EXECUTION COPY
HONDA AUTO RECEIVABLES 2008-1 OWNER TRUST,
as Issuer,
AMERICAN HONDA RECEIVABLES CORP.,
as Seller,
And
AMERICAN HONDA FINANCE CORPORATION,
as Servicer and Sponsor
SALE AND SERVICING AGREEMENT
Dated as of June 1, 2008
TABLE OF CONTENTS
Page
----
ARTICLE ONE
DEFINITIONS
Section 1.01. General
Definitions..................................................................
1
Section 1.02. Other Definitional
Provisions........................................................
18
Section 1.03. Interpretive
Provisions..............................................................
19
ARTICLE TWO
CONVEYANCE OF RECEIVABLES; CUSTODY
OF RECEIVABLES FILES
Section 2.01. Conveyance of
Receivables............................................................
19
Section 2.02. Custody of Receivable
Files..........................................................
20
Section 2.03. Representations and Warranties of Seller as to the
Receivables....................... 21
Section 2.04. Repurchase of Receivables Upon
Breach................................................ 25
Section 2.05. Duties of Servicer as
Custodian......................................................
26
Section 2.06. Instructions; Authority to
Act....................................................... 26
Section 2.07. Indemnification by
Custodian.........................................................
27
Section 2.08. Effective Period and
Termination.....................................................
27
ARTICLE THREE
ADMINISTRATION AND
SERVICING OF RECEIVABLES
Section 3.01. Duties of
Servicer...................................................................
27
Section 3.02. Collection of Receivable
Payments.................................................... 28
Section 3.03.
[Reserved]...........................................................................
29
Section 3.04. Realization Upon
Receivables.........................................................
29
Section 3.05. Maintenance of Physical Damage Insurance
Policies.................................... 29
Section 3.06. Maintenance of Security Interests in Financed
Vehicles............................... 29
Section 3.07. Covenants of
Servicer................................................................
30
Section 3.08. Purchase of Receivables Upon
Breach.................................................. 30
Section 3.09. Total Servicing Fee; Payment of Certain Expenses by
Servicer......................... 30
Section 3.10. Servicer's
Certificate...............................................................
31
Section 3.11. Annual Statement as to Compliance; Notice of
Default................................. 31
Section 3.12. Assessment of Compliance and Annual Accountants'
Report.............................. 31
Section 3.13. Access to Certain Documentation and Information
Regarding Receivables................ 33
Section 3.14. Amendments to Schedule of
Receivables................................................ 33
Section 3.15. Reports to Securityholders and Rating
Agencies....................................... 33
Section 3.16. Appointment of Subservicer or
Subcontractor.......................................... 33
Section 3.17. Information to be Provided by the
Servicer........................................... 34
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Section 3.18.
Remedies.............................................................................
35
ARTICLE FOUR
DISTRIBUTIONS; RESERVE FUND;
STATEMENTS TO SECURITYHOLDERS
Section 4.01. Establishment of
Accounts............................................................
36
Section 4.02.
Collections..........................................................................
37
Section 4.03. Application of
Collections...........................................................
38
Section 4.04.
Advances.............................................................................
39
Section 4.05. Additional
Deposits..................................................................
40
Section 4.06.
Distributions........................................................................
40
Section 4.07. Reserve
Fund.........................................................................
41
Section 4.08. Yield Supplement
Account.............................................................
42
Section 4.09. Net
Deposits.........................................................................
42
Section 4.10. Statements to
Securityholders........................................................
42
ARTICLE FIVE
THE SELLER
Section 5.01. Representations of
Seller............................................................
44
Section 5.02. Liability of Seller;
Indemnities.....................................................
45
Section 5.03. Merger, Consolidation or Assumption of the
Obligations of Seller; Certain
Limitations
......................................................................
46
Section 5.04. Limitation on Liability of Seller and
Others......................................... 48
Section 5.05. Seller May Own
Notes.................................................................
48
ARTICLE SIX
THE SERVICER
Section 6.01. Representations of
Servicer..........................................................
48
Section 6.02. Indemnities of
Servicer..............................................................
50
Section 6.03. Merger, Consolidation or Assumption of the
Obligations of Servicer................... 50
Section 6.04. Limitation on Liability of Servicer and
Others....................................... 51
Section 6.05. AHFC Not to Resign as
Servicer.......................................................
51
ARTICLE SEVEN
SERVICER
DEFAULTS
Section 7.01. Servicer
Defaults....................................................................
52
Section 7.02. Appointment of Successor
Servicer.................................................... 53
Section 7.03. Notification of Servicer
Termination................................................. 54
Section 7.04. Waiver of Past
Defaults..............................................................
54
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Section 7.05. Repayment of
Advances................................................................
54
ARTICLE EIGHT
TERMINATION
Section 8.01. Optional Purchase of All
Receivables................................................. 54
ARTICLE NINE
MISCELLANEOUS
Section 9.01.
Amendment............................................................................
56
Section 9.02. Protection of Title to
Trust.........................................................
57
Section 9.03.
Notices..............................................................................
59
Section 9.04.
Assignment...........................................................................
59
Section 9.05. Limitations on Rights of
Others...................................................... 60
Section 9.06.
Severability.........................................................................
60
Section 9.07. Separate
Counterparts................................................................
60
Section 9.08.
Headings.............................................................................
60
Section 9.09. Governing
Law........................................................................
60
Section 9.10. Nonpetition
Covenants................................................................
60
Section 9.11. Limitation of Liability of Owner Trustee and
Indenture Trustee....................... 61
Section 9.12. Third-Party
Beneficiary..............................................................
61
Section 9.13.
Confidentiality......................................................................
61
Section 9.14. Federal Tax
Treatment................................................................
62
Section 9.15. Intent of the Parties;
Reasonableness................................................
62
SCHEDULES
Schedule A - Schedule of Receivables A-1
Schedule B - Location of Receivable Files B-1
iii
EXHIBITS
Exhibit A - Form of Distribution Statement
of Securityholders and Servicer's
Certificate A-1
Exhibit B - [Reserved] B-1
Exhibit C - Form of Redemption Notice C-1
Exhibit D - Form of Officer's Certificate D-1
Exhibit E - Form of Annual Certification E-1
Exhibit F - Servicing Criteria to be Addressed
In Assessment of Compliance F-1
iv
This Sale and Servicing Agreement, dated as of June 1, 2008,
is among
American Honda Receivables Corp., a California corporation ("AHRC"
or, in its
capacity as Seller, the "Seller"), American Honda Finance
Corporation, a
California corporation ("AHFC" or, in its capacity as Servicer, the
"Servicer"),
and Honda Auto Receivables 2008-1 Owner Trust, a Delaware statutory
trust, as
Issuer (the "Issuer").
WHEREAS the Issuer desires to purchase from the Seller a
portfolio of
receivables arising in connection with retail installment sale or
conditional
sale contracts (the "Receivables") generated by AHFC in the
ordinary course of
its business, which Receivables have been sold by AHFC to AHRC;
WHEREAS, AHRC is willing to sell the Receivables to the Issuer
pursuant to
the terms hereof; and
WHEREAS, AHFC is willing to service the Receivables pursuant
to the terms
hereof;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. General Definitions. Whenever used in this
Agreement, the
following words and phrases, unless the context otherwise requires,
shall have
the following meanings:
"Absolute Prepayment Model" means a model calculating
prepayment of
receivables with respect to which the receivables prepay at a
specified constant
monthly prepayment rate.
"Accounts" means the Collection Account, the Note Distribution
Account, the
Yield Supplement Account and the Reserve Fund.
"Account Property" means, with respect to each Account, such
Account,
together with all cash, securities, financial assets and
investments and other
property from time to time deposited or credited to such Account
and all
proceeds thereof, including, with respect to the (i) Reserve Fund,
the Reserve
Fund Initial Deposit and (ii) Yield Supplement Account, the Yield
Supplement
Account Deposit.
"Actual Payment" means, with respect to a Receivable and a
Collection
Period, all payments received by the Servicer from or for the
account of the
related Obligor on such Receivable during such Collection Period,
net of any
Supplemental Servicing Fees attributable to such Receivable.
"Administration Agreement" means the Administration Agreement,
dated as of
June 1, 2008, among the Administrator, the Issuer, the Depositor
and the
Indenture Trustee.
"Administrator" means AHFC, or any successor Administrator
under the
Administration Agreement.
"Administrative Purchase Payment" means, with respect to a
Payment Date and
to an Administrative Receivable purchased by the Seller or the
Servicer as of
the end of the related Collection Period, the sum of (a) the unpaid
principal
balance owed by the related Obligor in respect of such Receivable
and (b)
interest on such unpaid principal balance at a rate equal to the
APR of the
related Receivable from the date of last payment by such Obligor to
the last day
of such Collection Period.
"Administrative Receivable" means a Receivable which the
Servicer is
required to purchase pursuant to Section 3.08 or which the Servicer
has elected
to purchase pursuant to Section 8.01.
"Advance" shall have the meaning set forth in Section 4.04(a).
"Affiliate" means, with respect to any specified Person, any
other Person
controlling or controlled by or under common control with such
specified Person.
For the purpose of this definition, "control", when used with
respect to any
specified Person, means the power to direct the management and
policies of such
Person, directly or indirectly, whether through the ownership of
voting
securities, by contract or otherwise; and the terms "controlling"
and
"controlled" have meanings correlative to the foregoing.
"Aggregate Net Losses" means, with respect to a Collection
Period, an
amount equal to the aggregate Principal Balance of all Receivables
that became
Defaulted Receivables during such Collection Period minus all Net
Liquidation
Proceeds collected during such Collection Period with respect to
all Defaulted
Receivables.
"Agreement" means this Sale and Servicing Agreement, and all
amendments
hereof and supplements hereto.
"AHFC" means American Honda Finance Corporation, and its
successors.
"AHRC" means American Honda Receivables Corp., and its
successors.
"Amount Financed" in respect of a Receivable means the
aggregate amount
advanced under such Receivable toward the purchase price of the
related Financed
Vehicle and any related costs, including but not limited to
accessories,
insurance premiums, service and warranty contracts and other items
customarily
financed as part of motor vehicle retail installment sale
contracts.
"Annual Percentage Rate" or "APR" of a Receivable means the
annual rate of
finance charges stated in such Receivable.
"Available Amount" means, with respect to any Payment Date,
the sum of
Available Interest and Available Principal.
"Available Interest" means, with respect to any Payment Date,
the total of
the following amounts allocable to interest received by the
Servicer on or in
respect of the Receivables during the related Collection Period
(computed by the
simple interest method): (i) the sum of the
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interest component of all (a) collections on or in respect of all
Receivables
other than Defaulted Receivables, (b) Net Liquidation Proceeds, (c)
Advances
made by the Servicer, (d) Warranty Purchase Payments, (e)
Administrative
Purchase Payments and (f) the Yield Supplement Withdrawal Amount,
if any, for
the related Payment Date, less (ii) the sum of all (a) amounts
received on or in
respect of a particular Receivable (other than a Defaulted
Receivable) to the
extent of the aggregate Outstanding Interest Advances in respect of
such
Receivable and (b) Net Liquidation Proceeds with respect to a
particular
Receivable to the extent of the aggregate Outstanding Interest
Advances in
respect of such Receivable.
