce the Monthly Scheduled Payments or other
payments due under the Contracts.
30
(xxxiv) Such Obligor and Contract satisfied in all material respects
the requirements under the Underwriting Guidelines as in effect as of the
date of origination or purchase of such Contract by AutoNation Financial
Services.
(xxxv) The sale, transfer, assignment and conveyance of such
Contract and the related Conveyed Property by AutoNation Financial Services
pursuant to the Receivables Purchase Agreement, by the Seller pursuant to
this Agreement and by the Issuer pursuant to the Indenture is not subject
to and will not result in any tax, fee or governmental charge payable by
AutoNation Financial Services, the Seller, the Issuer or the Indenture
Trustee to any federal, state or local government ("Transfer Taxes") other
--------------
than the Transfer Taxes which have or will be paid by AutoNation Financial
Services or the Seller as due. In the event that the Issuer or the
Indenture Trustee receives actual notice of any Transfer Taxes arising out
of the transfer, assignment and conveyance of such Contract and the related
Trust Property, on written demand by the Issuer or the Indenture Trustee,
or upon the Seller's otherwise being given notice thereof by the Issuer or
the Indenture Trustee, the Seller shall pay, and otherwise indemnify and
hold the Issuer, the Indenture Trustee and the Insurer harmless, on an
after-tax basis, from and against any and all such Transfer Taxes (it being
understood that the Noteholders, the Indenture Trustee, the Issuer and the
Insurer shall have no obligation to pay such Transfer Taxes).
(xxxvi) Such Contract has an APR equal to or greater than _______%.
(xxxvii) To the best of the Seller's knowledge, no Obligor is a
Person who is a lessor or a seller of equipment of a type similar to the
Financed Vehicles.
(xxxviii) Such Contract does not constitute a "consumer lease" under
either (a) the UCC as in effect in the jurisdiction whose law governs the
Contract or (b) the Consumer Leasing Act, 15 U.S.C. 1667.
(xxxix) AutoNation Financial Services and the Seller have duly
fulfilled all obligations to be fulfilled under or in connection with the
origination, acquisition and assignment of such Contract and the other
Trust Property, including, without limitation, giving any notices or
consents necessary to effect the acquisition of such Contract and the other
Trust Property by the Issuer and the subsequent pledge of the Trust
Property to the Indenture Trustee, and have not done anything that would
impair the rights of the Issuer, the Indenture Trustee, the Noteholders or
the Insurer to payments relating thereto.
(xl) To the best of the Seller's knowledge as of the Closing
Date, no Dealer has engaged in any conduct constituting fraud or
misrepresentation with respect to such Contract or the related Trust
Property.
(xli) The collection practices used by the Originator and each
agent of the Originator with respect to such Contract have been in all
material respects in accordance with the Collection Policy.
31
(xlii) There are no amounts owing by the Originator to any Dealer
in connection with the origination of any Contract and such Dealer has no
right, title or interest in or to such Contract.
(xliii) Amounts due to, or received by, an Obligor upon the
cancellation by such Obligor of the extended service or other products or
services (the "Additional Products") included in the Amount Financed shall
-------------------
not reduce the Principal Balance of such Contract unless the Indenture
Trustee will receive all amounts due to an Obligor or lienholder upon
cancellation by such Obligor of such Additional Product. Each Additional
Product, and the sale of the Additional Product to each Obligor complied at
the time of such sale with all applicable state and federal laws (and
regulations thereunder), including without limitation, insurance, usury,
disclosure and consumer protection laws, equal credit opportunity, fair
credit reporting, truth-in-lending or other similar laws, the Federal Trade
Commission Act, and applicable state laws regulating such Additional
Products. There is not and will not be any right of rescission, offset,
defense, claim or counterclaim to the obligation of the related Obligor to
pay the amount due under each Contract which relates to Additional
Products.
(c) As to all of the Contracts:
(i) The aggregate Outstanding Principal Balance payable by
Obligors of the Contracts as of the Cut-Off Date equals the Original Pool
Balance.
(ii) As of the Cut-Off Date, Contracts representing approximately
________% of the Outstanding Principal Balance are secured by new Financed
Vehicles, and Contracts representing approximately _______ % of the
Outstanding Principal Balance of all Contracts are secured by used Financed
Vehicles.
(iii) The transfer, assignment and conveyance of the Contracts by
the Seller pursuant to this Agreement are not subject to the bulk transfer
laws or any similar statutory provisions in effect in any applicable
jurisdiction.
(d) None of the foregoing representations and warranties shall
be construed as, and the Seller is specifically not making, any representations
and warranties regarding the collectability of the Contracts or the future
performance of the Contracts.
(e) The Seller has not prepared any financial statement which
accounts for the transfer of the Conveyed Property hereunder to the Issuer in
any manner other than as a sale of the Conveyed Property by it to the Issuer,
and the Seller has not in any other non-income tax respect (including, but not
limited to, for accounting purposes) accounted for or treated the transfer of
the Conveyed Property hereunder in any manner other than as a sale and absolute
assignment to the Issuer of the Seller's full right, title and ownership
interest in the Conveyed Property.
32
SECTION 2.03. Repurchase of Certain Contracts.
-------------------------------
The representations and warranties of the Seller set forth in Section
2.02(b) and (c) shall survive the Closing Date and shall continue until the
termination of this Agreement. Upon discovery by the Seller, the Servicer, the
Insurer or a Responsible Officer of the Owner Trustee or the Indenture Trustee
that any of such representations and warranties was incorrect, without regard to
any limitation set forth in such representation or warranty concerning the
knowledge of the Seller as to the facts stated therein, or that any of such
conditions was unsatisfied as of the time made or that any of the Contract
Documents relating to any such Contract has not been properly executed by the
Obligor or contains a material defect or has not been received by the Custodian
or its agent, such Person making such discovery shall give prompt notice to the
other such Persons. Without regard to any limitation set forth in such
representation or warranty concerning the knowledge of the Seller as to the
facts stated therein, if any such defect, incorrectness or omission materially
and adversely affects the interest in the Contract of the Noteholders, the
Indenture Trustee, the Issuer or the Insurer, the Seller shall cure the defect
or eliminate or otherwise cure the circumstances or condition in respect of
which such representation or warranty was incorrect as of the time made;
provided that if the Seller does not do so by the last day of the Collection
--------
Period following the Collection Period (or, if the Seller elects, the last day
of such Collection Period) during which the Seller becomes aware of or receives
written notice from the Servicer, the Insurer or the Indenture Trustee of such
defect, incorrectness or omission, the Seller shall repurchase such Contract on
the last day of the applicable Collection Period from the Issuer at the Purchase
Amount. Upon any such repurchase, the Issuer shall execute and deliver such
instruments of transfer or assignment, in each case without recourse, as shall
be necessary to vest in the Seller any Contract purchased hereunder. Except as
provided in Section 5.01, the sole remedy of the Issuer, the Indenture Trustee,
the Insurer or the Noteholders with respect to a breach of the Seller's
representations and warranties pursuant to Section 2.02 shall be to require the
Seller to repurchase Contracts pursuant to this Section 2.03; provided that the
--------
Seller shall indemnify the Owner Trustee, the Indenture Trustee, the Insurer,
the Issuer and the Noteholders against all costs, expenses, losses, damages,
claims and liabilities, including reasonable fees and expenses of counsel, which
may be asserted against or incurred by any of them as a result of third-party
claims arising out of the events or facts giving rise to such breach.
SECTION 2.04. Custody of Contract Files.
-------------------------
(a) Duties of Custodian. The Custodian shall or shall cause any agent
-------------------
acting on its behalf to:
(i) maintain or cause to be maintained continuous custody of the
Contract Documents in secure and fire resistant facilities in accordance
with customary standards for such custody. Such Contract Documents shall be
electronically segregated to show the Issuer as owner thereof and the
Indenture Trustee as the pledgee thereof, unless the Insurer has waived the
requirement for such segregation by notice in writing to the Indenture
Trustee, the Custodian and the Servicer.
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(ii) to the extent the Servicer directs the Custodian in writing,
pursuant to a Request for Release of Documents, deliver or cause to be
delivered certain specified Contract Documents to the Servicer to enable
the Servicer to service the Contracts pursuant to this Agreement. At such
time as the Servicer returns such Contract Documents to the Custodian or
its agent, the Servicer shall provide written notice of such return to the
Custodian. The Custodian or its agent shall acknowledge receipt of the
returned Contract Documents by signing the Servicer's notice and shall
promptly send copies of such acknowledgment or receipt to the Servicer;
provided, however, prior to the release of any Contract to the Servicer,
-------- -------
such original Contract shall be stamped to indicate that such Contract has
been sold to ANRC Auto Owner Trust _________ and is subject to a first
priority perfected security interest of ___________, as Indenture Trustee,
on behalf of the Noteholders and ___________, provided, further, however,
-------- ------- -------
that if a Servicer Default shall have occurred, no part of the Contract
Documents shall be released by the Custodian to the Servicer without the
Insurer's prior written consent, which may be evidenced by the Insurer's
execution of the Request for Release of Documents. Except as provided
above, no part of the Contract Documents shall be delivered by the
Custodian to the Seller, the Servicer, the Originator or otherwise released
from the possession of the Custodian, except upon the written consent or
direction of the Insurer and the Indenture Trustee.
(iii) upon reasonable prior written notice, and without charge, permit
the Noteholders, the Servicer, the Issuer, the Indenture Trustee and the
Insurer to examine the Contract Files and Contract Documents in the
possession, or under the control, of the Custodian or its agent.
(iv) at its own expense, maintain or cause to be maintained at all
times while acting as Custodian, and keep in full force and effect (A)
fidelity insurance, (B) theft of documents insurance, (C) fire insurance,
and (D) forgery insurance. All such insurance shall be in amounts, with
standard coverage and subject to deductibles, as are customary for similar
insurance typically maintained by banks that act as custodian in similar
transactions.
(v) perform its duties as custodian in accordance with the terms of
this Agreement and applicable law, and to the extent consistent with such
terms, in the same manner in which, and with the same care, skill, prudence
and diligence with which, it administers files for other portfolios, if
any, giving due consideration to customary and usual standards of practice
of prudent custodians. The Custodian shall promptly report to the Indenture
Trustee, the Owner Trustee and the Insurer any failure by it to hold the
complete set of Contract Documents for each Contract as herein provided and
shall promptly take appropriate action to remedy such failure.
(vi) with respect to the Contract Documents (A) act as the Custodian
exclusively for the benefit of the Indenture Trustee, (B) acknowledge on
the Closing Date and pursuant to Section 2.04(c) that it is holding each of
the
34
Contract Documents in respect of each of the Contracts (except as otherwise
noted on the certificate given to the Insurer and the Indenture Trustee),
(C) hold such Contract Documents for the exclusive use and benefit of the
Indenture Trustee on behalf of the Noteholders and the Insurer and (D)
maintain accurate records pertaining to each Contract to enable it to
comply with terms hereof and to maintain a current inventory thereof.
(vii) not have and will not assert any beneficial ownership interest
in the Contracts or the Contract Documents.
(viii) agree that the Contract Documents shall be maintained at World
Omni Financial Corp.'s offices located at _____________ or at such of its
other offices as the Custodian shall designate from time to time after
giving the Custodian, the Originator, the Servicer, the Issuer, the Insurer
and the Indenture Trustee 60 days' prior written notice, which office shall
be maintained separate from the offices of AutoNation Financial Services,
the Servicer and the Seller and shall be at all times under the dominion
and control of the Custodian. Prior to any change in the location of the
Contract Documents, the Servicer shall deliver to the Trust, the Indenture
Trustee and the Insurer an Opinion of Counsel regarding the perfection,
under the laws of the state where the Contract Documents will be maintained
based upon possession, of the Indenture Trustee's first priority security
interest in the Contracts and proceeds thereof and stating that in the
opinion of such counsel, all actions necessary fully to preserve and
protect the interest of the Trust, the Indenture Trustee, the Noteholders
and the Insurer in the Contracts, the related Financed Vehicles and the
proceeds thereof have been taken and reciting the details thereof.
(b) Appointment of Custodian. As of the Closing Date, AutoNation
------------------------
Financial Services, as initial Servicer, shall be the Custodian of the Contract
Documents; provided that upon the execution by the Indenture Trustee (or, if the
--------
Notes have been paid in full and the Indenture has been satisfied and
discharged, the Issuer) of a letter agreement with the prior written consent of
the Insurer (such consent not to be unreasonably withheld) revocably appointing
another entity acceptable to the Insurer as agent of and bailee for the
Indenture Trustee (or, if applicable, the Trust) to act as Custodian (such
Person, the "Successor Custodian") of the Contract Documents, such Successor
-------------------
Custodian shall be so appointed and shall from the effective date of such
agreement retain custody of the Contract Documents and any and all other
documents relating to a Contract or the related Obligor or Financed Vehicle. On
or prior to the effective date of any such appointment, the Contract Documents
and any and all other documents relating to a Contract or the related Obligor or
Financed Vehicle will be delivered by the predecessor Custodian to the Successor
Custodian in its capacity as agent of and bailee for the Indenture Trustee (or,
if applicable, the Trust). The Custodian may delegate or subcontract out its
duties as Custodian hereunder to an entity acceptable to the Insurer; provided
--------
that no such delegation or subcontract arrangement shall relieve the Custodian
of its duties and obligations hereunder. The Indenture Trustee, the Seller and
the Insurer hereby consent to the delegation by the initial Custodian of its
duties and obligations to World Omni Financial Corp., as agent of the Custodian.
35
(c) Certification.
-------------
(i) Within 90 days of the Closing Date, the Custodian shall
ascertain that all Contract Documents for each Contract are in its
possession or in the possession of its designated agent, and shall deliver
to the Issuer, the Indenture Trustee and the Insurer a certification to the
effect that, as to each Contract Document listed in Schedule A (other than
any Contract paid in full or any Contract specifically identified in such
certification as not covered by such certification): (i) all of the
Contract Documents in respect of each such Contract are in its possession
or the possession of its designated agent and (ii) such Contract Documents
have been reviewed by it and appear regular on their face and relate to
such Contract. In making this certification, the Custodian shall separately
list those Contracts for which an original certificate of title was not
found in the relevant Contract Documents. In addition, the Custodian shall,
within 180 days after the Closing Date, deliver to the Issuer, the
Indenture Trustee and the Insurer a certification (the "Second
------
Certification"), to the effect that, as to each such set of Contract
-------------
Documents that did not include an original certificate of title in the
initial certification (other than any Contract paid in full or any Contract
specifically identified in such certification as not covered by such
certification): (i) all of the Contract Documents in respect of each such
Contract are in its possession or the possession of its designated agent
and (ii) such Contract Documents have been reviewed by it and appear
regular on their face and relate to such Contract.
(ii) If the Custodian or its agent, during the process of reviewing
the Contract Documents, pursuant to this Section 2.04, finds any Contract
Document which is not executed, has not been received, is unrelated to the
Contract identified in Schedule A, or does not conform to the requirements
of clause (i) above or the loan number set forth in Schedule A, then the
Custodian or its agent appointed in accordance with this Section 2.04 shall
promptly so notify the Issuer, the Servicer, the Insurer and the Indenture
Trustee in writing of such discovery.
(iii) The Servicer will use reasonable efforts to remedy a material
defect in a Contract Document or omission of a Contract Document of which
it is so notified by the Custodian or its agent as set forth above. If,
however, within 15 days after the initial Custodian's certification in
respect of such defect or omission (other than a defect or omission in
respect of a certificate of title) or within 15 days after the Second
Certification in respect of a defect or omission as to a certificate of
title, the Servicer has not remedied or caused the Seller to remedy such
defect or omission, the Servicer shall give notice to the Indenture Trustee
of the date and Purchase Amount in respect of any affected Contract and, on
the next succeeding Servicer Report Date, cause the Seller to repurchase
such Contract, which Purchase Amount shall be deposited into the Collection
Account.
