|
Exhibit 4.1
================================================================================
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
================================================================================
<PAGE>
<TABLE>
<CAPTION>
Table of Contents
Page
ARTICLE I
DEFINITIONS
<S> <C> <C>
Section 1.1
Definitions.........................................................................1
Section 1.2 Usage of
Terms.....................................................................14
Section 1.3 Simple Interest Method;
Allocations................................................14
Section 1.4
References.........................................................................14
Section 1.5 Section
References.................................................................14
ARTICLE II
Section 2.1 Creation of
Trust..................................................................14
ARTICLE III
Section 3.1 Conveyance of
Receivables..........................................................15
ARTICLE IV
Section 4.1 Acceptance by
Trustee..............................................................15
ARTICLE V
THE RECEIVABLES
Section 5.1 Representations and Warranties of Depositor;
Conditions Relating to
Receivables........................................................................16
Section 5.2 Repurchase Upon Breach or Failure of a
Condition...................................19
Section 5.3 Custody of Receivable
Files........................................................19
Section 5.4 Duties of Servicer as
Custodian....................................................20
Section 5.5 Instructions; Authority to
Act.....................................................21
Section 5.6 Custodian's
Indemnification........................................................21
Section 5.7 Effective Period and
Termination...................................................21
ARTICLE VI
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 6.1 Duties of
Servicer.................................................................22
Section 6.2 Collection of Receivable
Payments..................................................22
Section 6.3 Realization Upon
Receivables.......................................................23
Section 6.4 Maintenance of Security Interests in Financed
Vehicles.............................23
Section 6.5 Covenants of
Servicer..............................................................24
Section 6.6 Purchase of Receivables Upon
Breach................................................24
Section 6.7 Servicing
Fee......................................................................25
i
<PAGE>
Section 6.8 Servicer's
Certificate.............................................................25
Section 6.9 Annual Statement as to
Compliance..................................................25
Section 6.10 Annual Audit
Report................................................................26
Section 6.11 Reports to Certificateholders and the Rating
Agencies..............................26
Section 6.12
Insurance..........................................................................27
ARTICLE VII
DISTRIBUTIONS; STATEMENTS TO CERTIFICATEHOLDERS
Section 7.1
Accounts...........................................................................27
Section 7.2
Collections........................................................................29
Section 7.3
Advances...........................................................................29
Section 7.4 Additional
Deposits................................................................30
Section 7.5
Distributions......................................................................30
Section 7.6 Reserve
Account....................................................................32
Section 7.7 Net
Deposits.......................................................................32
Section 7.8 Statements to
Certificateholders...................................................32
ARTICLE VIII
YIELD SUPPLEMENT AGREEMENT
Section 8.1 Yield Supplement
Agreement.........................................................33
Section 8.2 Yield Supplement
Account...........................................................34
ARTICLE IX
THE CERTIFICATES
Section 9.1 The
Certificates...................................................................36
Section 9.2 Execution, Authentication and Delivery of
Certificates.............................36
Section 9.3 Registration of Transfer and Exchange of
Certificates..............................36
Section 9.4 Mutilated, Destroyed, Lost, or Stolen
Certificates.................................38
Section 9.5 Persons Deemed
Owners..............................................................38
Section 9.6 Access to List of Certificateholders' Names and
Addresses..........................38
Section 9.7 Maintenance of Office or
Agency....................................................39
Section 9.8 Book-Entry
Certificates............................................................39
Section 9.9 Notices to Clearing
Agency.........................................................40
Section 9.10 Definitive
Certificates............................................................40
Section 9.11 Appointment of Paying
Agent........................................................41
Section 9.12 Authenticating
Agent...............................................................41
Section 9.13 Actions of
Certificateholders......................................................43
ARTICLE X
THE DEPOSITOR
Section 10.1 Representations of
Depositor.......................................................44
Section 10.2 Liability of Depositor;
Indemnities................................................45
ii
<PAGE>
Section 10.3 Merger or Consolidation of
Depositor...............................................45
Section 10.4 Limitation on Liability of Depositor and
Others....................................45
Section 10.5 Depositor May Own
Certificates.....................................................46
ARTICLE XI
THE SERVICER
Section 11.1 Representations of
Servicer........................................................46
Section 11.2 Liability of Servicer;
Indemnities.................................................47
Section 11.3 Merger or Consolidation of
Servicer................................................48
Section 11.4 Limitation on Liability of Servicer and
Others.....................................48
Section 11.5 Servicer Not To
Resign.............................................................50
Section 11.6 Delegation of
Duties...............................................................50
ARTICLE XII
EVENTS OF SERVICING TERMINATION
Section 12.1 Events of Servicing
Termination....................................................50
Section 12.2 Trustee to Act; Appointment of
Successor...........................................52
Section 12.3 Notification to
Certificateholders.................................................52
Section 12.4 Waiver of Past
Defaults............................................................52
ARTICLE XIII
THE TRUSTEE
Section 13.1 No Power to Engage in Business or to Vary
Investments..............................53
Section 13.2 Duties of
Trustee..................................................................53
Section 13.3 Trustee's Assignment of Repurchased Receivables and
Trustee's Certificate..........55
Section 13.4 Certain Matters Affecting the
Trustee..............................................55
Section 13.5 Trustee Not Liable for Certificates or
Receivables.................................57
Section 13.6 Trustee May Own
Certificates.......................................................58
Section 13.7 Trustee's Fees and
Expenses........................................................58
Section 13.8
Indemnity..........................................................................59
Section 13.9 Eligibility Requirements for
Trustee...............................................59
Section 13.10 Resignation or Removal of
Trustee..................................................59
Section 13.11 Successor
Trustee..................................................................60
Section 13.12 Merger or Consolidation of
Trustee.................................................60
Section 13.13 Appointment of Co-Trustee or Separate
Trustee......................................61
Section 13.14 Representations and Warranties of