"Available Principal" means, with respect to any Payment Date,
the total of
the following amounts allocable to principal received by the
Servicer on or in
respect of the Receivables during the related Collection Period
(computed by the
simple interest method): (i) the sum of the principal component of
all (a)
collections on or in respect of all Receivables other than
Defaulted
Receivables, (b) Net Liquidation Proceeds, (c) Advances made by the
Servicer,
(d) Warranty Purchase Payments and (e) Administrative Purchase
Payments, less
(ii) an amount equal to all (a) amounts received on or in respect
of a
particular Receivable (other than a Defaulted Receivable) to the
extent of the
aggregate Outstanding Principal Advances in respect of such
Receivable and (b)
Net Liquidation Proceeds with respect to a particular Receivable to
the extent
of the aggregate Outstanding Principal Advances in respect of such
Receivable.
"Basic Documents" means this Agreement, the Administration
Agreement, the
Indenture, the Note Depository Agreement, the Receivables Purchase
Agreement,
the Trust Agreement and the Control Agreement and any other
documents or
certificates delivered in connection therewith as the same may be
amended,
supplemented or otherwise modified and in effect.
"Basic Servicing Fee" means the fee payable pursuant to
Section 3.09 to the
Servicer on each Payment Date for services rendered during the
related
Collection Period, which shall be equal to one-twelfth of the
Servicing Fee Rate
multiplied by the Pool Balance as of the first day of the related
Collection
Period or, with respect to the first Payment Date, the Original
Pool Balance.
"Business Day" means any day other than a Saturday, a Sunday
or a day on
which banking institutions in New York, New York, Los Angeles,
California or
Wilmington, Delaware are authorized or obligated by law, executive
order or
governmental decree to be closed.
"Certificate Balance" means, on any Payment Date, the Original
Certificate
Balance reduced by all distributions of principal previously made
in respect of
the Certificates.
"Certificate Distributable Amount" means, with respect to any
Payment Date,
the sum of the Certificate Interest Distributable Amount and the
Certificate
Principal Distributable Amount for such Payment Date.
"Certificate Distribution Account" has the meaning specified
in the Trust
Agreement.
"Certificate Interest Carryover Shortfall" means, with respect
to any
Payment Date, the excess, if any, of (x) the sum of (i) the
Certificate Monthly
Interest Distributable Amount and (ii)
3
any outstanding Certificate Interest Carryover Shortfall for the
preceding
Payment Date, over (y) the amount in respect of interest on the
Certificates
that is actually paid as interest on the Certificates on such
Payment Date,
plus, to the extent permitted by applicable law, interest on the
Certificate
Interest Carryover Shortfall at the Certificate Rate for the
Interest Accrual
Period.
"Certificate Interest Distributable Amount" means, with
respect to any
Payment Date, the sum of the Certificate Monthly Interest
Distributable Amount
for such Payment Date and the Certificate Interest Carryover
Shortfall for such
Payment Date.
"Certificate Monthly Interest Distributable Amount" means,
with respect to
any Payment Date, interest accrued for the related Interest Accrual
Period at
the Certificate Rate on the Certificate Balance on the immediately
preceding
Payment Date after giving effect to all payments of principal to
Certificateholders on or prior to such Payment Date (or, in the
case of the
first Payment Date, on the Original Certificate Balance).
"Certificate Monthly Principal Distributable Amount" means,
with respect to
any Payment Date, the Certificate Percentage of the Principal
Distributable
Amount for such Payment Date.
"Certificate of Trust" means the Certificate of Trust filed
for the Issuer
pursuant to Section 3810(a) of the Statutory Trust Statute,
substantially in the
form of Exhibit A to the Trust Agreement.
"Certificate Percentage" means (i) for each Payment Date until
the Class
A-1 and Class A-2 Notes have been paid in full, 0%; (ii) after the
Class A-1 and
Class A-2 Notes have been paid in full, for each Payment Date to
and including
the Payment Date on which the principal amount of the Class A-3 and
Class A-4
Notes has been paid in full, the percent equivalent of a fraction,
the numerator
of which is the initial aggregate principal amount of the
Certificates and the
denominator of which is the sum of the initial aggregate principal
amount of the
Class A-3 and Class A-4 Notes and the initial principal amount of
the
Certificates; provided however, if the amount on deposit in the
Reserve Fund is
less than 0.075% of the Initial Pool Balance other than if the then
outstanding
principal amount of the Notes and the then outstanding principal
balance of the
Certificates is less than the Reserve Fund balance, then the
Certificate
Percentage of the principal distributable amount will equal 0%; and
(iii)
thereafter, 100%.
"Certificate Pool Factor" means, with respect to the
Certificates on any
Payment Date, a seven-digit decimal figure equal to the outstanding
principal
balance of the Certificates on such Payment Date (after giving
effect to any
reductions thereof to be made on such Payment Date) divided by the
Original
Certificate Balance.
"Certificate Principal Carryover Shortfall" means, with
respect to any
Payment Date, the excess, if any, of (x) the sum of (i) the
Certificate Monthly
Principal Distributable Amount and (ii) any outstanding Certificate
Principal
Carryover Shortfall for the preceding Payment Date, over (y) the
amount in
respect of principal that is actually paid as principal on the
Certificates on
such Payment Date.
4
"Certificate Principal Distributable Amount" means, with
respect to any
Payment Date, the sum of the Certificate Monthly Principal
Distributable Amount
for each Payment Date and any outstanding Certificate Principal
Carryover
Shortfall as of the close of the immediately preceding Payment
Date; provided,
however, that the Certificate Principal Distributable Amount shall
not exceed
the Certificate Balance. In addition, on the Payment Date as of
which all of the
Receivables are to be purchased pursuant to Section 8.01, the
principal required
to be deposited into the Certificate Distribution Account will
include the
amount necessary to reduce the Certificate Balance to zero.
"Certificate Rate" means 0.00% per annum (computed on the
basis of a 360
day year consisting of twelve 30-day months).
"Certificateholders" has the meaning specified in the Trust
Agreement.
"Charge-off Rate" with respect to a Collection Period will
equal the
Aggregate Net Losses with respect to the Receivables expressed, on
an annualized
basis, as a percentage of the average of the (i) Pool Balance on
the last day of
the immediately preceding Collection Period and (ii) Pool Balance
on the last
day of such current Collection Period.
"Class" means all Securities whose form is identical except
for variation
in denomination, principal amount or owner (i.e., each of Class
A-1, Class A-2,
Class A-3 and Class A-4).
"Class A-1 Final Payment Date" means the July 20, 2009 Payment
Date.
"Class A-1 Noteholder" means a Person in whose name a Class
A-1 Note is
Registered the Note Register.
"Class A-2 Final Payment Date" means the September 20, 2010
Payment Date.
"Class A-2 Noteholder" means a Person in whose name a Class
A-2 Note is
registered in the Note Register.
"Class A-3 Final Payment Date" means the January 18, 2012
Payment Date.
"Class A-3 Noteholder" means a Person in whose name a Class
A-3 Note is
registered in the Note Register.
"Class A-4 Final Payment Date" means the September 18, 2014
Payment Date.
"Class A-4 Noteholder" means the Person in whose name a Class
A-4 Note is
registered in the Note Register.
"Closing Date" means June 26, 2008.
"Collection Account" means the account designated as such, and
established
and maintained pursuant to Section 4.01.
5
"Collection Period" means each calendar month during the term
of this
Agreement (or, in the case of the first Collection Period, the
period of time
since the Cutoff Date through the last day of the calendar month
immediately
preceding the month in which the first Payment Date occurs).
"Commission" means the Securities and Exchange Commission, and
its
successors.
"Control" shall have the meaning specified in Section 8-106 of
the UCC.
"Control Agreement" means the control agreement, dated as of
June 1, 2008,
among AHRC, the Issuer, the Servicer, the Indenture Trustee and
Deutsche Bank
Trust Company Americas, as securities intermediary, as amended or
supplemented
from time to time.
"Corporate Trust Office" means the principal office of the
Indenture
Trustee at which at any particular time its corporate trust
business shall be
administered, which office at the date of the execution of this
Agreement is
located at 60 Wall Street, 26th Floor, Mail Stop NYC60-2606, New
York, New York
10004, Attention: Asset Backed Securities Unit - Honda Auto
Receivables 2008-1
or at such other address as the Indenture Trustee may designate
from time to
time by notice to the Noteholders and the Seller, or the principal
corporate
trust office of any successor Indenture Trustee (of which address
such successor
Indenture Trustee will notify the Noteholders and the Seller).
"Current Receivable" means each Receivable that is not a
Defaulted
Receivable or a Liquidated Receivable.
"Cutoff Date" means June 1, 2008.
"Dealer" means the dealer of motor vehicles who sold a
Financed Vehicle and
who originated and assigned the Receivable relating to such
Financed Vehicle to
AHFC under an existing agreement between such dealer and AHFC.
"Dealer Recourse" means, with respect to a Receivable, all
recourse rights
against the Dealer which originated the Receivable, and any
successor to such
Dealer.
"Defaulted Receivable" means a Receivable (other than an
Administrative
Receivable or a Warranty Receivable as to which a Warranty Purchase
Payment or
an Administrative Purchase Payment has been made) as to which (i)
all or any
part of a Scheduled Payment is 120 or more days past due and the
Servicer has
not repossessed the related Financed Vehicle or (ii) the Servicer
has, in
accordance with its customary servicing procedures, determined that
eventual
payment in full is unlikely and either repossessed and liquidated
the related
Financed Vehicle or repossessed and held the related Financed
Vehicle in its
repossession inventory for 90 days, whichever occurs first.
"Delinquency Percentage" means, with respect to a Collection
Period, the
percentage equivalent of a fraction, the numerator of which is the
number of (i)
Receivables 61 days or more delinquent (after taking into account
permitted
extensions) as of the last day of such Collection Period,
determined in
accordance with the Servicer's normal practices, plus (ii)
Receivables the
6
related Financed Vehicles of which have been repossessed but have
not been
liquidated (to the extent the related Receivable is not otherwise
reflected in
clause (i) above or is not a Defaulted Receivable), and the
denominator of which
is the aggregate number of Current Receivables on the last day of
such
Collection Period.
"Deposit Date" means, with respect to any Collection Period
and Payment
Date, the Business Day immediately preceding such Payment Date.
"Depositor" means the Seller in its capacity as Depositor
under the Trust
Agreement.
"Determination Date" means, with respect to any Payment Date,
the 13th
calendar day of the month in which such Payment Date occurs or, if
such day is
not a Business Day, the immediately succeeding Business Day.
"Discount Receivable" means any Receivable that has an APR
which is less
than the Required Rate.
