Exhibit 4
BAY VIEW SECURITIZATION CORPORATION
Depositor
BAY VIEW ACCEPTANCE CORPORATION
Servicer
and
BANKERS TRUST COMPANY
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of December 14, 1999
$246,773,107
Bay View 1999-LG-1 Auto Trust
$42,750,000 6.12912% Class A-1 Automobile Receivable Backed Certificates
$97,000,000 6.88% Class A-2 Automobile Receivable Backed Certificates
$55,000,000 6.91% Class A-3 Automobile Receivable Backed Certificates
$52,023,107 7.07% Class A-4 Automobile Receivable Backed Certificates
Class I Interest Only Automobile Receivable Backed Certificates
and
Class IC Automobile Receivable Backed Certificate
TABLE OF CONTENTS
Page
ARTICLE I Creation of Trust........................................................................ 1
ARTICLE II Definitions.............................................................................. 1
SECTION 2.01. Definitions............................................................... 1
SECTION 2.02. Usage of Terms............................................................ 18
SECTION 2.03. Cutoff Date and Record Date............................................... 18
SECTION 2.04. Section References........................................................ 18
ARTICLE III Conveyance of Receivables................................................................ 19
ARTICLE IV Acceptance by Trustee.................................................................... 20
ARTICLE V Information Delivered to The Rating Agency............................................... 20
ARTICLE VI Agent For Service........................................................................ 21
ARTICLE VII The Receivables.......................................................................... 21
SECTION 7.01. Representations and Warranties of Depositor............................... 21
SECTION 7.02. Repurchase Upon Breach.................................................... 22
SECTION 7.03. Custody of Receivable Files............................................... 22
SECTION 7.04. Duties of Servicer as Custodian........................................... 23
SECTION 7.05. Instructions; Authority to Act............................................ 24
SECTION 7.06. Custodian's Indemnification............................................... 24
SECTION 7.07. Effective Period and Termination.......................................... 24
ARTICLE VIII Administration And Servicing of Receivables.............................................. 25
SECTION 8.01. Duties of Servicer........................................................ 25
SECTION 8.02. Collection of Receivable Payments......................................... 25
SECTION 8.03. Realization Upon Receivables.............................................. 26
SECTION 8.04. Physical Damage Insurance................................................. 27
SECTION 8.05. Maintenance of Security Interests in Financed Vehicles.................... 27
SECTION 8.06. Covenants of Servicer..................................................... 27
SECTION 8.07. Purchase of Receivables Upon Breach....................................... 27
SECTION 8.08. Servicing Fee............................................................. 27
SECTION 8.09. Servicer's Certificate.................................................... 28
SECTION 8.10. Annual Statement as to Compliance; Notice of Default...................... 28
SECTION 8.11. Annual Independent Certified Public Accountant's Report................... 29
SECTION 8.12. Access to Certain Documentation and Information Regarding Receivables..... 29
SECTION 8.13. Servicer Expenses......................................................... 29
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SECTION 8.14. Reports to Certificateholders............................................. 29
ARTICLE IX Distributions; Statements to Certificateholders.......................................... 30
SECTION 9.01. Certificate Account....................................................... 30
SECTION 9.02. Collections............................................................... 30
SECTION 9.03. Purchase Amounts.......................................................... 31
SECTION 9.04. Distributions to Parties.................................................. 31
SECTION 9.05. Advances.................................................................. 34
SECTION 9.06. Net Deposits.............................................................. 34
SECTION 9.07. Statements to Certificateholders.......................................... 34
SECTION 9.08. Intentionally Blank....................................................... 34
SECTION 9.09. Payahead Account.......................................................... 35
SECTION 9.10. Calculation of Notional Principal Amount.................................. 35
ARTICLE X Credit Enhancement....................................................................... 35
SECTION 10.01. Subordination............................................................. 35
SECTION 10.02. Intentionally Blank....................................................... __
SECTION 10.03. Policy.................................................................... 37
ARTICLE XI The Certificates......................................................................... 38
SECTION 11.01. The Certificates.......................................................... 38
SECTION 11.02. Authentication of Certificates............................................ 38
SECTION 11.03. Registration of Transfer and Exchange of Certificates..................... 38
SECTION 11.04. Mutilated, Destroyed, Lost, or Stolen Certificates........................ 39
SECTION 11.05. Persons Deemed Owners..................................................... 39
SECTION 11.06. Access to Agreement and List of Certificateholders'
Names and Addresses....................................................... 39
SECTION 11.07. Maintenance of Office or Agency........................................... 39
SECTION 11.08. Book-Entry Certificates................................................... 40
SECTION 11.09. Notices to Clearing Agency................................................ 40
SECTION 11.10. Definitive Certificates................................................... 40
SECTION 11.11. The Tax Partnership Agreement............................................. 41
ARTICLE XII The Depositor............................................................................ 41
SECTION 12.01. Representations and Undertakings of Depositor............................. 41
SECTION 12.02. Merger or Consolidation of, or Assumption of the
Obligations of Depositor.................................................. 43
SECTION 12.03. Limitation on Liability of Depositor and Others........................... 43
SECTION 12.04. Depositor May Own Certificates............................................ 44
ARTICLE XIII The Servicer............................................................................. 44
SECTION 13.01. Representations of Servicer............................................... 44
SECTION 13.02. Indemnities of Servicer................................................... 45
SECTION 13.03. Merger or Consolidation of, or Assumption of
the Obligations of Servicer............................................... 46
iii
SECTION 13.04. Limitation on Liability of Servicer and Others............................ 46
SECTION 13.05. Servicer Not to Resign.................................................... 47
SECTION 13.06. Delegation of Duties...................................................... 47
ARTICLE XIV Default.................................................................................. 47
SECTION 14.01. Events of Default......................................................... 47
SECTION 14.02. Appointment of Successor.................................................. 49
SECTION 14.03. Notification to Certificateholders........................................ 49
SECTION 14.04. Waiver of Past Defaults................................................... 49
ARTICLE XV The Trustee.............................................................................. 51
SECTION 15.01. Duties of Trustee......................................................... 51
SECTION 15.02. Trustee's Certificate..................................................... 52
SECTION 15.03. Trustee's Assignment of Purchased Receivables............................. 52
SECTION 15.04. Certain Matters Affecting the Trustee..................................... 53
SECTION 15.05. Trustee Not Liable for Certificates or Receivables........................ 54
SECTION 15.06. Trustee May Own Certificates.............................................. 55
SECTION 15.07. Trustee's Fees and Expenses............................................... 55
SECTION 15.08. Eligibility Requirements for Trustee...................................... 55
SECTION 15.09. Resignation or Removal of Trustee......................................... 56
SECTION 15.10. Successor Trustee......................................................... 56
SECTION 15.11. Merger or Consolidation of Trustee........................................ 56
SECTION 15.12. Appointment of Co-Trustee or Separate Trustee............................. 57
SECTION 15.13. Representations and Warranties of Trustee................................. 58
ARTICLE XVI Termination.............................................................................. 59
SECTION 16.01. Termination of the Trust.................................................. 59
SECTION 16.02. Optional Purchase of All Receivables...................................... 60
ARTICLE XVII Miscellaneous Provisions................................................................. 61
SECTION 17.01. Amendment................................................................. 61
SECTION 17.02. Protection of Title to Trust.............................................. 62
SECTION 17.03. Limitation on Rights of Certificateholders................................ 63
SECTION 17.04. Governing Law............................................................. 64
SECTION 17.05. Notices................................................................... 64
SECTION 17.06. Severability of Provisions................................................ 65
SECTION 17.07. Assignment................................................................ 65
SECTION 17.08. Certificates Nonassessable and Fully Paid................................. 65
SECTION 17.09. Nonpetition Covenants..................................................... 65
SECTION 17.10. Counterparts.............................................................. 65
SECTION 17.11. Third Party Beneficiary................................................... 65
EXHIBIT 1 - Trustee's Certificate Pursuant to Section 15.02
EXHIBIT 2 - Trustee's Certificate Pursuant to Section 15.02
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EXHIBIT 3 - Servicer's Certificate
EXHIBIT A-1 - Form of Class A-1 Automobile Receivable Backed Certificate
EXHIBIT A-2 - Form of Class A-2 Automobile Receivable Backed Certificate
EXHIBIT A-3 - Form of Class A-3 Automobile Receivable Backed Certificate
EXHIBIT A-4 - Form of Class A-4 Automobile Receivable Backed Certificate
EXHIBIT B - Form of Class I Automobile Receivable Backed Certificate
EXHIBIT C - Form of Class IC Automobile Receivable Backed Certificate
EXHIBIT D - Form of Depository Trust Co. Letter of Representations
SCHEDULE A - Schedule of Receivables
SCHEDULE B - Location of Receivables
SCHEDULE C - Planned Notional Principal Amount Schedule
ANNEX A - Tax Partnership Agreement
[All Exhibits, Schedules and Annexes, except
Schedule C and Annex A, are omitted from this From 8-K]
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This POOLING AND SERVICING AGREEMENT, dated as of December 14, 1999, is
made with respect to the formation of the Bay View 1999-LG-1 Auto Trust, among
BAY VIEW SECURITIZATION CORPORATION, a Delaware corporation, as depositor (the
"Depositor"), BAY VIEW ACCEPTANCE CORPORATION, a Nevada corporation, as servicer
(the "Servicer"), and BANKERS TRUST COMPANY, a New York banking corporation, as
trustee (the "Trustee").
WITNESSETH THAT: In consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
CREATION OF TRUST
Upon the execution of this Agreement by the parties hereto, there is hereby
created the Bay View 1999-LG-1 Auto Trust.
The parties hereto intend that this Agreement be construed so as to create
a partnership, for tax purposes, formed to facilitate the direct investment by
Certificateholders in the assets of the Trust.
ARTICLE II
DEFINITIONS
SECTION 2.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"Accrued Interest" means all interest accrued on the Receivables prior to
the opening of business on the day following the Cutoff Date.
"Advance" means, with respect to a Receivable and with respect to a
Collection Period, the amount that the Servicer advances pursuant to Section
9.05.
"Affiliate" means any wholly-owned subsidiary of BVCC, a Delaware
corporation.
"Agreement" means this Pooling and Servicing Agreement executed by the
Depositor, the Servicer and the Trustee, and all amendments and supplements
thereto.
"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.
"Approved Rating" means a rating of P-1 by Moody's or A-l+ by Standard &
Poor's.
"Authorized Newspaper" means a newspaper of general circulation in the
Borough of Manhattan, the City of New York, printed in the English language and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays and holidays.
"Available Funds" means the amount defined as such in Section 9.02.
"Avoided Payment" has the meaning set forth in the definition of Preference
Amounts.
"Bank" means Bay View Bank, N.A., (and its predecessor, Bay View Federal
Savings Bank.)
"Bay View Credit" means Bay View Credit, formerly a wholly-owned subsidiary
of BVAC which was merged into BVAC on June 14, 1999.
"Book-Entry Certificates" means certificates evidencing a beneficial
interest in the Certificates, ownership and transfers of which shall be made
through book entries by a Clearing Agency as described in Section 11.08;
provided, however, that after the occurrence of a condition whereupon book-entry
registration and transfer are no longer permitted and Definitive Certificates
are to be issued to the Certificate Owners, such Certificates shall no longer be
"Book-Entry Certificates".
"Business Day" means, unless otherwise specified, any day other than a
Saturday, a Sunday or a day on which banking institutions in New York, New York
or San Francisco, California shall be authorized or obligated by law, executive
order, or governmental decree to be closed. The Servicer shall provide prior
notice to a Responsible Officer of the Trustee of any such day on which banking
institutions in San Francisco shall be so authorized or obligated to close.
"BVAC" means Bay View Acceptance Corporation, a Nevada corporation, and its
successors and assigns, other than in its capacity as Servicer.
"BVCC" means Bay View Capital Corporation, a Delaware corporation holding
100% of the Depositor's outstanding Common Stock.
"Certificate" means a Class A Certificate, a Class I Certificate or a Class
IC Certificate.
"Certificateholder" or "Holder" means the Person in whose name the
respective Certificate shall be registered in the Certificate Register, except
that, solely for the purposes of giving any consent, waiver, request, or demand
pursuant to the Agreement, the interest evidenced by any Certificate registered
in the name of the Depositor, the Servicer or BVAC, or any Person controlling,
controlled by, or under common control with the Depositor or the Servicer, shall
not be taken into account in determining whether the requisite percentage of
Certificates (except the Class IC Certificate) necessary to effect any such
consent, waiver, request, or demand shall have been obtained. The Depositor or
the Servicer shall notify a Responsible Officer of the Trustee of
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a change in any Person controlling, controlled by or under common control with
the Depositor or the Servicer, as the case may be. The term "control," when used
with respect to any specified Person, means the power to direct the management
and policies of such Person, directly and indirectly, whether through the
ownership of voting securities, by contract or otherwise.
"Certificate Account" means the account designated as such, established and
maintained pursuant to Section 9.01.
"Certificate Balance" means, at any time, the Initial Certificate Balance
minus all distributions of Monthly Principal made up to such time.
"Certificate Factor" means a seven digit decimal number computed by the
Servicer and stated in the Servicer's Certificate which is computed by dividing
the Certificate Balance (after giving effect to any prior distribution of
Monthly Principal) by the Initial Certificate Balance.
"Certificate Owner" means, with respect to a Book-Entry Certificate, the
Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a Person maintaining an account
with such Clearing Agency (directly or as an indirect participant, in accordance
with the rules of such Clearing Agency).
"Certificate Register" and "Certificate Registrar" mean, respectively, the
register maintained and the registrar appointed pursuant to Section 11.03.
"Class A Certificate" means a certificate executed on behalf of the Trust
and authenticated by the Trustee substantially in the form attached hereto as
Exhibit X-0, Xxxxxxx X-0, Xxxxxxx X-0 or Exhibit A-4.
"Class A Certificateholder" means the Person in whose name the respective
Class A Certificate shall be registered in the Certificate Register, except
that, solely for the purposes of giving any consent, waiver, request, or demand
pursuant to this Agreement, the interest evidenced by any Class A Certificate
registered in the name of the Depositor, the Servicer or BVAC, or any Person
controlling, controlled by, or under common control with the Depositor 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.
"Class A Monthly Interest" means, for any Distribution Date, the sum of
Class A-1 Monthly Interest, Class A-2 Monthly Interest, Class A-3 Monthly
Interest and Class A-4 Monthly Interest.
"Class A-1 Certificate" means a certificate executed on behalf of the Trust
and authenticated by the Trustee substantially in the form attached hereto as
Exhibit A-1.
"Class A-1 Certificate Balance" means, at any time, the Initial Class A-1
Certificate Balance minus all distributions of Monthly Principal to Class A-1
Certificateholders made up to such time.
3
"Class A-1 Certificate Factor" means a seven digit decimal number computed
by the Servicer and stated in the Servicer's Certificate which is computed by
dividing the Class A-1 Certificate Balance (after giving effect to any prior
distribution of Monthly Principal) by the Initial Class A-1 Certificate Balance.
"Class A-1 Certificateholder" means the Person in whose name the respective
Class A-1 Certificate shall be registered in the Certificate Register, except
that, solely for the purposes of giving any consent, waiver, request, or demand
pursuant to this Agreement, the interest evidenced by any Class A-1 Certificate
registered in the name of the Depositor, the Servicer or BVAC, or any Person
controlling, controlled by, or under common control with the Depositor or the
Servicer (as defined in Section 12.01(b)(ii)(C)), 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.
"Class A-1 Final Scheduled Distribution Date" means the Distribution Date
occurring in January 2001.
"Class A-1 Monthly Interest" means, (i) for the first Distribution Date,
the product of the following: the actual number of days from the Closing Date
through the day before the first Distribution Date multiplied by one-three
hundred sixtieth (1/360th) of the Class A-1 Pass-Through Rate multiplied by the
Class A-1 Certificate Balance at the Closing Date and (ii) for any subsequent
Distribution Date, the actual number of days from the previous Distribution Date
through the day before the related Distribution Date multiplied by one-three
hundred sixtieth (1/360th) of the product of the Class A-1 Pass-Through Rate and
the Class A-1 Certificate Balance as of the immediately preceding Distribution
Date (after giving effect to any distribution of Monthly Principal made on such
immediately preceding Distribution Date).
"Class A-1 Monthly Principal" means that portion of Monthly Principal to be
distributed to Class A-1 Certificateholders on each Distribution Date in
accordance with Section 9.04.
"Class A-1 Pass-Through Rate" means 6.12912% per annum, payable monthly at
one-twelfth of the annual rate.
"Class A-2 Certificate" means a certificate executed on behalf of the Trust
and authenticated by the Trustee substantially in the form attached hereto as
Exhibit A-2.
"Class A-2 Certificate Balance" means, at any time, the Initial Class A-2
Certificate Balance minus all distributions of Monthly Principal to Class A-2
Certificateholders made up to such time.
"Class A-2 Certificate Factor" means a seven digit decimal number computed
by the Servicer and stated in the Servicer's Certificate which is computed by
dividing the Class A-2 Certificate Balance (after giving effect to any prior
distribution of Monthly Principal) by the Initial Class A-2 Certificate Balance.
4
"Class A-2 Certificateholder" means the Person in whose name the respective
Class A-2 Certificate shall be registered in the Certificate Register, except
that, solely for the purposes of giving any consent, waiver, request, or demand
pursuant to this Agreement, the interest evidenced by any Class A-2 Certificate
registered in the name of the Depositor, the Servicer or BVAC, or any Person
controlling, controlled by, or under common control with the Depositor or the
Servicer (as defined in Section 12.01(b)(ii)(C)), 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.
"Class A-2 Final Scheduled Distribution Date" means the Distribution Date
occurring in February 2003.
"Class A-2 Monthly Interest" means, (i) for the first Distribution Date,
the product of the following: one-twelfth of the Class A-2 Pass-Through Rate
multiplied by the Class A-2 Certificate Balance at the Closing Date and (ii) for
any subsequent Distribution Date, one-twelfth of the product of the Class A-2
Pass-Through Rate and the Class A-2 Certificate Balance as of the immediately
preceding Distribution Date (after giving effect to any distribution of Monthly
Principal made on such immediately preceding Distribution Date).
"Class A-2 Monthly Principal" means that portion of Monthly Principal to be
distributed to Class A-2 Certificateholders on each Distribution Date in
accordance with Section 9.04.
"Class A-2 Pass-Through Rate" means 6.88% per annum, payable monthly at
one-twelfth of the annual rate.
"Class A-3 Certificate" means a certificate executed on behalf of the Trust
and authenticated by the Trustee substantially in the form attached hereto as
Exhibit A-3.
"Class A-3 Certificate Balance" means, at any time, the Initial Class A-3
Certificate Balance minus all distributions of Monthly Principal to Class A-3
Certificateholders made up to such time.
"Class A-3 Certificate Factor" means a seven digit decimal number computed
by the Servicer and stated in the Servicer's Certificate which is computed by
dividing the Class A-3 Certificate Balance (after giving effect to any prior
distribution of Monthly Principal) by the Initial Class A-3 Certificate Balance.
"Class A-3 Certificateholder" means the Person in whose name the respective
Class A-1 Certificate shall be registered in the Certificate Register, except
that, solely for the purposes of giving any consent, waiver, request, or demand
pursuant to this Agreement, the interest evidenced by any Class A-3 Certificate
registered in the name of the Depositor, the Servicer or BVAC, or any Person
controlling, controlled by, or under common control with the Depositor or the
Servicer (as defined in Section 12.01(b)(ii)(C)), 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.
5
"Class A-3 Final Scheduled Distribution Date" means the Distribution Date
occurring in March 2004.
"Class A-3 Monthly Interest" means, (i) for the first Distribution Date,
the product of the following: one-twelfth of the Class A-3 Pass-Through Rate
multiplied by the Class A-3 Certificate Balance at the Closing Date and (ii) for
any subsequent Distribution Date, one-twelfth of the product of the Class A-3
Pass-Through Rate and the Class A-3 Certificate Balance as of the immediately
preceding Distribution Date (after giving effect to any distribution of Monthly
Principal made on such immediately preceding Distribution Date).
"Class A-3 Monthly Principal" means that portion of Monthly Principal to be
distributed to Class A-3 Certificateholders on each Distribution Date in
accordance with Section 9.04.
"Class A-3 Pass-Through Rate" means 6.91% per annum, payable monthly at
one-twelfth of the annual rate.
"Class A-4 Certificate" means a certificate executed on behalf of the Trust
and authenticated by the Trustee substantially in the form attached hereto as
Exhibit A-4.
"Class A-4 Certificate Balance" means, at any time, the Initial Class A-4
Certificate Balance minus all distributions of Monthly Principal to Class A-4
Certificateholders made up to such time.
"Class A-4 Certificate Factor" means a seven digit decimal number computed
by the Servicer and stated in the Servicer's Certificate which is computed by
dividing the Class A-4 Certificate Balance (after giving effect to any prior
distribution of Monthly Principal) by the Initial Class A-4 Certificate Balance.
"Class A-4 Certificateholder" means the Person in whose name the respective
Class A-4 Certificate shall be registered in the Certificate Register, except
that, solely for the purposes of giving any consent, waiver, request, or demand
pursuant to this Agreement, the interest evidenced by any Class A-4 Certificate
registered in the name of the Depositor, the Servicer or BVAC, or any Person
controlling, controlled by, or under common control with the Depositor or the
Servicer (as defined in Section 12.01(b)(ii)(C)), 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.