(d) Indemnification. The Custodian will indemnify the Trust, the
---------------
Insurer, the Owner Trustee and the Indenture Trustee and each of their
respective officers, directors, employees and agents for any and all
liabilities, obligations, losses,
36
compensatory damages, payments, costs or expenses of any kind whatsoever that
may be imposed upon, incurred by or asserted against the Trust, the Insurer, the
Owner Trustee or the Indenture Trustee or any of their respective officers,
directors, employees or agents as the result of negligence, lack of good faith
or wilful misconduct on the part of the Custodian or its agent relating to the
maintenance and custody of the Contract Documents as Custodian thereof;
provided, however, that the Custodian shall not be liable to the Owner Trustee
-------- -------
or the Indenture Trustee, or any such officer, director, employee or agent of
the Owner Trustee or the Indenture Trustee for any portion of any such amount
resulting from the wilful misfeasance, bad faith or negligence of the Owner
Trustee or the Indenture Trustee, as the case may be, or of any such officer,
director, employee or agent of the Owner Trustee or the Indenture Trustee, as
the case may be.
Indemnification under this subsection shall survive the resignation or
removal of the Custodian or the termination of this Agreement and shall include
reasonable fees and expenses of counsel and expenses of litigation. If the
Custodian shall have made any indemnity payments pursuant to this subsection 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 Custodian, without interest, to the extent such Person received more than
the indemnity payable pursuant to the Basic Documents.
SECTION 2.05. Duties of Servicer Relating to the Contracts.
--------------------------------------------
(a) Safekeeping. The Servicer, in its capacity as servicer, shall
-----------
hold or cause to be held the Contract Files and any Contract Documents held by
it in accordance with this Agreement on behalf of the Issuer, the Indenture
Trustee and the Insurer for the use and benefit of all present and future
Noteholders, and shall maintain such accurate and complete accounts, records and
computer systems pertaining to each Contract File as shall enable the Servicer
and Issuer to comply with this Agreement. In performing its duties as servicer,
the Servicer shall act with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to the files relating to all
comparable automobile contracts that the Servicer owns or services for itself or
others. The Servicer shall (i) conduct, or cause to be conducted, periodic
physical inspections of the Contract Files (and the Contract Documents, if the
Servicer is acting as Custodian) held by it or its agents under this Agreement
and of the related accounts, records and computer systems; (ii) maintain or
cause to be maintained the Contract Files (and the Contract Documents, if the
Servicer is acting as Custodian) in such a manner as shall enable the Issuer,
the Indenture Trustee and the Insurer to verify the accuracy of the Servicer's
record keeping; (iii) promptly report to the Issuer, the Indenture Trustee and
the Insurer any failure on its part or the part of its agents to hold the
Contract Files (and the Contract Documents, if the Servicer is acting as
Custodian) and maintain its accounts, records and computer systems as herein
provided and (iv) promptly take appropriate action to remedy any such failure.
(b) Maintenance of and Access to Records. The Servicer shall maintain
------------------------------------
or cause to be maintained each Contract File (other than the Contract Documents,
unless the Servicer is acting as Custodian) at the address of the Servicer or
its agents set forth in Section 9.04, or at such other location as shall be
specified to the
37
Issuer, the Indenture Trustee and the Insurer by 30 days' prior written notice.
The Servicer shall permit the Issuer, the Indenture Trustee and the Insurer or
their respective duly authorized representatives, attorneys or auditors to
inspect the Contract Files and the related accounts, records and computer
systems maintained by the Servicer at such times as such Persons may request.
(c) Release of Documents. If the Servicer is acting as Custodian
--------------------
pursuant to Section 2.04, upon instruction from the Indenture Trustee (a copy of
which shall be furnished to the Issuer and the Insurer), the Servicer shall
release or cause to be released any document in the Contract Files to the
Indenture Trustee, the Indenture Trustee's agent, or the Indenture Trustee's
designee, as the case may be, at such place or places as the Indenture Trustee
may designate, as soon as practicable.
(d) Monthly Reports. On each Servicer Report Date, commencing with
---------------
the month next succeeding the month of the Closing Date, the Servicer shall
deliver to the Issuer, the Indenture Trustee and the Insurer a certificate of a
Servicing Officer stating (i) the number of Contracts and aggregate outstanding
principal balance of such Contracts that have become Defaulted Contracts since
the Business Day immediately preceding the date of the last statement delivered
pursuant to this subsection (or since the Closing Date in the case of the first
such statement); (ii) that, if such Contract has been the subject of a Full
Prepayment pursuant to clause (a) of the definition of the term "Full
Prepayment", all proceeds received in respect thereof have been deposited in or
credited to the Collection Account in accordance with Section 4.02; (iii) that,
if such Contract has been the subject of a Full Prepayment pursuant to clause
(b) of the definition of the term "Full Prepayment", the correct Purchase Amount
or termination price, as applicable, has been deposited in or credited to the
Collection Account in accordance with Section 2.03, 3.06, 4.02 or 8.01; and (iv)
that the Indenture Trustee is authorized to release such Contract and the
related Contract Documents as provided herein.
On each Servicer Report Date, the Servicer shall also deliver to the
Indenture Trustee, the Owner Trustee and the Insurer a statement setting forth
(i) the amounts on deposit in the Collection Account; (ii) the sources of such
amounts; (iii) the amounts to be paid to Noteholders.
(e) Schedule of Title Documents. The Servicer shall deliver to the
---------------------------
Indenture Trustee, the Issuer and the Insurer (i) within 60 days of the Closing
Date, a schedule of Title Documents for Financed Vehicles which, as of the
Closing Date, did not show AutoNation Financial Services as first lienholder and
(ii) within 180 days of the Closing Date, as to the Contracts, a schedule of
Title Documents for Financed Vehicles which, as of the date prior to such
delivery, do not show AutoNation Financial Services as first lienholder and as
to which the Seller is obligated to repurchase pursuant to the provisions
hereof.
(f) Electronic Marking of Contracts; Possession. The Servicer shall
-------------------------------------------
cause the electronic record of the Contracts maintained by it to be clearly
marked to indicate that the Contracts have been sold to the Issuer and pledged
to the Indenture Trustee and shall not in any way assert or claim an ownership
interest in the Contracts. It
38
is intended that pursuant to the applicable provisions of Section 2.04 and this
Section 2.05, the Custodian on behalf of the Indenture Trustee and the Insurer
shall be deemed to have possession of the Contract Documents for purposes of
Section 9-305 of the UCC of the state in which the Contract Documents are
located.
(g) Transfer and Delivery of Contract Documents. Following the
-------------------------------------------
occurrence of a Non-Servicer Default, the Insurer may instruct the Servicer and
the Custodian to transfer and deliver and the Servicer and the Custodian shall
transfer and deliver, the Contract Documents to the Indenture Trustee or a
Successor Custodian. The Servicer and the predecessor Custodian shall pay all
costs and expenses of any such transfer of the Contract Documents.
SECTION 2.06. Instructions; Authority to Act.
------------------------------
The Servicer shall be deemed to have received proper instructions (a
copy of which shall be furnished to the Issuer and the Insurer) with respect to
the Contract Files upon its receipt of written instructions signed by a
Responsible Officer of the Indenture Trustee.
SECTION 2.07. Indemnification.
---------------
Subject to Section 7.02, the Servicer shall indemnify the Issuer, the
Owner Trustee, the Indenture Trustee, the Insurer, the Custodian and the
Noteholders for any and all liabilities, obligations, losses, compensatory
damages, payments, costs or expenses of any kind whatsoever (including the
reasonable fees and expenses of counsel) that may be imposed on, incurred by or
asserted against the Issuer, the Owner Trustee, the Indenture Trustee, the
Insurer, the Custodian or the Noteholders as the result of any improper act or
omission in any way relating to the maintenance and custody by the Servicer of
the Contract Files or the Contract Documents or the failure of the Servicer to
perform its duties and service the Contracts in compliance with the terms of
this Agreement; provided that the Servicer shall not be liable to the Owner
--------
Trustee, the Indenture Trustee, the Custodian or the Insurer for any portion of
any such amount resulting from the willful misfeasance, bad faith or negligence
of the Owner Trustee, the Indenture Trustee, the Custodian or the Insurer,
respectively.
SECTION 2.08. Effective Period and Termination.
--------------------------------
The appointment of the initial Servicer as Custodian shall become
effective as of the Closing Date and shall continue in full force and effect
until the earlier of (i) the removal of the initial Servicer as Custodian or
(ii) the termination of this Agreement. If AutoNation Financial Services shall
subsequently resign as Servicer in accordance with the terms of this Agreement
or if all of the rights and obligations of the Servicer shall have been
terminated pursuant to Section 7.01, any appointment of the Servicer as
Custodian may be terminated by the Insurer, or if an Insurer Default has
occurred and is continuing, by the holders of Notes evidencing not less than 25%
of the Outstanding Principal Amount of the Notes, acting together as a single
class, or by the Indenture Trustee. As soon as practicable after any termination
of such appointment, the
39
Servicer shall, at the Servicer's expense, deliver or cause the delivery of all
Contract Documents and all Contract Files (including those held in microfiche or
electronic form) to the Indenture Trustee or its agent (or, if the Indenture has
been satisfied and discharged, as directed by the Trust, with the consent of the
Issuer) at such place or places as the applicable party may reasonably designate
and shall cooperate in good faith to effect such delivery. The foregoing
notwithstanding, if the Servicer is acting as Custodian, the Servicer shall, at
the request of the Insurer, deliver the Contract Documents to the Indenture
Trustee in the event that such delivery is required by any Rating Agency to
consider the Securities investment grade without consideration of the Insurance
Policy.
SECTION 2.09. Nonpetition Covenant.
--------------------
(a) None of the parties hereto shall petition or otherwise invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Issuer under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Issuer.
(b) The parties hereto shall not, nor cause the Seller to, petition
or otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Seller under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Seller or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Seller.
SECTION 2.10. Collecting Title Documents Not Delivered at the Closing
-------------------------------------------------------
Date.
----
In the case of any Contract in respect of which, in place of a Title
Document, the Custodian received on or before the Closing Date written evidence
from the Dealer selling the related Financed Vehicle, or from AutoNation
Financial Services, that the Title Document for such Financed Vehicle showing
AutoNation Financial Services as first lienholder has been applied for from the
Registrar of Titles, the Servicer shall use its best efforts to collect such
Title Document from the Registrar of Titles as promptly as possible. If such
Title Document showing AutoNation Financial Services as first lienholder is not
received by the Servicer within 180 days after the Closing Date with respect to
the Contracts, then the representation and warranty in Section 2.02(b)(iii) as
to such Contracts in respect of such Contract shall be deemed to have been
incorrect in a manner that materially and adversely affects the Noteholders, and
the Seller shall be obligated to repurchase such Contract in accordance with
Section 2.03.
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ARTICLE III
ADMINISTRATION AND SERVICING OF CONTRACTS
SECTION 3.01. Duties of Servicer.
------------------
The Servicer, for the benefit of the Indenture Trustee and the
Insurer, shall manage, service, administer, and make collections on the
Contracts and perform such other actions required of the Servicer under this
Agreement. The Servicer agrees that its servicing of the Contracts shall be
carried out in accordance with reasonable care consistent with customary and
usual procedures employed by institutions that service motor vehicle retail
installment contracts and, to the extent more exacting, the Collection Policy;
provided that, subject to Section 3.02 as to extensions, the Servicer shall not
--------
release or waive the right to collect the unpaid balance of any Contract unless
the Insurer has provided its prior written consent. The Servicer's duties shall
include, without limitation, collection and posting of all payments, responding
to inquiries of Obligors on the Contracts, investigating delinquencies, sending
payment coupons to Obligors, reporting tax information to Obligors, monitoring
the Trust Property, accounting for collections, furnishing monthly and annual
statements to the Indenture Trustee, the Issuer and the Insurer with respect to
distributions and the preparation of tax forms required by any federal, state or
local tax authority, if any. The Servicer shall have, subject to the terms
hereof and consistent with its Collection Policy, full power and authority,
acting alone, and subject only to the specific requirements and prohibitions of
this Agreement, to do any and all things in connection with such managing,
servicing, administration, and collection of the Contracts that it may deem
necessary or desirable. Without limiting the generality of the foregoing, but
subject to the provisions of this Agreement, the Servicer is authorized and
empowered by the Indenture Trustee and the Issuer to execute and deliver, on
behalf of itself, the Issuer, the Noteholders, the Indenture Trustee or any of
them, any and all instruments of satisfaction or cancellation, or partial or
full release or discharge, and all other comparable instruments, with respect to
the Contracts or to the Financed Vehicles; provided, however, that
-------- -------
notwithstanding the foregoing, the Servicer shall not, except pursuant to an
order from a court of competent jurisdiction or with the prior written consent
of the Insurer, release an Obligor from payment of any unpaid amount due under
any Contract or reduce the related APR. The Issuer shall furnish to the Servicer
any documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder. The Servicer may engage agents
and subservicers to fulfill its duties hereunder with the prior written consent
of the Insurer and pursuant to a subservicing agreement acceptable to the
Insurer; provided, that such subservicer does not primarily service the
Contracts from inside the State of Florida. Unless the Insurer provides its
prior written consent, the Servicer, so long as the Servicer is AutoNation
Financial Services, shall at all times contract with a Subservicer acceptable to
the Insurer to service the Contracts. ______________ is an acceptable
Subservicer to the Insurer. The Servicer may not terminate or consent to any
assignment of servicing by, any Subservicer, with respect to the Contracts,
without the Insurer's prior written consent, and following the occurrence of a
Non-Servicer Default, shall, at the written direction of the Insurer, terminate
such Subservicer. All amounts payable to any Subservicer shall be paid by the
Servicer and shall not be obligations of the Issuer or paid
41
from the Trust Property. In addition, the Servicer shall pay all costs and
expenses (including, without limitations, reasonable fees and expenses of
counsel) associated with the transfer of subservicing from the existing
Subservicer to a successor. The Servicer may also at any time perform through
agents or subcontractors the specified duties of (i) repossession and subsequent
sale of Financed Vehicles and (ii) pursuing collection of deficiency balances on
certain Defaulted Contracts, in each case without the prior written consent of
the Insurer; provided that any such agent or subcontractor shall be required at
all times to act in accordance with the Collection Policy. No such delegation or
engagement of agents, subservicers or subcontractors by the Servicer shall
relieve the Servicer of its responsibilities with respect to any of its duties
hereunder.
Neither the Servicer nor any Subservicer shall perform any non-
ministerial duties in the State of Florida without first providing an Opinion of
Counsel in form and substance acceptable to the Indenture Trustee and the
Insurer to the effect that the performance of such non-ministerial duties will
not adversely affect the tax treatment of the Issuer.
On or prior to the Closing Date, the Servicer shall deliver to the
Owner Trustee, the Indenture Trustee and the Insurer a list of Servicing
Officers of the Servicer involved in, or responsible for, the administration and
servicing of the Contracts, which list shall from time to time be updated by the
Servicer at the request of the Owner Trustee, the Indenture Trustee or the
Insurer.
On the Closing Date, the Servicer shall deposit in the Collection
Account: (i) all installments of each Monthly Scheduled Payment received after
the Cut-Off Date and received by the Servicer at least two Business Days prior
to the Closing Date; (ii) the proceeds of each Full Prepayment pursuant to
clause (a) of the definition thereof of any Contract and all partial prepayments
on Contracts received by the Servicer after the Cut-Off Date and at least two
Business Days prior to the Closing Date; and (iii) all Net Liquidation Proceeds
and Net Insurance Proceeds received with respect to a Financed Vehicle to which
a Contract relates received after the Cut-Off Date and at least two Business
Days prior to the Closing Date.
