EXHIBIT 4.3
EXECUTION COPY
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HONDA AUTO RECEIVABLES 2000-1 OWNER TRUST,
as Issuer,
AMERICAN HONDA RECEIVABLES CORP.,
as Seller,
and
AMERICAN HONDA FINANCE CORPORATION,
as Servicer
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SALE AND SERVICING AGREEMENT
Dated as of October 1, 2000
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TABLE OF CONTENTS
PAGE
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ARTICLE ONE
DEFINITIONS
Section 1.01. General Definitions........................................1
Section 1.02. Other Definitional Provisions.............................20
Section 1.03. Interpretive Provisions...................................20
ARTICLE TWO
CONVEYANCE OF RECEIVABLES; CUSTODY OF RECEIVABLES FILES
Section 2.01. Conveyance of Receivables.................................21
Section 2.02. Custody of Receivable Files...............................22
Section 2.03. Representations and Warranties of Seller as to the
Receivables.............................................22
Section 2.04. Repurchase of Receivables Upon Breach.....................25
Section 2.05. Duties of Servicer as Custodian...........................26
Section 2.06. Instructions; Authority to Act............................27
Section 2.07. Indemnification by Custodian..............................27
Section 2.08. Effective Period and Termination..........................27
ARTICLE THREE
ADMINISTRATION AND SERVICING OF RECEIVABLES
Section 3.01. Duties of Servicer........................................28
Section 3.02. Collection of Receivable Payments.........................29
Section 3.03. Rebates on Full Prepayments...............................29
Section 3.04. Realization Upon Receivables..............................29
Section 3.05. Maintenance of Physical Damage Insurance Policies.........30
Section 3.06. Maintenance of Security Interests in Financed Vehicles....30
Section 3.07. Covenants of Servicer.....................................30
Section 3.08. Purchase of Receivables Upon Breach.......................31
Section 3.09. Total Servicing Fee; Payment of Certain Expenses by
Servicer................................................31
Section 3.10. Servicer's Certificate....................................31
Section 3.11. Annual Statement as to Compliance; Notice of Default......32
Section 3.12. Annual Accountants' Report................................32
Section 3.13. Access to Certain Documentation and Information
Regarding Receivables...................................32
Section 3.14. Amendments to Schedule of Receivables.....................33
Section 3.15. Reports to Securityholders and Rating Agencies............33
Section 3.16. Appointment of Subservicer................................33
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ARTICLE FOUR
DISTRIBUTIONS; RESERVE FUND; STATEMENTS TO SECURITYHOLDERS
Section 4.01. Establishment of Accounts.................................34
Section 4.02. Collections...............................................35
Section 4.03. Application of Collections................................36
Section 4.04. Advances..................................................37
Section 4.05. Additional Deposits.......................................38
Section 4.06. Distributions.............................................39
Section 4.07. Reserve Fund..............................................40
Section 4.08. Yield Supplement Account..................................40
Section 4.09. Net Deposits..............................................41
Section 4.10. Statements to Securityholders.............................41
ARTICLE FIVE
THE SELLER
Section 5.01. Representations of Seller.................................42
Section 5.02. Liability of Seller; Indemnities..........................44
Section 5.03. Merger, Consolidation or Assumption of the Obligations
of Seller; Certain Limitations..........................45
Section 5.04. Limitation on Liability of Seller and Others..............46
Section 5.05. Seller May Own Notes......................................47
ARTICLE SIX
THE SERVICER
Section 6.01. Representations of Servicer...............................47
Section 6.02. Indemnities of Servicer...................................48
Section 6.03. Merger, Consolidation or Assumption of the Obligations
of Service................r.............................49
Section 6.04. Limitation on Liability of Servicer and Others............49
Section 6.05. AHFC Not to Resign as Servicer............................49
ARTICLE SEVEN
SERVICER DEFAULTS
Section 7.01. Servicer Defaults.........................................50
Section 7.02. Appointment of Successor Servicer.........................51
Section 7.03. Notification of Servicer Termination......................52
Section 7.04. Waiver of Past Defaults...................................52
Section 7.05. Repayment of Advances.....................................52
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ARTICLE EIGHT
TERMINATION
Section 8.01. Optional Purchase of All Receivables......................52
ARTICLE NINE
MISCELLANEOUS
Section 9.01. Amendment.................................................53
Section 9.02. Protection of Title to Trust..............................54
Section 9.03. Notices...................................................56
Section 9.04. Assignment................................................56
Section 9.05. Limitations on Rights of Others...........................57
Section 9.06. Severability..............................................57
Section 9.07. Separate Counterparts.....................................57
Section 9.08. Headings..................................................57
Section 9.09. Governing Law.............................................57
Section 9.10. Nonpetition Covenants.....................................57
Section 9.11. Limitation of Liability of Owner Trustee and
Indenture Trustee.......................................58
SCHEDULES
Schedule A - Schedule of Receivables.....................................SA-1
Schedule B - Location of Receivable Files................................SB-1
EXHIBITS
Exhibit A - Form of Distribution Statement of Securityholders.............A-1
Exhibit B - Form of Servicer's Certificate................................B-1
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This Sale and Servicing Agreement, dated as of October 1, 2000, 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 2000-1 Owner Trust, a Delaware
business trust, as issuer (the "Issuer").
WHEREAS the Issuer desires to purchase from the Seller a portfolio
of receivables arising in connection with retail installment sale or
conditional sale contracts (the "Receivables") generated by AHFC in the
ordinary course of its business, which Receivables have been sold by AHFC to
AHRC;
WHEREAS, AHRC is willing to sell the Receivables to the Issuer
pursuant to the terms hereof; and
WHEREAS, AHFC is willing to service the Receivables pursuant to the
terms hereof;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
Section 1.01. GENERAL DEFINITIONS. Whenever used in this Agreement,
the following words and phrases, unless the context otherwise requires, shall
have the following meanings:
"ABSOLUTE PREPAYMENT MODEL" means a model calculating prepayment of
receivables with respect to which the receivables prepay at a specified
constant monthly prepayment rate.
"ACCOUNTS" means the Collection Account, the Note Distribution
Account, the Payahead Account, the Yield Supplement Account and the Reserve
Fund.
"ACCOUNT PROPERTY" means, with respect to each Account, such
Account, together with all cash, securities, financial assets and investments
and other property from time to time deposited or credited to such Account
and all proceeds thereof, including, with respect to the (i) Reserve Fund,
the Reserve Fund Initial Deposit and (ii) Yield Supplement Account, the Yield
Supplement Account Deposit.
"ACTUAL PAYMENT" means, with respect to a Receivable and a
Collection Period, all payments received by the Servicer from or for the
account of the related Obligor on such Receivable during such Collection
Period, net of any Supplemental Servicing Fees attributable to such
Receivable. Actual Payments do not include Applied Payments Ahead.
"ACTUARIAL RECEIVABLE" means any Receivable which provides for the
allocation of payments according to the "actuarial" method.
"ADMINISTRATION AGREEMENT" means the Administration Agreement, dated
as of October 1, 2000, among the Administrator, the Issuer, the Depositor and
the Indenture Trustee.
"ADMINISTRATOR" means AHFC, or any successor Administrator under the
Administration Agreement.
"ADMINISTRATIVE PURCHASE PAYMENT" means, with respect to a Payment
Date and to an Administrative Receivable purchased by the Seller or the
Servicer as of the end of the related Collection Period, which Receivable is
(i) a Precomputed Receivable, (a) the sum of (1) all Scheduled Payments on
such Receivable due after the last day of such Collection Period, (2) an
amount equal to any reimbursement of Outstanding Advances made pursuant to
the first sentence of Section 4.04(c) with respect to such Receivable (3) all
past due Scheduled Payments for which an Advance has not been made, minus (b)
the sum of (1) all Payments Ahead in respect of such Administrative
Receivable held by the Servicer or on deposit in the Payahead Account, (2)
any Rebate and (3) any proceeds of the liquidation of such Receivable
previously received (to the extent applied to reduce the Principal Balance of
such Receivable) or (ii) a Simple Interest Receivable, the sum of (a) the
unpaid principal balance owed by the related Obligor in respect of such
Receivable and (b) interest on such unpaid principal balance at a rate equal
to the APR of the related Receivable from the date of last payment by such
Obligor to the last day of such Collection Period.
"ADMINISTRATIVE RECEIVABLE" means a Receivable which the Servicer is
required to purchase pursuant to Section 3.08 or which the Servicer has
elected to purchase pursuant to Section 8.01.
"ADVANCE" means a Precomputed Advance or a Simple Interest Advance.
"AFFILIATE" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such
specified Person. For the purpose of this definition, "control", when used
with respect to any specified Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"AGGREGATE NET LOSSES" means, with respect to a Collection Period,
an amount equal to the aggregate Principal Balance of all Receivables that
became Defaulted Receivables during such Collection Period minus all Net
Liquidation Proceeds collected during such Collection Period with respect to
all Defaulted Receivables.
"AGREEMENT" means this Sale and Servicing Agreement, and all
amendments hereof and supplements hereto.
"AHFC" means American Honda Finance Corporation, and its successors.
"AHRC" means American Honda Receivables Corp., and its successors.
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"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.
"APPLIED PAYMENT AHEAD" means, with respect to a Precomputed
Receivable and a Collection Period as to which (i) the Actual Payment is less
than the Scheduled Payment and (ii) a Deferred Prepayment is on deposit in
the Payahead Account or otherwise retained by the Servicer pursuant to
Section 4.02(c), an amount equal to the lesser of (a) such Deferred
Prepayment and (b) the amount by which the Scheduled Payment exceeds the
Actual Payment.
"AVAILABLE AMOUNT" means, with respect to any Payment Date, the sum
of Available Interest and Available Principal.
"AVAILABLE INTEREST" means, with respect to any Payment Date, the
total of the following amounts allocable to interest received by the Servicer
on or in respect of the Receivables during the related Collection Period
(computed, in the case of Precomputed Receivables, by the actuarial method
and, in the case of Simple Interest Receivables, by the simple interest
method): (i) the sum of the interest component of all (a) collections on or
in respect of all Receivables other than Defaulted Receivables (including the
interest portion of Applied Payments Ahead, but excluding Payments Ahead to
be applied in one or more future Collections Periods), (b) Net Liquidation
Proceeds, (c) Advances made by the Servicer, (d) Warranty Purchase Payments,
(e) Administrative Purchase Payments and (f) the Yield Supplement Withdrawal
Amount, if any, for the related Payment Date, less (ii) the sum of all (a)
amounts received on or in respect of a particular Receivable (other than a
Defaulted Receivable) to the extent of the aggregate Outstanding Interest
Advances in respect of such Receivable and (b) Net Liquidation Proceeds with
respect to a particular Receivable to the extent of the aggregate Outstanding
Interest Advances in respect of such Receivable.
"AVAILABLE PRINCIPAL" means, with respect to any Payment Date, the
total of the following amounts allocable to principal received by the
Servicer on or in respect of the Receivables during the related Collection
Period (computed, in the case of Precomputed Receivables, by the actuarial
method and, in the case of Simple Interest Receivables, by the simple
interest method): (i) the sum of the principal component of all (a)
collections on or in respect of all Receivables other than Defaulted
Receivables (including the principal portion of Applied Payments Ahead but
excluding Payments Ahead), (b) Net Liquidation Proceeds, (c) Advances made by
the Servicer, (d) Warranty Purchase Payments and (e) Administrative Purchase
Payments, less (ii) an amount equal to all (a) amounts received on or in
respect of a particular Receivable (other than a Defaulted Receivable) to the
extent of the aggregate Outstanding Principal Advances in respect of such
Receivable and (b) Net Liquidation Proceeds with respect to a particular
Receivable to the extent of the aggregate Outstanding Principal Advances in
respect of such Receivable.
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"BASIC DOCUMENTS" means this Agreement, the Administration
Agreement, the Indenture, the Note Depository Agreement, the Receivables
Purchase Agreement, the Amended and Restated 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, Wilmington, Delaware or Chicago, Illinois 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 sum of the Certificate Monthly Interest
Distributable Amount plus any outstanding Certificate Interest Carryover
Shortfall for the preceding Payment Date, over the amount in respect of
interest on the Certificates that is actually paid as interest on the
Certificates on such Payment Date.
"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.
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"CERTIFICATE PERCENTAGE" means (i) for each Payment Date until the
principal amount of the Class A-1 Notes has been paid in full, 0%; (ii) for
each Payment Date to and including the Payment Date on which the principal
amount of the Class A-4 Notes has been paid in full, the percent equivalent
of a fraction, the numerator of which is the initial principal amount of the
Certificates and the denominator of which is the sum of the initial aggregate
principal amount of the Notes and the initial principal amount of the
Certificates; and (iii) for each Payment Date after the Payment Date on which
the principal amount of the Class A-4 Notes has been paid in full, 100%;
notwithstanding the foregoing, for each Payment Date after the acceleration
of the Notes following an Event of Default, the Certificate Percentage shall
be 0% until the Notes have been paid in full.
"CERTIFICATE POOL FACTOR" means, with respect to the Certificates on
any Payment Date, a seven-digit decimal figure equal to the outstanding
principal balance of the Certificates on such Payment Date (after giving
effect to any reductions thereof to be made on such Payment Date) divided by
the Original Certificate Balance.
"CERTIFICATE PRINCIPAL CARRYOVER SHORTFALL" means, with respect to
any Payment Date, the excess of the Certificate Monthly Principal
Distributable Amount plus any outstanding Certificate Principal Carryover
Shortfall for the preceding Payment Date, over the amount in respect of
principal that is actually paid as principal on the Certificates on such
Payment Date.
"CERTIFICATE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to
any Payment Date, the sum of the Certificate Monthly Principal Distributable
Amount for each Payment Date and any outstanding Certificate Principal
Carryover Shortfall as of the close of the immediately preceding Payment
Date; provided, however, that the Certificate Principal Distributable Amount
shall not exceed the Certificate Balance. In addition, on the Payment Date as
of which all of the Receivables are to be purchased pursuant to Section 8.01,
the principal required to be deposited into the Certificate Distribution
Account will include the amount necessary to reduce the Certificate Balance
to zero.
"CERTIFICATE RATE" means 6.670% 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 November 2001 Payment Date.
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"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 December 2002 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 July 2004 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 January 2006 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 October 25, 2000.
"COLLECTION ACCOUNT" means the account designated as such, and
established and maintained pursuant to Section 4.01.
"COLLECTION PERIOD" means each calendar month during the term of
this Agreement (or, in the case of the first Collection Period, the period of
time since the Cutoff Date through the last day of the calendar month
immediately preceding the month in which the first Payment Date occurs).
"COMMISSION" means the Securities and Exchange Commission, and its
successors.
"CONTROL" shall have the meaning specified in Section 8-106 of the
UCC.
"CONTROL AGREEMENT" means the control agreement, dated as of October
1, 2000, among AHRC, the Issuer, the Servicer, the Indenture Trustee and U.S.
Bank National Association, 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 111 East Wacker Drive, Suite 3000, Chicago, Illinois 60601,
Attention: Honda 2000-1 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).
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"CURRENT RECEIVABLE" means each Receivable that is not a Defaulted
Receivable or a Liquidated Receivable.
"CUTOFF DATE" means October 1, 2000.
"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.
"DEFERRED PREPAYMENT" means, with respect to a Receivable and a
Collection Period, the aggregate amount, if any, of Payments Ahead remitted
to the Servicer in respect of such Receivable during one or more prior
Collection Periods and currently held by the Servicer or in the Payahead
Account.
"DELINQUENCY PERCENTAGE" means, with respect to a Collection Period,
the percentage equivalent of a fraction, the numerator of which is the number
of (i) Receivables 61 days or more delinquent (after taking into account
permitted extensions) as of the last day of such Collection Period,
determined in accordance with the Servicer's normal practices, plus (ii)
Receivables the related Financed Vehicles of which have been repossessed but
have not been liquidated (to the extent the related Receivable is not
otherwise reflected in clause (i) above or is not a Defaulted Receivable),
and the denominator of which is the aggregate number of Current Receivables
on the last day of such Collection Period.
"DEPOSIT DATE" means, with respect to any Collection Period and
Payment Date, the Business Day immediately preceding such Payment Date.
"DEPOSITOR " means the Seller in its capacity as Depositor under the
Trust Agreement.
"DETERMINATION DATE" means, with respect to any Payment Date, the
tenth 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.
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"ELIGIBLE ACCOUNT" means either (A) a segregated deposit account
over which the applicable Trustee has sole signature authority, maintained
with an Eligible Institution meeting the requirements of clause (i) thereof
or (B) a segregated trust account maintained with an Eligible Institution
meeting the requirements of clause (ii) thereof, in each case bearing a
designation clearly indicating that the funds deposited therein are held for
the benefit of the Securityholders, the Noteholders or the
Certificateholders, as the case may be.
