CHEVY CHASE BANK, F.S.B.,
Seller and Servicer
and
_____________________________________,
Trustee
POOLING AND SERVICING AGREEMENT,
Dated as of ___________________
$_____________________
Chevy Chase Auto Receivables Trust _____
___% Auto Receivables Backed Securities
TABLE OF CONTENTS
Page
----
ARTICLE I DEFINITIONS................................................. 1
SECTION 1.1 DEFINITIONS............................................ 1
SECTION 1.2 USAGE OF TERMS......................................... 18
SECTION 1.3 CUT-OFF DATE AND RECORD DATE........................... 18
SECTION 1.4 SECTION REFERENCES..................................... 18
SECTION 1.5 INTEREST CALCULATIONS.................................. 18
ARTICLE II CREATION OF THE TRUST;
CONVEYANCE OF RECEIVABLES................................... 19
SECTION 2.1 CREATION OF TRUST...................................... 19
SECTION 2.2 CONVEYANCE OF RECEIVABLES.............................. 19
SECTION 2.3 ACCEPTANCE BY TRUSTEE.................................. 21
ARTICLE III THE RECEIVABLES............................................. 21
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF
SELLER................................................. 21
SECTION 3.2 REPURCHASE UPON BREACH................................. 26
SECTION 3.3 CUSTODY OF RECEIVABLE FILES............................ 26
SECTION 3.4 DUTIES OF SERVICER AND SUB-SERVICER
AS CUSTODIAN........................................... 27
SECTION 3.5 INSTRUCTIONS; AUTHORITY TO ACT......................... 28
SECTION 3.6 EFFECTIVE PERIOD AND TERMINATION....................... 28
ARTICLE IV ADMINISTRATION AND SERVICING OF
RECEIVABLES................................................. 29
SECTION 4.1 DUTIES OF SERVICER..................................... 29
SECTION 4.2 COLLECTION OF RECEIVABLE PAYMENTS...................... 29
SECTION 4.3 REALIZATION UPON RECEIVABLES........................... 30
SECTION 4.4 INSURANCE.............................................. 30
SECTION 4.5 MAINTENANCE OF SECURITY INTERESTS
IN FINANCED VEHICLES................................... 31
SECTION 4.6 COVENANTS OF SERVICER.................................. 31
SECTION 4.7 PURCHASE OF RECEIVABLES UPON
BREACH................................................. 35
SECTION 4.8 SERVICING FEES......................................... 35
SECTION 4.9 SERVICER'S CERTIFICATE................................. 36
SECTION 4.10 ANNUAL STATEMENT AS TO COMPLIANCE;
NOTICE OF DEFAULT...................................... 36
SECTION 4.11 ANNUAL INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANTS' REPORT.................................... 37
SECTION 4.12 ACCESS TO CERTAIN DOCUMENTATION AND
INFORMATION REGARDING RECEIVABLES...................... 37
SECTION 4.13 SERVICER EXPENSES...................................... 38
SECTION 4.14 REPORTS TO SECURITYHOLDERS............................. 38
i
ARTICLE V DISTRIBUTIONS; STATEMENTS TO
SECURITYHOLDERS............................................. 38
SECTION 5.1 ESTABLISHMENT OF ACCOUNTS.............................. 38
SECTION 5.2 COLLECTIONS............................................ 41
SECTION 5.3 PURCHASE AMOUNTS....................................... 42
SECTION 5.4 DISTRIBUTIONS.......................................... 42
SECTION 5.5 CERTIFICATE INSURANCE POLICY........................... 43
SECTION 5.6 RESERVE ACCOUNT AND YIELD
MAINTENANCE ACCOUNT.................................... 46
SECTION 5.7 STATEMENTS TO CERTIFICATEHOLDERS....................... 47
ARTICLE VI THE CERTIFICATES............................................ 49
SECTION 6.1 THE CERTIFICATES....................................... 49
SECTION 6.2 AUTHENTICATION OF CERTIFICATES......................... 50
SECTION 6.3 REGISTRATION OF TRANSFER AND
EXCHANGE OF CERTIFICATES............................... 50
SECTION 6.4 MUTILATED, DESTROYED, LOST, OR
STOLEN CERTIFICATES.................................... 51
SECTION 6.5 PERSONS DEEMED OWNERS.................................. 51
SECTION 6.6 ACCESS TO LIST OF
CERTIFICATEHOLDERS' NAMES AND
ADDRESSES.............................................. 51
SECTION 6.7 MAINTENANCE OF OFFICE OR AGENCY........................ 52
SECTION 6.8 BOOK-ENTRY CERTIFICATES................................ 52
SECTION 6.9 NOTICES TO CLEARING AGENCY............................. 53
SECTION 6.10 DEFINITIVE CERTIFICATES................................ 53
ARTICLE VII THE SELLER.................................................. 54
SECTION 7.1 REPRESENTATIONS OF SELLER.............................. 54
SECTION 7.2 LIABILITY OF SELLER.................................... 57
SECTION 7.3 MERGER OR CONSOLIDATION OF, OR
ASSUMPTION OF THE OBLIGATIONS OF
THE SELLER............................................. 57
SECTION 7.4 LIMITATION ON LIABILITY OF CERTAIN
PERSONS OF SELLER...................................... 57
ARTICLE VIII THE SERVICER................................................ 58
SECTION 8.1 REPRESENTATIONS OF SERVICER............................ 58
SECTION 8.2 LIABILITIES OF SERVICER, INDEMNITIES................... 60
SECTION 8.3 MERGER OR CONSOLIDATION OF, OR
ASSUMPTION OF THE OBLIGATIONS OF
THE SERVICER........................................... 62
SECTION 8.4 LIMITATION ON LIABILITY OF CERTAIN
PERSONS OF SERVICER.................................... 62
SECTION 8.5 SERVICER NOT TO RESIGN................................. 63
SECTION 8.6 DELEGATION OF DUTIES................................... 64
ii
ARTICLE IX DEFAULT..................................................... 64
SECTION 9.1 EVENTS OF DEFAULT...................................... 64
SECTION 9.2 APPOINTMENT OF SUCCESSOR............................... 66
SECTION 9.3 NOTIFICATION TO CERTIFICATEHOLDERS..................... 67
SECTION 9.4 WAIVER OF PAST DEFAULTS................................ 67
SECTION 9.5 EFFECT OF EVENT OF DEFAULT ON SUB-SERVICER............. 68
ARTICLE X THE TRUSTEE................................................. 68
SECTION 10.1 DUTIES OF TRUSTEE...................................... 68
SECTION 10.2 TRUSTEE'S CERTIFICATE.................................. 70
SECTION 10.3 TRUSTEE'S ASSIGNMENT OF PURCHASED RECEIVABLES.......... 70
SECTION 10.4 CERTAIN MATTERS AFFECTING THE TRUSTEE.................. 71
SECTION 10.5 TRUSTEE NOT LIABLE FOR CERTIFICATES OR RECEIVABLES..... 73
SECTION 10.6 TRUSTEE MAY OWN CERTIFICATES........................... 74
SECTION 10.7 TRUSTEE'S FEES......................................... 74
SECTION 10.8 ELIGIBILITY REQUIREMENTS FOR TRUSTEE................... 74
SECTION 10.9 RESIGNATION OR REMOVAL OF TRUSTEE...................... 75
SECTION 10.10 SUCCESSOR TRUSTEE...................................... 75
SECTION 10.11 MERGER OR CONSOLIDATION OF TRUSTEE..................... 76
SECTION 10.12 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.......... 76
SECTION 10.13 REPRESENTATIONS AND WARRANTIES OF TRUSTEE.............. 78
SECTION 10.14 TAX RETURNS............................................ 79
ARTICLE XI TERMINATION................................................. 79
SECTION 11.1 TERMINATION OF THE TRUST............................... 79
SECTION 11.2 OPTIONAL PURCHASE OF ALL
RECEIVABLES............................................ 80
ARTICLE XII MISCELLANEOUS PROVISIONS.................................... 81
SECTION 12.1 AMENDMENT.............................................. 81
SECTION 12.2 PROTECTION OF TITLE TO TRUST........................... 00
XXXXXXX 00.0 XXXXXXXXXX XX RIGHTS OF CERTIFICATEHOLDERS............. 84
SECTION 12.4 GOVERNING LAW.......................................... 86
SECTION 12.5 NOTICES................................................ 86
SECTION 12.6 SEVERABILITY OF PROVISIONS............................. 86
SECTION 12.7 ASSIGNMENT............................................. 86
SECTION 12.8 CERTIFICATES NONASSESSABLE AND FULLY PAID.............. 87
SECTION 12.9 COUNTERPARTS........................................... 87
SECTION 12.10 BENEFITS OF AGREEMENT.................................. 87
SECTION 12.11 TAX TREATMENT.......................................... 87
iii
Exhibit A Schedule of Receivables
Exhibit B Form of Security
Exhibit C Form of Trustee's Certificate (assignment to Seller)
Exhibit D Form of Trustee's Certificate (assignment to Servicer)
Exhibit E Form of Servicer's Certificate
Exhibit F List of Designated Loans
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This POOLING AND SERVICING AGREEMENT (this "Agreement" or this "Pooling
and Servicing Agreement"), dated as of -____________________, is made with
respect to the formation of the Chevy Chase Auto Receivables Trust
_____________, among CHEVY CHASE BANK, F.S.B., a federally chartered savings
bank, as seller and servicer (the "Seller" or the "Servicer" in its respective
capacities as such), and _______________________, as trustee (the "Trustee").
WITNESSETH THAT: In consideration of the premises and of the mutual
agreements herein contained, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINITIONS.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
"ACCOUNT" means any of the Collection Account, the Certificate
Account, the Yield Maintenance Account and the Reserve Account.
"ADDITIONAL FEES" means any late fees, prepayment charges, extension
fees or other administrative fees or similar charges allowed by applicable law
with respect to the Receivables and collected by the Servicer.
"AMOUNT FINANCED", with respect to a Receivable, means the amount
advanced under the Receivable toward the purchase price of the Financed Vehicle
and any related costs, except with respect to Receivables originated through
applications submitted by Obligors directly to the Seller, exclusive of the
amount allocable to the premium of credit life, disability or hospitalization
insurance covering the Financed Vehicle or the Obligor.
"ANNUAL PERCENTAGE RATE" or "APR" of a Receivable means the annual
interest rate stated in the Receivable.
"APR": see "Annual Percentage Rate."
"AVAILABLE DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the sum of the amounts described in clauses (w), (x) and (y)
of Section 5.4(a) on such Distribution Date.
"AVAILABLE FUNDS" means the amount defined as such in Section 5.2(c).
The term "Available Funds" does not
include Insured Payments and does not include any amounts that cannot be
distributed to the Securityholders by the Trustee as a result of proceedings
under the United States Bankruptcy Code.
"BALLOON PAYMENT" means, with respect to a Balloon Receivable, the
payment to be made by the Obligor on the stated maturity date of such Balloon
Receivable.
"BALLOON RECEIVABLE" means any Receivable that on the date of
origination provided for scheduled monthly payments in level amounts
substantially lower than the amount of the final scheduled payment.
"BOOK-ENTRY SECURITIES" means beneficial interests in the Definitive
Security described in Section 6.8, the ownership and transfers of which shall be
made through book entries by a Clearing Agency as described in Section 6.8.
"BUSINESS DAY" means, unless otherwise specified in this Agreement,
any day other than a Saturday, a Sunday, or a day on which banking institutions
in New York, New York, ______ or Chevy Chase, Maryland shall be authorized or
obligated by law, executive order, or governmental decree to be closed.
"CLAIM DATE" shall have the meaning specified in Section 5.5(b).
"CLEARING AGENCY" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. The initial Clearing Agency shall be The Depository Trust Company.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other
financial institution or other person for whom from time to time a Clearing
Agency effects book-entry transfers of securities deposited with the Clearing
Agency.
"CLOSING DATE" means _________________.
"CODE" means the Internal Revenue Code of 1986, as it may be amended
from time to time, or any successor statute thereto, and applicable temporary or
final regulations of the U.S. Department of the Treasury promulgated thereunder.
"COLLATERAL INSURANCE" shall have the meaning specified in Section
4.4(b).
"COLLECTION ACCOUNT" means the account designated as such, established
and maintained pursuant to Section 5.1.
2
"COLLECTION PERIOD" means (i) initially, the period from and including
the Cut-off Date through and including the last day of the calendar month in
which the Cut-off Date occurs and (ii) thereafter, each calendar month until the
Trust shall terminate pursuant to Article XI.
"CORPORATE TRUST OFFICE" at the date hereof, is located at
_____________________________________; the telecopy number for the Corporate
Trust Office on the date of the execution of this Agreement is _______________.
"CUT-OFF DATE" means ______________________.
"DEALER" means the seller of a Financed Vehicle who arranged for a
sales contract or loan from a Lender to the purchaser of a Financed Vehicle
under an existing agreement with such Lender.
"DEFAULTED RECEIVABLE", with respect to a Distribution Date, means a
Receivable (other than a Purchased Receivable) as to which the earlier of the
following has occurred (i) a scheduled payment is 180 days past due as of the
end of the most recently completed Collection Period or (ii) the Servicer has
determined in accordance with its customary servicing practices, during the
Collection Period preceding such Distribution Date, that eventual payment in
full of the Amount Financed is unlikely.
"DEFICIENCY AMOUNT" shall have the meaning specified in Section
5.5(b).
"DEFINITIVE SECURITIES" shall have the meaning specified in Section
6.8.
"DELINQUENCY PERCENTAGE" means, with respect to any Distribution Date,
the fraction, expressed as a percentage, equal to (x) the aggregate principal
balances of all Receivables 30 or more days delinquent (including any
Receivables relating to repossessed Financed Vehicles held in the Servicer's
inventory) as of the last day of the related Collection Period divided by (y)
the Pool Balance as of such date.
"DELIVERY" when used with respect to any Eligible Investments means:
(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 by physical delivery to the Trustee
endorsed to, or registered in the name of, the Trustee or its
3
nominee 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 to the Trustee or by delivery of such
certificated security to a financial intermediary endorsed to, or
registered in the name of, the Trustee or its nominee or endorsed in blank
to a financial intermediary (as defined in Section 8-313 of the UCC) and
the making by such financial intermediary of entries on its books and
records identifying such certificated securities as belonging to the
Trustee and the sending by such financial intermediary of a confirmation of
the purchase of such certificated security by the Trustee, or (ii) by
delivery thereof to a "clearing corporation" (as defined in Section 8-102
(3) of the UCC) and the making by such clearing corporation of appropriate
entries on its books reducing the appropriate securities account of the
transferor and increasing the appropriate securities account of a financial
intermediary by the amount of such certificated security, the
identification by the clearing corporation of the certificated securities
for the sole and exclusive account of the financial intermediary, the
maintenance of such certificated securities by such clearing corporation or
a "custodian bank" (as defined in Section 8-102(4) of the UCC) or the
nominee of either subject to the clearing corporation's exclusive control,
the sending of a confirmation by the financial intermediary of the purchase
by the Trustee of such securities and the making by such financial
intermediary of entries on its books and records identifying such
certificated securities as belonging to the Trustee (all of the foregoing,
"Physical Property"), and such additional or alternative procedures as may
hereafter become appropriate to effect the complete transfer of ownership
of or a security interest in any such Eligible Investment to the Trustee,
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 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 Eligible Investment to an appropriate book-entry
account maintained with a Federal Reserve Bank by a financial intermediary
which is also a "depositary" pursuant to applicable federal
4
regulations and issuance by such financial intermediary of a deposit advice
or other written confirmation of such book-entry registration to the
Trustee of the purchase by the Trustee of such book-entry securities; the
making by such financial intermediary of entries in its books and records
identifying such book-entry security held through the Federal Reserve
System pursuant to federal book-entry regulations as belonging to the
Trustee and indicating that such financial intermediary holds such Eligible
Investment solely as agent for the Trustee; and such additional or
alternative procedures as may hereafter become appropriate to effect
complete transfer of ownership of or a security interest in any such
Eligible Investment to the Trustee, consistent with changes in applicable
law or regulations or the interpretation thereof; and
(c) with respect to any Eligible Investment that is an uncertificated
security under Article 8 of the UCC and that is not governed by clause (b)
above, registration on the books and records of the issuer thereof in the
name of the financial intermediary, the sending of a confirmation by the
financial intermediary of the purchase by the Trustee or its nominee of
such uncertificated security, and the making by such financial intermediary
of entries on its books and records identifying such uncertificated
certificates as belonging to the Trustee.
"DEPOSIT DATE" means, with respect to any Distribution Date, the
Business Day immediately preceding such Distribution Date.
"DESIGNATED LOANS" means any Receivable with an APR below the Required
Rate, as listed on Exhibit F.
"DESIGNATED LOAN REQUIRED AMOUNT" means, with respect to any
Distribution Date, and with respect to each Designated Loan held by the Trust as
of the opening of business on the first day of the Collection Period in which
such Distribution Date occurs, the sum, for such Collection Period and each
future Collection Period (assuming that such Designated Loan amortizes in
accordance with its terms) of the products of (x) one-twelfth, (y) such
Designated Loan's principal balance as of the opening of business on the first
day of such Collection Period and all future Collection Periods, assuming that
such Designated Loan amortizes according to its terms and (z) the excess of (i)
the Required Rate over (ii) such Designated Loan's APR.
"DETERMINATION DATE" means the earlier of the ________ Business Day or
the ___________ calendar day of the month (or, if such ____________ calendar day
is not a
5
Business Day, the Business Day preceding the _____________ calendar day of the
month).
"DISTRIBUTION DATE", with respect to each Collection Period, means the
_________ day of the following month, or if the __________ day shall not be a
Business Day, the next following Business Day, commencing _______________.
"ELIGIBLE ACCOUNT" means either (a) a segregated account with an
Eligible Bank or (b) a segregated trust account with the corporate trust
department of a depository institution with corporate trust powers organized
under the laws of the United States of America or any state thereof or the
District of Columbia (or any United States branch of a foreign bank) and whose
deposits are insured by the FDIC, provided that such institution must have a net
worth in excess of $______________ and must have a rating of Baa3 or higher from
Moody's and a rating of BBB- or higher from Standard & Poor's with respect to
long-term deposit obligations.
"ELIGIBLE BANK" shall mean a depository institution organized under
the laws of the United States or any one of the states thereof, including the
District of Columbia (or any United States branch or agency of a foreign bank),
which is subject to supervision and examination by federal or state banking
authorities, the deposits of which are insured by the Federal Deposit Insurance
Corporation ("FDIC") and which at all times (a) has a net worth in excess of
$______________ and (b) has either (x) a long-term unsecured debt rating of at
least A2 by Moody's and AA by Standard & Poor's or (y) a short-term certificate
of deposit rating of P-1 by Moody's and A-1+ by Standard & Poor's.
"ELIGIBLE INVESTMENT" means any of the following:
(i) Direct obligations of the United States of America and
securities fully and unconditionally guaranteed as to the timely payment of
principal and interest by the United States of America; PROVIDED, that the
full faith and credit of the United States of America must be pledged to
any such direct obligation or guarantee ("Direct Obligations");
(ii) Direct Obligations and fully guaranteed certificates of
beneficial interest of the Export-Import Bank of the United States;
consolidated debt obligations and letter of credit-backed issues of the
Federal Home Loan Banks; participation certificates and senior debt
obligations of the Federal Home Loan Mortgage Corporation ("FHLMCs");
debentures of the Federal Housing Administration; mortgage-backed
securities (except stripped mortgage securities which
6
are valued greater than par on the portion of unpaid principal) and senior
debt obligations of the Federal National Mortgage Association ("FNMAs");
participation certificates of the General Services Administration;
guaranteed mortgage backed securities and guaranteed participation
certificates of the Government National Mortgage Association ("GNMAs");
guaranteed participation certificates and guaranteed pool certificates of
the Small Business Administration; debt obligations and letter of credit-
backed issues of the Student Loan Marketing Association; local authority
bonds of the U.S. Department of Housing & Urban Development; guaranteed
Title XI financings of the U.S. Maritime Administration; guaranteed transit
bonds of the Washington Metropolitan Area Transit Authority; and Resolution
Funding Corporation securities; all of the foregoing rated, at the time of
purchase, "P-1" or "A2" by Moody's.
(iii) Direct obligations of any state of the United States of
America or any subdivision or agency thereof whose unsecured, uninsured and
unguaranteed general obligation debt is rated, at the time of purchase "A2"
or better by Moody's and "A" or better by Standard & Poor's, or any
obligation fully and unconditionally guaranteed by any state, subdivision
or agency whose unsecured, uninsured and unguaranteed general obligation
debt is rated, at the time of purchase, "A2" or better by Moody's and "A"
or better by Standard & Poor's;
(iv) Commercial paper (having original maturities of not more
than 270 days) rated, at the time of purchase, "P-1" by Moody's and "A-1"
or better by Standard & Poor's;
(v) Federal funds, unsecured certificates of deposit, time
deposits or bankers acceptances (in each case having maturities of not more
than 365 days) of any domestic bank including a branch office of a foreign
bank which branch office is located in the United States, provided legal
opinions are received to the effect that full and timely payment of such
deposit or similar obligation is enforceable against the principal office
or any branch of such bank, which, at the time of purchase, has a short-
term "Bank Deposit" rating of "P-1" by Moody's and a "Short-Term CD" rating
of "A-1" or better by Standard & Poor's and further provided that the bank
is subject to the supervision and examination of federal and state banking
authorities.
7
(vi) Deposits of any bank or savings and loan association which
has combined capital, surplus and undivided profits of not less than $3
million, provided such deposits are continuously and fully insured by the
Bank Insurance Fund or the Savings Association Insurance Fund of the FDIC;
(vii) Investments in money-market funds rated "AAAm" or "AAAm-G"
by Standard & Poor's and "Aaa" by Moody's;
(viii) Repurchase agreements collateralized by Direct
Obligations, GNMAs, FNMAs or FHLMCs, as defined above, with any registered
broker/dealer subject to the Securities Investors' Protection Corporation
jurisdiction or any commercial bank insured by the FDIC, if such broker/dealer
or bank has an uninsured, unsecured and unguaranteed obligation rated "P-1" or
"A2" or better by Moody's, and "A-1" or "A-" or better by Standard Poor's,
provided:
a. a master repurchase agreement or specific written repurchase
agreement governs the transaction; and
b. the securities are held free and clear of any lien by the
Trustee or an independent third party acting solely as agent ("Agent")
for the Trustee, and such third party is (i) a Federal Reserve Bank,
(ii) a bank which is a member of the FDIC and which has combined
capital, surplus and undivided profits of not less than $50 million
or (iii) a bank approved in writing for such purpose by the
Certificate Insurer, and the Trustee shall have received written
confirmation from such third party that it holds such securities, free
and clear of any lien, as agent for the Trustee; and
c. a perfected first security interest under the Uniform
Commercial Code, or book entry procedures prescribed at 31 C.F.R.
306.1 et seq. or 31 C.F.R. 350.0 et seq. in such securities is created
for the benefit of the Trustee; and
d. the repurchase agreement has a term of 180 days or less, and
the Trustee or the Agent will value the collateral securities no less
frequently than weekly and will liquidate the collateral securities if
any deficiency in the required collateral percentage is not restored
within two business days of such valuation; and
8
e. the fair market value of the securities in relation to
the amount of the repurchase obligation, including principal and
interest, is equal to at least 103%.
f. the securities have a rating, at the time of purchase of
"P-1" or "A-2" or better by Moody's.
(ix) Investment agreements, the issuer, form and substance of
which are specifically approved by the Certificate Insurer with notice to
Standard & Poor's and Moody's.
