c
Exhibit 4.1
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USAA ACCEPTANCE, LLC
Depositor
USAA FEDERAL SAVINGS BANK
Seller and Servicer
and
--------------------
Trustee and Collateral Agent
on behalf of the Certificateholders
--------------------
FORM OF POOLING AND SERVICING AGREEMENT
Dated as of ________ __, ______
$____________
USAA Auto Grantor Trust ______
_____% Asset Backed Certificates, Class A
_____% Asset Backed Certificates, Class B
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Table of Contents
Page
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ARTICLE I
DEFINITIONS
Section 1.1
Definitions..................................................1
Section 1.2 Usage of
Terms..............................................16
Section 1.3
Simple Interest
Method; Allocations.........................16
Section 1.4
References..................................................16
Section 1.5 Section
References..........................................17
ARTICLE II
CREATION OF TRUST
Section 2.1 Creation of
Trust...........................................17
ARTICLE III
CONVEYANCE OF RECEIVABLES
Section 3.1 Conveyance of
Receivables...................................17
ARTICLE IV
ACCEPTANCE BY TRUSTEE
Section 4.1 Acceptance by
Trustee.......................................18
ARTICLE V
THE RECEIVABLES
Section 5.1 Representations
and Warranties of Depositor; Conditions
Relating to Receivables.....................................18
Section 5.2 Repurchase Upon
Breach or Failure of a Condition............22
Section 5.3 Custody of
Receivable Files.................................22
Section 5.4 Duties of
Servicer as Custodian.............................23
Section 5.5 Instructions;
Authority to Act..............................24
Section 5.6 Custodian's
Indemnification.................................24
Section 5.7 Effective Period
and Termination............................24
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ARTICLE VI
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 6.1 Duties of
Servicer..........................................24
Section 6.2 Collection of
Receivable Payments...........................25
Section 6.3 Realization Upon
Receivables................................26
Section 6.4 Maintenance of
Security Interests in Financed Vehicles......26
Section 6.5 Covenants of
Servicer.......................................26
Section 6.6 Purchase of
Receivables Upon Breach.........................27
Section 6.7 Servicing
Fee...............................................27
Section 6.8 Servicer's
Certificate......................................28
Section 6.9 Annual Statement
as to Compliance; Item 1122 Servicing
Criteria Assessment; Notice of Event of
Servicing Termination.......................................28
Section 6.10 Annual Independent
Certified Public Accounant's Report......29
Section 6.11 Reports to
Certificateholders and the Rating Agencies.......30
Section 6.12
Insurance...................................................30
ARTICLE VII
DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS
Section 7.1
Accounts....................................................30
Section 7.2
Collections.................................................32
Section 7.3
Advances....................................................33
Section 7.4 Additional
Deposits.........................................34
Section 7.5
Distributions...............................................34
Section 7.6 Reserve
Account.............................................35
Section 7.7 Net
Deposits................................................35
Section 7.8 Statements to
Certificateholders............................36
ARTICLE VIII
YIELD SUPPLEMENT AGREEMENT
Section 8.1 Yield Supplement
Agreement..................................37
Section 8.2 Yield Supplement
Account....................................37
ARTICLE IX
THE CERTIFICATES
Section 9.1 The
Certificates............................................39
Section 9.2 Execution,
Authentication and Delivery of Certificates......40
Section 9.3 Registration of
Transfer and Exchange of Certificates.......40
Section 9.4 Mutilated,
Destroyed, Lost, or Stolen Certificates..........41
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Section 9.5 Persons Deemed
Owners.......................................42
Section 9.6 Access to List
of Certificateholders' Names and Addresses...42
Section 9.7 Maintenance of
Office or Agency.............................42
Section 9.8 Book-Entry
Certificates.....................................42
Section 9.9 Notices to
Clearing Agency..................................43
Section 9.10 Definitive
Certificates.....................................43
Section 9.11 Appointment of Paying
Agent.................................44
Section 9.12 Authenticating
Agent........................................45
Section 9.13 Actions of
Certificateholders...............................46
ARTICLE X
THE DEPOSITOR
Section 10.1 Representations of
Depositor................................47
Section 10.2 Liability of
Depositor; Indemnities.........................48
Section 10.3 Merger or
Consolidation of Depositor........................48
Section 10.4 Limitation on
Liability of Depositor and Others.............49
Section 10.5 Depositor May Own
Certificates..............................49
ARTICLE XI
THE SERVICER
Section 11.1 Representations of
Servicer.................................49
Section 11.2 Liability of Servicer;
Indemnities..........................50
Section 11.3 Merger or
Consolidation of Servicer.........................51
Section 11.4 Limitation on
Liability of Servicer and Others..............52
Section 11.5 Servicer Not To
Resign......................................53
Section 11.6 Delegation of
Duties........................................53
ARTICLE XII
EVENTS OF SERVICING TERMINATION
Section 12.1 Events of Servicing
Termination.............................53
Section 12.2 Trustee to Act;
Appointment of Successor....................55
Section 12.3 Notification to
Certificateholders..........................55
Section 12.4 Waiver of Past
Defaults.....................................56
ARTICLE XIII
THE TRUSTEE
Section 13.1 No Power to Engage in
Business or to Vary Investments.......56
Section 13.2 Duties of
Trustee...........................................56
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Section 13.3 Trustee's Assignment
of Repurchased Receivables and
Trustee's Certificate.......................................58
Section 13.4 Certain Matters
Affecting the Trustee.......................58
Section 13.5 Trustee Not Liable for
Certificates or Receivables..........60
Section 13.6 Trustee May Own
Certificates................................61
Section 13.7 Trustee's Fees and
Expenses.................................61
Section 13.8
Indemnity...................................................62
Section 13.9 Eligibility
Requirements for Trustee........................62
Section 13.10
Resignation or Removal of Trustee...........................63
Section 13.11
Successor Trustee...........................................63
Section 13.12
Merger or Consolidation of Trustee..........................64
Section 13.13
Appointment of Co-Trustee or Separate Trustee...............64
Section 13.14
Representations and Warranties of Trustee...................65
Section 13.15
Tax Returns.................................................66
Section 13.16
Trustee May Enforce Claims Without Possession of
Certificates. ..............................................66
Section 13.17
Suits for Enforcement.......................................66
Section 13.18
Maintenance of Office or Agency.............................66
ARTICLE XIV
TERMINATION
Section 14.1 Termination of the
Trust....................................67
Section 14.2 Optional Purchase of
All Receivables........................68
ARTICLE XV
MISCELLANEOUS PROVISIONS
Section 15.1
Amendment...................................................68
Section 15.2 Protection of Title to
Trust................................69
Section 15.3 Limitation on Rights
of Certificateholders..................71
Section 15.4 Governing
Law...............................................72
Section 15.5
Notices.....................................................72
Section 15.6 Severability of
Provisions..................................72
Section 15.7
Assignment..................................................73
Section 15.8 Certificates
Nonassessable and Fully Paid...................73
Section 15.9 Third-Party
Beneficiaries...................................73
ARTICLE XVI
EXCHANGE ACT REPORTING
Section 16.1 Further
Assurances..........................................73
Section 16.2 Form 10-D
Filings...........................................74
Section 16.3 Form 8-K
Filings............................................74
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Section 16.4 Form 10-K
Filings...........................................74
Section 16.5 Report on Assessment
of Compliance and Attestation..........74
Section 16.6 Back-up Sarbanes-Oxley
Certification........................75
Section 16.7 Use of
Subcontractors.......................................76
Section 16.8 Representations and
Warranties..............................76
Section 16.9
Indemnification.............................................76
Section 16.10
Amendments..................................................77
Schedule A:....List of Receivables
Schedule B-1:..Location of Receivables Files
Schedule B-2:..Location of Lien Certificates
Exhibit A:.....Form of Class A Certificate
Exhibit B:.....Form of Class B Certificate
Exhibit C-1:...Trustee's Certificate
Exhibit C-2:...Trustee's Certificate
Exhibit D:.....Servicer's Report
Exhibit E:.....Form of Certificateholder Report
Exhibit F:.....Form of Yield Supplement Agreement
Exhibit G:.....Item 1119 Parties
Exhibit H:.....Minimum Servicing Criteria
Exhibit I:.....Performance Certification (Trustee/ Reporting
Subcontractor)
Exhibit J:.....Performance Certification (Servicer)
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This
Pooling and Servicing Agreement, dated as of _____ __, ______,
is
made with respect to the formation of the USAA Auto Grantor Trust
______ (the
"Trust"), among USAA Acceptance, LLC, a Delaware limited liability
company
(the "Depositor"), USAA Federal Savings Bank, a federally chartered
savings
association (the "Seller" and the "Servicer" in its respective
capacities as
such), and _________________, a banking corporation organized under
the laws
of the State of _____________, as trustee (the "Trustee") and as
collateral
agent with respect to the Reserve Account and the Yield Supplement
Account (in
such capacity, the "Collateral Agent").
WITNESSETH THAT: In consideration of the premises and of the
mutual
agreements herein contained, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. Whenever used in this Agreement, the
following
words and phrases, unless the context otherwise requires, shall
have the
following meanings:
"Account Property" means the Reserve Account, the Yield
Supplement
Account and all amounts, Financial Assets and other investments
held from time
to time in the Reserve Account and the Yield Supplement Account and
all
proceeds of the foregoing.
"Advance" as of a Record Date means any payment made by the
Servicer
pursuant to Section 7.3.
"Affiliate" shall mean, with respect to any specified Person, any
other
Person controlling or controlled by or under common control with
such
specified Person. For the purposes of this definition, "control"
when used
with respect to any Person shall mean 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" shall have meanings correlative to the
foregoing.
"Agent" means any of the Paying Agent, the Collateral Agent,
the
Authenticating Agent and the Transfer Agent.
"Agreement" means this Pooling and Servicing Agreement and all
amendments
and supplements hereto.
"Amount Financed" in respect of a Receivable means the amount
advanced
under the Receivable toward the purchase price of the Financed
Vehicle and
related costs.
"Annual Percentage Rate" or "APR" of a Receivable means the annual
rate
of interest stated in the Receivable.
"Authenticating Agent" shall have the meaning specified in Section
9.12.
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"Authorized Officer" means any officer in the Corporate Trust
Department
of the Trustee with direct responsibility for the administration of
this
Agreement.
"Available Interest" means, with respect to any Payment Date, the
excess
of (a) the sum of (i) Interest Collections for such Payment Date,
[(ii) the
Yield Supplement Amount for such Payment Date] and (iii) all
Advances made by
the Servicer with respect to such Payment Date pursuant to Section
7.3(a),
over (b) the amount of Outstanding Advances to be reimbursed on or
with
respect to such Payment Date pursuant to Section 7.3(a).
"Available Principal" means, with respect to any Payment Date, the
sum of
the following amounts with respect to the preceding Collection
Period: (i)
that portion of all Collections on the Receivables received during
such
Collection Period and allocable to principal in accordance with the
terms of
the Receivables and the Servicer's customary servicing procedures,
(ii) to the
extent attributable to principal, the Purchase Amount received with
respect to
each Receivable repurchased by the Depositor or purchased by the
Servicer
under an obligation which arose during the related Collection
Period and (iii)
Liquidation Proceeds, to the extent allocable to principal,
received during
such Collection Period. Available Principal on any Payment Date
shall exclude
all payments and proceeds of any Receivables the Purchase Amount of
which has
been distributed on a prior Payment Date.
"Available Reserve Amount" means, as of any Payment Date, the
lesser of
(i) the amount on deposit in the Reserve Account (exclusive of
earnings and
income from the investment of funds therein) as of such date and
(ii) the
Specified Reserve Account Balance as of such date.
"Basic Documents" means the Receivables Purchase Agreement, the
Underwriting Agreement, the Note Depository Agreement and the other
documents
and certificates delivered in connection therewith.
"Book-Entry Certificates" means beneficial interests in the
Certificates
described in Section 9.8, the ownership and transfers of which
shall be made
through book entries by a Clearing Agency as described in Section
9.8.
"Business Day" means a day, other than a Saturday or a Sunday, on
which
banking institutions or trust companies located in the State of New
York and
the State of Texas are open for the purpose of conducting a
commercial banking
business.
"Certificate" means any Class A Certificate or Class B
Certificate.
"Certificateholder" or "Holder" means the Person in whose name
a
Certificate is registered in the Certificate Register, except that,
solely for
the purpose of giving any consent, request, waiver or demand
pursuant to this
Agreement, the interest evidenced by any Certificate registered in
the name of
the Depositor, the Servicer or any Person controlling, controlled
by, or under
common control with the Depositor or the Servicer shall not be
taken into
account in determining whether the requisite percentage necessary
to effect
any such consent, request or waiver shall have been obtained;
provided,
however, that in determining whether the Trustee
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shall be protected in relying upon any such consent, request,
waiver or
demand, only Certificates that an Authorized Officer of the Trustee
knows to
be so owned shall be so disregarded.
"Certificate Owner" means, with respect to a Book-Entry
Certificate, the
Person who is the owner of such Book-Entry Certificate, as
reflected on the
books of the Clearing Agency, or on the books of a direct or
indirect Clearing
Agency Participant.
"Certificate Register" means the register maintained pursuant to
Section
9.3.
"Certifying Party" shall have the meaning set forth in Section 16.6
of
this Agreement.