The Servicer shall deposit in or credit to the Collection Account
within two Business Days of receipt (i) all collections of Monthly Scheduled
Payments after the Cut-Off Date, together with the proceeds of all Full
Prepayments pursuant to clause (a) of the definition thereof on all Contracts
and all partial prepayments on all Contracts, and any accompanying interest;
(ii) all Net Liquidation Proceeds and Net Insurance Proceeds; (iii) all Purchase
Amounts received or payable by the Servicer; provided such amounts shall be
remitted no later than as required by Section 4.02 and (iv) any amounts received
as a result of the Servicer exercising its rights under certain circumstances to
purchase all of the Contracts. The foregoing requirements for deposit in the
Collection Account are exclusive, it being understood that collections in the
nature of late payment charges, extension fees and similar charges or fees may,
but need not be deposited in the Collection Account and shall be retained by the
Servicer as additional servicing compensation.
42
In order to facilitate the servicing of the Contracts by the Servicer,
the Servicer shall retain, subject to and only to the extent permitted by the
provisions of this Agreement, all collections on the Contracts prior to the time
they are remitted or credited, in accordance with such provisions, to the
Collection Account. The Servicer acknowledges that the unremitted collections on
the Contracts are part of the Trust Property and the Servicer agrees to act as
custodian and bailee of the Indenture Trustee, the Issuer and the Insurer in
holding such monies and collections. The Servicer agrees, for the benefit of the
Indenture Trustee, the Issuer, the Noteholders and the Insurer, to act as such
custodian and bailee, and to hold and deal with such monies and such
collections, in trust as custodian and bailee for the Indenture Trustee, the
Issuer and the Insurer, in accordance with the provisions of this Agreement.
The Servicer shall retain all data (including, without limitation,
computerized title records) relating directly to or maintained in connection
with the servicing of the Contracts at the address of the Custodian or its agent
set forth in Section 9.04 or, upon 15 days' prior written notice to the Issuer,
the Indenture Trustee and the Insurer, at such other place where the servicing
offices of the Servicer are located, and shall give the Issuer, the Indenture
Trustee and the Insurer access to all data (including, without limitation,
computerized title records, documentation and personnel having knowledge of such
documentation or software in such cases where the Indenture Trustee acts as
Successor Servicer) at all reasonable times and, while a Servicer Default shall
be continuing, the Servicer shall, on demand of the Indenture Trustee or the
Insurer deliver or cause to be delivered to the Indenture Trustee or the
Insurer, as the case may be, all data (including, without limitation,
computerized title records and, to the extent transferable, related operating
software) necessary for the servicing of the Contracts and all monies collected
by it and required to be deposited in or credited to the Collection Account.
All deposits made by the Servicer in any Trust Account shall be made
in immediately available funds.
The Administrator shall be responsible for the payment of the fees and
expenses of the Indenture Trustee and the Owner Trustee; provided that any
--------
Indenture Trustee Fee or Owner Trustee Fee not paid as of a Distribution Date
shall be paid as provided in Section 4.03(a)(ii).
SECTION 3.02. Collection of Contract Payments.
-------------------------------
Consistent with the standards, policies and procedures required by
this Agreement, the Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Contracts as and when
the same shall become due and shall use its reasonable efforts to cause each
Obligor to make all payments in respect of his or her Contract to the Servicer.
Consistent with the foregoing and the Collection Policy, the Servicer may, on a
case-by-case basis, in its discretion (i) waive any late payment charges in
connection with delinquent payments on a Contract, (ii) waive any prepayment
charges or (iii) grant an extension in order to work out a default or an
impending default; provided that following the extension there will have been no
--------
more
43
than two extensions of the related Contract in the last 12 months and the sum of
the terms of all extensions of the Contract does not exceed six months. The
Servicer shall not extend the Maturity Date of a Contract except as provided in
clause (iii) of the preceding sentence. Except as explicitly permitted by this
paragraph, the Servicer shall not change any material term of a Contract,
including but not limited to the APR, the payment amounts or due dates, or the
property securing such Contract unless the Insurer has provided prior written
consent.
SECTION 3.03. Realization upon Defaulted Contracts.
------------------------------------
The Servicer shall use its best efforts, consistent with the Servicing
Standards and Section 3.01, to repossess or otherwise convert the ownership of
the Financed Vehicle securing any Contract as to which no satisfactory
arrangements can be made for collection of delinquent payments. Such servicing
procedures may include reasonable efforts to realize upon any recourse to
Dealers and selling the Financed Vehicle at public or private sale. In
connection with such repossession or other conversion, the Servicer shall follow
such practices and procedures as it shall deem necessary or advisable and as
shall be normal and usual for prudent holders of retail installment sales
contracts and as shall be in compliance with all applicable laws, and, in
connection with the repossession of any Financed Vehicle or any contract in
default, may commence and prosecute any proceedings in respect of such Contract
in its own name or, if the Servicer deems it necessary, in the name of the
Issuer or the Indenture Trustee or on behalf of the Issuer or the Indenture
Trustee. The Servicer's obligations under this Section 3.03 are subject to the
provision that, in the case of damage to a Financed Vehicle from an uninsured
cause, the Servicer shall not expend its own funds in repairing such motor
vehicle unless it shall determine (i) that such restoration will increase the
proceeds of liquidation of the related Contract, after reimbursement to itself
for such expenses and (ii) that such expenses will be recoverable by it either
as Liquidation Expenses or as expenses recoverable under an applicable insurance
policy. The Servicer shall be responsible for all other costs and expenses
incurred by it in connection with any action taken in respect of a Defaulted
Contract; provided that it shall be entitled to reimbursement of such costs and
--------
expenses to the extent they constitute Liquidation Expenses or expenses
recoverable under an applicable insurance policy. All Net Liquidation Proceeds
and Net Insurance Proceeds shall be deposited directly in or credited to the
Collection Account (without deposit in any intervening account) to the extent
required by Section 4.02.
SECTION 3.04. Maintenance of Security Interests in Financed Vehicles.
------------------------------------------------------
(a) The Servicer shall take such steps as are necessary to maintain
continuous perfection and priority of the security interest created by each
Contract in the related Financed Vehicle, including but not limited to,
obtaining the execution by the related Obligor and the recording, registering,
filing, re-recording, re-registering, and refiling of all security agreements,
financing statements, continuation statements or other instruments as are
necessary to maintain the security interest granted by such Obligor under each
respective Contract. The Issuer and the Indenture Trustee each hereby authorize
the Servicer to take such steps as are necessary to re-perfect such security
44
interest on behalf of the Issuer in the event of the relocation of a Financed
Vehicle or for any other reason. In the event that the assignment of a Contract
to the Issuer and the subsequent pledge thereof by the Issuer to the Indenture
Trustee is insufficient, without a notation on the related Financed Vehicle's
certificate of title, or without fulfilling any additional administrative
requirements under the laws of the state in which the Financed Vehicle is
located, to grant to the Issuer a perfected security interest in the related
Financed Vehicle and to pledge such perfected security interest to the Indenture
Trustee, the initial Servicer hereby agrees that the identification of
AutoNation Financial Services as the secured party on the Title Document is
deemed to be in its capacity as agent of the Indenture Trustee and further
agrees to hold such Title Document as the Indenture Trustee's agent and
custodian; provided that, except as provided in subsection (b) of this Section
--------
3.04 and the Insurance Agreement, neither the Servicer nor AutoNation Financial
Services shall make, nor shall the Issuer or Noteholders have the right to
require that the Servicer or AutoNation Financial Services make, any such
notation on the related Financed Vehicles' Title Document or fulfill any such
additional administrative requirement of the laws of the state in which a
Financed Vehicle is located.
(b) The Seller, the Indenture Trustee, the Owner Trustee, the
Servicer and the Issuer hereby agree that upon the occurrence of a Non-Servicer
Default, the Insurer may direct the Servicer to take or to cause to be taken
such action as may, in the Insurer's discretion, be necessary to perfect or re-
perfect the security interest in the Financed Vehicles in the name of the
Indenture Trustee, including the amending of the Title Documents of the Financed
Vehicles and the Indenture Trustee agrees to execute any and all documents or
instruments prepared by and at the expense of the Servicer in this regard. The
Servicer hereby agrees to pay all expenses related to such perfection or
reperfection, and the Servicer and the Indenture Trustee hereby agree to take
all action necessary therefor. If such expenses are not paid within days after
delivery of any invoice for such expenses to the Servicer, such expenses shall
be paid pursuant to Section 4.03(a)(x). The Insurer, in its sole discretion, may
pay such costs and any such amounts shall be included in amounts owed to the
Insurer as Reimbursement Amounts.
SECTION 3.05. Covenants, Representations and Warranties of Servicer.
-----------------------------------------------------
The Servicer hereby makes the following covenants, representations and
warranties on which (i) the Issuer and the Indenture Trustee are deemed to have
relied in acquiring the Contracts and (ii) the Insurer is deemed to have relied
in issuing the Insurance Policy. Such covenants, representations and warranties
speak as of the execution and delivery of this Agreement and as of the Closing
Date, but shall survive the sale, transfer and assignment of the Contracts to
the Issuer and the pledge thereof to the Indenture Trustee pursuant to the
Indenture.
(a) The Servicer covenants as to the Contracts:
(i) The Financed Vehicle securing each Contract shall not be released
from the lien granted by the Contract in whole or in part, except as
contemplated herein.
45
(ii) The Servicer shall not impair the rights of the Noteholders or
the Insurer in the Contracts or the other Trust Property.
(iii) The Servicer shall not increase the number of payments under a
Contract, nor increase the amount financed under a Contract, nor extend,
forgive payments on a Contract or otherwise amend the terms of any
Contract, except as provided in Section 3.02 and the Servicer shall not
amend in any materially adverse respect, the Collection Policy without the
Insurer's prior written consent.
(iv) The Servicer shall not consent to the sale or transfer by an
Obligor of any Financed Vehicle unless the original Obligor under the
related Contract remains liable under such Contract and the transferee
assumes all of the Obligor's obligations thereunder and upon doing so the
credit profile with respect to such Obligor will not be changed from
adequate to speculative by virtue of the addition of the transferee's
obligation thereunder.
(v) The Servicer shall not (A) create, incur or suffer to exist, or
agree to create, incur or suffer to exist, or consent to or permit in the
future (upon the occurrence of a contingency or otherwise) the creation,
incurrence or existence of any Lien on or restriction on transferability of
any Contract except for the Lien of the Indenture and the restrictions on
transferability imposed by this Agreement or (B) sign or file any UCC
financing statements with respect to the Trust Property, in any
jurisdiction that names AutoNation Financial Services, the Servicer or the
Depositor as debtor other than those financing statements executed and
filed in connection with the Basic Documents to create or maintain the
first priority perfected security interest of the Indenture Trustee in the
Trust Property, or sign any security agreement authorizing any secured
party thereunder to file any financing statements with respect to the Trust
Property, other than the Basic Documents.
(b) The Servicer represents and warrants as of the Closing Date:
(i) The Servicer (1) is duly organized, is validly existing and in
good standing as a corporation organized and existing under the laws of the
State of Delaware, (2) is qualified to do business as a foreign
corporation, is in good standing in each jurisdiction where the character
of its properties or the nature of its activities makes such qualification
necessary, and (3) has full power, authority and legal right to own its
property, to carry on its business as presently conducted, and to enter
into and perform its obligations under this Agreement and the other Basic
Documents to which it is a party.
(ii) The execution, delivery and performance by the Servicer of this
Agreement and the other Basic Documents to which it is a party are within
the corporate power of the Servicer and have been duly authorized by all
necessary corporate action on the part of the Servicer. Neither the
execution, delivery and performance of this Agreement, nor the consummation
of the transactions herein contemplated, nor compliance with the provisions
hereof, will conflict with or
46
result in a breach of, or constitute a default under, any of the provisions
of the Certificate of Incorporation or By-laws of the Servicer, or any of
the provisions of any material indenture, mortgage, contract or other
instrument to which the Servicer is a party or by which it is bound or
result in the creation or imposition of any lien, charge or encumbrance
upon any of its property pursuant to the terms of any such indenture,
mortgage, contract or other instrument, in each case, which might have a
material adverse effect on the Servicer or the performance by the Servicer
of its obligations under or the validity or enforceability of this
Agreement nor violate any law, governmental rule, regulation, judgment,
decree or order binding on the Servicer or its properties.
(iii) Other than consents, licenses, approvals and authorizations and
registrations or declarations that have been obtained prior to the Closing
Date, the Servicer is not required to obtain the consent of any other party
or any consent, license, approval or authorization, or registration or
declaration with, any governmental authority, bureau or agency in
connection with the execution, delivery, performance, validity or
enforceability of this Agreement and the other Basic Documents to which it
is a party, and the consummation of all the transactions herein
contemplated.
(iv) This Agreement and the other Basic Documents to which it is a
party have been duly executed and delivered by the Servicer and, assuming
the due authorization, execution and delivery hereof by the Issuer, the
Seller and the Indenture Trustee, this Agreement and the other Basic
Documents to which it is a party constitute the legal, valid and binding
obligations of the Servicer enforceable against the Servicer in accordance
with their respective terms (subject to applicable bankruptcy and
insolvency laws and other similar laws affecting the enforcement of
creditors' rights generally).
(v) There are no actions, suits or proceedings pending or, to the
knowledge of the Servicer, threatened against or affecting the Servicer,
before or by any court, administrative agency, arbitrator or governmental
body with respect to any of the transactions contemplated by this Agreement
and the other Basic Documents, or which may be reasonably expected, if
determined adversely to the Servicer, to materially and adversely affect it
or its business, assets, operations or condition, financial or otherwise,
or materially and adversely affect the Servicer's ability to perform its
obligations under this Agreement and the other Basic Documents. The
Servicer is not in default with respect to any order of any court,
administrative agency, arbitrator or governmental body so as to materially
and adversely affect the transactions contemplated by the above-mentioned
documents.
(vi) The Servicer has obtained or made all necessary consents,
approvals, waivers and notifications of creditors, lessors and other
nongovernmental persons, in each case, in connection with the execution and
delivery of this Agreement and the other Basic Documents to which it is a
party, and the consummation of all the transactions herein contemplated.
47
SECTION 3.06. Purchase of Contracts upon Breach by Servicer; Third
----------------------------------------------------
Party Claims.
------------
The Servicer or the Issuer shall inform the other party and the
Indenture Trustee and the Insurer promptly, in writing, upon the discovery of
any breach of the representations and warranties set forth in Section 3.05(b) or
of the covenants set forth in Sections 3.02, 3.04 or 3.05(a); provided, however,
-------- -------
failure to give notice shall not affect any obligation of the Servicer under
this Section 3.06. Unless the breach shall have been cured within 30 days
following such discovery or receipt of notice of such breach, the Servicer shall
purchase any Contract if such breach materially and adversely affects the
interests of the Issuer, the Indenture Trustee, the Owner Trustee, the
Noteholders or the Insurer in the Contract. As consideration for the Contract,
the Servicer shall remit the Purchase Amount on the Business Day preceding the
Servicer Report Date next succeeding the end of such 30-day cure period in the
manner specified in Section 4.02(a). The sole remedy of the Issuer, the
Indenture Trustee, or the Noteholders with respect to a breach of Section 3.02,
3.04 or 3.05(a), if such obligation is fulfilled, shall be to require the
Servicer to purchase Contracts pursuant to this Section 3.06; provided that the
--------
Servicer shall indemnify the Owner Trustee, the Indenture Trustee, the Insurer,
the Issuer, the Custodian and the Noteholders against all costs, expenses,
losses damages, claims and liabilities, including reasonable fees and expenses
of counsel, which may be asserted against or incurred by any of them as a result
of third-party claims arising out of the events or facts giving rise to such
breach; provided, further, that, the Servicer's failure to repurchase or
-------- -------
indemnify in accordance with this Section 3.06 shall be a Servicer Default
pursuant to Section 7.01.
The Servicer shall (i) immediately notify the Issuer, the Insurer and
the Indenture Trustee if a claim is made by a third party with respect to the
Contracts, (ii) assume, with the consent of the Issuer, the Indenture Trustee
and the Insurer, the defense of any such claim, (iii) pay all expenses in
connection therewith, including counsel fees, and (iv) promptly pay, discharge
and satisfy any judgment or decree which may be entered with respect to such
claim against the Servicer, the Issuer, the Owner Trustee, the Indenture
Trustee, the Insurer, the Custodian or the Noteholders.
