Exhibit 10.1
EXECUTION COPY
SALE AND SERVICING AGREEMENT
among
HYUNDAI AUTO RECEIVABLES TRUST 1998-A,
Issuer,
SSB VEHICLE SECURITIES INC.,
Depositor,
HYUNDAI MOTOR FINANCE COMPANY,
Seller and Servicer,
and
THE CHASE MANHATTAN BANK,
Indenture Trustee, Custodian, Administrator and Backup Servicer
Dated as of April 1, 1998
TABLE OF CONTENTS
Page
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ARTICLE I
DEFINITIONS
Section 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02. Other Definitional Provisions . . . . . . . . . . . . 23
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.01. Conveyance of Receivables . . . . . . . . . . . . . . 25
ARTICLE III
THE RECEIVABLES
Section 3.01. Representations and Warranties of the Seller . . . . 28
Section 3.02. Representations and Warranties of the Depositor . . . 28
Section 3.03. Repurchase Upon Breach . . . . . . . . . . . . . . . 29
Section 3.04. Custody of Custodial Files . . . . . . . . . . . . . 29
Section 3.05. Duties of the Custodian . . . . . . . . . . . . . . . 30
Section 3.06. Obligations of the Custodian . . . . . . . . . . . . 32
Section 3.07. Certification. . . . . . . . . . . . . . . . . . . . 32
Section 3.08. Future Defects. . . . . . . . . . . . . . . . . . . . 33
Section 3.09. Fees of Custodian. . . . . . . . . . . . . . . . . . 33
Section 3.10. Liability of Custodian. . . . . . . . . . . . . . . . 34
Section 3.11. Reliance of Custodian . . . . . . . . . . . . . . . . 34
Section 3.12. Transmission of Custodial Files . . . . . . . . . . . 34
Section 3.13. Resignation and Removal; Appointment of Successor . . 34
Section 3.14. Acceptance of Appointment by Successor . . . . . . . 35
Section 3.15. Merger, Conversion, Consolidation or Succession to
Business of Custodian . . . . . . . . . . . . . . . . 36
Section 3.16. Representations and Warranties of the Custodian . . . 36
Section 3.17. Custodian's Indemnification . . . . . . . . . . . . . 37
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 4.01. Duties of Servicer . . . . . . . . . . . . . . . . . 39
Section 4.02. Collection of Receivable Payments; Modifications of
Receivables . . . . . . . . . . . . . . . . . . . . . 40
Section 4.03. Realization upon Receivables . . . . . . . . . . . . 40
Section 4.04. Physical Damage Insurance . . . . . . . . . . . . . . 41
Section 4.05. Maintenance of Security Interests in Financed
Vehicles . . . . . . . . . . . . . . . . . . . . . . 41
Section 4.06. Covenants of Servicer . . . . . . . . . . . . . . . . 42
Section 4.07. Purchase of Receivables Upon Breach . . . . . . . . . 43
Section 4.08. Servicing Fee . . . . . . . . . . . . . . . . . . . . 43
Section 4.09. Servicer's Certificate . . . . . . . . . . . . . . . 44
Section 4.10. Annual Statement as to Compliance; Notice of
Servicer Termination Event . . . . . . . . . . . . . 44
Section 4.11. Annual Independent Accountants' Report . . . . . . . 44
Section 4.12. Access to Certain Documentation and Information
Regarding Receivables . . . . . . . . . . . . . . . . 45
Section 4.13. Monthly Tape . . . . . . . . . . . . . . . . . . . . 45
Section 4.14. Term of Servicer . . . . . . . . . . . . . . . . . . 46
Section 4.15. Status Report . . . . . . . . . . . . . . . . . . . . 46
ARTICLE V
DISTRIBUTIONS; STATEMENTS TO SECURITYHOLDERS
Section 5.01. Post Office Box . . . . . . . . . . . . . . . . . . . 47
Section 5.02. Accounts . . . . . . . . . . . . . . . . . . . . . . 47
Section 5.03. Application of Collections . . . . . . . . . . . . . 50
Section 5.04. Purchase Amounts . . . . . . . . . . . . . . . . . . 50
Section 5.05. (Reserved) . . . . . . . . . . . . . . . . . . . . . 50
Section 5.06. Distributions . . . . . . . . . . . . . . . . . . . . 50
Section 5.07. Yield Maintenance Account . . . . . . . . . . . . . . 52
Section 5.08. Reserve Account . . . . . . . . . . . . . . . . . . . 52
Section 5.09. Claims on the Policy . . . . . . . . . . . . . . . . 55
Section 5.10. Notices to the Note Insurer . . . . . . . . . . . . . 56
Section 5.11. Rights in Respect of Insolvency Proceedings . . . . . 56
Section 5.12. Effect of Payments by the Note Insurer;
Subrogation . . . . . . . . . . . . . . . . . . . . . 57
Section 5.13. Statements to Securityholders . . . . . . . . . . . . 57
Section 5.14. Pre-Funding Account . . . . . . . . . . . . . . . . . 59
Section 5.15. Capitalized Interest Account . . . . . . . . . . . . 60
ARTICLE VI
THE DEPOSITOR
Section 6.01. Representations of Depositor . . . . . . . . . . . . 61
Section 6.02. Corporate Existence . . . . . . . . . . . . . . . . . 62
Section 6.03. Liability of Depositor; Indemnities . . . . . . . . . 63
Section 6.04. Merger or Consolidation of, or Assumption of the
Obligations of, Depositor . . . . . . . . . . . . . . 63
Section 6.05. Limitation on Liability of Depositor and Others . . . 63
Section 6.06. Depositor May Own Securities . . . . . . . . . . . . 64
ARTICLE VII
THE SERVICER
Section 7.01. Representations of Servicer . . . . . . . . . . . . . 65
Section 7.02. Indemnities of Servicer . . . . . . . . . . . . . . . 66
Section 7.03. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer . . . . . . . . . . . . . . 67
Section 7.04. Limitation on Liability of Servicer, Backup
Servicer and Others . . . . . . . . . . . . . . . . . 68
Section 7.05. Appointment of Subservicer . . . . . . . . . . . . . 69
Section 7.06. Servicer and Backup Servicer Not to Resign . . . . . 70
Section 7.07. Backup Servicer . . . . . . . . . . . . . . . . . . . 71
Section 7.08. Liability of Backup Servicer. . . . . . . . . . . . . 71
Section 7.09. Reliance of Backup Servicer. . . . . . . . . . . . . 71
Section 7.10. Resignation and Removal; Appointment of
Successor. . . . . . . . . . . . . . . . . . . . . . 72
Section 7.11. Acceptance of Appointment by Successor. . . . . . . . 73
Section 7.12. Merger, Conversion, Consolidation or Succession to
Business of Backup Servicer. . . . . . . . . . . . . 73
Section 7.13. Representations and Warranties of the Backup
Servicer. . . . . . . . . . . . . . . . . . . . . . . 73
ARTICLE VIII
DEFAULT
Section 8.01. Servicer Termination Events . . . . . . . . . . . . . 75
Section 8.02. Consequences of a Servicer Termination Event . . . . 75
Section 8.03. Appointment of Successor . . . . . . . . . . . . . . 76
Section 8.04. Notification to Securityholders . . . . . . . . . . . 77
Section 8.05. Waiver of Past Defaults . . . . . . . . . . . . . . . 77
ARTICLE IX
TERMINATION
Section 9.01. Optional Purchase of All Receivables . . . . . . . . 78
ARTICLE X
MISCELLANEOUS
Section 10.01. Amendment . . . . . . . . . . . . . . . . . . . . . 79
Section 10.02. Protection of Title to Trust . . . . . . . . . . . . 80
Section 10.03. Notices . . . . . . . . . . . . . . . . . . . . . . 82
Section 10.04. Assignment by the Depositor or the Servicer . . . . 82
Section 10.05. Limitations on Rights of Others . . . . . . . . . . 82
Section 10.06. Severability . . . . . . . . . . . . . . . . . . . . 83
Section 10.07. Counterparts . . . . . . . . . . . . . . . . . . . . 83
Section 10.08. Headings . . . . . . . . . . . . . . . . . . . . . . 83
SECTION 10.09. GOVERNING LAW . . . . . . . . . . . . . . . . . . . 83
Section 10.10. Assignment by Issuer . . . . . . . . . . . . . . . . 83
Section 10.11. Nonpetition Covenants . . . . . . . . . . . . . . . 83
Section 10.12. Limitation of Liability of Owner Trustee and
Indenture Trustee . . . . . . . . . . . . . . . . . 84
Section 10.13. Servicer Payment Obligation . . . . . . . . . . . . 84
SCHEDULE A Schedule of Receivables
SCHEDULE B Location of the Receivable Files
EXHIBIT A Representations and Warranties of HMFC
EXHIBIT B Form of Distribution Date Statement to
Securityholders
EXHIBIT C Form of Servicer's Certificate
EXHIBIT D Form of Policy
EXHIBIT E Form of Subsequent Transfer Agreement
EXHIBIT F (Reserved)
EXHIBIT G Custodial Notice
EXHIBIT H Extension Policy
EXHIBIT I Cumulative Net Loss Rate Table
EXHIBIT J (Reserved)
EXHIBIT K Form of Dealer Agreement
EXHIBIT L Trigger and Reserve Events
EXHIBIT M Form of Request to Release Documents
EXHIBIT N Backup Servicer Duties
This SALE AND SERVICING AGREEMENT, dated as of April 1, 1998, among
HYUNDAI AUTO RECEIVABLES TRUST 1998-A, a Delaware business trust (the
"Issuer"), SSB VEHICLE SECURITIES INC., a Delaware corporation (the
"Depositor"), HYUNDAI MOTOR FINANCE COMPANY, a California corporation, as
servicer (in such capacity, the "Servicer") and as seller (in such capacity,
the "Seller"), and THE CHASE MANHATTAN BANK, a New York banking corporation,
as indenture trustee (in such capacity, the "Indenture Trustee"), as
administrator (in such capacity, the "Administrator"), as custodian (in such
capacity, the "Custodian") and as backup servicer (in such capacity, the
"Backup Servicer").
WHEREAS, the Issuer desires to purchase a portfolio of receivables
arising in connection with automobile retail installment sale contracts
generated by Hyundai Motor Finance Company in the ordinary course of business
and sold by Hyundai Motor Finance Company to the Depositor;
WHEREAS, the Depositor is willing to sell such receivables to the
Issuer; and
WHEREAS, Hyundai Motor Finance Company is willing to service such
receivables.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. Definitions. Whenever used in this Agreement, the
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following words and phrases, unless the context otherwise requires, shall
have the following meanings:
"Addition Notice" means, with respect to any transfer of Subsequent
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Receivables to the Trust pursuant to Section 2.01, notice of the Depositor's
election to transfer Subsequent Receivables to the Trust, such notice to
designate the Subsequent Transfer Date and the (1) Principal Balance of the
Subsequent Receivables (2) the Reserve Account Subsequent Deposit Amount and
(3) the Yield Maintenance Account Subsequent Deposit Amount to be transferred
on the Subsequent Transfer Date.
"Agreement" means this Sale and Servicing Agreement, as the same may be
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amended or supplemented from time to time.
"Amount Financed" means with respect to a Receivable, the amount
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advanced under the Receivable toward the purchase price of the Financed
Vehicle and any related costs, exclusive of any amount allocable to the
premium of force-placed physical damage insurance covering the Financed
Vehicle.
"Annual Percentage Rate" or "APR" of a Receivable means the annual rate
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of finance charges stated in the related Contract.
"Annualized Net Loss Ratio" means, as of any date of determination, the
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product of the Net Loss Ratio and 12.
"Backup Servicer" means The Chase Manhattan Bank, its successor in
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interest pursuant to Section 7.03(b) or such other Person as shall have been
appointed as Backup Servicer pursuant to Section 8.03(b).
"Basic Documents" means the Trust Agreement, the Certificate Trust
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Agreement, the Indenture, this Agreement, the Receivables Purchase Agreement,
the Administration Agreement, the Performance Guaranty, the Note Depository
Agreement, the Policy, the Insurance Agreement, the Subsequent Purchase
Agreement and the Subsequent Transfer Agreement and other documents and
certificates delivered in connection therewith.
"Business Day" means any day other than a Saturday, a Sunday or a day
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on which the Note Insurer or a commercial banking institution in the states
of California or New York are authorized or obligated by law or executive
order to remain closed.
"Capitalized Interest Account" means the account designated as such,
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established and maintained pursuant to Section 5.02(b)(vi).
"Capitalized Interest Distribution Amount" shall mean for each
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Determination Date and related Distribution Date during the Funding Period,
the amount equal to (A) the product of (i) 1/12, (ii) the Weighted Average
Note Rate and (iii) the amount equal to 87% of the amount by which the sum of
the Certificate Balance and the Note Balance exceeds the amount set forth in
clause (i) of the definition of Pool Balance as of the first day of the
related Collection Period (or in the case of the May 1998 Determination Date,
as of the Closing Date) less (B), the amount of Investment Earnings allocable
to the Pre-Funding Account and the Capitalized Interest Account.
"Capitalized Interest Initial Deposit" shall mean $349,265.34.
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"Certificate" means a certificate evidencing the beneficial interest of
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a Certificateholder in the Trust.
"Certificate Balance" equals, as of any date of determination, the Pool
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Balance minus the Note Balance.
"Certificate Distribution Account" has the meaning assigned to such term
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in the Trust Agreement.
"Certificate Pool Factor" means, as of the close of business on the last
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day of a Collection Period, a seven-digit decimal figure equal to the
Certificate Balance (after giving effect to any reductions therein to be made
on the immediately following Distribution Date) divided by the Initial
Certificate Balance. The Certificate Pool Factor will be 1.0000000 as of the
Closing Date; thereafter, the Certificate Pool Factor will decline to reflect
reductions in the Certificate Balance.
"Certificate Trust" means Hyundai Auto Business Trust 1998-1, a Delaware
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business trust.
"Certificateholders" has the meaning assigned to such term in the Trust
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Agreement.
"Class" means any one of the classes of Notes.
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"Class A-1 Final Scheduled Distribution Date" means the April 2001
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Distribution Date.
"Class A-1 Interest Carryover Shortfall" means, with respect to any
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Distribution Date, the amount, if any, by which the sum of the Class A-1
Monthly Interest Distributable Amount for the preceding Distribution Date and
any outstanding Class A-1 Interest Carryover Shortfall on such preceding
Distribution Date exceeds the amount in respect of interest actually
deposited in the Note Distribution Account on such preceding Distribution
Date, plus interest on the amount of interest due but not paid to the Class
A-1 Noteholders on such preceding Distribution Date, to the extent permitted
by law, at the Class A-1 Rate.
"Class A-1 Interest Distributable Amount" means, with respect to any
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Distribution Date, the sum of the Class A-1 Monthly Interest Distributable
Amount for such Distribution Date and the Class A-1 Interest Carryover
Shortfall for such Distribution Date. For all purposes of this Agreement and
the other Basic Documents, interest with respect to the Class A-1 Notes shall
be computed on the basis of a 360-day year consisting of twelve 30-day
months.
"Class A-1 Monthly Interest Distributable Amount" means, with respect
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to any Distribution Date, interest accrued from and including the 15th day of
the preceding calendar month (or, in the case of the first Distribution Date,
from and including the Closing Date) to and including the 14th day of the
calendar month in which such Distribution Date occurs, on the Class A-1 Notes
at the Class A-1 Rate on the Outstanding Amount of the Class A-1 Notes on the
immediately preceding Distribution Date (or, in the case of the first
Distribution Date, the Closing Date), after giving effect to all
distributions of principal to the Class A-1 Noteholders on or prior to such
preceding Distribution Date.
"Class A-1 Monthly Principal Distributable Amount" means, with respect
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to any Distribution Date until the Class A-1 Notes are paid in full, the Note
Percentage of the Regular Principal Distributable Amount.
"Class A-1 Noteholder" means the Person in whose name a Class A-1 Note
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is registered in the Note Register.
"Class A-1 Notes" means the 5.90% Asset Backed Notes, Class A-1,
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substantially in the form of Exhibit A-1 to the Indenture.
"Class A-1 Principal Carryover Shortfall" means, with respect to any
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Distribution Date, the amount, if any, by which the sum of the Class A-1
Monthly Principal Distributable Amount for the preceding Distribution Date
and any outstanding Class A-1 Principal Carryover Shortfall on such preceding
Distribution Date exceeds the amount in respect of principal actually
deposited in the Note Distribution Account on such preceding Distribution
Date.
"Class A-1 Principal Distributable Amount" means, with respect to any
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Distribution Date, the sum of the Class A-1 Monthly Principal Distributable
Amount and the Class A-1 Principal Carryover Shortfall; provided, however,
that the Class A-1 Principal Distributable Amount on any Distribution Date
shall not exceed the Outstanding Amount of the Class A-1 Notes on such
Distribution Date. In addition, on the Class A-1 Final Scheduled
Distribution Date, the principal required to be deposited in the Note
Distribution Account will include the amount necessary (after giving effect
to the other amounts to be deposited in the Note Distribution Account on such
Distribution Date and allocable to principal) to reduce the Outstanding
Amount of the Class A-1 Notes to zero.
"Class A-1 Rate" means 5.90% per annum, computed on the basis of a
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360-day year consisting of twelve 30-day months.
"Class A-2 Final Scheduled Distribution Date" means the July 2004
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Distribution Date.
"Class A-2 Interest Carryover Shortfall" means, with respect to any
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Distribution Date, the amount, if any, by which the sum of the Class A-2
Monthly Interest Distributable Amount for the preceding Distribution Date and
any outstanding Class A-2 Interest Carryover Shortfall on such preceding
Distribution Date exceeds the amount in respect of interest actually
deposited in the Note Distribution Account on such preceding Distribution
Date, plus interest on the amount of interest due but not paid to the Class
A-2 Noteholders on such preceding Distribution Date, to the extent permitted
by law, at the Class A-2 Rate.
"Class A-2 Interest Distributable Amount" means, with respect to any
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Distribution Date, the sum of the Class A-2 Monthly Interest Distributable
Amount for such Distribution Date and the Class A-2 Interest Carryover
Shortfall for such Distribution Date. For all purposes of this Agreement and
the other Basic Documents, interest with respect to the Class A-2 Notes shall
be computed on the basis of a 360-day year consisting of twelve 30-day
months.
"Class A-2 Monthly Interest Distributable Amount" means, with respect
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to any Distribution Date, interest accrued from and including the 15th day of
the preceding calendar month (or, in the case of the first Distribution Date,
from and including the Closing Date) to and including the 14th day of the
calendar month in which such Distribution Date occurs, on the Class A-2 Notes
at the Class A-2 Rate on the Outstanding Amount of the Class A-2 Notes on the
immediately preceding Distribution Date (or, in the case of the first
Distribution Date, the Closing Date), after giving effect to all
distributions of principal to the Class A-2 Noteholders on or prior to such
preceding Distribution Date.
"Class A-2 Monthly Principal Distributable Amount" means, with respect
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to any Distribution Date (i) prior to the Distribution Date on which the
Class A-1 Notes are paid in full, zero and (ii) on or after the Distribution
Date on which the Class A-1 Notes are paid in full the Note Percentage of the
Regular Principal Distributable Amount (less, on the Distribution Date on
which the Class A-1 Notes are paid in full, the portion thereof payable on
the Class A-1 Notes).
"Class A-2 Noteholder" means the Person in whose name a Class A-2 Note
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is registered in the Note Register.
"Class A-2 Notes" means the 6.05% Asset Backed Notes, Class A-2,
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substantially in the form of Exhibit A-2 to the Indenture.
"Class A-2 Principal Carryover Shortfall" means, with respect to any
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Distribution Date, the amount, if any, by which the sum of the Class A-2
Monthly Principal Distributable Amount for the preceding Distribution Date
and any outstanding Class A-2 Principal Carryover Shortfall on such preceding
Distribution Date exceeds the amount in respect of principal actually
deposited in the Note Distribution Account on such preceding Distribution
Date.
"Class A-2 Principal Distributable Amount" means, with respect to any
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Distribution Date, the sum of the Class A-2 Monthly Principal Distributable
Amount and the Class A-2 Principal Carryover Shortfall; provided, however,
that the Class A-2 Principal Distributable Amount on any Distribution Date
shall not exceed the Outstanding Amount of the Class A-2 Notes on such
Distribution Date. In addition, on the Class A-2 Final Scheduled
Distribution Date, the principal required to be deposited in the Note
Distribution Account will include the amount necessary (after giving effect
to the other amounts to be deposited in the Note Distribution Account on such
Distribution Date and allocable to principal) to reduce the Outstanding
Amount of the Class A-2 Notes to zero.
"Class A-2 Rate" means 6.05% per annum, computed on the basis of a
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360-day year consisting of twelve 30-day months.
"Closing Date " means April 16, 1998.
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"Collateral" has the meaning specified in the Granting Clause of the
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Indenture.
"Collection Account" means the account designated as such, established
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and maintained pursuant to Section 5.02(b)(i).
"Collection Period" means with respect to any Distribution Date other
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than the first Distribution Date, the calendar month preceding such
Distribution Date. The Collection Period with respect to the first
Distribution Date will be the period from and including the Initial Cutoff
Date to and including April 30, 1998. Any amount stated as of the last day
of a Collection Period or as of the first day of a Collection Period shall
give effect to the following calculations as determined as of the close of
business on such last day: (i) all applications of collections and (ii) all
distributions to be made on the following Distribution Date.
"Contract" means a motor vehicle retail installment sale contract.
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"Controlling Party" means (i) as long as the Policy is in effect and no
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Note Insurer Default has occurred and is continuing, the Note Insurer, (ii)
if (a) a Note Insurer Default has occurred and is continuing or the Policy is
otherwise no longer in effect and (b) the Notes have not been paid in full,
the Indenture Trustee for the benefit of the Noteholders and (iii) if (a) a
Note Insurer Default has occurred and is continuing and (b) the Notes have
been paid in full, the Owner Trustee for the benefit of the
Certificateholders.
"Corporate Trust Administration Department" shall have the meaning set
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forth in the Trust Agreement.
"Corporate Trust Office" shall have the meaning set forth in the
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Indenture.
"Cram Down Loss" means any loss resulting from an order issued by a
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court of appropriate jurisdiction in an insolvency proceeding that reduces
the amount owed on a Receivable or otherwise modifies or restructures the
scheduled payments to be made thereon. The amount of any such Cram Down Loss
will equal the excess of (i) the Principal Balance of the Receivable
immediately prior to such order over (ii) the Principal Balance of such
Receivable as so reduced, modified or restructured. A Cram Down Loss will be
deemed to have occurred on the date of issuance of such order.
"Credit and Collection Policy" means the credit and collection policy
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of HMFC as in effect as of the Closing Date unless the context indicates
otherwise (a copy of which has been delivered to the Note Insurer) and any
subsequent amendments thereto which shall be delivered to the Note Insurer at
the time of its annual review of the Servicer.
"Cumulative Net Loss Ratio" means, as of any date of determination, a
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fraction (expressed as a percentage), the numerator of which is the aggregate
Principal Balance of Receivables that became Liquidated Receivables during
the period from the end of the Funding Period through the close of business
on the last day of the related Collection Period minus all Liquidation
Proceeds received during the same period, and the denominator of which is the
Initial Pool Balance.
"Cumulative Net Loss Ratio Table" means the table set forth in Exhibit
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I hereto.