Notwithstanding the foregoing, Eligible Investments shall not include (i)
"stripped securities" and investments which contractually may return less than
the purchase price therefore, and (ii) instruments with a purchase price greater
than par if such instrument may be prepaid or called at a price less than its
purchase price prior to its stated maturity.
"EVENT OF DEFAULT" means an event specified in Section 9.1.
"FINANCED VEHICLE" means an automobile, light duty truck or van,
together with all accessions thereto, securing an Obligor's indebtedness under
the respective Receivable.
["FITCH" means Fitch Investors Service, Inc.]
"HOLDER" see "Securityholder."
"INDEMNIFICATION AGREEMENT" means the Indemnification Agreement dated
as of __________________ by and among _________________________________, Chevy
Chase Bank, F.S.B., and ____________________________, as representative of
itself, ______________________________, and __________________________.
"INITIAL SECURITY PRINCIPAL BALANCE" shall be $________________.
$____________________
"INITIAL YIELD MAINTENANCE AMOUNT" means $_________________.
$____________________
"INSURANCE POLICIES" means the insurance policies described in Section
3.1(xiii).
"INSURED PAYMENT" means (i) as of any Distribution Date, any
Deficiency Amount and (ii) any Preference Amount.
9
"LATE PAYMENT RATE" means, for any Distribution Date, the "Prime Rate"
of interest as published in THE WALL STREET JOURNAL in New York, New York plus
2%. The Late Payment Rate shall be computed on the basis of a 360-day year
consisting of twelve 30-day months.
"LENDERS" means, together, the Seller and the Seller's wholly- owned
subsidiary, Consumer Finance Corporation, a Virginia corporation, and "Lender"
means the Seller or Consumer Finance Corporation.
"LIEN" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind other than tax liens, mechanics' liens, and any liens
which attach to the respective Receivable by operation of law.
"LIQUIDATION PROCEEDS" means, with respect to a Distribution Date, all
monies collected on a Defaulted Receivable from whatever source (other than
withdrawals from the Reserve Account or the Yield Maintenance Account and the
proceeds of a claim under the Security Insurance Policy), including insurance
proceeds and proceeds of Financed Vehicles which have been sold or otherwise
disposed of, during the preceding Collection Period, net of the sum of any
amounts expended by the Servicer for the account of the Obligor plus any amounts
required by law to be remitted to the Obligor.
"MONTHLY INTEREST" for any Distribution Date will equal one-twelfth of
the product of the Pass-Through Rate on the Security Principal Balance
immediately prior to such Distribution Date.
"MONTHLY PRINCIPAL" for any Distribution Date will equal the Principal
Balances of the Receivables on the last day of the second preceding Collection
Period (or, in the case of the first Distribution Date, the Initial Security
Principal Balance) less the Pool Balance of the Receivables on the last day of
the preceding Collection Period; PROVIDED, HOWEVER, that Monthly Principal on
the Final Scheduled Distribution Date will equal the Security Principal Balance
on such date. For the purpose of determining Monthly Principal, the Principal
Balance of a Defaulted Receivable or a Purchased Receivable is deemed to be zero
on and after the last day of the Collection Period in which such Receivable
became a Defaulted Receivable or a Purchased Receivable.
"MONTHLY SERVICING FEE" means, for any Distribution Date, one- twelfth
of the product of (a) the Pool Balance as of the beginning of the Collection
Period for the month prior to the month of such Distribution Date and (b) the
Servicing Fee Rate.
10
"MONTHLY TRUSTEE'S FEE" means, for any Distribution Date, one twelfth
of the product of (a) the Security Principal Balance as of the end of the
Collection Period for the month prior to the month of such Distribution Date and
(b) ___%.
["MOODY'S" means Xxxxx'x Investors Service, Inc.]
"NET AVAILABLE DISTRIBUTION AMOUNT" means, with respect to any
Distribution Date, the excess of (x) the Available Distribution Amount for such
Distribution Date over (y) the amounts described in clauses (i) and (ii) of
Section 5.4(a) on such Distribution Date.
"NET AVAILABLE FUNDS" means the amount defined as such in Section
5.2(c).
"NET LOSSES" means with respect to a Collection Period and with
respect to each Receivable which became a Defaulted Receivable during such
Collection Period, the excess of (x) the principal balance of each such
Defaulted Receivable over (y) the Liquidation Proceeds, if any, collected during
such Collection Period.
"NET LOSS PERCENTAGE" means, with respect to any Distribution Date,
the fraction, expressed as a percentage, equal to (x) twelve times the Net
Losses for the related Collection Period divided, by (y) the Pool Balance as of
the last day of such Collection Period.
"OBLIGOR" on a Receivable means the purchaser or the co-purchasers of
the Financed Vehicle or any other Person who owes payments under the Receivable.
The phrase "payment made on behalf of an Obligor" shall mean all payments made
with respect to a Receivable except payments made by a Lender or the Servicer.
"OFFICERS' CERTIFICATE" means a certificate signed by any two of the
chairman of the board, the president, any vice chairman of the board, any
executive vice president, any senior vice president, any vice president, the
treasurer, or the controller of the Seller or the Servicer, as appropriate;
provided that no individual shall sign in a dual capacity.
"OPINION OF COUNSEL" means a written opinion of counsel, who may be
in-house counsel to the Seller or Servicer, which counsel shall be acceptable to
the Trustee and the Security Insurer.
"OPTIONAL PURCHASE PRICE" means the amount specified as such in
Section 11.2.
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"ORIGINAL POOL BALANCE" shall be $_______________.
"PASS-THROUGH RATE" shall be ___% per annum.
"PERSON" means any individual, corporation, estate, partnership,
limited liability company, joint venture, association, joint stock company,
trust, unincorporated organization, or government or any agency or political
subdivision thereof.
"POOL BALANCE" as of any date means the aggregate Principal Balance of
the Receivables as of such date.
"PREFERENCE AMOUNT" means, as to any Distribution Date, any amounts
included in previous distributions to Securityholders of Required Payments
(exclusive of Insured Payments) which are recovered from such Securityholders as
a voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code (11 U.S.C.), as amended from time to time, in accordance with a
final, nonappealable order of a court having competent jurisdiction and which
have not theretofore been repaid to such Securityholders, provided such
Securityholders have complied with the provisions of Section 5.5(e).
"PREFERENCE ORDER" shall have the meaning set forth in Section 5.5(e).
"PREMIUM AMOUNT" means, as to any Distribution Date, one-twelfth of
the product of (x) the Premium Percentage and (y) the Security Principal Balance
on such Distribution Date (after taking into account any distributions of
Principal to the Securityholders to be made on such Distribution Date).
"PREMIUM PERCENTAGE" has the meaning set forth in the letter agreement
between the Seller and the Security Insurer.
"PRINCIPAL BALANCE" of a Receivable, at any time, means the Amount
Financed minus that portion of all payments received by the Servicer on or
before such time allocable to principal of such Receivable.
"PURCHASE AMOUNT" means, with respect to a Purchased Receivable as of
a Distribution Date, the amount equal to the sum of the Principal Balance of
such Receivable as of the last day of the preceding Collection Period and any
unpaid interest accrued thereon through the date such Receivable is repurchased.
"PURCHASED RECEIVABLE" means, with respect to a Distribution Date, a
Receivable purchased not later than the
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Determination Date immediately preceding such Distribution Date by the Servicer
pursuant to Section 4.2, 4.7 or 11.2 or repurchased not later than such
Determination Date by the Seller pursuant to Section 3.2.
"RATING AGENCIES" means ______________, _____________ and
________________.
"RECEIVABLE" means any motor vehicle retail installment sales contract
or motor vehicle installment loan executed by an obligor in respect of a
Financed Vehicle, including, without limitation, any extension or revision
agreement relating thereto and all payments due thereunder on or after the Cut-
off Date and all proceeds thereof, which Receivable appears on the Schedule of
Receivables.
"RECEIVABLE FILES" means the documents specified in Section 3.3.
"RECORD DATE" means, as to any Distribution Date, the close of
business, if applicable, on the day (whether or not a Business Day) immediately
preceding such Distribution Date or, if Definitive Securities are issued
pursuant to Section 6.8, the last day of the calendar month immediately
preceding the month in which such Distribution Date occurs.
"REIMBURSEMENT AMOUNT" means, as of any Distribution Date, the sum of
(i) all Insured Payments previously paid by the Security Insurer and not
previously repaid to the Security Insurer pursuant to Section 5.5(d), plus the
amount of any unpaid Premium Amount not paid to the Security Insurer pursuant to
Section 5.4(a)(ii), plus (ii) interest accrued on each such Insured Payment not
previously repaid and each such unpaid Premium Amount, calculated at the Late
Payment Rate in each case from the date the Security Insurer paid the related
Insured Payment, or the date the related Premium Amount was due, as the case may
be. The Security Insurer shall notify in writing the Trustee and the Seller of
the amount of any Reimbursement Amount due in respect of any Distribution Date
at least two days prior to the related Determination Date.
"REQUIRED PAYMENTS" means, with respect to any Distribution Date, the
sum of the Monthly Interest and the Monthly Principal for such Distribution
Date.
"REQUIRED RATE" means ____% per annum.
"RESERVE ACCOUNT" means the Reserve Account established pursuant to
Section 5.6.
"RESERVE ACCOUNT DEPOSIT AMOUNT" means, with respect to any
Distribution Date, the lesser of (x) the
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excess of (i) the Specified Reserve Balance on such Distribution Date over (ii)
the amount on deposit in the Reserve Account on such Distribution Date, after
taking into account the amount of any Reserve Account Withdrawal Amount on such
Distribution Date and (y) the amount remaining in the Security Account after
taking into account the distributions therefrom described in clauses (i) through
(v) of Section 5.4(a).
"RESERVE ACCOUNT WITHDRAWAL AMOUNT" means, with respect to any
Distribution Date, the lesser of (x) the excess of (i) the sum of the amounts
described in clauses (i) through (v) of Section 5.4 (a) over (ii) the Available
Funds for such Distribution Date and (y) the amount on deposit in the Reserve
Account on such Distribution Date before taking into account any withdrawal
therefrom on such Distribution Date.
"RESERVE INITIAL DEPOSIT" shall be $______________.
"RESPONSIBLE OFFICER" means, when used with respect to the Trustee,
any officer within the Corporate Trust Department (or any successor group of the
Trustee), including any senior vice president, vice president, assistant vice
president, assistant secretary, assistant treasurer or any other officer or
assistant officer of the Trustee customarily performing functions similar to
those performed by the persons who at the time shall be such officers,
respectively, or to whom any corporate trust matter is referred at the Corporate
Trust Department because of his knowledge of and familiarity with the particular
subject.
"SCHEDULE OF RECEIVABLES" shall be, as of any date, the schedule of
Receivables included in the Trust on such date. The initial Schedule of
Receivables as of the Cut-off Date is attached hereto as Exhibit A and sets
forth as to each Receivable, among other things, (a) its identifying number and
the state of residence of the related Obligor; (b) its date of origination; (c)
the original number of months to stated maturity; (d) the original stated
maturity; (e) the Amount Financed; (f) the Principal Balance as of the Cut-off
Date; (g) the original Principal Balance; (h) the APR; (i) the scheduled monthly
payment of principal and interest; (j) the amount of the Balloon Payment, if
any; and (k) whether such Receivable is with recourse to any Dealer and the type
of such recourse.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
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"SECURITY" means a security executed on behalf of the Trustee and
authenticated by the Trustee substantially in the form attached as Exhibit B.
"SECURITYHOLDER" or "HOLDER" means the Person in whose name the
respective Security shall be registered in the Security Register, except that,
solely for the purposes of giving any consent, waiver, request, or demand
pursuant to this Agreement, the interest evidenced by any Security registered in
the name of the Seller or the Servicer, or any Person controlling, controlled
by, or under common control with the Seller or the Servicer, shall not be taken
into account in determining whether the requisite percentage necessary to effect
any such consent, waiver, request, or demand shall have been obtained unless all
of the Securities outstanding are registered in the name of the Seller, the
Servicer and any such Persons.
"SECURITY ACCOUNT" means the account designated as such, established
and maintained pursuant to Section 5.1.
"SECURITY FACTOR" means, at any time, a seven digit decimal number
equal to the current Security Principal Balance divided by the Initial Security
Principal Balance.
"SECURITY INSURANCE POLICY" means the security guaranty insurance
policy number _____, issued by the Security Insurer to the Trustee for the
benefit of the Securityholders.
"SECURITY INSURER" means _____________________________, and any
successor thereto.
"SECURITY OWNER" means, with respect to a Book-Entry Security, the
Person who is the owner of such Book-Entry Security, as reflected on the books
of the Clearing Agency, or on the books of a direct or indirect Clearing Agency
Participant.
"SECURITY PRINCIPAL BALANCE" means, at any time, the Initial Security
Principal Balance minus all distributions of Monthly Principal made up to such
time plus all amounts referred to in Section 5.4(c) unless paid pursuant to the
Security Insurance Policy.
"SECURITY REGISTER" and "SECURITY REGISTRAR" mean the register
maintained and the registrar appointed pursuant to Section 6.3.
"SELLER" means Chevy Chase Bank, F.S.B. in its capacity as the seller
of the Receivables under this
15
Agreement, and each successor to Chevy Chase Bank, F.S.B. (in the same capacity)
pursuant to Section 2.2.
"SERVICER" means Chevy Chase Bank, F.S.B. in its capacity as the
servicer of the Receivables, and each successor to Chevy Chase Bank, F.S.B. (in
the same capacity) pursuant to Sections 3.3, 3.4 and 9.2.
"SERVICER'S CERTIFICATE" means a certificate completed and executed by
the Servicer by its chairman of the board, its president, any vice chairman of
its board, any executive vice president, any senior vice president, any vice
president, the treasurer, or the controller of the Servicer pursuant to Section
4.9.
"SERVICING FEE RATE" means ____%.
"SERVICING OFFICE" means, at the date of this Agreement, the office of
the Servicer specified in this Agreement, or such other address as the Servicer
may designate from time to time by notice to the Seller, the Trustee and the
Security Insurer.
"SERVICING OFFICER" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Receivables whose name
appears on a list of servicing officers annexed to an Officers, Certificate
furnished to the Trustee by the Servicer, as the case may be, as such list may
from time to time be amended.
"SPECIFIED RESERVE BALANCE" means, with respect to any Distribution
Date, the greater of (i) $_____________, and (ii) __% of the Pool Balance on the
first day of the related Collection Period; except that if on any Distribution
Date (a) the average of the Net Loss Percentage for the three preceding
Collection Periods exceeds __%, or (b) the average of the Delinquency
Percentages for the three preceding Collection Periods exceeds __%, then the
Specified Reserve Balance applicable to such Distribution Date shall be an
amount equal to the greater of (x) $______________ and (y) ____% of the Pool
Balance on the first day of the related Collection Period.
["STANDARD & POOR'S" means Standard & Poor's Ratings Services, a
division of The McGraw Hill Companies, Inc.]
"STATE" means (i) any state of the United States of America or (ii)
the District of Columbia.
"STATED FINAL DISTRIBUTION DATE" means the Distribution Date in
____________________.
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"SUB-SERVICER" means, as to the Sub-Serviced Receivables, the
Servicer's wholly-owned subsidiary, Consumer Finance Corporation, a Virginia
corporation.
"SUB-SERVICED RECEIVABLES" means those Receivables sold to Chevy Chase
Bank, F.S.B. pursuant to the Purchase and Sale Agreement dated as of
_________________, _____ between Chevy Chase Bank, F.S.B. as Purchaser and
Consumer Finance Corporation as Seller.
"TRUST" means the trust created by this Agreement, the estate of which
shall consist of the Receivables (other than Purchased Receivables) and all
monies due (including accrued interest) or received thereon on or after the Cut-
off Date; security interests in the Financed Vehicles, the Security Account and
the Collection Account; funds deposited in the Collection Account and the
Security Account; proceeds of Purchased Receivables; the right to receive
payments from funds deposited in the Reserve Account and the Yield Maintenance
Account (under the conditions specified herein); all rights to receive payments
under the Security Insurance Policy; any property (including the right to
receive future Liquidation Proceeds) that shall have secured a Receivable and
that shall have been acquired by or on behalf of the Trust; proceeds from
recourse to Dealers relating to the Receivables; proceeds from claims on any
physical damage, lender's. single interest, credit life, disability, or
hospitalization insurance policies covering Financed Vehicles or obligors; the
rights of recourse of the Seller against any cosigner or under any personal
guarantee and any and all of the proceeds of the foregoing.
"TRUSTEE" means _________________________________, or its successor in
interest, or any successor trustee appointed as herein provided.
"TRUSTEE'S CERTIFICATE" means a certificate completed and executed by
the Trustee by a Responsible Officer pursuant to Section 10.2, substantially in
the form of, in the case of an assignment to the Seller, Exhibit C, and, in the
case of an assignment to the Servicer, Exhibit D.
"UCC" means the Uniform Commercial Code as in effect in the applicable
jurisdiction.
"YIELD MAINTENANCE ACCOUNT" means the Yield Maintenance Account
established pursuant to Section 5.6.
"YIELD MAINTENANCE AMOUNT" means, with respect to any Distribution
Date, the sum of all Designated Loan Required Amounts as of such Distribution
Date.
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"YIELD MAINTENANCE WITHDRAWAL AMOUNT" means, as of any Distribution
Date, the lesser of (i) the sum of, with respect to each Designated Loan held by
the Trust as of the opening of business on the first day of the related
Collection Period, the products of (x) one-twelfth, (y) such Designated Loan's
Principal Balance as of such time and (z) the excess of (1) the Required Rate
over (2) such Designated Loan's APR and (ii) the amount on deposit in the Yield
Maintenance Account on such Distribution Date, exclusive of any net investment
earnings.
SECTION 1.2 USAGE OF TERMS.
With respect to all terms in this Agreement, the singular includes the
plural and the plural the singular; words importing any gender include the other
genders; references to "writing" include printing, typing, lithography, and
other means of reproducing words in a visible form; references to agreements and
other contractual instruments include all subsequent amendments thereto or
changes therein entered into in accordance with their respective terms and not
prohibited by this Agreement; references to Persons include their permitted
successors and assigns; and the term "including" means "including without
limitation."
SECTION 1.3 CUT-OFF DATE AND RECORD DATE.
All references to the Record Date prior to the first Record Date in
the life of the Trust shall be to the Cut-off Date.
SECTION 1.4 SECTION REFERENCES.
All section references in this Agreement shall be to sections in this
Agreement.
SECTION 1.5 INTEREST CALCULATIONS.
(a) All allocations of payments with respect to a Receivable to
principal and interest and determinations of periodic charges and the like shall
be made using the simple interest method, based on the actual number of days
elapsed and the actual number of days in the calendar year. Each payment on a
Receivable (net of fees and charges) shall be applied first to the amount of
interest accrued on such Receivable to the date of receipt and then to reduce
the principal amount outstanding on the Receivable.
(b) All calculations of interest on the Securities shall be made on
the basis of a 360-day year comprised of twelve 30-day months.
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ARTICLE II
CREATION OF THE TRUST;
CONVEYANCE OF RECEIVABLES
SECTION 2.1 CREATION OF TRUST.
Upon the execution of this Pooling and Servicing Agreement by the
parties hereto and the concurrent conveyance of the Receivables by the Seller to
the Trustee pursuant to Section 2.2, there is hereby created the Chevy Chase
Auto Receivables Trust _________.
SECTION 2.2 CONVEYANCE OF RECEIVABLES.
In consideration of the Trustee's delivery to or upon the order of the
Seller of authenticated Securities with an initial Security Principal Balance
equal to $___________________, the Seller does hereby sell, transfer, assign,
and otherwise convey to the Trustee, in trust for the benefit of the
Securityholders and the Security Insurer, without re-course (subject to the
obligations herein):
(i) all right, title, and interest of the Seller in and to the
Receivables listed in the Schedule of Receivables, including all monies due
or received thereunder on or after the Cut-off Date;
(ii) the security interests of the Seller in the Financed
Vehicles granted by obligors pursuant to the Receivables;
(iii) the Security Account and the Collection Account and funds
deposited therein;
(iv) the interest of the Seller in the documents constructively
delivered to the Trustee pursuant to Section 3.3;
(v) the interest of the Seller in any proceeds from recourse to
Dealers relating to the Receivables;
(vi) the interest of the Seller in any Liquidation Proceeds and
any proceeds from claims on any physical damage, theft, vendor's single
interest, credit life, disability or hospitalization insurance policies
covering Financed Vehicles or Obligors;
(vii) the rights of the Seller to proceeds of Insurance
Policies;
19
(viii) the right to receive payments as set forth herein from
the Reserve Account and the Yield Maintenance Account;
(ix) the right to receive payments as set forth herein from the
Security Insurance Policy; and
(x) the proceeds of any and all of the foregoing.
It is the express intention of the Seller and the Trustee that (a) the
assignment and transfer herein contemplated constitute a sale of the Receivables
and the other property of the Trust described above, conveying good title
thereto free and clear of any liens, encumbrances, security interests or rights
of other Persons, from the Seller to the Trust and (b) the Receivables and the
other property of the Trust described above not be a part of the Seller's estate
in the event of an insolvency of the Seller. In the event that such conveyance
is deemed to be a pledge in connection with a financing, the parties intend that
the Seller shall have granted to the Trustee a first priority perfected security
interest in all of the Seller's right, title and interest in the items of
property listed in clauses (i) through (ix) above, and all proceeds of the
foregoing, and that this Agreement shall constitute a security agreement under
applicable law and the Trustee shall have all of the rights and remedies of a
secured party and creditor under the UCC as in force in the relevant
jurisdictions.
The Seller hereby pledges, grants, assigns and otherwise sets over to
the Trustee, in trust, the Yield Maintenance Account and the Reserve Account and
all amounts on deposit therein and all Eligible Investments held therein from
time to time and all proceeds thereof, and hereby grants to the Trustee for the
benefit of the Securityholders and the Security Insurer a first priority
perfected security interest in such Accounts, amounts and Eligible Investments.
It is the intention of the Seller that, with respect to such Accounts and such
amounts and Eligible Investments, this Agreement shall constitute a security
agreement under applicable law and the Trustee shall have all of the rights and
remedies of a secured party and creditor under the UCC and other applicable law
as in force in the relevant jurisdictions.
SECTION 2.3 ACCEPTANCE BY TRUSTEE.
The Trustee does hereby accept the assignment by the Seller pursuant
to Section 2.2 and declares that the Trustee accepts such assignment upon the
trusts herein set
20
forth for the benefit of the Securityholders and the Security Insurer, as their
respective interests may appear, subject to the terms and provisions of this
Agreement. The assignment will not constitute, and is not intended to result in,
an assumption by the Trustee, any Securityholder or the Security Insurer of any
obligation of the Seller or any other Persons in connection with the
Receivables, the Receivables Files, the Insurance Policies or under any
agreements or instruments relating to any of them.
ARTICLE III
THE RECEIVABLES
SECTION 3.1 REPRESENTATIONS AND WARRANTIES OF SELLER.
The Seller makes, the following representations and warranties as to
the Receivables on which the Trustee relies in accepting the Receivables in
trust and executing and authenticating the Securities and upon which the
Security Insurer relies in executing and delivering the Security Insurance
Policy. Such representations and warranties speak as of the Closing Date, but
shall survive the sale, transfer, and assignment of the Receivables to the
Trustee.