"ELIGIBLE INSTITUTION" means a depository institution or trust
company, (i) the commercial paper or other short-term unsecured debt
obligations of which have the Required Deposit Rating or (ii) having
corporate trust powers and organized under the laws of the United States, any
state thereof, the District of Columbia or the Commonwealth of Puerto Rico
which has a long-term deposit rating from (A) Moody's of at least Baa3 or (B)
Standard and Poor's of at least BBB- (or such lower rating as either Rating
Agency shall approve in writing).
"ELIGIBLE INVESTMENTS" means, at any time, any one or more of the
following obligations and securities:
(i) obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, the United States or
any agency thereof, provided such obligations are backed by the full
faith and credit of the United States;
(ii) general obligations of or obligations guaranteed by
FNMA, any state of the United States, the District of Columbia or
the Commonwealth of Puerto Rico then rated the highest available
credit rating of each Rating Agency for such obligations;
(iii) securities bearing interest or sold at a discount
issued by any corporation incorporated under the laws of the United
States or any state thereof, the District of Columbia or the
Commonwealth of Puerto Rico, so long as at the time of such
investment or contractual commitment providing for such investment
either the long-term unsecured debt of such corporation has the
highest available credit rating from each Rating Agency for such
obligations or the commercial paper or other short-term debt which
is then rated has the highest available credit rating of each Rating
Agency for such obligations;
(iv) certificates of deposit issued by any depository
institution or trust company (including the Trustee) incorporated
under the laws of the United States or any state thereof, the
District of Columbia or the Commonwealth of Puerto Rico and subject
to supervision and examination by banking authorities of one or more
of such jurisdictions, provided that the short-term unsecured debt
obligations of such depository institution or trust company has the
highest available credit rating of each Rating Agency for such
obligations;
(v) certificates of deposit issued by any bank, trust
company, savings bank or other savings institution and fully insured
by the FDIC;
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(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 U.S. Bank National Association 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 a "Eligible Investment" unless (i) the Trustee
has Control over such obligation or security and (ii) at the time such
obligation or security was delivered to the Trustee or the Trustee became the
related Entitlement Holder, the Trustee did not have notice of any adverse
claim with respect thereto within the meaning of Section 8-105 of the UCC.
For purposes of this definition, any reference to the highest
available credit rating of an obligation shall mean the highest available
credit rating for such obligation, or such lower credit rating (as approved
in writing by each Rating Agency) as will not result in the qualification,
downgrading or withdrawal of the rating then assigned to any Rated Securities
by such Rating Agency.
"ENTITLEMENT HOLDER" shall have the meaning specified in Section
8-102 of the UCC.
"ENTITLEMENT ORDER" shall have the meaning specified in Section
8-102 of the UCC.
"EXCESS PAYMENT" means, with respect to a Receivable and a
Collection Period, the amount, if any, by which the Actual Payment exceeds
the sum of (i) the Scheduled Payment and (ii) any Overdue Payment.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FDIC" means the Federal Deposit Insurance Corporation.
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"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 December 31, 2005.
"FINANCED VEHICLE" means, with respect to any retail installment
sale or conditional sale contract, the related new or used Honda or Acura
motor vehicle, together with all accessions thereto, securing the related
Obligor's indebtedness under such retail installment sale or conditional sale
contract.
"FINANCIAL ASSET" shall have the meaning specified in Section
8-102(a)(9) of the UCC.
"FITCH" means Fitch, Inc., or its successors.
"INDENTURE" means the indenture, dated as of October 1, 2000,
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 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
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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, 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 2.5%) 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.
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"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 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 the sum of the Note
Monthly Interest Distributable Amount for such Class for the preceding
Payment Date plus any outstanding Note Interest Carryover Shortfall for such
Class on such preceding Payment Date, over the amount of interest that is
actually paid on the Notes on such preceding Payment Date, plus, to the
extent permitted by law, interest on the Note Interest Carryover Shortfall at
the related Interest Rate for the related Interest Accrual Period.
"NOTE INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Payment Date and a Class of Notes, the sum of the Note Monthly Interest
Distributable Amount for such Payment Date and the Note Interest Carryover
Shortfall for such Class of Notes. For all purposes of this Agreement and the
other Basic Documents, interest with respect to the Class A-2, Class A-3 and
Class A-4 Notes shall be computed on the basis of a 360-day year consisting
of twelve 30-day months; and interest with respect to the Class A-1 Notes
shall be computed on the basis of the actual number of days in each
applicable Interest Accrual Period, divided by 360.
"NOTE MONTHLY INTEREST DISTRIBUTABLE AMOUNT" means, with respect to
any Payment Date, interest accrued for the related Interest Accrual Period at
the related Interest Rate for each Class of Notes on the Outstanding Amount
of the Notes of each such Class on the immediately preceding Payment Date
(or, in the case of the first Payment Date, the original principal amount of
each such Class of Notes), after giving effect to all distributions of
principal to the Noteholders of each such Class on or prior to such Payment
Date.
"NOTE MONTHLY PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to
any Payment Date, the Note Percentage of the Principal Distributable Amount
for such Payment Date.
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"NOTE PERCENTAGE" means (i) for each Payment Date until the
principal amount of the Class A-1 Notes has been paid in full, 100%; (ii) for
each Payment Date on or after the principal amount of the Class A-1 Notes has
been paid in full to and including the Payment Date on which the principal
amount of the Class A-4 Notes has been paid in full, the percent equivalent
of a fraction, the numerator of which is the initial aggregate principal
amount of the Notes and the denominator of which is the sum of the initial
aggregate principal amount of the Notes and the initial principal amount of
the Certificates; and (iii) for each Payment Date after the Payment Date on
which the principal amount of the Class A-4 Notes has been paid in full, 0%;
notwithstanding the foregoing, for each Payment Date after the acceleration
of the Notes following an Event of Default, the Note Percentage shall be 100%
until the Notes have been paid in full.
"NOTE POOL FACTOR" means, with respect to each Class of Notes as of
any Payment Date, a seven-digit decimal figure equal to the Outstanding
Amount of such Class of Notes as of such Payment Date (after giving effect to
any reductions thereof to be made on such Payment Date) divided by the
original outstanding principal balance of such Class of Notes.
"NOTE PRINCIPAL CARRYOVER SHORTFALL" means, with respect to any
Payment Date, the excess, if any, of the sum of the Note Monthly Principal
Distributable Amount plus any outstanding Note Principal Carryover Shortfall
for the preceding Payment Date, over the amount in respect of principal that
is actually paid as principal on the Notes on such Payment Date.
"NOTE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Payment Date, the sum of (i) the Note Monthly Principal Distributable Amount,
(ii) any outstanding Note Principal Carryover Shortfall as of the close of
the immediately preceding Payment Date and, (iii) on the Final Payment Date
for a Class of Notes or the Payment Date as of which all of the Receivables
are to be purchased pursuant to Section 8.01, the amount necessary (after
giving effect to all amounts allocable to principal required to be deposited
in the Note Distribution Account on such Payment Date) to reduce the
Outstanding Amount of each related Class of Notes to zero; provided, however,
that the Note Principal Distributable Amount with respect to a Class of Notes
shall not exceed the Outstanding Amount of such Class of Notes.
"NOTES" means the Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes and the Class A-4 Notes.
"OBLIGOR " on a Receivable means the purchaser or co-purchasers of
the related Financed Vehicle purchased in part or in whole by the execution
and delivery of a retail installment contract or any other Person who owes or
may be liable for payments under such retail installment contract.
"OFFERED SECURITIES" shall have the meaning specified in Section
5.03(b)(ii)(B).
"OFFICERS' CERTIFICATE" means a certificate signed by the president,
any Vice President, the treasurer or the secretary of the Seller or the
Servicer, as the case may be, and delivered to the Trustee.
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"OPINION OF COUNSEL" means a written opinion of counsel (who, in the
case of counsel to the Seller or the Servicer, may be an employee of or
outside counsel to the Seller or the Servicer), which counsel shall be
acceptable to the Trustee.
"ORIGINAL CERTIFICATE BALANCE" means $46,755,487.15.
"ORIGINAL POOL BALANCE" means $1,100,025,487.15.
"OUTSTANDING ADVANCES" means, with respect to a Receivable and the
last day of a Collection Period, the sum of all Advances made as of or prior
to such date, minus (1) all payments or collections as of or prior to such
date which are specified in Section 4.04(b) and (c) as applied to reimburse
all unpaid Advances with respect to such Receivable and (2) all amounts for
which the Servicer has deemed to have released all claims for reimbursement
of Outstanding Advances pursuant to Section 3.08.
"OUTSTANDING AMOUNT" means the aggregate principal amount of all
Notes, or if indicated by the context, all Notes of any class, outstanding at
the date of the determination.
"OUTSTANDING INTEREST ADVANCES" means, as of the last day of a
Collection Period with respect to a Receivable, the portion of Outstanding
Advances allocable to interest.
"OUTSTANDING PRINCIPAL ADVANCES" means, as of the last day of a
Collection Period with respect to a Receivable, the portion of Outstanding
Advances allocable to principal.
"OVERDUE PAYMENT" shall have the meaning specified in Section
4.03(a).
"OWNER TRUST ESTATE" shall have the meaning specified in the Trust
Agreement.
"OWNER TRUSTEE" means the Person acting as Owner Trustee under the
Trust Agreement, its successors in interest and any successor owner trustee
under the Trust Agreement.
"PAYAHEAD ACCOUNT" means the account designated as such and
established and maintained pursuant to Section 4.01.
"PAYMENT AHEAD" means, with respect to a Precomputed Receivable and
a Collection Period, any Excess Payment (not representing, when added to any
Deferred Prepayment with respect to such Precomputed Receivable, a prepayment
in full of such Precomputed Receivable) which the Servicer, in accordance
with its customary servicing practices, will apply towards the payment of
Scheduled Payments due in one or more future Collection Periods.
"PAYMENT DATE" means, with respect to a Collection Period, the
fifteenth calendar day of the next succeeding calendar month or, if such day
is not a Business Day, the next succeeding Business Day, commencing November
2000.
"PERCENTAGE INTERESTS" shall have the meaning specified in the Trust
Agreement.
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"PERSON" means any legal person, including any individual,
corporation, partnership, joint venture, association, joint stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"POOL BALANCE" means, as of any date, the aggregate Principal
Balance of the Receivables (exclusive of all Administrative Receivables for
which the Servicer has paid the Administrative Purchase Payment, Warranty
Receivables for which the Seller has paid the Warranty Purchase Payment and
Defaulted Receivables) as of the close of business on such date.
"PRECOMPUTED ADVANCE" shall have the meaning specified in Section
4.04(a).
"PRECOMPUTED RECEIVABLE" means any Actuarial Receivable or Rule of
78s Receivable.
"PREPAYMENT" means any Excess Payment with respect to a Receivable
other than a Payment Ahead.
"PRINCIPAL BALANCE" means, with respect to any Receivable as of any
date, the Amount Financed minus the sum of the following amounts: (i) in the
case of a Precomputed Receivable, that portion of all Scheduled Payments due
on or prior to such date allocable to principal, computed in accordance with
the actuarial method, (ii) in the case of a Simple Interest Receivable, that
portion of all Scheduled Payments actually received on or prior to such date
allocable to principal, computed in accordance with the simple interest
method, (iii) any Warranty Purchase Payment or Administrative Purchase
Payment with respect to such Receivable allocable to principal and (iv) any
Prepayments or other payments applied to reduce the unpaid principal balance
of such Receivable.
"PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any Payment
Date, the sum of the following amounts (i) in the case of (a) Precomputed
Receivables, the principal portion of all Scheduled Payments due during the
related Collection Period, computed in accordance with the actuarial method
and (b) Simple Interest Receivables, the principal portion of all Scheduled
Payments actually received during the related Collection Period, computed in
accordance with the simple interest method, (ii) the principal portion of all
Prepayments, received during such Collection Period (to the extent such
amounts are not included in clause (i) above) and (iii) the Principal Balance
of each Receivable that became an Administrative Receivable, a Warranty
Receivable or a Defaulted Receivable during such Collection Period (to the
extent such amounts are not included in clauses (i) or (ii) above).
"RATED SECURITIES" means each Class of Securities that has been
rated by a Rating at the request of the Seller.
"RATING AGENCY" means Fitch, Moody's and Standard & Poor's.
"RATING AGENCY CONDITION" means, with respect to any action, that
each Rating Agency shall have been given ten days' (or such shorter period as
shall be acceptable to each Rating Agency) prior notice thereof and that each
Rating Agency shall have notified the Seller, the
15
Servicer and the Trustees in writing that such action will not result in a
reduction or withdrawal of the then current rating of the Rated Securities.
"REBATE" means, with respect to a Precomputed Receivable and any
date, the rebate, calculated in accordance with the actuarial method, under
such Receivable that is or would be payable to the related Obligor for
unearned finance charges or any other charges rebatable to the Obligor if
such Obligor were to prepay such Receivable in full on such date.
"RECEIVABLE" means any retail installment sale contract executed by
an Obligor in respect of a Financed Vehicle, and all proceeds thereof and
payments thereunder, which Receivables shall be identified in a Schedule of
Receivables.
"RECEIVABLE FILES" means the documents specified in Section 2.02.
"RECEIVABLES PURCHASE AGREEMENT" means the receivables purchase
agreement, dated as of October 1, 2000, between AHFC and the Seller, as
amended or supplemented from time to time.
"RELEASED ADMINISTRATIVE AMOUNT" means, with respect to a Payment
Date and to an Administrative Receivable, the Deferred Prepayment, if any,
for such Administrative Receivable.
"RELEASED WARRANTY AMOUNT" means, with respect to a Payment Date and
to a Warranty Receivable, the Deferred Prepayment, if any, for such Warranty
Receivable.
"REQUIRED RATE" means the sum of (a) the percent equivalent of a
fraction, the numerator of which is the sum for each Class of Notes of the
product of (1) the Interest Rate for such Class of Notes, (2) the original
principal balance of such Class of Notes and (3) the expected weighted
average life for such Class of Notes at the prepayment speed of 1.3% under
the Absolute Prepayment Model and the denominator of which is the sum for
each such Class of Notes of the product of (1) the original principal balance
of such Class of Notes and (2) the expected weighted average life for such
Class of Notes at the prepayment speed of 1.3% under the Absolute Prepayment
Model and (b) the Servicing Fee Rate.
"REQUIRED DEPOSIT RATING" means the short-term credit rating of the
related entity is at least equal to P-1 by Moody's, A-1 by Standard & Poor's
and F1 by Fitch.
"REQUIRED SERVICER RATING" means, with respect to the Servicer, that
the then short-term unsecured debt obligations of the Servicer are rated at
least equal to P-1 by Moody's, A-1 by Standard & Poor's and F1 by Fitch.
"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 $5,500,127.44 made by or on behalf of the Seller into the
Reserve Fund on the Closing Date.
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"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 Principal, Managing Director, Vice President, assistant Vice
President, assistant treasurer, assistant secretary 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
and, with respect to the Owner Trustee, any officer in the Corporate Trust
Administration Department of the Owner Trustee with direct responsibility for
the administration of the Trust Agreement and the Basic Documents on behalf
of the Owner Trustee.
"RETAIL INSTALLMENT CONTRACTS" means retail installment sale and
conditional sale contracts.
"RULE OF 78s RECEIVABLE" means any Receivable which provides for the
allocation of payments according to the "sum of periodic balances" or "sum of
monthly payments" method.
"SCHEDULE OF RECEIVABLES" means the schedule of Receivables attached
as Schedule A to this Agreement, as it may be amended from time to time.
"SCHEDULED PAYMENT" means, with respect to any Payment Date and to a
Receivable, the payment set forth in such Receivable as due from the Obligor
in the related Collection Period; provided, however, that in the case of the
first Collection Period, the Scheduled Payment shall include all such
payments due from the Obligor on or after the Cutoff Date.
"SECURITIES" means the Notes and the Trust Certificates.
"SECURITY ENTITLEMENT" shall have the meaning specified in Section
8-102(a)(17) of the UCC.
"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
17
conditions described in Section 4.02(b)(ii), (i) an irrevocable letter of
credit, issued by a Letter of Credit Bank and naming the Indenture Trustee a
beneficiary or (ii) a surety bond, insurance policy or deposit of cash or
securities, which is satisfactory to each Rating Agency.