"Custodial Files" shall have the meaning set forth in Section 3.04.
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"Custodian" means The Chase Manhattan Bank, or any successor thereto,
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or any other custodian of the receivables appointed pursuant hereto, as
custodian of the Receivables.
"Cutoff Date" means the Initial Cutoff Date or the Subsequent Cutoff
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Date, as the context may require.
"Dealer" means the dealer who sold a Financed Vehicle and who originated
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the related Receivable and assigned it to HMFC pursuant to a Dealer
Agreement.
"Dealer Agreement" means an agreement between HMFC and a Dealer pursuant
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to which such Dealer sells Contracts to HMFC.
"Deemed Cured" means, as of any date of determination, no Reserve Event
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occurred or was in existence with respect to any of the three immediately
preceding Collection Periods.
"Deficiency Amount" means on any Distribution Date, the sum of (a) the
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amount by which the Noteholders' Interest Distributable Amount exceeds the
sum of (x) the Total Distribution Amount remaining after the payment of
clauses (i) and (ii) of Section 5.06(b) and (y) the amounts on deposit in the
Reserve Account and (b) (i) the amount by which the Note Balance (after
taking into account all distributions of principal to be made on such
Distribution Date) exceeds the Pool Balance as of the close of business on
the last day of the preceding Collection Period; or (ii) (a) on the Class A-1
Final Scheduled Distribution Date, the amount by which the Class A-1 Note
Balance exceeds the sum of (x) the Total Distribution Amount remaining after
the payment of (i) through (iv) under Section 5.06(b) and (y) the amounts on
deposit in the Reserve Account and (b) on the Class A-2 Final Scheduled
Distribution Date, the amount by which the Class A-2 Note Balance exceeds the
sum of (x) the Total Distribution Amount remaining after the payment of (i)
through (iv) under Section 5.06(b) and (y) the amounts on deposit in the
Reserve Account.
"Deficiency Claim Date" means, with respect to each Distribution Date,
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the third Business Day preceding such Distribution Date.
"Delinquency Ratio" means, as of any date of determination, the ratio
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(expressed as a percentage), the numerator of which is the aggregate number
of all Receivables that were Delinquent Receivables during the related
Collection Period, and the denominator of which is the aggregate number of
Receivables as of the last day of such Collection Period, excluding
Receivables with respect to which the related Financed Vehicle has been
repossessed and Liquidated Receivables.
"Delinquent Receivable" means a Receivable with respect to which more
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than 20% of any Scheduled Payment is more than 30 days delinquent as of the
last day of the related Collection Period, excluding Receivables with respect
to which the related Financed Vehicle has been repossessed and Liquidated
Receivables.
"Delivery" when used with respect to Trust Account Property means:
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(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9-105(1)(i) of the UCC and
are susceptible of physical delivery, transfer thereof to the Indenture
Trustee by physical delivery to the Indenture Trustee endorsed to, or
registered in the name of, the Indenture Trustee or endorsed in blank,
and, with respect to a certificated security (as defined in
Section 8-102 of the UCC) transfer thereof (i) by delivery of such
certificated security endorsed to, or registered in the name of, the
Indenture Trustee or (ii) by delivery thereof to a "clearing
corporation" (as defined in Section 8-102 of the UCC) and the making by
such clearing corporation of appropriate entries on its books reducing
the appropriate securities account of the transferor and increasing the
appropriate securities account of the Indenture Trustee by the amount of
such certificated security and the identification by the clearing
corporation of the certificated securities for the sole and exclusive
account of the Indenture Trustee (all of the foregoing, "Physical
Property"), and, in any event, any such Physical Property in registered
form shall be in the name of the Indenture Trustee; and such additional
or alternative procedures as may hereafter become appropriate to effect
the complete transfer of ownership of any such Trust Account Property to
the Indenture Trustee or its nominee or custodian, consistent with
changes in applicable law or regulations or the interpretation thereof;
(b) with respect to any security issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National
Mortgage Association that is a book-entry security held through the
Federal Reserve System pursuant to federal book-entry regulations, the
following procedures, all in accordance with applicable law, including
applicable federal regulations and Articles 8 and 9 of the UCC: book-
entry registration of such Trust Account Property to an appropriate
book-entry account maintained with a Federal Reserve Bank by a
securities intermediary that is also a "depository" pursuant to
applicable federal regulations; the making by such securities
intermediary of entries in its books and records crediting such Trust
Account Property to the Indenture Trustee's security account at the
securities intermediary and identifying such book-entry security held
through the Federal Reserve System pursuant to federal book-entry
regulations as belonging to the Indenture Trustee; and such additional
or alternative procedures as may hereafter become appropriate to effect
complete transfer of ownership of any such Trust Account Property to the
Indenture Trustee, consistent with changes in applicable law or
regulations or the interpretation thereof; and
(c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not
governed by clause (b) above, registration on the books and records of
the issuer thereof in the name of the Indenture Trustee or its nominee
or custodian who either (i) becomes the registered owner on behalf of
the Indenture Trustee or (ii) having previously become the registered
owner, acknowledges that it holds for the Indenture Trustee.
"Depositor" means SSB and its successors in interest.
---------
"Determination Date" means, with respect to each Distribution Date, the
------------------
earlier of (i) the eighth calendar day of the month in which such
Distribution Date occurs (or if such eighth day is not a Business Day, the
next succeeding Business Day) and (ii) the fifth Business Day preceding such
Distribution Date.
"Distribution Date" means, with respect to each Collection Period, the
-----------------
fifteenth day of the following month or, if such day is not a Business Day,
the immediately following Business Day, commencing on May 15, 1998.
"Eligible Deposit Account" means either (a) a segregated account with
------------------------
an Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States of America or any State, having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution shall have a credit rating from
each Rating Agency in one of its generic rating categories that signifies
investment grade.
"Eligible Institution" means (a) the corporate trust department of the
--------------------
Indenture Trustee or the Owner Trustee or (b) a depository institution
organized under the laws of the United States of America or any State, that
(i) has either (A) a long-term unsecured debt rating acceptable to each
Rating Agency and, so long as a Note Insurer Default shall not have occurred
and be continuing, the Note Insurer or (B) a short-term unsecured debt rating
or certificate of deposit rating acceptable to each Rating Agency and, so
long as a Note Insurer Default shall not have occurred and be continuing, the
Note Insurer and (ii) the deposits of which are insured by the FDIC.
"Eligible Investments" means book-entry securities, negotiable
--------------------
instruments or securities represented by instruments in bearer or registered
form that are acceptable to the Note Insurer and that evidence:
(a) direct obligations of, and obligations fully guaranteed as to
the full and timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit of
any depository institution or trust company incorporated under the laws
of the United States of America or any State (or any domestic branch of
a foreign bank) and subject to supervision and examination by federal or
state banking or depository institution authorities; provided, however,
that at the time of the investment or contractual commitment to invest
therein, the commercial paper or other short-term unsecured debt
obligations (other than such obligations the rating of which is based on
the credit of a Person other than such depository institution or trust
company) thereof shall have a credit rating from each Rating Agency in
the highest investment category granted thereby;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each Rating
Agency in the highest investment category granted thereby;
(d) investments in money market funds having a rating from each
Rating Agency in the highest investment category granted thereby
(including funds for which the Indenture Trustee or the Owner Trustee or
any of their respective Affiliates is investment manager or advisor)
and, so long as a Note Insurer Default shall not have occurred and be
continuing, having been approved by the Note Insurer;
(e) bankers' acceptances issued by any depository institution or
trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a
direct obligation of, or fully guaranteed by, the United States of
America or any agency or instrumentality thereof the obligations of
which are backed by the full faith and credit of the United States of
America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (b);
(g) any other investment with respect to which the Issuer, the
Indenture Trustee or the Servicer has received written notification from
each Rating Agency that the acquisition of such investment will satisfy
the Rating Agency Condition, and, so long as a Note Insurer Default
shall not have occurred and be continuing, which is acceptable to the
Note Insurer.
"Eligible Servicer" means Hyundai Motor Finance Company, the Backup
-----------------
Servicer or any other Person that at the time of its appointment as Servicer
(i) is servicing a portfolio of motor vehicle retail installment sale
contracts or motor vehicle installment loans, (ii) is legally qualified and
has the capacity to service the Receivables, (iii) has demonstrated the
ability professionally and competently to service a portfolio of motor
vehicle retail installment sale contracts or motor vehicle installment loans
similar to the Receivables with reasonable skill and care, (iv) has a minimum
net worth of $100,000,000 or has been approved by the Note Insurer and (v),
so long as a Note Insurer Default shall not have occurred and be continuing,
is acceptable to the Note Insurer.
"Extension Policy" shall mean the policies of the Servicer with respect
----------------
to granting extensions on the Contracts as set forth on Exhibit H hereto.
"Extension Ratio" means, as of any date of determination, the ratio
---------------
(expressed as a percentage), the numerator of which is the aggregate number
of extensions granted during the related Collection Period, and the
denominator of which is the aggregate number of outstanding Receivables as of
the last day of the related Collection Period, excluding all Receivables that
became Liquidated Receivables during such Collection Period.
"FDIC" means the Federal Deposit Insurance Corporation, and its
----
successors.
"Fee Letter" means the letter regarding fees dated April 16, 1998
----------
between The Chase Manhattan Bank and HMFC.
"Final Scheduled Maturity Date" means April 15, 2004.
-----------------------------
"Financed Vehicle" means a new or used automobile, light-duty truck, van
----------------
or minivan, together with all accessions thereto, securing an Obligor's
indebtedness under the related Contract.
"Fiscal Agent" shall have the meaning specified in the Policy.
------------
"Funding Period" means the period beginning on and including the Closing
--------------
Date and ending on and including the first to occur of (a) the Determination
Date on which the amount on deposit in the Pre-Funding Account (after giving
effect to any transfers therefrom in connection with the transfer of
Subsequent Receivables to the Issuer on such Determination Date) is less than
or equal to $100,000, (b) the date of occurrence of a Servicer Termination
Event or an Event of Default under the Indenture, (c) the Determination Date
with respect to the July 1998 Distribution Date or (d) the Subsequent
Transfer Date.
"HMC" means Hyundai Motor Company.
---
"HMFC" means Hyundai Motor Finance Company, a California corporation,
----
and its successors.
"Indenture" means the Indenture, dated as of April 1, 1998, between the
---------
Issuer and the Indenture Trustee.
"Indenture Trustee" means the Person acting as Indenture Trustee under
-----------------
the Indenture, its successors in interest and any successor trustee under the
Indenture.
"Initial Certificate Balance" means $44,850,000.
---------------------------
"Initial Class A-1 Note Balance" means $220,000,000.
------------------------------
"Initial Class A-2 Note Balance" means $80,150,000.
------------------------------
"Initial Cutoff Date" means March 16, 1998.
-------------------
"Initial Pool Balance" means an amount equal to the sum of (i) the
--------------------
aggregate Principal Balance of the Initial Receivables as of the Initial
Cutoff Date and (ii) the aggregate Principal Balance of all Subsequent
Receivables as of their Subsequent Cutoff Date.
"Initial Receivable" means any Contract listed on Schedule A (which
------------------
Schedule may be in the form of microfiche).
"Insolvency Event" means, with respect to a specified Person, (a) the
----------------
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in
an involuntary case under any applicable federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, and such
decree or order shall remain unstayed and in effect for a period of
60 consecutive days; or (b) the commencement by such Person of a voluntary
case under any applicable federal or state bankruptcy, insolvency or other
similar law now or hereafter in effect, or the consent by such Person to the
entry of an order for relief in an involuntary case under any such law, or
the consent by such Person to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or the
making by such Person of any general assignment for the benefit of creditors,
or the failure by such Person generally to pay its debts as such debts become
due, or the taking of action by such Person in furtherance of any of the
foregoing.
"Insurance Agreement" means the Insurance Agreement dated as of April
-------------------
1, 1998 among the Note Insurer, the Issuer, HMFC, the Owner Trustee, the
Indenture Trustee, the Depositor, the Backup Servicer, the Custodian and the
Administrator.
"Insurance Documents" mean the Insurance Agreement and the Policy.
-------------------
"Insurance Premium" shall have the meaning set forth in the Insurance
-----------------
Agreement.
"Insured Payment" means, the sum of (i) as of any Distribution Date, any
---------------
Deficiency Amount and (ii) any Preference Amount.
"Interest Distribution Amount" means, with respect to any Distribution
----------------------------
Date, the sum of the following amounts, without duplication, with respect to
the Receivables in respect of the Collection Period preceding such
Distribution Date: (a) that portion of all collections on Receivables
allocable to interest, (b) Liquidation Proceeds with respect to the
Receivables to the extent allocable to interest due thereon, (c) the Purchase
Amount of each Receivable that became a Purchased Receivable during such
Collection Period to the extent attributable to accrued interest on such
Receivable, (d) Investment Earnings for the related Distribution Date, (e)
Liquidation Proceeds for such Collection Period to the extent allocable to
interest, (f) any Yield Maintenance Payment, (g) the Capitalized Interest
Distribution Amount; (h) extension fees collected from an Obligor in
connection with the extension of a Receivable and (i) Net Investment Losses
required to be deposited by the Servicer; provided, however, that in
calculating the Interest Distribution Amount the following will be excluded:
all payments and proceeds (including Liquidation Proceeds) of any Purchased
Receivables the Purchase Amount of which has been included in the Interest
Distribution Amount in a prior Collection Period.
"Inventory Ratio" means, as of any date of determination, the ratio
---------------
(expressed as a percentage), the numerator of which is the aggregate number
of Financed Vehicles that have been repossessed but have not been sold, and
the denominator of which is the aggregate number of Receivables as of the end
of the most recently completed Collection Period, excluding Receivables that
became Liquidated Receivables during such Collection Period.
"Investment Earnings" means, with respect to any Distribution Date, any
-------------------
investment earnings (net of losses and investment expenses) on amounts on
deposit in a Trust Account to be deposited into the Collection Account on
such Distribution Date pursuant to Section 5.02(b).
"Issuer" means Hyundai Auto Receivables Trust 1998-A.
------
"Lien" means a security interest, lien, charge, pledge, equity or
----
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Receivable by operation of law as a result of
any act or omission by the related Obligor.
"Liquidated Receivable" means a Receivable with respect to which the
---------------------
earlier of the following shall have occurred: (i) more than 20% of a payment
due under the related Contract is 120 or more days delinquent, (ii) the
related Financed Vehicle has been repossessed for 30 days or more or (iii)
the Servicer has determined in accordance with the Credit and Collections
Policy that eventual payment in full of the Amount Financed is unlikely.
"Liquidation Proceeds" means, with respect to any Receivable that
--------------------
becomes a Liquidated Receivable, the moneys collected in respect thereof,
from whatever source, during or after the Collection Period in which such
Receivable became a Liquidated Receivable, including liquidation of the
related Financed Vehicle, net of the sum of any reasonable out-of-pocket
expenses of the Servicer in connection with such liquidation and any amounts
required by law to be remitted to the Obligor on such Liquidated Receivable.
"Local Remittance Account" shall have the meaning provided in Section
------------------------
5.02(a).
"Mandatory Redemption Date" means the Distribution Date immediately
-------------------------
following the last day of the Funding Period.
"Moody's" means Xxxxx'x Investors Service, Inc., and its successors.
-------
"Net Investment Losses": With respect to a Trust Account and any
---------------------
Collection Period, the amount, if any, by which the aggregate of all losses
and expenses incurred during such period in connection with the investment of
funds in Eligible Investments in accordance with Section 5.02(b) exceeds the
aggregate of all interest and other income realized during such period on
such funds.
"Net Loss Ratio" means, as of any date of determination, the ratio
--------------
(expressed as a percentage), the numerator of which is (a) the aggregate
Principal Balance of all Receivables that became Liquidated Receivables
during the related Collection Period minus (b) all Liquidation Proceeds
received during such Collection Period, and the denominator of which is the
Pool Balance as of the last day of such Collection Period.
"Note Balance" means, as of any date of determination, an amount equal
------------
to the sum of (i) the Initial Class A-1 Note Balance and (ii) the Initial
Class A-2 Note Balance, less all amounts distributed to Noteholders on or
prior to such date and allocable to principal.
"Note Distribution Account" means the account designated as such,
-------------------------
established and maintained pursuant to Section 5.02(b)(ii).
"Note Insurer" means MBIA Insurance Corporation, a New York stock
------------
insurance company, and its successors.
"Note Insurer Default" means any one of the following events shall have
--------------------
occurred and be continuing:
(a) the Note Insurer shall have failed to make a required payment
when due under the Policy;
(b) the Note Insurer shall have (i) filed a petition or commenced
any case or proceeding under any provision or chapter of the United
States Bankruptcy Code, the New York State Insurance Law or any other
similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation, or reorganization, (ii) made a general
assignment for the benefit of its creditors or (iii) had an order for
relief entered against it under the United States Bankruptcy Code, the
New York State Insurance Law or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation, or
reorganization that is final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department of
Insurance or any other competent regulatory authority shall have entered
a final and nonappealable order, judgment or decree (i) appointing a
custodian, trustee, agent, or receiver for the Note Insurer or for all
or any material portion of its property or (ii) authorizing the taking
of possession by a custodian, trustee, agent, or receiver of the Note
Insurer or of all or any material portion of its property.
"Note Percentage" means, on any Distribution Date, the percentage equal
---------------
to the Note Balance divided by the Pool Balance.
"Note Pool Factor" means, with respect to each Class of Notes as of the
----------------
close of business on the last day of a Collection Period, a seven-digit
decimal figure equal to the Outstanding Amount of such Class of Notes (after
giving effect to any reductions thereof to be made on the immediately
following Distribution Date) divided by the original Outstanding Amount of
such Class of Notes. The Note Pool Factor will be 1.0000000 as of the
Closing Date; thereafter, the Note Pool Factor will decline to reflect
reductions in the Outstanding Amount of such Class of Notes.
"Noteholders" shall mean the Class A-1 Noteholders or the Class A-2
-----------
Noteholders.
"Noteholders' Distributable Amount" means, with respect to any
---------------------------------
Distribution Date, the sum of the Noteholders' Interest Distributable Amount
and the Noteholders' Principal Distributable Amount.
"Noteholders' Interest Distributable Amount" means, with respect to any
------------------------------------------
Distribution Date, the sum of the Class A-1 Interest Distributable Amount for
such Distribution Date and the Class A-2 Interest Distributable Amount for
such Distribution Date.
"Noteholders' Principal Distributable Amount" means, with respect to any
-------------------------------------------
Distribution Date, the sum of the Class A-1 Principal Distributable Amount
for such Distribution Date and the Class A-2 Principal Distributable Amount
for such Distribution Date.
"Notice" means the telephonic or telegraphic notice, promptly confirmed
------
in writing by telecopy substantially in the form of Exhibit A attached to the
Policy, the original of which is subsequently delivered by registered or
certified mail, from the Indenture Trustee specifying the Insured Payment
that shall be due and owing on the applicable Distribution Date.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
-------
related Financed Vehicle, and any other Person obligated to make payments
thereunder.
"Officers' Certificate" means a certificate signed by (a) the chairman
---------------------
of the board, any vice president, the controller or any assistant controller
and (b) the president, a treasurer, assistant treasurer, secretary or
assistant secretary of the Depositor or the Servicer, as appropriate.
"Opinion of Counsel" means one or more written opinions of counsel, in
------------------
form and substance acceptable to the Note Insurer, who may be an employee of
or counsel to the Depositor or the Servicer, which counsel shall be
acceptable to the Note Insurer and the Indenture Trustee, the Owner Trustee
or the Rating Agencies, as applicable and which shall be addressed to the
Note Insurer, the Owner Trustee and the Indenture Trustee.
"Outstanding Amount" means, as of any date of determination, the
------------------
aggregate principal amount of a Class of Notes outstanding as of such date of
determination.
"Overcollateralization Ratio" means, as of any date of determination,
---------------------------
the ratio (expressed as a percentage), the numerator of which is the Note
Balance as of such date, and the denominator of which is the Pool Balance as
of such date.
"Owner Trustee" means Wilmington Trust Company, acting not in its
-------------
individual capacity but solely as owner trustee under the Trust Agreement.
"Performance Guaranty" means the guaranty dated April 1, 1998 of HMC to
--------------------
the Note Insurer and other beneficiaries.
"Physical Property" has the meaning assigned to such term in the
-----------------
definition of "Delivery" above.
"Policy" means the financial guaranty insurance policy issued by the
------
Note Insurer with respect to the Notes, including any endorsements thereto,
in the form of Exhibit D hereto.
"Pool Balance" means, with respect to any Distribution Date, an amount
------------
equal to the sum of (i) the aggregate Principal Balance of the Receivables at
the end of the related Collection Period, after giving effect to all payments
of principal received from Obligors and Purchase Amounts to be remitted by
the Servicer for such Collection Period, and after adjustment for Cram Down
Losses and reduction to zero of the aggregate outstanding Principal Balance
of all Receivables that became Liquidated Receivables during such Collection
Period and (ii) the Pre-Funded Amount, if any.
"Post Office Box" means any post office boxes maintained by Citibank
---------------
N.A., to which payments on receivables owned or serviced by HMFC are or will
be sent.
"Precomputed Receivable" means any Receivable under which the portion
----------------------
of a payment allocable to earned interest (which may be referred to in the
related Contract as an add-on finance charge) and the portion allocable to
the Amount Financed is determined according to the sum of periodic balances
or the sum of monthly balances or any equivalent method or are monthly
actuarial receivables.
"Pre-Funded Amount" means the amount on deposit in the Pre-Funding
-----------------
Account, which shall initially be $46,545,439.07.
"Pre-Funded Percentage" means, with respect to a Class of Notes, the
---------------------
ratio (expressed as a percentage), the numerator of which is the Outstanding
Amount of such Class of Notes as of the preceding Distribution Date and the
denominator of which is the Note Balance as of the preceding Distribution
Date.
"Pre-Funding Account" means the account designated as such, established
-------------------
and maintained pursuant to Section 5.02(b)(iii).
"Preference Amount" means 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, as amended from time to time, in accordance with a final
nonappealable order of a court of competent jurisdiction.
"Preference Claim" shall have the meaning assigned hereto in Section
----------------
5.11(b).
"Principal Balance" means, with respect to any Receivable and a
-----------------
Determination Date, the Amount Financed minus an amount equal to the sum, as
of the close of business on the last day of the related Collection Period, of
(1) that portion of all amounts received on or prior to such day with respect
to such Receivable and allocable to principal using the actuarial method
(with respect to Precomputed Receivables) or the Simple Interest Method (with
respect to Simple Interest Receivables), as applicable, and (2) any Cram Down
Losses with respect to such Receivable.
"Purchase Amount" means, with respect to any Receivable that became a
---------------
Purchased Receivable, the unpaid principal balance owed by the Obligor
thereon plus interest on such amount at the applicable APR to the last day of
the month of repurchase.
"Purchased Receivable" means a Receivable purchased as of the close of
--------------------
business on the last day of a Collection Period by or on behalf of the
Servicer pursuant to Section 4.07 or by or on behalf of the Seller pursuant
to the Receivables Purchase Agreement.
