EXHIBIT 4.3
HONDA AUTO RECEIVABLES [___-__] OWNER TRUST,
as Issuer,
AMERICAN HONDA RECEIVABLES CORP.,
as Seller,
And
AMERICAN HONDA FINANCE CORPORATION,
as Servicer
SALE AND SERVICING AGREEMENT
Dated as of [____ __, ____]
TABLE OF CONTENTS
<TABLE>
Page
----
ARTICLE ONE
DEFINITIONS
Section 1.01. General Definitions.........................................................................1
Section 1.02. Other Definitional Provisions..............................................................19
Section 1.03. Interpretive Provisions....................................................................19
ARTICLE TWO
CONVEYANCE OF RECEIVABLES; CUSTODY OF RECEIVABLES FILES
Section 2.01. Conveyance of Receivables..................................................................20
Section 2.02. Custody of Receivable Files................................................................21
Section 2.03. Representations and Warranties of Seller as to the Receivables.............................21
Section 2.04. Repurchase of Receivables Upon Breach......................................................25
Section 2.05. Duties of Servicer as Custodian............................................................26
Section 2.06. Instructions; Authority to Act.............................................................27
Section 2.07. Indemnification by Custodian...............................................................27
Section 2.08. Effective Period and Termination...........................................................27
ARTICLE THREE
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 3.01. Duties of Servicer.........................................................................28
Section 3.02. Collection of Receivable Payments..........................................................28
Section 3.03. Rebates on Full Prepayments................................................................29
Section 3.04. Realization Upon Receivables...............................................................29
Section 3.05. Maintenance of Physical Damage Insurance Policies..........................................30
Section 3.06. Maintenance of Security Interests in Financed Vehicles.....................................30
Section 3.07. Covenants of Servicer......................................................................30
Section 3.08. Purchase of Receivables Upon Breach........................................................30
Section 3.09. Total Servicing Fee; Payment of Certain Expenses by Servicer...............................31
Section 3.10. Servicer's Certificate.....................................................................31
Section 3.11. Annual Statement as to Compliance; Notice of Default.......................................32
Section 3.12. Annual Accountants' Report.................................................................32
Section 3.13. Access to Certain Documentation and Information Regarding Receivables......................32
Section 3.14. Amendments to Schedule of Receivables......................................................33
Section 3.15. Reports to Securityholders and Rating Agencies.............................................33
Section 3.16. Appointment of Subservicer.................................................................33
ARTICLE FOUR
DISTRIBUTIONS; RESERVE FUND; STATEMENTS TO SECURITYHOLDERS
Section 4.01. Establishment of Accounts..................................................................34
Section 4.02. Collections................................................................................35
i
Page
----
Section 4.03. Application of Collections.................................................................36
Section 4.04. Advances...................................................................................37
Section 4.05. Additional Deposits........................................................................38
Section 4.06. Distributions..............................................................................38
Section 4.07. Reserve Fund...............................................................................40
Section 4.08. Yield Supplement Account...................................................................40
Section 4.09. Net Deposits...............................................................................40
Section 4.10. Statements to Securityholders..............................................................40
ARTICLE FIVE
THE SELLER
Section 5.01. Representations of Seller..................................................................42
Section 5.02. Liability of Seller; Indemnities...........................................................43
Section 5.03. Merger, Consolidation or Assumption of the Obligations of Seller; Certain Limitations......44
Section 5.04. Limitation on Liability of Seller and Others...............................................46
Section 5.05. Seller May Own Notes.......................................................................46
ARTICLE SIX
THE SERVICER
Section 6.01. Representations of Servicer................................................................46
Section 6.02. Indemnities of Servicer....................................................................48
Section 6.03. Merger, Consolidation or Assumption of the Obligations of Servicer.........................48
Section 6.04. Limitation on Liability of Servicer and Others.............................................48
Section 6.05. AHFC Not to Resign as Servicer.............................................................49
ARTICLE SEVEN
SERVICER DEFAULTS
Section 7.01. Servicer Defaults..........................................................................50
Section 7.02. Appointment of Successor Servicer..........................................................51
Section 7.03. Notification of Servicer Termination.......................................................52
Section 7.04. Waiver of Past Defaults....................................................................52
Section 7.05. Repayment of Advances......................................................................52
ARTICLE EIGHT
TERMINATION
Section 8.01. Optional Purchase of All Receivables.......................................................52
ARTICLE NINE
MISCELLANEOUS
Section 9.01. Amendment..................................................................................53
Section 9.02. Protection of Title to Trust...............................................................54
Section 9.03. Notices....................................................................................56
ii
Page
----
Section 9.04. Assignment.................................................................................56
Section 9.05. Limitations on Rights of Others............................................................56
Section 9.06. Severability...............................................................................57
Section 9.07. Separate Counterparts......................................................................57
Section 9.08. Headings...................................................................................57
Section 9.09. Governing Law..............................................................................57
Section 9.10. Nonpetition Covenants......................................................................57
Section 9.11. Limitation of Liability of Owner Trustee and Indenture Trustee.............................57
Section 9.12. Confidentiality............................................................................58
Section 9.13. Federal Tax Treatment......................................................................59
</TABLE>
SCHEDULES
Schedule A - Schedule of Receivables A-1
Schedule B - Location of Receivable Files B-1
EXHIBITS
Exhibit A - Form of Distribution Statement
of Securityholders A-1
Exhibit B - Form of Servicer's Certificate B-1
iii
This Sale and Servicing Agreement, dated as of [____ __, ____], is
among American Honda Receivables Corp., a California corporation ("AHRC" or, in
its capacity as Seller, the "Seller"), American Honda Finance Corporation, a
California corporation ("AHFC" or, in its capacity as Servicer, the "Servicer"),
and Honda Auto Receivables [___-__] Owner Trust, a Delaware statutory trust, as
issuer (the "Issuer").
WHEREAS the Issuer desires to purchase from the Seller a portfolio of
receivables arising in connection with retail installment sale or conditional
sale contracts (the "Receivables") generated by AHFC in the ordinary course of
its business, which Receivables have been sold by AHFC to AHRC;
WHEREAS, AHRC is willing to sell the Receivables to the Issuer pursuant
to the terms hereof; and
WHEREAS, AHFC is willing to service the Receivables pursuant to the
terms hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. General Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"Absolute Prepayment Model" means a model calculating prepayment of
receivables with respect to which the receivables prepay at a specified constant
monthly prepayment rate.
"Accounts" means the Collection Account, the Note Distribution Account,
the Payahead Account, the Yield Supplement Account and the Reserve Fund.
"Account Property" means, with respect to each Account, such Account,
together with all cash, securities, financial assets and investments and other
property from time to time deposited or credited to such Account and all
proceeds thereof, including, with respect to the (i) Reserve Fund, the Reserve
Fund Initial Deposit and (ii) Yield Supplement Account, the Yield Supplement
Account Deposit.
"Actual Payment" means, with respect to a Receivable and a Collection
Period, all payments received by the Servicer from or for the account of the
related Obligor on such Receivable during such Collection Period, net of any
Supplemental Servicing Fees attributable to such Receivable. Actual Payments do
not include Applied Payments Ahead.
"Actuarial Receivable" means any Receivable which provides for the
allocation of payments according to the "actuarial" method.
"Administration Agreement" means the Administration Agreement, dated as
of [____ __, ____], among the Administrator, the Issuer, the Depositor and the
Indenture Trustee.
"Administrator" means AHFC, or any successor Administrator under the
Administration Agreement.
"Administrative Purchase Payment" means, with respect to a Payment Date
and to an Administrative Receivable purchased by the Seller or the Servicer as
of the end of the related Collection Period, which Receivable is (i) a
Precomputed Receivable, (a) the sum of (1) all Scheduled Payments on such
Receivable due after the last day of such Collection Period, (2) an amount equal
to any reimbursement of Outstanding Advances made pursuant to the first sentence
of Section 4.04(c) with respect to such Receivable, (3) all past due Scheduled
Payments for which an Advance has not been made, minus (b) the sum of (1) all
Payments Ahead in respect of such Administrative Receivable held by the Servicer
or on deposit in the Payahead Account, (2) any Rebate and (3) any proceeds of
the liquidation of such Receivable previously received (to the extent applied to
reduce the Principal Balance of such Receivable) or (ii) a Simple Interest
Receivable, the sum of (a) the unpaid principal balance owed by the related
Obligor in respect of such Receivable and (b) interest on such unpaid principal
balance at a rate equal to the APR of the related Receivable from the date of
last payment by such Obligor to the last day of such Collection Period.
"Administrative Receivable" means a Receivable which the Servicer is
required to purchase pursuant to Section 3.08 or which the Servicer has elected
to purchase pursuant to Section 8.01.
"Advance" means a Precomputed Advance or a Simple Interest Advance.
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purpose of this definition, "control", when used with respect to
any specified Person, means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregate Net Losses" means, with respect to a Collection Period, an
amount equal to the aggregate Principal Balance of all Receivables that became
Defaulted Receivables during such Collection Period minus all Net Liquidation
Proceeds collected during such Collection Period with respect to all Defaulted
Receivables.
"Agreement" means this Sale and Servicing Agreement, and all amendments
hereof and supplements hereto.
"AHFC" means American Honda Finance Corporation, and its successors.
"AHRC" means American Honda Receivables Corp., and its successors.
"Amount Financed" in respect of a Receivable means the aggregate amount
advanced under such Receivable toward the purchase price of the related Financed
Vehicle and any related costs, including but not limited to accessories,
insurance premiums, service and warranty contracts and other items customarily
financed as part of motor vehicle retail installment sale contracts.
2
"Annual Percentage Rate" or "APR" of a Receivable means the annual rate
of finance charges stated in such Receivable.
"Applied Payment Ahead" means, with respect to a Precomputed Receivable
and a Collection Period as to which (i) the Actual Payment is less than the
Scheduled Payment and (ii) a Deferred Prepayment is on deposit in the Payahead
Account or otherwise retained by the Servicer pursuant to Section 4.02(c), an
amount equal to the lesser of (a) such Deferred Prepayment and (b) the amount by
which the Scheduled Payment exceeds the Actual Payment.
"Available Amount" means, with respect to any Payment Date, the sum of
Available Interest and Available Principal.
"Available Interest" means, with respect to any Payment Date, the total
of the following amounts allocable to interest received by the Servicer on or in
respect of the Receivables during the related Collection Period (computed, in
the case of Precomputed Receivables, by the actuarial method and, in the case of
Simple Interest Receivables, by the simple interest method): (i) the sum of the
interest component of all (a) collections on or in respect of all Receivables
other than Defaulted Receivables (including the interest portion of Applied
Payments Ahead, but excluding Payments Ahead to be applied in one or more future
Collections Periods), (b) Net Liquidation Proceeds, (c) Advances made by the
Servicer, (d) Warranty Purchase Payments, (e) Administrative Purchase Payments
and (f) the Yield Supplement Withdrawal Amount, if any, for the related Payment
Date, less (ii) the sum of all (a) amounts received on or in respect of a
particular Receivable (other than a Defaulted Receivable) to the extent of the
aggregate Outstanding Interest Advances in respect of such Receivable and (b)
Net Liquidation Proceeds with respect to a particular Receivable to the extent
of the aggregate Outstanding Interest Advances in respect of such Receivable.
"Available Principal" means, with respect to any Payment Date, the
total of the following amounts allocable to principal received by the Servicer
on or in respect of the Receivables during the related Collection Period
(computed, in the case of Precomputed Receivables, by the actuarial method and,
in the case of Simple Interest Receivables, by the simple interest method): (i)
the sum of the principal component of all (a) collections on or in respect of
all Receivables other than Defaulted Receivables (including the principal
portion of Applied Payments Ahead but excluding Payments Ahead), (b) Net
Liquidation Proceeds, (c) Advances made by the Servicer, (d) Warranty Purchase
Payments and (e) Administrative Purchase Payments, less (ii) an amount equal to
all (a) amounts received on or in respect of a particular Receivable (other than
a Defaulted Receivable) to the extent of the aggregate Outstanding Principal
Advances in respect of such Receivable and (b) Net Liquidation Proceeds with
respect to a particular Receivable to the extent of the aggregate Outstanding
Principal Advances in respect of such Receivable.
"Basic Documents" means this Agreement, the Administration Agreement,
the Indenture, the Note Depository Agreement, the Receivables Purchase
Agreement, the Trust Agreement and the Control Agreement and any other documents
or certificates delivered in connection therewith as the same may be amended,
supplemented or otherwise modified and in effect.
"Basic Servicing Fee" means the fee payable pursuant to Section 3.09 to
the Servicer on each Payment Date for services rendered during the related
Collection Period, which shall be
3
equal to one-twelfth of the Servicing Fee Rate multiplied by the Pool Balance as
of the first day of the related Collection Period or, with respect to the first
Payment Date, the Original Pool Balance.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in New York, New York, Los Angeles, California,
Chicago, Illinois or Wilmington, Delaware are authorized or obligated by law,
executive order or governmental decree to be closed.
"Certificate Balance" means, on any Payment Date, the Original
Certificate Balance reduced by all distributions of principal previously made in
respect of the Certificates.
"Certificate Distributable Amount" means, with respect to any Payment
Date, the sum of the Certificate Interest Distributable Amount and the
Certificate Principal Distributable Amount for such Payment Date.
"Certificate Distribution Account" has the meaning specified in the
Trust Agreement.
"Certificate Interest Carryover Shortfall" means, with respect to any
Payment Date, the excess, if any, of (x) the sum of (i) the Certificate Monthly
Interest Distributable Amount and (ii) any outstanding Certificate Interest
Carryover Shortfall for the preceding Payment Date, over (y) the amount in
respect of interest on the Certificates that is actually paid as interest on the
Certificates on such Payment Date, plus, to the extent permitted by applicable
law, interest on the Certificate Interest Carryover Shortfall at the Certificate
Rate for the Interest Accrual Period.
"Certificate Interest Distributable Amount" means, with respect to any
Payment Date, the sum of the Certificate Monthly Interest Distributable Amount
for such Payment Date and the Certificate Interest Carryover Shortfall for such
Payment Date.
"Certificate Monthly Interest Distributable Amount" means, with respect
to any Payment Date, interest accrued for the related Interest Accrual Period at
the Certificate Rate on the Certificate Balance on the immediately preceding
Payment Date after giving effect to all payments of principal to
Certificateholders on or prior to such Payment Date (or, in the case of the
first Payment Date, on the Original Certificate Balance).
"Certificate Monthly Principal Distributable Amount" means, with
respect to any Payment Date, the Certificate Percentage of the Principal
Distributable Amount for such Payment Date.
"Certificate Percentage" means (i) for each Payment Date until the
principal amount of the Class A-1 Notes has been paid in full, [__]%; (ii) after
the principal amount of the Class A-1 Notes has been paid in full, for each
Payment Date to and including the Payment Date on which the principal amount of
the Class A-4 Notes has been paid in full, the percent equivalent of a fraction,
the numerator of which is the initial principal amount of the Certificates and
the denominator of which is the sum of the initial aggregate principal amount of
the Class A-2, Class A-3 and Class A-4 Notes and the initial principal amount of
the Certificates; and (iii) for each Payment Date after the Payment Date on
which the principal amount of the Class A-4 Notes has been paid in full, [__]%;
notwithstanding the foregoing, for each Payment Date after the
4
acceleration of the Notes following an Event of Default, the Certificate
Percentage shall be [__]% until the Notes have been paid in full.
"Certificate Pool Factor" means, with respect to the Certificates on
any Payment Date, a seven-digit decimal figure equal to the outstanding
principal balance of the Certificates on such Payment Date (after giving effect
to any reductions thereof to be made on such Payment Date) divided by the
Original Certificate Balance.
"Certificate Principal Carryover Shortfall" means, with respect to any
Payment Date, the excess, if any, of (x) the sum of (i) the Certificate Monthly
Principal Distributable Amount and (ii) any outstanding Certificate Principal
Carryover Shortfall for the preceding Payment Date, over (y) the amount in
respect of principal that is actually paid as principal on the Certificates on
such Payment Date.
"Certificate Principal Distributable Amount" means, with respect to any
Payment Date, the sum of the Certificate Monthly Principal Distributable Amount
for each Payment Date and any outstanding Certificate Principal Carryover
Shortfall as of the close of the immediately preceding Payment Date; provided,
however, that the Certificate Principal Distributable Amount shall not exceed
the Certificate Balance. In addition, on the Payment Date as of which all of the
Receivables are to be purchased pursuant to Section 8.01, the principal required
to be deposited into the Certificate Distribution Account will include the
amount necessary to reduce the Certificate Balance to zero.
"Certificate Rate" means [___]% per annum (computed on the basis of a
360 day year consisting of twelve 30-day months).
"Certificateholders" has the meaning specified in the Trust Agreement.
"Charge-off Rate" with respect to a Collection Period will equal the
Aggregate Net Losses with respect to the Receivables expressed, on an annualized
basis, as a percentage of the average of the (i) Pool Balance on the last day of
the immediately preceding Collection Period and (ii) Pool Balance on the last
day of such current Collection Period.
"Class" means all Securities whose form is identical except for
variation in denomination, principal amount or owner (i.e., each of Class A-1,
Class A-2, Class A-3 and Class A-4).
"Class A-1 Final Payment Date" means the [____ __, ___] Payment Date.
"Class A-1 Noteholder" means a Person in whose name a Class A-1 Note is
Registered the Note Register.
"Class A-2 Final Payment Date" means the [_________] Payment Date.
"Class A-2 Noteholder" means a Person in whose name a Class A-2 Note is
registered in the Note Register.
"Class A-3 Final Payment Date" means the [_________] Payment Date.
5
"Class A-3 Noteholder" means a Person in whose name a Class A-3 Note is
registered in the Note Register.
"Class A-4 Final Payment Date" means the [__________] Payment Date.
"Class A-4 Noteholder" means the Person in whose name a Class A-4 Note
is registered in the Note Register.
"Closing Date" means [____ __, ____].
"Collection Account" means the account designated as such, and
established and maintained pursuant to Section 4.01.
"Collection Period" means each calendar month during the term of this
Agreement (or, in the case of the first Collection Period, the period of time
since the Cutoff Date through the last day of the calendar month immediately
preceding the month in which the first Payment Date occurs).
"Commission" means the Securities and Exchange Commission, and its
successors.
"Control" shall have the meaning specified in Section 8-106 of the UCC.
"Control Agreement" means the control agreement, dated as of [____ __,
____], among AHRC, the Issuer, the Servicer, the Indenture Trustee and
[____________], as securities intermediary, as amended or supplemented from time
to time.
"Corporate Trust Office" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Agreement is
located at [ ], Attention: Structured Finance Group: Honda Auto Receivables
[___-__] Owner Trust, or at such other address as the Indenture Trustee may
designate from time to time by notice to the Noteholders and the Seller, or the
principal corporate trust office of any successor Indenture Trustee (of which
address such successor Indenture Trustee will notify the Noteholders and the
Seller).
"Current Receivable" means each Receivable that is not a Defaulted
Receivable or a Liquidated Receivable.
"Cutoff Date" means [____ __, ____].
"Dealer" means the dealer of motor vehicles who sold a Financed Vehicle
and who originated and assigned the Receivable relating to such Financed Vehicle
to AHFC under an existing agreement between such dealer and AHFC.
"Dealer Recourse" means, with respect to a Receivable, all recourse
rights against the Dealer which originated the Receivable, and any successor to
such Dealer.