"Class A Certificate" means a certificate executed by the Trustee
on
behalf of the Trust and authenticated by the Trustee, substantially
in the
form of Exhibit A hereto.
"Class A Certificateholder" or "Class A Holder" means the Person in
whose
name a Class A Certificate shall be registered in the Certificate
Register,
except that, solely for the purpose of giving any consent, request
or waiver
pursuant to this Agreement, the interest evidenced by any Class A
Certificate
registered in the name of the Depositor, the Servicer or any Person
actually
known to an Authorized Officer of the Trustee to be an Affiliate of
the
Depositor or the Servicer shall not be taken into account in
determining
whether the requisite percentage necessary to effect any such
consent, request
or waiver shall have been obtained.
"Class A Certificate Balance" means, at any time, the Original
Class A
Certificate Balance, as reduced by all principal amounts
distributed to Class
A Certificateholders prior to such time.
"Class A Certificate Owner" means, with respect to a Book-Entry
Certificate representing a beneficial interest in the Class A
Certificates,
the Person who is the owner of such Book-Entry Certificate, as
reflected on
the books of the Clearing Agency, or on the books of a Person
maintaining an
account with such Clearing Agency (directly or as an indirect
participant in
accordance with the rules, regulations and procedures of such
Clearing
Agency).
"Class A Distribution Account" means the account established
and
maintained as such pursuant to Section 7.1.
"Class A Interest Carryover Shortfall" means, (i) with respect to
the
initial Payment Date, zero and (ii) with respect to any other
Payment Date,
the excess of Class A Monthly Interest for the preceding Payment
Date, and any
outstanding Class A Interest Carryover Shortfall on such preceding
Payment
Date, over the amount in respect of interest that is actually
deposited in the
Class A Distribution Account on such preceding Payment Date, plus
30 days of
interest on such excess, to the extent permitted by law, at the
Class A
Pass-Through Rate.
"Class A Interest Distribution" means, with respect to any Payment
Date,
the sum of Class A Monthly Interest for such Payment Date and the
Class A
Interest Carryover Shortfall for such Payment Date.
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"Class A Monthly Interest" means, with respect to any Payment
Date,
one-twelfth (or in the case of the first Payment Date, ____) of the
Class A
Pass-Through Rate multiplied by the Class A Certificate Balance as
of the
preceding Payment Date (after giving effect to all payments of
principal made
on such Payment Date) or, in the case of the first Payment Date, as
of the
Closing Date.
"Class A Monthly Principal" means, with respect to any Payment
Date, the
Class A Percentage of Available Principal for such Payment Date
plus the Class
A Percentage of Realized Losses with respect to the related
Collection Period.
"Class A Pass-Through Rate" means ____% per annum, calculated on
the
basis of a 360-day year comprised of twelve 30-day months.
"Class A Percentage" means ____%.
"Class A Pool Factor" means, with respect to any Payment Date, the
Class
A Certificate Balance as of such Payment Date (after giving effect
to all
payments of principal to be made on such Payment Date) divided by
the Original
Class A Certificate Balance, expressed as a seven-digit
decimal.
"Class A Principal Carryover Shortfall" means, (i) with respect to
the
initial Payment Date, zero and (ii) with respect to any other
Payment Date,
the excess of (x) Class A Monthly Principal for such Payment Date
and (y) any
outstanding Class A Principal Carryover Shortfall from the
preceding Payment
Date over the amount in respect of principal that is actually
deposited in the
Class A Distribution Account on such Payment Date.
"Class A Principal Distribution" means, (i) with respect to the
initial
Payment Date, the Class A Monthly Principal for such Payment Date
and (ii)
with respect to any other Payment Date, the sum of Class A Monthly
Principal
for such Payment Date and the Class A Principal Carryover Shortfall
as of the
preceding Payment Date. In addition, on the Final Scheduled Payment
Date, the
Class A Principal Distribution shall include any additional amount
required to
reduce the outstanding principal balance of the Class A
Certificates to zero.
"Class B Certificate" means a certificate executed by the Trustee
on
behalf of the Trust and authenticated by the Trustee, substantially
in the
form of Exhibit B hereto.
"Class B Certificateholder" or "Class B Holder" means the Person in
whose
name a Class B Certificate shall be registered in the Certificate
Register,
except that, solely for the purpose of giving any consent, request
or waiver
pursuant to this Agreement, the interest evidenced by any Class B
Certificate
registered in the name of the Depositor, the Servicer or any Person
actually
known to an Authorized Officer of the Trustee to be an Affiliate of
the
Depositor or the Servicer shall not be taken into account in
determining
whether the requisite percentage necessary to effect any such
consent, request
or waiver shall have been obtained.
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"Class B Certificate Balance", at any time, equals the Original
Class B
Certificate Balance, as reduced by all principal amounts
distributed to Class
B Certificateholders prior to such time.
"Class B Certificate Owner" means, with respect to a Book-Entry
Certificate representing a beneficial interest in the Class B
Certificates,
the Person who is the owner of such Book-Entry Certificate, as
reflected on
the books of the Clearing Agency, or on the books of a Person
maintaining an
account with such Clearing Agency (directly or as an indirect
participant in
accordance with the rules, regulations and procedures of such
Clearing
Agency).
"Class B Distribution Account" means the account established
and
maintained as such pursuant to Section 7.1.
"Class B Interest Carryover Shortfall" means, (i) with respect to
the
initial Payment Date, zero and (ii) with respect to any other
Payment Date,
the excess of Class B Monthly Interest for the preceding Payment
Date, and any
outstanding Class B Interest Carryover Shortfall on such preceding
Payment
Date, over the amount in respect of interest that is actually
deposited in the
Class B Distribution Account on such preceding Payment Date, plus
30 days of
interest on such excess, to the extent permitted by law, at the
Class B
Pass-Through Rate.
"Class B Interest Distribution" means, with respect to any Payment
Date,
the sum of Class B Monthly Interest for such Payment Date and the
Class B
Interest Carryover Shortfall for such Payment Date.
"Class B Monthly Interest" means, with respect to any Payment
Date,
one-twelfth (or in the case of the first Payment Date, ____) of the
Class B
Pass-Through Rate multiplied by the Class B Certificate Balance as
of the
preceding Payment Date (after giving effect to all payments of
principal made
on such Payment Date) or, in the case of the first Payment Date, as
of the
Closing Date.
"Class B Monthly Principal" means, with respect to any Payment
Date, the
Class B Percentage of Available Principal for such Payment Date
plus the Class
B Percentage of Realized Losses with respect to the related
Collection Period.
"Class B Pass-Through Rate" means ___% per annum, calculated on the
basis
of a year of twelve 30-day months.
"Class B Percentage" means ____%.
"Class B Pool Factor" means, with respect to any Payment Date, the
Class
B Principal Balance as of such Payment Date (after giving effect to
all
payments of principal to be made on such Payment Date) divided by
the Original
Class B Certificate Balance, expressed as a seven-digit
decimal.
"Class B Principal Carryover Shortfall" means, (i) with respect to
the
initial Payment Date, zero and (ii) with respect to any other
Payment Date,
the excess of the sum of (x) Class B
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Monthly Principal for such Payment Date (y) and any outstanding
Class B
Principal Carryover Shortfall from the preceding Payment Date over
the amount
in respect of principal that is actually deposited in the Class B
Distribution
Account on such Payment Date.
"Class B Principal Distribution" means, (i) with respect to the
initial
Payment Date, the Class B Monthly Principal for such Payment Date
and (ii)
with respect to any other Payment Date, the sum of Class B Monthly
Principal
for such Payment Date and the Class B Principal Carryover Shortfall
as of the
preceding Payment Date. In addition, on the Final Scheduled Payment
Date, the
Class B Principal Distribution shall include any additional amount
required to
reduce the outstanding principal balance of the Class B
Certificates to zero.
"Clearing Agency" means an organization registered as a "clearing
agency"
pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended.
The initial Clearing Agency shall be The Depository Trust
Company.
"Clearing Agency Participant" means a broker, dealer, bank,
other
financial institution or other Person for whom from time to time a
Clearing
Agency effects book-entry transfers of securities deposited with
the Clearing
Agency.
"Closing Date" means _______.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral Agent" means _________________, a ________________, in
its
capacity as collateral agent for the benefit of the
Certificateholders with
respect to the Reserve Account and the Yield Supplement
Account.
"Collection Account" means the account established and
maintained
pursuant to Section 7.1.
"Collection Period" means, during the term of this Agreement,
the
calendar month preceding each Payment Date, or in the case of the
initial
Collection Period, the period from the Cut-off Date to __________.
With
respect to any Determination Date, Deposit Date or Payment Date,
the "related
Collection Period" shall mean the Collection Period preceding the
month in
which such Determination Date, Deposit Date or Payment Date
occurs.
"Collections" mean all collections on the Receivables.
"Commission" shall mean the Securities and Exchange Commission.
"Contract Rate" means, with respect to a Receivable, the rate per
annum
of interest charged to the Obligor on the outstanding Principal
Balance of
such Receivable in accordance with the terms thereof.
"Corporate Trust Office" means the office of the Trustee at _______
or
such office at some other address as the Trustee may designate from
time to
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time by notice to the Certificateholders, the Depositor, the
Servicer, the
Paying Agent, the Transfer Agent and Certificate Registrar.
"Cut-off Date" means _______.
"Cut-off Date Principal Balance" means, with respect to any
Receivable,
the initial Principal Balance of such Receivable minus the sum of
the portion
of all payments received under such Receivable from or on behalf of
the
related Obligor prior to the close of business by the Servicer on
the day
prior to the Cut-off Date and allocable to principal in accordance
with the
terms of the Receivable and the Servicer's customary servicing
practices.
"Defaulted Receivable" means a Receivable (other than a
Repurchased
Receivable) as to which either (i) more than 5% of a scheduled
payment is 120
or more days delinquent as of the last day of the applicable
Collection Period
or (ii) the Servicer has determined based on its usual collection
practices
and procedures, during any Collection Period, that eventual payment
in full of
the Amount Financed is unlikely, whichever occurs first.
"Definitive Certificates" shall have the meaning specified in
Section
9.8.
"Deposit Date" means the Business Day immediately preceding each
Payment
Date.
"Depositor" shall mean USAA Acceptance, LLC, a Delaware limited
liability
company, as the depositor of the Receivables under this Agreement,
and each
successor to USAA Acceptance, LLC pursuant to Section 10.3.
"Depository Agreement" shall mean the agreement among the
Depositor, the
Trustee and the initial Clearing Agency, substantially in the form
attached
hereto as Exhibit F.
"Determination Date" means the __th calendar day of the month (or,
if
such 10th calendar day is not a Business Day, the Business Day
preceding such
__th calendar day) immediately succeeding the related Collection
Period.
"Entitlement Order" has the meaning specified in Section
8-102(a)(8) of
the UCC.
"Event of Servicing Termination" means an event specified in
Section
12.1.
"Excess Funds" shall have the meaning specified in Section
7.5(d).
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as
amended.
"Exchange Act Reports" shall mean any reports on Form 10-D, Form
8-K and
Form 10-K required to be filed by the Depositor with respect to the
Trust
under the Exchange Act.
"Fannie Mae" means Fannie Mae or any successor thereto.
"FDIC" means the Federal Deposit Insurance Corporation or any
successor
thereto.
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"FHLMC" means the Federal Home Loan Mortgage Corporation or any
successor
thereto.
"Final Scheduled Payment Date" means _______.
"Financed Vehicle" with respect to a Receivable means the new or
used
automobile or light-duty truck, together with all accessions
thereto, securing
an Obligor's indebtedness under such Receivable.
"Financial Asset" has the meaning specified in Section 8-102(a)(9)
of the
UCC.
"Form 10-D Disclosure Item" shall mean with respect to any Person,
any
litigation or governmental proceedings pending against such Person,
or any of
the Trust, the Depositor, the Trustee, the Collateral Agent or the
Servicer if
such Person or in the case of the Trustee or Collateral Agent, a
Responsible
Officer of such Person, has actual knowledge thereof, in each case
that would
be material to the Certificateholders.
"Form 10-K Disclosure Item" shall mean with respect to any Person,
(a)
any Form 10-D Disclosure Item and (b) any affiliations or
relationships
between such Person and any Item 1119 Party to the extent a
Responsible
Officer of such Person (in the case of the Trustee and the
Collateral Agent)
has actual knowledge thereof.
"Interest Collections" mean, with respect to any Payment Date, the
sum of
the following amounts for the preceding Collection Period: (i) that
portion of
the Collections on the Receivables received during such Collection
Period that
is allocable to interest in accordance with the terms of the
Receivables and
the Servicer's customary servicing procedures, (ii) Liquidation
Proceeds, to
the extent allocable to interest, received during such Collection
Period,
(iii) all Recoveries and (iv) to the extent attributable to
interest, the
Purchase Amount received with respect to each Receivable
repurchased by the
Depositor or purchased by the Servicer under an obligation which
arose during
the related Collection Period. "Interest Collections" for any
Payment Date
shall exclude all payments and proceeds of any Receivables the
Purchase Amount
of which has been distributed on a prior Payment Date.
"Item 1119 Party" shall mean the Depositor, the Seller, the
Servicer, the
Trustee, the Collateral Agent and any other material transaction
party, as
identified in Exhibit G to this Agreement.