(i) CHARACTERISTICS OF RECEIVABLES. Each Receivable (a)
shall have been originated or purchased by a Lender, (b) shall have been
fully and properly executed by the parties thereto, (c) is a fully-
amortizing simple interest installment contract or installment loan which
provides for level monthly payments over its original term, provided that
(x) some Receivables may include a payment in the last month in the life of
the Receivable which due to delinquencies or partial prepayments may be
different from the level monthly payment and (y) ___% of the Receivables
(measured as a percentage of the Original Pool Balance) may be Balloon
Receivables, (d) shall have created or shall create a valid, subsisting,
and enforceable first priority security interest in favor of such Lender in
the Financed Vehicle, which security interest shall be assignable and shall
have been validly assigned by the Seller to the Trustee, and (e) shall
contain customary and enforceable provisions such that the rights and
remedies of the holder thereof shall be adequate for realization against
the collateral of the benefits of the security.
(ii) SCHEDULE OF RECEIVABLES. The information set forth in
the Schedule of Receivables shall be true and correct in all material
respects as of the opening of business on the Cut-off Date. The
21
Seller shall have caused each Lender's electronic ledger relating to each
related Receivable to be clearly and unambiguously marked to show that such
Receivable has been sold to the Trust for the benefit of the
Securityholders pursuant to this Agreement.
(iii) COMPLIANCE WITH LAW. Each Receivable and each sale of
the related Financed Vehicle shall have complied at the time it was
originated or made and at the execution of this Agreement shall comply in
all material respects with all requirements of applicable federal, State,
and local laws, and regulations thereunder, including, without limitation,
usury laws, the Federal Truth-in-Lending Act, the Equal Credit Opportunity
Act, the Fair Credit Billing Act, the Fair Credit Reporting Act, the Fair
Debt Collection Practices Act, the Federal Trade Commission Act, the
Xxxxxxxx-Xxxx Warranty Act, the Federal Reserve Board's Regulations B and
Z, and State adaptations of the National Consumer Act and of the Uniform
Consumer Credit Code, and other applicable consumer credit laws and equal
credit opportunity and disclosure laws.
(iv) BINDING OBLIGATION. Each Receivable represents the
genuine, legal, valid, and binding payment obligation in writing of the
related Obligor, enforceable by the holder thereof in accordance with its
terms. All parties to such Receivable have full legal capacity to execute
and deliver such Receivable and all other documents related thereto and to
grant the security interest granted thereby and the terms of such
Receivable have not been waived or modified in any respect (other than
extensions of payments granted in the ordinary course of the Servicer's
collection procedures and the term of which does not extend beyond the last
day of the Collection Period immediately preceding the Stated Final
Distribution Date).
(v) NO GOVERNMENT OBLIGOR. None of the Receivables shall be
due from the United States of America or any State or local government or
from any agency, department, or instrumentality of the United States of
America or any State or local government.
(vi) SECURITY INTEREST IN FINANCED VEHICLE. Immediately prior
to the sale, assignment, and transfer thereof to the Trustee, each
Receivable shall be secured by a validly perfected first priority security
interest in the Financed Vehicle in favor of the Lender that originated or
purchased such Receivable as secured party and all necessary and
appropriate actions with respect to such Receivable shall have been taken
to
22
perfect a first priority security interest in the Financed Vehicle in favor
of such Lender as secured party, which security interest is assignable and
has been so assigned to the Trustee.
(vii) RECEIVABLES IN FORCE. No Receivable shall have been
satisfied, subordinated, or rescinded, nor shall any Financed Vehicle have
been released from the lien granted by the related Receivable in whole or
in part.
(viii) NO WAIVER. No provision of a Receivable shall have been
waived (other than extensions of payments granted in the ordinary course of
the collection procedures of the Servicer (or of the Sub-Servicer, with
respect to the Sub-Serviced Receivables) and the term of which does not
extend beyond the last day of the Collection Period immediately preceding
the Stated Final Distribution Date).
(ix) NO AMENDMENTS. No Receivable shall have been amended
such that the number of the Obligor's scheduled payments shall have been
increased.
(x) NO DEFENSES. No facts exist which would give rise to any
right of rescission, setoff, counterclaim or defense nor shall have any
right of rescission, setoff, counterclaim, or defense been asserted or
threatened with respect to any Receivable.
(xi) NO LIENS. No liens or claims shall have been filed,
including liens for work, labor, materials or taxes relating to a Financed
Vehicle, that shall be liens prior to, or equal or coordinate with, the
security interest in the Financed Vehicle granted by the Obligor pursuant
to the Receivable.
(xii) NO DEFAULT. Except for payment defaults continuing for a
period of not more than 59 days as of the Cut-off Date, no default, breach,
violation or event permitting acceleration under the terms of any
Receivable shall exist; no continuing condition that with notice or lapse
of time would constitute a default, breach, violation or event permitting
acceleration under the terms of any Receivable shall exist; and the related
Lender shall not have waived any of the foregoing.
(xiii) INSURANCE. The Servicer, in accordance with its
customary procedures, shall have (i) required that the Obligor obtain
physical damage and theft insurance covering the Financed Vehicle as of the
date
23
of related contract and (ii) obtained vendor's single interest insurance
covering the Financed Vehicle.
(xiv) TITLE. It is the intention of the Seller that the
transfer and assignment herein contemplated, taken as a whole, constitutes
a sale of the Receivables and other property of the Trust from the Seller
to the Trust and that the beneficial interest in and title to the
Receivables and other Trust property not be part of the receivership or
conservatorship estate in the event of the appointment of a receiver or
conservator for the Seller. No Receivable has been sold, transferred,
assigned, or pledged by the Seller to any Person other than the Trustee.
Immediately prior to the transfer and assignment herein contemplated, the
Seller had good and marketable title to each Receivable free and clear of
all Liens, and, immediately upon the transfer thereof, the Trustee for the
benefit of the Securityholders and the Security Insurer shall have good and
marketable title to each Receivable, free and clear of all Liens and rights
of others, except for the rights of the Securityholders and the Security
Insurer; and the transfer has been perfected under the UCC.
(xv) LAWFUL ASSIGNMENT. No Receivable shall have been
originated in, or shall be subject to the laws of, any jurisdiction under
which the sale, transfer, and assignment of such Receivable under this
Agreement or transfers of the Securities would be unlawful, void, or
voidable.
(xvi) ALL FILINGS MADE. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give the Trustee
a first priority perfected ownership interest in the Receivables shall have
been made.
(xvii) ONE ORIGINAL. There shall be only one original executed
copy of each Receivable, and immediately prior to the constructive delivery
thereof to the Trustee pursuant to Section 3.3, such copy shall have been
in the custody and possession of the applicable Lender.
(xviii) NO BANKRUPT OBLIGOR. None of the Receivables shall be
due from an Obligor who has commenced a voluntary case under the United
States Bankruptcy Code or consented to the entry of or failed to have
stayed within 60 days of entry an order for relief against it in an
involuntary case under the United States Bankruptcy Code.
24
(xix) CHATTEL PAPER. The Receivables constitute "chattel
paper" within the meaning of the UCC as in effect in the State of Maryland.
The chief executive office of the Seller is located in the State of
Maryland.
(xx) MAXIMUM AMOUNT FINANCED. No Obligor shall be the Obligor
on Receivables on which the sum of the Principal Balances of such
Receivables is greater than $_________.
(xxi) NO ASSIGNMENT. The related Lender has not taken any
action to convey any right to any Person that would result in such Person
having a right to payments due under the Receivable that is senior to or
equal with that of the Trust.
(xxii) COMPOSITION OF RECEIVABLES. Each Receivable is secured
by a Financed Vehicle which is a new or used automobile, light duty truck
or van.
(xxiii) MATURITY OF RECEIVABLES. Each Receivable shall have an
original term to stated maturity of at least __ months and not more than __
months.
(xxiv) MINIMUM AND MAXIMUM ANNUAL PERCENTAGE RATE. Each
Receivable shall have an Annual Percentage Rate no less than ____% and no
more than _____%.
(xxv) MINIMUM AND MAXIMUM PRINCIPAL BALANCE. Each Receivable
shall have a Principal Balance no less than $________ and no more than
$_________.
(xxvi) PAYMENT. With respect to Sub-Serviced Receivables only,
the Obligor under each Sub-Serviced Receivable has made at least one
payment with respect thereto as of the Cut-off Date.
(xxvii) STATES OF OBLIGOR RESIDENCE. Except with respect to
Receivables with an aggregate Principal Balance representing ___% of the
Original Pool Balance, the Obligor under each Receivable resides in
__________, _____________ or _______________.
(xxviii) LOCATION OF RECEIVABLE FILES. The Receivable Files shall
be kept by the Servicer as custodian for the Trustee at
_____________________, or at such other location or locations as may be
designated from time to time by notice to the Trustee and the Security
Insurer.
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(xxix) ADVANCE PAYMENTS. No Receivable has been paid more than
___ months in advance.
(xxx) NO ADVERSE SELECTION. The Receivables were selected from
retail installment sales contracts and motor vehicle installment loans in
the Seller's portfolio that had met the applicable conditions specified in
this Section 3.1 utilizing no selection procedures adverse to the
Securityholders or the Security Insurer relative to similar retail
installment sales contracts and motor vehicle installment loans in the
Seller's portfolio.
SECTION 3.2 REPURCHASE UPON BREACH.
The Seller, the Servicer, the Trustee or the Security Insurer, as the
case may be, shall inform the other parties promptly, in writing, upon the
discovery of any breach of the Seller's representations and warranties contained
in Section 3.1; PROVIDED, that the Trustee shall have no duty to inquire
concerning, or to investigate, the breach of any of such representations and
warranties. Unless the breach shall have been cured by the last day of the
Collection Period following the Collection Period during which the Seller
becomes aware of, or receives written notice of, such breach, the Seller shall
repurchase as of such day (or, at the Seller's option, as of the last day of the
month in which such breach was discovered) any Receivable materially and
adversely affected by such breach and any Receivable in which the interest of
the Trust is materially and adversely affected by such breach. In consideration
of the purchase of the Receivable, the Seller shall remit the Purchase Amount,
in the manner specified in Section 5.3. The sole remedy of the Trustee, the
Trust or the Securityholders with respect to a breach of the Seller's
representations and warranties contained in Section 3.1 shall be to require the
Seller to repurchase Receivables pursuant to this Section 3.2. The Seller shall
notify the Security Insurer of any repurchase of any Receivable pursuant to this
Section.
SECTION 3.3 CUSTODY OF RECEIVABLE FILES.
To assure uniform quality in servicing the Receivables and to reduce
administrative costs, the Trustee, upon the execution and delivery of this
Agreement, hereby revocably appoints the Servicer, and the Servicer hereby
accepts such appointment, to act as the agent of the Trustee as custodian of the
following documents or instruments which are hereby constructively delivered to
the Trustee with respect to each Receivable:
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(i) The original of the Receivable fully executed by the
Obligor.
(ii) The original credit application fully executed by the
Obligor.
(iii) The original certificate of title held by the Lender
that originated or purchased such Receivable evidencing the security
interest of such Lender in the Financed Vehicle.
(iv) Any and all other documents that the Servicer or the
applicable Lender shall keep on file, in accordance with its customary
procedures, relating to a Receivable, an Obligor, or a Financed Vehicle.
SECTION 3.4 DUTIES OF SERVICER AND SUB-SERVICER AS CUSTODIAN.
(a) SAFEKEEPING. The Servicer, in its capacity as custodian, shall
hold the Receivable Files on behalf of the Trustee for the use and benefit of
all present and future Securityholders and the Security Insurer and maintain
such accurate and complete accounts, records, and computer systems pertaining to
each Receivable File as shall enable the Trustee to comply with this Agreement.
In performing its duties as custodian, the Servicer shall act with reasonable
care, using that degree of skill and attention that the Servicer exercises with
respect to the receivable files relating to all comparable automotive
receivables that the Servicer services for itself. The Servicer shall conduct,
or cause to be conducted, periodic audits of the Receivable Files held by it
under this Agreement, and of the related accounts, records, and computer
systems, in such a manner as shall enable the Trustee to verify the accuracy of
the Servicer's record keeping. The Servicer shall promptly report to the Trustee
and the Security Insurer any failure on the Servicer's part to hold the
Receivable Files and maintain its accounts, records, and computer systems as
herein provided and promptly take appropriate action to remedy any such failure.
(b) MAINTENANCE OF AND ACCESS TO RECORDS. The Servicer shall maintain
each Receivable File at its office specified in this Agreement, or at such other
office or offices as shall be specified by the Servicer to the Trustee and the
Security Insurer by prior written notice. The Servicer shall make available to
the Trustee and the Security Insurer or their respective duly authorized
representatives, attorneys, or auditors a list of locations of the Receivable
Files, and the related accounts, records, and computer systems maintained by the
Servicer at such times during normal business hours as the Trustee or the
27
Security Insurer shall instruct, which does not unreasonably interfere with the
Servicer's normal operations or customer or employee relations.
(c) RELEASE OF DOCUMENTS. Upon instruction from the Trustee, the
Servicer shall release any document in a Receivable File to the Trustee, the
Trustee's agent, or the Trustee's designee, as the case may be, at such place or
places as the Trustee may designate, as soon as practicable.
(d) The Servicer shall require the Sub-Servicer to comply with the
preceding provisions of this Section 3.4 with respect to the Sub-Serviced
Receivables. Notwithstanding anything to the contrary, the Servicer shall remain
primarily liable for its duties as Custodian with respect to all Receivables,
including the Sub-Serviced Receivables.
SECTION 3.5 INSTRUCTIONS; AUTHORITY TO ACT.
The Servicer and the Sub-Servicer shall be deemed to have received
proper instructions with respect to the Receivable Files upon its receipt of
written instructions signed by a Responsible officer of the Trustee.
SECTION 3.6 EFFECTIVE PERIOD AND TERMINATION.
The appointment of the Servicer as custodian shall become effective as
of the Cut-off Date and shall continue in full force and effect for the term of
the Trust unless terminated earlier pursuant to this Section 3.6. If the
Servicer shall resign in accordance with the provisions of Section 8.5 or if all
of the rights and obligations of the Servicer shall have been terminated under
Section 9.1, the appointment of the Servicer and the Sub-Servicer as custodian
may be terminated (1) by the Trustee or by the Holders of Securities evidencing
not less than a majority of the Security Principal Balance, in either case, with
the consent of the Security Insurer or (ii) by the Security Insurer, by written
notification to the Servicer. The Trustee with the consent of the Security
Insurer may terminate the Servicer's appointment as custodian with cause at any
time upon written notification to the Servicer, in which case the Sub-Servicer
shall also be terminated as a custodian. The Trustee shall notify the Rating
Agencies of any termination of the Servicer's appointment as custodian pursuant
to this Section 3.6. As soon as practicable after any termination of such
appointment, the Servicer and the Sub-Servicer shall deliver the Receivable
Files to the Trustee or the Trustee's agent at such place or places as the
Trustee may reasonably designate.
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ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.1 DUTIES OF SERVICER.
The Servicer as agent for the Trustee shall manage, service,
administer, and make collections on the Receivables with reasonable care, using
that degree of skill and attention that the Servicer exercises with respect to
all comparable automotive receivables that it services for itself. The
Servicer's duties shall include the collection and posting of all payments,
responding to inquiries of Obligors or of federal, state or local governmental
authorities with respect to the Receivables, investigating delinquencies,
sending payment coupons to Obligors, accounting for collections, and furnishing
monthly and annual statements to the Trustee and the Security Insurer with
respect to distributions. The Servicer shall follow its customary standards,
policies, and procedures in performing its duties as Servicer; PROVIDED, that
with respect to the Sub-Serviced Receivables and for so long as the Sub-Servicer
is sub-servicing the Sub-Serviced Receivables, the Servicer shall follow the
Sub-Servicer's customary standards, policies and procedures. Without limiting
the generality of the foregoing, the Servicer is authorized and empowered by the
Trustee to execute and deliver, on behalf of itself, the Trust, the
Securityholders, or the Trustee or any of them, any and all instruments of
satisfaction or cancellation, or partial or full release or discharge, and all
other comparable instruments, with respect to such Receivables or to the
Financed Vehicles securing such Receivables. If the Servicer shall commence a
legal proceeding to enforce a Receivable, the Trustee shall thereupon be deemed
to have automatically assigned, solely for the purpose of collection, such
Receivable to the Servicer. The Trustee shall execute any documents prepared by
the Servicer and delivered to the Trustee for execution that are necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties hereunder.
SECTION 4.2 COLLECTION OF RECEIVABLE PAYMENTS.
The Servicer shall use its best efforts to collect all payments called
for under the terms and provisions of the Receivables as and when the same shall
become due and shall follow such collection procedures as it follows with
respect to all comparable automotive receivables that it services for itself. If
payments are extended in the ordinary course of the Servicer's collection
procedures, and, as a result, any Receivable would be outstanding on the first
day after the end of the Collection Period immediately
29
preceding the Stated Final Distribution Date, then the Servicer shall be
obligated to purchase such Receivable in the manner set forth in Section 4.7
(unless such Receivable is otherwise being purchased pursuant to Section 11.2)
as of the last day of the Collection Period following the Collection Period in
which the extension was made (or, at the Servicer's option, as of the last day
of the Collection Period in which the extension was made); PROVIDED, HOWEVER,
that the purchase obligation with respect to a Receivable shall be the
obligation of the Servicer which granted the extension, and not of any successor
Servicer; and PROVIDED, FURTHER, that the purchase obligation of any Servicer
shall survive the termination of such Servicer as Servicer. The Servicer may in
its discretion waive any Additional Fees.
SECTION 4.3 REALIZATION UPON RECEIVABLES.
On behalf of the Trust, the Servicer shall use its best efforts,
consistent with its customary servicing procedures, to repossess or otherwise
convert the ownership of the Financed Vehicle securing any Receivable as to
which the Servicer shall have determined that eventual payment in full is
unlikely. The Servicer shall follow such customary and usual practices and
procedures as it shall deem necessary or advisable in its servicing of
automotive receivables, which may include reasonable efforts to realize upon any
recourse to Dealers and selling the Financed Vehicle at a public or private
sale. The foregoing shall be subject to the provision that, in any case in which
the Financed Vehicle shall have suffered damage, the Servicer shall not expend
funds in connection with the repair or the repossession of such Financed Vehicle
unless it shall determine in its discretion that such repair and/or repossession
will increase the Liquidation Proceeds of the related Receivable by an amount
equal to or greater than the amount of such expenses.
SECTION 4.4 INSURANCE.
(a) The Servicer may xxx to enforce or collect upon the Insurance
Policies, in its own name, if possible, or as agent of the Trust. If the
Servicer elects to commence a legal proceeding to enforce an Insurance Policy,
the act of commencement shall be deemed to be an automatic assignment of the
rights of the Trust under such Insurance Policy to the Servicer for purposes of
collection only. If, however, in any enforcement suit or legal proceeding it is
held that the Servicer may not enforce an Insurance Policy on the grounds that
it is not a real party in interest or a holder entitled to enforce the Insurance
Policy, the Trustee, on behalf of the Trust, at the Servicer's expense, or the
Seller, at the Seller's expense, shall take such steps as the Servicer deems
necessary to enforce such
30
Insurance Policy, including bringing suit in its name or the name of the Trustee
for the benefit of the Securityholders.
(b) The Servicer shall maintain a vendor's single interest or other
collateral protection insurance policy with respect to all Financed Vehicles
("Collateral Insurance") which policy by its terms insures against physical
damage in the event any Obligor fails to maintain physical damage insurance with
respect to the related Financed Vehicles. The Seller will be the named insured
under all policies of Collateral Insurance. The Servicer shall maintain
Collateral Insurance at all times unless the Security Insurer otherwise consents
in writing.
(c) Costs incurred by the Servicer in maintaining Collateral
Insurance shall be paid by the Servicer.
SECTION 4.5 MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES.
The Servicer shall, in accordance with its customary servicing
procedures, take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed Vehicle.
The Trustee hereby authorizes the Servicer to take such steps as are necessary
to re-perfect such security interest on behalf of the Trust in the event of the
relocation of a Financed Vehicle or for any other reason. In the event that the
assignment of a Receivable to the Trust is insufficient, without a notation on
the related Financed Vehicle's certificate of title, or without fulfilling any
additional administrative requirements under the laws of the State in which the
Financed Vehicle is located, to grant to the Trust a perfected security interest
in the related Financed Vehicle, the Seller hereby agrees on behalf of itself
and the other Lender that the listing of the applicable Lender as the secured
party on the certificate of title is in its capacity as agent of the Trust.
SECTION 4.6 COVENANTS OF SERVICER.
(a) The Servicer shall not release the Financed Vehicle securing any
Receivable from the security interest granted by such Receivable in whole or in
part except in the event of payment in full by or on behalf of the Obligor
thereunder or repossession, nor shall the Servicer impair the rights of the
Trust or the Securityholders in the Receivables, nor shall the Servicer change
the amount of the scheduled payment under a Receivable (except for an extension
permitted pursuant to Section 4.2) or change the APR of or the Amount Financed
under a Receivable, nor shall the Servicer fail to comply with the provisions of
any Insurance Policy, if the failure to so comply would impair
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the protection or benefit to be afforded by such Insurance Policy.
(b) COMPLIANCE WITH APPLICABLE LAWS. The Servicer shall comply with
any law or, to the best of the Servicer's knowledge, any order, rule or
regulation applicable to the Servicer of any court or of any federal or state
regulatory body, administrative agency, or other governmental instrumentality
having jurisdiction over the Servicer or its properties, the failure to comply
with which may materially and adversely affect the performance by the Sellers of
its obligations under, or the validity or enforceability of, this Agreement or
the Securities.
(c) CORPORATE EXISTENCE. The Servicer and its successors and assigns
shall maintain their corporate existence and shall at all times continue to be
duly organized under the laws of their respective jurisdictions of incorporation
and duly qualified and duly authorized and shall conduct their business in
accordance with the terms of their certificates of incorporation and bylaws,
PROVIDED, HOWEVER, that the Servicer shall not be required to maintain its
existence as a federally chartered thrift if the board of directors shall
determine that the preservation of such status is no longer desirable and that
the loss thereof is not disadvantageous in any material respect to the
Securityholders or the Security Insurer.
(d) FINANCIAL STATEMENTS; ACCOUNTANTS' REPORTS; OTHER INFORMATION.
The Servicer shall keep or cause to be kept in reasonable detail books and
records of account of its assets and business, including, but not limited to,
books and records relating to this Agreement. The Servicer shall furnish or
cause to be furnished to the Security Insurer:
(i) ANNUAL FINANCIAL STATEMENTS. As soon as available, and in
any event within 120 days after the close of each fiscal year of the
Servicer, the audited consolidated balance sheets of the Servicer and its
subsidiaries as of the end of such fiscal year and the related audited
consolidated statements of income, changes in shareholders' equity and cash
flows for such fiscal year, all in reasonable detail and stating in
comparative form the respective figures for the corresponding date and
period in the preceding fiscal year, prepared in accordance with generally
accepted accounting principles, consistently applied, and accompanied by
the audit opinion of the Servicer's independent accountants (which shall be
a nationally recognized independent public accounting firm or otherwise
acceptable to the Security Insurer).
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(ii) QUARTERLY FINANCIAL STATEMENTS. As soon as available, and
in any event within 90 days after each of the first three fiscal quarters
of each fiscal year of the Servicer, the unaudited consolidated balance
sheets of the Servicer and its subsidiaries as of the end of such fiscal
quarter and the related unaudited consolidated statements of income,
changes in shareholders' equity and cash flows for such fiscal quarter, all
in reasonable detail and stating in comparative form the respective figures
for the corresponding date and period in the preceding fiscal year,
prepared in accordance with generally accepted accounting principles,
consistently applied.
(iii) CERTAIN INFORMATION. Upon the reasonable request of the
Security Insurer, the Servicer shall promptly provide copies of any
requested proxy statements, financial statements, reports and registration
statements which the Servicer files with, or delivers to, the Securities
and Exchange Commission or any national securities exchange.