"Defaulted Receivable" means a Receivable (other than an Administrative
Receivable or a Warranty Receivable as to which a Warranty Purchase Payment or
an Administrative Purchase
6
Payment has been made) as to which (i) all or any part of a Scheduled Payment is
120 or more days past due and the Servicer has not repossessed the related
Financed Vehicle or (ii) the Servicer has, in accordance with its customary
servicing procedures, determined that eventual payment in full is unlikely and
either repossessed and liquidated the related Financed Vehicle or repossessed
and held the related Financed Vehicle in its repossession inventory for 90 days,
whichever occurs first.
"Deferred Prepayment" means, with respect to a Receivable and a
Collection Period, the aggregate amount, if any, of Payments Ahead remitted to
the Servicer in respect of such Receivable during one or more prior Collection
Periods and currently held by the Servicer or in the Payahead Account.
"Delinquency Percentage" means, with respect to a Collection Period,
the percentage equivalent of a fraction, the numerator of which is the number of
(i) Receivables 61 days or more delinquent (after taking into account permitted
extensions) as of the last day of such Collection Period, determined in
accordance with the Servicer's normal practices, plus (ii) Receivables the
related Financed Vehicles of which have been repossessed but have not been
liquidated (to the extent the related Receivable is not otherwise reflected in
clause (i) above or is not a Defaulted Receivable), and the denominator of which
is the aggregate number of Current Receivables on the last day of such
Collection Period.
"Deposit Date" means, with respect to any Collection Period and Payment
Date, the Business Day immediately preceding such Payment Date.
"Depositor" means the Seller in its capacity as Depositor under the
Trust Agreement.
"Determination Date" means, with respect to any Payment Date, the
sixteenth calendar day of the month in which such Payment Date occurs or, if
such day is not a Business Day, the immediately succeeding Business Day.
"Discount Receivable" means any Receivable that has an APR which is
less than the Required Rate.
"Eligible Account" means either (A) a segregated deposit account over
which the applicable Trustee has sole signature authority, maintained with an
Eligible Institution meeting the requirements of clause (i) thereof or (B) a
segregated trust account maintained with an Eligible Institution meeting the
requirements of clause (ii) thereof, in each case bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Securityholders, the Noteholders or the Certificateholders, as the case may be.
"Eligible Institution" means a depository institution or trust company,
(i) the commercial paper or other short-term unsecured debt obligations of which
have the Required Deposit Rating or (ii) having corporate trust powers and
organized under the laws of the United States, any state thereof, the District
of Columbia or the Commonwealth of Puerto Rico which has a long-term deposit
rating from (A) Moody's of at least Baa3 or (B) Standard and Poor's of at least
BBB- (or such lower rating as either Rating Agency shall approve in writing).
7
"Eligible Investments" means, at any time, any one or more of the
following obligations and securities:
(i) obligations of, and obligations fully guaranteed as to timely
payment of principal and interest by, the United States or any agency
thereof, provided such obligations are backed by the full faith and
credit of the United States;
(ii) general obligations of or obligations guaranteed by FNMA,
any state of the United States, the District of Columbia or the
Commonwealth of Puerto Rico then rated the highest available credit
rating of each Rating Agency for such obligations;
(iii) securities bearing interest or sold at a discount issued by
any corporation incorporated under the laws of the United States or
any state thereof, the District of Columbia or the Commonwealth of
Puerto Rico, so long as at the time of such investment or contractual
commitment providing for such investment either the long-term
unsecured debt of such corporation has the highest available credit
rating from each Rating Agency for such obligations or the commercial
paper or other short-term debt which is then rated has the highest
available credit rating of each Rating Agency for such obligations;
(iv) certificates of deposit issued by any depository institution
or trust company (including the Trustee) incorporated under the laws
of the United States or any state thereof, the District of Columbia or
the Commonwealth of Puerto Rico and subject to supervision and
examination by banking authorities of one or more of such
jurisdictions, provided that the short-term unsecured debt obligations
of such depository institution or trust company has the highest
available credit rating of each Rating Agency for such obligations;
(v) certificates of deposit issued by any bank, trust company,
savings bank or other savings institution and fully insured by the
FDIC;
(vi) repurchase obligations held by the Trustee that are
acceptable to the Trustee with respect to any security described in
clauses (i) or (ii) hereof or any other security issued or guaranteed
by any other agency or instrumentality of the United States, in either
case entered into with a federal agency or a depository institution or
trust company (acting as principal) described in clause (iv) above;
(vii) any mutual fund, money market fund, common trust fund or
other pooled investment vehicle having a rating, at the time of such
investment, of no less than Aaa or its equivalent by Moody's, AAA or
its equivalent by Standard & Poor's and AAA or its equivalent by
Fitch, if rated by Fitch (including, but not limited to funds of which
[____________] or an affiliate thereof is the manager or financial
advisor);
(viii) such other investments acceptable to each Rating Agency in
writing as will not result in the qualification, downgrading or
withdrawal of the rating then assigned to any Rated Securities by such
Rating Agency;
provided that each of the foregoing investments shall mature no later than the
Deposit Date immediately following the date of purchase (other than in the case
of the investment of monies in
8
instruments of which the entity at which the related Account or the Certificate
Distribution Account, as the case may be, is located is the obligor, which may
mature on the related Payment Date), and shall be required to be held to such
maturity.
Notwithstanding anything to the contrary contained in this definition,
(a) no Eligible Investment may be purchased at a premium, and (b) no obligation
or security is an "Eligible Investment" unless (i) the Trustee has Control over
such obligation or security and (ii) at the time such obligation or security was
delivered to the Trustee or the Trustee became the related Entitlement Holder,
the Trustee did not have notice of any adverse claim with respect thereto within
the meaning of Section 8-105 of the UCC.
For purposes of this definition, any reference to the highest available
credit rating of an obligation shall mean the highest available credit rating
for such obligation, or such lower credit rating (as approved in writing by each
Rating Agency) as will not result in the qualification, downgrading or
withdrawal of the rating then assigned to any Rated Securities by such Rating
Agency.
"Entitlement Holder" shall have the meaning specified in Section 8-102
of the UCC.
"Entitlement Order" shall have the meaning specified in Section 8-102
of the UCC.
"Excess Payment" means, with respect to a Receivable and a Collection
Period, the amount, if any, by which the Actual Payment exceeds the sum of (i)
the Scheduled Payment and (ii) any Overdue Payment.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"FHLMC" means the Federal Home Loan Mortgage Corporation, and its
successors.
"FNMA" means the Federal National Mortgage Association, and its
successors.
"Final Payment Dates" means, collectively, the Class A-1 Final Payment
Date, the Class A-2 Final Payment Date, the Class A-3 Final Payment Date and the
Class A-4 Final Payment Date.
"Final Scheduled Maturity Date" means [_____ __, ___].
"Financed Vehicle" means, with respect to any retail installment sale
or conditional sale contract, the related new or used Honda or Acura motor
vehicle, together with all accessions thereto, securing the related Obligor's
indebtedness under such retail installment sale or conditional sale contract.
"Financial Asset" shall have the meaning specified in Section
8-102(a)(9) of the UCC.
"Fitch" means Fitch Inc., or its successors.
9
"Indenture" means the indenture, dated as of [____ __, ____] between
the Issuer and the Indenture Trustee.
"Indenture Trustee" means the Person acting as Indenture Trustee under
the Indenture, its successors in interest and any successor trustee under the
Indenture.
"Independent Director" means a director of the Seller who is not (i) a
director, officer or employee of any Affiliate of the Seller, (ii) a natural
person related to any director or officer of any Affiliate of the Seller, (iii)
a holder (directly or indirectly) of more than [___]% of any voting securities
of any Affiliate of the Seller or (iv) a natural person related to a holder
(directly or indirectly) of more than [___]% of any voting securities of any
Affiliate of the Seller.
"Insolvency Event" means, with respect to a specified Person, (i) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or ordering the
winding-up or liquidation of such Person's affairs, and such decree or order
shall remain unstayed and in effect for a period of 90 consecutive days; or (ii)
the commencement by such Person of a voluntary case under any applicable federal
or state bankruptcy, insolvency or other similar law now or hereafter in effect,
or the consent by such Person to the entry of an order for relief in an
involuntary case under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.
"Insurance Policy" means, with respect to a Receivable, an insurance
policy covering physical damage, credit life, credit disability, theft,
mechanical breakdown or any similar event relating to the related Financed
Vehicle or Obligor.
"Letter of Credit Bank" means any Person who has provided a Servicer
Letter of Credit pursuant to Section 4.02(b).
"Lien" means any security interest, lien, charge, pledge, equity or
encumbrance of any kind other than tax liens, mechanics' liens and any liens
that attach to a Receivable or any property, as the context may require, by
operation of law.
"Liquidated Receivable" means a Receivable that (i) has been the
subject of a Prepayment in full, (ii) has otherwise been paid in full or (iii)
the Servicer has determined that the final amounts in respect of such payment
have been paid with respect to a Defaulted Receivable, regardless of whether all
or any part of such payment has been made by the Obligor under such Receivable,
the Seller pursuant to this Agreement, AHFC pursuant to the Receivables Purchase
Agreement, the Servicer pursuant hereto, an insurer pursuant to an Insurance
Policy or otherwise.
10
"Liquidation Expenses" means, with respect to a Defaulted Receivable,
the amount charged by the Servicer, in accordance with its customary servicing
procedures, to or for its account for repossessing, refurbishing and disposing
of the related Financed Vehicle and other out-of-pocket costs related to such
liquidation.
"Liquidation Proceeds" means, with respect to a Defaulted Receivable,
all amounts realized with respect to such Receivable from whatever sources
(including, without limitation, proceeds of any Insurance Policy), net of
amounts that are required by law or such Receivable to be refunded to the
related Obligor.
"Maximum Yield Supplement Amount" means with respect to any Collection
Period and the related Deposit Date, after giving effect to the Yield Supplement
Amount, the maximum amount required to be on deposit in the Yield Supplement
Account on the immediately succeeding Payment Date, which is equal to the
present value (using an interest rate of: [___]% of the sum of all Yield
Supplement Amounts for all future Payment Dates, assuming that future Scheduled
Payments on the Discount Receivables are made on the date on which they are
scheduled as being due.
"Monthly Payment" means, with respect to any Receivable, the amount of
each fixed monthly payment payable to the obligee under such Receivable in
accordance with the terms thereof, net of any portion of such monthly payment
that represents late payment charges, extension fees or collections allocable to
payments to be made by Obligors for payment of insurance premiums, extended
service contracts or similar items.
"Moody's" means Xxxxx'x Investors Service, Inc., or its successors.
"Motor Vehicle Receivables" shall have the meaning specified in Section
5.03(b)(ii)(A).
"Net Liquidation Proceeds" means, with respect to a Defaulted
Receivable, Liquidation Proceeds less Liquidation Expenses.
"Nonrecoverable Advance" shall have the meaning specified in Section
4.04(c).
"Note Amount" means, with respect to any Payment Date, the aggregate
outstanding principal amount of the Notes after giving effect to payments of
principal made on the Notes on such Payment Date.
"Note Distributable Amount" means, with respect to any Payment Date,
the sum of the Note Interest Distributable Amount and the Note Principal
Distributable Amount for such Payment Date.
"Note Distribution Account" means the account designated as such, and
established and maintained pursuant to Section 4.01.
"Note Interest Carryover Shortfall" means, with respect to any Payment
Date and a Class of Notes, the excess, if any, of (x) the sum of (i) the Note
Monthly Interest Distributable Amount for such Class for the preceding Payment
Date and (ii) any outstanding Note Interest Carryover Shortfall for such Class
on such preceding Payment Date, over (y) the amount of interest that is
11
actually paid on the Notes on such preceding Payment Date, plus, to the extent
permitted by law, interest on the Note Interest Carryover Shortfall at the
related Interest Rate for the related Interest Accrual Period.
"Note Interest Distributable Amount" means, with respect to any Payment
Date and a Class of Notes, the sum of the Note Monthly Interest Distributable
Amount for such Payment Date and the Note Interest Carryover Shortfall for such
Class of Notes. For all purposes of this Agreement and the other Basic
Documents, interest with respect to the Class A-2, Class A-3 and Class A-4 Notes
shall be computed on the basis of a 360-day year consisting of twelve 30-day
months; and interest with respect to the Class A-1 Notes shall be computed on
the basis of the actual number of days in each applicable Interest Accrual
Period, divided by 360.
"Note Monthly Interest Distributable Amount" means, with respect to any
Payment Date, interest accrued for the related Interest Accrual Period at the
related Interest Rate for each Class of Notes on the Outstanding Amount of the
Notes of each such Class on the immediately preceding Payment Date (or, in the
case of the first Payment Date, the original principal amount of each such Class
of Notes), after giving effect to all distributions of principal to the
Noteholders of each such Class on or prior to such Payment Date.
"Note Monthly Principal Distributable Amount" means, with respect to
any Payment Date, the Note Percentage of the Principal Distributable Amount for
such Payment Date.
"Note Percentage" means (i) for each Payment Date until the principal
amount of the Class A-1 Notes has been paid in full, [___]% (ii) for each
Payment Date on or after the principal amount of the Class A-1 Notes has been
paid in full to and including the Payment Date on which the principal amount of
the Class A-4 Notes has been paid in full, the percent equivalent of a fraction,
the numerator of which is the initial aggregate principal amount of the Class
A-2, Class A-3 and Class A-4 Notes and the denominator of which is the sum of
the initial aggregate principal amount of the Class A-2, Class A-3 and Class A-4
Notes and the initial principal amount of the Certificates; and (iii) for each
Payment Date after the Payment Date on which the principal amount of the Class
A-4 Notes has been paid in full, [___]%; notwithstanding the foregoing, for each
Payment Date after the acceleration of the Notes following an Event of Default,
the Note Percentage shall be [___]% until the Notes have been paid in full.
"Note Pool Factor" means, with respect to each Class of Notes as of any
Payment Date, a seven-digit decimal figure equal to the Outstanding Amount of
such Class of Notes as of such Payment Date (after giving effect to any
reductions thereof to be made on such Payment Date) divided by the original
outstanding principal balance of such Class of Notes.
"Note Principal Carryover Shortfall" means, with respect to any Payment
Date, the excess, if any, of the sum of the Note Monthly Principal Distributable
Amount plus any outstanding Note Principal Carryover Shortfall for the preceding
Payment Date, over the amount in respect of principal that is actually paid as
principal on the Notes on such Payment Date.
"Note Principal Distributable Amount" means, with respect to any
Payment Date, the sum of (i) the Note Monthly Principal Distributable Amount,
(ii) any outstanding Note Principal Carryover Shortfall as of the close of the
immediately preceding Payment Date and, (iii) on the
12
Final Payment Date for a Class of Notes or the Payment Date as of which all of
the Receivables are to be purchased pursuant to Section 8.01, the amount
necessary (after giving effect to all amounts allocable to principal required to
be deposited in the Note Distribution Account on such Payment Date) to reduce
the Outstanding Amount of each related Class of Notes to zero; provided,
however, that the Note Principal Distributable Amount with respect to a Class of
Notes shall not exceed the Outstanding Amount of such Class of Notes.
"Notes" means the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes and the Class A-4 Notes.
"Obligor" on a Receivable means the purchaser or co-purchasers of the
related Financed Vehicle purchased in part or in whole by the execution and
delivery of a retail installment contract or any other Person who owes or may be
liable for payments under such retail installment contract.
"Offered Securities" shall have the meaning specified in Section
5.03(b)(ii)(B).
"Officers' Certificate" means a certificate signed by the president,
any Vice President, the treasurer or the secretary of the Seller or the
Servicer, as the case may be, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel (who, in the
case of counsel to the Seller or the Servicer, may be an employee of or outside
counsel to the Seller or the Servicer), which counsel shall be acceptable to the
Trustee.
"Original Certificate Balance" means $[____________].
"Original Pool Balance" means $[____________].
"Outstanding Advances" means, with respect to a Receivable and the last
day of a Collection Period, the sum of all Advances made as of or prior to such
date, minus (1) all payments or collections as of or prior to such date which
are specified in Section 4.04(b) and (c) as applied to reimburse all unpaid
Advances with respect to such Receivable and (2) all amounts for which the
Servicer has deemed to have released all claims for reimbursement of Outstanding
Advances pursuant to Section 3.08.
"Outstanding Amount" means the aggregate principal amount of all Notes,
or if indicated by the context, all Notes of any class, outstanding at the date
of the determination.
"Outstanding Interest Advances" means, as of the last day of a
Collection Period with respect to a Receivable, the portion of Outstanding
Advances allocable to interest.
"Outstanding Principal Advances" means, as of the last day of a
Collection Period with respect to a Receivable, the portion of Outstanding
Advances allocable to principal.
"Overdue Payment" shall have the meaning specified in Section 4.03(a).
"Owner Trust Estate" shall have the meaning specified in the Trust
Agreement.
13
"Owner Trustee" means the Person acting as Owner Trustee under the
Trust Agreement, its successors in interest and any successor owner trustee
under the Trust Agreement.
"Payahead Account" means the account designated as such and established
and maintained pursuant to Section 4.01.
"Payment Ahead" means, with respect to a Precomputed Receivable and a
Collection Period, any Excess Payment (not representing, when added to any
Deferred Prepayment with respect to such Precomputed Receivable, a prepayment in
full of such Precomputed Receivable) which the Servicer, in accordance with its
customary servicing practices, will apply towards the payment of Scheduled
Payments due in one or more future Collection Periods.
"Payment Date" means, with respect to a Collection Period, the
twenty-first calendar day of the next succeeding calendar month or, if such day
is not a Business Day, the next succeeding Business Day, commencing
[____ ____].
"Percentage Interests" shall have the meaning specified in the Trust
Agreement.
"Person" means any legal person, including any individual, corporation,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Pool Balance" means, as of any date, the aggregate Principal Balance
of the Receivables (exclusive of all Administrative Receivables for which the
Servicer has paid the Administrative Purchase Payment, Warranty Receivables for
which the Seller has paid the Warranty Purchase Payment and Defaulted
Receivables) as of the close of business on such date.
"Precomputed Advance" shall have the meaning specified in Section
4.04(a).
"Precomputed Receivable" means any Actuarial Receivable or Rule of 78s
Receivable.
"Prepayment" means any Excess Payment with respect to a Receivable
other than a Payment Ahead.
"Principal Balance" means, with respect to any Receivable as of any
date, the Amount Financed minus the sum of the following amounts: (i) in the
case of a Precomputed Receivable, that portion of all Scheduled Payments due on
or prior to such date allocable to principal, computed in accordance with the
actuarial method, (ii) in the case of a Simple Interest Receivable, that portion
of all Scheduled Payments actually received on or prior to such date allocable
to principal, computed in accordance with the simple interest method, (iii) any
Warranty Purchase Payment or Administrative Purchase Payment with respect to
such Receivable allocable to principal and (iv) any Prepayments or other
payments applied to reduce the unpaid principal balance of such Receivable.
"Principal Distributable Amount" means, with respect to any Payment
Date, the sum of the following amounts (i) in the case of (a) Precomputed
Receivables, the principal portion of all Scheduled Payments due during the
related Collection Period, computed in accordance with the actuarial method and
(b) Simple Interest Receivables, the principal portion of all Scheduled
14
Payments actually received during the related Collection Period, computed in
accordance with the simple interest method, (ii) the principal portion of all
Prepayments, received during such Collection Period (to the extent such amounts
are not included in clause (i) above), (iii) the Principal Balance of each
Receivable that became an Administrative Receivable or a Warranty Receivable
during such Collection Period (to the extent such amounts are not included in
clauses (i) or (ii) above) and (iv) the Principal Balance of each Receivable
that became a Defaulted Receivable during such Collection Period (to the extent
such amounts are not included in clauses (i), (ii) or (iii) above).
"Rated Securities" means each Class of Securities that has been rated
by a Rating at the request of the Seller.