"Class A-4 Final Scheduled Distribution Date" means the Distribution Date
occurring in December 2008.
"Class A-4 Monthly Interest" means, (i) for the first Distribution Date,
the product of the following: one-twelfth of the Class A-4 Pass-Through Rate
multiplied by the Class A-4 Certificate Balance at the Closing Date and (ii) for
any subsequent Distribution Date, one-twelfth of the product of the Class A-4
Pass-Through Rate and the Class A-4 Certificate Balance as of the
6
immediately preceding Distribution Date (after giving effect to any distribution
of Monthly Principal made on such immediately preceding Distribution Date).
"Class A-4 Monthly Principal" means that portion of Monthly Principal to be
distributed to Class A-1 Certificateholders on each Distribution Date in
accordance with Section 9.04.
"Class A-4 Pass-Through Rate" means 7.07% per annum, payable monthly at
one-twelfth of the annual rate.
"Class I Certificate" means a certificate executed on behalf of the Trust
and authenticated by the Trustee substantially in the form attached hereto as
Exhibit B.
"Class I Certificateholder" means the Person in whose name the respective
Class I Certificate shall be registered in the Certificate Register, except that
solely for the purposes of giving any consent, waiver, request, or demand
pursuant to the Agreement, the interest evidenced by any Class I Certificate
registered in the name of the Depositor, the Servicer or BVAC, or any Person
controlling, controlled by, or under common control with the Depositor or the
Servicer (as defined in Section 12.01(b)(ii)(C)), 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.
"Class I Final Scheduled Distribution Date" means December 2008.
"Class I Monthly Interest" means (i) for the first Distribution Date, the
product of the following: one-twelfth of the Class I Pass-Through Rate
multiplied by the Notional Principal Amount of the Class I Certificates at the
Closing Date, and (ii) for any subsequent Distribution Date, one-twelfth of the
product of the Class I Pass-Through Rate and the Notional Principal Amount as of
the immediately preceding Distribution Date (after giving effect to any
reduction of the Notional Principal Amount on such preceding Distribution Date);
provided, however, that after the Class I Final Scheduled Distribution Date, the
Class I Monthly Interest shall be zero.
"Class I Pass-Through Rate" means 1.50% per annum, payable monthly at one-
twelfth of the annual rate.
"Class IC Certificate" means a certificate executed on behalf of the Trust
and authenticated by the Trustee substantially in the form attached hereto as
Exhibit C.
"Class IC Certificateholder" means the Depositor or any Person in whose
name the Class IC Certificate shall be registered in the Certificate Register.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as amended.
7
"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 and pledges of securities deposited with the Clearing
Agency.
"Closing Date" means December 14, 1999.
"Collected Interest" on a Receivable, as of the last day of a Collection
Period, means the portion of all payments received by the Servicer allocable to
interest relating to such Collection Period determined in accordance with the
terms of a Simple Interest Receivable and on the actuarial or constant yield
method (starting on the Cutoff Date) for a Precomputed Receivable.
"Collected Principal" on a Receivable, as of the last day of a Collection
Period, means the portion of all payments received by the Servicer allocable to
principal relating to such Collection Period determined in accordance with the
terms of a Simple Interest Receivable and on the actuarial or constant yield
method (starting on the Cutoff Date) for a Precomputed Receivable.
"Collection Period" means (i) initially, the period from the day after the
Cutoff Date to the end of the calendar month of December 1999 and (ii)
thereafter, each calendar month, until the Trust shall terminate pursuant to
Article 16.
"Companion Component" means, for each respective Distribution Date, the
difference between the Certificate Balance and the PAC Component.
"Corporate Trust Office" means the office of the Trustee at which its
corporate trust business shall, at any particular time, be administered, which
office at the date of the execution of this Agreement is located at Four Xxxxxx
Xxxxxx, Xxx Xxxx, XX 00000; Attention: Corporate Trust and Agency Services;
Telecopy (000) 000-0000 or at such other address as the Trustee may designate
from time to time by notice to the Certificateholders, the Depositor and the
Servicer.
"Cutoff Date" means November 30, 1999.
"Dealer" means the seller of a Financed Vehicle, who originated and
assigned the related Receivable to BVAC or a Named Lienholder under an existing
agreement with BVAC or a Named Lienholder or who arranged for a loan from BVAC
or a named Lienholder to the purchaser of a Financed Vehicle under an existing
agreement with BVAC.
"Defaulted Receivable" means, for any Collection Period, a Receivable as to
which the earliest to occur of any of the following has occurred: (i) any
payment was delinquent 120 days or more as of the last day of such Collection
Period, (ii) the Financed Vehicle that secures the Receivable has been
repossessed and liquidated, or (iii) the Servicer has determined that the
Receivable is uncollectible in accordance with the Servicer's customary
practices on or before the last day of such Collection Period; provided,
however, that "Defaulted Receivable" shall not include any Receivable that has
been repurchased pursuant to Section 7.02 or purchased pursuant to Section 8.07
and provided further, that any Advances made pursuant to Section 9.05 shall not
be considered in the determination of the delinquency status with respect to
such Receivable.
8
"Definitive Certificate" means a Certificate defined as such in Section
11.08.
"Depositor" means Bay View Securitization Corporation, a Delaware
corporation, in its capacity as the depositor of the Receivables under this
Agreement, and each successor to Bay View Securitization Corporation (in the
same capacity) pursuant to Section 12.02.
"Depository Agreement" means the agreement among the Depositor, the Trustee
and the initial Clearing Agency in the form attached hereto as Exhibit D.
"Determination Date" means, for each Collection Period, the 10th calendar
day of the following month, (or in the event such day is not a Business Day, on
the next succeeding Business Day).
"Dissolution Distribution Date" means the Distribution Date following the
liquidation of the trust corpus pursuant to Section 16.02.
"Distribution Date" means, for each Collection Period, the 15th calendar
day of each month (or, in the event such day is not a Business Day, the next
succeeding Business Day). The first Distribution Date shall be January 18,
2000.
"Eligible Bank" means any depository institution with trust powers
(including the Trustee), organized under the laws of the United States or any
State having a net worth in excess of $50,000,000, the deposits of which are
insured to the full extent permitted by law by the Federal Deposit Insurance
Corporation, which is subject to supervision and examination by Federal or State
authorities and which (A) (i) has a long-term unsecured debt rating of at least
Baa3 from Moody's and BBB- from Standard & Poor's and (ii) a short-term
unsecured debt rating of at least P-2 from Moody's and A-2 from Standard &
Poor's or (B) is approved by each Rating Agency and the Insurer.
"Eligible Investment" means any of the following:
(i) direct obligations of, and obligations the full and timely payment of
principal and interest on which is fully guaranteed by, the United States of
America, Xxxxxx Xxx, or any agency or instrumentality of the United States of
America the obligations of which are backed by the full faith and credit of the
United States of America;
(ii) (A) demand and time deposits in, certificates of deposits of, bankers'
acceptances issued by, or federal funds sold by any depository institution or
trust company (including the Trustee or any agent of the Trustee, acting in
their respective commercial capacities) incorporated under the laws of the
United States of America, any State thereof or the District of Columbia or any
foreign depository institution with a branch or agency licensed under the laws
of the United States of America or any State, in each case subject to
supervision and examination by Federal and/or State banking authorities and
having an Approved Rating at the time of such investment or contractual
commitment providing for such investment or (B) any other demand or time deposit
or certificate of deposit which is fully insured by the Federal Deposit
Insurance Corporation;
9
(iii) repurchase obligations with respect to (A) any security described in
clause (i) above or (B) any other security issued or guaranteed by an agency or
instrumentality of the United States of America, in either case entered into
with a depository institution or trust company (acting as principal) described
in clause (ii) (A) above;
(iv) short-term securities bearing interest or sold at a discount issued
by any corporation incorporated under the laws of the United States of America
or any State, the short-term unsecured obligations of which have an Approved
Rating, or higher, at the time of such investment;
(v) commercial paper having an Approved Rating at the time of such
investment;
(vi) a guaranteed investment contract issued by any insurance company or
other corporation acceptable to the Rating Agency, provided that the Trustee
shall have received written notice from the Rating Agency to the effect that the
investment of funds in such a contract will not result in the reduction or
withdrawal of any rating on the Certificates;
(vii) interests in any money market fund having a rating of Aaa by Moody's
or AAAm by Standard & Poor's; and
(viii) any other investment approved in advance in writing by the Rating
Agencies and the Insurer.
"Event of Default" means an event specified in Section 14.01.
"Financed Vehicle" means a new or used automobile, light truck, motorcycle,
recreational vehicle, sport utility vehicle or van, together with all accessions
thereto, securing an Obligor's indebtedness under the respective Receivable.
"Fiscal Agent" means the party designated as such under the Policy. The
initial Fiscal Agent is State Street Bank and Trust Company, N.A. and its
address for purposes of notice hereunder is 00 Xxxxxxxx, 00/xx/ Xxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Telephone (000) 000-0000, Fax: (000) 000-0000, Attention:
Municipal Registrar and Payment Agent.
"Holder" -- see "Certificateholder."
"Initial Certificate Balance" means $246,773,107.
"Initial Class A-1 Certificate Balance" means $42,750,000.
"Initial Class A-2 Certificate Balance" means $97,000,000.
"Initial Class A-3 Certificate Balance" means $55,000,000.
"Initial Class A-4 Certificate Balance" means $52,023,107.
10
"Insolvency Event" with respect to a party means (i) 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 trustee-in-bankruptcy or similar official
for such party in any insolvency, readjustment of debt, marshalling of assets
and liabilities, or similar proceedings, or for the winding up or liquidation of
their respective affairs, and the continuance of any such decree or order
unstayed and in effect for a period of 60 consecutive days; or (ii) the consent
by such party to the appointment of a trustee-in-bankruptcy or similar official
in any insolvency, readjustment of debt, marshalling of assets and liabilities,
or similar proceedings of or relating to such party or of or relating to
substantially all of its property; or (iii) such party shall admit in writing
its inability to pay its debts generally as they become due, file a petition to
take advantage of any applicable insolvency or reorganization statute, make an
assignment for the benefit of its creditors, or voluntarily suspend payment of
its obligations.
"Insurance Agreement" means the Insurance and Reimbursement Agreement,
dated as of the Closing Date, among the Depositor, BVAC individually and as
Servicer, and the Insurer pursuant to which the Insurer issued the Policy.
"Insurance Fee" means for any Distribution Date, an amount equal to the sum
of the Premium and the First Loss Protection Fee, each as defined in the Premium
Side Letter Agreement.
"Insured Payment" means the amount payable in respect of a Preference
Amount which the Insurer is required to pay pursuant to the terms of the Policy.
"Insurer" means MBIA Insurance Corporation, a New York domiciled insurance
company.
"Interest Advance Amount" with respect to a Simple Interest Receivable as
to which an Advance is required to be made on the last day of a Collection
Period, shall mean an amount equal to 30 days of interest upon the Principal
Balance of such Receivable as of such date; and, with respect to a Precomputed
Receivable as to which an Advance is required to be made on the last day of a
Collection Period, shall mean an amount equal to that portion of the earliest
delinquent Scheduled Payment allocable to interest (using the actuarial or
constant yield method).
"Interest Shortfall" means, as to any Simple Interest Receivable as of the
last day of any Collection Period, the amount, if any, by which (a) interest due
on such Receivable exceeds (b) the Collected Interest on such Receivable.
"Interest Shortfall" with respect to a Precomputed Receivable as of the last day
of any Collection Period means the amount, if any, by which the portion of the
Scheduled Payment due during such Collection Period allocable to interest (using
the actuarial or constant yield method) exceeds the Collected Interest on such
Receivable (computed using the same method and after giving effect to the
withdrawal of any previously received Scheduled Payments in respect of such
Receivable from the Payahead Account in accordance with Sections 8.02(b) and
9.09 hereof).
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"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 or related Financed Vehicle by
operation of law.
"Liquidation Proceeds" means the monies collected from whatever source,
including insurance proceeds, on Defaulted Receivables, net of the sum of any
reasonable amounts expended by the Servicer for the account of the Obligor plus
any amounts required by law to be remitted to the Obligor. "Liquidation
Proceeds" with respect to a Distribution Date means such monies collected during
the preceding Collection Period.
"Monthly Interest" means the sum of the Class A Monthly Interest and Class
I Monthly Interest.
"Monthly Principal" means, for any Distribution Date, an amount equal to
(i) the Pool Balance at the close of business on the last day of the second
preceding Collection Period (or, in the case of the first Distribution Date, the
Original Pool Balance), less (ii) the Pool Balance at the close of business on
the last day of the preceding Collection Period; provided, however, that: (i)
Monthly Principal will be increased by the amount, if any, which is necessary to
reduce the Class A-1 Certificate Balance to zero on the Class A-1 Final
Scheduled Distribution Date; (ii) Monthly Principal will be increased by the
amount, if any, which is necessary to reduce the Class A-2 Certificate Balance
to zero on the Class A-2 Final Scheduled Distribution Date; (iii) Monthly
Principal will be increased by the amount, if any, which is necessary to reduce
the Class A-3 Certificate Balance to zero on the Class A-3 Final Scheduled
Distribution Date; and (iv) Monthly Principal will be increased by the amount,
if any, which is necessary to reduce the Class A-4 Certificate Balance to zero
on the Class A-4 Final Scheduled Distribution Date. Monthly Principal will not
exceed the Certificate Balance.
"Monthly Servicing Fee" means, (i) for the first Distribution Date, the
product of the following: (one-twelfth of the Servicing Rate) multiplied by the
Initial Certificate Balance and (ii) for any subsequent Distribution Date, one-
twelfth of the product of (a) the Certificate Balance on the preceding
Distribution Date (after giving effect to any distribution of Monthly Principal
made on that such Distribution Date) and (b) the Servicing Rate.
"Moody's" means Xxxxx'x Investors Service, Inc.
"Named Lienholder" means either California Thrift and Loan, Bay View Credit
or the Bank.
"Net Principal Policy Amount" means the Certificate Balance as of the first
Distribution Date minus all amounts previously drawn on the Policy with respect
to Monthly Principal.
"Note Rate" means, with respect to a Receivable, the contract rate of
interest on such Receivable, exclusive of prepaid finance charges.
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"Notional Principal Amount" means, for the purpose of calculating the Class
I Monthly Interest at any time, the Original Notional Principal Amount minus all
allocations of Monthly Principal to the PAC Component made up to such time
pursuant to Section 9.10 of this Agreement.
"Obligor" on a Receivable means the purchaser or the co-purchasers of the
Financed Vehicle 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 BVAC, the Depositor 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 vice
president, the treasurer, or the controller of BVAC, the Depositor or the
Servicer, as the case may be; provided that no individual shall sign in a dual
capacity.
"Opinion of Counsel" means a written opinion of counsel, who may be counsel
to the Depositor and/or Servicer, which counsel shall be acceptable to the
Trustee.
"Optional Purchase Price" means the amount specified as such in Section
16.02.
"Original Notional Principal Amount" shall be $184,645,582.
"Original Pool Balance" means $246,773,107.
"Outstanding Advances" as of any date, with respect to a Receivable, means
the total amount of Advances made on such Receivable for which the Servicer has
not been reimbursed.
"PAC Component" has the meaning set forth in Section 9.10.
"Payahead" on a Precomputed Receivable means the amount, as of the close of
business on the last day of a Collection Period, computed in accordance with
Section 8.02(b) with respect to such Receivable.
"Payahead Account" means the account designated as such, established and
maintained pursuant to Section 9.09.
"Payahead Balance" on a Precomputed Receivable means the sum, as of the
close of business on the last day of a Collection Period, of all Payaheads made
by or on behalf of the Obligor with respect to such Precomputed Receivable, as
reduced by applications of previous Payaheads with respect to such Precomputed
Receivable, pursuant to Sections 8.02(b) and 9.09.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
or government or any agency or political subdivision thereof.
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"Planned Notional Principal Amount" means, for each respective Distribution
Date, the corresponding amount specified in the Planned Notional Principal
Amount Schedule.
"Planned Notional Principal Amount Schedule" means, the amortization
Schedule of Planned Notional Principal Amount for each respective Distribution
Date, attached hereto as Schedule C.
"Policy" means the irrevocable Financial Guaranty Insurance Policy dated as
of the Closing Date issued by the Insurer to the Trustee for the benefit of the
Class A Certificateholders and the Class I Certificateholders and having a
maximum amount available to be drawn in respect of Class A Monthly Interest,
Class I Monthly Interest and Monthly Principal equal to the Policy Amount.
"Policy Amount" means with respect to any Distribution Date, the sum of (A)
the lesser of (i) the Certificate Balance (after giving effect to any
distribution of Available Funds to distribute Monthly Principal on such
Distribution Date) and (ii) the Net Principal Policy Amount, plus (B) Class A
Monthly Interest, plus (C) Class I Monthly Interest, plus (D) the Monthly
Servicing Fee.
"Pool Balance" as of any date means the aggregate Principal Balance of the
Receivables as of such date; provided, however, that for purposes of determining
Monthly Principal, the Principal Balance of a Defaulted Receivable or a
Purchased Receivable (if actually purchased by the Servicer or repurchased by
BVAC) shall be deemed to be zero on and after the close of business on the last
day of the Collection Period in which the Receivable becomes a Defaulted
Receivable or a Purchased Receivable is actually purchased or repurchased.
"Precomputed Receivable" means any Receivable under which the portion of a
payment allocable to earned interest (which may be referred to in the related
contract as an add-on finance charge) and the portion allocable to the Amount
Financed is determined according to the sum of periodic balances, the sum of
monthly balances, the rule of 78's or any equivalent method.
"Preference Amounts" means any amount guaranteed pursuant to the Policy
which is voided (a "Preference Event") under any applicable bankruptcy,
insolvency, receivership or similar law in an Insolvency Proceeding, and, as a
result of such a Preference Event, the Trustee or any Certificateholder is
required to return such voided payment, or any portion of such voided payment
made or to be made in respect of the Class A Certificates or the Class I
Certificates (an "Avoided Payment").
"Premium Side Letter Agreement" means the letter, dated as of the Closing
Date, as defined in the Insurance Agreement.
"Prepayment Charges," as used in the Agreement, shall be interpreted to
include, without limitation, in the case of a Precomputed Receivable that is
prepaid in full, the difference between the Principal Balance of such Receivable
(plus accrued interest to the date of prepayment) and the Principal Balance of
such Receivable computed in accordance with the method provided for in the
contract governing such Receivable, such as the rule of 78's.
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"Principal Balance" of a Simple Interest Receivable, as of the close of
business on the last day of a Collection Period, means the Amount Financed minus
that portion of all payments received on or before the close of business on such
last day allocable to principal of such Receivable. "Principal Balance" with
respect to a Precomputed Receivable, as of the close of business on the Cutoff
Date, means the gross principal balance of such Receivable on the records of the
Servicer, net of unearned or accrued interest reflected therein, and as of the
close of business on the last day of a Collection Period, means the Principal
Balance as of the Cutoff Date minus that portion of all Scheduled Payments
received with respect to such Receivable in respect of such Collection Period
and all prior Collection Periods allocable to principal of such Receivable using
the actuarial or constant yield method.
"Principal Distribution Sequence" means that Monthly Principal shall be
distributed among the Class A Certificateholders in the following sequence: (i)
to the Class A-1 Certificateholders until the Class A-1 Certificate Balance has
been reduced to zero, (ii) to the Class A-2 Certificateholders until the Class
A-2 Certificate Balance has been reduced to zero, (iii) to the Class A-3
Certificateholders until the Class A-3 Certificate Balance has been reduced to
zero, and (iv) to the Class A-4 Certificateholders until the Class A-4
Certificate Balance has been reduced to zero; provided, however, if the amount
of Available Funds (together with amounts withdrawn from the Policy) are not
sufficient on any Distribution Date to pay Monthly Principal in full, the amount
of such funds available to pay Monthly Principal will be distributed pro rata to
the Class A Certificateholders based upon the relative Certificate Balance of
each class of Class A Certificates.
"Purchase Agreement" means the Purchase Agreement, dated as of the Closing
Date, by and between the Depositor and BVAC, as amended, supplemented or
modified from time to time.
"Purchase Amount" of any Receivable, as of the close of business on the
last day of any Collection Period, means the amount equal to the sum of the
Principal Balance of such Receivable plus any unpaid interest accrued and due
during or prior to such Collection Period on such Receivable.
"Purchased Receivable" means a Receivable purchased not later than the
Determination Date of the month immediately following the respective Collection
Period by the Servicer pursuant to Section 8.07 or repurchased not later than
the Determination Date of the month immediately following the respective
Collection Period by BVAC pursuant to Section 7.02.
"Rating Agency" means each of Moody's and Standard & Poor's and their
successors and assigns.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days' (or such shorter period as shall be
acceptable to each Rating Agency) prior notice thereof and that, within 7 days
of receipt of such notice, the Rating Agencies shall have notified the
Depositor, the Servicer and the Trustee in writing that such action will not
result in a reduction or withdrawal of the then current ratings of the
Certificates.
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"Receivable" means any simple interest or pre-computed (add-on) interest
installment sales contract or installment loan and security agreement which
shall appear on Schedule A to the Agreement.
"Receivable Files" means the documents specified in Section 7.03.
"Receivables" or "Receivables Pool" means those Receivables conveyed to the
Trust by the Depositor listed as of the Cutoff Date in Schedule A.
"Record Date" means, for any Distribution Date, the last day of the
preceding Collection Period.