"SERVICER'S CERTIFICATE" means an Officers' Certificate of the
Servicer delivered pursuant to Section 3.10, substantially in the form of
Exhibit B.
"SERVICING FEE RATE" means 1.00% per annum.
"SIMPLE INTEREST ADVANCE" shall have the meaning specified in
Section 4.04(a).
"SIMPLE INTEREST RECEIVABLE" means any Receivable which provides for
the allocation of payments according to the "simple interest" method.
"SPECIFIED RESERVE FUND BALANCE" means, with respect to any Payment
Date $8,250,191.15, 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 minus (b) a fraction, the numerator of which is the
outstanding principal amount of the Notes with respect to such Payment Date
and the denominator of which is such Pool Balance. Notwithstanding the
foregoing, in no event will the Specified Reserve Fund Balance be more than
the outstanding principal amount of the Notes.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., or its successors.
"SUCCESSOR SERVICER" means any entity appointed as a successor to
the Servicer pursuant to Section 7.02.
"SUPPLEMENTAL SERVICING FEE" means any interest earned on investment
of the monies on deposit in the Accounts (other than the Yield Supplement
Account and the Reserve Fund) during a Collection Period, net of any
investment expenses and losses from such investments, plus all late fees,
prepayment charges and other administrative fees and expenses or similar
charges allowed by applicable law with respect to the Receivables, including,
in the case of a Rule of 78s Receivable and that is prepaid in full, the
difference between the Principal Balance of a Rule of 78s Receivable, minus
the Principal Balance of such Receivable computed according to the actuarial
method (plus accrued interest to the date of prepayment), received by the
Servicer during such Collection Period.
"TOTAL SERVICING FEE" means the sum of the Basic Servicing Fee and
the Supplemental Servicing Fee.
"TRUST" means the Issuer.
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"TRUST AGREEMENT" means the trust agreement, dated as of October 11,
2000, as amended and restated, dated October 25, 2000, between the Depositor
and the Owner Trustee.
"TRUST FEES AND EXPENSES" means all accrued and unpaid Trustees'
fees, any amounts due to the Trustees for reimbursement of expenses or in
respect of indemnification and other administrative fees of the Trust.
"TRUSTEE" means either the Owner Trustee or the Indenture Trustee,
as the context requires.
"TRUSTEES" means the Owner Trustee and the Indenture Trustee.
"UCC" means the Uniform Commercial Code as in effect in the
respective jurisdiction.
"UNITED STATES" means the United States of America.
"VICE PRESIDENT" of any Person means any vice president of such
Person, whether or not designated by a number or words before or after the
title "Vice President", who is a duly elected officer of such Person.
"WARRANTY PURCHASE PAYMENT" means, with respect to a Payment Date
and to a Warranty Receivable repurchased by the Seller as of the end of the
related Collection Period, which Receivable is (i) a Precomputed Receivable,
(a) the sum of (1) all Scheduled Payments on such Receivable due after the
last day of such Collection Period, (2) all past due Scheduled Payments for
which an Advance has not been made, (3) all Outstanding Advances made in
respect of such Receivable and (4) an amount equal to any reimbursement of
Outstanding Advances made pursuant to the first sentence of Section 4.04(c)
with respect to such Receivable minus (b) the sum of (1) all Payments Ahead
in respect of such Warranty Receivable held by the Servicer or on deposit in
the Payahead Account, (2) any Rebate and (3) any proceeds of the liquidation
of such Receivable previously received (to the extent applied to reduce the
Principal Balance of such Receivable) or (ii) a Simple Interest Receivable,
the sum of (a) the unpaid principal balance owed by the related Obligor in
respect of such Receivable and (b) interest on such unpaid principal balance
at a rate equal to the APR of the related Receivable from the date of last
payment by such Obligor to the last day of such Collection Period.
"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 $23,950,083.32 made by or on behalf of the Seller into the
Yield Supplement Account on the Closing Date.
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"YIELD SUPPLEMENT AMOUNT" means, with respect to any Collection
Period and the related Deposit Date, the aggregate amount by which one
month's interest on the Principal Balance as of the first day of such
Collection Period of each Discount Receivable (other than a Discount
Receivable that is a Defaulted Receivable) at a rate equal to the Required
Rate, exceeds one month's interest on such Principal Balance at the APR of
each such Receivable.
"YIELD SUPPLEMENT WITHDRAWAL AMOUNT" means, with respect to any
Collection Period and the related Deposit Date, the lesser of (a) the amount
on deposit in the Yield Supplement Account and (b) the sum of (i) the Yield
Supplement Amount and (ii) after giving effect to the withdrawal of the Yield
Supplement Amount, the amount by which the amount on deposit in the Yield
Supplement Account exceeds the Maximum Yield Supplement Amount.
Section 1.02. OTHER DEFINITIONAL PROVISIONS.
(a) Capitalized terms used herein that are not otherwise defined
herein shall have the meanings ascribed thereto in the Indenture.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any certificate or other document made or delivered
pursuant hereto unless otherwise defined therein.
Section 1.03. INTERPRETIVE PROVISIONS.
(a) For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires, (i) terms used
herein include, as appropriate, all genders and the plural as well as the
singular, (ii) references to words such as "herein", "hereof" and the like
shall refer to this Agreement as a whole and not to any particular part,
article or section within this Agreement, (iii) references to a section such
as "Section 1.01" and the like shall refer to the applicable section of this
Agreement, (iv) the term "include" and all variations thereof shall mean
"include without limitation", (v) the term "or" shall include "and/or", and
(vi) the term "proceeds" shall have the meaning set forth in the applicable
UCC.
(b) As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate
or other document to the extent not defined, shall have the respective
meanings given to them under generally accepted accounting principles. To the
extent that the definitions of accounting terms in this Agreement or in any
such certificate or other document 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.
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ARTICLE TWO
CONVEYANCE OF RECEIVABLES; CUSTODY OF RECEIVABLES FILES
Section 2.01. CONVEYANCE OF RECEIVABLES.
(a) In consideration of the Issuer's delivery to or upon the order
of the Seller of the Certificates and the net proceeds of the sale of the
Notes, less an amount equal to the Reserve Fund Initial Deposit to be
deposited to the Reserve Fund and the Yield Supplement Account Deposit to be
deposited to the Yield Supplement Account, each on the Closing Date, the
Seller does hereby sell, transfer, assign, set over and otherwise convey to
the Issuer, without recourse (subject to the obligations of the Seller set
forth herein), all right, title and interest of the Seller in, to and under:
(i) the Receivables and all monies due thereon or paid
thereunder or in respect thereof (including proceeds of the
repurchase of Receivables by the Seller pursuant to Section 2.04 or
the purchase of Receivables by the Servicer pursuant to Section 3.08
or 8.01) on or after the Cutoff Date;
(ii) the security interests in the Financed Vehicles;
(iii) any proceeds of any physical damage insurance
policies covering the Financed Vehicles and in any proceeds of any
credit life or credit disability insurance policies relating to the
Receivables or the Obligors;
(iv) any proceeds of Dealer Recourse;
(v) the Receivables Purchase Agreement, but not the
obligations of the Seller thereunder;
(vi) the right to realize upon any property (including the
right to receive future Liquidation Proceeds) that shall have
secured a Receivable and have been repossessed by or on behalf of
the Issuer;
(vii) all funds on deposit from time to time in the
Accounts, including the Reserve Fund Initial Deposit and the Yield
Supplement Account Deposit, and in all investment income and
proceeds thereof;
(viii) any Servicer Letter of Credit; and
(ix) the proceeds of any and all of the foregoing.
(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
21
foregoing. The parties hereto intend that this Agreement constitute a
security agreement under applicable law. Such grant is made to secure the
payment of all amounts payable hereunder.
Section 2.02. CUSTODY OF RECEIVABLE FILES. To assure uniform quality
in servicing the Receivables and to reduce administrative costs, the Issuer
hereby revocably appoints the Servicer, and the Servicer accepts such
appointment, to act for the benefit of the Issuer and the Indenture Trustee
as custodian of the following documents or instruments which are hereby
constructively delivered to the Indenture Trustee, as pledgee of the Issuer,
as of the Closing Date with respect to each Receivable:
(a) the fully executed original of the Receivable;
(b) documents evidencing or related to any Insurance Policy;
(c) the original credit application of each Obligor, fully
executed by such Obligor on AHFC's customary form, or on a form
approved by AHFC for such application;
(d) the original certificate of title (or evidence that
such certificate of title has been applied for) or such documents
that the Servicer shall keep on file, in accordance with its
customary procedures, evidencing the security interest in the
related Financed Vehicle; and
(e) any and all other documents that the Seller or the
Servicer, as the case may be, shall keep on file, in accordance with
its customary procedures, relating to such Receivable or the related
Obligor or Financed Vehicle.
Section 2.03. REPRESENTATIONS AND WARRANTIES OF SELLER AS TO THE
RECEIVABLES. The Seller makes the following representations and warranties as
to the Receivables on which the Issuer shall rely in acquiring the
Receivables. Such representations and warranties speak as of the execution
and delivery of this Agreement and as of the Closing Date, but shall survive
the sale, transfer and assignment of the Receivables to the Issuer and the
pledge thereof to the Indenture Trustee.
(a) CHARACTERISTICS OF RECEIVABLES. Each Receivable (i)
shall have been originated in the United States by a Dealer for the
retail sale of the related Financed Vehicle in the ordinary course
of such Dealer's business, shall have been fully and properly
executed by the parties thereto, shall have been purchased by AHFC
from such Dealer under an existing agreement with AHFC, shall have
been validly assigned by such Dealer to AHFC in accordance with the
terms of such agreement and shall have been subsequently sold by
AHFC to the Seller pursuant to the Receivables Purchase Agreement,
(ii) shall have created or shall create a valid, subsisting 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
22
adequate for realization against the collateral of the benefits of
the security, (iv) shall, except as otherwise provided in this
Agreement, provide for level Monthly Payments (provided that the
payment in the first or last month in the life of the Receivable may
be minimally different from the level payment) that fully amortize
the Amount Financed over its original term and shall provide for a
finance charge or shall yield interest at its APR, (v) shall provide
for, in the event that such Receivable is prepaid, a prepayment that
fully pays the Principal Balance and includes accrued but unpaid
interest at least through the date of prepayment in an amount
calculated by using an interest rate at least equal to its APR, (vi)
shall have an Obligor that is not a federal, state or local
governmental entity and (vii) is a retail installment contract.
(b) SCHEDULE OF RECEIVABLES. The information set forth in
the Schedule of Receivables shall be true and correct in all
material respects as of the opening of business on the Cutoff Date,
and no selection procedures believed to be adverse to the
Securityholders were utilized in selecting the Receivables from
those motor vehicle receivables of AHFC which met the selection
criteria set forth in this Agreement.
(c) COMPLIANCE WITH LAW. Each Receivable and each sale of
the related Financed Vehicle shall have complied at the time it was
originated or made, and shall comply at the time of execution of
this Agreement, in all material respects with all requirements of
applicable federal, state and local laws, and regulations
thereunder, including usury laws, the Federal Truth-in-Lending Act,
the Equal Credit Opportunity Act, the Fair Credit Billing Act, the
Fair Credit Reporting Act, the Fair Debt Collection Practices Act,
the Federal Trade Commission Act, the 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, 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.
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(g) RECEIVABLES IN FORCE. No Receivable shall have been
satisfied, subordinated or rescinded, nor shall any Financed Vehicle
have been released in whole or in part from the lien granted by the
related Receivable.
(h) NO WAIVERS. No provision of a Receivable shall have
been waived in such a manner that such Receivable fails to meet all
of the other representations and warranties made by the Seller
herein with respect thereto.
(i) NO AMENDMENTS. No Receivable shall have been amended or
modified in such a manner that the total number of Scheduled
Payments has been increased or that the related Amount Financed has
been increased or that such Receivable fails to meet all of the
other representations and warranties made by the Seller herein with
respect thereto.
(j) NO DEFENSES. No facts shall be known to the Seller
which would give rise to any right of rescission, setoff,
counterclaim or defense, nor shall the same have been asserted or
threatened, with respect to any Receivable.
(k) NO LIENS. To the knowledge of the Seller, no liens or
claims shall have been filed, including liens for work, labor or
materials relating to a Financed Vehicle, that shall be liens prior
to, or equal or coordinate with, the security interest in such
Financed Vehicle granted by the related Receivable.
(l) NO DEFAULTS. Except for payment defaults that, as of
the Cutoff Date, have been continuing for a period of not more than
30 days, no default, breach, violation or event permitting
acceleration under the terms of any Receivable shall have occurred
as of the Cutoff Date and no continuing condition that with notice
or the lapse of time would constitute a default, breach, violation
or event permitting acceleration under the terms of any Receivable
shall have arisen; and the Seller shall not have waived any of the
foregoing except as otherwise permitted hereunder.
(m) INSURANCE. Pursuant to the Receivables, each Obligor
has been required to obtain physical damage insurance covering the
related Financed Vehicle and the Obligor is required under the terms
of the related Receivable to maintain such insurance.
(n) TITLE. It is the intention of the Seller that the
transfer and assignment herein contemplated, taken as a whole,
constitute a sale of the Receivables from the Seller to the Issuer
and that the beneficial interest in and title to the Receivables not
be part of the debtor's estate in the event of the filing of a
bankruptcy petition by or against the Seller under any bankruptcy
law. No Receivable has been sold, transferred, assigned or pledged
by the Seller to any Person other than the Issuer, 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 others;
immediately upon the transfer and assignment thereof, the Issuer
shall have good and
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marketable title to each Receivable, free and clear of all Liens and
rights of others; and the transfer and assignment herein
contemplated has been perfected under the UCC.
(o) LAWFUL ASSIGNMENT. No Receivable shall have been
originated in, or shall be subject to the laws of, any jurisdiction
under which the sale, transfer and assignment of such Receivable
under this Agreement or pursuant to a transfer of the Securities
shall be unlawful, void or voidable.
(p) ALL FILINGS MADE. All filings (including UCC filings)
necessary in any jurisdiction 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.
(q) ONE ORIGINAL. There shall be only one original executed
copy of each Receivable.
(r) CHATTEL PAPER. Each Receivable constitutes "chattel
paper" as defined in the UCC.
(s) MATURITY OF RECEIVABLES. Each Receivable shall have an
original maturity of not less than 12 months nor greater than 60
months and, as of the Cutoff Date, a remaining maturity of not less
than 6 months nor greater than 60 months.
(t) FINANCE CHARGE. Each Receivable provides for the
payment of a finance charge calculated on the basis of an APR
ranging from 2.90% to 15.90%.
(u) PRINCIPAL BALANCE. Each Receivable had an original
principal balance of not less than $1,410.34 nor more than
$102,461.21 and an average unpaid principal balance, as of the
Cutoff Date, of $15,545.57.
(v) ORIGINATION. Each Receivable was originated on or
before July 1, 2000.
(w) NO OVERDUE PAYMENTS. No Receivable shall have a
Scheduled Payment that is more than 30 days past due as of the
Cutoff Date.
(x) LOCATION OF RECEIVABLE FILES. Each Receivable File
shall be kept at one of the locations listed in Schedule B hereto.
(y) FINANCED VEHICLES. Each Financed Vehicle shall be a
new or used Honda or Acura motor vehicle.
(z) ADDRESSES OF OBLIGORS. The Obligor under each
Receivable had a current billing address in the United States as of
the Cutoff Date.