If the Indenture Trustee is the Successor Servicer it shall not be
obligated to purchase Contracts pursuant to this Section 3.06.
SECTION 3.07. Servicing Compensation.
----------------------
As compensation for the performance of its obligations under this
Agreement and subject to the terms of this Section 3.07, the Servicer shall be
entitled to receive on each Distribution Date the Servicing Fee in respect of
each Contract that was Outstanding at the beginning of the Collection Period
ending immediately prior to such Distribution Date; provided that with respect
--------
to the first Distribution Date the Servicer will be entitled to receive the
Servicing Fee in respect of each Contract that was Outstanding as of the Cut-Off
Date. As servicing compensation in addition to the Servicing Fee, the Servicer
shall be entitled to retain all late payment charges, extension fees and similar
items paid in respect of Contracts. The Servicer shall pay all expenses
48
incurred by it in connection with its servicing activities hereunder and shall
not be entitled to reimbursement of such expenses except to the extent provided
in Section 3.03.
SECTION 3.08. Reporting by the Servicer.
-------------------------
(a) No later than 12:00 P.M. (New York time) on each Servicer
Report Date, the Servicer shall deliver (by telex, facsimile, electronic
transmission, first class mail, overnight courier, personal delivery or such
other format mutually agreed to by the Issuer, the Indenture Trustee and the
Insurer) to the Issuer, the Indenture Trustee and the Insurer a statement (the
"Distribution Date Statement") setting forth with respect to the next succeeding
---------------------------
Distribution Date:
(i) the Note Principal Distributable Amount for such Distribution
Date;
(ii) the Note Interest Distributable Amount for such Distribution
Date;
(iii) the aggregate distribution amount for such Distribution Date;
(iv) the Insurance Premium payable to the Insurer;
(v) the amount on deposit in the Spread Account on such
Distribution Date, before and after giving effect to deposits thereto and
withdrawals therefrom to be made in respect of such Distribution Date;
(vi) the amount of the withdrawal, if any, required to be made from
the Spread Account by the Indenture Trustee pursuant to Section 4.04(b);
(vii) the aggregate Servicing Fee paid to the Servicer with respect
to the related Contracts for the related Collection Period;
(viii) the amount of fees paid to the Owner Trustee and the Indenture
Trustee with respect to the related Collection Period to the extent paid
from Available Funds pursuant to Section 4.03;
(ix) the amount of any Note Interest Carryover Shortfall or Note
Principal Carryover Shortfall on such Distribution Date, the Insured
Payment required to pay any shortfall; and the change in such shortfall
amounts from those with respect to the immediately preceding Distribution
Date;
(x) the number of, and aggregate amount of, monthly principal and
interest payments due on the related Contracts which are delinquent as of
the end of the related Collection Period, presented in increments of 31 to
60 days, 61 to 90 days, 91 to 120 days and 121 days or more;
(xi) the Available Funds and the Insured Payment, if any, for such
Distribution Date;
49
(xii) the aggregate amount of Liquidation Proceeds received for
Defaulted Contracts;
(xiii) the number and net outstanding balance of Contracts for which
the Financed Vehicle has been repossessed;
(xiv) the Pool Balance; and
(xv) The Spread Account Required Amount for such Distribution Date.
Each such Distribution Date Statement shall be accompanied by an
Officers' Certificate of the Servicer, which Officers' Certificate shall state
that the computations reflected in such statement were made in conformity with
the requirements of this Agreement.
(b) On each Servicer Report Date, no later than 12:00 P.M. New York
Time, the Servicer shall deliver to the Issuer, the Indenture Trustee and the
Insurer a report, in respect of the immediately preceding Collection Period,
setting forth the following:
(i) the aggregate amount, if any, paid by or due from it or the
Seller for the purchases or repurchases of Contracts which the Servicer or
the Seller has become obligated to purchase or repurchase pursuant to
Sections 3.06 or 2.03;
(ii) the net amount of funds which have been deposited in or
credited to the Collection Account in respect of such Collection Period
after giving effect to all permitted deductions therefrom pursuant to
Section 4.02;
(iii) with respect to all Contracts which were the subject of a Full
Prepayment during such Collection Period, the following information:
(A) the related Contract Number; and
(B) the date(s) of such Full Prepayment;
(iv) the Contract Numbers, Monthly Scheduled Payment, Principal
Balances and Maturity Dates of all Contracts which became Defaulted
Contracts during such Collection Period;
(v) any other information relating to the Contracts reasonably
requested by the Owner Trustee, the Indenture Trustee or the Insurer; and
(vi) the amount of Net Liquidation Proceeds and Net Insurance
Proceeds which have been deposited in or credited to the Collection Account
in respect of the Collection Period ending immediately prior to such
Servicer Report Date and the cumulative amount of Net Liquidation Proceeds
and Net Insurance Proceeds deposited in or credited to the Collection
Account during the preceding Collection Periods.
50
SECTION 3.09. Annual Statement as to Compliance.
---------------------------------
(a) The Servicer shall deliver to the Issuer, the Owner Trustee, the
Indenture Trustee and the Insurer, on or before March 15, _________ and on or
before March 15 of each year thereafter, an Officers' Certificate of the
Servicer stating that (i) a review of the activities of the Servicer during the
preceding fiscal year (since the Closing Date in the case of the first of such
Officers' Certificates required to be delivered) and of its performance of its
obligations under this Agreement has been made under such officers' supervision
and (ii) to the best of such officers' knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement throughout such
year and that no default under this Agreement has occurred and is continuing,
or, if there has been a default in the fulfillment of any such obligation,
specifying each such default known to such officer and the nature and status
thereof.
(b) The Servicer shall deliver to the Issuer, the Owner Trustee, the
Indenture Trustee, the Insurer and each Rating Agency promptly after having
obtained knowledge thereof, but in no event later than three Business Days
thereafter, an Officer's Certificate specifying any event which with the giving
of notice or lapse of time, or both, would become a Servicer Default under
Section 7.01.
SECTION 3.10. Annual Independent Certified Public Accountant's Report.
-------------------------------------------------------
On or before April 30, _______ and on or before April 30 of each year
thereafter, AutoNation, Inc. at its expense shall cause a firm of nationally
recognized independent certified public accountants acceptable to the Insurer to
furnish a report to the Issuer, the Owner Trustee, the Indenture Trustee and the
Insurer to the effect that (i) they have audited the balance sheet of
AutoNation, Inc. as of the last day of the immediately preceding fiscal year and
the related statements of operations, retained earnings and cash flows for such
fiscal year and have issued an opinion thereon, specifying the date thereof,
(ii) they have also reviewed the reports delivered by the Servicer pursuant to
Section 3.08 and certain other documents and the records relating to the
servicing of the Contracts and the distributions on the Notes under this
Agreement, in each case in accordance with procedures agreed to by the Servicer
and the Insurer, (iii) their audit and review as described under clauses (i) and
(ii) above was made in accordance with generally accepted auditing standards and
accordingly included such tests of the accounting records and such other
auditing procedures as they considered necessary in the circumstances, and (iv)
their audits and reviews described under clauses (i) and (ii) above disclosed no
exceptions which, in their opinion, were material, relating to the servicing of
such Contracts in accordance with this Agreement and the making of distributions
on the Notes in accordance with this Agreement, or, if any such exceptions were
disclosed thereby, setting forth those exceptions which, in their opinion, were
material.
51
SECTION 3.11. Access to Certain Documentation and Information
-----------------------------------------------
Regarding Contracts.
-------------------
Each of the Servicer and the Custodian shall provide to the
Noteholders, the Issuer, the Indenture Trustee and the Insurer reasonable access
to the Contract Files and Contract Documents in its possession. Access shall be
afforded without charge, but only upon reasonable request and during normal
business hours at offices of the Servicer where such documents are kept. Nothing
in this Section 3.12 shall affect the obligation of the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors, and
the failure of the Servicer to provide access to information as a result of such
obligation shall not constitute a breach of this Section.
SECTION 3.12. Indemnification.
---------------
Subject to Section 7.02, the Servicer agrees to indemnify and hold the
Issuer, the Owner Trustee, the Indenture Trustee, the Insurer, the Seller, the
Custodian and Noteholders harmless against any and all claims, losses,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments, and any reasonable other costs, fees and expenses that the Issuer,
the Owner Trustee, the Indenture Trustee, the Insurer, the Custodian or the
Noteholders may sustain because of the negligence, willful misconduct 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. Indemnification under this Section shall survive the resignation or
removal of the Servicer or the termination of this Agreement and shall include
reasonable fees and expenses of counsel and expenses of litigation.
SECTION 3.13. Reports to Noteholders and the Rating Agencies.
----------------------------------------------
(a) The Owner Trustee or the Indenture Trustee at its own expense
shall provide to each Noteholder a copy of each Distribution Date Statement
described in Section 3.08(a) concurrently with the delivery of the statement
described in Section 4.05 below and the Indenture Trustee shall be permitted
(but not obligated) to post such statement on its website at __________.
(b) The Indenture Trustee shall provide to any Noteholder who so
requests in writing (addressed to the Corporate Trust Office of the Indenture
Trustee) a copy of the annual audit statement described in Section 3.09, or the
annual audit report described in Section 3.10.
(c) The Indenture Trustee shall forward to the Rating Agencies the
statement to Noteholders described in Section 4.05 and any other reports it may
receive pursuant to this Agreement to (i) Standard & Poor's Ratings Services,
Asset-Backed Surveillance Group, ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ and
(ii) ▇▇▇▇▇'▇ Investors Service, Inc., ABS Monitoring Dept., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
52
ARTICLE IV
DISTRIBUTIONS; SPREAD ACCOUNT;
STATEMENTS TO NOTEHOLDERS
SECTION 4.01. Establishment of Trust Accounts.
--------------------------------
(a) Prior to the Closing Date, the Indenture Trustee shall open, at
a depository institution (which shall be the same depository institution which
is acting in the capacity as Indenture Trustee) and shall maintain at the
Corporate Trust Office, the following accounts:
(i) an account denominated "Collection Account, ANRC Auto Owner
Trust ________, __________, Indenture Trustee" (the "Collection Account");
(ii) an account denominated "Note Distribution Account, ANRC Auto
Owner Trust _________, ____________, Indenture Trustee" (the "Note
----
Distribution Account");
--------------------
(iii) an account denominated "Spread Account, ANRC Auto Owner Trust
__________, ____________, Indenture Trustee" (the "Spread Account"); and
--------------
(iv) a trust account denominated "Payment Account, ANRC Auto Owner
Trust ________, _________, Indenture Trustee" (the "Payment Account" and,
---------------
together with the accounts described in clauses (i) and (ii) above, the
"Trust Accounts").
--------------
The Trust Accounts shall be Eligible Accounts (subject to the
requirement that the Payment Account must be maintained as provided in the
immediately preceding sentence) and relate solely to the Notes and to the
Contracts and, if applicable, the related Eligible Investments, and the
Indenture Trustee shall have sole dominion over the Trust Accounts. The location
and account numbers of the Trust Accounts as of the Closing Date are set forth
on Exhibit B. If at any time a Trust Account ceases to be an Eligible Account,
the Indenture Trustee (or the Servicer on its behalf) shall within 5 Business
Days establish a new Trust Account, which is an Eligible Account, and shall
transfer any cash or any investments from the prior account to the new Trust
Account. The Indenture Trustee shall give the Issuer, the Owner Trustee, the
Servicer and the Insurer at least five Business Days' prior written notice of
any change in the location of any Trust Account and shall not change any related
account identification information without the Insurer's prior written consent.
All amounts, financial assets and investment property held in, deposited in or
credited to, from time to time, the Trust Accounts shall be part of the Trust
Property. All amounts, financial assets and investment property held in,
deposited in or credited to, from time to time, the Collection Account and the
Spread Account shall be invested by the Indenture Trustee in Eligible
Investments pursuant to Section 4.01(b).
(b) All funds in the Collection Account and the Spread Account shall
be invested by the Indenture Trustee (so long as the Indenture Trustee maintains
the applicable account) or on behalf of the Indenture Trustee by the depository
institution
53
maintaining such account in Eligible Investments. Subject to the limitations set
forth herein, the Servicer shall direct the Indenture Trustee as to such
investment of funds in the Collection Account and the Spread Account in Eligible
Investments (which instructions may be in the form of standing instructions);
provided that in the absence of such directions from the Servicer, the Indenture
--------
Trustee shall invest funds in the Collection Account and the Spread Account in
Eligible Investments described in clause (e) of the definition thereof. All such
investments shall be in the name of the Indenture Trustee for the benefit of the
Noteholders. All income or other gain from investment of monies in the
Collection Account shall be deposited in or credited to the Collection Account
by the depository institution maintaining the Collection Account monthly and any
loss resulting from such reinvestment shall be charged to the Collection
Account. All income or other gain from investment of monies deposited in or
credited to the Spread Account shall be deposited in or credited to the Spread
Account immediately upon receipt, and any loss resulting from such investment
shall be charged to the Spread Account. No investment in Eligible Investments
may be sold prior to its maturity and, except as permitted in writing by the
Rating Agencies and the Insurer, funds on deposit in the Collection Account and
the Spread Account shall be invested in Eligible Investments that will mature no
later than the Business Day immediately preceding the next Distribution Date.
The funds on deposit in the Payment Account and the Note Distribution Account
shall remain uninvested.
The Indenture Trustee shall not in any way be held liable by reason of
any insufficiency in any of the foregoing Trust Accounts held by or on behalf of
the Indenture Trustee resulting from any investment loss on any Eligible
Investments, except in its capacity as obligor thereunder.
(c) With respect to the Trust Account Property, the Indenture
Trustee agrees, by its acceptance hereof and subject at all times to the terms
of the Securities Account Control Agreement, that:
(i) any Trust Account Property that is held in deposit accounts
shall be held solely in Eligible Accounts, subject to Section 4.01(a), and
each such Eligible Account shall be subject to the exclusive custody and
control of the Indenture Trustee, and the Indenture Trustee shall have sole
signature authority with respect thereto;
(ii) any Trust Account Property that constitutes Physical Property
shall be delivered to the Indenture Trustee in accordance with paragraph
(a) of the definition of "Delivery" and shall be held, pending maturity or
disposition, solely by the Indenture Trustee or a securities intermediary
(as such term is defined in Section 8-102(a)(14) of the UCC) acting solely
for the Indenture Trustee;
(iii) any Trust Account Property that is a book-entry security held
through the Federal Reserve System pursuant to federal book-entry
regulations shall be delivered in accordance with paragraph (b) of the
definition of "Delivery" and shall be maintained by the Indenture Trustee,
pending maturity or disposition,
54
through continued book-entry registration of such Trust Account Property as
described in such paragraph; and
(iv) any Trust Account Property that is an "uncertificated security"
under Article 8 of the UCC and that is not governed by clause (iii) above
shall be delivered to the Indenture Trustee in accordance with clause (c)
of the definition of "Delivery" and shall be maintained by the Indenture
Trustee, pending maturity or disposition, though continued registration of
the Indenture Trustee's or its securities intermediary's (or its
custodian's or its nominee's) ownership of such security.
Effective upon delivery of any Trust Account Property in the form of
physical property, book-entry securities or uncertificated securities, the
Indenture Trustee shall be deemed to have purchased such Trust Account Property
for value, in good faith and without notice of any adverse claim thereto.
The Indenture Trustee shall not enter into any subordination or
intercreditor agreement with respect to the Trust Account Property.
SECTION 4.02. Collections; Realization upon Insurance Policy; Net
---------------------------------------------------
Deposits; Transfers to Payment Account.
