Exhibit 99.1
SALE AND SERVICING AGREEMENT, dated as of
_______ __, ____ (as from time to time amended, supple-
mented or otherwise modified and in effect, this "Agree-
ment"), by and among NATIONSBANK AUTO OWNER TRUST ____-_
(the "Issuer"), a Delaware business trust, NATIONSBANK,
N.A., NATIONSBANK, N.A. (SOUTH) and NATIONSBANK OF TEXAS,
N.A. each a national banking association, (each a "Sell-
er" and together, the "Sellers"), and NATIONSBANK, N.A.,
as servicer (the "Servicer").
WHEREAS, the Issuer desires to purchase a
portfolio of receivables arising in connection with
retail motor vehicle installment sales contracts indi-
rectly originated by the Sellers in the ordinary course
of their business;
WHEREAS, the Sellers are willing to sell,
transfer, assign, set over and convey such receivables to
the Issuer; and
WHEREAS, NationsBank, N.A., is willing to
service such receivables on behalf of the Issuer;
NOW, THEREFORE, in consideration of the premis-
es and the mutual covenants herein contained, and other
good and valuable consideration, the receipt and suffi-
ciency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, agree as follows:
ARTICLE I
DEFINITIONS AND USAGE
Except as otherwise specified herein or as the
context may otherwise require, capitalized terms used but
not otherwise defined herein are defined in Appendix A
hereto, which also contains rules as to usage that shall
be applicable herein.
End of Article I
ARTICLE II
OWNER TRUST PROPERTY
SECTION 2.1. Conveyance of Owner Trust Proper-
ty. In consideration of the Issuer's delivery to, or
upon the order of, the Sellers of Notes and Certificates,
in aggregate principal amounts equal to the initial
principal amount of the Notes and the Initial Certificate
Balance, respectively, the Sellers hereby irrevocably
sell, transfer, assign, set over and otherwise convey to
the Issuer without recourse (subject to the obligations
herein) all right, title and interest of the Sellers,
whether now owned or hereafter acquired, in and to the
Owner Trust Property. The sale, transfer, assignment,
setting over and conveyance made hereunder shall not
constitute and is not intended to result in an assumption
by the Issuer of any obligation of the Sellers to the
Obligors, the Dealers or any other Person in connection
with the Receivables and the other Owner Trust Property
or any agreement, document or instrument related thereto.
It is the intention of the Sellers and the
Issuer that the transfer of the Owner Trust Property
contemplated herein constitute a sale of the Owner Trust
Property, conveying good title to the Owner Trust Proper-
ty from the Sellers to the Issuer. However, in the event
that such transfer is deemed to be a pledge to secure the
payment of the Notes and the Certificates, each Seller
hereby grants to the Issuer a first priority security
interest in all of such Seller's right, title and inter-
est in, to and under the Owner Trust Property conveyed by
such Seller, and all proceeds thereof, to secure the
payment of the Notes and the Certificates, and in such
event, this Agreement shall constitute a security agree-
ment under applicable law.
SECTION 2.2. Representations and Warranties of
the Sellers as to the Receivables. Each Seller makes the
following representations and warranties as to the Re-
ceivables conveyed by such Seller on which the Issuer
shall be deemed to have relied in accepting such Receiv-
ables. Such representations and warranties speak as of
the execution and delivery of this Agreement, but shall
survive the sale, transfer, assignment, setting over and
conveyance of the Receivables to the Issuer and the
pledge thereof to the Indenture Trustee pursuant to the
Indenture.
(i) Characteristics of Receivables. The
Receivable has been fully and properly executed by
the parties thereto and (a) has been originated by a
Dealer for the retail sale of a Motor Vehicle in the
ordinary course of such Dealer's business, and has
been purchased by the Seller from such Dealer in the
ordinary course of the Seller's business and in
accordance with the Seller's underwriting standards
to finance the retail sale by a Dealer of the Fi-
nanced Vehicle and has been validly assigned by such
Dealer to the Seller, (b) is secured by a valid,
subsisting, and enforceable first priority security
interest in favor of the Seller in the Financed
Vehicle (subject to administrative delays and cleri-
cal errors on the part of the applicable government
agency and to any statutory or other lien arising by
operation of law after the Closing Date which is
prior to such security interest), which security
interest is assignable together with such Receiv-
able, and has been so assigned, by the Seller to the
Trust, (c) contains or is accompanied by a security
agreement which contains customary and enforceable
provisions such that the rights and remedies of the
secured party are adequate for realization of the
benefits of the security interest in the subject
collateral, (d) provides at origination for level
monthly payments (provided, that the last payment
may be different from the level payment), which
fully amortize the Amount Financed over the original
term and (e) provides for interest at the related
Contract Rate.
(ii) Schedule of Receivables. The infor-
mation set forth in the Schedule of Receivables with
respect to such Receivable has been produced from
the Electronic Ledger and was true and correct as of
the close of business of the Servicer on the Cut-Off
Date [(and) any applicable Subsequent Transfer
Date)]; and the Cut-Off Date Principal Balance of
the Receivable has been accurately and correctly
calculated.
(iii) Compliance with Laws. To the
knowledge of the Seller, the Receivable, and the
sale of the related Financed Vehicle, complied at
the time it was originated or made, and will comply
as of the Closing Date, in all material respects
with all requirements of applicable federal, state,
and local laws, and regulations thereunder, includ-
ing, to the extent applicable, 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, Federal Reserve Board Regulations B
and Z, and any other consumer credit, equal opportu-
nity, and disclosure laws; provided, however, that
if, notwithstanding the knowledge of the Seller, any
Receivable, or the sale of the related Financed
Vehicle, fails to comply with applicable law in the
manner and to the extent set forth herein, the
Seller shall repurchase such Receivable in accor-
dance with the terms and conditions set forth in
Section 2.4, but such failure to comply with such
laws shall not constitute a breach of this warranty
except for purposes of Section 2.4.
(iv) Binding Obligation. The Receivable
constitutes the genuine, legal, valid, and binding
payment obligation in writing of the Obligor, en-
forceable in all material respects by the holder
thereof in accordance with its terms, except as such
enforceability may be limited by applicable bank-
ruptcy, insolvency, reorganization, moratorium,
conservatorship, receivership, liquidation and other
similar laws affecting creditors' rights in general.
(v) No Government Obligor. The Obligor
on the Receivable is not the United States of Ameri-
ca or any state thereof or any local government, or
any agency, department, political subdivision or
instrumentality of the United States of America or
any state thereof or any local government.
(vi) Receivables in Force. The Receiv-
able has not been satisfied, subordinated, or re-
scinded and the Financed Vehicle has not been re-
leased from the lien granted by the Receivable in
whole or in part.
(vii) No Amendment or Waiver. No materi-
al provision of the Receivable has been amended,
waived, altered or modified in any respect, except
pursuant to a document, instrument or writing in-
cluded in the Receivable File or reflected in the
Electronic Ledger, and no such amendment, waiver,
alteration or modification causes such Receivable
not to conform to the other warranties contained in
this Section.
(viii) No Defenses. The Receivable is
not subject to any right of rescission, setoff,
counterclaim or defense, including the defense of
usury, and the operation of any of the terms of the
Receivable, or the exercise of any right thereunder,
will not render the Receivable unenforceable in
whole or in part or subject to any right of rescis-
sion, setoff, counterclaim or defense, including the
defense of usury, and the Seller has not received
written notice of the assertion of any such right of
rescission, setoff, counterclaim or defense asserted
with respect thereto.
(ix) No Liens. The Seller has not re-
ceived notice of any liens or claims, including
liens for work, labor, materials or unpaid state or
federal taxes relating to the Financed Vehicle, that
are or may be liens prior to, or equal in priority
to or coordinate with, the lien granted by the
Receivable.
(x) No Default. Except for payment
delinquencies continuing for a period of not more
than thirty (30) days as of the Cut-Off Date [(or
any applicable Subsequent Transfer Date)], to the
knowledge of the Seller (a) no default, breach,
violation, or event permitting acceleration under
the terms of any Receivable exists; and (b) no
continuing condition that with notice or lapse of
time, or both, would constitute a default, breach,
violation, or event permitting acceleration under
the terms of any Receivable has arisen; and the
Seller has not waived any of the foregoing; provid-
ed, however, that if, notwithstanding the knowledge
of the Seller, any of the events specified in (a) or
(b) above exists or has arisen with respect to a
Receivable, the Seller shall repurchase such Receiv-
able in accordance with the terms and conditions of
Section 2.4, with the existence of such events not
constituting a breach of this warranty, except for
purposes of Section 2.4.
(xi) Insurance. The Financed Vehicle
securing such Receivable is required by the Receiv-
able to be insured under an Insurance Policy.
(xii) Good Title. Immediately prior to
the assignment herein contemplated, the Receivable
had not been sold, assigned, pledged or otherwise
conveyed by the Seller to any Person, and the Seller
had good and marketable title to the Receivable free
and clear of any encumbrance, equity, lien, pledge,
charge, claim, security interest or other right or
interest of any other Person, was the sole owner
thereof and had full right and power to transfer and
assign the Receivable to the Trust. Immediately
upon the transfer and assignment of the Receivable
to the Trust, the Trust shall have good and market-
able title to the Receivable, free and clear of any
encumbrance, equity, lien, pledge, charge, claim,
security interest or other right or interest of any
other Person; and all filings and actions required
by the UCC with respect to the transfer to the Trust
of Receivables associated with the sale of the same
have been accomplished for the purpose of complying
with the UCC provisions governing the relative
priority of interests of parties in the Receivables.
(xiii) Lawful Assignment. The Receivable
has not been originated in, and is not subject to
the laws of, any jurisdiction under which the sale,
transfer or assignment of such Receivable hereunder
or pursuant to transfers of the Notes or Certifi-
cates are unlawful, void, or voidable.
(xiv) All Filings Made. All filings have
been made, including filings under the UCC, which
are necessary in any jurisdiction to cause the
ownership and title interests of the Issuer in the
Receivables to be afforded priority over competing
claims of the holders of security interests or other
claims against whom such filings can assure priori-
ty.
(xv) Valid Security Interest. On the
Closing Date, there will exist a valid, subsisting
and enforceable first priority perfected security
interest in the Financed Vehicle securing the Re-
ceivable (subject to administrative delays and
clerical errors on the part of the applicable gov-
ernment agency and to any statutory or other lien
arising by operation of law after the Closing Date
which is prior to such security interest). With
respect to the foregoing, each Seller hereby cove-
nants to take all action necessary such that, at
such time as enforcement of such security interest
is sought, there shall exist a valid, subsisting and
enforceable first priority perfected security inter-
est in the Financed Vehicle for the benefit of the
Issuer (subject to administrative delays and cleri-
cal errors on the part of the applicable government
agency and any statutory or other lien arising by
operation of law after the Closing Date which is
prior to such interest).
(xvi) Capacity of Parties. To the knowl-
edge of the Seller, all parties to the Receivable
had capacity to execute the Receivable; provided,
however, that if, notwithstanding the knowledge of
the Seller, all parties to any Receivable did not
have the capacity to execute such Receivable, the
Seller shall repurchase such Receivable in accor-
dance with the terms and conditions of Section 2.4,
with the existence of such lack of capacity not
constituting a breach of this warranty, except for
purposes of Section 2.4.
(xvii) One Original. Only one original
of each Receivable was executed.
(xviii) Obligations; No Impairment. The
Seller has duly fulfilled all obligations on its
part to be fulfilled under, or in connection with,
the Receivable and has done nothing to impair the
rights of the Issuer, the Noteholders or the Certif-
icateholders in the Receivable or the proceeds
thereof.
(xix) No Fraud or Misrepresentation. To
the knowledge of the Seller, the Receivable was
originated by a Dealer and sold by such Dealer to
the Seller without any conduct constituting fraud or
misrepresentation against the Obligor on the part of
such Dealer; provided, however, that if, notwith-
standing the knowledge of the Seller, any Receivable
was originated and sold under conduct constituting
fraud or misrepresentation against the Obligor on
the part of such Dealer, the Seller shall repurchase
such Receivable in accordance with the terms and
conditions of Section 2.4, with the existence of
such conduct not constituting a breach of this
warranty, except for purposes of Section 2.4.
(xx) Possession. Immediately prior to
the Closing Date, the Seller (or an Affiliate) will
have possession of the Receivable File, and there
are and there will be no custodial agreements in
effect materially adversely affecting the right or
ability of the Seller to make, or cause to be made,
any delivery required hereunder.
(xxi) Bulk Transfer Laws. The transfer,
assignment and conveyance of the Receivable and
Receivable Files by the Seller pursuant to this
Agreement is not subject to the bulk transfer or any
similar statutory provisions in effect in any appli-
cable jurisdiction.
SECTION 2.3. Warranties as to the Receivables
in the Aggregate and Actions of the Sellers. The Sellers
hereby make the following warranties jointly and several-
ly as to the Receivables on which the Issuer shall be
deemed to have relied in accepting the Receivables.
Unless otherwise indicated, such warranties shall speak
as of the execution and delivery of this Agreement, but
shall survive the sale, transfer, and assignment of the
Receivables to the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture.
(a) Amounts. The aggregate Cut-Off Date Prin-
cipal Balances of the Receivables are equal to the Ini-
tial Pool Balance.
(b) Individual Characteristics. The Receiv-
ables have the following individual characteristics as of
the close of business of the Servicer on the Cut-Off
Date: (a) the obligations of the Obligors on the Receiv-
ables are secured by security interests in new or used
automobiles, vans or light-duty trucks; (b) each Receiv-
able has a Contract Rate of at least ___% and not more
than ___%; (c) each Receivable had a remaining maturity
of not less than [12] months and not more than __ months;
(d) each Receivable had a Cut-Off Date Principal Balance
of not less than $_____ and not more than $_____; (e) no
Receivable was more than thirty (30) days delinquent as
of the Cut-Off Date; (f) no Financed Vehicle had been
repossessed as of the Cut-Off Date; (g) no Receivable is
a Defaulted Receivable; (h) each Receivable is a retail
motor vehicle installment sales contract; (i) each [Sim-
ple Interest] Receivable [(except for those Receivables
that are Balloon Receivables)], at origination, provides
for allocation of payments between principal and interest
by the Simple Interest Method and for level monthly
payments that fully amortize the Amount Financed over the
original term; (j) each Receivable is not related to a
Motor Vehicle that is the subject of forced-placed insur-
ance; [and (k) each Balloon Receivable, at origination,
provides for allocation of payments between principal and
interest by the Simple Interest Method and for equal
monthly payments (except for the final scheduled monthly
payment) which fully amortize the Amount Financed over
the original term]. The Receivables were selected utiliz-
ing selection procedures that were not adverse to the
Certificateholders.
(c) Aggregate Characteristics. The Receivables
had the following characteristics in the aggregate as of
the Cut-Off Date: (a) approximately __% of the Initial
Pool Balance was attributable to loans for purchases of
new Financed Vehicles, and approximately __% of the
Initial Pool Balance was attributable to loans for pur-
chases of used Financed Vehicles; (b) the weighted aver-
age Contract Rate of the Receivables was approximately
____%; (c) there were _____ Receivables; (d) the average
Cut-Off Date Principal Balance was approximately $_____;
(e) the weighted average original term and weighted
average remaining term of the Receivables were approxi-
mately _____ months and _____ months, respectively; [(f)
no Receivable was originated on a date prior to ____ __,
____; (g) no Receivable has a first Scheduled Payment due
after ____ __, ____; and (h) % of the Initial Pool
Balance ( Receivables) are Simple Interest Receivables
and % of the Initial Pool Balance ( Receivables)
are Balloon Receivables.]
(d) Computer Tape. The Computer Tapes were
complete and accurate as of the Cut-Off Date and include
a description of the same Receivables that are described
in the Schedule of Receivables.
(e) Marking Records. On or before the Closing
Date, the Sellers will have caused the portions of the
Electronic Ledger relating to the Receivables to be
clearly and unambiguously marked to show that such Re-
ceivables constitute part of the Owner Trust Property and
are owned by the Trust in accordance with the terms of
the trust created hereunder.
(f) No Assignment. As of the Closing Date,
none of the Sellers shall have taken any action to convey
any right to any Person that would result in such Person
having a right to payments received under the Insurance
Policies, the Dealer Agreements, the Dealer Assignments
or payments due under the Receivables that is senior to,
or equal with, that of the Trust.
(g) Location of Receivable Files. The Receiv-
able Files shall be kept at one or more of the locations
listed in Schedule B hereto.
(h) Rating Agencies. The rating agencies
rating the Notes and the Certificates are Moody's and
Standard & Poor's.
(i) Agreement. The representations and warran-
ties of the Sellers in Section 6.1 are true and correct.
SECTION 2.4. Repurchase upon Breach. The
Sellers, the Servicer, the Issuer or the Owner Trustee,
as the case may be, shall inform the other parties to
this Agreement and the Indenture Trustee promptly, in
writing, upon the discovery of any breach of the Sellers'
representations and warranties made by the Sellers pursu-
ant to Section 2.2. (including, in the case of Sections
2.2(iii), (x), (xvi) and (xix), any breach or failure
which would have occurred if such warranty had not been
made to the knowledge of the Sellers) or Section 2.3.