"Rating Agency" means Fitch, Moody's and Standard & Poor's.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given ten days' (or such shorter period as shall
be acceptable to each Rating Agency) prior notice thereof and that each Rating
Agency shall have notified the Seller, the Servicer and the Trustees in writing
that such action will not result in a reduction or withdrawal of the then
current rating of the Rated Securities.
"Rebate" means, with respect to a Precomputed Receivable and any date,
the rebate, calculated in accordance with the actuarial method, under such
Receivable that is or would be payable to the related Obligor for unearned
finance charges or any other charges rebatable to the Obligor if such Obligor
were to prepay such Receivable in full on such date.
"Receivable" means any retail installment sale contract executed by an
Obligor in respect of a Financed Vehicle, and all proceeds thereof and payments
thereunder, which Receivables shall be identified in a Schedule of Receivables.
"Receivable Files" means the documents specified in Section 2.02.
"Receivables Purchase Agreement" means the receivables purchase
agreement, dated as of [____ __, ____], between AHFC and the Seller, as amended
or supplemented from time to time.
"Released Administrative Amount" means, with respect to a Payment Date
and to an Administrative Receivable, the Deferred Prepayment, if any, for such
Administrative Receivable.
"Released Warranty Amount" means, with respect to a Payment Date and to
a Warranty Receivable, the Deferred Prepayment, if any, for such Warranty
Receivable.
"Required Rate" means the sum of (a) the percent equivalent of a
fraction, the numerator of which is the sum for each Class of Notes of the
product of (1) the Interest Rate for such Class of Notes, (2) the original
principal balance of such Class of Notes and (3) the expected weighted average
life for such Class of Notes at the prepayment speed of [___]% under the
Absolute Prepayment Model and the denominator of which is the sum for each such
Class of Notes of the product of (1) the original principal balance of such
Class of Notes and (2) the expected
15
weighted average life for such Class of Notes at the prepayment speed of [___]%
under the Absolute Prepayment Model and (b) the Servicing Fee Rate.
"Required Deposit Rating" means the short-term credit rating of the
related entity is at least equal to P-1 by Moody's, A-1+ by Standard & Poor's
and F1 by Fitch.
"Required Servicer Rating" means, with respect to the Servicer, that
the then short-term unsecured debt obligations of the Servicer are rated at
least equal to P-1 by Moody's, and A-1 by Standard & Poor's.
"Reserve Fund" means the account designated as such, and established
and maintained pursuant to Section 4.01.
"Reserve Fund Initial Deposit" means the initial deposit of cash in the
amount of $[____________] made by or on behalf of the Seller into the Reserve
Fund on the Closing Date.
"Reserve Fund Property" means, the Reserve Fund Initial Deposit and all
proceeds thereof and all other amounts deposited in or credited to the Reserve
Fund from time to time under this Agreement, all Eligible Investments made with
amounts on deposit therein, all earnings and distributions thereon and proceeds
thereof.
"Responsible Officer" means, in the case of the Indenture Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee, including
any Managing Director, Vice President, assistant Vice President, assistant
secretary or any other officer of the Indenture Trustee customarily performing
functions similar to those performed by any of the above designated officers, in
each case having direct responsibility for the administration of the Indenture
and, with respect to the Owner Trustee, any officer in the Corporate Trust
Administration Department of the Owner Trustee with direct responsibility for
the administration of the Trust Agreement and the Basic Documents on behalf of
the Owner Trustee.
"retail installment contracts" means retail installment sale and
conditional sale contracts.
"Rule of 78s Receivable" means any Receivable which provides for the
allocation of payments according to the "sum of periodic balances" or "sum of
monthly payments" method.
"Schedule of Receivables" means the schedule of Receivables attached as
Schedule A to this Agreement, as it may be amended from time to time.
"Scheduled Payment" means, with respect to any Payment Date and to a
Receivable, the payment set forth in such Receivable as due from the Obligor in
the related Collection Period; provided, however, that in the case of the first
Collection Period, the Scheduled Payment shall include all such payments due
from the Obligor on or after the Cutoff Date.
"Securities" means the Notes and the Trust Certificates.
"Security Entitlement" shall have the meaning specified in Section
8-102(a)(17) of the UCC.
16
"Securityholders" means the Noteholders and the Certificateholders.
"Seller" means AHRC, in its capacity as Seller of the Receivables under
this Agreement, and each successor thereto (in the same capacity) pursuant to
Section 5.03.
"Servicer" means AHFC, in its capacity as servicer of the Receivables
pursuant to this Agreement, and each successor thereto (in the same capacity)
pursuant to Section 6.03.
"Servicer Default" shall have the meaning specified in Section 7.01.
"Servicer Letter of Credit" means, if the Servicer desires to remit
collections on or in respect of the Receivables to the Collection Account on a
monthly basis upon satisfaction of the conditions described in Section
4.02(b)(ii), (i) an irrevocable letter of credit, issued by a Letter of Credit
Bank and naming the Indenture Trustee a beneficiary or (ii) a surety bond,
insurance policy or deposit of cash or securities, which is satisfactory to each
Rating Agency.
"Servicer's Certificate" means an Officers' Certificate of the Servicer
delivered pursuant to Section 3.10, substantially in the form of Exhibit B.
"Servicing Fee Rate" means [___]% per annum.
"Simple Interest Advance" shall have the meaning specified in Section
4.04(a).
"Simple Interest Receivable" means any Receivable which provides for
the allocation of payments according to the "simple interest" method.
"Specified Reserve Fund Balance" means, on the Closing Date
$[____________], and with respect to any Payment Date [___]% of the initial
aggregate principal balance of the Receivables as of the Cutoff Date; except
that, if on any Payment Date (i) the average of the Charge-off Rates for the
three preceding Collection Periods exceeds [___]% or (ii) the average of the
Delinquency Percentages for the three preceding Collection Periods exceeds
[___]%, then the Specified Reserve Fund Balance will be an amount equal to a
specified percentage of the Pool Balance as of the last day of the immediately
preceding Collection Period. Such percentage shall be determined by deducting
from [___]% the following fraction, expressed as a percentage: (a) one minus (b)
a fraction, the numerator of which is the outstanding principal amount of the
Notes with respect to such Payment Date and the denominator of which is such
Pool Balance. Notwithstanding the foregoing, in no event will the Specified
Reserve Fund Balance be more than the outstanding principal amount of the Notes.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of The XxXxxx-Xxxx Companies, Inc., or its successors.
"Successor Servicer" means any entity appointed as a successor to the
Servicer pursuant to Section 7.02.
"Supplemental Servicing Fee" means any interest earned on investment of
the monies on deposit in the Accounts (other than the Yield Supplement Account
and the Reserve Fund) during a Collection Period, net of any investment expenses
and losses from such investments, plus all
17
late fees, prepayment charges and other administrative fees and expenses or
similar charges allowed by applicable law with respect to the Receivables,
including, in the case of a Rule of 78s Receivable and that is prepaid in full,
the difference between the Principal Balance of a Rule of 78s Receivable, minus
the Principal Balance of such Receivable computed according to the actuarial
method (plus accrued interest to the date of prepayment), received by the
Servicer during such Collection Period.
"Total Servicing Fee" means the sum of the Basic Servicing Fee and the
Supplemental Servicing Fee.
"Trust" means the Issuer.
"Trust Agreement" means the trust agreement, dated as of [____ __,
____], as amended and restated, on [____ __, ____], between the Depositor and
the Owner Trustee.
"Trust Fees and Expenses" means all accrued and unpaid Trustees' fees,
any amounts due to the Trustees for reimbursement of expenses or in respect of
indemnification and other administrative fees of the Trust.
"Trustee" means either the Owner Trustee or the Indenture Trustee, as
the context requires.
"Trustees" means the Owner Trustee and the Indenture Trustee.
"UCC" means the Uniform Commercial Code as in effect in the respective
jurisdiction.
"United States" means the United States of America.
"Vice President" of any Person means any vice president of such Person,
whether or not designated by a number or words before or after the title "Vice
President", who is a duly elected officer of such Person.
"Warranty Purchase Payment" means, with respect to a Payment Date and
to a Warranty Receivable repurchased by the Seller as of the end of the related
Collection Period, which Receivable is (i) a Precomputed Receivable, (a) the sum
of (1) all Scheduled Payments on such Receivable due after the last day of such
Collection Period, (2) all past due Scheduled Payments for which an Advance has
not been made, (3) all Outstanding Advances made in respect of such Receivable
and (4) an amount equal to any reimbursement of Outstanding Advances made
pursuant to the first sentence of Section 4.04(c) with respect to such
Receivable minus (b) the sum of (1) all Payments Ahead in respect of such
Warranty Receivable held by the Servicer or on deposit in the Payahead Account,
(2) any Rebate and (3) any proceeds of the liquidation of such Receivable
previously received (to the extent applied to reduce the Principal Balance of
such Receivable) or (ii) a Simple Interest Receivable, the sum of (a) the unpaid
principal balance owed by the related Obligor in respect of such Receivable and
(b) interest on such unpaid principal balance at a rate equal to the APR of the
related Receivable from the date of last payment by such Obligor to the last day
of such Collection Period.
18
"Warranty Receivable" means a Receivable which the Seller is required
to repurchase pursuant to Section 2.04.
"Yield Supplement Account" means the account designated as such, and
established and maintained pursuant to Section 4.01.
"Yield Supplement Account Deposit" means the initial deposit of cash in
the amount of $[____________] made by or on behalf of the Seller into the Yield
Supplement Account on the Closing Date.
"Yield Supplement Amount" means, with respect to any Collection Period
and the related Deposit Date, the aggregate amount by which one month's interest
on the Principal Balance as of the first day of such Collection Period of each
Discount Receivable (other than a Discount Receivable that is a Defaulted
Receivable) at a rate equal to the Required Rate, exceeds one month's interest
on such Principal Balance at the APR of each such Receivable.
"Yield Supplement Withdrawal Amount" means, with respect to any
Collection Period and the related Deposit Date, the lesser of (a) the amount on
deposit in the Yield Supplement Account and (b) the sum of (i) the Yield
Supplement Amount and (ii) after giving effect to the withdrawal of the Yield
Supplement Amount, the amount by which the amount on deposit in the Yield
Supplement Account exceeds the Maximum Yield Supplement Amount.
Section 1.02. Other Definitional Provisions.
(a) Capitalized terms used herein that are not otherwise defined herein
shall have the meanings ascribed thereto in the Indenture.
(b) All terms defined in this Agreement shall have the defined meanings
when used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.
Section 1.03. Interpretive Provisions.
(a) For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires, (i) terms used herein
include, as appropriate, all genders and the plural as well as the singular,
(ii) references to words such as "herein", "hereof" and the like shall refer to
this Agreement as a whole and not to any particular part, article or section
within this Agreement, (iii) references to a section such as "Section 1.01" and
the like shall refer to the applicable section of this Agreement, (iv) the term
"include" and all variations thereof shall mean "include without limitation",
(v) the term "or" shall include "and/or", and (vi) the term "proceeds" shall
have the meaning set forth in the applicable UCC.
(b) As used in this Agreement and in any certificate or other document
made or delivered pursuant hereto or thereto, accounting terms not defined in
this Agreement or in any such certificate or other document, and accounting
terms partly defined in this Agreement or in any such certificate or other
document to the extent not defined, shall have the respective meanings given to
them under generally accepted accounting principles. To the extent that the
definitions of accounting terms in this Agreement or in any such certificate or
other document
19
are inconsistent with the meanings of such terms under generally accepted
accounting principles, the definitions contained in this Agreement or in any
such certificate or other document shall control.
ARTICLE TWO
CONVEYANCE OF RECEIVABLES; CUSTODY OF RECEIVABLES FILES
Section 2.01. Conveyance of Receivables.
(a) In consideration of the Issuer's delivery to or upon the order of
the Seller of the Certificates and the net proceeds of the sale of the Notes,
less an amount equal to the Reserve Fund Initial Deposit to be deposited to the
Reserve Fund and the Yield Supplement Account Deposit to be deposited to the
Yield Supplement Account, each on the Closing Date, the Seller does hereby sell,
transfer, assign, set over and otherwise convey to the Issuer, without recourse
(subject to the obligations of the Seller set forth herein), all right, title
and interest of the Seller in, to and under:
(i) the Receivables and all monies due thereon or paid thereunder
or in respect thereof (including proceeds of the repurchase of
Receivables by the Seller pursuant to Section 2.04 or the purchase of
Receivables by the Servicer pursuant to Section 3.08 or 8.01) on or
after the Cutoff Date;
(ii) the security interests in the Financed Vehicles;
(iii) any proceeds of any physical damage insurance policies
covering the Financed Vehicles and in any proceeds of any credit life
or credit disability insurance policies relating to the Receivables or
the Obligors;
(iv) any proceeds of Dealer Recourse;
(v) the Receivables Purchase Agreement, but not the obligations
of the Seller thereunder;
(vi) the right to realize upon any property (including the right
to receive future Liquidation Proceeds) that shall have secured a
Receivable and have been repossessed by or on behalf of the Issuer;
(vii) all funds on deposit from time to time in the Accounts,
including the Reserve Fund Initial Deposit and the Yield Supplement
Account Deposit, and in all investment income and proceeds thereof;
(viii) any Servicer Letter of Credit; and
(ix) the proceeds of any and all of the foregoing.
The Seller hereby confirms to the Issuer that, as of the Closing Date, the
Seller shall have caused the portions of all related electronic records relating
to the Receivables to be clearly and
20
unambiguously marked, and shall have made the appropriate entries in its general
accounting records, to indicate that such Receivables have been transferred and
sold to the Issuer.
(b) The parties hereto intend that the conveyance hereunder be a sale.
In the event that the conveyance hereunder is not for any reason considered a
sale, the Seller hereby grants to the Issuer a first priority perfected security
interest in all of its right, title and interest in, to and under the
Receivables, and all other property conveyed hereunder and all proceeds of any
of the foregoing. The parties hereto intend that this Agreement constitute a
security agreement under applicable law. Such grant is made to secure the
payment of all amounts payable hereunder.
Section 2.02. Custody of Receivable Files. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Issuer hereby
revocably appoints the Servicer, and the Servicer accepts such appointment, to
act for the benefit of the Issuer and the Indenture Trustee as custodian of the
following documents or instruments which are hereby constructively delivered to
the Indenture Trustee, as pledgee of the Issuer, as of the Closing Date with
respect to each Receivable:
(a) the fully executed original of the Receivable;
(b) documents evidencing or related to any Insurance Policy;
(c) the original credit application of each Obligor, fully
executed by such Obligor on AHFC's customary form, or on a form
approved by AHFC for such application;
(d) the original certificate of title (or evidence that such
certificate of title has been applied for) or such documents that the
Servicer shall keep on file, in accordance with its customary
procedures, evidencing the security interest in the related Financed
Vehicle; and
(e) any and all other documents that the Seller or the Servicer,
as the case may be, shall keep on file, in accordance with its
customary procedures, relating to such Receivable or the related
Obligor or Financed Vehicle.
Section 2.03. Representations and Warranties of Seller as to the
Receivables. The Seller makes the following representations and warranties as to
the Receivables on which the Issuer shall rely in acquiring the Receivables.
Such representations and warranties speak as of the execution and delivery of
this Agreement and as of the Closing Date, but shall survive the sale, transfer
and assignment of the Receivables to the Issuer and the pledge thereof to the
Indenture Trustee.
(a) Characteristics of Receivables. Each Receivable (i) shall
have been originated in the United States by a Dealer for the retail
sale of the related Financed Vehicle in the ordinary course of such
Dealer's business, shall have been fully and properly executed by the
parties thereto, shall have been purchased by AHFC from such Dealer
under an existing agreement with AHFC, shall have been validly
assigned by such Dealer to AHFC in accordance with the terms of such
agreement, shall have been subsequently sold by AHFC to the Seller
pursuant to the Receivables Purchase
21
Agreement and, to the best knowledge of the Seller, shall have been
sold by a Dealer without fraud or misrepresentation, (ii) shall have
created or shall create a valid, continuing and enforceable first
priority security interest in favor of AHFC in the related Financed
Vehicle, which security interest has been assigned by AHFC to the
Seller and shall be assignable, and shall be so assigned, by the
Seller to the Owner Trustee, (iii) shall contain customary and
enforceable provisions such that the rights and remedies of the holder
thereof shall be adequate for realization against the collateral of
the benefits of the security, (iv) shall, except as otherwise provided
in this Agreement, provide for level Monthly Payments (provided that
the payment in the first or last month in the life of the Receivable
may be minimally different from the level payment) that fully amortize
the Amount Financed over its original term and shall provide for a
finance charge or shall yield interest at its APR, (v) shall provide
for, in the event that such Receivable is prepaid, a prepayment that
fully pays the Principal Balance and includes accrued but unpaid
interest at least through the date of prepayment in an amount
calculated by using an interest rate at least equal to its APR, (vi)
shall have an Obligor that is not a federal, state or local
governmental entity and (vii) is a retail installment contract.
(b) Schedule of Receivables. The information set forth in the
Schedule of Receivables shall be true and correct in all material
respects as of the opening of business on the Cutoff Date, and no
selection procedures believed to be adverse to the Securityholders
were utilized in selecting the Receivables from those motor vehicle
receivables of AHFC which met the selection criteria set forth in this
Agreement.
(c) Compliance with Law. Each Receivable and each sale of the
related Financed Vehicle shall have complied at the time it was
originated or made, and shall comply at the time of execution of this
Agreement, in all material respects with all requirements of
applicable federal, state and local laws, and regulations thereunder,
including usury laws, the Federal Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Fair Credit Billing Act, the Fair Credit
Reporting Act, the Fair Debt Collection Practices Act, the Federal
Trade Commission Act, the Xxxxxxxx-Xxxx Warranty Act, Federal Reserve
Board Regulations B , M and Z, state adaptations of the National
Consumer Act and of the Uniform Consumer Credit Code and other
consumer credit, equal credit opportunity and disclosure laws.
(d) Binding Obligation. Each Receivable shall constitute the
genuine, legal, valid and binding payment obligation in writing of the
related Obligor, enforceable by the holder thereof in accordance with
its terms, except as enforceability may be subject to or limited by
bankruptcy, insolvency, reorganization, moratorium, liquidation or
other similar laws affecting the enforcement of creditors' rights in
general and by general principles of equity, regardless of whether
such enforceability shall be considered in a proceeding in equity or
at law.
(e) No Bankrupt Obligors. According to the records of the Seller,
as of the Cutoff Date, no Obligor is the subject of a bankruptcy
proceeding.
(f) Security Interest in Financed Vehicles. According to the
records of the Seller, as of the Cutoff Date, no Financed Vehicle has
been repossessed and not
22
reinstated and immediately prior to the sale, assignment and transfer
thereof, all necessary steps shall be taken so that each Receivable
shall be secured by a validly perfected first priority security
interest in the related Financed Vehicle in favor of AHFC as secured
party or all necessary and appropriate action with respect to such
Receivable shall have been taken to perfect a first priority security
interest in such Financed Vehicle in favor of AHFC as secured party.
(g) Receivables in Force. No Receivable shall have been
satisfied, subordinated or rescinded, nor shall any Financed Vehicle
have been released in whole or in part from the lien granted by the
related Receivable.
(h) No Waivers. No provision of a Receivable shall have been
waived in such a manner that such Receivable fails to meet all of the
other representations and warranties made by the Seller herein with
respect thereto.
(i) No Amendments. No Receivable shall have been amended or
modified in such a manner that the total number of Scheduled Payments
has been increased or that the related Amount Financed has been
increased or that such Receivable fails to meet all of the other
representations and warranties made by the Seller herein with respect
thereto.