"Rating Agency" means Moody's or Standard & Poor's, as the context may
-------------
require. If none of Moody's, Standard & Poor's or a successor thereto
remains in existence, "Rating Agency" shall mean any nationally recognized
statistical rating organization or other comparable Person designated by the
Depositor and, so long as a Note Insurer Default shall not have occurred and
be continuing, with the prior written consent of the Note Insurer, written
notice of which designation shall be given to the Owner Trustee, the
Indenture Trustee, the Servicer and the Note Insurer.
"Rating Agency Condition" means, with respect to any action, that each
-----------------------
Rating Agency shall have been given 10 days' (or such shorter period as shall
be acceptable to each Rating Agency) prior notice thereof and that each
Rating Agency shall not have notified the Issuer, the Indenture Trustee or
the Note Insurer (if the Note Insurer is the Controlling Party) in writing
that such action will result in a reduction, withdrawal or down-grade of the
then-current rating of each class of Notes, or in an increased capital charge
to the Note Insurer.
"Realized Losses" means, with respect to any Receivable that becomes a
---------------
Liquidated Receivable, the excess of the Principal Balance thereof over the
portion of related Liquidation Proceeds allocable to principal.
"Receivable Files" means the following documents with respect to each
----------------
Financed Vehicle:
(i) the fully executed original of each Receivable (together with
any agreements modifying each such Receivable, including any extension
agreement);
(ii) the original credit application, or a copy thereof, fully
executed by each Obligor thereon;
(iii) the original certificate of title or such other documents
evidencing the security interest of the Seller in the related Financed
Vehicle; and
(iv) any and all other documents that the Servicer shall have kept
on file in accordance with its customary procedures relating to the
Receivables, the Obligors or the Financed Vehicles.
"Receivables" means the Initial Receivables and the Subsequent
-----------
Receivables.
"Receivables Purchase Agreement" means the Receivables Purchase
------------------------------
Agreement dated as of April 1, 1998, between HMFC, as seller, and SSB, as
Depositor.
"Record Date" means, as to any Distribution Date, the day immediately
-----------
preceding such Distribution Date.
"Regular Principal Distributable Amount" means, with respect to any
--------------------------------------
Distribution Date, the sum of the following amounts, without duplication,
with respect to the Receivables in respect of the related Collection Period:
(i) that portion of all collections on the Receivables allocable to
principal, (ii) the aggregate outstanding principal balance of all
Receivables that became Liquidated Receivables during such Collection Period,
(iii) that portion allocable to principal of the aggregate amount of any Cram
Down Losses and (iv) that portion allocable to principal of the Purchase
Amount of all Receivables that became Purchased Receivables during or in
respect of such Collection Period.
"Reimbursement Obligations" means the sum of (i) any unreimbursed
-------------------------
payments made by the Note Insurer under the Policy, (ii) any expense paid by
the Note Insurer pursuant to Section 4.05, (iii) any unpaid Insurance
Premium, and (iv) all other amounts due to the Note 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).
"Request for Release of Documents" means the request substantially in
--------------------------------
the form of Exhibit M.
"Required Rate" means the sum of (i) the Weighted Average Note Rate,
-------------
(ii) the Servicing Fee Rate, (iii) the rate at which the Insurance Premium is
calculated, and (iv) the sum of the Trustee Fee Rates.
"Reserve Account" means the account designated as such, established by
---------------
the Issuer and maintained by the Indenture Trustee pursuant to Section
5.02(b)(v).
"Reserve Account Claim Amount" shall have the meaning set forth in
----------------------------
Section 5.08(b).
"Reserve Account Claim Notice" shall have the meaning set forth in
----------------------------
Section 5.08(b).
"Reserve Account Initial Deposit" means the product of (a) 6% and (b)
-------------------------------
clause (i) of the definition of Initial Pool Balance.
"Reserve Account Percentage" shall have the meaning set forth in Exhibit
--------------------------
L.
"Reserve Account Property" means the Reserve Account Initial Deposit and
------------------------
all other amounts deposited in or credited to the Reserve Account from time
to time.
"Reserve Account Required Amount" shall have the meaning set forth in
-------------------------------
Exhibit L.
"Reserve Account Subsequent Deposit Amount" shall equal the product of
-----------------------------------------
the Reserve Account Percentage and the aggregate Principal Balance of the
Subsequent Receivables.
"Reserve Event" shall have the meaning set forth in Exhibit L.
-------------
"Responsible Officer" means the chairman of the board, the president,
-------------------
any executive vice president, any vice president, the treasurer, any
assistant treasurer, the secretary, or any assistant secretary of the
Servicer.
"Scheduled Payment" means, with respect to each Receivable, the
-----------------
scheduled monthly payment amount set forth in the related Contract and
required to be paid by the Obligor during each Collection Period.
"Securities" means the Notes and the Certificates.
----------
"Securities Intermediary" means The Chase Manhattan Bank, in its
-----------------------
capacity as the securities intermediary in the Securities Account Control
Agreement dated as of April 16, 1998.
"Securityholders" means the Noteholders and/or the Certificateholders,
---------------
as the context may require.
"Seller" means HMFC and its successors in interest as seller of the
------
Receivables to the Depositor pursuant to the Receivables Purchase Agreement
and the Subsequent Purchase Agreement.
"Senior Servicing Fee" means an amount equal to the sum of (i) the
--------------------
product of the Senior Servicing Fee Rate and the amount specified in clause
(i) of the definition of Pool Balance as of the first day of the related
Collection Period, and (ii) any late fees, prepayment charges (including, in
the case of a Receivable that provides for payments according to the "Rule of
78's" and that is prepaid in full, the difference between the Principal
Balance of such Receivable (plus accrued interest to the date of prepayment)
and the Principal Balance of such Receivable computed according to the Rule
of 78's), and other administrative fees or similar charges collected on the
Receivables.
"Senior Servicing Fee Rate" means (i) so long as HMFC is the Servicer,
-------------------------
1.5% per annum or (ii) if HMFC is not the Servicer, 3.0% per annum.
"Servicer" means HMFC, as the servicer of the Receivables, and each
--------
successor to HMFC (in the same capacity) pursuant to Section 7.03 or 8.03.
"Servicer Termination Event" shall have the meaning set forth in Section
--------------------------
8.01.
"Servicer's Certificate" means an Officers' Certificate of the Servicer
----------------------
delivered pursuant to Section 4.09, substantially in the form of Exhibit C.
"Servicing Fee" means the Senior Servicing Fee and the Subordinated
-------------
Servicing Fee.
"Servicing Fee Rate" means the Senior Servicing Fee Rate and the
------------------
Subordinated Servicing Fee Rate.
"Simple Interest Method" means the method of allocating the monthly
----------------------
payments received with respect to a Receivable to interest in an amount equal
to the product of (i) the applicable APR, (ii) the period of time (expressed
as a fraction of a year, based on the actual number of days in the calendar
month and 365 days in the calendar year) elapsed since the preceding payment
was made under such Receivable and (iii) the outstanding principal amount of
such Receivable, and allocating the remainder of each such monthly payment to
principal.
"Simple Interest Receivable" means any Receivable under which the
--------------------------
portion of a payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"SSB" means SSB Vehicle Securities Inc., a Delaware corporation, and its
---
successors.
"Standard & Poor's" means Standard & Poor's, a division of The McGraw
-----------------
Hill Companies, Inc., and its successors.
"Subordinated Servicing Fee" means an amount equal to the product of the
--------------------------
Subordinated Servicing Fee Rate and the amount specified in clause (i) of the
definition of Pool Balance as of the first day of the related Collection
Period.
"Subordinated Servicing Fee Rate" means (i) so long as HMFC is the
-------------------------------
Servicer, 1.5% per annum and (ii) if HMFC is not the Servicer, 0% per annum.
"Subsequent Closing Date" shall have the meaning assigned to such term
-----------------------
in the Subsequent Purchase Agreement.
"Subsequent Cutoff Date" means the date as of which Subsequent
----------------------
Receivables are conveyed to the Trust pursuant to Section 2.01.
"Subsequent Purchase Agreement" shall have the meaning assigned to such
-----------------------------
term in the Receivables Purchase Agreement.
"Subsequent Receivables" means the Contracts transferred to the Issuer
----------------------
pursuant to Section 2.01, which shall be listed on Schedule A to the
Subsequent Transfer Agreement.
"Subsequent Transfer Agreement" shall have the meaning assigned hereto
-----------------------------
in Section 2.01(b).
"Subsequent Transfer Date" means the date designated by the Depositor
------------------------
during the Funding Period on which Subsequent Receivables are to be
transferred to the Issuer in accordance with Section 2.01 and pursuant to the
Subsequent Transfer Agreement.
"Total Distribution Amount" means, for each Distribution Date, the sum
-------------------------
of the related Interest Distribution Amount and the related Regular Principal
Distributable Amount (other than the portion thereof attributable to Realized
Losses or Cram Down Losses).
"Trigger Event" shall have the meaning set forth in Exhibit L.
-------------
"Trust" means the Issuer.
-----
"Trust Account Property" means the Trust Accounts, all amounts and
----------------------
investments held from time to time in any Trust Account and all proceeds of
the foregoing.
"Trust Accounts" shall mean the Collection Account, the Note
--------------
Distribution Account, the Reserve Account, the Capitalized Interest Account,
the Yield Maintenance Account and the Pre-Funding Account.
"Trust Agreement" means the Amended and Restated Trust Agreement, dated
---------------
as of April 1, 1998, between the Depositor and the Owner Trustee.
"Trustee Fee Rates" means the rates at which the fees and expenses are
-----------------
due to the Indenture Trustee, the Owner Trustee, the Administrator (to the
extent such fees and expenses are related to the Trust, as set forth in the
Fee Letter) and the Custodian; provided that the aggregate of the rates at
which such fees and expenses accrue shall not exceed 0.25% per annum.
"Trust Officer" means, in the case of the Indenture Trustee or the
-------------
Backup Servicer, any Officer within the Corporate Trust Office of the
Indenture Trustee or the Backup Servicer, as the case may be, including any
Assistant Vice President, Assistant Treasurer, Assistant Secretary or any
other officer of the Indenture Trustee customarily performing functions
similar to those performed by any of the above designated officers and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject and, with respect to the Owner Trustee, any officer in the
Corporate Trust Administration Department of the Owner Trustee with direct
responsibility for the administration of the Trust Agreement and the other
Basic Documents on behalf of the Owner Trustee.
"Weighted Average Note Rate" means the percentage equivalent of a
--------------------------
fraction, the numerator of which is the sum of (i) the product of the Class
A-1 Rate times the Initial Class A-1 Note Balance plus (ii) the product of
the Class A-2 Rate times the Initial Class A-2 Note Balance, and the
denominator of which is the sum of the Initial Class A-1 Note Balance and the
Initial Class A-2 Note Balance.
"Yield Maintenance Account" means the account designated as such,
-------------------------
established by the Issuer and maintained by the Indenture Trustee pursuant to
Section 5.02(b)(iv).
"Yield Maintenance Account Subsequent Deposit Amount" means on the
---------------------------------------------------
Subsequent Transfer Date, an amount, to be deposited into the Yield
Maintenance Account, equal to (A) the aggregate amount by which (i) interest
on the Principal Balance of each Subsequent Receivable for the period
commencing on the Subsequent Cutoff Date and ending with the scheduled
maturity of each such Receivable (assuming that payments on such Receivables
are made as scheduled and no prepayments are made) at a rate equal to the
Required Rate, exceeds (ii) interest on such Principal Balance at the APR of
such Subsequent Receivable.
"Yield Maintenance Amount" means an amount equal to (A) the aggregate
------------------------
amount by which (i) interest on the Principal Balance of each Initial
Receivable for the period commencing on the Initial Cutoff Date and ending
with the scheduled maturity of each such Receivable (assuming that payments
on such Receivables are made as scheduled and no prepayments are made) at a
rate equal to the Required Rate, exceeds (ii) interest on such Principal
Balance at the APR of such Initial Receivable minus (B) the sum of (i) any
amount distributed as a Yield Maintenance Deposit Amount and (ii) any amount
attributable to an Initial Receivable which has been prepaid or liquidated
during the related Collection Period. As of the Initial Cutoff Date, the
Yield Maintenance Amount is $665,927.07.
"Yield Maintenance Deposit Amount" means the aggregate Yield Maintenance
--------------------------------
Payments in respect of the Receivables for the related Collection Period, if
any.
"Yield Maintenance Payment" means with respect to any payment made on
-------------------------
or in respect of a Receivable and any Distribution Date, the amount by which
(i) interest on the Principal Balance of such Receivable during the
Collection Period preceding such Distribution Date at a rate equal to the
Required Rate, exceeds (ii) interest on such Principal Balance at the APR of
such Receivable.
Section 1.02. Other Definitional Provisions.
-----------------------------
(a) Capitalized terms used herein that are not otherwise defined shall
have the meanings ascribed thereto in the Indenture or, if not defined
therein, in the Trust Agreement.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant
hereto unless otherwise defined therein.
(c) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given
to them under generally accepted accounting principles. To the extent that
the definitions of accounting terms in this Agreement or in any such
certificate or other document are inconsistent with the meanings of such
terms under generally accepted accounting principles, the definitions
contained in this Agreement or in any such certificate or other document
shall control.
(d) The words "hereof," "herein," "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not to any particular provision of this Agreement; Article, Section,
Schedule and Exhibit references contained in this Agreement are references to
Articles, Sections, Schedules and Exhibits in or to this Agreement unless
otherwise specified; "or" shall include "and/or"; and the term "including"
shall mean "including without limitation".
(e) The definitions contained in this Agreement are applicable to the
singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.
(f) Any agreement, instrument or statute defined or referred to herein
or in any instrument or certificate delivered in connection herewith means
such agreement, instrument or statute as from time to time amended, modified
or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
ARTICLE II
CONVEYANCE OF RECEIVABLES
Section 2.01. Conveyance of Receivables.
-------------------------
(a) Subject to the conditions set forth in paragraph (b) below with
respect to Subsequent Receivables, in consideration of the Issuer's delivery
to or upon the order of the Depositor of $233,720,124.34, the Certificates
and such other amounts to be distributed to the Depositor on the Closing Date
and the Subsequent Transfer Date, as applicable, the Depositor does hereby
sell, transfer, assign, set over and otherwise convey to the Issuer, without
recourse (subject to the obligations of the Depositor set forth herein), all
right, title and interest of the Depositor in and to:
(i) the Initial Receivables and all moneys received thereon on or
after the Initial Cutoff Date and the Subsequent Receivables listed on
Schedule A to the Subsequent Transfer Agreement and all moneys received
thereon on or after the Subsequent Cutoff Date;
(ii) the security interests in the Financed Vehicles and any
accessions thereto granted by Obligors pursuant to the Receivables and
any other interest of the Depositor in such Financed Vehicles;
(iii) any Liquidation Proceeds and any other proceeds with
respect to the Receivables from claims on any physical damage, credit
life or disability insurance policies covering the Financed Vehicles or
the related Obligors, including any vendor's single interest or other
collateral protection insurance policy;
(iv) any property that shall have secured a Receivable and shall
have been acquired by or on behalf of the Depositor, the Servicer or the
Trust;
(v) all documents and other items contained in the Receivable
Files;
(vi) all of the Depositor's rights (but not its obligations) under
the Receivables Purchase Agreement and the Subsequent Purchase
Agreement;
(vii) all right, title and interest in all funds on deposit
from time to time in the Trust Accounts and the Certificate Distribution
Account and in all investments therein and proceeds thereof (including
all Investment Earnings thereon);
(viii) any proceeds from any Receivable repurchased by a Dealer
pursuant to a Dealer Agreement; and
(ix) the proceeds of any and all of the foregoing.
In addition, on or prior to the Closing Date, the Seller shall cause the Note
Insurer to deliver the Policy to the Indenture Trustee for the benefit of the
Holders of the Notes.
It is the intention of the Depositor that the transfer and assignment
contemplated by this Agreement shall constitute a sale of the Receivables and
other related property from the Depositor to the Trust and the beneficial
interest in and title to the Receivables and the related property shall not
be part of the Depositor's estate in the event of the filing of a bankruptcy
petition by or against the Depositor under any bankruptcy law. In the event
that, notwithstanding the intent of the Depositor, the transfer and
assignment contemplated hereby is held not to be a sale, this Agreement shall
constitute a grant of a security interest in the property referred to in this
Section 2.01 for the benefit of the Securityholders and the Note Insurer.
(b) The Depositor shall transfer to the Issuer the Subsequent
Receivables and the other property and rights related thereto described in
paragraph (a) above only upon the satisfaction of each of the following
conditions and satisfaction by the Seller of the conditions in Section 2.03
of the Receivables Purchase Agreement on or prior to the Subsequent Transfer
Date:
(i) the Depositor shall have delivered to the Owner Trustee, the
Note Insurer and the Indenture Trustee (A) a written transfer agreement
in substantially the form of Exhibit E hereto, which shall have been
duly executed by each of the parties thereto (the "Subsequent Transfer
Agreement"), which shall include supplements to Schedule A hereto
listing the Subsequent Receivables and (B) an Addition Notice;
(ii) on the Subsequent Transfer Date, (A) the Depositor was not
insolvent and will not become insolvent as a result of the transfer of
the related Subsequent Receivables on the Subsequent Transfer Date, (B)
the Depositor did not intend to incur or believe that it would incur
debts that would be beyond the Depositor's ability to pay as such debts
matured, (C) such transfer was not made with actual intent to hinder,
delay or defraud any Person and (D) the assets of the Depositor did not
constitute unreasonably small capital to carry out its business as
conducted;
(iii) the Funding Period shall not have terminated;
(iv) each of the representations and warranties made by the
Depositor pursuant to Section 3.02 with respect to the related
Subsequent Receivables shall be true and correct as of the Subsequent
Transfer Date;
(v) the addition of any of the related Subsequent Receivables will
not result in a material adverse tax consequence to the Trust, the
Noteholders or the Certificateholders;
(vi) the Note Insurer in its absolute and sole discretion shall
have approved in writing the transfer of the Subsequent Receivables to
the Trust;
(vii) the Depositor shall have delivered to each Rating Agency,
the Issuer, the Indenture Trustee and the Note Insurer, an Opinion of
Counsel with respect to the transfer of the related Subsequent
Receivables substantially in the form of, or confirming, the Opinion of
Counsel delivered to each Rating Agency and the Note Insurer on the
Closing Date and any other opinions reasonably required by the Note
Insurer;
(viii) the Rating Agency Condition shall be satisfied with
respect to the transfer of the Subsequent Receivables to the Trust; and
(ix) the Depositor shall have delivered to the Indenture Trustee,
the Note Insurer and the Owner Trustee an Officers' Certificate
confirming the satisfaction of each condition precedent on its part to
be performed specified in this paragraph (b).
(c) The Depositor covenants to transfer to the Issuer during the
Funding Period pursuant to, and subject to the conditions set forth in,
paragraph (b) above, all Subsequent Receivables transferred by the Seller to
the Depositor pursuant to Section 2.03 of the Receivables Purchase Agreement.
ARTICLE III
THE RECEIVABLES
Section 3.01. Representations and Warranties of the Seller.
--------------------------------------------
(a) The Seller has made each of the representations and warranties set
forth in Exhibit A hereto under the Receivables Purchase Agreement and has
consented to the assignment by the Depositor to the Issuer of the Depositor's
rights with respect thereto. Such representations and warranties speak as of
the execution and delivery of this Agreement and as of the Closing Date in
the case of the Initial Receivables, and as of the Subsequent Transfer Date
in the case of the Subsequent Receivables, but shall survive the sale,
transfer and assignment of the Receivables to the Issuer and the pledge of
such Receivables to the Indenture Trustee. Pursuant to Section 2.01 of this
Agreement, the Depositor has sold, assigned, transferred and conveyed to the
Issuer, as part of the assets of the Issuer, its rights under the Receivables
Purchase Agreement, including the representations and warranties of the
Seller therein as set forth in Exhibit A, upon which representations and
warranties the Issuer relies in accepting the Receivables and delivering the
Securities, and upon which the Note Insurer relies in issuing the Policy,
together with all rights of the Depositor with respect to any breach thereof,
including the right to require the Seller to repurchase Receivables in
accordance with the Receivables Purchase Agreement. It is understood and
agreed that the representations and warranties referred to in this Section
shall survive the sale and delivery of the Receivables to the Issuer or the
Custodian.
(b) The Seller hereby agrees that the Issuer shall have the right to
enforce any and all rights under the Receivables Purchase Agreement assigned
to the Issuer herein, including the right to cause the Seller to repurchase
any Receivable with respect to which it is in breach of any of its
representations and warranties set forth in Exhibit A, directly against the
Seller as though the Issuer were a party to the Receivables Purchase
Agreement, and the Issuer shall not be obligated to exercise any such rights
indirectly through the Depositor.
Section 3.02. Representations and Warranties of the Depositor. The
-----------------------------------------------
Depositor makes the following representations and warranties, on which the
Issuer relies in accepting the Receivables and delivering the Securities, and
upon which the Note Insurer relies in issuing the Policy. Such
representations and warranties speak as of the execution and delivery of this
Agreement and as of the Closing Date in the case of the Initial Receivables,
and as of the Subsequent Transfer Date in the case of the Subsequent
Receivables, but shall survive the sale, transfer and assignment of the
Receivables by the Depositor to the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture:
(a) Title. The Depositor shall convey to the Issuer all right,
-----
title and interest of the Depositor in and to the Receivables.
(b) All Filings Made. The Depositor has caused all filings
----------------
(including UCC filings) to be made in California, New York and Delaware with
respect to the sale of the Receivables to the Issuer and the pledge
contemplated in the Basic Agreements to the Indenture Trustee.
(c) Liens. The Depositor has not taken any actions to create,
-----
incur or suffer to exist any Lien on or restriction on transferability of any
Receivable except for the Lien of the Indenture and the restrictions on
transferability imposed by this Agreement.
Section 3.03. Repurchase Upon Breach. The Depositor, the Owner
----------------------
Trustee, the Indenture Trustee, the Seller, the Backup Servicer and the
Servicer shall inform the other parties to this Agreement and the Note
Insurer promptly, in writing, upon the discovery of any breach of the
Seller's representations and warranties made pursuant to Section 3.01 of this
Agreement or Section 2.03 or 3.02 of the Receivables Purchase Agreement,
without regard to any limitation set forth in such representation or warranty
concerning the knowledge of the Seller as to the facts stated therein.
Unless any such breach shall have been cured by the last day of the first
Collection Period following the discovery or notice thereof, the Servicer
shall be obligated and, if necessary, the Issuer shall enforce the obligation
of the Seller under the Receivables Purchase Agreement, to purchase as of
such last day any Receivable materially and adversely affected by any such
breach or with respect to which the interests of the Note Insurer are
materially and adversely affected. In consideration of the repurchase of any
such Receivable, the Servicer shall remit the Purchase Amount to the
Collection Account and notify in writing the Indenture Trustee of such
deposit, in the manner specified in Section 5.04. The sole remedy of the
Issuer, the Indenture Trustee, the Noteholders, or the Certificateholders
with respect to a breach of representations and warranties pursuant to
Section 3.01 and the agreement contained in this Section shall be to require
the Servicer to purchase Receivables pursuant to this Section or the Seller
to repurchase Receivables pursuant to the Receivables Purchase Agreement. If
the Seller fails to repurchase any Receivable which it is so required to
reacquire pursuant to this Agreement or the Receivables Purchase Agreement by
the date specified, the Indenture Trustee shall promptly notify HMC of such
failure at the address set forth in the Performance Guaranty.