All financial statements specified in clause (i) above shall be
furnished in consolidated form for the Servicer and its subsidiaries in the
event the Servicer shall consolidate its financial statements with its
subsidiaries.
The Security Insurer, by the issuance of the Security Insurance
Policy, agrees that it and its agents, accountants and attorneys shall keep
confidential all financial statements, reports and other information delivered
by the Servicer pursuant to this Section 4.6(d).
(e) MAINTENANCE OF INSURANCE. The Servicer shall maintain with a
responsible company, and at its own expense, a blanket fidelity bond and an
errors and omissions insurance policy in a minimum amount generally maintained
by prudent federally chartered thrift institutions engaged in the servicing of
automotive receivables and having servicing portfolios of a similar size.
(f) ACCESS TO RECORDS; DISCUSSIONS WITH OFFICERS AND ACCOUNTANTS.
On an annual basis, or upon the occurrence of an event that could have a
material adverse effect on the ability of the Servicer to perform its
obligations under, or the validity or enforceability of, this Agreement or the
Securities, the Servicer shall, upon the reasonable request of the Security
Insurer, permit the Security Insurer or its authorized agents:
(i) to discuss the affairs, finances and accounts of the
Servicer with the chief operating
33
officer and the chief financial officer of the Servicer, in each case, to
the extent related to the Receivables, or the duty of the Servicer
hereunder; and
(ii) with the Servicer's consent, which consent shall not be
unreasonably withheld, to discuss the affairs, finances and accounts of the
Servicer with the Servicer's independent accountants, in each case, to the
extent related to the Receivables, or the duty of the Servicer hereunder,
provided that an officer of the Servicer shall have the right to be present
during such discussions.
Such inspections and discussions shall be conducted during normal
business hours and shall not unreasonably disrupt the business of the Servicer.
The Security Insurer, by the issuance of the Security Insurance
Policy, agrees that it and its shareholders, directors, agents, accountants and
attorneys shall keep confidential any matter of which it becomes aware through
such inspections or discussions (unless readily available from public sources),
except as may be otherwise required by regulation, law or court order or
requested by appropriate governmental authorities or as necessary to preserve
its rights or security under or to enforce this Agreement, provided that the
foregoing shall not limit the right of the Security Insurer to make such
information available to its regulators, securities rating agencies, reinsurers,
credit and liquidity providers, counsel and accountants. If the Security
Insurer is requested or required (by oral questions, interrogatories, requests
for information or documents subpoena, civil investigative demand or similar
process) to disclose any information of which it becomes aware through such
inspections or discussions, the Security Insurer will promptly notify the
Servicer of such request(s) so that the Servicer may seek an appropriate
protective order and/or waive the Security Insurer's compliance with the
provisions of this Agreement. If, in the absence of a protective order or the
receipt of a waiver hereunder, the Security Insurer is, nonetheless, in the
opinion of its counsel, compelled to disclose such information to any tribunal
or else stand liable for contempt or suffer other censure or significant
penalty, the Security Insurer may disclose such information to such tribunal
that the Security Insurer is compelled to disclose, provided that a copy of all
information disclosed is provided to the Servicer promptly upon such disclosure.
(g) NOTICE OF MATERIAL EVENTS. The Servicer shall promptly inform
the Security Insurer in writing of the receipt of notice of any proceeding by
any regulatory body seeking any determination or ruling that might materially
34
and adversely affect the performance by the Sellers of its obligations under, or
the validity or enforceability of, this Agreement or the Securities.
(h) MAINTENANCE OF LICENSES. The Servicer, or any successors
thereof, shall maintain all licenses, permits, charters and registrations which
are material to the performance of its obligations under this Agreement or the
Securities.
SECTION 4.7 PURCHASE OF RECEIVABLES UPON BREACH.
The Servicer, the Trustee or the Security Insurer shall inform the
other parties promptly, in writing, upon the discovery of any breach by the
Servicer of its obligations under Section 4.5 or 4.6; PROVIDED, that the Trustee
shall have no duty to inquire concerning, or to investigate, the breach of any
of such obligations. Unless the breach shall have been cured by the last day of
the Collection Period following the Collection Period during which the Seller
becomes aware of, or receives written notice of such breach, the Servicer shall
purchase as of such day (or, at the Servicer's option, as of the last day of the
month in which such breach was discovered) any Receivable materially and
adversely affected by such breach and any Receivable in which the interest of
the Trust is materially and adversely affected by such breach. In consideration
of the purchase of such Receivable, the Servicer shall remit the Purchase Amount
with respect to such Receivable in the manner specified in Section 5.3. The
sole remedy of the Trustee, the Trust or the Securityholders with respect to a
breach pursuant to Section 4.5 or 4.6 shall be to require the Servicer to
purchase Receivables pursuant to this Section 4.7. The Servicer shall notify the
Security Insurer of any purchase of a Receivable pursuant to this Section 4.7.
SECTION 4.8 SERVICING FEES.
The servicing fee for a Collection Period shall equal the Monthly
Servicing Fee (except that in the case of a successor Servicer, the servicing
fee shall equal such amount as is arranged in accordance with Section 9.2). The
Servicer shall deposit into the Collection Account all Additional Fees.
Investment earnings on the Collection Account, the Security Account, the Yield
Maintenance Account and the Reserve Account, if any, shall be deposited into the
respective accounts. The Monthly Servicing Fee may be retained by the Servicer
from the aggregate interest collections on the Receivables during the related
Collection Period, prior to the deposit in the Collection Account pursuant to
Section 5.2; in no event shall the Servicer retain with respect to any
Collection Period, an amount of
35
base servicing compensation in excess of the Monthly Servicing Fee, even if
multiple payments ("advance payments" or "payaheads") are received from the
Obligors during such Collection Period.
SECTION 4.9 SERVICER'S CERTIFICATE.
On or before each Determination Date, the Servicer shall deliver to
the Trustee and the Security Insurer by 12:00 pm New York City time a Servicer's
Certificate in the form of Exhibit E attached hereto containing all information
necessary to make the distributions pursuant to Section 5.4, to make any
transfers of funds pursuant to Sections 5.1, 5.2 and 5.6, and to make any
demands on the Security Insurance Policy pursuant to Section 5.5 for the
Collection Period preceding the date of such Servicer's Security and all
information necessary for the Trustee to send statements to Securityholders
pursuant to Section 5.7. Receivables purchased by the Servicer or repurchased by
the Seller as of the last day of such Collection Period shall be identified by
the Seller's account number with respect to such Receivable (as specified in the
Schedule of Receivables).
SECTION 4.10 ANNUAL STATEMENT AS TO COMPLIANCE; NOTICE OF DEFAULT.
(a) The Servicer shall deliver to the Trustee and the Security
Insurer, on or before _____________________ of each year, beginning
___________________, an Officers' Certificate stating that (i) a review of the
activities of the Servicer during the preceding 12-month period ended
_________________________ of such year (or such longer period since the date of
this Agreement) and of its performance under this Agreement has been made under
such officers' supervision and (ii) to the best of such officers' knowledge,
based on such review, the Servicer has fulfilled all of its obligations under
this Agreement throughout such year, or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officers and the nature and status thereof.
(b) The Servicer shall deliver to the Trustee and the Security
Insurer, promptly after having obtained knowledge thereof, but in no event later
than one Business Day thereafter, written notice in an Officers' Security of any
event which with the giving of notice or lapse of time, or both, would become an
Event of Default under clause (i) of Section 9.1. The Seller shall deliver to
the Trustee and the Security Insurer, promptly after having obtained knowledge
thereof, but in no event later than five Business Days thereafter, written
notice in an Officers' Certificate of any event which with the giving of notice
or lapse of
36
time, or both, would become an Event of Default under any other clause of
Section 9.1.
SECTION 4.11 ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORT.
The Servicer shall cause a firm of independent certified public
accountants, who may also render other services to the Servicer, to deliver to
the Trustee and the Security Insurer on or before __________________ of each
year concerning the 12-month period ended ________________ of such year (or such
longer period since the date of this Agreement), beginning ____________________,
a report addressed to the Board of Directors of the Servicer, the Trustee and
the Security Insurer, to the effect that such firm has read the monthly
Servicer's Certificates delivered pursuant to Section 4.9 with respect to each
Collection Period during such one-year (or longer) period and reviewed the
servicing of the Receivables by the Servicer and that such review (1) included
tests relating to automobile, light duty truck and van loans serviced for others
in accordance with the requirements of the Uniform Single Attestation Program
for Mortgage Bankers, to the extent the procedures in such program are
applicable to the servicing obligations set forth in this Agreement, and (2)
except as described in the report, disclosed no exceptions or errors in the
records relating to automobile, light duty truck and van loans serviced for
others that, in the firm's opinion, paragraph four of such program requires such
firm to report.
The report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 4.12 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
RECEIVABLES.
The Servicer shall provide (and shall require the Sub-Servicer to
provide) to the Securityholders and the Trustee access to the Receivables Files
in such cases where the Securityholder or the Trustee shall be required by
applicable statutes or regulations to review such documentation. The Security
Insurer shall be afforded such access at any time, subject to the requirements
of the next sentence. Access shall be afforded without charge, but only upon
reasonable request and during the normal business hours at the respective
offices of the Servicer. Nothing in this Section shall affect the obligation of
the Servicer to observe any applicable law prohibiting disclosure of information
regarding the Obligors, and the failure of the Servicer to provide access to
information as a result of
37
such obligation shall not constitute a breach of this Section 4.12.
SECTION 4.13 SERVICER EXPENSES.
The Servicer shall be required to pay all expenses incurred by it in
connection with its activities hereunder, including fees and disbursements of
independent accountants and taxes imposed on the Servicer.
SECTION 4.14 REPORTS TO CERTIFICATEHOLDERS.
The Trustee shall provide to any Securityholder, who so requests in
writing (addressed to the Corporate Trust Office) and the Rating Agencies a copy
of any certificate described in Section 4.9, or the annual statement described
in Section 4.10, or the annual report described in Section 4.11. The Trustee may
require the Securityholder to pay a reasonable sum to cover the cost of the
Trustee's compliance with such request.
ARTICLE V
DISTRIBUTIONS; STATEMENTS TO
SECURITYHOLDERS
SECTION 5.1 ESTABLISHMENT OF ACCOUNTS.
(a) The Trustee, on behalf of the Trust, shall establish the
Collection Account and the Security Account as segregated trust accounts in the
name of the Trust for the benefit of Securityholders and the Security Insurer
with the Corporate Trust Office of the Trustee. The Servicer shall direct the
Trustee to invest the amounts in the Collection Account and the Security Account
in Eligible Investments that, with respect to the Collection Account, mature not
later than the Business Day prior to the next succeeding Determination Date or,
with respect to the Security Account, mature not later than the next succeeding
Deposit Date, and to hold such Eligible Investments to maturity. The Collection
Account and the Security Account shall always be maintained as Eligible
Accounts. The Trustee may trade with itself or an affiliate in the purchase or
sale of Eligible Investments.
(b)(i) The Seller shall establish and maintain the Reserve Account
and the Yield Maintenance Account in the name of the Trustee, each as an
Eligible Account for the benefit of the Trust, the Securityholders and the
Security Insurer. The Reserve Account and the Yield Maintenance Account
shall not be property of the Trust.
38
(ii) Funds on deposit in the Reserve Account shall be
invested by the Trustee in Eligible Investments, in each case selected by
the Servicer by a written direction, which shall certify that any such
investment is authorized by this Section; PROVIDED, HOWEVER, the Trustee
shall not be liable for any loss arising from such investment in Eligible
Investments (other than as Obligor under any Eligible Investment). All such
Eligible Investments shall be held by the Trustee for the benefit of the
beneficiaries of the Reserve Account and the Yield Maintenance Account;
PROVIDED that on each Distribution Date all interest and other investment
income (net of investment losses and expenses) on funds on deposit in the
Yield Maintenance Account shall be withdrawn from the Yield Maintenance
Account at the direction of the Servicer and shall be paid to the Seller;
all interest and other investment income (net of investment losses and
expenses) on funds on deposit in the Reserve Account shall be deposited to
the Reserve Account. Funds on deposit in the Reserve Account and the Yield
Maintenance Account shall be invested in Eligible Investments that will
mature so that such funds will be available at the close of business on the
related Deposit Date. Funds deposited in the Reserve Account and the Yield
Maintenance Account on the day which immediately precedes a Distribution
Date upon the maturity of any Eligible Investments are not required to be
(but may be) invested overnight in accordance with the investment
provisions contained herein. The Seller shall treat the funds and other
assets in the Reserve Account and the Yield Maintenance Account as its own
for federal, state and local income tax and franchise tax purposes and
shall report on its tax returns all income and gain from the Reserve
Account and the Yield Maintenance Account.
(iii) The Trustee agrees as follows with respect to the
Eligible Investments, and the proceeds thereof, held from time to time in
the Reserve Account and the Yield Maintenance Account:
(A) any Eligible Investment that is held in deposit
accounts shall be subject to the exclusive custody and control of the
Trustee, and the Trustee shall have sole signature authority with
respect thereto;
(B) any Eligible Investment that constitutes Physical
Property (as defined in the definition of Delivery) shall be delivered
to the Trustee in accordance with paragraph (a) of the definition of
"Delivery" and shall be held, pending maturity or
39
disposition, solely by the Trustee or a financial intermediary (as
such term is defined in Section 8-313 (4) of the UCC) acting solely
for the Trustee;
(C) any Eligible Investment 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 Trustee,
pending maturity or disposition, through continued book entry
registration of such Eligible Investment as described in such
paragraph; and
(D) any Eligible Investment that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by
clause (C) above shall be delivered to the Trustee in accordance with
paragraph (c) of the definition of "Delivery" and shall be maintained
by the Trustee, pending maturity or disposition, through continued
registration of the Trustee's (or its nominee's) ownership of such
security directly or through one or more financial intermediaries.
(iv) The Servicer shall have the power, revocable by the
Trustee, to instruct the Trustee to make withdrawals and payments from the
Reserve Account and the Yield Maintenance Account for the purpose of making
distributions of funds on deposit in such Accounts in accordance with the
provisions hereof.
(c) In the event of any change of law regarding matters
relating to the perfection of security interests in any Account, the amounts or
any Eligible Investments held therein, the Seller shall cause to be furnished to
the Trustee, the Security Insurer and each Rating Agency, an opinion of Counsel
addressing such matters and if necessary, the Seller shall cooperate with the
Trustee in taking all actions necessary to comply with the change in law.
SECTION 5.2 COLLECTIONS.
(a) The Servicer shall remit to the Collection Account within
two Business Days following receipt thereof all payments by or on behalf of the
obligors on the Receivables and all Liquidation Proceeds (including payments
made under any of the Insurance Policies or the Collateral Insurance to the
extent applicable to payments due on the Receivables) , both as collected during
the Collection Period, net of (i) the Servicer's actual out-of-pocket expenses
reasonably incurred with respect to Defaulted
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Receivables or Vehicles, which shall be paid from amounts actually recovered
with respect to any Defaulted Receivable or Vehicle, (ii) charge backs
attributable to errors in posting, returned checks, or rights of offset for
amounts that should not have been paid or that must be refunded as the result of
a successful claim or defense under bankruptcy or similar laws and (iii) the
Monthly Servicing Fee, as provided in Section 4.8.
(b) On the Determination Date in each month, the Servicer shall
instruct the Trustee to withdraw from the Collection Account the amount
collected with respect to Receivables, including Additional Fees and Liquidation
Proceeds, received during the Collection Period and investment earnings related
to such Determination Date and deposit such amount in immediately available
funds or by wire transfer in immediately available funds into the Security
Account.
(c) On or before each Determination Date, the Servicer shall determine
(i) the sum of (x) the amount of payments on all Receivables, including all
Additional Fees and Liquidation Proceeds (including payments made under any of
the Insurance Policies or the Collateral Insurance to the extent applicable to
payments due on the Receivables), received during the related Collection
Period, investment earnings deposited in the Collection Account or Security
Account during the related Collection Period, investment earnings earned through
such Determination Date and not yet deposited in the Collection Account or
Security Account, and the Purchase Amounts for all Receivables to be purchased
or repurchased with respect to such Collection Period which have been deposited
in the Security Account (the "Net Available Funds") and (y) the Yield
Maintenance Withdrawal Amount for the related Distribution Date (the sum of (x)
and (y) being the "Available Funds"), and (ii) the amount of funds necessary to
make the distributions required pursuant to clauses (i) through (iv) of Section
5.4(a) on the next Distribution Date. The Servicer shall by a Servicer's
Certificate notify the Trustee of such amounts by telecopy to the Corporate
Trust office (or such other number as the Trustee may from time to time
provide), followed promptly by mailing such notice to the Trustee at the
Corporate Trust Office, and the Trustee shall provide such notice to the
Security Insurer.
SECTION 5.3 PURCHASE AMOUNTS.
On the Determination Date following each Collection Period, the
Servicer or the Seller, as the case may be, shall remit to the Security Account
the aggregate Purchase Amount for such Collection Period pursuant to Sections
3.2, 4.2 and 4.7.
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SECTION 5.4 DISTRIBUTIONS.
(a) On each Distribution Date, the Trustee shall apply or cause to be
applied the sum of (w) the Net Available Funds in the Security Account (after
withdrawing amounts deposited in error and Liquidation Proceeds relating to
Purchased Receivables) for the prior Collection Period, (x) the Yield
Maintenance Withdrawal Amount, (y) the Reserve Account Withdrawal Amount and (z)
the amount of any Insured Payment to make the following distributions in the
listed order of priority:
(i) the Monthly Trustee's Fee, including any overdue Monthly
Trustee's Fee, to the Trustee;
(ii) the Premium Amount, including any overdue Premium Amount, to
the Security Insurer;
(iii) Monthly Interest, including any overdue Monthly Interest, to
the Securityholders;
(iv) Monthly Principal, including any overdue Monthly Principal,
to the Securityholders;
(v) the Reimbursement Amount, to the Security Insurer;
(vi) the Reserve Account Deposit Amount, to the Reserve Account;
and
(vii) the remainder, to the Seller.
If the Servicer exercises the purchase option on any Distribution Date
pursuant to Section 11.2, the Optional Purchase Price shall be deposited into
the Security Account on the Determination Date related to such Distribution
Date.
In making such distributions, the Trustee shall be entitled to rely
upon (without investigation, confirmation or recalculation) all information and
calculations contained in the Servicer's Security delivered to the Trustee
pursuant to Section 4.9.
(b) All monthly distributions to Securityholders shall be made by wire
transfer (if wiring instructions are received from the Securityholders), or, in
the absence of such instructions, by check mailed to each Securityholder of
record on the preceding Record Date at its address appearing on the Security
Register, or by such other means as the Securityholder and the Trustee shall
agree. Payments to the Security Insurer or the Seller shall be made by wire
transfer based on instructions received by the Trustee from either of them.
Notwithstanding the foregoing, the final
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payment on each Security shall be made only against the presentation and
surrender of the Security at the office or agency then maintained by the
Trustee.
(c) Each Securityholder shall promptly notify the Trustee and the
Security Insurer in writing upon the receipt of a nonappealable court order of a
court having competent jurisdiction seeking to recover payments to
Securityholders or the Trust as a voidable preference by a trustee in bankruptcy
pursuant to the United States Bankruptcy Code and shall enclose a copy of such
order with such notice to the Trustee and the Security Insurer.
(d) If the Servicer has failed to provide the Trustee with the notice
required pursuant to Section 5.2, the Trustee may calculate Monthly Interest and
apply funds, if any, in the Security Account as of the last day of the prior
Collection Period, plus any payments from the Security Insurer, to make a
distribution of Monthly Interest to the Securityholders.
SECTION 5.5 SECURITY INSURANCE POLICY.
(a) By 12:00 noon New York City time on each Determination Date the
Trustee shall, based solely on the information set forth in the related
Servicer's Security, determine the Net Available Distribution Amount with
respect to the immediately following Distribution Date.
(b) If the Required Payments for any Distribution Date exceed the Net
Available Distribution Amount for such Distribution Date (such event giving rise
to a "Deficiency Amount") and the Security Insurer does not otherwise fund such
Deficiency Amount by 12:00 p.m. New York City time on the third Business Day
preceding the related Distribution Date (the "Claim Date"), the Trustee shall
complete a Notice in the form of Exhibit A attached to the Security Insurance
Policy and submit such notice to the Security Insurer no later than 12:00 p.m.
New York City time on the Claim Date as a claim for an Insured Payment in an
amount equal to such Deficiency Amount. The Notice shall specify the amount of
the Insured Payment and shall constitute a claim for an Insured Payment pursuant
to the Security Insurance Policy.
(c) The Trustee shall report to the Seller and the Security Insurer
with respect to the amounts then held in each Account held by the Trustee and
the identity of the investments included therein, as the Seller or the Security
Insurer may from time to time request. Without limiting the generality of the
foregoing, the Trustee shall, at the request of the Seller or the Security
Insurer, transmit promptly to the Security Insurer and the Seller copies of
43
all accountings of receipts in respect of the Receivables furnished to it by the
Servicer.
(d) The Trustee shall (i) receive as attorney-in-fact of the
Securityholders any Insured Payment from the Security Insurer and (ii) disburse
the same to such Securityholders as set forth in Section 5.4. Insured Payments
disbursed by the Trustee from proceeds of the Security Insurance Policy shall
not be considered payment by the Trust with respect to the Securities, and the
Security Insurer shall become the owner of such unpaid amounts due from the
Trust in respect of Insured Payments as the deemed assignee of such
Securityholders, as hereinafter provided. The Trust and the Trustee hereby
agree on behalf of each Securityholder for the benefit of the Security Insurer
that to the extent the Security Insurer pays Insured Payments, either directly
or indirectly (as by paying through the Trustee), to the Securityholders, the
Security Insurer shall be subrogated to the rights of the Securityholders with
respect to such Insured Payments, shall be deemed to the extent of the Insured
Payments so made to be a Securityholder and shall receive future distributions
until all such Insured Payments by the Security Insurer have been fully
reimbursed, as described in the following paragraph. To evidence such
subrogation, the Trustee shall note the Security Insurer's rights as subrogee on
the Security Register upon receipt from the Security Insurer of proof of the
payment of any Insured Payment, after making the distribution on any such future
Distribution Date to the Securityholders other than to the Security Insurer.
The Security Insurer shall be entitled to receive the related
Reimbursement Amount pursuant to Section 5.4 with respect to each Insured
Payment made by the Security Insurer. The Trustee hereby agrees on behalf of
each Securityholder and the Trust for the benefit of the Security Insurer that
it recognizes that to the extent the Security Insurer makes Insured Payments,
either directly or indirectly (as by paying through the Trustee), to the
Securityholders, or to the extent any Premium Amount remains unpaid, as the case
may be, the Security Insurer shall be entitled to receive the related
Reimbursement Amount pursuant to Section 5.4. It is understood and agreed that
the intention of the parties is that the Security Insurer shall not be entitled
to reimbursement on any Distribution Date for amounts previously paid by it
unless on such Distribution Date the Securityholders shall also have received
the full amount of the Required Payments for such Distribution Date.
(e) Each Securityholder which pays any Preference Amounts theretofore
received by such Securityholder on account of such Security will be entitled to
receive
44
reimbursement for such amounts from the Security Insurer in accordance with the
terms of the Security Insurance Policy, but only after (i) delivering a copy to
the Security Insurer of a final, nonappealable order (a "Preference Order") of a
court having competent jurisdiction under the United States Bankruptcy Code
demanding payment of such amount to the bankruptcy court and (ii) irrevocably
assigning such Securityholder's claim with respect to such Preference Order to
the Security Insurer in such form as is required by the Security Insurer. In no
event shall the Security Insurer pay more than one Insured Payment in respect of
any Preference Amount. Consequently, the Trustee shall not be entitled to
reimbursement with respect to any Preference Order relating to the
Securityholder's receipt of funds representing Insured Payments made by the
Security Insurer in respect of such Distribution Date.