"Recoveries" means Liquidation Proceeds received by the Servicer during the
preceding calendar month on Defaulted Receivables.
"Recoveries of Advances" means, for any Collection Period, all payments
received by the Servicer by or on behalf of Obligors (other than Obligors with
respect to Defaulted Receivables and excluding reimbursements of Outstanding
Advances on Defaulted Receivables pursuant to Sections 9.04(a) (i) and 9.05)
during such Collection Period representing recoveries of Interest Shortfalls for
which Advances were made for prior Collection Periods.
"Responsible Officer" means, when used with respect to the Trustee, any
officer within the Corporate Trust Office (or any successor group of the
Trustee) including any principal managing director, vice president, assistant
vice president, assistant treasurer, assistant secretary or any other 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 because of his knowledge of and familiarity
with the particular subject.
"Scheduled Payment" on a Receivable means that portion of the payment
required to be made by the Obligor during the respective Collection Period
sufficient to amortize the Principal Balance and to provide interest at the Note
Rate.
"Servicer" means Bay View Acceptance Corporation, a Nevada corporation, in
its capacity as the servicer of the Receivables and each successor to Bay View
Acceptance Corporation (in the same capacity) pursuant to Section 13.03 or
14.02.
"Servicer's Certificate" means a certificate completed and executed by an
officer of the Servicer pursuant to Section 8.09.
"Servicing Rate" means 0.75% per annum, payable monthly at one-twelfth of
the annual rate, subject to adjustment with respect to a successor Servicer
pursuant to Section 14.02.
"Simple Interest Receivables" means any Receivable which provides for equal
monthly payments, pursuant to which the portion of such payment that is
allocated to interest is equal to the product of the fixed rate of interest on
such obligation multiplied by the period of time
16
(expressed as a fraction of a year, based on the actual number of days in the
calendar month and 365 days in the calendar year) elapsed since the preceding
payment under which the obligation was made. Payments on Simple Interest
Receivables are applied, first, to collection fees, if any, then to applicable
late charges, then to pay interest accrued to the date of such payment, then to
principal due on such date, and then to further reduce the outstanding principal
balance.
"Standard & Poor's" means Standard & Poor's Ratings Services, a division of
XxXxxx-Xxxx Companies, Inc.
"State" means (i) any state of the United States of America or (ii) the
District of Columbia.
"Trigger Event" means any of the events identified as such in Section 6.01
of the Insurance Agreement.
"Trust" means the trust created by the Agreement, the estate of which shall
generally comprise the Receivables (other than Purchased Receivables) and all
monies paid on the Receivables, and all monies due thereon, including Accrued
Interest, after the Cutoff Date; security interests in the Financed Vehicles;
funds deposited in the Certificate Account and Payahead Account; all documents
contained in the Receivable Files; any property that shall have secured a
Receivable and that shall have been acquired by or on behalf of the Trust; any
Liquidation Proceeds and any rights of the Depositor in proceeds from claims or
refunds of premiums on any physical damage, credit life, disability, and
hospitalization insurance policies covering Financed Vehicles or Obligors; the
interest of the Depositor in recourse to Dealers relating to certain of the
Receivables; the proceeds of the foregoing; and the rights of the Depositor
under the Purchase Agreement, including without limitation Section 3.03 thereof.
"Trustee" means Bankers Trust Company, a banking corporation organized
under the laws of the State of New York and its successors or any corporation
resulting from or surviving any merger or consolidation to which it or its
successors may be a party or any successor trustee at the time serving as
successor trustee hereunder.
"Trustee's Certificate" means a certificate completed and executed by the
Trustee by a Responsible Officer pursuant to Section 15.02, substantially in the
form of, in the case of an assignment to BVAC, Exhibit 1, and in the case of an
assignment to the Servicer, Exhibit 2.
"UCC" means the Uniform Commercial Code as in effect in the respective
jurisdiction.
"Underwriting Agreement" means the Underwriting Agreement, dated as of
December 9, 1999, among BVAC, the Depositor, BVCC and PaineWebber Incorporated
and Xxxxxx Xxxxxxx & Co. Incorporated.
SECTION 2.02. Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography and other means of reproducing words in a visible
form; references to agreements and other contractual instruments
17
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 2.03. Cutoff 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
Cutoff Date.
SECTION 2.04. Section References. All section references in this
Agreement shall be to Sections in this Agreement unless otherwise specified.
ARTICLE III
CONVEYANCE OF RECEIVABLES
In consideration of the Trustee's delivery to or upon the order of the
Depositor of Class A Certificates with a Certificate Balance equal to the
Original Pool Balance, Class I Certificates representing in the aggregate the
Original Notional Principal Amount and the Class IC Certificate the Depositor
does hereby sell, transfer, assign, and otherwise convey to the Trustee, in
trust for the benefit of the Certificateholders and the Insurer, without
recourse (subject to the obligations herein):
(i) all right, title, and interest of the Depositor in and to the
Receivables listed in Schedule A hereto;
(ii) the security interests in the Financed Vehicles granted by Obligors
pursuant to the Receivables;
(iii) any Liquidation Proceeds and any proceeds from claims or refunds
of premiums on any physical damage, credit life, disability and hospitalization
insurance policies covering Financed Vehicles or Obligors;
(iv) funds deposited in the Certificate Account;
(v) the interest of the Depositor in any proceeds from recourse to
Dealers relating to the Receivables;
(vi) all documents contained in the Receivable Files;
(vii) all monies paid on the Receivables, and all monies due thereon,
including Accrued Interest, after the Cutoff Date with respect to the
Receivables held by the Servicer and
(viii) all rights of the Depositor under the Purchase Agreement,
including without limitation the rights of the Depositor pursuant to Section
3.03 thereof to require BVAC to
18
repurchase any Receivables as to which there has been a breach of the
representations and warranties contained therein;
(ix) the benefits of the Policy; and
(x) all proceeds of the foregoing.
The Depositor does hereby further assign, convey, pledge and grant a
security interest in (i) any and all other right, title and interest, including
any beneficial interest the Depositor may have in the Certificate Account and
the funds deposited therein, and (ii) any proceeds of any of the foregoing, to
the Trustee and for the benefit of the Certificateholders to secure amounts
payable to Certificateholders as provided under this Agreement.
The Depositor does not convey to the Trustee any interest in any contracts
with Dealers related to any "dealer reserve" or any rights to the recapture of
any dealer reserve.
ARTICLE IV
ACCEPTANCE BY TRUSTEE
The Trustee does hereby accept all consideration conveyed by the Depositor
pursuant to Article III, and declares that the Trustee shall hold such
consideration upon the trusts herein set forth for the benefit of all present
and future Certificateholders and the Insurer, subject to the terms and
provisions of this Agreement.
ARTICLE V
INFORMATION DELIVERED TO THE RATING AGENCY
(a) The Servicer hereby expresses its intention to deliver promptly to the
Rating Agency (i) a copy of each Servicer's Certificate that it delivers to the
Trustee and the Insurer pursuant to Section 8.09, (ii) a copy of each annual
Officers' Certificate as to compliance and any notice of Default that it
delivers to the Trustee pursuant to Section 8.10, (iii) a copy of each annual
certified public accountant's report that it delivers to the Trustee pursuant to
Section 8.11, (iv) a statement for each Collection Period including delinquency
and loss information for the Receivables, the amount of any draws on the Policy,
(v) written notice of any merger, consolidation, or other succession of the
Servicer, pursuant to Section 13.03, or the Depositor, pursuant to Section
12.03, (vi) a copy of each amendment to this Agreement and (vii) any Opinion of
Counsel delivered to the Trustee pursuant to Section 17.02(i).
19
(b) The Trustee and the Servicer hereby expresses its intention to deliver
promptly to the Rating Agency (i) a copy of each statement or notification to
Certificateholders delivered pursuant to Section 14.03 or 15.10, (ii) a copy of
each amendment to this Agreement and (iii) a copy of the notice of termination
of the Trust provided to Certificateholders pursuant to Section 16.01.
(c) For purposes of delivery pursuant to paragraphs (a) and (b) of this
Article VIII, the addresses for the Rating Agencies are:
Structured Finance/Asset Backed Surveillance Group
Standard & Poor's Ratings Group, a division of
XxXxxx-Xxxx, Inc.
00 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxx'x Investors Service, Inc.
Attention: ABS Monitoring Department
4th Floor
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
(d) The provisions of this Article V are included herein for convenience of
reference only and shall not be construed to be contractual undertakings or
obligations. The failure of the Servicer or the Trustee to comply with any or
all of the provisions of this Article V shall not constitute an Event of Default
or a default of any kind under this Agreement or make any remedy available to
any Person.
ARTICLE VI
AGENT FOR SERVICE
The agent for service for the Depositor shall be Xxxxxx X. Xxxx, Secretary
of the Depositor. Any and all service on the agent for service of the Depositor
shall be sent to Bay View Securitization Corporation, 0000 Xxxxx Xx Xxxxxx Xxxx,
Xxx Xxxxx, Xxxxxxxxxx 00000.
The agent for service for the Servicer shall be Xxxxx Xxxxxx, President of
the Servicer. Any and all service on the agent for service of the Servicer
shall be sent to Bay View Acceptance Corporation, 000 Xxx Xxxx Xxxx, Xxxxxx,
Xxxxxxxxxx 00000.
ARTICLE VII
THE RECEIVABLES
20
SECTION 7.01. Representations and Warranties of Depositor. Pursuant to
Article III, the Depositor has assigned to the Trust the benefit of, and its
rights respecting, the representations and warranties made to the Depositor in
the Purchase Agreement as to the Receivables on which the Trustee relies in
accepting the Receivables in trust and executing and authenticating the
Certificates. Such representations and warranties speak as of the execution and
delivery of the Purchase Agreement but shall survive the sale, transfer, and
assignment of the Receivables to the Trustee.
(a) The Depositor hereby represents and warrants to the Trustee that it has
entered into the Purchase Agreement with BVAC, that BVAC has made the
representations and warranties set forth therein, that such representations and
warranties run to and are for the benefit of the Depositor, and that pursuant to
Article III of this Agreement the Depositor has transferred and assigned to the
Trustee all rights of the Depositor to cause BVAC under the Purchase Agreement
to repurchase Receivables in the event of a breach of such representations and
warranties.
(b) It is the intention of the Depositor that the transfer and assignment
herein contemplated, taken as a whole, constitute a sale of the Receivables from
the Depositor to the Trust and that the beneficial interest in and title to the
Receivables not be part of the receivership estate in the event of the
appointment of a receiver for the Depositor. No Receivable has been sold,
transferred, assigned, or pledged by the Depositor to any Person other than the
Trustee. Immediately prior to the transfer and assignment herein contemplated,
the Depositor 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 Certificateholders and the 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 Certificateholders and the Insurer; and the
transfer has been perfected under the UCC. On or prior to the Closing Date, all
filings (including, without limitation, UCC filings) necessary in any
jurisdiction to give the Trustee a first perfected ownership interest in the
Receivables shall have been made.
(c) The Depositor further represents and warrants that it shall not incur
any indebtedness or issue and sell any securities directly or indirectly, unless
recourse with respect to such indebtedness or securities is limited solely to
the specific assets securing such indebtedness or securities, and in all events
without recourse to the Receivables or Financed Vehicles.
SECTION 7.02. Repurchase Upon Breach. The Depositor, BVAC, the Servicer,
or the Trustee, as the case may be, shall inform the Insurer and the other
parties (the Depositor, BVAC, the Servicer or the Trustee, as the case may be)
promptly, in writing, upon the discovery of any breach of the representations
and warranties contained in the Purchase Agreement or upon the discovery that
any Receivable has been materially and adversely affected because a court has
determined that a Receivable secured by a Financed Vehicle registered in a state
other than California is not perfected by a first priority perfected security
interest in the Financed Vehicle in favor of the Trustee. This obligation shall
not constitute an obligation on the part of the Trustee to actively seek to
discover any such breaches. Unless the breach or failure to so perfect shall
have been cured by the second Record Date following the discovery, BVAC,
pursuant to its obligations under the Purchase Agreement, shall repurchase any
Receivable materially and
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adversely affected by the breach or failure to so perfect as of such Record Date
(or, at BVAC's option, the first Record Date following the discovery). In
consideration of the purchase of the Receivable, BVAC shall remit the Purchase
Amount, in the manner specified in Section 9.03. The sole remedy of the Trustee,
the Trust, or the Certificateholders with respect to a breach of the
representations and warranties referred to in Section 7.01 shall be to require
BVAC to repurchase Receivables pursuant to the Purchase Agreement and this
Section 7.02.
SECTION 7.03. Custody of Receivable Files. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Trust, upon
the execution and delivery of the Agreement, hereby revocably appoints the
Servicer, and the Servicer hereby accepts such appointment, for the benefit of
the Trust and the Certificateholders, to act as the agent of the Trust as
custodian of the following documents or instruments which are hereby
constructively delivered to the Trustee with respect to each Receivable:
(i) The original of the Receivable.
(ii) The original credit application fully executed by the Obligor.
(iii) The original certificate of title or such documents that the
Depositor or Servicer shall keep on file, in accordance with its customary
procedures, evidencing the security interest of BVAC in the Financed Vehicle.
(iv) Any and all other documents that the Servicer or the Depositor shall
keep on file, in accordance with its customary procedures, relating to a
Receivable, an Obligor, or a Financed Vehicle.
SECTION 7.04. Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer, in its capacity as custodian, shall hold
the Receivable Files on behalf of the Trust for the use and benefit of all
present and future Certificateholders, and maintain such accurate and complete
accounts, records, and computer systems pertaining to each Receivable File as
shall enable the Trustee and Servicer 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 motor vehicle
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 in writing any failure on its part to hold the Receivable Files and
maintain its accounts, records, and computer systems as herein provided and
shall promptly take appropriate action to remedy any such failure; provided,
however, notwithstanding anything to the contrary in Section 7.03 or this
Section 7.04, the Servicer shall not be required to possess the original of
Receivables representing less than 2% of the Original Pool Balance until 30 days
following the Closing Date.
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(b) Maintenance of and Access to Records. The Servicer shall maintain each
Receivable File at one of its offices specified in Schedule B to this Agreement,
or at such other office as shall be specified to the Trustee by prior written
notice. The Servicer shall make available to the Trustee or its duly authorized
representatives, attorneys, or auditors a list of locations of the Receivable
Files, the Receivable Files, and the related accounts, records, and computer
systems maintained by the Servicer at such times as the Trustee shall instruct.
(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.
SECTION 7.05. Instructions; Authority to Act. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable Files
upon its receipt of written instructions signed by a Responsible Officer of the
Trustee.
SECTION 7.06. Custodian's Indemnification. The Servicer, in its capacity
as custodian, shall indemnify the Trust and the Trustee (which shall include,
for purposes of this Section 7.06, its directors, officers, employees and
agents) for any and all claims, liabilities, obligations, penalties, stamp or
other similar taxes, actions, suits, judgments, losses, compensatory damages,
payments, costs, or expenses of any kind whatsoever that may be imposed on,
incurred, or asserted against the Trust or the Trustee as the result of any act
or omission in any way directly or indirectly relating to the maintenance and
custody by the Servicer of the Receivable Files; provided, however, that the
Servicer shall not be liable to the Trustee for any portion of any such amount
resulting from the willful misconduct, bad faith, or negligence of the Trustee.
This indemnity shall survive the termination of this Agreement and the
resignation or removal of the Trustee.
SECTION 7.07. Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and shall
continue in full force and effect until terminated pursuant to this Section
7.07. If the Servicer shall resign in accordance with the provisions of this
Agreement or if all of the rights and obligations of the Servicer shall have
been terminated under Section 14.01, the appointment of the Servicer as
custodian may be terminated (i) by the Trustee with the consent of the Insurer,
which consent shall not be unreasonably withheld, (ii) by the Holders of
Certificates evidencing not less than 25% of the Certificate Balance and 25% of
the Notional Principal Amount of the Class I Certificates with the consent of
the Insurer, which consent shall not be unreasonably withheld, or (iii) by the
Insurer, without the consent of the Holders of the Certificates (and, as to the
rights of the Insurer under (i), (ii) or (iii), so long as the Insurer is not in
default of its obligations under the Policy). The Trustee, on behalf of the
Trust, may terminate the Servicer's appointment as custodian with cause at any
time upon written notification to the Servicer. As soon as practicable after
any termination of such appointment, the Servicer shall deliver the Receivable
Files to the Trustee or the Trustee's agent at such place or places as the
Trustee, with the consent of the Insurer, may reasonably designate.
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ARTICLE VIII
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 8.01. Duties of Servicer. The Servicer, for the benefit of the
Trust and the Certificateholders, 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 motor
vehicle receivables that it services for itself. The Servicer's duties shall
include collection and posting of all payments, making Advances (in accordance
with Section 9.05), 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 with respect to
distributions. The Servicer shall follow its customary standards, policies, and
procedures in performing its duties as Servicer. 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
Certificateholders, 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 or a Defaulted 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 at
the Servicer's written request any documents prepared by the Servicer and
delivered to the Trustee for execution that are necessary or appropriate in the
Servicer's sole judgment to enable the Servicer to carry out its servicing and
administrative duties hereunder.
SECTION 8.02. Collection of Receivable Payments. (a) The Servicer shall
make reasonable efforts to collect all payments called for under the terms and
provisions of such Receivables as and when the same shall become due and shall
follow such collection procedures as it follows with respect to all comparable
motor vehicle receivables that it services for itself. If payments are extended
in the ordinary course of the Servicer's collection procedures, and, as a
result, any Receivable would be outstanding at the Final Scheduled Distribution
Date, then the Servicer shall be obligated to purchase such Receivable pursuant
to Section 8.07 (unless such Receivable is otherwise being purchased pursuant to
Section 16.02) as of the last day of the Collection Period immediately preceding
the Final Scheduled Distribution Date. The Servicer may in its discretion waive
any late payment charge or any other fees that it is entitled to retain under
Section 8.08, or other fee (to the extent consistent with its credit and
collection policy on the Closing Date) that may be collected in the ordinary
course of servicing a Receivable.
(b) All allocations of payments with respect to a Simple Interest
Receivable to principal and interest and determinations of periodic charges and
the like shall be made using the simple interest method, based on either the
actual number of days elapsed and the actual number of days in the calendar year
or on the basis of a thirty-day month and a 360-day calendar year, as specified
in the related installment sales contract or installment loan and security
agreement. Each payment on a Simple Interest Receivable shall be applied first
to collection fees, if any; second, to late
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charges, if any, accrued on such Receivable; third to the amount of interest
accrued on such Receivable to the date of receipt; fourth to principal due on
such Receivable; and, last, to reduce the remaining principal amount outstanding
on such Receivable. All allocations of payments with respect to a Precomputed
Receivable to principal and interest shall be made using the actuarial or
constant yield method. Payments made by or on behalf of an Obligor, including
any prior Payaheads made and added to the Payahead Balance, with respect to a
Precomputed Receivable shall be applied first to overdue Scheduled Payments
(including reduction of Outstanding Advances as provided in Section 9.04). Next,
any excess shall be applied to the Scheduled Payment and any remaining excess
shall be added to the Payahead Balance, and shall be applied to prepay the
Precomputed Receivable, but only if such Payahead Balance shall be sufficient to
prepay the Receivable in full. Otherwise, any such remaining excess payments
shall constitute a Payahead and shall increase the Payahead Balance.
SECTION 8.03. Realization Upon Receivables. (a) 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 motor vehicle receivables, which may include
reasonable efforts to realize upon any recourse to Dealers and selling the
Financed Vehicle at 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.
(b) Unless otherwise stated in this Agreement, the Servicer shall either
purchase or liquidate each Financed Vehicle that has not previously been
liquidated and that secures, or previously secured, a Defaulted Receivable
either (i) by the end of the Collection Period preceding the Class A-4 Final
Scheduled Distribution Date or (ii) if earlier, by the end of the Collection
Period during which such Receivable became a Defaulted Receivable. Any purchase
of a Financed Vehicle by the Servicer shall be made at a price equal to the fair
market value of the Financed Vehicle as determined by the Servicer in accordance
with the Servicer's normal servicing standards.
(c) With respect to any Precomputed Receivable, to the extent such
Precomputed Receivable has not paid by the maturity thereof the amount equal to
the related Principal Balance as of the Cutoff Date, the Servicer shall remit to
the Certificate Account an amount equal to such difference.
SECTION 8.04. Physical Damage Insurance. The Servicer, in accordance
with its customary servicing procedures and underwriting standards, shall
require that each Obligor shall have obtained and shall maintain physical damage
insurance covering the Financed Vehicle as of the execution of the Receivable.
The Servicer shall be named as a loss payee as Servicer for the Trust on all
lender's collateral protection insurance coverage obtained on the Receivables.
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SECTION 8.05. Maintenance of Security Interests in Financed Vehicles.
The Servicer shall, in accordance with its customary servicing procedures, take
such steps as are necessary to ensure that perfection of the security interest
created by each Receivable in the related Financed Vehicle has been obtained,
and to maintain such security interest. 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.
SECTION 8.06. Covenants of Servicer. 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
the Obligor thereunder or repossession, nor shall the Servicer impair the rights
of the Certificateholders in the Receivables, nor shall the Servicer change the
amount of the Scheduled Payment under a Receivable or change the Amount Financed
under a Receivable or reduce the Note Rate of a Receivable (except if so ordered
by a bankruptcy court in a proceeding concerning the Obligor).