--------------------------------------
(a) Subject to the last sentence of this Section 4.02(a), the
Servicer shall remit or credit to the Collection Account all Monthly Scheduled
Payments, all Full Prepayments and partial prepayments and all Net Liquidation
Proceeds and Net Insurance Proceeds and other monies on a daily basis, within
two Business Days of receipt, by or on behalf of Obligors on the Contracts. The
Servicer or the Seller, as the case may be, each shall remit or credit to the
Collection Account each Purchase Amount to be remitted by it with respect to
Purchased Contracts on the Business Day preceding the Servicer Report Date next
succeeding (i) the end of the Collection Period in which the applicable Contract
is repurchased by the Seller pursuant to Section 2.03, in the case of the
Seller, (ii) the last day of the related cure period specified in Section 3.06,
in the case of the Servicer or (iii) the end of the Collection Period related to
purchase by the Servicer pursuant to Section 8.01. On the date of receipt, the
Servicer shall remit to the Collection Account any Purchase Amounts received
from the Originator pursuant to the Receivables Purchase Agreement.
(b) On the Servicer Report Date, the Servicer shall determine the
Insured Payment, if any, which exists with respect to the related Distribution
Date.
(c) The Indenture Trustee, based solely on the Distribution Date
Statement, shall, no later than 12:00 noon, New York City time, on the second
Business Day prior to each Distribution Date, make a claim under the Insurance
Policy for the Insured Payment, if any, for such Distribution Date by delivering
to the Fiscal Agent, with a copy to the Insurer and the Servicer, by hand
delivery, telex or facsimile transmission, a written notice (a "Deficiency
----------
Notice") specifying the Insured Payment, if any, for such Distribution Date. In
------
addition, the Indenture Trustee shall make claims
55
under the Insurance Policy for Preference Amounts as provided in the Insurance
Policy. Each Deficiency Notice shall be in the form set forth as Exhibit A to
the Insurance Policy. In making any such claim, the Indenture Trustee shall
comply with all the terms and conditions of the Insurance Policy. Upon receipt
of the Insured Payment, the Indenture Trustee shall deposit such amount in the
Payment Account and apply the portion thereof, if any, representing the
Deficiency Amount with respect to a Distribution Date as provided in Section
4.03(a) and the Insurance Policy solely to the applicable Noteholders. Any
amounts received by the Indenture Trustee under the Insurance Policy that
represent Preference Amounts shall be paid, in accordance with the Insurance
Policy, to the applicable Noteholder(s).
(d) In connection with any Preference Amount payable under the
Insurance Policy, the Indenture Trustee shall furnish to the Insurer its records
evidencing the distributions of principal of and interest on the Notes that have
been made and subsequently recovered from Noteholders and the dates on which
such payments were made.
(e) The Indenture Trustee shall keep a complete and accurate record
of the amount of interest and principal paid in respect of any Notes from monies
received under the Policy. The Insurer shall have the right to inspect such
records at reasonable times during normal business hours upon three Business
Day's prior notice to the Indenture Trustee, at the expense of the Insurer.
(f) So long as AutoNation Financial Services is the Servicer, the
Servicer may make deposits in or credits to the Collection Account net of
amounts to be paid to the Servicer under this Agreement. Notwithstanding the
foregoing, the Servicer shall maintain the records and accounts for such
deposits and credits on a gross basis.
SECTION 4.03. Distributions.
-------------
(a) Subject to Sections 5.02 and 5.06 of the Indenture, on the
Business Day immediately preceding each Distribution Date, the Indenture Trustee
will cause funds equal to the amount of Available Funds with respect to such
Distribution Date to be withdrawn from the Collection Account and deposit such
funds into the Payment Account. Subject to Sections 5.02 and 5.06 of the
Indenture, on each Distribution Date, the Indenture Trustee, based solely on the
Distribution Date Statement, will apply the Available Funds on deposit in the
Payment Account, together with amounts, if any, withdrawn from the Spread
Account or representing payment of the Insured Payment, to make the following
deposits and distributions in the following amounts and order of priority:
(i) to the Servicer, from Available Funds and amounts, if any,
withdrawn from the Spread Account, the Servicing Fee, including any unpaid
Servicing Fees with respect to one or more prior Distribution Dates;
(ii) to the Indenture Trustee and the Owner Trustee, from Available
Funds (after giving effect to the reduction in Available Funds described in
clause
56
(i) above) and amounts, if any, withdrawn from the Spread Account, any
accrued and unpaid Indenture Trustee Fees and reasonable out-of-pocket
expenses and Owner Trustee Fees of the Indenture Trustee and the Owner
Trustee, in each case to the extent the Indenture Trustee Fees, the Owner
Trustee Fees and the reasonable out-of-pocket expenses of each have not
been previously paid by the Administrator; provided that such payments
--------
pursuant to this clause (ii) will not during any calendar year exceed
$_________ in the aggregate;
(iii) to the Insurer, from Available Funds (after giving effect to
the reduction in Available Funds described in clauses (i) and (ii) above)
and amounts, if any, withdrawn from the Spread Account, the Insurance
Premium for such Distribution Date;
(iv) to the Note Distribution Account, from Available Funds (after
giving effect to the reduction in Available Funds described in clauses (i),
(ii) and (iii) above) and amounts, if any, withdrawn from the Spread
Account and any amounts representing payment of the Insured Payment, the
Note Interest Distributable Amount to be distributed to the holders of the
Notes at their respective Note Rates;
(v) to the Note Distribution Account, if such Distribution Date is
a Final Scheduled Distribution Date for any Class of Notes, the Note
Principal Distributable Amount to the extent of the remaining Outstanding
Principal Amount of such Class of Notes, from Available Funds (after giving
effect to the reduction in Available Funds described in clauses (i) through
(iv) above), and amounts, if any, withdrawn from the Spread Account and any
amounts representing payment of the Insured Payment to be paid to the
holders of such Class of Notes;
(vi) to the Note Distribution Account, from Available Funds (after
giving effect to the reduction in Available Funds described in clauses (i)
through (v) above) and amounts, if any, withdrawn from the Spread Account
and any amounts representing payment of the Insured Payment to be paid to
the Noteholders as follows, the remaining Note Principal Distributable
Amount (after giving effect to the payment, if any, described in clause (v)
above), to be distributed first to the holders of the Class A-1 Notes until
the Outstanding Principal Amount of the Class A-1 Notes has been reduced to
zero, second, to the holders of the Class A-2 Notes until the Outstanding
Principal Amount of the Class A-2 Notes has been reduced to zero, third, to
the holders of the Class A-3 Notes until the Outstanding Principal Amount
of the Class A-3 Notes has been reduced to zero, and fourth, to the holders
of the Class A-4 Notes until the Outstanding Principal Amount of the Class
A-4 Notes has been reduced to zero;
(vii) to the Insurer, from Available Funds (after giving effect to
the reduction in Available Funds described in clauses (i) through (vi)
above) and amounts, if any, withdrawn from the Spread Account, any
Reimbursement Amounts owing to the Insurer;
57
(viii) to the Spread Account, from Available Funds (after giving
effect to the reduction in Available Funds described in clauses (i) through
(vii) above), the amount, if any, required to increase the amount on
deposit therein to the Spread Account Required Amount;
(ix) to the Indenture Trustee or the Owner Trustee, from Available
Funds (after giving effect to the reduction in Available Funds described in
clauses (i) through (viii) above), the amount of any fees and reasonable
expenses not paid under clause (ii) above as a result of the dollar
limitation on fees and reasonable expenses set forth in clause (ii);
(x) to the Indenture Trustee or the Successor Servicer, as
applicable, from Available Funds (after giving effect to the reduction in
Available Funds described in clauses (i) through (ix) above), any Re-
▇▇▇▇▇▇▇ Expenses, to the extent not paid by the Servicer as required
pursuant to Section 3.04(b);
(xi) to the Successor Servicer, if applicable, from Available Funds
(after giving effect to the reduction in Available Funds described in
clauses (i) through (x) above), Transition Costs and the amount of any
Additional Servicing Fee owing to the Successor Servicer; and
(xii) any remaining Available Funds will be distributed to the holder
of the Residual Interest Certificate.
Any amounts deposited in the Payment Account pursuant to 4.04(b) with respect to
a Distribution Date shall be applied by the Indenture Trustee solely to make the
distributions referred to in clauses (i) through (vii) above and any Insured
Payment that represents the Deficiency Amount with respect to such Distribution
Date shall be applied by the Indenture Trustee solely to make the distributions
referred to in clauses (iv) through (vi) above, in that order of priority, but
only to the extent that the Available Funds with respect to such Distribution
Date, after application as provided above, were insufficient to make such
distribution.
SECTION 4.04. Spread Account.
--------------
(a) The Spread Account will be held for the benefit of the
Noteholders and the Insurer. On or prior to the Closing Date, the Issuer shall
deposit or cause to have deposited an amount equal to the Spread Account Initial
Deposit into the Spread Account from the net proceeds of the sale of the Notes.
(b) On each Distribution Date, the Indenture Trustee, based solely
on the Distribution Date Statement, shall withdraw funds from the Spread
Account, to the extent funds are on deposit therein, equal to the amount by
which the sum of the amounts set forth in Section 4.03(a), clauses (i) though
(vii), with respect to such Distribution Date exceeds the amount of Available
Funds for such Distribution Date. The Indenture Trustee shall deposit any such
funds withdrawn from the Spread Account into the Payment Account to be
distributed pursuant to Section 4.03(a). Funds shall also be withdrawn from the
Spread Account by the Indenture Trustee, as directed by the Insurer
58
to reimburse the Insurer for any draws under the Insurance Policy with respect
to any Preference Amount. If the amount on deposit in the Spread Account on any
Distribution Date (after giving effect to all deposits thereto or withdrawals
therefrom on such Distribution Date other than withdrawals relating to
distributions to be made pursuant to this sentence) exceeds the Spread Account
Required Amount set forth in the Insurance Agreement, the Indenture Trustee
shall, based solely on the Distribution Date Statement, distribute any excess
first, to the Insurer, to the extent of any amounts owing to the Insurer
pursuant to the Insurance Agreement, and then to the holder of the Residual
Interest Certificate. Upon any such distributions to the Insurer, the
Noteholders will have no further rights in, or claims to, such distributed
amounts. None of the Noteholders, the Indenture Trustee, the Owner Trustee, the
Seller or the Insurer will be required to refund any amounts properly
distributed to them, whether or not there are sufficient funds on any subsequent
Distribution Date to make full distributions to the Noteholders. The obligations
of the Insurer under the Insurance Policy will not be diminished or otherwise
affected by any amounts distributed to the Insurer.
(c) Amounts held in the Spread Account shall be invested in the
manner specified in Section 4.01(b) and (c), and such investments shall be made
in accordance with written instructions from the Servicer;
(d) With respect to the Spread Account Property, the Indenture
Trustee agrees that, subject at all times to the terms of the Securities Account
Control Agreement:
(i) Any Spread Account Property that is held in deposit accounts
shall be held solely in the name of the Indenture Trustee, as collateral
agent, with the Indenture Trustee. The Spread Account shall be subject to
the exclusive custody and control of the Indenture Trustee, and the
Indenture Trustee shall have sole signatory authority with respect thereto.
(ii) Any Spread Account Property that constitutes Physical Property
shall be delivered to the Indenture Trustee, as collateral agent, in
accordance with clause (a) of the definition of "Delivery" and shall be
held, pending maturity or disposition, solely by the Indenture Trustee, as
collateral agent, or a securities intermediary, as such term is defined in
Section 8-102(a)(14) of the UCC, acting solely for the Indenture Trustee,
as collateral agent.
(iii) Any Spread Account Property that is a book-entry security held
through the Federal Reserve System pursuant to federal book-entry
regulations shall be delivered in accordance with clause (b) of the
definition of "Delivery" and shall be maintained by the Indenture Trustee,
as collateral agent, pending maturity or disposition, through continued
book-entry registration of such Trust Account Property as described in such
paragraph.
(iv) Any Spread Account Property that is an "uncertificated security"
under Article 8 of the UCC and that is not governed by clause (iii) above
shall be delivered to the Indenture Trustee, as collateral agent, in
accordance with clause (c) of the definition of "Delivery" and shall be
maintained by the Indenture
59
Trustee, as collateral agent, pending maturity or disposition through
continued registration of the Indenture Trustee's or its securities
intermediary's (or its custodian's or its nominee's) ownership of such
security, in its capacity as collateral agent.
Effective upon delivery of any Spread Account Property in the form of
physical property, book-entry securities or uncertificated securities, the
Indenture Trustee shall be deemed to have purchased such Spread Account Property
for value, in good faith and without notice of any adverse claim thereto.
The Indenture Trustee shall not enter into any subordination or
intercreditor agreement with respect to the Spread Account Property.
(e) Any amounts on deposit in the Spread Account, after payments of
amounts due to the Noteholders and all amounts due to the Insurer pursuant to
the Insurance Agreement, shall be paid to the holder of the Residual Interest
Certificate on the date of the termination of the Trust pursuant to Section 9.01
of the Owner Trust Agreement; provided, however, that if an insolvency
-------- -------
proceeding with respect to any of the Seller, the Servicer, the Trust, the
Indenture Trustee or the Noteholders (collectively, the "Potential Preference
--------------------
Parties") shall have occurred during the period ending ninety-one (91) days
-------
after payment in full to the Noteholders of all amounts payable with respect to
the Notes and the payment in full of the Reimbursement Amount owed to the
Insurer then the funds on deposit in the Spread Account shall be retained until
the date all applicable statute of limitation periods with respect to all
applicable preference actions and periods have expired and during which time no
preference action or similar proceeding at law or in equity is commenced, at
which time, the Indenture Trustee shall release all amounts in the Spread
Account to the holder of the Residual Interest Certificate. In the event that
any preference action referred to above is commenced during any applicable
statute of limitations period, funds deposited in the Spread Account shall be
retained until the date on which there is a final determination by a court of
competent jurisdiction as to whether any payment or payments made pursuant to
this Agreement, the Indenture or the Insurance Agreement is recoverable from the
Insurer or the Noteholders. If it is so determined that a payment is so
recoverable, funds deposited in the Spread Account shall be applied by the
Indenture Trustee at the written direction of the Insurer, first to pay any and
all such claims with respect to such preference actions as the Noteholders and
the Insurer may be required to pay and then to the holder of the Residual
Interest Certificate. If it is determined that any such payment is not
recoverable, the Indenture Trustee shall release all amounts on deposit in the
Spread Account to the holder of the Residual Interest Certificate, upon receipt
by the Insurer of both a final order determining that such payments are not
recoverable and an opinion of nationally recognized bankruptcy counsel to the
effect that such appeal is final and not subject to appeal. For purposes of
compliance with this Section 4.04, the Indenture Trustee shall be entitled to
rely on written instructions from the Insurer.
(f) In the event the holder of the Residual Interest Certificate
seeks to have the amounts remaining on deposit in the Spread Account released to
it prior to the expiration of the ninety-one (91) day period specified in
Section 4.04(e) above, then, if
60
(i) amounts payable with respect to the Notes have been fully paid to the
Noteholders, (ii) the Reimbursement Amount and all other amounts owing to the
Insurer pursuant to the Insurance Agreement have been paid in full, (iii) no
insolvency proceeding has occurred with respect to the Potential Preference
Parties, and (iv) either (A) the long term unsecured debt of the Seller and the
Servicer is rated "BBB-" or better by Standard & Poor's and "Baa3" or better by
Moody's, (B) the Insurer shall have received a favorable opinion or opinions,
satisfactory in form and substance to the Insurer, from counsel to AutoNation
Financial Services, the Seller and the Servicer, to the effect that in the event
an insolvency proceeding were to occur with respect to the Potential Preference
Parties, no payment pursuant to this Agreement or the Insurance Agreement would
be recoverable from either the Insurer or the Noteholders, and such other
matters as the Insurer may reasonably request, or (C) the Insurer, in its sole
discretion, elects to have the remaining amounts on deposit in the Spread
Account paid to the holder of the Residual Interest Certificate, then, in any
such event, all remaining amounts on deposit in the Spread Account shall be paid
to the holder of the Residual Interest Certificate.