"Eligible Account" means either (A) a segregated deposit
account or
securities account over which the applicable Trustee has sole
signature
authority, maintained with an Eligible Institution meeting the
requirements of
clause (i) thereof or (B) a segregated trust account maintained
with an Eligible
Institution meeting the requirements of clause (ii) thereof, in
each case
bearing a designation clearly indicating that the funds deposited
therein are
held for the benefit of the Securityholders, the Noteholders or the
Certificateholders, as the case may be.
"Eligible Institution" means a federally insured depository
institution or
trust company, (i) the commercial paper or other short-term
unsecured debt
obligations of which have the Required Deposit Rating or (ii)
having corporate
trust powers and organized under the laws of the United States, any
state
thereof, the District of Columbia or the Commonwealth of Puerto
Rico which has a
long-term deposit rating from (A) Standard and Poor's of at least
AA- or (B)
Moody's of at least Aa2 (or such lower rating as either Rating
Agency shall
approve in writing).
"Eligible Investments" means, at any time, any one or more of
the following
obligations and securities:
(i) obligations of, and obligations fully guaranteed as
to timely
payment of principal and interest by, the United States or any
agency
thereof, provided such obligations are backed by the full
faith and credit
of the United States;
(ii) general obligations of or obligations guaranteed by
FNMA, any
state of the United States, the District of Columbia or the
Commonwealth of
Puerto Rico then rated the highest available credit rating of
each Rating
Agency for such obligations;
(iii) securities bearing interest or sold at a discount
issued by any
corporation incorporated under the laws of the United States
or any state
thereof, the District of Columbia or the Commonwealth of
Puerto Rico, so
long as at the time of such investment or contractual
commitment providing
for such investment either the long-term unsecured debt of
such corporation
has the highest available credit rating from each Rating
Agency
7
for such obligations or the commercial paper or other
short-term debt which
is then rated has the highest available credit rating of each
Rating Agency
for such obligations;
(iv) certificates of deposit issued by any depository
institution or
trust company (including the Trustee) incorporated under the
laws of the
United States or any state thereof, the District of Columbia
or the
Commonwealth of Puerto Rico and subject to supervision and
examination by
banking authorities of one or more of such jurisdictions,
provided that the
short-term unsecured debt obligations of such depository
institution or
trust company has the highest available credit rating of each
Rating Agency
for such obligations;
(v) certificates of deposit issued by any bank, trust
company, savings
bank or other savings institution and fully insured by the
FDIC;
(vi) repurchase obligations held by the Trustee that are
acceptable to
the Trustee with respect to any security described in clauses
(i) or (ii)
hereof or any other security issued or guaranteed by any other
agency or
instrumentality of the United States, in either case entered
into with a
federal agency or a depository institution or trust company
(acting as
principal) described in clause (iv) above;
(vii) any mutual fund, money market fund, common trust
fund or other
pooled investment vehicle having a rating, at the time of such
investment,
of no less than Aaa or its equivalent by Moody's, AAA or its
equivalent by
Standard & Poor's and AAA or its equivalent by Fitch, if
rated by Fitch
(including, but not limited to funds of which Deutsche Bank
Trust Company
Americas or an affiliate thereof is the manager or financial
advisor);
(viii) such other investments acceptable to each Rating
Agency in
writing as will not result in the qualification, downgrading
or withdrawal
of the rating then assigned to any Rated Securities by such
Rating Agency;
provided that each of the foregoing investments shall mature no
later than the
Deposit Date immediately following the date of purchase (other than
in the case
of the investment of monies in instruments of which the entity at
which the
related Account or the Certificate Distribution Account, as the
case may be, is
located is the obligor, which may mature on the related Payment
Date), and shall
be required to be held to such maturity.
Notwithstanding anything to the contrary contained in this
definition, (a)
no Eligible Investment may be purchased at a premium, and (b) no
obligation or
security is an "Eligible Investment" unless (i) the Trustee has
Control over
such obligation or security and (ii) at the time such obligation or
security was
delivered to the Trustee or the Trustee became the related
Entitlement Holder,
the Trustee did not have notice of any adverse claim with respect
thereto within
the meaning of Section 8-105 of the UCC.
For purposes of this definition, any reference to the highest
available
credit rating of an obligation shall mean the highest available
credit rating
for such obligation, or such lower credit
8
rating (as approved in writing by each Rating Agency) as will not
result in the
qualification, downgrading or withdrawal of the rating then
assigned to any
Rated Securities by such Rating Agency.
"Entitlement Holder" shall have the meaning specified in
Section 8-102 of
the UCC.
"Entitlement Order" shall have the meaning specified in
Section 8-102 of
the UCC.
"Event of Default" has the meaning set forth in the Indenture.
"Excess Payment" means, with respect to a Receivable and a
Collection
Period, the amount, if any, by which the Actual Payment exceeds the
sum of (i)
the Scheduled Payment and (ii) any Overdue Payment.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"FDIC" means the Federal Deposit Insurance Corporation.
"FHLMC" means the Federal Home Loan Mortgage Corporation, and
its
successors.
"FNMA" means the Federal National Mortgage Association, and
its successors.
"Final Payment Dates" means, collectively, the Class A-1 Final
Payment
Date, the Class A-2 Final Payment Date, the Class A-3 Final Payment
Date and the
Class A-4 Final Payment Date.
"Final Scheduled Maturity Date" means September 18, 2014.
"Financed Vehicle" means, with respect to any retail
installment sale or
conditional sale contract, the related new or used Honda or Acura
motor vehicle,
minivan, sport utility vehicle or light duty truck, together with
all accessions
thereto, securing the related Obligor's indebtedness under such
retail
installment sale or conditional sale contract.
"Financial Asset" shall have the meaning specified in Section
8-102(a)(9)
of the UCC.
"Fitch" means Fitch, Inc., or its successors.
"Indenture" means the indenture, dated as of June 1, 2008
between the
Issuer and the Indenture Trustee.
"Indenture Trustee" means the Person acting as Indenture
Trustee under the
Indenture, its successors in interest and any successor trustee
under the
Indenture.
"Independent Director" means a director of the Seller who is
not (i) a
director, officer or employee of any Affiliate of the Seller, (ii)
a natural
person related to any director or officer of any Affiliate of the
Seller, (iii)
a holder (directly or indirectly) of more than 10% of any voting
9
securities of any Affiliate of the Seller or (iv) a natural person
related to a
holder (directly or indirectly) of more than 10% of any voting
securities of any
Affiliate of the Seller.
"Insolvency Event" means, with respect to a specified Person,
(i) the
filing of a decree or order for relief by a court having
jurisdiction in the
premises in respect of such Person or any substantial part of its
property in an
involuntary case under any applicable federal or state bankruptcy,
insolvency or
other similar law now or hereafter in effect, or appointing a
receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official for
such Person or for any substantial part of its property, or
ordering the
winding-up or liquidation of such Person's affairs, and such decree
or order
shall remain unstayed and in effect for a period of 90 consecutive
days; or (ii)
the commencement by such Person of a voluntary case under any
applicable federal
or state bankruptcy, insolvency or other similar law now or
hereafter in effect,
or the consent by such Person to the entry of an order for relief
in an
involuntary case under any such law, or the consent by such Person
to the
appointment of or taking possession by a receiver, liquidator,
assignee,
custodian, trustee, sequestrator or similar official for such
Person or for any
substantial part of its property, or the making by such Person of
any general
assignment for the benefit of creditors, or the failure by such
Person generally
to pay its debts as such debts become due, or the taking of action
by such
Person in furtherance of any of the foregoing.
"Insurance Policy" means, with respect to a Receivable, an
insurance policy
covering physical damage, credit life, credit disability, theft,
mechanical
breakdown or any similar event relating to the related Financed
Vehicle or
Obligor.
"Letter of Credit Bank" means any Person who has provided a
Servicer Letter
of Credit pursuant to Section 4.02(b).
"Lien" means any security interest, lien, charge, pledge,
equity or
encumbrance of any kind other than tax liens, mechanics' liens and
any liens
that attach to a Receivable or any property, as the context may
require, by
operation of law.
"Liquidated Receivable" means a Receivable that (i) has been
the subject of
a prepayment in full, (ii) has otherwise been paid in full or (iii)
the Servicer
has determined that the final amounts in respect of such payment
have been paid
with respect to a Defaulted Receivable, regardless of whether all
or any part of
such payment has been made by the Obligor under such Receivable,
the Seller
pursuant to this Agreement, AHFC pursuant to the Receivables
Purchase Agreement,
the Servicer pursuant hereto, an insurer pursuant to an Insurance
Policy or
otherwise.
"Liquidation Expenses" means, with respect to a Defaulted
Receivable, the
amount charged by the Servicer, in accordance with its customary
servicing
procedures, to or for its account for repossessing, refurbishing
and disposing
of the related Financed Vehicle and other out-of-pocket costs
related to such
liquidation.
"Liquidation Proceeds" means, with respect to a Defaulted
Receivable, all
amounts realized with respect to such Receivable from whatever
sources
(including, without limitation,
10
proceeds of any Insurance Policy), net of amounts that are required
by law or
such Receivable to be refunded to the related Obligor.
"Maximum Yield Supplement Amount" means with respect to any
Collection
Period and the related Deposit Date, after giving effect to the
Yield Supplement
Amount, the maximum amount required to be on deposit in the Yield
Supplement
Account on the immediately succeeding Payment Date, which is equal
to the
present value (using an interest rate of: 1.25%) of the sum of all
Yield
Supplement Amounts for all future Payment Dates, assuming that
future Scheduled
Payments on the Discount Receivables are made on the date on which
they are
scheduled as being due.
"Monthly Payment" means, with respect to any Receivable, the
amount of each
fixed monthly payment payable to the obligee under such Receivable
in accordance
with the terms thereof, net of any portion of such monthly payment
that
represents late payment charges, extension fees or collections
allocable to
payments to be made by Obligors for payment of insurance premiums,
extended
service contracts or similar items.
"Moody's" means Moody's Investors Service, Inc., or its
successors.
"Motor Vehicle Receivables" shall have the meaning specified
in Section
5.03(b)(ii)(A).
"Net Liquidation Proceeds" means, with respect to a Defaulted
Receivable,
Liquidation Proceeds less Liquidation Expenses.
"Nonrecoverable Advance" shall have the meaning specified in
Section
4.04(c).
"Note Amount" means, with respect to any Payment Date, the
aggregate
outstanding principal amount of the Notes after giving effect to
payments of
principal made on the Notes on such Payment Date.
"Note Depository Agreement" means the agreement dated June 25,
2008, among
the Issuer, the Indenture Trustee and The Depository Trust Company,
as the
initial Clearing Agency, relating to the Notes.
"Note Distributable Amount" means, with respect to any Payment
Date, the
sum of the Note Interest Distributable Amount and the Note
Principal
Distributable Amount for such Payment Date.
"Note Distribution Account" means the account designated as
such, and
established and maintained pursuant to Section 4.01.