"Lien" means a security interest, lien, charge, pledge or
encumbrance of
any kind other than tax liens, mechanics' liens or any other liens
that attach
to a Receivable by operation of law.
"Liquidation Proceeds" means (i) insurance proceeds received by
the
Servicer and (ii) the monies collected by the Servicer (from
whatever source,
including but not limited to proceeds of a Financed Vehicle which
is sold
after repossession) during a Collection Period on a Defaulted
Receivable net
of any payments required by law to be remitted to the Obligor.
"Moody's" means
Moody's Investors Service, Inc. and any successor
thereto.
8
<PAGE>
"Obligor" on a Receivable means the purchaser or the co-purchasers
of the
Financed Vehicle purchased in part or in whole by the execution and
delivery
of such Receivable or any other Person who owes or may be liable
for payments
under such Receivable.
"Officer's Certificate" means a certificate signed by the chairman
of the
board, the president, the treasurer, the controller, any executive
or senior
vice president or any vice president of the Depositor or Servicer,
as
appropriate.
"Opinion of Counsel" means a written opinion of counsel (who may
be
counsel to the Depositor or the Servicer) acceptable in form and
substance to
the Trustee.
"Optional Purchase Percentage" means _____________%.
"Original Pool Balance" means $_____________.
"Outstanding Advances" means, as of any date, the aggregate of
all
Advances made by the Servicer with respect to prior Payment Dates
which have
not been reimbursed pursuant to Section 7.3.
"Outstanding Receivable" means, as of the time of reference
thereto, a
Receivable that (i) has not been fully paid, (ii) has not become a
Defaulted
Receivable, and (iii) has not become a Repurchased Receivable.
"Paying Agent" shall have the meaning specified in Section 9.11 and
shall
initially be _________________.
"Payment Date" means, for each Collection Period, the __th day of
the
following month, or if the __th day is not a Business Day, the next
following
Business Day, commencing on _________, ___.
"Performance Certification" shall have the meaning specified in
Section
16.6.
"Permitted Investments" means, at any time, any one or more of
the
following obligations and securities:
(i) obligations guaranteed as to timely payment of interest and
principal of the United States of America or any agency thereof,
provided
such
obligations are backed by the full faith and credit of the
United
States of America;
(ii) general obligations of or obligations guaranteed as to the
timely payment of interest and principal by any state of the
United
States of America or the District of Columbia then rated A-1+ or
AAA by
Standard & Poor's and P-1 or Aaa by Moody's or such lower
ratings (as
approved in writing by the Rating Agencies) as will not result
in
9
<PAGE>
the
qualification, downgrading or withdrawal of the ratings then
assigned
to
the Certificates by the Rating Agencies;
(iii) commercial paper which is then rated P-1 by Moody's and
A-1+
by
Standard & Poor's , or such lower rating categories (as
approved in
writing by the Rating Agencies) as will not result in the
qualification, downgrading or withdrawal of the ratings then
assigned
to
the Certificates by the Rating Agencies;
(iv) certificates of deposit, demand or time deposits, federal
funds
or
banker's acceptances issued by any depository institution or
trust
company (including the Trustee acting in its commercial banking
capacity)
incorporated under the laws of the United States or of any state
thereof
or
incorporated under the laws of a foreign jurisdiction with a branch
or
agency located in the United States of America and subject to
supervision
and
examination by federal or state banking authorities, provided
that
the
short term unsecured deposit obligations of such depository
institution or trust company is then rated P-1 by Moody's and A-1+
by
Standard & Poor's or such lower rating categories (as approved
in writing
by
the Rating Agencies) as will not result in the qualification,
downgrading or withdrawal of the ratings then assigned to the
Certificates by the Rating Agencies;
(v) demand or time deposits of, or certificates of deposit
issued
by,
any bank, trust company, savings bank or other savings
institution
provided that such deposits or certificates of deposit are fully
insured
by
the FDIC;
(vi) guaranteed reinvestment agreements issued by any bank,
insurance company or other corporation (A) the short term unsecured
debt
or
deposits of which are rated P-1 by Moody's and A-1+ by Standard
&
Poor's or the long-term unsecured debt of which are rated at least
Aaa by
Moody's and AAA by Standard & Poor's or (B) are otherwise
approved in
writing by the Rating Agencies as investments which will not result
in
the
qualification, downgrading or withdrawal of the ratings then
assigned
to
the Certificates by the Rating Agencies;
(vii) repurchase obligations with respect to any security
described
in
clauses (i), (ii) or (ix) herein or any other security issued
or
guaranteed by the FHLMC, Fannie Mae or any agency or
instrumentality of
the
United States of America which is backed by the full faith and
credit
of
the United States of America, in either case entered into with
a
federal agency or a depository institution or trust company (acting
as
principal) described in (iv) above or a corporation (acting as
principal)
described in (vi) above;
(viii) investments in money market funds, which funds (A) are
not
subject to any sales, load or other similar charge; (B) are rated
at
least AAAm or AAAm-G by Standard & Poor's and Aaa by Moody's
and (C) are
invested solely in obligations described in clauses (i) through
(vii)
above;
(ix) interests in any open-end or closed-end management type
investment company or investment trust (a) registered under the
Investment Company Act of
1940,
10
<PAGE>
as
from time to time amended, the portfolio of which is limited to
obligations of the United States or obligations guaranteed by the
United
States and to agreements to repurchase such obligations, which
agreements, with respect to principal and interest, are at least
100%
collateralized by such obligations marked to market on a daily
basis and
pursuant to which the investment company or investment trust is
required
to
take delivery of such obligations either directly or through an
independent custodian designated in accordance with the
Investment
Company Act of 1940, as from time to time amended and (b)
acceptable to
the
Rating Agencies (as approved in writing by the Rating Agencies)
as
collateral for securities having ratings equivalent to the ratings
of the
Certificates on the Closing Date; and
(x) such other investments where either (A) the short-term
unsecured
debt
or deposits of the obligor on such investments are rated A-1+
by
Standard & Poor's and P-1 by Moody's or (B) such investments
are
acceptable to the Rating Agencies (as approved in writing by each
of
them) and will not result in the qualification, downgrading or
withdrawal
of
the ratings then assigned to the Certificates by the Rating
Agencies.
"Person" means a legal person, including any individual,
corporation,
estate, partnership, joint venture, association, joint stock
company, trust,
limited liability company, unincorporated organization, or
government or any
agency or political subdivision thereof, or any other entity of
whatever
nature.
"Pool Balance" as of any date of determination means the
aggregate
Principal Balance of the Outstanding Receivables.
"Pool Factor" as of the last day of any Collection Period means the
Pool
Balance divided by the Original Pool Balance, expressed as a
seven-digit
decimal.
"Principal Balance" of a Receivable, as of any date of
determination,
means the Amount Financed minus that portion of all payments
received on or
prior to such date allocable to principal.
"Purchase Agreement" means the Receivables Purchase Agreement dated
as of
[ ] between the Seller and the Depositor.
"Purchase Amount" with respect to a Repurchased Receivable or
any
Receivable purchased by the Servicer pursuant to Section 14.2 means
the sum,
as of the last day of the preceding Collection Period on which such
Receivable
becomes such, of the Principal Balance thereof plus accrued
interest thereon
at the weighted average of the Class A Pass-Through Rate and the
Class B
Pass-Through Rate.
"Purchased Receivable" means, on any date of determination, a
Receivable
as to which payment of the Purchase Amount has been made by the
Depositor or
the Servicer pursuant to this Agreement.
11
<PAGE>
"Rating Agency" shall mean each of the nationally recognized
statistical
rating organizations designated by the Depositor to provide a
rating on the
Certificates which is then rating such Certificates. If no such
organization
or successor is any longer in existence, "Rating Agency" shall be a
nationally
recognized statistical rating organization or other comparable
Person
designated by the Depositor, notice of which designation shall be
given to the
Trustee, the Collateral Agent and the Servicer.
"Rating Agency Condition" shall mean, with respect to any action,
that
each of the Rating Agencies shall have notified the Servicer, the
Depositor,
the Trustee and the Collateral Agent in writing that such action
will not
result in a reduction or withdrawal of the then current ratings of
the
Certificates.
"Regulation AB" shall mean subpart 229.1100 - Asset Backed
Securities
(Regulation AB), 17 C.F.R. ss.ss.229.1100-229.1123, as such may be
amended
from time to time, and subject to such clarification and
interpretation as
have been provided by the Commission in the adopting release
(Asset-Backed
Securities, Securities 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.
"Reportable Event" shall mean any event required to be reported on
Form
8-K, and in any event, the following:
(a)
entry into a definitive agreement related to the Trust, the
Certificates or the Receivables, or an amendment to a Basic
Document, even if
the Depositor is not a party to such agreement (e.g., a servicing
agreement
with a servicer contemplated by Item 1108(a)(3) of Regulation
AB);
(b)
termination of a Basic Document (other than by expiration of
the
agreement on its stated termination date or as a result of all
parties
completing their obligations under such agreement), even if the
Depositor is
not a party to such agreement (e.g., a servicing agreement with a
servicer
contemplated by Item 1108(a)(3) of Regulation AB);
(c)
with respect to the Servicer only, the occurrence of a
Servicing
Termination Event or an Event of Default;
(d)
the resignation,
removal, replacement,
substitution of the Trustee,
the Collateral Agent or any Co-Trustee;
(e)
with respect to the Trustee only, a required distribution to
holders
of the Certificates is not made as of the required Payment Date
under this
Agreement; and
(f)
with respect to the Servicer only, if the Servicer becomes aware
of
any bankruptcy or receivership of the Seller, the Depositor, the
Trustee, the
Collateral Agent, any enhancement or support provider contemplated
by Item
1114(b) or 1115 of Regulation AB, or other material party
contemplated by Item
1101(d)(1) of Regulation AB.
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<PAGE>
"Reporting Subcontractor" shall mean with respect to the Trustee,
any
Subcontractor determined by such Person pursuant to Section 16.7 to
be
"participating in the servicing function" within the meaning of
Item 1122 of
Regulation AB. References to a Reporting Subcontractor shall refer
only to the
Subcontractor of such Person and shall not refer to Subcontractors
generally.
"Qualified Institution" means a depository institution organized
under
the laws of the United States of America or any one of the states
thereof or
incorporated under the laws of a foreign jurisdiction with a branch
or agency
located in the United States of America or one of the States
thereof and
subject to supervision and examination by federal or state banking
authorities
which at all times has the Required Deposit Rating and, in the case
of any
such institution organized under the laws of the United States of
America,
whose deposits are insured by the FDIC.
"Qualified Trust Institution" means an institution organized under
the
laws of the United States of America or any one of the states
thereof or
incorporated under the laws of a foreign jurisdiction with a branch
or agency
located in the United States of America or one of the States
thereof and
subject to supervision and examination by federal or state banking
authorities
which at all times (i) is authorized under such laws to act as a
trustee or in
any other fiduciary capacity, (ii) has not less than one billion
dollars in
assets under fiduciary management, (iii) has a minimum net worth of
at least
$50,000,000 and (iv) has a long term deposits rating of not less
than "BBB-"
and "Baa3" from Standard & Poor's and Moody's,
respectively.
"Rating Agencies" means Standard & Poor's and Moody's.
"Rating Agency Condition" means, with respect to any action,
written
confirmation by each Rating Agency that such action will not result
in a
withdrawal or reduction of its rating of the Class A Certificates
or the Class
B Certificates.
"Realized Losses" mean, for any Collection Period and for each
Receivable
that became a Defaulted Receivable during such Collection Period,
the excess
of (i) the aggregate Principal Balance of such Receivable over
(ii)
Liquidation Proceeds received with respect to such Receivable
during such
Collection Period, to the extent allocable to principal.
"Receivable" means a motor vehicle installment loan contract and
all
proceeds thereof and payments thereunder [(other than interest
accrued and
unpaid as of the Cut-off Date)], which Receivable shall appear on
Schedule A
to this Agreement.
"Receivable Files" means the documents specified in Section
5.3.
"Receivables Pool" means the pool of Receivables included in the
Trust.
"Record Date" means, with respect to any Payment Date, the Business
Day
prior to such Payment Date unless Definitive Certificates are
issued, in which
case Record Date shall mean the last day of the immediately
preceding calendar
month.
13
<PAGE>
"Recoveries" means, with respect to any Defaulted Receivable and
any
Collection Period after the Collection Period in which such
Receivable became
a Defaulted Receivable, all monies received by the Servicer with
respect to
any Defaulted Receivable during such Collection Period net of the
sum of (i)
any fees, costs or expenses incurred by the Servicer in connection
with the
collection of such Defaulted Receivable and the disposition of the
Financed
Vehicle as permitted by Section 6.3 (to the extent not previously
reimbursed)
and (ii) any payments required by law to be remitted to the
Obligor, but, in
any event, not less than zero.
"Repurchase Date" shall have the meaning set forth in Section
5.2.
"Repurchased Receivable" means as of the last day of any
Collection
Period a Receivable repurchased as of such date by the Depositor
pursuant to
Section 5.2 or purchased as of such date by the Servicer pursuant
to Section
6.6.
"Reserve Account Initial Deposit" means $_____________.
"Required Deposit Rating" means a short-term certificate of
deposit
rating from Moody's of P-1 and from Standard & Poor's of A-1+
[and a long-term
unsecured debt rating of not less than] ["AA" by Standard &
Poor's and "Aa2"
by Moody's].