The Trustee, for itself and on behalf of the Securityholders, agrees
that the Security Insurer may at any time during the continuation of any
proceeding relating to a Preference Order direct all matters relating to such
Preference Order, including, without limitation, the direction of any appeal of
any order relating to such Preference Order and the posting of any surety,
supersedeas or performance bond pending any such appeal. In addition and
without limitation of the foregoing, the Security Insurer shall be subrogated,
to the extent of Insured Payments, to the rights of the Seller, the Servicer,
the Trustee and each Securityholder in the conduct of any such preference claim,
including, without limitation, all rights of any party to any adversarial
proceeding or action with respect to any court order issued in connection with
any such preference claim.
(f) The Trustee shall keep a complete and accurate record of the
amount of interest and principal paid in respect of any Security from moneys
received under the Security Insurance Policy. The Security Insurer shall have
the right to inspect such records at reasonable times during normal business
hours upon one Business Day's prior notice to the Trustee.
(g) The Security Insurer shall have the right to give participations
in its rights under this Agreement and to enter into contracts of reinsurance
with respect to the Security Insurance Policy; PROVIDED that no such grant of
participation shall operate to relieve the Security Insurer of liability on the
Security Insurance Policy, and provided further that no such participation or
contract of reinsurance shall require the Servicer, the Trustee or the Seller to
deal with any person other than the Security Insurer.
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SECTION 5.6 RESERVE ACCOUNT AND YIELD MAINTENANCE ACCOUNT.
(a) On the Closing Date, the Seller shall deposit the Reserve Initial
Deposit into the Reserve Account. Amounts held from time to time in the Reserve
Account shall be held by the Trustee for the benefit of Seller, subject to the
first priority security interest granted under Section 2.2 hereof to the Trustee
for the benefit of the Securityholders and the Security Insurer, but the Reserve
Account shall not be an asset of the Trust.
The Security Insurer may, by written notice to the Trustee, direct the
Trustee to reduce the amount of the Specified Reserve Balance; PROVIDED,
HOWEVER, that no such notice given to the Trustee shall be effective unless
accompanied by written evidence from each Rating Agency that such reduction in
the Specified Reserve Balance will not result in the reduction or withdrawal of
any rating then assigned to the Securities.
On each Distribution Date (i) if the amount on deposit in the Reserve
Account is less than the Specified Reserve Balance, the Trustee shall, after
payment of any amounts required to be distributed pursuant to clauses (i)
through (iv) of Section 5.4(a) deposit in the Reserve Account the Reserve
Account Deposit Amount and (ii) if the amount on deposit in the Reserve Account
on any Distribution Date (after giving effect to all other deposits thereto and
withdrawals therefrom to be made on such Distribution Date) is greater than the
Specified Reserve Balance, the Trustee shall distribute the amount of such
excess to the Seller on such Distribution Date.
(b) On each Distribution Date, the Servicer shall instruct the Trustee
(based on the information contained in the Servicer's Security delivered on the
related Determination Date) to withdraw the Reserve Account Withdrawal Amount
from the Reserve Account and deposit such amount in the Security Account.
(c) On the Closing Date, the Seller shall deposit the Initial Yield
Maintenance Amount into the Yield Maintenance Account. Amounts held from time
to time in the Yield Maintenance Account shall be held by the Trustee for the
benefit of the Seller, subject to the first priority security interest granted
under Section 2.2 hereof to the Trustee for the benefit of the Securityholders
and the Security Insurer, but the Yield Maintenance Account shall not be an
asset of the Trust.
On each Distribution Date (i) the Trustee shall withdraw the Yield
Maintenance Withdrawal Amount from the
46
Yield Maintenance Account and distribute such amount to the Securityholders
pursuant to Section 5.4 hereof, (ii) the Trustee shall withdraw from the Yield
Maintenance Account the net investment earnings then on deposit thereon and
distribute such amount to the Seller and (iii) if the amount then on deposit in
the Yield Maintenance Account (after giving effect to all withdrawals therefrom
to be made on such Distribution Date) is greater than the Yield Maintenance
Amount, the Trustee shall distribute the amount of such excess to the Seller on
such Distribution Date.
(d) Amounts properly received by the Seller pursuant to this Agreement
shall not be available to the Trustee or the Trust for the purpose of making
deposits to the Reserve Account, or making payments to the Securityholders, nor
shall the Seller be required to refund any amount properly received by it.
SECTION 5.7 STATEMENTS TO SECURITYHOLDERS.
On each Distribution Date, the Trustee shall mail or send by facsimile
to the Securityholders, the Rating Agencies and the Security Insurer a
statement, based on information in the Servicer's Security furnished to the
Trustee by the Servicer pursuant to Section 4.9, setting forth for the
Collection Period relating to such Distribution Date the following information
(which in the case of items (i), (ii) and (iii) shall be based on a Security in
a principal amount of $1,000):
(i) the amount of the distribution allocable to principal,
including any overdue principal;
(ii) the amount of the distribution allocable to interest,
including any overdue interest;
(iii) the Monthly Servicing Fee, including any overdue Monthly
Servicing Fee, and the Monthly Trustee's Fee;
(iv) the amount of any Insured Payments;
(v) the Reserve Account Withdrawal Amount and the Yield
Maintenance Withdrawal Amount;
(vi) the aggregate Net Losses on the Receivables for the related
Collection Period;
(vii) the Pool Balance and Security Factor as of the end of the
related Collection Period;
47
(viii) the aggregate Principal Balance of all Receivables which
were delinquent 30 days or more as of the last day of the related
Collection Period;
(ix) the Security Principal Balance (after giving effect to any
distribution of Monthly Principal made on such Distribution Date) on which
Monthly Interest will be calculated with respect to the next succeeding
Distribution Date;
(x) the Delinquency Percentage relating to such Distribution
Date;
(xi) the aggregate of all Purchase Amounts received on the
related Determination Date;
(xii) the aggregate amount received with respect to Defaulted
Receivables, including Liquidation Proceeds, during the related Collection
Period; and
(xiii) the Reimbursement Amount for such Distribution Date.
Within the prescribed period of time for tax reporting purposes after
the end of each calendar year during the term of this Agreement, the Trustee
shall mail, to each Person who at any time during such calendar year shall have
been a Securityholder, a statement containing the sum of the amounts determined
in clauses (i), (ii) and (iii) for such calendar year or, in the event such
Person shall have been a Securityholder during a portion of such calendar year,
for the applicable portion of such year, unless substantially comparable
information has been provided to such Securityholder, for the purposes of such
Securityholder's preparation of federal income tax returns.
ARTICLE VI
THE SECURITIES
SECTION 6.1 THE SECURITIES.
(a) The Securities shall be issued in denominations of $1,000 and
integral multiples thereof; PROVIDED, HOWEVER, that one Security may be issued
in a denomination that includes any residual amount. The Securities shall be
executed on behalf of the Trust by manual signature of a Responsible Officer of
the Trustee. Securities bearing the signatures of individuals who were, at the
time when such signatures shall have been affixed, authorized to sign on behalf
of the Trust, shall be valid and binding obligations of the Trust,
notwithstanding that
48
such individuals or any of them shall have ceased to be so authorized prior to
the authentication and delivery of such Securities or did not hold such offices
at the date of such Securities.
(b) The Securities are pass-through securities having the rights
described therein and herein. Notwithstanding references herein or therein with
respect to the Securities as to "principal" and "interest" no debt of any Person
is represented thereby, nor are the Securities or the underlying Receivables
guaranteed by any Person (except that the Receivables may be recourse to the
Obligors thereof to the extent permitted by law and except for the rights of the
Trustee with respect to the Security Insurance Policy). Distributions on the
Securities are payable solely from payments received on or with respect to the
Receivables, moneys in the Collection Account and the Security Account, except
as otherwise provided herein, from earnings on moneys and the proceeds of
property held as a part of the Trust and, upon the occurrence of certain events
as herein provided, from draws on the Reserve Account and the Yield Maintenance
Account and claims under the Security Insurance Policy. Each Security entitles
the Security Owner thereof to receive monthly on each Distribution Date a
specified portion of such payments with respect to the Receivables, earnings,
proceeds and withdrawals from the Reserve Account and the Yield Maintenance
Account and claims under the Security Insurance Policy PRO RATA in accordance
with the ownership interest of such Security Owner.
SECTION 6.2 AUTHENTICATION OF SECURITIES.
The Trustee shall cause the Securities to be executed on behalf of the
Trust, authenticated, and delivered to or upon the written order of the Seller,
signed by its chairman of the board, any vice chairman of the board, its
president, any executive vice president, any senior vice president or any vice
president, without further corporate action by the Seller, in authorized
denominations, pursuant to this Agreement. No Security shall entitle its holder
to any benefit under this Agreement, or shall be valid for any purpose, unless
there shall appear on such Security a certificate of authentication,
substantially as set forth in the form of Security attached as Exhibit B hereto,
executed by the Trustee by manual signature; such authentication shall
constitute conclusive evidence that such Security shall have been duly
authenticated and delivered hereunder. All Securities shall be dated the date
of their authentication.
SECTION 6.3 REGISTRATION OF TRANSFER AND EXCHANGE OF SECURITIES.
49
The Security Registrar shall keep or cause to be kept, at the office
or agency maintained pursuant to Section 6.7, a Security Register in which,
subject to such reasonable regulations as it may prescribe, the Trustee shall
provide for the registration of Securities and of transfers and exchanges of
Securities as herein provided. The Trustee shall be the initial Security
Registrar.
Upon surrender for registration of transfer of any Security at the
Corporate Trust Office, the Trustee shall execute, authenticate, and deliver, in
the name of the designated transferee or transferees, one or more new Securities
in authorized denominations of a like aggregate amount dated the date of
authentication by the Trustee. At the option of a Holder, Securities may be
exchanged for other Securities of authorized denominations of a like aggregate
amount upon surrender of the Securities to be exchanged at the Corporate Trust
Office.
Every Security presented or surrendered for registration of transfer
or exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Security Registrar duly executed by the
Holder or his or her attorney duly authorized in writing. Each Security
surrendered for registration of transfer and exchange shall be canceled and
subsequently destroyed by the Trustee.
No service charge shall be made for any registration of transfer or
exchange of Securities, but the Trustee may require payment of a sum sufficient
to cover any tax or governmental charge that may be imposed in connection with
any transfer or exchange of Securities.
SECTION 6.4 MUTILATED, DESTROYED, LOST, OR STOLEN SECURITIES.
If (a) any mutilated Security shall be surrendered to the Security
Registrar, or if the Security Registrar shall receive evidence to its
satisfaction of the destruction, loss, or theft of any Security and (b) there
shall be delivered to the Security Registrar or the Trustee such security or
indemnity as may be required by them to save each of them harmless, then in the
absence of notice that such Security shall have been acquired by a bona fide
purchaser other than the Person who requested a replacement Security, the
Trustee on behalf of the Trust shall execute and the Trustee shall authenticate
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost,
or stolen Security, a new Security of like tenor and denomination. in connection
with the issuance of any new Security under this Section 6.4, the Trustee and
the Security Registrar may require the payment of a sum
50
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Security issued pursuant to this Section
6.4 shall constitute conclusive evidence of ownership [debt issued by a Trust]
in the Trust, as if originally issued, whether or not the lost, stolen, or
destroyed Security shall be found at any time.
SECTION 6.5 PERSONS DEEMED OWNERS.
Prior to registration of transfer, the Trustee or the Security
Registrar may treat the Person in whose name any Security shall be registered as
the owner of such Security for the purpose of receiving distributions pursuant
to Section 5.4 and for all other purposes whatsoever, and neither the Trustee,
the Security Insurer nor the Security Registrar shall be bound by any notice to
the contrary.
SECTION 6.6 ACCESS TO LIST OF SECURITYHOLDERS' NAMES AND ADDRESSES.
The Trustee shall furnish or cause to be furnished to the Servicer and
the Security Insurer, within 15 days after receipt by the Trustee of a request
therefor from such party in writing, a list, in such form as such party may
reasonably require, of the names and addresses of the Securityholders as of the
most recent Record Date. If three or more Securityholders, or one or more
Holders of Securities aggregating not less than 25% of the Security Principal
Balance, apply in writing to the Trustee, and such application states that the
applicants desire to communicate with other Securityholders with respect to
their rights under this Agreement or under the Securities and such application
shall be accompanied by a copy of the communication that such applicants propose
to transmit, then the Trustee shall, within five Business Days after the receipt
of such application, afford such applicants access during normal business hours
to the current list of Securityholders. Each Holder, by receiving and holding a
Security, shall be deemed to have agreed to hold neither the Servicer nor the
Trustee accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
SECTION 6.7 MAINTENANCE OF OFFICE OR AGENCY.
The Trustee shall maintain an office or offices or agency or agencies
where Securities may be surrendered for registration of transfer or exchange and
where notices and demands to or upon the Trustee in respect of the Securities
and this Agreement may be served. The Trustee initially designates the
Corporate Trust Office as specified in this Agreement as its office for such
purposes. The Trustee
51
shall give prompt written notice to the Servicer, the Security Insurer and
Securityholders of any change in the location of the Security Register or any
such office or agency.
SECTION 6.8 BOOK-ENTRY SECURITIES.
The Securities (other than a Security representing any residual
portion of the Pool Balance as of the Cut-Off Date), upon original issuance,
shall be issued in the form of typewritten Securities representing the Book-
Entry Securities, to be delivered to The Depository Trust Company, the initial
Clearing Agency, by the Seller or on its behalf. The Securities shall initially
be registered on the Security Register in the name of CEDE & Co., the nominee of
the initial Clearing Agency, and no Security Owner will receive a definitive
certificate representing such Security Owner's interest in the Securities,
except as provided in Section 6.10. Unless and until definitive, fully
registered Securities ("Definitive Securities") have been issued to
Securityholders pursuant to Section 6.10:
(i) the provisions of this Section 6.8 shall be in full force and
effect;
(ii) the Seller, the Servicer and the Trustee may deal with the
Clearing Agency and the Clearing Agency Participants for all purposes
(including the making of distributions on the Securities and the taking of
actions by the Securityholders) as the authorized representatives of the
Security Owners;
(iii) to the extent that the provisions of this Section 6.8
conflict with any other provisions of this Agreement, the provisions of
this Section 6.8 shall control;
(iv) the rights of Security Owners shall be exercised only
through the Clearing Agency (or to the extent Security Owners are not
Clearing Agency Participants through the Clearing Agency Participants
through which such Security Owners own Book-Entry Securities) and shall be
limited to those established by law and agreements between such Security
Owners and the Clearing Agency and/or the Clearing Agency Participants, and
all references in this Agreement to actions by Securityholders shall refer
to actions taken by the Clearing Agency upon instructions from the Clearing
Agency Participants, and all references in this Agreement to distributions,
notices, reports and statements to Securityholders shall refer to
distributions, notices, reports and statements to the Clearing Agency or
its nominee, as registered Holder of
52
the Securities, as the case may be, for distribution to Security Owners in
accordance with the procedures of the Clearing Agency; and
(v) pursuant to an agreement between the Clearing Agency and the
Seller, the initial Clearing Agency will make Book-Entry transfers among
the Clearing Agency Participants and receive and transmit distributions of
principal and interest on the Securities to the Clearing Agency
Participants, for distribution by such Clearing Agency Participants to the
Security Owners or their nominees.
SECTION 6.9 NOTICES TO CLEARING AGENCY.
Whenever notice or other communication to the Securityholders is
required under this Agreement, unless and until Definitive Securities shall have
been issued to Security Owners pursuant to Section 6.10, the Trustee shall give
to the Clearing Agency all such notices and communications specified herein to
be given to Securityholders.
SECTION 6.10 DEFINITIVE Securities.
If (i)(A) the Servicer advises the Trustee in writing that the
Clearing Agency is no longer willing or able properly to discharge its
responsibilities as Clearing Agency with respect to the Securities, and (B) the
Trustee or the Servicer is unable to locate a qualified successor, (ii) the
Servicer, at its option, elects to terminate the Book-Entry system through the
Clearing Agency or (iii) after the occurrence of an Event of Default, Security
Owners representing in the aggregate not less than a majority of the Security
Principal Balance advise the Clearing Agency through the Clearing Agency
Participants in writing that the continuation of a Book-Entry system through the
Clearing Agency is no longer in the best interests of the Security Owners, the
Trustee shall notify the Clearing Agency of the occurrence of any such event and
of the availability of Definitive Securities to Security Owners requesting the
same. Upon surrender to the Trustee by the Clearing Agency, accompanied by re-
registration instructions from the Clearing Agency for registration and
instructions and directions from the Servicer to execute and authenticate new
Securities, the Trustee shall issue authenticated Definitive Securities. The
Servicer shall arrange for, and will bear all costs of, the printing and
issuance of such Definitive Securities. None of the Seller, the Servicer, the
Trustee or the Security Insurer shall be liable for any delay in delivery of
such instructions and may conclusively rely on, and shall be protected in
relying on, such instructions. Upon the issuance of Definitive Securities, all
references
53
herein to obligations imposed upon or to be performed by the Clearing Agency
shall be deemed to be imposed upon and performed by the Trustee, to the extent
applicable with respect to such Definitive Securities and the Trustee shall
recognize the Holders of the Definitive Securities as Securityholders hereunder.
ARTICLE VII
THE SELLER
SECTION 7.1 REPRESENTATIONS OF SELLER.
The Seller makes the following representations on which the Trustee
relies in accepting the Receivables in trust and executing and authenticating
the Securities and upon which the Security Insurer relies in executing and
delivering the Security Insurance Policy. The representations speak as of the
Closing Date and shall survive the sale of the Receivables to the Trustee.
(i) DUE ORGANIZATION AND GOOD STANDING. The Seller shall have
been duly organized and shall be validly existing as a federal savings bank
in good standing under the laws of the United States of America, with the
corporate power and authority to own its properties and to conduct its
business as such properties shall be currently owned and such business is
presently conducted, and had at all relevant times, and shall have, the
corporate power and authority and legal right to acquire and own the
Receivables.
(ii) DUE QUALIFICATION. The Seller shall be duly qualified to do
business as a foreign corporation in good standing, and shall have obtained
all necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall require
such qualifications, except where the failure to be so qualified or to have
obtained such licenses or approvals would not have a material adverse
effect on the transactions contemplated by this Agreement.
(iii) POWER AND AUTHORITY. The Seller shall have the corporate
power and authority to execute and deliver this Agreement and to carry out
its terms, the Seller shall have full power and authority to sell and
assign the property to be sold and assigned to and deposited with the
Trustee as part of the Trust and shall have duly authorized such sale and
assignment to the Trustee by all necessary corporate action; and the duly
authorized by the Seller by all necessary corporate action.
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(iv) VALID SALE; BINDING OBLIGATIONS. This Agreement shall evidence a
valid sale, transfer, and assignment of the Receivables, enforceable
against creditors of and purchasers from the Seller; and shall a legal,
valid, and binding obligation of the Seller 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 or other obligees' rights in general or the rights of
creditors or obligees of federally chartered stock savings banks, the
deposits of which are insured by the FDIC, and by general principles of
equity, regardless of whether such enforceability shall be considered in a
proceeding in equity or at law.
(v) NO VIOLATION. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof
shall not conflict with, result in any breach of any of the terms and
provisions of, nor constitute (with or without notice or lapse of time) a
default under, the charter or by-laws of the Seller, or any indenture,
agreement, or other instrument to which the Seller is a party or by which
it shall be bound; nor result in the creation or imposition of any Lien
upon any of its properties pursuant to the terms of any such indenture,
agreement, or other instrument (other than this Agreement); nor violate any
law or, to the best of the Seller's knowledge, any order, rule, or
regulation applicable to the Seller of any court or of any federal or state
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Seller or its properties.
(vi) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the Seller's best knowledge, threatened before any court,
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Seller or its properties (A)
asserting the invalidity of this Agreement or the Securities, (B) seeking
to prevent the issuance of the Securities or the consummation of any of the
transactions contemplated by this Agreement, (C) seeking any determination
or ruling that might materially and adversely affect the performance by the
Seller of its obligations under, or the validity or enforceability of, this
Agreement or the Securities, or (D) which might adversely affect the
federal income tax attributes of the Securities.
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(vii) NO CONSENT REQUIRED. The Seller is not required to obtain
the consent of any other Person or any consent, license, approval or
authorization of, or make any registration or declaration with, any
governmental authority or agency in connection with the execution, delivery
and performance of this Agreement (except as have been obtained), other
than as may be required under the Blue Sky laws of any state or the
Securities Act.
(viii) NO INSOLVENCY. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby were
not made in contemplation of the insolvency of the Seller or after the
commission of any act of insolvency by the Seller.
(ix) NOT AN INVESTMENT COMPANY. The Trust is not required to be
registered as an "investment company" under the Investment Company Act of
1940, as amended.
(x) OFFICIAL RECORD. This Agreement and all other documents
related hereto to which the Seller is a party have been approved by the
Seller's board of directors, which approval is reflected in the minutes of
such board, and shall continuously from the time of each such document's
execution, be maintained as an official record of the Seller.
SECTION 7.2 LIABILITY OF SELLER.
The Seller shall be liable in accordance herewith only to the extent
of the obligations specifically undertaken and the representations made by the
Seller under this Agreement.
SECTION 7.3 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF THE
SELLER.
Any Person (a) into which the Seller may be merged or consolidated,
(b) which may result from any merger or consolidation to which the Seller shall
be a party, or (c) which may succeed to the properties and assets of the Seller
substantially as a whole, which Person in any of the foregoing cases executes an
agreement of assumption to perform every obligation of the Seller under this
Agreement, shall be the successor to the Seller hereunder without the execution
or filing of any document or any further act by any of the parties to this
Agreement; PROVIDED, HOWEVER, that (x) the Seller shall have delivered to the
Trustee and the Security Insurer an Officers' Security and an Opinion of Counsel
each stating that such consolidation, merger, or succession and such agreement
of
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assumption comply with this Section 7.3, and (y) all conditions precedent, if
any, provided for in this Agreement relating to such merger, consolidation or
succession have been complied with. Notwithstanding the above, no such
transaction shall result in the Seller becoming subject to the provisions of the
United States Bankruptcy Code or similar laws of any State. The Seller or its
successor hereunder shall provide the Trustee, the Servicer, the Security
Insurer and the Rating Agencies with prompt notice of any such transaction.
SECTION 7.4 LIMITATION ON LIABILITY OF CERTAIN PERSONS OF SELLER.
No recourse under or upon any obligation or covenant of this
Agreement, or of any Security or for any claim based thereon or otherwise in
respect thereof, shall be had against any incorporator, shareholder, officer or
director as such, of the Seller or of any successor corporation, either directly
or through the Seller, whether by virtue of any constitution, statute or rule of
law, or by the enforcement of any assessment or penalty or otherwise. This
Agreement and the obligations created hereunder are solely corporate
obligations, and no personal liability whatever shall attach to, or is or shall
be incurred by the incorporators, shareholders, officers or directors, as such,
of the Seller, or any of them, because of the issuance of the Securities, or
under or by reason of the obligations, covenants or agreements contained in this
Agreement or in any of the Securities or implied therefrom. Any and all such
personal liability, either at common law or in equity or by constitution or
statute, of, and any and all such rights and claims against, every such
incorporator, shareholder, officer or director, as such, because of the issuance
of the Securities, or under or by reason of the obligations, covenants or
agreements contained in this Agreement or in any of the Securities or implied
therefrom, are hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Agreement and the issuance of the
Securities. The Seller and any director, officer, employee or agent of the
Seller may rely in good faith on any document of any kind PRIMA FACIE properly
executed and submitted by any Person respecting any matters arising hereunder.