Unless the breach shall have been cured by the last day
of the Collection Period which includes the 60th day
after the date on which the Seller becomes aware of, or
receives notice in writing of, such breach or failure,
the Indenture Trustee shall enforce the obligation of the
Sellers under this Section 2.4, to repurchase, as of the
last day of such Collection Period, any Receivable mate-
rially and adversely affected by the breach on the Depos-
it Date immediately following such Collection Period;
provided, however, that if such breach or failure occurs
solely as a result of NationsBank, N.A.'s practice of
retaining original Motor Vehicle loan documents only in
microfilm form, NationsBank, N.A. shall not be required
to repurchase any such Receivables unless the Dealer with
respect to such Receivable becomes the subject of any
bankruptcy, insolvency or similar proceedings and the
trustee in bankruptcy, conservator, receiver or other
similar official or a creditor of such Dealer asserts
that NationsBank, N.A. did not have, or the Issuer does
not have, a first priority perfected ownership interest
in such Receivable as a result of such practice. Any
breach of a representation relating to the status of a
Receivable as a Simple Interest Receivable or the Con-
tract Rate of a Receivable shall be deemed material. In
consideration of the purchase of a Receivable hereunder,
the related Seller shall remit the Purchase Amount of
such Receivable, no later than the close of business (New
York time) on the applicable Deposit Date, in the manner
specified in Section 4.5. Except as provided in Section
6.2, the sole remedy of the Issuer, the Owner Trustee,
the Indenture Trustee, the Noteholders or the Certifi-
cateholders with respect to a breach or failure to be
true of the warranties made by a Seller pursuant to
Section 2.2 or Section 2.3 shall be to require such
Seller to repurchase any Receivables subject to such
breach pursuant to this Section 2.4. 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 Receiv-
able pursuant to this Section 2.4 or the eligibility of
any Receivable for purposes of this Agreement.
SECTION 2.5. Custody of Receivable Files. To
assure uniform quality in servicing the Receivables and
to reduce administrative costs, the Issuer, upon the
execution and delivery of this Agreement, hereby
revocably appoints the Servicer, and the Servicer hereby
accepts such appointment, to act as the agent 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 pursuant to the Indenture, with
respect to each Receivable (collectively, a "Receivable
File"):
(a) the original of the Receivable in all cases
in which an original exists;
(b) any documents evidencing the existence of
any Insurance Policies;
(c) copies of the original credit application;
(d) either (x) the original certificate of
title, or such other documents as the Seller shall keep
on file, in accordance with its customary procedures,
evidencing the security interest of the Seller in the
Financed Vehicle or the efforts (including the proof of
application for notice of lien or other evidence of such
security interest) made by the Seller to perfect such
security interest; or (y) with respect to jurisdictions
in which the certificate of title or other evidence of
ownership is not issued to the holder of a lien, evidence
of the Seller's security interest in the Financed Vehicle
(or the efforts made by the Seller to perfect such secu-
rity interest (including the proof of application for
notice of lien or other evidence of such security inter-
est)), in each case issued by the appropriate governmen-
tal agency of the state in which such Financed Vehicle is
registered;
(e) electronic entries or originals or true
copies of all documents, instruments or writings relating
to extensions, amendments or waivers of the Receivable;
and
(f) any and all other documents or electronic
records that the Seller or Servicer, as the case may be,
shall keep on file, in accordance with its customary
procedures, relating to the Receivable, the Obligor or
the Financed Vehicle.
SECTION 2.6. Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer, in its capacity
as custodian, shall hold the Receivable Files on behalf
of the Issuer and the Indenture Trustee for the benefit
of all present and future Noteholders and Certificate-
holders, and maintain such accurate and complete ac-
counts, records, and computer systems pertaining to each
Receivable as shall enable the Servicer and the Indenture
Trustee to comply with the terms and provisions of this
Agreement applicable to it. In performing its duties as
custodian hereunder, the Servicer and any Person delegat-
ed by the Servicer shall exercise the degree of skill and
care that the Servicer exercises with respect to similar
motor vehicle receivables owned and/or serviced by it and
that is consistent with industry standards. The Servicer
shall implement and maintain written policies and proce-
dures with respect to the handling and custody of the
Receivable Files, so that the integrity and physical
possession of the Receivable Files shall be maintained,
and, in general, shall attend to all details in connec-
tion with maintaining custody of the Receivable Files as
agent of the Owner Trustee, for the benefit of the Trust
and the Noteholders and the Certificateholders. The
Servicer shall also maintain a current inventory of the
Receivables and conduct, or cause to be conducted, peri-
odic audits (to the extent required by Section 3.11) of
the Receivable Files held by it under this Agreement and
the related accounts, records, and computer systems, and
shall otherwise maintain (or cause to be maintained) the
Receivable Files in such a manner as shall enable the
Issuer or Indenture Trustee to verify, if the Issuer or
Indenture Trustee so elects, the accuracy of the record
keeping of the Servicer; provided, however, nothing in
this Agreement shall be construed to require the Issuer,
the Owner Trustee or the Indenture Trustee to verify the
accuracy of the record keeping of the Servicer. The
Servicer shall promptly report to the Issuer, the Owner
Trustee and the Indenture Trustee any failure to hold the
Receivable Files and maintain the accounts, records, and
computer systems as herein provided, and the Servicer
shall promptly take appropriate action to remedy any such
failure.
(b) Maintenance of and Access to Records. The
Servicer shall maintain (or cause to be maintained) each
Receivable File at the location specified in Schedule B
to this Agreement, or at such other office of the
Servicer or of its delegatee within the states of North
Carolina or Texas (or, in the case of any successor
Servicer, within the state in which its principal place
of business is located) as shall be specified to the
Issuer and the Indenture Trustee by thirty (30) days'
prior written notice. The Servicer shall make available
to the Issuer and the Indenture Trustee or their Autho-
rized Officers (or, when requested in writing by the
Issuer or Indenture Trustee, to its attorneys or audi-
tors) and to Noteholders and Certificateholders (in
either case only for legitimate business purposes relat-
ing to the Trust) the Receivable Files and the related
accounts, records, and computer systems maintained by the
Servicer at such times during the normal business hours
of the Servicer as the Issuer or the Indenture Trustee
shall reasonably instruct.
(c) Release of Documents. Upon written in-
structions from the Indenture Trustee, the Servicer shall
release (or cause to be released) any document in the
Receivable Files to the Indenture Trustee, the Indenture
Trustee's agent, or the Indenture Trustee's designee, as
the case may be, at such place or places as the Indenture
Trustee may designate, as soon thereafter as is practica-
ble. Any document so released shall be handled by the
Indenture Trustee with due care and returned to the
Servicer for safekeeping as soon as the Indenture Trustee
or its agent or designee, as the case may be, shall have
no further need therefor.
(d) Title to Receivables. The Servicer agrees
that, in respect of any Receivable held by it as custodi-
an hereunder, the Servicer will not at any time have or
in any way attempt to assert any interest in such Receiv-
able (other than its interest in the Supplemental Servic-
ing Fee) or the related Receivable File, other than
solely for the purpose of collecting or enforcing the
Receivable for the benefit of the Trust and that the
entire equitable interest in such Receivable and the
related Receivable File shall at all times be vested in
the Trust.
(e) Authority to Delegate Duties. The
Servicer may delegate the performance of its obligations
under this Section 2.6 to any Person, including any
Affiliate of the Servicer; provided, that nothing in this
Section 2.6 shall relieve the Servicer of any liability
for the performance, by it or by a delegatee, of the
custodial obligations described herein.
SECTION 2.7. Instructions; Authority to Act.
The Servicer shall be deemed to have received proper
instructions with respect to the Receivable Files upon
its receipt of written instructions signed by an Autho-
rized Officer of the Indenture Trustee. A certified copy
of excerpts of By-Laws or certain resolutions of the
Board of Directors of the Indenture Trustee shall consti-
tute conclusive evidence of the authority of any such
Authorized Officer to act and shall be considered in full
force and effect until receipt by such Servicer of writ-
ten notice to the contrary given by the Indenture Trust-
ee.
SECTION 2.8. Custodian's Indemnification. The
Servicer, in its capacity as custodian, shall indemnify
and hold harmless the Issuer, the Owner Trustee and the
Indenture Trustee (and each of their officers, directors,
employees and agents) and the Noteholders and the Certif-
icateholders from and against any and all liabilities,
obligations, losses, compensatory damages, payments,
costs or expenses (including legal fees if any) of any
kind whatsoever that may be imposed on, incurred, or
asserted against the Issuer, the Owner Trustee, the
Indenture Trustee, the Noteholders or the Certificate-
holders as the result of any act or omission relating to
the maintenance and custody of the Receivable Files;
provided, however, that the Servicer shall not be liable
hereunder to the extent, but only to the extent, that
such liabilities, obligations, losses, compensatory
damages, payments, costs or expenses result from the
willful misfeasance, bad faith, or negligence of the
Owner Trustee or the Indenture Trustee.
SECTION 2.9. Effective Period and Termination.
The Servicer's appointment as custodian shall become
effective as of the Cut-Off Date and shall continue in
full force and effect until terminated pursuant to this
Section 2.9. If a Servicer resigns as the Servicer in
accordance with the terms of this Agreement or if all of
the rights and obligations of a Servicer shall have been
terminated under Section 8.1, the appointment of the
Servicer as custodian hereunder may be terminated by (i)
the Indenture Trustee, or (ii) by the Indenture Trustee
at the direction of Noteholders of Notes evidencing not
less than a majority of the aggregate principal amount of
Notes Outstanding (the "Majority Noteholders"), or (iii)
by the Owner Trustee with the consent of the Majority
Noteholders, or (iv) if the Notes have been paid in full,
(x) by the Owner Trustee, at the direction of the Certif-
icateholders of Certificates evidencing not less than a
majority of the aggregate outstanding principal balance
of Certificates (the "Majority Certificateholders") or
(y) by the Owner Trustee with the consent of the Majority
Certificateholders. The Indenture Trustee, at the direc-
tion of the Majority Noteholders, or, if no Notes are
Outstanding, the Owner Trustee at the direction of the
Majority Certificateholders, may terminate the Servicer's
appointment as a custodian hereunder at any time with
cause, or with thirty (30) days' prior notice without
cause, upon written notification to the Servicer. As
soon as practicable after any termination of such ap-
pointment the Servicer, at the Servicer's expense, shall
deliver or cause to be delivered, the Receivable Files to
the Indenture Trustee, the Indenture Trustee's agent or
the Indenture Trustee's designee at such place or places
as the Indenture Trustee may reasonably designate.
Notwithstanding any termination of the Servicer as custo-
dian hereunder (other than in connection with a termina-
tion resulting from the termination of the Servicer, as
such, pursuant to Section 8.1), the Indenture Trustee
agrees that, from and after the date of such termination,
and for so long as the Servicer is acting as Servicer
pursuant to this Agreement, the Indenture Trustee shall
provide, or cause the successor custodian to provide,
reasonable and customary access to the Receivable Files
to the Servicer, at such times as the Servicer shall
request, for the purpose of carrying out its duties and
responsibilities with respect to the servicing of the
Receivables hereunder and upon the Servicer providing to
the Indenture Trustee a request for release in such form
as may be agreed to between the Servicer and the Inden-
ture Trustee.
End of Article II
ARTICLE III
ADMINISTRATION AND SERVICING OF
RECEIVABLES AND OWNER TRUST PROPERTY
SECTION 3.1. Duties of Servicer. The Servicer
, acting alone and/or through subservicers as provided in
this Section 3.1, shall administer the Receivables ser-
viced in accordance herewith. The Servicer's duties
shall include, but not be limited to, the collection and
posting of all payments, responding to inquiries by
Obligors on the Receivables, or by federal, state, or
local governmental authorities, investigating delinquen-
cies, furnishing monthly and annual statements to the
Owner Trustee and the Indenture Trustee with respect to
distributions and providing collection and repossession
services in the event of Obligor default. The Servicer
shall also administer and enforce all rights and respon-
sibilities of the holder of the Receivables provided for
in the Dealer Agreements, Dealer Assignments and the
Insurance Policies, to the extent that such Dealer Agree-
ments, Dealer Assignments and Insurance Policies relate
to the Receivables, the Financed Vehicles or the
Obligors. In performing its duties as Servicer hereun-
der, the Servicer will exercise that degree of skill and
care that the Servicer exercises with respect to similar
motor vehicle receivables owned and/or serviced by the
Servicer and that is consistent with prudent industry
standards. Without limiting the generality of the fore-
going, the Servicer is hereby authorized and empowered by
the Owner Trustee to execute and deliver, on behalf of
itself, the Issuer, the Owner Trustee, the Indenture
Trustee, the Noteholders and the Certificateholders, or
any of them, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge,
and all other comparable instruments, with respect to the
Receivables or to the Financed Vehicles, all in accor-
dance with this Agreement; provided, however, that not-
withstanding the foregoing, the Servicer shall not,
except pursuant to an order from a court of competent
jurisdiction or as otherwise required by law, release an
Obligor from payment of any unpaid amount under any
Receivable or waive the right to collect the unpaid
balance (including accrued interest) of any Receivable
from the Obligor, except in connection with a de minimis
deficiency which the Servicer would not attempt to col-
lect in accordance with its customary procedures. If the
Servicer shall commence a legal proceeding to enforce a
Receivable, the Owner Trustee shall thereupon be deemed
to have automatically assigned such Receivable (other
than a Receivable purchased by the Servicer in respect of
a breach pursuant to Section 3.7 hereof) to the Servicer,
which assignment shall be solely for purposes of collec-
tion. The Owner Trustee shall execute and deliver to the
Servicer any powers of attorney and other documents or
instruments prepared by and at the expense of the
Servicer which are necessary or appropriate to enable the
Servicer to carry out its servicing and administrative
duties hereunder. The Servicer, at its expense, shall
obtain on behalf of the Issuer or the Owner Trustee, all
licenses, if any, required by the laws of any jurisdic-
tion to be held by the Issuer or the Owner Trustee in
connection with the ownership of the Receivables, and
shall make all filings and pay all fees as may be re-
quired in connection therewith during the term hereof.
From time to time during the term of this
Agreement, the Servicer may enter into agreements with
one or more Affiliates for the servicing and administra-
tion of certain of the Receivables; provided, however,
that any such subservicer shall be and shall remain, for
so long as it is acting as subservicer, an Eligible
Servicer, and any fees paid to such subservicer shall be
paid by the Servicer and not out of the assets of the
Trust, and any such subservicer shall agree to service
the Receivables in a manner consistent with the terms of
this Agreement.
(a) References in this Agreement to actions
taken, to be taken, permitted to be taken, or restric-
tions on actions permitted to be taken by the Servicer in
servicing the Receivables and other actions taken, to be
taken, permitted to be taken, or restrictions on actions
to be taken with respect to the Owner Trust Property
shall include actions taken, to be taken, permitted to be
taken, or restrictions on actions permitted to be taken
by a subservicer on behalf of a Servicer and references
herein to payments or Recoveries received by a Servicer
shall include payments or Recoveries received by a
subservicer, irrespective of whether such payments or
Recoveries are actually deposited in the Collection
Account by such subservicer.
(b) The Servicer shall be entitled to termi-
nate any subservicing agreement in accordance with the
terms and conditions of such subservicing agreement and
without any limitation by virtue of this Agreement;
provided, however, that, in the event of termination of
any subservicing agreement by the Servicer, the Servicer
shall either act directly as servicer of the related
Receivable or enter into a subservicing agreement with a
successor subservicer which will be bound by the terms of
the related subservicing agreement.
(c) As a condition to the appointment of any
subservicer other than an Affiliate of a Seller, the
Servicer shall notify the Issuer, the Owner Trustee, the
Indenture Trustee and the Rating Agencies in writing
before such assignment becomes effective and such
subservicer shall be required to execute and deliver an
instrument in which it agrees that, for so long as it
acts as subservicer of the Receivables and the other
Owner Trust Property being serviced by it, the covenants,
conditions, indemnities, duties, obligations and other
terms and provisions of this Agreement applicable to the
Servicer hereunder shall be applicable to it as
subservicer, that it shall be required to perform its
obligations as subservicer for the benefit of the Trust
as if it were Servicer hereunder (subject, however, to
the right of the Servicer to direct the performance of
such obligations in accordance with this Agreement) and
that, notwithstanding any provision of a subservicing
agreement to the contrary, such subservicer shall be
directly liable to the Issuer, Owner Trustee and the
Indenture Trustee (notwithstanding any failure by the
Servicer to perform its duties and obligations hereunder)
for the failure by such subservicer to perform its obli-
gations hereunder or under any subservicing agreement,
and that (notwithstanding any failure by a Servicer to
perform its respective duties and obligations hereunder)
the Issuer, the Owner Trustee, and the Indenture Trustee
may enforce the provisions of this Agreement and any
subservicing agreement against the subservicer for the
benefit of the Trust and the Noteholders and Certificate-
holders, without diminution of such obligations or lia-
bilities by virtue of any subservicing agreement, by
virtue of any indemnification provided thereunder or by
virtue of the fact that the Servicer is primarily respon-
sible hereunder for the performance of such duties and
obligations, as if a subservicer alone were servicing and
administering, under this Agreement, the Receivables and
the other Owner Trust Property being serviced by it under
the subservicing agreement. Any such subservicer shall
agree that it has no rights (including but not limited
to, rights to compensation and indemnity) against the
Trust.
(d) Notwithstanding any subservicing agree-
ment, any of the provisions of this Agreement relating to
agreements or arrangements between a Servicer or a
subservicer or reference to actions taken through such
Persons or otherwise, the Servicer shall remain obligated
and liable to the Issuer, the Owner Trustee, the Inden-
ture Trustee, the Noteholders and Certificateholders for
the servicing and administering of the Receivables and
the other Owner Trust Property serviced by it in accor-
dance with the provisions of this Agreement (including
for the deposit of payments and Recoveries received by a
subservicer, irrespective of whether such payments or
Recoveries are actually remitted to the Servicer or
deposited in the Collection Account by such subservicer;
provided, however, that if such amounts are so deposited,
the Servicer shall have no further obligation to do so)
without diminution of such obligation or liability by
virtue of such subservicing agreements or arrangements or
by virtue of indemnification from a subservicer, to the
same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the
Receivables and the other Owner Trust Property. The
Servicer shall be entitled to enter into any agreement
with a subservicer for indemnification, and nothing
contained in this Agreement shall be deemed to limit or
modify such indemnification.