"Reserve Account" shall mean the Reserve Account established
and
maintained as such pursuant to Section 7.6.
"Reserve Account Securities Intermediary" shall have the
meaning
specified in Section 7.1(c).
"Securities Act" means the Securities Act of 1933, as amended.
"Security Entitlement" has the meaning specified in Section
8-102(a)(17)
of the UCC.
"Seller" means USAA Federal Savings Bank in its capacity as the
seller of
the Receivables under this Purchase Agreement, and each successor
to USAA
Federal Savings Bank (in the same capacity).
"Servicer" means USAA Federal Savings Bank in its capacity as
the
servicer of the Receivables under this Agreement, each successor to
USAA
Federal Savings Bank (in the same capacity) pursuant to Section
11.3, and each
successor Servicer pursuant to Section 12.2.
"Servicer's Certificate" means a certificate, substantially in the
form
of Exhibit D attached hereto, completed and executed by the
Servicer by its
chairman of the board, the president, treasurer, controller or any
executive
vice president, senior vice president or vice president pursuant to
Section
6.8.
"Servicing Criteria" shall mean the "servicing criteria" set forth
in
Item 1122(d) of Regulation AB.
14
<PAGE>
"Servicing Fee" means with respect to a Collection Period the fee
payable
to the Servicer for services rendered during the Collection Period
ending on
the last day of such Collection Period, determined pursuant to
Section 6.7.
"Servicing Fee Rate" means ______% per annum.
"Specified Reserve Account Balance" means, with respect to any
Payment
Date, the lesser of (i) _____% of the Pool Balance as of the last
day of the
preceding Collection Period and (ii) _____% of the Original Pool
Balance.
Notwithstanding the foregoing, the Specified Reserve Account
Balance may be
reduced to a lesser amount as determined by the Depositor upon
satisfaction of
the Rating Agency Condition.
"Specified Yield Supplement Balance" means with respect to any
Payment
Date, an amount equal to [at least the sum of all projected Yield
Supplement
Amounts for all future Payment Dates, assuming that future
scheduled payments
on the Receivables are made on their scheduled due dates; provided
that if on
any date the Servicer shall fail to pay the amount payable under
the Yield
Supplement Agreement in accordance with the terms thereof, then, in
such
event, the Specified Yield Supplement Balance shall not thereafter
be reduced
hereunder].
"Standard & Poor's" means Standard & Poor's Ratings Group,
a division of
The McGraw-Hill Companies, Inc.
"Subcontractor" shall mean any vendor, subcontractor or other
Person that
is not responsible for the overall servicing (as "servicing" is
commonly
understood by participants in the mortgage-backed securities
market) of
Receivables but performs one or more discrete functions identified
in Item
1122(d) of Regulation AB with respect to the Receivables under the
direction
or authority of the Indenture Trustee.
"Total Collections" means with respect to any Collection Period
all
amounts deposited in the Collection Account relating to such
Collection Period
pursuant to Sections 7.2, 7.3 and 7.4.
"Transfer Agent
and Certificate Registrar" shall have the meaning
specified in Section 9.3 and shall initially be
_________________.
"Trust" means the trust created by this Agreement, the estate of
which
shall consist of the property transferred thereto pursuant to this
Agreement;
funds deposited in the Collection Account, the Class A Distribution
Account
and the Class B Distribution Account and such amounts as from time
to time may
be held therein (including the Account Property related thereto)
and proceeds
thereof; and the rights of the Trust to receive payments from the
Reserve
Account in accordance with this Agreement (but not the Reserve
Account itself)
[and certain rights under the Yield Supplement Agreement (but not
the Yield
Supplement Account itself)].
"Trustee" means the Person executing this Agreement as Trustee,
its
successor in interest pursuant to Section 13.12, and any successor
Trustee
pursuant to Section 13.11.
15
<PAGE>
"Trustee's Certificate" means a certificate completed and executed
by an
Authorized Officer pursuant to Section 13.3 and substantially in
the form
attached hereto as Exhibit C-1 or C-2.
"UCC" means the Uniform Commercial Code as in effect in the
respective
jurisdiction.
["Yield Supplement Account" means the account established,
maintained and
designated as the "Yield Supplement Account" pursuant to Section
8.2.
"Yield Supplement Account Property" has the meaning specified in
Section
8.2(b).
"Yield Supplemental Account Securities Intermediary" shall have
the
meaning specified in Section 8.2(c).
"Yield Supplement Agreement" means the Yield Supplement Agreement
dated
as of the Closing Date between the Depositor, the Servicer and
Trustee,
substantially in the form attached hereto as Exhibit F.
"Yield Supplement Amount" shall have the meaning specified in
Section
8.1.
"Yield Supplement Initial Deposit" means cash or
Permitted
Investments
having a value of at least $____.]
Section 1.2.Usage of Terms. With respect to all terms in the
Agreement,
the singular includes the plural and the plural the singular; words
importing
any gender include the other gender; references to "writing"
include printing,
typing, lithography, and other means of reproducing words in a
visible form;
references to agreements and other contractual instruments include
all
subsequent amendments thereto or changes therein effected in
accordance with
their respective terms and not prohibited by this Agreement;
references to
Persons include their permitted successors and assigns; and the
term
"including" and its variations means "including without
limitation."
Section 1.3.Simple Interest Method; Allocations. All allocations
of
payments to principal and interest and determinations of periodic
charges and
the like on the Receivables shall be based on a year with the
actual number of
days in such year and twelve months with the actual number of days
in each
such month. Each payment on a Receivable shall be applied first to
the amount
of interest accrued on such Receivable to the date of receipt, then
to reduce
the scheduled principal amount outstanding on the Receivable to the
extent of
the remaining scheduled payment and then to any outstanding fees
under the
terms of the Receivable. Amounts paid by the Depositor or the
Servicer in
respect of Repurchased Receivables shall be allocated first to any
interest
accrued on the related Receivable and then to the Principal Balance
of the
related Receivable.
Section 1.4.References. All references to the Record Date prior to
the
first Record Date in the life of the Trust shall be deemed to be
references to
the Cut-off Date. All references to "as of a Record Date" shall
refer to the
close of business on such Record Date. All references
16
<PAGE>
to the Pool Balance "asof the first day of a Collection Period"
shall refer to
the Pool Balance as of the last day of the preceding Collection
Period.
Section 1.5 Section References. All section references shall be
to
Sections in this Agreement unless otherwise specified.
ARTICLE II
CREATION OF TRUST
Section 2.1 Creation
of Trust. Upon the execution of this
Agreement by
the parties
hereto, there is hereby created the USAA Auto Grantor Trust
______.
ARTICLE
III
CONVEYANCE OF RECEIVABLES
Section 3.1 Conveyance of Receivables. In consideration of the
Trustee's
delivery to, or upon the order of, the Depositor of
authenticated
Certificates, in authorized denominations, in an aggregate amount
equal to the
Original Pool Balance, the Depositor does hereby sell, transfer,
assign, and
otherwise convey to the Trustee on behalf of the Trust, without
recourse
(subject to the Depositor's obligations herein):
(i) all right, title, and interest of the Depositor in and to
the
Receivables listed in Schedule A hereto, all proceeds thereof and
all
monies paid thereon on and after the Cut-off Date (including
proceeds of
the
repurchase of Receivables by the Depositor pursuant to Section 5.2
or
the
purchase of Receivables by the Servicer pursuant to Section 6.6
or
14.2), together with the interest of the Depositor in the
security
interests in the Financed Vehicles granted by the Obligors pursuant
to
the
Receivables;
(ii) all right, title and interest of the Depositor in any
Liquidation Proceeds and in any proceeds of any extended
warranties,
comprehensive and collision, credit life, or credit disability
policies
relating to the Financed Vehicles or the Obligors; and
(iii) all proceeds of the foregoing items in clauses (i) and
(ii).
In
connection with such sale, the Depositor agrees to record and file,
at
its own expense, financing statements (and continuation statements
with
respect to such financing statements when applicable) with respect
to the
Receivables for the sale of accounts and chattel paper meeting
the
requirements of applicable state law in such manner and in such
jurisdictions
as are necessary to perfect the sale and assignment of the
Receivables to the
Trust.
It
is the intention of the Depositor and the Trustee that the
assignment
and transfer herein contemplated constitute a sale of the
Receivables,
conveying good title thereto free and clear of any liens and
encumbrances,
from the Depositor to the Trust and that the Receivables not be
part of the
Depositor's estate in the event of an insolvency. In the event that
such
conveyance is
17
<PAGE>
deemed to be a pledge to secure a loan, the Depositor hereby grants
to the
Trustee on behalf of the Trust for the benefit of the
Certificateholders a
first priority perfected security interest in all of the
Depositor's right,
title and interest in the items of property listed in clauses (i),
(ii) and
(iii) above to secure the loan deemed to be made in connection with
such
pledge and, in such event, this Agreement shall constitute a
security
agreement under applicable law. In addition, if the sale of the
Receivables
from the Seller to the Depositor is deemed to be loan secured by
the
Receivables, the Depositor hereby transfers such loan and the
related security
interest to the Trustee and grants to the Trustee a security
interest in all
of the Depositor's right, title and interest in such loan and
related security
interest and this Agreement shall constitute a security agreement
under
applicable law.
ARTICLE IV
ACCEPTANCE BY TRUSTEE
Section 4.1 Acceptance by Trustee. The Trustee does hereby accept
all
consideration conveyed by the Depositor pursuant to Section 3.1 and
declares
that the Trustee shall hold such consideration upon the trusts
herein set
forth for the benefit of the Certificateholders, subject to the
terms and
provisions of this Agreement.
ARTICLE V
THE RECEIVABLES
Section 5.1
Representations and
Warranties
of Depositor; Conditions
Relating to Receivables.
(a)
The Depositor makes the following representations and warranties
as
to the Receivables on which the Trustee shall rely in accepting
the
Receivables in trust and authenticating the Certificates. Such
representations
and warranties shall speak as of the Cut-off Date unless otherwise
specified,
but shall survive the sale, transfer, and assignment of the
Receivables to the
Trustee.
(i) Schedule of Receivables. The information set forth in Schedule
A
to
this Agreement with respect to each Receivable is true and correct
in
all
material respects, and no selection procedures adverse to the
Certificateholders have been used in selecting the Receivables from
all
receivables owned by the Depositor which meet the selection
criteria
specified herein and in this Agreement.
(ii) No Sale or Transfer. No Receivable has been sold,
transferred,
assigned or pledged by the Depositor to any Person other than
the
Trustee.
(iii) Good Title. Immediately prior to the transfer and
assignment
of
the Receivables to the Trustee herein contemplated, the Depositor
had
good
and marketable title to each Receivable free and clear of all
Liens
and
rights of others; and, immediately upon the transfer thereof,
the
Trustee, for the benefit of the Certificateholders, has either
18
<PAGE>
(i)
good and marketable title to each Receivable, free and clear of
all
Liens and rights of others, and the transfer has been perfected
under
applicable law or (ii) a first priority perfected security interest
in
each
Receivable.
(iv) Receivable Files. The Receivable Files shall be kept at one
or
more
of the locations specified in Schedule B-1 hereto; provided,
that
the
Lien Certificates shall be kept at one or more of the locations
specified in Schedule B-2 hereto.
(b)
Each Receivable satisfies the following conditions as of the
Cut-off
Date unless otherwise specified, but such conditions shall survive
the sale,
transfer and assignment of the Receivables to the Trustee.
(i) Characteristics of Receivables. Each Receivable (a) has
been
originated for the retail financing of a Financed Vehicle by an
Obligor
located in one of the States of the United States or the District
of
Columbia; (b) contains customary and enforceable provisions such
that the
rights and remedies of the holder thereof are adequate for
realization
against the collateral of the benefits of the security; [and (c)
provides
for
fully amortizing level scheduled monthly or semi-monthly
payments
(provided that the payment in the last month in the life of the
Receivable may be different from the level scheduled payment) and
for
accrual of interest at a fixed rate according to the simple
interest
method].
(ii) Compliance with Law. Each Receivable and each sale of the
related Financed Vehicle complied at the time it was originated or
made,
and
complies on and after the Cut-off Date, 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
Reporting Act, the Federal Trade Commission Act, the
Magnuson-Moss
Warranty Act, Federal Reserve Board Regulations B and Z, state
adaptations of the National Consumer Act and of the Uniform
Consumer
Credit Code, and any other consumer credit, equal opportunity,
and
disclosure laws applicable to such Receivable and sale.
(iii) Binding Obligation. Each Receivable constitutes the
legal,
valid, and binding payment obligation in writing of the
Obligor,
enforceable by the holder thereof in all material respects in
accordance
with
its terms, subject, as to enforcement, to applicable
bankruptcy,
insolvency, reorganization, liquidation and other similar laws
and
equitable principles relating to or affecting the enforcement
of
creditors' rights.
(iv) No Government Obligor. No Receivable is due from the
United
States of America or any state or from any agency, department,
instrumentality or political subdivision of the United States of
America
or
any state or local municipality and no Receivable is due from a
business except to the extent that such receivable has a
personal
guaranty.