(j) No Defenses. No facts shall be known to the Seller which
would give rise to any right of rescission, setoff, counterclaim or
defense, nor shall the same have been asserted or threatened, with
respect to any Receivable.
(k) No Liens. To the knowledge of the Seller, no liens or claims
shall have been filed, including liens for work, labor or materials
relating to a Financed Vehicle, that shall be liens prior to, or equal
or coordinate with, the security interest in such Financed Vehicle
granted by the related Receivable. To the knowledge of the Seller,
there are no tax liens against the Seller, or against an Obligor
affecting the related Receivable.
(l) No Defaults. Except for payment defaults that, as of the
Cutoff Date, have been continuing for a period of not more than 30
days, no default, breach, violation or event permitting acceleration
under the terms of any Receivable shall have occurred as of the Cutoff
Date and no continuing condition that with notice or the lapse of time
would constitute a default, breach, violation or event permitting
acceleration under the terms of any Receivable shall have arisen; and
the Seller shall not have waived any of the foregoing except as
otherwise permitted hereunder.
(m) Insurance. Pursuant to the Receivables, each Obligor has been
required to obtain physical damage insurance covering the related
Financed Vehicle and the Obligor is required under the terms of the
related Receivable to maintain such insurance.
(n) Title. It is the intention of the Seller that the transfer
and assignment herein contemplated, taken as a whole, constitute a
sale of the Receivables from the Seller to the Issuer and that the
beneficial interest in and title to the Receivables not be part of the
debtor's estate in the event of the filing of a bankruptcy petition by
or against the Seller under any bankruptcy law. Other than (1) the
sale by the Seller to the Issuer pursuant to this Agreement and (2)
the security interest granted by the Issuer to the
23
Indenture Trustee in the Indenture, no Receivable has been sold,
transferred, assigned or pledged by the Seller to any Person other
than the Issuer, and no Receivable has been sold, transferred,
assigned or pledged by the Issuer to any Person other than the
Indenture Trustee, and no provision of a Receivable shall have been
waived, except as provided in clause (h) above; immediately prior to
the transfer and assignment herein contemplated, the Seller had good
and marketable title to each Receivable free and clear of all Liens
and rights of any other Person and immediately prior to the pledge of
security interest contemplated in the Indenture, the Issuer had good
and marketable title to each Receivable free and clear of all Liens
and rights of any other Person; immediately upon the transfer and
assignment contemplated herein, the Issuer shall have good and
marketable title to each Receivable, free and clear of all Liens and
rights of any other Person and immediately upon the pledge of the
security interest contemplated in the Indenture, the Indenture Trustee
will have a valid and continuing security interest in the Receivables;
and both the transfer and assignment herein contemplated and the
pledge of security interest contemplated by the Indenture have been
perfected under the applicable UCC.
(o) Lawful Assignment. No Receivable shall have been originated
in, or shall be subject to the laws of, any jurisdiction under which
the sale, transfer and assignment of such Receivable under this
Agreement or pursuant to a transfer of the Securities shall be
unlawful, void or voidable.
(p) All Filings Made. Both the Seller and the Issuer,
respectively, have caused or will have caused, or have taken or will
take, within ten days of the Closing Date, all steps necessary,
including the filing of all appropriate financing statements
(including UCC filings) necessary in the appropriate jurisdictions
under the applicable law, to give the Issuer a first priority
perfected security interest in the Receivables, and to give the
Indenture Trustee a first priority perfected security interest
therein, shall have been made. Except as contemplated hereby or in the
Indenture, as applicable, neither the Seller or the Issuer has
authorized the filing of nor is aware of any financing statements with
respect to the Receivables, other than such financing statements that
have been terminated on or prior to the Closing Date.
(q) One Original. There shall be only one original executed copy
of each Receivable.
(r) Chattel Paper. Each Receivable constitutes "tangible chattel
paper" as defined within the meaning of the applicable UCC.
(s) Maturity of Receivables. Each Receivable shall have an
original maturity of not less than 12 months nor greater than 60
months and, as of the Cutoff Date, a remaining maturity of not less
than 7 months nor greater than 58 months.
(t) Finance Charge. Each Receivable provides for the payment of a
finance charge calculated on the basis of an APR ranging from [___]%
to [___]%.
24
(u) Principal Balance. Each Receivable had an original principal
balance of not less than $[________] nor more than $[________]and an
average unpaid principal balance, as of the Cutoff Date, of
$[________].
(v) Origination. Each Receivable was originated on or after [___
__, ___]and on or before [____ __, ____].
(w) No Overdue Payments. No Receivable shall have a Scheduled
Payment that is more than 30 days past due as of the Cutoff Date.
(x) Location of Receivable Files. Each Receivable File shall be
kept at one of the locations listed in Schedule B hereto.
(y) Financed Vehicles. Each Financed Vehicle shall be a new or
used Honda or Acura motor vehicle.
(z) Addresses of Obligors. The Obligor under each Receivable had
a current billing address in the United States as of the Cutoff Date.
(aa) Security Interest. The Indenture creates a valid and
continuing security interest (as defined in the applicable UCC) in the
Receivables in favor of the Indenture Trustee, which security interest
is prior to all other Liens, and is enforceable as such as against
creditors of and purchasers from the Issuer.
(bb) Possession of Documents. The Servicer has in its possession
all original copies of the agreements that constitute or evidence the
Receivables. The agreements that constitute or evidence the
Receivables do not have any marks or notations indicating that they
have been pledged, assigned or otherwise conveyed to any Person other
than the Indenture Trustee. All financing statements filed or to be
filed against the Issuer in favor of the Indenture Trustee in
connection herewith describing the Receivables contain a statement to
the following effect: "A purchase of or security interest in any
collateral described in this financing statement will violate the
rights of the Indenture Trustee."
Section 2.04. Repurchase of Receivables Upon Breach. Upon discovery by
the Seller or the Servicer or upon the actual knowledge of a Responsible Officer
of either the Indenture Trustee or the Owner Trustee of a breach of any of the
representations and warranties of the Seller set forth in Section 2.03 that
materially and adversely affects the interests of the Issuer, the Trustees or
the Securityholders in any Receivable, the party discovering such breach shall
give prompt written notice to the others. As of the last day of the second
Collection Period following the Collection Period in which it discovers or
receives notice of such breach (or, at the Seller's election, the last day of
the first Collection Period following the Collection Period in which it
discovers or receives notice of such breach), the Seller shall, unless such
breach shall have been cured in all material respects, repurchase such
Receivable, and, if necessary, the Seller shall enforce the obligation of AHFC
under the Receivables Purchase Agreement to repurchase such Receivable from the
Seller. This repurchase obligation shall apply to all representations and
warranties of the Seller contained in Section 2.03 whether or not the Seller has
knowledge of the breach at the time of the breach or at the time the
representations and warranties were made. In consideration of the repurchase of
any such Receivable, on the related Deposit Date, the Seller
25
shall remit the Warranty Purchase Payment in respect of such Receivable to the
Collection Account in the manner specified in Section 4.05 and shall be entitled
to receive the Released Warranty Amount. In the event that, as of the date of
execution and delivery of this Agreement, any Liens or claims shall have been
filed, including Liens for work, labor or materials relating to a Financed
Vehicle, that shall be prior to, or equal or coordinate with, the lien granted
by the related Receivable, which Liens or claims shall not have been satisfied
or otherwise released in full as of the Closing Date, and such breach materially
and adversely affects the interests of the Issuer, the Trustees or the
Securityholders in such Receivable, the Seller shall repurchase such Receivable
on the terms and in the manner specified above. Upon any such repurchase, the
Issuer shall, without further action, be deemed to transfer, assign, set-over
and otherwise convey to the Seller, all right, title and interest of the Issuer
in, to and under such repurchased Receivable, all monies due or to become due
with respect thereto and all proceeds thereof. The Issuer and the Trustees shall
execute such documents and instruments of transfer and assignment and take such
other actions as shall be reasonably requested by the Seller to effect the
conveyance of such Receivable pursuant to this Section. The sole remedy of the
Issuer, the Trustees and the Securityholders with respect to a breach of the
Seller's representations and warranties pursuant to Section 2.03 or with respect
to the existence of any such Liens or claims shall be to require the Seller to
repurchase the related Receivable pursuant to this Section and to enforce AHFC's
obligation to repurchase such Receivables from the Seller pursuant to the
Receivables Purchase Agreement. Neither the Owner Trustee nor the Indenture
Trustee shall have any duty to conduct an affirmative investigation as to the
occurrence of any condition requiring the repurchase of any Receivable pursuant
to Section 2.04 or the eligibility of any Receivables for purposes of this
Agreement. In addition, no party to this agreement may waive a material breach
of any of the representations and warranties contained in Section 2.03 above.
Section 2.05. Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer, in its capacity as custodian, shall hold
the Receivable Files for the benefit of the Issuer and maintain such accurate
and complete accounts, records and computer systems pertaining to each
Receivable File as shall enable the Issuer to comply with this Agreement. In
performing its duties as custodian, the Servicer shall act with reasonable care,
using that degree of skill and attention that it exercises with respect to the
receivable files of comparable motor vehicle receivables that the Servicer
services for itself or others. The Servicer shall conduct, or cause to be
conducted, periodic examinations of the files of all receivables owned or
serviced by it which shall include the Receivable Files held by it under this
Agreement, and of the related accounts, records and computer systems, in such a
manner as shall enable the Issuer or the Indenture Trustee to verify the
accuracy of the Servicer's record keeping. The Servicer shall promptly report to
the Issuer and the Indenture Trustee any failure on its part to hold the
Receivable Files and maintain its accounts, records and computer systems as
herein provided and promptly take appropriate action to remedy any such failure.
Nothing herein shall be deemed to require an initial review or any periodic
review of the Receivable Files by the Issuer or the Indenture Trustee.
(b) Maintenance of and Access to Records. The Servicer shall maintain
each Receivable File solely in its capacity as Servicer at one of its offices
specified in Schedule B hereto or at such other office as shall be specified to
the Issuer and the Indenture Trustee by 30 days' prior written notice. The
Servicer shall make available to the Issuer and the Indenture
26
Trustee or its duly authorized representatives, attorneys or auditors the
Receivable Files and the related accounts, records and computer systems
maintained by the Servicer at such times as the Issuer and the Indenture Trustee
shall reasonably instruct.
(c) Release of Documents. Upon instruction from the Indenture Trustee,
the Servicer shall release any document in the Receivable Files to the Indenture
Trustee or its agent or designee, as the case may be, at such place or places as
the Indenture Trustee may designate, as soon as practicable. The Servicer shall
not be responsible for any loss occasioned by the failure of the Indenture
Trustee to return any document or any delay in doing so.
Section 2.06. Instructions; Authority to Act. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable Files
upon its receipt of written instructions signed by a Responsible Officer of the
Indenture Trustee. A certified copy of a bylaw or of a resolution of the board
of directors of the Indenture Trustee shall constitute conclusive evidence of
the authority of any such Responsible Officer to act and shall be considered in
full force and effect until receipt by the Servicer of written notice to the
contrary given by the Indenture Trustee.
Section 2.07. Indemnification by Custodian. The Servicer, as custodian
of the Receivable Files, shall fully indemnify and hold harmless the Issuer and
the Trustees for any and all liabilities, obligations, losses, compensatory
damages, payments, costs or expenses of any kind whatsoever that may be imposed
on, incurred or asserted against the Issuer and the Trustees as the result of
any improper act or omission in any way relating to the maintenance and custody
of the Receivable Files by the Servicer, as custodian; provided, however, that
the Servicer shall not be liable for any portion of any such amount resulting
from the willful misfeasance, bad faith or negligence of the Indenture Trustee
or the willful misfeasance, bad faith or gross negligence (except for errors in
judgment) in the case of the Owner Trustee.
Section 2.08. Effective Period and Termination. The Servicer's
appointment as custodian of the Receivable Files shall become effective as of
the Cutoff Date and shall continue in full force and effect until terminated
pursuant to this Section. If the Servicer shall resign as Servicer pursuant to
Section 6.05 or if all of the rights and obligations of the Servicer have been
terminated pursuant to Section 7.02, the appointment of the Servicer as
custodian of the Receivable Files shall be terminated without further action by
the Indenture Trustee or by the Holders of Notes. The Indenture Trustee or, with
the consent of the Indenture Trustee, the Owner Trustee may terminate the
Servicer's appointment as custodian of the Receivable Files with cause at any
time immediately upon written notification to the Servicer and, without cause,
upon 30 days' prior written notification by the Servicer. As soon as
practicable, but in no event later than 30 days immediately following the
effective date of any termination of such appointment, the Servicer shall
deliver the Receivable Files to the Indenture Trustee or its agent at such place
or places as the Indenture Trustee may reasonably designate. Notwithstanding the
termination of the Servicer as custodian of the Receivable Files, the Indenture
Trustee agrees that upon any such termination, the Indenture Trustee shall
provide, or cause its agent to provide, access to the Receivable Files to the
Servicer for the purpose of carrying out its duties and responsibilities with
respect to the servicing of the Receivables pursuant to this Agreement.
27
ARTICLE THREE
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 3.01. Duties of Servicer. The Servicer, for the benefit of the
Issuer (to the extent provided herein), shall manage, service, administer and
make collections on the Receivables (other than Administrative Receivables and
Warranty Receivables) with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to all comparable motor
vehicle receivables that it services for itself or others. The Servicer's duties
shall include collection and posting of all payments, responding to inquiries of
Obligors or by federal, state or local government authorities with respect to
the Receivables, investigating delinquencies, sending payment coupons to
Obligors, reporting tax information to Obligors in accordance with its customary
practices, policing the collateral, accounting for collections and furnishing
monthly and annual statements to the Trustees with respect to distributions,
generating federal income tax information, making Advances and performing the
other duties specified herein. The Servicer shall follow its customary
standards, policies and procedures and shall have full power and authority,
acting alone, to do any and all things in connection with such managing,
servicing, administration and collection that it may deem necessary or
desirable. Without limiting the generality of the foregoing, the Servicer shall
be authorized and empowered to execute and deliver, on behalf of itself, the
Issuer, the Trustees, the Securityholders or any of them, any and all
instruments of satisfaction or cancellation, or of partial or full release or
discharge and all other comparable instruments, with respect to the Receivables
and the Financed Vehicles. The Servicer is hereby authorized to commence, in its
own name or in the name of the Issuer, a legal proceeding to enforce a Defaulted
Receivable pursuant to Section 3.04 or to commence or participate in a legal
proceeding (including without limitation a bankruptcy proceeding) relating to or
involving a Receivable, including a Defaulted Receivable. If the Servicer
commences or participates in such a legal proceeding in its own name, the Issuer
shall thereupon be deemed to have automatically assigned, solely for the purpose
of collection on behalf of the party retaining an interest in such Receivable,
such Receivable and the other property conveyed to the Issuer pursuant to
Section 2.01 with respect to such Receivable to the Servicer for purposes of
commencing or participating in any such proceeding as a party or claimant, and
the Servicer is authorized and empowered by the Issuer to execute and deliver in
the Servicer's name any notices, demands, claims, complaints, responses,
affidavits or other documents or instruments in connection with any such
proceeding. If in any enforcement suit or legal proceeding it shall be held that
the Servicer may not enforce a Receivable on the grounds that it shall not be a
real party in interest or a holder entitled to enforce such Receivable, the
Owner Trustee on behalf of the Issuer shall, at the Servicer's expense and
written direction, take steps to enforce such Receivable, including bring suit
in its name or the name of the Issuer, the Indenture Trustee, the Noteholders or
the Certificateholders. The Owner Trustee on behalf of the Issuer shall furnish
the Servicer with any powers of attorney and other documents and take any other
steps which the Servicer may deem necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder.
Section 3.02. Collection of Receivable Payments. The Servicer shall
make reasonable efforts to collect all payments called for under the terms and
provisions of the Receivables as and when the same shall become due, and shall
follow such collection procedures as it follows with respect to all comparable
motor vehicle receivables that it services for itself or others. The
28
Servicer shall be authorized to grant extensions, rebates or adjustments on a
Receivable without the prior consent of the Issuer. If, as a result of the
extending of payments in accordance with the customary servicing standards of
the Servicer, any Receivable will be outstanding later than the Final Scheduled
Maturity Date occurs, the Servicer shall be obligated to repurchase such
Receivable pursuant to Section 3.08. In addition, in the event that any such
rescheduling or extension of a Receivable modifies the terms of such Receivable
in such a manner as to constitute a cancellation of such Receivable and the
creation of a new motor vehicle receivable that results in a deemed exchange
thereof within the meaning of Section 1001 of the Code, the Servicer shall
purchase such Receivable pursuant to Section 3.08, and the receivable created
shall not be included in the Issuer. Notwithstanding the foregoing, extensions
or modifications of the payment schedule of a Receivable can be made only in
accordance with the customary servicing procedures of the Servicer, provided
that the amount of any extension fee charged in connection with the extension of
a Receivable is deposited into the Collection Account by the Servicer in
accordance with Section 4.05(a). The Servicer may, in accordance with its
customary servicing procedures, waive any prepayment charge, late payment charge
or any other fees that may be collected in the ordinary course of servicing the
Receivables.
Section 3.03. Rebates on Full Prepayments. In the event that the amount
of a full Prepayment by an Obligor under a Precomputed Receivable, after
adjustment for the applicable Rebate, is less than the amount that would be
payable under the actuarial method if a full Prepayment were made at the end of
the billing month under such Precomputed Receivable, either because the Rebate
calculated under the terms of such Precomputed Receivable is greater than the
amount calculable under the actuarial method or because the Servicer's customary
servicing procedure is to credit a greater Rebate, the Servicer, as part of its
servicing duties, shall remit such difference to the Trust by deposit into the
Collection Account pursuant to Section 4.05(a).
Section 3.04. Realization Upon Receivables. On behalf of the Issuer,
the Servicer shall use its best efforts, consistent with its customary servicing
procedures, to repossess or otherwise comparably convert the ownership of any
Financed Vehicle that it has reasonably determined should be repossessed or
otherwise converted following a default under the Receivable secured by the
Financed Vehicle (and shall specify such Receivables to the Trustees no later
than the Determination Date following the end of the Collection Period in which
the Servicer shall have made such determination). The Servicer shall follow such
practices and procedures as it shall deem necessary or advisable and as shall be
customary and usual in its servicing of motor vehicle receivables, which
practices and procedures may include reasonable efforts to realize upon any
Dealer Recourse, selling the related Financed Vehicle at public or private sale
and other actions by the Servicer in order to realize upon such a Receivable.
The Servicer shall be entitled to recover its reasonable Liquidation Expenses
with respect to each Defaulted Receivable, which are not to exceed the related
Net Liquidation Proceeds with respect to each such Defaulted Receivable. All Net
Liquidation Proceeds realized in connection with any such action with respect to
a Receivable shall be deposited by the Servicer in the Collection Account in the
manner specified in Section 4.02(a). The foregoing is subject to the proviso
that, in any case in which the Financed Vehicle shall have suffered damage, the
Servicer shall not expend funds in connection with any repair or towards the
repossession of such Financed Vehicle unless it shall determine in its
discretion that such repair and/or repossession shall increase the Liquidation
Proceeds of the related Receivable by an amount greater than the amount of such
expenses.
29
Section 3.05. Maintenance of Physical Damage Insurance Policies. The
Servicer shall, in accordance with its customary servicing procedures and
underwriting standards, require that each Obligor shall have obtained physical
damage insurance covering each Financed Vehicle as of the origination of the
related Receivable.
Section 3.06. Maintenance of Security Interests in Financed Vehicles.