(e) Any subservicing agreement shall provide
that in the event the Servicer shall for any reason no
longer be acting as such (including by reason of the
occurrence of any of the Events of Servicing Termina-
tion), the successor Servicer may, in its discretion,
thereupon assume all of the rights and obligations of the
outgoing Servicer under a subservicing agreement. In
such event, the successor Servicer shall be deemed to
have assumed all of the Servicer's interest therein and
to have replaced the outgoing Servicer as a party to such
subservicing agreement to the same extent as if such
subservicing agreement had been assigned to the successor
Servicer, except that the outgoing Servicer shall not
thereby be relieved of any liability or obligation on the
part of the outgoing Servicer to the subservicer under
such subservicing agreement. The outgoing Servicer
shall, upon request of the Issuer or the Indenture Trust-
ee, but at the expense of the outgoing Servicer, deliver
to the successor Servicer all documents and records
relating to each such subservicing agreement and the
Receivables and the other Owner Trust Property then being
serviced thereunder and an accounting of amounts collect-
ed and held by it and otherwise use its commercially
reasonable efforts to effect the orderly and efficient
transfer of the subservicing agreement to the successor
Servicer. In the event that the successor Servicer
elects not to assume a subservicing agreement, the outgo-
ing Servicer, at its expense, shall terminate such
subservicing agreement and shall cause the subservicer to
deliver to the successor Servicer all documents and
records relating to the Receivables and the other Owner
Trust Property being serviced thereunder and all amounts
held (or thereafter received) by such subservicer (to-
gether with an accounting of such amounts) and shall
otherwise use its commercially reasonable efforts to
effect the orderly and efficient transfer of servicing of
the Receivables and the other Owner Trust Property being
serviced by such subservicer to the successor Servicer.
The relationship of the Servicer (and of any successor to
the Servicer as servicers under this Agreement) to the
Issuer, the Owner Trustee or the Indenture Trustee under
this Agreement is intended by the parties to be that of
independent contractors and not that of joint venturers,
partners or agents of the Issuer, the Owner Trustee or
the Indenture Trustee.
SECTION 3.2. Collection of Receivable Payments.
The Servicer shall make reasonable efforts to collect all
payments called for under the terms and provisions of the
Receivables as and when the same shall become due, and
otherwise act with respect to the Receivables, the Dealer
Agreements, the Insurance Policies and the other Trust
Property in such manner as will, in the reasonable judg-
ment of the Servicer, maximize the amount to be received
by the Trust with respect thereto, in accordance with the
standard of care required by Section 3.1. The Servicer
will not increase or decrease the number or amount of any
Scheduled Payment or the Amount Financed under a Receiv-
able or the Contract Rate of a Receivable, or extend,
rewrite or otherwise modify the payment terms of a Re-
ceivable, release collateral securing a Receivable, or
otherwise modify, waive, or consent to any change in any
material term of a Receivable unless (i) the Servicer
determines that default by the Obligor on the Receivable
is reasonably foreseeable and such action, in the
Servicer's reasonable judgment, will maximize the amount
ultimately collected by the Trust with respect to such
Receivables; (ii) the Servicer would take such action if
the Receivable were serviced by it for its own account
and in accordance with its customary standards; and (iii)
any such action with respect to any Receivable shall not
cause the term of such Receivable to extend beyond the
last day of the Collection Period immediately preceding
the Final Scheduled Distribution Date.
In the event that the Servicer fails to comply with the
provisions of the preceding sentence, the Servicer shall
be required to purchase the Receivable or Receivables
affected thereby, for the Purchase Amount, in the manner
specified in Section 3.7 as of the close of the Collec-
tion Period in which such failure occurs.
SECTION 3.3. Realization upon Receivables. On
behalf of the Issuer, the Servicer shall charge off a
Receivable as a Defaulted Receivable no later than [120]
days from a first date of delinquency (unless such delin-
quency shall have subsequently been cured in accordance
with the Servicer's customary servicing practices);
provided, however, that in the event of (a) a bankruptcy
filing under federal law; (b) a bankruptcy or similar
filing under state law; and/or (c) the repossession and
sale of a Financed Vehicle, the Servicer shall charge off
a Receivable as a Defaulted Receivable no later than
[210] days from the first date of delinquency; and pro-
vided, further, that the Servicer shall use commercially
reasonable efforts to repossess and liquidate the Fi-
nanced Vehicle securing any Receivable as soon as it
determines that a Receivable is uncollectible in accor-
dance with the Servicer's customary servicing procedures,
subject to and in accordance with the standard of care
required by Section 3.1. In taking any such actions, the
Servicer shall follow such customary servicing procedures
as it shall deem necessary or advisable in its servicing
of motor vehicle receivables, and as are otherwise con-
sistent with the standard of care required under Section
3.1, which shall include the exercise of any rights of
recourse to Dealers under the Dealer Agreements, Dealer
Assignments (or rights to compel repurchase against third
Persons) and selling the Financed Vehicle at public or
private sale. The Servicer shall be entitled to recover
all reasonable expenses incurred by it in the course of
repossessing and liquidating a Financed Vehicle into cash
proceeds, but only out of the cash proceeds of such
Financed Vehicle, any deficiency obtained from the Obli-
gor or any amounts received from the related Dealer. The
foregoing shall be subject to the provision that, in any
case in which a Financed Vehicle shall have suffered
damage, the Servicer shall not expend funds in connection
with the repair or the repossession of such Financed
Vehicle unless it shall determine in its discretion that
such repair and/or repossession will increase the Liqui-
dation Proceeds of the related Receivable by an amount
equal to or greater than the amount of such expenses
(which, in any event, shall not be unreasonable).
If, in any enforcement suit or legal proceed-
ing, it is held that a Seller or the Servicer, as the
case may be, may not enforce any Receivable on the ground
that it shall not be a real party in interest or a Person
entitled to enforce the Receivable, or otherwise, the
Owner Trustee shall, at the expense of such Seller or the
Servicer, as the case may be, take such steps as such
Seller or the Servicer, as the case may be, deems neces-
sary to enforce the Receivable, including bringing suit
in the Owner Trustee's name or the names of the Indenture
Trustee, the Noteholders, the Certificateholders, or any
of them.
If the Servicer elects to commence a legal
proceeding to enforce a Dealer Agreement, the act of
commencement shall be deemed to be an automatic assign-
ment from the Owner Trustee to the Servicer of the rights
of the Trust under such Dealer Agreement. If, however,
in any enforcement suit or legal proceeding, it is held
that the Servicer may not enforce the Trust's rights
under a Dealer Agreement on the grounds that it is not a
real party in interest or a Person entitled to enforce
the Dealer Agreement, or otherwise, the Owner Trustee, at
the Servicer's expense, or the applicable Seller, at such
Seller's expense, shall take such steps as the Servicer
deems necessary to enforce the Dealer Agreement, includ-
ing bringing suit in its name or the names of the Inden-
ture Trustee, the Noteholders, the Certificateholders, or
any of them.
SECTION 3.4. Physical Damage Insurance. The
Servicer may sue to enforce or collect upon the Insurance
Policies, in its own name, if possible, or as agent for
the Trust. If the Servicer elects to commence a legal
proceeding to enforce an Insurance Policy, the act of
commencement shall be deemed to be an automatic assign-
ment of the rights of the Trust under such Insurance
Policy to the Servicer for purposes of collection only.
If, however, in any enforcement suit or legal proceeding
it is held that the Servicer may not enforce an Insurance
Policy on the grounds that it is not a real party in
interest or a holder entitled to enforce the Insurance
Policy, or otherwise, the Owner Trustee, on behalf of the
Trust, at the Servicer's expense, or the related Seller,
at the Servicer's expense, shall take such steps as the
Servicer deems necessary to enforce such Insurance Poli-
cy, including bringing suit in its name and/or the names
of the Indenture Trustee, the Noteholders, the Certifi-
cateholders, or any of them.
SECTION 3.5. Maintenance of Security Interests
in Financed Vehicles. The Servicer, in accordance with
the standard of care required under Section 3.1, shall
take such steps as are necessary to maintain perfection
of the security interest created by each Receivable in
the related Financed Vehicle for the benefit of the
Trust. The Issuer and the Owner Trustee, on behalf of
the Trust, hereby authorize the Servicer, and the
Servicer hereby agrees, to take such steps as are neces-
sary to re-perfect such security interest on behalf of
the Trust. If there has been an Event of Servicing
Termination (or the occurrence of an event specified in
clause (iii) or (iv) of Section 8.1(a) with respect to a
Seller), the Servicer, at its expense, shall promptly and
duly execute and deliver such documents and instruments,
and take such other actions as may be necessary, as
evidenced by an Opinion of Counsel delivered to the
Issuer, the Owner Trustee and the Indenture Trustee, to
perfect the Trust's interest in the Owner Trust Property
against all other Persons, including the delivery of the
Receivables and the Receivable Files to the Indenture
Trustee, its agent, or its designee, the endorsement and
delivery of the Insurance Policies or the notification of
the insurers thereunder, the execution of transfer in-
struments, and the endorsement to the Owner Trustee and
the delivery of the certificates of title to the Financed
Vehicles to the appropriate department or departments of
motor vehicles (or other appropriate governmental agen-
cy).
SECTION 3.6. Covenants of the Servicer. The
Servicer makes the following covenants to the Issuer, the
Owner Trustee, the Indenture Trustee, the Noteholders and
the Certificateholders:
(i) Security Interest to Remain in Force.
The Financed Vehicle securing each Receivable will
not be released from the security interest granted
by the Receivable in whole or in part, except as
contemplated herein.
(ii) No Impairment. The Servicer will
not (nor will it permit any subservicer to) impair
in any material respect the rights of the Certifi-
cateholders in the Receivables, the Dealer Agree-
ments, Dealer Assignments or the Insurance Policies
or, subject to clause (iii) below, otherwise amend
or alter the terms thereof if, as a result of such
amendment or alteration, the interests of the Trust,
the Noteholders or the Certificateholders hereunder
would be materially adversely affected.
(iii) Amendments. The Servicer will not
increase or decrease the number or amount of Sched-
uled Payments or the Amount Financed under a Receiv-
able, or extend, rewrite or otherwise waive, amend,
or modify any material term of a Receivable, except
in accordance with the restrictions set forth in
Section 3.2.
SECTION 3.7. Purchases by Servicer upon
Breach. Each Seller, the Servicer and the Owner Trustee,
as the case may be, shall inform the other parties
promptly, in writing, upon the discovery of any breach by
the Servicer of its covenants under Section 3.6. Unless
the breach shall have been cured by the last day of the
Collection Period which includes the 60th day after the
date on which the Servicer becomes aware of, or receives
written notice of, such breach, the Servicer shall pur-
chase, as of the last day of such Collection Period, the
Receivable or Receivables materially adversely affected
thereby on the immediately succeeding Deposit Date;
provided, however, that in the case of a breach of the
covenant contained in Section 3.6(iii), the Servicer
shall be obligated to purchase the affected Receivable or
Receivables on the Deposit Date immediately succeeding
the Collection Period during which the Servicer becomes
aware of, or receives written notice of, such breach
(which in all cases shall be deemed to have a material
adverse effect on the Certificateholders), such purchase
to be as of the last day of such Collection Period. In
consideration of the purchase of a Receivable hereunder,
the Servicer shall remit the Purchase Amount of such
Receivable in the manner specified in Section 4.5.
Except as provided in Section 7.2, the sole remedy of the
Issuer, the Indenture Trustee, or the Certificateholders
against the Servicer with respect to a breach pursuant to
Section 3.6 shall be to require the Servicer to repur-
chase Receivables pursuant to this Section 3.7.
SECTION 3.8. Servicing Compensation. On each
Distribution Date, the Servicer shall be paid its Servic-
ing Fee for such Distribution Date and any unpaid Servic-
ing Fees from prior Distribution Dates to the extent of
funds available therefor in accordance with the provi-
sions of Section 4.6. The Servicing Fee in respect of a
Collection Period (together with any portion of a Servic-
ing Fee that remains unpaid from prior Distribution
Dates) may, at the option of the Servicer, be paid at or
as soon as possible after the beginning of such Collec-
tion Period out of the first collections received on the
Receivables during such Collection Period. In addition,
notwithstanding any other provision of this Agreement,
the Servicer shall (i) retain any late fees or other fees
and charges collected on Receivables during a Collection
Period [and (ii) be paid any interest earned during a
Collection Period on deposits in the Accounts of Collec-
tions on the Receivables] ([collectively], the "Supple-
mental Servicing Fee"). The General Partner shall be
required to pay all expenses incurred by the Servicer in
connection with the Servicer's activities hereunder
(including fees and expenses of the Issuer, [the Inden-
ture Trustee and its counsel (and any custodian appointed
by the Indenture Trustee)] and independent accountants,
any subservicer, taxes imposed on the Servicer or any
subservicer, and expenses incurred in connection with
distributions and reports to the Issuer, the Owner Trust-
ee, the Indenture Trustee, the Noteholders and the Cer-
tificateholders) except expenses incurred in connection
with realizing upon Receivables under Section 3.3. No
transfer, sale, pledge or other disposition of the
Servicer's right to receive all or any portion of the
Servicing Fee or Supplemental Servicing Fee shall be
made, and any such attempted transfer, sale, pledge or
other disposition shall be void, unless such transfer is
made to one or more successor Servicers in connection
with the assumption by any such successor Servicer of the
duties hereunder pursuant to Section 8.2 and all (and not
a portion) of the Servicing Fee and Supplemental Servic-
ing Fee is transferred to any such successor Servicer.
SECTION 3.9. Servicer's Report. (a) On or
before the Determination Date immediately preceding each
Distribution Date, the Servicer shall deliver to the
Owner Trustee, the Indenture Trustee, each Note Paying
Agent and Certificate Paying Agent, and the Sellers, with
a copy to the Rating Agencies, a certificate of an Autho-
rized Officer of the Servicer substantially in the form
of Exhibit C hereto (each, a "Servicer's Certificate")
containing all information necessary to make the distri-
butions pursuant to Sections [4.4, 4.5,] 4.6 and 4.7, for
the Collection Period preceding the date of such
Servicer's Certificate, together with all information
necessary for the Owner Trustee to send statements to
Certificateholders pursuant to Section 4.9, and for the
Indenture Trustee to send statements to the Noteholders
pursuant to Section 4.9 hereof and Section 6.6 of the
Indenture. Receivables purchased or to be purchased by
the Servicer or a Seller shall be identified by the
Servicer by the Seller's account number with respect to
such Receivable (as specified in the Schedule of Receiv-
ables).
(b) On the Determination Date in each calendar
month, the Servicer shall deliver to the respective
underwriters of the Notes and the Certificates the Note
Pool Factor for each class of Notes and the Certificate
Pool Factor as of the close of business on the Distribu-
tion Date occurring in that month.
SECTION 3.10. Annual Statement as to Compli-
ance. (a) The Servicer shall deliver to the Owner
Trustee, the Indenture Trustee and each Rating Agency on
or before [________ 31] of each year, commencing
[___________ 31, 1997], an Officer's Certificate, stating
that (i) a review of the activities of the Servicer
during the preceding calendar year (or shorter period, in
the case of the first such Officer's Certificate) and of
its performance of its obligations under this Agreement
has been made under such officer's supervision and (ii)
to the best of such officer's knowledge, based on such
review, the Servicer has, or has caused to be, fully
performed its obligations under this Agreement throughout
such year (or shorter period, in the case of the first
such certificate), or, if there has been a material
default in the performance of any such obligation, speci-
fying each such default known to such officer and the
nature and status thereof. [A copy of such Officer's
Certificate and the report referred to in Section 3.11
may be obtained by any Certificateholder or Person certi-
fying that it is a Certificate Owner by a request in
writing to the Owner Trustee, or by any Noteholder or
Person certifying that it is a Note Owner by a request in
writing to the Indenture Trustee, in either case ad-
dressed to the applicable Corporate Trust Office. Upon
the telephone request of the Owner Trustee, the Indenture
Trustee shall promptly furnish the Owner Trustee a list
of Noteholders as of the date specified by the Owner
Trustee.]
(b) The Servicer shall deliver to the Owner
Trustee, the Indenture Trustee and each Rating Agency,
promptly upon having knowledge thereof, but in no event
later than five (5) Business Days thereafter, written
notice in an Officer's Certificate of any event which
constitutes or, with the giving of notice or lapse of
time, or both, would become, an Event of Servicing Termi-
nation under clause (ii) of Section 8.1(a).
SECTION 3.11. Independent Certified Public
Accountants' Reports. The Servicer shall cause a firm of
independent certified public accountants (who may also
render other services to the Servicer and the Sellers and
their Affiliates) to deliver to the [Owner Trustee and
the Indenture Trustee] on or before [______ 31] of each
year commencing [_____ 31, ___], a report to the effect
that such firm has conducted an examination, substantial-
ly in compliance with attestation standards established
by the American Institute of Certified Public Accoun-
tants, of certain documents and records relating to the
servicing procedures under this Agreement and that, on
the basis of such examination, such firm is of the opin-
ion that such servicing was conducted in compliance with
the sections of this Agreement with which independent
public accountants generally possess adequate profession-
al knowledge and which are reasonably subject to positive
assurance by them, except for such exception as they
believe to be immaterial and such other exceptions as
shall be set forth in such report.