Section 3.04. Custody of Custodial Files.
--------------------------
(a) To assure uniform quality in the servicing of the Receivables, the
Issuer hereby appoints the Custodian, and the Custodian hereby accepts such
appointment, to act for the benefit of the Issuer and the Indenture Trustee
as custodian of the following documents or instruments relating to the
Receivables (the "Custodial Files"), which documents and instruments shall be
delivered by the Servicer to the Custodian within 30 days of the Closing Date
with respect to the Initial Receivables and within 30 days of the Subsequent
Closing Date with respect to the Subsequent Receivables:
(i) the fully executed original of each Receivable (together with
any agreements modifying each such Receivable, including any extension
agreement as set forth in the related Schedule); and
(ii) the original certificate of title, application for duplicate
title with proof of security interest for certain identified Receivables
or such other original documents evidencing the security interest of the
Seller in the related Financed Vehicle.
(b) If the Servicer fails to deliver any of the required documents, the
Servicer shall purchase or shall cause the Seller to purchase the related
Receivable for the Purchase Amount pursuant to Section 3.07.
Section 3.05. Duties of the Custodian.
-----------------------
(a) The Custodian may, upon receipt of a Request for Release of
Documents from the Servicer, release any Custodial File to the Servicer, for
the limited purpose, if necessary, of temporarily assisting the Servicer to
conduct collection and other servicing activities; provided, however, that
prior to being released to the Servicer all documents to be released in such
Custodial File shall be conspicuously stamped to reflect the sale to the
Issuer and the security interest of the Indenture Trustee in the related
Receivables (except if the Custodial File is being released because the
related Receivable has been paid in full); provided, further, that if a
-------- -------
Servicer Termination Event shall have occurred and be continuing and of which
the Custodian has actual knowledge of or has received notice thereof, no part
of any Custodial File shall be released by the Custodian to the Servicer
without the Note Insurer's prior written consent, which shall be evidenced by
the Note Insurer's execution of the Request for Release of Documents. Except
as noted above, no part of the Custodial File shall be delivered by the
Custodian to the Depositor, the Seller or the Servicer or otherwise released
from the possession of the Custodian. The Custodian shall not be under any
duty or obligation to inspect, review or examine any document, instrument,
certificate, agreement or other papers to determine that they are genuine,
enforceable, or appropriate for the represented purpose or that they are
other than what they purport to be on their face.
No successor Custodian may be appointed unless such Person shall be
acceptable to the Note Insurer and shall have entered into an agreement with
the Indenture Trustee, for the benefit of the Noteholders and the Note
Insurer, containing provisions substantially similar to this Section.
(b) Upon receipt of the Custodial Files, the Custodian shall hold
and acknowledge that it is holding the Custodial File documents (except for
those noted on the notice in the form of Exhibit G given to the Indenture
Trustee) as the agent of the Indenture Trustee and the Owner Trustee for the
use and benefit of the Securityholders and the Note Insurer with respect
thereto. The Indenture Trustee shall not have any responsibility, duty,
obligation or liability with respect to the Custodian acting as a custodian
hereunder or with respect to any document, agreement, certificate or
instrument held or purported to be held by the Custodian. Neither the
Custodian nor the Indenture Trustee shall have any responsibility or
liability with respect to any Receivable or Custodial Files not conveyed by
the Servicer hereunder.
(c) The Custodian shall 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 to the Note Insurer,
any failure by it to hold the complete set of Custodial Files as herein
provided and shall promptly take appropriate action to remedy any such
failure.
The Custodian shall have and perform the following powers and
duties:
(i) hold the Custodial Files on behalf of the Indenture Trustee
and the Owner Trustee for the benefit of the Securityholders and the
Note Insurer, maintain accurate records pertaining to each Receivable to
enable it to comply with the terms and conditions of this Agreement, and
maintain a current inventory thereof;
(ii) implement policies and procedures in accordance with the
Custodian's normal business practices with respect to the handling and
custody of the Custodial Files so that the integrity and physical
possession of the Custodial Files will be maintained; and
(iii) attend to all details in connection with maintaining custody
of the Custodial Files on behalf of the Indenture Trustee, the Owner
Trustee, the Securityholders and the Note Insurer.
(d) In acting as a custodian, the Custodian agrees further that it
does not and will not have or assert any beneficial ownership interest in the
Receivables or the Custodial Files or any other Receivable.
(e) The Custodian agrees to maintain any Custodial Files in its
possession at its office located in Chase Bank of Texas, 000 Xxxx Xxxxxx
Xxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000, or at such other offices as shall from
time to time be identified by prior written notice to the Issuer, to the
Indenture Trustee and the Note Insurer.
Section 3.06. Obligations of the Custodian.
----------------------------
(a) With respect to the documents constituting each Custodial File
which is delivered to the Custodian or which come into the possession of the
Custodian, the Custodian is the custodian for the Indenture Trustee, on
behalf of the Note Insurer and the Securityholders. The Custodian shall hold
all documents received by it constituting the Custodial Files for the
exclusive use and benefit of the Indenture Trustee on behalf of the
Securityholders and the Note Insurer, and shall make disposition thereof only
in accordance with this Agreement or the instructions furnished by the
Indenture Trustee provided such instructions are consistent with this
Agreement unless otherwise directed in writing by the Note Insurer. The
Custodian shall segregate and maintain continuous custody of all documents
constituting the Custodial Files in secure and fire resistant facilities in
accordance with customary standards for such custody. The Custodian makes no
representations as to and shall not be responsible to verify (i) the
validity, legality, enforceability, sufficiency, due authorization,
recordability or genuineness of any document in the Custodial Files or of any
of the Receivables or (ii) the collectability, insurability, effectiveness or
suitability of any Receivable.
(b) Upon the payment in full of any Receivable or redemption of
the Notes by the Servicer, the Indenture Trustee or the Note Insurer, which
shall be evidenced by the delivery to the Custodian of the Request for
Release of Documents, the Custodian shall promptly release the related
Custodial File to the Servicer or the Note Insurer unless otherwise
instructed in writing by such party.
Section 3.07. Certification.
--------------
(a) Within 90 days of the Closing Date or Subsequent Transfer
Date, as applicable, the Custodian shall ascertain that all documents
referred to in Section 3.04 with respect to each Receivable are in its
possession, and shall deliver to the Issuer, the Indenture Trustee and the
Note Insurer a certification in the form of Exhibit G to the effect that, as
to each Custodial File listed in Schedule A (other than any Receivable paid
in full or any Receivable specifically identified in such certification as
not covered by such certification): (i) all documents required to be in the
Custodial Files are in its possession and (ii) such documents have been
reviewed by it and appear regular on their face and relate to such
Receivable. In making this certification, the Custodian shall separately
list those Receivables for which an original certificate of title was not
found in the relevant Custodial File and shall, within 180 days after the
Closing Date or Subsequent Transfer Date, as applicable, deliver to the
Issuer, the Indenture Trustee and the Note Insurer a certification (the
"Second Certification"), to the effect that, as to each such Custodial File
that did not include an original certificate of title in the initial
Certification (other than any Receivable paid in full or any Receivable
specifically identified in such certification as not covered by such
certification): (i) all documents required to be in the Custodial File are in
its possession and (ii) such documents have been reviewed by it and appear
regular on their face and relate to such Receivable.
(b) If the Custodian during the process of reviewing the Custodial
Files, whether pursuant to clause (a) above or Section 3.08 hereof, finds any
document constituting a part of a Custodial File which is not executed, has
not been received, is unrelated to the Receivable identified in Schedule A,
or does not conform to the requirements of clause (a) above or the loan
number set forth in Schedule A, then the Custodian shall promptly so notify
the Issuer, the Servicer, the Note Insurer and the Indenture Trustee in
writing of such discovery.
The Servicer will use reasonable efforts to remedy a material
defect in a document or omission of a document constituting part of a
Custodial File of which it is so notified by the Custodian as set forth in
Section 3.07(a) above. If, however, within 15 days after the initial
Custodian's certification to it respecting such defect or omission (other
than a defect or omission in respect of a certificate of title) or within 15
days after the Second Certification in respect of a defect or omission as to
a certificate of title the Servicer has not remedied or caused the Seller to
remedy the defect or omission, the Servicer shall give notice to the
Indenture Trustee of the date and price of repurchase and, on the next
succeeding Determination Date, cause the Seller to repurchase such
Receivable, which Purchase Amount shall be deposited in the Collection
Account.
Section 3.08. Future Defects.
---------------
During the term of this Agreement, if the Custodian discovers any
defect with respect to the Custodial Files, the Custodian shall give written
specification of such defect to the Indenture Trustee, the Issuer, the
Depositor and the Note Insurer. Notwithstanding the foregoing, the Custodian
shall be under no obligation to conduct any other review of the Custodial
Files other than as described in Section 3.07.
Section 3.09. Fees of Custodian.
------------------
The Custodian shall charge such fees for its services under this
Agreement as are set forth in the Fee Letter, the payment of which fees,
together with the Custodian's expenses in connection herewith, shall be made
in the priority set forth in Section 5.06(b). The Custodian shall perform
its obligations under this Agreement notwithstanding nonpayment of the fees
and expenses of the Custodian.
Section 3.10. Liability of Custodian.
-----------------------
Neither the Custodian nor any of its directors, officers, agents or
employees, shall be liable for any action taken or omitted to be taken by it
or them hereunder or in connection herewith in good faith and believed by it
or them to be within the purview of this Agreement, except for its or their
own negligence, lack of good faith or willful misconduct.
Section 3.11. Reliance of Custodian.
---------------------
In the absence of bad faith or negligence on the part of the
Custodian, the Custodian may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
request, instructions, certificate, opinion or other document furnished to
the Custodian, reasonably believed by the Custodian to be genuine and to have
been signed or presented by the proper party or parties and conforming to the
requirements of this Agreement; but in the case of any loan document or other
request, instruction, document or certificate which by any provision hereof
is specifically required to be furnished to a Trust Officer of the Custodian,
the Custodian shall be under a duty to examine the same to determine whether
or not it conforms to the requirements of this Agreement.
Section 3.12. Transmission of Custodial Files.
-------------------------------
Written instructions as to the method of shipment and shipper(s)
the Custodian is directed to utilize in connection with the transmission of
files and loan documents in the performance of the Custodian's duties
hereunder shall be delivered by the Servicer to the Custodian prior to any
shipment of any files and loan documents hereunder. Pursuant to this
Agreement, the Servicer will arrange for the provision of such services at
its sole cost and expense (or, at the Custodian's option, reimburse the
Custodian for all costs and expenses incurred by the Custodian consistent
with such instructions) and will maintain such insurance in connection with
shipment of the Custodial Files against loss or damage to files and loan
documents as the Servicer deems appropriate. Without limiting the generality
of the provisions of Section 3.10 hereof, it is expressly agreed that in no
event shall the Custodian have any liability for any losses or damages to any
person, including without limitation, the Indenture Trustee, arising out of
actions of the Custodian consistent with instructions of the Servicer unless
such instructions are inconsistent with any of the Basic Documents.
Section 3.13. Resignation and Removal; Appointment of Successor.
--------------------------------------------------
(a) No resignation or removal of the Custodian and no appointment
of a successor Custodian pursuant to this Article III shall become effective
until the acceptance of appointment by the successor Custodian under Section
3.14 hereof.
(b) The Custodian may resign at any time by giving 30 days' prior
written notice thereof to the Issuer, the Note Insurer and the Indenture
Trustee. If the Custodian shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Custodian for any
cause with respect to any of the Notes, the Issuer shall, with the prior
written consent of the Note Insurer, promptly appoint a successor Custodian
reasonably satisfactory to the Note Insurer. If no successor Custodian shall
have been so appointed by the Issuer within 30 days of notice of removal or
resignation and shall not have accepted appointment in the manner hereinafter
provided, then the Note Insurer may appoint a successor Custodian. If the
Note Insurer shall fail to appoint a successor Custodian within 90 days or if
a Note Insurer Default shall have occurred and is continuing, then the
Controlling Party may petition any court of competent jurisdiction for the
appointment of a successor Custodian with respect to the Notes.
(c) The Custodian may be removed by the Note Insurer or, if a Note
Insurer Default has occurred and is continuing, by the Controlling Party, at
any time if one of the following events have occurred:
(i) the Custodian shall become incapable of acting or shall be
adjudged a bankrupt or insolvent, or a receiver of the Custodian or of
its property shall be appointed, or any public officer shall take charge
or control of the Custodian or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation, or
(ii) the Custodian has failed to perform its duties under any of
the Basic Documents or any side agreements with the Servicer or has
breached any representation or warranty made herein or therein.
(d) The Issuer shall give notice in the manner provided in Section
10.03 of each resignation and each removal of the Custodian and each
appointment of a successor Custodian to the Indenture Trustee, the Note
Insurer and the Rating Agencies. Each notice shall include the name of the
successor Custodian and the address of its chief executive office.
Section 3.14. Acceptance of Appointment by Successor.
--------------------------------------
Every successor Custodian appointed hereunder shall be acceptable
to the Note Insurer and shall execute, acknowledge and deliver to the Issuer,
the Indenture Trustee, the Note Insurer and the retiring Custodian an
instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Custodian shall become effective and such successor
Custodian, without any further act, deed or conveyance, shall become vested
with all the rights, powers, trusts and duties of the retiring Custodian but,
on request of the Issuer, the Indenture Trustee, the Note Insurer or the
successor Custodian, such retiring Custodian shall execute and deliver an
instrument transferring to such successor Custodian all the rights, powers
and trusts of the retiring Custodian, and shall duly assign, transfer and
deliver to such successor Custodian all property and money held by such
retiring Custodian hereunder. Upon request of any such successor Custodian,
the Issuer or the Indenture Trustee on behalf of the Issuer shall execute any
and all instruments for more fully and certainly vesting in and confirming to
such successor Custodian all such rights, powers and trusts.
No successor Custodian shall accept its appointment unless at the
time of such acceptance such successor Custodian shall be acceptable to the
Note Insurer and shall be eligible under this Article III.
Section 3.15. Merger, Conversion, Consolidation or Succession to
--------------------------------------------------
Business of Custodian.
----------------------
Any Person into which the Custodian may be merged or converted or
with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Custodian shall be a party, or any
corporation succeeding to all or substantially all of the business of the
Custodian, shall be the successor of the Custodian hereunder, provided such
Person shall be acceptable to the Note Insurer and shall be otherwise
qualified and eligible, without the execution or filing of any paper or any
further act on the part of any of the parties hereto, and prior written
notice thereof shall be provided by the Custodian to the Indenture Trustee,
the Note Insurer and the Rating Agencies.
Section 3.16. Representations and Warranties of the Custodian.
------------------------------------------------
The Custodian represents and warrants to, and agrees with the
Indenture Trustee, the Note Insurer and the Issuer, as of the Closing Date
that:
(a) The Custodian is duly organized as a state banking association
under the laws of the state of New York, is validly existing, in good
standing and has the corporate power and authority under the laws of the
United States of America to conduct its business as now conducted.
(b) The Custodian has full corporate power and authority under the
laws of the United States of America to enter into and perform all
transactions contemplated herein and no consent, approval, authorization or
order of any federal court or governmental agency or body governing or having
jurisdiction with respect to the Custodian's custodial powers is required for
the Custodian to enter into this Agreement and to perform its obligations
hereunder.
(c) The execution, delivery and performance by it of this
Agreement (a) do not violate any provision of any law or regulation governing
the banking or the custodial powers of the Custodian or any order, writ,
judgment, or decree of any court, arbitrator, or governmental authority
applicable to the Custodian or any of its assets, (b) do not violate any
provision of its corporate charter or by-laws, or (c) do not violate any
provision of, or constitute, with or without notice or lapse of time, a
default under, or result in the creation or imposition of any lien on any of
the property acquired by the Issuer pursuant to the provisions of any
indenture, contract, agreement or other undertaking other than this Agreement
to which it is a party.
(d) This Agreement has been duly executed and delivered by the
Custodian and constitutes the legal, valid and binding agreement of the
Custodian, enforceable in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or at
law.
(e) Nothing has come to the Custodian's attention indicating that,
with respect to the Receivables and the Financed Vehicles (i) there exist any
adverse claims, lien, or encumbrances against any of the same; (ii) any
Receivable was overdue or had been dishonored or subject to the circumstances
described in Section3-304 of the Uniform Commercial Code as in effect in the
State of New York, or (iii) there exists any other defense against or claim
to the Receivables by any other person or entity. For purposes of this
subsection (e), the Custodian shall not be deemed to have notice or knowledge
of the foregoing matters unless a Responsible Officer assigned to and working
in the Custodian's Corporate Trust Office shall have actual knowledge thereof
or written notice thereof is received by the Custodian in accordance
herewith.
Section 3.17. Custodian's Indemnification. The Custodian shall
---------------------------
indemnify the Trust, the Note 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, compensatory
damages, payments, costs or expenses of any kind whatsoever that may be
imposed upon, incurred by or asserted against the Trust, 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
willful misconduct on the part of the Custodian relating to the maintenance
and custody of the Custodial Files as Custodian thereof; provided, however,
that the Custodian shall not be liable to the Owner Trustee, the Indenture
Trustee or any such officer, director, employee or agent of the Owner Trustee
or the Indenture Trustee for any portion of any such amount resulting from
the willful misfeasance, bad faith or negligence of the Owner Trustee or the
Indenture Trustee, as the case may be, or of any such officer, director,
employee or agent of the Owner Trustee or the Indenture Trustee, as the case
may be.
Indemnification under this Section shall survive the resignation or
removal of the 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
Section and the Person to or on behalf of whom such payments are made
thereafter collects any of such amounts from others, such Person shall
promptly repay such amounts to the Custodian, without interest.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 4.01. Duties of Servicer. The Servicer, for the benefit of the
------------------
Issuer, the Indenture Trustee and the Note Insurer, shall manage, service,
administer and make collections on the Receivables and perform the other
actions required by the Servicer under this Agreement. The Servicer shall
service the Receivables in accordance with its customary and usual procedures
and consistent with the procedures employed by institutions that service
motor vehicle retail installment sale contracts. The Servicer's duties shall
include the collection and posting of all payments, responding to inquiries
of Obligors, investigating delinquencies, sending payment statements to
Obligors, reporting any required tax information to Obligors, monitoring the
Collateral, accounting for collections, furnishing monthly and annual
statements to the Owner Trustee, the Indenture Trustee and the Note Insurer
with respect to distributions and performing the other duties specified
herein. The Servicer also shall administer and enforce all rights of the
holder of the Receivables under the Receivables and the Dealer Agreements.
To the extent consistent with the standards, policies and procedures
otherwise required hereby and the Credit and Collection Policy, the Servicer
shall follow its customary standards, policies and procedures and shall have
full power and authority, acting alone, to do any and all things in
connection with the managing, servicing, administration and collection of the
Receivables that it may deem necessary or desirable. Without limiting the
generality of the foregoing, the Servicer is hereby authorized and empowered
to execute and deliver, on behalf of itself, the Issuer, the Owner Trustee,
the Indenture Trustee, the Certificateholders and the Noteholders, or any of
them, any and all instruments of satisfaction or cancellation, or of partial
or full release or discharge, and all other comparable instruments with
respect to the Receivables and with respect to the Financed Vehicles;
provided, however, that notwithstanding the foregoing, the Servicer shall
not, except pursuant to an order from a court of competent jurisdiction,
release an Obligor from payment of any unpaid amount due under any
Receivable, reduce the related APR or waive the right to collect the unpaid
balance of any Receivable from an Obligor. The Servicer is hereby authorized
to commence, in its own name or in the name of the Issuer, the Indenture
Trustee, the Owner Trustee, the Certificateholders or the Noteholders, a
legal proceeding to enforce a Receivable pursuant to Section 4.03 or to
commence or participate in any other legal proceeding (including a bankruptcy
proceeding) relating to or involving a Receivable, an Obligor or a Financed
Vehicle. If the Servicer commences or participates in any such legal
proceeding in its own name, the Indenture Trustee or the Issuer shall
thereupon be deemed to have automatically assigned the applicable Receivable
to the Servicer solely for purposes of commencing or participating in such
proceeding as a party or claimant, and the Servicer is authorized and
empowered by the Indenture Trustee or the Issuer to execute and deliver in
the Indenture Trustee's or the Issuer's name any notices, demands, claims,
complaints, responses, affidavits or other documents or instruments in
connection with any such proceeding. If in any enforcement suit or legal
proceeding it shall be held that the Servicer may not enforce a Receivable on
the ground that it shall not be a real party in interest or a holder entitled
to enforce such Receivable, the Owner Trustee shall, at the Servicer's
expense and direction, take steps to enforce such Receivable, including
bringing suit in its name or the name of the Issuer, the Indenture Trustee,
the Certificateholders or the Noteholders. The Owner Trustee and the
Indenture Trustee shall upon the written request of the Servicer furnish the
Servicer with any powers of attorney and other documents reasonably necessary
or appropriate to enable the Servicer to carry out its servicing and
administrative duties hereunder.
Section 4.02. Collection of Receivable Payments; Modifications of
---------------------------------------------------
Receivables.
-----------
(a) Consistent with the standards, policies and procedures required by
this Agreement, the Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the Receivables as and
when the same shall become due, and shall follow such collection procedures
as it follows with respect to all comparable motor vehicle receivables that
it services for itself or others and otherwise act with respect to the
Receivables in such a manner as will, in the reasonable judgment of the
Servicer, maximize the amount to be received by the Trust with respect
thereto. The Servicer is authorized in its discretion to waive any
prepayment charge, late payment charge or any other similar fees that may be
collected in the ordinary course of servicing any Receivable. The Servicer
shall grant extensions on the Receivables only to the extent permissible in
its extension policy attached hereto as Exhibit H; provided, however, that
the Servicer shall not grant any "holiday extensions" with respect to any
Receivables.
(b) The Servicer may grant payment extensions in accordance with its
customary procedures if the Servicer believes in good faith that such
extension, is necessary to avoid a default on such Receivable, will maximize
the amount to be received by the Trust with respect to such Receivable and is
otherwise in the best interests of the Trust and the Note Insurer; provided,
that no such extension shall extend the final payment date on any Receivable
beyond the last day of the Collection Period ending three months prior to the
Final Scheduled Maturity Date. Anything herein to the contrary
notwithstanding, the Servicer shall grant payment extensions with respect to
a Receivable only to the extent permissible in its extension policy attached
hereto as Exhibit H.
(c) Upon any extension not in accordance with this Section, the
Servicer shall be required to purchase the related Receivable in accordance
with Section 4.07.