SECTION 8.07. Purchase of Receivables Upon Breach. The Servicer or the
Trustee shall inform the other party and the Insurer promptly, in writing, upon
the discovery of any breach by the Servicer of its obligations under Section
8.06. This obligation shall not constitute an obligation on the part of the
Trustee to discover any such breaches. Unless the breach shall have been cured
by the last day of the Collection Period following the Collection Period during
which such breach was discovered, the Servicer shall purchase any Receivable
materially and adversely affected by such breach as of such day (or, at the
Servicer's election, as of the last day of the Collection Period during which
such breach was discovered). 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 9.03. The sole remedy of the
Trustee, the Trust, or the Certificateholders with respect to a breach pursuant
to Section 8.06 shall be to require the Servicer to purchase Receivables
pursuant to this Section 8.07, except as provided in Section 13.02.
SECTION 8.08. Servicing Fee. 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 14.02). The Servicer shall be entitled to retain from payments of
interest on the Receivables collected during a Collection Period an amount equal
to the Monthly Servicing Fee due the Servicer in respect of such Collection
Period and need not deposit such amount in the Certificate Account. The
Servicer shall also be entitled to retain, and need not deposit in the
Certificate Account, all late fees, prepayment charges, other administrative
fees or similar charges allowed by applicable law with respect to Receivables,
if any, collected (from whatever source) on the Receivables. The Monthly
Servicing Fee will be paid only out of the funds of the Trust and not from the
Trustee's own funds. So long as Bay View Acceptance Corporation or an Affiliate
is the Servicer, if the Servicer fails to pay the Trustee's fees and expenses
pursuant to Section 15.07, the Trustee shall be entitled to receive such amount
from the Monthly Servicing Fee prior to payment thereof to the Servicer and the
Servicer shall not retain from collections that portion of the Monthly Servicing
Fee equal to any fees of the Trustee that are due and payable and any unpaid
amount that the Servicer has received notice is due the Trustee as reimbursement
for expenses.
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SECTION 8.09. Servicer's Certificate. On or before the Determination
Date following each Collection Period, the Servicer shall deliver to the Trustee
and the Insurer a Servicer's Certificate in substantially the form of Exhibit 3
attached hereto containing all information necessary to make the distributions
pursuant to Section 9.04 for the Collection Period preceding the date of such
Servicer's Certificate, including (A) the amount of aggregate collections on the
Receivables, (B) the aggregate Purchase Amount of the Receivables repurchased by
BVAC and purchased by the Servicer, (C) with respect to Precomputed Receivables
the net deposit from the Certificate Account to the Payahead Account or the net
withdrawal from the Payahead Account to the Certificate Account required for the
Collection Period in accordance with Section 9.09, and in the case of a net
withdrawal, the Monthly Interest and Monthly Principal reported on such
Servicer's Certificate shall reflect the portions of such withdrawal allocable
to interest and principal, respectively, in accordance with this Agreement, (D)
current and cumulative information respecting (i) delinquent Receivables that
are 30, 60 and 90 days past due, and (ii) charge-offs, the number of
repossessions of Financed Vehicles during the preceding Collection Period,
number of unliquidated repossessed Financed Vehicles, gross and net losses on
the Receivables, and recoveries on charged off Receivables; and (E) each other
item listed in Section 9.04 hereof reasonably requested by the Rating Agency or
the Insurer in order to monitor the performance of the Receivables. Receivables
purchased by BVAC as of the last day of such Collection Period shall be
identified by the BVAC account number with respect to such Receivable (as
specified in Schedule A to this Agreement).
SECTION 8.10. Annual Statement as to Compliance; Notice of Default. (a)
The Servicer shall deliver to the Trustee and the Insurer, on or before April 30
of each year, beginning on the first April 30 that is at least six months after
the Closing Date, an Officers' Certificate, dated as of December 31 of the
preceding year, stating that (i) a review of the activities of the Servicer
during the preceding 12-month period (or in the case of the initial Officer's
Certificate, the period from the Closing Date to and including the date of such
Officer's Certificate) and of its performance under this Agreement has been made
under such officer's supervision and (ii) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all 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 officer and the nature and status thereof. A copy of such certificate and
the Report referred to in Section 8.11 may be obtained by any Certificateholder
at its own expense by a request in writing to the Trustee addressed to the
Corporate Trust Office.
(b) The Servicer shall deliver to a Responsible Officer of the Trustee and
the Insurer, promptly after having obtained knowledge thereof, but in no event
later than 5 Business Days thereafter, written notice in an Officers'
Certificate of any event which with the giving of notice or lapse of time, or
both, would become an Event of Default under Section 14.01. The Depositor or
the Servicer shall deliver to a Responsible Officer of the Trustee and the
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 time, or both, would
become an Event of Default under clause (ii) of Section 14.01.
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SECTION 8.11. Annual Independent Certified Public Accountant's 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 Insurer on or before March 31 of each year concerning the 12-month period
ended December 31 of the preceding year (or shorter period since the date of
this Agreement), beginning on the first December 31 following the first March 31
after the Closing Date, a report addressed to the Board of Directors of the
Servicer and to the Trustee, to the effect that such firm has reviewed the
servicing of the Receivables by the Servicer and that such review (1) included
tests relating to new or used automobile, light-duty truck, motorcycle,
recreational vehicle, sport utility vehicle and van loans serviced for others in
accordance with the requirements of the Uniform Single Audit Program for
Mortgage Bankers, to the extent the procedures in such program are applicable to
the servicing obligations set forth in the Agreement, and (2) except as
described in the report, disclosed no exceptions or errors in the records
relating to automobile, van or light truck loans serviced for others that, in
the firm's opinion, paragraph four of such program requires such firm to report.
In the event such firm requires the Trustee to agree to the procedures performed
by such firm, the Servicer shall direct the Trustee in writing to so agree; it
being understood and agreed that the Trustee will deliver such letter of
agreement in conclusive reliance upon the direction of the Servicer, and the
Trustee makes no independent inquiry or investigation as to, and shall have no
obligation or liability in respect of, the sufficiency, validity or correctness
of such procedures.
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 8.12. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to the Certificateholders access to the
Receivables Files in such cases where the Certificateholder shall be required by
applicable statutes or regulations to review such documentation. 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 such
obligation shall not constitute a breach of this Section 8.12.
SECTION 8.13. 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 its agents, independent accountants, taxes
imposed on the Servicer, and expenses incurred in connection with distributions
and reports to Certificateholders.
SECTION 8.14. Reports to Certificateholders. The Trustee shall provide
to any Certificateholder who so requests in writing (addressed to the Corporate
Trust Office) a copy of any certificate described in Section 8.09, or the
annual statement described in Section 8.10, or the annual report described in
Section 8.11. The Trustee may require the Certificateholder to pay a reasonable
sum to cover the cost of the Trustee's complying with such request.
ARTICLE IX
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DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS
SECTION 9.01. Certificate Account. The Servicer, on behalf of the Trust,
shall establish the Certificate Account with an Eligible Bank as a segregated
non-interest bearing, trust account in the name of the Trust for the benefit of
Certificateholders with the Corporate Trust Office of the Trustee. The Servicer
shall direct the Trustee to invest the amounts in the Certificate Account in
Eligible Investments that mature not later than the Business Day prior to the
next succeeding Distribution Date and to hold such Eligible Investments to
maturity. The Trustee (or its custodian) shall (i) maintain possession of any
negotiable instruments or securities evidencing Eligible Investments until the
time of sale or maturity and each certificated security or negotiable instrument
evidencing an Eligible Investment shall be endorsed in blank or to the Trustee
or registered in the name of the Trustee and (ii) cause any Eligible Investment
represented by an uncertificated security to be registered in the name of the
Trustee.
SECTION 9.02. Collections. The Servicer shall remit to the Certificate
Account all payments by or on behalf of the Obligors on the Receivables and all
Liquidation Proceeds, both as collected during the Collection Period net of
Monthly Servicing Fees and administrative fees allowed to be retained by the
Servicer pursuant to Section 8.08 and net of 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) not later than the second Business
Day following the Business Day on which such amounts are received by the
Servicer. Notwithstanding the foregoing, for so long as (a) BVAC or an
Affiliate remains the Servicer, (b) no Event of Default shall have occurred and
be continuing and (c)(1) BVAC (or an Affiliate succeeding BVAC as Servicer)
maintains a short-term rating of at least A-1 by Standard & Poor's and P-l by
Moody's (and for five Business Days following a reduction in either such rating)
or (2) prior to ceasing daily remittances, the Rating Agency Condition shall
have been satisfied (and any conditions or limitations imposed by the Rating
Agencies in connection therewith are complied with) and the prior written
consent of the Insurer (not to be unreasonably withheld) shall have been
obtained, BVAC, as Servicer, or an Affiliate with the consent of the Insurer,
may remit all such payments and Liquidation Proceeds with respect to any
Collection Period to the Certificate Account on a less frequent basis, but in no
event later than the Determination Date immediately preceding each Distribution
Date. The Servicer shall remit any Advances with respect to a Collection Period
to the Certificate Account on or before the Determination Date.
On each Determination Date, the Servicer shall determine (a) the amount of
payments on all Receivables and all Liquidation Proceeds received during such
Collection Period, the amount of Advances for such Collection Period, and the
Purchase Amount for all Receivables purchased or repurchased with respect to
such Collection Period which have been deposited in the Certificate Account (net
of amounts required to be paid pursuant to Section 9.04(d), excluding investment
income on all such amounts, and not including amounts required to be paid
pursuant to Sections 7.02, 8.07, and 9.05 but not so paid) after giving effect
to the net transfer from the Certificate Account to the Payahead Account or from
the Payahead Account to the Certificate Account as provided in Section 9.09,
(the "Available Funds"), and (b) the amount of funds
29
necessary to make the distributions required pursuant to Sections 9.04(a)(i)
through (viii), inclusive, 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 at the number specified in the Agreement (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 to the
Insurer. On each Distribution Date, the Trustee, or the Servicer on its behalf,
shall effect the net transfer between the Certificate Account and the Payahead
Account as required by Section 9.09 for such Distribution Date.
On any Distribution Date on which there are not sufficient Available Funds
to make the distributions required pursuant to Sections 9.04(a)(i) through (iv)
the Trustee, or the Servicer on its behalf, shall promptly (and in any event not
later than 1:00 p.m. New York City time on the Business Day preceding the
Distribution Date) deliver a Notice for Payment as defined in the Policy
(appropriately completed) to the Fiscal Agent with respect to the Policy. The
Insurer is required pursuant to Section 10.03 and the terms of the Policy to pay
the amount of such deficiency of Class I Monthly Interest, Class A Monthly
Interest and Monthly Principal, up to the Policy Amount.
The Trustee shall deposit in the Certificate Account all amounts received
pursuant to Article III of the Agreement and any funds received by the Trustee
in respect of funds drawn under the Policy from the Insurer.
If the Available Funds for a Distribution Date are insufficient to pay
current and past due Insurance Fees, or any amounts owing to the Insurer
pursuant to the Insurance Agreement including, without limitation,
reimbursements, indemnities, fees and expenses, plus accrued interest thereon,
to the Insurer, the Servicer shall notify the Trustee of such deficiency.
SECTION 9.03. Purchase Amounts. Not later than the Determination Date,
BVAC or the Servicer, as the case may be, shall remit to the Certificate Account
the aggregate Purchase Amount for such Collection Period pursuant to Sections
7.02 and 8.07.
SECTION 9.04. Distributions to Parties.
(a) On each Distribution Date, the Trustee shall apply or cause to be
applied the Available Funds in the Certificate Account for the prior Collection
Period, (plus any amounts drawn on the Policy pursuant to Section 9.02), to make
the following distributions in the listed order of priority:
(i) Without duplication, an amount equal to the sum of (y) Outstanding
Advances on all Receivables that became Defaulted Receivables during the prior
Collection Period, plus (z) Outstanding Advances which the Servicer determines
to be unrecoverable pursuant to Section 9.05, to the Servicer;
(ii) To the extent not previously distributed to the Servicer, the Monthly
Servicing Fee, including any overdue Monthly Servicing Fee, to the Servicer;
30
(iii) Pro rata (y) Class A Monthly Interest, including any overdue
Class A Monthly Interest, to the Class A Certificateholders and (z) Class I
Monthly Interest, including any overdue Class I Monthly Interest, to the Class I
Certificateholders;
(iv) Monthly Principal, together with any overdue Monthly Principal, to
the Class A Certificateholders entitled to receive Monthly Principal in
accordance with the Principal Distribution Sequence;
(v) The Insurance Fee, including any overdue Insurance Fee, plus accrued
interest thereon at the rate provided in the Insurance Agreement, to the
Insurer;
(vi) The amount of Recoveries of Advances, to the Servicer (to the extent
not applied pursuant to (i) above on or prior to such Distribution Date);
(vii) The aggregate amount of all unreimbursed draws made on the Policy
in respect of Class A Monthly Interest, Class I Monthly Interest and Monthly
Principal and any other amounts payable to the Insurer under the Insurance
Agreement, plus accrued interest thereon at the rate provided in the Insurance
Agreement, to the Insurer or an account designated by the Insurer;
(viii) The balance to the Class IC Certificateholder.
(b) (i) If on any Distribution Date there are not sufficient Available
Funds (together with amounts drawn on the Policy) to pay the distribution
required by Section 9.04(a)(iii), the Available Funds distributable under
Section 9.04(a)(iii) shall be distributed proportionately on the basis of the
ratio of the required distribution due each of the Class A Certificateholders
and Class I Certificateholders, respectively, to the sum of the distributions
required by Section 9.04(a)(iii) to the Class A Certificateholders and the Class
I Certificateholders.
(ii) Notwithstanding the foregoing, the Class I Certificateholders will
not be entitled to any distributions after the Notional Principal Amount of the
Class I Certificates has been reduced to zero.
(iii) Notwithstanding the foregoing, if the Servicer exercises its option
to purchase the remaining corpus of the Trust on any Distribution Date pursuant
to Section 16.02, the following shall apply: (a) the Available Funds and amounts
drawn on the Policy in respect only of Monthly Interest and Monthly Principal
with respect to the immediately preceding Distribution Date as determined in
accordance with Section 9.02 and 9.04 shall be distributed to Certificateholders
on such Distribution Date; (b) the Policy will not be available to pay any
shortfall of Monthly Interest or Monthly Principal after a disposition of the
Receivables pursuant to Section 16.02; and (c) the Optional Purchase Price and
any remaining assets of the Trust shall be distributed to Certificateholders on
such Distribution Date based on their Adjusted Capital Accounts (as defined in
Section 6(c)(iv) of Annex A attached hereto) in accordance with Section
6(b)(iii) and Section 9 of Annex A attached hereto.
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(iv) In making such distributions the Trustee shall be entitled to
conclusively rely upon (without investigation, confirmation or recalculation)
all information and calculations contained in the Servicer's Certificate
delivered to the Trustee pursuant to Section 8.09 hereof.
(v) All monthly distributions shall be made by wire transfer of
immediately available funds to each Certificateholder of record on the preceding
Record Date. Notwithstanding the foregoing, the final payment on each
Certificate shall be made only against presentation and surrender of the
Certificate at the office or agency then maintained by the Trustee in accordance
with Section 11.07.
(c) On each Distribution Date, the Trustee shall remit to the Servicer all
investment income earned through the last day of the preceding Collection Period
on amounts held from time to time in the Certificate Account.
(d) On each Distribution Date, if the Servicer has reported to the Trustee
in the Servicer's Certificate for any Collection Period that an Obligor or an
Obligor's representative or successor successfully shall have asserted a claim
or defense under bankruptcy law or similar laws for the protection of creditors
generally (including the avoidance of a preferential transfer under bankruptcy
law) that results in a liability of the Trust to such Obligor for monies
previously collected and remitted to the Trustee and not otherwise netted
against collections pursuant to Section 9.02, the Trustee shall make all
payments in respect of such claims or defenses out of the amounts on deposit in
the Certificate Account with respect to such Collection Period before making the
distributions required by paragraph (a) of this Section 9.04.
(e) If the Servicer has failed to provide the Trustee with the notice
required pursuant to Section 9.02, the Trustee may calculate Monthly Interest
and Monthly Principal and apply funds, if any, in the Certificate Account as of
the last day of the Collection Period, to make a distribution of Monthly
Interest and Monthly Principal to the Certificateholders.
SECTION 9.05. Advances. (a) As of the last day of the initial Collection
Period, the Servicer shall advance funds equal to the excess, if any, of Monthly
Interest due in respect of the initial Collection Period, over the Collected
Interest for such Collection Period; and (b) as of the last day of each
Collection Period, the Servicer shall advance funds in the amount of the
Interest Advance Amount (or such other amount as the Servicer shall reasonably
determine to cover an Interest Shortfall) with respect to each Receivable that
is delinquent for more than 30 days, in each such case, to the extent that the
Servicer, in its sole discretion, determines that the Advance will be
recoverable from payments by or on behalf of the Obligor, the Purchase Amount,
or Liquidation Proceeds. With respect to each Receivable, the Advance paid
pursuant to this Section 9.05 shall increase Outstanding Advances. Outstanding
Advances shall be reduced by subsequent payments by or on behalf of the Obligor,
collections of Liquidation Proceeds, or payments of the Purchase Amount. The
Servicer shall remit any Advances with respect to a Collection Period to the
Certificate Account by the related Determination Date.
If the Servicer shall determine that an Outstanding Advance with respect to
any Receivable shall not be recoverable, the Servicer shall be reimbursed from
any collections made on other
32
Receivables in the Trust, and Outstanding Advances with respect to such
Receivable shall be reduced accordingly.
No successor Servicer shall be obligated to make Advances under this
Agreement and shall not be liable for Advances incurred by the Servicer before
the commencement of performance by such successor Servicer.
SECTION 9.06. Net Deposits. For so long as BVAC or an Affiliate, is the
Servicer, BVAC (or an Affiliate succeeding BVAC as Servicer with the consent of
the Insurer) (in whatever capacity) may make the remittances with respect to any
Distribution Date pursuant to Section 9.02 above, net of amounts to be
distributed to itself or its delegee under Section 13.06 (also in whatever
capacity) pursuant to Section 9.04, if it determines pursuant to Section 9.02
that there is no deficiency in Available Funds for such Distribution Date.
Nonetheless, the Servicer shall account for all of the above described amounts
as if such amounts were deposited and distributed.
SECTION 9.07. Statements to Certificateholders. On each Distribution
Date, the Trustee shall mail to the Rating Agency and the Certificateholders the
Servicer's Certificate furnished to the Trustee by the Servicer pursuant to
Section 8.09.
Within the prescribed period of time for tax reporting purposes after the
end of each calendar year during the term of the Agreement, the Trustee shall
mail, to each Person who at any time during such calendar year shall have been a
Certificateholder, a statement containing the annual sum of the respective
amounts determined in items 5 through 11 of the Servicer's Certificate for such
calendar year, as applicable to such Person, or, in the event such Person shall
have been a Certificateholder during a portion of such calendar year, for the
applicable portion of such year, unless substantially comparable information has
been provided to such Certificateholder, for the purposes of such
Certificateholder's preparation of federal income tax returns pursuant to
Section 5(b) of Annex A hereto. To the extent required by applicable law, the
Servicer shall prepare or cause to be prepared and the Class IC
Certificateholder or the Trustee shall sign the tax returns of the Trust and
shall file such returns and such of the above information with the Internal
Revenue Service.
SECTION 9.08. Intentionally Blank.
SECTION 9.09. Payahead Account. The Servicer shall establish the
Payahead Account in the name of the Trustee on behalf of the Obligors and the
Certificateholders as their interests may appear. The Payahead Account shall be
a segregated non-interest bearing trust account established with an Eligible
Bank (which may be the Trustee). Amounts in the Payahead Account shall be
invested in Eligible Investments that mature not later than the Business Day
prior to the next succeeding Distribution Date. Investment income or interest
earned on the Payahead Account shall be remitted to the Servicer at least
monthly, or as frequently as the Servicer may reasonably request. On or prior to
each Distribution Date, the Servicer shall transfer or the Trustee (as
instructed in the Servicer's Certificate) shall transfer (a) from the
Certificate Account to the Payahead Account, in immediately available funds, all
Payaheads received by the Servicer and previously deposited to the Certificate
Account during the Collection Period as described in
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Section 9.02; and (b) from the Payahead Account to the Certificate Account, in
immediately available funds, the aggregate amount of previously deposited
Payaheads to be applied to Scheduled Payments on Precomputed Receivables for the
related Collection Period or prepayments for the related Collection Period,
pursuant to Section 8.02(b), each in the amounts set forth in the Servicer's
Certificate delivered on the related Determination Date. A single, net transfer
between the Payahead Account and the Certificate Account may be made. Any amount
deposited in the Payahead Account shall not constitute Available Funds under
Section 9.02. Any amount deposited to the Certificate Account from the Payahead
Account pursuant to Section 9.09(b) shall be included in Available Funds under
Section 9.02.
SECTION 9.10. Calculation of Notional Principal Amount.
(a) Solely for the purpose of calculating the Class I Monthly Interest, the
Certificate Balance will be divided into, and equal the sum of, two principal
components: (i) the "PAC Component" and (ii) the "Companion Component." The PAC
Component shall initially equal the Original Notional Principal Amount.
(b) On each Distribution Date, solely for the purposes of calculating the
Notional Principal Amount, the Monthly Principal will be allocated (i) first, to
the PAC Component up to the amount necessary to reduce the PAC Component to its
Planned Notional Principal Amount for such Distribution Date, (ii) second, to
the Companion Component until the balance thereof is reduced to zero, and (iii)
third, to the PAC Component without regard to the Planned Notional Principal
Amount for such Distribution Date.