SECTION 3.12. Access to Certain Documentation
and Information Regarding Receivables. The Servicer
shall provide the Indenture Trustee and the Certificate-
holders with access to the Receivable Files in such cases
where the Indenture Trustee or the Certificateholders
shall be required by applicable statutes or regulations
to have access to such documentation. Such access shall
be afforded without charge, but only upon reasonable
request and during normal business hours at an office of
the Servicer reasonably designated by the Servicer.
Nothing in this Section 3.12 shall affect the obligation
of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors, and the
failure of a Servicer to provide access to information as
a result of such obligation shall not constitute a breach
of this Section. Any Certificateholder, by its accep-
tance of a Certificate, shall be deemed to have agreed to
keep any information obtained by it pursuant to this
Section confidential, except as may be required by appli-
cable law.
SECTION 3.13. Reports to the Commission. The
Servicer shall, on behalf of the Trust, cause to be filed
with the Commission any periodic reports required to be
filed under the provisions of the Exchange Act and the
rules and regulations of the Commission thereunder.
SECTION 3.14. Reports to the Rating Agencies.
The Servicer shall deliver to each Rating Agency, at such
address as each Rating Agency may request, a copy of all
reports or notices furnished or delivered pursuant to
this Article and a copy of any amendments, supplements or
modifications to this Agreement and, if any subservicer
is not an Affiliate of the Seller, any subservicing
agreement and any other information reasonably requested
by such Rating Agency to monitor this transaction.
End of Article III
ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT;
STATEMENTS TO NOTEHOLDERS AND CERTIFICATEHOLDERS
SECTION 4.1. Accounts. (a) The Servicer
shall, prior to the Closing Date, establish and maintain
a segregated trust account in the name of the Indenture
Trustee, at an Eligible Institution (which shall initial-
ly be ), which shall be designated as the
"Collection Account". The Collection Account shall be
held in trust for the benefit of the Noteholders and the
Certificateholders. The Collection Account shall be
under the sole dominion and control of the Indenture
Trustee; provided, that the Servicer may make deposits
to, and direct the Indenture Trustee in writing to make
withdrawals from, the Collection Account in accordance
with the terms of the Basic Documents. All monies depos-
ited from time to time in the Collection Account shall be
held by the Indenture Trustee as part of the Owner Trust
Property and all deposits to and withdrawals therefrom
shall be made only upon the terms and conditions of the
Basic Documents.
If the Servicer is required to remit collec-
tions pursuant to the first sentence of Section 4.2, all
amounts held in the Collection Account shall, to the
extent permitted by applicable law, rules and regula-
tions, be invested, as directed in writing by the
Servicer, by the bank or trust company then maintaining
the Collection Account in Permitted Investments that
mature not later than the Business Day immediately prior
to the Distribution Date for the Collection Period to
which such amounts relate and such Permitted Investments
shall be held to maturity. [All interest and other
income (net of losses and investment expenses) on funds
on deposit in the Collection Account shall be withdrawn
from the Collection Account at the written direction of
the Servicer and shall be paid to the _________.] In the
event that the Collection Account is no longer to be
maintained at ___________, the Servicer shall, with the
Indenture Trustee's or Owner Trustee's assistance as
necessary, cause the Collection Account to be moved to an
Eligible Institution within ten (10) Business Days (or
such longer period not to exceed thirty (30) calendar
days as to which each Rating Agency may consent).
(b) The Servicer shall, prior to the Closing
Date, establish and maintain a segregated trust account
in the name of the Indenture Trustee at an Eligible
Institution (which shall initially be _______), which
shall be designated as the "Note Payment Account." The
Note Payment Account shall be held in trust for the
benefit of the Noteholders. The Note Payment Account
shall be under the sole dominion and control of the
Indenture Trustee. All monies deposited from time to
time in the Note Payment Account pursuant to this Agree-
ment and the Indenture shall be held by the Indenture
Trustee as part of the Owner Trust Property and shall be
applied as provided in the Basic Documents. In the event
that the Note Payment Account is no longer to be main-
tained at ___________, the Servicer shall, with the
Indenture Trustee's assistance as necessary, cause the
Note Payment Account to be moved to an Eligible Institu-
tion within ten (10) Business Days (or such longer period
not to exceed thirty (30) calendar days as to which each
Rating Agency may consent).
(c) The Servicer shall, prior to the Closing
Date, establish and maintain a segregated trust account
in the name of the Owner Trustee at an Eligible Institu-
tion (which shall initially be ),
which shall be designated as the "Certificate Distribu-
tion Account". Except as provided in the Trust Agree-
ment, the Certificate Distribution Account shall be held
in trust for the benefit of the Certificateholders. The
Certificate Distribution Account shall be under the sole
dominion and control of the Owner Trustee. All monies
deposited from time to time in the Certificate Distribu-
tion Account pursuant to this Agreement and the Indenture
shall be held by the Owner Trustee as part of the Owner
Trust Property and shall be applied as provided in the
Basic Documents. In the event that the Certificate
Distribution Account is no longer to be maintained at
_________, the Servicer shall, with the Owner Trustee's
assistance as necessary, cause the Certificate Distribu-
tion Account to be moved to an Eligible Institution
within ten (10) Business Days (or such longer period not
to exceed thirty (30) calendar days as to which each
Rating Agency may consent).
[(d) The Collection Account, the Note Payment
Account, [the Yield Supplement Account, the Pre-Funding
Account] and the Reserve Account are, collectively, the
"Indenture Trust Accounts." Each Indenture Trust Account
and the Certificate Distribution Account shall be main-
tained as an Eligible Deposit Account, and funds on
deposit in the Indenture Trust Accounts and the Certifi-
cate Distribution Account may, except to the extent
specified herein, be invested by the Indenture Trustee
(or, in the case of the Certificate Distribution Account,
by the Owner Trustee) in Permitted Investments selected
by the Servicer. It is understood and agreed that nei-
ther the Indenture nor the Trust shall be liable for any
loss or charge arising from such investment in Permitted
Investments. Funds on deposit in the Indenture Trust
Accounts with respect to any Collection Period shall be
invested in Permitted Investments that will mature so
that all funds (including both principal and interest)
will be available at the close of business on the Deposit
Date following such Collection Period. Funds deposited
in an Indenture Trust Account on a Deposit Date which
immediately precedes a Distribution Date upon the maturi-
ty of any Permitted Investments are not required to be
(but may be) invested overnight.
SECTION 4.2. Collections. (a) The Servicer
shall remit to the Collection Account (i) all payments by
or on behalf of the Obligors (excluding Purchased Receiv-
ables) and (ii) all Liquidation Proceeds and Recoveries,
in each case as soon as practicable, but in any event not
later than the second Business Day after the receipt
thereof; provided, that if and so long as the specific
terms and conditions set forth below in this Section 4.2
are fulfilled, the Servicer may make remittances of
collections less frequently than daily.
(b) Notwithstanding the provisions of Section
4.2(a), if (i) the Servicer shall have the Required
Rating or (ii) (A) the Servicer shall have obtained a
letter of credit or surety bond (or other form of guaran-
ty) in favor of the Indenture Trustee, on behalf of the
Issuer, the Owner Trustee, the Noteholders and the Cer-
tificateholders, providing that the Indenture Trustee may
demand payment (up to the amount then available thereun-
der) in the event that the Servicer fails to make any
payment or deposit required hereunder and (B) the Rating
Agency Condition shall be satisfied, the Servicer may
deposit the amounts referred to in subsection (a) above
into the Collection Account not later than the Deposit
Date immediately succeeding the last day of the related
Collection Period, for so long as the Servicer shall have
the Required Rating or such letter of credit, surety bond
or other form of guaranty is in full force and effect, as
the case may be; provided, however, that (i) if an Event
of Servicing Termination has occurred and is continuing,
(ii) the Servicer has been terminated as such pursuant to
Section 8.1 or (iii) the Servicer ceases to have the
Required Rating (and the Servicer has not obtained a
letter of credit, surety bond or other form of guaranty
satisfying the conditions specified above), the Servicer
shall deposit such amounts (including any amounts then
being held by the Servicer) into the Collection Account
as provided in Section 4.2(a). Notwithstanding the
foregoing, the provisions of the proviso to the preceding
sentence shall not be applicable to a successor Servicer
solely by reason of the occurrence of an event specified
in clauses (i), (ii) and (iii) of such proviso with
respect to the outgoing Servicer. Following the occur-
rence of an event specified in clauses (i), (ii) or (iii)
of the proviso to the second preceding sentence, on a
monthly basis, all Collections, Liquidation Proceeds and
Recoveries shall be segregated by book-entry or other
form of identification on the Servicer's books and re-
cords and identified as the property of the Trust. The
Servicer shall promptly notify the Indenture Trustee in
writing if it shall obtain or lose the Required Rating or
the benefit of such letter of credit, surety bond or
other form of guaranty.
(c) Notwithstanding the provisions of subsec-
tions (a) and (b) hereof, the Servicer may retain, or
will be entitled to be reimbursed, from amounts otherwise
payable into, or on deposit in, the Collection Account
with respect to a Collection Period any amounts previous-
ly deposited in the Collection Account but later deter-
mined to have resulted from mistaken deposits or postings
or checks returned for insufficient funds, in each case,
with respect to which the Servicer has not been previous-
ly reimbursed hereunder. The amount to be retained or
reimbursed hereunder shall not be included in Collections
with respect to the related Distribution Date.
(d) In those cases where a subservicer is
servicing a Receivable, the Servicer shall cause the
subservicer to remit to the Collection Account as soon as
practicable, but in no event later than the close of
business on the second Business Day after receipt thereof
by the subservicer (but subject to the provisions of
Section 4.2(b) applied with respect to such subservicer
and the limitations contained in Section 4.2(c) of this
Agreement) the amounts referred to in Section 4.2(a) in
respect of a Receivable being serviced by the
subservicer.
The Owner Trustee or the Indenture Trustee shall not be
deemed to have knowledge of any event or circumstance
that would require daily remittance by the Servicer to
the Collection Account unless the Owner Trustee or the
Indenture Trustee has received notice of such event or
circumstance from the Sellers or the Servicer in an
Officer's Certificate or from the Noteholders of Notes
evidencing not less than 25% of the principal amount of
the Notes Outstanding or from the Certificateholders of
Certificates evidencing not less than 25% of the Certifi-
cate Balance or an Officer in the Corporate Trust Office
with knowledge hereof or familiarity herewith has actual
knowledge of such event or circumstance. For purposes of
this Article IV the phrase "payments by or on behalf of
Obligors" shall mean payments made by Persons other than
the Servicer or by other means.
SECTION 4.3. [Reserved]
SECTION 4.4. [Reserved] [Advances. On each
Deposit Date, the Servicer shall make an advance with
respect to each Receivable (other than a Defaulted Re-
ceivable) equal to the excess, if any, of (i) the amount
of interest due on such Receivable at its applicable
Contract Rate as of its Due Date, assuming the payment
thereon was made on such Due Date [(or as of the date
that would have been its Due Date had the Obligor not
paid such Receivable ahead by more than one month)] over
(ii) Interest Collections actually received by the
Servicer as of the last day of such Collection Period
with respect to such Receivable (each such payment, an
"Advance"). If the amount specified in clause (ii) above
with respect to a Receivable exceeds the amount specified
in clause (i) above with respect to such Receivable, such
excess amount shall be remitted to the Servicer to reim-
burse the Servicer for previously unreimbursed Advances
with respect to such Receivable; provided, however, that
the Servicer shall not be entitled to reimbursement for
an Advance resulting from a payment being made by or on
behalf of the Obligor prior to the Due Date under the
Receivable (a "Simple Interest Advance"). In addition,
in the event that a Receivable becomes a Defaulted Re-
ceivable, Outstanding Advances of accrued unpaid interest
thereon shall be reimbursed to the extent of Interest
Collections with respect to such Receivable and, if such
amounts are insufficient, from amounts on deposit in the
Reserve Account. The Servicer shall not be required to
make an Advance (other than a Simple Interest Advance) to
the extent that the Servicer, in its sole discretion,
determines that such Advance would not subsequently be
recovered (whether from Interest Collections on such
Receivables (including Liquidation Proceeds) or the
Reserve Account). The Servicer shall not make any ad-
vance with respect to principal of Receivables. With
respect to each Receivable, the Advance shall increase
Outstanding Advances. Outstanding Advances shall be
reduced by subsequent payments by or on behalf of the
Obligor, collections of Liquidation Proceeds and payments
of the Purchase Amount. If the Servicer shall determine
that an Outstanding Advance with respect to any Receiv-
able shall not be recoverable, the Servicer shall be
reimbursed from any collections made on other Receivables
in the Trust, and Outstanding Advances with respect to
such Receivable shall be reduced accordingly.]
SECTION 4.5. [Reserved] [Additional Deposits.
(a) The Servicer shall deposit in the Collection Account
the aggregate Advances on the Receivables pursuant to
Section 4.4. To the extent that the Servicer fails to
make an advance pursuant to Section 4.4 on the date
required, the Servicer shall so notify the Indenture
Trustee in writing specifying the amount of the Advance
and the Receivable to which such Advance relates, and the
Indenture Trustee shall withdraw such amount (or, if
determinable, such portion of such amount as does not
represent advances for delinquent interest) from the
Reserve Account and deposit such amount in the Collection
Account.
(b) The Servicer and the Sellers shall deposit
or cause to be deposited in the Collection Account the
aggregate Purchase Amount with respect to Purchased
Receivables. All such deposits shall be made, in immedi-
ately available funds, no later than the applicable
Deposit Date. The Servicer shall deposit in the Collec-
tion Account the aggregate of all amounts to be paid
under Sections 9.1 and 3.7. [The Indenture Trustee shall
deposit in the Collection Account the aggregate of
amounts received pursuant to the Yield Supplement Agree-
ment, if any, and amounts received from the Yield Supple-
ment Account, if any, pursuant to Article V.]
(c) The Indenture Trustee shall on the Distri-
bution Date relating to each Collection Period make a
withdrawal from the Reserve Account in an amount equal to
the amount (if positive) calculated by the Servicer
pursuant to the second sentence of Section 4.6(b) and
shall deposit such funds into the Collection Account.]
SECTION 4.6. Distributions. (a) On each
Distribution Date after making the reimbursement of
Outstanding Advances pursuant to Sectron 4.4, the Inden-
ture Trustee shall cause to be made the following trans-
fers and distributions in the amounts set forth in the
Servicer's Certificate for such Distribution Date:
(i) to the Servicer, from the Available
Interest (as so allocated), the Servicing Fee
and all unpaid Servicing Fees from prior Col-
lection Periods;
(ii) to the Note Payment Account, from the
Available Funds remaining after the application of
clause (i), the Accrued Note Interest [and the Net
Trust Swap Payment, if any];
(iii) to the Note Payment Account, from the
Available Funds remaining after the application of
clauses (i) and (ii), the Noteholders' Principal
Payment Amount;
(iv) to the Certificate Distribution Account,
from the Available Funds remaining after the appli-
cation of clauses (i) through (iii), the Accrued
Certificate Interest;
(v) to the Certificate Distribution Account,
from the Available Funds remaining after the appli-
cation of clauses (i) through (iv), the
Certificateholders' Principal Distribution Amount;
and
(vi) to the Reserve Account, the Available
Funds remaining after the application of clauses (i)
through (v).
Notwithstanding the foregoing, following the occurrence
and during the continuation of an Event of Default which
has resulted in an acceleration of the Notes or following
an Insolvency Event with respect to [NB-SPC], the Avail-
able Funds remaining after the application of clauses (i)
and (ii) above will be deposited in the Note Payment
Account to the extent necessary to reduce the principal
amount of all the Notes to zero, and the Certificatehold-
ers will not receive any distributions until the princi-
pal amount and accrued interest on the Notes have been
paid in full.
(b) Prior to each Distribution Date, the
Servicer shall on each Determination Date calculate the
Available Funds, the Available Interest, the Available
Principal, the Servicing Fee, the Accrued Note Interest,
[the Net Swap Interest,] the Noteholders' Principal
Payment Amount, the Noteholders' Regular Principal, the
Noteholders' Accelerated Principal, [the Principal Dis-
tribution Amount,] the Accrued Certificate Interest, the
Certificateholders' Principal Distribution Amount, [the
Certificateholders' Regular Principal and the Yield
Supplement Amount, if any]. In addition, the Servicer
shall calculate on each Determination Date the difference
between the Total Required Payment and the Available
Funds.
(c) On each Distribution Date, all amounts on
deposit in the Note Payment Account [(other than [any]
Investment Earnings [in excess of the weighted average of
the Note Interest Rates] [and the Certificate Rate])]
will be paid in the following order of priority:
(i) to the [applicable] Noteholders, accrued
and unpaid interest on the outstanding principal
amount of the [applicable class of] Notes at the
[applicable] Note Interest Rate [and to the Swap
Counterparty, the Net Trust Swap Payment, if any,
for such Distribution Date, on a pro rata basis with
the amount[s] payable to the Noteholders pursuant to
this clause (i)]; [and]
(ii) to the [Class A-1] Noteholders in reduc-
tion of principal until the principal amount of the
[Class A-1] Notes has been reduced to zero[;
(iii) to the Class A-2 Noteholders in reduc-
tion of principal until the principal amount of the
Class A-2 Notes has been reduced to zero; and
(iv) to the Class A-3 Noteholders in reduction
of principal until the principal amount of the Class
A-3 Notes has been reduced to zero].
(d) On each Distribution Date, all amounts on
deposit in the Certificate Distribution Account will be
distributed to the Certificateholders.
