LETTER OF CREDIT REIMBURSEMENT
AGREEMENT
THIS LETTER OF
CREDIT REIMBURSEMENT AGREEMENT, dated as of April 4, 2007
(this “Reimbursement Agreement”), is entered into among
SANTANDER DRIVE AUTO RECEIVABLES TRUST 2007-1, a Delaware statutory
trust (the “Issuer”), WELLS FARGO BANK, NATIONAL
ASSOCIATION (“Wells Fargo”), as indenture trustee (in
such capacity, the “Indenture Trustee”), SANTANDER
DRIVE AUTO RECEIVABLES LLC, a Delaware limited liability company,
as seller (the “Seller”), SANTANDER CONSUMER USA INC.,
an Illinois corporation (“Santander Consumer”), as
servicer (in such capacity, the “Servicer”), and
WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking association
(“Wachovia Bank”), as letter of credit issuer (in such
capacity, the “Letter of Credit Issuer”).
WHEREAS, the
Seller, the Servicer, the Issuer, the Indenture Trustee and Wells
Fargo, as backup servicer, are, concurrently herewith, entering
into a Sale and Servicing Agreement, dated as of April 4, 2007
(the “Sale and Servicing Agreement”), pursuant to which
the Issuer is acquiring from the Seller a pool of retail
installment sales contracts (the “Contracts”) secured
by new and used automobiles, light-duty trucks, vans and mini-vans
financed thereby;
WHEREAS, the
Issuer and the Indenture Trustee are, concurrently herewith,
entering into an indenture, dated as of April 4, 2007 (the
“Indenture”), pursuant to which the Issuer is issuing
$1,200,000,000 aggregate principal amount of Class A Asset
Backed Notes (the “Notes”);
WHEREAS, Wachovia
Bank, as administrative agent and as issuing bank, Drive Residual
Holdings LP, as borrower, Santander Consumer, as originator, the
financial institutions signatory thereto from time to time (the
“Lenders”) and Wachovia Capital Markets, LLC, as
arranger, have entered into an amended and restated credit
agreement, dated as of December 7, 2006 (the “Credit
Agreement”), pursuant to which Wachovia Bank, as Letter of
Credit Issuer, may provide, pursuant to the terms and conditions
contained in the Credit Agreement, the Letter of Credit, in
substantially the form attached hereto as Exhibit A;
and
WHEREAS, the
parties hereto wish to set forth certain terms and conditions
relating to the issuance of the Letter of Credit in connection with
the Notes and the Reserve Amount.
NOW, THEREFORE,
the parties hereto agree as follows:
Section 1.1.
Definitions . As used in this Reimbursement Agreement and
unless the context requires a different meaning, capitalized terms
defined in the recitals, the heading and text hereof shall have
their defined meanings when used herein, and capitalized terms not
otherwise defined herein shall have the meanings assigned to such
terms in the Sale and Servicing Agreement and the following terms
shall have the following meanings:
“ Base
Rate ” shall mean, as of any date, a rate per annum equal
to the greater of (i) the rate announced by Wachovia Bank from time
to time as its prime rate in the United States, such rate to change
as and when such designated rate changes, which rate is not
intended to be the lowest rate of interest charged by Wachovia Bank
in connection with extensions of credit to debtors or (ii) a
fluctuating interest rate per annum (rounded upwards, if necessary,
to the nearest 1/100 of 1%) equal for each day during such period
to the weighted average of the federal funds rates as quoted by
Wachovia Bank and confirmed in Federal Reserve Board Statistical
Release H.15(519) or any successor or substitute publication
selected by Wachovia Bank (or, if such day is not a Business Day,
for the preceding Business Day), or, if for any reason such rate is
not available on any day, the rate determined, in the sole opinion
of Wachovia Bank, to be the rate at which federal funds are being
offered for sale in the national federal funds market at 9:00 a.m.
(Charlotte, North Carolina time) on such day, plus
1.00%.
“ Cash
Flow ” means cash flow supporting the Notes, calculated
in accordance with Item 1114 of Regulation AB, as determined
by the Issuer or the Servicer in its reasonable
discretion.
“
Commission ” means the United States Securities and
Exchange Commission.
“
Eligible Letter of Credit Issuer ” means an
institution with a short-term debt or deposit rating at least equal
to A-1 or the equivalent from S&P and Prime-1 or the equivalent
from Moody’s and a long-term debt or deposit rating at least
equal to A or the equivalent from S&P and A2 or the equivalent
from Moody’s.
“
Exchange Act ” means the Securities Exchange Act of
1934, including, unless the context otherwise requires, the rules
and regulations thereunder.