ARTICLE VIII
THE SERVICER
SECTION 8.1 REPRESENTATIONS OF SERVICER.
The Servicer makes the following representations on which the Trustee
relies in accepting the Receivables in
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trust and executing and authenticating the Securities and upon which the
Security Insurer relies in executing and delivering the Security Insurance
Policy. The representations speak as of the Closing Date and shall survive the
sale of the Receivables to the Trustee.
(a) DUE ORGANIZATION AND GOOD STANDING. The Servicer shall have been
duly organized and shall be validly existing as a federal savings bank in good
standing under the laws of the United States of America, with the corporate
power and authority to own its properties and to conduct its business as such
properties shall be currently owned and such business is presently conducted,
and had at all relevant times, and shall have, the corporate power and authority
and legal right to acquire, own, sell, and service the Receivables and to hold
the Receivable Files as custodian on behalf of the Trustee.
(b) DUE QUALIFICATION. The Servicer shall be duly qualified to do
business as a foreign corporation in good standing, and shall have obtained all
necessary licenses and approvals in all jurisdictions in which the ownership or
lease of property or the conduct of its business (including the servicing of the
Receivables as required by this Agreement) shall require such qualifications,
except where the failure to be so qualified or to have obtained such licenses or
approvals would not have a material adverse effect on the transactions
contemplated by this Agreement and would not render any Receivable unenforceable
by the Trustee on behalf of the Securityholders and the Security Insurer.
(c) POWER AND AUTHORITY. The Servicer shall have the corporate power
and authority to execute and deliver this Agreement and to carry out its terms,
and the execution, delivery, and performance of this Agreement shall have been
duly authorized by the Servicer by all necessary corporate action.
(d) BINDING OBLIGATIONS. This Agreement shall constitute a legal,
valid, and binding obligation of the 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' or
other obligees' rights in general or the rights of creditors or obligees of
federally chartered stock savings banks, the deposits of which are insured by
the Federal Deposit Insurance Corporation, and by general principles of equity,
regardless of whether such enforceability shall be considered in a proceeding in
equity or at law.
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(e) NO VIOLATION. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof shall not conflict
with, result in any breach of any of the terms and provisions of, nor constitute
(with or without notice or lapse of time) a default under, the charter or by-
laws of the Servicer, or any indenture, agreement, or other instrument to which
the Servicer is a party or by which it shall be bound; nor result in the
creation or imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement, or other instrument (other than this
Agreement); nor violate any law or, to the best of the Servicer's knowledge any
order, rule, or regulation applicable to the Servicer of any court or of any
federal or State regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Servicer or its properties.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending or, to the Servicer's best knowledge, threatened before any court,
regulatory body, administrative agency, or other governmental instrumentality
having jurisdiction over the Servicer or its properties (A) asserting the
invalidity of this Agreement or the Securities, (B) seeking to prevent the
issuance of the Securities or the consummation of any of the transactions
contemplated by this Agreement, (C) 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 the
Securities, or (D) which might adversely affect the federal income tax
attributes of the Securities.
SECTION 8.2 LIABILITIES OF SERVICER, INDEMNITIES.
(a) The Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken and the representations made
by the Servicer under this Agreement, including its duties as custodian of the
Receivable Files.
(i) The Servicer, except as set forth in this Section 8.2, shall
not be under any liability to the Trust or the Securityholders for taking
any action or for refraining from taking any action pursuant to this
Agreement, or for errors in judgment; PROVIDED, HOWEVER, that this
provision shall not protect the Servicer against any liability which would
otherwise be imposed upon the Servicer by reason of its willful
misfeasance, bad faith or negligence in the performance of its duties or by
reason of its reckless disregard of its obligations and duties as Servicer
hereunder.
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(ii) The Servicer shall indemnify, defend, and hold harmless
the Trustee, its officers, directors, agents and employees, the Trust, the
Securityholders and the Security 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; PROVIDED, that the Servicer shall
have no obligation to indemnify any Person against any credit losses on any
Receivable serviced by the Servicer in accordance with the requirements of
this Agreement.
(iii) The Servicer shall indemnify, defend and hold harmless the
Trust, the Trustee and its officers, directors, employees and agents and
the Security Insurer from and against any loss, liability, expense, damage
or injury, including any judgment, award, settlement and other costs or
expenses incurred in connection with the defense of any action, proceeding
or claim, to the extent such loss, liability, expense, damage or injury
arose out of, or was imposed upon such persons through, the willful
misfeasance, bad faith or negligence of the Servicer in the performance of
its duties or by reason of its reckless disregard of its obligations and
duties as Servicer hereunder.
(iv) The initial Servicer shall indemnify, defend and hold
harmless the Trustee, its officers, directors, employees and agents from
and against any loss, liability or expense incurred without negligence or
bad faith on the part of the Trustee or its officers, directors, employees
or agents and arising out of or in connection with the acceptance or
administration by the Trustee of this Trust, as applicable, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of the Trustee's powers
or duties hereunder.
(v) The Servicer shall defend, indemnify and hold harmless the
Trust and the Trustee, its respective officers, directors, agents and
employees, the Security Insurer and the Securityholders from and against
any taxes that may at any time be asserted against the Trust, the Trustee,
the Security Insurer or the Securityholders with respect to the
transactions contemplated in this Agreement, including, without limitation,
any sales, gross receipts, general corporation, tangible personal property,
privilege or license taxes (but not including any personal property taxes
asserted with respect to ownership of the Receivables, or federal or other
income taxes arising
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out of distributions on the Securities) and costs and expenses in defending
against the same.
Indemnification under this Section 8.2 shall include reasonable fees
and expenses of counsel and expenses of litigation.
Within a reasonable period after receipt by the Trustee, the Trust,
the Security Insurer or the Securityholders of notice of the commencement of any
action with respect to which indemnification is sought under this Section 8.2,
such party shall notify the Servicer in writing of the commencement thereof. In
case any such action shall be brought, the Servicer shall be entitled to
participate in and, to the extent that it shall wish, to assume the defense
thereof, with counsel satisfactory to such indemnified party, and after notice
from the Servicer to the indemnified party of its election so to assume the
defense thereof, the Servicer shall not be liable to such indemnified party for
any legal or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation.
The Servicer shall not be liable for any settlement of any litigation
or proceeding effected without the written consent of the Servicer (which shall
not be unreasonably withheld). The indemnified party shall not, without the
Servicer's written consent (which shall not be unreasonably withheld), settle or
compromise any claim or consent to entry of any judgment which would impose an
injunction or other equitable relief on the Servicer or which does not include
as an unconditional term thereof the release by the claimant or the plaintiff of
the Servicer from all liability in respect of such claim.
The rights to indemnification under this Section 8.2 shall survive the
termination, resignation or removal of the Servicer with respect to acts and
omissions to act of the Servicer giving rise to such rights and occurring prior
to such termination, resignation or removal. In addition, the rights to
indemnification under this Section 8.2 shall survive the termination of the
Trust.
SECTION 8.3 MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF
THE SERVICER.
Any Person (a) into which the Servicer may be merged or consolidated,
(b) which may result from any merger or consolidation to which the Servicer
shall be a party, or (c) which may succeed to the properties and assets of the
Servicer substantially as a whole, which Person in any of the foregoing cases
executes an agreement of assumption to perform every obligation of the Servicer
hereunder, shall be
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the successor to the Servicer 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; PROVIDED, HOWEVER, that (x) the Servicer shall have delivered to
the Trustee and the Security Insurer an Officers' Certificate and an Opinion of
Counsel each stating that such consolidation, merger or succession and such
agreement of assumption comply with this Section 8.3 and (y) all conditions
precedent, if any, provided for in this Agreement relating to such merger,
consolidation or succession have been complied with. The Servicer or its
successor hereunder shall provide the Trustee, the Seller, the Security Insurer
and the Rating Agencies with prompt notice of any such transaction.
SECTION 8.4 LIMITATION ON LIABILITY OF CERTAIN PERSONS OF SERVICER.
No recourse under or upon any obligation or covenant of this
Agreement, or of any Security or for any claim based thereon or otherwise in
respect thereof, shall be had against any incorporator, shareholder, officer or
director as such, of the Servicer or of any successor corporation, either
directly or through the Servicer, whether by virtue of any constitution, statute
or rule of law, or by the enforcement of any assessment or penalty or otherwise.
This Agreement and the obligations created hereunder are solely corporate
obligations, and no personal liability whatever shall attach to, or is or shall
be incurred by the incorporators, shareholders, officers or directors, as such,
of the Servicer, or any of them, because of the issuance of the Securities, or
under or by reason of the obligations, covenants or agreements contained in this
Agreement or in any of the Securities or implied therefrom. Any and all such
personal liability, either at common law or in equity or by constitution or
statute, of, and any and all such rights and claims against, every such
incorporator, shareholder, officer or director, as such, because of the issuance
of the Securities, or under or by reason of the obligations, covenants or
agreements contained in this Agreement or in any of the Securities or implied
therefrom, are hereby expressly waived and released as a condition of, and as a
consideration for, the execution of this Agreement and the issuance of the
Securities. The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on any document of any kind PRIMA FACIE properly
executed and submitted by any Person respecting any matters arising hereunder.
Except as provided in this Agreement, the Servicer shall not be under
any obligation to appear in, prosecute, or defend any legal action that shall
not be incidental to its duties to service the Receivables in accordance with
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this Agreement (collection actions with respect to Defaulted Receivables are
understood to be incidental to the Servicer's duties to service the
Receivables), and that in its opinion may involve it in any expense or
liability.
SECTION 8.5 SERVICER NOT TO RESIGN.
The Servicer shall not resign from its obligations and duties under
this Agreement except upon determination that the performance of its duties
shall no longer be permissible under applicable law (any such determination
permitting the resignation of the Servicer shall be evidenced by an Opinion of
Counsel to such effect delivered to the Trustee and the Security Insurer).
Notice of any such determination permitting the resignation of the Servicer,
shall be communicated to the Trustee, the Security Insurer and the Rating
Agencies at the earliest practicable time and any such determination permitting
the resignation of the Servicer shall be evidenced by an Opinion of Counsel to
such effect delivered to the Trustee concurrently with such notice. No such
resignation shall become effective until the Trustee or other successor
Servicer shall have assumed the responsibilities and obligations of the Servicer
in accordance with Section 9.2.
SECTION 8.6 DELEGATION OF DUTIES.
The Servicer may at any time delegate any duties hereunder to any
Person, including, without limitation, the Sub-Servicer, who agrees to conduct
such duties in accordance with this Agreement; PROVIDED, HOWEVER, that the
Servicer may not delegate its duties as Custodian except (i) with the consent of
the Security Insurer, or (ii) as provided in Section 3.3 and 3.4 of this
Agreement. Such delegation shall not relieve the Servicer of its
responsibilities and liabilities with respect to such duties, and shall not
constitute a resignation within the meaning of Section 8.5.
ARTICLE IX
DEFAULT
SECTION 9.1 EVENTS OF DEFAULT.
If any one of the following events ("Events of Default") shall occur
and be continuing:
(i) any failure by the Servicer to deliver to the Trustee the
Servicer's Security for a Collection Period or to deliver to the Trustee
for distribution to Securityholders any proceeds or payment required to be
so delivered under the terms of the Securities and this
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Agreement that shall continue unremedied for a period of more than three
Business Days after written notice from (x) the Trustee or the Holders of
Securities evidencing not less than 25% of the Security Principal Balance,
which notice, in either case, shall be consented to by the Security
Insurer, or (y) the Security Insurer is received by the Servicer as
specified in this Agreement; or
(ii) failure on the part of the Servicer or the Seller duly to
observe or to perform in any material respect any other covenants or
agreements of the Servicer or the Seller, as the case may be, set forth in
the Securities or in this Agreement, which failure shall (a) materially and
adversely affect the rights of Securityholders (determined without regard
to the availability of the Security Insurance Policy) and (b) continue
unremedied for a period of more than 30 days after the date on which
written notice of such failure, requiring the same to be remedied, shall
have been given (x) (1) to the Servicer or the Seller, as the case may be,
by the Trustee, or (2) to the Servicer or the Seller, as the case may be,
and to the Trustee by the Holders of Securities evidencing not less than
25% of the Security Principal Balance, which notice, in either case, shall
be consented to by the Security Insurer, or (y) to the Servicer or the
Seller, as the case may be, by the Security Insurer; or
(iii) the entry of a decree or order by a court or agency or
supervisory authority having jurisdiction in the premises for the
appointment of a conservator, receiver, or liquidator for the Servicer in
any insolvency, readjustment of debt, marshaling of assets and liabilities,
or similar proceedings, or for the winding up or liquidation of its
affairs, and the continuance of any such decree or order unstayed and in
effect for a period of 60 consecutive days; or
(iv) the consent by the Servicer to the appointment of a
conservator or receiver or liquidator in any insolvency, readjustment of
debt, marshaling of assets and liabilities, or similar proceedings of or
relating to the Servicer or of or relating to substantially all of its
property; or the admission by the Servicer in writing of its inability to
pay its debts generally as they become due, the filing by the Servicer of a
petition to take advantage of any applicable insolvency or reorganization
statute, the making by the servicer of an assignment for the benefit of its
creditors, or the voluntary suspension by the Servicer of payment of its
obligations;
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then, and in each and every case, so long as an Event of Default shall not have
been remedied, (x) the Trustee or the Holders of Securities evidencing not less
than 51% of the Security Principal Balance, in either case with the consent of
the Security Insurer or (y) the Security Insurer, by notice then given in
writing to the Servicer (and to the Trustee if given by the Security Insurer or
the Securityholders), 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, all
authority and power of the Servicer under this Agreement, whether with respect
to the Securities or the Receivables or otherwise, shall, without further
action, pass to and be vested in the Trustee or such successor Servicer as may
be appointed under Section 9.2 pursuant to and under this Section 9.1; and,
without limitation, the Servicer, the Trustee or such other successor Servicer,
as the case may be, is hereby authorized and empowered to execute and deliver,
on behalf of the predecessor Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of the Receivables
and related documents, or otherwise; PROVIDED, HOWEVER, that the Trustee or any
successor Servicer shall not be liable for any acts, omissions or obligations of
the Servicer prior to such succession. The predecessor Servicer shall cooperate
with the successor Servicer and the Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer under this Agreement,
including the transfer to the successor Servicer of electronic records related
to the Receivables or such form as the successor Servicer may reasonably request
and the transfer to the successor Servicer for administration by it of all cash
amounts that shall at the time be held by the predecessor Servicer for deposit,
or shall thereafter be received with respect to a Receivable. The Trustee shall
give the Rating Agencies and the Security Insurer notice of any termination of
the Servicer pursuant to the terms of this Section 9.1.
SECTION 9.2 APPOINTMENT OF SUCCESSOR.
(a) Upon the Servicer's receipt of notice of termination pursuant to
Section 9.1 or the Servicer's resignation in accordance with the terms of this
Agreement, the predecessor Servicer shall continue to perform its functions as
Servicer under this Agreement, in the case of termination, only until the date
specified in such termination notice or, if no such date is specified in a
notice of termination, until receipt of such notice and, in
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the case of resignation, until the later of (x) the date 45 days from the
delivery to the Trustee and the Security Insurer of written notice of such
resignation (or written confirmation of such notice) in accordance with the
terms of this Agreement and (y) the date upon which the predecessor Servicer
shall become unable to act as Servicer, as specified in the notice of
resignation and accompanying Opinion of Counsel. In the event of the Servicer's
resignation or termination hereunder, the Trustee shall, with the consent of the
Security Insurer, appoint a successor Servicer, and the successor Servicer shall
accept its appointment by a written assumption in form acceptable to the
Trustee. In the event that a successor Servicer has not been appointed at the
time when the predecessor Servicer has ceased to act as Servicer in accordance
with this Section 9.2, the Trustee without further action shall automatically be
appointed the successor Servicer; PROVIDED, HOWEVER, that the Trustee shall not
be liable for any acts, omissions or obligations of the Servicer prior to such
succession. Notwithstanding the above, the Trustee shall, if it shall be legally
unable so to act, appoint, or petition a court of competent jurisdiction to
appoint, any established financial institution, having a net worth of not less
than $_______________ and whose regular business shall include the servicing of
automotive receivables, as the successor to the Servicer under this Agreement.
(b) Upon appointment, the successor Servicer 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 all of the rights
granted to the predecessor Servicer, by the terms and provisions of this
Agreement.
(c) In connection with such appointment, the Trustee may make such
arrangements for the compensation of a successor Servicer out of payments on
Receivables as it and such successor Servicer shall agree; PROVIDED, HOWEVER,
that no such compensation shall be in excess of that permitted the original
Servicer under this Agreement. The Trustee and such successor Servicer shall
take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
The Servicer shall cooperate with the successor Servicer in effecting
the transfer of the rights and responsibilities of the Servicer under this
Agreement.
SECTION 9.3 NOTIFICATION TO SECURITYHOLDERS.
Upon any notice of an Event of Default or upon any termination of, or
appointment of a successor to, the
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Servicer pursuant to this Article IX, the Trustee shall give prompt written
notice thereof to Securityholders at their respective addresses appearing in the
Security Register, to the Rating Agencies and to the Security Insurer.
SECTION 9.4 WAIVER OF PAST DEFAULTS.
The Security Insurer or, provided they have obtained the prior consent
of the Security Insurer, the Holders of Securities evidencing not less than 51%
of the Security Principal Balance may, on behalf of all Holders of Securities,
waive any default by the Servicer or the Seller in the performance of its
obligations hereunder and its consequences, except a default in making any
required deposits to or payments from the Security Account in accordance with
this Agreement. Upon any such waiver of a past default, such default shall
cease to exist, and any Event of Default arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other default or impair any right consequent
thereon.
SECTION 9.5 EFFECT OF EVENT OF DEFAULT ON SUB-SERVICER.
Any removal of the Servicer pursuant to this Article IX shall IPSO
FACTO constitute a removal of the Sub-Servicer.
ARTICLE X
THE TRUSTEE
SECTION 10.1 DUTIES OF TRUSTEE.
The Trustee both prior to and after the occurrence of an Event of
Default, shall undertake to perform such duties as are specifically set forth in
this Agreement. If an Event of Default shall have occurred and shall not have
been cured, the Trustee shall exercise such of the rights and powers vested in
it by this Agreement, and shall use the same degree of care and skill in their
exercise, as a prudent man or woman would exercise or use under the
circumstances in the conduct of his or her own affairs; PROVIDED, HOWEVER, that
if the Trustee shall assume the duties of the Servicer pursuant to Section 9.2,
the Trustee in performing such duties shall use the degree of skill and
attention customarily exercised by a servicer with respect to automobile
receivables that it services for itself or others.
The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Trustee that
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shall be specifically required to be furnished pursuant to any provision of this
Agreement, shall examine them to determine whether they conform as to form to
the requirements of this Agreement.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own bad faith; PROVIDED, HOWEVER, that:
(i) prior to the occurrence of an Event of Default, and after the
curing of all such Events of Default that may have occurred, the duties and
obligations of the Trustee shall be determined solely by the express
provisions of this Agreement, the Trustee shall not be liable except for
the performance of such duties and obligations as shall be specifically set
forth in this Agreement, no implied covenants or obligations shall be read
into this Agreement against the Trustee and, in the absence of bad faith on
the part of the Trustee, or manifest error, the Trustee may conclusively
rely on the truth of the statements and the correctness of the opinions
expressed in any certificates or opinions furnished to the Trustee and
conforming to the requirements of this Agreement;
(ii) the Trustee shall not be liable for an error of judgment made
in good faith by a Responsible Officer, unless it shall be proved that the
Trustee shall have been negligent in ascertaining the pertinent facts;
(iii) the Trustee shall not be liable with respect to any action
taken, suffered, or omitted to be taken in good faith in accordance with
this Agreement or at the direction of the Security Insurer or the Holders
of Securities evidencing not less than 25% of the Security Principal
Balance with the consent of the Security Insurer relating to the time,
method, and place of conducting any proceeding for any remedy available to
the Trustee, or exercising any trust or power conferred upon the Trustee,
under this Agreement;
(iv) the Trustee shall not be charged with knowledge of any failure
by the Servicer to comply with the obligations of the Servicer referred to
in clause (i) or (ii) of Section 9.1, or of any failure by the Seller to
comply with the obligations of the Seller referred to in clause (ii) of
Section 9.1, unless a Responsible Officer of the Trustee receives written
notice of such failure (it being understood that knowledge of the Servicer
or the Servicer as custodian, in its capacity as agent for the Trustee, is
not
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attributable to the Trustee) from the Servicer, the Seller or the Security
Insurer, as the case may be, or the Holders of Securities evidencing not
less than 25% of the Security Principal Balance; and
(v) without limiting the generality of this Section or Section
10.4, the Trustee shall have no duty (i) to see to any recording, filing,
or depositing of this Agreement or any agreement referred to therein or any
financing statement evidencing a security interest in the Receivables or
the Financed Vehicles, or to see to the maintenance of any such recording
or filing or depositing or to any rerecording, refiling or redepositing of
any thereof, (ii) to see to any insurance of the Financed Vehicles or
Obligors or to effect or maintain any such insurance, (iii) to see to the
payment or discharge of any tax, assessment, or other governmental charge
or any Lien or encumbrance of any kind owing with respect to, or assessed
or levied against, any part of the Trust, (iv) to confirm or verify the
contents of any reports or certificates of the Servicer delivered to the
Trustee pursuant to this Agreement believed by the Trustee to be genuine
and to have been signed or presented by the proper party or parties, or (v)
to inspect the Financed Vehicles at any time or ascertain or inquire as to
the performance or observance of any of the Seller's or the Servicer's
representations, warranties or covenants or the Servicer's duties and
obligations as Servicer and as custodian of the Receivable Files under this
Agreement.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there shall be
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability shall not be reasonably assured to it,
and none of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Servicer under this Agreement except during
such time, if any, as the Trustee shall be the successor to, and be vested with
the rights, duties, powers, and privileges of, the Servicer in accordance with
the terms of this Agreement.
SECTION 10.2 TRUSTEE'S SECURITY.
On or as soon as practicable after each Distribution Date on which
Receivables shall be (i) assigned to the Seller pursuant to Section 3.2 or (ii)
assigned to the Servicer pursuant to Section 4.2, 4.7 or 11.2, the Trustee shall
execute a Trustee's Security, substantially in
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the form of, in the case of an assignment to the Seller, Exhibit C, or, in the
case of an assignment to the Servicer, Exhibit D, based on the information
contained in the Servicer's Security for the related Collection Period, amounts
deposited to the Security Account, and notices received pursuant to this
Agreement, identifying the Receivables repurchased by the Seller pursuant to
Section 3.2 or purchased by the Servicer pursuant to Section 4.2, 4.7 or 11.2
with respect to such Collection Period, and shall deliver such Trustee's
Security, accompanied by a copy of the Servicer's Security for such Collection
Period to the Seller or the Servicer, as the case may be, with a copy to the
Security Insurer. The Trustee's Security shall be an assignment pursuant to
Section 10.3.
SECTION 10.3 TRUSTEE'S ASSIGNMENT OF PURCHASED RECEIVABLES.
With respect to each Receivable repurchased by the Seller pursuant to
Section 3.2 or purchased by the Servicer pursuant to Section 4.2, 4.7 or 11.2,
the Trustee shall assign, on the day on which the Trustee receives payment for
such Receivable, effective as of the last day of the Collection Period during
which such Receivable became subject to repurchase by the Seller or purchase by
the Servicer, without recourse, representation, or warranty, to the Seller or
the Servicer (as the case may be) all the Trustee's right, title, and interest
in and to such Receivables, and all security and documents relating thereto, and
all proceeds thereof, such assignment being an assignment outright and not for
security. 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 the Receivable, the
Trustee shall, at the Servicer's expense, take such steps as the Trustee deems
necessary to enforce the Receivable, including bringing suit in its name or the
name of the Securityholders.