SECTION 4.7. Reserve Account. (a) (i) There
shall be established, prior to the Closing Date, an
account in the name of the Indenture Trustee at an Eligi-
ble Institution (which shall initially be ),
which shall be designated as the "Reserve Account". The
Reserve Account shall be under the sole dominion and
control of the Indenture Trustee; provided, that the
Servicer may make deposits to the Reserve Account in
accordance with the Basic Documents. On the Closing
Date, the Sellers shall deposit the Reserve Account
Initial Deposit into the Reserve Account from the net
proceeds of the sale of the Notes and the Certificates.
All amounts on deposit in and credited to the Reserve
Account, including the Reserve Account Initial Deposit
and any Permitted Investments (whether in the form of
deposit accounts, Physical Property, book-entry securi-
ties, uncertificated securities or otherwise), and all
proceeds thereof (such amounts, the "Reserve Account
Property") shall be pledged by the Sellers to __________,
acting in its capacity as agent for the benefit of the
Noteholders and the Certificateholders. Pursuant to the
Indenture, the Issuer will pledge all of its right, title
and interest in, to and under the Reserve Account and the
Reserve Account Property to the Indenture Trustee on
behalf of the Noteholders to secure the Issuer's obliga-
tions under the Notes and the Indenture.
The Reserve Account Property shall, to the
extent permitted by applicable law, rules and regula-
tions, be invested, as directed in writing by the
Servicer, by the bank or trust company then maintaining
the Reserve Account in Permitted Investments that mature
not later than the next Distribution Date, and such
Permitted Investments shall be held to maturity. All
interest and other income (net of losses and investment
expenses) on funds on deposit in the Reserve Account
shall, upon the written direction of the Servicer, be
paid to on any Distribution Date to the
extent funds on deposit therein, as certified by the
Servicer, exceed the Specified Reserve Account Balance.
In the event the Reserve Account is no longer to be
maintained at , the
Servicer shall, with the Indenture Trustee's or Owner
Trustee's assistance as necessary, cause the Reserve
Account to be moved to an Eligible Institution within ten
(10) Business Days (or such longer period not to exceed
thirty (30) calendar days as to which each Rating Agency
may consent).
(ii) With respect to Reserve Account Property:
(A) any Reserve Account Property
that is held in deposit accounts shall be
held solely in the name of the Indenture
Trustee at one or more depository institu-
tions having the Required Rating. Each
such deposit account shall be subject to
the exclusive custody and control of the
Indenture Trustee, and the Indenture
Trustee shall have sole signature authori-
ty with respect thereto.
(B) any Reserve Account Property
that constitutes Physical Property shall
be delivered to the Indenture Trustee in
accordance with paragraph (a) of the defi-
nition of "Delivery" and shall be held,
pending maturity or disposition, solely by
the Indenture Trustee or a financial in-
termediary (as such term is defined in
Section 8-313(4) of the UCC) acting solely
for the Indenture Trustee.
(C) any Reserve Account Property
that is a book-entry security held through
the Federal Reserve System pursuant to
federal book-entry regulations shall be
delivered in accordance with paragraph (b)
of the definition of "Delivery" and shall
be maintained by the Indenture Trustee,
pending maturity or disposition, through
continued book-entry registration of such
Reserve Account Property as described in
such paragraph.
(D) any Reserve Account Property
that is an "uncertificated security" under
Article 8 of the UCC shall be delivered to
the Indenture Trustee in accordance with
paragraph (c) of the definition of "Deliv-
ery" and shall be maintained by the Inden-
ture Trustee, pending maturity or disposi-
tion, through continued registration of
the Indenture Trustee's (or its nominee's)
ownership of such security;
(E) Property of a type which is not
capable of being delivered to the Inden-
ture Trustee in accordance with the defi-
nition of "Delivery" shall not constitute
Reserve Account Property.
Effective upon Delivery of any Reserve Account
Property in the form of Physical Property, uncertified
securities or book-entry securities, the Indenture Trust-
ee shall be deemed to have represented that it has pur-
chased such Reserve Account Property for value, in good
faith, and without notice of any adverse claim thereto.
(b) [If the Servicer pursuant to Section 4.4
determines on any Determination Date that it is required
to make an Advance and does not do so from its own funds,
the Servicer shall promptly instruct the Indenture Trust-
ee in writing to withdraw funds, in an amount specified
by the Servicer, from the Reserve Account and deposit
them in the Collection Account to cover any shortfall.
Such payment shall be deemed to have been made by the
Servicer pursuant to Section 4.4 for purposes of making
distributions pursuant to this Agreement, but shall not
otherwise satisfy the Servicer's obligation to deliver
the amount of the Advances to the Indenture Trustee, and
the Servicer shall within two Business Days replace any
funds in the Reserve Account so used.]
(c) If the amount on deposit in the Reserve
Account on any Distribution Date (after giving effect to
all deposits thereto or withdrawals therefrom on such
Distribution Date) is greater than the Specified Reserve
Account Balance for such Distribution Date, the Servicer
shall instruct the Indenture Trustee to [apply such
excess as Noteholders' Accelerated Principal] [distribute
the amount of such excess to the holder of the right to
receive any remaining Reserve Account Property following
the payment of the aggregate principal balance of the
Notes and the Certificate Balance and of all other
amounts owing hereunder or under the Indenture or the
Trust Agreement (the "Contingent Payment Right"); provid-
ed that the Indenture Trustee and the Owner Trustee
hereby release, on each Distribution Date, their security
interest in, to and under Reserve Account Property dis-
tributed to the holder of the Contingent Pay-
ment Right and provided further, that any portion of such
excess attributable to investment income (net of losses
and investment expenses) shall be paid to the holder of
the Contingent Payment Right. [Subsequent to any reduc-
tion or withdrawal by any Rating Agency of its rating of
[the] [any class of] Notes, unless such rating has been
restored, any such excess released from the Reserve
Account on a Distribution Date will be deposited in the
Note Payment Account for payment to Noteholders as an
accelerated payment of principal on [such Distribution
Date.]
(d) Amounts held from time to time in the
Reserve Account will be held for the benefit of
Noteholders and Certificateholders. On each Distribution
Date, funds will be withdrawn from the Reserve Account up
to the Available Reserve Amount [to the extent that the
Available Funds (after the payment of the Servicing Fee)
with respect to any Collection Period is less than the
Noteholders' Payment Amount and will be deposited in the
Note Payment Account. In addition, funds will be with-
drawn from the Reserve Account up to the Available Re-
serve Amount (as reduced by any withdrawal pursuant to
the [preceding sentence][two preceding sentences]) to the
extent that the Available Funds remaining after the
payment of the Servicing Fee and the deposit of the
Noteholders' Payment Amount in the Note Payment Account
is less than the Certificateholders' Distribution Amount
and will be deposited in the Certificate Distribution
Account. If funds applied in accordance with the preced-
ing sentence are insufficient to distribute interest due
on the Certificates, subject to certain limitations,
funds will be withdrawn from the Reserve Account and
applied to distribute interest due on the Certificates to
the extent of the Certificate Interest Reserve Amount.]
[in an amount equal to the shortfall between the Total
Required Amount, with respect to such Distribution Date,
and the Available Funds, with respect to such Distribu-
tion Date.] On each Distribution Date, the Reserve
Account will be reinstated up to the Specified Reserve
Account Balance to the extent, if any, of the Available
Funds remaining after payment of the Servicing Fee, the
deposit of the Noteholders' Payment Amount into the Note
Payment Account and the deposit of the
Certificateholders' Distribution Amount into the Certifi-
cate Distribution Account.
(e) Following the payment in full of the
aggregate principal amount of the Notes and the Certifi-
cate Balance and of all other amounts owing or to be
distributed hereunder or under the Indenture or the Trust
Agreement to Noteholders and Certificateholders and the
termination of the Trust, any remaining Reserve Account
Property shall be distributed to the holder of the Con-
tingent Payment Right.
SECTION 4.8. Net Deposits. For so long as (i)
NationsBank, N.A. shall be the Servicer and (ii) the
Servicer shall be entitled pursuant to Section 4.2 to
remit collections on a monthly rather than daily basis,
NationsBank, N.A. may make the remittances pursuant to
Sections 4.2 and 4.5 above, net of amounts to be distrib-
uted to NationsBank, N.A. pursuant to Section 4.6(a)(i).
Nonetheless, the Servicer shall account for all of the
above described remittances and distributions except for
the Supplemental Servicing Fee in the Servicer's Certifi-
cate as if the amounts were deposited and/or transferred
separately. The Sellers may make the remittances pursu-
ant to Sections 4.2 and 4.5 above, net of amounts to be
distributed to the Sellers pursuant to Section 4.6(a)(i).
Nonetheless, the Sellers shall account for all of the
above described remittances and distributions as if the
amounts were deposited and/or transferred separately.
SECTION 4.9. Statements to Noteholders and
Certificateholders. On each Distribution Date, the
Servicer shall provide to the Indenture Trustee (with
copies to the Rating Agencies and each Note Paying Agent)
for the Indenture Trustee to forward to each Noteholder
of record as of the most recent Record Date and to the
Owner Trustee (with copies to the Rating Agencies and to
each Certificate Paying Agent) for the Owner Trustee to
forward to each Certificateholder of record as of the
most recent Record Date a statement based on information
in the Servicer's Certificate furnished pursuant to
Section 3.9, setting forth for the Collection Period
relating to such Distribution Date the following informa-
tion as to the Notes and the Certificates to the extent
applicable:
(i) the amount of such distribution
allocable to principal allocable to the Notes and to
the Certificates;
(ii) the amount of such distribution
allocable to interest allocable to the Notes and the
Certificates;
(iii) the amount of such distribution
allocable to withdrawals made from the Reserve
Account [and under the Yield Supplement Agreement
and from amounts on deposit in the Yield Supplement
Account];
(iv) the Pool Balance as of the close of
business on the Deposit Date;
(v) the amount of the Servicing Fee paid
to the Servicer with respect to the related Collec-
tion Period and the amount of any unpaid Servicing
Fees and the change in such amount from that of the
prior Distribution Date;
(vi) the amounts of the Noteholders'
Interest Carryover Shortfall, the Noteholders'
Principal Carryover Shortfall, the
Certificateholders' Interest Carryover Shortfall and
the Certificateholders' Principal Carryover Short-
fall, if any, on such Distribution Date and the
change in such amounts from the preceding Distribu-
tion Date;
(vii) the aggregate outstanding principal
amount of each Class of Notes, the Note Pool Factor
for each Class of Notes, the Certificate Balance and
the Certificate Pool Factor as of such Distribution
Date;
(viii) the balance of the Reserve Account
on such Distribution Date, after giving effect to
distributions made on such Distribution Date and the
change in such balance from the preceding Distribu-
tion Date;
(ix) the amount of the aggregate Realized
Losses, if any, with respect to the related Collec-
tion Period;
(x) the aggregate Purchase Amount of
Receivables repurchased by the Sellers or purchased
by the Servicer, if any, with respect to the related
Collection Period;
[(xi) the balance of the Yield Supplement
Account on such Distribution Date, after giving
effect to distributions made on such Distribution
Date and the change in such balance from the preced-
ing Distribution Date;]
[(xii) the balance of the Pre-Funding
Account on such Distribution Date, after giving
effect to distributions made on such Distribution
Date and the change in such balance from the preced-
ing Distribution Date;]
[(xiii) with respect to the succeeding
Accrual Period, the applicable Note Interest Rate
for [each Class of ] the Notes Outstanding; and]
[(xiv) the amount, if any, of [Advanc-
es,][Advance Reserve Withdrawals] made on such
Distribution Date.
Each amount set forth on the Distribution Date
statement pursuant to clauses (i), (ii), (v) or (vi)
above shall be expressed as a dollar amount per $1,000 of
original principal amount or original Certificate Balance
of a Note or a Certificate, as applicable.
End of Article IV
ARTICLE V
[ RESERVED]
ARTICLE VI
THE SELLERS
SECTION 6.1. Representations and Warranties of
Sellers. Each Seller makes the following representations
and warranties on which the Issuer is deemed to have
relied in acquiring the Owner Trust Property. These
representations and warranties are made as of the Closing
Date, but shall survive the sale, transfer and assignment
of the Receivables and the other Owner Trust Property to
the Trust.
(i) Organization and Good Standing. The
Seller has been duly organized and is validly exist-
ing as a national banking association, with the
power and authority to own its properties and to
conduct its business as such properties are present-
ly owned and such business is presently conducted
and had at all relevant times, and has, full power,
authority and legal right to acquire, own and sell
its Receivables.
(ii) Due Qualification. The Seller has
obtained all necessary licenses and approvals, in
all jurisdictions where the failure to do so would
materially and adversely affect the ownership or
servicing of its Receivables or render any of its
Receivables unenforceable.
(iii) Power and Authority. The Seller
has the power, authority and legal right to execute
and deliver this Agreement and to carry out its
terms and to sell and assign the property to be sold
and assigned to and deposited with the Owner Trustee
as Owner Trust Property; and the execution, deliv-
ery, and performance of this Agreement and all of
the documents required pursuant hereto have been
duly authorized by the Seller by all necessary
corporate action.
(iv) No Consent Required. The Seller is
not required to obtain the consent of any other
Person, or any consent, license, approval or autho-
rization or registration or declaration with, any
governmental authority, bureau or agency in connec-
tion with the execution, delivery or performance of
this Agreement, other than as may be required under
the blue sky or securities laws of any state or the
Act, or under state laws governing the perfection of
the interests created under this Agreement.
(v) Valid Sale; Binding Obligation. This
Agreement effects a valid sale, transfer, and as-
signment of the Receivables and the other Owner
Trust Property conveyed by the Seller to the Trust
hereunder, enforceable against creditors of and
purchasers from the Seller; and this Agreement
constitutes a legal, valid, and binding obligation
of the Seller, enforceable against the Seller in
accordance with its terms, subject, as to enforce-
ability, to applicable bankruptcy, insolvency,
reorganization, moratorium, conservatorship, receiv-
ership, liquidation and other similar laws affecting
the enforcement of creditors' rights in general and
except as such enforceability may be limited by
general principles of equity (whether considered in
a suit at law or in equity).
(vi) No Violation. The execution, deliv-
ery and performance by the Seller of this Agreement
and the consummation of the transactions contemplat-
ed hereby and the fulfillment of the terms hereof
will not conflict with, result in any breach of any
of the terms and provisions of, or constitute (with
or without notice or lapse of time) a default under,
the articles of association or bylaws of the Seller,
or conflict with, or breach any of the terms or
provisions of, or constitute (with or without notice
or lapse of time) a default under, any material
indenture, agreement, mortgage, deed of trust or
other instrument to which the Seller is a party or
by which the Seller is bound or any of its proper-
ties are subject, or result in the creation or
imposition of any lien upon any of its properties
pursuant to the terms of any such indenture, agree-
ment, mortgage, deed of trust or other instrument
(other than this Agreement), or violate any law,
order, rule, or regulation, applicable to the Seller
or its properties, of any federal or state regulato-
ry body, any court, administrative agency, or other
governmental instrumentality having jurisdiction
over the Seller or any of its properties.
(vii) No Proceedings. There are no
proceedings or investigations pending, or, to the
knowledge of the Seller, threatened, before any
court, regulatory body, administrative agency, or
other tribunal or governmental instrumentality
having jurisdiction over the Seller or its proper-
ties: (a) asserting the invalidity of this Agree-
ment or the Certificates, (b) seeking to prevent the
issuance of the Certificates or the consummation of
any of the transactions contemplated by this Agree-
ment, (c) seeking any determination or ruling that
might materially and adversely affect the perfor-
mance by the Seller of its obligations under, or the
validity or enforceability of, this Agreement or the
Certificates, or (d) that may adversely affect the
federal or state income, excise, franchise or simi-
lar tax attributes of the Certificates.
SECTION 6.2. Liability of the Sellers; Indem-
nities. (a) The Sellers shall be jointly and severally
liable in accordance herewith only to the extent of the
obligations specifically undertaken hereunder and shall
have no other obligations or liabilities hereunder.
(b) The Sellers shall jointly and severally
indemnify, defend and hold harmless the Issuer, the Owner
Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders from and against any taxes that may at
any time be asserted against any such Person, its direc-
tors, officers, employees and agents, the Trust, a
Noteholder or a Certificateholder with respect to, and as
of the date of, the sale, transfer and assignment of the
Owner Trust Property to the Trust or the issuance and
original sale of the Notes or the Certificates, including
any sales, gross receipts, general corporation, tangible
or intangible personal property, privilege, or license
taxes (but not including any taxes asserted with respect
to ownership of the Owner Trust Property or federal or
other Applicable Tax State income taxes, including fran-
chise taxes measured by net income, arising out of the
transactions contemplated by this Agreement and the other
Basic Documents, or any transfer taxes arising in connec-
tion with the transfer of the Notes or the Certificates),
and reasonable costs and expenses in defending against
the same.
(c) The Sellers shall jointly and severally
indemnify, defend and hold harmless the Issuer, the Owner
Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders from and against any loss, liability
or expense incurred by reason of (i) a Seller's willful
misfeasance, bad faith, or negligence in the performance
of its duties hereunder, or by reason of reckless disre-
gard of the obligations and duties hereunder; or (ii) any
action taken, or failed to be taken, by a Seller in
respect of any portion of the Owner Trust Property.
(d) The Sellers shall jointly and severally
indemnify, defend and hold harmless the Issuer, the Owner
Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders from and against any loss, liability
or expense incurred by reason of the violation by a
Seller of federal or state securities laws in connection
with the registration or the sale of the Notes or the
Certificates.