"Note Interest Carryover Shortfall" means, with respect to any
Payment Date
and a Class of Notes, the excess, if any, of (x) the sum of (i) the
Note Monthly
Interest Distributable Amount for such Class for the preceding
Payment Date and
(ii) any outstanding Note Interest Carryover Shortfall for such
Class on such
preceding Payment Date, over (y) the amount of interest that is
actually paid on
the Notes on such preceding Payment Date, plus, to the extent
permitted by law,
11
interest on the Note Interest Carryover Shortfall at the related
Interest Rate
for the related Interest Accrual Period.
"Note Interest Distributable Amount" means, with respect to
any Payment
Date and a Class of Notes, the sum of the Note Monthly Interest
Distributable
Amount for such Payment Date and the Note Interest Carryover
Shortfall for such
Class of Notes. For all purposes of this Agreement and the other
Basic
Documents, interest with respect to the Class A-2 Notes shall be
computed on the
basis of a 360-day year consisting of twelve 30-day months; and
interest with
respect to the Class A-1, Class A-3 and Class A-4 Notes shall be
computed on the
basis of the actual number of days in each applicable Interest
Accrual Period,
divided by 360.
"Note Monthly Interest Distributable Amount" means, with
respect to any
Payment Date, interest accrued for the related Interest Accrual
Period at the
related Interest Rate for each Class of Notes on the Outstanding
Amount of the
Notes of each such Class on the immediately preceding Payment Date
(or, in the
case of the first Payment Date, the original principal amount of
each such Class
of Notes), after giving effect to all distributions of principal to
the
Noteholders of each such Class on or prior to such Payment Date.
"Note Monthly Principal Distributable Amount" means, with
respect to any
Payment Date, the Note Percentage of the Principal Distributable
Amount for such
Payment Date.
"Note Percentage" means (i) for each Payment Date until the
principal
amount of the Class A-1 and Class A-2 Notes have been paid in full,
100%; (ii)
for each Payment Date on or after the principal amount of the Class
A-1 and
Class A-2 Notes has been paid in full to and including the Payment
Date on which
the principal amount of the Class A-3 and Class A-4 Notes have been
paid in
full, the percent equivalent of a fraction, the numerator of which
is the
initial aggregate principal amount of the Class A-3 and Class A-4
Notes and the
denominator of which is the sum of the initial aggregate principal
amount of the
Class A-3 and Class A-4 Notes and the initial principal amount of
the
Certificates; provided however, if the amount on deposit in the
Reserve Fund is
less than 0.075% of the Initial Pool Balance other than if the then
outstanding
principal amount of the Notes and the then outstanding principal
balance of the
Certificates is less than the Reserve Fund balance, then the Note
Percentage of
the principal distributable amount will equal 100%; and (iii)
thereafter, 0%.
"Note Pool Factor" means, with respect to each Class of Notes
as of any
Payment Date, a seven-digit decimal figure equal to the Outstanding
Amount of
such Class of Notes as of such Payment Date (after giving effect to
any
reductions thereof to be made on such Payment Date) divided by the
original
outstanding principal balance of such Class of Notes.
"Note Principal Carryover Shortfall" means, with respect to
any Payment
Date, the excess, if any, of the sum of the Note Monthly Principal
Distributable
Amount plus any outstanding Note Principal Carryover Shortfall for
the preceding
Payment Date, over the amount in respect of principal that is
actually paid as
principal on the Notes on such Payment Date.
"Note Principal Distributable Amount" means, with respect to
any Payment
Date, the sum of (i) the Note Monthly Principal Distributable
Amount, (ii) any
outstanding Note Principal
12
Carryover Shortfall as of the close of the immediately preceding
Payment Date
and, (iii) on the Final Payment Date for a Class of Notes or the
Payment Date as
of which all of the Receivables are to be purchased pursuant to
Section 8.01,
the amount necessary (after giving effect to all amounts allocable
to principal
required to be deposited in the Note Distribution Account on such
Payment Date)
to reduce the Outstanding Amount of each related Class of Notes to
zero;
provided, however, that the Note Principal Distributable Amount
with respect to
a Class of Notes shall not exceed the Outstanding Amount of such
Class of Notes.
"Notes" means the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes
and the Class A-4 Notes.
"Obligor" on a Receivable means the purchaser or co-purchasers
of the
related Financed Vehicle purchased in part or in whole by the
execution and
delivery of a retail installment contract or any other Person who
owes or may be
liable for payments under such retail installment contract.
"Offered Securities" shall have the meaning specified in
Section
5.03(b)(ii)(B).
"Officer's Certificate" means a certificate signed by the
president, any
vice president, the treasurer or the secretary of the Seller or the
Servicer, as
the case may be, and delivered to the Trustee.
"Opinion of Counsel" means a written opinion of counsel (who,
in the case
of counsel to the Seller or the Servicer, may be an employee of or
outside
counsel to the Seller or the Servicer).
"Original Certificate Balance" means $45,001,174.27.
"Original Pool Balance" means $1,500,001,174.27.
"Outstanding Advances" means, with respect to a Receivable and
the last day
of a Collection Period, the sum of all Advances made as of or prior
to such
date, minus (1) all payments or collections as of or prior to such
date which
are specified in Section 4.04(b) and (c) as applied to reimburse
all unpaid
Advances with respect to such Receivable and (2) all amounts for
which the
Servicer has deemed to have released all claims for reimbursement
of Outstanding
Advances pursuant to Section 3.08.
"Outstanding Amount" means the aggregate principal amount of
all Notes, or
if indicated by the context, all Notes of any class, outstanding at
the date of
the determination.
"Outstanding Interest Advances" means, as of the last day of a
Collection
Period with respect to a Receivable, the portion of Outstanding
Advances
allocable to interest.
"Outstanding Principal Advances" means, as of the last day of
a Collection
Period with respect to a Receivable, the portion of Outstanding
Advances
allocable to principal.
"Overdue Payment" shall have the meaning specified in Section
4.03(a).
13
"Owner Trust Estate" shall have the meaning specified in the
Trust
Agreement.
"Owner Trustee" means the Person acting as Owner Trustee under
the Trust
Agreement, its successors in interest and any successor owner
trustee under the
Trust Agreement.
"Payment Date" means, with respect to a Collection Period, the
18th
calendar day of the next succeeding calendar month or, if such day
is not a
Business Day, the next succeeding Business Day, commencing July 18,
2008.
"Percentage Interests" shall have the meaning specified in the
Trust
Agreement.
"Person" means any legal person, including any individual,
corporation,
partnership, joint venture, association, joint stock company,
trust,
unincorporated organization or government or any agency or
political subdivision
thereof.
"Pool Balance" means, as of any date, the aggregate Principal
Balance of
the Receivables (exclusive of all Administrative Receivables for
which the
Servicer has paid the Administrative Purchase Payment, Warranty
Receivables for
which the Seller has paid the Warranty Purchase Payment and
Defaulted
Receivables) as of the close of business on such date.
"Principal Balance" means, with respect to any Receivable as
of any date,
the Amount Financed minus the sum of the following amounts: (i)
that portion of
all Scheduled Payments actually received on or prior to such date
allocable to
principal, computed in accordance with the simple interest method,
(ii) any
Warranty Purchase Payment or Administrative Purchase Payment with
respect to
such Receivable allocable to principal and (iii) any Excess
Payments or other
payments applied to reduce the unpaid principal balance of such
Receivable.
"Principal Distributable Amount" means, with respect to any
Payment Date,
the sum of the following amounts (i) the principal portion of all
Scheduled
Payments actually received during the related Collection Period,
computed in
accordance with the simple interest method, (ii) the principal
portion of all
Excess Payments, received during such Collection Period (to the
extent such
amounts are not included in clause (i) above), (iii) the Principal
Balance of
each Receivable that became an Administrative Receivable or a
Warranty
Receivable during such Collection Period (to the extent such
amounts are not
included in clauses (i) or (ii) above) and (iv) the Principal
Balance of each
Receivable that became a Defaulted Receivable during such
Collection Period (to
the extent such amounts are not included in clauses (i), (ii) or
(iii) above).
"Rated Securities" means each Class of Securities that has
been rated by
one or both Rating Agencies at the request of the Seller.
"Rating Agency" means Moody's and Standard & Poor's.
"Rating Agency Condition" shall have the meaning set forth in
the
Indenture.
"Receivable" means any retail installment sale contract
executed by an
Obligor in respect of a Financed Vehicle, and all proceeds thereof
and payments
thereunder, which Receivables shall be identified in a Schedule of
Receivables.
14
"Receivable Files" means the documents specified in Section
2.02.
"Receivables Purchase Agreement" means the receivables
purchase agreement,
dated as of June 1, 2008, between AHFC and the Seller, as amended
or
supplemented from time to time.
"Record Date" shall have the meaning set forth in the
Indenture.
"Regulation AB" means Subpart 229.1100 - Asset Backed
Securities
(Regulation AB), 17 C.F.R. Sections229.1100-229.1123, as such may
be amended
from time to time, and subject to such clarification and
interpretation as have
been provided by the Commission in the adopting release
(Asset-Backed
Securities, Securities Act Release No. 33-8518, 70 Fed. Reg. 1,506,
1,531 (Jan.
7, 2005)) or by the staff of the Commission, or as may be provided
by the
Commission or its staff from time to time.
"Required Rate" means 6.35%.
"Required Deposit Rating" means the short-term credit rating
of the related
entity is at least equal to P-1 by Moody's, A-1+ by Standard &
Poor's and F1 by
Fitch.
"Required Servicer Rating" means, with respect to the
Servicer, that the
then short-term unsecured debt obligations of the Servicer are
rated at least
equal to P-1 by Moody's and A-1 by Standard & Poor's.
"Reserve Fund" means the account designated as such, and
established and
maintained pursuant to Section 4.01.
"Reserve Fund Initial Deposit" means the initial deposit of
cash in the
amount of $2,250,001.76 made by or on behalf of the Seller into the
Reserve Fund
on the Closing Date.
"Reserve Fund Property" means, the Reserve Fund Initial
Deposit and all
proceeds thereof and all other amounts deposited in or credited to
the Reserve
Fund from time to time under this Agreement, all Eligible
Investments made with
amounts on deposit therein, all earnings and distributions thereon
and proceeds
thereof.
"Responsible Officer" means, in the case of the Indenture
Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee,
including
any Managing Director, Vice President, assistant Vice President,
director,
associate, or any other officer of the Indenture Trustee
customarily performing
functions similar to those performed by any of the above designated
officers and
also, with respect to a particular matter, any other officer to
whom such matter
is referred because of such officer's knowledge of and familiarity
with the
particular subject, in each case having direct responsibility for
the
administration of the Indenture and, with respect to the Owner
Trustee, any
officer of the Owner Trustee or person acting pursuant to a power
of attorney
with direct responsibility for the administration of the Trust
Agreement and the
Basic Documents on behalf of the Owner Trustee.
"retail installment contracts" means retail installment sale
and
conditional sale contracts.
15
"Sarbanes Certification" shall have the meaning specified in
Section
3.12(a)(v).
"Schedule of Receivables" means the schedule of Receivables
attached as
Schedule A to this Agreement, as it may be amended from time to
time.