ARTICLE X
CREDIT ENHANCEMENT
SECTION 10.01. Subordination. The rights of the Class IC
Certificateholder shall be subordinated to the rights of the Class A
Certificateholders and Class I Certificateholders to the extent described in
Section 9.04.
SECTION 10.02. Intentionally Blank.
SECTION 10.03. Policy.
(a) The Insurer is required under the terms of the Policy to pay Class A
Monthly Interest, Class I Monthly Interest and Monthly Principal up to the
Policy Amount in the event of any deficiency of Available Funds to pay such
amounts (after permitted reimbursements of Outstanding Advances and payment of
the Monthly Servicing Fee) as determined pursuant to Section 9.02 to the Trustee
for credit to the Certificate Account on the later of (a) 12:00 noon, New York
City time, on the Distribution Date and (b) 12:00 noon, New York City time, on
the Business Day immediately succeeding presentation to the Fiscal Agent of the
Trustee's demand therefor. Any demand for payment pursuant to Section 9.02 to
the Fiscal Agent received by the Fiscal Agent on
34
a Business Day after 1:00 p.m., New York City time, or on any day that is not a
Business Day, will be deemed to be received by the Fiscal Agent at 9:00 a.m.,
New York City time, on the next Business Day. A copy of any notice to the Fiscal
Agent shall be promptly sent to the Insurer, provided, however, that any failure
to do so will not relieve the Insurer of its obligations pursuant to this
Section 10.03. Notwithstanding the foregoing, on a Dissolution Distribution
Date, the obligations of the Insurer under the Policy shall be limited in
accordance with Section 9.04(b)(iii). The Trustee hereby agrees on behalf of
each Class A Certificateholder and each Class I Certificateholder (and each
Class A Certificateholder and each Class I Certificateholder, by its acceptance
of its Certificates, hereby agrees) for the benefit of the Insurer that the
Trustee shall recognize that to the extent the Insurer makes a payment under the
Policy, either directly or indirectly (as by paying through the Trustee), to the
Class A Certificateholders or the Class I Certificateholders, the Insurer will
be entitled to be subrogated to the rights of the Class A Certificateholders and
the Class I Certificateholders to the extent of such payments. Any rights of
subrogation acquired by the Insurer as a result of any payment made under the
Policy shall, in all respects, be subordinate and junior in right of payment to
the prior indefeasible payment in full of all amounts due the Trustee on account
of payments due under the Class A Certificates and the Class I Certificates
pursuant to Section 9.04 hereof.
(b) The Insurer shall pay any Preference Amounts, but only after there
shall have been delivered to the Insurer and the Fiscal Agent (x) a certified
copy of a final order of the court exercising jurisdiction in the Insolvency
Proceeding to the effect that the Trustee is required to return any such payment
or portion thereof prior to the Termination Date (as defined in the Policy) of
the Policy because such payment was voided under applicable law, with respect to
which order the appeal period has expired without an appeal having been filed
(the "Final Order"), (y) an assignment, in the form of Exhibit D to the Policy,
irrevocably assigning to the Insurer all rights and claims of such Trustee
relating to or arising under such Avoided Payment and (z) a Notice for Payment
in the form of Exhibit A to the Policy appropriately completed and executed by
the Trustee. Such payment shall be disbursed to the receiver, conservator,
debtor-in-possession or trustee in bankruptcy named in the Final Order and not
to the Trustee directly. In no event shall the Insurer pay more than one
Insured Payment in respect of any Preference Amount.
The Trustee, for itself and on behalf of the Certificateholders, agrees
that the Insurer may at any time during the continuation of any proceeding
relating to a Final Order direct all matters relating to such Final Order,
including, without limitation, the direction of any appeal of any order relating
to such Final Order and the posting of any surety, supersedeas or performance
bond pending any such appeal. In addition and without limitation of the
foregoing, the Insurer shall be subrogated, to the extent of the Insured
Payments, to the rights of BVAC, the Servicer, the Depositor, the Trustee and
each Certificateholder in the conduct of any 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.
35
ARTICLE XI
THE CERTIFICATES
SECTION 11.01. The Certificates. The Class A Certificates and Class I
Certificates shall be issued in denominations of $1,000 ($1,000 Notional
Principal Amount in the case of the Class I Certificates) and integral multiples
thereof except that one Certificate of each Class may be issued in a different
denomination. The Class IC Certificate shall be issued in the form of one or
more Certificates and shall initially be issued to the Depositor. The
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of a Responsible Officer of the Trustee. Certificates bearing the
manual or facsimile 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 such
individuals or any of them shall have ceased to be so authorized prior to the
authentication and delivery of such Certificates or did not hold such offices at
the date of such Certificates.
SECTION 11.02. Authentication of Certificates. The Trustee shall cause
the Certificates to be executed on behalf of the Trust, authenticated, and
delivered to or upon the written order of the Depositor, signed by its chairman
of the board, its president, or any vice president, without further corporate
action by the Depositor, in authorized denominations, pursuant to this
Agreement. No Certificate shall entitle its holder to any benefit under this
Agreement, or shall be valid for any purpose, unless there shall appear on such
Certificate a certificate of authentication, substantially as set forth in the
forms of Certificate attached as Exhibits to this Agreement, executed by a
Responsible Officer of the Trustee by manual signature; such authentication
shall constitute conclusive evidence that such Certificate shall have been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication.
SECTION 11.03. Registration of Transfer and Exchange of Certificates.
The Certificate Registrar shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 11.07, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Trustee shall
provide for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Trustee shall be the initial Certificate
Registrar.
Upon surrender for registration of transfer of any Certificate 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
Certificates in authorized denominations of a like aggregate amount dated the
date of authentication by the Trustee, provided, however, that registration of
transfer of the Class IC Certificate may not be effected unless the Trustee
receives an Opinion of Counsel, reasonably satisfactory to it, to the effect
that such transfer may be made in reliance upon an exemption from the
registration requirements of the Securities Act of 1933, as amended. At the
option of a Holder, Certificates may be exchanged for other Certificates of
authorized denominations of a like aggregate amount upon surrender of the
Certificates to be exchanged at the Corporate Trust Office.
36
Every Certificate 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 Certificate Registrar duly executed by the
Holder or his attorney duly authorized in writing. Each Certificate 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 Certificates, 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 Certificates.
SECTION 11.04. Mutilated, Destroyed, Lost, or Stolen Certificates. If
(a) any mutilated Certificate shall be surrendered to the Certificate Registrar,
or if the Certificate Registrar shall receive evidence to its satisfaction of
the destruction, loss, or theft of any Certificate and (b) there shall be
delivered to the Certificate 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 Certificate shall have been acquired by a bona fide purchaser,
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 Certificate, a new Certificate of like tenor and
denomination. In connection with the issuance of any new Certificate under this
Section 11.04, the Trustee and the Certificate Registrar may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Certificate issued pursuant to
this Section 11.04 shall constitute conclusive evidence of ownership in the
Trust, as if originally issued, whether or not the lost, stolen, or destroyed
Certificate shall be found at any time.
SECTION 11.05. Persons Deemed Owners. Prior to registration of transfer,
the Trustee or the Certificate Registrar may treat the Person in whose name any
Certificate shall be registered as the owner of such Certificate for the purpose
of receiving distributions pursuant to Section 9.04 and for all other purposes
whatsoever, and neither the Trustee nor the Certificate Registrar shall be bound
by any notice to the contrary.
SECTION 11.06. Access to Agreement and List of Certificateholders' Names
and Addresses. The Trustee shall furnish or cause to be furnished to the
Servicer, within 15 days after receipt by the Trustee of a request therefor from
the Servicer in writing, a list of the names and addresses of the
Certificateholders as of the most recent Record Date. If three or more
Certificateholders, or one or more Holders of Certificates aggregating not less
than 25% of the Certificate Balance or not less than 25% of the Notional
Principal Amount of the Class I Certificates, apply in writing to the Trustee,
and such application states that the applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Certificates 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
Certificateholders. The Trustee shall also allow any Certificateholder, upon
request, to examine a copy of this Agreement at its Corporate Trust Office
during regular business hours. Each Holder, by receiving and holding a
Certificate, shall be deemed to have agreed to hold
37
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 11.07. Maintenance of Office or Agency. The Trustee shall
maintain in the Borough of Manhattan, The City of New York, an office or offices
or agency or agencies where Certificates may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Trustee in
respect of the Certificates 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 shall give prompt written notice
to the Servicer and to Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
SECTION 11.08. Book-Entry Certificates. The Class A Certificates and
Class I Certificates, upon original issuance, shall be issued in the form of one
or more typewritten Certificates representing the Book-Entry Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Depositor. The Class A Certificates and Class I Certificates,
shall initially be registered on the Certificate Register in the name of Cede &
Co., the nominee of the Clearing Agency, and no Certificate Owner will receive a
definitive Certificate representing such Certificate Owner's interest in the
Certificates, except as provided in Section 11.10. Unless and until definitive,
fully registered Certificates ("Definitive Certificates") have been issued to
Certificate Owners pursuant to Section 11.10:
(i) the provisions of this Section 11.08 shall be in full force and
effect;
(ii) the Depositor, 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 Certificates) as the authorized
representatives of the Certificate Owners (requests and directions from, and
votes of, such representatives shall not be considered inconsistent if they are
made with respect to different Certificate Owners);
(iii) to the extent that the provisions of this Section 11.08 conflict with
any other provisions of this Agreement, the provisions of this Section 11.08
shall control; and
(iv) the rights of Certificate Owners shall be exercised only through the
Clearing Agency and the Clearing Agency Participants and shall be limited to
those established by law and agreements between such Certificate Owners and the
Clearing Agency and/or the Clearing Agency Participants. Pursuant to the
Depository Agreement, unless and until Definitive Certificates are issued
pursuant to Section 11.10, 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 Certificates to such Clearing
Agency Participants.
SECTION 11.09. Notices to Clearing Agency. Whenever notice or other
communication to the Class A Certificateholders or Class I Certificateholders,
is required under this Agreement, unless and until Definitive Certificates shall
have been issued to Certificate Owners pursuant to
38
Section 11.10, the Trustee shall give all such notices and communications
specified herein to be given to such Certificateholders to the Clearing Agency.
SECTION 11.10. Definitive Certificates. The Class IC Certificate will be
issued initially in fully registered, certificated form. If (i)(A) the
Depositor advises the Trustee in writing that the Clearing Agency is no longer
willing or able to properly discharge its responsibilities under the Depository
Agreement, and (B) the Trustee or the Depositor is unable to locate a qualified
successor, (ii) the Depositor, at its option, advises the Trustee in writing
that it elects to terminate the book-entry system through the Clearing Agency or
(iii) after the occurrence of an Event of Default, Certificate Owners
representing beneficial interests aggregating not less than 50% of the
Certificate Balance advise the Trustee through the Clearing Agency in writing
that the continuation of a book-entry system through the Clearing Agency is no
longer in the best interests of the Certificate Owners, the Trustee shall notify
the Clearing Agency of the occurrence of any such event and of the availability
of Definitive Certificates to Certificate Owners requesting the same. Upon
surrender to the Trustee of the Certificates by the Clearing Agency, accompanied
by registration instructions from the Clearing Agency for registration, the
Trustee shall issue the Definitive Certificates. Neither the Depositor nor the
Trustee 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 Certificates all references herein to
obligations imposed on 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 Certificates and the Trustee shall recognize the
Holders of the Definitive Certificates as Certificateholders hereunder.
SECTION 11.11. The Tax Partnership Agreement. Each of the Class A
Certificateholders and Class I Certificateholders and the Class IC
Certificateholder agrees to be bound by the terms of the Tax Partnership
Agreement attached hereto as Annex A.
ARTICLE XII
THE DEPOSITOR
SECTION 12.01. Representations and Undertakings of Depositor. (a) The
Depositor makes the following representations on which the Trustee relies in
accepting the Receivables in trust and executing and authenticating the
Certificates. The representations speak as of the execution and delivery of
this Agreement and shall survive the sale of the Receivables to the Trust.
(i) Organization and Good Standing. The Depositor shall have been duly
organized and shall be validly existing as a corporation in good standing under
the laws of the State of Delaware, with power and authority to own its
properties and to conduct its business as such properties shall be currently
owned and such business is presently conducted, and had at all relevant times,
and shall have, power, authority, and legal right to acquire and own the
Receivables.
39
(ii) Due Qualification. The Depositor 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 so qualify would not materially and
adversely affect the performance by the Depositor of its obligations under, or
the validity or enforceability of this Agreement or the Certificates.
(iii) Power and Authority. The Depositor shall have the power and
authority to execute and deliver this Agreement and to carry out its terms, the
Depositor 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 execution, delivery, and performance of the
Agreement shall have been duly authorized by the Depositor by all necessary
corporate action.
(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 Depositor; and shall evidence a legal,
valid, and binding obligation of the Depositor 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 in general and by general principles of equity, regardless of whether
such enforceability shall be considered in a proceeding in equity or at law.
(v) No Violation. The consummation of the transactions contemplated by
the 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 certificate of
incorporation or by-laws of the Depositor, or any indenture, agreement, or other
instrument to which the Depositor 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
Depositor's knowledge, any order, rule, or regulation applicable to the
Depositor of any court or of any federal or State regulatory body,
administrative agency, or other governmental instrumentality having jurisdiction
over the Depositor or its properties.
(vi) No Proceedings. There are no proceedings or investigations pending,
or, to the Depositor's best knowledge, threatened, before any court, regulatory
body, administrative agency, or other governmental instrumentality having
jurisdiction over the Depositor or its properties: (A) asserting the invalidity
of this Agreement or the Certificates, (B) seeking to prevent the issuance of
the Certificates 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 Depositor of its obligations under,
or the validity or enforceability of, this Agreement or the Certificates, or (D)
which might adversely affect the federal income tax attributes of the
Certificates.
(vii) No Subsidiaries. The Depositor neither currently has nor will have
any subsidiaries.
40
(b) The Depositor further covenants that, prior to termination of the
Trust:
(i) It will not engage at any time in any business or business activity
other than such activities expressly set forth in its Certificate of
Incorporation delivered to the Insurer on or prior to the Closing Date, and will
not amend its Certificate of Incorporation without the prior written consent of
the Insurer.
(ii) It will not:
(A) Fail to do all things necessary to maintain its corporate existence
separate and apart from BVCC and any other Person, including, without
limitation, holding regular meetings of its stockholders and board of directors
and maintaining appropriate corporate books and records (including a current
minute book);
(B) Suffer any limitation on the authority of its own directors and
officers to conduct its business and affairs in accordance with their
independent business judgment or authorize or suffer any Person other than its
own officers and directors to customarily delegated to others under powers of
attorney) for which a corporation's own Officers and directors would customarily
be responsible;
(C) Fail to (I) maintain or cause to be maintained by an agent of the
Depositor under the Depositor's control physical possession of all its books and
records, (II) maintain capitalization adequate for the conduct of its business,
(III) account for and manage all its liabilities separately from those of any
other Person, including payment by it of all payroll, administrative expenses
and taxes, if any, from its own assets, (IV) segregate and identify separately
all of its assets from those of any other Person, (V) to the extent any such
payments are made, pay its employees, officers and agents for services performed
for the Depositor, or (VI) maintain a separate telephone number from those of
BVCC or any other affiliate thereof.
(D) Except as may be provided in this Agreement, or a similar agreement
relating to other securitizations in which the Depositor has similar rights
and/or obligations, commingle its funds with those of BVCC or any affiliate
thereof or use its funds for other than the Depositor's uses.
SECTION 12.02. Merger or Consolidation of, or Assumption of the
Obligations of Depositor. Any Person (a) into which the Depositor may be merged
or consolidated, (b) which may result from any merger or consolidation to which
the Depositor shall be a party, or (c) which may succeed to all or substantially
all of the properties and assets of the Depositor's business, which Person in
any of the foregoing cases executes an agreement of assumption to perform every
obligation of the Depositor under this Agreement, shall be the successor to the
Depositor hereunder without the execution or filing of any document or any
further act by any of the parties to this Agreement; provided, however, that (i)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 7.01 shall have been breached and no Event of
Default, and no event that, after notice or lapse of time, or both, would become
an Event of Default shall have happened and be continuing, (ii) the Depositor
shall have delivered to the
41
Trustee 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 12.02 and that all conditions precedent, if any,
provided for in this Agreement relating to such transaction have been complied
with and (iii) the Depositor shall have delivered an Opinion of Counsel either
(A) stating that, in the opinion of such counsel, all financing statements and
continuation statements and amendments thereto have been executed and filed that
are necessary fully to preserve and protect the interest of the Trustee in the
Receivables, and reciting the details of such filings, or (B) stating that, in
the opinion of such Counsel, no such action shall be necessary to preserve and
protect such interest. Notwithstanding the forgoing, the Depositor shall not
engage in any merger or consolidation with any Person, or a disposition of all
or substantially all of its assets without the prior written consent of the
Insurer, not to be unreasonably withheld and without notifying the Rating Agency
of the proposed merger or consolidation.
SECTION 12.03. Limitation on Liability of Depositor and Others. The
Depositor and any director or officer or employee or agent of the Depositor may
rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Depositor shall not be under any obligation to appear
in, prosecute, or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
SECTION 12.04. Depositor May Own Certificates. The Depositor and any
Person controlling, controlled by, or under common control with the Depositor
may in its individual or any other capacity become the owner or pledgee of
Certificates with the same rights as it would have if it were not the Depositor
or an affiliate thereof, except as otherwise provided in the definition of
"Certificateholder," "Class A Certificateholder" and "Class I
Certificateholder." Certificates so owned by or pledged to the Depositor or
such controlling or commonly controlled Person shall have an equal and
proportionate benefit under the provisions of this Agreement, without
preference, priority, or distinction as among all of the Certificates.
ARTICLE XIII
THE SERVICER
SECTION 13.01. Representations of Servicer. The Servicer makes the
following representations on which the Trustee relies in accepting the
Receivables in trust and executing and authenticating the Certificates. The
representations speak as of the execution and delivery of this Agreement and
shall survive the sale of the Receivables to the Trustee.
(i) Organization and Good Standing. The Servicer shall have been duly
organized and shall be validly existing as a corporation under the laws of the
State of Nevada, with 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, power,
authority, and legal right to acquire, own, sell, and service the Receivables
and to hold the Receivable Files as custodian on behalf of the Trustee.
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(ii) 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 so qualify would not materially and adversely affect
the performance by the Depositor of its obligations under, or the validity or
enforceability of this Agreement or the Certificates.
(iii) Power and Authority. The Servicer shall have the power and
authority to execute and deliver this Agreement and to carry out its terms; and
the execution, delivery, and performance of this Agreement shall have been duly
authorized by the Servicer by all necessary corporate action.
(iv) 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'
rights in general and by general principles of equity, regardless of whether
such enforceability shall be considered in a proceeding in equity or at law.
(v) 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 articles of
incorporation 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.
(vi) No Proceedings. There are no proceedings or investigations pending,
or, to the Servicer's 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 Certificates, (B) seeking to prevent the issuance of the
Certificates 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 Certificates, or (D)
which might adversely affect the federal income tax attributes of the
Certificates.
SECTION 13.02. Indemnities of Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement.
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(i) The Servicer shall indemnify, defend and hold harmless the Trustee,
its officers, directors, employees and agents, the Trust and the
Certificateholders 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.
(ii) The Servicer shall indemnify, defend and hold harmless the Trustee,
its officers, directors, employees and agents and the Trust from and against any
taxes that may at any time be asserted against the Trustee, its officers,
directors, employees or agents or the Trust with respect to the transactions
contemplated herein, including, without limitation, any sales, gross receipts,
general corporation, tangible or intangible personal property, privilege, or
license taxes, including any taxes asserted with respect to, and as of the date
of, the sale of the Receivables to the Trust or the issuance and original sale
of the Certificates, or asserted with respect to ownership of the Receivables,
or federal or other income taxes arising out of distributions on the
Certificates and costs and expenses in defending against the same.
(iii) The Servicer shall indemnify, defend, and hold harmless the
Trustee, its officers, directors, employees and agents, the Trust and the
Certificateholders from and against any and all costs, expenses, losses, claims,
damages, and liabilities to the extent that such cost, expense, loss, claim,
damage, or liability arose out of, or was imposed upon the Trustee, the Trust or
the Certificateholders through any act or omission of the Servicer in the
performance of its duties under this Agreement, or by reason of reckless
disregard of its obligations and duties under this Agreement, provided, however,
that the Servicer shall not be liable to the Trustee for any portion of any such
amount resulting from the willful misconduct, bad faith, or negligence of the
Trustee.
(iv) The Servicer shall indemnify, defend, and hold harmless the Trustee,
its officers, directors, employees and agents, and the Trust from and against
all costs, expenses, losses, claims, damages, and liabilities arising out of or
incurred in connection with the acceptance or performance of the trusts and
duties herein contained, except to the extent that such cost, expense, loss,
claim, damage or liability: (a) shall be due to the willful misfeasance, bad
faith, or negligence of the Trustee; (b) relates to any tax other than the taxes
with respect to which the Servicer shall be required to indemnify the Trustee;
(c) shall arise from the Trustee's breach of any of its representations or
warranties set forth in Section 15.13; or (d) shall arise out of or be incurred
in connection with the acceptance or performance by the Trustee of the duties of
successor Servicer hereunder.