(e) The Sellers shall jointly and severally
indemnify, defend and hold harmless the Issuer, the Owner
Trustee, the Indenture Trustee, the Noteholders and the
Certificateholders from and against any loss, liability
or expense imposed upon, or incurred by, the Issuer, the
Owner Trustee, the Indenture Trustee, the Noteholders or
the Certificateholders as the result of the failure of
any Receivable conveyed by it to the Trust hereunder, or
the sale of the related Financed Vehicle, to comply with
all requirements of applicable law.
(f) Indemnification under this Section 6.2
shall include reasonable fees and expenses of counsel and
expenses of litigation and shall survive termination of
the Trust. If the Sellers shall have made any indemnity
payments pursuant to this Section 6.2 and the indemnified
party thereafter shall collect any of such amounts from
Persons other than the Sellers, such indemnified party
shall immediately upon receipt thereof repay such amounts
to the Sellers, without interest.
(g) The Sellers shall jointly and severally
indemnify, defend and hold harmless the Owner Trustee and
the Indenture Trustee 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 accep-
tance or performance of the trusts and duties contained
herein and in the Trust Agreement, in the case of the
Owner Trustee, and 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, in the case of the
Indenture Trustee, shall be due to the willful misfea-
sance, bad faith or negligence (except for errors in
judgment) of the Indenture Trustee; or (ii) in the case
of the Owner Trustee shall arise from the breach by the
Owner Trustee of any of its representations or warranties
set forth in Section 7.3 of the Trust Agreement or (iii)
in the case of the Indenture Trustee shall arise from the
breach by the Indenture Trustee of any of its representa-
tions and warranties set forth in the Indenture.
(h) The General Partner shall pay any and all
taxes levied or assessed upon all or any part of the
Owner Trust Property.
SECTION 6.3. Merger or Consolidation of, or
Assumption of the Obligations of, any of the Sellers.
Any Person (i) into which a Seller may be merged or
consolidated, (ii) that may result from any merger,
conversion, or consolidation to which a Seller is a
party, or (iii) that may succeed by purchase and assump-
tion to all or substantially all of the business of a
Seller, where such Seller is not the surviving entity,
which Person in any of the foregoing cases executes an
agreement of assumption to perform every obligation of
such affected Seller(s) under this Agreement, will be the
successor to such Seller(s) 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;
provided, however, that (x) such affected Seller(s) shall
have delivered to the Owner Trustee and the Indenture
Trustee an Officer's Certificate and an Opinion of Coun-
sel each stating that such merger, conversion, consolida-
tion or succession and such agreement of assumption
comply with this Section 6.3 and that all conditions
precedent, if any, provided for in this Agreement relat-
ing to such transaction have been complied with and (y)
the Sellers shall have delivered to the Owner Trustee and
the Indenture Trustee an Opinion of Counsel either (A)
stating that, in the opinion of such counsel, all financ-
ing statements and continuation statements and amendments
thereto have been executed and filed that are necessary
fully to preserve and protect the interests of the Issuer
and the Indenture Trustee, respectively, in the Receiv-
ables and the other Owner Trust Property, and reciting
the details of such filings, or (B) stating that, in the
opinion of such counsel, no such action shall be neces-
sary to preserve and protect such interest. The Sellers
shall provide notice of any merger, conversion, consoli-
dation, or succession pursuant to this Section 6.3 to the
Rating Agencies. Notwithstanding anything herein to the
contrary, the execution of the foregoing agreement of
assumption and compliance with clauses (x) or (y) above
shall be conditions to the consummation of the transac-
tions referred to in clauses (i), (ii) or (iii) above.
SECTION 6.4. Limitation on Liability of the
Sellers and Others. Each Seller and any officer or
employee or agent of any of the Sellers 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. No
Seller shall be under any obligation to appear in, prose-
cute, or defend any legal action that shall not be inci-
dental to its obligations under this Agreement, and that
in its opinion may involve it in any expense or liabili-
ty.
SECTION 6.5. Sellers May Own Notes or Certifi-
cates. Each of the Sellers, and any Affiliate of the
Sellers, may in its individual or any other capacity
become the owner or pledgee of Notes or Certificates with
the same rights as it would have if it were not the
Sellers or an Affiliate thereof, except as otherwise
expressly provided herein or in the other Basic Docu-
ments. Except as set forth herein or in the other Basic
Documents, Notes and Certificates so owned by or pledged
to the Sellers or any such Affiliate shall have an equal
and proportionate benefit under the provisions of this
Agreement and the other Basic Documents, without prefer-
ence, priority, or distinction as among all of the Notes
and Certificates.
End of Article VI
ARTICLE VII
THE SERVICER
SECTION 7.1. Representations of Servicer. The
Servicer makes the following representations and warran-
ties on which the Issuer is deemed to have relied in
acquiring the Owner Trust Property. These representa-
tions and warranties are made as of the Closing Date, but
shall survive the sale, transfer and assignment of the
Receivables and the other Owner Trust Property to the
Trust.
(i) Organization and Good Standing. The
Servicer has been duly organized and is validly
existing as a national banking association, with the
power and authority to own its properties and to
conduct its business as such properties are present-
ly owned and such business is presently conducted,
and had at all relevant times, and has, the power,
authority and legal right to service the Receiv-
ables, and to hold the Receivable Files as custodian
on behalf of the Owner Trustee and the Indenture
Trustee.
(ii) Due Qualification. The Servicer has
obtained all necessary licenses and approvals, in
all jurisdictions where the failure to do so would
materially and adversely affect the ability of the
Servicer to service, or the enforceability of, the
Receivables.
(iii) Power and Authority. The Servicer
has the power, authority and legal right 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.
(iv) No Consent Required. The Servicer
is not required to obtain the consent of any other
Person, or any consent, license, approval or autho-
rization or registration or declaration with, any
governmental authority, bureau or agency in connec-
tion with the execution, delivery or performance of
this Agreement.
(v) Binding Obligation; Enforceability.
This Agreement constitutes a legal, valid, and
binding obligation of the Servicer, enforceable
against the Servicer in accordance with it terms,
subject, as to enforceability, to applicable bank-
ruptcy, insolvency, reorganization, moratorium,
conservatorship, receivership, liquidation and other
similar laws now or hereafter in effect affecting
the enforcement of creditors' rights in general and
except as such enforceability may be limited by
general principles of equity (whether considered in
a suit at law or in equity).
(vi) No Violation. The execution, deliv-
ery and performance of this Agreement, the consumma-
tion of the transactions contemplated hereby and the
fulfillment of the terms hereof will not conflict
with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice
or lapse of time) a default under, the articles of
association or bylaws of the Servicer, or conflict
with or breach any of the terms or provisions of, or
constitute (with or without notice or lapse of time)
a default under, any material indenture, agreement,
mortgage, deed of trust or other instrument to which
the Servicer is a party or by which the Servicer is
bound or to which any of its properties are subject,
or result in the creation or imposition of any lien
upon any of its properties pursuant to the terms of
any such indenture, agreement, mortgage, deed of
trust or other instrument (other than this Agree-
ment), or violate any law, order, rule, or regula-
tion applicable to the Servicer or its properties of
any federal or state regulatory body, any court,
administrative agency, or other governmental instru-
mentality having jurisdiction over the Servicer or
any of its properties.
(vii) No Proceedings. There are no
proceedings or investigations pending, or, to the
Servicer's knowledge, threatened, before any court,
regulatory body, administrative agency, or tribunal
or other governmental instrumentality having juris-
diction over the Servicer or its properties: (a)
asserting the invalidity of this Agreement, the
Indenture, any of the other Basic Documents, the
Notes or the Certificates, (b) seeking to prevent
the issuance of the Notes or the Certificates or the
consummation of any of the transactions contemplated
by this Agreement or any of the other Basic Docu-
ments, (c) seeking any determination or ruling that
might materially and adversely affect the perfor-
mance by the Servicer of its obligations under, or
the validity or enforceability of, this Agreement,
the Indenture, any of the other Basic Documents, the
Notes or the Certificates, or (d) that may adversely
affect the federal or Applicable Tax State income,
excise, franchise or similar tax attributes of the
Notes or the Certificates.
SECTION 7.2. Indemnities of Servicer. The
Servicer shall be liable in accordance herewith only to
the extent of the obligations specifically undertaken by
the Servicer under this Agreement, and hereby agrees to
the following:
(a) The Servicer shall defend, indemnify and
hold harmless the Issuer, the Owner Trustee, the Inden-
ture Trustee, the Noteholders, the Certificateholders and
the Sellers from and against any and all costs, expenses,
losses, damages, claims and liabilities, arising out of
or resulting from the use, ownership or operation by the
Servicer or any Affiliate thereof of a Financed Vehicle
or in respect of any action taken, or failed to be taken,
by the Servicer with respect to any Receivable or other
portion of the Owner Trust Property.
(b) The Servicer shall indemnify, defend and
hold harmless the Issuer, the Owner Trustee and the
Indenture Trustee from and against any taxes that may at
any time be asserted against any of the foregoing with
respect to the transactions contemplated herein or in the
other Basic Documents, if any, including, without limita-
tion, any sales, gross receipts, general corporation,
tangible personal property, privilege, or license taxes
(but not including any taxes asserted with respect to,
and as of the date of, the sale, transfer and assignment
of the Owner Trust Property to the Trust or the issuance
and original sale of the Notes and the Certificates, or
asserted with respect to ownership of the Receivables or
the other Owner Trust Property, or federal or other
Applicable Tax State income taxes arising out of the
transactions contemplated by this Agreement and the other
Basic Documents) and costs and expenses in defending
against the same.
(c) The Servicer shall indemnify, defend and
hold harmless the Issuer, the Owner Trustee, the Inden-
ture Trustee, the Noteholders, the Certificateholders and
the Sellers from and against any and all costs, expenses,
losses, claims, damages, and liabilities to the extent
that such cost, expense, loss, claim, damage, or liabili-
ty arose out of, or was imposed upon any of the foregoing
through, the negligence, willful misfeasance, or bad
faith of the Servicer in the performance of its duties
under this Agreement or any other Basic Document to which
it is a party.
(d) The Servicer shall indemnify, defend and
hold harmless the Trustee, the Trust and the Certificate-
holders from and against any and all costs, expenses,
losses, claims, damages, and liabilities, to the extent
that such cost, expense, loss, claim, damage, or liabili-
ty arose out of, or was imposed upon, or incurred by, the
Trustee, the Trust or the Certificateholders as a result
of the willful misfeasance, negligence, or bad faith of
the Servicer in the performance of its duties under this
Agreement.
Indemnification under this Section 7.2 shall
include reasonable fees and expenses of counsel and
expenses of litigation. The indemnity obligations of the
Servicer hereunder shall survive any termination of the
Servicer pursuant to Section 8.1, but only with respect
to obligations arising prior thereto, and any payment of
the amount owing under, or the Purchase Amount with
respect to, any Receivable. If the Servicer shall have
made any indemnity payments pursuant to this Section 7.2
and the indemnified party thereafter collects any of such
amounts from others, such indemnified party shall immedi-
ately upon receipt thereof repay such amounts to the
Servicer, without interest.
SECTION 7.3. Merger or Consolidation of, or
Assumption of the Obligations of, Servicer. Any corpora-
tion or other entity (i) into which the Servicer may be
merged or consolidated, (ii) that may result from any
merger, conversion, or consolidation to which a Servicer
is a party, or (iii) that may succeed by purchase and
assumption to all or substantially all of the business of
the Servicer, where the Servicer is not the surviving
entity, which corporation or other entity shall be an
Eligible Servicer and shall have executed an agreement
assuming the performance of the obligations of the
Servicer under this Agreement, shall be the successor to
the Servicer under this Agreement (without relieving the
Servicer of its responsibilities hereunder, if it sur-
vives such merger, conversion or consolidation) without
any further act on the part of any of the parties to this
Agreement; the Servicer shall promptly inform the Owner
Trustee, the Indenture Trustee and the Rating Agencies of
any such merger, conversion, consolidation or purchase
and assumption, where the Servicer is not the surviving
entity.
SECTION 7.4. Limitation on Liability of
Servicer and Others. (a) Neither the Servicer nor any of
the directors or officers or employees or agents of the
Servicer shall be under any liability to the Issuer, the
Noteholders or the Certificateholders, except as provided
under this Agreement, for any action taken or for re-
fraining 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 or bad faith in
the performance of duties or by reason of reckless disre-
gard of obligations and duties under this Agreement, or
by reason of negligence in the performance of its duties
under this Agreement (except for errors in judgment).
The Servicer and any director, officer or employee or
agent of the Servicer may rely in good faith on any
Opinion of Counsel or on any Officer's Certificate or
certificate of auditors believed to be genuine and to
have been signed by the proper party in respect of any
matters arising under this Agreement.
(b) Except as 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 rights and duties of the par-
ties to this Agreement and the interests of the
Noteholders and Certificateholders under this Agreement.
In such event, the legal expenses and costs of such
action and any liability resulting therefrom shall be
expenses, costs and liabilities of the Servicer.
SECTION 7.5. NationsBank, N.A. Not to Resign
as Servicer. Subject to the provisions of Section 7.3,
NationsBank, N.A. shall not resign from the obligations
and duties hereby imposed on it as Servicer under this
Agreement except upon 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 NationsBank,
N.A. shall be communicated to the Owner Trustee and the
Indenture Trustee at the earliest practicable time (and,
if such communication is not in writing, shall be con-
firmed 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 Owner Trustee
and the Indenture Trustee concurrently with or promptly
after such notice. No such resignation shall become
effective until the Indenture Trustee or a successor
Servicer shall have (i) taken the actions required by the
last paragraph of Section 8.1, (ii) assumed the responsi-
bilities and obligations of NationsBank, N.A. in accor-
dance with Section 8.2 and (iii) become the Administrator
under the Administration Agreement pursuant to Section 9
thereof.
SECTION 7.6. Servicer May Own Notes or Certif-
icates. The Servicer, and any Affiliate of the Servicer,
may, in its individual or any other capacity, become the
owner or pledgee of Notes or Certificates with the same
rights as it would have if it were not the Servicer or an
Affiliate thereof, except as otherwise expressly provided
herein or in the other Basic Documents. Except as set
forth herein or in the other Basic Documents, Notes and
Certificates so owned by or pledged to the Servicer or
such Affiliate shall have an equal and proportionate
benefit under the provisions of this Agreement, without
preference, priority or distinction as among all of the
Notes and Certificates.
End of Article VII
ARTICLE VIII
SERVICING TERMINATION
SECTION 8.1. Events of Servicing Termination.
(a) If any one of the following events ("Events of
Servicing Termination") shall occur and be continuing:
(i) Any failure by the Servicer to (A) deliver
the Servicer's Certificate in accordance with Sec-
tion 3.9 hereof, or (B) deliver to the Owner Trustee
or the Indenture any proceeds or payment required to
be so delivered under the terms of the Notes and the
Certificates and this Agreement that shall continue
unremedied for a period of five (5) Business Days
after the due date therefor (or, in the case of a
payment or deposit to be made no later than a Depos-
it Date immediately preceding a Distribution Date,
the failure to make such payment or deposit by such
Distribution Date); or
(ii) Failure on the part of the Servicer duly
to observe or to perform in any material respect any
other covenants or agreements of the Servicer set
forth in the Notes, the Certificates or in this
Agreement, which failure shall (a) materially and
adversely affect the rights of Noteholders or Cer-
tificateholders and (b) continue unremedied for a
period of ninety (90) days after the date on which
written notice of such failure, requiring the same
to be remedied, shall have been given (1) to the
Servicer by the Owner Trustee or the Indenture
Trustee, or (2) to the Owner Trustee, the Indenture
Trustee, the Sellers and the Servicer by the Majori-
ty Noteholders or by the Majority Certificatehold-
ers; or
(iii) The entry of a decree or order by a
court or agency or supervisory authority of compe-
tent jurisdiction for the appointment of a conserva-
tor, receiver, liquidator or trustee for the
Servicer in any bankruptcy, insolvency, receivership
, readjustment of debt, marshalling of assets and
liabilities, or similar proceedings, or for the
winding up or liquidation of its affairs, and any
such decree or order continues unstayed and in
effect for a period of sixty (60) consecutive days;
(iv) The consent by the Servicer to the
appointment of a conservator, receiver, liquidator
or trustee in any bankruptcy, insolvency, readjust-
ment of debt, marshalling of assets and liabilities,
or similar proceedings of or relating to the
Servicer or relating to substantially all of its
property, the admission in writing by the Servicer
of its inability to pay its debts generally as they
become due, the filing by the Servicer of a petition
to take advantage of any applicable bankruptcy,
insolvency or reorganization statute, the making by
the Servicer of an assignment for the benefit of its
creditors or the voluntary suspension by the
Servicer of payment of its obligations; or
(v) The failure by the Servicer to be an
Eligible Servicer;
then, and in each and every case, so long as an Event of
Servicing Termination shall not have been remedied,
either (i) the Indenture Trustee, or (ii) by the Inden-
ture Trustee at the direction of the Majority
Noteholders, or (iii) by the Owner Trustee with the
consent of the Majority Noteholders, or (iv) if the Notes
have been paid in full, (x) by the Owner Trustee, at the
direction of the Majority Certificateholders or (y) by
the Owner Trustee with the consent of the Majority Cer-
tificateholders. On or after the receipt by the Servicer
of such written notice, all authority and power of the
Servicer under this Agreement, whether with respect to
the Notes, the Certificates or the Owner Trust Property
or otherwise, shall pass to and be vested in the Inden-
ture Trustee or such successor Servicer as may be ap-
pointed under Section 8.2; and, without limitation, the
Indenture Trustee and the Owner Trustee are hereby autho-
rized and empowered to execute and deliver, on behalf of
the predecessor Servicer, as attorney-in-fact or other-
wise, 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 en-
dorsement of the Receivables Files and related documents,
or otherwise.