Section 2.04. REPURCHASE OF RECEIVABLES UPON BREACH. Upon discovery
by the Seller, the Servicer or the Owner Trustee or upon the actual knowledge
of the Indenture Trustee of a
25
breach of any of the representations and warranties of the Seller set forth
in Section 2.03 that materially and adversely affects the interests of the
Issuer, the Trustees or the Securityholders in any Receivable, the party
discovering such breach shall give prompt written notice to the others. As of
the last day of the second Collection Period following the Collection Period
in which it discovers or receives notice of such breach (or, at the Seller's
election, the last day of the first Collection Period following the
Collection Period in which it discovers or receives notice of such breach),
the Seller shall, unless such breach shall have been cured in all material
respects, repurchase such Receivable, and, if necessary, the Seller shall
enforce the obligation of AHFC under the Receivables Purchase Agreement to
repurchase such Receivable from the Seller. This repurchase obligation shall
apply to all representations and warranties of the Seller contained in
Section 2.03 whether or not the Seller has knowledge of the breach at the
time of the breach or at the time the representations and warranties were
made. In consideration of the repurchase of any such Receivable, on the
related Deposit Date, the Seller shall remit the Warranty Purchase Payment in
respect of such Receivable to the Collection Account in the manner specified
in Section 4.05 and shall be entitled to receive the Released Warranty
Amount. In the event that, as of the date of execution and delivery of this
Agreement, any Liens or claims shall have been filed, including Liens for
work, labor or materials relating to a Financed Vehicle, that shall be prior
to, or equal or coordinate with, the lien granted by the related Receivable,
which Liens or claims shall not have been satisfied or otherwise released in
full as of the Closing Date, and such breach materially and adversely affects
the interests of the Issuer, the Trustees or the Securityholders in such
Receivable, the Seller shall repurchase such Receivable on the terms and in
the manner specified above. Upon any such repurchase, the Issuer shall,
without further action, be deemed to transfer, assign, set-over and otherwise
convey to the Seller, all right, title and interest of the Issuer in, to and
under such repurchased Receivable, all monies due or to become due with
respect thereto and all proceeds thereof. The Issuer and the Trustees shall
execute such documents and instruments of transfer and assignment and take
such other actions as shall be reasonably requested by the Seller to effect
the conveyance of such Receivable pursuant to this Section. The sole remedy
of the Issuer, the Trustees and the Securityholders with respect to a breach
of the Seller's representations and warranties pursuant to Section 2.03 or
with respect to the existence of any such Liens or claims shall be to require
the Seller to repurchase the related Receivable pursuant to this Section and
to enforce AHFC's obligation to repurchase such Receivables from the Seller
pursuant to the Receivables Purchase Agreement. Neither the Owner Trustee nor
the Indenture Trustee shall have any duty to conduct an affirmative
investigation as to the occurrence of any condition requiring the repurchase
of any Receivable pursuant to Section 2.04 or the eligibility of any
Receivables for purposes of this Agreement.
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
26
receivables owned or serviced by it which shall include the Receivable Files
held by it under this Agreement, and of the related accounts, records and
computer systems, in such a manner as shall enable the Issuer or the
Indenture Trustee to verify the accuracy of the Servicer's record keeping.
The Servicer shall promptly report to the Issuer and the Indenture Trustee
any failure on its part to hold the Receivable Files and maintain its
accounts, records and computer systems as herein provided and promptly take
appropriate action to remedy any such failure. Nothing herein shall be deemed
to require an initial review or any periodic review of the Receivable Files
by the Issuer or the Indenture Trustee.
(b) MAINTENANCE OF AND ACCESS TO RECORDS. The Servicer shall
maintain each Receivable File solely in its capacity as Servicer at one of
its offices specified in Schedule B hereto or at such other office as shall
be specified to the Issuer and the Indenture Trustee by 30 days' prior
written notice. The Servicer shall make available to the Issuer and the
Indenture Trustee or its duly authorized representatives, attorneys or
auditors the Receivable Files and the related accounts, records and computer
systems maintained by the Servicer at such times as the Issuer and the
Indenture Trustee shall reasonably instruct.
(c) RELEASE OF DOCUMENTS. Upon instruction from the Indenture
Trustee, the Servicer shall release any document in the Receivable Files to
the Indenture Trustee or its agent or designee, as the case may be, at such
place or places as the Indenture Trustee may designate, as soon as
practicable. The Servicer shall not be responsible for any loss occasioned by
the failure of the Indenture Trustee to return any document or any delay in
doing so.
Section 2.06. INSTRUCTIONS; AUTHORITY TO ACT. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable
Files upon its receipt of written instructions signed by a Responsible
Officer of the Indenture Trustee. A certified copy of a bylaw or of a
resolution of the board of directors of the Indenture Trustee shall
constitute conclusive evidence of the authority of any such Responsible
Officer to act and shall be considered in full force and effect until receipt
by the Servicer of written notice to the contrary given by the Indenture
Trustee.
Section 2.07. INDEMNIFICATION BY CUSTODIAN. The Servicer, as
custodian of the Receivable Files, shall fully indemnify and hold harmless
the Issuer and the Trustees for any and all liabilities, obligations, losses,
compensatory damages, payments, costs or expenses of any kind whatsoever that
may be imposed on, incurred or asserted against the Issuer and the Trustees
as the result of any improper act or omission in any way relating to the
maintenance and custody of the Receivable Files by the Servicer, as
custodian; provided, however, that the Servicer shall not be liable for any
portion of any such amount resulting from the willful misfeasance, bad faith
or negligence of the Owner Trustee or the Indenture Trustee.
Section 2.08. EFFECTIVE PERIOD AND TERMINATION. The Servicer's
appointment as custodian of the Receivable Files shall become effective as of
the Cutoff Date and shall continue in full force and effect until terminated
pursuant to this Section. If the Servicer shall resign as Servicer pursuant
to Section 6.05 or if all of the rights and obligations of the Servicer have
been terminated pursuant to Section 7.02, the appointment of the Servicer as
custodian of the Receivable Files shall be terminated without further action
by the Indenture Trustee or by the
27
Holders of Notes. The Indenture Trustee or, with the consent of the Indenture
Trustee, the Owner Trustee may terminate the Servicer's appointment as
custodian of the Receivable Files with cause at any time immediately upon
written notification to the Servicer and, without cause, upon 30 days' prior
written notification by the Servicer. As soon as practicable after 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. 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
28
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 occurs, the Servicer shall be obligated to
repurchase such Receivable pursuant to Section 3.08. In addition, in the
event that any such rescheduling or extension of a Receivable modifies the
terms of such Receivable in such a manner as to constitute a cancellation of
such Receivable and the creation of a new motor vehicle receivable that
results in a deemed exchange thereof within the meaning of Section 1001 of
the Code, the Servicer shall purchase such Receivable pursuant to Section
3.08, and the receivable created shall not be included in the Issuer.
Notwithstanding the foregoing, extensions or modifications of the payment
schedule of a Receivable can be made only in accordance with the customary
servicing procedures of the Servicer, provided that the amount of any
extension fee charged in connection with the extension of a Receivable is
deposited into the Collection Account by the Servicer in accordance with
Section 4.05(a). The Servicer may, in accordance with its customary servicing
procedures, waive any prepayment charge, late payment charge or any other
fees that may be collected in the ordinary course of servicing the
Receivables.
Section 3.03. REBATES ON FULL PREPAYMENTS. In the event that the
amount of a full Prepayment by an Obligor under a Precomputed Receivable,
after adjustment for the applicable Rebate, is less than the amount that
would be payable under the actuarial method if a full Prepayment were made at
the end of the billing month under such Precomputed Receivable, either
because the Rebate calculated under the terms of such Precomputed Receivable
is greater than the amount calculable under the actuarial method or because
the Servicer's customary servicing procedure is to credit a greater Rebate,
the Servicer, as part of its servicing duties, shall remit such difference to
the Trust by deposit into the Collection Account pursuant to Section 4.05(a).
Section 3.04. REALIZATION UPON RECEIVABLES. On behalf of the Issuer,
the Servicer shall use its best efforts, consistent with its customary
servicing procedures, to repossess or otherwise comparably convert the
ownership of any Financed Vehicle that it has reasonably determined should be
repossessed or otherwise converted following a default under the Receivable
secured by the Financed Vehicle (and shall specify such Receivables to the
Trustees no later than the Determination Date following the end of the
Collection Period in which the Servicer shall have
29
made such determination). The Servicer shall follow such practices and
procedures as it shall deem necessary or advisable and as shall be customary
and usual in its servicing of motor vehicle receivables, which practices and
procedures may include reasonable efforts to realize upon any Dealer
Recourse, selling the related Financed Vehicle at public or private sale and
other actions by the Servicer in order to realize upon such a Receivable. The
Servicer shall be entitled to recover its reasonable Liquidation Expenses
with respect to each Defaulted Receivable. 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.
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.
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Section 3.08. PURCHASE OF RECEIVABLES UPON BREACH. Upon discovery by
the Seller, the Servicer or the Issuer or upon the actual knowledge of the
Indenture Trustee or Owner Trustee of a breach of any of the covenants of the
Servicer set forth in Section 3.07 that materially and adversely affects the
interests of the Issuer, the Indenture Trustee or the Securityholders in any
Receivable, or if an improper extension, rescheduling or modification of a
Receivable is made by the Servicer as described in Section 3.02, the party
discovering such breach shall give prompt written notice to the others. As of
the last day of the second Collection Period following the Collection Period
in which it discovers or receives notice of such breach (or, at the
Servicer's election, the last day of the first Collection Period following
the Collection Period in which it discovers or receives notice of such
breach), the Servicer shall, unless such breach or impropriety shall have
been cured in all material respects, purchase from the Issuer such
Receivable. In consideration of the purchase of any such Receivable, on the
related Deposit Date the Servicer shall remit the Administrative Purchase
Payment to the Collection Account in the manner specified in Section 4.05,
and shall be entitled to receive the Released Administrative Amount. Upon
such deposit of the Administrative Purchase Payment, the Servicer shall for
all purposes of this Agreement be deemed to have released all claims for
reimbursement of Outstanding Advances made in respect of such Receivable. The
sole remedy of the Issuer, the Trustees or the Securityholders against the
Servicer with respect to a breach pursuant to Section 3.02 or 3.07 shall be
to require the Servicer to purchase the related Receivables pursuant to this
Section, except as otherwise provided in Section 6.02. Neither the Owner
Trustee nor the Indenture Trustee shall have any duty to conduct any
affirmative investigation as to the occurrence of any condition requiring the
repurchase of any Receivable pursuant to this Section.
Section 3.09. TOTAL SERVICING FEE; PAYMENT OF CERTAIN EXPENSES BY
SERVICER. As compensation for the performance of its obligations hereunder,
the Servicer shall be entitled to receive on each Payment Date the Total
Servicing Fee. The Basic Servicing Fee in respect of a Collection Period
shall be calculated based on a 360 day year comprised of twelve 30-day
months. Except to the extent otherwise provided herein, the Servicer shall be
required to pay all expenses incurred by it in connection with its activities
under this Agreement (including fees and disbursements of the Trustees and
independent accountants, taxes imposed on the Servicer, expenses incurred in
connection with distributions and reports to Securityholders and all other
fees and expenses not expressly stated under this Agreement to be for the
account of the Securityholders).
Section 3.10. SERVICER'S CERTIFICATE. On or before each
Determination Date, the Servicer shall deliver to the Trustees and each
Rating Agency a Servicer's Certificate containing all information necessary
to make the distributions required by Sections 4.06 and 4.07 in respect of
the related Collection Period and all information necessary for the Trustees
to send statements to Securityholders pursuant to Section 4.10. The Servicer
shall also specify 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
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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, commencing
with the fiscal year ended March 31, 2001, 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 such officer's knowledge, based on such review, the
Servicer has fulfilled all its obligations under this Agreement throughout
such period, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof.
(b) The Servicer shall deliver to the Trustees and each Rating
Agency, promptly after having obtained knowledge thereof, but in no event
later than five Business Days thereafter, an Officer's Certificate specifying
the nature and status of any event which with the giving of notice or lapse
of time, or both, would become a Servicer Default.
Section 3.12. ANNUAL ACCOUNTANTS' REPORT. The Servicer shall cause a
firm of independent accountants (who may also render other services to the
Servicer or to the Seller) to deliver to the Trustees on or before June 30 of
each year, beginning with the June 30 that is at least six months after the
Closing Date, a report with respect to the preceding 12-month period ended
March 31 (or, if applicable, such shorter period in the case of the first
such report) to the effect that such accountants have examined certain
records and documents relating to the servicing of the Receivables under this
Agreement (using procedures specified in such report, which procedures shall
be substantially in compliance with generally accepted auditing standards and
which procedure shall be specified to the Trustees by the Servicer in
writing; and the Trustees make no independent inquiry or investigation as to,
and shall have no obligation or liability in respect of, the sufficiency,
validity or correctness of such procedures) and that nothing has come to
their attention indicating that such servicing has not been conducted in
compliance with the customary servicing procedures of the Servicer, including
but not limited to the procedures set forth in this Agreement, except for (i)
such exceptions as such firm shall believe to be immaterial and (ii) such
other exceptions as shall be set forth in such report. Such report shall also
indicate that the firm is independent with respect to the Seller and the
Servicer within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants.
Section 3.13. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING RECEIVABLES. The Servicer shall provide to the Trustees reasonable
access to the documentation regarding the Receivables. The Servicer shall
provide such access to any Securityholder only in such cases where a
Securityholder is required by applicable statutes or regulations to review
such documentation. In each case, such access shall be afforded without
charge but only upon
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reasonable request and during normal business hours at the respective offices
of the Servicer. Nothing in this Section shall derogate from the obligation
of the Servicer to observe any applicable law prohibiting disclosure of
information regarding the Obligors, and the failure of the Servicer to
provide access as provided in this Section as a result of such obligation
shall not constitute a breach of this Section.
Section 3.14. AMENDMENTS TO SCHEDULE OF RECEIVABLES. If the
Servicer, during a Collection Period, assigns to a Receivable an account
number that differs from the original account number identifying such
Receivable on the Schedule of Receivables, the Servicer shall deliver to the
Seller and the Trustees on or before the Payment Date relating to such
Collection Period an amendment to the Schedule of Receivables reporting the
newly assigned account number, together with the old account number of each
such Receivable. The first such delivery of amendments to the Schedule of
Receivables shall include monthly amendments reporting account numbers
appearing on the Schedule of Receivables with the new account numbers
assigned to such Receivables during any prior Collection Period.
Section 3.15. REPORTS TO SECURITYHOLDERS AND RATING AGENCIES.
(a) At the expense of the Issuer, the Indenture Trustee shall
provide to any Note Owner and the Owner Trustee shall provide to any
Certificateholder who so requests in writing a copy of (i) any Servicer's
Certificate, (ii) any annual statement as to compliance described in Section
3.1l(a), (iii) any annual accountants' report described in Section 3.12, (iv)
any statement to Securityholder pursuant to Section 4.10, (v) the Trust
Agreement, (vi) the Indenture or (vii) this Agreement (without Exhibits). The
Indenture Trustee or the Owner Trustee, as applicable, may require such
Securityholder or Note Owner to pay a reasonable sum to cover the cost of the
Trustee's complying with such request.
(b) The Servicer shall forward to each Rating Agency a copy of
each (i) Servicer's Certificate, (ii) annual statement as to compliance
described in Section 3.11(a), (iii) Officer's Certificate of the Servicer
described in Section 3.11(b), (iv) annual accountants' report pursuant to
Section 3.12, (v) statement to Securityholders pursuant to Section 4.10 and
(vi) other report it may receive pursuant to this Agreement, the Trust
Agreement or the Indenture.
Section 3.16. APPOINTMENT OF SUBSERVICER. The Servicer may at any
time appoint a subservicer to perform all or any portion of its obligations
as Servicer hereunder if each Rating Agency has received 10 days prior
written notice of the Servicer's intention to do so and has not notified the
Servicer that such an appointment would or might result in the qualification,
reduction or withdrawal of a rating then assigned by such Rating Agency to
any Class of Notes; provided, however, that the Servicer shall remain
obligated and be liable to the Issuer, the Owner Trustee, the Indenture
Trustee, the Certificateholders and the Noteholders for the servicing and
administering of the Receivables in accordance with the provisions hereof
without diminution of such obligation and liability by virtue of the
appointment of such subservicer and to the same extent and under the same
terms and conditions as if the Servicer alone were servicing and
administering the Receivables. The fees and expenses of the subservicer shall
be as agreed between the Servicer and its subservicer from time to time, and
none of the Issuer, the Owner
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Trustee, the Indenture Trustee, the Certificateholders or the Noteholders
shall have any responsibility therefor.
ARTICLE FOUR
DISTRIBUTIONS; RESERVE FUND;
STATEMENTS TO SECURITYHOLDERS
Section 4.01. ESTABLISHMENT OF ACCOUNTS.
(a) The Servicer shall establish and maintain an Eligible Account
with and in the name of the Indenture Trustee for the benefit of (i) the
Securityholders (the "Collection Account"), (ii) the Noteholders (the "Note
Distribution Account"), (iii) the Noteholders (the "Reserve Fund"), (iv) the
Securityholders (the "Yield Supplement Account") and (v) the Securityholders
(the "Payahead Account"), in each case, bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
related Securityholders. Except as otherwise provided in this Agreement, in
the event that the Indenture Trustee is no longer an Eligible Institution,
the Servicer shall, with the assistance of the Indenture Trustee as
necessary, cause the Accounts to be moved to an Eligible Institution.