(v) Security Interest in Financed Vehicle. Immediately prior to
the
sale
and assignment thereof to the Trust as herein contemplated,
each
Receivable was secured by a
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validly perfected first priority security interest in the
Financed
Vehicle in favor of the Seller as secured party or all necessary
and
appropriate action with respect to such Receivable had been taken
to
perfect a first priority security interest in the related
Financed
Vehicle in favor of the Seller as secured party, which security
interest
is
assignable and has been so assigned by the Depositor to the
Trust.
(vi) Receivables in Force. No Receivable has been satisfied,
subordinated, or rescinded, nor has any Financed Vehicle been
released
from
the Lien granted by the related Receivable in whole or in part.
(vii) No Waiver. No provision of a Receivable has been waived
in
such
a manner that such Receivable fails either to meet all of the
representations and warranties made by the Depositor herein with
respect
thereto or to meet all of the conditions with respect thereto
pursuant to
this
subsection 5.1(b).
(viii) No Amendments. No Receivable has been amended except
pursuant
to
either instruments included in the Receivable Files or instruments
to
be
included in the Receivable Files pursuant to Section 6.2 and no
such
amendment has caused such Receivable either to fail to meet all of
the
representations and warranties made by the Depositor herein with
respect
thereto or to fail to meet all of the conditions with respect
thereto
pursuant to this subsection 5.1(b).
(ix) No Defenses. As of the Cut-off Date, there are no rights
of
rescission, setoff, counterclaim, or defense, and the Depositor has
no
knowledge of the same being asserted or threatened, with respect to
any
Receivable.
(x) No Liens. As of the Cut-off Date, the Depositor has no
knowledge
of
any Liens or claims that have been filed, including Liens for
work,
labor, materials or unpaid taxes relating to a Financed Vehicle,
that
would be Liens prior to, or equal or coordinate with, the Lien
granted by
the
Receivable.
(xi) No Default. Except for payment defaults continuing for a
period
of
not more than [30] days as of the Cut-off Date, the Depositor has
no
knowledge that a default, breach, violation, or event
permitting
acceleration under the terms of any Receivable exists; the
Depositor has
no
knowledge that a continuing condition that with notice or lapse
of
time
would constitute a default, breach, violation, or event
permitting
acceleration under the terms of any Receivable exists; and the
Depositor
has
not waived any of the foregoing.
(xii) Insurance. Each Receivable requires that the Obligor
thereunder obtain comprehensive and collision insurance covering
the
Financed Vehicle.
(xiii) Lawful Assignment. No Receivable has been originated in,
or
is
subject to the laws of, any jurisdiction under which the sale,
transfer, and assignment of such Receivable under this Agreement
or
pursuant to transfers of the Certificates is unlawful, void or
voidable.
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(xiv) All Filings Made. No filings (other than UCC filings
which
have
been made) or other actions are necessary in any jurisdiction
to
give
the Trustee a first perfected security interest in the
Receivables.
(xv) One Original. With respect to any Receivable for which an
original executed copy exists, there is no more than one
original
executed copy of such Receivable which, immediately prior to the
delivery
thereof to the Servicer, as custodian for the Trustee, was in
the
possession of the Servicer.
(xvi) Security. Each Receivable is secured by a new or used
automobile or light-duty truck.
(xvii) Maturity of Receivables. Each Receivable has a remaining
maturity, as of the Cut-off Date, of not less than 6 months nor
greater
than
72 months and (i) with respect to Receivables secured by new
Financed Vehicles, an original maturity of at least [12] months and
not
more
than [72] months and (ii) with respect to Receivables secured
by
used
Financed Vehicles, an original maturity of at least ___ months
and
not
more than ___ months. No Receivable has a scheduled maturity
later
than
____________.
(xviii) Annual Percentage Rate. Each Receivable is a
[fully-amortizing fixed rate simple interest contract that provides
for
level scheduled monthly payments (except for the last payment,
which may
be
minimally different from the level payments) over its
respective
remaining term, and has an Annual Percentage Rate that equals or
exceeds
_____%, is not secured by any interest in real estate, and has not
been
identified on the computer files of the Seller as relating to
Obligors
who
have requested a reduction in the periodic finance charges, as of
the
Cut-off Date, by application of the Servicemembers Civil Relief
Act].
(xix) No Repossessions. Each Receivable is secured by a
Financed
Vehicle that, as of the Cut-off Date, has not been repossessed
without
reinstatement of such Receivable.
(xx) Obligor Not Subject to Bankruptcy Proceedings. Each
Receivable
has
been entered into by an Obligor who has not been identified on
the
computer files of the Depositor as being a debtor in any
bankruptcy
proceeding as of the Cut-off Date.
(xxi) No Overdue Payments. No Receivable has any payment that
is
more
than thirty (30) days past due as of the Cut-off Date.
(xxii) Tangible Chattel Paper. The Receivables constitute
"tangible
chattel paper" within the meaning of UCC Section 9-102.
(xxiii) Remaining Principal Balance. Each Receivable had a
remaining
Principal Balance, as of the Cut-off Date, of at least $_____.
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<PAGE>
(xxiv) Filing Statement Language. The financing statements
referenced in paragraph (xiv) above, will 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
Secured Party".
Section 5.2 Repurchase Upon Breach or Failure of a Condition.
The
Depositor, the Servicer, or the Trustee, as the case may be, shall
inform the
other parties promptly, in writing, upon the discovery by the
Depositor, the
Servicer or an Authorized Officer of the Trustee of either any
breach of the
Depositor's representations and warranties set forth in subsection
5.1(a) or
the failure of any Receivable to satisfy any of the conditions set
forth in
subsection 5.1(b). Unless the breach or failed condition shall have
been cured
by the last day of the Collection Period following the Collection
Period
during which such discovery occurred (or, at the Depositor's
option, the last
day of the Collection Period during which such discovery occurred)
(such date,
the "Repurchase Date"), the Depositor shall repurchase any
Receivable the
Trust's interest in which was materially and adversely affected by
the breach
or failed condition, as determined by the Servicer and reported in
an
Officer's Certificate, as of the Repurchase Date; provided that
unless the
Depositor has sufficient cash, distributed to it by the Issuer, to
make such
repurchase, the Seller shall only be required to repurchase such
Receivable if
the Seller concurrently repurchases such Receivable under the
Purchase
Agreement. The Seller shall enforce its rights under the Sale and
Servicing
Agreement to have the Seller repurchase such Receivable. Subject to
the
preceding proviso, in consideration of the repurchase of a
Receivable, the
Depositor shall remit the Purchase Amount of such Receivable as of
the
Repurchase Date (less any Liquidation Proceeds deposited, or to be
deposited,
by the Servicer in the Collection Account with respect to such
Receivable
pursuant to Section 6.3) in the manner specified in Section 7.4.
The sole
remedy of the Trust, the Trustee or the Certificateholders with
respect either
to a breach of the Depositor's representations and warranties set
forth in
subsection 5.1(a) or to a failure of any of the conditions set
forth in
subsection 5.1(b) shall be to require the Depositor to repurchase
Receivables
pursuant to, and subject to the terms of, this Section 5.2. The
obligation of
the Depositor to repurchase under this Section 5.2 shall not be
solely
dependent upon the actual knowledge of the Depositor of any
breached
representation or warranty. The Trustee shall have no duty to
conduct any
affirmative investigation as to the occurrence of any condition
requiring the
repurchase of any Receivable pursuant to this Section 5.2 or the
eligibility
of any Receivable for purposes of this Agreement.
Section 5.3 Custody of Receivable Files. To assure uniform quality
in
servicing the Receivables and to reduce administrative costs, the
Trustee,
upon the execution and delivery of this Agreement, agrees to have
the Servicer
act as custodian of the following documents or instruments which
are hereby
constructively delivered to the Trustee with respect to each
Receivable:
(i) The original executed Receivable or, if no such original
exists,
a
copy of the original executed Receivable;
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<PAGE>
(ii) To the extent that a credit application with respect to an
Obligor exists, the original executed copy of such credit
application or,
if
no such original exists, a copy of such original executed copy,
fully
executed by the Obligor;
(iii) The notice of recorded Lien or such documents that the
Servicer or the Depositor shall keep on file, in accordance with
its
customary procedures, evidencing the first priority perfected
security
interest of the Seller in the Financed Vehicle; and
(iv) Any and all other documents that the Depositor or Servicer,
as
the
case may be, shall keep on file, in accordance with its
customary
procedures, relating to a Receivable, an Obligor (to the extent
relating
to a
Receivable), or a Financed Vehicle.
The
Servicer hereby agrees to act as custodian of the Receivable
Files,
as agent for the Trustee, hereunder. The Servicer acknowledges that
it holds
the documents and instruments relating to the Receivables for the
benefit of
the Trustee and the Certificateholders. The Trustee shall have
no
responsibility to monitor the Servicer's performance as custodian
and shall
have no liability in connection with the Servicer's performance of
such duties
hereunder.
Section 5.4 Duties of Servicer as Custodian.
(a)
Safekeeping. The Servicer, in its capacity as custodian, shall
hold
the Receivable Files on behalf of the Trustee for the use and
benefit of all
present and future Certificateholders, and maintain such accurate
and complete
accounts, records, and computer systems pertaining to the
Receivables as shall
enable the Trustee to comply with its obligations pursuant to these
Standard
Terms and Conditions of Agreement. In performing its duties as
custodian, the
Servicer shall act with reasonable care, using that degree of skill
and
attention that the Servicer exercises with respect to the
receivable files of
comparable new or used automobile and light-duty truck receivables
that the
Servicer services for itself or others. The Servicer shall conduct,
or cause
to be conducted, periodic audits of the files of all receivables
owned or
serviced by the Servicer which shall include the Receivable Files
held by it
under this Agreement and the related accounts, records, and
computer systems,
in such a manner as shall enable the Trustee to identify all
Receivable Files
and such related accounts, records and computer systems and to
verify, if the
Trustee so elects, the accuracy of the Servicer's record-keeping.
The Servicer
shall promptly report to the 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.
(b)
Maintenance of and Access to Records. The Servicer shall
maintain
each Receivable File at one of its offices specified in Schedule B
to this
Agreement, or at such other office as shall be specified to the
Trustee by 30
days' prior written notice. The Servicer shall make available to
the 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 during normal operating hours as the
Trustee shall
reasonably instruct which does not unreasonably interfere with the
Servicer's
normal operations.
23
<PAGE>
(c)
Release of Documents. Upon instruction from the Trustee, the
Servicer, at its expense, shall release any document in the
Receivable Files
to the Trustee, the Trustee's agent, or the Trustee's designee, as
the case
may be, at such place or places as the Trustee may reasonably
designate as
soon as reasonably practicable to the extent it does not
unreasonably
interfere with the Servicer's normal operations. The Servicer shall
not be
responsible for any loss occasioned by the failure of the Trustee,
its agent
or its designee to return any document or any delay in doing
so.
Section 5.5 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 an Authorized
Officer. A
certified copy of a by-law or of a resolution of the Board of
Directors of the
Trustee shall constitute conclusive evidence of the authority of
any such
Authorized 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
Trustee.
Section 5.6 Custodian's Indemnification. The Servicer, as
custodian,
shall indemnify the Trustee, its officers, directors, employees and
agents for
any and all liabilities, obligations, losses, damages, payments,
costs, or
expenses of any kind whatsoever that may be imposed on, incurred,
or asserted
against the Trustee, its officers, directors, employees or agents
as the
result of any improper act or omission in any way relating to the
maintenance
and custody by the Servicer, as custodian, of the Receivable Files;
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
Trustee or any loss occasioned by the failure of the Trustee, its
agent or
designee to return any document to the Servicer or any delay in
doing so.
Section 5.7 Effective Period and Termination. The Servicer's
appointment
as custodian shall become effective as of the Cut-off Date and
shall continue
in full force and effect until terminated pursuant to this Section
5.7 or
until this Agreement shall be terminated. If the Servicer shall
resign as
Servicer under Section 11.5 or if all of the rights and obligations
of the
Servicer shall have been terminated under Section 12.1, the
appointment of the
Servicer as custodian may be terminated by the Trustee or by the
Holders of
Certificates evidencing not less than 25% of the Pool Balance, in
the same
manner as the Trustee or such Holders may terminate the rights and
obligations
of the Servicer under Section 12.1. As soon as practicable after
any
termination of such appointment, the Servicer shall, at its
expense, deliver
the Receivable Files to the Trustee or the Trustee's agent at such
place or
places as the Trustee may reasonably designate. Notwithstanding
the
termination of the Servicer as custodian, the Trustee agrees that
upon any
such termination, the 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 hereunder.
ARTICLE VI
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 6.1 Duties of Servicer. The Servicer shall manage,
service,
administer and make collections on the Receivables (other than
Repurchased
Receivables) with reasonable care,
24
<PAGE>
using that degree of skill and attention that the Servicer
exercises with
respect to comparable new or used automobile and light-duty truck
receivables
that it services for itself. The Servicer's duties shall include
collection
and posting of all payments, responding to inquiries by Obligors or
by
federal, state, or local governmental authorities with respect to
the
Receivables, investigating delinquencies, reporting tax information
to
Obligors in accordance with its customary practices, accounting
for
collections, furnishing monthly and annual statements to the
Trustee with
respect to distributions, and, if it elects to do so, making
Advances pursuant
to Section 7.3. The Servicer shall follow its customary standards,
policies,
and procedures in performing its duties as Servicer. Without
limiting the
generality of the foregoing, the Servicer shall be authorized and
empowered by
the Trustee to execute and deliver, on behalf of itself, the Trust,
the
Trustee, the Certificateholders, 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, without recourse to the Trustee,
with
respect to the Receivables or with respect to the Financed
Vehicles. If the
Servicer shall commence a legal proceeding to enforce a Receivable
or a
Defaulted Receivable, the Trustee shall thereupon be deemed to
have
automatically assigned such Receivable and the related property
conveyed to
the Trust pursuant to Section 3.1 with respect to such Receivable
to the
Servicer, solely for the purpose of collection. The Trustee shall
furnish the
Servicer with such documents as have been prepared by the Servicer
for
execution by the Trustee and as are necessary or appropriate to
enable the
Servicer to carry out its servicing and administrative duties
hereunder.