Section 4.03. Realization upon Receivables. Consistent with the
----------------------------
standards, policies and procedures required by this Agreement and the Credit
and Collection Policy, the Servicer shall use its best efforts to repossess
or otherwise convert the ownership of and liquidate any Financed Vehicle
securing a Receivable with respect to which the Servicer shall have
determined that eventual payment in full is unlikely. The Servicer shall
begin such repossession and conversion procedures as soon as practicable
after default on such Receivable; provided, however, that the Servicer may
elect not to repossess a Financed Vehicle within such time period if in its
good faith judgment it determines that the proceeds ultimately recoverable
with respect to such Receivable would be increased by forbearance. In
repossessing or otherwise converting the ownership of a Financed Vehicle and
liquidating a Receivable, the Servicer is authorized to follow such customary
practices and procedures as it shall deem necessary or advisable, consistent
with the standard of care required by Section 4.01, which practices and
procedures may include reasonable efforts to realize upon any recourse to
Dealers, the sale of the related Financed Vehicle at public or private sale,
the submission of claims under an insurance policy and other actions by the
Servicer in order to realize upon a Receivable; provided, however, that in
any case in which the Financed Vehicle shall have suffered damage, the
Servicer shall not expend funds in connection with any repair or towards the
repossession of such Financed Vehicle unless it shall determine in its
reasonable judgment that such repair or repossession shall increase the
related Liquidation Proceeds by an amount materially greater than the expense
for such repair or repossession. The Servicer shall be entitled to recover
all reasonable expenses incurred by it in the course of repossessing and
liquidating a Financed Vehicle into cash proceeds, but only out of the cash
proceeds of the sale of such Financed Vehicle, any deficiency obtained from
the related Obligor or any amounts received from recourse to the related
Dealer.
Section 4.04. Physical Damage Insurance. The Servicer shall, in
-------------------------
accordance with its customary servicing procedures, require each Obligor to
obtain and maintain physical loss damage insurance covering the related
Financed Vehicle as of the execution of the related Receivable.
Section 4.05. Maintenance of Security Interests in Financed Vehicles.
------------------------------------------------------
(a) The Servicer shall, in accordance with its customary servicing
procedures, take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed Vehicle.
The Servicer is hereby authorized to take such steps as are necessary to re-
perfect such security interest on behalf of the Issuer and the Indenture
Trustee in the event of the relocation of a Financed Vehicle, or for any
other reason. In the event that the assignment of a Receivable to the Issuer
is insufficient, without a notation on the related Financed Vehicle's
certificate of title, or without fulfilling any additional administrative
requirements under the laws of the State in which such Financed Vehicle is
located, to perfect a security interest in the related Financed Vehicle in
favor of the Issuer, the Servicer hereby agrees that the designation of HMFC
as the secured party on the certificate of title is in its capacity as agent
of the Issuer.
(b) The Depositor, the Owner Trustee, the Indenture Trustee, the
Servicer and the Backup Servicer hereby agree that, upon a Trigger Event, the
Controlling Party may take or cause to be taken such actions as may, in the
opinion of counsel to the Controlling Party, be necessary to perfect or
re-perfect the security interests in the Financed Vehicles in the name of the
Issuer, including by amending the title documents of the Financed Vehicles.
The Servicer hereby agrees to pay all expenses related to such perfection or
reperfection and to take all action necessary therefor. If such expenses are
not paid within 15 days after delivery of any invoice for such expenses to
the Servicer, such expenses shall be paid pursuant to Section 5.06(b)(x).
The Note Insurer may in its sole discretion pay such costs and any such
amounts shall be included in amounts owed to the Note Insurer pursuant to
Section 5.06(b)(vi). In addition, the Controlling Party may at any other
time instruct the Servicer to take or cause to be taken such action as may,
in the opinion of counsel to the Controlling Party, be necessary to perfect
or re-perfect the security interest in the Financed Vehicles in the name of
the Trust; provided, however, that if the Controlling Party requests that the
title documents be amended prior to the occurrence of a Trigger Event, the
out-of-pocket expenses of the Servicer or any other entity incurred in
connection with any such action shall be reimbursed to the Servicer or such
other party by the Controlling Party.
Section 4.06. Covenants of Servicer. By its execution and delivery of
---------------------
this Agreement, the Servicer hereby covenants as follows (upon which
covenants the Issuer, the Indenture Trustee and the Owner Trustee rely in
accepting the Receivables and delivering the applicable Securities and on
which the Note Insurer relies in issuing the Policy):
(a) Liens in Force. No Financed Vehicle securing a Receivable
--------------
shall be released in whole or in part from the security interest granted by
such Receivable, except upon payment in full of such Receivable or as
otherwise contemplated herein;
(b) No Impairment. The Servicer shall do nothing to impair the
-------------
rights of the Trust or the Note Insurer in the property of the Trust;
(c) No Amendments. The Servicer shall not extend or otherwise
-------------
amend the terms of any Receivable, except in accordance with Section 4.02 and
the Servicer shall not amend or modify the Credit and Collection Policy if
such amendment or modification may have a material adverse effect on the
interest of the Noteholders or Note Insurer; and
(d) Restrictions on Liens. The Servicer shall not (A) create,
---------------------
incur or suffer to exist, or agree to create, incur or suffer to exist, or
consent to or permit in the future (upon the occurrence of a contingency or
otherwise) the creation, incurrence or existence of any Lien on or
restriction on transferability of any Receivable except for the Lien of the
Indenture and the restrictions on transferability imposed by this Agreement
or (B) sign or file any UCC financing statements in any jurisdiction that
names HMFC, the Servicer or the Depositor as a debtor, and any Person other
than the Depositor, the Indenture Trustee or the Issuer as a secured party,
or sign any security agreement authorizing any secured party thereunder to
file any such financing statement with respect to the Receivables or the
related property.
Section 4.07. Purchase of Receivables Upon Breach. Upon discovery by
-----------------------------------
any of the Servicer, the Seller, the Depositor, the Owner Trustee, the
Indenture Trustee or the Backup Servicer of a breach of any of the covenants
set forth in Sections 3.07, 4.02(b), 4.05(a) or 4.06, the party discovering
such breach shall give prompt written notice to the other parties and the
Note Insurer; provided, however, that the failure to give any such notice
shall not affect any obligation of the Servicer under this Section 4.07. On
or before the last day of the first Collection Period following its discovery
or receipt of notice of the breach of any covenant set forth in Sections
3.07, 4.02(b), 4.05(a) or 4.06 that materially and adversely affects the
interests of the Issuer, the Indenture Trustee, the Owner Trustee, the
Certificateholders, the Noteholders or the Note Insurer in any Receivable,
the Servicer shall, unless such breach shall have been cured in all material
respects by such date, purchase from the Issuer the Receivable affected by
such breach. In consideration of the purchase of any such Receivable, the
Servicer shall remit the related Purchase Amount into the Collection Account,
with written notice to the Indenture Trustee of such deposit, in the manner
specified in Section 5.04. Subject to Section 7.02, it is understood and
agreed that the obligation of the Servicer to purchase any Receivable with
respect to which such a breach has occurred and is continuing shall, if such
obligation is fulfilled, constitute the sole remedy against the Servicer for
such breach available to the Issuer, the Owner Trustee, the Indenture
Trustee, the Certificateholders or the Noteholders. If the Servicer fails to
purchase any Receivable which it is so required to purchase pursuant to this
Agreement by the date specified, the Indenture Trustee shall promptly notify
HMC of such failure at the address set forth in the Performance Guaranty.
Section 4.08. Servicing Fee. The Servicing Fee shall be payable to the
-------------
Servicer on each Distribution Date. The Servicing Fee shall be calculated on
the basis of a 360-day year comprised of twelve 30-day months. The Servicer
shall be required to pay all expenses incurred by it in connection with its
activities under this Agreement (including taxes imposed on the Servicer and
expenses incurred in connection with distributions and reports made by the
Servicer to the Owner Trustee, the Note Insurer and the Indenture Trustee).
The Backup Servicer shall be paid a portion of the Servicing Fee pursuant to
Section 5.06(b) (ii) for its duties as Backup Servicer as set forth in the
Fee Letter.
Section 4.09. Servicer's Certificate. Not later than 10:00 a.m. (New
----------------------
York City time) on each Determination Date, the Servicer shall deliver to the
Owner Trustee, each Paying Agent (if any), the Indenture Trustee, the Backup
Servicer, the Note Insurer and the Depositor, with a copy to each Rating
Agency, a Servicer's Certificate containing all information necessary to make
the distributions to be made on the related Distribution Date pursuant to
Section 5.06 for the related Collection Period and any other information the
Indenture Trustee may reasonably request and such Servicer's Certificate
shall be certified by a Responsible Officer of the Servicer that the
information provided is complete and no defaults have occurred. Receivables
to be purchased by the Servicer or to be repurchased by the Seller and each
Receivable that became a Liquidated Receivable shall be identified by the
Servicer by account number with respect to such Receivable (as specified in
the applicable Schedule of Receivables).
Section 4.10. Annual Statement as to Compliance; Notice of Servicer
-----------------------------------------------------
Termination Event.
-----------------
(a) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee, the Backup Servicer, the Note Insurer and each Rating Agency, within
120 days after the end of the Servicer's fiscal year (or, in the case of the
first such certificate, not later than April 30, 1999), an Officer's
Certificate signed by a Responsible Officer of the Servicer, stating that (i)
a review of the activities of the Servicer during the preceding 12-month
period (or such shorter period in the case of the first such Officer's
Certificate) and of the performance of its obligations under this Agreement
has been made under such officer's supervision and (ii) to such officer's
knowledge, based on such review, the Servicer has fulfilled all its
obligations under this Agreement throughout such period or, if there has been
a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof.
(b) The Servicer shall deliver to the Owner Trustee, the Indenture
Trustee, the Backup Servicer, the Note Insurer and each Rating Agency,
promptly after having obtained knowledge thereof, but in no event later than
two Business Days thereafter, written notice in an Officer's Certificate of
any event that with the giving of notice or lapse of time or both would
become a Servicer Termination Event under Section 8.01.
Section 4.11. Annual Independent Accountants' Report. The Servicer
--------------------------------------
shall cause a firm of independent certified public accountants, reasonably
acceptable to the Note Insurer, which may also render other services to the
Servicer or its Affiliates, to deliver to the Owner Trustee, the Indenture
Trustee, the Backup Servicer, the Note Insurer and each Rating Agency, within
120 days after the end of each fiscal year (or, in the case of the first such
report, not later than April 30, 1999), a report addressed to the Board of
Directors of the Servicer, the Owner Trustee, the Indenture Trustee, the
Backup Servicer and the Note Insurer, to the effect that such firm has
audited the books and records of the Servicer and issued its report thereon
and that (i) such audit was made in accordance with generally accepted
auditing standards and accordingly included such tests of the accounting
records and such other auditing procedures as such firm considered necessary
in the circumstances; (ii) the firm is independent of the Depositor and the
Servicer within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants; (iii) a review in
accordance with agreed-upon procedures was made of the Servicer's
Certificates relating to such fiscal year, including the delinquency, default
and loss statistics required to be specified therein and, except as disclosed
in the accountants' report, no exceptions or errors in the Servicer's
Certificates were found; and (iv) a review in accordance with agreed-upon
procedures was made of the Servicer's compliance with its servicing
obligations in this Agreement, including without limitation the obligations
of the Servicer set forth in Section 4.02(b) hereof, and, except as disclosed
in the accountants' report, no exceptions to such compliance were found.
Section 4.12. Access to Certain Documentation and Information Regarding
---------------------------------------------------------
Receivables. The Servicer shall provide to representatives of the Owner
-----------
Trustee, the Indenture Trustee, the Backup Servicer, the Note Insurer (so
long as no Note Insurer Default shall have occurred and be continuing), the
Certificateholders and the Noteholders reasonable access to the documentation
regarding the Receivables and the related Trust property. Access shall be
afforded without charge, but only upon reasonable request and during the
normal business hours at the offices of the Servicer. Nothing in this
Section shall affect the obligation of the Servicer to observe any applicable
law prohibiting disclosure of information regarding the Obligors and the
failure of the Servicer to provide access to information as a result of such
obligation shall not constitute a breach of this Section.
Section 4.13. Monthly Tape. On the Determination Date, the Servicer
------------
shall deliver or cause to be delivered to the Indenture Trustee, the Owner
Trustee, the Note Insurer and the Backup Servicer a computer tape and a
diskette (or any other form of electronic transmission acceptable to the
Owner Trustee, the Indenture Trustee, the Note Insurer and the Backup
Servicer) in a format acceptable to the Indenture Trustee, Owner Trustee, the
Note Insurer and the Backup Servicer containing the information with respect
to the Receivables as of the last day of the preceding Collection Period and
necessary for preparation of the Servicer's Certificate for the immediately
succeeding Determination Date and to determine the application of payments
received on the Receivables as provided herein. The Backup Servicer shall
use such tape or diskette (or other electronic transmission acceptable to the
Indenture Trustee, Owner Trustee, the Note Insurer and the Backup Servicer)
to verify the mathematical accuracy of the items set forth in Exhibit C to
the extent possible from the information given to the Backup Servicer at such
time or subsequent thereto, and the Backup Servicer shall certify to the
Indenture Trustee, the Note Insurer and the Owner Trustee that it has
verified the mathematical accuracy of the Servicer's Certificate, other than
the items in I of the Servicer's Certificate, and such compliance by the
Servicer in accordance with this Section 4.13 and shall notify the Servicer,
the Indenture Trustee, the Note Insurer and the Owner Trustee of any
discrepancies, in each case, on or before the third Business Day following
the related Determination Date. In the event that the Backup Servicer
reports any discrepancies, the Servicer and the Backup Servicer shall attempt
to reconcile such discrepancies prior to the related Distribution Date, but
in the absence of a reconciliation, the Servicer's Certificate shall control
for the purpose of calculations and distributions with respect to the related
Distribution Date. In the event that the Backup Servicer and the Servicer
are unable to reconcile discrepancies with respect to a Servicer's
Certificate by the related Distribution Date, the Servicer shall cause a firm
of nationally recognized independent certified public accountants, at the
Servicer's expense, to audit the Servicer's Certificate and, prior to the
third Business Day, but in no event later than the fifth calendar day, of the
following month, to reconcile such discrepancies. The effect, if any, of
such reconciliation shall be reflected in the Servicer's Certificate for the
next succeeding Determination Date. In addition, upon the occurrence of a
Servicer Termination Event, the Servicer shall, if so requested by the
Indenture Trustee, the Note Insurer or the Owner Trustee, each with the prior
written consent of the Note Insurer, deliver to the Backup Servicer, or the
successor Servicer if other than the Backup Servicer, within 15 days after
demand therefor its records relating to the Receivables and the related
property and a computer tape containing as of the close of business on the
date of demand all of the data maintained by the Servicer in computer format
in connection with the servicing of the Receivables. Other than the duties
specifically set forth in this Agreement, the Backup Servicer shall have no
obligations hereunder, including, without limitation, to supervise, verify or
monitor the performance of the Servicer. The Backup Servicer shall have no
liability for any actions taken or omitted by the Servicer.
Section 4.14. Term of Servicer. The Servicer hereby covenants and
----------------
agrees to act as Servicer under, and for the term of, this Agreement.
Section 4.15. Status Report. The Servicer shall provide to the Note
-------------
Insurer on a semi-annual basis, beginning June 30, 1998, forecasts for (i)
HMFC's expected quarterly contract origination volume for the following six
month period and (ii) HMFC's financial budgets for contract origination and
servicing operations for such period. The Servicer shall also provide to the
Note Insurer on a semi-annual basis a status report (i) setting forth actual
versus budgeted contract originations during the preceding six month period
and (ii) updating the condition of HMFC's credit facilities; this status
report shall be delivered within 60 days following the end of each semi-
annual calendar period (the first such status report shall be due on or
before March 2, 1999); provided, however, that the Servicer shall not be
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required to deliver any of such forecasts or such reports if HMC is assigned
and maintains a senior unsecured debt rating of at least "investment grade"
by each Rating Agency.
ARTICLE V
DISTRIBUTIONS; STATEMENTS TO SECURITYHOLDERS
Section 5.01. Post Office Box. All payments and other proceeds of any
---------------
type and from any source on or with respect to the Receivables that are
delivered to a Post Office Box shall be the property of the Trust, subject to
the Lien of the Indenture and the rights of the Indenture Trustee thereunder.
On each Business Day, Citibank N.A., as the remittance processor, will
transfer any such payments received by it to the Local Remittance Account or
to such other account as directed by the Note Insurer pursuant to Section
5.02(a).
Section 5.02. Accounts.
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(a) The Servicer has established an account or accounts in the name of
HMFC (the "Local Remittance Account"). All payments on the Receivables
mailed by Obligors or any other Person to the Post Office Box or otherwise
delivered to the Servicer shall be deposited by Citibank N.A., as remittance
processor, or the Servicer, as applicable, on a daily basis into the Local
Remittance Account, from which the available funds related to the Receivables
will be swept by the Servicer within two Business Days to the Collection
Account; provided, however, that if the Servicer fails to transfer such
payments to the Collection Account within two Business Days or the Servicer
shall for any reason no longer be acting as Servicer, at the direction of the
Note Insurer, HMFC at its expense shall deliver to the successor Servicer all
documents and records relating to the Post Office Boxes and cause Citibank
N.A. to transfer payments related to the Receivables directly from the Post
Office Box to the Collection Account or such other account designated by the
Note Insurer. Amounts on deposit in the Local Remittance Account shall not
be invested.
(b) (i) On or prior to the Closing Date, the Indenture Trustee shall
establish, or cause to be established, an account with and in the name of the
Indenture Trustee (the "Collection Account"), which shall be maintained as an
Eligible Deposit Account and shall bear a designation clearly indicating that
the amounts deposited thereto are held for the benefit of the Noteholders,
the Note Insurer and Certificateholders.
(ii) The Issuer, for the benefit of the Noteholders, shall cause
the Indenture Trustee to establish with and maintain in the name of the
Indenture Trustee an Eligible Deposit Account (the "Note Distribution
Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Noteholders.
(iii) The Issuer, for the benefit of the Noteholders, the Note
Insurer, and the Certificateholders, shall cause the Indenture Trustee
to establish with and maintain in the name of the Indenture Trustee an
Eligible Deposit Account (the "Pre-Funding Account"), bearing a
designation clearly indicating that the funds deposited therein are held
for the benefit of the Noteholders, the Note Insurer and the
Certificateholders.
(iv) The Issuer, for the benefit of the Noteholders and the Note
Insurer, shall cause the Indenture Trustee to establish with and
maintain in the name of the Indenture Trustee an Eligible Deposit
Account (the "Yield Maintenance Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of
the Noteholders and the Note Insurer.
(v) The Issuer, for the benefit of the Noteholders and the Note
Insurer, shall cause the Indenture Trustee to establish with and
maintain in the name of the Indenture Trustee an Eligible Deposit
Account (the "Reserve Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of
the Noteholders and the Note Insurer.
(vi) The Issuer, for the benefit of the Noteholders, the Note
Insurer and the Certificateholders, shall cause the Indenture Trustee to
establish with and maintain in the name of the Indenture Trustee an
Eligible Deposit Account (the "Capitalized Interest Account"), bearing a
designation clearly indicating that the funds deposited therein are held
for the benefit of the Noteholders, the Note Insurer and the
Certificateholders.
(vii) Funds on deposit in the Collection Account, the
Capitalized Interest Account, the Reserve Account, the Yield Maintenance
Account and the Pre-Funding Account shall be invested by the Indenture
Trustee in Eligible Investments selected in writing by the Servicer
provided, however, that if the Servicer fails to select any Eligible
Investment, the Indenture Trustee shall invest such funds in an Eligible
Investment described in clause (d) of such definition. All such
Eligible Investments shall be held by the Indenture Trustee for the
benefit of the Note Insurer, Noteholders and/or the Certificateholders,
as applicable; provided, that such amount shall be calculated on the
Determination Date and on each Distribution Date all interest and other
investment income (net of Net Investment Losses) on funds on deposit in
the Trust Accounts shall be deposited by the Indenture Trustee into the
Collection Account and shall be deemed to constitute a portion of the
Interest Distribution Amount for the related Distribution Date. Other
than as permitted in writing by the Rating Agencies and the Note
Insurer, funds on deposit in certain of the Trust Accounts shall be
invested in Eligible Investments that will mature not later than the
Business Day immediately preceding the next Distribution Date. Funds
deposited in a Trust Account on a day which immediately precedes a
Distribution Date upon the maturity of any Eligible Investments are not
required to be invested overnight.
(viii) In the event that there are Net Investment Losses in
Eligible Investments chosen by the Servicer, the Servicer shall deposit
into the Collection Account, no later than two (2) Business Days prior
to the Distribution Date the amount of the Net Investment Losses. The
Indenture Trustee shall not be held liable in any way for any Net
Investment Losses, except for losses attributable to the Indenture
Trustee's failure to make payments on such Eligible Investments issued
by the Indenture Trustee, in its commercial capacity as principal
obligor and not as Indenture Trustee, in accordance with their terms.
(c) (i) The Indenture Trustee and the Note Insurer shall possess all
right, title and interest in all funds received and all funds on deposit
from time to time in a Post Office Box and the Local Remittance Account
in each case only with respect to the Receivables, the Trust Accounts
and in all proceeds thereof (including all income thereon). The Trust
Accounts shall be under the sole dominion and control of the Indenture
Trustee for the benefit of the Noteholders and the Note Insurer or the
Noteholders, the Note Insurer and the Certificateholders, as the case
may be. If, at any time, a Trust Account ceases to be an Eligible
Deposit Account, the Indenture Trustee (or the Servicer on its behalf)
shall within 5 Business Days (or such longer period, not to exceed 15
calendar days, as to which each Rating Agency and the Note Insurer may
consent) establish a new Trust Account as an Eligible Deposit Account
and shall transfer any cash or any investments from the account that is
no longer an Eligible Deposit Account to the Trust Account.
(ii) With respect to the Trust Account Property, the Indenture
Trustee agrees, by its acceptance hereof, that:
(A) any Trust Account Property that is held in deposit
accounts shall be held solely in the Eligible Deposit Accounts,
subject to the last sentence of Section 5.02(c)(i); and each such
Eligible Deposit Account shall be subject to the exclusive custody
and control of the Indenture Trustee, and the Indenture Trustee
shall have sole signature authority with respect thereto;
(B) any Trust Account Property that constitutes Physical
Property shall be delivered to the Indenture Trustee in accordance
with paragraph (a) of the definition of "Delivery" and shall be
held, pending maturity or disposition, solely by the Indenture
Trustee or a securities intermediary (as such term is defined in
Section 8-102(a)(14) of the UCC) acting solely for the Indenture
Trustee;
(C) any Trust Account Property that is a book-entry security
held through the Federal Reserve System pursuant to federal book-
entry regulations shall be delivered in accordance with
paragraph (b) of the definition of "Delivery" and shall be
maintained by the Indenture Trustee, pending maturity or
disposition, through continued book-entry registration of such
Trust Account Property as described in such paragraph; and
(D) any Trust Account Property that is an "uncertificated
security" under Article VIII of the UCC and that is not governed by
clause (C) above shall be delivered to the Indenture Trustee in
accordance with paragraph (c) of the definition of "Delivery" and
shall be maintained by the Indenture Trustee, pending maturity or
disposition, through continued registration of the Indenture
Trustee's (or its nominee's) ownership of such security.
(iii) The Servicer shall have the power, revocable by the
Indenture Trustee or by the Owner Trustee with the consent of the
Indenture Trustee, to instruct the Indenture Trustee to make withdrawals
and payments from the Trust Accounts and the Certificate Distribution
Account for the purpose of withdrawing any amounts deposited in error
into such accounts.
Section 5.03. Application of Collections. All payments received from
--------------------------
or on behalf of an Obligor during each Collection Period (i) with respect to
each Simple Interest Receivable (other than a Purchased Receivable), shall be
applied to interest and principal in accordance with the Simple Interest
Method; and (ii) with respect to each Precomputed Receivable (other than a
Purchased Receivable), shall be applied, first, to the Scheduled Payment,
with any excess amounts being applied to future Scheduled Payments.