(g) On or after the occurrence of an Event of Default under the
Indenture and the acceleration of the Notes thereunder, and upon the written
direction of the Insurer, all, or any portion of, amounts on deposit in the
Spread Account shall be applied to pay amounts described in Section 5.06 of the
Indenture.
SECTION 4.05. Statements to Noteholders.
-------------------------
(a) On each Distribution Date, the Indenture Trustee shall include
with each distribution to a Noteholder of record as of the related Record Date,
a statement, prepared by the Servicer, based solely on the information in the
Distribution Date Statement furnished pursuant to Section 3.08 (which the
Indenture Trustee shall be permitted, but not obligated, to post on its website
at ______________), setting forth for such Distribution Date at least the
following information as of the Distribution Date, as the case may be:
(i) the Note Principal Distributable Amount for such Distribution
Date;
(ii) the Note Interest Distributable Amount for such Distribution
Date;
(iii) the aggregate distribution amount for such Distribution Date;
(iv) the Insurance Premium payable to the Insurer;
(v) the amount on deposit in the Spread Account on such
Distribution Date, before and after giving effect to deposits thereto and
withdrawals therefrom to be made in respect of such Distribution Date;
(vi) the amount of the withdrawal, if any required to be made from
the Spread Account by the Indenture Trustee pursuant to Section 4.04(b);
61
(vii) the aggregate Servicing Fee paid to the Servicer with respect
to the Contracts for the related Collection Period;
(viii) the amount of the Owner Trustee Fee and Indenture Trustee Fee
paid to the Owner Trustee and the Indenture Trustee, with respect to the
related Collection Period to the extent not paid by the Servicer or from
Available Funds pursuant to Section 4.03;
(ix) the amount of any Note Interest Carryover Shortfall or Note
Principal Carryover Shortfall on such Distribution Date and the change in
such shortfall amounts from those with respect to the immediately preceding
Distribution Date;
(x) the number of, and aggregate amount of, monthly principal and
interest payments due on the related Contracts which are delinquent as of
the end of the related Collection Period presented in increments of 31 to
60 days, 61 to 90 days, 91 to 120 days and 121 days or more;
(xi) the Available Funds and the Insured Payment, if any, for such
Distribution Date;
(xii) the aggregate amount of Liquidation Proceeds received for
Defaulted Contracts;
(xiii) the number and net outstanding balance of Contracts for which
the Financed Vehicle has been repossessed;
(xiv) the Pool Balance; and
(xv) the Spread Account Required Amount for such Distribution Date.
Each amount set forth pursuant to subclauses (i) or (ii) above shall be
expressed as a dollar amount per $1,000.00 of Original Principal Amount of a
Note.
(b) No later than the latest date permitted by law, the Servicer
shall prepare and furnish to the Issuer, the Indenture Trustee and each Paying
Agent, and the Paying Agent for the Notes and the Paying Agent for the Notes
shall furnish to each Person who on any Record Date during such calendar year
shall have been a Noteholder, a statement or statements containing the sum of
the amounts set forth in clauses (i) and (ii) above for such calendar year and
such other information as is reasonably necessary for the preparation of such
Person's federal income tax return in respect of the Notes or, in the event such
Person shall have been a Noteholder during a portion of such calendar year, for
the applicable portion of such year, for the purposes of such Noteholder's
preparation of federal income tax returns.
62
SECTION 4.06. Effect of Payments by the Insurer; Subrogation.
----------------------------------------------
(a) Anything herein to the contrary notwithstanding, any
distribution of principal of or interest on the Notes that is made with moneys
received pursuant to the terms of the Insurance Policy shall not be considered
payment of the Notes by the Issuer and shall not discharge the Trust Estate in
respect of such distribution. The Indenture Trustee acknowledges that, without
the need for any further action on the part of the Insurer, the Indenture
Trustee or the Note Registrar, (i) to the extent the Insurer makes payments,
directly or indirectly, on account of principal of or interest on the Notes to
the Noteholders thereof, the Insurer will be fully subrogated to the rights of
such Noteholders to receive such principal and interest from distributions of
the assets of the Trust and will be deemed to the extent of the payments so made
to be a Noteholder and (ii) the Insurer shall be paid principal and interest in
its capacity as a Noteholder until all such payments by the Insurer have been
fully reimbursed, but only from the sources and in the manner provided herein
for the distribution of such principal and interest and in each case only after
the Noteholders have received all payments of principal and interest due to them
under this Agreement on the related Distribution Date.
(b) Without limiting the rights or interests of the Noteholders as
otherwise set forth herein, so long as no Insurer Default exists or is not
continuing, the Indenture Trustee shall cooperate in all respect with any
reasonable request by the Insurer for action to preserve or enforce the
Insurer's rights or interests under this Agreement, including, upon the
occurrence of an Event of Default or a Non-Servicer Default, a request to take
any one or more of the following actions:
(i) institute proceedings for the collection of all amounts then
payable on the Notes or under this Agreement, enforce any judgment obtained
and collect moneys adjudged due; and
(ii) exercise any remedies of a secured party under the UCC and take
any other appropriate action to protect and enforce the rights and remedies
of the Insurer hereunder or under the other Basic Documents.
ARTICLE V
THE SELLER
SECTION 5.01. Liability of Seller; Indemnities.
--------------------------------
The Seller shall be liable in accordance herewith only to the extent
of the obligations specifically undertaken by the Seller under this Agreement.
The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Indenture Trustee, the Insurer and the Custodian and their
respective officers, directors, agents and employees from and against any taxes
that may at any time be asserted against any such Person with respect to the
transactions contemplated herein and in the other Basic Documents, including any
sales, gross receipts, general corporation, tangible or intangible personal
property, privilege or license taxes (but not
63
including any federal or other income taxes arising out of distributions on the
Notes) and costs and expenses in defending against the same.
The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Indenture Trustee, the Insurer, the Custodian their
respective officers, directors, agents and employees and the Noteholders from
and against any loss, liability or expense incurred by reason of the Seller's
willful misfeasance, bad faith or negligence (other than errors in judgment) in
the performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement.
The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Indenture Trustee, and their respective officers, directors,
agents and employees from and against all costs, expenses, losses, claims,
damages and liabilities arising out of or incurred in connection with the
acceptance or performance of the trusts and duties herein and, in the case of
the Owner Trustee, in the Owner Trust Agreement and, in the case of the
Indenture Trustee, in the Indenture, except to the extent that such cost,
expense, loss, claim, damage or liability, in the case of (i) the Owner Trustee,
shall be due to the willful misfeasance, bad faith or negligence of the Owner
Trustee or shall arise from the breach by the Owner Trustee of any of its
representations or warranties set forth in the Owner Trust Agreement, (ii) the
Indenture Trustee, shall be due to the willful misfeasance, bad faith or
negligence of the Indenture Trustee or (iii) the Custodian, shall be due to the
willful misfeasance, bad faith or negligence of the Custodian, respectively.
Indemnification under this Section 5.01 shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation.
Indemnification under this Section 5.01 shall be payable solely from amounts
payable to the Seller, as holder of the Residual Interest Certificate, pursuant
to clause (xii) of Section 4.03(a) and shall not otherwise be payable from the
Trust Property. If the Seller shall have made any indemnity payments pursuant to
this Section 5.01 and the Person to or on behalf of whom such payments are made
thereafter shall collect any of such amounts from others, such Person shall
promptly repay such amounts to the Seller, without interest to the extent such
Person has received amounts in excess of the indemnity payments such Person is
entitled to under the Basic Documents. Indemnification under this Section 5.01
shall survive the resignation or removal of the Seller or the termination of
this Agreement.
SECTION 5.02. Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of Seller; Certain Limitations.
------------------------------------------
(a) The Seller shall keep in full effect its existence, rights and
franchises as a corporation incorporated under the laws of the State of
Delaware, and will obtain and preserve its qualification to do business as a
foreign corporation in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of the Contract
Documents and this Agreement.
(b) The Seller shall not consolidate with or merge into any other
corporation or convey, transfer or lease substantially all of its assets as an
entirety to any Person unless such action is accomplished in accordance with the
Insurance Agreement
64
and the corporation formed by such consolidation or into which the Seller has
merged or the Person which acquires by conveyance, transfer or lease
substantially all the assets of the Seller as an entirety, can lawfully perform
the obligations of the Seller hereunder and executes and delivers to the Issuer,
the Indenture Trustee and the Insurer an agreement in form and substance
reasonably satisfactory to the Issuer, the Indenture Trustee and the Insurer,
which contains an assumption by such successor entity of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by the Seller under this Agreement. The Seller shall provide prompt
notice of any merger, consolidation or succession pursuant to this Section 5.02
to the Owner Trustee, the Indenture Trustee, the Insurer, the Servicer and the
Rating Agencies. Notwithstanding the foregoing, the Seller shall not merge or
consolidate with any other Person or permit any other Person to become a
successor to the Seller's business unless (x) immediately after giving effect to
such transaction, no representation or warranty made pursuant to Section 2.02
shall have been breached (for purposes hereof, such representations and
warranties shall speak as of the date of the consummation of such transaction),
(y) the Seller shall have delivered to the Owner Trustee, the Indenture Trustee,
the Servicer and the Insurer an Officer's Certificate and an Opinion of Counsel
each stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section 5.02 and that all conditions precedent
provided for in this Agreement relating to such transaction have been complied
with and (z) the Seller shall have delivered to the Owner Trustee, the Indenture
Trustee, the Servicer and the Insurer an Opinion of Counsel stating that, in the
opinion of such counsel, either (A) all financing statements and continuation
statements and amendments thereto have been duly executed and filed that are
necessary to preserve and protect the interest of the Trust in the Contracts and
reciting the details of such filings or (B) no such action is necessary to
preserve and protect such interest.
SECTION 5.03. Limitation on Liability of Seller and Others.
--------------------------------------------
The Seller and any director or officer or employee or agent of the
Seller may rely in good faith on any document of any kind, prima facie properly
----- -----
executed and submitted by any Person respecting any matters arising hereunder.
The Seller shall not be under any obligation to appear in, prosecute or defend
any legal action that shall not be incidental to its obligations under this
Agreement, and that in its opinion may involve it in any expense or liability.
SECTION 5.04. Seller Not to Resign.
--------------------
Subject to the provisions of Section 5.02, the Seller shall not resign
from the obligations and duties hereby imposed on it as Seller under this
Agreement.
SECTION 5.05. Seller May Own Notes.
--------------------
The Seller and any Affiliate thereof may in its individual or any
other capacity become the owner or pledgee of Notes with the same rights as it
would have if it were not the Seller or an Affiliate thereof, except as
expressly provided herein or in any Basic Document. Notes so owned by or pledged
to the Seller or such Affiliate shall have
65
an equal and proportionate benefit under the provisions of this Agreement,
without preference, priority or distinction as among all of the Notes.
ARTICLE VI
THE SERVICER
SECTION 6.01. Liability of Servicer; Indemnities.
----------------------------------
Subject to Section 7.02, the Servicer shall be liable in accordance
herewith only to the extent of the obligations specifically undertaken by the
Servicer under this Agreement. Such obligations shall include the following:
(a) The Servicer shall defend, indemnify and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Insurer, the Seller, the
Custodian, their respective officers, directors, agents and employees, and the
Noteholders from and against any and all costs, expenses, losses, damages,
claims and liabilities, arising out of or resulting from the use, ownership or
operation by the Servicer or any Affiliate thereof of a Financed Vehicle.
(b) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Insurer, the Custodian and
their respective officers, directors, agents and employees from and against any
taxes that may at any time be asserted against the Issuer, the Owner Trustee,
the Indenture Trustee, the Insurer, the Seller or the Custodian with respect to
the transactions contemplated herein, including, without limitation, any sales,
gross receipts, general corporation, tangible or intangible personal property,
privilege or license taxes (but, not including (i) in the case of the Issuer,
any taxes asserted with respect to, and as of the date of, the sale of the
Contracts to the Issuer or the issuance and original sale of the Securities, or
(ii) any taxes asserted with respect to ownership of the Contracts, or (iii) any
federal or other income taxes arising out of distributions on the Securities)
and costs and expenses in defending against the same.
Indemnification under this Section 6.01 shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation.
If the Servicer shall have made any indemnity payments pursuant to this Section
and the recipient thereafter collects any of such amounts from others, the
recipient Person shall promptly repay such amounts to the Servicer, without
interest to the extent such Person has received amounts in excess of the
indemnity payments such Person is entitled to under the Basic Documents.
This Section 6.01 shall survive the resignation or removal of the
Servicer and the termination of this Agreement.
SECTION 6.02. Corporate Existence; Status as Servicer; Merger.
-----------------------------------------------
(a) The Servicer shall keep in full effect its existence, rights
and franchises as a corporation incorporated under the laws of the State of
Delaware, and will
66
obtain and preserve its qualification to do business as a foreign corporation in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of the Contract Documents and this
Agreement.
(b) The Servicer shall not consolidate with or merge into any other
Person or convey, transfer or lease all or substantially all of its assets as an
entirety to any Person or engage in any similar corporate transaction pursuant
to which the surviving or successor entity is not AutoNation Financial Services,
unless (i) all additional conditions contained in the Insurance Agreement are
satisfied; (ii) the resulting entity executes and delivers to the Issuer, the
Indenture Trustee and the Insurer an agreement in form and substance reasonably
satisfactory to the Issuer, the Indenture Trustee and the Insurer, which
contains an assumption by such successor entity of the due and punctual
performance and observance of each covenant and condition to be performed or
observed by the Servicer under this Agreement; (iii) the Servicer shall provide
notice of any merger, consolidation or succession pursuant to this Section 6.02
to the Owner Trustee, the Indenture Trustee, the Insurer and each Rating Agency;
(iv) immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 3.05 shall have been breached (for purposes
hereof, such representations and warranties shall speak as of the date of the
consummation of such transaction) and no event that, after notice or lapse of
time or both, would become a Servicer Default shall have occurred; (v) the
Servicer shall have delivered to the Owner Trustee, the Indenture Trustee and
the Insurer an Officer's Certificate and an Opinion of Counsel, each stating
that such consolidation, merger or succession and such agreement of assumption
comply with this Section 6.02 and that all conditions precedent provided for in
this Agreement relating to such transaction have been complied with and (vi) the
Servicer shall have delivered to the Owner Trustee, the Indenture Trustee and
the Insurer an Opinion of Counsel stating that either (A) all financing
statements and continuation statements and amendments thereto have been duly
executed and filed that are necessary to preserve and protect the interest of
the Trust and the Indenture Trustee, respectively, in the assets of the Trust
and reciting the details of such filings or (B) no such action shall be
necessary to preserve and protect such interest.
SECTION 6.03. Performance of Obligations.
--------------------------
(a) The Servicer shall punctually perform and observe all of its
obligations and agreements contained in this Agreement.
(b) The Servicer shall not take any action, or permit any action to
be taken by others, which would excuse any person from any of its covenants or
obligations under any of the Contract Documents or under any other instrument
included in the Trust Property, or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any of the Contract Documents or any such
instrument, except as expressly provided herein and therein.
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SECTION 6.04. Servicer Not to Resign; Assignment.
----------------------------------
(a) The Servicer shall not resign from the duties and obligations
hereby imposed on it except upon determination by its Board of Directors that by
reason of change in applicable legal requirements the continued performance by
the Servicer of its duties hereunder would cause it to be in violation of such
legal requirements in a manner which would result in a material adverse effect
on the Servicer or its financial condition, said determination to be evidenced
by a resolution of its Board of Directors to such effect accompanied by an
Opinion of Counsel, satisfactory to the Issuer, the Insurer and the Indenture
Trustee, to such effect. No such resignation shall become effective unless and
until (i) the Indenture Trustee assumes all of the Servicer's obligations under
this Agreement; provided, however, the Indenture Trustee shall in no event
-------- -------
whatsoever assume the Servicer's obligation to repurchase Contracts, nor will
the Indenture Trustee purchase Contracts or (ii) a new servicer acceptable to
the Insurer assumes the servicing of the Contracts and enters into a servicing
agreement with the Issuer, the Indenture Trustee and the Insurer in form and
substance substantially similar to this Agreement and satisfactory to the
Indenture Trustee and the Insurer, and each Rating Agency confirms that the
selection of such new servicer will not result in the qualification, reduction
or withdrawal of its then-current rating of each Class of Notes assigned by such
Rating Agency, without regard to the Insurance Policy. No such resignation by
the Servicer shall affect the obligation of the Servicer to repurchase pursuant
to Section 3.06 Contracts which were adversely affected as a result of the
Servicer's actions while acting as Servicer.