“
Exchange Act Reports ” means all Distribution Reports
on Form 10-D, Current Reports on Form 8-K and Annual Reports on
Form 10-K that are required to be filed by the Seller or the Issuer
with respect to the Notes pursuant to the Exchange Act.
“ Letter
of Credit ” means the Reserve Account Letter of Credit
issued by the Letter of Credit Issuer, substantially in the form of
Exhibit A.
“ Letter
of Credit Draw Amount ” means any unreimbursed drawing
under the Letter of Credit.
“ Rating
Agency Condition ” means written confirmation by each
Rating Agency that its then current rating of the Notes, without
giving effect to the Note Policy, shall not be reduced or
withdrawn.
“
Repayment Amount ” shall mean the sum of all amounts
payable with respect to any outstanding Letter of Credit Draw
Amounts, fees, interest and expenses and all other amounts owing to
the Letter of Credit Issuer hereunder and to Wachovia Bank and the
Lenders under the Credit Agreement, with respect to the Letter of
Credit.
“
Regulation AB ” means Subpart 229.1100 —
Asset Backed Securities (Regulation AB), 17 C.F.R. §
§ 229.1100-229.1123, and subject to such clarification and
interpretation as have been provided by the Commission in the
adopting release (Asset-Backed Securities, Securities
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Act Release no.
33-8518.70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff
of the Commission, or as may be provided by the Commission or its
staff from time to time.
Section 1.2.
Interpretation . When used in this Reimbursement Agreement,
unless a contrary intention appears: (a) a term has the
meaning assigned to it; (b) an accounting term not otherwise
defined has the meaning assigned to it in accordance with GAAP; (c)
“or” is not exclusive; (d) “including”
means including without limitation; (e) words in the singular
include the plural and words in the plural include the singular;
(f) any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in
connection herewith means such agreement, instrument or statute as
from time to time amended, modified or supplemented and includes
(in the case of agreements or instruments) references to all
attachments thereto and instruments incorporated therein;
(g) references to a Person are also to its successors and
permitted assigns; (h) the words “hereof”,
“herein” and “hereunder” and words of
similar import when used in this Reimbursement Agreement shall
refer to this Reimbursement Agreement as a whole and not to any
particular provision hereof; (i) references contained herein
to Section, Schedule and Exhibit, as applicable, are references to
Sections, Schedules and Exhibits in this Reimbursement Agreement
unless otherwise specified; (j) references to
“writing” include printing, typing, lithography and
other means of reproducing words in a visible form; and
(k) the term “proceeds” has the meaning set forth
in the applicable UCC.
Section 2.1.
Issuance . The Letter of Credit Issuer hereby agrees, upon
the request of the Servicer on the terms and subject to the
conditions set forth in the Credit Agreement, to issue to the
Indenture Trustee the Letter of Credit. If a successor Indenture
Trustee is appointed, promptly following the appointment of such
successor Indenture Trustee pursuant to the terms of the Indenture
and upon receipt of an Instruction to Transfer substantially in the
form of Annex C to the Letter of Credit, the Letter of Credit
Issuer shall deliver to such successor Indenture Trustee, in
exchange for the outstanding Letter of Credit held by the
predecessor Indenture Trustee, a substitute Letter of Credit
substantially in the form of Exhibit A hereto, having terms
identical to the then outstanding Letter of Credit but in favor of
such successor Indenture Trustee.
Section 2.2.
Terms and Payments .
(a) Except
as expressly provided herein or in any Transaction Document, all
terms and conditions with respect to the payment of the Repayment
Amount and any other fees, interest and expenses with respect to
the Letter of Credit, shall not be determined in accordance with
the Transaction Documents, but shall be determined in accordance
with the Letter of Credit and the Credit Agreement.
(b) Without
the prior written consent of the Letter of Credit Issuer, at no
time while the Issuer is subject to the reporting requirements of
the Exchange Act will the face amount of the Letter of Credit be
modified to exceed an amount equal to 9.50% of the Cash
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Flow, provided
that the foregoing shall not reduce or modify the Letter of Credit
Issuer’s obligations under the Letter of Credit.
(c) To
the extent the face amount of the Letter of Credit would exceed an
amount equal to 9.50% of the Cash Flow, the Issuer and the Servicer
shall (i) arrange for the issuance of an additional letter or
letters of credit and/or (ii) provide for deposits to be made
to the Reserve Account from Available Funds (as defined in the Sale
and Servicing Agreement), other than any draws on the Letter of
Credit and otherwise to the extent available, so that at all times
the Letter of Credit Amount shall not exceed 9.50% of the Cash
Flow.
Section 2.3.
Limited Recourse; Obligations Absolute .