SECTION 10.4 CERTAIN MATTERS AFFECTING THE TRUSTEE.
Except as otherwise provided in Section 10.1:
(i) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate,
Servicer's Security, certificate of auditors, or any other certificate,
statement, instrument, opinion, report, notice, request, consent, order,
appraisal, bond, or other paper or document believed by it to be genuine
and to have been signed or presented by the proper party or parties.
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(ii) The Trustee may consult with counsel and any Opinion of
Counsel shall be full and complete authorization and protection in respect
of any action taken or suffered or omitted by it under this Agreement in
good faith and in accordance with such Opinion of Counsel.
(iii) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement, or to institute,
conduct, or defend any litigation under this Agreement or in relation to
this Agreement, at the request, order, or direction of any of the
Securityholders pursuant to the provisions of this Agreement, unless such
Securityholders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses, and liabilities that may be incurred
therein or thereby; nothing contained in this Agreement, however, shall
relieve the Trustee of the obligations, upon the occurrence of an Event of
Default (that shall not have been cured), to exercise such of the rights
and powers vested in it by this Agreement, and to use the same degree of
care and skill in their exercise as a prudent man or woman would exercise
or use under the circumstances in the conduct of his or her own affairs.
(iv) The Trustee shall not be liable for any action taken,
suffered, or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Agreement.
(v) Prior to the occurrence of an Event of Default and after
the curing of all Events of Default that may have occurred, the Trustee
shall not be bound to make any investigation into the facts or matters
stated in any resolution, certificate, statement, instrument, opinion,
report, notice, request, consent, order, approval, bond, or other paper or
document, unless requested in writing to do so by the Holders of Securities
evidencing not less than 25% of the Security Principal Balance or the
Security Insurer; PROVIDED, HOWEVER, that if the payment within a
reasonable time to the Trustee of the costs, expenses, or liabilities
likely to be incurred by it in the making of such investigation shall be,
in the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Agreement, the Trustee may
require reasonable indemnity against such cost, expense, or liability as a
condition to so proceeding. Nothing in this clause (v) shall affect the
obligation of the Servicer to observe any
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applicable law prohibiting disclosure of information regarding the
Obligors.
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties under this Agreement either directly or by
or through agents or attorneys or a custodian and shall not be liable for
the negligence of any of such agents, attorneys or custodians appointed
with due care. The Trustee shall not be responsible for any misconduct or
negligence solely attributable to the acts or omissions of the Servicer in
its capacity as Servicer or custodian.
(vii) Subsequent to the sale of the Receivables by the Seller to
the Trustee, the Trustee shall have no duty of independent inquiry, except
as may be required by Section 10.1, and the Trustee may rely upon the
representations and warranties and covenants of the Seller and the
Servicer contained in this Agreement with respect to the Receivables and
the Receivable Files.
SECTION 10.5 TRUSTEE NOT LIABLE FOR SECURITIES OR RECEIVABLES.
The recitals contained herein and in the Securities (other than the
certificate of authentication on the Securities) shall be taken as the
statements of the Seller or the Servicer, as the case may be, and the Trustee
assumes no responsibility for the correctness thereof. The Trustee shall make
no representations as to the validity or sufficiency of this Agreement or of the
Securities (other than the certificate of authentication on the Securities), or
of any Receivable or related document. The Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity, and
enforceability of any security interest in any Financed Vehicle or any
Receivable, or the perfection and priority of such a security interest or the
maintenance of any such perfection and priority, or for or with respect to the
efficacy of the Trust or its ability to generate the payments to be distributed
to Securityholders under this Agreement, including, without limitation, the
existence, condition, location, and ownership of any Financed Vehicle; the
existence and enforceability of any physical damage insurance, lender's single
interest insurance, or credit life or disability and hospitalization insurance
with respect to any Receivable; the existence and contents of any Receivable or
any computer or other record thereof; the validity of the assignment of any
Receivable to the Trust or of any intervening assignment; the completeness of
any Receivable; the performance or enforcement of any Receivable; the compliance
by the Seller or the Servicer with any warranty or
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representation made under this Agreement or in any related document and the
accuracy of any such warranty or representation prior to the Trustee's receipt
of notice or other discovery of any noncompliance therewith or any breach
thereof; any investment of monies by the Servicer or any loss resulting
therefrom other than investments in obligations of or guaranteed by the Trustee
(it being understood that the Trustee shall remain responsible for any Trust
property that it may hold); the acts or omissions of the Seller, the Servicer,
or any Obligor; any action of the Servicer taken in the name of the Trustee; or
any action by the Trustee taken at the instruction of the Servicer; PROVIDED,
HOWEVER, that the foregoing shall not relieve the Trustee of its obligation to
perform its duties under this Agreement. Except with respect to a claim based
on the failure of the Trustee to perform its duties under this Agreement or
based on the Trustee's negligence or willful misconduct, no recourse shall be
had for any claim based on any provision of this Agreement, the Securities, or
any Receivable or assignment thereof against the Trustee in its individual
capacity, the Trustee shall not have any personal obligation, liability, or duty
whatsoever to any Securityholder or any other Person with respect to any such
claim, and any such claim shall be asserted solely against the Trust or any
indemnitor who shall furnish indemnity as provided in this Agreement. The
Trustee shall not be accountable for the use or application by the Seller of any
of the Securities or of the proceeds of such Securities, or for the use or
application of any funds paid to the Seller or the Servicer in respect of the
Receivables. The Trustee shall not be responsible for any statement in any
document prepared, executed or delivered in connection with the sale and
issuance of the Securities other than any such document prepared, executed or
delivered by the Trustee in connection therewith on the Closing Date.
SECTION 10.6 TRUSTEE MAY OWN SECURITIES.
The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities with the same rights as it would have if it were
not Trustee.
SECTION 10.7 TRUSTEE'S FEES.
The Trustee's fee for a Collection Period shall equal the Monthly
Trustee's Fee. The Monthly Trustee's Fee will be paid from the funds of the
Trust in accordance with Section 5.4.
SECTION 10.8 ELIGIBILITY REQUIREMENTS FOR TRUSTEE.
The Trustee under this Agreement shall at all times be a corporation
having an office in the same State as
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the location of the Corporate Trust Office as specified in this Agreement, or
another state of the United States of America or the District of Columbia; and
organized and doing business under the laws of such State, district or the
United States of America; authorized under such laws to exercise corporate trust
powers; having a combined capital and surplus of at least $_________________ and
subject to supervision or examination by federal or State authorities; having a
rating of its long-term debt obligations by Moody's of no less than Baa3; and
reasonably satisfactory to the Security Insurer. If such corporation shall
publish reports of condition at least annually, pursuant to law or to the
requirements of the aforesaid supervising or examining authority, then for the
purpose of this Section 10.8, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set forth
in its most recent report of condition so published. In case at any time the
Trustee shall cease to be eligible in accordance with the provisions of this
Section 10.8, the Trustee shall resign immediately in the manner and with the
effect specified in Section 10.9.
SECTION 10.9 RESIGNATION OR REMOVAL OF TRUSTEE.
The Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Servicer. Upon receiving
such notice of resignation, the Servicer shall, with the consent of the Security
Insurer, promptly appoint a successor Trustee by written instrument, in
duplicate, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor Trustee. If no successor Trustee shall
have been so appointed and have accepted appointment within 30 days after the
giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 10.8 and shall fail to resign after written
request therefor by the Servicer or the Security Insurer, or if at any time the
Trustee shall be legally unable to act, or shall be adjudged a bankrupt or
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation, or
liquidation, then the Servicer or the Security Insurer may remove the Trustee.
If it shall remove the Trustee under the authority of the immediately preceding
sentence, the Servicer shall promptly appoint a successor Trustee by written
instrument, in duplicate, one copy of which
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instrument shall be delivered to the Trustee so removed and one copy to the
successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 10.9 shall
not become effective without the consent of the Security Insurer and until
acceptance of appointment by the successor Trustee pursuant to Section 10.10.
SECTION 10.10 SUCCESSOR TRUSTEE.
Any successor Trustee appointed pursuant to Section 10.9 shall
execute, acknowledge, and deliver to the Servicer and to its predecessor Trustee
an instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Trustee shall become effective and
such successor Trustee, without any further act, deed, or conveyance, shall
become fully vested with all the rights, powers, duties, and obligations of its
predecessor under this Agreement, with like effect as if originally named as
Trustee. The predecessor Trustee shall deliver to the successor Trustee all
documents and statements held by it under this Agreement; and the Servicer and
the predecessor Trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for fully and certainly vesting and
confirming in the successor Trustee all such rights, powers, duties, and
obligations.
No successor Trustee shall accept appointment as provided in this
Section 10.10 unless at the time of such acceptance such successor Trustee shall
be eligible pursuant to Section 10.8.
Upon acceptance of appointment by a successor Trustee pursuant to this
Section 10.10, the Servicer shall mail notice of the successor of such Trustee
under this Agreement to all Holders of Securities at their addresses as shown in
the Security Register, to the Security Insurer and to the Rating Agencies. If
the Servicer shall fail to mail such notice within 10 days after acceptance of
appointment by the successor Trustee, the successor Trustee shall cause such
notice to be mailed at the expense of the Servicer.
SECTION 10.11 MERGER OR CONSOLIDATION OF TRUSTEE.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion, or consolidation to which the Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Trustee, shall be the
75
successor of the Trustee hereunder, provided such corporation shall be eligible
pursuant to Section 10.8, without the execution or filing of any instrument or
any further act on the part of any of the parties hereto, anything herein to the
contrary notwithstanding. The Trustee or its successor hereunder shall provide
the Servicer, the Security Insurer and the Rating Agencies with prompt notice of
any such transaction.
SECTION 10.12 APPOINTMENT OF CO-TRUSTEE OR SEPARATE TRUSTEE.
Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal requirements of any jurisdiction in which
any part of the Trust or any Financed Vehicle may at the time be located, the
Servicer and the Trustee with the consent of the Security Insurer acting jointly
shall have the power and shall execute and deliver all instruments to appoint
one or more Persons approved by the Trustee to act as co-trustee, jointly with
the Trustee, or separate trustee or separate trustees, of all or any part of the
Trust, and to vest in such Person, in such capacity and for the benefit of the
Securityholders and the Security Insurer, such title to the Trust, or any part
thereof, and, subject to the other provisions of this Section 10.12, such
powers, duties, obligations, rights, and trusts as the Servicer and the Trustee
may consider necessary or desirable. If the Servicer shall not have joined in
such appointment within 15 days after the receipt by it of a request so to do,
or in the case an Event of Default shall have occurred and be continuing, the
Trustee alone shall have the power to make such appointment. No co-trustee or
separate trustee under this Agreement shall be required to meet the terms of
eligibility as a successor Trustee pursuant to Section 10.8 and no notice to
Securityholders of the appointment of any co-trustee or separate trustee shall
be required pursuant to Section 10.10.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(A) all rights, powers, duties, and obligations conferred or
imposed upon the Trustee shall be conferred upon and exercised or performed
by the Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized to
act separately without the Trustee joining in such act), except to the
extent that under any law of any jurisdiction in which any particular act
or acts are to be performed (whether as Trustee under this Agreement or as
successor to the
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Servicer under this Agreement), the Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties, and obligations (including the holding of title to the
Trust or any portion thereof in any such jurisdiction) shall be exercised
and performed singly by such separate trustee or co-trustee, but solely at
the direction of the Trustee;
(B) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
(C) the Servicer, the Trustee and the Security Insurer acting
jointly may at any time accept the resignation of or remove any separate
trustee or co-trustee.
Any notice, request, or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-
trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article X. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the provisions
of this Agreement, specifically including every provision of this Agreement
relating to the conduct of, affecting the liability of, or affording protection
to, the Trustee. Each such instrument shall be filed with the Trustee and a
copy thereof given to the Servicer and the Security Insurer.
Any separate trustee or co-trustee may at any time appoint the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign, or be removed, all of its
estates, properties, rights, remedies, and trusts shall vest in and be exercised
by the Trustee, to the extent permitted by law, without the appointment of a new
or successor trustee.
SECTION 10.13 REPRESENTATIONS AND WARRANTIES OF TRUSTEE.
The Trustee shall make the following representations and warranties on
which the Seller, the Security Insurer and Securityholders may rely:
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(A) DUE ORGANIZATION AND GOOD STANDING. The Trustee is a
national banking association duly organized, validly existing, and in good
standing under the laws of the United States of America.
(B) POWER AND AUTHORITY. The Trustee has full power, authority,
and legal right to execute, deliver, and perform this Agreement, and shall
have taken all necessary action to authorize the execution, delivery, and
performance by it of this Agreement.
(C) NO VIOLATION. The execution, delivery, and performance by
the Trustee of this Agreement shall not violate any provision of any law
governing the banking and trust powers of the Trustee or, to the best of
the Trustee's knowledge, any order, writ, judgment, or decree of any court,
arbitrator, or governmental authority applicable to the Trustee or any of
its assets.
(D) NO PROCEEDINGS. The execution, delivery, and performance by
the Trustee of this Agreement shall not require the authorization,
consent, or approval of, the giving of notice to, the filing or
registration with, or the taking of any other action in respect of any
governmental authority or agency regulating the banking and corporate trust
activities of the Trustee.
(E) DULY EXECUTED. This Agreement shall have been duly executed
and delivered by the Trustee and shall constitute the legal, valid, and
binding agreement of the Trustee, enforceable in accordance with its terms.
(F) SECURITIES INTERMEDIARY. The Trustee is a securities
intermediary as defined under Article 8 of the Minnesota Uniform Commercial
Code.
SECTION 10.14 TAX RETURNS.
The Servicer shall prepare or shall cause to be prepared any tax
returns required to be filed by the Trust and the Trustee shall promptly sign
and file such returns. In no event shall the Trustee be liable for any
liabilities, costs or expenses of the Trust or the Securityholders under any tax
law, including without limitation federal, state or local income or excise
taxes or any other tax imposed on or measured by income (or any interest or
penalty with respect thereto or arising from a failure to comply therewith).
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ARTICLE XI
TERMINATION
SECTION 11.1 TERMINATION OF THE TRUST.
The respective obligations and responsibilities of the Seller, the
Servicer, and the Trustee created hereby and the Trust created by this Agreement
shall terminate upon (i) the purchase as of the last day of any Collection
Period by the Servicer at its option, pursuant to Section 11.2, of the corpus of
the Trust or (ii) the payment to Securityholders and the Security Insurer of all
amounts required to be paid to them pursuant to this Agreement and the
disposition of all property held as part of the Trust; PROVIDED, HOWEVER, that
in no event shall the trust created by this Agreement continue beyond the
expiration of 21 years from the death of the last survivor of the descendants of
Xxxxxx X. Xxxxxxx, the late ambassador of the Court of St. Xxxxx, living on the
date of this Agreement. The Servicer shall promptly notify the Trustee and the
Security Insurer of any prospective termination pursuant to this Section 11.1.
Notice of any termination, specifying the Distribution Date upon which
the Securityholders may surrender their Securities to the Trustee for payment of
the final distribution and cancellation, shall be given promptly by the Trustee
by letter to Securityholders mailed not later than the first day of the month in
which the specified Distribution Date occurs, stating (A) the Distribution Date
upon which final payment of the Securities shall be made upon presentation and
surrender of the Securities at the office of the Trustee therein designated, (B)
the amount of any such final payment, and (C) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made only
upon presentation and surrender of the Securities at the office of the Trustee
therein specified. The Trustee shall give such notice to the Security Registrar
(if other than the Trustee) at the time such notice is given to Securityholders.
Upon presentation and surrender of the Securities, the Trustee shall cause to be
distributed to Securityholders and the Security Insurer amounts distributable on
such Distribution Date pursuant to Section 5.4.
In the event that all of the Securityholders shall not surrender their
Securities for cancellation within six months after the date specified in the
above-mentioned written notice, the Trustee shall give a second written notice
to the remaining Securityholders to surrender their Securities for cancellation
and receive the final distribution with respect thereto. If within one year
after
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the second notice all the Securities shall not have been surrendered for
cancellation, the Trustee may take appropriate steps, or may appoint an agent to
take appropriate steps, to contact the remaining Securityholders concerning
surrender of their Securities, and the cost thereof shall be paid out of the
funds and other assets that shall remain subject to this Agreement. Any funds
remaining in the Trust after exhaustion of such remedies shall, upon notice to
the Trustee, be paid by the Trustee to the Servicer for deposit into an escrow
account, and thereafter Securityholders shall look only to such escrow account
with respect to any claims in respect of such funds.
SECTION 11.2 OPTIONAL PURCHASE OF ALL RECEIVABLES.
The Seller shall have the option to purchase the corpus of the Trust
on any Distribution Date following a Record Date on which the Pool Balance is
% or less of the Original Pool Balance. To exercise such option, the Seller
---
shall deposit in the Security Account an amount equal to the aggregate Purchase
Amounts for the Receivables, together with any Reimbursement Amount then owed to
the Security Insurer (the "Optional Purchase Price"); PROVIDED, HOWEVER, that
the Seller may not effect any such purchase unless the Trustee and the Security
Insurer shall have received an Opinion of Counsel acceptable to them that such
purchase does not constitute a fraudulent conveyance under applicable federal
and state laws. Such price shall be deposited to the Security Account in
immediately available funds by 12:00 noon, New York City time, on the
Distribution Date and, upon notice to the Trustee of such deposit, the Trustee
shall release the Receivables and the Receivable Files and all other property of
the Trust to the Seller, whereupon the Securities shall no longer evidence any
right or interest in the Receivables or other property of the Trust or any
proceeds thereof.
ARTICLE XII
MISCELLANEOUS PROVISIONS
SECTION 12.1 AMENDMENT.
This Agreement may be amended by the Seller, the Servicer and the
Trustee, without the consent of any of the Securityholders but with the consent
of the Security Insurer, to cure any ambiguity or defect, to correct or
supplement any provisions in this Agreement, to correct any typographical error
or to add any other provisions with respect to matters or questions arising
under this Agreement; PROVIDED, HOWEVER, that such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any material respect the
interests of any Securityholder.
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This Agreement may also be amended from time to time by the Seller,
the Servicer and the Trustee with the consent of the Security Insurer and the
Holders of Securities evidencing not less than 51% of the Security Principal
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 Holders of Securities; PROVIDED, HOWEVER, that no such
amendment shall, without the consent of the Holders of all Securities then
outstanding, reduce the aforesaid percentage required to consent to any such
amendment. In no case may any such amendment 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 on any Security
without the consent of the Holder of such Security.
The Trustee shall notify each Rating Agency prior to any amendment of
this Agreement; to the extent practicable, such notice shall be given not less
than 10 days prior to the date on which such amendment is executed.
Promptly after the execution of any amendment or consent, the Trustee
shall furnish written notification of the substance of such amendment or consent
to each Securityholder, each Rating Agency and the Security Insurer; a copy of
any proposed amendment shall be furnished to the Security Insurer by the Seller
prior to its execution by the Seller.
It shall not be necessary for the consent of Securityholders pursuant
to this Section 12.1 to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Securityholders shall be subject to
such reasonable requirements as the Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the 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 12.2(i)(1). The Trustee may, but
shall not be obligated to, enter into any such amendment which affects the
Trustee's own rights, duties, or immunities under this Agreement.
SECTION 12.2 PROTECTION OF TITLE TO TRUST.
(a) The Seller shall execute and file, or cause to be executed and
filed, such financing statements and cause to be executed and filed such
continuation statements,
81
all in such manner and in such places as may be required by law fully to
preserve, maintain, and protect the interest of the Securityholders, the
Security Insurer and the Trustee under this Agreement in the Receivables and in
the proceeds thereof. The Seller shall deliver (or cause to be delivered) to
the Trustee and the Security Insurer file-stamped copies of, or filing receipts
for, any document filed as provided above, as soon as available following such
filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity, or corporate structure in any manner that would, could, or might make
any financing statement or continuation statement filed by the Seller in
accordance with paragraph (a) above seriously misleading within the meaning of
Section 9-402(7) of the UCC, unless the Seller or Servicer shall have filed (or
cause to be filed) UCC financing statements upon any of the stated events.
(c) If, as a result of a relocation of the Seller's or Servicer's
principal executive office, 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, then the Seller or the Servicer
shall file or cause to be filed such amendment or continuation statement or new
financing statement within the period of time necessary fully to preserve and
protect the interest of the Trustee in the Receivables. The Servicer shall at
all times maintain each office from which it shall service Receivables, and its
principal executive office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Security Account
in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables to the Trustee,
the Servicer's master computer records (including any back-up archives) that
refer to a Receivable shall indicate clearly with reference to the particular
grantor trust that such Receivable is owned by the Trustee. Indication of the
Trustee's ownership of a Receivable shall be deleted from or modified on the
Servicer's computer systems when, and only
82
when, the Receivable shall have been paid in full or repurchased.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in automotive
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 print-outs (including any restored from back-up
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
Trustee.
(g) The Servicer shall permit the Trustee and the Security Insurer and
their respective agents at any time during normal business hours to inspect,
audit, and make copies of and abstracts from the Servicer's records regarding
any Receivable to the extent permitted by applicable banking, privacy and other
laws limiting such access.
(h) Upon request, the Servicer shall furnish to the Trustee and to the
Security Insurer, within five Business Days, a list of all Receivables (by
contract number and name of Obligor) then held as part of the Trust, together
with a reconciliation of such list to the Schedule of Receivables and to each of
the Servicer's Certificates furnished before such request indicating removal of
Receivables from the Trust.
(i) The Servicer shall deliver to the Trustee and the Security
Insurer:
(A) promptly after the execution and delivery of this Agreement
and of each amendment hereto and at the time of any merger,
consolidation or succession of the Seller or the Servicer, an Opinion
of Counsel either (a) stating that, in the opinion of such counsel,
all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect
the first priority perfected security interest of the Trustee in the
Receivables, and reciting the details of such filings or referring to
prior Opinions of Counsel in which such details are given, or (b)
stating that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interest; and (2) by
of each calendar year beginning ,
-------------- --------------------
an Opinion of Counsel, dated as of a date during the 90-day period
ending on such date, either
83
(a) stating that, in the opinion of such counsel, all financing
statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the first priority
perfected security interest of the Trustee in the Receivables, and
reciting the details of such filings or referring to prior Opinions of
Counsel in which such details are given, or (b) stating that, in the
opinion of such counsel, no such action shall be necessary to preserve
and protect such interest.
SECTION 12.3 LIMITATION ON RIGHTS OF SECURITYHOLDERS.
The death or incapacity of any Securityholder shall not operate to
terminate this Agreement or the Trust, nor entitle such Securityholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations, and liabilities of the parties to
this Agreement or any of them.
No Securityholder shall have any right to vote (except as provided in
Section 9.1, 9.4, 12.1, 12.3 or 12.7) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties to this
Agreement, nor shall anything in this Agreement set forth, or contained in the
terms of the Securities, be construed so as to constitute the Securityholders
from time to time as partners or members of an association; nor shall any
Securityholder be under any liability to any third person by reason of any
action taken pursuant to any provision of this Agreement.