Neither the Trustee nor any of its officers, directors, employees or agents
shall be liable for any action taken or omitted under this Agreement or in
connection therewith except to the extent caused by the Trustee's negligence or
willful misconduct, as determined by the final judgment of a court of competent
jurisdiction, no longer subject to appeal or review. The parties each (for
itself and any person or entity claiming through it) hereby releases, waives,
discharges, exculpates and convenants not to xxx the Trustee for any action
taken or omitted under this Agreement except to the extent caused by the
Trustee's failure to perform its duties under this Agreement, negligence or
willful misconduct. Anything in this Agreement to the contrary withstanding, in
no event shall the Trustee be liable for special, indirect or consequential loss
or
44
damage of any kind whatsoever (including but not limited to lost profits),
even if the Trustee has been advised of the likelihood of such loss or damage
and regardless of the form of action.
Indemnification under this Section 13.02 shall include reasonable fees and
expenses of counsel and expenses of litigation. If the Servicer shall have made
any indemnity payments pursuant to this Section and the recipient thereafter
collects any of such amounts from others, the recipient shall promptly repay
such amounts to the Servicer, without interest. This indemnification shall
survive the termination of this Agreement or the Trust and the resignation or
removal of the Trustee or the Servicer.
SECTION 13.03. Merger or Consolidation of, or Assumption of the
Obligations of 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, (c) which may succeed to all or substantially all
of the properties and assets of the Servicer's indirect automobile financing and
receivables servicing business or (d) that is an Affiliate, which Person in any
of the foregoing cases executes an agreement of assumption to perform every
obligation of the Servicer hereunder, shall be the successor to the Servicer
under this Agreement without further act on the part of any of the parties to
this Agreement; provided, however, that (i) immediately after giving effect to
such transaction, no Event of Default, and no event which, after notice or lapse
of time, or both, would become an Event of Default shall have happened and be
continuing, (ii) the Servicer shall have delivered to the Trustee 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
13.03 and that all conditions precedent provided for in this Agreement relating
to such transaction have been complied with and (iii) the Servicer shall have
delivered an Opinion of Counsel either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements and amendments
thereto have been executed and filed that are necessary fully to preserve and
protect the interest of the Trustee and the Insurer in the Receivables, and
reciting the details of such filings, or (B) stating that, in the opinion of
such Counsel, no such action shall be necessary to preserve and protect such
interest. Notwithstanding the forgoing, the Servicer shall not engage in any
merger or consolidation in which it is not the surviving corporation without the
prior written consent of the Insurer, not to be unreasonably withheld.
SECTION 13.04. Limitation on Liability of Servicer and Others. Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Trust or the Certificateholders,
except as provided under this Agreement, for any action taken or for refraining
from the taking of any action pursuant to this Agreement; provided, however,
that this provision shall not protect the Servicer or any such person against
any liability that would otherwise be imposed by reason of willful misconduct,
bad faith, or negligence in the performance of duties or by reason of reckless
disregard of obligations and duties under this Agreement. The Servicer and any
director or officer or employee or agent of the Servicer may rely in good faith
on any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising under this Agreement.
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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 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 13.05. 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 or otherwise with the consent of the Trustee and the Insurer.
Any determination described above permitting the resignation of the Servicer
shall be evidenced by an Opinion of Counsel to such effect delivered to the
Trustee. No such resignation shall become effective until the Trustee or a
successor servicer shall have assumed the responsibilities and obligations of
the Servicer in accordance with Section 14.02. Notwithstanding anything
contained herein to the contrary, if the Trustee shall be the Servicer, it may
resign as Servicer if it resigns or is removed as Trustee hereunder.
SECTION 13.06. Delegation of Duties. Except as provided in Section 13.03
hereof, it is understood and agreed by the parties hereto that the Servicer or
the Depositor may at any time delegate any duties including duties as custodian
to any Person willing to accept such delegation and to perform such duties
(including any affiliate of the Servicer) in accordance with the customary
procedures of the Servicer. In connection with such delegation, the Servicer or
the Depositor may assign rights to the delegee or direct the payment to the
delegee of benefits or amounts otherwise inuring to the benefit of, or payable
to, the Depositor or the Servicer hereunder. Any such delegation shall not
relieve the Servicer or the Depositor of their respective liability and
responsibility with respect to such duties, and shall not constitute a
resignation within Section 13.05 hereof. The Servicer shall give written notice
to the Rating Agency, the Insurer and the Trustee of any such delegation.
ARTICLE XIV
DEFAULT
SECTION 14.01. Events of Default. If any one of the following events
("Events of Default") shall occur and be continuing:
(i) Any failure by the Servicer or BVAC to deliver to the Trustee for
distribution to Certificateholders any proceeds or payment required to be so
delivered under the terms of the Certificates and this Agreement or the Purchase
Agreement or any failure by the Servicer to deliver any Servicer's Certificate
pursuant to Section 8.09 that, in either case, shall continue unremedied for a
period of two Business Days (A) after written notice from either the Trustee,
the Insurer (so long as the Insurer is not in default of its obligations under
the Policy) or the Holders of Certificates evidencing not less than 25% of the
Certificate Balance and 25% of the Notional
46
Principal Amount of the Class I Certificates is received by the Servicer or BVAC
as specified in this Agreement or (B) after discovery by an officer of the
Servicer; or
(ii) Failure on the part of the Servicer, the Depositor or BVAC duly to
observe or to perform in any material respect any other covenants or agreements
of the Servicer, the Depositor or BVAC, as the case may be, set forth in the
Certificates or in this Agreement or the Purchase Agreement, which failure shall
(a) materially and adversely affect the rights of Certificateholders or the
Insurer and (b) continue unremedied for a period of 60 days after the date on
which written notice of such failure, requiring the same to be remedied, shall
have been given (1) to the Servicer, BVAC or the Depositor, as the case may be,
by the Trustee, or (2) to the Servicer or the Depositor, as the case may be, and
to the Trustee, by the Insurer (so long as the Insurer is not in default of its
obligations under the Policy) or by the Holders of Certificates evidencing not
less than 25% of the Certificate Balance and 25% of the Notional Principal
Amount of the Class I Certificates; or
(iii) The occurrence of an Insolvency Event with respect to the Servicer;
then, and in each and every case, so long as an Event of Default shall not have
been remedied, either the Trustee, or the Holders of Certificates evidencing not
less than 25% of the Certificate Balance and 25% of the Notional Principal
Amount of the Class I Certificates by notice then given in writing to the
Servicer (and to the Trustee if given by the Certificateholders) may, with the
consent of the Insurer (so long as the Insurer is not in default of its
obligations under the Policy) terminate all of the rights and obligations of the
Servicer under this Agreement. In addition, if a Trigger Event as defined in the
Insurance Agreement shall have occurred, the Insurer may (A) require that the
Trustee deliver a notice of termination to the Servicer and appoint a successor
Servicer designated by the Insurer in such notice pursuant to Section 14.02; (B)
require that the Trustee amend certificates of title relating to the Financed
Vehicles and take other actions to identify the Trust as the new secured party
on such certificates of title; (C) as provided in the Insurance Agreement,
require that the Servicer or successor Servicer or the Trustee instruct Obligors
in respect of the Receivables to remit payment on the Receivable directly to the
Trustee or a separate account established exclusively for the Trust; and (D) as
provided in the Insurance Agreement, compel transfer by the Servicer of all
Receivables Files and, if applicable, certain rights in respect of servicing
systems assets to the Insurer or to the successor Servicer designated by the
Insurer. 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 Certificates or the Receivables or otherwise, shall, without further
action, pass to and be vested in the Trustee (except that the Trustee may but
shall not be required to make Advances and shall not be subject to the
indemnification obligations of the Servicer under Section 13.02(i), (ii) or
(iv)) or such successor Servicer as may be appointed under Section 14.02
pursuant to and under this Section 14.01; and, without limitation, the Trustee
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. 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
47
records related to the Receivables in 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. All reasonable costs and expenses (including attorneys' fees)
incurred in connection with transferring the Receivable Files to the successor
Servicer and amending this Agreement to reflect such succession as Servicer
pursuant to this Section 14.01 shall be paid by the predecessor Servicer upon
presentation of reasonable documentation of such costs and expenses.
SECTION 14.02. Appointment of Successor. (a) Upon the Servicer's receipt
of notice of termination pursuant to Section 14.01 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 the case of resignation, until the later of (x) the date 45 days
from the delivery to the Trustee 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 appoint a successor Servicer, which
successor Servicer shall be reasonably acceptable to the Insurer (so long as the
Insurer is not in default of its obligations under the Policy), 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 14.02, the Trustee without further
action shall automatically be appointed the successor Servicer. Notwithstanding
the above, the Trustee shall, if it shall be legally unable or unwilling 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
$50,000,000 and whose regular business shall include the servicing of automotive
receivables, as the successor to the Servicer under this Agreement and which
financial institution is, in the case of appointment by the Trustee, reasonably
acceptable to the Insurer.
(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 the Servicing Fee
and all of the rights granted to the predecessor Servicer, by the terms and
provisions of this Agreement. The predecessor Servicer shall be entitled to be
reimbursed for Outstanding Advances.
(c) In connection with such appointment, the Trustee may make such
arrangements for successor Servicer out of payments on Receivables it and such
successor Servicer shall agree; provided, however, that no such compensation
shall exceed the market rate for servicing of similar receivables. The Trustee
and such successor Servicer shall take such action, consistent with this
Agreement, as shall be necessary to effectuate any such succession.
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SECTION 14.03. Notification to Certificateholders. Upon any notice of an
Event of Default or upon any termination of, or appointment of a successor to,
the Servicer pursuant to this Article XIV, the Trustee shall give prompt written
notice thereof to Certificateholders at their respective addresses appearing in
the Certificate Register.
SECTION 14.04. Waiver of Past Defaults. The Holders of Certificates
evidencing not less than 51% of the Certificate Balance and 51% of the Notional
Principal Amount of the Class I Certificates, may, on behalf of all Holders of
Certificates, waive any default by the Servicer in the performance of its
obligations hereunder and its consequences, except a default in making any
required deposits to or payments from the Certificate Account in accordance with
this Agreement; provided, that the no waiver of any default or provision of this
Agreement shall become effective without the consent of the Insurer (unless the
Insurer is in default of its obligations under the Policy) and the Rating Agency
Condition shall have been satisfied. 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.
ARTICLE XV
THE TRUSTEE
SECTION 15.01. Duties of Trustee. If an Event of Default shall have
occurred and shall not have been cured and, in the case of an Event of Default
described in clause (i) of Section 14.01, the Trustee has received notice of
such Event of Default, 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 would exercise or use under the
circumstances in the conduct of his own affairs; provided, however, that if the
Trustee shall assume the duties of the Servicer pursuant to Section 14.02, the
Trustee in performing such duties shall use the degree of skill and attention
customarily exercised by a servicer with respect to motor vehicle 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 shall be specifically required to be furnished pursuant to any
provision of this Agreement, shall (without any obligation of independent
investigation) examine them to determine whether they conform in 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
49
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, the Trustee may conclusively rely as to 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 conclusively determined by a
court of competent jurisdiction 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 by it in good faith in accordance with this
Agreement or at the direction of the Holders of Certificates evidencing not less
than 25% of the Certificate Balance 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 or BVAC to comply with the obligations of the Servicer or BVAC, as the
case may be, referred to in clauses (i) or (ii) of Section 14.01, or of any
failure by the Depositor to comply with the obligations of the Depositor
referred to in clause (ii) of Section 14.01, 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 attributable to the Trustee) from the Servicer, BVAC or
the Depositor, as the case may be, or the Holders of Certificates evidencing not
less than 25% of the Certificate Balance;
(v) Without limiting the generality of this Section or Section 15.04, the
Trustee shall have no duty (A) 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, (B) to see to any
insurance of the Financed Vehicles or Obligors or to effect or maintain any such
insurance, (C) 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, assessed, or levied against, any part of the Trust, (D) 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 (E) to
inspect the Financed Vehicles at any time or ascertain or inquire as to the
performance or observance of any of the Depositor'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; and
(vi) The Trustee shall not be required to expend or risk its own funds or
otherwise incur liability, financial or otherwise 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
50
of such funds or indemnity reasonably satisfactory to it 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.
(vii) Whenever in the administration of the provisions of this Agreement
the Trustee shall deem it necessary or desirable that a matter be proved or
established prior to taking or suffering any action to be taken hereunder, such
matter (unless other evidence in respect thereof be herein specifically
prescribed) may, in the absence of negligence or bad faith on the part of the
Trustee, be deemed to be conclusively proved and established by a certificate
signed by the Servicer, Depositor or the Holders, as the case may be, and
delivered to the Trustee and such certificate, in the absence of negligence or
bad faith on the part of the Trustee, shall be full warrant to the Trustee for
any action taken, suffered or omitted by it under the provisions of this
Agreement upon the faith thereof.
(viii) The Trustee shall have no obligation to invest and reinvest any
cash held in the absence of timely and specific written investment direction
from the Servicer. In no event shall the Trustee be liable for the selection of
investments or for investment losses incurred thereon except as an obligor in
its individual capacity. The Trustee shall have no liability in respect of
losses incurred as a result of the liquidation of any investment prior to its
stated maturity or the failure of the Servicer to provide timely written
investment direction.
SECTION 15.02. Trustee's Certificate. On or as soon as practicable after
each Distribution Date on which Receivables shall be (i) assigned to BVAC
pursuant to Section 7.02 or deemed to be assigned to the Depositor as a result
of the application of Available Funds in respect of Defaulted Receivables
pursuant to Section 9.02 or (ii) assigned to the Servicer pursuant to Section
8.07 or 16.02, the Trustee shall, at the written request of the Servicer,
execute a Trustee's Certificate, substantially in the form of, in the case of an
assignment to BVAC, Exhibit 1, or, in the case of an assignment to the Servicer,
Exhibit 2, based on the information contained in the Servicer's Certificate for
the related Collection Period, amounts deposited to the Certificate Account, and
notices received pursuant to this Agreement, identifying the Receivables
repurchased or deemed to be repurchased by BVAC pursuant to Section 7.02 or 9.02
or purchased by the Servicer pursuant to Section 8.07 or 16.02 during such
Collection Period, and shall deliver such Trustee's Certificate, accompanied by
a copy of the Servicer's Certificate for such Collection Period to BVAC or the
Servicer, as the case may be. The Trustee's Certificate shall be an assignment
pursuant to Section 15.03.
SECTION 15.03. Trustee's Assignment of Purchased Receivables. With
respect to each Receivable repurchased by BVAC pursuant to Section 7.02, or
deemed to be so repurchased pursuant to Section 9.02 or purchased by the
Servicer pursuant to Section 8.07 or 16.02, the Trustee at the direction of the
Depositor shall assign, as of the last day of the Collection Period during which
such Receivable became a Defaulted Receivable or became subject to repurchase by
BVAC or purchase by the Servicer, without recourse, representation, or warranty,
to BVAC or
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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, 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
Certificateholders.
SECTION 15.04. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 15.01:
(i) The Trustee may conclusively rely and shall be fully protected in
acting or refraining from acting upon any resolution, Officers' Certificate,
Servicer's Certificate, 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.
(ii) The Trustee may consult with counsel and any advice or 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 advice or 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 Certificateholders pursuant to
the provisions of this Agreement, unless such Certificateholders shall have
offered to the Trustee reasonable security or indemnity reasonably satisfactory
to the Trustee 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 would exercise or use under the circumstances in the
conduct of his 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 of 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
so to do by Holders of Certificates evidencing not less than 25% of the
Certificate Balance or not less than 25% of the Notional Principal Amount of the
Class I Certificates; provided, however, that if the payment within a reasonable
time to the Trustee of the costs, expenses, or liabilities
52
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 reasonably satisfactory to it against such cost, expense,
or liability as a condition to so proceeding. The reasonable expense of every
such examination shall be paid by the Servicer or, if paid by the Trustee, shall
be reimbursed by the Servicer upon demand. Nothing in this clause (v) shall
affect the obligation of the Servicer to observe any 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 nominee or a custodian and the Trustee shall not be
responsible for any misconduct or negligence on the part or any agent, attorney,
nominee or a custodian appointed with due care by it hereunder. The Trustee
shall not be liable for any acts or omissions of the Servicer in its capacity as
Servicer or custodian.
(vii) The Trustee shall have no duty of independent inquiry, except as
may be required by Section 15.01, and the Trustee may conclusively rely upon the
representations and warranties and covenants of the Depositor and the Servicer
contained in this Agreement with respect to the Receivables and the Receivable
Files.
SECTION 15.05. Trustee Not Liable for Certificates or Receivables. The
recitals contained herein and in the Certificates (other than the certificate of
authentication on the Certificates) shall be taken as the statements of the
Depositor 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
Certificates (other than the certificate of authentication on the Certificates),
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 Certificateholders 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
collateral protection 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 Depositor or the Servicer with any
warranty or 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 (it being understood that the Trustee shall remain responsible for any
Trust property that it may hold); the acts or omissions of the Depositor, the
Servicer, or any Obligor; an 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
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duties under this Agreement. Except with respect to a claim 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 Certificates, 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 Certificateholder 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 Depositor of
any of the Certificates or of the proceeds of such Certificates, or for the use
or application of any funds paid to the Depositor or the Servicer in respect of
the Receivables.
SECTION 15.06. Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights as it would have if it were not Trustee.
SECTION 15.07. Trustee's Fees and Expenses. The Servicer shall pay to
the Trustee, and the Trustee shall be entitled to, reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by it
in the execution of the trusts created by this Agreement and in the exercise and
performance of any of the Trustee's powers and duties under this Agreement,
including acting as Servicer, and the Servicer shall pay or reimburse the
Trustee upon its request for all reasonable expenses, disbursements, and
advances (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ)
incurred or made by the Trustee in accordance with any provisions of this
Agreement, including acting as Servicer, except any such expense, disbursement,
or advance as may be attributable to its willful misconduct, negligence, or bad
faith, and the Servicer shall indemnify the Trustee (which, for purposes of this
section, shall include its directors, officers, employees, and agents) for and
hold it harmless against any loss, liability, claim or expense incurred without
willful misconduct, negligence, or bad faith on its part, directly or indirectly
arising out of or in connection with the acceptance or administration of the
Trust or by reason of its participation in the transactions contemplated hereby,
including acting as Servicer, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties under this Agreement. Additionally,
the Servicer, pursuant to Section 7.06 and Section 13.02, respectively, shall
indemnify the Trustee with respect to certain matters. This indemnification
shall survive the termination of this Agreement or the Trust and the resignation
or removal of the Trustee or the Servicer.
SECTION 15.08. Eligibility Requirements for Trustee. The Trustee under
this Agreement shall at all times be a corporation having an office in the same
State as the location of the Corporate Trust Office as specified in this
Agreement; and organized and doing business under the laws of such State or the
United States of America; authorized under such laws to exercise corporate trust
powers; and having a net worth of at least $50,000,000 and subject to
supervision or examination by federal or State authorities and (A)(i) has a
long-term unsecured debt rating of at least Baa3 from Moody's and BBB- from
Standard & Poor's and (ii) a short-term unsecured debt rating of at least P-2
from Moody's and A-2 from Standard & Poor's or (B) is approved by the Insurer
and each Rating Agency. If such corporation shall publish reports of condition
at least
54
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purpose of this Section 15.08, 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 15.08, the Trustee shall resign
immediately in the manner and with the effect specified in Section 15.09.
SECTION 15.09. 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, with the prior written consent of the Insurer, shall 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 15.08 and shall fail to resign after written request
therefor by the Servicer, 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 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 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 15.09 shall not become
effective until acceptance of appointment by the successor Trustee pursuant to
Section 15.10.
SECTION 15.10. Successor Trustee. Any successor Trustee appointed
pursuant to Section 15.09 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
15.10 unless at the time of such acceptance such successor Trustee shall be
eligible pursuant to Section 15.08.
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Upon acceptance of appointment by a successor Trustee pursuant to this
Section 15.10, the Servicer shall mail notice of the successor of such Trustee
under this Agreement to all Holders of Certificates at their addresses as shown
in the Certificate Register. 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 15.11. 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 successor of the Trustee hereunder, provided such
corporation shall be eligible pursuant to Section 15.08, without the execution
or filing of any instrument or any further act on the part of any of the parties
hereto except where an instrument of transfer or assignment is required by law
to effect such succession, anything herein to the contrary notwithstanding.
SECTION 15.12. 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 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 Certificateholders, such title to the Trust,
or any part thereof, and, subject to the other provisions of this Section 15.12,
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 15.08 and no
notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 15.10.
Each separate trustee and co-trustee shall, to the extent permitted by law,
be appointed and act subject to the following provisions and conditions:
(i) 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 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;
56
(ii) No trustee under this Agreement shall be personally liable by reason
of any act or omission of any other trustee under this Agreement; and
(iii) The Servicer and the Trustee 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 XV. 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.
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 15.13. Representations and Warranties of Trustee. The Trustee
shall make the following representations and warranties on which the Depositor
and Certificateholders may rely:
(i) Organization and Existence. The Trustee is a New York banking
corporation duly organized and validly existing under the laws of the State of
New York and authorized to engage in a banking and trust business under such
laws.
(ii) 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.
(iii) 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, except as
such enforceability may be limited by (i) bankruptcy, insolvency, liquidation,
reorganization, moratorium, conservatorship, receivership or other similar laws
now or hereinafter in effect relating to the enforcement of creditors' rights in
general, as such laws would apply in the event of a bankruptcy, insolvency,
liquidation, reorganization, moratorium, conservatorship, receivership or
similar occurrence affecting the Trustee, and (ii) general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law) as well as concepts of reasonableness, good faith and fair
dealing.