(a) Subject
to Sections 2.3(b), (c) and (d) hereof, the
obligation to repay any Repayment Amount shall be without recourse
to the Seller (or any Person acting on behalf of the Seller), the
Issuer, the Servicer, the Insurer, the Indenture Trustee or any
holder of Notes or any Affiliate, officer or director of any of
them and the obligation to pay any Repayment Amount shall be
limited solely to the application of:
(i) Available
Funds (as defined in the Credit Agreement) and other amounts
payable in respect thereof required to be distributed to the
Lenders, and only to the extent that such amounts are available
pursuant to the Credit Agreement for distribution to the Lenders
with respect to the Letter of Credit; and
(ii) any remaining
funds of the Issuer, after payment in full of the debt and all
other obligations of the Issuer, incurred in accordance with the
Transaction Documents.
(b) In
the event of a failure by the Servicer to make any payments,
deposits, transfers or give any instructions to transfer, in each
case as required by the Sale and Servicing Agreement, which failure
directly results in (i) a withdrawal from the Reserve Account
or a drawing under the Letter of Credit or (ii) a decreased
amount required to be distributed to the Letter of Credit Issuer
under the Credit Agreement, the obligation to repay the portion of
the Repayment Amount resulting from such breach shall be a full
recourse obligation of the Servicer, together with interest on such
amount at the Base Rate in effect from time to time plus 2.00% from
the date such payment, deposit or transfer was required to be
received by the Issuer or, in the case of the failure to furnish
required instructions resulting in a withdrawal from the Reserve
Account or a drawing under the Letter of Credit, from the date of
such withdrawal or drawing. Amounts payable hereunder by the
Servicer shall not include amounts that have the effect of recourse
or which constitute advances by the Servicer due to credit or
payment problems of the related obligors; provided that the
foregoing shall not affect any obligations the Servicer may
otherwise have pursuant to the Credit Agreement.
(c) The
obligations of (i) the Seller and the Servicer under this
Section are solely corporate obligations of the Seller and the
Servicer and (ii) the Issuer under this Section are solely
trust obligations of the Issuer, and shall be payable by such
Person solely as provided in this Section. No recourse shall be had
for the payment of any amount owing hereunder or any other
obligation of, or claim against, the Seller or the Issuer or the
Servicer, as the case may be,
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arising out of
or based upon Section 2.3 against any stockholder, employee,
officer, agent, director or authorized person of the Seller, the
Issuer or the Servicer.
(d) Nothing
contained in this Section shall relieve the Seller (or any Person
acting on behalf of the Seller), the Issuer, the Servicer, the
Insurer, the Indenture Trustee or any holder of Notes or any
Affiliate, officer or director of any of them, of any liability
such Person might otherwise have as a result of actions or
omissions taken by them resulting from fraud, gross negligence or
willful misconduct.
(e) The
provisions of Section 2.3(a) shall constitute a subordination
agreement for purposes of Section 510(a) of the Bankruptcy Code. No
amount owing by the Seller or the Issuer, as the case may be,
hereunder, in excess of the liabilities that it is required to pay
in accordance with Section 2.3(a) shall constitute a
“claim” (as defined in Section 101(5) of the
Bankruptcy Code) against it.
(f) The
Letter of Credit Issuer agrees that it shall have no right of
setoff or banker’s lien against (i) the Seller, the
Issuer, the Indenture Trustee, the Servicer, the Insurer, any
holder of a Note or any Affiliate, officer or director of any of
them, (ii) the Trust Estate or (iii) any amounts on
deposit in any Trust Account (other than the Residual Interest
Account, to the extent applicable), in any such case with respect
to the reimbursement of the Repayment Amount or with respect to any
amount owing to the Letter of Credit Issuer arising hereunder or
under the Letter of Credit.
REPRESENTATIONS, WARRANTIES AND
COVENANTS
Section 3.1.
Representations and Warranties of the Issuer, the Seller and the
Servicer . To induce the Letter of Credit Issuer to enter into
this Reimbursement Agreement and to issue the Letter of Credit,
each of the Issuer, the Seller and the Servicer hereby represents
and warrants, each as to itself only (which representations and
warranties shall be deemed made on the date of issuance of the
Letter of Credit), to the Letter of Credit Issuer that:
(a)
Due Organization and Qualification . Such Person is:
(i) duly formed and validly existing as a Delaware statutory
trust, Illinois corporation or Delaware limited liability company,
respectively, and is in good standing under the laws of the State
of Delaware or Illinois, as applicable; and (ii) duly
qualified to do business and is in good standing in each
jurisdiction in which the failure to be so qualified would have a
material adverse effect upon such Person or their ability to
perform their obligations under this Reimbursement Agreement and
any Tran
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