Section 5.04. Purchase Amounts. The Servicer or the Seller shall
----------------
deposit or cause to be deposited in the Collection Account, on or prior to
each Determination Date, the aggregate Purchase Amount with respect to
Purchased Receivables and the Servicer shall deposit therein all amounts to
be paid under Section 4.07.
Section 5.05. (Reserved).
--------
Section 5.06. Distributions.
-------------
(a) On each Determination Date, the Servicer shall calculate all
amounts required to be deposited pursuant to this Section and deliver a
Servicer's Certificate pursuant to Section 4.09.
(b) On each Distribution Date, the Servicer shall instruct the
Indenture Trustee in writing (based on the information contained in the
Servicer's Certificate delivered on the related Determination Date pursuant
to Section 4.09) to make the following deposits and distributions from
amounts on deposit in the Collection Account, to the extent of the Total
Distribution Amount for such Distribution Date including all amounts
transferred to the Collection Account from the Reserve Account and any
amounts transferred pursuant to Section 5.02(b)(viii), Section 5.07(b) and
Section 5.15, to make required payments and distributions on such date
pursuant to clauses (i) through (xi) below, in the following order and
priority (subject to the provisions of Section 5.08):
(i) to the Owner Trustee, the Indenture Trustee, the Administrator
and the Custodian, any currently due fees and expenses, in the aggregate
not to exceed an amount equal to the product of the Trustee Fee Rates
and the Pool Balance on such Distribution Date (if such amount shall be
insufficient to pay all amounts due, such amount shall be distributed
pro-rata based on the amounts otherwise due to the parties);
(ii) to the Servicer and the Backup Servicer, their ratable portion
of the Senior Servicing Fee (and any accrued and unpaid Senior Servicing
Fees from prior Collection Periods) and following a Servicer Termination
Event, to the successor Servicer, reasonably incurred Servicer
transition costs up to $75,000;
(iii) to the Note Distribution Account, the Noteholders'
Interest Distributable Amount;
(iv) to the Note Insurer, the Insurance Premium;
(v) to the Note Distribution Account, the Noteholders' Principal
Distributable Amount;
(vi) to the Note Insurer, any Reimbursement Obligations owed to the
Note Insurer;
(vii) to the Reserve Account, any deficiency in the Reserve
Account Required Amount;
(viii) to the Indenture Trustee, the Owner Trustee, the
Custodian, the Administrator and the Backup Servicer, any accrued and
unpaid fees, expenses and indemnification expenses owed thereto under
any of the Basic Documents to the extent not otherwise paid (including
legal fees and expenses and any Servicer transition costs not paid in
clause (ii) above) and to the Securities Intermediary, any accrued and
unpaid indemnification expenses owed to it;
(ix) to the Servicer, the Subordinated Servicing Fee;
(x) any costs associated with the perfection of security interests
in the Financed Vehicles to the extent not paid by the Servicer; and
(xi) the remaining balance, if any, to the Owner Trustee for
deposit in the Certificate Distribution Account and distribution to the
Certificateholders.
If the Total Distribution Amount remaining on any Distribution Date after
payment of the amounts due pursuant to clause (ii) above is insufficient to
pay the amounts due pursuant to clause (iii), then such shortfall shall be
paid, first, from amounts available, if any, in the Reserve Account, then
from amounts payable under the Policy. If the Total Distribution Amount
remaining on any Distribution Date after payment of the amounts due pursuant
to clause (iv) above is insufficient to pay amounts due pursuant to clause
(v), then such shortfall shall be paid, first, from amounts available, if
any, in the Reserve Account (but only to the extent the Note Balance exceeds
the Pool Balance) and then from amounts payable under the Policy (but only to
the extent the Note Balance exceeds the Pool Balance) or on the Class A-1
Final Scheduled Distribution Date or the Class A-2 Final Scheduled
Distribution Date, as applicable, to the extent of the outstanding principal
amount of the Class A-1 Notes or the Class A-2 Notes, as applicable. Any
amounts received under the Policy shall be deposited to the Note Distribution
Account and distributed to the Noteholders on the related Distribution Date
in accordance with the terms of the Policy. Notwithstanding that the Notes
have been paid in full, the Indenture Trustee shall continue to maintain the
Collection Account hereunder until the Certificate Balance is reduced to
zero.
Section 5.07. Yield Maintenance Account.
-------------------------
(a) On or prior to the Closing Date, the Issuer shall cause to have
deposited an amount equal to the Yield Maintenance Amount into the Yield
Maintenance Account from the net proceeds of the sale of the Notes. On each
Determination Date, the Servicer shall recalculate the Yield Maintenance
Amount. Amounts held in the Yield Maintenance Account shall be invested by
the Indenture Trustee in Eligible Investments pursuant to 5.02(b)(vii). Upon
termination of this Agreement pursuant to Section 9.01, any amounts on
deposit in the Yield Maintenance Account, after payments of amounts due to
the Noteholders, shall be paid to the Certificateholders.
(b) On each Determination Date, by delivery of a Servicer's Certificate
pursuant to Section 4.09, the Servicer shall notify the Indenture Trustee of
the Yield Maintenance Deposit Amount for the related Distribution Date. No
later than 12:00 noon, New York City time, on the Business Day prior to the
related Distribution Date, the Indenture Trustee shall withdraw from the
Yield Maintenance Account an amount equal to the Yield Maintenance Deposit
Amount and deposit such amount into the Collection Account.
(c) To the extent that the amount on deposit in the Yield Maintenance
Account exceeds the Yield Maintenance Amount for the related Distribution
Date, such excess shall be deposited one Business Day prior to the related
Distribution Date into the Certificate Distribution Account.
Section 5.08. Reserve Account.
---------------
(a) On or prior to the Closing Date, the Issuer shall cause to have
deposited an amount equal to the Reserve Account Initial Deposit into the
Reserve Account from the net proceeds of the sale of the Notes.
(b) In the event that the Servicer's Certificate with respect to any
Determination Date shall state that the amount of the Total Distribution
Amount with respect to such Determination Date is insufficient to pay the
amounts payable on the related Distribution Date pursuant to Section
5.06(b)(iii) or Section 5.06(b)(v) (but, with respect to Section 5.06(b)(v),
only to the extent the Note Balance, after taking into account all
distributions to be made on the related Distribution Date, exceeds the Pool
Balance or on the Class A-1 Final Scheduled Distribution Date or the Class X-
0 Final Scheduled Distribution Date, as applicable, to the extent of the
outstanding principal amount of the Class A-1 Notes or the Class A-2 Notes,
as applicable) (such deficiency being a "Reserve Account Claim Amount") then
on the third Business Day immediately preceding such Distribution Date, the
Indenture Trustee shall deliver to the Note Insurer, the Owner Trustee and
the Servicer, by hand delivery, telex or facsimile transmission, a written
notice (a "Reserve Account Claim Notice") specifying the Reserve Account
Claim Amount for such Distribution Date. Unless otherwise so directed by the
Note Insurer, the Indenture Trustee shall deposit such Reserve Account Claim
Amount (to the extent of the funds available in the Reserve Account) from the
Reserve Account into the Collection Account no later than 12:00 noon, New
York City time, on the Business Day prior to the related Distribution Date.
(c) In the event that the Servicer's Certificate with respect to any
Determination Date shall state that the amount on deposit in the Reserve
Account (after giving effect to all deposits thereto and withdrawals
therefrom on such Business Day prior to a Distribution Date) is greater than
the Reserve Account Required Amount, the Indenture Trustee shall release and
deposit all such amounts on the related Distribution Date into the
Certificate Distribution Account. Upon any such deposit into the Certificate
Distribution Account, the Noteholders shall have no further rights in, or
claims to, such amounts.
(d) Unless a Trigger Event shall have occurred, in the event that the
Servicer's Certificate with respect to any Determination Date shall state
that on the related Distribution Date, the amount on deposit in the Reserve
Account shall be less than the Reserve Account Required Amount, the Total
Distribution Amount remaining after the payment of the amounts set forth in
Section 5.06(b)(i) through (vi), up to an amount equal to such shortfall,
shall be deposited by the Indenture Trustee to the Reserve Account on such
Distribution Date.
(e) Upon the occurrence of a Trigger Event of which the Indenture
Trustee has actual knowledge or has received written notice and each
Distribution Date thereafter, any amounts remaining after the payment of the
amount set forth in Section 5.06(b)(v) and all amounts in the Reserve
Account, at the discretion of the Note Insurer, shall be applied in the
following order of priority:
(i) to the Noteholder's Distribution Account, all amounts to
reduce the Outstanding Amount of the Notes until the Note Balance is
reduced to zero;
(ii) to pay Reimbursement Obligations to the Note Insurer;
(iii) to pay any accrued and unpaid fees and expenses owed to
the Indenture Trustee, the Owner Trustee, the Custodian and the Backup
Servicer; and
(iv) the remaining balance, if any, to the Certificate Distribution
Account.
(f) Upon the occurrence of a Reserve Event of which the Indenture
Trustee has actual knowledge or has received written notice, any amounts
remaining after the deposit pursuant to Section 5.06(b)(vii) from the Total
Distribution Amount shall be deposited in the Reserve Account to the extent
necessary to maintain the amounts on deposit therein at the Reserve Account
Required Amount until the earlier of (i) all Reserve Events have been Deemed
Cured of which the Indenture Trustee shall have received written notice
acknowledged by the Note Insurer or (ii) the occurrence of a Trigger Event.
(g) Amounts held in the Reserve Account shall be invested in Eligible
Investments pursuant to Section 5.02(b)(vii).
(h) With respect to the Reserve Account Property, the Indenture Trustee
agrees that:
(i) Any Reserve 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 Reserve 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 Reserve 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 Reserve 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 Reserve Account Property as
described in such paragraph.
(iv) Any Reserve Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by clause
(iii) above shall be delivered to the Indenture Trustee, as collateral
agent, in accordance with clause (c) of the definition of "Delivery" and
shall be maintained by the Indenture Trustee, as collateral agent,
pending maturity or disposition, through continued registration of the
Indenture Trustee's or its securities intermediary's (or its custodian's
or its nominee's) ownership of such security, in its capacity as
collateral agent.
Effective upon Delivery of any Reserve Account Property in the form of
Physical Property, book-entry securities or uncertificated securities, the
Indenture Trustee shall be deemed to have purchased such Reserve 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 Reserve Account Property.
Upon termination of this Agreement, any amounts on deposit in the
Reserve Account, after payment of all amounts due to the Noteholders and the
Note Insurer, shall be paid to the Certificateholders.
Section 5.09. Claims on the Policy.
--------------------
(a) If an Insured Payment is necessary for any Collection Period, then
the Indenture Trustee shall give notice to the Note Insurer and the Fiscal
Agent (as defined in the Policy), if any, by telephone or telecopy of the
amount of the required Insured Payment. Such notice shall be confirmed in
writing by the Indenture Trustee in the form set forth as Exhibit A to the
Policy, to the Note Insurer and the Fiscal Agent, if any, so that such notice
is received by the Note Insurer and the Fiscal Agent no later than
12:00 noon, New York City time, on the Deficiency Claim Date. Following
receipt by the Note Insurer of such notice in such form, the Note Insurer or
the Fiscal Agent shall pay the Indenture Trustee any amount payable under the
Policy, on the later to occur of (i) 12:00 noon, New York City time, on the
third Business Day following such receipt and (ii) 12:00 noon, New York City
time, on the Distribution Date to which such deficiency relates, as provided
in the Policy.
(b) The Indenture Trustee shall deposit the Insured Payment made under
the Policy in the Note Distribution Account and distribute such amount only
to pay to the Noteholders in accordance with the terms of the Policy, and
such amount may not be applied in any other manner. Amounts paid under the
Policy shall remain uninvested and shall be disbursed by the Indenture
Trustee to Noteholders in accordance with Section 5.06(b), the Policy and the
Indenture. However, the amount of any payment of principal of or interest on
the Notes to be paid from amounts in the Note Distribution Account in respect
of payments on the Policy shall be noted as provided in paragraph (c) below
in the Note Register, and in the statement to be furnished to the Noteholders
pursuant to Section 5.13.
(c) The Indenture Trustee shall keep a complete and accurate record of
the amount of interest and principal paid in respect of any Notes from moneys
received under the Policy. The Note 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
Note Insurer.
Section 5.10. Notices to the Note Insurer. All notices, statements,
---------------------------
reports, notes, or opinions required by this Agreement to be sent to any
other party hereto or to the Noteholders at any time shall also be sent to
the Note Insurer unless the Policy is no longer in effect (and the Note
Insurer has been paid in full).
Section 5.11. Rights in Respect of Insolvency Proceedings.
-------------------------------------------
(a) In the event that the Indenture Trustee has received a certified
copy of a final, nonappealable order of the appropriate court that any
distribution of the Noteholders' Distributable Amount has been voided in
whole or in part as a preference payment under applicable bankruptcy or
insolvency law, the Indenture Trustee shall comply with the terms of the
Policy relating to Preference Amounts.
(b) The Indenture Trustee shall promptly notify the Note Insurer of
either of the following as to which an applicable Trust Officer has actual
knowledge: (i) the commencement of any proceeding by or against an Obligor,
the Seller, the Depositor or the Issuer commenced under the United States
Bankruptcy Code or any other applicable United States federal or state
bankruptcy, insolvency, receivership, rehabilitation, or similar law (an
"Insolvency Proceeding") or (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 the Notes
or the Certificates. Each Noteholder, by its purchase of a Note, and the
Indenture Trustee hereby agree that, so long as a Note Insurer Default shall
not have occurred and be continuing, the Note Insurer may at any time during
the continuation of an Insolvency Proceeding direct all matters relating to
such Insolvency Proceeding, including (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, supersedeas or
performance bond pending any such appeal. In addition, and without
limitation of the foregoing, as set forth in Section 5.12, the Note 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 and such Noteholder in the conduct of any Insolvency
Proceeding, including all rights of any party to an adversary proceeding
action with respect to any court order issued in connection with any such
Insolvency Proceeding.
(c) Upon the occurrence of any of the events described in (a) or (b)
above, the Indenture Trustee shall furnish to the Note 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.
Section 5.12. Effect of Payments by the Note 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 Policy shall not be considered payment of the
Notes by the Issuer and shall not discharge the Trust assets in respect of
such distribution. The Indenture Trustee acknowledges that, without the need
for any further action on the part of the Note Insurer, the Indenture Trustee
or the Note Registrar, (i) to the extent the Note Insurer makes payments,
directly or indirectly, on account of principal of or interest on the Notes
to the Noteholders thereof, the Note 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 Note Insurer shall be
paid principal and interest in its capacity as a Noteholder until all such
payments by the Note 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 Note Insurer Default exists or is
not continuing, the Indenture Trustee shall cooperate in all respects with
any reasonable request by the Note Insurer for action to preserve or enforce
the Note Insurer's rights or interests under this Agreement, including, upon
the occurrence of a Servicer Termination Event, 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 Note Insurer hereunder.
Section 5.13. Statements to Securityholders. On each Distribution
-----------------------------
Date, the Servicer shall provide to the Note Insurer and the Indenture
Trustee (with a copy to each Rating Agency and each Paying Agent (if any))
for the Indenture Trustee to forward to each Noteholder of record as of the
most recent Record Date and to the Owner Trustee (with a copy to each Paying
Agent (if any)) for the Owner Trustee to forward to each Certificateholder of
record as of the most recent Record Date a statement substantially in the
form of Exhibit B, respectively, setting forth at least the following
information as to the Securities to the extent applicable:
(i) the amount of collections received with respect to the
Receivables during the related Collection Period and allocable to
principal allocable to each Class of Notes on such Distribution Date;
(ii) the amount of collections received with respect to the
Receivables during the related Collection Period and allocable to
interest allocable to each Class of Notes on such Distribution Date;
(iii) the Outstanding Amount of each Class of Notes, the Note
Pool Factor for each such Class, the Certificate Balance and the
Certificate Pool Factor as of the close of business on the last day of
the preceding Collection Period, after giving effect to payments
allocated to principal reported under clause (i) above;
(iv) the amount of the Servicing Fee paid to the Servicer and the
amount of any fees payable to the Owner Trustee, the Backup Servicer,
the Custodian or the Indenture Trustee with respect to the related
Collection Period;
(v) the aggregate amounts of Realized Losses, if any, and Cram
Down Losses, if any, separately identified, with respect to the related
Collection Period;
(vi) the amount, if any, of the distribution payable on such
Distribution Date pursuant to claims under the Policy;
(vii) the balance of the Reserve Account on the related
Determination Date after giving effect to deposits and withdrawals to be
made on such Distribution Date, if any;
(viii) the Pool Balance as of the close of business on the last
day of the related Collection Period, after giving effect to payments
allocated to principal reported under clause (i) above;
(ix) the amount of any deposit to the Reserve Account and the
amount and application of any funds withdrawn from the Reserve Account,
in each case with respect to such Distribution Date;
(x) the aggregate principal balance of all Receivables that became
Liquidated Receivables or Purchased Receivables during the related
Collection Period;
(xi) the aggregate principal balance and number of Receivables that
are 30 to 59 days, 60 to 89 days or 90 days or more delinquent as of the
last day of the related Collection Period;
(xii) the Class A-1 Interest Carryover Shortfall, the Class A-1
Principal Carryover Shortfall, the Class A-2 Interest Carryover
Shortfall, the Class A-2 Principal Carryover Shortfall, in each case
after giving effect to payments on such Distribution Date, and any
change in such amounts from the preceding statement;
(xiii) the aggregate Purchase Amounts for Receivables, if any,
that were purchased during or with respect to such Collection Period;
(xiv) for each such date during the Funding Period, the
remaining amount in the Pre-Funding Account and the Capitalized Interest
Account;
(xv) the amount released to Certificateholders from the Yield
Maintenance Account on such Distribution Date, the amount on deposit in
the Yield Maintenance Account after giving effect to distributions made
on such Distribution Date, the change in such amount from the
immediately preceding Distribution Date;
(xvi) the Pre-Funded Amount remaining following the end of the
Funding Period that was not used to fund the purchase of Subsequent
Receivables and is being passed through as payments of principal on one
or both Classes of Notes;
(xvii) the aggregate Principal Balance and number of all
Receivables with respect to which the related Financed Vehicle was
repossessed;
(xviii) the aggregate Principal Balance and number of Receivables
with respect to which the Servicer granted an extension;
(xix) the Delinquency Ratio, the Cumulative Net Loss Ratio, the
Net Loss Ratio, the Annualized Net Loss Ratio, the Inventory Ratio
(including the aggregate number of Financed Vehicles that were
repossessed during the related Collection Period, the aggregate number
of all Financed Vehicles repossessed and unsold as of the end of the
related Collection Period and the number of Financed Vehicles
repossessed and sold during the related Collection Period), the
Extension Ratio and the Overcollateralization Ratio; and
(xx) any amounts distributed to the Certificateholders.
Each amount set forth on the Distribution Date statement under clauses
(i), (ii) or (iv) above shall be expressed as a dollar amount per $1,000 of
original principal balance of a Certificate or Note, as applicable.
Section 5.14. Pre-Funding Account.
-------------------
(a) On the Closing Date, the Issuer shall cause the Indenture Trustee
to deposit in the Pre-Funding Account the Pre-Funded Amount from the net
proceeds of the sale of the Notes. On the Subsequent Transfer Date, upon
satisfaction of the conditions set forth in Section 2.01(b) with respect to
such transfer, the Servicer shall instruct the Indenture Trustee in writing
to withdraw from the Pre-Funding Account an amount equal to (i) the Principal
Balance of the Subsequent Receivables transferred to the Issuer on such
Subsequent Transfer Date less the Reserve Account Subsequent Deposit Amount
and the Yield Maintenance Account Subsequent Deposit Amount for such
Subsequent Transfer Date, to distribute such amount to or upon the order of
the Depositor, (ii) the Reserve Account Subsequent Deposit Amount for such
Subsequent Transfer Date and, on behalf of the Issuer, to deposit such amount
in the Reserve Account and (iii) the Yield Maintenance Account Subsequent
Deposit Amount for such Subsequent Transfer Date and, on behalf of the
Depositor, to deposit such amount in the Yield Maintenance Account.
(b) If the Pre-Funded Amount has not been reduced to zero on the last
day of the Funding Period after giving effect to any reductions in the Pre-
Funded Amount on such date pursuant to paragraph (a) above, the Servicer
shall instruct the Indenture Trustee in writing to withdraw from the Pre-
Funding Account on the Mandatory Redemption Date (i) if the Pre-Funded Amount
is equal to or less than $100,000, the Pre-Funded Amount and deposit such
amount in the Note Distribution Account to be applied to reduce the
Outstanding Amount of the Class A-1 Notes and (ii) if the Pre-Funded Amount
is greater than $100,000, amounts equal to the Pre-Funded Percentage for each
Class of Notes of the Pre-Funded Amount and deposit such amounts in the Note
Distribution Account to be applied in reduction of the Outstanding Amount of
each Class of Notes.
Section 5.15. Capitalized Interest Account.
----------------------------
(a) On the Closing Date, the Issuer shall cause the Indenture Trustee
to deposit in the Capitalized Interest Account the Capitalized Interest
Initial Deposit from the net proceeds of the sale of the Notes.
(b) No later than 12:00 noon, New York City time, on the Business Day
prior to each Distribution Date during the Funding Period, the Indenture
Trustee shall withdraw, based on the information contained in the Servicer's
Certificate delivered pursuant to Section 4.09, from the Capitalized Interest
Account an amount equal to the Capitalized Interest Distribution Amount and
deposit such amount into the Collection Account.
(c) At the end of the Funding Period, any amounts remaining in the
Capitalized Interest Account shall be deposited into the Certificate
Distribution Account.
ARTICLE VI
THE DEPOSITOR
Section 6.01. Representations of Depositor. The Depositor makes the
----------------------------
following representations on which the Issuer relies in accepting the
Receivables and delivering the Securities and the Note Insurer relies in
issuing the Policy. Such representations speak as of the execution and
delivery of this Agreement and as of the Closing Date, in the case of the
Initial Receivables, and as of the Subsequent Transfer Date in the case of
the Subsequent Receivables, and shall survive the sale, transfer and
assignment of the Receivables by the Depositor to the Issuer and the pledge
thereof to the Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Depositor is duly
------------------------------
organized and validly existing as a corporation in good standing under the
laws of the State of Delaware, with the corporate power and authority to own
its properties and to conduct its business as such properties are currently
owned and such business is presently conducted.
(b) Due Qualification. The Depositor is duly qualified to do
-----------------
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions where the failure to
do so would materially and adversely affect the Depositor's ability to
transfer the Receivables to the Trust pursuant to this Agreement or the
validity or enforceability of the Receivables.
(c) Power and Authority. The Depositor has the corporate power
-------------------
and authority to execute and deliver this Agreement and the other Basic
Documents to which it is a party and to carry out their respective terms; the
Depositor has full power and authority to sell and assign the property to be
sold and assigned to and deposited with the Issuer, and the Depositor shall
have duly authorized such sale and assignment to the Issuer by all necessary
corporate action; and the execution, delivery and performance of this
Agreement and the other Basic Documents to which the Depositor is a party
have been and, in the case of the Subsequent Purchase Agreement and the
Subsequent Transfer Agreement, will be, duly authorized by the Depositor by
all necessary corporate action.