The predecessor Servicer shall cooperate with
the Indenture Trustee, the Owner Trustee and such succes-
sor Servicer in effecting the termination of the respon-
sibilities and rights of the predecessor Servicer under
this Agreement, including the transfer to the Indenture
Trustee or such successor Servicer for administration of
all cash amounts that shall at the time be held by the
predecessor Servicer for deposit, or shall thereafter be
received with respect to a Receivable and the delivery of
the Receivable Files and the related accounts and records
maintained by the Servicer. All reasonable costs and
expenses (including attorneys' fees) incurred in connec-
tion with transferring the Receivable Files to the suc-
cessor Servicer and amending this Agreement to reflect
such succession as Servicer pursuant to this Section 8.1
shall be paid by the predecessor Servicer upon presenta-
tion of reasonable documentation of such costs and ex-
penses.
SECTION 8.2. Appointment of Successor
Servicer. (a) Upon the Servicer's receipt of notice of
termination pursuant to Section 8.1 or the Servicer's
resignation in accordance with the terms of this Agree-
ment, 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 (x)
the date 45 days from the delivery to the Indenture
Trustee of written notice of such resignation (or written
confirmation of such notice) in accordance with the terms
of this Agreement and (y) the date upon which the prede-
cessor Servicer shall become unable to act as Servicer,
as specified in the notice of resignation and accompany-
ing Opinion of Counsel. In the event of the Servicer's
resignation or termination hereunder, the Indenture
Trustee shall appoint a successor Servicer, and the
successor Servicer shall accept its appointment by a
written assumption in form acceptable to the Owner Trust-
ee and the Indenture Trustee, provided, however, that if
the Servicer has been terminated as a result of the
appointment of a trustee, receiver or other official
pursuant to Section 8.1(a)(iii) and no other Event of
Servicing Termination has occurred, such trustee or
official may have the power to prevent such Indenture
Trustee or the Noteholders from effecting a transfer of
servicing. 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 8.2, the Indenture Trustee without further
action shall automatically be appointed the successor
Servicer. Notwithstanding the above, the Indenture
Trustee shall, if it shall be legally unable so to act,
appoint, or petition a court of competent jurisdiction to
appoint, any Eligible Servicer as the successor to the
Servicer under this Agreement. The Servicer shall not
resign or be relieved of its duties under this Agreement
until a newly appointed Servicer shall have assumed the
responsibilities and obligations of the terminated
Servicer under this Agreement.
(b) Upon appointment, the successor
Servicer shall be the successor in all respects to the
predecessor Servicer and shall be subject to all the
responsibilities, duties, and liabilities arising there-
after relating thereto placed on the predecessor
Servicer, by the terms and provisions of this Agreement.
(c) In connection with such appointment,
the Indenture Trustee may make such arrangements for the
compensation of such successor Servicer out of payments
on Receivables as it and such successor Servicer shall
agree; provided, however, that no such compensation shall
be in excess of that permitted the predecessor Servicer
under this Agreement. The Indenture Trustee and such
successor Servicer shall take such action, consistent
with this Agreement, as shall be necessary to effectuate
any such succession.
SECTION 8.3. Effect of Servicing Transfer.
(a) After the transfer of servicing hereunder, the
Indenture Trustee or successor Servicer shall, if neces-
sary, notify Obligors to make directly to the successor
Servicer payments that are due under the Receivables
after the effective date of such transfer.
(b) Except as provided in Sections 7.2 and 9.8
after the transfer of servicing hereunder, the outgoing
Servicer shall have no further obligations with respect
to the management, administration, servicing, custody or
collection of the Receivables and the successor Servicer
shall have all of such obligations, except that the
outgoing Servicer shall transmit or cause to be transmit-
ted directly to the successor Servicer for its own ac-
count, promptly on receipt and in the same form in which
received, any amounts held by the outgoing Servicer
(properly endorsed where required for the successor
Servicer to collect any such items) received as payments
upon or otherwise in connection with the Receivables and
the outgoing Servicer shall continue to cooperate with
the successor Servicer by providing information and in
the enforcement of the Dealer Agreements, the Dealer
Assignments and the Insurance Policies.
(c) A transfer of servicing hereunder shall
not affect the rights and duties of the parties hereunder
(including the obligations and indemnities of the Sellers
pursuant to Sections 2.4, 3.3, 6.1 and 6.2 or, with
respect to obligations and indemnities arising prior to,
or concurrently with, a transfer of servicing hereunder,
the outgoing Servicer pursuant to Section 2.8, 7.1 or
7.2) other than those relating to the management, admin-
istration, servicing, custody or collection of the Re-
ceivables and the other Owner Trust Property. The suc-
cessor Servicer shall, upon its appointment pursuant to
Section 8.2 and as part of its duties and responsibili-
ties under this Agreement, promptly take all action it
deems necessary or appropriate so that the outgoing
Servicer (in whatever capacity) is paid or reimbursed all
amounts it is entitled to receive under this Agreement on
each Distribution Date subsequent to the date on which it
is terminated as Servicer hereunder.
(d) Any successor Servicer shall provide the
Sellers with access to the Receivable Files and to the
successor Servicer's records (whether written or automat-
ed) with respect to the Receivable Files. Such access
shall be afforded without charge, but only upon reason-
able request and during normal business hours at the
offices of the successor Servicer. Nothing in this
Section 8.3 shall affect the obligation of the successor
Servicer to observe any applicable law prohibiting dis-
closure of information regarding the Obligors, and the
failure of the Servicer to provide access to information
as a result of such obligation shall not constitute a
breach of this Section 8.3.
SECTION 8.4. Repayment of Advances. If the
identity of the Servicer shall change, the predecessor
Servicer shall be entitled to receive to the extent of
available funds reimbursement for Outstanding Advances
pursuant to Section 4.3 and 4.4, in the manner specified
in Section 4.6, with respect to all Advances made by the
predecessor Servicer.
SECTION 8.5. Notification to Noteholders and
Certificateholders. Upon any termination of, or appoint-
ment of a successor to, the Servicer pursuant to this
Article VIII, the Indenture Trustee shall give prompt
written notice thereof to the Noteholders, and the Owner
Trustee shall give prompt written notice thereof to the
Certificateholders at their respective addresses of
record and to each Rating Agency.
SECTION 8.6. Waiver of Past Events of Servic-
ing Termination. The Noteholders of Notes evidencing not
less than a majority of the principal amount of the Notes
Outstanding or the Certificateholders of Certificates
evidencing not less than a majority of the Certificate
Balance (in the case of an Event of Servicing Termination
which does not adversely affect the Indenture Trustee or
the Noteholders) may, on behalf of all Noteholders and
Certificateholders, waive any Event of Servicing Termina-
tion hereunder and its consequences, except an event
resulting from the failure to make any required deposits
to or payments from any of the Indenture Trust Accounts,
the Certificate Distribution Account[, the Yield Supple-
ment Account or the Reserve Account] in accordance with
this Agreement. Upon any such waiver of a past Event of
Servicing Termination, such Event of Servicing Termina-
tion shall cease to exist, and shall be deemed to have
been remedied for every purpose of this Agreement. No
such waiver shall extend to any subsequent or other event
or impair any right consequent thereon.
SECTION 8.7. Transfer of Accounts. Notwith-
standing the provisions of Section 8.1, if any of the
Indenture Trust Accounts, [Certificate Distribution
Account] or the Reserve Account is maintained with the
Servicer or any Affiliate of the Servicer and an Event of
Servicing Termination shall occur and be continuing, the
Servicer shall promptly, and in any event within five (5)
Business Days, give notice to an Authorized Officer of
the Indenture Trustee (or, in the case of the Certificate
Distribution Account, the Owner Trustee) of such Event of
Servicing Termination, and the Indenture Trustee (or the
Owner Trustee, as applicable), within five (5) Business
Days after the receipt of such notice, shall establish
new Eligible Deposit Accounts conforming with the re-
quirements of this Agreement and promptly shall transfer
all funds in any such Indenture Trust Accounts, Certifi-
cate Distribution Account or the Reserve Account to such
new Eligible Deposit Accounts.
End of Article VIII
ARTICLE IX
TERMINATION
SECTION 9.1. Optional Purchase of All Receiv-
ables. On the last day of any Collection Period as of
which the [Pool Factor shall be less than the Optional
Purchase Percentage] [Pool Balance shall be not more than
5% of the Initial Pool Balance], the Servicer shall have
the option to purchase the corpus of the Trust. To
exercise such option, the Servicer shall deposit pursuant
to Section 4.5 in the Collection Account an amount equal
to the aggregate Purchase Amount for the Receivables,
plus the appraised value of any other property held by
the Trust, such value to be determined by an appraiser
mutually agreed upon by the Servicer, the Owner Trustee
and the Indenture Trustee, and shall succeed to all
interests in and to the Trust. Notwithstanding the
foregoing, the Servicer shall not be permitted to exer-
cise such option unless the amount to be deposited in the
Collection Account pursuant to the preceding sentence is
greater than or equal to the sum of the outstanding
principal amount of the Notes and the Certificate Balance
and all accrued but unpaid interest (including any over-
due interest) thereon. The amount deposited in the
Collection Account pursuant to this Section 9.1 shall be
used on the next Distribution Date to make payments in
full to Noteholders and Certificateholders in the manner
set forth in Article IV.
SECTION 9.2. Succession Upon Satisfaction and
Discharge of Indenture. Following the satisfaction and
discharge of the Indenture and the payment in full of the
principal of and interest on the Notes, the Certificate-
holders will succeed to the rights of the Noteholders
hereunder, and the Indenture Trustee will continue to
carry out its obligations hereunder with respect to the
Certificateholders, including without limitation making
distributions from the Collection Account in accordance
with Section 4.6 and making withdrawals from the Reserve
Account in accordance with Section 4.5(c) and Section
4.7.
[SECTION 9.3. Sale Upon Termination. (a)
The Servicer will, within [ten] days following a Distri-
bution Date as of which the Pool Balance is equal to or
less than the Optional Purchase Percentage of the Initial
Pool Balance, solicit bids for the purchase of the Re-
ceivables remaining in the Trust, in a commercially
reasonable manner and on commercially reasonable terms.
The minimum price of any such bid which may be accepted
shall be an amount not less than the sum of (i) the
amount of all accrued and unpaid interest on the Notes
Outstanding to the next succeeding Distribution Date,
(ii) the unpaid principal amount of the Notes Outstand-
ing, (iii) the amount of all accrued and unpaid interest
on the Certificates Outstanding to the next succeeding
Distribution Date, and (iv) the principal balance of the
Certificates Outstanding. The Owner's Trustee's interest
in such Receivables and related Owner Trust Property will
not be released or terminated except upon receipt of
payment of the purchase price therefor. If two or more
bids are received, each of which are at least equal to
the amount described above, then the Receivables and
related Owner Trust Property remaining in such Trust will
be sold to the highest bidder.
(b) The amount of the accepted bid described in the
paragraph (a) of this Section 9.3 shall be deposited in
the Collection Account and shall be used on the next
Distribution Date to make payments in full to Noteholders
and Certificateholders in the manner set forth in Article
IV.
End of Article IX
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1. Amendment. (a) This Agreement
may be amended by the Sellers, the Servicer and the
Issuer, with the consent of the Indenture Trustee and the
Owner Trustee to the extent that their respective rights
or obligations may be affected thereby (which consent may
not be unreasonably withheld), but without the consent of
any of the Noteholders or the Certificateholders, to cure
any ambiguity, to correct, delete or supplement any
provisions in this Agreement, or to add any other provi-
sions with respect to matters or questions arising under
this Agreement that shall not be inconsistent with the
provisions of this Agreement; provided, however, that
such action shall not, as evidenced by an Opinion of
Counsel delivered to the Owner Trustee and the Indenture
Trustee, adversely affect in any material respect the
interests of any Noteholder or Certificateholder.
(b) This Agreement may also be amended from
time to time by the Sellers, the Servicer and the Issuer,
with the consent of the Indenture Trustee and the Owner
Trustee to the extent that their respective rights or
obligations may be affected thereby (which consent may
not be unreasonably withheld) and with the consent of (i)
the Majority Noteholders and (ii) the Majority Certifi-
cateholders (which consent, when given pursuant to this
Section 10.1 or pursuant to any other provision of this
Agreement, shall be conclusive and binding on the holder
of such Note or Certificate, as the case may be, and on
all future Noteholders of such Note or Certificateholders
of such Certificate, as the case may be, and of any Note
or Certificate, as applicable, issued upon the transfer
thereof or in exchange thereof or in lieu thereof whether
or not notation of such consent is made upon such Note or
the Certificate), for the purpose of adding any provi-
sions 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 Noteholders or the Certificate-
holders; provided, however, that no such amendment shall
(a) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, or change the alloca-
tion or priority of, collections of payments on Receiv-
ables or distributions that shall be required to be made
on any Note or Certificate or change any Note Interest
Rate or the Certificate Rate or the Specified Reserve
Account Balance, without the consent of all adversely
affected Noteholders or Certificateholders or (b) reduce
the aforesaid percentage required to consent to any such
amendment, without the consent of the Noteholders of all
Notes and Certificateholders of all Certificates affected
thereby.
(c) Prior to the execution of any such amend-
ment or consent the Servicer will provide and the Owner
Trustee shall distribute written notification of the
substance of such amendment or consent to each Rating
Agency.
(d) 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 neces-
sary for the consent of Noteholders or the Certificate-
holders pursuant to this Section 10.1 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 any other consents of Noteholders and Certificate-
holders provided for in this Agreement) and of evidencing
the authorization of the execution thereof by Noteholders
and Certificateholders shall be subject to such reason-
able requirements as the Owner Trustee and the Indenture
Trustee may prescribe, including the establishment of
record dates pursuant to paragraph number 2 of the Note
Depository Agreements.
(e) Prior to the execution of any amendment to
this Agreement, the Owner Trustee and the Indenture
Trustee 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
10.2(i)(1). The Owner Trustee or the Indenture Trustee
may, but shall not be obligated to, enter into any such
amendment which affects such Owner Trustee's or Indenture
Trustee's own rights, duties or immunities under this
Agreement or otherwise.
SECTION 10.2. Protection of Title to Trust.
(a) The Sellers shall execute and file such financing
statements and cause to be executed and filed such con-
tinuation 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 the
Indenture Trustee for the benefit of the Noteholders in
the Receivables and in the proceeds thereof. The Sellers
shall deliver (or cause to be delivered) to the Owner
Trustee and the Indenture Trustee file-stamped copies of,
or filing receipts for, any document filed as provided
above, as soon as available following such filing.
(b) None of the Sellers 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 by the Sellers
in accordance with paragraph (a) above seriously mislead-
ing within the meaning of SECTION 9-402(7) of the UCC, unless
it shall have given the Owner Trustee and the Indenture
Trustee at least five (5) Business Days prior written
notice thereof and shall have promptly filed appropriate
amendments to all previously filed financing statements
or continuation statements.
(c) The Sellers and the Servicer shall give
the Owner Trustee and the Indenture Trustee at least
sixty (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 of America.
(d) The Servicer shall maintain accounts and
records as to each Receivable accurately and in suffi-
cient detail to permit (i) the reader thereof to know at
any time the status of such Receivable, including pay-
ments and recoveries made and payments owing (and the
nature of each) and (ii) reconciliation between payments
or recoveries on (or with respect to) each Receivable and
the amounts from time to time deposited in the Collection
Account,[ the Yield Supplement Account] and the Reserve
Account 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 to the Issuer, the
Servicer's master computer records (including any back-up
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 pursuant to the Indenture. Indication of the
Issuer's and the Indenture Trustee's interest in a Re-
ceivable shall be deleted from or modified on the
Servicer's computer systems when, and only when, the
Receivable shall have been paid in full or repurchased.
(f) If at any time the Sellers or the Servicer
shall propose to sell, grant a security interest in, or
otherwise transfer any interest in retail automotive
installment sales contracts to any prospective purchaser,
lender, or other transferee, the Servicer shall give to
such prospective purchaser, lender, or other transferee
computer tapes, records, or print-outs (including any
restored from back-up archives) that, if they shall refer
in any manner whatsoever to any Receivable, shall indi-
cate 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 Owner Trust-
ee, the Indenture Trustee and their respective 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 and the Indenture Trustee, within
twenty (20) Business Days, a list of all Receivables (by
contract number and name of Obligor) then held as part of
the Trust, 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 Trust.
(i) The Servicer shall deliver to the Owner
Trustee and the Indenture Trustee:
(1) promptly after the execution and
delivery of this Agreement and of each amend-
ment thereto, an Opinion of Counsel either (A)
stating that, in the opinion of such Counsel,
all financing statements and continuation
statements have been executed and filed that
are necessary fully to preserve and protect the
interest of the Issuer and the Indenture Trust-
ee 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) stating that, in the opinion of such Coun-
sel, no such action shall be necessary to pre-
serve and protect such interest; and
(2) within 120 days after the begin-
ning of each calendar year beginning with the
first calendar year beginning more than three
months after the Cutoff Date, an Opinion of
Counsel, dated as of a date during such 120-day
period, either (A) stating that, in the opinion
of such counsel, all financing statements and
continuation statements have been executed and
filed that are necessary fully to preserve and
protect the interest of the Issuer and the
Indenture Trustee in the Receivables, and re-
citing the details of such filings or referring
to prior Opinions of Counsel in which such
details are given, or (B) stating that, in the
opinion of such Counsel, no such action shall
be necessary to preserve and protect such in-
terest.