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ARTICLE XVI
TERMINATION
SECTION 16.01. Termination of the Trust. The respective obligations and
responsibilities of the Depositor, the Servicer and the Trustee created hereby
and the Trust created by this Agreement shall terminate upon (i) the disposition
of the Trust corpus as of the last day of any Collection Period at the direction
of Servicer, at its option, pursuant to Section 16.02, or (ii) the payment to
Certificateholders and the Insurer of all amounts required to be paid to them
pursuant to this Agreement and the Insurance Agreement (as set forth in writing
by the Insurer) 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 date as of which this
Agreement is executed. The Servicer shall promptly, and in any event not less
than five Business Days prior to the date on which notice is given to the
Certificateholders, notify the Trustee in writing of any prospective termination
pursuant to this Section 16.01.
Notice of any termination, specifying the Distribution Date upon which the
Certificateholders may surrender their Certificates to the Trustee for payment
of the final distribution and cancellation, shall be given promptly by the
Trustee by letter to Certificateholders mailed not later than the 10th day prior
to the specified Distribution Date stating (A) the Distribution Date upon which
final payment of the Certificates shall be made upon presentation and surrender
of the Certificates at the office of the Trustee therein designated, (B) the
amount of any such final payment, and (C) if applicable, that the Record Date
otherwise applicable to such Distribution Date is not applicable, payments being
made only upon presentation and surrender of the Certificates at the office of
the Trustee therein specified. The Trustee shall give such notice to the
Certificate Registrar (if other than the Trustee) at the time such notice is
given to Certificateholders. Upon presentation and surrender of the
Certificates, the Trustee shall cause to be distributed to Certificateholders
amounts distributable on such Distribution Date pursuant to Section 9.04 and, in
the event of a termination pursuant to clause (i) or (ii) of the preceding
paragraph, the provisions of Section 9 of Annex A hereto shall govern the
remaining distributions to Certificateholders.
In the event that all of the Certificateholders shall not surrender their
Certificates 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 Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all the Certificates 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
Certificateholders concerning surrender of their Certificates, 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 distributed by the Trustee
to the Depositor or its successor, and upon such distribution the
Certificateholders' rights to any amounts so distributed will be extinguished.
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SECTION 16.02. Optional Purchase of All Receivables. On the last day of
any Collection Period following which (i) the Notional Principal Amount has been
reduced to zero, and (ii) the Certificate Balance as of the related Distribution
Date is less than or equal to 10% of the Original Pool Balance, the Servicer
shall have the option to purchase the corpus of the Trust at a price (the
"Optional Purchase Price") equal to the fair market value of the Receivables,
but not less than (i) the sum of (x) 100% of the Certificate Balance, (y)
accrued and unpaid interest on such amount computed at a rate equal to the
weighted average Note Rate, and (z) all amounts due and owing to the Insurer
under the Agreement and the Insurance Agreement minus any amounts representing
payments received on the Receivables not yet applied to the interest related
thereto or to reduce the principal balance thereof. The proceeds of such sale
will be deposited into the Certificate Account for distribution to the
Certificateholders (and, to the extent applicable, the Insurer) on the next
succeeding Distribution Date. In connection with such disposition, the Class IC
Certificateholder is required to pay any unpaid fees and expenses of the Trustee
that it would otherwise have been entitled to pursuant to this Agreement. The
fair market value of the outstanding Receivables for purposes of this Section
16.02 shall be an amount equal to the average of the bid prices for such assets
taken as a whole, provided to the Servicer by two independent, nationally
recognized dealers in automobile loans substantially similar to the Receivables.
Such price shall be deposited to the Certificate Account in immediately
available funds by 12:00 noon, New York City time, on the Business Day prior to
such next succeeding Distribution Date and, upon notice to the Trustee of such
deposit, the Trustee shall transfer the Receivables and the Receivable Files to
the purchaser, whereupon the Certificates shall no longer evidence any right or
interest in the Receivables or any proceeds thereof.
ARTICLE XVII
MISCELLANEOUS PROVISIONS
SECTION 17.01. Amendment. This Agreement may be amended by the Depositor,
the Servicer and the Trustee, without the consent of any of the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement, or to add any other provisions with respect to
matters or questions arising under this Agreement that shall not be inconsistent
with the provisions of this Agreement; provided, however, that such action shall
not, as evidenced by an Opinion of Counsel satisfactory to the Trustee,
adversely affect in any material respect the interests of any Certificateholder.
This Agreement may also be amended from time to time by the Depositor, the
Servicer, and the Trustee with the consent of the Class IC Certificateholder,
Holders of Certificates evidencing not less than 51% of the Certificate Balance
and 51% of the Notional Principal Amount of the Class I Certificates 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 Certificates; provided, however, that no such amendment shall,
without the consent of the Holders of all Certificates 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 Certificate.
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Notwithstanding anything to the contrary to this Agreement, no amendment of
this Agreement shall be effective without the prior written consent of the
Insurer and without notifying the Rating Agency of the proposed amendment.
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 Certificateholder.
It shall not be necessary for the consent of Certificateholders pursuant to
this Section 17.01 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 Certificateholders 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 and Officer's
Certificate stating (i) that the execution of such amendment is authorized or
permitted by this Agreement and (ii) that such amendment will not materially and
adversely affect the tax status of the Trust, and the Opinion of Counsel
referred to in Section 17.02(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 17.02. Protection of Title to Trust.
(a) The Depositor shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such manner
and in such places as may be required by law fully to preserve, maintain, and
protect the interest of the Certificateholders and the Trustee under this
Agreement in the Receivables and in the proceeds thereof. The Depositor shall
deliver (or cause to be delivered) to the Trustee file-stamped copies of, or
filing receipts for, any document filed as provided above, as soon as available
following such filing.
(b) Neither the Depositor nor the Servicer shall change its name, identity,
or corporate structure in any manner that would, could, or might make any
financing statement or continuation statement filed by the Depositor in
accordance with paragraph (a) above seriously misleading within the meaning of
ss. 9-402(7) of the UCC, unless it shall have given the Trustee at least 60
days' prior written notice thereof.
(c) The Depositor and the Servicer shall give the Trustee at least 60 days'
prior written notice of any relocation of its principal executive office if, as
a result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement (in which case the Servicer shall
file or cause to be filed such amendment or continuation statement or new
financing statement). The Servicer shall at all times maintain each office from
which it shall service Receivables, and its principal executive office, within
the United States of America.
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(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 Certificate 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
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 when, the Receivable shall have been paid in
full or repurchased.
(f) If at any time the Depositor or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in motor
vehicle receivables to any prospective purchaser, lender, or other transferee,
the Servicer shall give to such prospective purchaser, lender, or other
transferee computer tapes, records, or 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 its agents at any time during
normal business hours to inspect, audit, and make copies of and abstracts from
the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Trustee, 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:
(1) Promptly after the time of the execution and delivery of this Agreement
and of each amendment thereto, and upon any resignation or removal of 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 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) Within 90 days after the beginning of each calendar year beginning with
the first calendar year beginning more than three months after the Cutoff Date,
an Opinion of Counsel, dated as of a date during such 90-day period, either (a)
stating that, in the opinion of such counsel, all financing statements and
continuation statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Trustee in the Receivables, and
reciting
61
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 17.03. Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder'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 Certificateholder shall have any right to vote (except as provided in
Section 14.04, 17.01, 17.03 or 17.07) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties to this
Agreement except as expressly set forth herein, nor shall anything in this
Agreement set forth, or contained in the terms of the Certificates, be construed
so as to constitute the Certificateholders from time to time as members of an
association; nor shall any Certificateholder be under any liability to any third
person by reason of any action taken pursuant to any provision of this
Agreement.
No Certificateholder 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 given to the Trustee a written notice of default
and of the continuance thereof, as hereinbefore provided, and unless also the
Holders of Certificates evidencing not less than 25% of the Certificate Balance
or not less than 25% of the Notional Principal Amount of the Class I
Certificates 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 and during such 30-day period no direction
inconsistent with such written request has been given to the Trustee pursuant to
Section 14.04; no one or more Holders of Certificates 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 Certificates, 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 Certificateholders. For the
protection and enforcement of the provisions of this Section 17.03, each
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
SECTION 17.04. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed within the State of New York, without regard to conflict of
laws, principles and the obligations, rights, and remedies of the parties under
this Agreement shall be determined in accordance with such laws.
62
SECTION 17.05. Notices. All demands, notices, and communications under
this Agreement shall be in writing, personally delivered, sent by facsimile to,
sent by courier to or mailed by certified mail, return receipt requested, and
shall be deemed to have been duly given unless otherwise provided herein, upon
receipt (a) in the case of the Depositor to the agent for service as specified
in this Agreement, at the following address: Bay View Securitization
Corporation, 0000 Xxxxx Xx Xxxxxx Xxxx, Xxx Xxxxx, Xxxxxxxxxx 00000, or at such
other address as shall be designated by the Depositor in a written notice to the
Servicer or Trustee; (b) in the case of the Servicer to the agent for service as
specified in this Agreement, at the following address, Bay View Acceptance
Corporation, 000 Xxx Xxxx Xxxx, Xxxxxx, Xxxxxxxxxx 00000, (c) in the case of
the Trustee, at the Corporate Trust Office, (d) in the case of the Insurer, at
MBIA Insurance Corporation, 000 Xxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000, Fax (914)
000-0000, Attention: Insured Portfolio Management Structured Finance, (e) in the
case of a Rating Agency: Structured Finance/Asset Backed Surveillance Group
Standard & Poor's Ratings Group, a division of XxXxxx-Xxxx, Inc., 00 Xxxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Fax (000) 000-0000 or Xxxxx'x
Investors Service, Inc., Attention: ABS Monitoring Department, 4th Floor, 00
Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Fax (000) 000-0000. Any notice required
or permitted to be mailed to a Certificateholder shall be given by first class
mail, postage prepaid, at the address of such Holder as shown in the Certificate
Register unless otherwise provided herein. Unless otherwise provided herein,
any notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder shall receive such notice.
SECTION 17.06. 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, 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
Certificates or the rights of the Holders thereof.
SECTION 17.07. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided below or in Sections 12.02 and 13.03 and as
provided in the provisions of this Agreement concerning the resignation of the
Servicer, this Agreement may not be assigned by the Depositor or the Servicer
without the prior written consent of the Trustee, the Class IC
Certificateholder, and the Holders of Certificates evidencing not less than 66%
of the Certificate Balance and 66% of the Notional Principal Amount of the Class
I Certificates provided, that, notwithstanding the foregoing, BVAC may direct or
irrevocably assign payments to which it is entitled under this Agreement to the
Depositor or another wholly-owned subsidiary of BVCC, upon written notice to the
Trustee.
SECTION 17.08. Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of the Trust.
The interests represented by the Certificates 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 11.02, Certificates
shall be deemed fully paid.
63
SECTION 17.09. Nonpetition Covenants. Notwithstanding any prior
termination of this Agreement, the Servicer, BVAC and the Trustee shall not,
prior to the date which is one year and one days after the termination of this
Agreement with respect to the Trust or the Depositor, acquiesce, petition or
otherwise invoke or cause the Trust or the Depositor to invoke the process of
any court or government authority for the purpose of commencing or sustaining a
case against the Trust or the Depositor under any Federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Trust or the
Depositor or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Trust or the Depositor.
SECTION 17.10. 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 17.11. Third Party Beneficiary. This Agreement shall inure to
the benefit of the Insurer and its successors and assigns.
64
IN WITNESS WHEREOF, the parties hereto have caused this Pooling and
Servicing Agreement to be duly executed by their respective officers as of the
day and year first above written.
BAY VIEW SECURITIZATION CORPORATION,
as Depositor
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxx
Title: President
BAY VIEW ACCEPTANCE CORPORATION,
as Servicer
By: /s/ Xxxxxxx X. XxXxxxxx
----------------------------------------
Xxxxxxx X. XxXxxxxx
Title: Vice President & Controller
BANKERS TRUST COMPANY,
as Trustee
By:
----------------------------------------
Title:
65
[All Exhibits, Schedules and Annexes, except
Schedule C and Annex A, are omitted from this Form 8-K]
Schedule C
Planned Notional Principal Amount Schedule
Planned Notional
Distribution Date in Principal Amount
Initial $184,645,581.57
January, 2000 $175,917,043.08
February, 2000 $167,311,480.03
Xxxxx, 0000 $158,831,106.62
April, 2000 $150,478,170.76
May, 2000 $142,254,954.54
June, 2000 $134,163,774.71
July, 2000 $126,206,983.19
August, 2000 $118,386,967.50
September, 2000 $110,706,151.33
October, 2000 $103,166,994.99
November, 2000 $ 95,771,995.95
December, 2000 $ 88,523,689.35
January, 2001 $ 81,424,648.52
February, 2001 $ 74,477,485.55
March, 2001 $ 67,684,851.75
April, 2001 $ 61,603,743.70
May, 2001 $ 55,811,801.62
June, 2001 $ 50,276,799.79
July, 2001 $ 45,003,594.00
August, 2001 $ 39,963,861.00
September, 2001 $ 35,882,550.94
October, 2001 $ 31,981,471.91
November, 2001 $ 28,243,583.93
December, 2001 $ 24,671,129.41
January, 2002 $ 21,248,879.65
February, 2002 $ 18,594,638.17
March, 2002 $ 16,053,196.63
April, 2002 $ 13,615,374.10
May, 2002 $ 11,281,809.56
June, 2002 $ 9,044,262.72
July, 2002 $ 7,476,267.04
August, 2002 $ 5,975,037.60
September, 2002 $ 4,536,010.42
October, 2002 $ 3,158,766.09
November, 2002 $ 1,839,252.61
December, 2002 $ 1,198,036.28
January, 2003 $ 585,470.21
February, 2003 $ 0.00
The Class I certificates will not be entitled to any distribution after the
notional principal amount has been reduced to zero.
ANNEX A
TAX PARTNERSHIP AGREEMENT
1. Characterization for Tax Purposes. For United States federal and state
income tax purposes, the Depositor's contribution of the Receivables to the
Trust in exchange for interests in the Trust, and the sale by the Depositor of
Class A Certificates (which includes Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates and Class A-4 Certificates) and Class I
Certificates and the retention by the Depositor of the Class IC Certificate is
intended to constitute the formation of a partnership (the "Tax Partnership")
whose partners are the Class A Certificateholders, the Class I
Certificateholders and the Class IC Certificateholder (which are hereinafter
collectively referred to as the "Tax Partners"). This Tax Partnership shall
continue in effect as provided in Paragraph 3 below. Pursuant to the final
regulations adopting the "check-the-box" classification systems for
unincorporated organizations, the Servicer on behalf of the Tax Partners shall
elect, in such manner as provided in such regulations, to treat the Trust as a
partnership for federal and applicable state and local income tax purposes, and
each Tax partner irrevocably agrees to be bound by such election. The Tax
Partnership shall not be a partnership to any other extent or for any other
purpose.
2. Election with Respect to Subchapter K. Notwithstanding anything to the
contrary, each Tax Partner agrees: (a) not to elect to be excluded from the
application of Subchapter K of Chapter 1 of Subtitle A of the Code, or any
comparable provisions of applicable state laws; and (b) to join in the execution
of such additional documents and elections as may be required in order to
effectuate the foregoing.
3. Term. The provisions of this Tax Partnership Agreement shall be
effective as of the effective date of the sale by the Depositor of the Class A
Certificates and Class I Certificates and the issuance to the Depositor of the
Class IC Certificate (the "Effective Date") and shall continue in full force and
effect from and after such date until the earliest of: (a) the termination of
the Agreement pursuant to its terms; or (b) the mutual agreement of all of the
Tax Partners to terminate the Trust.
4. Capital Contributions and Capital Accounts.
(a) The value of the interests contributed by the Class A
Certificateholders and the Class I Certificateholders shall equal the
amount paid by such Certificateholders for such interests, respectively,
and such amounts shall constitute the opening balance in their Capital
Accounts (as hereinafter defined). The value of the interests contributed
by the Class IC Certificateholder shall equal the fair market value of the
receivables contributed to the Tax Partnership less the value attributed to
the Class A Certificateholders and the Class I Certificateholders, as
described above. Such amount shall constitute the opening balance in the
Class IC Certificateholder's Capital Account.
(b) An individual capital account (a "Capital Account") shall be
maintained for each Tax Partner in compliance with Treasury Regulation
Sections 1.704-1(b)(2)(iv) and 1.704-2 and accordingly, except as otherwise
provided herein:
(i) The Capital Account of each Tax Partner shall be credited
by (A) the amount of cash and the fair market value of property other than
cash contributed (or deemed contributed pursuant to Code Section 708) by
such Tax Partner to the Tax Partnership (net of any liabilities assumed by
the Tax Partnership upon such contribution or to which such property is
subject at the time of such contribution); and (B) the amount of any item
of taxable income or gain and the amount of any item of income or gain
exempt from tax allocated to such Tax Partner.
(ii) The Capital Account of each Tax Partner shall be debited
by (A) the amount of any item of tax deduction or loss allocated to such
Tax Partner; (B) such Tax Partner's allocable share, of expenditures not
deductible in computing taxable income and not properly chargeable as
capital expenditures; and (C) the amount of cash and the fair market value
of any property other than cash (net of any liabilities assumed by such Tax
Partner or to which such property is subject at the time of distribution)
distributed to such Tax Partner.
(iii) Immediately prior to any distribution of property in kind,
the Tax Partners' Capital Accounts shall be adjusted by assuming that the
distributed properties were sold for cash at their respective fair market
values as of the date of distribution and crediting or debiting each Tax
Partner's Capital Account with its respective share of the hypothetical
gains or losses resulting from such assumed sales in the same manner as
gains or losses on actual sales of such properties would be allocated under
Paragraph 6 below.
(iv) Any adjustments of basis of property provided for under
Code Section 734 and 733 and comparable provisions of state law (resulting
from an election under Code Section 754 or comparable provisions of state
law) shall not affect the Capital Accounts of the Tax Partners, except as
provided in Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(5).
5. Federal and State Income Tax Returns and Elections.
(a) The Tax Partners agree that the holder of the Class IC Certificate
shall serve as the "tax matters partner" (as such term is defined in Code
Section 6231(a)(7) (the "Tax Matters Partner")) of the Tax Partnership.
The Tax Matters Partner shall (i) apply to the Internal Revenue Service for
a taxpayer identification number for the Tax Partnership, (ii) elect to
adopt the accrual method of accounting and, if permitted by applicable
federal tax law, the calendar year as the Tax Partnership's fiscal year,
(iv) make such other elections as it deems proper, including, but not
limited to, making or causing the Trust to make a proper election not to be
treated as an association taxable as a corporation pursuant to the final
"check-the-box" regulations issued by the
Department of the Treasury on December 17, 1996 and effective as of January
1, 1997, by timely filing Form 8832--Entity Classification Election, with
the appropriate IRS service center, (v) prepare, execute and file the
necessary federal and state partnership income tax returns for the Tax
Partnership and (vi) keep the other Tax Partners informed of all material
matters that may come to its attention in its capacity as Tax Matters
Partner. Each Tax Partner agrees to furnish the Tax Matters Partner with
all pertinent information relating to activities under the Agreement and
this Annex A which is necessary for the Tax Matters Partner to prepare and
file federal and state partnership returns. In acting as Tax Matters
Partner, the Tax Matters Partner shall use its best efforts, but shall
incur no liability to the other Tax Partners.
(b) Within 60 days after the end of each of the Tax Partnership's
taxable years, the Tax Matters Partner shall send to each Tax Partner who
has been a Tax Partner at any time during the taxable year then ended such
tax information as shall be necessary for the preparation by such Tax
Partner of its Federal income tax return and state income and other tax
returns, if any, in states where the Tax Partnership is organized or is
qualified to do business.
6. Allocations.
(a) (i) "Net Income" and "Net Loss" respectively, for any period,
means the income or losses of the Tax Partnership as determined in
accordance with the method of accounting followed by the Tax Partnership
for Federal income tax purposes, including, for all purposes, any income
exempt from tax and any expenditures of the Tax Partnership described in
Code Section 705(a)(2)(B); provided, however, (i) that any item allocated
under Paragraphs 6(b)(iii) or 6(c) shall be excluded from the computation
of Net Income and Net Loss and (ii) that if, as a result of the
contribution of an asset whose fair market value differs from its adjusted
basis for Federal income tax purposes or as a result of the revaluation of
the Tax Partnership's assets, the book value of any Tax Partnership asset
differs from its adjusted basis for Federal income tax purposes, gain,
loss, depreciation and amortization with respect to such asset shall be
computed using the asset's book value consistently with the requirements of
Treasury Regulation Section 1.704- 1(b)(2)(iv)(g).
(ii) "Period" shall mean the calendar month; provided that as to
the month in which the Closing Date occurs, Period shall mean the period
commencing on the Closing Date and ending on the last day of that calendar
month, and as to the month in which the Tax Partnership terminates, Period
shall mean the period beginning on the first day of such month and ending
on the date of the Tax Partnership's termination.