(d) Binding Obligation. This Agreement and the other Basic
------------------
Documents to which the Depositor is a party, when duly executed and delivered
by the other parties hereto and thereto, shall constitute legal, valid and
binding obligations of the Depositor, enforceable against the Depositor in
accordance with their respective terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization or similar laws now
or hereafter in effect relating to or affecting creditors' rights generally
and to general principles of equity (whether applied in a proceeding at law
or in equity).
(e) No Violation. The consummation of the transactions
------------
contemplated by this Agreement and the other Basic Documents and the
fulfillment of the terms of this Agreement and the other Basic Documents
shall not conflict with, result in any breach of any of the terms or
provisions of or constitute (with or without notice or lapse of time, or
both) a default under, the certificate of incorporation or bylaws of the
Depositor, or any indenture, agreement, mortgage, deed of trust or other
instrument to which the Depositor is a party or by which it is bound; or
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of
trust or other instrument, other than this Agreement and the other Basic
Documents; or violate any law, order, rule or regulation applicable to the
Depositor of any court or federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the
Depositor or its properties.
(f) No Proceedings. There are no proceedings or investigations
--------------
pending or, to the Depositor's knowledge, threatened, against the Depositor
before any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the Depositor or its
properties: (i) asserting the invalidity of this Agreement or any other Basic
Document; (ii) seeking to prevent the issuance of the Notes or the
Certificates or the consummation of any of the transactions contemplated by
this Agreement or any other Basic Document; (iii) seeking any determination
or ruling that might materially and adversely affect the performance by the
Depositor of its obligations under, or the validity or enforceability of,
this Agreement or any other Basic Document; or (iv) seeking to adversely
affect the federal income tax attributes of the Trust, the Notes or the
Certificates.
(g) No Consents. The Depositor is not required to obtain the
-----------
consent of any other party or any consent, license, approval, registration,
authorization, or declaration of or with any governmental authority, bureau
or agency in connection with the execution, delivery, performance, validity
or enforceability of this Agreement or any other Basic Document to which it
is a party that has not already been obtained.
Section 6.02. Corporate Existence. During the term of this Agreement,
-------------------
the Depositor will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business
in each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the Basic
Documents and each other instrument or agreement necessary or appropriate to
the proper administration of this Agreement and the transactions contemplated
hereby. In addition, all transactions and dealings between the Depositor and
its Affiliates will be conducted on an arm's-length basis.
Section 6.03. Liability of Depositor; Indemnities. The Depositor shall
-----------------------------------
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Depositor under this Agreement (which shall
not include distributions on account of the Notes or the Certificates).
Section 6.04. Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, Depositor. The Depositor shall not merge or consolidate with
-------------------------
any other Person or permit any other Person to become the successor to the
Depositor's business without the prior written consent of the Note Insurer.
Any such successor Person shall execute an agreement of assumption of every
obligation of the Depositor under this Agreement and the other Basic
Documents and, whether or not such assumption agreement is executed, shall be
the successor to the Depositor under this Agreement without the execution or
filing of any document or any further act on the part of any of the parties
to this Agreement. The Depositor shall provide prompt notice of any merger,
consolidation or succession pursuant to this Section 6.04 to the Owner
Trustee, the Indenture Trustee, the Note Insurer, the Servicer, the
Securityholders and the Rating Agencies. Notwithstanding the foregoing, the
Depositor shall not merge or consolidate with any other Person or permit any
other Person to become a successor to the Depositor's business unless (x)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 3.02 or 6.01 shall have been breached (for
purposes hereof, such representations and warranties shall speak as of the
date of the consummation of such transaction), (y) the Depositor shall have
delivered to the Owner Trustee, the Indenture Trustee, the Servicer and the
Note 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 6.04 and that all conditions precedent
provided for in this Agreement relating to such transaction have been
complied with and (z) the Depositor shall have delivered to the Owner
Trustee, the Indenture Trustee, the Servicer and the Note 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 executed and filed that are necessary to preserve and protect the
interest of the Trust in the Receivables and reciting the details of such
filings or (B) no such action is necessary to preserve and protect such
interest.
Section 6.05. Limitation on Liability of Depositor and Others. The
-----------------------------------------------
Depositor and any director, officer, employee or agent of the Depositor may
rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any
matters arising hereunder. The Depositor shall be under no obligation to
appear in, prosecute or defend any legal action that shall not be incidental
to its obligations under this Agreement and that in its opinion may involve
it in any expense or liability.
Section 6.06. Depositor May Own Securities. The Depositor and any
----------------------------
Affiliate thereof may in its individual or any other capacity become the
owner or pledgee of Securities with the same rights as it would have if it
were not the Depositor or an Affiliate thereof, except as expressly provided
herein or in any Basic Document.
ARTICLE VII
THE SERVICER
Section 7.01. Representations of Servicer. The Servicer makes the
---------------------------
following representations upon which the Issuer is deemed to have relied in
acquiring the Receivables and upon which the Note Insurer relies in issuing
the Policy. Such representations speak as of the execution and delivery of
this Agreement and as of the Closing Date, in the case of the Initial
Receivables, and as of the Subsequent Transfer Date in the case of the
Subsequent Receivables, and shall survive the sale of the Receivables to the
Issuer and the pledge thereof to the Indenture Trustee pursuant to the
Indenture.
(a) Organization and Good Standing. The Servicer is duly
------------------------------
organized and validly existing as a corporation in good standing under the
laws of the State of its incorporation, with the corporate power and
authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted, and
had at all relevant times, and has, the corporate power, authority and legal
right to acquire, own, and service the Receivables.
(b) Due Qualification. The Servicer is duly qualified to do
-----------------
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals, in all jurisdictions where the failure to
do so would materially and adversely affect the Servicer's ability to
acquire, own and service the Receivables.
(c) Power and Authority. The Servicer has the power and authority
-------------------
to execute and deliver this Agreement and the other Basic Documents to which
it is a party and to carry out their respective terms; and the execution,
delivery and performance of this Agreement and the other Basic Documents to
which it is a party have been duly authorized by the Servicer by all
necessary corporate action.
(d) Binding Obligation. This Agreement and the other Basic
------------------
Documents to which it is a party constitute legal, valid and binding
obligations of the Servicer, enforceable against the Servicer in accordance
with their respective terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and to general
principles of equity whether applied in a proceeding in equity or at law.
(e) No Violation. The consummation of the transactions
------------
contemplated by this Agreement and the other Basic Documents to which it is a
party and the fulfillment of their respective terms shall not conflict with,
result in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time or both) a default under, the
articles of incorporation or bylaws of the Servicer, or any indenture,
agreement, mortgage, deed of trust or other instrument to which the Servicer
is a party or by which it is bound; or result in the creation or imposition
of any Lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument, other than
this Agreement and the other Basic Documents, or violate any law, order, rule
or regulation applicable to the Servicer of any court or federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Servicer or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
--------------
pending or, to the Servicer's knowledge, threatened, against the Servicer
before any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the Servicer or its
properties: (i) asserting the invalidity of this Agreement or any of the
other Basic Documents; (ii) seeking to prevent the issuance of the Securities
or the consummation of any of the transactions contemplated by this Agreement
or any of the other Basic Documents; (iii) seeking any determination or
ruling that might materially and adversely affect the performance by the
Servicer of its obligations under, or the validity or enforceability of, this
Agreement or any of the other Basic Documents; or (iv) seeking to adversely
affect the federal income tax or other federal, state or local tax attributes
of the Securities.
(g) No Insolvent Obligors. As of the related Cutoff Date, no
---------------------
Obligor on a Receivable is shown on the Receivable Files as or has been the
subject of a bankruptcy proceeding.
Section 7.02. Indemnities of Servicer. The Servicer shall be liable
-----------------------
in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer and the representations made by the Servicer under
this Agreement:
(a) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Backup Servicer,
the Note Insurer, the Securityholders and the Depositor and any of the
officers, directors, employees and agents of the Issuer, the Owner
Trustee, the Indenture Trustee, the Backup Servicer and the Note Insurer
from and against any and all costs, expenses, losses, damages, claims
and liabilities arising out of or resulting from the use, ownership or
operation by the Servicer or any Affiliate thereof of a Financed
Vehicle, excluding any losses incurred in connection with the sale of
any repossessed Financed Vehicles in a commercially reasonable manner
and in compliance with the terms of this Agreement.
(b) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Depositor, the
Backup Servicer, the Note Insurer and their respective officers,
directors, agents and employees, and the Securityholders, from and
against any taxes that may at any time be asserted against any of such
parties with respect to the transactions contemplated in this Agreement,
including any sales, gross receipts, tangible or intangible personal
property, privilege or license taxes (but not including any federal or
other income taxes, including franchise taxes asserted with respect to,
and as of the date of, the transfer of the Receivables to the Trust or
the issuance and original sale of the Securities), and any costs and
expenses in defending against the same.
(c) The Servicer shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Indenture Trustee, the Depositor, the
Backup Servicer, the Note Insurer, the Securityholders and any of the
officers, directors, employees or agents of the Issuer, the Owner
Trustee, the Note Insurer and the Indenture Trustee from and against any
and all costs, expenses, losses, claims, damages and liabilities to the
extent that such cost, expense, loss, claim, damage or liability arose
out of, or was imposed upon any such Person through, the negligence,
misfeasance or bad faith of the Servicer in the performance of its
duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.
For purposes of this Section, in the event of the termination of the
rights and obligations of HMFC (or any successor thereto pursuant to
Section 7.03) as Servicer pursuant to Section 8.02, or the resignation by
such Servicer pursuant to this Agreement, such Servicer shall be deemed to be
the Servicer pending appointment of a successor Servicer (other than the
Indenture Trustee) pursuant to Section 8.03.
Indemnification under this Section shall survive the resignation or
removal of the Servicer or the termination of this Agreement, and shall
include reasonable fees and expenses of counsel and reasonable expenses of
litigation. If the Servicer shall have made any indemnity payments pursuant
to this Section and the Person to or on behalf of whom such payments are made
thereafter collects any of such amounts from others, such Person shall
promptly repay such amounts to the Servicer, without interest. The Servicer
shall pay all amounts due, pursuant to this Section, with respect to the
Indenture Trustee and Owner Trustee as set forth in Section 5.06(b)(viii).
Section 7.03. Merger or Consolidation of, or Assumption of the
------------------------------------------------
Obligations of, Servicer.
------------------------
(a) The Servicer shall not merge or consolidate with any other Person,
convey, transfer or lease substantially all its assets as an entirety to
another Person, or permit any other Person to become the successor to the
Servicer's business unless, after such merger, consolidation, conveyance,
transfer, lease or succession, the successor or surviving entity shall be
capable of fulfilling the duties of the Servicer contained in this Agreement
and shall be reasonably acceptable to the Controlling Party. Any Person (i)
into which the Servicer may be merged or consolidated, (ii) resulting from
any merger or consolidation to which the Servicer shall be a party, (iii)
that acquires by conveyance, transfer or lease substantially all of the
assets of the Servicer or (iv) succeeding to the business of the Servicer,
which Person shall execute an agreement of assumption to perform every
obligation of the Servicer under this Agreement, shall be the successor to
the Servicer under this Agreement without the execution or filing of any
paper or any further act on the part of any of the parties to this Agreement.
The Servicer shall provide notice of any merger, consolidation or succession
pursuant to this Section 7.03(a) to the Owner Trustee, the Indenture Trustee,
the Note Insurer and each Rating Agency. Notwithstanding the foregoing, the
Servicer shall not merge or consolidate with any other Person or permit any
other Person to become a successor to the Servicer's business unless (i)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 7.01 shall have been breached (for purposes
hereof, such representations and warranties shall speak as of the date of the
consummation of such transaction) and no event that, after notice or lapse of
time or both, would become a Servicer Termination Event shall have occurred,
(ii) the Servicer shall have delivered to the Owner Trustee, the Indenture
Trustee and the Note 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 7.03(a) and that all
conditions precedent provided for in this Agreement relating to such
transaction have been complied with and (iii) the Servicer shall have
delivered to the Owner Trustee, the Indenture Trustee and the Note Insurer an
Opinion of Counsel stating that either (A) all financing statements and
continuation statements and amendments thereto have been executed and filed
that are necessary to preserve and protect the interest of the Trust and the
Indenture Trustee, respectively, in the assets of the Trust and reciting the
details of such filings or (B) no such action shall be necessary to preserve
and protect such interest.
(b) Any Person who is acceptable to the Note Insurer and (i) into which
the Backup Servicer may be merged or consolidated, (ii) resulting from any
merger or consolidation to which the Backup Servicer shall be a party, (iii)
that acquires by conveyance, transfer or lease substantially all of the
assets of the Backup Servicer or (iv) succeeding to the business of the
Backup Servicer, which Person shall execute an agreement of assumption to
perform every obligation of the Backup Servicer under this Agreement, shall
be the successor to the Backup Servicer under this Agreement without the
execution or filing of any paper or any further act on the part of any of the
parties to this Agreement.
Section 7.04. Limitation on Liability of Servicer, Backup Servicer and
--------------------------------------------------------
Others.
------
(a) None of the Servicer, the Backup Servicer or any of their
respective directors, officers, employees or agents shall be under any
liability to the Issuer, the Depositor, the Note Insurer, the Indenture
Trustee, the Owner Trustee, the Noteholders or the Certificateholders, except
as provided in this Agreement, for any action taken or for refraining from
the taking of any action pursuant to this Agreement; provided, however, that
this provision shall not protect the Servicer, the Backup Servicer or any
such Person against any liability that would otherwise be imposed by reason
of a breach of this Agreement or willful misfeasance, bad faith or negligence
in the performance of duties. The Servicer, the Backup Servicer and any
director, officer, employee or agent of the Servicer or Backup Servicer may
conclusively rely in good faith on the written advice of counsel or on any
document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising under this Agreement.
(b) The Backup Servicer shall not be liable for any obligation of the
Servicer contained in this Agreement or for any errors of the Servicer
contained in any computer tape, certificate or other data or document
delivered to the Backup Servicer hereunder or on which the Backup Servicer
must rely in order to perform its obligations hereunder, and the Owner
Trustee, the Indenture Trustee, the Depositor, the Note Insurer and the
Securityholders shall look only to the Servicer to perform such obligations.
The Backup Servicer, the Owner Trustee and the Indenture Trustee shall have
no responsibility and shall not be in default hereunder or incur any
liability for any failure, error, malfunction or any delay in carrying out
any of its duties under this Agreement if such failure or delay results from
the Backup Servicer acting in accordance with information prepared or
supplied by a Person other than the Backup Servicer or the failure of any
such other Person to prepare or provide such information. Subject to Section
7.04(a), the Backup Servicer shall have no responsibility, shall not be in
default and shall incur no liability for (i) any act or failure to act of any
third party, including the Servicer or the Controlling Party, (ii) any
inaccuracy or omission in a notice or communication received by the Backup
Servicer from any third party, (iii) the invalidity or unenforceability of
any Receivable under applicable law, (iv) the breach or inaccuracy of any
representation or warranty made with respect to any Receivable, or (v) the
acts or omissions of any successor Backup Servicer.
(c) The parties expressly acknowledge and consent to The Chase
Manhattan Bank simultaneously acting in the capacity of Backup Servicer or
successor Servicer and Indenture Trustee. The Chase Manhattan Bank may, in
such capacities, discharge its separate functions fully, without hinderance
or regard to conflict of interest principles, duty of loyalty principles or
other breach of fiduciary duties to the extent that any such conflict or
breach arises from the performance by The Chase Manhattan Bank of express
duties set forth in this Agreement in any of such capacities.
Section 7.05. Appointment of Subservicer. The Servicer may at any
--------------------------
time, with the Note Insurer's consent, appoint a subservicer to perform all
or any portion of its obligations as Servicer hereunder; provided, however,
that 10 days' prior notice of such appointment shall have been given to each
Rating Agency and the Note Insurer, and each Rating Agency shall have
notified the Servicer, the Backup Servicer, the Owner Trustee, the Indenture
Trustee and the Note Insurer in writing that such appointment satisfies the
Rating Agency Condition; and provided further, that the Servicer shall remain
obligated and be liable to the Owner Trustee, the Indenture Trustee, the Note
Insurer and the Securityholders for the servicing and administering of the
Receivables in accordance with the provisions hereof without diminution of
such obligation and liability by virtue of the appointment of such
subservicer and to the same extent and under the same terms and conditions as
if the Servicer alone were servicing and administering the Receivables. The
fees and expenses of any subservicer shall be as agreed between the Servicer
and such subservicer from time to time, and none of the Owner Trustee, the
Indenture Trustee, the Issuer, the Backup Servicer, the Note Insurer or the
Securityholders shall have any responsibility therefor. The Note Insurer's
consent and notice requirement of this Section shall not apply to the use of
independent repossession companies by the Servicer in accordance with the
Credit and Collection Policy.
Section 7.06. Servicer and Backup Servicer Not to Resign.
------------------------------------------
(a) Subject to the provisions of Section 7.03(a), the Servicer shall
not resign from the obligations and duties imposed on it by this Agreement as
Servicer except upon a determination that the performance of its duties under
this Agreement shall no longer be permissible under applicable law.
(b) Subject to the provisions of Section 7.03(b), the Backup Servicer
may resign from the obligations and duties imposed on it by this Agreement as
Backup Servicer (i) upon a determination that the performance of its duties
under this Agreement shall no longer be permissible under applicable law,
(ii) if the Backup Servicer resigns or is removed as Indenture Trustee (in
which case the Backup Servicer may resign as Backup Servicer subject to the
same conditions applicable to the Indenture Trustee pursuant to Section 6.08
of the Indenture), or (iii) with the prior written consent of each Rating
Agency and the Controlling Party; provided, that the Rating Agency Condition
shall have been satisfied.
(c) Notice of any determination that the performance by either the
Servicer or the Backup Servicer of its duties hereunder is no longer
permitted under applicable law shall be communicated to the Owner Trustee,
the Indenture Trustee and the Note Insurer at the earliest practicable time
(and, if such communication is not in writing, shall be confirmed in writing
at the earliest practicable time) and any such determination shall be
evidenced by an Opinion of Counsel to such effect delivered by the Servicer
or Backup Servicer, as applicable, to the Owner Trustee, the Indenture
Trustee and the Note Insurer concurrently with or promptly after such notice.
No resignation of the Servicer shall become effective until the Backup
Servicer or a successor Servicer acceptable to the Note Insurer shall have
assumed the responsibilities and obligations of the Servicer in accordance
with Section 8.03. No resignation of the Backup Servicer or the Servicer
shall become effective until an entity acceptable to the Controlling Party
shall have assumed the responsibilities and obligations of the Backup
Servicer or the Servicer, as applicable. If no successor Backup Servicer or
Servicer has been appointed within 30 days of resignation or removal, the
Controlling Party may petition any court of competent jurisdiction for such
appointment.
Section 7.07. Backup Servicer
---------------
(a) No successor Backup Servicer may be appointed unless such Person
shall be acceptable to the Note Insurer and shall have entered into an
agreement, acceptable to the Note Insurer, with the Indenture Trustee, for
the benefit of the Noteholders and the Note Insurer.
(b) The Backup Servicer shall perform its duties as backup servicer 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 backup servicers.
Section 7.08. Liability of Backup Servicer.
-----------------------------
Neither the Backup Servicer nor any of its directors, officers, agents
or employees, shall be liable for any action taken or omitted to be taken by
it or them hereunder or in connection herewith in good faith and believed by
it or them to be within the purview of this Agreement, except for its or
their own negligence, lack of good faith or willful misconduct.
Section 7.09. Reliance of Backup Servicer.
----------------------------
In the absence of bad faith and negligence on the part of the Backup
Servicer, the Backup Servicer may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon any
request, instructions, certificate, electronic file/tape/diskette, opinion or
other document furnished to the Backup Servicer, reasonably believed by the
Backup Servicer to be genuine and to have been signed or presented by the
proper party or parties and conforming to the requirements of this Agreement;
but in the case of any loan document or other request, instruction, document
or certificate which by any provision hereof is specifically required to be
furnished to the Backup Servicer, the Backup Servicer shall be under a duty
to examine the same to determine whether or not it conforms to the
requirements of this Agreement.
Section 7.10. Resignation and Removal; Appointment of Successor.
--------------------------------------------------
(a) No resignation or removal of the Backup Servicer and no
appointment of a successor Backup Servicer pursuant to this Article VII shall
become effective until the acceptance of appointment by the successor Backup
Servicer under Section 7.11 hereof.
(b) The Backup Servicer may resign at any time by giving 30 days'
prior written notice thereof to the Issuer, the Note Insurer and the
Indenture Trustee. If the Backup Servicer shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of the Backup
Servicer for any cause with respect to any of the Notes, the Issuer shall,
with the prior written consent of the Note Insurer, promptly appoint a
successor Backup Servicer reasonably satisfactory to the Note Insurer. If no
successor Backup Servicer shall have been so appointed by the Issuer within
30 days of notice of removal or resignation and shall not have accepted
appointment in the manner hereinafter provided, then the Note Insurer may
appoint a successor Backup Servicer. If the Note Insurer shall fail to
appoint a successor Backup Servicer within 90 days or if a Note Insurer
Default shall have occurred and is continuing, then the Controlling Party may
petition any court of competent jurisdiction for the appointment of a
successor Backup Servicer with respect to the Notes.
(c) The Backup Servicer may be removed by the Note Insurer or, if
a Note Insurer Default has occurred and is continuing, by the Controlling
Party, at any time if one of the following events have occurred:
(i) the Backup Servicer shall become incapable of acting or shall
be adjudged a bankrupt or insolvent, or a receiver of the Backup
Servicer or of its property shall be appointed, or any public officer
shall take charge or control of the Backup Servicer or of its property
or affairs for the purpose of rehabilitation, conservation or
liquidation, or
(ii) the Backup Servicer has failed to perform its duties under
any of the Basic Documents or any side agreements with the Servicer or
has breached any representation or warranty made herein or therein.
(d) The Issuer shall give notice in the manner provided in
Section 10.03 of each resignation and each removal of the Backup Servicer and
each appointment of a successor Backup Servicer to the Indenture Trustee, the
Note Insurer, the Servicer and the Rating Agencies. Each notice shall
include the name of the successor Backup Servicer and the address of its
chief executive office.
Section 7.11. Acceptance of Appointment by Successor.
--------------------------------------
Every successor Backup Servicer appointed hereunder shall be
acceptable to the Note Insurer and shall execute, acknowledge and deliver to
the Issuer, the Indenture Trustee, the Servicer, the Note Insurer and the
retiring Backup Servicer an instrument accepting such appointment, and
thereupon the resignation or removal of the retiring Backup Servicer shall
become effective and such successor Backup Servicer, without any further act,
deed or conveyance, shall become vested with all the rights, powers, trusts
and duties of the retiring Backup Servicer but, on request of the Issuer, the
Indenture Trustee, the Note Insurer, the Servicer or the successor Backup
Servicer, such retiring Backup Servicer shall execute and deliver an
instrument transferring to such successor Backup Servicer all the rights,
powers and trusts of the retiring Backup Servicer, and shall duly assign,
transfer and deliver to such successor Backup Servicer all property and money
held by such retiring Backup Servicer hereunder. Upon request of any such
successor Backup Servicer, the Issuer or the Indenture Trustee on behalf of
the Issuer shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Backup Servicer all such rights,
powers and trusts.
No successor Backup Servicer shall accept its appointment unless at
the time of such acceptance such successor Backup Servicer shall be
acceptable to the Note Insurer and shall be eligible under this Article VII.