"Scheduled Payment" means, with respect to any Payment Date
and to a
Receivable, the payment set forth in such Receivable as due from
the Obligor in
the related Collection Period; provided, however, that in the case
of the first
Collection Period, the Scheduled Payment shall include all such
payments due
from the Obligor on or after the Cutoff Date.
"Securities" means the Notes and the Trust Certificates.
"Security Entitlement" shall have the meaning specified in
Section
8-102(a)(17) of the UCC.
"Securityholders" means the Noteholders and the
Certificateholders.
"Seller" means AHRC, in its capacity as Seller of the
Receivables under
this Agreement, and each successor thereto (in the same capacity)
pursuant to
Section 5.03.
"Servicer" means AHFC, in its capacity as servicer of the
Receivables
pursuant to this Agreement, and each successor thereto (in the same
capacity)
pursuant to Section 6.03.
"Servicer Default" shall have the meaning specified in Section
7.01.
"Servicer Letter of Credit" means, if the Servicer desires to
remit
collections on or in respect of the Receivables to the Collection
Account on a
monthly basis upon satisfaction of the conditions described in
Section
4.02(b)(ii), (i) an irrevocable letter of credit, issued by a
Letter of Credit
Bank and naming the Indenture Trustee a beneficiary or (ii) a
surety bond,
insurance policy or deposit of cash or securities, which is
satisfactory to each
Rating Agency.
"Servicer's Certificate" means an Officers' Certificate of the
Servicer
delivered pursuant to Section 3.10, substantially in the form of
Exhibit A.
"Servicing Criteria" means the "servicing criteria" set forth
in Item
1122(d) of Regulation AB, as such may be amended from time to time.
"Servicing Fee Rate" means 1.00% per annum.
"Specified Reserve Fund Balance" means, on the Closing Date
$2,250,001.76,
and with respect to any Payment Date 0.15% of the initial aggregate
principal
balance of the Receivables as of the Cutoff Date; except that, if
on any Payment
Date (i) the average of the Charge-off Rates for the three
preceding Collection
Periods exceeds 2.25% or (ii) the average of the Delinquency
Percentages for the
three preceding Collection Periods exceeds 2.25%, then the
Specified Reserve
Fund Balance will be an amount equal to a specified percentage of
the Pool
Balance as of the last day of the immediately preceding Collection
Period. Such
percentage shall be determined by deducting from 8.00% the
following fraction,
expressed as a percentage: (a) one
16
minus (b) a fraction, the numerator of which is the outstanding
principal amount
of the Notes and the outstanding principal amounts of the
Certificates with
respect to such Payment Date and the denominator of which is such
Pool Balance.
Notwithstanding the foregoing, in no event will the Specified
Reserve Fund
Balance be more than the outstanding principal amount of the Notes
and the
outstanding principal amounts of the Certificates.
"Standard & Poor's" means Standard & Poor's Rating
Services, a division of
The McGraw Hill Companies, Inc., or its successors.
"Subcontractor" means any vendor, subcontractor or other
Person that is not
responsible for the overall servicing (as "servicing" is commonly
understood by
participants in the asset-backed securities market) of the
Receivables but
performs one or more discrete functions identified in Item 1122(d)
of Regulation
AB with respect to the Receivables under the direction or authority
of the
Servicer or a Subservicer.
"Subservicer" means any Person that services Receivables on
behalf of the
Servicer or any Subservicer and is responsible for the performance
(whether
directly or through Subservicers or Subcontractors) of a
substantial portion of
the material servicing functions required to be performed by the
Servicer under
this Agreement that are identified in Item 1122(d) of Regulation
AB.
"Successor Servicer" means any entity appointed as a successor
to the
Servicer pursuant to Section 7.02.
"Supplemental Servicing Fee" means any interest earned on
investment of the
monies on deposit in the Accounts (other than the Yield Supplement
Account and
the Reserve Fund) during a Collection Period, net of any investment
expenses and
losses from such investments, plus all late fees, prepayment
charges and other
administrative fees and expenses or similar charges allowed by
applicable law
with respect to the Receivables.
"Total Servicing Fee" means the sum of the Basic Servicing Fee
and the
Supplemental Servicing Fee.
"Trust" means the Issuer.
"Trust Agreement" means the trust agreement, dated as of June
9, 2008 as
amended and restated, on June 26, 2008, among the Depositor and the
Owner
Trustee.
"Trust Fees and Expenses" means all accrued and unpaid
Trustees' fees, any
amounts due to the Trustees for reimbursement of expenses or in
respect of
indemnification and other administrative fees of the Trust.
"Trustee" means any of the Owner Trustee or the Indenture
Trustee as the
context requires.
"Trustees" means the Owner Trustee and the Indenture Trustee.
17
"UCC" means the Uniform Commercial Code as in effect in the
respective
jurisdiction.
"United States" means the United States of America.
"Vice President" of any Person means any vice president of
such Person,
whether or not designated by a number or words before or after the
title "Vice
President," who is a duly elected officer of such Person.
"Warranty Purchase Payment" means, with respect to a Payment
Date and to a
Warranty Receivable repurchased by the Seller as of the end of the
related
Collection Period, the sum of (a) the unpaid principal balance owed
by the
related Obligor in respect of such Receivable and (b) interest on
such unpaid
principal balance at a rate equal to the APR of the related
Receivable from the
date of last payment by such Obligor to the last day of such
Collection Period.
"Warranty Receivable" means a Receivable which the Seller is
required to
repurchase pursuant to Section 2.04.
"Yield Supplement Account" means the account designated as
such, and
established and maintained pursuant to Section 4.01.
"Yield Supplement Account Deposit" means the initial deposit
of cash in the
amount of $27,861,655.35 made by or on behalf of the Seller into
the Yield
Supplement Account on the Closing Date.
"Yield Supplement Amount" means, with respect to any
Collection Period and
the related Deposit Date, the aggregate amount by which one month's
interest on
the Principal Balance as of the first day of such Collection Period
of each
Discount Receivable (other than a Discount Receivable that is a
Defaulted
Receivable) at a rate equal to the Required Rate, exceeds one
month's interest
on such Principal Balance at the APR of each such Receivable.
"Yield Supplement Withdrawal Amount" means, with respect to
any Collection
Period and the related Deposit Date, the lesser of (a) the amount
on deposit in
the Yield Supplement Account and (b) the sum of (i) the Yield
Supplement Amount
and (ii) after giving effect to the withdrawal of the Yield
Supplement Amount,
the amount by which the amount on deposit in the Yield Supplement
Account
exceeds the Maximum Yield Supplement Amount.
Section 1.02. Other Definitional Provisions.
(a) Capitalized terms used herein that are not otherwise
defined herein
shall have the meanings ascribed thereto in the Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings
when used in any certificate or other document made or delivered
pursuant hereto
unless otherwise defined therein.
18
Section 1.03. Interpretive Provisions.
(a) For all purposes of this Agreement, except as otherwise
expressly
provided or unless the context otherwise requires, (i) terms used
herein
include, as appropriate, all genders and the plural as well as the
singular,
(ii) references to words such as "herein," "hereof" and the like
shall refer to
this Agreement as a whole and not to any particular part, article
or section
within this Agreement, (iii) references to a section such as
"Section 1.01" and
the like shall refer to the applicable section of this Agreement,
(iv) the term
"include" and all variations thereof shall mean "include without
limitation,"
(v) the term "or" shall include "and/or," and (vi) the term
"proceeds" shall
have the meaning set forth in the applicable UCC.
(b) As used in this Agreement and in any certificate or other
document made
or delivered pursuant hereto or thereto, accounting terms not
defined in this
Agreement or in any such certificate or other document, and
accounting terms
partly defined in this Agreement or in any such certificate or
other document to
the extent not defined, shall have the respective meanings given to
them under
generally accepted accounting principles. To the extent that the
definitions of
accounting terms in this Agreement or in any such certificate or
other document
are inconsistent with the meanings of such terms under generally
accepted
accounting principles, the definitions contained in this Agreement
or in any
such certificate or other document shall control.
ARTICLE TWO
CONVEYANCE OF RECEIVABLES; CUSTODY OF RECEIVABLES
FILES
Section 2.01. Conveyance of Receivables.
(a) In consideration of the Issuer's delivery to or upon the
order of the
Seller of the Certificates and the net proceeds of the sale of the
Notes, less
an amount equal to the Reserve Fund Initial Deposit to be deposited
to the
Reserve Fund and the Yield Supplement Account Deposit to be
deposited to the
Yield Supplement Account, each on the Closing Date, the Seller does
hereby sell,
transfer, assign, set over and otherwise convey to the Issuer,
without recourse
(subject to the obligations of the Seller set forth herein), all
right, title
and interest of the Seller in, to and under:
(i) the Receivables and all monies due thereon or paid
thereunder or
in respect thereof (including proceeds of the repurchase of
Receivables by
the Seller pursuant to Section 2.04 or the purchase of
Receivables by the
Servicer pursuant to Section 3.08 or 8.01) on or after the
Cutoff Date;
(ii) the security interests in the Financed Vehicles;
(iii) any proceeds of any physical damage insurance
policies covering
the Financed Vehicles and in any proceeds of any credit life
or credit
disability insurance policies relating to the Receivables or
the Obligors;
(iv) any proceeds of Dealer Recourse;
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(v) the Receivables Purchase Agreement, but not the
obligations of the
Seller thereunder;
(vi) the right to realize upon any property (including
the right to
receive future Liquidation Proceeds) that shall have secured a
Receivable
and have been repossessed by or on behalf of the Issuer;
(vii) all funds on deposit from time to time in the
Accounts,
including the Reserve Fund Initial Deposit and the Yield
Supplement Account
Deposit, and in all investment income and proceeds thereof;
(viii) any Servicer Letter of Credit; and
(ix) the proceeds of any and all of the foregoing.
The Seller hereby confirms to the Issuer that, as of the Closing
Date, the
Seller shall have caused the portions of all related electronic
records relating
to the Receivables to be clearly and unambiguously marked, and
shall have made
the appropriate entries in its general accounting records, to
indicate that such
Receivables have been transferred and sold to the Issuer.
(b) The parties hereto intend that the conveyance hereunder be
a sale. In
the event that the conveyance hereunder is not for any reason
considered a sale,
the Seller hereby grants to the Issuer a first priority perfected
security
interest in all of its right, title and interest in, to and under
the
Receivables, and all other property conveyed hereunder and all
proceeds of any
of the foregoing. The parties hereto intend that this Agreement
constitute a
security agreement under applicable law. Such grant is made to
secure the
payment of all amounts payable hereunder.