Section 6.2 Collection of Receivable Payments. The Servicer shall
make
reasonable efforts to collect all payments called for under the
terms and
provisions of the Receivables and of this Agreement as and when the
same shall
become due, and shall follow such collection procedures as it
follows with
respect to comparable new or used automobile and light-duty truck
receivables
that it services for itself. The Servicer shall not change the
amount of or
reschedule the due date of any scheduled payment to a date more
than 30 days
from the original due date of such scheduled payment, change the
annual
percentage rate of, or extend any Receivable or change any material
term of a
Receivable, except as provided by the terms of the Receivable or of
this
Agreement or as required by law or court order, provided, however,
that the
Servicer may extend any Receivable that is in default or with
respect to which
default is reasonably foreseeable and that would be acceptable to
the Servicer
with respect to comparable new or used automobile and light-duty
truck
receivables that it services for itself, if (a) the amount on
deposit in the
Reserve Account is greater than zero at the time of the extension,
(b) the
total credit-related extensions granted on the Receivable will not
exceed four
months in the aggregate, (c) the total number of credit-related
extensions
granted on the Receivable will not exceed two, (d) the maturity of
such
Receivable would not be extended beyond the Collection Period
immediately
preceding the Final Payment Date and (e) the rescheduling or
extension would
not modify the terms of such Receivable in such a manner as to
constitute a
cancellation of such Receivable and the creation of a new
receivable. If, as a
result of inadvertently rescheduling or extending of payments,
such
rescheduling or extension breaches any of the terms of the proviso
to the
preceding sentence, then the Servicer shall be obligated to
purchase such
Receivable pursuant to Section 6.6. For the purpose of such
purchases pursuant
to Section 6.6, notice shall be deemed to have been received by the
Servicer
at such time as shall make purchase mandatory as of the last day of
the
Collection Period during which the discovery of such breach
occurred.
25
<PAGE>
Section 6.3 Realization Upon Receivables. On behalf of the Trust,
the
Servicer shall use reasonable efforts, consistent with its
customary servicing
procedures, to repossess or otherwise take possession of the
Financed Vehicle
securing any Receivable which the Servicer shall have determined to
be a
Defaulted Receivable or otherwise (and shall specify any such
Defaulted
Receivable to the Trustee no later than the Determination Date
following the
Collection Period in which the Servicer shall have made such
determination).
The Servicer shall follow such customary and usual practices and
procedures as
it shall deem necessary or advisable in its servicing of new or
used
automobile and light-duty truck receivables, which may include
selling the
Financed Vehicle at public or private sale. The Servicer shall be
entitled to
recover from proceeds all reasonable expenses incurred by it in the
course of
converting the Financed Vehicle into cash proceeds. The Liquidation
Proceeds
(net of such expenses) 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 7.2 and shall be applied
to reduce
(or to satisfy, as the case may be) the Purchase Amount of the
Receivable, if
such Receivable is to be repurchased by the Depositor pursuant to
Section 5.2,
or is to be purchased by the Servicer pursuant to Section 6.6. The
foregoing
shall be subject to the provision that, in any case in which the
Financed
Vehicle shall have suffered damage, the Servicer shall not expend
funds in
connection with the repair or the repossession of such Financed
Vehicle unless
it shall determine in its sole discretion that such repair and/or
repossession
will increase the Liquidation Proceeds of the related Receivable by
an amount
equal to or greater than the amount of such expenses.
Section 6.4 Maintenance of Security Interests in Financed Vehicles.
The
Servicer, in accordance with its customary servicing procedures,
shall take
such steps as are necessary to maintain (i) perfection of the
security
interest created in any Financed Vehicle which secures a Receivable
and (ii)
perfection of the Trust's interest in the Receivables including,
without
limitation, the filing of financing statements and continuation
statements. On
behalf of the Trust, the Servicer hereby agrees to take such steps
as are
necessary to re-perfect such security interest in the event of the
relocation
of a Financed Vehicle or for any other reason, in either case, when
the
Servicer has knowledge of the need for such re-perfection. In the
event that
the assignment of a Receivable to the Trust is insufficient,
without a
notation on the related Financed Vehicle's certificate of title, or
without
fulfilling any additional administrative requirements under the
laws of the
state in which the Financed Vehicle is located, to grant to the
Trust a
perfected security interest in the related Financed Vehicle, the
Servicer
hereby agrees that the Servicer's listing as the secured party on
the
certificate of title is deemed to be in its capacity as agent of
the Trust and
further agrees to hold such certificate of title as the Trustee's
agent and
custodian; provided that the Servicer shall not, nor shall the
Trustee or
Certificateholders have the right to require that the Servicer,
make any such
notation on the related Financed Vehicles' certificate of title or
fulfill any
such additional administrative requirement of the laws of the state
in which a
Financed Vehicle is located.
Section 6.5 Covenants of Servicer. The Servicer hereby makes
the
following covenants on which the Trustee shall rely in accepting
the
Receivables in trust and authenticating the Certificates:
26
<PAGE>
(i) Security Interest to Remain in Force. The Financed Vehicle
securing each Receivable shall not be released from the security
interest
granted by the Receivable in whole or in part except as
contemplated
herein;
(ii) No Impairment. The Servicer shall not impair the rights of
the
Trust in the Receivables; and
(iii) Extensions, Defaulted Receivables. The Servicer shall not
increase the number of payments under a Receivable, nor increase
the
Amount Financed under a Receivable, nor extend or forgive payments
on a
Receivable, except as provided in Section 6.2. In the event that at
the
end
of the scheduled term of any Receivable, the outstanding
principal
amount thereof is such that the final payment to be made by the
related
Obligor is larger than the regularly scheduled payment of principal
and
interest made by such Obligor, the Servicer may permit such Obligor
to
pay
such remaining principal amount in more than one payment of
principal
and
interest, provided that the last such payment shall be due on
or
prior to the Collection Period immediately preceding the Final
Payment
Date.
Section 6.6 Purchase of Receivables Upon Breach. The Servicer or
the
Trustee, as the case may be, shall inform the other party promptly,
in
writing, upon the discovery by the Servicer or an Authorized
Officer of the
Trustee, as the case may be, of any breach by the Servicer of its
covenants
under Section 6.5. Except as otherwise specified in Section 6.2,
unless the
breach shall have been cured by the last day of the Collection
Period
following the Collection Period during which such breach was
discovered (or,
at the Servicer's election, the last day of the Collection Period
during which
such breach was discovered), the Servicer shall purchase any
Receivable
materially and adversely affected by such breach, as determined by
the
Servicer and reported in an Officer's Certificate as of such date.
For this
purpose, any breach of the covenant set forth in Section 6.5(iii)
shall be
deemed to materially and adversely affect the interest of the Trust
in a
Receivable. In consideration of the purchase of such Receivable,
the Servicer
shall remit the Purchase Amount (less any Liquidation Proceeds
deposited, or
to be deposited, by the Servicer in the Collection Account with
respect to
such Receivable pursuant to Section 6.3) in the manner specified in
Section
7.4. The sole remedy of the Trust, the Trustee, or the
Certificateholders
against the Servicer with respect to a breach of its covenants in
Section 6.5
shall be to require the Servicer to purchase Receivables pursuant
to this
Section 6.6. The Trustee shall have no duty to conduct any
affirmative
investigation as to the occurrence of any condition requiring the
repurchase
of any Receivable pursuant to this Section 6.6 or the eligibility
of any
Receivable for purposes of this Agreement.
Section 6.7 Servicing Fee. The Servicing Fee for a Collection
Period
shall equal the product of one-twelfth of the Servicing Fee Rate
and the Pool
Balance as of the first day of such Collection Period. In addition,
the
Servicer shall be entitled to receive as additional servicing
compensation
investment earnings on amounts on deposit in the Collection Account
or earned
on collections pending deposit in the Collection Account[;
provided, however,
that, beginning with the Collection Period for which the Trustee is
notified
in writing that the Servicer has failed to deposit an Advance with
respect to
a Receivable other than because such Receivable has been
27
<PAGE>
designated a Defaulted Receivable and continuing until the Final
Payment Date,
such investment earnings shall not be paid to the Servicer, but
shall be
treated as Available Interest]. The Servicer shall be required to
pay from its
own account all expenses incurred by it in connection with its
activities
hereunder (including fees and disbursements of the Trustee,
Trustee's counsel,
the Paying Agent, the Transfer Agent and Certificate Registrar and
independent
accountants, taxes imposed on the Servicer, and expenses incurred
in
connection with distributions and reports to Certificateholders)
except
expenses in connection with realizing upon a Receivable under
Section 6.3
which may be paid from Liquidation Proceeds from such
Receivable.
Section 6.8 Servicer's Certificate. On or before each Determination
Date,
the Servicer shall deliver to the Trustee, the Paying Agent, the
Rating
Agencies, a Servicer's Certificate substantially in the form of
Exhibit D
hereto, for the Collection Period preceding such Determination
Date,
containing all information necessary to make the distributions
pursuant to
Section 7.5 and all information necessary for the Paying Agent to
send
statements to Certificateholders pursuant to Section 7.8. The
Servicer shall
deliver to the Rating Agencies any information, to the extent it is
available
to the Servicer, that the Rating Agencies reasonably request in
order to
monitor the Trust. The Servicer shall also specify each Receivable
which the
Depositor or the Servicer is required to repurchase or purchase, as
the case
may be, as of the last day of the preceding Collection Period, each
Receivable
which the Servicer shall have determined to be a Defaulted
Receivable during
the preceding Collection Period, and each Receivable for which the
Servicer
has failed to deposit an Advance pursuant to Section 7.3 other than
because
such Receivable has been designated a Defaulted Receivable.
Subsequent to the
Closing Date, the form of Servicer's Certificate may be revised or
modified to
cure any ambiguities or inconsistencies with this Agreement;
provided,
however, that no material information shall be deleted from the
form of
Servicer's Certificate. In the event that the form of Servicer's
Certificate
is revised or modified in accordance with the preceding sentence, a
form
thereof, as so revised or modified, shall be provided to the
Trustee and each
Rating Agency.
Section 6.9 Annual Statement as to Compliance; Item 1122
Servicing
Criteria Assessment; Notice of Event of Servicing Termination. (a)
The
Servicer shall deliver to the Trustee and the Rating Agencies, and
on or
before March 31 of each year commencing March 31, _____,
(i) a certificate signed by the chairman of the board,
president,
the
treasurer, the controller, any executive or senior vice president
or
any
vice president of the Servicer, stating that (a) a review of
the
activities of the Servicer during the year ended the preceding
December
31
(or shorter period in the case of the first such certificate) and
of
its
performance under this Agreement has been made under such
officer's
supervision and (b) to the best of such officer's knowledge, based
on
such
review, the Servicer has fulfilled all its obligations in all
material respects under this Agreement throughout such year, or, if
there
has
been a default in the fulfillment of any such obligation,
specifying
each
such default known to such officer and the nature and status
thereof, and
(ii) the servicing criteria assessment required to be filed in
respect of the Trust under the Exchange Act under Item 1122 of
Regulation
AB
if periodic reports under
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Section 15(d) of the Exchange Act, or any successor provision
thereto,
were
required to be filed in respect of the Trust. Such report shall
be
signed by an authorized officer of the Servicer and shall at a
minimum
address each of the Servicing Criteria specified on a
certification
substantially in the form of Exhibit H hereto delivered to the
Depositor
concurrently with the execution of this Agreement. To the extent
any of
the
Servicing Criteria are not applicable to the Servicer, with
respect
to
asset-backed securities transactions taken as a whole involving
the
Servicer and that are backed by the same asset type backing the
Certificates, such report shall include such a statement to that
effect.
The
Depositor and the Servicer, and each of their respective officers
and
directors shall be entitled to rely on upon each such servicing
criteria
assessment.
(b)
The Servicer shall deliver to the Trustee 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
any event
which with the giving of notice or lapse of time, or both, would
become an
Event of Servicing Termination under Section 12.1. The Depositor
shall deliver
to the Trustee, promptly after having obtained knowledge thereof,
but in no
event later than five Business Days thereafter, an Officer's
Certificate
specifying any event which with the giving of notice or lapse of
time, or
both, would become an Event of Servicing Termination under Section
12.1.