Section 7.12. Merger, Conversion, Consolidation or Succession to
--------------------------------------------------
Business of Backup Servicer.
----------------------------
Any Person into which the Backup Servicer may be merged or
converted or with which it may be consolidated, or any Person resulting from
any merger, conversion or consolidation to which the Backup Servicer shall be
a party, or any corporation succeeding to all or substantially all of the
business of the Backup Servicer, shall be the successor of the Backup
Servicer hereunder, provided such Person shall be acceptable to the Note
Insurer and shall be otherwise qualified and eligible, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto, and prior written notice thereof shall be provided by the Backup
Servicer to the Indenture Trustee, the Note Insurer and the Rating Agencies.
Section 7.13. Representations and Warranties of the Backup Servicer.
------------------------------------------------------
The Backup Servicer represents and warrants to, and agrees with the
Indenture Trustee, the Note Insurer and the Issuer, as of the Closing Date
that:
(a) The Backup Servicer is duly organized as a state banking
association under the laws of the state of New York, is validly existing, in
good standing and has the corporate power and authority under the laws of the
United States of America to conduct its business as now conducted.
(b) The Backup Servicer has full corporate power and authority under
the laws of the United States of America to enter into and perform all
transactions contemplated herein and no consent, approval, authorization or
order of any federal court or governmental agency or body governing or having
jurisdiction with respect to the Backup Servicer's custodial powers is
required for the Backup Servicer to enter into this Agreement and to perform
its obligations hereunder.
(c) The execution, delivery and performance by it of this Agreement (a)
do not violate any provision of any law or regulation governing the banking
or the custodial powers of the Backup Servicer or any order, writ, judgment,
or decree of any court, arbitrator, or governmental authority applicable to
the Backup Servicer or any of its assets, (b) do not violate any provision of
its corporate charter or by-laws, or (c) do not violate any provision of, or
constitute, with or without notice or lapse of time, a default under, or
result in the creation or imposition of any lien on any of the property
acquired by the Issuer pursuant to the provisions of any mortgage, indenture,
contract, agreement or other undertaking other than this Agreement to which
it is a party.
(d) This Agreement has been duly executed and delivered by the Backup
Servicer and constitutes the legal, valid and binding agreement of the Backup
Servicer, enforceable in accordance with its terms, except as enforceability
may be limited by bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or at
law.
(e) Nothing has come to the Backup Servicer's attention indicating
that, with respect to the Contracts and the Financed Vehicles (i) there exist
any adverse claims, lien, or encumbrances against any of the same; (ii) any
Contract was overdue or had been dishonored or subject to the circumstances
described in Section3-304 of the Uniform Commercial Code as in effect in the
State of New York, or (iii) there exists any other defense against or claim
to the Contracts by any other person or entity. For purposes of this
subsection (e), the Backup Servicer shall not be deemed to have notice or
knowledge of the foregoing matters unless a Responsible Officer assigned to
and working in the Backup Servicer's Corporate Trust Office shall have actual
knowledge thereof or written notice thereof is received by a Responsible
Officer of the Backup Servicer's Corporate Trust Office in accordance
herewith.
ARTICLE VIII
DEFAULT
Section 8.01. Servicer Termination Events. For purposes of this
---------------------------
Agreement, the occurrence of a Trigger Event (other than for event 6 in the
definition of Trigger Event) shall constitute a "Servicer Termination Event".
Section 8.02. Consequences of a Servicer Termination Event. If a
--------------------------------------------
Servicer Termination Event shall occur, the Note Insurer or, if the Note
Insurer is not the Controlling Party, the Custodian, the Indenture Trustee or
Noteholders evidencing 25% of the Outstanding Amount of the Notes, by notice
given in writing to the Servicer (and to the Indenture Trustee, the Owner
Trustee and the Depositor if given by the Note Insurer or such Noteholders),
may terminate all of the rights and obligations of the Servicer under this
Agreement. On or after the receipt by the Servicer of such written notice,
and upon the consent of the Note Insurer (if the Note Insurer is the
Controlling Party), all authority, power, obligations and responsibilities of
the Servicer under this Agreement automatically shall pass to, be vested in
and become obligations and responsibilities of the Backup Servicer (or such
other successor Servicer appointed by the Controlling Party); provided,
however, that the Backup Servicer or any other successor Servicer shall have
no liability with respect to any obligation that was required to be performed
by the terminated Servicer prior to the date that the Backup Servicer or any
other successor Servicer becomes the Servicer or any claim of a third party
based on any alleged action or inaction of the terminated Servicer. The
Backup Servicer or any other successor Servicer is authorized and empowered
by this Agreement to execute and deliver, on behalf of the terminated
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of the Receivables and related
documents to show the Indenture Trustee (or the Owner Trustee if the Notes
have been paid in full) as lienholder or secured party on the related
certificates of title of the Financed Vehicles or otherwise. The terminated
Servicer agrees to cooperate with the Backup Servicer or any other successor
Servicer in effecting the termination of the responsibilities and rights of
the terminated Servicer under this Agreement, including the transfer to the
Backup Servicer or any other successor Servicer for administration by it of
all money and property held by the Servicer with respect to the Receivables
and other records relating to the Receivables, including any portion of the
Receivables File held by the Servicer and a computer tape in readable form as
of the most recent Business Day containing all information necessary to
enable the Backup Servicer or any other successor Servicer to service the
Receivables. The terminated Servicer shall also provide the Backup Servicer
or any other successor Servicer access to Servicer personnel and computer
records in order to facilitate the orderly and efficient transfer of
servicing duties.
Section 8.03. Appointment of Successor Servicer.
---------------------------------
(a) On and after the time the Servicer receives a notice of termination
pursuant to Section 8.02 or upon the resignation of the Servicer pursuant to
Section 7.06, the Backup Servicer (unless the Note Insurer shall have
exercised its option pursuant to Section 8.03(b) to appoint an alternate
successor Servicer) shall be the successor in all respects to the Servicer in
its capacity as Servicer under this Agreement and shall be subject to all the
rights, responsibilities, restrictions, duties, liabilities and termination
provisions relating to the Servicer under this Agreement, except as otherwise
stated herein. The Depositor, the Owner Trustee, the Indenture Trustee and
such successor Servicer shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession. If a
successor Servicer is acting as Servicer hereunder, it shall be subject to
termination under Section 8.02 upon the occurrence of any Servicer
Termination Event after its appointment as successor Servicer.
(b) On and after the time the Servicer receives a notice of termination
pursuant to Section 8.02 or upon the resignation of the Servicer pursuant to
Section 7.06, or if the Backup Servicer is legally unable or unwilling to act
as Servicer, the Controlling Party may exercise at any time its right to
appoint as Backup Servicer or as successor to the Servicer a Person other
than the Person serving as Backup Servicer at the time, and shall have no
liability to the Owner Trustee, the Indenture Trustee, the Servicer, the
Depositor, the Person then serving as Backup Servicer, any Noteholders, any
Certificateholders or any other Person if it does so. Notwithstanding the
above, if the Backup Servicer shall be legally unable or unwilling to act as
Servicer, and the Note Insurer is no longer the Controlling Party or
otherwise fails to appoint a successor, the Backup Servicer, the Indenture
Trustee, the Owner Trustee or Noteholders evidencing 25% of the Outstanding
Amount of the Notes may petition a court of competent jurisdiction to appoint
any Eligible Servicer as the successor to the Servicer. Pending appointment
pursuant to the preceding sentence, the Backup Servicer shall act as
successor Servicer unless it is legally unable to do so, in which event the
outgoing Servicer shall continue to act as Servicer until a successor
acceptable to the Note Insurer has been appointed and accepted such
appointment. Subject to Section 7.06, no provision of this Agreement shall
be construed as relieving the Backup Servicer of its obligation to succeed as
successor Servicer upon the termination of the Servicer pursuant to Section
8.02 or the resignation of the Servicer pursuant to Section 7.06. If upon
the termination of the Servicer pursuant to Section 8.02 or the resignation
of the Servicer pursuant to Section 7.06, the Controlling Party appoints a
successor Servicer other than the Backup Servicer, the Backup Servicer shall
not be relieved of its duties as Backup Servicer hereunder.
(c) Upon appointment, the successor Servicer (including the Backup
Servicer acting as successor Servicer) shall be the successor in all respects
to the predecessor Servicer and shall be subject to all the responsibilities,
duties and liabilities arising thereafter relating thereto placed on the
predecessor Servicer, and shall be entitled to the Servicing Fee and all the
rights granted to the predecessor Servicer by the terms and provisions of
this Agreement.
Section 8.04. Notification to Securityholders. Upon any termination
-------------------------------
of, or appointment of a successor to, the Servicer pursuant to this
Article VIII, the Owner Trustee shall give prompt written notice thereof to
the Certificateholders, and the Indenture Trustee shall give prompt written
notice thereof to the Noteholders, the Note Insurer and each Rating Agency.
Section 8.05. Waiver of Past Defaults. The Note Insurer or, if the
-----------------------
Note Insurer is no longer the Controlling Party, Noteholders evidencing not
less than a majority of the Outstanding Amount of the Notes or the
Certificateholders evidencing not less than a majority of the outstanding
Certificate Balance (in the case of any default that does not adversely
affect the Indenture Trustee, the Note Insurer or the Noteholders) may, on
behalf of all Securityholders, waive in writing any default by the Servicer
in the performance of its obligations hereunder and its consequences, except
a default in making any required deposits to or payments from any of the
Trust Accounts in accordance with this Agreement. Upon any such waiver of a
past default, such default shall cease to exist, and any Servicer Termination
Event arising therefrom shall be deemed to have been remedied for every
purpose of this Agreement. No such waiver shall extend to any subsequent or
other default or impair any right consequent thereto.
ARTICLE IX
TERMINATION
Section 9.01. Optional Purchase of All Receivables.
------------------------------------
(a) On each Determination Date as of which the Pool Balance is equal to
or less than 10% of the Initial Pool Balance, the Servicer (with the consent
of the Note Insurer, if a claim has previously been made under the Policy or
if such purchase would result in a claim on the Policy or if such purchase
would result in any amount owing and remaining unpaid under this Agreement or
the Insurance Agreement to the Note Insurer or any other Person) and, if the
Servicer does not, the Note Insurer, shall have the option to purchase the
Receivables. To exercise such option, the Servicer or the Note Insurer, as
applicable, shall deposit to the Collection Account pursuant to Section 5.04
an amount equal to the aggregate Purchase Amount for the Receivables
(including Liquidated Receivables) and shall pay to the Note Insurer all
amounts due to the Note Insurer and shall succeed to all interests in and to
the Receivables. The exercise of such option shall effect a retirement, in
whole but not in part, of all outstanding Class A-2 Notes.
(b) As described in Article IX of the Trust Agreement, notice of any
termination of the Trust shall be given by the Servicer to the Owner Trustee,
the Indenture Trustee and the Note Insurer as soon as practicable after the
Servicer has received notice thereof.
(c) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes and all amounts
owed to the Note Insurer, the Certificateholders will succeed to the rights
of the Noteholders hereunder and the Owner Trustee will succeed to the rights
of, and assume the obligations to make payments to Certificateholders of, the
Indenture Trustee pursuant to this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.01. Amendment.
---------
(a) This Agreement may be amended by the Depositor, the Servicer, the
Backup Servicer, the Indenture Trustee and the Issuer, with the prior written
consent of the Note Insurer (unless the Notes are no longer Outstanding and
the Note Insurer has been paid in full), but without the consent of any of
the Noteholders or the Certificateholders, to cure any ambiguity, to correct
or supplement any provisions in this Agreement or for the purpose of adding
any provisions to or changing in any manner or eliminating any of the
provisions in this Agreement or of modifying in any manner the rights of the
Noteholders or the Certificateholders; provided, however, that such action
shall not, as evidenced by an Opinion of Counsel delivered to the Owner
Trustee and the Indenture Trustee, adversely affect in any material respect
the interests of any Noteholder or Certificateholder.
(b) This Agreement may also be amended from time to time by the
Depositor, the Servicer and the Issuer, with the prior written consent of the
Indenture Trustee, the Note Insurer (unless the Notes are no longer
Outstanding and the Note Insurer has been paid in full), Noteholders holding
not less than a majority of the Outstanding Amount of the Notes and the
Holders (as defined in the Trust Agreement) of outstanding Certificates
evidencing not less than a majority of the outstanding Certificate Balance,
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Securityholders; provided, however, that no such
amendment shall (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Receivables or
distributions that shall be required to be made for the benefit of the
Securityholders or (ii) reduce the aforesaid percentage of the Outstanding
Amount of the Notes and the Certificate Balance, the Securityholders of which
are required to consent to any such amendment, without the consent of the
Noteholders holding all Outstanding Notes and Certificateholders holding all
outstanding Certificates.
Promptly after the execution of any amendment or consent, the
Administrator shall furnish written notification of the substance of such
amendment or consent to each Securityholder, the Indenture Trustee, the Note
Insurer and each Rating Agency.
It shall not be necessary for the consent of Securityholders pursuant to
this Section to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the
substance thereof.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee, on behalf of the Issuer, the Note Insurer and the Indenture Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement
and the Opinion of Counsel referred to in Section 10.02(i)(A). The Owner
Trustee, on behalf of the Issuer, and the Indenture Trustee may, but shall
not be obligated to, enter into any such amendment that affects the Owner
Trustee's or the Indenture Trustee's, as applicable, own rights, duties or
immunities under this Agreement or otherwise.
Section 10.02. Protection of Title to Trust.
----------------------------
(a) The Servicer shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such a
manner and in such places as may be required by law fully to preserve,
maintain and protect the interest of the Issuer and the Indenture Trustee in
the Receivables and the proceeds thereof. The Servicer shall deliver or
cause to be delivered to the Owner Trustee, the Note Insurer and the
Indenture Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above as soon as available following such filing.
(b) Neither the Depositor nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of Section 9-
402(7) of the UCC, unless it shall have given the Owner Trustee, the Note
Insurer and the Indenture Trustee at least five days' prior written notice
thereof and shall have promptly filed appropriate amendments to all
previously filed financing statements or continuation statements.
(c) Each of the Depositor and the Servicer shall have an obligation to
give the Owner Trustee, the Note Insurer and the Indenture Trustee at least
5 days' prior written notice of any relocation of its principal executive
office if, as a result of such relocation, the applicable provisions of the
UCC would require the filing of any amendment of any previously filed
financing or continuation statement or of any new financing statement, and
shall promptly file any such amendment or new financing statement. The
Servicer shall at all times maintain each office from which it shall service
Receivables, and its principal executive office, within the United States of
America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of each such Receivable, including
payments and recoveries made and payments owing (and the nature of each) and
(ii) reconciliation between payments or recoveries on or with respect to each
such Receivable and the amounts from time to time deposited in the Collection
Account in respect of each such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables, the
Servicer's master computer records (including any backup archives) that refer
to a Receivable shall indicate clearly the interest of the Issuer in such
Receivable and that such Receivable is owned by the Issuer and has been
pledged to the Indenture Trustee. Indication of the Issuer's interest in a
Receivable shall be deleted from or modified on the Servicer's computer
systems when, and only when, the related Receivable shall have been paid in
full or repurchased.
(f) If at any time the Depositor or the Servicer shall propose to sell,
grant a security interest in or otherwise transfer any interest in motor
vehicle receivables to any prospective purchaser, lender or other transferee,
the Servicer shall give to such prospective purchaser, lender or other
transferee computer tapes, records or printouts (including any restored from
backup archives) that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has been sold and is
owned by the Issuer and has been pledged to the Indenture Trustee.
(g) The Servicer shall permit the Indenture Trustee and the Note
Insurer (so long as no Note Insurer Default shall have occurred and be
continuing) and their agents upon reasonable notice and at any time during
normal business hours to inspect, audit and make copies of and abstracts from
the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Owner Trustee, the
Note Insurer (so long as no Note Insurer Default shall have occurred and be
continuing) or the Indenture Trustee, within fifteen Business Days, a list of
all Receivables (by contract number and name of Obligor) then held as part of
the Trust, together with a reconciliation of such list to the Schedule of
Receivables and to each of the Servicer's Certificates furnished prior to
such request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Owner Trustee, the Note Insurer
(so long as no Note Insurer Default shall have occurred and be continuing)
and the Indenture Trustee:
(A) promptly after the execution and delivery of this Agreement
and each amendment hereto and in connection with the transfer of
Subsequent Receivables from the Depositor to the Trust, an Opinion of
Counsel stating that, in the opinion of such counsel, either (i) all
financing statements and continuation statements have been executed and
filed that are necessary to fully preserve and protect the interest of
the Trust and the Indenture Trustee in the Receivables, and reciting the
details of such filings or referring to prior Opinions of Counsel in
which such details are given, or (ii) no such action shall be necessary
to preserve and protect such interest; and
(B) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Initial Cutoff Date, an Opinion of Counsel, dated as of a date
during such 90-day period, stating that, in the opinion of such counsel,
either (i) all financing statements and continuation statements have
been executed and filed that are necessary to fully preserve and protect
the interest of the Trust and the Indenture Trustee in the Receivables,
and reciting the details of such filings or referring to prior Opinions
of Counsel in which such details are given, or (ii) no such action shall
be necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (i) or (ii) above shall specify
any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
Section 10.03. Notices. All demands, notices, communications and
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instructions upon or to the Depositor, the Servicer, the Issuer, the Owner
Trustee, the Note Insurer, the Indenture Trustee or any Rating Agency under
this Agreement shall be in writing, personally delivered, faxed and followed
by first class mail, or mailed by certified mail, return receipt requested,
and shall be deemed to have been duly given upon receipt (a) in the case of
the Depositor, to Seven Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: SSB Vehicle Securities Inc.; (b) in the case of the Servicer and
HMFC, to 00000 Xxxxxxx Xxxxxx, Xxxxxxxx Xxxxxx, Xxxxxxxxxx 00000, Attention:
Vice President and General Counsel with a copy to Vice President, Finance;
(c) in the case of the Backup Servicer, the Custodian, the Administrator or
the Indenture Trustee, to 000 Xxxx 00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Structured Finance Services, Attention: Indenture
Trust Administration; (d) in the case of the Issuer or the Owner Trustee, at
the Corporate Trust Administration Department (as defined in the Trust
Agreement), (e) in the case of the Note Insurer, to 000 Xxxx Xxxxxx, Xxxxxx,
Xxx Xxxx 00000, Attention: IPM-SF; (f) in the case of Moody's, to 00 Xxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: ABS Monitoring Department, and
(g) in the case of Standard & Poor's, to 00 Xxxxxxxx (00xx Xxxxx), Xxx Xxxx,
Xxx Xxxx 00000, Attention: Asset Backed Surveillance Department; or, as to
each of the foregoing, at such other address as shall be designated by
written notice to the other parties. In addition, copies of such notices
shall be sent to the Note Insurer pursuant to Section 5.10.
Section 10.04. Assignment by the Depositor or the Servicer.
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Notwithstanding anything to the contrary contained herein, except as provided
in Sections 6.04 and 7.03 herein and as provided in the provisions of this
Agreement concerning the resignation of the Servicer, this Agreement may not
be assigned by the Depositor or the Servicer.
Section 10.05. Limitations on Rights of Others. The Note Insurer is
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an intended third party beneficiary of this Agreement entitled to enforce the
provisions hereof as if a party hereto. The provisions of this Agreement are
solely for the benefit of the Depositor, the Servicer, the Issuer, the Owner
Trustee, the Note Insurer, the Certificateholders, the Indenture Trustee and
the Noteholders, and nothing in this Agreement, whether express or implied,
shall be construed to give to any other Person any legal or equitable right,
remedy or claim in the Trust Estate or under or in respect of this Agreement
or any covenants, conditions or provisions contained herein.
Section 10.06. Severability. Any provision of this Agreement that is
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prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
Section 10.07. Counterparts. This Agreement may be executed by the
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parties hereto in any number of counterparts, each of which when so executed
and delivered shall be an original, but all of which shall together
constitute but one and the same instrument.
Section 10.08. Headings. The headings of the various Articles and
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Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 10.09. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
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ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AND THE OBLIGATIONS,
RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Section 10.10. Assignment by Issuer. The Depositor hereby acknowledges
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and consents to any mortgage, pledge, assignment and grant of a security
interest by the Issuer to the Indenture Trustee pursuant to the Indenture for
the benefit of the Noteholders of all right, title and interest of the Issuer
in, to and under the Receivables or the assignment of any or all of the
Issuer's rights and obligations hereunder to the Indenture Trustee.
Section 10.11. Nonpetition Covenants. Notwithstanding any prior
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termination of this Agreement, the parties hereto shall not, prior to the
date that is one year and one day after the termination of this Agreement
with respect to the Issuer, the Certificate Trust or the Depositor,
acquiesce, petition or otherwise invoke or cause the Issuer, the Certificate
Trust or the Depositor to invoke the process of any court or government
authority for the purpose of commencing or sustaining a case against the
Issuer, the Certificate Trust or the Depositor under any federal or state
bankruptcy, insolvency or similar law, or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Issuer, the Certificate Trust or the Depositor or any substantial part of its
property, or ordering the winding up or liquidation of the affairs of the
Issuer, the Certificate Trust or the Depositor.
Section 10.12. Limitation of Liability of Owner Trustee and Indenture
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Trustee.
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(a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by Wilmington Trust Company not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Wilmington Trust Company in its individual capacity or,
except as expressly provided in the Trust Agreement, as Owner Trustee of the
Issuer have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer in accordance
with the priorities set forth herein. For all purposes of this Agreement, in
the performance of its duties or obligations hereunder or in the performance
of any duties or obligations of the Issuer hereunder, the Owner Trustee shall
be subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by The Chase Manhattan Bank, not in its
individual capacity but solely as Indenture Trustee, and in no event shall
The Chase Manhattan Bank have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer
hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the
assets of the Issuer in accordance with the priorities set forth herein.
Section 10.13. Servicer Payment Obligation. The Servicer shall be
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responsible for the payment of all fees and expenses of the Trust, the Owner
Trustee and the Indenture Trustee paid by any of them in connection with any
of their obligations under the Basic Documents to obtain or maintain any
required license under the Pennsylvania Motor Vehicle Sales Finance Act.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
HYUNDAI AUTO RECEIVABLES TRUST 1998-A
By: WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as Owner
Trustee on behalf of the Trust
By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
Title: Vice President
SSB VEHICLE SECURITIES INC.,
as Depositor
By: /s/ Xxx Xxxxxxxxx
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Name: Xxx Xxxxxxxxx
Title: Vice President
HYUNDAI MOTOR FINANCE COMPANY,
as Servicer and Seller
By: /s/ Yang-Ki Chae
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Name: Yang-Ki Chae
Title: Executive Vice President and Treasurer
THE CHASE MANHATTAN BANK,
as Indenture Trustee,
Administrator, Custodian
and Backup Servicer
By: /s/ Xxxx Xxxxxx
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Name: Xxxx Xxxxxx
Title: Vice President
SCHEDULE A
Schedule of Receivables
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(To be Delivered to the Trust at Closing and Supplemented
on the Subsequent Transfer Date for Subsequent Receivables)
SCHEDULE B
Location of Receivable Files
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Hyundai Motor Finance Company
00000 Xxxxxxx Xxxxxx
Xxxxxxxx Xxxxxx, XX 00000