(b) The Tax Partners agree that the Tax Partnership's Net Income and
Net Loss and each item of income, gain, loss, or deduction entering into
the computation thereof for any Fiscal Year shall be allocated by first
allocating the Tax Partnership's Net Income and Net Loss (and each item of
income, gain, loss, or deduction entering into the computation thereof) for
each Period within such Fiscal Year (as if such Period
were a complete fiscal year) and then aggregating the allocations for each
Period within the Fiscal Year. In the case of the transfer of any interest
in the Tax Partnership, the items of Net Income and Net Loss allocated for
any Period with respect to the transferred interest shall be allocated to
the holder of that interest on the first business day of the month
following the end of such Period (or in the case of the Period in which the
Tax Partnership terminates, the last day of such Period). If the Tax
Matters Partner determines that this method of allocation of items of Net
Income and Net Loss is not consistent with the requirements of the Code and
applicable Treasury Regulations, it may revise such method of allocation to
conform with such requirements. The Tax Partnership's Net Income and Net
Loss for each Period within a Fiscal Year shall be allocated as follows:
(i) Net Income for such Period shall be allocated as follows:
(A) (I) An amount of Net Income equal to the excess of (x) the
sum for such Period and each preceding Period up to the Period
beginning with the Closing Date, of (1) the product of the Class A-1
Pass-Through Rate and (2) the Class A-1 Certificate Balance amount for
such Period (and each such preceding Period) over (y) all amounts
previously allocated to the Class A-1 Certificateholders pursuant to
this Paragraph 6(b)(i)(A)(I) shall be allocated 100% to the Class A-1
Certificateholders, in proportion to their holdings of Class A-1
Certificates; provided that the product of (1) and (2) in clause (x)
shall be computed on the basis of a 360 day year consisting of twelve
30 day months, and that any such product shall be appropriately
prorated for any Period that is not a full calendar month in a manner
consistent with the computation of cash distributions with respect to
such Periods as provided by the Agreement.
(II) An amount of Net Income equal to the excess of (x)
the sum for such Period and each preceding Period up to the Period
beginning with the Closing Date, of that portion of any excess of the
principal amount of the Class A-1 Certificates over their initial
issue price (disregarding accrued interest) that would have accrued
with respect to such Periods if the Class A-1 Certificates were
indebtedness and such excess were original issue discount over (y) all
amounts previously allocated to the Class A-1 Certificateholders
pursuant to this Paragraph 6(b)(i)(A)(II) shall be allocated 100% to
the Class A-1 Certificateholders, in proportion to their holdings of
Class A-1 Certificates.
(B) (I) An amount of Net Income equal to the excess of (x) the
sum for such Period and each preceding Period up to the Period
beginning with the Closing Date, of (1) the product of the Class A-2
Pass-Through Rate and (2) the Class A-2 Certificate Balance amount for
such Period (and each such preceding Period) over (y) all amounts
previously allocated to the Class A-2 Certificateholders pursuant to
this Paragraph 6(b)(i)(B)(I) shall be allocated 100% to the Class A-2
Certificateholders, in proportion to their holdings of Class A-2
Certificates; provided that the product of (1) and (2) in clause (x)
shall be computed on the basis of a 360 day year consisting of twelve 30
day months, and that any such product shall be appropriately prorated for
any Period that is not a full calendar month in a manner consistent with
the computation of cash distributions with respect to such Periods as
provided by the Agreement.
(II) An amount of Net Income equal to the excess of (x)
the sum for such Period and each preceding Period up to the Period
beginning with the Closing Date, of that portion of any excess of the
principal amount of the Class A-2 Certificates over their initial issue
price (disregarding accrued interest) that would have accrued with respect
to such Periods if the Class A-2 Certificates were indebtedness and such
excess were original issue discount over (y) all amounts previously
allocated to the Class A-2 Certificateholders pursuant to this Paragraph
6(b)(i)(B)(II) shall be allocated 100% to the Class A-2 Certificateholders,
in proportion to their holdings of Class A-2 Certificates.
(C) (I) An amount of Net Income equal to the excess of (x) the
sum for such Period and each preceding Period up to the Period beginning
with the Closing Date, of (1) the product of the Class A-3 Pass-Through
Rate and (2) the Class A-3 Certificate Balance amount for such Period (and
each such preceding Period) over (y) all amounts previously allocated to
the Class A-3 Certificateholders pursuant to this Paragraph 6(b)(i)(C)(I)
shall be allocated 100% to the Class A-3 Certificateholders in proportion
to their holdings of Class A-3 Certificates; provided that the product of
(1) and (2) in clause (x) shall be computed on the basis of a 360 day year
consisting of twelve 30 day months, and that any such product shall be
appropriately prorated for any Period that is not a full calendar month in
a manner consistent with the computation of cash distributions with respect
to such Periods as provided by the Agreement.
(II) An amount of Net Income equal to the excess of (x) the sum
for such Period and each preceding Period up to the Period beginning with
the Closing Date, of that portion of any excess of the principal amount of
the Class A-3 Certificates over their initial issue price (disregarding
accrued interest) that would have accrued with respect to such Periods if
the Class A-3 Certificates were indebtedness and such excess were original
issue discount over (y) all amounts previously allocated to the Class A-3
Certificateholders pursuant to this Paragraph 6(b)(i)(C)(II) shall be
allocated 100% to the Class A-3 Certificateholders, in proportion to their
holdings of class A-3 Certificates.
(D) (I) An amount of Net Income equal to the excess of (x) the
sum for such Period and each preceding Period up to the Period beginning
with the Closing Date, of (1) the product of the Class A-4 Pass-Through
Rate and (2) the Class A-4 Certificate Balance amount for such Period (and
each such preceding Period) over (y) all amounts previously allocated to
the Class A-4 Certificateholders, in proportion to their holdings of Class
A-4 Certificates; provided that the product of (1) and (2) in clause (x)
shall be computed on the
basis of 360 day year consisting of twelve 30 day months, and that any such
product shall be appropriately prorated for any Period that is not a full
calendar month in a manner consistent with the computation of cash
distributions with respect to such Periods as provided by the Agreement.
(II) An amount of Net Income equal to the excess of (x) the sum
for such Period and each preceding Period up to the Period beginning with
the Closing Date, of that portion of any excess of the principal amount of
the Class A-4 Certificates over their initial issue price (disregarding
accrued interest) that would have accrued with respect to such Periods if
the Class A-4 Certificates were indebtedness and such excess were original
issue discount over (y) all amounts previously allocated to the Class A-4
Certificateholders pursuant to this Paragraph 6(b)(i)(D)(II) shall be
allocated 100% to the Class a-4 Certificateholders, in the proportion to
their holdings of class A-4 Certificates.
(E) An amount of Net Income equal to the excess of (x) the sum
for such Period and each preceding Period up to the Period beginning with
the Closing Date, of the Periodic Allocation (as hereinafter defined) over
(y) all amounts previously allocated to the Class I Certificateholders
pursuant to this Paragraph 6(b)(i)(D), shall be allocated 100% to the Class
I Certificateholders, in proportion to their holdings of Class I
Certificates. The "Periodic Allocation" for any Period shall equal the
excess of (i) the product of (1) the Class I Pass-Through Rate and (2) the
Notional Principal Amount for such Period over (ii) the portion of the
amount distributable with respect to the Class I Certificates with respect
to such Period that would constitute a return of basis for an initial
holder if the Class I Certificates constituted an instrument described in
Code Section 860G(a)(1)(B)(ii), employing the principles of Code Section
1272(a)(6) and the constant yield method of accrual; provided that the
product of (1) and (2) in clause (i) shall be computed on the basis of a
360 day year consisting of twelve 30 days months, and that such product
shall be appropriately prorated for any Period that is not a full calendar
month in a manner consistent with the computation of cash distributions
with respect to such Periods as provided by the Agreement.
(F) Notwithstanding the foregoing Paragraphs (A) through (E), if
the actual Net Income for such Period is less than the Net Income allocable
under the sum of the amounts described in such Paragraphs (A) through (E),
the actual Net Income for such Period shall be allocable to the Class A
Certificateholders and the Class I Certificateholders in proportion to the
allocations that would have been made to such Certificateholders with
respect to such Period under such foregoing Paragraphs (A) through (E) if
sufficient Net Income for such period had existed and the amount
distributable hereunder to Class A Certificateholders shall be distributed
pro rata. For the purposes of applying the foregoing Paragraphs (A) through
(F), in such periods, any amounts allocated pursuant to this Paragraph (F)
shall be treated as allocated
pursuant to Paragraphs (A) through (E), as the case may be, to the extent
the allocation was related thereto.
(E) Any remaining Net Income shall be allocated 100% to the Class
IC Certificateholder.
(ii) Net Losses for such Periods shall be allocated as follows:
(A) 100% to the Class IC Certificateholder until the Adjusted
Capital Account (as hereinafter defined) balance of the Class IC
Certificateholders equals zero.
(B) 100% pro rata according to their Adjusted Capital Account
Balances:
(I) to the Class I Certificateholders, in proportion to
their holdings of Class I Certificates, until the Adjusted Capital
Account balances of the Class I Certificateholders equal zero; and
(II) to the Class A Certificateholders, in proportion to
their holdings of Class A Certificates, until the Adjusted Capital
Account balances of the Class A Certificateholders equal zero.
(C) Any remaining Net Losses shall be allocated 100% to the Class
IC Certificateholder. (iii) Any provision of this Agreement to the
contrary notwithstanding, any payment of amounts due and owing the
Insurer from time to time or in connection with an optional purchase
of all Receivables pursuant to Section 16.02 of the Agreement shall be
treated as a loss of the Tax Partnership and shall be allocated in the
same manner as the Net Loss would be allocated under paragraph
6(b)(ii).
(c) (i) In the taxable year in which the final redemption of the
Class I Certificates occurs, a portion of the premium and other deductions
derived by the Trust up to an amount equal to the aggregate remaining
Capital Account balances of the Class I Certificateholders shall be
allocated to the Class I Certificateholders in proportion to their
respective Capital Account balances.
(ii) Any deductions not allocated pursuant to Paragraph 6(c)(i)
and attributable to (w) the amortization of premium on the Receivables, (x)
payments to the Trustee and (y) payments to the Servicer shall be specially
allocated to the Class IC Certificateholder.
(iii) If there is a net decrease in "partnership minimum gain"
(within the meaning of Treasury Regulation Section 1.704-2(d))for a Fiscal
Year, then there shall be allocated to each Tax Partner items of income and
gain for that year equal to that Tax Partner's share of the net decrease in
partnership minimum gain (within the meaning of Treasury Regulation Section
1.704-2(g)(2)), subject to the exceptions set forth in Treasury Regulation
Sections 1.704-2(f)(2), (3) and (5), provided, that if the Tax Partnership
has any discretion as to an exception set forth pursuant to Treasury
Regulation Section 1.704-2(f)(5), the Tax Matters Partner may exercise such
discretion on behalf of the Tax Partnership. In the event the application
of the minimum gain chargeback requirement would cause a distortion in the
economic arrangement among the Tax Partners, the Tax Matters Partner shall
request the Commissioner to waive the minimum gain chargeback requirement
pursuant to Treasury Regulation Section 1.704-2(f)(4). The foregoing is
intended to be a "minimum gain chargeback" provision as described in
Treasury Regulation Section 1.704-2(f) and shall be interpreted and applied
in all respects in accordance with that Treasury Regulation. If during a
Fiscal
Year there is a net decrease in partner nonrecourse debt minimum gain (as
determined in accordance with Treasury Regulation Section 1.704-2(i)(3)),
then, in addition to the amounts, if any, allocated pursuant to the
preceding paragraph, any Tax Partner with a share of that partner
nonrecourse debt minimum gain (determined in accordance with Treasury
Regulation Section 1.704-2(i)(5)) as of the beginning of the Fiscal Year
shall, subject to the exceptions set forth in Treasury Regulation Section
1.704-2(i)(4), including exceptions analogous to those provided pursuant to
Treasury Regulation Sections 1.704-2(f)(2), (3) and (5) (provided, that if
the Tax Partnership has any discretion as to an exception set forth
pursuant to Treasury Regulation Section 1.704-2(f)(5) as made applicable by
Treasury Regulation Section 1.704-2(i)(4), the Tax Matters Partner may
exercise such discretion on behalf of the Tax Partnership) be allocated
items of income and gain for the year (and, if necessary, for succeeding
years) equal to that Tax Partner's share of the net decrease in the partner
nonrecourse minimum gain. In the event the application of the minimum gain
chargeback requirement would cause a distortion in the economic arrangement
among the Tax Partners, the Tax Matters Partner shall request the
Commissioner to waive the minimum gain chargeback requirement pursuant to
Treasury Regulation Sections 1.704-2(i)(4) and 1.704-2(f)(4). The foregoing
is intended to be the "chargeback of partner nonrecourse debt minimum gain"
required by Treasury Regulation Section 1.704-2(i)(4) and shall be
interpreted and applied in all respects in accordance with that Treasury
Regulation.
(iv) If during any Fiscal Year of the Tax Partnership a Tax
Partner unexpectedly receives an adjustment, allocation or distribution
described in Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) or
(6), which causes or increases a deficit balance in the Tax Partner's
Adjusted Capital Account (as defined below), there shall be allocated to
the Tax Partner items of income and gain (consisting of a pro rata portion
of each item of Tax Partnership income, including gross income, and gain
for such year) in an amount and manner sufficient to eliminate such deficit
as quickly as possible. The foregoing is intended to be a "qualified
income offset" provision as described in Treasury Regulation Section 1.704-
1(b)(2)(ii)(d) and shall be interpreted and applied in all respects in
accordance with the Treasury Regulation. A Tax Partner's "Adjusted Capital
Account", at any time, shall equal the Tax Partner's Capital Account at
such time (x) increased by the sum of (A) the amount of the Tax Partner's
share of partnership minimum gain (as defined in Treasury Regulation
Section 1.704-2(g)(1)and (3)), (B) the amount of the Tax Partner's share of
partner nonrecourse debt minimum gain (as defined in Treasury Regulation
Section 1.704-2(i)(5)), and (C) any amount of the deficit balance in its
Capital Account and Tax Partner is obligated to restore on liquidation of
the Tax Partnership and (y) decreased by reasonably expected adjustments,
allocations and distributions described in Treasury Regulation Sections
1.704-1(b)(2)(ii)(d)(4), (5) and (6).
(v) Notwithstanding anything to the contrary in this Paragraph 6,
Tax Partnership losses, deductions, or Code Section 705(a)(2)(B)
expenditures that are attributable to a particular partner nonrecourse
liability shall be allocated to the Tax
Partner that bears the economic risk of loss for the liability in
accordance with the rules of Treasury Regulation Section 1.704-2(i).
(vi) Notwithstanding any provision of Paragraphs 6(b) and
6(c)(ii), no allocation of items of loss or deduction shall be made to a
Tax Partner if it would cause the Tax Partner to have a negative balance in
its Adjusted Capital Account. Allocations of items of loss or deduction
that would be made to a Tax Partner but for this Paragraph 6(c)(vi) shall
instead be made first to the Class IC Certificateholder to the extent not
inconsistent with this Paragraph 6(c)(vi), and second, to the Class A and
Class I Certificateholders in proportion to the amounts distributable for
the related Period pursuant to Sections 9.04(a)(iii) of the Agreement. To
the extent allocations of items of loss or deduction cannot be made to any
Tax Partner because of this Paragraph 6(c)(vi), such allocations shall be
made to the Tax Partners in accordance with Paragraphs 6(b) and 6(c)(ii)
notwithstanding this Paragraph 6(c)(vi).
(vii) To the extent that any item of income, gain, loss or
deduction has been specially allocated pursuant to Paragraphs 6(c)(iv) and
(vi) and such allocation is inconsistent with the way in which the same
amount otherwise would have been allocated under Paragraphs 6(b) and
6(c)(ii), subsequent allocations under Paragraph 6(b) and 6(c)(ii) shall be
made, to the extent possible and without duplication, in a manner
consistent with Paragraphs 6(c)(iii), (iv), (v) and (vi) which negate as
rapidly as possible the effect of all such inconsistent allocations.
(viii) Any allocations made pursuant to this Paragraph 6 shall be
made in the following order:
(i) Paragraph 6(c)(iii)
(ii) Paragraph 6(c)(iv)
(iii) Paragraph 6(c)(v)
(iv) Paragraph 6(c)(vii)
(v) Paragraph 6(c)(i)
(vi) Paragraph 6(c)(ii)
(vii) Paragraph 6(b)(iii)
(viii) Paragraph 6(b)(i) and (ii)
These provisions shall be applied as if all distributions and allocations
were made at the end of the Fiscal Year. Where any provision depends on
the Capital Account of any Partner, that Capital Account shall be
determined after the operation of all preceding provisions for the year.
These allocations shall be made consistently with the requirements of
Treasury Regulation Section 1.704-2(j).
(d) The income, gains, losses, deductions and credits of the Tax
Partnership for Federal, state and local income tax purposes shall be
allocated in the same manner as the corresponding items entering into the
computation of Net Income and Net Losses were allocated pursuant to
Paragraphs 6(b) and (c) provided that solely for Federal,
local and state income and franchise tax purposes and not for book or
Capital Account purposes, income, gain, loss and deduction with respect to
property properly carried on the Tax Partnership's books at a value other
than its tax basis shall be allocated (i) in the case of property
contributed in kind, in accordance with the requirements of Code Section
704(c) and such Treasury Regulations as may be promulgated thereunder from
time to time, and (ii) in the case of other property, in accordance with
the principles of Code Section 704(c) and the Treasury Regulations
thereunder as incorporated among the requirements of the relevant
provisions of the Treasury Regulations under Code Section 704(b).
(e) The Tax Partnership shall comply with all withholding requirements
under Federal, state and local law and shall remit amounts withheld to and
file required forms with the applicable jurisdictions. To the extent the
Tax Partnership is required to withhold and pay over any amounts with
respect to distributions or allocations to any Tax Partner, the amount
withheld shall be treated as a distribution to that Tax Partner. In the
event of any claimed overwithholding, Tax Partners shall have no claim for
recovery against the Tax Partnership or other Tax Partners. If the amount
withheld was not withheld from actual distributions, the Tax Partnership,
may at its option, (i) require the Tax Partner to reimburse the Tax
Partnership for such withholding (and each Tax Partner agrees to reimburse
the Tax Partnership promptly following such request) or (ii) reduce any
subsequent distributions by the amount of such withholding. If there is a
possibility that withholding tax is payable with respect to a distribution
(such as a distribution to a non-U.S. Tax Partner), the Tax Partnership may
in its sole discretion withhold such amounts in accordance with this
Paragraph 6(e). Each Tax Partner agrees to furnish the Tax Partnership
with any representations and forms as shall reasonably be requested by the
Tax Partnership to assist it in determining the extent of, and in
fulfilling, its withholding obligations. If a Tax Partner wishes to apply
for a refund of any such withholding tax, the Trustee shall reasonably
cooperate with such Tax Partner in making such claim as long as the Tax
Partner agrees to reimburse the Tax Partnership for any out-of-pocket
expenses incurred.
7. Sale of Interests. The Tax Partners agree that any sale by a Tax
Partner of any ownership interest in a Certificate shall be deemed to be a sale
of all or a portion of such Tax Partner's interest in the Tax Partnership.
8. Termination of a Tax Partner's Interest. Any distribution by the Tax
Partnership in termination of any Tax Partner's interest in the Tax Partnership
other than pursuant to Paragraph 9 below shall be in an amount of cash or
property other than cash having a net fair market value equal to the positive
Capital Account balance of such Tax Partner at the time such interest is
terminated, after such Capital Account balance has been adjusted in accordance
with Paragraphs 4 and 6 above for all operations preceding such distribution and
the applicable Treasury Regulations under Code Section 704(b), and shall be made
by the later of: (a) the end of the Tax Partnership's taxable year in which such
termination occurs; or (b) within 90 days after the date of such termination.
9. Distributions upon Termination. Upon termination of the Agreement
pursuant to its terms, the activities of the Tax Partners under this Annex A
shall be concluded and the assets subject to the Agreement and this Annex A
shall be distributed to the Tax Partners in the manner and in the order set
forth below:
(a) Debts of the Tax Partnership created pursuant to the Agreement,
other than to Tax Partners, including, except as provided in Paragraph
9(e), all amounts due and owing to the Insurer, shall be paid.
(b) Debts owed among the Tax Partners created pursuant to the
Agreement shall be paid.
(c) All cash on hand representing unexpended contributions by any Tax
Partner shall be returned to the contributor.
(d) The Tax Partners' Capital Accounts shall be adjusted by:
(i) assuming the sale of all remaining assets at their fair
market values as of the date of termination of the Agreement; and
(ii) debiting or crediting each Tax Partner's Capital Account
with the Tax Partner's respective share of the hypothetical gains or losses
resulting from such assumed sales in the same manner as such Tax Partner's
Capital Account would be debited or credited under Paragraph 6 above for
gains or losses on actual sales of such properties.
(e) All Tax Partnership assets shall be distributed to the Tax
Partners in accordance with their respective Capital Account balances as so
adjusted by the later of: (i) the end of the Tax Partnership's taxable year
in which the termination occurs; or (ii) within 90 days after the date of
such termination, in the following order or priority:
(i) to the Class A Certificateholders and Class I
Certificateholders, pro rata; and
(ii) to the Class IC Certificateholder; provided, that in the
event of an optional termination of the Trust under Section 16.02 of the
Agreement, all amounts due and owing to the Insurer shall be paid to the
Insurer after the distribution to the Class A Certificateholders and Class
I Certificateholders pursuant to clause (i) of this Paragraph 9(e) and
prior to the distribution to the Class IC Certificateholder pursuant to
clause (ii) of this Paragraph 9(e).