(b) To the extent permitted by applicable laws, rules and
regulations, all amounts held in (i) the Collection Account, the Note
Distribution Account, the Reserve Fund and the Yield Supplement Account shall
be either invested by the Indenture Trustee in Eligible Investments selected
in writing by the Servicer or maintained in cash and (ii) the Payahead
Account shall be either invested by the Indenture Trustee in investments
defined in clause (vii) of the definition of the term "Eligible Investments"
selected in writing by the Servicer or maintained in cash. Earnings on
investment of funds in the Accounts (other than the Yield Supplement Account
and the Reserve Fund) (net of losses and investment expenses) shall be paid
to the Servicer as part of the Supplemental Servicing Fee and any losses and
investment expenses shall be charged against the funds on deposit in the
related Account.
(i) Except as otherwise provided in Section 4.01(b), the
Indenture Trustee shall possess all right, title and interest in all
funds on deposit from time to time in the Accounts and in all
proceeds thereof (including all income thereon) and all such funds,
investments, proceeds and income shall be part of the Owner Trust
Estate. The Accounts shall be under the sole dominion and control of
the Indenture Trustee for the benefit of the Noteholders or the
Securityholders, as the case may be.
(ii) Notwithstanding anything else contained herein, the
Servicer agrees that each Account and the Certificate Distribution
Account will be established only with an Eligible Institution which
agrees substantially as follows: (A) it will comply with Entitlement
Orders related to such account issued by the Indenture Trustee
without further consent by the Servicer; (B) until termination of
this Agreement, it will not enter into any other agreement related
to such account pursuant to which it agrees to comply with
Entitlement Orders of any Person other than the Indenture Trustee;
(C) all Account Property delivered or credited to it in connection
with such account and all proceeds
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thereof will be promptly credited to such account; (D) it will treat
all Account Property as Financial Assets; and (E) all Account
Property will be physically delivered (accompanied by any required
endorsements) to, or credited to an account in the name of, the
Eligible Institution maintaining the related Account in accordance
with such Eligible Institution's customary procedures such that such
Eligible Institution establishes a Security Entitlement in favor of
the Indenture Trustee with respect thereto over which the Indenture
Trustee (or such other Eligible Institution) has Control.
(iii) The Servicer shall have the power, revocable by the
Indenture Trustee or by the Owner Trustee with the consent of the
Indenture Trustee, to instruct the Indenture Trustee to make
withdrawals and payments from the Accounts for the purpose of
permitting the Servicer or the Owner Trustee to carry out its
respective duties hereunder or permitting the Indenture Trustee to
carry out its duties under the Indenture.
Section 4.02. COLLECTIONS.
(a) The Servicer shall remit daily to the Collection Account all
payments received from or on behalf of the Obligors on or in respect of the
Receivables (other than, in the case of Precomputed Receivables, payments
constituting Payments Ahead) and all Net Liquidation Proceeds within two
Business Days after receipt thereof.
(b) Notwithstanding the provisions of Section 4.02(a) and subject
to the conditions set forth below, the Servicer may be permitted to make
remittances of collections on a less frequent basis than that specified in
Section 4.02(a) upon compliance with the specific terms and conditions set
forth below in this Section and for so long as such terms and conditions are
fulfilled. Accordingly, notwithstanding the provisions of Section 4.02(a),
the Servicer will be permitted to remit such collections to the Collection
Account in immediately available funds, on each Deposit Date but only for so
long as (i)(A) the Servicer shall be AHFC, (B) except as provided in clause
(ii) below, the Required Servicer Rating is satisfied and (C) no Servicer
Default shall have occurred and be continuing, provided, however, that
immediately following the non-compliance with clause (B) above or in the
event that an event of the nature specified in Section 7.01(c) has occurred
(notwithstanding any period of grace contained in such clause), the Servicer
shall remit such collections to the Collection Account on a daily basis
within two Business Days of receipt thereof, or (ii)(A) if the conditions
specified in clause (i)(A) and (C) above are satisfied, and (B) the Servicer
shall have obtained (1) a Servicer Letter of Credit issued by a depository
institution or insurance company, as the case may be, having a short-term
credit rating at least equal to the Required Deposit Rating and providing
that the Indenture Trustee may draw thereon in the event that the Servicer
fails to deposit collections into the Collection Account on a monthly basis
or (2) a surety bond, insurance policy or other deposit of cash or securities
satisfactory to the Indenture Trustee and each Rating Agency; provided that
in connection with clause (ii) above, the Servicer provides to the Indenture
Trustee, from each Rating Agency for which the Servicer's then-current
short-term credit rating is not at least equal to the Required Servicer
Rating for such Rating Agency, a letter to the effect that the satisfaction
of the conditions in clause (ii) above and allowing the Servicer to make
monthly deposits will not result in a qualification, reduction or withdrawal
of its then-current rating of any Class of Notes and, if applicable, an
Officer's Certificate from the Servicer to the effect that the Servicer's
35
then-current short-term credit rating is at least equal to the Required
Servicer Rating from each other Rating Agency, if any; and, provided further,
that if the Servicer shall have obtained a Servicer Letter of Credit in
accordance with clause (ii) above, the Servicer shall be required to remit
collections to the Collection Account on each Business Day to the extent that
the aggregate amount of collections described in Section 4.02(a) and received
during such Collection Period exceeds the Servicer Letter of Credit Amount.
The Indenture Trustee shall not be deemed to have knowledge of any event or
circumstance under clause (i)(C) above that would require daily remittance by
the Servicer to the Collection Account unless a Responsible Officer has
received notice of such event or circumstance from the Seller or the Servicer
in an Officer's Certificate, from Securityholders as provided in Section 7.01
or from the Letter of Credit Bank. For purposes of this Article the phrase
"payments made on behalf of Obligors" shall mean payments made by Persons
other than the Seller, the Servicer or the Letter of Credit Bank, if any.
Any funds held by the Servicer which it determines are to be
remitted (or any of its own funds which the Seller or the Servicer determines
to pay to the Letter of Credit Bank) in respect of a failure previously to
remit collections which failure resulted in a payment under the Servicer
Letter of Credit, if any, shall not be remitted to the Collection Account,
but shall instead be paid immediately and directly to the Letter of Credit
Bank. Any such payment to the Letter of Credit Bank shall be accompanied by a
copy of the Servicer's Certificate related to the previous failure to remit
funds and an Officer's Certificate which includes a statement identifying, by
reference to the items in such related Servicer's Certificate, each shortfall
in Servicer remittances to which such payment relates. The Servicer will also
provide the Indenture Trustee with copies of each such Servicer's Certificate
and Officer's Certificate delivered with any such payment to the Letter of
Credit Bank.
(c) The Servicer shall deposit all Payments Ahead in the Payahead
Account within two Business Days after receipt thereof, which Payments Ahead
shall be transferred to the Collection Account pursuant to Section
4.06(a)(i). Notwithstanding the foregoing, so long as the Servicer is
permitted to remit collections to the Collection Account on a monthly basis
pursuant to Section 4.02(b), the Servicer will not be required to deposit
Payments Ahead in the Payahead Account within two Business Days after receipt
thereof but shall be entitled to retain such Payments Ahead, without
segregation from its other funds, until such time as the Servicer shall be
required to remit Applied Payments Ahead to the Collection Account pursuant
to Section 4.06(a)(ii). Commencing with the first day of the first Collection
Period that begins at least two Business Days after the day on which the
Servicer is no longer permitted to remit collections to the Collection
Account on a monthly basis pursuant to Section 4.02(b), and until such time
as the Servicer is once again permitted by Section 4.02(b) to remit
collections to the Collection Account on a monthly basis, all Payments Ahead
then held by the Servicer shall be immediately deposited into the Payahead
Account and all future Payments Ahead shall be remitted by the Servicer to
the Payahead Account within two Business Days after receipt thereof.
Section 4.03. APPLICATION OF COLLECTIONS. On each Payment Date, all
collections for the related Collection Period shall be applied by the
Servicer as follows:
(a) With respect to each Receivable (other than an Administrative
Receivable or a Warranty Receivable), payments made by or on behalf of the
Obligor which are not
36
Supplemental Servicing Fees shall be applied first to reimburse the Servicer
for Outstanding Advances made with respect to such Receivable (each such
payment, an "Overdue Payment"). Next, the amount of any payment in excess of
Supplemental Servicing Fees and Outstanding Advances with respect to such
Receivable shall be applied to the Scheduled Payment with respect to such
Receivable. If the amount of such payment remaining after the applications
described in the two preceding sentences (i) in the case of Precomputed
Receivables equals (together with any Deferred Prepayment) the unpaid
principal balance of such Receivable, it shall be applied to prepay the
principal balance of such Receivable, or (ii) in the case of Simple Interest
Receivables, it shall be applied to prepay the principal balance of such
Receivable.
(b) With respect to each Administrative Receivable and Warranty
Receivable, payments made by or on behalf of the Obligor shall be applied in
the same manner, except that any Released Administrative Amount or Released
Warranty Amount shall be remitted to the Servicer or the Seller, as
applicable. A Warranty Purchase Payment shall be applied to reduce
Outstanding Advances and such Warranty Purchase Payment or an Administrative
Purchase Payment, as applicable, shall then be applied to the Scheduled
Payment, in each case to the extent that the payments by the Obligor shall be
insufficient, and then to prepay the unpaid principal balance of such
Receivable in full.
Section 4.04. ADVANCES.
(a) As of the close of business on the last day of a Collection
Period, if the payments during such Collection Period by or on behalf of the
Obligor on or in respect of a Receivable (other than an Administrative
Receivable or a Warranty Receivable) after application under Section 4.03(a)
shall be less than the Scheduled Payment, whether as a result of any
extension granted to the Obligor or otherwise, then (i) in the case of a
Precomputed Receivable, the Deferred Prepayment, if any, with respect to such
Precomputed Receivable shall be applied by the Servicer to the extent of the
shortfall, and such Deferred Prepayment shall be reduced accordingly and the
Servicer shall advance to the Trust an amount equal to such shortfall (each,
a "Precomputed Advance") and (ii) in the case of a Simple Interest
Receivable, the Servicer shall advance to the Trust an amount equal to the
product of the principal balance of such Receivable as of the first day of
such Collection Period and one-twelfth of its APR minus the amount of
interest actually received on such Receivable during such Collection Period
(each, a "Simple Interest Advance"). If the calculation in clause (ii) above
in respect of a Simple Interest Receivable results in a negative number, an
amount equal to such negative amount shall be paid to the Servicer in
reimbursement of any Outstanding Advances in respect of Simple Interest
Receivables. In addition, in the event that a Simple Interest Receivable
becomes a Liquidated Receivable, the amount of accrued and unpaid interest
thereon (but not including interest for the current Collection Period) shall,
up to the amount of Outstanding Advances in respect of Simple Interest
Receivables in respect thereof, be withdrawn from the Collection Account and
paid to the Servicer in reimbursement of such Outstanding Advances. No
Advances will be made with respect to the Principal Balance of Simple
Interest Receivables. Notwithstanding the foregoing, the Servicer shall not
be required to make any Advance (other than a Simple Interest Advance in
respect of an interest shortfall arising from the Prepayment of a Simple
Interest Receivable) to the extent that the Servicer, in its sole discretion,
shall determine that such Advance is unlikely to be recovered from subsequent
payments made by or on behalf of the related Obligor,
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Liquidation Proceeds, by the Administrative Purchase Payment or by the
Warranty Purchase Payment, in each case, with respect to such Receivable or
otherwise. On each Deposit Date, the Servicer will deposit into the
Collection Account an amount equal to all Advances to be made in respect of
the related Collection Period. The Successor Servicer shall only be required
to make Advances for payments on behalf of Obligors in respect of Receivables
arising on or after the Collection Period in which the (i) Successor Servicer
accepts its appointment or (ii) the Indenture Trustee is automatically
appointed Successor Servicer.
(b) The Servicer shall be entitled to reimbursement for
Outstanding Advances, without interest, with respect to a Receivable from the
following sources with respect to such Receivable: (i) subsequent payments
made by or on behalf of the related Obligor, (ii) Liquidation Proceeds, (iii)
the Administrative Purchase Payment and (iv) the Warranty Purchase Payment.
(c) To the extent that during any Collection Period any funds
described above in Section 4.04(b) with respect to a Receivable as to which
the Servicer previously has made an unreimbursed Advance are received by the
Issuer or the Servicer, and the Servicer determines that any Outstanding
Advances (other than a Simple Interest Advance in respect of an interest
shortfall arising from the Prepayment of a Simple Interest Receivable) with
respect to such Receivable are unlikely to be recovered from payments made on
or with respect to such Receivable (each, a "Nonrecoverable Advance"), then,
on the related Payment Date, upon the Servicer providing the Seller and the
Trustees with an Officer's Certificate setting forth the basis for its
determination of any such Nonrecoverable Advance, the Indenture Trustee shall
promptly remit to the Servicer from the Collection Account, (i) from
Available Interest an amount equal to the portion of such Nonrecoverable
Advance allocable to interest and (ii) from Available Principal an amount
equal to the portion of such Nonrecoverable Advance allocable to principal,
in each case without interest, in accordance with Section 4.06(c)(i). In lieu
of causing the Indenture Trustee to remit any such amounts or the amounts
described in clauses (i) through (iv) in Section 4.04(b), the Servicer may
deduct such amounts from deposits otherwise to be made into the Collection
Account in accordance with Section 4.09.
Section 4.05. ADDITIONAL DEPOSITS.
(a) The following additional deposits shall be made to the
Collection Account: (i) the Seller shall remit the aggregate Warranty
Purchase Payments with respect to Warranty Receivables pursuant to Section
2.04 and (ii) the Servicer shall remit (A) any extension fee charged in
connection with the extension of a Receivable pursuant to Section 3.02, (B)
the amount required to be remitted in respect of certain full Prepayments
pursuant to Section 3.03, (C) the aggregate Advances pursuant to Section
4.04(a), (D) the aggregate Administrative Purchase Payments with respect to
Administrative Receivables pursuant to Section 3.08 and (E) the amount
required upon the optional purchase of all Receivables by the Servicer or any
successor to the Servicer pursuant to Section 8.01.
(b) All deposits required to be made in respect of a Collection
Period pursuant to this Section by the Seller or the Servicer, as the case
may be, may be made in the form of a single deposit and shall be made in
immediately available funds, on the related Deposit Date.
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Section 4.06. DISTRIBUTIONS.
(a) On each Deposit Date, the Indenture Trustee shall cause to be
made the following transfers and distributions in immediately available funds
in the amounts set forth in the Servicer's Certificate for such Payment Date:
(i) from the Payahead Account (or directly from the
Servicer in the case of Payments Ahead held by the Servicer pursuant
to Section 4.02(b) or (c)) to the Collection Account, the aggregate
Applied Payments Ahead;
(ii) if the Servicer is not permitted to hold Payments
Ahead pursuant to Section 4.02(b) or (c), from the Collection
Account to the Payahead Account, the aggregate Payments Ahead for
the related Collection Period; and
(iii) from the Yield Supplement Account to the Collection
Account, an amount equal to the Yield Supplement Withdrawal Amount,
if any, for such Payment Date.
(b) On each Determination Date, the Servicer shall calculate all
amounts required to be deposited in the Note Distribution Account and the
Certificate Distribution Account and to make all distributions on the related
Payment Date.
(c) On each Payment Date, the Servicer shall instruct the
Indenture Trustee in writing (based on the information contained in the
Servicer's Certificate delivered on the related Determination Date pursuant
to Section 3.10) to make the following deposits and distributions for receipt
by the Servicer or deposit in the applicable account, to the extent of the
Available Amount, in the following order of priority:
(i) to the Servicer, Nonrecoverable Advances;
(ii) to the Servicer, the Total Servicing Fee (including
any unpaid Total Servicing Fees from one or more prior Collection
Periods);
(iii) to the Indenture Trustee and the Owner Trustee, any
accrued and unpaid Trust Fees and Expenses, in each case to the
extent such fees and expenses have not been previously paid by the
Servicer, provided that, until the Notes have been paid in full, the
annual amount paid to the Trustees out of the Available Amount
allocation as described in this clause (iii) shall not exceed
$100,000.00;
(iv) to the Note Distribution Account, the Note Interest
Distributable Amount to be distributed to the holders of the Notes
at their respective Interest Rates;
(v) to the Note Distribution Account, the Note Principal
Distributable Amount;
39
(vi) to the Reserve Fund, the amount, if any, necessary to
reinstate the balance in the Reserve Fund up to the Specified
Reserve Fund Balance;
(vii) to the Certificate Distribution Account, the
Certificate Interest Distributable Amount to be distributed to
Certificateholders;
(viii) to the Certificate Distribution Account, the
Certificate Principal Distributable Amount;
(ix) to the Indenture Trustee and the Owner Trustee, any
accrued and unpaid Trust Fees and Expenses remaining after
application of the payments described in clause (iii) above; and
(x) to the Seller, any Available Amount remaining (after
giving effect to the reduction in the Available Amount described in
clauses (i) through (ix) above.