No Securityholder shall have any right by virtue or by availing itself
of any provisions of this Agreement to institute any suit, action, or proceeding
in equity or at law upon or under or with respect to this Agreement, unless such
Holder previously shall have received the written consent of the Security
Insurer and shall have given to the Trustee a written notice of default and of
the continuance thereof, as hereinbefore provided, and unless also the Holders
of Securities evidencing not less than 25% of the Security Principal Balance
shall have made written request upon the Trustee to institute such action, suit,
or proceeding in its own name as Trustee under this Agreement and shall have
offered to the Trustee such reasonable indemnity as it may require against the
costs, expenses, and liabilities to be incurred therein or thereby, and the
Trustee, for 30 days after its receipt of such notice, request, and offer of
indemnity, shall have neglected or refused to institute any such action, suit,
or proceeding
84
and during such 30-day period no direction inconsistent with such written
request has been given to the Trustee pursuant to Section 9.4; no one or more
Holders of Securities shall have any right in any manner whatever by virtue or
by availing itself or themselves of any provisions of this Agreement to affect,
disturb, or prejudice the rights of the Holders of any other of the Securities,
or to obtain or seek to obtain priority over or preference to any other such
Holder, or to enforce any right, under this Agreement except in the manner
provided in this Agreement and for the equal, ratable, and common benefit of all
Securityholders. For the protection and enforcement of the provisions of this
Section 12.3, each Securityholder and the Trustee shall be entitled to such
relief as can be given either at law or in equity.
SECTION 12.4 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO CONFLICTS
OF LAW PRINCIPLES) APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED WITHIN THE
STATE OF NEW YORK, AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES
UNDER THIS AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 12.5 NOTICES.
All demands, notices, and communications under this Agreement shall be
in writing, personally delivered or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt (a) in the
case of the Seller or the Servicer, to the agent for service as specified in
this Agreement, at the following address: Chevy Chase Bank, F.S.B., 0000
Xxxxxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxx Xxxxx, Xxxxxxxx 00000, Attention: General
Counsel, or at such other address as shall be designated by the Seller or the
Servicer in a written notice to the Trustee and (b) in the case of the Trustee,
at the Corporate Trust Office, (c) in the case of the Security Insurer, at
, Attention:
--------------------------------------
. Any notice required or permitted to be mailed
--------------------------------
to a Securityholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Security Register. Any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed to
have been duly given, whether or not the Securityholder shall receive such
notice.
SECTION 12.6 SEVERABILITY OF PROVISIONS.
If any one or more of the covenants, agreements, provisions, or terms
of this Agreement shall be for any reason whatsoever held invalid, then such
covenants,
85
agreements, provisions, or terms shall be deemed severable from the remaining
covenants, agreements, provisions, or terms of this Agreement and shall in no
way affect the validity or enforceability of the other provisions of this
Agreement or of the Securities or the rights of the Holders thereof or the
rights of the Security Insurer.
SECTION 12.7 ASSIGNMENT.
Notwithstanding anything to the contrary contained herein, except as
provided in Sections 7.3 and 8.3 and as provided in the provisions of this
Agreement concerning the resignation of the Servicer, this Agreement may not be
assigned by the Seller or the Servicer without the prior written consent of (x)
the Security Insurer or (y) the Trustee or the Holders of Securities evidencing
not less than % of the Security Principal Balance, in either case acting with
---
the consent of the Security Insurer.
SECTION 12.8 SECURITIES NONASSESSABLE AND FULLY PAID.
Securityholders shall not be personally liable for obligations of the
Trust. The interests represented by the Securities shall be nonassessable for
any losses or expenses of the Trust or for any reason whatsoever, and, upon
authentication thereof by the Trustee pursuant to Section 6.2, Securities shall
be deemed fully paid.
SECTION 12.9 COUNTERPARTS.
For the purpose of facilitating the execution of this Agreement and
for other purposes, this Agreement may be executed simultaneously in any number
of counterparts, each of which counterparts shall be deemed to be an original,
and all of which counterparts shall constitute but one and the same instrument.
SECTION 12.10 BENEFITS OF AGREEMENT.
This Agreement shall inure to the benefit of and be binding upon the
parties hereto, the Securityholders and their respective successors and assigns,
and to the extent provided herein, the Security Insurer. Without limiting the
generality of the foregoing, all covenants and agreements in this Agreement
which expressly confer rights upon the Security Insurer shall be for the benefit
of and run directly to the Security Insurer, and the Security Insurer shall be
entitled to rely on and enforce such covenants to the same extent as if it were
a party hereto. Except as otherwise provided in this Agreement, no other person
shall have any rights or obligations hereunder.
86
SECTION 12.11 TAX TREATMENT.
The parties hereto agree that the Trust created hereby will at all
times be characterized as a grantor trust for federal, state and local income
tax purposes.
87
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers as of the day and year first above
written.
CHEVY CHASE BANK, F.S.B.,
as Seller and Servicer
By:
---------------------------
Name:
Title:
------------------------------
, as Trustee
By:
---------------------------
Name:
Title:
88
EXHIBIT A
SCHEDULE OF RECEIVABLES
EXHIBIT B
FORM OF SECURITY
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY SECURITY
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE
TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE
OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL, INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
CHEVY CHASE AUTO RECEIVABLES TRUST ________
____% AUTO RECEIVABLES BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined below,
the property of which includes a pool of simple interest retail installment
sales contracts and installment loans and other similar evidences of
installment indebtedness, secured by new and used automobiles, light duty
trucks and vans and sold to the Trustee by Chevy Chase Bank, F.S.B.
This Security does not represent an interest in or obligation of Chevy Chase
Bank, F.S.B. or any of its affiliates. This Security is not a savings account
or a deposit and neither this Security nor the underlying Receivables (as
defined below) and other property are insured or guaranteed by the Federal
Deposit Insurance Corporation or any other government agency. This Security is
limited in right of payment to certain collections in respect of the Receivables
and payments made pursuant to the Security Insurance Policy and, under certain
circumstances, amounts available in the Reserve Account and the Yield
Maintenance Account.
2
NUMBER: CUSIP:___________
$______________
THIS CERTIFIES THAT _________ is the registered owner of a
$___________ dollars nonassessable, fully paid, fractional undivided interest in
the Chevy Chase Auto Receivables Trust ______ (the "Trust") formed by Chevy
Chase Bank, F.S.B., a federally chartered savings bank (the "Bank", or the
"Seller" or the "Servicer" in its respective capacities as such). The Trust was
created pursuant to a Pooling and Servicing Agreement dated as of ____________
(the "Agreement") between Chevy Chase Bank, F.S.B., as Seller and Servicer, and
_______________________, as trustee (the "Trustee"), a summary of certain of the
pertinent provisions of which is set forth below. To the extent not otherwise
defined herein, the capitalized terms used herein have the meanings assigned to
them in the Agreement. This Security is one of the duly authorized Securities
designated as "____% Auto Receivables Backed Securities" (the "Certificates").
This Security is issued under and is subject to the terms, provisions, and
conditions of the Agreement, to which Agreement the holder of this Security by
virtue of the acceptance hereof assents and by which such holder is bound. The
property of the Trust includes a pool of simple interest retail installment
sales contracts and installment loans for new and used automobiles, light duty
trucks and vans (the "Receivables"), all monies due or received thereon on or
after ___________________, security interests in the vehicles financed thereby,
such amounts as from time to time may be held in the Collection Account and the
Security Account, all rights to receive payments under certain circumstances
from the Reserve Account and the Yield Maintenance Account, the Security
Insurance Policy (described below), proceeds from claims on physical damage,
credit life, and disability or hospitalization insurance policies covering
vehicles financed thereby and the obligors thereunder, any property (including
the right to receive future Liquidation Proceeds) that secures a Receivable that
may from time to time be acquired by or on behalf of the Trustee, proceeds from
recourse to Dealers relating to the Receivables, and the proceeds of any and all
of the foregoing.
Under the Agreement, there will be distributed on the first Business
Day on or after the ____ day of each month (the "Distribution Date"), commencing
on _____________, to the person in whose name this Security is registered at the
close of business, if applicable, on the day (whether or not a Business Day)
immediately preceding such Distribution Date (the "Record Date"), such
Securityholder's fractional interest in Monthly Interest and Monthly Principal.
Each Securityholder's "fractional interest" is equal to the original principal
amount of such
3
Securityholder's Security, as set forth on the face thereof, divided by the
aggregate original principal amount of all of the Securities.
Distributions on this Security will be made by the Trustee by wire
transfer (if wiring instructions are received from the Securityholder), by check
or money order mailed to the Person entitled thereto, or by such other means as
the Securityholder and the Trustee shall agree, without the presentation or
surrender of this Security or the making of any notation hereon. Except as
otherwise provided in the Agreement and notwithstanding the above, the final
distribution on this Security will be made after due notice by the Trustee of
the pendency of such distribution and only upon presentation and surrender of
this Security at the office or agency maintained for that purpose by the
Trustee in __________________, or at such other office as the Trustee may
designate.
Unless the certificate of authentication hereon shall have been
executed by a Responsible Officer of the Trustee, by manual signature, this
Security shall not entitle the holder hereof to any or benefit under the
Agreement or be valid for any purpose.
Pursuant to the Security Insurance Policy, the Security Insurer is
required, to the extent of any insufficiency in the Available Distribution
Amount, to make Insured Payments available to the Trustee necessary to
distribute the full amount of the Required Payments with respect to the
Securities on each Distribution Date.
The Securities do not represent an obligation of, or an interest in,
the Bank or any affiliate of the Bank. The Securities are limited in right of
payment to certain collections and recoveries respecting the Receivables and
rights to payments under certain circumstances from the Reserve Account, the
Yield Maintenance Account and the Security Insurance Policy, all as more
specifically set forth in the Agreement. A copy of the Agreement may be
examined during normal business hours at the principal office of the Seller, and
at such other places, if any, designated by the Seller, by any Securityholder
upon request.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Seller and the rights of the Securityholders under the Agreement at any time by
the Seller, the Servicer and the Trustee with the consent of the Security
Insurer and the Holders of Securities evidencing not less than 51% of the
Security Principal Balance. Any such consent by the Holder of this Security
4
shall be conclusive and binding on such Holder and on all future Holders of this
Security and of any Security issued upon the transfer hereof or in exchange
herefor or in lieu hereof whether or not notation of such consent is made upon
this Security. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Securities.
As provided in the Agreement and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register upon surrender of this Security for registration of transfer at the
offices or agencies maintained by the Trustee in its capacity as Security
Registrar, or by any successor Security Registrar, accompanied by a written
instrument of transfer in form satisfactory to the Trustee and the Security
Registrar duly executed by the holder hereof or such holder's attorney duly
authorized in writing, and thereupon one or more new Securities of authorized
denominations evidencing the same aggregate interest in the Trust will be issued
to the designated transferee.
The Securities are issuable only as registered Securities without
coupons in integral multiples of $______; PROVIDED, HOWEVER, that one Security
may be issued in a denomination that includes any residual amount. As provided
in the Agreement and subject to certain limitations therein set forth,
Securities are exchangeable for new Securities of authorized denominations
evidencing the same aggregate denomination, as requested by the holder
surrendering the same.
No service charge will be made for any such registration of transfer
or exchange, but the Trustee may require payment of a sum sufficient to cover
any tax or governmental charges payable in connection therewith.
The Trustee, the Security Registrar, and any agent of the Trustee or
the Security Registrar may treat the person in whose name this Security is
registered as the owner hereof for all purposes, and neither the Trustee, the
Security Registrar, nor any such agent shall be affected by any notice to the
contrary.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Securityholders and
the Security Insurer of all amounts required to be paid to them pursuant to the
Agreement or the disposition of all property held as part of the Trust. The
Seller of the Receivables may at its option purchase the corpus of the Trust at
a price specified in the Agreement, and such purchase of the Receivables and
other property of the Trust will effect early retirement of the
5
Securities; however, such right of purchase is exercisable on any Distribution
Date following a Record Date on which the Pool Balance is __% or less of the
original aggregate principal balance of the Receivables.
STATEMENT OF INSURANCE
The Security Insurer has issued the Security Insurance Policy
containing the following provisions, such Security Insurance Policy being on
file at the offices of the Trustee at _______________________________________.
The Security Insurer, in consideration of the payment of the premium
and subject to the terms of the Security Guaranty Insurance Policy (the
"Security Insurance Policy"), thereby unconditionally and irrevocably
guarantees to any Owner that an amount equal to each full and complete Insured
Payment will be received by __________, or its successor, as trustee for the
Owners (the "Trustee"), on behalf of the Owners from the Security Insurer, for
distribution by the Trustee to each Owner of each Owner's proportionate share of
the Insured Payment. The Security Insurer's obligations under the Security
Insurance Policy with respect to a particular Insured Payment shall be
discharged to the extent funds equal to the applicable Insured Payment are
received by the Trustee, whether or not such funds are properly applied by the
Trustee. Insured Payments shall be made only at the time set forth in the
Security Insurance Policy and no accelerated Insured Payments shall be made
regardless of any acceleration of the Securities, unless such acceleration is at
the sole option of the Security Insurer.
Notwithstanding the foregoing paragraph, the Security Insurance Policy
does not cover shortfalls, if any, attributable to the liability of the Trust or
the Trustee for withholding taxes, if any (including interest and penalties in
respect of any such liability).
The Security Insurer will pay any Insured Payment that is a Preference
Amount on the Business Day following receipt on a Business Day by the Fiscal
Agent (as described below) of (i) a certified copy of the order requiring the
return of a preference payment, (ii) an opinion of counsel satisfactory to the
Security Insurer that such order is final and not subject to appeal, (iii) an
assignment in such form as is reasonably required by the Security Insurer,
irrevocably assigning to the Security Insurer all rights and claims of the Owner
relating to or arising under the Securities against the debtor which made such
preference payment or otherwise with respect to such preference payment and (iv)
appropriate instruments to effect the appointment of the Security Insurer as
agent for such Owner in any legal
6
proceeding related to such preference payment, such instruments being in a form
satisfactory to the Security Insurer, provided that if such documents are
received after ___________________ time on such Business Day, they will be
deemed to be received on the following Business Day. Such payments shall be
disbursed to the receiver or trustee in bankruptcy named in the final order of
the court exercising jurisdiction on behalf of the Owner and not to any Owner
directly unless such Owner has returned principal or interest paid on the
Securities to such receiver or trustee in bankruptcy, in which case such payment
shall be disbursed to such Owner.
The Security Insurer will pay any other amount payable under the
Security Insurance Policy no later than ___________________ time on the later of
the Distribution Date on which the related Deficiency Amount is due or the third
Business Day following receipt in _______________ on a Business Day by
_____________________________________, as Fiscal Agent for the Security Insurer
or any successor fiscal agent appointed by the Security Insurer (the "Fiscal
Agent") of a Notice (as described below); provided that if such Notice is
received after _______________ time on such Business Day, it will be deemed to
be received on the following Business Day. If any such Notice received by the
Fiscal Agent is not in proper form or is otherwise insufficient for the purpose
of making claim under the Security Insurance Policy it shall be deemed not to
have been received by the Fiscal Agent for purposes of this paragraph, and the
Security Insurer or the Fiscal Agent, as the case may be, shall promptly so
advise the Trustee and the Trustee may submit an amended Notice.
Insured Payments due under the Security Insurance Policy unless
otherwise stated therein will be disbursed by the Fiscal Agent to the Trustee on
behalf of the Owners by wire transfer of immediately available funds in the
amount of the Insured Payment less, in respect of Insured Payments related to
Preference Amounts, any amount held by the Trustee for the payment of such
Insured Payment and legally available therefor.
The Fiscal Agent is the agent of the Security Insurer only and the
Fiscal Agent shall in no event be liable to Owners for any acts of the Fiscal
Agent or any failure of the Security Insurer to deposit, or cause to be
deposited, sufficient funds to make payments due under the Security Insurance
Policy.
As used in the Security Insurance Policy, the following terms shall
have the following meanings:
7
"AGREEMENT" means the Pooling and Servicing Agreement dated as of
_____________, among Chevy Chase Bank, F.S.B., as Seller and as Servicer, and
the Trustee, as trustee, without regard to any amendment or supplement thereto,
unless such amendment or modification has been approved in writing by the
Security Insurer.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a day
on which banking institutions in New York City, Chevy Chase, Maryland or in the
city in which the corporate trust office of the Trustee under the Agreement or
the Security Insurer is located are authorized or obligated by law or executive
order to close.
"DEFICIENCY AMOUNT" means the excess, if any, of Required Payments
over Net Available Distribution Amount for such Distribution Date.
"INSURED PAYMENT" means (i) as of any Distribution Date, any
Deficiency Amount and (ii) any Preference Amount.
"NOTICE" means the telephonic or telegraphic notice, promptly
confirmed in writing by telecopy substantially in the form of Exhibit A attached
to the Security Insurance Policy, the original of which is subsequently
delivered by registered or certified mail, from the Trustee specifying the
Insured Payment which shall be due and owing on the applicable Distribution
Date.
"OWNER" means each Holder (as defined in the Agreement) who, on the
applicable Distribution Date, is entitled under the terms of the applicable
Securities to payment thereunder.
"PREFERENCE AMOUNT" means any amount previously distributed to an
Owner on the Securities that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the United States
Bankruptcy Code (11 U.S.C.), as amended from time to time, in accordance with a
final nonappealable order of a court having competent jurisdiction.
Capitalized terms used in the Security Insurance Policy and not
otherwise defined in the Security Insurance Policy shall have the respective
meanings set forth in the Agreement as of the date of execution of the Security
Insurance Policy, without giving effect to any subsequent amendment or
modification to the Agreement unless such amendment or modification has been
approved in writing by the Security Insurer.
Any notice under the Security Insurance Policy or service of process
on the Fiscal Agent of the Security
8
Insurer may be made at the address listed below for the Fiscal Agent of the
Security Insurer or such other address as the Security Insurer shall specify in
writing to the Trustee.
The notice address of the Fiscal Agent is
___________________________________________ Attention: _____________________, or
such other address as the Fiscal Agent shall specify to the Trustee in writing.
The Security Insurance Policy is being issued under and pursuant to,
and shall be construed under, the laws of the State of ____________, without
giving effect to the conflict of laws principles thereof.
[The insurance provided by the Security Insurance Policy is not
covered by the Property/Casualty Insurance Security Fund specified in Article 76
of the New York Insurance Law.]
The Security Insurance Policy is not cancelable for any reason. The
premium on the Security Insurance Policy is not refundable for any reason
including payment, or provision being made for payment, prior to maturity of the
Securities.
__________________
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Security to be duly executed.
Dated: ____________, 1996
CHEVY CHASE AUTO RECEIVABLES
TRUST _________
By:
-----------------------------
___________, as Trustee
By:
-----------------------------
[name]
9
CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to
in the within-mentioned Agreement
_______________________________, as
Trustee
By:________________________________
[name]
Dated: ____________
10
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE _________________
_______________________________________________________________________________
(Please print or typewrite name and address, including postal zip code, of
assignee)
_______________________________________________________________________________
the within Security, and all rights thereunder, hereby irrevocably constituting
and appointing
_______________________________________________________________________ Attorney
to transfer said Security on the books of the Security Registrar, with full
power of substitution in the premises.
Dated:
_________________________ *
Signature Guaranteed
_________________________ *
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Security in every particular, without
alteration, enlargement or any change whatever. Such a signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank or
trust company.
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EXHIBIT C
FORM OF TRUSTEE'S CERTIFICATE
PURSUANT TO SECTION 10.2
OF THE POOLING AND SERVICING AGREEMENT
__________________________, as trustee (the "Trustee") of the Chevy
Chase Auto Receivables Trust _____ created pursuant to the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), dated as of
________________, between Chevy Chase Bank, F.S.B. (the "Seller") and the
Trustee, does hereby sell, transfer, assign and otherwise convey to the Seller,
without recourse, representation or warranty, all of the Trustee's right, title
and interest in and to all of the Receivables (as defined in the Pooling and
Servicing Agreement) identified in the attached Servicer's Certificate as
"Purchased Receivables," which are to be repurchased by the Seller pursuant to
Section 3.2, and all Insurance Policies, security and documents relating
thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this ___ day of
__________.
_______________________________
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EXHIBIT D
FORM OF TRUSTEE'S CERTIFICATE
PURSUANT TO SECTION 10.2
OF THE POOLING AND SERVICING AGREEMENT
_______________________________, as trustee (the "Trustee") of the
Chevy Chase Auto Receivables Trust ______ created pursuant to the Pooling and
Servicing Agreement (the "Pooling and Servicing Agreement"), dated as of
________________, between Chevy Chase Bank, F.S.B. (the "Seller") and the
Trustee, does hereby sell, transfer, assign and otherwise convey to the
Servicer, without recourse, representation or warranty, all of the Trustee's
right, title and interest in and to all of the Receivables (as defined in the
Pooling and Servicing Agreement) identified in the attached Servicer's
Certificate as "Purchased Receivables," which are to be purchased by the
Servicer pursuant to Sections 4.2, 4.7 or 11.2, and all Insurance Policies,
security and documents relating thereto.
IN WITNESS WHEREOF, I have hereunto set my hand this ___ day of
______________.
_______________________________
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EXHIBIT E
FORM OF SERVICER'S CERTIFICATE
CHEVY CHASE AUTO RECEIVABLES TRUST ______
_____% AUTO RECEIVABLES BACKED SECURITIES
Distribution Date: _______________
Collection Period: _______________
Record Date: _______________
Under the Pooling and Servicing Agreement, dated as of
________________, between Chevy Chase Bank, F.S.B. (as "Seller" and "Servicer")
and ____________________, as trustee, the Servicer is required to prepare
certain information each month regarding current distributions to
Securityholders and the performance of the Chevy Chase Auto Receivables Trust
_______ (the "Trust") during the previous month. The information which is
required to be prepared with respect to the Distribution Date and Collection
Period listed above is set forth below. Certain of the information is presented
on the basis of an original principal amount of $_____ per Securities, and
certain other information is presented based upon the aggregate amounts for the
Trust as a whole.
A. INFORMATION REGARDING THE CURRENT MONTHLY DISTRIBUTION.
1. SECURITIES.
(a) The aggregate amount of the
distribution to Securityholders
on the Distribution Date
set forth above....................... $______
(b) The amount of the distribution
set forth in paragraph (a)
above allocable to principal,
including any overdue
principal............................. $______
(c) The amount of the distribution
set forth in paragraph (a) above
allocable to interest, including
any overdue interest.................. $______
(d) The Insured Payments, if any,
with respect to such Distribution
Date.................................. $______
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(e) The Premium Amount, with respect
to such Distribution Date....... $______
(f) The amount of the distribution
set forth in paragraph (a) above,
per Security in a principal
amount of $_____................ $______
(g) The amount of the distribution
set forth in paragraph (b)
above, per Security in a
principal amount of $_____...... $______
(h) The amount of the distribution
set forth in paragraph (c) above,
per Security in a principal
amount of $_____................ $______
(i) The amount set forth in paragraph
(d) above, per Security in a
principal amount of $_____...... $______
(j) The Security Principal Balance
as of such Distribution Date
(after giving effect to any
distribution on such Distribution
Date)........................... $______
(k) The balance of the Reserve Account,
after giving effect to distributions
and deposits and the change in the
balances from that of the prior
Distribution Date............... $______
(l) The balance of the Yield Maintenance
Account, after giving effect to
distributions from the prior
Distribution Date............... $______
B. INFORMATION REGARDING THE PERFORMANCE OF THE TRUST.
1. NET LOSSES, DELINQUENCIES AND POOL BALANCE.
(a) The aggregate net losses on the
Receivables for the related
Collection Period............... $______
(b) The aggregate principal balance
of all Receivables which were
delinquent 30 days or more as
of the last day of the related
Collection Period............... $______
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(c) The Pool Balance as of the
end of the related Collection
Period.......................... $______
(d) The Security Factor as of the
end of the related Collection
Period.......................... $______
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EXHIBIT F
LIST OF DESIGNATED LOANS
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