(b) Except as specifically permitted in this Agreement, the
Servicer may not assign this Agreement or any of its rights, powers, duties or
obligations hereunder; provided that the Servicer may assign this Agreement in
--------
connection with a consolidation, merger, conveyance, transfer or lease made in
compliance with Section 6.02(b).
(c) Except as provided in Sections 6.04(a) and (b), the duties and
obligations of the Servicer under this Agreement shall continue until this
Agreement shall have been terminated as provided in Section 8.01 or the Trust
shall have been terminated as provided by the terms of the Owner Trust
Agreement, and shall survive the exercise by the Issuer, the Indenture Trustee
or the Insurer of any right or remedy under this Agreement, or the enforcement
by the Issuer, the Indenture Trustee, any Noteholder or the Insurer of any
provision of the Notes, the Indenture, the Insurance Agreement or this
Agreement.
(d) The resignation of the Servicer in accordance with this Section
6.04 shall not affect the rights of the Seller hereunder. If the Servicer
resigns pursuant to this Section, its appointment as custodian may be terminated
pursuant to Section 2.08.
SECTION 6.05. Limitation on Liability of Servicer and Others.
----------------------------------------------
Neither the Servicer nor any of the directors, officers, employees or
agents of the Servicer shall be under any liability to the Issuer or the
Noteholders, except as
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provided under this Agreement, for any action taken or for refraining from the
taking of any action pursuant to this Agreement or for errors in judgment;
provided that this provision shall not protect the Servicer or any such person
--------
against any liability that would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of duties or by reason
of reckless disregard of obligations and duties under this Agreement. The
Servicer and any director, officer, employee or agent of the Servicer may rely
in good faith on any document of any kind prima facie properly executed and
----- -----
submitted by any person respecting any matters arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not be under
any obligation to appear in, prosecute or defend any legal action that shall not
be incidental to its duties to service the Contracts in accordance with this
Agreement, and that in its opinion may involve it in any expense or liability;
provided that the Servicer may undertake any reasonable action that it may deem
--------
necessary or desirable in respect of this Agreement and the other Basic
Documents and the rights and duties of the parties to this Agreement and the
other Basic Documents and the interests of the Noteholders under this Agreement
and the other Basic Documents.
ARTICLE VII
SERVICER DEFAULTS
SECTION 7.01. Servicer Defaults.
-----------------
If any one of the following events (each, a "Servicer Default") shall
----------------
occur and be continuing:
(a) any failure by the Servicer to deposit or credit to the
Collection Account any amount required under this Agreement to be so deposited
or credited, which failure continues unremedied for a period of two Business
Days after discovery by the Servicer or receipt by the Servicer of written
notice of such failure from the Issuer, the Indenture Trustee or the Insurer or
after discovery of such failure by an officer of the Servicer;
(b) the Insurer, the Indenture Trustee or the Issuer shall not have
received a report in accordance with Section 3.08 by the Servicer Report Date
with respect to which such report is due and which shall continue unremedied for
a period of one day after the date on which written notice of such failure,
requiring the same to be remedied, shall have been given;
(c) failure on the part of the Seller or the Servicer duly to
observe or to perform any other covenants or agreements of the Seller or the
Servicer set forth in this Agreement or any other Basic Document, which failure
shall (i) materially and adversely affect the rights of the Noteholders, the
Insurer, the Issuer, the Owner Trustee or the Indenture Trustee and (ii)
continue unremedied for a period of 30 days after the date on which the Seller,
the Custodian or the Servicer shall have knowledge of such failure or written
notice of such failure, requiring the same to be remedied, shall have been given
69
(A) to the Seller or the Servicer, as the case may be, by the Insurer, the
Issuer, the Owner Trustee or the Indenture Trustee or (B) to the Seller or the
Servicer, as the case may be, and to the Issuer and the Indenture Trustee by
Noteholders, acting together as a single class, evidencing in the aggregate not
less than 25% of the Outstanding Principal Amount of the Notes or, so long as no
Insurer Default has occurred and is continuing, by the Insurer;
(d) the entry of a decree or order for relief by a court or
regulatory authority having jurisdiction in respect of the Servicer or the
Seller in an involuntary case under the federal bankruptcy laws, as now or
hereafter in effect, or another present or future, federal or state, bankruptcy,
insolvency or similar law, or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Servicer or
the Seller or of any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Servicer or the Seller and the
continuance of any such decree or order unstayed and in effect for a period of
60 consecutive days or the commencement of an involuntary case under the federal
bankruptcy laws, as now or hereinafter in effect, or another present or future
federal or state bankruptcy, insolvency or similar law and such case is not
dismissed within 60 days;
(e) the commencement by the Servicer or the Seller of a voluntary
case under the federal bankruptcy laws, as now or hereafter in effect, or any
other present or future, federal or state, bankruptcy, insolvency or similar
law, or the consent by the Servicer or the Seller to the appointment of or
taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Servicer or the Seller or of any
substantial part of its property or the making by the Servicer or the Seller of
an assignment for the benefit of creditors or the failure by the Servicer or the
Seller generally to pay its debts as such debts become due or the taking of
corporate action by the Servicer or the Seller in furtherance of any of the
foregoing;
(f) any merger or consolidation or sale of assets of the Servicer
in violation of the covenant set forth in Section 6.02 hereof;
(g) the Servicer shall have failed in the reasonable opinion of the
Insurer to service the Contracts in accordance with the Servicing Standards and
such failure shall have continued unremedied for 30 days after written notice of
such failure shall have been delivered to the Servicer by the Insurer;
(h) any representation, warranty or statement of the Servicer or
the Seller made in this Agreement or the other Basic Documents or any
certificate, report or other writing delivered pursuant hereto or thereto shall
prove to be incorrect in any material respect as of the time when the same shall
have been made (excluding, however, any representation or warranty made in this
Agreement or any other Basic Document as to which Section 2.03 or 3.06 shall be
applicable so long as the Servicer or the Seller shall be in compliance with
Section 2.03 or 3.06, as the case may be), and the incorrectness of such
representation, warranty or statement has a material adverse effect on the
Noteholders or the Insurer and, within 30 days after written notice thereof
shall have been given to the Servicer or the Seller by the Indenture Trustee or
the Issuer or by
70
Noteholders, acting together as a single Class, evidencing in the aggregate not
less than 25% of the Outstanding Principal Amount of the Notes, or so long as no
Insurer Default has occurred, by the Insurer, the circumstance or condition in
respect of which such representation, warranty or statement was incorrect shall
not have been eliminated or otherwise cured;
(i) the subservicing agreement between World Omni Financial Corp.
and the Servicer shall for any reason cease to be in full force and a successor
Subservicer acceptable to the Insurer shall not be appointed within 60 days, or
if any party thereto denies that it has any further liability thereunder or
gives notice to such effect;
(j) the Indenture Trustee shall, for any reason, fail to have a
valid perfected first priority security interest in Contracts pledged by the
Issuer to the Indenture Trustee the outstanding aggregate Principal Balance of
which exceeds 5.00% of the Pool Balance;
(k) unless authorized under Section 5.02, the Seller shall enter
into any transaction described in Section 5.02 regardless of the surviving
entity; or
(l) an Event of Default as defined in the Insurance Agreement;
then and in each and every case, so long as such Servicer Default shall not have
been remedied, (i) if no Insurer Default has occurred and is continuing, the
Insurer or (ii) if an Insurer Default has occurred and is continuing, the
Indenture Trustee acting at the direction of the Noteholders evidencing not less
than 25% of the outstanding amount of the Notes, acting together as a single
Class, by notice then given in writing to the Servicer (and to the Insurer, the
Indenture Trustee and the Issuer if given by the Noteholders) may terminate all
the rights and obligations of the Servicer under this Agreement. Upon such
termination, termination of the Servicer as custodian, if the Servicer is acting
as such, can be made pursuant to Section 2.08.
On or after the receipt by the Servicer of such written notice of
termination, all authority and power of the Servicer under this Agreement,
whether with respect to the Notes, the Contracts or otherwise, shall, without
further action, pass to and be vested in the Indenture Trustee or such Successor
Servicer as may be appointed under Section 7.02 and, without limitation, the
Indenture Trustee and the Issuer are hereby authorized and empowered to execute
and deliver on behalf of the Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of the Contracts
and related documents, or otherwise. The Servicer shall cooperate with the
Indenture Trustee, the Insurer and the Issuer in effecting the transfer of the
responsibilities and rights of the Servicer under this Agreement (whether due to
termination, resignation or otherwise), including the transfer to the Indenture
Trustee or such Successor Servicer, as applicable, for administration by it of
all cash amounts that (i) shall at the time be held by the Servicer for deposit
in, or shall have been deposited by the Servicer in, the Collection Account or
(ii) shall thereafter be received by it with respect to any Contract. The
71
predecessor Servicer shall pay all costs of the Successor Servicer associated
with its transition to the role of Successor Servicer (whether due to
termination, resignation or otherwise).
SECTION 7.02. Trustee to Act; Appointment of Successor.
----------------------------------------
(a) Upon the termination of the Servicer by the Insurer pursuant to
Section 7.01 or resignation of the Servicer pursuant to Section 6.04 or
otherwise, the Insurer may appoint a successor servicer ("Successor Servicer"
------------------
other than the Indenture Trustee. Until the Insurer has appointed a Successor
Servicer, the Indenture Trustee shall be the Successor Servicer for all purposes
of this Agreement. In the event that the Indenture Trustee is unable to so act
and the Insurer has not appointed a Successor Servicer within 60 days, the
Indenture Trustee may, with the consent of the Insurer, which consent will not
be unreasonably withheld, appoint, or petition a court of competent jurisdiction
for the appointment of, a successor acceptable to the Insurer with a net worth
of at least $50,000,000 and whose regular business includes the servicing of
automobile and light-duty retail installment sales contracts. If an Insurer
Default has occurred and is continuing, upon the termination of the Servicer by
the Indenture Trustee, the Noteholders shall appoint a Successor Servicer
pursuant to Section 7.01, or upon the resignation of the Servicer pursuant to
Section 6.04 in the event that the Insurer is not entitled to appoint a
Successor Servicer by operation of Section 9.08, (i) if the Notes have not been
paid in full, the Indenture Trustee shall be the Successor Servicer and (ii) if
the Notes have been paid in full, the Depositor shall appoint the Successor
Servicer. If the Indenture Trustee acts as Successor Servicer, the Indenture
Trustee shall be entitled to such compensation (whether payable out of the
Collection Account or otherwise) as the Servicer would have been entitled to
under this Agreement if no such notice of termination shall have been given, as
well as reasonable Transition Costs, which shall be payable as provided in
Section 4.03(a)(xi). Pending appointment of any such Successor Servicer, the
Indenture Trustee shall act in such capacity as provided above.
(b) The Successor Servicer shall succeed to all the responsibilities,
duties and liabilities of the Servicer under this Agreement, except that if the
Indenture Trustee is the Successor Servicer, it shall not be obligated to
purchase Contracts pursuant to Section 3.06; provided, however, the Successor
-------- -------
Servicer (if the Indenture Trustee) shall be obligated to indemnify, defend and
hold harmless the Issuer, the Seller, the Noteholders and the Insurer and their
respective officers, directors, agents and employees from and against any and
all costs, expenses, losses, damages, claims and liabilities arising out of or
resulting from such Successor Servicer's failure to perform its obligations
under Sections 3.02, 3.04 or 3.05(a). Any Successor Servicer has the right, with
the prior written consent of the Insurer, to terminate the services of any
Subservicer in respect of the Contracts arising under the related subservicing
agreement between the predecessor Servicer and such Subservicer which is in
effect at the time such Successor Servicer assumes its responsibilities as
Successor Servicer and any termination fees in connection with such termination
shall be paid by the predecessor servicer. In connection with any appointment of
a Successor Servicer, the Indenture Trustee may make arrangements for the
compensation of such successor out of payments on Contracts as the Indenture
Trustee, the Insurer and such Successor Servicer shall agree; provided that such
--------
72
amount shall equal the product of a fixed percentage rate and the Principal
Balance, as of the commencement of each Collection Period, of each Contract. The
Indenture Trustee and such successor shall take such action, consistent with
this Agreement, as shall be necessary to effectuate any such succession.
SECTION 7.03. Notification to Noteholders.
---------------------------
Upon any termination of, or appointment of a successor to, the
Servicer pursuant to this Article VII, the Indenture Trustee shall give prompt
written notice thereof to each Noteholder of record at their respective
addresses appearing in the Note Register.
SECTION 7.04. Waiver of Past Defaults.
-----------------------
Unless an Insurer Default shall have occurred and be continuing, the
Insurer, and only the Insurer, may waive any default by the Servicer in the
performance of its obligations under this Agreement or any Servicer Default. If
an Insurer Default has occurred and is continuing, the Noteholders evidencing at
least a majority of the Outstanding Principal Amount of the Notes, acting
together as a single Class on behalf of all Noteholders, shall have the right to
waive any default by the Servicer in the performance of its obligations under
this Agreement or any Servicer Default except a Servicer Default in making any
required deposits to or payment from the Trust Accounts in accordance with this
Agreement. No such waiver shall impair the Insurer's or the Noteholders' rights
with respect to subsequent defaults.
SECTION 7.05. Insurer Direction of Insolvency Proceedings.
-------------------------------------------
(a) The Indenture Trustee, upon the actual knowledge of a Responsible
Officer of the Indenture Trustee, shall promptly notify the Insurer of (i) the
commencement of any of the events or proceedings by or against any Obligor, the
Servicer, the Seller, the Issuer or the Originator under the United States
Bankruptcy Code or any other applicable federal or state bankruptcy, insolvency,
receivership, rehabilitation or similar law (individually, an "Insolvency
----------
Proceeding") and (ii) the making of any claim in connection with any Insolvency
----------
Proceeding seeking the avoidance as a preferential transfer (a "Preference
----------
Claim") of any payment of principal of, or interest on, any Notes. Any
-----
Preference Amounts paid by the Insurer shall be reimbursed to the Insurer as
provided in Section 4.03(a) and 4.04(b). Each Noteholder, by its purchase of
Notes, the Owner Trustee and the Indenture Trustee hereby agree that, so long as
no Insurer Default has occurred and is continuing, the Insurer may at any time
during the continuation of an Insolvency Proceeding direct all matters relating
to such Insolvency Proceeding, including, without limitation, (i) all matters
relating to any Preference Claim, (ii) the direction of any appeal of any order
relating to any Preference Claim and (iii) the posting of any surety or
performance bond pending any such appeal. The Insurer shall be subrogated to,
and each Noteholder and the Indenture Trustee hereby delegate and assign, to the
fullest extent permitted by law, the rights of the Indenture Trustee, the Owner
Trustee and each Noteholder in the conduct of any Insolvency Proceeding,
including, without limitation, all rights of any party to an adversary
73
proceeding action with respect to any court order issued in connection with any
such Insolvency Proceeding.
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ARTICLE VIII
TERMINATION
SECTION 8.01. Optional Purchase of All Contracts; Satisfaction and
----------------------------------------------------
Discharge of the Indenture.