The Servicer shall, in accordance with its customary servicing procedures and at
its own expense, take such steps as are necessary to maintain perfection of the
security interest created by each Receivable in the related Financed Vehicle.
The Servicer is hereby authorized to take such steps as are necessary to
reperfect such security interest on behalf of the Issuer in the event of the
relocation of a Financed Vehicle or for any other reason. In the event that the
assignment of a Receivable to the Issuer is insufficient, without a notation on
the related Financed Vehicle's certificate of title, to grant to the Issuer a
first priority perfected security interest in the related Financed Vehicle, the
Servicer hereby agrees to serve as the agent of the Issuer for the purpose of
perfecting the security interest of the Issuer in such Financed Vehicle and
agrees that the Servicer's listing as the secured party on the certificate of
title is solely in its capacity as agent of the Issuer.
Section 3.07. Covenants of Servicer. The Servicer makes the following
covenants on which the Issuer shall rely in accepting the Receivables in trust
pursuant to Section 2.01:
(a) Liens in Force. Except as otherwise contemplated by this
Agreement, the Servicer shall not release in whole or in part any
Financed Vehicle from the security interest securing the related
Receivable.
(b) No Impairment. The Servicer shall do nothing to impair the
rights of the Issuer in the Receivables.
(c) No Amendments. Subject to Section 3.02, the Servicer shall
not amend or otherwise modify any Receivable such that the total
number of Scheduled Payments is extended beyond the Final Scheduled
Maturity Date, or either the Amount Financed or the APR is altered.
Section 3.08. Purchase of Receivables Upon Breach. Upon discovery by
the Seller, the Servicer or the Issuer or upon the actual knowledge of a
Responsible Officer of the Indenture Trustee or Owner Trustee of a breach of any
of the covenants of the Servicer set forth in Section 3.07 that materially and
adversely affects the interests of the Issuer, the Indenture Trustee or the
Securityholders in any Receivable, or if an improper extension, rescheduling or
modification of a Receivable is made by the Servicer as described in Section
3.02, the party discovering such breach shall give prompt written notice to the
others. As of the last day of the second Collection Period following the
Collection Period in which it discovers or receives notice of such breach (or,
at the Servicer's election, the last day of the first Collection Period
following the Collection Period in which it discovers or receives notice of such
breach), the Servicer shall, unless such breach or impropriety shall have been
cured in all material respects, purchase from the Issuer such Receivable. In
consideration of the purchase of any such Receivable, on the related Deposit
Date the Servicer shall remit the Administrative Purchase Payment to the
Collection Account in the manner specified in Section 4.05, and shall be
entitled to receive the Released Administrative
30
Amount. Upon such deposit of the Administrative Purchase Payment, the Servicer
shall for all purposes of this Agreement be deemed to have released all claims
for reimbursement of Outstanding Advances made in respect of such Receivable.
The sole remedy of the Issuer, the Trustees or the Securityholders against the
Servicer with respect to a breach pursuant to Section 3.02 or 3.07 shall be to
require the Servicer to purchase the related Receivables pursuant to this
Section, except as otherwise provided in Section 6.02. Neither the Owner Trustee
nor the Indenture Trustee shall have any duty to conduct any affirmative
investigation as to the occurrence of any condition requiring the repurchase of
any Receivable pursuant to this Section.
Section 3.09. Total Servicing Fee; Payment of Certain Expenses by
Servicer. As compensation for the performance of its obligations hereunder, the
Servicer shall be entitled to receive on each Payment Date the Total Servicing
Fee. The Basic Servicing Fee in respect of a Collection Period shall be
calculated based on a 360 day year comprised of twelve 30-day months. Except to
the extent otherwise provided herein, the Servicer shall be required to pay all
expenses incurred by it in connection with its activities under this Agreement
(including fees and disbursements of the Trustees and independent accountants,
taxes imposed on the Servicer, expenses incurred in connection with
distributions and reports to Securityholders and all other fees and expenses not
expressly stated under this Agreement to be for the account of the
Securityholders).
Section 3.10. Servicer's Certificate. On or before each Determination
Date, the Servicer shall deliver to the Trustees and each Rating Agency a
Servicer's Certificate containing all information necessary to make the
distributions required by Sections 4.06 and 4.07 in respect of the related
Collection Period and all information necessary for the Trustees to send
statements to Securityholders pursuant to Section 4.10. The Servicer shall also
specify in writing to the Trustees, no later than the Determination Date
following the last day of a Collection Period as of which the Seller shall be
required to repurchase or the Servicer shall be required to purchase a
Receivable, the identity of any such Receivable and the identity of any
Receivable which the Servicer shall have determined to be a Defaulted Receivable
during such Collection Period. Receivables purchased or to be purchased by the
Servicer or the Seller and Receivables as to which the Servicer has determined
during such Collection Period to be Defaulted Receivables and with respect to
which payment of the Administrative Purchase Payment or Warranty Purchase
Payment has been provided from whatever source as of last day of such Collection
Period shall be identified by the Seller's account number with respect to such
Receivable (as specified in the Schedule of Receivables).
31
Section 3.11. Annual Statement as to Compliance; Notice of Default.
(a) The Servicer shall deliver to the Trustees and each Rating Agency,
on or before 90 days after the end of each fiscal year, commencing with the
fiscal year ended [____ __, ____] an Officer's Certificate of the Servicer,
stating that (i) a review of the activities of the Servicer during the preceding
12-month period ended [_____] (or, if applicable, such shorter period in the
case of the first such Officer's Certificate) and of its performance under this
Agreement has been made under such officer's supervision, and (ii) to such
officer's knowledge, based on such review, the Servicer has fulfilled all its
obligations under this Agreement throughout such period, or, if there has been a
default in the fulfillment of any such obligation, specifying each such default
known to such officer and the nature and status thereof.
(b) The Servicer shall deliver to the Trustees and each Rating Agency,
promptly after having obtained knowledge thereof, but in no event later than
five Business Days thereafter, an Officer's Certificate specifying the nature
and status of any event which with the giving of notice or lapse of time, or
both, would become a Servicer Default.
Section 3.12. Annual Accountants' Report. The Servicer shall cause a
firm of independent accountants (who may also render other services to the
Servicer or to the Seller) to deliver to the Trustees on or before [___] of each
year, beginning with the [___] that is at least six months after the Closing
Date, a report with respect to the preceding 12-month period ended [_______]
(or, if applicable, such shorter period in the case of the first such report) to
the effect that such accountants have examined certain records and documents
relating to the servicing of the Receivables under this Agreement (using
procedures specified in such report, which procedures shall be substantially in
compliance with generally accepted auditing standards and which procedure shall
be specified to the Trustees by the Servicer in writing; in the event such firm
of independent accountants requires any of the Trustees to agree to the
procedures performed by such firm, the Servicer shall direct such Trustees in
writing to so agree; it being understood and agreed that the Trustees will
deliver such letters of agreement in conclusive reliance upon the direction of
the Servicer, and none of the Trustees make any representation of warranty,
independent inquiry or investigation as to, and shall have no obligation or
liability in respect of, the sufficiency, validity or correctness of such
procedures) and that nothing has come to their attention indicating that such
servicing has not been conducted in compliance with the customary servicing
procedures of the Servicer, including but not limited to the procedures set
forth in this Agreement, except for (i) such exceptions as such firm shall
believe to be immaterial and (ii) such other exceptions as shall be set forth in
such report. Such report shall also indicate that the firm is independent with
respect to the Seller and the Servicer within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public Accountants.
Section 3.13. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to the Trustees reasonable access to the
documentation regarding the Receivables. The Servicer shall provide such access
to any Securityholder only in such cases where a Securityholder is required by
applicable statutes or regulations to review such documentation. In each case,
such access shall be afforded without charge but only upon reasonable request
and during normal business hours at the respective offices of the Servicer.
Nothing in this Section shall derogate from the obligation of the Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Obligors, and the failure of the
32
Servicer to provide access as provided in this Section as a result of such
obligation shall not constitute a breach of this Section.
Section 3.14. Amendments to Schedule of Receivables. If the Servicer,
during a Collection Period, assigns to a Receivable an account number that
differs from the original account number identifying such Receivable on the
Schedule of Receivables, the Servicer shall deliver to the Seller and the
Trustees on or before the Payment Date relating to such Collection Period an
amendment to the Schedule of Receivables reporting the newly assigned account
number, together with the old account number of each such Receivable. The first
such delivery of amendments to the Schedule of Receivables shall include monthly
amendments reporting account numbers appearing on the Schedule of Receivables
with the new account numbers assigned to such Receivables during any prior
Collection Period.
Section 3.15. Reports to Securityholders and Rating Agencies.
(a) At the expense of the Issuer, the Indenture Trustee shall provide
to any Note Owner and the Owner Trustee shall provide to any Certificateholder
who so requests in writing a copy of (i) any Servicer's Certificate, (ii) any
annual statement as to compliance described in Section 3.1l(a), (iii) any annual
accountants' report described in Section 3.12, (iv) any statement to
Securityholder pursuant to Section 4.10, (v) the Trust Agreement, (vi) the
Indenture or (vii) this Agreement (without Exhibits). The Indenture Trustee or
the Owner Trustee, as applicable, may require such Securityholder or Note Owner
to pay a reasonable sum to cover the cost of the Trustee's complying with such
request.
(b) The Servicer shall forward to each Rating Agency a copy of each (i)
Servicer's Certificate, (ii) annual statement as to compliance described in
Section 3.11(a), (iii) Officer's Certificate of the Servicer described in
Section 3.11(b), (iv) annual accountants' report pursuant to Section 3.12, (v)
statement to Securityholders pursuant to Section 4.10 and (vi) other report it
may receive pursuant to this Agreement, the Trust Agreement or the Indenture.
Section 3.16. Appointment of Subservicer. The Servicer may at any time
appoint a subservicer to perform all or any portion of its obligations as
Servicer hereunder if each Rating Agency and the Indenture Trustee has received
10 days prior written notice of the Servicer's intention to do so and has not
notified the Servicer that such an appointment would or might result in the
qualification, reduction or withdrawal of a rating then assigned by such Rating
Agency to any Class of Notes; provided, however, that the Servicer shall remain
obligated and be liable to the Issuer, the Owner Trustee, the Indenture Trustee,
the Certificateholders and the Noteholders for the servicing and administering
of the Receivables in accordance with the provisions hereof without diminution
of such obligation and liability by virtue of the appointment of such
subservicer and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the Receivables. The fees
and expenses of the subservicer shall be as agreed between the Servicer and its
subservicer from time to time, and none of the Issuer, the Owner Trustee, the
Indenture Trustee, the Certificateholders or the Noteholders shall have any
responsibility therefor.
33
ARTICLE FOUR
DISTRIBUTIONS; RESERVE FUND;
STATEMENTS TO SECURITYHOLDERS
Section 4.01. Establishment of Accounts.
(a) The Servicer shall establish and maintain an Eligible Account with
and in the name of the Indenture Trustee for the benefit of (i) the
Securityholders (the "Collection Account"), (ii) the Noteholders (the "Note
Distribution Account"), (iii) the Noteholders (the "Reserve Fund"), (iv) the
Securityholders (the "Yield Supplement Account") and (v) the Securityholders
(the "Payahead Account"), in each case, bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the related
Securityholders. Except as otherwise provided in this Agreement, in the event
that the Indenture Trustee is no longer an Eligible Institution, the Servicer
shall, with the assistance of the Indenture Trustee as necessary, cause the
Accounts to be moved to an Eligible Institution.
(b) To the extent permitted by applicable laws, rules and regulations,
all amounts held in (i) the Collection Account, the Note Distribution Account,
the Reserve Fund and the Yield Supplement Account shall be either invested by
the Indenture Trustee in Eligible Investments selected in writing by the
Servicer or maintained in cash and (ii) the Payahead Account shall be either
invested by the Indenture Trustee in investments defined in clause (vii) of the
definition of the term "Eligible Investments" selected in writing by the
Servicer or maintained in cash. Earnings on investment of funds in the Accounts
(other than the Yield Supplement Account and the Reserve Fund) (net of losses
and investment expenses) shall be paid to the Servicer as part of the
Supplemental Servicing Fee and any losses and investment expenses shall be
charged against the funds on deposit in the related Account.
(i) Except as otherwise provided in Section 4.01(b), the
Indenture Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the Accounts and in all proceeds
thereof (including all income thereon) and all such funds,
investments, proceeds and income shall be part of the Owner Trust
Estate. The Accounts shall be under the sole dominion and control of
the Indenture Trustee for the benefit of the Noteholders or the
Securityholders, as the case may be.
(ii) Notwithstanding anything else contained herein, the Servicer
agrees that each Account and the Certificate Distribution Account will
be established only with an Eligible Institution which agrees
substantially as follows: (A) it will comply with Entitlement Orders
related to such account issued by the Indenture Trustee without
further consent by the Servicer; (B) until termination of this
Agreement, it will not enter into any other agreement related to such
account pursuant to which it agrees to comply with Entitlement Orders
of any Person other than the Indenture Trustee; (C) all Account
Property delivered or credited to it in connection with such account
and all proceeds thereof will be promptly credited to such account;
(D) it will treat all Account Property as Financial Assets; and (E)
all Account Property will be physically delivered (accompanied by any
required endorsements) to, or credited to an account in the name of,
the Eligible Institution maintaining the related Account in accordance
with such Eligible Institution's
34
customary procedures such that such Eligible Institution establishes a
Security Entitlement in favor of the Indenture Trustee with respect
thereto over which the Indenture Trustee (or such other Eligible
Institution) has Control.
(iii) The Servicer shall have the power, revocable by the
Indenture Trustee or by the Owner Trustee with the consent of the
Indenture Trustee, to instruct the Indenture Trustee to make
withdrawals and payments from the Accounts for the purpose of
permitting the Servicer or the Owner Trustee to carry out its
respective duties hereunder or permitting the Indenture Trustee to
carry out its duties under the Indenture.
Section 4.02. Collections.
(a) The Servicer shall remit daily to the Collection Account all
payments received from or on behalf of the Obligors on or in respect of the
Receivables (other than, in the case of Precomputed Receivables, payments
constituting Payments Ahead) and all Net Liquidation Proceeds within two
Business Days after receipt thereof.
(b) Notwithstanding the provisions of Section 4.02(a) and subject to
the conditions set forth below, the Servicer may be permitted to make
remittances of collections on a less frequent basis than that specified in
Section 4.02(a) upon compliance with the specific terms and conditions set forth
below in this Section and for so long as such terms and conditions are
fulfilled. Accordingly, notwithstanding the provisions of Section 4.02(a), the
Servicer will be permitted to remit such collections to the Collection Account
in immediately available funds, on each Deposit Date but only for so long as
(i)(A) the Servicer shall be AHFC, (B) except as provided in clause (ii) below,
the Required Servicer Rating is satisfied and (C) no Servicer Default shall have
occurred and be continuing, provided, however, that immediately following the
non-compliance with clause (B) above or in the event that an event of the nature
specified in Section 7.01(c) has occurred (notwithstanding any period of grace
contained in such clause), the Servicer shall remit such collections to the
Collection Account on a daily basis within two Business Days of receipt thereof,
or (ii)(A) if the conditions specified in clause (i)(A) and (C) above are
satisfied, and (B) the Servicer shall have obtained (1) a Servicer Letter of
Credit issued by a depository institution or insurance company, as the case may
be, having a short-term credit rating at least equal to the Required Deposit
Rating and providing that the Indenture Trustee may draw thereon in the event
that the Servicer fails to deposit collections into the Collection Account on a
monthly basis or (2) a surety bond, insurance policy or other deposit of cash or
securities satisfactory to the Indenture Trustee and each Rating Agency;
provided that in connection with clause (ii) above, the Servicer provides to the
Indenture Trustee, from each Rating Agency for which the Servicer's then-current
short-term credit rating is not at least equal to the Required Servicer Rating
for such Rating Agency, a letter to the effect that the satisfaction of the
conditions in clause (ii) above and allowing the Servicer to make monthly
deposits will not result in a qualification, reduction or withdrawal of its
then-current rating of any Class of Notes and, if applicable, an Officer's
Certificate from the Servicer to the effect that the Servicer's then-current
short-term credit rating is at least equal to the Required Servicer Rating from
each other Rating Agency, if any; and, provided further, that if the Servicer
shall have obtained a Servicer Letter of Credit in accordance with clause (ii)
above, the Servicer shall be required to remit collections to the Collection
Account on each Business Day to the extent that the aggregate amount of
collections described in Section 4.02(a) and received during such Collection
Period
35
exceeds the Servicer Letter of Credit Amount. The Indenture Trustee shall not be
deemed to have knowledge of any event or circumstance under clause (i)(C) above
that would require daily remittance by the Servicer to the Collection Account
unless a Responsible Officer has received notice of such event or circumstance
from the Seller or the Servicer in an Officer's Certificate, from
Securityholders as provided in Section 7.01 or from the Letter of Credit Bank.
For purposes of this Article the phrase "payments made on behalf of Obligors"
shall mean payments made by Persons other than the Seller, the Servicer or the
Letter of Credit Bank, if any.
Any funds held by the Servicer which it determines are to be remitted
(or any of its own funds which the Seller or the Servicer determines to pay to
the Letter of Credit Bank) in respect of a failure previously to remit
collections which failure resulted in a payment under the Servicer Letter of
Credit, if any, shall not be remitted to the Collection Account, but shall
instead be paid immediately and directly to the Letter of Credit Bank. Any such
payment to the Letter of Credit Bank shall be accompanied by a copy of the
Servicer's Certificate related to the previous failure to remit funds and an
Officer's Certificate which includes a statement identifying, by reference to
the items in such related Servicer's Certificate, each shortfall in Servicer
remittances to which such payment relates. The Servicer will also provide the
Indenture Trustee with copies of each such Servicer's Certificate and Officer's
Certificate delivered with any such payment to the Letter of Credit Bank.
(c) The Servicer shall deposit all Payments Ahead in the Payahead
Account within two Business Days after receipt thereof, which Payments Ahead
shall be transferred to the Collection Account pursuant to Section 4.06(a)(i).
Notwithstanding the foregoing, so long as the Servicer is permitted to remit
collections to the Collection Account on a monthly basis pursuant to Section
4.02(b), the Servicer will not be required to deposit Payments Ahead in the
Payahead Account within two Business Days after receipt thereof but shall be
entitled to retain such Payments Ahead, without segregation from its other
funds, until such time as the Servicer shall be required to remit Applied
Payments Ahead to the Collection Account pursuant to Section 4.06(a)(ii).
Commencing with the first day of the first Collection Period that begins at
least two Business Days after the day on which the Servicer is no longer
permitted to remit collections to the Collection Account on a monthly basis
pursuant to Section 4.02(b), and until such time as the Servicer is once again
permitted by Section 4.02(b) to remit collections to the Collection Account on a
monthly basis, all Payments Ahead then held by the Servicer shall be immediately
deposited into the Payahead Account and all future Payments Ahead shall be
remitted by the Servicer to the Payahead Account within two Business Days after
receipt thereof.
Section 4.03. Application of Collections. On each Payment Date, all
collections for the related Collection Period shall be applied by the Servicer
as follows:
(a) With respect to each Receivable (other than an Administrative
Receivable or a Warranty Receivable), payments made by or on behalf of the
Obligor which are not Supplemental Servicing Fees shall be applied first to
reimburse the Servicer for Outstanding Advances made with respect to such
Receivable (each such payment, an "Overdue Payment"). Next, the amount of any
payment in excess of Supplemental Servicing Fees and Outstanding Advances with
respect to such Receivable shall be applied to the Scheduled Payment with
respect to such Receivable. If the amount of such payment remaining after the
applications described in the two preceding sentences (i) in the case of
Precomputed Receivables equals
36
(together with any Deferred Prepayment) the unpaid principal balance of such
Receivable, it shall be applied to prepay the principal balance of such
Receivable, or (ii) in the case of Simple Interest Receivables, it shall be
applied to prepay the principal balance of such Receivable.