Notwithstanding that the Notes have been paid in full, the Indenture
Trustee shall continue to maintain the Collection Account hereunder until the
Pool Balance has been reduced to zero.
Section 4.07. RESERVE FUND.
(a) On the Closing Date, the Owner Trustee will deposit, on behalf
of the Seller, the Reserve Fund Initial Deposit into the Reserve Fund from
the net proceeds of the sale of the Notes. The Reserve Fund shall be the
property of the Issuer subject to the rights of the Indenture Trustee in the
Reserve Fund Property.
(b) In the event that the Note Distributable Amount exceeds the
sum of the amounts deposited into the Note Distribution Account pursuant to
Sections 4.06(c)(iv) and (v) on each Payment Date (or, if the Reserve Fund is
not maintained by the Indenture Trustee, on the related Deposit Date), the
Indenture Trustee shall cause an amount equal to the lesser of (A) the amount
on deposit in the Reserve Fund and (B) such excess, to be deposited into the
Note Distribution Account in immediately available funds in the amounts set
forth in the Servicer's Certificate for such Payment Date; provided that such
amount shall be applied first, to the payment of interest due on the Notes to
the extent, if any, that the amount deposited pursuant to Section 4.06(c)(iv)
is not sufficient to cover such payment of interest and, second, to the
payment of principal of the Notes.
(c) All interest and other income (net of losses and investment
expenses) on funds on deposit in the Reserve Fund shall upon the written
direction of the Servicer, be paid to the Seller to the extent that the funds
therein exceed the Specified Reserve Fund Balance. Upon any distribution to
the Seller of amounts in excess of the Specified Reserve Fund Balance, the
Noteholders will not have any rights in, or claims to, such amounts.
Section 4.08. YIELD SUPPLEMENT ACCOUNT. On the Closing Date, the
Seller will deposit the Yield Supplement Account Deposit to the Yield
Supplement Account from the net proceeds
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of the sale of the Notes. The Yield Supplement Account shall be the property
of the Issuer subject to the rights of the Indenture Trustee for the benefit
of the Securityholders.
Section 4.09. NET DEPOSITS. For so long as AHFC shall be the
Servicer, the Seller, the Servicer and the Indenture Trustee may make any
remittances pursuant to this Article net of amounts to be distributed by the
applicable recipient to such remitting party. Nonetheless, each such party
shall account for all of the above described remittances and distributions as
if the amounts were deposited and/or transferred separately.
Section 4.10. Statements to Securityholders.
(a) On each Payment Date, the Servicer shall provide to the Owner
Trustee to forward to each Certificateholder of record and to the Indenture
Trustee to forward to each Noteholder of record a statement, based on the
Servicer's Certificate furnished pursuant to Section 3.10, setting forth at
least the following information as to the Securities, to the extent
applicable:
(i) the amount of such distribution allocable to principal,
as allocated to each Class of Notes and to the Certificates (stated
separately for each Class of Notes and the Certificates);
(ii) the amount of such distribution allocable to interest,
as allocated to each Class of Notes and to the Certificates (stated
separately for each Class of Notes and the Certificates);
(iii) the Yield Supplement Amount, the Yield Supplement
Withdrawal Amount and the amount on deposit in the Yield Supplement
Account after giving effect to the distributions made on such
Payment Date;
(iv) the Pool Balance as of the close of business on the
last day of the related Collection Period, after giving effect to
payments allocated to principal reported under clause (i) above;
(v) the Note Distributable Amount, the Certificate
Distributable Amount and the Available Amount;
(vi) the Total Servicing Fee paid to the Servicer with
respect to the related Collection Period;
(vii) the amount of non-recoverable Advances;
(viii) total Payments Ahead and the Applied Payments Ahead;
(ix) the amount of Trust Fees and Expenses;
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(x) the amount of any Note Interest Carryover Shortfall
and Note Principal Carryover Shortfall on such Payment Date and the
change in such amounts from those with respect to the immediately
preceding Payment Date;
(xi) the amount of any Certificate Interest Carryover
Shortfall and Certificate Principal Carryover Shortfall on such
Payment Date and the change in such amounts from those with respect
to the immediately preceding Payment Date;
(xii) the Note Pool Factor for each Class of Notes and the
Certificate Pool Factor, in each case as of such Payment Date;
(xiii) the balance on deposit in the Reserve Fund on such
Payment Date, after giving effect to distributions made on the
Payment Date, if any, and the change in such balance from the
immediately preceding Payment Date; and
(xiv) the amount available under the Servicer Letter of
Credit, if any, and such amount as a percentage of the Pool Balance
as of the last day of such Collection Period.
Each amount set forth on the Payment Date statement under clauses
(i), (ii), (vi), (x) and (xi) above shall be expressed as a dollar amount per
$1,000 of original principal balance of a Note or the Original Certificate
Balance of a Certificate, as the case may be.
(b) Within the prescribed period of time for tax reporting
purposes after the end of each calendar year during the term of the Issuer,
but not later than the latest date permitted by law, the related Trustee
shall mail to each Person who at any time during such calendar year shall
have been a Securityholder, a statement, prepared by the Servicer, containing
certain information for such calendar year or, in the event such Person shall
have been a Securityholder during a portion of such calendar year, for the
applicable portion of such year, for the purposes of such Securityholder's
preparation of federal income tax returns. In addition, the Servicer shall
furnish to the Trustees for distribution to such Person at such time any
other information necessary under applicable law for the preparation of such
income tax returns.
ARTICLE FIVE
THE SELLER
Section 5.01. REPRESENTATIONS OF SELLER. The Seller makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution and
delivery of this Agreement and as of the Closing Date, and shall survive the
sale of the Receivables to the Issuer and the pledge thereof to the Indenture
Trustee pursuant to the Indenture.
(a) ORGANIZATION AND GOOD STANDING. The Seller has been
duly organized and is validly existing as a corporation in good
standing under the laws of the State of California, with power and
authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently
conducted, and had at
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all relevant times, and has, power, authority and legal right to
acquire, own and sell the Receivables.
(b) DUE QUALIFICATION. The Seller is duly qualified to do
business as a foreign corporation in good standing, and has obtained
all necessary licenses and approvals in all jurisdictions in which
the ownership or lease of property or the conduct of its business
shall require such qualifications.
(c) POWER AND AUTHORITY. The Seller has the power and
authority to execute and deliver this Agreement and to carry out its
terms, the Seller has full power and authority to sell and assign
the property to be sold and assigned to and deposited with the
Issuer and has duly authorized such sale and assignment by all
necessary corporate action; and the execution, delivery and
performance of this Agreement has been duly authorized by the Seller
by all necessary corporate action.
(d) VALID SALE; BINDING OBLIGATION. This Agreement
evidences a valid sale, transfer and assignment of the Receivables,
enforceable against creditors of and purchasers from the Seller, and
constitutes a legal, valid and binding obligation of the Seller
enforceable in accordance with its terms, except as enforceability
may be subject to or limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such enforceability
shall be considered in a proceeding in equity or at law.
(e) NO VIOLATION. The execution, delivery and performance
by the Seller of this Agreement and the consummation of the
transactions contemplated by this Agreement and the fulfillment of
the terms of this Agreement does not conflict with, result in any
breach of any of the terms and provisions of, nor constitute (with
or without notice or lapse of time) a default under, the articles of
incorporation or bylaws of the Seller, or conflict with or violate
any of the material terms or provisions of, or constitute (with or
without notice or lapse of time) a default under, any indenture,
agreement or other instrument to which the Seller is a party or by
which it shall be bound; nor result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of any
such indenture, agreement or other instrument (other than this
Agreement); nor violate any law or, to the Seller's knowledge, any
order, rule or regulation applicable to the Seller of any court or
of any federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over the
Seller or its properties, which breach, default, conflict, lien or
violation would have a material adverse effect on the earnings,
business affairs or business prospects of the Seller.
(f) NO PROCEEDINGS. There are no proceedings or
investigations pending, or to the Seller's knowledge, threatened,
before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Seller or
its properties: (i) asserting the invalidity of this Agreement or
any other Basic Document, (ii) seeking to prevent the issuance of
the Securities or the consummation of any of the transactions
contemplated by the Basic Documents, (iii) seeking any determination
or
43
ruling that might materially and adversely affect the performance by
the Seller of its obligations under, or the validity or
enforceability of, the Basic Documents or the Securities or (iv)
relating to the Seller and which might adversely affect the federal
income tax attributes of the Securities.
Section 5.02. LIABILITY OF SELLER; INDEMNITIES. The Seller shall be
liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Seller under this Agreement, which obligations
shall include the following:
(a) The Seller shall indemnify, defend and hold harmless
the Issuer, the Trustees and the Servicer and any of the officers,
directors, employees and agents of the Issuer, the Owner Trustee and
the Indenture Trustee from and against any taxes that may at any
time be asserted against any such Person with respect to the
transactions contemplated herein and in the other Basic Documents,
including any sales, gross receipts, general corporation, tangible
personal property, privilege or license taxes (but, in the case of
the Issuer, not including any taxes asserted with respect to, and as
of the date of, the sale of the Receivables to the Issuer or the
issuance and original sale of the Securities, or asserted with
respect to ownership of the Receivables, or federal or other income
taxes arising out of distributions on the Securities) and costs and
expenses in defending against the same.
(b) The Seller shall indemnify, defend and hold harmless
the Issuer, the Trustees and the Securityholders and any of the
officers, directors, employees and agents of the Issuer, the Owner
Trustee and the Indenture Trustee from and against any loss,
liability or expense incurred by reason of (i) the Seller's willful
misfeasance, bad faith or negligence in the performance of its
duties under this Agreement, or by reason of reckless disregard of
its obligations and duties under this Agreement and (ii) the
Seller's or the Issuer's violation of federal or state securities
laws in connection with the offering and sale of the Securities.
(c) The Seller shall indemnify, defend and hold harmless
the Trustees and their respective officers, directors, employees and
agents from and against all costs, expenses, losses, claims, damages
and liabilities arising out of or incurred in connection with the
acceptance or performance of the trusts and duties herein and
contained in the Trust Agreement, in the case of the Owner Trustee,
and contained in the Indenture, in the case of the Indenture
Trustee, except to the extent that such cost, expense, loss, claim,
damage or liability: (i) in the case of the Owner Trustee, shall be
due to the willful misfeasance, bad faith or negligence (except for
errors in judgment) of the Owner Trustee or shall arise from the
breach by the Owner Trustee of any of its representations or
warranties set forth in Section 7.03 of the Trust Agreement, or (ii)
in the case of the Indenture Trustee, shall be due to the willful
misfeasance, bad faith or negligence (except for errors in judgment)
of the Indenture Trustee.
(d) The Seller shall pay any and all taxes levied or
assessed upon all or any part of the Owner Trust Estate.
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Indemnification under this Section shall survive the resignation or
removal of the Owner Trustee or the Indenture Trustee, as the case may be,
and the termination of this Agreement and shall include reasonable fees and
expenses of counsel and expenses of litigation. If the Seller shall have made
any indemnity payments pursuant to this Section and the Person to or on
behalf of whom such payments are made thereafter shall collect any of such
amounts from others, such Person shall promptly repay such amounts to the
Seller, without interest.
Section 5.03. MERGER, CONSOLIDATION OR ASSUMPTION OF THE OBLIGATIONS
OF SELLER; CERTAIN LIMITATIONS.
(a) Any corporation (i) into which the Seller may be merged or
consolidated, (ii) which may result from any merger, conversion or
consolidation to which the Seller shall be a party or (iii) which may succeed
to all or substantially all of the business of the Seller, which corporation
in any of the foregoing cases executes an agreement of assumption to perform
every obligation of the Seller under this Agreement, shall be the successor
to the Seller under this Agreement without the execution or filing of any
document or any further act on the part of any of the parties to this
Agreement, except that if the Seller in any of the foregoing cases is not the
surviving entity, then the surviving entity shall execute an agreement of
assumption to perform every obligation of the Seller hereunder. The Seller
shall provide notice of any merger, consolidation or succession pursuant to
this Section to each Rating Agency and shall receive from each Rating Agency
a letter to the effect that such merger, consolidation or succession will not
result in a qualification, downgrading or withdrawal of its then-current
rating of any Class of Notes.
(b) (i) Subject to paragraph (ii) below, the purpose of the
Seller shall be to engage in any lawful activity for which a
corporation may be organized under the general corporation law of
California other than the banking business, the trust company
business or the practice of a profession permitted to be
incorporated by the California Corporations Code.
(ii) Notwithstanding paragraph (b)(i) above, the purpose of
the Seller shall be limited to the following purposes, and
activities incident to and necessary or convenient to accomplish the
following purposes: (A) to acquire, own, hold, sell, transfer,
assign, pledge, finance, refinance and otherwise deal with, retail
installment contracts or wholesale loans secured by, new and used
Honda and Acura motor vehicles (the "Motor Vehicle Receivables");
(B) to authorize, issue, sell and deliver one or more series of
obligations, consisting of one or more classes of certificates
and/or notes or other evidence of indebtedness (the "Offered
Securities") that are collateralized by or evidence an interest in
Motor Vehicle Receivables; and (C) to negotiate, authorize, execute,
deliver and assume the obligations or any agreement relating to the
activities set forth in clauses (A) and (B) above, including but not
limited to any pooling and servicing agreement, sale and servicing
agreement, indenture, reimbursement agreement, credit support
agreement, receivables purchase agreement or underwriting agreement
and to engage in any lawful activity which is incidental to the
activities contemplated by any such agreement. So long as any
outstanding debt of the Seller or Offered Securities are rated by
any nationally recognized statistical rating organization, the
Seller shall not issue notes or otherwise borrow money unless (1)
the Seller has made a written request to the related
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nationally recognized statistical rating organization to issue notes
or incur borrowings, which notes or borrowings are rated by the
related nationally recognized statistical rating organization the
same as or higher than the rating afforded any outstanding rated
debt or Offered Securities, or (2) such notes or borrowings (X) are
fully subordinated (and which shall provide for payment only after
payment in respect of all outstanding rated debt and/or Offered
Securities) or are nonrecourse against any assets of the Seller
other than the assets pledged to secure such notes or borrowings,
(Y) do not constitute a claim against the Seller in the event such
assets are insufficient to pay such notes or borrowings and (Z)
where such notes or borrowings are secured by the rated debt or
Offered Securities, are fully subordinated (and which shall provide
for payment only after payment in respect of all outstanding rated
debt and/or Offered Securities) to such rated debt or Offered
Securities.
(c) Notwithstanding any other provision of this Section and any
provision of law, the Seller shall not do any of the following:
(i) engage in any business or activity other than as set
forth in clause (b) above;
(ii) without the affirmative vote of a majority of the
members of the Board of Directors of the Seller (which must include
the affirmative vote of all duly appointed Independent Directors, as
required by the articles of incorporation and bylaws of the Seller),
(A) dissolve or liquidate, in whole or in part, or institute
proceedings to be adjudicated bankrupt or insolvent, (B) consent to
the institution of bankruptcy or insolvency proceedings against it,
(C) file a petition seeking or consent to reorganization or relief
under any applicable federal or state law relating to bankruptcy,
(D) consent to the appointment of a receiver, liquidator, assignee,
trustee, sequestrator or other similar official of the corporation
or a substantial part of its property, (E) make a general assignment
for the benefit of creditors, (F) admit in writing its inability to
pay its debts generally as they become due or (G) take any corporate
action in furtherance of the actions set forth in clauses (A)
through (F) above; provided, however, that no director may be
required by any shareholder of the Seller to consent to the
institution of bankruptcy or insolvency proceedings against the
Seller so long as it is solvent; or
(iii) merge or consolidate with any other corporation,
company or entity or sell all or substantially all of its assets or
acquire all or substantially all of the assets or capital stock or
other ownership interest of any other corporation, company or entity
(except for the acquisition of Motor Vehicle Receivables of AHFC and
the sale of Motor Vehicle Receivables to one or more trusts in
accordance with the terms of clause (b)(ii) above, which shall not
be otherwise restricted by this Section).
Section 5.04. LIMITATION ON LIABILITY OF SELLER AND OTHERS. The
Seller and any director, officer, employee or agent of the Seller may rely in
good faith on the advice of counsel or on any document of any kind, prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Seller shall not be under any obligation to appear in,
46
prosecute or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in
any expense or liability.