(c)
The Servicer shall cause each Reporting Subcontractor to deliver
to
the Depositor an assessment of compliance and accountant's
attestation as and
when provided in paragraph (a)(ii) of this Section 6.9 and Section
6.10. The
Servicer shall execute (provided the Servicer is not an Affiliate
of the
Depositor) (and shall cause each Reporting Subcontractor to
execute) a
reliance certificate to enable the Certification Parties to rely
upon each (i)
annual report on assessments of compliance with servicing criteria
provided
pursuant to Section 6.9 and (ii) accountant's report provided
pursuant to
Section 6.10 and shall include a certification that each such
annual
compliance statement or report discloses any deficiencies or
defaults
described to the registered public accountants of such Person to
enable such
accountants to render the certificates provided for in Section
6.10.
(d)
In the event the Servicer or Reporting Subcontractor is terminated
or
resigns during the term of this Agreement, such Person shall
provide the
documents and information pursuant to Section 6.9 and Section 6.10
with
respect to the period of time it was subject to this Agreement or
provided
services with respect to the Trust or the Receivables.
Notwithstanding
anything to the contrary contained herein, if the Servicer has
exercised
commercially reasonable efforts to obtain any assessment or
attestation
required hereunder from a Reporting Subcontractor, the failure by
the
Reporting Subcontractor to provide such attestation on or
assessment shall not
constitute a breach hereunder by the Servicer.
Section 6.10 Annual Independent Certified Public Accounant's
Report. The
Servicer shall cause a firm of independent certified public
accountants, who
may also render other services to the Servicer, the Seller or the
Depositor,
to deliver to the Trustee on or before March 31 of each year
beginning March
31, 20__ with respect to the prior calendar year (or such shorter
period in
the case of the first such report) the attestation report that
would be
required to be filed
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in respect of the Trust under the Exchange Act if periodic reports
under
Section 15(d) of the Exchange Act, or any successor provision
thereto, were
required to be filed in respect of the Trust. Such attestation
shall be in
accordance with Rules 1-02(a)(3) and 2-02(g) of Regulation S-X
under the
Securities Act and the Exchange Act, including, without limitation
that in the
event that an overall opinion cannot be expressed, such registered
public
accounting firm shall state in such report why it was unable to
express such
an opinion.
The
report of the independent certified public accountants shall
also
indicate that such accounting firm is independent of the Servicer
within the
meaning of the Code of Professional Ethics of the American
Institute of
Certified Public Accountants.
Section 6.11 Reports to Certificateholders and the Rating Agencies.
(a)
The Trustee shall provide to any Certificateholder who so requests
in writing
(addressed to the Corporate Trust Office) a copy of any Servicer's
Certificate
described in Section 6.8, the annual audit statement described in
Section 6.9,
or the annual audit report described in Section 6.10. The Trustee
may require
the Certificateholder to pay a reasonable sum to cover the cost of
the
Trustee's complying with such request.
(b)
The Trustee shall forward to the Rating Agencies the statement
to
Certificateholders described in Section 7.8 and any other reports
it may
receive pursuant to this Agreement to (i) Standard & Poor's
Ratings Group,
Asset-Backed Surveillance Group, 55 Water Street, New York, New
York 10004,
and (ii) Moody's Investors Service, Inc., ABS Monitoring Dept., 99
Church
Street, 4th Floor, New York, New York 10007.
Section 6.12 Insurance. The Servicer, in accordance with its
customary
servicing procedures and underwriting standards, shall require that
each
Obligor shall have obtained and shall maintain comprehensive and
collision
insurance covering the Financed Vehicle as of the execution of the
Receivable.
The Servicer shall enforce its rights under the Receivables to
require the
Obligors to maintain comprehensive and collision insurance, in
accordance with
the Servicer's customary practices and procedures with respect to
comparable
new or used automobile and light-duty truck receivables that it
services for
itself or others.
ARTICLE VII
DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS
Section 7.1 Accounts. (a) The Servicer shall establish the (i)
Collection
Account in the name of the Trustee for the benefit of the
Certificateholders,
(ii) the Class A Distribution Account in the name of the Trustee
for the
benefit of the Class A Certificateholders and (iii) the Class B
Distribution
Account in the name of the Trustee for the benefit of the Class
B
Certificateholders. Each such account shall be either:
(x)
a segregated identifiable trust account established in the
trust
department of a Qualified Trust Institution; or
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(y)
a separately identifiable deposit account established in the
deposit
taking department of a Qualified Institution, which may be the
Seller so long
as the Seller is a Qualified Institution.
The
Collection Account shall satisfy the requirements of clause (x)
above. The Depositor hereby grants to the Collateral Agent for the
benefit of
the Class A Certificateholders a security interest in the Class A
Distribution
Account, likewise, the Depositor hereby grants to the Collateral
Agent for the
benefit of the Class B Certificateholders a security interest in
the Class B
Distribution Account. Should any depositary of the Collection
Account, the
Class A Distribution Account or the Class B Distribution Account
cease to be,
as applicable, a Qualified Institution or a Qualified Trust
Institution, then
the Servicer shall, with the Depositor's assistance as necessary,
cause such
account to be moved, upon thirty (30) days notice to the Trustee,
to a
Qualified Institution or a Qualified Trust Institution, unless the
Servicer
provides the Trustee with a letter from the Rating Agencies to the
effect that
the current ratings assigned to the Certificates by the Rating
Agencies will
not be adversely affected by such depositary's ceasing to be a
Qualified
Institution or a Qualified Trust Institution, as the case may
be.
All
amounts held in the Collection Account shall be invested by the
bank
or trust company then maintaining the account at the written
direction of the
Servicer in Permitted Investments that mature on a date not later
than the
Deposit Date next succeeding the date of investment; provided, that
if the
Collection Account is maintained with the Trustee, such Permitted
Investments
may mature on the Payment Date next succeeding the date of
investment, if the
Trustee is the obligor on such investments (including repurchase
agreements on
which the Trustee in its commercial capacity is liable as
principal).
(b)
The Depositor shall establish the Reserve Account in the name of
the
Collateral Agent for the benefit of the Certificateholders. Subject
to Section
7.5(b), the Reserve Account shall be under the sole dominion and
control of
the Collateral Agent. The Reserve Account shall be a segregated
identifiable
trust account established in the trust department of a Qualified
Trust
Institution.
Should any depositary of the Reserve Account cease to be a
Qualified
Trust Institution, then the Collateral Agent shall, upon thirty
(30) days
notice to the Trustee, with the Depositor's assistance as
necessary, cause
such account to be moved to a Qualified Trust Institution, unless
the
Depositor provides the Trustee and the Collateral Agent with a
letter from the
Rating Agencies to the effect that the current ratings assigned to
the
Certificates by the Rating Agencies will not be adversely affected
by such
depositary's ceasing to be a Qualified Trust Institution. The
Reserve Account
shall not be property of the Trust.
Funds on deposit in the Reserve Account shall be invested by
the
Collateral Agent in Permitted Investments selected in writing by
the Servicer;
provided, however, it is understood and agreed that the Collateral
Agent shall
not be liable for any loss or charge arising from such investment
in Permitted
Investments. All such Permitted Investments shall be held by the
Collateral
Agent for the benefit of the Certificateholders in the manner
specified in
subsection (c) below; provided, however, that on each Payment Date
all
interest and other investment income (net of losses and investment
expenses)
on funds on deposit therein shall be withdrawn from the
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Reserve Account at the written direction of the Servicer and paid
to the
Depositor. Funds on deposit in the Reserve Account shall be
invested in
Permitted Investments that will mature so that all funds (including
both
principal and interest) will be available at the opening of
business on the
next following Deposit Date; provided, however, that subject to
satisfaction
of the Rating Agency Condition and notice thereof to the Trustee
and the
Collateral Agent, all or a portion of such funds on deposit in the
Reserve
Account may be invested in Permitted Investments that mature later
than such
next following Deposit Date.
(c)
Each Permitted Investment made with funds from the Reserve
Account
shall be delivered to the Collateral Agent by causing the
financial
institution then maintaining the Reserve Account (such institution
being
referred to as the "Reserve Account Securities Intermediary") to
create a
Security Entitlement in the Reserve Account in favor of the Trustee
with
respect to such Permitted Investment by indicating by book-entry
that such
Permitted Investment has been credited to the Reserve Account. The
Servicer
shall only invest in Permitted Investments which the Reserve
Account
Securities Intermediary agrees to credit to the Reserve
Account.
(d)
The Servicer shall have the power, revocable by the Collateral
Agent,
to instruct the Collateral Agent to make withdrawals and payments
from the
Reserve Account for the purpose of permitting the Servicer to carry
out its
duties hereunder.
(e)
Each of the Depositor and the Servicer agree to take or cause to
be
taken such further actions, to execute, deliver and file or cause
to be
executed, delivered and filed such further documents and
instruments
(including, without limitation, any financing statements under the
UCC or this
Agreement) as may be determined to be necessary, in order to
perfect the
security interests created by this Section 7.1 and otherwise
effectuate the
purposes, terms and conditions of this Section 7.1.
(f)
Notwithstanding anything else contained herein, the Reserve
Account
shall only be established at Qualified Trust Institution which
agrees that it
will (i) comply with Entitlement Orders (i.e., orders directing the
transfer
or redemption of any financial assets credited to the Reserve
Account)
relating to the Reserve Account issued by the Collateral Agent
without further
consent by the Depositor; (ii) credit all Permitted Investments to
the Reserve
Account; (iii) treat each item of property (including, without
limitation,
investment property, securities, instruments and cash) credited to
the Reserve
Account as a Financial Asset; (iv) not enter into any agreement
with any other
person relating to the Reserve Account pursuant to which agreement
it has
agreed to comply with Entitlement Orders made by such person; (v)
not accept
for credit to the Reserve Account any Permitted Investment which is
registered
in the name of, or payable to the order of, or specially indorsed
to, any
person other than such Qualified Trust Institution unless it has
been indorsed
to such Qualified Trust Institution or is indorsed in blank and
(vi) such
Qualified Trust Institution has agreed that it will waive any right
of set-off
unrelated to its fees for such Account.
Section 7.2 Collections. The Servicer shall remit daily within
two
Business Days of receipt to the Collection Account all payments by
or on
behalf of the Obligors on the Receivables and all Liquidation
Proceeds (net of
expenses), both as collected during the Collection Period.
Notwithstanding the
provisions of the first sentence of this Section 7.2, so
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long as the Servicer is USAA Federal Savings Bank, the Servicer
shall be
permitted to make deposits on a monthly instead of a daily basis if
either (a)
the Servicer obtains a short-term certificate of deposit rating of
the
Servicer from Standard & Poor's and Moody's of at least A-1+
and P-1,
respectively, or (b) the Servicer provides the Trustee with (1) a
letter from
each Rating Agency to the effect that the current ratings assigned
to the
Certificates by the Rating Agency will not be adversely affected by
the
remittance of Collections on a monthly, rather than a daily, basis.
Any such
collections remitted to the Collection Account on a monthly basis
shall be in
immediately available funds and shall be remitted no later than
11:00 a.m.,
New York City time on or before the Deposit Date. For purposes of
this Section
7.2 the phrase "payments made on behalf of the Obligors" shall mean
payments
made by Persons other than the Depositor or the Servicer.
Section 7.3 Advances.
(a)
As of each Deposit Date, the Servicer shall make a payment with
respect to each Receivable (other than a Defaulted Receivable)
equal to the
excess, if any, of (x) the product of the Principal Balance of such
Receivable
as of the first day of the related Collection Period and
one-twelfth of the
Annual Percentage Rate of interest on such Receivable (calculated
on the basis
of a 360-day year of twelve 30-day months), over (y) the interest
actually
received by the Servicer with respect to such Receivable from the
Obligor or
from payment of the Purchase Amount during or with respect to such
Collection
Period. The Servicer shall deposit all such Advances into the
Collection
Account in immediately available funds no later than, 11:00 a.m.
New York City
time, on the Deposit Date. Notwithstanding the foregoing, the
Servicer may
elect not to make any Advance with respect to a Receivable to the
extent that
the Servicer, in its sole discretion, shall determine that such
Advance is not
recoverable from subsequent payments on such Receivable or from
withdrawals
from the Reserve Account. To the extent that the amount set forth
in clause
(y) above with respect to a Receivable is greater than the amount
set forth in
clause (x) above with respect thereto, such excess amount shall be
distributed
to the Servicer pursuant to Section 7.5(b); [provided, however,
that the
Servicer shall not be entitled to reimbursement for an Advance
resulting from
a payment being made by or on behalf of the Obligor prior to the
Due Date
under the Receivable (a "Simple Interest Advance")]. In addition,
in the event
that a Receivable becomes a Defaulted Receivable, Outstanding
Advances in
respect of that Receivable shall be reimbursed to the extent of
Interest
Collections with respect to such Receivable and, if such amounts
are
insufficient, from amounts on deposit in the Reserve Account, and
if such
amounts are not sufficient, from amounts on deposit in the
Collection Account.
The Servicer shall not make any advance with respect to principal
of
Receivables.
(b)
The Servicer shall deposit in the Collection Account the
aggregate
Advances on the Receivables pursuant to Section 7.3(a). To the
extent that the
Servicer fails to make an Advance pursuant to Section 7.3(a) on the
date
required, the Servicer shall so notify the Trustee in writing
specifying the
amount of the Advance and the Receivable to which such Advance
relates, and
the Trustee shall withdraw such amount (or, if determinable, such
portion of
such amount as does not represent advances for delinquent interest)
from the
Reserve Account and deposit such amount in the Collection Account.