Section 2.02. Custody of Receivable Files. To assure uniform
quality in
servicing the Receivables and to reduce administrative costs, the
Issuer hereby
revocably appoints the Servicer, and the Servicer accepts such
appointment, to
act for the benefit of the Issuer and the Indenture Trustee as
custodian of the
following documents or instruments which are hereby constructively
delivered to
the Indenture Trustee, as pledgee of the Issuer, as of the Closing
Date with
respect to each Receivable:
(a) the fully executed original of the Receivable;
(b) documents evidencing or related to any Insurance
Policy;
(c) the original credit application of each Obligor,
fully executed by
such Obligor on AHFC's customary form, or on a form approved
by AHFC for
such application;
(d) the original certificate of title (or evidence that
such
certificate of title has been applied for) or such documents
that the
Servicer shall keep on file, in accordance with its customary
procedures,
evidencing the security interest in the related Financed
Vehicle; and
20
(e) any and all other documents that the Seller or the
Servicer, as
the case may be, shall keep on file, in accordance with its
customary
procedures, relating to such Receivable or the related Obligor
or Financed
Vehicle;
provided that the Servicer may appoint one or more agents to act as
subcustodians of certain items contained in a Receivable File so
long as the
Servicer remains primarily responsible for their safekeeping.
Section 2.03. Representations and Warranties of Seller as to
the
Receivables. The Seller makes the following representations and
warranties as to
the Receivables on which the Issuer shall rely in acquiring the
Receivables.
Such representations and warranties speak as of the execution and
delivery of
this Agreement and as of the Closing Date, but shall survive the
sale, transfer
and assignment of the Receivables to the Issuer and the pledge
thereof to the
Indenture Trustee.
(a) Characteristics of Receivables. Each Receivable (i)
shall have
been originated in the United States by a Dealer for the
retail sale of the
related Financed Vehicle in the ordinary course of such
Dealer's business,
shall have been fully and properly executed by the parties
thereto, shall
have been purchased by AHFC from such Dealer under an existing
agreement
with AHFC, shall have been validly assigned by such Dealer to
AHFC in
accordance with the terms of such agreement, shall have been
subsequently
sold by AHFC to the Seller pursuant to the Receivables
Purchase Agreement
and, to the best knowledge of the Seller, shall have been sold
by a Dealer
without fraud or misrepresentation, (ii) shall have created or
shall create
a valid, continuing and enforceable first priority security
interest in
favor of AHFC in the related Financed Vehicle, which security
interest has
been assigned by AHFC to the Seller and shall be assignable,
and shall be
so assigned, by the Seller to the Owner Trustee, (iii) shall
contain
customary and enforceable provisions such that the rights and
remedies of
the holder thereof shall be adequate for realization against
the collateral
of the benefits of the security, (iv) shall, except as
otherwise provided
in this Agreement, provide for level Monthly Payments
(provided that the
payment in the first or last month in the life of the
Receivable may be
minimally different from the level payment) that fully
amortize the Amount
Financed over its original term and shall provide for a
finance charge or
shall yield interest at its APR, (v) shall provide for, in the
event that
such Receivable is prepaid, a prepayment that fully pays the
Principal
Balance and includes accrued but unpaid interest at least
through the date
of prepayment in an amount calculated by using an interest
rate at least
equal to its APR, (vi) shall have an Obligor that is not a
federal, state
or local governmental entity and (vii) is a retail installment
contract.
(b) Schedule of Receivables. The information set forth in
the Schedule
of Receivables shall be true and correct in all material
respects as of the
opening of business on the Cutoff Date, and no selection
procedures
believed to be adverse to the Securityholders were utilized in
selecting
the Receivables from those motor vehicle, minivan, sport
utility vehicle or
light duty truck receivables, as applicable, of AHFC which met
the
selection criteria set forth in this Agreement.
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(c) Compliance with Law. Each Receivable and each sale of
the related
Financed Vehicle shall have complied at the time it was
originated or made,
and shall comply at the time of execution of this Agreement,
in all
material respects with all requirements of applicable federal,
state and
local laws, and regulations thereunder, including usury laws,
the Federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the
Fair Credit
Billing Act, the Fair Credit Reporting Act, the Fair Debt
Collection
Practices Act, the Federal Trade Commission Act, the
Magnuson-Moss Warranty
Act, Federal Reserve Board Regulations B, M and Z, state
adaptations of the
National Consumer Act and of the Uniform Consumer Credit Code
and other
consumer credit, equal credit opportunity and disclosure laws.
(d) Binding Obligation. Each Receivable shall constitute
the genuine,
legal, valid and binding payment obligation in writing of the
related
Obligor, enforceable by the holder thereof in accordance with
its terms,
except as enforceability may be subject to or limited by
bankruptcy,
insolvency, reorganization, moratorium, liquidation or other
similar laws
affecting the enforcement of creditors' rights in general and
by general
principles of equity, regardless of whether such
enforceability shall be
considered in a proceeding in equity or at law.
(e) No Bankrupt Obligors. According to the records of the
Seller, as
of the Cutoff Date, no Obligor is the subject of a bankruptcy
proceeding.
(f) Security Interest in Financed Vehicles. According to
the records
of the Seller, as of the Cutoff Date, no Financed Vehicle has
been
repossessed and not reinstated and immediately prior to the
sale,
assignment and transfer thereof, all necessary steps shall be
taken so that
each Receivable shall be secured by a validly perfected first
priority
security interest in the related Financed Vehicle in favor of
AHFC as
secured party or all necessary and appropriate action with
respect to such
Receivable shall have been taken to perfect a first priority
security
interest in such Financed Vehicle in favor of AHFC as secured
party.
(g) Receivables in Force. No Receivable shall have been
satisfied,
subordinated or rescinded, nor shall any Financed Vehicle have
been
released in whole or in part from the lien granted by the
related
Receivable.
(h) No Waivers. No provision of a Receivable shall have
been waived in
such a manner that such Receivable fails to meet all of the
other
representations and warranties made by the Seller herein with
respect
thereto.
(i) No Amendments. No Receivable shall have been amended
or modified
in such a manner that the total number of Scheduled Payments
has been
increased or that the related Amount Financed has been
increased or that
such Receivable fails to meet all of the other representations
and
warranties made by the Seller herein with respect thereto.
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(j) No Defenses. No facts shall be known to the Seller
which would
give rise to any right of rescission, setoff, counterclaim or
defense, nor
shall the same have been asserted or threatened, with respect
to any
Receivable.
(k) No Liens. To the knowledge of the Seller, no liens or
claims shall
have been filed, including liens for work, labor or materials
relating to a
Financed Vehicle, that shall be liens prior to, or equal or
coordinate
with, the security interest in such Financed Vehicle granted
by the related
Receivable. To the knowledge of the Seller, there are no tax
liens against
the Seller, or against an Obligor affecting the related
Receivable.
(l) No Defaults. Except for payment defaults that, as of
the Cutoff
Date, have been continuing for a period of not more than 30
days, no
default, breach, violation or event permitting acceleration
under the terms
of any Receivable shall have occurred as of the Cutoff Date
and no
continuing condition that with notice or the lapse of time
would constitute
a default, breach, violation or event permitting acceleration
under the
terms of any Receivable shall have arisen; and the Seller
shall not have
waived any of the foregoing except as otherwise permitted
hereunder.
(m) Insurance. Pursuant to the Receivables, an Obligor
has been
required to obtain physical damage insurance covering the
related Financed
Vehicle and is required under the terms of the related
Receivable to
maintain such insurance.
(n) Title. It is the intention of the Seller that the
transfer and
assignment herein contemplated, taken as a whole, constitute a
sale of the
Receivables from the Seller to the Issuer and that the
beneficial interest
in and title to the Receivables not be part of the debtor's
estate in the
event of the filing of a bankruptcy petition by or against the
Seller under
any bankruptcy law. Other than (1) the sale by the Seller to
the Issuer
pursuant to this Agreement and (2) the security interest
granted by the
Issuer to the Indenture Trustee in the Indenture, no
Receivable has been
sold, transferred, assigned or pledged by the Seller to any
Person other
than the Issuer, and no Receivable has been sold, transferred,
assigned or
pledged by the Issuer to any Person other than the Indenture
Trustee, and
no provision of a Receivable shall have been waived, except as
provided in
clause (h) above; immediately prior to the transfer and
assignment herein
contemplated, the Seller had good and marketable title to each
Receivable
free and clear of all Liens and rights of any other Person and
immediately
prior to the pledge of security interest contemplated in the
Indenture, the
Issuer had good and marketable title to each Receivable free
and clear of
all Liens and rights of any other Person; immediately upon the
transfer and
assignment contemplated herein, the Issuer shall have good and
marketable
title to each Receivable, free and clear of all Liens and
rights of any
other Person and immediately upon the pledge of the security
interest
contemplated in the Indenture, the Indenture Trustee will have
a valid and
continuing security interest in the Receivables; and both the
transfer and
assignment herein contemplated and the pledge of security
interest
contemplated by the Indenture have been perfected under the
applicable UCC.
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(o) Lawful Assignment. No Receivable shall have been
originated in, or
shall be subject to the laws of, any jurisdiction under which
the sale,
transfer and assignment of such Receivable under this
Agreement or pursuant
to a transfer of the Securities shall be unlawful, void or
voidable.
(p) All Filings Made. Both the Seller and the Issuer,
respectively,
have caused or will have caused, or have taken or will take,
within ten
days of the Closing Date, all steps necessary, including the
filing of all
appropriate financing statements (including UCC filings)
necessary in the
appropriate jurisdictions under the applicable law, to give
the Issuer a
first priority perfected security interest in the Receivables,
and to give
the Indenture Trustee a first priority perfected security
interest therein,
shall have been made. Except as contemplated hereby or in the
Indenture, as
applicable, neither the Seller nor the Issuer has authorized
the filing of
or is aware of any financing statements with respect to the
Receivables,
other than such financing statements that have been terminated
on or prior
to the Closing Date.
(q) One Original. There shall be only one original
executed copy of
each Receivable.
(r) Chattel Paper. Each Receivable constitutes "tangible
chattel
paper" as defined within the meaning of the applicable UCC.
(s) Maturity of Receivables. Each Receivable shall have
an original
maturity of not less than 24 months nor greater than 72 months
and, as of
the Cutoff Date, a remaining maturity of not less than 7
months nor greater
than 70 months.
(t) Finance Charge. Each Receivable provides for the
payment of a
finance charge calculated on the basis of an APR ranging from
1.59% to
19.99%.
(u) Principal Balance. Each Receivable had an original
principal
balance of not less than $2,938.00 nor greater than $84,194.38
and an
average unpaid principal balance, as of the Cutoff Date, of
$16,442.15.
(v) Origination. Each Receivable was originated on or
after July 12,
2004 and on or before February 29, 2008.
(w) No Overdue Payments. No Receivable shall have a
Scheduled Payment
that is more than 30 days past due as of the Cutoff Date.
(x) Location of Receivable Files. Each Receivable File
shall be kept
at one of the locations listed in Schedule B hereto.
(y) Financed Vehicles. Each Financed Vehicle shall be a
new or used
Honda or Acura motor vehicle, minivan, sport utility vehicle
or light duty
truck.
(z) Addresses of Obligors. The Obligor under each
Receivable had a
current billing address in the United States as of the Cutoff
Date.