--------------------------
(a) On any Distribution Date as of which the Pool Balance is 10% or
less of the Original Pool Balance, the Servicer shall have the option to
purchase the remaining Contracts from the Trust (such purchase an "Optional
--------
Purchase"). Notice of the exercise of such option shall be given by the Servicer
--------
to the Issuer, the Indenture Trustee and the Insurer not later than the 10th day
prior to the specified Distribution Date and not earlier than the 15th day of
the month prior to the month of the specified Distribution Date. To exercise
such option, the Servicer shall pay to the Indenture Trustee for the benefit of
the Noteholders and the Insurer, by deposit in the Collection Account on the
Business Day immediately preceding the related Servicer Report Date, the greater
of (i) the sum of (x) the Pool Balance on the date of repurchase, plus (y) any
----
accrued and unpaid interest on the Contracts and (ii) the sum of (x) the
aggregate unpaid principal amount of the Notes, plus (y) any accrued and unpaid
----
interest thereon to such Distribution Date plus (z) all amounts due to the
----
Servicer, the Insurer, the Indenture Trustee and the Owner Trustee under the
Basic Documents. Such purchase shall be deemed to have occurred on the last day
of the related Collection Period.
Any Outstanding Notes will be redeemed concurrently with any Optional
Purchase.
(b) Notice of any termination of the Trust shall be given by the
Servicer to the Owner Trustee, the Insurer and the Indenture Trustee as soon as
practicable after the Servicer has received notice thereof. Such notice shall
conform to the notice described in Section 9.01(c) of the Owner Trust Agreement.
(c) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes and all amounts
owed to the Insurer and return of the Insurance Policy to the Insurer for
cancellation, the Residual Interest Certificateholder 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.
SECTION 8.02. Termination of this Agreement. This Agreement shall
terminate upon the termination of the Trust, except that obligations to make tax
reporting shall survive so long as such obligations exist.
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ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendment.
---------
(a) This Agreement may be amended by the Issuer, the Seller, the
Servicer and the Indenture Trustee, collectively without the consent of any
Noteholders or the Custodian but with the consent of the Insurer (which consent,
so long as an Insurer Default has occurred and is continuing, shall not be
unreasonably withheld), to cure any ambiguity, to correct or supplement any
provisions in this Agreement which are inconsistent with the provisions herein,
or to make any other provisions with respect to matters or questions arising
under this Agreement which are not inconsistent with the provisions of this
Agreement; provided that any such action shall not materially and adversely
--------
affect the interests of any Noteholder; and provided, further, that any such
-------- -------
amendment shall be deemed not to materially and adversely affect the interests
of any Noteholder if the Person requesting the amendment obtains (i) a letter
from each Rating Agency to the effect that such amendment would not result in a
downgrading or withdrawal of the ratings then assigned to the applicable Notes
by such Rating Agency, without regard to the Insurance Policy and (ii) the
consent of the Insurer.
(b) This Agreement may also be amended by the Issuer, the Seller, the
Servicer and the Indenture Trustee, with the consent of the Insurer, without the
consent of the Custodian and, for so long as the Notes are outstanding and an
Insurer Default shall have occurred and be continuing, the Noteholders
evidencing in the aggregate more than 50% of the principal amount of the Notes
then outstanding, acting together as a single Class, for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of this Agreement, or of modifying in any manner the rights of the Noteholders;
provided that no such amendment may without the consent of each Noteholder (i)
--------
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on the Contracts or distributions that shall
be required to be made for the benefit of the Noteholders, (ii) reduce the
aforesaid percentage of the Noteholders which are required to consent to any
such amendment or (iii) result in a taxable event to any of the Noteholders for
federal income tax purposes or result in the Trust being classified as an
association or publicly traded partnership taxable as a corporation for federal
income tax purposes .
(c) Promptly after the execution of any such amendment or consent,
the Indenture Trustee shall furnish written notification of the substance of
such amendment or consent to each Noteholder.
(d) It shall not be necessary for the consent of Noteholders pursuant
to Section 9.01(b) to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization by Noteholders of the execution thereof shall be subject to such
reasonable requirements as the Indenture Trustee may prescribe. Any consent by a
Noteholder to an amendment of this Agreement
76
shall be conclusive and binding on such Noteholder and upon all future
Noteholders, of such Note and of any Note issued upon the transfer thereof or in
exchange thereof or in lieu thereof whether or not notation of such consent is
made upon such Note.
(e) The Indenture Trustee may, but shall not be obligated to, enter
into any such amendment which affects the Indenture Trustee's own rights, duties
or immunities under this Agreement or otherwise and any such amendment shall be
unenforceable in its entirety absent the execution of such amendment by the
Indenture Trustee. Before consenting to any amendment pursuant to Section
9.01(a), the Indenture Trustee shall, if it requests, be entitled to receive an
Opinion of Counsel (not at its own expense) stating that such amendment is
authorized and permitted under the terms of this Agreement and the Indenture. To
the extent such Opinion of Counsel is provided to the Indenture Trustee, the
Insurer shall also be a recipient thereof.
SECTION 9.02. Protection of Title to Trust.
----------------------------
(a) The Servicer shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such manner
and in such places as may be required by law fully to preserve, maintain and
protect the interest of the Issuer, the Noteholders, the Indenture Trustee and
the Insurer in the Contracts and in the proceeds thereof. The Servicer shall
deliver (or cause to be delivered) to the Indenture Trustee and the Insurer
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed in accordance with
Section 9.02(a) seriously misleading within the meaning of Section 9-402(7) of
the UCC, unless it shall have given the Insurer and the Indenture Trustee at
least 30 days' prior written notice thereof and shall promptly file appropriate
amendments to all previously filed financing statements or file new financing
statements, as applicable. Promptly thereafter, the Servicer shall deliver to
the Trust, the Indenture Trustee and the Insurer an Opinion of Counsel stating
that in the opinion of counsel, all actions necessary fully to preserve and
protect the interest of the Trust, the Indenture Trustee, the Noteholders and
the Insurer in the Contracts, the related Financed Vehicles and the proceeds
thereof have been taken and reciting the details thereof.
(c) The Seller and the Servicer shall give the Insurer, the Owner
Trustee and the Indenture Trustee at least 30 days' prior written notice of any
relocation of the principal executive office or state of incorporation of the
Seller and the Servicer if, as a result of such relocation, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement and shall promptly file appropriate amendments or new financing
statements. Promptly thereafter, the Servicer shall deliver to the Trust, the
Indenture Trustee and the Insurer an Opinion of Counsel stating that in the
opinion of counsel, all actions necessary fully to preserve and protect the
interest of the Trust, the Indenture Trustee, the Noteholders and the Insurer in
the Trust Property have been taken
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and reciting the details thereof. The Servicer shall at all times maintain each
office from which it shall service Contracts, and its principal executive
office, within the United States.
(d) The Servicer shall maintain or cause to be maintained accounts
and records as to each Contract accurately and in sufficient detail to permit
(i) the reader thereof to know at any time the status of such Contract,
including payments and recoveries made and payments owing (and the nature of
each) and (ii) reconciliation between payments or recoveries on (or with respect
to) each Contract and the amounts from time to time deposited in or credited to
the Collection Account in respect of such Contract.
(e) The Servicer shall maintain or cause to be maintained its or its
agent's computer systems so that, from and after the time of sale under this
Agreement of the Contracts to the Issuer, the Servicer's master computer records
(including any backup archives) that shall refer to a Contract indicate clearly
the interest of the Issuer and the Indenture Trustee in such Contract and that
such Contract is owned by the Issuer and has been pledged to the Indenture
Trustee.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in automotive
retail installment sales contracts to any prospective purchaser, lender or other
transferee, the Servicer shall give or cause to be given to such prospective
purchaser, lender or other transferee computer tapes, records or print-outs
(including any restored from back-up archives) that, if they shall refer in any
manner whatsoever to any Contract, shall indicate clearly that such Contract has
been sold and is owned by the Issuer and has been pledged to the Indenture
Trustee.
(g) The Servicer shall permit the Owner Trustee, the Indenture
Trustee and the Insurer and their respective agents, at any time during normal
business hours, to inspect, audit and make copies of and abstracts from the
Servicer's records regarding any Contract.
(h) Upon request, the Servicer shall furnish to the Owner Trustee,
the Indenture Trustee and the Insurer, within five Business Days, a list of all
Contracts then held as part of the Trust Property.
(i) The Servicer shall deliver to the Indenture Trustee and the
Insurer:
(i) promptly after the execution and delivery of this Agreement and
of each amendment hereto, an Opinion of Counsel stating that, in the
opinion of such counsel, 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 Issuer and the Indenture
Trustee in the Contracts, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given, or
(B) no such action shall be necessary to preserve and protect such
interest; and
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(ii) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cut-Off Date an Opinion of Counsel, dated as of a date during such
90-day period, 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
Issuer and the Indenture Trustee in the Contracts, and reciting the details
of such filings or referring to prior Opinions of Counsel in which such
details are given or (B) no such action shall be necessary to preserve and
protect such interest.
(j) Each Opinion of Counsel referred to in clause (i) or (ii) above
shall specify any action necessary (as of the date of such opinion) to be taken
in the following year to preserve and protect such interest.
(k) The Seller shall, to the extent required by applicable law, cause
the Notes to be registered with the Securities and Exchange Commission pursuant
to Section 12(b) or Section 12(g) of the Securities Exchange Act of 1934, as
amended, within the time periods specified in such sections.
(l) For the purpose of facilitating the execution of this Agreement
and for other purposes, this Agreement may be executed simultaneously in any
number of counterparts, each of which counterpart shall be deemed to be an
original, and all of which counterparts shall constitute but one and the same
instrument.
SECTION 9.03. Governing Law.
-------------
This Agreement shall, in accordance with Section 5-1401 of the General
Obligations Law of the State of New York, be governed by, and construed in
accordance with, the laws of the State of New York without regard to its
conflict of laws principles.
SECTION 9.04. Notices.
-------
All demands, notices and communications under this Agreement shall be
in writing, personally delivered or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt in the case
of
(i) the Seller, at_________________, Attention:____, facsimile______
____;
(ii) the Servicer, at___________ , Attention:___ , facsimile______ ,
with a copy to___________, as Custodian;
(iii) the Insurer, at__________,____________, Attention:___________,
facsimile__________;
(iv) the Issuer or the Owner Trustee, at the Owner Trustee Corporate
Trust Office (with, in the case of the Issuer, a copy to the Seller);
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(v) the Indenture Trustee, at the Corporate Trust Office;
(vi) Moody's, to ▇▇▇▇▇'▇ Investors Service, ABS Monitoring
Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇;
(vii) Standard & Poor's, to Standard & Poor's Ratings Services, ▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Asset Backed
Surveillance Department; and
(viii) the Custodian, to____________, Attention:_________________,
facsimile_________;
or, as to each of the foregoing, at such other address as shall be designated by
written notice to the other parties. Any notice required or permitted to be
mailed to a Noteholder shall be given by first class mail, postage prepaid, at
the address of such Noteholder as shown in the Note Register. Any notice so
mailed within the time prescribed herein shall be conclusively presumed to have
been duly given, whether or not such Noteholder shall receive such notice.
SECTION 9.05. Severability of Provisions.
--------------------------
If the covenants, agreements, provisions or terms of this Agreement
shall be for any reason whatsoever held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and shall in no way
affect the validity or enforceability of the other provisions of this Agreement
or of the Notes or the rights of the Noteholders thereof.
SECTION 9.06. Assignment.
----------
Notwithstanding anything to the contrary contained herein, except as
provided in Sections 5.02 and 6.02, neither the Seller nor the Servicer may
transfer or assign all, or a portion of, its rights, obligations and duties
under this Agreement unless such transfer or assignment (i)(A) will not result
in a reduction or withdrawal by any Rating Agency of the rating then assigned by
it to the Notes, without regard to the Insurance Policy and (B) the Issuer, the
Indenture Trustee, acting at the direction of the Noteholders evidencing more
than 50% of the outstanding amount of Notes, and the Insurer have consented to
such transfer or assignment, or (ii) the Insurer, the Issuer, the Indenture
Trustee and the Noteholders of each Class evidencing more than 50% of the
outstanding amount of Notes of such Class consent thereto. Any transfer or
assignment with respect to the Servicer of all of its rights, obligations and
duties will not become effective until a Successor Servicer has assumed the
Servicer's rights, duties and obligations under this Agreement. In the event of
a transfer or assignment pursuant to clause (ii) above, each Rating Agency shall
be provided with notice of such transfer or assignment.
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SECTION 9.07. Third Party Beneficiaries.
-------------------------
The parties hereto intend for the Insurer to be, and the Insurer hereby
is an express third party beneficiary of this Agreement entitled to enforce the
provisions hereof as if it were a party hereto. Except as otherwise specifically
provided herein, the parties to this Agreement hereby manifest their intent that
no third party other than the Insurer shall be deemed a third party beneficiary
of this Agreement, and specifically that the Obligors are not third party
beneficiaries of this Agreement.
SECTION 9.08. Certain Matters Relating to the Insurer.
---------------------------------------
So long as an Insurer Default shall not have occurred and be continuing,
the Insurer shall have the right to exercise all rights, including voting
rights, which the Noteholders are entitled to exercise pursuant to this
Agreement, without any consent of such Noteholders, subject to any rights
specifically granted to Noteholders in respect of amendments to this Agreement
pursuant to Section 9.01.
All notices, statements or reports required by this Agreement to be sent
to any other party hereto or to the Noteholders at any time shall also be sent
to the Insurer unless the Insurance Policy is no longer in effect (and the
Insurer has been paid all amounts owing to it under this Agreement and the
Insurance Agreement).
Notwithstanding any provision in this Agreement to the contrary, for so
long as an Insurer Default shall have occurred and be continuing, the Insurer
shall not have the right to take any action under this Agreement or to control
or direct the actions of the Trust, the Seller, the Indenture Trustee pursuant
to the terms of this Agreement, nor shall the consent of the Insurer be required
with respect to any action (or waiver of a right to take action) to be taken by
the Trust, the Seller, the Indenture Trustee or the Noteholders; provided that
--------
the consent of the Insurer shall be required at all times (which consent, so
long as an Insurer Default has occurred and is continuing, shall not be
unreasonably withheld) with respect to any amendment of this Agreement.
SECTION 9.09. Headings.
--------
The headings of the various Articles and Sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
SECTION 9.10. Assignment by Issuer.
--------------------
The Seller hereby acknowledges and consents to any mortgage, pledge,
assignment and grant of a security interest by the Issuer to the Indenture
Trustee pursuant to the Indenture for the benefit of the Noteholders and the
Insurer of all right, title and interest of the Issuer in, to and under the
Contracts and/or the assignment of any or all of the Issuer's rights and
obligations hereunder to the Indenture Trustee.
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SECTION 9.11. Limitation of Liability of Owner Trustee.
----------------------------------------
Notwithstanding anything contained herein to the contrary, this
instrument has been executed by_________, not in its individual capacity but in
its capacity as Owner Trustee of the Issuer, and in no event shall_______, in
its individual capacity or any beneficial owner of the Issuer have any liability
for the representations, warranties, covenants, agreements or other obligations
of the Issuer hereunder, as to all of which recourse shall be had solely to the
assets of the Issuer.
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IN WITNESS WHEREOF, the parties hereto have caused this Sale and
Servicing Agreement to be duly executed by their respective officers as of the
day and year first above written.
ANRC AUTO OWNER TRUST___,
as Issuer
By:________________________________________________,
not in its individual capacity but solely as
Owner Trustee
By:________________________________________________
Name:
Title:
AUTONATION RECEIVABLES CORPORATION,
as Seller
By:_______________________________________________
Name:
Title:
AUTONATION FINANCIAL SERVICES CORP.,
as Servicer and as Custodian
By:________________________________________________
Name:
Title:
___________________________________________________,
as Indenture Trustee
By:________________________________________________
Name:
Title:
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EXHIBIT A
List of Contracts
-----------------
(Delivered to the Indenture Trustee at Closing)
EXHIBIT B
Location and Account Numbers of Trust Accounts
----------------------------------------------
EXHIBIT C
Distribution Date Statement
---------------------------