[The
Trustee shall deposit in the Collection
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<PAGE>
Account the aggregate of any amounts received pursuant to the Yield
Supplement
Agreement on the date of receipt thereof.]
Section 7.4 Additional Deposits. The Servicer, or the Depositor, as
the
case may be, shall deposit into the Collection Account the
aggregate Purchase
Amount pursuant to Sections 5.2, 6.6 and 14.2, as applicable. All
remittances
shall be made to the Collection Account, in immediately available
funds, no
later than 11:00 a.m., on the Deposit Date.
Section 7.5 Distributions.
(a)
On or before each Determination Date, the Servicer shall
calculate
all amounts to be deposited in the Class A Distribution Account and
the Class
B Distribution Account, which calculations shall be set forth in
the
Servicer's Certificate delivered to the Trustee on or before
such
Determination Date.
(b)
On each Payment Date, after making the reimbursements to the
Servicer
from amounts on deposit in the Collection Account of Outstanding
Advances
pursuant to Section 7.3, the Trustee shall withdraw from the
Collection
Account, the Available Interest and Available Principal for such
Payment Date,
withdraw from the Reserve Account such amounts as may be required
to satisfy
amounts requested by the Servicer for such Payment Date, make the
following
deposits and distributions, if necessary, based solely on the
information
contained in the Servicer's Certificate, to the extent of amounts
available
from the indicated sources, in the following priority:
(i) to the Servicer, first from Available Interest, and then,
if
necessary, from the Available Reserve Amount, any unpaid Servicing
Fee
owing to such Servicer for the related Collection Period and all
unpaid
Servicing Fees from prior Collection Periods less any amounts owing
to
the
Trustee pursuant to Section 13.7 hereof, which shall be paid to
the
Trustee;
(ii) to the Class A Distribution Account, first from Available
Interest, then, if necessary, from the Available Reserve Amount,
and
finally, if necessary, from the Class B Percentage of Available
Principal, the Class A Interest Distribution for such Payment Date;
and
(iii) to the Class B Distribution Account, first from Available
Interest, and then, if necessary, from the Available Reserve
Amount, the
Class B Interest Distribution for such Payment Date.
(c) On each Payment Date, the Trustee shall make the following
deposits and distributions (based on the information contained in
the
Servicer's Certificate), to the extent of the portion of
Available
Principal, Available Interest and the Available Reserve Amount (to
be
applied in that order of priority) remaining after the application
of
clauses (i), (ii) and (iii) above, in the following priority:
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(i) to the Class A Distribution Account, the Class A Principal
Distribution for such Payment Date;
(ii) to the Class B Distribution Account, the Class B Principal
Distribution for such Payment Date;
(iii) to the Collateral Agent for deposit in the Reserve
Account,
any
amounts remaining, until the amount on deposit in the Reserve
Account
equals the Specified Reserve Account Balance; and
(iv) to the Depositor, any amount remaining less any accrued
and
unpaid Trustee fees and expenses which shall be paid to the
Trustee;
(d)
On each Payment Date, all amounts on deposit in the Class A
Distribution Account will be distributed pro rata to the Class
A
Certificateholders by the Trustee and all amounts on deposit in the
Class B
Distribution Account will be distributed pro rata to the Class
B
Certificateholders by the Trustee. Except as provided in Section
14.1,
payments under this paragraph shall be made to the
Certificateholders by check
mailed by the Trustee to each Holder's respective address of record
(or, in
the case of Certificates registered in the name of a Clearing
Agency, or its
nominee, by wire transfer of immediately available funds). To the
extent that
the Trustee is required to wire funds to the Certificateholders
from the Class
A Distribution Account or the Class B Distribution Account, as
applicable, it
shall request the bank maintaining the Class A Distribution Account
or the
Class B Distribution Account, as applicable, to make a wire
transfer of the
amount to be distributed and to confirm such wire transfer.
Section 7.6 Reserve Account. On the Closing Date, the Depositor
shall
deposit the Reserve Account Initial Deposit into the Reserve
Account. The
Depositor hereby grants to the Collateral Agent for the benefit of
the
Certificateholders a security interest in and to the Reserve
Account, any and
all Financial Assets or other property credited thereto from time
to time,
including Permitted Investments, and the related Security
Entitlements to
secure payment of the Certificates according to their terms.
Amounts held from
time to time in the Reserve Account will continue to be held by the
Collateral
Agent for the benefit of Class A Certificateholders and the Class
B
Certificateholders, but the Reserve Account shall not be an asset
of the
Trust. By acceptance of their Certificates or interest therein,
Certificateholders and Certificate Owners shall be deemed to have
appointed
_________________, as Collateral Agent. _________________ hereby
accepts such
appointment as Collateral Agent. The Collateral Agent accepts such
appointment
and agrees to establish the Reserve Account at the Corporate Trust
Office and
to comply with Section 7.1(f).
Section 7.7 Net Deposits. USAA Federal Savings Bank (in
whatever
capacity) may make the remittances pursuant to Section 7.2 and
Section 7.4
above, net of amounts to be retained by it or distributed to it
(also in
whatever capacity) pursuant to Section 7.5, if (a) it shall be the
Servicer
and (b) it is entitled, pursuant to Section 7.2, to make deposits
on a monthly
basis, rather than a daily basis. The Servicer may remit amounts to
the
Collection Account net of investment earnings accrued on such
amounts pending
deposit into the Collection Account, whether or not the Servicer is
then
entitled to make deposits on a monthly basis. Nonetheless,
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the Servicer shall account for all of the above described amounts
as if such
amounts were deposited and distributed separately.
Section 7.8 Statements to Certificateholders. On each Payment Date,
the
Servicer shall prepare and furnish to the Trustee and the Paying
Agent, and
the Paying Agent shall include with the distribution to each
Certificateholder, a statement substantially in the form of Exhibit
E, based
on information in the certificate furnished pursuant to Section
6.8, setting
forth for the related Collection Period the following
information:
(i) the amount of the distribution allocable to principal on
the
Class A Certificates and the Class B Certificates;
(ii) the amount of the distribution allocable to interest on
the
Class A Certificates and the Class B Certificates;
(iii) the Yield Supplement Amount;
(iv) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period;
(v) the Class A Certificate Balance, the Class A Pool Factor,
the
Class B Certificate Balance and the Class B Pool Factor as of
such
Payment Date, after giving effect to payments allocated to
principal
reported pursuant to clause (i) above;
(vi) the Pool Balance as of the close of business of the Servicer
on
the
last day of the preceding Collection Period;
(vii) the amount of the aggregate Realized Losses, if any, for
such
Collection Period;
(viii) the aggregate Purchase Amount of Receivables repurchased
by
the
Depositor or purchased by the Servicer;
(ix) the balance of the Reserve Account on such Payment Date,
after
giving effect to changes therein on such Payment Date; and
(x) the Specified Reserve Account Balance as of the close of
business on such Payment Date.
Each amount set forth pursuant to clauses (i), (ii) and (v) above
shall be
expressed in the aggregate and as a dollar amount per $1,000 of
original
denomination of a Certificate.
Within a reasonable period of time after the end of each calendar
year,
but not later than the latest date permitted by law, the Servicer
shall
prepare and furnish to the Trustee and the Paying Agent, and the
Paying Agent
shall furnish to each Person who at any time during such calendar
year shall
have been a Certificateholder, a statement containing the sum of
the amounts
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determined in clauses (i) and (ii) for such calendar year, for the
purposes of
such Certificateholder's preparation of federal income tax
returns.
ARTICLE VIII
[YIELD SUPPLEMENT AGREEMENT
Section 8.1 Yield Supplement Agreement. Simultaneously with the
execution
of this Agreement, the Depositor shall convey the Yield Supplement
Agreement
to the Trust as part of the Trust Property. The Yield Supplement
Agreement,
with respect to each Receivable (other than Repurchased Receivables
and
Defaulted Receivables), provides for the payment by the Depositor,
to the
extent of the funds available in the Yield Supplement Account, on
or prior to
each Deposit Date of an amount (if positive) calculated by the
Servicer equal
to one-twelfth of the difference between (i) interest on such
Receivable's
Principal Balance as of the first day of the preceding Collection
Period
calculated at a rate equal to the sum of the weighted average of
the Class A
Pass-Through Rate and the Class B Pass-Through Rate and the
Servicing Fee Rate
over (ii) interest accrued on such Receivable's Principal Balance
as of the
first day of the preceding Collection Period at its Contract Rate
(in the
aggregate for all Receivables with respect to any Payment Date, the
"Yield
Supplement Amount").
Section 8.2 Yield Supplement Account. (a) The Depositor shall
establish
and maintain in the name of the Collateral Agent a segregated trust
account to
secure the Depositor's obligations under the Yield Supplement
Agreement (the
"Yield Supplement Account"). The Yield Supplement Account and any
amounts
therein shall not be property of the Trust, but shall be pledged to
the
Collateral Agent for the benefit of Certificateholders.
(b)
In order to provide for the prompt payment by the Depositor of
the
Yield Supplement Amount, to assure availability of the amounts
maintained in
the Yield Supplement Account and as security for the performance by
the
Depositor of its obligations under the Yield Supplement Agreement,
the
Depositor, on behalf of itself and its successors and assigns,
hereby pledges
to the Collateral Agent and its successors and assigns for the
benefit of the
Certificateholders, all of its right, title and interest in and to
the Yield
Supplement Account, and all proceeds of the foregoing, including
all other
amounts and investments held from time to time in the Yield
Supplement Account
including the Yield Supplement Initial Deposit, subject, however,
to the
limitations set forth below, and solely for the purpose of securing
payment of
the Yield Supplement Amount (all of the foregoing, subject to the
limitations
set forth in this Section, the "Yield Supplement Account
Property"), to have
and to hold all the aforesaid property, rights and privileges unto
the
Collateral Agent, its successors and assigns, in trust for the uses
and
purposes, and subject to the terms and provisions set forth in this
Section.
The Collateral Agent hereby acknowledges such transfer and accepts
the trust
hereunder and shall hold and distribute the Yield Supplement
Account Property
in accordance with the terms and provisions of this Section.
(c)
Funds on deposit in the Yield Supplement Account shall be invested
by
the Collateral Agent in Permitted Investments selected by the
Depositor and
designated in writing by the Depositor to the Collateral Agent;
provided,
however, that the Collateral Agent shall not be
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liable for any loss arising from such investment in Permitted
Investments.
Funds on deposit in the Yield Supplement Account shall be invested
in
Permitted Investments that will mature so that all such funds will
be
available at the opening of business on each Deposit Date;
provided, however,
that to the extent permitted by the Rating Agencies, funds on
deposit in the
Yield Supplement Account may be invested in Permitted Investments
that mature
later than the next Deposit Date. Funds deposited in the Yield
Supplement
Account on a Deposit Date upon the maturity of any Permitted
Investments are
not required to be (but may be) invested over night. The Depositor
will treat
the funds, Permitted Investments and other assets in the Yield
Supplement
Account as its own for Federal, state and local income tax and
franchise tax
purposes and will report on its tax returns all income, gain and
loss from the
Yield Supplement Account.
(d)
Each Permitted Investment made with funds from the Yield
Supplement
Account shall be delivered to the Collateral Agent by causing the
financial
institution then maintaining the Yield Supplement Account (such
institution
being referred to as the "Yield Supplement Account Securities
Intermediary")
to create a Security Entitlement in the Yield Supplement Account in
favor of
the Trustee with respect to such Permitted Investment by indicating
by
book-entry that such Permitted Investment has been credited to the
Yield
Supplement Account. The Servicer shall only invest in Permitted
Investments
which the Yield Supplement Account Securities Intermediary agrees
to credit to
the Yield Supplement Account.
(e)
Each of the Depositor and the Servicer agree to take or cause to
be
taken such further actions, to execute, deliver and file or cause
to be
executed, delivered and filed such further documents and
instruments
(including, without limitation, any financing statements under the
UCC or this
Agreement) as may be determined to be necessary, in order to
perfect the
security interests created by this Section 8.2 and otherwise
effectuate the
purposes, terms and conditions of this Section 8.2.
(f)
Notwithstanding anything else contained herein, the Yield
Supplement
Account shall only be established at Qualified Trust Institution
which agrees
that it will (i) comply with Entitlement Orders (i.e., orders
directing the
transfer or redemption of any financial assets credited to the
Yield
Supplement Account) relating to the Yield Supplement Account issued
by the
Collateral Agent without further consent by the Depositor; (ii)
credit all
Permitted Investments to the Yield Supplement Account; (iii) treat
each item
of property (including, without limitation, investment property,
securities,
instruments and cash) credited to the Yield Supplement Account as a
Financial
Asset; (iv) not enter into any agreement with any other person
relating to the
Yield Supplement Account pursuant to which agreement it has agreed
to comply
with Entitlement Orders made by such person; (v) not accept for
credit to the
Yield Supplement Account any Permitted Investment which is
registered in the
name of, or payable to the order of, or specially indorsed to, any
person
other than such Qualified Trust Institution unless it has been
indorsed to
such Qualified Trust Institution or is indorsed in blank and (vi)
such
Qualified Trust Institution has agreed that it will waive any right
of set-off
unrelated to its fees for such Account.
38
<PAGE>
(g)
No later than 11:00 A.M. (New York time) on each Deposit Date,
the
Servicer shall deposit to the Collection Account