(b) With respect to each Administrative Receivable and Warranty
Receivable, payments made by or on behalf of the Obligor shall be applied in the
same manner, except that any Released Administrative Amount or Released Warranty
Amount shall be remitted to the Servicer or the Seller, as applicable. A
Warranty Purchase Payment shall be applied to reduce Outstanding Advances and
such Warranty Purchase Payment or an Administrative Purchase Payment, as
applicable, shall then be applied to the Scheduled Payment, in each case to the
extent that the payments by the Obligor shall be insufficient, and then to
prepay the unpaid principal balance of such Receivable in full.
Section 4.04. Advances.
(a) As of the close of business on the last day of a Collection Period,
if the payments during such Collection Period by or on behalf of the Obligor on
or in respect of a Receivable (other than an Administrative Receivable or a
Warranty Receivable) after application under Section 4.03(a) shall be less than
the Scheduled Payment, whether as a result of any extension granted to the
Obligor or otherwise, then (i) in the case of a Precomputed Receivable, the
Deferred Prepayment, if any, with respect to such Precomputed Receivable shall
be applied by the Servicer to the extent of the shortfall, and such Deferred
Prepayment shall be reduced accordingly and the Servicer shall advance to the
Trust an amount equal to such shortfall (each, a "Precomputed Advance") and (ii)
in the case of a Simple Interest Receivable, the Servicer shall advance to the
Trust an amount equal to the product of the principal balance of such Receivable
as of the first day of such Collection Period and one-twelfth of its APR minus
the amount of interest actually received on such Receivable during such
Collection Period (each, a "Simple Interest Advance"). If the calculation in
clause (ii) above in respect of a Simple Interest Receivable results in a
negative number, an amount equal to such negative amount shall be paid to the
Servicer in reimbursement of any Outstanding Advances in respect of Simple
Interest Receivables. In addition, in the event that a Simple Interest
Receivable becomes a Liquidated Receivable, the amount of accrued and unpaid
interest thereon (but not including interest for the current Collection Period)
shall, up to the amount of Outstanding Advances in respect of Simple Interest
Receivables in respect thereof, be withdrawn from the Collection Account and
paid to the Servicer in reimbursement of such Outstanding Advances. No Advances
will be made with respect to the Principal Balance of Simple Interest
Receivables. Notwithstanding the foregoing, the Servicer shall not be required
to make any Advance (other than a Simple Interest Advance in respect of an
interest shortfall arising from the Prepayment of a Simple Interest Receivable)
to the extent that the Servicer, in its sole discretion, shall determine that
such Advance is unlikely to be recovered from subsequent payments made by or on
behalf of the related Obligor, Liquidation Proceeds, by the Administrative
Purchase Payment or by the Warranty Purchase Payment, in each case, with respect
to such Receivable or otherwise. On each Deposit Date, the Servicer will deposit
into the Collection Account an amount equal to all Advances to be made in
respect of the related Collection Period. The Successor Servicer shall only be
required to make Advances for payments on behalf of Obligors in respect of
Receivables arising on or after the Collection Period in which the (i) Successor
Servicer accepts its appointment or (ii) the Indenture Trustee is automatically
appointed Successor Servicer.
37
(b) The Servicer shall be entitled to reimbursement for Outstanding
Advances, without interest, with respect to a Receivable from the following
sources with respect to such Receivable: (i) subsequent payments made by or on
behalf of the related Obligor, (ii) Liquidation Proceeds, (iii) the
Administrative Purchase Payment and (iv) the Warranty Purchase Payment.
(c) To the extent that during any Collection Period any funds described
above in Section 4.04(b) with respect to a Receivable as to which the Servicer
previously has made an unreimbursed Advance are received by the Issuer or the
Servicer, and the Servicer determines that any Outstanding Advances (other than
a Simple Interest Advance in respect of an interest shortfall arising from the
Prepayment of a Simple Interest Receivable) with respect to such Receivable are
unlikely to be recovered from payments made on or with respect to such
Receivable (each, a "Nonrecoverable Advance"), then, on the related Payment
Date, upon the Servicer providing the Seller and the Trustees with an Officer's
Certificate setting forth the basis for its determination of any such
Nonrecoverable Advance, the Indenture Trustee shall promptly remit to the
Servicer from the Collection Account, (i) from Available Interest an amount
equal to the portion of such Nonrecoverable Advance allocable to interest and
(ii) from Available Principal an amount equal to the portion of such
Nonrecoverable Advance allocable to principal, in each case without interest, in
accordance with Section 4.06(c)(i). In lieu of causing the Indenture Trustee to
remit any such amounts or the amounts described in clauses (i) through (iv) in
Section 4.04(b), the Servicer may deduct such amounts from deposits otherwise to
be made into the Collection Account in accordance with Section 4.09.
Section 4.05. Additional Deposits.
(a) The following additional deposits shall be made to the Collection
Account one day prior to each Payment Date: (i) the Seller shall remit the
aggregate Warranty Purchase Payments with respect to Warranty Receivables
pursuant to Section 2.04 and (ii) the Servicer shall remit (A) any extension fee
charged in connection with the extension of a Receivable pursuant to Section
3.02, (B) the amount required to be remitted in respect of certain full
Prepayments pursuant to Section 3.03, (C) the aggregate Advances pursuant to
Section 4.04(a), (D) the aggregate Administrative Purchase Payments with respect
to Administrative Receivables pursuant to Section 3.08 and (E) the amount
required upon the optional purchase of all Receivables by the Servicer or any
successor to the Servicer pursuant to Section 8.01.
(b) All deposits required to be made in respect of a Collection Period
pursuant to this Section by the Seller or the Servicer, as the case may be, may
be made in the form of a single deposit and shall be made in immediately
available funds, on the related Deposit Date.
Section 4.06. Distributions.
(a) On each Deposit Date, the Indenture Trustee shall cause to be made
the following transfers and distributions in immediately available funds in the
amounts set forth in the Servicer's Certificate for such Payment Date:
(i) from the Payahead Account (or directly from the Servicer in
the case of Payments Ahead held by the Servicer pursuant to Section
4.02(b) or (c)) to the Collection Account, the aggregate Applied
Payments Ahead;
38
(ii) if the Servicer is not permitted to hold Payments Ahead
pursuant to Section 4.02(b) or (c), from the Collection Account to the
Payahead Account, the aggregate Payments Ahead for the related
Collection Period; and
(iii) from the Yield Supplement Account to the Collection
Account, an amount equal to the Yield Supplement Withdrawal Amount, if
any, for such Payment Date.
(b) On each Determination Date, the Servicer shall calculate all
amounts required to be deposited in the Note Distribution Account and the
Certificate Distribution Account and to make all distributions on the related
Payment Date.
(c) On each Payment Date, the Servicer shall instruct the Indenture
Trustee in writing (based on the information contained in the Servicer's
Certificate delivered on the related Determination Date pursuant to Section
3.10) to make the following deposits and distributions for receipt by the
Servicer or deposit in the applicable account, to the extent of the Available
Amount, in the following order of priority:
(i) to the Servicer, Nonrecoverable Advances;
(ii) to the Servicer, the Total Servicing Fee (including any
unpaid Total Servicing Fees from one or more prior Collection
Periods);
(iii) to the Indenture Trustee and the Owner Trustee, any accrued
and unpaid Trust Fees and Expenses, in each case to the extent such
fees and expenses have not been previously paid by the Servicer, in
its capacity as Administrator, until the Notes have been paid in full,
the annual amount paid to the Trustees out of the Available Amount
allocation as described in this clause (iii) shall not exceed
$[________];
(iv) to the Note Distribution Account, the Note Interest
Distributable Amount to be distributed to the holders of the Notes at
their respective Interest Rates;
(v) to the Note Distribution Account, the Note Principal
Distributable Amount;
(vi) to the Reserve Fund, the amount, if any, necessary to
reinstate the balance in the Reserve Fund up to the Specified Reserve
Fund Balance;
(vii) after the Class A-1 Notes have been paid in full, to the
Certificate Distribution Account, the Certificate Interest
Distributable Amount to be distributed to Certificateholders;
(viii) after the Class A-1 Notes have been paid in full, to the
Certificate Distribution Account, the Certificate Principal
Distributable Amount;
(ix) to the Indenture Trustee and the Owner Trustee, any accrued
and unpaid Trust Fees and Expenses remaining after application of the
payments described in clause (iii) above; and
39
(x) to the Seller, any Available Amount remaining (after giving
effect to the reduction in the Available Amount described in clauses
(i) through (ix) above.
Notwithstanding that the Notes have been paid in full, the Indenture
Trustee shall continue to maintain the Collection Account hereunder until the
Pool Balance has been reduced to zero.
Section 4.07. Reserve Fund.
(a) On the Closing Date, the Seller will deposit the Reserve Fund
Initial Deposit into the Reserve Fund from the net proceeds of the sale of the
Notes. The Reserve Fund shall be the property of the Issuer subject to the
rights of the Indenture Trustee in the Reserve Fund Property.
(b) In the event that the Note Distributable Amount exceeds the sum of
the amounts deposited into the Note Distribution Account pursuant to Sections
4.06(c)(iv) and (v) on each Payment Date (or, if the Reserve Fund is not
maintained by the Indenture Trustee, on the related Deposit Date), the Indenture
Trustee shall cause an amount equal to the lesser of (A) the amount on deposit
in the Reserve Fund and (B) the amount by which the Note Distributable Amount
exceeds the sum of the amounts in the Note Distribution Account, to be deposited
into the Note Distribution Account in immediately available funds in the amounts
set forth in the Servicer's Certificate for such Payment Date; provided that
such amount shall be applied first, to the payment of interest due on the Notes
to the extent, if any, that the amount deposited pursuant to Section 4.06(c)(iv)
is not sufficient to cover such payment of interest and, second, to the payment
of principal of the Notes.
(c) On each Payment Date (or, if the Reserve Fund is not maintained by
the Indenture Trustee, on the related Deposit Date), all interest and other
income (net of losses and investment expenses) on funds on deposit in the
Reserve Fund shall upon the written direction of the Servicer, be paid to the
Seller to the extent that the funds therein exceed the Specified Reserve Fund
Balance. Upon any distribution to the Seller of amounts in excess of the
Specified Reserve Fund Balance, the Noteholders will not have any rights in, or
claims to, such amounts.
Section 4.08. Yield Supplement Account. On the Closing Date, the Seller
will deposit the Yield Supplement Account Deposit to the Yield Supplement
Account from the net proceeds of the sale of the Notes. The Yield Supplement
Account shall be the property of the Issuer subject to the rights of the
Indenture Trustee for the benefit of the Securityholders.
Section 4.09. Net Deposits. For so long as AHFC shall be the Servicer
and the Seller, the Servicer and the Indenture Trustee may make any remittances
pursuant to this Article net of amounts to be distributed by the applicable
recipient to such remitting party. Nonetheless, each such party shall account in
writing for all of the above described remittances and distributions as if the
amounts were deposited and/or transferred separately.
Section 4.10. Statements to Securityholders.
(a) On each Payment Date, the Servicer shall provide to the Owner
Trustee to forward to each Certificateholder of record and to the Indenture
Trustee to forward to each Noteholder of record a statement, based on the
Servicer's Certificate furnished pursuant to
40
Section 3.10, setting forth at least the following information as to the
Securities, to the extent applicable:
(i) the amount of such distribution allocable to principal, as
allocated to each Class of Notes and to the Certificates (stated
separately for each Class of Notes and the Certificates);
(ii) the amount of such distribution allocable to interest, as
allocated to each Class of Notes and to the Certificates (stated
separately for each Class of Notes and the Certificates);
(iii) the Yield Supplement Amount, the Yield Supplement
Withdrawal Amount and the amount on deposit in the Yield Supplement
Account after giving effect to the distributions made on such Payment
Date;
(iv) the Pool Balance as of the close of business on the last day
of the related Collection Period, after giving effect to payments
allocated to principal reported under clause (i) above;
(v) the Note Distributable Amount, the Certificate Distributable
Amount and the Available Amount;
(vi) the Total Servicing Fee paid to the Servicer with respect to
the related Collection Period;
(vii) the amount of non-recoverable Advances;
(viii) total Payments Ahead and the Applied Payments Ahead;
(ix) the amount of Trust Fees and Expenses;
(x) the amount of any Note Interest Carryover Shortfall and Note
Principal Carryover Shortfall on such Payment Date and the change in
such amounts from those with respect to the immediately preceding
Payment Date;
(xi) the amount of any Certificate Interest Carryover Shortfall
and Certificate Principal Carryover Shortfall on such Payment Date and
the change in such amounts from those with respect to the immediately
preceding Payment Date;
(xii) the Note Pool Factor for each Class of Notes and the
Certificate Pool Factor, in each case as of such Payment Date;
(xiii) the balance on deposit in the Reserve Fund on such Payment
Date, after giving effect to distributions made on the Payment Date,
if any, and the change in such balance from the immediately preceding
Payment Date; and
(xiv) the amount available under the Servicer Letter of Credit,
if any, and such amount as a percentage of the Pool Balance as of the
last day of such Collection Period.
41
Each amount set forth on the Payment Date statement under clauses (i),
(ii), (vi), (x) and (xi) above shall be expressed as a dollar amount per
$[________] of original principal balance of a Note or the Original Certificate
Balance of a Certificate, as the case may be.
(b) Within the prescribed period of time for tax reporting purposes
after the end of each calendar year during the term of the Issuer, but not later
than the latest date permitted by law, the related Trustee shall mail to each
Person who at any time during such calendar year shall have been a
Securityholder, a statement, prepared by the Servicer, containing certain
information for such calendar year or, in the event such Person shall have been
a Securityholder during a portion of such calendar year, for the applicable
portion of such year, for the purposes of such Securityholder's preparation of
federal income tax returns. In addition, the Servicer shall furnish to the
Trustees for distribution to such Person at such time any other information
necessary under applicable law for the preparation of such income tax returns.
ARTICLE FIVE
THE SELLER
Section 5.01. Representations of Seller. The Seller makes the following
representations on which the Issuer is deemed to have relied in acquiring the
Receivables. The representations speak as of the execution and delivery of this
Agreement and as of the Closing Date, and shall survive the sale of the
Receivables to the Issuer and the pledge thereof to the Indenture Trustee
pursuant to the Indenture.
(a) Organization and Good Standing. The Seller has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of California, with power and authority to
own its properties and to conduct its business as such properties are
currently owned and such business is presently conducted, and had at
all relevant times, and has, power, authority and legal right to
acquire, own and sell the Receivables.
(b) Due Qualification. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall
require such qualifications.
(c) Power and Authority. The Seller has the power and authority
to execute and deliver this Agreement and to carry out its terms, the
Seller has full power and authority to sell and assign the property to
be sold and assigned to and deposited with the Issuer and has duly
authorized such sale and assignment by all necessary corporate action;
and the execution, delivery and performance of this Agreement has been
duly authorized by the Seller by all necessary corporate action.
(d) Valid Sale; Binding Obligation. This Agreement evidences a
valid sale, transfer and assignment of the Receivables, enforceable
against creditors of and purchasers from the Seller, and constitutes a
legal, valid and binding obligation of the Seller enforceable in
accordance with its terms, except as enforceability may be subject to
42
or limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights in
general and by general principles of equity, regardless of whether
such enforceability shall be considered in a proceeding in equity or
at law.
(e) No Violation. The execution, delivery and performance by the
Seller of this Agreement and the consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms of
this Agreement does not conflict with, result in any breach of any of
the terms and provisions of, nor constitute (with or without notice or
lapse of time) a default under, the articles of incorporation or
bylaws of the Seller, or conflict with or violate any of the material
terms or provisions of, or constitute (with or without notice or lapse
of time) a default under, any indenture, agreement or other instrument
to which the Seller is a party or by which it shall be bound; nor
result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement or
other instrument (other than this Agreement); nor violate any law or,
to the Seller's knowledge, any order, rule or regulation applicable to
the Seller of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Seller or its properties, which breach, default,
conflict, lien or violation would have a material adverse effect on
the earnings, business affairs or business prospects of the Seller.
(f) No Proceedings. There are no proceedings or investigations
pending, or to the Seller's knowledge, threatened, before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties:
(i) asserting the invalidity of this Agreement or any other Basic
Document, (ii) seeking to prevent the issuance of the Securities or
the consummation of any of the transactions contemplated by the Basic
Documents, (iii) seeking any determination or ruling that might
materially and adversely affect the performance by the Seller of its
obligations under, or the validity or enforceability of, the Basic
Documents or the Securities or (iv) relating to the Seller and which
might adversely affect the federal income tax attributes of the
Securities.
Section 5.02. Liability of Seller; Indemnities. The Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement, which obligations shall include
the following:
(a) The Seller shall indemnify, defend and hold harmless the
Issuer, the Trustees and the Servicer and any of the officers,
directors, employees and agents of the Issuer, the Owner Trustee and
the Indenture Trustee from and against any taxes that may at any time
be asserted against any such Person with respect to the transactions
contemplated herein and in the other Basic Documents, including any
sales, gross receipts, general corporation, tangible personal
property, privilege or license taxes (but, in the case of the Issuer,
not including any taxes asserted with respect to, and as of the date
of, the sale of the Receivables to the Issuer or the issuance and
original sale of the Securities, or asserted with respect to ownership
of the Receivables, or federal or other income taxes arising out of
distributions on the Securities) and costs and expenses in defending
against the same.
43
(b) The Seller shall indemnify, defend and hold harmless the
Issuer, the Trustees and the Securityholders and any of the officers,
directors, employees and agents of the Issuer, the Owner Trustee and
the Indenture Trustee from and against any loss, liability or expense
incurred by reason of (i) the Seller's willful misfeasance, bad faith
or negligence in the performance of its duties under this Agreement,
or by reason of reckless disregard of its obligations and duties under
this Agreement and (ii) the Seller's or the Issuer's violation of
federal or state securities laws in connection with the offering and
sale of the Securities.
(c) The Seller shall indemnify, defend and hold harmless the
Trustees and their respective officers, directors, employees and
agents from and against all costs, expenses, losses, claims, damages
and liabilities arising out of or incurred in connection with the
acceptance or performance of the trusts and duties herein and
contained in the Trust Agreement, in the case of the Owner Trustee,
and contained in the Indenture, in the case of the Indenture Trustee,
except to the extent that such cost, expense, loss, claim, damage or
liability: (i) in the case of the Owner Trustee, shall be due to the
willful misfeasance, bad faith or gross negligence (except for errors
in judgment) of the Owner Trustee or shall arise from the breach by
the Owner Trustee of any of its representations or warranties set
forth in Section 7.03 of the Trust Agreement, or (ii) in the case of
the Indenture Trustee, shall be due to the willful misfeasance, bad
faith or negligence of the Indenture Trustee.
(d) The Seller shall pay any and all taxes levied or assessed
upon all or any part of the Owner Trust Estate.
Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee, as the case may be, and
the termination of this Agreement and shall include reasonable fees and expenses
of counsel and expenses of litigation. If the Seller shall have made any
indemnity payments pursuant to this Section and the Person to or on behalf of
whom such payments are made thereafter shall collect any of such amounts from
others, such Person shall promptly repay such amounts to the Seller, without
interest.
Section 5.03. Merger, Consolidation or Assumption of the Obligations of
Seller; Certain Limitations.