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(aa) Security Interest. The Indenture creates a valid and
continuing
security interest (as defined in the applicable UCC) in the
Receivables in
favor of the Indenture Trustee, which security interest is
prior to all
other Liens, and is enforceable as such as against creditors
of and
purchasers from the Issuer.
(bb) Possession of Documents. The Servicer has in its
possession all
original copies of the agreements that constitute or evidence
the
Receivables. The agreements that constitute or evidence the
Receivables do
not have any marks or notations indicating that they have been
pledged,
assigned or otherwise conveyed to any Person other than the
Indenture
Trustee. All financing statements filed or to be filed against
the Issuer
in favor of the Indenture Trustee in connection herewith
describing the
Receivables contain a statement to the following effect: "A
purchase of or
security interest in any collateral described in this
financing statement
will violate the rights of the Indenture Trustee."
Section 2.04. Repurchase of Receivables Upon Breach. Upon
discovery by the
Seller or the Servicer or upon the actual knowledge of a
Responsible Officer of
either the Indenture Trustee or the Owner Trustee of a breach of
any of the
representations and warranties of the Seller set forth in Section
2.03 that
materially and adversely affects the interests of the Issuer, any
of the
Trustees or the Securityholders in any Receivable, the party
discovering such
breach shall give prompt written notice to the others. As of the
last day of the
second Collection Period following the Collection Period in which
it discovers
or receives notice of such breach (or, at the Seller's election,
the last day of
the first Collection Period following the Collection Period in
which it
discovers or receives notice of such breach), the Seller shall,
unless such
breach shall have been cured in all material respects, repurchase
such
Receivable, and, if necessary, the Seller shall enforce the
obligation of AHFC
under the Receivables Purchase Agreement to repurchase such
Receivable from the
Seller. This repurchase obligation shall apply to all
representations and
warranties of the Seller contained in Section 2.03 whether or not
the Seller has
knowledge of the breach at the time of the breach or at the time
the
representations and warranties were made. On the related Deposit
Date, the
Seller shall remit the Warranty Purchase Payment in respect of such
Receivable
to the Collection Account in the manner specified in Section 4.05.
In the event
that, as of the date of execution and delivery of this Agreement,
any Liens or
claims shall have been filed, including Liens for work, labor or
materials
relating to a Financed Vehicle, that shall be prior to, or equal or
coordinate
with, the lien granted by the related Receivable, which Liens or
claims shall
not have been satisfied or otherwise released in full as of the
Closing Date,
and such breach materially and adversely affects the interests of
the Issuer,
any of the Trustees or the Securityholders in such Receivable, the
Seller shall
repurchase such Receivable on the terms and in the manner specified
above. Upon
any such repurchase, the Issuer shall, without further action, be
deemed to
transfer, assign, set-over and otherwise convey to the Seller, all
right, title
and interest of the Issuer in, to and under such repurchased
Receivable, all
monies due or to become due with respect thereto and all proceeds
thereof. The
Issuer and the Trustees shall execute such documents and
instruments of transfer
and assignment and take such other actions as shall be reasonably
requested by
the Seller to effect the conveyance of such Receivable pursuant to
this Section.
The sole remedy of the Issuer, the Trustees and the Securityholders
with respect
to a breach of the Seller's representations and warranties pursuant
to Section
2.03 or with respect to the existence of any such Liens or claims
shall be to
require the Seller to repurchase the related Receivable pursuant to
this Section
and to enforce AHFC's obligation to
25
repurchase such Receivables from the Seller pursuant to the
Receivables Purchase
Agreement. Neither the Owner Trustee nor the Indenture Trustee
shall have any
duty to conduct an affirmative investigation as to the occurrence
of any
condition requiring the repurchase of any Receivable pursuant to
Section 2.04 or
the eligibility of any Receivables for purposes of this Agreement.
In addition,
no party to this agreement may waive a material breach of any of
the
representations and warranties contained in Section 2.03 above.
Section 2.05. Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer, in its capacity as custodian,
shall hold the
Receivable Files for the benefit of the Issuer and maintain such
accurate and
complete accounts, records and computer systems pertaining to each
Receivable
File as shall enable the Issuer to comply with this Agreement. In
performing its
duties as custodian, the Servicer shall act with reasonable care,
using that
degree of skill and attention that it exercises with respect to the
receivable
files of comparable motor vehicle receivables that the Servicer
services for
itself or others. The Servicer shall conduct, or cause to be
conducted, periodic
examinations of the files of all receivables owned or serviced by
it which shall
include the Receivable Files held by it under this Agreement, and
of the related
accounts, records and computer systems, in such a manner as shall
enable the
Issuer or the Indenture Trustee to verify the accuracy of the
Servicer's record
keeping. The Servicer shall promptly report to the Issuer and the
Indenture
Trustee any failure on its part to hold the Receivable Files and
maintain its
accounts, records and computer systems as herein provided and
promptly take
appropriate action to remedy any such failure. Nothing herein shall
be deemed to
require an initial review or any periodic review of the Receivable
Files by the
Issuer or the Indenture Trustee.
(b) Maintenance of and Access to Records. The Servicer shall
maintain each
Receivable File solely in its capacity as Servicer at one of its
(or its
agents') offices specified in Schedule B hereto or at such other
office as shall
be specified to the Issuer and the Indenture Trustee by 30 days'
prior written
notice. The Servicer shall make available to the Issuer and the
Indenture
Trustee or its duly authorized representatives, attorneys or
auditors the
Receivable Files and the related accounts, records and computer
systems
maintained by the Servicer at such times as the Issuer and the
Indenture Trustee
shall reasonably instruct.
(c) Release of Documents. Upon instruction from the Indenture
Trustee, the
Servicer shall release any document in the Receivable Files to the
Indenture
Trustee or its agent or designee, as the case may be, at such place
or places as
the Indenture Trustee may designate, as soon as practicable. The
Servicer shall
not be responsible for any loss occasioned by the failure of the
Indenture
Trustee to return any document or any delay in doing so.
Section 2.06. Instructions; Authority to Act. The Servicer
shall be deemed
to have received proper instructions with respect to the Receivable
Files upon
its receipt of written instructions signed by a Responsible Officer
of the
Indenture Trustee. A certified copy of a bylaw or of a resolution
of the board
of directors of the Indenture Trustee shall constitute conclusive
evidence of
the authority of any such Responsible Officer to act and shall be
considered in
full force and effect until receipt by the Servicer of written
notice to the
contrary given by the Indenture Trustee.
26
Section 2.07. Indemnification by Custodian. The Servicer, as
custodian of
the Receivable Files, shall fully indemnify and hold harmless the
Issuer and the
Trustees for any and all liabilities, obligations, losses,
compensatory damages,
payments, costs or expenses of any kind whatsoever that may be
imposed on,
incurred or asserted against the Issuer and the Trustees as the
result of any
improper act or omission in any way relating to the maintenance and
custody of
the Receivable Files by the Servicer, as custodian; provided,
however, that the
Servicer shall not be liable for any portion of any such amount
resulting from
the willful misfeasance, bad faith or negligence of the Indenture
Trustee or the
willful misfeasance, bad faith or gross negligence (except for
errors in
judgment) of the Owner Trustee only.
Section 2.08. Effective Period and Termination. The Servicer's
appointment
as custodian of the Receivable Files shall become effective as of
the Cutoff
Date and shall continue in full force and effect until terminated
pursuant to
this Section. If the Servicer shall resign as Servicer pursuant to
Section 6.05
or if all of the rights and obligations of the Servicer have been
terminated
pursuant to Section 7.02, the appointment of the Servicer as
custodian of the
Receivable Files shall be terminated without further action by the
Indenture
Trustee or by the Holders of Notes. The Indenture Trustee or, with
the written
consent of the Indenture Trustee, the Owner Trustee may terminate
the Servicer's
appointment as custodian of the Receivable Files with cause at any
time
immediately upon written notification to the Servicer and, without
cause, upon
30 days' prior written notification by the Servicer. As soon as
practicable, but
in no event later than 30 days immediately following the effective
date of any
termination of such appointment, the Servicer shall deliver the
Receivable Files
to the Indenture Trustee or its agent at such place or places as
the Indenture
Trustee may reasonably designate. Notwithstanding the termination
of the
Servicer as custodian of the Receivable Files, the Indenture
Trustee agrees that
upon any such termination, the Indenture Trustee shall provide, or
cause its
agent to provide, access to the Receivable Files to the Servicer
for the purpose
of carrying out its duties and responsibilities with respect to the
servicing of
the Receivables pursuant to this Agreement.
ARTICLE THREE
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 3.01. Duties of Servicer. The Servicer, for the
benefit of the
Issuer (to the extent provided herein), shall manage, service,
administer and
make collections on the Receivables (other than Administrative
Receivables and
Warranty Receivables) with reasonable care, using that degree of
skill and
attention that the Servicer exercises with respect to all
comparable motor
vehicle receivables that it services for itself or others. The
Servicer's duties
shall include collection and posting of all payments, responding to
inquiries of
Obligors or by federal, state or local government authorities with
respect to
the Receivables, investigating delinquencies, sending payment
coupons to
Obligors, reporting tax information to Obligors in accordance with
its customary
practices, policing the collateral, accounting for collections and
furnishing
monthly and annual statements to the Trustees with respect to
distributions,
generating federal income tax information, making Advances and
performing the
other duties specified herein. The Servicer shall follow its
customary
standards, policies and procedures and shall have full power and
authority,
acting alone, to do any and all things in connection with such
managing,
servicing, administration and collection that it may deem necessary
or
desirable.
27
Without limiting the generality of the foregoing, the Servicer
shall be
authorized and empowered to execute and deliver, on behalf of
itself, the
Issuer, the Trustees, the Securityholders or any of them, any and
all
instruments of satisfaction or cancellation, or of partial or full
release or
discharge and all other comparable instruments, with respect to the
Receivables
and the Financed Vehicles. The Servicer is hereby authorized to
commence, in its
own name or in the name of the Issuer, a legal proceeding to
enforce a Defaulted
Receivable pursuant to Section 3.04 or to commence or participate
in a legal
proceeding (including without limitation a bankruptcy proceeding)
relating to or
involving a Receivable, including a Defaulted Receivable. If the
Servicer
commences or participates in such a legal proceeding in its own
name, the Issuer
shall thereupon be deemed to have automatically assigned, solely
for the purpose
of collection on behalf of the party retaining an interest in such
Receivable,
such Receivable and the other property conveyed to the Issuer
pursuant to
Section 2.01 with respect to such Receivable to the Servicer for
purposes of
commencing or participating in any such proceeding as a party or
claimant, and
the Servicer is authorized and empowered by the Issuer to execute
and deliver in
the Servicer's name any notices, demands, claims, complaints,
responses,
affidavits or other documents or instruments in connection with any
such
proceeding. If in any enforcement suit or legal proceeding it shall
be held that
the Servicer may not enforce a Receivable on the grounds that it
shall not be a
real party in interest or a holder entitled to enforce such
Receivable, the
Owner Trustee on behalf of the Issuer shall, at the Servicer's
expense and
written direction, take steps to enforce such Receivable, including
bring suit
in its name or the name of the Issuer, the Indenture Trustee, the
Noteholders or
the Certificateholders. The Owner Trustee on behalf of the Issuer
shall furnish
the Servicer with any powers of attorney and other documents and
take any other
steps which the Servicer may deem necessary or appropriate to
enable the
Servicer to carry out its servicing and administrative duties
hereunder.