Trustee..........................................62
Section 13.15 Tax
Returns........................................................................63
Section 13.16 Trustee May Enforce Claims Without Possession of
Certificates......................63
Section 13.17 Suits for
Enforcement..............................................................63
Section 13.18 Maintenance of Office or
Agency....................................................63
iii
<PAGE>
ARTICLE XIV
TERMINATION
Section 14.1 Termination of the
Trust...........................................................64
Section 14.2 Optional Purchase of All
Receivables...............................................65
ARTICLE XV
MISCELLANEOUS PROVISIONS
Section 15.1
Amendment..........................................................................65
Section 15.2 Protection of Title to
Trust.......................................................66
Section 15.3 Limitation on Rights of
Certificateholders.........................................68
Section 15.4 Governing
Law......................................................................69
Section 15.5
Notices............................................................................69
Section 15.6 Severability of
Provisions.........................................................69
Section 15.7
Assignment.........................................................................69
Section 15.8 Certificates Nonassessable and Fully
Paid..........................................70
Section 15.9 Third-Party
Beneficiaries..........................................................70
</TABLE>
Schedule A:.......List of Receivables
Schedule B:.......Location of Receivables Files
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
iv
<PAGE>
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.
"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.
"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
<PAGE>
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.
"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 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.
"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.
2
<PAGE>
"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.
"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 ____%.
3
<PAGE>
"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.
"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
4
<PAGE>
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 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.
5
<PAGE>
"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.
"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 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.
6
<PAGE>
"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).
"Fannie Mae" means Fannie Mae or any successor thereto.
"FDIC" means the Federal Deposit Insurance Corporation or any
successor
thereto.
"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.
"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.
7
<PAGE>
"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.
"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 $_____________.
"Original Pool Balance" means the Pool Balance as of the Cut-off
Date,
as specified in this Agreement.
"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 _________, ___.
"Permitted Investments" means, at any time, any one or more of
the
following obligations and securities:
8
<PAGE>
(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 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;
9
<PAGE>
(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, 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
10
<PAGE>
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.
"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.
11
<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 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.
12
<PAGE>
"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.
"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.
"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).
13
<PAGE>
"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 to the
Pool Balance "as of
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.
14
<PAGE>
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 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
15
<PAGE>
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 (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 hereto.
16
<PAGE>
(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
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 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.
17
<PAGE>
(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.
(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.
18
<PAGE>
(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.
(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) Remaining Principal Balance. Each Receivable had a
remaining Principal Balance, as of the Cut-off Date, of at
least
$_____.
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
19
<PAGE>
(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;
(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
20
<PAGE>
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.
(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.
21
<PAGE>
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, 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
22
<PAGE>
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.
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
23
<PAGE>
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:
(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
24
<PAGE>
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
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
25
<PAGE>
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. (a) The Servicer
shall
deliver to the Trustee and the Rating Agencies, and on or before
March 31 of
each year commencing March 31, _____, 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.
(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.
Section 6.10 Annual Audit Report. The Servicer shall cause a
firm of
independent public accountants (which may provide other services
to the Servicer
or the Depositor) to prepare a report addressed to the Board of
Directors of the
Servicer, for the information and use of the Trustee, and the
Rating Agencies on
or before March 31 of each year, beginning March 31, _____, to
the effect that
such firm has examined the automobile and light-duty truck
receivable servicing
functions of the Servicer, including the Servicer's procedures
and records
relating to servicing of the Receivables under this Agreement
and that, on the
basis of such examination, such firm is of the opinion that such
servicing has
been conducted in compliance with this Agreement except for (a)
such exceptions
as such firm believes to be immaterial and (b) such other
exceptions as shall be
set forth in such firm's report. In addition, such report shall
state that such
firm has compared the mathematical calculations of each amount
set forth in the
monthly certificates forwarded by the Servicer pursuant to
Section 6.8 during
the period covered by such report (which shall be the preceding
calendar year)
with the Servicer's computer reports which were the source of
such amounts and
that on the basis of such comparison, such firm is of the
opinion that such
amounts are in agreement, except for such exceptions as such
firm believes to be
immaterial and such other exceptions as shall be set forth in
such statement. In
addition, such report shall set forth the procedures performed
in conjunction
with the examination and shall contain an opinion of such firm
as to the
accuracy of the amounts set forth in the certificates delivered
pursuant to
Section 6.8 in such period.
26
<PAGE>
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
(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
27
<PAGE>
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 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.
28
<PAGE>
(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 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
29
<PAGE>
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 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.
30
<PAGE>
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:
(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
31
<PAGE>
(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 remitt
| 