(a) Any corporation (i) into which the Seller may be merged or
consolidated, (ii) which may result from any merger, conversion or consolidation
to which the Seller shall be a party or (iii) which may succeed to all or
substantially all of the business of the Seller, which corporation in any of the
foregoing cases executes an agreement of assumption to perform every obligation
of the Seller under this Agreement, shall be the successor to the Seller under
this Agreement without the execution or filing of any document or any further
act on the part of any of the parties to this Agreement, except that if the
Seller in any of the foregoing cases is not the surviving entity, then the
surviving entity shall execute an agreement of assumption to perform every
obligation of the Seller hereunder. The Seller shall provide notice of any
merger, consolidation or succession pursuant to this Section to each Rating
Agency and shall receive from each Rating Agency a letter to the effect that
such merger, consolidation or succession will
44
not result in a qualification, downgrading or withdrawal of its then-current
rating of any Class of Notes.
(b) (i) Subject to paragraph (ii) below, the purpose of the Seller
shall be to engage in any lawful activity for which a corporation may be
organized under the general corporation law of California other than the banking
business, the trust company business or the practice of a profession permitted
to be incorporated by the California Corporations Code.
(ii) Notwithstanding paragraph (b)(i) above, the purpose of the
Seller shall be limited to the following purposes, and activities
incident to and necessary or convenient to accomplish the following
purposes: (A) to acquire, own, hold, sell, transfer, assign, pledge,
finance, refinance and otherwise deal with, retail installment
contracts or wholesale loans secured by, new and used Honda and Acura
motor vehicles (the "Motor Vehicle Receivables"); (B) to authorize,
issue, sell and deliver one or more series of obligations, consisting
of one or more classes of certificates and/or notes or other evidence
of indebtedness (the "Offered Securities") that are collateralized by
or evidence an interest in Motor Vehicle Receivables; and (C) to
negotiate, authorize, execute, deliver and assume the obligations or
any agreement relating to the activities set forth in clauses (A) and
(B) above, including but not limited to any pooling and servicing
agreement, sale and servicing agreement, indenture, reimbursement
agreement, credit support agreement, receivables purchase agreement or
underwriting agreement and to engage in any lawful activity which is
incidental to the activities contemplated by any such agreement. So
long as any outstanding debt of the Seller or Offered Securities are
rated by any nationally recognized statistical rating organization,
the Seller shall not issue notes or otherwise borrow money unless (1)
the Seller has made a written request to the related nationally
recognized statistical rating organization to issue notes or incur
borrowings, which notes or borrowings are rated by the related
nationally recognized statistical rating organization the same as or
higher than the rating afforded any outstanding rated debt or Offered
Securities, or (2) such notes or borrowings (X) are fully subordinated
(and which shall provide for payment only after payment in respect of
all outstanding rated debt and/or Offered Securities) or are
nonrecourse against any assets of the Seller other than the assets
pledged to secure such notes or borrowings, (Y) do not constitute a
claim against the Seller in the event such assets are insufficient to
pay such notes or borrowings and (Z) where such notes or borrowings
are secured by the rated debt or Offered Securities, are fully
subordinated (and which shall provide for payment only after payment
in respect of all outstanding rated debt and/or Offered Securities) to
such rated debt or Offered Securities.
(c) Notwithstanding any other provision of this Section and any
provision of law, the Seller shall not do any of the following:
(i) engage in any business or activity other than as set forth in
clause (b) above;
(ii) without the affirmative vote of a majority of the members of
the Board of Directors of the Seller (which must include the
affirmative vote of all duly appointed Independent Directors, as
required by the articles of incorporation and bylaws of the
45
Seller), (A) dissolve or liquidate, in whole or in part, or institute
proceedings to be adjudicated bankrupt or insolvent, (B) consent to
the institution of bankruptcy or insolvency proceedings against it,
(C) file a petition seeking or consent to reorganization or relief
under any applicable federal or state law relating to bankruptcy, (D)
consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the corporation or
a substantial part of its property, (E) make a general assignment for
the benefit of creditors, (F) admit in writing its inability to pay
its debts generally as they become due or (G) take any corporate
action in furtherance of the actions set forth in clauses (A) through
(F) above; provided, however, that no director may be required by any
shareholder of the Seller to consent to the institution of bankruptcy
or insolvency proceedings against the Seller so long as it is solvent;
or
(iii) merge or consolidate with any other corporation, company or
entity or sell all or substantially all of its assets or acquire all
or substantially all of the assets or capital stock or other ownership
interest of any other corporation, company or entity (except for the
acquisition of Motor Vehicle Receivables of AHFC and the sale of Motor
Vehicle Receivables to one or more trusts in accordance with the terms
of clause (b)(ii) above, which shall not be otherwise restricted by
this Section).
Section 5.04. Limitation on Liability of Seller and Others. The Seller
and any director, officer, employee or agent of the Seller 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 Seller shall not be under any obligation to appear in, prosecute
or defend any legal action that shall not be incidental to its obligations under
this Agreement, and that in its opinion may involve it in any expense or
liability.
Section 5.05. Seller May Own Notes. The Seller and any Affiliate
thereof may in its individual or any other capacity become the owner or pledgee
of Notes with the same rights as it would have if it were not the Seller or an
Affiliate thereof, except as expressly provided herein or in any other Basic
Document.
ARTICLE SIX
THE SERVICER
Section 6.01. Representations of Servicer. The Servicer makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution and
delivery of this Agreement and as of the Closing Date, and shall survive the
sale of the Receivables to the Issuer and the pledge thereof to the Indenture
Trustee pursuant to the Indenture:
(a) Organization and Good Standing. The Servicer has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of California, with power and authority to own its properties
and to conduct its business as such properties are currently owned and such
business is presently conducted, and had at all relevant times, and has, power,
authority and legal right to acquire, own, sell and service the Receivables and
to hold the Receivable Files as custodian on behalf of the Issuer.
46
(b) Due Qualification. The Servicer is duly qualified to do business as
a foreign corporation in good standing, and has obtained all necessary licenses
and approvals in all jurisdictions in which the ownership or lease of property
or the conduct of its business (including the servicing of the Receivables as
required by this Agreement) shall require such qualifications.
(c) Power and Authority. The Servicer has the power and authority to
execute and deliver this Agreement and to carry out its terms; and the
execution, delivery and performance of this Agreement has been duly authorized
by the Servicer by all necessary corporate action.
(d) Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of the Servicer enforceable in accordance with its terms,
except as enforceability may be subject to or limited by bankruptcy, insolvency,
reorganization, moratorium, liquidation or other similar laws affecting the
enforcement of creditors' rights in general and by general principles of equity,
regardless of whether such enforceability shall be considered in a proceeding in
equity or in law.
(e) No Violation. The execution, delivery and performance by the
Servicer of this Agreement and the execution, delivery and performance by the
Seller of this Agreement and the consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms of this Agreement shall not
conflict with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under, the
articles of incorporation or bylaws of the Servicer, or conflict with or breach
any of the material terms or provisions of, or constitute (with or without
notice or lapse of time) a default under, any indenture, agreement or other
instrument to which the Servicer is a party or by which it shall be bound; nor
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than this Agreement); nor violate any law or, to the Servicer's
knowledge, any order, rule or regulation applicable to the Servicer of any court
or of any federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Servicer or its
properties, which breach, default, conflict, lien or violation would have a
material adverse effect on the earnings, business affairs or business prospects
of the Servicer.
(f) No Proceedings. There are no proceedings or investigations pending,
or to the Servicer's best knowledge, threatened, before any court, regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Servicer or its properties: (i) asserting the invalidity
of this Agreement or any other Basic Document, (ii) seeking to prevent the
issuance of the Securities or the consummation of any of the transactions
contemplated by the Basic Documents, (iii) seeking any determination or ruling
that might materially and adversely affect the performance by the Servicer of
its obligations under, or the validity or enforceability of, the Basic Documents
or the Securities or (iv) relating to the Servicer and which might adversely
affect the federal income tax attributes of the Securities.
(g) Existence. The Issuer is qualified to do business in each
jurisdiction in which such qualification is necessary to protect the validity
and enforceability of the Indenture, the Notes, the Collateral (including any
security interests therein) and each other instrument or agreement included in
the Owner Trust Estate, including all required licenses, in connection with
47
this Agreement and the other Basic Documents and the transactions contemplated
hereby and thereby.
Section 6.02. Indemnities of Servicer.
(a) The Servicer shall be liable in accordance herewith only to the
extent of the obligations specifically undertaken by the Servicer under this
Agreement. In this regard, the Servicer shall indemnify, defend and hold
harmless the Issuer, the Trustees, the Securityholders and the Seller and any of
the officers, directors, employees and agents of the Issuer, the Owner Trustee
and the Indenture Trustee from and against any and all costs, expenses, losses,
damages, claims and liabilities (i) arising out of or resulting from the use,
ownership or operation by the Servicer or any Affiliate thereof of a Financed
Vehicle, and (ii) to the extent that such cost, expense, loss, claim, damage or
liability arose out of, or was imposed upon any such Person through, the
negligence, willful misfeasance or bad faith of the Servicer in the performance
of its duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.
For purposes of this Section, in the event of the termination of the
rights and obligations of AHFC (or any successor thereto pursuant to Section
6.03) as Servicer pursuant to Section 7.01, or a resignation by such Servicer
pursuant to this Agreement, such Servicer shall be deemed to be the Servicer
pending appointment of a Successor Servicer (other than the Indenture Trustee)
pursuant to Section 7.02. For the avoidance of doubt, AHFC shall not be liable
for any claims described in the first sentence of this Section which relate to a
date or period on or after the date on which AHFC is terminated or removed as
the Servicer or which are cause by a successor servicer.
(b) Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee, as the case may be, or
the termination of this Agreement and shall include reasonable fees and expenses
of counsel and expenses of litigation. If the Servicer shall have made any
indemnity payments pursuant to this Section and the Person to or on behalf of
whom such payments are made thereafter collects any of such amounts from others,
such Person shall promptly repay such amounts to the Servicer, without interest.
Section 6.03. Merger, Consolidation or Assumption of the Obligations of
Servicer. Any corporation (i) into which the Servicer may be merged or
consolidated, (ii) which may result from any merger, conversion or consolidation
to which the Servicer shall be a party or (iii) which may succeed to all or
substantially all of the business of the Servicer, which corporation in any of
the foregoing cases executes an agreement of assumption to perform every
obligation of the Servicer under this Agreement, shall be the successor to the
Servicer under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties to this Agreement. The
Servicer shall provide notice of any merger, consolidation or succession
pursuant to this Section to the Trustees and each Rating Agency.
Section 6.04. Limitation on Liability of Servicer and Others. Neither
the Servicer nor any of the directors, officers, employees or agents of the
Servicer shall be under any liability to the Issuer or any Securityholder,
except as provided under this Agreement, for any action taken or for refraining
from the taking of any action pursuant to this Agreement or for errors in
48
judgment; provided, however, that this provision shall not protect the Servicer
or any such person against any liability that would otherwise be imposed by
reason of willful misfeasance, bad faith or negligence in the performance of
duties or by reason of reckless disregard of obligations and duties under this
Agreement. The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising under this
Agreement.
Except as otherwise provided in this Agreement, the Servicer shall not
be under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the Receivables in accordance
with this Agreement and that in its opinion may involve it in any expense or
liability; provided, however, that the Servicer may undertake any reasonable
action that it may deem necessary or desirable in respect of this Agreement and
the other Basic Documents and the rights and duties of the parties to this
Agreement and the other Basic Documents and the interests of the
Certificateholders under this Agreement and the Noteholders under the Indenture.
The legal expenses and costs of such action and any liability resulting
therefrom will be expenses, costs and liabilities of the Issuer.
Section 6.05. AHFC Not to Resign as Servicer. Subject to the provisions
of Section 6.03, AHFC shall not resign from the obligations and duties hereby
imposed on it as Servicer under this Agreement except upon a determination that
the performance of its duties under this Agreement shall no longer be
permissible under applicable law. Notice of any such determination permitting
the resignation of AHFC shall be communicated to the Trustees at the earliest
practicable time (and, if such communication is not in writing, shall be
confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to the Trustees concurrently with or promptly after such notice. No
such resignation shall become effective until the Indenture Trustee or a
Successor Servicer shall have (i) assumed the responsibilities and obligations
of AHFC in accordance with Section 7.02 and (ii) become the Administrator
pursuant to Section 1.09 of the Administration Agreement.
49
ARTICLE SEVEN
SERVICER DEFAULTS
Section 7.01. Servicer Defaults. If any one of the following events
(each, a "Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to deliver to the related Trustee
for deposit in any of the Accounts or the Certificate Distribution
Account any required payment or to direct the Indenture Trustee to
make any required distributions therefrom, which failure continues
unremedied for a period of three Business Days after discovery of such
failure by an officer of the Servicer or after the date on which
written notice of such failure, requiring the same to be remedied,
shall have been given (i) to the Servicer by the related Trustee or
(ii) to the Servicer and to the Trustees by the Holders of Notes,
evidencing not less than [___]% of the Outstanding Amount of the
Notes;
(b) failure by the Servicer (or so long as the Servicer is AHFC,
the Seller) duly to observe or to perform in any material respect any
other covenants or agreements of the Servicer (or so long as the
Servicer is AHFC, the Seller) set forth in this Agreement or any other
Basic Document, which failure shall (i) materially and adversely
affect the rights of Certificateholders or Noteholders and (ii)
continue unremedied for a period of 90 days after the date on which
written notice of such failure, requiring the same to be remedied,
shall have been given (A) to the Servicer or the Seller (as the case
may be) by the related Trustee or (B) to the Servicer or the Seller
(as the case may be), and to the related Trustee by the Holders of
Notes, evidencing not less than [___]% of the Outstanding Amount of
the Notes; or
(c) the occurrence of an Insolvency Event with respect to the
Seller or the Servicer;
then, and in each and every case, so long as the Servicer Default shall not have
been remedied, either the Indenture Trustee or the Holders of Notes evidencing
not less than [___]% of the Outstanding Amount of the Notes (or, if the Notes
have been paid in full and the Indenture has been discharged in accordance with
its terms, by holders of Certificates evidencing not less than [___]% of the
Percentage Interests) by notice then given in writing to the Servicer (and to
the Indenture Trustee and the Owner Trustee if given by the Noteholders) may
terminate all the rights and obligations (other than the obligations set forth
in Section 6.02 that accrued on or prior to the effective date of the
termination) of the Servicer under this Agreement. On or after the date
specified in such written notice, all authority and power of the Servicer under
this Agreement, whether with respect to the Notes, the Certificates or the
Receivables or otherwise, shall, without further action, pass to and be vested
in the Indenture Trustee or such Successor Servicer as may be appointed under
Section 7.02; and, without limitation, the Indenture Trustee and the Owner
Trustee are hereby authorized and empowered to execute and deliver, for the
benefit of the predecessor Servicer, as attorney-in-fact or otherwise, any and
all documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of the Receivables
and related documents, or otherwise. The predecessor Servicer
50
shall cooperate with the Successor Servicer and the Trustees in effecting the
termination of the responsibilities and rights of the predecessor Servicer under
this Agreement, including the transfer to the Successor Servicer for
administration by it of all cash amounts that shall at the time be held by the
predecessor Servicer for deposit, or have been deposited by the predecessor
Servicer, in the Accounts or the Certificate Distribution Account or thereafter
received with respect to the Receivables and all Payments Ahead that shall at
that time by held by the predecessor Servicer. All reasonable costs and expenses
(including servicer conversion costs and attorneys' fees) incurred in connection
with transferring the Receivable Files to the Successor Servicer and amending
this Agreement to reflect such succession as Servicer pursuant to this Section
shall be paid by the predecessor Servicer upon presentation of reasonable
documentation of such costs and expenses. Any costs or expenses incurred in
connection with a Servicer Default shall constitute an expense of administration
under Title 11 of the United States Bankruptcy Code or any other applicable
Federal or State bankruptcy laws. Upon receipt of notice of the occurrence of a
Servicer Default, the Indenture Trustee shall give notice thereof to each Rating
Agency.
Section 7.02. Appointment of Successor Servicer.
(a) Upon the Servicer's receipt of notice of termination pursuant to
Section 7.01 or the Servicer's resignation pursuant to Section 6.05, the
predecessor Servicer shall continue to perform its functions as Servicer under
this Agreement, in the case of termination, only until the date specified in
such termination notice or, if no such date is specified in a notice of
termination, until receipt of such notice and, in the case of resignation, until
the later of (i) the date 45 days from the delivery to the Trustees of written
notice of such resignation (or written confirmation of such notice) in
accordance with the terms of this Agreement and (ii) the date upon which the
predecessor Servicer shall become unable to act as Servicer, as specified in the
notice of resignation and accompanying Opinion of Counsel. In the event of the
Servicer's termination hereunder, the Indenture Trustee shall appoint a
Successor Servicer, and the Successor Servicer shall accept its appointment
(including its appointment as Administrator under the Administration Agreement
as set forth in Section 7.02(b)) by a written assumption in form acceptable to
the Trustees. In the event that a Successor Servicer has not been appointed at
the time when the predecessor Servicer has ceased to act as Servicer in
accordance with this Section, the Indenture Trustee without further action shall
automatically be appointed the Successor Servicer and the Indenture Trustee
shall be entitled to receive the Total Servicing Fee. Notwithstanding the above,
the Indenture Trustee shall, if it shall be legally unable or unwilling so to
act, appoint or petition a court of competent jurisdiction to appoint any
established institution, having a net worth of not less than $[________] and
whose regular business shall include the servicing of motor vehicle receivables,
as the successor to the Servicer under this Agreement. In no event shall the
Successor Servicer be liable for the acts or omissions of any predecessor
Servicer.
(b) Upon appointment, the Successor Servicer (including the Indenture
Trustee acting as Successor Servicer) shall (i) be the successor in all respects
to the predecessor Servicer and shall be subject to all the responsibilities,
duties and liabilities arising thereafter relating thereto placed on the
predecessor Servicer and shall be entitled to the Total Servicing Fee and all
the rights granted to the predecessor Servicer by the terms and provisions of
this Agreement and (ii) become the Administrator pursuant to Section 1.09 of the
Administration Agreement.
51
Section 7.03. Notification of Servicer Termination. Upon any
termination of, or appointment of a successor to, the Servicer pursuant to this
Article, the Owner Trustee shall give prompt written notice thereof to
Certificateholders, and the Indenture Trustee shall give prompt written notice
thereof to Noteholders and each Rating Agency.
Section 7.04. Waiver of Past Defaults. The Holders of Notes evidencing
not less than a majority of the Outstanding Amount of the Notes or the Holders
(as defined in the Trust Agreement) of Certificates evidencing not less than a
majority of the Percentage Interests (in the case of a default by the Servicer
that does not adversely affect the Indenture Trustee or the Noteholders or if
all Notes have been paid in full and the Indenture Trustee has been discharged
in accordance with its terms) may, on behalf of all Securityholders waive in
writing any default by the Servicer in the performance of its obligations
hereunder and its consequences, except a default in making any required deposits
to or payments from any of the Accounts or the Certificate Distribution Account
in accordance with this Agreement or in respect of a covenant or provision
hereof that cannot be modified with the consent of each Securityholder. Upon any
such waiver of a past default, such default shall cease to exist, and any
Servicer Default arising therefrom shall be deemed to have been remedied for
every purpose of this Agreement. No such waiver shall extend to any subsequent
or other default or impair any right consequent thereto except to the extent
expressly so waived.
Section 7.05. Repayment of Advances. If a Successor Servicer replaces
the Servicer, the predecessor Servicer shall be entitled to receive
reimbursement for all outstanding Advances made by the predecessor Servicer.
ARTICLE EIGHT
TERMINATION
Section 8.01. Optional Purchase of All Receivables.