Section 5.05. SELLER MAY OWN NOTES. The Seller and any Affiliate
thereof may in its individual or any other capacity become the owner or
pledgee of Notes with the same rights as it would have if it were not the
Seller or an Affiliate thereof, except as expressly provided herein or in any
other Basic Document.
ARTICLE SIX
THE SERVICER
Section 6.01. REPRESENTATIONS OF SERVICER. The Servicer makes the
following representations on which the Issuer is deemed to have relied in
acquiring the Receivables. The representations speak as of the execution and
delivery of this Agreement and as of the Closing Date, and shall survive the
sale of the Receivables to the Issuer and the pledge thereof to the Indenture
Trustee pursuant to the Indenture:
(a) ORGANIZATION AND GOOD STANDING. The Servicer has been duly
organized and is validly existing as a corporation in good standing under the
laws of the State of California, with power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted, and had at all relevant times, and
has, power, authority and legal right to acquire, own, sell and service the
Receivables and to hold the Receivable Files as custodian on behalf of the
Issuer.
(b) DUE QUALIFICATION. The Servicer is duly qualified to do
business as a foreign corporation in good standing, and has obtained all
necessary licenses and approvals in all jurisdictions in which the ownership
or lease of property or the conduct of its business (including the servicing
of the Receivables as required by this Agreement) shall require such
qualifications.
(c) POWER AND AUTHORITY. The Servicer has the power and authority
to execute and deliver this Agreement and to carry out its terms; and the
execution, delivery and performance of this Agreement has been duly
authorized by the Servicer by all necessary corporate action.
(d) BINDING OBLIGATION. This Agreement constitutes a legal, valid
and binding obligation of the Servicer enforceable in accordance with its
terms, except as enforceability may be subject to or limited by bankruptcy,
insolvency, reorganization, moratorium, liquidation or other similar laws
affecting the enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such enforceability shall be
considered in a proceeding in equity or in law.
(e) NO VIOLATION. The execution, delivery and performance by the
Servicer of this Agreement and the execution, delivery and performance by the
Seller of this Agreement and the consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms of this
Agreement shall not conflict with, result in any breach of any of the terms
and provisions of, nor constitute (with or without notice or lapse of time) a
default under, the articles
47
of incorporation or bylaws of the Servicer, or conflict with or breach any of
the material terms or provisions of, or constitute (with or without notice or
lapse of time) a default under, any indenture, agreement or other instrument
to which the Servicer is a party or by which it shall be bound; nor result in
the creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement or other instrument (other than
this Agreement); nor violate any law or, to the Servicer's knowledge, any
order, rule or regulation applicable to the Servicer of any court or of any
federal or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Servicer or its properties,
which breach, default, conflict, lien or violation would have a material
adverse effect on the earnings, business affairs or business prospects of the
Servicer.
(f) NO PROCEEDINGS. There are no proceedings or investigations
pending, or to the Servicer's best knowledge, threatened, before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Servicer or its properties: (i) asserting the
invalidity of this Agreement or any other Basic Document, (ii) seeking to
prevent the issuance of the Securities or the consummation of any of the
transactions contemplated by the Basic Documents, (iii) seeking any
determination or ruling that might materially and adversely affect the
performance by the Servicer of its obligations under, or the validity or
enforceability of, the Basic Documents or the Securities or (iv) relating to
the Servicer and which might adversely affect the federal income tax
attributes of the Securities.
Section 6.02. INDEMNITIES OF SERVICER.
(a) The Servicer shall be liable in accordance herewith only to
the extent of the obligations specifically undertaken by the Servicer under
this Agreement. In this regard, the Servicer shall indemnify, defend and hold
harmless the Issuer, the Trustees, the Securityholders and the Seller and any
of the officers, directors, employees and agents of the Issuer, the Owner
Trustee and the Indenture Trustee from and against any and all costs,
expenses, losses, damages, claims and liabilities (i) arising out of or
resulting from the use, ownership or operation by the Servicer or any
Affiliate thereof of a Financed Vehicle, and (ii) to the extent that such
cost, expense, loss, claim, damage or liability arose out of, or was imposed
upon any such Person through, the negligence, willful misfeasance or bad
faith of the Servicer in the performance of its duties under this Agreement
or by reason of reckless disregard of its obligations and duties under this
Agreement.
For purposes of this Section, in the event of the termination of the
rights and obligations of AHFC (or any successor thereto pursuant to Section
6.03) as Servicer pursuant to Section 7.01, or a resignation by such Servicer
pursuant to this Agreement, such Servicer shall be deemed to be the Servicer
pending appointment of a Successor Servicer (other than the Indenture
Trustee) pursuant to Section 7.02.
(b) Indemnification under this Section shall survive the
resignation or removal of the Owner Trustee or the Indenture Trustee, as the
case may be, or the termination of this Agreement and shall include
reasonable fees and expenses of counsel and expenses of litigation. If the
Servicer shall have made any indemnity payments pursuant to this Section and
the Person
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to or on behalf of whom such payments are made thereafter collects any of
such amounts from others, such Person shall promptly repay such amounts to
the Servicer, without interest.
Section 6.03. MERGER, CONSOLIDATION OR ASSUMPTION OF THE OBLIGATIONS
OF SERVICER. Any corporation (i) into which the Servicer may be merged or
consolidated, (ii) which may result from any merger, conversion or
consolidation to which the Servicer shall be a party or (iii) which may
succeed to all or substantially all of the business of the Servicer, which
corporation in any of the foregoing cases executes an agreement of assumption
to perform every obligation of the Servicer under this Agreement, shall be
the successor to the Servicer under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties to
this Agreement. The Servicer shall provide notice of any merger,
consolidation or succession pursuant to this Section to the Trustees and each
Rating Agency.
Section 6.04. LIMITATION ON LIABILITY OF SERVICER AND OTHERS.
Neither the Servicer nor any of the directors, officers, employees or agents
of the Servicer shall be under any liability to the Issuer or any
Securityholder, except as provided under this Agreement, for any action taken
or for refraining from the taking of any action pursuant to this Agreement or
for errors in judgment; provided, however, that this provision shall not
protect the Servicer or any such person against any liability that would
otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement. The Servicer and any director,
officer, employee or agent of the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising under this Agreement.
Except as otherwise provided in this Agreement, the Servicer shall
not be under any obligation to appear in, prosecute or defend any legal
action that shall not be incidental to its duties to service the Receivables
in accordance with this Agreement and that in its opinion may involve it in
any expense or liability; provided, however, that the Servicer may undertake
any reasonable action that it may deem necessary or desirable in respect of
this Agreement and the other Basic Documents and the rights and duties of the
parties to this Agreement and the other Basic Documents and the interests of
the Certificateholders under this Agreement and the Noteholders under the
Indenture. The legal expenses and costs of such action and any liability
resulting therefrom will be expenses, costs and liabilities of the Issuer.
Section 6.05. AHFC NOT TO RESIGN AS SERVICER. Subject to the
provisions of Section 6.03, AHFC shall not resign from the obligations and
duties hereby imposed on it as Servicer under this Agreement except upon a
determination that the performance of its duties under this Agreement shall
no longer be permissible under applicable law. Notice of any such
determination permitting the resignation of AHFC shall be communicated to the
Trustees at the earliest practicable time (and, if such communication is not
in writing, shall be confirmed in writing at the earliest practicable time)
and any such determination shall be evidenced by an Opinion of Counsel to
such effect delivered to the Trustees concurrently with or promptly after
such notice. No such resignation shall become effective until the Indenture
Trustee or a Successor Servicer shall have (i) assumed the responsibilities
and obligations of AHFC in accordance with Section 7.02 and (ii) become the
Administrator pursuant to Section 1.09 of the Administration Agreement.
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ARTICLE SEVEN
SERVICER DEFAULTS
Section 7.01. SERVICER DEFAULTS. If any one of the following events
(each, a "Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to deliver to the related
Trustee for deposit in any of the Accounts or the Certificate
Distribution Account any required payment or to direct the Indenture
Trustee to make any required distributions therefrom, which failure
continues unremedied for a period of three Business Days after
discovery of such failure by an officer of the Servicer or after the
date on which written notice of such failure, requiring the same to
be remedied, shall have been given (i) to the Servicer by the
related Trustee or (ii) to the Servicer and to the Trustees by the
Holders of Notes, evidencing not less than 25% of the Outstanding
Amount of the Notes;
(b) failure by the Servicer (or so long as the Servicer is
AHFC, the Seller) duly to observe or to perform in any material
respect any other covenants or agreements of the Servicer (or so
long as the Servicer is AHFC, the Seller) set forth in this
Agreement or any other Basic Document, which failure shall (i)
materially and adversely affect the rights of Certificateholders or
Noteholders and (ii) continue unremedied for a period of 90 days
after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given (A) to the Servicer
or the Seller (as the case may be) by the related Trustee or (B) to
the Servicer or the Seller (as the case may be), and to the related
Trustee by the Holders of Notes, evidencing not less than 25% of the
Outstanding Amount of the Notes; or
(c) the occurrence of an Insolvency Event with respect to
the Seller or the Servicer;
then, and in each and every case, so long as the Servicer Default shall not
have been remedied, either the Indenture Trustee or the Holders of Notes
evidencing not less than 25% of the Outstanding Amount of the Notes (or, if
the Notes have been paid in full and the Indenture has been discharged in
accordance with its terms, by holders of Certificates evidencing not less
than 25% of the Percentage Interests) by notice then given in writing to the
Servicer (and to the Indenture Trustee and the Owner Trustee if given by the
Noteholders) may terminate all the rights and obligations (other than the
obligations set forth in Section 6.02) of the Servicer under this Agreement.
On or after the date specified in such written notice, all authority and
power of the Servicer under this Agreement, whether with respect to the
Notes, the Certificates or the Receivables or otherwise, shall, without
further action, pass to and be vested in the Indenture Trustee or such
Successor Servicer as may be appointed under Section 7.02; and, without
limitation, the Indenture Trustee and the Owner Trustee are hereby authorized
and empowered to execute and deliver, for the benefit of the predecessor
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of the Receivables and related
documents, or otherwise.
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The predecessor Servicer shall cooperate with the Successor Servicer and the
Trustees in effecting the termination of the responsibilities and rights of
the predecessor Servicer under this Agreement, including the transfer to the
Successor Servicer for administration by it of all cash amounts that shall at
the time be held by the predecessor Servicer for deposit, or have been
deposited by the predecessor Servicer, in the Accounts or the Certificate
Distribution Account or thereafter received with respect to the Receivables
and all Payments Ahead that shall at that time by held by the predecessor
Servicer. All reasonable costs and expenses (including servicer conversion
costs and attorneys' fees) incurred in connection with transferring the
Receivable Files to the Successor Servicer and amending this Agreement to
reflect such succession as Servicer pursuant to this Section shall be paid by
the predecessor Servicer upon presentation of reasonable documentation of
such costs and expenses. Any costs or expenses incurred in connection with to
a Servicer Default shall constitute an expense of administration under Title
11 of the United States Bankruptcy Code or any other applicable Federal or
State bankruptcy laws. Upon receipt of notice of the occurrence of a Servicer
Default, the Indenture Trustee shall give notice thereof to each Rating
Agency.
Section 7.02. APPOINTMENT OF SUCCESSOR SERVICER.
(a) Upon the Servicer's receipt of notice of termination pursuant
to Section 7.01 or the Servicer's resignation pursuant to Section 6.05, the
predecessor Servicer shall continue to perform its functions as Servicer
under this Agreement, in the case of termination, only until the date
specified in such termination notice or, if no such date is specified in a
notice of termination, until receipt of such notice and, in the case of
resignation, until the later of (i) the date 45 days from the delivery to the
Trustees of written notice of such resignation (or written confirmation of
such notice) in accordance with the terms of this Agreement and (ii) the date
upon which the predecessor Servicer shall become unable to act as Servicer,
as specified in the notice of resignation and accompanying Opinion of
Counsel. In the event of the Servicer's termination hereunder, the Indenture
Trustee shall appoint a Successor Servicer, and the Successor Servicer shall
accept its appointment (including its appointment as Administrator under the
Administration Agreement as set forth in Section 7.02(b)) by a written
assumption in form acceptable to the Trustees. In the event that a Successor
Servicer has not been appointed at the time when the predecessor Servicer has
ceased to act as Servicer in accordance with this Section, the Indenture
Trustee without further action shall automatically be appointed the Successor
Servicer and the Indenture Trustee shall be entitled to receive the Total
Servicing Fee. Notwithstanding the above, the Indenture Trustee shall, if it
shall be legally unable or unwilling so to act appoint or petition a court of
competent jurisdiction to appoint any established institution, having a net
worth of not less than $50,000,000 and whose regular business shall include
the servicing of motor vehicle receivables, as the successor to the Servicer
under this Agreement.
(b) Upon appointment, the Successor Servicer (including the
Indenture Trustee acting as Successor Servicer) shall (i) be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities arising thereafter relating thereto
placed on the predecessor Servicer and shall be entitled to the Total
Servicing Fee and all the rights granted to the predecessor Servicer by the
terms and provisions of this Agreement and (ii) become the Administrator
pursuant to Section 1.09 of the Administration Agreement.
51
Section 7.03. NOTIFICATION OF SERVICER TERMINATION. Upon any
termination of, or appointment of a successor to, the Servicer pursuant to
this Article, the Owner Trustee shall give prompt written notice thereof to
Certificateholders, and the Indenture Trustee shall give prompt written
notice thereof to Noteholders and each Rating Agency.
Section 7.04. WAIVER OF PAST DEFAULTS. The Holders of Notes
evidencing not less than a majority of the Outstanding Amount of the Notes or
the Holders (as defined in the Trust Agreement) of Certificates evidencing
not less than a majority of the Percentage Interests (in the case of a
default by the Servicer that does not adversely affect the Indenture Trustee
or the Noteholders or if all Notes have been paid in full and the Indenture
Trustee has been discharged in accordance with its terms) may, on behalf of
all Securityholders waive in writing any default by the Servicer in the
performance of its obligations hereunder and its consequences, except a
default in making any required deposits to or payments from any of the
Accounts or the Certificate Distribution Account in accordance with this
Agreement or in respect of a covenant or provision hereof that cannot be
modified with the consent of each Securityholder. Upon any such waiver of a
past default, such default shall cease to exist, and any Servicer Default
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other
default or impair any right consequent thereto except to the extent expressly
so waived.
Section 7.05. REPAYMENT OF ADVANCES. If a Successor Servicer
replaces the Servicer, the predecessor Servicer shall be entitled to receive
reimbursement for all outstanding Advances made by the predecessor Servicer.
ARTICLE EIGHT
TERMINATION
Section 8.01. OPTIONAL PURCHASE OF ALL RECEIVABLES.
(a) On the Payment Date following the last day of any Collection
Period as of which the Pool Balance is 10% or less of the Original Pool
Balance, the Servicer or any successor to the Servicer shall have the option
to purchase the Owner Trust Estate, other than the Accounts and the
Certificate Distribution Account. To exercise such option, on the related
Deposit Date the Servicer shall deposit pursuant to Section 4.05(a) in the
Collection Account an amount equal to the aggregate Administrative Purchase
Payments for the Receivables (including Defaulted Receivables), and shall
succeed to all interests in and to the Issuer. Notwithstanding the foregoing,
the Servicer or any successor to the Servicer shall not be permitted to
exercise such option if the amount to be distributed to Securityholders on
the related Payment Date would be less than the Note Distributable Amount and
Certificate Distributable Amount.
(b) As described in Article Nine of the Trust Agreement, notice of
any termination of the Trust shall be given by the Servicer to the Owner
Trustee and the Indenture Trustee as soon as practicable after the Servicer
has received notice thereof.
52
(c) Following the satisfaction and discharge of the Indenture and
the payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder
and the Owner Trustee will succeed to the rights of the Indenture Trustee
pursuant to this Agreement.
ARTICLE NINE
MISCELLANEOUS
Section 9.01. AMENDMENT.
(a) This Agreement may be amended by the Seller, the Servicer and
the Issuer, with the consent of the Indenture Trustee, but without the
consent of any Securityholders, (i) to cure any ambiguity, to correct or
supplement any provision in this Agreement which may be inconsistent with any
other provision of this Agreement, to add, change or eliminate any other
provision of this Agreement with respect to matters or questions arising
under this Agreement that shall not be inconsistent with the provisions of
this Agreement, (ii) to change the formula for determining the Specified
Reserve Fund Balance or the manner in which the Reserve Fund is funded or to
amend or modify any provisions of this Agreement relating to the remittance
schedule with respect to collections deposited into the Collection Account or
the Payahead Account pursuant to Section 4.02 or (iii) to amend or modify any
provisions in this Agreement relating to the Servicer Letter of Credit, if
any, or the acquisition thereof and including replacing the Servicer Letter
of Credit with a surety bond, insurance policy or deposit of cash or
securities satisfactory to the Indenture Trustee and each Rating Agency;
provided, however, that in connection with any amendment pursuant to clause
(i) above, any such action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any Securityholder
and provided, further, that in connection with any amendment pursuant to
clause (ii) or (iii) above, the Servicer shall deliver to the Trustees a
letter from each Rating Agency to the effect that such amendment will not
cause its then-current rating on the Rated Securities to be qualified,
reduced or withdrawn.