Section 3.02. Collection of Receivable Payments. The Servicer
shall make
reasonable efforts to collect all payments called for under the
terms and
provisions of the Receivables as and when the same shall become
due, and shall
follow such collection procedures as it follows with respect to all
comparable
motor vehicle receivables that it services for itself or others.
The Servicer
shall be authorized to grant extensions, rebates or adjustments on
a Receivable
without the prior consent of the Issuer. If, as a result of the
extending of
payments in accordance with the customary servicing standards of
the Servicer,
any Receivable will be outstanding later than the Final Scheduled
Maturity Date,
the Servicer shall be obligated to repurchase such Receivable
pursuant to
Section 3.08. In addition, in the event that any such rescheduling
or extension
of a Receivable modifies the terms of such Receivable in such a
manner as to
constitute a cancellation of such Receivable and the creation of a
new motor
vehicle receivable that results in a deemed exchange thereof within
the meaning
of Section 1001 of the Code, the Servicer shall purchase such
Receivable
pursuant to Section 3.08, and the receivable created shall not be
included in
Collateral held by the Issuer. Notwithstanding the foregoing,
extensions or
modifications of the payment schedule of a Receivable can be made
only in
accordance with the customary servicing procedures of the Servicer,
provided
that the amount of any extension fee charged in connection with the
extension of
a Receivable is deposited into the Collection Account by the
Servicer in
accordance with Section 4.05(a). The Servicer may, in accordance
with its
customary servicing procedures, waive any prepayment charge, late
payment charge
or any other fees that may be collected in the ordinary course of
servicing the
Receivables.
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Section 3.03. [Reserved]
Section 3.04. Realization Upon Receivables. On behalf of the
Issuer, the
Servicer shall use its best efforts, consistent with its customary
servicing
procedures, to repossess or otherwise comparably convert the
ownership of any
Financed Vehicle that it has reasonably determined should be
repossessed or
otherwise converted following a default under the Receivable
secured by the
Financed Vehicle (and shall specify such Receivables to the
Trustees no later
than the Determination Date following the end of the Collection
Period in which
the Servicer shall have made such determination). The Servicer
shall follow such
practices and procedures as it shall deem necessary or advisable
and as shall be
customary and usual in its servicing of motor vehicle, minivan,
sport utility
vehicle or light duty truck receivables, as applicable, which
practices and
procedures may include reasonable efforts to realize upon any
Dealer Recourse,
selling the related Financed Vehicle at public or private sale and
other actions
by the Servicer in order to realize upon such a Receivable. The
Servicer shall
be entitled to recover its reasonable Liquidation Expenses with
respect to each
Defaulted Receivable, which are not to exceed the related Net
Liquidation
Proceeds with respect to each such Defaulted Receivable; provided,
however, that
the Servicer shall not be obligated to take actions to realize upon
any
Defaulted Receivables unless, in its reasonable opinion,
Liquidation Proceeds
will exceed Liquidation Expenses. All Net Liquidation Proceeds
realized in
connection with any such action with respect to a Receivable shall
be deposited
by the Servicer in the Collection Account in the manner specified
in Section
4.02(a). The foregoing is subject to the proviso that, in any case
in which the
Financed Vehicle shall have suffered damage, the Servicer shall not
expend funds
in connection with any repair or towards the repossession of such
Financed
Vehicle unless it shall determine in its discretion that such
repair and/or
repossession shall increase the Liquidation Proceeds of the related
Receivable
by an amount greater than the amount of such expenses.
Section 3.05. Maintenance of Physical Damage Insurance
Policies. The
Servicer shall, in accordance with its customary servicing
procedures and
underwriting standards, require that each Obligor shall have
obtained physical
damage insurance covering each Financed Vehicle as of the
origination of the
related Receivable.
Section 3.06. Maintenance of Security Interests in Financed
Vehicles. The
Servicer shall, in accordance with its customary servicing
procedures and at its
own expense, take such steps as are necessary to maintain
perfection of the
security interest created by each Receivable in the related
Financed Vehicle.
The Servicer is hereby authorized to take such steps as are
necessary to
reperfect such security interest on behalf of the Issuer in the
event of the
relocation of a Financed Vehicle or for any other reason. In the
event that the
assignment of a Receivable to the Issuer is insufficient, without a
notation on
the related Financed Vehicle's certificate of title, to grant to
the Issuer a
first priority perfected security interest in the related Financed
Vehicle, the
Servicer hereby agrees to serve as the agent of the Issuer for the
purpose of
perfecting the security interest of the Issuer in such Financed
Vehicle and
agrees that the Servicer's listing as the secured party on the
certificate of
title is solely in its capacity as agent of the Issuer.
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Section 3.07. Covenants of Servicer. The Servicer makes the
following
covenants on which the Issuer shall rely in accepting the
Receivables in trust
pursuant to Section 2.01:
(a) Liens in Force. Except as otherwise contemplated by
this
Agreement, the Servicer shall not release in whole or in part
any Financed
Vehicle from the security interest securing the related
Receivable.
(b) No Impairment. The Servicer shall do nothing to
impair the rights
of the Issuer in the Receivables.
(c) No Amendments. Subject to Section 3.02, the Servicer
shall not
amend or otherwise modify any Receivable such that the total
number of
Scheduled Payments is extended beyond the Final Scheduled
Maturity Date, or
either the Amount Financed or the APR is altered.
Section 3.08. Purchase of Receivables Upon Breach. Upon
discovery by the
Seller, the Servicer or the Issuer or upon the actual knowledge of
a Responsible
Officer of the Indenture Trustee or Owner Trustee of a breach of
any of the
covenants of the Servicer set forth in Section 3.07 that materially
and
adversely affects the interests of the Issuer, the Indenture
Trustee or the
Securityholders in any Receivable, or if an improper extension,
rescheduling or
modification of a Receivable is made by the Servicer as described
in Section
3.02, the party discovering such breach shall give prompt written
notice to the
others. As of the last day of the second Collection Period
following the
Collection Period in which it discovers or receives notice of such
breach (or,
at the Servicer's election, the last day of the first Collection
Period
following the Collection Period in which it discovers or receives
notice of such
breach), the Servicer shall, unless such breach or impropriety
shall have been
cured in all material respects, purchase from the Issuer such
Receivable and
remit on the related Deposit Date the Administrative Purchase
Payment to the
Collection Account in the manner specified in Section 4.05. Upon
such deposit of
the Administrative Purchase Payment, the Servicer shall for all
purposes of this
Agreement be deemed to have released all claims for reimbursement
of Outstanding
Advances made in respect of such Receivable. The sole remedy of the
Issuer, the
Trustees or the Securityholders against the Servicer with respect
to a breach
pursuant to Section 3.02 or 3.07 shall be to require the Servicer
to purchase
the related Receivables pursuant to this Section, except as
otherwise provided
in Section 6.02. Neither the Owner Trustee nor the Indenture
Trustee shall have
any duty to conduct any affirmative investigation as to the
occurrence of any
condition requiring the repurchase of any Receivable pursuant to
this Section.
Section 3.09. Total Servicing Fee; Payment of Certain Expenses
by Servicer.
As compensation for the performance of its obligations hereunder,
the Servicer
shall be entitled to receive on each Payment Date the Total
Servicing Fee;
provided, the Servicing Fee in respect of a Collection Period
(together with any
portion of the Servicing Fee that remains unpaid from prior Payment
Dates) will
be paid at the beginning of that Collection Period out of
collections of
interest on the Receivables for such Collection Period. The Basic
Servicing Fee
in respect of a Collection Period shall be calculated based on a
360 day year
comprised of twelve 30-day months. Except to the extent otherwise
provided
herein, the Servicer shall be required to pay all expenses incurred
by it in
connection with its activities under this Agreement (including
taxes
30
imposed on the Servicer and expenses incurred in connection with
the preparation
of reports and fees to independent accountants).
Section 3.10. Servicer's Certificate. On or before each
Determination Date,
the Servicer shall deliver to the Trustees and each Rating Agency a
Servicer's
Certificate containing all information necessary to make the
distributions
required by Sections 4.06 and 4.07 in respect of the related
Collection Period
and all information necessary for the Trustees to send statements
to
Securityholders pursuant to Section 4.10. The Servicer shall also
specify in
writing to the Trustees, no later than the Determination Date
following the last
day of a Collection Period as of which the Seller shall be required
to
repurchase or the Servicer shall be required to purchase a
Receivable, the
identity of any such Receivable and the identity of any Receivable
which the
Servicer shall have determined to be a Defaulted Receivable during
such
Collection Period. Receivables purchased or to be purchased by the
Servicer or
the Seller and Receivables as to which the Servicer has determined
during such
Collection Period to be Defaulted Receivables and with respect to
which payment
of the Administrative Purchase Payment or Warranty Purchase Payment
has been
provided from whatever source as of last day of such Collection
Period shall be
identified by the Seller's account number with respect to such
Receivable (as
specified in the Schedule of Receivables).
Section 3.11. Annual Statement as to Compliance; Notice of
Default.
(a) The Servicer shall deliver to the Trustees and each Rating
Agency, on
or before 90 days after the end of each fiscal year for which a
report on Form
10-K is required to be filed with the commission by or on behalf of
the Issuer,
commencing with the fiscal year ended March 31, 2009, an Officer's
Certificate
of the Servicer, stating that (i) a review of the activities of the
Servicer
during the preceding 12-month period ended March 31 (or, if
applicable, such
shorter period in the case of the first such Officer's Certificate)
and of its
performance under this Agreement has been made under such officer's
supervision,
and (ii) to the best of such officer's knowledge, based on such
review, the
Servicer has fulfilled all its obligations under this Agreement
throughout such
period, or, if there has been a default in the fulfillment of any
such
obligation, specifying each such default known to such officer and
the nature
and status thereof.
(b) The Servicer shall deliver to the Trustees and each Rating
Agency,
promptly after having obtained knowledge thereof, but in no event
later than
five Business Days thereafter, an Officer's Certificate specifying
the nature
and status of any event which with the giving of notice or lapse of
time, or
both, would become a Servicer Default.
Section 3.12. Assessment of Compliance and Annual Accountants'
Report.
(a) On or before 90 days after the end of each fiscal year for
which a
report on Form 10-K is required to be filed with the Commission by
or on behalf
of the Issuer, commencing with the fiscal year ended March 31,
2009, the
Servicer shall:
(i) deliver to the Issuer, the Owner Trustee, the
Administrator and
the Rating Agencies a report regarding the Servicer's
assessment of
compliance with the Servicing Criteria during the immediately
preceding
calendar year, as required under Rules 13a-18
31
and 15d-18 of the Exchange Act and Item 1122 of Regulation AB.
Such report
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