Each Opinion of Counsel referred to in clause
(i)(1) or (i)(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 Sellers shall, to the extent required
by applicable law, cause the Notes and the Certificates
to be registered with the Securities and Exchange Commis-
sion pursuant to Section 12(b) or Section 12(g) of the
Exchange Act within the time periods specified in such
sections.
(k) For the purpose of facilitating the execu-
tion of this Agreement and for other purposes, this
Agreement may be executed in any number of counterparts,
each of which counterparts shall be deemed to be an
original, and all of which counterparts shall constitute
but one and the same instrument.
SECTION 10.3. GOVERNING LAW. THIS AGREEMENT
SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS, AND REME-
DIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETER-
MINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 10.4. Notices. All demands, notices,
and communications under this Agreement shall be in
writing, personally delivered, sent by telecopier, over-
night courier or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given
upon receipt (a) in the case of the Sellers or the
Servicer, to the agent for service as specified in Sec-
tion 10.11 hereof, or at such other address as shall be
designated by the Sellers or the Servicer in a written
notice to the Owner Trustee and the Indenture Trustee,
(b) in the case of the Owner Trustee, at the Corporate
Trust Office of the Owner Trustee, (c) in the case of the
Indenture Trustee, at the Corporate Trust Office of the
Indenture Trustee, (d) in the case of Moody's Investors
Service, Inc., at the following address: Moody's Inves-
tors Service, Inc., ABS Monitoring Department, 99 Church
Street, New York, New York 10007, and (e) in the case of
[Standard & Poor's Ratings Group], at the following
address: [Standard & Poor's Ratings Group], 25 Broadway,
20th Floor, New York, New York 10004, Attention: Asset
Backed Surveillance Department. Any notice required or
permitted to be mailed to a Noteholder or Certificate-
holder shall be given by first class mail, postage pre-
paid, at the address of such Person as shown in the Note
Register or the Certificate Register, as applicable. Any
notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been
duly given, whether or not the Noteholder or Certificate-
holder shall receive such notice.
SECTION 10.5. Severability of Provisions. If
any one or more of the covenants, agreements, provisions,
or terms of this Agreement shall be for any reason what-
soever 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 provisions of this Agreement
or of the Notes, the Certificates or the rights of the
holders thereof.
SECTION 10.6. Assignment. Notwithstanding
anything to the contrary contained herein, except as
provided in Sections 7.3 and 8.2 and as provided in the
provisions of this Agreement concerning the resignation
of the Servicer, this Agreement may not be assigned by
the Sellers or the Servicer without the prior written
consent of the Owner Trustee, the Indenture Trustee, the
Noteholders of Notes evidencing not less than 66-2/3% of
the principal amount of the Notes Outstanding and the
Certificateholders of Certificates evidencing not less
than 66-2/3% of the Certificate Balance.
SECTION 10.7. Further Assurances. The Sellers
and the Servicer agree to do and perform, from time to
time, any and all acts and to execute any and all further
instruments required or reasonably requested by the Owner
Trustee or the Indenture Trustee more fully to effect the
purposes of this Agreement, including, without limita-
tion, the execution of any financing statements or con-
tinuation statements relating to the Receivables for
filing under the provisions of the UCC of any applicable
jurisdiction.
SECTION 10.8. No Waiver; Cumulative Remedies.
No failure to exercise and no delay in exercising, on the
part of the Owner Trustee, the Indenture Trustee, the
Noteholders or the Certificateholders, any right, remedy,
power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights,
remedies, powers and privileges therein provided are
cumulative and not exhaustive of any rights, remedies,
powers and privileges provided by law.
SECTION 10.9. Third-Party Beneficiaries. This
Agreement will inure to the benefit of and be binding
upon the parties hereto, the Noteholders, the Certifi-
cateholders, and their respective successors and permit-
ted assigns. Except as otherwise provided in this Arti-
cle X, no other Person will have any right or obligation
hereunder. The parties hereto hereby acknowledge and
consent to the pledge of this Agreement by the Issuer to
the Indenture Trustee for the benefit of the Noteholders
pursuant to the Indenture.
SECTION 10.10. Actions by Noteholders or
Certificateholders. (a) Wherever in this Agreement a
provision is made that an action may be taken or a no-
tice, demand, or instruction given by Noteholders or
Certificateholders, such action, notice, or instruction
may be taken or given by any Noteholder or Certificate-
holder, as applicable, unless such provision requires a
specific percentage of Noteholders or Certificateholders.
(b) Any request, demand, authorization, direc-
tion, notice, consent, waiver, or other act by a
Noteholder or Certificateholder shall bind such
Noteholder or Certificateholder and every subsequent
holder of such Note or Certificate issued upon the regis-
tration of transfer thereof or in exchange therefor or in
lieu thereof in respect of anything done or omitted to be
done by the Owner Trustee, the Indenture Trustee or the
Servicer in reliance thereon, whether or not notation of
such action is made upon such Note or Certificate.
SECTION 10.11. Agent for Service. The agent
for service of the Sellers and the Servicer in respect of
this Agreement shall be Robert W. Long, Jr., Esq.,
NationsBank Corporation, NationsBank Corporate Center,
100 North Tryon Street, NC1-007-20-01, Charlotte, North
Carolina 28255.
SECTION 10.12. No Bankruptcy Petition. The
Owner Trustee, the Indenture Trustee, the Sellers and the
Servicer each covenants and agrees that, prior to the
date which is one year and one day after the payment in
full of all securities issued by a trust which securities
were rated by any nationally recognized statistical
rating organization it will not institute against, or
join any other Person in instituting against, the General
Partner any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceed-
ings under any federal or State bankruptcy or similar
law. This Section 10.12 shall survive the resignation or
removal of the Owner Trustee under the Trust Agreement or
the Indenture Trustee under the Indenture or the termina-
tion of this Agreement.
SECTION 10.13. Limitation of Liability of
Owner Trustee and Indenture Trustee. (a) Notwithstand-
ing anything contained herein to the contrary, this
Agreement has been countersigned by _____ not in its
individual capacity but solely in its capacity as Owner
Trustee of the Issuer and in no event shall _____ 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 VI, VII
and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein
to the contrary, this Agreement has been accepted by
_____, not in its individual capacity but solely as
Indenture Trustee, and in no event shall _____ 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.
End of Article X
IN WITNESS WHEREOF, the parties have caused
this Sale and Servicing Agreement to be duly executed by
their respective officers thereunto duly authorized as of
the day and year first above written.
NATIONSBANK, N.A.
as Seller
By:
Name:
Title:
NATIONSBANK, N.A. (SOUTH)
as Seller
By:
Name:
Title:
NATIONSBANK OF TEXAS, N.A.
as Seller
By:
Name:
Title:
NATIONSBANK, N.A.
as Servicer
By:
Name:
Title:
NATIONSBANK AUTO OWNER TRUST
_____-__,
as Issuer
By:_____________________,
as Owner Trustee
By:
Name:
Title:
Accepted and agreed:
_________________________,
as Indenture Trustee
By:
Name:
Title:
_________________________,
as Owner Trustee
By:
Name:
Title:
SCHEDULE A
[SCHEDULE OF RECEIVABLES]
Delivered to Indenture Trustee at Closing
EXHIBIT A
[FORM OF YIELD SUPPLEMENT AGREEMENT]
________, _____
NationsBank Auto Owner Trust ___-__
c/o NationsBank, N.A.
100 North Tryon Street
Charlotte, North Carolina 28255
Re: NationsBank Auto Owner Trust -
Ladies and Gentlemen:
We hereby confirm arrangements made as of the
date hereof with you to be effective upon (i) receipt by
us of the enclosed copy of this letter agreement (as from
time to time amended, supplemented or otherwise modified
and in effect, the "Yield Supplement Agreement"), execut-
ed by you, and (ii) execution of the Sale and Servicing
Agreement referred to below and payment of the purchase
price specified thereunder. Capitalized terms used and
not otherwise defined herein shall have the meanings
assigned to such terms in the Sale and Servicing Agree-
ment, dated as of _______, ____ (as from time to time
amended, supplemented or otherwise modified and in ef-
fect, the "Sale and Servicing Agreement"), between
NationsBank, N.A., NationsBank, N.A .(South) and
NationsBank of Texas, N.A. (each a "Seller", and collec-
tively, the "Sellers"), and NationsBank, Auto Owner Trust
, as purchaser and Issuer (the "Purchaser").
1. On or prior to the Determination Date
preceding each Distribution Date, the Servicer shall
notify the Purchaser and the Sellers of the Yield Supple-
ment Amount for such Distribution Date.
2. In consideration for the Purchaser enter-
ing into the Sale and Servicing Agreement and the pur-
chase price paid to the Sellers for the Receivables under
the Sale and Servicing Agreement, we agree to make a
payment of the Yield Supplement Amount to the Purchaser,
or to the pledgee or the assignee of the Purchaser re-
ferred to in paragraph 5 hereof, on the Business Day
prior to each Distribution Date.
3. All payments pursuant hereto shall be made
by federal wire transfer (same day) funds or in immedi-
ately available funds, to such account as the Purchaser
or the pledgee of the assignee of the Purchaser referred
to in Section 5 hereof, may designate in writing to the
Sellers, prior to the relevant Distribution Date.
4. Our agreements set forth in this Yield
Supplement Agreement are our primary obligations and such
obligations are irrevocable, absolute and unconditional,
shall not be subject to any counterclaim, setoff or
defense and shall remain in full force and effect without
regard to, and shall not be released, discharged or in
NationsBank Auto Owner Trust ___-__
______, ____
Page 2
any way affected by, any circumstances or condition whatsoever.
5. Pursuant to the Indenture, the Purchaser
will pledge its rights under this Yield Supplement Agree-
ment, along with certain other assets of the Purchaser,
to __________, as Indenture Trustee, to secure its obli-
gations under the Notes and the Indenture, and the Sell-
ers hereby acknowledge and consent to such pledge. The
Sellers hereby agree, for the benefit of the Trust, that
following such sale, transfer, assignment, conveyance and
pledge, this Yield Supplement Agreement shall not be
amended, modified or terminated without the consent of
the Purchaser, and, prior to the payment in full of the
Notes, the Indenture Trustee.
6. This Yield Supplement Agreement will be
governed by, and construed in accordance with, the laws
of the State of New York.
7. Except as otherwise provided herein, all
notices pursuant to this Yield Supplement Agreement shall
be in writing and shall be effective upon receipt there-
of. All notices shall be directed as set forth below, or
to such other address or to the attention of such other
person as the relevant party shall have designated for
such purpose in a written notice.
If to the Purchaser:
NationsBank Auto Owner Trust
c/o NationsBank, N.A.
100 North Tryon Street
NC1-007-20-01
Charlotte, North Carolina 28255
Attention: ___________
Telephone: (704) 386-____
Telecopy:
If to the Sellers:
c/o NationsBank, N.A.
100 North Tryon Street
NC1-007-20-01
Charlotte, North Carolina 28255
Attention: ___________
Telephone: (704) 386-____
Telecopy:
8. This Yield Supplement Agreement may be
executed in one or more counterparts and by the different
parties hereto on separate counterparts, all of which
shall be deemed to be one and the same document.
NationsBank Auto Owner Trust ___-__
______, ____
Page 3
If the foregoing satisfactorily sets forth the
terms and conditions of our agreement, please indicate
your acceptance thereof by signing in the space provided
below and returning to us the enclosed duplicate original
of this letter.
Very truly yours,
NATIONSBANK, N.A.,
as Seller
By: _______________________
Name:
Title:
NATIONSBANK, N.A. (SOUTH),
as Seller
By: _______________________
Name:
Title:
NATIONSBANK OF TEXAS, N.A.,
as Seller
By: _______________________
Name:
Title:
NationsBank Auto Owner Trust ___-__
______, ____
Page 4
Agreed and accepted as of
the date first above written:
NationsBank Auto Owner Trust,
as Purchaser
By: _____________
Owner Trustee
By: _______________________
Name:
Title:
SALE AND SERVICING AGREEMENT
by and among
NATIONSBANK AUTO OWNER TRUST ______-_,
as Issuer,
NATIONSBANK, N.A., NATIONSBANK, N.A. (SOUTH) AND
NATIONSBANK OF TEXAS, N.A.
as Sellers
and
NATIONSBANK, N.A.
as Servicer
Dated as of ____________, ____
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND USAGE
ARTICLE II
OWNER TRUST PROPERTY
SECTION 2.1. Conveyance of Owner Trust Property
2
SECTION 2.2. Representations and Warranties of
the Sellers as to the Receivables . . . 2
SECTION 2.3. Warranties as to the Receivables in
the Aggregate and Actions
of the Sellers . . . . . . . . . . . . . 7
SECTION 2.4. Repurchase upon Breach . . . . 9
SECTION 2.5. Custody of Receivable Files . . 10
SECTION 2.6. Duties of Servicer as Custodian 11
SECTION 2.7. Instructions; Authority to Act 13
SECTION 2.8. Custodian's Indemnification . . 13
SECTION 2.9. Effective Period and Termination
13
ARTICLE III
ADMINISTRATION AND SERVICING OF
RECEIVABLES AND OWNER TRUST PROPERTY
SECTION 3.1. Duties of Servicer . . . . . . 15
SECTION 3.2. Collection of Receivable Payments;
Credit Deferrals . . . . . . . 19
SECTION 3.3. Realization upon Receivables . 19
SECTION 3.4. Physical Damage Insurance . . . 20
SECTION 3.5. Maintenance of Security Interests in
Financed Vehicles . . . . . . . . . . . 21
SECTION 3.6. Covenants of the Servicer . . . 21
SECTION 3.7. Purchases by Servicer upon Breach
22
SECTION 3.8. Servicing Compensation . . . . 22
SECTION 3.9. Servicer's Report . . . . . . . 23
SECTION 3.10. Annual Statement as to Compliance
24
SECTION 3.11. Independent Certified Public
Accountants' Reports . . . . . 24
SECTION 3.12. Access to Certain Documentation and
Information Regarding Receivables . . . 25
SECTION 3.13. Reports to the Commission . . . 25
SECTION 3.14. Reports to the Rating Agencies 25
ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS TO
NOTEHOLDERS AND CERTIFICATEHOLDERS
SECTION 4.1. Accounts . . . . . . . . . . . 27
SECTION 4.2. Collections . . . . . . . . . . 29
SECTION 4.3. [Reserved] 30
SECTION 4.4. [Reserved] [Advances . . . . . 30
SECTION 4.5. [Reserved] [Additional Deposits 31
SECTION 4.6. Distributions . . . . . . . . . 32
SECTION 4.7. Reserve Account . . . . . . . . 34
SECTION 4.8. Net Deposits . . . . . . . . . 37
Page
SECTION 4.9. Statements to . . . . . . . . 37
ARTICLE V
[ RESERVED] . . . . . . . . . 41
ARTICLE VI
THE SELLERS
SECTION 6.1. Representations and Warranties of
Sellers . . . . . . . . . . . . 41
SECTION 6.2. Liability of the Sellers; Indemni-
ties . . . . . . . . . . . . . 43
SECTION 6.3. Merger or Consolidation of, or As-
sumption of the Obligations of, any
of the Sellers . . . . . . . . 44
SECTION 6.4. Limitation on Liability of the Sell-
ers and Others . . . . . . . . 45
SECTION 6.5. Sellers May Own Notes or Certifi-
cates . . . . . . . . . . . . . 45
ARTICLE VII
THE SERVICER
SECTION 7.1. Representations of Servicer . . 47
SECTION 7.2. Indemnities . . . . . . . . . . 49
SECTION 7.3. Merger or Consolidation of, or As-
sumption of the Obligations of,
Servicer . . . . . . . . . . . 50
SECTION 7.4. Limitation on Liability of Servicer
and Others . . . . . . . . . . 50
SECTION 7.5. NationsBank, N.A. Not to Resign as
Servicer . . . . . . . . . . . 51
SECTION 7.6. Servicer May Own Notes or Certifi-
cates . . . . . . . . . . . . . 51
ARTICLE VIII
SERVICING TERMINATION
SECTION 8.1. Events of Servicing Termination 53
SECTION 8.2. Appointment of Successor Servicer
55
SECTION 8.3. Effect of Servicing Transfer . 56
SECTION 8.4. Repayment of Advances . . . . . 57
SECTION 8.5. Notification to Noteholders and Cer-
tificateholders . . . . . . . . 57
SECTION 8.6. Waiver of Past Events of Servicing
Termination . . . . . . . . . . . . . . 57
SECTION 8.7. Transfer of Accounts . . . . . 57
ARTICLE IX
TERMINATION
SECTION 9.1. Optional Purchase of All Receivables
59
SECTION 10.1. Amendment . . . . . . . . . . . 60
SECTION 10.2. Protection of Title to Trust . 61
Page
SECTION 10.3. Governing Law . . . . . . . . . 64
SECTION 10.4. Notices . . . . . . . . . . . . 64
SECTION 10.5. Severability of Provisions . . 65
SECTION 10.6. Assignment . . . . . . . . . . 65
SECTION 10.7. Further Assurances . . . . . . 65
SECTION 10.8. No Waiver; Cumulative Remedies 65
SECTION 10.9. Third-Party Beneficiaries . . . . .
SECTION 10.10. Actions by Noteholders or
Certificateholders . . . . . . . . . . 66
SECTION 10.11. Agent for Service . . . . . . . 66
SECTION 10.12. No Bankruptcy Petition. . . . . 66
SECTION 10.13. Limitation of Liability of Owner
Trustee
and Indenture Trustee . . . . . . . . . 67
SCHEDULE A: Schedule of Receivables
EXHIBIT A: Form of Yield Supplement Agreement