(a) On the Payment Date following the last day of any Collection Period
as of which the Pool Balance is [___]% or less of the Original Pool Balance, the
Servicer or any successor to the Servicer shall have the option to purchase the
Owner Trust Estate, other than the Accounts and the Certificate Distribution
Account. To exercise such option, on the related Deposit Date the Servicer shall
deposit pursuant to Section 4.05(a) in the Collection Account an amount equal to
the aggregate Administrative Purchase Payments for the Receivables (including
Defaulted Receivables), and shall succeed to all interests in and to the Issuer.
Notwithstanding the foregoing, the Servicer or any successor to the Servicer
shall not be permitted to exercise such option if the amount to be distributed
to Securityholders on the related Payment Date would be less than the Note
Distributable Amount and Certificate Distributable Amount.
(b) As described in Article Nine of the Trust Agreement, notice of any
termination of the Trust shall be given by the Servicer to the Owner Trustee and
the Indenture Trustee as soon as practicable after the Servicer has received
notice thereof.
(c) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of
52
the Noteholders hereunder and the Owner Trustee will succeed to the rights of
the Indenture Trustee pursuant to this Agreement.
ARTICLE NINE
MISCELLANEOUS
Section 9.01. Amendment.
(a) This Agreement may be amended by the Seller, the Servicer and the
Issuer, with the consent of the Indenture Trustee, but without the consent of
any Securityholders, (i) to cure any ambiguity, to correct or supplement any
provision in this Agreement which may be inconsistent with any other provision
of this Agreement, to add, change or eliminate any other provision of this
Agreement with respect to matters or questions arising under this Agreement that
shall not be inconsistent with the provisions of this Agreement, (ii) to change
the formula for determining the Specified Reserve Fund Balance or the manner in
which the Reserve Fund is funded or to amend or modify any provisions of this
Agreement relating to the remittance schedule with respect to collections
deposited into the Collection Account or the Payahead Account pursuant to
Section 4.02 or (iii) to amend or modify any provisions in this Agreement
relating to the Servicer Letter of Credit, if any, or the acquisition thereof
and including replacing the Servicer Letter of Credit with a surety bond,
insurance policy or deposit of cash or securities satisfactory to the Indenture
Trustee and each Rating Agency; provided, however, that in connection with any
amendment pursuant to clause (i) above, any such action shall not, as evidenced
by an Opinion of Counsel, adversely affect in any material respect the interests
of any Securityholder and provided, further, that in connection with any
amendment pursuant to clause (ii) or (iii) above, the Servicer shall deliver to
the Trustees a letter from each Rating Agency to the effect that such amendment
will not cause its then-current rating on the Rated Securities to be qualified,
reduced or withdrawn.
(b) This Agreement may also be amended from time to time by the Seller,
the Servicer and the Issuer, with the consent of the Indenture Trustee, the
written consent of the Holders of Notes evidencing not less than a majority of
the Outstanding Amount of the Notes and the Owner Trustee, consent of the
Holders (as defined in the Trust Agreement) of outstanding Certificates
evidencing not less than a majority of the Percentage Interests, for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Securityholders; provided, however, that no such amendment shall (i) except as
otherwise provided in Section 9.01 (a) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on
Receivables or distributions that shall be required to be made for the benefit
of the Securityholders or (ii) reduce the aforesaid percentage of the
Outstanding Amount of the Notes and the Percentage Interests, the Holders of
which are required to consent to any such amendment, without the written consent
of all of the Securityholders.
(c) Promptly after the execution of any such amendment or consent, the
Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee and each
Rating Agency. It shall not be necessary for the consent of Securityholders
pursuant to this Section to approve the particular form of any
53
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents and of
evidencing the authorization of Certificateholders of the execution thereof
shall be subject to such reasonable requirements as the Owner Trustee may
require.
(d) Prior to the execution of any amendment to this Agreement, the
Trustees shall be entitled to receive and rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by this
Agreement and the Opinion of Counsel referred to in Section 9.02(i)(1). The
Trustees may, but shall not be obligated to, enter into any such amendment which
affects the Owner Trustee's or the Indenture Trustee's, as applicable, own
rights, duties or immunities under this Agreement or otherwise.
Section 9.02. Protection of Title to Trust.
(a) The Seller shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such manner
and in such places as may be required by law fully to preserve, maintain and
protect the interest of the Issuer and of the Indenture Trustee in the
Receivables and in the proceeds thereof. The Seller shall deliver (or cause to
be delivered) to the Trustees file-stamped copies of, or filing receipts for,
any document filed as provided above, as soon as available following such
filing.
(b) Neither the Seller nor the Servicer shall change its name, identity
or corporate structure in any manner that would, could or might make any
financing statement or continuation statement filed in accordance with Section
9.02(a) seriously misleading within the meaning of Section 9-507(c) of the UCC,
unless it shall have given the Trustees at least 30 days' prior written notice
thereof and shall, within 30 days of such change, execute and file the
appropriate amendments to all previously filed financing statements or
continuation statements.
(c) Each of the Seller and the Servicer shall give the Trustees at
least 60 days' prior written notice of any relocation of its principal executive
office if, as a result of such relocation, the applicable provisions of the UCC
would require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement and shall promptly file
any such amendment or new financing statement. The Servicer shall at all times
maintain each office from which it shall service Receivables, and its principal
executive office, within the United States.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Accounts and any
Payments Ahead held by the Servicer in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables, the Servicer's
master computer records (including any backup archives) that refer to a
Receivable shall indicate clearly the interest of the Issuer and the Indenture
Trustee in such Receivable and that such Receivable is owned by the
54
Issuer and has been pledged to the Indenture Trustee. Indication of the Issuer's
and the Indenture Trustee's interest in a Receivable shall be deleted from or
modified on the Servicer's computer systems when, and only when, the related
Receivable shall have been paid in full or repurchased.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in motor
vehicle receivables to any prospective purchaser, lender or other transferee,
the Servicer shall give to such prospective purchaser, lender or other
transferee computer tapes, records or printouts (including any restored from
backup archives) that, if they shall refer in any manner whatsoever to any
Receivable, shall indicate clearly that such Receivable has been sold and is
owned by the Issuer and has been pledged to the Indenture Trustee.
(g) The Servicer shall permit the Indenture Trustee and its agents at
any time during normal business hours to inspect, audit and make copies of and
abstracts from the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Owner Trustee or to
the Indenture Trustee, within five Business Days, a list of all Receivables (by
contract number and name of Obligor) then held as part of the Issuer, together
with a reconciliation of such list to the Schedule of Receivables and to each of
the Servicer's Certificates furnished before such request indicating removal of
Receivables from the Issuer.
(i) The Servicer shall deliver to the Trustees:
(1) promptly after the execution and delivery of this Agreement
and of each amendment hereto, an Opinion of Counsel stating that, in
the opinion of such counsel, either (A) all financing statements and
continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Trustees
in the Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are
given, or (B) no such action shall be necessary to preserve and
protect such interest; and
(2) within 90 days after the beginning of each fiscal year of the
Issuer beginning with the first fiscal year beginning more than three
months after the Cutoff Date, an Opinion of Counsel, dated as of a
date during such 90-day period, stating that, in the opinion of such
counsel, either (A) all financing statements and continuation
statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Trustees in the Receivables,
and reciting the details of such filings or referring to prior
Opinions of Counsel in which such details are given, or (B) no such
action shall be necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (1) or (2) above shall
specify any action necessary (as of the date of such opinion) to be taken in the
following year to preserve and protect such interest.
55
(j) The Seller shall, to the extent required by applicable law, cause
the Notes to be registered with the Commission pursuant to Section 12(b) or
Section 12(g) of the Exchange Act within the time periods specified in such
sections.
Section 9.03. Notices. All demands, notices and communications under
this Agreement shall be in writing, personally delivered or mailed by certified
mail, return receipt requested, and shall be deemed to have been duly given upon
receipt (i) in the case of the Seller, to CT Corp., 000 Xxxx 0xx Xxxxxx, Xxxxxx
Xxxxx, Xxx Xxxxxxx, Xxxxxxxxxx 00000, (ii) in the case of the Servicer, to
American Honda Finance Corporation, 000 Xxx Xxxx Xxxxxx, Xxxxxxxx 000, Xxxxxxxx,
XX 00000, Attention: President, (iii) in the case of the Issuer or the Owner
Trustee, at the Corporate Trust Office (as such term is defined in the Trust
Agreement), (iv) in the case of the Indenture Trustee, at the Corporate Trust
Office (as such term is herein defined), (v) in the case of Moody's, to Xxxxx'x
Investors Service, Inc., ABS Monitoring Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, (vi) in the case of Standard & Poor's, to Standard & Poor's
Ratings Services, a division of The XxXxxx-Xxxx Companies, Inc., 00 Xxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Asset Backed Surveillance
Department, (vii) in the case of Fitch, to Fitch Ratings, Xxx Xxxxx Xxxxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Asset Backed Surveillance Department
or (viii) as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.
Section 9.04. Assignment.
(a) Notwithstanding anything to the contrary contained herein, except
as provided in the remainder of this Section, as provided in Sections 5.03, 6.03
and 6.05, this Agreement may not be assigned by the Seller or the Servicer
without the prior written consent of Holders of Notes evidencing not less than a
majority of the Outstanding Amount of the Notes and Holders (as such term is
defined in the Trust Agreement) of Certificates evidencing not less than a
majority of the Percentage Interests. And as provided in the provisions of this
Agreement concerning the resignation of the Servicer, this Agreement may not be
assigned by the Seller or the Servicer.
(b) The Seller hereby acknowledges and consents to the mortgage,
pledge, assignment and grant of a security interest by the Issuer to the
Indenture Trustee pursuant to the Indenture for the benefit of the Noteholders
of all right, title and interest of the Issuer in, to and under the Receivables
and/or the assignment of any or all of the Issuer's rights and obligations
hereunder to the Indenture Trustee.
Section 9.05. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Seller, the Servicer, the Issuer,
the Owner Trustee, the Certificateholders, the Indenture Trustee and the
Noteholders, and nothing in this Agreement, whether express or implied, shall be
construed to give to any other Person any legal or equitable right, remedy or
claim in the Owner Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein. The Owner Trustee is a
third-party beneficiary of Sections 2.07, 5.02 and 6.02 of this Agreement and is
entitled to the rights and benefits thereof and may enforce the provisions as if
it were a party hereto.
56
Section 9.06. Severability. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other covenants, agreements, provisions or terms of this
Agreement.
Section 9.07. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 9.08. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 9.09. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 9.10. Nonpetition Covenants.
(a) Notwithstanding any prior termination of this Agreement, the
Servicer and the Seller shall not, prior to the date which is one year and one
day after the termination of this Agreement with respect to the Issuer,
acquiesce, petition or otherwise invoke or cause the Issuer to invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Issuer under any federal or state bankruptcy,
insolvency or similar law, or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement, the
Servicer shall not, prior to the date which is one year and one day after the
termination of this Agreement with respect to the Seller, acquiesce, petition or
otherwise invoke or cause the Seller to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
the Seller under any federal or state bankruptcy, insolvency or similar law, or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Seller or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Seller.
Section 9.11. Limitation of Liability of Owner Trustee and Indenture
Trustee.
(a) Notwithstanding anything contained herein to the contrary, this
Agreement has been countersigned by [____________], not in its individual
capacity but solely in its capacity as Owner Trustee of the Issuer and in no
event shall [____________], in its individual capacity or, except as expressly
provided in the Trust Agreement, [____________], as Owner Trustee of the Issuer
have any liability for the representations, warranties, covenants, agreements or
other obligations of the Issuer hereunder or in any of the certificates, notices
or agreements delivered
57
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Issuer. For all purposes of this Agreement, in the performance of its
duties or obligations hereunder or in the performance of any duties or
obligations of the Issuer hereunder, the Owner Trustee shall be subject to, and
entitled to the benefits of, the terms and provisions of Articles Six, Seven and
Eight of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by [____________], not in its individual capacity
but solely as Indenture Trustee and in no event shall [____________] have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer.
Section 9.12. Confidentiality.
The Issuer hereby agrees to hold and treat all Confidential Information
(as defined below) provided to it in connection with the offering of the Notes
in confidence and in accordance with this Section 9.12, and will implement and
maintain safeguards to further assure the confidentiality of such Confidential
Information. Such Confidential Information will not, without the prior written
consent of the Servicer, be disclosed or used by the Issuer or by its
subsidiaries or, affiliates, or its or their directors, officers, employees,
agents or controlling persons or agents or advisors (collectively, the
"Information Recipients") other than for the purposes of (i) structuring the
securitization transaction and the facilitating the issuance of the Notes, or
(ii) in connection with the performance of its required due diligence on the
Receivables. Disclosure that is not in violation of the Right to Financial
Privacy Act of 1978, as amended, the Xxxxx-Xxxxx-Xxxxxx Act of 1999, as amended,
(the "G-L-B Act") or other applicable law by the Issuer of any Confidential
Information at the request of its outside auditors or governmental regulatory
authorities in connection with an examination of the Issuer by any such
authority or for the purposes specified in above shall not constitute a breach
of its obligations under this Section 9.12, and shall not require the prior
consent of the Servicer.
As used herein, "Confidential Information" means non-public personal
information (as defined in the G-L-B Act and its enabling regulations issued by
the Federal Trade Commission) regarding obligors on the Receivables that is
identified as such by the Servicer. Confidential Information shall not include
information which (i) is or becomes generally available to the public other than
as a result of disclosure by the Issuer or any of its Information Recipients;
(ii) was available to the Issuer on a non-confidential basis from a person or
entity other than the Servicer prior to its disclosure to the Issuer; (iii) is
requested to be disclosed by a governmental authority or related governmental,
administrative, or regulatory or self-regulatory agencies having or claiming
authority to regulate or oversee any aspect of the Issuer's business or that of
its affiliates or is otherwise required by law or by legal or regulatory process
to be disclosed; (iv) becomes available to the Issuer on a non-confidential
basis from a person or entity other than the Servicer who, to the best knowledge
of the Issuer, is not otherwise bound by a confidentiality agreement with the
Servicer, and is not otherwise prohibited from transmitting the information to
the Issuer; or (v) the Servicer provides written permission to the Issuer to
release.
58
Section 9.13. Federal Tax Treatment. Notwithstanding anything to the
contrary contained in this Agreement or any document delivered herewith, all
persons may disclose to any and all persons, without limitation of any kind, the
federal income tax treatment of the Notes, any fact relevant to understanding
the federal tax treatment of the Notes, and all materials of any kind (including
opinions or other tax analyses) relating to such federal tax treatment.
59
IN WITNESS WHEREOF, the parties hereto have caused this Sale and
Servicing Agreement to be duly executed by their respective officers as of the
day and year first above written.
HONDA AUTO RECEIVABLES [___-__] OWNER TRUST
By: [____________], not in its individual capacity
but solely as Owner Trustee on behalf of the Trust
By:
--------------------------------------------------
Name:
Title:
AMERICAN HONDA RECEIVABLES CORP., as Seller
By:
--------------------------------------------------
Name:
Title:
AMERICAN HONDA FINANCE CORPORATION, as Servicer
By:
--------------------------------------------------
Name:
Title:
Acknowledged and accepted as of the day
and year first above written:
[____________], not in its
individual capacity but solely as Indenture
Trustee
By:
-------------------------------------
Name:
Title:
60
SCHEDULE A
SCHEDULE OF RECEIVABLES
Delivered to the Owner Trustee and Indenture Trustee at Closing.
A-1
SCHEDULE B
LOCATION OF RECEIVABLE FILES
American Honda Finance Corporation
0000 Xxxxxxx Xxxxxx
Xxxxx 0X
Xxxxxxx, Xxxxxxxxxx 00000
American Honda Finance Corporation
0000 Xxxxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
American Honda Finance Corporation
0000 Xxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000
American Honda Finance Corporation
000 Xxxxxx Xxxx, Xxxxx 0
X. Xxxxxx, Xxxxxxxxxxxxx 00000
American Honda Finance Corporation
0000 Xxxxx Xxxx.
Xxxxx 000
Xxxxx, Xxxxxxxx 00000
American Honda Finance Corporation
0000 Xxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
American Honda Finance Corporation
0000 XxXxxxxx Xxxx Xxxxx, #000
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
American Honda Finance Corporation
000 Xxxxxxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
American Honda Finance Corporation
000 Xxx Xxxx Xxxxxx, Xxxxxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
B-1
EXHIBIT A
FORM OF DISTRIBUTION STATEMENT TO SECURITYHOLDERS
Honda Auto Receivables [___-__] Owner Trust
NOTE PRINCIPAL DISTRIBUTABLE AMOUNT $__________
Class A-1 Notes: ($ per $1,000 original principal amount)
Class A-2 Notes: ($ per $1,000 original principal amount)
Class A-3 Notes: ($ per $1,000 original principal amount)
Class A-4 Notes: ($ per $1,000 original principal amount)
NOTE INTEREST DISTRIBUTABLE AMOUNT $__________
Class A-1 Notes: ($ per $1,000 original principal amount)
Class A-2 Notes: ($ per $1,000 original principal amount)
Class A-3 Notes: ($ per $1,000 original principal amount)
Class A-4 Notes: ($ per $1,000 original principal amount)
NOTE PRINCIPAL CARRYOVER SHORTFALL $__________
change from immediately preceding Payment Date
Class A-1 Notes: ($ per $1,000 original principal amount)
Class A-2 Notes: ($ per $1,000 original principal amount)
Class A-3 Notes: ($ per $1,000 original principal amount)
Class A-4 Notes: ($ per $1,000 original principal amount)
NOTE INTEREST CARRYOVER SHORTFALL $__________
change from immediately preceding Payment Date $__________
Class A-1 Notes: ($ per $1,000 original principal amount)
Class A-2 Notes: ($ per $1,000 original principal amount)
Class A-3 Notes: ($ per $1,000 original principal amount)
Class A-4 Notes: ($ per $1,000 original principal amount)
AVAILABLE AMOUNT $__________
Available Interest $__________
Available Principal $__________
CERTIFICATE INTEREST DISTRIBUTABLE AMOUNT $__________
($_______ per 1,000 original principal amount)
CERTIFICATE PRINCIPAL DISTRIBUTABLE AMOUNT $__________
($_______ per 1,000 original principal amount)
NOTE DISTRIBUTABLE AMOUNT $__________
CERTIFICATE DISTRIBUTABLE AMOUNT $__________
CERTIFICATE PRINCIPAL CARRYOVER SHORTFALL $__________
change from immediately preceding Payment Date $__________
CERTIFICATE INTEREST CARRYOVER SHORTFALL $__________
change from immediately preceding Payment Date $__________
POOL BALANCE $__________
A-1
NOTE POOL FACTOR $__________
Class A-1 Notes $__________
Class A-2 Notes $__________
Class A-3 Notes $__________
Class A-4 Notes $__________
CERTIFICATE POOL FACTOR $__________
RESERVE FUND BALANCE $__________
change from immediately preceding Payment Date $__________
PAYMENTS AHEAD $__________
APPLIED PAYMENTS AHEAD $__________
TOTAL SERVICING FEE $__________
($_______ per 1,000 original principal amount)
NONRECOVERABLE ADVANCES $__________
YIELD SUPPLEMENT WITHDRAWAL AMOUNT $__________
YIELD SUPPLEMENT AMOUNT $__________
AMOUNT ON DEPOSIT IN YIELD SUPPLEMENT ACCOUNT $__________
TRUST FEES AND EXPENSES $__________
PRINCIPAL PAYMENT AMOUNT $__________
A-2
EXHIBIT B
FORM OF SERVICER'S CERTIFICATE
B-1