(b) This Agreement may also be amended from time to time by the
Seller, the Servicer and the Issuer, with the consent of the Indenture
Trustee, the consent of the Holders of Notes evidencing not less than a
majority of the Outstanding Amount of the Notes and the Owner Trustee,
consent of the Holders (as defined in the Trust Agreement) of outstanding
Certificates evidencing not less than a majority of the Percentage Interests,
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Securityholders; provided, however, that no such
amendment shall (i) except as otherwise provided in Section 9.01 (a) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables or distributions that shall be
required to be made for the benefit of the Securityholders or (ii) reduce the
aforesaid percentage of the Outstanding Amount of the Notes and the
Percentage Interests, the Holders of which are required to consent to any
such amendment, without the consent of all of the Securityholders.
53
(c) Promptly after the execution of any such amendment or consent,
the Owner Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee and
each Rating Agency. It shall not be necessary for the consent of
Securityholders pursuant to this Section to approve the particular form of
any proposed amendment or consent, but it shall be sufficient if such consent
shall approve the substance thereof. The manner of obtaining such consents
and of evidencing the authorization of Certificateholders of the execution
thereof shall be subject to such reasonable requirements as the Owner Trustee
may require.
(d) Prior to the execution of any amendment to this Agreement, the
Trustees shall be entitled to receive and rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by
this Agreement and the Opinion of Counsel referred to in Section 9.02(i)(1).
The Trustees may, but shall not be obligated to, enter into any such
amendment which affects the Owner Trustee's or the Indenture Trustee's, as
applicable, own rights, duties or immunities under this Agreement or
otherwise.
Section 9.02. PROTECTION OF TITLE TO TRUST.
(a) The Seller shall execute and file such financing statements
and cause to be executed and filed such continuation statements, all in such
manner and in such places as may be required by law fully to preserve,
maintain and protect the interest of the Issuer and of the Indenture Trustee
in the Receivables and in the proceeds thereof. The Seller shall deliver (or
cause to be delivered) to the Trustees file-stamped copies of, or filing
receipts for, any document filed as provided above, as soon as available
following such filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed in accordance with
Section 9.02(a) seriously misleading within the meaning of Section 9-402(7)
of the UCC, unless it shall have given the Trustees at least 30 days' prior
written notice thereof and shall have promptly filed appropriate amendments
to all previously filed financing statements or continuation statements.
(c) Each of the Seller and the Servicer shall give the Trustees at
least 60 days' prior written notice of any relocation of its principal
executive office if, as a result of such relocation, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement and shall promptly file any such amendment or new financing
statement. The Servicer shall at all times maintain each office from which it
shall service Receivables, and its principal executive office, within the
United States.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including payments
and recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
54
Receivable and the amounts from time to time deposited in the Accounts and
any Payments Ahead held by the Servicer in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from
and after the time of sale under this Agreement of the Receivables, the
Servicer's master computer records (including any backup archives) that refer
to a Receivable shall indicate clearly the interest of the Issuer and the
Indenture Trustee in such Receivable and that such Receivable is owned by the
Issuer and has been pledged to the Indenture Trustee. Indication of the
Issuer's and the Indenture Trustee's interest in a Receivable shall be
deleted from or modified on the Servicer's computer systems when, and only
when, the related Receivable shall have been paid in full or repurchased.
(f) If at any time the Seller or the Servicer shall propose to
sell, grant a security interest in, or otherwise transfer any interest in
motor vehicle receivables to any prospective purchaser, lender or other
transferee, the Servicer shall give to such prospective purchaser, lender or
other transferee computer tapes, records or printouts (including any restored
from backup archives) that, if they shall refer in any manner whatsoever to
any Receivable, shall indicate clearly that such Receivable has been sold and
is owned by the Issuer and has been pledged to the Indenture Trustee.
(g) The Servicer shall permit the Indenture Trustee and its agents
at any time during normal business hours to inspect, audit and make copies of
and abstracts from the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Owner Trustee
or to the Indenture Trustee, within five Business Days, a list of all
Receivables (by contract number and name of Obligor) then held as part of the
Issuer, together with a reconciliation of such list to the Schedule of
Receivables and to each of the Servicer's Certificates furnished before such
request indicating removal of Receivables from the Issuer.
(i) The Servicer shall deliver to the Trustees:
(1) promptly after the execution and delivery of this
Agreement and of each amendment hereto, an Opinion of Counsel
stating that, in the opinion of such counsel, either (A) all
financing statements and continuation statements have been executed
and filed that are necessary fully to preserve and protect the
interest of the Trustees in the Receivables, and reciting the
details of such filings or referring to prior Opinions of Counsel in
which such details are given, or (B) no such action shall be
necessary to preserve and protect such interest; and
(2) within 90 days after the beginning of each fiscal year
of the Issuer beginning with the first fiscal year beginning more
than three months after the Cutoff Date, an Opinion of Counsel,
dated as of a date during such 90-day period, stating that, in the
opinion of such counsel, either (A) all financing statements and
continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Trustees
in the Receivables, and reciting the details of such filings or
55
referring to prior Opinions of Counsel in which such details are
given, or (B) no such action shall be necessary to preserve and
protect such interest.
Each Opinion of Counsel referred to in clause (1) or (2) above shall
specify any action necessary (as of the date of such opinion) to be taken in
the following year to preserve and protect such interest.
(j) The Seller shall, to the extent required by applicable law,
cause the Notes to be registered with the Commission pursuant to Section
12(b) or Section 12(g) of the Exchange Act within the time periods specified
in such sections.
Section 9.03. NOTICES. All demands, notices and communications under
this Agreement shall be in writing, personally delivered or mailed by
certified mail, return receipt requested, and shall be deemed to have been
duly given upon receipt (i) in the case of the Seller, to CT Corp., 818 West
7th Street, Second Floor, Los Angeles, California 90017, (ii) in the case of
the Servicer, to American Honda Finance Corporation, 700 Van Ness Avenue,
Building 300, Torrance, CA 90501, Attention: President, (iii) in the case of
the Issuer or the Owner Trustee, at the Corporate Trust Office (as such term
is defined in the Trust Agreement), with a copy to: Bankers Trust Company, 4
Albany Street, 10th Floor, New York, New York 10006, Attention: Chip Greiter,
(iv) in the case of the Indenture Trustee, at the Corporate Trust Office (as
such term is herein defined), (v) in the case of Moody's, to Moody's
Investors Service, Inc., ABS Monitoring Department, 99 Church Street, New
York, New York 10007, (vi) in the case of Standard & Poor's, to Standard &
Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc., 25
Broadway (15th Floor), New York, New York 10004, Attention: Asset Backed
Surveillance Department, (vii) in the case of Fitch, to Fitch, Inc., One
State Street Plaza, New York, New York 10004, Attention: Asset Backed
Surveillance Department or (viii) as to each of the foregoing, at such other
address as shall be designated by written notice to the other parties.
Section 9.04. ASSIGNMENT.
(a) Notwithstanding anything to the contrary contained herein,
except as provided in the remainder of this Section, as provided in Sections
5.03, 6.03 and 6.05, this Agreement may not be assigned by the Seller or the
Servicer without the prior written consent of Holders of Notes evidencing not
less than a majority of the Outstanding Amount of the Notes and Holders (as
such term is defined in the Trust Agreement) of Certificates evidencing not
less than a majority of the Percentage Interests. And as provided in the
provisions of this Agreement concerning the resignation of the Servicer, this
Agreement may not be assigned by the Seller or the Servicer.
(b) The Seller hereby acknowledges and consents to the mortgage,
pledge, assignment and grant of a security interest by the Issuer to the
Indenture Trustee pursuant to the Indenture for the benefit of the
Noteholders of all right, title and interest of the Issuer in, to and under
the Receivables and/or the assignment of any or all of the Issuer's rights
and obligations hereunder to the Indenture Trustee.
56
Section 9.05. LIMITATIONS ON RIGHTS OF OTHERS. The provisions of
this Agreement are solely for the benefit of the Seller, the Servicer, the
Issuer, the Owner Trustee, the Certificateholders, the Indenture Trustee and
the Noteholders, and nothing in this Agreement, whether express or implied,
shall be construed to give to any other Person any legal or equitable right,
remedy or claim in the Owner Trust Estate or under or in respect of this
Agreement or any covenants, conditions or provisions contained herein. The
Owner Trustee is a third-party beneficiary of Sections 2.07 and 6.02 of this
Agreement and is entitled to the rights and benefits thereof and may enforce
the provisions as if it were a party hereto.
Section 9.06. SEVERABILITY. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity
or enforceability of the other covenants, agreements, provisions or terms of
this Agreement.
Section 9.07. SEPARATE COUNTERPARTS. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
Section 9.08. HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 9.09. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, EXCEPT
THAT THE DUTIES OF THE INDENTURE TRUSTEE SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK.
Section 9.10. NONPETITION COVENANTS.
(a) Notwithstanding any prior termination of this Agreement, the
Servicer and the Seller shall not, prior to the date which is one year and
one day after the termination of this Agreement with respect to the Issuer,
acquiesce, petition or otherwise invoke or cause the Issuer to invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Issuer under any federal or state bankruptcy,
insolvency or similar law, or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or
any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement, the
Servicer shall not, prior to the date which is one year and one day after the
termination of this Agreement with respect to the Seller, acquiesce, petition
or otherwise invoke or cause the Seller to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case
against the Seller under any federal or state bankruptcy, insolvency or
similar law, or appointing
57
a receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Seller or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Seller.
Section 9.11. LIMITATION OF LIABILITY OF OWNER TRUSTEE AND INDENTURE
TRUSTEE.
(a) Notwithstanding anything contained herein to the contrary,
this Agreement has been countersigned by Bankers Trust (Delaware) not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Bankers Trust (Delaware) in its individual capacity or,
except as expressly provided in the Trust Agreement, as beneficial owner of
the Issuer have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer. For all
purposes of this Agreement, in the performance of its duties or obligations
hereunder or in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the
benefits of, the terms and provisions of Articles Six, Seven and Eight of the
Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary,
this Agreement has been accepted by U.S. Bank National Association, not in
its individual capacity but solely as Indenture Trustee and in no event shall
U.S. Bank National Association have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer
hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the
assets of the Issuer.
58
IN WITNESS WHEREOF, the parties hereto have caused this Sale and
Servicing Agreement to be duly executed by their respective officers as of
the day and year first above written.
HONDA AUTO RECEIVABLES 2000-1 OWNER
TRUST
By: BANKERS TRUST (DELAWARE), not
in its individual capacity but
solely as Owner Trustee on behalf
of the Trust
By: /s/ Eileen M. Hughes
-----------------------------------
Name: EILEEN M. HUGHES
Title: VICE PRESIDENT
AMERICAN HONDA RECEIVABLES CORP.,
as Seller
By: /s/ Y. Kohama
-----------------------------------
Name: Y. KOHAMA
Title: PRESIDENT
AMERICAN HONDA FINANCE CORPORATION,
as Servicer
By: /s/ Y. Kohama
----------------------------------
Name: Y. KOHAMA
Title: PRESIDENT
Acknowledged and accepted as of the day and year first above written:
U.S. BANK NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Indenture Trustee
By: /s/ Patricia M. Child
---------------------------------
Name: PATRICIA M. CHILD
Title: VICE PRESIDENT
SCHEDULE A
SCHEDULE OF RECEIVABLES
[On File with Dewey Ballantine LLP]
SA-1
SCHEDULE B
LOCATION OF RECEIVABLE FILES
American Honda Finance Corporation
21041 South Western Avenue, Suite 200
Torrance, California 90501
American Honda Finance Corporation
1355 Northmeadow Parkway, Suite 100
Roswell, Georgia 30076
American Honda Finance Corporation
8505 Freeport Parkway, Suite 600
Irving, Texas 75063
American Honda Finance Corporation
470 Granby Road, Suite 2
S. Hadley, Massachusetts 01075
American Honda Finance Corporation
601 Campus Drive, Suite C-7
Arlington Heights, Illinois 60004
American Honda Finance Corporation
2680 Bishop Drive, Suite 100
San Ramon, California 94583
American Honda Finance Corporation
8514 McAlpine Park Drive, Suite 100
Charlotte, North Carolina 28211
American Honda Finance Corporation
200 Continental Drive, Suite 301
Newark, Delaware 19713
American Honda Finance Corporation
700 Van Ness Avenue, Building 300
Torrance, California 90501
SB-1
EXHIBIT A
FORM OF DISTRIBUTION STATEMENT TO SECURITYHOLDERS
Honda Auto Receivables 2000-1 Owner Trust
NOTE PRINCIPAL DISTRIBUTABLE AMOUNT $
--------------------------
Class A-1 Notes: ($ per $1,000 original principal amount)
Class A-2 Notes: ($ per $1,000 original principal amount)
Class A-3 Notes: ($ per $1,000 original principal amount)
Class A-4 Notes: ($ per $1,000 original principal amount)
NOTE INTEREST DISTRIBUTABLE AMOUNT $
--------------------------
Class A-1 Notes: ($ per $1,000 original principal amount)
Class A-2 Notes: ($ per $1,000 original principal amount)
Class A-3 Notes: ($ per $1,000 original principal amount)
Class A-4 Notes: ($ per $1,000 original principal amount)
NOTE PRINCIPAL CARRYOVER SHORTFALL $
--------------------------
change from immediately preceding Payment Date
Class A-1 Notes: ($ per $1,000 original principal amount)
Class A-2 Notes: ($ per $1,000 original principal amount)
Class A-3 Notes: ($ per $1,000 original principal amount)
Class A-4 Notes: ($ per $1,000 original principal amount)
NOTE INTEREST CARRYOVER SHORTFALL $
--------------------------
change from immediately preceding Payment Date $
--------------------------
Class A-1 Notes: ($ per $1,000 original principal amount)
Class A-2 Notes: ($ per $1,000 original principal amount)
Class A-3 Notes: ($ per $1,000 original principal amount)
Class A-4 Notes: ($ per $1,000 original principal amount)
AVAILABLE AMOUNT $
--------------------------
Available Interest $
--------------------------
Available Principal $
--------------------------
CERTIFICATE INTEREST DISTRIBUTABLE AMOUNT $
--------------------------
($_______ per 1,000 original principal amount)
CERTIFICATE PRINCIPAL DISTRIBUTABLE AMOUNT $
--------------------------
($_______ per 1,000 original principal amount)
NOTE DISTRIBUTABLE AMOUNT $
--------------------------
CERTIFICATE DISTRIBUTABLE AMOUNT $
--------------------------
CERTIFICATE PRINCIPAL CARRYOVER SHORTFALL $
--------------------------
change from immediately preceding Payment Date $
--------------------------
CERTIFICATE INTEREST CARRYOVER SHORTFALL $
--------------------------
change from immediately preceding Payment Date $
--------------------------
POOL BALANCE $
--------------------------
A-1
NOTE POOL FACTOR $
--------------------------
Class A-1 Notes $
--------------------------
Class A-2 Notes $
--------------------------
Class A-3 Notes $
--------------------------
Class A-4 Notes $
--------------------------
CERTIFICATE POOL FACTOR $
--------------------------
RESERVE FUND BALANCE $
--------------------------
change from immediately preceding Payment Date $
--------------------------
PAYMENTS AHEAD $
--------------------------
APPLIED PAYMENTS AHEAD $
--------------------------
TOTAL SERVICING FEE $
--------------------------
($_______ per 1,000 original principal amount)
NONRECOVERABLE ADVANCES $
--------------------------
YIELD SUPPLEMENT WITHDRAWAL AMOUNT $
--------------------------
YIELD SUPPLEMENT AMOUNT $
--------------------------
AMOUNT ON DEPOSIT IN YIELD SUPPLEMENT ACCOUNT $
--------------------------
TRUST FEES AND EXPENSES $
--------------------------
PRINCIPAL PAYMENT AMOUNT $
--------------------------
A-2
EXHIBIT B
FORM OF SERVICER'S CERTIFICATE
Deposit to Collection Account.................................... $
B-1